Recent Highlights
- Reported net income attributable to common stockholders of
$0.06 per diluted share - Reported normalized FFO attributable to common stockholders of
$0.79 per diluted share - Seniors Housing Operating ("SHO") portfolio occupancy increased approximately 190 basis points ("bps") during the second quarter, exceeding our guidance of an approximate gain of 130 bps
- Completed
$1.5 billion of pro rata gross investments during the second quarter - Announced the acquisition of an 86 property seniors housing portfolio operated by Holiday Retirement for
$1.58 billion . The transaction is expected to be immediately accretive to normalized funds from operations per diluted share following its anticipated closing in the third quarter - Closed on a new
$4.7 billion unsecured credit facility which includes a five bps improvement in pricing from the previous facility - Sold 20.1 million shares of common stock under our ATM program via forward sale agreements since
April 1, 2021 which are expected to generate$1.6 billion of gross proceeds and issued$500 million of 2.050% senior unsecured notes dueJanuary 2029 - Earned the 2021 ENERGY STAR® Partner of the Year Award for the third consecutive year and further elevated to the level of Sustained Excellence, the
Environmental Protection Agency's highest recognition within the ENERGY STAR® program
COVID-19 Update
SHO Portfolio Virtually all of our communities are currently accepting new residents, resulting in an increase in move-in activity and occupancy rates in the most recent months. Month end occupancy rates are as follows:
|
|
|
|
|||||||||
Spot occupancy (1) |
72.6 |
% |
73.2 |
% |
73.6 |
% |
74.6 |
% |
||||
Sequential occupancy change (2) |
0.5 |
% |
0.5 |
% |
0.9 |
% |
||||||
(1) Spot occupancy represents approximate month end occupancy at our share for 592 properties in operation as of |
||||||||||||
(2) Sequential occupancy changes are based on actual spot occupancy and may not recalculate due to rounding. |
On a month-to-date basis, as of
In 2020, applications were made for amounts under Phase 2 and Phase 3 of the
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
Capital Activity and Liquidity In June, we announced an expanded
Inclusive of available borrowings under our line of credit, cash and cash equivalents, and IRC Section 1031 deposits, at
On
Dividend On
Notable Investment Activity Completed or Announced During the Quarter
Safanad/HC-One Loan Funding and
Additionally, we will have the ability to participate in the anticipated recovery in the
StoryPoint Senior Living During the quarter, we acquired three combination independent living, assisted living and memory care communities located in the Midwest with an average age of four years for
Pathway to Living During the quarter, we formed a new RIDEA relationship with
Oakmont Senior Living During the quarter, we expanded our relationship with Oakmont Senior Living through the acquisition of Ivy Living at
ProMedica Joint Venture Disposition As previously announced, the
Long-Term/Post-Acute Medical Disposition During the quarter, we completed the disposition of three properties for
Holiday Retirement On
Genesis Healthcare Update As previously announced, we entered into a definitive agreement to execute a series of mutually beneficial transactions resulting in the substantial exit of
- The transition of 9 PowerBack facilities to an 80/20 joint venture with
ProMedica , which occurred in April and generated pro rata proceeds of$58 million . - As of
July 1, 2021 , operations have transitioned for 28 properties with a remaining seven expected to transition before year end. The sales of these properties are expected to close during the second half of the year.
Other Transactions During the second quarter, we acquired four seniors housing communities for
Notable July Investment Activity
Aspect Health Acquisition In July, we formed a new 95/5 joint venture with
Outlook for Third Quarter 2021 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
- Provider Relief Funds: Our third quarter guidance does not include the recognition of any Provider Relief Funds which may be received during the quarter.
- SHO Portfolio Occupancy: Midpoint of normalized FFO guidance assumes a continuation of recent trends resulting in an approximate increase of 190 bps through the third quarter.
- General and Administrative Expenses: We anticipate full year general and administrative expenses to be approximately
$132 million to$137 million and stock-based compensation expense to be approximately$21 million . - Investments: Our third 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
$288 million of development in 2021 relating to projects underway onJune 30, 2021 . - Dispositions: We expect pro rata disposition proceeds of
$1.5 billion at a blended yield of 8.1% in 2021. This includes approximately$758 million in proceeds from dispositions and loan payoffs completed throughJune 30, 2021 and$735 million of incremental expected proceeds related to properties classified as held-for-sale as ofJune 30, 2021 .
