Health Care REIT, Inc. Supplemental Information Package

EX-99.2 3 d249643dex992.htm HEALTH CARE REIT, INC. SUPPLEMENTAL INFORMATION PACKAGE Health Care REIT, Inc. Supplemental Information Package

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Exhibit 99.2

3Q11 SUPPLEMENTAL INFORMATION

HEALTHCARE REIT TM

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3Q11 Supplemental Information

Overview | 2

Portfolio | 3

Investment | 13

Financial | 16

Glossary | 21

Supplemental Reporting Measures | 23

Forward Looking Statements and Risk Factors | 24

HEALTHCARE REIT TM

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OVERVIEW

Portfolio Composition

(dollars in thousands, except per bed / unit / square foot)

Overview by Investment Type

Age

Properties

Investment Balance

% of Total

Committed Balance

Beds / Units

/ Square Feet

Per Bed / Unit / Square Foot

Seniors housing triple-net

277

3,953,994

29.6%

$4,042,295

24,731

$163,451

Skilled nursing / post-acute

303

3,549,696

26.6%

3,556,646

39,426

90,211

Seniors housing operating

2,173,410

16.3%

2,173,410

10,537

206,265

Hospital

891,697

6.7%

893,042

2,105

424,248

Medical office

177

2,442,508

18.3%

2,602,605

10,255,203

254

Life science

340,235

2.5%

340,235

1,188,132

N/A

Total

898

13,351,540

100.0%

13,608,233

Current Quarter

Portfolio NOI

Total Revenues

Operating Expenses

Net Operating Income

Annualized NOI(1)

Seniors housing triple-net

82,355

—

82,355

329,420

Skilled nursing / post-acute

94,577

—

94,577

378,308

Seniors housing operating

125,125

86,218

38,907

155,628

Hospital

20,308

252

20,056

80,224

Medical office

63,366

17,861

45,505

182,020

Life science

10,814

3,199

7,615

30,460

Corporate

307

—

307

1,228

Total

396,852

107,530

289,322

1,157,288

Portfolio Performance

Facility Revenue Mix

Stable Portfolio(2)

Occupancy

Cash Flow Coverage(3)

Private Pay

Medicaid

Medicare

Seniors housing triple-net(4)

87.7%

1.42x

87.0%

9.2%

3.8%

Skilled nursing / post-acute

87.8%

2.28x

20.2%

47.0%

32.8%

Seniors housing operating

89.8%

n/a

99.0%

0.0%

1.0%

Hospital

64.9%

2.62x

32.5%

7.9%

59.6%

Medical office

93.3%

n/a

100.0%

0.0%

Life science

100.0%

n/a

100.0%

0.0%

Total

1.96x

68.6%

17.4%

14.0%

Notes:

(1) Annualized NOI calculated as current quarter NOI multiplied by 4.

(2) Data as of September 30, 2011 for seniors housing operating, medical office and life science and June 30, 2011 for remaining asset types.

(3) Represents trailing twelve month coverage metrics.

(4) Excludes entrance fee portfolio.

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PORTFOLIO

Portfolio Concentration

(dollars in thousands)

Balances By State

Seniors Housing Triple-net

Skilled Nursing / Post-Acute

Seniors Housing Operating

Hospital

Medical Office & Life Science(1)

Total Properties

Investment Balance

% of Total

New Jersey

575,752

450,326

$—

$35,275

$172,730

$1,234,083

9.2%

Massachusetts

104,689

369,216

337,383

11,363

340,235

1,162,886

8.7%

Florida

321,206

207,543

6,744

22,458

452,452

1,010,403

7.6%

California

79,264

—

407,577

314,100

206,440

1,007,381

7.5%

Texas

221,031

166,941

113,325

191,179

216,341

908,817

6.8%

Pennsylvania

209,291

554,172

—

17,962

—

781,425

5.9%

Connecticut

128,054

99,992

368,321

—

596,367

4.5%

Washington

106,978

—

340,996

—

119,682

567,656

4.3%

Ohio

193,257

168,161

90,017

32,391

24,787

508,613

3.8%

Wisconsin

148,492

—

22,492

294,640

465,624

3.5%

Remaining

1,865,980

1,533,345

509,047

244,477

955,436

396

5,108,285

38.2%

Total

3,953,994

3,549,696

$2,173,410

$891,697

$2,782,743

898

$13,351,540

100.0%

NOI By State

Seniors Housing Triple-net

Skilled Nursing / Post - Acute

Seniors Housing Operating

Hospital

Medical Office & Life Science(1)

Total Properties

Total NOI(2)

% of Total

Massachusetts

2,989

10,040

$6,300

$—

$7,615

$26,944

9.4%

California

2,329

—

9,073

7,825

4,002

23,229

8.1%

New Jersey

7,341

10,647

—

965

2,559

21,512

7.5%

Florida

5,165

7,052

171

349

8,270

21,007

7.3%

Texas

5,090

4,913

2,118

3,661

4,378

20,160

7.0%

Pennsylvania

4,241

13,681

—

355

198

18,475

6.4%

Connecticut

3,335

2,539

7,091

—

12,965

4.5%

Ohio

3,503

5,343

1,319

818

415

11,398

4.0%

Wisconsin

3,238

—

683

6,767

10,688

3.7%

Washington

2,697

—

5,393

—

1,728

9,818

3.4%

Remaining

42,026

40,309

7,442

5,637

15,903

396

111,317

38.7%

Total

81,954

94,524

$38,907

$20,293

$51,835

898

$287,513

100.0%

Notes:

(1) Includes unconsolidated joint ventures. Balance and NOI for Massachusetts represent our Life Science portfolio only.

(2) Represents NOI including discontinued operations for the three months ended September 30, 2011, excluding other income totaling $1,809,000.

