WELLTOWER INC. - Annual Report 2014

10-K 1 10-K.htm 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

Commission File No. 1-8923

HEALTH CARE REIT, INC.

(Exact name of registrant as specified in its charter)

Delaware	34-1096634
(State or other jurisdiction of incorporation or organization)	(I.R.S. 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)

Securities registered pursuant to Section 12(b) of the Act:

| Title of Each
Class | Name of Each
Exchange on Which Registered |
| --- | --- |
| Common
Stock, $1.00 par value | New
York Stock Exchange |
| 6.50%
Series I Cumulative Convertible
Perpetual Preferred Stock, $1.00 par value | New
York Stock Exchange |
| 6.50%
Series J Cumulative Redeemable
Preferred Stock, $1.00 par value | New
York Stock Exchange |
| 4.800%
Notes due 2028 | New
York Stock Exchange |
| 4.500%
Notes due 2034 | 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 ☑ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No ☑

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 o

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 ☑ No o

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 to this Form 10-K. R

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☑

The aggregate market value of the shares of voting common stock held by non-affiliates of the registrant, computed by reference to the closing sales price of such shares on the New York Stock Exchange as of the last business day of the registrant’s most recently completed second fiscal quarter was $19,277,423,332.

As of January 31, 2015, the registrant had 329,912,724 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the annual stockholders’ meeting to be held May 7, 2015, are incorporated by reference into Part III.

HEALTH CARE REIT, INC.

2014 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
	PART I
Item
1.	Business	2
Item
1A.	Risk
Factors	31
Item
1B.	Unresolved
Staff Comments	39
Item
2.	Properties	40
Item
3. Item
4.	Legal
Proceedings Mine
Safety Disclosures	42 42
	PART II
Item
5.	Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities	42
Item
6.	Selected
Financial Data	44
Item
7.	Management’s
Discussion and Analysis of Financial Condition and Results of Operations	45
Item
7A.	Quantitative
and Qualitative Disclosures About Market Risk	70
Item
8.	Financial
Statements and Supplementary Data	71
Item
9.	Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure	106
Item
9A.	Controls
and Procedures	106
Item
9B.	Other
Information	107
	PART III
Item
10.	Directors, Executive Officers and Corporate Governance	108
Item
11.	Executive
Compensation	108
Item
12.	Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters	108
Item
13.	Certain Relationships and Related Transactions and Director Independence	108
Item
14.	Principal
Accounting Fees and Services	108
	PART IV
Item
15.	Exhibits and Financial Statement Schedules	109

PART I

Item 1. Business

General

Health Care REIT, Inc. is a real estate investment trust (“REIT”) that has been at the forefront of seniors housing and health care real estate since the company was founded in 1970. We are an S&P 500 company headquartered in Toledo, Ohio. Our portfolio spans the full spectrum of seniors housing and health care real estate, including seniors housing communities, long-term/post-acute care facilities, medical office buildings, inpatient and outpatient medical centers and life science facilities. Our capital programs, when combined with comprehensive planning, development and property management services, make us a single-source solution for acquiring, planning, developing, managing, repositioning and monetizing real estate assets. More information is available on the Internet at www.hcreit.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.

Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in net operating income and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, customer and geographic location.

Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund operations, meet debt service obligations (both principal and interest), make dividend distributions and complete construction projects in process. We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured credit facility, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net operating income and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our primary unsecured credit facility, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.

References herein to “we,” “us,” “our” or the “Company” refer to Health Care REIT, Inc. and its subsidiaries unless specifically noted otherwise.

Portfolio of Properties

Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Executive Summary – Company Overview” for a table that summarizes our portfolio as of December 31, 2014.

Property Types

We invest in seniors housing and health care real estate and evaluate our business on three reportable segments: seniors housing triple-net, seniors housing operating and medical facilities. For additional information regarding our segments, please see Note 17 to our consolidated financial statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to our consolidated financial statements. The following is a summary of our various property types.

Seniors Housing Triple-Net

Our seniors housing triple-net properties include independent living facilities, independent supportive living facilities (Canada), continuing care retirement communities, assisted living facilities, care homes with and without nursing, Alzheimer’s/dementia facilities, long-term/post-acute care facilities, hospitals and combinations thereof. We invest primarily through acquisitions, development and joint venture partnerships. Our properties are primarily leased to operators under long-term, triple-net master leases. We are not involved in property management. Our properties include stand-alone facilities that provide one level of service, combination facilities that provide multiple levels of service, and communities or campuses that provide a wide range of services.

Independent Living Facilities and Independent Supportive Living Facilities (Canada). Independent living facilities and independent supportive living facilities are age-restricted, multifamily properties with central dining facilities that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities.

Continuing Care Retirement Communities. Continuing care retirement communities typically include a combination of detached homes, an independent living facility, an assisted living facility and/or a long-term/post-acute care facility on one campus. These communities appeal to residents because there is no need to relocate when health and medical needs change. Resident payment plans Do not modify beyond this point! !

Do not modify before this point! ! vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services.

Assisted Living Facilities . Assisted living facilities are state regulated rental properties that provide the same services as independent living facilities, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including, but not limited to, management of medications, bathing, dressing, toileting, ambulating and eating.

Care Homes with Nursing (United Kingdom) . Care homes with nursing, regulated by the Care Quality Commission are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for various federal and local reimbursement programs. Unlike the U.S., care homes with nursing in the U.K. generally do not provide post-acute care.

Care Homes (United Kingdom) . Care homes, regulated by the Care Quality Commission, are rental properties that provide essentially the same services as U.S. assisted living facilities.

Alzheimer’s/Dementia Care Facilities. Certain assisted living facilities may include state-licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or other types of dementia.

Long-Term/Post-Acute Care Facilities . Our long-term/post-acute care facilities generally include skilled nursing/post-acute care facilities, inpatient rehabilitation facilities and long-term acute care facilities. Skilled nursing/post-acute care facilities are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement in the United States or provincial reimbursement in Canada. All facilities offer some level of rehabilitation services. Some facilities focus on higher acuity patients and offer rehabilitation units specializing in cardiac, orthopedic, dialysis, neurological or pulmonary rehabilitation. Inpatient rehabilitation facilities provide inpatient services for patients with intensive rehabilitation needs. Long-term acute care facilities provide inpatient services for patients with complex medical conditions that require more intensive care, monitoring or emergency support than is available in most skilled nursing/post-acute care facilities.

Hospitals . Hospitals are acute care facilities that provide a wide range of inpatient and outpatient services, including, but not limited to, surgery, rehabilitation, therapy and clinical laboratories.

Our seniors housing triple-net segment accounted for 31%, 31% and 46% of total revenues (including discontinued operations) for the years ended December 31, 2014, 2013 and 2012, respectively. We lease 181 facilities to Genesis Healthcare, LLC, an operator of long-term/post-acute care facilities, pursuant to a long-term, triple-net master lease. In addition to rent, the master lease requires Genesis to pay all operating costs, utilities, real estate taxes, insurance, building repairs, maintenance costs and all obligations under the ground leases. All obligations under the master lease have been guaranteed by FC-GEN Operations Investment, LLC. For the year ended December 31, 2014, our lease with Genesis accounted for approximately 31% of our seniors housing triple-net segment revenues and 9% of our total revenues.

Seniors Housing Operating

Our seniors housing operating properties include several of the facility types described in “Item 1 – Business – Property Types – Seniors Housing Triple-Net”, including independent living facilities and independent supportive living facilities, assisted living facilities, care homes and Alzheimer’s/dementia care facilities.

Properties are primarily held in consolidated joint venture entities with operating partners. We utilize the structure proposed in the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). See Note 18 for more information.

Our seniors housing operating segment accounted for 57%, 56% and 37% of total revenues (including discontinued operations) for the years ended December 31, 2014, 2013 and 2012, respectively. We have relationships with ten operators to own and operate 297 facilities (plus 55 unconsolidated facilities). In each instance, our partner provides management services to the properties pursuant to an incentive-based management contract. We rely on our partners to effectively and efficiently manage these properties. For the year ended December 31, 2014, our relationship with Sunrise Senior Living accounted for approximately 47% of our seniors housing operating segment revenues and 27% of our total revenues.

Medical Facilities

Our medical facilities include medical office buildings and life science facilities. We typically lease our medical office buildings to multiple tenants and provide varying levels of property management. Our life science investment represents an investment in an unconsolidated joint venture entity (see Note 7 to our consolidated financial statements). Our medical facilities segment accounted for 12%, 13% and 17% of total revenues (including discontinued operations) for the years ended December 31, 2014, 2013 and 2012, respectively. No single tenant exceeds 20% of segment revenues.

Medical Office Buildings . The medical office building portfolio consists of health care related buildings that generally include physician offices, ambulatory surgery centers, diagnostic facilities, outpatient services and/or labs. Our portfolio has a strong affiliation with health systems. Approximately 95% of our medical office building portfolio is affiliated with health systems (with buildings on hospital campuses or serving as satellite locations for the health system and their physicians).

Life Science Facilities . The life science portfolio consists of laboratory and office facilities specifically designed and constructed for use by biotechnology and pharmaceutical companies. These facilities are located adjacent to The Massachusetts Institute of Technology, which is a well-established market known for pharmaceutical and biotechnology research. They are similar to commercial office buildings with advanced HVAC (heating, ventilation and air conditioning), electrical and mechanical systems.

Investments

Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. We invest in seniors housing and health care real estate primarily through acquisitions, developments and joint venture partnerships. For additional information regarding acquisition and development activity, please see Note 3 to our consolidated financial statements. We diversify our investment portfolio by property type, relationship and geographic location. In determining whether to invest in a property, we focus on the following: (1) the experience of the obligor’s/partner’s management team; (2) the historical and projected financial and operational performance of the property; (3) the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate attributes of the building and its location; (6) the capital committed to the property by the obligor/partner; and (7) the operating fundamentals of the applicable industry. We conduct market research and analysis for all potential investments. In addition, we review the value of all properties, the interest rates and covenant requirements of any facility-level debt to be assumed at the time of the acquisition and the anticipated sources of repayment of any existing debt that is not to be assumed at the time of the acquisition.

We monitor our investments through a variety of methods determined by the type of property. Our proactive and comprehensive asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division actively manages and monitors the medical office building portfolio with a comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions. In monitoring our portfolio, our personnel use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to ascertain industry trends.

We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we are generally able to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.

Investment Types

Real Property. Our properties are primarily comprised of land, buildings, improvements and related rights. Our seniors housing triple-net properties are generally leased to operators under long-term operating leases. The leases generally have a fixed contractual term of 12 to 15 years and contain one or more five to 15-year renewal options. Certain of our leases also contain purchase options, a portion of which could result in the disposition of properties for less than full market value. Most of our rents are received under triple-net leases requiring the operator to pay rent and all additional charges incurred in the operation of the leased property. The tenants are required to repair, rebuild and maintain the leased properties. Substantially all of these operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period.

At December 31, 2014, approximately 89% of our seniors housing triple-net properties were subject to master leases. A master lease is a lease of multiple properties to one tenant entity under a single lease agreement. From time to time, we may acquire additional properties that are then leased to the tenant under the master lease. The tenant is required to make one monthly payment that represents rent on all the properties that are subject to the master lease. Typically, the master lease tenant can exercise its right to purchase the properties or to renew the master lease only with respect to all leased properties at the same time. This bundling feature benefits us because the tenant cannot limit the purchase or renewal to the better performing properties and terminate the leasing Do not modify beyond this point! !

Do not modify before this point! ! arrangement with respect to the poorer performing properties. This spreads our risk among the entire group of properties within the master lease. The bundling feature should provide a similar advantage to us if the master lease tenant is in bankruptcy. Subject to certain restrictions, a debtor in bankruptcy has the right to assume or reject each of its leases. It is our intent that a tenant in bankruptcy would be required to assume or reject the master lease as a whole, rather than deciding on a property by property basis.

Our medical office building portfolio is primarily self-managed and consists principally of multi-tenant properties leased to health care providers. Our leases typically include increasers and some form of operating expense reimbursement by the tenant. As of December 31, 2014, 85% of our portfolio included leases with full pass through, 13% with a partial expense reimbursement (modified gross) and 2% with no expense reimbursement (gross). Our medical office building leases are non-cancellable operating leases that have a weighted-average remaining term of eight years at December 31, 2014 and are often credit enhanced by security deposits, guaranties and/or letters of credit.

Construction. We occasionally provide for the construction of properties for tenants as part of long-term operating leases. We capitalize certain interest costs associated with funds used for the construction of properties owned by us. The amount capitalized is based upon the amount advanced during the construction period using the rate of interest that approximates our company-wide cost of financing. Our interest expense is reduced by the amount capitalized. We also typically charge a transaction fee at the commencement of construction which we defer and amortize to income over the term of the resulting lease. The construction period commences upon funding and terminates upon the earlier of the completion of the applicable property or the end of a specified period. During the construction period, we advance funds to the tenants in accordance with agreed upon terms and conditions which require, among other things, periodic site visits by a Company representative. During the construction period, we generally require an additional credit enhancement in the form of payment and performance bonds and/or completion guaranties. At December 31, 2014, we had outstanding construction investments of $186,327,000 and were committed to provide additional funds of approximately $227,618,000 to complete construction for investment properties.

Real Estate Loans. Our real estate loans are typically structured to provide us with interest income, principal amortization and transaction fees and are generally secured by first/second mortgage liens, leasehold mortgages, corporate guaranties and/or personal guaranties. At December 31, 2014, we had outstanding real estate loans of $380,169,000. The interest yield averaged approximately 8.2% per annum on our outstanding real estate loan balances. Our yield on real estate loans depends upon a number of factors, including the stated interest rate, average principal amount outstanding during the term of the loan and any interest rate adjustments. The real estate loans outstanding at December 31, 2014 are generally subject to one to 15-year terms with principal amortization schedules and/or balloon payments of the outstanding principal balances at the end of the term. Typically, real estate loans are cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.

Investments in Unconsolidated Entities . Our investments in unconsolidated entities generally represent interests ranging from 10% to 50% in real estate assets. Investments in less than majority owned entities are reported under the equity method of accounting when our interests represent either (1) general partnership interests subject to substantive participating or kick-out rights that have been granted to the limited partners, or (2) limited partnership interests with no control over major operating and financial policies of the entities. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest or the estimated fair value of the assets prior to the sale of interests in the entity. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded. See Note 7 to our consolidated financial statements for more information.

Principles of Consolidation

The consolidated financial statements include the accounts of our wholly-owned subsidiaries and joint venture entities that we control, through voting rights or other means. All material intercompany transactions and balances have been eliminated in consolidation.

At inception of joint venture transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, Consolidations , requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated on a continuous basis. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance.

For investments in joint ventures, we evaluate the type of rights held by the limited partner(s), which may preclude consolidation in circumstances in which the sole general partner would otherwise consolidate the limited partnership. The assessment of limited partners’ rights and their impact on the presumption of control over a limited partnership by the sole general partner should be made when an investor becomes the sole general partner and should be reassessed if (i) there is a change to the terms or in the exercisability of the rights of the limited partners, (ii) the sole general partner increases or decreases its ownership in the limited partnership interests, or (iii) there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.

Borrowing Policies

We utilize a combination of debt and equity to fund investments. Our debt and equity levels are determined by management to maintain a conservative credit profile. Generally, we intend to issue unsecured, fixed-rate public debt with long-term maturities to approximate the maturities on our triple-net leases and loans. For short-term purposes, we may borrow on our primary unsecured credit facility. We replace these borrowings with long-term capital such as senior unsecured notes, common stock or preferred stock. When terms are deemed favorable, we may invest in properties subject to existing mortgage indebtedness. In addition, we may obtain secured financing for unleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis. In certain agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness.

Competition

We compete with other real estate investment trusts, real estate partnerships, private equity and hedge fund investors, banks, insurance companies, finance/investment companies, government-sponsored agencies, taxable and tax-exempt bond funds, health care operators, developers and other investors in the acquisition, development, leasing and financing of health care and seniors housing properties. We compete for investments based on a number of factors including relationships, certainty of execution, investment structures and underwriting criteria. Our ability to successfully compete is impacted by economic and demographic trends, availability of acceptable investment opportunities, our ability to negotiate beneficial investment terms, availability and cost of capital, construction and renovation costs and applicable laws and regulations.

The operators/tenants of our properties compete with properties that provide comparable services in the local markets. Operators/tenants compete for patients and residents based on a number of factors including quality of care, reputation, physical appearance of properties, location, services offered, family preferences, physicians, staff and price. We also face competition from other health care facilities for tenants, such as physicians and other health care providers that provide comparable facilities and services.

For additional information on the risks associated with our business, please see “Item 1A — Risk Factors” of this Annual Report on Form 10-K.

Employees As of January 31, 2015, we had 438 employees.

Credit Concentrations Please see Note 8 to our consolidated financial statements.

Geographic Concentrations Please see “Item 2 – Properties” of this Annual Report on Form 10-K and Note 17 to our consolidated financial statements.

Health Care Industry

The demand for health care services, and consequently health care properties, is projected to reach unprecedented levels in the near future. The Centers for Medicare and Medicaid Services (“CMS”) projects that national health expenditures will rise to approximately $3.4 trillion in 2016 or 17.7% of gross domestic product (“GDP”). The average annual growth in national health expenditures for 2013 through 2023 is expected to be 5.7%.

While demographics are the primary driver of demand, economic conditions and availability of services contribute to health care service utilization rates. We believe the health care property market may be less susceptible to fluctuations and economic downturns relative to other property sectors. Investor interest in the market remains strong, especially in specific sectors such as private-pay senior living and medical office buildings.

The total U.S. population is projected to increase by 13.4% through 2033. The elderly population aged 65 and over is projected to increase by 68.3% through 2033. The elderly are an important component of health care utilization, especially independent living services, assisted living services, long-term/post-acute care services, inpatient and outpatient hospital services and physician ambulatory care. Most health care services are provided within a health care facility such as a hospital, a physician’s office or a seniors housing community. Therefore, we believe there will be continued demand for companies, such as ours, with expertise in health care real estate.

Health care real estate investment opportunities tend to increase as demand for health care services increases. We recognize the need for health care real estate as it correlates to health care service demand. Health care providers require real estate to house their businesses and expand their services. We believe that investment opportunities in health care real estate will continue to be present due to:

· The specialized nature of the industry, which enhances the credibility and experience of our company;

· The projected population growth combined with stable or increasing health care utilization rates, which ensures demand; and

· The on-going merger and acquisition activity.

Certain Government Regulations

United States

Health Law Matters — Generally

Typically, operators of seniors housing facilities do not receive significant funding from government programs and are largely subject to state laws, as opposed to federal laws. Operators of long-term/post-acute care facilities and hospitals do receive significant funding from government programs, and these facilities are subject to the federal and state laws that regulate the type and quality of the medical and/or nursing care provided, ancillary services (e.g., respiratory, occupational, physical and infusion therapies), qualifications of the administrative personnel and nursing staff, the adequacy of the physical plant and equipment, reimbursement and rate setting and operating policies. In addition, as described below, operators of these facilities are subject to extensive laws and regulations pertaining to health care fraud and abuse, including, but not limited to, the Federal Anti-Kickback Statute, the Federal Stark Law, and the Federal False Claims Act, as well as comparable state law counterparts. Hospitals, physician group practice clinics, and other health care providers that operate in our portfolio are subject to extensive federal, state, and local licensure, registration, certification, and inspection laws, regulations, and industry standards. Our tenants’ failure to comply with any of these, and other, laws could result in loss of accreditation; denial of reimbursement; imposition of fines; suspension, decertification, or exclusion from federal and state health care programs; loss of license; or closure of the facility.

Licensing and Certification

The primary regulations that affect seniors housing facilities with assisted living are state licensing and registration laws. In granting and renewing these licenses, the state regulatory agencies consider numerous factors relating to a property’s physical plant and operations, including, but not limited to, admission and discharge standards, staffing, and training. A decision to grant or renew a license is also affected by a property owner’s record with respect to patient and consumer rights, medication guidelines, and rules. Certain of the seniors housing facilities mortgaged to or owned by us may require the resident to pay an entrance or upfront fee, a portion of which may be refundable. These entrance fee communities are subject to significant state regulatory oversight, including, for example, oversight of each facility’s financial condition; establishment and monitoring of reserve requirements, and other financial restrictions; the right of residents to cancel their contracts within a specified period of time; lien rights in favor of residents; restrictions on change of ownership; and similar matters. Such oversight, and the rights of residents within these entrance fee communities, may have an effect on the revenue or operations of the operators of such facilities, and, therefore, may adversely affect us.

Certain health care facilities are subject to a variety of licensure and certificate of need (“CON”) laws and regulations. Where applicable, CON laws generally require, among other requirements, that a facility demonstrate the need for (1) constructing a new facility, (2) adding beds or expanding an existing facility, (3) investing in major capital equipment or adding new services, (4) changing the ownership or control of an existing licensed facility, or (5) terminating services that have been previously approved through the CON process. Certain state CON laws and regulations may restrict the ability of operators to add new properties or expand an existing facility’s size or services. In addition, CON laws may constrain the ability of an operator to transfer responsibility for operating a particular facility to a new operator. If we have to replace a property operator who is excluded from participating in a federal or state health care program (as discussed below), our ability to replace the operator may be affected by a particular state’s CON laws, regulations, and applicable guidance governing changes in provider control.

With respect to licensure, generally our long-term/post-acute care facilities and acute care facilities are required to be licensed and certified for participation in Medicare, Medicaid, and other federal health care programs. This generally requires license renewals and compliance surveys on an annual or bi-annual basis. The failure of our operators to maintain or renew any required license or regulatory approval as well as the failure of our operators to correct serious deficiencies identified in a compliance survey could require those operators to discontinue operations at a property. In addition, if a property is found to be out of compliance with Medicare, Medicaid, or other health care program conditions of participation, the property operator may be excluded from participating in those government health care programs. Any such occurrence may impair an operator’s ability to meet their financial Do not modify beyond this point! !

Do not modify before this point! ! obligations to us. If we have to replace an excluded-property operator, our ability to replace the operator may be affected by federal and state laws, regulations, and applicable guidance governing changes in provider control. This may result in payment delays, an inability to find a replacement operator, a significant working capital commitment from us to a new operator or other difficulties.

Reimbursement

The reimbursement methodologies applied to health care facilities continue to evolve. Federal and state authorities have considered and may seek to implement new or modified reimbursement methodologies that may negatively impact health care property operations. The impact of any such changes, if implemented, may result in a material adverse effect on our portfolio. No assurance can be given that current revenue sources or levels will be maintained. Accordingly, there can be no assurance that payments under a government health care program are currently, or will be in the future, sufficient to fully reimburse the property operators for their operating and capital expenses. As a result, an operator’s ability to meet its financial obligations to us could be adversely impacted.

Seniors Housing Facilities (excluding long-term/post-acute care facilities). Approximately 58% of our overall revenues (including discontinued operations) for the year ended December 31, 2014 were attributable to U.S. seniors housing facilities. The majority of the revenues received by the operators of these facilities are from private pay sources. The remaining revenue source is primarily Medicaid under certain waiver programs. As a part of the Omnibus Budget Reconciliation Act (“OBRA”) of 1981, Congress established a waiver program enabling some states to offer Medicaid reimbursement to assisted living providers as an alternative to institutional long-term care services. The provisions of OBRA and the subsequent OBRA Acts of 1987 and 1990 permit states to seek a waiver from typical Medicaid requirements to develop cost-effective alternatives to long-term care, including Medicaid payments for assisted living and home health. As of September 30, 2014, 14 of our 38 seniors housing operators received Medicaid reimbursement pursuant to Medicaid waiver programs. For the twelve months ended September 30, 2014, approximately 2% of the revenues at our seniors housing facilities were from Medicaid reimbursement. There can be no guarantee that a state Medicaid program operating pursuant to a waiver will be able to maintain its waiver status.

Rates paid by self-pay residents are set by the facilities and are determined by local market conditions and operating costs. Generally, facilities receive a higher payment per day for a private pay resident than for a Medicaid beneficiary who requires a comparable level of care. The level of Medicaid reimbursement varies from state to state. Thus, the revenues generated by operators of our assisted living facilities may be adversely affected by payor mix, acuity level, changes in Medicaid eligibility, and reimbursement levels. In addition, a state could lose its Medicaid waiver and no longer be permitted to utilize Medicaid dollars to reimburse for assisted living services. Changes in revenues could in turn have a material adverse effect on an operator’s ability to meet its obligations to us.

Long-Term/Post-Acute Care Facilities . Approximately 13% of our overall revenues (including discontinued operations) for the year ended December 31, 2014 were attributable to long-term/post-acute care facilities. The majority of the revenues received by the operators of these facilities are from the Medicare and Medicaid programs, with the balance representing reimbursement payments from private payors, including private insurers. Consequently, changes in federal or state reimbursement policies may adversely affect an operator’s ability to cover its expenses, including our rent or debt service. Long-term/post-acute care facilities are subject to periodic pre- and post-payment reviews, and other audits by federal and state authorities. A review or audit of a property operator’s claims could result in recoupments, denials, or delay of payments in the future, which could have a material adverse effect on the operator’s ability to meet its financial obligations to us. Due to the significant judgments and estimates inherent in payor settlement accounting, no assurance can be given as to the adequacy of any reserves maintained by our property operators to cover potential adjustments to reimbursements, or to cover settlements made to payors. Recent attention on billing practices, payments, and quality of care, or ongoing government pressure to reduce spending by government health care programs, could result in lower payments to long-term/post-acute care facilities and, as a result, may impair an operator’s ability to meet its financial obligations to us.

Medicare Reimbursement and Long-Term/Post-Acute Care Facilities. For the twelve months ended September 30, 2014, approximately 34% of the revenues at our long-term/post-acute care facilities were paid by Medicare. Generally, long-term/post-acute care facilities are reimbursed under the Medicare Skilled Nursing Facility Prospective Payment System (“SNF PPS”), the Inpatient Rehabilitation Facility Prospective Payment System (“IRF PPS”), or the Long Term Care Hospital Prospective Payment System (“LTCH PPS”). There is a risk under these payment systems that costs will exceed the fixed payments, or that payments may be set below the costs to provide certain items and services, which could result in immediate financial difficulties for operators, and could cause operators to seek bankruptcy protection.

The Centers for Medicare & Medicaid Services (“CMS”), an agency of HHS, made positive payment updates for the 2015 fiscal year under the SNF PSS, the IRF PPS and the LTCH PPS.

· On August 5, 2014, CMS issued a final rule for the SNF PPS. Under the final rule, skilled nursing facilities (“SNFs”) will receive a net rate increase of 2.0%, accounting for adjustments, such as the multifactor productivity adjustment. CMS estimates aggregate payments to SNFs will increase by $750 million in fiscal year 2015.

· On August 6, 2014, CMS issued a final rule for the IRF PPS. Under the final rule, inpatient rehabilitation facilities (“IRFs”) will receive a net rate increase of 2.2%, accounting for adjustments, such as the multifactor productivity adjustment. CMS estimates aggregate payments to IRFs will increase by $180 million in fiscal year 2015.

· On August 22, 2014, CMS issued a final rule for the LTCH PPS. Under the final rule, long-term care hospitals (“LTCHs”) will receive a net rate increase of 0.9%, accounting for adjustments including, but not limited to, a multifactor productivity adjustment and the phase-in of a budget neutrality adjustment. Including other changes, CMS estimates aggregate payments to LTCHs will increase by $62 million in fiscal year 2015.

On December 26, 2014, the President signed into law the Pathway for SGR Reform Act (“SGR Reform”). SGR Reform implemented several changes to the Medicare payment rules for LTCHs. For a discharge in cost reporting periods beginning on or after October 1, 2015, specified cases in LTCHs will receive the “applicable” site-neutral payment rate. Specifically, payment rates will be blended for discharges in cost reporting periods beginning in fiscal year 2016 and fiscal year 2017, consisting of half of the site neutral payment rate and half of the payment rate that would otherwise apply, and then shift to all site-neutral payments in fiscal year 2018. Patients with a three-day stay in an intensive care unit (“ICU”) prior to LTCH admission or ventilator patients with at least 96 hours are exempted from the lower site-neutral payments if the discharge does not have a principal diagnosis relating to a psychiatric diagnosis or to rehabilitation. Beginning in fiscal year 2020, LTCHs are to maintain at least 50% of patients that are excluded from the site-neutral payments. SGR Reform also requires the Medicare Payment Advisory Committee (“MedPAC”) to conduct a study and submit a report to Congress by June 30, 2019 that includes recommendations that address these changes to the LTCH payment policies. Additionally, beginning in fiscal year 2016, calculation of length of stay requirements for LTCHs will exclude any patients for whom payment is made (i) at the site-neutral payment rate and (ii) under any Medicare Advantage plan. SGR Reform also delayed implementation of a limit of no more than 25% of patients referred from any one hospital (“25% Rule”) for another three years, and the Secretary of HHS must issue a report in two years on the need for any further extension or modifications to the 25% Rule. Finally, SGR Reform reinstituted a moratorium on new LTCHs or any increase in LTCH beds from January 1, 2015 through September 30, 2017.

On October 6, 2014, the President signed into law the Improving Medicare Post-Acute Transformation Act of 2014 (“IMPACT Act”). The law applies to SNFs, LTCHs, IRFs and home health agencies and requires providers to report standardized patient assessment data, data on quality measures, and data on resource use and other measures. The law requires public reporting of quality and resource use and other measures. MedPAC is required to submit a report to Congress by June 30, 2016, evaluating and recommending features of a post-acute payment system that establishes payment rates according to individual characteristics instead of the post-acute setting where the patient is treated. The report must include a technical prototype for a post-acute prospective payment system and the impact of moving from the current to the new payment system.

On April 1, 2014, the Protecting Access to Medicare Act of 2014 (“Access to Medicare Act”) was enacted. The Access to Medicare Act implements value-based purchasing for SNFs. Beginning in fiscal year 2019, 2% of SNF payments will be withheld and approximately 50% to 70% of the amount withheld will be paid to SNFs through value-based payments. SNFs will begin reporting a readmissions rate measure by October 1, 2015 and a resource use measure by October 1, 2016. Both measures will be publicly available by October 1, 2017.

Medicare Reimbursement and Physicians. CMS annually adjusts the Medicare Physician Fee Schedule payment rates based on an update formula that includes application of the Sustainable Growth Rate (“SGR”). On November 13, 2014, CMS published the calendar year 2015 Physician Fee Schedule final rule, which called for a negative 21.2% update under the statutory SGR formula. The Budget Act and Access to Medicare Act avoided, until March 31, 2015, the reimbursement cuts that would have occurred. Congress has overridden the required reduction every year since 2003. The final rule continues implementation of quality and cost measures that will be used in establishing a new value−based modifier that would adjust physician payments based on whether they are providing higher quality and more efficient care. The Health Reform Laws, as defined below, require CMS to begin making payment adjustments to certain physicians and physician groups on January 1, 2015, and to apply the modifier to all physicians by January 1, 2017. Calendar year 2013 is the initial performance year for purposes of adjusting payments in calendar year 2015.

Medicaid Reimbursement and Long-Term/Post-Acute Care Facilities. For the twelve months ended September 30, 2014, approximately 42% of the revenues of long-term/post-acute care facilities were paid by Medicaid. The federal and state governments share responsibility for financing Medicaid. The federal matching rate, known as the Federal Medical Assistance Percentage (“FMAP”), varies by state based on relative per capita income, but is at least 50% in all states. Medicaid is the largest component of total state spending, representing approximately 25.8% of total state expenditures in state fiscal year 2014. The percentage of Medicaid dollars for long-term/post-acute care facilities varies from state to state, due in part to different ratios of elderly population and eligibility requirements. Within certain federal guidelines, states have a fairly wide range of discretion to determine eligibility and reimbursement methodology. Many states reimburse SNFs, for example, using fixed daily rates, which are applied prospectively based on patient acuity and the historical costs incurred in providing patient care. Reasonable costs typically include allowances for staffing, administrative and general expenses, property, and equipment (e.g., real estate taxes, depreciation and fair rental).

In most states, Medicaid does not fully reimburse the cost of providing services. Certain states are attempting to slow the rate of Medicaid growth by freezing rates or restricting eligibility and benefits. Average Medicaid rates for our long-term/post-acute care facilities will likely vary throughout the year as states continue to make interim changes to their budgets and Medicaid funding. In addition, Medicaid reimbursement rates may decline if revenues in a particular state are not sufficient to fund budgeted expenditures.

Health Reform Laws. On March 23, 2010, the President signed into law the Patient Protection and Affordable Care Act of 2010 (the “PPACA”) and the Health Care and Education Reconciliation Act of 2010, which amends the PPACA (collectively, the “Health Reform Laws”). The Health Reform Laws contain various provisions that may directly impact us or the operators and tenants of our properties. Some provisions of the Health Reform Laws may have a positive impact on our operators’ or tenants’ revenues, by, for example, increasing coverage of uninsured individuals, while others may have a negative impact on the reimbursement of our operators or tenants by, for example, altering the market basket adjustments for certain types of health care facilities. The Health Reform Laws also enhance certain fraud and abuse penalty provisions that could apply to our operators and tenants, in the event of one or more violations of the federal health care regulatory laws. In addition, there are provisions that impact the health coverage that we and our operators and tenants provide to our respective employees. The Health Reform Laws also provide additional Medicaid funding to allow states to carry out the expansion of Medicaid coverage to certain financially−eligible individuals beginning in 2014, and have also permitted states to expand their Medicaid coverage to these individuals since April 1, 2010, if certain conditions are met. On June 28, 2012, The United States Supreme Court upheld the individual mandate of the Health Reform Laws but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion will allow States not to participate in the expansion – and to forego funding for the Medicaid expansion – without losing their existing Medicaid funding. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but could also further strain state budgets. While the federal government will pay for approximately 100% of those additional costs from 2014 to 2016, states will be expected to pay for part of those additional costs beginning in 2017.

We cannot predict whether the existing Health Reform Laws, or future health care reform legislation or regulatory changes, will have a material impact on our operators’ or tenants’ property or business. If the operations, cash flows or financial condition of our operators and tenants are materially adversely impacted by the Health Reform Laws or future legislation, our revenue and operations may be adversely affected as well.

Other Related Laws

Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are subject to federal, state, and local laws, regulations, and applicable guidance that govern the operations and financial and other arrangements that may be entered into by health care providers. Certain of these laws prohibit direct or indirect payments of any kind for the purpose of inducing or encouraging the referral of patients for medical products or services reimbursable by government health care programs. Other laws require providers to furnish only medically necessary services and submit to the government valid and accurate statements for each service. Still other laws require providers to comply with a variety of safety, health and other requirements relating to the condition of the licensed property and the quality of care provided. Sanctions for violations of these laws, regulations, and other applicable guidance may include, but are not limited to, criminal and/or civil penalties and fines, loss of licensure, immediate termination of government payments, and exclusion from any government health care program. In certain circumstances, violation of these rules (such as those prohibiting abusive and fraudulent behavior) with respect to one property may subject other facilities under common control or ownership to sanctions, including exclusion from participation in the Medicare and Medicaid programs, as well as other government health care programs. In the ordinary course of its business, a property operator is regularly subjected to inquiries, investigations, and audits by the federal and state agencies that oversee these laws and regulations.

Long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments) are also subject to the Federal Anti-Kickback Statute, which generally prohibits persons from offering, providing, soliciting, or receiving remuneration to induce either the referral of an individual or the furnishing of a good or service for which payment may be made under a federal health care program, such as Medicare or Medicaid. Long-term/post-acute care facilities are also subject to the Federal Ethics in Patient Referral Act of 1989, commonly referred to as the Stark Law. The Stark Law generally prohibits the submission of claims to Medicare for payment if the claim results from a physician referral for certain designated services and the physician has a financial relationship with the health service provider that does not qualify under one of the exceptions for a financial relationship under the Stark Law. Similar prohibitions on physician self-referrals and submission of claims apply to state Medicaid programs. Further, long-term/post-acute care facilities (and seniors housing facilities that receive Medicaid payments), are subject to substantial financial penalties under the Civil Monetary Penalties Act and the Federal False Claims Act and, in particular, actions under the Federal False Claims Act’s “whistleblower” provisions. Private enforcement of health care fraud has increased due in large part to amendments to the Federal False Claims Act that encourage private individuals to sue on behalf of the government. These whistleblower suits brought by private individuals, known as qui tam actions, may be filed by almost anyone, including present and former patients, nurses and other employees. Significantly, if a claim is successfully adjudicated, the Federal False Claims Act provides for treble damages up to $11,000 per claim.

Prosecutions, investigations, or whistleblower actions could have a material adverse effect on a property operator’s liquidity, financial condition, and operations, which could adversely affect the ability of the operator to meet its financial obligations to us. Finally, various state false claim act and anti-kickback laws may also apply to each property operator. Violation of any of the foregoing statutes can result in criminal and/or civil penalties that could have a material adverse effect on the ability of an operator to meet its financial obligations to us.

Other legislative developments, including the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), have greatly expanded the definition of health care fraud and related offenses and broadened its scope to include private health care plans in addition to government payors. Congress also has greatly increased funding for the Department of Justice, Federal Bureau of Investigation and the Office of the Inspector General of the Department of Health and Human Services to audit, investigate and prosecute suspected health care fraud. Moreover, a significant portion of the billions in health care fraud recoveries over the past several years has also been returned to government agencies to further fund their fraud investigation and prosecution efforts.

Additionally, other HIPAA provisions and regulations provide for communication of health information through standard electronic transaction formats and for the privacy and security of health information. In order to comply with the regulations, health care providers often must undertake significant operational and technical implementation efforts. Operators also may face significant financial exposure if they fail to maintain the privacy and security of medical records and other personal health information about individuals. The Health Information Technology for Economic and Clinical Health (“HITECH”) Act, passed in February 2009, strengthened the HHS Secretary’s authority to impose civil money penalties for HIPAA violations occurring after February 18, 2009. HITECH directs the HHS Secretary to provide for periodic audits to ensure covered entities and their business associates (as that term is defined under HIPAA) comply with the applicable HITECH requirements, increasing the likelihood that a HIPAA violation will result in an enforcement action. CMS issued an interim Final Rule which conformed HIPAA enforcement regulations to the HITECH Act, increasing the maximum penalty for multiple violations of a single requirement or prohibition to $1.5 million. Higher penalties may accrue for violations of multiple requirements or prohibitions. Additionally, on January 17, 2013, CMS released a final rule, which expands the applicability of HIPAA and HITECH and strengthens the government’s ability to enforce these laws. The final rule broadens the definition of “business associate” and provides for civil money penalty liability against covered entities and business associates for the acts of their agents regardless of whether a business associate agreement is in place. This rule also modified the standard for when a breach of unsecured personally identifiable health information must be reported. Some covered entities have entered into settlement agreements with HHS for allegedly failing to adopt policies and procedures sufficient to implement the breach notification provisions in the HITECH Act. Additionally, the final rule adopts certain changes to the HIPAA enforcement regulations to incorporate the increased and tiered civil monetary penalty structure provided by HITECH, and makes business associates of covered entities directly liable under HIPAA for compliance with certain of the HIPAA privacy standards and HIPAA security standards. HIPAA violations are also potentially subject to criminal penalties.

In November 2002, CMS began an ongoing national Nursing Home Quality Initiative (“NHQI”). Under this initiative, historical survey information, the NHQI Pilot Evaluation Report and the NHQI Overview is made available to the public on-line. The NHQI website provides consumer and provider information regarding the quality of care in nursing homes. The data allows consumers, providers, states, and researchers to compare quality information that shows how well nursing homes are caring for their residents’ physical and clinical needs. The posted nursing home quality measures come from resident assessment data that nursing homes routinely collect on the residents at specified intervals during their stay. If the operators of nursing facilities are unable to achieve quality of care ratings that are comparable or superior to those of their competitors, they may lose market share to other facilities, reducing their revenues and adversely impacting their ability to make rental payments.

Finally, government investigations and enforcement actions brought against the health care industry have increased dramatically over the past several years and are expected to continue. Some of these enforcement actions represent novel legal theories and expansions in the application of the Federal False Claims Act. The costs for an operator of a health care property associated with both defending such enforcement actions and the undertakings in settling these actions can be substantial and could have a material adverse effect on the ability of an operator to meet its obligations to us.

United Kingdom

Registration

In England, care home services are principally regulated by the Health and Social Care Act 2008 (the “Act”) and associated Regulations. The Act requires all persons carrying out “Regulated Activities” in England, and the managers of such persons, to be registered. Regulated Activities are defined in the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010, as amended (the “2010 Regulations”), and include (among other activities):

· The provision of personal care for persons who, by reason of old age, illness or disability are unable to provide it for themselves, and which is provided in a place where those persons are living at the time the care is provided; and

· The provision of residential accommodation, together with nursing or personal care.

Any person who carries on a regulated activity without being registered in respect of that activity is guilty of an offense under the Act. A person guilty of an offense is liable on summary conviction, to a fine of up to £50,000, or to imprisonment for a term not exceeding 12 months, or both, and on conviction on indictment, to a fine, or to imprisonment for a term not exceeding 12 months, or to both.

From April 1, 2015, the 2010 Regulations will be fully revoked by the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 (the “2014 Regulations”). While the 2014 Regulations introduce certain modifications with regard to service standards, the registration obligations under the Act remain.

Under the Care Quality Commission (Registration) Regulations 2009, as amended, service providers and managers of Regulated Activities must provide documentation demonstrating their ability to provide the relevant service(s); in particular, registrants must be able to demonstrate that they (or a nominated individual, if the registered person is a company) possess good character, are physically and mentally fit to carry on the regulated activity and have the necessary qualifications, skills and experience to do so.

Service Standards and Notification Obligations

The 2010 Regulations list the standards that must be met when providing care services. The service providers’ legal obligations include:

· Ensuring service users are protected against receiving care or treatment that is inappropriate or unsafe;

· Assessing and monitoring the quality of service provision;

· Safeguarding service users from abuse;

· Ensuring that service users and others are protected against risks of a healthcare associated infection;

· Protecting service users against risks in relation to the unsafe use of medicines;

· Meeting the nutritional needs of service users;

· Ensuring that the premises are safe and suitable;

· Ensuring that any equipment used is safe, suitable and readily available when required;

· Respecting and involving service users;

· Obtaining and acting in accordance with the consent of service users to care and treatment;

· Having in place an effective complaints system;

· Maintaining accurate records;

· Operating effective recruitment procedures; and

· Having sufficient numbers of suitably qualified, skilled and experienced employees and supporting workers through training, professional development, supervision, appraisals and qualifications.

Failure to comply with certain provisions of the above Regulations is an offense, with a person guilty of the offense liable on summary conviction to a fine of up to £50,000. Monetary penalty notices may also be issued.

From April 1, 2015, the 2010 Regulations will be fully revoked by the 2014 Regulations. The 2014 Regulations aim to streamline the legal obligations in the 2010 Regulations, and replace them with a set of more broadly-phrased, legally binding “Fundamental Standards” largely based on existing obligations in the 2010 Regulations.

While the obligations listed above will continue to exist in line with the new “Fundamental Standards,” the 2014 Regulations introduce a number of changes including:

· A new “duty of candour” to notify and apologize to affected persons, in the event of certain incidents having actually or potentially led to the death of the service user, where the death relates directly to the incident rather than to the natural course of the service user's illness or underlying condition, or severe harm, moderate harm or prolonged psychological harm to the service user (note that this requirement came into force on November 27, 2014); and

· More detailed standards to be met by individuals to be eligible to act as a director of a service provider institution. For instance, the individual should not have been responsible for, been privy to, contributed to or facilitated any serious misconduct or mismanagement (whether unlawful or not) in the course of carrying on a regulated activity, or equivalent outside of England (note that this requirement came into force on November 27, 2014).

· The provisions on penalties will remain similar to the 2010 Regulations although the reference to a fine not exceeding £50,000 will be removed from April 1, 2015.

Under the Care Quality Commission (Registration) Regulations 2009 certain matters must be notified to the Care Quality Commission (the “CQC”), the government regulatory body overseeing the provision of nursing and other care services in England. Events that must be notified include (among others):

· Where the service provider or registered manager proposes to be absent for a continuous period of 28 days or more;

· A change of the registered person or where the registered person is a company changes in the name or address of the registered person, a change of director, secretary or other similar officer, or a change of the nominated individual;

· The death of a service user;

· Incidents resulting in an injury (provided certain conditions are met);

· Abuse and allegations of abuse in relation to a service user; and

· Any event which prevents, or appears to the service provider to be likely to threaten to prevent, the service provider’s ability to continue to carry on the regulated activity safely, or in accordance with the registration requirements.

Failure to comply with the above notification obligations is an offense and a person guilty of an offense is liable on summary conviction to a fine of up to £2,500. The amount of this fine will be increased to £10,000 by a Statutory Instrument once coming into force.

Regulatory Oversight and Inspections

The Act also sets out the powers and responsibilities of the CQC. Among other powers, the CQC administers the compulsory registration system and issues guidance to care service providers on how to comply with applicable standards set out in legislation.

The CQC is also empowered to carry out inspections of care home premises to verify compliance with the standards set out in legislation. The CQC’s current policy is to carry out routine unannounced inspections at care homes at least once a year. Reports of all inspections in England are published, as are details of enforcement actions taken by the CQC, which can include issuing warning notices, restricting the services that the provider can offer, stopping admissions into the care service, issuing fixed penalty notices, suspending or cancelling the service registration and prosecution.

The Care Act 2014 sets out certain provisions which are not yet in force concerning (among others):

· The duty of a local authority to meet the needs of an adult for care and support and a carer’s needs where the registered care provider is unable to carry on a regulated activity because of business failure;

· The duty of the CQC to assess the financial sustainability of providers subject to its regulatory regime with a view to identifying any threats that such providers may face to their financial sustainability. Where the CQC identifies a significant risk to financial sustainability it can require the provider to develop a sustainability plan setting out the provider’s plan to mitigate or eliminate risk or require the provider to organize an independent review of the business with the costs being recovered from the provider; and

· A new offense where certain registered care providers supply, publish or make available information that is false or misleading in a material respect.

Financial Assistance for Service Users

Financial assistance for service users towards care home fees is available from local authorities and is means-tested. The National Health Service may also, in certain circumstances, contribute towards the costs of nursing care.

Privacy

In the European Union (“EU”), data protection is governed by the EU Data Protection Directive 95/46/EC (the “Data Protection Directive”). The Data Protection Directive has been implemented in the UK by the Data Protection Act 1998 (the “Act”) which entered into force on March 2000 and is enforced by the Information Commissioner’s Office (“ICO”).

The Act applies to a data controller that processes personal data in the context of an establishment in the UK, or where not established in the UK, in any other State of the European Economic Area (“EEA”), processes personal data through equipment located in the UK other than for the purposes of transit through the UK. Under the Act, a data controller is the person who (either alone or jointly or in common with other persons) determines the purposes for which and the manner in which any personal data are, or are to be, processed. Personal data is widely defined as data which relates to a living individual who can be identified from those data, or from those data and other information which is in the possession of, or is likely to come into the possession of, the data controller. Sensitive personal data is personal data consisting of information as to the racial or ethnic origin of the data subject; his/her political opinions, religious beliefs or other beliefs of a similar nature; whether he/she is a member of a trade union; his/her physical or mental health or condition; his/her sexual life; and the commission or alleged commission by him/her of an offense, any proceedings for any Do not modify beyond this point! !

Do not modify before this point! ! offense committed or alleged to have been committed by him/her, the disposal of such proceedings, or the sentence of any court in such proceedings.

The Act imposes a number of obligations on the data controller contained in eight Data Protection Principles: (i) personal data must be processed fairly and lawfully, (ii) personal data must be processed for specified and lawful purposes, (iii) personal data must be adequate, relevant and not excessive, (iv) personal data must be accurate and up to date, (v) personal data must not be kept for longer than necessary, (vi) personal data must be processed in accordance with the rights of data subjects, (vii) appropriate technical and organizational measures shall be taken against unauthorized or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data; and (viii) there is a prohibition on transfers of personal data to countries outside the EEA that are not deemed by the European Commission to provide an adequate level of protection, which includes the U.S., unless certain exemptions under the Act apply.

The ICO has a number of enforcement powers available which includes, in certain limited cases, criminal prosecution and non-criminal enforcement and audits. In case of a breach of the Act, the ICO may: (i) provide practical advice to organizations on how they should handle data protection matters; (ii) issue undertakings committing an organization to a particular course of action in order to improve its compliance; (iii) serve enforcement notices where there has been a breach, requiring organizations to take (or refrain from taking) specified steps in order to ensure they comply with the law; (iv) conduct consensual assessments (audits) to determine if organizations are complying; (v) serve assessment notices to conduct compulsory audits to assess whether organizations’ processing of personal data follows good data protection practices; (vi) issue monetary penalty notices requiring organizations to pay up to £500,000 for serious breaches of the Act occurring on or after April 6, 2010 or serious breaches of the Privacy and Electronic Communications Regulations occurring after May 26, 2011; and (vii) prosecute those who commit criminal offenses under the Act. Under the Act, individuals also have the right to claim compensation from an organization in respect of damage caused by a breach of any of the requirements of the Act.

There is a proposal for an EU Data Protection Regulation which would replace the Data Protection Directive and impose a significant number of new obligations including, among others, a requirement to appoint data protection officers, having detailed documentation on the processing of personal data, carrying out privacy impact assessments in certain circumstances, providing standardized data protection notices, reporting security breaches without undue delay, and providing certain rights to individuals such as a right of erasure of personal data. The EU Data Protection Regulation is to have significant enforcement powers with fines proposed by the European Commission of up 2% of annual worldwide turnover and with fines proposed by the European Parliament of up to 5% of annual worldwide turnover or €100 million, whichever is greater. The EU Data Protection Regulation may be adopted sometime in 2015 with EU Member States possibly having two years to implement the Regulation .

Canada

Retirement homes and long-term care facilities are subject to regulation, and long-term care facilities receive funding, under provincial law. There is no federal regulation in this area. Set out below are summaries of the principal regulatory requirements in the provinces where we have a material number of facilities.

Licensing and Regulation

Alberta

In Alberta, there are three relevant designations for seniors’ living arrangements, ordered below from the most independent to the highest level of care.

Retirement Homes (also referred to as independent living) are designed for older adults who are able to live on their own. These communities may offer amenities such as fitness centers, gardens, paths, libraries, and beauty salons. Residents may access publicly-funded external care services at the home from funded external suppliers.

Alberta retirement residences may be rented, privately owned, or life-leased. They may be operated for profit or non-profit. Retirement residences typically do not offer support services but residents may arrange support services separate from their accommodations.

Retirement homes do not generally receive government funding; residents pay for tenancy and services received at retirement homes. Rental subsidies may be available to qualified seniors.

Alberta Independent Living residences are legislated under the Residential Tenancies Act, SA 2004, c R-17.1 and the Alberta Housing Act, RSA 2000, c A-25.

Supportive Living (also referred to as assisted living) provides accommodation in a home-like setting, where residents can remain as independent as possible while still having access to necessary care, assistance, and services. A provider of designated Supportive Living services provides at least one meal a day or housekeeping services. Supportive living includes many different types of facilities, including seniors lodges, group homes, and mental health and designated supportive living accommodations. These facilities can be operated by private for-profit, private not-for-profit, or public operators.

Supportive Living services are licensed under the Supportive Living Accommodation Licensing Act, SA 2009, c S-23.5, and the Supportive Living Accommodation Licensing Regulation, Alta Reg 40/2010. They are governed by the Ministry of Health.

Operators that receive public funds, either directly or indirectly, for health and personal care services must also comply with the Ministry of Health Continuing Care Health Service Standards (March 2007, and revised). They are also subject to the Protection for Persons in Care Act, SA 2009, c P-29.1, under which the province investigates suspected abuse of adults receiving government-funded care services.

Licenses may be granted for periods of six months to three years, depending on how long the facility has been licensed, and depending on past reports. The Ministry, through a designated director, may conduct inspections of facilities and review records. The Director may order a delinquent facility to take specific steps or to stop certain practices or may temporarily stop operations; alternatively, the facility’s license may be suspended.

There are four levels of supportive living, ordered from basic to more advance care: (1) Residential Living (residents can manage most daily tasks and direct own care and assistance can be scheduled); (2) Lodge Living (residents can manage some daily tasks and direct own care and assistance can be scheduled, although some non-scheduled assistance may be required); (3) Assisted Living (residents require assistance with many daily tasks, with increased scheduled and some non-scheduled assistance required); (4) Enhanced Level (residents require assistance with most or all daily tasks and frequent unscheduled assistance). In addition, there are two specialized designations of Supportive Care: (1) Alberta Enhanced Assisted Living (also referred to as Enhanced Lodges or Alberta Designated Supportive Living Level 4 (SL4) (provides 24-hour scheduled and unscheduled professional, personal care and support services provided by Licensed Practical Nurses and Health Care Aides); and (2) Enhanced Assisted Living Dementia Care Sites (also referred to as Designated Supportive Living Level 4 Dementia (SL4-D)) (provides assisted living for seniors living with cognitive impairments (such as Alzheimer’s disease or other types of dementia) who require safe and secure living accommodation in a therapeutic environment).

Residents pay a fee to cover the costs of providing accommodations and services like meals, housekeeping and building maintenance. The accommodation fee varies by accommodation type and the services or amenities that are available to the resident. Alberta Health regulates the maximum accommodation fee in publicly-funded designated supportive living. In other types of supportive living settings, the operator sets the cost of accommodation. Health services are publicly-funded and provided through Alberta Health Services. Private sector operators of Supportive Living facilities are eligible to apply for funding under the Affordable Supportive Living Initiative (“ASLI”), an Alberta government capital grant program that provides funding to develop long-term care and affordable supportive living spaces in the province.

Nursing Homes (also referred to as long-term care) are for residents who have complex, unpredictable medical needs and who require 24-hour on-site registered nurse assessment or treatment.

Nursing homes are subject to the Nursing Homes Act, RSA 2000, c N-7, and the Nursing Home General Regulation, Alta Reg 232/1985, and Long-term Care Accommodation Standards. They are governed by the Ministry of Health.

Nursing home operators are not licensed, but enter into agreements with the Ministry for the operation of nursing homes. These facilities can be operated by private for-profit, private not-for-profit, or public operators.

All operators must comply with the Ministry of Health Long-term Care Accommodation Standards (March 2007, and revised). Operators that receive public funds, either directly or indirectly, for health and personal care services must also comply with the Continuing Care Health Service Standards and are subject to the Protection for Persons in Care Act.

The Ministry may conduct inspections of facilities and review records. Deficient facilities may be ordered to submit a correction plan.

Residents pay an accommodation fee to cover the costs of providing accommodations and services like meals, housekeeping and building maintenance. Alberta Health regulates the maximum accommodation fee in publicly-funded long-term care facilities. In other types of supportive living settings, the accommodation fee is set by the operator. Health services in long-term care are publicly-funded Do not modify beyond this point! !

Do not modify before this point! ! and provided through Alberta Health Services. Private sector operators of nursing homes are eligible to apply for funding under the ASLI. The Minister may make grants to an operator in respect of its operating or capital costs as prescribed by the regulations.

Ontario

Long-term care facilities, or nursing homes, receive government funding, are licensed under the Long-Term Care Homes Act, 2007 and are governed by the Ministry of Health and Long-Term Care. The LTC Homes Act places a strong emphasis on the protection of residents.

Retirement homes in Ontario are regulated under the Retirement Homes Act, 2010 (the “Act”). Retirement homes do not receive any government funding; residents pay for tenancy and services received at retirement homes. Residents may access publicly-funded external care services at the home from funded external suppliers.

A license is required to operate a retirement home. Licenses must be applied for and are non-transferable. Applications for licenses are directed to the Registrar of the Retirement Homes Regulatory Authority (RHRA). All of the homes in which we have an interest in Ontario are licensed as retirement homes. One of the homes also has some licensed long-term care beds.

Licenses can have conditions imposed upon them or can be suspended in circumstances where the operator is found to be in contravention of the Act. There is no set renewal period for licenses, and they terminate according to the terms set out in the license itself, or if one of the enumerated triggering mechanisms occurs (for example, if the operator ceases to have controlling interest in the license).

The licensee of a retirement home must ensure that the care provided by the home meets prescribed standards. The Act and its regulations include a number of detailed provisions with respect to care standards, safety plans in the event of emergency or infectious disease, temperature control, cleanliness, pest control, maintenance, food preparations, risk of resident falls and behavioral management, among other things. A care plan must be developed for each resident of the home (with their consent). The Act establishes a Residents’ Bill of Rights, which provides residents with a list of rights, such as the right to participate fully in decision-making with respect to care, the right not to be restrained and the right to know what care services are provided and their cost. The Residents’ Bill of Rights can be enforced as a contract.

The Act requires a report to the RHRA when any person has reasonable grounds to suspect abuse of a resident by anyone, or neglect of a resident by staff. Following a report to the RHRA, there is a mandatory inspection carried out by the RHRA, which results in a report that is posted on the RHRA’s public website. The most recent report must also be posted in the subject home, and be readily available for review if requested thereafter.

The Registrar of the RHRA has the power to inspect a retirement home at any time without warning or issue a warrant to ensure compliance with the Act. Compliance inspections occur at least every three years. The Registrar has the power to make a variety of orders including, for example, the imposition of a fine or an order revoking the operator’s license. There is an appeal process in place with respect to orders made by the Registrar. The Act also enumerates offenses, such as operating without a license, and provides for penalties for offenses.

British Columbia

The Community Care and Assisted Living Act, the Residential Care Regulation, and the Community Care and Assisted Living Regulation (together, the “B.C. Act”) regulate “community care facilities” (long-term care facilities) in substantially the same manner as retirement homes are regulated under the Ontario Act. The B.C. Act defines such a facility as premises used for the purpose of supervising vulnerable persons who require three or more prescribed services.

The B.C. Act also creates a separate regime for regulating “assisted living residences,” which are facilities providing at least one but not more than two prescribed care services. Assisted living residences are designed for those who can live independently, but who require assistance with certain activities. Unlike community care facilities, assisted living residences must be registered with the registrar of assisted living residences, but do not require a license. Nevertheless, assisted living residences must be operated in a manner that does not jeopardize the health or safety of its residents. If the registrar has reason to believe a residence is not being operated in accordance with this standard, the registrar may inspect the assisted living residence and may suspend or cancel a registration. Most of the residences in which we have an interest in B.C. are assisted living residences, with one being an independent living residence.

Independent living residences offer housing and hospitality services for retired adults who are functionally independent and able to direct their own care. Services available for residents can include, for example, meals, housekeeping, monitoring and emergency support, social and recreational opportunities, and transportation.

Québec

In Québec, retirement homes are regulated by the Act respecting Health Services and Social Services (the “Act”) and the Regulation respecting the conditions for obtaining a certificate of compliance and the operating standards for a private seniors' residence (the “Regulation”), which refer to “private seniors’ residences.” Private seniors’ residences in Québec are required to obtain a certificate of compliance. The Regulation is currently in the process of being amended.

A certificate of compliance is issued for a period of three years, is renewable and can only be validly transferred to another person with the written permission of the regional licensing agency. An agency may revoke a temporary certificate, or revoke or refuse to issue or renew a certificate of compliance if, among other things, the operator fails to comply with the Act and the Regulation, although the decision of the applicable agency can be contested before the Administrative Tribunal of Québec. The agency may also order the residence to take corrective measures, further to an inspection, complaint and/or investigation. The agency is authorized to inspect a residence, at any reasonable time of day, in order to ascertain whether it complies with the Act and the Regulation.

Private seniors’ residences may belong to either or both of the following two categories: those offering services to independent elderly persons and those offering services to semi-independent elderly persons. The operator of a residence must, for each category, comply with the applicable criteria and standards, with some exceptions provided for residences with fewer than six or ten rooms or apartments. The Act and the Regulation set out a number of detailed provisions with respect to residents’ health and safety (including mandatory call-for-help systems, safety plans in the event of fire or infectious disease, health assessments, permissible control measures, as well as administration and distribution of medication), meal services and recreation, content of residents’ files, disclosure of information to residents, and staffing requirements, among other things.

Other Related Laws

Privacy

The services provided in our facilities are generally subject to privacy legislation in Canada, including, in certain provinces, privacy laws specifically related to personal health information. Although the obligations of custodians of personal health information in the various provinces differ to some extent, they all include the obligation to protect the information. The organizations with which we have management agreements may be the custodian of personal health information/personal information collected in connection with the operation of our facilities.

Privacy laws in Canada are consent-based and require the implementation of a privacy program involving policies, procedures and the designation of an individual or team with primary responsibility for a custodian’s privacy law compliance. Mandatory breach notification is a requirement under some laws. Some laws require notification where personal health information/personal information is processed or stored outside of Canada. One provincial law (in Quebec) provides for fines where an organization fails to perform required due diligence before outsourcing activities involving personal information to a service provider outside of the province.

Some privacy regulators in Canada have order-making authority and others are ombudspersons who make recommendations that may only be enforced by a court. Under a number of privacy laws, a finding by a regulator that a custodian has breached the law creates a right to apply to a court for money damages. In some provinces there is a statutory civil cause of action for breach of privacy. In other provinces, the courts have recognized a limited common law cause of action for breach of privacy.

The powers of privacy regulators and penalties for violations of privacy law vary according to the applicable law or are left to the courts. To date, penalties have generally not been monetary, although that may change depending on decisions in connection with class actions. Regulators have the authority to make public the identity of a health information custodian that has been found to have committed a breach, so that there is a reputational risk associated with privacy law violations even where no monetary damages are incurred. The notification of patients (mandatory under some privacy laws) and other activities required to manage a privacy breach can give rise to significant costs.

Other Legislation

Retirement homes may be subject to residential tenancy laws, such that there can be restrictions on rent increases and termination of tenancies, for instance. Other provincial legislation applicable to occupational health and safety, public health, and the provision of community health care and funded long-term/post-acute care may also apply to retirement homes. In addition, municipal laws with respect to matters such as fire safety, food services and zoning would also apply.