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 third quarter outlook and assumptions on the second quarter 2021 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
No reconciliation of forecasted normalized FFO attributable to common stockholders per diluted share accretion or estimate of forecasted impact on net income attributable to common stockholders per diluted share for the announced Holiday Retirement acquisition is provided herein because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts primarily due to the anticipated timing of receipt of draft third-party real estate appraisals and valuations. We believe such reconciliation would imply a degree of precision that could be confusing or misleading to investors.
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
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
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) |
||||||||
|
||||||||
2021 |
2020 |
|||||||
Assets |
||||||||
Real estate investments: |
||||||||
Land and land improvements |
$ |
3,448,542 |
$ |
3,479,369 |
||||
Buildings and improvements |
28,124,236 |
28,589,269 |
||||||
Acquired lease intangibles |
1,516,971 |
1,565,978 |
||||||
Real property held for sale, net of accumulated depreciation |
592,699 |
382,580 |
||||||
Construction in progress |
458,844 |
411,700 |
||||||
Less accumulated depreciation and intangible amortization |
(6,415,676) |
(6,001,177) |
||||||
Net real property owned |
27,725,616 |
28,427,719 |
||||||
Right of use assets, net |
453,621 |
502,604 |
||||||
Real estate loans receivable, net of credit allowance |
1,097,299 |
224,871 |
||||||
Net real estate investments |
29,276,536 |
29,155,194 |
||||||
Other assets: |
||||||||
Investments in unconsolidated entities |
1,020,112 |
786,921 |
||||||
|
68,321 |
68,321 |
||||||
Cash and cash equivalents |
513,602 |
1,678,770 |
||||||
Restricted cash |
295,102 |
147,473 |
||||||
Straight-line rent receivable |
331,381 |
464,716 |
||||||
Receivables and other assets |
671,062 |
861,257 |
||||||
Total other assets |
2,899,580 |
4,007,458 |
||||||
Total assets |
$ |
32,176,116 |
$ |
33,162,652 |
||||
Liabilities and equity |
||||||||
Liabilities: |
||||||||
Unsecured credit facility and commercial paper |
$ |
— |
$ |
— |
||||
Senior unsecured notes |
11,157,732 |
11,815,972 |
||||||
Secured debt |
2,304,178 |
2,619,678 |
||||||
Lease liabilities |
409,628 |
447,424 |
||||||
Accrued expenses and other liabilities |
1,061,370 |
1,015,906 |
||||||
Total liabilities |
14,932,908 |
15,898,980 |
||||||
Redeemable noncontrolling interests |
392,379 |
327,145 |
||||||
Equity: |
||||||||
Common stock |
423,933 |
418,343 |
||||||
Capital in excess of par value |
21,161,838 |
20,836,549 |
||||||
|
(108,633) |
(93,799) |
||||||
Cumulative net income |
8,425,401 |
7,838,284 |
||||||
Cumulative dividends |
(13,854,145) |
(12,834,381) |
||||||
Accumulated other comprehensive income |
(127,948) |
(116,856) |
||||||
|
15,920,446 |
16,048,140 |
||||||
Noncontrolling interests |
930,383 |
888,387 |
||||||
Total equity |
16,850,829 |
16,936,527 |
||||||
Total liabilities and equity |
$ |
32,176,116 |
$ |
33,162,652 |
Consolidated Statements of Income (unaudited) |
||||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||
|
|
|||||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||||
Revenues: |
||||||||||||||||||
Resident fees and services |
$ |
740,891 |
$ |
769,560 |
$ |
1,464,355 |
$ |
1,619,532 |
||||||||||
Rental income |
354,723 |
396,305 |
657,566 |
786,265 |
||||||||||||||
Interest income |
38,448 |
16,069 |
58,027 |
31,310 |
||||||||||||||
Other income |
6,930 |
6,541 |
13,106 |
9,970 |
||||||||||||||
Total revenues |
1,140,992 |
1,188,475 |
2,193,054 |
2,447,077 |
