TOLEDO,
Ohio, May 2, 2023 /PRNewswire/ -- Welltower
Inc. (NYSE: WELL) today announced results for the quarter ended
March 31, 2023.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.05 per diluted share
- Reported normalized funds from operations ("FFO") attributable
to common stockholders of $0.85 per
diluted share
- Reported total portfolio year-over-year same store NOI
("SSNOI") growth of 11.0%, driven by SSNOI growth in our Seniors
Housing Operating ("SHO") portfolio of 23.4%
- SHO portfolio year-over-year same store ("SS") revenue
increased 10.0% in the first quarter, driven by 240 basis points
("bps") of year-over-year average occupancy growth and Revenue Per
Occupied Room ("RevPOR") growth of 6.8%
- SHO portfolio year-over-year SSNOI margin expanded by 240 bps
driven primarily by strong RevPOR growth which continued to
meaningfully outpace Expense per Occupied Room ("ExpPOR")
growth
- Completed approximately $785
million of pro rata gross investments during the first
quarter
- As of March 31, 2023, we had
approximately $4.6 billion of
available liquidity inclusive of $0.6
billion of available cash and restricted cash and full
capacity under $4.0 billion line of
credit
- Announced the appointment of Jerry
Davis, a former multifamily executive with 33 years of
industry experience, as a Strategic Advisor
- Revised full year 2023 net income attributable to common
stockholders outlook to a range of $0.57 to $0.72 per
diluted share as compared to previous guidance of $0.57 to $0.75 per
diluted share. Normalized FFO attributable to common stockholders
guidance has been revised to a range of $3.39 to $3.54 per
diluted share as compared to previous guidance of $3.35 to $3.53 per
diluted share
- In recognition of our leading environmental efforts, earned the
2023 ENERGY STARĀ® Partner of the Year Award for the fifth
consecutive year and received recognition at the level of Sustained
Excellence, the Environmental Protection Agency's (EPA's) highest
honor in the ENERGY STAR program, for the third consecutive
year
Capital Activity and Liquidity During the quarter,
net debt to consolidated enterprise value improved to 28.2% at
March 31, 2023 from 29.5% at
December 31, 2022. Through
May 1, 2023, we sourced over
$1.0 billion of attractively priced
capital, including debt, equity, and proceeds from dispositions and
loan payoffs, to fund accretive capital deployment opportunities
and to further strengthen our already robust liquidity position. In
March 2023, we entered into a
one-year interest rate swap agreement with a notional amount of
$350 million. The interest rate swap
fixes the underlying one month term SOFR variable interest rate for
a fixed rate of 4.385% on our $1.0 billion
USD unsecured term loan maturing July
19, 2026.
Notable Investment Activity Completed During the
Quarter
In the first quarter, we completed $785
million of pro rata gross investments, including
$529 million in acquisitions and loan
funding and $257 million in
development funding. We opened four development projects for an
aggregate pro rata investment amount of $57
million. Additionally, during the quarter we completed pro
rata property dispositions and loan payoffs of $92 million.
Outpatient Medical Acquisitions During the quarter, we acquired
29 medical office buildings totaling 1.3 million rentable square
feet across multiple transactions for $348
million, representing an initial yield of 6.9%. These
acquisitions include the $78 million
purchase of a 174,000 square foot medical office building
strategically located in Washington
D.C., along K Street's prime medical office corridor, with
82% current occupancy and an initial yield of 6.6%.
U.K. Seniors Housing Acquisition During the quarter, we acquired
a portfolio of care homes located in Northern Ireland for $75 million. The communities will be operated by
Healthcare Ireland under a new triple-net master lease.
Integra Healthcare Properties Transition As part of the
previously announced transition and sale of 147 skilled nursing
facilities operated by ProMedica to Integra Healthcare Properties,
in January 2023 we sold to Integra a
15% interest in 31 skilled nursing assets for approximately
$74 million. The transaction
represents the second tranche in the formation of an 85/15 joint
venture between Welltower and Integra, with the remaining tranches
expected to close later in the year.
