well-20220930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-8923

WELLTOWER INC.

(Exact name of registrant as specified in its charter)

Delaware

34-1096634

(State or other jurisdiction
of Incorporation)

(IRS Employer
Identification No.)

4500 Dorr Street

Toledo,

Ohio

43615

(Address of principal executive office)

(Zip Code)

(419) -

247-2800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $1.00 par value per share	WELL	New York Stock Exchange
Guarantee of 4.800% Notes due 2028 issued by Welltower OP LLC	WELL/28	New York Stock Exchange
Guarantee of 4.500% Notes due 2034 issued by Welltower OP LLC	WELL/34	New York Stock Exchange

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted 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 þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

As of October 31, 2022, Welltower Inc. had 472,521,446 shares of common stock outstanding.

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION		Page

Item 1. Financial Statements (Unaudited)		3

	Consolidated Balance Sheets	3

	Consolidated Statements of Comprehensive Income	4

	Consolidated Statements of Equity	6

	Consolidated Statements of Cash Flows	8

	Notes to Unaudited Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		30

Item 3. Quantitative and Qualitative Disclosures About Market Risk		57

Item 4. Controls and Procedures		58

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		59

Item 1A. Risk Factors		59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		59

Item 5. Other Information		59

Item 6. Exhibits		60

Signatures		61

PART I. FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


	September 30, 2022 (Unaudited)		December 31, 2021 (Note)
Assets:
Real estate investments:
Real property owned:
Land and land improvements	$	4,156,985	$	3,968,430
Buildings and improvements	33,018,251		31,062,203
Acquired lease intangibles	1,920,803		1,789,628
Real property held for sale, net of accumulated depreciation	175,657		134,097
Construction in progress	1,012,202		651,389
Less accumulated depreciation and amortization	(7,687,077)		(6,910,114)
Net real property owned	32,596,821		30,695,633
Right of use assets, net	323,230		522,796
Real estate loans receivable, net of credit allowance	916,639		1,068,681
Net real estate investments	33,836,690		32,287,110
Other assets:
Investments in unconsolidated entities	1,383,246		1,039,043
Goodwill	68,321		68,321
Cash and cash equivalents	343,446		269,265
Restricted cash	81,738		77,490
Straight-line rent receivable	430,173		365,643
Receivables and other assets	1,270,874		803,453
Total other assets	3,577,798		2,623,215
Total assets	$	37,414,488	$	34,910,325

Liabilities and equity
Liabilities:
Unsecured credit facility and commercial paper	$	654,715	$	324,935
Senior unsecured notes	12,324,601		11,613,758
Secured debt	2,121,628		2,192,261
Lease liabilities	410,415		545,944
Accrued expenses and other liabilities	1,445,479		1,235,554
Total liabilities	16,956,838		15,912,452
Redeemable noncontrolling interests	400,965		401,294
Equity:
Common stock	473,930		448,605
Capital in excess of par value	25,289,432		23,133,641
Treasury stock	(111,772)		(107,750)
Cumulative net income	8,808,678		8,663,736
Cumulative dividends	(15,215,694)		(14,380,915)
Accumulated other comprehensive income (loss)	(75,267)		(121,316)
Total Welltower Inc. stockholders’ equity	19,169,307		17,636,001
Noncontrolling interests	887,378		960,578
Total equity	20,056,685		18,596,579
Total liabilities and equity	$	37,414,488	$	34,910,325

Note: The consolidated balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues:
Resident fees and services	$	1,068,706	$	835,617	$	3,073,040	$	2,299,972
Rental income	361,983		357,984		1,079,784		1,015,550
Interest income	37,791		39,864		113,925		97,891
Other income	5,364		6,332		75,335		19,438
Total revenues	1,473,844		1,239,797		4,342,084		3,432,851

