Highlights
- Reported net income attributable to common stockholders of
$0.39 per diluted share - Reported normalized FFO attributable to common stockholders of
$0.84 per diluted share - Completed
$657 million of pro rata acquisitions since the start of the fourth quarter 2020 at a blended, non-stabilized yield of 4.5%, including a 790 unit portfolio of seniors housing assets operated byHarbor Retirement Associates for$132 million subsequent to quarter end - Completed
$781 million of pro rata dispositions since the start of the fourth quarter 2020 at a blended yield of 5.2%, resulting in near-term liquidity of$5.1 billion as ofFebruary 8, 2021 - Over 90% of assisted living and memory care facilities in our Seniors Housing Operating ("SHO") portfolio have completed their first vaccination clinic, based on operator reported data as of
February 8, 2021 - Named to the Dow Jones Sustainability World Index for the third consecutive year and to the Dow Jones Sustainability North America Index for the fifth consecutive year
COVID-19 Update
SHO Portfolio Occupancy remains pressured by a decline in move in activity resulting from the continued increase in COVID-19 cases and implementation of new admissions bans across many of our geographies. As of
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December |
January |
|||||||||||||||||||||||||
Spot |
85.6 |
% |
84.9 |
% |
82.6 |
% |
80.9 |
% |
79.9 |
% |
79.3 |
% |
78.7 |
% |
78.4 |
% |
78.0 |
% |
77.3 |
% |
76.2 |
% |
74.8 |
% |
||||||||||||
Sequential |
(0.7) |
% |
(2.3) |
% |
(1.7) |
% |
(1.0) |
% |
(0.6) |
% |
(0.6) |
% |
(0.3) |
% |
(0.4) |
% |
(0.7) |
% |
(1.1) |
% |
(1.4) |
% |
||||||||||||||
(1) Spot occupancy represents approximate month end occupancy for properties in operation as of |
Through
Our share of property-level expenses associated with the COVID-19 pandemic relating to our total SHO portfolio, net of reimbursements, totaled approximately
In 2020 applications were made for amounts under Phase 2 and Phase 3 of the
Rent Collections During the fourth quarter, we collected approximately 97% of rent due from operators under Triple-net lease agreements (primarily seniors housing and post-acute care facilities). In the Outpatient Medical ("OM") segment we collected over 98% of rent due in the fourth quarter, with uncollected amounts primarily attributable to local jurisdictions with COVID-19 related ordinances providing temporary rent relief to tenants. In most cases, approved and executed OM rent deferrals from earlier in the year represented two months of rent which was generally repaid in full by year end. We collected over 99% of deferred rent due in the fourth quarter.
Fourth Quarter Capital Activity and Liquidity On
Inclusive of available borrowings under our line of credit, cash and cash equivalents, and IRC Section 1031 deposits, at
Dividend On
Notable Fourth Quarter Portfolio Transactions
StoryPoint Senior Living Acquisitions During the quarter, we acquired a portfolio of 11 assisted living and memory care communities located throughout the Midwest for
Additionally, we expanded our RIDEA relationship with StoryPoint through the acquisition of four purpose-built, Class-A seniors housing communities in the Midwest for a pro rata investment of
Wafra Joint Venture During the fourth quarter, we announced a joint venture partnership with certain investment vehicles managed by Wafra. The joint venture comprises a portfolio of 24 outpatient medical properties previously majority-owned by
Northbridge Senior Housing Disposition During the fourth quarter, we sold a portfolio of SHO properties operated by
Annual Investment and Disposition Activity During the year ended
Notable Annual Disposition Activity
Senior Star Disposition During the second quarter, we closed on the disposition of six SHO properties operated by
Including consideration for capital expenditures, the SHO properties which were previously managed by
We sold 27 OM properties related to the transaction for total pro rata proceeds
During the third quarter, we expanded our partnership with IRE through a new joint venture which comprises a portfolio of 20 outpatient medical properties previously majority owned by
Outlook for First Quarter 2021 The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and related containment and vaccination measures, among others. Accordingly, we are only introducing earnings guidance for the quarter ended
- Provider Relief Funds: Our first quarter guidance includes approximately
$31 million of pro rata net Provider Relief Funds received to date. - SHO Portfolio Occupancy: We anticipate total SHO portfolio average occupancy to decline 275 to 375 basis points in the first quarter relative to fourth quarter average occupancy.