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4 Top Ten Customer Descriptions

PORTFOLIO

Genesis HealthCare, LLC, located in Kennett Square, PA, is a privately held company that operates 234 eldercare facilities, consisting of 209 skilled nursing facilities and 25 assisted living facilities. Genesis has the ability to serve approximately 25,500 residents across 13 New England and Middle Atlantic states. Genesis also provides third-party rehabilitation services to nearly 900 healthcare providers. As of September 30, 2011, the HCN portfolio consisted of 149 facilities with 18,106 units in 11 states with an investment balance of $2.5 billion.

Benchmark Senior Living, LLC, located in Wellesley, MA, is a privately held company that operates 41 facilities with approximately 4,000 residents across the Northeast. The company currently operates independent living, assisted living, and dementia care facilities that focus on low to moderate acuity. As of September 30, 2011, the HCN portfolio consisted of 35 facilities with 3,090 units in six states with an investment balance of $897.9 million.

Merrill Gardens LLC, located in Seattle, WA, is a privately held company that owns, operates and/or manages 53 independent and assisted living facilities with over 6,000 units in nine states. As of September 30, 2011, the HCN portfolio consisted of 38 facilities in eight states with an investment balance of $699.9 million.

Senior Living Communities, LLC, located in Charlotte, NC, is a privately held company that operates premier continuing care retirement communities (CCRCs) throughout the southeastern United States. The company operates 12 facilities in five states. As of September 30, 2011, the HCN portfolio consisted of 12 facilities in five states with an investment balance of $605.9 million.

Brandywine Senior Living, LLC, located in Mount Laurel, NJ, is a privately held company that operates 19 seniors housing facilities with over 1,800 units in five states. As of September 30, 2011, the HCN portfolio consisted of 19 facilities in five states with an investment balance of $602.5 million.

Senior Star Living, located in Tulsa, OK, is a private operator of CCRCs and independent living, assisted living and dementia care facilities that operates 10 facilities in six states. As of September 30, 2011, the HCN portfolio consisted of 10 facilities in six states with an investment balance of $458.8 million.

Brookdale Senior Living, Inc. (NYSE:BKD), located in Chicago, IL, is a publicly traded company that provides independent living and assisted living services. The company operates 559 facilities in 33 states with the ability to serve approximately 51,000 residents. As of September 30, 2011, the HCN portfolio consisted of 74 facilities in 16 states with an investment balance of $319.1 million.

Chelsea Senior Living, located in Fanwood, NJ, is a privately held company that operates 14 seniors housing facilities throughout New Jersey, New York, and Pennsylvania. As of September 30, 2011, the HCN portfolio consisted of ten facilities in two states with an investment balance of $306.9 million.

Capital Senior Living Corp., (NYSE:CSU) located in Dallas, TX, is a publicly traded company that owns, operates, develops and manages seniors living communities throughout the United States. The Company operates 81 seniors living communities in 23 states with an aggregate capacity of approximately 11,500 residents. As of September 30, 2011, the HCN portfolio consisted of 24 facilities in seven states with an investment balance of $294.9 million.

Aurora Health Care, Inc., located in Milwaukee, WI, is a non-profit operator of over 250 hospitals, pharmacies and clinics in eastern Wisconsin. Aurora is investment grade rated and is the largest health care system in the state. As of September 30, 2011, the HCN portfolio consisted of 18 facilities with an investment balance of $294.6 million.

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PORTFOLIO

By Relationship

(dollars in thousands)

Total Properties

Investment Balance(1)

% of Balances

Genesis HealthCare, LLC

149

2,472,607

18.5%

Benchmark Senior Living, LLC

897,925

6.7%

Merrill Gardens, LLC

699,913

5.2%

Senior Living Communities, LLC

605,861

4.5%

Brandywine Senior Living, LLC

602,476

4.5%

Senior Star Living

458,798

3.4%

Brookdale Senior Living, Inc.

319,141

2.4%

Chelsea Senior Living

306,868

2.3%

Capital Senior Living Corporation

294,887

2.2%

Aurora Health Care, Inc.

294,640

2.2%

Remaining portfolio

509

6,398,424

48.1%

Total

898

13,351,540

100.0%

Entrance Fee Portfolio

Properties

Average Age

Investment Balance

Entrance Fee Units

Entrance Fee Occupancy

Rental Units

Rental Occupancy

Open Properties

$ 662,600

1,432

56%

1,150

82%

Same Store Cash NOI Growth

Properties(5)

3Q10 Same Store Cash NOI

3Q11 Same Store Cash NOI

% Change

Seniors housing triple-net(2)

184

44,125

46,086

4.4%

Skilled nursing/post-acute(2)

162

33,617

34,124

1.5%

Seniors housing operating(3)

35,964

38,907

8.2%

Hospitals(2)

13,450

13,949

3.7%

Medical office(4)

123

27,221

27,680

1.7%

Life Science(6)

6,253

6,629

6.0%

Total

599

160,630

167,375

4.2%

Notes:

(1) Includes unconsolidated joint ventures.

(2) Represents cash-only rent or interest income excluding the impact of lease or loan basis changes (e.g., rent-producing capital improvement additions for leases and principal draws or paydowns for loans).

(3) See page 7.

(4) See page 8.

(5) Represents those properties in the portfolio (both stable and unstable) for the 15 months preceding the end of the portfolio performance period.

(6) See page 10.

