TOLEDO, Ohio, May 5, 2017 /PRNewswire/ -- Welltower
Inc. (NYSE: HCN) today announced results for the quarter ended
March 31, 2017. For the quarter, we
generated net income attributable to common stockholders of
$0.86 per share and normalized FFO
attributable to common stockholders of $1.05 per share.
Quarterly Highlights
- Continued portfolio repositioning efforts generating
$1.1 billion of disposition
proceeds
- Net debt to undepreciated book capitalization declined to 35.8%
from 37.4% versus 12/31/16
- Net debt to adjusted EBITDA improved to 5.26x
- Adjusting for the effect of leap
year in 2016, seniors housing operating SSNOI grew 1.9%,
including 1.0% from the U.S. portfolio, and SS REVPOR grew
4.1%
"Welltower has once again delivered a strong overall quarter,"
commented CEO Tom DeRosa. "Our
premier seniors housing operators in high barrier to entry markets
showed resiliency during a bad flu season and pockets of heightened
supply nationwide, and were able to drive continued rate growth. We
further executed on our strategy of deleveraging, while taking
advantage of robust pricing to sell non-core assets in secondary
markets at low cap rates. Our patience, discipline and the
long-term nature of our decision making continues to drive
shareholder value and best position Welltower for the compelling
opportunities that lie ahead."
Capital Activity On March 31,
2017, we had $380 million of
cash and cash equivalents and $2.5
billion of available borrowing capacity under our primary
unsecured credit facility. During the first quarter, we
generated approximately $112 million
in proceeds under our ATM and DRIP programs. In addition, we
extinguished $806 million of secured
debt at a blended average interest rate of 5.6%. In March, we
redeemed all 11.5 million shares of our 6.5% Series J preferred
stock.
Outlook for 2017 Net income attributable to common
stockholders has been revised to a range of $2.39 to $2.49 per diluted share from the
previous range of $2.65 to $2.75 per
diluted share primarily due to the normalizing items in Exhibit 1.
We are affirming our 2017 normalized FFO attributable to common
stockholders guidance and expect to report in a range of
$4.15 to $4.25 per diluted
share. As previously disclosed, we will no longer report FAD,
primarily because it could be considered a liquidity metric, but we
will provide relevant data components. In preparing our guidance,
we have updated the following assumptions:
- Same Store NOI: We continue to expect average blended SSNOI
growth of approximately 2%-3% in 2017.
- Acquisitions: 2017 earnings guidance excludes any additional
potential acquisitions beyond what has been announced.
- Development: We anticipate funding additional development of
approximately $265 million in 2017
relating to projects underway on March 31,
2017. We expect development conversions during the remainder
of 2017 of approximately $375
million, which are currently expected to generate stabilized
yields of approximately 7.9%. These projections exclude the midtown
Manhattan development project
which is still in the planning stage.
- Dispositions: We continue to anticipate approximately
$2 billion of disposition proceeds at
a blended yield of 7.6% in 2017. This includes approximately
$1.1 billion of proceeds from
dispositions completed to-date and $0.9
billion of incremental proceeds from other potential loan
payoffs and property sales.
Our guidance does not include any additional investments,
dispositions or capital transactions beyond what we have announced,
nor any transaction costs, impairments, unanticipated additions to
the loan loss reserve or other additional normalizing items.
Please see the exhibits for a reconciliation of the outlook for net
income available to common stockholders to FFO attributable to
common stockholders. We will provide additional detail
regarding our 2017 outlook and assumptions on the first quarter
2017 conference call.
Dividend Growth As previously announced, the Board of
Directors declared a cash dividend for the quarter ended
March 31, 2017 of $0.87 per share, as compared to $0.86 per share for the same period in
2016. On May 22, 2017, we will
pay our 184th consecutive quarterly cash dividend.
The declaration and payment of future quarterly dividends remains
subject to review and approval by the Board of Directors.
Investment and Disposition Activity We completed
$217 million of pro rata gross
investments for the quarter including $104
million in acquisitions/JVs, $102
million in development funding and $11 million in loans. 100% of these
investments were completed with existing relationships.
