# Healthpeak Properties, Inc.: Form 10-Q for the period ended Mar 31, 2021

- Company: [Healthpeak Properties, Inc.](/companies/doc.md) (CIK 765880)
- Form: 10-Q
- Filed: 2021-05-05
- Accepted by EDGAR: May 5, 2021, 16:18 ET
- Period: 2021-03-31
- Accession: 0001628280-21-009094
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/765880/000162828021009094/peak-20210331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/765880/000162828021009094/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-01-01 to 2021-03-31 | $116.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2021-01-01 to 2021-03-31 | $181.8m | us-gaap:CostOfGoodsAndServicesSold |
| Interest expense | 3 months, 2021-01-01 to 2021-03-31 | $46.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-01-01 to 2021-03-31 | $8.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-01-01 to 2021-03-31 | $145.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-01-01 to 2021-03-31 | $0.27 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-01-01 to 2021-03-31 | $0.27 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-01-01 to 2021-03-31 | 538,679,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2021-01-01 to 2021-03-31 | $122.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months, 2021-01-01 to 2021-03-31 | $164.1m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months, 2021-01-01 to 2021-03-31 | $12.2m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2021-03-31 | $34.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2021-03-31 | $15.19bn | us-gaap:Assets |
| Total liabilities | at 2021-03-31 | $7.88bn | us-gaap:Liabilities |
| Long-term debt | at 2021-03-31 | $6.04bn | us-gaap:LongTermDebt |
| Shareholders' equity | at 2021-03-31 | $6.76bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 85,435 characters.

*All references in this report to “Healthpeak,” the “Company,” “we,” “us” or “our” mean Healthpeak Properties, Inc., together with its consolidated subsidiaries. Unless the context suggests otherwise, references to “Healthpeak Properties, Inc.” mean the parent company without its subsidiaries.*

### Cautionary Language Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not historical factual statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could cause actual results, including our future financial condition and results of operations, to differ materially from those expressed or implied by any forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance.

Forward-looking statements are based on certain assumptions and analysis made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate under the circumstances. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this Quarterly Report.

As more fully set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, risks and uncertainties that may cause our actual results to differ materially from the expectations contained in the forward-looking statements include, among other things:

- the COVID-19 pandemic and health and safety measures intended to reduce its spread;
- operational risks associated with third party management contracts, including the additional regulation and liabilities of our RIDEA lease structures;
- the ability of our existing and future tenants, operators and borrowers to conduct their respective businesses in a manner sufficient to maintain or increase their revenues and manage their expenses in order to generate sufficient income to make rent and loan payments to us and our ability to recover investments made, if applicable, in their operations;
- increased competition, operating costs and market changes affecting our tenants, operators and borrowers;
- the financial condition of our tenants, operators and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings;
- our concentration of investments in the healthcare property sector, which makes us vulnerable to a downturn in a specific sector than if we invested in multiple industries;
- our ability to identify replacement tenants and operators and the potential renovation costs and regulatory approvals associated therewith;
- our property development and redevelopment activity risks, including costs above original estimates, project delays and lower occupancy rates and rents than expected;
- changes within the life science industry;
- high levels of regulation, funding requirements, expense and uncertainty faced by our life science tenants;
- the ability of the hospitals on whose campuses our MOBs are located and their affiliated healthcare systems to remain competitive or financially viable;
- our ability to maintain our or expand our hospital and health system client relationships;
- economic and other conditions that negatively affect geographic areas from which we recognize a greater percentage of our revenue;
- uninsured or underinsured losses, which could result in significant losses and/or performance declines by us or our tenants and operators;
- our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners’ financial condition and continued cooperation;
- our use of contingent rent provisions and/or rent escalators based on the Consumer Price Index;
- competition for suitable healthcare properties to grow our investment portfolio;
- our ability to make material acquisitions and successfully integrate them;
- the potential impact on us and our tenants, operators and borrowers from litigation matters, including rising liability and insurance costs;
- our ability to foreclose on collateral securing our real estate-related loans;
- laws or regulations prohibiting eviction of our tenants;
- the failure of our tenants and operators to comply with federal, state and local laws and regulations, including resident health and safety requirement, as well as licensure, certification and inspection requirements;
- required regulatory approvals to transfer our healthcare properties;
- compliance with the Americans with Disabilities Act and fire, safety and other health regulations;
- the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid;
- legislation to address federal government operations and administration decisions affecting the Centers for Medicare and Medicaid Services;
- our participation in the CARES Act Provider Relief Program and other COVID-19 related stimulus and relief programs;
- volatility or uncertainty in the capital markets, the availability and cost of capital as impacted by interest rates, changes in our credit ratings, and the value of our common stock, and other conditions that may adversely impact our ability to fund our obligations or consummate transactions, or reduce the earnings from potential transactions;
- cash available for distribution to stockholders and our ability to make dividend distributions at expected levels;
- our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness;
- changes in global, national and local economic and other conditions;
- provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders;
- environmental compliance costs and liabilities associated with our real-estate investments;
- our ability to maintain our qualification as a real estate investment trust (“REIT”);
- changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions;
- calculating non-REIT tax earnings and profits;
- ownership limits in our charter that restrict ownership in our stock;
- our reliance on information technology systems and the potential impact of system failures, disruptions or breaches;
- unfavorable litigation resolution or disputes; and
- the loss or limited availability of our key personnel.

Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.

### COVID-19 Infection Information

Information related to the number of our senior housing facilities with confirmed resident COVID-19 cases was provided to us by our operators, but has not been independently verified by us. We have no reason to believe that this information is inaccurate in any material respect, but cannot assure you it is accurate.

### Overview

The information set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. We will discuss and provide our analysis in the following order:

- Executive Summary
- COVID-19 Update
- 2021 Transaction Overview
- Dividends
- Results of Operations
- Liquidity and Capital Resources
- Contractual Obligations and Off-Balance Sheet Arrangements
- Non-GAAP Financial Measures Reconciliations
- Critical Accounting Policies and Recent Accounting Pronouncements

### Executive Summary

Healthpeak Properties, Inc. is a Standard & Poor’s (“S&P”) 500 company that acquires, develops, owns, leases and manages healthcare real estate across the United States (“U.S.”). Our company was originally founded in 1985. We are a Maryland corporation and qualify as a self-administered REIT. In November 2020, we moved our corporate headquarters from Irvine, California to Denver, Colorado. With properties in nearly every state, the new headquarters provides a favorable mix of affordability and a centralized geographic location. Our Irvine, California and Franklin, Tennessee offices will continue to operate.

During 2020, we began the process of disposing of our senior housing triple-net portfolio and senior housing operating portfolio (“SHOP”). We have successfully disposed of a significant portion of both portfolios and will continue that process during the remainder of 2021. Refer to a discussion of recent and upcoming dispositions in “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—2021 Transaction Overview” for the current status of transactions. As of December 31, 2020, we concluded the planned dispositions represented a strategic shift and therefore, the assets are classified as discontinued operations in all periods presented herein and prior periods have been recast to conform to the current period presentation. See Note 5 to the Consolidated Financial Statements for further information regarding discontinued operations.

In conjunction with the planned disposal of our senior housing triple-net and SHOP portfolios, we focused our strategy on investing in a diversified portfolio of high-quality healthcare properties across our three core asset classes of life science, medical office, and continuing care retirement community (“CCRC”) real estate. Under the life science and medical office segments, we invest through the acquisition, development and management of life science buildings, medical office buildings (“MOBs”), and hospitals. Under the CCRC segment, our properties are operated through structures permitted by the Housing and Economic Recovery Act of 2008, and includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”). We have other non-reportable segments that are comprised primarily of the following investments: (i) an interest in an unconsolidated joint venture that owns 19 senior housing assets, (ii) debt investments, and (iii) two preferred equity investments.

