Welltower Inc. · NYSE:WELL
Welltower — Investor Presentation (December 2015)
49 slides from Welltower's investor presentation, December 2015
Slide 1: Corporate Presentation
Corporate Presentation December 2015 Transforming healthcare infrastructure through premium quality properties, partners and locations London Toronto Los Angeles Boston New York Chicago Washington DC
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains “forward-looking” statements as Forward-looking statements are not guarantees of future that term is defined in the Private Securities Litigation performance and involve risks and uncertainties that may Reform Act of 1995. When the company uses words
Slide 3: Table of Contents
Table of Contents The Brand page 4 Investment Highlights page 6 Market Overview page 7 Company Overview page 12 Financial Summary page 25 3
Slide 4: The Welltower Brand
The WelltowerTM Brand “We have changed our name – not how we do business.” – Tom DeRosa, CEO • Company name change effective 9.30.2015 • Reflects our evolution and the changes in health care infrastructure • Our marketplace approach clearly differentiates us… now our name does as well “A Welltower o
Slide 5: Highly Experienced Management Team
Highly Experienced Management Team Tenure Industry Experience (Yrs) (Yrs) Tom DeRosa 12 (1) 27 CEO Unparalleled Industry Scott Brinker 14 17 Experience CIO 16-year average tenure Scott Estes 12 21 24-year average industry CFO experience Board members of NYSE Jeff Miller 11 27 companies & key COO
Slide 6: Uniquely Positioned to Transform Healthcare Infrastructure
Uniquely Positioned to Transform Healthcare Infrastructure Major, high growth metro Largest global markets in US, Canada and UK Best-in-class healthcare operating partners REIT Diverse >$650M portfolio across quarterly seniors housing, repeat business post acute with existing and outpatient operatin
Slide 7: Market Overview
Market Overview 7
Slide 8: Growing & Consolidating Market
Growing & Consolidating Market Massive & Fragmented (1) Compelling Opportunity (2) 201% 200% 174% 150% 132% Population Growth Rate $1 TRILLION (Base Year 2015) US Health Care Real Estate Market 100% 89% 45% 50% 19% 7% Welltower 4% 4% 4% 5% 7% 10% 0% 0% 3% 2015 2020 2025 2030 2035 2040 2045 2050 ~2.5
Slide 9: Growth Strategy Aligned with Healthcare Themes & Demographic Trends
Growth Strategy Aligned with Healthcare Themes & Demographic Trends Outcome and Value-Based 1 Incentives Position our portfolio in lower cost settings e.g. outpatient, post-acute and Improve care & reduce cost seniors housing 2 Aging Population Create innovative seniors housing and care Exponential
Slide 10: Healthcare Infrastructure to Drive Wellness
Healthcare Infrastructure to Drive Wellness LOWER AVERAGE COST HIGHER AVERAGE COST Welltower focuses on keeping people out of acute care hospital beds to drive better outcomes at lower cost 10
Slide 11: Seniors Housing Rents Less Volatile
Annual Asking Rent Growth Seniors Housing Rents Less Volatile 10% 8% Office 6% Hotel 4% Apartment Seniors Housing 2% Retail 0% -2% -4% -6% -8% -10% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: NIC Research 11
Slide 12: Company Overview
Company Overview 12
Slide 13: Company Snapshot
Company Snapshot $37B 1,414 S&P 500 Properties Member 87% Private Pay Sources 1970 Founded as Enterprise Value 1st Healthcare-Focused REIT Global NOI Diversity Moody’s S&P Fitch US + UK + CANADA Baa2 BBB BBB+ 85% 8% 7% Positive Positive Stable Data as of 9/30/2015. Country percentages based on In-Pl
Slide 14: A Global Leader in Providing Healthcare Capital
