Senior Unsecured Notes and Secured Debt

9 Months Ended

Sep. 30, 2024

At September 30, 2024, the annual principal payments due on our debt obligations were as follows (in thousands):


	Senior Unsecured Notes (1,2)		Secured Debt (3)		Totals
2024	$	—	$	96,016	$	96,016
2025	1,260,000		279,372		1,539,372
2026	700,000		231,413		931,413
2027 (4,5)	1,906,945		448,710		2,355,655
2028 (6)	2,521,890		157,797		2,679,687
Thereafter (7)	7,054,900		1,368,570		8,423,470
Total principal balance	13,443,735		2,581,878		16,025,613
Unamortized discounts and premiums, net	(23,230)		—		(23,230)
Unamortized debt issuance costs, net	(80,736)		(16,747)		(97,483)
Fair value adjustments and other, net	(44,673)		(96,604)		(141,277)
Total carrying value of debt	$	13,295,096	$	2,468,527	$	15,763,623

(1) Annual interest rates range from 2.05% to 6.50%. The ending weighted average interest rate, after considering the effects of interest rate swaps, was 3.87% and 4.02% as of September 30, 2024 and September 30, 2023, respectively.

(2) All senior unsecured notes with the exception of the $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 have been issued by Welltower OP and are fully and unconditionally guaranteed by Welltower. The $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 have been issued through private placement by a wholly-owned subsidiary of Welltower OP and are fully and unconditionally guaranteed by Welltower OP.

(3) Annual interest rates range from 1.31% to 8.00%. The ending weighted average interest rate, after considering the effects of interest rate swaps and caps, was 4.34% and 4.83% as of September 30, 2024 and September 30, 2023, respectively. Gross real property value of the properties securing the debt totaled $6,460,936,000 at September 30, 2024.

(4) Includes a $1,000,000,000 unsecured term loan and a $250,000,000 Canadian-denominated unsecured term loan (approximately $184,975,000 based on the Canadian/U.S. Dollar exchange rate on September 30, 2024). Both term loans mature on July 19, 2026 and may be extended for two successive terms of six months at our option. The loans bear interest at adjusted SOFR plus 0.85% (6.05% at September 30, 2024) and adjusted Canadian Overnight Repo Rate Average plus 0.85% (5.44% at September 30, 2024), respectively.

(5) Includes $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $221,970,000 based on the Canadian/U.S. Dollar exchange rate on September 30, 2024).

(6) Includes £550,000,000 4.80% senior unsecured notes due 2028 (approximately $736,890,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on September 30, 2024).

(7) Includes £500,000,000 4.50% senior unsecured notes due 2034 (approximately $669,900,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on September 30, 2024).

The following is a summary of our senior unsecured notes principal activity during the periods presented (dollars in thousands):


	Nine Months Ended
	September 30, 2024		September 30, 2023
Beginning balance	$	13,699,619	$	12,584,529
Debt issued	1,035,000		1,035,000
Debt extinguished	(1,350,000)		—

Foreign currency	59,116		14,295
Ending balance	$	13,443,735	$	13,633,824

Welltower, the parent entity that consolidates Welltower OP and all other subsidiaries, fully and unconditionally guarantees to each holder of all series of senior unsecured notes issued by Welltower OP that the principal of and premium, if any, and interest on the notes will be promptly paid in full when due, whether at the applicable maturity date, by acceleration or redemption or otherwise, and interest on the overdue principal of and interest on the notes, if any, if lawful, and all other obligations of Welltower OP to the holders of the notes will be promptly paid in full or performed. Welltower's guarantees of such notes are its senior unsecured obligation and rank equally with all of Welltower's other future unsecured senior indebtedness and guarantees from time to time outstanding. Welltower's guarantees of such notes are effectively subordinated to all liabilities of its subsidiaries and to its secured indebtedness to the extent of the assets securing such indebtedness. Because Welltower conducts substantially all of its business through its subsidiaries, Welltower's ability to make required payments with respect to the guarantees depends on the financial results and condition of its subsidiaries and its ability to receive funds from its subsidiaries, whether by dividends, loans, distributions or other payments.

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, subject to certain contractual restrictions, at a redemption price equal to the sum of: (i) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (ii) any "make-whole" amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Exchangeable Senior Unsecured Notes

In May 2023, Welltower OP issued $1,035,000,000 aggregate principal amount of 2.750% exchangeable senior unsecured notes maturing May 15, 2028 (the "2028 Exchangeable Notes") unless earlier exchanged, purchased or redeemed. The 2028 Exchangeable Notes will pay interest semi-annually in arrears on May 15 and November 15 of each year. We recognized contractual interest expense on the 2028 Exchangeable Notes of approximately $7,116,000 and $21,348,000 for the three and nine months ended September 30, 2024, and $7,116,000 and $11,069,000 for the same periods in 2023, respectively. Additionally, amortization of related issuance costs were $1,168,000 and $3,500,000 for the three and nine ended September 30, 2024, and $1,117,000 and $1,810,000 for the same periods in 2023, respectively. Unamortized issuance costs were $16,790,000 as of September 30, 2024 and $20,245,000 as of December 31, 2023.

In July 2024, Welltower OP issued $1,035,000,000 aggregate principal amount of 3.125% exchangeable senior unsecured notes maturing July 15, 2029 (the "2029 Exchangeable Notes") unless earlier exchanged, purchased or redeemed. The 2029 Exchangeable Notes will pay interest semi-annually in arrears on January 15 and July 15 of each year. The net proceeds from the offering of the 2029 Exchangeable Notes were approximately $1,015,063,000 after deducting the underwriting fees and other expenses. During the quarter ended September 30, 2024, we recognized approximately $7,188,000 of contractual interest expense and amortization of issuance costs of $857,000 related to the 2029 Exchangeable Notes. Unamortized issuance costs were $19,079,000 as of September 30, 2024.

Prior to the close of business on the business day immediately preceding January 15, 2029, the 2029 Exchangeable Notes are exchangeable at the option of the holders only upon certain circumstances and during certain periods. On or after January 15, 2029, the 2029 Exchangeable Notes will be exchangeable at the option of the holders at any time prior to the close of business on the second scheduled trading day preceding the maturity date. Welltower OP will settle exchanges of the 2029 Exchangeable Notes by delivering cash up to the principal amount of the 2029 Exchangeable Notes exchanged and, in respect of the remainder of the exchanged value, if any, in excess thereof, cash or shares of Welltower's common stock, or a combination thereof, at the election of Welltower OP. The exchange rate initially equals 7.8177 shares of common stock per $1,000 principal amount of 2029 Exchangeable Notes (equivalent to an exchange price of approximately $127.91 per share of common stock). The exchange rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest.

Welltower OP may redeem the 2029 Exchangeable Notes, at its option in whole or in part, on any business day on or after July 20, 2027, if the last reported sales price of the common stock has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Welltower OP provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the 2029 Exchangeable Notes to be redeemed, plus accrued and unpaid interest, if any, to but excluding the redemption date.

The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):


	Nine Months Ended
	September 30, 2024		September 30, 2023
Beginning balance	$	2,222,445	$	2,129,954

Debt issued	3,708		381,369
Debt assumed	896,705		344,023
Debt extinguished	(323,805)		(397,381)

Debt disposed(1)	(164,640)		—
Principal payments	(32,411)		(41,646)
Foreign currency	(20,124)		(188)
Ending balance	$	2,581,878	$	2,416,131

(1) Please see Note 5 for additional information.

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of September 30, 2024, we were in compliance in all material respects with all of the covenants under our debt agreements.