WELLTOWER INC.
Company Overview 30
Business Strategy 31
Key Transactions 32
Key Performance Indicators, Trends and Uncertainties 32
Corporate Governance 34
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash 34
Off-Balance Sheet Arrangements 35
Contractual Obligations 36
Capital Structure 36
RESULTS OF OPERATIONS
Summary 37
Seniors Housing Operating 38
Triple-net 40
Outpatient Medical 42
Non-Segment/Corporate 43
OTHER
Non-GAAP Financial Measures 44
Critical Accounting Policies 50
Cautionary Statement Regarding Forward-Looking Statements 51
29
-------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis is based primarily on the unaudited consolidated financial statements ofWelltower Inc. for the periods presented and should be read together with the notes thereto contained in this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , including factors identified under the headings "Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." OnMarch 7, 2022 , we announced our intent to complete an UPREIT reorganization. InFebruary 2022 , the company formerly known asWelltower Inc. ("Old Welltower") formedWELL Merger Holdco Inc. ("New Welltower") as a wholly owned subsidiary, and New Welltower formedWELL Merger Holdco Sub Inc. ("Merger Sub") as a wholly owned subsidiary. OnApril 1, 2022 , Merger Sub merged with and into OldWelltower , with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the "Merger"). In connection with the Merger, Old Welltower's name was changed to "Welltower OP Inc. ", and NewWelltower inherited the name "Welltower Inc. " This Quarterly Report on Form 10-Q pertains to the business and results of Old Welltower for its quarter endedMarch 31, 2022 . We have elected to co-file this report to ensure continuity of information to investors. Unless the context requires otherwise, references herein to "the Company", "we", "us" and "our" refer toWelltower OP Inc. (Old Welltower) throughMarch 31, 2022 . Forward-looking references to dates and periods occurring afterApril 1, 2022 are references toWelltower Inc. (New Welltower).
Executive Summary
Company Overview
Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered inToledo, Ohio , is driving the transformation of health care infrastructure. As noted above, effectiveApril 1, 2022 ,Welltower OP Inc. became a wholly owned subsidiary ofWelltower Inc. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate and infrastructure needed to scale innovative care delivery models and improve people's wellness and overall health care experience. Welltower™, a real estate investment trust ("REIT"), owns interests in properties concentrated in major, high-growth markets inthe United States (U.S. ),Canada and theUnited Kingdom (U.K. ), consisting of seniors housing and post-acute communities and outpatient medical properties.
The following table summarizes our consolidated portfolio for the three months
ended
Percentage of Number of
Type of Property NOI (1) NOI Properties
Seniors Housing Operating $ 206,684 38.0 % 774
Triple-net 223,952 41.2 % 578
Outpatient Medical 113,408 20.8 % 311
Totals $ 544,044 100.0 % 1,663
(1) Represents consolidated NOI and excludes our share of investments in unconsolidated entities. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount. See Non-GAAP Financial Measures for additional information and reconciliation.
The COVID-19 pandemic has had and may continue to have material and adverse effects on our financial condition, results of operations and cash flows in the future. The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the effectiveness of vaccines, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, the overall pace of recovery, among others. Our Seniors Housing Operating revenues are dependent on occupancy, which has steadily increased in recent months. As ofMarch 31, 2022 , nearly all communities are open for new admissions and allowing visitors, in-person tours and communal dining and activities. We have incurred increased operational costs as a result of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor, personal protective equipment and sanitation. We expect total Seniors Housing Operating expenses to remain elevated during the pandemic and potentially beyond as these additional health and safety measures become standard practice. Our Triple-net operators are experiencing similar trends related to occupancy and operating costs with respect to our Seniors Housing Operating properties. However, long-term/post-acute care facilities are generally experiencing a higher degree of occupancy declines. These factors may continue to impact the ability of our Triple-net operators to make contractual rent payments to us in the future. Many of our Triple-net operators received funds under the Coronavirus Aid Relief, and Economic Security Act ("CARES Act") Paycheck Protection Program and theProvider Relief Fund . 30
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Strategy Our primary objectives are to protect stockholder capital and enhance stockholder value. We seek to pay consistent cash dividends to stockholders and create opportunities to increase dividend payments to stockholders as a result of annual increases in NOI and portfolio growth. To meet these objectives, we invest across the full spectrum of seniors housing and health care real estate and diversify our investment portfolio by property type, relationship and geographic location. Substantially all of our revenues are derived from operating lease rentals, resident fees and services and interest earned on outstanding loans receivable. These items represent our primary sources of liquidity to fund distributions and depend upon the continued ability of our obligors to make contractual rent and interest payments to us and the profitability of our operating properties. To the extent that our obligors/partners experience operating difficulties and become unable to generate sufficient cash to make payments or operating distributions to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by the type of property. Our asset management process for seniors housing properties generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our internal property management division manages and monitors the outpatient medical portfolio with a comprehensive process including review of tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs and market conditions among other things. We evaluate the operating environment in each property's market to determine the likely trend in operating performance of the facility. When we identify unacceptable trends, we seek to mitigate, eliminate or transfer the risk. Through these efforts, we generally aim to intervene at an early stage to address any negative trends, and in so doing, support both the collectability of revenue and the value of our investment. In addition to our asset management and research efforts, we also aim to structure our relevant investments to mitigate payment risk. Operating leases and loans are normally credit enhanced by guarantees and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other real estate loans, operating leases or agreements between us and the obligor and its affiliates. For the three months endedMarch 31, 2022 , resident fees and services and rental income represented 71% and 26%, respectively, of total revenues. Substantially all of our operating leases are designed with escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our yield on loans receivable depends upon a number of factors, including the stated interest rate, the average principal amount outstanding during the term of the loan and any interest rate adjustments. Our primary sources of cash include resident fees and services, rent and interest receipts, borrowings under our unsecured revolving credit facility and commercial paper program, public issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures, construction advances and transaction costs), loan advances, property operating expenses, general and administrative expenses and other expenses. Depending upon the availability and cost of external capital, we believe our liquidity is sufficient to fund these uses of cash. We also continuously evaluate opportunities to finance future investments. New investments are generally funded from temporary borrowings under our unsecured revolving credit facility and commercial paper program, internally generated cash and the proceeds from investment dispositions. Our investments generate cash from NOI and principal payments on loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving credit facility and commercial paper program, has historically been provided through a combination of the issuance of public debt and equity securities and the incurrence or assumption of secured debt. Depending upon market conditions, we believe that new investments will be available in the future with spreads over our cost of capital that will generate appropriate returns to our stockholders. It is also likely that investment dispositions may occur in the future. To the extent that investment dispositions exceed new investments, our revenues and cash flows from operations could be adversely affected. We expect to reinvest the proceeds from any investment dispositions in new investments. To the extent that new investment requirements exceed our available cash on-hand, we expect to borrow under our unsecured revolving credit facility and commercial paper program. AtMarch 31, 2022 , we had$301,089,000 of cash and cash equivalents,$65,954,000 of restricted cash and$3,700,000,000 of available borrowing capacity under our unsecured revolving credit facility. 31
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Key Transactions
Capital The following summarizes key capital transactions that occurred during
the three months ended
•In
•InJuly 2021 , we entered into an amended and restated ATM Program (as defined below) pursuant to which we may offer and sell up to$2,500,000,000 of common stock from time to time. During the three months endedMarch 31, 2022 , we settled 6,605,191 shares of common stock that were sold under our ATM Program via forward sale agreements resulting in$558,790,000 of gross proceeds.
•During the three months ended
Investments The following summarizes our property acquisitions and joint venture investments completed during the three months endedMarch 31, 2022 (dollars in thousands): Properties Book Amount (1) Capitalization Rates (2) Seniors Housing Operating 10$ 477,605 3.8 % Triple-net - 171 - % Outpatient Medical 4 152,482 5.5 % Totals 14$ 630,258 4.2 %
(1) Represents amounts recorded in net real estate investments including fair value adjustments pursuant to
Dispositions The following summarizes property dispositions completed during the
three months ended
Properties Proceeds (1) Book Amount (2) Capitalization Rates (3)
Triple-net 7 $ 73,568 $ 52,661 7.4 %
(1) Represents net proceeds received upon disposition, including any seller financing.
(2) Represents carrying value of net real estate assets at time of disposition. See Note 5 to our unaudited consolidated financial statements
for additional information.
(3) Represents annualized contractual income that was being received in cash at date of disposition divided by stated purchase price.
Dividends Our Board of Directors declared a cash dividend for the quarter ended
Key Performance Indicators, Trends and Uncertainties
We utilize several key performance indicators to evaluate the various aspects of
our business. These indicators are discussed below and relate to operating
performance, credit strength and concentration risk. Management uses these key
performance indicators to facilitate internal and external comparisons to our
historical operating results, in making operating decisions and for budget
planning purposes.
