Core Viewpoint - Welltower Inc. has announced a $900 million offering of 3.125% exchangeable senior notes due 2029, which has been upsized and is expected to close on July 11, 2024 [1] Group 1: Offering Details - The offering consists of $900 million aggregate principal amount of 3.125% exchangeable senior notes due 2029, with an option for initial purchasers to buy an additional $135 million [1] - The notes will be exchangeable under certain conditions, with an initial exchange rate of 7.8177 shares of common stock per $1,000 principal amount, equating to an exchange price of approximately $127.91 per share [2] - The notes will accrue interest at a rate of 3.125% per year, payable semi-annually, and will mature on July 15, 2029 [7] Group 2: Use of Proceeds - The estimated net proceeds from the offering are approximately $882.3 million, or $1,015.0 million if the option for additional notes is fully exercised, intended for general corporate purposes including debt repayment and investment in health care properties [9] Group 3: Redemption and Repurchase Conditions - Welltower OP may redeem the notes starting July 20, 2027, if the common stock price meets certain conditions [3] - In the event of a fundamental change, holders may require Welltower OP to repurchase their notes at 100% of the principal amount plus accrued interest [8]

Shares of Welltower Inc. (WELL) have gained 18.1% in the year-to-date period against the industry's decline of 6.8%. This Toledo, OH-based healthcare real estate investment trust (REIT) owns a well-diversified portfolio of healthcare real estate assets in the key markets of the United States, Canada and the U.K. Its portfoliorestructuring initiatives and capital-recycling activities have aided Welltower in riding the growth curve so far. A healthy balance sheet position will likely support its growth endeav ...

Group 1 - Welltower Inc. announced an offering of $750 million aggregate principal amount of exchangeable senior notes due 2029, with an option for initial purchasers to buy an additional $112.5 million [1][4] - The notes will be senior unsecured obligations, accruing interest payable semi-annually, and will be exchangeable into cash or shares of common stock at Welltower OP's election [4][6] - The net proceeds from the offering will be used for general corporate purposes, including debt repayment and investment in health care and seniors housing properties [8] Group 2 - Welltower is a real estate investment trust focused on transforming health care infrastructure, investing in seniors housing and post-acute communities across the U.S., Canada, and the U.K. [6] - The company aims to fund the real estate infrastructure necessary for innovative care delivery models to enhance wellness and health care experiences [6]

Financial Data and Key Metrics Changes - Welltower reported a net income attributable to common stockholders of $0.22 per diluted share and normalized funds from operations (FFO) of $1.01 per diluted share, representing an 18.8% year-over-year growth [41] - The company achieved nearly 19% year-over-year growth in FFO per share, with strong contributions from all business segments [6] - Total portfolio same-store net operating income (NOI) growth was 12.9% year-over-year [41] Business Line Data and Key Metrics Changes - The Senior Housing operating portfolio saw a 25.5% year-over-year same-store NOI increase, marking the sixth consecutive quarter of growth exceeding 20% [21] - The outpatient medical portfolio produced year-over-year same-store NOI growth of 2% for Q1 2024, with a retention rate exceeding 90% [20] - Same-store revenue growth for independent living and wellness housing portfolios was strong, while assisted living continued to outperform [11] Market Data and Key Metrics Changes - Same-store occupancy grew by 340 basis points year-over-year, with a reported same-store revenue per occupied room (RevPOR) growth of 4.8%, adjusted for Leap Year impact, the growth was 5.6% [8][9] - Revenue growth in Canada was 9.1%, while the U.S. and U.K. grew at 10.1% and 14.8%, respectively [22] - Overall same-store expenses increased by 5.7% year-over-year, with unit expenses (ExpPOR) up 0.4% [9][22] Company Strategy and Development Direction - The company aims to achieve significant regional density by focusing on granular transactions and partnerships with operators that deliver strong results [17][36] - Welltower is converting eight additional communities from triple-net to RIDEA, which is expected to enhance long-term earnings [13] - The capital markets environment is favorable for deploying capital, with $2.8 billion of investments closed or under contract across 23 transactions [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand-supply backdrop for Senior Housing, noting that new construction remains challenging [7] - The company is focused on improving customer and employee experiences, which are expected to drive financial performance [12][25] - Management acknowledged the uncertainty in the market and emphasized the importance of the upcoming summer leasing season [61] Other Important Information - The company raised $2.4 billion in gross proceeds through equity issuance to fund investment activities and extinguish approximately $1.5 billion of debt [47] - The updated full-year 2024 guidance for net income attributable to common stockholders is projected to be between $1.48 and $1.61 per diluted share [50] Q&A Session Summary Question: Guidance assumptions and peak leasing season indications - Management indicated that it is too early in the year to define annual results, emphasizing a healthy level of caution regarding market conditions [61] Question: Outlook for FAD growth and dividend policy - Management noted that FAD growth remains strong, and discussions regarding the dividend policy are ongoing, reflecting confidence in cash flow recovery [63][65] Question: Acquisitions and yield expectations - Management stated that the $2.6 billion in closed or under contract transactions is entirely focused on Senior Housing and Wellness Housing, with yield expectations similar to previous quarters [68][69] Question: Senior housing operators' rent increase strategies - Management reported that there has been no pushback on rent increases, with strong demand supporting the value proposition [72] Question: Investments in analytics and operations team - Management highlighted ongoing investments in operational efficiency and analytics capabilities to enhance capital deployment opportunities [74][85] Question: Performance of the Cogir, PLR portfolio in Canada - Management expressed satisfaction with the performance of the Cogir partnership, indicating strong expectations for the portfolio [87] Question: Managing potential risks and market conditions - Management acknowledged the challenges in the industry, emphasizing the importance of maintaining a strong balance sheet and focusing on long-term value creation [99][103]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) For the first quarter ended March 31, 2024, Welltower reported total revenues of **$1.86 billion**, a significant increase from **$1.56 billion** in the prior-year period, with net income attributable to common stockholders rising to **$127.1 million** ($0.22 per diluted share) from **$25.7 million** ($0.05 per diluted share) year-over-year [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets were **$44.55 billion**, a slight increase from **$44.01 billion** at year-end 2023, while total liabilities decreased significantly to **$16.01 billion** from **$17.64 billion**, primarily due to a reduction in senior unsecured notes Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Net real estate investments | $38,757,448 | $38,775,913 | | Cash and cash equivalents | $2,388,488 | $1,993,646 | | **Total assets** | **$44,553,585** | **$44,012,166** | | **Liabilities & Equity** | | | | Senior unsecured notes | $12,171,913 | $13,552,222 | | **Total liabilities** | **$16,005,677** | **$17,640,439** | | **Total equity** | **$28,246,993** | **$26,081,122** | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the three months ended March 31, 2024, total revenues increased by **19.2%** year-over-year to **$1.86 billion**, driven by strong growth in resident fees and services, with net income attributable to common stockholders surging to **$127.1 million** from **$25.7 million** in the same period of 2023 Q1 2024 Statement of Comprehensive Income Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenues | $1,859,741 | $1,560,729 | | Net income | $131,634 | $28,635 | | Net income attributable to common stockholders | $127,146 | $25,673 | | Diluted EPS | $0.22 | $0.05 | | Dividends declared per common share | $0.61 | $0.61 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2024, net cash from operating activities was **$406.8 million**, up from **$376.1 million** in Q1 2023, while net cash used in investing activities decreased to **$580.9 million** from **$932.8 million**, reflecting lower acquisition spending Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $406,806 | $376,058 | | Net cash used in investing activities | ($580,931) | ($932,837) | | Net cash from financing activities | $578,567 | $470,470 | | **Increase (decrease) in cash** | **$402,252** | **($83,496)** | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail the company's business as a healthcare infrastructure REIT, its accounting policies, and significant activities during the quarter, including real property acquisitions totaling **$82.2 million** and dispositions generating **$44.8 million** in cash proceeds - Welltower is a REIT focused on healthcare infrastructure, with properties in the U.S., Canada, and the U.K., primarily consisting of seniors housing, post-acute communities, and outpatient medical properties[15](index=15&type=chunk) - In Q1 2024, the company invested **$427.0 million** in real property, including **$62.8 million** for acquisitions and **$231.8 million** for construction in progress[21](index=21&type=chunk) - During Q1 2024, the company recorded total impairment charges of **$43.3 million**, primarily related to Seniors Housing Operating properties classified as held for sale or held for use[27](index=27&type=chunk) - The company's Seniors Housing Operating segment generated the highest consolidated NOI of **$347.4 million** for Q1 2024, followed by the Triple-net segment with **$258.9 million**[98](index=98&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the strong Q1 2024 performance to robust growth in the Seniors Housing Operating segment, which saw a **37%** increase in Net Operating Income (NOI) year-over-year, driven by rising occupancy and rental rates [Executive Summary](index=27&type=section&id=Executive%20Summary) Welltower, a healthcare infrastructure REIT, reported strong Q1 2024 results driven by its Seniors Housing Operating portfolio, which constitutes **46.8%** of its consolidated NOI, with key activities including raising **$2.4 billion** in equity and repaying **$1.35 billion** of senior unsecured notes - The company's primary objectives are to protect stockholder capital, enhance value, and pay consistent cash dividends through diversified investments in seniors housing and health care real estate[123](index=123&type=chunk) Key Performance Indicators | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | NICS (in thousands) | $127,146 | $25,673 | | FFO (in thousands) | $556,703 | $386,062 | | NOI (in thousands) | $762,828 | $602,976 | | Net debt to book capitalization | 29% | 40% | | Interest coverage ratio | 4.29x | 3.44x | - During Q1 2024, the company sold **26.6 million** shares under its ATM programs for gross proceeds of approximately **$2.4 billion** and repaid **$1.35 billion** of senior unsecured notes[132](index=132&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with primary cash sources from operations, equity issuances, and borrowings, with cash and equivalents standing at **$2.48 billion** and **$4.0 billion** available under its unsecured revolving credit facility as of March 31, 2024 - Primary sources of cash include resident fees, rent, interest receipts, and proceeds from debt and equity issuances, while primary uses include dividend distributions, debt service, and real property investments[143](index=143&type=chunk) Contractual Obligations Summary (as of March 31, 2024, in thousands) | Obligation Type | Total | 2024 | 2025-2026 | 2027-2028 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | Senior unsecured notes & term facilities | $12,328,089 | $0 | $1,960,000 | $4,385,299 | $5,981,850 | | Secured debt (Consolidated) | $2,070,776 | $307,236 | $532,136 | $312,147 | $919,257 | | Purchase obligations | $1,103,007 | $799,951 | $291,535 | $7,792 | $3,729 | | **Total Contractual Obligations** | **$21,883,508** | **$1,747,742** | **$4,420,059** | **$5,647,237** | **$10,068,470** | - The company maintains an active ATM Program, with **$936 million** of remaining capacity as of April 26, 2024, to fund investments and repay borrowings[153](index=153&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Overall operating results for Q1 2024 showed significant year-over-year growth, with Net Income increasing **360%** to **$131.6 million** and FFO increasing **44%** to **$556.7 million**, primarily driven by the Seniors Housing Operating segment Q1 2024 vs Q1 2023 Performance Summary | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net income (in thousands) | $131,634 | $28,635 | 360% | | FFO (in thousands) | $556,703 | $386,062 | 44% | | NOI (in thousands) | $762,828 | $602,976 | 27% | | SSNOI (in thousands) | $537,581 | $477,990 | 12% | | Diluted FFO per share | $0.96 | $0.78 | 23% | - The Seniors Housing Operating segment's NOI increased by **37%** to **$347.4 million**, driven by a **20%** rise in resident fees and services, with average occupancy for this segment increasing to **82.5%** in Q1 2024 from **79.0%** in Q1 2023[158](index=158&type=chunk)[159](index=159&type=chunk) - The Triple-net segment's NOI grew **14%** to **$258.9 million**, supported by a **10%** increase in rental income from acquisitions and rent escalators, though partially offset by a **$9.4 million** write-off of straight-line rent receivables[165](index=165&type=chunk)[167](index=167&type=chunk) - The Outpatient Medical segment's NOI increased by **8%** to **$136.7 million**, due to acquisitions, construction conversions, and positive leasing activity[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Welltower is exposed to market risks from changes in interest rates and foreign currency exchange rates, which it manages through matching investment terms with long-term