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Welltower (WELL) Expects Senior Housing Segment to Aid Q3 Results

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Welltower, Inc. WELL, in its business update, recently noted that the company’s seniors housing operating (“SHO”) portfolio is seeing a recovery with occupancy trending ahead of expectations. The healthcare REIT anticipates to achieve normalized funds from operations (FFO) per share in the range of 78-83 cents. The Zacks Consensus Estimate of 80 cents falls within this range.

Quarter to date through Sep 3, 2021, spot occupancy has already expanded 150 basis points (bps) compared with the initial guidance of around 190 bps gain for the full third quarter. The U.S. and U.K portfolios witnessed a spot occupancy gain of 180 bps and 190 bps, respectively. Canada has reported a spot occupancy gain of 70 bps, quarter to date.

The SHO portfolio spot occupancy ended at 76.1% as of Sep 3. This marks an approximate occupancy gain of 380 bps since the pandemic-induced low on Mar 12, 2021. Through Sep 3, 2021, the U.S. and U.K. SHO portfolio reported an occupancy gain of roughly 520 bps and 440 bps, respectively, since the pandemic-induced low.

The rapid distribution of COVID-19 vaccinations at the assisted living and memory care facilities has reduced the total resident case counts, while the relaxation of restrictions has enabled Welltower’s communities to accept new residents, resulting in higher move-in activity and occupancy growth. The desire for socializing following the isolation experienced during the pandemic looks encouraging.

Welltower has also been active on the investment and balance-sheet front in third-quarter 2021. The company announced the closing of $1.8 billion of pro rata gross investments since its prior business update issued on Jul 29, 2021, bringing the year-to-date pro rata gross investments to $3.7 billion.

During the third quarter, the company closed the acquisition of an 86-property seniors housing portfolio for $1.58 billion. This move will likely be immediately accretive to its normalized FFO per diluted share.

Since the beginning of the year through Sep 3, it has received $1.3 billion in pro-rata disposition proceeds and loan payoffs. Following the recent debt repayments, the company has no material unsecured debt maturities until 2024.

Shares of this Zacks Rank #3 (Hold) company have gained 8% over the past three months, outperforming the industry's growth of 4.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Key Picks

The Zacks Consensus Estimate for CorePoint Lodging Inc’s CPLG ongoing-year FFO per share has moved up significantly to 99 cents over the past two months. The company flaunts a Zacks Rank of 1 (Strong Buy), currently.

The Zacks Consensus Estimate for CubeSmart’s CUBE 2021 FFO per share has moved 5.7% upward over the past month. The company currently carries a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Extra Space Storage Inc.’s EXR current-year FFO per share has moved 3.6% north in the past 30 days. The company carries a Zacks Rank of 2, at present.

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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