Taxation

Federal Income Tax Considerations

The following summary of the taxation of the Company and the material federal tax consequences to the holders of our debt and equity securities is for general information only and is not tax advice. This summary does not address all aspects of taxation that may be relevant to certain types of holders of stock or securities (including, but not limited to, insurance companies, tax-exempt entities, financial institutions or broker-dealers, persons holding shares of common stock as part of a hedging, integrated conversion, or constructive sale transaction or a straddle, traders in securities that use a mark-to-market method of accounting for their securities, investors in pass-through entities and foreign corporations and persons who are not citizens or residents of the United States).

This summary does not discuss all of the aspects of U.S. federal income taxation that may be relevant to you in light of your particular investment or other circumstances. In addition, this summary does not discuss any state or local income taxation or foreign income taxation or other tax consequences. This summary is based on current U.S. federal income tax law. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of purchasing, owning and disposing of our securities as set forth in this summary. Before you purchase our securities, you should consult your own tax advisor regarding the particular U.S. federal, state, local, foreign and other tax consequences of acquiring, owning and selling our securities.

General

We elected to be taxed as a real estate investment trust (a “REIT”) commencing with our first taxable year. We intend to continue to operate in such a manner as to qualify as a REIT, but there is no guarantee that we will qualify or remain qualified as a REIT for subsequent years. Qualification and taxation as a REIT depends upon our ability to meet a variety of qualification tests imposed under federal income tax law with respect to income, assets, distribution level and diversity of share ownership as discussed below under “— Qualification as a REIT.” There can be no assurance that we will be owned and organized and will operate in a manner so as to qualify or remain qualified.

In any year in which we qualify as a REIT, in general, we will not be subject to federal income tax on that portion of our REIT taxable income or capital gain that is distributed to stockholders. We may, however, be subject to tax at normal corporate rates on any taxable income or capital gain not distributed. If we elect to retain and pay income tax on our net long-term capital gains, stockholders are required to include their proportionate share of our undistributed long-term capital gains in income, but they will receive a refundable credit for their share of any taxes paid by us on such gain.

Despite the REIT election, we may be subject to federal income and excise tax as follows:

• To the extent that we do not distribute all of our net capital gain or distribute 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 corporate tax rates;

• We may be subject to the “alternative minimum tax” (the “AMT”) on certain tax preference items to the extent that the AMT exceeds our regular tax;

• If we have net income from the sale or other disposition of “foreclosure property” that is held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, such income will be taxed at the highest corporate rate;

• Any net income from prohibited transactions (which are, in general, sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than dispositions of foreclosure property and dispositions of property due to an involuntary conversion) will be subject to a 100% tax;

• If we fail to satisfy either the 75% or 95% gross income tests (as discussed below), but nonetheless maintain our qualification as a REIT because certain other requirements are met, we will be subject to a 100% tax on an amount equal to (1) the gross income attributable to the greater of (i) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% gross income test (discussed below) or (ii) 95% of our gross income over the amount of qualifying gross income for purposes of the 95% gross income test (discussed below) multiplied by (2) a fraction intended to reflect our profitability;

• If we fail to distribute during each year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for such year (other than capital gain that we elect to retain and pay tax on) and (3) any undistributed taxable income from preceding periods, we will be subject to a 4% excise tax on the excess of such required distribution over amounts actually distributed;

• We will be subject to a 100% tax on the amount of any rents from real property, deductions or excess interest paid to us by any of our “taxable REIT subsidiaries” that would be reduced through reallocation under certain federal income tax principles in Do not modify beyond this point! !

Do not modify before this point! ! order to more clearly reflect income of the taxable REIT subsidiary. See “— Qualification as a REIT — Investments in Taxable REIT Subsidiaries;” and

• We may be subject to the corporate “alternative minimum tax” on any items of tax preference, including any deductions of net operating losses.

If we acquire any assets from a corporation, which is or has been a “C” corporation, in a carryover basis transaction, we could be liable for specified liabilities that are inherited from the “C” corporation. A “C” corporation is generally defined as a corporation that is required to pay full corporate level federal income tax. If we recognize gain on the disposition of the assets during the ten-year period beginning on the date on which the assets were acquired by us, then, to the extent of the assets’ “built-in gain” (i.e., the excess of the fair market value of the asset over the adjusted tax basis in the asset, in each case determined as of the beginning of the ten-year period), we will be subject to tax on the gain at the highest regular corporate rate applicable. The results described in this paragraph with respect to the recognition of built-in gain assume that the built-in gain assets, at the time the built-in gain assets were subject to a conversion transaction (either where a “C” corporation elected REIT status or a REIT acquired the assets from a “C” corporation), were not treated as sold to an unrelated party and gain recognized. For those properties that are subject to the built-in-gains tax, if triggered by a sale within the ten-year period beginning on the date on which the properties were acquired by us, then the potential amount of built-in-gains tax will be an additional factor when considering a possible sale of the properties. See Note 18 to our consolidated financial statements for additional information regarding the built-in gains tax.

Qualification as a REIT

A REIT is defined as a corporation, trust or association:

(1) which is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;

(3) which would be taxable as a domestic corporation but for the federal income tax law relating to REITs;

(4) which is neither a financial institution nor an insurance company;

(5) the beneficial ownership of which is held by 100 or more persons in each taxable year of the REIT except for its first taxable year;

(6) not more than 50% in value of the outstanding stock of which is owned during the last half of each taxable year, excluding its first taxable year, directly or indirectly, by or for five or fewer individuals (which includes certain entities) (the “Five or Fewer Requirement”); and

(7) which meets certain income and asset tests described below.

Conditions (1) to (4), inclusive, must be met during the entire taxable year and condition (5) must be met during at least 335 days of a taxable year of 12 months or during a proportionate part of a taxable year of less than 12 months. For purposes of conditions (5) and (6), pension funds and certain other tax-exempt entities are treated as individuals, subject to a “look-through” exception in the case of condition (6).

Based on publicly available information, we believe we have satisfied the share ownership requirements set forth in (5) and (6) above. In addition, Article VI of our by-laws provides for restrictions regarding ownership and transfer of shares. These restrictions are intended to assist us in continuing to satisfy the share ownership requirements described in (5) and (6) above. These restrictions, however, may not ensure that we will, in all cases, be able to satisfy the share ownership requirements described in (5) and (6) above.

We have complied with, and will continue to comply with, regulatory rules to send annual letters to certain of our stockholders requesting information regarding the actual ownership of our stock. If, despite sending the annual letters, we do not know, or after exercising reasonable diligence would not have known, whether we failed to meet the Five or Fewer Requirement, we will be treated as having met the Five or Fewer Requirement. If we fail to comply with these regulatory rules, we will be subject to a monetary penalty. If our failure to comply was due to intentional disregard of the requirement, the penalty would be increased. However, if our failure to comply were due to reasonable cause and not willful neglect, no penalty would be imposed.

We may own a number of properties through wholly owned subsidiaries. A corporation will qualify as a “qualified REIT subsidiary” if 100% of its stock is owned by a REIT, and the REIT does not elect to treat the subsidiary as a taxable REIT subsidiary. Do not modify beyond this point! !

Do not modify before this point! ! A “qualified REIT subsidiary” will not be treated as a separate corporation, and all assets, liabilities and items of income, deductions and credits of a “qualified REIT subsidiary” will be treated as assets, liabilities and items (as the case may be) of the REIT. A “qualified REIT subsidiary” is not subject to federal income tax, and our ownership of the voting stock of a qualified REIT subsidiary will not violate the restrictions against ownership of securities of any one issuer which constitute more than 10% of the value or total voting power of such issuer or more than 5% of the value of our total assets, as described below under “— Asset Tests.”

If we invest in a partnership, a limited liability company or a trust taxed as a partnership or as a disregarded entity, we will be deemed to own a proportionate share of the partnership’s, limited liability company’s or trust’s assets. Likewise, we will be treated as receiving our share of the income and loss of the partnership, limited liability company or trust, and the gross income will retain the same character in our hands as it has in the hands of the partnership, limited liability company or trust. These “look-through” rules apply for purposes of the income tests and assets tests described below.

Income Tests. There are two separate percentage tests relating to our sources of gross income that we must satisfy for each taxable year.

• At least 75% of our gross income (excluding gross income from certain sales of property held primarily for sale) must be directly or indirectly derived each taxable year from “rents from real property,” other income from investments relating to real property or mortgages on real property or certain income from qualified temporary investments.

• At least 95% of our gross income (excluding gross income from certain sales of property held primarily for sale) must be directly or indirectly derived each taxable year from any of the sources qualifying for the 75% gross income test and from dividends (including dividends from taxable REIT subsidiaries) and interest.

As to transactions entered into in taxable years beginning after October 22, 2004 and on or prior to July 30, 2008, any of our income from a “clearly identified” hedging transaction that is entered into by us in the normal course of business, directly or indirectly, to manage the risk of interest rate movements, price changes or currency fluctuations with respect to borrowings or obligations incurred or to be incurred by us, or such other risks that are prescribed by the Internal Revenue Service, is excluded from the 95% gross income test.

For transactions entered into after July 30, 2008, any of our income from a “clearly identified” hedging transaction that is entered into by us in the normal course of business, directly or indirectly, to manage the risk of interest rate movements, price changes or currency fluctuations with respect to borrowings or obligations incurred or to be incurred by us is excluded from the 95% and 75% gross income tests.

For transactions entered into after July 30, 2008, any of our income from a “clearly identified” hedging transaction entered into by us primarily to manage risk of currency fluctuations with respect to any item of income or gain that is included in gross income in the 95% and 75% gross income tests is excluded from the 95% and 75% gross income tests.

In general, a hedging transaction is “clearly identified” if (1) the transaction is identified as a hedging transaction before the end of the day on which it is entered into and (2) the items or risks being hedged are identified “substantially contemporaneously” with the hedging transaction. An identification is not substantially contemporaneous if it is made more than 35 days after entering into the hedging transaction.

As to gains and items of income recognized after July 30, 2008, “passive foreign exchange gain” for any taxable year will not constitute gross income for purposes of the 95% gross income test and “real estate foreign exchange gain” for any taxable year will not constitute gross income for purposes of the 75% gross income test. Real estate foreign exchange gain is foreign currency gain (as defined in Internal Revenue Code Section 988(b)(1)) which is attributable to: (i) any qualifying item of income or gain for purposes of the 75% gross income test; (ii) the acquisition or ownership of obligations secured by mortgages on real property or interests in real property; or (iii) becoming or being the obligor under obligations secured by mortgages on real property or on interests in real property. Real estate foreign exchange gain also includes Internal Revenue Code Section 987 gain attributable to a qualified business unit (a “QBU”) of a REIT if the QBU itself meets the 75% gross income test for the taxable year and the 75% asset test at the close of each quarter that the REIT has directly or indirectly held the QBU. Real estate foreign exchange gain also includes any other foreign currency gain as determined by the Secretary of the Treasury. Passive foreign exchange gain includes all real estate foreign exchange gain and foreign currency gain which is attributable to: (i) any qualifying item of income or gain for purposes of the 95% gross income test; (ii) the acquisition or ownership of obligations; (iii) becoming or being the obligor under obligations; and (iv) any other foreign currency gain as determined by the Secretary of the Treasury.

Generally, other than income from “clearly identified” hedging transactions entered into by us in the normal course of business, any foreign currency gain derived by us from dealing, or engaging in substantial and regular trading, in securities will constitute gross income which does not qualify under the 95% or 75% gross income tests.

Rents received by us will qualify as “rents from real property” for purposes of satisfying the gross income tests for a REIT only if several conditions are met:

• The amount of rent must not be based in whole or in part on the income or profits of any person, although rents generally will not be excluded merely because they are based on a fixed percentage or percentages of receipts or sales.

• Rents received from a tenant will not qualify as rents from real property if the REIT, or an owner of 10% or more of the REIT, also directly or constructively owns 10% or more of the tenant, unless the tenant is our taxable REIT subsidiary and certain other requirements are met with respect to the real property being rented.

• If rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as “rents from real property.”

• For rents to qualify as rents from real property, we generally must not furnish or render services to tenants, other than through a taxable REIT subsidiary or an “independent contractor” from whom we derive no income, except that we may directly provide services that are “usually or customarily rendered” in the geographic area in which the property is located in connection with the rental of real property for occupancy only, or are not otherwise considered “rendered to the occupant for his convenience.”

• For taxable years beginning after July 30, 2008, the REIT may lease “ qualified health care properties” on an arm’s-length basis to a taxable REIT subsidiary if the property is operated on behalf of such subsidiary by a person who qualifies as an “independent contractor” and who is, or is related to a person who is, actively engaged in the trade or business of operating health care facilities for any person unrelated to us or our taxable REIT subsidiary, an “ eligible independent contractor . ” Generally, the rent that the REIT receives from the taxable REIT subsidiary will be treated as “rents from real property.” A “qualified health care property” includes any real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility that extends medical or nursing or ancillary services to patients and is operated by a provider of such services that is eligible for participation in the Medicare program with respect to such facility.

A REIT is permitted to render a de minimis amount of impermissible services to tenants and still treat amounts received with respect to that property as rent from real property. The amount received or accrued by the REIT during the taxable year for the impermissible services with respect to a property may not exceed 1% of all amounts received or accrued by the REIT directly or indirectly from the property. The amount received for any service or management operation for this purpose shall be deemed to be not less than 150% of the direct cost of the REIT in furnishing or rendering the service or providing the management or operation. Furthermore, impermissible services may be furnished to tenants by a taxable REIT subsidiary subject to certain conditions, and we may still treat rents received with respect to the property as rent from real property.

The term “interest” generally does not include any amount if the determination of the amount depends in whole or in part on the income or profits of any person, although an amount generally will not be excluded from the term “interest” solely by reason of being based on a fixed percentage of receipts or sales.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may nevertheless qualify as a REIT for such year if we are eligible for relief. These relief provisions generally will be available if (1) following our identification of the failure, we file a schedule for such taxable year describing each item of our gross income, and (2) the failure to meet such tests was due to reasonable cause and not due to willful neglect.

It is not now possible to determine the circumstances under which we may be entitled to the benefit of these relief provisions. If these relief provisions apply, a 100% tax is imposed on an amount equal to (a) the gross income attributable to (1) 75% of our gross income over the amount of qualifying gross income for purposes of the 75% income test and (2) 95% of our gross income over the amount of qualifying gross income for purposes of the 95% income test, multiplied by (b) a fraction intended to reflect our profitability.

The Secretary of the Treasury is given broad authority to determine whether particular items of income or gain qualify or not under the 75% and 95% gross income tests, or are to be excluded from the measure of gross income for such purposes.

Asset Tests. Within 30 days after the close of each quarter of our taxable year, we must also satisfy several tests relating to the nature and diversification of our assets determined in accordance with generally accepted accounting principles. At least 75% of the value of our total assets must be represented by real estate assets, cash, cash items (including receivables arising in the ordinary course of our operation), government securities and qualified temporary investments. Although the remaining 25% of our assets generally may be invested without restriction, we are prohibited from owning securities representing more than 10% of either the vote (the Do not modify beyond this point! !

Do not modify before this point! ! “10% vote test”) or value (the “10% value test”) of the outstanding securities of any issuer other than a qualified REIT subsidiary, another REIT or a taxable REIT subsidiary. Further, no more than 25% of the total assets may be represented by securities of one or more taxable REIT subsidiaries (the “25% asset test”) and no more than 5% of the value of our total assets may be represented by securities of any non-governmental issuer other than a qualified REIT subsidiary (the “5% asset test”), another REIT or a taxable REIT subsidiary. Each of the 10% vote test, the 10% value test and the 25% and 5% asset tests must be satisfied at the end of each quarter. There are special rules which provide relief if the value related tests are not satisfied due to changes in the value of the assets of a REIT.

Certain items are excluded from the 10% value test, including: (1) straight debt securities (as defined in Internal Revenue Code Section 1361(c)(5)) of an issuer (including straight debt that provides certain contingent payments); (2) any loan to an individual or an estate; (3) any rental agreement described in Section 467 of the Internal Revenue Code, other than with a “related person”; (4) any obligation to pay rents from real property; (5) certain securities issued by a state or any subdivision thereof, the District of Columbia, a foreign government, or any political subdivision thereof, or the Commonwealth of Puerto Rico; (6) any security issued by a REIT; and (7) any other arrangement that, as determined by the Secretary of the Treasury, is excepted from the definition of security (“excluded securities”). Special rules apply to straight debt securities issued by corporations and entities taxable as partnerships for federal income tax purposes. If a REIT, or its taxable REIT subsidiary, holds (1) straight debt securities of a corporate or partnership issuer and (2) securities of such issuer that are not excluded securities and have an aggregate value greater than 1% of such issuer’s outstanding securities, the straight debt securities will be included in the 10% value test.

A REIT’s interest as a partner in a partnership is not treated as a security for purposes of applying the 10% value test to securities issued by the partnership. Further, any debt instrument issued by a partnership will not be a security for purposes of applying the 10% value test (1) to the extent of the REIT’s interest as a partner in the partnership and (2) if at least 75% of the partnership’s gross income (excluding gross income from prohibited transactions) would qualify for the 75% gross income test. For purposes of the 10% value test, a REIT’s interest in a partnership’s assets is determined by the REIT’s proportionate interest in any securities issued by the partnership (other than the excluded securities described in the preceding paragraph).

For taxable years beginning after July 30, 2008, if the REIT or its QBU uses a foreign currency as its functional currency, the term “cash” includes such foreign currency, but only to the extent such foreign currency is (i) held for use in the normal course of the activities of the REIT or QBU which give rise to items of income or gain that are included in the 95% and 75% gross income tests or are directly related to acquiring or holding assets qualifying under the 75% asset test, and (ii) not held in connection with dealing or engaging in substantial and regular trading in securities.

With respect to corrections of failures as to violations of the 10% vote test, the 10% value test or the 5% asset test, a REIT may avoid disqualification as a REIT by disposing of sufficient assets to cure a violation that does not exceed the lesser of 1% of the REIT’s assets at the end of the relevant quarter or $10,000,000, provided that the disposition occurs within six months following the last day of the quarter in which the REIT first identified the assets. For violations of any of the REIT asset tests due to reasonable cause and not willful neglect that exceed the thresholds described in the preceding sentence, a REIT can avoid disqualification as a REIT after the close of a taxable quarter by taking certain steps, including disposition of sufficient assets within the six month period described above to meet the applicable asset test, paying 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 assets during the period of time that the assets were held as non-qualifying assets and filing a schedule with the Internal Revenue Service that describes the non-qualifying assets.

Investments in Taxable REIT Subsidiaries. REITs may own more than 10% of the voting power and value of securities in taxable REIT subsidiaries. We and any taxable corporate entity in which we own an interest are allowed to jointly elect to treat such entity as a “taxable REIT subsidiary.”

Certain of our subsidiaries have elected to be treated as a taxable REIT subsidiary. Taxable REIT subsidiaries are subject to full corporate level federal taxation on their earnings but are permitted to engage in certain types of activities that cannot be performed directly by REITs without jeopardizing their REIT status. Our taxable REIT subsidiaries will attempt to minimize the amount of these taxes, but there can be no assurance whether or the extent to which measures taken to minimize taxes will be successful. To the extent our taxable REIT subsidiaries are required to pay federal, state or local taxes, the cash available for distribution as dividends to us from our taxable REIT subsidiaries will be reduced.

The amount of interest on related-party debt that a taxable REIT subsidiary may deduct is limited. Further, a 100% tax applies to any interest payments by a taxable REIT subsidiary to its affiliated REIT to the extent the interest rate is not commercially reasonable. A taxable REIT subsidiary is permitted to deduct interest payments to unrelated parties without any of these restrictions.

The Internal Revenue Service may reallocate costs between a REIT and its taxable REIT subsidiary where there is a lack of arm’s-length dealing between the parties. Any deductible expenses allocated away from a taxable REIT subsidiary would increase its tax liability. Further, any amount by which a REIT understates its deductions and overstates those of its taxable REIT subsidiary may, subject to certain exceptions, be subject to a 100% tax. Additional taxable REIT subsidiary elections may be made in the future for additional entities in which we obtain an interest.

Annual Distribution Requirements. In order to avoid being taxed as a regular corporation, we are required to make distributions (other than capital gain distributions) to our stockholders which qualify for the dividends paid deduction in an amount at least equal to (1) 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 after-tax net income, if any, from foreclosure property, minus (2) a portion of certain items of non-cash income. These distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for that year and if paid on or before the first regular distribution payment after such declaration. The amount distributed must not be preferential. This means that every stockholder of the class of stock to which a distribution is made must be treated the same as every other stockholder of that class, and no class of stock may be treated otherwise than in accordance with its dividend rights as a class. To the extent that we do not distribute all of our net capital gain or distribute 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 corporate tax rates. As discussed above, we may be subject to an excise tax if we fail to meet certain other distribution requirements. We believe we have satisfied the annual distribution requirements for the year of our initial REIT election and each year thereafter through the year ended December 31, 2014. Although we intend to make timely distributions sufficient to satisfy these annual distribution requirements for subsequent years, economic, market, legal, tax or other factors could limit our ability to meet those requirements. See “Item 1A — Risk Factors.”

It is also possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement, or to distribute such greater amount as may be necessary to avoid income and excise taxation, due to, among other things, (1) timing differences between (i) the actual receipt of income and actual payment of deductible expenses and (ii) the inclusion of income and deduction of expenses in arriving at our taxable income, or (2) the payment of severance benefits that may not be deductible to us. In the event that timing differences occur, we may find it necessary to arrange for borrowings or, if possible, pay dividends in the form of taxable stock dividends in order to meet the distribution requirement.

Under certain circumstances, in the event of a deficiency determined by the Internal Revenue Service, we may be able to rectify a resulting failure to meet the distribution requirement for a year by paying “deficiency dividends” to stockholders in a later year, which may be included in our deduction for distributions paid for the earlier year. Thus, we may be able to avoid being taxed on amounts distributed as deficiency dividends; however, we will be required to pay applicable penalties and interest based upon the amount of any deduction taken for deficiency dividend distributions.

Failure to Qualify as a REIT

If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates. Distributions to stockholders in any year in which we fail to qualify as a REIT will not be deductible nor will any particular amount of distributions be required to be made in any year. All distributions to stockholders will be taxable as ordinary income to the extent of current and accumulated earnings and profits allocable to these distributions and, subject to certain limitations, will be eligible for the dividends received deduction for corporate stockholders. Unless entitled to relief under specific statutory provisions, we also will be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost. It is not possible to state whether in all circumstances we would be entitled to statutory relief. Failure to qualify for even one year could result in our need to incur indebtedness or liquidate investments in order to pay potentially significant resulting tax liabilities.

In addition to the relief described above under “— Income Tests” and “— Asset Tests,” relief is available in the event that we violate a provision of the Internal Revenue Code that would result in our failure to qualify as a REIT if: (1) the violation is due to reasonable cause and not due to willful neglect; (2) we pay a penalty of $50,000 for each failure to satisfy the provision; and (3) the violation does not include a violation described under “— Income Tests” or “— Asset Tests” above. It is not now possible to determine the circumstances under which we may be entitled to the benefit of these relief provisions.

Federal Income Taxation of Holders of Our Stock

Treatment of Taxable U.S. Stockholders. The following summary applies to you only if you are a “U.S. stockholder.” A “U.S. stockholder” is a holder of shares of stock who, for United States federal income tax purposes, is:

• a citizen or resident of the United States;

• a corporation, partnership or other entity classified as a corporation or partnership for these purposes, created or organized in or under the laws of the United States or of any political subdivision of the United States, including any state;

• an estate, the income of which is subject to United States federal income taxation regardless of its source; or

• a trust, if, in general, a U.S. court is able to exercise primary supervision over the trust’s administration and one or more U.S. persons, within the meaning of the Internal Revenue Code, has the authority to control all of the trust’s substantial Do not modify beyond this point! !

Do not modify before this point! ! decisions.

So long as we qualify for taxation as a REIT, distributions on shares of our stock made out of the current or accumulated earnings and profits allocable to these distributions (and not designated as capital gain dividends) will be includable as ordinary income for federal income tax purposes. None of these distributions will be eligible for the dividends received deduction for U.S. corporate stockholders.

Generally, the current maximum marginal rate of tax payable by individuals on dividends received from corporations that are subject to a corporate level of tax is 20%. Except in limited circumstances, this tax rate will not apply to dividends paid to you by us on our shares, because generally we are not subject to federal income tax on the portion of our REIT taxable income or capital gains distributed to our stockholders. The reduced maximum federal income tax rate will apply to that portion, if any, of dividends received by you with respect to our shares that are attributable to: (1) dividends received by us from non-REIT corporations or other taxable REIT subsidiaries; (2) income from the prior year with respect to which we were required to pay federal corporate income tax during the prior year (if, for example, we did not distribute 100% of our REIT taxable income for the prior year); or (3) the amount of any earnings and profits that were distributed by us and accumulated in a non-REIT year.

Distributions that are designated as capital gain dividends will be taxed as long-term capital gains (to the extent they do not exceed our actual net capital gain for the taxable year), without regard to the period for which you held our stock. However, if you are a corporation, you may be required to treat a portion of some capital gain dividends as ordinary income.

If we elect to retain and pay income tax on any net long-term capital gain, you would include in income, as long-term capital gain, your proportionate share of this net long-term capital gain. You would also receive a refundable tax credit for your proportionate share of the tax paid by us on such retained capital gains, and you would have an increase in the basis of your shares of our stock in an amount equal to your includable capital gains less your share of the tax deemed paid.

You may not include in your federal income tax return any of our net operating losses or capital losses. Federal income tax rules may also require that certain minimum tax adjustments and preferences be apportioned to you. In addition, any distribution declared by us in October, November or December of any year on a specified date in any such month shall be treated as both paid by us and received by you on December 31 of that year, provided that the distribution is actually paid by us no later than January 31 of the following year.

We will be treated as having sufficient earnings and profits to treat as a dividend any distribution up to the amount required to be distributed in order to avoid imposition of the 4% excise tax discussed under “— General” and “— Qualification as a REIT — Annual Distribution Requirements” above. As a result, you may be required to treat as taxable dividends certain distributions that would otherwise result in a tax-free return of capital. Moreover, any “deficiency dividend” will be treated as a dividend (an ordinary dividend or a capital gain dividend, as the case may be), regardless of our earnings and profits. Any other distributions in excess of current or accumulated earnings and profits will not be taxable to you to the extent these distributions do not exceed the adjusted tax basis of your shares of our stock. You will be required to reduce the tax basis of your shares of our stock by the amount of these distributions until the basis has been reduced to zero, after which these distributions will be taxable as capital gain, if the shares of our stock are held as capital assets. The tax basis as so reduced will be used in computing the capital gain or loss, if any, realized upon sale of the shares of our stock. Any loss upon a sale or exchange of shares of our stock which were held for six months or less (after application of certain holding period rules) will generally be treated as a long-term capital loss to the extent you previously received capital gain distributions with respect to these shares of our stock.

Upon the sale or exchange of any shares of our stock to or with a person other than us or a sale or exchange of all shares of our stock (whether actually or constructively owned) with us, you will generally recognize capital gain or loss equal to the difference between the amount realized on the sale or exchange and your adjusted tax basis in these shares of our stock. This gain will be capital gain if you held these shares of our stock as a capital asset.

If we redeem any of your shares in us, the treatment can only be determined on the basis of particular facts at the time of redemption. In general, you will recognize gain or loss (as opposed to dividend income) equal to the difference between the amount received by you in the redemption and your adjusted tax basis in your shares redeemed if such redemption: (1) results in a “complete termination” of your interest in all classes of our equity securities; (2) is a “substantially disproportionate redemption”; or (3) is “not essentially equivalent to a dividend” with respect to you. In applying these tests, you must take into account your ownership of all classes of our equity securities (e.g., common stock, preferred stock, depositary shares and warrants). You also must take into account any equity securities that are considered to be constructively owned by you.

If, as a result of a redemption by us of your shares, you no longer own (either actually or constructively) any of our equity securities or only own (actually and constructively) an insubstantial percentage of our equity securities, then it is probable that the redemption of your shares would be considered “not essentially equivalent to a dividend” and, thus, would result in gain or loss to you. However, Do not modify beyond this point! !

Do not modify before this point! ! whether a distribution is “not essentially equivalent to a dividend” depends on all of the facts and circumstances, and if you rely on any of these tests at the time of redemption, you should consult your tax advisor to determine their application to the particular situation.

Generally, if the redemption does not meet the tests described above, then the proceeds received by you from the redemption of your shares will be treated as a distribution taxable as a dividend to the extent of the allocable portion of current or accumulated earnings and profits. If the redemption is taxed as a dividend, your adjusted tax basis in the redeemed shares will be transferred to any other shareholdings in us that you own. If you own no other shareholdings in us, under certain circumstances, such basis may be transferred to a related person, or it may be lost entirely.

Gain from the sale or exchange of our shares held for more than one year is generally taxed at a maximum long-term capital gain rate of 20% in the case of stockholders who are individuals and 35% in the case of stockholders that are corporations. Pursuant to Internal Revenue Service guidance, we may classify portions of our capital gain dividends as gains eligible for the long-term capital gains rate or as gain taxable to individual stockholders at a maximum rate of 25%. Capital losses recognized by a stockholder upon the disposition of our shares held for more than one year at the time of disposition will be considered long-term capital losses, and are generally available only to offset capital gain income of the stockholder but not ordinary income (except in the case of individuals, who may offset up to $3,000 of ordinary income each year).

An additional tax of 3.8% generally will be imposed on the “net investment income” of U.S. stockholders who meet certain requirements and are individuals, estates or certain trusts. Among other items, “net investment income” generally includes gross income from dividends and net gain attributable to the disposition of certain property, such as shares of our common stock or warrants. In the case of individuals, this tax will only apply to the extent such individual’s modified adjusted gross income exceeds $200,000 ($250,000 for married couples filing a joint return and surviving spouses, and $125,000 for married individuals filing a separate return). U.S. stockholders should consult their tax advisors regarding the possible applicability of this additional tax in their particular circumstances.

Treatment of Tax-Exempt U.S. Stockholders. Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts (“Exempt Organizations”), generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income (“UBTI”). The Internal Revenue Service has issued a published revenue ruling that dividend distributions from 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 this ruling, amounts distributed by us to Exempt Organizations generally should not constitute UBTI. However, if an Exempt Organization finances its acquisition of the shares of our stock with debt, a portion of its income from us will constitute UBTI pursuant to the “debt financed property” rules. Likewise, a portion of the Exempt Organization’s income from us would constitute UBTI if we held a residual interest in a real estate mortgage investment conduit.

In addition, in certain circumstances, a pension trust that owns more than 10% of our stock is required to treat a percentage of our dividends as UBTI. This rule applies to a pension trust holding more than 10% of our stock only if: (1) the percentage of our income that is UBTI (determined as if we were a pension trust) is at least 5%; (2) we qualify as a REIT by reason of the modification of the Five or Fewer Requirement that allows beneficiaries of the pension trust to be treated as holding shares in proportion to their actuarial interests in the pension trust; and (3) either (i) one pension trust owns more than 25% of the value of our stock, or (ii) a group of pension trusts individually holding more than 10% of the value of our stock collectively own more than 50% of the value of our stock.

Backup Withholding and Information Reporting. Under certain circumstances, you may be subject to backup withholding at applicable rates on payments made with respect to, or cash proceeds of a sale or exchange of, shares of our stock. Backup withholding will apply only if you: (1) fail to provide a correct taxpayer identification number, which if you are an individual, is ordinarily your social security number; (2) furnish an incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you have failed to properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury, that you have furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified you that you are subject to backup withholding.

Backup withholding will not apply with respect to payments made to certain exempt recipients, such as corporations and tax-exempt organizations. You should consult with a tax advisor regarding qualification for exemption from backup withholding, and the procedure for obtaining an exemption. Backup withholding is not an additional tax. Rather, the amount of any backup withholding with respect to a payment to a stockholder will be allowed as a credit against such stockholder’s United States federal income tax liability and may entitle such stockholder to a refund, provided that the required information is provided to the Internal Revenue Service. In addition, withholding a portion of capital gain distributions made to stockholders may be required for stockholders who fail to certify their non-foreign status.

Taxation of Foreign Stockholders. The following summary applies to you only if you are a foreign person. The federal taxation of foreign persons is a highly complex matter that may be affected by many considerations.

Except as discussed below, distributions to you of cash generated by our real estate operations in the form of ordinary dividends, but not by the sale or exchange of our capital assets, generally will be subject to U.S. withholding tax at a rate of 30%, unless an applicable tax treaty reduces that tax and you file with us the required form evidencing the lower rate.

In general, you will be subject to United States federal income tax on a graduated rate basis rather than withholding with respect to your investment in our stock if such investment is “effectively connected” with your conduct of a trade or business in the United States. A corporate foreign stockholder that receives income that is, or is treated as, effectively connected with a United States trade or business may also be subject to the branch profits tax, which is payable in addition to regular United States corporate income tax. The following discussion will apply to foreign stockholders whose investment in us is not so effectively connected. We expect to withhold United States income tax, as described below, on the gross amount of any distributions paid to you unless (1) you file an Internal Revenue Service Form W-8ECI with us claiming that the distribution is “effectively connected” or (2) certain other exceptions apply.

Distributions by us that are attributable to gain from the sale or exchange of a United States real property interest will be taxed to you under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) as if these distributions were gains “effectively connected” with a United States trade or business. Accordingly, you will be taxed at the normal capital gain rates applicable to a U.S. stockholder on these amounts, subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. Distributions subject to FIRPTA may also be subject to a branch profits tax in the hands of a corporate foreign stockholder that is not entitled to treaty exemption.

We will be required to withhold from distributions subject to FIRPTA, and remit to the Internal Revenue Service, 35% of designated capital gain dividends, or, if greater, 35% of the amount of any distributions that could be designated as capital gain dividends. In addition, if we designate prior distributions as capital gain dividends, subsequent distributions, up to the amount of the prior distributions not withheld against, will be treated as capital gain dividends for purposes of withholding.

Any capital gain dividend with respect to any class of stock that is “regularly traded” on an established securities market will be treated as an ordinary dividend if the foreign stockholder did not own more than 5% of such class of stock at any time during the taxable year. Foreign stockholders generally will not be required to report distributions received from us on U.S. federal income tax returns and all distributions treated as dividends for U.S. federal income tax purposes (including any such capital gain dividends) will be subject to a 30% U.S. withholding tax (unless reduced under an applicable income tax treaty) as discussed above. In addition, the branch profits tax will not apply to such distributions.

Unless our shares constitute a “United States real property interest” within the meaning of FIRPTA or are effectively connected with a U.S. trade or business, a sale of our shares by you generally will not be subject to United States taxation. Our shares will not constitute a United States real property interest if we qualify as a “domestically controlled REIT.” We believe that we, and expect to continue to, qualify as a domestically controlled REIT. A domestically controlled REIT is a REIT in which at all times during a specified testing period less than 50% in value of its shares is held directly or indirectly by foreign stockholders. However, if you are a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions apply, you will be subject to a 30% tax on such capital gains. In any event, a purchaser of our shares from you will not be required under FIRPTA to withhold on the purchase price if the purchased shares are “regularly traded” on an established securities market or if we are a domestically controlled REIT. Otherwise, under FIRPTA, the purchaser may be required to withhold 10% of the purchase price and remit such amount to the Internal Revenue Service.

Backup withholding tax and information reporting will generally not apply to distributions paid to you outside the United States that are treated as: (1) dividends to which the 30% or lower treaty rate withholding tax discussed above applies; (2) capital gains dividends; or (3) distributions attributable to gain from the sale or exchange by us of U.S. real property interests. Payment of the proceeds of a sale of stock within the United States or conducted through certain U.S. related financial intermediaries is subject to both backup withholding and information reporting unless the beneficial owner certifies under penalties of perjury that he or she is not a U.S. person (and the payor does not have actual knowledge that the beneficial owner is a U.S. person) or otherwise established an exemption. You may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service.

Withholding tax at a rate of 30% will be imposed on certain payments to you or certain foreign financial institutions (including investment funds) and other non-US persons receiving payments on your behalf, including distributions in respect of shares of our stock and gross proceeds from the sale of shares of our stock, if you or such institutions fail to comply with certain due diligence, disclosure and reporting rules, as set forth in recently issued Treasury regulations. Accordingly, the entity through which shares of our stock are held will affect the determination of whether such withholding is required. Withholding currently applies to payments of dividends made after June 30, 2014, and will apply to payments of gross proceeds from a sale of shares of our stock made after December 31, 2016. Stockholders that are otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect to such dividends and proceeds will be required to seek a refund from the Internal Revenue Service to obtain the benefit of such exemption or reduction. Additional requirements and conditions may be imposed pursuant to an intergovernmental agreement, if and when entered into, between the United States and such institution’s home jurisdiction. We will not pay any additional amounts to Do not modify beyond this point! !

Do not modify before this point! ! any stockholders in respect of any amounts withheld. You are encouraged to consult with your tax advisor regarding U.S. withholding taxes and the application of the recently issued Treasury regulations in light of your particular circumstances.

U.S. Federal Income Taxation of Holders of Depositary Shares

Owners of our depositary shares will be treated as if you were owners of the series of preferred stock represented by the depositary shares. Thus, you will be required to take into account the income and deductions to which you would be entitled if you were a holder of the underlying series of preferred stock.

Conversion or Exchange of Shares for Preferred Stock. No gain or loss will be recognized upon the withdrawal of preferred stock in exchange for depositary shares and the tax basis of each share of preferred stock will, upon exchange, be the same as the aggregate tax basis of the depositary shares exchanged. If you held your depositary shares as a capital asset at the time of the exchange for shares of preferred stock, the holding period for your shares of preferred stock will include the period during which you owned the depositary shares.

U.S. Federal Income and Estate Taxation of Holders of Our Debt Securities

The following is a general summary of the United States federal income tax consequences and, in the case that you are a holder that is a non-U.S. holder, as defined below, the United States federal estate tax consequences, of purchasing, owning and disposing of debt securities periodically offered under one or more indentures (the “notes”). This summary assumes that you hold the notes as capital assets. This summary applies to you only if you are the initial holder of the notes and you acquire the notes for a price equal to the issue price of the notes. The issue price of the notes is the first price at which a substantial amount of the notes is sold other than to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. In addition, this summary does not consider any foreign, state, local or other tax laws that may be applicable to us or a purchaser of the notes.

U.S. Holders

The following summary applies to you only if you are a U.S. holder, as defined below.

Definition of a U.S. Holder. A “U.S. holder” is a beneficial owner of a note or notes that is for United States federal income tax purposes:

• a citizen or resident of the United States;

• an estate, the income of which is subject to United States federal income taxation regardless of its source; or

Payments of Interest. Stated interest on the notes generally will be taxed as ordinary interest income from domestic sources at the time it is paid or accrues in accordance with your method of accounting for tax purposes.

Sale, Exchange or Other Disposition of Notes. The adjusted tax basis in your note acquired at a premium will generally be your cost. You generally will recognize taxable gain or loss when you sell or otherwise dispose of your notes equal to the difference, if any, between:

• the amount realized on the sale or other disposition, less any amount attributable to any accrued interest, which will be taxable in the manner described under “— Payments of Interest” above; and

• your adjusted tax basis in the notes.

Your gain or loss generally will be capital gain or loss. This capital gain or loss will be long-term capital gain or loss if at the time of the sale or other disposition you have held the notes for more than one year. Subject to limited exceptions, your capital losses cannot be used to offset your ordinary income (except in the case of individuals, who may offset up to $3,000 of ordinary income each year).

Backup Withholding and Information Reporting. In general, “backup withholding” may apply to any payments made to you of principal and interest on your note, and to payment of the proceeds of a sale or other disposition of your note before maturity, if you are a non-corporate U.S. holder and: (1) fail to provide a correct taxpayer identification number, which if you are an individual, is ordinarily your social security number; (2) furnish an incorrect taxpayer identification number; (3) are notified by the Internal Revenue Service that you have failed to properly report payments of interest or dividends; or (4) fail to certify, under penalties of perjury, that you have furnished a correct taxpayer identification number and that the Internal Revenue Service has not notified you that you are subject to backup withholding.

The amount of any reportable payments, including interest, made to you (unless you are an exempt recipient) and the amount of tax withheld, if any, with respect to such payments will be reported to you and to the Internal Revenue Service for each calendar year. You should consult your tax advisor regarding your qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable. The backup withholding tax is not an additional tax and will be credited against your U.S. federal income tax liability, provided that correct information is provided to the Internal Revenue Service.

Non-U.S. Holders

The following summary applies to you if you are a beneficial owner of a note and are not a U.S. holder, as defined above (a “non-U.S. holder”).

Special rules may apply to certain non-U.S. holders such as “controlled foreign corporations,” “passive foreign investment companies” and “foreign personal holding companies.” Such entities are encouraged to consult their tax advisors to determine the United States federal, state, local and other tax consequences that may be relevant to them.

U.S. Federal Withholding Tax. Subject to the discussion below, U.S. federal withholding tax will not apply to payments by us or our paying agent, in its capacity as such, of principal and interest on your notes under the “portfolio interest” exception of the Internal Revenue Code, provided that:

• you do not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

• you are not (1) a controlled foreign corporation for U.S. federal income tax purposes that is related, directly or indirectly, to us through sufficient stock ownership, as provided in the Internal Revenue Code, or (2) a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;

• such interest is not effectively connected with your conduct of a U.S. trade or business; and

• you provide a signed written statement, under penalties of perjury, which can reliably be related to you, certifying that you are not a U.S. person within the meaning of the Internal Revenue Code and providing your name and address to:

• us or our paying agent; or

• a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds your notes on your behalf and that certifies to us or our paying agent under penalties of perjury that it, or the bank or financial institution between it and you, has received from you your signed, written statement and provides us or our paying agent with a copy of such statement.

Treasury regulations provide that:

• if you are a foreign partnership, the certification requirement will generally apply to your partners, and you will be required to provide certain information;

• if you are a foreign trust, the certification requirement will generally be applied to you or your beneficial owners depending on whether you are a “foreign complex trust,” “foreign simple trust,” or “foreign grantor trust” as defined in the Treasury regulations; and

• look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.

If you are a foreign partnership or a foreign trust, you should consult your own tax advisor regarding your status under these Treasury regulations and the certification requirements applicable to you.

If you cannot satisfy the portfolio interest requirements described above, payments of interest will be subject to the 30% United States withholding tax, unless you provide us with a properly executed (1) Internal Revenue Service Form W-8BEN claiming an exemption from or reduction in withholding under the benefit of an applicable treaty or (2) Internal Revenue Service Form W-8ECI stating that interest paid on the note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States. Alternative documentation may be applicable in certain circumstances.

If you are engaged in a trade or business in the United States and interest on a note is effectively connected with the conduct of that trade or business, you will be required to pay United States federal income tax on that interest on a net income basis (although you will be exempt from the 30% withholding tax provided the certification requirement described above is met) in the same manner as if you were a U.S. person, except as otherwise provided by an applicable tax treaty. If you are a foreign corporation, you may be required to pay a branch profits tax on the earnings and profits that are effectively connected to the conduct of your trade or business in the United States.

Withholding tax at a rate of 30% will be imposed on payments of interest (including original issue discount) and gross proceeds of sale in respect of debt instruments to you or certain foreign financial institutions (including investment funds) and other non-US persons receiving payments on your behalf, if you or such institutions fail to comply with certain due diligence, disclosure and reporting rules, as set forth in recently issued Treasury regulations. However, the Treasury regulations generally exempt from such withholding requirement obligations, such as debt instruments, issued before July 1, 2014, provided that any material modification of such an obligation made after such date will result in such obligation being considered newly issued as of the effective date of such modification. These withholding rules are generally effective with respect to payments of interest made after June 30, 2014, and with respect to proceeds of sales received after December 31, 2016. We will not pay any additional amounts to any holders or our debt instruments in respect of any amounts withheld. You are encouraged to consult with your tax advisor regarding U.S. withholding taxes and the application of the recently issued Treasury regulations in light of your particular circumstances.

Sale, Exchange or other Disposition of Notes. You generally will not have to pay U.S. federal income tax on any gain or income realized from the sale, redemption, retirement at maturity or other disposition of your notes, unless:

• in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other disposition of your notes, and specific other conditions are met;

• you are subject to tax provisions applicable to certain United States expatriates; or

• the gain is effectively connected with your conduct of a U.S. trade or business.

If you are engaged in a trade or business in the United States, and gain with respect to your notes is effectively connected with the conduct of that trade or business, you generally will be subject to U.S. income tax on a net basis on the gain. In addition, if you are a foreign corporation, you may be subject to a branch profits tax on your effectively connected earnings and profits for the taxable year, as adjusted for certain items.

U.S. Federal Estate Tax. If you are an individual and are not a U.S. citizen or a resident of the United States, as specially defined for U.S. federal estate tax purposes, at the time of your death, your notes will generally not be subject to the U.S. federal estate tax, unless, at the time of your death (1) you owned actually or constructively 10% or more of the total combined voting power of all our classes of stock entitled to vote, or (2) interest on the notes is effectively connected with your conduct of a U.S. trade or business.

Backup Withholding and Information Reporting. Backup withholding will not apply to payments of principal or interest made by us or our paying agent, in its capacity as such, to you if you have provided the required certification that you are a non-U.S. holder as described in “— U.S. Federal Withholding Tax” above, and provided that neither we nor our paying agent have actual knowledge that you are a U.S. holder, as described in “— U.S. Holders” above. We or our paying agent may, however, report payments of interest on the notes.

The gross proceeds from the disposition of your notes may be subject to information reporting and backup withholding tax. If you sell your notes outside the United States through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your notes through a non-U.S. office of a broker that:

• is a U.S. person, as defined in the Internal Revenue Code;

• derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;

• is a “controlled foreign corporation” for U.S. federal income tax purposes; or

• is a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons who in the aggregate hold more than 50% of the income or capital interests in the partnership, or the foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence in its files that you are a non-U.S. person and certain other conditions are met or you otherwise establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless you provide a Form W-8BEN certifying that you are a non-U.S. person or you otherwise establish an exemption.

You should consult your own tax advisor regarding application of backup withholding in your particular circumstance and the availability of and procedure for obtaining an exemption from backup withholding. Any amounts withheld under the backup withholding rules from a payment to you will be allowed as a refund or credit against your U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

U.S. Federal Income and Estate Taxation of Holders of Our Warrants

Exercise of Warrants. You will not generally recognize gain or loss upon the exercise of a warrant. Your basis in the debt securities, preferred stock, depositary shares or common stock, as the case may be, received upon the exercise of the warrant will be equal to the sum of your adjusted tax basis in the warrant and the exercise price paid. Your holding period in the debt securities, preferred stock, depositary shares or common stock, as the case may be, received upon the exercise of the warrant will not include the period during which the warrant was held by you.

Expiration of Warrants. Upon the expiration of a warrant, you will recognize a capital loss in an amount equal to your adjusted tax basis in the warrant.

Sale or Exchange of Warrants. Upon the sale or exchange of a warrant to a person other than us, you will recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange and your adjusted tax basis in the warrant. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the warrant was held for more than one year. Upon the sale of the warrant to us, the Internal Revenue Service may argue that you should recognize ordinary income on the sale. You are advised to consult your own tax advisors as to the consequences of a sale of a warrant to us.

Potential Legislation or Other Actions Affecting Tax Consequences

Current and prospective securities holders should recognize that the present federal income tax treatment of an investment in us may be modified by legislative, judicial or administrative action at any time and that any such action may affect investments and commitments previously made. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes. Revisions in federal tax laws and interpretations of these laws could adversely affect the tax consequences of an investment in us.

State, Local and Foreign Taxes

We, and holders of our debt and equity securities, may be subject to state, local or foreign taxation in various jurisdictions, including those in which we or they transact business, own property or reside. It should be noted that we own properties located in a number of state, local and foreign jurisdictions, and may be required to file tax returns in some or all of those jurisdictions. The state, local or foreign tax treatment of us and holders of our debt and equity securities may not conform to the U.S. federal income tax consequences discussed above. Consequently, you are urged to consult your advisor regarding the application and effect of state, local and foreign tax laws with respect to any investment in our securities.

Internet Access to Our SEC Filings

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as our proxy statements and other materials that are filed with, or furnished to, the Securities and Exchange Commission are made available, free of charge, on the Internet at www.hcreit.com, as soon as reasonably practicable after they are filed with, or furnished to, the Securities and Exchange Commission.

Cautionary Statement Regarding Forward-Looking Statements

This Annual Report on Form 10-K and the documents incorporated by reference contain statements that constitute “forward-looking statements” as that term is defined in the federal securities laws. When we use words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, we are making forward-looking statements. In particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to acquire, develop or sell properties; our ability to close our anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to stockholders; our investment and financing opportunities and plans; our continued qualification as a real estate investment trust (“REIT”); and our ability to access capital markets or other sources of funds.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause our actual results to differ materially from our expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to:

• the status of the economy;

• the status of capital markets, including availability and cost of capital;

• issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance;

• changes in financing terms;

• competition within the health care, seniors housing and life science industries;

• negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans;

• our ability to transition or sell properties with profitable results;

• the failure to make new investments or acquisitions as and when anticipated;

• natural disasters and other acts of God affecting our properties;

• our ability to re-lease space at similar rates as vacancies occur;

• our ability to timely reinvest sale proceeds at similar rates to assets sold;

• operator/tenant or joint venture partner bankruptcies or insolvencies;

• the cooperation of joint venture partners;

• government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements;

• liability or contract claims by or against operators/tenants;

• unanticipated difficulties and/or expenditures relating to future investments or acquisitions;

• environmental laws affecting our properties;

• changes in rules or practices governing our financial reporting;

• the movement of U.S. and foreign currency exchange rates;

• our ability to maintain our qualification as a REIT;

• key management personnel recruitment and retention; and

• the risks described under “Item 1A — Risk Factors.”

We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

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, as well as other risks and uncertainties that are not yet identified or that we currently think are not material, actually occur, we could be materially adversely affected. In that event, the value of our securities could decline.

We group these risk factors into three 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

Our investments in and acquisitions of health care and seniors housing properties may be unsuccessful or fail to meet our expectations

We are exposed to the risk that some of our acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. If we agree to provide construction funding to an operator/tenant and the project is not completed, we may need to take steps to ensure completion of the project. Such expenditures may negatively affect our results of operations. Furthermore, there can be no assurance that our anticipated acquisitions and investments, the completion of which is subject to various conditions, will be consummated in accordance with anticipated timing, on anticipated terms, or at all. We also may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition.

Our investments in joint ventures could be adversely affected by our lack of exclusive control over these investments, our partners’ insolvency or failure to meet their obligations and disputes between us and our partners

We have entered into, and may continue in the future to enter into, partnerships or joint ventures with other persons or entities. Joint venture investments involve risks that may not be present with other methods of ownership, including the possibility that our partner might become insolvent, refuse to make capital contributions when due or otherwise fail to meet its obligations, which may result in certain liabilities to us for guarantees and other commitments; that our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such dispute and could have an adverse impact on the operations and profitability of the joint venture; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. In addition, our ability to transfer our interest in a joint venture to a third party may be restricted. In some instances, we and/or our partner may have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction. Our ability to acquire our partner’s interest may be limited if we do not have sufficient cash, available borrowing capacity or other capital resources. In such event, we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it. Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the properties in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition or financing of a property.

We are exposed to operational risks with respect to our seniors housing operating properties that could adversely affect our revenue and operations

We are exposed to various operational risks with respect to our seniors housing operating properties that may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in occupancy, Medicare and Medicaid reimbursement, if applicable, and private pay rates; economic conditions; competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; state regulation and rights of residents related to entrance fees; and the availability and increases in the cost of labor (as a result of unionization or otherwise). Any one or a combination of these factors may adversely affect our revenue and operations.

Decreases in our operators’ revenues or increases in our operators’ expenses could affect our operators’ ability to make payments to us

Our operators’ revenues are primarily driven by occupancy, private pay rates, and Medicare and Medicaid reimbursement, if applicable. Expenses for these facilities are primarily driven by the costs of labor, food, utilities, taxes, insurance and rent or debt service. Revenues from government reimbursement have, and may continue to, come under pressure due to reimbursement cuts and state budget shortfalls. Operating costs continue to increase for our operators. To the extent that any decrease in revenues and/or any increase in operating expenses result in a property not generating enough cash to make payments to us, the credit of our operator and the value of other collateral would have to be relied upon. To the extent the value of such property is reduced, we may need to record an impairment for such asset. Furthermore, if we determine to dispose of an underperforming property, such sale may result in a loss. Any such impairment or loss on sale would negatively affect our financial results.

Increased competition may affect our operators’ ability to meet their obligations to us

The operators of our properties compete on a local and regional basis with operators of properties and other health care providers that provide comparable services. We cannot be certain that the operators of all of our facilities will be able to achieve and maintain Do not modify beyond this point! !

Do not modify before this point! ! occupancy and rate levels that will enable them to meet all of their obligations to us. Our operators are expected to encounter increased competition in the future that could limit their ability to attract residents or expand their businesses.

The insolvency or bankruptcy of our obligors may adversely affect our business, results of operations and financial condition

We are exposed to the risk that our obligors may not be able to meet the rent, principal and interest or other payments due us, which may result in an obligor bankruptcy or insolvency, or that an obligor might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. An obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and interest in the case of a loan, and to exercise other rights and remedies.

We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. In some instances, we have terminated our lease with a tenant and relet the property to another tenant. In some of those situations, we have provided working capital loans to and limited indemnification of the new obligor. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Should such events occur, our revenue and operating cash flow may be adversely affected.

We may not be able to timely reinvest our sale proceeds on terms acceptable to us

From time to time, we will have cash available from (1) the proceeds of sales of our securities, (2) principal payments on our loans receivable and (3) the sale of properties, including non-elective dispositions, under the terms of master leases or similar financial support arrangements. In order to maintain current revenues and continue generating attractive returns, we expect to re-invest these proceeds in a timely manner. We compete for real estate investments with a broad variety of potential investors. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us.

Failure to properly manage our rapid growth could distract our management or increase our expenses

We have experienced rapid growth and development in a relatively short period of time and expect to continue this rapid growth in the future. This growth has resulted in increased levels of responsibility for our management. Future property acquisitions could place significant additional demands on, and require us to expand, our management, resources and personnel. Our failure to manage any such rapid growth effectively could harm our business and, in particular, our financial condition, results of operations and cash flows, which could negatively affect our ability to make distributions to stockholders. Our growth could also increase our capital requirements, which may require us to issue potentially dilutive equity securities and incur additional debt.

We depend on Genesis Healthcare, LLC (“Genesis”) for a significant portion of our revenues and any inability or unwillingness by Genesis to satisfy its obligations under its agreements with us could adversely affect us

The properties we lease to Genesis account for a significant portion of our revenues, and because our leases with Genesis are triple-net leases, we also depend on Genesis to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. We cannot assure you that Genesis will have sufficient assets, income and access to financing to enable it to make rental payments to us or to otherwise satisfy its obligations under our leases, and any inability or unwillingness by Genesis to do so could have an adverse effect on us. Genesis has also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with its business, and we cannot assure you that Genesis will have sufficient assets, income, access to financing and insurance coverage to enable it to satisfy its indemnification obligations.

The properties managed by Sunrise Senior Living, LLC account for a significant portion of our revenues and operating income and any adverse developments in its business or financial condition could adversely affect us

Sunrise Senior Living, LLC manages our entire Sunrise property portfolio, which as of December 31, 2014, consisted of 140 seniors housing properties. These properties account for a significant portion of our revenues, and we rely on Sunrise Senior Living, LLC to manage these properties efficiently and effectively. Any adverse developments in Sunrise Senior Living, LLC’s business or financial condition could impair its ability to manage our properties efficiently and effectively, which could adversely affect us.

Ownership of property outside the United States may subject us to different or greater risks than those associated with our domestic operations

We have operations in Canada and the United Kingdom. International development, ownership, and operating activities involve risks that are different from those we face with respect to our domestic properties and operations. These risks include, but are not limited to, any international currency gain recognized with respect to changes in exchange rates may not qualify under the 75% gross income test or the 95% gross income test that we must satisfy annually in order to qualify and maintain our status as a REIT; challenges with respect to the repatriation of foreign earnings and cash; changes in foreign political, regulatory, and economic conditions, including regionally, nationally, and locally; challenges in managing international operations; 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; foreign ownership restrictions with respect to operations in countries; differences in lending practices and the willingness of domestic or foreign lenders to provide financing; regional or country-specific business cycles and economic instability; 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. If we are unable to successfully manage the risks associated with international expansion and operations, our results of operations and financial condition may be adversely affected.

We do not know if our tenants will renew their existing leases, and if they do not, we may be unable to lease the properties on as favorable terms, or at all

We cannot predict whether our tenants will renew existing leases at the end of their lease terms, which expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy those properties or sell them. There can be no assurance that we would be able to identify suitable replacement tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be able to lease those properties at all.

Our operators’ may not have the necessary insurance coverage to insure adequately against losses

In recent years, long-term/post-acute care and seniors housing operators have experienced substantial increases in both the number and size of patient care liability claims. As a result, general and professional liability costs have increased in some markets. General and professional liability insurance coverage may be restricted or very costly, which may adversely affect the property operators’ future operations, cash flows and financial condition, and may have a material adverse effect on the property operators’ ability to meet their obligations to us.

Our ownership of properties through ground leases exposes us to the loss of such properties upon breach or termination of the ground leases

We have acquired an interest in certain of our properties by acquiring a leasehold interest in the property on which the building is located, and we may acquire additional properties in the future through the purchase of interests in ground leases. As the lessee under a ground lease, we are exposed to the possibility of losing the property upon termination of the ground lease or an earlier breach of the ground lease by us.

The requirements of, or changes to, governmental reimbursement programs, such as Medicare or Medicaid, could have a material adverse effect on our obligors’ liquidity, financial condition and results of operations, which could adversely affect our obligors’ ability to meet their obligations to us

Some of our obligors’ businesses are affected by government reimbursement. To the extent that an operator/tenant receives a significant portion of its revenues from government payors, primarily Medicare and Medicaid, such revenues may be subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, court decisions, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries or carriers, government funding restrictions (at a program level or with respect to specific facilities) and interruption or delays in payments due to any ongoing government investigations and audits at such property. In recent years, government payors have frozen or reduced payments to health care providers due to budgetary pressures. Health care reimbursement will likely continue to be of paramount importance to federal and state authorities. We cannot make any assessment as to the ultimate timing or effect any future legislative reforms may have on the financial condition of our obligors and properties. There can be no assurance that adequate reimbursement levels will be available for services provided by any property operator, whether the property receives reimbursement from Medicare, Medicaid or private payors. Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an obligor’s liquidity, financial condition and results of operations, which could adversely affect the ability of an obligor to meet its obligations to us. See “Item 1 — Business — Certain Government Regulations — United States — Reimbursement” above.

The Patient Protection and Affordable Care Act of 2010, as modified by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Reform Laws”), provides those states that expand their Medicaid coverage to otherwise eligible state residents with incomes at or below 138% of the federal poverty level with an increased federal medical assistance percentage, effective January 1, 2014, when certain conditions are met. On June 28, 2012, the United States Supreme Court upheld the individual mandate of the Health Reform Laws but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion allows Do not modify beyond this point! !

Do not modify before this point! ! states to elect not to participate in the expansion—and to forego funding for the Medicaid expansion—without losing their existing Medicaid funding. Given that the federal government substantially funds the Medicaid expansion, it is unclear how many states will ultimately pursue this option, although, as of late January 2015, roughly half of the states have expanded Medicaid coverage. The participation by states in the Medicaid expansion could have the dual effect of increasing our tenants’ revenues, through new patients, but further straining state budgets and their ability to pay our tenants. While the federal government will pay for approximately 100% of those additional costs from 2014 to 2016, states will be expected to pay for part of those additional costs beginning in 2017. In light of this, at least one state that has passed legislation to allow the state to expand its Medicaid coverage has included sunset provisions in the legislation that require that the expanded benefits be reduced or eliminated if the federal government’s funding for the program is decreased or eliminated, permitting the state to re-visit the issue once it begins to share financial responsibility for the expansion. With increasingly strained budgets, it is unclear how states that do not include such sunset provisions will pay their share of these additional Medicaid costs and what other health care expenditures could be reduced as a result. A significant reduction in other health care related spending by states to pay for increased Medicaid costs could affect our tenants’ revenue streams. See “Item 1 — Business — Certain Government Regulations — United States — Reimbursement” above.

More generally, and because of the dynamic nature of the legislative and regulatory environment for health care products and services, and in light of existing federal deficit and budgetary concerns, we cannot predict the impact that broad-based, far-reaching legislative or regulatory changes could have on the U.S. economy, our business or that of our operators and tenants.

Our operators’ or tenants’ failure to comply with federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards could adversely affect such operators’ or tenants’ operations, which could adversely affect our operators’ and tenants’ ability to meet their obligations to us

Our operators and tenants generally are subject to varying levels of federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards. Our operators’ or tenants’ failure to comply with any of these laws, regulations, or standards could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension, decertification or exclusion from federal and state health care programs, loss of license or closure of the facility. Such actions may have an effect on our operators’ or tenants’ ability to make lease payments to us and, therefore, adversely impact us. See “Item 1 — Business — Certain Government Regulations — United States — Other Related Laws” above.

Many of our properties may require a license, registration, and/or certificate of need (“CON”) to operate. Failure to obtain a license, registration, or CON, or loss of a required license, registration, or CON would prevent a facility from operating in the manner intended by the operators or tenants. These events could materially adversely affect our operators’ or tenants’ ability to make rent payments to us. State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of health care facilities, by requiring a CON or other similar approval from a state agency. See “Item 1 — Business — Certain Government Regulations — United States — Licensing and Certification” above.

