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Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (such as normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not necessarily an indication of the results that may be expected for the year ending December 31, 2020. For further information, refer to the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Impact of COVID-19 Pandemic

The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the future, including but not limited to, the following:

•

Our Seniors Housing Operating revenues and our Triple-net operators' revenues are dependent on occupancy. Declines in occupancy are expected due to heightened move-in criteria and screening, as well as increased mortality rates among seniors. In addition, increased expenses are expected to continue until the pandemic subsides. Such factors may impact our Triple-net operator's ability to pay rent and contractual obligations. Furthermore, various local and state stay at home orders and the temporary closure of certain medical practices as a result may impact our medical office building tenants' ability to pay rent. These factors may cause operators or tenants to seek modifications of such obligations, resulting in reductions in revenue and increases in uncollectible receivables.

•

Assessing properties for potential impairment involves subjectivity in determining if impairment indicators are present and in estimating the future undiscounted cash flows or estimated fair value of the asset. Key assumptions are made in this assessment and drive conclusions include the estimation of future rental revenues, operating expenses, capitalization rates and the ability and intent to hold the respective asset. All of these assumptions are significantly affected by our expectations of future market or economic conditions and can be highly impacted by the uncertainty of the COVID-19 pandemic, leading us to recognize increased impairment charges.

•

The determination of the allowance for credit losses is based on our evaluation of collectability of our loans receivable and includes review of factors such as delinquency status, historical loan charge-offs, financial strength of the borrower and guarantors and the value of the underlying collateral. Reduced economic activity severely impacts our borrowers' businesses, financial conditions and liquidity and may hinder their ability to make contractual payments to us, leading to an increase in loans deemed to have deteriorated credit which could result in an increase in the provision for loan losses.

New Accounting Standards     

•

On January 1, 2020, we adopted ASU 2016-13, “Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). This standard requires a new forward-looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. In November 2018, the FASB issued an amendment excluding operating lease receivables accounted for under the new leases standard from the scope of the new credit losses standard. ASU 2016-13 primarily impacts our measurement for credit losses related to our real estate and non-real estate loans receivable. In conjunction with our adoption of ASU 2016-13, we recorded a $5,212,000 increase to our allowance for credit losses on loans receivable (both real estate and non-real estate) with a corresponding adjustment to cumulative net income related to the change in accounting principle. See Note 7 for further details.

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•

At the FASB's April 8, 2020 Board meeting, the staff acknowledged that the economics of lease concessions that result from a global pandemic may not be aligned with the underlying premise of the modification framework in ASC 842, under which the concession would be recognized over the remainder of the lease term. The FASB thus determined that it would be appropriate for entities to make a policy election regarding how to account for lease concessions resulting directly from COVID-19. Rather than analyzing each lease contract individually, entities can elect to account for lease concessions "as though the enforceable rights and obligations for the concessions explicitly exist in the contract." Accordingly, entities that choose to apply the relief provided can either (1) apply the modification framework for these concessions in accordance with ASC 842 as applicable or (2) account for concessions as if they were made under the enforceable rights included in the original agreement as long as total cash flows resulting from the modified contract are substantially the same or less than cash flows in the original contract. As of March 31, 2020, we have adopted the relief put forth by the FASB and intend to account for qualifying concessions as lease modifications, but had not yet made significant lease concessions within our portfolio as a result of the COVID-19 pandemic.

The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.

The following is a summary of our real property investment activity by segment for the periods presented (in thousands):

	Three Months Ended
	March 31, 2020																March 31, 2019
	Seniors Housing Operating				Triple-net				Outpatient Medical				Totals				Seniors Housing Operating				Triple-net				Outpatient Medical				Totals
Land and land improvements	$	15,758			$	—			$	40,847			$	56,605			$	6,831			$	7,427			$	29,304			$	43,562
Buildings and improvements	132,480				765				171,457				304,702				97,759				74,116				60,671				232,546
Acquired lease intangibles	10,810				—				23,823				34,633				4,945				—				10,202				15,147
Right of use assets, net	—				—				—				—				—				—				2,012				2,012
Receivables and other assets	257				—				139				396				264				—				—				264
Total assets acquired (1)	159,305				765				236,266				396,336				109,799				81,543				102,189				293,531
Secured debt	—				—				—				—				(43,209		)		—				—				(43,209		)
Lease liabilities	—				—				—				—				—				—				(961		)		(961		)
Accrued expenses and other liabilities	(671		)		—				(2,036		)		(2,707		)		(848		)		—				(1,952		)		(2,800		)
Total liabilities acquired	(671		)		—				(2,036		)		(2,707		)		(44,057		)		—				(2,913		)		(46,970		)
Noncontrolling interests (2)	(2,827		)		—				—				(2,827		)		(7,895		)		(1,056		)		—				(8,951		)
Cash disbursed for acquisitions	155,807				765				234,230				390,802				57,847				80,487				99,276				237,610
Construction in progress additions	29,841				13,929				13,645				57,415				35,756				7,442				14,475				57,673
Less: Capitalized interest	(2,812		)		(941		)		(993		)		(4,746		)		(1,136		)		(390		)		(801		)		(2,327		)
Accruals (3)	(2,600		)		—				(1,294		)		(3,894		)		—				—				45				45
Cash disbursed for construction in progress	24,429				12,988				11,358				48,775				34,620				7,052				13,719				55,391
Capital improvements to existing properties	52,503				3,248				13,631				69,382				43,300				3,768				9,867				56,935
Total cash invested in real property, net of cash acquired	$	232,739			$	17,001			$	259,219			$	508,959			$	135,767			$	91,307			$	122,862			$	349,936

⁽¹⁾ Excludes $580,000 and $517,000 of unrestricted and restricted cash acquired during the three months ended March 31, 2020 and 2019, respectively.

⁽²⁾ Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.

⁽³⁾ Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.

