TOLEDO,
Ohio, Aug. 9, 2022 /PRNewswire/ --
Welltower Inc. (NYSE: WELL) today announced results
for the quarter ended June 30,
2022.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.20 per diluted share
- Reported normalized FFO attributable to common stockholders of
$0.86 per diluted share
- Reported normalized FFO growth attributable to common
stockholders per diluted share of 8.9% over the prior year, and
7.7% on a constant currency basis excluding Provider Relief
Funds
- Reported total portfolio year-over-year same store NOI
("SSNOI") growth of 8.7%, driven by SSNOI growth in our Seniors
Housing Operating ("SHO") portfolio of 15.4%
- SHO portfolio year-over-year same store revenue growth
accelerated relative to the first quarter, increasing to 11.5% in
the second quarter, driven by 500 bps of year-over-year average
occupancy growth and 4.5% same store REVPOR growth
- Completed $1.6 billion of pro
rata gross investments during the second quarter including
$1.1 billion in acquisitions and loan
funding and $448 million in
development funding, continuing one of the most active starts to
the year for investment activity in Welltower's history.
Transactions during the period were funded, in part, through the
issuance of Operating Partnership Units ("OP Units")
- Closed on an amended $5.2 billion
unsecured credit facility with improved pricing across term
loans
- Earned the 2022 ENERGY STAR® Partner of the Year Award for the
fourth consecutive year and attained the level of Sustained
Excellence, the Environmental Protection Agency's highest
recognition within the ENERGY STAR® program, for the second
consecutive year
COVID-19 Update
During the period, we recognized $17
million of Provider Relief Funds, as compared to guidance of
approximately $6 million. As a
result, second quarter 2022 net income attributable to common
stockholders and normalized FFO benefited by approximately
$0.02 per diluted share relative to
guidance.
Our share of property-level expenses associated with the
COVID-19 pandemic relating to our SHO portfolio totaled
$9 million. Net of reimbursements
including Provider Relief Funds and similar programs in the U.K.
and Canada, our share of
property-level expenses associated with the COVID-19 pandemic
relating to our SHO portfolio totaled a benefit of approximately
$13 million and $6 million for the three months and six months
ended June 30, 2022, respectively, as
compared to a benefit of approximately $1
million and $24 million for
the three months and six months ended June
30, 2021, respectively. Such amounts had a favorable impact
on net income attributable to common stockholders and normalized
FFO per diluted share of $0.03 and
$0.01 for the three months and six
months ended June 30, 2022,
respectively, and a favorable impact of less than
$0.01 and $0.06 per diluted share for the three months and
six months ended June 30, 2021,
respectively.
Capital Activity and Liquidity In June 2022, we closed on an amended $5.2 billion unsecured credit facility with
improved pricing across our term loans. The credit facility
includes $4.0 billion of revolving
credit capacity at a borrowing rate of 77.5 basis points over the
adjusted SOFR rate, $1.0 billion of
USD term loan capacity at a borrowing rate of 85.0 basis points
over the adjusted SOFR rate and $250
million CAD term loan capacity at 85.0 basis points over
CDOR. In addition, the revolving facility and term loans permit a
reduction in the interest rate upon meeting certain reductions in
greenhouse gas emissions.
Inclusive of available borrowings under our line of credit, cash
and cash equivalents, and restricted cash, as of June 30, 2022, we had $4.1
billion of near-term available liquidity and no material
senior unsecured note maturities until 2024. During the three
months ended June 30, 2022, we
settled 9.4 million shares of common stock that were sold under our
ATM program via forward sale agreements, resulting in $820 million of gross proceeds. During the
quarter, we extinguished $96 million
of secured debt at a blended average interest rate of 4.09%.
On May 24, 2022, Welltower OP
Inc., a wholly owned subsidiary of Welltower Inc., converted from a
Delaware corporation into a
Delaware limited liability company
named Welltower OP LLC, effectively completing the formation of an
UPREIT structure. This reorganization aligns our corporate
structure with other publicly traded REITs and allows us to more
efficiently acquire properties in a tax-deferred manner. Detailed
information on the UPREIT reorganization can be found in the Form
8-K filed on May 23, 2022 and on our
website.
