TOLEDO,
Ohio, July 29, 2024 /PRNewswire/ --
Welltower Inc. (NYSE:WELL) today announced results
for the quarter ended June 30,
2024.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.42 per diluted share
- Reported quarterly normalized funds from operations
attributable to common stockholders of $1.05 per diluted share, an increase of 16.7%
over the prior year or 19.3% exclusive of government subsidies
- Reported total portfolio year-over-year same store NOI
("SSNOI") growth of 11.3%, driven by SSNOI growth in our Seniors
Housing Operating ("SHO") portfolio of 21.7%
- During the second quarter, we completed $1.7 billion of pro rata gross investments,
including $1.4 billion in
acquisitions and loan funding and $251
million in development funding
- Since the beginning of the year, we have closed or have
definitive agreements to close $4.9
billion in pro rata acquisitions and loan funding
- During the quarter, converted or reached agreements to convert
47 triple-net leased properties to SHO (RIDEA) structures, allowing
us to directly participate in the underlying cash flow growth of
the communities
- Reported further balance sheet strengthening as of June 30, 2024 with net debt to Adjusted EBITDA of
3.68x and approximately $6.9 billion
of available liquidity inclusive of $2.9
billion of available cash and restricted cash and full
capacity under our $4.0 billion line
of credit
- Credit rating outlook revised to positive from stable by each
of S&P Global and Moody's, citing strong seniors housing
industry tailwinds and a materially improved balance sheet
- In July, closed on a new expanded $5.0
billion senior unsecured revolving credit facility, which
incorporates a maturity extension to 2029 and a 7.5bps improvement
in pricing from the previous $4.0
billion facility
- Board of Directors announced a 10% increase in the quarterly
dividend per share, reflecting our solid financial performance, low
payout ratio owing to outsized levels of cash flow growth and the
Board's confidence in the Company's strong growth prospects going
forward
- Announced the appointment of Andrew
Gundlach to the Board of Directors
Capital Activity and Liquidity
Liquidity Update During the second quarter, net debt to
consolidated enterprise value improved to 14.8% as of June 30, 2024 from 20.9% as of December 31, 2023. We sourced over $2.1 billion of attractively priced capital,
including equity and proceeds from dispositions and loan repayments
to fund accretive capital deployment opportunities and to further
strengthen our already robust liquidity profile. As of June 30, 2024, our share of variable rate debt
was approximately 7.1%.
Expanded Senior Unsecured Revolving Credit Facility In
July, we closed on an expanded $5.0
billion senior unsecured revolving credit facility, which
replaced our $4.0 billion existing
line of credit. The new facility is comprised of a $3.0 billion revolving line of credit maturing in
June 2028 that can be extended for an
additional year and a $2.0 billion
revolving line of credit maturing in June
2029. The revolving lines of credit will bear interest at a
borrowing rate of 72.5bps over the adjusted SOFR rate and an annual
facility fee of 12.5bps.
Exchangeable Senior Unsecured Notes Issuance In July,
Welltower OP issued $1,035,000,000
aggregate principal amount of 3.125% exchangeable senior unsecured
notes maturing July 15, 2029 (the
"Exchangeable Notes") unless earlier exchanged, purchased or
redeemed. The Exchangeable Notes will pay interest semi-annually in
arrears on January 15 and
July 15 of each year.
Notable Portfolio Activity
In the second quarter, we completed $1.7
billion of pro rata gross investments, including
$1.4 billion in acquisitions and loan
funding and $251 million in
development funding. We opened 13 development projects, including
partial conversions and expansions, for an aggregate pro rata
investment amount of $214 million.
Additionally, during the second quarter we completed pro rata
property dispositions and loan repayments of $578 million.
Private Equity Acquisition and Loan Funding During the
second quarter, we acquired a portfolio of seniors housing
communities for $271 million and
provided a first mortgage loan collateralized by a portfolio of
seniors housing properties for $456
million. The portfolios comprise 12 high quality seniors
housing communities encompassing approximately 2,000 units.
Atria Senior Living As
previously announced, we entered into an agreement to transition 89
Holiday by Atria communities to six of Welltower's existing
operating partners with strong operating acumen and deep expertise
in their respective regions. To date, operations for 69 properties
have been transitioned to new operators, with the remaining
properties expected to be transitioned by the end of the third
quarter.
