Ventas Inc

Previous wording

Forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made. We urge you to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made below and in our filings with the Securities and Exchange Commission, such as in the sections titled “Cautionary Statements — Summary Risk Factors,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made. We urge you to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made below and in our filings with the Securities and Exchange Commission, such as in the sections titled “Cautionary Statements — Summary Risk Factors,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 and our subsequent Quarterly Reports on Form 10-Q.

Previous wording

Certain factors that could affect our future results and our ability to achieve our stated goals include, but are not limited to: (a) our ability to achieve the anticipated benefits and synergies from, and effectively integrate, our completed or anticipated acquisitions and investments of properties, including our ownership of the properties included in our equitized loan portfolio; (b) our exposure and the exposure of our tenants, managers and borrowers to complex healthcare and other regulation, including evolving laws and regulations regarding data privacy and cybersecurity and environmental matters, and the challenges and expense associated with complying with such regulation; (c) the potential for significant general and commercial claims, legal actions, regulatory proceedings or enforcement actions that could subject us or our tenants, managers or borrowers to increased operating costs, uninsured liabilities, fines or significant operational limitations, including the loss or suspension of or moratoriums on accreditations, licenses or certificates of need, suspension of or nonpayment for new admissions, denial of reimbursement, suspension, decertification or exclusion from federal, state or foreign healthcare programs or the closure of facilities or communities; (d) the impact of market and general economic conditions on us, our tenants, managers and borrowers and in areas in which our properties are geographically concentrated, including macroeconomic trends and financial market events, such as bank failures and other events affecting financial institutions, market volatility, increases in inflation, changes in or elevated interest and exchange rates, tightening of lending standards and reduced availability of credit or capital, geopolitical conditions, supply chain pressures, rising labor costs and historically low unemployment, events that affect consumer confidence, our occupancy rates and resident fee revenues, and the actual and perceived state of the real estate markets, labor markets and public and private capital markets; (e) our reliance and the reliance of our tenants, managers and borrowers on the financial, credit and capital markets and the risk that those markets may be disrupted or become constrained, including as a result of bank failures or concerns or rumors about such events, tightening of lending standards and reduced availability of credit or capital; (f) the secondary and tertiary effects of the COVID-19 pandemic on our business, financial condition and results of operations and the implementation and impact of regulations related to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and other stimulus legislation, including the risk that some or all of the CARES Act or other COVID-19 relief payments we or our tenants, managers or borrowers received could be recouped; (g) our ability, and the ability of our tenants, managers and borrowers, to navigate the trends impacting our or their businesses a…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain factors that could affect our future results and our ability to achieve our stated goals include, but are not limited to: (a) our ability to achieve the anticipated benefits and synergies from, and effectively integrate, our completed or anticipated acquisitions and investments; (b) our exposure and the exposure of our tenants, managers and borrowers to complex healthcare and other regulation, including evolving laws and regulations regarding data privacy and cybersecurity and environmental matters, and the challenges and expense associated with complying with such regulation; (c) the potential for significant general and commercial claims, legal actions, investigations, regulatory proceedings and enforcement actions that could subject us or our tenants, managers or borrowers to increased operating costs, uninsured liabilities, including fines and other penalties, reputational harm or significant operational limitations, including the loss or suspension of or moratoriums on accreditations, licenses or certificates of need, suspension of or nonpayment for new admissions, denial of reimbursement, suspension, decertification or exclusion from federal, state or foreign healthcare programs or the closure of facilities or communities; (d) the impact of market and general economic conditions on us, our tenants, managers and borrowers and in areas in which our properties are geographically concentrated, including macroeconomic trends and financial market events, such as bank failures and other events affecting financial institutions, market volatility, increases in inflation, changes in or elevated interest and exchange rates, tightening of lending standards and reduced availability of credit or capital, geopolitical conditions, supply chain pressures, rising labor costs and historically low unemployment, events that affect consumer confidence, our occupancy rates and resident fee revenues, and the actual and perceived state of the real estate markets, labor markets and public and private capital markets; (e) our reliance and the reliance of our tenants, managers and borrowers on the financial, credit and capital markets and the risk that those markets may be disrupted or become constrained; (f) the implementation and impact of regulations related to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and other stimulus legislation, including the risk that some or all of the CARES Act or other COVID-19 relief payments we or our tenants, managers or borrowers received could be recouped; (g) our ability, and the ability of our tenants, managers and borrowers, to navigate the trends impacting our or their businesses and the industries in which we or they operate, and the financial condition or business prospect of our tenants, managers and borrowers; (h) the risk of bankruptcy, inability to obtain benefits from governmental programs, insolvency or financial deterioration of our tenants, managers, borrowers and other obligors whic…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Ventas, Inc., an S&P 500 company, is a real estate investment trust operating at the intersection of healthcare and real estate. We hold a portfolio that includes senior housing communities, outpatient medical buildings, research centers, hospitals and healthcare facilities located in North America and the United Kingdom. As of March 31, 2024, we owned or had investments in approximately 1,400 properties (including properties classified as held for sale and unconsolidated properties). Our company is headquartered in Chicago, Illinois with additional corporate offices in Louisville, Kentucky and New York, New York.