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1.53x

PORTFOLIO

1.30

1.40

1.50

1.60

1.70

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

2.44x

2.10

2.20

2.30

2.40

2.50

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

2.50x

1.10

1.60

2.10

2.60

3.10

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

Portfolio Performance—Same Store Triple–Net

Trailing Twelve Cash Flow Coverage

Seniors Housing Triple-Net (134 properties)

Skilled Nursing/Post-Acute (160 properties)

Hospitals (12 properties)

Basis Points

YoY 2Q11/2Q10

QoQ 2Q11/1Q11

Seniors Housing Triple-Net

-1

Skilled Nursing/Post-Acute

Hospitals

-40

-13

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PORTFOLIO

Portfolio Composition - Seniors Housing Operating

(dollars in thousands; dollar amounts represent 100% of partnerships)

Total Performance

4Q10

1Q11

2Q11

3Q11

Properties

Average age (years)

Beds/Units

6,075

10,538

10,536

10,537

Investment balance

1,080,416

2,240,442

2,207,194

2,173,410

Total occupancy

85.7%

84.2%

86.3%

86.6%

Total revenues

38,197

71,286

123,149

125,125

Operating expenses

24,628

49,272

84,334

86,218

NOI

13,569

22,014

38,815

38,907

Total cap-ex/TI/LC

2,131

2,903

4,066

4,319

Same Store Cash NOI Performance(1)

3Q10

3Q11

Properties

Total revenues

118,904

125,125

Operating expenses

82,940

86,218

NOI

35,964

38,907

Secured Debt(2)

Amount

Blended Interest Rate

Weighted Average Maturity

Principal balance

$1,096,214

5.3%

5.9

By State

Properties

Beds/Units

% of Total

California

2,793

26.5%

Washington

1,599

15.2%

Connecticut

1,380

13.1%

Massachusetts

1,055

10.0%

Texas

568

5.4%

Other

3,142

29.8%

Total

10,537

100.0%

Notes:

(1) Represents those properties in operation for 15 months preceding the end of the portfolio performance period. Amounts for 3Q10 represent the performance of operators that were not owned or operated by HCN, except for properties in the Merrill Gardens partnership which include one month of operations under HCN ownership.

(2) Non-recourse debt to HCN, secured by the joint ventures’ assets.

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PORTFOLIO

Portfolio Composition - Medical Office Buildings

(dollars in thousands, except per bed / unit / square foot)

Properties

Square Feet

Investment Balance

Total Revenues

Operating Expenses

NOI

Age

Occupancy

Health system-affiliated

126

7,770,659

1,954,950

53,355

14,585

38,770

94.5%

Unaffiliated

1,282,870

339,256

8,673

3,012

5,661

89.8%

Subtotal

163

9,053,529

2,294,206

62,028

17,597

44,431

93.3%

Equity investment(1)

405,414

46,654

1,165

264

901

Development

723,856

75,056

—

Loans

72,404

6,216

173

—

173

Land

—

20,376

—

Total

177

10,255,203

2,442,508

63,366

17,861

45,505

Portfolio Performance - Medical Office Buildings(2)

Total Performance

3Q10

4Q10

1Q11

2Q11

3Q11

Properties

124

142

145

151

163

Square feet

6,521,731

7,756,147

8,070,387

8,423,906

9,053,529

Investment balance

1,619,393

2,009,895

2,096,836

2,144,122

2,294,206

Occupancy

93.3%

92.9%

93.3%

Total revenue

42,535

43,314

54,225

56,699

62,028

Operating expenses

12,334

12,085

14,617

15,823

17,597

NOI from continuing operations

30,201

31,230

39,608

40,877

44,431

NOI from discontinued operations

468

525

588

485

—

Total cap-ex/TI/LC

4,754

5,997

5,054

4,858

5,673

Expired (square feet)(3)

587,143

534,413

552,532

594,633

740,799

Retained (square feet)(3)

488,694

451,147

433,627

496,728

609,433

Retention rate(3)

83.2%

84.4%

78.5%

83.5%

82.3%

Same Store Cash Performance

3Q10

4Q10

1Q11

2Q11

3Q11

Properties

123

Square feet

6,371,842

Investment balance

1,583,439

1,577,242

1,567,140

1,552,260

1,542,318

Occupancy

93.2%

93.5%

93.2%

93.6%

93.3%

Cash revenue

39,091

39,356

39,544

39,209

39,931

Operating expenses

11,870

11,345

11,622

11,859

12,251

Cash NOI

27,221

28,011

27,922

27,350

27,680

Remaining Lease Expirations

2011

2012

2013

2014

2015

Square feet

105,571

616,122

459,380

556,676

464,820

% of total portfolio

1.2%

6.8%

5.1%

6.1%

5.1%

Notes:

(1) Amounts reflected at HCN’s ownership interest in unconsolidated joint venture properties.

(2) Excludes equity investments, development and loan properties.

(3) Amounts represent trailing twelve months from the indicated quarter end.

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PORTFOLIO

Portfolio Concentration - Medical Office Buildings

(dollars in thousands)

By Tenant(1)

Square Feet

% of Total

Aurora Health Care, Inc.

1,441,588

15.9%

Melbourne Internal Medicine Associates

363,839

4.0%

Tenet Health Systems

284,089

3.1%

Swedish Health Services

195,148

2.2%

Baptist Health System, Inc

181,814

2.0%

Remaining Portfolio

6,587,051

72.8%

Total

9,053,529

100.0%

Notes:

(1) Excludes equity investments, development and loan properties.

