WELL - Earnings call transcript Q4 2017

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Operator

Good morning, ladies and gentlemen, and welcome to the Fourth Quarter 2017 Welltower Earnings Conference Call. My name is Nicole, and I will be your conference operator today. At this time, all participants are in a listen only mode.

We will be facilitating a question-and-answer-session towards the end of this conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

to Finance call and like McHugh, to would President, Vice Investments. I turn over the Tim Now, Please go ahead, sir.

Tim McHugh

results Welltower’s Thank you, joining quarter discuss for thank and for XXXX fourth Nicole. Good us morning today everyone and XXXX. outlook you to

hear John you CEO; EVP, Goodey, Relationship EVP, brief and from Mitra, Shankh Kerr, remarks will CFO. my Tom prepared Following SVP, Business Management; introduction, DeRosa, Mercedes Investments; and

statements may within of certain begin, meaning statements you made be let deemed conference this XXXX. we Private forward-looking Before the that call the Act of Securities me during Reform remind Litigation

any Although, release, to statements filings those Welltower believes in differ and in the materially and press the risks are results projected Company time the Factors Company’s no attained. based in the reasonable from in assurance those can that be give this statements morning’s forward-looking assumptions, from forward-looking could results on actual with detailed to will results time projected are cause SEC.

receive the Company’s you website a the If copy at via this not press morning, may it of did welltower.com. access you release

And through million highlight again the XXX Two, that extinguishing debt recycling preferred disposing on to billion over Tom, year average markets Tom And very realized year year growth senior call end DRIP per quarter. high advantage well manner, portfolio of high of by non-core we three, billion and call and his into our price to favorable our the a at remarks raising significant and portfolio. stock of average capital X.X just X.X of XXXX at X.X%, will few programs that, private $XX consistent a and housing One, above and continue XX.X% capital operating the balance the outperformance the pay for developments, of securities I take billion of to opportunistically through quality the disciplined over driven over and full capitalized share. total assets regarding to we a ATN sheet with finishing of redeployed high in mix. want original our I we guidance, X.X same-store handing results. acquisitions coupon with in hand have points Before our an a the

Tom DeRosa

effective run the financial environment I have the about all in speak results, optimism of and In challenging Tim. to healthcare alignment QX partner senior we shareholder to the deliver years, capital not We power most operating afraid report for initiatives years make asset strategic a mix XXXX ability some to the have and drive global for our business ensure weeks outlook and Thanks, pleased decisions our our most the seen our operator this of to strategy to am important deployment, to broad people, for and to be including number regarding XXXX housing delivery come. platform. bold value capital to Welltower been landscape that and

from Shankh. hear are about all waiting that positive. platform restructuring system a health systems and world's third have the Simon prominent more end Properties, accretive Despite model. portfolio Genesis are XXXX. credit solid We sure housing outlook for will delivered flu, in new that Joseph's, announced the by investments has our for and XXXX friend, we closed JV We deliver our billion headlines the enhanced to of month the negotiated the of as Providence billion successful XXXX Healthcare by on business quality seniors We growth investments remains St. and of and and a X.X owner. our highlights. oversupply some Viejo continued operating tying XXXX major our Here health Mission of our on largest I is of mall U.S. strategy am throughout in X.X sustainability business significantly the of Genesis gross to you to with evidenced most

an operator we will relationship in new Kerr to QX, Mercedes XXXX. you Now, relationships, expect overview give and of grow view her Mercedes? new investments on how in

Mercedes Kerr

Tom. you, Thank

our of growth we million release, and investments XXXX quarter funding, completed of acquisitions, loans yield a form fourth detailed in of in the As average at $XXX combined development earnings of the in X.X%.

fourth combined year of yield XX% period of two-thirds our totaled completed the more and our in than quarter prior the basis whole business. completed investments quarter or repeat the billion For an of XXXX, XXXX on off-market Consistent fourth investments average with of $X.X X.X%. had the of and transactions in were a

is purposefully best-in-class of Our focus transactions based relationship off-market we have roster business with scalable model. partner possible because on assembled a

Our unique Living, Florida Medical often help Clinic to opportunities us our Sagora fourth This grow us quarter operator we relationships partners perspective, expanded alignment was off-market find true with Ascension. our Senior together, so when to into new features themselves. incentivize and

first such of their Winkle great buying customer among It's four where DC an operators rest of practice in physician-owned were the rental survey. and and our In at I Group X%. million J.D. to are As acquisitions especially into Jersey. yield fold. for multispecialty in New should Senior the Every where communities Living bring proud them given and team the is our to identify to Living introduce well congratulations recently Senior providers as new see returns we the recently work. to communities medical above selectively and our portfolio. This Medical Summit Miami. as Living hard highly quarter, Sunrise CCRC are was add the in fourth with healthcare announced Chris we oldest of Power's located markets to These largest we project Senior $XXX year are Sunrise market satisfaction properties desirable which at noteworthy recognized satisfaction highest these Washington ever the Living Senior a ranked for note

new announced collaboration provider. of system, part and Providence also Mission progressive Joseph Hospital, health We a with healthcare the formidable a St.

expanded Welltower systems can bringing at partnership the we Shops bring state-of-the-art of our model to market. start The also speaks solutions infrastructure pool. at our the Since Cogir and Mission relationship Viejo and health delivery of Corporation together with them Management by evolution project to the of into premier Our partner to how XXXX, care

are due Mathieu created average working monitor that important and vehicle to these by take to senior subject at the time. year's staff doing moment and we labor financial year, to We housing to our a speak for know through this the last to severity This difficult joint over and voluntary partners headlines period. when pleased this visits and agency operator its flu, and in to Duguay communities. and XX with related the residents this a and mandatory closely can look flu the a spend, I with generation hard to communities. influenza-related death forward sick. or outs our its increase venture revenues outpatient it's in illness flu report, compared individual higher which a and with satisfied they has so spread next due expenses us increase for nature the the and XXXX, of thus his want for to and this, individual we’re extremely the to are trends work impact illnesses our are mostly have where States wide have said quantify of We care construct. Canadian to their flu team far impact Having United temporarily are season impact has in over, higher new been in additions caregivers anytime replaced also than not is a to cost with season and cases calculating season XXXX this compared the move XX% flu also on minimize impacted of the when when CDC precise The about XXX% operating is the may and

their that to quick a this of to them them about a back we said basics. allow the Mitra. going strategic we're will turn the Living's will get before, decision protracted our before. continue attention with holdings as the we hope been with much has just morning, to Finally review forward Brookdale we’ve focus I Senior and have will that, period, over Shankh of satisfied which That to announcement we call comment their with for now management With to process end collaborate portfolio Brookdale