At March 31, 2021, our portfolio of investments, including properties in our unconsolidated joint ventures and excluding investments classified as discontinued operations, consisted of interests in 463 properties. The following table summarizes information for our reportable segments, excluding discontinued operations, for the three months ended March 31, 2021 (dollars in thousands):

| Segment | Total Portfolio Adjusted NOI(1)(2) | Percentage of Total Portfolio Adjusted NOI(1) | Number of Properties |
| --- | ---: | ---: | ---: |
| Life science | $119,530 | 48% | 141 |
| Medical office | 101,156 | 40% | 286 |
| CCRC | 26,221 | 10% | 17 |
| Other non-reportable | 4,497 | 2% | 19 |
| Totals | $251,404 | 100% | 463 |

(1) Total Portfolio metrics include results of operations from disposed properties through the disposition date. See “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information regarding Adjusted NOI and see Note 14 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by segment to net income (loss).

(2) For the three months ended March 31, 2021, Adjusted NOI for our senior housing triple-net and SHOP portfolios was $5 million and $8 million, respectively. Operating results for these portfolios are reported as discontinued operations for all periods presented herein.

For a description of our significant activities during 2021, see “Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—2021 Transaction Overview” in this report.

We invest in and manage our real estate portfolio for the long-term to maximize benefit to our stockholders and support the growth of our dividends. Our strategy consists of four core elements:

(i) Our *real estate*: Our portfolio is grounded in high-quality properties in desirable locations. We focus on three purposely selected private pay asset classes, life science, medical office, and continuing care retirement community, to provide stability through inevitable market cycles.

(ii) Our *financials*: We maintain a strong investment-grade balance sheet with ample liquidity as well as long-term fixed-rate debt financing with staggered maturities to reduce our exposure to interest-rate volatility and refinancing risk.

(iii) Our *partnerships*: We work with leading healthcare companies, operators and service providers and are responsive to their space and capital needs. We provide high-quality management services to encourage tenants to renew, expand and relocate into our properties, which drives increased occupancy, rental rates, and property values.

(iv) Our *platform*: We have a people-first culture that we believe attracts, develops and retains top talent. We continually strive to create and maintain an industry-leading platform, with systems and tools that allow us to effectively and efficiently manage our assets and investment activity.

### COVID-19 Update

Global health concerns and increased efforts to reduce the spread of the Coronavirus (“COVID-19”) pandemic have prompted federal, state, and local governments to restrict normal daily activities, and have resulted in travel bans, quarantines, school closings, “shelter-in-place” orders requiring individuals to remain in their homes other than to conduct essential services or activities, as well as business limitations and shutdowns, which resulted in closure of many businesses deemed to be non-essential. Although most of these restrictions have since been lifted or scaled back, certain restrictions remain in place and any future surges of COVID-19 or its variants may lead to other restrictions being re-implemented in response to efforts to reduce the spread. In addition, our tenants, operators and borrowers have faced significant cost increases as a result of increased health and safety measures, including increased staffing demands for patient care and sanitation, as well as increased usage and inventory of critical medical supplies and personal protective equipment. These health and safety measures have been in place since the onset of the pandemic, continue to place a substantial strain on the business operations of many of our tenants, operators, and borrowers.

### Senior Housing

Within our SHOP and CCRC properties, occupancy rates have declined since the onset of the pandemic, a trend that may continue during the pandemic and for some period thereafter as a result of a reduction in, or in some cases prohibitions on, new tenant move-ins due to stricter move-in criteria, lower inquiry volumes, and reduced in-person tours, as well as incidences of COVID-19 outbreaks at our facilities or the perception that outbreaks may occur. Outbreaks, which directly affect our residents and the employees at our senior housing facilities, have and could continue to materially and adversely disrupt operations, as well as cause significant reputational harm to us, our operators, and our tenants. As of May 3, 2021, 55 of the remaining 62 senior housing properties in our portfolio had resident COVID-19 cases at some point during the pandemic, although cases have declined dramatically in those properties since the introduction of vaccines. Our senior housing property operators have experienced significant cost increases as a result of higher staffing hours and compensation, the implementation of increased health and safety measures and protocols, and increased usage and inventory of critical medical supplies and personal protective equipment. We have seen some abatement in those costs as resident caseloads have declined, but this could change if there are new surges. At our SHOP and CCRC facilities, we bear these significant cost increases.

We and/or our operators temporarily suspended redevelopment across our senior housing portfolio due to “shelter-in-place” orders and local, state, and federal directives except for certain life safety and essential projects. Although some of these projects have been allowed to restart with infection control protocols in place, future local, state, or federal orders could cause us to re-suspend the work. Other projects remain suspended and we do not know when we will be able to restart construction. In locations where construction continues, construction workers are following applicable guidelines, including appropriate social distancing, limitations on large group gatherings in close proximity, and increased sanitation efforts, which has slowed the pace of construction. These protective actions do not, however, eliminate the risk that outbreaks caused or spread by such activities may occur and impact our tenants, operators and residents. In addition, our planned dispositions may not occur within the expected time or at all because of buyer terminations or withdrawals related to the pandemic, capital constraints, inability to tour properties, or other factors relating to the pandemic.

The ultimate impact of the pandemic on senior housing generally and the public perception of senior housing as a desirable residential setting depend on a number of factors that are unknown at this time, including, but not limited to: (i) the course and severity of the pandemic; (ii) responses of public and private health authorities; and (iii) long-term efficacy and public acceptances of approved vaccinations, potential supply disruptions, timing of vaccine delivery, and health effects of vaccines and other treatments.

### Medical Office Portfolio

Within our medical office portfolio, many physician practices and affiliated hospitals initially delayed or discontinued nonessential surgeries and procedures due to “shelter-in-place” orders and other health and safety measures, which negatively impacted their cash flows during part of 2020. These restrictions have now been lifted in the majority of our markets and operations are at or near pre-pandemic levels. However, we expect that planned move-outs will be delayed during the COVID-19 pandemic, which is expected to slightly increase short-term retention in this portfolio.

We implemented a deferred rent program during the second and third quarters of 2020 that was limited to certain non-health system and non-hospital tenants in good standing, which reduced our cash collections during those months, although we required that the deferred rent be repaid ratably by the end of 2020. Under this program, we agreed to defer approximately $6 million of rent through December 31, 2020, all of which had been collected as of December 31, 2020. No such deferrals were granted during the three months ended March 31, 2021. We may also implement a deferred rent program for future periods.

### Life Science Portfolio

Within our life science portfolio, we have numerous tenants that are working tirelessly to address critical research and testing needs in the fight against COVID-19. We are focused on providing our tenants with the necessary space to complete their critical work and are in continuous contact with our tenants regarding how we can help them meet their needs. Through December 31, 2020, we had provided approximately $1 million of rent deferrals to our life science tenants, all of which was required to be repaid by the end of 2020. As of December 31, 2020, all of the deferred rent had been collected. No such deferrals were granted during the three months ended March 31, 2021.

However, within our life science portfolio, we may experience a decline in leasing activity at certain points during the COVID-19 pandemic. As a result of governmental restrictions on business activities in the greater San Francisco and Boston areas, we temporarily suspended development, redevelopment, and tenant improvement projects at many of our life science properties, resulting in delayed deliveries and project completions. Though we have been able to continue or re-start these projects, we remain subject to future governmental restrictions that may again suspend these projects. Even when these projects continue, we have been experiencing losses in efficiency as a result of the implementation of health and safety protocols related to social distancing and proper hygiene and sanitization.

### Liquidity

We believe that we are well positioned to manage the short-term and long-term impacts of the COVID-19 pandemic and the measures to slow its spread while working closely with our tenants, operators, and borrowers as they navigate the pandemic. We had approximately $1.85 billion of liquidity available, including $1.72 billion borrowing capacity under our bank line of credit facility and $133 million of cash and cash equivalents, as of May 3, 2021. While a future downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we continue to have access to the unsecured debt markets. We could also seek to enter into one or more secured debt financings, issue additional securities, including under our 2020 ATM Program (as defined below), or dispose of certain additional assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard.

