Welltower Inc. · NYSE:WELL
Welltower — Investor Presentation (June 2018)
55 slides from Welltower's investor presentation, June 2018
Slide 1: Driving the Future of Health Care Real Estate
Driving the Future of Health Care Real Estate Corporate Presentation | June 2018
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. When we use words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “pro forma,” “estimate” or simila
Slide 3: Welltower At A Glance
Welltower At A Glance 1,266 ~196,000 15,350,000 OUTPATIENT TOTAL HEALTH CARE PROPERTIES (3) RESIDENTS(2) MEDICAL VISITS(2) NYSE Dow Jones Moody’s S&P Fitch $36.1B Symbol: S&P Sustainability Baa1 BBB+ BBB+ Enterprise Value(1) WELL 500 Index Stable Stable Stable 1. Source: Bloomberg as of 6/30/2018. 2
Slide 4: Real Estate Investment Trust (REIT) Overview
Real Estate Investment Trust (REIT) Overview LARGEST U.S. PUBLIC REAL ESTATE COMPANIES By ENTERPRISE VALUE(1) Rank Company Sector $ (mm’s) 1 Simon Property Group Regional Malls $76,757 2 Prologis Inc. Industrial $47,015 RANK C O M PA N Y 3 C OStorage Public M PA N Y Self-Storage $44,655 4 Equinix In
Slide 5: Health Care Real Estate Landscape
Health Care Real Estate Landscape LOWER AVERAGE COST $ HIGHER AVERAGE COST $ ACUTE CARE POST-ACUTE CARE CONTINUUM SENIOR HOUSING Hospital Long-Term Inpatient Skilled Nursing Memory Assisted Independent Care Hospital Rehab Facility (LTC) Care Living Living HOME OUTPATIENT / MEDICAL OFFICE BUILDING 5
Slide 6: Powerful Demographic Tailwinds
Powerful Demographic Tailwinds 85+ Age Group % Growth 25-34 Age Group 110% 90% 70% 50% 30% 10% -10% 2018 2023 2028 2033 2038 Source: US Census Bureau National Population Projections, vintage 2017 6
Slide 7: Aging Population Drives Health Care Spending
Aging Population Drives Health Care Spending Source: National Health Expenditure, CMS. Data as of 9/30/2015. 7
Slide 8: Dementia / Alzheimer's: Residential Memory Care is the Answer
Dementia / Alzheimer’s: Residential Memory Care is the Answer ▪ Alzheimer’s Disease is the only “Top 10 Cause of Death” in the U.S. that cannot be prevented, slowed or cured 131.5 74.7 million million ▪ Number of people with dementia 46.8 globally will almost double every million 20 years ▪ Total es
Slide 9: Investing in Lower Cost Health Care Delivery Settings
Investing in Lower Cost Health Care Delivery Settings 9
Slide 10: Significant Opportunity to Increase Care Coordination in Post-Acute Settings
Significant Opportunity to Increase Care Coordination in Post-Acute Settings New England Journal of Medicine Catalyst Survey Findings DEGREE OF CARE COORDINATION BETWEEN IP, POST-ACUTE, HOME SETTINGS % health system survey respondents (N=375) 53% 55% health system leaders recognize decreased readmis
Slide 11: Shift to Value-Based Care will Increase the Role of Post-Acute Solutions
Shift to Value-Based Care will Increase the Role of Post- Acute Solutions VARIATION IN MEDICARE FFS SPEND % attributable by segment per beneficiary projected annual growth of lives 20% under fully capitated risk models, increasing from 9M lives to up to Post-acute 73 17M lives from 2017-20 Acute 27
Slide 12: Providers are Investing in and Engaging in Post-Acute Ventures
Providers are Investing in and Engaging in Post-Acute Ventures Direct ownership | Expanding regional / national footprint ▪ Propels ProMedica into the top 15 largest U.S. nonprofit health systems and scales its presence across full spectrum of care and 30 states ▪ Invested in a network of 5.5K+ seni
Slide 13: Welltower and ProMedica Health System Joint Venture
