Yahoo Finance Welltower Inc (WELL) Q1 2024 Earnings Call Transcript Highlights: Strong Growth and Strategic ...
Net Income: $0.22 per diluted share.
Normalized Funds from Operations (FFO): $1.01 per diluted share, 18.8% year-over-year growth.
Total Portfolio Same-Store NOI Growth: 12.9% year-over-year.
Senior Housing Operating Portfolio Same-Store NOI: 25.5% increase year-over-year.
Outpatient Medical Portfolio Same-Store NOI: 2% growth year-over-year.
Investments: Closed or under contract to close $2.8 billion across 23 transactions.
Equity Issuance: Raised $2.4 billion at an average price of $91.22 per share.
Debt Extinguishment: Approximately $1.5 billion, including $1.35 billion of senior unsecured notes.
Net Debt to Adjusted EBITDA: 4.03x, projected to be around 4.5x by year-end.
Full Year 2024 Guidance: Net income per diluted share of $1.48 to $1.61; normalized FFO of $4.02 to $4.15 per diluted share.
Senior Housing Triple-Net Portfolio: Same-store NOI up 3.8% year-over-year; EBITDA coverage 1.02x.
Long-Term Post-Acute Portfolio: Same-store NOI growth of 3.1% year-over-year; EBITDA coverage 1.23x.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you comment on the conservatism in the SHOP guidance rate and any early indications in the peak leasing season? A: Shankh S. Mitra, CEO & Director of Welltower Inc., explained that it is too early in the year to make definitive statements about the annual results, which will largely be defined by the summer leasing season. He emphasized a cautious approach, stating that while the company is pleased with the year's progress, the market's outcome remains uncertain. Welltower promises to capture more than its fair share of the market, but the actual results will depend on market conditions, which will be clearer in 90 days.
Q: Could you discuss your outlook for underlying FAD growth and how it relates to the dividend policy? A: Timothy G. McHugh, CFO of Welltower Inc., addressed the FAD growth, noting ongoing efforts to identify value-add projects through an internal capital management team. He mentioned that while CapEx might be elevated, it supports cash flow growth. Regarding dividends, McHugh reiterated that cash flow recovery and confidence in the senior housing recovery are influencing their dividend policy discussions with the Board of Directors.
Q: Can you provide insights into the first-year yield and stabilized yield expectations for the $2.6 billion in acquisitions, and discuss the funding strategy for these investments? A: Timothy G. McHugh, CFO, noted that the return profile for the recent acquisitions would be similar to previous quarters, reflecting the current capital market conditions. Shankh S. Mitra, CEO, added that Welltower has raised capital for these transactions and emphasized the robustness of their investment pipeline, hinting at the use of the company's balance sheet to drive growth post-Fed cycle adjustments.
Q: How is the strategy of pushing annual rent increases earlier in the key selling season affecting retention and new lease rate growth? A: John F. Burkart, COO of Welltower Inc., explained that the strategy has been smooth, with little pushback from residents who understand the ongoing cost pressures. He noted that robust demand supports market-driven economics, which in turn influence renewal rates.
Q: Could you elaborate on the investments being made in the analytics and operations team and their potential to address capital deployment opportunities? A: John F. Burkart highlighted ongoing opportunities to enhance operational efficiency through team expansion. Nikhil Chaudhri, CIO, emphasized the critical role of the analytics team in supporting Welltower's extensive transaction activities and operational predictions, which are integral to their investment process.
Q: What are your expectations for the non-same-store senior housing portfolio mentioned earlier, and how will it impact growth as these assets are folded into the same-store pool? A: Shankh S. Mitra responded that many early transition assets would enter the same-store pool towards the year's end, with strong growth expected. However, whether they will be additive to overall growth remains to be seen, as they also face strong comparative quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
