TOLEDO, Ohio, July 29,
2021 /PRNewswire/ -- Welltower Inc. (NYSE:WELL) today
announced results for the quarter ended June
30, 2021.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.06 per diluted share
- Reported normalized FFO attributable to common stockholders of
$0.79 per diluted share
- Seniors Housing Operating ("SHO") portfolio occupancy increased
approximately 190 basis points ("bps") during the second quarter,
exceeding our guidance of an approximate gain of 130 bps
- Completed $1.5 billion of pro
rata gross investments during the second quarter
- Announced the acquisition of an 86 property seniors housing
portfolio operated by Holiday Retirement for $1.58 billion. The transaction is expected to be
immediately accretive to normalized funds from operations per
diluted share following its anticipated closing in the third
quarter
- Closed on a new $4.7 billion
unsecured credit facility which includes a five bps improvement in
pricing from the previous facility
- Sold 20.1 million shares of common stock under our ATM program
via forward sale agreements since April 1,
2021 which are expected to generate $1.6 billion of gross proceeds and issued
$500 million of 2.050% senior
unsecured notes due January 2029
- Earned the 2021 ENERGY STAR® Partner of the Year
Award for the third consecutive year and further elevated to the
level of Sustained Excellence, the Environmental Protection
Agency's highest recognition within the ENERGY STAR®
program
COVID-19 Update
SHO Portfolio Virtually all of our communities are
currently accepting new residents, resulting in an increase in
move-in activity and occupancy rates in the most recent months.
Month end occupancy rates are as follows:
|
|
March 2021
|
|
April 2021
|
|
May 2021
|
|
June 2021
|
Spot occupancy
(1)
|
|
72.6
|
%
|
|
73.2
|
%
|
|
73.6
|
%
|
|
74.6
|
%
|
Sequential occupancy
change (2)
|
|
|
|
0.5
|
%
|
|
0.5
|
%
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Spot occupancy represents
approximate month end occupancy at our share for 592 properties in
operation as of December 31, 2020,
including unconsolidated properties but
excluding acquisitions, executed dispositions and development
conversions since this date.
|
(2) Sequential occupancy changes are
based on actual spot occupancy and may not recalculate due to
rounding.
|
On a month-to-date basis, as of July 23,
2021, SHO portfolio occupancy has increased approximately 40
bps. Occupancy continued to strengthen in the U.S. and U.K. with
gains of approximately 60 bps and 30 bps, respectively, while
occupancy in Canada remained flat
over the same period.
In 2020, applications were made for amounts under Phase 2 and
Phase 3 of the Provider Relief Fund related to our SHO portfolio.
During the second quarter, we received pro rata Provider Relief
Funds of approximately $5 million,
which was recognized as a reduction to COVID-19 costs within
property operating expenses.
Our share of property-level expenses associated with the
COVID-19 pandemic relating to our total SHO portfolio, net of
reimbursements including Provider Relief Funds and similar programs
in the U.K. and Canada, totaled a
benefit of approximately $1 million
and $24 million for the three and six
months ended June 30, 2021,
respectively, as compared to an expense of approximately
$37 million and $44 million for the three and six months ended
June 30, 2020, respectively. These
costs included higher labor expenses coupled with expenditures
related to procurement of personal protective equipment and other
supplies, net of any reimbursements. Such amounts had a favorable
impact on net income attributable to common stockholders and
normalized FFO per diluted share of less than $0.01 and $0.06,
for the three and six months ended June 30,
2021, respectively, and an unfavorable impact of
$0.09 and $0.11 per diluted share for the three and six
months ended June 30, 2020,
respectively.
Capital Activity and Liquidity In June, we announced
an expanded $4.7 billion unsecured
credit facility, including an expanded $4.0
billion unsecured revolving line of credit, which replaced
our existing line of credit of $3.0
billion. The revolving line of credit will bear interest at
LIBOR plus 77.5 bps based on our current credit ratings, which
represents a 5 bps improvement from pricing under our previous
unsecured revolving credit line. In addition, the revolving
facility permits a reduction in the interest rate upon meeting
certain reductions in greenhouse gas emissions. We have two
existing facilities which remain outstanding: a $500 million USD term loan and a $250 million CAD term loan.
Inclusive of available borrowings under our line of credit, cash
and cash equivalents, and IRC Section 1031 deposits, at
June 30, 2021, we have $4.8 billion of near-term available liquidity and
no material senior unsecured note maturities until 2024. Since the
beginning of the second quarter, we sold 20.1 million shares of
common stock under our ATM program via forward sale agreements at
an initial weighted average price of $79.69 per share. These forward ATM sales are
expected to generate gross proceeds of approximately $1.6 billion, of which 2.8 million shares were
settled during the second quarter for $212
million of gross proceeds. Since the beginning of the year,
we sold 22.3 million shares of common stock under our ATM program
via forward sale agreements which are expected to generate gross
proceeds of approximately $1.8
billion, of which 5.0 million shares have been settled
resulting in $372 million of gross
proceeds.
