TOLEDO, Ohio, Feb. 15, 2022 /PRNewswire/ -- Welltower Inc.
(NYSE:WELL) today announced results for the quarter ended
December 31, 2021.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.13 per diluted share
- Reported normalized FFO attributable to common stockholders of
$0.83 per diluted share
- Seniors Housing Operating ("SHO") portfolio spot occupancy
increased approximately 70 basis points ("bps") during the quarter
to 77.7%, while average pro rata occupancy growth exceeded guidance
of 140 bps(1)
- SHO same store revenue growth accelerated 4.8% in the fourth
quarter compared to the prior year
- Achieved same store REVPOR growth of 3.4% within the SHO
portfolio during the fourth quarter as compared to 2.2% in the
third quarter
- Completed $1.5 billion of pro
rata gross investments during the fourth quarter including
$1.4 billion in acquisitions and loan
funding and $142 million in
development funding
- In November, we issued $500
million in 2.75% senior unsecured notes due January 2032, matching our lowest-ever coupon on
a 10-year note
- Sold 11.3 million shares of common stock under our ATM program
via forward sale agreements at an initial weighted average price of
$85.06 since October 1, 2021 for total gross proceeds of
approximately $961 million. As of
February 14, 2022, approximately 11.1
million shares remain unsettled, which are expected to generate
future gross proceeds of $949
million
- Awarded a rating of A- from CDP, reflecting our comprehensive
disclosure, awareness and management of environmental risks, and
best practices associated with environmental leadership
Annual Highlights
- SHO portfolio spot occupancy increased approximately 510 bps
from the pandemic-low of 72.6% on March 12,
2021(1)
- Completed $5.7 billion of pro
rata gross investments during 2021
- Formed 19 new and proprietary long-term growth relationships
with best-in-class developers and operators that are expected to
meaningfully contribute to capital deployment opportunities
- Announced substantial exit of the operating relationship with
Genesis Healthcare ("Genesis") through real estate transactions
totaling $880 million in value,
generating an 8.5% unlevered IRR over full term of Genesis
relationship
- Moody's Investors Services and S&P Global Ratings revised
their ratings outlook for Welltower to Stable from Negative and
affirmed Welltower's issuer credit ratings as 'Baa1' and 'BBB+',
respectively
- Appointed John F. Burkhart as
Executive Vice President, Chief Operating Officer
- Added 51 net new employees in 2021, with a focus on Business
Insights, Development and Investments, representing a greater than
10% expansion in the Welltower team
(1) Occupancy metrics represent occupancy at our share for
546 properties in operation as of December
31, 2020, including unconsolidated properties but excluding
acquisitions, executed dispositions, development conversions and
one property closed for redevelopment.
COVID-19 Update
In the current quarter, SHO portfolio expenses were
significantly higher than expectations, driven by higher COVID-19
related expenses, including personal protective equipment and
testing costs, coupled with elevated labor expenses. Higher labor
expenses resulted mainly from increased utilization of contract
labor due to a rise in occupancy and challenging labor market
conditions stemming from the global surge in COVID-19 cases towards
the end of the year. Our share of contract labor totaled
$30 million, or approximately
$0.07 per diluted share on net income
attributable to common stockholders and normalized FFO for the
three months ended December 31, 2021,
resulting in an unfavorable sequential impact of $10 million or $0.02 per diluted share.
Our share of property-level expenses associated with the
COVID-19 pandemic relating to our total SHO portfolio, net of
reimbursements including Provider Relief Funds and similar programs
in the U.K. and Canada, totaled a
benefit of approximately $14 million
and $39 million for the three and
twelve months ended December 31,
2021, respectively, as compared to an expense of
approximately $7 million and
$68 million for the three and twelve
months ended December 31, 2020,
respectively. These costs included higher labor expenses coupled
with expenditures related to procurement of personal protective
equipment and other supplies, net of any reimbursements. Such
amounts had a favorable impact on net income attributable to common
stockholders and normalized FFO per diluted share of less than
$0.03 and $0.09, for the three and twelve months ended
December 31, 2021, respectively, and
an unfavorable impact of $0.02 and
$0.16 per diluted share for the three
and twelve months ended December 31,
2020, respectively.
