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Welltower (WELL) Q3 FFO Meets, Revenues Top, Same-Store NOI Up
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Welltower Inc.’s (WELL - Free Report) third-quarter 2022 normalized funds from operations (FFO) per share of 84 cents matched the Zacks Consensus Estimate. The reported figure climbed 5% from the year-ago quarter’s 80 cents.
Results reflect better-than-anticipated revenues. The same-store revenues of the seniors housing operating (SHO) portfolio improved year over year owing to an improvement in SHO portfolio occupancy and average revenues generated per occupied room per month (REVPOR) during the quarter. The total same-store net operating income (NOI) increased year over year.
WELL clocked in revenues of $1.47 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.46 billion. The top line increased 18.9% year over year.
On Nov 7, Welltower announced definitive agreements to effectuate the sale and transition of 147 skilled nursing facilities presently operated by ProMedica. Concurrently, WELL entered into a definitive agreement to sell the 147 skilled nursing facilities through an 85/15 joint venture (JV) between Integra Health and Welltower. As a result, relative to the total current contractual rent from the existing ProMedica Senior Care JV, Welltower's combined cash rent will increase to more than 4%.
Quarter in Detail
SHO portfolio’s same-store revenue increased 10.8% year over year to $707.8 million, backed by a 390 basis points uptick in average same-store occupancy from the year-ago quarter. Also, a 5.3% year-over-year rise in same-store REVPOR, which reached an all-time high, was a contributing factor.
In the third quarter, property operating expenses flared up 25.1% to $912.2 million year over year.
Welltower’s share of property-level expenses associated with the pandemic relating to its SHO portfolio was $7 million in the quarter. When considering net of reimbursements, including Provider Relief Funds and similar programs in the United Kingdom and Canada, the same aggregated to a benefit of $0.3 million in the third quarter of 2022 compared with a benefit of $0.4 million in the year-ago period. This had a favorable impact on third-quarter 2022 normalized FFO per share of 1 cent.
WELL’s total portfolio same-store NOI (SSNOI) grew 7.2% year over year, supported by SSNOI growth in its SHO portfolio of 17.6%.
Welltower's pro rata gross investments in the third quarter totaled $1.1 billion. This included $850 million in acquisitions and loan funding and $203 million in development funding. It opened four development projects for a total pro rata investment amount of $79 million. Welltower also completed pro rata property dispositions and loan payoffs of $8 million during the quarter.
Portfolio Activity
In the quarter, WELL acquired three newly constructed rental communities and three stable entrance fee communities in the high barrier-to-entry California markets from Oakmont Management Group for $312 million. The portfolio will be managed by Oakmont under a RIDEA 3.0 management contract.
WELL acquired a medical office building having around 99,000 rentable square feet in La Jolla, CA, for $57 million. The property is currently 89% leased. It also acquired a 54,000 rentable square feet medical office building in Towson, MD, for $15 million. The property is fully leased.
Balance Sheet Position
Along with available borrowings under its line of credit, cash and cash equivalents and restricted cash, as of Sep 30, 2022, WELL had $3.8 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
During the quarter, WELL settled 9.1 million shares of its common stock sold under its at-the-market (ATM) program through forward sale agreements. This generated gross proceeds of $842 million.
Following the expiration of its previous share repurchase program, Welltower’s board of directors authorized a share repurchase program under which the company may choose to repurchase up to $3 billion of common stock in the open market or through private transactions at times and amounts based on its evaluation of market conditions and other factors.
Dividend Update
On Nov 7, Welltower announced a cash dividend of 61 cents per share for the third quarter. The dividend will be paid out on Nov 30 to stockholders on record as of Nov 18, 2022. This will mark the company’s 206th consecutive quarterly cash dividend payout.
Guidance
Welltower projects fourth-quarter 2022 normalized FFO per share in the range of 80-85 cents. The Zacks Consensus Estimate for the same is currently pegged at 85 cents.
WELL’s fourth-quarter guidance assumes the average blended same-store NOI growth of 8.5-10.5%, comprising 18.5-23.5% growth in Seniors Housing Operating, 5-6% in Seniors Housing Triple-net, 1.5-2.5% in Outpatient Medical, 2.75% in Health System and 2.5-3.5% in Long-Term/Post-Acute Care.
Welltower expects to fund roughly $263 million of development for the remainder of 2022 relating to projects underway on Sep 30, 2022.
Healthpeak Properties, Inc. reported third-quarter 2022 FFO as adjusted per share of 43 cents, in line with the Zacks Consensus Estimate. The reported figure was up 7.5% from the year-ago quarter’s 40 cents.
PEAK's performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company revised its 2022 outlook.
Ventas, Inc. (VTR - Free Report) reported third-quarter 2022 normalized FFO per share of 76 cents, in line with the Zacks Consensus Estimate. The figure grew 4.1% from the prior-year quarter.
VTR's results reflect growth in same-store NOI for the senior housing operating portfolio, backed by an improvement in occupancy and pricing power. Additionally, the same-store NOI for the office portfolio rose while the triple-net leased portfolio experienced some weakness.
Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported third-quarter 2022 core FFO per share of $2.19, surpassing the Zacks Consensus Estimate of $2.09. The reported number improved by 23% year over year.
This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA increased its outlook for core FFO per share growth for the year.
