TOLEDO, Ohio,
May 10, 2022
/PRNewswire/ -- Welltower Inc. (NYSE:WELL) today announced
results for the quarter ended March 31,
2022.
Recent Highlights
- Reported net income attributable to common stockholders of
$0.14 per diluted share
- Reported normalized FFO attributable to common stockholders of
$0.82 per diluted share, exceeding
the midpoint of guidance range
- Reported normalized FFO growth attributable to common
stockholders per diluted share, excluding Provider Relief Funds, of
15% over the prior year
- Seniors Housing Operating ("SHO") portfolio average same store
occupancy increased approximately 460 basis points ("bps")
year-over-year to 78.0%. Guidance assumed approximately 420 bps of
year-over-year occupancy growth
- Reported total portfolio same store NOI ("SSNOI") growth of
8.9%, driven by year-over-year SSNOI growth in our SHO portfolio of
18.4%. Guidance assumed SSNOI growth of 7.0% and 15.0% for the
total portfolio and SHO portfolio, respectively
- Achieved same store REVPOR growth of 4.6% within the SHO
portfolio during the first quarter as compared to the prior year,
which represents an acceleration from 3.4% in the fourth quarter
2021
- Completed $787 million in
acquisitions and loan funding during the first quarter.
Year-to-date, completed $1.2 billion
of pro rata gross investments exclusive of development funding,
representing one of the most active starts to the year for
investment activity in Welltower's history
- Named to the Bloomberg Gender-Equality Index for the fourth
consecutive year in recognition of our ongoing efforts to support
gender equality through policy development, representation and
transparency
COVID-19 Update
Our share of property-level expenses associated with the
COVID-19 pandemic relating to our total SHO portfolio, net of
reimbursements including Provider Relief Funds and similar programs
in the U.K. and Canada, totaled an
expense of approximately $6 million
for the three months ended March 31,
2022, as compared to a benefit of approximately $23 million for the three months ended
March 31, 2021. Such amounts had an
unfavorable impact on net income attributable to common
stockholders and normalized FFO per diluted share of $0.01 for the three months ended March 31, 2022, and a favorable impact of
$0.05 per diluted share for the three
months ended March 31, 2021.
Capital Activity and Liquidity Inclusive of
available borrowings under our line of credit, cash and cash
equivalents, and restricted cash, as of March 31, 2022, we had $4.1 billion of near-term available liquidity and
no material senior unsecured note maturities until 2024. During the
three months ended March 31, 2022, we
settled 6.6 million shares of common stock that were sold under our
ATM program via forward sale agreements, resulting in $558.8 million of gross proceeds. On March 31, 2022, we completed the Company's second
green bond issuance consisting of $550
million senior unsecured notes bearing interest at 3.85%
with a maturity date of June 2032.
During the quarter, we extinguished $101
million of secured debt at a blended average interest rate
of 4.21%.
Effective April 1, 2022, we
completed a legal entity merger in anticipation of an UPREIT
reorganization that resulted in the formation of a new holding
company, which is now known as Welltower Inc., and the entity
formerly known as Welltower Inc. now known as Welltower OP Inc.
("Old Welltower"). Financial results for the quarter ended
March 31, 2022 and all other periods
prior to the merger relate to Old Welltower. Detailed information
on the merger and the UPREIT reorganization can be found in the
Form 8-K filed on March 7, 2022 and
the Form 8-K12B filed on April 1,
2022.
Investment and Disposition Activity In the first
quarter, we completed $1.0 billion of
pro rata gross investments including $787
million in acquisitions and loan funding, as well as
$233 million in development funding.
We converted four development projects for an aggregate pro rata
investment amount of $228 million.
Additionally, during the quarter we completed pro rata property
dispositions and loan payoffs of $155
million. Year-to-date, we completed $1.2 billion of pro rata gross investments
exclusive of development funding.
Notable Investment Activity Completed During the
Quarter
Cogir Management Corporation During the quarter, we
expanded our relationship with Cogir through the acquisition of a
portfolio of eight class-A private pay seniors housing communities
in highly attractive markets for a pro rata purchase price of
$389 million. Further, we entered
into a forward purchase agreement to acquire an additional
community currently under development. The transaction is expected
to generate an unlevered IRR in the high single-digit range.