Acquisitions/JVs were comprised of five separate transactions at a
blended yield of 6.4%. The development fundings are expected to
yield 7.5% upon stabilization and the loans were made at a blended
rate of 8.0%. We also placed into service nine development projects
totaling $186 million at a blended
stabilized yield of 7.0%. Also during the quarter, we completed
total dispositions of $1.1 billion
consisting of loan payoffs of $65
million at an average yield of 8.7% and property sales of
$1 billion at a blended yield on
proceeds of 6.5%.
Notable Investments with Existing Operating Partners
Benchmark Senior Living We expanded our relationship with
Benchmark by acquiring a 91-unit private pay seniors housing
property through our existing 95/5 joint venture. The property
opened in 2014 and is located in the New
Haven, CT MSA. The purchase price based upon 100% ownership
interest was $36 million, which
represents a cap rate of 6.1%. The property was acquired through a
purchase option that was granted to us after we provided a
mezzanine loan for construction financing. Since closing our
initial $846 million acquisition in 2011, we have
completed $543 million of follow-on pro rata investments
with Benchmark.
New Perspective We expanded our relationship with New
Perspective by acquiring a 100% ownership interest in a 77-unit
private pay seniors housing property owned by a third party and
located in the Minneapolis/St. Paul MSA for $22 million. The property opened in 2015 and
was added to a master lease which has a corporate guarantee and
expires in 2030. The initial lease yield is 6.0% with 3% annual
increasers. Since closing our initial $17
million acquisition/leaseback in 2009, we have
completed $296 million of follow-on pro rata investments
with New Perspective.
Avery Healthcare We expanded our relationship with Avery by
acquiring a 100% interest in two seniors housing properties in the
UK midlands for £14.3 million. The properties will be added to a
master lease at an initial lease yield of 7.5% with 3% annual
increasers. The master lease has a corporate guarantee and expires
in 2037. Since closing our initial $204
million acquisition/leaseback in 2013, we have completed
$620 million of follow-on pro rata
investments with Avery.
Community Health Network We acquired a 100% interest in an
affiliated outpatient medical office building in Anderson, Indiana for $22 million, which represents a year one cap rate
of 6.3%. The property is 68,624 rentable square feet, was built in
2017, and is 100% master leased to Community Health Network
(Moody's A2), a not-for-profit health system with over 1,400
affiliated physicians and 200 patient care sites throughout
Central Indiana. Community Health
Network leases over 160,000 square feet of space in Welltower
properties.
Notable Development Conversions
Kisco We expanded our relationship with Kisco by completing the
development of 165 independent living units as part of a private
pay, rental continuing care retirement community campus located in
the North Hills area of
Raleigh, NC. The investment amount
based on 100% ownership interest was $72
million and the property was added to a master
lease at an initial lease yield of 8.0% in our existing 85/15 joint
venture. There are no increasers for the first five years and
25 basis point annual increasers thereafter. The assisted
living, memory care and post-acute units will be completed during
the second quarter. Since closing our initial $19
million acquisition in 2012, we have completed $137
million of follow-on investments with Kisco.
Sagora We expanded our relationship with Sagora by completing
the development of two private pay seniors housing properties
located in Tulsa and Edmond, OK. The investment amount was
$55 million and the properties were
added to a master lease at an initial lease yield of
6.0%. There are outsized annual escalators for the first five
years of the lease followed by 3% annual escalators thereafter.
Since closing our initial $8.5 million acquisition in
2010, we have completed $430 million of follow-on
investments with Sagora.
Legend Senior Living We expanded our relationship with Legend by
completing the development of two private pay seniors housing
properties located in the Lancaster,
PA MSA. The investment amount was $31 million and the properties were added to
a master lease at an initial lease yield of 6.0%. There are
outsized annual escalators for the first five years of the lease
followed by 3% annual escalators. Since starting our initial
$6 million development in 2005, we
have completed $493 million of
follow-on investments with Legend.
Ministry Health Care We completed a 43,136 square foot
development of an outpatient medical building in Wausau, Wisconsin that is 100% leased by
Ministry Health Care (Moody's A2), a subsidiary of Ascension
Health. The investment amount was $14
million and the yield on the development is 8.0%. Ascension
Health leases over 250,000 square feet of space in Welltower
properties.
