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Welltower (WELL) Sees Seniors Housing Occupancy Gains in Q4
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Going by its recent business update, Welltower Inc.’s (WELL - Free Report) seniors housing operating (SHO) portfolio is seeing a recovery in occupancy. In the fourth quarter of 2021, the SHO portfolio spot occupancy expanded 70 basis points (bps). Moreover, average occupancy growth modestly advanced the guidance of 140bps.
During the December quarter, WELL’s U.S. and U.K. SHO portfolios reported occupancy gains of roughly 90 bps and 150 bps, respectively. In addition, Canada SHO portfolio saw an occupancy gain of 30 bps, marking a second consecutive quarter of spot occupancy gains.
The return of many communities to the pre-COVID conditions aided its performance, with move-in activity being impressive during the quarter. Also, lead generation remaining ahead of the pre-COVID levels in the fourth quarter is likely to support this tempo in the near term.
During the December-end quarter, WELL’s U.S. and U.K. SHO portfolios reported occupancy gains of roughly 90 bps and 150 bps, respectively. In addition, Canada SHO portfolio saw an occupancy gain of 30 bps, marking a second consecutive quarter of spot occupancy gains.
The return of many communities to the pre-COVID conditions aided its performance, with move-in activity being impressive during the quarter. Also, lead generation remaining ahead of the pre-COVID levels in the fourth quarter is likely to support this tempo in the near term.
During the fourth quarter, Welltower closed on $1.4 billion in pro rata investments with an expected initial yield of 5% and unlevered internal rate of return in the high-single digit range. Since October 2020, WELL has closed or entered into definitive agreements with an expected initial yield of 6.1% and an expected three-year yield of 8.2%.
Apart from these, WELL’s near-term capital deployment pipeline remains strong with an excess of $1.0 billion.
With the rising number of aging baby boomers, Welltower’s communities will likely absorb vacancy faster. Amid such encouraging prospects of recovery, WELL’s efforts to intensify focus on senior living asset class are commendable. In November, this healthcare REIT behemoth announced partnership with Kisco Senior. The partnership will bring together Kisco's next-generation senior housing and care model, and Welltower's unparalleled data analytics platform.
In the same month, WELL announced its agreements to acquire four distinct seniors housing portfolios for a pro rata gross investment of $1.3 billion. The moves remain strategic fit for Welltower, given the significant cash flow growth scope from the recovery in seniors housing and portfolio reinvestment.
However, expenses flared up amid the surge in COVID-19 cases due to increased COVID-related testing, PPE expenses and a rise in labor costs. Hence, amid such rising expenses, WELL is likely to witness strain on the margins in the near-term.
Some better-ranked stocks from the REIT sector are Extra Space Storage (EXR - Free Report) , Life Storage and Cubesmart (CUBE - Free Report) .
Extra Space flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of EXR have gained 22.8% in the past six months.
The Zacks Consensus Estimate for Extra Space’s 2021 funds from operations (FFO) per share has been raised 3.3% over the past two months. Over the last four quarters, EXR’s FFO per share surpassed the consensus mark on all occasions, the average being 5.9%.
The Zacks Consensus Estimate for Life Storage’s 2021 FFO per share has been raised marginally in the past months. Over the last four quarters, LSI’s FFO per share surpassed the consensus mark on all occasions, the average beat being 5.3%.
Currently, LSI sports a Zacks Rank of 1. Shares of Life Storage have appreciated 25.6% in the past six months.
The Zacks Consensus Estimate for Cubesmart’s 2021 FFO per share has been raised 1.9% over the past two months. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average being 7.1%.
Cubesmart flaunts a Zacks Rank of 1 at present. Shares of CUBE have rallied 9.4% in the past six months.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Welltower (WELL) Sees Seniors Housing Occupancy Gains in Q4
Going by its recent business update, Welltower Inc.’s (WELL - Free Report) seniors housing operating (SHO) portfolio is seeing a recovery in occupancy. In the fourth quarter of 2021, the SHO portfolio spot occupancy expanded 70 basis points (bps). Moreover, average occupancy growth modestly advanced the guidance of 140bps.
During the December quarter, WELL’s U.S. and U.K. SHO portfolios reported occupancy gains of roughly 90 bps and 150 bps, respectively. In addition, Canada SHO portfolio saw an occupancy gain of 30 bps, marking a second consecutive quarter of spot occupancy gains.
The return of many communities to the pre-COVID conditions aided its performance, with move-in activity being impressive during the quarter. Also, lead generation remaining ahead of the pre-COVID levels in the fourth quarter is likely to support this tempo in the near term.
During the December-end quarter, WELL’s U.S. and U.K. SHO portfolios reported occupancy gains of roughly 90 bps and 150 bps, respectively. In addition, Canada SHO portfolio saw an occupancy gain of 30 bps, marking a second consecutive quarter of spot occupancy gains.
The return of many communities to the pre-COVID conditions aided its performance, with move-in activity being impressive during the quarter. Also, lead generation remaining ahead of the pre-COVID levels in the fourth quarter is likely to support this tempo in the near term.
During the fourth quarter, Welltower closed on $1.4 billion in pro rata investments with an expected initial yield of 5% and unlevered internal rate of return in the high-single digit range. Since October 2020, WELL has closed or entered into definitive agreements with an expected initial yield of 6.1% and an expected three-year yield of 8.2%.
Apart from these, WELL’s near-term capital deployment pipeline remains strong with an excess of $1.0 billion.
With the rising number of aging baby boomers, Welltower’s communities will likely absorb vacancy faster. Amid such encouraging prospects of recovery, WELL’s efforts to intensify focus on senior living asset class are commendable. In November, this healthcare REIT behemoth announced partnership with Kisco Senior. The partnership will bring together Kisco's next-generation senior housing and care model, and Welltower's unparalleled data analytics platform.
In the same month, WELL announced its agreements to acquire four distinct seniors housing portfolios for a pro rata gross investment of $1.3 billion. The moves remain strategic fit for Welltower, given the significant cash flow growth scope from the recovery in seniors housing and portfolio reinvestment.
However, expenses flared up amid the surge in COVID-19 cases due to increased COVID-related testing, PPE expenses and a rise in labor costs. Hence, amid such rising expenses, WELL is likely to witness strain on the margins in the near-term.
Shares of this presently Zacks Rank #3 (Hold) player have gained 2.8% over the past three months compared with the industry's growth of 4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Extra Space Storage (EXR - Free Report) , Life Storage and Cubesmart (CUBE - Free Report) .
Extra Space flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of EXR have gained 22.8% in the past six months.
The Zacks Consensus Estimate for Extra Space’s 2021 funds from operations (FFO) per share has been raised 3.3% over the past two months. Over the last four quarters, EXR’s FFO per share surpassed the consensus mark on all occasions, the average being 5.9%.
The Zacks Consensus Estimate for Life Storage’s 2021 FFO per share has been raised marginally in the past months. Over the last four quarters, LSI’s FFO per share surpassed the consensus mark on all occasions, the average beat being 5.3%.
Currently, LSI sports a Zacks Rank of 1. Shares of Life Storage have appreciated 25.6% in the past six months.
The Zacks Consensus Estimate for Cubesmart’s 2021 FFO per share has been raised 1.9% over the past two months. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average being 7.1%.
Cubesmart flaunts a Zacks Rank of 1 at present. Shares of CUBE have rallied 9.4% in the past six months.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.