Welltower Inc. (WELL) reported third-quarter 2024 normalized funds from operations (FFO) per share of $1.11, which surpassed the Zacks Consensus Estimate of $1.04. The reported figure improved 20.7% year over year.

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Reflecting the positive sentiments of investors, shares of the company gained around 2.2% during the after-hours of Monday’s trading session.

Results reflected a rise in revenues on a year-over-year basis. The total portfolio same-store net operating income (SSNOI) increased year over year, driven by the SSNOI growth in the senior housing operating (SHO) portfolio. The company also raised its guidance for 2024.

WELL recorded revenues of $2.06 billion in the quarter, outpacing the Zacks Consensus Estimate of $1.95 billion by 5.4%. The top line increased 23.7% year over year.

WELL’s Q3 in Detail

The SHO portfolio’s same-store revenues increased 8.9% year over year, backed by a 310-basis point uptick in average occupancy and Revenue per Occupied Room (RevPOR) growth of 4.9%.

The company’s total portfolio SSNOI grew 12.6% year over year, supported by SSNOI growth in its SHO portfolio of 23%.

WELL’s pro-rata gross investments in the third quarter totaled $2.4 billion. This included $2.2 billion in acquisitions and loan funding and $203 million in development funding. It opened nine development projects for a pro-rata investment amount of $294 million.

During the quarter, WELL completed acquiring 20 of its previously announced 25 age-restricted active adult communities for $691 million. The acquisition was spread across two tranches, with the last tranche expected to close by the end of the year.

During the third quarter, WELL converted 41 triple net leased properties to Seniors Housing Operating structures to directly participate in the underlying cash flow growth of the communities.

In the third quarter, property operating expenses increased 21.8% to $1.21 billion year over year.

WELL’s Balance Sheet Position

As of Sept. 30, 2024, WELL had $8.8 billion of available liquidity, comprising $3.8 billion of available cash and restricted cash and full capacity under its $5 billion line of credit.

As of Sept. 30, 2024, its net debt to adjusted EBITDA improved to 3.73X from 5.14X on Sept. 30, 2023.

WELL’s 2024 Guidance Raised

Welltower now projects 2024 normalized FFO per share in the band of $4.27-$4.33, up from the prior-guided range of $4.13-$4.21. The Zacks Consensus Estimate is pegged at $4.19, which lies below the company's guided range.

WELL’s guidance now assumes the average blended SSNOI growth of 11.5-13%, comprising 22-24% growth in Seniors Housing Operating, 4-5% in Seniors Housing Triple-net, 2-3% in Outpatient Medical and 2-3% in Long-Term/Post-Acute Care.

Dividend Update for WELL

On Oct. 28, concurrent with its third-quarter 2024 earnings release, Welltower announced a cash dividend for the third quarter of 67 cents per share. The dividend will be paid out on Nov. 21 to stockholders of record as of Nov. 13, 2024. This will mark the company’s 214th consecutive quarterly cash dividend payout.

Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Ventas VTR and Realty Income O, which are slated to report on Oct. 30 and Nov. 4, respectively.

The Zacks Consensus Estimate for Ventas’ third-quarter 2024 FFO per share stands at 80 cents, indicating a 6.7% rise year over year. VTR currently has a Zacks Rank #2.

The Zacks Consensus Estimate for Realty Income’s third-quarter 2024 FFO per share is pegged at $1.05, implying a 2.9% year-over-year increase. O currently carries a Zacks Rank #2.

Performance of Another Healthcare REIT

Healthpeak Properties, Inc. DOC reported a third-quarter 2024 FFO as adjusted per share of 45 cents, beating the Zacks Consensus Estimate by a penny. The figure remained unchanged on a year-over-year basis.

Results reflected better-than-anticipated revenues. Growth in total merger-combined same-store cash (adjusted) net operating income was witnessed across the portfolio. However, higher interest expenses undermined the results to an extent. The company revised its 2024 outlook.

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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