Welltower Inc. (NYSE: WELL) continues to ramp up acquisitions to increase bottom line growth, including investment in skilled nursing facilities, with about $600 million earmarked for SNF deals in the upcoming financial quarters.
The Ohio-based real estate investment trust (REIT) recently announced $2 billion in potential deals tied to the launch of an equity offering, Stifel analysts said in a note. This is on top of approximately $1 billion in fully-funded investments under contract as of Oct. 30. Of the total $3 billion, $600 million appears to be devoted to SNFs acquisitions, mentioned above.
The remaining $2.4 billion – of the $3 billion – is for seniors housing acquisitions.
In terms of SNF acquisitions in previous years, Welltower purchased $25 million in SNF investments for 2021 and $100 million in 2022.
“Tracking WELL’s frenetic acquisition pace can be daunting,” said Stifel analysts.
Welltower’s dealmaking appears to be an outlier, with a notable decrease in the amount of money spent on acquiring seniors housing and care properties overall as other types of investors remain hampered by interest rates and other capital constraints. The third quarter of 2023 marks the lowest quarterly expenditure in the past 10 years for the nursing home sector with 115 deals being processed in total, according to data released by LevinPro LTC. About 41% of these transactions were related to SNFs.
The REIT is still minimizing its SNF portfolio relative to other properties, but likely took advantage of attractive market conditions for buying nursing homes, according to discussions during its Q3 earnings call.
Welltower closed on almost $1.4 billion of acquisitions in Q3, including $410 million toward SNFs, including long-term care hospitals (LTCHs) and post-acute care, analysts noted. Third quarter acquisitions include 24 long-term post-acute care properties totaling 2,897 beds at $140,000 per bed.
The REIT didn’t say who would operate the facilities.
Acquisition decisions come on the heels of Welltower’s plans announced in November of last year to sell and transition 147 SNFs currently managed by ProMedica into a newly established joint venture with Integra Health.
It’s unknown what the closing dates will be for the $2 billion in acquisitions, analysts at Stifel said in their investment note, but raising the capital early will be accretive for the REIT. The company’s fourth financial quarter may have higher interest income, up until funds are deployed.
Welltower has had a “voracious acquisition appetite,” analysts said. They expect funds to be deployed relatively quickly – within the next two or three financial quarters.
