TOLEDO, Ohio, Oct. 28,
2019 /PRNewswire/ -- Welltower Inc. (NYSE: WELL) today
announced results for the quarter ended September 30,
2019.
Quarterly Highlights
- Reported net income attributable to common stockholders of
$1.45 per diluted share and
normalized FFO attributable to common stockholders of $1.05 per diluted share
- Revised full year net income attributable to common
stockholders guidance to a range of $3.06 to $3.10 per
diluted share from the previous range of $3.33 to $3.43 per
diluted share and increased the midpoint of the guidance range of
full year normalized FFO attributable to common stockholders to
$4.14 to $4.18 per diluted share as compared to prior
guidance of $4.10 to $4.20 per diluted share
- Grew total portfolio same store NOI by 2.6%, driven by
consistent performance across all property types
- Improved net debt to Adjusted EBITDA to 5.79x at September 30, 2019 from 6.33x at June 30, 2019
- Announced a strategic collaboration with CareMore Health to
improve care, enhance outcomes and to lower the cost of care for
senior populations, with the goal of reducing hospitalizations and
increasing length of stay in select Welltower communities
- Named to the Dow Jones Sustainability World Index for the
second consecutive year and to the Dow Jones Sustainability North
America Index for the fourth consecutive year
"Our strong performance this quarter and year-to-date
underscores the resilience of Welltower's best-in-class seniors
housing portfolio and the accelerating transition of health care
delivery to more accessible and lower cost ambulatory settings,"
commented Thomas J. DeRosa, Chairman
and CEO. "We continue to use our cost of capital advantage to
invest in the next generation of health and wellness care delivery
assets and remain optimistic regarding our ability to source and
complete accretive opportunities in the future. We are confident
that Welltower's formidable platform is positioned to sustain
long-term growth and create significant value for our
shareholders."
Capital Activity On September 30, 2019, we had
$266 million of cash and cash
equivalents and $1.7 billion of
available borrowing capacity under our unsecured revolving credit
facility. During the third quarter, we sold 3.4 million shares of
common stock under our ATM and DRIP programs, through both cash
settle and forward sale agreements, at an initial weighted average
price of $87.73 per share, generating
expected gross proceeds of approximately $302 million.
In August 2019, we completed the
issuance of $750 million of 3.10%
senior unsecured notes due 2030 and a follow-on issuance of
$450 million of 3.625% senior
unsecured notes due 2024 priced to yield 2.494%, for net proceeds
of approximately $1.2 billion. In
September 2019, we redeemed our
$450 million of 4.95% senior
unsecured notes due 2021 and our $600
million of 5.25% senior unsecured notes due 2022.
Dividend The Board of Directors declared a cash dividend
for the quarter ended September 30, 2019 of $0.87 per share. On November 21, 2019, we will pay our
194th consecutive quarterly cash dividend to
stockholders of record on November 13,
2019. The declaration and payment of future quarterly
dividends remains subject to review and approval by the Board of
Directors.
Quarterly Investment and Disposition Activity We continue
to leverage our extensive industry relationships to drive
acquisition volume and recycle non-core real estate into new
investments that are accretive to the quality of our operator and
real estate portfolios and will drive future cash flow growth. In
the third quarter, we completed $435
million of pro rata gross investments including $294 million in acquisitions across seven
separate transactions at a blended yield of 5.6% and $141 million in development funding with an
expected stable yield of 8.1%. Also during the quarter, we
completed property dispositions of $2.0
billion at a 6.1% yield and loan payoffs of $62 million at a 9.4% yield.
Notable Investments and Dispositions
Outpatient Medical Investments During the quarter, we expanded
key health system relationships through the acquisition of nine
Class-A outpatient medical buildings with approximately 429,000
rentable square feet for $193
million. The buildings are leased to prominent regional
health systems such as Summit Medical Group, Novant Health,
Baylor Scott & White Health and
TriHealth.
LCB Senior Living We formed a new RIDEA relationship with
Norwood, Massachusetts-based LCB
Senior Living, a leading provider of senior living options
throughout New England and several Mid-Atlantic states. We acquired
a seniors housing community in Connecticut for a pro rata investment of
$31 million at approximately
$300,000 per unit. In addition,
subsequent to quarter end we completed the transition of two former
Brookdale communities in Chelmsfold, Massachusetts and Rocky Hill, Connecticut to LCB. LCB is the
fifth new seniors housing operator relationship we have announced
this year.
