Segment Reporting

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Reporting

— Segment Reporting

The disclosures below for the years ended December 31, 2021, 2020 and 2019, are presented for the Company’s two reportable business segments for management and internal financial reporting purposes: MOBs and SHOPs. Prior to December 31, 2021, the Company had three reportable segments 1) medical office and outpatient buildings (“Former MOBs”), 2) triple-net lease healthcare properties (“Former NNN”) and 3) SHOPs. Culminating in the year ended December 31, 2021, the Company has completed several strategic property divestitures from the Company’s Former NNN segment and transitioned certain properties previously reported in the Company’s Former NNN segment into the Company’s SHOP segment. The remaining Former NNN properties are similar in nature, cash flows, and risk structure with the Former MOB segment and are managed operationally and reported collectively by the Company’s management. Accordingly, in the fourth quarter of 2021, the Company reevaluated its segments and concluded that it had two reportable segments. The Company combined the properties in its Former NNN segment with the properties in its Former MOB segment for segment reporting. All prior periods presented in the tables below have been conformed to the presentation of the Company’s new reportable segment structure. The Company will restate other quarterly prior periods when they are subsequently reported in later quarterly filings for comparative purposes.

The Company evaluates performance and makes resource allocations based on its two business segments. The medical office building segment primarily consists of MOBs leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses as well as seniors housing properties, hospitals, inpatient rehabilitation facilities and skilled nursing facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses. The SHOP segment consists of direct investments in seniors housing properties, primarily providing assisted living, independent living and memory care services, which are operated through engaging independent third-party operators.

Net Operating Income

The Company evaluates the performance of the combined properties in each segment based on net operating income (“NOI”). NOI is defined as total revenues from tenants, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).

NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. The Company believes that in order to facilitate a clear understanding of the Company’s operating results, NOI should be examined in conjunction with net income (loss) as presented in the Company’s consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of the Company’s performance or to cash flows as a measure of the Company’s liquidity or ability to pay distributions.

The following tables reconcile the segment activity to consolidated net loss for the years ended December 31, 2021, 2020 and 2019:

	Year Ended December 31, 2021
(In thousands)	Medical Office Buildings		Seniors Housing — Operating Properties		Consolidated
Revenue from tenants	$	122,867	$	206,488	$	329,355
Property operating and maintenance	34,480		171,333		205,813
NOI	$	88,387	$	35,155	123,542
Impairment charges					(40,951)
Operating fees to related parties					(24,206)
Acquisition and transaction related					(2,714)
General and administrative					(16,828)
Depreciation and amortization					(79,926)
Gain on sale of real estate investments					3,648
Interest expense					(47,900)
Interest and other income					61
Loss on non designated derivatives					37
Income tax expense					(203)
Net income attributable to non-controlling interests					260
Allocation for preferred stock					(7,762)
Net loss attributable to common stockholders					$	(92,942)

	Year Ended December 31, 2020
(In thousands)	Medical Office Buildings		Seniors Housing — Operating Properties		Consolidated
Revenue from tenants	$	119,824	$	261,788	$	381,612
Property operating and maintenance	32,812		210,736		243,548
NOI	87,012		51,052		138,064
Impairment charges					(36,446)
Operating fees to related parties					(23,922)
Acquisition and transaction related					(173)
General and administrative					(21,572)
Depreciation and amortization					(81,053)
Interest expense					(51,519)
Interest and other income					44
Gain on sale of real estate investments					5,230
Loss on sale of non-designated derivatives					(102)
Income tax expense					(4,061)
Net loss attributable to non-controlling interests					(303)
Allocation for preferred stock					(2,968)
Net loss attributable to common stockholders					$	(78,781)

	Year Ended December 31, 2019
(In thousands)	Medical Office Buildings		Seniors Housing — Operating Properties		Consolidated
Revenue from tenants	$	114,943	$	259,971	$	374,914
Property operating and maintenance	34,123		200,062		234,185
NOI	80,820		59,909		140,729
Impairment charges					(55,969)
Operating fees to related parties					(23,414)
Acquisition and transaction related					(362)
General and administrative					(20,530)
Depreciation and amortization					(81,032)
Gain on sale of real estate investment					8,790
Interest expense					(56,059)
Interest and other income					7
Loss on non-designated derivatives					(68)
Income tax expense					(399)
Net loss attributable to non-controlling interests					393
Allocation for preferred stock					(173)
Net loss attributable to common stockholders					$	(88,087)

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

	December 31,
(In thousands)	2021		2020
ASSETS
Investments in real estate, net:
Medical office and other healthcare-related buildings	$	1,149,241	$	1,121,898
Seniors housing — operating properties	900,686		987,050
Total investments in real estate, net	2,049,927		2,108,948
Cash and cash equivalents	59,738		72,357
Restricted cash	25,644		17,989
Assets held for sale	—		90
Derivative assets, at fair value	174		13
Straight-line rent receivable, net	23,858		23,322
Operating lease right-of-use asset	7,914		13,912
Prepaid expenses and other assets	32,564		34,932
Deferred costs, net	14,581		15,332
Total assets	$	2,214,400	$	2,286,895

The following table reconciles capital expenditures by reportable business segments, excluding corporate non-real estate expenditures, for the periods presented:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Medical office and other healthcare-related buildings	$	6,152	$	8,561	$	5,705
Seniors housing — operating properties	12,919		12,833		11,014
Total capital expenditures	$	19,071	$	21,394	$	16,719