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) Q3 FFO Meets, Revenues Top, Same-Store NOI Up
Welltower Inc.’s (WELL - Free Report) third-quarter 2022 normalized funds from operations (FFO) per share of 84 cents matched the Zacks Consensus Estimate. The reported figure climbed 5% from the year-ago quarter’s 80 cents.
Results reflect better-than-anticipated revenues. The same-store revenues of the seniors housing operating (SHO) portfolio improved year over year owing to an improvement in SHO portfolio occupancy and average revenues generated per occupied room per month (REVPOR) during the quarter. The total same-store net operating income (NOI) increased year over year.
WELL clocked in revenues of $1.47 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.46 billion. The top line increased 18.9% year over year.
On Nov 7, Welltower announced definitive agreements to effectuate the sale and transition of 147 skilled nursing facilities presently operated by ProMedica. Concurrently, WELL entered into a definitive agreement to sell the 147 skilled nursing facilities through an 85/15 joint venture (JV) between Integra Health and Welltower. As a result, relative to the total current contractual rent from the existing ProMedica Senior Care JV, Welltower's combined cash rent will increase to more than 4%.
Quarter in Detail
SHO portfolio’s same-store revenue increased 10.8% year over year to $707.8 million, backed by a 390 basis points uptick in average same-store occupancy from the year-ago quarter. Also, a 5.3% year-over-year rise in same-store REVPOR, which reached an all-time high, was a contributing factor.
In the third quarter, property operating expenses flared up 25.1% to $912.2 million year over year.
Welltower’s share of property-level expenses associated with the pandemic relating to its SHO portfolio was $7 million in the quarter. When considering net of reimbursements, including Provider Relief Funds and similar programs in the United Kingdom and Canada, the same aggregated to a benefit of $0.3 million in the third quarter of 2022 compared with a benefit of $0.4 million in the year-ago period. This had a favorable impact on third-quarter 2022 normalized FFO per share of 1 cent.
WELL’s total portfolio same-store NOI (SSNOI) grew 7.2% year over year, supported by SSNOI growth in its SHO portfolio of 17.6%.
Welltower's pro rata gross investments in the third quarter totaled $1.1 billion. This included $850 million in acquisitions and loan funding and $203 million in development funding. It opened four development projects for a total pro rata investment amount of $79 million. Welltower also completed pro rata property dispositions and loan payoffs of $8 million during the quarter.
Portfolio Activity
In the quarter, WELL acquired three newly constructed rental communities and three stable entrance fee communities in the high barrier-to-entry California markets from Oakmont Management Group for $312 million. The portfolio will be managed by Oakmont under a RIDEA 3.0 management contract.
WELL acquired a medical office building having around 99,000 rentable square feet in La Jolla, CA, for $57 million. The property is currently 89% leased. It also acquired a 54,000 rentable square feet medical office building in Towson, MD, for $15 million. The property is fully leased.
Balance Sheet Position
Along with available borrowings under its line of credit, cash and cash equivalents and restricted cash, as of Sep 30, 2022, WELL had $3.8 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
During the quarter, WELL settled 9.1 million shares of its common stock sold under its at-the-market (ATM) program through forward sale agreements. This generated gross proceeds of $842 million.
Following the expiration of its previous share repurchase program, Welltower’s board of directors authorized a share repurchase program under which the company may choose to repurchase up to $3 billion of common stock in the open market or through private transactions at times and amounts based on its evaluation of market conditions and other factors.
Dividend Update
On Nov 7, Welltower announced a cash dividend of 61 cents per share for the third quarter. The dividend will be paid out on Nov 30 to stockholders on record as of Nov 18, 2022. This will mark the company’s 206th consecutive quarterly cash dividend payout.
Guidance
Welltower projects fourth-quarter 2022 normalized FFO per share in the range of 80-85 cents. The Zacks Consensus Estimate for the same is currently pegged at 85 cents.
WELL’s fourth-quarter guidance assumes the average blended same-store NOI growth of 8.5-10.5%, comprising 18.5-23.5% growth in Seniors Housing Operating, 5-6% in Seniors Housing Triple-net, 1.5-2.5% in Outpatient Medical, 2.75% in Health System and 2.5-3.5% in Long-Term/Post-Acute Care.
Welltower expects to fund roughly $263 million of development for the remainder of 2022 relating to projects underway on Sep 30, 2022.
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 Other REITs
Healthpeak Properties, Inc. reported third-quarter 2022 FFO as adjusted per share of 43 cents, in line with the Zacks Consensus Estimate. The reported figure was up 7.5% from the year-ago quarter’s 40 cents.
PEAK's performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company revised its 2022 outlook.
Ventas, Inc. (VTR - Free Report) reported third-quarter 2022 normalized FFO per share of 76 cents, in line with the Zacks Consensus Estimate. The figure grew 4.1% from the prior-year quarter.
VTR's results reflect growth in same-store NOI for the senior housing operating portfolio, backed by an improvement in occupancy and pricing power. Additionally, the same-store NOI for the office portfolio rose while the triple-net leased portfolio experienced some weakness.
Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported third-quarter 2022 core FFO per share of $2.19, surpassing the Zacks Consensus Estimate of $2.09. The reported number improved by 23% year over year.
This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA increased its outlook for core FFO per share growth for the year.
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.