Triple-net to Seniors Housing Operating Transitions During
the second quarter, we reached agreements to convert 47 triple-net
leased properties to Seniors Housing Operating (RIDEA) structures,
allowing us to directly participate in the underlying cash flow
growth of the communities. The transition to highly-aligned RIDEA
4.0 structures will deepen our partnership with several leading
managers, build on success within their existing portfolios, and
ensure that both Welltower and our partners benefit from the
communities' future growth potential. We completed 11 of these
transitions during the second quarter and expect to complete the
remainder during the third quarter.
Announced Future Investment Activity
Subsequent to quarter end, announced $1.1
billion in pro rata acquisitions under contract, in addition
to the previously announced $3.8
billion of investment activity closed or under contract to
close as of June 3, 2024.
Transactions under contract and not yet closed are subject to
customary closing conditions.
Environmental, Social and Governance ("ESG")
During the second quarter, we achieved an MSCI ESG rating of
"AA", reflecting our robust corporate governance practices, ESG
risk management relative to peers and ongoing commitment to
advancing sustainability initiatives. Additionally, in June, we
released our 2023 ESG Report, which is available on our website,
summarizing our progress and achievements across a range of ESG
initiatives, including those related to diversity and inclusion,
environmental responsibility and corporate governance.
Dividend On July 29, 2024, the Board of
Directors declared a cash dividend for the quarter ended
June 30, 2024 of $0.67 per share, an increase of 10% from the
prior quarter. This dividend, which will be paid on August 21, 2024 to stockholders of record as of
August 12, 2024, will be our 213th
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 2024 Net income attributable to common
stockholders guidance has been revised to a range of $1.52 to $1.60 per
diluted share from the previous range of $1.45 to $1.57 per
diluted share. We increased the guidance range of full year
normalized FFO attributable to common stockholders to a range of
$4.13 to $4.21 per diluted share from the previous range
of $4.05 to $4.17 per diluted share. In preparing our
guidance, we have updated or confirmed the following
assumptions:
- Same Store NOI: We expect average blended SSNOI growth of 10.0%
to 12.5%, which is comprised of the following components:
- Seniors Housing Operating approximately 19.0% to 23.0%
- Seniors Housing Triple-net approximately 3.0% to 4.0%
- Outpatient Medical approximately 2.0% to 3.0%
- Long-Term/Post-Acute Care approximately 2.0% to 3.0%
- Investments: Our earnings guidance includes only those
acquisitions announced or closed to date. Furthermore, no
transitions or restructures beyond those announced to date are
included.
- General and Administrative Expenses: We anticipate general and
administrative expenses to be approximately $205 million to $211
million and stock-based compensation expense to be
approximately $40 million.
- Development: We anticipate funding an additional $328 million of development in 2024 relating to
projects underway as of June 30,
2024.
- Dispositions: We expect pro rata disposition proceeds of
$643 million at a blended yield of
6.9% in the next twelve months. This includes approximately
$601 million of consideration from
expected property sales and $42
million of expected proceeds from loan repayments.
- Pandemic Relief Funds: Our initial 2024 earnings guidance did
not include the recognition of any pandemic relief funds which may
be received during the year. During the six months ended
June 30, 2024, we recognized
approximately $2 million at our share
related to Provider Relief Funds and similar programs in the
United Kingdom and Canada. Our updated guidance does not include
any additional funds in 2024. In 2023, we recognized approximately
$13 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 2024 outlook and assumptions on the second quarter
2024 conference call.
Conference Call Information We have scheduled a
conference call on Tuesday, July 30, 2024 at 9:00 a.m.
Eastern Time to discuss our second quarter 2024 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 August 6,
2024. To access the rebroadcast, dial (800) 770-2030 or
(609) 800-9909 (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"), 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 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 managers, 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. 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.
