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Welltower Inc.’s (WELL - Free Report) fourth-quarter 2021 normalized funds from operations (FFO) per share of 83 cents exceeded the Zacks Consensus Estimate of 81 cents. However, the reported figure marginally fell short of the year-ago quarter’s 84 cents.
The company generated revenues of $1.31 billion, outpacing the Zacks Consensus Estimate of $1.26 billion. Further, the top line increased 16.7% year over year.
Welltower seniors housing operating (“SHO”) portfolio is seeing recovery in occupancy. However, Welltower noted that in the fourth quarter, expenses for the SHO portfolio were considerably higher than expectations due to higher pandemic-related expenses, including personal protective equipment and testing costs, and raised labor expenses.
Concurrent with the fourth-quarter earnings release, Welltower and Reuben Brothers announced a long-term strategic partnership formation in tandem with the Reuben Brothers' acquisition of Avery Healthcare, which is one of Welltower's largest operating partners and the company's largest partner in the United Kingdom. This 50/50 joint venture partnership is expected to generate substantial future growth opportunities through the development of next-generation seniors housing properties. Also, Avery is poised to grow and capitalize on the high demand of the aging population in the United Kingdom.
Quarter in Detail
During the fourth quarter, property operating expenses were $785.2 million, reflecting an increase of 26.5% year over year.
SHO portfolio spot occupancy increased roughly 70 basis points (bps) during the quarter to 77.7%. Average pro rata occupancy growth topped the guidance of 140 bps.
SHO’s same store revenues were up 4.8% year over year. Moreover, during the fourth quarter, within the SHO portfolio, WELL achieved same store REVPOR (average revenues generated per occupied room per month) growth of 3.4% compared with 2.2% in the third quarter.
Welltower's pro-rata gross investments in the fourth quarter totaled $1.5 billion. This included $1.4 billion in acquisitions and loan funding and $142 million in development funding. It converted five development projects for a total pro-rata investment amount of $189 million. Welltower also accomplished pro rata property dispositions and loan payoffs of $200 million during the quarter.
Balance Sheet Position
Welltower exited 2021 with $269.3 million of cash and cash equivalents, down from $1.55 billion recorded at the 2020 end.
Along with available borrowings under its line of credit, as of Dec 31, 2021, WELL had $4.0 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
Dividend Update
On Feb 15, Welltower announced a cash dividend of 61 cents per share for the fourth quarter. The dividend will be paid out on Mar 8 to stockholders of record as of Mar 1, 2022. This marks the company’s 203rd consecutive quarterly cash dividend payout.
Guidance
Welltower projects first-quarter 2022 normalized FFO per share in the range of 79-84 cents. The Zacks Consensus Estimate for the same is pegged at 84 cents.
WELL’s first-quarter guidance assumes average blended same store net operating income growth of 7.0%.
Simon Property Group, Inc.’s (SPG - Free Report) fourth-quarter 2021 FFO per share of $3.09 exceeded the Zacks Consensus Estimate of $2.88. Simon Property’s performance was backed by occupancy and NOI growth. However, SPG generated revenues of $1.33 billion during the quarter, lagging the Zacks Consensus Estimate of $1.35 billion.
Prologis, Inc. (PLD - Free Report) reported fourth-quarter 2021 core FFO per share of $1.12, beating the Zacks Consensus Estimate of $1.10. Prologis also compared favorably with the year-ago quarter’s figure of 95 cents. PLD’s results reflected low vacancies and solid increases in rental revenues. Further, this industrial REIT issued its 2022 outlook.
Boston Properties Inc.’s (BXP - Free Report) fourth-quarter 2021 FFO per share of $1.55 beat the Zacks Consensus Estimate of $1.52. The figure also compared favorably with the year-ago quarter’s tally of $1.37. The quarterly figure also exceeded the midpoint of Boston Properties’ fourth-quarter guidance by 5 cents, reflecting an improved portfolio performance. BXP also experienced strong leasing activity in the fourth quarter.
