TOLEDO,
Ohio, Feb. 15, 2023 /PRNewswire/ -- Welltower
Inc. (NYSE: WELL) today announced results for the quarter ended
December 31, 2022.
Recent Highlights
- Reported net loss attributable to common stockholders of
$0.01 per diluted share
- Reported normalized FFO attributable to common stockholders of
$0.83 per diluted share
- Reported total portfolio year-over-year same store NOI
("SSNOI") growth of 12.9%, driven by SSNOI growth in our Seniors
Housing Operating ("SHO") portfolio of 28.1%
- SHO portfolio year-over-year same store revenue increased 10.3%
in the fourth quarter, driven by 200 basis points of year-over-year
average occupancy growth and REVPOR growth of 7.5%. Same store
REVPOR growth in the fourth quarter reached the highest level in
our recorded history
- Announced the formation of a joint venture with Integra
Healthcare Properties ("Integra") and the transition of operations
for the skilled nursing assets previously managed by ProMedica to
best-in-class regional operators. Integra has entered into a master
lease for the entire 147-property portfolio and purchased its 15%
ownership interest in two tranches of the portfolio
- Announced executive team promotions including the appointment
of Nikhil Chaudhri to Executive Vice
President - Chief Investment Officer and Ayesha Menon to Executive Vice President -
Wellness Housing and Development
- Received a favorable Private Letter Ruling concluding that
certain of Welltower's independent living facilities are not
"health care facilities" under the REIT Investment Diversification
and Empowerment Act ("RIDEA") that are required to be leased to a
third party or to a taxable REIT subsidiary
- Announced the appointment of Jerry
Davis, a former multifamily executive with 33 years of
industry experience, as a Strategic Advisor. Mr. Davis most
recently served as President and Chief Operating Officer of UDR, an
S&P 500 multifamily REIT, and will support our efforts on the
continued build out of a full-scale, industry-leading operating
platform.
Annual Highlights
- Completed $4.1 billion of pro
rata gross investments during 2022 which were largely funded
through the settlement of $3.7
billion of forward equity proceeds and $423 million of proceeds from dispositions and
loan payoffs
- Improved net debt to Adjusted EBITDA to 6.31x at December 31, 2022 from 6.95x at December 31, 2021 with $5.1 billion of available liquidity inclusive of
the line of credit capacity, available cash and near term expected
disposition proceeds
- In June 2022, we closed on an
amended $5.2 billion unsecured credit
facility with improved pricing across our term loans. The credit
facility includes $4.0 billion of
revolving credit capacity at a borrowing rate of 77.5 basis points
over the adjusted SOFR rate, $1.0
billion of USD term loan capacity at a borrowing rate of
85.0 basis points over the adjusted SOFR rate and $250 million CAD term loan capacity at 85.0 basis
points over CDOR. In addition, the revolving facility and term
loans permit a reduction in the interest rate upon meeting certain
reductions in greenhouse gas emissions
- Continued to form new long-term growth relationships with
best-in-class developers, operators and investors, including a
strategic partnership with Reuben
Brothers, a highly sophisticated global investor, through
its investment in Avery Healthcare, and a programmatic relationship
with Retirement Unlimited, Inc. ("RUI"), a premier U.S. seniors
housing operator with a significant East Coast presence. These
long-term partnerships are expected to meaningfully contribute to
future capital deployment opportunities
- Named to the Bloomberg Gender-Equality Index for the fifth
consecutive year in recognition of our ongoing efforts to support
gender equality through policy development, representation and
transparency
- Added 48 net new employees in 2022, with a focus on Asset
Management, Data Analytics, Investments and Development,
representing a greater than 10% expansion in the Welltower
team
Capital Activity and Liquidity Inclusive of
available borrowings under our line of credit, cash and cash
equivalents, and restricted cash, as of December 31, 2022, we had $4.7 billion of near-term available liquidity and
no material senior unsecured note maturities until 2024. During the
three months ended December 31, 2022,
we settled 18.0 million shares of common stock that were sold under
our ATM program via forward sale agreements, resulting in
$1.5 billion of gross proceeds. We
reduced our share of variable rate debt to 16.0% as of December 31, 2022 from 19.7% as of September 30, 2022.
Notable Investment Activity Completed During the
Quarter
In the fourth quarter, we completed $412
million of pro rata gross investments including $223 million in acquisitions and loan funding, as
well as $188 million in development
funding. We opened ten development projects for an aggregate pro
rata investment amount of $277
million. Additionally, during the quarter we completed pro
rata property dispositions and loan payoffs of $159 million.
Integra Healthcare Properties Transition During the quarter, we
entered into definitive agreements to effectuate the sale and
transition of 147 skilled nursing facilities operated by ProMedica.