Welltower and ProMedica Health System Joint Venture Welltower and ProMedica to enter into a 15-year absolute triple-net master lease with ProMedica as tenant to real estate joint venture First of its kind partnership between a REIT and health system which spans the full spectrum of care, includi
Slide 14: About ProMedica Health System
About ProMedica Health System Transaction to establish ProMedica Health System as Top 15 U.S. not-for-profit health system with $7B+ in revenue About ProMedica Health System Top 25 U.S. Health Systems (By Revenue) • Nationally recognized not-for-profit health care network headquartered in Toledo, $B
Slide 15: Innovative Strategic Partnership
Innovative Strategic Partnership Partnership to facilitate and redefine the care delivery value paradigm and continuum of care through a nationally integrated health system Real estate partnership will benefit from a well-covered lease (1.8x coverage) backed by a solid A-rated investment grade healt
Slide 16: Welltower's Unique Growth Platform
WELLTOWER’S UNIQUE GROWTH PLATFORM 16
Slide 17: Portfolio Transformation
Portfolio Transformation(1) 1Q10 2Q18 Pro Forma LIFE SCIENCE OUTPATIENT Health System 2% OUTPATIENT MEDICAL MEDICAL OUTPATIENT 7% HOSPITALS 19% 17% MEDICAL 16% 8% LONG-TERM/ LONG-TERM/ POST-ACUTE CARE POST-ACUTE CARE LONG-TERM/ POST-ACUTE CARE In-Place 11% In-Place 10% In-Place 31% NOI NOI NOI SENIO
Slide 18: SHO Partner Diversification
SHO Partner Diversification(1) Pro Forma SHO Portfolio 34% OTHER 11% 34% 9% In-Place 7% NOI TOP 5 PARTNERS 6% 66% 1. Based on 2Q18 SHO annualized In-Place NOI. Please see non-GAAP financial measures and reconciliations at the end of this presentation. 18
Slide 19: The Definition of a "Class A" Health Care Portfolio
The Definition of a “Class A” Health Care Portfolio High Barrier to Entry Premier Markets Merrill Gardens at the University, Seattle, WA Best-In-Class Operating Partners Midtown Manhattan Development Chartwell Toronto Development Active Portfolio Management Welltower Outpatient Center, Sunrise Conne
Slide 20: Welltower Family of Brands
Welltower Family of Brands 20
Slide 21: U.S. Seniors Housing Portfolio: Major Urban Market Focus
U.S. Seniors Housing Portfolio: Major Urban Market Focus 95% (2) 611 (1) $17.1B (1) SH Operating NOI Seniors Housing Gross Real Estate in Top 31 MSAs + Facilities Investments Coastal States 62,398 units TOP US MARKETS(2) (% OF SH OPERATING NOI) Los Angeles 15.5% Boston 9.7% New York 8.2% San Francis
Slide 22: Strategic Focus: Urban, High Barrier to Entry Markets
Strategic Focus: Urban, High Barrier to Entry Markets Seniors Housing Construction: All Markets TOP US MARKETS(1) (% OF SH OPERATING NOI) Los Angeles 15.5% Boston 9.7% New York 8.2% San Francisco 5.3% Washington, D.C. 4.9% San Diego 3.8% Dallas 3.6% Chicago 3.4% Seattle 2.9% San Jose 2.3% Source: NI
Slide 23: UK Portfolio: Urban, High Barrier to Entry Markets
UK Portfolio | Urban, High Barrier to Entry Markets 88 %(3) (2) (2) 106 $2.9B UK SH Operating NOI in Greater London & Facilities Gross Real Estate Investments Southern England Manchester (1) 75+ POPULATION Birmingham 15 POPULATION (in millions) 9.6 10 7.7 London 5.6 5 0 2018 2028 2038 1. Source: Off
Slide 24: Canadian Portfolio: Urban, High Barrier to Entry Markets
Canadian Portfolio | Urban, High Barrier to Entry Markets CN 78 %(3) SH Operating NOI in Top 10 Canadian MSAs 75+ POPULATION (1) (2) 6 5 5.5 149 4.0 Facilities 4 (in millions) Population 2.7 (2) 3 2 $2.9B 1 Gross Real Estate 0 Investments 2018 2028 2038 1. Canadian data, source: Statistics Canada. 2
Slide 25: Urban Market Focus: Aging in Cities Survey
