Segment Reporting

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Reporting

17. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: triple-net, seniors housing operating and outpatient medical. During the three months ended December 31, 2016, we reclassified interest expense on our foreign-denominated senior notes from the seniors housing operating segment to non-segment. Accordingly, the segment information provided in this Note has been reclassified to conform to the current presentation for all periods presented.

Our triple-net properties include long-term/post-acute care facilities, 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 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 Note 18). Our outpatient medical properties are typically leased to multiple tenants and generally require a certain level of property management.

We evaluate performance based upon consolidated net operating income (“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 as 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 certain 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 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016). 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) is as follows (in thousands):

Three Months Ended September 30, 2017:		Triple-net		Seniors Housing Operating		Outpatient Medical		Non-segment / Corporate		Total
Rental income	$	221,555	$	-	$	141,325	$	-	$	362,880
Resident fees and services		-		702,380		-		-		702,380
Interest income		20,187		-		-		-		20,187
Other income		3,174		1,497		667		698		6,036
Total revenues		244,916		703,877		141,992		698		1,091,483
Property operating expenses		-		478,777		45,220		-		523,997
Consolidated net operating income		244,916		225,100		96,772		698		567,486
Interest expense		3,622		16,369		2,929		99,658		122,578
Loss (gain) on derivatives, net		324		-		-		-		324
Depreciation and amortization		62,891		119,089		48,158		-		230,138
General and administrative		-		-		-		29,913		29,913
Other expenses		89,236 (1)		5,157		530		4,672		99,595
Income (loss) from continuing operations before income taxes and income from unconsolidated entities		88,843		84,485		45,155		(133,545)		84,938
Income tax (expense) benefit		(816)		(1,519)		(366)		2,032		(669)
Income (loss) from unconsolidated entities		5,478		(2,886)		816		-		3,408
Income (loss) from continuing operations		93,505		80,080		45,605		(131,513)		87,677
Gain (loss) on real estate dispositions, net		(185)		(197)		2,004		-		1,622
Net income (loss)	$	93,320	$	79,883	$	47,609	$	(131,513)	$	89,299
Total assets	$	9,463,910	$	13,538,090	$	4,992,534	$	185,845	$	28,180,379
(1) Represents non-capitalizable transaction costs primarily related to a joint venture transaction with an existing seniors housing operator including the conversion of properties from triple-net to seniors housing operating, an exchange of PropCo/OpCo interests, and termination/restructuring of pre-existing relationships.

Three Months Ended September 30, 2016:		Triple-net		Seniors Housing Operating		Outpatient Medical		Non-segment / Corporate		Total
Rental income	$	286,226	$	-	$	134,926	$	-	$	421,152
Resident fees and services		-		630,017		-		-		630,017
Interest income		23,017		1,054		1,009		-		25,080
Other income		1,621		716		358		189		2,884
Total revenues		310,864		631,787		136,293		189		1,079,133
Property operating expenses		-		432,292		41,388		-		473,680
Consolidated net operating income		310,864		199,495		94,905		189		605,453
Interest expense		4,714		20,360		3,986		100,639		129,699
Loss (gain) on derivatives, net		-		-		-		(2,516)		(2,516)
Depreciation and amortization		74,296		97,210		46,555		-		218,061
General and administrative		-		-		-		36,828		36,828
Transaction costs		1,613		18,083		146		-		19,842
Impairment of assets		5,070		-		4,635		-		9,705
Income (loss) from continuing operations before income taxes and income from unconsolidated entities		225,171		63,842		39,583		(134,762)		193,834
Income tax (expense) benefit		(896)		515		417		269		305
Income (loss) from unconsolidated entities		1,998		(3,891)		144		-		(1,749)
Income (loss) from continuing operations		226,273		60,466		40,144		(134,493)		192,390
Gain (loss) on real estate dispositions, net		163,579		-		(1,228)		-		162,351
Net income (loss)	$	389,852	$	60,466	$	38,916	$	(134,493)	$	354,741