Operating Performance We believe that net income and net income attributable to
common stockholders ("NICS") per the Consolidated Statements of Comprehensive
Income are the most appropriate earnings measures. Other useful supplemental
measures of our operating performance include funds from operations attributable
to common stockholders ("FFO") and consolidated net operating income ("NOI");
however, these supplemental measures are not defined by U.S. generally accepted
accounting principles ("U.S. GAAP"). Please refer to the section entitled
"Non-GAAP Financial Measures" for further discussion and reconciliations. These
earnings measures are widely used by investors and analysts in the valuation,
comparison and investment recommendations of companies. The following table
reflects the recent historical trends of our operating performance measures for
the periods presented (in thousands):
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2022 2021 2021 2021 2021
Net income (loss) $ 65,751 $ 66,194 $ 190,336 $ 45,757 $ 72,192
NICS 61,925 58,672 179,663 26,257 71,546
FFO 347,635 338,976 345,739 248,840 287,167
NOI 542,035 524,085 510,397 498,335 434,736
32
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Credit Strength 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 restricted cash.
The coverage ratios indicate our ability to service interest and fixed charges
(interest and secured debt principal amortization). We expect to maintain
capitalization ratios and coverage ratios sufficient to maintain a capital
structure consistent with our current profile. The coverage ratios are based on
earnings before interest, taxes, depreciation and amortization ("EBITDA").
Please refer to the section entitled "Non-GAAP Financial Measures" for further
discussion and reconciliation of these measures. Leverage ratios and coverage
ratios are widely used by investors, analysts and rating agencies in the
valuation, comparison, investment recommendations and rating of companies. The
following table reflects the recent historical trends for our credit strength
measures for the periods presented:
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2022 2021 2021 2021 2021
Net debt to book capitalization ratio 43% 42% 42% 43% 41%
Net debt to undepreciated book capitalization ratio 35% 35% 35% 35%
34%
Net debt to market capitalization ratio 24% 26% 27% 26% 28%
Interest coverage ratio 4.03x 3.89x 4.81x 3.30x 3.56x
Fixed charge coverage ratio 3.57x 3.42x 4.22x 2.93x 3.16x
Concentration Risk We evaluate our concentration risk in terms of NOI by
property mix, relationship mix and geographic mix. Concentration risk is a
valuable measure in understanding what portion of our NOI could be at risk if
certain sectors were to experience downturns. Property mix measures the portion
of our NOI that relates to our various property types. Relationship mix measures
the portion of our NOI that relates to our current top five relationships.
Geographic mix measures the portion of our NOI that relates to our current top
five states (or international equivalents). The following table reflects our
recent historical trends of concentration risk by NOI for the periods indicated
below:
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2022 2021 2021 2021 2021
Property mix:(1)
Seniors Housing Operating 38% 34% 34% 32% 39%
Triple-net 41% 44% 45% 45% 36%
Outpatient Medical 21% 22% 21% 23% 25%
Relationship mix: (1)
ProMedica 11% 11% 11% 12% 12%
Sunrise Senior Living 6% 7% 9% 10% 14%
Atria Senior Living 5% 4% 3% -% -%
HC-One Group 4% 5% 5% 3% -%
Avery Healthcare 4% 4% 4% 4% 5%
Remaining relationships 70% 69% 68% 71% 69%
Geographic mix:(1)
California 13% 13% 12% 12% 15%
United Kingdom 11% 13% 14% 13% 10%
Texas 8% 9% 9% 9% 7%
New Jersey 5% 5% 5% 5% 7%
Canada 5% 5% 6% 7% 7%
Remaining geographic areas 58% 55% 54% 54% 54%
(1) Excludes our share of investments in unconsolidated entities and non-segment/corporate NOI. Entities in which we have a joint venture with a minority partner are shown at 100% of the joint venture amount.
Lease Expirations The following table sets forth information regarding lease expirations for certain portions of our portfolio as ofMarch 31, 2022 (dollars in thousands): 33
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Expiration Year (1)
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Thereafter
Triple-net:
Properties 22 2 4 27 66 4 14 4 21 9 390
Base rent (2) $ 4,194 $ 840 $ 12,110 $ 6,612 $ 68,008 $ 15,191 $ 19,383 $ 3,972 $ 43,322 $ 21,203 $ 430,445 % of base rent 0.7 % 0.1 % 1.9 % 1.1 % 10.9 % 2.4 % 3.1 % 0.6 % 6.9 % 3.4 % 68.9 % Units/beds 3,285 222 692 1,725 5,016 633 1,474 219 2,279 896 39,542 % of Units/beds 5.9 % 0.4 % 1.2 % 3.1 % 9.0 % 1.1 % 2.6 % 0.4 % 4.1 % 1.6 % 70.6 % Outpatient Medical: Square feet 1,376,952 1,709,614 1,922,175 1,070,893 1,390,852 1,252,589 949,513 790,651 1,492,484 1,399,206 4,358,806 Base rent (2)$ 41,025 $ 48,971 $ 59,039 $ 30,385 $ 38,274 $ 33,066 $ 25,750 $ 22,763 $ 38,835 $ 38,270 $ 94,228 % of base rent 8.7 % 10.4 % 12.5 % 6.5 % 8.1 % 7.0 % 5.5 % 4.8 % 8.3 % 8.1 % 20.1 % Leases 312 363 355 233 258 204 133 90 104 79 185 % of Leases 13.5 % 15.7 % 15.3 % 10.1 % 11.1 % 8.8 % 5.7 % 3.9 % 4.5 % 3.4 % 8.0 %
(1) Excludes our share of investments in unconsolidated entities, developments, land parcels, loans receivable and sub-leases. Investments classified as held for sale are included in the current year. (2) The most recent monthly cash base rent annualized. Base rent does not include tenant recoveries or amortization of above and below market lease intangibles or other non-cash income.
We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved, and actual results may differ materially from our expectations. Factors that may cause actual results to differ from expected results are described in more detail in "Cautionary Statement Regarding Forward-Looking Statements" and other sections of this Quarterly Report on Form 10-Q. Management regularly monitors economic and other factors to develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends. Please refer to our Annual Report on Form 10-K for the year endedDecember 31, 2021 , under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Corporate Governance
Maintaining investor confidence and trust is important in today's business environment. Our Board of Directors and management are strongly committed to policies and procedures that reflect the highest level of ethical business practices. Our corporate governance guidelines provide the framework for our business operations and emphasize our commitment to increase stockholder value while meeting all applicable legal requirements. These guidelines meet the listing standards adopted by theNew York Stock Exchange and are available on the Internet at www.welltower.com/investors/governance. The information on our website is not incorporated by reference in this Quarterly Report on Form 10-Q, and our web address is included as an inactive textual reference only.
Liquidity and Capital Resources
Sources and Uses of Cash
Our primary sources of cash include resident fees and services, rent and
interest receipts, borrowings under our unsecured revolving credit facility and
commercial paper program, public issuances of debt and equity securities,
proceeds from investment dispositions and principal payments on loans
receivable. Our primary uses of cash include dividend distributions, debt
service payments (including principal and interest), real property investments
(including acquisitions, capital expenditures, construction advances and
transaction costs), loan advances, property operating expenses, general and
administrative expenses and other expenses. These sources and uses of cash are
reflected in our Consolidated Statements of Cash Flows and are discussed in
further detail below. The following is a summary of our sources and uses of cash
flows for the periods presented (dollars in thousands):
Three Months Ended Change
March 31, 2022 March 31, 2021 $ %
Cash, cash equivalents and restricted cash at
beginning of period $ 346,755 $ 2,021,043 $ (1,674,288) (83) %
Cash provided from (used in) operating
activities 324,520 303,658 20,862 7 %
Cash provided from (used in) investing
activities (808,547) (139,140) (669,407) (481) %
Cash provided from (used in) financing
activities 505,105 371,903 133,202 36 %
Effect of foreign currency translation (790) 1,358 (2,148) (158) %
Cash, cash equivalents and restricted cash at
end of period $ 367,043 $ 2,558,822 $ (2,191,779) (86) %
34-------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operating Activities The changes in net cash provided from operating activities was immaterial. Please see "Results of Operations" for discussion of net income fluctuations. For the three months endedMarch 31, 2022 and 2021, cash flows provided from operations exceeded cash distributions to stockholders. Investing Activities The changes in net cash provided from/used in investing activities are primarily attributable to net changes in real property investments and dispositions, loans receivable and investments in unconsolidated entities, which are summarized above in "Key Transactions." Please refer to Notes 3 and 5 of our unaudited consolidated financial statements for additional information. The following is a summary of cash used in non-acquisition capital improvement activities for the periods presented (dollars in thousands): Three Months Ended Change March 31, 2022 March 31, 2021 $ New development $
138,141
32,835 10,754 22,081
Renovations, redevelopments and other capital
improvements 57,394 18,026 39,368
Total $ 228,370 $ 102,385 $ 125,985
The change in new development is primarily due to the number and size of
construction projects on-going during the relevant periods. Renovations,
redevelopments and other capital improvements include expenditures to maximize
property value, increase net operating income, maintain a market-competitive
position and/or achieve property stabilization.
