Senior Housing Fundamentals Recovery Fully Underway for Welltower in Q1

Welltower reported first-quarter results that were slightly better than we anticipated, though we didn’t see anything in the quarter that would materially alter our $97 fair value estimate for the no-moat company. Occupancy for the same-store senior housing portfolio sequentially improved 30 basis points to 78.0%, slightly below our estimate of a 50-basis-point improvement. Still, the recovery in senior housing fundamentals is well underway with same-store revenue up 11.2% year over year, slightly better than our 9.8% estimate. While same-store expenses were up 9.4% in the quarter, net operating income margins improved to 20.9% and same-store NOI grew 18.4%. Welltower’s other segments also produced solid same-store NOI growth with triple-net senior housing up 6.9%, medical office up 2.7%, health systems up 2.8%, and skilled nursing up 1.8%. Combined, Welltower produced total company same-store NOI growth of 8.9% in the first quarter that beat our estimate of 6.6% growth. Welltower also produced normalized funds from operations of $0.82 per share that beat our estimate for the first quarter by a penny.