Earnings Review and Free Research Report: Welltower Reported Better than Expected Revenue and FFO Results

Research Desk Line-up: HCP, Inc. Post Earnings Coverage

LONDON, UK / ACCESSWIRE / August 11, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Welltower Inc. (NYSE: HCN), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=HCN, following the Company’s announcement of its second quarter fiscal 2017 results on July 28, 2017. The senior housing and health care real estate investment revised its net income guidance and re-affirmed FFO forecasts. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

For the three months ended June 30, 2017, Welltower reported gross revenues of $1.06 billion compared to revenue of $1.08 billion in Q2 2016. The Company’s revenue numbers exceeded analysts’ estimates of $1.04 billion. In the reported quarter, Welltower’s senior’s housing operating same store net operating income (SSNOI) grew 3.5% and same store revenue per occupied room (SS REVPOR) grew 3.9%

Welltower generated net income attributable to common stockholders of $0.51 per share for Q2 2017 compared to net income of $0.54 for Q2 2016. The Company recorded normalized FFO attributable to common stockholders of $1.06 per share for the reported quarter compared with FFO of $1.15 per share in the prior year’s same quarter. Welltower’s FFO numbers beat Wall Street’s estimates of $1.05 per share.

Investment and Disposition Activity

During Q2 2017, Welltower completed $292 million of pro-rata gross investments, including $110 million in acquisitions/JVs, $162 million in development funding and $20 million in loans. The Company stated that 92% of these investments were completed with existing relationships. Acquisitions/JVs were comprised of four separate transactions at a blended yield of 6.5%. The Company also placed into service 10 development projects totaling $273 million at a blended stabilized yield of 7.6%. Also during the reported quarter, Welltower completed total dispositions of $160 million consisting of loan payoffs of $43 million at an average yield of 8.9% and property sales of $117 million at a blended yield on proceeds of 9.3%

Notable Investments with Existing Operating Partners

During Q2 2017, Welltower expanded its relationship with Legend by acquiring two purpose-built, private pay seniors housing properties located in Tulsa, Oklahoma and Greeley, Colorado. The properties were acquired through the Company’s existing 88/12 joint venture with Legend and the purchase price based on a 100% ownership interest was $49 million. These properties were added to an existing long-term master lease at an initial lease yield of 6.25% and which escalates 3.25% annually. The Company noted that since starting its initial $6 million development in 2005, it has completed $547 million of follow-on investments with Legend.

Welltower expanded its relationship with Sagora Senior Living by acquiring a 100% ownership interest in a 90-unit private pay seniors housing property owned by a third party and located in the Houston MSA for $24 million. The initial lease yield is 6.25% with 5% annual increases for the first two years and then 3.5% annual increases thereafter.

Welltower acquired an on-campus, affiliated outpatient medical office building in the Austin MSA. The purchase price was $19 million, representing a 6.7% stabilized cap rate. The property was built in 2014 and has 80,734 rentable square feet of which 75.8% is leased. It is located on the campus of a 93-bed Ascension Health affiliated hospital.

Notable Development Conversions

During Q2 2017, Welltower expanded its relationships with Sunrise and Revera by completing the development of two private pay, seniors housing properties located in Bath and High Wycombe, UK for £24 million based upon 100% ownership. The purchase price represents an 8.1% stabilized return on cost. Since closing its initial $243 million acquisition in 2012, the Company completed $5.1 billion of follow-on pro-rata investments with Sunrise.

Welltower completed a 46,326 square foot development of an outpatient medical building in Timonium, MD that is 100% leased by Medstar Health. The investment amount was $21 million and the yield on the development is 6.0%. The Company also completed a 56,211 square foot development of an outpatient medical building in Howell, MI that is 70% leased by St. John Providence, a subsidiary of Ascension Health, with the remaining space fully occupied by several physician practices. The investment amount was $16 million and the stabilized yield on the development is 8.1%.

Cash Matters

As on June 30, 2017, Welltower had $442 million of cash and cash equivalents and $2.6 billion of available borrowing capacity under its primary unsecured credit facility. During the reported quarter, the Company generated approximately $192 million in proceeds under its ATM program at an average price of $72.56. In addition, Welltower extinguished $182 million of secured debt during Q2 2017, bringing its year-to-date retirement of debt and preferred securities to $1.275 billion at a blended average rate of 5.6%.

Welltower’s Board of Directors declared a cash dividend of $0.87 per share for the quarter ended June 30, 2017, compared to $0.86 per share for the same period in 2016. On August 21, 2017, the Company will pay its 185th consecutive quarterly cash dividend.

Outlook

For FY17, Welltower revised its net income attributable to common stockholders to a range of $2.32 to $2.42 per diluted share from the previous range of $2.39 to $2.49 per diluted share. The Company re-affirmed its normalized FFO attributable to common stockholders guidance and expects to report in a range of $4.15 to $4.25 per diluted share

Welltower increased its SSNOI guidance and now expects average blended SSNOI growth of approximately 2.25%-3% in 2017, up from 2%-3%. The Company anticipates funding additional development of approximately $173 million in 2017 relating to projects underway on June 30, 2017. The Company expects development conversions during the remainder of 2017 of approximately $143 million, which are currently expected to generate stabilized yields of approximately 8.8%.

Welltower is estimating approximately $2 billion of disposition proceeds at a blended yield of 7.6% in 2017.

Stock Performance

Welltower’s share price finished yesterday’s trading session at $70.60, marginally sliding 0.90%. A total volume of 1.48 million shares have exchanged hands. The Company’s stock price advanced 7.97% in the past six months. Additionally, the stock gained 5.48% since the start of the year. Shares of the Company have a PE ratio of 49.47 and have a dividend yield of 4.93%. The stock currently has a market cap of $26.49 billion.

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