8-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 2, 2016

Welltower Inc.
(Exact name of registrant as specified in its charter)
Delaware	1-8923		34-1096634
(State or other jurisdiction	(Commission		(IRS Employer
of incorporation)	File Number)		Identification No.)
4500 Dorr Street, Toledo, Ohio		43615
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code: (419) 247-2800
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02  Results of Operations and Financial Condition.

On August 2, 2016, Welltower Inc. (the “Company”) issued a press release that announced operating results for its second quarter ended June 30, 2016.  The press release refers to a supplemental information package that is available on the Company's website (www.welltower.com), free of charge.  Copies of the press release and supplemental information package have been furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report, and are incorporated herein by reference.

The information included in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing. 

Item 9.01  Financial Statements and Exhibits.

(d)  Exhibits.

99.1Press release of Welltower Inc. dated August 2, 2016.

99.2Welltower Inc. Supplemental Information Package for the quarter ended June 30, 2016.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

WELLTOWER INC.

By:  /s/ THOMAS J. DEROSA                                 

Name: Thomas J. DeRosa

Title:  Chief Executive Officer

Dated:  August 2, 2016

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EX-99.1

 

FOR IMMEDIATE RELEASE

August 2, 2016

For more information contact:

Scott Estes (419) 247-2800

Scott Brinker (419) 247-2800

Welltower Reports Second Quarter 2016 Results

Toledo, Ohio, August 2, 2016…..Welltower Inc. (NYSE:HCN) today announced results for the quarter ended June 30, 2016. For the quarter, we generated net income attributable to common stockholders of $0.54 per share, normalized FFO of $1.15 per share and normalized FAD of $1.04 per share. Second quarter results were positively impacted by strong trailing-four-quarter average total same store NOI growth, net investments of $1.9 billion and average net debt to undepreciated book capitalization ratio of 38.7%. Additional second quarter highlights include:

·Normalized FFO and FAD per share increased by 6% and 9%, respectively

·Total portfolio SSNOI grew 3.3%, led by 4.0% growth in seniors housing operating

·Same store seniors housing operating occupancy increased 100 basis points to 90.3% with REVPOR growth of 3.8%

·Announces $1.15 billion acquisition of premier west coast seniors housing operating portfolio

·Private payor mix increasing to approximately 90% by year-end

“Our exceptional health care real estate and operators continued to outperform across the portfolio this quarter,” said Welltower CEO Thomas J. DeRosa. “Our seniors housing operating business generated 4% same store NOI growth, further substantiating our strategic focus on premium properties in top metro markets with high barriers to entry. We are also excited to announce the acquisition of a high-quality, irreplaceable seniors housing portfolio in Northern and Southern California. We expect this acquisition to drive capital-efficient growth in premium assisted living and memory care communities, and plan to fund the transaction largely through anticipated dispositions throughout the remainder of the year. We plan to transition the portfolio to our operating partners Sunrise, Senior Resource Group and Silverado, who should enhance the operating performance and create significant value for our shareholders.”

Dividend Growth As previously announced, the Board of Directors declared a cash dividend for the quarter ended June 30, 2016 of $0.86 per share, as compared to $0.825 per share for the same period in 2015, which represents a 4.2% increase.  On August 22, 2016, we will pay our 181^st consecutive quarterly cash dividend.  The declaration and payment of quarterly dividends remains subject to review by and approval of the Board of Directors.

Capital ActivityOn June 30, 2016, we had $467 million of cash and cash equivalents and $2.3 billion of available borrowing capacity under our primary unsecured credit facility.  During the second quarter, we generated approximately $64 million in proceeds under our DRIP program.