Adventist We completed a 56,786 square foot development of an
outpatient medical building on Centura's Castle Rock Adventist
Health Campus in the Denver MSA that was 65% leased at
opening. The investment amount was $12
million and the stabilized yield on the development is
9.1%.
Notable Dispositions
Cindat/Union Life JV We completed the previously announced sale
of a 75% interest in 11 Brookdale communities at a valuation of
$268.5 million (based on a 100%
ownership interest), which represents a 5.75% cap rate on in-place
rent. The portfolio was added to an existing joint venture where
Cindat/Union Life owns a 75% interest and Welltower retains a
25% stake. We realized a gain on sale of $42
million.
Senior Lifestyle We completed the disposition of 26 senior
housing properties operated by and leased to Senior Lifestyle for
$753 million. We realized a gain on
sale of $169 million and an unlevered
IRR of 11.1%.
Long-Term/Post Acute Portfolio We completed the disposition of
six long-term/post-acute facilities pursuant to a purchase option
in our lease agreement for $72
million, which represents an 8.9% cap on in-place
rent. We realized a gain on sale of $20 million and an unlevered IRR of 12.8%.
Chartwell Retirement Residences We completed the disposition of
a seniors housing operating property with 183 units located in
Victoria, British Columbia,
Canada. The property was 100% owned by Welltower and third party
managed by Chartwell. The property was sold for $27.5 million, which represents a 4.8% cap on
in-place NOI. We realized a gain on sale of $13 million and an unlevered IRR of 16.2%.
Conference Call Information We have scheduled a
conference call on Friday, May 5,
2017 at 10:00 a.m. Eastern
Time to discuss our first quarter 2017 results, industry
trends, portfolio performance and outlook for 2017. Telephone
access will be available by dialing 888-346-2469 or 706-758-4923
(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 May 19,
2017. To access the rebroadcast, dial 855-859-2056 or
404-537-3406 (international). The conference ID number is
3098658. 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 revenues,
net operating income from continuing operations (NOICO), 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), same store net operating
income (SSNOI), same store revenues per occupied room (SS REVPOR),
and Adjusted EBITDA (A-EBITDA) to be useful supplemental measures
of our operating performance. Excluding A-EBITDA, 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 1. 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.
As discussed in Note 17 to our consolidated financial
statements, NOICO is used to evaluate the operating performance of
our properties. We define NOI as the pro rata version of NOICO
which is total revenues, including tenant reimbursements, less
property operating expenses. Property operating expenses
represent costs associated with managing, maintaining and servicing
tenants for our seniors housing operating and outpatient medical
properties. These expenses include, but are not limited to,
property-related payroll and benefits, property management fees,
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 under a consistent population which eliminates 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. Land parcels, loans and sub-leases as well as any
properties acquired, developed/redeveloped, transitioned, sold or
classified as held for sale during that period are excluded from
the same store amounts. 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 in the relevant supplemental
information package. We believe SSNOI provides investors relevant
and useful information because it measures the operating
performance of our properties at the property level on an
unleveraged basis. No reconciliation of the forecasted range for
SSNOI on a combined or segment basis for fiscal year 2017 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 the pro rata version of resident fees and
services revenues per 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
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.
We measure our credit strength both in terms of leverage ratios
and coverage ratios. The leverage ratios indicate how much of our
balance sheet capitalization is related to long-term debt, net of
cash and IRC section 1031 deposits. We expect to maintain
capitalization ratios and coverage ratios sufficient to maintain a
capital structure consistent with our current profile. The coverage
ratios are based on EBITDA which stands for earnings (net income
per income statement) before interest expense, income taxes,
depreciation and amortization. Covenants in our senior unsecured
notes contain financial ratios based on a definition of EBITDA that
is specific to those agreements. Failure to satisfy these
covenants could result in an event of default that could have a
material adverse impact on our cost and availability of capital,
which could in turn have a material adverse impact on our
consolidated results of operations, liquidity and/or financial
condition. Due to the materiality of these debt agreements
and the financial covenants, we have defined A-EBITDA to exclude
unconsolidated entities and to include adjustments for stock-based
compensation expense, provision for loan losses, gains/losses on
extinguishment of debt, transactions costs,
gains/losses/impairments on properties, gains/losses on derivatives
and other non-recurring and/or non-cash income/charges. We believe
that A-EBITDA, along with net income and cash flow provided from
operating activities, is an important supplemental measure because
it provides additional information to assess and evaluate the
performance of our operations. Our leverage ratios include
undepreciated book capitalization and net debt to A-EBITDA.
