12 Jan

Welltower’s 3Q17 Performance and Outlook

WRITTEN BY Raina Brown

2017 outlook

Welltower (HCN) increased its SSNOI (same-store net operating income) to 2.5%–3% from 2.25%–3%. This slight increase is due to strong seniors’ housing operating performance.

Welltower’s 3Q17 Performance and Outlook

Normalized FFO guidance also increased from $4.19 to $4.25 per share from the previous $4.15 to $4.25 per share. This increase is mainly due to the increase in SSNOI and revised dispositions timing.

Net income for common stockholders reduced from the previous outlook of $853 million–$890 million to $770 million–$792 million. Net income was revised to $2.09 to $2.15 from the previous $2.32 to $2.42 per share due to a slight increase in expenses.

Welltower’s estimated revenue for 2017 is $4.26 billion. For peers HCP (HCP), Healthcare Trust of America (HTA), and Ventas (VTR), revenue is estimated at $1.83 billion, $0.611 billion, and $3.5 billion, respectively. Welltower makes up almost 2.59% of the Vanguard REIT ETF (VNQ).

3Q17 results backed by strong performance

Senior housing operating SSNOI grew 4.1% on a YoY basis. HCN has 423 properties in the same-store operating pool, the highest in the same-store industry, making the growth statistically significant. SS REVPOR (same-store revenue per occupied room) grew 3.9%. Net debt to book capitalization declined to 35.5% from the previous 39.5%. Net debt to adjusted EBITDA also improved to 5.19x from the 3Q16 multiple of 5.65x

The company has combined both the use of triple net and RIDEA (REIT Investment Diversification and Empowerment Act). New assets are structured as RIDEA, while markets where reliable and consistent returns can be earned are under the triple-net portfolio.

In this series, we’ll look at Welltower’s revenue drivers, macroeconomic factors, valuation, and dividends.

Latest articles

With the help of huge subsidies and favorable policies, the Chinese government seems to be determined to keep the electric vehicle revolution in the country alive.

On June 25, AbbVie (ABBV) announced that it plans to buy Allergan (AGN) for ~$63 billion. At 10:20 AM ET, Allergan stock rose 27%, while AbbVie stock fell 15%.

On June 25, Credit Suisse initiated its coverage on Shake Shack with an “outperform” rating and a target price of $77—an upside potential of 15.4% from its closing price of $66.72 on June 24.

On June 25, the soft economic data isn't an isolated case. We have been getting a flurry of dismal data points. The US economy added only 75,000 non-farm jobs in May.

French retail giant Carrefour has agreed to sell an 80% stake in its China operations for ~$705 million to Suning.com, an Alibaba (BABA) backed company. While China represents a massive opportunity with its almost 1.4 billion population, it has not been an easy market for foreign companies, at least when it comes to retail and e-commerce.

On June 25, US Secretary of Agriculture Sonny Perdue told CNN in an interview that the US-China trade war has impacted US farmers. He said that farmers “are one of the casualties” of the trade war.