Current wording

Ventas, Inc., an S&P 500 company, is a real estate investment trust operating at the intersection of healthcare and real estate. We hold a portfolio that includes senior housing communities, outpatient medical buildings, research centers, hospitals and healthcare facilities located in North America and the United Kingdom. As of June 30, 2024, we owned or had investments in approximately 1,350 properties (including properties classified as held for sale and unconsolidated properties). Our company is headquartered in Chicago, Illinois with additional corporate offices in Louisville, Kentucky and New York, New York.

Previous wording

The following table summarizes information for our consolidated reportable business segments and non-segment assets for the three months ended March 31, 2024 (dollars in thousands):

Current wording

The following table summarizes information for our consolidated reportable business segments and non-segment assets for the six months ended June 30, 2024 (dollars in thousands):

Previous wording

We expect senior housing to benefit from strong supply/demand fundamentals, including robust projected demand growth combined with low projected supply growth. Senior housing is expected to benefit from a large and growing aging demographic in the United States, with the 80+ population anticipated to grow by more than 24% through 2029. United States senior housing construction starts are at their lowest point since 2010.

Current wording

Our operations have historically been and are expected to continue to be impacted by economic and market conditions. We expect senior housing to benefit from strong supply/demand fundamentals, including robust projected demand growth combined with low projected supply growth. Senior housing is expected to benefit from a large and growing aging demographic in the United States, with the 80+ population anticipated to grow by more than 24% through 2029. United States senior housing construction starts are at their lowest point since 2010.

Previous wording

•During the three months ended March 31, 2024, we acquired one senior housing community reported within our SHOP segment for $36.0 million.

Current wording

•During the six months ended June 30, 2024, we acquired 11 senior housing communities reported within our SHOP segment for an aggregate purchase price of $327.4 million.

Previous wording

•During the three months ended March 31, 2024, we sold seven senior housing communities, eight outpatient medical buildings (one of which was vacant) and one triple-net leased properties for aggregate consideration of $36.0 million and recognized a gain on the sale of these assets of $0.3 million in our Consolidated Statements of Income.

Current wording

•During the six months ended June 30, 2024, we sold 15 senior housing communities, 10 outpatient medical buildings (one of which was vacant) and 23 triple-net leased properties for aggregate consideration of $234.1 million and recognized a gain on the sale of these assets of $50.0 million in our Consolidated Statements of Income.

Previous wording

•As of March 31, 2024, we had $3.4 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program.

Current wording

•As of June 30, 2024, we had $3.3 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program.

Previous wording

•In February 2024, Ventas Canada Finance Limited (“Ventas Canada”) issued and sold C$650.0 million aggregate principal amount of 5.10% Senior Notes, Series J due 2029 in a private placement. The proceeds were primarily used to repay the C$500.0 million unsecured term loan facility due 2025.

