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EX-32.2 - SECTION 906 CFO CERTIFICATION - VENTAS INCvtr-ex322_2016630.htm
EX-32.1 - SECTION 906 CEO CERTIFICATION - VENTAS INCvtr-ex321_2016630.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - VENTAS INCvtr-ex312_2016630.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - VENTAS INCvtr-ex311_2016630.htm
EX-12.1 - STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES - VENTAS INCvtr-ex121_2016630.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016
OR
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                        TO
Commission file number: 1-10989
 
Ventas, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
 
61-1055020
(I.R.S. Employer
Identification No.)
353 N. Clark Street, Suite 3300
Chicago, Illinois
(Address of Principal Executive Offices)
60654
(Zip Code)
(877) 483-6827
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer ¨
 
Non-accelerated filer ¨
 (Do not check if a
smaller reporting company)
 
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class of Common Stock:
 
Outstanding at July 27, 2016:
Common Stock, $0.25 par value
 
351,350,059



VENTAS, INC.
FORM 10-Q
INDEX

 
 
 
 
 
 
 
 
 
Page
 
 
 
 
 
 
Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015
 
 
 
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2016 and 2015
 
 
 
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015
 
 
 
Consolidated Statements of Equity for the Six Months Ended June 30, 2016 and the Year Ended December 31, 2015
 
 
 
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I—FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VENTAS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
 
June 30,
2016
 
December 31,
2015
Assets
 
 
 
Real estate investments:
 
 
 
Land and improvements
$
2,041,880

 
$
2,056,428

Buildings and improvements
20,272,554

 
20,309,599

Construction in progress
127,647

 
92,005

Acquired lease intangibles
1,332,173

 
1,344,422

 
23,774,254


23,802,454

Accumulated depreciation and amortization
(4,560,504
)
 
(4,177,234
)
Net real estate property
19,213,750

 
19,625,220

Secured loans receivable and investments, net
1,003,561

 
857,112

Investments in unconsolidated real estate entities
96,952

 
95,707

Net real estate investments
20,314,263

 
20,578,039

Cash and cash equivalents
57,322

 
53,023

Escrow deposits and restricted cash
65,626

 
77,896

Goodwill
1,043,479

 
1,047,497

Assets held for sale
195,271

 
93,060

Other assets
417,511

 
412,403

Total assets
$
22,093,472

 
$
22,261,918

Liabilities and equity
 
 
 
Liabilities:
 
 
 
Senior notes payable and other debt
$
10,901,131

 
$
11,206,996

Accrued interest
80,157

 
80,864

Accounts payable and other liabilities
735,287

 
779,380

Liabilities related to assets held for sale
88,967

 
34,340

Deferred income taxes
320,468

 
338,382

Total liabilities
12,126,010

 
12,439,962

Redeemable OP unitholder and noncontrolling interests
217,686

 
196,529

Commitments and contingencies

 

Equity:
 
 
 
Ventas stockholders’ equity:
 
 
 
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued

 

Common stock, $0.25 par value; 600,000 shares authorized, 341,055 and 334,386 shares issued at June 30, 2016 and December 31, 2015, respectively
85,246

 
83,579

Capital in excess of par value
11,961,951

 
11,602,838

Accumulated other comprehensive loss
(44,195
)
 
(7,565
)
Retained earnings (deficit)
(2,313,287
)
 
(2,111,958
)
Treasury stock, 0 and 44 shares at June 30, 2016 and December 31, 2015, respectively

 
(2,567
)
Total Ventas stockholders’ equity
9,689,715

 
9,564,327

Noncontrolling interest
60,061

 
61,100

Total equity
9,749,776

 
9,625,427

Total liabilities and equity
$
22,093,472

 
$
22,261,918

See accompanying notes.

1


VENTAS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Rental income:
 
 
 
 
 
 
 
Triple-net leased
$
210,119

 
$
182,006

 
$
424,606

 
$
370,563

Medical office buildings
144,087

 
140,472

 
288,223

 
277,532

 
354,206

 
322,478

 
712,829

 
648,095

Resident fees and services
464,437

 
454,645

 
928,413

 
901,559

Medical office building and other services revenue
5,504

 
9,408

 
12,689

 
19,951

Income from loans and investments
24,146

 
25,215

 
46,532

 
47,268

Interest and other income
111

 
174

 
230

 
645

Total revenues
848,404

 
811,920

 
1,700,693

 
1,617,518

Expenses:
 
 
 
 
 
 
 
Interest
103,665

 
83,959

 
206,938

 
166,287

Depreciation and amortization
221,961

 
214,711

 
458,348

 
430,930

Property-level operating expenses:
 
 
 
 
 
 
 
Senior living
307,989

 
299,252

 
620,530

 
597,614

Medical office buildings
43,966

 
43,410

 
87,647

 
85,847

 
351,955

 
342,662

 
708,177

 
683,461

Medical office building services costs
1,852

 
5,764

 
5,303

 
12,682

General, administrative and professional fees
32,094

 
33,959

 
63,820

 
68,285

Loss (gain) on extinguishment of debt, net
2,468

 
(455
)
 
2,782

 
(434
)
Merger-related expenses and deal costs
7,224

 
12,265

 
8,856

 
42,878

Other
2,303

 
4,279

 
6,471

 
9,153

Total expenses
723,522

 
697,144

 
1,460,695

 
1,413,242

Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest
124,882

 
114,776

 
239,998

 
204,276

Income (loss) from unconsolidated entities
1,418

 
9

 
1,220

 
(242
)
Income tax benefit
11,549

 
9,789

 
19,970

 
17,039

Income from continuing operations
137,849

 
124,574

 
261,188

 
221,073

Discontinued operations
(148
)
 
18,243

 
(637
)
 
35,817

Gain on real estate dispositions
5,739

 
7,469

 
31,923

 
14,155

Net income
143,440

 
150,286

 
292,474

 
271,045

Net income attributable to noncontrolling interest
278

 
465

 
332

 
782

Net income attributable to common stockholders
$
143,162

 
$
149,821

 
$
292,142

 
$
270,263

Earnings per common share:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.42

 
$
0.39

 
$
0.87

 
$
0.71

Discontinued operations
(0.00
)
 
0.06

 
(0.00
)
 
0.11

Net income attributable to common stockholders
$
0.42

 
$
0.45

 
$
0.87

 
$
0.82

Diluted:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.42

 
$
0.40

 
$
0.86

 
$
0.71

Discontinued operations
(0.00
)
 
0.05

 
(0.00
)
 
0.11

Net income attributable to common stockholders
$
0.42

 
$
0.45

 
$
0.86

 
$
0.82

Weighted average shares used in computing earnings per common share:
 
 
 
 
 
 
 
Basic
338,901

 
330,715

 
337,230

 
327,890

Diluted
342,571

 
334,026

 
340,851

 
331,424

Dividends declared per common share
$
0.73

 
$
0.79

 
$
1.46

 
$
1.58

See accompanying notes.

2


VENTAS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
143,440

 
$
150,286

 
$
292,474

 
$
271,045

Other comprehensive (loss) income
 
 
 
 
 
 
 
Foreign currency translation
(22,715
)
 
14,393

 
(33,383
)
 
3,521

Change in unrealized gain on marketable securities
69

 
(6,395
)
 
250

 
(5,046
)
Other
(1,617
)
 
(2,175
)
 
(3,497
)
 
(1,416
)
Total other comprehensive (loss) income
(24,263
)
 
5,823

 
(36,630
)
 
(2,941
)
Comprehensive income
119,177

 
156,109

 
255,844

 
268,104

Comprehensive income attributable to noncontrolling interest
278

 
465

 
332

 
782

Comprehensive income attributable to common stockholders
$
118,899

 
$
155,644

 
$
255,512

 
$
267,322

   
See accompanying notes.

