Welltower Inc. · NYSE:WELL
Welltower — Mizuho REIT Conference 2024
43 slides from Welltower's conference presentation, Oct 1, 2024
Slide 1: Mizuho REIT Conference
Mizuho REIT Conference October 1, 2024
Slide 2: Forward Looking Statements and Risk Factors
Forward Looking Statements and Risk Factors This document 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,” “estimat
Slide 3: Seniors Housing NNN Portfolio Update
Seniors Housing NNN Portfolio Update 3
Slide 4: Seniors Housing Triple-Net Portfolio Update
Seniors Housing Triple-Net Portfolio Update Reducing Seniors Housing NNN exposure while crystallizing attractive return for shareholders and bolstering long-term growth prospects Sagora NNN to RIDEA conversion • In addition to the 47 conversions of triple-net leased properties to Seniors Housing Ope
Slide 5: Business Update as of July 29, 2024
Business Update as of July 29, 2024 5
Slide 6: Recent Highlights
Recent Highlights(1) Per previous business update issued July 29, 2024 Bottom-line results continue to exceed expectations; midpoint of full-year normalized FFO per diluted share guidance raised by 6¢ 17% • • Reported 17% year-over-year growth in normalized FFO per diluted share, or over 19% growth
Slide 7: Recent Highlights Continued
Recent Highlights Continued(1) Per previous business update issued July 29, 2024 Investment activity continues at torrid pace • $2.1 billion of transactions closed or under contract since 1Q2024 earnings release on April 29, 2024, inclusive of $1.0 billion previously announced on June 3, 2024 and an
Slide 8: 2024 Guidance Outlook
2024 Guidance Outlook Per previous business update issued July 29, 2024 Greater-than-expected SHO portfolio outperformance & investment activity driving 6¢ increase to normalized FFO per diluted share guidance midpoint Revised FY2024 Same Store NOI Guidance Seniors Housing Operating Portfolio - Outl
Slide 9: Proprietary Long-Term Operator Partnerships Widen The Welltower Moat
Proprietary Long-Term Operator Partnerships Widen The Welltower Moat Per previous business update issued July 29, 2024 Seniors housing is NOT a commodity business – exclusive operator relationships & alignment creating sustained alpha for Welltower Misaligned incentives due to revenue- based managem
Slide 10: Welltower's Unique Value Creation Flywheel
Welltower’s Unique Value Creation Flywheel Per previous business update issued July 29, 2024 Established Competitive Advantages Driving Sustainable Shareholder Value Creation Welltower Value-Add and Moat Internal Growth • Long-term demographic tailwinds and significant decline in new Best-in-class:
Slide 11: Societal & Technological Trends | Impact on Real Estate Sectors
Societal & Technological Trends | Impact on Real Estate Sectors Per previous business update issued July 29, 2024 Precedent for Extended Period of Compounding Cash Flow Growth Driven by Shifting Secular Tailwinds THEME REAL ESTATE SECTOR IMPACT E-Commerce Industrial / Logistics Themes of the Life Sc
Slide 12: Capital Markets Backdrop | Unprecedented Capital Deployment Opportunity
Capital Markets Backdrop | Unprecedented Capital Deployment Opportunity Per previous business update issued July 29, 2024 Scarcity of Equity and Debt Capital Pace of Agency Lending Insufficient to Address ’24 & ‘25 Maturities(1) • Many seniors housing closed-end funds remain out of the money on prom
Slide 13: Capital Markets Backdrop | Solutions Oriented Approach to Investing
Capital Markets Backdrop | Solutions Oriented Approach to Investing Per previous business update issued July 29, 2024 Expertise Investing Across the Capital Stack Creating Unique Capital Deployment Opportunities Transaction Overview | Structuring a Win-Win Solution Executed recapitalization with exi
Slide 14: Atria/Holiday Portfolio Transition
Atria/Holiday Portfolio Transition Maximizing NOI Potential Through Regional Densification Strategy (Unchanged since prior update) 14
Slide 15: Executive Summary
Executive Summary Per previous business update issued July 29, 2024 • Welltower to transition 89 Holiday by Atria properties to six existing regional operators, including Arrow, Cogir US, Discovery, QSL, Sagora and StoryPoint • As of July 29, 2024, 69 of the 89 properties have transitioned with the
Slide 16: Holiday Transitions | Regional Densification Illustration
Holiday Transitions | Regional Densification Illustration New Communities In-Place Communities Per previous business update issued July 29, 2024 Cogir US – Pacific Northwest StoryPoint - Midwest QSL - Southeast South Carolina Seattle MSA Michigan Mississippi Georgia Washington Louisiana Portland MSA
