Welltower Earnings: Senior Housing Continues to Recover as Company Announces $2.3 Billion in Deals

Second-quarter results for no-moat Welltower were relatively in line with our expectations, leading us to reaffirm our $98 fair value estimate. Same-store occupancy for the senior housing portfolio sequentially increased to 80.2%, better than our estimate of 79.9%. Rental rates increased 7.5% year over year, leading to second-quarter same-store revenue growth of 9.9%. Meanwhile, senior housing same-store operating expenses only increased 5.8%, so Welltower reported same-store net operating income growth of 24.2% for the senior housing segment that beat our estimate of 20.8% growth. The company's triple-net senior housing segment saw 3.1% same-store NOI growth, the medical office portfolio reported 3.2% same-store NOI growth, and the skilled nursing segment grew same-store NOI by 6.1%. Combined, Welltower reported total company same-store NOI growth of 12.7%, which was better than our estimate of 9.2% growth. Normalized funds from operations grew 4.0% year over year to $0.90 per share, in line with our estimate.