Welltower Reports Second Quarter 2021 Results
Welltower Inc. (NYSE: WELL) reported a net income of $0.06 per diluted share for Q2 2021, with normalized FFO at $0.79. The company achieved a 190 bps increase in occupancy rates within its Seniors Housing Operating portfolio, surpassing expectations. Welltower completed $1.5 billion in investments, including the acquisition of an 86-property portfolio for $1.58 billion. A new $4.7 billion credit facility was secured, improving pricing terms. The Board declared a cash dividend of $0.61 per share, marking the 201st consecutive quarterly dividend.
- Seniors Housing Operating portfolio occupancy increased by approximately 190 bps, surpassing guidance.
- Acquisition of 86-property portfolio from Holiday Retirement is expected to be immediately accretive to normalized FFO per share.
- $1.5 billion of pro rata gross investments completed, underscoring growth potential.
- Secured a new $4.7 billion unsecured credit facility with improved pricing terms.
- Declared a cash dividend of $0.61 per share, maintaining a consistent dividend payout.
- The ongoing COVID-19 pandemic creates uncertainty regarding future operational impacts and recovery timelines.
- Q2 earnings guidance does not include any expected Provider Relief Funds for Q3.
TOLEDO, Ohio, July 29, 2021 /PRNewswire/ -- Welltower Inc. (NYSE:WELL) today announced results for the quarter ended June 30, 2021.
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 of2.050% senior unsecured notes due January 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:
March 2021 | April 2021 | May 2021 | June 2021 | |||||||||
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 December 31, 2020, | ||||||||||||
(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 July 23, 2021, SHO portfolio occupancy has increased approximately 40 bps. Occupancy continued to strengthen in the U.S. and U.K. with gains of approximately 60 bps and 30 bps, respectively, while occupancy in Canada remained flat over the same period.
In 2020, applications were made for amounts under Phase 2 and Phase 3 of the Provider Relief Fund related to our SHO portfolio. During the second quarter, we received pro rata Provider Relief Funds of approximately
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 U.K. and Canada, totaled a benefit of approximately
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 June 30, 2021, we have
On June 28, 2021 we completed the issuance of
Dividend On July 29, 2021, the Board of Directors declared a cash dividend for the quarter ended June 30, 2021 of
Quarterly Investment and Disposition Activity In the second quarter, we completed
Notable Investment Activity Completed or Announced During the Quarter
Safanad/HC-One Loan Funding and Equity Investment As previously announced, we provided
Additionally, we will have the ability to participate in the anticipated recovery in the U.K. seniors housing sector through both warrants and an equity investment. The transaction is expected to generate a low-to-mid teens unlevered IRR.
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 Illinois-based Pathway to Living, an established operator of seniors housing communities, and acquired 22 properties in Illinois and Ohio for a pro rata investment amount of
Oakmont Senior Living During the quarter, we expanded our relationship with Oakmont Senior Living through the acquisition of Ivy Living at Otay Ranch, a combination assisted living and memory care community in San Diego, California for a pro rata purchase price of
Norman Regional Health System During the quarter, we expanded our relationship with Bremner Real Estate and began construction on the first building in a multi-phased expansion of the Norman Regional Health System. The total development cost for phase one of the multi-phased expansion is expected to be in excess of
ProMedica Joint Venture Disposition As previously announced, the Welltower and ProMedica joint venture intends to divest a 25 property portfolio of non-strategic skilled nursing facilities for
Long-Term/Post-Acute Medical Disposition During the quarter, we completed the disposition of three properties for
Holiday Retirement On June 21, 2021, we announced that we entered into a definitive agreement to acquire a portfolio of 86 seniors housing properties currently owned by Holiday Retirement for
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 Welltower's operating relationship with Genesis Healthcare. The status of these transactions is as follows:
- 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 Aspect Health and simultaneously acquired six medical office buildings in infill markets across the New York City metropolitan area for a pro rata investment amount of
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 September 30, 2021 and expect to report net income attributable to common stockholders in a range of
- 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 on June 30, 2021. - Dispositions: We expect pro rata disposition proceeds of
$1.5 billion at a blended yield of8.1% in 2021. This includes approximately$758 million in proceeds from dispositions and loan payoffs completed through June 30, 2021 and$735 million of incremental expected proceeds related to properties classified as held-for-sale as of June 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 Friday, July 30, 2021 at 9:00 a.m. Eastern Time to discuss our second quarter 2021 results, industry trends and portfolio performance. Telephone access will be available by dialing (844) 467-7115 or (409) 983-9837 (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 August 13, 2021. To access the rebroadcast, dial (855) 859-2056 or (404) 537-3406 (international). The conference ID number is 5191208. 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, NOI, SSNOI, REVPOR and SS REVPOR to be useful supplemental measures of our operating performance. 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.
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
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 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 June 30, 2021, 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 Welltower uses 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, Welltower is making forward-looking statements. Forward-looking statements 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: the duration and scope of the COVID-19 pandemic; the impact of the COVID-19 pandemic on occupancy rates and on the operations of Welltower and its operators/tenants; actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting Welltower's properties and the operations of Welltower and its operators/tenants; uncertainty regarding the implementation and impact of the CARES Act and future stimulus or other COVID-19 relief legislation; the effects of health and safety measures adopted by Welltower and its operators/tenants related to the COVID-19 pandemic; increased operational costs as a result of health and safety measures related to COVID-19; the impact of the COVID-19 pandemic on the business and financial condition of operators/tenants and their ability to make payments to Welltower; disruptions to Welltower's property acquisition and disposition activity due to economic uncertainty caused by COVID-19; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; 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; Welltower's 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 Welltower's properties; Welltower's ability to re-lease space at similar rates as vacancies occur; Welltower's 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 Welltower's properties; changes in rules or practices governing Welltower's financial reporting; the movement of U.S. and foreign currency exchange rates; Welltower's ability to maintain Welltower's qualification as a REIT; key management personnel recruitment and retention; and other risks described in Welltower's reports filed from time to time with the SEC. Finally, 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.
Welltower Inc.
Financial Exhibits
Consolidated Balance Sheets (unaudited) | ||||||||
(in thousands) | ||||||||
June 30, | ||||||||
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 | ||||||
Goodwill | 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 | ||||||
Treasury stock | (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) | ||||||
Total Welltower Inc. stockholders' equity | 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 | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
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 | ||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||
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 Welltower's share of unconsolidated entities. | ||||||||||||||||||||
(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 | ||||||||||||||||
June 30, | June 30, | |||||||||||||||||
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 U.K. tax rate and an adjustment to a deferred tax liability due to the recognition of an impairment charge. | ||||||||||||||||||
(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 September 30, 2021 | 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 Welltower's share of unconsolidated entities. | |||||||||||
(2) Includes estimated gains on expected dispositions. | |||||||||||
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SOURCE Welltower Inc.
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