Unsecured Credit Facility Enhancements As previously announced, we closed on a new $3.7 billion unsecured credit facility. The expanded, extended and lower-priced facility further enhances our access to efficient capital and financial flexibility. The following is a summary of the key changes (with cost data reflective of Welltower’s current credit ratings):

	Prior Capacity	New Capacity	Prior Cost	New Cost	Prior Maturity	New Maturity
Revolver	$2,500,000,000	$3,000,000,000	LIBOR+92.5	LIBOR+90.0	10/31/18 + 1yr	5/13/20 + 1yr
USD term loan	$500,000,000	$500,000,000	LIBOR+97.5	LIBOR+95.0	10/31/18 + 1yr	5/13/21
CAD term loan(1)	$250,000,000	$250,000,000	CDOR+97.5	CDOR+95.0	10/31/18 + 1yr	5/13/21

(1) Canadian denominated term loan balance was $193.5 million USD at exchange rate as of May 13, 2016. CDOR stands for Canadian Dealer Offered Rate.

Outlook for 2016 Net income attributable to common stockholders has been revised to a range of $2.74 to $2.84 per diluted share from the previous range of $2.07 to $2.17 per diluted share primarily due to the normalizing items described in Exhibit 1 and estimated gains on assets held for sale. We are affirming our 2016 normalized FFO and FAD guidance and continue to expect to report normalized FFO in a range of $4.50 to $4.60 per diluted share and normalized FAD in a range of $3.95 to $4.05 per diluted share, both representing a 3%-5% increase.  Additionally, in preparing our guidance, we have updated the following assumptions:

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2Q16 Earnings ReleaseAugust 2, 2016

·Same Store NOI: We are maintaining 2016 SSNOI guidance and expect growth of approximately 2.75%-3.25%.

·Acquisitions: 2016 earnings guidance does not include any acquisitions beyond what has been completed in the first half of 2016, the $1.15 billion west coast portfolio described below and approximately $48 million associated with the Mainstreet partnership.

·Development: We anticipate funding additional development of $287 million in 2016 relating to projects underway on June 30, 2016. This excludes the midtown Manhattan project previously disclosed. We expect development conversions of approximately $257 million in the remainder of 2016. These investments are currently expected to generate yields of approximately 7.5%.

·Dispositions: We are increasing our dispositions guidance and now anticipate approximately $1.3 billion of dispositions in 2016. This includes dispositions completed through June 30, 2016 and $769 million of proceeds from properties held for sale at a blended yield on proceeds of 9.3% with the remainder representing other potential loan payoffs and property sales.

Our guidance does not include any additional investments, dispositions or capital transactions beyond what we have announced, nor any transaction costs, impairments, unanticipated additions to the loan loss reserve or other additional normalizing items.  Please see the exhibits for a reconciliation of the outlook for net income available to common stockholders to normalized FFO and FAD.  We will provide additional detail regarding our 2016 outlook and assumptions on the second quarter 2016 conference call.

Investment and Disposition ActivityWe completed $356 million of pro rata gross investments for the quarter including $243 million in acquisitions/JVs, $104 million in development funding and $9 million in loans.  100% of these investments were completed with existing relationships. Acquisitions/JVs were comprised of a $106 million land acquisition for the mid-town Manhattan development and four separate transactions totaling $137 million at a blended yield of 6.9%. The $104 million in development funding is expected to yield 7.7% upon completion and the $9 million of loans were made at a blended rate of 7.4%. We also placed into service one development property project totaling $11 million at a yield of 7.7%. The investments are consistent with our strategy of investing in modern, high quality properties in major metropolitan markets with favorable supply/demand. Also during the quarter, we completed total dispositions of $227 million consisting of loan payoffs of $94 million at an average yield of 10.6% and property sales of $133 million at 5.9%.

Notable Investments with Existing Operating Partners

Sunrise Senior Living We expanded our relationship with Sunrise by acquiring a 137 unit private pay seniors housing property located in Saverna Park, MD from Sunrise. The purchase price was $72 million, which represents an effective cap rate in the mid 6’s. Sunrise will manage the property under an incentive-based management contract. Since closing our initial $243 million acquisition in 2012, we have completed $4.7 billion of follow-on pro rata investments with Sunrise.