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Construction Activity 

The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):

The following is a summary of our real estate intangibles, excluding those classified as held for sale, as of the dates indicated (dollars in thousands):

		March 31, 2020				December 31, 2019
Assets:
In place lease intangibles		$	1,523,390			$	1,513,836
Above market tenant leases		60,484				59,540
Lease commissions		45,788				43,675
Gross historical cost		1,629,662				1,617,051
Accumulated amortization		(1,195,330		)		(1,181,158		)
Net book value		$	434,332			$	435,893
Weighted-average amortization period in years		10.4				10.3
Liabilities:
Below market tenant leases		$	86,233			$	99,035
Accumulated amortization		(40,354		)		(49,390		)
Net book value		$	45,879			$	49,645
Weighted-average amortization period in years		8.6				8.6

 

The following is a summary of real estate intangible amortization income (expense) for the periods presented (in thousands):

		Three Months Ended March 31,
		2020				2019
Rental income related to (above)/below market tenant leases, net		$	524			$	(155	)
Amortization related to in place lease intangibles and lease commissions		(35,976		)		(24,905		)

The future estimated aggregate amortization of intangible assets and liabilities is as follows for the periods presented (in thousands):

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We periodically sell properties for various reasons, including favorable market conditions, the exercise of tenant purchase options or reduction of concentrations (i.e., property type, relationship or geography). At March 31, 2020, 18 Seniors Housing Operating, six Triple-net, and nine Outpatient Medical properties with an aggregate real estate balance of $729,560,000 were classified as held for sale. In addition to the real property balances held for sale, secured debt of $112,625,000 and net other assets and liabilities of $27,800,000 are included in the Consolidated Balance Sheet related to the held for sale properties. Subsequent to March 31, 2020, the expected sale of a Seniors Housing Operating portfolio, which met the held for sale criteria as of December 31, 2019, was not consummated as a result of the uncertainty of the COVID-19 pandemic on our business and industry and the 11 properties with a carrying value of $386,744,000 will be moved out of held for sale during the second quarter. Expected gross sales proceeds related to the remaining held for sale properties is approximately $412,535,000.

During the three months ended March 31, 2020, we recorded net impairment charges of $27,827,000 related to certain held for use properties for which the carrying value exceeded the fair values. The following is a summary of our real property disposition activity for the periods presented (in thousands):

		Three Months Ended March 31,
		2020				2019
Real estate dispositions:
Triple-net		$	33,445			$	436,071
Outpatient Medical		495,003				—
Total dispositions		528,448				436,071
Gain (loss) on real estate dispositions, net		262,824				167,409
Net other assets/liabilities disposed		10,120				(748		)
Proceeds from real estate dispositions		$	801,392			$	602,732

Operating results attributable to properties sold subsequent to or classified as held for sale and which do not meet the definition of discontinued operations, are not reclassified on our Consolidated Statements of Comprehensive Income. The following represents the activity related to these properties for the periods presented (in thousands):

We lease land, buildings, office space and certain equipment. Many of our leases include a renewal option to extend the term from one to 25 years or more. Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities.

The components of lease expense were as follows for the period presented (in thousands):

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				Three Months Ended
		Classification		March 31, 2020				March 31, 2019
Operating lease cost: (1)
Real estate lease expense		Property operating expenses		$	6,492			$	7,412
non-real estate investment lease expense		General and administrative expenses		1,267				362
Finance lease cost:
Amortization of leased assets		Property operating expenses		2,243				2,092
Interest on lease liabilities		Interest expense		1,379				1,002
Sublease income		Rental income		(1,043		)		(1,886		)
Total				$	10,338			$	8,982

⁽¹⁾ Includes short-term leases which are immaterial.

Supplemental balance sheet information related to leases was as follows (in thousands):

	Classification		March 31, 2020				December 31, 2019
Right of use assets:
Operating leases - real estate	Right of use assets, net		$	362,685			$	374,217
Finance leases - real estate	Right of use assets, net		160,532				162,216
Real estate right of use assets, net			523,217				536,433
Operating leases - non-real estate investments	Receivables and other assets		11,753				12,474
Total right of use assets, net			$	534,970			$	548,907
Lease liabilities:
Operating leases			$	356,311			$	364,803
Financing leases			108,348				108,890
Total			$	464,659			$	473,693

Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Leases in our Triple-net and Outpatient Medical portfolios typically include some form of operating expense reimbursement by the tenant. For the three months ended March 31, 2020, we recognized $389,960,000 of rental and other revenues related to operating leases, of which $55,754,000 was for variable lease payments which primarily represents the reimbursement of operating costs such as common area maintenance expenses, utilities, insurance and real estate taxes. For the three months ended March 31, 2019, we recognized $381,084,000 of rental and other revenues related to operating leases, of which $47,350,000 was for variable lease payments.

Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance for credit losses, or for non-real estate loans receivable, in receivables and other assets, net of allowance for credit losses. Real estate loans receivable consists of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien, a leasehold mortgage on, or an assignment of the partnership interest in, the related properties, corporate guarantees and/or personal guarantees. Non-real estate loans are generally corporate loans with no real estate backing. Interest income on loans is recognized as earned based upon the principal amount outstanding subject to an evaluation of the risk of credit loss. Accrued interest receivable was $7,868,000 and $6,897,000 as of March 31, 2020 and December 31, 2019, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets. The following is a summary of our loans receivable (in thousands):

		March 31, 2020				December 31, 2019
Mortgage loans		$	97,896			$	188,062
Other real estate loans		125,811				124,696
Allowance for credit losses on real estate loans receivable		(2,479		)		(42,376		)
Real estate loans receivable, net of credit allowance		$	221,228			$	270,382
Non-real estate loans		451,271				362,850
Allowance for credit losses on non-real estate loans receivable		(78,092		)		(25,996		)
Non-real estate loans receivable, net of credit allowance (1)		373,179				336,854
Total loans receivable, net of credit allowance		$	594,407			$	607,236

⁽¹⁾ Included in receivables and other assets on the Consolidated Balance Sheets.

During the three months ended March 31, 2020, the real estate collateral associated with one loan was released, therefore, the principal balance of $86,411,000 and related allowance for credit losses of $42,376,000 was reclassified to a non-real estate loan.

The following is a summary of our loan activity for the periods presented (in thousands):    

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		Three Months Ended
		March 31, 2020				March 31, 2019
Advances on loans receivable:
Investments in new loans		$	—			$	25,000
Draws on existing loans		10,441				20,452
Net cash advances on loans receivable		10,441				45,452
Receipts on loans receivable:
Loan payoffs		—				4,384
Principal payments on loans		10,045				2,826
Net cash receipts on loans receivable		10,045				7,210
Net cash advances (receipts) on loans receivable		$	396			$	38,242

The allowance for credit loss on loans receivable is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the credit allowance is based on a quarterly evaluation of each of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral.

A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans we identified as having deteriorated credit quality we determine the amount of credit loss on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.

