Tim McHugh
Executive Vice President, Chief Financial Officer at Welltower
Thank you, Shankh. My comments today will focus on our second quarter 2021 results, the performance of our investment segments in the quarter, our capital activity and finally, a balance sheet and liquidity update in addition to our outlook for the third quarter. At time of our last earnings call on April 29, we were six weeks into an occupancy recovery in our senior housing operating portfolio, which has seen total portfolio occupancy increase 67 basis points of March 12 lows or an average increase of 11 basis points per week.
In the 13 weeks that have followed, we have seen the occupancy recovery accelerate, adding an additional 204 basis points through July 23, an average pace of 16 basis points per week, bringing the portfolio-wide occupancy recovery since March 12 to 271 basis points. The recovery continues to be uneven across the portfolio, with the U.S. leading at 401 basis points since March 12, followed by the U.K. at 275 basis points. And lastly, Canada, which has seen a net decrease of 88 basis points over this time period. We believe these geographic discrepancies will normalize over time as the reopening of both Canada and the U.K. catch up to the U.S.
Looking forward, despite the uncertainty around the path of COVID in the near term, particularly rather than new variants, we continue to both gain evidence that the vaccines are exceptionally effective at protecting our residents and staff from this evolving virus, and gain confidence that the permanent demand impairment thesis that surrounded the senior housing asset class to much of the last 1.5 years is becoming significantly less probable. Now turning to the quarter.
Welltower reported net income attributable to common stockholders of $0.06 per diluted share and normalized FFO of $0.79 per diluted share versus initial guidance of $0.72 to $0.70 -- $0.77 per share and our June guidance update of $0.75 to $0.79 per share, which included a $5 million benefit from HHS Provider Relief Funds. We ultimately recognize that $5 million benefit from HHS funds and also recognized an additional $4.9 million of reimbursement payments for similar programs in Canada and the U.K. After adjusting for the impact of these funds, our normalized FFO per diluted share in the quarter is $0.77. Now turning to our individual portfolio components.
First, our triple-net lease portfolios. As a reminder, our triple-net lease portfolio coverage and occupancy stats are reported a quarter in arrears. So these statistics reflect the trailing 12 months ending 3/31/2021. Importantly, our collection rate remained high in the second quarter, having collected 95% of triple-net contractual rent due in the period. In our senior housing triple-net portfolio, same-store NOI declined 2.7% year-over-year. As leases that were moved to cash recognition in prior quarters continue to comp against prior year full contractual rent received and trailing 12-month EBITDAR coverage was 0.89 times.
As I've stated in the past, the timing and slope of the recovery in our senior housing portfolio will dictate whether or not disruption from COVID to underlying fundamentals generates a short-term liquidity issue or solvency problem for our triple-net operators. Over the first four months of recovery, we observed occupancy and EBITDA trends within this portfolio that are in line with our U.S. and U.K. operating portfolios. As these recovery trends strengthened, the solvency risk for operators has decreased in tandem. And our continued strong cash rent collection in the quarter is the best evidence we have of this. The value of the collateral that sits behind many of our lease agreements, continue to allow us to work with our operators to enhance near-term liquidity without impairing the value of Welltower's real estate position.
Next, our long-term post-acute portfolio generated negative 1.1% year-over-year same-store growth and trailing 12 months EBITDAR coverage was 1.29 times. In the quarter, we transitioned 40 of the 51 planned Genesis transition assets to new operators, including nine PowerBack assets transitioned to ProMedica with the 11 -- the remaining 11 scheduled to transition in the third quarter. 35 of these assets are expected to be disposed of in the third quarter. With the expected third quarter Genesis dispositions and the $75 million sales in LTAC portfolio in the quarter, Welltower's percentage of in-place NOI generated from long-term post-acute segment will be reduced to 5.6% and Genesis Healthcare will represent less than 90 basis points of total company in-place NOI.