Outpatient Medical Acquisition We acquired a portfolio of
four medical office buildings totaling 510,000 rentable square feet
in Birmingham, Alabama for
$148 million, representing a discount
to replacement cost and an initial yield of 5.5%. The properties
are heavily integrated with the local health system, housing
critical functions and specialties including a portion of the
emergency department. The portfolio is 100% occupied through a
single tenant absolute net lease with 15 years of remaining term.
The transaction is expected to generate an unlevered IRR in the
high single-digit range.
Related Companies and Atria Senior
Living In 2019, we began a long-term strategic partnership
with Related Companies and Atria Senior
Living to develop, own and operate modern urban communities
catering to seniors living in major metropolitan areas. During the
quarter, we delivered Coterie Cathedral Hill at 1001 Van Ness in
San Francisco, an upscale 208-unit
senior living facility in a premier location. The Coterie Cathedral
Hill represents the partnership's first senior living facility, and
we expect to complete Coterie Hudson Yards, the second location,
during the fourth quarter.
Additionally during the quarter, we expanded our partnership
with Related and Atria through an agreement to develop the third
and fourth locations for the partnership's series of modern urban
senior living 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, commenced development during the
quarter. The Santa Clara, located
at the apex of Silicon Valley and the growing East Bay, will break
ground in mid-2022.
Unitranche Loan During the quarter, we closed on a loan for
a pro rata investment amount of $18
million, representing the first investment in a previously
announced joint venture unitranche debt facility with KeyBank.
Subsequent to the end of the quarter, we closed on two additional
loans as part of the joint venture for a total pro rata investment
of $22 million, as well as one deal
outside of the joint venture structure for a pro rata investment
amount of $10 million.
Genesis Dispositions We continued to execute on our planned
exit of the Genesis relationship; during the quarter, we closed on
the sale of seven properties for a gross purchase price of
$76 million, and in April we closed
on the sale of two properties for proceeds of $17 million. With the completion of these
transactions, Welltower has substantially exited its relationship
with Genesis: one property remains in the lease between Welltower
and Genesis and seven properties that were formerly under a
sub-lease from Welltower to Genesis are now leased to a new
regional operator. As previously disclosed, we have entered into a
forward sale agreement for these seven properties valued at
$182 million, which is expected to
close simultaneously with the exercise of Welltower's bargain
purchase option.
Other Transactions Additionally during the first quarter,
we acquired two seniors housing communities for pro rata investment
of $65 million, which includes one
new operator.
Investment Activity Subsequent to Quarter End
StoryPoint Senior Living As previously announced, we
entered into an agreement to expand our relationship with
StoryPoint Senior Living, a preeminent senior living operator based
in Brighton, Michigan, through the
acquisition of 33 communities throughout Michigan, Ohio and Tennessee under an aligned RIDEA 3.0 contract.
During April, we closed on the first tranche through the
acquisition of two recently opened communities located in
Ohio and Tennessee for a pro rata purchase price of
$65 million.
Cogir Management Corporation Subsequent to quarter end, we
closed on an additional three property portfolio in Washington state for a pro rata purchase price
of $244 million in a 90/10 joint
venture, with Cogir also assuming management of the properties. The
acquisition is expected to generate an unlevered IRR in the high
single-digit range. Following the year-to-date acquisition
activity, our relationship with Cogir encompasses 34 communities
across the U.S. and Canada, having
grown from six communities beginning in 2018.
Treplus Communities Subsequent to quarter end, we expanded
our relationship with Treplus Communities through the acquisition
of a portfolio of three class-A wellness housing communities in the
Midwest. The communities feature unique environments with
individual cottage style units, clubhouses, 24/7 concierge
services, and offer residents a wellness-oriented social
lifestyle.
