Welltower's Q2 earnings fell short of forecasts due to lower rental income and higher property operating expenses, despite strong same-store net operating income growth in its seniors housing operating portfolio1:
- Revenue Shortfall: Total revenue was $1.82 billion, trailing the consensus estimate of $1.90 billion by $80 million. This shortfall can be attributed to lower rental income, which fell to $336 million from $383 million year-over-year, and resident fees and services revenue, which rose to $1.39 billion from $1.16 billion year-over-year but still contributed to the overall revenue shortfall1.
- Expense Increase: Total portfolio same-store net operating income ("SSNOI") rose 11.3% year-over-year, driven by SSNOI growth in its seniors housing operating portfolio of 21.7%. However, SSNOI at its seniors housing operating portfolio grew 21.7% year-over-year vs. 25.5% in Q1. Additionally, total expenses of $1.73 billion increased from $1.72 billion in Q1 and $1.51 billion in last year's Q2. The increase in expenses, coupled with lower rental income, contributed to the revenue shortfall and lower earnings1.
- Market Conditions: The company's portfolio was also impacted by market conditions, including a significant decline in construction starts and slower net inventory growth, which likely affected occupancy rates and rental income2.
In summary, Welltower's Q2 earnings fell short of forecasts due to lower rental income and higher property operating expenses, despite strong same-store net operating income growth in its seniors housing operating portfolio. The company's portfolio was also impacted by market conditions, including a significant decline in construction starts and slower net inventory growth.
3/31/2025 10:25am
