Welltower (WELL) Q3 FFO Tops, SHO Occupancy Up, '23 View Raised
Welltower Inc.’s WELL third-quarter 2023 normalized funds from operations (FFO) per share of 92 cents surpassed the Zacks Consensus Estimate of 89 cents. The reported figure improved 9.5% from the prior-year quarter’s actual.
Results reflect better-than-anticipated revenues. The total same-store net operating income (SSNOI) increased year over year, driven by SSNOI growth in the seniors housing operating (SHO) portfolio. The company also raised its guidance for 2023 normalized FFO per share.
WELL clocked in revenues of $1.66 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.64 billion. Moreover, the top line increased 12.8% year over year.
Quarter in Detail
The SHO portfolio’s same-store revenues increased 9.8% year over year, backed by a 220-basis point uptick in average occupancy from the year-ago quarter. A 6.9% year-over-year rise in same-store revenue per occupied room was another contributing factor.
In the third quarter, property operating expenses flared up 9.1% to $995.3 million year over year.
The company’s total portfolio SSNOI grew 14.1% year over year, supported by SSNOI growth in its SHO portfolio of 26.1%.
WELL’s pro-rata gross investments in the third quarter totaled $1.6 billion. This included $1.4 billion in acquisitions and loan funding and $270 million in development funding. It opened seven development projects for a pro-rata investment amount of $137 million. Welltower also completed pro-rata property dispositions and loan payoffs of $325 million in the quarter.
Portfolio Activity
During the third quarter, Welltower acquired five SHO properties, two Outpatient Medical properties and 24 Long-Term/ Post-Acute Care properties for a pro-rata purchase price of $619 million. Moreover, it also received $320 million in proceeds from the disposition of 17 seniors housing properties and one medical office building and $5 million in proceeds received from loan payoffs.
Balance Sheet Position
As of Sep 30, 2023, WELL had $6.7 billion of available liquidity comprising $2.7 billion of available cash and restricted cash and full capacity under its $4 billion line of credit.
Dividend Update
On Oct 30, concurrent with its third-quarter 2023 earnings release, Welltower announced a cash dividend of 61 cents per share for the third quarter. The dividend will be paid out on Nov 22 to stockholders of record as of Nov 14, 2023. This will mark the company’s 210th consecutive quarterly cash dividend payout.
2023 Guidance Raised
Welltower now projects 2023 normalized FFO per share of $3.59-$3.63, up from the prior-guided range of $3.51-$3.60. The Zacks Consensus Estimate for the same is pegged at $3.56.
The company’s full-year guidance now assumes the average blended SSNOI growth of 11.5-13.5%, comprising 23-26% growth in Seniors Housing Operating, 1.5-2.5% in Seniors Housing Triple-net, 2.5-3% in Outpatient Medical and 4-5% in Long-Term/Post-Acute Care.
Welltower expects to fund an additional $334 million of development in 2023 relating to projects underway as of Sep 30, 2023.
Currently, the company carries a Zacks Rank #2 (Buy). 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
Equinix Inc.’s EQIX third-quarter 2023 adjusted funds from operations (AFFO) per share of $8.19 surpassed the Zacks Consensus Estimate of $7.79. The figure improved nearly 6% from the prior-year quarter.
EQIX’s results reflected steady growth in colocation and inter-connection revenues as enterprises and service providers look to integrate artificial intelligence into their strategies and offerings. During the quarter, Equinix’s total interconnections reached 460,500, rising 1% sequentially and 4% year over year. The company also raised its AFFO per share guidance for 2023.
Healthpeak Properties, Inc. PEAK reported third-quarter 2023 FFO as adjusted per share of 45 cents, beating the Zacks Consensus Estimate by a whisker. The reported figure rose 4.6% from the prior-year quarter.
Results reflect better-than-anticipated revenues. Moreover, growth in same-store portfolio cash (adjusted) net operating income was witnessed across the portfolio. PEAK raised its outlook for the current year.
Alexandria Real Estate Equities, Inc. ARE reported third-quarter 2023 AFFO per share of $2.26, surpassing the Zacks Consensus Estimate of $2.24. The reported figure climbed 6.1% from the year-ago quarter.
Results reflect year-over-year revenue growth, aided by decent leasing activity and solid rental rate growth. ARE also increased the midpoint of its 2023 AFFO per share outlook by 2 cents.
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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