TOLEDO, Ohio, July 27,
2018 /PRNewswire/ -- Welltower Inc. (NYSE: WELL) today
announced results for the quarter ended June 30, 2018. For the
quarter, we generated net income attributable to common
stockholders of $0.41 per share, FFO
attributable to common stockholders of $1.02 per share and normalized FFO attributable
to common stockholders of $1.00 per
share.
Quarterly Highlights
- Closed the acquisition of QCP and transition of HCR ManorCare
operations to ProMedica Health System on July 26, 2018
- Announced value-enhancing restructuring of the Brookdale
relationship expected to significantly reduce Brookdale
concentration and increase lease coverage
- Increased normalized FFO guidance to $3.99 to $4.06 from
$3.95 to $4.05 per diluted share
- Delivered $89 million of pro rata
development projects with an expected stabilized yield of 7.0%
- Subsequent to quarter end converted Brandywine Living from a
triple-net to a RIDEA operating partner
"Welltower's seniors housing portfolio continues to deliver
results in-line with expectations despite a challenging,
industry-wide operating environment," commented CEO Tom DeRosa. "The restructuring of our
Brookdale relationship and conversion of Brandywine into a RIDEA
structure represents our best-in-class relationship investing
model. With these restructurings and the closing of our joint
venture with ProMedica Health System, the Welltower platform is now
even better positioned to grow and drive long-term shareholder
value."
Capital Activity On June 30, 2018, we had
$215 million of cash and cash
equivalents and $2.5 billion of
available borrowing capacity under our primary unsecured credit
facility. In April 2018, we completed
the issuance of 4.25% $550 million
senior unsecured notes maturing in April
2028 which we used to repay advances under our primary
unsecured credit facility.
Unsecured Credit Facility Post quarter, we closed on a
new $3.7 billion unsecured credit
facility with improved pricing across both our line of credit and
term loan facility and terminated the existing unsecured credit
facility. The credit facility includes $3.0 billion of revolving credit capacity at a
borrowing rate of 82.5 basis points over LIBOR, $500 million of USD term loan capacity at a
borrowing rate of 90.0 basis points over LIBOR and $250 million of CAD term loan capacity at 90.0
basis points over CIDOR.
Dividend The Board of Directors declared a cash dividend
for the quarter ended June 30, 2018 of $0.87 per share. On August
21, 2018, we will pay our 189th consecutive quarterly cash
dividend to stockholders of record on August
7, 2018. The Board of Directors also declared a quarterly
cash dividend on the Series I Cumulative Convertible Perpetual
Preferred Stock of $0.8125 per share,
payable October 15, 2018 to
stockholders of record on September
30, 2018. The declaration and payment of future
quarterly dividends remains subject to review and approval by the
Board of Directors.
Quarterly Investment and Disposition Activity We
completed $251 million of pro rata
gross investments for the quarter including $172 million in acquisitions/JVs, $75 million in development funding and
$5 million in loans. 100% of
these investments were completed with existing relationships.
Acquisitions/JVs were comprised of two separate transactions at a
blended yield of 6.7%. The development fundings are expected to
yield 7.8% upon stabilization and the loans were made at a blended
rate of 7.9%. We also placed four development projects into service
totaling $89 million at a blended
stabilized yield of 7.0%. Also during the quarter, we completed
dispositions of $67 million
consisting of loan payoffs of $12
million at an average yield of 10.0% and property sales of
$55 million at a blended yield on
proceeds of 10.8%.
Notable Investments with Existing Operating Partners
Sunrise Senior Living As previously announced, we expanded our
relationship with Sunrise by acquiring a portfolio of four rental
continuing care retirement communities located in the Washington D.C. (2), Miami, and Charlottesville MSAs.
Welltower acquired 100% of the landlord's ownership interest for
$368 million and has transitioned the
communities to a RIDEA structure with Sunrise continuing to manage
the communities under an incentive-based management contract.