On June 28, 2021 we completed the
issuance of $500 million senior
unsecured notes bearing interest at 2.05% with a maturity date of
January 2029. Proceeds from the
offering were used to pay down borrowings under our revolving line
of credit. During the quarter we extinguished $1.6 billion of debt, including $674 million in senior unsecured notes due 2023,
$860 million pay down of the term
loan due 2022 and $25 million of
secured debt at a yield of 3.31%.
Dividend On July 29,
2021, the Board of Directors declared a cash dividend for
the quarter ended June 30, 2021 of
$0.61 per share. This dividend, which
will be paid on August 19, 2021 to
stockholders of record on August 12,
2021, will be our 201st consecutive quarterly cash dividend.
The declaration and payment of future quarterly dividends remains
subject to review and approval by the Board of Directors.
Quarterly Investment and Disposition Activity In the
second quarter, we completed $1.5
billion of pro rata gross investments including $1.4 billion in acquisitions and loan funding as
well as $142 million in development
funding. We converted four development projects for an aggregate
pro rata amount of $196 million.
Additionally, during the quarter we completed pro rata property
dispositions and loan payoffs of $541
million.
Notable Investment Activity Completed or Announced During the
Quarter
Safanad/HC-One Loan Funding and Equity Investment As
previously announced, we provided £540 million ($750 million) of senior loan financing and a £30
million ($42 million) delayed
facility to affiliates of Safanad, a global real estate and private
equity firm, as part of the successful recapitalization of its
investment in HC-One Group. The recapitalization will enhance
HC-One's ability to meet the complex care needs of the communities
it serves and reinforces its commitment to its team members at all
levels of the organization, while enabling HC-One to continue to
modernize and enhance its portfolio of care homes. The loan has a
5-year term and is fully collateralized by the shares and assets of
the HC-One Group, including its underlying property portfolio of
owned assets across the United
Kingdom. Welltower's last pound basis on the initial £540
million tranche is approximately £40,000 per unit.
Additionally, we will have the ability to participate in the
anticipated recovery in the U.K. seniors housing sector through
both warrants and an equity investment. The transaction is expected
to generate a low-to-mid teens unlevered IRR.
StoryPoint Senior Living During the quarter, we acquired
three combination independent living, assisted living and memory
care communities located in the Midwest with an average age of four
years for $102 million. The
communities will be operated by StoryPoint under a new triple-net
master lease. The transaction is expected to generate an unlevered
IRR in the high-single digit range.
Pathway to Living During the quarter, we formed a new RIDEA
relationship with Illinois-based
Pathway to Living, an established operator of seniors housing
communities, and acquired 22 properties in Illinois and Ohio for a pro rata investment amount of
$100 million or $93,000 per unit, representing a substantial
discount to replacement cost. In July, we closed on a second
tranche of seven seniors housing properties from the same seller
for a pro rata purchase price of approximately $50 million which were added to the existing
RIDEA relationship with Frontier Management. The total transaction
of approximately $147 million is
expected to generate a low-double digit unlevered IRR.
Oakmont Senior Living During the quarter, we expanded our
relationship with Oakmont Senior Living through the acquisition of
Ivy Living at Otay Ranch, a
combination assisted living and memory care community in
San Diego, California for a pro
rata purchase price of $35 million.
Subsequent to quarter end, we entered into a strategic partnership
with Oakmont Management Group that is expected to expand the size
of Welltower and Oakmont's existing portfolio, which currently
spans nine assisted living and memory care communities. The
partnership will include acquisition opportunities and an
exclusive, long-term development agreement. Welltower and Oakmont
have agreed to a strongly aligned RIDEA 3.0 management
contract.
Norman Regional Health System During the quarter, we
expanded our relationship with Bremner Real Estate and began
construction on the first building in a multi-phased expansion of
the Norman Regional Health System. The total development cost for
phase one of the multi-phased expansion is expected to be in excess
of $100 million and will consist of
181,000 rentable square feet of class A outpatient medical
facilities.
ProMedica Joint Venture Disposition As previously
announced, the Welltower and ProMedica joint venture intends to
divest a 25 property portfolio of non-strategic skilled nursing
facilities for $265 million and is
expected to generate an unlevered IRR of 22% over the 2.5 year
ownership period of the assets. The properties, which were acquired
through the formation of the Welltower/ProMedica joint venture in
2018, are in eight states and have an average age of 41 years.
During the second quarter, we completed the disposition of 8
properties for pro rata proceeds of $47
million and a gain on sale of $12
million. The sale of the remaining properties are expected
to close during the second half of 2021.
Long-Term/Post-Acute Medical Disposition During the
quarter, we completed the disposition of three properties for
$75 million resulting in a gain on
sale of $31 million, further reducing
long-term/post-acute care exposure.
