Welltower Inc. reports strong quarter. “These results are the product of consistent growth across all of our business segments, in particular seniors housing, where performance is being driven by an ongoing stabilization of occupancy which Welltower began to benefit from in 2018,” explains Welltower Inc. CEO Thomas DeRosa on the firm’s Q1 call. “We expect this to continue through the rest of the year.”
According to DeRosa, the REIT continues to benefit from excellent access to capital which allowed the company to both fund its contractual investment pipeline and position the balance sheet for opportunistic investments going forward locking in long-term value creation for it’s shareholders.
“Our differentiated strategy and approach to capital allocation has resulted in a total of $2 billion in new investments, closed or announced, since the start of 2019 bringing accretive new investment volume to over $6 billion since early 2018,” he said on the call. “This is enabling Welltower to deliver the earnings growth we report to you today. Simply put, we run Welltower to deliver sustainable and reliable growth to our shareholders. Our results demonstrate that our strategy works.”
Shankh Mitra, EVP and chief investment officer of the firm, further reviewed the company’s operating results on the call. “While pundits proclaimed supply headwinds for years to come using their gut feel as it suits their story at a given moment, our data analytics team of statisticians and computer scientists, armed with machine learning, not gut feelings, informed our prediction of the turn in our operating trends that I have discussed with you over the last three quarters.”
According to Mitra, the first quarter SHOP results exceeded expectations in all three main drivers; rate, occupancy and labor cost. “Same-store NOI for the SHOP portfolio is up 3% year-over-year, driven by 60 basis points of occupancy growth, 2.9% rate growth, partially offset by a 3.6% labor cost growth. These are the best fundamental results we have seen in a long time.”
Sequential results are even more encouraging, Mitra continued. “Sequential revenue growth of 0.4% in a usually seasonally weak first quarter is one of the best we have seen in years, and is driven by both strong rate and occupancy. More interestingly, this quarter, for the first time in five years, we saw sequential revenue per occupied room growth of 3.3% outpaced compensation per occupied room growth of 2.8%, resulting in a positive spread of 50 basis points.”