Undepreciated book capitalization represents book capitalization
adjusted for accumulated depreciation and amortization. Book
capitalization represents the sum of net debt (defined as total
long-term debt less cash and cash equivalents and any IRC section
1031 deposits), total equity and redeemable noncontrolling
interests. Our leverage ratios are defined as the proportion of net
debt to total capitalization.
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 March 31,
2017, 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: HCN), 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 the company's 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 we use 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, we are
making forward-looking statements. In particular, these
forward-looking statements include, but are not limited to, those
relating to our opportunities to acquire, develop or sell
properties; our ability to close anticipated acquisitions,
investments or dispositions on currently anticipated terms, or
within currently anticipated timeframes; the expected performance
of our operators/tenants and properties; our expected occupancy
rates; our ability to declare and to make distributions to
shareholders; our investment and financing opportunities and plans;
our continued qualification as a REIT; our ability to access
capital markets or other sources of funds; and our ability to meet
our earnings guidance. Forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties that may cause our actual results to differ
materially from our expectations discussed in the forward-looking
statements. This may be a result of various factors, including, but
not limited to: 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; our 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 our properties;
our ability to re-lease space at similar rates as vacancies occur;
our 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 our properties; changes
in rules or practices governing our financial reporting; the
movement of U.S. and foreign currency exchange rates; our ability
to maintain our qualification as a REIT; key management personnel
recruitment and retention; and other risks described in our reports
filed from time to time with the Securities and Exchange
Commission. Finally, we undertake 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)
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
|
|
|
|
|
Land and land
improvements
|
|
$
|
2,650,473
|
|
$
|
2,596,670
|
|
|
|
Buildings and
improvements
|
|
|
24,930,472
|
|
|
25,712,496
|
|
|
|
Acquired lease
intangibles
|
|
|
1,421,277
|
|
|
1,346,064
|
|
|
|
Real property held
for sale, net of accumulated depreciation
|
|
|
178,260
|
|
|
293,806
|
|
|
|
Construction in
progress
|
|
|
390,180
|
|
|
297,023
|
|
|
|
|
|
|
29,570,662
|
|
|
30,246,059
|
|
|
|
Less accumulated
depreciation and intangible amortization
|
|
|
(4,335,160)
|
|
|
(4,032,726)
|
|
|
|
|
Net real property
owned
|
|
|
25,235,502
|
|
|
26,213,333
|
|
|
|
Real estate loans
receivable
|
|
|
574,080
|
|
|
725,291
|
|
|
|
Less allowance for
losses on loans receivable
|
|
|
(6,196)
|
|
|
-
|
|
|
|
|
Net real estate loans
receivable
|
|
|
567,884
|
|
|
725,291
|
|
|
|
Net real estate
investments
|
|
|
25,803,386
|
|
|
26,938,624
|
|
Other
assets:
|
|
|
|
|
|
|
|
|
|
Investments in
unconsolidated entities
|
|
|
416,110
|
|
|
545,070
|
|
|
|
Goodwill
|
|
|
68,321
|
|
|
68,321
|
|
|
|
Cash and cash
equivalents
|
|
|
380,360
|
|
|
355,949
|
|
|
|
Restricted
cash
|
|
|
42,777
|
|
|
62,176
|
|
|
|
Straight-line rent
receivable
|
|
|
348,085
|
|
|
425,231
|
|
|
|
Receivables and other
assets
|
|
|
708,238
|
|
|
692,922
|
|
|
|
|
|
|
1,963,891
|
|
|
2,149,669
|
|
Total
assets
|
|
$
|
27,767,277
|
|
$
|
29,088,293
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Borrowings under
primary unsecured credit facility
|
|
$
|
522,000
|
|
$
|
645,000
|
|
|
|
Senior unsecured
notes
|
|
|
8,188,928
|
|
|
8,828,053