Shankh Mitra

results expectations SHO and initial good will I our everyone. morning with Mercedes, our full assessment review our on you our specific our operating on year to with you, reflect quarterly provide preliminary a Thank performance portfolio. operating relative focus operating environment XXXX XXXX of

average quarter Our of end grew same-store NOI for in the X.X% X%. same-store X.X% initial total expectation to growth XXXX high our X% the of bringing to towards portfolio fourth

that tempered has declined which outlook Our performance. quarter. senior for was outperformance NOI X.X% affluent that flu, Late contributed positive this This operators. by to XXXX, operating our fourth business significant representing in markets year portfolio below and the due for premier relative expectation occupancy a assets believe quarter, we housing a to in despite of due quarter same-store our run grew have our will best-in-class growth

Specifically our to XXXX SHO for is outlook flat X.X%. portfolio

better, driven to know Low good XX combination occupancy a in X% X.X%, and be and combination growth. XXXX our X.X% of was then occupancy growth done to by a X% growth however, rate initial XXX achieved of growth of built you for expense expectation occupancy expense actual this set will was expectation. of same-store results lower portfolio thought. basis decline occupancy different so to As Rates growth, expenses. and rate a we X% We expense X% were to growth, SHO through and our NOI were points rate,

our to in We’ve the the fruit. our was continued starting In operator capabilities outperformed of cycle. up the part to bare and mature focus in investment outperform heavy to strategy, and analytics cycle more addition are relationship data in

entire differentiation time. on at ultimately and in some absolute cost point a year cycle result basis was in over that in We’re performance superior this significant confident the every a of consistent relative capital

capital quarter Genesis, retained to was by maximize this our important the on value committed journey our be last of spoke started encouraged is portfolio. you continued flow November, in the for Another we to total as Genesis. we focus update cash to are shareholder our Since we stabilization in to relative regarding

have this relationship. Additionally place important in changes taken

Genesis' key This improvement an this As the Company the Management, position all fixed the announced strong last by through multiple night, Genesis vote million of Trust, million Company come restructuring in effort, which the put A credit injection of have annual Apollo and a recap is have of industry. parties which wholly-owned expected result previously critical and the in broader is of step to a XXX parties. of confidence of Financial to charge a effort announced subsidiary million agreement recapitalization Genesis' $XXX Genesis is to Midcap structure a a Global into combined in XX sheet fresh strength. capital balance in in to of together element of of credit they the come

Our rent the a main contribution million is of this annual reduction $XX last restructuring mentioned call. in of to I cash as

to extension However, we also payback April option to five to years negotiated $XX Xst. million. loans lease five and a to Genesis rent of after committed reset the recoup also million year by that $XXX an

sold and forma realized is of billion guarantees with So, at X.X today's Genesis and profit Genesis the pro that XX.X% so in of have of times the EBITDARM corporate with NOI $X.X we stronger. now loans times levels, and of with coverage significantly IRR X.X% estate a a trailing is X.XX EBITDAR far real place with restructuring

purchase portfolio of we Genesis two of years. any in last option negotiating public action in complete multiple of high $XXX last heavy with path the in in we recap tenant while been future. has need a optionality March the Since the clear our have portfolio this that with with expires asset been the possible for communicating PowerBack million quality As year, retain

our inventory one that with attuned approach value for shareholder our all our posture and the public feel of well operator. share, to aim what substantially projected is demographic credit XXXX. maturely contrast core a seeing forced corporate the demand in a providing outcome Genesis strongly maintaining while shareholders any pending surplus ensure more We which standing supply win on optionality investor have industry. keep market behind refocus in to you're have its A while nursing lease value. to surge, enhanced maximize in has is outcomes on recapitalized Today We bids that context of Genesis our for a to flexibility order and we a broadly reliance possible highest strengthened to negotiation covered the in skilled our by our is stark shrinking minimizing market

We'd Humana, as a noticed Carson, the Kindred and I'll to case in recap tectonic now forward. you'll forward Number five Two, While not towards like credit the master participate to in loss has case of the provision deals Welsh, though Goodey. a Operating publically four, sentiment thank facts is space, to necessary we smart positive Genesis. we ideal dispassionate It $XX restructured as Three, is lease. in retained material With that optionality happened. through portfolio. investors the in we our in shift us TPG is year million following changes. MidCap we you stabilizing this our shareholders short in the occurring noticing preserve John income full for for in believe result improvement will change. of have supporting secured We Genesis rent over this that, reset going see when a of trend the transformation feel our pass summarize we're allocators you important all us Genesis journey, change in capital term, it of of performance more. announced

John Goodey

Thank as with the for XXXX provide and and QX U.S. delivered manage allocate on outperform pleasure highlights the our XXXX. Shankh, and from XXXX capital to our have full heard good conditions well again enabled for solid we the Despite quarter excellent Welltower It's for the platform and everyone. of the housing about prospects and overall operator relationships you in others, morning superior market portfolio, to positive Once portfolio to you our our have XXXX. of asset challenging financial fourth you, and results strength us my year our guidance senior peers. are financial as

to $XXX lower are noteworthy XXXX that refine actions continued of realized leverage being and strong and lowest a we financial our XXXX, and These our financial where in further to a In in financial generated improved of placed REIT in gain delivered sheet industry. year with dispositions strategic the XX.X% us of XXXX IRR a results our of portfolio also plan pursue is position balance leverage. one million we've and billion our the it $X.X In to our addition, a realized in be beyond.