Capital Activity and Liquidity Inclusive of
available borrowings under our line of credit, cash and cash
equivalents, and restricted cash, at December 31, 2021, we had $4.0 billion of near-term available liquidity and
no material senior unsecured note maturities until 2024. Since the
beginning of the fourth quarter, we sold 11.3 million shares of
common stock under our ATM program via forward sale agreements at
an initial weighted average price of $85.06 per share which are expected to generate
gross proceeds of approximately $961
million. As of February 14,
2022, approximately 11.1 million shares remain unsettled,
which are expected to generate future gross proceeds of
$949 million. On November 19, 2021 we completed the issuance of
$500 million senior unsecured notes
bearing interest at 2.75% with a maturity date of January 2032.
Dividend On February 15, 2022, the Board of
Directors declared a cash dividend for the quarter ended
December 31, 2021 of $0.61 per share. This dividend, which will be
paid on March 8, 2022 to stockholders
of record on March 1, 2022, will be
our 203rd consecutive quarterly cash dividend. The declaration and
payment of future quarterly dividends remains subject to review and
approval by the Board of Directors.
Quarterly Investment and Disposition Activity In the
fourth quarter, we completed $1.5
billion of pro rata gross investments including $1.4 billion in acquisitions and loan funding as
well as $142 million in development
funding. We converted five development projects for an aggregate
pro rata investment amount of $189
million. Additionally, during the quarter we completed pro
rata property dispositions and loan payoffs of $200 million.
Notable Investment Activity Completed During the
Quarter
Watermark Retirement Communities During the fourth quarter,
we acquired a portfolio of eight rental and six entrance fee
communities from Watermark Retirement Communities for $580 million, located in attractive markets
across the U.S. Watermark will be retained to manage the properties
under a highly aligned RIDEA 3.0 management agreement. The purchase
price represents a 40% discount to estimated replacement cost. The
transaction is expected to generate an unlevered IRR in the high
single-digit range.
New Perspective Senior Living We formed a new 98/2 joint
venture with New Perspective Senior Living and simultaneously
acquired three newly developed senior housing communities in fast
growing micro markets in the Midwest with densification
opportunities. The portfolio was acquired for a pro rata investment
of $108 million, and New Perspective
has assumed operations under a strongly aligned RIDEA 3.0 contract.
Additionally, we entered into a construction contract to fund the
development of 34 additional cottages at one of the properties for
$8 million. The transaction is
anticipated to generate unlevered IRR in the high single-digit
range.
Quality Senior Living During the quarter, we formed a new
partnership with Quality Senior Living ("QSL") through the
acquisition of a five-property portfolio of recently developed
Class-A communities across the Mid-Atlantic and Southeastern U.S.
for $172 million. Four of the
communities will be operated by QSL under a new triple-net master
lease with the remaining community managed under a strongly aligned
RIDEA 3.0 contract. Additionally, we entered into a strategic
long-term exclusive development agreement with QSL.
Floridian Club of Sarasota During the fourth quarter, we
acquired a cottage-style active adult community located in
Venice, Florida for $115 million. The property is a Class-A,
purpose-built, high end resort style senior community with first
rate amenities and finishes. The community was recently constructed
and is fully leased with a substantial waitlist. We entered into a
management agreement with The Barrington Group, who will continue
to manage the community.
Wingate Senior Living During
the fourth quarter, we acquired two seniors housing properties
located in the Boston MSA for $100
million. The communities will be operated by Wingate Senior Living under a new triple-net
master lease.
Outpatient Medical Acquisition During the fourth quarter,
we acquired a portfolio of eight medical office buildings in
Ann Arbor, Michigan for
$106 million. The portfolio is 97%
occupied, with an average age of seven years and a weighted average
remaining lease term of five years.
Other Transactions Additionally during the fourth quarter,
we acquired seven seniors housing communities for pro rata
investment of $142 million which will
be operated under new triple-net master leases with several
existing operators. Additionally, we acquired a medical office
building in Texas for $6 million. We disposed of four properties
previously leased to Genesis, one seniors housing triple-net
property and one medical office building for proceeds of
$131 million, resulting in a gain on
sale of $12 million.
Annual Investment and Disposition Activity During
2021, we completed $5.7 billion of
pro rata gross investments including $5.1
billion in acquisitions and loan funding as well as
$546 million in development funding.
We converted 16 development projects for an aggregate pro rata
amount of $625 million. Additionally,
during the year we completed pro rata property dispositions and
loan payoffs of $1.4 billion.
