The second quarter of 2021 was one of the best quarters for Welltower from a capital deployment perspective, CEO and Chief Investment Officer Shankh Mitra said Friday, explaining that the real estate investment trust closed on $1.4 billion of gross investments.
And the third quarter will likely top the second one, he said on the REIT’s second-quarter earnings call, because he ancitipcates another record quarter of investment activity. Mitra described the investment pipeline as “very strong.”
And the REIT anticipates funding approximately $288 million of development in 2021 relating to projects underway on June 30.
Welltower has formed 50 new operating and development partnerships since the beginning of the pandemic and has a few more in the works, Mitra said.
During the quarter, the REIT acquired three combination independent living, assisted living and memory care communities in the Midwest for $102 million. The communities will be operated by StoryPoint Senior Living under a new triple-net master lease.
Also in the second quarter, Welltower acquired four senior housing communities for $107 million that will be operated by existing operators Sunrise Senior Living, Chartwell Retirement Residences in Canada, Sparrow Living of Texas and a new relationship, Enclave Companies of Fargo, ND.
Following a June 21 announcement of an agreement with Holiday Retirement to buy a portfolio of 86 seniors housing properties for $1.58 billion, Welltower will have executed on approximately $4 billion in investments since the fourth quarter 2020 in 37 total transactions, acquiring 181 outpatient medical and senior housing properties, including 17,163 seniors housing units, the company said.
Since June 21, the REIT has completed $256 million in investments, including the acquisition of seven senior housing communities to be transitioned to Frontier Management in the second tranche of a previously announced 29-property portfolio transaction for $50 million.
Welltower also formed a new REIT Investment Diversification and Empowerment Act relationship with Illinois-based operator Pathway to Living and acquired 22 properties in Illinois and Ohio. And in July, after the close of the second quarter, Welltower closed on a second tranche of seven senior housing properties from the same seller, which were added to the existing RIDEA relationship with Frontier Management.
Welltower also reported expanding its relationship with Oakmont Senior Living by acquiring Ivy Living at Otay Ranch, an assisted living and memory care community in San Diego.
Additionally, the company entered into a strategic partnership with Oakmont Management Group that is expected to increase the size of Welltower and Oakmont’s existing portfolio of nine assisted living and memory care communities. The partnership will include acquisition opportunities and an exclusive, long-term development agreement with a focus on highly specialized programming, and resident health and wellness.
“Oakmont is one of Welltower’s strongest-performing operating partners,” Mitra said.
Although significant uncertainty and many unknowns related to COVID-19 exist, and it is too early to signal an “all clear,” Mitra said he is pleased with the progress Welltower is making in its senior housing operating portfolio.
Welltower’s senior housing operating portfolio occupancy increased about 190 basis points during the second quarter, with move-ins increasing 48% and move-outs decreasing 9%, according to Chief Financial officer Timothy McHugh. The REIT collected 95% of rent due in the second quarter as well.
“Last fall, when we made a significant pivot from defense to offense, we made an explicit bet that consumers would return to this needs-based business,” Mitra said. With occupancy gains, he said “it appears we are on the right side of that bet.”