Welltower announced its third quarter earnings results, and they were better than even the most optimistic investors thought they would. Probably better than what CEO Shankh Mitra thought they would be six months ago.
Everything is up, and while not where the numbers were a few years before Covid, the performance is better than most. Same-community occupancy in their SHOP portfolio grew by 310 basis points year over year and RevPOR grew by 4.9%. And same-community NOI increased by 300 basis points.
The REIT completed $2.4 billion in gross investments, and it has an acquisition pipeline that would make the other REITs blush. But don’t forget, it has nothing to do with their cost of capital, as management always likes to remind us. Management also increased the outlook for 2024, revising earnings guidance upward by nearly 20 cents a share. That is unheard of in the world of public companies, especially REITs. The REIT also announced converting 52 triple-net leased properties to RIDEA structures, which we assume were the former Retirement Unlimited properties (and 29 former Brandywine properties). You win some, you lose some. It is now RIDEA 4.0. Any bets on when 5.0 will be rolled out?
All of this resulted in a jump in Welltower’s share price of more than 5%. Pretty soon, the dividend yield will be under 2.0%, which is just too low. They have already increased it recently, but another increase would be nice.