Senior Resource Group We expanded our RIDEA relationship with
Senior Resource Group by acquiring a seniors housing community in
the San Francisco MSA for a pro rata investment of $35 million. We acquired this asset at a
significant discount to replacement cost at a basis of
approximately $360,000 per unit.
Benchmark Senior Living As previously disclosed, we sold our
Benchmark Senior Living portfolio for a gross $1.8 billion sale price, with potential to
receive an additional $50 million in
earnout proceeds subject to certain future sale hurdles. The 4,137
unit seniors housing operating portfolio consists of 48 assisted
living properties located in Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island and
Vermont. The portfolio had
$24 million of secured debt that was
extinguished at closing.
Long-Term/Post-Acute Care Dispositions During the quarter, we
completed the disposition of 22 properties for $288 million, further reducing
long-term/post-acute care concentration.
Investments Subsequent to Quarter End
Frontier Management We expanded our relationship with Frontier
Management by acquiring two assets that were already managed by
Frontier in Boise, Idaho and
Turlock, California for
approximately $39 million at a 6.3%
cap rate and $197,000 per unit.
Oakmont Senior Living We are expanding our relationship with
Oakmont Senior Living by entering into a definitive agreement to
acquire six newly built, Class-A senior living communities in
California for approximately
$297 million. Upon stabilization in
year two, we expect to achieve a mid-to-high 5% cap rate.
Outpatient Medical Investment We are expanding our outpatient
medical portfolio by entering into a definitive agreement to
acquire a $258 million portfolio,
sourced off-market from a private owner based in Southern California. The portfolio consists of
18 properties and is 98% occupied with a weighted average remaining
lease term of 8 years. We expect a mid-5% year one yield. The
portfolio compliments our current outpatient medical footprint and
aligns with top health systems, including Dignity Health and
UPMC.
Outlook for 2019 Net income attributable to common
stockholders guidance has been revised to a range of $3.06 to $3.10 per
diluted share from the previous range of $3.33 to $3.43 per
diluted share, primarily due to changes 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 guidance to
$4.14 to $4.18 per diluted share from the previous range
of $4.10 to $4.20 per diluted share. In preparing our
guidance, we have updated or confirmed the following
assumptions:
- Same Store NOI: We are increasing average blended SSNOI growth
guidance from 2.0% to 2.5% to 2.25% to 2.75%.
- General and administrative expenses: We anticipate annual
general and administrative expenses of approximately $130 million, including $24 million of stock-based compensation.
- Acquisitions: 2019 earnings guidance includes only acquisitions
closed or announced year to date.
- Development: We anticipate funding approximately $183 million of additional development in 2019
relating to projects underway on September
30, 2019.
- Dispositions: We expect disposition proceeds of $3.1 billion at a blended yield of 6.2%. This
includes approximately $2.8 billion
of proceeds from dispositions and loan payoffs completed to date
and $0.3 billion of incremental
proceeds from expected property sales and loan payoffs.
Our guidance does not include any additional investments,
dispositions or capital transactions beyond those we have
announced, nor any other expenses, impairments, unanticipated
additions to the loan loss reserve or other additional normalizing
items. Please see the Supplemental Reporting Measures section
for further discussion and our definition of normalized FFO and
SSNOI and the Exhibits 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 2019 outlook and assumptions on the
third quarter 2019 conference call.
Conference Call Information We have scheduled a
conference call on Tuesday, October 29, 2019 at 9:00 a.m. Eastern Time to discuss our third
quarter 2019 results, industry trends, portfolio performance and
outlook for 2019. Telephone access will be available by dialing
888-346-2469 or 706-758-4923 (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
November 12, 2019. To access the
rebroadcast, dial 855-859-2056 or 404-537-3406
(international). The conference ID number is 9352239. 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 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. Land parcels, loans, and sub-leases as well as
any properties acquired, developed/redeveloped (including major
refurbishments where 20% or more of units are simultaneously taken
out of commission for 30 days or more), sold or classified as held
for sale during that period are excluded from the same store
amounts. Properties undergoing operator transitions and/or segment
transitions (except Seniors Housing Triple-net to Seniors Housing
Operating with the same operator) are also excluded from the same
store amounts. 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 exceeds 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 Internal Revenue Code ("IRC") Section 1031 deposits. We
expect to maintain capitalization ratios and coverage ratios
sufficient to maintain a capital structure consistent with our
current profile. The coverage ratios are based on EBITDA which
stands for earnings (net income per income statement) before
interest expense, income taxes, depreciation and amortization.
