Welltower's (HCN) Q1 FFO Meets Estimates, Revenues Beat
Zacks Investment Research | May 04, 2017 10:29PM ET
Welltower Inc. (NYSE:HCN) , a healthcare real estate investment trust (REIT), came up with normalized funds from operations (FFO) per share of $1.05 for first-quarter 2017, in line with the Zacks Consensus Estimate. However, FFO was lower than the prior-year quarter figure of $1.13.
During the quarter, the company generated $1.1 billion proceeds through disposition.
Welltower posted revenues of around $1.06 billion, which came in higher than the Zacks Consensus Estimate of $1.05 billion. The prior year-quarter’s revenues were also $1.05 billion.
Quarter in Detail
Adjusted senior housing operating same-store net operating income (NOI) grew 1.9% year over year. Moreover, same-store revenues per occupied room grew at 4.1%.
Welltower completed gross investments of $217 million (pro rata basis) in the quarter. This comprised $104 million in acquisitions/joint ventures, $102 million in development funding and $11 million in loans. These investments were completed with existing relationships.
The company exited the quarter with cash and cash equivalents of $380 million, down from $419.4 million at the end of 2016. Moreover, as of Mar 31, 2017, the company had $2.5 billion of available borrowing capacity under its primary unsecured credit facility. Further, the company generated around $112 million through its ATM and DRIP programs.
2017 Outlook
Welltower has reaffirmed its 2017 outlook. The company expects normalized FFO per share guidance to remain in the range of $4.15–$4.25. Also, the company anticipates its 2017 same-store cash NOI growth to remain in the range of 2–3%.
Further, in sync with the strategic repositioning of its premier health care portfolio, the company expects 2017 disposition to be around $2 billion.
Welltower has provided guidance for 2017. The company expects normalized FFO per share in the range of $4.15–$4.25 for 2017. Also, the company anticipates its 2017 same-store cash NOI growth to remain in the range of 2–3%.
Further, in sync with the strategic repositioning of its premier health care portfolio, the company expects 2017 disposition to be around $2 billion.
Our Take
We find the company’s results, supported by a notable operating portfolio, encouraging. Additionally, a rise in senior citizen expenditure for healthcare promises strong prospects for the company. However, an anticipated rise in interest rate and intense competition remain matters of concern.
Welltower currently carries a Zacks Rank #4 (Sell).
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