Slide 17: Updated Holiday Per Unit Basis
Updated Holiday Per Unit Basis Per previous business update issued July 29, 2024 Transition Assets Properties Units Per Unit Total Purchase Price 89 10,500 $149,900 On target to deliver renovated portfolio at all-in (+) Completed renovations 8,100 basis significantly below replacement cost and (+) I
Slide 18: Seniors Housing Trends
Seniors Housing Trends (Unchanged since prior update) 18
Slide 19: Supply-Demand Imbalance Expected to Support Sustained Occupancy Growth in 2024+
Supply-Demand Imbalance Expected to Support Sustained Occupancy Growth in 2024+ Per previous business update issued July 29, 2024 Seniors Housing Demand Remains Robust…. ….While Supply Continues to Decline Rapidly TTM Absorption(1) Construction Pipeline(1) NIC MAP Primary and Secondary Markets NIC P
Slide 20: Favorable Unit Economics Driving Substantial Margin Expansion
Favorable Unit Economics Driving Substantial Margin Expansion Per previous business update issued July 29, 2024 Unit Revenue and Expense Trends(1) Same Store RevPOR (left axis) Same Store ExpPOR (left axis) Delta Between RevPOR and ExpPOR (right axis) 14% RevPOR growth continues to outpace ExpPOR 10
Slide 21: Seniors Housing | Compelling Backdrop for Multi-Year Revenue Growth
Seniors Housing | Compelling Backdrop for Multi-Year Revenue Growth Per previous business update issued July 29, 2024 Accelerating 80+ Population Growth Coinciding with Diminishing New Supply & Improved Affordability US 80+ Population Growth Seniors Housing TTM Construction Starts Seniors Housing Af
Slide 22: Minimal New Supply in Coming Years Sets Stage For Multi-Year Occupancy Gains
Minimal New Supply in Coming Years Sets Stage For Multi-Year Occupancy Gains Per previous business update issued July 29, 2024 Declining Deliveries Amplified by Elevated Level of Units Coming out of Service Deliveries Deletions Net Inventory Growth TTM Deliveries TTM Deliveries (% Inventory) TTM Del
Slide 23: Muted Seniors Housing Supply Expected Through the End of the Decade
Muted Seniors Housing Supply Expected Through the End of the Decade Per previous business update issued July 29, 2024 Disruption in Construction Financing Market and Dismantling of Development Teams Expected to Result in Multi-Year Period of Diminished Supply Surge in interest rates over the past 18
Slide 24: Global Financial Crisis Case Study
Global Financial Crisis Case Study Per previous business update issued July 29, 2024 Resilient Demand During GFC Driven By Needs-Based Nature of Seniors Housing Seniors Housing Average Occupancy TTM Market Rent Growth Existing Home Sales 4.0% 7.0 95% Seniors housing occupancy remained stable 2.0% 6.
Slide 25: SHO Portfolio | Path to Recovery
SHO Portfolio | Path to Recovery Per previous business update issued July 29, 2024 Category NOI ($M) (1) $477 million embedded NOI growth in return A) 2Q24 Total Portfolio - IPNOI Portfolio 1,459 to pre-COVID occupancy and margin Occupancy B) Chartwell JV Ownership Increase + 36 Announced NNN Conver
Slide 26: Capital Allocation & Balance Sheet
Capital Allocation & Balance Sheet (Unchanged since prior update) 26
Slide 27: Acquisitions Since 4Q2020
Acquisitions Since 4Q2020 Per previous business update issued July 29, 2024 Capital Deployment Volume(1) ✓ Initial yield of 6.4%; Stable yield of approximately 8.0% ✓ Low last-dollar exposure and innovative structure offer downside protection $15.1B GROSS INVESTMENTS ✓ Expected to generate high-sing
Slide 28: Balance Sheet & Liquidity Update
Balance Sheet & Liquidity Update Per previous business update issued July 29, 2024 Recent Highlights 3.7x 14.8% • Significant growth in EBITDA coupled with tactical capitalization of investment activity has driven a meaningful improvement in key credit metrics • Credit rating outlook revised to posi
Slide 29: Plurality of Capital Sources
Plurality of Capital Sources Per previous business update issued July 29, 2024 Leveraging Efficient & Low-Cost Capital to Execute Investment Strategy ✓ Access to secured and unsecured ✓ Pivot between multiple sources of capital ✓ Recycle capital to improve portfolio quality debt financing based upon
Slide 30: Well-Laddered Debt Maturity Schedule
Well-Laddered Debt Maturity Schedule(1,2,3) Per previous business update issued July 29, 2024 Weighted Average Maturity of 5.8 Years (in millions) USD Unsecured USD Secured USD Convertible Debt GBP Unsecured CAD Unsecured CAD Secured Weighted Average Interest $6,000 5.04% 4.88% $5,000 4.71% 4.67% 4.
