Welltower Inc.'s (NYSE: WELL) first financial quarter's $1.2 billion in skilled nursing investments served as a “credit business,” an executive at Real Estate Investment Trust (REIT) said Tuesday that it was discussing details of its investment in Aspire Healthcare.
Nikhil Chaudhri, Co-President and Chief Investment Officer of Welltower, described skilled nursing as a trustworthy business. So, he said the investment was approached with a focus on borrowers' ability to pay back.
The investment scope also attracted the attention of financial analysts during REIT quarterly revenue calls, given Welltower's high investments as well.
Well Tower's biggest skilled nursing transactions (most of the $1.2 billion investment) of the quarter, with Florida-based Aspire Healthcare involved as the new operator. Welltower began using Aspire Healthcare in 2023 with its turnaround portfolio.
REIT acquired 48 skilled nursing facilities in February for $999 million with a total purchase price of $990.9 million, according to 10-Q filing. The property was leased to sought under a long-term triple net master lease.
Chaudhri called it a “broken transaction.” This has fallen earlier, but he added Welltower could negotiate a major price cut.
“There's a lot of things we're really excited about with this year's large deal. It was a broken deal. There was some softness in the market and the deals fell apart,” Chaudhri said. “Welltower was able to enter with a dual-pass solution.”
The deal had no operators that Welltower had brought to the photographs. REITs also provided “certainty to close.” The Aspire was perfect considering its strength and performance track record. The portfolio currently has enough cash flow to cover the rent for the year, and is occupied in the mid-term 60%, Chaudhri said.
“We took advantage of the fact that getting a price adjustment that favors our favor with hundreds of millions of dollars was a broken deal,” Chowdry said. “Have quality assets: Check. Quality operator: Check. Cash flow with rooms upside: Check. Additional credit protection: Check. This is the setup here.”
Overall, Welltower has completed a $2.8 billion proportional investment, including $2.7 billion in acquisitions and loan financing and $142 million in development funds, REIT reported. Analysts at BMO Capital Markets said Welltower posted first-quarter revenues at $1.20, breaking funds from a consensus estimate of $1.15 per share. SKILDED NURSING SAME STORE NET Operating Income (SSNOI) rose 2.8% year-on-year, with compensation falling 1.56 times quarterly at 2 bps, BMO said.
Welltower shares closed on Tuesday with an increase of $151.48, or $2.43, or 1.63%, according to Yahoo Finance.