Investment and Disposition Activity In the second
quarter, we completed $1.6 billion of
pro rata gross investments including $1.1
billion in acquisitions and loan funding, as well as
$448 million in development funding.
Transactions during this period were funded, in part, through the
issuance of OP Units. We opened three development projects for an
aggregate pro rata investment amount of $84
million. Additionally, during the quarter we completed pro
rata property dispositions and loan payoffs of $101 million.
Notable Investment Activity Completed During the
Quarter
Calamar During the second quarter, we acquired a portfolio
of 25 senior apartment communities in non-coastal East Coast and
Midwest markets, including 20 newer vintage properties and five
properties currently in development, for $502 million or $172,000 per unit. The transaction was funded
through cash, the assumption of debt and the issuance of OP Units.
With the closing of this transaction, Welltower, as the largest
owner of moderately priced age-restricted and age-targeted rental
housing in the U.S., significantly expanded its market leadership
with a total of nearly 10,000 units.
Cogir Management Corporation We continued to grow our
relationship with Cogir, closing on three separate transactions
during the quarter. In April, we closed on a three-property
portfolio in Washington state for
a pro rata purchase price of $244
million in a 90/10 joint venture, where Cogir also assumed
the management of the properties.
Additionally, we closed on two properties in Montreal, Quebec for a pro rata purchase price
of $102 million in a 95/5 joint
venture and one property in Brentwood,
California for a pro rata purchase price of $35 million in a 90/10 joint venture. Here to,
Cogir assumed the management of the properties upon closing.
Oakmont Management Group During the quarter, we further
expanded our relationship with Oakmont through the acquisition of an assisted
living and memory care facility in Bakersfield, California for $22 million.
StoryPoint Senior Living As previously announced, we
entered into an agreement to expand our relationship with
StoryPoint Senior Living, a preeminent senior living operator based
in Brighton, Michigan, through the
acquisition of 33 communities throughout Michigan, Ohio and Tennessee under an aligned RIDEA 3.0 contract.
During April, we closed on the first tranche through the
acquisition of two recently opened communities located in
Ohio and Tennessee for a pro rata purchase price of
$65 million. The portfolio was
acquired at a significant discount to estimated replacement cost
and is expected to generate a high single-digit unlevered IRR.
Treplus Communities During the second quarter, we expanded
our relationship with Treplus Communities through the acquisition
of a portfolio of three class-A wellness housing communities in the
Midwest. The communities feature unique environments with
individual cottage style units, clubhouses, 24/7 concierge
services, and offer residents a wellness-oriented social
lifestyle.
Outpatient Medical Acquisition During the quarter, we
acquired a medical office building in Pleasanton, California for $35 million. The property has approximately
93,000 rentable square feet and is currently 90% leased.
Other Transactions Additionally during the second quarter,
we acquired four medical office buildings for $68 million. We disposed of two properties
previously leased to Genesis Healthcare and one seniors housing
operating property for proceeds of $21
million.
Investment Activity Subsequent to Quarter End
West Coast Transition Portfolio In July, we commenced the
previously announced transition of 12 well-located properties on
the West Coast of the U.S., representing 2,010 assisted living
units, to three best-in-class operators in Oakmont, Cogir and Kisco Senior Living under
well-aligned management contracts. The transitions are expected to
drive improved NOI through both higher occupancy and lower
expenses. Cogir and Kisco will each assume management of one
property in markets where they will have existing local scale.
Oakmont Management Group In July, we continued to expand
our relationship with Oakmont
through the acquisition of three newly-constructed rental
communities and three stable entrance fee communities in high
barrier-to-entry California
markets for an aggregate purchase price of $312 million. The portfolio will be managed by
Oakmont under a RIDEA 3.0
management contract.
Dividend On August 9, 2022, the Board of
Directors declared a cash dividend for the quarter ended
June 30, 2022 of $0.61 per share. This dividend, which will be
paid on August 31, 2022 to
stockholders of record as of August 23,
2022, will be our 205th consecutive quarterly cash dividend.
The declaration and payment of future quarterly dividends remains
subject to review and approval by the Board of Directors.