Current wording

•In February 2024, Ventas Canada Finance Limited (“Ventas Canada”) issued and sold $475.3 million (C$650.0 million) aggregate principal amount of 5.10% Senior Notes, Series J due 2029 in a private placement. The proceeds were primarily used to repay a $367.9 million (C$500.0 million) unsecured term loan facility due 2025.

Previous wording

•In April and May 2024, we repaid $854.0 million senior notes at maturity consisting of $400.0 million 3.50% Senior Notes, $400.0 million 3.75% Senior Notes and $54.0 million (C$73.0 million) 2.80% Senior Notes primarily with cash on hand and the remainder through our commercial paper program.

Current wording

•In April and May 2024, we repaid $800.0 million senior notes consisting of $400.0 million aggregate principal amount of 3.50% Senior Notes due 2024 and $400.0 million aggregate principal amount of 3.75% Senior Notes due 2024 at maturity primarily with cash on hand and through our commercial paper program.

Previous wording

(2)Results exclude ten senior housing communities which are included in the SHOP segment.

Current wording

(2)Results exclude 10 senior housing communities which are included in our SHOP segment.

Previous wording

(3)Ratios are based on total revenues (including amounts related to assets classified as held for sale) for each period presented.

Current wording

(4)Ratios are based on total revenues (including amounts related to assets classified as held for sale) for each period presented.

Previous wording

Any failure, inability or unwillingness by our tenants to satisfy their obligations under our triple-net leases could have a material adverse effect on us. Also, if our tenants are not able or willing to renew our triple-net leases upon expiration, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic terms, if at all. Although our lease expirations are staggered, the non-renewal of some or all of our triple-net leases that expire in any given year could have a material adverse effect on us. During the three months ended March 31, 2024, we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period.

Current wording

Any failure, inability or unwillingness by our tenants to satisfy their obligations under our triple-net leases could have a material adverse effect on us. Also, if our tenants are not able or willing to renew our triple-net leases upon expiration, we may be unable to reposition the applicable properties on a timely basis or on the same or better economic terms, if at all. Although our lease expirations are staggered, the non-renewal of some or all of our triple-net leases that expire in any given year could have a material adverse effect on us. During the six months ended June 30, 2024, we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period.

Previous wording

In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are evaluating the impact of adopting ASU 2023-07 on our Consolidated Financial Statements.

Current wording

In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are evaluating the impact of adopting ASU 2023-07 and expect to have additional disclosures in our Form 10-K for the year ended December 31, 2024.

Previous wording

As of March 31, 2024, we operated through three reportable business segments: senior housing operating portfolio, outpatient medical and research portfolio and triple-net leased properties. In our SHOP segment, we invest in senior housing communities throughout the United States and Canada and engage operators to operate those communities. In our outpatient medical and research portfolio segment, we primarily acquire, own, develop, lease and manage outpatient medical buildings and research centers throughout the United States. In our triple-net leased properties segment, we invest in and own senior housing communities, skilled nursing facilities (“SNFs”), long-term acute care facilities (“LTACs”), freestanding inpatient rehabilitation facilities (“IRFs”) and other healthcare facilities throughout the United States and the United Kingdom and lease those properties to tenants under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Information provided for “non-segment” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable.

Current wording

As of June 30, 2024, we operated through three reportable business segments: senior housing operating portfolio, outpatient medical and research portfolio and triple-net leased properties. In our SHOP segment, we invest in senior housing communities throughout the United States and Canada and engage operators to operate those communities. In our outpatient medical and research portfolio segment, we primarily acquire, own, develop, lease and manage outpatient medical buildings and research centers throughout the United States. In our triple-net leased properties segment, we invest in and own senior housing communities, skilled nursing facilities (“SNFs”), long-term acute care facilities (“LTACs”), freestanding inpatient rehabilitation facilities (“IRFs”) and other healthcare facilities throughout the United States and the United Kingdom and lease those properties to tenants under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Information provided for “non-segment” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable as well as investments in unconsolidated entities including VIM.

