EX-99.1 2 a4q18earningsrelease991.htm EXHIBIT 99.1 Exhibit
4Q18 Earnings Release
 
February 12, 2019

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FOR IMMEDIATE RELEASE
February 12, 2019
For more information contact:
John Goodey (419) 247-2800
Welltower Reports Fourth Quarter 2018 Results
Toledo, Ohio, February 12, 2019…..Welltower Inc. (NYSE:WELL) today announced results for the quarter ended December 31, 2018. For the quarter, we generated net income attributable to common stockholders of $0.27 per share and normalized FFO attributable to common stockholders of $1.01 per share. For the year, we generated net income attributable to common stockholders of $2.02 per share and normalized FFO attributable to common stockholders of $4.03 per share. The company also announced that previously disclosed 2019 net income attributable to common stockholders guidance has been increased to a range of $2.70 to $2.85 per share, while reaffirming our previously announced 2019 normalized FFO attributable to common stockholders of $4.10 to $4.25 per share.
Quarterly Highlights
•
Reaffirming 2019 FFO attributable to common stockholders guidance of $4.10 to $4.25 per share, driven by total portfolio same store NOI growth of 1.25% to 2.25%
•
Generated $552 million of gross proceeds from common stock issuances at an average price of $68.41 per share
•
Completed $394 million of property sales and loan payoffs at a blended yield of 2.7%
•
Closed $559 million of acquisitions at a blended yield of 5.6%, including $485 million of outpatient medical buildings at 5.5% yield
•
Seniors housing operating SSNOI grew 0.6% driven by a 40 bps increase in occupancy, the largest occupancy increase in over two years
•
Appointed two national health care executives to the Board of Directors, Karen DeSalvo, MD and Johnese Spisso, MPA, raising the representation of women and minorities among independent directors

Annual Highlights
•
Total portfolio average SSNOI grew 1.6%, driven by four quarters of positive year over year growth in all segments
•
Completed more than $4 billion of gross investments, including $3.4 billion in acquisitions at a 7.3% yield and $290 million in development funding with a 7.6% yield
•
Delivered $322 million of development projects with an 8.4% expected yield
•
Successfully closed $1.9 billion of senior unsecured notes offerings across 3 tranches with an average maturity of 13.8 years and a blended yield to maturity of 4.3%
•
Generated $795 million of gross proceeds from common stock issuances at an average price of $67.51
•
Named to the Dow Jones Sustainability World Index for the first time and the Dow Jones Sustainability North America Index for the third consecutive year

"Welltower delivered strong operating results in both the fourth quarter of 2018 and for the full year driven by consistent performance across all operating segments," commented Tom DeRosa, Welltower's Chief Executive Officer. "2018 represented a significant turning point towards growth for Welltower as we completed more than $4 billion of accretive investments, demonstrating the success of our differentiated strategy and ability to compete on capabilities to deploy capital at attractive returns and drive future cash flow growth. Furthermore, our commitment to sustainability, diversity and governance enhances our world-class platform that continues to deliver long-term value to shareholders."

Capital Activity On December 31, 2018, we had $215 million of cash and cash equivalents and $1.9 billion of available borrowing capacity under the primary unsecured credit facility. During the fourth quarter, we generated approximately $552 million under our dividend reinvestment program and equity shelf program at an average price of $68.41 per share. Subsequent to quarter-end, we generated an additional $195 million of equity capital under our dividend reinvestment program and equity shelf program at an average price of $73.97.
Dividend The Board of Directors declared a cash dividend for the quarter ended December 31, 2018 of $0.87 per share. On February 28, 2019, we will pay our 191st consecutive quarterly cash dividend to stockholders of record on February 22, 2019. The Board of Directors also approved a 2019 quarterly cash dividend rate of $0.87 per share ($3.48 per share annually) commencing with the February 2019 dividend payment. The Board of Directors also declared a quarterly cash dividend on the Series I Cumulative Convertible Perpetual Preferred Stock of $0.8125 per share, payable on April 15, 2019 to stockholders of record on March 31, 2019. The declaration and payment of future quarterly dividends remains subject to review and approval by the Board of Directors.