3


VENTAS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Six Months Ended June 30, 2016 and the Year Ended December 31, 2015
(Unaudited)
(In thousands, except per share amounts)
 
Common
Stock Par
Value
 
Capital in
Excess of
Par Value
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
(Deficit)
 
Treasury
Stock
 
Total Ventas
Stockholders’
Equity
 
Noncontrolling
Interest
 
Total Equity
Balance at January 1, 2015
$
74,656

 
$
10,119,306

 
$
13,121

 
$
(1,526,388
)
 
$
(511
)
 
$
8,680,184

 
$
74,213

 
$
8,754,397

Net income

 

 

 
417,843

 

 
417,843

 
1,379

 
419,222

Other comprehensive loss

 

 
(20,686
)
 

 

 
(20,686
)
 

 
(20,686
)
Acquisition-related activity
7,103

 
2,209,202

 

 

 

 
2,216,305

 
853

 
2,217,158

Impact of CCP Spin-Off

 
(1,247,356
)
 

 

 

 
(1,247,356
)
 
(4,717
)
 
(1,252,073
)
Net change in noncontrolling interest

 

 

 

 

 

 
(12,530
)
 
(12,530
)
Dividends to common stockholders—$3.04 per share

 

 

 
(1,003,413
)
 

 
(1,003,413
)
 

 
(1,003,413
)
Issuance of common stock
1,797

 
489,227

 

 

 

 
491,024

 

 
491,024

Issuance of common stock for stock plans
23

 
6,068

 

 

 
5,945

 
12,036

 

 
12,036

Change in redeemable noncontrolling interest

 
(374
)
 

 

 

 
(374
)
 
1,902

 
1,528

Adjust redeemable OP unitholder interests to current fair value

 
7,831

 

 

 

 
7,831

 

 
7,831

Purchase of OP units

 
1,719

 

 

 

 
1,719

 

 
1,719

Grant of restricted stock, net of forfeitures

 
17,215

 

 

 
(8,001
)
 
9,214

 

 
9,214

Balance at December 31, 2015
83,579

 
11,602,838

 
(7,565
)
 
(2,111,958
)
 
(2,567
)
 
9,564,327

 
61,100

 
9,625,427

Net income

 

 

 
292,142

 

 
292,142

 
332

 
292,474

Other comprehensive loss

 

 
(36,630
)
 

 

 
(36,630
)
 

 
(36,630
)
Impact of CCP Spin-Off

 
399

 

 

 

 
399

 

 
399

Net change in noncontrolling interest

 
(1,170
)
 

 

 

 
(1,170
)
 
(1,625
)
 
(2,795
)
Dividends to common stockholders—$1.46 per share

 

 

 
(493,471
)
 

 
(493,471
)
 

 
(493,471
)
Issuance of common stock
1,529

 
376,210

 

 

 

 
377,739

 

 
377,739

Issuance of common stock for stock plans
31

 
8,700

 

 

 
1,951

 
10,682

 

 
10,682

Change in redeemable noncontrolling interest

 
(445
)
 

 

 

 
(445
)
 
254

 
(191
)
Adjust redeemable OP unitholder interests to current fair value

 
(47,403
)
 

 

 

 
(47,403
)
 

 
(47,403
)
Purchase of OP units
80

 
21,191

 

 

 
1,020

 
22,291

 

 
22,291

Grant of restricted stock, net of forfeitures
27

 
1,631

 

 

 
(404
)
 
1,254

 

 
1,254

Balance at June 30, 2016
$
85,246

 
$
11,961,951

 
$
(44,195
)
 
$
(2,313,287
)
 
$

 
$
9,689,715

 
$
60,061

 
$
9,749,776

See accompanying notes.

4


VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
For the Six Months Ended June 30,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
292,474

 
$
271,045

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including amounts in discontinued operations)
458,348

 
496,660

Amortization of deferred revenue and lease intangibles, net
(10,090
)
 
(13,630
)
Other non-cash amortization
4,687

 
909

Stock-based compensation
10,037

 
11,192

Straight-lining of rental income, net
(15,426
)
 
(16,761
)
Loss (gain) on extinguishment of debt, net
2,782

 
(434
)
Gain on real estate dispositions (including amounts in discontinued operations)
(31,923
)
 
(14,432
)
Gain on real estate loan investments
(33
)
 

Gain on sale of marketable debt securities

 
(5,800
)
Income tax benefit
(21,443
)
 
(18,240
)
(Income) loss from unconsolidated entities
(1,220
)
 
242

Distributions from unconsolidated entities
3,873

 
14,973

Other
724

 
3,106

Changes in operating assets and liabilities:
 
 
 
Decrease (increase) in other assets
10,609

 
(9,711
)
(Decrease) increase in accrued interest
(769
)
 
16,108

Decrease in accounts payable and other liabilities
(46,155
)
 
(17,503
)
Net cash provided by operating activities
656,475

 
717,724

Cash flows from investing activities:
 
 
 
Net investment in real estate property
(34,453
)
 
(1,253,910
)
Investment in loans receivable and other
(152,450
)
 
(55,659
)
Proceeds from real estate disposals
63,561

 
273,191

Proceeds from loans receivable
7,644

 
93,275

Proceeds from sale or maturity of marketable securities

 
57,225

Funds held in escrow for future development expenditures

 
4,003

Development project expenditures
(69,679
)
 
(62,630
)
Capital expenditures
(46,925
)
 
(43,429
)
Other
(4,265
)
 
(8,813
)
Net cash used in investing activities
(236,567
)
 
(996,747
)
Cash flows from financing activities:
 
 
 
Net change in borrowings under credit facility
24,304

 
(321,334
)
Proceeds from debt
416,217

 
1,107,971

Repayment of debt
(740,337
)
 
(278,442
)
Purchase of noncontrolling interest
(1,604
)
 
(3,816
)
Payment of deferred financing costs
(3,844
)
 
(14,608
)
Issuance of common stock, net
377,739

 
352,167

Cash distribution to common stockholders
(493,471
)
 
(516,404
)
Cash distribution to redeemable OP unitholders
(4,437
)
 
(4,697
)
Purchases of redeemable OP units

 
(33,188
)
Contributions from noncontrolling interest
5,680

 

Distributions to noncontrolling interest
(3,582
)
 
(9,467
)
Other
7,883

 
5,928

Net cash (used in) provided by financing activities
(415,452
)
 
284,110

Net increase in cash and cash equivalents
4,456

 
5,087

Effect of foreign currency translation on cash and cash equivalents
(157
)
 
97

Cash and cash equivalents at beginning of period
53,023

 
55,348

Cash and cash equivalents at end of period
$
57,322

 
$
60,532

See accompanying notes.

5



VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
(In thousands)
 
For the Six Months Ended June 30,
 
2016
 
2015
Supplemental schedule of non-cash activities:
 
 
 
Assets and liabilities assumed from acquisitions:
 
 
 
Real estate investments
$
8,665

 
$
2,563,501

Utilization of funds held for an Internal Revenue Code Section 1031 exchange
(6,954
)
 
(8,911
)
Other assets acquired
861

 
16,505

Debt assumed

 
177,857

Other liabilities
2,638

 
49,788

Deferred income tax liability
(66
)
 
51,620

Redeemable OP unitholder interests assumed

 
87,245

Equity issued

 
2,204,585

Equity issued for purchase of OP and Class C units
20,770

 

See accompanying notes.