By State

Properties

Square Feet

% of Total

Committed Balance

Committed Balance per Square Foot

Florida

1,501,785

14.6%

452,452

$301

Wisconsin

1,441,588

14.1%

294,640

204

Texas

896,826

8.7%

216,341

241

New Jersey

879,361

8.6%

252,357

287

California

687,130

6.7%

206,440

300

Washington

451,677

4.4%

180,006

399

Tennessee

408,107

4.0%

99,950

245

Arizona

338,529

3.3%

90,542

267

Georgia

336,819

3.3%

66,631

198

Nevada

324,992

3.2%

104,076

320

Remaining portfolio

2,988,389

29.1%

639,170

214

Total

177

10,255,203

100.0%

2,602,605

$254

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PORTFOLIO

Portfolio Composition - Life Science Buildings

(dollars in thousands; dollar amounts represent HCN’s 49% ownership interest)

Total Life Science Performance

3Q10

4Q10

1Q11

2Q11

3Q11

Properties

Average age (years)

Square feet

1,188,132

Investment balance

349,832

346,562

344,413

342,725

340,235

Occupancy

100.0%

Total revenues(1)

10,401

10,521

11,270

10,584

10,814

Operating expenses

3,035

2,855

3,601

3,212

3,199

NOI

7,366

7,666

7,669

7,372

7,615

Total cap-ex/TI/LC

—

Same Store Cash NOI Performance

3Q10

3Q11

Properties

Total revenues

9,272

9,812

Operating expenses

3,019

3,183

NOI

6,253

6,629

Secured Debt(2)

Amount

Blended Interest Rate

Weighted Average Maturity

Principal balance

$163,669

6.3%

3.3

By Tenant

Square Feet

% of Total

Millennium (Takeda)

628,934

52.9%

Alkermes

210,248

17.7%

Brigham & Women’s Hospital

125,096

10.5%

Ariad Pharmaceuticals

100,361

8.4%

Novartis

70,475

5.9%

Genzyme

52,518

4.4%

Other Tenants

500

0.2%

Total(3)

1,188,132

100.0%

Notes:

(1) Includes amortization of below market rents and straight-line rent of $986,000 for the three months ended September 30, 2011.

(2) Non-recourse debt to HCN, secured by the joint venture’s assets.

(3) Excludes two parking garages consisting of 1,709 spaces included in the Forest City Enterprises joint venture.

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PORTFOLIO

Development Activity

(dollars in thousands)

Projects

Beds / Units / Square Feet

CIP Balance at 12/31/10

2011 YTD Funding

2011 YTD Conversions

CIP Balance at 9/30/11

Development Properties

Seniors housing triple-net

1,345

$38,206

99,188

$(39,462)

$97,932

Hospital

202

208,882

40,595

(219,622)

29,855

Medical office

1,038,094

85,512

95,485

(105,940)

75,057

Sub-total

332,600

235,268

(365,024)

$202,844

Expansion Projects

Seniors housing triple-net

173

$17,455

22,194

$(34,236)

$5,413

Hospital

6,738

2,819

(9,557)

—

Sub-total

24,193

25,013

(43,793)

5,413

Total

356,793

260,281

(408,817)

$208,257

Development Funding Projections(1)

Projected Future Funding

Beds / Units / Square Feet

Projects

Projected Cash Yield(2)

2011 Funding

2012 Funding

Funding Thereafter

Unfunded Commitments

Committed Balances

Development Properties

Seniors housing triple-net

1,345

8.6%

36,442

51,222

—

87,664

185,597

Hospital

11.0%

1,345

—

1,345

31,200

Medical office

723,854

8.6%

29,684

111,890

18,524

160,097

235,154

Total

8.7%

67,471

163,112

18,524

249,106

451,951

Development Project Conversion Estimates(1)

Quarterly Conversions

Annual Conversions

Amount

Projected Cash Yields(2)

Amount

Projected Cash Yields(2)

1Q11 actual

105,940

8.8%

2011 estimate

472,850

9.2%

2Q11 actual

219,625

9.3%

2012 estimate

282,692

8.6%

3Q11 actual

39,462

8.8%

2013 estimate

61,433

8.5%

4Q11 estimate

107,823

9.3%

2014 estimate

—

1Q12 estimate

24,350

9.0%

2015+ estimate

—

2Q12 estimate

130,009

8.4%

Total

816,975

8.9%

3Q12 estimate

—

4Q12 estimate

128,333

8.7%

Total

755,542

8.9%

Notes:

(1) Excludes expansion projects.

(2) Actual initial yields may be higher if the underlying market rates increase. MOBs represent stabilized yields.

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PORTFOLIO

Unstabilized Properties

(dollars in thousands)

6/30/11 Properties

Stabilized

Construction Conversions

Acquisitions/ Expansions/ Reclassifications

9/30/11 Properties

Seniors housing triple-net

(4)

—

Hospital

(1)

—

Total

(5)

—

9/30/11 Properties

Beds / Units

Investment Balance

% of Total Investment

Seniors housing triple-net

4,576

941,086

7.0%

Hospital

135

220,979

1.7%

Total

4,711

1,162,065

8.7%

Occupancy

6/30/11 Properties

Stabilized

Construction Conversions

Acquisitions/ Expansions

Progressions/ Reclassification

9/30/11 Properties

0% - 50%

(1)

—

50% - 70%

(1)

—

70% +

(3)

—

Total

(5)

—

9/30/11 Properties

Months In Operation

Revenues

% of Total Revenues(1)

Investment Balance

% of Total Investment

0% - 50%

43,343

4.4%

561,547

4.2%

50% - 70%

36,889

3.7%

457,210

3.4%

70% +

10,271

1.0%

143,308

1.1%

Total

90,502

9.1%

1,162,065

8.7%

Notes:

(1) Includes annualized revenues as presented on page 18 - revenue and lease maturity.