Other Transactions Additionally during the first quarter, we
acquired two seniors housing communities for $20 million. We also received $13 million in aggregate proceeds from loan
payoffs and the disposition of two seniors housing properties.
Notable Investment Activity Subsequent to Quarter End
Genesis HealthCare As disclosed on March
2, 2021 as part of the substantial exit of the Genesis
HealthCare operating relationship, we leased a portfolio of seven
facilities which were subleased to Genesis HealthCare and subject
to a purchase option held by us. As part of the March 2021 transaction, we entered into a forward
sale agreement for the seven properties valued at approximately
$182 million which was expected to
close when our purchase option became exercisable. In the second
quarter of 2021, we transitioned the sublease from Genesis
HealthCare to Complete Care Management. On May 1, 2023, we closed on the purchase option and
simultaneously effectuated the forward sale agreement to sell the
properties to a tri-party joint venture with Aurora Health Network,
Peace Capital (an affiliate of Complete Care Management) and us.
The transactions resulted in net cash proceeds of approximately
$104 million after our retained
interest in the properties.
Dividend On May 2, 2023, the Board of
Directors declared a cash dividend for the quarter ended
March 31, 2023 of $0.61 per share. This dividend, which will be
paid on May 23, 2023 to stockholders
of record as of May 16, 2023, will be
our 208th 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 Net income attributable to common
stockholders guidance has been revised to a range of $0.57 to $0.72 per
diluted share from the previous range of $0.57 to $0.75 per
diluted share, primarily due to change in projected net
gains/losses/impairments and depreciation and amortization. We
increased the midpoint of the guidance range of full year
normalized FFO attributable to common stockholders to a range of
$3.39 to $3.54 per diluted share from the previous range
of $3.35 to $3.53 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 9% to 13%, which is comprised of the following
components:
-
- Seniors Housing Operating approximately 17% to 24%
- Seniors Housing Triple-net approximately 1% to 3%
- Outpatient Medical approximately 2% to 3%
- Long-Term/Post-Acute Care approximately 3% to 4%
- 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 $31 million.
- Development: We anticipate funding an additional $649 million of development in 2023 relating to
projects underway on March 31,
2023.
- Dispositions: We expect pro rata disposition proceeds of
$393 million at a blended yield of
5.7% in the next twelve months. This includes approximately
$382 million from expected property
sales and $10 million of expected
proceeds from loan repayments.
- Provider Relief Funds: Our initial 2023 earnings guidance did
not include the recognition of any Provider Relief Funds or other
government grants. During the quarter ended March 31, 2023, we recognized approximately
$2 million at our share relating to
Provider Relief Funds and similar programs in the United Kingdom and Canada. Our updated guidance does not include
any additional funds in 2023. During the full year 2022, we
recognized approximately $35 million
at our share relating to these programs.
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 first quarter 2023
conference call.
Conference Call Information We have scheduled a
conference call on Wednesday, May 3, 2023 at 9:00 a.m. Eastern Time to discuss our first
quarter 2023 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 May 10, 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, net
operating income ("NOI"), same store NOI ("SSNOI"), revenue per
occupied room ("RevPOR"), same store RevPOR ("SS RevPOR"), expense
per occupied room ("ExpPOR") and same store ExpPOR ("SS ExpPOR") 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 Welltower 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 and ExpPOR represents the average expenses per
occupied room per month at our Seniors Housing Operating
properties. These metrics are calculated as our pro rata version of
total resident fees and services revenues or property operating
expenses from the income statement, divided by average monthly
occupied room days. SS RevPOR and SS ExpPOR are used to evaluate
the RevPOR and ExpPOR performance of our properties under a
consistent population, which eliminates changes in the composition
of our portfolio. They are based on the same pool of properties
used for SSNOI and includes any revenue or expense normalizations
used for SSNOI. We use RevPOR, ExpPOR, SS RevPOR and SS ExpPOR 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 which include net debt to
consolidated enterprise value, 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. Net debt is defined as total
long-term debt, excluding operating lease liabilities, less cash
and cash equivalents and restricted cash. Consolidated enterprise
value represents the sum of net debt, the fair market value of our
common stock and noncontrolling interests.