Page 1 of 9

4Q18 Earnings Release
 
February 12, 2019

Quarterly Investment and Disposition Activity We completed $722 million of pro rata gross investments for the quarter including $559 million in acquisitions, $92 million in development funding and $70 million in land acquisitions. Acquisitions were comprised of four separate transactions at a blended yield of 5.6%. The development fundings are expected to yield 7.5% upon stabilization. Also during the quarter, we completed dispositions of $394 million consisting of the sale of $239 million of non-yielding properties acquired in the QCP acquisition, other property sales of $110 million at a blended yield on proceeds of 6.7% and loan payoffs of $46 million at an average yield of 7.1%.
Notable Investments with Existing Operating Partners
Hammes As previously announced, we acquired a 100% interest in a 23 property, Class-A medical office portfolio for $391 million which represents a year one cap rate of 5.6%. The portfolio has an average age of 10 years and totals 979,421 rentable square feet across 12 major metropolitan markets. The properties are 94% occupied with 96% of the portfolio affiliated with health systems.
Medical Pavilion at Howard County General Hospital As previously announced, we acquired a 100% interest in an outpatient medical building located on the campus of Johns Hopkins Howard Country General Hospital in Columbia, Maryland for $79 million, which represents a year one cap rate of 4.9%. The 160,190 square foot property is 100% leased and sits adjacent to a 56,000 square foot Welltower-owned property on the same campus. With this acquisition, Johns Hopkins is the principal tenant in four of our properties totaling 371,000 square feet, inclusive of the Knoll North Campus a 30 acre complex we acquired in 2015.

StoryPoint We expanded our relationship with StoryPoint through the formation of a new RIDEA joint venture. The initial transaction to seed the 90/10 RIDEA JV was the acquisition of a 199-unit private-pay combination IL/AL/MC community located in the Columbus, OH MSA. The total investment amount based upon 100% ownership interest was $82 million and has a projected stabilized yield of 6.0%. Since closing our initial acquisition in 2010, we have completed $227 million of follow-on pro rata investments with StoryPoint.
US Oncology We acquired an outpatient medical building in San Antonio, TX for $15 million, which represents a projected year one cap rate of 5.7%. The property is 38,237 rentable square feet and was built in 2017. The building is 100% leased by Texas Oncology, a member of US Oncology. US Oncology leases over 175,000 square feet in our properties.
Notable Development Starts
Atrium Health MOBs We closed on the construction loans related to two state-of-the-art "Class A+" medical office buildings under development in Charlotte, North Carolina to be delivered in mid 2020. Both buildings are 100% master-leased to Atrium Health (Moody's: Aa3) for 15 years. This project is part of a 5.5-acre multi-phase health care anchored mixed-use development located next to Atrium Health's flagship Carolinas Medical Center campus. Once completed, these assets will house integrated specialty clinical practices for Atrium Health including the Sanger Heart and Vascular Institute. As part of this transaction, we will form a joint venture with the highly reputable Southeast developer, Pappas Properties and will acquire a 75% ownership in the properties upon completion.
Notable Dispositions
QCP Non-Yielding and Non-Core During the fourth quarter, we completed the disposition of 40 non-yielding held-for-sale properties and 1 non-core held-for-sale property acquired in conjunction with the QCP transaction. We realized sales proceeds of $264 million in conjunction with the disposals and recognized a gain on sale of $37 million.
Brandywine As a part of the Brandywine RIDEA conversion, we completed the disposition of two assisted living communities. The gross purchase price based upon 100% ownership interest was $33.5 million.
Kindred We completed the disposition of one long-term/post-acute facility for $9 million. We realized a gain on sale of $2 million and the sale represents an unlevered IRR of 8.8%.
Genesis In connection with its operational re-balancing, Genesis sold all of its assets and operations in the state of Texas and used part of the proceeds to pay down $14 million of outstanding loan obligations to us. Additionally, as part of that transaction, we sold our Richardson, Texas property for $16 million.

Heritage Enterprises We completed the disposition of a combination AL / post-acute property for $16 million which represents a 9.9% cap rate on in-place rent.