|
|
|
|
Secured
debt
|
|
|
2,669,787
|
|
|
3,515,053
|
|
|
|
Capital lease
obligations
|
|
|
73,470
|
|
|
75,092
|
|
|
|
Accrued expenses and
other liabilities
|
|
|
817,411
|
|
|
665,645
|
|
Total
liabilities
|
|
|
12,271,596
|
|
|
13,728,843
|
|
Redeemable
noncontrolling interests
|
|
|
385,418
|
|
|
359,656
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
718,750
|
|
|
1,006,250
|
|
|
|
Common
stock
|
|
|
365,187
|
|
|
356,953
|
|
|
|
Capital in excess of
par value
|
|
|
17,134,490
|
|
|
16,589,738
|
|
|
|
Treasury
stock
|
|
|
(62,306)
|
|
|
(51,271)
|
|
|
|
Cumulative net
income
|
|
|
5,130,593
|
|
|
3,891,093
|
|
|
|
Cumulative
dividends
|
|
|
(8,474,775)
|
|
|
(7,168,178)
|
|
|
|
Accumulated other
comprehensive income
|
|
|
(177,200)
|
|
|
(109,053)
|
|
|
|
Other
equity
|
|
|
1,464
|
|
|
4,062
|
|
|
|
|
Total Welltower Inc.
stockholders' equity
|
|
|
14,636,203
|
|
|
14,519,594
|
|
|
|
Noncontrolling
interests
|
|
|
474,060
|
|
|
480,200
|
|
Total
equity
|
|
|
15,110,263
|
|
|
14,999,794
|
|
Total liabilities
and equity
|
|
$
|
27,767,277
|
|
$
|
29,088,293
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Income (unaudited)
|
(in thousands,
except per share data)
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
Rental
income
|
|
$
|
367,141
|
|
$
|
415,663
|
|
|
Resident fees and
service
|
|
|
670,337
|
|
|
602,149
|
|
|
Interest
income
|
|
|
20,748
|
|
|
25,188
|
|
|
Other
income
|
|
|
4,072
|
|
|
4,050
|
Gross
revenues
|
|
|
1,062,298
|
|
|
1,047,050
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
118,597
|
|
|
132,960
|
|
|
Property operating
expenses
|
|
|
510,169
|
|
|
449,636
|
|
|
Depreciation and
amortization
|
|
|
228,276
|
|
|
228,696
|
|
|
General and
administrative expenses
|
|
|
31,101
|
|
|
45,691
|
|
|
Transaction
costs
|
|
|
-
|
|
|
8,208
|
|
|
Loss (gain) on
derivatives, net
|
|
|
1,224
|
|
|
-
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
|
31,356
|
|
|
(24)
|
|
|
Impairment of
assets
|
|
|
11,031
|
|
|
14,314
|
|
|
Other
expenses
|
|
|
11,675
|
|
|
-
|
|
Total
expenses
|
|
|
943,429
|
|
|
879,481
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
and income from
unconsolidated entities
|
|
|
118,869
|
|
|
167,569
|
Income tax (expense)
benefit
|
|
|
(2,245)
|
|
|
1,725
|
Income (loss) from
unconsolidated entities
|
|
|
(23,106)
|
|
|
(3,820)
|
Income (loss) from
continuing operations
|
|
|
93,518
|
|
|
165,474
|
Gain (loss) on real
estate dispositions, net
|
|
|
244,092
|
|
|
-
|
Net income
(loss)
|
|
|
337,610
|
|
|
165,474
|
Less:
|
Preferred
dividends
|
|
|
14,379
|
|
|
16,352
|
|
|
|
Preferred stock
redemption charge
|
|
|
9,769
|
|
|
-
|
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
823
|
|
|
153
|
Net income (loss)
attributable to common stockholders
|
|
$
|
312,639
|
|
$
|
148,969
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
362,534
|
|
|
355,076
|
|
|
Diluted
|
|
|
364,652
|
|
|
356,051
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.86
|
|
$
|
0.42
|
|
|
Diluted
|
|
$
|
0.86
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
Common dividends per
share
|
|
$
|
0.87
|
|
$
|
0.86
|
|
Normalizing
Items
|
|
|
|
|
Exhibit
1
|
|
|
(in thousands,
except per share data)
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
Transaction
costs
|
$
|
-
(1)
|
|
$
|
8,208
|
|
|
Loss (gain) on
derivatives, net
|
|
1,224
(2)
|
|
|
-
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
31,356
(3)
|
|
|
(24)
|
|
|
Preferred stock
redemption charge
|
|
9,769
(4)
|
|
|
-
|
|
|
Other
expenses
|
|
11,675
(5)
|
|
|
-
|
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
22,939
(6)
|
|
|
1,518
|
|
|
Net normalizing
items
|
$
|
76,963
|
|
$
|
9,702
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
364,652
|
|
|
356,051
|
|
|
Net normalizing items
per diluted share
|
$
|
0.21
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) Effective 1/1/17 with the adoption of
ASU 2017-01, any non-capitalizable transaction costs are
in Other Expenses.