Covenants in our senior unsecured notes and primary credit facility
contain financial ratios based on a definition of EBITDA that is
specific to those agreements. Failure to satisfy these covenants
could result in an event of default that could have a material
adverse impact on our cost and availability of capital, which could
in turn have a material adverse impact on our consolidated results
of operations, liquidity and/or financial condition. Due to the
materiality of these debt agreements and the financial covenants,
we have defined Adjusted EBITDA to exclude unconsolidated entities
and to include 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 and additional other
income. We believe that EBITDA and Adjusted EBITDA, along with net
income and cash flow provided from operating activities, are
important supplemental measures because they provide additional
information to assess and evaluate the performance of our
operations. Our leverage ratios include net debt to Adjusted
EBITDA. Net debt is defined as total long-term debt, excluding
operating lease liabilities, less cash and cash equivalents and any
IRC Section 1031 deposits.
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 September 30, 2019, 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 we use 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, we are
making forward-looking statements. In particular, these
forward-looking statements include, but are not limited to, those
relating to our opportunities to acquire, develop or sell
properties; our ability to close anticipated acquisitions,
investments or dispositions on currently anticipated terms, or
within currently anticipated timeframes; the expected performance
of our operators/tenants and properties; our expected occupancy
rates; our ability to declare and to make distributions to
shareholders; our investment and financing opportunities and plans;
our continued qualification as a REIT; our ability to access
capital markets or other sources of funds; and our ability to meet
our earnings guidance. Forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties that may cause our actual results to differ
materially from our 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; uncertainty
from the expected discontinuance of LIBOR and the transition to any
other interest rate benchmark; 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; our 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 our properties; our
ability to re lease space at similar rates as vacancies occur; our
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 our properties; changes in rules or
practices governing our financial reporting; the movement of U.S.
and foreign currency exchange rates; our ability to maintain our
qualification as a REIT; key management personnel recruitment and
retention; and other risks described in our reports filed from time
to time with the Securities and Exchange Commission. Finally, we
undertake 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)
|
|
|
September
30,
|
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
Real estate
investments:
|
|
|
|
|
Land and land
improvements
|
|
$
|
3,370,841
|
|
$
|
3,193,555
|
Buildings and
improvements
|
|
28,798,241
|
|
27,980,830
|
Acquired lease
intangibles
|
|
1,604,982
|
|
1,562,650
|
Real property held for
sale, net of accumulated depreciation
|
|
336,649
|
|
619,141
|
Construction in
progress
|
|
466,286
|
|
135,343
|
Less accumulated
depreciation and intangible amortization
|
|
(5,769,843)
|
|
(5,394,274)
|
Net real property
owned
|
|
28,807,156
|
|
28,097,245
|
Right of use assets,
net
|
|
536,689
|
|
—
|
Real estate loans
receivable, net of allowance
|
|
361,530
|
|
340,824
|
Net real estate
investments
|
|
29,705,375
|
|
28,438,069
|
Other
assets:
|
|
|
|
|
Investments in
unconsolidated entities
|
|
556,854
|
|
423,192
|
Goodwill
|
|
68,321
|
|
68,321
|
Cash and cash
equivalents
|
|
265,788
|
|
191,199
|
Restricted
cash
|
|
64,947
|
|
90,086
|
Straight-line rent
receivable
|
|
432,616
|
|
388,045
|
Receivables and other
assets
|
|
770,054
|
|
650,207
|
Total other
assets
|
|
2,158,580
|
|
1,811,050
|
Total
assets
|
|
$
|
31,863,955
|
|
$
|
30,249,119
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
|
1,334,586
|
|
$
|
1,312,000
|
Senior unsecured
notes
|
|
9,730,047
|
|
9,655,022
|
Secured
debt
|
|
2,623,010
|
|
2,465,661
|
Lease
liabilities
|
|
454,538
|
|
71,377
|
Accrued expenses and
other liabilities
|
|
1,025,704
|
|
1,074,994
|
Total
liabilities
|
|
15,167,885
|
|
14,579,054
|
Redeemable
noncontrolling interests
|
|
470,341
|
|
400,864
|
Equity:
|
|
|
|
|
Preferred
stock
|
|
—
|
|
718,498
|
Common
stock
|
|
406,498
|
|
376,353
|
Capital in excess of
par value
|
|
19,796,676
|
|
17,889,514
|
Treasury
stock
|
|
(78,843)
|
|
(68,753)
|
Cumulative net
income
|
|
7,129,642
|
|
6,008,095
|
Cumulative
dividends
|
|
(11,870,244)
|
|
(10,478,020)
|
Accumulated other
comprehensive income
|
|
(117,676)
|
|
(138,491)
|
Other
equity
|
|
12
|
|
489
|
Total Welltower Inc.