- General and Administrative Expenses: We anticipate full year general and administrative expenses to be approximately
$135 million to$140 million and stock-based compensation expense to be approximately$21 million . - Investments: To date in 2021, we have completed pro rata acquisitions of
$151 million at a blended yield of 7.7%. Our first quarter 2021 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
$395 million of development in 2021 relating to projects underway onDecember 31, 2020 . - Dispositions: We expect pro rata disposition proceeds of
$271 million at a blended yield of 4.7% in 2021 related primarily to properties classified as held-for-sale as ofDecember 31, 2020 , substantially all of which are expected to close during the first quarter.
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 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 first quarter outlook and assumptions on the fourth quarter 2020 conference call.
Conference Call Information We have scheduled a conference call on
Supplemental Reporting Measures We believe that net income and net income attributable to common stockholders ("NICS"), as defined by
Historical cost accounting for real estate assets in accordance with
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
About
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
Financial Exhibits
Consolidated Balance Sheets (unaudited) |
||||||||
(in thousands) |
||||||||
|
||||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Real estate investments: |
||||||||
Land and land improvements |
$ |
3,440,650 |
$ |
3,486,620 |
||||
Buildings and improvements |
28,024,971 |
29,163,305 |
||||||
Acquired lease intangibles |
1,500,030 |
1,617,051 |
||||||
Real property held for sale, net of accumulated depreciation |
216,613 |
1,253,008 |
||||||
Construction in progress |
487,742 |
507,931 |
||||||
Less accumulated depreciation and intangible amortization |
(6,104,297) |
(5,715,459) |
||||||
Net real property owned |
27,565,709 |
30,312,456 |
||||||
Right of use assets, net |
465,866 |
536,433 |
||||||
Real estate loans receivable, net of credit allowance |
443,372 |
270,382 |
||||||
Net real estate investments |
28,474,947 |
31,119,271 |
||||||
Other assets: |
||||||||
Investments in unconsolidated entities |
946,234 |
583,423 |
||||||
|
68,321 |
68,321 |
||||||
Cash and cash equivalents |
1,545,046 |
284,917 |
||||||
Restricted cash |
475,997 |
100,849 |
||||||
Straight-line rent receivable |
344,066 |
466,222 |
||||||
Receivables and other assets |
629,031 |
757,748 |
||||||
Total other assets |
4,008,695 |
2,261,480 |
||||||
Total assets |
$ |
32,483,642 |
$ |
33,380,751 |
||||
Liabilities and equity |
||||||||
Liabilities: |
||||||||
Unsecured credit facility and commercial paper |
$ |
— |
$ |
1,587,597 |
||||
Senior unsecured notes |
11,420,790 |
10,336,513 |
||||||
Secured debt |
2,377,930 |
2,990,962 |
||||||
Lease liabilities |
418,266 |
473,693 |
||||||
Accrued expenses and other liabilities |
1,041,594 |
1,009,482 |
||||||
Total liabilities |
15,258,580 |
16,398,247 |
||||||
Redeemable noncontrolling interests |
343,490 |
475,877 |
||||||
Equity: |
||||||||
Common stock |
418,691 |
411,005 |
||||||
Capital in excess of par value |
20,823,145 |
20,190,119 |
||||||
|
(104,490) |
(78,955) |
||||||
Cumulative net income |
8,327,598 |
7,353,966 |
||||||
Cumulative dividends |
(13,343,721) |
(12,223,534) |
||||||
Accumulated other comprehensive income |
(148,504) |
(112,157) |
||||||
|
15,972,719 |
15,540,444 |
||||||
Noncontrolling interests |
908,853 |
966,183 |
||||||
Total equity |
16,881,572 |
16,506,627 |
||||||
Total liabilities and equity |
$ |
32,483,642 |
$ |
33,380,751 |
Consolidated Statements of Income (unaudited) |
||||||||||||||
(in thousands, except per share data) |
||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||
|
|
|||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||
Revenues: |
||||||||||||||
Resident fees and services |
$ |
713,534 |
$ |
831,684 |
$ |
