Welltower Inc. · NYSE:WELL
Welltower — Q1 2021 Earnings Presentation
35 slides from Welltower's earnings presentation, April 2021
Slide 1: First Quarter 2021 Business Update
First Quarter 2021 Business Update April 2021
Slide 2: Forward Looking Statements
Forward Looking Statements 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,” “estimate” or similar exp
Slide 3: Recent Developments
Recent Developments Seniors Housing Operating (SHO) Portfolio Update(1) • SHO portfolio spot occupancy has increased in recent weeks, with an approximate gain of 60 basis points (“bps”) since a pandemic-low on March 12th • US and UK SHO portfolios reported occupancy gains of approximately 90bps and
Slide 4: Welltower at a Glance
Welltower at a Glance World’s Largest Health and Wellness Real Estate Platform ~1,300 ~22M sq. ft. Senior Living Communities(1) of Outpatient Facilities(1) S&P 500 Baa1 BBB+ 4 1. As of 3/31/2021
Slide 5: Portfolio Composition
Portfolio Composition(1) 7% 9% 17% 39% 24% 1Q 2019 48% 1Q 2021 IPNOI IPNOI(2) 10% 6% 18% 22% Seniors Housing Operating Seniors Housing Triple-Net Long-Term / Post-Acute Care Outpatient Medical Health System 1. Based on In-Place NOI. See Supplemental Financial Measures at the end of this presentation
Slide 6: Seniors Housing Operating Portfolio Update
Seniors Housing Operating Portfolio Update 6
Slide 7: Seniors Housing Operator Platform | Power of Diversification
Seniors Housing Operator Platform | Power of Diversification Diversity Across Acuity, Geography and Operating Model Operator Diversification | Average Monthly Rent vs Average Portfolio Acuity $$$ Monthly Rent $ Low Average Portfolio Acuity High 7
Slide 8: Demographic Backdrop | Rapidly Aging Population
Demographic Backdrop | Rapidly Aging Population(1) 80+ Population CAGR | Historical and Projected 10 Year Population CAGR by Age Cohort | 2020 - 2029 5% US UK Canada 4% 4.0% 4.0% 4.0% 3.8% 3.8% 3.6% 4% 3.6% 3.1% 3.0% 3.0% 3.0% 3% 3.1% 3% 2.0% 2.0% 2.0% 2.3% 1.7% 2% 1.3% 1.4% 2% 1.6% 1.0% 1.0% 1.0% 1
Slide 9: Seniors Housing Supply Backdrop
Seniors Housing Supply Backdrop Seniors Housing Historical Supply(1) Rapid Increase in Cost of Key Materials May Curtail Near-Term Starts(2) NIC Primary and Secondary Markets 2019 – 2020 Price Change YTD 2021 Price Change 14K Construction Starts Rolling 4-Quarter Starts vs. Inventory 5.0% Lumber +11
Slide 10: COVID Recovery | Growth Opportunity
COVID Recovery | Growth Opportunity 20M US 80+ Population Growth(1) 7.0% 3.6% CAGR 6.0% Demographic-driven 5.0% Occupancy Recovery 15M 1.3% CAGR 4.0% 3.0% 2.0% 10M 1.0% 80+ Population 0.0% 5M 80+ Population Growth (%YoY) -1.0% Supply Deceleration Seniors Housing Construction vs. Inventory – Rolling
Slide 11: SHO Portfolio | 1Q2021 Observations
SHO Portfolio | 1Q2021 Observations Revenues • SHO portfolio average occupancy declined approximately 310bps vs. 4Q2020 relative to initial guidance of down 275bps to 375bps • Average sequential occupancy decline impacted by significant occupancy losses experienced in late 4Q2020 • 1Q2021 Same store
Slide 12: SHO Portfolio | Occupancy Trends
SHO Portfolio | Occupancy Trends Total SHO Month-End Pro Rata Occupancy(1,2) 88% -10 bps -30 bps 86% -80 bps -240 bps 84% -180 bps 82% -90 bps -60 bps 80% -50 bps -30 bps -40 bps -70 bps 78% -110 bps -150 bps 76% -80 bps 0 bps(2) 74% 72% January February March April May June July August September Oc
Slide 13: SHO Portfolio | Path to Recovery
SHO Portfolio | Path to Recovery Embedded NOI growth of approximately $480 million through potential return to Pre-COVID levels Category NOI ($m) $999M $95M $22M (1) 1Q21 Annualized In-Place NOI ("IPNOI") 648 A) 1Q21 Provider Relief Funds ("HHS") (128) $362M B) 1Q21 Portfolio - Core 1Q21 IPNOI (ex H
Slide 14: SHO Portfolio | Move Ins & Move Outs
(1) SHO Portfolio | Move Ins & Move Outs Indexed Move Ins Since February 2020 Indexed Move Outs Since February 2020 120 81% Increase 120 Jan‘21→ Mar‘21 12% decrease Jan‘21→ Mar‘21 107.1 100 103.1 100 103.4 100.0 100.0 100.9 97.7 92.9 91.1 89.1 89.3 80 84.8 80 85.8 86.8 85.2 83.3 83.4 76.3 77.3 74.3
Slide 15: SHO Portfolio | Move Ins & Move Outs
(1) SHO Portfolio | Move Ins & Move Outs Move Ins as % 2019 Move Ins Move Outs as % 2019 Move Outs 120% 120% 103% 101% 100% 100% 97% 90% 89% 86% 84% 86% 79% 79% 79% 81% 80% 80% 74% 70% 65% 67% 59% 60% 60% 56% 57% 60% 54% 44% 40% 40% 21% 20% 17% 20% 0% 0% 1. Move Ins and Move outs have been revised f
Slide 16: SHO Portfolio | COVID-19 Impact
(1) SHO Portfolio | COVID-19 Impact Resident COVID-19 Cases – Trailing Two Weeks COVID-19 Impact 98% decline in TTW cases since peak • 99% of communities are accepting new residents, 1,400 up from 84% as of mid-January 2021 • Most AL/MC communities have completed their final scheduled vaccine clinic