Dividend On May 10, 2022, the Board of
Directors declared a cash dividend for the quarter ended
March 31, 2022 of $0.61 per share. This dividend, which will be
paid on May 31, 2022 to stockholders
of record on May 24, 2022, will be
our 204th 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 Second Quarter 2022 The degree to which
the COVID-19 pandemic continues to impact our operations and those
of our operators and tenants, including the variability in the
timing of recovery, is dependent on a variety of factors and
remains highly uncertain. Accordingly, we are only introducing
earnings guidance for the quarter ended June
30, 2022 and expect to report net income attributable to
common stockholders in a range of $0.20 to $0.25 per
diluted share and normalized FFO attributable to common
stockholders in a range of $0.82 to
$0.87 per diluted share. In preparing
our guidance, we have made the following assumptions:
- Same Store NOI: We expect average blended SSNOI growth of 8.0%
to 10.0%, which is comprised of the following components:
-
- Seniors Housing Operating approximately 15.0% to 20.0%
- Seniors Housing Triple-net approximately 7.0% to 8.0%
- Outpatient Medical approximately 2.0% to 3.0%
- Health System approximately 2.75%
- Long-Term/Post-Acute Care approximately 2.0% to 3.0%
- Provider Relief Funds: Our second quarter guidance includes
approximately $6 million of Provider
Relief Funds, which are expected to be received during the
quarter.
- General and Administrative Expenses: We anticipate second
quarter general and administrative expenses to be approximately
$35 million to $37 million and stock-based compensation expense
to be approximately $6 million.
- Investments: Our earnings guidance includes only those
acquisitions closed or announced to date. Furthermore, no
transitions or restructures beyond those announced to date are
included.
- Development: We anticipate funding approximately $673 million of development in 2022 relating to
projects underway on March 31,
2022.
- Dispositions: In addition to dispositions and loan payoffs
completed in the first quarter, we expect pro rata disposition
proceeds and loan payoffs of $352
million at a blended yield of 6.8% in the next twelve
months. This includes approximately $265
million of expected proceeds from properties classified as
held-for-sale as of March 31, 2022
and $87 million of expected proceeds
from loan repayments.
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 second quarter outlook and assumptions on the first quarter
2022 conference call.
Conference Call Information We have scheduled a
conference call on Wednesday, May 11, 2022 at 9:00 a.m. Eastern Time to discuss our first
quarter 2022 results, industry trends and portfolio performance.
Telephone access will be available by dialing (844) 467-7115 or
(409) 983-9837 (international). For those unable to listen to
the call live, a taped rebroadcast will be available beginning two
hours after completion of the call through May 25, 2022. To access the rebroadcast, dial
(855) 859-2056 or (404) 537-3406 (international). The
conference ID number is 2275720. To participate in the webcast, log
on to www.welltower.com 15 minutes before the call to download the
necessary software. Replays will be available for 90 days.
Supplemental Reporting Measures We believe that net
income and net income attributable to common stockholders ("NICS"),
as defined by U.S. generally accepted accounting principles ("U.S.
GAAP"), are the most appropriate earnings measurements. However, we
consider funds from operations ("FFO"), normalized FFO, NOI, SSNOI,
REVPOR and SS REVPOR to be useful supplemental measures of our
operating performance. These supplemental measures are disclosed on
our pro rata ownership basis. Pro rata amounts are derived by
reducing consolidated amounts for minority partners' noncontrolling
ownership interests and adding our minority ownership share of
unconsolidated amounts. We do not control unconsolidated
investments. While we consider pro rata disclosures useful, they
may not accurately depict the legal and economic implications of
our joint venture arrangements and should be used with caution.
Historical cost accounting for real estate assets in accordance
with U.S. GAAP implicitly assumes that the value of real estate
assets diminishes predictably over time as evidenced by the
provision for depreciation. However, since real estate values have
historically risen or fallen with market conditions, many industry
investors and analysts have considered presentations of operating
results for real estate companies that use historical cost
accounting to be insufficient. In response, the National
Association of Real Estate Investment Trusts ("NAREIT") created FFO
as a supplemental measure of operating performance for REITs that
excludes historical cost depreciation from net income. FFO
attributable to common stockholders, as defined by NAREIT, means
net income attributable to common stockholders, computed in
accordance with U.S. GAAP, excluding gains (or losses) from sales
of real estate and impairments of depreciable assets, plus real
estate depreciation and amortization, and after adjustments for
unconsolidated entities and noncontrolling
interests. Normalized FFO attributable to common stockholders
represents FFO attributable to common stockholders adjusted for
certain items detailed in Exhibit 2. We believe that
normalized FFO attributable to common stockholders is a useful
supplemental measure of operating performance because investors and
equity analysts may use this measure to compare the operating
performance of the Company between periods or as compared to other
REITs or other companies on a consistent basis without having to
account for differences caused by unanticipated and/or incalculable
items.