Financing Activities The changes in net cash provided from/used in financing
activities are primarily attributable to changes related to our long-term debt
arrangements, the issuances of common stock and dividend payments which are
summarized above in "Key Transactions." Please refer to Notes 10, 11 and 14 of
our unaudited consolidated financial statements for additional information.
In March 2022 , we completed the issuance of $550,000,000 senior unsecured notes
with a maturity date of June 2032 . As of March 31, 2022 , we have total near-term
available liquidity of approximately $4.1 billion .
Off-Balance Sheet Arrangements
AtMarch 31, 2022 , we had investments in unconsolidated entities with our ownership generally ranging from 10% to 88%. We use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. AtMarch 31, 2022 , we had 17 outstanding letter of credit obligations. Please see Notes 8, 12 and 13 to our unaudited consolidated financial statements for additional information. 35
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Contractual Obligations
The following table summarizes our payment requirements under contractual
obligations as of
Payments Due by Period
Contractual Obligations Total 2022 2023-2024 2025-2026 Thereafter
Unsecured credit facility and commercial
paper (1,3) $ 300,000 $ - $ - $ 300,000 $ -
Senior unsecured notes and term credit
facilities: (1)
U.S. Dollar senior unsecured notes 9,900,000 - 1,350,000 1,950,000 6,600,000
Canadian Dollar senior unsecured notes (2) 240,347 - - - 240,347
Pounds Sterling senior unsecured notes (2) 1,380,960 - - - 1,380,960
U.S. Dollar term credit facility 510,000 - 500,000 10,000 -
Canadian Dollar term credit facility (2) 200,288 - 200,288 - -
Secured debt: (1,2)
Consolidated 2,115,641 575,737 633,350 277,288 629,266
Unconsolidated 1,266,905 146,558 302,886 552,529 264,932
Contractual interest obligations: (3)
Unsecured credit facility and commercial
paper 12,821 2,263 6,033 4,525 -
Senior unsecured notes and term loans (2) 3,797,590 326,226 841,203 666,489 1,963,672
Consolidated secured debt (2) 212,912 45,628 75,365 43,926 47,993
Unconsolidated secured debt (2) 176,900 31,013 66,623 26,522 52,742
Financing lease liabilities (4) 208,588 6,429 71,634 3,354 127,171
Operating lease liabilities (4) 1,375,702 30,777 87,980 87,324 1,169,621
Purchase obligations (5) 1,845,205 914,297 883,699 47,202 7
Total contractual obligations $ 23,543,859 $
2,078,928
(1) Amounts represent principal amounts due and do not reflect unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet. (2) Based on foreign currency exchange rates in effect as of balance sheet date. (3) Based on variable interest rates in effect as of the balance sheet date. (4) See Note 6 to our unaudited consolidated financial statements for additional information. (5) See Note 13 to our unaudited consolidated financial statements for additional information. Capital Structure Please refer to "Credit Strength" above for a discussion of our leverage and coverage ratio trends. Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As ofMarch 31, 2022 , we were in compliance in all material respects with the covenants under our debt agreements. None of our debt agreements contain provisions for acceleration which could be triggered by our debt ratings. However, under our primary unsecured credit facility, the ratings on our senior unsecured notes are used to determine the fees and interest charged. We plan to manage the company to maintain compliance with our debt covenants and with a capital structure consistent with our current profile. Any downgrades in terms of ratings or outlook by any or all of the rating agencies could have a material adverse impact on our cost and availability of capital, which could have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. OnApril 1, 2022 ,Welltower Inc. andWelltower OP Inc. jointly filed with theSecurities and Exchange Commission (the "SEC") an open-ended automatic or "universal" shelf registration statement on Form S-3 covering an indeterminate amount of future offerings ofWelltower Inc.'s debt securities, common stock, preferred stock, depositary shares, guarantees of debt securities issued byWelltower OP Inc. , warrants and units andWelltower OP Inc.'s debt securities and guarantees of debt securities issued byWelltower Inc. to replace OldWelltower's existing "universal" shelf registration statement filed with theSEC onMay 4, 2021 . OnApril 1, 2022 ,Welltower Inc. also filed with theSEC a registration statement in connection with its enhanced dividend reinvestment plan ("DRIP") under which it may issue up to 15,000,000 shares of common stock to replace Old Welltower's existing DRIP registration statement on Form S-3 filed with theSEC onMay 4, 2021 . As ofApril 29, 2022 , 15,000,000 shares of common stock remained available for issuance under the DRIP registration statement. OnApril 4, 2022 ,Welltower Inc. andWelltower OP Inc. entered into (i) a second amended and restated equity distribution agreement (the "EDA") with (i)Robert W. Baird & Co. Incorporated ,Barclays Capital Inc. ,BMO Capital Markets Corp. ,BNP Paribas Securities Corp. ,BNY Mellon Capital Markets, LLC ,BofA Securities, Inc. ,BOK Financial Securities, Inc. ,Capital One Securities Inc. ,Citigroup Global Markets Inc. ,Comerica Securities, Inc. ,Credit Agricole Securities (USA) Inc. ,Deutsche Bank Securities Inc. ,Fifth Third Securities, Inc. ,Goldman Sachs & Co. LLC ,Jefferies LLC ,JMP Securities LLC ,J.P. Morgan Securities LLC ,KeyBanc Capital Markets Inc. ,Loop Capital Markets LLC ,Mizuho Securities USA LLC ,Morgan Stanley & Co. LLC ,MUFG Securities Americas Inc. ,RBC Capital Markets, LLC ,Regions Securities LLC ,Scotia Capital (USA) Inc. , 36 -------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsSMBC Nikko Securities America, Inc. ,Synovus Securities, Inc. ,TD Securities (USA) LLC ,Truist Securities, Inc. andWells Fargo Securities, LLC as sales agents and forward sellers and (ii) the forward purchasers named therein relating to issuances, offers and sales from time to time of up to$3,000,000,000 aggregate amount of common stock ofWelltower Inc. (together with the existing master forward sale confirmations relating thereto, the "ATM Program"), amending and restating the ATM Program entered into onJuly 30, 2021 to, among other amendments, increase the total amount of shares of common stock that may be offered and sold under the ATM Program from$2,500,000,000 to$3,000,000,000 , which amount excludes shares Old Welltower had previously sold pursuant to the prior program. The ATM Program also allowsWelltower Inc. to enter into forward sale agreements. As ofApril 29, 2022 , we had$3,000,000,000 of remaining capacity under the ATM Program, which excludes forward sales agreements outstanding for the sale of 4,662,141 shares or approximately$450,291,000 with maturity dates in 2023. In addition, we have forward sale agreements for the sale of 14,847,242 shares or approximately$1,307,384,000 with maturity dates in 2023 under theJuly 30, 2021 ATM Program. We expect to physically settle the forward sales for cash proceeds. Depending upon market conditions, we anticipate issuing securities under our registration statements to invest in additional properties and to repay borrowings under our unsecured revolving credit facility and commercial paper program. In connection with the filing of the new "universal" shelf registration statement,Welltower Inc. also filed with theSEC two prospectus supplements that will continue offerings that were previously covered by Old Welltower's prospectus supplements and the accompanying prospectus to the prior registration statement relating to: (i) the registration and possible issuance of up to 620,731 shares of common stock ofWelltower Inc. (the "DownREIT Shares"), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the "DownREIT Units") ofHCN G&L DownREIT, LLC , aDelaware limited liability company (the "DownREIT"), tender such DownREIT Units for redemption by the DownREIT, andHCN DownREIT Member, LLC , a majority-owned indirect subsidiary ofWelltower Inc. (including its permitted successors and assigns, the "Managing Member"), or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT and to satisfy all or a portion of the redemption consideration by issuing DownREIT Shares to the holders instead of or in addition to paying a cash amount; and (ii) the registration and possible issuance of up to 475,327 shares common stock ofWelltower Inc. (the "DownREIT II Shares"), that may be issued from time to time if, and to the extent that, certain holders of Class A units (the "DownREIT II Units," and collectively with the DownREIT Units, the "Units") ofHCN G&L DownREIT II LLC , aDelaware limited liability company (the "DownREIT II"), tender such DownREIT II Units for redemption by the DownREIT II, and the Managing Member, or a designated affiliate of the Managing Member, elects to assume the redemption obligations of the DownREIT II and to satisfy all or a portion of the redemption consideration by issuing DownREIT II Shares to the holders instead of or in addition to paying a cash amount.