Slide 17: SHO Portfolio | Additional Community Details
(1) SHO Portfolio | Additional Community Details Normalization in US and UK is offset by enhanced restrictions in Canada due to a nationwide increase in COVID cases Visitation Communal Dining 100% 100% 80% 80% 60% 60% 40% Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 40% Indoor Visitation Outdoor Visitation De
Slide 18: COVID-19 | Case Count & Vaccination Update
COVID-19 | Case Count & Vaccination Update US COVID New Daily Cases(1) UK COVID New Daily Cases(2) Canada COVID New Daily Cases(3) 7-Day Moving Average 7-Day Moving Average 7-Day Moving Average 300K 70K 10K 250K 60K 8K 50K 200K 40K 6K 150K 30K 4K 100K 20K 50K 10K 2K 0K K K Cumulative US COVID Vaccin
Slide 19: Vaccine and Therapeutics Timeline
Vaccine and Therapeutics Timeline Vaccine availability for all adult Americans anticipated by May 1 2021(1) New Daily Cases 7-Day Moving Avg Cumulative Vaccinations US daily COVID deaths EUA granted for Pfizer and Moderna vaccine and peak at 4,396(3) distribution begins in the UK, US, and Canada; FD
Slide 20: Balance Sheet & Investments Update
Balance Sheet & Investments Update 20
Slide 21: Balance Sheet & Investment Highlights
Balance Sheet & Investment Highlights Notable 2021 Year To Date Highlights Liquidity ($M) April 27, 2021 • Near-term liquidity of $4.0 billion as of April 27, 2021 Cash and Cash Equivalents(1) $1,000 (1) • Cash balance totals approximately $1.0 billion ; revolving credit facility is undrawn with cap
Slide 22: HC-One Recapitalization & WELL Investment
HC-One Recapitalization & WELL Investment 22
Slide 23: HC-One Recapitalization and WELL Investment Overview
HC-One Recapitalization and WELL Investment Overview Investment is immediately accretive to Welltower’s earnings and expected to generate low-to-mid teens unlevered IRR to WELL Total investment offers “equity-like” returns with strong downside protection, including last pound exposure of £40,000 per
Slide 24: HC-One Investment Details
HC-One Investment Details Transaction is expected to result in low-to-mid teens IRR to WELL and is immediately accretive to earnings Debt Investment WELL’s initial debt investment of £540M is secured by the corporate credit of HC-One as well as first mortgage rights on real estate owned by HC-One •
Slide 25: HC-One Portfolio Trends
(1) HC-One Portfolio Trends Active Resident COVID-19 Cases 79% Month-End Occupancy 800 700 78% 600 77.9% 77.8% Occupancy has increased 500 77.4% 77.4% 77% approximately 90bps from trough 400 300 76% 75.9% 200 100 75% - 74.7% Dec '20 Jan '21 Feb '21 Mar '21 Apr '21 74% 73% Resident & Staff Vaccinatio
Slide 26: UK Seniors Housing Market and Fundamentals
(1) UK Seniors Housing Market and Fundamentals Stagnating Supply Since 2013 The UK 80+ age cohort is expected to grow by ~40% over the next decade (2) 15K New Openings Closures UK Bed Capacity (RHS) 475K (1) The UK Seniors Housing sector is experiencing 3 structural market changes : 470K 1. An acute
Slide 27: Supplemental Financial Measures
Supplemental Financial Measures 27
Slide 28: 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), N
Slide 29: 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 30: Earnings Outlook Reconciliation
Earnings Outlook Reconciliation Quarter Ending June 30, 2021 (in millions, except per share data) Current Outlook Low High FFO Reconciliation: Net income attributable to common stockholders $ 128 $ 149 Impairments and losses (gains) on real estate dispositions, net (1,2) (75) (75) Depreciation and a
Slide 31: NOI, IPNOI, REVPOR & SS REVPOR
NOI, IPNOI, REVPOR & SS REVPOR 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 t
Slide 32: In-Place NOI Reconciliations
In-Place NOI Reconciliations (dollars in thousands) Genesis Proforma % of 1Q21 1Q19 In-Place NOI by property type 1Q21 Powerback(5) 1Q21(5) Total Net income (loss) $ 72,192 $ 292,302 Seniors Housing Operating $ 647,632 $ — $ 647,632 39 % Loss (gain) on real estate dispositions, net (59,080) (167,409
Slide 33: SSNOI Reconciliations: SHO REVPOR Growth Reconciliation
• SSNOI Reconciliations SHO REVPOR Growth Reconciliation (dollars in thousands, except SS REVPOR ) 1Q20 As Leap Year 1Q21 Reported Adjustment(10) Adjusted 1Q20 SHO SS REVPOR Growth Consolidated SHO revenues $ 726,402 $ 851,128 Unconsolidated SHO revenues attributable to WELL(1) 43,245 44,396 SHO rev
Slide 34: SHO SS REVPOR Growth Reconciliation (cont.)
• SSNOI Reconciliations SHO SS REVPOR Growth Reconciliation (cont.) (dollars in thousands, except SS REVPOR ) As Reported: Assisted Living/Memory Care (1) Independent Living (1) Senior Apartment Total 1Q21 1Q20 1Q21 1Q20 1Q21 1Q20 1Q21 1Q20 SHO SS revenues(2) $ 431,044 $ 519,867 $ 193,030 $ 215,605
Slide 35: welltower