Welltower Inc. · NYSE:WELL
Welltower — Debt Investor Presentation (November 2023)
42 slides from Welltower's debt investor presentation, November 2023
Slide 1: Fixed Income Update
Fixed Income Update November 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: Welltower Overview
Welltower Overview
Slide 4: World's Largest Owner of Health Care Real Estate
World’s Largest Owner of Health Care Real Estate S&P 500 Index Constituent USD $43B 22% Market Capitalization1) 3Q 2023 USD $6.6B 12% In-Place NOI(2) 66% Total Liquidity(3) 2.9% Seniors Housing & Wellness Housing Dividend Yield Outpatient Medical Long-Term/ Post-Acute Care 53 Year Company History 2,
Slide 5: Welltower's Unique Value Creation Flywheel
Welltower’s Unique Value Creation Flywheel Established Competitive Advantages Driving Sustainable Shareholder Value Creation Welltower Value-Add and Moat Internal Growth Elite: • Long-term demographic tailwinds and significant decline in Industry-Leading new supply expected to drive continued outsiz
Slide 6: Recent Highlights
Recent Highlights
Slide 7: Recent Portfolio Highlights
(1) Recent Portfolio Highlights Seniors Housing Operating (SHO) Portfolio Growth Continues to Exceed Expectations Outsized revenue growth and moderating expense pressure resulting in fourth consecutive quarter of 20%+ NOI growth 26.1% • SHO portfolio SS NOI growth of 26.1% represents the second high
Slide 8: Revised 2023 Outlook
Revised 2023 Outlook Unchanged as of October 30, 2023 Better-than-expected YTD SHO portfolio performance and capital activity driving 5.5c per share increase to FFO guidance midpoint Revised 2023 SS NOI Outlook Normalized Funds from Operations Per Diluted Share Outlook Segment Low High Revised Outlo
Slide 9: Balance Sheet Update
Balance Sheet Update
Slide 10: Recent Balance Sheet & Liquidity Highlights
Recent Balance Sheet & Liquidity Highlights Balance Sheet Highlights(1) Liquidity Highlights • Strong portfolio performance is driving substantial EBITDA growth, which, along with prudent • Liquidity profile remains exceptional with $6.6 billion in combined near-term available capitalization of tran
Slide 11: Plurality of Capital Sources
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 market in
Slide 12: Well-Laddered Debt Maturity Schedule
Well-Laddered Debt Maturity Schedule(1,2,3) Weighted Average Maturity of 5.8 Years USD Unsecured USD Secured GBP Unsecured GBP Secured CAD Unsecured CAD Secured Weighted Average Interest Rate $7,000 4.97% 5.03% $6,000 4.66% 4.41% 4.18% $5,000 4.07% 4.04% 3.78% 3.79% $4,000 3.14% As of October 30, 20
Slide 13: 3Q2023 Covenant Compliance
3Q2023 Covenant Compliance(1) Unsecured Debt Covenant Compliance(2) Line of Credit Covenant Compliance 3Q23 Covenant Compliance 3Q23 Covenant Compliance Secured Indebtedness 5.71% <40.00% ✓ Leverage Ratio 28.50% <60.00% ✓ to Total Assets Fixed Charge Coverage Ratio 3.57x >1.50x ✓ Total Indebtedness
Slide 14: Seniors Housing Trends
Seniors Housing Trends
Slide 15: Seniors Housing | Product Overview
Seniors Housing | Product Overview Seniors Housing Product Types Independent Living Assisted Living Memory Care Resident • Low Acuity; good health • Moderate Acuity; declining • High Acuity; declining Profile and mobility health and mobility health and cognitive impairment Services & • Some dining o
Slide 16: Favorable Unit Economics Driving Substantial Margin Expansion
Favorable Unit Economics Driving Substantial Margin Expansion Unit Revenue and Expense Trends(1) Same Store RevPOR Same Store ExpPOR 14.0% RevPOR growth continues to outpace ExpPOR growth, driving 12.0% +330 bps of SS NOI margin expansion in 3Q2023 vs. 3Q2022 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.
