Welltower Inc. HCN, a healthcare real estate investment trust (REIT), came up with normalized funds from operations (FFO) per share of $1.05 for first-quarter 2017, in line with the Zacks Consensus Estimate. However, FFO was lower than the prior-year quarter figure of $1.13.

During the quarter, the company generated $1.1 billion proceeds through disposition.

Welltower posted revenues of around $1.06 billion, which came in higher than the Zacks Consensus Estimate of $1.05 billion. The prior year-quarter’s revenues were also $1.05 billion.

Quarter in Detail

Adjusted senior housing operating same-store net operating income (NOI) grew 1.9% year over year. Moreover, same-store revenues per occupied room grew at 4.1%.

Welltower completed gross investments of $217 million (pro rata basis) in the quarter. This comprised $104 million in acquisitions/joint ventures, $102 million in development funding and $11 million in loans. These investments were completed with existing relationships.

The company exited the quarter with cash and cash equivalents of $380 million, down from $419.4 million at the end of 2016. Moreover, as of Mar 31, 2017, the company had $2.5 billion of available borrowing capacity under its primary unsecured credit facility. Further, the company generated around $112 million through its ATM and DRIP programs.

2017 Outlook

Welltower has reaffirmed its 2017 outlook. The company expects normalized FFO per share guidance to remain in the range of $4.15–$4.25. Also, the company anticipates its 2017 same-store cash NOI growth to remain in the range of 2–3%.

Further, in sync with the strategic repositioning of its premier health care portfolio, the company expects 2017 disposition to be around $2 billion.

Welltower has provided guidance for 2017. The company expects normalized FFO per share in the range of $4.15–$4.25 for 2017. Also, the company anticipates its 2017 same-store cash NOI growth to remain in the range of 2–3%.

Further, in sync with the strategic repositioning of its premier health care portfolio, the company expects 2017 disposition to be around $2 billion.

Our Take

We find the company’s results, supported by a notable operating portfolio, encouraging. Additionally, a rise in senior citizen expenditure for healthcare promises strong prospects for the company. However, an anticipated rise in interest rate and intense competition remain matters of concern.

Welltower Inc. Price, Consensus and EPS Surprise

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Welltower Inc. Price, Consensus and EPS Surprise | Welltower Inc. Quote

Welltower currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some real estate companies, which are expected to report results next week, include Mack-Cali Realty Corporation CLI, Regency Centers Corporation REG and Farmland Partners Inc. FPI.

Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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