Nine Months Ended September 30, 2017:		Triple-net		Seniors Housing Operating		Outpatient Medical		Non-segment / Corporate		Total
Rental income	$	666,735	$	-	$	418,886	$	-	$	1,085,621
Resident fees and services		-		2,049,757		-		-		2,049,757
Interest income		61,767		69		-		-		61,836
Other income		7,496		4,005		2,497		1,171		15,169
Total revenues		735,998		2,053,831		421,383		1,171		3,212,383
Property operating expenses		-		1,400,313		135,708		-		1,536,021
Consolidated net operating income		735,998		653,518		285,675		1,171		1,676,362
Interest expense		11,647		47,587		7,342		290,829		357,405
Loss (gain) on derivatives, net		2,284		-		-		-		2,284
Depreciation and amortization		182,672		356,023		144,567		-		683,262
General and administrative		-		-		-		93,643		93,643
Loss (gain) on extinguishment of debt, net		29,083		3,414		4,373		-		36,870
Impairment of assets		4,846		14,191		5,625		-		24,662
Other expenses		96,425		8,100		2,201		10,882		117,608
Income (loss) from continuing operations before income taxes and income from unconsolidated entities		409,041		224,203		121,567		(394,183)		360,628
Income tax (expense) benefit		(2,070)		9,133		(655)		(873)		5,535
Income (loss) from unconsolidated entities		14,983		(40,527)		1,868		-		(23,676)
Income (loss) from continuing operations		421,954		192,809		122,780		(395,056)		342,487
Gain (loss) on real estate dispositions, net		273,051		12,814		2,004		-		287,869
Net income (loss)	$	695,005	$	205,623	$	124,784	$	(395,056)	$	630,356

Nine Months Ended September 30, 2016:		Triple-net		Seniors Housing Operating		Outpatient Medical		Non-segment / Corporate		Total
Rental income	$	857,184	$	-	$	402,258	$	-	$	1,259,442
Resident fees and services		-		1,847,386		-		-		1,847,386
Interest income		67,842		3,126		3,307		-		74,275
Other income		4,317		11,889		4,824		705		21,735
Total revenues		929,343		1,862,401		410,389		705		3,202,838
Property operating expenses		-		1,259,182		122,966		-		1,382,148
Consolidated net operating income		929,343		603,219		287,423		705		1,820,690
Interest expense		16,832		61,157		15,132		301,864		394,985
Loss (gain) on derivatives, net		-		-		-		(2,516)		(2,516)
Depreciation and amortization		229,906		301,354		142,066		-		673,326
General and administrative		-		-		-		122,434		122,434
Transaction costs		5,760		25,259		2,188		-		33,207
Loss (gain) on extinguishment of debt, net		97		(88)		-		-		9
Impairment of assets		19,384		-		4,635		-		24,019
Other expenses		-		-		-		3,161		3,161
Income (loss) from continuing operations before income taxes and income from unconsolidated entities		657,364		215,537		123,402		(424,238)		572,065
Income tax expense		(1,425)		5,304		(59)		(1,277)		2,543
(Loss) income from unconsolidated entities		8,097		(15,713)		88		-		(7,528)
Income (loss) from continuing operations		664,036		205,128		123,431		(425,515)		567,080
Gain (loss) on real estate dispositions, net		165,109		-		(1,228)		-		163,881
Net income (loss)	$	829,145	$	205,128	$	122,203	$	(425,515)	$	730,961

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):

		Three Months Ended						Nine Months Ended
		September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Revenues:		Amount	%		Amount	%		Amount	%		Amount	%
United States	$	871,431	79.9%	$	874,050	81.0%	$	2,582,042	80.4%	$	2,581,533	80.6%
United Kingdom		105,028	9.6%		95,068	8.8%		298,618	9.3%		295,203	9.2%
Canada		115,024	10.5%		110,015	10.2%		331,723	10.3%		326,102	10.2%
Total	$	1,091,483	100.0%	$	1,079,133	100.0%	$	3,212,383	100.0%	$	3,202,838	100.0%
		As of
		September 30, 2017			December 31, 2016
Assets:		Amount	%		Amount	%
United States	$	22,535,209	80.0%	$	23,572,459	81.7%
United Kingdom		3,202,180	11.3%		2,782,489	9.6%
Canada		2,442,990	8.7%		2,510,236	8.7%
Total	$	28,180,379	100.0%	$	28,865,184	100.0%