Holiday Retirement On June 21,
2021, we announced that we entered into a definitive
agreement to acquire a portfolio of 86 seniors housing properties
currently owned by Holiday Retirement for $1.58 billion. The portfolio is valued at
$152,000 per unit, representing a
discount to estimated replacement cost in excess of 30%.
Atria Senior Living will assume
operations of the portfolio following its acquisition of the
Holiday management company (also announced on June 21, 2021). The transaction is expected to be
immediately accretive to Welltower's normalized funds from
operations per diluted share and has significant growth upside
through the post-COVID recovery in seniors housing fundamentals,
implementation of Atria's technologically advanced operating
platform and capital investment in assets.
Genesis Healthcare Update As previously announced, we
entered into a definitive agreement to execute a series of mutually
beneficial transactions resulting in the substantial exit of
Welltower's operating relationship with Genesis Healthcare. The
status of these transactions is as follows:
- The transition of 9 PowerBack facilities to an 80/20 joint
venture with ProMedica, which occurred in April and generated pro
rata proceeds of $58 million.
- As of July 1, 2021, operations
have transitioned for 28 properties with a remaining seven expected
to transition before year end. The sales of these properties are
expected to close during the second half of the year.
Other Transactions During the second quarter, we acquired
four seniors housing communities for $107
million which will be operated by existing operators Sunrise
Senior Living, Chartwell Residences, Sparrow Living and a new
relationship with Enclave Companies. Additionally, a first mortgage
loan previously extended by Welltower in August 2020 was repaid in full for $178 million during the quarter.
Notable July Investment Activity
Aspect Health Acquisition In July, we formed a new 95/5
joint venture with Aspect Health and simultaneously acquired six
medical office buildings in infill markets across the New York City metropolitan area for a pro rata
investment amount of $99 million. The
class-A portfolio has a weighted average remaining lease term of 12
years. With the transaction, we will have a 10-year exclusivity
agreement with Aspect Health which allows the joint venture to
finance future development projects in the New York City metropolitan area.
Outlook for Third Quarter 2021 The degree to which
the COVID-19 pandemic continues to impact our operations and those
of our operators and tenants, including the variability in the
timing of recovery, is dependent on a variety of factors and
remains highly uncertain. Accordingly, we are only introducing
earnings guidance for the quarter ended September 30, 2021 and expect to report net
income attributable to common stockholders in a range of
$0.44 to $0.49 per diluted share and normalized FFO
attributable to common stockholders in a range of $0.78 to $0.83 per
diluted share. In preparing our guidance, we have made the
following assumptions:
- Provider Relief Funds: Our third quarter guidance does not
include the recognition of any Provider Relief Funds which may be
received during the quarter.
- SHO Portfolio Occupancy: Midpoint of normalized FFO guidance
assumes a continuation of recent trends resulting in an approximate
increase of 190 bps through the third quarter.
- General and Administrative Expenses: We anticipate full year
general and administrative expenses to be approximately
$132 million to $137 million and stock-based compensation expense
to be approximately $21 million.
- Investments: Our third quarter 2021 earnings guidance includes
only those acquisitions closed or announced to date. Furthermore,
no transitions or restructures beyond those announced to date are
included.
- Development: We anticipate funding approximately $288 million of development in 2021 relating to
projects underway on June 30,
2021.
- Dispositions: We expect pro rata disposition proceeds of
$1.5 billion at a blended yield of
8.1% in 2021. This includes approximately $758 million in proceeds from dispositions and
loan payoffs completed through June 30,
2021 and $735 million of
incremental expected proceeds related to properties classified as
held-for-sale as of June 30,
2021.
Our guidance does not include any additional investments,
dispositions or capital transactions beyond those we have
announced, nor any other expenses, impairments, unanticipated
additions to the loan loss reserve or other additional normalizing
items. Please see the Supplemental Reporting Measures section for
further discussion and our definition of normalized FFO and Exhibit
3 for a reconciliation of the outlook for net income available to
common stockholders to normalized FFO attributable to common
stockholders. We will provide additional detail regarding our third
quarter outlook and assumptions on the second quarter 2021
conference call.
Conference Call Information We have scheduled a
conference call on Friday, July 30, 2021 at 9:00 a.m. Eastern Time to discuss our second
quarter 2021 results, industry trends and portfolio performance.
Telephone access will be available by dialing (844) 467-7115 or
(409) 983-9837 (international). For those unable to listen to
the call live, a taped rebroadcast will be available beginning two
hours after completion of the call through August 13, 2021. To access the rebroadcast, dial
(855) 859-2056 or (404) 537-3406 (international). The
conference ID number is 5191208. To participate in the webcast, log
on to www.welltower.com 15 minutes before the call to download the
necessary software. Replays will be available for 90 days.
Supplemental Reporting Measures We believe that net
income and net income attributable to common stockholders ("NICS"),
as defined by U.S. generally accepted accounting principles ("U.S.
