Welltower (NYSE:WELL), formerly Health Care REIT, reported healthy growth in funds from operations before the market opened on Friday. Driving this growth was the nearly $3.3 billion in acquisitions the company has closed so far this year. That acquisition-driven growth, when combined with solid organic growth and the fact that the company is on pace to invest more than $4 billion this year, is giving it the confidence to increase its full-year guidance.

Welltower results: The raw numbers


Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)

Funds from operations

$396.5 million

$326.1 million






FFO payout ratio




Data source: Welltower.

What happened with Welltower this quarter? 
Welltower's results show healthy growth:

  • Welltower delivered high-single-digit FFO growth through a combination of organic and acquired growth. Organically, it delivered strong total same-store cash net operating income growth of 3.1%. Meanwhile, the company benefited from closing $3.3 billion of investments year to date.
  • Despite substantial acquisitions, Welltower has improved its balance sheet by reducing its leverage ratio to 37%.
  • During the quarter, the company completed $474 million of investments, including $361 million of acquisitions and joint ventures.
  • Among the notable acquisitions was an expansion of its relationship with Genesis Healthcare (NYSE:GEN). The company acquired two properties from Genesis Healthcare during the quarter for $15 million. Further, subsequent to the end of the quarter, Genesis entered into a sale-leaseback whereby Welltower will provide funding for a $195 million transaction. Since closing its initial $2.4 billion acquisition/leaseback with Genesis Healthcare in 2011, Welltower will have completed $931 million in follow-on investments with Genesis.

What management had to say 
CEO Tom DeRosa, commenting on the company's results, said:

This has been a milestone quarter. We changed our name to Welltower to reflect the new realities and opportunities in healthcare, and our strong financial performance gave us the confidence to increase our guidance and next year's dividend. ... This quarter's operating results underscore our continued momentum as we invest with leading seniors' housing and post-acute operators and health systems to fund the real estate infrastructure needed to grow their platforms. We will invest over $4 billion for the year in high-quality assets, primarily in major metro markets. We have a strong balance sheet, low leverage, and a robust pipeline of opportunities focused on innovative care models. We believe we have a tremendous opportunity to transform healthcare infrastructure and drive value for our shareholders.

DeRosa makes note of the significant accomplishments Welltower made during the quarter. Specifically, he notes the company's focus on investing in high-quality properties owned by leading senior housing and post-acute care operators, as well as health systems. An important part of this process has been building long-term relationships, which leads to follow-on investment opportunities such as the recent Genesis Healthcare transactions. This approach has enabled Welltower to consistently grow, by supporting the growth of others such as Genesis.

Looking forward 
Thanks to its solid results thus far, Welltower is now increasing its full-year FFO guidance. It now sees FFO in a range of $4.32 to $4.37 per share, up from the prior range of $4.25 to $4.35 per share and representing a 5%-6% increase. Further, with the strong balance sheet and robust pipeline that DeRosa referenced, the company appears poised to continue to deliver healthy growth for the foreseeable future.