Segment Reporting

3 Months Ended

Mar. 31, 2018

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. 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, 2017). 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 March 31, 2018:		Triple-net		Seniors Housing Operating		Outpatient Medical		Non-segment / Corporate		Total
Rental income	$	206,831	$	-	$	136,538	$	-	$	343,369
Resident fees and services		-		735,934		-		-		735,934
Interest income		14,551		85		12		-		14,648
Other income		1,377		1,148		121		368		3,014
Total revenues		222,759		737,167		136,671		368		1,096,965
Property operating expenses		21		511,941		44,503		-		556,465
Consolidated net operating income		222,738		225,226		92,168		368		540,500
Interest expense		3,442		16,935		1,676		100,722		122,775
Loss (gain) on derivatives and financial instruments, net		(7,173)		-		-		-		(7,173)
Depreciation and amortization		56,032		125,769		46,400		-		228,201
General and administrative		-		-		-		33,705		33,705
Loss (gain) on extinguishment of debt, net		(32)		(189)		11,928		-		11,707
Impairment of assets		25,884		2,301		-		-		28,185
Other expenses		1,120		(188)		598		2,182		3,712
Income (loss) from continuing operations before income taxes and income from unconsolidated entities		143,465		80,598		31,566		(136,241)		119,388
Income tax (expense) benefit		(1,136)		162		(428)		(186)		(1,588)
Income (loss) from unconsolidated entities		5,821		(9,480)		1,230		-		(2,429)
Income (loss) from continuing operations		148,150		71,280		32,368		(136,427)		115,371
Gain (loss) on real estate dispositions, net		123,397		5		214,782		-		338,184
Net income (loss)	$	271,547	$	71,285	$	247,150	$	(136,427)	$	453,555

Total assets	$	8,937,964	$	13,769,265	$	4,911,566	$	127,864	$	27,746,659


Three Months Ended March 31, 2017:		Triple-net		Seniors Housing Operating		Outpatient Medical		Non-segment / Corporate		Total
Rental income	$	227,290	$	-	$	139,851	$	-	$	367,141
Resident fees and services		-		670,337		-		-		670,337
Interest income		20,679		69		-		-		20,748
Other income		1,766		1,461		612		233		4,072
Total revenues		249,735		671,867		140,463		233		1,062,298
Property operating expenses		-		462,425		47,744		-		510,169
Consolidated net operating income		249,735		209,442		92,719		233		552,129
Interest expense		5,511		15,816		2,291		94,979		118,597
Loss (gain) on derivatives and financial instruments, net		1,224		-		-		-		1,224
Depreciation and amortization		59,608		119,737		48,931		-		228,276
General and administrative		-		-		-		31,101		31,101
Loss (gain) on extinguishment of debt, net		29,084		890		1,382		-		31,356
Impairment of assets		-		5,406		5,625		-		11,031
Other expenses		5,010		1,778		360		4,527		11,675
Income (loss) from continuing operations before income taxes and income from unconsolidated entities		149,298		65,815		34,130		(130,374)		118,869
Income tax (expense) benefit		(800)		(1,087)		(335)		(23)		(2,245)
Income (loss) from unconsolidated entities		5,638		(29,191)⁽¹⁾		447		-		(23,106)
Income (loss) from continuing operations		154,136		35,537		34,242		(130,397)		93,518
Gain (loss) on real estate dispositions, net		231,081		13,011		-		-		244,092
Net income (loss)	$	385,217	$	48,548	$	34,242	$	(130,397)	$	337,610
(1) Primarily due to the recognition of goodwill and intangible asset impairments on unconsolidated joint ventures, as well as non-recurring income tax expense.

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
		March 31, 2018			March 31, 2017
Revenues:		Amount	%		Amount	%
United States	$	863,789	78.8%	$	858,668	80.9%
United Kingdom		116,525	10.6%		93,843	8.8%
Canada		116,651	10.6%		109,787	10.3%
Total	$	1,096,965	100.0%	$	1,062,298	100.0%

		As of
		March 31, 2018			December 31, 2017
Assets:		Amount	%		Amount	%
United States	$	21,847,420	78.7%	$	22,274,443	79.7%
United Kingdom		3,397,904	12.3%		3,239,039	11.6%
Canada		2,501,335	9.0%		2,430,963	8.7%
Total	$	27,746,659	100.0%	$	27,944,445	100.0%