Outlook for Third Quarter 2022 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, 2022 and expect to report net
income attributable to common stockholders in a range of
$0.12 to $0.17 per diluted share and normalized FFO
attributable to common stockholders in a range of $0.82 to $0.87 per
diluted share. In preparing our guidance, we have made the
following assumptions:
- Same Store NOI: We expect average blended SSNOI growth of 7% to
9%, which is comprised of the following components:
-
- Seniors Housing Operating approximately 15% to 20%
- Seniors Housing Triple-net approximately 5% to 6%
- Outpatient Medical approximately 1.75% to 2.75%
- Health System approximately 2.75%
- Long-Term/Post-Acute Care approximately 2.5% to 3.5%
- Provider Relief Funds: Our third quarter guidance includes
approximately $7 million of Provider
Relief Funds, which are expected to be received during the
quarter.
- Impact of Interest Rates and Foreign Exchange Rates: Increased
interest rates on floating rate debt and a strengthening U.S.
Dollar relative to the British Pound and Canadian Dollar are
expected to reduce third quarter 2022 normalized FFO attributable
to common stockholders by approximately $0.03 per diluted share versus the second quarter
2022 and $0.04 per diluted share
versus the third quarter 2021.
- General and Administrative Expenses: We anticipate third
quarter general and administrative expenses to be approximately
$34 million to $36 million and stock-based compensation expense
to be approximately $5 million.
- Investments: Our 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 $670 million of development through the remainder
of 2022 relating to projects underway on June 30, 2022.
- Dispositions: We expect pro rata disposition proceeds of
$258 million at a blended yield of
5.9% in the next twelve months. This includes approximately
$231 million of expected proceeds
from properties classified as held-for-sale as of June 30, 2022 and $27
million of expected proceeds from loan repayments.
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 SSNOI
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
2022 conference call.
Conference Call Information We have scheduled a
conference call on Wednesday, August 10, 2022 at 9:00 a.m. Eastern Time to discuss our second
quarter 2022 results, industry trends and portfolio performance.
Telephone access will be available by dialing (888) 340-5024 or
(646) 960-0135 (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 17, 2022. To access the rebroadcast, dial
(800) 770-2030 or (647) 362-9199 (international). The
conference ID number is 8230248. 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. In addition, we believe that presentation of constant
currency normalized FFO exclusive of Provider Relief Funds provides
enhanced comparability for investor evaluations of
period-over-period results.
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. No reconciliation of the forecasted range for
SSNOI on a combined basis or by property type is included in this
release because we are unable to quantify certain amounts that
would be required to be included in the comparable GAAP financial
measure without unreasonable efforts, and we believe such
reconciliation would imply a degree of precision that could be
confusing or misleading to investors.
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,
2022, 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, including statements related to Funds
From Operations guidance, 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 impact of
the COVID-19 pandemic; uncertainty regarding the implementation and
impact of the CARES Act and future stimulus or other COVID-19
relief legislation; the status of the economy; 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 its 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. 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,
|
|
|
2022
|
|
2021
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
4,109,851
|
|
$
3,448,542
|
Buildings and
improvements
|
|
32,480,543
|
|
28,124,236
|
Acquired lease
intangibles
|
|
1,902,141
|
|
1,516,971
|
Real property held for
sale, net of accumulated depreciation
|
|
177,719
|
|
592,699
|
Construction in
progress
|
|
900,633
|
|
458,844
|
Less accumulated
depreciation and intangible amortization
|
|
(7,437,779)
|
|
(6,415,676)
|
Net real property
owned
|
|
32,133,108
|
|
27,725,616
|
Right of use assets,
net
|
|
324,720
|
|
453,621
|
Real estate loans
receivable, net of credit allowance
|
|
956,285
|
|
1,097,299
|
Net real estate
investments
|
|
33,414,113
|
|
29,276,536
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,300,975
|
|
1,020,112
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
363,339
|
|
513,602
|
Restricted
cash
|
|
78,912
|
|
295,102
|
Straight-line rent
receivable
|
|
408,575
|
|
331,381
|
Receivables and other
assets
|
|
939,436
|
|
671,062
|
Total other
assets
|
|
3,159,558
|
|
2,899,580
|
Total
assets
|
|
$
36,573,671
|
|
$
32,176,116
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
354,000
|
|
$
—
|
Senior unsecured
notes
|
|
12,488,718
|
|
11,157,732
|
Secured
debt
|
|
2,191,826
|
|
2,304,178
|
Lease
liabilities
|
|
410,717
|
|
409,628
|
Accrued expenses and
other liabilities
|
|
1,254,497
|
|
1,061,370
|
Total
liabilities
|
|
16,699,758
|
|
14,932,908
|
Redeemable
noncontrolling interests
|
|
420,018
|
|
392,379
|
Equity:
|
|
|
|
|
Common
stock
|
|
464,778
|
|
423,933
|
Capital in excess of
par value
|
|
24,465,041
|
|
21,161,838
|
Treasury
stock
|
|
(111,691)
|
|
(108,633)
|
Cumulative net
income
|
|
8,815,446
|
|
8,425,401
|
Cumulative
dividends
|
|
(14,932,198)
|
|
(13,854,145)
|
Accumulated other
comprehensive income
|
|
(145,196)
|
|
(127,948)
|
Total Welltower Inc.