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties

Real estate investments are relatively illiquid. Our ability to quickly sell or exchange any of our properties in response to changes in economic and other conditions will be limited. No assurances can be given that we will recognize full value for any property that we are required to sell for liquidity reasons. Our inability to respond rapidly to changes in the performance of our investments could adversely affect our financial condition and results of operations. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us.

Unfavorable resolution of pending and future litigation matters and disputes could have a material adverse effect on our financial condition

From time to time, we may be directly involved in a number of legal proceedings, lawsuits and other claims. We may also be named as defendants in lawsuits allegedly arising out of our actions or the actions of our operators/tenants or managers in which such operators/tenants or managers have agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses. An unfavorable resolution of pending or future litigation may have a material adverse effect on our business, results of operations and financial condition. Regardless of its outcome, litigation may result in substantial costs and expenses and significantly divert the attention of management. There can be no assurance that we will be able to prevail in, or achieve a favorable settlement of, pending or future litigation. In addition, pending litigation or future litigation, government proceedings or environmental matters could lead to increased costs or interruption of our normal business operations.

Development, redevelopment and construction risks could affect our profitability

At any given time, we may be in the process of constructing one or more new facilities that ultimately will require a CON and license before they can be utilized by the operator for their intended use. The operator also may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider agreements and/or third party payor contracts. In the event that the operator is unable to obtain the necessary CON, licensure, certification, provider agreements or contracts after the completion of construction, there is a risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license or certification to operate the new facility and the necessary provider agreements or contracts or we find and contract with a new operator that is able to obtain a license to operate the facility for its intended use and the necessary provider agreements or contracts.

In connection with our renovation, redevelopment, development and related construction activities, we may be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations. These factors could result in increased costs or our abandonment of these projects. In addition, we may not be able to obtain financing on favorable terms, which may render us unable to proceed with our development activities, and we may not be able to complete construction and lease-up of a property on schedule, which could result in increased debt service expense or construction costs.

Additionally, the time frame required for development, construction and lease-up of these properties means that we may have to wait years for significant cash returns. Because we are required to make cash distributions to our stockholders, if the cash flow from operations or refinancing is not sufficient, we may be forced to borrow additional money to fund such distributions. Newly developed and acquired properties may not produce the cash flow that we expect, which could adversely affect our overall financial performance.

In deciding whether to acquire or develop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected occupancy, rental rates and capital costs. If our financial projections with respect to a new property are inaccurate as a result of increases in capital costs or other factors, the property may fail to perform as we expected in analyzing our investment. Our estimate of the costs of repositioning or redeveloping an acquired property may prove to be inaccurate, which may result in our failure to meet our profitability goals. Additionally, we may acquire new properties that are not fully leased, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property.

We may experience losses caused by severe weather conditions or natural disasters, which could result in an increase of our or our tenants’ cost of insurance, a decrease in our anticipated revenues or a significant loss of the capital we have invested in a property

We maintain or require our tenants to maintain comprehensive insurance coverage on our properties with terms, conditions, limits and deductibles that we believe are appropriate given the relative risk and costs of such coverage, and we continually review our insurance programs and requirements. However, a large number of our properties are located in areas particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, earthquakes, tornadoes and floods. We believe, given current industry practice and analysis prepared by outside consultants, that our and our tenants’ insurance coverage is appropriate to cover reasonably anticipated losses that may be caused by hurricanes, earthquakes, tornadoes, floods and other severe weather conditions and natural disasters. Nevertheless, we are always subject to the risk that such insurance will not fully cover all losses and, depending on the severity of the event and the impact on our properties, such insurance may not cover a significant portion of the losses. These losses may lead to an increase of our and our tenants’ cost of insurance, a decrease in our anticipated revenues from an affected property and a loss of all or a portion of the capital we have invested in an affected property. In addition, we or our tenants may not purchase insurance under certain circumstances if the cost of insurance exceeds, in our or our tenants’ judgment, the value of the coverage relative to the risk of loss.

We may incur costs to remediate environmental contamination at our properties, which could have an adverse effect on our or our obligors’ business or financial condition

Under various federal and state laws, owners or operators of real estate may be required to respond to the presence or release of hazardous substances on the property and may be held liable for property damage, personal injuries or penalties that result from environmental contamination or exposure to hazardous substances. We may become liable to reimburse the government for damages and costs it incurs in connection with the contamination. Generally, such liability attaches to a person based on the person’s relationship to the property. Our tenants or borrowers are primarily responsible for the condition of the property. Moreover, we review environmental site assessments of the properties that we own or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which we believe qualifies us for the innocent purchaser defense if environmental liabilities arise. Based upon such assessments, we do not believe that any of our properties are subject to material environmental contamination. However, environmental liabilities may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition or the business or financial condition of our obligors.

Cybersecurity incidents could disrupt our business and result in the loss of confidential information

Our business is at risk from and may be impacted by cybersecurity attacks, including attempts to gain unauthorized access to our confidential data, and other electronic security breaches. Such cyber attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber attack. Cybersecurity incidents could disrupt our business and compromise the confidential information of our employees, operators and tenants.

Our certificate of incorporation and by-laws contain anti-takeover provisions

Our certificate of incorporation and by-laws contain anti-takeover provisions (restrictions on share ownership and transfer and super majority stockholder approval requirements for business combinations) that could make it more difficult for or even prevent a third party from acquiring us without the approval of our incumbent Board of Directors. Provisions and agreements that inhibit or discourage takeover attempts could reduce the market value of our common stock.

Our success depends on key personnel whose continued service is not guaranteed

We are dependent on key personnel. Although we have entered into employment agreements with our executive officers, losing any one of them could, at least temporarily, have an adverse impact on our operations. We believe that losing more than one could have a material adverse impact on our business.

Risks Arising from Our Capital Structure

We may become more leveraged

Permanent financing for our investments is typically provided through a combination of public offerings of debt and equity securities and the incurrence or assumption of secured debt. The incurrence or assumption of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, or (4) negatively affect our credit ratings or outlook by one or more of the rating agencies.

We are subject to covenants in our debt agreements that may restrict or limit our operations and acquisitions and our failure to comply with the covenants in our debt agreements could have a material adverse impact on our business, results of operations and financial condition

Our debt agreements contain various covenants, restrictions and events of default. Among other things, these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. Breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness, in addition to any other indebtedness cross-defaulted against such instruments. These defaults could have a material adverse impact on our business, results of operations and financial condition.

Limitations on our ability to access capital could have an adverse effect on our ability to make future investments or to meet our obligations and commitments

We cannot assure you that we will be able to raise the capital necessary to make future investments or to meet our obligations and commitments as they mature. Our access to capital depends upon a number of factors over which we have little or no control, including rising interest rates, inflation and other general market conditions; the market’s perception of our growth potential and our current and potential future earnings and cash distributions; the market price of the shares of our capital stock and the credit ratings of our debt securities; the financial stability of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us; changes in the credit ratings on U.S. government debt securities; or default or delay in payment by the United States of its obligations. If our access to capital is limited by these factors or other factors, it could negatively impact our ability to acquire properties, repay or refinance our indebtedness, fund operations or make distributions to our stockholders.

Downgrades in our credit ratings could have a material adverse impact on our cost and availability of capital

We plan to manage the Company to maintain a capital structure consistent with our current profile, but there can be no assurance that we will be able to maintain our current credit ratings. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

Fluctuations in the value of foreign currencies could adversely affect our results of operations and financial position

As we expand our operations internationally, currency exchange rate fluctuations could affect our results of operations and financial position. We expect to generate an increasing portion of our revenue and expenses in such foreign currencies as the Canadian dollar and the British pound. Although we may enter into foreign exchange agreements with financial institutions and/or obtain local currency mortgage debt in order to reduce our exposure to fluctuations in the value of foreign currencies, we cannot assure you that foreign currency fluctuations will not have a material adverse effect on us.

Our entry into swap agreements may not effectively reduce our exposure to changes in interest rates or foreign currency exchange rates

We enter into swap agreements from time to time to manage some of our exposure to interest rate and foreign currency exchange rate volatility. These swap agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to changes in interest rates or foreign currency exchange rates. When we use forward-starting interest rate swaps, there is a risk that we will not complete the long-term borrowing against which the swap is intended to hedge. If such events occur, our results of operations may be adversely affected.

Risks Arising from Our Status as a REIT

We might fail to qualify or remain qualified as a REIT

We intend to operate as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and believe we have and will continue to operate in such a manner. If we lose our status as a REIT, we will face serious income tax consequences that will substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders because:

• we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

• we could be subject to the federal alternative minimum tax and possibly 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.

Since REIT qualification requires us to meet a number of complex requirements, it is possible that we may fail to fulfill them, and if we do, our earnings will be reduced by the amount of U.S. federal and other income taxes owed. A reduction in our earnings would affect the amount we could distribute to our stockholders. If we do not qualify as a REIT, we would not be required to make distributions to stockholders since a non-REIT is not required to pay dividends to stockholders in order to maintain REIT status or avoid an excise tax. See “Item 1 — Business — Taxation — Federal Income Tax Considerations” above for a discussion of the provisions of the Code that apply to us and the effects of failure to qualify as a REIT.

In addition, if we fail to qualify as a REIT, all distributions to stockholders would continue to be treated as dividends to the extent of our current and accumulated earnings and profits, although corporate stockholders may be eligible for the dividends received deduction, and individual stockholders may be eligible for taxation at the rates generally applicable to long-term capital gains (currently at a maximum rate of 20%) with respect to distributions.

As a result of all these factors, our failure to qualify as a REIT also could impair our ability to implement our business strategy and would 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 various factual matters and circumstances not entirely within our control may affect our ability to remain qualified as a REIT. Although we believe that we qualify as a REIT, we cannot assure you that we will continue to qualify or remain qualified as a REIT for U.S. federal income tax purposes. See “Item 1 — Business — Taxation — Federal Income Tax Considerations” above.

Certain subsidiaries might fail to qualify or remain qualified as a REIT

As a result of our acquisition of shares in Senior Housing Realty Trust (“SHRT”), we own a minority interest in an entity which elected to be taxed as a REIT for federal income tax purposes. Additionally, we own substantially all of the outstanding stock of a subsidiary which we consolidate for financial reporting purposes but which is treated as a separate REIT for federal income tax purposes (together with SHRT, each a “Subsidiary REIT”). To qualify as a REIT, each Subsidiary REIT must independently satisfy all of the REIT qualification requirements under the Code, together with all other rules applicable to REITs. Provided that each Do not modify beyond this point! !

Do not modify before this point! ! Subsidiary REIT qualifies as a REIT, our interests in the Subsidiary REITs will be treated as qualifying real estate assets for purposes of the REIT asset tests. See “Item 1 – Business – Taxation – Federal Income Tax Considerations – Qualification as a REIT – Asset Tests” above. If a Subsidiary REIT fails to qualify as a REIT in any taxable year, such Subsidiary REIT will be subject to federal and state income taxes and may not be able to qualify as a REIT for the four subsequent taxable years. Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions.

The 90% annual 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 “Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Annual Distribution Requirements” above. Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement, or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. This may be due to 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. In addition, non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement. In the event that timing differences occur, or we deem it appropriate to retain cash, we may borrow funds, issue additional equity securities (although we cannot assure you that we will be able to do so), pay taxable stock dividends, if possible, distribute other property or securities or engage in another transaction intended to enable us to meet the REIT distribution requirements. This may require us to raise additional capital to meet our obligations.

The lease of qualified health care properties to a taxable REIT subsidiary is subject to special requirements

We lease certain qualified health care properties to taxable REIT subsidiaries (or limited liability companies of which the taxable REIT subsidiaries are members), which lessees contract with managers (or related parties) to manage the health care operations at these properties. The rents from this taxable REIT subsidiary lessee structure are treated as qualifying rents from real property if (1) they are paid pursuant to an arms-length lease of a qualified health care property with a taxable REIT subsidiary and (2) the manager qualifies as an eligible independent contractor (as defined in the Code). If any of these conditions are not satisfied, then the rents will not be qualifying rents. See “Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Income Tests” above.

If certain sale-leaseback transactions are not characterized by the Internal Revenue Service as “true leases,” we may be subject to adverse tax consequences

We have purchased certain properties and leased them back to the sellers of such properties, and we may enter into similar transactions in the future. We intend for any such sale-leaseback transaction to be structured in such a manner that the lease will be characterized as a “true lease,” thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, depending on the terms of any specific transaction, the Internal Revenue Service might take the position that the transaction is not a “true lease” but is more properly treated in some other manner. In the event any sale-leaseback transaction is challenged and successfully re-characterized by the Internal Revenue Service, we would not be entitled to claim the deductions for depreciation and cost recovery generally available to an owner of property. Furthermore, if a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT asset tests or income tests and, consequently, could lose our REIT status effective with the year of re-characterization. See “Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Asset Tests” and “Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Income Tests” above. Alternatively, the amount of our REIT taxable income could be recalculated, which may cause us to fail to meet the REIT annual distribution requirements for a taxable year. See “Item 1 — Business — Taxation — Federal Income Tax Considerations — Qualification as a REIT — Annual Distribution Requirements” above.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We own our corporate headquarters located at 4500 Dorr Street, Toledo, Ohio 43615. We also lease corporate offices in Florida, California and the United Kingdom and have ground leases relating to certain of our properties. The following table sets forth certain information regarding the properties that comprise our consolidated real property and real estate loan investments as of December 31, 2014 (dollars in thousands and annualized revenues adjusted for timing of investment):

| Property Location | Seniors
Housing Triple-Net — Number
of Properties | Total
Investment | Annualized
Revenues | Seniors
Housing Operating — Number
of Properties | Total
Investment | Annualized
Revenues |
| --- | --- | --- | --- | --- | --- | --- |
| Alabama | 4 | $ 36,941 | $ 3,765 | - | $ - | $ - |
| Arizona | 1 | 6,963 | 833 | 4 | 63,984 | 22,847 |
| California | 28 | 532,723 | 54,606 | 47 | 1,343,848 | 373,773 |
| Colorado | 3 | 76,048 | 9,645 | 5 | 148,070 | 37,734 |
| Connecticut | 14 | 179,783 | 19,647 | 14 | 327,746 | 112,555 |
| District Of Columbia | - | - | - | 1 | 66,257 | 13,790 |
| Delaware | 11 | 164,414 | 18,231 | 1 | 22,165 | 5,420 |
| Florida | 43 | 602,039 | 53,326 | - | - | - |
| Georgia | 8 | 105,483 | 10,121 | 7 | 126,861 | 35,139 |
| Iowa | 3 | 48,193 | 4,165 | 1 | 34,082 | 8,209 |
| Idaho | 2 | 34,397 | 3,640 | - | - | - |
| Illinois | 15 | 343,389 | 30,642 | 12 | 442,507 | 94,739 |
| Indiana | 30 | 431,753 | 44,737 | - | - | - |
| Kansas | 7 | 142,586 | 14,826 | 3 | 71,987 | 16,886 |
| Kentucky | 12 | 102,297 | 15,467 | 2 | 40,233 | 11,977 |
| Louisiana | 3 | 22,642 | 3,353 | 2 | 53,481 | 11,547 |
| Massachusetts | 31 | 413,211 | 53,334 | 22 | 558,492 | 139,977 |
| Maryland | 27 | 415,111 | 39,394 | 3 | 85,677 | 31,766 |
| Maine | - | - | - | 2 | 54,156 | 18,246 |
| Michigan | 8 | 121,909 | 10,760 | 5 | 115,759 | 23,310 |
| Minnesota | 3 | 37,186 | 3,438 | 4 | 118,380 | 24,275 |
| Missouri | 2 | 29,066 | 2,913 | 3 | 116,500 | 14,769 |
| Mississippi | 3 | 31,053 | 3,364 | - | - | - |
| Montana | 1 | 6,482 | 952 | - | - | - |
| North Carolina | 56 | 374,384 | 38,821 | 1 | 42,504 | 7,369 |
| Nebraska | 5 | 136,705 | 15,333 | - | - | - |
| New Hampshire | 12 | 177,255 | 21,987 | 3 | 79,396 | 18,091 |
| New Jersey | 59 | 1,296,969 | 127,150 | 8 | 249,811 | 65,758 |
| New Mexico | - | - | - | 1 | 19,468 | 993 |
| Nevada | 5 | 101,238 | 13,350 | 2 | 38,314 | 10,020 |
| New York | 9 | 205,222 | 17,685 | 8 | 307,829 | 72,573 |
| Ohio | 28 | 236,656 | 38,088 | 4 | 197,435 | 34,084 |
| Oklahoma | 18 | 130,829 | 13,173 | 2 | 39,039 | 3,263 |
| Oregon | 1 | 3,400 | 757 | - | - | - |
| Pennsylvania | 49 | 848,335 | 93,805 | 6 | 84,683 | 36,715 |
| Rhode Island | 3 | 45,102 | 5,667 | 3 | 70,499 | 20,827 |
| South Carolina | 5 | 36,129 | 10,287 | - | - | - |
| Tennessee | 25 | 184,515 | 26,731 | 2 | 51,167 | 15,219 |
| Texas | 51 | 614,366 | 71,312 | 13 | 328,093 | 75,905 |
| Utah | 1 | 5,824 | 887 | 1 | 17,223 | 11,161 |
| Virginia | 14 | 208,884 | 19,830 | 2 | 39,296 | 15,035 |
| Vermont | 2 | 26,171 | 3,300 | 1 | 28,749 | 7,183 |
| Washington | 23 | 408,435 | 40,676 | 7 | 271,099 | 47,110 |
| Wisconsin | 17 | 234,308 | 25,247 | - | - | - |
| West Virginia | 24 | 370,338 | 46,558 | - | - | - |
| Total domestic | 666 | 9,528,734 | 1,031,802 | 202 | 5,654,792 | 1,438,263 |
| Canada | 13 | 323,486 | 18,114 | 54 | 1,146,379 | 232,892 |
| United Kingdom | 43 | 581,885 | 42,929 | 41 | 1,537,562 | 309,300 |
| Total international | 56 | 905,371 | 61,043 | 95 | 2,683,941 | 542,192 |
| Grand total | 722 | $ 10,434,105 | $ 1,092,845 | 297 | $ 8,338,733 | $ 1,980,455 |

| Property Location | Medical
Facilities — Number
of Properties | Total
Investment | Annualized
Revenues |
| --- | --- | --- | --- |
| Alaska | 1 | $ 23,380 | $ 3,046 |
| Alabama | 3 | 31,865 | 5,065 |
| Arkansas | 1 | 25,987 | 2,935 |
| Arizona | 4 | 71,703 | 8,683 |
| California | 22 | 463,260 | 44,814 |
| Colorado | 1 | 12,738 | 1,990 |
| Florida | 38 | 485,233 | 50,128 |
| Georgia | 10 | 170,333 | 22,605 |
| Iowa | 1 | 7,080 | 1,394 |
| Illinois | 3 | 39,709 | 7,199 |
| Indiana | 8 | 157,528 | 17,514 |
| Kansas | 7 | 81,588 | 13,117 |
| Maryland | 2 | 22,549 | 2,293 |
| Maine | 1 | 22,815 | 2,932 |
| Michigan | 1 | 16,959 | 1,797 |
| Minnesota | 8 | 187,699 | 25,948 |
| Missouri | 7 | 156,324 | 17,768 |
| North Carolina | 3 | 60,114 | 6,856 |
| Nebraska | 2 | 38,619 | 5,658 |
| New Hampshire | 1 | 15,317 | 1,580 |
| New Jersey | 7 | 224,503 | 37,736 |
| New Mexico | 3 | 36,180 | 3,638 |
| Nevada | 5 | 47,452 | 3,512 |
| New York | 7 | 67,180 | 7,660 |
| Ohio | 8 | 79,612 | 12,321 |
| Oklahoma | 2 | 27,550 | 3,415 |
| Oregon | 1 | 10,038 | 1,363 |
| South Carolina | 1 | 28,101 | 2,259 |
| Tennessee | 7 | 82,061 | 10,276 |
| Texas | 49 | 898,805 | 89,942 |
| Virginia | 4 | 62,816 | 7,689 |
| Washington | 5 | 164,550 | 16,342 |
| Wisconsin | 18 | 258,710 | 27,700 |
| Total | 241 | $ 4,078,358 | $ 467,175 |

The following table sets forth occupancy, coverages and average annualized revenues for certain property types (excluding investments in unconsolidated entities):

| | Occupancy (1) — 2014 | 2013 | Coverages (1,2) — 2014 | 2013 | Average
Annualized Revenues (3) — 2014 | 2013 | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Seniors housing triple-net (4) | 87.7% | 87.7% | 1.54x | 1.58x | $ 14,562 | $ 14,000 | per bed/unit |
| Seniors housing operating (5) | 90.3% | 90.7% | n/a | n/a | 67,376 | 65,374 | per unit |
| Medical facilities (6) | 94.4% | 94.5% | n/a | n/a | 33 | 28 | per sq. ft. |
| (1) We use unaudited, periodic financial information provided
solely by tenants/borrowers to calculate occupancy and coverages for
properties other than medical office buildings and have not independently
verified the information. | | | | | | | |
| (2) Represents the ratio of our triple-net customers' earnings
before interest, taxes, depreciation, amortization, rent and management fees
to contractual rent or interest due us. Data reflects the 12 months ended
September 30 for the periods presented. | | | | | | | |
| (3) Represents annualized revenues divided by total beds, units
or square feet as presented in the tables above. | | | | | | | |
| (4) Occupancy represents average quarterly operating occupancy
based on the quarters ended September 30 and excludes properties that are
unstabilized, closed or for which data is not available or meaningful. | | | | | | | |
| (5) Occupancy for seniors housing operating represents average
occupancy for the three months ended December 31. | | | | | | | |
| (6) Medical office building occupancy represents the percentage
of total rentable square feet leased and occupied (including month-to-month
and holdover leases and excluding terminations and discontinued operations)
as of December 31. | | | | | | | |

The following table sets forth information regarding lease expirations for certain portions of our portfolio as of December 31, 2014 (dollars in thousands):

	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	Thereafter
Seniors housing triple-net:
Properties	20	-	33	51	3	12	26	41	13	21	472
Base rent (1)	$ 37,423	$ -	$ 14,907	$ 37,421	$ 2,973	$ 14,870	$ 38,293	$ 36,309	$ 18,442	$ 45,602	$ 798,931
% of base rent	3.6%	0.0%	1.4%	3.6%	0.3%	1.4%	3.7%	3.5%	1.8%	4.4%	76.4%
Units	91	-	1,467	3,151	235	1,079	3,806	5,144	1,357	2,254	52,029
% of units	0.1%	0.0%	2.1%	4.5%	0.3%	1.5%	5.4%	7.3%	1.9%	3.2%	73.7%
Medical office buildings:
Square feet	711,737	790,389	1,218,498	920,688	1,070,191	968,769	1,118,555	2,108,813	1,047,083	1,367,691	2,956,912
Base rent (1)	$ 17,440	$ 18,299	$ 29,078	$ 21,994	$ 25,896	$ 22,791	$ 28,386	$ 43,663	$ 26,007	$ 36,446	$ 71,813
% of base rent	5.1%	5.4%	8.5%	6.4%	7.6%	6.7%	8.3%	12.8%	7.6%	10.7%	20.9%
Leases	262	201	248	192	207	113	119	134	80	102	89
% of leases	15.0%	11.5%	14.2%	11.0%	11.8%	6.5%	6.8%	7.7%	4.6%	5.8%	5.1%
(1) The most recent monthly base rent including straight line
for leases with fixed escalators or annual cash rents with contingent
escalators. Base rent does not include tenant recoveries or amortization of
above and below market lease intangibles.

Item 3. Legal Proceedings

From time to time, there are various legal proceedings pending to which we are a party or to which some of our properties are subject arising in the normal course of business. We do not believe that the ultimate resolution of these proceedings will have a material adverse effect on our consolidated financial position or results of operations.

Item 4. Mine Safety Disclosures

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There were 4,960 stockholders of record as of January 31, 2015. The following table sets forth, for the periods indicated, the high and low prices of our common stock on the New York Stock Exchange (NYSE:HCN), and common dividends paid per share:

| | Sales
Price — High | Low | Dividends
Paid — Per
Share |
| --- | --- | --- | --- |
| 2014 | | | |
| First Quarter | $ 59.93 | $ 52.90 | $ 0.795 |
| Second Quarter | 65.25 | 58.91 | 0.795 |
| Third Quarter | 68.36 | 61.42 | 0.795 |
| Fourth Quarter | 78.17 | 62.05 | 0.795 |
| 2013 | | | |
| First Quarter | $ 67.92 | $ 60.78 | $ 0.765 |
| Second Quarter | 80.07 | 61.62 | 0.765 |
| Third Quarter | 68.79 | 58.16 | 0.765 |
| Fourth Quarter | 66.76 | 52.43 | 0.765 |

Our Board of Directors has approved a new quarterly cash dividend rate of $0.825 per share of common stock per quarter, commencing with the February 2015 dividend. The declaration and payment of quarterly dividends remains subject to the review and approval of the Board of Directors.

Stockholder Return Performance Presentation

Set forth below is a line graph comparing the yearly percentage change and the cumulative total stockholder return on our shares of common stock against the cumulative total return of the S & P Composite-500 Stock Index and the FTSE NAREIT Equity Index. As of December 31, 2014, 156 companies comprised the FTSE NAREIT Equity Index. The Index consists of REITs identified by NAREIT as equity (those REITs which have at least 75% of their investments in real property). The data are based on the closing prices as of December 31 for each of the five years. 2009 equals $100 and dividends are assumed to be reinvested.

	12/31/09	12/31/10	12/31/11	12/31/12	12/31/13	12/31/14
S
& P 500	100.00	115.06	117.49	136.30	180.44	205.14
Health
Care REIT, Inc.	100.00	114.33	138.65	163.91	150.11	222.93
FTSE
NAREIT Equity	100.00	127.96	138.57	163.60	167.63	218.16

Except to the extent that we specifically incorporate this information by reference, the foregoing Stockholder Return Performance Presentation shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended. This information shall not otherwise be deemed filed under such Acts.

| Issuer
Purchases of Equity Securities — Period | Total
Number of Shares Purchased | Average
Price Paid Per Share |
| --- | --- | --- |
| October 1, 2014 through October 31, 2014 | - | $ - |
| November 1, 2014 through November 30, 2014 | - | - |
| December 1, 2014 through December 31, 2014 | - | - |
| Totals | - | $ - |
| (1) No shares were purchased as part of publicly announced plans
or programs. | | |

Item 6. Selected Financial Data

The following selected financial data for the five years ended December 31, 2014 are derived from our audited consolidated financial statements (in thousands, except per share data):

| | Year
Ended December 31, — 2010 | 2011 | 2012 | 2013 | 2014 |
| --- | --- | --- | --- | --- | --- |
| Operating Data | | | | | |
| Revenues (1) | $ 559,491 | $ 1,313,182 | $ 1,805,044 | $ 2,880,608 | $ 3,343,546 |
| Expenses (1) | 526,515 | 1,200,979 | 1,619,132 | 2,778,363 | 2,959,333 |
| Income from continuing operations before income taxes and income
(loss) from unconsolidated entities | 32,976 | 112,203 | 185,912 | 102,245 | 384,213 |
| Income tax (expense) benefit | (364) | (1,388) | (7,612) | (7,491) | 1,267 |
| Income (loss) from unconsolidated entities | 6,673 | 5,772 | 2,482 | (8,187) | (27,426) |
| Income from continuing operations | 39,285 | 116,587 | 180,782 | 86,567 | 358,054 |
| Income from discontinued operations, net (1) | 89,599 | 96,129 | 114,058 | 51,713 | 7,135 |
| Gain (loss) on real estate dispositions, net | - | - | - | - | 147,111 |
| Net income | 128,884 | 212,716 | 294,840 | 138,280 | 512,300 |
| Preferred stock dividends | 21,645 | 60,502 | 69,129 | 66,336 | 65,408 |
| Preferred stock redemption charge | - | - | 6,242 | - | - |
| Net income (loss) attributable to noncontrolling interests | 357 | (4,894) | (2,415) | (6,770) | 147 |
| Net income attributable to common stockholders | $ 106,882 | $ 157,108 | $ 221,884 | $ 78,714 | $ 446,745 |
| Other Data | | | | | |
| Average number of common shares outstanding: | | | | | |
| Basic | 127,656 | 173,741 | 224,343 | 276,929 | 306,272 |
| Diluted | 128,208 | 174,401 | 225,953 | 278,761 | 307,747 |
| Per Share Data | | | | | |
| Basic: | | | | | |
| Income from continuing operations attributable to common
stockholders | $ 0.14 | $ 0.35 | $ 0.48 | $ 0.10 | $ 1.44 |
| Discontinued operations, net | 0.70 | 0.55 | 0.51 | 0.19 | 0.02 |
| Net income attributable to common stockholders * | $ 0.84 | $ 0.90 | $ 0.99 | $ 0.28 | $ 1.46 |
| Diluted: | | | | | |
| Income from continuing operations attributable to common
stockholders | $ 0.13 | $ 0.35 | $ 0.48 | $ 0.10 | $ 1.43 |
| Discontinued operations, net | 0.70 | 0.55 | 0.50 | 0.19 | 0.02 |
| Net income attributable to common stockholders * | $ 0.83 | $ 0.90 | $ 0.98 | $ 0.28 | $ 1.45 |
| Cash distributions per common share | $ 2.74 | $ 2.835 | $ 2.96 | $ 3.06 | $ 3.18 |
| * Amounts may not sum due to rounding | | | | | |
| (1) We have
reclassified the income and expenses attributable to properties sold prior to
or held for sale at December 31, 2013, to discontinued operations for all
periods presented. See Note 5 to our consolidated financial statements. | | | | | |
| | December
31, | | | | |
| Balance Sheet Data | 2010 | 2011 | 2012 | 2013 | 2014 |
| Net real estate investments | $ 8,590,833 | $ 13,942,350 | $ 17,423,009 | $ 21,680,221 | $ 22,851,196 |
| Total assets | 9,451,734 | 14,924,606 | 19,549,109 | 23,083,957 | 25,014,296 |
| Total long-term obligations | 4,469,736 | 7,240,752 | 8,531,899 | 10,652,014 | 10,828,013 |
| Total liabilities | 4,714,081 | 7,612,309 | 8,993,998 | 11,292,587 | 11,454,838 |
| Total preferred stock | 291,667 | 1,010,417 | 1,022,917 | 1,017,361 | 1,006,250 |
| Total equity | 4,733,100 | 7,278,647 | 10,520,519 | 11,756,331 | 13,473,049 |

| EXECUTIVE
SUMMARY | |
| --- | --- |
| Company Overview Business Strategy Capital Market Outlook Key Transactions in 2014 Key Performance
Indicators, Trends and Uncertainties Corporate Governance | 46 46 47 47 48 50 |
| LIQUIDITY
AND CAPITAL RESOURCES | |
| Sources and Uses of Cash Off-Balance Sheet
Arrangements Contractual Obligations Capital Structure | 50 51 51 51 |
| RESULTS
OF OPERATIONS | |
| Summary Seniors Housing Triple-net Seniors Housing Operating Medical Facilities Non-Segment/Corporate | 52 53 56 58 60 |
| OTHER | |
| Non-GAAP Financial
Measures | 62 |
| Critical Accounting
Policies | 67 |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based primarily on the consolidated financial statements of Health Care REIT, Inc. for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in “Item 1 — Business” and “Item 1A — Risk Factors” above.

Executive Summary

Company Overview

The following table summarizes our consolidated portfolio as of December 31, 2014:

| | Investments | Percentage
of | Number
of |
| --- | --- | --- | --- |
| Type
of Property | (in
thousands) (1) | Investments | Properties |
| Seniors housing triple-net | $ 10,434,105 | 45.7% | 722 |
| Seniors housing operating | 8,338,733 | 36.5% | 297 |
| Medical facilities | 4,078,358 | 17.8% | 241 |
| Totals | $ 22,851,196 | 100.0% | 1,260 |
| (1) Excludes our share of investments in unconsolidated
entities. Entities in which we have a joint venture with a minority partner
are shown at 100% of the joint venture amount. | | | |

Business Strategy

Substantially all of our revenues are derived from operating lease rentals, resident fees and services, and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our customers/partners experience operating difficulties and become unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our proactive and comprehensive asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division actively manages and monitors the medical office building portfolio with a comprehensive process including review of, among other things, tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions. In monitoring our portfolio, our personnel use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to ascertain industry trends. We evaluate the operating environment in each property’s market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we are generally able to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment.

In addition to our asset management and research efforts, we also structure our investments to help mitigate payment risk. Operating leases and loans are normally credit enhanced by guaranties and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates.

For the year ended December 31, 2014, rental income and resident fees represented 42% and 57% respectively, of total revenues (including discontinued operations). Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental Do not modify beyond this point! !

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Do not modify before this point! ! payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments.

Our primary sources of cash include rent and interest receipts, resident fees and services, borrowings under our primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses and general and administrative expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash.

We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our primary unsecured credit facility, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from net operating income and principal payments on loans receivable. Permanent financing for future investments, which generally replaces funds drawn under our primary unsecured credit facility, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt.

Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also possible that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our primary unsecured credit facility. At December 31, 2014, we had $473,726,000 of cash and cash equivalents, $79,697,000 of restricted cash and $2,428,723,000 of available borrowing capacity under our primary unsecured credit facility.

Capital Market Outlook

The capital markets remain supportive of our investment strategy. For the year ended December 31, 2014, we raised $3.2 billion in aggregate gross proceeds through the issuance of common stock and unsecured debt. The capital raised, in combination with available cash and borrowing capacity under our primary unsecured credit facility, supported $3.7 billion in gross new investments for the year. We expect attractive investment opportunities to remain available in the future as we continue to leverage the benefits of our relationship investment strategy.

Key Transactions in 2014

Capital . In May 2014, we completed the public issuance of 16,100,000 shares of common stock for approximate gross proceeds of $1,003,835,000. In September 2014, we completed the public issuance of 17,825,000 shares of common stock for approximate gross proceeds of $1,136,344,000. Also, for the year ended December 31, 2014, we raised $257,055,000 through our dividend reinvestment program. In July 2014, we closed on a new primary unsecured credit facility that includes a $2,500,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. Among other things, the primary unsecured credit facility provides us with additional borrowing capacity and extends the agreement to October 31, 2018. It can be extended for an additional year at our option. In November 2014, we issued £500,000,000 of 4.5% 20-year senior unsecured notes, generating approximately $773,992,000 of net proceeds.

Investments . The following summarizes our acquisitions and joint venture investments made during the year ended December 31, 2014 (dollars in thousands):

| Seniors housing triple-net | Properties — 87 | $ 1,519,657 | Capitalization
Rates (2) — 7.0% | $ 1,544,441 |
| --- | --- | --- | --- | --- |
| Seniors housing operating | 30 | 893,593 | 6.4% | 693,953 |
| Medical facilities | 34 | 665,398 | 6.2% | 677,637 |
| Total acquisitions/JVs | 151 | $ 3,078,648 | 6.6% | $ 2,916,031 |
| (1) Represents stated purchase price including cash and any
assumed debt but excludes fair value adjustments pursuant to U.S. GAAP. | | | | |
| (2) Represents annualized contractual or projected income to be
received in cash divided by investment amounts. | | | | |
| (3) Represents amounts recorded on our books including fair
value adjustments pursuant to U.S. GAAP. See Notes 3 and 7 to our
consolidated financial statements for additional information. | | | | |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Dispositions . The following summarizes property dispositions made during the year ended December 31, 2014 (dollars in thousands):

| Seniors housing triple-net | Properties — 26 | $ 900,335 | Capitalization
Rates (2) — 8.7% | $ 747,720 |
| --- | --- | --- | --- | --- |
| Medical facilities | 2 | 46,602 | 7.6% | 45,695 |
| Total property sales | 28 | $ 946,937 | 8.7% | $ 793,415 |
| (1) Represents book amount plus net gains/losses. See Note 5 to
our consolidated financial statements for additional information. | | | | |
| (2) Represents annualized contractual income that was being
received in cash at date of disposition divided by book amount. | | | | |
| (3) Represents carrying value of assets at time of disposition. | | | | |

Dividends . Our Board of Directors increased the annual cash dividend to $3.30 per common share ($0.825 per share quarterly), as compared to $3.18 per common share for 2014, beginning in February 2015. The dividend declared for the quarter ended December 31, 2014 represents the 175 th consecutive quarterly dividend payment.

Key Performance Indicators, Trends and Uncertainties

We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to operating performance, credit strength and concentration risk. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results, in making operating decisions and for budget planning purposes.

Operating Performance . We believe that net income attributable to common stockholders (“NICS”) is the most appropriate earnings measure. Other useful supplemental measures of our operating performance include funds from operations (“FFO”), net operating income from continuing operations (“NOI”) and same store cash NOI (“SSCNOI”); however, these supplemental measures are not defined by U.S. generally accepted accounting principles (“U.S. GAAP”). Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion and reconciliations of FFO, NOI and SSCNOI. These earnings measures and their relative per share amounts are widely used by investors and analysts in the valuation, comparison and investment recommendations of companies. The following table reflects the recent historical trends of our operating performance measures for the periods presented (in thousands):

| | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Net income attributable to common stockholders | $ 221,884 | $ 78,714 | $ 446,745 |
| Funds from operations | 697,557 | 924,884 | 1,178,330 |
| Net operating income from continuing operations | 1,237,055 | 1,673,795 | 1,940,188 |
| Same store cash net operating income | 882,885 | 898,909 | 931,255 |

Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt. The coverage ratios indicate our ability to service interest and fixed charges (interest, secured debt principal amortization and preferred dividends). We expect to maintain capitalization ratios and coverage ratios sufficient to maintain compliance with our debt covenants. The coverage ratios are based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which is discussed in further detail, and reconciled to net income, below in “Non-GAAP Financial Measures.” Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, investment recommendations and rating of companies. The following table reflects the recent historical trends for our credit strength measures for the periods presented:

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Debt to book capitalization ratio | 45% | 48% | 45% |
| Debt to undepreciated book capitalization ratio | 41% | 43% | 40% |
| Debt to market capitalization ratio | 33% | 39% | 29% |
| Adjusted interest coverage ratio | 3.31x | 3.23x | 3.86x |
| Adjusted fixed charge coverage ratio | 2.58x | 2.56x | 3.06x |

Concentration Risk . We evaluate our concentration risk in terms of investment mix, relationship mix and geographic mix. Concentration risk is a valuable measure in understanding what portion of our investments could be at risk if certain sectors were to experience downturns. Investment mix measures the portion of our investments that relate to our various property types. Relationship mix measures the portion of our investments that relate to our top five relationships. Geographic mix measures the portion of our investments that relate to our top five states (or international equivalents). The following table reflects our recent historical trends of concentration risk by investment balance for the periods presented:

| | December
31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Investment mix: (1) | | | |
| Seniors housing triple-net | 52% | 45% | 46% |
| Seniors housing operating | 28% | 39% | 36% |
| Medical facilities | 20% | 16% | 18% |
| Relationship mix: (1) | | | |
| Sunrise Senior Living (2) | 6% | 19% | 18% |
| Genesis Healthcare | 15% | 12% | 12% |
| Brookdale | | | 6% |
| Revera (2) | | 5% | 5% |
| Benchmark Senior Living | 5% | 4% | 4% |
| Belmont Village | 5% | 4% | |
| Merrill Gardens | 6% | | |
| Remaining customers | 63% | 56% | 55% |
| Geographic mix: (1) | | | |
| California | 9% | 10% | 10% |
| England | | 8% | 9% |
| Texas | 9% | 7% | 8% |
| New Jersey | 9% | 8% | 8% |
| Canada | | | 6% |
| Florida | 7% | 5% | |
| Pennsylvania | 5% | | |
| Remaining | 61% | 62% | 59% |
| (1) Excludes our share of investments in unconsolidated
entities. Entities in which the company has a joint venture partner are shown
at 100% of the joint venture amount. | | | |
| (2) Revera owns a controlling interest in Sunrise. | | | |

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in “Item 1 — Business — Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A — Risk Factors” and other sections of this Annual Report on Form 10-K. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to “Item 1 — Business,” “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for further discussion of these risk factors.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Corporate Governance

Maintaining investor confidence and trust is important in today’s business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by the New York Stock Exchange and are available on the Internet at www.hcreit.com/investor-relations/governance. 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.

Liquidity and Capital Resources

Sources and Uses of Cash

Our primary sources of cash include rent and interest receipts, resident fees and services, borrowings under our primary unsecured credit facility, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses, and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows and are discussed in further detail below. The following is a summary of our sources and uses of cash flows (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December,
31 | December,
31 | | | December,
31 | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| Beginning cash and cash equivalents | $ 163,482 | $ 1,033,764 | $ 870,282 | 532% | $ 158,780 | $ (874,984) | -85% | $ (4,702) | -3% |
| Cash provided from (used in): | | | | | | | | | |
| Operating activities | 818,133 | 988,497 | 170,364 | 21% | 1,138,670 | 150,173 | 15% | 320,537 | 39% |
| Investing activities | (3,592,979) | (3,531,593) | 61,386 | -2% | (2,126,206) | 1,405,387 | -40% | 1,466,773 | -41% |
| Financing activities | 3,645,128 | 1,667,670 | (1,977,458) | -54% | 1,303,172 | (364,498) | -22% | (2,341,956) | -64% |
| Effect of foreign currency translation on cash and cash
equivalents | 0 | 442 | 442 | n/a | (690) | (1,132) | n/a | (690) | n/a |
| Ending cash and cash equivalents | $ 1,033,764 | $ 158,780 | $ (874,984) | -85% | $ 473,726 | $ 314,946 | 198% | $ (560,038) | -54% |

Operating Activities . The change in net cash provided from operating activities is primarily attributable to increases in NOI which is primarily due to acquisitions. Please see “Results of Operations” for further discussion. For the years ended December 31, 2012, 2013 and 2014, cash flows from operations exceeded cash distributions to stockholders.

Investing Activities . The changes in net cash used in investing activities are primarily attributable to acquisitions, real estate loans receivable and investments in unconsolidated entities which are summarized above in “Key Transactions in 2014.” Please refer to Notes 3, 6 and 7 of our consolidated financial statements for additional information. The following is a summary of non-acquisition capital improvements (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| New development | $ 286,410 | $ 247,560 | $ (38,850) | -14% | $ 197,881 | $ (49,679) | -20% | $ (88,529) | -31% |
| Recurring capital expenditures, tenant improvements and lease
commissions | 45,175 | 60,984 | 15,809 | 35% | 59,134 | (1,850) | -3% | 13,959 | 31% |
| Renovations, redevelopments and other capital improvements | 90,275 | 74,848 | (15,427) | -17% | 73,646 | (1,202) | -2% | (16,629) | -18% |
| Total | $ 421,860 | $ 383,392 | $ (38,468) | -9% | $ 330,661 | $ (52,731) | -14% | $ (91,199) | -22% |

The change in new development is primarily due to the number and size of construction projects on-going during the relevant periods. Renovations, redevelopments and other capital improvements include expenditures to maximize property value, increase net operating income, maintain a market-competitive position and/or achieve property stabilization.

Financing Activities . The changes in net cash provided from financing activities are primarily attributable to changes related to our long-term debt arrangements, the issuance/redemptions of common and preferred stock, and dividend payments which are summarized above in “Key Transactions in 2014.” Please refer to Notes 9, 10 and 13 of our consolidated financial statements for additional information.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Off-Balance Sheet Arrangements

At December 31, 2014, we had investments in unconsolidated entities with our ownership ranging from 10% to 50%. Please see Note 7 to our consolidated financial statements for additional information. We use financial derivative instruments to hedge interest rate exposure. Please see Note 11 to our consolidated financial statements for additional information. At December 31, 2014, we had eight outstanding letter of credit obligations. Please see Note 12 to our consolidated financial statements for additional information.

Contractual Obligations

The following table summarizes our payment requirements under contractual obligations as of December 31, 2014 (in thousands):

| Contractual Obligations | Payments
Due by Period — Total | 2015 | 2016-2017 | 2018-2019 | Thereafter |
| --- | --- | --- | --- | --- | --- |
| Unsecured revolving credit facility (1) | $ - | $ - | $ - | $ - | $ - |
| Senior unsecured notes and term credit facilities: (2) | | | | | |
| U.S. Dollar senior unsecured notes | 5,465,965 | - | 1,150,000 | 1,050,000 | 3,265,965 |
| Pounds Sterling senior unsecured notes (3) | 1,635,690 | - | - | - | 1,635,690 |
| U.S. Dollar term credit facility | 500,000 | - | - | 500,000 | - |
| Canadian Dollar term credit facility (3) | 215,499 | - | - | 215,499 | - |
| Secured debt: (2,3) | | | | | |
| Consolidated | 2,941,765 | 399,813 | 770,271 | 806,956 | 964,725 |
| Unconsolidated | 622,220 | 206,281 | 176,558 | 81,073 | 158,308 |
| Contractual interest obligations: (4) | | | | | |
| Unsecured revolving credit facility | - | - | - | - | - |
| Senior unsecured notes and term loans (3) | 3,560,409 | 338,290 | 638,105 | 533,104 | 2,050,909 |
| Consolidated secured debt (3) | 754,363 | 140,101 | 218,789 | 127,354 | 268,119 |
| Unconsolidated secured debt (3) | 98,668 | 27,869 | 29,373 | 16,385 | 25,041 |
| Capital lease obligations (5) | 111,726 | 13,157 | 9,464 | 9,012 | 80,093 |
| Operating lease obligations (5) | 916,404 | 15,078 | 30,370 | 30,457 | 840,499 |
| Purchase obligations (5) | 308,492 | 140,150 | 151,697 | 6,792 | 9,853 |
| Other long-term liabilities (6) | 367,128 | 361,475 | 2,950 | 2,703 | - |
| Total contractual obligations | $ 17,498,329 | $ 1,642,214 | $ 3,177,577 | $ 3,379,335 | $ 9,299,202 |
| (1) Relates to our $2,500,000,000 unsecured revolving credit
facility. See Note 9 to our consolidated financial statements for additional
information. | | | | | |
| (2) Amounts represent principal amounts due and do not reflect
unamortized premiums/discounts or other fair value adjustments as reflected
on the balance sheet. | | | | | |
| (3) Based on foreign currency exchange rates in effect as of
balance sheet date. | | | | | |
| (4) Based on variable interest rates in effect as of balance
sheet date. | | | | | |
| (5) See Note 12 to our consolidated financial statements for
additional information. | | | | | |
| (6) Primarily relates to an unfunded commitment for a secured
bridge facility with one of our operators, which is discussed in Note 12 to
our consolidated financial statements, and our Supplemental Executive
Retirement Plan, which is discussed in Note 19 to the consolidated financial
statements. | | | | | |

Capital Structure

Please refer to “Credit Strength” above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2014, we were in compliance with all of the covenants under our debt agreements. Please refer to the section entitled “Non-GAAP Financial Measures” for further discussion. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. A summary of certain covenants and our results as of and for the year ended December 31, 2014 is as follows:

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| Covenant | Per
Agreement — Primary
Unsecured Credit Facility | Senior
Unsecured Notes | Actual
At December 31, 2014 |
| --- | --- | --- | --- |
| Total Indebtedness to Book Capitalization Ratio maximum: | 60% | n/a | 45% |
| Secured Indebtedness to Total Assets Ratio maximum: | 30% | 40% | 12% |
| Total Indebtedness to Total Assets maximum: | n/a | 60% | 43% |
| Unsecured Debt to Unencumbered Assets maximum: | 60% | n/a | 38% |
| Adjusted Interest Coverage Ratio minimum: | n/a | 1.50x | 3.86x |
| Adjusted Fixed Charge Coverage minimum: | 1.50x | n/a | 3.06x |

We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

On May 4, 2012, we filed an open-ended automatic or “universal” shelf registration statement with the Securities and Exchange Commission covering an indeterminate amount of future offerings of debt securities, common stock, preferred stock, depositary shares, warrants and units. As of January 31, 2015, we had an effective registration statement on file in connection with our enhanced dividend reinvestment plan under which we may issue up to 10,000,000 shares of common stock. As of January 31, 2015, 3,016,824 shares of common stock remained available for issuance under this registration statement. We have entered into separate Equity Distribution Agreements with each of UBS Securities LLC, RBS Securities Inc., KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. relating to the offer and sale from time to time of up to $630,015,000 aggregate amount of our common stock (“Equity Shelf Program”). As of January 31, 2015, we had $457,112,000 of remaining capacity under the Equity Shelf Program. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our primary unsecured credit facility.

Results of Operations

Summary

Our primary sources of revenue include rent, resident fees and services, and interest income. Our primary expenses include interest expense, depreciation and amortization, property operating expenses, transaction costs and general and administrative expenses. These revenues and expenses are reflected in our Consolidated Statements of Comprehensive Income and are discussed in further detail below. The following is a summary of our results of operations (dollars in thousands, except per share amounts):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | Amount | % | 2014 | Amount | % | Amount | % |
| Net income attributable to common stockholders | $ 221,884 | $ 78,714 | $ (143,170) | -65% | $ 446,745 | $ 368,031 | 468% | $ 224,861 | 101% |
| Funds from operations | 697,557 | 924,884 | 227,327 | 33% | 1,178,330 | 253,446 | 27% | 480,773 | 69% |
| Adjusted EBITDA | 1,264,091 | 1,503,715 | 239,624 | 19% | 1,877,992 | 374,277 | 25% | 613,901 | 49% |
| Net operating income from continuing operations | 1,237,055 | 1,673,795 | 436,740 | 35% | 1,940,188 | 266,393 | 16% | 703,133 | 57% |
| Same store cash NOI | 882,885 | 898,909 | 16,024 | 2% | 931,255 | 32,346 | 4% | 48,370 | 5% |
| Per share data (fully diluted): | | | | | | | | | |
| Net income attributable to common stockholders | $ 0.98 | $ 0.28 | $ (0.70) | -71% | $ 1.45 | $ 1.17 | 418% | $ 0.47 | 48% |
| Funds from operations | 3.09 | 3.32 | 0.23 | 7% | 3.83 | 0.51 | 15% | 0.74 | 24% |
| Adjusted interest coverage ratio | 3.31x | 3.19x | -0.12x | -4% | 3.86x | 0.67x | 21% | 0.55x | 17% |
| Adjusted fixed charge coverage ratio | 2.58x | 2.52x | -0.06x | -2% | 3.06x | 0.54x | 21% | 0.48x | 19% |

The following table represents the changes in outstanding common stock for the period from January 1, 2012 to December 31, 2014 (in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| | Year
Ended — December
31, 2012 | December
31, 2013 | December
31, 2014 | Totals |
| --- | --- | --- | --- | --- |
| Beginning balance | 192,275 | 260,374 | 289,564 | 192,275 |
| Public offerings | 64,400 | 23,000 | 33,925 | 121,325 |
| Dividend reinvestment plan issuances | 2,136 | 3,430 | 4,123 | 9,689 |
| Senior note conversions | 1,040 | 988 | 259 | 2,287 |
| Preferred stock conversions | - | 117 | 233 | 350 |
| Issuances in acquisitions of noncontrolling interests | - | 1,109 | - | 1,109 |
| Option exercises | 341 | 214 | 498 | 1,053 |
| Other, net | 182 | 332 | 188 | 702 |
| Ending balance | 260,374 | 289,564 | 328,790 | 328,790 |
| Average number of shares outstanding: | | | | |
| Basic | 224,343 | 276,929 | 306,272 | |
| Diluted | 225,953 | 278,761 | 307,747 | |

During the past three years, inflation has not significantly affected our earnings because of the moderate inflation rate. Additionally, our earnings are primarily long-term investments with predictable rates of return. These investments are mainly financed with a combination of equity, senior unsecured notes, secured debt and borrowings under our primary unsecured credit facility. During inflationary periods, which generally are accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs. Presuming the current inflation rate remains moderate and long-term interest rates do not increase significantly, we believe that inflation will not impact the availability of equity and debt financing for us.

We evaluate our business and make resource allocations on our three business segments: seniors housing triple-net, seniors housing operating and medical facilities. The primary performance measures for our properties are NOI and SSCNOI, which are discussed below. Please see Note 17 to our consolidated financial statements for additional information.

Seniors Housing Triple-net

The following is a summary of our NOI for the seniors housing triple-net segment (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| SSCNOI (1) | $ 589,912 | $ 598,235 | $ 8,323 | 1% | $ 618,672 | $ 20,437 | 3% | $ 28,760 | 5% |
| Non-cash NOI attributable to same store properties (1) | 34,176 | 33,745 | (431) | -1% | 53,133 | 19,388 | 57% | 18,957 | 55% |
| NOI attributable to non same store properties (2) | 170,923 | 262,641 | 91,718 | 54% | 355,329 | 92,688 | 35% | 184,406 | 108% |
| NOI | $ 795,011 | $ 894,621 | $ 99,610 | 13% | $ 1,027,134 | $ 132,513 | 15% | $ 232,123 | 29% |
| (1) Change is due to increases in cash and non-cash NOI
(described below) related to 453 same store properties. | | | | | | | | | |
| (2) Change is primarily due to the acquisition of 195
properties, the conversion of 13 construction projects into
revenue-generating properties subsequent to January 1, 2012 and the
transition of 38 properties from our seniors housing operating segment on
September 1, 2013. | | | | | | | | | |

The following is a summary of our results of operations for the seniors housing triple-net segment (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| Revenues: | | | | | | | | | |
| Rental income | $ 762,968 | $ 866,138 | $ 103,170 | 14% | $ 992,638 | $ 126,500 | 15% | $ 229,670 | 30% |
| Interest income | 30,654 | 28,214 | (2,440) | -8% | 32,255 | 4,041 | 14% | 1,601 | 5% |
| Other income | 2,471 | 1,504 | (967) | -39% | 2,973 | 1,469 | 98% | 502 | 20% |
| | 796,093 | 895,856 | 99,763 | 13% | 1,027,866 | 132,010 | 15% | 231,773 | 29% |
| Property operating expenses | 1,082 | 1,235 | 153 | 14% | 732 | (503) | -41% | (350) | -32% |
| Net operating income from continuing operations (NOI) | 795,011 | 894,621 | 99,610 | 13% | 1,027,134 | 131,507 | 15% | 232,123 | 29% |
| Other expenses: | | | | | | | | | |
| Interest expense | 1,745 | 23,322 | 21,577 | 1237% | 38,460 | 15,138 | 65% | 36,715 | 2104% |
| Loss (gain) on derivatives, net | 96 | 4,877 | 4,781 | 4980% | (1,770) | (6,647) | -136% | (1,866) | -1944% |
| Depreciation and amortization | 223,921 | 249,913 | 25,992 | 12% | 273,296 | 23,383 | 9% | 49,375 | 22% |
| Transaction costs | 35,705 | 24,426 | (11,279) | -32% | 45,146 | 20,720 | 85% | 9,441 | 26% |
| Loss (gain) on extinguishment of debt, net | 2,405 | 40 | (2,365) | -98% | 98 | 58 | 145% | (2,307) | -96% |
| Provision for loan losses | 27,008 | 2,110 | (24,898) | -92% | - | (2,110) | -100% | (27,008) | -100% |
| Other expenses | - | - | - | n/a | 8,825 | 8,825 | n/a | 8,825 | n/a |
| | 290,880 | 304,688 | 13,808 | 5% | 364,055 | 59,367 | 19% | 73,175 | 25% |
| Income from continuing operations before income taxes and income
(loss) from unconsolidated entities | 504,131 | 589,933 | 85,802 | 17% | 663,079 | 73,146 | 12% | 158,948 | 32% |
| Income tax benefit (expense) | (2,852) | (1,817) | 1,035 | -36% | 6,141 | 7,958 | -438% | 8,993 | -315% |
| Income (loss) from unconsolidated entities | (33) | 5,035 | 5,068 | n/a | 5,423 | 388 | 8% | 5,456 | -16533% |
| Income from continuing operations | 501,246 | 593,151 | 91,905 | 18% | 674,643 | 81,492 | 14% | 173,397 | 35% |
| Discontinued operations: | | | | | | | | | |
| Gain (loss) on sales of properties, net | 112,309 | 56,625 | (55,684) | -50% | 6,411 | (50,214) | -89% | (105,898) | -94% |
| Impairment of assets | (20,612) | - | 20,612 | -100% | - | - | n/a | 20,612 | -100% |
| Income from discontinued operations, net | 38,356 | 1,117 | (37,239) | -97% | 724 | (393) | -35% | (37,632) | -98% |
| Discontinued operations, net | 130,053 | 57,742 | (72,311) | -56% | 7,135 | (50,607) | -88% | (122,918) | -95% |
| Gain (loss) on real estate dispositions, net | - | - | - | n/a | 146,205 | 146,205 | n/a | 146,205 | n/a |
| Net income | 631,299 | 650,893 | 19,594 | 3% | 827,983 | 177,090 | 27% | 196,684 | 31% |
| Less: Net income attributable to noncontrolling interests | 511 | 1,558 | 1,047 | 205% | 1,874 | 316 | 20% | 1,363 | 267% |
| Net income attributable to common stockholders | $ 630,788 | $ 649,335 | $ 18,547 | 3% | $ 826,109 | $ 176,774 | 27% | $ 195,321 | 31% |

The increase in rental income is primarily attributable to the acquisitions of new properties, the transition of 38 properties from our seniors housing operating segment and the conversion of newly constructed seniors housing triple-net properties from which we receive rent. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index and/or changes in the gross operating revenues of the tenant’s properties. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If gross operating revenues at our facilities and/or the Consumer Price Index do not increase, a portion of our revenues may not continue to increase. Sales of real property would offset revenue increases and, to the extent that they exceed new acquisitions, could result in decreased revenues. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2014, we had no lease renewals but we had 12 leases with rental rate increasers ranging from 0.14% to 0.33% in our seniors housing triple-net portfolio. The increase in interest income is attributable to investments in new loans and draws on existing loans in the current year (see Note 6 to our consolidated financial statements for additional information).

During the year ended December 31, 2014, we completed four seniors housing triple-net construction projects representing $71,569,000 or $185,896 per bed/unit plus expansion projects totaling $18,053,000. The following is a summary of seniors housing triple-net construction projects pending as of December 31, 2014 (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| Location — Upper Providence, PA | Units/Beds — 96 | $ 29,030 | $ 22,718 | Est.
Completion — 2Q15 |
| --- | --- | --- | --- | --- |
| Mahwah, NJ | 96 | 28,259 | 16,208 | 2Q15 |
| Haddonfield, NJ | 52 | 18,815 | 11,323 | 2Q15 |
| Derby, England | 74 | 11,501 | 6,885 | 2Q15 |
| Edmond, OK | 142 | 24,500 | 3,007 | 1Q16 |
| Carrollton, TX | 104 | 18,900 | 3,063 | 1Q16 |
| Bracknell, England | 64 | 15,671 | 6,281 | 2Q16 |
| Piscataway, NJ | 124 | 30,600 | 15,067 | 4Q15 |
| Frederick, MD | 130 | 19,000 | 11,030 | 4Q15 |
| Raleigh, NC | 225 | 93,000 | 17,827 | 4Q16 |
| Total | 1,107 | $ 289,276 | $ 113,409 | |

Total interest expense represents secured debt interest expense and interest expense on capital lease obligations offset by interest allocated to discontinued operations. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, extinguishments and principal amortizations. The following is a summary of our seniors housing triple-net secured debt principal activity (dollars in thousands):

| | Year
Ended — December
31, 2012 | | Year
Ended — December
31, 2013 | | Year
Ended — December
31, 2014 | |
| --- | --- | --- | --- | --- | --- | --- |
| | | Weighted
Avg. | | Weighted
Avg. | | Weighted
Avg. |
| | Amount | Interest
Rate | Amount | Interest
Rate | Amount | Interest
Rate |
| Beginning balance | $ 259,000 | 5.105% | $ 218,741 | 5.393% | $ 587,136 | 5.394% |
| Debt transitioned | - | 0.000% | 367,997 | 5.298% | - | 0.000% |
| Debt issued | 9,387 | 4.080% | 13,800 | 5.480% | - | 0.000% |
| Debt assumed | 83,002 | 5.304% | 9,578 | 5.582% | 120,352 | 5.404% |
| Debt extinguished | (128,818) | 4.743% | (16,482) | 3.304% | (22,970) | 6.235% |
| Foreign currency | - | 0.000% | - | 0.000% | (2,180) | 5.317% |
| Principal payments | (3,830) | 5.556% | (6,498) | 5.698% | (11,569) | 5.564% |
| Ending balance | $ 218,741 | 5.393% | $ 587,136 | 5.394% | $ 670,769 | 5.337% |
| Monthly averages | $ 216,314 | 5.254% | $ 339,129 | 5.394% | $ 596,941 | 5.381% |

The change in loss on debt extinguishment is attributable to the volume of debt payoffs each year. Derivative gains and losses are related to certain foreign currency forward exchange contracts related to properties acquired. Please refer to Note 11 to our consolidated financial statements for further discussion.

Depreciation and amortization increased primarily as a result of new property acquisitions and the conversions of newly constructed properties. To the extent that we acquire or dispose of additional properties in the future, our provision for depreciation and amortization will change accordingly.

The increase in other expenses is primarily related to the reversal of the indemnification asset recorded in connection with the Genesis acquisition. An income tax benefit was recorded in the same amount to reverse the unrecognized tax benefits related to the transaction. Please refer to Note 18 to our consolidated financial statements for further discussion.

