Welltower (WELL) Tops Q4 EPS by 21c; Offers 1Q EPS Guidance Above Consensus

Welltower (NYSE: WELL) reported Q4 EPS of $0.39, $0.21 better than the analyst estimate of $0.18. Revenue for the quarter came in at $1.12 billion versus the consensus estimate of $1.14 billion.

Highlights

• Reported net income attributable to common stockholders of $0.39 per diluted share
• Reported normalized FFO attributable to common stockholders of $0.84 per diluted share
• Completed $657 million of pro rata acquisitions since the start of the fourth quarter 2020 at a blended, non-stabilized yield of 4.5%, including a 790 unit portfolio of seniors housing assets operated by Harbor Retirement Associates for $132 million subsequent to quarter end
• Completed $781 million of pro rata dispositions since the start of the fourth quarter 2020 at a blended yield of 5.2%, resulting in near-term liquidity of $5.1 billion as of February 8, 2021
• Over 90% of assisted living and memory care facilities in our Seniors Housing Operating (\"SHO\") portfolio have completed their first vaccination clinic, based on operator reported data as of February 8, 2021
• Named to the Dow Jones Sustainability World Index for the third consecutive year and to the Dow Jones Sustainability North America Index for the fifth consecutive year

GUIDANCE:

Welltower sees Q1 2021 EPS of $0.24-$0.29, versus the consensus of $0.23.

Outlook for First Quarter 2021

The extent to which the COVID-19 pandemic impacts our operations and those of our operators and tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and related containment and vaccination measures, among others. Accordingly, we are only introducing earnings guidance for the quarter ended March 31, 2021 and expect to report net income attributable to common stockholders in a range of $0.24 to $0.29 per diluted share and normalized FFO attributable to common stockholders in a range of $0.71 to $0.76 per diluted share. In preparing our guidance, we have made the following assumptions:

• Provider Relief Funds: Our first quarter guidance includes approximately $31 million of pro rata net Provider Relief Funds received to date.
• SHO Portfolio Occupancy: We anticipate total SHO portfolio average occupancy to decline 275 to 375 basis points in the first quarter relative to fourth quarter average occupancy.
• General and Administrative Expenses: We anticipate full year general and administrative expenses to be approximately $135 million to $140 million and stock-based compensation expense to be approximately $21 million.
• Investments: To date in 2021, we have completed pro rata acquisitions of $151 million at a blended yield of 7.7%. Our first quarter 2021 earnings guidance includes only those acquisitions closed or announced to date. Furthermore, no transitions or restructures beyond those announced to date are included.
• Development: We anticipate funding approximately $395 million of development in 2021 relating to projects underway on December 31, 2020.
• Dispositions: We expect pro rata disposition proceeds of $271 million at a blended yield of 4.7% in 2021 related primarily to properties classified as held-for-sale as of December 31, 2020, substantially all of which are expected to close during the first quarter.
• Our guidance does not include any additional investments, dispositions or capital transactions beyond those we have announced, nor any other expenses, impairments, unanticipated additions to the loan loss reserve or other additional normalizing items. Please see the Supplemental Reporting Measures section for further discussion and our definition of normalized FFO and Exhibit 3 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 first quarter outlook and assumptions on the fourth quarter 2020 conference call.

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