Previous wording

The NOI increase in our SHOP segment for the three months ended March 31, 2024 compared to the same period in 2023 was driven by positive trends in occupancy and revenue per occupied room in 2024, properties acquired in connection with our equitization of the Santerre Mezzanine Loan and communities that converted business model from our triple-net lease properties segment to our SHOP segment. The revenue increase is partially offset by higher operating expenses, driven by an increase in occupancy and macro inflationary impacts in 2024.

Current wording

The NOI increase in our SHOP segment for the three months ended June 30, 2024 compared to the same period in 2023 was primarily driven by positive trends in occupancy and revenue per occupied room in 2024, the addition of communities acquired in our SHOP segment and conversions from our triple-net leased properties to our SHOP segment. The revenue increase is partially offset by higher operating expenses, driven by the additions to our SHOP segment and an increase in occupancy in our same-store portfolio.

Previous wording

The NOI increase in our same-store SHOP segment for the three months ended March 31, 2024 compared to the same period in 2023 was driven by positive trends in occupancy and revenue per occupied room in 2024, partially offset by higher operating expenses, driven by an increase in occupancy and macro inflationary impacts in 2024.

Current wording

The NOI increase in our same-store SHOP segment for the three months ended June 30, 2024 compared to the same period in 2023 was primarily driven by positive trends in occupancy and revenue per occupied room in 2024, partially offset by higher operating expenses driven by an increase in occupancy in 2024.

Previous wording

The NOI increase in outpatient medical and research portfolio reportable business segment for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to properties acquired in connection with our equitization of the Santerre Mezzanine Loan, leasing activity and high tenant retention, partially offset by asset dispositions and higher operating costs.

Current wording

The NOI increase in our outpatient medical and research portfolio segment for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to properties acquired, leasing activity and improved parking revenues, partially offset by asset dispositions.

Previous wording

The following table compares results of operations for our 341 same-store outpatient medical and research portfolio (dollars in thousands):

Current wording

The following table compares results of operations for our 337 same-store outpatient medical and research portfolio (dollars in thousands):

Previous wording

The NOI increase in our same-store outpatient medical and research portfolio segment for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by leasing activity and high tenant retention, partially offset by higher operating costs

Current wording

The NOI increase in our same-store outpatient medical and research portfolio segment for the three months ended June 30, 2024 compared to the same period in 2023 was primarily driven by leasing activity, high tenant retention and improved parking revenues, partially offset by higher operating expenses.

Previous wording

Occupancy rates may affect the profitability of our tenants’ operations. For senior housing communities and post-acute properties in our triple-net leased properties segment, occupancy generally reflects average operator-reported unit and bed occupancy, respectively, for the reporting period. Because triple-net financials are delivered to us following the reporting period, occupancy is reported in arrears. The following table sets forth average continuing occupancy rates for the fourth quarter of 2023 and 2022 related to the triple-net leased properties we owned at March 31, 2024 and 2023, respectively. The table excludes non-stabilized properties, properties owned through investments in unconsolidated real estate entities, certain properties for which we do not receive occupancy information and properties acquired or properties that transitioned operators for which we do not have a full quarter of occupancy results.

Current wording

Occupancy rates may affect the profitability of our tenants’ operations. For senior housing communities and post-acute properties in our triple-net leased properties segment, occupancy generally reflects average operator-reported unit and bed occupancy, respectively, for the reporting period. Because triple-net financials are delivered to us following the reporting period, occupancy is reported in arrears. The following table sets forth average continuing occupancy rates for the first quarter of 2024 and 2023 related to the triple-net leased properties we owned at June 30, 2024 and 2023, respectively. The table excludes non-stabilized properties, properties owned through investments in unconsolidated real estate entities, certain properties for which we do not receive occupancy information and properties acquired or properties that transitioned operators for which we do not have a full quarter of occupancy results.

