Stock analysis/Share presentation โฌ๏ธ
Today we are talking about the company Welltower: $WELL (+0,55%)
What is and does Welltower anyway ๐ค
Welltower formerly Well Merger Holdco, is a real estate investment trust (REIT). It provides real estate capital to senior living operators, post-acute care providers, and health systems. It owns interests in real estate concentrated in markets in the United States, Canada and the United Kingdom, consisting of senior housing, post-acute communities and ambulatory medical properties.
Which segments are part of Welltower:
The segments include Seniors Housing Operating, Triple-net and Outpatient Medical. Properties in the Seniors Housing Operating segment include assisted living, independent living communities, independent living communities with assistance, nursing homes with and without nursing care, and combinations. The Triple-net segment invests in seniors housing and healthcare properties through the acquisition and financing of properties that are primarily leased to a single tenant. The acquired properties are primarily leased under triple-net leases. The properties in the Outpatient Medical segment are leased to multiple tenants.
When was Welltower founded?
Welltower was founded in 1970. The headquarters is located in Toledo, Ohio.
How many employees does the company have: ๐๐ฝโโ๏ธ๐๐ปโโ๏ธ
Currently, Welltower has a total of over 500 employees.
KGV:
Welltower has a current P/E ratio of just under 318, which is very very high in my opinion.
Market capitalization: ๐ฆ
Currently, Welltower has a market capitalization of around 35.1 billion euros.
Dividend yield: ๐ฐ
The company pays its shareholders a nice dividend of currently over 3.2%. This distribution is made on a quarterly basis.
Strengths of the share: ๐
Welltower is a leader in healthcare real estate and has many strengths:
- Experience: the company has experience in healthcare real estate since 1970.
- Diversification: Welltower owns a wide range of healthcare properties such as senior housing, medical office buildings, and nursing homes.
- Quality: Welltower properties are of high quality and provide a safe and comfortable environment for patients and employees.
- Innovation: the company is innovative and constantly working to find new and better ways to improve healthcare.
- Financial Strength: Welltower is financially strong and has the resources to invest in its properties and employees.
- Sustainability: Welltower is an environmentally friendly company and is committed to sustainability and protecting the environment.
Weaknesses of the share: ๐
Welltower also has some weaknesses, including:
- Dependence on Medicare and Medicaid: Welltower relies heavily on Medicare and Medicaid payments, which can make the company vulnerable to policy changes and cuts.
- Concentration on the U.S. market: Welltower is primarily focused on the U.S. market, which makes the company vulnerable to economic changes and political instability in the United States.
- Competition: the healthcare real estate market is competitive, and Welltower competes with other companies for tenants and investors.
- Interest Rate Risk: Welltower is vulnerable to interest rate increases, which can increase the cost of debt and impact profitability.
- Dependence on Tenants: Welltower depends on its tenants to generate rental income, which may make it vulnerable to problems with its tenants.
- Dependence on Property Values: Welltower depends on its real estate values to obtain loans and attract investors, which makes the company vulnerable to fluctuations in the real estate market.
Welltower's Industry:
Welltower is a U.S. REIT. REIT stands for real estate investment trust. A REIT is a special form of a real estate investment trust. The investment capital is invested in the acquisition of real estate (or other tangible assets). REITs have a tax advantage over "normal" companies. This is because there is no taxation of income at the company level.
In the USA, Germany and other countries, REITs must distribute at least 90% of their profits directly to shareholders. The obligation to distribute earnings ensures adequate tax revenues for the state. Income is generated by the companies through their rental income.
Unlike companies such as Apple, Coca-Cola or Microsoft, REITs do not talk about profits but about Funds From Operations (FFO). FFO is the net distributable income to shareholders. This ratio reflects the true profitability of a property. Net income is adjusted for depreciation and amortization and gains on the sale of properties are deducted.
REITs are particularly popular in the United States. Over 80 million Americans are invested in REIT shares. The reason: there is no government pension system. The need of many Americans to build up a predictable and recurring income by investing in REIT shares is correspondingly high. It is therefore not surprising that the USA is the largest REIT market. After the U.S., Australia and France are the second and third largest REIT markets in the world.
REITs often focus on a specific industry. For example, they may invest in office buildings, infrastructure, hospitals or other sectors. In the case of Welltower, the focus is on senior living and healthcare properties.
The senior living sector in particular could continue to grow in the coming years. The reason for this is the baby boomer generation. By 2030, the roughly 73 million boomers will be 65 and older. Although about 73% of senior households, which includes people 65 and older, are expected to retain homeownership, there are still a large number of aging seniors who need housing.
A little more about the business model: โฌ๏ธ
Welltower is engaged in providing healthcare infrastructure and investing in senior housing operators, post-acute facilities and healthcare systems. The company currently owns a diversified portfolio of more than 1,800 healthcare properties in North America and overseas, including 100 properties in Canada and the United Kingdom.
The company's strategy is to invest in senior housing and healthcare properties. In doing so, Welltower is careful not to commit to one type of property, but to diversify its real estate portfolio by property type, location and region. The group's portfolio includes senior living facilities, medical offices, inpatient and outpatient medical centers and hospitals, as well as buildings for companies involved in the life sciences.
Tenants primarily include healthcare companies and senior living facility operators. Welltower generates revenue through customer rents, resident fees, and services. The company divides its revenue into three segments.
Senior Housing. This segment includes all senior housing activities. Properties include skilled nursing facilities and assisted living facilities. In the U.S., so-called retirement communities are also very popular. These are residential units and neighborhoods specifically designed for senior living.
Revenues are highly dependent on the occupancy rate of the buildings and facilities. During the pandemic, occupancy plummeted due to contact restrictions. However, the market has since recovered and this is reflected in the stable occupancy rates.
Senior housing - Triple-net. The company makes a further distinction in senior housing. Triple-net means that Welltower only pays for the purchase of the property. The tenant pays not only rent and property tax, but also insurance, maintenance and repairs. This has the advantage for Welltower that they only have to make one payment.
Ambulatory Health Care Facilities. This segment includes the company's real estate offerings in the medical facilities sector. In addition to hospitals, the portfolio includes medical centers, rehabilitation centers and specialized hospitals.
Your opinion: ๐ค๐ง
Now I would like to hear your opinion about this stock in the comments.
What do you think of Welltower and did you already know this company?
Do you guys maybe already have this stock in your portfolio?
Feel free to let me know in the comments.
This is of course not an investment advice but just my own opinion that I want to share with you.