Lastly, health systems, which is comprised of our ProMedica Senior Care joint venture with the ProMedica Health System had since NOI growth of positive 2.7% year-over-year and trailing 12-month EBITDAR coverage was 1.25 times. Turning to medical office. Our outpatient medical segment delivered 2.2% year-over-year same-store growth due to improved platform profitability and increased property level expense recoveries. Occupancy in our same-store portfolio ended the quarter at 94.8%, a 20 basis point sequential increase versus first quarter. The strong growth was driven by executed new leasing totaling 178,000 square feet, our highest quarter since the fourth quarter of 2019 and supported by 94% retention in the quarter as consistent renewal activity was paired with reduced vacancies.
Also during the quarter, we delivered one purpose-built medical office building with the Maimonides Medical Center in Brooklyn along with two recently converted state-of-the-art MOBs in Charlotte with Atrium Health. These buildings totaled 449,000 square feet of fully occupied space with highly credited health systems. Now turning to our senior housing operating portfolio. Before getting into this quarter's results, I want to provide some color on the recently announced transfer of the Sunrise U.K. operating platform to two local operators, Signature Senior Lifestyle and Care UK. We're excited to take this opportunity to deepen our local operator relationships.
The Sunrise U.K. portfolio consists of 46 predominantly private pay properties located primarily in Southern England. The portfolio is being split largely by geographic focus. The properties located in Greater London moving to Signature, a premium operator. With it Welltower has had a relationship since 2012. And the rest of the property is moving to Care UK a new member of the Welltower operating family and the fourth largest independent care home operator in the U.K. with a focus on the private pay market. Turning to government grants. In the quarter, we received approximately $5 million from the Department of Health and Human Services, CARES Act Provider Relief Fund.
As we've done in past quarters, these funds are recognized on a cash basis, and as such, will flow through financials in the quarter they are received. We are normalizing HHS funds out of our same-store metrics, however, along with any other government funds received that are not matched to expenses incurred in the period they are received. In the second quarter, approximately $9.3 million of reimbursements normalized out of our same-store senior housing operating results. Now turning to results for the quarter. Year-over-year same-store NOI decreased 17.6% as compared to second quarter 2020 driven by a 670 basis point decrease in year-over-year average occupancy.
The COVID-related decline in occupancy that began in March of 2020 came to a halt in mid-March of this year and portfolio-wide occupancy increased by approximately 230 basis points from March 12 to the end of June, with 190 basis points taking place in the second quarter. The start of the occupancy recovery and the accompanying operating margin expansion has created an inflection point for bottom line results. The sequential same-store NOI increased 11.2% from the first to the second quarter. Sequential same-store revenue was up 1.8% in Q-two, driven primarily by a 40 basis point increase in average occupancy and sequential monthly REVPOR increase of 1.3%.
With respect to expenses, total same-store expenses decreased 40 basis points sequentially and declined 2.9% year-over-year. I'll focus on the sequential change, and this is more relevant to trend in the current operating environment. The 40 basis point sequential decline in operating costs was driven mainly by lower COVID costs as case counts remain near 0 for all the second quarter after spiking meaningfully in the first quarter. Costs were also driven lower sequentially by seasonal utility costs as the spring and early summer have lower utility costs relative to Q-one.
The net result of the resilient rental rates and rebounding occupancy combined with a decrease in total expenses was a sequential margin improvement in our same-store pool of 180 basis points to 21.2%. Looking forward to the third quarter and starting with July quarter-to-date data we have already observed, we've experienced a 40 basis point increase in occupancy through July 23, with the U.S. and U.K., up 60 and 30 basis points, respectively, while Canada is flat. Despite the strength of the recovery so far, particularly in the U.S., we remain cautious on projecting an acceleration in trends from the second quarter to the third quarter. Given the continued lack of historical precedence with which to forecast and also uncertainty around COVID variants.
Despite seeing promising resilience in our U.K. portfolio over the last month as a surge in the Delta variant infections amongst the general population has not been echoed amongst our resident population, there remains uncertainty, particularly around how national and local authorities may react in the coming months if the surge continues or accelerates in our other geographies. On a spot basis, we are currently projecting an approximately 190 basis point increase in occupancy from June 30 through September 30. We expect monthly REVPOR to be up 1% to 1.5% sequentially and up 2.5% year-over-year. Lastly, we expect total expenses to be up 1.5% to 2% sequentially driven by a combination of occupancy-driven labor utilization and seasonal utility costs, offset slightly by continued declines in COVID costs.
