Recent Highlights
- Reported net income attributable to common stockholders of
$0.05 per diluted share - Reported normalized funds from operations ("FFO") attributable to common stockholders of
$0.85 per diluted share - Reported total portfolio year-over-year same store NOI ("SSNOI") growth of 11.0%, driven by SSNOI growth in our Seniors Housing Operating ("SHO") portfolio of 23.4%
- SHO portfolio year-over-year same store ("SS") revenue increased 10.0% in the first quarter, driven by 240 basis points ("bps") of year-over-year average occupancy growth and
Revenue Per Occupied Room ("RevPOR") growth of 6.8% - SHO portfolio year-over-year SSNOI margin expanded by 240 bps driven primarily by strong RevPOR growth which continued to meaningfully outpace Expense per
Occupied Room ("ExpPOR") growth - Completed approximately
$785 million of pro rata gross investments during the first quarter - As of
March 31, 2023 , we had approximately$4.6 billion of available liquidity inclusive of$0.6 billion of available cash and restricted cash and full capacity under$4.0 billion line of credit - Announced the appointment of
Jerry Davis , a former multifamily executive with 33 years of industry experience, as a Strategic Advisor - Revised full year 2023 net income attributable to common stockholders outlook to a range of
$0.57 to$0.72 per diluted share as compared to previous guidance of$0.57 to$0.75 per diluted share. Normalized FFO attributable to common stockholders guidance has been revised to a range of$3.39 to$3.54 per diluted share as compared to previous guidance of$3.35 to$3.53 per diluted share - In recognition of our leading environmental efforts, earned the 2023 ENERGY STAR® Partner of the Year Award for the fifth consecutive year and received recognition at the level of Sustained Excellence, the
Environmental Protection Agency's (EPA's ) highest honor in the ENERGY STAR program, for the third consecutive year
Capital Activity and Liquidity During the quarter, net debt to consolidated enterprise value improved to 28.2% at
Notable Investment Activity Completed During the Quarter
In the first quarter, we completed
Outpatient Medical Acquisitions During the quarter, we acquired 29 medical office buildings totaling 1.3 million rentable square feet across multiple transactions for
Integra Healthcare Properties Transition As part of the previously announced transition and sale of 147 skilled nursing facilities operated by
Other Transactions Additionally during the first quarter, we acquired two seniors housing communities for
Notable Investment Activity Subsequent to Quarter End
Genesis HealthCare As disclosed on
Dividend On
Outlook for 2023 Net income attributable to common stockholders guidance has been revised to a range of
- Same Store NOI: We continue to expect average blended SSNOI growth of 9% to 13%, which is comprised of the following components:
- Seniors Housing Operating approximately 17% to 24%
- Seniors Housing Triple-net approximately 1% to 3%
- Outpatient Medical approximately 2% to 3%
- Long-Term/Post-Acute Care approximately 3% to 4%
- 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.
- Impact of Interest Rates and Foreign Exchange Rates: Increased interest rates on floating rate debt and a strengthening
U.S. Dollar relative to the British Pound and Canadian Dollar are expected to reduce 2023 normalized FFO attributable to common stockholders by approximately$0.19 per diluted share versus 2022. - General and Administrative Expenses: We anticipate general and administrative expenses to be approximately
$166 million to$174 million and stock-based compensation expense to be approximately$31 million . - Development: We anticipate funding an additional
$649 million of development in 2023 relating to projects underway onMarch 31, 2023 . - Dispositions: We expect pro rata disposition proceeds of
$393 million at a blended yield of 5.7% in the next twelve months. This includes approximately$382 million from expected property sales and$10 million of expected proceeds from loan repayments. - Provider Relief Funds: Our initial 2023 earnings guidance did not include the recognition of any Provider Relief Funds or other government grants. During the quarter ended
March 31, 2023 , we recognized approximately$2 million at our share relating to Provider Relief Funds and similar programs in theUnited Kingdom andCanada . Our updated guidance does not include any additional funds in 2023. During the full year 2022, we recognized approximately$35 million at our share relating to these programs.