6


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—DESCRIPTION OF BUSINESS
Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”), an S&P 500 company, is a real estate investment trust (“REIT”) with a highly diversified portfolio of seniors housing and healthcare properties located throughout the United States, Canada and the United Kingdom. As of June 30, 2016, we owned approximately 1,300 properties (including properties classified as held for sale), consisting of seniors housing communities, medical office buildings (“MOBs”), skilled nursing facilities, specialty hospitals and general acute care hospitals, and we had five properties under development, including two properties that are owned by an unconsolidated real estate entity. Our company was originally founded in 1983 and is headquartered in Chicago, Illinois. In August 2015, we completed the spin off of most of our post-acute/skilled nursing facility portfolio into an independent, publicly traded REIT named Care Capital Properties, Inc. (“CCP”) (the “CCP Spin-Off”). The historical results of operations of the CCP properties are presented as discontinued operations in the accompanying consolidated financial statements.
We primarily invest in seniors housing and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers. As of June 30, 2016, we leased a total of 575 properties (excluding MOBs and 34 properties owned through investments in unconsolidated entities, and including 25 properties classified as held for sale) to various healthcare operating companies 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, and we engaged independent operators, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 304 seniors housing communities for us pursuant to long-term management agreements. Our three largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”), Kindred Healthcare, Inc. (together with its subsidiaries, “Kindred”) and Ardent Health Partners, LLC (together with its subsidiaries, “Ardent”) leased from us 140 properties (excluding six properties owned through investments in unconsolidated real estate entities and one property managed by Brookdale Senior Living pursuant to a long-term management agreement), 68 properties (excluding one MOB) and ten properties, respectively, as of June 30, 2016.
Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and other loans and investments relating to seniors housing and healthcare operators or properties.
NOTE 2—ACCOUNTING POLICIES
The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The accompanying Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 12, 2016. Certain prior period amounts have been reclassified to conform to the current period presentation.
Principles of Consolidation
The accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity

7


investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We consolidate our investment in a VIE when we determine that we are its primary beneficiary. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.
We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact 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 perform this analysis on an ongoing basis.
As it relates to investments in joint ventures, GAAP may preclude consolidation by the sole general partner in certain circumstances based on the type of rights held by the limited partner(s). We assess limited partners’ rights and their impact on our consolidation conclusions, and we reassess if there is a change to the terms or in the exercisability of the rights of the limited partners, the sole general partner increases or decreases its ownership of limited partnership interests, or there is an increase or decrease in the number of outstanding limited partnership interests. We also apply this guidance to managing member interests in limited liability companies.
On January 1, 2016, we adopted Accounting Standards Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which makes certain changes to both the variable interest and voting models. The adoption of ASU 2015-02 did not result in any changes to our conclusions regarding the consolidation of investments under the new standard. We identified several entities already consolidated under the previous standard but not considered VIEs, which under the new standard are considered VIEs and will continue to be consolidated. In general, each of these consolidated VIEs has the following common characteristics:

VIEs in the legal form of a limited partnership (“LP”) or Limited Liability Company (“LLC”);
The VIEs were designed to own and manage their underlying real estate investments;
Ventas (or a subsidiary thereof) is the general partner or managing member of the VIE;
Ventas (or a subsidiary thereof) also owns a majority of the voting interests in the VIE;
A minority of voting interests in the VIE are owned by external third parties, unrelated to us;
The minority owners do not have substantive kick-out or participating rights in the VIEs; and
Ventas (or a subsidiary thereof) is the primary beneficiary of the VIE.

In general, the assets of the consolidated VIEs are available only for the settlement of the obligations of the respective entities. Unless otherwise required by the LP or LLC agreement, any mortgage loans of the consolidated VIEs are non-recourse to us. The table below summarizes the total assets and liabilities of our consolidated VIEs as reported on our Consolidated Balance Sheets.
 
 
June 30, 2016
 
December 31, 2015
 
 
Total Assets
 
Total Liabilities
 
Total Assets
 
Total Liabilities
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
NHP/PMB L.P.
 
$
646,407

 
$
199,257

 
$
645,109

 
$
203,235

Ventas Realty Capital Healthcare Trust Operating Partnership, L.P.
 
2,288,126

 
217,027

 
2,367,296

 
233,600

Other identified VIEs
 
1,536,594

 
379,332

 
1,582,430

 
431,582

Redeemable OP Unitholder and Noncontrolling Interests
We own a majority interest in NHP/PMB L.P. (“NHP/PMB”), a limited partnership formed in 2008 to acquire properties from entities affiliated with Pacific Medical Buildings LLC. We consolidate NHP/PMB, as our wholly owned subsidiary is the general partner, who is the primary beneficiary of this VIE. As of June 30, 2016, third party investors owned 2,779,571 Class A limited partnership units in NHP/PMB (“OP Units”), which represented 28.1% of the total units then outstanding, and we owned 7,123,312 Class B limited partnership units in NHP/PMB, representing the remaining 71.9%. At any time following the first anniversary of the date of their issuance, the OP Units may be redeemed at the election of the holder for cash or, at our option, 0.9051 shares of our common stock per unit, subject to further adjustment in certain circumstances. We are party by assumption to a registration rights agreement with the holders of the OP Units that requires us, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of our common stock upon redemption of OP Units.

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We own a majority interest in Ventas Realty Capital Healthcare Trust Operating Partnership, L.P. (“Ventas Realty OP”) and we consolidate this entity, as our wholly owned subsidiary is the general partner, who is the primary beneficiary of this VIE. The limited partnership units (“Class C Units”) may be redeemed at the election of the holder for one share of our common stock per unit or, at our option, an equivalent amount in cash, subject to adjustment in certain circumstances. We are party by assumption to a registration rights agreement with the holders of the Class C Units that requires us, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of our common stock upon redemption of Class C Units. As of June 30, 2016, third party investors owned 361,776 Class C Units, which represented 1.2% of the total units then outstanding, and we owned 29,307,561 Class C Units and 176,374 OP units in Ventas Realty OP, representing the remaining 98.8%.
During the six months ended June 30, 2016, third party investors redeemed 32,747 OP Units and 311,208 Class C Units for 340,845 shares of Ventas common stock, valued at $20.8 million.
As redemption rights are outside of our control, the redeemable OP unitholder interests (OP Units and Class C Units) are classified outside of permanent equity on our Consolidated Balance Sheets. We reflect the redeemable OP unitholder interests at the greater of cost or fair value. As of June 30, 2016 and December 31, 2015, the fair value of the redeemable OP unitholder interests was $209.5 million and $188.5 million, respectively. We recognize changes in fair value through capital in excess of par value, net of cash distributions paid and purchases by us of any OP Units or Class C Units. Our diluted earnings per share (“EPS”) includes the effect of any potential shares outstanding from redemption of the OP Units or Class C Units.
Certain noncontrolling interests of other consolidated joint ventures were also classified as redeemable at June 30, 2016 and December 31, 2015. Accordingly, we record the carrying amount of these noncontrolling interests at the greater of their initial carrying amount (increased or decreased for the noncontrolling interest’s share of net income or loss and distributions) or the redemption value. Our joint venture partners have certain redemption rights with respect to their noncontrolling interests in these joint ventures that are outside of our control, and the redeemable noncontrolling interests are classified outside of permanent equity on our Consolidated Balance Sheets. We recognize changes in the carrying value of redeemable noncontrolling interests through capital in excess of par value.
Noncontrolling Interests
Excluding the redeemable noncontrolling interests described above, we present the portion of any equity that we do not own in entities that we control (and thus consolidate) as noncontrolling interests and classify those interests as a component of consolidated equity, separate from total Ventas stockholders’ equity, on our Consolidated Balance Sheets. For consolidated joint ventures with pro rata distribution allocations, net income or loss is allocated between the joint venture partners based on their respective stated ownership percentages. In other cases, net income or loss is allocated between the joint venture partners based on the hypothetical liquidation at book value method. We account for purchases or sales of equity interests that do not result in a change of control as equity transactions, through capital in excess of par value. In addition, we include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Income.
Assets Held for Sale and Discontinued Operations
We sell properties from time to time for various reasons, including favorable market conditions or the exercise of purchase options by tenants. We classify certain long-lived assets as held for sale once the criteria, as defined by GAAP, has been met. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated. We report discontinued operations when the following criteria are met: (1) a component of an entity or group of components has been disposed of or classified as held for sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results; or (2) an acquired business is classified as held for sale on the acquisition date. The results of operations for assets meeting the definition of discontinued operations are reflected in our Consolidated Statements of Income as discontinued operations for all periods presented. We allocate estimated interest expense to discontinued operations based on property values and our weighted average interest rate or the property’s actual mortgage interest.
Impairment of Long-Lived Assets
We periodically evaluate our long-lived assets, primarily consisting of investments in real estate, for impairment indicators. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than book value. We recognize an impairment loss at the time we make any such determination.