Results of Operations
Summary
Our primary sources of revenue include resident fees and services, rent and
interest income. Our primary expenses include property operating expenses,
depreciation and amortization, interest expense, general and administrative
expenses and other expenses. We evaluate our business and make resource
allocations on our three business segments: Seniors Housing Operating,
Triple-net and Outpatient Medical. The primary performance measures for our
properties are NOI and same store NOI ("SSNOI"), and other supplemental measures
include Funds From Operations ("FFO") and EBITDA, which are further discussed
below. Please see Non-GAAP Financial Measures for additional information and
reconciliations. The following is a summary of our results of operations
(dollars in thousands, except per share amounts):
Three Months Ended Change
March 31, March 31,
2022 2021 Amount %
Net income $ 65,751 $ 72,192 $ (6,441) (9) %
NICS 61,925 71,546 (9,621) (13) %
FFO 347,635 287,167 60,468 21 %
EBITDA 496,548 443,703 52,845 12 %
NOI 542,035 434,736 107,299 25 %
SSNOI 391,228 388,964 2,264 1 %
Per share data (fully diluted):
NICS $ 0.14 $ 0.17 $ (0.03) (18) %
FFO $ 0.77 $ 0.69 $ 0.08 12 %
Interest coverage ratio 4.03 x 3.56 x 0.47 x 13 %
Fixed charge coverage ratio 3.57 x 3.16 x 0.41 x 13 %
37--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Seniors Housing Operating
The following is a summary of our SSNOI at
QTD Pool
Three Months Ended Change
March 31, 2022 March 31, 2021 $ %
SSNOI (1) $ 143,572 $ 151,610 $ (8,038) (5.3) %
(1) For the
The following is a summary of our results of operations for the Seniors Housing Operating segment (dollars in thousands):
Three Months Ended Change
March 31, March 31,
2022 2021 $ %
Revenues:
Resident fees and services $ 994,335 $ 723,464 $ 270,871 37 % Interest income 1,417 1,119 298 27 % Other income 860 1,819 (959) (53) % Total revenues 996,612 726,402 270,210 37 % Property operating expenses 789,928 555,968 233,960 42 % NOI (1) 206,684 170,434 36,250 21 % Other expenses: Depreciation and amortization 192,793 132,586 60,207 45 % Interest expense 7,650 11,418 (3,768) (33) % Loss (gain) on extinguishment of debt, net (15) (4,643) 4,628 100 % Provision for loan losses, net 267 251 16 6 % Impairment of assets - 4,604 (4,604) (100) % Other expenses 8,191 3,459 4,732 137 % 208,886 147,675 61,211 41 % Income (loss) from continuing operations before income taxes and other items (2,202) 22,759 (24,961) (110) % Income (loss) from unconsolidated entities (17,782) 5,234 (23,016) (440) % Gain (loss) on real estate dispositions, net 2,701 5,195 (2,494) (48) % Income from continuing operations (17,283) 33,188 (50,471) (152) % Net income (loss) (17,283) 33,188 (50,471) (152) % Less: Net income (loss) attributable to noncontrolling interests (5,381) (4,924) (457) (9) % Net income (loss) attributable to common stockholders$ (11,902) $ 38,112 $ (50,014) (131) %
(1) See Non-GAAP Financial Measures below.
Resident fees and services and property operating expenses increased for the three month period endedMarch 31, 2022 compared to the same period in the prior year primarily due to acquisitions, including the acquisition of the Holiday Retirement portfolio onJuly 30, 2021 for a total purchase price of$1.6 billion . The increases were partially offset by decreases due to property dispositions. Our Seniors Housing Operating revenues are dependent on occupancy, which has steadily increased in recent months. As ofMarch 31, 2022 , nearly all communities are open for new admissions and allowing visitors, in-person tours and communal dining and activities. Average occupancy increased from 73.0% to 77.5% for the three months endedMarch 31, 2022 and 2021, respectively. Occupancy metrics represent occupancy at our share for 543 properties in operation as ofDecember 31, 2020 , including unconsolidated properties but excluding acquisitions, executed dispositions, development conversions and four closed properties. Property-level operating expenses associated with the COVID-19 pandemic relating to our Seniors Housing Operating portfolio totaled$11,003,000 and$27,976,000 for the three months endedMarch 31, 2022 and 2021, respectively. These expenses were incurred as a result of the introduction of public health measures and other regulations affecting our properties, as well as additional health and safety measures adopted by us and our operators related to the COVID-19 pandemic, including increases in labor and property cleaning expenses and expenditures related to our efforts to procure personal protective equipment and supplies, net of reimbursements. Certain new expenses incurred since the start of the pandemic may continue on an ongoing basis as part of new health and safety protocols. 38 -------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations In 2021 and 2022, we received government grants under the CARES Act primarily to cover increased expenses and lost revenue during the COVID-19 pandemic, as well as under similar programs in theU.K. andCanada . For the three months endedMarch 31, 2022 and 2021, we recognized$5,760,000 and$49,180,000 , respectively, of government grant income as a reduction to property operating expenses in our Consolidated Statements of Comprehensive Income.
The fluctuations in depreciation and amortization are due to acquisitions, dispositions and transitions. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly.
During the three months endedMarch 31, 2021 , we recorded impairment charges of$4,604,000 related to one held for use property in which the carrying value exceeded the estimated fair value. Transaction costs related to asset acquisitions are capitalized as a component of the purchase price. The fluctuation in other expenses is primarily due to the timing of noncapitalizable transaction costs associated with acquisitions and operator transitions. Changes in the gain on sales of properties are related to the volume and timing of property sales and the sales prices. During the three months endedMarch 31, 2022 , we completed oneSeniors Housing Operating construction project representing$73,458,000 or$720,176 per unit. The following is a summary of our Seniors Housing Operating construction projects, excluding expansions, pending as ofMarch 31, 2022 (dollars in thousands): Location Units/Beds Commitment Balance Est. Completion Barnet, UK 100$ 68,127 $ 61,496 2Q22 Sachse, TX 193 38,054 18,639 3Q22 Princeton, NJ 80 29,780 27,932 3Q22 Berea, OH 120 14,934 12,483 3Q22 Painesville, OH 119 14,462 10,702 3Q22 Beaver, PA 116 14,184 9,813 3Q22 New Rochelle, NY 72 42,669 18,184 4Q22 Pflugerville, TX 196 39,500 15,542 4Q22 Georgetown, TX 188 36,215 18,897 4Q22 Denton, TX 65 20,194 7,293 4Q22 Brookline, MA 159 145,990 38,683 2Q23 Lake Jackson, TX 130 32,020 4,378 2Q23 Charlotte, NC 328 96,416 37,707 3Q23 White Marsh, MD 188 78,610 8,535 3Q23 Weymouth, MA 165 77,545 15,999 3Q23 Glendale, AZ 204 54,250 8,518 3Q23 Miami Twp, OH 122 18,206 2,179 4Q23 Gaithersburg, MD 302 173,548 32,770 2Q24 Leander, TX 72 26,761 3,705 2Q24 Temple, TX 245 65,569 5,574 4Q24 Kyle, TX 225 62,700 4,616 1Q25 3,389$ 1,149,734 363,645 Boise, ID(1) 33,639 Boise, ID(1) 12,326 Brookhaven, GA(1) 10,943 Columbus, OH(1) 14,067 Kansas City, MO(1) 12,404 Raleigh, NC(1) 3,544 Toronto, ON(1) 51,600 Washington, DC(1) 32,554 Wellesley, MA(1) 9,500$ 544,222
(1) Final units/beds, commitment amount and expected conversion date not yet known.
39
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Interest expense represents secured debt interest expense which fluctuates based
on the net effect and timing of assumptions, segment transitions, fluctuations
in foreign currency rates, extinguishments and principal amortizations. The
fluctuations in loss (gain) on extinguishment of debt is primarily attributable
to the volume of extinguishments and terms of the related secured debt. The
following is a summary of our Seniors Housing Operating segment property secured
debt principal activity (dollars in thousands):
Three Months Ended
March 31, 2022 March 31, 2021
Weighted Average Weighted Average
Amount Interest Rate Amount Interest Rate
Beginning balance $ 1,599,522 2.81 % $ 1,706,189 3.05 %
Debt transferred 32,478 4.79 % - - %
Debt issued 5,385 3.08 % - - %
Debt extinguished (94,647) 4.21 % (41,933) 7.60 %
Principal payments (12,998) 2.92 % (12,261) 3.26 %
Foreign currency 24,733 2.73 % 15,283 2.81 %
Ending balance $ 1,554,473 2.83 % $ 1,667,278 2.89 %
Monthly averages $ 1,606,723 2.84 % $ 1,688,213 2.99 %
The majority of our Seniors Housing Operating properties are formed through
partnership interests. The fluctuation in income from unconsolidated entities is
primarily due to a gain recognized from the sale of a home health business owned
by one of our unconsolidated entities during the three months ended March 31,
2021 . Net income attributable to noncontrolling interests represents our
partners' share of net income (loss) related to joint ventures.