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 2023 outlook and assumptions on the first quarter 2023 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
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 general overhead costs that are unrelated to property operations and unallocable to the properties, or transaction costs. These expenses include, but are not limited to, payroll and benefits related to corporate employees, professional services, office expenses and depreciation of corporate fixed assets. SSNOI is used to evaluate the operating performance of our properties using a consistent population which controls for changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Acquisitions and development conversions are included in the same store amounts five full quarters after acquisition or being placed into service. Land parcels, loans and sub-leases, as well as any properties sold or classified as held for sale during the period, are excluded from the same store amounts. Redeveloped properties (including major refurbishments of a Seniors Housing Operating property where 20% or more of units are simultaneously taken out of commission for 30 days or more or Outpatient Medical properties undergoing a change in intended use) are excluded from the same store amounts until five full quarters post completion of the redevelopment. Properties undergoing operator transitions and/or segment transitions are also excluded from the same store amounts until five full quarters post completion of the operator transition or segment transition. In addition, properties significantly impacted by force majeure, acts of God or other extraordinary adverse events are excluded from same store amounts until five full quarters after the properties are placed back into service. SSNOI excludes non-cash NOI and includes adjustments to present consistent property ownership percentages and to translate Canadian properties and
RevPOR represents the average revenues generated per occupied room per month and ExpPOR represents the average expenses per occupied room per month at our Seniors Housing Operating properties. These metrics are calculated as our pro rata version of total resident fees and services revenues or property operating expenses from the income statement, divided by average monthly occupied room days. SS RevPOR and SS ExpPOR are used to evaluate the RevPOR and ExpPOR performance of our properties under a consistent population, which eliminates changes in the composition of our portfolio. They are based on the same pool of properties used for SSNOI and includes any revenue or expense normalizations used for SSNOI. We use RevPOR, ExpPOR, SS RevPOR and SS ExpPOR 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.
We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios which include net debt to consolidated enterprise value, indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and restricted cash. We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. Net debt is defined as total long-term debt, excluding operating lease liabilities, less cash and cash equivalents and restricted cash. Consolidated enterprise value represents the sum of net debt, the fair market value of our common stock and noncontrolling interests.
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and ratings agencies in the valuation, comparison, rating and investment recommendations of companies. Our management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with
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) |
||||
|
||||
2023 |
2022 |
|||
Assets |
||||
Real estate investments: |
||||
Land and land improvements |
$ 4,324,541 |
$ 4,030,150 |
||
Buildings and improvements |
34,161,466 |
31,724,328 |
||
Acquired lease intangibles |
1,990,830 |
1,844,780 |
||
Real property held for sale, net of accumulated depreciation |
215,583 |
199,490 |
||
Construction in progress |
1,121,446 |
717,657 |
||
Less accumulated depreciation and intangible amortization |
(8,417,151) |
(7,215,622) |
||
Net real property owned |
33,396,715 |
31,300,783 |
||
Right of use assets, net |
322,896 |