In December, ProMedica relinquished to us its 15% interest in the
portfolio previously owned in a joint venture with Welltower and
ProMedica, absolving ProMedica from its lease obligation related to
these properties. Integra entered into master leases for the
portfolio and will bear financial responsibility for all assets,
including assets where it has not yet acquired an ownership stake.
Integra's business plan entails entering into sub-leases with
approximately 15 regional operators with strong performance track
records in their respective markets. Additionally, in December we
sold to Integra a 15% interest in 54 skilled nursing assets for
approximately $73 million, and in
January 2023, we sold to Integra a
15% interest in 31 skilled nursing assets for approximately
$74 million. The transactions
represent the first two tranches in the formation of an 85/15 joint
venture between Welltower and Integra, with the remaining tranches
expected to close over the next 12 months.
StoryPoint Senior Living During October, we closed on a
tranche of five properties for a purchase price of $113 million.
Other Transactions Additionally, during the fourth quarter, we
disposed of one seniors housing property for proceeds of
$8 million.
Notable Investment Activity Completed During 2022
During 2022, we completed $4.1
billion of pro rata gross investments including $3.0 billion in acquisitions and loan funding, as
well as $1.1 billion in development
funding. We converted 21 development projects for an aggregate pro
rata amount of $668 million.
Additionally, during the year we completed pro rata property
dispositions and loan payoffs of $423
million.
Wellness Housing Platform As the largest owner of
moderately priced age-restricted and age-targeted rental housing in
the U.S., we continued to grow our platform throughout 2022 through
the acquisition of 42 properties. As of December 31, 2022, we have greater than 3,600
wellness housing units currently under development.
StoryPoint Senior Living During 2022, we expanded our
relationship with StoryPoint Senior Living, a preeminent senior
living operator based in Brighton,
Michigan through the acquisition of communities throughout
Michigan, Ohio and Tennessee under an aligned RIDEA 3.0 contract.
In total, we have acquired 30 properties with StoryPoint throughout
2022 for a pro rata purchase price of $470
million. With a median vintage of 2016, the communities were
largely in lease-up at the onset of the pandemic and, similar to
the rest of the industry, were significantly impacted by
COVID-related operational challenges. These properties are
anticipated to generate significant occupancy, margin and cash flow
growth in 2023 and beyond under StoryPoint's operating
platform.
Oakmont Management Group Throughout 2022, we expanded our
strategic partnership with Oakmont, a leading West Coast operator
of Class-A communities focused on specialized resident health and
wellness programming. We purchased four newly constructed rental
communities and three stable entrance fee communities in high
barrier-to-entry California
markets for an aggregate purchase price of $334 million. Additionally, because of Oakmont's
demonstrated track record of success to drive improved NOI, we
transitioned ten California
properties from another operator to Oakmont. Following these
transactions, the Welltower-Oakmont partnership comprises 33
assets, with an additional property in development.
Cogir Management Corporation We continued to grow our
relationship with Cogir, closing on four separate transactions
during the year, for a total of 10 properties in Canada and four in the U.S. with a total pro
rata purchase price of $772 million.
The properties are in highly attractive markets and expected to
generate unlevered IRR in the high single-digit range.
Related Companies and Atria Senior
Living In 2019, we announced a long-term strategic
partnership with Related Companies and Atria Senior Living to develop and invest in
modern urban communities catering to seniors living in major
metropolitan areas. During 2022, we delivered two residential
communities as part of the partnership; Coterie Cathedral Hill, an
upscale 208-unit senior living facility in a premier location
within San Francisco, and a luxury
residential tower in New York City
that includes Coterie Hudson Yards, a 126-unit assisted living
tower, and 406 apartment units.
Additionally, we began development on our third and fourth
locations for the partnership's series of modern communities in
California. The Cupertino development, which will grant
seniors unrivaled access to the best of Cupertino's amenities with convenient
connectivity to Silicon Valley, and the Santa Clara development, which is located at
the apex of Silicon Valley and the growing East Bay, both broke ground during 2022.
Reuben Brothers During 2022,
we formed a long-term strategic partnership in conjunction with
Reuben Brothers acquisition of Avery
Healthcare, one of our largest operators and our largest partner in
the U.K. The 50/50 joint venture is expected to generate
significant future growth opportunities through Reuben Brothers real estate investment and
development acumen. During the year the joint venture acquired six
properties previously owned or financed by Welltower and commenced
development starts for an additional four properties. Additionally,
in December 2022, Lorna Rose, a highly-accomplished seniors
housing executive with over 25 years of experience, was appointed
CEO of Avery to lead the joint
venture into its next stage of growth. Ms. Rose spent the last
seven years at Barchester Healthcare where she served as a member
of the Executive Team and had responsibility for the operational
leadership of 80 care homes.
