Tim McHugh headshot
Tim McHugh

Despite the ongoing negative effects of the pandemic on Welltower’s financial results and seniors housing occupancy, the Toledo, OH-based real estate investment trust beat analysts expectations with regard to its third quarter earnings.

Welltower ended the period with quarterly funds from operations of 84 cents per share, beating 81 cent per share estimates from Zacks and Mizuho Securities USA of $0.81 per share. This compares with FFO of $1.05 per share a year ago. 

Despite the beat, the outlook for senior housing remains challenging as the REIT expects continued declines in its senior housing portfolio occupancy in the fourth quarter. Welltower’s senior housing tenants reported a 1.5% occupancy decline in the third quarter, in line with expectations. The firm did collect 98% of rent due from operators under its senior housing triple net facilities, despite the challenging environment, noted Mizuho analysts Omotayo Okusanya and Venkat Kommineni, in an investor note on the REIT’s third-quarter results.

“The million dollar question remains when senior housing occupancy will trough,” they said. 

Also during the quarter, Welltower completed approximately $1.4 billion in largely pre-announced dispositions.

“We believe that these transactions show a strong market for senior housing and medical office building assets despite some of the COVID-related headwinds both healthcare real estate sectors have recently faced,” Okusaya and Kommini said. 

The firm also declared a dividend of 61 cents per share Wednesday, payable on Nov. 19.

During the firm’s third-quarter earning conference call Thursday, Chief Financial Officer Tim McHugh confirmed Welltower’s commitment to the senior housing sector and reassured shareholders that the sector likely will continue to see improvements moving forward.

“Although the last seven months have been very challenging for our senior housing triple-net operators, the sequential stabilization we observed between the second and third quarters, along with relief funds from [Department of Health and Human Services] to be received in the fourth quarter, should help our operators find their footing heading into 2021,” McHugh said.

For additional coverage of the earnings call, see this article from McKnight’s Senior Living.