2. Forward Looking Statements
This document contains “forward-looking” statements as that term is 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 our company’s 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 stockholders; our investment
and financing opportunities and plans; our continued qualification as a real estate investment trust (“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; 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 assume no obligation to update or revise 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
4. 1Q14
Private Pay: 87%(3)
POST-ACUTE /
ACUTE CARE
23%
OUTPATIENT
MEDICAL
14%
SENIORS
HOUSING(2)
61%
LIFE SCIENCE
2%
Strategic Portfolio Transformation(1)
4
1. Based on In-Place NOI. See the Supplemental Reporting Measures section of our 3Q18 Supplemental for additional information and reconciliation of In-Place NOI to GAAP net income. In addition, both the 3Q18 and 1Q14
concentrations are based on In-Place NOI as disclosed and reconciled in the respective Supplementals.
2. Comprises Seniors Housing Triple-Net and Seniors Housing Operating properties.
3. Based on Facility Revenue Mix.
3Q18
SENIORS
HOUSING(2)
66%
OUTPATIENT
MEDICAL
16%
LONG-TERM/
POST-ACUTE CARE
11%
Private Pay: 94%(3)
HEALTH SYSTEM
7%
Shifting to high quality seniors housing and lower cost outpatient sites of care
FUTURE HEALTH SYSTEM &
OUTPATIENT MEDICAL GROWTH
5. $0B
$2B
$4B
$6B
$8B
$10B
$12B
Non-Core Dispositions Strategic Acquisitions
Post Acute/Acute Care Outpatient Medical Seniors Housing Health System
Strategic Portfolio Transformation – Capital Recycling
5
Capital Recycling 2014 – 2018
(1)
1. Investment amounts Pro Rata. 2018 reported as YTD based on 3Q18 Supplemental Information.
2. Based on GAAP Property Values.
53%
62%
24%
OF OUR 2014 ASSET BASE
RECYCLED INTO HIGHER
QUALITY ASSETS
$14B
RESTRUCTURED OR SOLD
SINCE 2014
$12B
GROSS INVESTMENTS
SINCE 2014
(1)
(2)
6. 6
Strategic Portfolio Optimization - Differentiators
Data Science &
Analytics
Connectivity
and Integration
RIDEA 3.0
▪ Maximizing value through alignment with partners
▪ Financial alignment – upside incentive, downside protection
▪ Ownership and governance role
▪ Granular site selection – 8.2M micro markets
▪ Predictive labor and proprietary Adjusted Competition Unit
▪ Hospital risk and physician need analysis
▪ Unique position across multiple provider segments, and payors
▪ Connectivity and integration driving investment narrative
▪ Investing in facilities that improve health outcomes and lower
costs
7. 7
Strategic Portfolio Optimization - Transformative Transactions
Innovative & Accretive Investments
▪ ProMedica/HCR ManorCare: Redefines the care delivery value paradigm and
continuum of care through nationally integrated health system
▪ Johns Hopkins: $80M MOB investment, 100% leased with future development
opportunity
▪ Medical Office Portfolio: $400M, 23 properties with 150k sq. ft. of land for
development
▪ Pegasus: Transitioning 36 Brookdale properties to operator led by turn-around
specialist Steven Vick
▪ Cogir: Expanding relationship by 12 communities with leading & innovative
operator
▪ Brookdale: Extended SALI master lease by 8 years with higher annual
escalators
▪ Brandywine: Conversion of 27 properties to seniors housing operating platform
Leveraging Relationships To Drive Growth
8. 8
Strategic Portfolio Optimization - $1.0B in New Acquisition Volume
4 Transactions
$725 Million
6.6% Blended Cap Rate
7 Transactions
$280 Million
5.9% Blended Cap Rate
Pappas Properties and Atrium Health MOBs
Seniors Housing Outpatient Medical
▪ Innovative off-market investment will redefine outpatient
healthcare delivery
▪ 100% master-leased by Atrium Health (Moody’s: Aa3) for 15
years with 2% increasers
▪ Anticipated delivery in 2Q20 and 3Q20
▪ Adjacent to Carolinas Medical Center campus with 286k sq. ft.
of future development opportunities
▪ JV will be foundation for continued growth
Sourcing and executing on granular and organic acquisitions
10. 13.8%
5.2%
0%
3%
6%
9%
12%
15%
3Q16 3Q18
7.3%
2.7%
0%
3%
6%
9%
2Q18 3Q18
Triple-Net Lease Portfolio – Portfolio Improvement Success
101. See the Supplemental Reporting Measures section of our 3Q18 Supplemental for additional information and reconciliation of In-Place NOI to GAAP net income. In addition, both the 3Q16 and 3Q18 Genesis concentrations and 2Q18 and
3Q18 Brookdale concentrations are based on In-Place NOI as disclosed and reconciled in the respective Supplementals.