Notable Investment Activity Subsequent to Year End
Subsequent to year end, we completed $283
million in pro rata gross investments, in addition to the
sale of a 15% interest in 31 skilled nursing assets for
approximately $74 million to
Integra.
Dividend On February 15, 2023, the Board
of Directors declared a cash dividend for the quarter ended
December 31, 2022 of $0.61 per share. This dividend, which will be
paid on March 8, 2023 to stockholders
of record as of February 28, 2023,
will be our 207th consecutive quarterly cash dividend. The
declaration and payment of future quarterly dividends remains
subject to review and approval by the Board of Directors.
Outlook for 2023 We are introducing our 2023
earnings guidance and expect to report net income attributable to
common stockholders in a range of $0.57 to $0.75 per
diluted share and normalized FFO attributable to common
stockholders in a range of $3.35 to
$3.53 per diluted share. In preparing
our guidance, we have made the following assumptions:
- Same Store NOI: We expect average blended SSNOI growth of 8% to
13%, which is comprised of the following components:
-
- Seniors Housing Operating approximately 15% to 24 %
- Seniors Housing Triple-net approximately 1% to 3%
- Outpatient Medical approximately 2% to 3%
- Long-Term/Post-Acute Care approximately 2% to 3%
- 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.
- Impact of Interest Rates and Foreign Exchange Rates: Increased
interest rates on floating rate debt and a strengthening U.S.
Dollar relative to the British Pound and Canadian Dollar are
expected to reduce 2023 normalized FFO attributable to common
stockholders by approximately $0.19
per diluted share versus 2022.
- General and Administrative Expenses: We anticipate general and
administrative expenses to be approximately $166 million to $174
million and stock-based compensation expense to be
approximately $29 million.
- Development: We anticipate funding approximately $689 million of development in 2023 relating to
projects underway on December 31,
2022.
- Dispositions: We expect pro rata disposition proceeds of
$383 million at a blended yield of
7.9% in the next twelve months. This includes approximately
$362 million of expected proceeds
from property sales and $21 million
of expected proceeds from loan repayments.
- Provider Relief Funds: Our 2023 earnings guidance does not
include the recognition of any Provider Relief Funds or other
government grants which may be received during the year. In 2022,
we recognized approximately $35
million at our share relating to Provider Relief Funds and
similar programs in the United
Kingdom and Canada.
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 2023 outlook and assumptions on the fourth quarter 2022
conference call.
Conference Call Information We have scheduled a
conference call on Thursday, February 16, 2023 at 9:00 a.m. Eastern Time to discuss our fourth
quarter 2022 results, industry trends and portfolio performance.
Telephone access will be available by dialing (888) 340-5024 or
(646) 960-0135 (international). For those unable to listen to
the call live, a taped rebroadcast will be available beginning two
hours after completion of the call through February 23, 2023. To access the rebroadcast,
dial (800) 770-2030 or (647) 362-9199 (international). The
conference ID number is 8230248. To participate in the webcast, log
on to www.welltower.com 15 minutes before the call to download the
necessary software. Replays will be available for 90 days.
Supplemental Reporting Measures We believe that net
income and net income attributable to common stockholders ("NICS"),
as defined by U.S. generally accepted accounting principles ("U.S.
GAAP"), are the most appropriate earnings measurements. However, we
consider funds from operations ("FFO"), normalized FFO, NOI, SSNOI,
REVPOR, SS REVPOR, EBITDA and Adjusted EBITDA to be useful
supplemental measures of our operating performance. Excluding
EBITDA and Adjusted 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 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 general overhead costs that are unrelated to property
operations and unallocable to the properties, or transaction costs.
These expenses include, but are not limited to, payroll and
benefits related to corporate employees, 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.
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 restricted cash. We expect to maintain capitalization
ratios and coverage ratios sufficient to maintain a capital
structure consistent with our current profile. The ratios are based
on EBITDA and Adjusted EBITDA. EBITDA is defined as earnings (net
income per income statement) before interest expense, income taxes,
depreciation and amortization. Adjusted EBITDA is defined as EBITDA
excluding unconsolidated entities and including adjustments for
stock-based compensation expense, provision for loan losses,
gains/losses on extinguishment of debt, gains/losses/impairments on
properties, gains/losses on derivatives and financial instruments,
other expenses, other impairment charges and other adjustments
deemed appropriate in management's opinion. We believe that EBITDA
and Adjusted EBITDA, along with net income, are important
supplemental measures because they provide additional information
to assess and evaluate the performance of our operations. Our
leverage ratios include net debt to Adjusted EBITDA. Net debt is
defined as total long-term debt, excluding operating lease
liabilities, less cash and cash equivalents and restricted
cash.
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,
2022, which is available on the Company's website
(www.welltower.com), for information and reconciliations of
additional supplemental reporting measures.
