Yahoo Finance Welltower (WELL) Boosts Liquidity, Expands $5.2B Credit Facility
As part of its effort to boost liquidity position and flexibility, Welltower, Inc. WELL recently announced an upsizing and extension of its $5.2 billion unsecured credit facility.
This involved an amended $4.0 billion unsecured revolving credit facility (RCF), $1.0 billion term loan and CAD 250 million term loan. This move offers the extension of its debt maturity profile and improved pricing across its term facility.
Welltower’s revolving facility comprises an existing $3.0 billion tranche known as RCF A and a $1.0 billion tranche called RCF B. The maturity for RCF A is on Jun 4, 2025, while the same for RCF B has been extended from Jun 4, 2023, to Jun 4, 2026. The maturity of the tranches can be prolonged by two successive terms of six months at the company's discretion.
Further, based on WELL’s current credit ratings, the loans under its revolving facility carry an interest rate of 77.5 basis points (bps) over the adjusted secured overnight financing rate (SOFR). In addition, upon meeting certain reductions in greenhouse gas emissions, the revolving facility allows a reduction in the interest rate. The facility also carries a facility fee of 15 bps per annum.
Simultaneously, Welltower replaced its existing $500 million term loan and a CAD 250 million term loan with $1.0 billion term loan and CAD 250 million term loan, respectively. It extended the maturity of this facility by three years from its present maturity date of Jul 19, 2023, with an option to extend the maturity for two successive terms of six months. The loans under this term facility bear an interest rate of 85 bps over the adjusted SOFR rate, reflecting a five-bps improvement from the earlier facility pricing.
Welltower also reserves the right to expand the revolving facility and the USD term loan by up to an additional $1.25 billion in totality. The CAD term loan can be increased by up to an additional CAD 250 million. This amendment increases Welltower’s total available credit to more than $6.5 billion in aggregate, assuming that all incremental facilities are funded. It is also allowed to borrow up to $1.0 billion of the revolving facility in certain foreign currencies.
Amid rising healthcare spending and an aging population, Welltower is well-poised to benefit from its diversified portfolio in the healthcare real estate industry. It maintains a decent balance-sheet position. As of Mar 31, 2022, the total near-term available liquidity was $4.1 billion.
Moreover, the company is focusing on strategic portfolio optimization and synergistic collaborations with health systems to invest in the next-generation assets of health and wellness care delivery. It has resorted to capital-recycling activities to finance near-term investment and development opportunities. From the beginning of the year through Jun 6, 2022, Welltower has announced or completed $2.8 billion of capital deployment. Such moves to boost liquidity will enable it to meet its near-term obligations and fund its development pipeline.
Shares of this Zacks Rank#3 (Hold) company have declined 3.3% over the past six months compared with the industry’s fall of 18.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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