### Future Rent Collections

The impact of COVID-19 on the ability of our tenants to pay rent in the future is currently unknown. We have, and will continue to monitor the credit quality of each of our tenants and write-off straight-line rent and accounts receivable, as necessary. In the event we conclude that substantially all of a tenant’s straight-line rent or accounts receivable is not probable of collection in the future, such amounts will be written off, which could have a material impact on our future results of operations.

### Employee Update

We have taken, and will continue to take, proactive measures to provide for the well-being of our workforce. We have maximized our systems infrastructure as well as virtual and remote working technologies for our employees, including our executive team, to ensure productivity and connectivity internally, as well as with key third-party relationships.

The extent of the impact of the COVID-19 pandemic on our business and financial results will depend on future developments, including the duration, severity, and spread of COVID-19, health and safety actions taken to contain its spread, any new surges of COVID-19, the severity of outbreak of new strains of COVID-19, the timing and distribution of vaccines and other treatments, and how quickly and to what extent normal economic and operating conditions can resume within the markets in which we operate, each of which are highly uncertain at this time and outside of our control.

### 2021 Transaction Overview

### South San Francisco Land Site Acquisition

In October 2020, we executed a definitive agreement to acquire approximately 12 acres of land for $128 million. The acquisition site is located in South San Francisco, California, adjacent to two sites currently held by us as land for future development. We paid a $10 million nonrefundable deposit upon completing due diligence in November 2020. The first phase, with a purchase price of $61 million, closed in April 2021.

### Westview Medical Plaza MOB Acquisition

In February 2021, we acquired one MOB in Nashville, Tennessee for $13 million.

### Pinnacle at Ridgegate Acquisition

In April 2021, we acquired one MOB in Denver, Colorado for $38 million.

### MOB Portfolio Acquisition

In April 2021, we acquired 14 MOBs for $371 million and issued $142 million of secured mortgage debt.

### Senior Housing Portfolio Sales

- In January 2021, we sold a portfolio of 32 SHOP assets (“the Sunrise Senior Housing Portfolio”) for $664 million and provided the buyer with: (i) financing of $410 million and (ii) a commitment to finance up to $92 million of additional debt for capital expenditures, none of which has been funded as of March 31, 2021. Under our definitive agreement, there are two remaining senior housing triple-net assets that are expected to sell during the remainder of 2021, upon completion of the license transfer process.
- In January 2021, we sold 24 senior housing assets under a triple-net lease with Brookdale for $510 million.
- In January 2021, we sold a portfolio of 16 SHOP assets for $230 million and provided the buyer with financing of $150 million.
- In February 2021, we sold eight senior housing assets in a triple-net lease with Harbor Retirement Associates for $132 million.
- In April 2021, we sold a portfolio of 12 SHOP assets for $564 million.
- In April 2021, we sold: (i) a portfolio of 10 SHOP assets for $334 million and (ii) 2 mezzanine loans and 2 preferred equity investments for $21 million.
- In April 2021, we sold a portfolio of five SHOP assets for $64 million.

### Other Real Estate Transactions

- During the three months ended March 31, 2021, we sold one SHOP asset for $5 million.
- In April 2021, we sold two SHOP assets for $13 million, two senior housing triple-net assets for $7 million, and one MOB for $10 million.
- In April 2021, we sold our share of the SHOP property in the Otay Ranch JV for $32 million.

### Financing Activities

- In January 2021, we repurchased $112 million aggregate principal amount of our 4.25% senior unsecured notes due in 2023, $201 million aggregate principal amount of our 4.20% senior unsecured notes due in 2024, and $469 million aggregate principal amount of our 3.88% senior unsecured notes due in 2024.
- In February 2021, we used optional redemption provisions to redeem the remaining $188 million of our 4.25% senior unsecured notes due in 2023, $149 million of our 4.20% senior unsecured notes due in 2024, and $331 million of our 3.88% senior unsecured notes due in 2024.
- On May 4, 2021, we announced the commencement of tender offers to purchase up to an aggregate principal amount of $550 million for cash, targeting (i) $250 million of our 3.40% senior unsecured notes due in 2025 and (ii) $300 million of our 4.00% senior unsecured notes due in 2025.

### Development Activities

- At March 31, 2021, we had five MOB developments, all of which are on-campus, in process with an aggregate total estimated cost of $122 million.
- At March 31, 2021, we had five life science development projects in process with an aggregate total estimated cost of approximately $927 million.
- During the three months ended March 31, 2021, the remaining portion of one life science development project was placed in service with a total project cost of $151 million at completion.

### Dividends

The following table summarizes our common stock cash dividends declared in 2021:

| Declaration Date | Record Date | Amount Per Share | Dividend Payment Date |
| --- | --- | ---: | --- |
| February 9 | February 22 | $0.30 | March 5 |
| April 29 | May 10 | 0.30 | May 21 |

44

### Results of Operations

We evaluate our business and allocate resources among our reportable business segments: (i) life science, (ii) medical office, and (iii) CCRC. Under the life science and medical office segments, we invest through the acquisition and development of life science facilities, MOBs, and hospitals, which generally require a greater level of property management. Our CCRCs are operated through RIDEA structures. We have other non-reportable segments that are comprised primarily of the following investments: (i) an interest in an unconsolidated joint venture that owns 19 senior housing assets, (ii) debt investments, and (iii) two preferred equity investments. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (“SEC”), as updated by Note 2 to the Consolidated Financial Statements herein.

In conjunction with classifying our senior housing triple-net and SHOP portfolios as discontinued operations as of December 31, 2020, the results of operations related to those portfolios are no longer presented in reportable business segments. Accordingly, results of operations of those portfolios are not included in the reportable business segment analysis below. Refer to Note 5 to the Consolidated Financial Statements for further information regarding discontinued operations.

### Non-GAAP Financial Measures

#### Net Operating Income

NOI and Adjusted NOI are non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measures used to evaluate the operating performance of real estate. NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses (which exclude transition costs); NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 14 to the Consolidated Financial Statements. Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense. NOI and Adjusted NOI include our share of income (loss) generated by unconsolidated joint ventures and exclude noncontrolling interests’ share of income (loss) generated by consolidated joint ventures. Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes NOI and Adjusted NOI are important supplemental measures because they provide relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and present them on an unlevered basis. We use NOI and Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Same-Store (“SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI. NOI and Adjusted NOI should not be viewed as alternative measures of operating performance to net income (loss) as defined by GAAP since they do not reflect various excluded items. Further, our definitions of NOI and Adjusted NOI may not be comparable to the definitions used by other REITs or real estate companies, as they may use different methodologies for calculating NOI and Adjusted NOI. For a reconciliation of NOI and Adjusted NOI to net income (loss) by segment, refer to Note 14 to the Consolidated Financial Statements.

Operating expenses generally relate to leased medical office and life science properties, as well as SHOP and CCRC facilities. We generally recover all or a portion of our leased medical office and life science property expenses through tenant recoveries. We present expenses as operating or general and administrative based on the underlying nature of the expense.

#### Same-Store

Same-Store NOI and Adjusted (Cash) NOI information allows us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our consolidated portfolio of properties. Same-Store Adjusted NOI excludes amortization of deferred revenue from tenant-funded improvements and certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.

Properties are included in Same-Store once they are stabilized for the full period in both comparison periods. Newly acquired operating assets are generally considered stabilized at the earlier of lease-up (typically when the tenant(s) control(s) the physical use of at least 80% of the space) or 12 months from the acquisition date. Newly completed developments and redevelopments are considered stabilized at the earlier of lease-up or 24 months from the date the property is placed in service. Properties that experience a change in reporting structure, such as a conversion from a triple-net lease to a RIDEA reporting structure, are considered stabilized after 12 months in operations under a consistent reporting structure. A property is removed from Same-Store when it is classified as held for sale, sold, placed into redevelopment, experiences a casualty event that significantly impacts operations, a change in reporting structure or operator transition has been agreed to, or a significant tenant relocates from a Same-Store property to a non Same-Store property and that change results in a corresponding increase in revenue. We do not report Same-Store metrics for our other non-reportable segments. For a reconciliation of Same-Store to total portfolio Adjusted NOI and other relevant disclosures by segment, refer to our Segment Analysis below.

