Welltower (HCN) Tops Q2 EPS by 7c, Miss on Revenues; FY17 EPS Guidance Above Consensus

Welltower (NYSE: HCN) reported Q2 EPS of $0.51, $0.07 better than the analyst estimate of $0.44. Revenue for the quarter came in at $1.06 billion versus the consensus estimate of $1.07 billion.

GUIDANCE:

Welltower sees FY2017 EPS of $2.32-$2.42, versus the consensus of $2.21.

Outlook for 2017

Net income attributable to common stockholders has been revised to a range of $2.32 to $2.42 per diluted share from the previous range of $2.39 to $2.49 per diluted share primarily due to the normalizing items in Exhibit 1 and impairments. We are affirming our 2017 normalized FFO attributable to common stockholders guidance and expect to report in a range of $4.15 to $4.25 per diluted share. As previously disclosed, we will no longer report FAD, primarily because it could be considered a liquidity metric, but we will provide relevant data components. In preparing our guidance, we have updated the following assumptions:

• Same Store NOI: We are increasing SSNOI guidance and now expect average blended SSNOI growth of approximately 2.25%-3% in 2017, up from 2%-3% primarily due to better than expected performance in our seniors housing operating portfolio in the first half of 2017.
• Acquisitions: 2017 earnings guidance excludes any additional potential acquisitions beyond what has been announced.
• Development: We anticipate funding additional development of approximately $173 million in 2017 relating to projects underway on June 30, 2017. We expect development conversions during the remainder of 2017 of approximately $143 million, which are currently expected to generate stabilized yields of approximately 8.8%. These projections exclude the development projects in London and midtown Manhattan which are still in the planning stages.
• Dispositions: We continue to anticipate approximately $2 billion of disposition proceeds at a blended yield of 7.6% in 2017. This includes approximately $1.3 billion of proceeds from dispositions completed to-date and $0.7 billion of incremental proceeds from other potential loan payoffs and property sales.

Our guidance does not include any additional investments, dispositions or capital transactions beyond what we have announced, nor any transaction costs, impairments, unanticipated additions to the loan loss reserve or other additional normalizing items. Please see the exhibits for a reconciliation of the outlook for net income available to common stockholders to normalized FFO attributable to common stockholders. We will provide additional detail regarding our 2017 outlook and assumptions on the second quarter 2017 conference call.

For earnings history and earnings-related data on Welltower (HCN) click here.

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