|
|
|
(2) Primarily related to
mark-to-market of a convertible note receivable.
|
|
|
(3) Primarily related to secured
debt extinguishments.
|
|
|
(4) Primarily related to redemption of
Series J preferred stock.
|
|
|
(5) Primarily related to severance costs
and non-capitalizable transaction costs.
|
|
|
(6) Primarily related to
goodwill/intangible impairments and non-recurring income tax
expense adjustments at an
unconsolidated entity as well as non-capitalizable transaction
costs related to joint ventures.
|
|
|
|
FFO
Reconciliations
|
|
|
|
|
Exhibit
2
|
|
|
(in thousands,
except per share data)
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
Net income (loss)
attributable to common stockholders
|
$
|
312,639
|
|
$
|
148,969
|
|
|
Depreciation and
amortization
|
|
228,276
|
|
|
228,696
|
|
|
Losses/impairments
(gains) on properties, net
|
|
(233,061)
|
|
|
14,314
|
|
|
Noncontrolling
interests(1)
|
|
(18,107)
|
|
|
(17,319)
|
|
|
Unconsolidated
entities(2)
|
|
16,484
|
|
|
16,604
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
306,231
|
|
|
391,264
|
|
|
Normalizing items,
net(3)
|
|
76,963
|
|
|
9,702
|
|
|
Normalized FFO
attributable to common stockholders
|
$
|
383,194
|
|
$
|
400,966
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
364,652
|
|
|
356,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
Net income
|
$
|
0.86
|
|
$
|
0.42
|
|
|
NAREIT FFO
|
$
|
0.84
|
|
$
|
1.10
|
|
|
Normalized
FFO
|
$
|
1.05
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
Dividends per common
share
|
$
|
0.87
|
|
$
|
0.86
|
|
|
Normalized FFO
attributable to common stockholders per share
|
$
|
1.05
|
|
$
|
1.13
|
|
|
Normalized
FFO payout ratio
|
|
83%
|
|
|
76%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(4)
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
$
|
(17,921)
|
|
$
|
(29,621)
|
|
|
Non-cash interest
expenses
|
|
2,239
|
|
|
(58)
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(13,806)
|
|
|
(11,806)
|
|
|
Stock-based
compensation
|
|
4,906
|
|
|
8,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) Represents noncontrolling interests'
share of net FFO adjustments.
|
|
|
(2) Represents Welltower's share of
net FFO adjustments from unconsolidated entities.
|
|
|
(3) See Exhibit 1.