#### Funds From Operations (“FFO”)

FFO encompasses NAREIT FFO and FFO as Adjusted, each of which is described in detail below. We believe FFO applicable to common shares, diluted FFO applicable to common shares, and diluted FFO per common share are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue.

*NAREIT FFO*. FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate, plus real estate and other real estate-related depreciation and amortization, and adjustments to compute our share of NAREIT FFO and FFO as Adjusted (see below) from joint ventures. Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of NAREIT FFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. For consolidated joint ventures in which we do not own 100%, we reflect our share of the equity by adjusting our NAREIT FFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. Our pro-rata share information is prepared on a basis consistent with the comparable consolidated amounts, is intended to reflect our proportionate economic interest in the operating results of properties in our portfolio and is calculated by applying our actual ownership percentage for the period. We do not control the unconsolidated joint ventures, and the pro-rata presentations of reconciling items included in NAREIT FFO do not represent our legal claim to such items. The joint venture members or partners are entitled to profit or loss allocations and distributions of cash flows according to the joint venture agreements, which provide for such allocations generally according to their invested capital.

The presentation of pro-rata information has limitations, which include, but are not limited to, the following: (i) the amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses and (ii) other companies in our industry may calculate their pro-rata interest differently, limiting the usefulness as a comparative measure. Because of these limitations, the pro-rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro-rata financial information as a supplement.

NAREIT FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income (loss). We compute NAREIT FFO in accordance with the current NAREIT definition; however, other REITs may report NAREIT FFO differently or have a different interpretation of the current NAREIT definition from ours.

*FFO as Adjusted*. In addition, we present NAREIT FFO on an adjusted basis before the impact of non-comparable items including, but not limited to, transaction-related items, other impairments (recoveries) and other losses (gains), losses (gains) from the sale of non-depreciable assets, restructuring and severance related charges, prepayment costs (benefits) associated with early retirement or payment of debt, litigation costs (recoveries), casualty-related charges (recoveries), foreign currency remeasurement losses (gains), deferred tax asset valuation allowances, and changes in tax legislation (“FFO as Adjusted”). Transaction-related items include transaction expenses and gains/charges incurred as a result of mergers and acquisitions and lease amendment or termination activities. Prepayment costs (benefits) associated with early retirement of debt include the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of debt. Management believes that FFO as Adjusted provides a meaningful supplemental measurement of our FFO run-rate and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. At the same time that NAREIT created and defined its FFO measure for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe stockholders, potential investors, and financial analysts who review our operating performance are best served by an FFO run-rate earnings measure that includes certain other adjustments to net income (loss), in addition to adjustments made to arrive at the NAREIT defined measure of FFO. FFO as Adjusted is used by management in analyzing our business and the performance of our properties and we believe it is important that stockholders, potential investors, and financial analysts understand this measure used by management. We use FFO as Adjusted to: (i) evaluate our performance in comparison with expected results and results of previous periods, relative to resource allocation decisions, (ii) evaluate the performance of our management, (iii) budget and forecast future results to assist in the allocation of resources, (iv) assess our performance as compared with similar real estate companies and the industry in general, and (v) evaluate how a specific potential investment will impact our future results. Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as Adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to NAREIT FFO and FFO as Adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.

#### Adjusted FFO (“AFFO”)

AFFO is defined as FFO as Adjusted after excluding the impact of the following: (i) amortization of stock-based compensation, (ii) amortization of deferred financing costs, net, (iii) straight-line rents, (iv) deferred income taxes, and (v) other AFFO adjustments which includes: (a) amortization of acquired market lease intangibles, net, (b) non-cash interest related to DFLs and lease incentive amortization (reduction of straight-line rents), (c) actuarial reserves for insurance claims that have been incurred but not reported, and (d) amortization of deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents. Also, AFFO: (i) is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements and (ii) includes lease restructure payments and adjustments to compute our share of AFFO from our unconsolidated joint ventures. More specifically, recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements ("AFFO capital expenditures") excludes our share from unconsolidated joint ventures (reported in “other AFFO adjustments”). Adjustments for joint ventures are calculated to reflect our pro-rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of AFFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our AFFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods (reported in “other AFFO adjustments”). See FFO for further disclosure regarding our use of pro-rata share information and its limitations. Other REITs or real estate companies may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to those reported by other REITs. Although our AFFO computation may not be comparable to that of other REITs, management believes AFFO provides a meaningful supplemental measure of our performance and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. We believe AFFO is an alternative run-rate earnings measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods, and (iii) results among REITs more meaningful. AFFO does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, (iv) restructuring and severance-related charges, and (v) actual cash receipts from interest income recognized on loans receivable (in contrast to our AFFO adjustment to exclude non-cash interest and depreciation related to our investments in direct financing leases). Furthermore, AFFO is adjusted for recurring capital expenditures, which are generally not considered when determining cash flows from operations or liquidity. AFFO is a non-GAAP supplemental financial measure and should not be considered as an alternative to net income (loss) determined in accordance with GAAP. For a reconciliation of net income (loss) to AFFO and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.

### Comparison of the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

### Overview

#### Three Months Ended March 31, 2021 and 2020

The following table summarizes results for the three months ended March 31, 2021 and 2020 (dollars in thousands):

|  | Three Months Ended March 31, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: |
| Net income (loss) applicable to common shares | $143,337 | $277,464 | $(134,127) |
| NAREIT FFO | 40,233 | 171,549 | (131,316) |
| FFO as Adjusted | 215,391 | 227,013 | (11,622) |
| AFFO | 184,798 | 207,576 | (22,778) |

Net income (loss) applicable to common shares decreased primarily as a result of the following:

- a reduction in other income, net as a result of: (i) a gain upon change of control related to the acquisition of the outstanding equity interest in 13 CCRCs from Brookdale during the first quarter of 2020 and (ii) a gain on sale related to the sale of a hospital underlying a DFL during the first quarter of 2020;
- an increase in loss on debt extinguishments related to our repurchase and redemption of certain outstanding senior notes in the first quarter of 2021;
- an increase in depreciation, primarily as a result of: (i) 2020 and 2021 acquisitions of real estate and (ii) the above-mentioned acquisition of the outstanding equity interest and consolidation of 13 CCRCs from Brookdale during the first quarter of 2020;
- a decrease in income tax benefit, primarily as a result of the tax benefits recognized in the first quarter of 2020 related to the above-mentioned acquisition of the outstanding equity interest in 13 CCRCs from Brookdale and the management termination fee expense fee paid to Brookdale in connection with transitioning management to Life Care Services LLC (“LCS”); and
- additional expenses and decreased occupancy in our CCRCs related to COVID-19.

The decrease in net income (loss) applicable to common shares was partially offset by:

- an increase in income (loss) from discontinued operations, primarily due to an increase in gain on sales of real estate and lower impairments of depreciable real estate;
- NOI generated from our life science and medical office segments related to: (i) 2020 and 2021 acquisitions of real estate, (ii) development and redevelopment projects placed in service during 2020 and 2021, and (iii) new leasing activity during 2020 and 2021 (including the impact to straight-line rents);
- a reduction in operating expenses primarily as a result of the management termination fee paid to Brookdale in connection with transitioning management of 13 CCRCs to LCS during the first quarter of 2020;
- a reduction in transaction costs, primarily as a result of costs associated with the transition of 13 CCRCs from Brookdale to LCS in the first quarter of 2020;
- an increase in our share of net income from an unconsolidated joint venture owning 19 SHOP assets;
- a reduction in impairment charges related to depreciable real estate;
- a reduction in interest expense, primarily as a result of senior unsecured notes repurchases and redemptions in 2021; and
- an increase in interest income, primarily as a result of seller financing.