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Investment

Gross Investment Activity

(dollars in thousands, except per bed / unit / square foot)

Third Quarter 2011

Properties

Beds / Units / Square Feet

Amount

Investment Per Bed / Unit / Square Foot

Cash Yield

Real Property Acquisitions

Seniors housing triple-net

1,175

units

342,500

291,489

6.9%

Skilled nursing/post-acute

106

beds

6,150

58,019

8.3%

Hospital

248

beds

75,000

302,419

9.3%

Medical office

629,623

145,739

231

7.3%

Total acquisitions

569,389

7.3%

Construction in Progress

Development projects:

Seniors housing triple-net

1,345

units

38,856

Hospital

beds

920

Medical office

723,854

13,829

Total development projects

53,605

Expansion projects:

Seniors housing triple-net

173

units

6,527

Total expansion projects

6,527

Total construction in progress

60,132

Capital improvements to existing properties

6,297

9.1%

Loan advances

8,068

7.2%

Gross investments

643,886

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Investment

Gross Investment Activity

(dollars in thousands, except per bed / unit / square foot)

Year-to-Date 2011

Properties

Beds / Units / Square Feet

Amount

Investment Per Bed / Unit / Square Foot

Cash Yield

Real Property Acquisitions

Seniors housing operating

3,878

units

1,098,400

283,239

7.1%

Seniors housing triple-net

5,185

units

891,616

171,961

7.5%

Skilled nursing/post-acute

130

16,262

beds

2,229,127

137,076

8.3%

Hospital

248

beds

75,000

302,419

9.3%

Medical office

1,012,958

210,346

208

7.4%

Land parcels

6,770

Total acquisitions

248

4,511,259

7.8%

Construction in Progress

Development projects:

Seniors housing triple-net

1,345

units

99,188

Hospital

202

beds

40,595

Medical office

1,038,094

95,485

Total development projects

235,268

Expansion projects:

Seniors housing triple-net

173

units

22,194

Hospital

beds

2,819

Total expansion projects

25,013

Total construction in progress

260,281

Capital improvements to existing properties

13,527

8.6%

Loan advances

36,535

7.4%

Gross investments

4,821,602

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Investment

Investment Timing

(dollars in thousands)

Acquisitions/ Joint Ventures

Cash Yield

Loan Advances

Cash Yield

Construction Conversions

Cash Yield

Dispositions

Yield on Sale

July

$142,389

7.3%

$1,977

6.8%

426

6.0%

6,055

5.1%

Aug

75,000

9.3%

3,756

7.6%

39,743

8.7%

6,597

12.4%

Sep

352,000

6.8%

2,335

7.1%

23,866

6.0%

2,943

8.0%

Total

$569,389

7.3%

$8,068

7.3%

64,035

7.7%

15,595

8.7%

Disposition Activity

Third Quarter 2011

Year-to-Date 2011

Amount

% of Total

Amount

% of Total

Dispositions by Investment Type

Real property

$12,652

81.1%

165,022

55.4%

Real estate loans receivable

2,943

18.9%

132,803

44.6%

Total

$15,595

100.0%

297,825

100.0%

Dispositions by Property Type

Seniors housing triple-net

$12,652

81.1%

93,065

31.2%

Skilled nursing

—

0.0%

36,662

12.3%

Medical office

—

0.0%

35,295

11.9%

Real estate loans receivable

2,943

18.9%

132,803

44.6%

Total

$15,595

100.0%

297,825

100.0%

Discontinued Operations

Third Quarter

Year-to-Date

2011

2010

2011

2010

Revenues

Rental income

9,805

9,489

30,944

Expenses

Interest expense

2,050

1,771

6,182

Property operating expenses

212

1,495

2,427

4,456

Depreciation and amortization

—

3,430

2,635

10,420

Income/(loss) from discontinued operations, net

(141)

2,830

2,656

9,886

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Financial

Net Operating Income Reconciliation(1)

(dollars in thousands)

Three Months Ended

Nine Months Ended

September 30,

Total revenues:

2011

2010

2011

2010

Seniors housing triple-net:

Seniors housing

78,221

56,162

223,002

164,723

Skilled nursing/post-acute

91,447

41,496

221,654

123,425

Sub-total rental income

169,668

97,658

444,656

288,148

Interest income

6,810

9,179

27,224

26,583

Other income

454

698

5,458

2,726

Total seniors housing triple-net income

176,932

107,535

477,338

317,457

Seniors housing operating: Resident fees and services

125,125

12,809

319,559

12,809

Medical facilities:

Rental income(3)

Medical office(2)

62,160

43,758

175,489

125,903

Hospital

19,418

13,313

49,646

36,578

Life science(2)

10,814

10,401

32,668

23,481

Sub-total rental income

92,392

67,472

257,803

185,962

Interest income

1,048

875

5,209

1,854

Other income

1,048

227

3,879

800

Total medical facilities income

94,488

68,574

266,891

188,616

Non-segment/corporate other income

307

231

637

1,276

Total revenues

396,852

189,149

1,064,425

520,158

Property operating expenses:

Seniors housing operating

86,218

7,993

219,824

7,993

Medical facilities(2,3)

21,312

16,864

61,407

47,404

Total property operating expenses

107,530

24,857

281,231

55,397

Net operating income:

Seniors housing triple-net

176,932

107,535

477,338

317,457

Seniors housing operating

38,907

4,816

99,735

4,816

Medical facilities

73,176

51,710

205,484

141,212

Non-segment/corporate

307

231

637

1,276

Net operating income

289,322

164,292

783,194

464,761

Notes:

(1) Please see discussion of Supplemental Reporting Measures on page 23.

(2) Includes HCN’s share of revenues and expenses from unconsolidated joint ventures. See pages 8 and 10 for additional information.

(3) The three months ended September 30, 2011 includes the following amounts (in thousands):

Rental income from discontinued operations:

Seniors housing triple-net

Non-cash rental income from continuing operations:

Seniors housing triple-net

2,953

Skilled nursing/post-acute

5,972

Hospital

212

Medical office

2,966

Life science(2)

986

Total

13,089

Property operating expenses from discontinued operations:

Hospitals

212

Total

212

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Financial

Adjusted EBITDA Reconciliation(1)

(dollars in thousands)

Twelve Months Ended

Three Months Ended

September 30,

2011

Net income

216,407

52,353

Interest expense(2)

280,354

87,811

Income tax expense

601

223

Depreciation and amortization(2)

360,580

115,640

Stock-based compensation

11,106

1,767

Provision for loan losses

1,314

132

Adjusted EBITDA

870,362

257,926

Interest Coverage Ratio(3)

Interest expense(2)