For the remaining loans we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses. The following is a summary of our loans by credit loss category (in thousands):

	March 31, 2020
Loan category	Years of Origination	Loan Carrying Value			Allowance for Credit Loss			Net Loan Balance			No. of Loans
Deteriorated loans	2007 - 2018	$	185,982		$	(75,372	)	$	110,610		4
Collective loan pool	2007 - 2015	128,971			(1,873		)	127,098			15
Collective loan pool (1)	2016	183,218			(1,534		)	181,684			6
Collective loan pool	2017	117,156			(970		)	116,186			7
Collective loan pool	2018	15,865			(229		)	15,636			2
Collective loan pool	2019	43,786			(593		)	43,193			6
Total loans		$	674,978		$	(80,571	)	$	594,407		40
(1) Carrying value is exclusive of deferred gains of $62,819,000 recorded in accrued expenses and other liabilities on the Consolidated Balance Sheets.

In March 2019, we recognized a provision for loan losses of $18,690,000 to fully reserve for certain Triple-net real estate loans receivable that were no longer deemed collectible. During the quarter ended June 30, 2019, these loans were written off. In March 31, 2020, we recognized a provision for loan losses of $6,898,000 to fully reserve for one Triple-net non-real estate loan receivable that was no longer deemed collectible. The following is a summary of the allowance for credit losses on loans receivable for the periods presented (in thousands):

	Three Months Ended
	March 31, 2020				March 31, 2019
Balance at beginning of period	$	68,372			$	68,372
Adoption of ASU 2016-13	5,212				—
Provision for loan losses	7,072				18,690
Foreign currency translation	(85		)		—
Balance at end of period	$	80,571			$	87,062

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The following is a summary of our deteriorated loans (in thousands):

		Three Months Ended
		March 31, 2020				March 31, 2019
Balance of deteriorated loans at end of period (1)		$	185,982			$	206,783
Allowance for credit losses		(75,372		)		(87,062		)
Balance of deteriorated loans not reserved		$	110,610			$	119,721
Interest recognized on deteriorated loans (2)		$	4,046			$	3,971

 

⁽¹⁾ Includes two loans that are on non-accrual as of March 31, 2020, with a total carrying value of $9,534,000 at both the beginning and the end of the first quarter of 2020.

⁽²⁾ Represents cash interest recognized in the period.

We participate in a number of joint ventures, which generally invest in seniors housing and health care real estate. The results of operations for these properties have been included in our consolidated results of operations from the date of acquisition by the joint ventures and are reflected in our Consolidated Statements of Comprehensive Income as income or loss from unconsolidated entities. The following is a summary of our investments in unconsolidated entities (dollars in thousands): 

		Percentage Ownership (1)		March 31, 2020				December 31, 2019
Seniors Housing Operating		10% to 50%		$	511,645			$	463,741
Triple-net		10% to 25%		7,438				7,740
Outpatient Medical		15% to 50%		183,414				111,942
Total				$	702,497			$	583,423

 

⁽¹⁾ Excludes ownership of in substance real estate.

At March 31, 2020, the aggregate unamortized basis difference of our joint venture investments of $112,258,000 is primarily attributable to the difference between the amount for which we purchase our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the joint venture. This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of income from unconsolidated entities.

We have made loans totaling $210,994,000 related to eight properties as of March 31, 2020 for the development and construction of certain properties which are classified as in substance real estate investments. We believe that such borrowers typically represent variable interest entities ("VIE" or "VIEs") in accordance with ASC 810 Consolidation. VIEs are required to be consolidated by their primary beneficiary ("PB") which is the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity's economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We have concluded that we are not the PB of such borrowers, therefore, the loan arrangements were assessed based on among other factors, the amount and timing of expected residual profits, the estimated fair value of the collateral and the significance of the borrower's equity in the project. Based on these assessments, the arrangements have been classified as in substance real estate investments. We expect to fund an additional $251,495,000 related to these investments.

We use consolidated net operating income (“NOI”) as our credit concentration metric. See Note 18 for additional information and reconciliation. The following table summarizes certain information about our credit concentration for the three months ended March 31, 2020, excluding our share of NOI in unconsolidated entities (dollars in thousands):

Concentration by relationship: (1)		Number of Properties			Total NOI				Percent of NOI (2)
Sunrise Senior Living (3)		165			$	81,577			14%
ProMedica		215			53,498				9%
Revera(3)		94			32,874				6%
Genesis Healthcare		52			29,391				5%
Belmont Village		21			19,615				3%
Remaining portfolio		1,016			359,866				63%
Totals		1,563			$	576,821			100%

⁽¹⁾ Genesis Healthcare and ProMedica are in our Triple-net segment. Sunrise Senior Living, Revera and Belmont Village are in our Seniors Housing Operating segment.

⁽²⁾ NOI with our top five relationships comprised 37% of total NOI for the year ended December 31, 2019.

⁽³⁾ Revera owns a controlling interest in Sunrise Senior Living.

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At March 31, 2020, we had a primary unsecured credit facility with a consortium of 31 banks that includes a $3,000,000,000 unsecured revolving credit facility ($795,000,000 outstanding at March 31, 2020), a $500,000,000 unsecured term credit facility and a $250,000,000 Canadian-denominated unsecured term credit facility. We have an option, through an accordion feature, to upsize the unsecured revolving credit facility and the $500,000,000 unsecured term credit facility by up to an additional $1,000,000,000, in the aggregate, and the $250,000,000 Canadian-denominated unsecured term credit facility by up to an additional $250,000,000. The primary unsecured credit facility also allows us to borrow up to $1,000,000,000 in alternate currencies (none outstanding at March 31, 2020). Borrowings under the unsecured revolving credit facility are subject to interest payable at the applicable margin over LIBOR interest rate (1.82% at March 31, 2020). The applicable margin is based on our debt ratings and was 0.825% at March 31, 2020. In addition, we pay a facility fee quarterly to each bank based on the bank’s commitment amount. The facility fee depends on our debt ratings and was 0.15% at March 31, 2020. The term credit facilities mature on July 19, 2023. The revolving credit facility is scheduled to mature on July 19, 2022 and can be extended for two successive terms of six months each at our option.