|
|
|
(4) Amounts presented net of
noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
|
Outlook
Reconciliations: Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
Exhibit
3
|
|
|
(in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
Outlook
|
|
|
Current
Outlook
|
|
|
|
|
|
|
Low
|
|
High
|
|
|
Low
|
|
High
|
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
967
|
|
$
|
1,003
|
|
|
$
|
880
|
|
$
|
917
|
|
|
Gains on real estate
dispositions(1,2)
|
|
(316)
|
|
|
(316)
|
|
|
|
(316)
|
|
|
(316)
|
|
|
Depreciation and
amortization(1)
|
|
852
|
|
|
852
|
|
|
|
887
|
|
|
887
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
1,503
|
|
|
1,539
|
|
|
|
1,451
|
|
|
1,488
|
|
|
Normalizing items,
net(3)
|
|
10
|
|
|
10
|
|
|
|
77
|
|
|
77
|
|
|
Normalized FFO
attributable to common stockholders
|
$
|
1,513
|
|
$
|
1,549
|
|
|
$
|
1,528
|
|
$
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
2.65
|
|
$
|
2.75
|
|
|
$
|
2.39
|
|
$
|
2.49
|
|
|
NAREIT FFO
|
|
4.12
|
|
|
4.22
|
|
|
|
3.94
|
|
|
4.04
|
|
|
Normalized
FFO
|
|
4.15
|
|
|
4.25
|
|
|
|
4.15
|
|
|
4.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Items(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
$
|
(59)
|
|
$
|
(59)
|
|
|
$
|
(65)
|
|
$
|
(65)
|
|
|
Non-cash interest
expenses
|
|
5
|
|
|
5
|
|
|
|
10
|
|
|
10
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(71)
|
|
|
(71)
|
|
|
|
(71)
|
|
|
(71)
|
|
|
Stock-based
compensation
|
|
18
|
|
|
18
|
|
|
|
18
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) Amounts presented net of
noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
|
(2) Includes estimated gains
on projected dispositions.
|
|
|
(3) See Exhibit 1.
|
|
|
SSNOI
Reconciliations
|
|
|
|
Exhibit
4
|
|
|
(in thousands and
at pro rata ownership except NOICO)
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Net operating income
from continuing operations (NOICO)(1)
|
$
|
552,129
|
|
$
|
597,414
|
|
|
|
|
NOI attributable to
unconsolidated investments
|
|
21,279
|
|
|
16,006
|
|
|
|
|
NOI attributable to
noncontrolling interests
|
|
(27,542)
|
|
|
(24,804)
|
|
|
|
|
Pro rata
NOI
|
|
545,866
|
|
|
588,616
|
|
|
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
(13,711)
|
|
|
(20,182)
|
|
|
|
|
|
|
NOI attributable to
non same store properties
|
|
(70,572)
|
|
|
(97,325)
|
|
|
|
|
|
|
Adjustments(2)
|
|
(1,167)
|
|
|
(20,883)
|
|
|
|
|
Same store NOI
(SSNOI)
|
$
|
460,416
|
|
$
|
450,226
|
|
|
|
|
|
|
|
|
|
|
|
%
growth
|
|
|
Seniors housing
triple-net
|
$
|
128,824
|
|
$
|
124,484
|
|
3.5%
|
|
|
Long-term/post-acute
care
|
|
62,396
|
|
|
60,332
|
|
3.4%
|
|
|
Seniors housing
operating (SHO)
|
|
186,521
|
|
|
184,807
|
|
0.9%
|
|
|
Outpatient
medical
|
|
82,675
|
|
|
80,707
|
|
2.4%
|
|
|
|
|
Total
SSNOI
|
$
|
460,416
|
|
$
|
450,330
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted SHO
SSNOI:(3)
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
129,869
|
|
$
|
128,553
|
|
1.0%
|
|
|
|
|
United
Kingdom
|
|
19,395
|
|
|
17,936
|
|
8.1%
|
|
|
|
|
Canada
|
|
37,257
|
|
|
36,520
|
|
2.0%
|
|
|
|
|
Total Adjusted SHO
SSNOI
|
$
|
186,521
|
|
$
|
183,009
|
|
1.9%
|
|
|
Notes:
|
(1) See Note 17 to
Welltower's 10-Q. Represents consolidated revenues less
consolidated property operating expenses.
|
|
|
|
(2) Includes
adjustments to reflect consistent ownership percentages and foreign
currency exchange rates for properties in the UK and Canada as well
as other adjustments described in the accompanying
Supplement.
|
|
|
|
(3) Includes
$1,798,000 of 2016 adjustments to normalize the impact of leap year
for operators who charge residents daily rather than
monthly.