Slide 17: Pre-COVID Occupancy Seasonality
Pre-COVID Occupancy Seasonality Occupancy Gains Accelerating through 3Q2023 and Outpacing Historical Trends Year-over-Year Occupancy Gains: Max Change Min Change 2023 July 2023: +180 bps August 2023: +220 bps September 2023: +260 bps 1Q 2Q 3Q 4Q 17 1. Represents SHO same store portfolio each quarter
Slide 18: 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 US 80+ Population Growth Seniors Housing TTM Deliveries Seniors Housing Affordability 20M 41k Indexed Growth Since 2008 4.4% populati
Slide 19: 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 Declining Deliveries Amplified by Elevated Level of Units Coming out of Service TTM Deliveries (% Total Inventory) Obsolescence Net Inventory Growth TTM Deletions (% Inventory Growth) Assisted Living Independent Living Seni
Slide 20: Supply-Demand Imbalance Expected to Support Sustained Occupancy Growth in 2023+
Supply-Demand Imbalance Expected to Support Sustained Occupancy Growth in 2023+ Seniors Housing Demand Remains Robust…. ….While Supply Continues to Decline Rapidly TTM Absorption(1) Construction Pipeline NIC MAP Primary and Secondary Markets NIC Primary and Secondary Markets TTM Absorption Average S
Slide 21: Global Financial Crisis Case Study
Global Financial Crisis Case Study 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% 6.5 through the GFC despite a significant deteriorat
Slide 22: SHO Portfolio | Path to Recovery
SHO Portfolio | Path to Recovery Category NOI ($M) $537 million embedded NOI growth in return A) 3Q23 Total Portfolio - IPNOI Portfolio (1) 1,105 to pre-COVID occupancy and margin B) Revera JV Ownership Increase 19 $1,900M C) 3Q23 Total Portfolio – Adjusted IPNOI Portfolio 1,124 D) 4Q19 Open Propert
Slide 23: Outpatient Medical
Outpatient Medical
Slide 24: Outpatient Medical | Welltower Portfolio Overview
Outpatient Medical | Welltower Portfolio Overview Secular shift in delivery of healthcare Demand-driven demographic tailwind Superior data analytics platform Rentable 20.7M Square Feet In-House Managed 85.9% Properties Health System 87.3% Affiliated Properties Average Remaining 6.4 Lease Term (years
Slide 25: Investment Theme | Shift to Outpatient Care Settings
Investment Theme | Shift to Outpatient Care Settings Drivers of Change TECHNOLOGY Advances in medical procedures and clinical & INNOVATION innovation ease the migration to outpatient settings CONSUMER Consumer demand for improved care delivery and PREFERENCE value necessitates a change in care deliv
Slide 26: Outpatient Medical | Unprecedented and Ongoing Shift in Delivery of Healthcare
Outpatient Medical | Unprecedented and Ongoing Shift in Delivery of Healthcare Indexed Patient Visit Volume by Care Setting(1) Forecasted Patient Visit Volume Growth by Care Setting 60% Inpatient Days Outpatient Visits 2020 – 2030(1) Orthopedics 43% -6% 50% Thoracic Surgery 43% -4% Spine 40% -12% 40
Slide 27: Capital Allocation
Capital Allocation
Slide 28: Acquisitions Since 4Q2020
Acquisitions Since 4Q2020 Capital Deployment Volume(1) ✓ Initial yield of 6.1%; Stable yield of approximately 7.9% ✓ Low last-dollar exposure and innovative structure offer downside protection $11.6B GROSS INVESTMENTS ✓ Expected to generate high-single-digit to mid-teens unlevered IRRs to WELL Granu
Slide 29: Macroeconomic Backdrop to Boost Near-Term Capital Deployment and Long-Term Fundamentals
Macroeconomic Backdrop to Boost Near-Term Capital Deployment and Long-Term Fundamentals Scarcity of Equity and Debt Capital Multi-Year Period of Muted Supply Expected Equity Debt Surge in interest rates over the past 18 months has resulted in prohibitively expensive floating-rate debt for developers
Slide 30: Supplemental Financial Measures
Supplemental Financial Measures
Slide 31: 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 32: 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 33: 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 $ 385 $ 431 $ 468 $ 489 Impairments and losses (gains) on real estate dispositions, net
Slide 34: 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 35: In-Place NOI Reconciliations
In-Place NOI Reconciliations (dollars in thousands) 3Q23 In-Place NOI by property type 3Q23 % of Total Net income (loss) $ 134,722 Seniors Housing Operating $ 1,105,180 48 % Loss (gain) on real estate dispositions, net (71,102) Seniors Housing Triple-net 413,312 18 % Loss (income) from unconsolidate
Slide 36: SSNOI Reconciliation
SSNOI Reconciliation (dollars in thousands) Three Months Ended September 30, 2022 2023 % growth YOY Net income (loss) $ (2,653) $ 134,722 Loss (gain) on real estate dispositions, net (1,064) (71,102) Loss (income) from unconsolidated entities 6,698 4,031 Income tax expense (benefit) 3,257 4,584 Othe
Slide 37: SHO RevPOR Growth Reconciliation
SHO RevPOR Growth Reconciliation (dollars in thousands, except SS RevPOR and units) September 30, 2022 September 30, 2023 SHO SS RevPOR Growth Consolidated SHO revenues $ 1,072,600 $ 1,203,899 Unconsolidated SHO revenues attributable to WELL(1) 53,953 59,550 SHO revenues attributable to noncontrolli
Slide 38: SHO SS ExpPOR Growth Reconciliation
SHO SS ExpPOR Growth Reconciliation (dollars in thousands, except SS ExpPOR and units) September 30, 2022 September 30, 2023 SHO SS ExpPOR Growth Consolidated SHO property operating expenses $ 841,914 $ 918,990 Unconsolidated SHO expenses attributable to WELL (1) 39,416 40,512 SHO expenses attributa
Slide 39: SHO SSNOI Growth Reconciliation
SHO SSNOI Growth Reconciliation (dollars in thousands) United States United Kingdom Canada Total 3Q22 3Q23 3Q22 3Q23 3Q22 3Q23 3Q22 3Q23 SHO SSNOI Growth Consolidated SHO NOI $ 182,251 $ 226,086 $ 17,956 $ 21,443 $ 30,479 $ 37,380 $ 230,686 $ 284,909 Unconsolidated SHO NOI attributable to WELL(1) 7,
Slide 40: 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 41: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA (dollars in thousands) Three Months Ended Three Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Net income $ 134,722 $ (2,653) Total debt(2) $ 15,899,420 $ 15,210,358 Interest expense 156,532 139,682 Cash and cash equivalents and r
Slide 42: Net Debt to Consolidated Enterprise Value
Net Debt to Consolidated Enterprise Value (in thousands, except share price) Three Months Ended September 30, 2023 Common shares outstanding 532,268 Period end share price $ 81.92 Common equity market capitalization $ 43,603,395 Total debt(1) $ 15,899,420 Cash and cash equivalents and restricted cas
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