404,689 |
||
Real estate loans receivable, net of credit allowance |
954,156 |
1,003,136 |
||
Net real estate investments |
34,673,767 |
32,708,608 |
||
Other assets: |
||||
Investments in unconsolidated entities |
1,596,413 |
1,138,526 |
||
|
68,321 |
68,321 |
||
Cash and cash equivalents |
571,902 |
301,089 |
||
Restricted cash |
66,894 |
65,954 |
||
Straight-line rent receivable |
357,359 |
385,639 |
||
Receivables and other assets |
1,159,233 |
804,316 |
||
Total other assets |
3,820,122 |
2,763,845 |
||
Total assets |
$ 38,493,889 |
$ 35,472,453 |
||
Liabilities and equity |
||||
Liabilities: |
||||
Unsecured credit facility and commercial paper |
$ — |
$ 299,968 |
||
Senior unsecured notes |
12,486,229 |
12,136,760 |
||
Secured debt |
2,474,837 |
2,104,945 |
||
Lease liabilities |
415,169 |
548,999 |
||
Accrued expenses and other liabilities |
1,521,499 |
1,203,755 |
||
Total liabilities |
16,897,734 |
16,294,427 |
||
Redeemable noncontrolling interests |
392,195 |
445,960 |
||
Equity: |
||||
Common stock |
497,928 |
455,376 |
||
Capital in excess of par value |
27,160,014 |
23,620,112 |
||
|
(112,925) |
(112,518) |
||
Cumulative net income |
8,830,623 |
8,725,661 |
||
Cumulative dividends |
(15,815,926) |
(14,654,583) |
||
Accumulated other comprehensive income |
(111,559) |
(138,472) |
||
|
20,448,155 |
17,895,576 |
||
Noncontrolling interests |
755,805 |
836,490 |
||
Total equity |
21,203,960 |
18,732,066 |
||
Total liabilities and equity |
$ 38,493,889 |
$ 35,472,453 |
Consolidated Statements of Income (unaudited) |
||||||
(in thousands, except per share data) |
||||||
Three Months Ended |
||||||
|
||||||
2023 |
2022 |
|||||
Revenues: |
||||||
Resident fees and services |
$ 1,131,685 |
$ 994,335 |
||||
Rental income |
384,059 |
356,390 |
||||
Interest income |
36,405 |
38,994 |
||||
Other income |
8,580 |
5,985 |
||||
Total revenues |
1,560,729 |
1,395,704 |
||||
Expenses: |
||||||
Property operating expenses |
957,753 |
853,669 |
||||
Depreciation and amortization |
339,112 |
304,088 |
||||
Interest expense |
144,403 |
121,696 |
||||
General and administrative expenses |
44,371 |
37,706 |
||||
Loss (gain) on derivatives and financial instruments, net |
930 |
2,578 |
||||
Loss (gain) on extinguishment of debt, net |
5 |
(12) |
||||
Provision for loan losses, net |
777 |
(804) |
||||
Impairment of assets |
12,629 |
— |
||||
Other expenses |
22,745 |
26,069 |
||||
Total expenses |
1,522,725 |
1,344,990 |
||||
Income (loss) from continuing operations before income taxes |
||||||
and other items |
38,004 |
50,714 |
||||
Income tax (expense) benefit |
(3,045) |
(5,013) |
||||
Income (loss) from unconsolidated entities |
(7,071) |
(2,884) |
||||
Gain (loss) on real estate dispositions, net |
747 |
22,934 |
||||
Income (loss) from continuing operations |
28,635 |
65,751 |
||||
Net income (loss) |
28,635 |
65,751 |
||||
Less: |
Net income (loss) attributable to noncontrolling interests (1) |
2,962 |
3,826 |
|||
Net income (loss) attributable to common stockholders |
$ 25,673 |
$ 61,925 |
||||
Average number of common shares outstanding: |
||||||
Basic |
492,061 |
447,379 |
||||
Diluted |
494,494 |
449,802 |
||||
Net income (loss) attributable to common stockholders per share: |
||||||
Basic |
$ 0.05 |
$ 0.14 |
||||
Diluted(2) |
$ 0.05 |
$ 0.14 |
||||
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 Units and DownREIT Units. |
FFO Reconciliations |
Exhibit 1 |
|||||||
(in thousands, except per share data) |
Three Months Ended |
|||||||
|
||||||||
2023 |
2022 |
|||||||
Net income (loss) attributable to common stockholders |
$ 25,673 |
$ 61,925 |
||||||
Depreciation and amortization |
339,112 |
304,088 |
||||||
Impairments and losses (gains) on real estate dispositions, net |
11,882 |
(22,934) |
||||||
Noncontrolling interests(1) |
(13,327) |
(14,753) |
||||||
Unconsolidated entities(2) |
22,722 |
19,309 |
||||||
NAREIT FFO attributable to common stockholders |
386,062 |
347,635 |
||||||
Normalizing items, net(3) |
33,471 |
20,647 |
||||||
Normalized FFO attributable to common stockholders |
$ 419,533 |
$ 368,282 |
||||||
Average diluted common shares outstanding |