Previous wording

The following table compares results of operations for our 275 same-store triple-net leased properties (dollars in thousands):

Current wording

The following table compares results of operations for our 266 same-store triple-net leased properties (dollars in thousands):

Previous wording

Information provided for non-segment NOI includes management fees and promote revenues, net of expenses, related to our third-party institutional capital management business, income from loans and investments and various corporate-level expenses not directly attributable to any of our three reportable business segments. The $12.2 million decrease in non-segment NOI for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to the conversion of the outstanding principal amount of the Santerre Mezzanine Loan to equity in May 2023.

Current wording

Non-segment NOI includes management fees and promote revenues, net of expenses, related to our third-party institutional capital management business, income from loans and investments and various corporate-level expenses not directly attributable to any of our three reportable business segments. The $5.1 million decrease in non-segment NOI for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to the conversion of the outstanding principal amount of a loan to equity in May 2023.

Previous wording

The $5.0 million increase in interest and other income for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to interest income earned on cash invested in short-term money market funds.

Current wording

The $3.8 million increase in interest and other income for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to interest income earned on cash invested in short-term money market funds.

Previous wording

The $18.1 million increase in depreciation and amortization expense for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to a $26.3 million increase in depreciation and amortization related to our ownership of additional properties received in connection with our equitization of the Santerre Mezzanine Loan in May 2023, partially offset by a $4.6 million decrease in amortization of lease intangibles and a $3.2 million decrease in impairments.

Current wording

The $35.2 million increase in depreciation and amortization expense for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to a $32.3 million increase in impairments recognized in 2024 primarily related to properties that were classified as held for sale or sold and a $6.7 million increase in depreciation and amortization related to our ownership of additional properties, partially offset by a decrease in depreciation and amortization related to properties sold after June 30, 2023.

Previous wording

The $3.9 million increase in general, administrative and professional fees for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to inflationary increases.

Current wording

The $3.3 million increase in general, administrative and professional fees for the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to lower turnover, increased staffing and inflationary increases.

Previous wording

Allowance on Loans Receivable and Investments

Current wording

Allowance on loans receivable and investments, net and Gain on foreclosure of real estate

Previous wording

The $3.0 million and $2.8 million income tax benefit for the three months ended March 31, 2024 and 2023, respectively, was primarily due to losses in certain of our TRS entities.

Current wording

The $7.8 million income tax expense for the three months ended June 30, 2024 is primarily due to the enactment of Bill C-59 in Canada, which limits the amount of interest expense we can deduct with respect to our Canadian entities. Bill C-59 is retrospectively applied to October 1, 2023 and the cumulative effect tax of such interest limitation was recognized in the current quarter. The impact of the interest limitation was partially offset by reversal of valuation allowances recorded against the net deferred tax assets of certain of our TRS entities and losses in certain of our TRS entities. The $9.8 million income tax benefit for the three months ended June 30, 2023 was primarily due to losses in certain of our TRS entities as well as an $8.0 million benefit from internal restructurings of our U.S. TRS entities.

Previous wording

The NOI increase in our triple-net leased properties for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by properties acquired in connection with our equitization of the Santerre Mezzanine Loan and contractual rent escalators, partially offset by rental income from communities that converted business model to our senior housing operating portfolio and additional rental income received in 2023.

Current wording

The NOI increase in our triple-net leased properties for the six months ended June 30, 2024 compared to the same period in 2023 was primarily driven by acquisitions and contractual rent escalators, partially offset by rental income from communities that converted to our SHOP segment and additional rental income received in 2023.

Previous wording

The NOI decrease in our same-store triple-net leased portfolio for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by additional rental income received in 2023 partially offset by contractual rent escalators in 2024.

Current wording

The NOI increase in our same-store triple-net leased properties segment for the six months ended June 30, 2024 compared to the same period in 2023 was primarily driven by contractual rent escalators, partially offset by additional rental income received in 2023.

Previous wording

The $21.9 million increase in interest expense, net of capitalized interest, for the three months ended March 31, 2024 compared to the same period in 2023 was due to an increase of $12.6 million due to higher debt balances and an increase of $8.7 million due to higher effective interest rates. Our weighted average debt outstanding was $13.6 billion and $12.4 billion for the three months ended March 31, 2024 and 2023, respectively. Our weighted average effective interest rate was 4.32% and 4.04% for the three months ended March 31, 2024 and 2023, respectively. Capitalized interest was $2.7 million for both the three months ended March 31, 2024 and 2023.

