Toledo, OH-based Welltower has revised its guidance for the second quarter.
The real estate investment trust said Monday in a business update that it raised the midpoint of normalized funds from operations guidance range $0.84 to $0.87 per share, compared with $0.82 to $0.87 previously. The REIT said it expects earnings in the range of $0.22 to $0.25 per share, compared with its earlier outlook of $0.20 to $0.25 per share.
Among the drivers of per share cash flow growth, Welltower cited secular growth tailwinds, accretive capital deployment, a diversified platform of operators and a strong internal base of talent. Further, the REIT said that a “value-based investment philosophy and innovative structure of transactions offer significant downside protection.”
A balanced lease structure mitigates the effects of inflationary pressures, the company said, so it favors shorter-duration leases in its senior housing operating portfolio to allow for more frequent mark-to-market of rents.
Since the first quarter, Welltower has announced or completed the deployment of approximately $750 million of new capital. The REIT said it expects near-term capital deployment to remain “robust,” with roughly $2 billion under contract.
Among the capital deployments the REIT announced was an agreement to purchase a 25-property senior apartment portfolio from Calamar for $502 million, or $172,000 per unit. The transaction is expected to be funded with cash, the assumption of debt, and UPREIT operating partnership units.
In announcing the purchase, Welltower said it already is the largest U.S. owner of moderately priced age-restricted and age-targeted rental housing. The new deal, according to the REIT, brings its total number of such units in its portfolio to almost 10,000, with “significant future growth expected through additional capital deployment opportunities, including development.”
In other news from Welltower, spot occupancy has increased 80 basis points (0.8%) since the first quarter, which is “in line with expectations” despite the increasing number of reported COVID-19 cases during the second quarter.
“Pricing power remains robust with strong recognized renewal rate increases and improving street rates,” the company said.
Some operators within Welltower’s portfolio have reported a positive turnaround in applications and staffing. Reliance on outside staffing agencies also has decreased in spite of COVID-19 surges, the REIT said.