Notable Annual Investment Activity
Atria Senior Living During
the third quarter, we completed the acquisition of a portfolio of
85 seniors housing properties owned by Holiday Retirement for
$1.58 billion. The portfolio is
valued at $152,000 per unit,
representing a discount to estimated replacement cost in excess of
30%. Atria Senior Living assumed
operations of the portfolio following its acquisition of the
Holiday management company.
StoryPoint Senior Living We expanded our relationship with
StoryPoint through the acquisition of 11 seniors housing
communities located across the Midwest for $274 million. These properties will be operated
by StoryPoint under a triple-net master lease.
Safanad/HC-One Loan Funding and Equity Investment During
the second quarter, we provided £540 million ($750 million) of senior loan financing and a £30
million ($42 million) delayed
facility to affiliates of Safanad, a global real estate and private
equity firm, as part of the successful recapitalization of its
investment in HC-One Group. The loan has a 5-year term and is fully
collateralized by the shares and assets of the HC-One Group,
including its underlying property portfolio of owned assets across
the United Kingdom. Welltower's
last pound basis on the initial £540 million investment is
approximately £40,000 per unit.
Genesis Update During the first quarter, we entered into a
definitive agreement to execute a series of mutually beneficial
transactions resulting in the substantial exit of Welltower's
operating relationship with Genesis. As of December 31, 2021, we have closed on the
transitions of nine PowerBack facilities to an 80/20 joint venture
with ProMedica, which occurred in April and generated pro rata
proceeds of $58 million.
Additionally, operations have transitioned for 39 of the remaining
42 properties, with three properties expected to transition at a
later date. We have entered into definitive agreements to sell the
42 properties to either a joint venture with Aurora Health Network,
the new operator and us, or to sell outright. As of December 31, 2021, we have closed on the sale of
25 of these properties for proceeds of $379
million. An additional ten properties are classified as held
for sale and the remaining seven properties are expected to be sold
in 2023.
Investment Activity Subsequent to Quarter
End Subsequent to the end of the fourth quarter, we
closed an additional $600 million of
pro rata acquisitions and loan funding across four separate
transactions, including a portfolio of eight class-A private pay
seniors housing communities with an average age of 11 years. The
investments are expected to generate high single digit unlevered
IRRs.
Outlook for First 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 March 31, 2022 and expect to report net income
attributable to common stockholders in a range of $0.17 to $0.22 per
diluted share and normalized FFO attributable to common
stockholders in a range of $0.79 to
$0.84 per diluted share. In preparing
our guidance, we have made the following assumptions:
- Same Store NOI: We expect average blended SSNOI growth of 7.0%,
which is comprised of the following components:
-
- Seniors Housing Operating approximately 15.0%
- Seniors Housing Triple-net approximately 5.0% to 6.0%
- Outpatient Medical approximately 1.0% to 2.0%
- Health System approximately 2.75%
- Long-Term/Post-Acute Care approximately 1.0% to 2.0%
- Provider Relief Funds: Our first quarter guidance includes
approximately $6 million of Provider
Relief Funds which are expected to be received during the
quarter.
- General and Administrative Expenses: We anticipate first
quarter general and administrative expenses to be approximately
$35 million to $37 million and stock-based compensation expense
to be approximately $7 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 $728 million of development in 2022 relating to
projects underway on December 31,
2021.
- Dispositions: We expect pro rata disposition proceeds of
$220 million at a blended yield of
5.3% in 2022. This includes approximately $161 million of expected proceeds from properties
classified as held-for-sale as of December
31, 2021 and $59 million in
expected loan payoffs.
Our guidance does not include any additional investments,
dispositions or capital transactions beyond those we have
announced, nor any other expenses, impairments, unanticipated
additions to the loan loss reserve or other additional normalizing
items. Please see the Supplemental Reporting Measures section for
further discussion and our definition of normalized FFO and 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 first quarter outlook and assumptions on the fourth quarter
2021 conference call.
Conference Call Information We have scheduled a
conference call on Wednesday, February 16, 2022 at
9:00 a.m. Eastern Time to discuss our
fourth quarter 2021 results, industry trends and portfolio
performance. Telephone access will be available by dialing (844)
467-7115 or (409) 983-9837 (international). For those unable
to listen to the call live, a taped rebroadcast will be available
beginning two hours after completion of the call through
March 2, 2022. To access the
rebroadcast, dial (855) 859-2056 or (404) 537-3406
(international). The conference ID number is 2198105. To
participate in the webcast, log on to www.welltower.com 15 minutes
before the call to download the necessary software. Replays
will be available for 90 days.