Triple-net
The following is a summary of our SSNOI at
QTD Pool
Three Months Ended Change
March 31, 2022 March 31, 2021 $ %
SSNOI (1) $ 144,488 $ 137,314 $ 7,174 5.2 %
(1) For the
The following is a summary of our results of operations for the Triple-net segment (dollars in thousands):
Three Months Ended Change
March 31, March 31,
2022 2021 $ %
Revenues:
Rental income $ 196,001 $ 152,463 $ 43,538 29 %
Interest income 37,506 14,922 22,584 151 %
Other income 1,656 1,097 559 51 %
Total revenues 235,163 168,482 66,681 40 %
Property operating expenses 11,211 12,841 (1,630) (13) %
NOI (1) 223,952 155,641 68,311 44 %
Other expenses:
Depreciation and amortization 53,504 56,667 (3,163) (6) %
Interest expense 314 1,882 (1,568) (83) %
Loss (gain) on derivatives and financial
instruments, net 2,578 1,934 644 33 %
Provision for loan losses, net (1,065) 853 (1,918) (225) %
Impairment of assets - 18,964 (18,964) (100) %
Other expenses 11,044 4,983 6,061 122 %
66,375 85,283 (18,908) (22) %
Income (loss) from continuing operations before
income taxes and other items 157,577 70,358 87,219 124 %
Income (loss) from unconsolidated entities 15,543 4,907 10,636 217 %
Gain (loss) on real estate dispositions, net 20,449 2,042 18,407 901 %
Income from continuing operations 193,569 77,307 116,262 150 %
Net income 193,569 77,307 116,262 150 %
Less: Net income (loss) attributable to
noncontrolling interests 7,065 3,400 3,665 108 %
Net income attributable to common stockholders $ 186,504 $ 73,907 $ 112,597 152 %
(1) See Non-GAAP Financial Measures below.
40
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Rental income has increased primarily due to the timing of the establishment of
reserves for straight-line rent receivable balances relating to leases for which
collection of substantially all contractual lease payments is no longer deemed
probable. During the three months ended March 31, 2021 , we recorded reserves for
previously recognized straight-line receivables of $49,241,000 .
Certain of our leases contain annual rental escalators that are contingent upon
changes in the Consumer Price Index and/or changes in the gross operating
revenues of the tenant's properties. These escalators are not fixed, so no
straight-line rent is recorded; however, rental income is recorded based on the
contractual cash rental payments due for the period. If gross operating revenues
at our facilities and/or the Consumer Price Index do not increase, a portion of
our revenues may not continue to increase. For the three months ended March 31,
2022 , we had eight leases with rental rate increases ranging from 0.26% to
57.76% in our Triple-net portfolio. Our Triple-net operators are experiencing
similar impacts on occupancy and operating costs due to the COVID-19 pandemic as
our Seniors Housing Operating properties. Long-term/post-acute facilities have
generally experienced a higher degree of occupancy declines, which in some cases
impacted the ability of our Triple-net operators to make contractual rent
payments to us. However, many of our Triple-net operators received funds under
the CARES Act Paycheck Protection Program and the Provider Relief Fund .
Depreciation and amortization fluctuate as a result of the acquisitions,
dispositions and segment transitions of Triple-net properties. To the extent we
acquire or dispose of additional properties in the future, our provision for
depreciation and amortization will change accordingly.
The increase to interest income is primarily driven by the interest recognized
on senior loan financings of £540,000,000 to affiliates of Safanad as part of
the recapitalization of its investment in HC-One Group during the second quarter
2021.
During the three months ended March 31, 2021 , we recorded impairment charges of
$18,964,000 related to one held for sale property and two held for use
properties. Transaction costs related to asset acquisitions are capitalized as a
component of purchase price. The fluctuation in other expenses is primarily due
to noncapitalizable transaction costs from acquisitions and segment transitions.
Changes in the gain on sales of properties are related to the volume and timing
of property sales and the sales prices.
During the three months ended
Location Units/Beds Commitment Balance Est. Completion Redhill, UK 76$ 20,912 $ 18,471 2Q22 London, UK 82 42,436 22,650 3Q22 Wombourne, UK 66 15,782 11,891 4Q22 Leicester, UK 60 14,730 10,186 4Q22 Rugby, UK 76 20,140 10,460 1Q23 Raleigh, NC 191 154,256 62,694 2Q23 551$ 268,256 $ 136,352 During the three months endedMarch 31, 2022 , loss (gain) on derivatives and financial instruments, net is primarily attributable to the mark-to-market of the equity warrants received as part of the Safanad/HC-One transaction that closed in the second quarter of 2021. In addition, the mark-to-market adjustment on our Genesis Healthcare available-for-sale investment is reflected in all periods. Interest expense represents secured debt interest expense and related fees. The change in secured debt interest expense is due to the net effect and timing of assumptions, segment transitions, fluctuations in foreign currency rates, extinguishments and principal amortizations. The following is a summary of our Triple-net secured debt principal activity for the periods presented (dollars in thousands): Three Months Ended March 31, 2022 March 31, 2021 Weighted Average Weighted Average Amount Interest Rate Amount Interest Rate Beginning balance$ 72,536 4.57 %$ 123,652 4.91 % Debt transferred (32,478) 4.79 % - - % Principal payments (221) 4.37 % (1,220) 5.15 % Foreign currency - - % 707 5.43 % Ending balance$ 39,837 4.39 %$ 123,139 4.91 % Monthly averages$ 39,914 4.39 %$ 123,126 4.96 % 41
-------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations A portion of our Triple-net properties were formed through partnerships. Income or loss from unconsolidated entities represents our share of net income or losses from partnerships where we are the noncontrolling partner. The increase in income from unconsolidated entities during the three months endedMarch 31, 2022 is primarily related to the write off of straight-line rent payable balances on an unconsolidated joint venture that was restructured during the quarter. Net income attributable to noncontrolling interests represents our partners' share of net income relating to those partnerships where we are the controlling partner. The increase for the three months endedMarch 31, 2022 compared to the same period in the prior year, is primarily due to a restructure and segment transition related to one of our partners.
Outpatient Medical
The following is a summary of our SSNOI at
QTD Pool
Three Months Ended Change
March 31, 2022 March 31, 2021 $ %
SSNOI (1) $ 103,168 $ 100,040 $ 3,128 3.1 %
(1) For the
The following is a summary of our results of operations for the Outpatient Medical segment for the periods presented (dollars in thousands):
Three Months Ended Change
March 31, March 31,
2022 2021 $ %
Revenues:
Rental income $ 160,389 $ 150,380 $ 10,009 7 %
Interest income 71 3,538 (3,467) (98) %
Other income 2,863 2,305 558 24 %
Total revenues 163,323 156,223 7,100 5 %
Property operating expenses 49,915 46,863 3,052 7 %
NOI (1) 113,408 109,360 4,048 4 %
Other expenses:
Depreciation and amortization 57,791 55,173 2,618 5 %
Interest expense 4,567 4,015 552 14 %
Loss (gain) on extinguishment of debt, net 3 - 3 n/a
Provision for loan losses, net (6) 279 (285) (102) %
Other expenses 789 712 77 11 %
63,144 60,179 2,965 5 %
Income (loss) from continuing operations before
income taxes and other items 50,264 49,181 1,083 2 %
Income (loss) from unconsolidated entities (645) 2,908 (3,553) (122) %
Gain (loss) on real estate dispositions, net (216) 51,843 (52,059) (100) %
Income from continuing operations 49,403 103,932 (54,529) (52) %
Net income (loss) 49,403 103,932 (54,529) (52) %
Less: Net income (loss) attributable to
noncontrolling interests 2,142 2,170 (28) (1) %
Net income (loss) attributable to common
stockholders $ 47,261 $ 101,762 $ (54,501) (54) %
(1) See Non-GAAP Financial Measures.