3,074,022 |
$ |
3,448,175 |
||||||
Rental income |
382,049 |
409,583 |
1,443,360 |
1,588,400 |
||||||||||
Interest income |
21,096 |
15,718 |
69,156 |
63,830 |
||||||||||
Other income |
5,337 |
5,837 |
19,429 |
20,901 |
||||||||||
Total revenues |
1,122,016 |
1,262,822 |
4,605,967 |
5,121,306 |
||||||||||
Expenses: |
||||||||||||||
Property operating expenses |
620,561 |
662,520 |
2,597,823 |
2,690,042 |
||||||||||
Depreciation and amortization |
242,733 |
262,644 |
1,038,437 |
1,027,073 |
||||||||||
Interest expense |
121,173 |
131,648 |
514,388 |
555,559 |
||||||||||
General and administrative expenses |
27,848 |
26,507 |
128,394 |
126,549 |
||||||||||
Loss (gain) on derivatives and financial instruments, net |
569 |
(5,069) |
11,049 |
(4,399) |
||||||||||
Loss (gain) on extinguishment of debt, net |
13,796 |
2,612 |
47,049 |
84,155 |
||||||||||
Provision for loan losses |
83,085 |
— |
94,436 |
18,690 |
||||||||||
Impairment of assets |
9,317 |
98 |
135,608 |
28,133 |
||||||||||
Other expenses |
33,088 |
16,042 |
70,335 |
52,612 |
||||||||||
Total expenses |
1,152,170 |
1,097,002 |
4,637,519 |
4,578,414 |
||||||||||
Income (loss) from continuing operations before income taxes |
||||||||||||||
and other items |
(30,154) |
165,820 |
(31,552) |
542,892 |
||||||||||
Income tax (expense) benefit |
(290) |
4,832 |
(9,968) |
(2,957) |
||||||||||
Income (loss) from unconsolidated entities |
258 |
57,420 |
(8,083) |
42,434 |
||||||||||
Gain (loss) on real estate dispositions, net |
185,464 |
12,064 |
1,088,455 |
748,041 |
||||||||||
Income (loss) from continuing operations |
155,278 |
240,136 |
1,038,852 |
1,330,410 |
||||||||||
Net income (loss) |
155,278 |
240,136 |
1,038,852 |
1,330,410 |
||||||||||
Less: |
Net income (loss) attributable to noncontrolling interests (1) |
(8,451) |
15,812 |
60,008 |
97,978 |
|||||||||
Net income (loss) attributable to common stockholders |
$ |
163,729 |
$ |
224,324 |
$ |
978,844 |
$ |
1,232,432 |
||||||
Average number of common shares outstanding: |
||||||||||||||
Basic |
417,123 |
405,974 |
415,451 |
401,845 |
||||||||||
Diluted |
418,753 |
407,904 |
417,387 |
403,808 |
||||||||||
Net income (loss) attributable to common stockholders per share: |
||||||||||||||
Basic |
$ |
0.39 |
$ |
0.55 |
$ |
2.36 |
$ |
3.07 |
||||||
Diluted(2) |
$ |
0.39 |
$ |
0.55 |
$ |
2.33 |
$ |
3.05 |
||||||
Common dividends per share |
$ |
0.61 |
$ |
0.87 |
$ |
2.70 |
$ |
3.48 |
||||||
(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 |
Twelve Months Ended |
|||||||||||||||
|
|
||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||
Net income (loss) attributable to common stockholders |
$ |
163,729 |
$ |
224,324 |
$ |
978,844 |
$ |
1,232,432 |
|||||||||
Depreciation and amortization |
242,733 |
262,644 |
1,038,437 |
1,027,073 |
|||||||||||||
Impairments and losses (gains) on real estate dispositions, net |
(176,147) |
(11,966) |
(952,847) |
(719,908) |
|||||||||||||
Noncontrolling interests(1) |
(20,579) |
(14,895) |
(23,968) |
(20,197) |
|||||||||||||
Unconsolidated entities(2) |
16,091 |
16,191 |
62,096 |
57,680 |
|||||||||||||
NAREIT FFO attributable to common stockholders |
225,827 |
476,298 |
1,102,562 |
1,577,080 |
|||||||||||||
Normalizing items, net(3) |
125,468 |
(49,947) |
381,618 |
101,636 |
|||||||||||||
Normalized FFO attributable to common stockholders |
$ |
351,295 |
$ |
426,351 |
$ |
1,484,180 |
$ |
1,678,716 |
|||||||||
Average diluted common shares outstanding |
418,753 |
407,904 |
417,387 |
403,808 |
|||||||||||||
Per diluted share data attributable to common stockholders: |
|||||||||||||||||
Net income (loss)(4) |
$ |
0.39 |
$ |
0.55 |
$ |
2.33 |
$ |
3.05 |
|||||||||
NAREIT FFO |
$ |
0.54 |
$ |
1.17 |
$ |
2.64 |
$ |
3.91 |
|||||||||
Normalized FFO |
$ |
0.84 |
$ |
1.05 |
$ |
3.56 |
$ |
4.16 |
|||||||||
Normalized FFO Payout Ratio: |
|||||||||||||||||
Dividends per common share |
$ |
0.61 |
$ |
0.87 |
$ |
2.70 |
$ |
3.48 |
|||||||||
Normalized FFO attributable to common stockholders per share |
$ |
0.84 |
