Welltower buys 43 senior housing properties for $2.7 billion

Welltower acquired 43 senior housing properties for $2.7 billion in the third quarter, part of $21 billion of investments completed or under contract this year across 196 transactions, Commercial Observer reported from Tuesday's earnings call.

Third-quarter revenue was $3.7 billion, up about 38% from a year earlier. Normalized funds from operations rose 24.6% to $1.67 a share, and net income was $414.8 million, compared with $282 million a year earlier.

Private buyers pursuing senior housing will compete with Welltower, which has $21 billion of investments completed or under contract this year. About $8 billion of U.S. senior housing debt matures in 2026. “While some owners may recapitalize, most will sell as the impact of rising rates offsets improved industry fundamentals,” Nikhil Chaudhri, Welltower's co-president and chief investment officer, said. “That is where Welltower comes in.”

Occupancy across the portfolio was 88%. The company said the driver of revenue growth has shifted from filling units to rent: average monthly revenue per occupied unit rose 5.3% in the quarter, which it attributed to shrinking system capacity and pricing at luxury senior living communities. Its long-term senior housing portfolio posted a 21% year-over-year increase, marking 16 consecutive quarters of compounding growth.

On the exit side, Welltower has sold $2.1 billion of outpatient medical assets this year, including 25 properties in the quarter. Earlier this month, Brookdale Senior Living said it acquired 30 communities leased from Welltower for $290 million.

Other expenses, a line that includes transaction costs and legal fees, nearly tripled to $124.7 million from $44.7 million. Chief executive Shankh Mitra said the company avoids large-scale mergers “like the plague” and acquires less than 3% of the assets it screens.