Rental income has increased due primarily to acquisitions and construction conversions that occurred during 2021. Certain of our leases contain annual rental escalators that are contingent upon changes in the Consumer Price Index. These escalators are not fixed, so no straight-line rent is recorded; however, rental income is recorded based on the contractual cash rental payments due for the period. If the Consumer Price Index does not increase, a portion of our revenues may not continue to increase. Our leases could renew above or below current rental rates, resulting in an increase or decrease in rental income. For the three months endedMarch 31, 2022 , our consolidated outpatient medical portfolio signed 88,145 square feet of new leases and 418,329 square feet of renewals. The weighted-average term of these leases was eight years, with a rate of$44.19 per square foot and tenant improvement and lease commission costs of$37.73 per square foot. Substantially all of these leases contain an annual fixed or contingent escalation rent structure ranging from 1.5% to 5.0%. The decrease in interest income for the three months endedMarch 31, 2022 is due primarily to a$178,207,000 first mortgage loan which was repaid in full in June of 2021. 42 -------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The fluctuation in property operating expenses and depreciation and amortization are primarily attributable to acquisitions and construction conversions that occurred during 2021. To the extent that we acquire or dispose of additional properties in the future, these amounts will change accordingly. Transaction costs related to asset acquisitions are capitalized as a component of purchase price. The fluctuation in other expenses is primarily due to noncapitalizable transaction costs. Changes in gains/losses on sales of properties are related to volume of property sales and the sales prices. During the three months endedMarch 31, 2022 , there were no Outpatient Medical projects completed. The following is a summary of the consolidated Outpatient Medical construction projects, excluding expansions, pending as ofMarch 31, 2022 (dollars in thousands): Location Square Feet Commitment Balance Est. Completion Tyler, TX 85,214$ 35,369 $ 21,071 4Q22 Stafford, TX 36,788 18,031 6,172 4Q22 122,002$ 53,400 27,243 Beaumont, TX(1) 29 Total$ 27,272
(1) Final units/beds, commitment amount and expected conversion date not yet known.
Total interest expense represents secured debt interest expense. The change in
secured debt interest expense is primarily due to the net effect and timing of
assumptions, extinguishments and principal amortizations. The following is a
summary of our outpatient medical secured debt principal activity (dollars in
thousands):
Three Months Ended
March 31, 2022 March 31, 2021
Weighted Average Weighted Average
Amount Interest Rate Amount Interest Rate
Beginning balance $ 530,254 3.49 % $ 548,229 3.55 %
Debt extinguished (6,174) 4.17 % - - %
Principal payments (2,749) 4.38 % (2,474) 4.46 %
Ending balance $ 521,331 3.51 % $ 545,755 3.54 %
Monthly averages $ 526,392 3.49 % $ 546,613 3.54 %
A portion of our Outpatient Medical properties were formed through partnerships.
Income or loss from unconsolidated entities represents our share of net income
or losses from partnerships where we are the noncontrolling partner. During the
three months ended March 31, 2021 , the loss from unconsolidated entities is
largely attributable to depreciation and amortization of short-lived intangible
assets related to certain investments in unconsolidated joint ventures. Net
income attributable to noncontrolling interests represents our partners' share
of net income or loss relating to those partnerships where we are the
controlling partner.
Non-Segment/Corporate
The following is a summary of our results of operations for the
Non-Segment/Corporate activities for the periods presented (dollars in
thousands):
Three Months Ended Change
March 31, March 31,
2022 2021 $ %
Revenues:
Other income $ 606 $ 955 $ (349) (37) %
Total revenues 606 955 (349) (37) %
Property operating expenses 2,615 1,654 961 58 %
NOI (1) (2,009) (699) (1,310) (187) %
Expenses:
Interest expense 109,165 105,827 3,338 3 %
General and administrative expenses 37,706 29,926 7,780 26 %
Other expenses 6,045 1,840 4,205 229 %
152,916 137,593 15,323 11 %Loss from continuing operations before income taxes and other items
(154,925) (138,292) (16,633) (12) %
Income tax benefit (expense) (5,013) (3,943) (1,070) (27) %
Loss from continuing operations (159,938) (142,235) (17,703) (12) %
Net loss attributable to common stockholders $ (159,938) $ (142,235) $ (17,703) (12) %
(1) See Non-GAAP Financial Measures.
43
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Property operating expenses represent insurance costs related to our captive
insurance company, which acts as a direct insurer of property level insurance
coverage for our portfolio.
The following is a summary of our Non-Segment/Corporate interest expense for the periods presented (dollars in thousands):
Three Months Ended Change
March 31, March 31,
2022 2021 $ %
Senior unsecured notes $ 101,239 $ 100,213 $ 1,026 1 %
Unsecured credit facility and commercial paper
program 2,779 1,180 1,599 136 %
Loan expense 5,147 4,434 713 16 %
Totals $ 109,165 $ 105,827 $ 3,338 3 %
The change in interest expense on senior unsecured notes is due to the net
effect of issuances and extinguishments, as well as the movement in foreign
exchange rates and related hedge activity. Please refer to Note 11 for
additional information. The change in interest expense on our unsecured
revolving credit facility and commercial paper program is due primarily to the
net effect and timing of draws, paydowns and variable interest rate
changes. Please refer to Note 10 for additional information regarding our
unsecured revolving credit facility and commercial paper program. Loan expenses
represent the amortization of costs incurred in connection with senior unsecured
notes issuances.
General and administrative expenses as a percentage of consolidated revenues for
the three months ended March 31, 2022 and 2021 were 2.70% and 2.84%,
respectively. Other expenses includes legal expenses related to the planned
UPREIT merger and reorganization. The provision for income taxes primarily
relates to state taxes, foreign taxes and taxes based on income generated by
entities that are structured as TRSs.
Other
Non-GAAP Financial Measures
We believe that net income and net income attributable to common stockholders
("NICS"), as defined by U.S. GAAP, are the most appropriate earnings
measurements. However, we consider FFO, NOI, SSNOI, EBITDA and Adjusted EBITDA
to be useful supplemental measures of our operating performance. 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 fallen with market conditions, many industry
investors and analysts have considered presentations of operating results for
real estate companies that use historical cost accounting to be insufficient. In
response, the National Association of Real Estate Investment Trusts ("NAREIT")
created funds from operations attributable to common stockholders ("FFO") as a
supplemental measure of operating performance for REITs that excludes historical
cost depreciation from net income. FFO, as defined by NAREIT, means NICS,
computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of
real estate and impairment of depreciable assets, plus depreciation and
amortization, and after adjustments for unconsolidated entities and
noncontrolling interests.
Consolidated 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, maintaining and servicing tenants for
our properties. These expenses include, but are not limited to, property-related
payroll and benefits, property management fees paid to operators, marketing,
housekeeping, food service, maintenance, utilities, property taxes and
insurance. General and administrative expenses represent costs unrelated to
property operations. These expenses include, but are not limited to, payroll and
benefits, professional services, office expenses and depreciation of corporate
fixed assets. Same store NOI ("SSNOI") is used to evaluate the operating
performance of our properties using a consistent population, which controls for
changes in the composition of our portfolio. We believe the drivers of property
level NOI for both consolidated properties and unconsolidated properties are
generally the same and therefore, we evaluate SSNOI based on our ownership
interest in each property ("Welltower Share"). To arrive at Welltower's Share,
NOI is adjusted by adding our minority ownership share related to unconsolidated
properties and by subtracting the minority partners' noncontrolling ownership
interests for consolidated properties. We do not control investments in
unconsolidated properties, and while we consider disclosures at Welltower Share
to be useful, they may not accurately depict the legal and economic implications
of our joint venture arrangements and should be used with caution. As used
herein, same store is generally defined as those revenue-generating properties
in the portfolio for the relevant year-over-year reporting periods. Acquisitions
and development conversions are included in SSNOI five full quarters after
acquisition or being placed into service for the QTD Pool . Land parcels, loans
and sub-leases, as well as any properties sold or classified as held for sale
during the respective periods, are excluded from SSNOI. Redeveloped properties
(including major refurbishments of a Seniors Housing Operating property where
20% or more of units are simultaneously taken out of commission for 30 days or
more or Outpatient Medical properties undergoing a change in intended use) are
excluded from SSNOI until five full quarters post completion of the
redevelopment for the QTD Pool . Properties undergoing operator transitions
and/or segment transitions are also excluded from
44
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
SSNOI until five full quarters post completion of the transition for the QTD
Pool . In addition, properties significantly impacted by force majeure, acts of
God, or other extraordinary adverse events are excluded from SSNOI until five
full quarters after the properties are placed back into service for the QTD
Pool . SSNOI excludes non-cash NOI and includes adjustments to present consistent
ownership percentages and to translate Canadian properties and U.K. properties
using a consistent exchange rate. We believe NOI and SSNOI provide investors
relevant and useful information because they measure the operating performance
of our properties at the property level on an unleveraged basis. We use NOI and
SSNOI to make decisions about resource allocations and to assess the property
level performance of our properties.
