Welltower Announces Upsized Pricing of $900 Million of Exchangeable Senior Notes
Welltower announced the pricing and upsizing of its offering of $900 million in 3.125% exchangeable senior notes due 2029. The offering was upsized from the previously announced amount and will close on July 11, 2024, subject to conditions. The notes, to be sold to institutional buyers, will accrue interest at 3.125% annually and mature on July 15, 2029, unless exchanged or redeemed earlier. Welltower OP has also granted initial purchasers an option to buy an additional $135 million in notes. Proceeds estimated at $882.3 million will be used for corporate purposes, including debt repayment and investments in healthcare properties. Notes will be exchangeable for cash or Welltower common stock and may be redeemed under specific conditions. The exchange rate is initially set at 7.8177 shares per $1,000 principal, with a 22.5% premium on the share price of $104.42 as of July 8, 2024.
- Successful upsizing of the offering to $900 million from the previously announced amount.
- Estimated net proceeds of $882.3 million, with potential to increase to $1,015.0 million if additional notes are purchased.
- Proceeds to be used for corporate purposes such as debt repayment and investments in healthcare properties.
- The notes are not registered under the Securities Act or state laws, limiting their marketability.
Insights
Welltower's upsized offering of $900 million in exchangeable senior notes is a significant event that warrants a deeper look at its financial implications. These notes come with a 3.125% annual interest rate, payable semi-annually and are due in 2029. The offering's upsize and pricing suggest strong investor demand, which is a positive indicator of market sentiment towards Welltower.
This move will bring in approximately
From a financial perspective, this issuance helps Welltower extend its debt maturity profile while locking in relatively low-interest rates, which is beneficial given the current interest rate environment. Exchangeable notes also offer flexibility for investors, with provisions to convert into common stock under certain conditions, providing a cushion if the company's stock price performs well.
Rating: 1.This strategic move by Welltower to price and upsize its offering of $900 million exchangeable senior notes can be seen as a vote of confidence by institutional investors. The notes allow for conversion into common stock at a premium of
The health care and senior housing sectors are poised for growth due to demographic trends such as an aging population. Welltower's intent to use the proceeds for investing in these sectors underscores its commitment to expanding its portfolio and capitalizing on these trends. This positions the company well in both the short-term and long-term, as it can leverage these funds for strategic acquisitions and developments, thereby potentially increasing its revenue streams.
However, the success of this plan hinges on Welltower's ability to effectively deploy the capital into high-yielding investments and manage its existing debt load. Failure to do so could adversely impact its financial health and investor sentiment.
Rating: 1.The legal structuring of Welltower's exchangeable senior notes involves several important considerations. These notes are being offered under Rule 144A, targeting qualified institutional buyers, which means they are not registered under the Securities Act and therefore are not available for general retail investors. This reduces administrative burdens and speeds up the capital-raising process while still providing robust protections for institutional investors.
Moreover, the option for noteholders to convert their notes into common stock under specific conditions provides an additional layer of security and potential upside, aligning the interests of the noteholders with the future performance of Welltower's stock. The indenture governing these notes includes provisions for repurchase in the event of a fundamental change, adding another protective layer for investors.
However, it's important to note that these instruments also carry specific risks, as they are unsecured obligations of Welltower OP, meaning they rank behind any secured debt in the event of liquidation. Investors need to be aware of these risks when considering the overall risk profile of their investment in these notes.
Rating: 1.
The notes will be Welltower OP's senior unsecured obligations and will accrue interest payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025, at a rate of
Prior to the close of business on the business day immediately preceding January 15, 2029, the notes will be exchangeable at the option of holders only upon certain circumstances and during certain periods. On or after January 15, 2029, the notes will be exchangeable at the option of the holders at any time prior to the close of business on the scheduled trading day immediately preceding the Maturity Date. Welltower OP will settle exchanges of notes by delivering cash up to the principal amount of the notes exchanged and, in respect of the remainder of the exchange value, if any, in excess thereof, cash or shares of common stock, par value
If a fundamental change (as defined in the indenture that will govern the convertible notes), subject to certain conditions, holders of the notes may require Welltower OP to repurchase for cash all or any portion of their notes at a repurchase price equal to
Welltower OP may redeem the notes, at its option, in whole or in part, on any business day on or after July 20, 2027, if the last reported sale price of the Common Stock has been at least
Welltower OP estimates that the net proceeds from the offering will be approximately
Neither the notes nor the shares of Common Stock issuable upon exchange of the notes have been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in
This press release does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any offer or sale of, the notes in any jurisdiction in which the offer, solicitation or sale of the notes would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction.
Forward-Looking Statement
This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as "may," "will," "intend," "believe," "expect," "project," "estimate" or similar expressions that do not relate solely to historical matters, Welltower is making forward-looking statements. Forward-looking statements, including statements related to the Offering, are not guarantees of future performance and involve risks and uncertainties that may cause Welltower's actual results to differ materially from Welltower's expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to, Welltower's ability to complete the Offering and those factors discussed in Welltower's reports filed from time to time with the Securities and Exchange Commission. Welltower undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.
About Welltower
Welltower Inc. (NYSE:WELL), a real estate investment trust ("REIT") and S&P 500 company headquartered in
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SOURCE Welltower Inc.
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