The year one cap rate is 7.0%. We completed the acquisition
of one community in December 2017 for
$55 million and two communities in
March 2018 for $217 million. We completed the acquisition
of the remaining community during the second quarter of 2018 at a
price of $96 million. Since our
initial acquisition in 2012, we have completed a total of
$5.9 billion of pro rata investments
with Sunrise.
Kisco Senior Living We expanded our relationship with Kisco
through the acquisition of a 176 unit combination senior housing
community located in Cary, NC. The community was acquired
through the formation of a 90/10 joint venture with Kisco and the
purchase price based on a 100% ownership interest was $84 million. The year one cap rate is
6.3%. Since our initial acquisition in 2012, we have
completed a total of $235 million of
pro rata investments with Kisco.
Notable Development Conversions
Community Health Systems We completed a 38,578 square foot
development of an outpatient medical building in Palmer, Alaska that is 67% leased at
opening. The investment amount was $11
million and the stabilized yield on the development is
8.4%.
Notable Dispositions
Hollinger We completed the disposition of one triple-net CCRC
property for $18 million, which
represents an 8.6% cap rate on EBITDAR. We realized a gain on
the sale of $10 million gain and
unlevered IRR of 12.8%.
Symphony We completed the disposition of two
long-term/post-acute facilities for $37
million or $160,870 per bed,
which represents a gain on the sale of $0.7
million.
Post Quarter Investment Activity
Acquisition of Quality Care Properties As previously announced,
on July 26, 2018 we completed the
acquisition of QCP, with QCP shareholders receiving $20.75 in cash for each share of QCP common
stock. Prior to the acquisition, ProMedica Health System
("ProMedica") completed the acquisition of the operations of HCR
ManorCare. Immediately following the acquisition, we formed
an 80/20 strategic partnership between Welltower and ProMedica to
own the real estate associated with 218 properties leased to
ProMedica under a 15 year absolute NNN master lease. Separate
from the partnership, as previously disclosed, we acquired 61
non-yielding QCP held-for-sale properties which we anticipate will
generate approximately $400 million
in proceeds. We also expect to generate an additional
$107 million in disposition proceeds
through the sale of non-core former QCP assets.
Brandywine Living In July 2018, we
converted 27 triple-net Brandywine Living properties to a seniors
housing operating structure (RIDEA), in which Brandywine will
manage the communities under an incentive-based management
contract. Brandywine operates a high-quality portfolio of
newly built communities with an average age of 13 years, primarily
in Northeast MSAs, that
represent some of the highest demographic scores in our
portfolio. Due to the conversion (subject to different state
regulatory approvals), we will experience initial rent dilution due
to the number of development assets in lease-up, while
participating in the future benefit of lease-up as a primary owner
of the OpCo and PropCo and a 34.9% owner of the management and
development company. We believe this structure aligns our
interest, as well as Brandywine's, to benefit from strong growth
from this great real estate in the long term. Since our
initial investment in 19 buildings in 2010, the Brandywine
portfolio has grown to 29 properties through acquisitions,
developments expansions and redevelopments and represents a total of $1.0 billion of pro rata investment.
Brookdale Restructuring As previously announced, we entered into
a value-enhancing restructuring of the Brookdale relationship which
is expected to significantly reduce our Brookdale concentration
while also providing pro forma lease coverage of 1.31x on EBITDAR
and 1.51x on EBITDARM basis.
Outlook for 2018 Net income attributable to common
stockholders has been revised upward to a range of $2.66 to $2.73 per
diluted share from the previous range of $2.55 to $2.65 per
diluted share, primarily due to changes in projected net
gains/losses/impairments and depreciation and amortization
partially offset by the normalizing items in Exhibit 2. We
are raising our 2018 normalized FFO attributable to common
stockholders guidance to $3.99 to
$4.06 per diluted share. In
preparing our guidance, we have updated or confirmed the following
assumptions:
- Same Store NOI: We continue to expect average blended SSNOI
growth of approximately 1.0%-2.0% in 2018.
- Acquisitions: 2018 earnings guidance includes any acquisitions
closed or announced year to date, inclusive of the acquisition of
QCP.
