Segment Disclosures

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Disclosures

Segment Disclosures

The Company evaluates its business and allocates resources based on its reportable business segments: (i) life science, (ii) medical office, and (iii) CCRC. The Company has non-reportable segments that are comprised primarily of the Company’s interests in an unconsolidated senior housing joint venture and debt investments. The accounting policies of the segments are the same as those described under Summary of Significant Accounting Policies (see Note 2).

During the first quarter of 2020, primarily as a result of: (i) acquiring 100% ownership interest in 13 of 15 CCRCs previously held by a CCRC joint venture (see discussion of the 2019 MTCA with Brookdale in Note 3) and (ii) deconsolidating 19 SHOP assets into a new joint venture in December 2019, the Company's CODMs began reviewing operating results of CCRCs on a stand-alone basis and financial information for each respective segment inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share on consolidated joint ventures. Therefore, during the first quarter of 2020, the Company began reporting CCRCs as a separate segment and began reporting segment measures inclusive of the Company’s share of unconsolidated joint ventures and exclusive of noncontrolling interests’ share of consolidated joint ventures. All prior period segment information has been recast to conform to the current period presentation.

In conjunction with establishing and beginning execution of a plan to dispose of the Company’s senior housing triple-net and SHOP portfolios during 2020, both of these previously reportable segments are now classified as discontinued operations in all periods presented herein. See Note 5 for further information.

In December 2020, as a result of a change in how operating results are reported to the Company's CODMs, the Company’s hospitals were reclassified from other non-reportable segments to the medical office segment and the Company’s one remaining unconsolidated investment in a senior housing joint venture was reclassified from the SHOP segment to other non-reportable segments.

The Company evaluates performance based on property Adjusted NOI. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss). Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.

NOI and Adjusted NOI include the Company’s share of income (loss) from unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) from consolidated joint ventures. Management believes Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presenting it on an unlevered basis. Additionally, management believes that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items.

Non-segment assets consist of assets in the Company's other non-reportable segments and corporate non-segment assets. Corporate non-segment assets consist primarily of corporate assets, including cash and cash equivalents, restricted cash, accounts receivable, net, loans receivable, marketable equity securities, other assets, real estate assets held for sale and discontinued operations, and liabilities related to assets held for sale.

The following tables summarize information for the reportable segments (in thousands):

For the year ended December 31, 2020:

	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	569,296	$	622,398	$	436,494	$	16,687	$	—	$	1,644,875
Government grant income(1)	—		—		16,198		—		—		16,198
Less: Interest income	—		—		—		(16,553)		—		(16,553)
Healthpeak's share of unconsolidated joint venture total revenues	448		2,772		35,392		74,023		—		112,635
Healthpeak's share of unconsolidated joint venture government grant income	—		—		920		359		—		1,279
Noncontrolling interests' share of consolidated joint venture total revenues	(239)		(34,597)		—		—		—		(34,836)
Operating expenses	(138,005)		(204,008)		(440,528)		—		—		(782,541)
Healthpeak's share of unconsolidated joint venture operating expenses	(137)		(1,129)		(32,125)		(53,779)		—		(87,170)
Noncontrolling interests' share of consolidated joint venture operating expenses	72		10,282		—		—		—		10,354
Adjustments to NOI(2)	(20,133)		(5,544)		97,072		433		—		71,828
Adjusted NOI	411,302		390,174		113,423		21,170		—		936,069
Plus: Adjustments to NOI(2)	20,133		5,544		(97,072)		(433)		—		(71,828)
Interest income	—		—		—		16,553		—		16,553
Interest expense	(234)		(400)		(7,227)		—		(210,475)		(218,336)
Depreciation and amortization	(217,921)		(222,165)		(113,851)		(12)		—		(553,949)
General and administrative	—		—		—		—		(93,237)		(93,237)
Transaction costs	(236)		—		(17,994)		(112)		—		(18,342)
Impairments and loan loss reserves (recoveries), net	(14,671)		(10,208)		—		(18,030)		—		(42,909)
Gain (loss) on sales of real estate, net	—		90,390		—		(40)		—		90,350
Loss on debt extinguishments	—		—		—		—		(42,912)		(42,912)
Other income (expense), net	—		—		187,844		41,707		5,133		234,684
Less: Government grant income	—		—		(16,198)		—		—		(16,198)
Less: Healthpeak's share of unconsolidated joint venture NOI	(311)		(1,643)		(4,187)		(20,603)		—		(26,744)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	167		24,315		—		—		—		24,482
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	198,229		276,007		44,738		40,200		(341,491)		217,683
Income tax benefit (expense)(3)	—		—		—		—		9,423		9,423
Equity income (loss) from unconsolidated joint ventures	(40)		798		(1,547)		(65,810)		—		(66,599)
Income (loss) from continuing operations	198,189		276,805		43,191		(25,610)		(332,068)		160,507
Income (loss) from discontinued operations	—		—		—		—		267,746		267,746
Net income (loss)	$	198,189	$	276,805	$	43,191	$	(25,610)	$	(64,322)	$	428,253

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(1)Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the consolidated statements of operations.