||||||||||||||
Expenses: |
||||||||||||||||||
Property operating expenses |
642,657 |
660,764 |
1,259,983 |
1,342,545 |
||||||||||||||
Depreciation and amortization |
240,885 |
265,371 |
485,311 |
540,172 |
||||||||||||||
Interest expense |
122,341 |
126,357 |
245,483 |
268,364 |
||||||||||||||
General and administrative expenses |
31,436 |
34,062 |
61,362 |
69,543 |
||||||||||||||
Loss (gain) on derivatives and financial instruments, net |
(359) |
1,434 |
1,575 |
9,085 |
||||||||||||||
Loss (gain) on extinguishment of debt, net |
55,612 |
249 |
50,969 |
249 |
||||||||||||||
Provision for loan losses |
6,197 |
1,422 |
7,580 |
8,494 |
||||||||||||||
Impairment of assets |
23,692 |
75,151 |
47,260 |
102,978 |
||||||||||||||
Other expenses |
11,687 |
19,411 |
22,681 |
25,703 |
||||||||||||||
Total expenses |
1,134,148 |
1,184,221 |
2,182,204 |
2,367,133 |
||||||||||||||
Income (loss) from continuing operations before income taxes |
||||||||||||||||||
and other items |
6,844 |
4,254 |
10,850 |
79,944 |
||||||||||||||
Income tax (expense) benefit |
2,221 |
(2,233) |
(1,722) |
(7,675) |
||||||||||||||
Income (loss) from unconsolidated entities |
(7,976) |
1,332 |
5,073 |
(2,360) |
||||||||||||||
Gain (loss) on real estate dispositions, net |
44,668 |
155,863 |
103,748 |
418,687 |
||||||||||||||
Income (loss) from continuing operations |
45,757 |
159,216 |
117,949 |
488,596 |
||||||||||||||
Net income (loss) |
45,757 |
159,216 |
117,949 |
488,596 |
||||||||||||||
Less: |
Net income (loss) attributable to noncontrolling interests (1) |
19,500 |
(20,030) |
20,146 |
(934) |
|||||||||||||
Net income (loss) attributable to common stockholders |
$ |
26,257 |
$ |
179,246 |
$ |
97,803 |
$ |
489,530 |
||||||||||
Average number of common shares outstanding: |
||||||||||||||||||
Basic |
417,452 |
417,084 |
417,360 |
413,696 |
||||||||||||||
Diluted |
419,305 |
419,121 |
419,205 |
415,775 |
||||||||||||||
Net income (loss) attributable to common stockholders per share: |
||||||||||||||||||
Basic |
$ |
0.06 |
$ |
0.43 |
$ |
0.23 |
$ |
1.18 |
||||||||||
Diluted(2) |
$ |
0.06 |
$ |
0.42 |
$ |
0.23 |
$ |
1.17 |
||||||||||
Common dividends per share |
$ |
0.61 |
$ |
0.61 |
$ |
1.22 |
$ |
1.48 |
||||||||||
(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 |
Six Months Ended |
||||||||||||||||||
|
|
|||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||||||
Net income (loss) attributable to common stockholders |
$ |
26,257 |
$ |
179,246 |
$ |
97,803 |
$ |
489,530 |
||||||||||||
Depreciation and amortization |
240,885 |
265,371 |
485,311 |
540,172 |
||||||||||||||||
Impairments and losses (gains) on real estate dispositions, net |
(20,976) |
(80,712) |
(56,488) |
(315,709) |
||||||||||||||||
Noncontrolling interests(1) |
(16,591) |
(42,539) |
(29,107) |
(51,948) |
||||||||||||||||
Unconsolidated entities(2) |
19,265 |
14,231 |
38,488 |
29,676 |
||||||||||||||||
NAREIT FFO attributable to common stockholders |
248,840 |
335,597 |
536,007 |
691,721 |
||||||||||||||||
Normalizing items, net(3) |
81,407 |
25,358 |
128,152 |
88,553 |
||||||||||||||||
Normalized FFO attributable to common stockholders |
$ |
330,247 |
$ |
360,955 |
$ |
664,159 |
$ |
780,274 |
||||||||||||
Average diluted common shares outstanding |
419,305 |
419,121 |
419,205 |
415,775 |
||||||||||||||||
Per diluted share data attributable to common stockholders: |
||||||||||||||||||||
Net income (loss)(4) |
$ |
0.06 |
$ |
0.42 |
$ |
0.23 |
$ |
1.17 |
||||||||||||
NAREIT FFO |
$ |
0.59 |
$ |
0.80 |
$ |
1.28 |
$ |
1.66 |
||||||||||||
Normalized FFO |
$ |
0.79 |
$ |
0.86 |
$ |
1.58 |
$ |
1.88 |
||||||||||||
Normalized FFO Payout Ratio: |
||||||||||||||||||||
Dividends per common share |
$ |
0.61 |
$ |
0.61 |
$ |
1.22 |
