Welltower Inc. · NYSE:WELL
Welltower — Nareit REITweek 2021
57 slides from Welltower's conference presentation, June 2021
Slide 1: Business Update
Business Update Nareit | June 2021
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: Recent Developments
Recent Developments Leadership Update • Announced the appointment of John F. Burkart as Executive Vice President, Chief Operating Officer (“COO”) of Welltower starting July 19, 2021. Mr. Burkart had previously served as COO of Essex Property Trust • Announced the appointment of Andrew Haslam as Vice
Slide 4: Recent Developments
Recent Developments Investments Update • Completed $1.7 billion of YTD pro rata gross investment activity, excluding development funding, through June 4, 2021 • $354M of pro rata gross investments since previous business update on May 19, 2021, including $260 million of seniors housing acquisitions
Slide 5: Welltower at a Glance
Welltower at a Glance S&P $44B 3.2% Baa1 BBB+ 500 Enterprise Value(1) Dividend Yield(1) ~1,300 ~22M sq. ft. Senior Living Communities(2) Outpatient Facilities(2) World's largest health & wellness real estate platform 1. As of 6/4/2021 2. As of 3/31/2021 5
Slide 6: Portfolio Overview
Portfolio Overview Health System Seniors Housing 9% Operating 39% 24% Outpatient Medical 1Q 2021 IPNOI(1) 6% Long-Term/ 22% Post-Acute Care Seniors Housing Triple-Net 1. Based on In-Place NOI. See Supplemental Financial Measures at the end of this presentation for reconciliations. 1Q2021 IPNOI is ad
Slide 7: Leadership Team
Leadership Team SHANKH MITRA TIMOTHY G. MCHUGH JOHN F. BURKART MATTHEW G. MCQUEEN AYESHA MENON JOSHUA T. FIEWEGER Chief Executive Officer & Chief Financial Officer Chief Operating Officer* General Counsel & Senior Vice President Chief Accounting Officer Chief Investment Officer Corporate Secretary W
Slide 8: Environmental, Social and Governance
Environmental, Social and Governance • Named to Barron’s list of America’s Most Sustainable Companies for the second consecutive year • Named ENERGY STAR® Partner of the Year for third consecutive year by U.S. EPA and the U.S. Department of Energy • Targeting 10% reduction in greenhouse gas emission
Slide 9: Secular Themes
Secular Themes Powerful demographic tailwinds to drive multi-year period of internal and external growth 9
Slide 10: The Health and Wellness Ecosystem
The Health and Wellness Ecosystem $$$ RELATIVE COST OF CARE $ ACUTE POST-ACUTE SENIORS HOUSING WELLNESS HOUSING Hospital Specialty IRF/LTACH SNF Memory Assisted Independent Senior Home Inpatient Care Care Living Living Apartments CONSUMER DRIVEN VENUES AND SERVICES Digital Home Payor Virtual Retail
Slide 11: Secular Theme | Addressing the Aging Population
Secular Theme | Addressing the Aging Population GLOBAL DEMOGRAPHIC SHIFT driving significant INTERNAL & EXTERNAL growth opportunities 80+ U.S. Population Growth(1) 80+ UK Population Growth(2) 25M 7% 5M 7% Population 80+ (M) 3.1% CAGR through end of decade(3) 6% YoY Growth (%) 5% 23M 4M 6% 4% 3% 21M
Slide 12: Secular Theme | The Shift to Value-Based Care
Secular Theme | The Shift to Value-Based Care The AGING POPULATION outspends all other cohorts on HEALTH CARE US Personal Health Care Per-Capita Spend by Age(1) US Health Care Spend Projections(2) $20K 20% $35K Per Capita Health Spend %GDP 20% $32.9 $30K 19% $25K 4.1X $15K 19% $20K 18% $15K $17.0 18
Slide 13: Secular Theme | The Shift to Value-Based Care
Secular Theme | The Shift to Value-Based Care The US spends the MOST PER CAPITA on health care, yet achieves significantly LOWER HEALTH OUTCOMES Health Care Spend vs. Life Expectancy(1) Health Care Spend vs. Life Expectancy(1) 100% 84 NOR NETH SWIZ 80% Life Expectancy at Birth (years) 82 AUS NZ FR S