494,494 |
449,802 |
||||||
Per diluted share data attributable to common stockholders: |
||||||||
Net income (loss)(4) |
$ 0.05 |
$ 0.14 |
||||||
NAREIT FFO |
$ 0.78 |
$ 0.77 |
||||||
Normalized FFO |
$ 0.85 |
$ 0.82 |
||||||
Normalized FFO Payout Ratio: |
||||||||
Dividends per common share |
$ 0.61 |
$ 0.61 |
||||||
Normalized FFO attributable to common stockholders per share |
$ 0.85 |
$ 0.82 |
||||||
Normalized FFO payout ratio |
72 % |
74 % |
||||||
Other items:(5) |
||||||||
Net straight-line rent and above/below market rent amortization |
$ (33,384) |
$ (20,014) |
||||||
Non-cash interest expenses(6) |
5,878 |
4,721 |
||||||
Recurring cap-ex, tenant improvements, and lease commissions |
(36,913) |
(32,466) |
||||||
Stock-based compensation |
9,124 |
7,445 |
||||||
(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 foreign currency loss (gain) (see Exhibit 2). |
||||||||
Normalizing Items |
Exhibit 2 |
||||
(in thousands, except per share data) |
Three Months Ended |
||||
|
|||||
2023 |
2022 |
||||
Loss (gain) on derivatives and financial instruments, net |
$ 930 |
(1) |
$ 2,578 |
||
Loss (gain) on extinguishment of debt, net |
5 |
(2) |
(12) |
||
Provision for loan losses, net |
777 |
(3) |
(804) |
||
Income tax benefits |
(246) |
(4) |
— |
||
Other expenses |
22,745 |
(5) |
26,069 |
||
Lease termination and leasehold interest adjustment |
— |
(8,457) |
|||
Casualty losses, net of recoveries |
4,487 |
(6) |
13 |
||
Foreign currency loss (gain) |
(227) |
(7) |
— |
||
Normalizing items attributable to noncontrolling interests and unconsolidated entities, net |
5,000 |
(8) |
1,260 |
||
Net normalizing items |
$ 33,471 |
$ 20,647 |
|||
Average diluted common shares outstanding |
494,494 |
449,802 |
|||
Net normalizing items per diluted share |
$ 0.07 |
$ 0.05 |
|||
(1) Primarily related to mark-to-market of the equity warrants received as part of the Safanad/ |
|||||
(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 the release of valuation allowances. |
|||||
(5) Primarily related to non-capitalizable transaction costs and an accrual for non-capitalizable promotes. |
|||||
(6) Primarily relates to casualty losses net of any insurance recoveries. |
|||||
(7) Primarily relates to foreign currency gains and losses related to accrued interest on intercompany loans and third party debt denominated in a |
|||||
(8) Primarily related to hypothetical liquidation at book value adjustments related to in substance real estate investments. |
Outlook Reconciliation: Year Ending |
Exhibit 3 |
|||||||||
(in millions, except per share data) |
Prior Outlook |
Current Outlook |
||||||||
Low |
High |
Low |
High |
|||||||
FFO Reconciliation: |
||||||||||
Net income attributable to common stockholders |
$ 280 |
$ 369 |
$ 283 |
$ 358 |
||||||
Impairments and losses (gains) on real estate dispositions, net(1,2) |
(30) |
(30) |
(19) |
(19) |
||||||
Depreciation and amortization(1) |
1,402 |
1,402 |
1,391 |
1,391 |
||||||
NAREIT FFO attributable to common stockholders |
1,652 |
1,741 |
1,655 |
1,730 |
||||||
Normalizing items, net(1,3) |
— |
— |
33 |
33 |
||||||
Normalized FFO attributable to common stockholders |
$ 1,652 |
$ 1,741 |
$ 1,688 |
$ 1,763 |
||||||
Diluted per share data attributable to common stockholders: |
||||||||||
Net income |
$ 0.57 |
$ 0.75 |
$ 0.57 |
$ 0.72 |
||||||
NAREIT FFO |
$ 3.35 |
$ 3.53 |
$ 3.32 |
$ 3.47 |
||||||
Normalized FFO |
$ 3.35 |
$ 3.53 |
$ 3.39 |
$ 3.54 |
||||||
Other items:(1) |
||||||||||
Net straight-line rent and above/below market rent amortization |
$ (126) |
$ (126) |
$ (126) |
$ (126) |
||||||
Non-cash interest expenses |
23 |
23 |
24 |
24 |
||||||
Recurring cap-ex, tenant improvements, and lease commissions |
(172) |
(172) |
(174) |
(174) |
||||||
Stock-based compensation |
30 |
30 |
33 |
33 |
||||||
(1) Amounts presented net of noncontrolling interests' share and |
||||||||||
(2) Includes estimated gains on projected dispositions. |
||||||||||
(3) See Exhibit 2. |
SSNOI Reconciliation |
Exhibit 4 |
|||||||
(in thousands) |
Three Months Ended |
|||||||
|
||||||||
2023 |
2022 |
% growth |
||||||
Net income (loss) |
$ 28,635 |