Changes in gains on sales of properties are related to the volume of property sales and the sales prices. We recognized impairment losses on certain held-for-sale properties in prior years as the fair value less estimated costs to sell exceeded our carrying values. Please refer to Note 5 to our consolidated financial statements for further discussion. The following illustrates the reclassification impact as a result of classifying the properties sold prior to or held for sale at December 31, 2014 as discontinued operations for the periods presented (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Rental income | $ 71,044 | $ 8,987 | $ 881 |
| Expenses: | | | |
| Interest expense | 13,723 | 2,566 | 157 |
| Property operating expenses | 215 | - | - |
| Provision for depreciation | 18,750 | 5,304 | - |
| Income (loss) from discontinued operations, net | $ 38,356 | $ 1,117 | $ 724 |

During the year ended December 31, 2012, we wrote off one loan related to an entrance fee community. During the year ended December 31, 2013, we wrote off one loan related to an active adult community. During the year ended December 31, 2014, we did not record a provision for loan loss or have any loan write-offs. The provision for loan losses is related to our critical accounting estimate for the allowance for loan losses and is discussed in “Critical Accounting Policies” and Note 6 to our consolidated financial statements.

A portion of our seniors housing triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. Net income attributable to noncontrolling interests represents our partners’ share of net income relating to those partnerships where we are the controlling partner.

Seniors Housing Operating

The following is a summary of our NOI for the seniors housing operating segment (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| SSCNOI (1) | $ 140,968 | $ 146,624 | $ 5,656 | 4% | $ 156,072 | $ 9,448 | 6% | $ 15,104 | 11% |
| NOI attributable to non same store properties (2) | 91,056 | 381,539 | 290,483 | 319% | 475,191 | 93,652 | 25% | 384,135 | 422% |
| NOI | $ 232,024 | $ 528,163 | $ 296,139 | 128% | $ 631,263 | $ 103,100 | 20% | $ 399,239 | 172% |
| (1) Due to increases in cash revenues (described below) related
to 74 same store properties. | | | | | | | | | |
| (2) Primarily due to the acquisition of 221 properties
subsequent to January 1, 2012 and the transition of 38 properties to our
seniors housing triple-net segment on September 1, 2013. | | | | | | | | | |

The following is a summary of our results of operations for the seniors housing operating segment (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| | | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| Revenues: | | | | | | | | | |
| Resident fees and services | $ 697,494 | $ 1,616,290 | $ 918,796 | 132% | $ 1,892,237 | $ 275,947 | 17% | $ 1,194,743 | 171% |
| Interest income | 6,208 | 757 | (5,451) | -88% | 2,119 | 1,362 | 180% | (4,089) | -66% |
| Other income | - | 355 | 355 | n/a | 3,215 | 2,860 | 806% | 3,215 | n/a |
| | 703,702 | 1,617,402 | 913,700 | 130% | 1,897,571 | 280,169 | 17% | 1,193,869 | 170% |
| Property operating expenses | 471,678 | 1,089,239 | 617,561 | 131% | 1,266,308 | 177,069 | 16% | 794,630 | 168% |
| Net operating income from continuing operations (NOI) | 232,024 | 528,163 | 296,139 | 128% | 631,263 | 103,100 | 20% | 399,239 | 172% |
| Other expenses: | | | | | | | | | |
| Interest expense | 67,524 | 92,148 | 24,624 | 36% | 113,099 | 20,951 | 23% | 45,575 | 67% |
| Loss (gain) on derivatives, net | (1,921) | (407) | 1,514 | -79% | 275 | 682 | -168% | 2,196 | -114% |
| Depreciation and amortization | 165,798 | 478,007 | 312,209 | 188% | 418,199 | (59,808) | -13% | 252,401 | 152% |
| Transaction costs | 12,756 | 107,066 | 94,310 | 739% | 16,880 | (90,186) | -84% | 4,124 | 32% |
| Loss (gain) on extinguishment of debt, net | (2,697) | (3,372) | (675) | 25% | 383 | 3,755 | -111% | 3,080 | -114% |
| Other expenses | - | - | - | n/a | 1,437 | 1,437 | n/a | 1,437 | n/a |
| | 241,460 | 673,442 | 431,982 | 179% | 550,273 | (123,169) | -18% | 308,813 | 128% |
| (Loss) income from continuing operations before income from
unconsolidated entities | (9,436) | (145,279) | (135,843) | 1440% | 80,990 | 226,269 | -156% | 90,426 | -958% |
| Income tax expense | (1,086) | (5,337) | (4,251) | 391% | (3,047) | 2,290 | -43% | (1,961) | 181% |
| (Loss) income from unconsolidated entities | (6,364) | (22,695) | (16,331) | 257% | (38,204) | (15,509) | 68% | (31,840) | 500% |
| Net income (loss) | (16,886) | (173,311) | (156,425) | 926% | 39,739 | 213,050 | -123% | 56,625 | -335% |
| Less: Net income (loss) attributable to noncontrolling interests | (3,015) | (8,639) | (5,624) | 187% | (2,335) | 6,304 | -73% | 680 | -23% |
| Net income (loss) attributable to common stockholders | $ (13,871) | $ (164,672) | $ (150,801) | 1087% | $ 42,074 | $ 206,746 | -126% | $ 55,945 | -403% |

Fluctuations in revenues and property operating expenses are primarily a result of acquisitions subsequent to January 1, 2012, partially offset by the transition of 38 properties to seniors housing triple-net on September 1, 2013. Interest income for the years ended December 31, 2012 and 2013 relates to the Sunrise loan funded during the three months ended December 31, 2012 and acquired in January 2013 (please refer to Note 6 to our consolidated financial statements for additional information). The fluctuations in depreciation and amortization are due to the net impact of acquisitions and variations in amortization of short-lived intangible assets. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. Losses from unconsolidated entities are primarily attributable to depreciation and amortization of short-lived intangible assets related to our investments in unconsolidated joint ventures with Chartwell in 2012, Sunrise in 2013 and Senior Resource Group in 2014.

The following is a summary of our seniors housing operating construction projects, excluding expansions, pending as of December 31, 2014 (dollars in thousands):

| Location — Edgbaston, England | Units/Beds — 70 | $ 20,820 | $ 19,571 | Est.
Completion — 2Q15 |
| --- | --- | --- | --- | --- |
| Camberley, England | 102 | 21,613 | 11,142 | 4Q15 |
| Total | 172 | $ 42,433 | $ 30,713 | |

Interest expense represents secured debt interest expense as well as interest expense related to our Canadian-denominated unsecured term credit facility and Sterling-denominated senior unsecured notes. The increases in interest expense are attributed primarily to the £550,000,000 Sterling-dominated senior unsecured notes issued in November 2013 and the £500,000,000 Sterling-dominated senior unsecured notes issued in November 2014. Please refer to Note 10 to our consolidated financial statements for additional information. The following is a summary of our seniors housing operating property secured debt principal activity (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| | Year
Ended — December
31, 2012 | | Year
Ended — December
31, 2013 | | Year
Ended — December
31, 2014 | |
| --- | --- | --- | --- | --- | --- | --- |
| | | Weighted
Avg. | | Weighted
Avg. | | Weighted
Avg. |
| | Amount | Interest
Rate | Amount | Interest
Rate | Amount | Interest
Rate |
| Beginning balance | $ 1,318,599 | 4.665% | $ 1,369,526 | 4.874% | $ 1,714,714 | 4.622% |
| Debt issued | 148,031 | 4.220% | 75,408 | 4.891% | 109,503 | 3.374% |
| Debt assumed | 115,371 | 5.512% | 1,228,706 | 4.063% | 18,484 | 4.359% |
| Debt extinguished | (193,962) | 4.395% | (548,876) | 3.597% | (114,793) | 3.626% |
| Debt transitioned | - | 0.000% | (367,997) | 5.298% | - | 0.000% |
| Foreign currency | 187 | 5.624% | (10,361) | 4.013% | (39,379) | 3.727% |
| Principal payments | (18,700) | 4.850% | (31,692) | 4.643% | (33,998) | 4.296% |
| Ending balance | $ 1,369,526 | 4.874% | $ 1,714,714 | 4.622% | $ 1,654,531 | 4.422% |
| Monthly averages | $ 1,366,758 | 4.866% | $ 1,723,122 | 4.820% | $ 1,657,416 | 4.515% |

The fluctuations in gains/losses on debt extinguishments is primarily attributable the volume of extinguishments and terms of the related secured debt. Derivative gains relate primarily to foreign currency forward exchange contracts entered into in conjunction with international investments made during the respective years. Please refer to Note 11 to our consolidated financial statements for further discussion.

Transaction costs represent costs incurred with property 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 similar costs. The change in transaction costs from year to year is primarily a function of investment volume. The majority of our seniors housing operating properties are formed through partnership interests. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss related to those partnerships where we are the controlling partner.

Medical Facilities

The following is a summary of our NOI for the medical facilities segment (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| SSCNOI (1) | $ 152,005 | $ 154,050 | $ 2,045 | 1% | $ 156,511 | $ 2,461 | 2% | $ 4,506 | 3% |
| Non-cash NOI attributable to same store properties (1) | 5,720 | 5,248 | (472) | -8% | 3,290 | (1,958) | -37% | (2,430) | -42% |
| NOI attributable to non same store properties (2) | 51,383 | 91,417 | 40,034 | 78% | 121,313 | 29,896 | 33% | 69,930 | 136% |
| NOI | $ 209,108 | $ 250,715 | $ 41,607 | 20% | $ 281,114 | $ 30,399 | 12% | $ 72,006 | 34% |
| (1) Due to increases in cash and non-cash revenues (described
below) related to 138 same store properties. | | | | | | | | | |
| (2) Primarily due to the acquisition of 74 properties and
conversions of construction projects into 19 revenue-generating properties
subsequent to January 1, 2012. | | | | | | | | | |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a summary of our results of operations for the medical facilities segment (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| Revenues: | | | | | | | | | |
| Rental income | $ 300,246 | $ 361,451 | $ 61,205 | 20% | $ 413,129 | $ 51,678 | 14% | $ 112,883 | 38% |
| Interest income | 2,203 | 3,692 | 1,489 | 68% | 3,293 | (399) | -11% | 1,090 | 49% |
| Other income | 1,888 | 1,911 | 23 | 1% | 1,010 | (901) | -47% | (878) | -47% |
| | 304,337 | 367,054 | 62,717 | 21% | 417,432 | 50,378 | 14% | 113,095 | 37% |
| Property operating expenses | 95,229 | 116,339 | 21,110 | 22% | 136,318 | 19,979 | 17% | 41,089 | 43% |
| Net operating income from continuing operations (NOI) | 209,108 | 250,715 | 41,607 | 20% | 281,114 | 30,399 | 12% | 72,006 | 34% |
| Other expenses: | | | | | | | | | |
| Interest expense | 28,878 | 36,823 | 7,945 | 28% | 32,904 | (3,919) | -11% | 4,026 | 14% |
| Depreciation and amortization | 116,501 | 137,880 | 21,379 | 18% | 152,635 | 14,755 | 11% | 36,134 | 31% |
| Transaction costs | 13,148 | 1,909 | (11,239) | -85% | 7,512 | 5,603 | 294% | (5,636) | -43% |
| Loss (gain) on extinguishment of debt, net | (483) | - | 483 | -100% | 405 | 405 | n/a | 888 | n/a |
| | 158,044 | 176,612 | 18,568 | 12% | 193,456 | 16,844 | 10% | 35,412 | 22% |
| Income from continuing operations before income taxes and income
(loss) from unconsolidated entities | 51,064 | 74,103 | 23,039 | 45% | 87,658 | 13,555 | 18% | 36,594 | 72% |
| Income tax expense | (2,381) | (270) | 2,111 | -89% | (1,827) | (1,557) | 577% | 554 | -23% |
| Income (loss) from unconsolidated entities | 8,879 | 9,473 | 594 | 7% | 5,355 | (4,118) | -43% | (3,524) | -40% |
| Income from continuing operations | 57,562 | 83,306 | 25,744 | 45% | 91,186 | 7,880 | 9% | 33,624 | 58% |
| Discontinued operations: | | | | | | | | | |
| Gain (loss) on sales of properties, net | (11,759) | (7,487) | 4,272 | -36% | - | 7,487 | -100% | 11,759 | -100% |
| Impairment of assets | (8,676) | - | 8,676 | -100% | - | - | n/a | 8,676 | -100% |
| Income (loss) from discontinued operations, net | 4,440 | 1,458 | (2,982) | -67% | - | (1,458) | -100% | (4,440) | -100% |
| Discontinued operations, net | (15,995) | (6,029) | 9,966 | -62% | - | 6,029 | -100% | 15,995 | -100% |
| Gain (loss) on real estate dispositions, net | - | - | - | n/a | 906 | 906 | n/a | 906 | n/a |
| Net income (loss) | 41,567 | 77,277 | 35,710 | 86% | 92,092 | 14,815 | 19% | 50,525 | 122% |
| Less: Net income (loss) attributable to noncontrolling interests | 89 | 310 | 221 | 248% | 608 | 298 | 96% | 519 | 583% |
| Net income (loss) attributable to common stockholders | $ 41,478 | $ 76,967 | $ 35,489 | 86% | $ 91,484 | $ 14,517 | 19% | $ 50,006 | 121% |

The increase in rental income is primarily attributable to the acquisitions of new properties and the conversion of newly constructed medical facility properties from which we receive rent. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the Consumer Price Index does not increase, a portion of our revenues may not continue to increase. Sales of real property would offset revenue increases and, to the extent that they exceed new acquisitions, could result in decreased revenues. Our leases could renew above or below current rent rates, resulting in an increase or decrease in rental income. For the three months ended December 31, 2014, our consolidated medical office building portfolio signed 72,159 square feet of new leases and 251,399 square feet of renewals. The weighted-average term of these leases was six years, with a rate of $26.25 per square foot and tenant improvement and lease commission costs of $21.23 per square foot. Substantially all of these leases during the referenced quarter contain an annual fixed or contingent escalation rent structure ranging from the change in CPI to 4%.

During the year ended December 31, 2014, we completed seven medical office building construction projects representing $127,290,000 or $243 per square foot. The following is a summary of medical office building construction projects pending as of December 31, 2014 (dollars in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| Location — Houston, TX | Square
Feet — 51,057 | $ 17,600 | $ 12,801 | Est.
Completion — 1Q15 |
| --- | --- | --- | --- | --- |
| Bel Air, MD | 99,184 | 26,386 | 2,391 | 1Q16 |
| Total | 150,241 | $ 43,986 | $ 15,192 | |

Total interest expense represents secured debt interest expense offset by interest allocated to discontinued operations. The change in secured debt interest expense is primarily due to the net effect and timing of assumptions, extinguishments and principal amortizations. The following is a summary of our medical facility secured debt principal activity (dollars in thousands):

| | Year
Ended — December
31, 2012 | | Year
Ended — December
31, 2013 | | Year
Ended — December
31, 2014 | |
| --- | --- | --- | --- | --- | --- | --- |
| | | Weighted
Avg. | | Weighted
Avg. | | Weighted
Avg. |
| | Amount | Interest
Rate | Amount | Interest
Rate | Amount | Interest
Rate |
| Beginning balance | $ 520,066 | 5.981% | $ 713,720 | 5.950% | $ 700,427 | 5.999% |
| Debt assumed | 246,371 | 5.888% | 52,574 | 6.126% | 66,113 | 3.670% |
| Debt extinguished | (37,622) | 5.858% | (49,017) | 5.357% | (141,796) | 5.567% |
| Principal payments | (15,095) | 6.180% | (16,850) | 6.193% | (15,476) | 5.797% |
| Ending balance | $ 713,720 | 5.950% | $ 700,427 | 5.999% | $ 609,268 | 5.838% |
| Monthly averages | $ 669,753 | 5.952% | $ 708,107 | 5.956% | $ 626,797 | 5.928% |

The increases in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions of new medical facilities for which we incur certain property operating expenses offset by discontinued operations.

Income from unconsolidated entities represents our share of net income or losses related to our joint venture investment with Forest City Enterprises and certain unconsolidated property investments related to our strategic joint venture relationship with a national medical office building company. The decrease is primarily attributable to lower occupancy in the current year.

Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices . We recognized impairment losses on certain held for sale properties in prior years as the fair value less estimated costs to sell exceeded our carrying values. Please refer to Note 5 to our consolidated financial statements for further discussion. The following illustrates the reclassification impact as a result of classifying the properties sold prior to or held for sale at December 31, 2014 as discontinued operations for the periods presented (dollars in thousands):

| | Year
Ended December 31, — 2012 | 2013 |
| --- | --- | --- |
| Rental income | $ 25,334 | $ 9,390 |
| Expenses: | | |
| Interest expense | 8,013 | 1,681 |
| Property operating expenses | 4,267 | 3,396 |
| Provision for depreciation | 8,614 | 2,855 |
| Income (loss) from discontinued operations, net | $ 4,440 | $ 1,458 |

A portion of our medical facility properties were formed through partnerships. Net income attributable to noncontrolling interests represents our partners’ share of net income or loss relating to those partnerships where we are the controlling partner.

Non-Segment/Corporate

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a summary of our results of operations for the non-segment/corporate activities (dollars in thousands):

Other income primarily represents income from non-real estate activities such as interest earned on temporary investments of cash reserves. The following is a summary of our non-segment/corporate interest expense (dollars in thousands):

| | Year
Ended | | One
Year Change | | Year
Ended | One
Year Change | | Two
Year Change | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, | December
31, | | | December
31, | | | | |
| | 2012 | 2013 | $ | % | 2014 | $ | % | $ | % |
| Senior unsecured notes | $ 249,564 | $ 279,617 | $ 30,053 | 12% | $ 280,037 | $ 420 | 0% | $ 30,473 | 12% |
| Secured debt | 557 | 495 | (62) | -11% | 460 | (35) | -7% | (97) | -17% |
| Primary unsecured credit facility | 11,769 | 15,498 | 3,729 | 32% | 8,914 | (6,584) | -42% | (2,855) | -24% |
| Capitalized interest | (9,777) | (6,700) | 3,077 | -31% | (7,150) | (450) | 7% | 2,627 | -27% |
| Interest SWAP savings | (96) | (14) | 82 | -85% | (14) | (0) | 3% | 82 | -85% |
| Loan expense | 11,401 | 17,171 | 5,770 | 51% | 14,329 | (2,842) | -17% | 2,928 | 26% |
| Totals | $ 263,418 | $ 306,067 | $ 42,649 | 16% | $ 296,576 | $ (9,491) | -3% | $ 33,158 | 13% |

The change in interest expense on senior unsecured notes is due to the net effect of issuances and extinguishments, excluding our Sterling-denominated senior unsecured notes, both of which are in our seniors housing operating segment. Please refer to Note 10 to our consolidated financial statements for additional information. We capitalize certain interest costs associated with funds used for the construction of properties owned directly by us. The amount capitalized is based upon the balances outstanding during the construction period using the rate of interest that approximates our cost of financing. Our interest expense is reduced by the amount capitalized. The change in capitalized interest is due to both changes in construction fundings and in our weighted-average cost of financing. Please see Note 11 to our consolidated financial statements for a discussion of our interest rate swap agreements and their impact on interest expense. Loan expense represents the amortization of deferred loan costs incurred in connection with the issuance and amendments of debt. Loan expense changes are due to amortization of charges for costs incurred in connection with senior unsecured note issuances. The change in interest expense on our primary unsecured credit facility is due primarily to the net effect and timing of draws, paydowns and variable interest rate changes. Please refer to Note 9 of our consolidated financial statements for additional information regarding our primary unsecured credit facility.

General and administrative expenses as a percentage of consolidated revenues (including revenues from discontinued operations) Do not modify beyond this point! !

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Do not modify before this point! ! for the years ended December 31, 2014, 2013 and 2012 were 4.27%, 3.74% and 5.12%, respectively. The increase in general and administrative expenses is primarily related to costs associated with our initiatives to attract and retain appropriate personnel to achieve our business objectives and $19,688,000 of CEO transition costs. The changes in percent of revenue are primarily related to the increasing revenue base as a result of our acquisitions. The loss on extinguishment of debt is due to the refinancing of our primary unsecured credit facility and the redemption of convertible senior notes. Please see Notes 9 and 13 to our consolidated financial statements for additional information. The changes in preferred stock dividends and redemption charge are primarily attributable to the net effect of issuances, redemptions and conversions. Please see Note 13 to our consolidated financial statements for additional information.

Other

Non-GAAP Financial Measures

We believe that net income, as defined by U.S. GAAP, is the most appropriate earnings measurement. However, we consider FFO to be a useful supplemental measure of our operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (“NAREIT”) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairment of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.

Net operating income from continuing operations (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our seniors housing operating and medical facility properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and administrative expenses represent costs unrelated to property operations or transaction costs. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. Same store cash NOI (“SSCNOI”) is used to evaluate the cash-based operating performance of our properties under a consistent population which eliminates changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the full three year reporting period. Any properties acquired, developed, transitioned or classified in discontinued operations during that period are excluded from the same store amounts. We believe NOI and SSCNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSCNOI to make decisions about resource allocations and to assess the property level performance of our properties.

EBITDA stands for earnings before interest, taxes, depreciation and amortization. We believe that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of our operations. We primarily utilize EBITDA to measure our interest coverage ratio, which represents EBITDA divided by total interest, and our fixed charge coverage ratio, which represents EBITDA divided by fixed charges. Fixed charges include total interest, secured debt principal amortization and preferred dividends.

A covenant in our primary unsecured credit facility contains a financial ratio based on a definition of EBITDA that is specific to that agreement. Failure to satisfy these covenants could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of these debt agreements and the financial covenants, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above and adjusted for stock-based compensation expense, provision for loan losses and gain/loss on extinguishment of debt. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge coverage ratio of at least 1.50 times.

Other than Adjusted EBITDA, our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Management uses these financial measures to facilitate internal and external comparisons to our historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. Adjusted EBITDA is used solely to determine our compliance with a financial covenant in our primary unsecured credit Do not modify beyond this point! !

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Do not modify before this point! ! facility and is not being presented for use by investors for any other purpose. None of our supplemental measures represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies.

The table below reflects the reconciliation of FFO to net income attributable to common stockholders, the most directly comparable U.S. GAAP measure, for the periods presented. The provisions for depreciation and amortization include provisions for depreciation and amortization from discontinued operations. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization. Amounts are in thousands except for per share data.

| FFO Reconciliation: | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Net income attributable to common stockholders | $ 221,884 | $ 78,714 | $ 446,745 |
| Depreciation and amortization | 533,585 | 873,960 | 844,130 |
| Impairment of assets | 29,287 | - | - |
| Loss (gain) on sales of properties | (100,549) | (49,138) | (153,522) |
| Noncontrolling interests | (21,058) | (36,304) | (37,852) |
| Unconsolidated entities | 34,408 | 57,652 | 74,580 |
| Funds from operations | $ 697,557 | $ 924,884 | $ 1,174,081 |
| Average common shares outstanding: | | | |
| Basic | 224,343 | 276,929 | 306,272 |
| Diluted | 225,953 | 278,761 | 307,747 |
| Per share data: | | | |
| Net income attributable to common stockholders | | | |
| Basic | $ 0.99 | $ 0.28 | $ 1.46 |
| Diluted | 0.98 | 0.28 | 1.45 |
| Funds from operations | | | |
| Basic | $ 3.11 | $ 3.34 | $ 3.83 |
| Diluted | 3.09 | 3.32 | 3.82 |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The table below reflects the reconciliation of Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for the periods presented. Interest expense and the provisions for depreciation and amortization include discontinued operations. Dollars are in thousands.

| Adjusted EBITDA Reconciliation: | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Net income | $ 294,840 | $ 138,280 | $ 512,300 |
| Interest expense | 383,300 | 462,606 | 481,196 |
| Income tax expense (benefit) | 7,612 | 7,491 | (1,267) |
| Depreciation and amortization | 533,585 | 873,960 | 844,130 |
| Stock-based compensation expense | 18,521 | 20,177 | 32,075 |
| Provision for loan losses | 27,008 | 2,110 | - |
| Loss (gain) on extinguishment of debt | (775) | (909) | 9,558 |
| Adjusted EBITDA | $ 1,264,091 | $ 1,503,715 | $ 1,877,992 |
| Adjusted Interest Coverage Ratio: | | | |
| Interest expense | $ 383,300 | $ 462,606 | $ 481,196 |
| Capitalized interest | 9,777 | 6,700 | 7,150 |
| Non-cash interest expense | (11,395) | (4,044) | (2,427) |
| Total interest | 381,682 | 465,262 | 485,919 |
| Adjusted EBITDA | $ 1,264,091 | $ 1,503,715 | $ 1,877,992 |
| Adjusted interest coverage ratio | 3.31x | 3.23x | 3.86x |
| Adjusted Fixed Charge Coverage Ratio: | | | |
| Interest expense | $ 383,300 | $ 462,606 | $ 481,196 |
| Capitalized interest | 9,777 | 6,700 | 7,150 |
| Non-cash interest expense | (11,395) | (4,044) | (2,427) |
| Secured debt principal payments | 38,744 | 56,205 | 62,280 |
| Preferred dividends | 69,129 | 66,336 | 65,408 |
| Total fixed charges | 489,555 | 587,803 | 613,607 |
| Adjusted EBITDA | $ 1,264,091 | $ 1,503,715 | $ 1,877,992 |
| Adjusted fixed charge coverage ratio | 2.58x | 2.56x | 3.06x |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following tables reflect the reconciliation of NOI and SSCNOI to net income attributable to common stockholders, the most directly comparable U.S. GAAP measure, for the periods presented. Amounts are in thousands.

| NOI Reconciliation: | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Total revenues: | | | |
| Seniors housing triple-net | $ 796,093 | $ 895,856 | $ 1,027,866 |
| Seniors housing operating | 703,702 | 1,617,402 | 1,897,571 |
| Medical facilities | 304,337 | 367,054 | 417,432 |
| Non-segment/corporate | 912 | 296 | 677 |
| Total revenues | 1,805,044 | 2,880,608 | 3,343,546 |
| Property operating expenses: | | | |
| Seniors housing triple-net | 1,082 | 1,235 | 732 |
| Seniors housing operating | 471,678 | 1,089,239 | 1,266,308 |
| Medical facilities | 95,229 | 116,339 | 136,318 |
| Total property operating expenses | 567,989 | 1,206,813 | 1,403,358 |
| Net operating income: | | | |
| Seniors housing triple-net | 795,011 | 894,621 | 1,027,134 |
| Seniors housing operating | 232,024 | 528,163 | 631,263 |
| Medical facilities | 209,108 | 250,715 | 281,114 |
| Non-segment/corporate | 912 | 296 | 677 |
| Net operating income from continuing operations | $ 1,237,055 | $ 1,673,795 | $ 1,940,188 |
| Reconciling items: | | | |
| Interest expense | (361,565) | (458,360) | (481,039) |
| Gain (loss) on derivatives, net | 1,825 | (4,470) | 1,495 |
| Depreciation and amortization | (506,220) | (865,800) | (844,130) |
| General and administrative | (97,341) | (108,318) | (142,943) |
| Transaction costs | (61,609) | (133,401) | (69,538) |
| Gain (loss) on extinguishment of debt, net | 775 | 909 | (9,558) |
| Other expenses | - | - | (10,262) |
| Provision for loan losses | (27,008) | (2,110) | - |
| Income tax benefit (expense) | (7,612) | (7,491) | 1,267 |
| Income (loss) from unconsolidated entities | 2,482 | (8,187) | (27,426) |
| Income (loss) from discontinued operations, net | 114,058 | 51,713 | 7,135 |
| Gain (loss) on real estate dispositions, net | - | - | 147,111 |
| Preferred dividends | (69,129) | (66,336) | (65,408) |
| Preferred stock redemption charge | (6,242) | - | - |
| Loss (income) attributable to noncontrolling interests | 2,415 | 6,770 | (147) |
| | (1,015,171) | (1,595,081) | (1,493,443) |
| Net income (loss) attributable to common stockholders | $ 221,884 | $ 78,714 | $ 446,745 |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

| Same Store Cash NOI Reconciliation: | Year
Ended December 31, — 2012 | 2013 | 2014 |
| --- | --- | --- | --- |
| Net operating income from continuing operations: | | | |
| Seniors housing triple-net | $ 795,011 | $ 894,621 | $ 1,027,134 |
| Seniors housing operating | 232,024 | 528,163 | 631,263 |
| Medical facilities | 209,108 | 250,715 | 281,114 |
| Total | 1,236,143 | 1,673,499 | 1,939,511 |
| Adjustments: | | | |
| Seniors housing triple-net: | | | |
| Non-cash NOI on same store properties | (34,176) | (33,747) | (53,136) |
| NOI attributable to non same store properties | (170,923) | (262,639) | (355,326) |
| Subtotal | (205,099) | (296,386) | (408,462) |
| Seniors housing operating: | | | |
| NOI attributable to non same store properties | (91,056) | (381,539) | (475,191) |
| Subtotal | (91,056) | (381,539) | (475,191) |
| Medical facilities: | | | |
| Non-cash NOI on same store properties | (5,720) | (5,248) | (3,290) |
| NOI attributable to non same store properties | (51,383) | (91,417) | (121,313) |
| Subtotal | (57,103) | (96,665) | (124,603) |
| Total | (353,258) | (774,590) | (1,008,256) |
| Same store cash net operating income: | | | |
| Seniors housing triple-net | 589,912 | 598,235 | 618,672 |
| Seniors housing operating | 140,968 | 146,624 | 156,072 |
| Medical facilities | 152,005 | 154,050 | 156,511 |
| Total | $ 882,885 | $ 898,909 | $ 931,255 |
| Same Store Cash NOI Property
Reconciliation: | | | |
| Total properties | 1,260 | | |
| Acquisitions | (490) | | |
| Developments | (32) | | |
| Disposals/Held-for-sale | (21) | | |
| Segment transitions | (40) | | |
| Other (1) | (12) | | |
| Same store properties | 665 | | |
| (1) Includes nine land parcels and three loans. | | | |

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions. Management considers accounting estimates or assumptions critical if:

· the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

· the impact of the estimates and assumptions on financial condition or operating performance is material.

Management has discussed the development and selection of its critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to them. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 1 to our consolidated financial statements for further information on significant accounting policies that impact us. There were no material changes to these policies in 2014.

The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:

Nature of Critical Accounting Estimate
Principles of Consolidation The consolidated
financial statements include our accounts, the accounts of our wholly-owned
subsidiaries and the accounts of joint venture entities in which we own a
majority voting interest with the ability to control operations and where no
substantive participating rights or substantive kick out rights have been
granted to the noncontrolling interests. In addition, we consolidate those
entities deemed to be variable interest entities (VIEs) in which we are
determined to be the primary beneficiary. All material intercompany
transactions and balances have been eliminated in consolidation.	We
make judgments about which entities are VIEs based on an assessment of
whether (i) the equity investors as a group, if any, do not have a
controlling financial interest, or (ii) the equity investment at risk is
insufficient to finance that entity’s activities without additional
subordinated financial support. We make
judgments with respect to our level of influence or control of an entity and
whether we are (or are not) the primary beneficiary of a VIE. Consideration
of various factors includes, but is not limited to, our ability to direct the
activities that most significantly impact the entity's economic performance,
our form of ownership interest, our representation on the entity's governing
body, the size and seniority of our investment, our ability and the rights of
other investors to participate in policy making decisions, replace the
manager and/or liquidate the entity, if applicable. Our ability to correctly
assess our influence or control over an entity at inception of our
involvement or on a continuous basis when determining the primary beneficiary
of a VIE affects the presentation of these entities in our consolidated
financial statements. If we perform a primary beneficiary analysis at a date
other than at inception of the variable interest entity, our assumptions may
be different and may result in the identification of a different primary
beneficiary.
Income Taxes As part of the
process of preparing our consolidated financial statements, significant
management judgment is required to evaluate our compliance with REIT
requirements.	Our determinations
are based on interpretation of tax laws, and our conclusions may have an
impact on the income tax expense recognized. Adjustments to income tax
expense may be required as a result of: (i) audits conducted by federal
and state tax authorities, (ii) our ability to qualify as a REIT,
(iii) the potential for built-in-gain recognized related to prior-tax-free
acquisitions of C corporations and (iv) changes in tax laws. Adjustments
required in any given period are included in income.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Nature of Critical Accounting Estimate	Assumptions/Approach Used
Business Combinations Real property
developed by us is recorded at cost, including the capitalization of
construction period interest. The cost of real property acquired is allocated
to net tangible and identifiable intangible assets based on their respective
fair values. Tangible assets primarily consist of land, buildings and
improvements. The remaining purchase price is allocated among identifiable
intangible assets primarily consisting of the above or below market component
of in-place leases and the value of in-place leases. The total amount of
other intangible assets acquired is further allocated to in-place lease
values and customer relationship values based on management’s evaluation of
the specific characteristics of each tenant’s lease and the Company’s overall
relationship with that respective tenant.	We make estimates
as part of our allocation of the purchase price of acquisitions to the
various components of the acquisition based upon the relative fair value of
each component. The most significant components of our allocations are
typically the allocation of fair value to the buildings as-if-vacant, land
and in-place leases. In the case of the fair value of buildings and the
allocation of value to land and other intangibles, our estimates of the
values of these components will affect the amount of depreciation and
amortization we record over the estimated useful life of the property
acquired or the remaining lease term. In the case of the value of in-place
leases, we make our best estimates based on our evaluation of the specific
characteristics of each tenant's lease. Factors considered include estimates
of carrying costs during hypothetical expected lease-up periods, market
conditions and costs to execute similar leases. Our assumptions affect the
amount of future revenue that we will recognize over the remaining lease term
for the acquired in-place leases. We compute
depreciation and amortization on our properties using the straight-line
method based on their estimated useful lives which range from 15 to
40 years for buildings and five to 15 years for improvements. Amortization
periods for intangibles are based on the remaining life of the lease.
Allowance for Loan Losses We maintain an
allowance for loan losses in accordance with U.S. GAAP. The allowance for
loan losses is maintained at a level believed adequate to absorb potential
losses in our loans receivable. The determination of the allowance is based
on a quarterly evaluation of all outstanding loans. If this evaluation
indicates that there is a greater risk of loan charge-offs, additional
allowances or placement on non-accrual status may be required. A loan is
impaired when, based on current information and events, it is probable that
we will be unable to collect all amounts due as scheduled according to the
contractual terms of the original loan agreement. Consistent with this
definition, all loans on non-accrual are deemed impaired. To the extent
circumstances improve and the risk of collectability is diminished, we will
return these loans to full accrual status.	The determination
of the allowance is based on a quarterly evaluation of all outstanding loans,
including general economic conditions and estimated collectability of loan
payments and principal. We evaluate the collectability of our loans
receivable based on a combination of factors, including, but not limited to,
delinquency status, historical loan charge-offs, financial strength of the
borrower and guarantors and value of the underlying property.
Fair Value of Derivative Instruments The valuation of derivative instruments is accounted for in
accordance with U.S. GAAP, which requires companies to record derivatives at
fair market value on the balance sheet as assets or liabilities.	The valuation of derivative instruments requires us to make
estimates and judgments that affect the fair value of the instruments. Fair
values of our forward exchange contracts are estimated using pricing models
that consider forward currency spot rates, forward trade rates and discount
rates. Fair values of our interest rate swaps are estimated by utilizing
pricing models that consider forward yield curves, discount rates and
counterparty credit risk. Such amounts and their recognition are subject to
significant estimates which may change in the future.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Nature of Critical Accounting Estimate	Assumptions/Approach Used
Revenue Recognition Revenue is recorded
in accordance with U.S. GAAP, which requires that revenue be recognized after
four basic criteria are met. These four criteria include persuasive evidence
of an arrangement, the rendering of service, fixed and determinable income
and reasonably assured collectability. If the collectability of revenue is
determined incorrectly, the amount and timing of our reported revenue could
be significantly affected. Interest income on loans is recognized as earned
based upon the principal amount outstanding subject to an evaluation of
collectability risk. Substantially all of our operating leases contain fixed
and/or contingent escalating rent structures. Leases with fixed annual rental
escalators are generally recognized on a straight-line basis over the initial
lease period, subject to a collectability assessment. Rental income related
to leases with contingent rental escalators is generally recorded based on
the contractual cash rental payments due for the period. We recognize
resident fees and services, other than move-in fees, monthly as services are
provided. Lease agreements with residents generally have a term of one year
and are cancelable by the resident with 30 days’ notice.	We evaluate the
collectability of our revenues and related receivables on an on-going basis.
We evaluate collectability based on assumptions and other considerations
including, but not limited to, the certainty of payment, payment history, the
financial strength of the investment’s underlying operations as measured by
cash flows and payment coverages, the value of the underlying collateral and
guaranties and current economic conditions. If our evaluation
indicates that collectability is not reasonably assured, we may place an
investment on non-accrual or reserve against all or a portion of current
income as an offset to revenue.
Impairment of Long-Lived Assets We review our
long-lived assets for potential impairment in accordance with U.S. GAAP. An
impairment charge must be recognized when the carrying value of a long-lived
asset is not recoverable. The carrying value is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from the
use and eventual disposition of the asset. If it is determined that a
permanent impairment of a long-lived asset has occurred, the carrying value
of the asset is reduced to its fair value and an impairment charge is
recognized for the difference between the carrying value and the fair value.	The net book value of
long-lived assets is reviewed quarterly on a property by property basis to
determine if there are indicators of impairment. These indicators may
include anticipated operating losses at the property level, the tenant’s
inability to make rent payments, a decision to dispose of an asset before the
end of its estimated useful life and changes in the market that may
permanently reduce the value of the property. If indicators of impairment
exist, then the undiscounted future cash flows from the most likely use of
the property are compared to the current net book value. This analysis
requires us to determine if indicators of impairment exist and to estimate
the most likely stream of cash flows to be generated from the property during
the period the property is expected to be held.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. We seek to mitigate the underlying foreign currency exposures with gains and losses on derivative contracts hedging these exposures. We seek to mitigate the effects of fluctuations in interest rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent possible. We may or may not elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to match our variable rate investments with comparable borrowings, but are also based on the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. This section is a discussion of the risks associated with potential fluctuations in interest rates and foreign currency exchange rates. For additional information, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” and Notes 11 and 16 to our consolidated financial statements.

We historically borrow on our primary unsecured credit facility to acquire, construct or make loans relating to health care and seniors housing properties. Then, as market conditions dictate, we will issue equity or long-term fixed rate debt to repay the borrowings under our primary unsecured credit facility. We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of refinancing may not be as favorable as the terms of current indebtedness. The majority of our borrowings were completed under indentures or contractual agreements that limit the amount of indebtedness we may incur. Accordingly, in the event that we are unable to raise additional equity or borrow money because of these limitations, our ability to acquire additional properties may be limited.

A change in interest rates will not affect the interest expense associated with our fixed rate debt. Interest rate changes, however, will affect the fair value of our fixed rate debt. Changes in the interest rate environment upon maturity of this fixed rate debt could have an effect on our future cash flows and earnings, depending on whether the debt is replaced with other fixed rate debt, variable rate debt or equity or repaid by the sale of assets. To illustrate the impact of changes in the interest rate markets, we performed a sensitivity analysis on our fixed rate debt instruments whereby we modeled the change in net present values arising from a hypothetical 1% increase in interest rates to determine the instruments’ change in fair value. The following table summarizes the analysis performed as of the dates indicated (in thousands):

| | December
31, 2014 — Principal
balance | Fair
value change | December
31, 2013 — Principal
balance | Fair
value change |
| --- | --- | --- | --- | --- |
| Senior unsecured notes | $ 7,817,154 | $ (547,358) | $ 7,421,707 | $ (408,790) |
| Secured debt | 2,673,480 | (93,580) | 2,787,236 | (102,211) |
| Totals | $ 10,490,634 | $ (640,938) | $ 10,208,943 | $ (511,001) |

Our variable rate debt, including our unsecured line of credit arrangements, is reflected at fair value. At December 31, 2014, we had $983,783,000 outstanding related to our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would result in increased annual interest expense of $9,838,000. At December 31, 2013, we had $1,089,362,000 outstanding related to our variable rate debt. Assuming no changes in outstanding balances, a 1% increase in interest rates would have resulted in increased annual interest expense of $10,894,000.

We are subject to currency fluctuations that may, from time to time, affect our financial condition and results of operations. Increases or decreases in the value of the Canadian Dollar or Pounds Sterling relative to the U.S. Dollar impacts the amount of net income we earn from our investments in Canada and the United Kingdom. Based solely on our results for the twelve months ended December 31, 2014, if these exchange rates were to increase or decrease by 100 basis points, our net income from these investments would decrease or increase, as applicable, by less than $500,000 for the twelve-month period. We seek to mitigate these underlying foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts hedging these exposures. If we increase our international presence through investments in, or acquisitions or development of, seniors housing and health care properties outside the United States, we may also decide to transact additional business or borrow funds in currencies other than the U.S. Dollar, Canadian Dollars or Pounds Sterling. To illustrate the impact of changes in foreign currency markets, we performed a sensitivity analysis on our derivative portfolio whereby we modeled the change in net present values arising from a hypothetical 1% increase in foreign currency exchange rates to determine the instruments’ change in fair value. The following table summarizes the results of the analysis performed, excluding cross currency hedge activity (dollars in thousands):

| | December
31, 2014 — Carrying
value | Fair
value change | December
31, 2013 — Carrying
value | Fair
value change |
| --- | --- | --- | --- | --- |
| Foreign currency exchange contracts | $ 54,247 | $ 4,242 | $ 4,066 | $ (2,964) |
| Debt designated as hedges | 1,851,189 | 13,000 | 1,146,596 | 8,002 |
| Totals | $ 1,905,436 | $ 17,242 | $ 1,150,662 | $ 5,038 |

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Health Care REIT, Inc.

We have audited the accompanying consolidated balance sheets of Health Care REIT, Inc. as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and 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 also 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Health Care REIT, Inc. at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for reporting discontinued operations effective January 1, 2014.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Health Care REIT, Inc.’s 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 (2013 framework) and our report dated February 20, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Toledo , Ohio

February 20, 2015

| | December
31, | December
31, |
| --- | --- | --- |
| | 2014 | 2013 |
| Assets | (In
thousands) | |
| Real estate investments: | | |
| Real property owned: | | |
| Land and land improvements | $ 2,046,541 | $ 1,878,877 |
| Buildings and improvements | 21,799,313 | 20,625,515 |
| Acquired lease intangibles | 1,135,936 | 1,070,754 |
| Real property held for sale, net of accumulated depreciation | 323,818 | 18,502 |
| Construction in progress | 186,327 | 141,085 |
| Gross real property owned | 25,491,935 | 23,734,733 |
| Less accumulated depreciation and amortization | (3,020,908) | (2,386,658) |
| Net real property owned | 22,471,027 | 21,348,075 |
| Real estate loans receivable | 380,169 | 332,146 |
| Net real estate investments | 22,851,196 | 21,680,221 |
| Other assets: | | |
| Investments in unconsolidated entities | 744,151 | 479,629 |
| Goodwill | 68,321 | 68,321 |
| Deferred loan expenses | 69,282 | 70,875 |
| Cash and cash equivalents | 473,726 | 158,780 |
| Restricted cash | 79,697 | 72,821 |
| Receivables and other assets | 727,923 | 553,310 |
| Total other assets | 2,163,100 | 1,403,736 |
| Total assets | $ 25,014,296 | $ 23,083,957 |
| Liabilities and equity | | |
| Liabilities: | | |
| Borrowings under primary unsecured credit facility | $ - | $ 130,000 |
| Senior unsecured notes | 7,766,251 | 7,379,308 |
| Secured debt | 2,977,713 | 3,058,248 |
| Capital lease obligations | 84,049 | 84,458 |
| Accrued expenses and other liabilities | 626,825 | 640,573 |
| Total liabilities | 11,454,838 | 11,292,587 |
| Redeemable noncontrolling interests | 86,409 | 35,039 |
| Equity: | | |
| Preferred stock | 1,006,250 | 1,017,361 |
| Common stock | 328,835 | 289,461 |
| Capital in excess of par value | 14,740,712 | 12,418,520 |
| Treasury stock | (35,241) | (21,263) |
| Cumulative net income | 2,842,022 | 2,329,869 |
| Cumulative dividends | (5,635,923) | (4,600,854) |
| Accumulated other comprehensive income (loss) | (77,009) | (24,531) |
| Other equity | 5,507 | 6,020 |
| Total Health Care REIT, Inc. stockholders’ equity | 13,175,153 | 11,414,583 |
| Noncontrolling interests | 297,896 | 341,748 |
| Total equity | 13,473,049 | 11,756,331 |
| Total liabilities and equity | $ 25,014,296 | $ 23,083,957 |

See accompanying notes

CONSOLIDATED BALANCE SHEETS

HEALTH CARE REIT, INC. AND SUBSIDIARIES

| | Year
Ended December 31, — 2014 | 2013 | 2012 |
| --- | --- | --- | --- |
| Revenues: | | | |
| Rental income | $ 1,405,767 | $ 1,227,589 | $ 1,063,214 |
| Resident fees and services | 1,892,237 | 1,616,290 | 697,494 |
| Interest income | 37,667 | 32,663 | 39,065 |
| Other income | 7,875 | 4,066 | 5,271 |
| Total revenues | 3,343,546 | 2,880,608 | 1,805,044 |
| Expenses: | | | |
| Interest expense | 481,039 | 458,360 | 361,565 |
| Property operating expenses | 1,403,358 | 1,206,813 | 567,989 |
| Depreciation and amortization | 844,130 | 865,800 | 506,220 |
| General and administrative | 142,943 | 108,318 | 97,341 |
| Transaction costs | 69,538 | 133,401 | 61,609 |
| Loss (gain) on derivatives, net | (1,495) | 4,470 | (1,825) |
| Loss (gain) on extinguishment of debt, net | 9,558 | (909) | (775) |
| Provision for loan losses | - | 2,110 | 27,008 |
| Other expenses | 10,262 | - | - |
| Total expenses | 2,959,333 | 2,778,363 | 1,619,132 |
| Income from continuing operations before income taxes | | | |
| and income from unconsolidated entities | 384,213 | 102,245 | 185,912 |
| Income tax (expense) benefit | 1,267 | (7,491) | (7,612) |
| Income (loss) from unconsolidated entities | (27,426) | (8,187) | 2,482 |
| Income from continuing operations | 358,054 | 86,567 | 180,782 |
| Discontinued operations: | | | |
| Gain (loss) on sales of properties, net | 6,411 | 49,138 | 100,549 |
| Impairment of assets | - | - | (29,287) |
| Income (loss) from discontinued operations, net | 724 | 2,575 | 42,796 |
| Discontinued operations, net | 7,135 | 51,713 | 114,058 |
| Gain (loss) on real estate dispositions, net | 147,111 | - | - |
| Net income | 512,300 | 138,280 | 294,840 |
| Less: Preferred stock dividends | 65,408 | 66,336 | 69,129 |
| Less: Preferred stock redemption charge | - | - | 6,242 |
| Less: Net income (loss) attributable to noncontrolling
interests (1) | 147 | (6,770) | (2,415) |
| Net income attributable to common stockholders | $ 446,745 | $ 78,714 | $ 221,884 |
| Average number of common shares outstanding: | | | |
| Basic | 306,272 | 276,929 | 224,343 |
| Diluted | 307,747 | 278,761 | 225,953 |
| Earnings per share: | | | |
| Basic: | | | |
| Income from continuing operations | | | |
| attributable to common stockholders | $ 1.44 | $ 0.10 | $ 0.48 |
| Discontinued operations, net | 0.02 | 0.19 | 0.51 |
| Net income attributable to common stockholders | $ 1.46 | $ 0.28 | $ 0.99 |
| Diluted: | | | |
| Income from continuing operations | | | |
| attributable to common stockholders | $ 1.43 | $ 0.10 | $ 0.48 |
| Discontinued operations, net | 0.02 | 0.19 | 0.50 |
| Net income attributable to common stockholders | $ 1.45 | $ 0.28 | $ 0.98 |

Amounts may not sum due to rounding

(1) Includes amounts attributable to redeemable noncontrolling interests

See accompanying notes

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

HEALTH CARE REIT, INC. AND SUBSIDIARIES

(In thousands, except per share data)

| | Year
Ended December 31, — 2014 | 2013 | 2012 |
| --- | --- | --- | --- |
| Net income | $ 512,300 | $ 138,280 | $ 294,840 |
| Other comprehensive income (loss): | | | |
| Unrecognized gain/(loss) on equity investments | 389 | (173) | 403 |
| Unrecognized gain/(loss) on cash flow hedges | 4,409 | 1,898 | 1,604 |
| Unrecognized actuarial gain/(loss) | (137) | 1,522 | (226) |
| Foreign currency translation gain/(loss) | (71,964) | (23,247) | (881) |
| Total other comprehensive income (loss) | (67,303) | (20,000) | 900 |
| Total comprehensive income | 444,997 | 118,280 | 295,740 |
| Total comprehensive income attributable to noncontrolling
interests (1) | (14,678) | (13,267) | (2,415) |
| Total comprehensive income attributable to stockholders | $ 430,319 | $ 105,013 | $ 293,325 |
| (1) Includes amounts attributable to redeemable noncontrolling
interests. | | | |

See accompanying notes

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)

HEALTH CARE REIT, INC. AND SUBSIDIARIES

(In thousands)

| (in
thousands) | | | | | | | Accumulated | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | Capital
in | | | | Other | | | |
| | Preferred | Common | Excess
of | Treasury | Cumulative | Cumulative | Comprehensive | Other | Noncontrolling | |
| | Stock | Stock | Par
Value | Stock | Net
Income | Dividends | Income | Equity | Interests | Total |
| Balances at December 31, 2011 | $ 1,010,417 | $ 192,299 | $ 7,019,714 | $ (13,535) | $ 1,893,806 | $ (2,972,129) | $ (11,928) | $ 6,120 | $ 153,883 | $ 7,278,647 |
| Comprehensive income: | | | | | | | | | | |
| Net income | | | | | 297,255 | | | | (1,480) | 295,775 |
| Other comprehensive income: | | | | | | | 900 | | | 900 |
| Total comprehensive income | | | | | | | | | | 296,675 |
| Net change in noncontrolling interests | | | (7,136) | | | | | | 73,315 | 66,179 |
| Distributions to noncontrolling interests | | | | | | | | | | |
| Amounts related to issuance of common stock | | | | | | | | | | |
| from dividend reinvestment and stock | | | | | | | | | | |
| incentive plans, net of forfeitures | | 2,658 | 149,955 | (4,340) | | | | (2,534) | | 145,739 |
| Net proceeds from sale of common stock | | 64,400 | 3,382,532 | | | | | | | 3,446,932 |
| Equity component of convertible debt | | 1,039 | 2,236 | | | | | | | 3,275 |
| Proceeds from issuance of preferred shares | 287,500 | | (9,813) | | | | | | | 277,687 |
| Redemption of preferred stock | (275,000) | | 6,202 | | (6,242) | | | | | (275,040) |
| Option compensation expense | | | | | | | | 2,875 | | 2,875 |
| Cash dividends paid: | | | | | | | | | | |
| Common stock cash dividends | | | | | | (653,321) | | | | (653,321) |
| Preferred stock cash dividends | | | | | | (69,129) | | | | (69,129) |
| Balances at December 31, 2012 | 1,022,917 | 260,396 | 10,543,690 | (17,875) | 2,184,819 | (3,694,579) | (11,028) | 6,461 | 225,718 | 10,520,519 |
| Comprehensive income: | | | | | | | | | | |
| Net income | | | | | 145,050 | | | | (5,487) | 139,563 |
| Other comprehensive income: | | | | | | | (13,503) | | (6,497) | (20,000) |
| Total comprehensive income | | | | | | | | | | 119,563 |
| Net change in noncontrolling interests | | 1,109 | 23,815 | | | | | | 128,014 | 152,938 |
| Distributions to noncontrolling interests | | | | | | | | | | |
| Amounts related to issuance of common stock | | | | | | | | | | |
| from dividend reinvestment and stock | | | | | | | | | | |
| incentive plans, net of forfeitures | | 3,852 | 239,837 | (3,388) | | | | (1,555) | | 238,746 |
| Net proceeds from sale of common stock | | 23,000 | 1,607,281 | | | | | | | 1,630,281 |
| Equity component of convertible debt | | 988 | (1,543) | | | | | | | (555) |
| Conversion of preferred stock | (5,556) | 116 | 5,440 | | | | | | | - |
| Option compensation expense | | | | | | | | 1,114 | | 1,114 |
| Cash dividends paid: | | | | | | | | | | |
| Common stock cash dividends | | | | | | (839,939) | | | | (839,939) |
| Preferred stock cash dividends | | | | | | (66,336) | | | | (66,336) |
| Balances at December 31, 2013 | 1,017,361 | 289,461 | 12,418,520 | (21,263) | 2,329,869 | (4,600,854) | (24,531) | 6,020 | 341,748 | 11,756,331 |
| Comprehensive income: | | | | | | | | | | |
| Net income | | | | | 512,153 | | | | (342) | 511,811 |
| Other comprehensive income: | | | | | | | (52,478) | | (14,825) | (67,303) |
| Total comprehensive income | | | | | | | | | | 444,508 |
| Net change in noncontrolling interests | | | (17,653) | | | | | | (28,685) | (46,338) |
| Amounts related to issuance of common stock | | | | | | | | | | |
| from dividend reinvestment and stock | | | | | | | | | | |
| incentive plans, net of forfeitures | | 4,958 | 297,975 | (13,978) | | | | (1,425) | | 287,530 |
| Net proceeds from sale of common stock | | 33,925 | 2,030,057 | | | | | | | 2,063,982 |
| Equity component of convertible debt | | 258 | 935 | | | | | | | 1,193 |
| Conversion of preferred stock | (11,111) | 233 | 10,878 | | | | | | | - |
| Option compensation expense | | | | | | | | 912 | | 912 |
| Cash dividends paid: | | | | | | | | | | |
| Common stock cash dividends | | | | | | (969,661) | | | | (969,661) |
| Preferred stock cash dividends | | | | | | (65,408) | | | | (65,408) |
| Balances at December 31, 2014 | $ 1,006,250 | $ 328,835 | $ 14,740,712 | $ (35,241) | $ 2,842,022 | $ (5,635,923) | $ (77,009) | $ 5,507 | $ 297,896 | $ 13,473,049 |

See accompanying notes

CONSOLIDATED STATEMENTS OF EQUITY

HEALTH CARE REIT, INC. AND SUBSIDIARIES

| (In thousands) | Year
Ended December 31, — 2014 | 2013 | 2012 |
| --- | --- | --- | --- |
| Operating activities | | | |
| Net income | $ 512,300 | $ 138,280 | $ 294,840 |
| Adjustments to reconcile net income to | | | |
| net cash provided from (used in) operating activities: | | | |
| Depreciation and amortization | 844,130 | 873,960 | 533,585 |
| Other amortization expenses | 6,971 | 8,097 | 15,185 |
| Provision for loan losses | - | 2,110 | 27,008 |
| Impairment of assets | - | - | 29,287 |
| Stock-based compensation expense | 32,075 | 20,177 | 18,521 |
| Loss (gain) on derivatives, net | (1,495) | 4,470 | (1,825) |
| Loss (gain) on extinguishment of debt, net | 9,558 | (909) | (775) |
| Loss (income) from unconsolidated entities | 27,426 | 8,187 | (2,482) |
| Rental income in excess of cash received | (74,552) | (46,068) | (32,362) |
| Amortization related to above (below) market leases, net | 739 | 460 | 165 |
| Loss (gain) on sales of properties, net | (153,522) | (49,138) | (100,549) |
| Distributions by unconsolidated entities | 9,060 | 8,885 | 17,607 |
| Increase (decrease) in accrued expenses and other liabilities | (48,381) | 67,557 | 38,213 |
| Decrease (increase) in receivables and other assets | (25,639) | (47,571) | (18,285) |
| Net cash provided from (used in) operating activities | 1,138,670 | 988,497 | 818,133 |
| Investing activities | | | |
| Cash disbursed for acquisitions | (2,210,600) | (3,597,955) | (2,923,251) |
| Cash disbursed for capital improvements to existing properties | (132,780) | (135,832) | (135,450) |
| Cash disbursed for construction in progress | (197,881) | (247,560) | (286,410) |
| Capitalized interest | (7,150) | (6,700) | (9,777) |
| Investment in real estate loans receivable | (202,207) | (117,059) | (665,094) |
| Other investments, net of payments | (100,033) | (15,634) | 25,425 |
| Principal collected on real estate loans receivable | 105,496 | 102,886 | 35,020 |
| Contributions to unconsolidated entities | (353,496) | (99,769) | (227,735) |
| Distributions by unconsolidated entities | 57,183 | 30,853 | 13,136 |
| Proceeds from (payments on) derivatives | 10,269 | (6,803) | 6,652 |
| Decrease (increase) in restricted cash | (6,072) | 79,957 | (35,766) |
| Proceeds from sales of real property | 911,065 | 482,023 | 610,271 |
| Net cash provided from (used in) investing activities | (2,126,206) | (3,531,593) | (3,592,979) |
| Financing activities | | | |
| Net increase (decrease) under unsecured lines of credit
arrangements | (130,000) | 130,000 | (610,000) |
| Proceeds from issuance of senior unsecured notes | 773,992 | 1,756,192 | 2,025,708 |
| Payments to extinguish senior unsecured notes | (365,188) | (517,625) | (370,524) |
| Net proceeds from the issuance of secured debt | 109,503 | 89,208 | 157,418 |
| Payments on secured debt | (341,839) | (674,103) | (406,210) |
| Net proceeds from the issuance of common stock | 2,343,868 | 1,854,637 | 3,581,292 |
| Net proceeds from the issuance of preferred stock | - | - | 277,687 |
| Redemption of preferred stock | - | - | (275,000) |
| Decrease (increase) in deferred loan expenses | (16,782) | (13,503) | (7,152) |
| Contributions by noncontrolling interests (1) | 9,962 | 5,072 | 24,115 |
| Distributions to noncontrolling interests (1) | (43,691) | (35,592) | (29,353) |
| Acquisitions of non-controlling interests | (1,175) | (23,247) | - |
| Cash distributions to stockholders | (1,035,069) | (906,275) | (722,450) |
| Other financing activities | (409) | 2,906 | (403) |
| Net cash provided from (used in) financing activities | 1,303,172 | 1,667,670 | 3,645,128 |
| Effect of foreign currency translation on cash and cash
equivalents | (690) | 442 | - |
| Increase (decrease) in cash and cash equivalents | 314,946 | (874,984) | 870,282 |
| Cash and cash equivalents at beginning of period | 158,780 | 1,033,764 | 163,482 |
| Cash and cash equivalents at end of period | $ 473,726 | $ 158,780 | $ 1,033,764 |
| Supplemental cash flow information: | | | |
| Interest paid | $ 504,165 | $ 447,108 | $ 369,511 |
| Income taxes paid | 18,548 | 12,110 | 3,071 |

(1) Includes amounts attributable to redeemable noncontrolling interests.

See accompanying notes.

CONSOLIDATED STATEMENTS OF CASH FLOWS

HEALTH CARE REIT, INC. AND SUBSIDIARIES

1. Business

Health Care REIT, Inc., an S&P 500 company with headquarters in Toledo, Ohio, is an equity real estate investment trust (“REIT”) that invests in seniors housing and health care real estate. Our full service platform offers property management and development services to our customers. As of December 31, 2014, our diversified portfolio consisted of 1,328 properties in 46 states, the United Kingdom, and Canada. Founded in 1970, we were the first real estate investment trust to invest exclusively in health care facilities.

2. Accounting Policies and Related Matters

Principles of Consolidation

At inception of joint venture transactions, we identify entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and determine which business enterprise is the primary beneficiary of its operations. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. We consolidate investments in VIEs when we are determined to be the primary beneficiary. Accounting Standards Codification Topic 810, Consolidations (“ASC 810”), requires enterprises to perform a qualitative approach to determining whether or not a VIE will need to be consolidated on a continuous basis. This evaluation is based on an enterprise’s ability to direct and influence the activities of a VIE that most significantly impact that entity’s economic performance.

For investments in joint ventures, we evaluate the type of rights held by the limited partner(s), which may preclude consolidation in circumstances in which the sole general partner would otherwise consolidate the limited partnership. The assessment of limited partners’ rights and their impact on the presumption of control over a limited partnership by the sole general partner should be made when an investor becomes the sole general partner and should be reassessed if (i) there is a change to the terms or in the exercisability of the rights of the limited partners, (ii) the sole general partner increases or decreases its ownership in the limited partnership, or (iii) there is an increase or decrease in the number of outstanding limited partnership interests. We similarly evaluate the rights of managing members of limited liability companies.

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recorded in accordance with U.S. GAAP, which requires that revenue be recognized after four basic criteria are met. These four criteria include persuasive evidence of an arrangement, the rendering of service, fixed and determinable income and reasonably assured collectability. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risk. Substantially all of our operating leases contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Leases in our medical office building portfolio typically include some form of operating expense reimbursement by the tenant. Certain payments made to operators are treated as lease incentives and amortized as a reduction of revenue over the lease term. We recognize resident fees and services, other than move-in fees, monthly as services are provided. Lease agreements with residents generally have a term of one year and are cancelable by the resident with 30 days’ notice.

Cash and Cash Equivalents

Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months or less.

Restricted Cash

Restricted cash primarily consists of amounts held by lenders to provide future payments for real estate taxes, insurance, tenant and capital improvements and amounts held in escrow relating to acquisitions we are entitled to receive over a period of time as outlined in the escrow agreement.

Deferred Loan Expenses

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred loan expenses are costs incurred by us in connection with the issuance, assumption and amendments of debt arrangements. We amortize these costs over the term of the debt using the straight-line method, which approximates the effective interest method.

Investments in Unconsolidated Entities

Investments in less than majority owned entities are reported under the equity method of accounting when our interests represent either (1) general partnership interests subject to substantive participating or kick-out rights that have been granted to the limited partners, or (2) limited partnership interests with no control over major operating and financial policies of the entities. Under the equity method of accounting, our share of the investee’s earnings or losses is included in our consolidated results of operations. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying value of investments in unconsolidated entities is based on the amount paid to purchase the entity interest or the estimated fair value of the assets prior to the sale of interests in the entity. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded.

