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Shankh Mitra headshot
Welltower CEO Shankh Mitra

Last year’s momentum carried over into the first quarter “and translated into the first period of year-over-year bottom-line growth for our company since the beginning of [the] pandemic,” Welltower CEO Shankh Mitra said Wednesday on the company’s first-quarter earnings call.

Total revenue for the Ohio-based real estate investment trust is up 32.7% year-over-year, “driven by both organic revenue growth as well as a significant volume of high conviction capital deployment during the last 18 months,” Mitra said. The REIT’s senior housing operating portfolio revenue is up 11.2% year-over-year, driven by a 4.6% occupancy growth and 4.6% rate growth. That’s more than two times the growth rate experienced last quarter and is the highest year-over-year increase since at least 2017, Chief Operating Officer John Burkart said.

“Encouragingly, we saw sequential pricing growth was 4.3%, the fastest growth recorded in our history despite only half of our operators pushing through in-house rent increases on [the] Jan. 1 schedule,” Mitra said.

According to Burkart, the combination of higher rental rates, increasing occupancy and improving margins led to a net operating growth rate of 18.4%. 

“Our operators continue to report very strong demand, with traffic above 2019 levels, which bodes well for the peak sales season ahead,” he said.

Welltower also reported that it is expanding its partnership with Cogir U.S. with the purchase of three senior living communities in Washington state and the purchase of another property in the East Bay of Northern California. According to Mitra, all of the properties were bought at significant discount replacement cost. The REIT also acquired 33 StoryPoint Senior Living communities in Michigan, Ohio and Tennessee.

Additionally, Welltower announced Tuesday the expansion of its relationship with Oakmont Management Group in California; the REIT has agreed to purchase seven senior living communities, which Oakmont will operate under an aligned RIDEA 3.0 contract.

Welltower also announced that it has “substantially exited” its relationship with Genesis. Last year, the REIT terminated its master lease with Genesis in a $880 million deal and continues its planned exit from the relationship. During the first quarter of 2022, the REIT closed on the sale of seven properties for a gross purchase price of $76 million; in April, Welltower closed on the sale of two properties for proceeds of $17 million. 

Chief Financial Officer Tim McHugh said the REIT continues “to be pleased by the momentum of the top-line recovery in our senior housing operating portfolio, driven by a combination of rate and occupancy growth, setting the stage for a multiyear recovery to average occupancy in the portfolio at 76.4% at quarter end.”

“We’ve described this recovery in the past as a coiled spring with both secular and cyclical tailwinds behind it. When we’ve started to see the spring release in the core portfolio, we have made the conscious decision to steadily allocate capital to distressed, under-operated and, often, initially diluted properties, along with high-quality development projects,” McHugh said.

“While this capital allocation has the effect of offsetting some of our core growth today, we will sustainably amplify it in the years to come. In short, we’re working hard to keep that spring coiled even as we start to realize the power of the earnings growth it can drive,” he added.

In closing, Mitra said he could not be “more pleased with the internal and external growth prospects of the company.”
See more coverage of the earnings call in McKnight’s Senior Living and McKnight’s Long-term Care News.