(2)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

(3)Income tax benefit (expense) for the year ended December 31, 2020 includes: (i) a $51 million tax benefit recognized in conjunction with internal restructuring activities, which resulted in the transfer of assets subject to certain deferred tax liabilities from taxable REIT subsidiaries to the REIT in connection with the 2019 MTCA (see Note 3), (ii) a $33 million income tax expense related to the valuation allowance on deferred tax assets that are no longer expected to be realized (see Note 17), and (iii) a $3.7 million net tax benefit recognized due to changes under the CARES Act, which resulted in net operating losses being utilized at a higher income tax rate than previously available.

For the year ended December 31, 2019:

	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	440,784	$	621,171	$	3,010	$	175,374	$	—	$	1,240,339
Less: Interest income	—		—		—		(9,844)		—		(9,844)
Healthpeak's share of unconsolidated joint venture total revenues	—		2,810		211,377		23,834		—		238,021
Noncontrolling interests' share of consolidated joint venture total revenues	(187)		(33,998)		—		2,355		—		(31,830)
Operating expenses	(107,472)		(201,620)		(2,215)		(93,937)		—		(405,244)
Healthpeak's share of unconsolidated joint venture operating expenses	—		(1,107)		(170,473)		(1,996)		—		(173,576)
Noncontrolling interests' share of consolidated joint venture operating expenses	59		10,109		—		(1,536)		—		8,632
Adjustments to NOI(1)	(22,103)		(4,602)		16,985		(5,449)		—		(15,169)
Adjusted NOI	311,081		392,763		58,684		88,801		—		851,329
Plus: Adjustments to NOI(1)	22,103		4,602		(16,985)		5,449		—		15,169
Interest income	—		—		—		9,844		—		9,844
Interest expense	(277)		(434)		—		—		(216,901)		(217,612)
Depreciation and amortization	(168,339)		(221,175)		—		(45,677)		—		(435,191)
General and administrative	—		—		—		—		(92,966)		(92,966)
Transaction costs	—		—		—		—		(1,963)		(1,963)
Impairments and loan loss reserves (recoveries), net	—		(17,332)		—		(376)		—		(17,708)
Gain (loss) on sales of real estate, net	3,651		3,139		—		(6,830)		—		(40)
Loss on debt extinguishments	—		—		—		—		(58,364)		(58,364)
Other income (expense), net	—		—		(5,665)		161,886		8,848		165,069
Less: Healthpeak's share of unconsolidated joint venture NOI	—		(1,703)		(40,904)		(21,838)		—		(64,445)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	128		23,889		—		(819)		—		23,198
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	168,347		183,749		(4,870)		190,440		(361,346)		176,320
Income tax benefit (expense)	—		—		—		—		5,479		5,479
Equity income (loss) from unconsolidated joint ventures	—		858		(16,313)		9,125		—		(6,330)
Income (loss) from continuing operations	168,347		184,607		(21,183)		199,565		(355,867)		175,469
Income (loss) from discontinued operations	—		—		—		—		(115,408)		(115,408)
Net income (loss)	$	168,347	$	184,607	$	(21,183)	$	199,565	$	(471,275)	$	60,061

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(1)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

For the year ended December 31, 2018:

	Life Science		Medical Office		CCRC		Other Non-reportable		Corporate Non-segment		Total
Total revenues	$	395,064	$	596,399	$	—	$	199,857	$	—	$	1,191,320
Less: Interest income	—		—		—		(10,406)		—		(10,406)
Healthpeak's share of unconsolidated joint venture total revenues	4,328		2,695		206,221		11,812		—		225,056
Noncontrolling interests' share of consolidated joint venture total revenues	(117)		(18,042)		—		3,927		—		(14,232)
Operating expenses	(91,742)		(195,362)		—		(91,553)		—		(378,657)
Healthpeak's share of unconsolidated joint venture operating expenses	(1,131)		(1,053)		(166,414)		(77)		—		(168,675)
Noncontrolling interests' share of consolidated joint venture operating expenses	44		4,591		—		(3,020)		—		1,615
Adjustments to NOI(1)	(9,718)		(5,953)		15,504		(5,458)		—		(5,625)
Adjusted NOI	296,728		383,275		55,311		105,082		—		840,396
Plus: Adjustments to NOI(1)	9,718		5,953		(15,504)		5,458		—		5,625
Interest income	—		—		—		10,406		—		10,406
Interest expense	(316)		(474)		—		—		(260,490)		(261,280)
Depreciation and amortization	(140,480)		(206,731)		—		(57,464)		(6)		(404,681)
General and administrative	—		—		—		—		(96,702)		(96,702)
Transaction costs	—		—		—		—		(1,137)		(1,137)
Impairments and loan loss reserves (recoveries), net	(7,639)		(553)		—		(2,725)		—		(10,917)
Gain (loss) on sales of real estate, net	806,184		4,428		—		20,756		—		831,368
Loss on debt extinguishments	—		—		—		—		(44,162)		(44,162)
Other income (expense), net	—		—		—		9,604		3,821		13,425
Less: Healthpeak's share of unconsolidated joint venture NOI	(3,197)		(1,642)		(39,807)		(11,735)		—		(56,381)
Plus: Noncontrolling interests' share of consolidated joint venture NOI	73		13,451		—		(907)		—		12,617
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	961,071		197,707		—		78,475		(398,676)		838,577
Income tax benefit (expense)	—		—		—		—		4,396		4,396
Equity income (loss) from unconsolidated joint ventures	575		824		(10,847)		3,693		—		(5,755)
Income (loss) from continuing operations	961,646		198,531		(10,847)		82,168		(394,280)		837,218
Income (loss) from discontinued operations	—		—		—		—		236,256		236,256
Net income (loss)	$	961,646	$	198,531	$	(10,847)	$	82,168	$	(158,024)	$	1,073,474

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(1)Represents straight-line rents, DFL non-cash interest, amortization of market lease intangibles, net, actuarial reserves for insurance claims that have been incurred but not reported, deferral of community fees, and termination fees. Includes the Company’s share of income (loss) generated by unconsolidated joint ventures and excludes noncontrolling interests’ share of income (loss) generated by consolidated joint ventures.

The following table summarizes the Company’s revenues by segment (in thousands):

	Year Ended
	December 31,
Segments	2020		2019		2018
Life science	$	569,296	$	440,784	$	395,064
Medical office	622,398		621,171		596,399
CCRC	436,494		3,010		—
Other Non-reportable	16,687		175,374		199,857
Total revenues	$	1,644,875	$	1,240,339	$	1,191,320

The following table summarizes the Company’s total assets by segment (in thousands):

	December 31,
Segment	2020		2019
Life science	$	7,205,949	$	5,688,659
Medical office	5,197,777		5,061,351
CCRC	2,179,294		652,114
Reportable segment assets	14,583,020		11,402,124
Accumulated depreciation and amortization	(2,658,890)		(2,316,724)
Net reportable segment assets	11,924,130		9,085,400
Other non-reportable segment assets	584,432		653,746
Assets held for sale and discontinued operations, net	2,626,306		3,648,265
Other non-segment assets	785,221		645,480
Total assets	$	15,920,089	$	14,032,891

See Notes 3, 4, 5, 6, 7 and 8 for significant transactions impacting the Company's segment assets during the periods presented.

The Company completed the required annual goodwill impairment test during the fourth quarter of 2020, 2019, and 2018, and no impairment was recognized.

At December 31, 2019, goodwill of $17 million was allocated as follows: (i) medical office—$13 million and (ii) other—$4 million.

During the year ended December 31, 2020, as a result of reporting CCRCs as a separate segment, the Company reallocated $2 million of goodwill from other non-reportable segments to the CCRC segment. Additionally, during the year ended December 31, 2020, as a result of reporting hospitals in the medical office segment and reporting a senior housing joint venture in other non-reportable segments, the Company reallocated $1 million of goodwill from other non-reportable segments to the medical office segment and $1 million of goodwill from senior housing properties to other non-reportable segments.

At December 31, 2020, goodwill of $18 million was allocated to the Company’s segment assets as follows: (i) medical office—$14 million, (ii) CCRC—$2 million, and (iii) other—$2 million.