Shankh, growth XXXX, and QX quarter detailed As growing Overall was housing in post at with X.X% portfolio acute show long at growing same-store our both by the XXXX and averaged X.X% X.X% and net overall. outpatient NOI X.X%. seniors by term medical X.X% grew for triple in

along divestments $X.XX with QX quarter to per loan we payoffs. for report $XXX growth XXXX a result quarter's and within augmented They've This was FFO $XXX acquisitions million of share. joint us normalized XXXX total. of ventures of a delivered Overall, and million normalized enabled share of a $X.XX FFO per in

new quarter's million joint excited a future In loan and these truly of million for acquisitions, allowance we of by the state-of-the-art number $XXX X.X%. this of approximately a deliveries completed stabilized We're bringing yield In including addition we've across relating all to operating buildings. segments Genesis to growth $XX developments items ventures of earnings potential $XX normalized to million a year at QX, restructuring. full

unconsolidated in to down impairment, JV non-consolidated write investments. of certain to million interest the We $XX non-controlling also equity relating normalized majority

of $XX transaction is and headquarters we our to of million related mark-to-market other shareholding. also Genesis public impairment which Toledo $XX of of In our expenses the normalized cost, against a which donation $XX and million addition, million

further to Additionally, optimizing capital efficiency we Act. Tax valuation continues Cuts related the deferred human to million operational and Welltower systems, and own a tax by $XX impact physical our Jobs corporate on normalized a of focus infrastructure. processes, allowances and including

was QX the for quarter G&A XX.X% Our reduction a $XX.X XXXX. over million

For by XXXX prior. XX% reduced year compared to we G&A the overall, nearly our

efficiency in our continue implement to to improve initiatives XXXX. operations We further and

great Our group. shape leads our balance in and sheet remains peer

flexibility. balance maintain strength to and continue will financial sheet We

and of XXXX of we of our bringing the cash at $X.X full a extinguished billion under of $X.X our cash During capacity debt retirement ended secured line million borrowing average securities to of We debt available $XXX blended billion equivalents $XXX year a X.X%. the of quarter, rate preferred credit. million fourth and and with

planned cover the debt XXXX EBITDA net we and EBITDA times metrics capitalization remain end levels ratio X.X for debt of with Based our un-depreciated being charge to ratio in of five leverage XXXX leverage at the with adjusted to see net low times times. and year, Our to remains acquisitions a book X.X net low fix adjusted announced dispositions or on historically near strong debt XX.X%, at year area.

debt and to well XXXX Our in will markets maturity bond further access controlled our remains we profile profile. opportunistically manage

will in As we acquisitions, to affords I noted our drive pursue growth. liquidity flexibility remarks conclude previously you, for us position my XXXX. and to our to deep reinvesting to with enhancing significant our outlook opportunities development value portfolio

the currently XXXX guidance. from $XXX previously and other in sales. XXXX dispositions billion approximately We’ve of blended approximately conversions proceeds of payoffs December This property approximately incorporated expected $XXX proceeds to stabilized million, underway overall the And post-acute Master XXXX, NOI, following million in developments of to development X%. loan care housing expected Starting X%, of X.X% $XXX we and Lease approximately for XXXX. funding same-store operating As proceeds X% of X% are during in same-store outlooks have $XX of in X.X%. components. yield relating we in $XXX potential disposition of $X.X which impact yields project million release, X.X%, senior and to approximately and to We X% with average X% long-term NOI approximately we same-store to of expect earnings approximately blended Senior housing growth post-acute medical approximately adjusted anticipate our Genesis XXXX as restructuring. a expect close to growth net noted at to includes to the our X.X% of million our to of approximately is which million X% XXXX outpatient generate triple XX, comprised and from term X.X% incremental NOI of long approximately

with replaced in of stages negotiations recently approximately in placeholder announced. advanced this million million are paying of loan expected restructuring sales, XX% and the XXXX downs year. our Genesis representing portfolio, This $XXX dispositions of non-core expected $XXX loans proceeds also disposition million tied and of comprises the to million $XXX Genesis payoffs property of We which of $XXX

$X.XX expenses, we to in XXXX. anticipate aforementioned net common the discussed, $X.XX of above, XXXX normalized of to with per per Moving other XXXX level range for be $XXX $X.XX a FFO million G&A of and the range G&A our spend in approximately diluted on expenses restructuring attributable share, the Based XXXX. share. income below XXXX administrative items stockholders and to general, anticipate in Genesis $X.XX we diluted significantly to normalized This remains to

earnings beyond acquisitions being usual, any does As but approved share include excludes of annually. am additional guidance our $X.XX the share planned the rate dispositions. announced, dividend at per to pleased Board which XXXX quarterly cash those been of maintained per Directors the announce have I $X.XX

on poised As growth consecutive operational our our quarterly overall yield for annual X.X%. approximately Welltower such XX, development represents its paid portfolio February with XXXth cash this the pipeline on and for Tom? dividend outlook strong position liquidity at Based XXXX, closing dividend, XXXX our accretive quality the current level. dividend for I'll high his gains, Tom With and delivery, to back hand comfortable we through comments. that, remain of acquisitions

Tom DeRosa

asset was I Executive $X estate real business strong that of an we XXXX, years asset long-term XX.X%. asset we've Since Chief nearly strategy. and a year-end I sold knew ago, billion advantage the then, When have a at of rapid pricing, sustainable it viable was John. not almost will in accumulation by taken nor of was became tailwind accumulation IRR Thanks, four period. Officer,

asset balance improving sheet. the quality, the overall also we radically de-levered massively While

real On alignment the now global at healthcare This for made now capitalized. in of is strategic we markets sector benefit component health stood work delivering the our participate to the hardest the promote Welltower. I post-acute aligned positioned integrity proud now years refocused abandon completely plans is in who role reinventing and most Welltower estate has highest old healthcare companies the both one smartest, I here Genesis. of based the optimization by about like want shareholder a focused to sides operating critical our and end continuum and capital a in provide markets this from its to a and platform bring the operates around major through and believe This and have business UK settings we now balance us know leading delivery unique It will now attention is hospitals. with process. We the than speaks built construct urban senior on in shared journey, objective in not is platform the Three this team and Genesis St. say and our team thank strategy U.S., business. long-term decision on From asset sector. financial also value. see wellness how strategy, feels driving coming working, This the of like lower the am stronger that I business Joseph's. to You structure that stock diverse operating wellness a costs for are the this we systems to on with the ago as for housing Providence W-E-L-L, of I WELL that core upon effectively acute-care XXth, sheet that markets, shareholders as for is we're to the symbol an the of February care. growth. to a well value-based Canada

please? Now, for up questions Nicole, line open the

Operator

question from Instructions] comes Malhotra the [Operator Stanley. Your line Morgan with of first Vikram

