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Segment Information | 12 Months Ended
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Dec. 31, 2011
Segment Information |
Segment Information |
Note 20—Segment Information As of December 31, 2011, we operated through three reportable business segments: triple-net leased properties, senior living operations and MOB operations. Our triple-net leased properties segment consists of acquiring and owning seniors housing and healthcare properties in the United States and leasing those properties to healthcare operating companies under "triple-net" or "absolute-net" leases, which require the tenants to pay all property-related expenses. Our senior living operations segment consists of investments in seniors housing communities located in the United States and Canada for which we engage independent third parties, such as Atria and Sunrise, to manage the operations. Our MOB operations segment primarily consists of acquiring, owning, developing, leasing and managing MOBs. Information provided for "all other" includes revenues such as income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to 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 miscellaneous accounts receivable. With the addition of the Lillibridge businesses and properties in July 2010, we believed the segregation of our MOB operations into its own reporting segment would be useful in assessing the performance of this portion of our business in the same way that management intends to review our performance and make operating decisions. Prior to the Lillibridge acquisition, we operated through two reportable business segments: triple-net leased properties and senior living operations. Prior year amounts have been restated to reflect the segregation of our MOB operations into a reportable business segment. We evaluate performance of the combined properties in each reportable business segment based on segment profit, which we define as NOI adjusted for gain/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 believe that net income, as defined by GAAP, is the most appropriate earnings measurement. However, we believe that segment profit serves as a useful supplement to net income 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 and between periods on a consistent basis. Segment profit should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance. In order to facilitate a clear understanding of our consolidated historical operating results, segment profit should be examined in conjunction with net income as presented in our Consolidated Financial Statements and data included elsewhere in this Annual Report on Form 10-K. Interest expense, depreciation and amortization, general, administrative and professional fees and non-property specific revenues and expenses are not allocated to individual 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 year ended December 31, 2011:
|  | Triple-Net Leased Properties |  | Senior Living Operations |  | MOB Operations |  | All Other |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | (In thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 652,577 |  | $ | — |  | $ | 167,003 |  | $ | — |  | $ | 819,580 |
Resident fees and services |  |  | — |  |  | 873,308 |  |  | — |  |  | — |  |  | 873,308 |
Medical office building and other services revenue |  |  | 2,217 |  |  | — |  |  | 34,254 |  |  | — |  |  | 36,471 |
Income from loans and investments |  |  | — |  |  | — |  |  | — |  |  | 34,415 |  |  | 34,415 |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 1,217 |  |  | 1,217 |
Total revenues |  | $ | 654,794 |  | $ | 873,308 |  | $ | 201,257 |  | $ | 35,632 |  | $ | 1,764,991 |
Total revenues |  | $ | 654,794 |  | $ | 873,308 |  | $ | 201,257 |  | $ | 35,632 |  | $ | 1,764,991 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 1,217 |  |  | 1,217 |
Property-level operating expenses |  |  | — |  |  | 593,977 |  |  | 57,584 |  |  | — |  |  | 651,561 |
Medical office building services costs |  |  | — |  |  | — |  |  | 27,082 |  |  | — |  |  | 27,082 |
Segment NOI |  |  | 654,794 |  |  | 279,331 |  |  | 116,591 |  |  | 34,415 |  |  | 1,085,131 |
Income (loss) from unconsolidated entities |  |  | 295 |  |  | — |  |  | (347 | ) |  | — |  |  | (52 | )
Segment profit |  | $ | 655,089 |  | $ | 279,331 |  | $ | 116,244 |  | $ | 34,415 |  |  | 1,085,079 |
Interest and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,217 |
Interest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (236,807 | )
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (456,590 | )
General, administrative and professional fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (74,537 | )
Loss on extinguishment of debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (27,604 | )
Litigation proceeds, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 202,259 |
Merger-related expenses and deal costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (153,923 | )
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (8,653 | )
Income tax benefit |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 31,137 |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,683 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 363,261 |
For the year ended December 31, 2010:
|  | Triple-Net Leased Properties |  | Senior Living Operations |  | MOB Operations |  | All Other |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | (In thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 461,709 |  | $ | — |  | $ | 69,747 |  | $ | — |  | $ | 531,456 |
Resident fees and services |  |  | — |  |  | 446,301 |  |  | — |  |  | — |  |  | 446,301 |
Medical office building and other services revenue |  |  | — |  |  | — |  |  | 14,098 |  |  | — |  |  | 14,098 |
Income from loans and investments |  |  | — |  |  | — |  |  | — |  |  | 16,412 |  |  | 16,412 |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 484 |  |  | 484 |