fixed-rate debt and using derivatives - The company is exposed to interest rate risk and foreign currency exchange rate risk from its operations and capital structure[196](index=196&type=chunk) - A hypothetical **1%** increase in interest rates would increase annual interest expense on variable-rate debt by **$11.7 million** as of March 31, 2024[199](index=199&type=chunk) - A hypothetical **10%** change in CAD or GBP exchange rates would impact annualized net income by less than **$19 million**, after accounting for existing hedges[200](index=200&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2024, concluding that these controls are effective in ensuring timely and accurate reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[201](index=201&type=chunk) - No material changes were made to the internal control over financial reporting during the first quarter of 2024[201](index=201&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings that arise in the ordinary course of business, which management does not believe will have a material adverse effect on the company's financial condition or results of operations - Management asserts that pending legal proceedings are not expected to have a material adverse effect on the company's financial condition or results[203](index=203&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes from the risk factors identified in the Annual Report on Form 10-K for the year ended December 31, 2023, have been reported[204](index=204&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2024, the company acquired **36,437** shares of its common stock from employees to satisfy tax withholding obligations related to vested restricted stock awards, and did not repurchase any shares under its **$3.0 billion** stock repurchase program - The company acquired **36,437** shares from employees for tax withholding purposes at an average price of **$89.63** per share[205](index=205&type=chunk)[206](index=206&type=chunk) - No shares were repurchased under the company's **$3.0 billion** stock repurchase program during the three months ended March 31, 2024[207](index=207&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including compensatory plan agreements, CEO and CFO certifications as required by the Sarbanes-Oxley Act, and XBRL data files - The report includes certifications from the CEO and CFO pursuant to Rule 13a-14(a)/15d-14(a) and Section 1350 of the U.S. Code[211](index=211&type=chunk) - Various long-term incentive program agreements and forms are filed as exhibits[211](index=211&type=chunk)

[Overview](index=3&type=section&id=Overview) This chapter provides a snapshot of Welltower's portfolio composition by asset type, details same-store Net Operating Income (NOI) performance for Q1 2024, and shows the facility revenue mix Portfolio Composition (Total Properties: 2,096, Average Age: 19 years) | Asset Type | Properties | Total Beds/Units/SqFt | Wellness Housing | Independent Living | Assisted Living | Memory Care | Long-Term/Post-Acute Care | | :-------------------------- | :--------- | :---------------------- | :--------------- | :----------------- | :-------------- | :---------- | :------------------------ | | Seniors Housing Operating | 994 | 120,401 units | 20,767 | 45,676 | 37,958 | 15,370 | 630 | | Seniors Housing Triple-net | 360 | 27,842 units | — | 5,001 | 13,671 | 8,791 | 379 | | Outpatient Medical | 450 | 26,680,153 sqft | n/a | n/a | n/a | n/a | n/a | | Long-Term/Post-Acute Care | 292 | 37,225 beds | — | — | 1,022 | — | 36,203 | Same Store NOI Performance (Q1 2024 vs Q1 2023) | Asset Type | 1Q23 NOI ($) | 1Q24 NOI ($) | % Change | | :-------------------------- | :----------- | :----------- | :--------- | | Seniors Housing Operating | 212,749 | 266,907 | 25.5 % | | Seniors Housing Triple-net | 90,310 | 93,740 | 3.8 % | | Outpatient Medical | 116,879 | 119,184 | 2.0 % | | Long-Term/Post-Acute Care | 57,507 | 59,308 | 3.1 % | | **Total** | **477,445** | **539,139** | **12.9 %** | Portfolio Performance Facility Revenue Mix (as of March 31, 2024) | Asset Type | Occupancy | Private Pay | Medicaid | Medicare | Other Government | | :-------------------------- | :-------- | :---------- | :------- | :------- | :--------------- | | Seniors Housing Operating | 83.9 % | 97.6 % | 1.0 % | 0.4 % | 1.0 % | | Seniors Housing Triple-net | 83.2 % | 88.6 % | 4.2 % | 0.5 % | 6.7 % | | Outpatient Medical | 94.2 % | 100.0 % | — | — | — | | Long-Term/Post-Acute Care | 79.3 % | 27.6 % | 47.7 % | 24.7 % | — % | | **Total** | **—** | **93.0 %** | **3.9 %** | **1.7 %** | **1.4 %** | [Portfolio](index=4&type=section&id=Portfolio) This section provides a detailed breakdown of Welltower's portfolio, including diversification by partner, country, and metropolitan statistical area (MSA), as well as specific performance metrics for key segments [Portfolio Diversification](index=4&type=section&id=Portfolio%20Diversification) This section details the diversification of In-Place Net Operating Income (NOI) across various partners, countries, and metropolitan statistical areas (MSAs) In-Place NOI Diversification by Partner (Annualized) | Partner | Total Properties | Total In-Place NOI ($) | % of Total | | :-------------------------- | :--------------- | :--------------------- | :--------- | | Cogir Management Corporation | 105 | 176,880 | 6.8 % | | Sunrise Senior Living | 91 | 170,568 | 6.5 % | | Integra Healthcare Properties | 147 | 156,272 | 6.0 % | | Avery Healthcare | 91 | 146,120 | 5.6 % | | Oakmont Management Group | 63 | 112,844 | 4.3 % | | Remaining | 1,151 | 1,446,092 | 55.5 % | | **Total** | **1,937** | **2,609,800** | **100.0 %** | In-Place NOI Diversification by Country (Annualized) | Country | Total Properties | Total In-Place NOI ($) | % of Total | | :-------------- | :--------------- | :--------------------- | :--------- | | United States | 1,674 | 2,240,160 | 85.8 % | | United Kingdom | 129 | 194,816 | 7.5 % | | Canada | 134 | 174,824 | 6.7 % | | **Total** | **1,937** | **2,609,800** | **100.0 %** | Top MSAs by In-Place NOI (Annualized) | MSA | Total Properties | Total In-Place NOI ($) | % of Total | | :---------------- | :--------------- | :--------------------- | :--------- | | Los Angeles | 74 | 155,452 | 6.0 % | | New York / New Jersey | 76 | 131,068 | 5.0 % | | Dallas | 71 | 103,880 | 4.0 % | | Greater London | 49 | 90,100 | 3.5 % | | Washington D.C. | 40 | 82,288 | 3.2 % | [Seniors Housing Operating (SHO) Performance](index=5&type=section&id=Seniors%20Housing%20Operating%20(SHO)%20Performance) This section presents a quarterly overview of Seniors Housing Operating (SHO) performance, including total portfolio and same-store metrics, highlighting significant year-over-year NOI growth SHO Total Portfolio Performance (Quarterly) | Metric | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | | :---------------- | :----- | :----- | :----- | :----- | :----- | | Properties | 885 | 886 | 883 | 915 | 935 | | Units | 89,240 | 89,932 | 90,953 | 99,387 | 101,395 | | Total occupancy | 79.0 % | 79.6 % | 80.7 % | 82.2 % | 82.5 % | | Total revenues ($) | 1,143,744 | 1,178,975 | 1,221,753 | 1,287,666 | 1,386,818 | | NOI ($) | 248,763 | 276,907 | 288,290 | 305,589 | 351,836 | | NOI margin | 21.7 % | 23.5 % | 23.6 % | 23.7 % | 25.4 % | SHO Same Store Performance (Quarterly) | Metric | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | | :-------------------------- | :----- | :----- | :----- | :----- | :----- | | Properties | 665 | 665 | 665 | 665 | 665 | | Occupancy | 80.0 % | 80.8 % | 82.2 % | 83.5 % | 83.4 % | | Same store revenues ($) | 909,268 | 935,048 | 962,566 | 980,403 | 1,003,135 | | Same store NOI ($) | 212,749 | 231,714 | 242,254 | 245,338 | 266,907 | | Same store NOI margin % | 23.4 % | 24.8 % | 25.2 % | 25.0 % | 26.6 % | | Year over year NOI growth rate | — | — | — | — | 25.5 % | | Year over year revenue growth rate | — | — | — | — | 10.3 % | Top SHO Partners by 1Q24 NOI | Partner | 1Q24 NOI ($) | % of Total | | :-------------------------- | :----------- | :--------- | | Cogir Management Corporation | 32,634 | 9.3 % | | Sunrise Senior Living | 19,709 | 5.6 % | | Oakmont Management Group | 18,426 | 5.2 % | | Belmont Village | 18,191 | 5.2 % | | Atria Senior Living | 15,365 | 4.4 % | [Lease and Coverage Metrics](index=6&type=section&id=Lease%20and%20Coverage%20Metrics) This section details payment coverage stratification for Seniors Housing and Long-Term/Post-Acute Care properties and provides a comprehensive schedule of revenue and lease maturities EBITDARM Coverage Stratification (as of Dec 31, 2023) | % of In-Place NOI | Seniors Housing Triple-net | Long-Term/Post-Acute Care | Total | Weighted Average Maturity (Years) | Number of Leases | | :---------------- | :------------------------- | :------------------------ | :---- | :-------------------------------- | :--------------- | | <.85x | 0.4 % | — % | 0.4 % | 9 | 2 | | .85x-.95x | — % | — % | — % | — | — | | .95x-1.05x | 2.3 % | — % | 2.3 % | 9 | 2 | | 1.05x-1.15x | 1.9 % | 0.4 % | 2.3 % | 5 | 4 | | 1.15x-1.25x | 2.1 % | 0.9 % | 3.0 % | 11 | 3 | | 1.25x-1.35x | 5.7 % | 0.1 % | 5.8 % | 8 | 5 | | >1.35 | 1.2 % | 4.3 % | 5.5 % | 17 | 13 | | **Total** | **13.6 %** | **5.7 %** | **19.3 %** | **11** | **29** | Revenue and Lease Maturity Schedule (Total Revenues $1,499,102k) | Year | Seniors Housing Triple-net ($) | Outpatient Medical ($) | Long-Term/Post-Acute Care ($) | Interest Income ($) | Total Revenues ($) | % of Total | | :--- | :----------------------------- | :--------------------- | :---------------------------- | :------------------ | :----------------- | :--------- | | 2024 | 13,495 | 50,449 | — | 39,088 | 103,032 | 6.9 % | | 2025 | 5,837 | 40,593 | 720 | 16,667 | 63,817 | 4.3 % | | 2026 | 3,304 | 49,666 | 9,287 | 40,118 | 102,375 | 6.8 % | | 2027 | — | 45,040 | 1,232 | 11,953 | 58,225 | 3.9 % | | 2028 | — | 46,576 | 6,404 | 103,633 | 156,613 | 10.4 % | | 2029 | 1,035 | 42,595 | — | 3,322 | 46,952 | 3.1 % | | 2030 | 42,330 | 39,955 | 29,031 | 361 | 111,677 | 7.4 % | | 2031 | 6,571 | 52,905 | 4,430 | 233 | 64,139 | 4.3 % | | 2032 | 94,226 | 44,474 | — | 351 | 139,051 | 9.3 % | | 2033 | 55,028 | 32,495 | — | — | 87,523 | 5.8 % | | Thereafter | 154,579 | 129,182 | 280,219 | 1,718 | 565,698 | 37.8 % | | **Total** | **376,405** | **573,930** | **331,323** | **217,444** | **1,499,102** | **100.0 %** | | Weighted Avg Maturity Years | 10 | 7 | 14 | 3 | 9 | | [Outpatient Medical Performance](index=7&type=section&id=Outpatient%20Medical%20Performance) This section provides a quarterly performance review for the Outpatient Medical portfolio, including total and same-store metrics, portfolio diversification, and lease expiration schedules Outpatient Medical Total Portfolio Performance (Quarterly) | Metric | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | | :---------------------- | :----- | :----- | :----- | :----- | :----- | | Properties | 419 | 420 | 422 | 426 | 427 | | Square feet | 20,188,159 | 20,236,315 | 20,748,969 | 21,043,557 | 21,148,949 | | Occupancy | 94.0 % | 94.4 % | 94.5 % | 94.5 % | 94.2 % | | Total revenues ($) | 185,190 | 186,802 | 195,136 | 192,822 | 203,849 | | NOI ($) | 126,213 | 127,444 | 131,305 | 137,762 | 138,687 | | NOI margin | 68.2 % | 68.2 % | 67.3 % | 71.4 % | 68.0 % | Outpatient Medical Same Store Performance (Quarterly) | Metric | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | | :-------------------------- | :----- | :----- | :----- | :----- | :----- | | Properties | 378 | 378 | 378 | 378 | 378 | | Occupancy | 94.7 % | 94.9 % | 95.0 % | 94.8 % | 94.7 % | | Same store revenues ($) | 172,500 | 171,576 | 174,464 | 167,390 | 176,084 | | Same store NOI ($) | 116,879 | 117,828 | 117,750 | 120,320 | 119,184 | | NOI margin | 67.8 % | 68.7 % | 67.5 % | 71.9 % | 67.7 % | | Year over year NOI growth rate | — | — | — | — | 2.0 % | Outpatient Medical Portfolio Diversification (by Tenant Rental Income) | Tenant | Rental Income ($) | % of Total | | :-------------------------- | :---------------- | :--------- | | Kelsey-Seybold | 45,543 | 7.9 % | | UnitedHealth | 18,404 | 3.2 % | | Common Spirit Health | 17,976 | 3.1 % | | Novant Health | 17,485 | 3.0 % | | Providence Health & Services | 16,739 | 2.9 % | | Remaining portfolio | 457,783 | 79.9 % | | **Total** | **573,930** | **100.0 %** | - Outpatient Medical Quality Indicators: - **Health system affiliated properties as % of NOI**: 88.9 % - **Health system affiliated tenants as % of rental income**: 60.4 % - **Investment grade tenants as % of rental income**: 55.6 % - **Retention (trailing twelve months)**: 92.7 % - **Average remaining lease term**: 6.6 years[23](index=23&type=chunk) Outpatient Medical Expirations (% of occupied square feet) | Year | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | :--------- | | % of occupied square feet | 8.5 % | 6.7 % | 9.0 % | 8.0 % | 8.3 % | 59.5 % | [Investment](index=8&type=section&id=Investment) This section details Welltower's investment activities, including historical acquisitions, gross investment breakdown, and a comprehensive overview of development projects and unstabilized properties [Investment Activity Overview](index=8&type=section&id=Investment%20Activity%20Overview) This section provides a historical overview of Welltower's acquisition and joint venture activities and details investment timing for Q1 2024 Relationship Investment History (Acquisitions/JVs Total) | Year | Count | Total ($) | | :--- | :---- | :-------- | | 2020 | 12 | 910,217 | | 2021 | 35 | 4,101,534 | | 2022 | 27 | 2,785,739 | | 2023 | 52 | 4,222,706 | | 1Q24 | 3 | 61,034 | | **20-24 Total** | **129** | **12,081,230** | Investment Timing (Q1 2024) | Activity | Total ($) | Yield | | :-------------------------- | :-------- | :------ | | Acquisitions and Loan Funding | 207,934 | 6.8 % | | Construction Conversions | 165,603 | 3.7 % | | Dispositions and Loan Repayments | 106,994 | 5.0 % | [Gross Investment Details](index=9&type=section&id=Gross%20Investment%20Details) This section outlines the gross investment activities for Q1 2024, categorizing them into acquisitions, development funding, and dispositions Gross Investment Activity (First Quarter 2024) | Category | Properties | Pro Rata Amount ($) | Yield | | :-------------------------------- | :--------- | :------------------ | :------ | | Acquisitions and Loan Funding | 3 | 207,934 | 6.8 % | | Development Funding (Total) | 56 | 241,295 | 7.1 % | | **Total Gross Investments** | **—** | **449,229** | **6.9 %** | | Dispositions and Loan Repayments | 10 | 106,994 | 5.0 % | | **Net Investments (Dispositions)** | **—** | **342,235** | **—** | [Development Projects](index=10&type=section&id=Development%20Projects) This section provides a detailed summary of current development