Vikram Malhotra

a a just but and chunk cut talk Tom, least large I it providing of back rent of portfolio. fairly maybe an at sort doing or call, not Shankh about as asset being stepping was size the sale, you of obviously known, last sort simultaneously the took on your

asset you if dilution has between seeing now, elaborate further should some any You what's but on more specifically now, potentially the then changed of given, sort right expect what you're more and outlook of and through components what the we changed, maybe on can from maybe walked sales of Genesis?

Shankh Mitra

things few have changed, Vikram, you I'll tell the right. So,

that's together, a job but of sustainable $XXX capital us together really estate structure, important surprised point a progress. side into credit bringing on owners, parties -- think get you all fresh of have we positive not parties $X has the they If But capital extraordinary of an they're which its just management the to bringing all thought to Genesis extremely business. million for credit basically making real million done about the

the forward. strength portfolio. obviously So, importantly in But that for cash can a a portfolio going Company heavy you of as and much more stabilization now position and flow our portfolio much see puts I more is of that's long it’s portfolio is focused, in we time something retained that our as PowerBack financially is smaller see for us a mentioned

of So have things changed. that's one the other

has performance has operating So changed, quality credit changed.

asset Now you look right. at sale, we our on that portfolio as as capital can in imagine allocators every

at and sale will tell a And not every price. answer that at -- to we'll those don't So, that so are the sell to we're for that at sold. operating going I'm is these for know really coverage the we're we going question know hold, what right slightly owned, the I outlook buy, the forward. the prices assets we looking asset sell. I'm is like it We asset also not is going thinking we quality to and tell are be know you buildings a further those it operating this not a you that assets not Genesis also flexibility complete retain

Genesis And a operator ago. is was days sort today is that that drastically messaging facts of change different we when the So XX change. it information when change

Tom DeRosa

look that credit on to manage always you going enhance optionality it credit stronger is let Welltower in based business how Genesis restructuring forward. to we make terms is going because statement stronger and that that add Vik, dramatically me a is a means forward strongest the to this we I can of this And

Vikram Malhotra

Got flow, and to earnings. it that grow I to you're and a it sort be very that are and actually changes of now too think position safe Would you many grow flow grow see Genesis? from to alluded say that to position things just not you a cash in cash clarify from little there keep the be dilution, fact here if AFFO intact? Would in assuming you on any

Tom DeRosa

so run business. hope the that’s We how Vik, we

Shankh Mitra

the manage we Vik, as whether we’re the the else that, you can't that as but feel towards very of we’re end to sell, as sheet journey. to for the Mercedes Tom. with be portfolio. that balance of at will hopefully we feel deploy but heard Tom seems something like and cycle our will and always eight inning, end in that We able we definitely which inning like starting asset There capital our where with tell from journey, like we’re looked or I that journey confident said, you've the everybody be always seventh at in we're to

Tom DeRosa

very the we I’ll take to was tough this them do back those starting our should the when the felt less decisions We’ve be of decisions And glad did did that be back. a wind fact not glad, we So, tough you we number at wind I'm never is made emphasize and when the at that. our then because time we right now.

this the we're heard to from journey, that do kind the that call here So of this we're we speaks the you've -- on future. about today is what towards I believe emphasize, want tail optimism end everyone to and

in about line Welltower optimistic in you healthcare this very future. We’re if fixing significant will healthcare to non-hospital ability the drive space the will certain we at that which in healthcare the you role delivery. change shareholders reduced least And believe participate red or value sectors the your play space, of

Operator

JP Mueller question the Michael Your of of line from next comes Morgan.

Michael Mueller

the if same-store million and number NOI for the guess so growth? go growth, in same-store you post-acute same-store would overall on the XX ramp adjusted not I questions, of the Couple and reduction. What’s

Tom DeRosa

per cut a we the at the as if adjusted was it's that question, if midpoint just rate, not the So it's XX.XX%. X I we've adjusted, think -- rent January minus

Shankh Mitra

Mike positive And year-over-year. negative to of X.X% total it's for the midpoint X.X% portfolio flat

Michael Mueller

beforehand? pro forma how coverages. So had coverages much the with all improvement the about talked What the Genesis then, And you that there is announced? where transaction been

Shankh Mitra

sector, close the majority If will which flexibility have coverage, one. important to times, back of rent the that's range did about rent And it the landlords investment will this the think look if the business. if you not this went of will them where why one at in cut very they at our flexibility a history profile was give give business, actually grow to the range. right. give And look you see they and you Mike, you the it's of not question sub, we tenant their them of And coverage, in see started, you taken to free that because you to sort did that in back sort

not to do did absolutely want we that. So

As to decision. take This was Tom it said, we’re happened. and never bold needed afraid

So, like that you forward the didn't assurance have the can feel significant we that can kick a down very we where we taken going feel road.