Redeemable Noncontrolling Interests

Certain noncontrolling interests are redeemable at fair value. Accordingly, we record the carrying amount of the noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss and dividends or (ii) the redemption value. In accordance with ASC 810, the redeemable noncontrolling interests were classified outside of permanent equity, as a mezzanine item, in the balance sheet.

During 2014, we entered into a DownREIT partnership which gives a real estate seller the ability to exchange its property on a tax deferred basis for equity membership interests (“OP units”). The OP units may be redeemed any time following the first anniversary of the date of issuance at the election of the holders for one share of our common stock per unit or, at our option, cash.

Real Property Owned

Real property developed by us is recorded at cost, including the capitalization of construction period interest. Expenditures for repairs and maintenance are expensed as incurred. Property acquisitions are accounted for as business combinations where we measure the assets acquired, liabilities (including assumed debt and contingencies) and any noncontrolling interests at their fair values on the acquisition date. The cost of real property acquired, which represents substantially all of the purchase price, is allocated to net tangible and identifiable intangible assets based on their respective fair values. These properties are depreciated on a straight-line basis over their estimated useful lives which range from 15 to 40 years for buildings and 5 to 15 years for improvements. Tangible assets primarily consist of land, buildings and improvements, including those related to capital leases. We consider costs incurred in conjunction with re-leasing properties, including tenant improvements and lease commissions, to represent the acquisition of productive assets and, accordingly, such costs are reflected as investment activities in our statement of cash flows.

The remaining purchase price is allocated among identifiable intangible assets primarily consisting of the above or below market component of in-place leases and the value associated with the presence of in-place tenants or residents. The value allocable to the above or below market component of the acquired in-place lease is determined based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using fair market rates over the remaining term of the lease. The amounts allocated to above market leases are included in acquired lease intangibles and below market leases are included in other liabilities in the balance sheet and are amortized to rental income over the remaining terms of the respective leases.

The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship values for in-place tenants based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors . The total amount of other intangible assets acquired is further allocated to in-place lease values for in-place residents with such value representing (i) value associated with lost revenue related to tenant reimbursable operating costs that would be incurred in an assumed re-leasing period, and (ii) value associated with lost rental revenue from existing leases during an assumed re-leasing period. This intangible asset will be amortized over the remaining life of the lease.

The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be changed. We consider external Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! factors relating to each asset and the existence of a master lease which may link the cash flows of an individual asset to a larger portfolio of assets leased to the same tenant. If these factors and the projected undiscounted cash flows of the asset over the remaining depreciation period indicate that the asset will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and in particular, the seniors housing and health care industries. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell properties for a price or on terms acceptable to us.

Capitalization of Construction Period Interest

We capitalize interest costs associated with funds used for the construction of properties owned directly by us. The amount capitalized is based upon the balance outstanding during the construction period using the rate of interest which approximates our cost of financing. We capitalize interest costs related to construction of real property owned by us. Our interest expense reflected in the consolidated statements of comprehensive income has been reduced by the amounts capitalized.

Gain on Sale of Assets

We recognize sales of assets only upon the closing of the transaction with the purchaser. Payments received from purchasers prior to closing are recorded as deposits and classified as other assets on our consolidated balance sheets. Gains on assets sold are recognized using the full accrual method upon closing when (i) the collectability of the sales price is reasonably assured, (ii) we are not obligated to perform significant activities after the sale to earn the profit, (iii) we have received adequate initial investment from the purchaser and (iv) other profit recognition criteria have been satisfied. Gains may be deferred in whole or in part until the sales satisfy the requirements of gain recognition on sales of real estate.

Real Estate Loans Receivable

Real estate loans receivable consist of mortgage loans and other real estate loans. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of collectability risks. The loans are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guaranties and/or personal guaranties.

Allowance for Losses on Loans Receivable

The allowance for losses on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the allowance is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors and value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the original loan agreement. Consistent with this definition, all loans on non-accrual are deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to full accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.

Goodwill

We account for goodwill in accordance with U.S. GAAP. Goodwill is tested annually for impairment and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount, including goodwill, exceeds the reporting unit’s fair value and the implied fair value of goodwill is less than the carrying amount of that goodwill. We have not had any goodwill impairments.

Fair Value of Derivative Instruments

Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. The fair value of our forward exchange contracts are estimated by pricing models that consider foreign currency spot rates, forward trade rates and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future. See Note 11 for additional information.

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”), commencing with our first taxable year, and made no provision for federal income tax purposes prior to our acquisition of our “taxable REIT subsidiaries.” As a result of these as well as subsequent acquisitions, we now record income tax expense or benefit Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! with respect to certain of our entities that are taxed as taxable REIT subsidiaries under provisions similar to those applicable to regular corporations and not under the REIT provisions.

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 a change in 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 a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur. See Note 18 for additional information.

Foreign Currency

Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. 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. We record transaction gains and losses in our consolidated statements of comprehensive income.

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding for the period adjusted for non-vested shares of restricted stock. The computation of diluted earnings per share is similar to basic earnings per share, except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

New Accounting Standards

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”), which amends U.S. GAAP to require reporting of discontinued operations only if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. This pronouncement will be effective for the first annual reporting period beginning after December 15, 2014 with early adoption permitted. We adopted ASU 2014-08 on January 1, 2014 on a prospective basis. The adoption of this guidance did not have a material impact on our consolidated financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. Accordingly, the standard is effective for us on January 1, 2017. We are currently evaluating the impact that the standard will have on our consolidated financial statements and have not yet determined the method by which we will adopt the standard.

Reclassifications

Certain amounts in prior years have been reclassified to conform to current year presentation.

*HEALTH CARE REIT, INC.*

NOTES TO 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 respective 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 property 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. During the year ended December 31, 2014, we finalized our purchase price allocation of certain previously reported acquisitions and there were no material changes from those previously disclosed.

Seniors Housing Triple-net Activity

The following provides our purchase price allocations and other seniors housing triple-net real property investment activity for the periods presented (in thousands):

| | | Year
Ended December 31, — 2014 (1) | 2013 | 2012 |
| --- | --- | --- | --- | --- |
| Land and land improvements | | $ 141,387 | $ 54,596 | $ 87,372 |
| Buildings and improvements | | 1,365,638 | 360,594 | 1,000,278 |
| Acquired lease intangibles | | 19,196 | - | - |
| Restricted cash | | - | 189 | - |
| Receivables and other assets | | 4,895 | 1,020 | 119 |
| | Total assets acquired (2) | 1,531,116 | 416,399 | 1,087,769 |
| Secured debt | | (130,638) | (9,810) | (89,881) |
| Senior unsecured notes | | (48,567) | - | - |
| Accrued expenses and other liabilities | | (9,067) | (540) | (3,542) |
| | Total liabilities assumed | (188,272) | (10,350) | (93,423) |
| Capital in excess of par | | - | - | 921 |
| Noncontrolling interests | | - | - | (17,215) |
| Non-cash acquisition related activity (3) | | (3,453) | (12,207) | (616) |
| | Cash disbursed for acquisitions | 1,339,391 | 393,842 | 977,436 |
| Construction in progress additions | | 135,349 | 145,624 | 180,009 |
| Less: Capitalized interest | | (4,582) | (4,828) | (6,042) |
| Accruals | Foreign currency translation | 421 | - | - |
| | Non-cash related activity | (14,459) | - | - |
| Cash disbursed for construction in progress | | 116,729 | 140,796 | 173,967 |
| Capital improvements to existing properties | | 18,901 | 35,912 | 67,026 |
| | Total cash invested in real property, net of cash acquired | $ 1,475,021 | $ 570,550 | $ 1,218,429 |
| | (1) Includes acquisitions with an aggregate purchase price of
$1,081,607,000 for which the allocation of the purchase price consideration
is preliminary and subject to change. | | | |
| | (2) Excludes $1,382,000, $0, and $2,031,000 of cash acquired
during the year ended December 31, 2014, 2013 and 2012, respectively. | | | |
| | (3) For the year ended December 31, 2013, relates to an asset
swap transaction. Please refer to Note 5 for additional information. | | | |

Seniors Housing Operating Activity

Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses from the operation of these qualified health care properties in our consolidated statements of comprehensive income. Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. See Note 2 for information regarding our foreign currency policies.

The following is a summary of our seniors housing operating real property investment activity for the periods presented (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| | Year
Ended December 31, — 2014 (1) | 2013 | 2012 |
| --- | --- | --- | --- |
| Land and land improvements | $ 57,534 | $ 445,152 | $ 146,332 |
| Buildings and improvements | 297,314 | 4,275,046 | 1,341,560 |
| Acquired lease intangibles | 12,983 | 396,444 | 118,077 |
| Construction in progress | 27,957 | - | - |
| Restricted cash | 804 | 44,427 | 1,296 |
| Receivables and other assets | 9,327 | 79,564 | 10,125 |
| Total assets acquired (2) | 405,919 | 5,240,633 | 1,617,390 |
| Secured debt | (19,834) | (1,275,245) | (124,190) |
| Accrued expenses and other liabilities | (17,802) | (96,709) | (17,347) |
| Total liabilities assumed | (37,636) | (1,371,954) | (141,537) |
| Noncontrolling interests | (482) | (232,575) | (56,884) |
| Non-cash acquisition related activity (3) | - | (555,563) | - |
| Cash disbursed for acquisitions | 367,801 | 3,080,541 | 1,418,969 |
| Construction in progress additions | 12,291 | 3,894 | - |
| Less: Capitalized interest | (714) | (57) | - |
| Less: Foreign currency translation | (2,012) | - | - |
| Cash disbursed for construction in progress | 9,565 | 3,837 | - |
| Capital improvements to existing properties | 86,803 | 72,258 | 21,751 |
| Total cash invested in real property, net of cash acquired | $ 464,169 | $ 3,156,636 | $ 1,440,720 |
| (1) Includes an aggregate purchase price of $368,313,000
relating to acquisitions for which the allocation of the purchase price
consideration is preliminary and subject to change. | | | |
| (2) Excludes $9,060,000, $92,148,000 and $20,691,000 of cash
acquired during the years ended December 31, 2014, 2013 and 2012,
respectively. | | | |
| (3) Represents Sunrise loan and noncontrolling interest
acquisitions during the first quarter of 2013. | | | |

Medical Facilities Activity

Accrued contingent consideration related to certain medical facility acquisitions was $27,374,000, $26,187,000 and $34,692,000 as of December 31, 2014, 2013 and 2012, respectively. Of the amount recognized, $12,500,000 is required to be settled in the Company’s common stock upon the achievement of certain performance thresholds. The following is a summary of our medical facilities real property investment activity for the periods presented (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| | Year
Ended December 31, — 2014 (1) | 2013 | 2012 |
| --- | --- | --- | --- |
| Land and land improvements | $ 63,129 | $ 14,515 | $ 68,489 |
| Buildings and improvements | 567,847 | 156,087 | 632,208 |
| Acquired lease intangibles | 46,661 | 9,432 | 115,233 |
| Restricted cash | - | 505 | 975 |
| Receivables and other assets | - | 344 | 4,469 |
| Total assets acquired | 677,637 | 180,883 | 821,374 |
| Secured debt | (66,113) | (55,884) | (267,527) |
| Accrued expenses and other liabilities | (22,293) | (1,041) | (25,928) |
| Total liabilities assumed | (88,406) | (56,925) | (293,455) |
| Noncontrolling interests | (39,987) | (386) | (193) |
| Non-cash acquisition related activity (2) | (45,836) | - | (880) |
| Cash disbursed for acquisitions | 503,408 | 123,572 | 526,846 |
| Construction in progress additions | 99,878 | 123,494 | 134,505 |
| Less: Capitalized interest | (1,854) | (1,815) | (3,735) |
| Accruals (3) | (26,437) | (18,752) | (18,327) |
| Cash disbursed for construction in progress | 71,587 | 102,927 | 112,443 |
| Capital improvements to existing properties | 27,076 | 27,662 | 46,673 |
| Total cash invested in real property, net of cash acquired | $ 602,071 | $ 254,161 | $ 685,962 |
| (1) Includes acquisitions with an aggregate purchase price of
$489,042,000 for which the allocation of the purchase price consideration is
preliminary and subject to change. | | | |
| (2) For the year ended December 31, 2014, relates to an
acquisition of assets previously financed as real estate loans. Please refer
to Note 6 for additional information. | | | |
| (3) Represents non-cash consideration accruals for amounts to be
paid in future periods relating to properties that converted in the periods
noted above. | | | |

Construction Activity

The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented :

| | Year
Ended — December
31, 2014 | December
31, 2013 | December
31, 2012 |
| --- | --- | --- | --- |
| Development projects: | | | |
| Seniors housing triple-net | $ 71,569 | $ 133,181 | $ 146,913 |
| Medical facilities | 127,290 | 127,363 | 189,135 |
| Total development projects | 198,859 | 260,544 | 336,048 |
| Expansion projects | 24,804 | 26,395 | 4,983 |
| Total construction in progress conversions | $ 223,663 | $ 286,939 | $ 341,031 |

At December 31, 2014, future minimum lease payments receivable under operating leases (excluding properties in our seniors housing operating partnerships and excluding any operating expense reimbursements) are as follows (in thousands):

2015	$
2016	1,259,168
2017	1,250,683
2018	1,243,452
2019	1,209,371
Thereafter	9,576,144
Totals	$ 15,822,302

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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):

| | December
31, 2014 | December
31, 2013 |
| --- | --- | --- |
| Assets: | | |
| In place lease intangibles | $ 988,290 | $ 937,357 |
| Above market tenant leases | 65,684 | 55,939 |
| Below market ground leases | 62,426 | 59,165 |
| Lease commissions | 19,536 | 18,293 |
| Gross historical cost | 1,135,936 | 1,070,754 |
| Accumulated amortization | (776,501) | (571,008) |
| Net book value | $ 359,435 | $ 499,746 |
| Weighted-average amortization period in years | 17.7 | 16.7 |
| Liabilities: | | |
| Below market tenant leases | $ 91,168 | $ 76,381 |
| Above market ground leases | 7,859 | 9,490 |
| Gross historical cost | 99,027 | 85,871 |
| Accumulated amortization | (40,891) | (34,434) |
| Net book value | $ 58,136 | $ 51,437 |
| Weighted-average amortization period in years | 14.4 | 14.3 |

The following is a summary of real estate intangible amortization for the periods presented (in thousands):

| | Year
Ended December 31, — 2014 | 2013 | 2012 |
| --- | --- | --- | --- |
| Rental income related to above/below market tenant leases, net | $ 509 | $ 748 | $ 1,120 |
| Property operating expenses related to above/below market ground
leases, net | (1,248) | (1,208) | (1,285) |
| Depreciation and amortization related to in place lease
intangibles and lease commissions | (214,966) | (246,938) | (103,044) |

The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):

2015	$ 58,224	$ 3,278
2016	56,656	9,513
2017	54,241	10,795
2018	53,715	7,758
2019	23,038	6,474
Thereafter	113,561	20,318
Totals	$ 359,435	$ 58,136

5. Dispositions, Assets Held for Sale and Discontinued Operations

We periodically sell properties for various reasons, including favorable market conditions or the exercise of tenant purchase options. Impairment of assets as reflected in our consolidated statements of comprehensive income relate to properties designated as held for sale and represent the charges necessary to adjust the carrying values to estimated fair values less costs to sell based on current sales price expectations. The following is a summary of our real property disposition activity for the periods presented (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| | Year
Ended — December
31, 2014 | December
31, 2013 | December
31, 2012 |
| --- | --- | --- | --- |
| Real property dispositions: | | | |
| Seniors housing triple-net | $ 747,720 | $ 189,572 | $ 372,378 |
| Medical facilities | 45,695 | 259,367 | 149,344 |
| Total dispositions | 793,415 | 448,939 | 521,722 |
| Gain (loss) on sales of real property, net | 153,522 | 49,138 | 100,549 |
| Seller financing on sales of real property | - | (3,850) | (12,000) |
| Non-cash disposition activity | (35,872) | (12,204) | - |
| Proceeds from real property sales | $ 911,065 | $ 482,023 | $ 610,271 |

Discontinued Operations

As discussed in Note 2, we adopted ASU 2014-08 effective January 1, 2014. During the year-ended December 31, 2014, we sold seniors housing triple-net properties previously held for sale with a balance of $18,502,000 for a gain of $6,411,000. We have reclassified the income and expenses attributable to all properties sold prior to or held for sale at January 1, 2014 to discontinued operations. The following illustrates the reclassification impact as reported in our Consolidated Statements of Comprehensive Income as a result of classifying these properties as discontinued operations for the periods presented (in thousands):

	2014	2013	2012
Revenues:
Rental income	$ 881	$ 18,377	$ 96,378
Expenses:
Interest expense	157	4,246	21,735
Property operating expenses	-	3,396	4,482
Provision for depreciation	-	8,160	27,365
Income (loss) from discontinued operations, net	$ 724	$ 2,575	$ 42,796

Dispositions and Assets Held for Sale

Pursuant to our adoption of ASU 2014-08, operating results attributable to properties sold subsequent to or classified as held for sale after January 1, 2014 and which do not meet the definition of discontinued operations are no longer reclassified on our Consolidated Statements of Comprehensive Income. The following represents the activity related to these properties for the periods presented (in thousands):

| | Year
Ended | | |
| --- | --- | --- | --- |
| | December
31, | | |
| | 2014 | 2013 | 2012 |
| Revenues: | | | |
| Rental income | $ 90,541 | $ 108,133 | $ 104,478 |
| Expenses: | | | |
| Interest expense | 20,339 | 22,119 | 23,298 |
| Property operating expenses | 1,755 | 3,024 | 2,716 |
| Provision for depreciation | 26,715 | 32,128 | 31,238 |
| Total expenses | 48,809 | 57,271 | 57,252 |
| Income (loss) from real estate dispositions, net | $ 41,732 | $ 50,862 | $ 47,226 |

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Real Estate Loans Receivable

The following is a summary of our real estate loans receivable (in thousands):

	2014	2013
Mortgage loans	$ 188,651	$ 146,987
Other real estate loans	191,518	185,159
Totals	$ 380,169	$ 332,146

The following is a summary of our real estate loan activity for the periods presented (in thousands):

| | Year
Ended | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | December
31, 2014 | | | December
31, 2013 | | | December
31, 2012 | | | |
| | Seniors | | | Seniors | | | Seniors | Seniors | | |
| | Housing | Medical | | Housing | Medical | | Housing | Housing | Medical | |
| | Triple-net | Facilities | Totals | Triple-net | Facilities | Totals | Triple-net | Operating (2) | Facilities | Totals |
| Advances on real estate loans receivable: | | | | | | | | | | |
| Investments in new loans | $ 61,730 | $ 60,902 | $ 122,632 | $ 41,180 | $ 4,095 | $ 45,275 | $ 2,220 | $ 580,834 | $ 38,336 | $ 621,390 |
| Draws on existing loans | 59,420 | 20,155 | 79,575 | 71,315 | 4,319 | 75,634 | 43,645 | - | 59 | 43,704 |
| Sub-total | 121,150 | 81,057 | 202,207 | 112,495 | 8,414 | 120,909 | 45,865 | 580,834 | 38,395 | 665,094 |
| Less: Seller financing on property sales | - | - | - | (3,850) | - | (3,850) | - | - | - | - |
| Net cash advances on real estate loans | 121,150 | 81,057 | 202,207 | 108,645 | 8,414 | 117,059 | 45,865 | 580,834 | 38,395 | 665,094 |
| Receipts on real estate loans receivable: | | | | | | | | | | |
| Loan payoffs | 71,004 | 48,258 | 119,262 | 69,596 | - | 69,596 | 12,555 | - | - | 12,555 |
| Principal payments on loans | 31,998 | 72 | 32,070 | 33,216 | 74 | 33,290 | 22,395 | - | 70 | 22,465 |
| Sub-total | 103,002 | 48,330 | 151,332 | 102,812 | 74 | 102,886 | 34,950 | - | 70 | 35,020 |
| Less: Non-cash activity (1) | - | (45,836) | (45,836) | - | - | - | - | - | - | - |
| Net cash receipts on real estate loans | 103,002 | 2,494 | 105,496 | 102,812 | 74 | 102,886 | 34,950 | - | 70 | 35,020 |
| Net cash advances (receipts) on real estate loans | 18,148 | 78,563 | 96,711 | 5,833 | 8,340 | 14,173 | 10,915 | 580,834 | 38,325 | 630,074 |
| Change in balance due to foreign currency translation | (2,852) | - | (2,852) | 1,402 | - | 1,402 | - | - | - | - |
| Net change in real estate loans receivable | $ 15,296 | $ 32,727 | $ 48,023 | $ 7,235 | $ 8,340 | $ 15,575 | $ 10,915 | $ 580,834 | $ 38,325 | $ 630,074 |
| (1) Represents loan to Sunrise Senior Living, Inc. that was
acquired upon merger consummation on January 9, 2013. | | | | | | | | | | |
| (2) Represents an acquisition of assets previously financed as a
real estate loan. | | | | | | | | | | |

The following is a summary of the allowance for losses on loans receivable for the periods presented (in thousands):

	2014	2013	2012
Balance at beginning of year	$ -	$ -	$ -
Provision for loan losses	-	2,110	27,008
Charge-offs	-	(2,110)	(27,008)
Balance at end of year	$ -	$ -	$ -

The following is a summary of our loan impairments (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2014	2013	2012
Balance of impaired loans at end of year	$ 21,000	$ 500	$ 4,230
Allowance for loan losses	-	-	-
Balance of impaired loans not reserved	$ 21,000	$ 500	$ 4,230
Average impaired loans for the year	$ 10,750	$ 2,365	$ 5,237
Interest recognized on impaired loans (1)	757	206	44
(1) Represents interest recognized prior to placement on
non-accrual status.

7. Investments in Unconsolidated Entities

We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. The results of operations for these properties have been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our statements of comprehensive income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands):

| | Percentage
Ownership | December
31, 2014 | December
31, 2013 |
| --- | --- | --- | --- |
| Seniors housing triple-net (1) | 10%
to 49% | $ 31,511 | $ 27,513 |
| Seniors housing operating | 10%
to 50% | 539,147 | 263,838 |
| Medical facilities | 36%
to 49% | 173,493 | 188,278 |
| Total | | $ 744,151 | $ 479,629 |
| (1) As of December 31, 2013, asset amounts include an
available-for-sale equity investment. See Note 16 for additional information. | | | |

At December 31, 2014, the aggregate unamortized basis difference of our joint venture investments of $175,369,000 is primarily attributable to appreciation of the underlying properties and transaction costs. This difference will be amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.

Summarized combined financial information for our investments in unconsolidated entities held as of December 31, 2014 is as follows (dollars in thousands):

| | Year
Ended December 31, — 2014 | 2013 |
| --- | --- | --- |
| Net real estate investments | $ 2,470,623 | $ 1,589,590 |
| Other assets | 998,648 | 564,109 |
| Total assets | 3,469,271 | 2,153,699 |
| Total liabilities | 1,778,540 | 1,227,053 |
| Redeemable noncontrolling interests | 40,525 | 29,482 |
| Total equity | $ 1,650,206 | $ 897,164 |

| | Year
Ended December 31, — 2014 (1) | 2013 (2) | 2012 |
| --- | --- | --- | --- |
| Total revenues | $ 1,875,744 | $ 1,678,485 | $ 324,941 |
| Net income (loss) | 316,139 | (17,064) | 10,702 |
| (1) Beginning February 28, 2014, includes the financial
information for the Senior Resource Group unconsolidated entities. | | | |
| (2) Beginning January 9, 2013, includes the financial
information for the Sunrise management company and the unconsolidated Sunrise
Senior Living properties. | | | |

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Credit Concentration

The following table summarizes certain information about our credit concentration as of December 31, 2014, excluding our share of investments in unconsolidated entities. See Note 7 for additional information (dollars in thousands):

| | Number
of | Total | Percent
of |
| --- | --- | --- | --- |
| Concentration by investment: (1) | Properties | Investment | Investment (2) |
| Sunrise Senior Living (3) | 136 | $ 4,130,125 | 18% |
| Genesis Healthcare | 181 | 2,657,907 | 12% |
| Brookdale | 146 | 1,401,834 | 6% |
| Revera | 48 | 1,038,099 | 5% |
| Benchmark | 39 | 917,995 | 4% |
| Remaining portfolio | 710 | 12,705,236 | 55% |
| Totals | 1,260 | $ 22,851,196 | 100% |

(1) Genesis is in our seniors housing triple-net segment. Sunrise Senior Living and Revera are in our seniors housing operating segment. Brookdale and Benchmark are in both our seniors housing triple-net and seniors housing operating segments.

(2) Investments with our top five relationships comprised 44% of total investments at December 31, 2013.

(3) For the year ended December 31, 2014, we recognized $895,897,000 of revenue from Sunrise Senior Living .

9. Borrowings Under Credit Facilities and Related Items

On July 25, 2014, we closed on a new primary unsecured credit facility with a consortium of 28 banks that includes a $2,500,000,000 unsecured revolving credit facility, a $500,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional $1,000,000,000 and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000 through an accordion feature. The primary unsecured credit facility also allows us to borrow up to $500,000,000 in alternative currencies (none outstanding at December 31, 2014). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (1.22% at December 31, 2014). The applicable margin is based on certain of our debt ratings and was 1.150% at December 31, 2014. In addition, we pay a facility fee quarterly to each bank based on the bank’s respective commitment amount. The facility fee depends on certain of our debt ratings and was 0.200% at December 31, 2014. The primary unsecured credit facility provides us with additional borrowing capacity and extends the agreement to October 31, 2018. It can be extended for an additional year at our option.

The following information relates to aggregate borrowings under our primary unsecured credit facility for the periods presented (dollars in thousands):

| | Year
Ended December 31, — 2014 | 2013 | 2012 |
| --- | --- | --- | --- |
| Balance outstanding at year end (1) | $ - | $ 130,000 | $ - |
| Maximum amount outstanding at any month end | $ 637,000 | $ 1,019,050 | $ 897,000 |
| Average amount outstanding (total of daily | | | |
| principal balances divided by days in period) | $ 207,452 | $ 488,842 | $ 191,378 |
| Weighted-average interest rate (actual interest | | | |
| expense divided by average borrowings outstanding) | 1.50% | 1.45% | 1.80% |
| (1) As of December 31, 2014, letters of credit in the aggregate
amount of $71,276,000 have been issued which reduce the available borrowing
capacity on the primary unsecured credit facility. | | | |

10. Senior Unsecured Notes and Secured Debt

We may repurchase, redeem or refinance convertible and non-convertible senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The non-convertible senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! a redemption price equal to the sum of (1) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (2) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. At December 31, 2014, the annual principal payments due on these debt obligations were as follows (in thousands):

| | Senior — Unsecured
Notes (1,2) | Secured — Debt (1,3) | Totals |
| --- | --- | --- | --- |
| 2015 | $ - | $ 399,813 | $ 399,813 |
| 2016 | 700,000 | 412,248 | 1,112,248 |
| 2017 | 450,000 | 358,023 | 808,023 |
| 2018 | 450,000 | 436,884 | 886,884 |
| 2019 (4,5) | 1,315,499 | 370,072 | 1,685,571 |
| Thereafter (6,7) | 4,901,655 | 964,725 | 5,866,380 |
| Totals | $ 7,817,154 | $ 2,941,765 | $ 10,758,919 |
| (1) Amounts represent principal amounts due and do not include
unamortized premiums/discounts or other fair value adjustments as reflected
on the consolidated balance sheet. | | | |
| (2) Annual interest rates range from 1.32% to 6.5%. | | | |
| (3) Annual interest rates range from 1.0% to 7.98%. Carrying
value of the properties securing the debt totaled $5,424,956,000 at December
31, 2014. | | | |
| (4) On July 25, 2014, we refinanced the funding on a $250,000,000
Canadian-denominated unsecured term credit facility (approximately
$215,498,664 based on the Canadian/U.S. Dollar exchange rate on December 31,
2014). The loan matures on October 31, 2018 (with an option to extend for an
additional year at our discretion) and bears interest at the Canadian Dealer
Offered Rate plus 115 basis points (2.4% at December 31, 2014). | | | |
| (5) On July 25, 2014, we refinanced the funding on a
$500,000,000 unsecured term credit facility. The loan matures on October 31,
2018 (with an option to extend for one additional year at our discretion) and
bears interest at LIBOR plus 115 basis points (1.32% at December 31, 2014). | | | |
| (6) On November 20, 2013, we completed funding on £550,000,000
(approximately $853,790,000 based on the Sterling/U.S. Dollar exchange rate
on December 31, 2014) of 4.8% senior unsecured notes due 2028. | | | |
| (7) On November 25, 2014, we completed funding on £500,000,000
(approximately $781,900,000 based on the Sterling/U.S. Dollar exchange rate
on December 31, 2014) of 4.5% senior unsecured notes due 2034. | | | |

The following is a summary of our senior unsecured note principal activity during the periods presented (dollars in thousands):

| | Year
Ended — December
31, 2014 | | December
31, 2013 | | December
31, 2012 | |
| --- | --- | --- | --- | --- | --- | --- |
| | | Weighted
Avg. | | Weighted
Avg. | | Weighted
Avg. |
| | Amount | Interest
Rate | Amount | Interest
Rate | Amount | Interest
Rate |
| Beginning balance | $ 7,421,707 | 4.395% | $ 5,894,403 | 4.675% | $ 4,464,927 | 5.133% |
| Debt issued | 838,804 | 4.572% | 2,036,930 | 3.824% | 1,800,000 | 3.691% |
| Debt extinguished | (298,567) | 5.855% | (300,000) | 6.000% | (76,853) | 8.000% |
| Debt redeemed | (59,143) | 3.000% | (219,295) | 3.000% | (293,671) | 4.750% |
| Foreign currency | (85,647) | 4.222% | 9,669 | 3.993% | - | 0.000% |
| Ending balance | $ 7,817,154 | 4.385% | $ 7,421,707 | 4.395% | $ 5,894,403 | 4.675% |

During the twelve months ended December 31, 2010, we issued $494,403,000 of 3.00% senior unsecured convertible notes due December 2029. The notes are convertible, in certain circumstances, into cash and, if applicable, shares of common stock at an initial conversion rate of 19.5064 shares per $1,000 principal amount of notes, which represents an initial conversion price of $51.27 per share. In general, upon conversion, the holder of each note would receive, in respect of the conversion value of such note, cash up to the principal amount of such note and common stock for the note’s conversion value in excess of such principal amount. In addition, on each of December 1, 2019 and December 1, 2024, holders may require us to purchase all or a portion of their notes at a purchase price in cash equal to 100% of the principal amount of the notes to be purchased, plus any accrued and unpaid interest. The notes are bifurcated into a debt component and an equity component since they may be settled in cash upon conversion. The value of the debt component is based upon the estimated fair value of a similar debt instrument without the conversion feature at the time of issuance. The difference between the contractual principal on the debt and the value allocated to the debt of $29,925,000 was recorded as an equity component and represents the conversion feature of the instrument. The excess of the contractual principal amount of the debt over its estimated fair value is amortized to interest expense using the effective interest method over the period used to estimate the fair value. During the year ended December 31, 2014, we received notice of conversion from holders of $59,143,000 of the senior Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! unsecured convertible notes. These notes were converted into 258,542 shares of common stock and we recognized a loss on extinguishment of $974,000, which is reflected on the consolidated statement of comprehensive income. Subsequent to December 31, 2014, we received notices of conversion from holders of $142,238,000 of the senior unsecured convertible notes which are expected to settle by March 31, 2015.

The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):

| | Year
Ended — December
31, 2014 | | December
31, 2013 | | December
31, 2012 | |
| --- | --- | --- | --- | --- | --- | --- |
| | | Weighted
Avg. | | Weighted
Avg. | | Weighted
Avg. |
| | Amount | Interest
Rate | Amount | Interest
Rate | Amount | Interest
Rate |
| Beginning balance | $ 3,010,711 | 5.095% | $ 2,311,586 | 5.140% | $ 2,108,384 | 5.285% |
| Debt issued | 109,503 | 3.374% | 89,208 | 4.982% | 157,418 | 4.212% |
| Debt assumed | 204,949 | 4.750% | 1,290,858 | 4.159% | 444,744 | 5.681% |
| Debt extinguished | (279,559) | 4.824% | (614,375) | 3.730% | (360,403) | 4.672% |
| Principal payments | (62,280) | 4.930% | (56,205) | 5.248% | (38,744) | 5.456% |
| Foreign currency | (41,559) | 3.811% | (10,361) | 4.013% | 187 | 5.637% |
| Ending balance | $ 2,941,765 | 4.940% | $ 3,010,711 | 5.095% | $ 2,311,586 | 5.140% |

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of December 31, 2014, we were in compliance with all of the covenants under our debt agreements.

11. Derivative Instruments

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We may elect to use financial derivative instruments to hedge interest rate exposure. These decisions are principally based on our policy to manage the general trend in interest rates at the applicable dates and our perception of the future volatility of interest rates. In addition, non-U.S. investments expose us to the potential losses associated with adverse changes in foreign currency to U.S. Dollar exchange rates. We have elected to manage these risks through the use of forward exchange contracts and issuing debt in the foreign currency.

I nterest Rate Swap Contracts and Foreign Currency Forward Contracts Designated as Cash Flow Hedges

For instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”), and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings. Approximately $1,137,000 of gains, which are included in accumulated other comprehensive income (“AOCI”), are expected to be reclassified into earnings in the next 12 months.

Foreign Currency Hedges

For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. dollar of the instrument is recorded as a cumulative translation adjustment component of OCI. The balance of the cumulative translation adjustment will be reclassified to earnings when the hedged investment is sold or substantially liquidated.

The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| | | December
31, 2014 | | December
31, 2013 |
| --- | --- | --- | --- | --- |
| Derivatives designated as net investment hedges: | | | | |
| Denominated in Canadian Dollars | $ | 900,000 | $ | 600,000 |
| Denominated in Pounds Sterling | £ | 350,000 | £ | 350,000 |
| Financial instruments designated as net investment hedges: | | | | |
| Denominated in Canadian Dollars | $ | 250,000 | $ | 250,000 |
| Denominated in Pounds Sterling | £ | 1,050,000 | £ | 550,000 |
| Derivatives designated as cash flow hedges | | | | |
| Denominated in U.S. Dollars | $ | 57,000 | $ | 57,000 |
| Denominated in Canadian Dollars | $ | 58,000 | $ | - |
| Denominated in Pounds Sterling | £ | 40,000 | £ | - |
| Derivative instruments not designated: | | | | |
| Denominated in Canadian Dollars | $ | 12,000 | $ | - |

The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):

| | Location | Year
Ended — December
31, 2014 | December
31, 2013 | December
31, 2012 |
| --- | --- | --- | --- | --- |
| Gain (loss) on interest rate swap recognized in OCI (effective
portion) | OCI | $ (15) | $ (16) | $ 3,200 |
| Gain (loss) on interest rate swaps reclassified from AOCI into
income (effective portion) | Interest expense | (1,799) | (1,914) | (1,596) |
| Gain (loss) on forward exchange contracts recognized in income | Gain (loss) on derivatives, net | 1,495 | (4,470) | 1,921 |
| Gain (loss) on interest rate swaps recognized in income | Gain (loss) on derivatives, net | - | - | (96) |
| Gain on release of cumulative translation adjustment related to
net investment hedge of an equity investment | Income (loss) from unconsolidated entities | 528 | - | - |
| Gain (loss) on forward exchange contracts and term loans
designated as net investment hedge recognized in OCI | OCI | 103,140 | (28,244) | (5,134) |

12. Commitments and Contingencies

At December 31, 2014, we had eight outstanding letter of credit obligations totaling $82,456,000 and expiring between 2015 and 2018. At December 31, 2014, we had outstanding construction in process of $186,327,000 for leased properties and were committed to providing additional funds of approximately $227,618,000 to complete construction. At December 31, 2014, we had contingent purchase obligations totaling $80,874,000. These contingent purchase obligations relate to unfunded capital improvement obligations and contingent obligations on acquisitions. Rents due from the tenant are increased to reflect the additional investment in the property. At December 31, 2014, we had an unfunded commitment of $360,000,000 related to a secured bridge facility with one of our operators for which we are receiving a commitment fee.

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We evaluate our leases for operating versus capital lease treatment in accordance with ASC Topic 840 “Leases.” A lease is classified as a capital lease if it provides for transfer of ownership of the leased asset at the end of the lease term, contains a bargain purchase option, has a lease term greater than 75% of the economic life of the leased asset, or if the net present value of the future minimum lease payments are in excess of 90% of the fair value of the leased asset. Certain leases contain bargain purchase options and have been classified as capital leases. At December 31, 2014, we had operating lease obligations of $916,404,000 relating to certain ground leases and Company office space. Regarding the ground leases, we have sublease agreements with certain of our operators that require the operators to reimburse us for our monthly operating lease obligations. At December 31, 2014, aggregate future minimum rentals to be received under these noncancelable subleases totaled $27,190,000.

At December 31, 2014, future minimum lease payments due under operating and capital leases are as follows (in thousands):

| | Operating
Leases | Capital
Leases (1) |
| --- | --- | --- |
| 2015 | $ 15,078 | $ 13,157 |
| 2016 | 15,158 | 4,732 |
| 2017 | 15,212 | 4,732 |
| 2018 | 15,249 | 4,679 |
| 2019 | 15,208 | 4,333 |
| Thereafter | 840,499 | 80,093 |
| Totals | $ 916,404 | $ 111,726 |
| (1) Amounts above represent principal and interest obligations
under capital lease arrangements. Related assets with a gross value of
$185,250,000 and accumulated depreciation of $17,953,000 are recorded in real
property. | | |

13. Stockholders’ Equity

The following is a summary of our stockholder’s equity capital accounts as of the dates indicated:

| | December
31, 2014 | December
31, 2013 |
| --- | --- | --- |
| Preferred Stock, $1.00 par value: | | |
| Authorized shares | 50,000,000 | 50,000,000 |
| Issued shares | 25,875,000 | 26,108,236 |
| Outstanding shares | 25,875,000 | 26,108,236 |
| Common Stock, $1.00 par value: | | |
| Authorized shares | 700,000,000 | 400,000,000 |
| Issued shares | 329,487,615 | 290,024,789 |
| Outstanding shares | 328,790,066 | 289,563,651 |

Preferred Stock. The following is a summary of our preferred stock activity during the periods presented (dollars in thousands, except per share amounts):

| | Year
Ended — December
31, 2014 | | December
31, 2013 | | December
31, 2012 | |
| --- | --- | --- | --- | --- | --- | --- |
| | | Weighted
Avg. | | Weighted
Avg. | | Weighted
Avg. |
| | Shares | Dividend
Rate | Shares | Dividend
Rate | Shares | Dividend
Rate |
| Beginning balance | 26,108,236 | 6.496% | 26,224,854 | 6.493% | 25,724,854 | 7.013% |
| Shares issued | - | 0.000% | - | 0.000% | 11,500,000 | 6.500% |
| Shares redeemed | - | 0.000% | - | 0.000% | (11,000,000) | 7.716% |
| Shares converted | (233,236) | 6.000% | (116,618) | 6.000% | - | 0.000% |
| Ending balance | 25,875,000 | 6.500% | 26,108,236 | 6.496% | 26,224,854 | 6.493% |

During the three months ended December 31, 2010, we issued 349,854 shares of 6.00% Series H Cumulative Convertible and Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! Redeemable Preferred Stock in connection with a business combination. During the years ended December 31, 2013 and 2014, all shares were converted into common stock, leaving zero shares outstanding.

During the three months ended March 31, 2011, we issued 14,375,000 of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock. These shares have a liquidation value of $50.00 per share. Dividends are payable quarterly in arrears. The preferred stock is not redeemable by us. The preferred shares are convertible, at the holder’s option, into 0.8460 shares of common stock (equal to an initial conversion price of approximately $59.10).

During the three months ended March 31, 2012, we issued 11,500,000 of 6.50% Series J Cumulative Redeemable Preferred Stock. Dividends are payable quarterly in arrears. The preferred stock, which has no stated maturity, may be redeemed by us at a redemption price of $25.00 per share, plus accrued and unpaid dividends on such shares to the redemption date, on or after March 7, 2017.

Common Stock . The following is a summary of our common stock issuances during the periods indicated (dollars in thousands, except per share amounts):

| February 2012 public issuance | Shares
Issued — 20,700,000 | $ 53.50 | $ 1,107,450 | $ 1,062,256 |
| --- | --- | --- | --- | --- |
| August 2012 public issuance | 13,800,000 | 58.75 | 810,750 | 778,011 |
| September 2012 public issuance | 29,900,000 | 56.00 | 1,674,400 | 1,606,665 |
| 2012 Dividend reinvestment plan issuances | 2,136,140 | 56.37 | 120,411 | 120,411 |
| 2012 Option exercises | 341,371 | 40.86 | 13,949 | 13,949 |
| 2012 Senior note conversions | 1,039,721 | | - | - |
| 2012 Totals | 67,917,232 | | $ 3,726,960 | $ 3,581,292 |
| May 2013 public issuance | 23,000,000 | $ 73.50 | $ 1,690,500 | $ 1,630,281 |
| 2013 Dividend reinvestment plan issuances | 3,429,928 | 62.78 | 215,346 | 215,346 |
| 2013 Option exercises | 213,724 | 42.16 | 9,010 | 9,010 |
| 2013 Senior note conversions | 988,007 | | - | - |
| 2013 Preferred stock conversions | 116,618 | | - | - |
| 2013 Equity issued in acquisition of noncontrolling interest | 1,108,917 | | - | - |
| 2013 Totals | 28,857,194 | | $ 1,914,856 | $ 1,854,637 |
| June 2014 public issuance | 16,100,000 | 62.35 | 1,003,835 | 968,517 |
| September 2014 public issuance | 17,825,000 | 63.75 | 1,136,344 | 1,095,465 |
| 2014 Dividend reinvestment plan issuances | 4,122,941 | 62.35 | 257,055 | 257,055 |
| 2014 Option exercises | 498,549 | 45.79 | 22,831 | 22,831 |
| 2014 Preferred stock conversions | 233,236 | | - | - |
| 2014 Stock incentive plans, net of forfeitures | 188,147 | | - | - |
| 2014 Senior note conversions | 258,542 | | - | - |
| 2014 Totals | 39,226,415 | | $ 2,420,065 | $ 2,343,868 |

During the twelve months ended December 31, 2013, we acquired the remaining 20% noncontrolling interest in an existing partnership for $91,000,000 which consisted of $23,247,000 of cash and 1,108,917 shares of common stock. In connection with the acquisition, we incurred $2,732,000 of transaction costs, which we have included as a reduction to additional paid in capital .

Dividends . The increase in dividends is primarily attributable to increases in our common shares outstanding as described above. Please refer to Notes 2 and 18 for information related to federal income tax of dividends. The following is a summary of our dividend payments (in thousands, except per share amounts) :

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| | Year
Ended — December
31, 2014 | | December
31, 2013 | | December
31, 2012 | |
| --- | --- | --- | --- | --- | --- | --- |
| | Per
Share | Amount | Per
Share | Amount | Per
Share | Amount |
| Common Stock | $ 3.18000 | $ 969,661 | $ 3.06000 | $ 839,939 | $ 2.96000 | $ 653,321 |
| Series D Preferred Stock | - | - | - | - | 0.50301 | 2,012 |
| Series F Preferred Stock | - | - | - | - | 0.48715 | 3,410 |
| Series H Preferred Stock | 0.00794 | 1 | 2.85840 | 930 | 2.85840 | 1,000 |
| Series I Preferred Stock | 3.25000 | 46,719 | 3.25000 | 46,719 | 3.25000 | 46,719 |
| Series J Preferred Stock | 1.62510 | 18,688 | 1.62510 | 18,687 | 1.39038 | 15,988 |
| Totals | | $ 1,035,069 | | $ 906,275 | | $ 722,450 |

Accumulated Other Comprehensive Income . The following is a summary of accumulated other comprehensive income/(loss) for the periods presented (in thousands):

| | Foreign
Currency Translation | Equity
Investments | Actuarial
losses | Cash
Flow Hedges | Total |
| --- | --- | --- | --- | --- | --- |
| Balance at December 31, 2013 | $ (17,631) | $ (389) | $ (1,452) | $ (5,059) | $ (24,531) |
| Other comprehensive income before reclassification adjustments | (56,611) | 389 | (137) | 2,610 | (53,749) |
| Reclassification amount to net income | (528) | - | - | 1,799 (1) | 1,271 |
| Net current-period other comprehensive income | (57,139) | 389 | (137) | 4,409 | (52,478) |
| Balance at December 31, 2014 | $ (74,770) | $ - | $ (1,589) | $ (650) | $ (77,009) |
| Balance at December 31, 2012 | $ (881) | $ (216) | $ (2,974) | $ (6,957) | $ (11,028) |
| Other comprehensive income before reclassification adjustments | (16,750) | (173) | 1,522 | (16) | (15,417) |
| Reclassification amount to net income | - | - | - | 1,914 (1) | 1,914 |
| Net current-period other comprehensive income | (16,750) | (173) | 1,522 | 1,898 | (13,503) |
| Balance at December 31, 2013 | $ (17,631) | $ (389) | $ (1,452) | $ (5,059) | $ (24,531) |
| (1) Please see Note 11 for additional information. | | | | | |

Other Equity . Other equity consists of accumulated option compensation expense, which represents the amount of amortized compensation costs related to stock options awarded to employees and directors.

14. Stock Incentive Plans

Our Amended and Restated 2005 Long-Term Incentive Plan authorizes up to 6,200,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. The 2005 Plan replaced the 1995 Stock Incentive Plan and the Stock Plan for Non-Employee Directors. The options granted to officers and key employees under the 1995 Plan vested through 2010 and expire ten years from the date of grant. Our non-employee directors, officers and key employees are eligible to participate in the 2005 Plan. The 2005 Plan allows for the issuance of, among other things, stock options, restricted stock, deferred stock units and dividend equivalent rights. Under our long-term incentive plan, certain restricted stock awards are performance based. Compensation expense for these performance grants is measured based on the probability of achievement of certain objective and subjective performance goals and is recognized over both the performance period and vesting period. If the estimated number of performance based restricted stock to be earned changes, an adjustment will be recorded to recognize the accumulated difference between the revised and previous estimates. Vesting periods for options, deferred stock units and restricted shares generally range from one to three years for non-employee directors and from three to five years for officers and key employees. Options expire ten years from the date of grant.

The following table summarizes compensation expense recognized for the periods presented (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2014	2013	2012
Stock options	$ 912	$ 1,113	$ 2,777
Restricted stock	31,163	19,064	15,744
	$ 32,075	$ 20,177	$ 18,521

Stock Options

We have not granted stock options since the year ended December 31, 2012 but some remain outstanding. As of December 31, 2014, there was $1,147,000 of total unrecognized compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of two years. Stock options outstanding at December 31, 2014 have an aggregate intrinsic value of $19,358,000.

Restricted Stock

The fair value of the restricted stock is equal to the market price of the company’s common stock on the date of grant and is amortized over the vesting periods. As of December 31, 2014, there was $30,692,000 of total unrecognized compensation expense related to unvested restricted stock that is expected to be recognized over a weighted-average period of three years. The following table summarizes information about non-vested restricted stock incentive awards as of and for the year ended December 31, 2014:

| | Restricted
Stock — Number
of | Weighted-Average |
| --- | --- | --- |
| | Shares | Grant
Date |
| | (000's) | Fair
Value |
| Non-vested at December 31, 2013 | 788 | $ 56.92 |
| Vested | (553) | 56.29 |
| Granted | 324 | 57.59 |
| Terminated | (5) | 57.20 |
| Non-vested at December 31, 2014 | 554 | $ 57.94 |

15. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

| | Year
Ended December 31, — 2014 | 2013 | 2012 |
| --- | --- | --- | --- |
| Numerator for basic and diluted earnings | | | |
| per share - net income attributable to | | | |
| common stockholders | $ 446,745 | $ 78,714 | $ 221,884 |
| Denominator for basic earnings per | | | |
| share: weighted-average shares | 306,272 | 276,929 | 224,343 |
| Effect of dilutive securities: | | | |
| Employee stock options | 188 | 226 | 231 |
| Non-vested restricted shares | 500 | 457 | 312 |
| Convertible senior unsecured notes | 787 | 1,149 | 1,067 |
| Dilutive potential common shares | 1,475 | 1,832 | 1,610 |
| Denominator for diluted earnings per | | | |
| share: adjusted-weighted average shares | 307,747 | 278,761 | 225,953 |
| Basic earnings per share | $ 1.46 | $ 0.28 | $ 0.99 |
| Diluted earnings per share | $ 1.45 | $ 0.28 | $ 0.98 |

The diluted earnings per share calculations exclude the dilutive effect of 0, 0, and 182,000 stock options for the years ended December 31, 2014, 2013 and 2012, respectively, because the exercise prices were more than the average market price. The Series H Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! Cumulative Convertible and Redeemable Preferred Stock and the Series I Cumulative Convertible Perpetual Preferred Stock were excluded from the calculations as the effect of the conversions were anti-dilutive.

16. Disclosure about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.

Mortgage Loans and Other Real Estate Loans Receivable — The fair value of mortgage loans and other real estate loans receivable is generally estimated by using level two and level three inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Cash and Cash Equivalents — The carrying amount approximates fair value.

Available-for-sale Equity Investments — Available-for-sale equity investments are recorded at their fair value based on level one publicly available trading prices.

Borrowings Under Primary Unsecured Credit Facility — The carrying amount of the primary unsecured credit facility approximates fair value because the borrowings are interest rate adjustable.

Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on level one publicly available trading prices.

Secured Debt — The fair value of fixed rate secured debt is estimated using level two inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable.

Interest Rate Swap Agreements — Interest rate swap agreements are recorded in other assets or other liabilities on the balance sheet at fair market value. Fair market value is estimated using level two inputs by utilizing pricing models that consider forward yield curves and discount rates.

Foreign Currency Forward Contracts — Foreign currency forward contracts are recorded in other assets or other liabilities on the balance sheet at fair market value. Fair market value is determined using level two inputs by estimating the future value of the currency pair based on existing exchange rates, comprised of current spot and traded forward points, and calculating a present value of the net amount using a discount factor based on observable traded interest rates.

Redeemable OP Unitholder Interests — The fair value of our redeemable unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances.

The carrying amounts and estimated fair values of our financial instruments are as follows (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

| | December
31, 2014 — Carrying | Fair | December
31, 2013 — Carrying | Fair |
| --- | --- | --- | --- | --- |
| | Amount | Value | Amount | Value |
| Financial Assets: | | | | |
| Mortgage loans receivable | $ 188,651 | $ 194,935 | $ 146,987 | $ 148,088 |
| Other real estate loans receivable | 191,518 | 195,375 | 185,159 | 188,920 |
| Available-for-sale equity investments | - | - | 1,211 | 1,211 |
| Cash and cash equivalents | 473,726 | 473,726 | 158,780 | 158,780 |
| Foreign currency forward contracts | 57,087 | 57,087 | - | - |
| Financial Liabilities: | | | | |
| Borrowings under unsecured lines of credit arrangements | $ - | $ - | $ 130,000 | $ 130,000 |
| Senior unsecured notes | 7,766,251 | 8,613,702 | 7,379,308 | 7,743,730 |
| Secured debt | 2,977,713 | 3,053,067 | 3,058,248 | 3,168,775 |
| Foreign currency forward contracts | 1,495 | 1,495 | 11,637 | 11,637 |
| Redeemable OP unitholder interests | $ 46,722 | $ 46,722 | $ - | $ - |

U.S. GAAP provides authoritative guidance for measuring and disclosing fair value measurements of assets and liabilities. The guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Please see Note 2 for additional information.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Items Measured at Fair Value on a Recurring Basis

The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

| | Fair
Value Measurements as of December 31, 2014 — Total | Level
1 | Level
2 | Level
3 |
| --- | --- | --- | --- | --- |
| Foreign currency forward contracts (1) | $ 55,592 | $ - | $ 55,592 | $ - |
| Redeemable OP unitholder interests | 46,722 | - | 46,722 | - |
| Totals | $ 102,314 | $ - | $ 102,314 | $ - |
| (1) Please see Note 11 for additional information. | | | | |

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, we also have assets and liabilities in our balance sheet that are measured at fair value on a nonrecurring basis. As these assets and liabilities are not measured at fair value on a recurring basis, they are not included in the tables above. Assets, liabilities and noncontrolling interests that are measured at fair value on a nonrecurring basis include those acquired/assumed in business combinations (see Note 3) and asset impairments (see Note 5 for Do not modify beyond this point! !

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! impairments of real property and Note 6 for impairments of loans receivable). We have determined that the fair value measurements included in each of these assets and liabilities rely primarily on Company-specific inputs and our assumptions about the use of the assets and settlement of liabilities, as observable inputs are not available. As such, we have determined that each of these fair value measurements generally reside within Level 3 of the fair value hierarchy. We estimate the fair value of real estate and related intangibles using the income approach and unobservable data such as net operating income and estimated capitalization and discount rates. We also consider local and national industry market data including comparable sales, and commonly engage an external real estate appraiser to assist us in our estimation of fair value. We estimate the fair value of assets held for sale based on current sales price expectations or, in the absence of such price expectations, Level 3 inputs described above. We estimate the fair value of secured debt assumed in business combinations using current interest rates at which similar borrowings could be obtained on the transaction date.

17. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our four operating segments: seniors housing triple-net, seniors housing operating, medical office buildings and life science. During 2014, we realigned our corporate structure and operating segment designations. Accordingly, the segment information provided in this note has been reclassified to conform to the current presentation for all periods presented. As part of the change in presentation, we removed the “hospitals” operating segment. Amounts previously classified within “hospitals” and aggregated into the medical facilities reporting segment have been reclassified to seniors housing triple-net properties.

Our seniors housing triple-net properties include long-term/post-acute care facilities, hospitals, assisted living facilities, independent living/continuing care retirement communities, care homes (United Kingdom), independent support living facilities (Canada), care homes with nursing (United Kingdom) and combinations thereof. Under the seniors housing triple-net segment, we invest in seniors housing and health care real estate through acquisition and financing of primarily single tenant properties. Properties acquired are primarily leased under triple-net leases and we are not involved in the management of the property. Our seniors housing operating properties include the seniors housing communities referenced above that are owned and/or operated through RIDEA structures (see Notes 3 and 18).

Our medical facility properties include medical office buildings and life science buildings which are aggregated into our medical facilities reportable segment. Our medical office buildings are typically leased to multiple tenants and generally require a certain level of property management. Our life science investment represents an investment in an unconsolidated entity (see Note 7).

We evaluate performance based upon net operating income from continuing operations (“NOI”) of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations and to assess the property level performance of our properties.

Non-segment revenue consists mainly of interest income on non-real estate investments and other income. Non-segment assets consist of corporate assets including cash, deferred loan expenses and corporate offices and equipment among others. Non-property specific revenues and expenses are not allocated to individual segments in determining NOI .

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The results of operations for all acquisitions described in Note 3 are included in our consolidated results of operations from the acquisition dates and are components of the appropriate segments. There are no intersegment sales or transfers.

Summary information for the reportable segments (which excludes unconsolidated entities) during the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2014: — Rental income	$ 992,638	$ -	$ 413,129	$ -	$ 1,405,767
Resident fees and services	-	1,892,237	-	-	1,892,237
Interest income	32,255	2,119	3,293	-	37,667
Other income	2,973	3,215	1,010	677	7,875
Total revenues	1,027,866	1,897,571	417,432	677	3,343,546
Property operating expenses	732	1,266,308	136,318	-	1,403,358
Net operating income from continuing operations	1,027,134	631,263	281,114	677	1,940,188
Reconciling items:
Interest expense	38,460	113,099	32,904	296,576	481,039
(Loss) gain on derivatives, net	(1,770)	275	-	-	(1,495)
Depreciation and amortization	273,296	418,199	152,635	-	844,130
General and administrative	-	-	-	142,943	142,943
Transaction costs	45,146	16,880	7,512	-	69,538
(Loss) gain on extinguishment of debt, net	98	383	405	8,672	9,558
Other expenses	8,825	1,437	-	-	10,262
Income (loss) from continuing operations before income taxes and
income (loss) from unconsolidated entities	663,079	80,990	87,658	(447,514)	384,213
Income tax expense	6,141	(3,047)	(1,827)	-	1,267
(Loss) income from unconsolidated entities	5,423	(38,204)	5,355	-	(27,426)
Income (loss) from continuing operations	674,643	39,739	91,186	(447,514)	358,054
Income (loss) from discontinued operations	7,135	-	-	-	7,135
Gain (loss) on real estate dispositions, net	146,205	-	906	-	147,111
Net income (loss)	$ 827,983	$ 39,739	$ 92,092	$ (447,514)	$ 512,300
Total assets	$ 10,958,269	$ 9,531,608	$ 4,465,130	$ 59,287	$ 25,014,296

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2013: — Rental income	$ 866,138	$ -	$ 361,451	$ -	$ 1,227,589
Resident fees and services	-	1,616,290	-	-	1,616,290
Interest income	28,214	757	3,692	-	32,663
Other income	1,504	355	1,911	296	4,066
Total revenues	895,856	1,617,402	367,054	296	2,880,608
Property operating expenses	1,235	1,089,239	116,339	-	1,206,813
Net operating income from continuing operations	894,621	528,163	250,715	296	1,673,795
Reconciling items:
Interest expense	23,322	92,148	36,823	306,067	458,360
(Loss) gain on derivatives, net	4,877	(407)	-	-	4,470
Depreciation and amortization	249,913	478,007	137,880	-	865,800
General and administrative	-	-	-	108,318	108,318
Transaction costs	24,426	107,066	1,909	-	133,401
(Loss) gain on extinguishment of debt, net	40	(3,372)	-	2,423	(909)
Provision for loan losses	2,110	-	-	-	2,110
Income (loss) from continuing operations before income taxes and
income (loss) from unconsolidated entities	589,933	(145,279)	74,103	(416,512)	102,245
Income tax expense	(1,817)	(5,337)	(270)	(67)	(7,491)
(Loss) income from unconsolidated entities	5,035	(22,695)	9,473	-	(8,187)
Income (loss) from continuing operations	593,151	(173,311)	83,306	(416,579)	86,567
Income (loss) from discontinued operations	57,742	-	(6,029)	-	51,713
Net income (loss)	$ 650,893	$ (173,311)	$ 77,277	$ (416,579)	$ 138,280
Total assets	$ 10,121,813	$ 8,984,316	$ 3,829,547	$ 148,281	$ 23,083,957

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2012 — Rental income	$ 762,968	$ -	$ 300,246	$ -	$ 1,063,214
Resident fees and services	-	697,494	-	-	697,494
Interest income	30,654	6,208	2,203	-	39,065
Other income	2,471	-	1,888	912	5,271
Total revenues	796,093	703,702	304,337	912	1,805,044
Property operating expenses	1,082	471,678	95,229	-	567,989
Net operating income from continuing operations	795,011	232,024	209,108	912	1,237,055
Reconciling items:
Interest expense	1,745	67,524	28,878	263,418	361,565
Loss (gain) on derivatives, net	96	(1,921)	-	-	(1,825)
Depreciation and amortization	223,921	165,798	116,501	-	506,220
General and administrative	-	-	-	97,341	97,341
Transaction costs	35,705	12,756	13,148	-	61,609
Loss (gain) on extinguishment of debt, net	2,405	(2,697)	(483)	-	(775)
Provision for loan losses	27,008	-	-	-	27,008
Income (loss) from continuing operations before income taxes and
income (loss) from unconsolidated entities	504,131	(9,436)	51,064	(359,847)	185,912
Income tax expense	(2,852)	(1,086)	(2,381)	(1,293)	(7,612)
(Loss) income from unconsolidated entities	(33)	(6,364)	8,879	-	2,482
Income from continuing operations	501,246	(16,886)	57,562	(361,140)	180,782
Income (loss) from discontinued operations	130,053	-	(15,995)	-	114,058
Net income (loss)	$ 631,299	$ (16,886)	$ 41,567	$ (361,140)	$ 294,840

Our portfolio of properties and other investments are located in the United States, the United Kingdom and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands):

| | December
31, 2014 | | December
31, 2013 | | December
30, 2012 | |
| --- | --- | --- | --- | --- | --- | --- |
| Revenues: | Amount | % | Amount | % | Amount | % |
| United States | $ 2,801,474 | 83.8% | $ 2,489,196 | 86.4% | $ 1,778,507 | 98.5% |
| International | 542,072 | 16.2% | 391,412 | 13.6% | 26,537 | 1.5% |
| Total | $ 3,343,546 | 100.0% | $ 2,880,608 | 100.0% | $ 1,805,044 | 100.0% |
| | As
of | | | | | |
| | December
31, 2014 | | December
31, 2013 | | | |
| Assets: | Amount | % | Amount | % | | |
| United States | $ 20,728,477 | 82.9% | $ 19,759,945 | 85.6% | | |
| International | 4,285,819 | 17.1% | 3,324,012 | 14.4% | | |
| Total | $ 25,014,296 | 100.0% | $ 23,083,957 | 100.0% | | |

100

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Income Taxes and Distributions

We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of current year taxable income in the current year are also subject to a 4% federal excise tax. The main differences between net income for federal income tax purposes and financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes.