9


Fair Values of Financial Instruments
Fair value is a market-based measurement, not an entity-specific measurement, and we determine fair value based on the assumptions that we expect market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy).
Level one inputs utilize unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. Level two inputs are inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves. Level three inputs are unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity. If the determination of the fair value measurement is based on inputs from different levels of the hierarchy, the level within which the entire fair value measurement falls is the lowest level input that is significant to the fair value measurement in its entirety. If the volume and level of market activity for an asset or liability has decreased significantly relative to the normal market activity for such asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that a transaction for an asset or liability is not orderly, little, if any, weight is placed on that transaction price as an indicator of fair value. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
We use the following methods and assumptions in estimating the fair value of our financial instruments.
Cash and cash equivalents - The carrying amount of unrestricted cash and cash equivalents reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
Escrow deposits and restricted cash - The carrying amount of escrow deposits and restricted cash reported on our Consolidated Balance Sheets approximates fair value due to the short maturity of these instruments.
Loans receivable - We estimate the fair value of loans receivable using level two and level three inputs: we discount future cash flows using current interest rates at which similar loans with the same terms and length to maturity would be made to borrowers with similar credit ratings.
Marketable debt securities - We estimate the fair value of corporate bonds, if any, using level two inputs: we observe quoted prices for similar assets or liabilities in active markets that we have the ability to access. We estimate the fair value of certain government-sponsored pooled loan investments using level three inputs: we consider credit spreads, underlying asset performance and credit quality, default rates and any other applicable criteria.
Derivative instruments - With the assistance of a third party, we estimate the fair value of derivative instruments, including interest rate caps, interest rate swaps, and foreign currency forward contracts, using level two inputs: for interest rate caps, we observe forward yield curves and other relevant information; for interest rate swaps, we observe alternative financing rates derived from market-based financing rates, forward yield curves and discount rates; and for foreign currency forward contracts, we estimate the future values of the two currency tranches using forward exchange rates that are based on traded forward points and calculate a present value of the net amount using a discount factor based on observable traded interest rates.
Senior notes payable and other debt - We estimate the fair value of senior notes payable and other debt using level two inputs: we discount the future cash flows using current interest rates at which we could obtain similar borrowings. For mortgage debt, we may estimate fair value using level three inputs.
Redeemable OP unitholder interests - We estimate the fair value of our redeemable OP unitholder interests using level one inputs: we base fair value on the closing price of our common stock, as OP units and Class C Units may be redeemed at the election of the holder for cash or, at our option, shares of our common stock, subject to adjustment in certain circumstances.
Revenue Recognition
Triple-Net Leased Properties and MOB Operations
Certain of our triple-net leases and most of our MOB leases provide for periodic and determinable increases in base rent. We recognize base rental revenues under these leases on a straight-line basis over the applicable lease term when collectibility

10


is reasonably assured. Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a straight-line rent receivable that is included in other assets on our Consolidated Balance Sheets. At June 30, 2016 and December 31, 2015, this cumulative excess totaled $233.4 million (net of allowances of $103.1 million) and $219.1 million (net of allowances of $101.4 million), respectively (excluding properties classified as held for sale).
Certain of our leases provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term.
Senior Living Operations
We recognize resident fees and services, other than move-in fees, monthly as services are provided. We recognize move-in fees on a straight-line basis over the average resident stay. Our lease agreements with residents generally have terms of 12 to 18 months and are cancelable by the resident upon 30 days’ notice.
Other
We recognize interest income from loans and investments, including discounts and premiums, using the effective interest method when collectibility is reasonably assured. We apply the effective interest method on a loan-by-loan basis and recognize discounts and premiums as yield adjustments over the related loan term. We recognize interest income on an impaired loan to the extent our estimate of the fair value of the collateral is sufficient to support the balance of the loan, other receivables and all related accrued interest. When the balance of the loan, other receivables and all related accrued interest is equal to or less than our estimate of the fair value of the collateral, we recognize interest income on a cash basis. We provide a reserve against an impaired loan to the extent our total investment in the loan exceeds our estimate of the fair value of the loan collateral.
We recognize income from rent, lease termination fees, development services, management advisory services, and all other income when all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104: (i) the applicable agreement has been fully executed and delivered; (ii) services have been rendered; (iii) the amount is fixed or determinable; and (iv) collectibility is reasonably assured.
Allowances
We assess the collectibility of our rent receivables, including straight-line rent receivables. We base our assessment of the collectibility of rent receivables (other than straight-line rent receivables) on several factors, including, among other things, payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. We also base our assessment of the collectibility of straight-line rent receivables on several factors, including, among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates it is probable that we will be unable to receive the rent payments due in the future, we provide a reserve against the recognized straight-line rent receivable asset for the portion, up to its full value, that we estimate may not be recovered. If we change our assumptions or estimates regarding the collectibility of future rent payments required by a lease, we may adjust our reserve to increase or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates.
Recently Issued or Adopted Accounting Standards
On January 1, 2016, we adopted ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”) to simplify the accounting for business combinations, specifically as it relates to measurement-period adjustments. Acquiring entities in a business combination must recognize measurement-period adjustments in the reporting period in which the adjustment amounts are determined. Also, ASU 2015-16 requires entities to present separately on the face of the income statement (or disclose in the notes to the financial statements) the portion of the amount recorded in the current period earnings, by line item, that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. Adoption of this ASU did not have a significant impact on our consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which provides for an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses. ASU 2016-13 is effective for the Company beginning January 1, 2020 and we do not expect its adoption will have a significant effect on our consolidated financial statements.

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In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which introduces a lessee model that brings most leases on the balance sheet and amongst other changes, eliminates the requirement in current GAAP for an entity to use bright-line tests in determining lease classification. The amendments in ASU 2016-02 do not significantly change the current lessor accounting model. ASU 2016-02 is not effective for the Company until January 1, 2019 with early adoption permitted. We are continuing to evaluate this guidance and the impact to us, as both lessor and lessee, on our consolidated financial statements.
In 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In 2015, the FASB provided for a one-year deferral of the effective date for ASU 2014-09, which is now effective for us beginning January 1, 2018. We are continuing to evaluate ASU 2014-09 (and related clarifying guidance issued by the FASB); however, we do not expect its adoption to have a significant impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.
NOTE 3—CONCENTRATION OF CREDIT RISK
As of June 30, 2016, Atria, Sunrise, Brookdale Senior Living, Kindred and Ardent managed or operated approximately 23.2%, 11.8%, 8.5%, 1.8% and 5.3%, respectively, of our real estate investments based on gross book value (excluding properties classified as held for sale as of June 30, 2016). Because Atria and Sunrise manage our properties in exchange for the receipt of a management fee from us, we are not directly exposed to the credit risk of our managers in the same manner or to the same extent as our triple-net tenants.
Seniors housing communities constituted approximately 64.8% of our real estate investments based on gross book value (excluding properties classified as held for sale as of June 30, 2016), while MOBs, skilled nursing facilities, specialty hospitals and general acute care hospitals collectively comprised the remaining 35.2%. Our properties were located in 46 states, the District of Columbia, seven Canadian provinces and the United Kingdom as of June 30, 2016, with properties in one state (California) accounting for more than 10% of our total revenues and total net operating income (“NOI,” which is defined as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs) (in each case excluding amounts in discontinued operations) for the three months then ended.
Triple-Net Leased Properties
For the three months ended June 30, 2016 and 2015, approximately 4.9% and 5.2%, respectively, of our total revenues and 8.3% and 9.1%, respectively, of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Brookdale Senior Living. For the same periods, approximately 5.4% and 5.7%, respectively, of our total revenues and 9.3% and 10.0%, respectively, of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Kindred (“Kindred Master Leases”). For the three months ended June 30, 2016, approximately 3.1% of our total revenues and 5.4% of our total NOI (in each case excluding amounts in discontinued operations) were derived from our lease agreements with Ardent. Each of our leases with Brookdale Senior Living, Kindred and Ardent is a triple-net lease that obligates the tenant to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures, and to comply with the terms of the mortgage financing documents, if any, affecting the properties. In addition, each of our Brookdale Senior Living, Kindred and Ardent leases has a corporate guaranty. Brookdale Senior Living and Kindred have multiple leases with us and those leases contain cross-default provisions tied to each other, as well as bundled lease renewals.
The properties we lease to Brookdale Senior Living, Kindred and Ardent accounted for a significant portion of our triple-net leased properties segment revenues and NOI for the three months ended June 30, 2016 and 2015. If either Brookdale Senior Living, Kindred or Ardent becomes unable or unwilling to satisfy its obligations to us or to renew its leases with us upon expiration of the terms thereof, our financial condition and results of operations could decline and our ability to service our indebtedness and to make distributions to our stockholders could be impaired. We cannot assure you that Brookdale Senior Living, Kindred and Ardent will have sufficient assets, income and access to financing to enable them to satisfy their respective obligations to us, and any failure, inability or unwillingness by Brookdale Senior Living, Kindred or Ardent to do so could have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and other obligations and our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a “Material Adverse Effect”). We also cannot assure you that Brookdale Senior Living, Kindred and Ardent