Expenses:
Property operating expenses	912,180		729,400		2,619,932		1,989,383
Depreciation and amortization	353,699		267,754		968,082		753,065
Interest expense	139,682		122,522		389,128		368,005
General and administrative expenses	34,811		32,256		109,071		93,618
Loss (gain) on derivatives and financial instruments, net	6,905		(8,078)		8,076		(6,503)
Loss (gain) on extinguishment of debt, net	2		(5)		593		50,964
Provision for loan losses, net	490		(271)		(149)		7,309
Impairment of assets	4,356		1,490		4,356		48,750
Other expenses	15,481		3,575		76,716		26,256
Total expenses	1,467,606		1,148,643		4,175,805		3,330,847

Income (loss) from continuing operations before income taxes and other items	6,238		91,154		166,279		102,004
Income tax (expense) benefit	(3,257)		(4,940)		(11,335)		(6,662)
Income (loss) from unconsolidated entities	(6,698)		(15,832)		(16,640)		(10,759)
Gain (loss) on real estate dispositions, net	1,064		119,954		20,466		223,702
Income (loss) from continuing operations	(2,653)		190,336		158,770		308,285

Net income (loss)	(2,653)		190,336		158,770		308,285
Less: Net income (loss) attributable to noncontrolling interests(1)	4,114		10,673		13,828		30,819
Net income (loss) attributable to common stockholders	$	(6,767)	$	179,663	$	144,942	$	277,466

Weighted average number of common shares outstanding:
Basic	463,366		428,031		455,074		420,955
Diluted	463,366		429,983		457,999		422,835

Earnings per share:
Basic:
Income (loss) from continuing operations	$	(0.01)	$	0.44	$	0.35	$	0.73
Net income (loss) attributable to common stockholders	$	(0.01)	$	0.42	$	0.32	$	0.66

Diluted:
Income (loss) from continuing operations	$	(0.01)	$	0.44	$	0.35	$	0.73
Net income (loss) attributable to common stockholders(2)	$	(0.01)	$	0.42	$	0.32	$	0.65

Dividends declared and paid per common share	$	0.61	$	0.61	$	1.83	$	1.83

(1) Includes amounts attributable to redeemable noncontrolling interests.

(2) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income (loss)	$	(2,653)	$	190,336	$	158,770	$	308,285

Other comprehensive income (loss):
Foreign currency translation gain (loss)	(372,494)		(112,263)		(746,165)		(55,059)
Derivative and financial instruments designated as hedges gain (loss)	417,567		130,711		753,588		100,866
Total other comprehensive income (loss)	45,073		18,448		7,423		45,807

Total comprehensive income (loss)	42,420		208,784		166,193		354,092
Less: Total comprehensive income (loss) attributable to noncontrolling interests(1)	(20,741)		4,350		(24,798)		31,299
Total comprehensive income (loss) attributable to common stockholders	$	63,161	$	204,434	$	190,991	$	322,793

(1) Includes amounts attributable to redeemable noncontrolling interests.

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


	Nine Months Ended September 30, 2022
	Common Stock		Capital in Excess of Par Value		Treasury Stock		Cumulative Net Income		Cumulative Dividends		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total
Balances at January 1, 2022	$	448,605	$	23,133,641	$	(107,750)	$	8,663,736	$	(14,380,915)	$	(121,316)	$	960,578	$	18,596,579
Comprehensive income:
Net income (loss)							61,925						2,752		64,677
Other comprehensive income (loss)											(17,156)		1,465		(15,691)
Total comprehensive income															48,986
Net change in noncontrolling interests			(63,026)										(128,305)		(191,331)
Amounts related to stock incentive plans, net of forfeitures	166		7,279		(4,768)										2,677
Net proceeds from issuance of common stock	6,605		542,218												548,823
Dividends paid:
Common stock dividends									(273,668)						(273,668)
Balances at March 31, 2022	$	455,376	$	23,620,112	$	(112,518)	$	8,725,661	$	(14,654,583)	$	(138,472)	$	836,490	$	18,732,066
Comprehensive income:
Net income (loss)							89,785						4,409		94,194
Other comprehensive income (loss)											(6,724)		(15,116)		(21,840)
Total comprehensive income															72,354
Net change in noncontrolling interests			(6,760)										118,793		112,033
Adjustment to members' interest from change in ownership in Welltower OP			46,861										(46,861)		—
Amounts related to stock incentive plans, net of forfeitures	20		6,551		827										7,398
Net proceeds from issuance of common stock	9,382		798,277												807,659

