Driving the Future of Health Care Real Estate Outpatient Medical Acquistion Update November 2019
Forward Looking Statements This document contains “forward - looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When we use words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “pro forma,” “estimate” or similar expressions that do not relate solely to historical matters, we are making forward-looking statements. In particular, these forward-looking statements include, but are not limited to, those relating to our opportunities to acquire, develop or sell properties; our ability to close anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of our operators/tenants and properties; our expected occupancy rates; our ability to declare and to make distributions to shareholders; our investment and financing opportunities and plans; our continued qualification as a REIT; our ability to access capital markets or other sources of funds; and our ability to meet our earnings guidance. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause our actual results to differ materially from our expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmark; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost -effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and seniors housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; our ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when anticipated; natural disasters and other acts of God affecting our properties; our ability to re lease space at similar rates as vacancies occur; our ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affecting our properties; changes in rules or practices governing our financial reporting; the movement of U.S. and foreign currency exchange rates; our ability to maintain our qualification as a REIT; key management personnel recruitment and retention; and other risks described in our reports filed from time to time with the Securities and Exchange Commission. Finally, we undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements. 2
Investment Highlights (1) Announced with Q3 Earnings on 10/28/19 Newly Announced on 11/11/19 Hammes Follow-On Acquisition Transactions Post Third Quarter 2019 29 outpatient medical properties for $787 million across 1.5M RSF in dense metro markets Oakmont: High-quality portfolio of 6 newly-built, Class A senior living communities located in California for $297 million with mid-to-high 5% cap rate o New York and Boston MSAs and urban centers in CA, TX, MD Frontier: Acquired 2 senior living communities for $39 million at a 6.3% cap rate o 97% economic occupancy, WALT of 12 years OM Acquisitions Previously Disclosed: Off-market acquisition of 18 properties o Average property age of 10 years for $258 million with expected mid-5% yield o 2.2% average annual rent escalator Additional OM Acquisitions Under Contract Third Quarter 2019 Year-To-Date Transaction Activity 4 separate OM transactions for $885 million (negotiated over last 12 months) at a blended year 1 cash cap rate of 5.4% Year-to-date pro rata acquisition volume of $3.0B at a blended year 1 cap rate of 5.5% o No transaction below a 5.3% year 1 cash cap rate o 30 properties comprising 2.0M RSF o Significant value creation opportunity through exclusive development rights Invesco Joint Venture $850 million joint venture partnership in which WELL will retain a 15% interest o Portfolio of 35 Outpatient Medical properties across 2.6M RSF in 15 states o Welltower to retain leasing, portfolio and asset management responsibilities 3 1. All investment amounts shown at 100% ownership
Acquisition Activity Overview | Outpatient Medical $3.3 billion in Pro Rata OM acquisitions closed and announced year-to-date at a blended year one cash yield of 5.6% Cumulative Pro Rata OM Acquisition Volume HEALTH SYSTEM 1Q19 YTD 2Q19 YTD 3Q19 YTD 4Q19 YTD $3.5B (1) 7% and Announced SHO $3.0B 44% $2.5B $2.0B Pro Forma 23% In-Place NOI (2) $1.5B $1.0B $0.5B $0.0B SH NNN LT/PAC 1Q19 YTD 2Q19 YTD 3Q19 YTD 4Q19 YTD 18% 8% and Announced 1. Announced acquisitions are subject to customary closing conditions and expected to close in 4Q19 or 1Q20. 4 2. See supplemental Financial Measures at the end of this presentation for reconciliations.
Transaction Highlights 5
Hammes II Acquisition • Tenant Snapshot $787M Purchase Price TRANSACTION • 2.2% average annual rent escalator HIGHLIGHTS • Weighted average lease term of 12 years • Premier portfolio of 29 outpatient medical properties • 1.5M RSF concentrated in dense metro markets • New York and Boston MSA PORTFOLIO • Urban centers in California, Texas and Maryland DETAILS • 97% occupied • Average property age of 10 years 6 6
Invesco Real Estate Joint Venture • $850M Joint Venture Partnership New Investment Relationship TRANSACTION • WELL to retain 15% interest as well as property management and asset management responsibilities HIGHLIGHTS • Weighted average lease term of 5 years • Portfolio of 35 Outpatient Medical properties Established in 1983, Invesco Real Estate • 2.6M RSF across 15 states PORTFOLIO is one of the world's largest investment managers of direct real estate, with assets DETAILS • 89% occupied under management exceeding $50 billion • Average property age of 19 years 7
Sources and Uses Update Uses ($ millions) (1) Sources ($ millions) Oakmont (announced 10/28/19) $296.9 Assets Held for Sale (as of 9/30/19) $348.7 Frontier (announced 10/28/19) $38.8 Invesco JV (announced 11/11/19) $722.5 OM Acquisitions Previously Disclosed (closed $276.0 Assumption of Secured Debt $760.4 and announced subsequent to 9/30/19) Hammes II (announced 11/11/19) $786.8 Issuance of OP Units $135.6 OM Acquisitions Under Contract $884.9 Forward ATM Settlement (2) $316.2 (announced 11/11/19) Total Uses of Capital $2,283.4 Total Sources of Capital $2,283.4 1. Investments structured as DownREIT shown at 100% 2. Estimated proceeds of $212 million from forward ATM sales as of 10/31/2019 remain unsettled after consideration of the above transactions beyond 9/30/19 actuals. 8
Recent Highlights 9
Third Quarter 2019 and Year-to-Date Highlights Key 3Q19 Metrics (1) Full Year 2019 Update (1) Current 6/30/2019 +2.25% to +2.75% Total Portfolio SS NOI Growth +2.6% Total Portfolio SS NOI Guidance +2.0% to +2.5% Normalized FFO Per Diluted $4.14 - $4.18 Seniors Housing Operating NOI Growth +2.8% $4.10 - $4.20 Share Guidance $5.2B (2) Pro Rata Total Investments $435M Pro Rata Total Investments (YTD) $2.9B $3.5B (2) Pro Rata Dispositions $2.1B Pro Rata Dispositions (YTD) $641M 1. See Supplemental Financial Measures at the end of this presentation for reconciliations. 2. Current YTD pro rata total investments and pro rata dispositions represent actual pro rata amounts as of 9/30/2019, adjusted for the announced and closed acquisition amounts subsequent to quarter end 10 structured as DownREIT at 100% ownership. Such amounts do not include any other investment activity, including loan advances, loan payoffs, development funding, or other acquisitions or property sales.
Portfolio Optimization Strategic Capital Deployment into Outpatient Medical & Health Systems HEALTH SYSTEM HEALTH SYSTEM 7% 7% SHO SHO OM 46% OM 44% 17% 23% Pro Forma In-Place NOI In-Place NOI (1) 4Q 2018 (1) LT/PAC 10% LT/PAC 8% SH NNN SH NNN 18% 20% 11 1. See Supplemental Financial Measures at the end of this presentation for reconciliations.
WELL Outpatient Medical Portfolio Map WELL Portfolio (3Q19) Hammes Follow-On 12
Supplemental Financial Measures 13
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