12


will elect to renew their respective leases with us upon expiration of the leases or that we will be able to reposition any non-renewed properties on a timely basis or on the same or better economic terms, if at all.
On April 3, 2016, we entered into several agreements with Kindred to improve the quality and productivity of the long term acute care hospital (“LTAC”) portfolio leased by Ventas to Kindred. Certain of the agreements consist of lease amendments to the Kindred Master Leases. Under these lease amendments, annual rent on seven identified LTACs (the “7 LTACs”), which was approximately $8 million, was immediately re-allocated to other more productive post-acute assets subject to the Kindred Master Leases. Total annual rent under the Kindred Master Leases remains the same. Separately, we agreed to sell the 7 LTACs to an unrelated third party, subject to conditions to closing. The 7 LTACs are reported as assets held for sale on our Consolidated Balance Sheets as of June 30, 2016. As a result of this pending disposition, we recognized an impairment of $10.3 million during the six months ended June 30, 2016, which is reported in depreciation and amortization in our Consolidated Statements of Income. In April, we received $3.5 million from Kindred in connection with the lease amendments, which is being amortized over the lease term of certain assets remaining in the Kindred Master Leases.
In December 2014, we entered into favorable agreements with Kindred to transition or sell the operations of nine licensed healthcare assets, make modifications to the master leases governing 34 leased assets, and reimburse us for certain deferred capital expenditures at skilled nursing facilities previously transferred to new operators. In January 2015, Kindred paid us $37 million in connection with these agreements, which is being amortized over the remaining lease term for the 34 assets governed by the Kindred Master Leases. The nine licensed healthcare assets were all disposed of as of April 1, 2016.
Senior Living Operations
As of June 30, 2016, Atria and Sunrise, collectively, provided comprehensive property management and accounting services with respect to 268 of our 304 seniors housing communities, for which we pay annual management fees pursuant to long-term management agreements.
We rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior living operations efficiently and effectively. We also rely on our managers to set appropriate resident fees and otherwise operate our seniors housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our management agreements, including various rights to terminate and exercise remedies under the agreements as provided therein, Atria’s or Sunrise’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a Material Adverse Effect on us. In addition, significant changes in Atria’s or Sunrise’s senior management or equity ownership or any adverse developments in their businesses and affairs or financial condition could have a Material Adverse Effect on us.
Our 34% ownership interest in Atria entitles us to certain rights and minority protections, as well as the right to appoint two of five members on the Atria Board of Directors.
Brookdale Senior Living, Kindred, Atria, Sunrise and Ardent Information
Each of Brookdale Senior Living and Kindred is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to Brookdale Senior Living and Kindred contained or referred to in this Quarterly Report on Form 10-Q has been derived from SEC filings made by Brookdale Senior Living or Kindred, as the case may be, or other publicly available information, or was provided to us by Brookdale Senior Living or Kindred, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Brookdale Senior Living’s and Kindred’s publicly available filings, which can be found at the SEC’s website at www.sec.gov.
Atria, Sunrise and Ardent are not currently subject to the reporting requirements of the SEC. The information related to Atria, Sunrise and Ardent contained or referred to in this Quarterly Report on Form 10-Q has been derived from publicly available information or was provided to us by Atria, Sunrise or Ardent, as the case may be, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.

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NOTE 4—DISPOSITIONS
2016 Activity
During the six months ended June 30, 2016, we sold three triple-net leased properties, one seniors housing community included in our senior living operations reportable business segment and one MOB for aggregate consideration of $63.8 million. We recognized a gain on the sales of these assets of $32.0 million.
2015 Activity
During the six months ended June 30, 2015, we sold 30 triple-net leased properties and 25 MOBs for aggregate consideration of $423.3 million, including $5.5 million of lease termination fees (included within triple-net leased rental income in our Consolidated Statements of Income). For the six months ended June 30, 2015, we recognized a gain on the sales of these assets of $32.6 million (net of taxes), of which $18.1 million was deferred due to an unsecured loan we made to the buyer in connection with the sale of certain assets. The gain is being recognized into income as principal payments are made on the loan over its five-year term.
Real Estate Impairment
We recognized impairments of $14.5 million and $28.7 million for the six months ended June 30, 2016 and 2015, respectively, which are recorded in depreciation and amortization. Of these impairments, $0 and $13.0 million for the six months ended June 30, 2016 and 2015, respectively, were reported in discontinued operations in our Consolidated Statements of Income.

Discontinued Operations and Assets Held for Sale

The table below summarizes our real estate assets classified as held for sale as of June 30, 2016 and December 31, 2015, including the amounts reported on our Consolidated Balance Sheets.
 
 
June 30, 2016
 
December 31, 2015
 
 
Number of Properties Held for Sale
 
Assets Held for Sale
 
Liabilities Held for Sale
 
Number of Properties Held for Sale
 
Assets Held for Sale
 
Liabilities Held for Sale
 
 
(Dollars in thousands)
Triple-net leased properties
 
25

 
$
141,084

 
$
76,758

 
2

 
$
4,488

 
$
44

MOB operations
 
7

 
52,369

 
12,188

 
8

 
68,619

 
24,759

Senior Living Operations*
 

 
1,818

 
21

 
1

 
19,953

 
9,537

Total
 
32

 
$
195,271

 
$
88,967

 
11

 
$
93,060

 
$
34,340

 
 
 
 
 
 
 
 
 
 
 
 
 
* As of June 30, 2016 there is one vacant land parcel classified as held for sale.

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Set forth below is a summary of our results of operations for properties within discontinued operations for the three and six months ended June 30, 2016 and 2015.
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Rental income
$

 
$
78,556

 
$

 
$
156,207

Income from loans and investments

 
853

 

 
1,699

Interest and other income

 
62

 

 
63

 

 
79,471

 

 
157,969

Expenses:
 
 
 
 
 
 
 
Interest

 
23,742

 

 
48,256

Depreciation and amortization

 
34,496

 

 
65,730

General, administrative and professional fees

 
3

 

 
7

Merger-related expenses and deal costs
147

 
2,320

 
636

 
6,879

Other

 
880

 

 
1,445

 
147

 
61,441

 
636

 
122,317

(Loss) income before real estate dispositions and noncontrolling interest
(147
)
 
18,030

 
(636
)
 
35,652

(Loss) gain on real estate dispositions
(1
)
 
277

 
(1
)
 
277

Net (loss) income from discontinued operations
(148
)
 
18,307

 
(637
)
 
35,929

Net income attributable to noncontrolling interest

 
64

 

 
112

Net (loss) income from discontinued operations attributable to common stockholders
$
(148
)
 
$
18,243

 
$
(637
)
 
$
35,817


Substantially all of the amounts reported for 2015 as discontinued operations in the table above reflect the historical results of operations of the CCP properties prior to the CCP Spin-Off. All merger-related expenses and deal costs presented above reflect separation costs relating to the CCP Spin-Off.