We define NOI as total revenues, including tenant
reimbursements, less property operating expenses. Property
operating expenses represent costs associated with managing,
maintaining and servicing tenants for our properties. These
expenses include, but are not limited to, property-related payroll
and benefits, property management fees paid to operators,
marketing, housekeeping, food service, maintenance, utilities,
property taxes and insurance. General and administrative expenses
represent costs unrelated to property operations or transaction
costs. These expenses include, but are not limited to, payroll and
benefits, professional services, office expenses and depreciation
of corporate fixed assets. SSNOI is used to evaluate the operating
performance of our properties using a consistent population which
controls for changes in the composition of our portfolio. As used
herein, same store is generally defined as those revenue-generating
properties in the portfolio for the relevant year-over-year
reporting periods. Acquisitions and development conversions are
included in the same store amounts five full quarters after
acquisition or being placed into service. Land parcels, loans and
sub-leases, as well as any properties sold or classified as held
for sale during the period, are excluded from the same store
amounts. Redeveloped properties (including major refurbishments of
a Seniors Housing Operating property where 20% or more of units are
simultaneously taken out of commission for 30 days or more or
Outpatient Medical properties undergoing a change in intended use)
are excluded from the same store amounts until five full quarters
post completion of the redevelopment. Properties undergoing
operator transitions and/or segment transitions are also excluded
from the same store amounts until five full quarters post
completion of the operator transition or segment transition. In
addition, properties significantly impacted by force majeure, acts
of God or other extraordinary adverse events are excluded from same
store amounts until five full quarters after the properties are
placed back into service. SSNOI excludes non-cash NOI and includes
adjustments to present consistent property ownership percentages
and to translate Canadian properties and UK properties using a
consistent exchange rate. Normalizers include adjustments that in
management's opinion are appropriate in considering SSNOI, a
supplemental, non-GAAP performance measure. None of these
adjustments, which may increase or decrease SSNOI, are reflected in
our financial statements prepared in accordance with U.S. GAAP.
Significant normalizers (defined as any that individually exceed
0.50% of SSNOI growth per property type) are separately disclosed
and explained. We believe NOI and SSNOI provide investors relevant
and useful information because they measure the operating
performance of our properties at the property level on an
unleveraged basis. We use NOI and SSNOI to make decisions about
resource allocations and to assess the property level performance
of our properties. No reconciliation of the forecasted range for
SSNOI on a combined basis or by property type is included in this
release because we are unable to quantify certain amounts that
would be required to be included in the comparable GAAP financial
measure without unreasonable efforts, and we believe such
reconciliation would imply a degree of precision that could be
confusing or misleading to investors.
REVPOR represents the average revenues generated per occupied
room per month at our Seniors Housing Operating properties. It is
calculated as our pro rata version of total resident fees and
services revenues from the income statement divided by average
monthly occupied room days. SS REVPOR is used to evaluate the
REVPOR performance of our properties under a consistent population
which eliminates changes in the composition of our portfolio. It is
based on the same pool of properties used for SSNOI and includes
any revenue normalizations used for SSNOI. We use REVPOR and SS
REVPOR to evaluate the revenue-generating capacity and profit
potential of our Seniors Housing Operating portfolio independent of
fluctuating occupancy rates. They are also used in comparison
against industry and competitor statistics, if known, to evaluate
the quality of our Seniors Housing Operating portfolio.
