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Dispositions of Real Estate and Discontinued Operations | 9 Months Ended
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Sep. 30, 2021
Discontinued Operations and Disposal Groups [Abstract] |
Dispositions of Real Estate and Discontinued Operations | Dispositions of Real Estate and Discontinued Operations 2021 Dispositions of Real Estate Sunrise Senior Housing Portfolio In January 2021, the Company sold a portfolio of 32 SHOP assets (the “Sunrise Senior Housing Portfolio”) for $664 million, resulting in an immaterial loss on sale, which is recognized in income (loss) from discontinued operations, and provided the buyer with: (i) financing of $410 million (see Note 7) and (ii) a commitment to finance up to $92 million of additional debt for capital expenditures. The commitment to finance additional debt for capital expenditures was subsequently reduced to $56 million during June 2021, $0.4 million of which had been funded as of September 30, 2021 (see Note 7). Upon completion of the license transfer process in June 2021, the Company sold the two remaining Sunrise senior housing triple-net assets for $80 million, resulting in a gain on sale of $22 million, which is recognized in income (loss) from discontinued operations. Brookdale Triple-Net Portfolio In January 2021, the Company sold 24 senior housing assets in a triple-net lease with Brookdale for $510 million, resulting in total gain on sale of $169 million, which is recognized in income (loss) from discontinued operations. Additional SHOP Portfolio In January 2021, the Company sold a portfolio of 16 SHOP assets for $230 million, resulting in total gain on sale of $59 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $150 million (see Note 7). HRA Triple-Net Portfolio In February 2021, the Company sold eight senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million, resulting in total gain on sale of $33 million, which is recognized in income (loss) from discontinued operations. Oakmont SHOP Portfolio In April 2021, the Company sold a portfolio of 12 SHOP assets for $564 million. In conjunction with the sale, mortgage debt held on two properties with a carrying value of $64 million was repaid and the remaining mortgage debt held on four properties with a carrying value of $107 million was assumed by the buyer. The transaction resulted in total gain on sale of $80 million, which is recognized in income (loss) from discontinued operations. Discovery SHOP Portfolio In April 2021, the Company sold a portfolio of 10 SHOP assets for $334 million, resulting in total gain on sale of $9 million, which is recognized in income (loss) from discontinued operations. Also included in this transaction was the sale of two mezzanine loans and two preferred equity investments for $21 million, resulting in no gain or loss on sale of the investments (collectively, the “Discovery SHOP Portfolio”). Sonata SHOP Portfolio In April 2021, the Company sold a portfolio of five SHOP assets for $64 million, resulting in total gain on sale of $3 million, which is recognized in income (loss) from discontinued operations. SLC SHOP Portfolio In May 2021, the Company sold seven SHOP assets for $113 million and repaid $70 million of mortgage debt that was held on six of the assets, resulting in total gain on sale of $1 million, which is recognized in income (loss) from discontinued operations. Hoag Hospital In May 2021, the Company sold one hospital for $226 million through the exercise of a purchase option by a tenant, resulting in gain on sale of $172 million. 2021 Other Dispositions During the three months ended September 30, 2021, the Company sold the following: (i) eight SHOP assets for $120 million, (ii) four senior housing triple-net assets for $12 million, and (iii) three MOBs for $36 million, resulting in total gain on sales of $42 million ($27 million of which is recognized in income (loss) from discontinued operations). In conjunction with one of the SHOP asset sales, mortgage debt held on the property with a carrying value of $36 million was assumed by the buyer. In addition to the portfolio and individual sales discussed above, during the nine months ended September 30, 2021, the Company sold the following: (i) 15 SHOP assets for $169 million, (ii) 7 senior housing triple-net assets for $24 million, and (iii) 7 MOBs for $57 million, resulting in total gain on sales of $52 million ($34 million of which is recognized in income (loss) from discontinued operations). 