280,354

87,811

Capitalized interest

14,873

3,111

Non-cash interest expense

(13,315)

(3,714)

Total interest

281,912

87,208

Adjusted EBITDA

870,362

257,926

Adjusted interest coverage ratio

3.09x

2.96x

Fixed Charge Coverage Ratio(4)

Total interest(2)

281,912

87,208

Secured debt principal amortization

25,051

7,204

Preferred dividends

48,572

17,234

Total fixed charges

355,535

111,646

Adjusted EBITDA

870,362

257,926

Adjusted fixed charge coverage ratio

2.45x

2.31x

Net Debt to EBITDA Ratio

Total debt

6,793,047

Less: cash and cash equivalents

(136,676)

Net debt

6,656,371

Adjusted EBITDA Annualized

1,031,704

Net debt to adjusted EBITDA ratio

6.45x

Notes:

(1) Please see discussion of Supplemental Reporting Measures on page 23.

(2) Interest expense and depreciation and amortization include discontinued operations.

(3) A comparable covenant in our senior unsecured notes is a minimum of 1.50 times.

(4) A comparable covenant in our unsecured line of credit arrangement is a minimum of 1.50 times.

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Financial

Revenue and Lease Maturity

(dollars in thousands except per share data)

Rental Income(1)

Year

Seniors Housing triple-net

Skilled Nursing / Post-Acute

Hospitals

Medical Office

Total Rental Income

Interest Income(2)

Total Revenues

% of Total

2011

769

—

2,229

2,998

647

3,645

0.4%

2012

5,759

7,015

—

12,999

25,773

1,560

27,333

2.8%

2013

44,568

—

10,074

54,642

11,930

66,572

6.7%

2014

21,023

6,400

—

11,815

39,238

5,291

44,529

4.5%

2015

—

2,026

—

10,265

12,291

1,225

13,516

1.4%

2016

—

17,821

509

18,330

1.8%

2017

13,038

3,885

2,350

13,007

32,280

3,125

35,405

3.6%

2018

36,823

—

5,811

42,634

1,397

44,031

4.4%

2019

9,463

18,934

—

10,649

39,046

163

39,209

3.9%

2020

12,918

27,564

5,959

10,579

57,020

1,458

58,478

5.9%

Thereafter

184,575

289,215

70,049

95,053

638,892

3,126

642,018

64.6%

328,936

355,039

78,358

200,302

962,635

30,431

993,066

100.0%

Notes:

(1) Rental income represents annualized base rent for effective lease agreements. The amounts are derived from the current contracted monthly base rent including straight-line for leases with fixed escalators or annual cash rent for leases with contingent escalators, net of collectability reserves, if applicable. Rental income does not include common area maintenance charges or the amortization of above/below market lease intangibles.

(2) Reflects contract rate of interest for loans, net of collectability reserves if applicable.

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Financial

Debt Maturities and Principal Payments

(dollars in thousands)

Year

Line of Credit(1)

Senior Notes(2,3)

Secured Debt(2,4)

Consolidated Debt(5)

% of Total

Joint Ventures(6)

Combined Debt

% of Total

2011

—

$7,522

0.1%

1,226

8,748

0.1%

2012

—

76,853

105,993

182,846

2.7%

39,757

222,603

3.2%

2013

—

300,000

275,041

575,041

8.6%

28,967

604,008

8.7%

2014

—

186,726

2.8%

25,058

211,784

3.1%

2015

390,000

250,000

181,280

821,280

12.2%

9,207

830,487

12.0%

2016

—

700,000

172,758

872,758

13.0%

45,370

918,128

13.3%

2017

—

450,000

428,031

878,031

13.1%

31,654

909,685

13.2%

Thereafter

—

2,688,077

510,346

3,198,423

47.5%

10,156

3,208,579

46.4%

Totals

390,000

4,464,930

$1,867,697

$6,722,627

100.0%

191,395

6,914,022

100.0%

Weighted Avg

Interest Rate(7)

1.6%

5.1%

5.5%

5.0%

6.1%

5.0%

Weighted Avg

Maturity Years(3)

3.8

10.5

6.9

9.1

4.2

9.0

Fixed and Floating Rate Debt

(dollars in thousands)

Consolidated Debt

% of Consolidated

Combined Debt

% of Combined

Fixed Rate Debt

Senior notes

$4,464,930

66.4%

4,464,930

64.6%

Secured debt

1,652,593

24.6%

1,815,137

26.3%

Total fixed

$6,117,523

91.0%

6,280,067

90.8%

Floating Rate Debt

Line of credit

$390,000

5.8%

390,000

5.6%

Secured debt

215,104

3.2%

243,955

3.5%

Total floating

$605,104

9.0%

633,955

9.2%

Total debt

$6,722,627

100.0%

6,914,022

100.0%

Notes:

(1) Current line of credit capacity of $2.0 billion with remaining availability of $1.6 billion as of September 30, 2011. Line of credit currently matures on July 27, 2015.

(2) Amounts above represent principal amounts due and do not include unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet.

(3) $126 million of convertible senior notes are puttable on December 1, 2011, $168 million of convertible senior notes are puttable on July 15, 2012 and $494 million of convertible senior notes are puttable on December 1, 2014. Weighted average maturities would be 7.9 years and 7.7 years for senior notes and consolidated debt, respectively, using the puttable dates.

(4) Secured debt includes $1.1 billion related to HCN’s seniors housing – operating partnerships.

(5) Excludes capital lease obligations of $82.9 million, of which $8.8 million that mature in April 2015 and $73.3 million that mature in November 2013.

(6) Represents HCN’s share of secured debt of unconsolidated joint ventures.

(7) Line of credit interest rate represents 1-month LIBOR + 135 bps at September 30, 2011. Senior notes and secured debt average interest rate represents the face value note rate.