Supplemental Reporting Measures We believe that net
income and net income attributable to common stockholders ("NICS"),
as defined by U.S. generally accepted accounting principles ("U.S.
GAAP"), are the most appropriate earnings measurements. However, we
consider funds from operations ("FFO"), normalized FFO, NOI, SSNOI,
REVPOR and SS REVPOR to be useful supplemental measures of our
operating performance. These supplemental measures are disclosed on
our pro rata ownership basis. Pro rata amounts are derived by
reducing consolidated amounts for minority partners' noncontrolling
ownership interests and adding our minority ownership share of
unconsolidated amounts. We do not control unconsolidated
investments. While we consider pro rata disclosures useful, they
may not accurately depict the legal and economic implications of
our joint venture arrangements and should be used with caution.
Historical cost accounting for real estate assets in accordance
with U.S. GAAP implicitly assumes that the value of real estate
assets diminishes predictably over time as evidenced by the
provision for depreciation. However, since real estate values have
historically risen or fallen with market conditions, many industry
investors and analysts have considered presentations of operating
results for real estate companies that use historical cost
accounting to be insufficient. In response, the National
Association of Real Estate Investment Trusts ("NAREIT") created FFO
as a supplemental measure of operating performance for REITs that
excludes historical cost depreciation from net income. FFO
attributable to common stockholders, as defined by NAREIT, means
net income attributable to common stockholders, computed in
accordance with U.S. GAAP, excluding gains (or losses) from sales
of real estate and impairments of depreciable assets, plus real
estate depreciation and amortization, and after adjustments for
unconsolidated entities and noncontrolling
interests. Normalized FFO attributable to common stockholders
represents FFO attributable to common stockholders adjusted for
certain items detailed in Exhibit 2. We believe that
normalized FFO attributable to common stockholders is a useful
supplemental measure of operating performance because investors and
equity analysts may use this measure to compare the operating
performance of the Company between periods or as compared to other
REITs or other companies on a consistent basis without having to
account for differences caused by unanticipated and/or incalculable
items.
We define NOI as total revenues, including tenant
reimbursements, less property operating expenses. Property
operating expenses represent costs associated with managing,
maintaining and servicing tenants for our properties. These
expenses include, but are not limited to, property-related payroll
and benefits, property management fees paid to operators,
marketing, housekeeping, food service, maintenance, utilities,
property taxes and insurance. General and administrative expenses
represent costs unrelated to property operations or transaction
costs. These expenses include, but are not limited to, payroll and
benefits, professional services, office expenses and depreciation
of corporate fixed assets. SSNOI is used to evaluate the operating
performance of our properties using a consistent population which
controls for changes in the composition of our portfolio. As used
herein, same store is generally defined as those revenue-generating
properties in the portfolio for the relevant year-over-year
reporting periods. Acquisitions and development conversions are
included in the same store amounts five full quarters after
acquisition or being placed into service. Land parcels, loans and
sub-leases, as well as any properties sold or classified as held
for sale during the period, are excluded from the same store
amounts. Redeveloped properties (including major refurbishments of
a Seniors Housing Operating property where 20% or more of units are
simultaneously taken out of commission for 30 days or more or
Outpatient Medical properties undergoing a change in intended use)
are excluded from the same store amounts until five full quarters
post completion of the redevelopment. Properties undergoing
operator transitions and/or segment transitions are also excluded
from the same store amounts until five full quarters post
completion of the operator transition or segment transition. In
addition, properties significantly impacted by force majeure, acts
of God or other extraordinary adverse events are excluded from same
store amounts until five full quarters after the properties are
placed back into service. SSNOI excludes non-cash NOI and includes
adjustments to present consistent property ownership percentages
and to translate Canadian properties and UK properties using a
consistent exchange rate. Normalizers include adjustments that in
management's opinion are appropriate in considering SSNOI, a
supplemental, non-GAAP performance measure. None of these
adjustments, which may increase or decrease SSNOI, are reflected in
our financial statements prepared in accordance with U.S. GAAP.
Significant normalizers (defined as any that individually exceed
0.50% of SSNOI growth per property type) are separately disclosed
and explained. We believe NOI and SSNOI provide investors relevant
and useful information because they measure the operating
performance of our properties at the property level on an
unleveraged basis. We use NOI and SSNOI to make decisions about
resource allocations and to assess the property level performance
of our properties. 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 December 31,
2021, which is available on the Company's website
(www.welltower.com), for information and reconciliations of
additional supplemental reporting measures.