projects, funding projections, conversion timelines, and an overview of unstabilized properties Total Development Projects (Commitment Amount & Future Funding) | Category | Commitment Amount ($) | Estimated Future Funding ($) | | :-------------------------- | :-------------------- | :--------------------------- | | Seniors Housing Operating | 1,811,089 | 543,075 | | Outpatient Medical | 710,406 | 382,563 | | **Total Development Projects** | **2,521,495** | **925,638** | Development Funding Projections (Total) | Category | Stable Yields | 2024 Funding ($) | Thereafter Funding ($) | Total Unfunded Commitments ($) | Committed Balances ($) | | :-------------------------- | :------------ | :--------------- | :--------------------- | :--------------------------- | :--------------------- | | Seniors Housing Operating | 7.3 % | 351,697 | 191,378 | 543,075 | 1,811,089 | | Outpatient Medical | 6.3 % | 308,716 | 73,847 | 382,563 | 710,406 | | **Total** | **7.0 %** | **660,413** | **265,225** | **925,638** | **2,521,495** | Development Project Conversion Estimates (Total) | Period | Amount ($) | Year 1 Yields | Stable Yields | | :---------------- | :--------- | :------------ | :------------ | | 1Q24 actual | 162,557 | 3.7 % | 6.6 % | | 2Q24 estimate | 388,082 | 2.9 % | 6.5 % | | 3Q24 estimate | 317,906 | 0.6 % | 7.7 % | | 4Q24 estimate | 742,951 | 2.0 % | 7.1 % | | 1Q25 estimate | 561,326 | 4.0 % | 7.0 % | | 2Q25 estimate | 250,798 | 1.7 % | 6.3 % | | 3Q25 estimate | 66,799 | 0.7 % | 6.9 % | | 4Q25 estimate | 58,284 | (0.3)% | 7.2 % | | 1Q26 estimate | 18,375 | (3.4)% | 10.9 % | | 3Q26 estimate | 116,974 | 0.5 % | 7.5 % | | **Total** | **2,684,052** | **2.3 %** | **7.0 %** | Unstabilized Properties (as of March 31, 2024) | Occupancy | Properties | Months In Operation | Revenues ($) | % of Total Revenues | Gross Investment Balance ($) | % of Total Gross Investment | | :-------- | :--------- | :------------------ | :----------- | :------------------ | :--------------------------- | :-------------------------- | | 0% - 50% | 16 | 11 | 88,874 | 1.2 % | 866,877 | 1.8 % | | 50% - 70% | 20 | 24 | 172,291 | 2.3 % | 938,069 | 2.0 % | | 70% + | 14 | 29 | 165,498 | 2.2 % | 559,736 | 1.2 % | | **Total** | **50** | **21** | **426,663** | **5.7 %** | **2,364,682** | **5.0 %** | [Financial](index=12&type=section&id=Financial) This section provides a comprehensive financial overview, including Net Asset Value (NAV) components, Net Operating Income (NOI) by segment, leverage reconciliations, and debt structure [Components of NAV](index=12&type=section&id=Components%20of%20NAV) This section details the components contributing to Welltower's Net Asset Value (NAV), including stabilized NOI, total debt, and other assets and liabilities Total Stabilized NOI | Category | Amount ($) | | :-------------------------- | :----------- | | Seniors Housing Operating | 1,344,032 | | Seniors Housing Triple-net | 407,064 | | Outpatient Medical | 526,384 | | Long-Term/Post-Acute Care | 332,320 | | Incremental stabilized NOI | 116,098 | | **Total stabilized NOI** | **2,725,898** | Total Debt Obligations | Category | Amount ($) | | :-------------------------- | :----------- | | Lines of credit and commercial paper | — | | Senior unsecured notes | 12,328,089 | | Secured debt | 2,905,614 | | Financing lease liabilities | 80,541 | | **Total debt** | **15,314,244** | Net Obligations | Category | Amount ($) | | :---------------------------------------- | :----------- | | Total debt | 15,314,244 | | Other liabilities (assets), net | 424,081 | | Cash and cash equivalents and restricted cash | (2,478,335) | | **Net obligations** | **13,259,990** | Other Assets | Category | Amount ($) | | :-------------------------- | :----------- | | Land parcels | 427,215 | | Real estate loans receivable | 2,147,555 | | Non-real estate loans receivable | 290,619 | | Joint venture real estate loans receivables | 269,190 | | Property dispositions (expected) | 1,043,796 | | Development properties (committed balances) | 2,539,605 | [Net Operating Income](index=13&type=section&id=Net%20Operating%20Income) This section provides a detailed quarterly breakdown of Net Operating Income (NOI) by property segment, showing revenues and property operating expenses for each Total Revenues by Segment (1Q24) | Segment | Resident Fees & Services ($) | Rental Income ($) | Interest Income ($) | Other Income ($) | Total Revenues ($) | | :-------------------------- | :--------------------------- | :---------------- | :------------------ | :--------------- | :----------------- | | Seniors Housing Operating | 1,379,295 | — | 4,716 | 2,807 | 1,386,818 | | Seniors Housing Triple-net | — | 110,967 | 35,478 | 955 | 147,400 | | Outpatient Medical | — | 200,593 | 852 | 2,404 | 203,849 | | Long-Term/Post-Acute Care | — | 104,046 | 15,823 | 244 | 120,113 | | Corporate | — | — | — | 28,729 | 28,729 | | **Total** | **1,379,295** | **415,606** | **56,869** | **35,139** | **1,886,909** | Total Property Operating Expenses by Segment (1Q24) | Segment | Property Operating Expenses ($) | | :-------------------------- | :------------------------------ | | Seniors Housing Operating | 1,034,982 | | Seniors Housing Triple-net | 7,559 | | Outpatient Medical | 65,162 | | Long-Term/Post-Acute Care | 3,448 | | Corporate | 3,636 | | **Total** | **1,114,787** | Net Operating Income (NOI) by Segment (1Q24) | Segment | NOI ($) | | :-------------------------- | :-------- | | Seniors Housing Operating | 351,836 | | Seniors Housing Triple-net | 139,841 | | Outpatient Medical | 138,687 | | Long-Term/Post-Acute Care | 116,665 | | Corporate | 25,093 | | **Total Net Operating Income** | **772,122** | [Leverage and EBITDA Reconciliations](index=14&type=section&id=Leverage%20and%20EBITDA%20Reconciliations) This section provides reconciliations for EBITDA and Adjusted EBITDA, along with calculations for key coverage and net debt ratios EBITDA and Adjusted EBITDA (Twelve Months Ended March 31, 2024) | Metric | Amount ($) | | :-------------------------- | :----------- | | Net income (loss) | 461,138 | | Interest expense | 610,761 | | Income tax expense (benefit) | 9,510 | | Depreciation and amortization | 1,427,852 | | **EBITDA** | **2,509,261** | | Total adjustments | 159,892 | | **Adjusted EBITDA** | **2,669,153** | Coverage Ratios (Twelve Months Ended March 31, 2024) | Ratio | Value | | :-------------------------- | :------ | | Interest coverage ratio | 3.94 x | | Adjusted Interest coverage ratio | 4.19 x | | Fixed charge coverage ratio | 3.65 x | | Adjusted Fixed charge coverage ratio | 3.88 x | Net Debt to EBITDA Ratios (as of March 31, 2024) | Metric | Amount ($) | Ratio | | :-------------------------- | :----------- | :------ | | Total debt | 14,285,686 | | | Less: cash and cash equivalents and restricted cash | (2,478,335) | | | **Net debt** | **11,807,351** | | | EBITDA Annualized | 2,604,024 | 4.53 x | | Adjusted EBITDA Annualized | 2,929,464 | 4.03 x | [Leverage and Current Capitalization](index=15&type=section&id=Leverage%20and%20Current%20Capitalization) This section details Welltower's capitalization structure across book and enterprise value metrics, highlighting key leverage indicators Book Capitalization (as of March 31, 2024) | Category | Amount ($) | % of Total | | :---------------------------------------- | :----------- | :--------- | | Long-term debt obligations | 14,285,686 | 35.40 % | | Cash and cash equivalents and restricted cash | (2,478,335) | (6.14)% | | Net debt to consolidated book capitalization | 11,807,351 | 29.26 % | | Total equity | 28,547,908 | 70.74 % | | **Consolidated book capitalization** | **40,355,259** | **100.00 %** | Enterprise Value (as of March 31, 2024) | Category | Amount ($) | % of Total | | :---------------------------------------- | :----------- | :--------- | | Net debt to consolidated enterprise value | 11,807,351 | 17.36 % | | Common equity market capitalization | 55,216,873 | 81.17 % | | Noncontrolling interests | 999,965 | 1.47 % | | **Consolidated enterprise value** | **68,024,189** | **100.00 %** | - Debt Ratios (as of March 31, 2024): - **Secured debt as % of gross asset value**: 3.76 % - **Total debt as % of gross asset value**: 26.41 % - **Unsecured debt as % of unencumbered assets**: 25.07 %[51](index=51&type=chunk) [Debt Maturities and Scheduled Principal Amortization](index=16&type=section&id=Debt%20Maturities%20and%20Scheduled%20Principal%20Amortization) This section provides a detailed schedule of debt maturities and scheduled principal amortization by year, along with a breakdown of debt by local currency Debt Maturities and Scheduled Principal Amortization (Total Combined Debt $15,233,703k) | Year | Senior Unsecured Notes ($) | Consolidated Secured Debt ($) | Combined Debt ($) | % of Total | Wtd. Avg. Interest Rate | | :--- | :------------------------- | :---------------------------- | :---------------- | :--------- | :---------------------- | | 2024 | — | 307,236 | 400,509 | 2.63 % | 4.75 % | | 2025 | 1,260,000 | 379,484 | 2,115,154 | 13.88 % | 4.03 % | | 2026 | 700,000 | 152,652 | 881,481 | 5.79 % | 4.03 % | | 2027 | 1,906,204 | 206,191 | 2,197,899 | 14.43 % | 4.66 % | | 2028 | 2,480,035 | 105,956 | 2,597,090 | 17.05 % | 3.79 % | | 2029 | 1,050,000 | 318,012 | 1,403,229 | 9.21 % | 3.81 % | | 2030 | 750,000 | 57,066 | 841,298 | 5.52 % | 3.13 % | | 2031 | 1,350,000 | 6,978 | 1,390,263 | 9.13 % | 2.77 % | | 2032 | 1,050,000 | 47,952 | 1,101,746 | 7.23 % | 3.38 % | | 2033 | — | 395,502 | 367,371 | 2.41 % | 4.88 % | | Thereafter | 1,781,850 | 93,747 | 1,937,663 | 12.74 % | 5.04 % | | **Totals** | **12,328,089** | **2,070,776** | **15,233,703** | **100.00 %** | **4.02 %** | | Weighted Avg. Maturity Years | 6.3 | 4.8 | 6.0 | | | | % Floating Rate Debt | 5.63 % | 23.15 % | 7.56 % | | | Debt by Local Currency (as of March 31, 2024) | Currency | Senior Unsecured Notes ($) | Consolidated Secured Debt ($) | Combined Debt ($) | Investment Hedges ($) | | :------------- | :------------------------- | :---------------------------- | :---------------- | :-------------------- | | United States | 10,595,000 | 1,354,921 | 12,673,242 | — | | United Kingdom | 1,326,885 | — | 1,326,885 | 2,098,637 | | Canada | 406,204 | 715,855 | 1,233,576 | 1,920,236 | | **Totals** | **12,328,089** | **2,070,776** | **15,233,703** | **4,018,873** | [Glossary](index=17&type=section&id=Glossary) This section provides definitions for key terms used throughout the financial report, including various financial metrics, property classifications, and operational concepts - **EBITDAR**: Earnings before interest, taxes, depreciation, amortization and rent[64](index=64&type=chunk) - **EBITDARM**: Earnings before interest, taxes, depreciation, amortization, rent and management fees[66](index=66&type=chunk) - **NOI (Net Operating Income)**: Total revenues, including tenant reimbursements, less property operating expenses[80](index=80&type=chunk) - **Seniors Housing Operating (SHO)**: Includes independent, assisted living and dementia care properties in the U.S. and Canada and all care homes in the U.K. generally structured to take advantage of the REIT Investment Diversification and Empowerment Act of 2007, as well as Wellness Housing properties[73](index=73&type=chunk) - **Outpatient Medical**: Buildings offering ambulatory medical services such as primary and secondary care, outpatient surgery, diagnostic procedures and rehabilitation, typically affiliated with a health system[72](index=72&type=chunk) - **Stable Property**: Generally, a triple-net rental property is considered stable when it has achieved EBITDAR coverage of 1.00x or greater for three consecutive months or 12 months following the budgeted stabilization date. A Seniors Housing Operating facility is stable upon the earliest of 90% occupancy, NOI at or above the underwritten target or 12 months past the underwritten stabilization date[76](index=76&type=chunk) [Supplemental Reporting Measures](index=18&type=section&id=Supplemental%20Reporting%20Measures) This section defines and reconciles various non-GAAP financial measures used by Welltower to assess operating performance and credit strength [Non-GAAP Measure Definitions](index=18&type=section&id=Non-GAAP%20Measure%20Definitions) This section defines key supplemental reporting measures such as EBITDA, Adjusted EBITDA, NOI, In-Place NOI (IPNOI), Same Store NOI (SSNOI), RevPOR, and ExpPOR - **NOI (Net Operating Income)**: Total revenues, including tenant reimbursements, less property operating expenses[80](index=80&type=chunk) - **In-Place NOI (IPNOI)**: NOI excluding interest income, other income and non-IPNOI, adjusted for timing of current quarter portfolio changes[80](index=80&type=chunk) - **Same Store NOI (SSNOI)**: Evaluates operating performance of properties using a consistent population, controlling for portfolio changes[80](index=80&type=chunk) - **EBITDA**: Earnings (net income) before interest expense, income taxes, depreciation and amortization[82](index=82&type=chunk) - **Adjusted EBITDA**: EBITDA excluding unconsolidated entities and including adjustments for stock-based compensation, loan losses, gains/losses on debt extinguishment, properties, derivatives, other expenses, and impairment charges[82](index=82&type=chunk) - **RevPOR**: Average revenues generated per occupied room per month at Seniors Housing Operating properties[81](index=81&type=chunk) - **ExpPOR**: Average expenses per occupied room at Seniors Housing Operating properties[81](index=81&type=chunk) [Non-GAAP Reconciliations](index=19&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations from net income to NOI, and further breakdowns for In-Place NOI, Same Store Property, Same Store NOI, and SHO RevPOR NOI Reconciliation (1Q24) | Metric | Amount ($) | | :---------------------------------------- | :----------- | | Net income (loss) | 131,634 | | Total adjustments (various non-operating items) | 640,500 | | Consolidated net operating income | 762,828 | | NOI attributable to unconsolidated investments | 32,090 | | NOI attributable to noncontrolling interests | (22,796) | | **Pro rata net operating income (NOI)** | **772,122** | Annualized In-Place NOI Reconciliation (1Q24) | Segment | Annualized In-Place NOI ($) | | :-------------------------- | :-------------------------- | | Seniors Housing Operating | 1,344,032 | | Seniors Housing Triple-net | 407,064 | | Outpatient Medical | 526,384 | | Long-Term/Post-Acute Care | 332,320 | | Corporate | — | | **Total Annualized In-Place NOI** | **2,609,800** | Same Store NOI Reconciliation (1Q24 vs 1Q23 YoY Growth) | Segment | 1Q23 SSNOI ($) | 1Q24 SSNOI ($) | Y/o/Y Growth | | :-------------------------- | :------------- | :------------- | :----------- | | Seniors Housing