Adventist We completed the disposition of two Outpatient Medical properties for $11 million which represents an 8.3% cap rate on in-place rent. We realized a gain on the sale of $4 million.

Outlook for 2019 Net income attributable to common stockholders guidance has been increased to a range of $2.70 to $2.85 per diluted share from the previous range of $1.88 to $2.03 per diluted share, primarily due to changes in projected net gains/losses/impairments and depreciation and amortization. We are affirming our previously announced 2019 normalized FFO attributable to common stockholders guidance to $4.10 to $4.25 per diluted share. In preparing our guidance, we have updated or confirmed the following assumptions:

Page 2 of 9

4Q18 Earnings Release
 
February 12, 2019

•
Same Store NOI: We continue to expect average blended SSNOI growth of approximately 1.25%-2.25% in 2019.
◦
Seniors Housing Operating approximately 0.5%-2.0%
◦
Seniors Housing Triple-net approximately 3.0%-3.5%
◦
Outpatient Medical approximately 1.75%-2.25%
◦
Health System 1.375%
◦
Long-term/Post-acute Care approximately 2.0%-2.5%
•
General and administrative expenses: We anticipate annual general and administrative expenses of approximately $130 million to $135 million, including $26 million of stock-based compensation.
•
Acquisitions: 2019 earnings guidance includes any acquisitions closed or announced year to date.
•
Development: We anticipate funding development of approximately $385 million in 2019 relating to projects underway on December 31, 2018.
•
Dispositions:  We anticipate disposition proceeds of approximately $1.4 billion at a blended yield of 6.2% in 2019.
Our guidance does not include any additional investments, dispositions or capital transactions beyond those we have announced, nor any other expenses, impairments, unanticipated additions to the loan loss reserve or other additional normalizing items. Please see the exhibits for a reconciliation of the outlook for net income available to common stockholders to normalized FFO attributable to common stockholders. We will provide additional detail regarding our 2019 outlook and assumptions on the fourth quarter 2018 conference call.
Conference Call Information We have scheduled a conference call on Tuesday, February 12, 2019 at 10:00 a.m. Eastern Time to discuss our fourth quarter 2018 results, industry trends, portfolio performance and outlook for 2019. Telephone access will be available by dialing 888-346-2469 or 706-758-4923 (international). For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the call through February 26, 2019. To access the rebroadcast, dial 855-859-2056 or 404-537-3406 (international). The conference ID number is 4369176. To participate in the webcast, log on to www.welltower.com 15 minutes before the call to download the necessary software.  Replays will be available for 90 days.
Supplemental Reporting Measures We believe that net income and net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), are the most appropriate earnings measurements. However, we consider funds from operations (FFO), net operating income (NOI) and same store NOI (SSNOI) to be useful supplemental measures of our operating performance. These supplemental measures are disclosed on our pro rata ownership basis. Pro rata amounts are derived by reducing consolidated amounts for minority partners’ noncontrolling ownership interests and adding our minority ownership share of unconsolidated amounts. We do not control unconsolidated investments. While we consider pro rata disclosures useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution.
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 FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO attributable to common stockholders, as defined by NAREIT, means net income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. Normalized FFO attributable to common stockholders represents FFO attributable to common stockholders adjusted for certain items detailed in Exhibit 2. We believe that normalized FFO attributable to common stockholders is a useful supplemental measure of operating performance because investors and equity analysts may use this measure to compare the operating performance of the company between periods or as compared to other REITs or other companies on a consistent basis without having to account for differences caused by unanticipated and/or incalculable items.
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 seniors housing operating and outpatient medical 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 or transaction costs. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed assets. 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. As used herein, same store is generally defined as those revenue-generating properties in the portfolio for the relevant year-over-year reporting periods. Land parcels, loans, and sub-leases as well as any properties acquired, developed/redeveloped (including major refurbishments where 20% or more of units are simultaneously taken out of commission for 30 days or more), sold or classified as held for sale during that period are excluded from the same store amounts. Properties undergoing operator transitions and/or segment transitions (except triple-net to seniors housing operating with the same operator) are also excluded from the same store amounts. Normalizers include adjustments that in management’s opinion are appropriate in considering SSNOI, a supplemental, non-GAAP performance measure. None of these adjustments, which may increase or decrease SSNOI, are reflected in the company’s financial statements prepared in accordance with U.S. GAAP. Significant normalizers