In January 2019, we established an unsecured commercial paper program. Under the terms of the program, we may issue unsecured commercial paper notes with maturities that vary, but do not exceed 397 days from the date of issue, up to a maximum aggregate face or principal amount outstanding at any time of $1,000,000,000. As of March 31, 2020, there was a balance of $49,985,000 outstanding on the commercial paper program ($50,000,000 in principal outstanding net of an unamortized discount of $15,000), which reduces the borrowing capacity on the unsecured revolving credit facility. The notes bear interest at various floating rates with a weighted average of 1.55% as of March 31, 2020 and a weighted average maturity of seven days as of March 31, 2020.

The following information relates to aggregate borrowings under the unsecured revolving credit facility and commercial paper program for the periods presented (dollars in thousands):

		Three Months Ended March 31,
		2020				2019
Balance outstanding at quarter end		$	845,000			$	419,293
Maximum amount outstanding at any month end		$	2,100,000			$	1,150,000
Average amount outstanding (total of daily
principal balances divided by days in period)		$	1,593,816			$	790,516
Weighted average interest rate (actual interest
expense divided by average borrowings outstanding)		2.21		%		3.22		%

 

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, at a redemption price equal to the sum of: (i) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (ii) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. At March 31, 2020, the annual principal payments due on these debt obligations were as follows (in thousands):

		Senior Unsecured Notes (1,2)				Secured Debt (1,3)				Totals
2020		$	—			$	275,279			$	275,279
2021		—				424,952				424,952
2022		10,000				449,900				459,900
2023 (4,5)		1,777,054				473,564				2,250,618
2024		1,350,000				295,714				1,645,714
Thereafter (6,7,8)		7,169,819				985,229				8,155,048
Totals		$	10,306,873			$	2,904,638			$	13,211,511

 

⁽¹⁾ Amounts represent principal amounts due and do not include unamortized premiums/discounts, debt issuance costs, or other fair value adjustments as reflected on the Consolidated Balance Sheet.

⁽²⁾ Annual interest rates range from 1.65% to 6.50%.

⁽³⁾ Annual interest rates range from 1.69% to 12.00%. Carrying value of the properties securing the debt totaled $6,324,000 at March 31, 2020.

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⁽⁴⁾ Includes a $250,000,000 Canadian-denominated unsecured term credit facility (approximately $177,054,000 based on the Canadian/U.S. Dollar exchange rate on March 31, 2020). The loan matures on July 19, 2023 and bears interest at the Canadian Dealer Offered Rate plus 0.9% (2.49% at March 31, 2020).

⁽⁵⁾ Includes a $500,000,000 unsecured term credit facility. The loan matures on July 19, 2023 and bears interest at LIBOR plus 0.9% (1.65% at March 31, 2020).

⁽⁶⁾ Includes a $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $212,465,000 based on the Canadian/U.S. Dollar exchange rate on March 31, 2020).

⁽⁷⁾ Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $684,804,000 based on the Sterling/U.S. Dollar exchange rate in effect on March 31, 2020).

⁽⁸⁾ Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $622,550,000 based on the Sterling/U.S. Dollar exchange rate in effect on March 31, 2020).

On April 1, 2020, we closed on a $1,000,000,000 unsecured term credit facility that matures on April 1, 2022. The term loan carries a 60-day delayed draw and bears interest at a rate of LIBOR plus 1.20%.

The following is a summary of our senior unsecured notes principal activity during the periods presented (dollars in thousands):

		Three Months Ended
		March 31, 2020						March 31, 2019
						Weighted Avg.						Weighted Avg.
		Amount				Interest Rate		Amount				Interest Rate
Beginning balance		$	10,427,562			4.03%		$	9,699,984			4.48%
Debt issued		—				—%		1,050,000				3.89%
Debt extinguished		—				—%		(1,050,000		)		4.98%
Foreign currency		(120,689		)		4.15%		37,553				4.33%
Ending balance		$	10,306,873			3.97%		$	9,737,537			4.35%

 

The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands): 

		Three Months Ended
		March 31, 2020						March 31, 2019
						Weighted Avg.						Weighted Avg.
		Amount				Interest Rate		Amount				Interest Rate
Beginning balance		$	2,993,342			3.63%		$	2,485,711			3.90%
Debt issued		44,921				2.58%		247,163				3.68%
Debt assumed		—				—%		42,000				4.62%
Debt extinguished		(16,040		)		4.51%		(114,570		)		4.96%
Principal payments		(15,526		)		3.78%		(13,543		)		3.85%
Foreign currency		(102,059		)		3.27%		26,197				3.33%
Ending balance		$	2,904,638			3.63%		$	2,672,958			3.84%

 

We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our non-U.S. investments and interest rate risk related to our capital structure. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, cross currency swap contracts, interest rate swaps, interest rate locks and debt issued in foreign currencies to offset a portion of these risks.

Foreign Currency Forward Contracts Designated as Cash Flow Hedges

For instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in earnings. 

Cash Flow Hedges of Interest Rate Risk

We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from

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a counterparty in exchange for our fixed-rate payments. These interest rate swap agreements were used to hedge the variable cash flows associated with variable-rate debt.

Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to the Consolidated Statements of Comprehensive Income.

Foreign Currency Forward Contracts and Cross Currency Swap Contracts Designated as Net Investment Hedges

We use foreign currency forward and cross currency forward swap contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. For instruments that are designated and qualify as net investment hedges, the variability in the foreign currency to U.S. Dollar of the instrument is recorded as a cumulative translation adjustment component of OCI. 

The balance of the cumulative translation adjustment will be reclassified to earnings if the hedged investment is sold or substantially liquidated.

Derivative Contracts Undesignated

We use foreign currency exchange contracts to manage existing exposures to foreign currency exchange risk. Gains and losses resulting from the changes in fair value of these instruments are recorded in interest expense on the Consolidated Statements of Comprehensive Income and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures. In addition, we have several interest rate cap contracts related to variable rate secured debt agreements. Gains and losses resulting from the changes in fair values of these instruments are also recorded in interest expense.

The following presents the notional amount of derivatives and other financial instruments as of the dates indicated (in thousands): 

		March 31, 2020				December 31, 2019
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars		$	700,000			$	725,000
Denominated in Pounds Sterling		£	1,340,708			£	1,340,708
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars		$	250,000			$	250,000
Denominated in Pounds Sterling		£	1,050,000			£	1,050,000
Interest rate swaps designated as cash flow hedges:
Denominated in U.S Dollars (1)		$	1,188,250			$	1,188,250
Derivative instruments not designated:
Interest rate caps denominated in U.S. Dollars		$	405,819			$	405,819
Forward sales contracts denominated in Canadian Dollars		$	80,000			$	—
Forward purchase contracts denominated in Pounds Sterling		£	(125,000	)		£	(125,000	)
Forward sales contracts denominated in Pounds Sterling		£	125,000			£	125,000

 

⁽¹⁾ At March 31, 2020 the maximum maturity date was July 15, 2021.