A Global Leader in Providing Healthcare Capital Over $27 billion invested since 2007(1) Over past five years, invested on average $1.2 billion per quarter, and 60% with existing operating partners(1) Partnerships with Canada’s largest two operators – Revera and Chartwell Partnerships with UK’s leadi
Slide 15: Focus On Delivering Outstanding Returns
Focus On Delivering Outstanding Returns Dividend Growth (1) Total Returns (2) Welltower S&P 500 $3.50 65% $3.00 55% $2.50 45% $2.00 35% +38% $1.50 25% $1.00 15% $0.50 +8% 5% $- 1971 1982 1993 2004 2015 -5% 12/31/13 9/30/15 4.9% 73.7% 83.3% % Average Annual Dividend Yield (1) FFO Payout Ratio (3) FAD
Slide 16: Unique Strategy Leads to Superior Performance
Unique Strategy Leads to Superior Performance Premier Operating Partners and Class ‘A’ Real Estate 3.8% Portfolio average SS NOI Growth Past 18 Quarters(1) Active Portfolio 7.4% Management SH-Operating Average SS NOI Growth Past 18 Quarters(1) $674M Welltower Repeat Business Per Quarter Partners Sin
Slide 17: 2015 Investment Success
2015 Investment Success $4.1B – 2015 YTD Announced or Closed Investments Outpatient US $2,438M Medical 5% Loans 17% Seniors Housing Operating $4.1B 44% UK $821M Triple-Net 34% CAN $827M 82% with Existing Operating Partners All currency references are in U.S. dollars. All amounts reported in this sli
Slide 18: US Portfolio | Focus on Major Metro Markets
US Portfolio | Focus on Major Metro Markets SEATTLE MINNEAPOLIS BOSTON MILWAUKEE NEW YORK CHICAGO PHILADELPHIA WASHINGTON DC INDIANAPOLIS KANSAS CITY SAN FRANCISCO LOS ANGELES DALLAS SAN DIEGO ATLANTA TOP US MARKETS (% OF SH OPERATING NOI) Los Angeles 12.4% HOUSTON Boston 10.7% New York 9.9% MIAMI S
Slide 19: UK Portfolio | Strategic Platform and Partnerships
UK Portfolio | Strategic Platform and Partnerships Portfolio Summary UK 82% 110 $2.8B SH Operating NOI in Facilities Gross Real Estate Greater London & Investments Southern England 75+ POPULATION (1) 10 9.1 7.3 POPULATION 5.3 (in millions) 5 ASPEN AVERY SIGNATURE SUNRISE 0 2015 2025 2035 Data as of
Slide 20: Canadian Portfolio | Strategic Platform and Partnerships
Canadian Portfolio | Strategic Platform and Partnerships Key Operators REVERA CHARTWELL SUNRISE AGECARE CONTINUUM Portfolio Summary 75+ POPULATION (1) 6 5.1 76% 129 $2.2B 5 4 3.6 (in millions) CN Population SH Operating NOI in Facilities Gross Real Estate 3 2.5 Top 10 Canadian Investments 2 MSAs 1 0
Slide 21: Diversification Creates Resiliency
Diversification Creates Resiliency Segment Diversification Partner Diversification HOSPITAL TOP 5 1% PARTNERS 15.3% 45% 13.5% OUTPATIENT MEDICAL 15% SENIORS 7.4% HOUSING OPERATING 4.8% 35% 4.1% LONG-TERM/ TOP 6-10 POST-ACUTE CARE SENIORS OTHER PARTNERS 21% HOUSING TRIPLE-NET 42% 13% 28% Data as of 9
Slide 22: Superior Assets Lead to Superior Operating Results
Superior Assets Lead to Superior Operating Results US Seniors Housing UK Seniors Housing(13) Welltower US HC REIT Public Industry Welltower UK Industry RIDEA(1) Peers(2) Operators(3) Benchmarks RIDEA(9) Benchmarks Property Age 12 18(4) 17(4) 20(5) 9 20(10) Years Housing Value $461,264 $221,390(4) $1
Slide 23: Superior Assets Lead to Superior Operating Results
Superior Assets Lead to Superior Operating Results Post-Acute and Long-Term Care WELLTOWER HC REIT Public Industry PAC/LTC (1) Peers (2) Operators (3) Benchmarks (4) Property Age 22 36 32 37 Years Occupancy 86% 83% 81% 88% Quality Mix 59% 51% 54% 39% Private & Medicare Revenue % Data Data EBITDARM C
Slide 24: Superior Assets Lead to Superior Operating Results
Superior Assets Lead to Superior Operating Results Outpatient Medical Outpatient Welltower (1) Medical Peers (2) Occupancy 95% 90% Property Size 66,853 56,862 Square Feet Health System Affiliation(3) 96% 94% NOI Margin 68% 65% NOI per Square Foot $21.05 $17.60 Annualized Lease Expirations(4) 15% 37%
