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Welltower (WELL) Q1 FFO Beats Estimates, Occupancy Up in April

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Welltower Inc. (WELL - Free Report) reported normalized funds from operations (FFO) per share of 80 cents in first-quarter 2021, which surpassed the Zacks Consensus Estimate of 75 cents. However, the reported figure compares unfavorably with the year-ago quarter’s $1.02.

Moreover, it generated revenues of $1.05 billion, which missed the Zacks Consensus Estimate of $1.09 billion. The top line also declined 16.4% year over year.

The company’s seniors housing operating (“SHO”) portfolio continued to be affected by the coronavirus pandemic. In fact, a decline in rental income, and revenues from resident fees and services impeded top-line growth.

Concurrent with the first-quarter earnings release, Welltower announced that it provided a £540-million ($750 million) senior secured loan, a £55-million ($76 million) equity investment and a £30-million ($42 million) delayed facility to a Safanad-led investment group to recapitalize HC-One. HC-One is the largest UK-based seniors housing operating platform.

Moreover, it announced that in the reported quarter, the company delivered two medical office buildings in Charlotte, NC, spanning more than 280,000 square feet of space. Markedly, both buildings are fully master-leased to Atrium Health for 15 years.

Quarter in Detail

Welltower's pro-rata gross investments in the first quarter totaled $368 million. This included $209 million in acquisitions, $121 million in development funding and $38 million of loan funding.

From the beginning of the year through Apr 27, the company completed $1.3 billion of pro-rata gross investments, exclusive of development funding.

Apart from this, the company completed property dispositions of $216 million.

Balance Sheet Position

It exited the quarter with $2.1 billion of cash and cash equivalents, up from $303.4 million recorded in the prior-year quarter.

As of Apr 27, the company had near-term liquidity of $4 billion and no material senior unsecured note maturities until 2024.

Dividend Update

On Apr 28, Welltower announced a cash dividend of 61 cents per share for the first quarter. The dividend will be paid out on May 20 to stockholders of record as of May 11. This marks the company’s 200th consecutive quarterly cash dividend payout.

COVID-19 Update

The company’s SHO portfolio witnessed a spot occupancy sequential decline of 230 basis points (bps) to 73.6% in March from 75.9% in December.

Nonetheless, the rapid distribution of COVID-19 vaccinations at assisted living and memory care facilities in the United States and the U.K. has reduced total resident case counts and 99% of Welltower’s communities are now accepting new residents. This has resulted in higher move-in activity and occupancy growth in recent weeks. In fact, from Apr 1 till Apr 23, SHO portfolio occupancy improved nearly 20 bps.

For second-quarter 2021, occupancy is expected to sequentially increase 130 bps.

Further, Welltower collected 96% of first-quarter rents from its triple-net lease operators. In its outpatient medical segment, the company collected 99% of first-quarter rents.

Guidance

The company expects second-quarter 2021 normalized FFO per share of 72-77 cents. The Zacks Consensus Estimate for the same is pegged at 73 cents.

Currently, the company carries a Zacks Rank #4 (Sell).

Welltower Inc. Price, Consensus and EPS Surprise

 

Welltower Inc. Price, Consensus and EPS Surprise

Welltower Inc. price-consensus-eps-surprise-chart | Welltower Inc. Quote

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

PS Business Parks, Inc. (PSB - Free Report) reported first-quarter 2021 core FFO per share of $1.67, in line with the Zacks Consensus Estimate. However, the reported figure decreased 2.9% year over year.

Boston Properties Inc.’s (BXP - Free Report) first-quarter 2021 FFO per share of $1.56 beat the Zacks Consensus Estimate of $1.55. The quarterly figure also exceeded the mid-point of the company’s guidance by a cent, highlighting better-than-projected portfolio performance and higher fee income.

Highwoods Properties, Inc.’s (HIW - Free Report) first-quarter 2021 FFO per share of 91 cents surpassed the Zacks Consensus Estimate of 87 cents. However, FFO per share declined 2.2% from 91 cents recorded in the year-ago period.

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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