Item 8.01. Other Events.
On March 7, 2022, Welltower Inc. ("Old Welltower") issued a press release
announcing that it intends to implement a corporate reorganization into a new
holding company structure commonly referred to as an Umbrella Partnership Real
Estate Investment Trust, or UPREIT (the "Reorganization"). In the
Reorganization, WELL Merger Holdco Inc. ("New Welltower"), a Delaware
corporation that currently is a wholly owned subsidiary of Old Welltower, will
become the publicly traded parent company of Old Welltower and its subsidiaries
and will inherit the name "Welltower Inc." Old Welltower, the current real
estate investment trust, will exist as a wholly owned subsidiary of New
Welltower initially called "Welltower OP Inc." and, subject to approval of New
Welltower's shareholders, convert to a Delaware limited liability company (the
"LLC Conversion") called "Welltower OP LLC."
New Welltower will replace Old Welltower as the public holding company listed on
the New York Stock Exchange (the "NYSE") and, as of the Effective Time (as
defined below), New Welltower common stock will trade on the NYSE on an
uninterrupted basis under the existing symbol "WELL" and will retain the CUSIP
number of 95040Q104. The NYSE ticker symbols of Old Welltower's 4.800% Notes due
2028 (CUSIP number 95040QAA2) and $4.500% Notes due 2034 (CUSIP number
95040QAB0) will change, respectively, to WELL/28 and WELL/34 and these notes
will retain their existing CUSIP numbers.
Merger
The first step of the Reorganization will be effectuated pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), dated March 7, 2022,
among Old Welltower, New Welltower and WELL Merger Holdco Sub Inc. ("Merger
Sub"), a Delaware corporation and wholly owned subsidiary of New Welltower.
Pursuant to the Merger Agreement, Merger Sub will merge with and into Old
Welltower pursuant to Section 251(g) of the General Corporation Law of the State
of Delaware (the "DGCL"), with Old Welltower continuing as the surviving
corporation and a wholly owned subsidiary of New Welltower (the "Merger"). The
Merger will be conducted pursuant to Section 251(g) of the DGCL, which provides
for the formation of a holding company (i.e., New Welltower) without a vote of
the shareholders of the constituent corporation (i.e., Old Welltower). The
Merger is expected to be effective as of April 1, 2022 (the "Effective Time").
In accordance with the Merger Agreement, at the Effective Time, each issued and
outstanding share of Old Welltower common stock immediately prior to the
Effective Time will be converted into an issued and outstanding share of New
Welltower common stock, having the same designations, rights, powers and
preferences and the qualifications, limitations and restrictions as the
corresponding share of Old Welltower common stock being converted. Accordingly,
upon consummation of the Merger, Old Welltower's shareholders immediately prior
to the consummation of the Merger will become shareholders of New Welltower. The
conversion of stock will occur automatically without an exchange of stock
certificates at the Effective Time.
The consolidated assets and liabilities of New Welltower immediately following
the Merger will be identical to the consolidated assets and liabilities of Old
Welltower immediately prior to the Merger. New Welltower will not hold any
assets directly other than certain de minimis assets that may be held for
certain administrative functions. None of the properties owned by Old Welltower
or its subsidiaries or any interests therein have been or will be transferred as
part of the Reorganization. All material indebtedness of Old Welltower
immediately prior to the Merger is expected to be indebtedness of Old Welltower
after the Merger.
LLC Conversion
An UPREIT structure allows owners of appreciated property to contribute such
property to an "operating partnership" in exchange for partnership interests
therein. Partnership interests in Welltower OP LLC will generally entitle its
holders to receive the same distributions as holders of New Welltower common
stock, and the holders of such interests will generally be entitled to exchange
the partnership interests for cash or common stock, at New Welltower's option.
In order for Old Welltower to function as the operating partnership in the
UPREIT structure it must be converted from a Delaware corporation to a limited
liability company.
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As required by Section 251(g) of the DGCL, the certificate of incorporation of
Old Welltower will be amended in connection with the Merger to add a
"Pass-Through Vote Provision." The Pass-Through Vote Provision will require the
shareholders of New Welltower to approve any act or transaction by or involving
Old Welltower (other than the election or removal of directors) that would have
required the approval of the shareholders of Old Welltower if taken by Old
Welltower prior to the Effective Time, by the same vote as was required by the
DGCL and/or by the certificate of incorporation or bylaws of Old Welltower in
effect immediately prior to the Effective Time.
Under the DGCL, a conversion of a Delaware corporation to a limited liability
company requires the unanimous approval of all shareholders, voting and
nonvoting. Normally, New Welltower could approve the LLC Conversion in its
capacity as sole shareholder of Old Welltower. However, due to the Pass-Through
Vote Provision, all of the shareholders of New Welltower would also have to
approve the LLC Conversion. New Welltower will have over 447 million shares
outstanding, held by more than 3,100 record and beneficial holders, making the
unanimous shareholder approval requirement for the LLC Conversion time
consuming, expensive and likely impossible to achieve. Therefore, in order to
provide the benefits of the Reorganization to New Welltower shareholders, Old
Welltower expects to include a proposal (the "Proposal") in its proxy statement
for its 2022 annual shareholders' meeting to allow the shareholders, voting as
shareholders of New Welltower, to approve the removal of the Pass-Through Vote
Provision so that the LLC Conversion may be approved solely by New Welltower.
If New Welltower's shareholders approve the Proposal, the LLC Conversion is
expected to be effective shortly following the annual meeting of shareholders.
The foregoing description of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, filed herewith as Exhibits 2.1 and
incorporated by reference herein. Copies of the press release and Frequently
Asked Questions about the Reorganization have been filed as Exhibits 99.1 and
99.2, respectively, to this Current Report, and are incorporated herein by
reference.
Forward-Looking Statements
This 8-K and the accompanying press release may contain "forward-looking"
statements as defined in the Private Securities Litigation Reform Act of 1995.
When Welltower Inc. uses words such as "may," "will," "intend," "should,"
"believe," "expect," "anticipate," "project," "estimate" or similar expressions
that do not relate solely to historical matters, it is making forward-looking
statements. Forward-looking statements, including, but not limited to,
statements regarding the Company's ability to complete the Reorganization, the
impacts of the Reorganization on the Company's financial condition, business
operations, financial statements and outstanding securities and the Company's
ability to realize the expected benefits of Reorganization, are not guarantees
of future performance and involve risks and uncertainties that may cause
Welltower Inc.'s actual results to differ materially from Welltower Inc.'s
expectations discussed in the forward-looking statements. This may be a result
of various factors, including, but not limited to, those factors discussed in
Welltower Inc.'s reports filed from time to time with the SEC. Welltower Inc.
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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
2.1 Merger Agreement and Plan of Reorganization, dated March 7, 2021, by and
among Old Welltower, New Welltower and Merger Sub.*
99.1 Press release of Welltower Inc. dated March 7, 2022.
99.2 Frequently Asked Questions About the Reorganization into an UPREIT
Structure dated March 7, 2022.
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
* Certain of the exhibits and schedules to this Exhibit have been omitted in
accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish
supplementally a copy of all omitted exhibits and schedules to the Securities
and Exchange Commission upon its request.
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