Slide 14: Secular Theme | Social Determinants of Health
Secular Theme | Social Determinants of Health 80% of an individual’s health and wellness HEALTH and WELLNESS can be directly is influenced by SOCIAL DETERMINANTS(1) impacted by where you LIVE and AGE Socioeconomic factors Physical 10% Environment 20% Health Care Drivers of 40% Health Health Behavior
Slide 15: Drivers of Per Share Cash Flow Growth
Drivers of Per Share Cash Flow Growth SECULAR GROWTH Post-COVID fundamental recovery sustained by strong demographic trends, TAILWINDS shift to value-based health care, and social determinants of health ACCRETIVE CAPITAL External growth strategy underpinned by value-oriented capital deployment DEPLO
Slide 16: New Paradigm for Growth with Lower Entity-Level Risk
New Paradigm for Growth with Lower Entity-Level Risk PAST FIVE YEARS DO NOT REFLECT OUTLOOK FOR NEXT FIVE YEARS Where we Were (2015- 2020) Where we’re Going (2021 and beyond) SENIORS HOUSING DEMAND • Relatively flat demographic growth of key seniors housing demographic resulting from “Baby Bust” of
Slide 17: Secular Societal & Technological Trends | Impact on Real Estate Sectors
Secular Societal & Technological Trends | Impact on Real Estate Sectors Precedent for EXTENDED PERIOD OF MULTIPLE EXPANSION in Secular Growth Sectors THEME REAL ESTATE SECTOR IMPACT E-Commerce Industrial Digital Technology Data Centers Mobile Phone Usage & Wireless Technology Cellular Towers AGING O
Slide 18: Competitive Advantages to Drive Growth Through Cycles
Competitive Advantages to Drive Growth Through Cycles INDUSTRY-LEADING DATA ANALYTICS PLATFORM across all commercial real estate: predictive analytics and artificial intelligence platform driving micro-market capital allocation decisions Internal and external GROWTH OPPORTUNITES spanning the care co
Slide 19: Seniors Housing
Seniors Housing welltower
Slide 20: Seniors Housing Operator Platform | Power of Diversification
Seniors Housing Operator Platform | Power of Diversification Monthly $$$ Rent Diversity across Acuity, Geography and Operating Model $ Low Average Portfolio Acuity High 20
Slide 21: Demographic Backdrop | Rapidly Aging Population
Demographic Backdrop | Rapidly Aging Population 80+ Population CAGR | Historical and Projected(1) 10 Year Population CAGR by Age Cohort | 2020 - 2029 4.0% US UK Canada 2010 - 2019 2020 - 2029 3.8% 4.0% 4.0% 4.0% 3.8% 3.6% 3.5% 3.6% 3.1% 3.0% 3.1% 3.0% 3.0% 3.0% 2.5% 2.0% 2.0% 2.0% 2.3% 1.7% 2.0% 1.4
Slide 22: Seniors Housing Supply | Precipitous Decline in Starts
Seniors Housing Supply | Precipitous Decline in Starts Seniors Housing Historical Supply(1) NIC Primary and Secondary Markets 14K Construction Starts Rolling 4-Quarter Starts vs Inventory 5.00% 4.50% 12K 77% decline in starts from 4.00% 10K 4Q17 peak 3.50% 3.00% 8K 2.50% 6K 2.00% 1.50% 4K 1.00% 2K 0
Slide 23: Seniors Housing Supply | Surging Construction Costs
Seniors Housing Supply | Surging Construction Costs Material increase in cost of development for ALL RESIDENTIAL property types including SENIORS HOUSING Lumber Cement and Concrete Copper 1800 185 500 +341% since 2015 +20% since 2015 +68% since 2015 1500 180 450 175 400 1200 350 170 900 300 165 600
Slide 24: Post COVID Recovery | Growth Opportunity
Post COVID Recovery | Growth Opportunity 20M US 80+ Population Growth(1) 7.0% 3.6% CAGR 6.0% Demographic-driven 15M 5.0% Occupancy Recovery 1.3% CAGR 4.0% 3.0% 2.0% 10M 1.0% 0.0% 5M -1.0% Supply Deceleration Seniors Housing Construction Starts vs. Inventory(2) Rolling Four Quarters 5.0% 4.5% 4.0% 3.
