Welltower Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Welltower, Inc. earnings conference call. At this time, all participants are in the listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, to Mr. Matt McQueen, General Counsel. Thank you. Please go ahead, sir.

Thank you, and good morning. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Wealthower believes any forward-looking statements are based on reasonable assumptions, And with that, I'll hand the call over to Sean for his opening remarks. Sean.

Thank you, Matt, and good morning, everyone. First and foremost, I hope that all of you and your families are safe and healthy during these difficult times. Before I get into the accomplishment for the quarter and discuss our capital allocation strategy, let me make some comments on leadership changes and strategy going forward for WorldTower. Let me start with our outgoing CEO, my close friend and mentor, Tom DeRosa. Tom's impact on our industry, our company, and me can never be overstated. He was a visionary who saw the need of integrating senior housing into healthcare continuum years before COVID, and now we all know the importance of that today and going forward. He took a successful entrepreneurial company and made it a process-driven institutional company that attracted an incredible caliber of talent. And last but not the least, his contribution on me personally and my career can never be overemphasized. He has been a terrific boss, a great mentor, and a close friend. He continues to help me even today and guide me as necessary. We wish Tom the very best in his retirement. I'm also pleased to announce that Phil Hawkins, one of the most well-respected ex-CEOs of the REIT space, has joined our board. We're looking forward to Phil's guidance and mentorship for many years to come. And finally, I'm thrilled to be working with our new independent chairman of the board, Ken Bacon, who has a strong track record of leadership and experience, both in real estate and finance. Ken will lead our board and partner with me and our leadership team as we execute our company strategy. As far as our team is concerned, the company has never been in a better place. There are about 20 women and men who are leading this company forward every day. I cannot be more proud of this team. In the coming weeks and months, you will see a series of promotions and new roles that will consolidate the leadership of this company. Not a change per se, just a recognition of the exceptional work that the team is doing. Our team has never been busier and more excited to create once-in-a-lifetime value for our owners. Many of you have asked me if our strategy will change going forward. The answer to that question is an emphatic no. Wellfare will continue to strive to be the premier wellness infrastructure company that allocates capital in the path of growth of healthcare and wellness trends. You are not going to get any grand strategic pronouncement from me We'll continue to focus on creating value for our partners and our employees if they create significant value for our owners. And the partners and employees will be able to create long-term sustainable value only if their end customers are happy. It is that simple. We do not need to complicate a simple idea. We need to continue to execute and deliver superior cash flow growth on a partial basis. To paraphrase one of my favorite CEOs of all time, Tom Murphy, the goal is not to have the longest wait, but to arrive at the station first using the least amount of will. We will continue to be vigilant as ever that institutional imperatives do not creep into our culture, and we remain focused on efficiency of the platform, decision-making, and employee satisfaction. Given it is my first call as CEO, I'll lay out a simple capital allocation framework for you. A company effectively has four choices of raising capital. Capping internal cash flow, issuing debt, issuing equity, and disposition of its existing assets. It also has five essential choices of deploying that capital. Investing in existing assets, acquisitions, paying down debt, paying dividends, and buying that stock. You can loosely call the first set of choices is selling, but right description of that would be sourcing or raising capital. You can loosely call the second set of choices is buying, but the current description would be deployment of capital. Following the same line of thinking, loosely speaking, consistent buying low and selling high creates value for our shareholders. In a more wholesome and thoughtful description, Optimizing these choices from this menu of sources and uses in a tax-efficient manner creates value for a continuing shareholder on a partial basis. The goal is to maximize cash flow and value per share, not to become the biggest or the most revolutionary. We at World Tower do not spend a second strategizing on how to win the popularity contest on Wall Street. In fact, as stated in the past, We focus on buying assets when they're out of favor, that is, unpopular, at the right price, in the right structure. Ultimately, this capital deployment strategy allows for outside return with a large margin of safety. Price, not exposure, is the ultimate mitigant of risk. We are constantly striving to create value and trust you as our shareholders will reward the companies that create true intrinsic value over long term. If you allow me to continue this theme of sourcing and deployment of capital, let's look at what we have achieved in Q3 and post-quarter close. We are delighted to inform you that we have executed on two large senior housing transactions at a valuation significant in excess of $400,000 per unit, in the mid-3% cap rate on current NOI and around 5% cap rate on pre-COVID NOI. These transactions with our Invest4Join venture on MOVs puts us in an enviable position of balance sheet strength. We currently have $5.2 billion of liquidity and $2.2 billion of cash, which is expected to rise farther as the quarter progresses. We at World Tower do not see balance sheets as a matter of vanity, like vintage cars, but the most important counter cyclical tool to create values at the cycle load and avoid the need of raising diluted capital at exactly the wrong time in the cycle. That gets us to our menu of capital deployment, too particular of interest, investing in hard assets and doubling down on the assets that we already own to bind back our own stock. In matter of any acquisition, at the first start, patience is a virtue with occasional boldness. And we think that moment of occasional boldness is finally here. We have, in excess of a billion dollars of acquisition in our pipeline, comprised of 6,500 plus units at an average price of $165,000 units at a material discount to replacement costs. 17 deals in the pipeline represent a wide range of transactions, from a $10 million redevelopment asset to $188 million core portfolio of brand new assets. We have identified many of these assets working with our existing partners through our data analytics platform or who are buying up other capital partners of our existing operators. The pipeline's initial yield is a low force. but we believe it will stabilize in the high single digits to low double-digit yields. A very short-term but incorrect way to look at this will be we're deploying capital in the low 4% range and sourcing that capital in the mid 3% range. We believe the correct way to look at this will be that we're sourcing that capital in the mid single-digit unlevered IRR and deploying at a low double-digit unlevered IRR. as evidenced by sourcing the capital in the $400,000-plus per unit level and deploying that capital at $165,000 per unit level. Despite our weak cost of public capital, this spread has never been wider, and hence the opportunity to create generational value for our owners on a part-share basis. And that completes the loop for you, and explains why our team is so excited and so busy. We believe we're making real impact and anticipate creating exceptional value. We not only see this environment as an opportunity for smart capital allocation in the financial realm, but also in the human capital area. We're seeing availability of superior talent in the marketplace today, and we're pouncing on this opportunity as we are on the investment side. With that, I will hand the mic over to Tim, who will walk you through the operational and financial results for the quarter. I will come back to make some additional comments on the operating environment after him. Tim?