About Welltower Welltower Inc. (NYSE:WELL), an S&P
500 company headquartered in Toledo,
Ohio, is driving the transformation of health care
infrastructure. The Company invests with leading seniors housing
operators, post-acute providers and health systems to fund the real
estate infrastructure needed to scale innovative care delivery
models and improve people's wellness and overall health care
experience. Welltower™, a real estate investment trust
("REIT"), owns interests in properties concentrated in major,
high-growth markets in the United
States, Canada and the
United Kingdom, consisting of
seniors housing and post-acute communities and outpatient medical
properties. More information is available at
www.welltower.com. We routinely post important information on
our website at www.welltower.com in the "Investors" section,
including corporate and investor presentations and financial
information. We intend to use our website as a means of
disclosing material, non-public information and for complying with
our disclosure obligations under Regulation FD. Such disclosures
will be included on our website under the heading
"Investors". Accordingly, investors should monitor such
portion of our website in addition to following our press releases,
public conference calls and filings with the Securities and
Exchange Commission. The information on our website is not
incorporated by reference in this press release, and our web
address is included as an inactive textual reference only.
Forward-Looking Statements and Risk Factors This
press release contains "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. When
Welltower uses words such as "may," "will," "intend," "should,"
"believe," "expect," "anticipate," "project," "pro forma,"
"estimate" or similar expressions that do not relate solely to
historical matters, Welltower is making forward-looking statements.
Forward-looking statements, including statements related to Funds
From Operations guidance, are not guarantees of future performance
and involve risks and uncertainties that may cause Welltower's
actual results to differ materially from Welltower's expectations
discussed in the forward-looking statements. This may be a result
of various factors, including, but not limited to: the impact of
the COVID-19 pandemic; uncertainty regarding the implementation and
impact of the CARES Act and future stimulus or other COVID-19
relief legislation; the status of the economy; the status of
capital markets, including availability and cost of capital; issues
facing the health care industry, including compliance with, and
changes to, regulations and payment policies, responding to
government investigations and punitive settlements and
operators'/tenants' difficulty in cost effectively obtaining and
maintaining adequate liability and other insurance; changes in
financing terms; competition within the health care and seniors
housing industries; negative developments in the operating results
or financial condition of operators/tenants, including, but not
limited to, their ability to pay rent and repay loans; Welltower's
ability to transition or sell properties with profitable results;
the failure to make new investments or acquisitions as and when
anticipated; natural disasters and other acts of God affecting
Welltower's properties; Welltower's ability to re-lease space at
similar rates as vacancies occur; Welltower's ability to timely
reinvest sale proceeds at similar rates to assets sold;
operator/tenant or joint venture partner bankruptcies or
insolvencies; the cooperation of joint venture partners; government
regulations affecting Medicare and Medicaid reimbursement rates and
operational requirements; liability or contract claims by or
against operators/tenants; unanticipated difficulties and/or
expenditures relating to future investments or acquisitions;
environmental laws affecting Welltower's properties; changes in
rules or practices governing Welltower's financial reporting; the
movement of U.S. and foreign currency exchange rates; Welltower's
ability to maintain its qualification as a REIT; key management
personnel recruitment and retention; and other risks described in
Welltower's reports filed from time to time with the SEC. Welltower
undertakes no obligation to update or revise publicly any
forward-looking statements, whether because of new information,
future events or otherwise, or to update the reasons why actual
results could differ from those projected in any forward-looking
statements.
Welltower Inc.
Financial
Exhibits
Consolidated Balance
Sheets (unaudited)
|
(in
thousands)
|
|
|
December 31,
|
|
|
2022
|
|
2021
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
4,249,834
|
|
$
3,968,430
|
Buildings and
improvements
|
|
33,651,336
|
|
31,062,203
|
Acquired lease
intangibles
|
|
1,945,458
|
|
1,789,628
|
Real property held for
sale, net of accumulated depreciation
|
|
133,058
|
|
134,097
|
Construction in
progress
|
|
1,021,080
|
|
651,389
|
Less accumulated
depreciation and intangible amortization
|
|
(8,075,733)
|
|
(6,910,114)
|
Net real property
owned
|
|
32,925,033
|
|
30,695,633
|
Right of use assets,
net
|
|
323,942
|
|
522,796
|
Real estate loans
receivable, net of credit allowance
|
|
890,844
|
|
1,068,681
|
Net real estate
investments
|
|
34,139,819
|
|
32,287,110
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,499,790
|
|
1,039,043
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
631,681
|
|
269,265
|
Restricted
cash
|
|
90,611
|
|
77,490
|
Straight-line rent
receivable
|
|
322,173
|
|
365,643
|
Receivables and other
assets
|
|
1,140,838
|
|
803,453
|
Total other
assets
|
|
3,753,414
|
|
2,623,215
|
Total
assets
|
|
$
37,893,233
|
|
$
34,910,325
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
—
|
|
$
324,935
|
Senior unsecured
notes
|
|
12,437,273
|
|
11,613,758
|
Secured
debt
|
|
2,110,815
|
|
2,192,261
|
Lease
liabilities
|
|
415,824
|
|
545,944
|
Accrued expenses and
other liabilities
|
|
1,535,325
|
|
1,235,554
|
Total
liabilities
|
|
16,499,237
|
|
15,912,452
|
Redeemable
noncontrolling interests
|
|
384,443
|
|
401,294
|
Equity:
|
|
|
|
|
Common
stock
|
|
491,919
|
|
448,605
|
Capital in excess of
par value
|
|
26,742,750
|
|
23,133,641
|
Treasury
stock
|
|
(111,001)
|
|
(107,750)
|
Cumulative net
income
|
|
8,804,950
|
|
8,663,736
|
Cumulative
dividends
|
|
(15,514,097)
|
|
(14,380,915)
|
Accumulated other
comprehensive income
|
|
(119,707)
|
|
(121,316)
|
Total Welltower Inc.