Current wording

The $27.9 million increase in interest expense, net of capitalized interest, for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to an increase of $16.9 million due to higher effective interest rates and an increase of $14.9 million due to higher debt balances. Our weighted average debt outstanding was $13.4 billion and $12.7 billion for the six months ended June 30, 2024 and 2023, respectively. Our weighted average effective interest rate was 4.37% and 4.11% for the six months ended June 30, 2024 and 2023, respectively. Capitalized interest for the six months ended June 30, 2024 and 2023 was $6.6 million and $5.6 million, respectively.

Previous wording

Transaction, transition and restructuring costs include transition and integration expenses incurred by properties that have undergone operator or business model transitions; costs and expenses relating to mergers, acquisitions, investments, leases, management agreements and similar arrangements, strategic transactions, such as spin-offs, joint ventures, partnerships and minority investments, and other transactions; and costs and expenses related to organizational or other restructuring activities. The $3.3 million increase in transaction, transition and restructuring costs for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to integration costs for properties acquired and transition costs in connection with properties that have undergone operator or business model transitions.

Current wording

Transaction, transition and restructuring costs include transition and integration expenses incurred by properties that have undergone operator or business model transitions; costs and expenses relating to mergers, acquisitions, investments, leases, management agreements and similar arrangements, strategic transactions, such as spin-offs, joint ventures, partnerships and minority investments, and other transactions; and costs and expenses related to organizational or other restructuring activities. The $3.1 million increase in transaction, transition and restructuring costs for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to integration costs for properties acquired and transition costs in connection with properties that have undergone operator or business model transitions.

Previous wording

Shareholder relations matters of $15.7 million for the three months ended March 31, 2024 relates to proxy advisory costs related to our response to a proxy campaign associated with the Company’s 2024 annual meeting. There were no such costs incurred for the three months ended March 31, 2023.

Current wording

Shareholder relations matters for the six months ended June 30, 2024 relates to proxy advisory costs related to our response to a proxy campaign associated with the Company’s 2024 annual meeting. There were no such costs incurred for the six months ended June 30, 2023.

Previous wording

Other income (expense) includes the changes in fair value of stock warrants, net expenses or recoveries related to materially disruptive events and other expenses or income. The $9.1 million change in other income (expense) for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to an increase of $8.3 million in unrealized gain on stock warrants received in connection with the Brookdale Senior Living lease modification in the third quarter of 2020. For the three months ended March 31, 2024 and 2023, we recognized unrealized gains of $9.3 million and $1.0 million, respectively. As of March 31, 2024, the fair value of the stock warrants was $68.6 million, which was $40.5 million higher than the value at the grant date.

Current wording

Other (expense) income includes the changes in fair value of stock warrants, net expenses or recoveries related to significant disruptive events and other expenses or income. The $17.0 million change in other (expense) income for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to a $7.9 million change in the fair value of the remaining stock warrants received in connection with the Brookdale Senior Living lease modification in the third quarter of 2020 and a $8.0 million change in insurance reimbursements received, net of impairments recognized, for damages caused by significant disruptive events. For the six months ended June 30, 2024 and 2023, we recognized unrealized gains of $9.0 million and $16.8 million, respectively, relating to the change in fair value of the Brookdale stock warrants. As of June 30, 2024, the fair value of the stock warrants was $61.1 million, which was $33.0 million higher than the value at the grant date.

Previous wording

The $2.8 million increase in loss from unconsolidated entities for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to our share of higher net loss from our unconsolidated entities in 2024.

Current wording

The $35.7 million change in income (loss) from unconsolidated entities for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to a $33.5 million gain recognized upon the sale of approximately 24% of our 9.8% ownership interest in Ardent to a third-party investor in May 2023.