- Development: We anticipate funding development of approximately
$162 million in 2018 relating to
projects underway on June 30, 2018.
We expect development conversions during the remainder of 2018 of
approximately $130 million, which are
currently expected to generate stabilized yields of approximately
8.0%.
- Dispositions: We are increasing anticipated disposition
proceeds of $1.9 billion to
$2.4 billion at a blended yield of
6.0% in 2018. This includes approximately $1.1 billion of proceeds from dispositions
completed to-date, $0.8 billion of
previously disclosed property dispositions and payoffs and
$0.5 billion of incremental asset
sales associated with the QCP transaction described above.
Our guidance does not include any additional investments,
dispositions or capital transactions beyond what we have announced,
nor any other expenses, 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 normalized FFO
attributable to common stockholders. We will provide
additional detail regarding our 2018 outlook and assumptions on the
second quarter 2018 conference call.
Conference Call Information We have scheduled a
conference call on Friday, July 27, 2018 at 8:30 a.m. Eastern Time to discuss our second
quarter 2018 results, industry trends, portfolio performance and
outlook for 2018. 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
August 10, 2018. To access the
rebroadcast, dial 855-859-2056 or 404-537-3406
(international). The conference ID number is 8875759. 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), NOI and SSNOI 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 seniors housing operating
and outpatient medical 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 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 (including major refurbishments where 20% or
more of units are simultaneously taken out of commission for 30
days or more), sold or classified as held for sale during that
period are excluded from the same store amounts. Properties
undergoing operator transitions and/or segment transitions (except
triple-net to seniors housing operating with the same operator) are
also 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 the company's 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 or segment basis 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.
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, 2018, 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 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)
|
|
|
June 30,
|
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
|
2,746,046
|
|
|
$
|
2,746,483
|
|
Buildings and
improvements
|
|
25,443,106
|
|
|
25,399,178
|
|
Acquired lease
intangibles
|
|
1,534,755
|
|
|
1,436,041
|
|
Real property held for
sale, net of accumulated depreciation
|
|
547,321
|
|
|
141,319
|
|
Construction in
progress
|
|
200,569
|
|
|
321,655
|
|
|
|
30,471,797
|
|
|
30,044,676
|
|
Less accumulated
depreciation and intangible amortization
|
|
(5,113,928)
|
|
|
(4,568,408)
|
|
Net real property
owned
|
|
25,357,869
|
|
|
25,476,268
|
|
Real estate loans
receivable
|
|
449,467
|
|
|
520,479
|
|
Less allowance for
losses on loans receivable
|
|
(68,372)
|
|
|
(5,811)
|
|
Net real estate loans
receivable
|
|
381,095
|
|
|
514,668
|
|
Net real estate
investments
|
|
25,738,964
|
|
|
25,990,936
|
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
450,027
|
|
|
425,489
|
|
Goodwill
|
|
68,321
|
|
|
68,321
|
|
Cash and cash
equivalents
|
|
215,120
|
|
|
442,284
|
|
Restricted
cash
|
|
57,263
|
|
|
45,357
|
|
Straight-line rent
receivable
|
|
367,358
|
|
|
370,819
|
|
Receivables and other
assets
|
|
721,929
|
|
|
632,580
|
|
|
|
1,880,018
|
|
|
1,984,850
|
|
Total
assets
|
|
$
|
27,618,982
|
|
|
$
|
27,975,786
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Borrowings under
primary unsecured credit facility
|
|
$
|
540,000
|
|
|
$
|
385,000
|
|
Senior unsecured
notes
|
|
8,373,774
|
|
|
8,250,940
|
|
Secured
debt
|
|
2,450,483
|
|
|
2,670,914
|
|
Capital lease
obligations
|
|
71,302
|
|
|
73,092
|
|
Accrued expenses and
other liabilities
|
|
984,779
|
|
|
893,441
|
|
Total
liabilities
|
|
12,420,338
|
|
|
12,273,387
|
|
Redeemable
noncontrolling interests
|
|
398,157
|
|
|
388,876
|
|
Equity:
|
|
|
|
|
Preferred
stock
|
|
718,498
|
|
|
718,750
|
|
Common
stock
|
|
372,801
|
|
|
369,525
|
|
Capital in excess of
par value
|
|
17,661,384
|
|
|
17,439,977
|
|
Treasury
stock
|
|
(68,661)
|
|
|
(62,335)
|
|
Cumulative net
income
|
|
5,932,035
|
|
|
5,330,702
|
|
Cumulative
dividends
|
|
(10,142,162)
|
|
|
(8,805,336)
|
|
Accumulated other
comprehensive income
|
|
(132,631)
|
|
|
(163,624)
|
|
Other
equity
|
|
659
|
|
|
1,173
|
|
Total Welltower Inc.