Urban Market Focus: Aging in Cities Survey Welltower-commissioned survey reaffirms current city dwellers desire to age in place. Seniors Wanting to Stay in Their City Boston 69% Chicago 69% Houston 66% Los Angeles 67% Miami 70% New York City 65% San Francisco 71% Seattle 68% Toronto 73% Washington D
Slide 26: Urban Market Focus: Midtown Manhattan Development
Urban Market Focus: Midtown Manhattan Development D E M A N D FAC T O R S • Manhattan has a vast, highly under-served population of aging New Yorkers • Current availability of assisted living is 5x less than national average • Currently, only 70 fully licensed memory care beds in Manhattan • >30,000
Slide 27: Urban Market Focus: The Sumach by Chartwell, Toronto
Urban Market Focus: The Sumach by Chartwell, Toronto D E M A N D FAC TO R S • New independent living community located in Regent Park neighborhood -- the “gold standard” for urban revitalization • 12-story building with 332 units; 5,500 square feet of retail space • Bistro-style restaurant for tenan
Slide 28: Urban Market Focus: The Wandsworth
Urban Market Focus: The Wandsworth D E M A N D FAC T O R S • Urban development to meet significant and growing demand in London market • Assisted living & memory care community located in Wandsworth, London, UK • 6 story building with 98 units; c. 70,000 square feet • High end facilities offered ons
Slide 29: Outpatient Medical Growth Opportunity
Outpatient Medical Growth Opportunity Health Systems & Physicians Currently Own ~65% of Outpatient Medical Real Estate 5% Properties Total Total Government/Other Value Sq. Feet 19% Investor/Private Hospital 5,529 $626B 1.6B Outpatient 33,927 $394B 1.4B 11% 51% TOTALS 39,456 $1.0T Health Systems 3.0B
Slide 30: Procedures Driving Outpatient Medical Growth
Procedures Driving Outpatient Medical Growth Segment Demand Growth: 2017 - 2027 Opthamology 31.8% -8.3% Gynecology 7.4% -6.2% Cardiology 21.4% -5.4% Vascular 35.1% -7.3% ENT 34.7% -1.1% Orthopedics 3.0% 7.2% Obstetrics 16.8% 5.1% Oncology 12.2% 10.4% Neurology 41.6% 9.9% Neurosurgery 23.2% 28.0% -20
Slide 31: Welltower's Full Service Outpatient Medical Group
Welltower’s Full Service Outpatient Medical Group Strategic Health Care Alliances & Innovative Care Delivery Models $5.7B INVESTED IN 249 PROPERTIES 95% HEALTH SYSTEM 16.3M AFFILIATED AS % OUTPATIENT MEDICAL OF CORE NOI(1) SQUARE FEET Welltower proudly serves many of the nation’s top 99% IN-HOUSE MA
Slide 32: Transformational Retail & Health Care Real Estate Partnership
Transformational Retail & Health Care Real Estate Partnership 32
Slide 33: Welltower & Johns Hopkins Strategic Alliance
Welltower & Johns Hopkins Strategic Alliance Strategic alliance supports modern, efficient health care infrastructure and innovative care • Measure quality of care outcomes in Assisted Living and Memory Care • Educational programs for patients and care givers • Evaluate market opportunities • Delive
Slide 34: Financial Summary
FINANCIAL SUMMARY welltower'| 34
Slide 35: Balanced and Manageable Debt Maturity Profile
Balanced and Manageable Debt Maturity Profile Weighted average maturity of 7.2 years 2018 2019 2020 2021 2022 2023 2024 2025 2026 Thereafter Pro Rata Secured Debt Senior Notes Lines of Credit in millions 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thereafter Unsecured $0 $600 $686 1,140 $600 $
Slide 36: Consistently Outperforming Peers
Consistently Outperforming Peers Total Returns(1) 45.00% Welltower 35.00% FNHEA Index 25.00% +20% 15.00% +15% 5.00% -5.00% -15.00% Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 14.7% Average Annual Return Since Inception (1) 5.
