10-QPeriod: Q3 FY2011

WELLTOWER INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 3, 2011For Securities:WELL

Summary

Health Care REIT, Inc. (WELL) reported significant growth in its third quarter and the first nine months of 2011 compared to the same periods in 2010. Total revenues increased substantially due to strategic acquisitions, particularly the Genesis acquisition, and growth in rental income and resident fees. The company's balance sheet expanded considerably, with total assets growing to $13.86 billion from $9.45 billion at the end of 2010. This growth was driven by substantial investments in real estate and a significant increase in borrowings and equity issuances. Despite increased interest expenses and depreciation, the company managed to improve its net income attributable to common stockholders for the nine-month period, indicating successful integration of new assets and effective operational management.

Financial Highlights

33 data points
Beta

Revenue

$370.73M

Net Income

$53.84M

14.5% Net Margin

EPS (Diluted)

$0.21

Total Assets

$13.86B

Cash & Equivalents

$136.68M

Free Cash Flow

$176.03M

Financial Statements
Beta
Revenue$370.73M
SG&A Expenses$19.73M
Operating Expenses$325.74M
Interest Expense$84.43M
Net Income$53.84M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)177.27M
Shares Outstanding (Diluted)177.85M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2011, surged to $1.019 billion, a substantial increase from $465.7 million in the prior year period, driven by acquisitions and expanded rental and resident fee income.
  • 2Total assets grew significantly to $13.86 billion as of September 30, 2011, up from $9.45 billion at December 31, 2010, reflecting substantial real estate investments.
  • 3The company completed a major acquisition of Genesis HealthCare Corporation's real estate assets in April 2011, involving 147 properties for approximately $2.48 billion, funded through equity and debt offerings.
  • 4Net income attributable to common stockholders for the nine months ended September 30, 2011, was $129.8 million, a notable increase from $66.9 million in the same period of 2010.
  • 5Borrowings increased significantly, with the unsecured line of credit arrangement rising to $390 million and senior unsecured notes and secured debt showing substantial growth, indicating an expansion of the company's debt.
  • 6The company's portfolio continues to diversify, with significant investments across seniors housing (triple-net and operating) and medical facilities, including notable partnerships like Silverado and Benchmark.
  • 7The dividend per common share has seen an increase, reflecting confidence in future performance and commitment to shareholder returns.

Frequently Asked Questions

Revenue growth was primarily driven by significant real estate acquisitions, notably the Genesis HealthCare Corporation transaction, which added 147 properties. Additionally, organic growth in rental income and resident fees from the existing and newly acquired portfolios contributed to the substantial revenue increase.

The company significantly increased its leverage and equity base. Borrowings under its unsecured line of credit arrangement rose to $390 million, and total borrowings (senior unsecured notes and secured debt) increased substantially. Equity financing also played a key role, with significant proceeds raised from public offerings of common and preferred stock, reflecting an active capital markets strategy to fund growth.

The Genesis acquisition was a transformative event, significantly increasing the company's real estate investments and total assets. It was funded through a combination of equity and debt, leading to a larger balance sheet. The acquisition is expected to contribute substantially to future rental income and operational performance.

The company's debt agreements contain various covenants that it is committed to maintaining. As of September 30, 2011, the company was in compliance with all covenants. It actively monitors its leverage and coverage ratios to ensure continued compliance and manage its capital structure effectively.