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A wealth of accomplishments. 2012 Annual Report 1 Even greater potential. 2012 Annual Report 2 CONTE NTS Successful Past. Bright Future. 4 2012 Highlights 6 Letter to Shareholders 7 The Portfolio 8 Next Level of Execution 11 Conclusion 13 A Focused Strategy, Executed Well 15 Strong Operating Fundamentals 16 Resilient Rate Growth 16 Affluent Markets 16 Investment Management Delivers Consistency 17 Strong Leadership 17 Best-In-Class Partners 19 Sunrise Senior Living 22 Senior Lifestyle Corporation 24 Legend Senior Living 25 Belmont Village Senior Living 26 Medical Office Building Portfolio 27 Portfolio Map 29 The Health Care Market: Strong Potential for Growth 33 Non-GAAP Reconciliations 34 Form 10-K 36 Shareholder Information (Inside Back Cover) 3 SU CCESSFUL PA ST. BR IGHT F UTURE. 2012 was a breakthrough year for Health Care REIT fueled by the exceptional performance of the company’s employees and an in-depth knowledge of the health care and seniors housing sectors. Health Care REIT is positioned as a top-tier organization with a portfolio designed to deliver consistent, resilient results. The company’s proven, relationship- based investing philosophy creates the opportunity to capture the most desirable investments. 4 George L. Chapman – Chairman, Chief Executive Officer and President 5 2012 HIGHLIGHTS COMpaNY PERFORMANCE Health Care REIT generated one-year, three-year and five-year cumulative total returns of 18%, 64% and 85%, respectively. INVESTMENTS The company completed and announced over $8 billion of gross investments and expanded into Canada and the United Kingdom. Including the company’s recently announced Sunrise acquisition, 82% of revenue is derived from private-pay sources. PORTFOLIO PERFORMANCE In 2012, the company’s portfolio generated 4% average same store NOI growth. The seniors housing operating portfolio same store NOI grew an average of 8%. The medical office portfolio finished the year at 94.4% occupancy, with a full-year retention rate of 82%. The medical services group ranked in the top 5% in the Kingsley Tenant Satisfaction Index. CAPITAL Health Care REIT raised $3.7 billion of common equity at an average gross price of $55.80, $287.5 million of preferred equity at 6.5%, and $2.1 billion in senior debt at a blended rate of 3.6% and an average maturity of 9.6 years. In January 2013, the company also increased its credit facility to $2.75 billion at a reduced interest rate and extended the term. DIVIDENDS The fourth quarter 2012 dividend payment, paid in February 2013, was the company’s 167th consecutive dividend. It was $0.765 per share, or $3.06 annually, representing a 3.4% increase over dividends paid in 2012. For Non-GAAP reconciliations, see page 34 6 LETTER TO SH AREHOLDERS During the last several years we have emerged as a leader in the REIT and health care sectors. Our disciplined investments have created a platform that is producing strong, predictable internal and external growth and consistent, sustainable results. Our portfolio is second to none, with 82% of our facilities private-pay and 80% in the most affluent markets. Health Care REIT has become a world-class organization with a culture of excellence dedicated to the continuous improvement of health care delivery. We have enjoyed one of the most successful cycles in the history of our company, and it is with great pleasure that I share my belief that the future is even brighter. Our success is due to the prodigious efforts of all our employees. We are systematizing every process, institutionalizing our collaborative culture and affirming our reputation as the partner of choice in health care. We have added highly qualified and experienced personnel in key areas to help us effectively manage the substantial increase in investment volume. At the same time, we have maintained our entrepreneurial spirit and drive. Last year was one of substantial achievement in all areas of our business. But the lead story of the year related to our purchase of Sunrise Senior Living, Inc. 7 THE POR TFOLIO S unrise S enior L iving Our partnership and the Sunrise team hit the The Sunrise acquisition in many respects was ground running when we closed the transaction in the capstone of several years of exceptional early 2013. By taking the management company and carefully planned acquisitions in a period private, Sunrise can improve every process, of consolidation and change in health care and become a model of “best practices,” and position seniors housing. The Sunrise acquisition fits itself for further growth and capital availability in perfectly with our overall strategy. This exceptional this dynamic and consolidating market. portfolio offers an attractive initial yield, strong NOI growth and a pipeline of unique development As part of the transaction, we ensured that the opportunities. Sunrise has a truly national current Sunrise CEO, Mark Ordan, would lead platform with a