Our supplemental reporting measures and similarly entitled
financial measures are widely used by investors, equity and debt
analysts and ratings agencies in the valuation, comparison, rating
and investment recommendations of companies. Our management uses
these financial measures to facilitate internal and external
comparisons to historical operating results and in making operating
decisions. Additionally, they are utilized by the Board of
Directors to evaluate management. The supplemental reporting
measures do not represent net income or cash flow provided from
operating activities as determined in accordance with U.S. GAAP and
should not be considered as alternative measures of profitability
or liquidity. Finally, the supplemental reporting measures, as
defined by us, may not be comparable to similarly entitled items
reported by other real estate investment trusts or other
companies. Please see the exhibits for reconciliations of
supplemental reporting measures and the supplemental information
package for the quarter ended March 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)
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
4,030,150
|
|
$
3,397,055
|
Buildings and
improvements
|
|
31,724,328
|
|
27,667,188
|
Acquired lease
intangibles
|
|
1,844,780
|
|
1,506,823
|
Real property
held for sale, net of accumulated depreciation
|
|
199,490
|
|
564,062
|
Construction in
progress
|
|
717,657
|
|
542,302
|
Less accumulated
depreciation and intangible amortization
|
|
(7,215,622)
|
|
(6,212,432)
|
Net real
property owned
|
|
31,300,783
|
|
27,464,998
|
Right of use
assets, net
|
|
404,689
|
|
454,787
|
Real estate
loans receivable, net of credit allowance
|
|
1,003,136
|
|
487,674
|
Net real
estate investments
|
|
32,708,608
|
|
28,407,459
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
1,138,526
|
|
1,020,010
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
301,089
|
|
2,131,846
|
Restricted
cash
|
|
65,954
|
|
426,976
|
Straight-line
rent receivable
|
|
385,639
|
|
312,721
|
Receivables and
other assets
|
|
804,316
|
|
624,918
|
Total
other assets
|
|
2,763,845
|
|
4,584,792
|
Total
assets
|
|
$
35,472,453
|
|
$
32,992,251
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
299,968
|
|
$
—
|
Senior unsecured
notes
|
|
12,136,760
|
|
12,183,710
|
Secured
debt
|
|
2,104,945
|
|
2,329,474
|
Lease
liabilities
|
|
548,999
|
|
408,916
|
Accrued expenses
and other liabilities
|
|
1,203,755
|
|
1,023,219
|
Total
liabilities
|
|
16,294,427
|
|
15,945,319
|
Redeemable
noncontrolling interests
|
|
445,960
|
|
355,915
|
Equity:
|
|
|
|
|
Common
stock
|
|
455,376
|
|
418,866
|
Capital in
excess of par value
|
|
23,620,112
|
|
20,814,196
|
Treasury
stock
|
|
(112,518)
|
|
(106,519)
|
Cumulative net
income
|
|
8,725,661
|
|
8,399,144
|
Cumulative
dividends
|
|
(14,654,583)
|
|
(13,598,673)
|
Accumulated
other comprehensive income
|
|
(138,472)
|
|
(128,136)
|
Total
Welltower Inc. stockholders' equity
|
|
17,895,576
|
|
15,798,878
|
Noncontrolling
interests
|
|
836,490
|
|
892,139
|
Total
equity
|
|
18,732,066
|
|
16,691,017
|
Total liabilities
and equity
|
|
$
35,472,453
|
|
$
32,992,251
|
|
Consolidated
Statements of Income (unaudited)
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2022
|
|
2021
|
|
Revenues:
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
994,335
|
|
$
723,464
|
|
|
|
Rental
income
|
|
356,390
|
|
302,843
|
|
|
|
Interest
income
|
|
38,994
|
|
19,579
|
|
|
|
Other income
|
|
5,985
|
|
6,176
|
|
|
|
Total
revenues
|
|
1,395,704
|
|
1,052,062
|
|
Expenses:
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
853,669
|
|
617,326
|
|
|
|
Depreciation and
amortization
|
|
304,088
|
|
244,426
|
|
|
|
Interest
expense
|
|
121,696
|
|
123,142
|
|
|
|
General and
administrative expenses
|
|
37,706
|
|
29,926
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
2,578
|
|
1,934
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(12)
|
|
(4,643)
|
|
|
|
Provision for loan
losses, net
|
|
(804)
|
|
1,383
|
|
|
|
Impairment of
assets
|
|
—
|
|
23,568
|
|
|
|
Other
expenses
|
|
26,069
|
|
10,994
|
|
|
|
Total
expenses
|
|
1,344,990
|
|
1,048,056
|
|
Income (loss) from
continuing operations before income taxes and other
items
|
|
50,714
|
|
4,006
|
|
Income tax (expense)
benefit
|
|
(5,013)
|
|
(3,943)
|
|
Income (loss) from
unconsolidated entities
|
|
(2,884)
|
|
13,049
|
|
Gain (loss) on real
estate dispositions, net
|
|
22,934
|
|
59,080
|
|
Income (loss) from
continuing operations
|
|
65,751
|
|
72,192
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
65,751
|
|
72,192
|
|
Less:
|
|
Net income (loss)
attributable to noncontrolling interests (1)
|
|
3,826
|
|
646
|
|
Net income (loss)
attributable to common stockholders
|
|
$
61,925
|
|
$
71,546
|
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
447,379
|
|
417,241
|
|
|
|
Diluted
|
|
449,802
|
|
419,079
|
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
Basic
|
|
$
0.14
|
|
$
0.17
|
|
|
|
Diluted(2)
|
|
$
0.14
|
|
$
0.17
|
|
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
unitholders.