GAAP"), are the most appropriate earnings measurements. However, we
consider funds from operations ("FFO"), normalized FFO, NOI, SSNOI,
REVPOR and SS REVPOR to be useful supplemental measures of our
operating performance. These supplemental measures are disclosed on
our pro rata ownership basis. Pro rata amounts are derived by
reducing consolidated amounts for minority partners' noncontrolling
ownership interests and adding our minority ownership share of
unconsolidated amounts. We do not control unconsolidated
investments. While we consider pro rata disclosures useful, they
may not accurately depict the legal and economic implications of
our joint venture arrangements and should be used with caution.
Historical cost accounting for real estate assets in accordance
with U.S. GAAP implicitly assumes that the value of real estate
assets diminishes predictably over time as evidenced by the
provision for depreciation. However, since real estate values have
historically risen or fallen with market conditions, many industry
investors and analysts have considered presentations of operating
results for real estate companies that use historical cost
accounting to be insufficient. In response, the National
Association of Real Estate Investment Trusts ("NAREIT") created FFO
as a supplemental measure of operating performance for REITs that
excludes historical cost depreciation from net income. FFO
attributable to common stockholders, as defined by NAREIT, means
net income attributable to common stockholders, computed in
accordance with U.S. GAAP, excluding gains (or losses) from sales
of real estate and impairments of depreciable assets, plus real
estate depreciation and amortization, and after adjustments for
unconsolidated entities and noncontrolling
interests. Normalized FFO attributable to common stockholders
represents FFO attributable to common stockholders adjusted for
certain items detailed in Exhibit 2. We believe that
normalized FFO attributable to common stockholders is a useful
supplemental measure of operating performance because investors and
equity analysts may use this measure to compare the operating
performance of the Company between periods or as compared to other
REITs or other companies on a consistent basis without having to
account for differences caused by unanticipated and/or incalculable
items.
No reconciliation of forecasted normalized FFO attributable to
common stockholders per diluted share accretion or estimate of
forecasted impact on net income attributable to common stockholders
per diluted share for the announced Holiday Retirement acquisition
is provided herein because we are unable to quantify certain
amounts that would be required to be included in the comparable
GAAP financial measures without unreasonable efforts primarily due
to the anticipated timing of receipt of draft third-party real
estate appraisals and valuations. We believe such reconciliation
would imply a degree of precision that could be confusing or
misleading to investors.
We define NOI as total revenues, including tenant
reimbursements, less property operating expenses. Property
operating expenses represent costs associated with managing,
maintaining and servicing tenants for our properties. These
expenses include, but are not limited to, property-related payroll
and benefits, property management fees paid to operators,
marketing, housekeeping, food service, maintenance, utilities,
property taxes and insurance. General and administrative expenses
represent costs unrelated to property operations or transaction
costs. These expenses include, but are not limited to, payroll and
benefits, professional services, office expenses and depreciation
of corporate fixed assets. SSNOI is used to evaluate the operating
performance of our properties using a consistent population which
controls for changes in the composition of our portfolio. As used
herein, same store is generally defined as those revenue-generating
properties in the portfolio for the relevant year-over-year
reporting periods. Acquisitions and development conversions are
included in the same store amounts five full quarters after
acquisition or being placed into service. Land parcels, loans and
sub-leases, as well as any properties sold or classified as held
for sale during the period, are excluded from the same store
amounts. Redeveloped properties (including major refurbishments of
a Seniors Housing Operating property where 20% or more of units are
simultaneously taken out of commission for 30 days or more or
Outpatient Medical properties undergoing a change in intended use)
are excluded from the same store amounts until five full quarters
post completion of the redevelopment. Properties undergoing
operator transitions and/or segment transitions are also excluded
from the same store amounts until five full quarters post
completion of the operator transition or segment transition. In
addition, properties significantly impacted by force majeure, acts
of God or other extraordinary adverse events are excluded from same
store amounts until five full quarters after the properties are
placed back into service. SSNOI excludes non-cash NOI and includes
adjustments to present consistent property ownership percentages
and to translate Canadian properties and UK properties using a
consistent exchange rate. Normalizers include adjustments that in
management's opinion are appropriate in considering SSNOI, a
supplemental, non-GAAP performance measure. None of these
adjustments, which may increase or decrease SSNOI, are reflected in
our financial statements prepared in accordance with U.S. GAAP.
Significant normalizers (defined as any that individually exceed
0.50% of SSNOI growth per property type) are separately disclosed
and explained. We believe NOI and SSNOI provide investors relevant
and useful information because they measure the operating
performance of our properties at the property level on an
unleveraged basis. We use NOI and SSNOI to make decisions about
resource allocations and to assess the property level performance
of our properties.