NAREIT FFO decreased primarily as a result of the aforementioned events impacting net income (loss) applicable to common shares, except for the following, which are excluded from NAREIT FFO:

- the gain upon change of control related to the acquisition of Brookdale’s interest in 13 CCRCs;
- depreciation and amortization expense; and
- impairment charges related to depreciable real estate.

FFO as Adjusted decreased primarily as a result of the aforementioned events impacting NAREIT FFO, except for the following, which are excluded from FFO as Adjusted:

- the loss on debt extinguishment;
- the management termination fee paid to Brookdale in connection with our acquisition of their interest in 13 CCRCs;
- the transaction costs associated with transition of 13 CCRCs from Brookdale to LCS; and
- net gain on sales of assets underlying DFLs.

AFFO decreased primarily as a result of the aforementioned events impacting FFO as Adjusted, except for the impact of straight-line rents, which is excluded from AFFO.

#### Segment Analysis

The following tables provide selected operating information for our Same-Store and total property portfolio for each of our reportable segments. For the three months ended March 31, 2021, our Same-Store consists of 361 properties representing properties acquired or placed in service and stabilized on or prior to January 1, 2020 and that remained in operations under a consistent reporting structure through March 31, 2021. Our total property portfolio consisted of 463 and 449 properties at March 31, 2021 and 2020, respectively.

### Life Science

The following table summarizes results at and for the three months ended March 31, 2021 and 2020 (dollars and square feet in thousands, except per square foot data):

|  | SS Three Months Ended March 31, 2021 | 2020 | Change | Total Portfolio Three Months Ended March 31, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Rental and related revenues | $116,708 | $108,714 | $7,994 | $169,934 | $128,883 | $41,051 |
| Healthpeak’s share of unconsolidated joint venture total revenues | — | — | — | 1,337 | — | 1,337 |
| Noncontrolling interests' share of consolidated joint venture total revenues | (53) | (46) | (7) | (65) | (52) | (13) |
| Operating expenses | (26,851) | (25,256) | (1,595) | (39,461) | (30,201) | (9,260) |
| Healthpeak's share of unconsolidated joint venture operating expenses | — | — | — | (425) | — | (425) |
| Noncontrolling interests' share of consolidated joint venture operating expenses | 15 | 14 | 1 | 20 | 17 | 3 |
| Adjustments to NOI(1) | (3,974) | (4,315) | 341 | (11,810) | (4,280) | (7,530) |
| Adjusted NOI | $85,845 | $79,111 | $6,734 | 119,530 | 94,367 | 25,163 |
| Less: non-SS Adjusted NOI |  |  |  | (33,685) | (15,256) | (18,429) |
| SS Adjusted NOI |  |  |  | $85,845 | $79,111 | $6,734 |
| Adjusted NOI % change |  |  | 8.5% |  |  |  |
| Property count | 109 | 109 |  | 141 | 134 |  |
| End of period occupancy | 97.7% | 95.5% |  | 97.0% | 94.4% |  |
| Average occupancy | 97.2% | 95.6% |  | 96.6% | 95.0% |  |
| Average occupied square feet | 7,424 | 7,299 |  | 9,809 | 8,053 |  |
| Average annual total revenues per occupied square foot(2) | $61 | $57 |  | $65 | $62 |  |
| Average annual base rent per occupied square foot(3) | $49 | $46 |  | $51 | $50 |  |

(1) Represents adjustments to NOI in accordance with the Company’s definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(2) Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

(3) Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

- annual rent escalations;
- new leasing activity; and
- mark-to-market lease renewals.

Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned impacts to Same-Store and the following Non-Same-Store impacts:

- NOI from (i) increased occupancy in developments and redevelopments placed into service in 2020 and 2021 and (ii) acquisitions in 2020.

### Medical Office

The following table summarizes results at and for the three months ended March 31, 2021 and 2020 (dollars and square feet in thousands, except per square foot data):

|  | SS Three Months Ended March 31, 2021 | 2020 | Change | Total Portfolio(1) Three Months Ended March 31, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Rental and related revenues | $137,018 | $135,073 | $1,945 | $158,038 | $153,372 | $4,666 |
| Income from direct financing leases | 2,163 | 2,124 | 39 | 2,163 | 3,269 | (1,106) |
| Healthpeak’s share of unconsolidated joint venture total revenues | 693 | 673 | 20 | 715 | 695 | 20 |
| Noncontrolling interests' share of consolidated joint venture total revenues | (8,766) | (8,528) | (238) | (8,926) | (8,640) | (286) |
| Operating expenses | (44,014) | (44,362) | 348 | (51,121) | (50,694) | (427) |
| Healthpeak's share of unconsolidated joint venture operating expenses | (293) | (275) | (18) | (294) | (275) | (19) |
| Noncontrolling interests' share of consolidated joint venture operating expenses | 2,504 | 2,600 | (96) | 2,504 | 2,600 | (96) |
| Adjustments to NOI(2) | (1,666) | (1,429) | (237) | (1,923) | (994) | (929) |
| Adjusted NOI | $87,639 | $85,876 | $1,763 | 101,156 | 99,333 | 1,823 |
| Less: non-SS Adjusted NOI |  |  |  | (13,517) | (13,457) | (60) |
| SS Adjusted NOI |  |  |  | $87,639 | $85,876 | $1,763 |
| Adjusted NOI % change |  |  | 2.1% |  |  |  |
| Property count(3) | 250 | 250 |  | 286 | 279 |  |
| End of period occupancy | 92.0% | 92.2% |  | 90.3% | 91.6% |  |
| Average occupancy | 92.0% | 92.2% |  | 90.3% | 91.6% |  |
| Average occupied square feet | 18,577 | 18,597 |  | 20,703 | 20,399 |  |
| Average annual total revenues per occupied square foot(4) | $30 | $30 |  | $31 | $31 |  |
| Average annual base rent per occupied square foot(5) | $26 | $26 |  | $27 | $27 |  |

(1) Total Portfolio includes results of operations from disposed properties through the disposition date.

(2) Represents adjustments to NOI in accordance with the Company’s definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(3) From our first quarter 2020 presentation of Same-Store, we removed nine MOBs that were sold, seven MOBs that were classified as held for sale, and three MOBs that were placed into redevelopment.

(4) Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

(5) Base rent does not include tenant recoveries, additional rents in excess of floors and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).

Same-Store Adjusted NOI increased primarily as a result of the following:

- mark-to-market lease renewals; and
- annual rent escalations; partially offset by
- lower parking income.

Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned increases to Same-Store and the following Non-Same-Store impacts:

- increased NOI from our 2020 and 2021 acquisitions;
- increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by
- decreased NOI from our 2020 dispositions.

### Continuing Care Retirement Community

The following table summarizes results at and for the three months ended March 31, 2021 and 2020 (dollars in thousands, except per unit data):

|  | SS Three Months Ended March 31, 2021 | 2020 | Change | Total Portfolio Three Months Ended March 31, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Resident fees and services | $18,844 | $21,007 | $(2,163) | $116,128 | $91,780 | $24,348 |
| Government grant income(1) | 143 | — | 143 | 1,310 | — | 1,310 |
| Healthpeak’s share of unconsolidated joint venture total revenues | — | — | — | 4,488 | 21,647 | (17,159) |
| Healthpeak's share of unconsolidated joint venture government grant income | — | — | — | 199 | — | 199 |
| Operating expenses | (13,394) | (14,310) | 916 | (91,179) | (156,482) | 65,303 |
| Healthpeak's share of unconsolidated joint venture operating expenses | — | — | — | (4,745) | (18,037) | 13,292 |
| Adjustments to NOI(2) | — | — | — | 20 | 91,561 | (91,541) |
| Adjusted NOI | $5,593 | $6,697 | $(1,104) | 26,221 | 30,469 | (4,248) |
| Less: non-SS Adjusted NOI |  |  |  | (20,628) | (23,772) | 3,144 |
| SS Adjusted NOI |  |  |  | $5,593 | $6,697 | $(1,104) |
| Adjusted NOI % change |  |  | (16.5)% |  |  |  |
| Property count | 2 | 2 |  | 17 | 17 |  |
| Average occupancy | 75.8% | 86.4% |  | 78.7% | 86.2% |  |
| Average capacity (units)(3) | 1,052 | 1,052 |  | 8,326 | 8,322 |  |
| Average annual rent per unit | $71,651 | $79,875 |  | $61,024 | $65,179 |  |

(1) Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations.