$ 65,751 |
||||||
Loss (gain) on real estate dispositions, net |
(747) |
(22,934) |
||||||
Loss (income) from unconsolidated entities |
7,071 |
2,884 |
||||||
Income tax expense (benefit) |
3,045 |
5,013 |
||||||
Other expenses |
22,745 |
26,069 |
||||||
Impairment of assets |
12,629 |
— |
||||||
Provision for loan losses, net |
777 |
(804) |
||||||
Loss (gain) on extinguishment of debt, net |
5 |
(12) |
||||||
Loss (gain) on derivatives and financial instruments, net |
930 |
2,578 |
||||||
General and administrative expenses |
44,371 |
37,706 |
||||||
Depreciation and amortization |
339,112 |
304,088 |
||||||
Interest expense |
144,403 |
121,696 |
||||||
Consolidated NOI |
602,976 |
542,035 |
||||||
NOI attributable to unconsolidated investments(1) |
26,354 |
20,142 |
||||||
NOI attributable to noncontrolling interests(2) |
(25,057) |
(34,999) |
||||||
Pro rata NOI |
604,273 |
527,178 |
||||||
Non-cash NOI attributable to same store properties |
(19,694) |
(13,669) |
||||||
NOI attributable to non-same store properties |
(144,558) |
(106,506) |
||||||
Currency and ownership adjustments(3) |
(576) |
(4,787) |
||||||
Normalizing adjustments, net(4) |
4,558 |
(2,123) |
||||||
Same Store NOI (SSNOI) |
$ 444,003 |
$ 400,093 |
11.0 % |
|||||
Seniors Housing Operating |
216,304 |
175,325 |
23.4 % |
|||||
Seniors Housing Triple-net |
94,408 |
94,203 |
0.2 % |
|||||
Outpatient Medical |
109,983 |
108,201 |
1.6 % |
|||||
Long-Term/Post-Acute Care |
23,308 |
22,364 |
4.2 % |
|||||
Total SSNOI |
$ 444,003 |
$ 400,093 |
11.0 % |
|||||
(1) Represents Welltower's interests in joint ventures where |
||||||||
(2) Represents minority partners' interests in joint ventures where |
||||||||
(3) Includes adjustments to reflect consistent property ownership percentages and foreign currency exchange rates for properties in the |
||||||||
(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 |
|||||
|
||||||
2023 |
2022 |
|||||
Consolidated SHO revenues |
$ 1,136,681 |
$ 996,612 |
||||
Unconsolidated SHO revenues attributable to WELL(1) |
59,580 |
49,108 |
||||
SHO revenues attributable to noncontrolling interests(2) |
(52,517) |
(75,741) |
||||
SHO pro rata revenues(3) |
1,143,744 |
969,979 |
||||
Non-cash and non-RevPOR revenues on same store properties |
(2,348) |
(2,439) |
||||
Revenues attributable to non-same store properties |
(173,762) |
(87,730) |
||||
Currency and ownership adjustments(4) |
(2,411) |
(1,877) |
||||
SHO SS revenues(5) |
$ 965,223 |
$ 877,933 |
||||
Average occupied units/month(6) |
59,221 |
57,508 |
||||
SHO SS RevPOR(7) |
$ 5,508 |
$ 5,159 |
||||
SS RevPOR YOY growth |
6.8 % |
|||||
(1) Represents Welltower's interests in joint ventures where |
||||||
(2) Represents minority partners' interests in joint ventures where |
||||||
(3) Represents SHO revenues at |
||||||
(4) Includes where appropriate adjustments to reflect consistent property ownership percentages, to translate Canadian properties at a |
||||||
(5) Represents SS SHO RevPOR revenues at |
||||||
(6) Represents average occupied units for SS properties on a pro rata basis. |
||||||
(7) Represents pro rata SS average revenues generated per occupied room per month. |
Net Debt to Consolidated Enterprise Value |
Exhibit 6 |
|||||
(in thousands, except share price) |
Three Months Ended |
|||||
|
|
|||||
Common shares outstanding |
496,295 |
490,509 |
||||
Period end share price |
$ 71.69 |
$ 65.55 |
||||
Common equity market capitalization |
$ 35,579,389 |
$ 32,152,865 |
||||
Total debt(1) |
$ 15,074,320 |
$ 14,661,552 |
||||
Cash and cash equivalents and restricted cash |
(638,796) |
(722,292) |
||||
Net debt |
$ 14,435,524 |
$ 13,939,260 |
||||
Noncontrolling interests(2) |
1,148,000 |
1,099,182 |
||||
Consolidated enterprise value |
$ 51,162,913 |
$ 47,191,307 |
||||
Net debt to consolidated enterprise value |
28.2 % |
29.5 % |
||||
(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to finance leases, as reflected on our consolidated |
||||||
(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our consolidated |
||||||
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SOURCE
Tim McHugh (419) 247-2800