REVPOR represents the average revenues generated per occupied
room per month at our Seniors Housing Operating properties. It is
calculated as our pro rata version of total resident fees and
services revenues from the income statement divided by average
monthly occupied room days. SS REVPOR is used to evaluate the
REVPOR performance of our properties under a consistent population
which eliminates changes in the composition of our portfolio. It is
based on the same pool of properties used for SSNOI and includes
any revenue normalizations used for SSNOI. We use REVPOR and SS
REVPOR to evaluate the revenue-generating capacity and profit
potential of our Seniors Housing Operating portfolio independent of
fluctuating occupancy rates. They are also used in comparison
against industry and competitor statistics, if known, to evaluate
the quality of our Seniors Housing Operating portfolio.
Our supplemental reporting measures and similarly entitled
financial measures are widely used by investors, equity and debt
analysts and ratings agencies in the valuation, comparison, rating
and investment recommendations of companies. Our management uses
these financial measures to facilitate internal and external
comparisons to historical operating results and in making operating
decisions. Additionally, they are utilized by the Board of
Directors to evaluate management. The supplemental reporting
measures do not represent net income or cash flow provided from
operating activities as determined in accordance with U.S. GAAP and
should not be considered as alternative measures of profitability
or liquidity. Finally, the supplemental reporting measures, as
defined by us, may not be comparable to similarly entitled items
reported by other real estate investment trusts or other
companies. Please see the exhibits for reconciliations of
supplemental reporting measures and the supplemental information
package for the quarter ended June 30,
2021, which is available on the Company's website
(www.welltower.com), for information and reconciliations of
additional supplemental reporting measures.
About Welltower Welltower Inc. (NYSE:WELL), an S&P
500 company headquartered in Toledo,
Ohio, is driving the transformation of health care
infrastructure. The Company invests with leading seniors housing
operators, post-acute providers and health systems to fund the real
estate infrastructure needed to scale innovative care delivery
models and improve people's wellness and overall health care
experience. Welltower™, a real estate investment trust
("REIT"), owns interests in properties concentrated in major,
high-growth markets in the United
States, Canada and the
United Kingdom, consisting of
seniors housing and post-acute communities and outpatient medical
properties. More information is available at
www.welltower.com. We routinely post important information on
our website at www.welltower.com in the "Investors" section,
including corporate and investor presentations and financial
information. We intend to use our website as a means of
disclosing material, non-public information and for complying with
our disclosure obligations under Regulation FD. Such disclosures
will be included on our website under the heading
"Investors". Accordingly, investors should monitor such
portion of our website in addition to following our press releases,
public conference calls and filings with the Securities and
Exchange Commission. The information on our website is not
incorporated by reference in this press release, and our web
address is included as an inactive textual reference only.
Forward-Looking Statements and Risk Factors This
press release contains "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. When
Welltower uses words such as "may," "will," "intend," "should,"
"believe," "expect," "anticipate," "project," "pro forma,"
"estimate" or similar expressions that do not relate solely to
historical matters, Welltower is making forward-looking statements.
Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties that may cause Welltower's
actual results to differ materially from Welltower's expectations
discussed in the forward-looking statements. This may be a result
of various factors, including, but not limited to: the duration and
scope of the COVID-19 pandemic; the impact of
the COVID-19 pandemic on occupancy rates and on the
operations of Welltower and its operators/tenants; actions
governments take in response to the COVID-19 pandemic,
including the introduction of public health measures and other
regulations affecting Welltower's properties and the operations of
Welltower and its operators/tenants; uncertainty regarding the
implementation and impact of the CARES Act and future stimulus or
other COVID-19 relief legislation; the effects of health and safety
measures adopted by Welltower and its operators/tenants related to
the COVID-19 pandemic; increased operational costs as a
result of health and safety measures related to COVID-19; the
impact of the COVID-19 pandemic on the business and
financial condition of operators/tenants and their ability to make
payments to Welltower; disruptions to Welltower's property
acquisition and disposition activity due to economic uncertainty
caused by COVID-19; general economic uncertainty in key markets as
a result of the COVID-19 pandemic and a worsening of
global economic conditions or low levels of economic growth; the
status of capital markets, including availability and cost of
capital; issues facing the health care industry, including
compliance with, and changes to, regulations and payment policies,
responding to government investigations and punitive settlements
and operators'/tenants' difficulty in cost effectively obtaining
and maintaining adequate liability and other insurance; changes in
financing terms; competition within the health care and seniors
housing industries; negative developments in the operating results
or financial condition of operators/tenants, including, but not
limited to, their ability to pay rent and repay loans; Welltower's
ability to transition or sell properties with profitable results;
the failure to make new investments or acquisitions as and when
anticipated; natural disasters and other acts of God affecting
Welltower's properties; Welltower's ability
to re-lease space at similar rates as vacancies occur;
Welltower's ability to timely reinvest sale proceeds at similar
rates to assets sold; operator/tenant or joint venture partner
bankruptcies or insolvencies; the cooperation of joint venture
partners; government regulations affecting Medicare and Medicaid
reimbursement rates and operational requirements; liability or
contract claims by or against operators/tenants; unanticipated
difficulties and/or expenditures relating to future investments or
acquisitions; environmental laws affecting Welltower's properties;
changes in rules or practices governing Welltower's financial
reporting; the movement of U.S. and foreign currency exchange
rates; Welltower's ability to maintain Welltower's qualification as
a REIT; key management personnel recruitment and retention; and
other risks described in Welltower's reports filed from time to
time with the SEC. Finally, Welltower undertakes no obligation to
update or revise publicly any forward-looking statements, whether
because of new information, future events or otherwise, or to
update the reasons why actual results could differ from those
projected in any forward-looking statements.