About Welltower Welltower Inc. (NYSE:WELL), an S&P
500 company headquartered in Toledo,
Ohio, is driving the transformation of health care
infrastructure. The Company invests with leading seniors housing
operators, post-acute providers and health systems to fund the real
estate infrastructure needed to scale innovative care delivery
models and improve people's wellness and overall health care
experience. Welltower™, a real estate investment trust
("REIT"), owns interests in properties concentrated in major,
high-growth markets in the United
States, Canada and the
United Kingdom, consisting of
seniors housing and post-acute communities and outpatient medical
properties. More information is available at
www.welltower.com. We routinely post important information on
our website at www.welltower.com in the "Investors" section,
including corporate and investor presentations and financial
information. We intend to use our website as a means of
disclosing material, non-public information and for complying with
our disclosure obligations under Regulation FD. Such disclosures
will be included on our website under the heading
"Investors". Accordingly, investors should monitor such
portion of our website in addition to following our press releases,
public conference calls and filings with the Securities and
Exchange Commission. The information on our website is not
incorporated by reference in this press release, and our web
address is included as an inactive textual reference only.
Forward-Looking Statements and Risk Factors This
press release contains "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. When
Welltower uses words such as "may," "will," "intend," "should,"
"believe," "expect," "anticipate," "project," "pro forma,"
"estimate" or similar expressions that do not relate solely to
historical matters, Welltower is making forward-looking statements.
Forward-looking statements, 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)
|
|
|
December
31,
|
|
|
2021
|
|
2020
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
3,968,430
|
|
$
3,440,650
|
Buildings and
improvements
|
|
31,062,203
|
|
28,024,971
|
Acquired lease
intangibles
|
|
1,789,628
|
|
1,500,030
|
Real property held for
sale, net of accumulated depreciation
|
|
134,097
|
|
216,613
|
Construction in
progress
|
|
651,389
|
|
487,742
|
Less accumulated
depreciation and intangible amortization
|
|
(6,910,114)
|
|
(6,104,297)
|
Net real property
owned
|
|
30,695,633
|
|
27,565,709
|
Right of use assets,
net
|
|
522,796
|
|
465,866
|
Real estate loans
receivable, net of credit allowance
|
|
1,068,681
|
|
443,372
|
Net real estate
investments
|
|
32,287,110
|
|
28,474,947
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,039,043
|
|
946,234
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
269,265
|
|
1,545,046
|
Restricted
cash
|
|
77,490
|
|
475,997
|
Straight-line rent
receivable
|
|
365,643
|
|
344,066
|
Receivables and other
assets
|
|
803,453
|
|
629,031
|
Total other
assets
|
|
2,623,215
|
|
4,008,695
|
Total
assets
|
|
$
34,910,325
|
|
$
32,483,642
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
324,935
|
|
$
—
|
Senior unsecured
notes
|
|
11,613,758
|
|
11,420,790
|
Secured
debt
|
|
2,192,261
|
|
2,377,930
|
Lease
liabilities
|
|
545,944
|
|
418,266
|
Accrued expenses and
other liabilities
|
|
1,235,554
|
|
1,041,594
|
Total
liabilities
|
|
15,912,452
|
|
15,258,580
|
Redeemable
noncontrolling interests
|
|
401,294
|
|
343,490
|
Equity:
|
|
|
|
|
Common
stock
|
|
448,605
|
|
418,691
|
Capital in excess of
par value
|
|
23,133,641
|
|
20,823,145
|
Treasury
stock
|
|
(107,750)
|
|
(104,490)
|
Cumulative net
income
|
|
8,663,736
|
|
8,327,598
|
Cumulative
dividends
|
|
(14,380,915)
|
|
(13,343,721)
|
Accumulated other
comprehensive income
|
|
(121,316)
|
|
(148,504)
|
Total Welltower Inc.