stockholders' equity
|
|
15,266,065
|
|
14,307,685
|
Noncontrolling
interests
|
|
959,664
|
|
961,516
|
Total
equity
|
|
16,225,729
|
|
15,269,201
|
Total liabilities
and equity
|
|
$
|
31,863,955
|
|
$
|
30,249,119
|
Consolidated
Statements of Income (unaudited)
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Resident fees and
services
|
|
$
|
834,121
|
|
$
|
875,171
|
|
$
|
2,616,491
|
|
$
|
2,374,450
|
|
|
Rental
income
|
|
412,147
|
|
342,887
|
|
1,178,817
|
|
1,019,857
|
|
|
Interest
income
|
|
15,637
|
|
14,622
|
|
48,112
|
|
42,732
|
|
|
Other
income
|
|
4,228
|
|
3,699
|
|
15,064
|
|
22,217
|
|
|
Total
revenues
|
|
1,266,133
|
|
1,236,379
|
|
3,858,484
|
|
3,459,256
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
655,588
|
|
657,157
|
|
2,027,522
|
|
1,782,373
|
|
|
Depreciation and
amortization
|
|
272,445
|
|
243,149
|
|
764,429
|
|
707,625
|
|
|
Interest
expense
|
|
137,343
|
|
138,032
|
|
423,911
|
|
382,223
|
|
|
General and
administrative expenses
|
|
31,019
|
|
28,746
|
|
100,042
|
|
95,282
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
1,244
|
|
8,991
|
|
670
|
|
(5,642)
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
65,824
|
|
4,038
|
|
81,543
|
|
16,044
|
|
|
Provision for loan
losses
|
|
—
|
|
—
|
|
18,690
|
|
—
|
|
|
Impairment of
assets
|
|
18,096
|
|
6,740
|
|
28,035
|
|
39,557
|
|
|
Other
expenses
|
|
6,186
|
|
88,626
|
|
36,570
|
|
102,396
|
|
|
Total
expenses
|
|
1,187,745
|
|
1,175,479
|
|
3,481,412
|
|
3,119,858
|
Income (loss) from
continuing operations before income taxes
|
|
|
|
|
|
|
|
|
|
|
and other
items
|
|
78,388
|
|
60,900
|
|
377,072
|
|
339,398
|
Income tax (expense)
benefit
|
|
(3,968)
|
|
(1,741)
|
|
(7,789)
|
|
(7,170)
|
Income (loss) from
unconsolidated entities
|
|
3,262
|
|
344
|
|
(14,986)
|
|
(836)
|
Gain (loss) on real
estate dispositions, net
|
|
570,250
|
|
24,723
|
|
735,977
|
|
373,662
|
Income (loss) from
continuing operations
|
|
647,932
|
|
84,226
|
|
1,090,274
|
|
705,054
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
647,932
|
|
84,226
|
|
1,090,274
|
|
705,054
|
Less:
|
|
Preferred
dividends
|
|
—
|
|
11,676
|
|
—
|
|
35,028
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
58,056
|
|
8,166
|
|
82,166
|
|
13,539
|
Net income (loss)
attributable to common stockholders
|
|
$
|
589,876
|
|
$
|
64,384
|
|
$
|
1,008,108
|
|
$
|
656,487
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
405,023
|
|
373,023
|
|
400,441
|
|
372,052
|
|
|
Diluted
|
|
406,891
|
|
374,487
|
|
402,412
|
|
373,638
|
Net income (loss)
attributable to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.46
|
|
$
|
0.17
|
|
$
|
2.52
|
|
$
|
1.76
|
|
|
Diluted
|
|
$
|
1.45
|
|
$
|
0.17
|
|
$
|
2.51
|
|
$
|
1.76
|
Common dividends per
share
|
|
$
|
0.87
|
|
$
|
0.87
|
|
$
|
2.61
|
|
$
|
2.61
|
Outlook
reconciliations: Year Ending December 31, 2019
|
Exhibit
1
|
|
(in millions,
except per share data)
|
|
|
|
|
|
Prior
Outlook
|
|
Current
Outlook
|
|
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
FFO
Reconciliation:
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