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 and
consolidated enterprise value. 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 June 30,
2024, 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 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 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, health
emergencies (such as the COVID-19 pandemic) 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)
|
|
|
June 30,
|
|
|
2024
|
|
2023
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
4,839,036
|
|
$
4,262,745
|
Buildings and
improvements
|
|
38,540,623
|
|
34,127,012
|
Acquired lease
intangibles
|
|
2,192,386
|
|
1,950,349
|
Real property held for
sale, net of accumulated depreciation
|
|
81,033
|
|
404,071
|
Construction in
progress
|
|
1,474,024
|
|
1,108,773
|
Less accumulated
depreciation and intangible amortization
|
|
(9,908,007)
|
|
(8,599,622)
|
Net real property
owned
|
|
37,219,095
|
|
33,253,328
|
Right of use assets,
net
|
|
360,282
|
|
322,316
|
Real estate loans
receivable, net of credit allowance
|
|
1,791,202
|
|
965,509
|
Net real estate
investments
|
|
39,370,579
|
|
34,541,153
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,709,558
|
|
1,650,133
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
2,776,628
|
|
2,203,788
|
Restricted
cash
|
|
86,970
|
|
95,281
|
Straight-line rent
receivable
|
|
420,666
|
|
389,381
|
Receivables and other
assets
|
|
1,101,215
|
|
1,116,078
|
Total other
assets
|
|
6,163,358
|
|
5,522,982
|
Total
assets
|
|
$
45,533,937
|
|
$
40,064,135
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
—
|
|
$
—
|
Senior unsecured
notes
|
|
12,169,775
|
|
13,530,788
|
Secured
debt
|
|
1,765,992
|
|
2,460,349
|
Lease
liabilities
|
|
393,670
|
|
348,770
|
Accrued expenses and
other liabilities
|
|
1,515,921
|
|
1,531,114
|
Total
liabilities
|
|
15,845,358
|
|
17,871,021
|
Redeemable
noncontrolling interests
|
|
262,273
|
|
369,191
|
Equity:
|
|
|
|
|
Common
stock
|
|
609,859
|
|
509,805
|
Capital in excess of
par value
|
|
36,693,283
|
|
28,085,297
|
Treasury
stock
|
|
(114,674)
|
|
(112,032)
|
Cumulative net
income
|
|
9,526,904
|
|
8,933,663
|
Cumulative
dividends
|
|
(17,492,484)
|
|
(16,116,698)
|
Accumulated other
comprehensive income
|
|
(246,462)
|
|
(95,594)
|
Total Welltower Inc.
stockholders' equity
|
|
28,976,426
|
|
21,204,441
|
Noncontrolling
interests
|
|
449,880
|
|
619,482
|
Total
equity
|
|
29,426,306
|
|
21,823,923
|
Total liabilities
and equity
|
|
$
45,533,937
|
|
$
40,064,135
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
1,393,473
|
|
$
1,159,449
|
|
$
2,753,747
|
|
$
2,291,134
|
|
Rental
income
|
|
335,811
|
|
383,439
|
|
753,463
|
|
767,498
|
|
Interest
income
|
|
63,453
|
|
38,710
|
|
116,117
|
|
75,115
|
|
Other income
|
|
32,147
|
|
83,880
|
|
61,298
|
|
92,460
|
|
Total
revenues
|
|
1,824,884
|
|
1,665,478
|
|
3,684,625
|
|
3,226,207
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
1,111,297
|
|
958,672
|
|
2,208,210
|
|
1,916,425
|
|
Depreciation and
amortization
|
|
382,045
|
|
341,945
|
|
747,908
|
|
681,057
|
|
Interest
expense
|
|
133,424
|
|
152,337
|
|
280,742
|
|
296,740
|
|
General and
administrative expenses
|
|
55,565
|
|
44,287
|
|
108,883
|
|
88,658
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(5,825)
|
|
1,280
|
|
(8,879)
|
|
2,210
|
|
Loss (gain) on
extinguishment of debt, net
|
|
1,705
|
|
1
|
|
1,711
|
|
6
|
|
Provision for loan
losses, net
|
|
5,163
|
|
2,456
|
|
6,177
|
|
3,233
|
|
Impairment of
assets
|
|
2,394
|
|
1,086
|
|
45,725
|
|
13,715
|
|
Other
expenses
|
|
48,684
|
|
11,069
|
|
62,815
|
|
33,814
|
|
Total
expenses
|
|
1,734,452
|
|
1,513,133
|
|
3,453,292
|
|
3,035,858
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
