Segment Disclosures

9 Months Ended

Sep. 30, 2011

Segment Disclosures

Segment Disclosures

(14) Segment Disclosures

The Company evaluates its business and makes resource allocations based on its five business segments: (i) senior housing, (ii) post-acute/skilled nursing, (iii) life science, (iv) medical office and (v) hospital. Under the senior housing, post-acute/skilled nursing, life science and hospital segments, the Company invests primarily in single operator or tenant properties, through the acquisition and development of real estate or through investment in debt issued by operators in these sectors. Under the medical office segment, the Company invests through the acquisition of medical office buildings (“MOBs”) that are primarily leased under gross or modified gross leases, which are generally to multiple tenants and require a greater level of property management. The accounting policies of the segments are the same as those described in Note 2 to the Condensed Consolidated Financial Statements for the year ended December 31, 2010 in the Company’s Annual Report on Form 10-K filed with the SEC. There were no intersegment sales or transfers during the nine months ended September 30, 2011 and 2010. The Company evaluates performance based upon property net operating income from continuing operations (“NOI”) and interest income of the combined investments in each segment.

Non-segment assets consist primarily of real estate held for sale and corporate assets including cash, restricted cash, accounts receivable, net, marketable equity securities and deferred financing costs. Interest expense, depreciation and amortization and non-property specific revenues and expenses are not allocated to individual segments in determining the Company’s performance measure. See Note 12 for other information regarding concentrations of credit risk.

Summary information for the reportable segments follows (in thousands):

For the three months ended September 30, 2011:

Segments	Rental Revenues(1)		Income From DFLs		Interest Income		Investment Management Fee Income		Total Revenues		NOI(2)
Senior housing	$	107,465	$	30,652	$	42	$	—	$	138,159	$	128,494
Post-acute/skilled	9,548		122,844		287		—		132,679		132,147
Life science	71,093		—		—		1		71,094		57,862
Medical office	81,145		—		—		493		81,638		47,799
Hospital	20,854		—		248		—		21,102		19,627
Total	$	290,105	$	153,496	$	577	$	494	$	444,672	$	385,929

For the three months ended September 30, 2010:

Segments	Rental Revenues(1)		Income From DFLs		Interest Income		Investment Management Fee Income		Total Revenues		NOI(2)
Senior housing	$	88,151	$	13,028	$	67	$	577	$	101,823	$	87,855
Life science	69,660		—		—		1		69,661		56,953
Medical office	78,074		—		—		579		78,653		44,775
Post-acute/skilled	9,274		—		28,750		—		38,024		9,197
Hospital	21,123		—		7,765		—		28,888		20,104
Total	$	266,282	$	13,028	$	36,582	$	1,157	$	317,049	$	218,884

For the nine months ended September 30, 2011:

Segments	Rental Revenues(1)		Income From DFLs		Interest Income		Investment Management Fees Income		Total Revenues		NOI(2)
Senior housing	$	307,023	$	73,671	$	49	$	70	$	380,813	$	369,306
Post-acute/skilled	28,495		236,882		98,167		—		363,544		265,058
Life science	215,045		—		—		3		215,048		176,386
Medical office	241,045		—		—		1,532		242,577		143,688
Hospital	62,118		—		983		—		63,101		58,702
Total	$	853,726	$	310,553	$	99,199	$	1,605	$	1,265,083	$	1,013,140

For the nine months ended September 30, 2010:

Segments	Rental Revenues(1)		Income From DFLs		Interest Income		Investment Management Fee Income		Total Revenues		NOI(2)
Senior housing	$	235,566	$	37,238	$	352	$	1,965	$	275,121	$	257,794
Life science	206,641		—		—		3		206,644		170,596
Medical office	231,967		—		—		1,787		233,754		135,074
Post-acute/skilled	27,843		—		84,636		—		112,479		27,667
Hospital	62,732		—		23,016		—		85,748		58,927
Total	$	764,749	$	37,238	$	108,004	$	3,755	$	913,746	$	650,058

(1)Represents rental and related revenues, tenant recoveries, and resident fees and services.

(2)The Company defines NOI as rental revenues, including tenant recoveries, resident fees and services, and income from direct financing leases, less property level operating expenses. NOI excludes interest income, investment management fee income, depreciation and amortization, interest expense, general and administrative expenses, impairments, impairment recoveries, other income (expense), net, income taxes, equity income from and impairments of investments in unconsolidated joint ventures, and discontinued operations.

The following is a reconciliation from NOI to reported net income (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net operating income from continuing operations	$	385,929		$	218,884		$	1,013,140		$	650,058
Interest income	577			36,582			99,199			108,004
Investment management fee income	494			1,157			1,605			3,755
Depreciation and amortization	(88,556		)	(78,313		)	(270,028		)	(233,948		)
Interest expense	(104,198		)	(71,598		)	(317,903		)	(220,295		)
General and administrative	(19,648		)	(19,590		)	(76,472		)	(65,039		)
(Impairments) recoveries	(15,400		)	—			(15,400		)	11,900
Other income (expense), net	(772		)	6,657			17,058			7,151
Impairment of investment in unconsolidated joint venture	—			(71,693		)	—			(71,693		)
Income taxes	(5		)	(867		)	(290		)	(1,809		)
Equity income from unconsolidated joint ventures	17,050			209			32,798			4,078
Total discontinued operations	—			4,745			—			6,707
Net income	$	175,471		$	26,173		$	483,707		$	198,869

The Company’s total assets by segment were:

	September 30,			December 31,
Segments	2011			2010
Senior housing	$	5,969,625		$	4,364,026
Post-acute/skilled nursing	5,612,116			2,133,640
Life science	3,875,744			3,709,528
Medical office	2,336,474			2,305,175
Hospital	757,144			770,038
Gross segment assets	18,551,103			13,282,407
Accumulated depreciation and amortization	(1,650,685		)	(1,434,150		)
Net segment assets	16,900,418			11,848,257
Other non-segment assets	538,959			1,483,666
Total assets	$	17,439,377		$	13,331,923

On October 5, 2006, simultaneous with the closing of the Company’s merger with CNL Retirement Properties, Inc. (“CRP”), the Company also merged with CNL Retirement Corp. (“CRC”). CRP was a REIT that invested primarily in senior housing facilities and MOBs. Under the purchase method of accounting, the assets and liabilities of CRC were recorded at their estimated relative fair values, with $51.7 million paid in excess of the estimated fair value of CRC’s assets and liabilities recorded as goodwill. The CRC goodwill amount was allocated in proportion to the assets of the Company’s reporting units (property sectors) subsequent to the CRP acquisition.

At September 30, 2011, goodwill of $50.3 million was allocated to segment assets as follows: (i) senior housing—$30.5 million, (ii) post-acute/skilled nursing—$3.3 million, (iii) medical office—$11.4 million, and (iv) hospital—$5.1 million.