Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On July 11, 2024, Welltower OP LLC (the “Issuer”), the operating company through which Welltower Inc. (the “Company”) conducts all of its business, issued $1,035,000,000 principal amount of its 3.125% Exchangeable Senior Notes due 2029 (the “Notes”), which amount includes $135,000,000 principal amount of the Notes pursuant to the exercise in full by the initial purchasers of their option to acquire additional Notes. The Notes were issued pursuant to, and are governed by, an Indenture, dated as of July 11, 2024 (the “Indenture”), among the Issuer, the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Notes were sold in the United States only to accredited investors pursuant to an exemption from the Securities Act of 1933, as amended (the “Securities Act”), and subsequently resold to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
The Notes are the Issuer’s senior unsecured obligations and rank senior in right of payment to any future indebtedness of the Issuer that is expressly subordinated in right of payment to the Notes, equal in right of payment to the Issuer’s existing and future unsecured indebtedness that is not so subordinated, effectively junior to any of the Issuer’s future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally junior to all existing and future indebtedness (including trade payables) and preferred equity of the Issuer’s subsidiaries. The Notes are fully and unconditionally guaranteed by the Company on a senior unsecured basis.
The Notes will pay interest semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025, at a rate of 3.125% per year. The Notes will mature on July 15, 2029 (the “Maturity Date”), unless earlier exchanged, purchased or redeemed.
Prior to the close of business on the business day immediately preceding July 20, 2027, the Notes are exchangeable at the option of holders only upon certain circumstances and during certain periods. On or after July 20, 2027, the Notes will be exchangeable at the option of the holders at any time prior to the close of business on the second scheduled trading day preceding the Maturity Date. The Issuer will settle exchanges of Notes by delivering cash up to the principal amount of the Notes exchanged and, in respect of the remainder of the exchange value, if any, in excess thereof, cash or shares, par value $1.00 per share, of the Company (the “Common Stock”), or a combination thereof, at the election of the Issuer. The exchange rate initially equals 7.8177 shares of Common Stock per $1,000 principal amount of the Notes (equivalent to an exchange price of approximately $127.91 per share of Common Stock and an exchange premium of approximately 22.5% based on the closing price of $104.42 per share of Common Stock on July 8, 2024). The exchange rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest.
If a fundamental change (as defined in the Indenture) occurs, subject to certain conditions, holders of the Notes may require the Issuer to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change purchase date (as defined in the Indenture). In addition, if certain fundamental changes occur or if the Issuer provides notice of redemption, the Issuer may be required, in certain circumstances, to increase the exchange rate for any Notes exchanged in connection with such fundamental change or notice of redemption.
The Issuer may redeem the Notes, at its option, in whole or in part, on any business day on or after July 20, 2027, if the last reported sale price of the Common Stock has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Issuer provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
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