Cash distributions paid to common stockholders, for federal income tax purposes, are as follows for the periods presented:

	2014	2013	2012
Per Share:
Ordinary income	$ 1.7861	$ 1.4928	$ 1.5000
Return of capital	0.8368	1.4176	1.3376
Long-term capital gains	0.1638	0.0448	0.1176
Unrecaptured section 1250 gains	0.3933	0.1048	0.0048
Totals	$ 3.1800	$ 3.0600	$ 2.9600

Our consolidated provision for income taxes is as follows for the periods presented (dollars in thousands):

	2014	2013	2012
Current	$ 2,672	$ 12,389	$ 4,785
Deferred	(3,939)	(4,898)	2,827
Totals	$ (1,267)	$ 7,491	$ 7,612

REITs generally are not subject to U.S. federal income taxes on that portion of REIT taxable income or capital gain that is distributed to stockholders. For the tax year ended December 31, 2014, as a result of acquisitions located in Canada and the United Kingdom, we were subject to foreign income taxes under the respective tax laws of these jurisdictions.

The provision for income taxes for the year ended December 31, 2014 primarily relates to state taxes, foreign taxes, and taxes based on income generated by entities that are structured as taxable REIT subsidiaries. During 2014, we established certain new wholly-owned direct and indirect subsidiaries in Luxembourg and Jersey and transferred interests in certain foreign investments into this new holding company structure. The new structure includes a property holding company that is tax resident in the United Kingdom. No material adverse current tax consequences in Luxembourg, Jersey or the United Kingdom resulted from the creation of this new holding company structure and all of the subsidiary entities in the structure are treated as disregarded entities of the company for U.S. federal income tax purposes. The company will reflect current and deferred tax liabilities for any such withholding taxes incurred as a result of this holding company structure in its consolidated financial statements.

For the tax year ended December 31, 2014 and 2013, the Canadian and United Kingdom tax benefit amount included in the consolidated provision for income taxes was $6,069,000 and $484,000, respectively. The income tax benefit in 2014 is due primarily to the elimination of deferred tax liabilities in certain United Kingdom property holding companies which offsets the current year tax provision. For the tax year ended December 31, 2012, the Canadian and United Kingdom tax expense amount included in the consolidated provision for income taxes was $596,000.

A reconciliation of income tax expense, which is computed by applying the federal corporate tax rate for the years ended December 31, 2014, 2013 and 2012, to the income tax provision/(benefit) is as follows for the periods presented (dollars in thousands):

101

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2014	2013	2012
Tax at statutory rate on earnings from continuing operations
before unconsolidated entities, noncontrolling interests and income taxes	$ 178,862	$ 51,020	$ 64,979
Increase / (decrease) in valuation allowance (1)	9,133	18,444	9,234
Tax at statutory rate on earnings not subject to federal income
taxes	(189,070)	(88,762)	(72,640)
Foreign permanent depreciation	4,383	22,313	-
Other differences	(4,575)	4,476	6,039
Totals	$ (1,267)	$ 7,491	$ 7,612
(1) Excluding purchase price accounting.

Each TRS and foreign entity subject to income taxes is a tax paying component for purposes of classifying deferred tax assets and liabilities. The tax effects of taxable and deductible temporary differences, as well as tax attributes, are summarized as follows for the periods presented (dollars in thousands):

	2014	2013	2012
Investments and property, primarily differences in investment
basis, depreciation and amortization, the basis of land assets and the
treatment of interests and certain costs	$ (1,020)	$ (34,236)	$ (2,144)
Operating loss and interest deduction carryforwards	47,528	67,215	8,552
Expense accruals and other	26,191	19,309	4,372
Valuation allowance	(85,207)	(71,955)	(12,199)
Totals	$ (12,508)	$ (19,667)	$ (1,419)

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. As required under the provisions of ASC 740, we apply the concepts on an entity-by-entity, jurisdiction-by-jurisdiction basis. With respect to the analysis of certain entities in multiple jurisdictions, a significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2014. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth.

On the basis of the evaluations performed as required by the codification, valuation allowances totaling $85,207,000 were recorded on U.S. taxable REIT subsidiaries as well as entities in other jurisdictions to limit the deferred tax assets to the amount that we believe is more likely that not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses is no longer present (and additional weight may be given to subjective evidence such as our projections for growth). The valuation allowance rollforward is summarized as follows for the periods presented (dollars in thousands):

	2014	2013	2012
Beginning balance	$ 71,955	$ 12,199	$ 2,965
Additions:
Purchase price accounting	4,119	41,312	-
Expense	9,133	18,444	9,234
Ending balance	$ 85,207	$ 71,955	$ 12,199

As a result of certain acquisitions, we are subject to corporate level taxes for any related asset dispositions that may occur during the ten-year period immediately after such assets were owned by a C corporation (“built-in gains tax”). The amount of income Do not modify beyond this point! !

102

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! potentially subject to this special corporate level tax is generally equal to the lesser of (a) the excess of the fair value of the asset over its adjusted tax basis as of the date it became a REIT asset, or (b) the actual amount of gain. Some but not all gains recognized during this period of time could be offset by available net operating losses and capital loss carryforwards. During the year ended December 31, 2014, we acquired certain additional assets with built-in gains as of the date of acquisition that could be subject to the built-in gains tax if disposed of prior to the expiration of the applicable ten-year period. We have not recorded a deferred tax liability as a result of the potential built-in gains tax based on our intentions with respect to such properties and available tax planning strategies.

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), for taxable years beginning after July 30, 2008, the REIT may lease “qualified health care properties” on an arm’s-length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.” Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property.” A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility (our long-term/post-acute care facilities), assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the consolidated financial statements and are subject to federal and state income taxes as the operations of such facilities are included in a TRS. Certain net operating loss carryforwards could be utilized to offset taxable income in future years.

Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2011 and subsequent years, by the Canada Revenue Agency (“CRA”) and provincial authorities for acquisitions subsequent to May 2102, and by Her Majesty Revenue & Customs (“HMRC”) for acquisitions subsequent to August 2012. The statute of limitations may vary in the states in which we own properties or conduct business. We do not expect to be subject to audit by state taxing authorities for any year prior to the year ended December 31, 2008.

At December 31, 2014, we had a net operating loss (“NOL”) carryforward related to the REIT of $378,791,000. 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. The NOL carryforwards will expire through 2034.

At December 31, 2014, 2013 and 2012, we had a net operating loss carryforward related to Canadian entities of $32,085,000, $50,958,000 and $4,275,000, respectively. These Canadian losses have a 20-year carryforward period. At December 31, 2014 and 2013, we had a net operating loss carryforward related to United Kingdom entities of $177,079,000 and $238,741,000, respectively. These United Kingdom losses do not have a finite carryforward period. On the basis of evaluations performed as required by the codification, valuation allowances were recorded to limit the deferred tax assets for the related net operating loss carryforwards to the amount that we believe is more likely than not realizable.

We apply the rules under ASC 740-10 “Accounting for Uncertainty in Income Taxes” for uncertain tax positions using a “more likely than not” recognition threshold for tax positions. Pursuant to these rules, we will initially recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. The following table summarizes the activity related to our unrecognized tax benefits for the periods presented (dollars in thousands):

	2014	2013
Gross unrecognized tax benefits at beginning of year	$ 6,413	$ 6,098
Increases (decreases) in unrecognized tax benefits related to a
prior year	-	76
Increases (decreases) in unrecognized tax benefits related to
the current year	-	260
Lapse in statute of limitations for assessment	(5,556)	(21)
Gross unrecognized tax benefits at end of year	$ 857	$ 6,413

The balance of our unrecognized tax benefits as of December 31, 2014 and 2013 was $857,000 and $6,413,000, respectively. During 2014, $6,976,000 (including penalties and interest) relating to the April 1, 2011 Genesis Healthcare Corporation transaction (“Genesis Acquisition”) expired due to the applicable statute of limitations. As a part of the Genesis Acquisition, we received a full Do not modify beyond this point! !

103

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Do not modify before this point! ! indemnification from FC-GEN Operations Investment, LLC covering income taxes or other taxes as well as interest and penalties relating to tax positions taken by FC-GEN Operations Investment, LLC prior to the acquisition. Accordingly, an offsetting indemnification asset was recorded in receivables and other assets on the consolidated balance sheet and was reversed during 2014.

There is no amount of unrecognized tax benefits, currently accrued for, that would have a material impact on the effective tax rate to the extent that would be recognized. There were insignificant uncertain tax positions as of December 31, 2014 for which it is reasonably possible that the amount of unrecognized tax benefits would decrease during 2015. Interest and penalties totaled $137,000 and $253,000, respectively, for the year ended December 31, 2014 and are included in income tax expense.

19. Retirement Arrangements

Under the retirement plan and trust (the “401(k) Plan”), eligible employees may make contributions, and we may make matching contributions and a profit sharing contribution. Our contributions to the 401(k) Plan totaled $2,701,000, $2,562,000, and $2,140,000 in 2014, 2013 and 2012, respectively.

We have a Supplemental Executive Retirement Plan (“SERP”), a non-qualified defined benefit pension plan, which provides one executive officer with supplemental deferred retirement benefits. The SERP provides an opportunity for the participant to receive retirement benefits that cannot be paid under our tax-qualified plans because of the restrictions imposed by ERISA and the Internal Revenue Code of 1986, as amended. Benefits are based on compensation and length of service and the SERP is unfunded. Benefit payments are expected to total $7,128,000 during the next five fiscal years. We use a December 31 measurement date for the SERP. The accrued liability on our balance sheet for the SERP was $6,882,000 at December 31, 2014 ($6,453,000 at December 31, 2013).

On April 13, 2014, George L. Chapman, formerly the Chairman, Chief Executive Officer and President of the Company, informed the Board of Directors that he wished to retire from the Company, effective immediately. As a result of Mr. Chapman’s retirement, general and administrative expenses for the year ended December 31, 2014 included charges of $19,688,000 related to: (i) the acceleration of $9,223,000 of deferred compensation for restricted stock; and (ii) consulting, retirement payments and other costs of $10,465,000.

20. Quarterly Results of Operations (Unaudited)

The following is a summary of our unaudited quarterly results of operations for the years ended December 31, 2014 and 2013 (in thousands, except per share data). The sum of individual quarterly amounts may not agree to the annual amounts included in the consolidated statements of income due to rounding.

| | Year
Ended December 31, 2014 — 1st
Quarter | 2nd
Quarter | 3rd
Quarter | 4th
Quarter |
| --- | --- | --- | --- | --- |
| Revenues | $ 801,807 | $ 826,446 | $ 847,523 | $ 867,770 |
| Net income (loss) attributable to common stockholders | 50,022 | 71,829 | 136,255 | 188,639 |
| Net income (loss) attributable to common stockholders per share: | | | | |
| Basic | $ 0.17 | $ 0.24 | $ 0.44 | $ 0.58 |
| Diluted | 0.17 | 0.24 | 0.44 | 0.57 |
| | Year
Ended December 31, 2013 | | | |
| | 1st
Quarter | 2nd
Quarter (2) | 3rd
Quarter | 4th
Quarter |
| Revenues - as reported | $ 633,915 | $ 682,125 | $ 786,930 | $ 788,577 |
| Discontinued operations | (4,129) | (3,592) | (3,217) | - |
| Revenues - as adjusted (1) | $ 629,786 | $ 678,533 | $ 783,713 | $ 788,577 |
| Net income attributable to common stockholders | $ 55,058 | $ (8,508) | $ 20,691 | $ 11,473 |
| Net income attributable to common stockholders per share: | | | | |
| Basic | $ 0.21 | $ (0.03) | $ 0.07 | $ 0.04 |
| Diluted | 0.21 | (0.03) | 0.07 | 0.04 |
| (1) We have reclassified the income attributable to the
properties sold prior to or held for sale at December 31, 2013 to
discontinued operations. See Note 5 for additional information. | | | | |
| (2) The decrease in net income and amounts per share are
primarily attributable to gains on sales of real estate of $82,492,000 for
the first quarter as compared to losses of $29,997,000 for the second
quarter. | | | | |

104

*HEALTH CARE REIT, INC.*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended). The 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 U.S. generally accepted accounting principles. The 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 U.S. 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.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in a report entitled Internal Control — Integrated Framework.

The scope of management’s assessment as of December 31, 2014 did not include an assessment of the internal control over financial reporting for the Gracewell Healthcare acquisition because the business combination occurred during the year ended December 31, 2014. The acquired businesses represent 1% of total assets at December 31, 2014 and less than 1% of revenues and net operating income for the year then ended. The scope of management’s assessment on internal control over financial reporting for the year ended December 31, 2015 will include the aforementioned acquired operations.

Based on this assessment, using the criteria above, management concluded that the Company’s system of internal control over financial reporting was effective as of December 31, 2014.

The independent registered public accounting firm of Ernst & Young LLP, as auditors of the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended) occurred during the fourth quarter of the one-year period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

105

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

The Board of Directors and Shareholders of Health Care REIT, Inc.

We have audited Health Care REIT, Inc.’s 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 (the COSO criteria, 2013 framework). Health Care REIT, Inc.’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 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, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and 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.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the Gracewell Healthcare acquisition, which is included in the 2014 consolidated financial statements of Health Care REIT, Inc. and cumulatively constitute 1% of total assets at December 31, 2014 and less than 1% of revenues and net operating income for the year then ended. Our audit of the internal control over financial reporting of Health Care REIT, Inc. also did not include an evaluation of the internal control over financial reporting of the aforementioned relationship.

In our opinion, Health Care REIT, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Health Care REIT, Inc. as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2014 and our report dated February 20, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Toledo , Ohio

February 20, 2015

Item 9B. Other Information

Preferred Stock – Certificates of Elimination

On February 18, 2015, we filed certificates of elimination with the Delaware Secretary of State, which became effective upon filing, to eliminate from our Second Restated Certificate of Incorporation, as amended, all matters set forth in the certificates of designation for the Junior Participating Preferred Stock, Series A (the “Series A Stock”), and the 6% Series H Cumulative Convertible and Redeemable Preferred Stock (the “Series H Stock”). No shares of the Series A Stock or the Series H Stock were issued or outstanding at the time of the filing of the certificates of elimination.

106

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated herein by reference to the information under the headings “Election of Directors,” “Corporate Governance,” “Executive Officers,” and “Security Ownership of Directors and Management and Certain Beneficial Owners — Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement, which will be filed with the Securities and Exchange Commission (the “Commission”) prior to April 30, 2015.

We have adopted a Code of Business Conduct & Ethics that applies to our directors, officers and employees. The code is posted on the Internet at www.hcreit.com/investor-relations/governance. Any amendment to, or waivers from, the code that relate to any officer or director of the Company will be promptly disclosed on the Internet at www.hcreit.com.

In addition, the Board has adopted charters for the Audit, Compensation and Nominating/Corporate Governance Committees. These charters are posted on the Internet at www.hcreit.com/investor-relations/governance.

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.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the information under the headings “Executive Compensation” and “Director Compensation” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2015.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to the information under the headings “Security Ownership of Directors and Management and Certain Beneficial Owners” and “Equity Compensation Plan Information” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2015.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to the information under the headings “Corporate Governance — Independence and Meetings” and “Security Ownership of Directors and Management and Certain Beneficial Owners — Certain Relationships and Related Transactions” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2015.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated herein by reference to the information under the heading “Ratification of the Appointment of the Independent Registered Public Accounting Firm” in our definitive proxy statement, which will be filed with the Commission prior to April 30, 2015.

107

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) 1. Our Consolidated Financial Statements are included in Part II, Item 8:

Report of Independent Registered Public Accounting Firm	71
Consolidated
Balance Sheets – December 31, 2014 and 2013	72
Consolidated
Statements of Comprehensive Income — Years ended December 31, 2014, 2013
and 2012	73
Consolidated
Statements of Equity — Years ended December 31, 2014, 2013 and 2012	75
Consolidated
Statements of Cash Flows — Years ended December 31, 2014, 2013 and 2012	76
Notes
to Consolidated Financial Statements	77

The following Financial Statement Schedules are included in Item 15(c):

III – Real Estate and Accumulated Depreciation

IV – Mortgage Loans on Real Estate

The financial statement schedule required by Item15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K.

Exhibit Index:

The information required by this item is set forth on the Exhibit Index that follows the Financial Statement Schedules to this Annual Report on Form 10-K.

(b) Exhibits:

The exhibits listed on the Exhibit Index are either filed with this Form 10-K or incorporated by reference in accordance with Rule 12b-32 of the Securities Exchange Act of 1934.

Financial statement schedules are included beginning on page 111.

108

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 20, 2015

HEALTH CARE REIT, INC.

By: /s/ T homas J. DeRosa

Thomas J. DeRosa,

Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 20, 2015 by the following persons on behalf of the Registrant and in the capacities indicated.

/s/ Jeffrey H. Donahue **	/s/ Judith C. Pelham **
Jeffrey H. Donahue, Chairman
of the Board	Judith
C. Pelham, Director
/s/ William C. Ballard, Jr.**	/s/ Sergio D. Rivera**
William
C. Ballard, Jr., Director	Sergio
D. Rivera, Director
/s/ Peter J. Grua **	/s/ R. Scott Trumbull**
Peter
J. Grua, Director	R.
Scott Trumbull, Director
/s/ Fred S. Klipsch **	/s/ Thomas J. DeRosa
Fred
S. Klipsch, Director	Thomas
J. DeRosa, Chief Executive Officer
	and
Director
	(Principal
Executive Officer)
/s/ Geoffrey G. Meyers**	/s/ Scott A. Estes**
Geoffrey
G. Meyers, Director	Scott A.
Estes, Executive Vice President and Chief
	Financial
Officer (Principal Financial Officer)
/s/ T imothy J. Naughton**	/s/ Paul D. Nungester, Jr.**
Timothy J.
Naughton, Director	Paul
D. Nungester, Jr., Senior Vice President and Corporate
Controller (Principal Accounting Officer)
/s/ Sharon M. Oster **	**By: /s/ Thomas J. DeRosa
Sharon
M. Oster, Director	Thomas
J. DeRosa, Attorney-in-Fact

109

Health Care REIT, Inc.
Schedule III
Real Estate and
Accumulated Depreciation
December 31, 2014
(Dollars in thousands)		Initial Cost to Company			Gross Amount at Which
Carried at Close of Period
Description	Encumbrances	Land	Building &
Improvements	Cost Capitalized
Subsequent to Acquisition	Land	Building &
Improvements	Accumulated Depreciation (1)	Year Acquired	Year Built	Address
Seniors Housing Triple-Net:
Lafayette, LA $	-	$ 1,928	$ 10,483	$ 25	$ 1,928	$ 10,509	$ 3,246	2006	1993	204 Energy Parkway
Tulsa, OK	-	3,003	6,025	20	3,003	6,045	2,603	2006	1992	329 S. 79th E. Ave.
Lakeway, TX	-	5,142	18,574	2,001	5,142	20,575	662	2007	2011	2000 Medical Dr
Abilene, TX	-	950	20,987	-	950	20,987	283	2014	1998	6565 Central Park Boulevard
Abilene, TX	-	990	8,187	-	990	8,187	56	2014	1985	1250 East N 10th Street
Aboite Twp, IN	-	1,770	19,930	1,601	1,770	21,531	2,352	2010	2008	611 W County Line Rd South
Agawam, MA	-	880	16,112	2,134	880	18,246	6,259	2002	1993	1200 Suffield St.
Agawam, MA	-	1,230	13,618	593	1,230	14,211	1,548	2011	1975	61 Cooper Street
Agawam, MA	-	930	15,304	293	930	15,596	1,643	2011	1970	55 Cooper Street
Agawam, MA	-	920	10,661	36	920	10,697	1,191	2011	1985	464 Main Street
Agawam, MA	-	920	10,562	45	920	10,607	1,181	2011	1967	65 Cooper Street
Akron, OH	-	290	8,219	491	290	8,710	2,346	2005	1961	721 Hickory St.
Alexandria	-	630	7,535	229	630	7,764	1,853	2006	1915	209 Merriman Road
Alexandria, IN	-	190	6,495	-	190	6,495	24	2014	1982	1912 South Park Avenue
Alliance, OH	-	270	7,723	107	270	7,830	1,995	2006	1982	1785 Freshley Ave.
Albertville, AL	2,015	170	6,203	174	176	6,371	1,046	2010	1999	151 Woodham Dr.
Ames, IA	-	330	8,870	-	330	8,870	1,118	2010	1999	1325 Coconino Rd.
Anderson, SC	-	710	6,290	419	710	6,709	2,515	2003	1986	311 Simpson Rd.
Annapolis, MD	-	1,010	24,825	151	1,010	24,976	2,542	2011	1993	35 Milkshake Lane
Ansted, WV	-	240	14,113	108	240	14,221	1,422	2011	1982	106 Tyree Street, P.O. Drawer 400
Andover, MA	-	1,310	12,647	27	1,310	12,674	1,455	2011	1985	89 Morton Street
Avon Lake, OH	-	790	10,421	142	790	10,562	1,278	2011	2001	345 Lear Rd.
Apple Valley, CA	10,632	480	16,639	84	486	16,716	2,911	2010	1999	11825 Apple Valley Rd.
Asheboro, NC	-	290	5,032	165	290	5,197	1,633	2003	1998	514 Vision Dr.
Aspen Hill, MD	-	-	9,008	1,181	-	10,188	1,081	2011	1988	3227 Bel Pre Road
Asheville, NC	-	204	3,489	-	204	3,489	1,536	1999	1999	4 Walden Ridge Dr.
Asheville, NC	-	280	1,955	351	280	2,306	813	2003	1992	308 Overlook Rd.
Atlanta, GA	7,557	2,058	14,914	1,101	2,080	15,993	10,585	1997	1999	1460 S Johnson Ferry Rd.
Austin, TX	18,729	880	9,520	1,152	885	10,667	4,438	1999	1998	12429 Scofield Farms Dr.
Aurora, OH	-	1,760	14,148	106	1,760	14,254	1,664	2011	2002	505 S. Chillicothe Rd
Aurora, CO	-	2,600	5,906	7,915	2,600	13,821	4,064	2006	1988	14101 E. Evans Ave.
Aurora, CO	-	2,440	28,172	-	2,440	28,172	6,748	2006	2007	14211 E. Evans Ave.
Avon, IN	-	1,830	14,470	-	1,830	14,470	1,904	2010	2004	182 S Country RD. 550E
Avon, IN	-	900	19,453	-	900	19,453	71	2014	2013	10307 E. CR 100 N
Aventura, FL	-	4,540	33,986	438	4,540	34,424	2,146	2012	2001	2777 NE 183rd Street
Ayer, MA	-	-	22,074	3	-	22,077	2,260	2011	1988	400 Groton Road
Baltimore, MD	-	1,350	14,884	321	1,350	15,204	1,624	2011	1905	115 East Melrose Avenue
Baltimore, MD	-	900	5,039	147	900	5,186	653	2011	1969	6000 Bellona Avenue
Benbrook, TX	-	1,550	13,553	769	1,550	14,322	1,315	2011	1984	4242 Bryant Irvin Road
Burnaby, BC	9,998	9,094	16,515	-	9,094	16,515	59	2014	2006	7195 Canada Way
Beachwood, OH	-	1,260	23,478	-	1,260	23,478	8,393	2001	1990	3800 Park East Drive
Boardman, OH	-	1,200	12,800	-	1,200	12,800	2,585	2008	2008	8049 South Ave.
Brandon, MS	-	1,220	10,241	-	1,220	10,241	1,169	2010	1999	140 Castlewoods Blvd
Brecksville, OH	-	990	19,363	-	990	19,363	70	2014	2011	8757 Brecksville Road
Bedford, NH	-	2,250	28,831	5	2,250	28,836	2,936	2011	1978	25 Ridgewood Road
Bellingham, WA	8,580	1,500	19,861	121	1,507	19,975	3,380	2010	1996	4415 Columbine Dr.
Brookfield, WI	-	1,300	12,830	-	1,300	12,830	402	2012	2013	1185 Davidson Road
Brooks, AB	2,478	448	5,906	-	448	5,906	21	2014	2000	951 Cassils Road West
Brookville, IN	-	300	13,467	-	300	13,467	47	2014	1987	11049 State Road 101
Bowling Green, KY	-	3,800	26,700	149	3,800	26,849	4,409	2008	1992	1300 Campbell Lane
Bellingham, MA	-	9,270	-	-	9,270	-	-	2007	1900	Maple Street and High Street
Bethel Park, PA	-	1,700	16,007	-	1,700	16,007	2,525	2007	2009	5785 Baptist Road
Burlington, NC	-	280	4,297	707	280	5,004	1,545	2003	2000	3619 S. Mebane St.
Burlington, NC	-	460	5,467	-	460	5,467	1,735	2003	1997	3615 S. Mebane St.
Burlington, NC	-	810	11,263	-	810	11,263	41	2014	2012	2766 Grand Oaks Blvd
Bluefield, VA	-	900	12,463	32	900	12,495	1,309	2011	1990	Westwood Medical Park
Boca Raton, FL	-	1,440	31,048	893	1,440	31,941	1,955	2012	1989	1080 Northwest 15th Street
Braintree, MA	-	170	7,157	1,290	170	8,447	8,028	1997	1968	1102 Washington St.
Bradenton, FL	-	252	3,298	-	252	3,298	1,685	1996	1995	6101 Pointe W. Blvd.
Bradenton, FL	-	480	9,953	-	480	9,953	660	2012	2000	2800 60th Avenue West
Brick, NJ	-	1,290	25,247	278	1,290	25,525	2,268	2011	2000	458 Jack Martin Blvd.
Brick, NJ	-	1,170	17,372	1,102	1,180	18,464	1,916	2010	1998	515 Jack Martin Blvd
Brick, NJ	-	690	17,125	111	690	17,236	1,772	2010	1999	1594 Route 88
Brookline, MA	-	2,760	9,217	3,369	2,760	12,586	1,327	2011	1984	30 Webster Street
Brooklyn Park, MD	-	1,290	16,329	29	1,290	16,358	1,732	2011	1973	613 Hammonds Lane
Burleson, TX	-	670	13,985	250	670	14,235	1,391	2011	1988	300 Huguley Boulevard
Burleson, TX	-	3,150	10,437	-	3,150	10,437	146	2012	2014	621 Old Highway 1187
Bartlesville, OK	-	100	1,380	-	100	1,380	699	1996	1995	5420 S.E. Adams Blvd.
Broadview Heights, OH	-	920	12,400	2,393	920	14,793	4,705	2001	1984	2801 E. Royalton Rd.
Baltic, OH	-	50	8,709	189	50	8,898	2,226	2006	1983	130 Buena Vista St.
Braintree, England	-	-	16,789	-	-	16,789	91	2014	2009	Meadow Park Tortoiseshell Way
Bremerton, WA	-	390	2,210	144	390	2,354	487	2006	1999	3231 Pine Road
Bremerton, WA	-	830	10,420	193	830	10,613	1,300	2010	1984	3201 Pine Road NE
Bremerton, WA	-	590	2,899	-	590	2,899	60	2014	1997	3210 Rickey Road
Beattyville, KY	-	100	6,900	660	100	7,560	1,935	2005	1972	249 E. Main St.
Burlington, NJ	-	1,700	12,554	466	1,700	13,020	1,552	2011	1965	115 Sunset Road
Burlington, NJ	-	1,170	19,205	167	1,170	19,372	1,916	2011	1994	2305 Rancocas Road
Beverly Hills, CA	9,623	6,000	13,385	-	6,000	13,385	57	2014	2000	220 N Clark Drive
Bridgewater, NJ	-	1,850	3,050	-	1,850	3,050	1,244	2004	1970	875 Route 202/206 North
Bridgewater, NJ	-	1,730	48,201	941	1,746	49,125	5,042	2010	1999	2005 Route 22 West
Bridgewater, NJ	-	1,800	31,810	322	1,800	32,132	2,817	2011	2001	680 US-202/206 North
Bexleyheath, England	-	4,736	13,646	-	4,736	13,646	31	2014	1996	35 West Street
Byrdstown, TN	-	-	2,414	269	-	2,683	1,750	2004	1982	129 Hillcrest Dr.
Cambridge, MD	-	490	15,843	207	490	16,050	1,650	2011	1990	525 Glenburn Avenue
Calgary, AB	20,989	2,793	51,019	-	2,793	51,019	174	2014	1971	1729-90th Avenue SW
Calgary, AB	34,791	5,450	83,741	-	5,450	83,741	283	2014	2001	500 Midpark Way SE
Canton, MA	-	820	8,201	263	820	8,464	4,515	2002	1993	One Meadowbrook Way
Canton, NC	-	130	5,357	-	130	5,357	19	2014	1952	27 North Main Street
Columbia Heights, MN	-	825	14,175	163	825	14,338	1,223	2011	2009	3807 Hart Boulevard
Cleburne, TX	-	520	5,369	-	520	5,369	1,089	2006	2007	402 S Colonial Drive
Columbus, IN	-	610	3,190	-	610	3,190	411	2010	1998	2564 Foxpointe Dr.
Concord, NC	-	550	3,921	55	550	3,976	1,400	2003	1997	2452 Rock Hill Church Rd.
Cape May Court House, NJ	-	1,440	17,002	-	1,440	17,002	265	2014	1990	144 Magnolia Drive
Centreville, MD	-	600	14,602	241	600	14,843	1,562	2011	1978	205 Armstrong Avenue
Congleton, England	-	2,570	6,465	-	2,570	6,465	15	2014	1994	Rood Hill
Chickasha, OK	-	85	1,395	-	85	1,395	700	1996	1996	801 Country Club Rd.
Chatham, VA	-	320	14,046	-	320	14,046	55	2014	2009	100 Rorer Street
Chicago, IL	-	1,800	19,256	-	1,800	19,256	1,382	2012	2005	6700 South Keating Avenue
Chicago, IL	-	2,900	17,016	-	2,900	17,016	1,238	2012	2007	4239 North Oak Park Avenue
Chelmsford, MA	0	1,040	10,951	1,499	1,040	12,450	3,390	2003	1997	4 Technology Dr.
Chapel Hill, NC	-	354	2,646	783	354	3,429	1,188	2002	1997	100 Lanark Rd.
Chapel Hill, NC	-	470	7,512	-	470	7,512	29	2014	1999	405 Smith Level Road
Charleston, WV	-	440	17,575	297	440	17,873	1,772	2011	1998	1000 Association Drive, North Gate Business Park
Charleston, WV	-	410	5,430	13	410	5,444	615	2011	1979	699 South Park Road
Cinnaminson, NJ	-	860	6,663	149	860	6,812	809	2011	1965	1700 Wynwood Drive
Clarks Summit, PA	-	600	11,179	15	600	11,194	1,234	2011	1985	100 Edella Road
Clarks Summit, PA	-	400	6,529	54	400	6,583	739	2011	1997	150 Edella Road
Columbia, TN	-	341	2,295	-	341	2,295	1,005	1999	1999	5011 Trotwood Ave.
Columbia, TN	-	590	3,787	-	590	3,787	1,588	2003	1974	1410 Trotwood Ave.
Clevedon, England	-	3,583	21,374	-	3,583	21,374	188	2014	1994	18/19 Elton Road
Cleveland, TN	-	350	5,000	122	350	5,122	1,951	2001	1987	2750 Executive Park N.W.
Colchester, CT	-	980	4,860	495	980	5,355	687	2011	1986	59 Harrington Court
Clinton, MD	-	2,330	20,876	590	2,330	21,467	1,559	2012	1988	7520 Surratts Road
Clarksville, TN	-	330	2,292	-	330	2,292	996	1998	1998	2183 Memorial Dr.
Claremore, OK	-	155	1,427	6,130	155	7,557	850	1996	1996	1605 N. Hwy. 88
Cloquet, MN	-	340	4,660	120	340	4,780	431	2011	2006	705 Horizon Circle
Charles Town, WV	-	230	22,834	30	230	22,863	2,264	2011	1997	219 Prospect Ave
Clayton, NC	-	520	15,741	-	520	15,741	54	2014	2013	84 Johnson Estate Road
Columbia, SC	-	2,120	4,860	5,709	2,120	10,569	3,410	2003	2000	731 Polo Rd.
Camrose, AB	16,885	1,215	24,667	-	1,215	24,667	80	2014	2011	6821-50 Avenue
Concord, NH	-	780	18,423	446	780	18,869	1,874	2011	1972	20 Maitland Street
Concord, NH	-	1,760	43,179	568	1,760	43,747	4,352	2011	1994	239 Pleasant Street
Concord, NH	-	720	3,041	340	720	3,381	415	2011	1905	227 Pleasant Street
Conroe, TX	-	980	7,771	-	980	7,771	1,049	2009	2010	903 Longmire Road
Cobham, England	-	12,385	31,556	-	12,385	31,556	1,170	2013	2013	Redhill Road
Columbus, OH	-	530	5,170	8,255	1,070	12,885	3,269	2005	1968	1425 Yorkland Rd.
Columbus, OH	(0)	1,010	5,022	-	1,010	5,022	1,405	2006	1983	1850 Crown Park Ct.
Columbus, OH	-	1,010	4,931	13,620	1,860	17,701	4,435	2006	1978	5700 Karl Rd.
Cape Coral, FL	-	530	3,281	-	530	3,281	1,162	2002	2000	911 Santa Barbara Blvd.
Cape Coral, FL	9,065	760	18,868	-	760	18,868	1,263	2012	2009	831 Santa Barbara Boulevard
Coppell, TX	-	1,550	8,386	-	1,550	8,386	317	2012	2013	1530 East Sandy Lake Road
Cedar Grove, NJ	-	1,830	10,939	10	1,830	10,949	1,214	2011	1964	25 East Lindsley Road
Cedar Grove, NJ	-	2,850	27,737	21	2,850	27,757	2,895	2011	1970	536 Ridge Road
Carrollton, TX	-	4,280	31,444	734	4,280	32,178	829	2013	2010	2105 North Josey Lane
Cortland, NY	-	700	18,041	58	700	18,099	1,050	2012	2001	839 Bennie Road
Cary, NC	-	1,500	4,350	986	1,500	5,336	2,184	1998	1996	111 MacArthur
Carson City, NV	-	520	8,238	39	520	8,277	253	2013	1997	1111 W. College Parkway
Colts Neck, NJ	-	780	14,733	722	993	15,242	1,656	2010	2002	3 Meridian Circle
Chester, VA	-	1,320	18,136	-	1,320	18,136	70	2014	2009	12001 Iron Bridge Road
Citrus Heights, CA	14,747	2,300	31,876	507	2,300	32,383	5,577	2010	1997	7418 Stock Ranch Rd.
Canton, OH	-	300	2,098	-	300	2,098	917	1998	1998	1119 Perry Dr., N.W.
Castleton, IN	-	920	15,144	-	920	15,144	57	2014	2013	8405 Clearvista Lake
Catonsville, MD	-	1,330	15,003	549	1,330	15,552	1,645	2011	1973	16 Fusting Avenue
Crawfordsville, IN	-	720	17,239	-	720	17,239	64	2014	2013	517 Concord Road
Conyers, GA	-	2,740	19,302	227	2,740	19,529	1,205	2012	1998	1504 Renaissance Drive
Dedham, MA	-	1,360	9,830	-	1,360	9,830	3,737	2002	1996	10 CareMatrix Dr.
Denton, TX	-	1,760	8,305	-	1,760	8,305	774	2010	2011	2125 Brinker Rd
Dundalk, MD	-	1,770	32,047	785	1,770	32,831	3,305	2011	1978	7232 German Hill Road
Daniels, WV	-	200	17,320	49	200	17,370	1,732	2011	1986	1631 Ritter Drive
Danville, VA	-	410	3,954	722	410	4,676	1,506	2003	1998	149 Executive Ct.
Danville, VA	-	240	8,440	-	240	8,440	33	2014	1996	508 Rison Street
Dover, DE	-	400	7,717	38	400	7,755	849	2011	1997	1203 Walker Road
Dover, DE	-	600	22,266	90	600	22,356	2,278	2011	1984	1080 Silver Lake Blvd.
Daphne, AL	-	2,880	8,670	127	2,880	8,797	635	2012	2001	27440 County Road 13
Durham, NC	-	1,476	10,659	2,196	1,476	12,855	9,437	1997	1999	4434 Ben Franklin Blvd.
Dresher, PA	-	2,060	40,236	558	2,068	40,786	4,169	2010	2001	1405 N. Limekiln Pike
Defuniak Springs, FL	-	1,350	10,250	-	1,350	10,250	2,456	2006	1980	785 S. 2nd St.
Drayton Valley, AB	-	733	12,165	-	733	12,165	39	2014	2012	3902-47 Street
Eastbourne, England	-	5,141	30,858	-	5,141	30,858	268	2014	1999	Carew Road
Elizabethton, TN	-	310	4,604	336	310	4,940	1,898	2001	1980	1200 Spruce Lane
Edmond, OK	-	410	8,388	-	410	8,388	654	2012	2001	15401 North Pennsylvania Avenue
Edmond, OK	-	1,810	14,849	-	1,810	14,849	207	2014	1985	1225 Lakeshore Drive
Eden, NC	-	390	4,877	-	390	4,877	1,569	2003	1998	314 W. Kings Hwy.
Englewood, NJ	-	930	4,514	17	930	4,531	520	2011	1966	333 Grand Avenue
El Paso, TX	-	1,420	12,394	-	1,420	12,394	176	2014	1999	435 S Mesa Hills Drive
Elizabeth City, NC	-	200	2,760	2,011	200	4,771	1,816	1998	1999	400 Hastings Lane
Emeryville, CA	-	2,560	57,491	-	2,560	57,491	739	2014	2010	1440 40th Street
Englishtown, NJ	-	690	12,520	715	764	13,161	1,447	2010	1997	49 Lasatta Ave
East Norriton, PA	-	1,200	28,129	747	1,210	28,866	2,993	2010	1988	2101 New Hope St
Erin, TN	-	440	8,060	134	440	8,194	3,004	2001	1981	242 Rocky Hollow Rd.
Easton, MD	-	900	24,539	-	900	24,539	2,579	2011	1962	610 Dutchman's Lane
East Brunswick, NJ	-	1,380	34,229	489	1,380	34,717	3,010	2011	1998	606 Cranbury Rd.
Eatontown, NJ	-	1,190	23,358	67	1,190	23,426	2,438	2011	1996	3 Industrial Way East
Everett, WA	-	1,400	5,476	-	1,400	5,476	2,298	1999	1999	2015 Lake Heights Dr.
Fanwood, NJ	-	2,850	55,175	574	2,850	55,750	4,786	2011	1982	295 South Ave.
Fairfield, CA	-	1,460	14,040	1,541	1,460	15,581	5,162	2002	1998	3350 Cherry Hills St.
Farnborough, England	-	2,570	7,244	-	2,570	7,244	16	2014	1980	Bruntile Close, Reading Road
Franconia, NH	-	360	11,320	69	360	11,390	1,177	2011	1971	93 Main Street
Fairhope, AL	-	570	9,119	-	570	9,119	657	2012	1987	50 Spring Run Road
Fishers, IN	-	1,500	14,500	-	1,500	14,500	1,907	2010	2000	9745 Olympia Dr.
Franklin, NH	-	430	15,210	47	430	15,257	1,562	2011	1990	7 Baldwin Street
Follansbee, WV	-	640	27,670	49	640	27,719	2,795	2011	1982	840 Lee Road
Fall River, MA	-	620	5,829	4,856	620	10,685	4,457	1996	1973	1748 Highland Ave.
Fall River, MA	-	920	34,715	208	920	34,923	3,551	2011	1993	4901 North Main Street
Florence, NJ	-	300	2,978	-	300	2,978	1,049	2002	1999	901 Broad St.
Florence, AL	7,085	353	13,049	160	385	13,177	2,197	2010	1999	3275 County Road 47
Flourtown, PA	-	1,800	14,830	203	1,800	15,033	1,587	2011	1908	350 Haws Lane
Flower Mound, TX	-	1,800	8,414	-	1,800	8,414	507	2011	2012	4141 Long Prairie Road
Farmington, MI	-	570	6,615	-	570	6,615	25	2014	1974	34225 Grand River Avenue
Findlay, OH	-	200	1,800	-	200	1,800	848	1997	1997	725 Fox Run Rd.
Fresno, CA	-	2,500	35,800	118	2,500	35,918	5,905	2008	1991	7173 North Sharon Avenue
Folsom, CA	-	-	33,600	-	1,582	32,018	1,170	2013	2009	330 Montrose Drive
Forest City, NC	-	320	4,497	-	320	4,497	1,463	2003	1999	493 Piney Ridge Rd.
Fredericksburg, VA	-	1,000	20,000	1,200	1,000	21,200	5,242	2005	1999	3500 Meekins Dr.
Fredericksburg, VA	-	590	28,611	35	590	28,646	2,868	2011	1977	11 Dairy Lane
Fredericksburg, VA	-	3,700	22,016	59	3,700	22,075	1,284	2012	1992	12100 Chancellors Village
Fredericksburg, VA	-	1,130	23,214	-	1,130	23,214	82	2014	2010	140 Brimley Drive
Fremont, CA	19,186	3,400	25,300	1,821	3,456	27,065	6,710	2005	1987	2860 Country Dr.
Fair Lawn, NJ	-	2,420	24,504	444	2,420	24,948	2,564	2011	1962	12-15 Saddle River Road
Fort Ashby, WV	-	330	19,566	123	330	19,689	1,944	2011	1980	Diane Drive, Box 686
Fort Wayne, IN	-	170	8,232	-	170	8,232	1,686	2006	2006	2626 Fairfield Ave.
Fort Worth, TX	-	450	13,615	5,086	450	18,701	1,818	2010	2011	425 Alabama Ave.
Fayetteville, GA	-	560	12,665	309	560	12,974	778	2012	1994	1967 Highway 54 West
Gardner, MA	-	480	10,210	27	480	10,237	1,107	2011	1902	32 Hospital Hill Road
Grafton, WV	-	280	18,824	37	280	18,861	1,874	2011	1986	8 Rose Street
Greenfield, WI	-	-	15,204	-	890	14,314	484	2013	1983	5017 South 110th Street
Gig Harbor, WA	5,358	1,560	15,947	61	1,583	15,986	2,636	2010	1994	3213 45th St. Court NW
Granger, IN	-	1,670	21,280	2,401	1,670	23,681	2,536	2010	2009	6330 North Fir Rd
Glen Mills, PA	-	690	9,110	165	690	9,275	1,006	2011	1993	549 Baltimore Pike
Glenside, PA	-	1,940	16,867	153	1,940	17,020	1,786	2011	1905	850 Paper Mill Road
Gambrills, MD	-	2,500	16,726	-	2,500	16,726	283	2012	2014	1219 Waugh Chapel Road
Greendale, WI	-	2,060	35,383	522	2,060	35,905	2,612	2012	1988	5700 Mockingbird Lane
Greeneville, TN	-	400	8,290	507	400	8,797	2,629	2004	1979	106 Holt Ct.
Greenville, SC	-	310	4,750	-	310	4,750	1,432	2004	1997	23 Southpointe Dr.
Groton, CT	-	2,430	19,941	895	2,430	20,836	2,292	2011	1975	1145 Poquonnock Road
Graceville, FL	-	150	13,000	-	150	13,000	3,029	2006	1980	1083 Sanders Ave.
Granbury, TX	-	2,040	30,670	149	2,040	30,819	3,003	2011	2009	100 Watermark Boulevard
Granbury, TX	-	2,550	2,940	400	2,550	3,340	250	2012	1996	916 East Highway 377
Gardnerville, NV	12,399	1,143	10,831	776	1,164	11,586	8,166	1998	1999	1565-A Virginia Ranch Rd.
Georgetown, TX	-	200	2,100	-	200	2,100	976	1997	1997	2600 University Dr., E.
Grand Ledge, MI	7,748	1,150	16,286	5,119	1,150	21,405	1,986	2010	1999	4775 Village Dr
Greenville, NC	-	290	4,393	168	290	4,561	1,435	2003	1998	2715 Dickinson Ave.
Greensboro, NC	-	330	2,970	554	330	3,524	1,164	2003	1996	5809 Old Oak Ridge Rd.
Greensboro, NC	-	560	5,507	1,013	560	6,520	2,135	2003	1997	4400 Lawndale Dr.
Greensboro, NC	-	350	6,634	-	350	6,634	25	2014	2013	5918 Netfield Road
Gastonia, NC	-	470	6,129	-	470	6,129	1,934	2003	1998	1680 S. New Hope Rd.
Gastonia, NC	-	310	3,096	22	310	3,118	1,053	2003	1994	1717 Union Rd.
Gastonia, NC	-	400	5,029	120	400	5,149	1,639	2003	1996	1750 Robinwood Rd.
Glastonbury, CT	-	1,950	9,532	909	2,360	10,031	1,116	2011	1966	72 Salmon Brook Drive
Gettysburg, PA	-	590	8,913	91	590	9,003	1,022	2011	1987	867 York Road
Grass Valley, CA	4,340	260	7,667	55	260	7,722	212	2013	2001	415 Sierra College Drive
Greenwood, IN	-	1,550	22,770	81	1,550	22,851	2,540	2010	2007	2339 South SR 135
Hamilton, NJ	-	440	4,469	-	440	4,469	1,559	2001	1998	1645 Whitehorse-Mercerville Rd.
Harriman, TN	-	590	8,060	158	590	8,218	3,188	2001	1972	240 Hannah Rd.
Hattiesburg, MS	-	450	15,518	176	450	15,694	1,643	2010	2009	217 Methodist Hospital Blvd
Herne Bay, England	-	2,399	30,751	-	2,399	30,751	1,528	2013	2011	165 Reculver Road
Hockessin, DE	-	1,120	6,308	-	1,120	6,308	79	2014	1992	100 Saint Claire Drive
Hickory, NC	-	290	987	232	290	1,219	540	2003	1994	2530 16th St. N.E.
Haddonfield, NJ	-	-	-	2,480	-	2,480	2,480	2011	1900	132 Warwick Road
Highland Park, IL	-	2,820	15,832	187	2,820	16,019	872	2011	2012	1651 Richfield Avenue
Hemet, CA	-	870	3,405	-	870	3,405	673	2007	1996	25818 Columbia St.
Hemet, CA	13,550	1,890	28,606	650	1,899	29,247	7,377	2010	1989	1001 N. Lyon Ave
Hemet, CA	-	430	9,630	723	430	10,353	1,426	2010	1988	1001 N. Lyon Ave
High River, AB	-	1,138	40,937	-	1,138	40,937	132	2014	2014	660 7th Street
Hilltop, WV	-	480	25,355	15	480	25,370	2,564	2011	1977	Saddle Shop Road
Highlands Ranch, CO	-	940	3,721	4,983	940	8,704	1,454	2002	1999	9160 S. University Blvd.
Hollywood, FL	-	1,240	13,806	436	1,240	14,242	875	2012	2001	3880 South Circle Drive
Hamburg, PA	-	840	10,543	191	840	10,734	1,258	2011	1966	125 Holly Road
Homestead, FL	-	2,750	11,750	-	2,750	11,750	2,801	2006	1994	1990 S. Canal Dr.
Hanford, England	-	1,745	12,411	-	1,745	12,411	465	2013	2012	Bankhouse Road
Hinckley, England	-	2,726	5,296	-	2,726	5,296	219	2013	2013	Tudor Road
Huntington, WV	-	800	32,261	126	800	32,387	3,280	2011	1976	101 13th Street
Houston, TX	-	5,090	9,471	-	5,090	9,471	1,592	2007	2009	15015 Cypress Woods Medical Drive
Howell, MI	-	630	8,550	-	630	8,550	31	2014	1964	3003 West Grand River Avenue
High Point, NC	-	560	4,443	793	560	5,236	1,694	2003	2000	1568 Skeet Club Rd.
High Point, NC	-	370	2,185	410	370	2,595	899	2003	1999	1564 Skeet Club Rd.
High Point, NC	-	330	3,395	28	330	3,423	1,117	2003	1994	201 W. Hartley Dr.
High Point, NC	-	430	4,143	-	430	4,143	1,339	2003	1998	1560 Skeet Club Rd.
Hurricane, WV	-	620	21,454	805	620	22,258	2,255	2011	1986	590 N Poplar Fork Road
Hermitage, TN	-	1,500	9,856	47	1,500	9,902	929	2011	2006	4131 Andrew Jackson Parkway
Harleysville, PA	-	960	11,355	-	960	11,355	1,696	2008	2009	695 Main Street
Harrow, England	-	9,347	10,437	-	9,347	10,437	24	2014	2001	177 Preston Hill
Hatboro, PA	-	-	28,112	1,746	-	29,858	2,910	2011	1996	3485 Davisville Road
Hutchinson, KS	0	600	10,590	194	600	10,784	2,888	2004	1997	2416 Brentwood
Hatfield, England	-	3,692	9,504	-	3,692	9,504	359	2013	2012	St Albans Road East
Huron, OH	-	160	6,088	1,452	160	7,540	1,815	2005	1983	1920 Cleveland Rd. W.
Haverford, PA	-	1,880	33,993	588	1,883	34,578	3,540	2010	2000	731 Old Buck Lane
Hanover, IN	-	210	4,430	-	210	4,430	1,369	2004	2000	188 Thornton Rd
Howell, NJ	9,761	1,066	21,577	-	1,066	21,577	2,310	2010	2007	100 Meridian Place
Indianapolis, IN	-	495	6,287	22,565	495	28,852	8,017	2006	1981	8616 W. Tenth St.
Indianapolis, IN	-	255	2,473	12,123	255	14,596	3,933	2006	1981	8616 W.Tenth St.
Indianapolis, IN	-	870	14,696	-	870	14,696	56	2014	2014	1635 N Arlington Avenue
Indianapolis, IN	-	890	18,781	-	890	18,781	38	2014	2014	5404 Georgetown Road
Jackson, NJ	-	6,500	26,405	2,193	6,500	28,598	1,611	2012	2001	2 Kathleen Drive
Jefferson, OH	-	80	9,120	-	80	9,120	2,395	2006	1984	222 Beech St.
Jacksonville Beach, FL	-	1,210	26,207	472	1,210	26,679	1,591	2012	1999	1700 The Greens Way
Jamestown, TN	-	-	6,707	508	-	7,215	4,829	2004	1966	208 N. Duncan St.
Jupiter, FL	-	3,100	47,453	563	3,100	48,016	2,731	2012	2002	110 Mangrove Bay Way
Kokomo, IN	-	710	16,052	-	710	16,052	61	2014	2014	2200 S. Dixon Rd
Kirkstall, England	-	3,077	11,888	-	3,077	11,888	446	2013	2009	29 Broad Lane
Keene, NH	-	530	9,639	284	530	9,923	968	2011	1980	677 Court Street
Kennewick, WA	-	1,820	27,991	255	1,834	28,232	5,715	2010	1994	2802 W 35th Ave
Kenner, LA	-	1,100	10,036	328	1,100	10,364	7,543	1998	2000	1600 Joe Yenni Blvd
Kent, WA	-	940	20,318	10,470	940	30,788	5,271	2007	2000	24121 116th Avenue SE
Kennesaw, GA	-	940	10,848	389	940	11,236	701	2012	1998	5235 Stilesboro Road
Kirkland, WA	-	1,880	4,315	683	1,880	4,998	1,420	2003	1996	6505 Lakeview Dr.
Kennett Square, PA	-	1,050	22,946	143	1,083	23,056	2,386	2010	2008	301 Victoria Gardens Dr.
Laconia, NH	-	810	14,434	497	810	14,930	1,546	2011	1968	175 Blueberry Lane
Lee, MA	-	290	18,135	926	290	19,061	6,578	2002	1998	600 & 620 Laurel St.
Lancaster, CA	9,917	700	15,295	574	712	15,857	2,947	2010	1999	43051 15th St. West
Lancaster, PA	-	890	7,623	80	890	7,702	901	2011	1928	336 South West End Ave
Lancaster, NH	-	430	15,804	161	430	15,964	1,625	2011	1981	91 Country Village Road
Lancaster, NH	-	160	434	28	160	462	91	2011	1905	63 Country Village Road
Lebanon, NH	-	550	20,138	64	550	20,202	2,062	2011	1985	24 Old Etna Road
Lecanto, FL	-	200	6,900	-	200	6,900	1,996	2004	1986	2341 W. Norvell Bryant Hwy.
Leicester, England	-	3,863	30,823	-	3,863	30,823	1,635	2012	2010	307 London Road
Lexington, KY	-	1,980	21,269	-	1,980	21,269	77	2014	2013	2531 Old Rosebud Road
Langhorne, PA	-	1,350	24,881	117	1,350	24,998	2,618	2011	1979	262 Toll Gate Road
Longview, TX	0	610	5,520	-	610	5,520	1,129	2006	2007	311 E Hawkins Pkwy
Longwood, FL	-	1,260	6,445	-	1,260	6,445	602	2011	2011	425 South Ronald Reagan Boulevard
Libertyville, IL	-	6,500	40,024	-	6,500	40,024	4,059	2011	2001	901 Florsheim Dr
Lake Barrington, IL	-	3,400	66,179	46	3,400	66,225	3,772	2012	2000	22320 Classic Court
Lakewood, CO	-	2,160	28,091	-	2,160	28,091	614	2014	2010	7395 West Eastman Place
Lake Zurich, IL	-	1,470	9,830	-	1,470	9,830	983	2011	2007	550 America Court
Lillington, NC	-	470	17,588	-	470	17,588	64	2014	2013	54 Red Mulberry Way
Lillington, NC	-	500	16,460	-	500	16,460	57	2014	1999	2041 NC-210 N
Leominster, MA	-	530	6,201	25	530	6,226	746	2011	1966	44 Keystone Drive
Lincoln, NE	-	390	13,807	-	390	13,807	1,694	2010	2000	7208 Van Dorn St.
Lenoir, NC	-	190	3,748	641	190	4,389	1,413	2003	1998	1145 Powell Rd., N.E.
Linwood, NJ	-	800	21,984	668	838	22,614	2,409	2010	1997	432 Central Ave
Loganville, GA	-	1,430	22,912	557	1,430	23,469	1,516	2012	1997	690 Tommy Lee Fuller Drive
Louisville, KY	-	490	10,010	2,767	490	12,777	3,400	2005	1978	4604 Lowe Rd
LaPlata, MD	-	700	19,068	466	700	19,534	2,018	2011	1984	One Magnolia Drive
Las Vegas, NV	-	580	23,420	-	580	23,420	2,088	2011	2002	2500 North Tenaya Way
Lethbridge, AB	1,844	1,448	3,280	-	1,448	3,280	15	2014	2003	785 Columbia Boulevard West
Lethbridge, AB	3,720	737	8,178	-	737	8,178	26	2014	2004	1730 10th Avenue
Litchfield, CT	-	1,240	17,908	164	1,250	18,062	1,882	2010	1998	19 Constitution Way
Little Neck, NY	-	3,350	38,461	780	3,355	39,235	4,076	2010	2000	55-15 Little Neck Pkwy.
Lutherville, MD	-	1,100	19,786	1,579	1,100	21,365	2,127	2011	1988	515 Brightfield Road
Livermore, CA	10,065	4,100	24,996	-	4,100	24,996	106	2014	1974	35 Fenton Street
Lewisburg, WV	-	260	3,699	70	260	3,769	451	2011	1995	331 Holt Lane
Lowell, MA	-	1,070	13,481	103	1,070	13,584	1,489	2011	1975	841 Merrimack Street
Lowell, MA	-	680	3,378	30	680	3,408	457	2011	1969	30 Princeton Blvd
Lawrence, KS	3,604	250	8,716	-	250	8,716	566	2012	1996	3220 Peterson Road
Lakewood Ranch, FL	-	650	6,714	1,988	650	8,702	506	2011	2012	8230 Nature's Way
Lakewood Ranch, FL	7,191	1,000	22,388	-	1,000	22,388	1,471	2012	2005	8220 Natures Way
Lexington, NC	-	200	3,900	1,015	200	4,915	1,664	2002	1997	161 Young Dr.
Lynchburg, VA	-	340	16,122	-	340	16,122	60	2014	2013	189 Monica Blvd
Mahwah, NJ	-	-	-	785	785	-	-	2012	1900	15 Edison Road
Fayetteville, NY	-	410	3,962	500	410	4,462	1,545	2001	1997	5125 Highbridge St.
Marlinton, WV	-	270	8,430	11	270	8,441	896	2011	1987	Stillwell Road, Route 1
Marianna, FL	-	340	8,910	-	340	8,910	2,070	2006	1997	2600 Forest Glenn Tr.
Middleburg Heights, OH	-	960	7,780	-	960	7,780	2,156	2004	1998	15435 Bagley Rd.
Manteca, CA	6,091	1,300	12,125	1,451	1,312	13,564	3,561	2005	1986	430 N. Union Rd.
Macungie, PA	-	960	29,033	17	960	29,049	2,921	2011	1994	1718 Spring Creek Road
Manchester, NH	-	1,080	3,059	-	1,080	3,059	16	2014	1978	191 Hackett Hill Road
McMurray, PA	-	1,440	15,805	1,894	1,440	17,699	1,486	2010	2011	240 Cedar Hill Dr
Mechanicsburg, PA	-	1,350	16,650	-	1,350	16,650	1,520	2011	1971	4950 Wilson Lane
Mercerville, NJ	-	860	9,929	115	860	10,045	1,113	2011	1967	2240 White Horse- Merceville Road
Mendham, NJ	-	1,240	27,169	633	1,240	27,802	2,768	2011	1968	84 Cold Hill Road
Louisville, KY	-	430	7,135	163	430	7,298	2,843	2002	1974	2529 Six Mile Lane
Medicine Hat, AB	2,990	1,112	6,554	-	1,112	6,554	24	2014	1999	65 Valleyview Drive SW
Meriden, CT	-	1,300	1,472	5	1,300	1,477	338	2011	1968	845 Paddock Ave
Melbourne, FL	-	7,070	48,257	13,257	7,070	61,514	8,255	2007	2009	7300 Watersong Lane
Mesa, AZ	6,015	950	9,087	713	950	9,800	3,787	1999	2000	7231 E. Broadway
Morgantown, KY	-	380	3,705	615	380	4,320	1,404	2003	1965	206 S. Warren St.
Morgantown, WV	-	190	15,633	20	190	15,653	1,248	2011	1997	161 Bakers Ridge Road
McHenry, IL	-	1,576	-	-	1,576	-	-	2006	1900	_
Middleton, WI	-	420	4,006	600	420	4,606	1,462	2001	1991	6701 Stonefield Rd.
Middletown, RI	-	1,480	19,703	-	1,480	19,703	2,076	2011	1975	333 Green End Avenue
McKinney, TX	-	1,570	7,389	-	1,570	7,389	1,022	2009	2010	2701 Alma Rd.
Mill Creek, WA	28,094	10,150	60,274	614	10,179	60,859	12,788	2010	1998	14905 Bothell-Everett Hwy
Milford, DE	-	400	7,816	40	400	7,855	858	2011	1997	500 South DuPont Boulevard
Milford, DE	-	680	19,216	58	680	19,274	2,015	2011	1905	700 Marvel Road
Midland, MI	-	200	11,025	5,522	200	16,547	1,244	2010	1994	2325 Rockwell Dr
Millersville, MD	-	680	1,020	25	680	1,045	1,045	2011	1962	899 Cecil Avenue
Melville, NY	-	4,280	73,283	1,224	4,282	74,505	7,661	2010	2001	70 Pinelawn Rd
Monmouth Junction, NJ	-	720	6,209	57	720	6,266	733	2011	1996	2 Deer Park Drive
Marmet, WV	-	540	26,483	-	540	26,483	2,623	2011	1986	1 Sutphin Drive
Monclova, OH	-	1,750	12,243	-	1,750	12,243	670	2011	2013	6935 Monclova Road
Menomonee Falls, WI	-	1,020	6,984	1,607	1,020	8,591	1,374	2006	2007	W128 N6900 Northfield Drive
Manahawkin, NJ	-	1,020	20,361	122	1,020	20,483	2,126	2011	1994	1361 Route 72 West
Manalapan, NJ	-	900	22,624	156	900	22,780	1,991	2011	2001	445 Route 9 South
Monroe, NC	-	470	3,681	648	470	4,329	1,429	2003	2001	918 Fitzgerald St.
Monroe, NC	-	310	4,799	857	310	5,656	1,760	2003	2000	919 Fitzgerald St.
Monroe, NC	-	450	4,021	114	450	4,135	1,363	2003	1997	1316 Patterson Ave.
Manassas, VA	-	750	7,446	530	750	7,976	2,304	2003	1996	8341 Barrett Dr.
Montville, NJ	-	3,500	31,002	428	3,500	31,429	2,789	2011	1988	165 Changebridge Rd.
Monroe, WA	-	2,560	34,460	304	2,584	34,741	5,841	2010	1994	15465 179th Ave. SE
Morton Grove, IL	-	1,900	19,374	152	1,900	19,526	1,618	2010	2011	5520 N. Lincoln Ave.
Monroe Twp, NJ	-	1,160	13,193	75	1,160	13,268	1,479	2011	1996	292 Applegarth Road
Moyock, NC	-	280	13,387	-	280	13,387	48	2014	2011	141 Moyock Landing Drive
Mount Pleasant, SC	-	-	17,200	-	4,052	13,149	662	2013	1985	1200 Hospital Drive
Memphis, TN	-	940	5,963	-	940	5,963	2,129	2004	1951	1150 Dovecrest Rd.
Memphis, TN	-	390	9,660	1,600	390	11,260	1,326	2010	1981	141 N. McLean Blvd.
Marietta, GA	-	1,270	10,519	446	1,270	10,966	670	2012	1997	3039 Sandy Plains Road
Marlborough, England	-	3,380	8,615	-	3,380	8,615	20	2014	1999	The Common
Meridian, ID	-	3,600	20,802	251	3,600	21,053	6,584	2006	2008	2825 E. Blue Horizon Dr.
Morehead City, NC	-	200	3,104	1,648	200	4,752	1,815	1999	1999	107 Bryan St.
Marlton, NJ	-	-	38,300	1,830	-	40,130	6,384	2008	1994	92 Brick Road
Marion, IN	-	720	12,750	-	720	12,750	48	2014	2012	614 W. 14th Street
Marion, IN	-	990	9,190	-	990	9,190	41	2014	1976	505 N. Bradner Avenue
Marysville, WA	4,513	620	4,780	329	620	5,109	1,570	2003	1998	9802 48th Dr. N.E.
Merrillville, IN	-	700	11,699	154	700	11,853	2,132	2007	2008	9509 Georgia St.
Monterey, TN	-	-	4,195	410	-	4,605	3,034	2004	1977	410 W. Crawford Ave.
Missoula, MT	-	550	7,490	377	550	7,867	1,935	2005	1998	3620 American Way
Mansfield, TX	-	660	5,251	-	660	5,251	1,086	2006	2007	2281 Country Club Dr
Louisville, KY	-	350	4,675	133	350	4,808	1,903	2002	1975	1120 Cristland Rd.
Moorestown, NJ	-	2,060	51,628	813	2,063	52,438	5,384	2010	2000	1205 N. Church St
Moorestown, NJ	-	6,400	23,875	-	6,400	23,875	414	2012	2014	250 Marter Avenue
Mishawaka, IN	-	740	16,122	-	740	16,122	62	2014	2013	60257 Bodnar Blvd
Mountain City, TN	-	220	5,896	660	220	6,556	4,179	2001	1976	919 Medical Park Dr.
Monteagle, TN	-	310	3,318	-	310	3,318	1,293	2003	1980	218 Second St., N.E.
Martinsburg, WV	-	340	17,180	50	340	17,230	1,719	2011	1987	2720 Charles Town Road
Matthews, NC	-	560	4,738	-	560	4,738	1,569	2003	1998	2404 Plantation Center Dr.
Martinsville, VA	-	349	-	-	349	-	-	2003	1900	Rolling Hills Rd. & US Hwy. 58
Mt. Vernon, WA	-	400	2,200	156	400	2,356	501	2006	2001	3807 East College Way
Mount Vernon, WA	-	3,440	21,842	-	3,440	21,842	102	2014	1987	1810 E. Division Street
Matawan, NJ	-	1,830	20,618	7	1,830	20,625	1,769	2011	1965	625 State Highway 34
Millville, NJ	-	840	29,944	104	840	30,048	3,071	2011	1986	54 Sharp Street
Nacogdoches, TX	0	390	5,754	-	390	5,754	1,169	2006	2007	5902 North St
North Augusta, SC	-	332	2,558	-	332	2,558	1,109	1999	1998	105 North Hills Dr.
North Andover, MA	-	950	21,817	54	950	21,870	2,243	2011	1977	140 Prescott Street
North Andover, MA	-	1,070	17,341	1,303	1,070	18,644	1,928	2011	1990	1801 Turnpike Street
Naugatuck, CT	-	1,200	15,826	176	1,200	16,002	1,678	2011	1980	4 Hazel Avenue
New Braunfels, TX	-	1,200	19,800	-	1,200	19,800	1,998	2011	2009	2294 East Common Street
Newcastle Under Lyme, England	-	1,402	7,141	-	1,402	7,141	267	2013	2010	Hempstalls Lane
Newcastle-under-Lyme, England	-	1,421	6,991	-	1,421	6,991	16	2014	1999	Silverdale Road
North Cape May, NJ	-	600	22,266	36	600	22,302	2,275	2011	1995	700 Townbank Road
Needham, MA	-	1,610	13,715	366	1,610	14,081	5,445	2002	1994	100 West St.
Newport, VT	-	290	3,867	-	290	3,867	452	2011	1967	35 Bel-Aire Drive
Northampton, England	-	6,543	21,906	-	6,543	21,906	851	2013	2011	Cliftonville Road
Northampton, England	-	2,542	7,901	-	2,542	7,901	44	2014	2014	Cliftonville Road
New Haven, IN	-	176	3,524	-	176	3,524	1,305	2004	1981	1201 Daly Dr.
New Moston, England	-	1,869	5,529	-	1,869	5,529	216	2013	2010	90a Broadway
Nuneaton, England	-	4,198	11,342	-	4,198	11,342	424	2013	2011	132 Coventry Road
Naples, FL	-	1,716	17,306	1,878	1,738	19,162	16,523	1997	1999	1710 S.W. Health Pkwy.
Naples, FL	-	550	5,450	-	550	5,450	1,698	2004	1968	2900 12th St. N.
Naperville, IL	-	3,470	29,547	-	3,470	29,547	3,054	2011	2001	504 North River Road
Naperville, IL	-	1,550	12,237	-	1,550	12,237	330	2012	2013	1936 Brookdale Road
Norman, OK	-	55	1,484	-	55	1,484	813	1995	1995	1701 Alameda Dr.
Norman, OK	10,776	1,480	33,330	-	1,480	33,330	2,144	2012	1985	800 Canadian Trails Drive
Norristown, PA	-	1,200	19,488	1,762	1,200	21,250	2,101	2011	1995	1700 Pine Street
Nashville, TN	-	4,910	29,590	-	4,910	29,590	5,152	2008	2007	15 Burton Hills Boulevard
Nashville, TN	-	4,500	12,287	-	4,500	12,287	649	2011	2013	832 Wedgewood Ave
Nuthall, England	-	2,056	7,908	-	2,056	7,908	21	2014	2014	172A Nottingham Road
Nuthall, England	-	3,155	13,177	-	3,155	13,177	498	2013	2011	172 Nottingham Road
Newark, DE	-	560	21,220	1,488	560	22,708	5,775	2004	1998	200 E. Village Rd.
Oakland, CA	-	4,760	16,143	-	4,760	16,143	214	2014	2002	468 Perkins Street
Ocala, FL	-	1,340	10,564	-	1,340	10,564	1,571	2008	2009	2650 SE 18TH Avenue
Ogden, UT	-	360	6,700	699	360	7,399	1,935	2004	1998	1340 N. Washington Blv.
Oak Hill, WV	-	240	24,506	-	240	24,506	2,422	2011	1988	422 23rd Street
Oak Hill, WV	-	170	721	-	170	721	157	2011	1999	438 23rd Street
Oklahoma City, OK	-	590	7,513	-	590	7,513	1,347	2007	2008	13200 S. May Ave
Oklahoma City, OK	-	760	7,017	-	760	7,017	1,175	2007	2009	11320 N. Council Road
Olds, AB	-	265	9,172	-	265	9,172	29	2014	2001	5600 Sunrise Crescent
Olympia, WA	6,619	550	16,689	158	553	16,844	2,827	2010	1995	616 Lilly Rd. NE
Omaha, NE	-	370	10,230	-	370	10,230	1,276	2010	1998	11909 Miracle Hills Dr.
Omaha, NE	-	380	8,864	-	380	8,864	1,150	2010	1999	5728 South 108th St.
Owenton, KY	-	100	2,400	-	100	2,400	819	2005	1979	905 Hwy. 127 N.
Ormond Beach, FL	-	-	2,739	452	-	3,191	1,791	2002	1983	103 N. Clyde Morris Blvd.
Orwigsburg, PA	-	650	20,632	134	650	20,766	2,143	2011	1992	1000 Orwigsburg Manor Drive
Oneonta, NY	-	80	5,020	-	80	5,020	933	2007	1996	1846 County Highway 48
Overland Park, KS	-	3,730	27,076	340	3,730	27,416	3,866	2008	2009	12000 Lamar Avenue
Overland Park, KS	-	4,500	29,105	7,295	4,500	36,400	4,142	2010	1988	6101 W 119th St
Owensboro, KY	-	240	6,760	609	240	7,369	1,948	1993	1966	1614 W. Parrish Ave.
Owensboro, KY	-	225	13,275	-	225	13,275	3,688	2005	1964	1205 Leitchfield Rd.
Owasso, OK	-	215	1,380	-	215	1,380	673	1996	1996	12807 E. 86th Place N.
Oxford, MI	11,275	1,430	15,791	-	1,430	15,791	1,812	2010	2001	701 Market St
Paris, TX	0	490	5,452	-	490	5,452	2,967	2005	2006	750 N Collegiate Dr
Panama City Beach, FL	-	900	7,717	35	900	7,752	731	2011	2005	6012 Magnolia Beach Road
Petoskey, MI	5,900	860	14,452	-	860	14,452	1,544	2011	1997	965 Hager Dr
Pigeon Forge, TN	-	320	4,180	117	320	4,297	1,738	2001	1986	415 Cole Dr.
Philadelphia, PA	-	2,700	25,709	333	2,700	26,041	2,708	2011	1976	184 Bethlehem Pike
Philadelphia, PA	-	2,930	10,433	3,373	2,930	13,806	1,475	2011	1952	1526 Lombard Street
Philadelphia, PA	-	540	11,239	65	540	11,304	1,141	2011	1965	8015 Lawndale Avenue
Philadelphia, PA	-	1,810	16,898	32	1,810	16,931	1,946	2011	1972	650 Edison Avenue
Piqua, OH	-	204	1,885	-	204	1,885	844	1997	1997	1744 W. High St.
Parkersburg, WV	-	390	21,288	643	390	21,931	2,187	2011	1979	723 Summers Street
Plattsmouth, NE	-	250	5,650	-	250	5,650	742	2010	1999	1913 E. Highway 34
Plymouth, MI	-	1,490	19,990	129	1,490	20,119	2,192	2010	1972	14707 Northville Rd
Pella, IA	-	870	6,716	89	870	6,805	417	2012	2002	2602 Fifield Road
Palm Coast, FL	-	870	10,957	-	870	10,957	1,495	2008	2010	50 Town Ct.
Phillipsburg, NJ	-	800	21,175	193	800	21,368	2,244	2011	1992	290 Red School Lane
Phillipsburg, NJ	-	300	8,114	38	300	8,151	856	2011	1905	843 Wilbur Avenue
Palestine, TX	-	180	4,320	1,300	180	5,620	1,201	2006	2005	1625 W. Spring St.
Plainview, NY	-	3,990	11,969	391	3,990	12,361	1,210	2011	1963	150 Sunnyside Blvd
Pennington, NJ	-	1,380	27,620	607	1,462	28,145	2,385	2011	2000	143 West Franklin Avenue
Pinehurst, NC	-	290	2,690	484	290	3,174	1,085	2003	1998	17 Regional Dr.
Ponoka, AB	4,464	498	12,920	-	498	12,920	41	2014	2010	4004 40th Street Close
Princeton, NJ	-	1,730	30,888	1,150	1,775	31,992	2,752	2011	2001	155 Raymond Road
Parkville, MD	-	1,350	16,071	274	1,350	16,345	1,729	2011	1980	8710 Emge Road
Parkville, MD	-	791	11,186	2	791	11,189	1,223	2011	1972	8720 Emge Road
Parkville, MD	-	1,100	11,768	-	1,100	11,768	1,273	2011	1972	1801 Wentworth Road
Post Falls, ID	-	2,700	14,217	2,181	2,700	16,398	2,770	2007	2008	460 N. Garden Plaza Ct.
Port St. Joe, FL	-	370	2,055	-	370	2,055	1,060	2004	1982	220 9th St.
Pennsauken, NJ	-	900	10,780	179	900	10,959	1,297	2011	1985	5101 North Park Drive
Port St. Lucie, FL	-	8,700	47,230	5,882	8,700	53,112	6,406	2008	2010	10685 SW Stony Creek Way
Paso Robles, CA	-	1,770	8,630	693	1,770	9,323	3,150	2002	1998	1919 Creston Rd.
Pittsburgh, PA	-	1,750	8,572	115	1,750	8,687	2,390	2005	1998	100 Knoedler Rd.
Pottsville, PA	-	950	26,964	202	950	27,166	2,833	2011	1990	1000 Schuylkill Manor Road
Puyallup, WA	11,296	1,150	20,776	201	1,156	20,971	3,652	2010	1985	123 Fourth Ave. NW
Quakertown, PA	-	1,040	25,389	72	1,040	25,461	2,599	2011	1977	1020 South Main Street
Rochdale, MA	-	-	7,100	-	690	6,410	246	2013	1994	111 Huntoon Memorial Highway
Rockville, MD	-	-	16,398	10	-	16,408	1,237	2012	1986	9701 Medical Center Drive
Red Bank, NJ	-	1,050	21,275	267	1,050	21,542	1,877	2011	1997	One Hartford Dr.
Ridgely, TN	-	300	5,700	97	300	5,797	2,173	2001	1990	117 N. Main St.
Reidsville, NC	-	170	3,830	857	170	4,687	1,605	2002	1998	2931 Vance St.
Ridgewood, NJ	-	1,350	16,170	479	1,350	16,650	1,686	2011	1971	330 Franklin Turnpike
Reading, PA	-	980	19,906	102	980	20,008	2,073	2011	1994	5501 Perkiomen Ave
Ridgeland, MS	-	520	7,675	427	520	8,102	2,362	2003	1997	410 Orchard Park
Rogersville, TN	-	350	3,278	-	350	3,278	1,282	2003	1980	109 Hwy. 70 N.
Rehoboth Beach, DE	-	960	24,248	368	973	24,603	2,573	2010	1999	36101 Seaside Blvd
Rocky Hill, CT	-	1,090	6,710	1,500	1,090	8,210	2,281	2003	1996	60 Cold Spring Rd.
Rockville, CT	-	1,500	4,835	76	1,500	4,911	688	2011	1960	1253 Hartford Turnpike
Rockledge, FL	-	360	4,117	-	360	4,117	1,868	2001	1970	1775 Huntington Lane
Raleigh, NC	24,942	3,530	59,589	-	3,530	59,589	3,538	2012	2002	5301 Creedmoor Road
Raleigh, NC	-	2,580	16,837	-	2,580	16,837	1,092	2012	1988	7900 Creedmoor Road
Richmond, VA	-	-	12,000	-	250	11,750	440	2013	1989	2220 Edward Holland Drive
Romeoville, IL	-	1,895	-	-	1,895	-	-	2006	1900	Grand Haven Circle
Reno, NV	-	1,060	11,440	605	1,060	12,045	3,217	2004	1998	5165 Summit Ridge Road
Rohnert Park, CA	13,494	6,500	18,700	1,498	6,546	20,152	5,062	2005	1986	4855 Snyder Lane
Ruston, LA	-	710	9,790	-	710	9,790	970	2011	1988	1401 Ezelle St
Rugeley, England	-	2,399	12,958	-	2,399	12,958	513	2013	2010	Horse Fair
Rutland, VT	-	1,190	23,655	87	1,190	23,743	2,467	2011	1968	9 Haywood Avenue
Rockville Centre, NY	-	4,290	20,310	436	4,290	20,746	1,902	2011	2002	260 Maple Ave
Rockwood, TN	-	500	7,116	741	500	7,857	2,905	2001	1979	5580 Roane State Hwy.
Roswell, GA	7,759	1,107	9,627	793	1,114	10,413	7,337	1997	1999	655 Mansell Rd.
Sacramento, CA	10,125	940	14,781	96	952	14,865	2,588	2010	1978	6350 Riverside Blvd
Sanatoga, PA	-	980	30,695	37	980	30,733	3,082	2011	1993	225 Evergreen Road
San Angelo, TX	-	260	8,800	425	260	9,225	2,414	2004	1997	2695 Valleyview Blvd.
San Angelo, TX	-	1,050	24,689	-	1,050	24,689	330	2014	1999	6101 Grand Court Road
San Ramon, CA	8,827	2,430	17,488	52	2,435	17,535	2,918	2010	1989	18888 Bollinger Canyon Rd
South Bend, IN	-	670	17,770	-	670	17,770	41	2014	2014	52565 State Road 933
San Bernardino, CA	-	3,700	14,300	687	3,700	14,987	2,366	2008	1993	1760 W. 16th St.
South Boston, MA	-	385	2,002	5,218	385	7,220	3,154	1995	1961	804 E. Seventh St.
Salisbury, NC	-	370	5,697	168	370	5,865	1,848	2003	1997	2201 Statesville Blvd.
Scott Depot, WV	-	350	6,876	58	350	6,934	754	2011	1995	5 Rolling Meadows
Scranton, PA	-	440	17,618	-	440	17,618	62	2014	2005	2741 Blvd. Ave
Scranton, PA	-	320	12,150	-	320	12,150	43	2014	2013	2751 Boulevard Ave
St. Charles, MD	-	580	15,555	84	580	15,639	1,641	2011	1996	4140 Old Washington Highway
South Croydon, England	-	3,116	2,648	-	3,116	2,648	6	2014	1997	42-46 Bramley Hill
San Diego, CA	-	-	22,003	1,845	-	23,848	3,683	2008	1992	555 Washington St.
Seattle, WA	7,563	5,190	9,350	350	5,199	9,692	2,615	2010	1962	11501 15th Ave NE
Seattle, WA	7,055	3,420	15,555	138	3,420	15,693	2,938	2010	2000	2326 California Ave SW
Seattle, WA	-	2,630	10,257	36	2,630	10,293	2,019	2010	2003	4611 35th Ave SW
Seattle, WA	28,100	10,670	37,291	157	10,700	37,418	8,809	2010	2005	805 4th Ave N
Seaford, DE	-	720	14,029	53	720	14,082	1,539	2011	1977	1100 Norman Eskridge Highway
Seaford, DE	-	830	7,995	1,547	830	9,542	623	2012	1992	715 East King Street
Severna Park, MD	-	2,120	31,273	808	2,120	32,081	3,178	2011	1981	24 Truckhouse Road
Loxley, England	-	1,729	19,784	-	1,729	19,784	982	2013	2008	Loxley Road
Shillington, PA	-	1,020	19,569	956	1,020	20,525	2,084	2011	1964	500 E Philadelphia Ave
Shelbyville, KY	-	630	3,870	602	630	4,472	1,096	2005	1965	1871 Midland Trail
Shelton, WA	-	530	17,049	296	530	17,345	1,192	2012	1989	900 W Alpine Way
Shepherdstown, WV	-	250	13,806	14	250	13,819	1,391	2011	1990	80 Maddex Drive
Sherman, TX	0	700	5,221	-	700	5,221	1,131	2005	2006	1011 E. Pecan Grove Rd.
Shawnee, OK	-	80	1,400	-	80	1,400	706	1996	1995	3947 Kickapoo
Southbury, CT	-	1,860	23,613	958	1,860	24,571	2,381	2011	2001	655 Main St
Silvis, IL	-	880	16,420	139	880	16,559	1,914	2010	2005	1900 10th St.
Sissonville, WV	-	600	23,948	54	600	24,003	2,434	2011	1981	302 Cedar Ridge Road
Selbyville, DE	-	750	25,912	220	769	26,113	2,743	2010	2008	21111 Arrington Dr
Salem, OR	-	449	5,171	-	449	5,172	2,220	1999	1998	1355 Boone Rd. S.E.
Columbus, IN	-	530	6,710	-	530	6,710	2,217	2002	2001	2011 Chapa Dr.
Stamford, England	-	2,298	4,089	-	2,298	4,089	10	2014	1998	Priory Road
Somerset, MA	-	1,010	29,577	152	1,010	29,728	2,990	2011	1998	455 Brayton Avenue
Smithfield, NC	0	290	5,680	-	290	5,680	1,806	2003	1998	830 Berkshire Rd.
Smithfield, NC	-	360	8,220	-	360	8,220	29	2014	1999	250 Highway 210 West
San Antonio, TX	-	6,120	28,169	2,124	6,120	30,293	2,672	2010	2011	2702 Cembalo Blvd
San Antonio, TX	-	-	17,303	-	-	17,303	5,084	2007	2007	8902 Floyd Curl Dr.
Sonoma, CA	14,705	1,100	18,400	1,374	1,109	19,764	4,887	2005	1988	800 Oregon St.
Spring City, TN	-	420	6,085	3,210	420	9,295	3,120	2001	1987	331 Hinch St.
Springfield, IL	-	-	10,100	-	768	9,332	409	2013	2010	701 North Walnut Street
Springfield, IL	-	990	13,378	-	990	13,378	48	2014	2013	3089 Old Jacksonville Road
Spring House, PA	-	900	10,780	199	900	10,979	1,207	2011	1900	905 Penllyn Pike
Sparks, NV	-	3,700	46,526	-	3,700	46,526	6,862	2007	2009	275 Neighborhood Way
Spencer, WV	-	190	8,810	28	190	8,838	924	2011	1988	825 Summit Street
Spruce Pine, NC	-	240	8,340	-	240	8,340	31	2014	2012	13681 Highway 226 South
South Pittsburg, TN	-	430	5,628	-	430	5,628	1,901	2004	1979	201E. 10th St.
Shrewsbury, NJ	-	2,120	38,116	561	2,123	38,674	4,016	2010	2000	5 Meridian Way
Sarasota, FL	-	475	3,175	-	475	3,175	1,622	1996	1995	8450 McIntosh Rd.
Sarasota, FL	-	600	3,400	-	600	3,400	1,181	2004	1982	4602 Northgate Ct.
Sarasota, FL	-	3,360	19,140	-	3,360	19,140	1,673	2011	2006	6150 Edgelake Drive
Sarasota, FL	-	1,120	12,489	107	1,120	12,595	800	2012	1999	2290 Cattlemen Road
Sarasota, FL	-	950	8,825	535	950	9,360	573	2012	1998	3221 Fruitville Road
Sarasota, FL	-	880	9,854	182	880	10,036	660	2012	1990	3749 Sarasota Square Boulevard
Sand Springs, OK	6,624	910	19,654	-	910	19,654	1,288	2012	2002	4402 South 129th Avenue West
Silver Spring, MD	-	1,250	7,278	268	1,250	7,547	575	2012	1952	2101 Fairland Road
Silver Spring, MD	-	1,150	9,252	104	1,150	9,356	690	2012	1968	12325 New Hampshire
Sisterville, WV	-	200	5,400	242	200	5,642	625	2011	1986	201 Wood Street
Stanwood, WA	-	2,260	28,474	277	2,283	28,728	5,110	2010	1998	7212 265th St NW
Sittingbourne, England	-	1,714	8,256	-	1,714	8,256	18	2014	1997	200 London Road
St. Louis, MO	-	1,890	12,165	131	1,890	12,297	1,378	2010	1963	6543 Chippewa St
Stroudsburg, PA	-	340	16,321	-	340	16,321	59	2014	2011	370 Whitestone Corner Road
Stockton, CA	2,914	2,280	5,983	285	2,372	6,176	1,273	2010	1988	6725 Inglewood
Statesville, NC	-	150	1,447	266	150	1,713	584	2003	1990	2441 E. Broad St.
Statesville, NC	-	310	6,183	8	310	6,191	1,904	2003	1996	2806 Peachtree Place
Statesville, NC	-	140	3,627	-	140	3,627	1,146	2003	1999	2814 Peachtree Rd.
Superior, WI	-	1,020	13,735	79	1,020	13,814	761	2009	2010	1915 North 34th Street
Summit, NJ	-	3,080	14,152	-	3,080	14,152	1,449	2011	2001	41 Springfield Avenue
Seven Fields, PA	-	484	4,663	60	484	4,722	2,033	1999	1999	500 Seven Fields Blvd.
Swanton, OH	-	330	6,370	-	330	6,370	1,876	2004	1950	401 W. Airport Hwy.
Stillwater, OK	-	80	1,400	-	80	1,400	708	1995	1995	1616 McElroy Rd.
Thomasville, GA	-	530	13,899	436	530	14,335	1,304	2011	2006	423 Covington Avenue
Takoma Park, MD	-	1,300	10,136	-	1,300	10,136	762	2012	1962	7525 Carroll Avenue
Tomball, TX	-	1,050	13,300	671	1,050	13,971	1,357	2011	2001	1221 Graham Dr
Toms River, NJ	-	1,610	34,627	594	1,672	35,159	3,685	2010	2005	1587 Old Freehold Rd
Topeka, KS	-	260	12,712	-	260	12,712	860	2012	2011	1931 Southwest Arvonia Place
Trumbull, CT	-	4,440	43,384	-	4,440	43,384	4,239	2011	2001	6949 Main Street
Troy, OH	-	200	2,000	4,254	200	6,254	1,504	1997	1997	81 S. Stanfield Rd.
Troy, OH	-	470	16,730	-	470	16,730	4,744	2004	1971	512 Crescent Drive
Tulsa, OK	-	1,390	7,110	462	1,390	7,572	1,011	2010	1998	7220 S. Yale Ave.
Tulsa, OK	-	1,320	10,087	-	1,320	10,087	641	2011	2012	7902 South Mingo Road East
The Villages, FL	-	1,035	7,446	-	1,035	7,446	205	2013	2014	2450 Parr Drive
Towson, MD	-	1,180	13,280	194	1,180	13,475	1,434	2011	1973	7700 York Road
Texarkana, TX	-	192	1,403	-	192	1,403	683	1996	1996	4204 Moores Lane
Tyler, TX	0	650	5,268	-	650	5,268	1,081	2006	2007	5550 Old Jacksonville Hwy.
Uhrichsville, OH	-	24	6,716	-	24	6,716	1,690	2006	1977	5166 Spanson Drive S.E.
Uniontown, PA	-	310	6,817	84	310	6,901	738	2011	1964	75 Hikle Street
Vacaville, CA	13,876	900	17,100	1,417	900	18,517	4,650	2005	1987	799 Yellowstone Dr.
Vancouver, WA	11,632	1,820	19,042	99	1,821	19,140	3,375	2010	2006	10011 NE 118th Ave
Virginia Beach, VA	-	1,540	22,605	-	1,540	22,605	80	2014	1993	5520 Indian River Rd
Vallejo, CA	13,892	4,000	18,000	1,841	4,030	19,812	4,970	2005	1989	350 Locust Dr.
Vallejo, CA	7,361	2,330	15,407	152	2,330	15,559	2,930	2010	1990	2261 Tuolumne
Valparaiso, IN	-	112	2,558	-	112	2,558	967	2001	1998	2601 Valparaiso St.
Valparaiso, IN	-	108	2,962	-	108	2,962	1,098	2001	1999	2501 Valparaiso St.
Valley Falls, RI	-	1,080	7,433	10	1,080	7,443	808	2011	1975	100 Chambers Street
Venice, FL	-	500	6,000	-	500	6,000	1,837	2004	1987	1240 Pinebrook Rd.
Venice, FL	-	1,150	10,674	-	1,150	10,674	1,509	2008	2009	1600 Center Rd.
Vero Beach, FL	-	263	3,187	-	263	3,187	1,170	2001	1999	420 4th Ct.
Vero Beach, FL	-	297	3,263	-	297	3,263	1,209	2001	1996	410 4th Ct.
Vero Beach, FL	-	2,930	40,070	14,729	2,930	54,799	9,214	2007	2003	7955 16th Manor
Voorhees, NJ	-	1,800	37,299	559	1,800	37,858	3,898	2011	1965	2601 Evesham Road
Voorhees, NJ	-	1,900	26,040	893	1,900	26,934	2,765	2011	1985	3001 Evesham Road
Voorhees, NJ	-	3,100	25,950	-	3,100	25,950	1,450	2011	2013	113 South Route 73
Voorhees, NJ	-	3,700	24,312	-	3,700	24,312	906	2012	2013	311 Route 73
Wabash, IN	-	670	14,596	-	670	14,596	56	2014	2013	20 John Kissinger Drive
Wallingford, CT	-	490	1,210	59	490	1,269	223	2011	1962	35 Marc Drive
Warren, NJ	-	2,000	30,810	391	2,000	31,202	2,690	2011	1999	274 King George Rd
Pewaukee, WI	-	4,700	20,669	-	4,700	20,669	5,342	2007	2007	2400 Golf Rd.
Warwick, RI	-	1,530	18,564	170	1,530	18,734	1,984	2011	1963	660 Commonwealth Avenue
Webster Groves, MO	-	1,790	15,425	-	1,790	15,425	958	2011	2012	45 E Lockwood Avenue
Webster, NY	-	800	8,968	36	800	9,004	538	2012	2001	100 Kidd Castle Way
Webster, NY	-	1,300	21,127	9	1,300	21,136	1,214	2012	2001	200 Kidd Castle Way
Wichita Falls, TX	-	1,070	26,167	-	1,070	26,167	347	2014	1998	3908 Kell W Boulevard
Waconia, MN	-	890	14,726	4,495	890	19,221	1,555	2011	2005	500 Cherry Street
Windsor, CT	-	2,250	8,539	1,842	2,250	10,382	1,141	2011	1969	One Emerson Drive
Windsor, CT	-	1,800	600	944	1,800	1,544	247	2011	1974	One Emerson Drive
West Bend, WI	-	620	17,790	38	620	17,828	1,417	2010	2011	2130 Continental Dr
West Chester, PA	-	1,350	29,237	122	1,350	29,359	3,026	2011	1974	800 West Miner Street
West Chester, PA	-	3,290	42,258	595	3,290	42,852	3,124	2012	2000	1615 East Boot Road
West Chester, PA	-	600	11,894	5	600	11,899	888	2012	2002	1615 East Boot Road
Westfield, IN	-	890	15,972	-	890	15,972	60	2014	2013	937 E. 186th Street
Westlake, OH	-	1,330	17,926	-	1,330	17,926	6,500	2001	1985	27601 Westchester Pkwy.
Winter Garden, FL	-	1,350	7,937	-	1,350	7,937	435	2012	2013	720 Roper Road
Wilmington, DE	-	800	9,494	57	800	9,551	1,057	2011	1970	810 S Broom Street
Wareham, MA	-	875	10,313	1,701	875	12,014	4,384	2002	1989	50 Indian Neck Rd.
Whittier, CA	10,830	4,470	22,151	301	4,483	22,439	5,393	2010	1988	13250 E Philadelphia St
Wilkes-Barre, PA	-	610	13,842	119	610	13,961	1,492	2011	1986	440 North River Street
Wilkes-Barre, PA	-	570	2,301	44	570	2,345	393	2011	1992	300 Courtright Street
Waukee, IA	-	1,870	31,878	1,075	1,870	32,953	1,971	2012	2007	1650 SE Holiday Crest Circle
Wake Forest, NC	-	200	3,003	1,742	200	4,745	1,863	1998	1999	611 S. Brooks St.
Walkersville, MD	-	1,650	15,103	-	1,650	15,103	1,107	2012	1997	56 West Frederick Street
Willard, OH	-	730	6,447	-	730	6,447	478	2011	2012	1100 Neal Zick
Wall, NJ	-	1,650	25,350	1,958	1,690	27,268	2,236	2011	2003	2021 Highway 35
Williamsport, PA	-	300	4,946	373	300	5,319	577	2011	1991	1251 Rural Avenue
Williamsport, PA	-	620	8,487	438	620	8,925	1,011	2011	1988	1201 Rural Avenue
Wilmington, NC	-	210	2,991	-	210	2,991	1,278	1999	1999	3501 Converse Dr.
Wilmington, NC	-	400	15,363	-	400	15,363	57	2014	2012	3828 Independence Blvd
Wilmington, NC	-	610	6,575	-	610	6,575	29	2014	2011	3915 Stedwick Ct
Wolverhampton, England	-	1,986	8,432	-	1,986	8,432	320	2013	2011	378 Prestonwood Road
Westmoreland, TN	-	330	1,822	2,640	330	4,462	1,736	2001	1994	1559 New Hwy. 52
Williamstown, KY	-	70	6,430	-	70	6,430	1,804	2005	1987	201 Kimberly Lane
Winter Haven, FL	-	710	10,038	-	710	10,038	141	2014	1979	650 North Lake Howard Drive
Boonville, IN	-	190	5,510	-	190	5,510	1,948	2002	2000	1325 N. Rockport Rd.
Weston Super Mare, England	-	3,178	8,908	-	3,178	8,908	335	2013	2011	141b Milton Road
Worcester, MA	-	3,500	54,099	-	3,500	54,099	7,241	2007	2009	101 Barry Road
Worcester, MA	-	2,300	9,060	-	2,300	9,060	1,598	2008	1993	378 Plantation St.
Westford, MA	-	920	13,829	206	920	14,034	1,497	2011	1993	3 Park Drive
Westfield, NJ	-	2,270	16,589	497	2,270	17,086	1,921	2011	1970	1515 Lamberts Mill Road
Winston-Salem, NC	-	360	2,514	459	360	2,973	979	2003	1996	2980 Reynolda Rd.
Westerville, OH	-	740	8,287	3,105	740	11,392	7,518	1998	2001	690 Cooper Rd.
Wichita, KS	-	1,400	11,000	-	1,400	11,000	3,066	2006	1997	505 North Maize Road
Wichita, KS	-	1,760	19,007	-	1,760	19,007	1,518	2011	2012	10604 E 13th Street North
Wichita, KS	13,594	630	19,747	-	630	19,747	1,281	2012	2009	2050 North Webb Road
Weatherford, TX	-	660	5,261	-	660	5,261	1,088	2006	2007	1818 Martin Drive
Watchung, NJ	-	1,920	24,880	633	1,967	25,466	2,168	2011	2000	680 Mountain Boulevard
Wetaskiwin, AB	-	401	24,015	-	401	24,015	77	2014	2005	5430-37 A Avenue
White Lake, MI	10,231	2,920	20,179	92	2,920	20,271	2,256	2010	2000	935 Union Lake Rd
West Orange, NJ	-	2,280	10,687	182	2,280	10,869	1,247	2011	1963	20 Summit Street
Willow Grove, PA	-	1,300	14,736	109	1,300	14,845	1,654	2011	1905	1113 North Easton Road
Witherwack, England	-	1,192	8,731	-	1,192	8,731	328	2013	2009	Whitchurch Road
West Worthington, OH	-	510	5,090	-	510	5,090	1,330	2006	1980	111 Lazelle Rd., E.
Westworth Village, TX	-	2,060	31,296	-	2,060	31,296	69	2014	2014	25 Leonard Trail
Waxahachie, TX	-	650	5,763	-	650	5,763	1,045	2007	2008	1329 Brown St.
Wyncote, PA	-	2,700	22,244	148	2,700	22,392	2,372	2011	1960	1245 Church Road
Wyncote, PA	-	1,610	21,256	214	1,610	21,470	2,170	2011	1962	8100 Washington Lane
Wyncote, PA	-	900	7,811	32	900	7,843	827	2011	1889	240 Barker Road
Youngsville, NC	-	380	10,694	-	380	10,694	38	2014	2013	100 Sunset Drive
York, England	-	3,739	10,437	-	3,739	10,437	24	2014	2006	Rosetta Way, Boroughbridge Road
Zionsville, IN	-	1,610	22,400	1,691	1,610	24,091	2,636	2010	2009	11755 N Michigan Rd
Seniors Housing Triple-Net Total	$ 593,414	$ 900,397	$ 9,683,752	$ 365,636	$ 912,535	$ 10,037,249	$ 1,262,419