Page 3 of 9

4Q18 Earnings Release
 
February 12, 2019

(defined as any that individually exceeds 0.50% of SSNOI growth per property type) are separately disclosed and explained. 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. No reconciliation of the forecasted range for SSNOI on a combined or segment basis is included in this release because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measure without unreasonable efforts, and we believe such reconciliation would imply a degree of precision that could be confusing or misleading to investors.

Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and ratings agencies in the valuation, comparison, rating and investment recommendations of companies. Our management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The supplemental reporting measures do not 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 reporting measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see the exhibits for reconciliations of supplemental reporting measures and the supplemental information package for the quarter ended December 31, 2018, which is available on the company’s website (www.welltower.com), for information and reconciliations of additional supplemental reporting measures.
About Welltower Welltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate 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 in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities and outpatient medical properties. More information is available at www.welltower.com. We routinely post important information on our website at www.welltower.com in the “Investors” section, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website under the heading “Investors”. Accordingly, investors should monitor such portion of the company’s website in addition to following our press releases, public conference calls and filings with the Securities and Exchange Commission. The information on our website is not incorporated by reference in this press release, and our web address is included as an inactive textual reference only.
Forward-Looking Statements and Risk Factors This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When we use words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “pro forma,” “estimate” or similar expressions that do not relate solely to historical matters, we are making forward-looking statements. In particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to acquire, develop or sell properties; our ability to close anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to shareholders; our investment and financing opportunities and plans; our continued qualification as a REIT; our ability to access capital markets or other sources of funds; and our ability to meet our earnings guidance. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause our actual results to differ materially from our expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; 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; our 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 affecting our properties; our ability to re-­lease space at similar rates as vacancies occur; our 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 affecting our properties; changes in rules or practices governing our financial reporting; the movement of U.S. and foreign currency exchange rates; our ability to maintain our qualification as a REIT; key management personnel recruitment and retention; and other risks described in our reports filed from time to time with the Securities and Exchange Commission. Finally, we undertake 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.

Page 4 of 9

4Q18 Earnings Release
 
February 12, 2019

Welltower Inc.
Financial Exhibits

Consolidated Balance Sheets (unaudited)
(in thousands)
 
 
December 31,
 
 
2018
 
2017
Assets
 
 
 
 
Real estate investments:
 
 
 
 
Land and land improvements
 
$
3,205,091

 
$
2,734,467

Buildings and improvements
 
28,019,502

 
25,373,117

Acquired lease intangibles
 
1,581,159

 
1,502,471

Real property held for sale, net of accumulated depreciation
 
590,271

 
734,147

Construction in progress
 
194,365

 
237,746

Gross real property owned
 
33,590,388

 
30,581,948

Less accumulated depreciation and intangible amortization
 
(5,499,958
)
 
(4,838,370
)
Net real property owned
 
28,090,430

 
25,743,578

Real estate loans receivable
 
398,711

 
495,871

Less allowance for losses on loans receivable
 
(68,372
)
 
(68,372
)
Net real estate loans receivable
 
330,339

 
427,499

Net real estate investments
 
28,420,769

 
26,171,077

Other assets:
 
 

 
 

Investments in unconsolidated entities
 
482,914

 
445,585

Goodwill
 
68,321

 
68,321

Cash and cash equivalents
 
215,376

 
243,777

Restricted cash
 
100,753

 
65,526

Straight-line rent receivable
 
367,093

 
389,168

Receivables and other assets
 
686,846

 
560,991

Total other assets
 
1,921,303

 
1,773,368

Total assets
 
$
30,342,072

 
$
27,944,445

 
 
 
 
 
Liabilities and equity
 
 

 
 

Liabilities:
 
 

 
 