2. Based on 9/30/18 revenue maturity profile, adjusted for $10M Emeritus ML1 and $3M Emeritus ML3 to SHO 10/1 and extension of $30M SALI lease maturing 12/31/18 to 12/31/26.
3. Based on facility revenue mix.
Genesis In-Place NOI Concentration(1)
Brookdale In-Place NOI Concentration(1)
Triple-Net Lease Maturity Timeline (2)
Private Pay Exposure (3)
69%
87%
94%
50%
60%
70%
80%
90%
100%
1Q10 1Q14 3Q18
0% 0% 0% 1% 1%
0%
1%
6%
10%
3% 4%
38%
0%
5%
10%
15%
20%
25%
30%
35%
40%
$0m
$100m
$200m
$300m
$400m
$500m
18 19 20 21 22 23 24 25 26 27 28 After
LT/PAC HS SH NNN % of Total Revenue (RHS)
13. Plurality of Equity Capital
13
Tactical Equity Issuance
$1.1B Raised in Joint Venture
Capital Since 2014
Partnerships Drive Capital Diversification
$400m
$450m
$500m
$550m
$600m
$650m
$700m
2016 2017 2018
ATM / DRIP
Average Price of $69.72/share
Best-in-class equity and joint venture partnerships
Global Equity Ownership and Joint Venture Partnerships
14. Superior Access to Unsecured Debt Capital
17
WELL 10-Yr Benchmark Spread Over US 10-Yr Treasury Unsecured Debt Maturity Profile
Diversification Across Geographies and Currencies
Amount
Outstanding
Years to
Maturity
Coupon
$7.45B 8.2 4.6%
£1.05B 12.9 4.7%
C$300M 2.0 3.4%
Balance sheet anchored by laddered debt maturities across major international currencies
100 bps
120 bps
140 bps
160 bps
180 bps
200 bps
220 bps
240 bps
260 bps
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18
4.1%
5.2%
5.0%
5.3%
3.5%
4.5%
4.0%
4.3%
4.5%
5.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
$0.0B
$0.5B
$1.0B
$1.5B
$2.0B
$2.5B
$3.0B
$3.5B
$4.0B
Unsecured Debt (LHS) Line of Credit (LHS) Interest Rate (RHS)
15. Unparalleled Asset Backed Financing
15
Segment Issuer LTV Spread bps(1)
US Seniors Housing GSE 55% - 75% 116 - 130
CAD Seniors Housing(2) CMHC 75% 90 - 110
Medical Office LifeCo 50% - 60% 115 - 130
Skilled Nursing HUD 75% 100 - 120
Indicative Pricing Across WELL Asset Classes
1. Spread is based on 10 Year Fixed Rate Facility. Benchmark for spreads is 10 Yr US Treasuries.
2. Benchmark for spreads is 10 Yr GoC bonds.
Consistent access to diverse sources of secured financing with attractive pricing
GSE Seniors Housing Spreads vs Multifamily
36% Compression in Seniors Housing Spreads
20 bps
25 bps
30 bps
35 bps
40 bps
45 bps
Nov 12 Nov 15 Nov 18Nov 2012 Nov 2015 Nov 2018
17. 2019 Guidance – Underlying Assumptions
17
1. Represents normalized FFO attributable to common stockholders per share. Please see Supplemental Reporting Measures for additional information.
2. Includes $232M of non-yielding QCP Dispositions.
3. Please see Supplemental Reporting Measures for additional information and reconciliation to net income attributable to common stockholder.
2018 Revision
Equity Issuance $420M ($300M QIA + $120M DRIP/ATM)
2018 FFO
(1)
$4.02 - $4.06 (vs previously announced $4.02 - $4.07)
2019 Assumptions
Equity Issuance $200M
Acquisitions $1.5B @ 6.1% yield
Previously announced post 3Q18 $480M @ 5.4% yield
Expected to close by 1H19 $1.0B @ 6.4% yield
Dispositions(2)
$800M @ 4.4% yield
Closed QTD $180M @ 5.9% yield
Yet to Close $620M @ 4.0% yield
Pro Forma Net Debt to Adj. EBITDA
(3)
5.7x
Guidance does not include any additional investment activity beyond announced acquisitions
18. 2019 Guidance - Same Store NOI
(1)
18
Low High
Seniors Housing Operating 0.50% 2.00%
Seniors Housing Triple-Net 3.00% 3.50%
Outpatient Medical 1.75% 2.25%
Health System 1.375% 1.375%
Long Term / Post-Acute 2.00% 2.50%
Total Portfolio 1.25% 2.25%
1. Please see Supplemental Reporting Measures for further information.
19. 2019 Guidance
19Please see Supplemental Reporting Measures for additional information and reconciliation of FFO to net income attributable to common stockholders.
