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Welltower Inc.’s (WELL - Free Report) fourth-quarter 2022 normalized funds from operations (FFO) per share of 83 cents surpassed the Zacks Consensus Estimate by a penny. The reported figure was in line with the prior-year quarter’s actual.
Results reflect better-than-anticipated revenues. The total same-store net operating income (NOI) increased year over year, driven by same-store NOI growth in the seniors housing operating (SHO) portfolio. The company issued its guidance for 2023.
WELL clocked in revenues of $1.52 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.50 billion. The top line increased almost 16% year over year.
For 2022, the company reported a normalized FFO per share of $3.55, up from the prior year’s $3.21. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $3.35. The total revenues of $5.86 billion improved 23.6% year over year and beat the consensus mark of $5.81 billion.
Concurrent with the fourth-quarter earnings release, Welltower and a family-owned and Virginia-based senior living community management company, Retirement Unlimited Inc. (“RUI”), announced a robust programmatic partnership in the senior living space. As part of the first installment in RUI's new luxury brand of Elancé communities, it revealed the community's new name, Elancé at Alexandria. The partnership between WELL and RUI is expected to grow to more than 20 communities in the near term, spanning multiple states throughout the East Coast.
Quarter in Detail
The SHO portfolio’s same-store revenues increased 10.3% year over year to $811.6 million, backed by a 200-basis-point uptick in average same-store occupancy from the year-ago quarter. A 7.5% year-over-year rise in same-store REVPOR, which reached an all-time high, was another contributing factor.
In the fourth quarter, property operating expenses flared up 19.6% to $938.8 million year over year.
The company’s total portfolio same-store NOI (SSNOI) grew 12.9% year over year, supported by SSNOI growth in its SHO portfolio of 28.1%.
WELL’s pro-rata gross investments in the fourth quarter totaled $412 million. This included $223 million in acquisitions and loan funding, and $188 million in development funding. It opened 10 development projects for pro-rata investment amount of $277 million. Welltower also completed pro-rata property dispositions and loan payoffs of $159 million in the quarter.
Portfolio Activity
In the quarter, WELL entered definitive agreements to effectuate the sale and transition of 147 skilled nursing facilities operated by ProMedica. In December 2022, ProMedica surrendered its 15% interest in the 85/15 joint venture (JV) with Welltower. ProMedica was released of all its lease obligations related to the properties.
As a result, Integra Health entered master leases with Welltower for the entirety of the nursing portfolio and will take responsibility for the financial aspect of all assets, including assets, wherein it has not yet acquired an ownership stake.
In the same month, Welltower sold 15% interest in 54 skilled nursing assets to Integra for around $73 million. In January 2023, the company sold 15% interest in 31 skilled nursing assets to Integra for nearly $74 million. These represent the first two tranches in the formation of an 85/15 JV between Welltower and Integra. The remaining tranches are expected to be completed over the next 12 months.
Balance Sheet Position
Along with available borrowings under its line of credit, cash and cash equivalents, and restricted cash, as of Dec 31, 2022, WELL had $4.7 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
In the quarter, WELL settled 18 million shares of its common stock sold under its at-the-market (ATM) program through forward sale agreements. This generated gross proceeds of $1.5 million.
Dividend Update
On Feb 15, concurrent with its fourth-quarter 2022 earnings release, 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 Feb 28, 2023. This will mark the company’s 207th consecutive quarterly cash dividend payout.
2023 Guidance
Welltower issued its guidance for 2023.
The company projects a current-year normalized FFO per share of $3.35-$3.53. The Zacks Consensus Estimate for the same is pegged at $3.57.
WELL’s full-year guidance assumes the average blended same-store NOI growth of 8-13%, comprising 15-24% growth in Seniors Housing Operating, 1.3% in Seniors Housing Triple-net, 2-3% in Outpatient Medical and 2-3% in Long-Term/Post-Acute Care.
Welltower expects to fund $689 million of development in 2023 relating to projects underway as of Dec 31, 2022.
Currently, the company carries a Zacks Rank #4 (Sell).
Healthpeak Properties, Inc. reported a fourth-quarter 2022 FFO as adjusted per share of 44 cents, beating the Zacks Consensus Estimate by a penny. The reported figure was up 7.3% from the year-ago quarter’s 41 cents.
The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company issued its 2023 outlook.
Ventas, Inc. (VTR - Free Report) reported a fourth-quarter 2022 normalized FFO per share of 73 cents, outpacing the Zacks Consensus Estimate by a penny. The figure was in line with the prior-year quarter’s actual.
VTR’s results reflected better-than-anticipated revenues. Also, the same-store NOI for the senior housing operating portfolio (SHOP) improved year over year on strong pricing power and occupancy growth.
Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported fourth-quarter 2022 core FFO per share of $2.32, surpassing the Zacks Consensus Estimate of $2.28. The reported number improved 22.1% 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 also issued its outlook for 2023.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Welltower (WELL) Q4 FFO & Revenues Beat, SHO Occupancy Rises
Welltower Inc.’s (WELL - Free Report) fourth-quarter 2022 normalized funds from operations (FFO) per share of 83 cents surpassed the Zacks Consensus Estimate by a penny. The reported figure was in line with the prior-year quarter’s actual.
Results reflect better-than-anticipated revenues. The total same-store net operating income (NOI) increased year over year, driven by same-store NOI growth in the seniors housing operating (SHO) portfolio. The company issued its guidance for 2023.
WELL clocked in revenues of $1.52 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.50 billion. The top line increased almost 16% year over year.
For 2022, the company reported a normalized FFO per share of $3.55, up from the prior year’s $3.21. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $3.35. The total revenues of $5.86 billion improved 23.6% year over year and beat the consensus mark of $5.81 billion.
Concurrent with the fourth-quarter earnings release, Welltower and a family-owned and Virginia-based senior living community management company, Retirement Unlimited Inc. (“RUI”), announced a robust programmatic partnership in the senior living space. As part of the first installment in RUI's new luxury brand of Elancé communities, it revealed the community's new name, Elancé at Alexandria. The partnership between WELL and RUI is expected to grow to more than 20 communities in the near term, spanning multiple states throughout the East Coast.
Quarter in Detail
The SHO portfolio’s same-store revenues increased 10.3% year over year to $811.6 million, backed by a 200-basis-point uptick in average same-store occupancy from the year-ago quarter. A 7.5% year-over-year rise in same-store REVPOR, which reached an all-time high, was another contributing factor.
In the fourth quarter, property operating expenses flared up 19.6% to $938.8 million year over year.
The company’s total portfolio same-store NOI (SSNOI) grew 12.9% year over year, supported by SSNOI growth in its SHO portfolio of 28.1%.
WELL’s pro-rata gross investments in the fourth quarter totaled $412 million. This included $223 million in acquisitions and loan funding, and $188 million in development funding. It opened 10 development projects for pro-rata investment amount of $277 million. Welltower also completed pro-rata property dispositions and loan payoffs of $159 million in the quarter.
Portfolio Activity
In the quarter, WELL entered definitive agreements to effectuate the sale and transition of 147 skilled nursing facilities operated by ProMedica. In December 2022, ProMedica surrendered its 15% interest in the 85/15 joint venture (JV) with Welltower. ProMedica was released of all its lease obligations related to the properties.
As a result, Integra Health entered master leases with Welltower for the entirety of the nursing portfolio and will take responsibility for the financial aspect of all assets, including assets, wherein it has not yet acquired an ownership stake.
In the same month, Welltower sold 15% interest in 54 skilled nursing assets to Integra for around $73 million. In January 2023, the company sold 15% interest in 31 skilled nursing assets to Integra for nearly $74 million. These represent the first two tranches in the formation of an 85/15 JV between Welltower and Integra. The remaining tranches are expected to be completed over the next 12 months.
Balance Sheet Position
Along with available borrowings under its line of credit, cash and cash equivalents, and restricted cash, as of Dec 31, 2022, WELL had $4.7 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.
In the quarter, WELL settled 18 million shares of its common stock sold under its at-the-market (ATM) program through forward sale agreements. This generated gross proceeds of $1.5 million.
Dividend Update
On Feb 15, concurrent with its fourth-quarter 2022 earnings release, 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 Feb 28, 2023. This will mark the company’s 207th consecutive quarterly cash dividend payout.
2023 Guidance
Welltower issued its guidance for 2023.
The company projects a current-year normalized FFO per share of $3.35-$3.53. The Zacks Consensus Estimate for the same is pegged at $3.57.
WELL’s full-year guidance assumes the average blended same-store NOI growth of 8-13%, comprising 15-24% growth in Seniors Housing Operating, 1.3% in Seniors Housing Triple-net, 2-3% in Outpatient Medical and 2-3% in Long-Term/Post-Acute Care.
Welltower expects to fund $689 million of development in 2023 relating to projects underway as of Dec 31, 2022.
Currently, the company carries a Zacks Rank #4 (Sell).
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 a fourth-quarter 2022 FFO as adjusted per share of 44 cents, beating the Zacks Consensus Estimate by a penny. The reported figure was up 7.3% from the year-ago quarter’s 41 cents.
The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company issued its 2023 outlook.
Ventas, Inc. (VTR - Free Report) reported a fourth-quarter 2022 normalized FFO per share of 73 cents, outpacing the Zacks Consensus Estimate by a penny. The figure was in line with the prior-year quarter’s actual.
VTR’s results reflected better-than-anticipated revenues. Also, the same-store NOI for the senior housing operating portfolio (SHOP) improved year over year on strong pricing power and occupancy growth.
Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported fourth-quarter 2022 core FFO per share of $2.32, surpassing the Zacks Consensus Estimate of $2.28. The reported number improved 22.1% 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 also issued its outlook for 2023.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.