Borrowings under primary unsecured credit facility
 
$
1,147,000

 
$
719,000

Senior unsecured notes
 
9,603,299

 
8,331,722

Secured debt
 
2,476,177

 
2,608,976

Capital lease obligations
 
70,668

 
72,238

Accrued expenses and other liabilities
 
1,034,283

 
911,863

Total liabilities
 
14,331,427

 
12,643,799

Redeemable noncontrolling interests
 
424,046

 
375,194

Equity:
 
 

 
 

Preferred stock
 
718,498

 
718,503

Common stock
 
384,465

 
372,449

Capital in excess of par value
 
18,424,368

 
17,662,681

Treasury stock
 
(68,499
)
 
(64,559
)
Cumulative net income
 
6,121,534

 
5,316,580

Cumulative dividends
 
(10,818,557
)
 
(9,471,712
)
Accumulated other comprehensive income
 
(129,769
)
 
(111,465
)
Other equity
 
294

 
670

Total Welltower Inc. stockholders’ equity
 
14,632,334

 
14,423,147

Noncontrolling interests
 
954,265

 
502,305

Total equity
 
15,586,599

 
14,925,452

Total liabilities and equity
 
$
30,342,072


$
27,944,445


Page 5 of 9

4Q18 Earnings Release
 
February 12, 2019

Consolidated Statements of Income (unaudited)
 
 
 
 
(in thousands, except per share data)
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
December 31,
 
December 31,
 
 
 
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
 
 
 
Resident fees and service
 
$
860,402

 
$
729,666

 
$
3,234,852

 
$
2,779,423

 
 
Rental income
 
360,565

 
360,249

 
1,380,422

 
1,445,871

 
 
Interest income
 
13,082

 
11,975

 
55,814

 
73,811

 
 
Other income
 
7,194

 
2,367

 
29,411

 
17,536

 
 
Total revenues
 
1,241,243

 
1,104,257

 
4,700,499

 
4,316,641

Expenses:
 
 

 
 

 
 

 
 

 
 
Property operating expenses
 
650,644

 
547,904

 
2,433,017

 
2,083,925

 
 
Depreciation and amortization
 
242,834

 
238,458

 
950,459

 
921,720

 
 
Interest expense
 
144,369

 
127,217

 
526,592

 
484,622

 
 
General and administrative expenses
 
31,101

 
28,365

 
126,383

 
122,008

 
 
Loss (gain) on derivatives and financial instruments, net
 
1,626

 
—

 
(4,016
)
 
2,284

 
 
Loss (gain) on extinguishment of debt, net
 
53

 
371

 
16,097

 
37,241

 
 
Provision for loan losses
 
—

 
62,966

 
—

 
62,966

 
 
Impairment of assets
 
76,022

 
99,821

 
115,579

 
124,483

 
 
Other expenses
 
10,502

 
60,167

 
112,898

 
177,776

 
 
Total expenses
 
1,157,151

 
1,165,269

 
4,277,009

 
4,017,025

Income (loss) from continuing operations before income taxes
 
 

 
 

 
 

 
 

 
 
and other items
 
84,092

 
(61,012
)
 
423,490

 
299,616

Income tax (expense) benefit
 
(1,504
)
 
(25,663
)
 
(8,674
)
 
(20,128
)
Income (loss) from unconsolidated entities
 
195

 
(59,449
)
 
(641
)
 
(83,125
)
Gain (loss) on real estate dispositions, net
 
41,913

 
56,381

 
415,575

 
344,250

Income (loss) from continuing operations
 
124,696

 
(89,743
)
 
829,750

 
540,613

 
 
 
 
 
 
 
 
 
Net income (loss)
 
124,696

 
(89,743
)
 
829,750

 
540,613

Less:
 
Preferred dividends
 
11,676

 
11,676

 
46,704

 
49,410

 
 
Preferred stock redemption charge
 
—

 
—

 
—

 
9,769

 
 
Net income (loss) attributable to noncontrolling interests
 
11,257

 
10,104

 
24,796

 
17,839

Net income (loss) attributable to common stockholders
 
$
101,763

 
$
(111,523
)
 
$
758,250

 
$
463,595

Average number of common shares outstanding:
 
 

 
 

 
 

 
 

 
 
Basic
 
378,240

 
370,485

 
373,620

 
367,237

 
 
