10-QPeriod: Q2 FY2009

WELLTOWER INC. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 6, 2009For Securities:WELL

Summary

Health Care REIT, Inc. (WELL) reported its financial results for the quarter ended June 30, 2009. The company, an equity real estate investment trust focused on senior housing and health care properties, demonstrated resilience amidst a challenging economic environment. Revenue increased year-over-year, driven by growth in rental and interest income, reflecting a diversified portfolio and strategic investments. Despite macroeconomic headwinds, the company maintained strong liquidity and financial flexibility, with notable transactions including equity offerings to strengthen its balance sheet and new debt financing. Management remains focused on portfolio management, liquidity, and selective investment to navigate the current economic conditions while positioning the company for long-term growth.

Financial Highlights

23 data points
Beta

Revenue

$139.04M

Net Income

$64.76M

46.6% Net Margin

EPS (Diluted)

$0.53

Cash & Equivalents

$79.50M

Free Cash Flow

$184.33M

Financial Statements
Beta
Revenue$139.04M
SG&A Expenses$11.06M
Operating Expenses$86.52M
Interest Expense$26.11M
Net Income$64.76M
EPS (Basic)$0.53
EPS (Diluted)$0.53
Shares Outstanding (Basic)110.86M
Shares Outstanding (Diluted)111.27M

Key Highlights

  • 1Rental income increased by 12% year-over-year for the three months ended June 30, 2009, reaching $130.3 million, indicating continued demand for healthcare real estate.
  • 2Net income attributable to common stockholders for the quarter was $59.2 million, or $0.53 per diluted share, compared to $155.4 million, or $1.73 per diluted share, in the prior year period. The decrease was largely due to significant gains on property sales in the prior year.
  • 3The company maintained a strong liquidity position, with cash and cash equivalents of $79.5 million at June 30, 2009, and available borrowing capacity under its unsecured line of credit.
  • 4Investment properties represent the largest segment of the company's portfolio, accounting for 19.2% of investments, with skilled nursing facilities making up the largest sub-segment within investment properties.
  • 5Health Care REIT successfully completed a public offering of common stock in February 2009, raising approximately $210.9 million in net proceeds, bolstering its capital position.
  • 6The company continued to pay consistent cash dividends, with the quarterly dividend of $0.68 per share representing the 153rd consecutive quarterly payment.
  • 7Despite economic challenges, the company maintained its focus on portfolio diversification and prudent financial management, with a debt-to-book capitalization ratio of 44% at June 30, 2009.

Frequently Asked Questions

For the three months ended June 30, 2009, total revenues were $141.7 million, an increase from $129.2 million in the same period of 2008. This growth was primarily driven by an increase in rental income, which rose from $118.1 million to $130.3 million.

The company has actively managed its capital structure. As of June 30, 2009, total borrowings under its unsecured line of credit arrangements decreased to $342 million from $570 million at December 31, 2008. Senior unsecured notes totaled $1.81 billion and secured debt was $543.8 million. The company also strengthened its equity base through a public offering in February 2009.

The company views the health care industry favorably, citing projected increases in national health expenditures and an aging population as key drivers of demand. They believe the health care property market is less susceptible to economic downturns compared to other sectors, and investor interest remains strong, particularly in medical office buildings.

Net income attributable to common stockholders decreased significantly from $155.4 million in the second quarter of 2008 to $59.2 million in the second quarter of 2009. This decrease was primarily due to substantial gains on sales of properties recorded in the prior year's quarter, which were absent in the current quarter. Income from continuing operations, however, showed an increase.