Texas Health Resources We acquired an on campus outpatient medical building in Dallas, TX for $15 million, which represents a projected year one cap rate in the mid 6’s. The property is 46,839 rentable square feet, 100% occupied, was built in 2014, and is located on the campus of Texas Health Dallas, an 888-bed acute-care hospital. The building is anchored by Texas Oncology, which leases 58% of the property. We own 13 buildings, totaling 903,189 rentable square feet, that are affiliated with Texas Health Resources, the largest health system in Dallas.

Notable Dispositions

Genesis Healthcare During the quarter, Genesis repaid $61 million of Welltower mortgage loans using proceeds from new HUD financing. The outstanding balance of the Welltower mortgage loans has been paid down to $311 million as of June 30, 2016. Genesis expects to make additional repayments on the Welltower mortgage loans throughout 2016.

Continuum We completed the disposition of eight seniors housing properties, comprising 752 units, located in Alberta, Canada, for $125 million, which represents a 5.6% cap rate on in-place rent. The properties were leased to Continuum Health Care.

Investments Subsequent to Quarter-End

Senior Resource Group/Sunrise Senior Living/Silverado Senior Living We entered into a definitive agreement to acquire a high quality, private pay portfolio of 19 seniors housing communities for $1.15 billion at a stabilized yield of mid to high 6%. The portfolio includes 2,590 units concentrated in Southern California and Northern California, two of our core markets.

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2Q16 Earnings ReleaseAugust 2, 2016

Welltower will transition management of these communities to our existing operating partners SRG (11), Sunrise (7) and Silverado (1) that have substantial footprints and expertise in these markets. Vintage Senior Living currently operates the properties. We believe the acquisition will strengthen our leading market position in these high barrier markets. Closing is anticipated to occur in tranches beginning in September 2016 and is subject to customary closing conditions.

Conference Call Information  We have scheduled a conference call on Tuesday, August 2, 2016 at 10:00 a.m. Eastern Time to discuss our second quarter 2016 results, industry trends, portfolio performance and outlook for 2016. Telephone access will be available by dialing 888-346-2469 or 706-758-4923 (international).  For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the call through August 16, 2016. To access the rebroadcast, dial 855-859-2056 or 404-537-3406 (international).  The conference ID number is 45026086. To participate in the webcast, log on to www.welltower.com 15 minutes before the call to download the necessary software.  Replays will be available for 90 days.

Supplemental Reporting Measures We believe that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, we consider funds from operations (FFO), funds available for distribution (FAD), same store net operating income (SSNOI) and same store revenues per occupied room (SS REVPOR) to be useful supplemental measures of our operating performance. 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, 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 represents FFO adjusted for certain items detailed in Exhibit 1.  FAD represents FFO excluding net straight-line rental adjustments, amortization related to above/below market leases and amortization of non-cash interest expenses and less cash used to fund capital expenditures, tenant improvements and lease commissions.  Normalized FAD represents FAD adjusted for certain items detailed in Exhibit 1. We believe that normalized FFO and normalized FAD are useful supplemental measures of operating performance because investors and equity analysts may use these measures 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.  NOI is used to evaluate the operating performance of our properties. 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, 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 cash-based 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, transitioned, sold or classified as held for sale during that period are 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 our financial statements prepared in accordance with U.S. GAAP.  Significant normalizers (defined as any that individually exceed 0.50% of SSNOI growth per property type) shall be separately disclosed and explained in the relevant supplement information package. We believe SSNOI provides investors relevant and useful information because it measures the operating performance of our properties at the property level on an unleveraged basis. No reconciliation of the forecasted range for SSNOI on a combined or segment basis for fiscal year 2016 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. REVPOR represents the average revenues generated per occupied room per month at our seniors housing operating properties.  It is calculated as total resident fees and services revenues divided by average monthly occupied room days.  SS REVPOR is used to evaluate the REVPOR performance of our properties under a consistent population which eliminates changes in the composition of our portfolio. It based on the same pool of properties used for SSNOI and includes any revenue normalizations used for SSNOI. We use REVPOR and SS REVPOR to evaluate the

