Welltower Inc. WELL boasts a diversified portfolio of healthcare real estate assets in the key markets of the United States, Canada and the U.K. The favorable senior housing industry, capital-recycling efforts and a healthy balance sheet are likely to continue aiding the company to ride the growth curve.

Last month, this Toledo, OH-based healthcare real estate investment trust (REIT) company reported third-quarter 2024 normalized funds from operations (FFO) per share of $1.11, beating the Zacks Consensus Estimate of $1.04. The reported figures improved from 92 cents per share a year ago.

Analysts seem bullish on this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for WELL’s 2024 FFO per share has moved 1.7% northward over the past month to $4.26.

Shares of this company have gained 34.5% in the past six months compared with the industry’s 17.1% growth.

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Factors That Make Welltower a Solid Pick

Favorable SHO Portfolio Dynamics: Given an aging population and an expected rise in senior citizens’ healthcare expenditure, Welltower’s seniors’ housing operating (SHO) portfolio is well-poised to capitalize on this positive trend.

With a supply-demand imbalance, the portfolio is expected to experience sustained occupancy growth in 2024 and the coming years. Capitalizing on these positive aspects, Welltower’s SHO portfolio is well-prepared for compelling multiyear revenue growth.

In the third quarter of 2024, SHO portfolio same-store net operating income (NOI) grew 23%. This represents the eighth consecutive quarter in which growth has exceeded 20%. In 2024, management anticipates the SHO portfolio same-store NOI to grow 22-24%, up from the previous guidance range of 19-23%. This is driven by favorable results and expectations for continued strength in the fourth quarter of 2024.

Favorable OM Visit Trend: There has been a favorable outpatient visits trend compared with in-patient admissions. Banking on this, the company is optimizing its outpatient medical (OM) portfolio, growing relationships with health system partners, and deploying capital in strategic acquisitions. From the beginning of 2024 through Oct. 28, 2024, Welltower carried out pro-rata acquisitions and loan funding totaling $45.6 million for one OM property.

Given the favorable secular trends and growing need for value-based care, the company’s efforts to strengthen its OM footprint will boost long-term growth.

Capital-Recycling Efforts: WELL’s capital-recycling efforts to finance near-term investment and development opportunities highlight its prudent capital management practices and pave the way for long-term growth.

In the third quarter of 2024, the company completed pro-rata gross investments of $2.4 billion. This included $2.2 billion in acquisitions and loan funding and $203.3 million in development funding. During this period, pro rata property dispositions and loan payoffs totaled $384 million. As of Sept. 30, 2024, seven SHO and 10 triple-net properties were classified as held for sale.

Balance Sheet Strength: Welltower maintains a healthy balance sheet position and has $8.8 billion of available liquidity as of Sept. 30, 2024. The company enjoys investment-grade credit ratings of BBB+ and Baa1 from S&P Global Ratings and Moody’s, respectively, rendering it access to the debt market at favorable rates.

With a well-laddered debt maturity schedule and enough financial flexibility, Welltower is likely to meet its near-term obligations and fund its development pipeline.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are OUTFRONT Media OUT and Cousins Properties CUZ, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for OUTFRONT Media’s 2024 FFO per share is pinned at $1.73, suggesting year-over-year growth of 5.5%.

The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share stands at $2.68, indicating an increase of 2.3% from the year-ago reported figure.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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