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Current Capitalization

(amounts in thousands except per share data) % of Consolidated Total

Book Capitalization

Line of credit $ 390,000 2.9% Long-term debt obligations 6,403,047 47.5% Debt to consolidated book capitalization(1) 6,793,047 50.4% Total equity 6,693,166 49.6% Consolidated book capitalization $ 13,486,213 100.0% HCN share of unconsolidated joint venture debt 191,395 Total book capitalization $ 13,677,608

Undepreciated Book Capitalization

Line of credit $ 390,000 2.7% Long-term debt obligations 6,403,047 43.9% Debt to consolidated undepreciated book capitalization 6,793,047 46.6% Accumulated depreciation and amortization 1,084,746 7.5% Total equity 6,693,166 45.9% Consolidated undepreciated book capitalization $ 14,570,959 100.0% HCN share of unconsolidated joint venture debt 191,395 Total undepreciated book capitalization $ 14,762,354

Enterprise Value

Line of credit $ 390,000 2.4% Long-term debt obligations 6,403,047 39.2% Debt to consolidated enterprise value 6,793,047 41.6% Common shares outstanding 178,778 Period end share price $46.80 Common equity market capitalization 8,366,810 51.3% Noncontrolling interests 147,236 0.9% Preferred stock 1,010,417 6.2% Consolidated enterprise value $ 16,317,510 100.0% HCN share of unconsolidated joint venture debt 191,395 Total enterprise value $ 16,508,905

Secured Debt as % of Total Assets(2)

Secured debt $ 1,888,083 13.6% Total assets $ 13,861,089

Total Debt as % of Total Assets(3)

Total debt $ 6,793,047 49.0% Total assets $ 13,861,089

Unsecured Debt as % of Unencumbered Assets(4)

Unsecured debt $ 4,822,092 45.3% Unencumbered assets $ 10,652,015 Notes: (1) A comparable covenant in our unsecured line of credit arrangement is a maximum of 60%.

(2) A comparable covenant in our senior unsecured notes is a maximum of 40%. A comparable covenant in our unsecured line of credit arrangement is a maximum of 30%.

(3) A comparable covenant in our senior unsecured notes is a maximum of 60%.

(4) A comparable covenant in our unsecured line of credit arrangement is a maximum of 60%. A comparable covenant in our senior unsecured notes is a maximum of 66.7%.

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21 Age: Current year, less the year built, adjusted for major renovations.

GLOSSARY

Cap-ex, Tenant Improvements, Leasing Commissions: Represents amounts paid in cash for: 1) recurring and non-recurring capital expenditures required to maintain and re-tenant our properties, 2) second generation tenant improvements and 3) leasing commissions paid to third party leasing agents to secure new tenants.

Cash Flow Coverage: Represents the ratio of EBITDARM to contractual rent for leases or interest and principal payments for loans. CFC is a measure of a property’s ability to generate sufficient cash flows for the operator/borrower to pay rent and meet other obligations, assuming that management fees are not paid. The coverage shown excludes properties that are unstabilized, closed or for which data is not available or meaningful.

Cash Yield: Represents annualized contractual or projected income to be received in cash divided by investment amount.

CCRC: Continuing care retirement communities include a combination of detached homes, an independent living facility, an assisted living facility and/or a skilled nursing facility on one campus. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services.

Committed Balance: Represents investment balance plus unfunded construction commitments for which initial funding has commenced.

Construction Conversion: Represents completed construction projects that were placed into service and began earning rent.

EBITDARM: Earnings before interest, taxes, depreciation, amortization, rent and management fees. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate EBITDARM and has not independently verified the information. EBITDARM is used to calculate CBMF.

Entrance Fee: A property where the resident pays a substantial upfront fee and an ongoing monthly service fee for the right to occupy a unit. Typically, a portion of the upfront fee is refundable.

Expense per Occupied Unit: Represents the ratio of revenue less EBITDARM to occupied units based on the most recent quarter of available data and excludes properties that are unstabilized, closed, or for which data is not available or meaningful. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate expense per occupied unit and has not independently verified the information.

Health System-Affiliated: Properties are considered affiliated with a health system if one or more of the following conditions are met: 1) the land parcel is contained within the physical boundaries of a hospital campus; 2) the land parcel is located adjacent to the campus; 3) the building is physically connected to the hospital regardless of the land ownership structure; 4) a ground lease is maintained with a health system entity; 5) a master lease is maintained with a health system entity; 6) significant square footage is leased to a health system entity; 7) the property includes an ambulatory surgery center with a hospital partnership interest; or (8) a significant square footage is leased to a physician group that is either employed, directly or indirectly by a health system, or has a significant clinical and financial affiliation with the health system.

Hospitals: Hospitals generally include acute care hospitals, inpatient rehabilitation hospitals and long-term acute care hospitals. Acute care hospitals provide a wide range of inpatient and outpatient services, including, but not limited to, surgery, rehabilitation, therapy and clinical laboratories. Long-term acute care hospitals provide inpatient services for patients with complex medical conditions who require more intensive care, monitoring or emergency support than that available in most skilled nursing facilities.

Investment Amount:

Acquisitions – Represents purchase price excluding accounting adjustments pursuant to U.S. GAAP.

New loans – Represents face amount of new loan.

Construction conversion – Represents book balance converted from CIP to real property upon completion.

Capital improvements to existing properties – Represents cash funded to tenants under an existing lease.

Loan advances – Represents cash funded to operators under an existing loan agreement.

Investment Balance: Represents net book value of real estate investments or the company’s interest in unconsolidated joint ventures as reflected on the company’s balance sheet.

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GLOSSARY

22 Life Science: Life science buildings are laboratory and office facilities, often located near universities, specifically constructed and designed for use by biotechnology and pharmaceutical companies.