90,432
|
|
152,345
|
|
231,333
|
|
190,349
|
Income tax (expense)
benefit
|
|
(1,101)
|
|
(3,503)
|
|
(7,292)
|
|
(6,548)
|
Income (loss) from
unconsolidated entities
|
|
4,896
|
|
(40,332)
|
|
(2,887)
|
|
(47,403)
|
Gain (loss) on real
estate dispositions, net
|
|
166,443
|
|
(2,168)
|
|
171,150
|
|
(1,421)
|
Income (loss) from
continuing operations
|
|
260,670
|
|
106,342
|
|
392,304
|
|
134,977
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
260,670
|
|
106,342
|
|
392,304
|
|
134,977
|
Less: Net income (loss)
attributable to noncontrolling interests(1)
|
|
5,956
|
|
3,302
|
|
10,444
|
|
6,264
|
Net income (loss)
attributable to common stockholders
|
|
$
254,714
|
|
$
103,040
|
|
$
381,860
|
|
$
128,713
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
600,545
|
|
499,023
|
|
587,297
|
|
495,561
|
|
Diluted
|
|
604,563
|
|
501,970
|
|
591,047
|
|
498,305
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.42
|
|
$
0.21
|
|
$
0.65
|
|
$
0.26
|
|
Diluted(2)
|
|
$
0.42
|
|
$
0.20
|
|
$
0.65
|
|
$
0.26
|
Common dividends per
share
|
|
$
0.61
|
|
$
0.61
|
|
$
1.22
|
|
$
1.22
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net income (loss)
attributable to common stockholders
|
|
$
254,714
|
|
$
103,040
|
|
$
381,860
|
|
$
128,713
|
|
Depreciation and
amortization
|
|
382,045
|
|
341,945
|
|
747,908
|
|
681,057
|
|
Impairments and losses
(gains) on real estate dispositions, net
|
|
(164,049)
|
|
3,254
|
|
(125,425)
|
|
15,136
|
|
Noncontrolling
interests(1)
|
|
(6,348)
|
|
(12,841)
|
|
(18,344)
|
|
(26,168)
|
|
Unconsolidated
entities(2)
|
|
27,411
|
|
30,784
|
|
64,477
|
|
53,506
|
|
NAREIT FFO attributable
to common stockholders
|
|
493,773
|
|
466,182
|
|
1,050,476
|
|
852,244
|
|
Normalizing items,
net(3)
|
|
143,759
|
|
(15,318)
|
|
172,264
|
|
18,153
|
|
Normalized FFO
attributable to common stockholders
|
|
637,532
|
|
450,864
|
|
1,222,740
|
|
870,397
|
|
Government subsidies
recognized(4)
|
|
(753)
|
|
(10,220)
|
|
(2,158)
|
|
(12,506)
|
|
Government subsidies
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
(19)
|
|
557
|
|
242
|
|
1,057
|
|
Normalized FFO
attributable to common stockholders, excluding government
subsidies
|
|
$
636,760
|
|
$
441,201
|
|
$ 1,220,824
|
|
$
858,948
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
604,563
|
|
501,970
|
|
591,047
|
|
498,305
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)(5)
|
|
$
0.42
|
|
$
0.20
|
|
$
0.65
|
|
$
0.26
|
|
|
NAREIT FFO
|
|
$
0.82
|
|
$
0.93
|
|
$
1.78
|
|
$
1.71
|
|
|
Normalized
FFO
|
|
$
1.05
|
|
$
0.90
|
|
$
2.07
|
|
$
1.75
|
|
|
Normalized FFO,
excluding government subsidies
|
|
$
1.05
|
|
$
0.88
|
|
$
2.07
|
|
$
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.61
|
|
$
0.61
|
|
$
1.22
|
|
$
1.22
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
1.05
|
|
$
0.90
|
|
$
2.07
|
|
$
1.75
|
|
|
Normalized FFO payout
ratio
|
|
58 %
|
|
68 %
|
|
59 %
|
|
70 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(6)
|
|
|
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization(7)
|
|
$
(37,104)
|
|
$
(30,336)
|
|
$
(72,108)
|
|
$
(63,720)
|
|
Non-cash interest
expenses(8)
|
|
9,812
|
|
6,574
|
|
19,198
|
|
12,452
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(67,348)
|
|
(40,694)
|
|
(118,964)
|
|
(77,607)
|
|
Stock-based
compensation
|
|
10,026
|
|
10,491
|
|
21,368
|
|
19,615
|
|
|
|
(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) Represents amounts
recognized related to Health and Human Services Provider Relief
Fund in the United States and similar programs in the United
Kingdom
and Canada, but
excluding various state and local programs.
|
|
(5) Includes adjustment
to the numerator for income (loss) attributable to OP Units and
DownREIT Units.