The following presents the impact of derivative instruments on the Consolidated Statements of Comprehensive Income for the periods presented (in thousands):

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At March 31, 2020, we had 12 outstanding letter of credit obligations totaling $42,219,000 and expiring between 2020 and 2024. At March 31, 2020, we had outstanding construction in progress of $431,497,000 and were committed to providing additional funds of approximately $373,422,000 to complete construction. Additionally, at March 31, 2020, we had outstanding investments classified as in substance real estate of $210,994,000 and were committed to provide additional funds of $251,495,000 (see Note 8 for additional information). Purchase obligations at March 31, 2020 also include $20,764,000 of contingent purchase obligations to fund capital improvements. Rents due from the tenant are increased to reflect the additional investment in the property.

The following is a summary of our stockholders’ equity capital accounts as of the dates indicated: 

		March 31, 2020			December 31, 2019
Preferred Stock:
Authorized shares		50,000,000			50,000,000
Issued shares		—			—
Outstanding shares		—			—
Common Stock, $1.00 par value:
Authorized shares		700,000,000			700,000,000
Issued shares		418,781,215			411,550,857
Outstanding shares		417,390,540			410,256,615

 

Preferred Stock The following is a summary of our preferred stock activity during the periods indicated: 

		Three Months Ended
		March 31, 2020					March 31, 2019
					Weighted Avg.					Weighted Avg.
		Shares			Dividend Rate		Shares			Dividend Rate
Beginning balance		—			—%		14,369,965			6.50%
Shares converted		—			—%		(14,369,965	)		6.50%
Ending balance		—			—%		—			—%

 

During the three months ended March 31, 2019, we converted all of the outstanding Series I Preferred Stock. Each share was converted into 0.8857 shares of common stock.

Common Stock In February 2019, we entered into a separate amended and restated equity distribution agreement whereby we can offer and sell up to $1,500,000,000 aggregate amount of our common stock ("Equity Shelf Program"). The Equity Shelf Program also allows us to enter into forward sale agreements. During the three months ended March 31, 2020, we physically settled all of our outstanding forward sales agreements for cash proceeds of $576,196,000. As of March 31, 2020, we had $499,341,000 of remaining capacity under the Equity Shelf Program.

The following is a summary of our common stock issuances during the three months ended March 31, 2020 and 2019 (dollars in thousands, except shares and average price amounts): 

		Shares Issued			Average Price				Gross Proceeds				Net Proceeds
2019 Dividend reinvestment plan issuances		4,148,667			$	75.04			$	311,301			$	307,821
2019 Option exercises		2,505			53.89				135				135
2019 Equity shelf program issuances		3,060,865			74.22				227,180				225,587
2019 Preferred stock conversions		12,712,452							—				—
2019 Stock incentive plans, net of forfeitures		140,940							—				—
2019 Totals		20,065,429							$	538,616			$	533,543
2020 Dividend reinvestment plan issuances		175,129			$	84.54			$	14,805			$	14,805
2020 Equity shelf program issuances		6,799,978			86.48				588,072				576,196
2020 Stock incentive plans, net of forfeitures		158,818							—				—
2020 Totals		7,133,925							$	602,877			$	591,001

 

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Dividends  The increase in dividends is attributable to increases in our common shares outstanding. The following is a summary of our dividend payments (in thousands, except per share amounts): 

		Three Months Ended
		March 31, 2020								March 31, 2019
		Per Share				Amount				Per Share				Amount
Common stock		$	0.8700			$	356,001			$	0.8700			$	344,760

 

Accumulated Other Comprehensive Income  The following is a summary of accumulated other comprehensive income (loss) for the periods presented (in thousands):

		March 31, 2020				December 31, 2019
Foreign currency translation		$	(962,982	)		$	(719,814	)
Derivative and financial instruments designated as hedges		866,769				607,657
Total accumulated other comprehensive loss		$	(96,213	)		$	(112,157	)

Our 2016 Long-Term Incentive Plan (“2016 Plan”) authorizes up to 10,000,000 shares of common stock to be issued at the discretion of the Compensation Committee of the Board of Directors. Our non-employee directors, officers and key employees are eligible to participate in the 2016 Plan. The 2016 Plan allows for the issuance of, among other things, stock options, stock appreciation rights, restricted stock, deferred stock units, performance units and dividend equivalent rights. Vesting periods for options, deferred stock units and restricted shares generally range from three to five years. Options expire ten years from the date of grant. Stock-based compensation expense totaled $7,083,000 and $7,529,000 for the three months ended March 31, 2020 and 2019, respectfully.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

		Three Months Ended March 31,
		2020				2019
Numerator for basic earnings per share - net income (loss) attributable to common stockholders		$	310,284			$	280,470
Adjustment for net income (loss) attributable to OP units		(1,388		)		46
Numerator for diluted earnings per share		$	308,896			$	280,516
Denominator for basic earnings per share - weighted average shares		410,306				391,474
Effect of dilutive securities:
Employee stock options		—				1
Non-vested restricted shares		702				868
Redeemable shares		1,396				1,096
Employee stock purchase program		16				13
Dilutive potential common shares		2,114				1,978
Denominator for diluted earnings per share - adjusted weighted average shares		412,420				393,452
Basic earnings per share		$	0.76			$	0.72
Diluted earnings per share		$	0.75			$	0.71

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Please see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for additional information. The three levels are defined below: 

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•Level 1 - Quoted prices in active markets for identical assets or liabilities. 

•Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted            prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market            data for substantially the full term of the assets or liabilities. 

•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value        of the assets or liabilities. 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. 

Mortgage Loans, Other Real Estate Loans and Non-real Estate Loans Receivable — The fair value of mortgage loans, other real estate loans and non-real estate loans receivable is generally estimated by using Level 2 and Level 3 inputs such as discounting the estimated future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.  

Cash and Cash Equivalents and Restricted Cash — The carrying amount approximates fair value. 

