Welltower Inc. · NYSE:WELL
Welltower — Corporate Update (June 2023)
33 slides from Welltower's corporate update, Jun 6, 2023
Slide 1: Business Update June 6, 2023
Exhibit 99.1 Business Update June 6, 2023
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 Highlights – Since Previous Business Update on May 2, 2023
Recent Highlights – Since Previous Business Update on May 2, 2023 (1) 2023 Guidance Update Seniors Housing Operating Portfolio Update • Raised 2023 net income attributable to common stockholders (“NICS”) guidance range • QTD fundamentals reflect sustained momentum from 1Q2023, with better than antic
Slide 4: Balance Sheet
Balance Sheet 4
Slide 5: Plurality of Capital Sources Leveraging Efficient & Low-Cost Capital
(1) Plurality of Capital Sources 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 cost and availability and capitalize on marke
Slide 6: Well-Laddered Debt Maturity Schedule
(1,2,3) Well-Laddered Debt Maturity Schedule Weighted Average Maturity of 6.3 Years $4,500 USD Unsecured USD Secured GBP Unsecured CAD Unsecured CAD Secured WAI 5.16% 5.03% $4,000 4.49% 4.49% $3,500 4.12% 4.11% 4.08% 3.94% $3,000 3.66% 3.14% $2,500 2.77% Current liquidity profile includes $1.5 billi
Slide 7: Capital Allocation (Unchanged since prior business update)
Capital Allocation (Unchanged since prior business update) 7
Slide 8: Acquisitions Since 4Q2020
Acquisitions Since 4Q2020 (1) Capital Deployment Volume ✓ Initial yield of 5.9%; Stable yield of approximately 7.8% ✓ Low last-dollar exposure and innovative structure offer downside protection GROSS INVESTMENTS $9.1B✓ Expected to generate high-single-digit to mid-teens unlevered IRRs to WELL Granul
Slide 9: Foundation for Long-Term Growth Established
Foundation for Long-Term Growth Established Opportunity to deploy in excess of $3.0 billion annually | Economics Defined During Pandemic NEW and PROPRIETARY long-term relationships with best-in-class developers and operators with either exclusive rights or right of first offer 5 23 2 30 $30B+ Relati
Slide 10: Case Study | Aurora and Peace Capital Joint Venture Transition
Case Study | Aurora and Peace Capital Joint Venture Transition Significant Performance Improvement Following Transition to Premier Regional Operator • Subsequent to quarter-end, Welltower exercised a purchase option for $66 million and immediately closed on a forward agreement to sell seven skilled
Slide 11: Welltower Regional Density Strategy
Welltower Regional Density Strategy Deepening Relationships with Best-in-Class Local & Regional Operators Case studies 11
Slide 12: Case Studies | Regional Densification Strategy
Case Studies | Regional Densification Strategy Data-Driven Active Portfolio Management and Disciplined Capital Allocation Driving Regional Densification • Welltower continues to take an active approach to portfolio management, deepening relationships with leading operators in key markets and regions
Slide 13: Case Study Oakmont Senior Living – History of Success
Case Study 1 Oakmont Senior Living – History of Success Oakmont meaningfully outperformed during the pandemic; Ivy Living brand created to leverage that success across transition properties Relationship Overview | 34 Welltower Communities + 1 Under Development Same Store Portfolio Performance • The
Slide 14: Portfolio Transition to Oakmont
Case Study 1 Case Study | Portfolio Transition to Oakmont Transitioned Six Communities to Oakmont; Meaningful Value Creation Recognized through Improved Performance Predicted Performance Operational Update • In August 2021, Welltower transitioned management of six predominately assisted living 90.0%
Slide 15: Kisco Senior Living | Premier Seniors Housing Operator
Case Study 2 Kisco Senior Living | Premier Seniors Housing Operator Deepened Market Share in Walnut Creek to Expand on Kisco’s Best-in-Class Operational Expertise Kisco Relationship Overview Kisco | The Cardinal at North Hills • Welltower owns a portfolio of seven Kisco communities (3 NNN / 4 SHO) w
Slide 16: Byron Park Acquisition & Transition
Case Study 2 Case Study | Byron Park Acquisition & Transition Kisco Byron Park Acquisition and Transition of The Kensington • Acquired the purpose-built IL/AL community in the San Francisco suburb of Walnut Creek in mid- Target Metrics Amount 2022 for $129.5 million, representing an attractive disco
Slide 17: Seniors Housing Trends (Unchanged since prior business update)
Seniors Housing Trends (Unchanged since prior business update) 17