Transition Services Agreement
We and CCP entered into a transition services agreement prior to the CCP Spin-Off pursuant to which we and our subsidiaries provide to CCP, on an interim, transitional basis, various services. The services provided include information technology, accounting and tax services. The overall fee charged by us for such services (the "Service Fee") is $2.5 million for one year. For the three and six months ended June 30, 2016, we recognized income of $0.6 million and $1.2 million, respectively, relating to the Service Fee, which is payable in four quarterly installments. The transition services agreement will terminate on the expiration of the term of the last service provided under the agreement, which will be on or prior to August 31, 2016.

15


NOTE 5—LOANS RECEIVABLE AND INVESTMENTS
As of June 30, 2016 and December 31, 2015, we had $1.0 billion and $895.0 million, respectively, of net loans receivable and investments relating to seniors housing and healthcare operators or properties. The following is a summary of our net loans receivable and investments as of June 30, 2016 and December 31, 2015, including amortized cost, fair value and unrealized gains or losses on available-for-sale investments:
 
 
June 30, 2016
 
 
Carrying Amount
 
Amortized Cost
 
Fair Value
 
Unrealized Gain
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Secured mortgage loans and other
 
$
939,171

 
$
939,171

 
$
965,807

 
$

Government-sponsored pooled loan investments (1)
 
64,390

 
62,591

 
64,390

 
1,799

Total investments reported as Secured loans receivable and investments, net
 
1,003,561

 
1,001,762

 
1,030,197

 
1,799

 
 
 
 
 
 
 
 
 
Non-mortgage loans receivable
 
38,363

 
38,363

 
39,750

 

Total investments reported as Other assets
 
38,363

 
38,363

 
39,750

 

Total net loans receivable and investments
 
$
1,041,924

 
$
1,040,125

 
$
1,069,947

 
$
1,799

(1) Investments in government-sponsored pool loans have contractual maturity dates in 2023.
 
 
December 31, 2015
 
 
Carrying Amount
 
Amortized Cost
 
Fair Value
 
Unrealized Gain
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
Secured mortgage loans and other
 
$
793,433

 
$
793,433

 
$
816,849

 
$

Government-sponsored pooled loan investments
 
63,679

 
62,130

 
63,679

 
1,549

Total investments reported as Secured loans receivable and investments, net
 
857,112

 
855,563

 
880,528

 
1,549

 
 
 
 
 
 
 
 
 
Non-mortgage loans receivable
 
37,926

 
37,926

 
38,806

 

Total investments reported as Other assets
 
37,926

 
37,926

 
38,806

 

Total net loans receivable and investments
 
$
895,038

 
$
893,489

 
$
919,334

 
$
1,549

2016 Activity

In April 2016, we received aggregate proceeds of $5.0 million in final repayment of one secured loans receivable and recognized a $0.1 million gain on the repayment of this loan receivable that is recorded in income from loans and investments in our Consolidated Statements of Income for the three and six months ended June 30, 2016.

In February 2016, we made a $140.0 million secured mezzanine loan investment, at par, relating to Class A life sciences properties in California and Massachusetts, that has an annual interest rate of 9.95% and matures in 2021.

2015 Activity

We issued one non-mortgage loan ($20.0 million) and one secured loan ($78.4 million) to buyers in connection with the sales of certain assets in February and October, respectively. In June 2015, we sold our $71.0 million investment in senior unsecured corporate bonds for $76.8 million. We recognized a gain of $5.8 million that is included within income from loans and investments in our Consolidated Statements of Income for the year ended December 31, 2015. This gain includes $5.0 million that was previously unrealized within accumulated other comprehensive income on our Consolidated Balance Sheets as of December 31, 2014.


16


During the year ended December 31, 2015, we received aggregate proceeds of $97.0 million in final repayment of three secured and one non-mortgage loans receivable. We recognized gains aggregating $1.9 million on the repayment of these loans receivable that are recorded in income from loans and investments in our Consolidated Statements of Income for the year ended December 31, 2015.
NOTE 6—INVESTMENTS IN UNCONSOLIDATED ENTITIES
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We are not required to consolidate these entities because our joint venture partners have significant participating rights, nor are these entities considered VIEs, as they are controlled by equity holders with sufficient capital. At June 30, 2016 and December 31, 2015, we had ownership interests (ranging from 5% to 25%) in joint ventures that owned 39 properties, excluding properties in development. We account for our interests in real estate joint ventures, as well as our 34% interest in Atria and 9.9% interest in Ardent (which are included within other assets on our Consolidated Balance Sheets), under the equity method of accounting.
With the exception of our interests in Atria and Ardent, we provide various services to each unconsolidated entity in exchange for fees and reimbursements. Total management fees earned in connection with these entities were $1.6 million and $1.8 million for the three months ended June 30, 2016 and 2015, respectively, and $3.2 million and $3.7 million for the six months ended June 30, 2016 and 2015, respectively (which is included in medical office building and other services revenue in our Consolidated Statements of Income).
NOTE 7—INTANGIBLES
The following is a summary of our intangibles as of June 30, 2016 and December 31, 2015:
 
June 30, 2016
 
December 31, 2015
 
Balance
 
Remaining
Weighted Average
Amortization
Period in Years
 
Balance
 
Remaining
Weighted Average
Amortization
Period in Years
 
(Dollars in thousands)
Intangible assets:
 
 
 
 
 
 
 
Above market lease intangibles
$
149,824

 
6.4
 
$
155,161

 
7.0
In-place and other lease intangibles
1,182,349

 
22.4
 
1,189,261

 
20.9
Goodwill
1,043,479

 
N/A
 
1,047,497

 
N/A
Other intangibles
35,845

 
9.6
 
35,792

 
8.6
Accumulated amortization
(726,688
)
 
N/A
 
(655,176
)
 
N/A
Net intangible assets
$
1,684,809

 
20.5
 
$
1,772,535

 
19.2
Intangible liabilities:
 
 
 
 
 
 
 
Below market lease intangibles
$
247,327

 
14.3
 
$
256,034

 
14.2
Other lease intangibles
35,925

 
31.1
 
35,925

 
30.1
Accumulated amortization
(121,655
)
 
N/A
 
(113,647
)
 
N/A
Purchase option intangibles
3,568

 
N/A
 
3,568

 
N/A
Net intangible liabilities
$
165,165

 
15.9
 
$
181,880

 
15.6
 
 
 
 
 
N/A—Not Applicable.
Above market lease intangibles and in-place and other lease intangibles are included in acquired lease intangibles within real estate investments on our Consolidated Balance Sheets. Other intangibles (including non-compete agreements, trade names and trademarks) are included in other assets on our Consolidated Balance Sheets. Below market lease intangibles, other lease intangibles and purchase option intangibles are included in accounts payable and other liabilities on our Consolidated Balance Sheets.

17


NOTE 8—OTHER ASSETS
The following is a summary of our other assets as of June 30, 2016 and December 31, 2015:
 
June 30,
2016
 
December 31,
2015
 
(In thousands)
Straight-line rent receivables, net
$
233,388

 
$
219,064

Non-mortgage loans receivable, net
38,363

 
37,926

Other intangibles, net
10,736

 
13,224

Investment in unconsolidated operating entities
28,561

 
28,199

Other
106,463

 
113,990

Total other assets
$
417,511

 
$
412,403


18


NOTE 9—SENIOR NOTES PAYABLE AND OTHER DEBT
The following is a summary of our senior notes payable and other debt as of June 30, 2016 and December 31, 2015:
 
June 30,
2016
 
December 31,
2015
 
(In thousands)
Unsecured revolving credit facility (1)
$
212,382

 
$
180,683

1.55% Senior Notes due 2016
94,530

 
550,000

1.250% Senior Notes due 2017
300,000

 
300,000

2.00% Senior Notes due 2018
700,000

 
700,000

Unsecured term loan due 2018 (2)
200,000

 
200,000

Unsecured term loan due 2019 (2)
374,849

 
468,477

4.00% Senior Notes due 2019
600,000

 
600,000

3.00% Senior Notes, Series A due 2019 (3)
309,526

 
289,038

2.700% Senior Notes due 2020
500,000

 
500,000

Unsecured term loan due 2020
900,000

 
900,000

4.750% Senior Notes due 2021
700,000

 
700,000

4.25% Senior Notes due 2022
600,000

 
600,000

3.25% Senior Notes due 2022
500,000

 
500,000

3.300% Senior Notes due 2022 (3)
193,454

 
180,649

3.125% Senior Notes due 2023
400,000

 