Diluted
 
380,002

 
370,485

 
375,250

 
369,001

Net income (loss) attributable to common stockholders per share:
 
 
 
 

 
 
 
 

 
 
Basic
 
$
0.27

 
$
(0.30
)
 
$
2.03

 
$
1.26

 
 
Diluted
 
$
0.27

 
$
(0.30
)
 
$
2.02

 
$
1.26

Common dividends per share
 
$
0.87

 
$
0.87

 
$
3.48

 
$
3.48


Page 6 of 9

4Q18 Earnings Release
 
February 12, 2019

Outlook reconciliations: Year Ending December 31, 2019
Exhibit 1

 
(in millions, except per share data)
 
 
 
 
 
Prior Outlook
 
Current Outlook
 
 
 
 
Low
 
High
 
Low
 
High
 
FFO Reconciliation:
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
 
$
723

 
$
781

 
$
1,045

 
$
1,103

 
Impairments and losses (gains) on real estate dispositions, net(1,2)
 
(174
)
 
(174
)
 
(448
)
 
(448
)
 
Depreciation and amortization(1)
 
1,025

 
1,025

 
990

 
990

 
NAREIT and Normalized FFO attributable to common stockholders
 
$
1,574

 
$
1,632

 
$
1,587

 
$
1,645

 
 
 
 
 
 
 
 
 
 
 
 
Per share data attributable to common stockholders:
 
 
 
 
 
 
 
 
 
Net income
 
$
1.88

 
$
2.03

 
$
2.70

 
$
2.85

 
NAREIT & Normalized FFO
 
$
4.10

 
$
4.25

 
$
4.10

 
$
4.25

 
 
 
 
 
 
 
 
 
 
 
 
Other items:(1)
 
 
 
 
 
 
 
 
 
Net straight-line rent and above/below market rent amortization
 
$
(73
)
 
$
(73
)
 
$
(73
)
 
$
(73
)
 
Non-cash interest expenses
 
21

 
21

 
21

 
21

 
Recurring cap-ex, tenant improvements, and lease commissions
 
(124
)
 
(124
)
 
(124
)
 
(124
)
 
Stock-based compensation
 
26

 
26

 
26

 
26

 
 
 
 
Note : (1) Amounts presented net of noncontrolling interests' share and Welltower's share of unconsolidated entities.
 
           (2) Includes estimated gains on projected dispositions.
 



Normalizing Items
 
 
 
 

 
 
 
Exhibit 2

 
(in thousands, except per share data)
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
December 31,
 
December 31,
 
 
 
 
2018
 
 
2017
 
2018
 
2017
 
Loss (gain) on derivatives and financial instruments, net
 
$
1,626

(1) 
 
$
—

 
$
(4,016
)
 
$
2,284

 
Loss (gain) on extinguishment of debt, net
 
53

(2) 
 
371

 
16,097

 
37,241

 
Provision for loan losses
 
—

 
 
62,966

 
—

 
62,966

 
Preferred stock redemption charge
 
—

 
 
—

 
—

 
9,769

 
Nonrecurring interest expense
 
—

 
 
2,634

 
—

 
2,634

 
Incremental stock-based compensation expense
 
—

 
 
—

 
3,552

 
—

 
Nonrecurring income tax benefits
 
—

 
 
17,354

 
—

 
9,438

 
Other expenses
 
10,502

(3) 
 
60,167

 
112,898

 
177,776

 
Additional other income
 
(4,027
)
(4) 
 
—

 
(14,832
)
 
—

 
Normalizing items attributable to noncontrolling interests and unconsolidated entities, net
 
(338
)
(5) 
 
57,566

 
4,595

 
86,589

 
Net normalizing items
 
$
7,816

 
 
$
201,058

 
$
118,294

 
$
388,697

 
 
 
 
 
 
 
 
 
 
 
 
 
Average diluted common shares outstanding
 
380,002

 
 
372,145

 
375,250

 
369,001

 
Net normalizing items per diluted share
 
$
0.02

 
 
$
0.54

 
$
0.32

 
$
1.05

 
 
 
 
Note : (1) Primarily related to mark-to-market of Genesis HealthCare stock holdings.
 
