Senior Housing Occupancy Gains and Record Rental Rate Growth Drive Welltower's Q3 Results

No-moat Welltower reported third-quarter results that were mixed compared with our expectations, though we didn’t see anything in the quarter that would materially change our $97 fair value estimate. Same-store occupancy improved 110 basis points sequentially and 390 basis points year over year to 79.7%, which was ahead of our estimate of 78.9%. Welltower reported that revenue per occupied room increased 5.3% year over year in the third quarter, the largest rental rate increase in the company’s history. As a result, same-store revenue for the senior housing portfolio were up 10.8% and same-store net operating income increased 17.6%, beating our estimate of just 9.1% growth. However, same-store NOI for the triple-net senior housing portfolio only increased 1.6%, slightly below our estimate of 2.5% growth, and same-store NOI for the medical office portfolio increased just 1.4%, below our estimate of 3.5% growth. Combined, Welltower reported total company same-store NOI growth of 7.2%, which was in line with our estimate of 6.9% growth for the third quarter. Welltower reported normalized funds from operations of $0.84 per share, which missed our $0.88 estimate but beat the $0.80 figure the company reported in the third quarter of 2021.