TOLEDO, Ohio, Nov. 4, 2021 /PRNewswire/ -- Welltower
Inc. (NYSE:WELL) today announced results for the quarter ended
September 30, 2021.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.42 per diluted share
- Reported normalized FFO attributable to common stockholders of
$0.80 per diluted share
- Seniors Housing Operating ("SHO") portfolio occupancy increased
approximately 210 basis points ("bps") during the third quarter,
exceeding our July guidance of an approximate gain of 190 bps
- Achieved same store REVPOR growth of 2.2% within the SHO
portfolio during the third quarter, resulting in strong sequential
same store revenue growth of 3.5%
- During the third quarter, year-over-year same store revenue
growth for the SHO portfolio turned positive in the United States and United Kingdom for the first time since the
beginning of the pandemic, a trend that accelerated into quarter
end
- Completed $2.2 billion of pro
rata gross investments during the third quarter and $4.1 billion year-to-date, including the
previously announced acquisition of a portfolio of 85 seniors
housing properties previously owned by Holiday Retirement for
$1.58 billion
- Subsequent to quarter end, we entered into definitive
agreements to acquire four distinct seniors housing portfolios for
a pro rata gross investment amount of $1.3
billion
- Year-to-date, sold 29.5 million shares of common stock under
our ATM program via forward sale agreements for total gross
proceeds of approximately $2.4
billion, of which approximately 11.8 million shares remain
unsettled which are expected to generate future gross proceeds of
$1.0 billion
- Moody's Investors Services and S&P Global Ratings revised
their ratings outlook for Welltower to Stable from Negative and
affirmed Welltower's issuer credit ratings as 'Baa1' and 'BBB+',
respectively
- Initiated a program with a national payor to deliver wellness
coordination services through the presence of onsite Wellness
Advisors to senior residents in the New
York market. This partnership, the third such program across
our seniors housing portfolio, will strengthen residents'
connection to health care and wellness resources, enabling aging in
place and improved quality of life
- MSCI ESG rating upgraded to 'AA' from 'A', driven by our
continued commitment to strong governance practices
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. Month end occupancy rates are
as follows:
|
|
March 2021
|
|
April 2021
|
|
May 2021
|
|
June 2021
|
|
July 2021
|
|
August
2021
|
|
September
2021
|
Spot occupancy
(1)
|
|
72.7
|
%
|
|
73.2
|
%
|
|
73.7
|
%
|
|
74.6
|
%
|
|
75.2
|
%
|
|
75.9
|
%
|
|
76.7
|
%
|
Sequential occupancy
change (2)
|
|
|
|
0.5
|
%
|
|
0.5
|
%
|
|
0.9
|
%
|
|
0.6
|
%
|
|
0.8
|
%
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Spot occupancy represents
approximate month end occupancy at our share for 591 properties in
operation as of December 31, 2020, including unconsolidated
properties but excluding acquisitions, executed dispositions,
development conversions since this date as well as one property
closed for redevelopment.
|
(2) Sequential occupancy changes are
based on actual spot occupancy and may not recalculate due to
rounding.
|
In the current quarter, SHO portfolio expenses were
significantly higher than expectations, driven by higher seasonal
utility costs and elevated labor expenses mainly resulting from an
increased utilization of contract labor due to a rise in occupancy
and a challenging labor market. Our share of contract labor totaled
$19 million, which resulted in an
unfavorable sequential impact of $9
million or $0.02 per diluted
share on net income attributable to common stockholders and
normalized FFO for the three months ended September 30, 2021.
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 $25 million for the three and
nine months ended September 30, 2021,
respectively, as compared to an expense of approximately
$17 million and $64 million for the three and nine months ended
September 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 nine months ended
September 30, 2021, respectively, and
an unfavorable impact of $0.04 and
$0.15 per diluted share for the three
and nine months ended September 30,
2020, respectively.