stockholders' equity
|
|
17,636,001
|
|
15,972,719
|
Noncontrolling
interests
|
|
960,578
|
|
908,853
|
Total
equity
|
|
18,596,579
|
|
16,881,572
|
Total liabilities
and equity
|
|
$
34,910,325
|
|
$
32,483,642
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
897,251
|
|
$
713,534
|
|
$
3,197,223
|
|
$
3,074,022
|
|
|
Rental
income
|
|
359,145
|
|
382,049
|
|
1,374,695
|
|
1,443,360
|
|
|
Interest
income
|
|
39,672
|
|
21,096
|
|
137,563
|
|
69,156
|
|
|
Other
income
|
|
13,196
|
|
5,337
|
|
32,634
|
|
19,429
|
|
|
Total
revenues
|
|
1,309,264
|
|
1,122,016
|
|
4,742,115
|
|
4,605,967
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
785,179
|
|
620,561
|
|
2,774,562
|
|
2,597,823
|
|
|
Depreciation and
amortization
|
|
284,501
|
|
242,733
|
|
1,037,566
|
|
1,038,437
|
|
|
Interest
expense
|
|
121,848
|
|
121,173
|
|
489,853
|
|
514,388
|
|
|
General and
administrative expenses
|
|
33,109
|
|
27,848
|
|
126,727
|
|
128,394
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(830)
|
|
569
|
|
(7,333)
|
|
11,049
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(1,090)
|
|
13,796
|
|
49,874
|
|
47,049
|
|
|
Provision for loan
losses, net
|
|
(39)
|
|
83,085
|
|
7,270
|
|
94,436
|
|
|
Impairment of
assets
|
|
2,357
|
|
9,317
|
|
51,107
|
|
135,608
|
|
|
Other
expenses
|
|
15,483
|
|
33,088
|
|
41,739
|
|
70,335
|
|
|
Total
expenses
|
|
1,240,518
|
|
1,152,170
|
|
4,571,365
|
|
4,637,519
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
68,746
|
|
(30,154)
|
|
170,750
|
|
(31,552)
|
Income tax (expense)
benefit
|
|
(2,051)
|
|
(290)
|
|
(8,713)
|
|
(9,968)
|
Income (loss) from
unconsolidated entities
|
|
(12,174)
|
|
258
|
|
(22,933)
|
|
(8,083)
|
Gain (loss) on real
estate dispositions, net
|
|
11,673
|
|
185,464
|
|
235,375
|
|
1,088,455
|
Income (loss) from
continuing operations
|
|
66,194
|
|
155,278
|
|
374,479
|
|
1,038,852
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
66,194
|
|
155,278
|
|
374,479
|
|
1,038,852
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
7,522
|
|
(8,451)
|
|
38,341
|
|
60,008
|
Net income (loss)
attributable to common stockholders
|
|
$
58,672
|
|
$
163,729
|
|
$
336,138
|
|
$
978,844
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
436,909
|
|
417,123
|
|
424,976
|
|
415,451
|
|
|
Diluted
|
|
438,719
|
|
418,753
|
|
426,841
|
|
417,387
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.13
|
|
$
0.39
|
|
$
0.79
|
|
$
2.36
|
|
|
Diluted(2)
|
|
$
0.13
|
|
$
0.39
|
|
$
0.78
|
|
$
2.33
|
Common dividends per
share
|
|
$
0.61
|
|
$
0.61
|
|
$
2.44
|
|
$
2.70
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net income (loss)
attributable to common stockholders
|
|
$
58,672
|
|
$
163,729
|
|
$
336,138
|
|
$
978,844
|
|
Depreciation and
amortization
|
|
284,501
|
|
242,733
|
|
1,037,566
|
|
1,038,437
|
|
Impairments and
losses (gains) on real estate dispositions, net
|
|
(9,316)
|
|
(176,147)
|
|
(184,268)
|
|
(952,847)
|
|
Noncontrolling
interests(1)
|
|
(13,988)
|
|
(20,579)
|
|
(54,190)
|
|
(23,968)
|
|
Unconsolidated
entities(2)
|
|
19,107
|
|
16,091
|
|
85,476
|
|
62,096
|
|
NAREIT FFO
attributable to common stockholders
|
|
338,976
|
|
225,827
|
|
1,220,722
|
|
1,102,562
|
|
Normalizing items,
net(3)
|
|
23,136
|
|
125,468
|
|
147,816
|
|
381,618
|
|
Normalized FFO
attributable to common stockholders
|
|
$
362,112
|
|
$
351,295
|
|
$
1,368,538
|
|
$
1,484,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
438,719
|
|
418,753
|
|
426,841
|
|
417,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share
data attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)(4)
|
|
$
0.13
|
|
$
0.39
|
|
$
0.78
|
|
$
2.33
|
|
|
NAREIT FFO
|
|
$
0.77
|
|
$
0.54
|
|
$
2.86
|
|
$
2.64
|
|
|
Normalized
FFO
|
|
$
0.83
|
|
$
0.84
|
|
$
3.21
|
|
$
3.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.61
|
|
$
0.61
|
|
$
2.44
|
|
$
2.70
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
0.83
|
|
$
0.84
|
|
$
3.21
|
|
$
3.56
|
|
|
|
Normalized FFO payout
ratio
|
|
73%
|
|
73 %
|
|
76%
|
|
76%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(5)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent
amortization(6)
|
|
$
(18,792)
|
|
$
(21,640)
|
|
$
(77,464)
|
|
$
(90,926)
|
|
Non-cash interest
expenses(7)
|
|
7,027
|
|
2,108
|
|
21,599
|
|
11,545
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(46,344)
|
|
(21,634)
|
|
(100,925)
|
|
(81,271)
|
|
Stock-based
compensation(8)
|
|
2,945
|
|
1,875
|
|
16,934
|
|
22,154
|
|
|
|
(1) Represents
noncontrolling interests' share of net FFO adjustments.