stockholders' equity
|
|
20,294,814
|
|
17,636,001
|
Noncontrolling
interests
|
|
714,739
|
|
960,578
|
Total
equity
|
|
21,009,553
|
|
18,596,579
|
Total liabilities
and equity
|
|
$
37,893,233
|
|
$
34,910,325
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
1,100,671
|
|
$
897,251
|
|
$
4,173,711
|
|
$
3,197,223
|
|
|
Rental
income
|
|
372,002
|
|
359,145
|
|
1,451,786
|
|
1,374,695
|
|
|
Interest
income
|
|
36,646
|
|
39,672
|
|
150,571
|
|
137,563
|
|
|
Other income
|
|
9,212
|
|
13,196
|
|
84,547
|
|
32,634
|
|
|
Total
revenues
|
|
1,518,531
|
|
1,309,264
|
|
5,860,615
|
|
4,742,115
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
938,838
|
|
785,179
|
|
3,558,770
|
|
2,774,562
|
|
|
Depreciation and
amortization
|
|
342,286
|
|
284,501
|
|
1,310,368
|
|
1,037,566
|
|
|
Interest
expense
|
|
140,391
|
|
121,848
|
|
529,519
|
|
489,853
|
|
|
General and
administrative expenses
|
|
41,319
|
|
33,109
|
|
150,390
|
|
126,727
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
258
|
|
(830)
|
|
8,334
|
|
(7,333)
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
87
|
|
(1,090)
|
|
680
|
|
49,874
|
|
|
Provision for loan
losses, net
|
|
10,469
|
|
(39)
|
|
10,320
|
|
7,270
|
|
|
Impairment of
assets
|
|
13,146
|
|
2,357
|
|
17,502
|
|
51,107
|
|
|
Other
expenses
|
|
24,954
|
|
15,483
|
|
101,670
|
|
41,739
|
|
|
Total
expenses
|
|
1,511,748
|
|
1,240,518
|
|
5,687,553
|
|
4,571,365
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
6,783
|
|
68,746
|
|
173,062
|
|
170,750
|
Income tax (expense)
benefit
|
|
4,088
|
|
(2,051)
|
|
(7,247)
|
|
(8,713)
|
Income (loss) from
unconsolidated entities
|
|
(4,650)
|
|
(12,174)
|
|
(21,290)
|
|
(22,933)
|
Gain (loss) on real
estate dispositions, net
|
|
(4,423)
|
|
11,673
|
|
16,043
|
|
235,375
|
Income (loss) from
continuing operations
|
|
1,798
|
|
66,194
|
|
160,568
|
|
374,479
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
1,798
|
|
66,194
|
|
160,568
|
|
374,479
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
5,526
|
|
7,522
|
|
19,354
|
|
38,341
|
Net income (loss)
attributable to common stockholders
|
|
$
(3,728)
|
|
$
58,672
|
|
$
141,214
|
|
$
336,138
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
483,305
|
|
436,909
|
|
462,185
|
|
424,976
|
|
|
Diluted
|
|
483,305
|
|
438,719
|
|
465,158
|
|
426,841
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.01)
|
|
$
0.13
|
|
$
0.31
|
|
$
0.79
|
|
|
Diluted(2)
|
|
$
(0.01)
|
|
$
0.13
|
|
$
0.30
|
|
$
0.78
|
Common dividends per
share
|
|
$
0.61
|
|
$
0.61
|
|
$
2.44
|
|
$
2.44
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
amounts attributable to redeemable noncontrolling
interests.
|
(2) Includes
adjustment to the numerator for income (loss) attributable to OP
Units and DownREIT Units.