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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Welltower (WELL) Q4 FFO Beats Estimates Despite Higher Expenses
Welltower Inc.’s (WELL - Free Report) fourth-quarter 2021 normalized funds from operations (FFO) per share of 83 cents exceeded the Zacks Consensus Estimate of 81 cents. However, the reported figure marginally fell short of the year-ago quarter’s 84 cents.
The company generated revenues of $1.31 billion, outpacing the Zacks Consensus Estimate of $1.26 billion. Further, the top line increased 16.7% year over year.
Welltower seniors housing operating (“SHO”) portfolio is seeing recovery in occupancy. However, Welltower noted that in the fourth quarter, expenses for the SHO portfolio were considerably higher than expectations due to higher pandemic-related expenses, including personal protective equipment and testing costs, and raised labor expenses.
Concurrent with the fourth-quarter earnings release, Welltower and Reuben Brothers announced a long-term strategic partnership formation in tandem with the Reuben Brothers' acquisition of Avery Healthcare, which is one of Welltower's largest operating partners and the company's largest partner in the United Kingdom. This 50/50 joint venture partnership is expected to generate substantial future growth opportunities through the development of next-generation seniors housing properties. Also, Avery is poised to grow and capitalize on the high demand of the aging population in the United Kingdom.
Quarter in Detail
During the fourth quarter, property operating expenses were $785.2 million, reflecting an increase of 26.5% year over year.
SHO portfolio spot occupancy increased roughly 70 basis points (bps) during the quarter to 77.7%. Average pro rata occupancy growth topped the guidance of 140 bps.
SHO’s same store revenues were up 4.8% year over year. Moreover, during the fourth quarter, within the SHO portfolio, WELL achieved same store REVPOR (average revenues generated per occupied room per month) growth of 3.4% compared with 2.2% in the third quarter.
Welltower's pro-rata gross investments in the fourth quarter totaled $1.5 billion. This included $1.4 billion in acquisitions and loan funding and $142 million in development funding. It converted five development projects for a total pro-rata investment amount of $189 million. Welltower also accomplished pro rata property dispositions and loan payoffs of $200 million during the quarter.
Balance Sheet Position
Welltower exited 2021 with $269.3 million of cash and cash equivalents, down from $1.55 billion recorded at the 2020 end.
Along with available borrowings under its line of credit, as of Dec 31, 2021, WELL had $4.0 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
Dividend Update
On Feb 15, Welltower announced a cash dividend of 61 cents per share for the fourth quarter. The dividend will be paid out on Mar 8 to stockholders of record as of Mar 1, 2022. This marks the company’s 203rd consecutive quarterly cash dividend payout.
Guidance
Welltower projects first-quarter 2022 normalized FFO per share in the range of 79-84 cents. The Zacks Consensus Estimate for the same is pegged at 84 cents.
WELL’s first-quarter guidance assumes average blended same store net operating income growth of 7.0%.
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Welltower Inc. Price, Consensus and EPS Surprise
Welltower Inc. price-consensus-eps-surprise-chart | Welltower Inc. Quote
Performance of Notable REITs
Simon Property Group, Inc.’s (SPG - Free Report) fourth-quarter 2021 FFO per share of $3.09 exceeded the Zacks Consensus Estimate of $2.88. Simon Property’s performance was backed by occupancy and NOI growth. However, SPG generated revenues of $1.33 billion during the quarter, lagging the Zacks Consensus Estimate of $1.35 billion.
Prologis, Inc. (PLD - Free Report) reported fourth-quarter 2021 core FFO per share of $1.12, beating the Zacks Consensus Estimate of $1.10. Prologis also compared favorably with the year-ago quarter’s figure of 95 cents. PLD’s results reflected low vacancies and solid increases in rental revenues. Further, this industrial REIT issued its 2022 outlook.
Boston Properties Inc.’s (BXP - Free Report) fourth-quarter 2021 FFO per share of $1.55 beat the Zacks Consensus Estimate of $1.52. The figure also compared favorably with the year-ago quarter’s tally of $1.37. The quarterly figure also exceeded the midpoint of Boston Properties’ fourth-quarter guidance by 5 cents, reflecting an improved portfolio performance. BXP also experienced strong leasing activity in the fourth quarter.
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.