Welltower(WELL)2024-07-30 11:37Debt Issuance and Repayment - Issued $1.035 billion of 2.75% exchangeable senior unsecured notes in May 2023, maturing May 15, 2028[22] - Repaid $400 million of 4.5% senior unsecured notes in January 2024 and $950 million of 3.625% senior unsecured notes in March 2024[22] - Issued $1.035 billion of 3.125% exchangeable senior unsecured notes in July 2024, maturing July 15, 2029[22] - Expanded unsecured revolving credit facility to $5 billion in July 2024, replacing the previous $4 billion facility[22] - The company issued $1.04 billion aggregate principal amount of 3.125% exchangeable senior unsecured notes maturing July 15, 2029, in July 2024[108] Capital Expenditures and Investments - Total capital expenditures for the six months ended June 30, 2024, were $756.724 million, an 11% increase from $679.093 million in the same period in 2023[26] - Recurring capital expenditures, tenant improvements, and lease commissions increased by 53% to $118.964 million for the six months ended June 30, 2024[26] - Renovations, redevelopments, and other capital improvements increased by 40% to $178.638 million for the six months ended June 30, 2024[26] - Development projects in the Seniors Housing Operating segment amounted to $194.012 million for the six months ended June 30, 2024, up from $140.865 million in 2023[52] - Total construction in progress conversions for the six months ended June 30, 2024, were $320.837 million, slightly down from $329.305 million in 2023[52] - Construction in progress additions amounted to $499.79 million in the first half of 2024, compared to $510.93 million in the same period in 2023[57] - Capital improvements to existing properties totaled $297.6 million in the first half of 2024, up from $204.98 million in the same period in 2023[57] - Total cash invested in real property, net of cash acquired, reached $1.36 billion in the first half of 2024, compared to $1.1 billion in the same period in 2023[57] - The company had outstanding construction in progress of $1,474,024,000 and committed to providing additional funds of approximately $697,515,000 to complete construction as of June 30, 2024[116] Financial Performance and Metrics - Net income for the six months ended June 30, 2024, was $392.304 million, compared to $134.977 million in the same period in 2023[8] - Total comprehensive income attributable to common stockholders for the six months ended June 30, 2024, was $345.637 million, compared to $165.512 million in the same period in 2023[8] - Net income for the six months ended June 30, 2024, increased by 191% to $392.3 million compared to $134.98 million in the same period in 2023[32] - FFO (Funds From Operations) for the six months ended June 30, 2024, rose by 23% to $1.05 billion compared to $852.24 million in the same period in 2023[32] - EBITDA for the six months ended June 30, 2024, increased by 28% to $1.43 billion compared to $1.12 billion in the same period in 2023[32] - NOI (Net Operating Income) for the six months ended June 30, 2024, grew by 13% to $1.48 billion compared to $1.31 billion in the same period in 2023[32] - Resident fees and services revenue for the six months ended June 30, 2024, increased by 20% to $2.75 billion compared to $2.29 billion in the same period in 2023[38] - Interest income for the six months ended June 30, 2024, surged by 354% to $21.1 million compared to $4.65 million in the same period in 2023[38] - Property operating expenses for the six months ended June 30, 2024, increased by 16% to $2.05 billion compared to $1.77 billion in the same period in 2023[38] - Depreciation and amortization expenses for the six months ended June 30, 2024, rose by 11% to $490.33 million compared to $440.84 million in the same period in 2023[38] - Interest expense for the six months ended June 30, 2024, decreased by 33% to $18.51 million compared to $27.62 million in the same period in 2023[38] - Total revenues for the six months ended June 30, 2024, increased by 21% to $2.78 billion compared to $2.3 billion in the same period in 2023[38] - Net income for Q2 2024 was $260,670K, a 145.1% increase from $106,342K in Q2 2023[231] - Depreciation and amortization expenses for Q2 2024 were $382,045K, an 11.7% increase from $341,945K in Q2 2023[231] - Adjusted EBITDA for Q2 2024 was $2,816,379 thousand, showing an increase from $2,669,153 thousand in Q1 2024[234] - Net income for Q2 2024 was $615,466 thousand, up from $461,138 thousand in Q1 2024[234] - Interest expense for Q2 2024 was $591,848 thousand, slightly lower than $610,761 thousand in Q1 2024[234] - Depreciation and amortization for Q2 2024 was $1,467,952 thousand, compared to $1,427,852 thousand in Q1 2024[234] - Adjusted interest coverage ratio for Q2 2024 was 4.56x, up from 4.19x in Q1 2024[234] - Adjusted fixed charge coverage ratio for Q2 2024 was 4.23x, compared to 3.88x in Q1 2024[234] - FFO (Funds From Operations) for the six months ended June 30, 2024, was $1,050,476,000, compared to $852,244,000 for the same period in 2023[222] - Net income attributable to common stockholders for the six months ended June 30, 2024, was $381,860,000, compared to $128,713,000 for the same period in 2023[222] - Net income attributable to common stockholders for Q2 2024 was $254.7 million, a significant increase from $103.0 million in Q2 2023[134] Occupancy and Property Performance - Occupancy rate increased to 82.8% in June 2024, up from 79.6% in June 2023[34] - Consolidated NOI for Seniors Housing Operating increased to $376,544K in Q2 2024, up from $279,252K in Q2 2023, representing a 34.8% growth[229] - Total SSNOI at Welltower Share for Q2 2024 reached $532,202K, a 8.3% increase compared to $491,584K in Q2 2023[229] - Outpatient Medical SSNOI at Welltower Share grew to $239,445K in the first half of 2024, up 1.7% from $235,495K in the same period of 2023[229] - Triple-net SSNOI at Welltower Share increased to $299,290K in the first half of 2024, a 4.0% rise compared to $287,907K in the same period of 2023[229] - Average occupancy for Seniors Housing Operating properties increased steadily, with SSNOI (Same Store Net Operating Income) at Welltower's share rising to $257,009K for Q2 2024, a 15.1% increase from $223,244K in Q2 2023[266][267] - SSNOI for the six months ended June 30, 2024, was $501,642K, a 20.0% increase from $417,923K in the same period in 2023[267] Acquisitions and Dispositions - The company announced the acquisition of 25 Seniors Housing Operating properties for $969 million, expected to close in the second half of 2024, with $521 million in secured debt assumed[58] - The company entered into a definitive agreement to acquire a seniors housing portfolio for approximately $0.9 billion in July 2024, expected to close later in the year[58] - Cash disbursed for acquisitions totaled $607.53 million in the first half of 2024, a significant increase from $424.09 million in the same period in 2023[57] - Total net real estate assets increased to $666.9 million as of June 30, 2024, compared to $493.96 million in the same period in 2023, reflecting significant growth in property investments[57] - The company classified eight Seniors Housing Operating properties and one Outpatient Medical property as held for sale, with an aggregate real estate balance of $81.03 million and expected gross sales proceeds of $95.25 million[60] - Impairment charges of $41.16 million were recorded for nine Seniors Housing Operating properties classified as held for sale or disposed of, as their carrying value exceeded the estimated fair value[60] - The company recorded a loss from continuing operations before income taxes of $(47.06 million) for properties sold or classified as held for sale in the first half of 2024, compared to a gain of $46.85 million in the same period in 2023[60] - The company acquired the remaining interests in 29 properties in the U.K. from Revera, with total proceeds related to the four properties disposed amounting to $222,521 thousand[68] - In the U.S., the company acquired the remaining interests in ten properties and recorded net real estate investments of $479,525 thousand[68] - The Canadian portfolio transaction involved the acquisition of the remaining interests in 71 properties, with total net proceeds related to the 14 properties disposed amounting to $430,898 thousand[68] - Total real estate dispositions for the six months ended June 30, 2024, amounted to $393,027 thousand, with a net gain of $171,150 thousand[77] Debt and Credit Facilities - Long-term debt obligations decreased to $14,027,128 as of June 30, 2024, compared to $14,285,686 on March 31, 2024[239] - Total net debt decreased to $11,163,530 as of June 30, 2024, from $11,807,351 on March 31, 2024[239] - Net debt to book capitalization ratio improved to 27% as of June 30, 2024, down from 29% on March 31, 2024[239] - Common equity market capitalization increased to $63,399,742 as of June 30, 2024, up from $55,216,873 on March 31, 2024[239] - Consolidated enterprise value rose to $75,275,425 as of June 30, 2024, compared to $68,024,189 on March 31, 2024[239] - Net debt to consolidated enterprise value ratio decreased to 15% as of June 30, 2024, from 17% on March 31, 2024[239] - The company closed on an expanded $5,000,000,000 unsecured revolving credit facility in July 2024, replacing the previous $4,000,000,000 line of credit[88] - Total principal balance of debt obligations as of June 30, 2024, was $14,124,813 thousand, with annual principal payments due starting from $106,622 thousand in 2024[90] - The company has a primary unsecured credit facility totaling $5.25 billion, including a $4 billion unsecured revolving credit facility, a $1 billion unsecured term credit facility, and a $250 million Canadian-denominated unsecured term credit facility[96] - The unsecured revolving credit facility bears interest at 0.775% over the adjusted SOFR rate as of June 30, 2024, with a facility fee of 0.15%[96] - The company's commercial paper program