Welltower Inc.
Financial Exhibits
Consolidated
Balance Sheets (unaudited)
|
(in
thousands)
|
|
|
June 30,
|
|
|
2021
|
|
2020
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
|
3,448,542
|
|
|
$
|
3,479,369
|
|
Buildings and
improvements
|
|
28,124,236
|
|
|
28,589,269
|
|
Acquired lease
intangibles
|
|
1,516,971
|
|
|
1,565,978
|
|
Real property held for
sale, net of accumulated depreciation
|
|
592,699
|
|
|
382,580
|
|
Construction in
progress
|
|
458,844
|
|
|
411,700
|
|
Less accumulated
depreciation and intangible amortization
|
|
(6,415,676)
|
|
|
(6,001,177)
|
|
Net real property
owned
|
|
27,725,616
|
|
|
28,427,719
|
|
Right of use assets,
net
|
|
453,621
|
|
|
502,604
|
|
Real estate loans
receivable, net of credit allowance
|
|
1,097,299
|
|
|
224,871
|
|
Net real estate
investments
|
|
29,276,536
|
|
|
29,155,194
|
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,020,112
|
|
|
786,921
|
|
Goodwill
|
|
68,321
|
|
|
68,321
|
|
Cash and cash
equivalents
|
|
513,602
|
|
|
1,678,770
|
|
Restricted
cash
|
|
295,102
|
|
|
147,473
|
|
Straight-line rent
receivable
|
|
331,381
|
|
|
464,716
|
|
Receivables and other
assets
|
|
671,062
|
|
|
861,257
|
|
Total other
assets
|
|
2,899,580
|
|
|
4,007,458
|
|
Total
assets
|
|
$
|
32,176,116
|
|
|
$
|
33,162,652
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior unsecured
notes
|
|
11,157,732
|
|
|
11,815,972
|
|
Secured
debt
|
|
2,304,178
|
|
|
2,619,678
|
|
Lease
liabilities
|
|
409,628
|
|
|
447,424
|
|
Accrued expenses and
other liabilities
|
|
1,061,370
|
|
|
1,015,906
|
|
Total
liabilities
|
|
14,932,908
|
|
|
15,898,980
|
|
Redeemable
noncontrolling interests
|
|
392,379
|
|
|
327,145
|
|
Equity:
|
|
|
|
|
Common
stock
|
|
423,933
|
|
|
418,343
|
|
Capital in excess of
par value
|
|
21,161,838
|
|
|
20,836,549
|
|
Treasury
stock
|
|
(108,633)
|
|
|
(93,799)
|
|
Cumulative net
income
|
|
8,425,401
|
|
|
7,838,284
|
|
Cumulative
dividends
|
|
(13,854,145)
|
|
|
(12,834,381)
|
|
Accumulated other
comprehensive income
|
|
(127,948)
|
|
|
(116,856)
|
|
Total Welltower Inc.