Operator

comes with the of Capital next Sadler from You Markets. question KeyBanc Jordan line

Jordan Sadler

discount. lending? invest Genesis loan seller So, wondering; then doesn't skilled to willing does you recommitting sound exactly piece would hold the I or beyond if at Genesis but incremental in term se, be margin you're at are today's am to one, the business today to fair nursing sound rather per news willing you excessive a you to two, incrementally be an than like are it it's a in the characterization; that and

Shankh Mitra

right. net if is think a lease credit, Jordan, you about a triple

important by property So, is coverage most the level payment, above management right, I the, of to EBITDARM corporate. with and subordinate remember, guaranteed the X.X, the thing a fee from at also it as our said rent perspective, improved is the and credit significantly coverage

at look improved. you the level stratification levels is every it, at of three So materially

I point to want point, about. the reemphasize and I also to the that rent So, reemphasize that reset talked I want

demographics change So, be going at and you nothing to too supply, future. there's million crisscross $XX we'll utilization a is that you perspective, and Will if not a if supply, able that of negative demand believe And are, rent be in believe to in are. We the demographics I the going from in recoup we and to look said. too invest not going -- distant already of forward? as Genesis you

that's that, we'd and If happy believe from to spoke PowerBack and if invest that look have at, change we we in so other be there're model no in drives development, Genesis hub you in we PowerBack that's that what a its business model, do to done. progress opportunities from, have that

Tom DeRosa

option. sector. down consistently are that with down were coming of the kicked say, and viable need Jordan, not the until this And which country, they REIT are to we say were you interact major CEOs reimbursement. just last kicking post-acute to back sector is has Shankh they in I in industry the a it can at the of the occurred to talking lot, continue and that you because that keeps fix that changes can road, can as morning said this at say wall say the you've you. regional health the leaders care been the are keep dealing the heard can happen about a the problems kick to that do What this with The we've given needed road. you abandon and we've ago, -- sustainable some going night announced systems, what the run not years but when a healthcare Why structures the that all me that capital I

We their partners, have just and brought the capital structure, new Genesis' in of it not every was Welltower, one a capital we fixed capital partner.

think enhancing of future our that Optionality about optionality. of maintaining says business the in for of the something I deploy interest we capital best in shareholders. and are so where we the Genesis,

shareholders. so, I it. arrows interest best and stones And will consistently, and took of have I But the prove out to our this, you've been a strategy heard has say for our lot changed, think in nothing of saying me

Jordan Sadler

consistent with you've that's relayed no the messaging think time. Yes, I over

the for is relates What to Genesis So it Genesis, either recognized in is of the recognize that in on again, so or 'XX John, to in had plus $XXX I if my is that's million Genesis? loan income XQ And to and FFO specifically got you what's that as the total follow-up guidance. you've guide? you interest the forgiveness $X but expect that embedded this know total really don't you to then

Shankh Mitra

Jordan, I'll question, answer the is answer the zero. first part the of

We have not loans. forgiven

loans. those have against We reserved

payment significant of loan said that few and you go And it a know We book at question was gave complete saw we quarters difference in last from that as we them what months. confusion go I We kind, and and today. pass financials two restructuring our a look payment back last your I hidden pick that, entire is and in for payment part went part if in you to is, our about, through lot did the Genesis they there a were for whole today. see doing in cash the will cash, part a John. not tactic something to So a that with two over

John Goodey

Tim's Genesis the FFO answer front, recognized pennies I from on got the you the in penny for on And actual think loan. so

Tim McHugh

on on answer know we that notes interest few this of recognizing a just part this in morning, are is cash important this is So and to Genesis XXXX.

this, FFO as through our Genesis' of was loans XXth cash that's just XX/XX year. in to guidance, -- prior and of noted this both morning February release there these the in year no to the last from and November picked So this XXth is

February roughly through we was at recognize we full recognition five the that XXXX we are through and income note you That's all So in full FFO. if component income Xst of from recognizing numbers. about for you XXXX we penny year FFO. it for represents did interest important the What our XXth basis if a the to of of then about would have to that the look year not cash $XX went year recognizing not on that have January pick rest is million pennies and a pick recognized

Jordan Sadler

the progress XXX, to than no do piece to pay you to forgiveness the piece, make less them the I'm on less they have obligations. What happens the a guess to because so I I'm they've confused Genesis the bridge -- Okay about repay XXX? of $XXX did loans, reading million can want no

Tim McHugh

the Genesis based be rest announced of this is XXth, remaining million part real to And and back now a $XXX XXXX As XXXX. the step piece it The assumed the current that are will is commitment paying for having February paying. cash current of the of $XXX for of in midyear paying, and estate outstanding refinancing. cash that upon a piece because that is for around cash assumption outstanding loan contingency right term and after XXX be restructuring model ourselves morning of remaining our the is million That in paid both remain and it loan all financing paying. went back up is to partner cash

John Goodey

just I what reiterate, said. Shankh Jordan, don't think I'll

We collateralized this have not as forgiven them loans you some we have that's the have can test is to taken we because collaterals the that the to that. a reserve orders to imagine underneath have relates of And we not be a that make was write therefore of the the forgiven. to take reserve do Genesis down that collateral, but us loan, again will

down. the not there that So, million is XX Shankh big write forgiven difference to we've

Operator

Your next Daniel question from line Bernstein of One Securities. with Capital comes

Daniel Bernstein

is X.X% to further want Genesis, just just or pay make that exposure sure to downs I loan is where the including understand I it today?

Tim McHugh

forma to the The our of employees so way think is what's is, X.X% that you of calculate pre is rent so about as Genesis. exposure currently just a pro our X.X% we the of NOI for the rent cut supplement, is cut. our The in property end X% NOI, quarter, off if the fourth

just… it's So

Shankh Mitra

the As well as asset itself.

Tim McHugh

forma sales as that pro is cut Genesis X.X% XX/XX to NOI and as sales. essentially asset rent Yes our as exposure well for assets after health as the

Daniel Bernstein

credit, change of the think a in so bit in property improvement if the mentioned the your you at see Genesis I level, little but in view also much the that improvements You comment.

that company your the you operational a What's changing property level the or understand there more better. to want in bit of a lot assets? at just little So confident or makes level Genesis, in

Shankh Mitra

core you always It important the cash markets, markets core will grow and lot and retained the about power cash understand this selling in you seeing to flow is I emphasize space. of we’re we're has we In that is long-term if process of Genesis an I said refocusing be our back want look and a out is retained again is that out transitioning very our on well. is done future. operator, after where in are as portfolio, stabilization core obviously plays portfolio. Genesis which that how think to the able has Genesis heavy If fact we portfolio that very selling flow now to There they at in sold of none believe

you of definitely above one coverage the you is that important the can credit. and got look and that we credit in corporate is improvement look that’s to the with So the guarantee at that and here, market EBITDA the improve today Genesis is Genesis debt obviously and at extremely half, coverage coverage, an significantly self which points explanatory very coverage the if almost at EBITDA EBITDA the look -- in if

we optionality feel optimistic as sound of of why say So our part where any that all that’s in again portfolio. can our

