Senior Unsecured Notes and Secured Debt

9 Months Ended

Sep. 30, 2023

At September 30, 2023, the annual principal payments due on our debt obligations were as follows (in thousands):


	Senior Unsecured Notes (1,2)		Secured Debt (3)		Totals
2023	$	—	$	221,074	$	221,074
2024	1,350,000		460,313		1,810,313
2025	1,260,000		414,358		1,674,358
2026	700,000		141,748		841,748
2027 (4, 5)	1,906,354		187,805		2,094,159
Thereafter (6, 7)	8,417,470		990,833		9,408,303
Total principal balance	13,633,824		2,416,131		16,049,955
Unamortized discounts and premiums, net	(26,488)		—		(26,488)
Unamortized debt issuance costs, net	(76,884)		(20,625)		(97,509)
Fair value adjustments and other, net	(76,467)		(15,253)		(91,720)
Total carrying value of debt	$	13,453,985	$	2,380,253	$	15,834,238

(1) Annual interest rates range from 2.05% to 6.50%.

(2) All senior unsecured notes with the exception of the $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 have been issued by Welltower OP and are fully and unconditionally guaranteed by Welltower. The $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 have been issued through private placement by a wholly-owned subsidiary of Welltower OP and are fully and unconditionally guaranteed by Welltower OP.

(3) Annual interest rates range from 1.25% to 8.50%. Gross real property value of the properties securing the debt totaled $5,257,776,000 at September 30, 2023.

(4) Includes a $1,000,000,000 unsecured term loan and a $250,000,000 Canadian-denominated unsecured term loan (approximately $184,706,000 based on the Canadian/U.S. Dollar exchange rate on September 30, 2023). Both term loans mature on July 19, 2026 and may be extended for two successive terms of six months at our option. The loans bear interest at adjusted SOFR plus 0.85% (6.28% at September 30, 2023) and Canadian Dealer Offered Rate plus 0.85% (6.24% at September 30, 2023), respectively.

(5) Includes a $300,000,000 Canadian-denominated 2.95% senior unsecured notes due 2027 (approximately $221,648,000 based on the Canadian/U.S. Dollar exchange rate on September 30, 2023).

(6) Includes a £550,000,000 4.80% senior unsecured notes due 2028 (approximately $671,770,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on September 30, 2023).

(7) Includes a £500,000,000 4.50% senior unsecured notes due 2034 (approximately $610,700,000 based on the Pounds Sterling/U.S. Dollar exchange rate in effect on September 30, 2023).

The following is a summary of our senior unsecured notes principal activity during the periods presented (dollars in thousands):


	Nine Months Ended
	September 30, 2023			September 30, 2022
			Weighted Avg.			Weighted Avg.
	Amount		Interest Rate	Amount		Interest Rate
Beginning balance	$	12,584,529	4.06%	$	11,707,961	3.67%
Debt issued	1,035,000		2.75%	1,050,000		3.08%


Foreign currency	14,295		4.65%	(278,949)		4.51%
Ending balance	$	13,633,824	4.02%	$	12,479,012	3.86%

Welltower, the parent entity that consolidates Welltower OP and all other subsidiaries, fully and unconditionally guarantees to each holder of all series of senior unsecured notes issued by Welltower OP that the principal of and premium, if any, and interest on the notes will be promptly paid in full when due, whether at the applicable maturity date, by acceleration or redemption or otherwise, and interest on the overdue principal of and interest on the notes, if any, if lawful, and all other obligations of Welltower OP to the holders of the notes will be promptly paid in full or performed. Welltower’s guarantees of such notes are its senior unsecured obligation and rank equally with all of Welltower’s other future unsecured senior indebtedness and guarantees from time to time outstanding. Welltower’s guarantees of such notes are effectively subordinated to all liabilities of its subsidiaries and to its secured indebtedness to the extent of the assets securing such indebtedness. Because Welltower conducts substantially all of its business through its subsidiaries, Welltower's ability to make required payments with respect to the guarantees depends on the financial results and condition of its subsidiaries and its ability to receive funds from its subsidiaries, whether by dividends, loans, distributions or other payments.

We may repurchase, redeem or refinance senior unsecured notes from time to time, taking advantage of favorable market conditions when available. We may purchase senior notes for cash through open market purchases, privately negotiated transactions, a tender offer or, in some cases, through the early redemption of such securities pursuant to their terms. The senior unsecured notes are redeemable at our option, at any time in whole or from time to time in part, subject to certain contractual restrictions, at a redemption price equal to the sum of: (i) the principal amount of the notes (or portion of such notes) being redeemed plus accrued and unpaid interest thereon up to the redemption date and (ii) any “make-whole” amount due under the terms of the notes in connection with early redemptions. Redemptions and repurchases of debt, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Exchangeable Senior Unsecured Notes

In May 2023, Welltower OP issued $1,035,000,000 aggregate principal amount of 2.75% exchangeable senior unsecured notes maturing May 15, 2028 (the "Exchangeable Notes" or the "Notes") unless earlier exchanged, purchased or redeemed. The Exchangeable Notes will pay interest semi-annually in arrears on May 15 and November 15 of each year. The net proceeds from the offering of the Exchangeable Notes were approximately $1,011,780,000 after deducting the underwriting fees and other expenses. We recognized contractual interest expense on the Exchangeable Notes of approximately $7,116,000 and $11,069,000 for the three and nine month periods ended September 30, 2023, respectively. Additionally, amortization of related issuance costs for the three and nine month periods ending September 30, 2023 were $1,117,000 and $1,810,000 respectively. Unamortized issuance costs were $21,410,000 as of September 30, 2023.

Prior to the close of business on the business day immediately preceding November 15, 2027, the Notes are exchangeable at the option of the holders only upon certain circumstances and during certain periods, including upon a notice of redemption described below. On or after November 15, 2027, the Notes will be exchangeable at the option of the holders at any time prior to the close of business on the second scheduled trading day preceding the maturity date. Welltower OP will settle exchanges of the Notes by delivering cash up to the principal amount of the Notes exchanged and, in respect of the remainder of the exchanged value, if any, in excess thereof, cash or shares of Welltower's common stock, or a combination thereof, at the election of Welltower OP. The exchange rate initially equals 10.4808 shares of common stock per $1,000 principal amount of Notes (equivalent to an exchange price of approximately $95.41 per share of common stock). The exchange rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest.

Welltower OP may redeem the Notes, at its option, in whole or in part, on any business day on or after May 20, 2026, if the last reported sales price of the common stock has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Welltower OP provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to but excluding the redemption date.

The following is a summary of our secured debt principal activity for the periods presented (dollars in thousands):


	Nine Months Ended
	September 30, 2023			September 30, 2022
			Weighted Avg.			Weighted Avg.
	Amount		Interest Rate	Amount		Interest Rate
Beginning balance	$	2,129,954	4.33%	$	2,202,312	3.03%

Debt issued	381,369		5.10%	89,804		4.57%
Debt assumed	344,023		7.02%	221,159		4.32%
Debt extinguished	(397,381)		6.61%	(276,252)		4.28%


Principal payments	(41,646)		3.85%	(44,125)		3.36%
Foreign currency	(188)		3.91%	(71,577)		3.17%
Ending balance	$	2,416,131	4.83%	$	2,121,321	3.91%

Our debt agreements contain various covenants, restrictions and events of default. Certain agreements require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. As of September 30, 2023, we were in compliance in all material respects with all of the covenants under our debt agreements.