|
|
(2) Represents
Welltower's share of net FFO adjustments from unconsolidated
entities.
|
|
(3) See Exhibit
2.
|
|
(4) Includes
adjustment to the numerator for income (loss) attributable to OP
unitholders.
|
|
(5) Amounts presented
net of noncontrolling interests' share and including Welltower's
share of unconsolidated entities.
|
|
(6) Excludes
normalized other impairment (see Exhibit 2).
|
|
(7) Excludes
normalized incremental interest expense (see Exhibit 2).
|
|
(8) Excludes certain
severance related stock-based compensation recorded in other
expense (see Exhibit 2).
|
|
Normalizing
Items
|
|
|
|
|
|
|
Exhibit
2
|
|
(in thousands,
except per share data)
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
(830)
|
(1)
|
$
569
|
|
$
(7,333)
|
|
$
11,049
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(1,090)
|
(2)
|
13,796
|
|
49,874
|
|
47,049
|
|
Provision for loan
losses, net
|
|
(39)
|
(3)
|
83,085
|
|
7,270
|
|
94,436
|
|
Nonrecurring income
tax benefits
|
|
—
|
|
—
|
|
(6,298)
|
|
—
|
|
Incremental interest
expense
|
|
—
|
|
—
|
|
—
|
|
5,871
|
|
Other
impairment
|
|
—
|
|
—
|
|
49,241
|
|
146,508
|
|
Other
expenses
|
|
15,483
|
(4)
|
33,088
|
|
41,739
|
|
70,335
|
|
Leasehold interest
adjustment
|
|
1,400
|
(5)
|
—
|
|
760
|
|
—
|
|
Casualty losses, net
of recoveries
|
|
|
4,788
|
(6)
|
—
|
|
5,786
|
|
—
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
3,424
|
(7)
|
(5,070)
|
|
6,777
|
|
6,370
|
|
Net normalizing
items
|
|
$
23,136
|
|
$ 125,468
|
|
$ 147,816
|
|
$ 381,618
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
438,719
|
|
418,753
|
|
426,841
|
|
417,387
|
|
Net normalizing items
per diluted share
|
|
$
0.05
|
|
$
0.30
|
|
$
0.35
|
|
$
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of the equity warrants received as part of the
Safanad/HC-One transaction that closed in the second
quarter.
|
|
(2) Primarily related
to 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 non-capitalizable transaction costs, including an accrual for
non-capitalizable promotes, and legal fees and accrued litigation
settlements.
|
|
(5) Represents
$14,774,000 of revenues and $16,174,000 of property operating
expenses associated with a leasehold portfolio interest relating to
26 properties assumed by a wholly-owned affiliate in conjunction
with the Holiday Retirement transaction. Subsequent to the initial
transaction, we purchased eight of the leased properties and one of
the properties was sold by the landlord and removed from the lease.
