Segment Disclosures

9 Months Ended

Sep. 30, 2015

Segment Disclosures

Segment Disclosures

NOTE 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 medical office segment, the Company invests through the acquisition and development of MOBs, which generally require a greater level of property management. Otherwise, the Company primarily invests, through the acquisition and development of real estate, in single tenant and operator properties and debt issued by tenants and operators in these sectors. The accounting policies of the segments are the same as those described in Note2 to the Consolidated Financial Statements herein and in the Company’s 2014 Annual Report on Form 10-K filed with the SEC. There were no intersegment sales or transfers during the nine months ended September 30, 2015 and 2014. The Company evaluates performance based upon (i) property net operating income from continuing operations (“NOI”), (ii) adjusted NOI (cash NOI), and (iii) adjusted NOI plus interest income (“Portfolio Income”) of the combined investments in each segment.

Non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, marketable equity securities, deferred financing costs and, if any, real estate held for sale. Interest expense, depreciation and amortization, and non-property specific revenues and expenses are not allocated to individual segments in evaluating the Company’s segment-level performance. See Note 19 for other information regarding concentrations of credit risk.

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

For the three months ended September 30, 2015:

	Senior		Post-acute/		Life		Medical
	Housing		Skilled nursing		Science		Office		Hospital		Total
Rental revenues(1)	$	131,267	$	132,650	$	86,140	$	109,915	$	22,395	$	482,367
Resident fees and services		155,290		—		—		—		—		155,290
Operating expenses		(111,167)		(531)		(17,785)		(43,432)		(600)		(173,515)
NOI		175,390		132,119		68,355		66,483		21,795		464,142
Non-cash adjustments to NOI(2)		(6,141)		(20,362)		(2,613)		(1,363)		286		(30,193)
Adjusted (cash) NOI		169,249		111,757		65,742		65,120		22,081		433,949
Interest income		2,411		17,431		—		—		—		19,842
Portfolio Income	$	171,660	$	129,188	$	65,742	$	65,120	$	22,081		453,791
Addback non-cash adjustments												30,193
Investment management fee income												454
Interest expense												(122,157)
Depreciation and amortization												(134,704)
General and administrative expenses												(20,534)
Acquisition and pursuit costs												(1,553)
Impairments												(69,622)
Gains on sales of real estate, net of income taxes												52
Other expense, net												(1,026)
Income tax benefit												1,980
Equity income in unconsolidated joint ventures												8,314
Impairment of investments in unconsolidated joint ventures												(27,234)
Net income											$	117,954

For the three months ended September 30, 2014:

	Senior		Post-acute/		Life		Medical
	Housing		Skilled nursing		Science		Office		Hospital		Total
Rental revenues(1)	$	183,834	$	139,205	$	79,450	$	92,412	$	21,560	$	516,461
Resident fees and services		62,213		—		—		—		—		62,213
Operating expenses		(43,017)		(534)		(16,637)		(38,459)		(952)		(99,599)
NOI		203,030		138,671		62,813		53,953		20,608		479,075
Non-cash adjustments to NOI(2)		(47,518)		(16,693)		(2,091)		528		130		(65,644)
Adjusted (cash) NOI		155,512		121,978		60,722		54,481		20,738		413,431
Interest income		3,919		13,598		—		—		—		17,517
Portfolio Income	$	159,431	$	135,576	$	60,722	$	54,481	$	20,738		430,948
Addback non-cash adjustments												65,644
Investment management fee income												447
Interest expense												(111,275)
Depreciation and amortization												(122,975)
General and administrative expenses												(19,479)
Acquisition and pursuit costs												(5,475)
Other expense, net												3,111
Income tax benefit												(55)
Equity income in unconsolidated joint ventures												10,168
Net income											$	251,059

For the nine months ended September 30, 2015:

	Senior		Post-acute/		Life		Medical
	Housing		Skilled nursing		Science		Office		Hospital		Total
Rental revenues(1)	$	382,559	$	404,121	$	255,100	$	310,805	$	66,129	$	1,418,714
Resident fees and services		367,141		—		—		—		—		367,141
Operating expenses		(263,191)		(1,602)		(51,718)		(122,469)		(2,908)		(441,888)
NOI		486,509		402,519		203,382		188,336		63,221		1,343,967
Non-cash adjustments to NOI(2)		(11,316)		(57,522)		(8,433)		(4,399)		764		(80,906)
Adjusted (cash) NOI		475,193		344,997		194,949		183,937		63,985		1,263,061
Interest income		22,042		67,007		—		—		—		89,049
Portfolio Income	$	497,235	$	412,004	$	194,949	$	183,937	$	63,985		1,352,110
Addback non-cash adjustments												80,906
Investment management fee income												1,372
Interest expense												(357,569)
Depreciation and amortization												(369,629)
General and administrative expenses												(74,152)
Acquisition and pursuit costs												(23,350)
Impairments												(592,921)
Gains on sales of real estate, net of income taxes												6,377
Other income, net												11,753
Income tax benefit												6,620
Equity income in unconsolidated joint ventures												33,916
Impairment of investments in unconsolidated joint ventures												(27,234)
Net income											$	48,199

For the nine months ended September 30, 2014:

	Senior		Post-acute/		Life		Medical
	Housing		Skilled nursing		Science		Office		Hospital		Total
Rental revenues(1)	$	485,823	$	415,533	$	233,113	$	273,215	$	64,372	$	1,472,056
Resident fees and services		138,205		—		—		—		—		138,205
Operating expenses		(92,388)		(1,599)		(46,247)		(111,140)		(2,799)		(254,173)
NOI		531,640		413,934		186,866		162,075		61,573		1,356,088
Non-cash adjustments to NOI(2)		(72,277)		(51,752)		(7,976)		(795)		301		(132,499)
Adjusted (cash) NOI		459,363		362,182		178,890		161,280		61,874		1,223,589
Interest income		10,633		40,517		—		—		—		51,150
Portfolio Income	$	469,996	$	402,699	$	178,890	$	161,280	$	61,874		1,274,739
Addback non-cash adjustments												132,499
Investment management fee income												1,340
Interest expense												(324,755)
Depreciation and amortization												(343,496)
General and administrative expenses												(62,034)
Acquisition and pursuit costs												(13,376)
Other income, net												5,750
Income tax expense												(2,840)
Equity income in unconsolidated joint ventures												39,388
Total discontinued operations												29,746
Net income											$	736,961

(1) Represents rental and related revenues, tenant recoveries and income from DFLs.

(2) Represents straight-line rents, DFL accretion, amortization of market lease intangibles and lease termination fees.

A summary of the Company’s total assets by segment follows (in thousands):

	September 30,		December 31,
Segment	2015		2014
Senior housing	$	9,490,110	$	8,383,345
Post-acute/skilled nursing		6,368,064		6,875,122
Life science		4,198,937		4,154,789
Medical office		3,439,970		2,988,888
Hospital		639,807		640,253
Gross segment assets		24,136,888		23,042,397
Accumulated depreciation and amortization		(2,895,184)		(2,600,072)
Net segment assets		21,241,704		20,442,325
Other non-segment assets		951,269		927,615
Total assets	$	22,192,973	$	21,369,940

At both September 30, 2015 and December 31, 2014, goodwill of $50 million was allocated to segment assets as follows: (i) senior housing—$31 million, (ii) post-acute/skilled nursing—$3 million, (iii) medical office—$11 million and (iv) hospital—$5million.