3.750% Senior Notes due 2024
400,000

 
400,000

4.125% Senior Notes, Series B due 2024 (3)
193,454

 
180,649

3.500% Senior Notes due 2025
600,000

 
600,000

4.125% Senior Notes due 2026
500,000

 
500,000

6.90% Senior Notes due 2037
52,400

 
52,400

6.59% Senior Notes due 2038
22,973

 
22,973

5.45% Senior Notes due 2043
258,750

 
258,750

5.70% Senior Notes due 2043
300,000

 
300,000

4.375% Senior Notes due 2045
300,000

 
300,000

Mortgage loans and other (4)
1,755,953

 
1,987,401

Total
10,968,271

 
11,271,020

Deferred financing costs, net
(65,253
)
 
(69,121
)
Unamortized fair value adjustment
27,107

 
33,570

Unamortized discounts
(28,994
)
 
(28,473
)
Senior notes payable and other debt
$
10,901,131

 
$
11,206,996

 
 
 
 
 
(1)
$155.4 million and $9.7 million of aggregate borrowings are denominated in Canadian dollars as of June 30, 2016 and December 31, 2015, respectively.
(2)
These amounts represent in aggregate the $574.8 million of unsecured term loan borrowings under our unsecured credit facility, of which $96.3 million included in the 2019 tranche is in the form of Canadian dollars.
(3)
These borrowings are in the form of Canadian dollars.
(4)
2016 and 2015 exclude $77.0 million and $22.9 million, respectively, of mortgage debt related to real estate assets classified as held for sale that is included in liabilities related to assets held for sale on our Consolidated Balance Sheets.


19


As of June 30, 2016, our indebtedness had the following maturities:
 
Principal Amount
Due at Maturity
 
Unsecured
Revolving Credit
Facility (1)
 
Scheduled Periodic
Amortization
 
Total Maturities
 
(In thousands)
2016 (2)
$
105,496

 
$

 
$
14,248

 
$
119,744

2017
681,502

 

 
25,912

 
707,414

2018
1,101,879

 
212,382

 
20,951

 
1,335,212

2019
1,708,956

 

 
14,471

 
1,723,427

2020
1,416,913

 

 
11,482

 
1,428,395

Thereafter (3)
5,526,211

 

 
127,868

 
5,654,079

Total maturities
$
10,540,957

 
$
212,382

 
$
214,932

 
$
10,968,271

 
 
 
 
 
(1)
As of June 30, 2016, we had $57.3 million of unrestricted cash and cash equivalents, for $155.1 million of net borrowings outstanding under our unsecured revolving credit facility.
(2)
Excludes $77.0 million of mortgage debt related to real estate assets classified as held for sale as of June 30, 2016 that are scheduled to mature in 2016 and 2017.
(3)
Includes $52.4 million aggregate principal amount of our 6.90% senior notes due 2037 that is subject to repurchase, at the option of the holders, on October 1 in each of 2017 and 2027, and $23.0 million aggregate principal amount of 6.59% senior notes due 2038 that is subject to repurchase, at the option of the holders, on July 7 in each of 2018, 2023 and 2028.
Unsecured Revolving Credit Facility and Unsecured Term Loans
Our unsecured credit facility is comprised of a $2.0 billion revolving credit facility priced at LIBOR plus 1.0% as of June 30, 2016, and a $200.0 million fully funded four-year term loan and an $800.0 million five-year term loan (with $374.8 million outstanding), each priced at LIBOR plus 1.05% as of June 30, 2016. The revolving credit facility matures in January 2018, but may be extended, at our option subject to the satisfaction of certain conditions, for an additional period of one year. The $200.0 million and $800.0 million term loans mature in January 2018 and January 2019, respectively. The unsecured credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.5 billion.
As of June 30, 2016, we had $212.4 million of borrowings outstanding, $14.1 million of letters of credit outstanding and $1.7 billion of unused borrowing capacity available under our unsecured revolving credit facility.
As of June 30, 2016, we also had a $900.0 million fully funded term loan due 2020 priced at LIBOR plus 97.5 basis points.
During the six months ended June 30, 2016, we repaid $100.0 million outstanding on our unsecured term loan due 2019 using cash on hand and recognized a loss on extinguishment of debt of $0.4 million.
Senior Notes
In May 2016, we issued and sold $400.0 million aggregate principal amount of 3.125% senior notes due 2023 at a public offering price equal to 99.343% of par, for total proceeds of $397.4 million before the underwriting discount and expenses.
In June 2016, we redeemed $455.5 million aggregate principal amount then outstanding of our 1.55% senior notes due September 2016 at a public offering price of 100.335% of par, plus accrued and unpaid interest to the redemption date, and recognized a loss on extinguishment of debt of $2.1 million. The redemption was funded using proceeds from our May 2016 senior note issuance, cash on hand and borrowings under our revolving credit facility. In July 2016, we repaid the remaining balance then outstanding of our 1.55% senior notes due September 2016.
Mortgages
During the six months ended June 30, 2016, we repaid in full mortgage loans outstanding in the aggregate principal amount of $180.5 million with a weighted average maturity of 2.7 years and recognized a loss on extinguishment of debt of $0.3 million in connection with these repayments.

20


Derivatives and Hedging
In February 2016, we entered into a $200 million notional amount interest rate swap with a maturity of August 3, 2020 that effectively converts LIBOR-based floating rate debt to fixed rate debt, setting LIBOR at 1.132% through the maturity date of the swap.
In July 2016, we entered into $225 million notional forward starting swaps with an effective date of October 6, 2016 that reduce our exposure to fluctuations in interest rates related to changes in rates between now and the forecasted issuance of long-term debt.  The weighted average rate on the notional amount is locked at 1.44%.
NOTE 10—FAIR VALUES OF FINANCIAL INSTRUMENTS
As of June 30, 2016 and December 31, 2015, the carrying amounts and fair values of our financial instruments were as follows:
 
June 30, 2016
 
December 31, 2015
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
57,322

 
$
57,322

 
$
53,023

 
$
53,023

Secured loans receivable, net
939,171

 
965,807

 
793,433

 
816,849

Non-mortgage loans receivable, net
38,363

 
39,750

 
37,926

 
38,806

Government-sponsored pooled loan investments
64,390

 
64,390

 
63,679

 
63,679

Liabilities:
 
 
 
 
 
 
 
Senior notes payable and other debt, gross
10,968,271

 
11,440,378

 
11,271,020

 
11,384,880

Derivative instruments and other liabilities
5,505

 
5,505

 
2,696

 
2,696

Redeemable OP unitholder interests
209,511

 
209,511

 
188,546

 
188,546

Fair value estimates are subjective in nature and based upon several important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange.
NOTE 11—LITIGATION
Proceedings against Tenants, Operators and Managers
From time to time, Brookdale Senior Living, Kindred, Atria, Sunrise and our other tenants, operators and managers are parties to certain legal actions, regulatory investigations and claims arising in the conduct of their business and operations. Even though we generally are not party to these proceedings, the unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect such tenants’, operators’ or managers’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to us, which, in turn, could have a Material Adverse Effect on us.
Proceedings Indemnified and Defended by Third Parties
From time to time, we are party to certain legal actions, regulatory investigations and claims for which third parties are contractually obligated to indemnify, defend and hold us harmless. The tenants of our triple-net leased properties and, in some cases, their affiliates are required by the terms of their leases and other agreements with us to indemnify, defend and hold us harmless against certain actions, investigations and claims arising in the course of their business and related to the operations of our triple-net leased properties. In addition, third parties from whom we acquired certain of our assets and, in some cases, their affiliates are required by the terms of the related conveyance documents to indemnify, defend and hold us harmless against certain actions, investigations and claims related to the acquired assets and arising prior to our ownership or related to excluded assets and liabilities. In some cases, a portion of the purchase price consideration is held in escrow for a specified period of time as collateral for these indemnification obligations. We are presently being defended by certain tenants and other obligated third parties in these types of matters. We cannot assure you that our tenants, their affiliates or other obligated third parties will