Capital Activity and Liquidity Inclusive of
available borrowings under our line of credit, cash and cash
equivalents, and IRC Section 1031 deposits, at September 30, 2021, we have $4.0 billion of near-term available liquidity and
no material senior unsecured note maturities until 2024. On
July 30, 2021, we entered into an
amended and restated equity distribution agreement, which among
other amendments, increased the total amount of shares of common
stock that may be offered and sold under the ATM program from
$2.0 billion to $2.5 billion. During the third quarter, we sold
11.5 million shares of common stock under our ATM program via
forward sale agreements at an initial weighted average price of
$84.36 per share which are expected
to generate gross proceeds of approximately $966 million. Since the beginning of the year, we
sold 29.5 million shares of common stock under our ATM program via
forward sale agreements which are expected to generate gross
proceeds of approximately $2.4
billion. As of September 30,
2021, approximately 11.8 million shares remain unsettled,
which are expected to generate future gross proceeds of
$1.0 billion.
Dividend On November 4, 2021, the Board of
Directors declared a cash dividend for the quarter ended
September 30, 2021 of $0.61 per share. This dividend, which will be
paid on November 23, 2021 to
stockholders of record on November 16,
2021, will be our 202nd 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
third quarter, we completed $2.2
billion of pro rata gross investments including $2.1 billion in acquisitions and loan funding as
well as $141 million in development
funding. We converted three development projects for an aggregate
pro rata amount of $66 million.
Additionally, during the quarter we completed pro rata property
dispositions and loan payoffs of $488
million.
Notable Investment Activity Completed During the
Quarter
Holiday Retirement During the third quarter, we closed on
the previously announced acquisition of a portfolio of 85 seniors
housing properties 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 ("Atria")
assumed operations of the portfolio following its acquisition of
the Holiday management company. The transaction 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.
Additionally during the third quarter, we acquired eight seniors
housing communities operated by Holiday Retirement, now Atria, for
$115 million or $126,000 per unit, representing a significant
discount to replacement cost.
Aspect Health Acquisition As previously announced, we
formed a new 95/5 joint venture with Aspect Health and
simultaneously acquired seven medical office buildings in infill
markets across the New York City
metropolitan area for a pro rata investment amount of $98 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.
StoryPoint Senior Living As previously announced, in August
we completed the acquisition of six seniors housing communities
located in Ohio and Tennessee for approximately $141 million. In September, we acquired an
additional property located in Wisconsin for approximately $19 million. The seven communities will be
operated by StoryPoint under a triple-net master lease.
Other Transactions Additionally during the third quarter,
we acquired four seniors housing communities for $44 million which were added to the existing
RIDEA relationship with Frontier Management and one health system
property for $16 million which was
added to the in place triple-net lease with ProMedica. We disposed
of 21 properties previously leased to Genesis, 13 properties
previously leased to ProMedica in addition to one
long-term/post-acute property and two medical office buildings for
proceeds of $488 million, resulting
in a gain on sale of $120
million.
Outlook for Fourth 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 December 31, 2021 and expect to report net income
attributable to common stockholders in a range of $0.20 to $0.25 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 fourth 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 sequential increase in average pro rata occupancy of 140
bps in the fourth quarter.
- General and Administrative Expenses: We anticipate full year
general and administrative expenses to be approximately
$129 million to $131 million and stock-based compensation expense
to be approximately $19 million.
- Investments: Our fourth 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 $221 million of development in 2021 relating to
projects underway on September 30,
2021.
- Dispositions: We expect pro rata disposition proceeds of
$1.6 billion at a blended yield of
7.1% in 2021. This includes approximately $1.2 billion in proceeds from dispositions and
loan payoffs completed through September 30,
2021, $283 million of expected
proceeds from properties classified as held-for-sale as of
September 30, 2021 and $26 million in expected loan payoffs.
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
fourth quarter outlook and assumptions on the third quarter 2021
conference call.
Conference Call Information We have scheduled a
conference call on Friday, November 5, 2021 at 8:30 a.m. Eastern Time to discuss our third
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 November 19, 2021. To access the rebroadcast,
dial (855) 859-2056 or (404) 537-3406 (international). The
conference ID number is 9392405. 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.