Our supplemental reporting measures and similarly entitled
financial measures are widely used by investors, equity and debt
analysts and ratings agencies in the valuation, comparison, rating
and investment recommendations of companies. Our management uses
these financial measures to facilitate internal and external
comparisons to historical operating results and in making operating
decisions. Additionally, they are utilized by the Board of
Directors to evaluate management. The supplemental reporting
measures do not represent net income or cash flow provided from
operating activities as determined in accordance with U.S. GAAP and
should not be considered as alternative measures of profitability
or liquidity. Finally, the supplemental reporting measures, as
defined by us, may not be comparable to similarly entitled items
reported by other real estate investment trusts or other
companies. Please see the exhibits for reconciliations of
supplemental reporting measures and the supplemental information
package for the quarter ended March 31,
2023, which is available on Welltower's website
(www.welltower.com), for information and reconciliations of
additional supplemental reporting measures.
About Welltower Welltower Inc. (NYSE:WELL), a real estate
investment trust ("REIT") and S&P 500 company headquartered in
Toledo, Ohio, is driving the
transformation of health care infrastructure. Welltower 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, 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)
|
|
|
March 31,
|
|
|
2023
|
|
2022
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
4,324,541
|
|
$
4,030,150
|
Buildings and
improvements
|
|
34,161,466
|
|
31,724,328
|
Acquired lease
intangibles
|
|
1,990,830
|
|
1,844,780
|
Real property held for
sale, net of accumulated depreciation
|
|
215,583
|
|
199,490
|
Construction in
progress
|
|
1,121,446
|
|
717,657
|
Less accumulated
depreciation and intangible amortization
|
|
(8,417,151)
|
|
(7,215,622)
|
Net real property
owned
|
|
33,396,715
|
|
31,300,783
|
Right of use assets,
net
|
|
322,896
|
|
404,689
|
Real estate loans
receivable, net of credit allowance
|
|
954,156
|
|
1,003,136
|
Net real estate
investments
|
|
34,673,767
|
|
32,708,608
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,596,413
|
|
1,138,526
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
571,902
|
|
301,089
|
Restricted
cash
|
|
66,894
|
|
65,954
|
Straight-line rent
receivable
|
|
357,359
|
|
385,639
|
Receivables and other
assets
|
|
1,159,233
|
|
804,316
|
Total other
assets
|
|
3,820,122
|
|
2,763,845
|
Total
assets
|
|
$
38,493,889
|
|
$
35,472,453
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
ā
|
|
$
299,968
|
Senior unsecured
notes
|
|
12,486,229
|
|
12,136,760
|
Secured
debt
|
|
2,474,837
|
|
2,104,945
|
Lease
liabilities
|
|
415,169
|
|
548,999
|
Accrued expenses and
other liabilities
|
|
1,521,499
|
|
1,203,755
|
Total
liabilities
|
|
16,897,734
|
|
16,294,427
|
Redeemable
noncontrolling interests
|
|
392,195
|
|
445,960
|
Equity:
|
|
|
|
|
Common
stock
|
|
497,928
|
|
455,376
|
Capital in excess of
par value
|
|
27,160,014
|
|
23,620,112
|
Treasury
stock
|
|
(112,925)
|
|
(112,518)
|
Cumulative net
income
|
|
8,830,623
|
|
8,725,661
|
Cumulative
dividends
|
|
(15,815,926)
|
|
(14,654,583)
|
Accumulated other
comprehensive income
|
|
(111,559)
|
|
(138,472)
|
Total Welltower Inc.