110

111

Health Care REIT, Inc.
Schedule III
Real Estate and
Accumulated Depreciation
December 31, 2014
(Dollars in thousands)
		Initial Cost to Company			Gross Amount at Which
Carried at Close of Period
Description	Encumbrances	Land	Building &
Improvements	Cost Capitalized
Subsequent to Acquisition	Land	Building &
Improvements	Accumulated Depreciation (1)	Year Acquired	Year Built	Address
Seniors housing operating:
Albuquerque, NM	$ 5,386	$ 1,270	$ 20,837	$ 1,113	$ 1,275	$ 21,945	$ 3,753	2010	1984	500 Paisano St NE
Acton, MA	-	-	31,346	443	3	31,786	2,441	2013	2000	10 Devon Drive
Agawam, MA	6,560	880	10,044	253	896	10,281	1,747	2011	1996	153 Cardinal Drive
Alhambra, CA	(0)	600	6,305	841	600	7,146	920	2011	1923	1118 N. Stoneman Ave.
Arlington, TX	21,858	1,660	37,395	493	1,660	37,888	5,390	2012	2000	1250 West Pioneer Parkway
Arnprior, ON	747	940	6,771	570	940	7,341	897	2013	1991	15 Arthur Street
Atlanta, GA	-	2,100	20,603	-	2,100	20,603	1,240	2014	2000	1000 Lenox Park Blvd NE
Atlanta, GA	-	-	-	-	-	-	-	2014	2007	650 Phipps Boulevard NE
Austin, TX	-	1,560	21,413	-	1,560	21,413	117	2014	2013	11330 Farrah Lane
Avon, CT	19,313	1,550	30,571	1,211	1,580	31,753	6,425	2011	1998	101 Bickford Extension
Azusa, CA	-	570	3,141	6,356	570	9,497	2,076	1998	1953	125 W. Sierra Madre Ave.
Bagshot, England	-	6,263	37,667	-	6,263	37,667	4,873	2012	2009	14 - 16 London Road
Bassett, England	-	6,154	39,867	-	6,154	39,867	4,737	2013	2006	111 Burgess Road
Beaconsfield, England	-	7,028	64,242	-	7,028	64,242	6,435	2013	2009	30-34 Station Road
Bedford, NH	-	-	-	33,076	2,527	30,549	2,591	2011	2012	5 Corporate Drive
Beaconsfield, QC	-	1,335	20,797	-	1,335	20,797	3,364	2013	2008	505 Elm Avenue
Buffalo Grove, IL	-	2,850	49,129	286	2,850	49,415	5,301	2012	2003	500 McHenry Road
Burlington, ON	16,014	1,559	22,733	-	1,559	22,733	2,785	2013	1990	500 Appleby Line
Burlington, MA	-	2,443	34,354	476	2,522	34,752	4,030	2013	2005	24 Mall Road
Borehamwood, England	-	7,074	41,060	10,953	6,778	52,310	5,087	2012	2003	Edgwarebury Lane
Buckingham, England	-	3,762	17,455	-	3,762	17,455	-	2014	1883	Church Street
Basking Ridge, NJ	-	2,356	37,710	355	2,356	38,065	3,839	2013	2002	404 King George Road
Bloomfield Hills, MI	-	2,000	35,662	319	2,000	35,980	3,640	2013	2009	6790 Telegraph Road
Broomfield, CO	-	4,140	44,547	9,035	6,804	50,918	5,177	2013	2009	400 Summit Blvd
Birmingham, England	-	5	26,540	-	5	26,540	3,072	2013	2006	5 Church Road, Edgbaston
Belmont, CA	-	3,000	23,526	1,091	3,000	24,616	3,967	2011	1971	1301 Ralston Avenue
Belmont, CA	-	-	35,300	541	-	35,841	3,975	2013	2002	1010 Alameda de Las Pulgas
Chula Vista, CA	-	2,072	22,163	421	2,072	22,584	2,273	2013	2003	3302 Bonita Road
Boulder, CO	-	2,994	27,458	783	2,994	28,242	3,971	2013	2003	3955 28th Street
Braintree, MA	21,377	-	41,290	382	36	41,636	4,566	2013	2007	618 Granite Street
Burbank, CA	-	4,940	43,466	424	4,940	43,891	5,946	2012	2002	455 E. Angeleno Avenue
Brantford, ON	-	-	-	-	-	-	0	2012	1986	436 Powerline Road
Brighton, MA	10,529	2,100	14,616	437	2,109	15,044	2,606	2011	1995	50 Sutherland Road
Brookfield, CT	19,681	2,250	30,180	620	2,262	30,788	5,350	2011	1999	246A Federal Road
Basingstoke, England	-	4,318	24,006	-	4,318	24,006	331	2014	2012	Grove Road
Banstead, England	-	8,781	54,836	13,313	8,437	68,494	7,095	2012	2005	Croydon Lane
Bethesda, MD	-	-	45,309	390	-	45,698	4,807	2013	2009	8300 Burdett Road
Bethesda, MD	-	-	-	45	-	45	4	2013	2009	8300 Burdett Road
Bethesda, MD	-	-	-	101	-	101	4	2013	2009	8300 Burdett Road
Baton Rouge, LA	9,498	790	29,436	124	801	29,549	2,960	2013	2009	9351 Siegen Lane
Bellevue, WA	-	2,800	19,004	824	2,800	19,828	2,714	2013	1998	15928 NE 8th Street
Blainville, QC	-	2,478	10,568	-	2,478	10,568	2,091	2013	2008	50 des Chateaux Boulevard
Calgary, AB	15,644	2,685	44,195	-	2,685	44,195	5,750	2013	2003	20 Promenade Way SE
Calgary, AB	18,011	3,319	48,797	-	3,319	48,797	5,883	2013	1998	80 Edenwold Drive NW
Calgary, AB	14,214	3,709	46,309	-	3,709	46,309	5,481	2013	1998	150 Scotia Landing NW
Calgary, AB	22,412	4,033	34,305	-	4,033	34,305	2,862	2013	1989	9229 16th Street SW
Carol Stream, IL	-	1,730	55,048	795	1,730	55,844	6,767	2012	2001	545 Belmont Lane
Camberley, England	-	-	(19)	-	-	(19)	(22)	2014	1957	Fernhill Road
Camberley, England	0	2,804	6,092	-	2,804	6,092	103	2014	1957	Fernhill Road
Church Crookham, England	-	3,271	17,962	-	3,271	17,962	1,129	2014	2014	Bourley Road
Chicoutimi, QC	-	-	-	-	-	-	(0)	2012	1989	1901 Des Roitelets Street
Chicoutimi, QC	-	-	-	-	-	-	0	2012	1991	220 Don-Bosco Street
Cardiff, England	-	4,020	15,610	-	4,020	15,610	2,417	2013	2007	127 Cyncoed Road
Cardiff by the Sea, CA	40,364	5,880	64,711	449	5,880	65,160	8,773	2011	2009	3535 Manchester Avenue
Chesterfield, MO	-	1,857	48,366	353	1,857	48,720	4,388	2013	2001	1880 Clarkson Road
North Chelmsford, MA	11,956	880	18,478	524	890	18,993	2,737	2011	1998	2 Technology Drive
Crystal Lake, IL	-	875	12,461	757	875	13,217	1,736	2013	2001	751 E Terra Cotta Avenue
Calabasas, CA	-	-	6,438	139	-	6,577	2,422	2013	1972	25100 Calabasas Road
Claremont, CA	-	2,430	9,928	352	2,438	10,271	1,287	2013	2001	2053 North Towne Avenue
Concord, NH	13,550	720	21,164	399	741	21,542	2,914	2011	2001	300 Pleasant Street
Cohasset, MA	-	2,485	26,147	891	2,485	27,038	2,824	2013	1998	125 King Street (Rt 3A)
Cornwall, ON	-	-	-	-	-	-	(0)	2012	1967	801 4th Street East
Coquitlam, BC	12,906	3,623	28,904	-	3,623	28,904	4,057	2013	1990	1142 Dufferin Street
Cary, NC	-	740	45,240	162	740	45,402	3,638	2013	2009	1206 West Chatham Street
Colorado Springs, CO	-	800	14,756	635	800	15,391	1,412	2013	2001	2105 University Park Boulevard
Costa Mesa, CA	-	2,050	19,969	247	2,050	20,216	3,319	2011	1965	350 West Bay St
Centerville, MA	-	1,300	27,357	372	1,301	27,728	3,891	2011	1998	22 Richardson Road
Chorleywood, England	-	7,094	53,317	-	7,094	53,317	6,035	2013	2007	High View, Rickmansworth Road
Dallas, TX	-	1,080	9,655	352	1,080	10,007	1,507	2011	1997	3611 Dickason Avenue
Danvers, MA	9,503	1,120	14,557	467	1,129	15,015	2,326	2011	2000	1 Veronica Drive
Davenport, IA	-	1,403	35,893	2,334	1,444	38,186	5,548	2006	2009	4500 Elmore Ave.
Dollard-Des-Ormeaux, QC	-	2,328	17,169	-	2,328	17,169	3,423	2013	2008	4377 St. Jean Blvd
Decatur, GA	-	1,932	27,523	534	1,932	28,057	3,411	2013	1998	920 Clairemont Avenue
Dix Hills, NY	-	3,808	39,014	328	3,808	39,342	4,345	2013	2003	337 Deer Park Road
Drummondville, QC	-	-	-	-	-	-	(0)	2012	1986	540 Brouillard Street
Dresher, PA	7,358	1,900	10,664	409	1,900	11,073	2,162	2013	2006	1650 Susquehanna Road
Dublin, OH	18,178	1,680	43,423	3,828	1,724	47,207	7,701	2010	1990	6470 Post Rd
Denver, CO	12,745	1,450	19,389	625	1,455	20,010	2,293	2012	1997	4901 South Monaco Street
Denver, CO	-	2,910	35,838	489	2,930	36,307	4,926	2012	2007	8101 E Mississippi Avenue
Eastbourne, England	-	5,219	42,277	-	5,219	42,277	4,700	2013	2008	6 Upper Kings Drive
Encino, CA	-	5,040	46,255	567	5,040	46,821	5,911	2012	2003	15451 Ventura Boulevard
Edgewater, NJ	-	4,561	25,047	779	4,561	25,826	2,889	2013	2000	351 River Road
Edison, NJ	-	1,892	32,314	726	1,892	33,040	5,771	2013	1996	1801 Oak Tree Road
Edmonton, AB	11,604	1,775	35,348	-	1,775	35,348	4,643	2013	1999	103 Rabbit Hill Court NW
Edmonton, AB	14,893	2,460	43,842	-	2,460	43,842	6,049	2013	1968	10015 103rd Avenue NW
East Meadow, NY	-	69	45,991	138	82	46,116	4,972	2013	2002	1555 Glen Curtiss Boulevard
Encinitas, CA	-	1,460	7,721	641	1,460	8,362	3,454	2000	1988	335 Saxony Rd.
Escondido, CA	12,482	1,520	24,024	909	1,520	24,933	3,978	2011	1987	1500 Borden Rd
Esher, England	-	7,275	60,625	-	7,275	60,625	5,634	2013	2006	42 Copsem Lane
East Setauket, NY	-	4,920	37,354	369	4,929	37,713	3,975	2013	2002	1 Sunrise Drive
East Haven, CT	22,869	2,660	35,533	1,298	2,681	36,810	7,840	2011	2000	111 South Shore Drive
Fairfield, NJ	-	3,120	43,868	620	3,127	44,480	4,807	2013	1998	47 Greenbrook Road
Fairfax, VA	-	19	2,678	43	19	2,720	503	2013	1991	9207 Arlington Boulevard
Franklin, MA	14,129	2,430	30,597	446	2,442	31,032	2,674	2013	1999	4 Forge Hill Road
Flossmoor, IL	-	1,292	9,496	672	1,292	10,169	1,467	2013	2000	19715 Governors Highway
Fareham, England	-	4,300	22,743	-	4,300	22,743	468	2014	2012	Redlands Lane
Frome, England	-	3,435	18,756	-	3,435	18,756	311	2014	2012	Welshmill Lane
Fullerton, CA	12,999	1,964	19,989	307	1,964	20,296	2,328	2013	2008	2226 North Euclid Street
Fort Worth, TX	-	2,080	27,888	850	2,082	28,736	4,607	2012	2001	2151 Green Oaks Road
Gahanna, OH	-	772	11,214	948	779	12,155	1,043	2013	1998	775 East Johnstown Road
Guildford, England	-	6,769	71,005	-	6,769	71,005	6,885	2013	2006	Astolat Way, Peasmarsh
Gilroy, CA	-	760	13,880	24,144	1,539	37,245	6,994	2006	2007	7610 Isabella Way
Gilbert, AZ	16,589	2,160	28,246	236	2,160	28,482	4,232	2013	2008	580 S. Gilbert Road
Glen Cove, NY	-	4,594	35,236	992	4,594	36,228	4,949	2013	1998	39 Forest Avenue
Glenview, IL	-	2,090	69,288	848	2,090	70,136	8,258	2012	2001	2200 Golf Road
Green Valley, AZ	-	-	0	-	-	0	0	2014	2000	500 W Camino Encanto
Grosse Pointe Woods, MI	-	950	13,662	136	950	13,798	1,272	2013	2006	1850 Vernier Road
Grosse Pointe Woods, MI	-	1,430	31,777	300	1,430	32,078	3,000	2013	2005	21260 Mack Avenue
Gatineau, QC	-	-	-	-	-	-	(0)	2012	2007	250 St. Raymond Boulevard
Guelph, ON	-	-	-	-	-	-	(0)	2012	2005	1691 Gordon Street
Gurnee, IL	-	890	27,931	730	890	28,662	2,432	2013	2002	500 North Hunt Club Road
Golden Valley, MN	20,093	1,520	33,513	393	1,520	33,906	3,263	2013	2005	4950 Olson Memorial Highway
Holbrook, NY	-	3,957	35,337	262	3,957	35,599	3,730	2013	2001	320 Patchogue Holbrook Road
Highland Park, IL	-	2,250	25,313	232	2,259	25,536	3,531	2013	2005	1601 Green Bay Road
Huntington Beach, CA	-	3,808	31,172	508	3,810	31,678	4,417	2013	2004	7401 Yorktown Avenue
Altrincham, England	-	5,685	29,221	2,045	5,347	31,604	3,580	2012	2009	295 Hale Road
Horley, England	-	2,944	15,379	-	2,944	15,379	817	2014	2014	Court Lodge Road
Hamden, CT	15,389	1,460	24,093	724	1,487	24,789	4,423	2011	1999	35 Hamden Hills Drive
Hampshire, England	-	5,268	32,516	-	5,268	32,516	3,356	2013	2006	22-26 Church Road
Henderson, NV	-	880	29,809	90	880	29,899	3,253	2011	2009	1935 Paseo Verde Parkway
Henderson, NV	5,777	1,190	11,600	312	1,202	11,900	2,314	2013	2008	1555 West Horizon Ridge Parkway
Houston, TX	-	3,830	55,674	4,074	3,830	59,749	8,533	2012	1998	2929 West Holcombe Boulevard
Houston, TX	17,923	1,040	31,965	5,231	1,040	37,196	4,054	2012	1999	505 Bering Drive
Houston, TX	7,719	960	27,598	1,244	960	28,842	4,278	2011	1995	10225 Cypresswood Dr
Hove, England	-	1,717	8,430	-	1,717	8,430	273	2014	1987	Furze Hill
Irving, TX	-	1,030	6,823	767	1,030	7,590	1,482	2007	1999	8855 West Valley Ranch Parkway
Johns Creek, GA	-	1,580	23,285	113	1,580	23,398	2,563	2013	2009	11405 Medlock Bridge Road
Jonquière, QC	-	-	-	-	-	-	(0)	2012	1990	3978 Harvey Boulevard
Kennebunk, ME	-	2,700	30,204	1,705	2,973	31,636	4,969	2013	2006	One Huntington Common Drive
Kitchener, ON	-	761	2,990	-	761	2,990	492	2013	1979	164 - 168 Ferfus Avenue
Kitchener, ON	5,683	1,348	11,779	-	1,348	11,779	1,577	2013	1988	20 Fieldgate Street
Kitchener, ON	4,330	1,302	8,475	-	1,302	8,475	1,680	2013	1964	290 Queen Street South
Kelowna, BC	7,291	3,205	15,981	-	3,205	15,981	2,659	2013	1999	863 Leon Avenue
Cincinnati, OH	-	2,060	109,388	4,202	2,060	113,590	12,750	2007	2010	5445 Kenwood Road
Kingsville, ON	-	-	-	-	-	-	(0)	2012	1990	240 Main Street East
Kanata, ON	-	1,955	36,314	-	1,955	36,314	5,428	2012	2005	70 Stonehaven Drive
Kingwood, TX	3,087	480	9,777	309	480	10,086	1,493	2011	1999	22955 Eastex Freeway
Solihull, England	-	6,402	54,129	-	6,402	54,129	6,457	2012	2009	1270 Warwick Road
Kansas City, MO	-	1,820	34,898	3,095	1,845	37,968	6,273	2010	1980	12100 Wornall Road
Kansas City, MO	6,530	1,930	39,997	2,555	1,963	42,519	7,711	2010	1986	6500 North Cosby Ave
Kirkland, WA	24,600	3,450	38,709	321	3,454	39,026	4,870	2011	2009	14 Main Street South
London, England	-	3,941	12,591	-	3,941	12,591	-	2014	2012	71 Hatch Lane
Leawood, KS	15,886	2,490	32,493	695	5,617	30,061	4,718	2012	1999	4400 West 115th Street
Lenexa, KS	9,925	826	26,251	275	826	26,527	3,086	2013	2006	15055 West 87th Street Parkway
Lafayette Hill, PA	-	1,750	11,848	1,164	1,789	12,973	2,004	2013	1998	429 Ridge Pike
Longueuil, QC	-	-	-	-	-	-	0	2012	1986	3460 Chambly Road
Lincroft, NJ	-	9	19,958	622	9	20,580	2,090	2013	2002	734 Newman Springs Road
Lombard, IL	17,168	2,130	59,943	215	2,130	60,158	5,310	2013	2009	2210 Fountain Square Dr
London, ON	-	-	-	-	-	-	(0)	2012	2010	609 Wharncliff Road South
Langley, BC	-	-	-	-	-	-	0	2012	2005	6676 203rd Street
Los Angeles, CA	-	-	11,430	996	-	12,426	1,824	2008	1971	330 North Hayworth Avenue
Los Angeles, CA	65,431	-	114,438	782	-	115,219	16,608	2011	2009	10475 Wilshire Boulevard
Los Angeles, CA	-	3,540	19,007	503	3,540	19,510	2,292	2012	2001	2051 N. Highland Avenue
Louisville, KY	-	2,420	20,816	372	2,420	21,188	2,743	2012	1999	4600 Bowling Boulevard
Louisville, KY	11,351	1,600	20,326	161	1,600	20,487	2,719	2013	2010	6700 Overlook Drive
La Palma, CA	-	2,950	16,591	311	2,950	16,902	1,860	2013	2003	5321 La Palma Avenue
Lawrenceville, GA	16,177	1,500	29,003	208	1,508	29,202	3,241	2013	2008	1375 Webb Gin House Road
Lynnfield, MA	-	3,165	45,200	942	3,165	46,142	4,927	2013	2006	55 Salem Street
Mansfield, MA	28,326	3,320	57,011	1,863	3,395	58,798	10,606	2011	1998	25 Cobb Street
Mansfield, MA	-	-	-	-	0	-	-	2011	1998	25 Cobb Street
Mobberley, England	-	6,497	33,425	-	6,497	33,425	5,408	2013	2007	Barclay Park, Hall Lane
Marlboro, NJ	-	2,222	14,888	366	2,222	15,254	1,860	2013	2002	3A South Main Street
Meriden, CT	9,381	1,500	14,874	510	1,525	15,360	3,612	2011	2001	511 Kensington Avenue
Metairie, LA	13,456	725	27,708	254	725	27,962	2,596	2013	2009	3732 West Esplanade Ave. S
Milford, CT	11,527	3,210	17,364	838	3,210	18,202	3,589	2011	1999	77 Plains Road
Middletown, CT	15,451	1,430	24,242	554	1,439	24,786	4,604	2011	1999	645 Saybrook Road
Middletown, RI	16,432	2,480	24,628	1,060	2,495	25,672	4,573	2011	1998	303 Valley Road
Moose Jaw, SK	3,344	692	15,150	-	692	15,150	1,980	2013	2001	425 4th Avenue NW
Markham, ON	19,991	4,446	57,556	-	4,446	57,556	7,645	2013	1981	7700 Bayview Avenue
Memphis, TN	-	1,800	17,744	525	1,800	18,269	3,227	2012	1999	6605 Quail Hollow Road
Mississauga, ON	11,074	1,909	21,371	-	1,909	21,371	2,755	2013	1984	1130 Bough Beeches Boulevard
Mississauga, ON	3,727	1,121	5,308	29	1,025	5,432	675	2013	1978	3051 Constitution Boulevard
Minnetonka, MN	14,462	2,080	24,360	625	2,131	24,935	3,106	2012	1999	500 Carlson Parkway
Minnetonka, MN	16,532	920	29,344	233	920	29,577	2,664	2013	2006	18605 Old Excelsior Blvd.
Montreal, QC	-	-	-	-	-	-	0	2012	2007	3000 Notre Dame Street
Monterey, CA	-	6,440	29,101	318	6,440	29,419	3,190	2013	2009	1110 Cass St.
Montgomery Village, MD	-	3,530	18,246	1,421	3,544	19,653	3,819	2013	1993	19310 Club House Road
Malvern, PA	-	1,651	17,194	996	1,653	18,188	3,163	2013	1998	324 Lancaster Avenue
Mystic, CT	11,527	1,400	18,274	541	1,427	18,787	3,139	2011	2001	20 Academy Lane Mystic
North Andover, MA	22,685	1,960	34,976	748	1,983	35,702	5,781	2011	1995	700 Chickering Road
Newton, MA	27,958	2,250	43,614	370	2,260	43,975	6,946	2011	1996	2300 Washington Street
Newton, MA	16,177	2,500	30,681	1,549	2,507	32,223	5,458	2011	1996	280 Newtonville Avenue
Newton, MA	-	3,360	25,099	888	3,376	25,971	4,715	2011	1994	430 Centre Street
Niantic, CT	-	1,320	25,986	4,022	1,331	29,997	3,789	2011	2001	417 Main Street
Newmarket, ON	-	-	-	-	-	-	(0)	2012	1990	197 Prospect Street
Naperville, IL	-	1,540	28,204	390	1,540	28,594	3,322	2013	2002	535 West Ogden Avenue
Nashville, TN	-	3,900	35,788	493	3,900	36,281	5,856	2012	1999	4206 Stammer Place
Newtown Square, PA	-	1,930	14,420	394	1,941	14,803	2,772	2013	2004	333 S. Newtown Street Rd.
North Tustin, CA	-	2,880	18,059	201	2,880	18,260	1,514	2013	2000	12291 Newport Avenue
Newmarket, England	-	5,141	13,478	-	5,141	13,478	80	2014	2011	Jeddah Way
Oakland, CA	-	3,877	47,508	701	3,877	48,208	5,383	2013	1999	11889 Skyline Boulevard
Oshawa, ON	4,005	1,002	8,895	-	1,002	8,895	1,250	2013	1991	649 King Street East
Oakton, VA	-	2,250	37,576	1,137	2,252	38,710	3,902	2013	1997	2863 Hunter Mill Road
Oak Park, IL	-	1,250	40,383	422	1,250	40,806	5,100	2012	2004	1035 Madison Street
Oakville, ON	1,819	1,622	8,357	10	1,494	8,494	1,156	2013	1982	289 and 299 Randall Street
Oakville, ON	12,660	2,539	35,287	-	2,539	35,287	5,000	2013	1994	25 Lakeshore Road West
Oakville, ON	6,596	1,516	16,093	-	1,516	16,093	1,759	2013	1988	345 Church Street
Oceanside, CA	12,714	2,160	18,352	811	2,193	19,130	3,363	2011	2005	3500 Lake Boulevard
Ottawa, ON	-	-	-	-	-	-	0	2012	1983	1344 Belcourt Boulevard
Ottawa, ON	3,658	895	4,998	476	809	5,560	713	2013	1995	1345 Ogilvie Road
Ottawa, ON	-	818	2,165	1,572	753	3,803	520	2013	1993	370 Kennedy Lane
Ottawa, ON	13,292	3,351	32,372	-	3,351	32,372	5,237	2013	1998	43 Aylmer Avenue
Ottawa, ON	5,852	1,329	11,519	-	1,329	11,519	1,179	2013	1998	1351 Hunt Club Road
Ottawa, ON	4,292	959	9,029	47	887	9,148	1,137	2013	1999	140 Darlington Private
Overland Park, KS	3,533	1,540	16,269	813	1,678	16,945	1,862	2012	1998	9201 Foster
Paramus, NJ	-	2,840	35,728	761	2,845	36,484	3,491	2013	1998	567 Paramus Road
Palo Alto, CA	17,129	-	39,639	627	-	40,267	4,188	2013	2007	2701 El Camino Real
Pointe-aux-Trembles, QC	-	-	-	-	-	-	(0)	2012	1951	3478 32nd avenue
Peabody, MA	6,446	-	-	18,543	2,200	16,343	264	2013	1994	73 Margin Street
Pembroke, ON	-	2,234	11,894	-	2,234	11,894	1,760	2012	1999	1111 Pembroke Street West
Plano, TX	4,167	840	8,538	659	840	9,197	1,655	2011	1996	5521 Village Creek Dr
Plano, TX	29,228	3,120	59,950	276	3,120	60,226	6,807	2013	2006	4800 West Parker Road
Plainview, NY	-	3,066	19,901	208	3,071	20,104	1,811	2013	2001	1231 Old Country Road
Providence, RI	-	2,600	27,546	844	2,639	28,351	6,482	2011	1998	700 Smith Street
Pittsburgh, PA	-	1,580	18,017	245	1,580	18,262	2,342	2013	2009	900 Lincoln Club Dr.
Pointe-Claire, QC	-	-	-	-	-	-	(0)	2012	1985	230 Hymus Boulevard
Purley, England	-	9,676	35,251	8,450	9,279	44,098	5,882	2012	2005	21 Russell Hill Road
Playa Vista, CA	-	1,580	40,531	481	1,580	41,012	4,541	2013	2006	5555 Playa Vista Drive
Quebec City, QC	-	-	-	-	-	-	(0)	2012	1996	545 Francis-Byrne Street
Quebec City, QC	-	-	-	-	-	-	0	2012	1988	1217 route de l'Eglise
Quebec City, QC	-	-	-	-	-	-	(0)	2012	2008	2321 del la Canardière
Quincy, MA	-	1,350	12,584	445	1,374	13,005	2,296	2011	1998	2003 Falls Boulevard
Rancho Cucamonga, CA	-	1,480	10,055	304	1,487	10,351	1,536	2013	2001	9519 Baseline Road
Randolph, NJ	-	1,540	46,934	238	1,540	47,172	4,896	2013	2006	648 Route 10 West
Redondo Beach, CA	-	-	9,557	197	-	9,754	3,088	2011	1957	514 North Prospect Ave
Regina, SK	8,696	1,771	25,011	-	1,771	25,011	3,179	2013	1999	3651 Albert Street
Regina, SK	8,332	1,482	24,918	-	1,482	24,918	2,768	2013	2004	3105 Hillsdale Street
Rocky Hill, CT	10,423	810	16,351	232	838	16,556	2,583	2011	2000	1160 Elm Street
Romeoville, IL	-	854	12,646	58,777	6,150	66,127	8,715	2006	2010	605 S Edward Dr.
Renton, WA	21,945	3,080	51,824	241	3,080	52,065	6,477	2011	2007	104 Burnett Avenue South
Rancho Palos Verdes, CA	-	5,450	60,034	529	5,450	60,563	7,472	2012	2004	5701 Crestridge Road
Roseville, MN	-	1,540	35,877	354	1,585	36,186	3,344	2013	2002	2555 Snelling Avenue, North
Roswell, GA	-	2,080	6,486	326	2,380	6,512	1,067	2012	1997	75 Magnolia Street
Sacramento, CA	-	1,300	23,394	256	1,304	23,646	2,274	2013	2004	345 Munroe Street
Salem, NH	20,907	980	32,721	566	1,048	33,218	4,725	2011	2000	242 Main Street
St. Albert, AB	10,979	1,365	21,172	-	1,365	21,172	1,387	2014	2005	78C McKenney Avenue
Seal Beach, CA	-	6,204	72,954	689	6,208	73,639	11,648	2013	2004	3850 Lampson Avenue
Bournemouth, England	-	6,979	53,622	-	6,979	53,622	4,774	2013	2008	42 Belle Vue Road
Scarborough, ON	-	-	-	-	-	-	0	2012	1965	65 Livingston Road
Swift Current, SK	2,981	569	11,821	-	569	11,821	1,469	2013	2001	301 Macoun Drive
Scottsdale, AZ	-	2,500	3,890	1,133	2,500	5,023	921	2008	1998	9410 East Thunderbird Road
Sun City West, AZ	12,478	1,250	21,778	720	1,250	22,498	2,287	2012	1998	13810 West Sandridge Drive
Studio City, CA	-	4,006	25,307	361	4,017	25,657	3,555	2013	2004	4610 Coldwater Canyon Avenue
San Diego, CA	-	4,200	30,707	116	4,200	30,823	2,473	2011	2011	2567 Second Avenue
San Diego, CA	-	5,810	63,078	541	5,810	63,619	10,073	2012	2001	13075 Evening Creek Drive S
San Diego, CA	-	3,000	27,164	271	3,000	27,434	2,449	2013	2003	810 Turquoise Street
San Diego, CA	-	-	0	-	-	0	-	2014	2003	11588 Via Rancho San Diego
Sandy Springs, GA	-	2,214	8,360	265	2,220	8,619	1,507	2012	1997	5455 Glenridge Drive NE
Seattle, WA	48,540	6,790	85,369	1,274	6,792	86,641	11,031	2011	2009	5300 24th Avenue NE
San Gabriel, CA	-	3,120	15,566	335	3,120	15,901	1,825	2013	2005	8332 Huntington Drive
Schaumburg, IL	-	2,460	22,863	599	2,471	23,451	3,195	2013	2001	790 North Plum Grove Road
Shelburne, VT	19,865	720	31,041	1,199	756	32,204	4,211	2011	1988	687 Harbor Road
Sidcup, England	-	9,773	56,163	13,642	9,365	70,213	10,379	2012	2000	Frognal Avenue
San Juan Capistrano, CA	-	1,390	6,942	956	1,390	7,898	2,737	2000	2001	30311 Camino Capistrano
St-Jerome, QC	-	-	-	-	-	-	0	2012	1997	475 Aubry
Spokane, WA	-	3,200	25,064	223	3,200	25,287	3,698	2013	2001	3117 E. Chaser Lane
Spokane, WA	-	2,580	25,342	100	2,580	25,442	3,501	2013	1999	1110 E. Westview Ct.
Stockport, England	-	5,516	31,307	-	5,516	31,307	4,465	2013	2008	1 Dairyground Road
Salt Lake City, UT	-	1,360	19,691	590	1,360	20,281	4,418	2011	1986	1430 E. 4500 S.
Santa Monica, CA	20,302	5,250	28,340	352	5,250	28,693	2,958	2013	2004	1312 15th Street
Sonning, England	-	7,099	53,058	-	7,099	53,058	5,801	2013	2009	Old Bath Rd.
San Jose, CA	-	2,850	35,098	158	2,850	35,256	4,353	2011	2009	1420 Curvi Drive
San Jose, CA	-	3,280	46,823	557	3,280	47,379	5,789	2012	2002	500 S Winchester Boulevard
Sunnyvale, CA	-	5,420	41,682	436	5,420	42,118	5,573	2012	2002	1039 East El Camino Real
Solihull, England	-	4,510	32,605	-	4,510	32,605	4,020	2013	2007	1 Worcester Way
Surrey, BC	-	-	-	-	-	-	0	2012	1989	13853 102nd Avenue
Surrey, BC	8,833	4,298	21,938	-	4,298	21,938	4,286	2013	2000	16028 83rd Avenue
Surrey, BC	4,182	5,431	26,369	-	5,431	26,369	4,637	2013	1987	15501 16th Avenue
Salisbury, England	-	3,435	19,365	-	3,435	19,365	220	2014	2013	Shapland Close
Saskatoon, SK	5,365	1,168	16,235	-	1,168	16,235	1,631	2013	1999	220 24th Street East
Saskatoon, SK	12,366	1,647	20,530	-	1,647	20,530	2,096	2013	2004	1622 Acadia Drive
Stittsville, ON	5,946	1,529	17,762	2,581	1,402	20,470	2,075	2013	1996	1340 - 1354 Main Street
Santa Maria, CA	-	6,050	50,658	584	6,063	51,229	9,445	2011	2001	1220 Suey Road
Shelby Township, MI	16,789	1,040	26,344	316	1,093	26,607	2,539	2013	2006	46471 Hayes Road
Sugar Land, TX	5,460	960	31,423	1,240	960	32,662	5,389	2011	1996	1221 Seventh St
Sevenoaks, England	-	7,804	50,524	-	7,804	50,524	6,799	2012	2009	64 - 70 Westerham Road
Simi Valley, CA	-	3,200	16,664	287	3,200	16,951	2,728	2013	2009	190 Tierra Rejada Road
South Windsor, CT	-	3,000	29,295	1,185	3,052	30,429	5,686	2011	1999	432 Buckland Road
Suwanee, GA	-	1,560	11,538	422	1,560	11,960	1,742	2012	2000	4315 Johns Creek Parkway
Sway, England	-	5,234	19,285	-	5,234	19,285	322	2014	2008	Sway Place
Tacoma, WA	18,640	2,400	35,053	143	2,446	35,150	4,399	2011	2008	7290 Rosemount Circle
Tucson, AZ	4,698	830	6,179	3,305	830	9,484	804	2012	1997	5660 N. Kolb Road
Tucson, AZ	-	-	0	-	-	0	-	2014	1999	6231 N Montebella Road
Toledo, OH	15,741	2,040	47,129	1,454	2,144	48,478	9,208	2010	1985	3501 Executive Parkway
Toronto, ON	-	-	-	-	-	-	0	2012	1990	10 Senlac
Toronto, ON	1,901	1,287	6,247	-	1,287	6,247	680	2013	1982	25 Centennial Park Road
Toronto, ON	10,411	2,998	23,165	-	2,998	23,165	1,797	2013	2002	305 Balliol Street
Toronto, ON	22,708	4,055	38,437	-	4,055	38,437	5,038	2013	1973	1055 and 1057 Don Mills Road
Toronto, ON	1,480	1,767	2,730	373	1,622	3,248	879	2013	1985	3705 Bathurst Street
Toronto, ON	2,399	1,851	3,785	589	1,726	4,499	734	2013	1987	1340 York Mills Road
Toronto, ON	40,022	6,321	62,703	-	6,321	62,703	8,315	2013	1988	8 The Donway East
Trumbull, CT	24,647	2,850	37,685	747	2,906	38,376	6,994	2011	1998	2750 Reservoir Avenue
Tustin, CA	6,827	840	15,299	142	840	15,442	2,087	2011	1965	240 East 3rd St
Tulsa, OK	6,129	1,330	21,285	1,108	1,350	22,373	3,860	2010	1986	8887 South Lewis Ave
Tulsa, OK	8,010	1,500	20,861	974	1,515	21,820	4,159	2010	1984	9524 East 71st St
Upper St Claire, PA	-	1,102	13,455	406	1,102	13,861	1,999	2013	2005	500 Village Drive
Virginia Water, England	-	7,106	29,937	7,313	6,823	37,534	4,708	2012	2002	Christ Church Road
Vankleek Hill, ON	1,414	435	3,448	-	435	3,448	554	2013	1987	48 Wall Street
Victoria, BC	-	3,189	16,793	-	3,189	16,793	2,708	2012	2002	2638 Ross Lane
Victoria, BC	9,277	3,405	21,327	-	3,405	21,327	3,221	2013	1974	3000 Shelbourne Street
Victoria, BC	8,553	4,359	18,642	-	4,359	18,642	2,889	2013	1988	3051 Shelbourne Street
Victoriaville, QC	-	-	-	-	-	-	0	2012	1990	222 Notre Dame West
Warwick, RI	15,941	2,400	24,635	859	2,407	25,487	5,498	2011	1998	75 Minnesota Avenue
Wayland, MA	-	1,207	27,462	864	1,307	28,226	3,064	2013	1997	285 Commonwealth Road
West Babylon, NY	-	3,960	47,085	261	3,960	47,346	4,438	2013	2003	580 Montauk Highway
West Bloomfield, MI	-	1,040	12,300	345	1,040	12,646	1,411	2013	2000	7005 Pontiac Trail
Waterbury, CT	24,709	2,460	39,547	950	2,495	40,462	10,223	2011	1998	180 Scott Road
Woodland Hills, CA	-	3,400	20,478	377	3,406	20,849	2,797	2013	2005	20461 Ventura Boulevard
The Woodlands, TX	2,477	480	12,379	205	480	12,584	1,892	2011	1999	7950 Bay Branch Dr
Weybridge, England	-	9,954	60,475	-	9,954	60,475	8,851	2013	2008	Ellesmere Road
Wilmington, DE	-	1,040	23,338	405	1,040	23,743	2,618	2013	2004	2215 Shipley Street
West Hills, CA	-	2,600	7,521	315	2,600	7,836	1,565	2013	2002	9012 Topanga Canyon Road
White Oak, MD	-	2,304	24,768	574	2,304	25,342	2,376	2013	2002	11621 New Hampshire Avenue
Wilbraham, MA	11,159	660	17,639	546	663	18,182	2,796	2011	2000	2387 Boston Road
Walnut Creek, CA	-	3,700	12,467	724	3,723	13,169	2,234	2013	1998	2175 Ygnacio Valley Road
Wolverhampton, England	-	3,708	10,876	-	3,708	10,876	2,217	2013	2008	73 Wergs Road
Winchester, England	-	7,587	36,990	-	7,587	36,990	4,347	2012	2010	Stockbridge Road
Windsor, ON	-	-	-	-	-	-	0	2012	1988	590 Grand Marais Road East
Winnipeg, MB	16,462	2,335	45,398	-	2,335	45,398	6,374	2013	1999	857 Wilkes Avenue
Winnipeg, MB	9,630	1,516	25,633	-	1,516	25,633	3,092	2013	1988	3161 Grant Avenue
Woodbridge, CT	-	1,370	14,219	776	1,391	14,974	3,689	2011	1998	21 Bradley Road
Worcester, MA	13,979	1,140	21,664	621	1,152	22,273	3,422	2011	1999	340 May Street
Washington, DC	32,699	4,000	69,154	439	4,000	69,593	7,335	2013	2004	5111 Connecticut Avenue NW
Westbourne, England	-	6,858	51,920	-	6,858	51,920	5,870	2013	2006	16-18 Poole Road
Weston, MA	-	1,160	6,200	447	1,160	6,647	535	2013	1998	135 North Avenue
West Vancouver, BC	23,475	9,128	32,217	105	8,421	33,028	4,501	2013	1987	2095 Marine Drive
Weymouth, England	0	3,271	21,011	-	3,271	21,011	235	2014	2013	Cross Road
Yarmouth, ME	17,412	450	27,711	381	456	28,086	4,026	2011	1999	27 Forest Falls Drive
Yorkton, SK	4,172	552	10,218	-	552	10,218	1,252	2013	2001	94 Russell Drive
Yonkers, NY	-	3,962	50,107	356	3,967	50,459	5,226	2013	2005	65 Crisfield Street
Seniors Housing Operating Total	$ 1,654,531	$ 773,492	$ 8,293,454	$ 348,816	$ 788,969	$ 8,626,789	$ 1,110,393