stockholders' equity
|
|
18,556,180
|
|
15,920,446
|
Noncontrolling
interests
|
|
897,715
|
|
930,383
|
Total
equity
|
|
19,453,895
|
|
16,850,829
|
Total liabilities
and equity
|
|
$
36,573,671
|
|
$
32,176,116
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
1,009,999
|
|
$
740,891
|
|
$
2,004,334
|
|
$
1,464,355
|
|
|
Rental
income
|
|
361,411
|
|
354,723
|
|
717,801
|
|
657,566
|
|
|
Interest
income
|
|
37,140
|
|
38,448
|
|
76,134
|
|
58,027
|
|
|
Other income
|
|
63,986
|
|
6,930
|
|
69,971
|
|
13,106
|
|
|
Total
revenues
|
|
1,472,536
|
|
1,140,992
|
|
2,868,240
|
|
2,193,054
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
854,083
|
|
642,657
|
|
1,707,752
|
|
1,259,983
|
|
|
Depreciation and
amortization
|
|
310,295
|
|
240,885
|
|
614,383
|
|
485,311
|
|
|
Interest
expense
|
|
127,750
|
|
122,341
|
|
249,446
|
|
245,483
|
|
|
General and
administrative expenses
|
|
36,554
|
|
31,436
|
|
74,260
|
|
61,362
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(1,407)
|
|
(359)
|
|
1,171
|
|
1,575
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
603
|
|
55,612
|
|
591
|
|
50,969
|
|
|
Provision for loan
losses, net
|
|
165
|
|
6,197
|
|
(639)
|
|
7,580
|
|
|
Impairment of
assets
|
|
—
|
|
23,692
|
|
—
|
|
47,260
|
|
|
Other
expenses
|
|
35,166
|
|
11,687
|
|
61,235
|
|
22,681
|
|
|
Total
expenses
|
|
1,363,209
|
|
1,134,148
|
|
2,708,199
|
|
2,182,204
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
109,327
|
|
6,844
|
|
160,041
|
|
10,850
|
Income tax (expense)
benefit
|
|
(3,065)
|
|
2,221
|
|
(8,078)
|
|
(1,722)
|
Income (loss) from
unconsolidated entities
|
|
(7,058)
|
|
(7,976)
|
|
(9,942)
|
|
5,073
|
Gain (loss) on real
estate dispositions, net
|
|
(3,532)
|
|
44,668
|
|
19,402
|
|
103,748
|
Income (loss) from
continuing operations
|
|
95,672
|
|
45,757
|
|
161,423
|
|
117,949
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
95,672
|
|
45,757
|
|
161,423
|
|
117,949
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
5,888
|
|
19,500
|
|
9,714
|
|
20,146
|
Net income (loss)
attributable to common stockholders
|
|
$
89,784
|
|
$
26,257
|
|
$
151,709
|
|
$
97,803
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
454,327
|
|
417,452
|
|
450,865
|
|
417,360
|
|
|
Diluted
|
|
457,082
|
|
419,305
|
|
453,455
|
|
419,205
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.20
|
|
$
0.06
|
|
$
0.34
|
|
$
0.23
|
|
|
Diluted(2)
|
|
$
0.20
|
|
$
0.06
|
|
$
0.33
|
|
$
0.23
|
Common dividends per
share
|
|
$
0.61
|
|
$
0.61
|
|
$
1.22
|
|
$
1.22
|
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net income (loss)
attributable to common stockholders
|
|
$ 89,784
|
|
$ 26,257
|
|
$
151,709
|
|
$ 97,803
|
|
Depreciation and
amortization
|
|
310,295
|
|
240,885
|
|
614,383
|
|
485,311