|
1,348
|
|
|
$
|
1,388
|
|
|
$
|
1,238
|
|
|
$
|
1,254
|
|
|
Impairments and
losses (gains) on real estate dispositions,
net(1,2)
|
|
(764)
|
|
|
(764)
|
|
|
(721)
|
|
|
(721)
|
|
|
Depreciation and
amortization(1)
|
|
1,000
|
|
|
1,000
|
|
|
1,004
|
|
|
1,004
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
1,584
|
|
|
1,624
|
|
|
1,521
|
|
|
1,537
|
|
|
Normalizing items,
net(1,3)
|
|
77
|
|
|
77
|
|
|
152
|
|
|
152
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
|
1,661
|
|
|
$
|
1,701
|
|
|
$
|
1,673
|
|
|
$
|
1,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3.33
|
|
|
$
|
3.43
|
|
|
$
|
3.06
|
|
|
$
|
3.10
|
|
|
NAREIT FFO
|
|
$
|
3.91
|
|
|
$
|
4.01
|
|
|
$
|
3.76
|
|
|
$
|
3.80
|
|
|
Normalized
FFO
|
|
$
|
4.10
|
|
|
$
|
4.20
|
|
|
$
|
4.14
|
|
|
$
|
4.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(1)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
$
|
(92)
|
|
|
$
|
(92)
|
|
|
$
|
(96)
|
|
|
$
|
(96)
|
|
|
Non-cash interest
expenses
|
|
18
|
|
|
18
|
|
|
14
|
|
|
14
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(127)
|
|
|
(127)
|
|
|
(125)
|
|
|
(125)
|
|
|
Stock-based
compensation
|
|
25
|
|
|
25
|
|
|
24
|
|
|
24
|
|
|
|
|
|
Note : (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.
|
|
Normalizing
Items
|
|
|
|
|
|
|
|
|
Exhibit
2
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2019
|
|
|
2018
|
|
2019
|
|
2018
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
$
|
1,244
|
|
(1)
|
|
$
|
8,991
|
|
|
$
|
670
|
|
|
$
|
(5,642)
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
65,824
|
|
(2)
|
|
4,038
|
|
|
81,543
|
|
|
16,044
|
|
|
Provision for loan
losses
|
|
—
|
|
|
|
—
|
|
|
18,690
|
|
|
—
|
|
|
Incremental
stock-based compensation expense
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
3,552
|
|
|
Other
expenses
|
|
6,186
|
|
(3)
|
|
88,626
|
|
|
36,570
|
|
|
102,396
|
|
|
Additional other
income
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(10,805)
|
|
|
Normalizing items
attributable to noncontrolling interests and unconsolidated
entities, net
|
|
1,031
|
|
(4)
|
|
724
|
|
|
14,110
|
|
|
4,933
|
|
|
Net normalizing
items
|
|
$
|
74,285
|
|
|
|
$
|
102,379
|
|
|
$
|
151,583
|
|
|
$
|
110,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
406,891
|
|
|
|
374,487
|
|
|
402,412
|
|
|
373,638
|
|
|
Net normalizing items
per diluted share
|
|
$
|
0.18
|
|
|
|
$
|
0.27
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
|
|
|
Note: (1) Primarily
related to mark-to-market of Genesis HealthCare stock
holdings.
|
|
(2) Primarily
related to the extinguishment of the $450 million of 4.95% senior
unsecured notes due 2021, the $600 million of 5.25% senior
unsecured notes due 2022 and the $1 billion unsecured term
loan.
|
|
(3) Primarily
related to non-capitalizable transaction costs, costs associated
with operator transitions and costs related to the departure of an
executive officer.
|
|
(4) Primarily
related to non-capitalizable transaction costs and costs associated
with operator transitions in joint ventures.
