Earnings call wrap-up: Welltower, LTC Properties

February 17, 2023

Real estate investment trusts Welltower and LTC Properties reported Thursday on their fourth-quarter and full-year 2022 earnings.


Welltower’s senior living operating portfolio experienced “further acceleration” in the fourth quarter, the Toledo, OH-based REIT reported in a business update issued in conjunction with Thursday’s earnings call. Same-store revenue exceeded 10% for the fourth consecutive quarter, driven by continued occupancy gains and solid rate growth, Welltower noted.

In the fourth quarter, the company completed $412 million of pro rata gross investments, including $223 million in acquisitions and loan funding, as well as $188 million in development funding. The REIT opened 10 development projects for an aggregate pro rata investment amount of $277 million. Additionally, Welltower completed pro rata property dispositions and loan payoffs of $159 million.

Notable investment activity in the quarter included definitive agreements to effectuate the sale and transition of 147 skilled nursing facilities operated by ProMedica Senior Care and to close on a tranche of five StoryPoint Senior Living properties for a purchase price of $113 million. Additionally, Welltower reported the disposition during the quarter of one senior housing property for proceeds of $8 million.

Since the fourth  quarter ended, the REIT closed on the second tranche of the previously announced Integra transaction involving the former ProMedica properties and sold a 15% interest in 31 skilled nursing properties for approximately $74 million.

Welltower ended the fourth quarter with $5.1 billion of near-term available liquidity. Normalized funds from operations attributable to common stockholders of $0.83 per diluted share, with net loss attributable to common stockholders of $0.01 per diluted share.

For all of 2022, the REIT completed $4.1 billion of capital deployment activity, funded entirely through disposition proceeds and the settlement of $3.7 billion of forward equity, making last year one of the most active years for investment activity in Welltower’s history, according to the business update. The total same-store net operating income increased year over year, driven by same-store NOI growth in the REIT’s senior housing operating portfolio.

Same-store occupancy in that portfolio was steady throughout the year, at almost 95%. Retention across the portfolio remained at 93% for the second straight quarter and at almost 92% for the entire year. 

“This robust retention rate helps us drive improved lease rates and continued strong releasing rates,” Chief Operating Officer John Burkart said during Thursday’s call.

Read more coverage of the earnings call in McKnight’s Senior Living and McKnight’s Long-Term Care News

LTC Properties 

LTC Properties experienced its strongest investment year since 2015, and the momentum is carrying over into 2023, CEO and Chairman Wendy Simpson said during Thursday’s earnings call.

“We have been busy strengthening our portfolio, solidifying relationships with existing operators and building relationships with operators with whom we have yet to work,” Chief Investment Officer Clint Malin said. “We are being adaptive to the marketplace by listening to operators and offering products that best suit their needs while sourcing new investments that fit our growth strategy and conservative financial management.”

Total revenue for the fourth quarter of 2022 increased by $8.4 million compared with the same quarter in 2021, in part due to a $4.7 million increase in rental revenue, according to Pam Kessler, LTC Properties’ co-president, chief financial officer and secretary. 

“The increase in rental revenue was primarily related to higher rent received from transitioned portfolios,” she said.

Other factors that affected the Westlake Village, CA-based REIT’s financial results, she said, included receipt of the funds from Anthem Memory Care’s second- and third-quarter temporary rent reduction, rent received from four skilled nursing facilities that were acquired during the second quarter of 2022 and rental income from completed development projects and annual rent escalations.

The increase in rental income was partially offset by the sale of three assisted living communities and a skilled nursing facility during the second quarter of 2022, Kessler said.

The REIT earned higher interest income from financing receivables due to the acquisition of three skilled nursing facilities during the third quarter of 2022, LTC Properties said in a press release issued in conjunction with the earnings call, which is accounted for as a financing receivable in accordance with generally accepted accounting principles, 

During the fourth quarter, the REIT recorded $2.1 million in impairment losses related to a 70-unit assisted living community located in Florida and a closed memory care community in Colorado, Kessler added.

Read more coverage of the earnings call in McKnight’s Senior Living and McKnight’s Long-Term Care News.

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