Welltower Inc (NYSE:WELL) Q3 2017 Earnings Conference Call - Final Transcript

Nov 07, 2017 • 10:00 am ET


Welltower Inc (NYSE:WELL) Q3 2017 Earnings Conference Call - Final Transcript


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Thomas J. Derosa

The unique hands-on operations and data and analytics-focused approach we employ in the senior housing space is validated by our continued outperformance, and we continue to attract top-quality operators to the Welltower family.

Together, Welltower and our premier operating partners deliver premier results. I'm proud to announce that Sagora Senior Living, a resident-first centered operator based in Fort Worth, joins our bench of RIDEA operators. Donny Edwards, Bryan McCaleb and Robert Bullock have built an outstanding business with some of the highest quality next-generation assets I've seen in this industry.

For Sagora, we used the security of a triple net lease to incubate this exceptional team and their business plan. Now as Sagora has achieved critical mass, we employ the RIDEA structure to share the future upside in the value of Sagora and the real estate. This new joint venture better aligns Welltower and Sagora to grow and enhance investment returns.

We also welcomed Encore, a UK-based operator of assisted living and independent living, this quarter. Many of you know, Welltower dominates the high-end private pay senior housing business in the UK, and Encore further solidifies our position there.

Welltower is quite bullish about the future of health care real estate, so in the current environment, we are taking every opportunity to enhance and derisk our business platform, so that we can take full advantage of the significant strategic opportunities to deploy capital we see in the future. We have continued to strengthen our balance sheet, reducing leverage to 5.19 times net debt to adjusted EBITDA this quarter. We continue to sell assets in non-core markets and assets where capex investment does not offer an appropriate risk-adjusted return.

Further, we have continued to look for ways to limit our exposure to assets subject to government reimbursement. And while we work with our operating partners to better manage expense growth, we also continue to tighten our own belt.

This quarter, you saw us donate our headquarters building in Toledo to the University of Toledo, which will allow us to maintain our corporate headquarters on this bucolic campus, while lowering our annual operating expenses by several millions of dollars per year going forward.

Along with other efforts to improve the efficiency and effectiveness of our business model, we are tracking overall G&A to decline from $155 million to below $130 million for the year. Keep in mind, we are undertaking these initiatives from a position of strength, all with an eye toward driving growth and shareholder value in the future.

I'll now hand the mic over to my colleague and friend, Mercedes Kerr.

Mercedes Kerr

Well, thank you, Tom. I would like to start today by describing the organization's resolve, which we witnessed from our operating partners and Welltower's own property management team last quarter.

Hurricanes, floods and forest fires put many people at risk, and it put about 100 Welltower outpatient medical properties and senior housing communities in the path of these natural disasters. We saw first-hand what great team preparedness and good