Welltower (WELL) Q4 2023 earnings summary

Executive summary

• Q4 SHO same-store NOI grew 23.7%, its fifth consecutive quarter above 20%; FY23 growth was 24.4%.

• Q4 normalized FFO per diluted share rose 15.7% YoY to $0.96; total portfolio SSNOI growth was 12.5%.

• FY23 normalized FFO per diluted share was $3.64; total portfolio average SSNOI growth was 12.6%.

• Q4 net income attributable to common stockholders was $83.9M, versus a $3.7M loss in Q4 2022; FY net income was $340.1M.

• Occupancy gains, pricing power and easing expense pressures supported margin recovery; management expects these operating trends to continue in 2024.

Financial highlights

• Q4 total revenue was $1.750B versus $1.519B YoY; FY revenue was $6.638B versus $5.861B.

• FY23 same-store revenue grew 9.8%; SHO occupancy increased 240 bps and operating margin expanded 280 bps on a weighted-average basis.

• Q4 SHO same-store revenue grew 9.7%; occupancy increased 330 bps YoY and 110 bps sequentially, while NOI margin expanded 290 bps YoY.

• Q4 same-store RevPOR growth was 5.5%, or 6.8% excluding Sunrise Senior Living; reported growth reflected a one-time pull-forward of rent increases into Q4 2022.

• Q4 same-store ExpPOR growth was 1.7% and compensation per occupied room growth was 1.9%, both reported as historical lows.

Outlook and guidance

• FY24 normalized FFO per diluted share guidance is $3.94–$4.10, midpoint $4.02; net income guidance is $1.21–$1.37 per diluted share.

• FY24 blended average SSNOI growth guidance is 8.25%–11.50%; SHO 15%–21%, seniors housing triple-net 2.5%–4%, outpatient medical 2%–3%, and long-term/post-acute care 2%–3%.

• SHO same-store revenue growth is forecast at 9.2%, including RevPOR growth of 5.25%; expense-per-occupied-room growth is expected to decelerate.

• Guidance assumes $819M of 2024 development funding, G&A of $195M–$205M and stock-based compensation expense of $37M; it excludes unannounced capital transactions and pandemic relief funds.

• Expected next-12-month pro rata disposition proceeds are $1.0B at a blended yield of 5.8%.