No rent will be paid in excess of net cash flow relating to the
leasehold properties and therefore, the net impact each quarter
will be excluded from Normalized FFO.
|
|
(6) Primarily relates
to casualty losses net of any insurance recoveries.
|
|
(7) Primarily related
to our share of accrued litigation settlements and
non-capitalizable transaction costs on unconsolidated
entities.
|
|
Outlook
Reconciliation: Quarter Ending March 31, 2022
|
Exhibit
3
|
|
(in millions,
except per share data)
|
|
|
|
Current
Outlook
|
|
|
|
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
|
$
78
|
|
$
101
|
|
Impairments and
losses (gains) on real estate dispositions,
net(1,2)
|
|
|
(30)
|
|
(30)
|
|
Depreciation and
amortization(1)
|
|
|
309
|
|
309
|
|
NAREIT FFO and
Normalized FFO attributable to common stockholders
|
|
|
357
|
|
380
|
|
|
|
|
|
|
|
|
|
Diluted per share
data attributable to common stockholders:
|
|
|
|
|
|
|
Net income
|
|
|
$
0.17
|
|
$
0.22
|
|
NAREIT FFO and
Normalized FFO
|
|
|
$
0.79
|
|
$
0.84
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
|
$
(20)
|
|
$
(20)
|
|
Non-cash interest
expenses
|
|
|
5
|
|
5
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
|
(27)
|
|
(27)
|
|
Stock-based
compensation
|
|
|
8
|
|
8
|
|
|
|
|
(1) Amounts presented
net of noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
(2) Includes
estimated gains on expected dispositions.
|
|
Reconciliation of
SHO SS REVPOR Growth
|
|
|
|
|
|
Exhibit
4
|
|
(in thousands
except SS REVPOR)
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
September
30,
|
|
September
30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Consolidated SHO
revenues
|
|
$
904,780
|
|
$
715,020
|
|
$
839,519
|
|
$
742,065
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
47,836
|
|
43,175
|
|
45,991
|
|
42,574
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(75,052)
|
|
(55,155)
|
|
(73,414)
|
|
(58,505)
|
|
SHO pro rata
revenues(3)
|
|
877,564
|
|
703,040
|
|
812,096
|
|
726,134
|
|
Non-cash revenues on
same store properties
|
|
(562)
|
|
(851)
|
|
(562)
|
|
(848)
|
|
Revenues attributable
to non-same store properties
|
|
(240,544)
|
|
(102,016)
|
|
(142,217)
|
|
(54,813)
|
|
Currency and
ownership adjustments(4)
|
|
514
|
|
3,801
|
|
(448)
|
|
2,266
|
|
Normalizing
adjustment for government grants(5)
|
|
(4,406)
|
|
—
|
|
—
|
|
—
|
|
Other normalizing
adjustments(6)
|
|
(383)
|
|
(549)
|
|
—
|
|
(1,481)
|
|
SHO SS
revenues(7)
|
|
$
632,183
|
|
$
603,425
|
|
$
668,869
|
|
$
671,258
|
|
SHO SS revenue YOY
growth
|
|
4.8%
|
|
|
|
(0.4)%
|
|
|
|
Average occupied
units/month(8)
|
|
38,686
|
|
38,190
|
|
39,716
|
|
40,736
|
|
SHO SS
REVPOR(9)
|
|
$
5,403
|
|
$
5,224
|
|
$
5,568
|
|
$
5,448
|
|
SS REVPOR YOY
growth
|
|
3.4%
|
|
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents
Welltower's interests in joint ventures where Welltower is the
minority partner.
|
|
|
|
|
|
(2) Represents
minority partners' interests in joint ventures where Welltower is
the majority partner and includes an adjustment to remove revenues
related to certain leasehold properties. See Exhibit 2 for more
information.
|
|
(3) Represents SHO
revenues at Welltower pro rata ownership.
|
|
|
|
|
|
(4) Includes where
appropriate adjustments to reflect consistent property ownership
percentages, to translate Canadian properties at a USD/CAD rate of
1.2684 and to translate UK properties at a GBP/USD rate of
1.38.
|
|
(5) Represents
normalizing adjustment related to amounts recognized related to the
Health and Human Services Provider Relief Fund in the United States
and similar programs in the United Kingdom and Canada.
|
|
(6) Represents
aggregate normalizing adjustments which are individually less than
.50% of SSNOI growth.
|
|
(7) Represents SS SHO
revenues at Welltower pro rata ownership.
|
|
(8) Represents
average occupied units for SS properties on a pro rata
basis.
|
|
(9) Represents pro
rata SS average revenues generated per occupied room per
month.
|
|
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multimedia:https://www.prnewswire.com/news-releases/welltower-reports-fourth-quarter-2021-results-301483027.html
SOURCE Welltower Inc.