stockholders' equity
|
|
15,920,446
|
|
|
16,048,140
|
|
Noncontrolling
interests
|
|
930,383
|
|
|
888,387
|
|
Total
equity
|
|
16,850,829
|
|
|
16,936,527
|
|
Total liabilities
and equity
|
|
$
|
32,176,116
|
|
|
$
|
33,162,652
|
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
|
740,891
|
|
|
$
|
769,560
|
|
|
$
|
1,464,355
|
|
|
$
|
1,619,532
|
|
|
|
Rental
income
|
|
354,723
|
|
|
396,305
|
|
|
657,566
|
|
|
786,265
|
|
|
|
Interest
income
|
|
38,448
|
|
|
16,069
|
|
|
58,027
|
|
|
31,310
|
|
|
|
Other
income
|
|
6,930
|
|
|
6,541
|
|
|
13,106
|
|
|
9,970
|
|
|
|
Total
revenues
|
|
1,140,992
|
|
|
1,188,475
|
|
|
2,193,054
|
|
|
2,447,077
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
642,657
|
|
|
660,764
|
|
|
1,259,983
|
|
|
1,342,545
|
|
|
|
Depreciation and
amortization
|
|
240,885
|
|
|
265,371
|
|
|
485,311
|
|
|
540,172
|
|
|
|
Interest
expense
|
|
122,341
|
|
|
126,357
|
|
|
245,483
|
|
|
268,364
|
|
|
|
General and
administrative expenses
|
|
31,436
|
|
|
34,062
|
|
|
61,362
|
|
|
69,543
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(359)
|
|
|
1,434
|
|
|
1,575
|
|
|
9,085
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
55,612
|
|
|
249
|
|
|
50,969
|
|
|
249
|
|
|
|
Provision for loan
losses
|
|
6,197
|
|
|
1,422
|
|
|
7,580
|
|
|
8,494
|
|
|
|
Impairment of
assets
|
|
23,692
|
|
|
75,151
|
|
|
47,260
|
|
|
102,978
|
|
|
|
Other
expenses
|
|
11,687
|
|
|
19,411
|
|
|
22,681
|
|
|
25,703
|
|
|
|
Total
expenses
|
|
1,134,148
|
|
|
1,184,221
|
|
|
2,182,204
|
|
|
2,367,133
|
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
6,844
|
|
|
4,254
|
|
|
10,850
|
|
|
79,944
|
|
Income tax (expense)
benefit
|
|
2,221
|
|
|
(2,233)
|
|
|
(1,722)
|
|
|
(7,675)
|
|
Income (loss) from
unconsolidated entities
|
|
(7,976)
|
|
|
1,332
|
|
|
5,073
|
|
|
(2,360)
|
|
Gain (loss) on real
estate dispositions, net
|
|
44,668
|
|
|
155,863
|
|
|
103,748
|
|
|
418,687
|
|
Income (loss) from
continuing operations
|
|
45,757
|
|
|
159,216
|
|
|
117,949
|
|
|
488,596
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
45,757
|
|
|
159,216
|
|
|
117,949
|
|
|
488,596
|
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
19,500
|
|
|
(20,030)
|
|
|
20,146
|
|
|
(934)
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
26,257
|
|
|
$
|
179,246
|
|
|
$
|
97,803
|
|
|
$
|
489,530
|
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
417,452
|
|
|
417,084
|
|
|
417,360
|
|
|
413,696
|
|
|
|
Diluted
|
|
419,305
|
|
|
419,121
|
|
|
419,205
|
|
|
415,775
|
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.06
|
|
|
$
|
0.43
|
|
|
$
|
0.23
|
|
|
$
|
1.18
|
|
|
|
Diluted(2)
|
|
$
|
0.06
|
|
|
$
|
0.42
|
|
|
$
|
0.23
|
|
|
$
|
1.17
|
|
Common dividends per
share
|
|
$
|
0.61
|
|
|
$
|
0.61
|
|
|
$
|
1.22
|
|
|
$
|
1.48
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes amounts attributable to
redeemable noncontrolling interests.
|
(2) Includes adjustment to the
numerator for income (loss) attributable to OP
unitholders.
|
FFO
Reconciliations
|
|
|
|
|
|
|
|
Exhibit
1
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
26,257
|
|
|
$
|
179,246
|
|
|
$
|
97,803
|
|
|
$
|
489,530
|
|
|
Depreciation and
amortization
|
|
240,885
|
|
|
265,371
|
|
|
485,311
|
|
|
540,172
|
|
|
Impairments and
losses (gains) on real estate dispositions, net
|
|
(20,976)
|
|
|
(80,712)
|
|
|
(56,488)
|
|
|
(315,709)
|
|
|
Noncontrolling
interests(1)
|
|
(16,591)
|
|
|
(42,539)
|
|
|
(29,107)
|
|
|
(51,948)
|
|
|
Unconsolidated
entities(2)
|
|
19,265
|
|
|
14,231
|
|
|
38,488
|
|
|
29,676
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
248,840
|
|
|
335,597
|
|
|
536,007
|
|
|
691,721
|
|
|
Normalizing items,
net(3)
|
|
81,407
|
|
|
25,358
|
|
|
128,152
|
|
|
88,553
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
|
330,247
|
|
|
$
|
360,955
|
|
|
$
|
664,159
|
|
|
$
|
780,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
419,305
|
|
|
419,121
|
|
|
419,205
|
|
|
415,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share
data attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)(4)
|
|
$
|
0.06
|
|
|
$
|
0.42
|
|
|
$
|
0.23
|
|
|
$
|
1.17
|
|
|
|
NAREIT FFO
|
|
$
|
0.59
|
|
|
$
|
0.80
|
|
|
$
|
1.28
|
|
|
$
|
1.66
|
|
|
|
Normalized
FFO
|
|
$
|
0.79
|
|
|
$
|
0.86
|
|
|
$
|
1.58
|
|
|
$
|
1.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
|
0.61
|
|
|
$
|
0.61
|
|
|
$
|
1.22
|
|
|
$
|
1.48
|
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
|
0.79
|
|
|
$
|
0.86
|
|
|
$
|
1.58
|
|
|
$
|
1.88
|
|
|
|
|
Normalized FFO payout
ratio
|
|
77
|
%
|
|
71
|
%
|
|
77
|
%
|
|
79
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(5)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent
amortization(6)
|
|
$
|
(20,729)
|
|
|
$
|
(25,627)
|
|
|
$
|
(38,863)
|
|
|
$
|
(50,557)
|
|
|
Non-cash interest
expenses(7)
|
|
4,714
|
|
|
2,275
|
|
|
8,349
|
|
|
5,098
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(20,426)
|
|
|
(17,579)
|
|
|
(31,859)
|
|
|
(40,195)
|
|
|
Stock-based
compensation(8)
|
|
4,129
|
|
|
6,892
|
|
|
9,510
|
|
|
13,714
|
|
|
|
|
(1) Represents
noncontrolling interests' share of net FFO adjustments.