112

113

Health Care REIT, Inc.
Schedule III
Real Estate and
Accumulated Depreciation
December 31, 2014
(Dollars in thousands)
		Initial Cost to Company			Gross Amount at Which
Carried at Close of Period
Description	Encumbrances	Land	Building &
Improvements	Cost Capitalized
Subsequent to Acquisition	Land	Building &
Improvements	Accumulated Depreciation (1)	Year Acquired	Year Built	Address
Medical Facilities:
Akron, OH	$ -	$ 821	$ 12,105	$ -	$ 821	$ 12,105	$ 1,086	2012	2010	701 White Pond Drive
Allen, TX	12,080	726	14,196	-	726	14,196	2,325	2012	2006	1105 N Central Expressway
Alpharetta, GA	-	773	18,902	-	773	18,902	2,978	2011	1993	3400-A Old Milton Parkway
Alpharetta, GA	-	1,769	36,256	-	1,769	36,256	6,603	2011	1999	3400-C Old Milton Parkway
Alpharetta, GA	-	476	14,757	-	476	14,757	2,515	2011	2003	11975 Morris Road
Alpharetta, GA	-	1,862	-	-	1,862	-	-	2011	1900	940 North Point Parkway
Alpharetta, GA	-	548	17,103	-	548	17,103	3,361	2011	2007	3300 Old Milton Parkway
Arcadia, CA	-	5,408	23,219	2,636	5,618	25,644	6,927	2006	1984	301 W. Huntington Drive
Arlington, TX	-	82	18,243	-	82	18,243	274	2012	2012	902 W. Randol Mill Road
Atlanta, GA	-	4,931	18,720	4,611	5,348	22,914	7,351	2006	1991	755 Mt. Vernon Hwy.
Atlanta, GA	17,260	1,947	24,248	-	1,947	24,248	2,989	2012	1984	975 Johnson Ferry Road
Atlanta, GA	26,086	-	43,425	-	-	43,425	7,248	2012	2006	5670 Peachtree-Dunwoody Road
Bartlett, TN	7,895	187	15,015	1,619	187	16,634	4,657	2007	2004	2996 Kate Bond Rd.
Bellevue, NE	-	-	16,680	-	-	16,680	2,780	2010	2010	2510 Bellevue Medical Center Drive
Bettendorf, IA	-	-	7,110	-	-	7,110	30	2013	2014	2140 53rd Avenue
Birmingham, AL	-	52	10,201	-	52	10,201	2,826	2006	1971	801 Princeton Avenue SW
Birmingham, AL	-	124	12,492	-	124	12,492	3,287	2006	1985	817 Princeton Avenue SW
Birmingham, AL	-	476	19,864	-	476	19,864	5,231	2006	1989	833 Princeton Avenue SW
Boardman, OH	-	80	12,165	-	80	12,165	2,489	2010	2007	8423 Market St
Boca Raton, FL	-	109	34,002	2,278	214	36,175	9,947	2006	1995	9970 S. Central Park Blvd.
Boca Raton, FL	-	31	12,312	-	31	12,312	1,451	2012	1993	9960 S. Central Park Boulevard
Boerne, TX	-	50	13,541	-	50	13,541	2,436	2011	2007	134 Menger Springs Road
Boynton Beach, FL	-	2,048	7,692	502	2,048	8,194	2,745	2006	1995	8188 Jog Rd.
Boynton Beach, FL	-	2,048	7,403	1,078	2,048	8,480	2,564	2006	1997	8200 Jog Road
Boynton Beach, FL	5,650	214	5,611	7,919	117	13,627	3,601	2007	1996	10075 Jog Rd.
Boynton Beach, FL	26,001	13,324	40,369	-	13,324	40,369	3,152	2013	1995	10301 Hagen Ranch Road
Bradenton, FL	-	1,184	9,799	-	1,184	9,799	220	2014	1975	315 75th Street West
Bradenton, FL	-	1,035	4,298	-	1,035	4,298	107	2014	2006	7005 Cortez Road West
Bridgeton, MO	10,670	450	21,272	-	450	21,272	4,139	2010	2006	12266 DePaul Dr
Burleson, TX	-	10	12,611	-	10	12,611	1,885	2011	2007	12001 South Freeway
Burnsville, MN	-	-	32,168	-	-	32,168	337	2013	2014	14101 Fairview Dr
Carmel, IN	-	2,280	19,238	-	2,280	19,238	4,264	2011	2005	12188-A North Meridian Street
Carmel, IN	-	2,026	21,559	-	2,026	21,559	5,597	2011	2007	12188-B North Meridian Street
Castle Rock, CO	-	80	13,004	-	80	13,004	346	2014	2013	2352 Meadows Boulevard
Cedar Grove, WI	-	113	618	-	113	618	109	2010	1986	313 S. Main St.
Charleston, SC	-	2,773	25,928	-	2,773	25,928	601	2014	2009	325 Folly Road
Cincinnati, OH	-	-	17,880	-	-	17,880	750	2012	2013	3301 Mercy West Boulevard
Claremore, OK	7,873	132	12,829	406	132	13,236	3,898	2007	2005	1501 N. Florence Ave.
Clarkson Valley, MO	-	-	35,592	-	-	35,592	6,773	2009	2010	15945 Clayton Rd
Clear Lake, TX	-	-	14,027	-	-	14,027	117	2013	2014	1010 South Ponds Drive
Columbia, MD	-	2,291	19,841	-	2,291	19,841	1,974	2012	2002	10700 Charter Drive
Columbus, OH	-	415	7,646	-	415	7,646	1,375	2012	1994	750 Mt. Carmel Mall
Coon Rapids, MN	-	-	26,679	-	-	26,679	894	2013	2014	11850 Blackfoot Street NW
Coral Springs, FL	-	1,598	10,627	1,276	1,636	11,865	4,092	2006	1992	1725 N. University Dr.
Dade City, FL	-	1,211	5,511	-	1,211	5,511	680	2011	1998	13413 US Hwy 301
Dallas, TX	14,247	137	28,690	2,150	137	30,841	8,751	2006	1995	9330 Poppy Dr.
Dallas, TX	28,450	462	52,488	-	462	52,488	5,173	2012	2004	7115 Greenville Avenue
Dayton, OH	-	730	6,937	-	730	6,937	1,342	2011	1988	1530 Needmore Road
Deerfield Beach, FL	-	2,408	7,809	-	2,408	7,809	1,943	2011	2001	1192 East Newport Center Drive
Delray Beach, FL	-	1,882	34,767	5,402	2,064	39,987	12,678	2006	1985	5130-5150 Linton Blvd.
Durham, NC	-	1,212	22,858	-	1,212	22,858	792	2013	2012	1823 Hillandale Road
Edina, MN	-	310	15,132	-	310	15,132	2,572	2010	2003	8100 W 78th St
El Paso, TX	9,558	677	17,075	2,045	677	19,120	6,157	2006	1997	2400 Trawood Dr.
Everett, WA	-	4,842	26,010	-	4,842	26,010	3,806	2010	2011	13020 Meridian Ave. S.
Fayetteville, GA	-	959	7,540	768	986	8,281	2,485	2006	1999	1275 Hwy. 54 W.
Fenton, MO	11,880	958	27,485	-	958	27,485	1,594	2013	2009	1011 Bowles Avenue
Fenton, MO	5,733	369	13,911	-	369	13,911	555	2013	2009	1055 Bowles Avenue
Flower Mound, TX	-	4,164	27,529	-	4,164	27,529	144	2014	2012	4370 Medical Arts Drive
Flower Mound, TX	-	5,980	-	-	5,980	-	-	2014	1900	Medical Arts Drive
Fort Wayne, IN	16,378	1,105	22,836	-	1,105	22,836	2,090	2012	2004	7916 Jefferson Boulevard
Fort Worth, TX	-	462	26,020	-	462	26,020	399	2012	2012	10840 Texas Health Trail
Fort Worth, TX	-	401	6,099	-	401	6,099	51	2014	2007	7200 Oakmont Boulevard
Franklin, TN	-	2,338	12,138	2,074	2,338	14,212	3,865	2007	1988	100 Covey Drive
Franklin, WI	5,061	6,872	7,550	-	6,872	7,550	1,398	2010	1984	9200 W. Loomis Rd.
Frisco, TX	-	-	18,635	1,164	-	19,799	5,186	2007	2004	4401 Coit Road
Frisco, TX	-	-	15,309	2,112	-	17,421	5,281	2007	2004	4461 Coit Road
Gallatin, TN	-	20	21,801	-	20	21,801	4,600	2010	1997	300 Steam Plant Rd
Germantown, TN	-	3,049	12,456	737	3,049	13,193	3,655	2006	2002	1325 Wolf Park Drive
Glendale, CA	-	37	18,398	744	37	19,142	4,717	2007	2002	222 W. Eulalia St.
Grand Prairie, TX	-	981	6,086	-	981	6,086	884	2012	2009	2740 N State Hwy 360
Grapevine, TX	5,548	-	5,943	-	-	5,943	-	2014	2002	2040 W State Hwy 114
Grapevine, TX	10,044	-	22,557	-	-	22,557	-	2014	2002	2020 W State Hwy 114
Green Bay, WI	7,635	-	14,891	-	-	14,891	2,435	2010	2002	2253 W. Mason St.
Green Bay, WI	-	-	20,098	-	-	20,098	3,224	2010	2002	2845 Greenbrier Road
Green Bay, WI	-	-	11,696	-	-	11,696	2,606	2010	2002	2845 Greenbrier Road
Greeneville, TN	-	970	10,131	-	970	10,131	1,918	2010	2005	438 East Vann Rd
Greenwood, IN	-	8,316	26,384	-	8,316	26,384	2,648	2012	2010	1260 Innovation Parkway
Greenwood, IN	-	1,262	7,045	-	1,262	7,045	128	2014	2010	333 E County Line Road
Grenwood, IN	-	2,098	21,538	-	2,098	21,538	252	2014	2013	3000 S State Road 135
Harker Heights, TX	-	1,907	3,575	-	1,907	3,575	209	2011	2012	E Central Texas Expressway
High Point, NC	-	2,659	29,069	-	2,659	29,069	2,345	2012	2010	4515 Premier Drive
Highland, IL	-	-	8,834	-	-	8,834	400	2012	2013	12860 Troxler Avenue
Houston, TX	-	10,403	-	-	10,403	-	1	2011	1900	15655 Cypress Woods Medical Drive
Houston, TX	-	5,837	33,128	-	5,837	33,128	4,677	2012	2005	15655 Cypress Woods Medical Drive
Houston, TX	-	3,688	13,313	-	3,688	13,313	1,318	2012	2007	10701 Vintage Preserve Parkway
Houston, TX	-	3,102	32,323	-	3,102	32,323	420	2014	2014	1900 N Loop W Freeway
Houston, TX	14,000	378	31,932	-	378	31,932	4,534	2012	1981	18100 St John Drive
Houston, TX	-	156	10,617	-	156	10,617	1,461	2012	1986	2060 Space Park Drive
Houston, TX	-	-	-	58,173	12,815	45,359	4,159	2012	1998	2727 W Holcombe Boulevard
Hudson, OH	-	2,587	13,720	-	2,587	13,720	1,695	2012	2006	5655 Hudson Drive
Humble, TX	-	-	10,358	-	-	10,358	43	2013	2014	8233 N. Sam Houston Parkway E.
Jackson, MI	-	607	17,367	-	607	17,367	1,015	2013	2009	1201 E Michigan Avenue
Jupiter, FL	6,655	2,252	11,415	463	2,252	11,878	3,426	2006	2001	550 Heritage Dr.
Jupiter, FL	-	2,825	5,858	413	2,825	6,271	2,027	2007	2004	600 Heritage Dr.
Katy, TX	-	1,099	1,604	-	1,099	1,604	286	2012	1986	21660 Kingsland Blvd
Kenosha, WI	8,312	-	18,058	-	-	18,058	2,891	2010	1993	10400 75th St.
Killeen, TX	-	760	22,878	-	760	22,878	3,975	2010	2010	2405 Clear Creek Rd
Kyle, TX	-	2,569	14,384	-	2,569	14,384	407	2014	2011	135 Bunton Road
La Quinta, CA	-	3,266	22,066	-	3,266	22,066	415	2014	2006	47647 Caleo Bay Drive
Lake St Louis, MO	-	240	14,249	-	240	14,249	2,693	2010	2008	400 Medical Dr
Lakeway, TX	-	2,801	-	-	2,801	-	-	2007	1900	Lohmans Crossing Road
Lakewood, CA	-	146	14,885	1,732	146	16,617	4,188	2006	1993	5750 Downey Ave.
Lakewood, WA	7,242	72	16,058	-	72	16,058	1,247	2012	2005	11307 Bridgeport Way SW
Las Vegas, NV	-	2,319	4,612	1,021	2,319	5,632	1,722	2006	1991	2870 S. Maryland Pkwy.
Las Vegas, NV	-	74	15,287	1,022	74	16,310	4,510	2006	2000	1815 E. Lake Mead Blvd.
Las Vegas, NV	-	433	6,921	212	433	7,133	2,166	2007	1997	1776 E. Warm Springs Rd.
Las Vegas, NV	-	6,127	-	-	6,127	-	-	2007	1900	SW corner of Deer Springs Way and Riley Street
Lenexa, KS	-	540	17,926	-	540	17,926	2,622	2010	2008	23401 Prairie Star Pkwy
Lenexa, KS	-	100	14,364	-	100	14,364	328	2013	2013	23351 Prairie Star Parkway
Lincoln, NE	-	1,420	29,723	-	1,420	29,723	6,423	2010	2003	575 South 70th St
Los Alamitos, CA	-	39	18,635	1,141	39	19,776	5,018	2007	2003	3771 Katella Ave.
Los Gatos, CA	-	488	22,386	1,402	488	23,787	7,422	2006	1993	555 Knowles Dr.
Loxahatchee, FL	-	1,637	5,048	909	1,719	5,875	1,752	2006	1997	12977 Southern Blvd.
Loxahatchee, FL	-	1,340	6,509	472	1,345	6,976	1,993	2006	1993	12989 Southern Blvd.
Loxahatchee, FL	-	1,553	4,694	1,057	1,650	5,654	1,561	2006	1994	12983 Southern Blvd.
Marinette, WI	6,576	-	13,538	-	-	13,538	2,607	2010	2002	4061 Old Peshtigo Rd.
Melbourne, FL	-	3,439	50,461	-	3,439	50,461	1,053	2014	2009	2222 South Harbor City Boulevard
Merced, CA	-	-	14,699	-	-	14,699	2,691	2009	2010	315 Mercy Ave.
Merriam, KS	-	1,226	25,099	-	1,226	25,099	1,265	2013	2009	9301 West 74th Street
Merriam, KS	-	176	8,005	-	176	8,005	2,066	2011	1972	8800 West 75th Street
Merriam, KS	-	81	3,849	-	81	3,849	732	2011	1980	7301 Frontage Street
Merriam, KS	-	336	13,318	-	336	13,318	3,022	2011	1977	8901 West 74th Street
Merriam, KS	14,689	182	8,144	-	182	8,144	1,722	2011	1985	9119 West 74th Street
Merrillville, IN	-	-	22,134	439	-	22,573	4,326	2008	2006	101 E. 87th Ave.
Mesa, AZ	-	1,558	9,561	406	1,558	9,966	3,338	2008	1989	6424 East Broadway Road
Mesquite, TX	-	496	3,834	-	496	3,834	364	2012	2012	1575 I-30
Milwaukee, WI	3,460	540	8,457	-	540	8,457	1,464	2010	1930	1218 W. Kilbourn Ave.
Milwaukee, WI	9,178	1,425	11,520	-	1,425	11,520	2,601	2010	1962	3301-3355 W. Forest Home Ave.
Milwaukee, WI	2,296	922	2,185	-	922	2,185	617	2010	1958	840 N. 12th St.
Milwaukee, WI	19,208	-	44,535	-	-	44,535	6,974	2010	1983	2801 W. Kinnickinnic Pkwy.
Mission Hills, CA	25,500	-	42,276	-	-	42,276	265	2014	1986	11550 Indian Hills Road
Moline, IL	-	-	8,783	-	-	8,783	250	2012	2013	3900 28th Avenue Drive
Monticello, MN	8,860	61	18,489	-	61	18,489	1,324	2012	2008	1001 Hart Boulevard
Moorestown, NJ	-	-	50,927	-	-	50,927	4,272	2011	2012	401 Young Avenue
Morrow, GA	-	818	8,064	234	845	8,270	2,848	2007	1990	6635 Lake Drive
Mount Juliet, TN	3,524	1,566	11,697	1,099	1,566	12,796	3,818	2007	2005	5002 Crossings Circle
Mount Vernon, IL	-	-	24,892	-	-	24,892	2,150	2011	2012	4121 Veterans Memorial Dr
Murrieta, CA	-	-	47,190	-	-	47,190	8,677	2010	2011	28078 Baxter Rd.
Murrieta, CA	-	3,800	-	-	3,800	-	-	2014	1900	28078 Baxter Rd.
Muskego, WI	1,104	964	2,159	-	964	2,159	345	2010	1993	S74 W16775 Janesville Rd.
Nashville, TN	-	1,806	7,165	1,715	1,806	8,880	3,009	2006	1986	310 25th Ave. N.
New Albany, IN	-	2,411	16,494	-	2,411	16,494	332	2014	2001	2210 Green Valley Road
New Berlin, WI	4,256	3,739	8,290	-	3,739	8,290	1,440	2010	1993	14555 W. National Ave.
Niagara Falls, NY	-	1,433	10,891	-	1,433	10,891	3,761	2007	1995	6932 - 6934 Williams Rd
Niagara Falls, NY	-	454	8,500	-	454	8,500	2,070	2007	2004	6930 Williams Rd
Oklahoma City, OK	-	216	19,135	-	216	19,135	1,270	2013	2008	535 NW 9th Street
Orange Village, OH	-	610	7,419	522	610	7,941	2,371	2007	1985	3755 Orange Place
Oro Valley, AZ	9,613	89	18,339	567	89	18,905	4,826	2007	2004	1521 E. Tangerine Rd.
Oshkosh, WI	-	-	18,339	-	-	18,339	2,913	2010	2000	855 North Wethaven Dr.
Oshkosh, WI	8,135	-	15,881	-	-	15,881	2,496	2010	2000	855 North Wethaven Dr.
Palm Springs, FL	2,545	739	4,066	487	739	4,552	1,496	2006	1993	1640 S. Congress Ave.
Palm Springs, FL	-	1,182	7,765	504	1,182	8,269	2,645	2006	1997	1630 S. Congress Ave.
Palmer, AK	18,660	217	29,705	1,042	217	30,747	7,584	2007	2006	2490 South Woodworth Loop
Pasadena, TX	-	1,700	8,009	-	1,700	8,009	301	2012	2013	5001 E Sam Houston Parkway S
Pearland, TX	-	1,500	11,253	-	1,500	11,253	331	2012	2013	2515 Business Center Drive
Pearland, TX	-	9,594	32,753	-	9,594	32,753	113	2014	2013	11511 Shadow Creek Parkway
Pendleton, OR	-	-	10,324	-	-	10,324	286	2012	2013	3001 St. Anthony Drive
Phoenix, AZ	(0)	1,149	48,018	11,396	1,149	59,415	16,360	2006	1998	2222 E. Highland Ave.
Pineville, NC	-	961	6,974	2,369	1,077	9,228	2,853	2006	1988	10512 Park Rd.
Plano, TX	-	5,423	20,752	285	5,423	21,037	8,288	2008	2007	6957 Plano Parkway
Plano, TX	53,236	793	83,209	-	793	83,209	10,534	2012	2005	6020 West Parker Road
Plantation, FL	8,988	8,563	10,666	2,536	8,575	13,190	5,098	2006	1997	851-865 SW 78th Ave.
Plantation, FL	8,342	8,848	9,262	337	8,908	9,539	5,463	2006	1996	600 Pine Island Rd.
Plymouth, WI	1,288	1,250	1,870	-	1,250	1,870	364	2010	1991	2636 Eastern Ave.
Portland, ME	-	655	25,930	-	655	25,930	3,770	2011	2008	195 Fore River Parkway
Redmond, WA	-	5,015	26,709	-	5,015	26,709	4,096	2010	2011	18000 NE Union Hill Rd.
Reno, NV	-	1,117	21,972	1,144	1,117	23,116	6,412	2006	1991	343 Elm St.
Richmond, VA	-	2,969	26,697	-	2,969	26,697	2,893	2012	2008	7001 Forest Avenue
Rockwall, TX	-	132	17,197	-	132	17,197	2,223	2012	2008	3142 Horizon Road
Rogers, AR	-	1,062	29,400	-	1,062	29,400	4,474	2011	2008	2708 Rife Medical Lane
Rolla, MO	-	1,931	47,639	-	1,931	47,639	5,648	2011	2009	1605 Martin Spring Drive
Roswell, NM	1,535	183	5,851	-	183	5,851	865	2011	2004	601 West Country Club Road
Roswell, NM	4,413	883	15,984	-	883	15,984	2,040	2011	2006	350 West Country Club Road
Roswell, NM	-	762	17,171	-	762	17,171	1,750	2011	2009	300 West Country Club Road
Sacramento, CA	-	866	12,756	1,727	866	14,483	3,868	2006	1990	8120 Timberlake Way
Salem, NH	-	1,655	14,050	-	1,655	14,050	388	2014	2013	31 Stiles Road
San Antonio, TX	18,400	4,518	31,041	-	4,518	31,041	5,074	2012	1986	5282 Medical Drive
San Antonio, TX	-	900	17,288	-	900	17,288	680	2014	2007	3903 Wiseman Boulevard
San Antonio, TX	-	1,012	10,545	-	1,012	10,545	3,142	2006	1999	19016 Stone Oak Pkwy.
San Antonio, TX	-	1,038	9,264	-	1,038	9,264	4,032	2006	1999	540 Stone Oak Centre Drive
Santa Clarita, CA	-	-	28,384	-	-	28,384	179	2014	1998	23929 McBean Parkway
Santa Clarita, CA	-	-	2,222	-	-	2,222	14	2014	1996	23871 McBean Parkway
Santa Clarita, CA	25,000	-	41,151	-	-	41,151	259	2014	2013	23803 McBean Parkway
Santa Clarita, CA	-	-	20,618	-	-	20,618	130	2014	1989	24355 Lyons Avenue
Santa Clarita, CA	-	9,835	-	-	9,835	-	-	2014	1900	23861 McBean Parkway
Santa Clarita, CA	-	-	2,338	-	-	2,338	15	2014	1976	23861 McBean Parkway
Santa Clarita, CA	-	-	2,318	-	-	2,318	15	2014	1976	23861 McBean Parkway
Santa Clarita, CA	-	-	2,318	-	-	2,318	15	2014	1976	23861 McBean Parkway
Santa Clarita, CA	-	-	2,318	-	-	2,318	15	2014	1976	23861 McBean Parkway
Santa Clarita, CA	-	-	13,124	-	-	13,124	83	2014	1976	23861 McBean Parkway
Sarasota, FL	-	62	47,325	-	62	47,325	4,592	2012	1990	1921 Waldemere Street
Seattle, WA	-	4,410	38,428	-	4,410	38,428	6,658	2010	2010	5350 Tallman Ave
Sewell, NJ	-	60	57,929	-	60	57,929	13,498	2007	2009	239 Hurffville-Cross Keys Road
Shakopee, MN	6,556	508	11,412	-	508	11,412	2,207	2010	1996	1515 St Francis Ave
Shakopee, MN	11,094	707	18,089	-	707	18,089	2,503	2010	2007	1601 St Francis Ave
Sheboygan, WI	1,779	1,012	2,216	-	1,012	2,216	436	2010	1958	1813 Ashland Ave.
Shenandoah, TX	-	-	21,653	-	-	21,653	-	2013	2014	106 Vision Park Boulevard
Sherman Oaks, CA	-	-	32,186	-	-	32,186	203	2014	1969	4955 Van Nuys Boulevard
Somerville, NJ	-	3,400	22,244	2	3,400	22,246	3,569	2008	2007	30 Rehill Avenue
Southlake, TX	11,680	592	18,243	-	592	18,243	2,327	2012	2004	1545 East Southlake Boulevard
Southlake, TX	18,054	698	30,549	-	698	30,549	3,182	2012	2004	1545 East Southlake Boulevard
Southlake, TX	-	3,000	-	-	3,000	-	-	2014	1900	Central Avenue
St Paul, MN	-	49	37,695	-	49	37,695	115	2014	2006	225 Smith Avenue N.
St. Louis, MO	-	336	17,247	1,031	336	18,278	4,984	2007	2001	2325 Dougherty Rd.
St. Paul, MN	25,253	2,706	39,507	-	2,706	39,507	5,864	2011	2007	435 Phalen Boulevard
Suffern, NY	-	653	37,255	-	653	37,255	4,974	2011	2007	255 Lafayette Avenue
Suffolk, VA	-	1,566	11,511	-	1,566	11,511	2,823	2010	2007	5838 Harbour View Blvd.
Sugar Land, TX	8,522	3,543	15,532	-	3,543	15,532	1,761	2012	2005	11555 University Boulevard
Summit, WI	-	2,899	87,666	-	2,899	87,666	19,308	2008	2009	36500 Aurora Dr.
Tacoma, WA	-	-	64,307	-	-	64,307	5,493	2011	2013	1608 South J Street
Tallahassee, FL	-	-	17,449	-	-	17,449	2,815	2010	2011	One Healing Place
Tampa, FL	-	1,212	19,643	-	1,212	19,643	2,548	2012	2006	3000 Medical Park Drive
Tampa, FL	-	2,208	6,491	-	2,208	6,491	1,303	2012	1985	3000 E. Fletcher Avenue
Tampa, FL	-	4,319	12,234	-	4,319	12,234	1,292	2011	2003	14547 Bruce B Downs Blvd
Temple, TX	-	2,900	9,954	-	2,900	9,954	620	2011	2012	2601 Thornton Lane
Tucson, AZ	-	1,302	4,925	824	1,302	5,749	1,906	2008	1995	2055 W. Hospital Dr.
Van Nuys, CA	-	-	36,187	-	-	36,187	5,468	2009	1991	6815 Noble Ave.
Virginia Beach, VA	-	924	19,168	-	924	19,168	3,725	2011	2007	828 Health Way
Voorhees, NJ	-	6,404	24,251	1,387	6,477	25,564	6,638	2006	1997	900 Centennial Blvd.
Voorhees, NJ	-	6	96,075	-	6	96,075	10,205	2010	2012	200 Bowman Drive
Wellington, FL	-	107	16,933	1,880	107	18,813	4,290	2006	2000	10115 Forest Hill Blvd.
Wellington, FL	-	388	13,697	414	388	14,111	3,470	2007	2003	1395 State Rd. 7
West Allis, WI	3,267	1,106	3,309	-	1,106	3,309	777	2010	1961	11333 W. National Ave.
West Palm Beach, FL	-	628	14,740	121	628	14,861	4,448	2006	1993	5325 Greenwood Ave.
West Palm Beach, FL	-	610	14,618	404	610	15,023	4,853	2006	1991	927 45th St.
West Seneca, NY	-	917	22,435	2,114	1,642	23,824	6,666	2007	1990	550 Orchard Park Rd
Westerville, OH	-	2,122	5,641	-	2,122	5,641	681	2012	2001	444 N Cleveland Avenue
Zephyrhills, FL	-	3,875	27,270	-	3,875	27,270	3,134	2011	1974	38135 Market Square Dr
Medical facilities total:	$ 609,268	$ 330,140	$ 4,143,585	$ 142,524	$ 345,036	$ 4,271,211	$ 648,096

114

Assets held for sale: — Bellaire, TX	$ -	$ 4,551	$ 46,105	$ -	$ -	$ -	$ -	2006	2005	5410 W. Loop S.
Bellaire, TX	-	2,972	33,445	-	-	-	-	2006	2005	5420 W. Loop S.
Denton, TX	-	-	19,407	-	-	-	-	2007	2005	2900 North I-35
Stafford, VA	-	-	11,260	-	-	9,422	-	2008	2009	125 Hospital Center Blvd
Bellevue, NE	-	4,500	109,719	-	-	101,627	-	2008	2010	2500 Bellevue Medical Center Dr
Bridgeton, MO	-	-	30,221	-	-	-	-	2011	2011	12380 DePaul Drive
Akron, OH	-	300	20,200	-	-	-	-	2009	2008	200 E. Market St.
Amelia Island, FL	-	3,290	24,310	-	-	-	-	2005	1998	48 Osprey Village Dr.
Austin, TX	9,658	730	18,970	-	-	15,750	-	2007	2006	3200 W. Slaughter Lane
Bellevue, WI	-	1,740	18,260	-	-	16,473	-	2006	2004	1660 Hoffman Rd.
Baytown, TX	9,059	450	6,150	-	-	4,360	-	2002	2000	3921 N. Main St.
Baytown, TX	-	540	11,110	-	-	9,987	-	2009	2008	2000 West Baker Lane
Corpus Christi, TX	-	400	1,916	-	-	-	-	2005	1985	1101 S. Alameda
DeForest, WI	-	250	5,350	-	-	4,862	-	2007	2006	6902 Parkside Circle
Denver, CO	-	2,530	9,514	-	-	-	-	2005	1986	3701 W. Radcliffe Ave.
Frisco, TX	-	130	16,445	-	-	-	-	2012	2010	2990 Legacy Drive
Grand Blanc, MI	-	700	7,843	-	-	-	-	2011	2012	5400 East Baldwin
Greenfield, WI	-	600	6,626	-	-	6,337	-	2006	2006	3933 S. Prairie Hill Lane
Greenville, SC	-	5,400	100,523	-	-	-	-	2006	2009	10 Fountainview Terrace
Houston, TX	9,656	860	18,715	-	-	15,927	-	2007	2006	8702 South Course Drive
Houston, TX	10,002	630	5,970	-	-	4,978	-	2002	1995	3625 Green Crest Dr.
Kenosha, WI	-	1,500	9,139	-	-	9,197	-	2007	2009	6300 67th Street
Lapeer, MI	-	220	7,625	-	-	-	-	2011	2012	2323 Demille Road
Melbourne, FL	-	2,540	21,319	-	-	-	-	2010	2012	3260 N Harbor City Blvd
McHenry, IL	-	3,550	15,300	3,012	-	21,862	-	2006	2004	3300 Charles Miller Rd.
Merrillville, IN	-	643	7,084	-	-	-	-	1997	1999	101 W. 87th Ave.
Merrillville, IN	-	1,080	3,413	-	-	-	-	2010	2011	300 W. 89th Ave.
Mount Airy, NC	-	270	6,430	-	-	-	-	2005	1998	1000 Ridgecrest Lane
Murrieta, CA	-	8,800	202,412	-	-	-	-	2008	2010	28062 Baxter Road
Myrtle Beach, SC	-	6,890	41,526	-	-	-	-	2007	2009	101 Brightwater Dr.
Neenah, WI	-	630	15,120	-	-	14,126	-	2010	1991	131 E. North Water St.
Oshkosh, WI	-	900	3,800	2,178	-	6,878	-	2006	2005	711 Bayshore Drive
Oshkosh, WI	-	400	23,237	-	-	20,069	-	2007	2008	631 Hazel Street
Overland Park, KS	-	1,120	8,360	-	-	-	-	2005	1970	7541 Switzer St.
Pasadena, TX	9,679	720	24,080	-	-	19,862	-	2007	2005	3434 Watters Rd.
Pawleys Island, SC	-	2,020	32,590	-	-	-	-	2005	1997	120 Lakes at Litchfield Dr.
Scituate, MA	-	1,740	10,640	-	-	-	-	2005	1976	309 Driftway
Sheboygan, WI	-	80	5,320	2,203	-	7,603	-	2006	2006	4221 Kadlec Dr.
Saint Simons Island, GA	-	6,440	50,060	-	-	-	-	2008	2007	136 Marsh's Edge Lane
San Antonio, TX	10,455	560	7,315	-	-	5,190	-	2002	2000	5437 Eisenhaur Rd.
San Antonio, TX	9,637	640	13,360	-	-	11,138	-	2007	2004	8503 Mystic Park
Spartanburg, SC	-	3,350	15,750	-	-	-	-	2005	1997	110 Summit Hills Dr.
Tucson, AZ	-	930	13,399	-	-	-	-	2005	1985	6211 N. La Cholla Blvd.
Waukesha, WI	-	1,100	14,910	-	-	14,042	-	2008	2009	400 Merrill Hills Rd.
Webster, TX	9,210	360	5,940	-	-	4,128	-	2002	2000	17231 Mill Forest
Winston-Salem, NC	$ -	$ 5,700	$ 13,550	$ -	$ -	$ -	$ -	2005	1997	2101 Homestead Hills
Assets held for sale total	$ 77,355	$ 82,756	$ 1,093,737	$ 7,393	$ -	$ 323,818	-

118

Summary: — Seniors housing triple-net	$ 593,414	$ 900,397	$ 9,683,752	$ 365,636	$ 912,536	$ 10,037,249	$ 1,262,419
Seniors housing operating	1,654,531	773,492	8,293,454	348,816	788,969	8,626,789	1,110,393
Medical facilities	609,268	330,140	4,143,585	142,524	345,036	4,271,211	648,096
Construction in progress	-	-	186,327	-	-	186,327	-
Total continuing operating properties	2,857,213	2,004,029	22,307,118	856,976	2,046,541	23,121,576	3,020,908
Assets held for sale	77,355	82,756	1,093,737	7,393	-	323,818	-
Total investments in real property owned	$ 2,934,568	$ 2,086,785	$ 23,400,855	$ 864,369	$ 2,046,541	$ 23,445,394	$ 3,020,908
(1) Please see Note 2 to our consolidated financial statements
for information regarding lives used for depreciation and amortization.
(2) Represents real property asset associated with a capital
lease.

119

	2014	2013	2012
Reconciliation of real property:	(in
thousands)
Investment in real estate:
Balance at beginning of year	$ 23,734,733	$ 18,082,399	$ 14,844,319
Additions:
Acquisitions	2,210,600	3,597,955	2,923,251
Improvements	380,298	408,844	449,964
Assumed other items, net	160,897	772,972	108,404
Assumed debt	265,152	1,340,939	481,598
Total additions	3,016,947	6,154,628	3,969,299
Deductions:
Cost of real estate sold	(916,997)	(498,564)	(581,696)
Reclassification of accumulated depreciation and amortization
for assets held for sale	(64,476)	(3,730)	(120,236)
Impairment of assets	-	-	(29,287)
Total deductions	(981,473)	(502,294)	(731,219)
Foreign currency translation	(278,272)	33,918	6,082
Balance at end of year (3)	$ 25,491,935	$ 23,734,733	$ 18,082,399
Accumulated depreciation:
Balance at beginning of year	$ 2,386,658	$ 1,555,055	$ 1,194,476
Additions:
Depreciation and amortization expenses	844,130	873,960	533,585
Amortization of above market leases	7,935	7,831	7,204
Total additions	852,065	881,791	540,789
Deductions:
Sale of properties	(123,582)	(49,625)	(59,974)
Reclassification of accumulated depreciation and amortization
for assets held for sale	(64,476)	(3,730)	(120,236)
Total deductions	(188,058)	(53,355)	(180,210)
Foreign currency translation	(29,757)	3,167	-
Balance at end of year	$ 3,020,908	$ 2,386,658	$ 1,555,055
(3) The aggregate
cost for tax purposes for real property equals $21,621,760,000,
$20,260,297,000, and $14,788,080,000 at December 31, 2014, 2013 and 2012,
respectively.

120

Health Care REIT, Inc.
Schedule
IV - Mortgage Loans on Real Estate
December
31, 2014
					(in
thousands)
Location	Segment	Interest
Rate	Final
Maturity Date	Monthly
Payment Terms	Prior
Liens	Face
Amount of Mortgages	Carrying
Amount of Mortgages	Principal
Amount of Loans Subject to Delinquent Principal or Interest
First mortgages relating to 1 property
located in:
California	Medical office buildings	6.08%	12/22/17	$ 314,464	$ -	$ 65,000	$ 60,902	$ -
United Kingdom	Seniors housing triple-net	7.00%	04/19/18	126,205	-	22,588	21,258	-
United Kingdom	Seniors housing triple-net	7.00%	11/21/18	110,898	-	21,653	18,912	-
Massachusetts	Seniors housing triple-net	7.86%	12/31/16	112,065	-	21,000	16,787	-
United Kingdom	Seniors housing triple-net	7.00%	12/31/19	19,605	-	28,664	4,264	-
Texas	Seniors housing triple-net	7.75%	10/31/18	26,419	-	8,800	4,014	-
Texas	Seniors housing triple-net	7.75%	10/31/18	20,734	-	8,800	3,150	-
United Kingdom	Seniors housing triple-net	8.50%	05/01/16	11,930	-	10,601	1,534	-
United Kingdom	Seniors housing triple-net	7.54%	07/31/15	9,605	-	3,116	1,500	-
Oklahoma	Seniors housing triple-net	8.11%	10/28/19	5,455	-	11,610	936	-
First mortgage relating to multiple
properties:
Five properties in the United Kingdom	Seniors housing triple-net	7.50%	11/30/19	83,130	-	16,356	13,050	-
Second mortgages relating to 1
property located in:
Connecticut	Seniors housing triple-net	8.11%	04/01/18	36,406	15,583	5,300	5,258	-
Texas	Seniors housing triple-net	12.17%	05/01/19	32,042	5,293	3,100	3,100	-
Florida	Seniors housing triple-net	12.17%	07/01/18	27,908	9,283	2,700	2,700	-
Florida	Seniors housing triple-net	12.17%	11/01/18	27,908	7,861	2,700	2,700	-
Colorado	Seniors housing triple-net	9.00%	05/01/16	15,500	7,972	2,000	2,000	-
Indiana	Seniors housing triple-net	9.00%	05/01/16	11,625	7,864	1,500	1,500	-
Canada	Seniors housing triple-net	7.24%	12/31/16	-	12,413	86	86	-
Second mortgage relating to multiple
properties:
Eleven properties in four states	Seniors housing triple-net	10.00%	12/30/18	$ 212,329	29,677	25,000	25,000	-
Totals					$ 95,946	$ 260,574	$ 188,651	$ -

	2014	2013	2012
Reconciliation of mortgage loans:	(in
thousands)
Balance at beginning of year	$ 146,987	$ 87,955	$ 63,934
Additions:
New mortgage loans	113,997	68,530	40,641
Draws on existing loans	26,330	-	-
Total additions	140,326	68,530	40,641
Deductions:
Collections of principal	(49,973)	(8,790)	(11,819)
Conversions to real property	(45,836)	-	(3,300)
Charge-offs	-	(2,110)	(1,501)
Total deductions	(95,810)	(10,900)	(16,620)
Change in balance due to foreign currency translation	(2,852)	1,402	-
Balance at end of year	$ 188,651	$ 146,987	$ 87,955

121

EXHIBIT INDEX

1.1(a) Form of Equity Distribution Agreement, dated as of November 12, 2010, entered into by and between the Company and each of UBS Securities LLC, RBS Securities Inc., KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. (filed with the Commission as Exhibit 1.1 to the Company’s Form 8-K filed November 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

1.1(b) Form of Amendment No. 1, dated September 1, 2011, to the Equity Distribution Agreements entered into by and between the Company and each of UBS Securities LLC, RBS Securities Inc., KeyBanc Capital Markets Inc. and Credit Agricole Securities (USA) Inc. (filed with the Commission as Exhibit 1.1 to the Company’s Form 8-K filed September 8, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

2.1 Agreement and Plan of Merger, dated as of August 21, 2012, by and among Sunrise Senior Living, Inc., Brewer Holdco, Inc., Brewer Holdco Sub, Inc., the Company and Red Fox, Inc. (the exhibits and schedules to the Agreement and Plan of Merger have been omitted pursuant to Item 601(b)(2) of Regulation S-K) (filed with the Commission as Exhibit 2.1 to the Company’s Form 8-K filed August 22, 2012 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(a) Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(b) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-K filed March 20, 2000 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(c) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed June 13, 2003 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(d) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.9 to the Company’s Form 10-Q filed August 9, 2007 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(e) Certificate of Change of Location of Registered Office and of Registered Agent of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 10-Q filed August 6, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(f) Certificate of Designation of 6.50% Series I Cumulative Convertible Perpetual Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 7, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(g) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 10, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(h) Certificate of Designation of 6.50% Series J Cumulative Redeemable Preferred Stock of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed March 8, 2012 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(i) Certificate of Amendment of Second Restated Certificate of Incorporation of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed May 6, 2014 (File No. 001-08923), and incorporated herein by reference thereto).

3.1(j) Certificate of Elimination of Junior Participating Preferred Stock, Series A, of the Company.

3.1(k) Certificate of Elimination of 6% Series H Cumulative Convertible and Redeemable Preferred Stock of the Company.

122

3.2 Fourth Amended and Restated By-Laws of the Company (filed with the Commission as Exhibit 3.1 to the Company’s Form 8-K filed November 1, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(a) Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 9, 2002 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(b) Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 9, 2002 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(c) Amendment No. 1, dated March 12, 2003, to Supplemental Indenture No. 1, dated as of September 6, 2002, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 14, 2003 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(d) Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 24, 2003 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(e) Amendment No. 1, dated September 16, 2003, to Supplemental Indenture No. 2, dated as of September 10, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.4 to the Company’s Form 8-K filed September 24, 2003 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(f) Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed October 30, 2003 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(g) Amendment No. 1, dated September 13, 2004, to Supplemental Indenture No. 3, dated as of October 29, 2003, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A., as successor to Fifth Third Bank (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed September 13, 2004 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(h) Supplemental Indenture No. 4, dated as of April 27, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed April 28, 2005 (File No. 001-08923), and incorporated herein by reference thereto).

4.1(i) Supplemental Indenture No. 5, dated as of November 30, 2005, to Indenture for Senior Debt Securities, dated as of September 6, 2002, between the Company and The Bank of New York Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed November 30, 2005 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(a) Indenture, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.1 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(b) Supplemental Indenture No. 1, dated as of March 15, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 15, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(c) Amendment No. 1 to Supplemental Indenture No. 1, dated as of June 18, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 18, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

123

4.2(d) Supplemental Indenture No. 2, dated as of April 7, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 7, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(e) Amendment No. 1 to Supplemental Indenture No. 2, dated as of June 8, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.3 to the Company’s Form 8-K filed June 8, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(f) Supplemental Indenture No. 3, dated as of September 10, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed September 13, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(g) Supplemental Indenture No. 4, dated as of November 16, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 16, 2010 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(h) Supplemental Indenture No. 5, dated as of March 14, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed March 14, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(i) Supplemental Indenture No. 6, dated as of April 3, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed April 4, 2012 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(j) Supplemental Indenture No. 7, dated as of December 6, 2012, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed December 11, 2012 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(k) Supplemental Indenture No. 8, dated as of October 7, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed October 9, 2013 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(l) Supplemental Indenture No. 9, dated as of November 20, 2013, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 20, 2013 (File No. 001-08923), and incorporated herein by reference thereto).

4.2(m) Supplemental Indenture No. 10, dated as of November 25, 2014, between the Company and The Bank of New York Mellon Trust Company, N.A. (filed with the Commission as Exhibit 4.2 to the Company’s Form 8-K filed November 25, 2014 (File No. 001-08923), and incorporated herein by reference thereto).

4.3 Form of Indenture for Senior Subordinated Debt Securities (filed with the Commission as Exhibit 4.9 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).

4.4 Form of Indenture for Junior Subordinated Debt Securities (filed with the Commission as Exhibit 4.10 to the Company’s Form S-3 (File No. 333-73936) filed November 21, 2001, and incorporated herein by reference thereto).

10.1 Credit Agreement dated as of July 25, 2014 by and among the Company; the lenders listed therein; KeyBank National Association, as administrative agent, L/C issuer and a swingline lender; Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents; Deutsche Bank Securities Inc., as documentation agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc. and Deutsche Bank Securities Inc., as U.S. joint lead arrangers; Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and RBC Capital Markets, as Canadian joint lead arrangers; and Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as joint book runners (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed July 31, 2014 (File No. 001-08923), and incorporated herein by reference thereto).

124

10.2 Equity Purchase Agreement, dated as of February 28, 2011, by and among the Company, FC-GEN Investment, LLC and FC-GEN Operations Investment, LLC (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 28, 2011 (File No. 001-08923), and incorporated herein by reference thereto).

10.3(a) Amended and Restated Health Care REIT, Inc. 2005 Long-Term Incentive Plan (filed with the Commission as Appendix A to the Company’s Proxy Statement for the 2009 Annual Meeting of Stockholders, filed March 25, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(b) Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.18 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(c) Form of Amendment to Stock Option Agreements (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.6 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(d) Form of Stock Option Agreement (with Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.8 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(e) Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.19 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(f) Form of Amendment to Stock Option Agreements (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.7 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(g) Form of Stock Option Agreement (with Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.9 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(h) Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.20 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(i) Form of Stock Option Agreement (without Dividend Equivalent Rights) for the Chief Executive Officer under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(j) Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.21 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(k) Form of Stock Option Agreement (without Dividend Equivalent Rights) for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(l) Form of Restricted Stock Agreement for the Chief Executive Officer under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.22 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(m) Form of Restricted Stock Agreement for Executive Officers under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.23 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

125

10.3(n) Form of Restricted Stock Agreement for the Chief Executive Officer under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(o) Form of Restricted Stock Agreement for Executive Officers under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.4 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(p) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.24 to the Company’s Form 10-K filed March 10, 2006 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(q) Form of Amendment to Deferred Stock Unit Grant Agreements for Non-Employee Directors under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.10 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(r) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.11 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.3(s) Form of Deferred Stock Unit Grant Agreement for Non-Employee Directors under the Amended and Restated 2005 Long-Term Incentive Plan (filed with the Commission as Exhibit 10.5 to the Company’s Form 10-Q filed May 10, 2010 (File No. 001-08923), and incorporated herein by reference thereto).*

10.4(a) Sixth Amended and Restated Employment Agreement, dated July 16, 2013, by and between the Company and George L. Chapman (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed July 17, 2013 (File No. 001-08923), and incorporated herein by reference thereto).*

10.4(b) Retirement and Consulting Agreement, dated April 13, 2014, between the Company and George L. Chapman (filed with the Commission as Exhibit 10.1 to the Company’s Form 10-Q filed May 8, 2014 (File No. 001-08923), and incorporated herein by reference thereto).*

10.5(a) Amended and Restated Employment Agreement, dated December 28, 2014, between the Company and Thomas J. DeRosa.*

10.5(b) Performance-Based Restricted Stock Unit Grant Agreement, dated effective as of July 30, 2014, between the Company and Thomas J. DeRosa (filed with the Commission as Exhibit 10.2 to the Company’s Form 10-Q filed November 4, 2014 (File No. 001-08923), and incorporated herein by reference thereto).*

10.6 Second Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Scott A. Estes (filed with the Commission as Exhibit 10.4 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.7 Second Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Charles J. Herman, Jr. (filed with the Commission as Exhibit 10.3 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.8 Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Jeffrey H. Miller (filed with the Commission as Exhibit 10.8 to the Company’s Form 10-K filed March 2, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.9 Employment Agreement, dated March 11, 2013, by and between the Company and Scott M. Brinker (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 7, 2013 (File No. 001-08923), and incorporated herein by reference thereto).*

126

10.10 Third Amended and Restated Employment Agreement, dated December 29, 2008, between the Company and Erin C. Ibele (filed with the Commission as Exhibit 10.11 to the Company’s Form 10-K filed March 2, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.11 Amended and Restated Health Care REIT, Inc. Supplemental Executive Retirement Plan, dated December 29, 2008 (filed with the Commission as Exhibit 10.12 to the Company’s Form 8-K filed January 5, 2009 (File No. 001-08923), and incorporated herein by reference thereto).*

10.12 Form of Indemnification Agreement between the Company and each director, executive officer and officer of the Company (filed with the Commission as Exhibit 10.1 to the Company’s Form 8-K filed February 18, 2005 (File No. 001-08923), and incorporated herein by reference thereto).*

10.13 Summary of Director Compensation.*

10.14 Health Care REIT, Inc. 2013-2015 Long-Term Incentive Program, as Amended and Restated (filed with the Commission as Exhibit 10.3 to the Company’s Form 10-Q filed May 8, 2014 (File No. 001-08923), and incorporated herein by reference thereto).*

12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Unaudited).

21 Subsidiaries of the Company.

23 Consent of Ernst & Young LLP, independent registered public accounting firm.

24 Powers of Attorney.

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1 Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer.

32.2 Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer.

101.INS XBRL Instance Document**

101.SCH XBRL Taxonomy Extension Schema Document**

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document**

101.LAB XBRL Taxonomy Extension Label Linkbase Document**

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document**

101.DEF XBRL Taxonomy Extension Definition Linkbase Document**

*	Management Contract or Compensatory Plan or Arrangement.
**	Attached as Exhibit 101 to this Annual Report on Form
10-K are the following materials, formatted in XBRL (eXtensible Business
Reporting Language): (i) the Consolidated Balance Sheets at December 31,
2014 and 2013, (ii) the Consolidated Statements of Comprehensive Income
for the years ended December 31, 2014, 2013 and 2012, (iii) the
Consolidated Statements of Equity for the years ended December 31, 2014, 2013
and 2012, (iv) the Consolidated Statements of Cash Flows for the years
ended December 31, 2014, 2013 and 2012, (v) the Notes to Consolidated
Financial Statements, (vi) Schedule III – Real Estate and Accumulated
Depreciation and (vii) Schedule IV – Mortgage Loans on Real Estate.

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WELLTOWER INC. Annual Report 2014

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WELLTOWER INC. Annual Report 2014