|
|
SHO SS REVPOR
Reconciliation
|
|
|
|
Exhibit
5
|
|
|
(dollars in
thousands, except REVPOR)
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Consolidated resident
fees and services (SHO revenues)
|
$
|
671,866
|
|
$
|
605,369
|
|
|
|
|
SHO revenues
attributable to unconsolidated investments
|
|
41,904
|
|
|
39,078
|
|
|
|
|
SHO revenues
attributable to noncontrolling interests
|
|
(57,808)
|
|
|
(51,412)
|
|
|
|
|
SHO pro rata
revenues
|
|
655,962
|
|
|
593,035
|
|
|
|
|
Adjustments(1)
|
|
(75,736)
|
|
|
(25,835)
|
|
|
|
|
SHO same store
revenues
|
$
|
580,226
|
|
$
|
567,200
|
|
|
|
|
Avg. occupied
rooms/month(2)
|
|
34,768
|
|
|
35,148
|
|
%
growth
|
|
|
SHO SS
REVPOR
|
$
|
5,640
|
|
$
|
5,454
|
|
3.4%
|
|
|
Adjusted SHO SS
REVPOR(3)
|
$
|
5,640
|
|
$
|
5,418
|
|
4.1%
|
|
|
Notes:
|
(1) Represents
revenues from non same store properties, non-cash revenues from
same store properties, currency and ownership adjustments and other
normalizing adjustments described in the accompanying
Supplement.
|
|
|
|
(2) Represents
average occupied rooms for same store properties on a pro rata
basis.
|
|
|
|
(3) Includes
adjustments to normalize 2016 for the impact of leap year for
operators who charge residents daily rather than
monthly.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undepreciated Book
Capitalization
|
|
|
|
Exhibit
6
|
|
|
(dollars in
thousands)
|
|
As Of
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
|
|
|
Lines of
credit
|
$
|
522,000
|
|
$
|
645,000
|
|
|
|
|
Long-term debt
obligations(1)
|
|
10,932,185
|
|
|
11,713,245
|
|
|
|
|
Cash and cash
equivalents(2)
|
|
(380,360)
|
|
|
(557,659)
|
|
|
|
|
Net debt
|
|
11,073,825
|
|
|
11,800,586
|
|
|
|
|
Accumulated
depreciation and amortization
|
|
4,335,160
|
|
|
4,093,494
|
|
|
|
|
Total
equity(3)
|
|
15,495,681
|
|
|
15,679,905
|
|
|
|
|
Undepreciated book
capitalization
|
$
|
30,904,666
|
|
$
|
31,573,985
|
|
|
|
|
Net debt to
undepreciated book capitalization ratio
|
|
35.8%
|
|
|
37.4%
|
|
|
|
|
Notes:
|
(1) Amounts include
unamortized premiums/discounts and other fair value adjustments as
reflected on balance sheet.
|
|
|
|
(2) Inclusive of IRC
section 1031 deposits, if any.
|
|
|
|
(3) Includes all
noncontrolling interests (redeemable and permanent) as reflected on
balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to
Adjusted EBITDA Reconciliation
|
|
|
|
Exhibit
7
|
|
|
(dollars in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
2017
|
|
|
|
|
Net income
|
$
|
337,610
|
|
|
|
|
Interest
expense
|
|
118,597
|
|
|
|
|
Income tax expense
(benefit)
|
|
2,245
|
|
|
|
|
Depreciation and
amortization
|
|
228,276
|
|
|
|
|
EBITDA
|
$
|
686,728
|
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
23,106
|
|
|
|
|
Stock-based
compensation
|
|
4,906
|
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
31,356
|
|
|
|
|
Losses/impairments
(gains) on properties, net
|
|
(233,061)
|
|
|
|
|
Loss (gain) on
derivatives, net
|
|
1,224
|
|
|
|
|
Other
expenses
|
|
11,675
|
|
|
|
|
Adjusted
EBITDA
|
$
|
525,934
|
|
|
|
|
Adjusted EBITDA
Annualized
|
$
|
2,103,736
|
|
|
|
|
Net
debt(1)
|
$
|
11,073,825
|
|
|
|
|
Net debt to Adjusted
EBITDA ratio
|
|
5.26x
|
|
|
|
|
Notes: (1)
See Exhibit 6.
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/welltower-reports-first-quarter-2017-results-300452245.html
SOURCE Welltower Inc.