Welltower(WELL)2023-02-16 18:49Financial Data and Key Metrics Changes - Welltower reported fourth quarter normalized funds from operations of 722 million of cash and $5.1 billion in near-term available liquidity [44] Business Line Data and Key Metrics Changes - The senior housing operating portfolio experienced a 28.1% fourth quarter NOI increase over the prior year's quarter, driven by revenue growth of 10.3% [28] - The outpatient medical business had same-store NOI growth of 2.1% over the prior year's quarter, with same-store occupancy steady at nearly 95% [27] - Agency expenses in the same-store portfolio decreased by 44% year-over-year in Q4 2022, contributing to a moderation in overall expense growth [30] Market Data and Key Metrics Changes - Revenue per occupied room (REVPOR) increased by 7.5% in Q4, reflecting strong pricing power [10] - Average occupancy in the portfolio improved with a gain of 20 basis points during the period [29] - The company expects 2023 same-store NOI growth of 8% to 13%, driven by various segments including senior housing operating growth of 15% to 24% [49] Company Strategy and Development Direction - The company aims to deepen relationships with existing operating partners rather than expanding the number of partners, focusing on regional density [59] - The Private Letter Ruling (PLR) allows Welltower to own and self-manage independent living assets, which is expected to enhance margins and operational efficiency [14][72] - Welltower is committed to modernizing operations and driving efficiencies through scale, leveraging technology and data analytics [47][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth supported by favorable demand-supply dynamics in the senior housing sector [12] - The company anticipates a strong start to 2023, with January move-ins up 16% compared to 2019 levels [13] - Management emphasized the importance of long-term value creation over short-term stock performance [7][51] Other Important Information - The company highlighted the addition of Retirement Unlimited as a new operating partner, which is expected to enhance operational performance [16] - Welltower's capital allocation strategy remains focused on acquiring high-quality assets in a favorable investment environment [19] Q&A Session All Questions and Answers Question: What is the landscape of high-quality operators after pandemic headwinds? - Management indicated that the focus is on deepening relationships with existing partners rather than expanding the number of operators, emphasizing the need for higher standards in the industry [59] Question: Have return rates changed for different property types? - Management noted that there are significant opportunities across all product types, with the potential for higher IRRs than seen in the past [63][64] Question: How should we think about the investment year and payoffs? - Management stated that returns are already being realized through aggressive asset management, with expectations for continued significant margin improvement [66] Question: What is the expected range of margins for the SHO business at full occupancy? - Management refrained from speculating but expressed disappointment if margins only returned to pre-COVID levels [69] Question: Can you elaborate on the impact of the PLR on earnings growth? - Management explained that the PLR allows for a shift from fee management to owner-operator, which is expected to significantly improve margins [72][74] Question: How has the relationship with independent living operators changed since the PLR? - Forward-thinking operators are more willing to collaborate on building out the platform, while those stuck in outdated practices are less likely to engage [76] Question: What is the status of the ProMedica and Integra assets? - Management reported smooth transitions with new operators, but it is too early to discuss performance metrics [79] Question: What investment opportunities are currently available? - Management highlighted that opportunities are present across all product types, with a focus on right location and product basis [81]