Daniel Bernstein

about working the leases some quickly to you be you looking And skilled you’re in still on talked thinking I like perhaps that mean may seniors something just nursing, real for you RIDEA move on? housing. sounds about that it demographics, net, Last would apply about quarter, more opportunities triple talked to is

Mercedes Kerr

into is at RIDEA in lot invest just mean there we our Hi, then we more we upside a that things obviously might to when opportunity is there of take is lot for risk. think consideration operators, This look a like with I that that downside as selectively Mercedes. we you know,

and triple might so there we portfolios from for that but all yes, And net we a structure something that candidate that talk become to that actually time have we're to now the to obviously be don’t partnership and the anything a look conversion time about might seasoning time. right at

Operator

comes Okusanya Your the Tayo next Jefferies. from of question line with

Tayo Okusanya

first NOI the portfolio. My Shop around question same-store outlook your is for

about than You your is curious, outlook if we more have generally talk have an guys do much that just negative. bit theirs? little just bullish I positive, why is that outlook outlook a peers your are am

Shankh Mitra

answer, good to That quality really the will the business. we've the mean question. to but the I every is or and it's to it operators for the relative would in a seven years you very year RIDEA of look like been Tayo, it you last that at portfolio and micro markets. -- performance our I So, give plus speaks peers,

set. mean have skill And investing in if we management. type estate of in know, net how requires in you different evolved, about invested that has have so equity you So, analytics you real -- the and are triple people, a we're technology, investors, data mostly you this asset ones in investing credit, if think are right, invested industry RIDEA in in invested who I

capital, at over that quarter portfolio. quality that not if probably every a time every be of seen look impact should obviously better period So, of the give you've we're a accept pretty that that I hope much outperformance but of and better you as but will that we cost that happened said much a year hopefully we surprising, yet people will have hasn't

Mercedes Kerr

and in to do with so of to combination I to the it And with, and initiatives with trenches operators benefit benefit do that asset of we course operators locations, that quality, of that source the the great are their are are for with the have barrier them. to also that do for lot a markets, high it's a having partnered to entry the collaborate but residents us and also the willing a we it's trying that with who to add have live has also

Tom DeRosa

not estate. operating that comes better drives and A an lot passive truly partner, of We as senior it being of a from housing real ourselves see owner results.

Tayo Okusanya

plan as result now the we're recapitalization these it's than status rather in November, a zones are that of Genesis at casting correct? the that with confirm to back just then And

Tom DeRosa

Correct.

Operator

Your with of next Mizuho question from comes the line Rich Anderson Securities.

Rich Anderson

against that like chain you that to to to weren't have you clairvoyant because of up the and it sell market investments, kind were you timeframe, so or December kind it, heck, the did protect this we assets and backed rolled you on back in could rent If of you sort everything moment worked Did kind and events point, sales saying you this your what keep where pricing you asset woo, getting you're at November, some we we the got Or I curious what you going situation I'm the better you're feeling wanted, time going the cut describe on luck am dead was there? skill? the Genesis to that's call. you where of of are glad of today? now didn't was into was weren't I -- where could step all of like

Shankh Mitra

you at doing, effectively of combination to said to an always what you line. a out of you I about that is credit said it get as you parties know that its never both; we're pulled management that code look finish able finish off actually Genesis Probably what with all know if the we will think happened point, restructuring be right, right,

think they'll did. absolutely be able the that capital to of did that we fresh they entity not get Second, the from did size they

changing. always tea there's Rich, interested, you like Welsh, would term what as So in point are and one observer a leaves time that industry, the frame Humana, I how you happens with you the are know, see observer an as long of Carson. to Kindred

absolutely. to specifically we to question way back happened Did we absolutely. things The going You can you in so happening answer because industry, that know things public they're the around but to injection absolutely? about counter do is see you that that other do non with a are transaction, to in wanted, of what the today fresh for your us obviously nature deal? price a a the capital, get Is ability lot of party do still have talk can I

a At the a question coverage digits. to X% we money, in make part The leverage X% a XXX the from the what end growth it is rate this about X cap that assets as X% which Genesis I at that is as market are That's we what portfolio to buy cut the decision cap about mid that a company day in capital despite classes about think assets heard this know shareholders half X.X the sell we We're here low a asset hold been we with XX% never you of has is of is the John participants on money our making asset are a every right, math every culled for to just CapEx did. X. are noise at we the XX% a about today going buy, has we X hold. sell. get will enthusiasm I So know think our you even the allocator IRR is you you make or thinking of from to it in of double mentioned with with see have group unlevered and share portfolio. have group time X% that or class. but of That's a grows the for right, around here the XX% or all price of to

Rich Anderson

for in lifeline are I'm question your Okay, follow Genesis tenants accrued is tongue clearly you of cheek, the paying that what the this and you shareholders fortunes saying know not up know REIT. to essentially

what is is. it it So

we you thing you we You if forward know we had do kind into of where kind you know what Genesis going narrative. sell Genesis, this want it ultimately get to sort of Genesis, don't want do risky did to were want changes of you but you don't more the

some have there way? risk that that Or forward? put yourself going don't feel is of So commit kind you and into corner a you almost to

Shankh Mitra

we estate is That in net said is happy out make we all call triple Tom get commitment real basis. credit right, investing were about getting if precisely price that lease is every what not a that business commitment of we're to the post-acute right did. we did what right, the

to do right escalators that be is that our flow not downright only we'll absolutely appropriate position of don't X%, they the all it. this believe is should we But the the growth So enjoy we that if but from business in are. de-risked the are footprint from it something shareholders for coverage price we'll X.X% the price can the the get we right sell, cash get think we if

looking thinking willing is a should we the So have never price the market We're it know to you is and sell not our flip-flopped assets all of or at sell Genesis, that we buy, hold bear. Genesis. sell at

Tom DeRosa

taken manage in is the of shareholder. like do the in approach and be and us public interest to the our any best able a to were business with what's we business Genesis. be to the We best things at ultimately change screaming of different actively markets have flexible which to have business interest The

approach. the took right we I think

that You other we thing took to and we And versus and responsible we're that, the down. we for our could have think shareholders. us but out did I happy that debate for may with debate I prove roads will think that gone want Genesis to