|
|
FFO
Reconciliations
|
|
|
|
|
|
|
|
Exhibit
3
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net income (loss)
attributable to common stockholders
|
|
$
|
589,876
|
|
|
$
|
64,384
|
|
|
$
|
1,008,108
|
|
|
$
|
656,487
|
|
|
Depreciation and
amortization
|
|
272,445
|
|
|
243,149
|
|
|
764,429
|
|
|
707,625
|
|
|
Impairments and
losses (gains) on real estate dispositions, net
|
|
(552,154)
|
|
|
(17,983)
|
|
|
(707,942)
|
|
|
(334,105)
|
|
|
Noncontrolling
interests(1)
|
|
31,347
|
|
|
(17,498)
|
|
|
(5,302)
|
|
|
(51,543)
|
|
|
Unconsolidated
entities(2)
|
|
10,864
|
|
|
13,220
|
|
|
41,489
|
|
|
38,753
|
|
|
NAREIT FFO
attributable to common stockholders
|
|
352,378
|
|
|
285,272
|
|
|
1,100,782
|
|
|
1,017,217
|
|
|
Normalizing items,
net(3)
|
|
74,285
|
|
|
102,379
|
|
|
151,583
|
|
|
110,478
|
|
|
Normalized FFO
attributable to common stockholders
|
|
$
|
426,663
|
|
|
$
|
387,651
|
|
|
$
|
1,252,365
|
|
|
$
|
1,127,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
406,891
|
|
|
374,487
|
|
|
402,412
|
|
|
373,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share
data attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
1.45
|
|
|
$
|
0.17
|
|
|
$
|
2.51
|
|
|
$
|
1.76
|
|
|
NAREIT FFO
|
|
$
|
0.87
|
|
|
$
|
0.76
|
|
|
$
|
2.74
|
|
|
$
|
2.72
|
|
|
Normalized
FFO
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
|
$
|
3.11
|
|
|
$
|
3.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized FFO Payout
Ratio:
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
|
0.87
|
|
|
$
|
0.87
|
|
|
$
|
2.61
|
|
|
$
|
2.61
|
|
|
Normalized FFO
attributable to common stockholders per share
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
|
$
|
3.11
|
|
|
$
|
3.02
|
|
|
Normalized FFO payout
ratio
|
|
83
|
%
|
|
84
|
%
|
|
84
|
%
|
|
86
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items:(4)
|
|
|
|
|
|
|
|
|
|
Net straight-line
rent and above/below market rent amortization
|
|
$
|
(24,578)
|
|
|
$
|
(19,164)
|
|
|
$
|
(72,644)
|
|
|
$
|
(48,940)
|
|
|
Non-cash interest
expenses
|
|
2,454
|
|
|
2,297
|
|
|
9,744
|
|
|
9,537
|
|
|
Recurring cap-ex,
tenant improvements, and lease commissions
|
|
(34,526)
|
|
|
(22,478)
|
|
|
(84,374)
|
|
|
(56,744)
|
|
|
Stock-based
compensation(5)
|
|
5,008
|
|
|
6,075
|
|
|
18,940
|
|
|
18,340
|
|
|
|
|
Note: (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)
Amounts presented net of noncontrolling interests' share and
Welltower's share of unconsolidated entities.
|
|
(5)
Excludes certain severance related stock-based compensation
recorded in other expense and normalized incremental stock-based
compensation expense (see Exhibit 2).
|
|
SSNOI
Reconciliation
|
|
|
|
|
|
Exhibit
4
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
|
2019
|
|
2018
|
|
%
growth
|
|
Net income
(loss)
|
|
$
|
647,932
|
|
|
$
|
84,226
|
|
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
(570,250)
|
|
|
(24,723)
|
|
|
|
|
Loss (income) from
unconsolidated entities
|
|
(3,262)
|
|
|
(344)
|
|
|
|
|
Income tax expense
(benefit)
|
|
3,968
|
|
|
1,741
|
|
|
|
|
Other
expenses
|
|
6,186
|
|
|
88,626
|
|
|
|
|
Impairment of
assets
|
|
18,096
|
|
|
6,740
|
|
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
65,824
|
|
|
4,038
|
|
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
1,244
|
|
|
8,991