stockholders' equity
|
|
14,341,923
|
|
|
14,828,832
|
|
Noncontrolling
interests
|
|
458,564
|
|
|
484,691
|
|
Total
equity
|
|
14,800,487
|
|
|
15,313,523
|
|
Total liabilities
and equity
|
|
$
|
27,618,982
|
|
|
$
|
27,975,786
|
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Rental
income
|
|
$
|
333,601
|
|
|
$
|
355,599
|
|
|
$
|
676,970
|
|
|
$
|
722,741
|
|
|
|
Resident fees and
service
|
|
763,345
|
|
|
677,040
|
|
|
1,499,279
|
|
|
1,347,377
|
|
|
|
Interest
income
|
|
13,462
|
|
|
20,901
|
|
|
28,110
|
|
|
41,649
|
|
|
|
Other
income
|
|
15,504
|
|
|
5,062
|
|
|
18,518
|
|
|
9,133
|
|
Gross
revenues
|
|
1,125,912
|
|
|
1,058,602
|
|
|
2,222,877
|
|
|
2,120,900
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
121,416
|
|
|
116,231
|
|
|
244,191
|
|
|
234,827
|
|
|
|
Property operating
expenses
|
|
568,751
|
|
|
501,855
|
|
|
1,125,216
|
|
|
1,012,024
|
|
|
|
Depreciation and
amortization
|
|
236,275
|
|
|
224,847
|
|
|
464,476
|
|
|
453,124
|
|
|
|
General and
administrative expenses
|
|
32,831
|
|
|
32,632
|
|
|
66,536
|
|
|
63,733
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(7,460)
|
|
|
736
|
|
|
(14,633)
|
|
|
1,960
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
299
|
|
|
5,515
|
|
|
12,006
|
|
|
36,870
|
|
|
|
Impairment of
assets
|
|
4,632
|
|
|
13,631
|
|
|
32,817
|
|
|
24,662
|
|
|
|
Other
expenses
|
|
10,058
|
|
|
6,339
|
|
|
13,770
|
|
|
18,014
|
|
|
|
Total
expenses
|
|
966,802
|
|
|
901,786
|
|
|
1,944,379
|
|
|
1,845,214
|
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and income from
unconsolidated entities
|
|
159,110
|
|
|
156,816
|
|
|
278,498
|
|
|
275,686
|
|
Income tax (expense)
benefit
|
|
(3,841)
|
|
|
8,448
|
|
|
(5,429)
|
|
|
6,203
|
|
Income (loss) from
unconsolidated entities
|
|
1,249
|
|
|
(3,978)
|
|
|
(1,180)
|
|
|
(27,084)
|
|
Income (loss) from
continuing operations
|
|
156,518
|
|
|
161,286
|
|
|
271,889
|
|
|
254,805
|
|
Gain (loss) on real
estate dispositions, net
|
|
10,755
|
|
|
42,155
|
|
|
348,939
|
|
|
286,247
|
|
Net income
(loss)
|
|
167,273
|
|
|
203,441
|
|
|
620,828
|
|
|
541,052
|
|
Less:
|
|
Preferred
dividends
|
|
11,676
|
|
|
11,680
|
|
|
23,352
|
|
|
26,059
|
|
|
|
Preferred stock
redemption charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,769
|
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
1,165
|
|
|
3,332
|
|
|
5,373
|
|
|
4,156
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
154,432
|
|
|
$
|
188,429
|
|
|
$
|
592,103
|
|
|
$
|
501,068
|
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
371,640
|
|
|
366,524
|
|
|
371,552
|
|
|
364,551
|
|
|
|
Diluted
|
|
373,075
|
|
|
368,149
|
|
|
373,186
|
|
|
366,423
|
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.42
|
|
|
$
|
0.51
|
|
|
$
|
1.59
|
|
|
$
|
1.37
|
|
|
|
Diluted
|
|
$
|
0.41
|
|
|
$
|
0.51
|
|
|
$
|