|
|
(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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Loss (gain) on
derivatives and financial instruments, net
|
$
(5,825)
|
(1)
|
$
1,280
|
|
$
(8,879)
|
|
$
2,210
|
|
Loss (gain) on
extinguishment of debt, net
|
1,705
|
(2)
|
1
|
|
1,711
|
|
6
|
|
Provision for loan
losses, net
|
5,163
|
(3)
|
2,456
|
|
6,177
|
|
3,233
|
|
Income tax
benefits
|
—
|
|
—
|
|
—
|
|
(246)
|
|
Other
impairment
|
88,318
|
(4)
|
—
|
|
97,674
|
|
—
|
|
Other
expenses
|
48,684
|
(5)
|
11,069
|
|
62,815
|
|
33,814
|
|
Leasehold interest
termination
|
—
|
|
(65,485)
|
|
—
|
|
(65,485)
|
|
Casualty losses, net of
recoveries
|
1,953
|
(6)
|
3,568
|
|
4,111
|
|
8,055
|
|
Foreign currency loss
(gain)
|
(200)
|
(7)
|
(345)
|
|
409
|
|
(572)
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
3,961
|
(8)
|
32,138
|
|
8,246
|
|
37,138
|
|
Net normalizing
items
|
$
143,759
|
|
$
(15,318)
|
|
$
172,264
|
|
$
18,153
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
604,563
|
|
501,970
|
|
591,047
|
|
498,305
|
|
Net normalizing items
per diluted share
|
$
0.24
|
|
$
(0.03)
|
|
$
0.29
|
|
$
0.04
|
|
|
|
|
|
|
|
|
|
|
(1) Primarily related
to mark-to-market of the equity warrants received as part of the
Safanad/HC-One transactions.
|
|
(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
represents the write-off of straight-line rent receivable and
unamortized lease incentive balances relating to the conversion of
triple-net leased properties to SHO
(RIDEA) structures and
leases placed on cash recognition.
|
|
(5) Primarily related
to costs associated with the termination of the Atria management
agreement and non-capitalizable transaction costs.
|
|
(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, 2024
|
Exhibit
3
|
|
(in millions, except
per share data)
|
|
|
Prior
Outlook
|
|
Current
Outlook
|
|
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
|
|
|
Net income attributable
to common stockholders
|
|
$
868
|
|
$
940
|
|
$
918
|
|
$
966
|
|
Impairments and losses
(gains) on real estate dispositions, net(1,2)
|
|
(154)
|
|
(154)
|
|
(249)
|
|
(249)
|
|
Depreciation and
amortization(1)
|
|
1,653
|
|
1,653
|
|
1,650
|
|
1,650
|
|
NAREIT FFO attributable
to common stockholders
|
|
2,367
|
|
2,439
|
|
2,319
|
|
2,367
|
|
Normalizing items,
net(1,3)
|
|
55
|
|
55
|
|
172
|
|
172
|
|
Normalized FFO
attributable to common stockholders
|
|
$
2,422
|
|
$
2,494
|
|
$
2,491
|
|
$
2,539
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
1.45
|
|
$
1.57
|
|
$
1.52
|
|
$
1.60
|
|
NAREIT FFO
|
|
$
3.96
|
|
$
4.08
|
|
$
3.84
|
|
$
3.92
|
|
Normalized
FFO
|
|
$
4.05
|
|
$
4.17
|
|
$
4.13
|
|
$
4.21
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization
|
|
$
(138)
|
|
$
(138)
|
|
$
(144)
|
|
$
(144)
|
|
Non-cash interest
expenses
|
|
48
|
|
48
|
|
44
|
|
44
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(235)
|
|
(235)
|
|
(251)
|
|
(251)
|
|
Stock-based
compensation
|
|
40
|
|
40
|
|
41
|
|
41
|
|
|
|
|
(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
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
2024
|
|
2023
|
|
%
growth
|
|
Net income
(loss)
|
|
$
260,670
|
|
$
106,342
|
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
(166,443)
|
|
2,168
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
(4,896)
|
|
40,332
|
|
|
|
Income tax expense
(benefit)
|
|
1,101
|
|
3,503
|
|
|
|
Other
expenses
|
|
48,684
|
|
11,069
|
|
|
|
Impairment of
assets
|
|
2,394
|
|
1,086
|
|
|
|
Provision for loan
losses, net
|
|
5,163