|
|
|
|
|
General and
administrative expenses
|
|
31,019
|
|
|
28,746
|
|
|
|
|
Depreciation and
amortization
|
|
272,445
|
|
|
243,149
|
|
|
|
|
Interest
expense
|
|
137,343
|
|
|
138,032
|
|
|
|
|
Consolidated
NOI
|
|
610,545
|
|
|
579,222
|
|
|
|
|
NOI attributable to
unconsolidated investments
|
|
21,957
|
|
|
22,247
|
|
|
|
|
NOI attributable to
noncontrolling interests
|
|
(42,356)
|
|
|
(37,212)
|
|
|
|
|
Pro rata
NOI
|
|
590,146
|
|
|
564,257
|
|
|
|
|
Non-cash NOI
attributable to same store properties
|
|
(12,726)
|
|
|
(9,668)
|
|
|
|
|
NOI attributable to
non-same store properties
|
|
(158,388)
|
|
|
(142,266)
|
|
|
|
|
Currency and ownership
adjustments(1)
|
|
2,636
|
|
|
154
|
|
|
|
|
Normalizing
adjustments, net(2)
|
|
14
|
|
|
(1,580)
|
|
|
|
|
Same Store NOI
(SSNOI)
|
|
$
|
421,682
|
|
|
$
|
410,897
|
|
|
2.6%
|
|
|
|
|
|
|
|
|
|
Seniors Housing
Operating
|
|
205,982
|
|
|
200,325
|
|
|
2.8%
|
|
Seniors Housing
Triple-net
|
|
90,443
|
|
|
87,446
|
|
|
3.4%
|
|
Outpatient
Medical
|
|
84,004
|
|
|
82,872
|
|
|
1.4%
|
|
Long-Term/Post-Acute
Care
|
|
41,253
|
|
|
40,254
|
|
|
2.5%
|
|
Total SSNOI
|
|
$
|
421,682
|
|
|
$
|
410,897
|
|
|
2.6%
|
|
|
|
|
|
|
|
|
|
|
Notes: (1)
Includes adjustments to reflect consistent property ownership
percentages and foreign currency exchange rates for properties in
the U.K. and Canada.
|
|
(2) Includes other
adjustments described in the accompanying Supplement.
|
|
Net Debt to
Adjusted EBITDA Reconciliation
|
|
|
|
Exhibit
5
|
|
(in
thousands)
|
|
Three Months
Ended
|
|
|
|
|
|
|
September 30,
2019
|
|
June 30,
2019
|
|
Net income
(loss)
|
|
$
|
647,932
|
|
|
$
|
150,040
|
|
|
Interest
expense
|
|
137,343
|
|
|
141,336
|
|
|
Income tax expense
(benefit)
|
|
3,968
|
|
|
1,599
|
|
|
Depreciation and
amortization
|
|
272,445
|
|
|
248,052
|
|
|
EBITDA
|
|
1,061,688
|
|
|
541,027
|
|
|
Loss (income) from
unconsolidated entities
|
|
(3,262)
|
|
|
9,049
|
|
|
Stock-based
compensation(1)
|
|
5,309
|
|
|
7,662
|
|
|
Loss (gain) on
extinguishment of debt, net
|
|
65,824
|
|
|
—
|
|
|
Loss (gain) on real
estate dispositions, net
|
|
(570,250)
|
|
|
1,682
|
|
|
Impairment of
assets
|
|
18,096
|
|
|
9,939
|
|
|
Loss (gain) on
derivatives and financial instruments, net
|
|
1,244
|
|
|
1,913
|
|
|
Other
expenses(1)
|
|
5,885
|
|
|
20,369
|
|
|
Adjusted
EBITDA
|
|
584,534
|
|
|
591,641
|
|
|
Adjusted EBITDA
annualized
|
|
$
|
2,338,136
|
|
|
$
|
2,366,564
|
|
|
|
|
|
|
|
|
Unsecured credit
facility and commercial paper
|
|
$
|
1,334,586
|
|
|
$
|
1,869,188
|
|
|
Long term debt
obligations(2)
|
|
12,463,680
|
|
|
13,390,344
|
|
|
Cash and cash
equivalents(3)
|
|
(265,788)
|
|
|
(268,666)
|
|
|
Net debt
|
|
$
|
13,532,478
|
|
|
$
|
14,990,866
|
|
|
Net debt to Adjusted
EBITDA ratio
|
|
5.79
|
x
|
|
6.33
|
x
|
|
|
|
|
|
|
|
|
Notes: (1)
Certain severance-related costs are included in stock-based
compensation and excluded from other expenses.
|
(2) Amounts include
unamortized premiums/discounts, fair value adjustments and lease
liabilities related to financing leases. Operating lease
liabilities related to ASC 842 adoption are excluded.
|
(3) Inclusive of IRC
section 1031 deposits, if any.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/welltower-reports-third-quarter-2019-results-300946621.html
SOURCE Welltower Inc.