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Welltower (WELL) Q2 FFO & Revenues Beat, SHOP Occupancy Up

Welltower Inc.’s WELL second-quarter 2022 normalized funds from operations (FFO) per share of 86 cents surpassed the Zacks Consensus Estimate by a cent. The reported figure climbed 8.9% from the year-ago quarter’s 79 cents.

Results reflect better-than-anticipated top-line growth. The same-store revenues of the seniors housing operating portfolio (SHOP) improved year over year owing to a healthy recovery in the occupancy for SHOP during the quarter.

WELL clocked in revenues of $1.47 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.42 billion. The top line increased 29.1% year over year.

Quarter in Detail

SHOP same-store revenue increased 11.5% year over year to $696.1 million, backed by a 500 basis points uptick in average same-store occupancy from the year-ago quarter. Also, a 4.5% rise in same-store REVPOR (average revenues generated per occupied room per month) year over year was a contributing factor.

In the second quarter, property operating expenses flared up 32.9% to $854.1 million year over year.

Welltower’s share of property-level expenses associated with the pandemic relating to its SHOP was $9 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 $13 million in the second quarter of 2022 compared with a benefit of $1 million in the year-ago period. This had a favorable impact on the second-quarter 2022 normalized FFO per share of 3 cents.

WELL’s total portfolio same-store net operating income (SSNOI) grew 8.9% year over year, supported by SSNOI growth in its SHOP of 15.4%.

Welltower's pro rata gross investments in the second quarter totaled $1.6 billion. This included $1.1 billion in acquisitions and loan funding and $448 million in development funding. It opened three development projects for a total pro rata investment amount of $84 million. Welltower also accomplished pro rata property dispositions and loan payoffs of $101 million during the quarter.

In the quarter, WELL acquired a 25-property senior apartment portfolio in non-coastal East Coast and Midwest markets from Calamar for $502 million. The transaction was funded by cash, the assumption of debt and the issuance of operating partnership units. After the completion of the deal, WELL significantly expanded its market leadership with a total of nearly 10,000 units.

Balance Sheet Position

Welltower exited the second quarter of 2022 with $363.3 million of cash and cash equivalents, down from the $513.6 million recorded at second-quarter 2021 end.

Along with available borrowings under its line of credit, cash and cash equivalents and restricted cash, as of Jun 30, 2022, WELL had $4.1 billion of near-term available liquidity and no material senior unsecured note maturities until 2024.

During the quarter, WELL settled 9.4 million shares of its common stock that were sold under its at-the-market (ATM) program through forward sale agreements. This generated gross proceeds of $820 million.

Also, in June, it completed the amendment of its $5.2 billion unsecured credit facility with improved pricing across term loans.

Dividend Update

On Aug 9, Welltower announced a cash dividend of 61 cents per share for the second quarter. The dividend will be paid out on Aug 31 to stockholders on record as of Aug 23, 2022. This will mark the company’s 205th consecutive quarterly cash dividend payout.


Welltower projects third-quarter 2022 normalized FFO per share in the range of 82-87 cents. The Zacks Consensus Estimate for the same is currently pegged at 88 cents.

WELL’s third-quarter guidance assumes the average blended same-store NOI growth of 7.0-9.0%, comprising 15.0-20.0% growth in Seniors Housing Operating, 5.0-6.0% in Seniors Housing Triple-net, 1.75-2.75% in Outpatient Medical, 2.75% in Health System and 2.5-3.5% in Long-Term/Post-Acute Care.

Welltower expects to fund roughly $670 million of development for the remainder of 2022 relating to projects underway on Jun 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. PEAK reported second-quarter 2022 FFO as adjusted per share of 44 cents, surpassing the Zacks Consensus Estimate by a whisker. The reported figure was up 10% from the year-ago quarter’s 40 cents.

PEAK’s performance was backed by solid top-line growth. However, weakness in the continuing care retirement communities portfolio was witnessed during the quarter.

Ventas, Inc. VTR reported second-quarter 2022 normalized FFO per share of 72 cents, in line with the Zacks Consensus Estimate. The figure was a cent lower than the prior-year quarter’s tally.

VTR’s results reflect growth in occupancy and improvement in pricing power for the senior housing operating portfolio. Additionally, the office portfolio witnessed growth in same-store net operating income while there was weakness in the triple-net leased portfolio.

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported second-quarter 2022 core FFO per share of $2.02, surpassing the Zacks Consensus Estimate of $2.00. The reported number improved 19.5% 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 increased its outlook for core FFO 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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