Welltower to Acquire Holiday Retirement's 86-Property Seniors Housing Portfolio for $1.58 billion in conjunction with Atria's Acquisition of Holiday

TOLEDO, Ohio, June 21, 2021 /PRNewswire/ --

• Transaction is expected to be immediately accretive to Welltower's next twelve months normalized funds from operations by approximately $0.10 per diluted share; Welltower expects an unlevered IRR in the low double-digit range
• Portfolio is valued at $152,000 per unit, representing a discount to estimated replacement cost in excess of 30%
• Initial cash cap rate of 6.2% with current near-trough occupancy of approximately 76%
• Significant future cash flow growth to be realized through post-COVID recovery in seniors housing fundamentals
• Meaningful value creation opportunities through portfolio reinvestment
• Unique opportunity to achieve value-add total return with core plus current return
• Atria Senior Living to acquire Holiday Retirement; Atria to retain Holiday senior management and staff, de-risking overall transaction
• Year-to-date, Welltower has efficiently issued approximately $1.36 billion of equity through at-the-market program on a forward basis at an average share price of $77.80 and recently announced an expanded $4.7 billion unsecured credit facility

Welltower® Inc. (the "Company") today announced that it has entered into a definitive agreement to acquire a portfolio of 86 seniors housing properties, including 80 nearly identical independent living ("IL") and six combination independent living/assisted living ("IL/AL") properties, currently owned by Holiday Retirement ("Holiday"). Additionally, as announced on June 21, 2021, upon the closing date of this transaction, which is expected to be in the third quarter 2021, Atria Senior Living ("Atria") will assume operations of the properties and retain Holiday's in-place senior management and staff.

Through this landmark transaction, the 86-property portfolio will be acquired by Welltower for $1.58 billion, or $152,000 per unit, representing a discount to estimated replacement cost in excess of 30%. The transaction is expected to be approximately $0.10 per diluted share accretive to Welltower's normalized funds from operations during the first twelve months post-closing. The portfolio is expected to deliver substantial net operating income growth in future quarters and in coming years as occupancy growth accelerates from near-trough levels of 76.3% as of June 20, 2021. Portfolio occupancy has already increased over 2.7% since bottoming in March 2021. Additionally, the anticipated recovery in occupancy and Atria's operational and technological expertise is expected to maximize community level performance and to generate meaningful expansion in operating margins going forward.

Welltower and Atria have agreed to a highly incentivized and strongly aligned enhanced RIDEA 3.0 management contract based on both top and bottom-line financial metrics. The contract will also include substantial promote opportunities to Atria upon achievement of certain long-term financial metrics. The achievement of such hurdles would imply significant growth in underlying property level performance, resulting in a nominal yield in excess of 9% to Welltower and a net economic yield in excess of 8% to Welltower after capital expenditures and payment of the promote.

Atria expects to integrate Holiday's corporate staff and retain its experienced and reputed management team, thereby de-risking the overall transaction. Atria has significant experience with Holiday properties, having successfully assumed operations in recent years of two portfolios previously managed by Holiday: a 29-property portfolio across Canada in 2014 and, in April 2021, a 21-property portfolio owned by New Senior Investment Group Inc.

The portfolio is expected to benefit from Atria's operating model and technology platform, which includes its proprietary Glennis software for staffing optimization, digital marketing, and CRM. Atria's digital marketing capabilities and front of house technology suite are also expected to reduce dependency on referral sources and increase organic lead generation. Holiday's management team expects that this significant investment in its platform and technology infrastructure will significantly enhance their ability to serve residents going forward.

"The Holiday team is focused on continuing the highest level of service and care to our residents and their families," said Holiday Retirement CEO Lilly Donohue. "We are excited to partner with Atria and Welltower as this transaction is squarely in line with Holiday's long-term strategy. We believe the significant investment into Holiday's platform, technology infrastructure and importantly, our communities, will enhance our collective ability to deliver quality services to the dynamic needs of our customers and to create a bright future for our employees."

In addition to the enhanced operating plan described above, Welltower and Atria anticipate implementing comprehensive value add investment initiatives that include, but are not limited to:

• Capital expenditure plan of $1.5 to $2.0 million per community which is expected to drive higher revenue and operating margins in future years
• Larger scale refurbishments and redevelopments with ten properties that have been designated for expansion opportunities including highly popular new cottages. The capital improvements are expected to result in a meaningful improvement in property level performance while maintaining Welltower's all-in basis (approximately $165,000-$170,000 per unit), at a substantial discount to replacement cost
• Five properties have been identified as higher and better use candidates
• Atria's renowned expertise in operating assisted living communities allow for additional cash flow growth opportunities in the portfolio's six IL/AL combination communities

"We're excited to announce this ground-breaking transaction with Welltower," stated John Moore, Atria Senior Living Chairman and CEO. "It has been a pleasure to work with Shankh and the Welltower team and we look forward to thoughtfully investing in this portfolio to best position it to deliver quality and value to residents. Our shared commitment to enhancing the customer experience makes this a perfect combination. By joining forces with Lilly Donohue and the great team at Holiday Retirement, this transaction also enables Atria to continue on our path to create a thoughtful variety of choice as an unprecedented number of seniors seek new residential options in the decade ahead.  We are eager to work with the Holiday team as we together build the best pure-play management services business in senior living and create value for Welltower and the other owners of the properties we manage."