widely recognized brand, so it the transition of the company to a top-flight is well positioned as a vehicle for the inevitable management team comprised of a successor consolidation that is necessary in a highly CEO, key personnel from Sunrise and new fragmented and increasingly complex industry. recruits capable of lifting the company to new heights. Mark will remain on the Sunrise board Due to a tremendous team effort, we accelerated to smooth the transition. the buyout of various Sunrise joint venture partners, so that by early January 2013, we had Other 2012 and 2013 Seniors Housing Investments invested $3.4 billion in 125 Sunrise communities. Besides the Sunrise transaction, we made a It is the largest transaction in Health Care REIT’s number of other key acquisitions that deepened history. By July 1, 2013, we expect to purchase our strong presence in the seniors housing space. the remainder of another large Sunrise joint These included new partnerships with Legend venture that will bring our total investment to Senior Living, Senior Lifestyle and Kisco Senior $4.3 billion. The overall cap rate of approximately Living. We also significantly grew our relationship 6.5% makes the transaction strongly accretive. with Belmont Village. These companies are widely regarded as top operators in the industry. We The Sunrise Senior Living management company look forward to building on these partnerships was sold to a group led by Kohlberg Kravis going forward. A summary of these investments Roberts and Beecken Petty O’Keefe & Company, is included on pages 22 through 26. with Health Care REIT retaining a 20% interest. 8 M edical F acilities Let me turn to the medical facilities sector. Our average MOB size is now approximately We believe there are significant investment 65,000 square feet. Due to the superb work opportunities in the of our property MOB arena. Today, management team, care providers perform our occupancy is a approximately 60% of sector-leading 94.4% acute care services in with an annual an outpatient setting. retention rate of 82%. Many of the MOBs are The high quality strategically located of our modern, on closer to the customer, campus and affiliated in suburban areas that portfolio allows us are experiencing the to maintain these greatest population kinds of performance growth. To provide a characteristics convenient, one-stop and deliver venue, MOBs are consistent returns. combining a variety of complementary During 2012, we services, including made several large surgical, diagnostic investments in the and wellness services. medical facilities Today, we are space, including investing in MOBs that investments with range from 50,000 to Kelsey-Seybold, 300,000 square feet. Northside, Trinity, These facilities, which some refer to as “hospitals Virtua, Christus and Scott & White. A summary without beds,” are becoming a focal point of of these investments is included on pages 27 health care delivery. and 28. We are building strong relationships that we are confident will lead to future investment opportunities. 9 10 NEXT LEVE L OF EXECUTION Health Care REIT is considered to be the partner savings of around 18% when costs were otherwise of choice in seniors housing and a value-add significantly rising. We are now working on a partner in the medical facilities space. We own joint purchasing program that should produce premier assets and partner with operators in substantial savings. affluent, high-barrier-to-entry markets in the United States, the United Kingdom and Canada. These operational improvements, together with Our portfolio is well-diversified. Our platform is the strong demographics and the resiliency poised to deliver continued growth. of occupancies and cash flows, will help us make the case that the seniors housing sector There are several key reasons for Health Care is undervalued. Better data from the National REIT’s success. First, we are immersed in health Investment Center for the Seniors Housing and care and seniors housing and understand how Care Industry and other studies are also helping it is evolving. Second, we take a partnership to make that case. In 2013 and later years, we approach to investing with operators and health will strive to improve seniors housing valuations systems. Finally, we hire the “best and the through better data, information and research. brightest” and develop talent effectively. In the medical facilities sector, our teams have I mmersion in H ealth Care a deep understanding of the evolution of acute By immersing ourselves in, and committing to and post-acute care. We understand each health improve, health care, we have been able to attract system’s needs and deliver solutions tailored leading operators and systems. to that system. Our medical office property management team received a high honor this In the seniors housing sector, the company is well year, ranking in the top 5% for overall tenant positioned to drive internal and external growth.