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Welltower (WELL) Q2 FFO Beats Estimates, Revenues Up Y/Y

Zacks Equity Research

Welltower Inc. WELL reported normalized funds from operations (FFO) per share of $1.05 for second-quarter 2019, which surpassed the Zacks Consensus Estimate by a penny. Further, the bottom line compares favorably with the year-ago quarter figure of $1.

Results reflect healthy same-store net operating income (SSNOI) performance of its seniors housing triple-net, outpatient medical and long-term/post-acute care segments.

Moreover, the company generated revenues of nearly $1.32 billion that outpaced the Zacks Consensus Estimate of $1.24 billion. The top line compares favorably with the year-earlier quarter’s reported figure of approximately $1.13 billion.

Quarter in Detail

Total portfolio SSNOI jumped 3.1% year over year, driven by growth across all its segments.

Welltower accomplished $2.6 billion of pro-rata gross investments in the second quarter. This included $2.4 billion in acquisitions and $152 million in development funding.

This apart, the company also completed total dispositions of $14 million.

The company exited the quarter with $268.7 million of cash and cash equivalents, up from $215.1 million recorded a year ago. In addition, as of Jun 30, 2019, it had $1.1 billion of available borrowing capacity under its new primary unsecured credit facility.

Dividend Update

Welltower announced a cash dividend of 87 cents per share for the second quarter. This dividend will be paid out on Aug 22 to stockholders of record as on Aug 15, 2019. This marks the company’s 193rd consecutive quarterly cash dividend payout.

2019 Outlook

Welltower lowered its 2019 normalized FFO per share outlook of $4.10-$4.20. The Zacks Consensus Estimate for the same is currently pegged at $4.18.

In addition, the company increased its 2019 average blended SSNOI expectation to 2-2.5% from 1.25-2.25% previously expected. Further, full-year disposition proceeds are projected to be around $3.1 billion, up from $1.4 billion.

Our Take

Welltower’s second-quarter 2019 results were buoyed by decent performance across all its operating segments. Further, the company’s efforts to expand its medical office portfolio are impressive. However, significant disposition activity is expected to affect its near-term bottom-line performance.

Welltower Inc. Price, Consensus and EPS Surprise

Welltower Inc. Price, Consensus and EPS Surprise

Welltower Inc. price-consensus-eps-surprise-chart | Welltower Inc. Quote

Currently, Welltower has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Cousins Properties Incorporated CUZ reported second-quarter FFO per share (before TIER transaction costs) of 71 cents, missing the Zacks Consensus Estimate by a whisker. Nonetheless, the bottom line came in higher than the prior-year quarter’s reported figure of 60 cents.

SL Green Realty Corp. SLG reported second-quarter 2019 FFO of $1.82 per share, surpassing the Zacks Consensus Estimate of $1.73. The bottom line includes promote income from the sale of 521 Fifth Avenue of $3.4 million or 4 cents per share. Results also compared favorably with the year-ago quarter figure of $1.69.

Crown Castle International Corp. CCI posted second-quarter adjusted AFFO per share of $1.48, up from the prior-year figure of $1.31. Further, the bottom line outpaced the Zacks Consensus Estimate of $1.43.

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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