Markets

Welltower (WELL) Q3 FFO and Revenues Beat Estimates, View Up

Welltower Inc.WELL reported normalized funds from operations (FFO) per share of $1.04 for third-quarter 2018, which surpassed the Zacks Consensus Estimate of $1.02. However, on a year-over-year basis, the figure compares unfavorably with the year-ago tally of $1.08.

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. The company also raised its normalized FFO per share outlook for the current year.

Moreover, the company posted revenues of nearly $1.24 billion, which outpaced the Zacks Consensus Estimate of $1.16 billion. It also compares favorably with the year-ago tally of $1.09 billion.

Quarter in Detail

Total portfolio SSNOI inched up 1.6% year over year, mainly driven by growth in seniors housing triple-net, outpatient medical and long-term/post-acute care segments.

Welltower accomplished $2.6 billion of pro-rata gross investments in the third quarter. This included $2.2 billion in acquisitions, $312 million in the takeover of non-yielding properties in association with the QCP buyout, as well as $63 million in development funding. Also, the company delivered $96 million of pro rata development projects, with an expected stabilized yield of 8.5%.

On the other hand, the company accomplished total dispositions of $316 million in the reported quarter. This comprised property sales of $109 million, sale of $147 million of non-yielding properties acquired in the QCP buyout, and loan payoffs of $60 million.

The company exited the Sep-end quarter with $191.2 million of cash and cash equivalents, down from $236.2 million recorded at the end of the prior-year quarter. In addition, as of Sep 30, 2018, it had $1.7 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 third quarter. The dividend will be paid on Nov 21, to stockholders of record on Nov 12, 2018. This marks the company's 190th consecutive quarterly cash dividend payout to stockholders.

2018 Outlook

Welltower raised its 2018 normalized FFO per share outlook to $4.02-$4.07 from the previous guidance of $3.99-$4.06. The Zacks Consensus Estimate for the same is currently pegged at $4.03.

In addition, the company anticipates its 2018 average blended same-store net operating income to be up around 1-2%. However, it lowered the full-year disposition proceeds projection to $2.2 billion from $2.4 billion guided earlier.

Our Take

With a diversified portfolio of healthcare facilities, Welltower remains poised for growth amid favorable demographics. Accretive acquisition comes as part of its portfolio-repositioning efforts and will boost the company's operating platform. Further, transformational improvements in asset quality and deal structures will likely drive long-term sustainability.

Nonetheless, the seniors housing market remains challenging amid elevated supply of senior housing assets. Additionally, rate hike is a concern for Welltower due to its high exposure to long-term leased assets.

Currently, Welltower has 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 and EPS Surprise | Welltower Inc. Quote

We now look forward to the earnings releases of other REITs like Mid-America Apartment Communities, Inc. MAA , Federal Realty Investment Trust FRT and Realty Income Corporation O , which are slated to report their quarterly numbers on Oct 31.

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.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Federal Realty Investment Trust (FRT): Free Stock Analysis Report

Realty Income Corporation (O): Free Stock Analysis Report

Mid-America Apartment Communities, Inc. (MAA): Free Stock Analysis Report

Welltower Inc. (WELL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

WELL MAA FRT O

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More