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2Q16 Earnings ReleaseAugust 2, 2016

revenue-generating capacity and profit potential of our seniors housing operating portfolio independent of fluctuating occupancy rates. They are also used in comparison against industry and competitor statistics, if known, to evaluate the quality of our seniors housing operating portfolio. Our supplemental reporting measures and similarly entitled financial measures are widely used by investors and equity analysts in the valuation, comparison 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 June 30, 2016, which is available on the company’s website (www.welltower.com), for information and reconciliations of additional supplemental reporting measures.

About Welltower Welltower Inc. (NYSE:HCN), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people’s wellness and overall health care experience.  Welltower™, a real estate investment trust (“REIT”), owns more than 1,400 properties in major, high-growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities and outpatient medical properties. More information is available at www.welltower.com.  We routinely post important information on our website at www.welltower.com in the “Investors” section, including corporate and investor presentations and financial information.  We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website under the heading “Investors”.  Accordingly, investors should monitor such portion of the company’s website in addition to following our press releases, public conference calls and filings with the Securities and Exchange Commission.  The information on our website is not incorporated by reference in this press release, and our web address is included as an inactive textual reference only.

Forward-Looking Statements and Risk Factors This press release 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,” “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; 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.

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2Q16 Earnings ReleaseAugust 2, 2016

Welltower Inc.

Financial Exhibits

Consolidated Balance Sheets (unaudited)
(in thousands)
			June 30,
			2016		2015
Assets
Real estate investments:
	Land and land improvements		$	2,537,508	$	2,244,048
	Buildings and improvements			25,293,007		24,097,963
	Acquired lease intangibles			1,345,424		1,214,628
	Real property held for sale, net of accumulated depreciation			501,192		352,113
	Construction in progress			475,203		159,352
				30,152,334		28,068,104
	Less accumulated depreciation and intangible amortization			(4,109,585)		(3,363,834)
		Net real property owned		26,042,749		24,704,270
	Real estate loans receivable			647,677		760,543
	Net real estate investments			26,690,426		25,464,813
Other assets:
	Investments in unconsolidated entities			543,068		569,621
	Goodwill			68,321		68,321
	Cash and cash equivalents			466,585		217,942
	Restricted cash			58,440		72,706
	Straight-line rent receivable			449,617		336,853
	Receivables and other assets			688,044		626,643
				2,274,075		1,892,086
Total assets			$	28,964,501	$	27,356,899
Liabilities and equity
Liabilities:
	Borrowings under primary unsecured credit facility		$	745,000	$	350,000
	Senior unsecured notes			8,711,790		8,023,835
	Secured debt			3,442,178		3,052,708
	Capital lease obligations			74,759		75,240
	Accrued expenses and other liabilities			728,080		650,437
Total liabilities				13,701,807		12,152,220
Redeemable noncontrolling interests				394,126		159,400
Equity:
	Preferred stock			1,006,250		1,006,250
	Common stock			357,950		351,651
	Capital in excess of par value			16,625,186		16,300,841
	Treasury stock			(51,288)		(41,693)
	Cumulative net income			4,102,919		3,378,096
	Cumulative dividends			(7,491,922)		(6,230,540)
	Accumulated other comprehensive income			(159,638)		(81,670)
	Other equity			3,917		4,238
		Total Welltower Inc. stockholders’ equity		14,393,374		14,687,173
	Noncontrolling interests			475,194		358,106
Total equity				14,868,568		15,045,279
Total liabilities and equity			$	28,964,501	$	27,356,899

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2Q16 Earnings ReleaseAugust 2, 2016

Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
				Three Months Ended				Six Months Ended
				June 30,				June 30,
				2016		2015		2016		2015
Revenues:
		Rental income		$	422,628	$	396,626	$	838,290	$	776,213
		Resident fees and service			615,220		535,553		1,217,369		1,028,063
		Interest income			24,007		20,576		49,195		37,570
		Other income			14,802		4,414		18,851		9,500
Gross revenues					1,076,657		957,169		2,123,705		1,851,346
Expenses:
		Interest expense			132,326		118,861		265,285		239,942
		Property operating expenses			458,832		398,354		908,468		774,815
		Depreciation and amortization			226,569		208,802		455,265		397,631
		General and administrative expenses			39,914		38,474		85,606		73,612
		Transaction costs			5,157		12,491		13,365		61,045
		Loss (gain) on derivatives, net			-		-		-		(58,427)
		Loss (gain) on extinguishment of debt, net			33		18,887		9		34,288
		Impairment of assets			-		-		14,314		2,220
		Other expenses			3,161		10,583		3,161		10,583
	Total expenses				865,992		806,452		1,745,473		1,535,709
Income (loss) from continuing operations before income taxes
	and income from unconsolidated entities				210,665		150,717		378,232		315,637
Income tax (expense) benefit					513		(7,417)		2,239		(7,113)
Income (loss) from unconsolidated entities					(1,959)		(2,952)		(5,778)		(15,600)
Income (loss) from continuing operations					209,219		140,348		374,693		292,924
Gain (loss) on real estate dispositions, net					1,530		190,111		1,530		246,956
Net income (loss)					210,749		330,459		376,223		539,880
Less:			Preferred dividends		16,352		16,352		32,703		32,703
			Net income (loss) attributable to noncontrolling interests		(1,077)		1,534		(924)		3,804
Net income (loss) attributable to common stockholders				$	195,474	$	312,573	$	344,444	$	503,373
Average number of common shares outstanding:
		Basic			356,646		350,399		355,879		343,624
		Diluted			358,891		351,366		357,489		344,623
Net income (loss) attributable to common stockholders per share:
		Basic		$	0.55	$	0.89	$	0.97	$	1.46
		Diluted		$	0.54	$	0.89	$	0.96	$	1.46
Common dividends per share				$	0.86	$	0.825	$	1.72	$	1.65

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2Q16 Earnings ReleaseAugust 2, 2016

Normalizing Items									Exhibit 1
(in thousands, except per share data)		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2016		2015		2016		2015
Transaction costs		$	5,157 (1)	$	12,491	$	13,365	$	61,045
Loss (gain) on derivatives, net			-		-		-		(58,427)
Loss (gain) on extinguishment of debt, net			33 (2)		18,887		9		34,288
Other expenses			3,161 (3)		10,583		3,161		11,278
Additional other income			(11,811)(4)		-		(11,811)		(2,144)
Normalizing items attributable to noncontrolling interests and unconsolidated entities, net			921 (5)		1,151		2,439		2,485
Net normalizing items		$	(2,539)	$	43,112	$	7,163	$	48,525
Average diluted common shares outstanding			358,891		351,366		357,489		344,623
Net normalizing items per diluted share		$	(0.01)	$	0.12	$	0.02	$	0.14
Notes:	(1) Primarily related to costs incurred with seniors housing transactions.
	(2) Primarily related to secured debt extinguishments.
	(3) Primarily related to an executive retirement.
	(4) Primarily related to additional income from prior year life science disposition and a seniors housing property's insurance proceeds.
	(5) Primarily related to transaction costs.

