12 Jan

Welltower’s Key Growth Drivers

WRITTEN BY Raina Brown

Demographics

Welltower (HCN) is in the business of senior housing and healthcare real estate. It has 1,334 healthcare properties and ~198,000 residents. The portfolio comprises acute care, which includes hospitals, post-acute care continuum, and senior housing. An increase in the old age population should help HCN generate additional revenue. Experts estimate that the age group of 85+ will double in the next 20 years.

Welltower’s Key Growth Drivers

Healthcare spending 

An aging population increases healthcare spending. According to National Healthcare Expenditure Data, personal healthcare per capita spending is $8.4 in the age group of 45–64, $15.9 in the age group of 65–84, and $34.8 for 85 and above—a drastic increase.

Diseases

For diseases like Alzheimer’s and dementia, residential memory care is vitally important. The number of people affected by dementia is expected to double every 20 years. The estimated cost of dementia care is expected to be around $1 trillion by 2018.

Portfolio transformation

Adapting to these, needs Welltower has made strategic changes in its portfolio. NOI (net operating income) for senior housing facilities has risen to 70% of the portfolio in 3Q17, compared to 40% in 1Q10. NOI for post-acute care decreased to 13% in 3Q17 from 31% in 1Q10. Private pay increased from 69% in 1Q10 to 93% in 3Q17.

Upper hand in competition

HCN has high-quality assets that require low maintenance. A high barrier to entry in the premier markets, mainly in cities, along with dependable and efficient operating partners and active portfolio management gives HCN an upper hand.

Welltower’s operations are in major US, Canadian, and UK markets. Its competitor HCP (HCP) is based in Irvine, California. Healthcare Trust of America (HTA) is based in Scottsdale, Arizona, and Ventas (VTR) is based in Chicago. Welltower makes up almost 2.59% of the Vanguard REIT ETF (VNQ).

Latest articles

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.

25 Jun

Hang Seng and Nikkei 225 Lose amid Trade Worries

WRITTEN BY Mayur Sontakke, CFA, FRM

After rising marginally yesterday, Hong Kong’s Hang Seng Index fell today. The index lost 1.15% to end at 28,185.98. Only seven stocks in the index rose, while 39 declined. Four remained unchanged. Tencent Holdings (TCEHY) was one of the worst performers with a 1.8% fall.

Square (SQ) was absent from the list of the inaugural members of the Libra Association, the entity that will ensure that Facebook’s (FB) Libra cryptocurrency works as intended. Nearly 30 companies have joined the Libra Association.

Kroger (KR) stock fell 2.2% on June 20—the day the company announced its results for the first quarter, which ended on May 25. The negative sentiment for the stock continued.

172.31.38.64