Equity Securities — Equity securities are recorded at their fair value based on Level 1 publicly available trading prices. 

Borrowings Under Primary Unsecured Credit Facility and Commercial Paper Program — The carrying amount of the primary unsecured credit facility and commercial paper program approximates fair value because the borrowings are interest rate adjustable. 

Senior Unsecured Notes — The fair value of the senior unsecured notes payable was estimated based on Level 1 publicly available trading prices. The carrying amount of the variable rate senior unsecured notes approximates fair value because they are interest rate adjustable. 

Secured Debt — The fair value of fixed rate secured debt is estimated using Level 2 inputs by discounting the estimated future cash flows using the current rates at which similar loans would be made with similar credit ratings and for the same remaining maturities. The carrying amount of variable rate secured debt approximates fair value because the borrowings are interest rate adjustable. 

Foreign Currency Forward Contracts, Interest Rate Swaps and Cross Currency Swaps — Foreign currency forward contracts, interest rate swaps and cross currency swaps are recorded in other assets or other liabilities on the balance sheet at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivatives are Level 2).

Redeemable OP Unitholder Interests — Our redeemable OP unitholder interests are recorded on the balance sheet at fair value using Level 2 inputs unless the fair value is below the initial amount in which case the redeemable OP unitholder interests are recorded at the initial amount adjusted for distribution to the unitholders and income or loss attributable to the unitholders. The fair value is measured using the closing price of our common stock, as units may be redeemed at the election of the holder for cash or, at our option, one share of our common stock per unit, subject to adjustment in certain circumstances. 

The carrying amounts and estimated fair values of our financial instruments are as follows (in thousands):

		March 31, 2020								December 31, 2019
		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Financial assets:
Mortgage loans receivable		$	96,480			$	96,702			$	145,686			$	150,217
Other real estate loans receivable		124,748				123,101				124,696				128,512
Equity securities		8,034				8,034				15,685				15,685
Cash and cash equivalents		303,423				303,423				284,917				284,917
Restricted cash		89,643				89,643				100,849				100,849
Non-real estate loans receivable		373,179				418,221				336,854				379,239
Foreign currency forward contracts, interest rate swaps and cross currency swaps		210,837				210,837				18,554				18,554
Financial liabilities:
Borrowings under unsecured credit facility and commercial paper program		$	844,985			$	844,985			$	1,587,597			$	1,587,597
Senior unsecured notes		10,218,853				10,565,256				10,336,513				11,400,571
Secured debt		2,901,232				3,032,376				2,990,962				3,041,893
Foreign currency forward contracts, interest rate swaps and cross currency swaps		87,557				87,557				53,601				53,601
Redeemable OP unitholder interests		$	94,048			$	81,717			$	121,440			$	121,440

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Items Measured at Fair Value on a Recurring Basis 

The market approach is utilized to measure fair value for our financial assets and liabilities reported at fair value on a recurring basis. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The following summarizes items measured at fair value on a recurring basis (in thousands):

		Fair Value Measurements as of March 31, 2020
		Total				Level 1				Level 2				Level 3
Equity securities		$	8,034			$	8,034			$	—			$	—
Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) (1)		123,280				—				123,280				—
Totals		$	131,314			$	8,034			$	123,280			$	—

⁽¹⁾ Please see Note 12 for additional information.

Items Measured at Fair Value on a Nonrecurring Basis 

We invest in seniors housing and health care real estate. We evaluate our business and make resource allocations on our three operating segments: Seniors Housing Operating, Triple-net and Outpatient Medical. Our Seniors Housing Operating properties include seniors apartments, assisted living, independent living/continuing care retirement communities, independent supportive living communities (Canada), care homes with and without nursing (U.K.) and combinations thereof that are owned and/or operated through RIDEA structures (see Note 19). Our Triple-net properties include the property types described above as well as long-term/post-acute care facilities. Under the 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 Outpatient Medical properties are typically leased to multiple tenants and generally require a certain level of property management by us.

We evaluate performance based upon consolidated NOI of each segment. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. We believe NOI provides investors relevant and useful information as 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 certain 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 NOI.

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, 2019). 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.

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Summary information for the reportable segments (which excludes unconsolidated entities) is as follows (in thousands): 

Three Months Ended March 31, 2020:		Seniors Housing Operating				Triple-net				Outpatient Medical				Non-segment / Corporate				Total
Resident fees and services		$	849,972			$	—			$	—			$	—			$	849,972
Rental income		—				191,385			(1)	198,575				—				389,960
Interest income		104				14,671				466				—				15,241
Other income		1,052				1,673				288				416				3,429
Total revenues		851,128				207,729				199,329				416				1,258,602
Property operating expenses		607,871				13,302				60,608				—				681,781
Consolidated net operating income		243,257				194,427				138,721				416				576,821
Depreciation and amortization		146,774				57,694				70,333				—				274,801
Interest expense		16,434				2,852				4,808				117,913				142,007
General and administrative expenses		—				—				—				35,481				35,481
Loss (gain) on derivatives and financial instruments, net		—				7,651				—				—				7,651
Provision for loan losses		—				7,072				—				—				7,072
Impairment of assets		3,495				24,332				—				—				27,827
Other expenses		2,989				513				1,007				1,783				6,292
Income (loss) from continuing operations before income taxes and other items		73,565				94,313				62,573				(154,761		)		75,690
Income tax (expense) benefit		—				—				—				(5,442		)		(5,442		)
Income (loss) from unconsolidated entities		(11,024		)		5,796				1,536				—				(3,692		)
Gain (loss) on real estate dispositions, net		(149		)		49,637				213,336				—				262,824
Income (loss) from continuing operations		62,392				149,746				277,445				(160,203		)		329,380
Net income (loss)		$	62,392			$	149,746			$	277,445			$	(160,203	)		$	329,380
Total assets		$	15,691,090			$	9,200,458			$	7,722,679			$	308,801			$	32,923,028

⁽¹⁾ During the three months ended March 31, 2020, we wrote off straight-line rent receivables of $32,268,000 recorded in rental income in conjunction with an amended lease.