EBITDA is defined as earnings (net income) before interest, taxes, depreciation
and amortization. Adjusted EBITDA is defined as EBITDA excluding unconsolidated
entities and including adjustments for stock-based compensation expense,
provision for loan losses, gains/losses on extinguishment of debt,
gains/loss/impairments on properties, gains/losses on derivatives and financial
instruments, other expenses, other impairment charges and other adjustments
deemed appropriate. We believe that EBITDA and Adjusted EBITDA, along with net
income, are important supplemental measures because they provide additional
information to assess and evaluate the performance of our operations. We
primarily use these measures to determine our interest coverage ratio, which
represents EBITDA and Adjusted EBITDA divided by total interest, and our fixed
charge coverage ratio, which represents EBITDA and Adjusted EBITDA divided by
fixed charges. Fixed charges include total interest and secured debt principal
amortization. Covenants in our unsecured senior notes and primary credit
facility contain financial ratios based on a definition of EBITDA and Adjusted
EBITDA that is specific to those agreements. Our leverage ratios are defined as
the proportion of net debt to total capitalization and include book
capitalization, undepreciated book capitalization and market capitalization.
Book capitalization represents the sum of net debt (defined as total long-term
debt, excluding operating lease liabilities, less cash and cash equivalents and
restricted cash), total equity and redeemable noncontrolling interests.
Undepreciated book capitalization represents book capitalization adjusted for
accumulated depreciation and amortization. Market capitalization represents book
capitalization adjusted for the fair market value of our common stock.
Our supplemental reporting measures and similarly entitled financial measures
are widely used by investors, equity and debt analysts and rating agencies in
the valuation, comparison, rating and investment recommendations of companies.
Management uses these financial measures to facilitate internal and external
comparisons to our historical operating results and in making operating
decisions. Additionally, these measures are utilized by the Board of Directors
to evaluate management. None of our supplemental measures represent net income
or cash flow provided from operating activities as determined in accordance with
U.S. GAAP and should not be considered as alternative measures of profitability
or liquidity. Finally, the supplemental measures, as defined by us, may not be
comparable to similarly entitled items reported by other real estate investment
trusts or other companies.
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The table below reflects the reconciliation of FFO to NICS, the most directly comparableU.S. GAAP measure, for the periods presented. Noncontrolling interest and unconsolidated entity amounts represent adjustments to reflect our share of depreciation and amortization, gains/loss on real estate dispositions and impairment of assets. Amounts are in thousands except for per share data. Three Months Ended March 31, December 31, September 30, June 30, March 31, FFO Reconciliation: 2022 2021 2021 2021 2021 Net income attributable to common stockholders$ 61,925
304,088 284,501 267,754 240,885 244,426
Impairment of assets - 2,357 1,490 23,692 23,568
Loss (gain) on real estate dispositions, net (22,934) (11,673) (119,954) (44,668) (59,080)
Noncontrolling interests (14,753) (13,988) (11,095) (16,591) (12,516)
Unconsolidated entities 19,309 19,107 27,881 19,265 19,223
FFO $ 347,635 $ 338,976 $ 345,739 $ 248,840 $ 287,167
Average diluted shares outstanding 449,802 438,719 429,983 419,305 419,079
Per diluted share data: Net income attributable to common stockholders(1)$ 0.14 $ 0.13 $ 0.42$ 0.06 $ 0.17 FFO$ 0.77 $ 0.77 $ 0.80$ 0.59 $ 0.69
(1) Includes adjustment to the numerator for income (loss) attributable to OP unitholders.
The table below reflects the reconciliation of consolidated NOI to net income,
the most directly comparable
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
NOI Reconciliations: 2022 2021 2021 2021 2021
Net income (loss) $ 65,751 $ 66,194 $ 190,336 $ 45,757 $ 72,192
Loss (gain) on real estate dispositions, net (22,934) (11,673) (119,954) (44,668) (59,080)
Loss (income) from unconsolidated entities 2,884 12,174 15,832 7,976
(13,049)
Income tax expense (benefit) 5,013 2,051 4,940 (2,221) 3,943 Other expenses 26,069 15,483 3,575 11,687 10,994 Impairment of assets - 2,357 1,490 23,692
23,568
Provision for loan losses, net (804) (39) (271) 6,197
1,383
Loss (gain) on extinguishment of debt, net (12) (1,090) (5) 55,612
(4,643)
Loss (gain) on derivatives and financial instruments, net 2,578 (830) (8,078) (359)
1,934
General and administrative expenses 37,706 33,109 32,256 31,436
29,926
Depreciation and amortization 304,088 284,501 267,754 240,885 244,426 Interest expense 121,696 121,848 122,522 122,341 123,142 Consolidated net operating income (NOI) $
542,035
NOI by segment: Seniors Housing Operating$ 206,684 $ 180,375 $ 172,909 $ 160,188 $ 170,434 Triple-net 223,952 230,846 228,321 226,314 155,641 Outpatient Medical 113,408 113,982 111,431 113,577 109,360 Non-segment/corporate (2,009) (1,118) (2,264) (1,744) (699) Total NOI$ 542,035 $ 524,085 $ 510,397 $ 498,335 $ 434,736 46
-------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is a reconciliation of the properties included in ourQTD Pool for SSNOI: QTD Pool Seniors Housing SSNOI Property Reconciliations: Operating Triple-net Outpatient Medical Total Consolidated properties 774 578 311 1,663 Unconsolidated properties 95 39 79 213 Total properties 869 617 390 1,876 Recent acquisitions/development conversions(1) (172) (30) (26) (228) Under development (36) (5) (4) (45) Under redevelopment(2) (4) (3) (2) (9) Current held for sale (3) (13) (1) (17) Land parcels, loans and subleases (23) (11) (6) (40) Transitions(3) (97) (19) - (116) Other(4) (2) (3) - (5) Same store properties 532 533 351 1,416
(1) Acquisition and development conversions will enter the
The following is a reconciliation of our consolidated NOI to same store NOI for
the periods presented for the respective pools. Dollar amounts are in thousands.
QTD Pool
Three Months Ended
SSNOI Reconciliations: March 31, 2022 March 31, 2021
Seniors Housing Operating:
Consolidated NOI $ 206,684 $ 170,434
NOI attributable to unconsolidated investments 12,751 17,324
NOI attributable to noncontrolling interests (24,392) (15,698)
NOI attributable to non-same store properties (51,575) (19,399)
Non-cash NOI attributable to same store properties (74) (865)
Currency and ownership adjustments (1) 178 (186)
SSNOI at Welltower Share 143,572 151,610
Triple-net:
Consolidated NOI 223,952 155,641
NOI attributable to unconsolidated investments 9,955 8,382
NOI attributable to noncontrolling interests (15,338) (11,531)
NOI attributable to non-same store properties (63,557) (7,031)
Non-cash NOI attributable to same store properties (11,356) (10,141)
Currency and ownership adjustments (1) 832 1,994
SSNOI at Welltower Share 144,488 137,314
Outpatient Medical:
Consolidated NOI 113,408 109,360
NOI attributable to unconsolidated investments 4,830 4,724
NOI attributable to noncontrolling interests (5,240) (4,686)
NOI attributable to non-same store properties (7,798) (5,562)
Non-cash NOI attributable to same store properties (2,096) (2,656)
Currency and ownership adjustments (1) 64 (1,140)
SSNOI at Welltower Share 103,168 100,040
SSNOI at Welltower Share:
Seniors Housing Operating 143,572 151,610
Triple-net 144,488 137,314
Outpatient Medical 103,168 100,040
Total $ 391,228 $ 388,964 (1) Includes adjustments to reflect consistent property ownership percentages, to translate Canadian properties at
a USD/CAD rate of 1.2739 and to translate
47
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The tables below reflects the reconciliation of EBITDA to net income, the most directly comparableU.S. GAAP measure, for the periods presented. Dollars are in thousands. Three Months Ended March 31, December 31, September 30, June 30, March 31, EBITDA Reconciliations: 2022 2021 2021 2021 2021 Net income (loss)$ 65,751 $ 66,194 $ 190,336 $ 45,757 $ 72,192 Interest expense 121,696 121,848 122,522 122,341 123,142 Income tax expense (benefit) 5,013 2,051 4,940 (2,221) 3,943 Depreciation and amortization 304,088 284,501 267,754 240,885 244,426 EBITDA$ 496,548 $ 474,594 $ 585,552 $ 406,762 $ 443,703 Interest Coverage Ratio: Interest expense$ 121,696 $ 121,848 $ 122,522 $ 122,341 $ 123,142 Non-cash interest expense (4,109) (5,082) (5,461) (3,972) (2,991) Capitalized interest 5,479 5,325 4,669 4,862 4,496 Total interest 123,066 122,091 121,730 123,231 124,647 EBITDA$ 496,548 $ 474,594 $ 585,552 $ 406,762 $ 443,703 Interest coverage ratio 4.03 x 3.89 x 4.81 x 3.30 x 3.56 x Fixed Charge Coverage Ratio: Total interest$ 123,066
15,968 16,877 17,040 15,715 15,955
Total fixed charges 139,034 138,968 138,770 138,946 140,602
EBITDA $ 496,548 $ 474,594 $ 585,552 $ 406,762 $ 443,703
Fixed charge coverage ratio 3.57 x 3.42 x 4.22 x 2.93 x 3.16 x