stockholders' equity
|
|
20,448,155
|
|
17,895,576
|
Noncontrolling
interests
|
|
755,805
|
|
836,490
|
Total
equity
|
|
21,203,960
|
|
18,732,066
|
Total liabilities
and equity
|
|
$
38,493,889
|
|
$
35,472,453
|
Consolidated
Statements of Income (unaudited)
|
(in thousands,
except per share data)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
1,131,685
|
|
$
994,335
|
|
|
Rental
income
|
|
384,059
|
|
356,390
|
|
|
Interest
income
|
|
36,405
|
|
38,994
|
|
|
Other income
|
|
8,580
|
|
5,985
|
|
|
Total
revenues
|
|
1,560,729
|
|
1,395,704
|
Expenses:
|
|
|
|
|
|
|
Property operating
expenses
|
|
957,753
|
|
853,669
|
|
|
Depreciation and
amortization
|
|
339,112
|
|
304,088
|
|
|
Interest
expense
|
|
144,403
|
|
121,696
|
|
|
General and
administrative expenses
|
|
44,371
|
|
37,706
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
930
|
|
2,578
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
5
|
|
(12)
|
|
|
Provision for loan
losses, net
|
|
777
|
|
(804)
|
|
|
Impairment of
assets
|
|
12,629
|
|
ā
|
|
|
Other
expenses
|
|
22,745
|
|
26,069
|
|
|
Total
expenses
|
|
1,522,725
|
|
1,344,990
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
and other
items
|
|
38,004
|
|
50,714
|
Income tax (expense)
benefit
|
|
(3,045)
|
|
(5,013)
|
Income (loss) from
unconsolidated entities
|
|
(7,071)
|
|
(2,884)
|
Gain (loss) on real
estate dispositions, net
|
|
747
|
|
22,934
|
Income (loss) from
continuing operations
|
|
28,635
|
|
65,751
|
|
|
|
|
|
Net income
(loss)
|
|
28,635
|
|
65,751
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
2,962
|
|
3,826
|
Net income (loss)
attributable to common stockholders
|
|
$
25,673
|
|
$
61,925
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
492,061
|
|
447,379
|
|
|
Diluted
|
|
494,494
|
|
449,802
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
Basic
|
|
$
0.05
|
|
$
0.14
|
|
|
Diluted(2)
|
|
$
0.05
|
|
$
0.14
|
Common dividends per
share
|
|
$
0.61
|
|
$
0.61
|
|
|
|
|
|
|
|
(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
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Net income (loss)
attributable to common stockholders
|
|
$
25,673
|
|
$
61,925
|
|
Depreciation and
amortization
|
|
339,112
|
|
304,088
|
|
Impairments and losses
(gains) on real estate dispositions, net
|
|
11,882
|
|
(22,934)
|
|
Noncontrolling
interests(1)
|
|
(13,327)
|
|
(14,753)
|
|
Unconsolidated
entities(2)
|
|
22,722
|
|
19,309
|
|
NAREIT FFO attributable
to common stockholders
|
|
386,062
|
|
347,635
|
|
Normalizing items,
net(3)
|
|
33,471
|
|
20,647
|
|
Normalized FFO
attributable to common stockholders
|
|
$
419,533
|
|
$
368,282
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
494,494
|
|
449,802
|
|
|
|
|
|
|
|
|
|
|
Per diluted share data
attributable to common stockholders:
|
|
|
|
|
|
|
Net income
(loss)(4)
|
|
$
0.05
|
|
$
0.14
|
|
|
NAREIT FFO
|
|
$
0.78
|
|
$
0.77
|
|
|
Normalized
FFO
|
|
$
0.85
|
|
$
0.82
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.61
|
|
$
0.61
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
0.85
|
|
$
0.82
|
|
|
|
Normalized FFO payout
ratio
|
|
72 %
|
|
74 %
|
|
|
|
|
|
|
|
|
|
|
Other
items:(5)
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization
|
|
$
(33,384)
|
|
$
(20,014)
|
|
Non-cash interest
expenses(6)
|
|
5,878
|
|
4,721
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(36,913)
|
|
(32,466)
|
|
Stock-based
compensation
|
|
9,124
|
|
7,445
|
|
|
|
(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
foreign currency loss (gain) (see Exhibit 2).