1.59
|
|
|
$
|
1.37
|
|
Common dividends per
share
|
|
$
|
0.87
|
|
|
$
|
0.87
|
|
|
$
|
1.74
|
|
|
$
|
1.74
|
|
Outlook
reconciliations: Year Ending December 31, 2018
|
Exhibit
1
|
|
(in millions,
except per share data)
|
|
|
|
|
|
Prior
Outlook
|
|
Current
Outlook
|
|
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
|
957
|
|
|
$
|
995
|
|
|
$
|
994
|
|
|
$
|
1,020
|
|
|
Impairments and
losses (gains) on real estate dispositions,
net(1,2)
|
|
(376)
|
|
|
(376)
|
|
|
(452)
|
|
|
(452)
|
|
|
Depreciation and
amortization(1)
|
|
885
|
|
|
885
|
|
|
938
|
|
|
938
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
1,466
|
|
|
1,504
|
|
|
1,480
|
|
|
1,506
|
|
|
Normalizing items,
net(1,3)
|
|
15
|
|
|
15
|
|
|
8
|
|
|
8
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
|
1,481
|
|
|
$
|
1,519
|
|
|
$
|
1,488
|
|
|
$
|
1,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2.55
|
|
|
$
|
2.65
|
|
|
$
|
2.66
|
|
|
$
|
2.73
|
|
|
NAREIT FFO
|
|
$
|
3.91
|
|
|
$
|
4.01
|
|
|
$
|
3.97
|
|
|
$
|
4.04
|
|
|
Normalized
FFO
|
|
$
|
3.95
|
|
|
$
|
4.05
|
|
|
$
|
3.99
|
|
|
$
|
4.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items(1)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
$
|
(61)
|
|
|
$
|
(62)
|
|
|
$
|
(64)
|
|
|
$
|
(64)
|
|
|
Non-cash interest
expenses
|
|
17
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(72)
|
|
|
(72)
|
|
|
(78)
|
|
|
(78)
|
|
|
Stock-based
compensation
|
|
23
|
|
|
22
|
|
|
22
|
|
|
22
|
|
|
|
|
|
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
2.
|
|
|
|
|
|
|
|
|
|
Normalizing
Items
|
|
|
|
|
|
|
|
|
Exhibit
2
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
2018
|
|
2017
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
|
(7,460)
|
|
(1)
|
|
$
|
736
|
|
|
$
|
(14,633)
|
|
|
$
|
1,960
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
299
|
|
(2)
|
|
5,515
|
|
|
12,006
|
|
|
36,870
|
|
|
Preferred stock
redemption charge
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
9,769
|
|
|
Incremental
stock-based compensation expense
|
|
—
|
|
|
|
—
|
|
|
3,552
|
|
|
—
|
|
|
Nonrecurring income
tax benefits
|
|
—
|
|
|
|
(7,916)
|
|
|
—
|
|
|
(7,916)
|
|
|
Other
expenses
|
|
10,058
|
|
(3)
|
|
6,339
|
|
|
13,770
|
|
|
18,014
|
|
|
Additional other
income
|
|
(10,805)
|
|
(4)
|
|
—
|
|
|
(10,805)
|
|
|
—
|
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
1,039
|
|
(5)
|
|
1,911
|
|
|
4,209
|
|
|
24,850
|
|
|
Net normalizing
items
|
|
$
|
(6,869)
|
|
|
|
$
|
6,585
|
|
|
$
|
8,099
|
|
|
$
|
83,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
373,075
|
|
|
|
368,149
|
|
|
373,186
|
|
|
366,423
|
|
|
Net normalizing items
per diluted share
|
|
$
|
(0.02)
|
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.23
|
|
|
|
|
|
Notes:
|
(1) Primarily related
to mark-to-market of Genesis HealthCare stock holdings.