FAD Reconciliation											Exhibit 2
(in thousands, except per share data)				Three Months Ended				Six Months Ended
				June 30,				June 30,
				2016		2015		2016		2015
Net income (loss) attributable to common stockholders				$	195,474	$	312,573	$	344,444	$	503,373
Depreciation and amortization					226,569		208,802		455,265		397,631
Losses/impairments (gains) on properties, net					(1,530)		(190,111)		12,784		(244,736)
Noncontrolling interests(1)					(18,639)		(9,447)		(34,190)		(15,786)
Unconsolidated entities(2)					15,740		16,908		31,972		42,744
Gross straight-line rental income					(27,537)		(31,190)		(57,784)		(59,727)
Amortization related to above (below) market leases, net					101		757		331		870
Non-cash interest expense					1,519		(4,202)		920		(4,082)
Cap-ex, tenant improvements, lease commissions					(16,089)		(15,114)		(28,354)		(25,599)
Funds available for distribution					375,608		288,976		725,388		594,688
Normalizing items, net(3)					(2,539)		43,112		7,163		48,525
Funds available for distribution - normalized				$	373,069	$	332,088	$	732,551	$	643,213
Average diluted common shares outstanding					358,891		351,366		357,489		344,623
Per share data:
	Net income (loss) attributable to common stockholders			$	0.54	$	0.89	$	0.96	$	1.46
	Funds available for distribution			$	1.05	$	0.82	$	2.03	$	1.73
	Funds available for distribution - normalized			$	1.04	$	0.95	$	2.05	$	1.87
Normalized FAD Payout Ratio:
	Dividends per common share			$	0.86	$	0.825	$	1.72	$	1.65
	FAD per diluted share - normalized			$	1.04	$	0.95	$	2.05	$	1.87
		Normalized FAD payout ratio			83%		87%		84%		88%
Notes:			(1) Represents noncontrolling interests' share of net FAD adjustments.
			(2) Represents Welltower's share of net FAD adjustments from unconsolidated entities.
			(3) See Exhibit 1.

Page 7 of 9

2Q16 Earnings ReleaseAugust 2, 2016

FFO Reconciliation											Exhibit 3
(in thousands, except per share data)				Three Months Ended				Six Months Ended
				June 30,				June 30,
				2016		2015		2016		2015
Net income (loss) attributable to common stockholders				$	195,474	$	312,573	$	344,444	$	503,373
Depreciation and amortization					226,569		208,802		455,265		397,631
Losses/impairments (gains) on properties, net					(1,530)		(190,111)		12,784		(244,736)
Noncontrolling interests(1)					(20,616)		(10,467)		(37,934)		(17,716)
Unconsolidated entities(2)					17,077		19,791		33,682		46,287
Funds from operations - NAREIT					416,974		340,588		808,241		684,839
Normalizing items, net(3)					(2,539)		43,112		7,163		48,525
Funds from operations - normalized				$	414,435	$	383,700	$	815,404	$	733,364
Average diluted common shares outstanding					358,891		351,366		357,489		344,623
Per share data:
	Net income (loss) attributable to common stockholders			$	0.54	$	0.89	$	0.96	$	1.46
	Funds from operations - NAREIT			$	1.16	$	0.97	$	2.26	$	1.99
	Funds from operations - normalized			$	1.15	$	1.09	$	2.28	$	2.13
Normalized FFO Payout Ratio:
	Dividends per common share			$	0.86	$	0.825	$	1.72	$	1.65
	FFO per diluted share - normalized			$	1.15	$	1.09	$	2.28	$	2.13
		Normalized FFO payout ratio			75%		76%		75%		77%
Notes:			(1) Represents noncontrolling interests' share of net FFO adjustments.
			(2) Represents Welltower's share of net FFO adjustments from unconsolidated entities.
			(3) See Exhibit 1.