"Welltower is thrilled to expand its strong partnership with Atria through the acquisition of this unique platform of assets," said Shankh Mitra, Welltower CEO and CIO.  "John and the Atria team share our vision for the significant, multi-year growth opportunity in the seniors housing sector and we are excited to embark on this journey together. Through a highly incentivized and aligned management contract, we have created tremendous upside opportunity for stakeholders of both Welltower and Atria. This privately negotiated, operator driven transaction strategy is the key to our unique ability to navigate through complex situations and provide counterparties certainty of execution at unmatched speed due to our data analytics platform and our best in class team's ability to structure win-win transactions. We are deeply familiar with the Holiday assets having looked at them multiple times in the past and have the utmost respect and admiration for Lilly and her team. We are delighted that we could finally align the interest of all parties, with strategic and value creation opportunity for Welltower's shareholders." Mr. Mitra continued, "Additionally, we are extremely pleased to have funded this transaction through efficiently priced permanent capital to create significant near and long-term per share value for our shareholders. Our pipeline of attractive opportunities across the health and wellness continuum remains robust going forward."

The Holiday portfolio is 100% private pay at an affordable price point and maintains attractive physical characteristics, including large rooms, high ceilings and kitchenettes. Most of the acquired properties lease space to third-party home health agencies, which enables residents to age in place by purchasing a-la-carte care as needed. The average resident age is 81 years old with an average length of stay of approximately 32 months, resulting in low recurring capital expenditures and higher operating margins.

Welltower's acquisition of the real estate portfolio, which is subject to customary closing conditions, is scheduled to close during the third quarter of 2021.

Forward-Looking Statements
This press release may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause Welltower's actual results to differ materially from Welltower's expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to, those factors discussed in Welltower's reports filed from time to time with the SEC. Welltower undertakes 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.

Supplemental Measures
We believe that net income and net income attributable to common stockholders ("NICS"), as defined by U.S. generally accepted accounting principles ("U.S. GAAP"), are the most appropriate earnings measurements. However, we consider funds from operations ("FFO") and normalized FFO to be useful supplemental measures of our operating performance. These supplemental measures are disclosed on our pro rata ownership basis. Pro rata amounts are derived by reducing consolidated amounts for minority partners' noncontrolling ownership interests and adding our minority ownership share of unconsolidated amounts. We do not control unconsolidated investments. While we consider pro rata disclosures useful, they may not accurately depict the legal and economic implications of our joint venture arrangements and should be used with caution. 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 attributable to common stockholders, 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 attributable to common stockholders represents FFO attributable to common stockholders adjusted for certain items detailed in our quarterly earnings releases. We believe that normalized FFO attributable to common stockholders is a useful supplemental measure of operating performance because investors and equity analysts may use this measure 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.

No reconciliation of forecasted normalized FFO attributable to common stockholders per diluted share accretion or estimate of forecasted impact on net income attributable to common stockholders per diluted share is provided herein because we are unable to quantify certain amounts that would be required to be included in the comparable GAAP financial measures without unreasonable efforts primarily due to the anticipated timing of receipt of draft third-party real estate appraisals and valuations. We believe such reconciliation would imply a degree of precision that could be confusing or misleading to investors.

Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and ratings agencies in the valuation, comparison, rating 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.

About Welltower
Welltower® Inc. (NYSE:WELL), 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 interests in properties concentrated in major, high growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing, post-acute communities and outpatient medical properties. For more information, visit www.welltower.com.

About Atria Senior Living
Atria Senior Living is a leading operator of independent living, assisted living, supportive living and memory care communities in more than 200 locations in 28 states and seven Canadian provinces. We are the residence of choice for more than 20,000 seniors, and the workplace of choice for more than 12,000 employees. We create vibrant communities where older adults can thrive and participate, know that their contributions are valued, and enjoy access to opportunities and support that help them keep making a positive difference in our world. Glennis Solutions, a subsidiary of Atria Senior Living, is the only fully integrated cloud-based software suite specifically designed to serve the senior housing industry. For more information about Atria, visit AtriaSeniorLiving.com or follow them on Facebook or Twitter. For career opportunities and more information about working for Atria, visit AtriaCareers.com. For more information on Glennis Solutions, visit GlennisSolutions.com.

About Holiday Retirement
Holiday Retirement is in the business of helping older people live better. Pioneering the concept of independent senior living in 1971, Holiday Retirement has grown to help more than 25,000 residents in 43 states live better. Holiday Retirement is also recognized as a Great Place to Work^®. For more information about Holiday Retirement visit www.holidayseniorliving.com.

SOURCE Welltower Inc.

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