Dividends paid:
Common stock dividends									(277,615)						(277,615)
Balances at June 30, 2022	$	464,778	$	24,465,041	$	(111,691)	$	8,815,446	$	(14,932,198)	$	(145,196)	$	897,715	$	19,453,895
Comprehensive income:
Net income (loss)							(6,768)						2,876		(3,892)
Other comprehensive income (loss)											69,929		(23,029)		46,900
Total comprehensive income															43,008
Net change in noncontrolling interests			(2,400)										12,801		10,401
Adjustment to members' interest from change in ownership in Welltower OP			2,779										(2,779)		—
Redemption of OP units	5		201										(206)		—
Amounts related to stock incentive plans, net of forfeitures	3		6,151		(81)										6,073
Net proceeds from issuance of common stock	9,144		817,660												826,804

Dividends paid:
Common stock dividends									(283,496)						(283,496)
Balances at September 30, 2022	$	473,930	$	25,289,432	$	(111,772)	$	8,808,678	$	(15,215,694)	$	(75,267)	$	887,378	$	20,056,685

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


	Nine Months Ended September 30, 2021
	Common Stock		Capital in Excess of Par Value		Treasury Stock		Cumulative Net Income		Cumulative Dividends		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total
Balances at January 1, 2021	$	418,691	$	20,823,145	$	(104,490)	$	8,327,598	$	(13,343,721)	$	(148,504)	$	908,853	$	16,881,572
Comprehensive income:
Net income (loss)							71,546						(177)		71,369
Other comprehensive income (loss)											20,368		3,729		24,097
Total comprehensive income															95,466
Net change in noncontrolling interests			(14,250)										(20,266)		(34,516)
Amounts related to stock incentive plans, net of forfeitures	175		5,393		(2,029)										3,539
Net proceeds from issuance of common stock			(92)												(92)

Dividends paid:
Common stock dividends									(254,952)						(254,952)
Balances at March 31, 2021	$	418,866	$	20,814,196	$	(106,519)	$	8,399,144	$	(13,598,673)	$	(128,136)	$	892,139	$	16,691,017
Comprehensive income:
Net income (loss)							26,257						19,695		45,952
Other comprehensive income (loss)											188		2,919		3,107
Total comprehensive income															49,059
Net change in noncontrolling interests			(17,377)										15,630		(1,747)
Amounts related to stock incentive plans, net of forfeitures	51		4,504		(2,114)										2,441
Net proceeds from issuance of common stock	5,016		360,515												365,531
Dividends paid:
Common stock dividends									(255,472)						(255,472)
Balances at June 30, 2021	$	423,933	$	21,161,838	$	(108,633)	$	8,425,401	$	(13,854,145)	$	(127,948)	$	930,383	$	16,850,829
Comprehensive income:
Net income (loss)							179,663						10,470		190,133
Other comprehensive income (loss)											24,771		(6,196)		18,575
Total comprehensive income															208,708
Net change in noncontrolling interests			(4,013)										(14,944)		(18,957)
Amounts related to stock incentive plans, net of forfeitures	3		4,932		155										5,090
Net proceeds from issuance of common stock	12,704		986,102												998,806
Dividends paid:
Common stock dividends									(261,560)						(261,560)
Balances at September 30, 2021	$	436,640	$	22,148,859	$	(108,478)	$	8,605,064	$	(14,115,705)	$	(103,177)	$	919,713	$	17,782,916