Slide 25: Corporate Responsibility
Corporate Responsibility TOP 10% in CDP’s Climate Disclosure Green Star 2015 Leadership Index 3-year survey respondent disclosure score of 99/100 3 Year Publisher of a GRESB Featured RANKED IN Corporate Case Study TOP 3 Sustainability among all REITs Report in Green Street’s Corporate Governance Par
Slide 26: Financial Summary
Financial Summary 26
Slide 27: Significant Portfolio Transformation
Significant Portfolio Transformation Since 2007… We have invested (2) Today: $27.8B • $37B Enterprise Value • 1,414 properties Disposed of • Major urban markets $4.5B • US, UK, Canada • 87% private pay Which has grown the company • S&P 500 member (1) >5X • BBB, Baa2, BBB+ 1. Data since12/31/2007 as
Slide 28: Effective Capital Plan | Proven Access to Capital
Effective Capital Plan | Proven Access to Capital Capital Raised Since 1Q 2010 $2.5B Unsecured Line of Credit $22.6B DEBT RAISED COMMON & PREFERRED 38% 8% EQUITY 62% Drawn (1) Data as of 9/30/2015 1. Line balance as of 9/30/2015 less cash and cash equivalents divided by line capacity. 28
Slide 29: Strong Balance Sheet Enables Flexibility
Strong Balance Sheet Enables Flexibility S&P RATIO 4Q13 3Q15 Improvement BBB NET DEBT / UNDEPRECIATED BOOK CAP (1) 42.6% 37.4% 520 bps Positive NET DEBT / Moody’s ENTERPRISE VALUE (1) 38.3% 30.4% 790 bps Baa2 NET DEBT / ADJUSTED EBITDA (2) 6.1x 5.2x 0.9x Positive ADJUSTED INTEREST Fitch COVERAGE (2)
Slide 30: Increasing FFOPS While Driving Down Leverage
Increasing FFOPS While Driving Down Leverage 46% $4.20 Net Debt / Undepreciated Book Cap 44% TTM FFOPS (Normalized) $4.00 42% $3.80 40% $3.60 38% 36% $3.40 Jan '12 Jan '13 Jan '14 Jan '15 Leverage TTM FFOPS (Normalized) Data between 12/31/2011 and 9/30/2015. “Leverage” represents net debt to undepre
Slide 31: Appendix
Appendix 31
Slide 32: Slide 22 – Detailed Footnotes
Slide 22 – detailed footnotes 1. Data as of 9/30/2015 for properties included in the seniors 9. Data as of 9/30/2015. Age, housing value, and REVPOR. housing segment. Age, housing value, household income, NOI per unit represents the annual cash NOI per unit based and REVPOR represents 2Q15 results.
Slide 33: Financial Disclosures
Financial Disclosures 33
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Welltower Inc. believes that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers Net Operating Income (NOI), In-Place N
Slide 35: NOI, In-Place NOI, SSCNOI, REVPOR and SS REVPOR
NOI, In-Place NOI, SSCNOI, REVPOR and SS REVPOR Net operating income (NOI) is used to evaluate the operating performance of our properties. We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with
Slide 36: In-Place NOI Reconciliations
In-Place NOI Reconciliations %of S e nio rs S e nio rs In tho us a nds a t We llto we r pro ra ta S HO by %of ho us ing ho us ing Lo ng-te rm / Outpa tie nt %of %of o wne rs hip C o untry S HO o pe ra ting triple -ne t po s t-a c ute Ho s pita l m e dic a l To ta l To ta l C o untry Thre e m o nths
Slide 37: In-Place NOI by Partner Reconciliations
In-Place NOI by Partner Reconciliations Thre e m o nths In tho us a nds e nde d 9/30/15 In-P la c e NOI by pa rtne r (1 ) S unris e S e nio r Living $ 79,121 15.3% Ge ne s is He a lthc a re 69,850 13.5% B ro o kda le S e nio r Living 38,169 7.4% B e nc hm a rk S e nio r Living 24,640 4.8% R e ve ra
Slide 38: SSCNOI Reconciliations
SSCNOI Reconciliations In tho us ands Three mo nths ended S S C N OI R e c o nc ilia tio ns : 6/30/11 6/30/10 9/30/11 9/30/10 12/31/11 12/31/10 3/31/12 3/31/11 6/30/12 6/30/11 9/30/12 9/30/11 12/31/12 12/31/11 3/31/13 3/31/12 6/30/13 6/30/12 Net inco me (lo s s ) attributable to co mmo n s to ckho l