|
FFO
Reconciliations
|
|
|
|
|
|
|
|
Exhibit
1
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net income (loss)
attributable to common stockholders
|
|
$ (3,728)
|
|
$ 58,672
|
|
$
141,214
|
|
$
336,138
|
|
Depreciation and
amortization
|
|
342,286
|
|
284,501
|
|
1,310,368
|
|
1,037,566
|
|
Impairments and losses
(gains) on real estate dispositions, net
|
|
17,569
|
|
(9,316)
|
|
1,459
|
|
(184,268)
|
|
Noncontrolling
interests(1)
|
|
(13,989)
|
|
(13,988)
|
|
(56,529)
|
|
(54,190)
|
|
Unconsolidated
entities(2)
|
|
15,847
|
|
19,107
|
|
81,560
|
|
85,476
|
|
NAREIT FFO attributable
to common stockholders
|
|
357,985
|
|
338,976
|
|
1,478,072
|
|
1,220,722
|
|
Normalizing items,
net(3)
|
|
46,247
|
|
23,136
|
|
80,198
|
|
147,816
|
|
Normalized FFO
attributable to common stockholders
|
|
$
404,232
|
|
$
362,112
|
|
$ 1,558,270
|
|
$ 1,368,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
For net income (loss)
purposes
|
|
483,305
|
|
438,719
|
|
465,158
|
|
426,841
|
|
|
For FFO
purposes
|
|
486,419
|
|
438,719
|
|
465,158
|
|
426,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)(5)
|
|
$
(0.01)
|
|
$
0.13
|
|
$
0.30
|
|
$
0.78
|
|
|
NAREIT FFO
|
|
$
0.74
|
|
$
0.77
|
|
$
3.18
|
|
$
2.86
|
|
|
Normalized
FFO
|
|
$
0.83
|
|
$
0.83
|
|
$
3.35
|
|
$
3.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.61
|
|
$
0.61
|
|
$
2.44
|
|
$
2.44
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
0.83
|
|
$
0.83
|
|
$
3.35
|
|
$
3.21
|
|
|
|
Normalized FFO payout
ratio
|
|
73 %
|
|
73 %
|
|
73 %
|
|
76 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(6)
|
|
|
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization(7)
|
|
$
(26,539)
|
|
$
(18,792)
|
|
$
(106,496)
|
|
$
(77,464)
|
|
Non-cash interest
expenses(8)
|
|
6,167
|
|
7,027
|
|
21,805
|
|
21,599
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(62,122)
|
|
(46,344)
|
|
(179,133)
|
|
(100,925)
|
|
Stock-based
compensation
|
|
6,569
|
|
2,945
|
|
26,027
|
|
16,934
|
|
|
|
(1) Represents
noncontrolling interests' share of net FFO adjustments.
|
|
(2) Represents
Welltower's share of net FFO adjustments from unconsolidated
entities.
|
|
(3) See Exhibit
2.
|
|
(4) Foreign currency
impact is calculated assuming constant exchange rates for all
periods presented of 1.2606 for USD/CAD and of 1.3483 for
GBP/USD.
|
|
(5) Includes adjustment
to the numerator for income (loss) attributable to OP
unitholders.
|
|
(6) Amounts presented
net of noncontrolling interests' share and including Welltower's
share of unconsolidated entities.
|
|
(7) Excludes normalized
other impairment (see Exhibit 2).
|
|
(8) Excludes normalized
foreign currency loss (gain) (see Exhibit 2).
|
|
|
|
Normalizing
Items
|
|
|
|
Exhibit
2
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
258
|
(1)
|
$
(830)
|
|
$ 8,334
|
|
$
(7,333)
|
|
Loss (gain) on
extinguishment of debt, net
|
|
87
|
(2)
|
(1,090)
|
|
680
|
|
49,874
|
|
Provision for loan
losses, net
|
|
10,469
|
(3)
|
(39)
|
|
10,320
|
|
7,270
|
|
Income tax
benefits
|
|
(6,784)
|
(4)
|
—
|
|
(6,784)
|
|
(6,298)
|
|
Other
impairment
|
|
—
|
|
—
|
|
(620)
|
|
49,241
|
|
Other
expenses
|
|
24,954
|
(5)
|
15,483
|
|
101,670
|
|
41,739
|
|
Lease termination and
leasehold interest adjustment
|
|
—
|
|
1,400
|
|
(64,854)
|
|
760
|
|
Casualty losses, net of
recoveries
|
|
7,377
|
(6)
|
4,788
|
|
10,391
|
|
5,786
|
|
Foreign currency loss
(gain)
|
|
(1,090)
|
(7)
|
—
|
|
2,787
|
|
—
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
10,976
|
(8)
|
3,424
|
|
18,274
|
|
6,777
|
|
Net normalizing
items
|
|
$
46,247
|
|
$
23,136
|
|
$
80,198
|
|
$
147,816
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
486,419
|
|
438,719
|
|
465,158
|
|
426,841
|
|
Net normalizing items
per diluted share
|
|
$
0.10
|
|
$
0.05
|
|
$
0.17
|
|
$
0.35
|
|
|
|
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of the equity warrants received as part of the
Safanad/HC-One transaction that closed in 2021.