(2) Represents adjustments to NOI in accordance with the Company’s definition of Adjusted NOI. Refer to “Non-GAAP Financial Measures” above for definitions of NOI and Adjusted NOI.

(3) Represents average capacity as reported by the respective tenants or operators for the three-month period.

Same-Store Adjusted NOI and Total Portfolio Adjusted NOI decreased primarily as a result of the following:

- additional expenses and decreased occupancy due to COVID-19; partially offset by
- government grant income received under the CARES Act.

Total Portfolio Adjusted NOI decreased primarily as a result of the aforementioned decreases to Same-Store, which are also applicable to the Company’s properties not yet included in Same-Store.

### Other Income and Expense Items

The following table summarizes the results of our other income and expense items for the three months ended March 31, 2021 and 2020 (in thousands):

|  | Three Months Ended March 31, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: |
| Interest income | $9,013 | $3,688 | $5,325 |
| Interest expense | 46,843 | 55,691 | (8,848) |
| Depreciation and amortization | 157,538 | 125,112 | 32,426 |
| General and administrative | 24,902 | 22,349 | 2,553 |
| Transaction costs | 798 | 14,563 | (13,765) |
| Impairments and loan loss reserves (recoveries), net | 3,242 | 11,107 | (7,865) |
| Gain (loss) on sales of real estate, net | — | 2,069 | (2,069) |
| Gain (loss) on debt extinguishments | (164,292) | 833 | (165,125) |
| Other income (expense), net | 2,200 | 210,653 | (208,453) |
| Income tax benefit (expense) | (8) | 29,868 | (29,876) |
| Equity income (loss) from unconsolidated joint ventures | 1,323 | (11,146) | 12,469 |
| Income (loss) from discontinued operations | 270,008 | 135,408 | 134,600 |
| Noncontrolling interests’ share in continuing operations | (3,306) | (3,463) | 157 |
| Noncontrolling interests’ share in discontinued operations | (329) | 3 | (332) |

#### Interest income

Interest income increased for the three months ended March 31, 2021 primarily as a result of seller financing.

#### Interest expense

Interest expense decreased for the three months ended March 31, 2021 as a result of senior unsecured notes repurchases and redemptions in the first quarter of 2021.

#### Depreciation and amortization expense

Depreciation and amortization expense increased for the three months ended March 31, 2021 primarily as a result of: (i) assets acquired during 2020 and 2021, (ii) the acquisition of Brookdale’s interest in and consolidation of 13 CCRCs during the first quarter of 2020, and (iii) development and redevelopment projects placed into service during 2020 and 2021. The increase was partially offset by: (i) dispositions of real estate throughout 2020 and (ii) an increase in the number of assets classified as held for sale during 2020 and 2021.

#### General and administrative expense

General and administrative expenses increased for the three months ended March 31, 2021 primarily as a result of increased restructuring and severance related charges.

#### Transaction Costs

Transaction costs decreased for the three months ended March 31, 2021 primarily as a result of costs associated with the transition of 13 CCRCs from Brookdale to LCS in January 2020.

#### Impairments and loan loss reserves (recoveries), net

The impairment charges recognized in each period vary depending on facts and circumstances related to each asset and are impacted by negotiations with potential buyers, current operations of the assets, and other factors. Impairments and loan loss reserves (recoveries), net decreased for the three months ended March 31, 2021 primarily as a result of no assets being impaired under the held for sale impairment model and a decrease in loan loss reserves under the current expected credit losses model. The reduction in loan loss reserves is primarily due to the economic impact of COVID-19 in the first quarter of 2020, partially offset by new seller financing in 2021.

#### Gain (loss) on sales of real estate, net

During the three months ended March 31, 2021 and 2020, there was no material gain or loss on sales in continuing operations.

#### Gain (loss) on debt extinguishments

Refer to Note 10 to the Consolidated Financial Statements for information regarding senior unsecured note repurchases and redemptions and the associated loss on debt extinguishment recognized.

#### Other income (expense), net

Other income (expense), net, decreased for the three months ended March 31, 2021 primarily as a result of: (i) a gain upon change of control related to the acquisition of the outstanding equity interest in 13 CCRCs from Brookdale during the first quarter of 2020 and (ii) a gain on sale related to the sale of a hospital underlying a DFL during the first quarter of 2020; partially offset by government grant income received under the CARES Act during 2021.

#### Income tax benefit (expense)

Income tax benefit decreased for the three months ended March 31, 2021 primarily as result of the tax benefits recognized in the first quarter of 2020 related to the following: (i) the purchase of Brookdale’s interest in 13 of the 15 communities in the CCRC JV, including the management termination fee expense paid to Brookdale in connection with transitioning management of 13 CCRCs to LCS, and (ii) the extension of the net operating loss carryback period provided by the CARES Act.

#### Equity income (loss) from unconsolidated joint ventures

Equity income from unconsolidated joint ventures increased for the three months ended March 31, 2021 as a result of a decrease in amortization expense due to fully amortized intangible assets related to an unconsolidated joint venture owning 19 SHOP assets.

#### Income (loss) from discontinued operations

Income from discontinued operations increased for the three months ended March 31, 2021 primarily as a result of: (i) increased gain on sales of real estate from the disposal of multiple senior housing portfolios during 2021; (ii) decreased depreciation and amortization expense due to assets being disposed of or classified as held for sale throughout 2020 and assets that were fully depreciated in 2020 and 2021; (iii) decreased impairments of depreciable real estate as a result of no assets being impaired under the held for sale impairment model, and (iv) government grant income received under the CARES Act during 2021. The increase in income (loss) from discontinued operations was partially offset by: (i) decreased NOI from dispositions of real estate during 2020 and 2021 and (ii) increased expenses and decreased occupancy related to COVID-19.

### Liquidity and Capital Resources

We anticipate that our cash flow from operations, available cash balances and cash from our various financing activities will be adequate for at least the next 12 months for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying our obligations to make distributions to our stockholders and non-controlling interest members. During the three months ended March 31, 2021, distributions to common shareholders and noncontrolling interest holders exceeded cash flows from operations by approximately $49 million. Distributions were made using a combination of cash flows from operations, funds available under our bank line of credit and commercial paper program, proceeds from the sale of properties, and other sources of cash available to us.

Our principal investing liquidity needs for the next 12 months are to:

- fund capital expenditures, including tenant improvements and leasing costs; and
- fund future acquisition, transactional and development activities.

We anticipate satisfying these future investing needs using one or more of the following:

- cash flow from operations;
- sale of, or exchange of ownership interests in, properties or other investments;
- borrowings under our bank line of credit and commercial paper program;
- issuance of additional debt, including unsecured notes, term loans and mortgage debt; and/or
- issuance of common or preferred stock or its equivalent.

Our ability to access the capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, our bank line of credit and term loan accrue interest at a rate per annum equal to LIBOR plus a margin that depends upon the credit ratings of our senior unsecured long-term debt. We also pay a facility fee on the entire revolving commitment that depends upon our credit ratings. As of May 3, 2021, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global and Fitch, and short-term credit ratings of P-2, A-2, and F2 from Moody’s, S&P Global, and Fitch, respectively.

