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Welltower Gives May Portfolio, Disposition & Liquidity Update

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Welltower Inc. (WELL - Free Report) announced an update on the seniors housing operating (SHO) portfolio, triple-net portfolio, outpatient medical portfolio, disposition transactions and liquidity status.

SHO Portfolio

Notably, new admissions continue to be restricted for around 39% of SHO properties as of May 29. Moreover, during May, move-ins declined year over year to nearly 79%. Low move-in activities and ban on admissions likely drove an occupancy decline.

The company announced the SHO portfolio’s spot occupancy of 81.1% as of May 29, 2020. This indicates a decline of around 150 basis points (bps) since May 1.

Nonetheless, it witnessed a slowing pace of occupancy declines in the second half of May.

The company continues to expect SHO portfolio occupancy to witness a sequential decline of 500-600 bps in the second quarter.

Moreover, total SHO portfolio expenses for the April-June quarter are anticipated to increase by 5% sequentially, primarily driven by a rise in labor expenses. In fact, the company incurred $18 million in the coronavirus outbreak-related expenses, labor costs and procurement of personal protective equipment (PPE) in April.

Outpatient Medical &Triple-Net Portfolio

The outpatient medicalportfolio’s occupancy as of May 29, 2020, was 93.8%. Moreover, the company has collected or approved deferral requests for 98% of its May rents.

It continues to capitalize on the favorable secular trends and growing need for value-based care in its medical office asset class as indicated by lease renewal activity. In fact, the company executed a renewal lease for 86% of leases expiring in the second quarter.

It also received 94% of May rents in its triple-net portfolio.

Dispositions and Liquidity Position

Post first-quarter earnings, the company’s dispositions aggregated $1.3 billion across two transactions. This included the two-phased sale of a $1-billion portfolio of seven seniors housing and 29 outpatient medical properties as well as a $300-million portfolio of six seniors housing assets in the Midwest.

The first tranche of the $1-billion portfolio sale closed in May. The company disposed of six seniors housing assets and 12 outpatient medical assets for gross proceeds of $429 million. The second tranche of the transaction is expected to close in July 2020 for gross proceeds of $360 million. 

The $300-million portfolio was closed on May 29 for $228 million.

With this, the company completed $1.5 billion in pro-rata dispositions year to date. It also expects proceeds of $312 million from assets held for sale for the remainder of the year.

Through the dispositions, the company also enhanced its near-term liquidity to more than $4.6 billion.

Price Performance

Moreover, shares of the Zacks Rank #3 (Hold) company have declined 28.9% over the past year compared with its industry’s decline of 3%.


Stocks to Consider

Alexander Baldwin Holdings, Inc.’s (ALEX - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

One Liberty Properties, Inc.’s FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently flaunts a Zacks Rank of 1.

Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimate for 2020 has moved 3% upward to 68 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).

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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