Operating | 212,749 | 266,907 | 25.5 % | | Seniors Housing Triple-net | 90,310 | 93,740 | 3.8 % | | Outpatient Medical | 116,879 | 119,184 | 2.0 % | | Long-Term/Post-Acute Care | 57,507 | 59,308 | 3.1 % | | Corporate | — | — | — | | **Total SSNOI** | **477,445** | **539,139** | **12.9 %** | SHO SS RevPOR Growth (1Q24 vs 1Q23 YoY Growth) | Region | 1Q23 SHO SS RevPOR ($) | 1Q24 SHO SS RevPOR ($) | YOY Growth | | :------------- | :----------------------- | :----------------------- | :--------- | | United States | 5,632 | 5,901 | 4.8 % | | United Kingdom | 8,100 | 8,690 | 7.3 % | | Canada | 2,469 | 2,535 | 2.7 % | | **Total** | **5,373** | **5,630** | **4.8 %** | SHO SSNOI/Unit (Trailing Four Quarters) | Region | Trailing Four Quarters' SSNOI ($) | Average Units in Service | SSNOI/Unit in USD ($) | | :------------- | :------------------------------- | :--------------------- | :-------------------- | | United States | 864,375 | 61,453 | 14,066 | | United Kingdom | 45,590 | 2,469 | 18,465 | | Canada | 76,248 | 7,419 | 10,277 | | **Total** | **986,213** | **71,341** | **13,824** | [Forward-Looking Statements and Risk Factors](index=22&type=section&id=Forward%20Looking%20Statements%20and%20Risk%20Factors) This section contains standard forward-looking statements and outlines various risks and uncertainties that could cause actual results to differ materially from expectations - **Forward-Looking Statements**: Welltower uses words like "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "pro forma," "estimate" or similar expressions[102](index=102&type=chunk) - **Key Risk Factors**: Include the status of the economy and capital markets, issues facing the health care industry (regulations, payment policies, operator/tenant financial condition), changes in financing terms, competition, natural disasters, ability to re-lease space, operator/tenant bankruptcies, government regulations (Medicare/Medicaid), environmental laws, and maintaining REIT qualification[102](index=102&type=chunk) - **Additional Information**: Investors can access SEC filings (10-K, 10-Q, 8-K) and other financial information on www.welltower.com and www.sec.gov[103](index=103&type=chunk)[104](index=104&type=chunk) - **About Welltower**: Welltower Inc (NYSE:WELL) is a REIT and S&P 500 company focused on transforming health care infrastructure by investing with leading seniors housing operators, post-acute providers, and health systems in major, high-growth markets across the United States, Canada, and the United Kingdom[105](index=105&type=chunk)

Revenue Segmentation - The Seniors Housing Operating segment accounted for 72% of total revenues for the year ended December 31, 2023, with a significant contribution from Sunrise Senior Living, which represented approximately 12% of total revenues[33]. - The Triple-net segment contributed 16% of total revenues for the year ended December 31, 2023, with Integra Healthcare Properties accounting for about 3% of total revenues[36]. - The Outpatient Medical segment represented 11% of total revenues for the year ended December 31, 2023, with no single tenant exceeding 20% of segment revenues[39]. Financial Commitments and Investments - As of December 31, 2023, the company had outstanding construction investments of $1,304,441,000 and was committed to provide an additional $966,829,000 to complete construction for consolidated investment properties[46]. - The company had outstanding loans, net of allowances, of $1,691,706,000 with an interest yield of approximately 10.5% per annum as of December 31, 2023[47]. - Investments in unconsolidated entities amounted to $1,636,531,000 as of December 31, 2023, representing interests ranging from 10% to 95% in real estate assets[48]. Risk Management - Approximately 97% of the company's triple-net properties were subject to master leases as of December 31, 2023, which helps spread risk among the entire group of properties[43]. - The outpatient medical leases had a weighted-average remaining term of seven years at December 31, 2023, with 62% of the portfolio including leases with full pass-through[45]. - The company focuses on diversifying its investment portfolio by property type, relationship, and geographic location to enhance operational efficiency[40]. Employee Engagement and Development - The company has a commitment to employee engagement, conducting annual surveys to measure progress on key issues such as manager relationships and employee empowerment[67]. - The company offers various employee development programs, including executive management coaching and mentorship, to support career advancement[68]. - The company provides a comprehensive compensation and benefits program, including annual bonuses, retirement plans, and health and wellness reimbursement programs[69]. Governance and Compliance - The company has maintained Prime status under the ISS-ESG Corporate Rating for five consecutive years, reflecting its commitment to governance practices[63]. - The company maintains a diverse Board of Directors, with 40% female representation and 20% Black or African American members as of December 31, 2023[64]. - The company has implemented numerous health and wellness programs to support the well-being of employees, tenants, and residents, focusing on safety and flexible work arrangements[70]. Regulatory Environment - Operators of U.S. seniors housing facilities primarily rely on private pay sources for revenue, with Medicaid as a secondary source under state waiver programs[76]. - Long-term/post-acute care facilities receive the majority of their revenues from Medicare and Medicaid, with changes in reimbursement policies potentially impacting operators' ability to cover expenses[76]. - The Health Insurance Portability and Accountability Act (HIPAA) and other laws impose significant compliance costs on operators, which could adversely affect their financial obligations[80]. REIT Compliance and Taxation - The company intends to maintain its REIT status, which allows it to avoid U.S. federal income tax on distributed taxable income, but must meet various qualification tests[87]. - The company must distribute at least 90% of its REIT taxable income to avoid corporate tax, with a 4% excise tax on any undistributed amounts[88]. - The company must ensure compliance with the 10% vote test, 10% value test, and other asset tests to maintain its REIT status[103]. Debt and Interest Rate Exposure - Welltower OP's total principal balance of debt was $14,425,617, with a change in fair value of $(573,789) as of December 31, 2023[382]. - A 1% increase in interest rates would lead to an additional annual interest expense of $14,964,000 on variable rate debt as of December 31, 2023[382]. - The company is exposed to market risks, including adverse changes in interest rates and foreign currency exchange rates[380]. Foreign Currency and International Operations - The company is subject to currency fluctuations that may affect its financial condition and results of operations[383]. - A 10% increase or decrease in the value of the Canadian Dollar or British Pounds Sterling relative to the U.S. Dollar would impact net income from investments in Canada and the UK by less than $9,000,000[383]. - The company plans to mitigate foreign currency exposures with non-U.S. denominated borrowings and gains and losses on derivative contracts[383].