Medical Office: Medical office buildings are office and clinic facilities, often located near hospitals or on hospital campuses, specifically constructed and designed for use by physicians and other health care personnel to provide services to their patients. They may also include ambulatory surgery centers that are used for general or specialty surgical procedures not requiring an overnight stay in a hospital. Medical office buildings typically contain sole and group physician practices and may provide laboratory and other patient services.

GLOSSARY

Occupancy: Medical office occupancy represents the percentage of total rentable square feet leased and occupied, including month-to-month leases, as of the date reported. Occupancy for all other property types represents average quarterly operating occupancy based on the most recent quarter of available data and excludes properties that are unstabilized, closed or for which data is not available or meaningful. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy and has not independently verified the information.

GLOSSARY

Renewal Rate: The ratio of total square feet expiring and available for lease to total renewed square feet.

Renewed Square Feet: Square feet expiring during the reporting period upon which a lease is executed by the current occupant.

Revenue per Occupied Unit: Represents the ratio of total revenue to occupied units based on the most recent quarter of available data and excludes properties that are unstabilized, closed or for which data is not available or meaningful. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate revenue per occupied unit and has not independently verified the information.

Same Store: For the medical office building portfolio, same store is defined as those properties owned for the entire previous five quarters. Properties acquired, developed or classified in discontinued operations are excluded from the same store amounts. For all other property types, same store is defined as those properties in the stable portfolio for the 24 months preceding the end of the portfolio performance reporting period, unless otherwise noted. Excludes seniors housing operating portfolio.

Seniors Housing Operating: Includes independent and assisted living properties held in consolidated joint ventures, structured to take advantage of the REIT Investment Diversification and Empowerment Act of 2007.

Seniors Housing Triple-net: Includes independent and assisted living properties subject to triple-net operating leases and real estate loans receivable.

Skilled Nursing/Post-Acute: Skilled nursing facilities are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement and are subject to triple-net operating leases.

Square Feet: Net rentable square feet calculated utilizing Building Owners and Managers Association measurement standards.

Stable: Generally, a property is considered stable (versus unstabilized or under development) when it has achieved payment CAMF of 1.10x or greater for three consecutive months or, if targeted performance has not been achieved, 12 months following the budgeted stabilization date. Entrance fee communities are considered stable after achieving aggregate property occupancy of 80% or more.

Unstabilized: An acquisition that does not meet the stable criteria upon closing or a construction property that has opened but not yet reached stabilization.

Yield on Sale: Represents annualized contractual income that was being received in cash at date of disposition divided by disposition cash proceeds.

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SUPPLEMENTAL REPORTING MEASURES

23 The company believes that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers EBITDA and net operating income (NOI) to be useful supplemental measures of its operating performance.

EBITDA stands for earnings before interest, taxes, depreciation and amortization. A covenant in our line of credit arrangement contains a financial ratio based on a definition of EBITDA that is specific to that agreement. Failure to satisfy this covenant could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of this debt agreement and the financial covenant, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above and adjusted for stock-based compensation expense, provision for loan losses and gain/loss on extinguishment of debt. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge ratio of at least 1.50 times.

Net operating income (NOI) is used to evaluate the operating performance of the company’s properties. The company defines NOI as total revenues, including tenant reimbursements and discontinued operations, less property operating expenses, which exclude depreciation and amortization, general and administrative expenses, impairments and interest expense. The company believes NOI provides investors relevant and useful information because it measures the operating performance of the company’s properties at the property level on an unleveraged basis. The company uses NOI to make decisions about resource allocations and to assess the property level performance of our properties.

Other than Adjusted EBITDA, the company’s supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. The company’s management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. Adjusted EBITDA is used solely to determine our compliance with a financial covenant of our line of credit arrangement and is not being presented for use by investors for any other purpose. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by the company, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Multi-period amounts may not equal the sum of the individual quarterly amounts due to rounding.

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FORWARD-LOOKING STATEMENTS AND RISK FACTORS

24 Forward-Looking Statements and Risk Factors

CORPORATE

This document may contain “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern and are based upon, among other things, the possible expansion of the company’s portfolio; the sale of properties; the performance of its operators/tenants and properties; its ability to enter into agreements with viable new tenants for vacant space or for properties that the company takes back from financially troubled tenants, if any; its occupancy rates; its ability to acquire, develop and/or manage properties; its ability to make distributions to stockholders; its policies and plans regarding investments, financings and other matters; its tax status as a real estate investment trust; its critical accounting policies; its ability to appropriately balance the use of debt and equity; its ability to access capital markets or other sources of funds; and its ability to meet its earnings guidance. When the company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The company’s expected results may not be achieved and actual results may differ materially from expectations. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care, seniors housing and life science industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; the company’s ability to transition or sell facilities with profitable results; the failure to make new investments as and when anticipated; acts of God affecting the company’s properties; the company’s ability to re-lease space at similar rates as vacancies occur; the company’s ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; regulatory approval and market acceptance of the products and technologies of life science tenants; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future acquisitions; environmental laws affecting the company’s properties; changes in rules or practices governing the company’s financial reporting; and legal and operational matters, including real estate investment trust qualification and key management personnel recruitment and retention. Finally, the company assumes no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements.

Additional Information

The information in this supplemental information package should be read in conjunction with the company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, earnings press release dated August 4, 2011 and other information filed with, or furnished to, the Securities and Exchange Commission (“SEC”). The Supplemental Reporting Measures and reconciliations of Non-GAAP measures are an integral part of the information presented herein.

You can access the company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act at http://www.hcreit.com as soon as reasonably practicable after they are filed with, or furnished to, the SEC. The information on or connected to the company’s website is not, and shall not be deemed to be, a part of, or incorporated into this supplemental information package. You can also review these SEC filings and other information by accessing the SEC’s website at http://www.sec.gov.

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HEALTHCAREREIT TM

4500 DORR STREET

TOLEDO, OHIO 43615-4040