|
|
2,456
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
1,705
|
|
1
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(5,825)
|
|
1,280
|
|
|
|
General and
administrative expenses
|
|
55,565
|
|
44,287
|
|
|
|
Depreciation and
amortization
|
|
382,045
|
|
341,945
|
|
|
|
Interest
expense
|
|
133,424
|
|
152,337
|
|
|
|
Consolidated
NOI
|
|
713,587
|
|
706,806
|
|
|
|
NOI attributable to
unconsolidated investments(1)
|
|
32,720
|
|
25,150
|
|
|
|
NOI attributable to
noncontrolling interests(2)
|
|
(17,296)
|
|
(24,262)
|
|
|
|
Pro rata NOI
|
|
729,011
|
|
707,694
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
66,066
|
|
(28,888)
|
|
|
|
NOI attributable to
non-same store properties
|
|
(262,613)
|
|
(190,353)
|
|
|
|
Currency and ownership
adjustments(3)
|
|
(262)
|
|
3,131
|
|
|
|
Normalizing
adjustments, net(4)
|
|
5,621
|
|
(8,342)
|
|
|
|
Same Store NOI
(SSNOI)
|
|
$
537,823
|
|
$
483,242
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
Seniors Housing
Operating
|
|
261,784
|
|
215,079
|
|
21.7 %
|
|
Seniors Housing
Triple-net
|
|
90,935
|
|
87,221
|
|
4.3 %
|
|
Outpatient
Medical
|
|
125,840
|
|
123,246
|
|
2.1 %
|
|
Long-Term/Post-Acute
Care
|
|
59,264
|
|
57,696
|
|
2.7 %
|
|
Total SSNOI
|
|
$
537,823
|
|
$
483,242
|
|
11.3 %
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
(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.
|
|
|
|
Net Debt to Adjusted
EBITDA Reconciliation
|
|
Exhibit
5
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
June 30,
2024
|
|
Net income
(loss)
|
|
$
260,670
|
|
Interest
expense
|
|
133,424
|
|
Income tax expense
(benefit)
|
|
1,101
|
|
Depreciation and
amortization
|
|
382,045
|
|
EBITDA
|
|
777,240
|
|
Loss (income) from
unconsolidated entities
|
|
(4,896)
|
|
Stock-based
compensation
|
|
10,026
|
|
Loss (gain) on
extinguishment of debt, net
|
|
1,705
|
|
Loss (gain) on real
estate dispositions, net
|
|
(166,443)
|
|
Impairment of
assets
|
|
2,394
|
|
Provision for loan
losses, net
|
|
5,163
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
(5,825)
|
|
Other
expenses
|
|
48,684
|
|
Casualty losses, net of
recoveries
|
|
1,953
|
|
Other
impairment(1)
|
|
88,318
|
|
Adjusted
EBITDA
|
|
$
758,319
|
|
|
|
|
|
Total
debt(2)
|
|
$
14,027,128
|
|
Cash and cash
equivalents and restricted cash
|
|
(2,863,598)
|
|
Net debt
|
|
$
11,163,530
|
|
|
|
|
|
Adjusted EBITDA
annualized
|
|
$
3,033,276
|
|
Net debt to Adjusted
EBITDA ratio
|
|
3.68x
|
|
|
|
|
|
|
(1) Represents
the write-off of straight-line rent receivable and unamortized
lease incentive balances for leases placed on cash
recognition.
|
|
(2) Amounts include
unamortized premiums/discounts, other fair value adjustments and
financing lease liabilities. Excludes operating lease liabilities
related
to ASC 842 of
$302,309,000 for the three months ended June 30,
2024.
|
|
|
|
|
|
|
Net Debt to
Consolidated Enterprise Value
|
|
|
|
Exhibit
6
|
|
(in thousands,
except share price)
|
|
|
|
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Common shares
outstanding
|
|
608,151
|
|
564,241
|
|
Period end share
price
|
|
$
104.25
|
|
$
90.17
|
|
Common equity market
capitalization
|
|
$
63,399,742
|
|
$
50,877,611
|
|
|
|
|
|
|
|
Net debt
|
|
$
11,163,530
|
|
$
13,739,143
|
|
|
|
|
|
|
|
|
Noncontrolling
interests(1)
|
|
712,153
|
|
967,351
|
|
Consolidated enterprise
value
|
|
$
75,275,425
|
|
$
65,584,105
|
|
Net debt to
consolidated enterprise value
|
|
14.8 %
|
|
20.9 %
|
|
|
|
|
|
|
|
|
(1) 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.