|
FFO
Reconciliations
|
|
|
|
Exhibit
1
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
%
growth
|
|
Net income (loss)
attributable to common stockholders
|
|
$
61,925
|
|
$
71,546
|
|
|
|
Depreciation and
amortization
|
|
304,088
|
|
244,426
|
|
|
|
Impairments and losses
(gains) on real estate dispositions, net
|
|
(22,934)
|
|
(35,512)
|
|
|
|
Noncontrolling
interests(1)
|
|
(14,753)
|
|
(12,516)
|
|
|
|
Unconsolidated
entities(2)
|
|
19,309
|
|
19,223
|
|
|
|
NAREIT FFO attributable
to common stockholders
|
|
347,635
|
|
287,167
|
|
|
|
Normalizing items,
net(3)
|
|
20,647
|
|
46,745
|
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
368,282
|
|
$
333,912
|
|
|
|
Provider Relief Funds
received
|
|
(601)
|
|
(35,682)
|
|
|
|
Provider Relief Funds
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
19
|
|
(141)
|
|
|
|
Normalized FFO
attributable to common stockholders, excluding Provider Relief
Funds
|
|
$
367,700
|
|
$
298,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
449,802
|
|
419,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Net income
(loss)(4)
|
|
$
0.14
|
|
$
0.17
|
|
|
|
|
NAREIT FFO
|
|
$
0.77
|
|
$
0.69
|
|
|
|
|
Normalized
FFO
|
|
$
0.82
|
|
$
0.80
|
|
|
|
|
Normalized FFO,
excluding Provider Relief Funds
|
|
$
0.82
|
|
$
0.71
|
|
15%
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.61
|
|
$
0.61
|
|
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
0.82
|
|
$
0.80
|
|
|
|
|
|
Normalized FFO payout
ratio
|
|
74%
|
|
76%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(5)
|
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization(6)
|
|
$
(20,014)
|
|
$
(18,134)
|
|
|
|
Non-cash interest
expenses
|
|
4,721
|
|
3,635
|
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(32,466)
|
|
(11,433)
|
|
|
|
Stock-based
compensation(7)
|
|
7,441
|
|
5,381
|
|
|
|
|
|
|
|
(1) Represents
noncontrolling interests' share of net FFO adjustments.
|
|
|
|
(2) Represents
Welltower's share of net FFO adjustments from unconsolidated
entities.
|
|
|
|
(3) See Exhibit
2.
|
|
|
|
(4) Includes adjustment
to the numerator for income (loss) attributable to OP
unitholders.
|
|
|
|
(5) Amounts presented
net of noncontrolling interests' share and including Welltower's
share of unconsolidated entities.
|
|
|
|
(6) Excludes normalized
other impairment (see Exhibit 2).
|
|
|
|
(7) Excludes certain
severance related stock-based compensation recorded in other
expense (see Exhibit 2).
|
|
|
|
Normalizing
Items
|
|
Exhibit
2
|
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
2021
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
2,578
|
(1)
|
$
1,934
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(12)
|
(2)
|
(4,643)
|
|
|
Provision for loan
losses, net
|
|
(804)
|
(3)
|
1,383
|
|
|
Other
impairment
|
|
—
|
|
49,241
|
|
|
Other
expenses
|
|
26,069
|
(4)
|
10,994
|
|
|
Leasehold interest
adjustment
|
|
(8,457)
|
(5)
|
—
|
|
|
Casualty losses, net of
recoveries
|
|
13
|
(6)
|
—
|
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
1,260
|
(7)
|
(12,164)
|
|
|
Net normalizing
items
|
|
$
20,647
|
|
$
46,745
|
|
|
|
|
|
|
|
|
|
Average diluted common
shares outstanding
|
|
449,802
|
|
419,079
|
|
|
Net normalizing items
per diluted share
|
|
$
0.05
|
|
$
0.11
|
|
|
|
|
|
|
|
|
|
(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 non-capitalizable transaction costs, including an accrual for
non-capitalizable promotes, legal fees and accrued litigation
settlements.
