Welltower came out with a business update for June, and there was some good news on the financial front, particularly in regard to labor cost trends. First, the REIT was able to raise guidance for both its 2023 net income attributable to common stockholders and 2023 normalized FFO on the back of better-than-expected operating results in its SHOP portfolio and a bolstered balance sheet.
Operationally, the REIT reported that same-store RevPOR continued to grow at a faster rate than ExpPOR in the first quarter of this year, the fifth consecutive quarter of margin expansion. This was helped in part by agency labor expense as a percentage of total compensation dropping to 3.4% in the first quarter, down from 4.9% in the fourth quarter of 2022 and from 7.9% from Q1:22. The other good staffing news was that several of Welltower’s operators noted lower applicant attrition throughout the recruitment process and an overall improved hiring and recruiting process. A potential recession would likely only improve the sector’s hiring and retaining prospects.
On the revenue side, the REIT reported that sustained rate growth and occupancy gains drove revenue ahead of expectations, all of this in the historically difficult first quarter. Hopefully the summer brings more margin gains across the industry, even as the capital markets keep valuations down and M&A markets quiet.