21


continue to defend us in these matters, that our tenants, their affiliates or other obligated third parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to us or that any purchase price consideration held in escrow will be sufficient to satisfy claims for which we are entitled to indemnification. The unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect our tenants’ or other obligated third parties’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to us, which, in turn, could have a Material Adverse Effect on us.
Proceedings Arising in Connection with Senior Living and MOB Operations; Other Litigation
From time to time, we are party to various legal actions, regulatory investigations and claims (some of which may not be insured and some of which may allege large damage amounts) arising in connection with our senior living and MOB operations or otherwise in the course of our business. In limited circumstances, the manager of the applicable seniors housing community or MOB may be contractually obligated to indemnify, defend and hold us harmless against such actions, investigations and claims. It is the opinion of management that, except as otherwise set forth in this note, the disposition of any such actions, investigations and claims that are currently pending will not, individually or in the aggregate, have a Material Adverse Effect on us. However, regardless of their merits, we may be forced to expend significant financial resources to defend and resolve these matters, if any. We are unable to predict the ultimate outcome of these actions, investigations and claims, and if management’s assessment of our liability with respect thereto is incorrect, such actions, investigations and claims could have a Material Adverse Effect on us.
NOTE 12—INCOME TAXES
We have elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal, state, and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this Note 12. Certain REIT entities are subject to foreign income tax.
Although the TRS entities and certain other foreign entities have paid minimal cash federal, state, and foreign income taxes for the six months ended June 30, 2016, their income tax liabilities may increase in future periods as we exhaust net operating loss (“NOL”) carryforwards and as our senior living and other operations grow. Such increases could be significant.
Our consolidated provision for income taxes for the three months ended June 30, 2016 and 2015 was a benefit of $11.5 million and $9.8 million, respectively. Our consolidated provision for income taxes for the six months ended June 30, 2016 and 2015 was a benefit of $20.0 million and $17.0 million, respectively. The income tax benefit for the six months ended June 30, 2016 and 2015 were each due primarily to operating losses at our taxable REIT subsidiaries, however, $5.9 million of the income tax benefit for the six months ended June 30, 2016 is due to the reversal of the net deferred tax liability at one TRS entity.
Realization of a deferred tax benefit related to NOLs depends in part upon generating sufficient taxable income in future periods. Our NOL carryforwards begin to expire in 2024 with respect to our TRS entities and in 2019 for the REIT.
Each TRS and foreign entity is a tax paying component for purposes of classifying deferred tax assets and liabilities. Net deferred tax liabilities with respect to our TRS and foreign entities totaled $320.5 million and $338.4 million as of June 30, 2016 and December 31, 2015, respectively, and related primarily to differences between the financial reporting and tax bases of fixed and intangible assets and to loss carryforwards.
Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December 31, 2012 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2011 and subsequent years. We are subject to audit by the Canada Revenue Agency and provincial authorities with respect to entities acquired or formed in connection with our 2007 acquisition of Sunrise Senior Living Real Estate Investment Trust generally for periods subsequent to the acquisition. We are also subject to audit in Canada for periods subsequent to the acquisition, and certain prior periods, with respect to the entities acquired in 2014 from Holiday Retirement. We are subject to audit in the United Kingdom generally for periods ended in and subsequent to 2015.

22


NOTE 13—STOCKHOLDERS’ EQUITY
Capital Stock
During the six months ended June 30, 2016, we issued and sold 6,116,189 shares of common stock under our “at-the-market” (“ATM”) equity offering program for aggregate net proceeds of $378.1 million, after sales agent commissions of $5.8 million. As of June 30, 2016, approximately $406.8 million of our common stock remained available for sale under our ATM equity offering program.
During the six months ended June 30, 2016, third party investors redeemed 32,747 OP Units and 311,208 Class C Units for 340,845 shares of Ventas common stock, valued at $20.8 million.
In July 2016, we completed the public offering and sale of 10,260,434 shares of our common stock for $735.8 million in total proceeds, which we intend to use to fund a portion of our pending acquisition of the real estate portfolio of Wexford Science & Technology, LLC (“Wexford”), or for working capital and other general corporate purposes.
Accumulated Other Comprehensive Loss
The following is a summary of our accumulated other comprehensive loss as of June 30, 2016 and December 31, 2015:
 
June 30, 2016
 
December 31, 2015
 
(In thousands)
Foreign currency translation
$
(47,309
)
 
$
(13,926
)
Unrealized gain on marketable securities
1,799

 
1,549

Other
1,315

 
4,812

Total accumulated other comprehensive loss
$
(44,195
)
 
$
(7,565
)
The change in foreign current translation during the six months ended June 30, 2016 was due primarily to the remeasurement of our properties located in the United Kingdom.

23


NOTE 14—EARNINGS PER COMMON SHARE
The following table shows the amounts used in computing our basic and diluted earnings per common share:
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(In thousands, except per share amounts)
Numerator for basic and diluted earnings per share:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
143,310

 
$
131,578

 
$
292,779

 
$
234,446

Discontinued operations
(148
)
 
18,243

 
(637
)
 
35,817

Net income attributable to common stockholders          
$
143,162

 
$
149,821

 
$
292,142

 
$
270,263

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share—weighted average shares
338,901

 
330,715

 
337,230

 
327,890

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options
630

 
341

 
475

 
436

Restricted stock awards
154

 
41

 
153

 
60

OP units
2,886

 
2,929

 
2,993

 
3,038

Denominator for diluted earnings per share—adjusted weighted average shares
342,571

 
334,026

 
340,851

 
331,424

Basic earnings per share:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.42

 
$
0.39

 
$
0.87

 
$
0.71

Discontinued operations
(0.00
)
 
0.06

 
(0.00
)
 
0.11

Net income attributable to common stockholders          
$
0.42

 
$
0.45

 
$
0.87

 
$
0.82

Diluted earnings per share:
 
 
 
 
 
 
 
Income from continuing operations attributable to common stockholders, including real estate dispositions
$
0.42

 
$
0.40

 
$
0.86

 
$
0.71

Discontinued operations
(0.00
)
 
0.05

 
(0.00
)
 
0.11

Net income attributable to common stockholders          
$
0.42

 
$
0.45

 
$
0.86

 
$
0.82


NOTE 15—SEGMENT INFORMATION
As of June 30, 2016, we operated through three reportable business segments: triple-net leased properties, senior living operations and MOB operations. Under our triple-net leased properties segment, we invest in and own seniors housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our MOB operations segment, we primarily acquire, own, develop, lease and manage MOBs throughout the United States. Information provided for “all other” 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. Assets included in “all other” consist primarily of corporate assets, including cash, restricted cash, deferred financing costs, loans receivable and investments, and miscellaneous accounts receivable.
We evaluate performance of the combined properties in each reportable business segment based on segment profit, which we define as NOI adjusted for income/loss from unconsolidated entities. We define NOI as total revenues, less interest and other income, property-level operating expenses and medical office building services costs. We consider segment profit useful because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies between periods on a consistent basis. In order to facilitate a clear understanding of our historical consolidated operating results, segment profit should be examined in conjunction with net income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.

24


Interest expense, depreciation and amortization, general, administrative and professional fees, income tax expense, discontinued operations and other non-property specific revenues and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are no intersegment sales or transfers.
Summary information by reportable business segment is as follows:
For the three months ended June 30, 2016:
 
Triple-Net
Leased
Properties
 
Senior
Living
Operations
 
MOB
Operations
 
All
Other
 
Total
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
 
 
Rental income
$
210,119

 
$

 
$
144,087

 
$

 
$
354,206

Resident fees and services

 
464,437

 

 

 
464,437

Medical office building and other services revenue
1,231