|
|
(2) Primarily related
to the extinguishment of secured debt.
|
|
(3) Primarily related
to the recognition of a specific reserve for a Triple-net held to
maturity debt security.
|
|
(4) Primarily related
to the release of valuation allowances.
|
|
(5) Primarily related
to non-capitalizable transaction costs and an accrual for
non-capitalizable promotes.
|
|
(6) Primarily relates
to casualty losses net of any insurance recoveries.
|
|
(7) Primarily relates
to foreign currency gains and losses related to accrued interest on
intercompany loans and third party debt denominated in a foreign
currency.
|
|
(8) Primarily related
to hypothetical liquidation at book value adjustments related to in
substance real estate investments.
|
|
Outlook
Reconciliation: Year Ending December 31, 2023
|
Exhibit
3
|
|
(in millions, except
per share data)
|
|
|
Current
Outlook
|
|
|
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
280
|
|
$
369
|
|
Impairments and losses
(gains) on real estate dispositions, net(1)
|
|
(30)
|
|
(30)
|
|
Depreciation and
amortization(1)
|
|
1,402
|
|
1,402
|
|
NAREIT FFO and
Normalized FFO attributable to common stockholders
|
|
$
1,652
|
|
$
1,741
|
|
|
|
|
|
|
|
|
Diluted per share data
attributable to common stockholders:
|
|
|
|
|
|
Net income
|
|
$
0.57
|
|
$
0.75
|
|
NAREIT FFO and
Normalized FFO
|
|
$
3.35
|
|
$
3.53
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization
|
|
$
(126)
|
|
$
(126)
|
|
Non-cash interest
expenses
|
|
23
|
|
23
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(172)
|
|
(172)
|
|
Stock-based
compensation
|
|
30
|
|
30
|
|
|
|
|
(1) Amounts presented
net of noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
SSNOI
Reconciliation
|
|
|
|
|
|
Exhibit
4
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2022
|
|
2021
|
|
%
growth
|
|
Net income
(loss)
|
|
$
1,798
|
|
$
66,194
|
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
4,423
|
|
(11,673)
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
4,650
|
|
12,174
|
|
|
|
Income tax expense
(benefit)
|
|
(4,088)
|
|
2,051
|
|
|
|
Other
expenses
|
|
24,954
|
|
15,483
|
|
|
|
Impairment of
assets
|
|
13,146
|
|
2,357
|
|
|
|
Provision for loan
losses, net
|
|
10,469
|
|
(39)
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
87
|
|
(1,090)
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
258
|
|
(830)
|
|
|
|
General and
administrative expenses
|
|
41,319
|
|
33,109
|
|
|
|
Depreciation and
amortization
|
|
342,286
|
|
284,501
|
|
|
|
Interest
expense
|
|
140,391
|
|
121,848
|
|
|
|
Consolidated
NOI
|
|
579,693
|
|
524,085
|
|
|
|
NOI attributable to
unconsolidated investments(1)
|
|
24,950
|
|
20,287
|
|
|
|
NOI attributable to
noncontrolling interests(2)
|
|
(27,523)
|
|
(27,889)
|
|
|
|
Pro rata NOI
|
|
577,120
|
|
516,483
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
(16,075)
|
|
(12,495)
|
|
|
|
NOI attributable to
non-same store properties
|
|
(146,465)
|
|
(121,643)
|
|
|
|
Currency and ownership
adjustments(3)
|
|
5,299
|
|
582
|
|
|
|
Normalizing
adjustments, net(4)
|
|
900
|
|
(10,154)
|
|
|
|
Same Store NOI
(SSNOI)
|
|
$
420,779
|
|
$
372,773
|
|
12.9 %
|
|
|
|
|
|
|
|
|
|
Seniors Housing
Operating
|
|
185,121
|
|
144,510
|
|
28.1 %
|
|
Seniors Housing
Triple-net
|
|
104,459
|
|
100,166
|
|
4.3 %
|
|
Outpatient
Medical
|
|
108,362
|
|
106,145
|
|
2.1 %
|
|
Long-Term/Post-Acute
Care
|
|
22,837
|
|
21,952
|
|
4.0 %
|
|
Total SSNOI
|
|
$
420,779
|
|
$
372,773
|
|
12.9 %
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1) Represents Welltower's interests in
joint ventures where Welltower is the minority partner.