Operator

Markets. RBC Michael Carroll Your of next question comes with the line from Capital

Michael Carroll

a bit believe Tom, little behind we're on on I wanted reimbursement space, are and now the the prosecute us? major dive this your shift transition What Where outlook changes? on phase. your to you in do prosecutor is comments the from the

Tom DeRosa

to difficult take very current some respect can for in to what to it's off, think seen I pressure thing Washington, predict space litigation. will suppose administration happen to is with the only say that look I the you've ways

think be comfort a that If people we drive some expensive reimbursement bigger of and put try the hospital in very in programs, their nursing much because we problem then country a business skilled have would this because continued beds. would we into there that I take to government in individuals settings. fact have lower recognition the the to So, is that cost stuck

estate healthcare lower Genesis, a bumpy lower changing to profile think our and the to into Washington that trying be but and sold, to is in continue I we and hospital still drive the stand so restructuring would hospitals bridge, there why service deliver we that credit rational think work. this will thinking skilled think to settings sector that industry, will build with and The based if settings. cost choppiness. we will care beds people it We valued need we people real to need we have and for drive is We're never view have hope cost abandon keep are fee now prevail will a doesn’t have we to to potential ham of we economy nursing right coverage health here. the

Shankh Mitra

because something that system, Mike them of in a you of industry that’s point, the have the of why been XXX been know for your leverage of of important cut reimbursement about, I would the lot than had that has And massive other so amplified encourage I think a huge, mean they small, but none been there you most all to that lot been right. sure, has on restructuring change, changes, RUGS-IV,

you ago, of different post-acute cycle a If to would And really be, all what other but excited absolute been let in be have even key been is industry finance these in you about we if a is this equity there massively and way. but entities. be what XX -- probably And ill happen have got where years -- levered Has seen people and think post-acute all about positions. that. these in chase point deals, choppiness operators very any the a this like remained its much would would they a stronger industry needs that’s lifecycle interesting recapitalized is unwind industry,

Michael Carroll

you happy you around, pops looking Or could deal grow underwriting right to fund And now? do of you exposure with investments care just maintain you to good your just Genesis on post-acute or deals it, does that and for to kind committed stance for new to clarify, your want I guy's say outside them? the you're new Genesis Genesis? exposure mean you just Are When space. you're maybe your with

Shankh Mitra

operators, quality sustainable markets capital good good capital, to structures. estate the real look to We deploy like, right in in with

confusion seen capital And we've that. care what Certain companies world and a fix interest term the that consider for hands what's was years. an those when changed. happening in our do because we will the the with interesting was to largely found we and business well us, ways will that, dealing of you've in it's money, problem long operator We So we not estate, pieces red if consider term post-acute people addressed REITs, is industry space, their of our the interest real largely until no, been line the structures. that think best had made would bad of into and these of new line of we REITs due for the best lot we've about all up, some think covered it's shareholders. But post-acute the RUGS-IV us that long what if

Operator

comes with next BMO of from Capital question Markets. John Your Kim the line

John Kim

And it renovations NOI looks SHO And increased is your the to other that redevelopment XX% to in in of what is quarter. that Turning on why CapEx XX% XX B, Page CapEx? is like or wondering I'm statistics, the CapEx, occurred? that A, versus this quarter third

John Goodey

to the second answer out historically to understand the we So, quarter-by-quarter vary, tend that quarters, in relative we pro quarter, first think. the overspent budget is forma couple of the it our does in comes roughly an where

having of great And CapEx. a part growth a so said portfolios I of balance sheet as can, we out in calls, through do some I reinvestment of think number existing think we've see on we drive buildings

was buildings free mentality, so wholesale as So capital is -- it CapEx reinvestment as as capital, those buildings we described, I do for the I I in other Shankh come more in our how added requests at and well look just that existing we terms I our capital, now capital as we do guess described think. in our way, the -- the significant as of the it I buy on saying, address capital look at aware, doesn't for think capital, you're investing

Shankh Mitra

CapEx in the plus and the spent Yes, fourth quarter. Vintage all

John Goodey

rate different need, expect there we to sort are year. normalized but CapEx on year based a I'd than have say number that we of of projects next sort again, run coming this drive growth, a last of so all, model. we we above of towards Because normal, substantially is ROI more year view CapEx back wanted it don't do

John Kim

is kind this redevelopment of renovation CapEx So, a bucket, work? separate type is more

John Goodey

both. No,

John Kim

update the also maintain wondering just Can them X.XX guys reduce the quarter or forward? I with outlook? sell you you morning. the Brookdale, your You think exposure rent mentioning coverage that's to us just this assets times going were you because plan relationship it major and last Do your announcement given referenced on and

Mercedes Kerr

said I holding. we're is so portfolio very like satisfied that we are steady, comments as my Yes, our in earlier,

conversations always together. are in We

close so We very to Other of could we together, there than and have I Welltower a the I of know as to one platforms such you anything any expect glaring isn't know well of business as that terms -- one -- operator is mean that’s different right I so We feel just -- another, portfolio, that now. to I lot our real that continue. kinds guess always of we you as respect a have in have with based. strengths geographically of diverse options that

feel a that we to so a we others alternative, so from we of nothing perspective always headstart have compared sort of lot in like a have And to always report perspective here a maybe right now. that

John Kim with

your does when And lease expire them? with

Mercedes Kerr

had leases, couple year. We a that again have we with period We're have them. extending are them yet, them actually later notice a of few them not expiring leases, with three in this about of conversations

don't considering some with it, we covering move have to friction know are feel We to operators any them that somebody these sort put had like the We of to again you once come would if of opportunities assets. of and properties properties -- there's else. are other that

Operator

Sanabria the line comes question of with Your America. next Bank of Juan from

Juan Sanabria

First contribution what for the in NOI guidance? impact same-store to the question What's was fourth Vintage, XXXX quarter? the

Shankh Mitra

'XX fourth said, was I on spent to answer I quarter. that give first The as you -- negative a you going renovation because with have on your me and fourth The give capital that are is Vintage question the a XX call. quarter I'll to fourth John a guidance in lot we I'll for said points later, quarter, the but don't of in that the drag basis projects

Tom DeRosa

of store commission capital in There's the reams active lot as a well.

