Welltower Reports Q2 Results in Line With Our Expectations, Though Health System Coverage Worrisome

Second-quarter results were relatively in line with our expectations, leading us to reaffirm our $97 fair value estimate for no-moat Welltower. Same-store occupancy in the senior housing portfolio sequentially improved 100 basis points, in line with our estimate, to 78.8% and is up 500 basis points year over year. Same-store revenue growth was 11.5% for senior housing in the second quarter, in line with our estimate, while same-store expense growth was 10.5%, slightly better than our estimate of 12.7% growth, which lead to same-store net operating income growth of 15.4% for senior housing. Same-store NOI growth for the triple-net senior housing portfolio was 9.9%, better than our 7.9% estimate. However, same-store NOI growth for the medical office portfolio was 2.5%, which was slightly below our estimate of 4.2% growth. Still, total company same-store NOI growth came in at 8.7% for the second quarter, slightly better than our 6.1% estimate. Welltower reported normalized funds from operations of $0.86 per share in the second quarter, in line with our $0.87 estimate and ahead of the $0.79 reported in the second quarter of 2021.