Funds From Operations
$4.10 - $4.25
21. Current Portfolio - 5 Year Cash Flow Growth Model
21
Bucket Assumptions Total Growth Annual Growth Incremental NOI
1 Total Stable Portfolio Growth
Stable portfolio generates 2.5% unlevered
annual growth
18.7% 3.5% $270M
2 SHO Occ. Stabilization
SHO portfolio leases up from current
occupancy of 88.7% to 92.0% stabilized
4.6% 0.9% $66M
3 Development Lease-Up
Incremental NOI from SHO properties that
have been open for less than two years
2.9% 0.6% $42M
4 Brookdale Transition Assets
Transition assets budgeted occupancy and
performance at stabilization
2.0% 0.4% $29M
5 Construction In Progress
WELL pro rata development funding to-
date at projected stabilized yield
1.4% 0.3% $20M
Portfolio Cash Flow Growth 29.6% 5.6% $427M
5 Year
$157M
22. 7 Acquisition Pipeline 1.6%
8 Development Pipeline 0.5%
Total Annualized Return 12.6%
0%
2%
4%
6%
8%
10%
12%
14%
Stable
Portfolio
SHO Occ.
Stabalization
Development
Lease-Up
Transition
Assets
Construction
In Progress
Dividend
Yield
Acquisition
Pipeline
Development
Pipeline
Total
Annualized
Return
Total Return to Shareholders
22
Embedded Portfolio Total Annualized Return
1
2
3
4
5
Portfolio Annualized Return 5.6%
6 Dividend 5.0%
Embedded Total Return 10.6%
2.1%+ External
External Growth KickerWithout External Capital
10.6% Embedded
23. 7 Acquisition Pipeline 1.6%
8 Development Pipeline 0.5%
Total Annualized Return 12.7%
0%
2%
4%
6%
8%
10%
12%
14%
Stable
Portfolio
SHO Occ.
Stabalization
Development
Lease-Up
Transition
Assets
Construction
In Progress
Dividend
Yield
Acquisition
Pipeline
Development
Pipeline
Total
Annualized
Return
12.7% Total Annualized Return to Shareholders
23
Embedded Portfolio Total Annualized Return
1 Total Stable Portfolio Growth 3.5%
2 SHO Occ. Portfolio Stabilization 0.9%
3 Development Lease-Up 0.6%
4 Brookdale Transition Assets 0.4%
5 Construction In Progress 0.3%
Portfolio Annualized Return 5.6%
6 Dividend 5.0%
Embedded Total Return 10.6%
12.7% Total Annualized Return
External Growth Driver
24. 24
Relative Valuation – Arbitrage Opportunity
REIT A 0 1 2 3 4 5 6 7 8 9 10 11
Proceeds -$2,024 $2,420
NOI $100 $103 $107 $111 $115 $118 $123 $127 $131 $136 $140 $145
CapEx -$15 -$16 -$16 -$17 -$17 -$18 -$18 -$19 -$20 -$20 -$21 -$22
Net Cash Flow -$1,939 $88 $91 $94 $97 $101 $104 $108 $111 $115 $2,540 $123
IRR 7.00%
REIT B
Proceeds -$1,657 $1,859
NOI $100 $101 $102 $103 $104 $105 $106 $107 $108 $109 $110 $112
CapEx -$15 -$15 -$15 -$15 -$16 -$16 -$16 -$16 -$16 -$16 -$17 -$17
Net Cash Flow -$1,572 $86 $87 $88 $88 $89 $90 $91 $92 $93 $1,953 $95
IRR 7.00%
1. Growth rate based on average YOY SHO SSNOI growth differential since 2012
Superior growth rates justify higher multiples for same IRR
REIT A REIT B
Portfolio Quality A A
CapEx as % of NOI 15% 15%
Exit Cap Rate 6.0% 6.0%
Growth Rate
(1)
3.5% 1.0%
Implied Going-In Cap Rate 4.94% 6.03%
Implied Multiple 20.2x 16.6x
Implied Going-In Cap Rate with 7% IRR
25. • Significant near-term triple-net lease maturities
• Misaligned operator relationships
• Exposure to highly levered operators and marginal locations
Higher Quality Portfolio Poised for Growth
25
Where Have We Come From
What Has Changed
• Extended well-covering triple-net leases and de-risked problem leases
• Sold non-core assets and restructured relationships into well-aligned and incentive driven RIDEA structures
• Improved quality of underlying cash flow by reducing loan exposure and increasing private pay percentage
Where Are We Going
• Seniors housing outlook improving
• Lease-up and transition assets will generate significant cash flow growth
• Data science = rifle shot approach to capital allocation
• Balance sheet positioned for maximum flexibility
2014
$4.13
2019
$4.10 - $4.25
2020+
26. WELL Positioned at Cusp of Significant Growth
26
Portfolio Built and Balance Sheet Primed for
Significant Long-Term Sustainable Growth
Thank You
28. Supplemental Reporting Measures
28
We believe that net income and net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), are the most appropriate earnings measurements. However, we consider funds from
operations (FFO), net operating income (NOI), same store NOI (SSNOI), EBITDA, and Adjusted EBITDA to be useful supplemental measures of our operating performance. Excluding EBITDA and Adjusted EBITDA, these supplemental measures are disclosed on
our pro rata ownership basis. Pro rata amounts are derived by reducing consolidated amounts for minority partners’ noncontrolling ownership interests and adding our minority ownership share of unconsolidated amounts. We do not control
unconsolidated investments. While we consider pro rata disclosures useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution.
Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have
historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association
of Real Estate Investment Trusts (NAREIT) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO attributable to common stockholders, as defined by NAREIT, means net
income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for
unconsolidated entities and noncontrolling interests. Normalized FFO attributable to common stockholders represents FFO attributable to common stockholders adjusted for certain unanticipated and/or incalculable items. We believe that normalized FFO
attributable to common stockholders is a useful supplemental measure of operating performance because investors and equity analysts may use this measure to compare the operating performance of the company between periods or as compared to other
REITs or other companies on a consistent basis without having to account for differences caused by unanticipated and/or incalculable items.
We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our seniors housing operating and
outpatient medical properties. These expenses include, but are not limited to, property-related payroll and benefits, property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance.
General and administrative expenses represent costs unrelated to property operations or transaction costs. These expenses include, but are not limited to, payroll and benefits, professional services, office expenses and depreciation of corporate fixed
assets. SSNOI is used to evaluate the operating performance of our properties under a consistent population which eliminates changes in the composition of our portfolio. As used herein, same store is generally defined as those revenue-generating
properties in the portfolio for the relevant year-over-year reporting periods. Land parcels, loans, and sub-leases as well as any properties acquired, developed/redeveloped (including major refurbishments where 20% or more of units are simultaneously
taken out of commission for 30 days or more), sold or classified as held for sale during that period are excluded from the same store amounts. Properties undergoing operator transitions and/or segment transitions (except triple-net to seniors housing
operating with the same operator) are also excluded from the same store amounts. Normalizers include adjustments that in management’s opinion are appropriate in considering SSNOI, a supplemental, non-GAAP performance measure. None of these
adjustments, which may increase or decrease SSNOI, are reflected in the company’s financial statements prepared in accordance with U.S. GAAP. Significant normalizers (defined as any that individually exceeds 0.50% of SSNOI growth per property type) are
separately disclosed and explained. We believe NOI and SSNOI provide investors relevant and useful information because they measure the operating performance of our properties at the property level on an unleveraged basis. We use NOI and SSNOI to
make decisions about resource allocations and to assess the property level performance of our properties. No reconciliation of the forecasted range for SSNOI on a combined or segment basis is included in this release because we are unable to quantify
certain amounts that would be required to be included in the comparable GAAP financial measure without unreasonable efforts, and we believe such reconciliation would imply a degree of precision that could be confusing or misleading to investors.
We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) Section 1031
deposits. We expect to maintain capitalization ratios and coverage ratios sufficient to maintain a capital structure consistent with our current profile. The coverage ratios are based on EBITDA which stands for earnings (net income per income statement)
before interest expense, income taxes, depreciation and amortization. Covenants in our senior unsecured notes contain financial ratios based on a definition of EBITDA that is specific to those agreements. Failure to satisfy these covenants could result in an
event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of
these debt agreements and the financial covenants, we have defined Adjusted EBITDA to exclude unconsolidated entities and to include adjustments for stock-based compensation expense, provision for loan losses, gains/losses on extinguishment of debt,
gains/losses/impairments on properties, gains/losses on derivatives and financial instruments, and other expenses. We believe that EBITDA and Adjusted EBITDA, along with net income and cash flow provided from operating activities, are important
supplemental measures because they provide additional information to assess and evaluate the performance of our operations. Our leverage ratios include net debt (defined as total long-term debt less cash and cash equivalents and any IRC Section 1031
deposits) to Adjusted EBITDA.
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and ratings agencies in the valuation, comparison, rating and investment recommendations of companies. Our
management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The
supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the
supplemental reporting measures, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see the exhibits for reconciliations of supplemental reporting measures and
the supplemental information package for the quarter ended September 30, 2018, which is available on the company’s website (www.welltower.com), for information and reconciliations of additional supplemental reporting measures.