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 September 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. Welltowerâ„¢, 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)
|
|
|
September
30,
|
|
|
2021
|
|
2020
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
|
3,698,858
|
|
|
$
|
3,386,072
|
|
Buildings and
improvements
|
|
29,775,951
|
|
|
27,782,471
|
|
Acquired lease
intangibles
|
|
1,653,415
|
|
|
1,509,053
|
|
Real property held for
sale, net of accumulated depreciation
|
|
251,152
|
|
|
362,886
|
|
Construction in
progress
|
|
562,487
|
|
|
414,833
|
|
Less accumulated
depreciation and intangible amortization
|
|
(6,634,061)
|
|
|
(6,002,775)
|
|
Net real property
owned
|
|
29,307,802
|
|
|
27,452,540
|
|
Right of use assets,
net
|
|
526,614
|
|
|
480,861
|
|
Real estate loans
receivable, net of credit allowance
|
|
1,115,645
|
|
|
414,706
|
|
Net real estate
investments
|
|
30,950,061
|
|
|
28,348,107
|
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
977,955
|
|
|
822,586
|
|
Goodwill
|
|
68,321
|
|
|
68,321
|
|
Cash and cash
equivalents
|
|
303,982
|
|
|
1,603,740
|
|
Restricted
cash
|
|
58,663
|
|
|
551,593
|
|
Straight-line rent
receivable
|
|
346,159
|
|
|
334,203
|
|
Receivables and other
assets
|
|
774,884
|
|
|
813,047
|
|
Total other
assets
|
|
2,529,964
|
|
|
4,193,490
|
|
Total
assets
|
|
$
|
33,480,025
|
|
|
$
|
32,541,597
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
|
290,996
|
|
|
$
|
—
|
|
Senior unsecured
notes
|
|
11,116,067
|
|
|
11,321,573
|
|
Secured
debt
|
|
2,262,345
|
|
|
2,459,659
|
|
Lease
liabilities
|
|
544,547
|
|
|
427,842
|
|
Accrued expenses and
other liabilities
|
|
1,093,959
|
|
|
1,041,368
|
|
Total
liabilities
|
|
15,307,914
|
|
|
15,250,442
|
|
Redeemable
noncontrolling interests
|
|
389,195
|
|
|
330,053
|
|
Equity:
|
|
|
|
|
Common
stock
|
|
436,640
|
|
|
418,361
|
|
Capital in excess of
par value
|
|
22,148,859
|
|
|
20,835,026
|
|
Treasury
stock
|
|
(108,478)
|
|
|
(94,022)
|
|
Cumulative net
income
|
|
8,605,064
|
|
|
8,163,869
|
|
Cumulative
dividends
|
|
(14,115,705)
|
|
|
(13,088,891)
|
|
Accumulated other
comprehensive income
|
|
(103,177)
|
|
|
(126,469)
|
|
Total Welltower Inc.
stockholders' equity
|
|
16,863,203
|
|
|
16,107,874
|
|
Noncontrolling
interests
|
|
919,713
|
|
|
853,228
|
|
Total
equity
|
|
17,782,916
|
|
|
16,961,102
|
|
Total liabilities
and equity
|
|
$
|
33,480,025
|
|
|
$
|
32,541,597
|
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
|
835,617
|
|
|
$
|
740,956
|
|
|
$
|
2,299,972
|
|
|
$
|
2,360,488
|
|
|
|
Rental
income
|
|
357,984
|
|
|
275,046
|
|
|
1,015,550
|
|
|
1,061,311
|
|
|
|
Interest
income
|
|
39,864
|
|
|
16,750
|
|
|
97,891
|
|
|
48,060
|
|
|
|
Other
income
|
|
6,332
|
|
|
4,122
|
|
|
19,438
|
|
|
14,092
|
|
|
|
Total
revenues
|
|
1,239,797
|
|
|
1,036,874
|
|
|
3,432,851
|
|
|
3,483,951
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
729,400
|
|
|
634,717
|
|
|
1,989,383
|
|
|
1,977,262
|
|
|
|
Depreciation and
amortization
|
|
267,754
|
|
|
255,532
|
|
|
753,065
|
|
|
795,704
|
|
|
|
Interest
expense
|
|
122,522
|
|
|
124,851
|
|
|
368,005
|
|
|
393,215
|
|
|
|
General and
administrative expenses
|
|
32,256
|
|
|
31,003
|
|
|
93,618
|
|
|
100,546
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(8,078)
|
|
|
1,395
|
|
|
(6,503)
|
|
|
10,480
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(5)
|
|
|
33,004
|
|
|
50,964
|
|
|
33,253
|