|
|
Impairments and losses
(gains) on real estate dispositions, net
|
|
3,532
|
|
(20,976)
|
|
(19,402)
|
|
(56,488)
|
|
Noncontrolling
interests(1)
|
|
(13,173)
|
|
(16,591)
|
|
(27,926)
|
|
(29,107)
|
|
Unconsolidated
entities(2)
|
|
19,150
|
|
19,265
|
|
38,459
|
|
38,488
|
|
NAREIT FFO attributable
to common stockholders
|
|
409,588
|
|
248,840
|
|
757,223
|
|
536,007
|
|
Normalizing items,
net(3)
|
|
(14,975)
|
|
81,407
|
|
5,672
|
|
128,152
|
|
Normalized FFO
attributable to common stockholders
|
|
$
394,613
|
|
$
330,247
|
|
$
762,895
|
|
$
664,159
|
|
Provider Relief Funds
received
|
|
(17,132)
|
|
(5,294)
|
|
(17,733)
|
|
(40,976)
|
|
Provider Relief Funds
attributable to noncontrolling interests and
unconsolidated entities, net
|
|
26
|
|
264
|
|
45
|
|
126
|
|
Foreign currency
impact(4)
|
|
4,720
|
|
(136)
|
|
6,495
|
|
674
|
|
Constant currency
normalized FFO attributable to common stockholders,
excluding Provider Relief Funds
|
|
$
382,227
|
|
$
325,081
|
|
$
751,702
|
|
$
623,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
457,082
|
|
419,305
|
|
453,455
|
|
419,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)(5)
|
|
$
0.20
|
|
$
0.06
|
|
$
0.33
|
|
$
0.23
|
|
|
NAREIT FFO
|
|
$
0.90
|
|
$
0.59
|
|
$
1.67
|
|
$
1.28
|
|
|
Normalized
FFO
|
|
$
0.86
|
|
$
0.79
|
|
$
1.68
|
|
$
1.58
|
|
|
|
% growth
|
|
|
8.9 %
|
|
|
|
|
|
|
|
|
Constant currency
normalized FFO, excluding Provider Relief Funds
|
|
$
0.84
|
|
$
0.78
|
|
$
1.66
|
|
$
1.49
|
|
|
|
% growth
|
|
|
7.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.61
|
|
$
0.61
|
|
$
1.22
|
|
$
1.22
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
0.86
|
|
$
0.79
|
|
$
1.68
|
|
$
1.58
|
|
|
|
Normalized FFO payout
ratio
|
|
71 %
|
|
77 %
|
|
73 %
|
|
77 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(6)
|
|
|
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization(7)
|
|
$ (26,127)
|
|
$ (20,729)
|
|
$ (46,141)
|
|
$ (38,863)
|
|
Non-cash interest
expenses(8)
|
|
5,552
|
|
4,714
|
|
10,273
|
|
8,349
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(39,558)
|
|
(20,426)
|
|
(72,024)
|
|
(31,859)
|
|
Stock-based
compensation(9)
|
|
5,900
|
|
4,129
|
|
13,341
|
|
9,510
|
|
|
|
(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) Foreign currency
impact is calculated assuming constant exchange rates for all
periods presented of 1.2286 for USD/CAD and of 1.3977 for
GBP/USD.
|
|
(5) Includes adjustment
to the numerator for income (loss) attributable to OP
unitholders.
|
|
(6) Amounts presented
net of noncontrolling interests' share and including Welltower's
share of unconsolidated entities.
|
|
(7) Excludes normalized
other impairment (see Exhibit 2).
|
|
(8) Excludes normalized
foreign currency loss (gain) (see Exhibit 2).