48-------------------------------------------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The table below reflects the reconciliation of Adjusted EBITDA to net income, the most directly comparableU.S. GAAP measure, for the periods presented. Dollars are in thousands. Twelve Months Ended March 31, December 31, September 30, June 30, March 31, Adjusted EBITDA Reconciliations: 2022 2021 2021 2021 2021 Net income$ 368,038 $ 374,479 $ 463,563 $ 668,205 $ 781,664 Interest expense 488,407 489,853 489,178 491,507 495,523 Income tax expense (benefit) 9,783 8,713 6,952 4,015
8,469
Depreciation and amortization 1,097,228 1,037,566 995,798 983,576 1,008,062 EBITDA 1,963,456 1,910,611 1,955,491 2,147,303 2,293,718 Loss (income) from unconsolidated entities 38,866 22,933 10,501 650
(8,658)
Stock-based compensation expense (1) 19,681 17,812 22,248 24,278
26,811
Loss (gain) on extinguishment of debt, net 54,505 49,874 64,760 97,769
42,406
Loss (gain) on real estate dispositions, net (199,229) (235,375) (409,166) (773,516) (884,711) Impairment of assets 27,539 51,107 58,067 79,890 131,349 Provision for loan losses, net 5,083 7,270 90,394 93,522
88,747
Loss (gain) on derivatives and financial instruments, net (6,689) (7,333) (5,934) 3,539 5,332 Other expenses (1) 56,127 40,860 52,960 60,985 68,939 Leasehold interest adjustment (2) (7,697) 760 (640) -
-
Casualty losses, net of recoveries (3) 5,799 5,786 998 - - Other impairment (4) - 49,241 49,241 161,639 163,481 Adjusted EBITDA$ 1,957,441 $ 1,913,546 $ 1,888,920 $ 1,896,059 $ 1,927,414 Adjusted Interest Coverage Ratio: Interest expense$ 488,407 $ 489,853 $ 489,178 $ 491,507 $ 495,523 Capitalized interest 20,335 19,352 18,265 17,543 17,222 Non-cash interest expense (18,624) (17,506) (14,163) (12,675) (10,617) Total interest 490,118 491,699 493,280 496,375 502,128 Adjusted EBITDA$ 1,957,441
3.99 x 3.89 x 3.83 x 3.82 x 3.84 x
Adjusted Fixed Charge Coverage Ratio: Total interest$ 490,118
65,600 65,587 64,832 63,668 63,136
Total fixed charges 555,718 557,286 558,112 560,043 565,264
Adjusted EBITDA $ 1,957,441
3.52 x 3.43 x 3.38 x 3.39 x 3.41 x
(1) Certain severance-related costs are included in stock-based compensation and excluded from other expenses.
(2) Represents revenues and property operating expenses associated with a leasehold portfolio interest relating to 26
properties assumed by a wholly-owned affiliate in conjunction with the Holiday Retirement transaction. Subsequent to the
initial transaction, we purchased eight of the leased properties and one of the properties was sold by the landlord and
removed from the lease. No rent will be paid in excess of net cash flow relating to the leasehold properties and
therefore, the net impact has been excluded from Adjusted EBITDA.
(3) Represents casualty losses net of any insurance recoveries.
(4) Represents reserve for straight-line rent receivable balances relating to leases placed on cash recognition.
Our leverage ratios include book capitalization, undepreciated book
capitalization and market capitalization. Book capitalization represents the sum
of net debt (defined as total long-term debt less cash and cash equivalents and
restricted cash), total equity and redeemable noncontrolling interests.
Undepreciated book capitalization represents book capitalization adjusted for
accumulated depreciation and amortization. Market capitalization represents book
capitalization adjusted for the fair market value of our common stock. Our
leverage ratios are defined as the proportion of net debt to total
capitalization. The table below reflects the reconciliation of our leverage
ratios to our balance sheets for the periods presented. Amounts are in
thousands, except share price.
49--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
As of
March 31 , December 31 , September 30 , June 30 , March 31,
2022 2021 2021 2021 2021
Book capitalization:
Unsecured credit facility and commercial paper $ 299,968 $ 324,935 $ 290,996 $ - $ -
Long-term debt obligations (1) 14,352,529 13,917,702 13,488,656 13,572,816 14,618,713
Cash and cash equivalents and restricted cash (367,043) (346,755) (362,645) (808,705) (2,558,822)
Total net debt 14,285,454 13,895,882 13,417,007 12,764,111 12,059,891
Total equity and noncontrolling interests(2) 19,178,026 18,997,873 18,172,111 17,243,208 17,046,932
Book capitalization $ 33,463,480 $ 32,893,755 $ 31,589,118 $ 30,007,319 $ 29,106,823
Net debt to book capitalization ratio 43% 42% 42% 43% 41%
Undepreciated book capitalization:
Total net debt $ 14,285,454 $ 13,895,882 $ 13,417,007 $ 12,764,111 $ 12,059,891
Accumulated depreciation and amortization 7,215,622 6,910,114 6,634,061 6,415,676 6,212,432
Total equity and noncontrolling interests(2) 19,178,026 18,997,873 18,172,111 17,243,208 17,046,932
Undepreciated book capitalization $ 40,679,102 $ 39,803,869 $ 38,223,179 $ 36,422,995 $ 35,319,255
Net debt to undepreciated book capitalization ratio 35% 35% 35% 35% 34%
Market capitalization:
Common shares outstanding 453,948 447,239 435,274 422,562 417,520
Period end share price $ 96.14 $ 85.77 $ 82.40 $ 83.10 $ 71.63
Common equity market capitalization $ 43,642,561 $ 38,359,689 $ 35,866,578 $ 35,114,902 $ 29,906,958
Total net debt 14,285,454 13,895,882 13,417,007 12,764,111 12,059,891
Noncontrolling interests(3) 1,282,450 1,361,872 1,308,908 1,322,762 1,248,054
Market capitalization $ 59,210,465 $ 53,617,443 $ 50,592,493 $ 49,201,775 $ 43,214,903
Net debt to market capitalization ratio 24% 26% 27% 26% 28%
(1) Amounts include senior unsecured notes, secured debt and lease liabilities related to financing leases, as reflected on our Consolidated Balance Sheets. Operating lease liabilities related to the ASC 842 adoption are excluded. (2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests as reflected on our Consolidated Balance Sheets.
Critical Accounting Policies and Estimates
Our unaudited consolidated financial statements are prepared in accordance with
•the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
•the impact of the estimates and assumptions on financial condition or operating performance is material.
Management has discussed the development and selection of its critical accounting policies and estimates with the Audit Committee of the Board of Directors. Management believes the current assumptions and other considerations used to estimate amounts reflected in our unaudited consolidated financial statements are appropriate and are not reasonably likely to change in the future. However, since these estimates require assumptions to be made that were uncertain at the time the estimate was made, they bear the risk of change. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our unaudited consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition. Please refer to Note 2 to our financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 for further information on significant accounting policies that impact us. There have been no material changes to these policies in 2022. 50
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. WhenWelltower uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "pro forma," "estimate" or similar expressions that do not relate solely to historical matters,Welltower is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may causeWelltower's actual results to differ materially fromWelltower's expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the duration and scope of the COVID-19 pandemic; uncertainty regarding the implementation and impact of the CARES Act and future stimulus or other COVID-19 relief legislation; the impact of the COVID-19 pandemic on occupancy rates and on the operations ofWelltower and its operators/tenants; actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affectingWelltower's properties and the operations ofWelltower and its operators/tenants; the effects of health and safety measures adopted byWelltower and its operators/tenants related to the COVID-19 pandemic; increased operational costs as a result of health and safety measures related to COVID-19; the impact of the COVID-19 pandemic on the business and financial condition of operators/tenants and their ability to make payments toWelltower ; disruptions toWelltower's property acquisition and disposition activity due to economic uncertainty caused by COVID-19; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators'/tenants' difficulty in cost effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and seniors housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans;Welltower's ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when anticipated; natural disasters and other acts of God affectingWelltower's properties;Welltower's ability to re-lease space at similar rates as vacancies occur;Welltower's ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affectingWelltower's properties; changes in rules or practices governingWelltower's financial reporting; the movement ofU.S. and foreign currency exchange rates;Welltower's ability to maintainWelltower's qualification as a REIT; key management personnel recruitment and retention; and other risks described inWelltower's reports filed from time to time with theSEC . Other important factors are identified in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , including factors identified under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Finally, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.
© Edgar Online, source