$ |
1.05 |
$ |
3.56 |
$ |
4.16 |
|||||||||
Normalized FFO payout ratio |
73 |
% |
83 |
% |
76 |
% |
84 |
% |
|||||||||
Other items:(5) |
|||||||||||||||||
Net straight-line rent and above/below market rent amortization(6) |
$ |
(21,640) |
$ |
(24,584) |
$ |
(90,926) |
$ |
(97,183) |
|||||||||
Non-cash interest expenses(7) |
2,108 |
1,282 |
11,545 |
11,026 |
|||||||||||||
Recurring cap-ex, tenant improvements, and lease commissions |
(21,634) |
(46,550) |
(81,271) |
(131,295) |
|||||||||||||
Stock-based compensation(8) |
1,875 |
4,547 |
22,154 |
23,487 |
|||||||||||||
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) Includes adjustment to the numerator for income (loss) attributable to OP unitholders. |
|||||||||||||||||
(5) Amounts presented net of noncontrolling interests' share and including |
|||||||||||||||||
(6) Excludes normalized other impairment (see Exhibit 2). |
|||||||||||||||||
(7) Excludes normalized incremental interest expense (see Exhibit 2). |
|||||||||||||||||
(8) 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 |
Twelve Months Ended |
||||||||||||
|
|
|||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||
Loss (gain) on derivatives and financial instruments, net |
$ |
569 |
(1) |
$ |
(5,069) |
$ |
11,049 |
$ |
(4,399) |
|||||
Loss (gain) on extinguishment of debt, net |
13,796 |
(2) |
2,612 |
47,049 |
84,155 |
|||||||||
Provision for loan losses |
83,085 |
(3) |
— |
94,436 |
18,690 |
|||||||||
Nonrecurring income tax benefits |
— |
(8,681) |
— |
(8,681) |
||||||||||
Incremental interest expense |
— |
— |
5,871 |
— |
||||||||||
Other impairment |
— |
— |
146,508 |
— |
||||||||||
Other expenses |
33,088 |
(4) |
16,042 |
70,335 |
52,612 |
|||||||||
Normalizing items attributable to noncontrolling interests and unconsolidated entities, net |
(5,070) |
(5) |
(54,851) |
6,370 |
(40,741) |
|||||||||
Net normalizing items |
$ |
125,468 |
$ |
(49,947) |
$ |
381,618 |
$ |
101,636 |
||||||
Average diluted common shares outstanding |
418,753 |
407,904 |
417,387 |
403,808 |
||||||||||
Net normalizing items per diluted share |
$ |
0.30 |
$ |
(0.12) |
$ |
0.91 |
$ |
0.25 |
||||||
Note: (1) Primarily related to mark-to-market of Genesis Healthcare stock holdings. |
||||||||||||||
(2) Primarily related to the extinguishment of secured debt as part of disposition transactions. |
||||||||||||||
(3) Represents additional reserves due to updated collateral estimate of our Genesis Healthcare loans, as well as additional reserves for loan losses under the current expected credit losses accounting standard. |
||||||||||||||
(4) Primarily related to non-capitalizable transaction costs and compensation and professional service costs associated with the CEO transition. |
||||||||||||||
(5) Primarily related to noncontrolling interests share of non-capitalizable transaction costs. |
Outlook Reconciliations: Quarter Ending |
Exhibit 3 |
|||||||
(in millions, except per share data) |
Current Outlook |
|||||||
Low |
High |
|||||||
FFO Reconciliation: |
||||||||
Net income attributable to common stockholders |
$ |
102 |
$ |
123 |
||||
Impairments and losses (gains) on real estate dispositions, net(1,2) |
(53) |
(53) |
||||||
Depreciation and amortization(1) |
248 |
248 |
||||||
NAREIT FFO and Normalized FFO attributable to common stockholders |
297 |
318 |
||||||
Per share data attributable to common stockholders: |
||||||||
Net income |
$ |
0.24 |
$ |
0.29 |
||||
NAREIT FFO and Normalized FFO |
$ |
0.71 |
$ |
0.76 |
||||
Other items:(1) |
||||||||
Net straight-line rent and above/below market rent amortization |
$ |
(18) |
$ |
(18) |
||||
Non-cash interest expenses |
3 |
3 |
||||||
Recurring cap-ex, tenant improvements, and lease commissions |
(21) |
(21) |
||||||
Stock-based compensation |
6 |
6 |
||||||
Note : (1) Amounts presented net of noncontrolling interests' share and |
||||||||
(2) Includes estimated gains on projected dispositions. |
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SOURCE
Tim McHugh, (419) 247-2800