|
|
(9) 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,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$ (1,407)
|
(1)
|
$
(359)
|
|
$ 1,171
|
|
$ 1,575
|
|
Loss (gain) on
extinguishment of debt, net
|
|
603
|
(2)
|
55,612
|
|
591
|
|
50,969
|
|
Provision for loan
losses, net
|
|
165
|
(3)
|
6,197
|
|
(639)
|
|
7,580
|
|
Nonrecurring income tax
benefits
|
|
—
|
|
(6,298)
|
|
—
|
|
(6,298)
|
|
Other
impairment
|
|
(620)
|
(4)
|
—
|
|
(620)
|
|
49,241
|
|
Other
expenses
|
|
35,166
|
(5)
|
11,687
|
|
61,235
|
|
22,681
|
|
Lease termination and
leasehold interest adjustment
|
|
(56,397)
|
(6)
|
—
|
|
(64,854)
|
|
—
|
|
Casualty losses, net of
recoveries
|
|
2,673
|
(7)
|
—
|
|
2,686
|
|
—
|
|
Foreign currency loss
(gain)
|
|
1,840
|
(8)
|
—
|
|
1,840
|
|
—
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
3,002
|
(9)
|
14,568
|
|
4,262
|
|
2,404
|
|
Net normalizing
items
|
|
$
(14,975)
|
|
$
81,407
|
|
$ 5,672
|
|
$
128,152
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
457,082
|
|
419,305
|
|
453,455
|
|
419,205
|
|
Net normalizing items
per diluted share
|
|
$
(0.03)
|
|
$
0.19
|
|
$
0.01
|
|
$
0.31
|
|
|
|
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of the equity warrants received as part of the
Safanad/HC-One transaction that closed in 2021.
|
|
(2) Primarily related
to the extinguishment of secured debt.
|
|
(3) Primarily related
to reserves for loan losses under the current expected credit
losses accounting standard.
|
|
(4) Primarily related
to the release of previously reserved straight-line
receivables.
|
|
|
|
|
|
|
|
|
|
(5) Primarily related
to non-capitalizable transaction costs, including an accrual for
non-capitalizable promotes, and legal fees and accrued litigation
settlements.
|
|
(6) Effective April 1,
2022, our leasehold interest relating to the master lease with
National Health Investors ("NHI") for 17 properties assumed in
conjunction with the Holiday
Retirement acquisition was terminated as a
result of the transition or sale of the properties by NHI. We
recognized a gain of $58,621,000 related to the termination of
this
lease in other income. The net impact of these
leasehold properties, inclusive of the gain, has been excluded from
normalized FFO.
|
|
(7) Primarily relates
to casualty losses net of any insurance recoveries.
|
|
(8) Primarily relates
to foreign currency gains and losses related to accrued interest on
intercompany loans and third party debt denominated in a foreign
currency.
|
|
(9) Primarily related
to our share of non-capitalizable transaction costs on
unconsolidated entities.
|
|
Outlook
Reconciliation: Quarter Ending September 30, 2022
|
Exhibit
3
|
|
(in millions, except
per share data)
|
|
|
Current
Outlook
|
|
|
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
57
|
|
$
81
|
|
Depreciation and
amortization(1)
|
|
334
|
|
334
|
|
NAREIT FFO and
Normalized FFO attributable to common stockholders
|
|
$
391
|
|
$
415
|
|
|
|
|
|
|
|
|
Diluted per share data
attributable to common stockholders:
|
|
|
|
|
|
Net income
|
|
$
0.12
|
|
$
0.17
|
|
NAREIT FFO and
Normalized FFO
|
|
$
0.82
|
|
$
0.87
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization
|
|
$
(25)
|
|
$
(25)
|
|
Non-cash interest
expenses
|
|
6
|
|
6
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(49)
|
|
(49)
|
|
Stock-based
compensation
|
|
5
|
|
5
|
|
|
|
|
(1) Amounts presented
net of noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
SSNOI
Reconciliation
|
|
|
|
|
|
Exhibit
4
