Welltower (HCN) Misses Q3 EPS by 27c, Beats on Revenues; Lowers FY EPS Guidance Below Consensus

Welltower (NYSE: HCN) reported Q3 EPS of $0.20, $0.27 worse than the analyst estimate of $0.47. Revenue for the quarter came in at $1.09 billion versus the consensus estimate of $1.07 billion.

Outlook for 2017

Net income attributable to common stockholders has been revised to a range of $2.09 to $2.15 per diluted share from the previous range of $2.32 to $2.42 per diluted share primarily due to the normalizing items in Exhibit 1. We are increasing our 2017 normalized FFO attributable to common stockholders guidance and now expect to report in a range of $4.19 to $4.25 per diluted share as compared to the previous range of $4.15 to $4.25 per diluted share. The increase is primarily attributable to increased SSNOI guidance and revised dispositions timing. As previously disclosed, we no longer report FAD, primarily because it could be considered a liquidity metric, but we do 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 2.5%-3% in 2017, up from 2.25%-3% primarily due to better than expected performance in our seniors housing operating portfolio for the year-to-date.
• Acquisitions: 2017 earnings guidance excludes any additional potential acquisitions beyond what has been announced.
• Development: We anticipate funding additional development of approximately $87 million in 2017 relating to projects underway on September 30, 2017. We expect development conversions during the remainder of 2017 of approximately $76 million, which are currently expected to generate stabilized yields of approximately 9.3%. These projections exclude the development projects in London and midtown Manhattan which are still in the planning stages.
• Dispositions: We are increasing dispositions guidance and now anticipate approximately $2.4 billion of disposition proceeds, up from $2 billion, at a blended yield of 7.4% in 2017. This includes approximately $1.4 billion of proceeds from dispositions completed as of September 30, 2017, and $1.0 billion of incremental proceeds from other potential loan payoffs and property sales which are generally expected to occur during the second half of the fourth quarter or later.

GUIDANCE:

Welltower sees FY2017 EPS of $2.09-$2.15, versus the consensus of $2.31.

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

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