|
|
|
(2) Primarily related
to secured debt extinguishments.
|
|
|
(3) Primarily related
to non-capitalizable transaction costs and severance-related
costs.
|
|
|
(4) Primarily related
to the recognition of lease termination fee income.
|
|
|
(5) Primarily related
to non-capitalizable transaction costs in joint
ventures.
|
|
FFO
Reconciliations
|
|
|
|
|
|
|
|
Exhibit
3
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
154,432
|
|
|
$
|
188,429
|
|
|
$
|
592,103
|
|
|
$
|
501,068
|
|
|
Depreciation and
amortization
|
|
236,275
|
|
|
224,847
|
|
|
464,476
|
|
|
453,124
|
|
|
Impairments and
losses (gains) on real estate dispositions, net
|
|
(6,123)
|
|
|
(28,524)
|
|
|
(316,122)
|
|
|
(261,585)
|
|
|
Noncontrolling
interests(1)
|
|
(17,692)
|
|
|
(16,955)
|
|
|
(34,045)
|
|
|
(35,061)
|
|
|
Unconsolidated
entities(2)
|
|
11,833
|
|
|
16,593
|
|
|
25,533
|
|
|
33,077
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
378,725
|
|
|
384,390
|
|
|
731,945
|
|
|
690,623
|
|
|
Normalizing items,
net(3)
|
|
(6,869)
|
|
|
6,585
|
|
|
8,099
|
|
|
83,547
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
|
371,856
|
|
|
$
|
390,975
|
|
|
$
|
740,044
|
|
|
$
|
774,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
373,075
|
|
|
368,149
|
|
|
373,186
|
|
|
366,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
0.41
|
|
|
$
|
0.51
|
|
|
$
|
1.59
|
|
|
$
|
1.37
|
|
|
|
NAREIT FFO
|
|
$
|
1.02
|
|
|
$
|
1.04
|
|
|
$
|
1.96
|
|
|
$
|
1.88
|
|
|
|
Normalized
FFO
|
|
$
|
1.00
|
|
|
$
|
1.06
|
|
|
$
|
1.98
|
|
|
$
|
2.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
|
0.87
|
|
|
$
|
0.87
|
|
|
$
|
1.74
|
|
|
$
|
1.74
|
|
|
|
Normalized FFO
attributable to common stockholders
per share
|
|
$
|
1.00
|
|
|
$
|
1.06
|
|
|
$
|
1.98
|
|
|
$
|
2.11
|
|
|
|
|
Normalized FFO payout
ratio
|
|
87
|
%
|
|
82
|
%
|
|
88
|
%
|
|
82
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(4)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
$
|
(12,447)
|
|
|
$
|
(17,058)
|
|
|
$
|
(29,776)
|
|
|
$
|
(34,980)
|
|
|
Non-cash interest
expenses
|
|
2,416
|
|
|
3,612
|
|
|
7,240
|
|
|
5,852
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(15,869)
|
|
|
(15,263)
|
|
|
(34,266)
|
|
|
(29,069)
|
|
|
Stock-based
compensation(5)
|
|
5,167
|
|
|
4,763
|
|
|
12,265
|
|
|
9,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
2.
|
|
|
|
|
|
|
(4) Amounts presented
net of noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
|
|
|
(5) Excludes certain
severance related stock-based compensation recorded in other
expense and normalized incremental stock-based compensation expense
(see Exhibit 2).
|
|
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SOURCE Welltower Inc.