allows for the issuance of up to $1 billion in unsecured commercial paper notes, with none outstanding as of June 30, 2024[96] - The weighted average interest rate for borrowings under the unsecured revolving credit facility and commercial paper program was 5.05% for the six months ended June 30, 2023[96] - The ending weighted average interest rate, after considering the effects of interest rate swaps, was 3.94% as of June 30, 2024, compared to 4.00% as of June 30, 2023[97] - The gross real property value securing the debt totaled $4.97 billion as of June 30, 2024[97] Market Risks and Hedging - The company is exposed to market risks, including interest rate and foreign currency exchange rate fluctuations, which are mitigated through hedging strategies[243] - The majority of the company's borrowings are subject to limitations on the amount of indebtedness that can be incurred, potentially impacting future acquisitions[243] - Senior unsecured notes principal balance increased from $12,800,253 to $11,631,434, while secured debt decreased from $1,625,364 to $1,436,784 as of June 30, 2024[244] - Variable rate debt outstanding decreased from $1,496,447,000 to $1,056,595,000, resulting in a reduced annual interest expense impact of $10,566,000 per 1% interest rate increase[244] - A 10% fluctuation in Canadian Dollar or British Pounds Sterling exchange rates could impact annualized net income by less than $19,000,000[244] - Foreign currency exchange contracts carrying value increased from $10,811 to $35,763, with a change in fair value from $5,087 to $471[244] - Debt designated as hedges carrying value decreased from $1,527,380 to $1,509,895, with a change in fair value from $15,274 to $15,099[244] - Total financial instruments carrying value increased from $1,538,191 to $1,545,658, with a change in fair value from $20,361 to $15,570[244] - The company terminated a $550 million fixed to floating swap in January 2024, resulting in a loss of $59.56 million, with an unamortized loss amount of $56.49 million as of June 30, 2024[101] - The company entered into a $550 million forward-starting fixed to floating swap in January 2024, effective from June 2025 to December 2030, with a fair value of $(8.13) million as of June 30, 2024[101] - The company settled certain net investment hedges, generating cash proceeds of $5.13 million for the six months ended June 30, 2024, compared to $1.99 million for the same period in 2023[101] - The notional amount of derivatives designated as net investment hedges in Canadian Dollars increased from $2,025,000 in December 2023 to $2,700,000 in June 2024[115] - The notional amount of interest rate swaps designated as fair value hedges remained constant at $550,000 from December 2023 to June 2024[115] - The gain on derivative instruments designated as hedges recognized in income increased from $4,759 in Q2 2023 to $5,833 in Q2 2024[116] - The gain on equity warrants recognized in income increased from a loss of $1,242 in Q2 2023 to a gain of $5,825 in Q2 2024[116] Stock Repurchase and Dividends - The company redeemed 2,199 OP Units for common shares during Q2 2024[237] - The company has a $3,000,000,000 stock repurchase program approved on November 7, 2022, but no shares were repurchased in Q2 2024[237] - The company repurchased 7,516 shares of common stock at an average price of $102.31 per share during the three months ended June 30, 2024[255] - The maximum dollar value of shares that may yet be purchased under the repurchase program is $3,000,000,000 as of June 30, 2024[255] - The company declared a cash dividend of $0.67 per share for Q2 2024, representing a 10% increase from the prior quarter[121] - Stock-based compensation expense totaled $10,350,000 for Q2 2024, compared to $10,504,000 for the same period in 2023[132] - The company had $2,469,193,000 of remaining capacity under its ATM Program as of June 30, 2024[120] - The company issued 43,315,945 shares of common stock under its ATM Program in 2024, generating gross proceeds of $4,041,776,000[124] Financial Statements and Disclosures - The company's unaudited consolidated financial statements are prepared in accordance with U.S. GAAP, requiring significant estimates and assumptions[240] - The company's disclosure controls and procedures were deemed effective by the Chief Executive Officer and Chief Financial Officer[245] - FFO, NOI, SSNOI, EBITDA, and Adjusted EBITDA are used as supplemental measures of operating performance, excluding historical cost depreciation and gains/losses from real estate sales[249] - SSNOI evaluates property performance using a consistent portfolio, excluding acquisitions, redevelopments, and properties impacted by extraordinary events for five to six quarters[249] - EBITDA and Adjusted EBITDA are used to assess interest coverage and fixed charge coverage ratios, with leverage ratios based on net debt to total capitalization[249] - The company is evaluating the impact of new accounting standards, including ASU