|
|
(2) Represents
Welltower's share of net FFO adjustments from unconsolidated
entities.
|
|
(3) See Exhibit
2.
|
|
(4) Includes
adjustment to the numerator for income (loss) attributable to OP
unitholders.
|
|
(5) Amounts presented
net of noncontrolling interests' share and including Welltower's
share of unconsolidated entities.
|
|
(6) Excludes
normalized other impairment (see Exhibit 2).
|
|
(7) Excludes
normalized incremental interest expense (see Exhibit 2).
|
|
(8) Excludes certain
severance related stock-based compensation recorded in other
expense (see Exhibit 2).
|
|
Normalizing
Items
|
|
|
|
|
|
|
Exhibit
2
|
|
(in thousands,
except per share data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
|
(359)
|
|
(1)
|
$
|
1,434
|
|
|
$
|
1,575
|
|
|
$
|
9,085
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
55,612
|
|
(2)
|
249
|
|
|
50,969
|
|
|
249
|
|
|
Provision for loan
losses
|
|
6,197
|
|
(3)
|
1,422
|
|
|
7,580
|
|
|
8,494
|
|
|
Nonrecurring income
tax benefits
|
|
(6,298)
|
|
(4)
|
—
|
|
|
(6,298)
|
|
|
—
|
|
|
Incremental interest
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,871
|
|
|
Other
impairment
|
|
—
|
|
|
1,842
|
|
|
49,241
|
|
|
34,110
|
|
|
Other
expenses
|
|
11,687
|
|
(5)
|
19,411
|
|
|
22,681
|
|
|
25,703
|
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
14,568
|
|
(6)
|
1,000
|
|
|
2,404
|
|
|
5,041
|
|
|
Net normalizing
items
|
|
$
|
81,407
|
|
|
$
|
25,358
|
|
|
$
|
128,152
|
|
|
$
|
88,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
419,305
|
|
|
419,121
|
|
|
419,205
|
|
|
415,775
|
|
|
Net normalizing items
per diluted share
|
|
$
|
0.19
|
|
|
$
|
0.06
|
|
|
$
|
0.31
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of Genesis Healthcare stock holdings.
|
|
(2) Primarily related
to the April extinguishment of $339,128,000 of our 3.75% senior
unsecured notes due March 2023 and $334,624,000 of our 3.95% senior
unsecured notes due September 2023.
|
|
(3) Primarily related
to reserves for loan losses under the current expected credit
losses accounting standard.
|
|
(4) Primarily related
to revaluation of deferred taxes due a change in the U.K. tax rate
and an adjustment to a deferred tax liability due to the
recognition of an impairment charge.
|
|
(5) Primarily related
to non-capitalizable transaction costs.
|
|
(6) Primarily related
to noncontrolling interests' share of the reserve for straight-line
rent receivable balances related to leases placed on cash
recognition.
|
|
Outlook
Reconciliations: Quarter Ending September 30, 2021
|
Exhibit
3
|
|
(in millions,
except per share data)
|
|
|
|
Current
Outlook
|
|
|
|
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
|
$
|
191
|
|
|
$
|
212
|
|
|
Impairments and
losses (gains) on real estate dispositions,
net(1,2)
|
|
|
(120)
|
|
|
(120)
|
|
|
Depreciation and
amortization(1)
|
|
|
267
|
|
|
267
|
|
|
NAREIT FFO and
Normalized FFO attributable to common stockholders
|
|
|
338
|
|
|
359
|
|
|
|
|
|
|
|
|
|
|
Diluted per share
data attributable to common stockholders:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.44
|
|
|
$
|
0.49
|
|
|
NAREIT FFO and
Normalized FFO
|
|
|
$
|
0.78
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
|
$
|
(20)
|
|
|
$
|
(20)
|
|
|
Non-cash interest
expenses
|
|
|
5
|
|
|
5
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
|
(30)
|
|
|
(30)
|
|
|
Stock-based
compensation
|
|
|
5
|
|
|
5
|
|
|
|
|
|
(1) Amounts presented
net of noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
(2) Includes
estimated gains on expected dispositions.
|
|
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SOURCE Welltower Inc.