Welltower (WELL) Sees Robust Operating Trend, Raises View
Per Welltower Inc.’s WELL recently released Business Update, the company raised its earnings guidance for 2023, backed by the continued strength in its seniors housing operating (SHO) portfolio and robust and accretive capital deployment activity.
The company noted that strengthening seniors housing fundamentals during the peak leasing season drove continued momentum in the SHO portfolio.
The asset management initiatives coupled with favorable demand-supply conditions resulted in healthy occupancy trends across all geographies, while the progress made on full-time employee hiring led to a moderation in expense growth.
Also, WELL’s recently transitioned properties to Oakmont and Avery in the United States and the United Kingdom, respectively, have yielded stronger-than-anticipated results.
Against this backdrop, Welltower amped up its expectations for its current-year normalized funds from operations (FFO) per share to $3.51-$3.60 from $3.48 -$3.59 guided earlier. This implies an increase of 2 cents per share at the midpoint of $3.555.
Analysts, too, seem bullish on this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for its current-year funds from operations (FFO) per share has been raised marginally over the past week to $3.54, which lies within the company’s guided range.
Additionally, WELL’s accretive capital deployment activity has been driving growth across its portfolio. Per the update, the company’s capital deployment from the beginning of the third quarter of 2023 through Sep 11 aggregated to around $1.3 billion. The transactions were carried out across the company’s seniors housing, wellness housing, outpatient medical and skilled nursing property types.
WELL also noted that its capital deployment opportunities are expanding, with deal flow accelerating across all regions, property types, and up and down the capital stack.
Welltower’s SHO portfolio remains well-poised to prosper given the acceleration in 80 years and above population and a rise in healthcare spending by this age cohort. Also, a decline in construction starts and slower net inventory growth are expected to boost occupancy levels.
Furthermore, a solid balance sheet with ample financial flexibility positions the company well to capitalize on long-term growth opportunities. As of Jul 28, 2023, it had available liquidity of $6.7 billion.
The company’s shares have gained 3.5% in the quarter-to-date period against the industry's decline of 2.5%.
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Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are SBA Communications SBAC, Americold Realty Trust COLD and Omega Healthcare Investors OHI. While COLD sports a Zacks Rank #1 (Strong Buy), SBAC and OHI carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SBA Communications’ current-year FFO per share has moved marginally northward over the past month to $12.88.
The Zacks Consensus Estimate for Americold Realty Trust’s ongoing year’s FFO per share has been raised 3.3% over the past month to $1.26.
The Zacks Consensus Estimate for Omega Healthcare’s ongoing year’s FFO per share has moved marginally upward over the past month to $2.84.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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