Slide 37: Performance Driven Strategy
Performance Driven Strategy Investment Grade Balance Sheet & Outstanding Access to Capital Significant and Stable Dividend Income Superior Internal & External Growth Best-in-Class Real Estate & Operating Investment in the Partners “Silver Economy” & Aging 37
Slide 38: Appendix
APPENDIX welltower | 38
Slide 39: Recognized For Sustainable Business Practices
Recognized For Sustainable Business Practices Listed to the 2018 RobecoSam Recognized by ISS for leading Sustainability Yearbook: environmental and social Industry Mover Designation transparency and disclosure with the highest rating Building Certifications IREM CSP: 11 LEED: 14 Energy Star: 62 BREE
Slide 40: Strong Growth in Projected Demand for Seniors Housing
Strong Growth in Projected Demand for Seniors Housing Projected Annual Demand Growth For Seniors Housing Units 96,000 92,000 48,500 50,500 53,000 28,000 25,000 18,000 43,500 45,500 13,000 9,500 25,000 8,500 12,000 2010-2015 2015 - 2020 2020 - 2025 2025 - 2030 2030 - 2035 Assisted Living and Memory C
Slide 41: Growth Platform Driving the Future of Health Care Delivery
Growth Platform Driving the Future of Health Care Delivery 72% Seniors Housing(2) (Independent Living, Assisted Living & Memory Care) Portfolio Mix (1) • Invest in top metro markets with high barriers to entry, concentrated along U.S. coastlines • Strategic partnerships with best-in-class, privately
Slide 42: Outpatient Will Continue to Dominate Care Delivery
Outpatient Will Continue to Dominate Care Delivery Outpatient visits Inpatient admissions 60% 50% 40% 30% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 51% increase in outpatient visits since 1999, compared with a 3% increase in inpatient admiss
Slide 43: Superior Assets Lead to Superior Operating Results
Superior Assets Lead to Superior Operating Results Outpatient Medical Outpatient Welltower (1) Medical Peers (2) Occupancy 94% 91% Average Property Size 65,406 64,803 Square Feet Health System Affiliation(3) 95% 95% NOI Margin 69% 65% NOI per Square Foot $23.06 $18.31 Annualized Lease Expirations(4)
Slide 44: 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 19 36 32 39 Years Occupancy 83% 81% 82% 82% Quality Mix 67%(5) 44% 51% 46% Private & Medicare Revenue % Data Data EBITDAR
Slide 45: Superior Assets Lead to Superior Operating Results
Superior Assets Lead to Superior Operating Results US Seniors Housing UK Seniors Housing Welltower US HC REIT Public Industry Welltower UK Industry RIDEA(1) Peers(2) Operators(3) Benchmarks RIDEA(1) Benchmarks Property Age 16 19(4) 20(4) 21(5) 10 21(9) Years Housing Value $536,727 $244,284(4) $216,9
Slide 46: Detailed Footnotes
Detailed Footnotes 1. Data as of 6/30/2018 for properties included in the seniors housing operating segment. Property age, housing value and household income are NOI-weighted as of June 30, 2018. The median housing value and household income is used for the US, and the average housing value and hous
Slide 47: Financial Disclosures
FINANCIAL DISCLOSURES welltower | 47
Slide 48: Non-GAAP Financial Measures
Non-GAAP Financial Measures Welltower Inc. believes 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, the company considers Net Operati
Slide 49: NOI, IPNOI, SSNOI, REVPOR and SS REVPOR
NOI, IPNOI, SSNOI, 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 managing
Slide 50: Historical In-Place NOI Reconciliations
Historical In-Place NOI Reconciliations Th re e mo n th s Th re e mo n th s $ s in th o u s a n d s e n d e d 6 /3 0 /18 $ s in th o u s a n d s e n d e d 3 /3 1/10 Ne t in c o me $ 16 7 ,2 7 3 Ne t in c o me $ 3 1,6 9 4 Lo s s (g a in ) o n re a l e s ta te d is p o s itio n s , n e t (10 ,7 5 5 )
Slide 51: In-Place NOI Concentration Reconciliations
In-Place NOI Concentration Reconciliations % of S e n io rs S e n io rs $ s in th o u s a n d s a t We llto we r p ro ra ta S HO b y % of h o u s in g h o u s in g Lo n g -te rm/ O u tp a tie n t % of % of o wn e rs h ip Co u n try S HO o p e ra tin g trip le -n e t p o s t-a c u te me d ic a l To t
Slide 52: SHO REVPOR Reconciliation
SHO REVPOR Reconciliation SSNOI Reconciliations 52
Slide 53: SHO Same Store Reconciliations
SHO Same Store Reconciliations SSNOI Reconciliations 53
Slide 54: Outpatient Medical NOI Reconciliations
Outpatient Medical NOI Reconciliations Outpatient Medical NOI Reconciliations 54
Slide 55: Pro Forma Annualized NOI Reconciliations
Pro Forma Annualized NOI Reconciliations $ s in th o u s a n d s P ro Fo rma Ad ju s tme n ts P ro Fo rma 2 Q '18 An n u a lize d An n u a lize d IP NO I(1) % o f To ta l Bro o kd a le Bra n d ywin e Q CP IP NO I(2 ) % o f To ta l S e n io rs Ho u s in g Trip le -Ne t $ 5 3 0 ,3 6 0 2 6 .7 % $ (5 2