2020 Dispositions of Real Estate During the three months ended September 30, 2020, the Company sold the following: (i) four MOBs for $14 million, (ii) one undeveloped MOB land parcel for $2 million and (iii) one asset from other non-reportable segments for $1 million, resulting in total gain on sales of $2 million recognized in income (loss) from continuing operations. Additionally, during the three months ended September 30, 2020, the Company sold four SHOP assets for $12 million, resulting in total loss on sales of $2 million recognized in income (loss) from discontinued operations. During the nine months ended September 30, 2020, the Company sold the following: (i) 13 SHOP assets for $76 million, (ii) 18 senior housing triple-net assets for $385 million (representative of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), (iii) 7 MOBs for $120 million (inclusive of the exercise of a purchase option by a tenant to acquire 3 MOBs in San Diego, California), (iv) one undeveloped MOB land parcel for $2 million and (v) one asset from other non-reportable segments for $1 million, resulting in total gain on sales of $248 million ($162 million of which is recognized in income (loss) from discontinued operations). Aegis NNN Portfolio In December 2020, the Company sold 10 senior housing triple-net assets (the “Aegis NNN Portfolio”) for $358 million and repaid $6 million of variable rate secured mortgage debt held on one asset, resulting in total gain on sale of $228 million, which is recognized in income (loss) from discontinued operations. Atria SHOP Portfolio In December 2020, the Company sold 12 SHOP assets (the “Atria SHOP Portfolio”) for $312 million, resulting in total gain on sale of $39 million, which is recognized in income (loss) from discontinued operations. The Company provided the buyer with financing of $61 million on four of the assets sold (see Note 7). 2020 Other Dispositions In addition to the portfolio sales discussed above, during the year ended December 31, 2020, the Company sold the following: (i) 23 SHOP assets for $190 million, (ii) 21 senior housing triple-net assets for $428 million (inclusive of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), (iii) 11 MOBs for $136 million (inclusive of the exercise of a purchase option by a tenant to acquire 3 MOBs in San Diego, California), (iv) 2 MOB land parcels for $3 million, and (v) 1 asset from other non-reportable segments for $1 million, resulting in total gain on sales of $283 million ($193 million of which is recognized in income (loss) from discontinued operations). Held for Sale and Discontinued Operations During 2020, the Company established and began executing a plan to dispose of its senior housing triple-net and SHOP properties. As of December 31, 2020, the Company concluded that the planned dispositions represented a strategic shift that has had and will have a major effect on the Company’s operations and financial results. Therefore, senior housing triple-net and SHOP assets meeting the held for sale criteria on or before September 30, 2021 are classified as discontinued operations in all periods presented herein. In September 2021, the Company successfully completed the disposition of the remaining senior housing triple-net and SHOP properties. The following summarizes the assets and liabilities classified as discontinued operations at September 30, 2021 and December 31, 2020, which are included in assets held for sale and discontinued operations, net and liabilities related to assets held for sale and discontinued operations, net, respectively, on the Consolidated Balance Sheets (in thousands):
| September 30, 2021 |  | December 31, 2020
ASSETS |  |  |
Real estate: |  |  |
Buildings and improvements | $ | 98 |  |  | $ | 2,553,254 |
Development costs and construction in progress | 54 |  |  | 21,509 |
Land | — |  |  | 355,803 |
Accumulated depreciation and amortization | — |  |  | (615,708) |
Net real estate | 152 |  |  | 2,314,858 |
Investments in and advances to unconsolidated joint ventures | — |  |  | 5,842 |
Accounts receivable, net of allowance of $4,583 and $5,873 | 4,826 |  |  | 20,500 |
Cash and cash equivalents | 14,005 |  |  | 53,085 |
Restricted cash | 3 |  |  | 17,168 |
Intangible assets, net | — |  |  | 24,541 |
Right-of-use asset, net | 30 |  |  | 4,109 |
Other assets, net(1) | 3,243 |  |  | 103,965 |
Total assets of discontinued operations, net(2) | 22,259 |  | 2,544,068
Assets held for sale, net(3) | 82,750 |  |  | 82,238 |
Assets held for sale and discontinued operations, net | $ | 105,009 |  |  | $ | 2,626,306 |
LIABILITIES |  |  |
Mortgage debt(4) | $ | — |  |  | $ | 318,876 |
Lease liability | 30 |  |  | 3,189 |