Slide 25: Drivers of Seniors Housing Affordability
Drivers of Seniors Housing Affordability Seniors housing is not INCOME DEPENDENT; generally funded through ASSET SALES and PERSONAL WEALTH Home Price Appreciation | 1987 – Present(1) S&P500(2) S&P/Case-Shiller U.S. National Home Price Index 4500 400 A home purchased in 1987 4000 +12.2% compounded an
Slide 26: SHO Portfolio | Occupancy Trends
SHO Portfolio | Occupancy Trends(1) Total Portfolio US 74.0% 74.0% -80bps +50 +70 73.0% +50 +90 73.0% 72.0% -60bps +10 +50 71.0% 72.0% 70.0% Jan Feb Mar Apr May Jan Feb Mar Apr May -210bps UK 81.0% Canada 68.5% -110bps 80.0% 67.5% +10 -90 +90 79.0% -30 66.5% -40 78.0% -10 65.5% 77.0% 64.5% 76.0% Jan
Slide 27: 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) $1,000M (1) $22M $999M 1Q21 Annualized In-Place NOI ("IPNOI") 648 $95M $900M A) 1Q21 Provider Relief Funds ("HHS") (128) $362M $800M B) 1Q21 Portfolio - C
Slide 28: SHO Portfolio | Move Ins & Move Outs
(1,2) SHO Portfolio | Move Ins & Move Outs Move Ins as % 2019 Move Ins Move Outs as % 2019 Move Outs 120% 120% 101% 99% 98% 100% 100% 90% 86% 86% 86% 87% 84% 80% 81% 79% 80% 80% 80% 74% 74% 70% 66% 67% 60% 60% 60% 56% 57% 60% 54% 44% 40% 40% 20% 20% 0% 0% 1. Move Ins and Move outs presented at Wellt
Slide 29: SHO Portfolio | COVID-19 Impact
(1) SHO Portfolio | COVID-19 Impact Resident COVID-19 Cases – Trailing Two Weeks COVID-19 Impact • All communities are accepting new residents Lowest TTW cases since start of the pandemic • 99% of communities have zero reported resident COVID-19 cases on a trailing two week (TTW) basis ✓ Lead genera
Slide 30: SHO Portfolio | Additional Community Details
(1) SHO Portfolio | Additional Community Details Nearly ALL COMMUNITIES across US, UK and Canada allowing VISITATION, IN-PERSON TOURS and COMMUNAL DINING Visitation Communal Dining % of communities % of communities 100% 100% 80% 80% 60% 60% 40% Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 40% In
Slide 31: COVID-19 | Case Count & Vaccination Update
COVID-19 | Case Count & Vaccination Update Significant decline in new COVID cases in Canada during recent weeks 300K US COVID New Daily Cases(1) 70K UK COVID New Daily Cases(2) Canada COVID New Daily Cases(3) 7-Day Moving Average 7-Day Moving Average 10K 7-Day Moving Average 250K 60K 8K 200K 50K 40K
Slide 32: Outpatient Medical Platform
Outpatient Medical Platform 32
Slide 33: Investment Theme | Secular Shift to Outpatient Care Settings
Investment Theme | Secular Shift to Outpatient Care Settings Drivers of Change TECHNOLOGY Advances in medical procedures and clinical innovation ease the migration & INNOVATION to outpatient settings CONSUMER Consumer demand for improved care delivery and value necessitates a PREFERENCE change in ca
Slide 34: Investment Theme | Secular Shift to Outpatient Care Settings
Investment Theme | Secular Shift to Outpatient Care Settings Forecasted Patient Visit Volume Growth by Care Setting Outpatient Medical TTM Same Store NOI Growth(2) 2019 – 2029(1) 2010 - 2020 3.5% 22% Outpatient Inpatient Urology -0.6% 58% Thoracic Surgery 3.0% Historical Average 3.6% 2.2% 30% Spine
Slide 35: Outpatient Medical Portfolio
Outpatient Medical Portfolio Long-Term/ Health Post-Acute System Portfolio Quality Indicators Health System Affiliated Properties Seniors Housing 91.9% Operating 6% % of NOI 9% Health System Tenants 65.1% % of Rental Income Retention 39% 24% 87.3% 1Q21 Outpatient Trailing twelve months Medical IPNOI
Slide 36: WELL Outpatient Medical Portfolio
WELL Outpatient Medical Portfolio 22M Sq. Ft 85.7% Properties Managed In-House 65.1% Health System Affiliated 51.8% (1) Largest MOB platform amongst Health Care REITs On-Campus 1. As of 3/31/2021. Health Care peer group includes: Welltower, Ventas, Healthpeak, Healthcare Realty Trust, Healthcare Tru
Slide 37: Business Insights Advantage | Granular Demand Analysis
Business Insights Advantage | Granular Demand Analysis Inputs: Required Visit Volume Physician Count Physician FTEs Estimates by Zip Code Output: Specialist Net Need (FTE) PHYSICIAN NET NEED General Family Practice 181 Hematology Oncology 55 Measures the demand for physicians Cardiology 51 of a give
Slide 38: Health Systems
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Slide 39: Health System Portfolio