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

WELLTOWER INC. AND SUBSIDIARIES

(In thousands)


	Nine Months Ended
	September 30,
	2022		2021
Operating activities:
Net income	$	158,770	$	308,285
Adjustments to reconcile net income to net cash provided from (used in) operating activities:
Depreciation and amortization	968,082		753,065
Other amortization expenses	20,643		13,951
Provision for loan losses, net	(149)		7,309
Impairment of assets	4,356		48,750
Stock-based compensation expense	19,456		14,868
Loss (gain) on derivatives and financial instruments, net	8,076		(6,503)
Loss (gain) on extinguishment of debt, net	593		50,964
Loss (income) from unconsolidated entities	16,640		10,759
Rental income less than (in excess of) cash received	(79,571)		(9,607)
Amortization related to above (below) market leases, net	(1,199)		(2,045)
Loss (gain) on real estate dispositions, net	(20,466)		(223,702)
Distributions by unconsolidated entities	8,648		11,783
Increase (decrease) in accrued expenses and other liabilities	96,250		97,924
Decrease (increase) in receivables and other assets	(124,807)		(83,806)
Net cash provided from (used in) operating activities	1,075,322		991,995

Investing activities:
Cash disbursed for acquisitions, net of cash acquired	(2,292,998)		(2,735,206)
Cash disbursed for capital improvements to existing properties	(315,835)		(165,691)
Cash disbursed for construction in progress	(463,465)		(263,325)
Capitalized interest	(20,729)		(14,027)
Investment in loans receivable	(133,179)		(953,006)
Principal collected on loans receivable	172,380		250,415
Other investments, net of payments	(62,625)		(10,885)
Contributions to unconsolidated entities	(390,493)		(278,833)
Distributions by unconsolidated entities	34,256		238,066
Proceeds from (payments on) derivatives	63,747		2,312
Proceeds from sales of real property	124,431		941,708
Net cash provided from (used in) investing activities	(3,284,510)		(2,988,472)

Financing activities:
Net increase (decrease) under unsecured credit facility and commercial paper	329,780		290,996
Net proceeds from issuance of senior unsecured notes	1,040,232		1,208,241
Payments to extinguish senior unsecured notes	—		(1,533,752)
Net proceeds from the issuance of secured debt	89,804		2,693
Payments on secured debt	(320,377)		(118,854)
Net proceeds from the issuance of common stock	2,184,953		1,366,464

Payments for deferred financing costs and prepayment penalties	(4,881)		(72,251)
Contributions by noncontrolling interests(1)	47,503		84,073
Distributions to noncontrolling interests(1)	(221,754)		(108,912)

Cash distributions to stockholders	(833,296)		(770,457)
Other financing activities	(7,730)		(9,322)
Net cash provided from (used in) financing activities	2,304,234		338,919
Effect of foreign currency translation on cash and cash equivalents and restricted cash	(16,617)		(840)
Increase (decrease) in cash, cash equivalents and restricted cash	78,429		(1,658,398)
Cash, cash equivalents and restricted cash at beginning of period	346,755		2,021,043
Cash, cash equivalents and restricted cash at end of period	$	425,184	$	362,645

Supplemental cash flow information:
Interest paid	$	364,345	$	341,134
Income taxes paid (received), net	6,725		1,288

(1) Includes amounts attributable to redeemable noncontrolling interests.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Welltower Inc., an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. We invest with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience. Welltower Inc., a real estate investment trust (“REIT”), owns interests in properties concentrated in major, high-growth markets in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”), consisting of seniors housing and post-acute communities and outpatient medical properties.