A downgrade in credit ratings by Moody’s, S&P Global, and Fitch may have a negative impact on the interest rates and facility fees for our bank line of credit and term loan and may negatively impact the pricing of notes issued under our commercial paper program and senior unsecured notes. While a downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we continue to have access to the unsecured debt markets, and we could also seek to enter into one or more secured debt financings, issue additional securities, including under our 2020 ATM Program (as defined below), or dispose of certain assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard. Refer to “COVID-19 Update” above for a more comprehensive discussion of the potential impact of COVID-19 on our business.

### Cash Flow Summary

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

The following table sets forth changes in cash flows (in thousands):

|  | Three Months Ended March 31, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities | $122,726 | $95,042 | $27,684 |
| Net cash provided by (used in) investing activities | 767,726 | (151,011) | 918,737 |
| Net cash provided by (used in) financing activities | (924,119) | 761,421 | (1,685,540) |

#### Operating Cash Flows

The increase in operating cash flow is primarily the result of an increase in income related to: (i) 2020 and 2021 acquisitions, (ii) annual rent increases, (iii) new leasing activity, and (iv) developments and redevelopments placed in service during 2020 and 2021. The increase in operating cash flow is partially offset by: (i) assets sold during 2020 and 2021 and (ii) occupancy declines and additional expenses within our SHOP and CCRC portfolios related to COVID-19. Our cash flow from operations is dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors.

#### Investing Cash Flows

The following are significant investing activities for the three months ended March 31, 2021:

- made investments of $181 million primarily related to the acquisition, development, and redevelopment of real estate and funding of a new and existing loans; and
- received net proceeds of $948 million primarily from sales of real estate assets.

The following are significant investing activities for the three months ended March 31, 2020:

- made investments of $657 million primarily related to the acquisition, development, and redevelopment of real estate and funding of a participating development loan; and
- received net proceeds of $506 million primarily from sales of real estate assets.

#### Financing Cash Flows

The following are significant financing activities for the three months ended March 31, 2021:

- made net borrowings of $909 million under our bank line of credit and commercial paper program;
- made repayments of $1.6 billion under our senior unsecured notes (including debt extinguishment costs) and mortgage debt; and
- paid cash dividends on common stock of $164 million.

The following are significant financing activities for the three months ended March 31, 2020:

- made net repayments of $98 million primarily under our bank line of credit and commercial paper program;
- issued common stock of $1.1 billion; and
- paid cash dividends on common stock of $189 million.

#### Discontinued Operations

Operating, investing, and financing cash flows in our Consolidated Statements of Cash Flows are reported inclusive of both cash flows from continuing operations and cash flows from discontinued operations. Certain significant cash flows from discontinued operations are disclosed in Note 15 to the Consolidated Financial Statements. The absence of future cash flows from discontinued operations is not expected to significantly impact our liquidity, as the proceeds from senior housing triple-net and SHOP dispositions are expected to be used to pay down debt and invest in additional real estate in our other business lines. Additionally, we have multiple other sources of liquidity that can be utilized in the future, as needed. Refer to the Liquidity and Capital Resources section above for additional information regarding our liquidity.

### Debt

In January 2021, we repurchased $112 million aggregate principal amount of our 4.25% senior unsecured notes due in 2023, $201 million aggregate principal amount of our 4.20% senior unsecured notes due in 2024, and $469 million aggregate principal amount of our 3.88% senior unsecured notes due in 2024.

In February 2021, we used optional redemption provisions to redeem the remaining $188 million of our 4.25% senior unsecured notes due in 2023, $149 million of our 4.20% senior unsecured notes due in 2024, and $331 million of our 3.88% senior unsecured notes due in 2024.

In March 2021, we repaid $39 million of variable rate secured debt on two SHOP assets classified as discontinued operations as of March 31, 2021.

On May 4, 2021, we announced the commencement of tender offers to purchase up to an aggregate principal amount of $550 million for cash, targeting (i) $250 million of our 3.40% senior unsecured notes due in 2025 and (ii) $300 million of our 4.00% senior unsecured notes due in 2025.

See Note 10 to the Consolidated Financial Statements for additional information about our outstanding debt.

Approximately 78% and 96% of our consolidated debt, excluding debt classified as liabilities related to assets held for sale and discontinued operations, net, was fixed rate debt as of March 31, 2021 and 2020, respectively. At March 31, 2021, our fixed rate debt and variable rate debt had weighted average interest rates of 3.77% and 0.51%, respectively. At March 31, 2020, our fixed rate debt and variable rate debt had weighted average interest rates of 3.95% and 1.98%, respectively. We had zero and $42 million, respectively, of variable rate debt swapped to fixed through interest rate swaps as of March 31, 2021 and 2020. For a more detailed discussion of our interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 3 below.

### Equity

At March 31, 2021, we had 539 million shares of common stock outstanding, equity totaled $7.32 billion, and our equity securities had a market value of $17.34 billion.

At March 31, 2021, non-managing members held an aggregate of five million units in seven limited liability companies (“DownREITs”) for which we are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At March 31, 2021, the outstanding DownREIT units were convertible into approximately seven million shares of our common stock.

#### At-The-Market Program

In February 2020, we terminated our previous at-the-market equity offering program and concurrently established a new at-the-market equity offering program (the “2020 ATM Program”). In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements with sales agents for the sale of our shares of common stock under our 2020 ATM Program.

During the three months ended March 31, 2021, no shares were settled under ATM forward contracts.

At March 31, 2021, approximately $1.25 billion of our common stock remained available for sale under the 2020 ATM Program. Actual future sales of our common stock will depend upon a variety of factors, including but not limited to market conditions, the trading price of our common stock, and our capital needs. We have no obligation to sell any of the remaining shares under our 2020 ATM Program.

During the three months ended March 31, 2021, we did not issue any shares of our common stock under our 2020 ATM Program.

See Note 12 to the Consolidated Financial Statements for additional information about our 2020 ATM Program.

#### Shelf Registration

In May 2018, we filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires on May 31, 2021 and at or prior to such time, we expect to file a new shelf registration statement. Under the “shelf” process, we may sell any combination of the securities described in the prospectus through one or more offerings. The securities described in the prospectus include common stock, preferred stock, depositary shares, debt securities, and warrants.

### Contractual Obligations and Off-Balance Sheet Arrangements

Our commitments related to development and redevelopment projects increased by $9 million, to $315 million at March 31, 2021, when compared to December 31, 2020, primarily as a result of increased commitments on existing projects and new projects started during the first quarter of 2021.

Our commitments to fund senior housing redevelopment and capital expenditures increased by $89 million, to $100 million at March 31, 2021, when compared to December 31, 2020, primarily as a result of a commitment to finance additional debt for capital expenditures on the Sunrise Senior Housing Portfolio sold during the three months ended March 31, 2021.

Our commitments related to debt have materially changed since December 31, 2020 as a result of draws on our bank line of credit and issuances of securities under our commercial paper program, the repurchase of senior unsecured notes in January 2021, and the redemption of senior unsecured notes in February 2021. As of March 31, 2021, we had an aggregate $1.04 billion balance outstanding under our bank line of credit or commercial paper program. See Note 10 to the Consolidated Financial Statements for additional information about our debt commitments.

There have been no other material changes, outside of the ordinary course of business, to these contractual obligations during the three months ended March 31, 2021.