$ |
1.48 |
||||||||||||
Normalized FFO attributable to common stockholders per share |
$ |
0.79 |
$ |
0.86 |
$ |
1.58 |
$ |
1.88 |
||||||||||||
Normalized FFO payout ratio |
77 |
% |
71 |
% |
77 |
% |
79 |
% |
||||||||||||
Other items:(5) |
||||||||||||||||||||
Net straight-line rent and above/below market rent amortization(6) |
$ |
(20,729) |
$ |
(25,627) |
$ |
(38,863) |
$ |
(50,557) |
||||||||||||
Non-cash interest expenses(7) |
4,714 |
2,275 |
8,349 |
5,098 |
||||||||||||||||
Recurring cap-ex, tenant improvements, and lease commissions |
(20,426) |
(17,579) |
(31,859) |
(40,195) |
||||||||||||||||
Stock-based compensation(8) |
4,129 |
6,892 |
9,510 |
13,714 |
||||||||||||||||
(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 |
Six Months Ended |
||||||||||||||||
|
|
|||||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||||
Loss (gain) on derivatives and financial instruments, net |
$ |
(359) |
(1) |
$ |
1,434 |
$ |
1,575 |
$ |
9,085 |
|||||||||
Loss (gain) on extinguishment of debt, net |
55,612 |
(2) |
249 |
50,969 |
249 |
|||||||||||||
Provision for loan losses |
6,197 |
(3) |
1,422 |
7,580 |
8,494 |
|||||||||||||
Nonrecurring income tax benefits |
(6,298) |
(4) |
— |
(6,298) |
— |
|||||||||||||
Incremental interest expense |
— |
— |
— |
5,871 |
||||||||||||||
Other impairment |
— |
1,842 |
49,241 |
34,110 |
||||||||||||||
Other expenses |
11,687 |
(5) |
19,411 |
22,681 |
25,703 |
|||||||||||||
Normalizing items attributable to noncontrolling interests and unconsolidated entities, net |
14,568 |
(6) |
1,000 |
2,404 |
5,041 |
|||||||||||||
Net normalizing items |
$ |
81,407 |
$ |
25,358 |
$ |
128,152 |
$ |
88,553 |
||||||||||
Average diluted common shares outstanding |
419,305 |
419,121 |
419,205 |
415,775 |
||||||||||||||
Net normalizing items per diluted share |
$ |
0.19 |
$ |
0.06 |
$ |
0.31 |
$ |
0.21 |
||||||||||
(1) Primarily related to mark-to-market of Genesis Healthcare stock holdings. |
||||||||||||||||||
(2) Primarily related to the April extinguishment of |
||||||||||||||||||
(3) Primarily related to reserves for loan losses under the current expected credit losses accounting standard. |
||||||||||||||||||
(4) Primarily related to revaluation of deferred taxes due a change in the |
||||||||||||||||||
(5) Primarily related to non-capitalizable transaction costs. |
||||||||||||||||||
(6) Primarily related to noncontrolling interests' share of the reserve for straight-line rent receivable balances related to leases placed on cash recognition. |
Outlook Reconciliations: Quarter Ending |
Exhibit 3 |
||||||||||
(in millions, except per share data) |
Current Outlook |
||||||||||
Low |
High |
||||||||||
FFO Reconciliation: |
|||||||||||
Net income attributable to common stockholders |
$ |
191 |
$ |
212 |
|||||||
Impairments and losses (gains) on real estate dispositions, net(1,2) |
(120) |
(120) |
|||||||||
Depreciation and amortization(1) |
267 |
267 |
|||||||||
NAREIT FFO and Normalized FFO attributable to common stockholders |
338 |
359 |
|||||||||
Diluted per share data attributable to common stockholders: |
|||||||||||
Net income |
$ |
0.44 |
$ |
0.49 |
|||||||
NAREIT FFO and Normalized FFO |
$ |
0.78 |
$ |
0.83 |
|||||||
Other items:(1) |
|||||||||||
Net straight-line rent and above/below market rent amortization |
$ |
(20) |
$ |
(20) |
|||||||
Non-cash interest expenses |
5 |
5 |
|||||||||
Recurring cap-ex, tenant improvements, and lease commissions |
(30) |
(30) |
|||||||||
Stock-based compensation |
5 |
5 |
|||||||||
(1) Amounts presented net of noncontrolling interests' share and |
|||||||||||
(2) Includes estimated gains on expected dispositions. |
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SOURCE
Tim McHugh (419) 247-2800