Three Months Ended March 31, 2019:		Seniors Housing Operating				Triple-net				Outpatient Medical				Non-segment / Corporate				Total
Resident fees and services		$	868,285			$	—			$	—			$	—			$	868,285
Rental income		—				232,032				149,052				—				381,084
Interest income		—				14,946				173				—				15,119
Other income		4,101				1,263				236				2,157				7,757
Total revenues		872,386				248,241				149,461				2,157				1,272,245
Property operating expenses		607,686				14,955				48,166				—				670,807
Consolidated net operating income		264,700				233,286				101,295				2,157				601,438
Depreciation and amortization		131,575				61,348				51,009				—				243,932
Interest expense		18,251				3,440				3,348				120,193				145,232
General and administrative expenses		—				—				—				35,282				35,282
Loss (gain) on derivatives and financial instruments, net		—				(2,487		)		—				—				(2,487		)
Loss (gain) on extinguishment of debt, net		—				—				—				15,719				15,719
Provision for loan losses		—				18,690				—				—				18,690
Other expenses		2,946				3,029				754				2,027				8,756
Income (loss) from continuing operations before income taxes and other items		111,928				149,266				46,184				(171,064		)		136,314
Income tax (expense) benefit		—				—				—				(2,222		)		(2,222		)
Income (loss) from unconsolidated entities		(16,580		)		5,658				1,723				—				(9,199		)
Gain (loss) on real estate dispositions, net		(160		)		167,574				(5		)		—				167,409
Income (loss) from continuing operations		95,188				322,498				47,902				(173,286		)		292,302
Net income (loss)		$	95,188			$	322,498			$	47,902			$	(173,286	)		$	292,302

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Our portfolio of properties and other investments are located in the United States, the United Kingdom and Canada. Revenues and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for the periods presented (dollars in thousands): 

		Three Months Ended
		March 31, 2020							March 31, 2019
Revenues:		Amount(1)				%			Amount				%
United States		$	1,027,781			81.6	%		$	1,043,667			82.1	%
United Kingdom		117,882				9.4	%		112,418				8.8	%
Canada		112,939				9.0	%		116,160				9.1	%
Total		$	1,258,602			100.0	%		$	1,272,245			100.0	%
		As of
		March 31, 2020							December 31, 2019
Assets:		Amount				%			Amount				%
United States		$	27,431,135			83.3	%		$	27,513,911			82.4	%
United Kingdom		3,216,727				9.8	%		3,405,388				10.2	%
Canada		2,275,166				6.9	%		2,461,452				7.4	%
Total		$	32,923,028			100.0	%		$	33,380,751			100.0	%

⁽¹⁾ The United States, United Kingdom and Canada represent 77%, 10% and 13%, respectively, of our resident fees and services revenue stream for the three months ended March 31, 2020.

We elected to be taxed as a REIT commencing with our first taxable year. To qualify as a REIT for federal income tax purposes, at least 90% of taxable income (excluding 100% of net capital gains) must be distributed to stockholders. REITs that do not distribute a certain amount of taxable income in the current year are also subject to a 4% federal excise tax. The main differences between undistributed net income for federal income tax purposes and financial statement purposes are the recognition of straight-line rent for reporting purposes, basis differences in acquisitions, recording of impairments, differing useful lives and depreciation and amortization methods for real property and the provision for loan losses for reporting purposes versus bad debt expense for tax purposes. 

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), for taxable years beginning after July 30, 2008, a REIT may lease “qualified health care properties” on an arm’s-length basis to a taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such TRS by a person who qualifies as an “eligible independent contractor”. Generally, the rent received from the TRS will meet the related party rent exception and will be treated as “rents from real property”. A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. We have entered into various joint ventures that were structured under RIDEA. Resident level rents and related operating expenses for these facilities are reported in the unaudited consolidated financial statements and are subject to federal and state income taxes as the operations of such facilities are included in TRS entities. Certain net operating loss carryforwards could be utilized to offset taxable income in future years. 

Income taxes reflected in the financial statements primarily represents U.S. federal, state and local income taxes as well as non-U.S. income based or withholding taxes on certain investments located in jurisdictions outside the U.S. The provision for income taxes for the three months ended March 31, 2020 and 2019, was primarily due to operating income or losses, offset by certain discrete items at our TRS entities. In 2014, we established certain wholly-owned direct and indirect subsidiaries in Luxembourg and Jersey and transferred interests in certain foreign investments into this holding company structure. The structure includes a property holding company that is tax resident in the United Kingdom. No material adverse current tax consequences in Luxembourg, Jersey or the United Kingdom resulted from the creation of this holding company structure and most of the subsidiary entities in the structure are treated as disregarded entities of the company for U.S. federal income tax purposes. Subsequent to 2014 we transferred certain subsidiaries to the United Kingdom, while some wholly-owned direct and indirect subsidiaries remain in Luxembourg and Jersey. The company reflects current and deferred tax liabilities for any such withholding taxes incurred from this holding company structure in its consolidated financial statements. Generally, given current statutes of limitations, we are subject to audit by the foreign, federal, state and local taxing authorities under applicable local laws.

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On March 27, 2020, the President of the United States signed the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) into law. The CARES Act, among its economic stimulus provisions, includes a number of tax provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carrybacks, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Certain of these provisions may impact the provision for taxes in our consolidated financial statements, including in particular the provision allowing for the carryback of net operating losses which would be applicable to our TRSs. We have made a reasonable estimate of the tax impact to us of the CARES Act in our consolidated financial statements, and while we do not believe that there will be further material impacts to the consolidated financial statements related to the CARES Act tax provisions, we will continue to evaluate the impact of the CARES Act and any guidance provided by the U.S. Treasury and the IRS on our consolidated financial statements. It is possible our estimates could differ materially from the actual tax impact to us of the CARES Act.

We have entered into joint ventures to own certain seniors housing and outpatient medical assets which are deemed to be VIEs. We have concluded that we are the primary beneficiary of these VIEs based on a combination of operational control of the joint venture and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Except for capital contributions associated with the initial joint venture formations, the joint ventures have been and are expected to be funded from the ongoing operations of the underlying properties. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs in the aggregate (in thousands):

		March 31, 2020				December 31, 2019
Assets:
Net real estate investments		$	956,254			$	960,093
Cash and cash equivalents		23,539				27,522
Receivables and other assets		16,461				14,586
Total assets (1)		$	996,254			$	1,002,201
Liabilities and equity:
Secured debt		$	458,191			$	460,117
Lease liabilities		1,326				1,326
Accrued expenses and other liabilities		20,569				22,215
Total equity		516,168				518,543
Total liabilities and equity		$	996,254			$	1,002,201

⁽¹⁾ Note that assets of the consolidated VIEs can only be used to settle obligations relating to such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs.

