Welltower(WELL)2025-02-12 12:48Revenue Segments - The Seniors Housing Operating segment accounted for 76% of total revenues for the year ended December 31, 2024, with key partners contributing 13%, 11%, and 11% of segment revenues [34]. - The Triple-net segment represented 10% of total revenues for the year ended December 31, 2024, with revenues from Integra Healthcare Properties accounting for approximately 27% of this segment [39]. - The Outpatient Medical segment contributed 10% of total revenues for the year ended December 31, 2024, with no single tenant exceeding 20% of segment revenues [42]. Investments and Financials - As of December 31, 2024, the company had outstanding construction investments of 540,297,000 to complete construction for consolidated investment properties [45]. - The company had outstanding loans, net of allowances, of 1,768,772,000 as of December 31, 2024, representing interests ranging from 10% to 95% in real estate assets [47]. Portfolio Composition - The outpatient medical portfolio primarily consists of multi-tenant properties leased to healthcare providers, with 63% of leases including full pass-through expense reimbursement [41]. - Approximately 96% of the company's triple-net properties were subject to master leases as of December 31, 2024, which helps spread risk among the entire group of properties [38]. - The company focuses on diversifying its investment portfolio by property type, relationship, and geographic location to enhance operational efficiency [43]. Employee and Workplace Initiatives - The company had 685 employees as of December 31, 2024, with 653 located in the U.S., 20 in the U.K., and 12 in Canada [63]. - The company has implemented a four-day in-office workweek to enhance collaboration while supporting a geographically dispersed workforce [71]. - The company has invested in career-pathing tools and workforce planning systems to align individual goals with broader business objectives [64]. - The company has launched an AI-based manager development program to enhance leadership decision-making capabilities [66]. - The company supports employee charitable contributions with a 100% match up to 43 billion over the next ten years due to new staffing requirements [79]. - The OIG published compliance program guidance for Skilled Nursing Facilities in November 2024, focusing on risk areas and compliance with federal regulations [80]. - The U.S. Supreme Court's ruling on agency interpretations may lead to increased litigation and scrutiny of healthcare regulations, potentially impacting operators' business [79]. - Changes in Medicare reimbursement for physicians and outpatient facilities may result in lower net pay increases, affecting operators' financial health [79]. - The costs associated with compliance to data privacy laws, including HIPAA, can significantly impact operators' financial obligations [82]. - In Canada, senior living residences are subject to varying provincial regulations, with significant penalties for privacy law violations, including up to CAD 1 billion [112]. - Statutory relief is available for violations of REIT provisions if the violation is due to reasonable cause and not willful neglect, along with a penalty payment [119]. - The company must file a schedule with the IRS describing non-qualifying assets to avoid disqualification as a REIT [108]. - The company may need to arrange for borrowings or pay dividends in the form of taxable stock dividends to meet distribution requirements [116]. - The IRS may redetermine amounts from transactions between the company and its taxable REIT subsidiaries if there is a lack of arm's-length dealing [110]. Tax Implications for Holders - Distributions from the company will be treated as dividends and taxable as ordinary income for taxable U.S. holders when received [125]. - Distributions exceeding current and accumulated earnings will be treated as a tax-free return of capital to the extent of the U.S. holder's adjusted tax basis [126]. - Capital gain dividends will be taxable as a gain from the sale of a capital asset held for more than one year, with U.S. holders required to treat up to 20% of certain capital gain dividends as ordinary income [128]. - The maximum tax rate for non-corporate taxpayers for long-term capital gains is generally 20%, with certain capital gain dividends potentially taxed at a 25% rate [136]. - Tax-exempt U.S. holders may have income from the company treated as unrelated business taxable income (UBTI) if shares are held as "debt-financed property" [137]. - Non-U.S. holders are advised to consult tax advisors regarding the complex rules governing U.S. federal income taxation of the acquisition, ownership, and disposition of the company's stock [140]. - The company may elect to retain net capital gains rather than distribute them as capital gain dividends, which would affect U.S. holders' earnings and profits [129]. - U.S. holders that receive taxable stock distributions must include the full amount as a dividend to the extent of current and accumulated earnings [127]. - The treatment of distributions as a return of capital will reduce the U.S. holder's adjusted tax basis in the shares [126]. - The company does not expect to be classified as a "pension-held REIT," which may affect the tax treatment of dividends for certain trusts [139]. - Distributions to non-U.S. holders are generally subject to a 30% U.S. federal income tax withholding unless a lower treaty rate applies or the distribution is effectively connected with a U.S. trade or business [142]. - Distributions exceeding current and accumulated earnings and profits will not be taxable to non-U.S. holders to the extent they do not exceed the adjusted tax basis of the holder's stock [143]. - Capital gain dividends designated for non-U.S. holders are generally not subject to U.S. federal income taxation unless the investment is effectively connected with a U.S. trade or business [144]. - Under FIRPTA, distributions attributable to gain from sales of U.S. real property interests will be subject to a 21% withholding tax for non-U.S. holders [145]. - Non-U.S. holders may offset their U.S. federal income tax liability with their proportionate share of tax paid on retained net capital gains [146]. - Gain from the sale of stock by non-U.S. holders is generally not subject to U.S. federal income tax unless the stock constitutes a U.S. real property interest [147]. - Non-U.S. holders are exempt from FIRPTA if they are qualified foreign pension funds [149]. - If a non-U.S. holder disposes of stock within 30 days preceding the ex-dividend date, they may be treated as having gain from the sale of a U.S. real property interest [150]. - Interest paid on debt securities to non-U.S. holders is generally not subject to U.S. federal income tax if not effectively connected with a U.S. trade or business [156]. - Non-U.S. holders may be exempt from U.S. federal withholding tax on interest if it is effectively connected with their U.S. trade or business, requiring a valid IRS Form W-8ECI [157]. - Effectively connected interest is subject to U.S. federal income tax at regular rates, and corporations may face a branch profits tax of 30% [158]. - Non-U.S. holders must provide required certifications to the withholding agent prior to interest payment to avoid excess withholding [159]. - Non-U.S. holders are not subject to U.S. federal income tax on gains from the sale of debt securities unless the gain is effectively connected with a U.S. trade or business [160]. - A non-U.S. holder that is a corporation may be subject to a branch profits tax of 30% on effectively connected gains [161]. - Non-U.S. holders may offset U.S. source capital losses against gains realized from the sale of debt securities [162]. - Payments of dividends and interest to non-U.S. holders generally will not be subject to backup withholding if proper certifications are provided [165]. - A 30% withholding tax may apply under FATCA on certain payments to non-U.S. financial institutions unless specific diligence and reporting obligations are met [168]. - Proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds from the sale of stock or debt securities [170]. Financial Risk Management - Welltower OP seeks to mitigate interest rate exposure by matching new investments with long-term fixed-rate borrowings [403]. - A 1% increase in interest rates would result in increased annual interest expense of 15,000,000 from a 10% change in exchange rates [407]. - The carrying value of foreign currency exchange contracts as of December 31, 2024, is 3,077 [407].