Financial Data and Key Metrics Changes - Welltower reported fourth quarter net income attributable to common stockholders of $0.15 per diluted share and normalized funds from operations of $0.96 per diluted share, representing 15.7% year-over-year growth [48] - Total portfolio, same-store NOI growth was 12.5% year-over-year [48] - The company finished the year with a net debt-to-EBITDA ratio of 5.03 times, down from nearly 7.5 times during the pandemic [53][55] Business Line Data and Key Metrics Changes - The Senior Housing Operating portfolio saw a same-store NOI growth of 24.4% for the full year 2023, with fourth quarter growth of 23.7% year-over-year [25][27] - The Outpatient Medical portfolio produced same-store growth of 2.8% for the fourth quarter, driven by favorable operating expense management [27] - Same-store ExpPOR (expense per occupied room) grew 1.7% year-over-year, the lowest growth in Welltower's recorded history [13][29] Market Data and Key Metrics Changes - The U.S. market experienced same-store revenue growth of 9.4%, while Canada and the U.K. grew at 9.7% and 14.1%, respectively [30] - NOI growth in the U.S., Canada, and the U.K. was 21.8%, 21.7%, and 75.5%, respectively [30] Company Strategy and Development Direction - Welltower's strategy includes a focus on high acuity products in affluent micro markets and a wellness housing segment with lower price points but higher NOI margins [73][75] - The company aims to leverage its integrated platform initiative to improve customer and employee experiences, with the first operator going live in the first half of 2024 [31] - The company is positioned to capitalize on a significant amount of Senior Housing loans maturing in the next 24 months, creating equity and private credit opportunities [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued double-digit NOI growth, driven by demand-supply dynamics and the ongoing build-out of the operating platform [80][82] - The company anticipates a robust investment pipeline, with nearly $3 billion in investments closed in the fourth quarter alone [33][39] - Management acknowledged the potential impact of regulatory changes in Senior Housing but emphasized the importance of reputation and quality in driving business success [96] Other Important Information - Welltower completed nearly $6 billion of investments in 2023, with a significant portion occurring in the fourth quarter [16][33] - The company has established a strategic partnership with Affinity Living Communities, acquiring a portfolio of 25 active adult properties for $969 million [44] Q&A Session Summary Question: Insights on Affinity portfolio margins and future focus - Management indicated that the 60% operating margin of the Affinity portfolio is at the upper end of wellness housing performance, with a historical NOI growth of mid-to-high single digits, reaching 12.2% in 2023 [71][77] Question: Market pricing and growth normalization - Management expressed surprise at market expectations for deceleration, suggesting continued strong growth potential based on improved demand-supply conditions [79][82] Question: Revenue per occupied room (RevPOR) growth expectations - Management indicated that RevPOR growth is expected to be in the range of 5% to 5.5%, with significant margin flow benefits as occupancy increases [86] Question: Investment pipeline and growth opportunities - Management refrained from providing specific guidance but noted a robust investment pipeline driven by credit situations and opportunities in the Senior Housing space [91][92] Question: Regulatory concerns and staffing in Senior Housing - Management acknowledged awareness of regulatory discussions but emphasized that reputation and quality of service are key drivers in the Senior Housing business [96] Question: Opportunities within maturing loans - Management noted that while the focus is on active adult and wellness housing, they are open to exploring additional opportunities as they arise [99][102]

Financial Data and Key Metrics Changes - Welltower reported a net income attributable to common stockholders of $0.24 per diluted share and normalized funds from operations (FFO) of $0.92 per diluted share, representing a year-over-year growth of 10.4% [43] - Total portfolio same-store NOI growth was 14.1% year-over-year, with senior housing operating portfolio achieving 26.1% growth [29][43] - The company achieved a net debt to adjusted EBITDA ratio of 5.14x, reflecting a 1.8x decrease compared to the previous year [48] Business Line Data and Key Metrics Changes - The senior housing operating portfolio experienced a 26.1% year-over-year NOI increase, driven by 9.8% revenue growth and 6.9% RevPOR growth [31][43] - The medical office portfolio reported a same-store NOI growth of 3.4% with a 95% occupancy rate [31] - The triple-net lease portfolio saw a same-store NOI increase of 3.9% year-over-year [44] Market Data and Key Metrics Changes - The U.S. region reported a same-store revenue growth of 9.6%, while Canada and the U.K. grew at 9.7% and 12.9%, respectively [33] - NOI growth in the U.S., Canada, and the U.K. was 25.4%, 27.1%, and 37%, respectively [34] Company Strategy and Development Direction - The company is focused on improving customer and employee experiences, which is expected to drive future growth [35][37] - Welltower is pursuing a digital transformation in the senior housing industry, enhancing technology infrastructure to improve operational efficiency [25][26] - The company plans to continue capital allocation activities, with a pipeline of $2.3 billion and a focus on selective investment opportunities [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating results despite macroeconomic uncertainties, highlighting strong pricing power and occupancy growth [6][10] - The company anticipates continued strong rate growth for existing customers, although finalization of rate letters is still in progress [74] - Management acknowledged the challenges in the debt and equity markets but remains confident in the company's balance sheet strength and flexibility [21][22] Other Important Information - The company is experiencing a significant reduction in net debt to adjusted EBITDA, which is one of the lowest levels in its recorded history [21] - Management emphasized the importance of maintaining high-quality staffing and reducing reliance on agency labor to enhance service quality [37][39] Q&A Session Summary Question: Interest in M&A opportunities following peers' merger - Management stated they are not engaged in the mentioned merger process and prefer one asset at a time transactions [63][66] Question: Occupancy levels and NOI potential from the Cogir transaction - Management indicated that occupancy levels are around 80% for properties transitioning to Cogir, with expectations for significant NOI upside [68][70] Question: Revenue increases for existing customers - Management expects strong rate growth for existing customers, although finalization is still ongoing [74] Question: Clarification on potential drag from Kisco and Balfour merger - Management clarified that multiple factors could collectively impact Q4, not just the Kisco and Balfour merger [76][78] Question: G&A trends for the next year - Management anticipates another year of elevated G&A growth due to ongoing platform build-out [80] Question: Senior housing development outlook - Management expressed skepticism about new senior housing developments due to high construction and capital costs [102] Question: Impact of liquidity issues on care quality - Management noted that their operating partners are performing well and attracting new operators despite market challenges [106]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-8923 WELLTOWER INC. (Exact name of registrant as specified in its charter) Delaware 34-1096634 (State or other jurisdiction o ...