We own interests in certain unconsolidated joint ventures as described in Note 8 to the Consolidated Financial Statements. Except in limited circumstances, our risk of loss is limited to our investment in the joint ventures and any outstanding loans receivable. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources except for commitments included in our Annual Report on Form 10-K for the year ended December 31, 2020 in “Contractual Obligations” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

### Non-GAAP Financial Measures Reconciliations

The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to NAREIT FFO, FFO as Adjusted, and AFFO (in thousands, except per share data):

|  | Three Months Ended March 31, 2021 | 2020 |
| --- | ---: | ---: |
| Net income (loss) applicable to common shares | $143,337 | $277,464 |
| Real estate related depreciation and amortization(1) | 157,538 | 189,276 |
| Healthpeak's share of real estate related depreciation and amortization from unconsolidated joint ventures | 4,453 | 29,610 |
| Noncontrolling interests' share of real estate related depreciation and amortization | (4,881) | (4,852) |
| Other real estate-related depreciation and amortization | — | 1,237 |
| Loss (gain) on sales of depreciable real estate, net(1) | (259,662) | (164,869) |
| Healthpeak's share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures | — | (7,729) |
| Loss (gain) upon change of control, net(2) | (1,042) | (167,434) |
| Taxes associated with real estate dispositions | 490 | (11,876) |
| Impairments (recoveries) of depreciable real estate, net(1) | — | 30,722 |
| NAREIT FFO applicable to common shares | 40,233 | 171,549 |
| Distributions on dilutive convertible units and other | — | 1,637 |
| Diluted NAREIT FFO applicable to common shares | $40,233 | $173,186 |
| Weighted average shares outstanding - diluted NAREIT FFO | 539,016 | 513,123 |
| Impact of adjustments to NAREIT FFO: |  |  |
| Transaction-related items(3) | $4,113 | $92,379 |
| Other impairments (recoveries) and other losses (gains), net(4) | 3,242 | (33,306) |
| Restructuring and severance related charges | 2,463 | — |
| Loss (gain) on debt extinguishments | 164,292 | (833) |
| Litigation costs (recoveries) | — | 106 |
| Casualty-related charges (recoveries), net | 1,048 | — |
| Foreign currency remeasurement losses (gains) | — | 10 |
| Tax rate legislation impact(5) | — | (2,892) |
| Total adjustments | $175,158 | $55,464 |
| FFO as Adjusted applicable to common shares | $215,391 | $227,013 |
| Distributions on dilutive convertible units and other | 1,940 | 1,549 |
| Diluted FFO as Adjusted applicable to common shares | $217,331 | $228,562 |
| Weighted average shares outstanding - diluted FFO as Adjusted | 546,342 | 513,123 |

58

|  | Three Months Ended March 31, 2021 | 2020 |
| --- | ---: | ---: |
| FFO as Adjusted applicable to common shares | $215,391 | $227,013 |
| Amortization of stock-based compensation | 4,364 | 3,987 |
| Amortization of deferred financing costs | 2,213 | 2,582 |
| Straight-line rents | (9,135) | (6,229) |
| AFFO capital expenditures | (20,710) | (21,791) |
| Lease restructure payments | 377 | 291 |
| Deferred income taxes | (1,723) | 4,787 |
| Other AFFO adjustments | (5,979) | (3,064) |
| AFFO applicable to common shares | 184,798 | 207,576 |
| Distributions on dilutive convertible units and other | 1,337 | 1,638 |
| Diluted AFFO applicable to common shares | $186,135 | $209,214 |
| Weighted average shares outstanding - diluted AFFO | 544,517 | 513,123 |

|  | Three Months Ended March 31, 2021 | 2020 |
| --- | ---: | ---: |
| Diluted earnings per common share | $0.27 | $0.54 |
| Depreciation and amortization | 0.29 | 0.42 |
| Loss (gain) on sales of depreciable real estate, net | (0.48) | (0.33) |
| Loss (gain) upon change of control, net(2) | (0.01) | (0.33) |
| Taxes associated with real estate dispositions | 0.00 | (0.02) |
| Impairments (recoveries) of depreciable real estate, net | — | 0.06 |
| Diluted NAREIT FFO per common share | $0.07 | $0.34 |
| Transaction-related items(3) | 0.01 | 0.18 |
| Other impairments (recoveries) and other losses (gains), net(4) | 0.01 | (0.06) |
| Restructuring and severance related charges | 0.01 | — |
| Loss (gain) on debt extinguishments | 0.30 | 0.00 |
| Tax rate legislation impact(5) | — | (0.01) |
| Diluted FFO as Adjusted per common share | $0.40 | $0.45 |

(1) This amount can be reconciled by combining the balances from the corresponding line of the Consolidated Statements of operations and the detailed financial information for discontinued operations in Note 5 to the Consolidated Financial Statements.

(2) For the three months ended March 31, 2020, includes a $170 million gain upon consolidation of 13 continuing care retirement communities ("CCRCs") in which we acquired Brookdale's interest and began consolidating during the first quarter of 2020. Gains and losses upon change of control are included in other income (expense), net in the Consolidated Statements of Operations.

(3) For the three months ended March 31, 2020, includes the termination fee and transition fee expenses related to terminating the management agreements with Brookdale for 13 CCRCs and transitioning those communities to Life Care Services, LLC, partially offset by the tax benefit recognized related to those expenses. The expenses related to terminating management agreements are included in operating expenses in the Consolidated Statements of Operations.

(4) For the three months ended March 31, 2021 and 2020, includes reserves for loan losses under the current expected credit losses accounting standard in accordance with Accounting Standards Codification 326, *Financial Instruments – Credit Losses ("ASC 326")*. The three months ended March 31, 2020 also includes a gain on sale of a hospital that was in a direct financing lease ("DFL") which is included in other income (expense), net in the Consolidated Statements of Operations.

(5) For the three months ended March 31, 2020, represents the tax benefit from the CARES Act, which extended the net operating loss carryback period to five years.

For a reconciliation of Adjusted NOI to net income (loss), refer to Note 14 to the Consolidated Financial Statements. For a reconciliation of Same-Store Adjusted NOI to total portfolio Adjusted NOI by segment, refer to the analysis of each segment in “Results of Operations” above.

### Critical Accounting Policies and Recent Accounting Pronouncements

The preparation of financial statements in conformity with U.S. GAAP requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2020 in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2 to the Consolidated Financial Statements. There have been no significant changes to our critical accounting policies during the three months ended March 31, 2021.

## Market risk

As filed, 3,087 characters.

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We use derivative and other financial instruments in the normal course of business to mitigate interest rate risk. We do not use derivative financial instruments for speculative or trading purposes. Derivatives are recorded on the consolidated balance sheets at fair value (see Note 18 to the Consolidated Financial Statements). During the three months ended March 31, 2021, we repaid our remaining variable rate secured debt and terminated the two remaining related interest-rate swap contracts.

*Interest Rate Risk.* At March 31, 2021, our exposure to interest rate risk is primarily on our variable rate debt. Our variable rate debt is comprised of our bank line of credit, commercial paper program, and our term loan. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing. If interest rates have risen at the time we seek to refinance our fixed rate debt, whether at maturity or otherwise, our future earnings and cash flows could be adversely affected by additional borrowing costs. Conversely, lower interest rates at the time of refinancing may reduce our overall borrowing costs. However, interest rate changes will affect the fair value of our fixed rate instruments. At March 31, 2021, a one percentage point increase or decrease in interest rates would change the fair value of our fixed rate debt by approximately $298 million and $324 million, respectively, and would not materially impact earnings or cash flows. Conversely, changes in interest rates on variable rate debt and investments would change our future earnings and cash flows, but not materially impact the fair value of those instruments. Assuming a one percentage point change in the interest rate related to our variable-rate debt and variable-rate investments, and assuming no other changes in the outstanding balance at March 31, 2021, our annual interest expense and interest income would increase by approximately $13 million and $1 million, respectively.

*Market Risk.* We have investments in marketable debt securities classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded at amortized cost and adjusted for the amortization of premiums and discounts through maturity. We consider a variety of factors in evaluating an other-than-temporary decline in value, such as: the length of time and the extent to which the market value has been less than our current adjusted carrying value; the issuer’s financial condition, capital strength, and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and our investment horizon in relationship to an anticipated near-term recovery in the market value, if any. At March 31, 2021, both the fair value and carrying value of marketable debt securities was $21 million.

## Controls and procedures

As filed, 1,856 characters.

*Disclosure Controls and Procedures.* We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2021.

*Changes in Internal Control Over Financial Reporting.* There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 161 characters.

There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.

Filed May 5, 2021.
Source: SEC EDGAR, the filing index for accession 0001628280-21-009094. Last ingested by Listed: Nov 10, 2026, 05:05 ET. No prices; not investment advice.