Accounts payable, accrued liabilities, and other liabilities | 18,442 |  |  | 79,411 |
Deferred revenue | 84 |  |  | 11,442 |
Total liabilities of discontinued operations, net(2) | 18,556 |  |  | 412,918 |
Liabilities related to assets held for sale, net(3) | 354 |  |  | 2,819 |
Liabilities related to assets held for sale and discontinued operations, net | $ | 18,910 |  |  | $ | 415,737 |
_______________________________________ (1)Includes goodwill of zero and $29 million as of September 30, 2021 and December 31, 2020, respectively. (2)At September 30, 2021, there were no senior housing triple-net or SHOP facilities classified as held for sale and discontinued operations. At December 31, 2020, 41 senior housing triple-net facilities, 97 SHOP facilities, and 1 SHOP joint venture were classified as held for sale and discontinued operations. (3)As of September 30, 2021, primarily comprised of the following: (i) five MOBs and one life science facility with net real estate assets of $30 million and right-of-use asset, net of $0.6 million and (ii) one loan receivable with a total carrying value of $51 million. As of December 31, 2020, primarily comprised of six MOBs with net real estate assets of $73 million and deferred revenue of $2 million. (4)During the three months ended September 30, 2021 and 2020, the Company made full and partial repayments of mortgage debt classified as discontinued operations of $37 million and $1 million, respectively. During the nine months ended September 30, 2021 and 2020, the Company made full and partial repayments of mortgage debt classified as discontinued operations of $318 million and $7 million, respectively. The results of discontinued operations through September 30, 2021, or the disposal date of each asset or portfolio of assets if they have been sold, are included in the consolidated results for the three and nine months ended September 30, 2021 and 2020. Summarized financial information for discontinued operations for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenues: |  |  |  |  |  |  |
Rental and related revenues | $ | 694 |  |  | $ | 24,589 |  |  | $ | 7,535 |  |  | $ | 81,070 |
Resident fees and services | 8,507 |  |  | 149,585 |  |  | 111,777 |  |  | 477,081 |
Total revenues | 9,201 |  |  | 174,174 |  |  | 119,312 |  |  | 558,151 |
Costs and expenses: |  |  |  |  |  |  |
Interest expense | 47 |  |  | 2,501 |  |  | 3,900 |  |  | 7,913 |
Depreciation and amortization | — |  |  | 31,659 |  |  | — |  |  | 134,620 |
Operating | 13,010 |  |  | 131,151 |  |  | 118,175 |  |  | 407,820 |
Transaction costs | — |  |  | 602 |  |  | 76 |  |  | 1,141 |
Impairments and loan loss reserves (recoveries), net | 21,740 |  |  | 36,327 |  |  | 32,736 |  |  | 81,556 |
Total costs and expenses | 34,797 |  |  | 202,240 |  |  | 154,887 |  |  | 633,050 |
Other income (expense): |  |  |  |  |  |  |
Gain (loss) on sales of real estate, net | 26,758 |  |  | (2,134) |  |  | 408,658 |  |  | 162,245 |
Other income (expense), net | (863) |  |  | 316 |  |  | 5,150 |  |  | 2,442 |
Total other income (expense), net | 25,895 |  |  | (1,818) |  |  | 413,808 |  |  | 164,687 |
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures | 299 |  |  | (29,884) |  |  | 378,233 |  |  | 89,788 |
Income tax benefit (expense) | 221 |  |  | (1,204) |  |  | 1,345 |  |  | 9,424 |
Equity income (loss) from unconsolidated joint ventures | 81 |  |  | (731) |  |  | 4,991 |  |  | (915) |
Income (loss) from discontinued operations | $ | 601 |  |  | $ | (31,819) |  |  | $ | 384,569 |  |  | $ | 98,297 |
Impairments of Real Estate 2021 During the three and nine months ended September 30, 2021, the Company recognized an aggregate impairment charge of $2 million, which is reported in impairments and loan loss reserves (recoveries), net, related to two MOBs classified as held for sale. The Company wrote down the two properties’ aggregate carrying value of $13 million to their aggregate fair value, less estimated costs to sell, of $11 million. Additionally, during the nine months ended September 30, 2021, the Company recognized an impairment charge of $4 million related to one SHOP asset classified as held for sale, which is reported in income (loss) from discontinued operations. Following a reduction in the expected sales price of the SHOP asset occurring in the second quarter of 2021, the Company wrote down its carrying value of $20 million to its fair value, less estimated costs to sell, of $16 million. The fair values of the impaired assets were based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. The Company’s forecasted sales prices are typically determined using an income approach and/or a market approach (comparable sales model), which rely on certain assumptions by management, including: (i) market capitalization rates, (ii) comparable market transactions, (iii) estimated prices per unit, (iv) negotiations with prospective buyers, and (v) forecasted cash flow streams (lease revenue rates, expense rates, growth rates, etc.). There are inherent uncertainties in making these assumptions. For the Company’s impairment calculation as of September 30, 2021, the Company’s fair value estimates primarily relied on a market approach and utilized comparable market transactions and negotiations with prospective buyers. 