Total revenues |  | $ | 461,709 |  | $ | 446,301 |  | $ | 83,845 |  | $ | 16,896 |  | $ | 1,008,751 |
Total revenues |  | $ | 461,709 |  | $ | 446,301 |  | $ | 83,845 |  | $ | 16,896 |  | $ | 1,008,751 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 484 |  |  | 484 |
Property-level operating expenses |  |  | — |  |  | 291,831 |  |  | 24,122 |  |  | — |  |  | 315,953 |
Medical office building services costs |  |  | — |  |  | — |  |  | 9,518 |  |  | — |  |  | 9,518 |
Segment NOI |  |  | 461,709 |  |  | 154,470 |  |  | 50,205 |  |  | 16,412 |  |  | 682,796 |
Loss from unconsolidated entities |  |  | — |  |  | — |  |  | (664 | ) |  | — |  |  | (664 | )
Segment profit |  | $ | 461,709 |  | $ | 154,470 |  | $ | 49,541 |  | $ | 16,412 |  |  | 682,132 |
Interest and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 484 |
Interest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (175,631 | )
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (203,762 | )
General, administrative and professional fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (49,830 | )
Loss on extinguishment of debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (9,791 | )
Merger-related expenses and deal costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (19,243 | )
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (272 | )
Income tax expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,201 | )
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 30,843 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 249,729 |
For the year ended December 31, 2009:
|  | Triple-Net Leased Properties |  | Senior Living Operations |  | MOB Operations |  | All Other |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  | (In thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 452,536 |  | $ | — |  | $ | 35,922 |  | $ | — |  | $ | 488,458 |
Resident fees and services |  |  | — |  |  | 421,058 |  |  | — |  |  | — |  |  | 421,058 |
Income from loans and investments |  |  | — |  |  | — |  |  | — |  |  | 13,107 |  |  | 13,107 |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 842 |  |  | 842 |
Total revenues |  | $ | 452,536 |  | $ | 421,058 |  | $ | 35,922 |  | $ | 13,949 |  | $ | 923,465 |
Total revenues |  | $ | 452,536 |  | $ | 421,058 |  | $ | 35,922 |  | $ | 13,949 |  | $ | 923,465 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest and other income |  |  | — |  |  | — |  |  | — |  |  | 842 |  |  | 842 |
Property-level operating expenses |  |  | — |  |  | 290,045 |  |  | 12,768 |  |  | — |  |  | 302,813 |
Segment NOI |  |  | 452,536 |  |  | 131,013 |  |  | 23,154 |  |  | 13,107 |  |  | 619,810 |
Income (loss) from unconsolidated entities |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Segment profit |  | $ | 452,536 |  | $ | 131,013 |  | $ | 23,154 |  | $ | 13,107 |  |  | 619,810 |
Interest and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 842 |
Interest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (173,810 | )
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (197,298 | )
General, administrative and professional fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (38,830 | )
Loss on extinguishment of debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (6,080 | )
Merger-related expenses and deal costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (13,015 | )
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (50 | )
Income tax benefit |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,719 |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 76,072 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 269,360 |
Assets by reportable business segment are as follows:
|  | As of December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Triple-net leased properties |  | $ | 8,704,061 |  |  | 50.4 | % | $ | 2,474,612 |  |  | 43.0 | %
Senior living operations |  |  | 5,758,497 |  |  | 33.3 |  |  | 2,297,041 |  |  | 39.9 |
MOB operations |  |  | 2,433,160 |  |  | 14.1 |  |  | 748,945 |  |  | 13.0 |
All other assets |  |  | 376,192 |  |  | 2.2 |  |  | 237,423 |  |  | 4.1 |
Total assets |  | $ | 17,271,910 |  |  | 100.0 | % | $ | 5,758,021 |  |  | 100.0 | %
Capital expenditures, including investments in real estate property and development project expenditures, by reportable business segment are as follows:
|  | For the Year Ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
|  | (In thousands) |
Capital expenditures: |  |  |  |  |  |  |  |  |  |
Triple-net leased properties(1) |  | $ | 133,761 |  | $ | 12,884 |  | $ | 10,867 |
Senior living operations |  |  | 370,455 |  |  | 10,268 |  |  | 11,081 |
MOB operations(2) |  |  | 125,453 |  |  | 271,144 |  |  | 105,880 |
Total capital expenditures |  | $ | 629,669 |  | $ | 294,296 |  | $ | 127,828 |
(1) 2009 includes $9.3 million from funds held in a Code Section 1031 exchange escrow account with a qualified intermediary. (2) 2009 includes $55.7 million from funds held in a Code Section 1031 exchange escrow account with a qualified intermediary. Our portfolio of properties and mortgage loan and other investments are located in the United States and Canada. Revenues are attributed to an individual country based on the location of each property. Geographic information regarding our operations is as follows:
|  | For the Year Ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
|  | (In thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |
United States |  | $ | 1,672,952 |  | $ | 924,221 |  | $ | 849,737 |
Canada |  |  | 92,039 |  |  | 84,530 |  |  | 73,728 |
Total revenues |  | $ | 1,764,991 |  | $ | 1,008,751 |  | $ | 923,465 |
|  | As of December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |
|  | (In thousands) |
Net real estate property: |  |  |  |  |  |  |
United States |  | $ | 15,510,824 |  | $ | 4,857,510 |
Canada |  |  | 402,908 |  |  | 422,009 |
Total net real estate property |  | $ | 15,913,732 |  | $ | 5,279,519 |

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