As of May 24, 2022, we are structured as an umbrella partnership REIT under which substantially all of our business is conducted through Welltower OP LLC, the day-to-day management of which is exclusively controlled by Welltower Inc. For additional information on the UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on March 7, 2022, April 1, 2022 and May 25, 2022. Unless stated otherwise or the context otherwise requires, references to "Welltower" mean Welltower Inc. and references to "Welltower OP" mean Welltower OP LLC. References to "we," "us" and "our" mean collectively Welltower, Welltower OP and those entities/subsidiaries owned or controlled by Welltower and/or Welltower OP. Welltower's weighted average ownership in Welltower OP was 99.737% for the three months ended September 30, 2022. As of September 30, 2022, Welltower owned 99.742% of the issued and outstanding units of Welltower OP, with other investors owning the remaining 0.258% of outstanding units. We adjust the noncontrolling members' interest at the end of each period to reflect their interest in the net assets of Welltower OP.

2. Accounting Policies and Related Matters

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2022 are not necessarily an indication of the results that may be expected for the year ending December 31, 2022. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Impact of COVID-19 Pandemic

The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the direct and indirect economic effects of the pandemic and containment measures, the impact of new variants, the effectiveness of vaccines and the overall pace of recovery, among others. The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the future.

Our Seniors Housing Operating revenues are dependent on occupancy. As of September 30, 2022, nearly all communities are open for new admissions and allowing visitors, in-person tours and communal dining and activities. Average occupancy is as follows:


	Three Months Ended(1)
	March 31,		June 30,		September 30,		December 31,
2021	72.7	%	73.0	%	74.9	%	76.3	%
2022	76.3	%	77.1	%	78.0	%

(1) Average occupancy includes our minority ownership share related to unconsolidated properties and excludes the minority partners' noncontrolling ownership share related to consolidated properties. Also excludes land parcels and properties under development.

Property-level operating expenses associated with the COVID-19 pandemic related to our Seniors Housing Operating portfolio totaled $8,134,000 and $28,152,000 for the three and nine ended September 30, 2022, respectively, as compared to $8,842,000 and $53,767,000 during the three and nine ended September 30, 2021, respectively. These expenses were incurred as a result of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure personal protective equipment and supplies. We expect total Seniors Housing Operating expenses to remain elevated during the pandemic and potentially beyond as these additional health and safety measures become standard practice.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In 2021 and 2022, we received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in the U.K. and Canada. We recognized $5,573,000 and $33,137,000 during the three and nine months ended September 30, 2022, respectively, as compared to $10,965,000 and $78,670,000 during the three and nine months ended September 30, 2021, respectively. These grants represent a reduction to property operating expenses in our Consolidated Statements of Comprehensive Income.

Our Triple-net operators have experienced similar occupancy declines and operating costs as our Seniors Housing Operating properties. Additionally, long-term/post-acute care facilities have generally experienced a higher degree of occupancy declines. These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the CARES Act Paycheck Protection Program and Provider Relief Fund.

New Accounting Standards

•In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” This ASU simplifies accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception. This ASU also simplifies the diluted earnings per share calculation in certain areas and provides updated disclosure requirements. The ASU is effective for public business entities beginning after December 15, 2021 including interim periods within those fiscal years. The adoption of this standard did not have a significant impact on our consolidated financial statements.

•In March 2020, the FASB issued an amendment to the reference rate reform standard, which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. An example of such reform is the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. Entities that make this optional expedient election would not have to remeasure the contracts at the modification date or reassess the accounting treatment if certain criteria are met and would continue applying hedge accounting for relationships affected by reference rate reform. The guidance is optional and may be elected over time as reference rate reform activities occur. We are currently evaluating our options with regards to existing contracts and hedging relationships and the impact of adopting this update on our 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 and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. 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 acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.

WELLTOWER INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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


	Nine Months Ended
	September 30, 2022								September 30, 2021
	Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	$	199,892	$	—	$	65,688	$	265,580	$	264,706	$	48,099	$	45,350	$	358,155
Buildings and improvements	1,988,999		172		249,660		2,238,831		1,655,067		436,828		227,390		2,319,285
Acquired lease intangibles	109,049		—		33,978		143,027		142,439		—		17,333		159,772
Construction in progress	108,141		—		—