The net result of the sequential changes will be expected flow-through margins in the mid-60s inclusive of the seasonal utility increase and mid-70s normalizing for the seasonality of utility costs. Turning to capital market activity. In June, we expanded our existing unsecured credit facility to $4.7 billion after closing on a $4 billion unsecured revolving line of credit, which replaced our previous $3 billion revolver. The revolving facility bears interest at LIBOR plus 77.5 basis points, representing a five basis point improvement from pricing under our previous revolver. The facility was reported by 31 incumbent in new banks and highlights the incredible support of our banking partners. On June 28, we completed the issuance of $500 million of senior unsecured notes due January 2029, bearing interest at 2.05%.
Proceeds from the offering were used to pay down borrowings on our revolving line of credit and to pay down the remaining balance of our COVID term loan put in place in April of 2020. Additionally, in the quarter, we extinguished $674 million of senior unsecured notes due 2023 using proceeds from our March 25, 2021, bond issuance, improving our weighted average maturity across senior unsecured notes to 8.2 years. We continue to enhance our balance sheet strength and position the company to efficiently capitalize our robust and highly visible pipeline of capital deployment opportunities by utilizing our ATM program to fund those near-term transactions.
Having sold 20.1 million shares since the beginning of the second quarter via a forward sale agreement at an initial weighted average price of approximately $80 per share for expected gross proceeds of $1.6 billion. Since the beginning of the year, we have sold a total of 22.3 million shares of common stock via forward sale agreements, which are expected to generate a total of $1.8 billion in proceeds, of which five million shares were settled during the second quarter, resulting in $372 million of gross proceeds. As capital deployment opportunities continue to materialize, we will look to fund those opportunities while maintaining ample liquidity and balance sheet flexibility.
We ended the second quarter at 6.8 times net debt to adjusted EBITDA, 6.88 times when adjusting out $5 million of HHS funds received in the quarter. This HHS adjusted second quarter '21 leverage number represents a 0.25 times decline from the prior quarter's 7.13 debt-to-EBIT adjusted for HHS. Last quarter, I highlighted the impact that the recovery in senior housing fundamentals would have on underlying EBITDA and cash flow-based leverage metrics. We are encouraged to see this trend take shape as a 15% sequential improvement in EBITDA contribution from senior housing operating drove the entirety of the HHS adjusted improvement in debt to EBITDA.
With total portfolio occupancy sitting at 74.6% at quarter end, 12.6% below pre-COVID levels and approximately 16.6% below peak levels achieved prior to last decade supply wave, we believe the stage is set for powerful EBITDA recovery as occupancy upside is coupled with margin expansion of a very depressed base. Lastly, moving to our third quarter outlook. Last night, we provided an outlook for the third quarter of net income attributable to common stockholders of per diluted share of $0.44 to $0.49 and normalized FFO per diluted share of $0.78 to $0.83. This guidance does not take into consideration any further HHS funds or similar government programs in the U.K. and Canada.
So when comparing it sequentially to our second quarter normalized FFO per share, it'd be better to use the as-adjusted $0.77 per share number I mentioned earlier in my comments, which excludes the out-of-period benefits of those programs as well. On this comparison, the midpoint of our third quarter guidance [$0.805] per share represents a $0.035 sequential increase from second quarter. This $0.035 increase is comprised of a $0.03 per share increase from our senior housing operating portfolio driven by an increase in sequential average occupancy and expected reduction in COVID costs.
A $0.02 per share increase from strong net investment activity, highlighted by the expected closing of the Holiday senior living portfolio during the third quarter, results in dilution from dispositions related to our previously communicated reduction in exposure to Genesis. And a [half penny] increased NOI from recently converted developments, mainly two fully leased MOBs in Charlotte, North Carolina and Brooklyn. These increases are offset by a $0.01 per share increase in sequential G&A driven mainly by new hires and a $0.01 dilution from shares settled in the second quarter.
And with that, I will turn the call back over to Shankh.