|
|
|
Provision for loan
losses, net
|
|
(271)
|
|
|
2,857
|
|
|
7,309
|
|
|
11,351
|
|
|
|
Impairment of
assets
|
|
1,490
|
|
|
23,313
|
|
|
48,750
|
|
|
126,291
|
|
|
|
Other
expenses
|
|
3,575
|
|
|
11,544
|
|
|
26,256
|
|
|
37,247
|
|
|
|
Total
expenses
|
|
1,148,643
|
|
|
1,118,216
|
|
|
3,330,847
|
|
|
3,485,349
|
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
91,154
|
|
|
(81,342)
|
|
|
102,004
|
|
|
(1,398)
|
|
Income tax (expense)
benefit
|
|
(4,940)
|
|
|
(2,003)
|
|
|
(6,662)
|
|
|
(9,678)
|
|
Income (loss) from
unconsolidated entities
|
|
(15,832)
|
|
|
(5,981)
|
|
|
(10,759)
|
|
|
(8,341)
|
|
Gain (loss) on real
estate dispositions, net
|
|
119,954
|
|
|
484,304
|
|
|
223,702
|
|
|
902,991
|
|
Income (loss) from
continuing operations
|
|
190,336
|
|
|
394,978
|
|
|
308,285
|
|
|
883,574
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
190,336
|
|
|
394,978
|
|
|
308,285
|
|
|
883,574
|
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
10,673
|
|
|
69,393
|
|
|
30,819
|
|
|
68,459
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
179,663
|
|
|
$
|
325,585
|
|
|
$
|
277,466
|
|
|
$
|
815,115
|
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
428,031
|
|
|
417,027
|
|
|
420,955
|
|
|
414,822
|
|
|
|
Diluted
|
|
429,983
|
|
|
418,987
|
|
|
422,835
|
|
|
416,860
|
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.42
|
|
|
$
|
0.78
|
|
|
$
|
0.66
|
|
|
$
|
1.96
|
|
|
|
Diluted(2)
|
|
$
|
0.42
|
|
|
$
|
0.77
|
|
|
$
|
0.65
|
|
|
$
|
1.94
|
|
Common dividends per
share
|
|
$
|
0.61
|
|
|
$
|
0.61
|
|
|
$
|
1.83
|
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
179,663
|
|
|
$
|
325,585
|
|
|
$
|
277,466
|
|
|
$
|
815,115
|
|
|
Depreciation and
amortization
|
|
267,754
|
|
|
255,532
|
|
|
753,065
|
|
|
795,704
|
|
|
Impairments and
losses (gains) on real estate dispositions, net
|
|
(118,464)
|
|
|
(460,991)
|
|
|
(174,952)
|
|
|
(776,700)
|
|
|
Noncontrolling
interests(1)
|
|
(11,095)
|
|
|
48,559
|
|
|
(40,202)
|
|
|
(3,389)
|
|
|
Unconsolidated
entities(2)
|
|
27,881
|
|
|
16,329
|
|
|
66,369
|
|
|
46,005
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
345,739
|
|
|
185,014
|
|
|
881,746
|
|
|
876,735
|
|
|
Normalizing items,
net(3)
|
|
(3,472)
|
|
|
167,597
|
|
|
124,680
|
|
|
256,150
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
|
342,267
|
|
|
$
|
352,611
|
|
|
$
|
1,006,426
|
|
|
$
|
1,132,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
429,983
|
|
|
418,987
|
|
|
422,835
|
|
|
416,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share
data attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)(4)
|
|
$
|
0.42
|
|
|
$
|
0.77
|
|
|
$
|
0.65
|
|
|
$
|
1.94
|
|
|
|
NAREIT FFO
|
|
$
|
0.80
|
|
|
$
|
0.44
|
|
|
$
|
2.09
|
|
|
$
|
2.10
|
|
|
|
Normalized
FFO
|
|
$
|
0.80
|
|
|
$
|
0.84
|
|
|
$
|
2.38
|
|
|
$
|
2.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
|
0.61
|
|
|
$
|
0.61
|
|
|
$
|
1.83
|
|
|
$
|
2.09
|
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
|
0.80
|
|
|
$
|
0.84
|
|
|
$
|
2.38
|
|
|
$
|
2.72
|
|
|
|
|
Normalized FFO payout
ratio
|
|
76
|
%
|
|
73
|
%
|
|
77
|
%
|
|
77
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(5)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent
amortization(6)
|
|
$
|
(19,809)
|
|
|
$
|
(18,729)
|
|
|
$
|
(58,672)
|
|
|
$
|
(69,286)
|
|
|
Non-cash interest
expenses(7)
|
|
6,223
|
|
|
4,339
|
|
|
14,572
|
|
|
9,437
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(22,722)