           (2) Primarily related to secured debt extinguishments.
 
           (3) Primarily related to non-capitalizable transaction costs.
 
           (4) Primarily related to the reversal of a contingent liability related to a prior year acquisition.
 
           (5) Primarily related to non-capitalizable transaction costs in joint ventures.
 



Page 7 of 9

4Q18 Earnings Release
 
February 12, 2019

FFO Reconciliations
 
 
 
 
 
 
 
Exhibit 3

 
(in thousands, except per share data)
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
 
 
December 31,
 
December 31,
 
 
 
 
 
 
2018
 
2017
 
2018
 
2017
 
Net income (loss) attributable to common stockholders
 
$
101,763

 
$
(111,523
)
 
$
758,250

 
$
463,595

 
Depreciation and amortization
 
242,834

 
238,458

 
950,459

 
921,720

 
Impairments and losses (gains) on real estate dispositions, net
 
34,109

 
43,440

 
(299,996
)
 
(219,767
)
 
Noncontrolling interests(1)
 
(17,650
)
 
(8,131
)
 
(69,193
)
 
(60,018
)
 
Unconsolidated entities(2)
 
13,910

 
16,980

 
52,663

 
60,046

 
NAREIT FFO attributable to common stockholders
 
374,966

 
179,224

 
1,392,183

 
1,165,576

 
Normalizing items, net(3)
 
7,816

 
201,058

 
118,294

 
388,697

 
Normalized FFO attributable to common stockholders
 
$
382,782

 
$
380,282

 
$
1,510,477

 
$
1,554,273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average diluted common shares outstanding:
 
 
 
 
 
 
 
 
 
 
For net income (loss) purposes
 
380,002

 
370,485

 
375,250

 
369,001

 
 
For FFO purposes
 
380,002

 
372,145

 
375,250

 
369,001

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share data attributable to common stockholders:
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
0.27

 
$
(0.30
)
 
$
2.02

 
$
1.26

 
 
NAREIT FFO
 
$
0.99

 
$
0.48

 
$
3.71

 
$
3.16

 
 
Normalized FFO
 
$
1.01

 
$
1.02

 
$
4.03

 
$
4.21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Normalized FFO Payout Ratio:
 
 
 
 
 
 
 
 
 
 
Dividends per common share
 
$
0.87

 
$
0.87

 
$
3.48

 
$
3.48

 
 
Normalized FFO attributable to common stockholders per share
 
$
1.01

 
$
1.02

 
$
4.03

 
$
4.21

 
 
 
Normalized FFO payout ratio
 
86
%
 
85
%
 
86
%
 
83
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other items:(4)
 
 
 
 
 
 
 
 
 
Net straight-line rent and above/below market rent amortization
 
$
(23,914
)
 
$
(18,692
)
 
$
(72,854
)
 
$
(72,838
)
 
Non-cash interest expenses
 
3,886

 
3,219

 
13,423

 
13,042

 
Recurring cap-ex, tenant improvements, and lease commissions
 
(31,664
)
 
(22,400
)
 
(88,408
)
 
(68,120
)
 
Stock-based compensation(5)
 
4,846

 
2,643

 
23,186

 
17,721

 
 
 
Note : (1) Represents noncontrolling interests' share of net FFO adjustments.
 
           (2) Represents Welltower's share of net FFO adjustments from unconsolidated entities.
 
           (3) See Exhibit 2.
 
           (4) Amounts presented net of noncontrolling interests' share and Welltower's share of unconsolidated entities.
 
           (5) Excludes certain severance related stock-based compensation recorded in other expense and normalized incremental stock-based compensation expense (see Exhibit 2).
 






