Segment Reporting

3 Months Ended

Mar. 31, 2012

17. Segment Reporting

We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three business segments: seniors housing triple-net, seniors housing operating and medical facilities. Our seniors housing triple-net properties include skilled nursing/post-acute facilities, assisted living facilities, independent living/continuing care retirement communities and combinations thereof. Under the seniors housing 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 assisted living facilities and independent living/continuing care retirement communities that are owned and operated through RIDEA (see Note 18) partnership structures. Our primary medical facility properties include medical office buildings, hospitals and life science buildings. Our medical office buildings are typically leased to multiple tenants and generally require a certain level of property management. Our hospital investments are structured similar to our seniors housing triple-net investments. Our life science investments represent investments in an unconsolidated entity (see Note 7 for additional information). 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, 2011). 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. We evaluate performance based upon net operating income from continuing operations (“NOI”) of each segment. We define NOI as total revenues, including tenant reimbursements, less property level operating expenses, which exclude depreciation and amortization, general and administrative expenses, transaction costs, impairments and interest expense. We believe NOI provides investors relevant and useful information because 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 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 net operating income.

Summary information for the reportable segments for the three months ended March 31, 2012 and 2011 is as follows (in thousands):

Three Months Ended March 31, 2012:		Seniors Housing Triple-net		Seniors Housing Operating		Medical Facilities		Non-segment / Corporate		Total
Rental income	$	172,894	$	-	$	94,464	$	-	$	267,358
Resident fees and services		-		158,174		-		-		158,174
Interest income		5,877		-		2,264		-		8,141
Other income		848		-		603		235		1,686
Total revenues		179,619		158,174		97,331		235		435,359

Property operating expenses		-		(107,243)		(22,025)		-		(129,268)
Net operating income from continuing operations		179,619		50,931		75,306		235		306,091

Reconciling items:
Interest expense		(2,522)		(15,835)		(10,239)		(64,116)		(92,712)
Unrealized loss on derivatives		-		(555)		-		-		(555)
Depreciation and amortization		(52,226)		(39,773)		(33,956)		-		(125,955)
General and administrative		-		-		-		(27,751)		(27,751)
Transaction costs		(1,523)		(1,578)		(2,478)		-		(5,579)
Income (loss) from continuing operations before income taxes and income from unconsolidated entities	$	123,348	$	(6,810)	$	28,633	$	(91,632)	$	53,539

Total assets	$	7,916,935	$	3,211,595	$	4,162,288	$	568,916	$	15,859,734

Three Months Ended March 31, 2011:		Seniors Housing Triple-net		Seniors Housing Operating		Medical Facilities		Non-segment / Corporate		Total
Rental income	$	95,784	$	-	$	64,153	$	-	$	159,937
Resident fees and services		-		71,286		-		-		71,286
Interest income		9,379		-		2,330		-		11,709
Other income		507		-		1,786		531		2,824
Total revenues		105,670		71,286		68,269		531		245,756

Property operating expenses		-		(49,272)		(14,291)		-		(63,563)
Net operating income from continuing operations		105,670		22,014		53,978		531		182,193

Reconciling items:
Interest expense		(148)		(6,527)		(6,782)		(43,445)		(56,902)
Depreciation and amortization		(27,674)		(20,131)		(22,938)		-		(70,743)
General and administrative		-		-		-		(17,714)		(17,714)
Transaction costs		(3,996)		(32,069)		-		-		(36,065)
Provision for loan losses		(248)		-		-		-		(248)
Income (loss) from continuing operations before income taxes and income from unconsolidated entities	$	73,604	$	(36,713)	$	24,258	$	(60,628)	$	521