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
2022
|
|
2021
|
|
%
growth
|
|
Net income
(loss)
|
|
$
95,672
|
|
$
45,757
|
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
3,532
|
|
(44,668)
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
7,058
|
|
7,976
|
|
|
|
Income tax expense
(benefit)
|
|
3,065
|
|
(2,221)
|
|
|
|
Other
expenses
|
|
35,166
|
|
11,687
|
|
|
|
Impairment of
assets
|
|
—
|
|
23,692
|
|
|
|
Provision for loan
losses
|
|
165
|
|
6,197
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
603
|
|
55,612
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(1,407)
|
|
(359)
|
|
|
|
General and
administrative expenses
|
|
36,554
|
|
31,436
|
|
|
|
Depreciation and
amortization
|
|
310,295
|
|
240,885
|
|
|
|
Interest
expense
|
|
127,750
|
|
122,341
|
|
|
|
Consolidated
NOI
|
|
618,453
|
|
498,335
|
|
|
|
NOI attributable to
unconsolidated investments(1)
|
|
23,648
|
|
21,180
|
|
|
|
NOI attributable to
noncontrolling interests(2)
|
|
(82,804)
|
|
(43,786)
|
|
|
|
Pro rata NOI
|
|
559,297
|
|
475,729
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
(22,628)
|
|
(4,477)
|
|
|
|
NOI attributable to
non-same store properties
|
|
(117,823)
|
|
(91,094)
|
|
|
|
Currency and ownership
adjustments(3)
|
|
1,696
|
|
256
|
|
|
|
Normalizing
adjustments, net(4)
|
|
(14,780)
|
|
(7,061)
|
|
|
|
Same Store NOI
(SSNOI)
|
|
$
405,762
|
|
$
373,353
|
|
8.7 %
|
|
|
|
|
|
|
|
|
|
Seniors Housing
Operating
|
|
154,230
|
|
133,684
|
|
15.4 %
|
|
Seniors Housing
Triple-net
|
|
84,320
|
|
76,692
|
|
9.9 %
|
|
Outpatient
Medical
|
|
101,848
|
|
99,372
|
|
2.5 %
|
|
Health
System
|
|
42,954
|
|
41,804
|
|
2.8 %
|
|
Long-Term/Post-Acute
Care
|
|
22,410
|
|
21,801
|
|
2.8 %
|
|
Total SSNOI
|
|
$
405,762
|
|
$
373,353
|
|
8.7 %
|
|
|
|
|
|
|
|
|
|
|
Notes:
(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 NOI related to certain
leasehold
properties. See Exhibit 2 for more information.
|
|
(3) Includes adjustments to reflect
consistent property ownership percentages and foreign currency
exchange rates for properties in the U.K. and Canada.
|
|
(4) Includes other adjustments
described in the accompanying Supplement.
|
|
Reconciliation of
SHO SS REVPOR Growth
|
|
Exhibit
5
|
|
|
(in thousands except
SS REVPOR)
|
|
Three Months
Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2022
|
|
2021
|
|
|
Consolidated SHO
revenues
|
|
$
1,071,210
|
|
$
742,549
|
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
51,456
|
|
44,966
|
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(121,704)
|
|
(59,347)
|
|
|
SHO pro rata
revenues(3)
|
|
1,000,962
|
|
728,168
|
|
|
Non-cash revenues on
same store properties
|
|
(613)
|
|
(571)
|
|
|
Revenues attributable
to non-same store properties
|
|
(306,259)
|
|
(100,881)
|
|
|
Currency and ownership
adjustments(4)
|
|
1,989
|
|
(2,682)
|
|
|
SHO SS
revenues(5)
|
|
$
696,079
|
|
$
624,034
|
|
|
SHO SS revenue YOY
growth
|
|
11.5 %
|
|
|
|
|
Average occupied
units/month(6)
|
|
41,469
|
|
38,854
|
|
|
SHO SS
REVPOR(7)
|
|
$
5,611
|
|
$
5,368
|
|
|
SS REVPOR YOY
growth
|
|
4.5 %
|
|
|
|
|
|
|
|
|
|
|
|
(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 1.2738 and to
translate UK properties at a GBP/USD rate of 1.3501.
|
|
(5) Represents SS SHO
revenues at Welltower pro rata ownership.
|
|
|
(6) Represents average
occupied units for SS properties on a pro rata basis.
|
|
|
(7) Represents pro rata
SS average revenues generated per occupied room per
month.
|
|
|
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SOURCE Welltower Inc.