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How Welltower Drives Basis Points, Attracts Younger Generation

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Continued positive NOI growth across all Welltower Inc.’s business segments has given the REIT the confidence to raise its 2018 FFO guidance by $0.03 at the low-end and $0.01 at the high-end or a raise of $0.02 at the midpoint from $3.99 to $4.06 to $4.02 to $4.07 despite the fact that the REIT raised $232 million in equity in the quarter under its ATM and DRIP programs at a weighted average share price of $66.07. That is according to the firm’s CEO and director, Thomas DeRosa.

On the firm’s Q3 call, he said that the company has been talking for a number of quarters about dispositions and restructurings—objectives that enabled them to delever and improve the quality of the company’s cash flow. “In 2018, we have shown our ability to reinvest accretively in assets and operator relationships that are aligned with our well-articulated strategy and will drive earnings growth,” he said. “Welltower’s value proposition which connects, senior’s housing, post-acute and ambulatory sites of care to dominant, financially strong health systems is being embraced by the broader healthcare delivery sector and truly differentiates us from REIT and other capital sources.”

He added that “A knowledge-based strategy aligned with our proprietary data and analytics capabilities is enabling Welltower to drive hundreds of basis points better relative operating performance from our senior housing assets even in a challenging new supply and labor environment.”

DeRosa explains that the REIT’s strategy “has enabled us to attract a next-generation of senior housing operators and assets as we have sold or restructured over 8 billion of non-strategic real estate on misaligned legacy operator relationships in the last 24 months. In a sector that is seeing little capital deployed into long-term real estate assets, Welltower has completed approximately $3 billion of high-quality accretive investments and developments year-to-date and the year is not over.”

In addition to the $2.2 billion ProMedica joint venture that closed this quarter, the firm revealed on the call nearly $0.5 billion of new medical office investments including an expansion of its growing portfolio with the Johns Hopkins Health System and Provident St. Joseph Health.