|
|
|
(19,443)
|
|
|
(54,581)
|
|
|
(59,638)
|
|
|
Stock-based
compensation(8)
|
|
4,479
|
|
|
6,565
|
|
|
13,989
|
|
|
20,279
|
|
|
|
|
(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
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
|
(8,078)
|
|
(1)
|
$
|
1,395
|
|
|
$
|
(6,503)
|
|
|
$
|
10,480
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(5)
|
|
|
33,004
|
|
|
50,964
|
|
|
33,253
|
|
|
Provision for loan
losses, net
|
|
(271)
|
|
(2)
|
2,857
|
|
|
7,309
|
|
|
11,351
|
|
|
Nonrecurring income
tax benefits
|
|
—
|
|
|
—
|
|
|
(6,298)
|
|
|
—
|
|
|
Incremental interest
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,871
|
|
|
Other
impairment
|
|
—
|
|
|
112,398
|
|
|
49,241
|
|
|
146,508
|
|
|
Other
expenses
|
|
3,575
|
|
(3)
|
11,544
|
|
|
26,256
|
|
|
37,247
|
|
|
Leasehold interest
adjustment
|
|
(640)
|
|
(4)
|
—
|
|
|
(640)
|
|
|
—
|
|
|
Casualty losses, net
of recoveries
|
|
|
998
|
|
(5)
|
—
|
|
|
998
|
|
|
—
|
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
949
|
|
(6)
|
6,399
|
|
|
3,353
|
|
|
11,440
|
|
|
Net normalizing
items
|
|
$
|
(3,472)
|
|
|
$
|
167,597
|
|
|
$
|
124,680
|
|
|
$
|
256,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
429,983
|
|
|
418,987
|
|
|
422,835
|
|
|
416,860
|
|
|
Net normalizing items
per diluted share
|
|
$
|
(0.01)
|
|
|
$
|
0.40
|
|
|
$
|
0.29
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of the equity warrants received as part of the
Safanad/HC-One transaction that closed in the second
quarter.
|
|
(2) Primarily related
to reserves for loan losses under the current expected credit
losses accounting standard.
|
|
(3) Primarily related
to non-capitalizable transaction costs, including an accrual for
noncapitalizable promotes.
|
|
(4) Represents
$13,214,000 of revenues and $12,574,000 of property operating
expenses associated with a leasehold portfolio interest relating to
26 properties assumed by a wholly-owned affiliate in conjunction
with the Holiday Retirement transaction. Subsequent to the initial
transaction, we purchased eight of the leased properties and one of
the properties was sold by the landlord and removed from the lease.
No rent will be paid in excess of net cash flow relating to the
leasehold properties and therefore, the net impact each quarter
will be excluded from Normalized FFO.
|
|
(5) Primarily relates
to casualty losses net of any insurance recoveries.
|
|
(6) Primarily related
to non-capitalizable transaction costs.
|
|
Outlook
Reconciliation: Quarter Ending December 31, 2021
|
Exhibit
3
|
|
(in millions,
except per share data)
|
|
|
|
Current
Outlook
|
|
|
|
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
|
$
|
87
|
|
|
$
|
109
|
|
|
Impairments and
losses (gains) on real estate dispositions,
net(1,2)
|
|
|
(36)
|
|
|
(36)
|
|
|
Depreciation and
amortization(1)
|
|
|
291
|
|
|
291
|
|
|
NAREIT FFO and
Normalized FFO attributable to common stockholders
|
|
|
342
|
|
|
364
|
|
|
|
|
|
|
|
|
|
|
Diluted per share
data attributable to common stockholders:
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.20
|
|
|
$
|
0.25
|
|
|
NAREIT FFO and
Normalized FFO
|
|
|
$
|
0.78
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
|
$
|
(19)
|
|
|
$
|
(19)
|
|
|
Non-cash interest
expenses
|
|
|
4
|
|
|
4
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
|
(43)
|
|
|
(43)
|
|
|
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.