Page 8 of 9

4Q18 Earnings Release
 
February 12, 2019

 
SSNOI Reconciliations












Exhibit 4
 

(in thousands)
Three Months Ended




 March 31,

 June 30,

 September 30,

 December 31,




2018

2017

2018

2017

2018

2017

2018

2017

Net income (loss)
$
453,555


$
337,610


$
167,273


$
203,441


$
84,226


$
89,299


$
124,696


$
(89,743
)

Loss (gain) on real estate dispositions, net
(338,184
)

(244,092
)

(10,755
)

(42,155
)

(24,723
)

(1,622
)

(41,913
)

(56,381
)

Loss (income) from unconsolidated entities
2,429


23,106


(1,249
)

3,978


(344
)

(3,408
)

(195
)

59,449


Income tax expense (benefit)
1,588


2,245


3,841


(8,448
)

1,741


669


1,504


25,663


Other expenses
3,712


11,675


10,058


6,339


88,626


99,595


10,502


60,167


Impairment of assets
28,185


11,031


4,632


13,631


6,740


—


76,022


99,821


Provision for loan losses
—


—


—


—


—


—


—


62,966


Loss (gain) on extinguishment of debt, net
11,707


31,356


299


5,515


4,038


—


53


371


Loss (gain) on derivatives and financial instruments, net
(7,173
)

1,224


(7,460
)

736


8,991


324


1,626


—


General and administrative expenses
33,705


31,101


32,831


32,632


28,746


29,913


31,101


28,365


Depreciation and amortization
228,201


228,276


236,275


224,847


243,149


230,138


242,834


238,458


Interest expense
122,775


118,597


121,416


116,231


138,032


122,578


144,369


127,217


Consolidated NOI
540,500


552,129


557,161


556,747


579,222


567,486


590,599


556,353


NOI attributable to unconsolidated investments
21,620


21,279


21,725


21,873


22,247


22,431


21,933


21,539


NOI attributable to noncontrolling interests
(31,283
)

(27,542
)

(30,962
)

(29,359
)

(37,212
)

(30,538
)

(40,341
)

(29,760
)

Pro rata NOI
530,837


545,866


547,924


549,261


564,257


559,379


572,191


548,132



Non-cash NOI attributable to same store properties
(11,220
)

(9,985
)

(7,131
)

(8,059
)

(8,578
)

(10,761
)

(12,019
)

(9,384
)


NOI attributable to non-same store properties
(55,795
)

(84,139
)

(98,281
)

(107,931
)

(109,610
)

(119,574
)

(121,255
)

(114,345
)


Currency and ownership(1)
(823
)

4,002


1,105


5,945


3,255


1,839


4,270


1,184



Other adjustments(2)
425


(536
)

(724
)

(2,516
)

(593
)

10,892


(158
)

10,293


Same store NOI (SSNOI)
$
463,424


$
455,208


$
442,893


$
436,700


$
448,731


$
441,775


$
443,029


$
435,880





























Seniors housing operating
$
213,588


$
212,306


$
207,601


$
207,304


$
224,652


$
224,079


$
223,670


$
222,312


Seniors housing triple-net
120,582


117,064


103,783


100,615


90,663


87,026


91,684


87,939


Outpatient medical
79,659


77,421


81,232


79,638


82,623


80,928


83,007


81,572


Long-term/post-acute care
49,595


48,417


50,277


49,143


50,793


49,742


44,668


44,057



Total SSNOI

$
463,424


$
455,208


$
442,893


$
436,700


$
448,731


$
441,775


$
443,029


$
435,880






































Average

Seniors housing operating
0.6
%

0.6
%

0.1
%

0.1
%

0.3
%

0.3
%

0.6
%

0.4
%

Seniors housing triple-net
3.0
%

3.0
%

3.1
%

3.1
%

4.2
%

4.2
%

4.3
%

3.7
%

Outpatient medical
2.9
%

2.9
%

2.0
%

2.0
%

2.1
%

2.1
%

1.8
%

2.2
%

Long-term/post-acute care
2.4
%

2.4
%

2.3
%

2.3
%

2.1
%

2.1
%

1.4
%

2.1
%


Total SSNOI growth

1.8
%

1.8
%

1.4
%

1.4
%

1.6
%

1.6
%

1.6
%

1.6
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note : (1) Includes adjustments to reflect consistent property ownership percentages and foreign currency exchange rates for properties in the U.K. and Canada.
 
           (2) Includes other adjustments as described in the respective Supplements.
 





Page 9 of 9