|
|
|
|
Normalizing
Items
|
Exhibit
2
|
|
(in thousands,
except per share data)
|
Three Months
Ended
|
|
|
March 31,
|
|
|
2023
|
|
|
2022
|
|
Loss (gain) on
derivatives and financial instruments, net
|
$
930
|
(1)
|
|
$
2,578
|
|
Loss (gain) on
extinguishment of debt, net
|
5
|
(2)
|
|
(12)
|
|
Provision for loan
losses, net
|
777
|
(3)
|
|
(804)
|
|
Income tax
benefits
|
(246)
|
(4)
|
|
ā
|
|
Other
expenses
|
22,745
|
(5)
|
|
26,069
|
|
Lease termination and
leasehold interest adjustment
|
ā
|
|
|
(8,457)
|
|
Casualty losses, net of
recoveries
|
4,487
|
(6)
|
|
13
|
|
Foreign currency loss
(gain)
|
(227)
|
(7)
|
|
ā
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
5,000
|
(8)
|
|
1,260
|
|
Net normalizing
items
|
$
33,471
|
|
|
$
20,647
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
494,494
|
|
|
449,802
|
|
Net normalizing items
per diluted share
|
$
0.07
|
|
|
$
0.05
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of the equity warrants received as part of the
Safanad/HC-One transaction that closed in 2021.
|
|
(2) Primarily related
to the extinguishment of secured debt.
|
|
(3) Primarily related
to reserves for loan losses under the current expected credit
losses accounting standard.
|
|
(4) Primarily related
to the release of 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)
|
|
|
Prior
Outlook
|
|
Current
Outlook
|
|
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
280
|
|
$
369
|
|
$
283
|
|
$
358
|
|
Impairments and losses
(gains) on real estate dispositions, net(1,2)
|
|
(30)
|
|
(30)
|
|
(19)
|
|
(19)
|
|
Depreciation and
amortization(1)
|
|
1,402
|
|
1,402
|
|
1,391
|
|
1,391
|
|
NAREIT FFO attributable
to common stockholders
|
|
1,652
|
|
1,741
|
|
1,655
|
|
1,730
|
|
Normalizing items,
net(1,3)
|
|
ā
|
|
ā
|
|
33
|
|
33
|
|
Normalized FFO
attributable to common stockholders
|
|
$
1,652
|
|
$
1,741
|
|
$
1,688
|
|
$
1,763
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
0.57
|
|
$
0.75
|
|
$
0.57
|
|
$
0.72
|
|
NAREIT FFO
|
|
$
3.35
|
|
$
3.53
|
|
$
3.32
|
|
$
3.47
|
|
Normalized
FFO
|
|
$
3.35
|
|
$
3.53
|
|
$
3.39
|
|
$
3.54
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization
|
|
$
(126)
|
|
$
(126)
|
|
$
(126)
|
|
$
(126)
|
|
Non-cash interest
expenses
|
|
23
|
|
23
|
|
24
|
|
24
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(172)
|
|
(172)
|
|
(174)
|
|
(174)
|
|
Stock-based
compensation
|
|
30
|
|
30
|
|
33
|
|
33
|
|
|
|
|
(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.
|
|
SSNOI
Reconciliation
|
|
|
|
|
|
Exhibit
4
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2023
|
|
2022
|
|
%
growth
|
|
Net income
(loss)
|
|
$
28,635
|
|
$
65,751
|
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
(747)
|
|
(22,934)
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
7,071
|
|
2,884
|
|
|
|
Income tax expense
(benefit)
|
|
3,045
|
|
5,013
|
|
|
|
Other
expenses
|
|
22,745
|
|
26,069
|
|
|
|
Impairment of
assets
|
|
12,629
|
|
ā
|
|
|
|
Provision for loan
losses, net
|
|
777
|
|
(804)
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
5
|
|
(12)
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
930
|
|
2,578
|
|
|
|
General and
administrative expenses
|
|
44,371
|
|
37,706
|
|
|
|
Depreciation and
amortization
|
|
339,112
|
|
304,088
|
|
|
|
Interest
expense
|
|
144,403
|
|
121,696
|
|
|
|
Consolidated
NOI
|
|