2020 During the three months ended September 30, 2020, the Company recognized an aggregate impairment charge of $37 million ($36 million of which is reported in income (loss) from discontinued operations) related to nine SHOP assets, one senior housing triple-net asset and one MOB as a result of being classified as held for sale and wrote down their aggregate carrying value of $200 million to their aggregate fair value, less estimated costs to sell, of $163 million. During the nine months ended September 30, 2020, the Company recognized an aggregate impairment charge of $87 million ($82 million of which is reported in income (loss) from discontinued operations) related to 28 SHOP assets, 5 senior housing triple-net assets, 2 MOBs, and 1 undeveloped MOB land parcel as a result of being classified as held for sale and wrote down their aggregate carrying value of $424 million to their aggregate fair value, less estimated costs to sell, of $337 million. For the Company’s impairment calculations during the nine months ended and as of September 30, 2020, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $33,000 to $300,000, with a weighted average price based on relative fair value of $136,000. Goodwill Impairment When testing goodwill for impairment, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company recognizes an impairment loss for the amount by which the carrying value, including goodwill, exceeds the reporting unit’s fair value. Following the disposition of the Company’s remaining senior housing triple-net and SHOP assets in September 2021, the Company performed an impairment assessment to evaluate the fair value of its reporting units as of September 30, 2021. During the three months ended September 30, 2021, the Company recognized a $22 million goodwill impairment charge reported in income (loss) from discontinued operations to reduce the associated goodwill balance to zero as no assets remained in the reporting units associated with the senior housing triple-net and SHOP portfolios as of the assessment date. During the nine months ended September 30, 2021, the Company recognized a $29 million goodwill impairment charge reported in income (loss) from discontinued operations, $7 million of which was recognized during the second quarter of 2021, as the fair value of the remaining assets based on forecasted sales prices was less than the carrying value of the assets, including the related goodwill as of the assessment date. During the three and nine months ended September 30, 2021, the fair value of the assets within each of the Company’s other reporting units was greater than the respective carrying value of the assets and related goodwill, and as a result, no impairment loss was recognized with respect to the other reporting units. During the three and nine months ended September 30, 2020, no goodwill impairment loss was recognized. These fair value estimates primarily relied on a market approach, utilizing comparable market transactions, forecasted sales prices, and negotiations with prospective buyers. These estimates are considered to be a Level 3 measurement within the fair value hierarchy, and are subject to inherent uncertainties. Deferred Tax Asset Valuation Allowance In conjunction with the Company establishing a plan during the year ended December 31, 2020 to dispose of all of its SHOP assets and classifying such assets as discontinued operations, the Company concluded it was more likely than not that it would no longer realize the future value of certain deferred tax assets generated by the net operating losses of its taxable REIT subsidiary entities. Accordingly, the Company recognized a deferred tax asset valuation allowance of $33 million as of December 31, 2020. As of September 30, 2021, the Company had a deferred tax asset valuation allowance of $36 million.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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