Mercedes Kerr

portfolio value know talking the we're Juan, this, really we Vintage was just irreplaceable because you about Which our kind cases. the plan, our always long here opportunities we're those can something one some to have was markets, having me strains in that of that one be outlook of add looking term select let for of markets really and the if at part of of

growth the of things, the that exceeds tell as can as rate in growth you CapEx be come as though [indiscernible] we're of I all well. which the the might the average probably just working so market you the And working that, rate of and actually through of while commission one out Vintage they we're Welltower through even exceeds of in all average portfolio know

So important the out investment. almost cities themselves is the they're that an for are decision hopefully we driving tenants and think holding that --

Juan Sanabria

was was given a drag fourth benefit quarter. So a in low drag occupancy quarter in starting the a 'XX the in the it point? it Why fourth but it's

Shankh Mitra

hopeful of CapEx you a spent page renovations the rate growth most on be as 'XX. will as drag would benefiting a that CapEx it benefit Vintage in started a I can see on. few CapEx would right. to help is 'XX, run lot starts Vintage the fourth quarters the its But will not spend the portfolio and be are from starting be to as to get necessarily quarter. now, It’s of it I right few their going said quarters in I being think

that will drag fourth and QX year. and a see towards impact probably been that's you of in QX the of So in the the quarter

Juan Sanabria

dividend On low guys mid like you about guidance are what your the it to forward, the it’s going looks fad XX% payout thinking on ratio. in

yielding how they are dividend cut any of So risk point whatever or decide Genesis more for we high at that think about should if assets you to assets? sell any reason

Shankh Mitra

and our roughly them but excreta. elements penny your the you a there through of our I elements restructure portfolio income think given the the FFO not your last, gone income think at is with job year Juan think the when that that, to input by ratio it genesis look rent is XX quality guidance that which we’ve refining think, done FFO No down, the I XXXX, know and is first stream quality in quantum the output in and about an for is of midpoint we guess we you our I pad and the dramatically way second pay very component our is of stream I that, of to up is income feel this taking component comfortable great to obviously this steam

the paying comfortable the comfort very forward. gives which So going that quality FFO that of with we both approved around on proposed feel the dividend given we stream us

as as flexibility, is feel the that, So balance we financial balance sheet pretty a with other so the the know a on have deal balance lowest leverage of well. sheet the side we in very you got much great sheet flexibility got the comfortable we sector, thing we

Tom DeRosa

the improve business, the the and because I the we long-term to made never been quality, flow amplify that from a based has balance changes here asset the that quality cash in very made, quality of in sheet more secure. strong on we the improvement the overall decisions the of model just dividend the business the of that

Juan Sanabria

Okay question of there to restructuring? discussion just dam with this or is with genesis, that with genesis equity part on tipping formation any quick any regards a was

Shankh Mitra

genesis time, talk in and our but we I'm formation where what that to information. all to might not specific majority so as sub into to about conversation might We any constant should on that get going have with going you formation the discussed assume

Operator

next [Operator James. Instructions] Raymond Hughes question the line with from Your Jonathan comes of

Jonathan Hughes

think down heard I may to terms comp strength to Shop I've RUG-IV don’t given how break And for your strong then but expense this the the and guidance assumptions you occupancy occupancy flu throughout start? should in of yet, be growth? could year season operating that

Shankh Mitra

did -- reiterate that I I'll you. for So

did, I no, in growth X% this same at basis we a to beginning the year, better rate the obviously a of X% using combination. X% last but low than But actually obviously and we're growth a X,XXX that’s low expecting a We’re results will expense expected decline different -- growth, X% X% the, rate of a to we give as low assumption we 'XX, occupancy modeling, rate you said result, got growth. points

-- than end like not all these would if not they you, And the they I be worse be be could I So right? comfortable, It better assume than that in or could range we will the combination, see down would could will rates we're but were we probably feel I different expenses independent up are through variables, where worse, be thinking better XXX. better. be maybe XX that or occupancy to

about, will was end pronounce of the at in that will the ramp you that about three how back drive trend, obviously that’s number, how occupancy are think beginning question low would I will how, see variable. more the into that’s which see probably that That’s one occupancy the now and because there usually seasonality of on flu, year, this how business, So the so year And so your anyway, will levels given this hopefully focus was you of other flu. year.

Jonathan Hughes

Okay more that’s just one on helpful and then Shop.

how X,XXX properties? guess is assuming a your yours even So REVPOR to X. I with in like I north to Shop month, would they're on newbuilds XXX% product mean price the X,XXX serious the of new about, most the national going of your the are roughly average thread curious construction as assets? month that I your a new it under markets am U.S. to supply U.S. to Is be really of just renter use is competitive

Shankh Mitra

one no one supply impacting our the competitors quality and and the our absolutely less, performance, of but talked you Mercedes the performance doubt it's market lot is what is the operator. another the reasons what outlined, is new There impacting that is of average our than is about our obviously

is competitive? those only we have the difficult and matter, rest we reputation the not better Absolutely, quality We those in -- the yes. markets to and obviously think the assets market? positioned build, we're also best assets only in that the of best think than of assets, do submarkets, care not our do markets, competition, they're premier Absolutely, which it's of but

Shankh Mitra

expensive number business. which they so Think didn't more bit probably a was rank the in about number price, and about six one one what is they're one Power, there, they of six, five rank than J.D. there're means Sunrise, the and didn't get in J.D. Mercedes said earlier that never categories, the one consumer it significant, And haven't others, the ranking they number little send you've very I but seen the tell you most I senior other where respective that house Sunrise seen ranking, ranked. we'll see housing think Power pretty the in name extraordinary rank for it'll of one be research number by was that have some it's names far every interesting if the because to to you research operators, and you would

Operator

and the disconnect. Thank dialing that conference We to you for appreciate your ask you call. Welltower in earnings participation

Welltower (WELL) 24 Feb 182017 Q4 Earnings call transcript