|
|
(5) Represents
$13,941,000 of revenues and $5,484,000 of property operating
expenses associated with a leasehold portfolio interest relating to
26 properties assumed by a wholly-owned affiliate in conjunction
with the Holiday Retirement transaction. Subsequent to the initial
transaction, we purchased eight of the leased properties and one of
the properties was sold by the landlord and removed from the lease.
No rent will be paid in excess of net cash flow relating to the
leasehold properties and therefore, the net impact each quarter
will be excluded from normalized FFO.
|
|
(6) Primarily relates
to casualty losses net of any insurance recoveries.
|
|
(7) Represents our
share of net normalizing adjustments from unconsolidated entities,
less noncontrolling interests' share of net normalizing
adjustments.
|
|
Outlook
Reconciliation: Quarter Ending June 30, 2022
|
Exhibit
3
|
|
(in millions, except
per share data)
|
|
|
|
Current
Outlook
|
|
|
|
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
Net income attributable
to common stockholders
|
|
|
$
94
|
|
$
117
|
|
Depreciation and
amortization(1)
|
|
|
323
|
|
323
|
|
NAREIT FFO attributable
to common stockholders
|
|
|
417
|
|
440
|
|
Normalizing items,
net(1,2)
|
|
|
(39)
|
|
(39)
|
|
Normalized FFO
attributable to common stockholders
|
|
|
$
378
|
|
$
401
|
|
|
|
|
|
|
|
|
|
Diluted per share data
attributable to common stockholders:
|
|
|
|
|
|
|
Net income
|
|
|
$
0.20
|
|
$
0.25
|
|
NAREIT FFO
|
|
|
$
0.90
|
|
$
0.95
|
|
Normalized
FFO
|
|
|
$
0.82
|
|
$
0.87
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
Net straight-line rent
and above/below market rent amortization
|
|
|
$
(25)
|
|
$
(25)
|
|
Non-cash interest
expenses
|
|
|
5
|
|
5
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
|
(39)
|
|
(39)
|
|
Stock-based
compensation
|
|
|
6
|
|
6
|
|
|
|
|
(1) Amounts presented
net of noncontrolling interests' share and Welltower's share of
unconsolidated entities.
|
|
(2) Primarily relates
to the NHI lease termination in April.
|
|
|
|
|
|
|
SSNOI
Reconciliation
|
|
|
|
|
|
Exhibit
4
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
March 31,
2022
|
|
March 31,
2021
|
|
%
growth
|
|
Net income
(loss)
|
|
$
65,751
|
|
$
72,192
|
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
(22,934)
|
|
(59,080)
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
2,884
|
|
(13,049)
|
|
|
|
Income tax expense
(benefit)
|
|
5,013
|
|
3,943
|
|
|
|
Other
expenses
|
|
26,069
|
|
10,994
|
|
|
|
Impairment of
assets
|
|
—
|
|
23,568
|
|
|
|
Provision for loan
losses
|
|
(804)
|
|
1,383
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
(12)
|
|
(4,643)
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
2,578
|
|
1,934
|
|
|
|
General and
administrative expenses
|
|
37,706
|
|
29,926
|
|
|
|
Depreciation and
amortization
|
|
304,088
|
|
244,426
|
|
|
|
Interest
expense
|
|
121,696
|
|
123,142
|
|
|
|
Consolidated
NOI
|
|
542,035
|
|
434,736
|
|
|
|
NOI attributable to
unconsolidated investments(1)
|
|
20,142
|
|
21,516
|
|
|
|
NOI attributable to
noncontrolling interests(2)
|
|
(34,999)
|
|
(20,827)
|
|
|
|
Pro rata
NOI
|
|
527,178
|
|
435,425
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
(13,526)
|
|