Slide 31: Supplemental Financial Measures
Supplemental Financial Measures (Unchanged since prior update) 31
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures We believe that revenues, 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"),
Slide 33: FFO and Normalized FFO
FFO and Normalized FFO 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
Slide 34: FFO Reconciliation
FFO Reconciliation Per previous business update issued July 29, 2024 (in thousands, except per share information) Twelve Months Ended Three Months Ended December 31, 2023 June 30, 2023 June 30, 2024 Net income (loss) attributable to common stockholders $ 340,094 $ 103,040 $ 254,714 Depreciation and
Slide 35: Earnings Outlook Reconciliation
Earnings Outlook Reconciliation Per previous business update issued July 29, 2024 (in millions, except per share data) Year Ended December 31, 2024 1Q24 Earnings June NAREIT Update Current Outlook Low High Low High Low High FFO Reconciliation: Net income attributable to common stockholders $ 879 $ 9
Slide 36: NOI, IPNOI, SSNOI, RevPOR, ExpPOR, SS RevPOR & SS ExpPOR
NOI, IPNOI, SSNOI, RevPOR, ExpPOR, SS RevPOR & SS ExpPOR 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 incl
Slide 37: In-Place NOI Reconciliations
In-Place NOI Reconciliations Per previous business update issued July 29, 2024 (dollars in thousands) June 30, 2024 In-Place NOI by property type June 30, 2024 % of Total Net income (loss) $ 260,670 Seniors Housing Operating $ 1,458,964 54 % Loss (gain) on real estate dispositions, net (166,443) Sen
Slide 38: SSNOI Reconciliation
SSNOI Reconciliation Per previous business update issued July 29, 2024 (dollars in thousands) June 30, 2024 June 30, 2023 % growth YOY Net income (loss) $ 260,670 $ 106,342 Loss (gain) on real estate dispositions, net (166,443) 2,168 Loss (income) from unconsolidated entities (4,896) 40,332 Income t
Slide 39: SHO RevPOR Growth
SHO RevPOR Growth Per previous business update issued July 29, 2024 Reconciliation (dollars in thousands, except SS RevPOR and units) June 30, 2023 June 30, 2024 SHO SS RevPOR Growth Consolidated SHO revenues $ 1,164,439 $ 1,411,450 Unconsolidated SHO revenues attributable to WELL(1) 63,041 63,164 S
Slide 40: SHO SS ExpPOR Growth
SHO SS ExpPOR Growth Per previous business update issued July 29, 2024 Reconciliation (dollars in thousands, except SS ExpPOR and units) June 30, 2023 June 30, 2024 SHO SS ExpPOR Growth Consolidated SHO property operating expenses $ 885,187 $ 1,034,906 Unconsolidated SHO expenses attributable to WEL
Slide 41: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and cash equivalents and restricted cash. We expect to maintain capitali
Slide 42: Net Debt to Adjusted EBITDA
Net Debt to Adjusted Per previous business update issued July 29, 2024 EBITDA Three Months Three Months (dollars in thousands) Ended Ended June 30, June 30, 2024 2024 Net income $ 260,670 Total debt(2) $ 14,027,128 Interest expense 133,424 Cash and cash equivalents and restricted cash (2,863,598) In
Slide 43: Net Debt to Consolidated Enterprise Value
Net Debt to Consolidated Enterprise Value Per previous business update issued July 29, 2024 (in thousands, except share price) Three Months Ended June 30, 2024 Common shares outstanding 608,151 Period end share price $ 104.25 Common equity market capitalization $ 63,399,742 Total debt(1) $ 14,027,12