602,976
|
|
542,035
|
|
|
|
NOI attributable to
unconsolidated investments(1)
|
|
26,354
|
|
20,142
|
|
|
|
NOI attributable to
noncontrolling interests(2)
|
|
(25,057)
|
|
(34,999)
|
|
|
|
Pro rata NOI
|
|
604,273
|
|
527,178
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
(19,694)
|
|
(13,669)
|
|
|
|
NOI attributable to
non-same store properties
|
|
(144,558)
|
|
(106,506)
|
|
|
|
Currency and ownership
adjustments(3)
|
|
(576)
|
|
(4,787)
|
|
|
|
Normalizing
adjustments, net(4)
|
|
4,558
|
|
(2,123)
|
|
|
|
Same Store NOI
(SSNOI)
|
|
$
444,003
|
|
$
400,093
|
|
11.0 %
|
|
|
|
|
|
|
|
|
|
Seniors Housing
Operating
|
|
216,304
|
|
175,325
|
|
23.4 %
|
|
Seniors Housing
Triple-net
|
|
94,408
|
|
94,203
|
|
0.2 %
|
|
Outpatient
Medical
|
|
109,983
|
|
108,201
|
|
1.6 %
|
|
Long-Term/Post-Acute
Care
|
|
23,308
|
|
22,364
|
|
4.2 %
|
|
Total SSNOI
|
|
$
444,003
|
|
$
400,093
|
|
11.0 %
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
|
March 31,
|
|
|
|
|
2023
|
|
2022
|
|
|
Consolidated SHO
revenues
|
|
$
1,136,681
|
|
$
996,612
|
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
59,580
|
|
49,108
|
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(52,517)
|
|
(75,741)
|
|
|
SHO pro rata
revenues(3)
|
|
1,143,744
|
|
969,979
|
|
|
Non-cash and non-RevPOR
revenues on same store properties
|
|
(2,348)
|
|
(2,439)
|
|
|
Revenues attributable
to non-same store properties
|
|
(173,762)
|
|
(87,730)
|
|
|
Currency and ownership
adjustments(4)
|
|
(2,411)
|
|
(1,877)
|
|
|
SHO SS
revenues(5)
|
|
$
965,223
|
|
$
877,933
|
|
|
|
|
|
|
|
|
|
Average occupied
units/month(6)
|
|
59,221
|
|
57,508
|
|
|
SHO SS
RevPOR(7)
|
|
$
5,508
|
|
$
5,159
|
|
|
SS RevPOR YOY
growth
|
|
6.8 %
|
|
|
|
|
|
|
|
|
|
|
|
(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 1.37 and to translate UK properties at a GBP/USD
rate of 1.20.
|
|
(5) Represents SS SHO
RevPOR revenues at Welltower pro rata ownership.
|
|
|
(6) Represents average
occupied units for SS properties on a pro rata basis.
|
|
|
(7) Represents pro rata
SS average revenues generated per occupied room per
month.
|
|
|
Net Debt to
Consolidated Enterprise Value
|
|
|
|
Exhibit
6
|
|
(in thousands,
except share price)
|
|
Three Months
Ended
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
Common shares
outstanding
|
|
496,295
|
|
490,509
|
|
Period end share
price
|
|
$
71.69
|
|
$
65.55
|
|
Common equity market
capitalization
|
|
$
35,579,389
|
|
$
32,152,865
|
|
|
|
|
|
|
|
Total
debt(1)
|
|
$
15,074,320
|
|
$
14,661,552
|
|
Cash and cash
equivalents and restricted cash
|
|
(638,796)
|
|
(722,292)
|
|
Net debt
|
|
$
14,435,524
|
|
$
13,939,260
|
|
|
|
|
|
|
|
|
Noncontrolling
interests(2)
|
|
1,148,000
|
|
1,099,182
|
|
Consolidated enterprise
value
|
|
$
51,162,913
|
|
$
47,191,307
|
|
Net debt to
consolidated enterprise value
|
|
28.2 %
|
|
29.5 %
|
|
|
|
|
|
|
|
|
(1) Amounts include
senior unsecured notes, secured debt and lease liabilities related
to finance leases, as reflected on our consolidated
balance sheets. Operating lease liabilities related to the ASC 842
adoption are excluded.
|
|
(2) Includes amounts
attributable to both redeemable noncontrolling interests and
noncontrolling interests as reflected on our consolidated
balance sheets.
|
|
|
|
|
|
|
|
|
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SOURCE Welltower Inc.