Health System Portfolio ProMedica Overview • Integrated healthcare organization serving 28 states and employing over 45,000 people Seniors Housing Long-Term/ • Strategically aligned operations as an integrated and connected health and wellness organization Operating Post-Acute 39% • Diversified port
Slide 40: Case Study | Welltower and ProMedica Joint Venture
Case Study | Welltower and ProMedica Joint Venture ProMedica Senior Care Platform Hospice & Skilled Nursing & Assisted & Memory Home Palliative Care* Rehabilitation Independent Living Care Health Care* WELL and ProMedica Joint Venture ✓ 25K beds over 200 properties in 18 states Acute Physician Care
Slide 41: Long-Term/Post-Acute Care
Long-Term/Post-Acute Care 41
Slide 42: Long-Term/Post-Acute Care Portfolio
Long-Term/Post-Acute Care Portfolio Remaining LT/PAC Portfolio concentrated in Skilled Nursing assets, with a focus on rehab facilities (2) Seniors Housing ✓ 61% reduction in long-term acute care hospital/in-patient rehab Operating 39% facility exposure (less than 1% of NOI) ✓ 50% Reduction in In-Pl
Slide 43: Balance Sheet & Investments Update
Balance Sheet & Investments Update 43
Slide 44: Capitalizing the Opportunity
Capitalizing the Opportunity(1) Disciplined Focus on Efficient & Low-Cost Capital Sourcing PUBLIC EQUITY DISPOSITIONS DEBT • Access to secured and unsecured debt financing • Pivot between multiple sources of capital based upon cost and $4B $14B $11B availability • Recycle capital to improve portfoli
Slide 45: Capital Deployment | Value-Driven Investment Thesis
Capital Deployment | Value-Driven Investment Thesis Capital Deployment Volume since 4Q20 Granular & Off-market Transactions Significant Discount to Replacement Cost 29 TOTAL TRANSACTIONS(1) $161k per unit Last dollar basis US transactions $2.2B GROSS INVESTMENTS (1) 76 6,007 OM and SH PROPERTIES ACQ
Slide 46: Notable Investments
Notable Investments Property Pro Rata Inv Transaction Segment Commentary Count Amount Portfolio of seniors housing communities across the Southeast under a new triple net HRA SHNNN 8 $132M lease with HRA, a regional seniors housing operator/developer. Anticipated unlevered IRR of 10%+. Opportunistic
Slide 47: Foundation for Long-Term Growth Established
Foundation for Long-Term Growth Established Opportunity to deploy in excess of $10 billion across ALL asset classes over next decade NEW and PROPRIETARY long-term relationships with best-in-class developers and operators with either exclusive rights or right of first offer $1B Expected average annua
Slide 48: HC-One Investment
HC-One Investment 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 • In April 2021, WELL completed a £540M ($750M) senior loan advancement to HC-One • An additional £30M ($42M) delayed
Slide 49: Balance Sheet & Investment Highlights
Balance Sheet & Investment Highlights (1,2) Notable 2021 Year To Date Highlights Unsecured Debt Covenant Compliance • On June 4, 2021, closed on an expanded $4.0 billion unsecured revolving line of credit 1Q2021 Covenant Compliance bearing interest of LIBOR plus 77.5 bps, representing a 5 basis poin
Slide 50: Balanced and Manageable Debt Maturity Profile
Balanced and Manageable Debt Maturity Profile(1,2) Weighted Average Maturity of 7.3 Years $2,500 USD Unsecured USD Secured CAD Unsecured CAD Secured GBP Unsecured Term Loan Weighted Average Interest 5.0% $2,000 3.8% 4.5% 4.1% 3.8% 3.9% $1,500 3.1% 2.8% 3.0% 3.1% 2.4% $1,000 2.1% $500 $0 (in Millions
Slide 51: Supplemental Financial Measures
Supplemental Financial Measures 51
Slide 52: 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 53: 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 54: Earnings Outlook Reconciliation
Earnings Outlook Reconciliation Quarter Ending June 30, 2021 (in millions, except per share data) Prior Outlook Current Outlook Low High Low High FFO Reconciliation: Net income attributable to common stockholders $ 128 $ 149 $ 141 $ 157 Impairments and losses (gains) on real estate dispositions, net
Slide 55: NOI and IPNOI
NOI and IPNOI 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-relat
Slide 56: In-Place NOI Reconciliations
In-Place NOI Reconciliations (dollars in thousands) Genesis Proforma % of 1Q21 In-Place NOI by property type 1Q21 Powerback(5) 1Q21(5) Total Net income (loss) $ 72,192 Seniors Housing Operating $ 647,632 $ — $ 647,632 39 % Loss (gain) on real estate dispositions, net (59,080) Seniors Housing Triple-
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