Slide 39: SSCNOI Reconciliations (Continued)
SSCNOI Reconciliations (Continued) In tho us ands Three mo nths ended S S C N OI R e c o nc ilia tio ns : 9/30/13 9/30/12 12/31/13 12/31/12 3/31/14 3/31/13 6/30/14 6/30/13 9/30/14 9/30/13 12/31/14 12/31/13 3/31/15 3/31/14 6/30/15 6/30/14 9/30/15 9/30/14 Net inco me (lo s s ) attributable to co mmo n
Slide 40: SSCNOI Growth Reconciliations
SSCNOI Growth Reconciliations In tho us a nds Thre e m o nths e nde d 12/31/13 12/31/14 3/31/14 3/31/15 6/30/14 6/30/15 9/30/14 9/30/15 A v e ra g e s C o ns o lida te d NOI(1) $ 454,529 $ 504,753 $ 460,376 $ 517,716 $ 482,692 $ 558,815 $ 492,366 $ 570,294 P ro ra ta a djus tm e nts (2) 6,521 8,336
Slide 41: SSCNOI / Unit Reconciliations
SSCNOI / Unit Reconciliations $ s in tho us a nds , e xc e pt pe r unit Thre e m o nths e nde d 12/31/14 3/31/15 6/30/15 9/30/15 TTM C o ns o lida te d NOI(1 ) $ 504,753 $ 517,716 $ 558,815 $ 570,294 $ 2,151,578 P ro ra ta a djus tm e nts (2 ) 8,336 8,186 5,260 (3,605) 18,177 To ta l pro ra ta NOI(3
Slide 42: Seniors Housing Operating REVPOR Reconciliations
Seniors Housing Operating REVPOR Reconciliations Do llars in tho us ands , except REVP OR Three mo nths ended 9/30/15: CA UK US To tal Co ns o lidated s enio rs ho us ing o perating revenues $ 547,080 $ 547,080 $ 547,080 $ 547,080 Unco ns o lidated revenues attributable to Wellto wer (1) 38,850 38,8
Slide 43: Seniors Housing Operating SS REVPOR Growth Reconciliations
Seniors Housing Operating SS REVPOR Growth Reconciliations $ s in tho us a nds , e xc e pt R EVP OR Thre e m o nths e nde d 12/31/13 12/31/14 3/31/14 3/31/15 6/30/14 6/30/15 9/30/14 9/30/15 A v e ra g e s C o ns o lida te d S HO re ve nue s (1) $ 452,030 $ 488,546 $ 456,319 $ 494,561 $ 468,914 $ 539
Slide 44: Outpatient Medical NOI Reconciliations
Outpatient Medical NOI Reconciliations $ s in tho us a nds , e xc e pt pe r s qua re fo o t OM re ve nue s (1 ) $ 118,827 OM o pe ra ting e xpe ns e s (1 ) (38,074) OM NOI(1 ) $ 80,753 OM NOI m a rgin 68% OM pro ra ta NOI(1 ) $ 80,753 No n-re nta l NOI(3 ) (4,129) OM pro ra ta re nta l NOI $ 76,624
Slide 45: FFO & FAD
FFO & FAD 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 and amortization. However, since real estate values have historically risen
Slide 46: FFO Reconciliations
FFO Reconciliations (in tho us ands , except per s hare info rmatio n) Three Mo nths Ended 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013 6/30/2013 9/30/2013 12/31/2013 3/31/2014 6/30/2014 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015 Funds Fro m Ope
Slide 47: FFO & FAD Payout Reconciliations
FFO & FAD Payout Reconciliations In tho us a nds , e xc e pt pe r s ha re Thre e M o nths Ende d S e pte m be r 30, 2015 Ne t inc o m e (lo s s ) a ttributa ble to c o m m o n s to c kho lde rs $ 182,043 De pre c ia tio n a nd a m o rtiza tio n 205,799 Lo s s e s /im pa irm e nts (ga ins ) o n pro p
Slide 48: EBITDA
EBITDA EBITDA stands for earnings before interest, taxes, depreciation and amortization. Covenants in our primary line of credit arrangement, senior unsecured notes and Canadian denominated term loan contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failu
Slide 49: EBITDA Reconciliations
EBITDA Reconciliations In tho us a nds Thre e M o nths Ende d Thre e M o nths Ende d De c e m be r 31, 2013 S e pte m be r 30, 2015 Ne t inc o m e $ 25,696 $ 199,257 Inte re s t e xpe ns e (1 ) 124,485 121,130 Inc o m e ta x e xpe ns e (be ne fit) 435 (3,344) De pre c ia tio n a nd a m o rtiza tio n