|
|
Reconciliation of
SHO SS REVPOR Growth
|
|
Exhibit
4
|
|
(in thousands
except SS REVPOR)
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
|
2021
|
|
2020
|
|
Consolidated SHO
revenues
|
|
$
|
839,519
|
|
|
$
|
742,065
|
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
45,991
|
|
|
42,574
|
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(73,414)
|
|
|
(58,505)
|
|
|
SHO pro rata
revenues(3)
|
|
812,096
|
|
|
726,134
|
|
|
Non-cash revenues on
same store properties
|
|
(562)
|
|
|
(848)
|
|
|
Revenues attributable
to non-same store properties
|
|
(142,217)
|
|
|
(54,813)
|
|
|
Currency and
ownership adjustments(4)
|
|
(448)
|
|
|
2,266
|
|
|
Other normalizing
adjustments(5)
|
|
—
|
|
|
(1,481)
|
|
|
SHO SS
revenues(6)
|
|
668,869
|
|
|
671,258
|
|
|
Average occupied
units/month(7)
|
|
39,716
|
|
|
40,736
|
|
|
SHO SS
REVPOR(8)
|
|
$
|
5,568
|
|
|
$
|
5,448
|
|
|
SS REVPOR YOY
growth
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
(1) Represents
Welltower's interests in joint ventures where Welltower is the
minority partner.
|
|
(2) Represents
minority partners' interests in joint ventures where Welltower is
the majority partner and includes an adjustment to remove revenues
related to certain leasehold properties. See Exhibit 2 for more
information.
|
|
(3) Represents SHO
revenues at Welltower pro rata ownership.
|
|
(4) Includes where
appropriate adjustments to reflect consistent property ownership
percentages, to translate Canadian properties at a USD/CAD rate of
1.2684 and to translate UK properties at a GBP/USD rate of
1.38.
|
|
(5) Represents
aggregate normalizing adjustments which are individually less than
.50% of SSNOI growth.
|
|
(6) Represents SS SHO
revenues at Welltower pro rata ownership.
|
|
(7) Represents
average occupied units for SS properties on a pro rata
basis.
|
|
(8) Represents pro
rata SS average revenues generated per occupied room per
month.
|
|
Reconciliation of
Sequential SS Revenue Growth
|
|
Exhibit
5
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
September 30,
2021
|
|
June 30,
2021
|
|
Consolidated SHO
revenues
|
|
$
|
839,519
|
|
|
$
|
742,549
|
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
45,991
|
|
|
45,032
|
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(73,414)
|
|
|
(59,346)
|
|
|
SHO pro rata
revenues(3)
|
|
812,096
|
|
|
728,235
|
|
|
Non-cash revenues on
same store properties
|
|
(562)
|
|
|
(572)
|
|
|
Revenues attributable
to non-same store properties
|
|
(142,217)
|
|
|
(77,938)
|
|
|
Currency and
ownership adjustments(4)
|
|
(448)
|
|
|
(3,621)
|
|
|
SHO SS
revenues(5)
|
|
$
|
668,869
|
|
|
$
|
646,104
|
|
|
Sequential SS Revenue
growth
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
(1) Represents
Welltower's interests in joint ventures where Welltower is the
minority partner.
|
|
(2) Represents
minority partners' interests in joint ventures where Welltower is
the majority partner and includes an adjustment to remove revenues
related to certain leasehold properties. See Exhibit 2 for more
information.
|
|
(3) Represents SHO
revenues at Welltower pro rata ownership.
|
|
(4) Includes where
appropriate adjustments to reflect consistent property ownership
percentages, to translate Canadian properties at a USD/CAD rate of
1.2684 and to translate UK properties at a GBP/USD rate of
1.38.
|
|
(5) Represents SS SHO
revenues at Welltower pro rata ownership.
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/welltower-reports-third-quarter-2021-results-301417049.html
SOURCE Welltower Inc.