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Dispositions of Real Estate and Discontinued Operations | 9 Months Ended
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Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Dispositions of Real Estate and Discontinued Operations | Dispositions of Real Estate and Discontinued Operations 2022 Dispositions of Real Estate In January 2022, the Company sold one life science facility in Salt Lake City, Utah for $14 million, resulting in a gain on sale of $4 million. During the three months ended June 30, 2022, the Company sold three MOBs and one MOB land parcel for $27 million, resulting in total gain on sales of $10 million. In July 2022, the Company sold two MOBs for $9 million, resulting in total gain on sales of $1 million. 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 6) 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 in June 2021, $47 million in February 2022, and $40 million in July 2022 (see Note 6). As of September 30, 2022, $0.4 million of the additional financing has been funded. 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 Senior Living Inc. 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 6). 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 Compa ny 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 T he Company sold the following during the three months ended September 30, 2021: (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, the Company sold the following during the nine months ended September 30, 2021: (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). During the fourth quarter of 2021, the Company sold three MOBs and a portion of one MOB land parcel for $11 million, resulting in total gain on sales of $1 million. 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 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 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 held for sale or as discontinued operations at September 30, 2022 and December 31, 2021, 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, 2022 |  | December 31, 2021
ASSETS |  |  |
Accounts receivable, net of allowance of $260 and $4,138 | $ | 367 |  |  | $ | 2,446 |
Cash and cash equivalents | 2,172 |  |  | 7,707 |
Right-of-use asset, net | — |  |  | 26 |
Other assets, net | 285 |  |  | 3,237 |
Total assets of discontinued operations, net | 2,824 |  | 13,416
Assets held for sale, net(1) | 48,671 |  |  | 23,774 |
Assets held for sale and discontinued operations, net | $ | 51,495 |  |  | $ | 37,190 |
LIABILITIES |  |  |
Lease liability | $ | — |  |  | $ | 26 |
Accounts payable, accrued liabilities, and other liabilities | 8,668 |  |  | 14,843 |
Deferred revenue | — |  |  | 92 |
Total liabilities of discontinued operations, net | 8,668 |  |  | 14,961 |
Liabilities related to assets held for sale, net(1) | 4,163 |  |  | 95 |
Liabilities related to assets held for sale and discontinued operations, net | $ | 12,831 |  |  | $ | 15,056 |
_______________________________________ (1)As of September 30, 2022, included two life science assets primarily comprised of net real estate assets of $43 million. As of December 31, 2021, included four MOBs and one life science facility primarily comprised of net real estate assets of $23 million. The results of discontinued operations during the three and nine months ended September 30, 2022 and 2021, or through the disposal date of each asset or portfolio of assets held within discontinued operations if sold during such periods, as applicable, are presented below (in thousands) and are included in the consolidated results of operations for the three and nine months ended September 30, 2022 and 2021:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenues: |  |  |  |  |  |  |
Rental and related revenues | $ | — |  |  | $ | 694 |  |  | $ | — |  |  | $ | 7,535 |
Resident fees and services | 1,284 |  |  | 8,507 |  |  | 6,765 |  |  | 111,777 |
Total revenues | 1,284 |  |  | 9,201 |  |  | 6,765 |  |  | 119,312 |
Costs and expenses: |  |  |  |  |  |  |
Interest expense | — |  |  | 47 |  |  | — |  |  | 3,900 |
Operating | 1,334 |  |  | 13,010 |  |  | 6,451 |  |  | 118,175 |
Transaction costs | — |  |  | — |  |  | — |  |  | 76 |
Impairments and loan loss reserves (recoveries), net | — |  |  | 21,740 |  |  | — |  |  | 32,736 |
Total costs and expenses | 1,334 |  |  | 34,797 |  |  | 6,451 |  |  | 154,887 |
Other income (expense): |  |  |  |  |  |  |
Gain (loss) on sales of real estate, net | (1,131) |  |  | 26,758 |  |  | 1,361 |  |  | 408,658 |
Other income (expense), net | (7) |  |  | (863) |  |  | 12 |  |  | 5,150 |
Total other income (expense), net | (1,138) |  |  | 25,895 |  |  | 1,373 |  |  | 413,808 |
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures | (1,188) |  |  | 299 |  |  | 1,687 |  |  | 378,233 |
Income tax benefit (expense) | (110) |  |  | 221 |  |  | 260 |  |  | 1,345 |
Equity income (loss) from unconsolidated joint ventures | — |  |  | 81 |  |  | 64 |  |  | 4,991 |
Income (loss) from discontinued operations | $ | (1,298) |  |  | $ | 601 |  |  | $ | 2,011 |  |  | $ | 384,569 |
Impairments of Real Estate 2022 During the three and nine months ended September 30, 2022, the Company did not recognize any impairment charges. 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 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 the forecasted sales prices, which are considered to be a Level 3 measurement 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 calculations during the three and nine months ended 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. 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 charge 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 senior housing triple-net 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. 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. Other Losses During the first quarter of 2022, the Company recognized $14 million of expenses for tenant relocation and other costs associated with the demolition of an MOB. These expenses are included in other income (expense), net on the Consolidated Statements of Operations for the nine months ended September 30, 2022.

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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 https://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 https://asc.fasb.org/subtopic&trid=2122178 + Details
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