|
|
(2) Represents minority partners' interests in
joint ventures where Welltower is the majority partner and includes
an adjustment to remove NOI related to certain
leasehold
properties.
|
|
(3) Includes adjustments to reflect consistent
property ownership percentages and foreign currency exchange rates
for properties in the U.K. and Canada.
|
|
(4) Includes other adjustments described in the
accompanying Supplement.
|
|
Reconciliation of
SHO SS REVPOR Growth
|
|
Exhibit
5
|
|
|
(in thousands except
SS REVPOR)
|
|
Three Months
Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2022
|
|
2021
|
|
|
Consolidated SHO
revenues
|
|
$
1,104,995
|
|
$
904,780
|
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
56,808
|
|
47,678
|
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(66,657)
|
|
(74,894)
|
|
|
SHO pro rata
revenues(3)
|
|
1,095,146
|
|
877,564
|
|
|
Non-cash revenues on
same store properties
|
|
(556)
|
|
(556)
|
|
|
Revenues attributable
to non-same store properties
|
|
(292,902)
|
|
(138,259)
|
|
|
Currency and ownership
adjustments(4)
|
|
9,897
|
|
1,068
|
|
|
Normalizing adjustment
for government grants(5)
|
|
—
|
|
(3,011)
|
|
|
Other normalizing
adjustments(6)
|
|
—
|
|
(242)
|
|
|
SHO SS
revenues(7)
|
|
$
811,585
|
|
$
736,564
|
|
|
Average occupied
units/month(8)
|
|
51,251
|
|
49,987
|
|
|
SHO SS
REVPOR(9)
|
|
$
5,235
|
|
$
4,872
|
|
|
SS REVPOR YOY
growth
|
|
7.5 %
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents
Welltower's interests in joint ventures where Welltower is the
minority partner.
|
|
|
(2) Represents minority
partners' interests in joint ventures where Welltower is the
majority partner and includes an adjustment to remove
revenues related to certain leasehold properties.
|
|
(3) Represents SHO
revenues at Welltower pro rata ownership.
|
|
|
(4) Includes where
appropriate adjustments to reflect consistent property ownership
percentages, to translate Canadian properties at a
USD/CAD rate of 1.2738 and to translate UK properties at a GBP/USD
rate of 1.3501.
|
|
(5) Represents
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
REVPOR 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.
|
|
|
Net Debt to Adjusted
EBITDA Reconciliation
|
|
|
|
Exhibit
6
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
December 31,
2022
|
|
December 31,
2021
|
|
Net income
(loss)
|
|
$
1,798
|
|
$
66,194
|
|
Interest
expense
|
|
140,391
|
|
121,848
|
|
Income tax expense
(benefit)
|
|
(4,088)
|
|
2,051
|
|
Depreciation and
amortization
|
|
342,286
|
|
284,501
|
|
EBITDA
|
|
480,387
|
|
474,594
|
|
Loss (income) from
unconsolidated entities
|
|
4,650
|
|
12,174
|
|
Stock-based
compensation
|
|
6,569
|
|
2,945
|
|
Loss (gain) on
extinguishment of debt, net
|
|
87
|
|
(1,090)
|
|
Loss (gain) on real
estate dispositions, net
|
|
4,423
|
|
(11,673)
|
|
Impairment of
assets
|
|
13,146
|
|
2,357
|
|
Provision for loan
losses, net
|
|
10,469
|
|
(39)
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
258
|
|
(830)
|
|
Other
expenses
|
|
24,954
|
|
15,483
|
|
Leasehold interest
adjustment(1)
|
|
—
|
|
1,400
|
|
Casualty losses, net of
recoveries
|
|
7,377
|
|
4,788
|
|
Adjusted
EBITDA
|
|
552,320
|
|
500,109
|
|
|
|
|
|
|
|
Total
debt(2)
|
|
$
14,661,552
|
|
$
14,242,637
|
|
Cash and cash
equivalents and restricted cash
|
|
(722,292)
|
|
(346,755)
|
|
Net debt
|
|
$
13,939,260
|
|
$
13,895,882
|
|
|
|
|
|
|
|
Adjusted EBITDA
annualized
|
|
$
2,209,280
|
|
$
2,000,436
|
|
Net debt to Adjusted
EBITDA ratio
|
|
6.31 x
|
|
6.95 x
|
|
|
|
|
|
|
|
|
Note:
(1) Represents revenues and 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 was paid
in excess of net cash flow relating to the leasehold
properties and therefore,
the net impact has been excluded from Adjusted EBITDA.
|
|
(2) Amounts include unamortized
premiums/discounts, other fair value adjustments and financing
lease liabilities. Excludes operating lease liabilities
related to ASC 842
adoption.
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Welltower Inc.