We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Welltower (WELL) is an Apt Portfolio Pick for Now
Read MoreHide Full Article
Welltower Inc. (WELL - Free Report) owns a diversified portfolio of healthcare real estate assets in the major, high-growth markets of the United States, Canada and the U.K. The favorable senior housing industry, capital-recycling efforts and a healthy balance sheet are likely to continue aiding the company to ride the growth curve.
This Toledo, OH-based healthcare real estate investment trust (REIT) has gained 3.1% in the past three months against the industry’s 4.7% decline.
Analysts seem bullish on this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for WELL’s 2024 FFO per share has moved marginally northward over the past month to $4.03.
Image Source: Zacks Investment Research
Factors That Make Welltower a Solid Pick
Favorable SHO Portfolio Dynamics: Given an aging population and an expected rise in senior citizens’ healthcare expenditure, Welltower’s seniors’ housing operating (SHO) portfolio is well-poised to capitalize on this positive trend. Muted new supply has also been a tailwind for this industry.
With favorable demand-supply fundamentals, the portfolio is likely to experience margin expansion in the upcoming period. Improving revenue and expense trends during the fourth quarter of 2023 led to a year-over-year same-store net operating income (NOI) margin expansion of 290 basis points. Capitalizing on these positive aspects, Welltower’s SHO portfolio is well-prepared for compelling multiyear growth. Management anticipates the same-store SHO NOI to grow at the midpoint of 18%, with a three-year compounded growth of over 75% in 2024.
Favorable OM Visit Trend: There has been a favorable outpatient visits trend compared with in-patient admissions. Banking on this, the company is optimizing its outpatient medical (OM) portfolio and growing relationships with health system partners and deploying capital in strategic acquisitions. From the beginning of 2023 through Feb 13, 2024, Welltower carried out pro-rata acquisitions and loan funding totaling $621.8 million for 35 OM properties.
Capital-Recycling Efforts: WELL’s capital-recycling efforts to finance near-term investment and development opportunities highlight its prudent capital management practices and pave the way for long-term growth.
From the beginning of 2023 through Feb 13, 2024, the company completed pro-rata gross investments of $5.86 billion. This included $4.8 billion in acquisitions and loan funding and $1.05 billion in development funding. During this period, pro rata property dispositions and loan payoffs totaled $893 million.
In the fourth quarter of 2023, the company opened 11 development projects with a total pro rata investment of $335 million.
Balance Sheet & Cash Flow Strength: Welltower maintains a healthy balance sheet position and has $6.6 billion of available liquidity as of Feb 9, 2024. The company enjoys investment-grade credit ratings of BBB+ and Baa1 from S&P Global Ratings and Moody’s, respectively, rendering it access to the debt market at favorable rates.
Therefore, with a well-laddered debt maturity schedule and enough financial flexibility, Welltower is likely to meet its near-term obligations and fund its development pipeline.
WELL’s current cash flow growth is projected at 20.65% compared with -5.32% growth estimated for the industry.
The Zacks Consensus Estimate for HST’s 2024 funds from operations (FFO) per share has been raised 2.6% northward over the past month to $1.97.
The consensus estimate for GOOD’s current-year FFO per share has moved 3.8% upward over the past month to $1.38.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Here's Why Welltower (WELL) is an Apt Portfolio Pick for Now
Welltower Inc. (WELL - Free Report) owns a diversified portfolio of healthcare real estate assets in the major, high-growth markets of the United States, Canada and the U.K. The favorable senior housing industry, capital-recycling efforts and a healthy balance sheet are likely to continue aiding the company to ride the growth curve.
This Toledo, OH-based healthcare real estate investment trust (REIT) has gained 3.1% in the past three months against the industry’s 4.7% decline.
Analysts seem bullish on this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for WELL’s 2024 FFO per share has moved marginally northward over the past month to $4.03.
Image Source: Zacks Investment Research
Factors That Make Welltower a Solid Pick
Favorable SHO Portfolio Dynamics: Given an aging population and an expected rise in senior citizens’ healthcare expenditure, Welltower’s seniors’ housing operating (SHO) portfolio is well-poised to capitalize on this positive trend. Muted new supply has also been a tailwind for this industry.
With favorable demand-supply fundamentals, the portfolio is likely to experience margin expansion in the upcoming period. Improving revenue and expense trends during the fourth quarter of 2023 led to a year-over-year same-store net operating income (NOI) margin expansion of 290 basis points. Capitalizing on these positive aspects, Welltower’s SHO portfolio is well-prepared for compelling multiyear growth. Management anticipates the same-store SHO NOI to grow at the midpoint of 18%, with a three-year compounded growth of over 75% in 2024.
Favorable OM Visit Trend: There has been a favorable outpatient visits trend compared with in-patient admissions. Banking on this, the company is optimizing its outpatient medical (OM) portfolio and growing relationships with health system partners and deploying capital in strategic acquisitions. From the beginning of 2023 through Feb 13, 2024, Welltower carried out pro-rata acquisitions and loan funding totaling $621.8 million for 35 OM properties.
Capital-Recycling Efforts: WELL’s capital-recycling efforts to finance near-term investment and development opportunities highlight its prudent capital management practices and pave the way for long-term growth.
From the beginning of 2023 through Feb 13, 2024, the company completed pro-rata gross investments of $5.86 billion. This included $4.8 billion in acquisitions and loan funding and $1.05 billion in development funding. During this period, pro rata property dispositions and loan payoffs totaled $893 million.
In the fourth quarter of 2023, the company opened 11 development projects with a total pro rata investment of $335 million.
Balance Sheet & Cash Flow Strength: Welltower maintains a healthy balance sheet position and has $6.6 billion of available liquidity as of Feb 9, 2024. The company enjoys investment-grade credit ratings of BBB+ and Baa1 from S&P Global Ratings and Moody’s, respectively, rendering it access to the debt market at favorable rates.
Therefore, with a well-laddered debt maturity schedule and enough financial flexibility, Welltower is likely to meet its near-term obligations and fund its development pipeline.
WELL’s current cash flow growth is projected at 20.65% compared with -5.32% growth estimated for the industry.
Other Stocks to Consider
Some other top-ranked stocks from the broader REIT sector are Host Hotels & Resorts (HST - Free Report) and Gladstone Commercial (GOOD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HST’s 2024 funds from operations (FFO) per share has been raised 2.6% northward over the past month to $1.97.
The consensus estimate for GOOD’s current-year FFO per share has moved 3.8% upward over the past month to $1.38.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.