Previous wording

We use the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP) excluding gains (or losses) from sales of real estate property, including gain (or loss) on re-measurement of equity method investments and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. Adjustments for unconsolidated entities and noncontrolling interests will be calculated to reflect FFO on the same basis. We define Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction, transition, and restructuring costs and amortization of intangibles; (b) the impact of expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to our executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income and non-cash charges related to leases; (d) the financial impact of contingent consideration; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other items related to unconsolidated entities and noncontrolling interests; (g) net expenses or recoveries related to materially disruptive events; and (h) other items set forth in the Normalized FFO reconciliation included herein.

Current wording

We use the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP) excluding gains (or losses) from sales of real estate property, including gain (or loss) on re-measurement of equity method investments and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. Adjustments for unconsolidated entities and noncontrolling interests will be calculated to reflect FFO on the same basis. We define Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction, transition and restructuring costs; (b) amortization of other intangibles; (c) the impact of expenses related to asset impairment and valuation allowances; (d) the write-off of unamortized deferred financing fees or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of our debt; (e) the non-cash impact of income tax benefits or expenses; (f) the non-cash impact of changes to our executive equity compensation plan; (g) non-cash charges related to leases; (h) the financial impact of contingent consideration; (i) gains and losses on derivatives and changes in the fair value of financial instruments; (j) gains and losses on non-real estate dispositions and other normalizing items related to noncontrolling interests and unconsolidated entities; (k) net expenses or recoveries related to significant disruptive events; and (l) other items set forth in the Normalized FFO reconciliation included herein.

Previous wording

The following table summarizes our FFO and Normalized FFO for the three months ended March 31, 2024 and 2023 (dollars in thousands). Normalized FFO for the three months ended March 31, 2024 increased over the same period in 2023 due to increased net operating income from our properties led by our SHOP reportable business segment as a result of increased revenues driven by positive trends in occupancy and revenue per occupied room, partially offset by higher interest expense.

Current wording

The following table summarizes our FFO and Normalized FFO for the three and six months ended June 30, 2024 and 2023 (dollars in thousands). Normalized FFO for the six months ended June 30, 2024 increased over the same period in 2023 due to increased net operating income from our properties led by our SHOP reportable business segment as a result of increased revenues driven by positive trends in occupancy and revenue per occupied room, partially offset by higher interest expense.

Previous wording

(1) Includes adjustments for unusual items, including approximately $2.4 million primarily related to the settlement by one of our operators of class action litigation in our SHOP segment.

Current wording

(1) Includes adjustments for unusual items, including $0.3 million and $2.7 million for the three and six months ended June 30, 2024, respectively, primarily related to the settlement by one of our operators of class action litigation in our SHOP segment.

Previous wording

Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a materially disruptive redevelopment; (iv) for our outpatient medical and research portfolio and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased properties reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.

Current wording

Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by significant disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a significant disruptive redevelopment; (iv) for our outpatient medical and research portfolio and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased properties reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.

Previous wording

Our material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, and operating obligations which include ground lease obligations. During the three months ended March 31, 2024, our contractual obligations increased primarily due to the issuance of C$650.0 million aggregate principal amount of 5.10% Senior Notes, Series J due 2029, partially offset by the repayment of C$500.0 million unsecured term loan facility due 2025. See “Note 10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding our long-term debt obligations and operating obligations, respectively.

Current wording

Our material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, and operating obligations which include ground lease obligations. During the six months ended June 30, 2024, our material contractual obligations decreased primarily due to the repayment of $400.0 million aggregate principal amount of 3.50% Senior Notes due 2024, $400.0 million aggregate principal amount of 3.75% Senior Notes due 2024, $367.9 million (C$500.0 million) unsecured term loan facility due 2025 and $53.4 million (C$73.0 million) aggregate principal amount of 2.80% Senior Notes, Series E due 2024, partially offset by.the issuance of $500.0 million aggregate principal amount of 5.625% Senior Notes due 2034 and $475.3 million (C$650.0 million) aggregate principal amount of 5.10% Senior Notes, Series J due 2029. See “Note 10 – Senior Notes Payable and Other Debt” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding our long-term debt obligations and operating obligations, respectively.