Segment Reporting

12 Months Ended

Dec. 31, 2010

17. Segment Reporting

We invest in senior housing and health care real estate. We evaluate our business and make resource allocations on our three business segments: senior housing triple-net, senior housing operating and medical facilities. Our primary senior housing triple-net properties include skilled nursing facilities, assisted living facilities, independent living/continuing care retirement communities and combinations thereof. Under the senior housing triple-net segment, we invest in senior 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 senior housing operating properties include assisted living facilities and independent living/continuing care retirement communities that our owned and/or operated through RIDEA 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 senior housing triple-net investments. Our life science investments represent investments in an unconsolidated joint venture (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 (in Note 2 to our audited consolidated financial statements). There are no intersegment sales or transfers. We evaluate performance based upon net operating income of the combined properties in each segment. 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.

During the three months ended March 31, 2011, we changed the name of our senior housing and care segment to senior housing triple-net. Additionally, we added a new senior housing operating segment. The following amounts previously reported in senior housing and care for the year ended December 31, 2010 have been reclassified to senior housing operating in the current year: (i) resident fees and services income of $51,006,000; (ii) property operating expenses of $32,621,000; (iii) net operating income of $18,385,000; (iv) real estate depreciation and amortization of $15,405,000; (v) interest expense of $6,321,000; and (vi) total assets of $1,080,416,000. There were no senior housing operating segment investments prior to September 1, 2010.

Summary information for the reportable segments during the years ended December 31, 2010, 2009 and 2008 is as follows (in thousands and includes amounts from discontinued operations):


											Property		Net		Real Estate
	Rental		Resident Fees		Interest		Other		Total		Operating		Operating		Depreciation/		Interest		Total
	Income		and Services		Income		Income		Revenues		Expenses		Income⁽¹⁾		Amortization		Expense		Assets
Year Ended December 31, 2010
Senior housing and care⁽²⁾	$	382,904	$	51,006	$	36,176	$	3,386	$	473,472	$	32,621	$	440,851	$	126,717	$	22,905	$	5,837,312
Medical facilities⁽³⁾		220,506		—		4,679		985		226,170		53,844		172,326		75,826		24,926		3,389,441
Non-segment/Corporate		—		—		—		2,874		2,874		—		2,874		—		113,129		224,981

	$	603,410	$	51,006	$	40,855	$	7,245	$	702,516	$	86,465	$	616,051	$	202,543	$	160,960	$	9,451,734



Year Ended December 31, 2009
Senior housing and care⁽²⁾	$	358,109	$	—	$	35,945	$	5,309	$	399,363	$	—	$	399,363	$	101,300	$	12,622	$	4,135,065
Medical facilities		181,802		—		4,940		9,368		196,110		48,965		147,145		63,623		20,584		2,140,044
Non-segment/Corporate		—		—		—		1,170		1,170		—		1,170		—		76,566		92,077

	$	539,911	$	—	$	40,885	$	15,847	$	596,643	$	48,965	$	547,678	$	164,923	$	109,772	$	6,367,186



Year Ended December 31, 2008
Senior housing and care⁽²⁾	$	345,053	$	—	$	35,143	$	5,994	$	386,190	$	—	$	386,190	$	98,675	$	7,176
Medical facilities		177,128		—		4,920		2,835		184,883		46,629		138,254		64,370		21,828
Non-segment/Corporate		—		—		—		1,692		1,692		—		1,692		—		112,055

	$	522,181	$	—	$	40,063	$	10,521	$	572,765	$	46,629	$	526,136	$	163,045	$	141,059


(1)		Net operating income (“NOI”) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property level operating expenses, which exclude depreciation and amortization, general and administrative expenses, 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.

(2)		Includes senior housing triple-net and senior housing operating results.

(3)		Excludes income and expense amounts related to our life science buildings held in an unconsolidated joint venture. Please see Note 7 for additional information.