Outlook Reconciliations: Year Ended December 31, 2016							Exhibit 4
(dollars per fully diluted share)
		Prior Outlook				Current Outlook
		Low		High		Low		High
FFO Reconciliation:
Net income attributable to common stockholders		$	2.07	$	2.17	$	2.74	$	2.84
Losses/impairments (gains) on sales, net(1,2)			(0.02)		(0.02)		(0.68)		(0.68)
Depreciation and amortization(1)			2.42		2.42		2.42		2.42
Funds from operations - NAREIT			4.47		4.57		4.48		4.58
Normalizing items, net(3)			0.03		0.03		0.02		0.02
Funds from operations - normalized		$	4.50	$	4.60	$	4.50	$	4.60
FAD Reconciliation:
Net income attributable to common stockholders		$	2.07	$	2.17	$	2.74	$	2.84
Losses/impairments (gains) on sales, net(1,2)			(0.02)		(0.02)		(0.68)		(0.68)
Depreciation and amortization(1)			2.42		2.42		2.42		2.42
FAD-only adjustments(1,4)			(0.55)		(0.55)		(0.55)		(0.55)
Funds available for distribution			3.92		4.02		3.93		4.03
Normalizing items, net(3)			0.03		0.03		0.02		0.02
Funds available for distribution - normalized		$	3.95	$	4.05	$	3.95	$	4.05
Notes:	(1) Amounts presented net of noncontrolling interests' share and Welltower's share of unconsolidated entities.
	(2) Includes estimated gains on expected dispositions.
	(3) See Exhibit 1.
	(4) Includes straight-line rent, above/below amortization, non-cash interest and cap-ex, tenant improvements and lease commissions.

Page 8 of 9

2Q16 Earnings ReleaseAugust 2, 2016

SSNOI Reconciliation						Exhibit 5
(In thousands. NOI amounts at Welltower pro rata ownership.)			Three Months Ended
			June 30,
			2016		2015
Consolidated total revenues		$	1,076,657	$	957,169
Consolidated property operating expenses			458,832		398,354
Consolidated net operating income			617,825		558,815
Pro rata adjustments(1)			(10,275)		(5,260)
Pro rata net operating income (NOI)		$	607,550	$	564,075
	Non-cash NOI attributable to same store properties		(24,364)		(29,356)
	NOI attributable to non same store properties		(90,858)		(56,095)
	Adjustments(2)		(4,643)		(6,564)
Same store NOI (SSNOI)		$	487,685	$	472,060
						% growth
Seniors housing triple-net		$	130,959	$	127,435	2.8%
Long-term/post-acute care			95,884		92,565	3.6%
Seniors housing operating			179,921		173,021	4.0%
Outpatient medical			80,920		79,039	2.4%
	Total SSNOI	$	487,684	$	472,060	3.3%
Notes:	(1) Represents NOI amounts attributable to joint venture partners, both majority and minority.
	(2) Includes adjustments to reflect consistent ownership percentages and foreign currency exchange rates for properties in the UK and Canada as well as other adjustments described in the accompanying Supplement.

REVPOR Reconciliation						Exhibit 6
(dollars in thousands, except REVPOR)			Three Months Ended
			June 30,
			2016		2015
Consolidated seniors housing operating (SHO) revenues(1)		$	625,251	$	539,805
Pro rata adjustments(2)			(16,686)		4,137
SHO pro rata revenues(3)			608,565		543,942
Adjustments(4)			(60,111)		(20,996)
SHO same store revenues(5)		$	548,454	$	522,946
Avg. occupied rooms/month(6)			31,203		30,871
SHO same store REVPOR(7)		$	5,875	$	5,662
SHO same store REVPOR growth			3.8%
Notes:	(1) Represents total consolidated revenues per U.S. GAAP which agree to the relevant 10-Q.
	(2) Represents amounts attributable to joint venture partners, both majority and minority.
	(3) Represents total SHO revenues at Welltower pro rata ownership.
	(4) Represents revenues from non same store properties, non-cash revenues from same store properties, currency and ownership adjustments and other normalizing adjustments described in the accompanying Supplement.
	(5) Represents same store SHO revenues at Welltower pro rata ownership.
	(6) Represents average occupied rooms for same store properties on a pro rata basis.
	(7) Represents pro rata same store average revenues per occupied room per month.

Page 9 of 9

EX-99.2