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•	During the three months ended March 31, 2020, we extinguished $16,040,000 of secured debt at a blended average interest rate of 4.51%.

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During the three months ended March 31, 2020, we sold 2,039,000 shares of common stock under our ATM and DRIP programs, via both cash settle and forward sale agreements, generating gross proceeds of approximately $171,183,000. The sale of these shares and settlement of previously outstanding forward sales resulted in gross proceeds of approximately $602,877,000 which were used to reduce borrowings under our unsecured revolving credit facility.

•	On April 1, 2020, we closed on a previously announced $1.0 billion two-year unsecured term loan. The term loan carries a 60-day delayed draw and bears interest at a rate of 1-month LIBOR + 1.20%, based on our credit rating.

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•	the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

•	the impact of the estimates and assumptions on financial condition or operating performance is material.

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Risks Related to Revenue: Our revenues and our operators’ revenues are dependent on occupancy. Our Seniors Housing Operating portfolio has experienced a decline in spot occupancy from 85.8% at February 28, 2020 to 84.8% at April 3, 2020, and a further decline to 82.7% as of May 1, 2020. In addition to the impact of increases in mortality rates on occupancy of our Seniors Housing Operating facilities, the ongoing COVID-19 pandemic has prevented prospective occupants and their families from visiting our facilities and limited the ability of new occupants to move into our facilities due to heightened move-in criteria and screening. Although the ongoing impact of the pandemic on occupancy remain uncertain, occupancy of our Seniors Housing Operating and Triple-net properties could further decrease. Such a decrease could affect the net operating income of our Seniors Housing Operating properties and the ability of our Triple-net operators to make contractual payments to us. In addition, rental income in our Outpatient Medical segment may decrease if our tenants do not renew leases or do not make timely or full lease payments as a result of temporary medical practice closures or decreases in revenue due to government imposed restrictions on elective medical procedures or decisions by patients to delay treatments. As a result of the financial impact of the COVID-19 pandemic on our operators and tenants, we may offer certain tenants concessions such as rent deferrals or rent abatements across Triple-net and Outpatient Medical segments.

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Risks Related to Operator and Tenant Financial Condition: In addition to the risk of decreased revenue from tenant and operator payments, the impact of the COVID-19 pandemic creates a heightened risk of tenant, operator, borrower, manager or other obligor bankruptcy or insolvency due to factors such as decreased occupancy, medical practice disruptions resulting from stay-at-home orders, increased health and safety and labor expenses or litigation resulting from developments related to the COVID-19 pandemic. Although our operating lease agreements provide us with the right to evict a tenant, demand immediate payment of rent and exercise other remedies, and our loans provide us with the right to terminate any funding obligation, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant, operator, borrower, manager or other obligor in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive

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Risks Related to Operations: Across all of our properties, we and our operators have incurred increased operational costs as a result of the introduction of public health measures and other regulations affecting our properties and our operations, as well additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure PPE and supplies on behalf of our operators. Such operational costs may increase in the future based on the duration and severity of the pandemic or the introduction of additional public health regulations. Operators and tenants are also subject to risks arising from the unique pressures on seniors housing and medical practice employees during the COVID-19 pandemic. As a result of difficult conditions and stresses related to the COVID-19 pandemic, employee morale and productivity may suffer and additional pay, such as hazard pay, may not be sufficient to retain key operator and tenant employees. In addition, our operations or those of our operators or tenants may be adversely impacted if a significant number of our employees or those of our operators or tenants contract COVID-19. Although we continue to undertake extensive efforts to ensure the safety of our properties, employees and residents and to provide operator support in this regard, the impact of the COVID-19 pandemic on our facilities could result in additional operational costs and reputational and litigation risk to us and our operators. As a result of the COVID-19 pandemic, operator and tenant cost of insurance is expected to increase and such insurance may not cover certain claims related to COVID-19. Our exposure to COVID-19 related litigation risk may be increased if the operators or tenants of the relevant facilities are subject to bankruptcy or insolvency. In addition, we are facing increased operational challenges and costs resulting from logistical challenges such as supply chain interruptions, business closures and restrictions on the movement of people. In response to stay-at-home orders and to support the health and well-being of our employees, the large majority of our employees are currently working remotely. The effects of such work arrangements for an extended period of time could impact employee productivity and morale and introduce additional operational risk, including but not limited to cybersecurity risks.

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Risks Related to Property Acquisitions and Dispositions: As a result of uncertainty regarding the length and severity of the COVID-19 pandemic and the impact of the pandemic on our business and related industries, our investments in and acquisitions of senior housing and health care properties, as well as our ability to transition or sell properties with profitable results, may be limited. During April 2020, a previously announced disposition of a prominent portfolio of 11 Seniors Housing Operating properties was not consummated as a result of the uncertainty of COVID-19 pandemic on our business and industry. We have a significant development portfolio and as of March 31, 2020, have not experience significant delays or disruptions, but may in the future. Such disruptions to acquisition, disposition and development activity may negatively impact our long-term competitive position.

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Risks Related to Liquidity: The COVID-19 pandemic and related public health measures implemented by governments worldwide has had severe global macroeconomic impacts and has resulted in significant financial market volatility. An extended period of volatility or a downturn in the financial markets could result in increased cost of capital. In addition, in order to maintain our REIT status, we may be unable to participate in any government stimulus program or lending facility that would limit our ability to pay dividends. On April 1, 2020, in response to uncertain financial market conditions arising from the pandemic, we undertook steps to strengthen our balance sheet and to enhance our liquidity by entering into a $1.0 billion two-year unsecured term loan. After consideration of this unsecured term loan, we have total near-term available liquidity of approximately $3.5 billion. If our access to capital is restricted or our borrowing costs increase as a result of developments in financial markets relating to the pandemic, our operations and financial condition could be adversely impacted. In addition, a prolonged period of decreased revenue and limited acquisition and disposition activity operations could adversely affect our financial condition and long-term growth prospects and there can also be no assurance that we will not face credit rating downgrades. Future downgrades could adversely affect our cost of capital, liquidity, competitive position and access to capital markets.

•	Risks Related to Dividends The impacts of COVID-19 pandemic on our results of operations, liquidity and financial condition could adversely affect our ability to pay dividend distributions at expected levels or at all. All distributions are

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