(13,662)
|
|
|
|
NOI attributable to
non-same store properties
|
|
(123,498)
|
|
(33,467)
|
|
|
|
Currency and ownership
adjustments(3)
|
|
1,074
|
|
668
|
|
|
|
Normalizing
adjustments, net(4)
|
|
(2,303)
|
|
(31,685)
|
|
|
|
Same Store NOI
(SSNOI)
|
|
$
388,925
|
|
$
357,279
|
|
8.9%
|
|
|
|
|
|
|
|
|
|
Seniors Housing
Operating
|
|
142,019
|
|
119,923
|
|
18.4%
|
|
Seniors Housing
Triple-net
|
|
82,902
|
|
77,531
|
|
6.9%
|
|
Outpatient
Medical
|
|
102,631
|
|
99,885
|
|
2.7%
|
|
Health
System
|
|
39,069
|
|
38,023
|
|
2.8%
|
|
Long-Term/Post-Acute
Care
|
|
22,304
|
|
21,917
|
|
1.8%
|
|
Total SSNOI
|
|
$
388,925
|
|
$
357,279
|
|
8.9%
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
(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
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2022
|
|
2021
|
|
2021
|
|
2020
|
|
Consolidated SHO
revenues
|
|
$
996,612
|
|
$
726,402
|
|
$
904,780
|
|
$
715,020
|
|
Unconsolidated SHO
revenues attributable to WELL(1)
|
|
49,108
|
|
43,214
|
|
47,836
|
|
43,175
|
|
SHO revenues
attributable to noncontrolling interests(2)
|
|
(75,741)
|
|
(58,529)
|
|
(75,052)
|
|
(55,155)
|
|
SHO pro rata
revenues(3)
|
|
969,979
|
|
711,087
|
|
877,564
|
|
703,040
|
|
Non-cash revenues on
same store properties
|
|
(562)
|
|
(849)
|
|
(562)
|
|
(851)
|
|
Revenues attributable
to non-same store properties
|
|
(289,029)
|
|
(98,717)
|
|
(240,544)
|
|
(102,016)
|
|
Currency and ownership
adjustments(4)
|
|
(394)
|
|
(68)
|
|
514
|
|
3,801
|
|
Normalizing adjustment
for government grants(5)
|
|
—
|
|
—
|
|
(4,406)
|
|
—
|
|
Other normalizing
adjustments(6)
|
|
—
|
|
—
|
|
(383)
|
|
(549)
|
|
SHO SS
revenues(7)
|
|
$
679,994
|
|
$
611,453
|
|
$
632,183
|
|
$
603,425
|
|
Average occupied
units/month(8)
|
|
40,908
|
|
38,479
|
|
38,686
|
|
38,190
|
|
SHO SS
REVPOR(9)
|
|
$
5,618
|
|
$
5,370
|
|
$
5,403
|
|
$
5,224
|
|
SS REVPOR YOY
growth
|
|
4.6%
|
|
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents
Welltower's interests in joint ventures where Welltower is the
minority partner.
|
|
|
|
|
|
(2) Represents minority
partners' interests in joint ventures where Welltower is the
majority partner and includes an adjustment to remove revenues
related to certain leasehold properties. See Exhibit 2 for more
information.
|
|
(3) Represents SHO
revenues at Welltower pro rata ownership.
|
(4) Includes where
appropriate adjustments to reflect consistent property ownership
percentages, to translate Canadian properties at a USD/CAD rate of
1.2739 and to translate UK properties at a GBP/USD rate of
1.35.
|
|
(5) Represents
normalizing adjustment related to amounts recognized related to the
Health and Human Services Provider Relief Fund in the United States
and similar programs in the United Kingdom and Canada.
|
|
(6) Represents
aggregate normalizing adjustments which are individually less than
.50% of SSNOI growth.
|
|
|
|
|
|
(7) Represents SS SHO
revenues at Welltower pro rata ownership.
|
|
|
|
|
|
(8) Represents average
occupied units for SS properties on a pro rata basis.
|
|
|
|
|
|
(9) Represents pro rata
SS average revenues generated per occupied room per
month.
|
|
|
|
|
|
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SOURCE Welltower Inc.