Slide 18: Substantial SS NOI Margin Expansion Through 1Q2023
Substantial SS NOI Margin Expansion Through 1Q2023 Same Store RevPOR and ExpPOR Trends 14.0% RevPOR ExpPOR 12.0% RevPOR growth continues to outpace ExpPOR growth, driving +240bps of SS NOI margin expansion in 1Q2023 vs. 1Q2022 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
Slide 19: Net Hiring and Agency Labor Expense Trends
Net Hiring and Agency Labor Expense Trends (1) Significant Shift in Labor Market Driving Continued Positive Net Hiring Momentum (2) Year-over-Year Job Growth Same Store Agency Labor Expense (% Compensation) 15.0% 9.0% Healthcare All Employees Community Care Facilities for the Elderly 8.0% 10.0% 7.9%
Slide 20: Pre-COVID Occupancy Seasonality
Pre-COVID Occupancy Seasonality Majority of annual occupancy gains have historically been generated in the second half of the year (1) SHO Portfolio Same Store Sequential Occupancy Change 2014 - 2019 150bps 1Q23 occupancy growth continued to outpace historical trends 100bps 50bps 0bps -50bps -100bps
Slide 21: Societal & Technological Trends | Impact on Real Estate Sectors
Societal & Technological Trends | Impact on Real Estate Sectors Precedent for Extended Period of Compounding Growth and Re-Rating of Cash Flow Multiple THEME REAL ESTATE SECTOR IMPACT Industrial / Logistics E-Commerce Example: Prologis Themes of the Data Centers Digital Technology Example: Equinix l
Slide 22: Seniors Housing | Compelling Backdrop for Multi-Year Revenue Growth
Seniors Housing | Compelling Backdrop for Multi-Year Revenue Growth Accelerating 80+ Population Growth Coinciding with Diminishing New Supply & Improved Affordability (1) (2) (3) US 80+ Population Growth Seniors Housing Net Inventory Growth Rate Seniors Housing Affordability Indexed Growth Since 200
Slide 23: Supply-Demand Imbalance Expected to Support Sustained Occupancy Growth
Supply-Demand Imbalance Expected to Support Sustained Occupancy Growth in 2023+ Seniors Housing Demand Remains Robust Seniors Housing Supply Continues to Decline Rapidly (1,2) (1) TTM Absorption Construction Starts NIC MAP Primary and Secondary Markets NIC Primary and Secondary Markets 60K Starts Av
Slide 24: Slower Net Inventory Growth Sets Stage For Occupancy Gains
Slower Net Inventory Growth Sets Stage For Occupancy Gains Meaningful Deceleration in Net Inventory Growth Paving the Way for MULTI-YEAR OCCUPANCY GAINS TTM Deliveries (% Total Inventory) Obsolescence Net Inventory Growth TTM Deletions (% Inventory Growth) AL IL SH AL IL SH AL IL SH 5.5% 5.0% 2.0% 4
Slide 25: Balanced Lease Structure Mitigates Impact of Inflationary Pressures
(1) Balanced Lease Structure Mitigates Impact of Inflationary Pressures Shorter duration leases in SHO portfolio allow for more frequent mark-to-market of rents Outpatient SHO SH Triple-Net LT/PAC Hospital Life Science Medical 2% 16% 5% 23% 22% Meaningful increase in SHO (2) (3) 46% 1Q 2013 NOI 29%
Slide 26: Global Financial Crisis Case Study
Global Financial Crisis Case Study Resilient Demand During GFC Driven By Needs-Based Nature of Seniors Housing (2) (3) (1) TTM Market Rent Growth Existing Home Sales Seniors Housing Average Occupancy 7.0 4.0% 95% Seniors housing occupancy remained stable 6.5 2.0% through the GFC despite a significan
Slide 27: SHO Portfolio | Path to Recovery
SHO Portfolio | Path to Recovery Category NOI ($M) $482 million embedded NOI growth in return to Pre-COVID levels A) 1Q23 Total Portfolio - IPNOI Portfolio 960 $1,600M B) 4Q19 Open Property Occupancy Recovery (ex. Transitions) 184 $1,400M $1,441M $136 C) Transition Properties 78 $83 D) Fill-Up Prope
Slide 28: Supplemental Financial Measures
Supplemental Financial Measures 28
Slide 29: 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 30: 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 31: Earnings Outlook Reconciliation
Earnings Outlook Reconciliation (in millions, except per share data) Year Ended December 31, 2023 Prior Outlook Current Outlook Low High Low High FFO Reconciliation: Net income attributable to common stockholders $ 283 $ 358 $ 303 $ 368 (1,2) Impairments and losses (gains) on real estate disposition
Slide 32: 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 33: In-Place NOI Reconciliations
In-Place NOI Reconciliations (dollars in thousands) 1Q23 In-Place NOI by property type 1Q23 % of Total Net income (loss) $ 28,635 Seniors Housing Operating $ 959,844 46 % Loss (gain) on real estate dispositions, net (747) Seniors Housing Triple-net 398,356 19 % Loss (income) from unconsolidated enti