Welltower's Q2 FFO Beat Estimates on Strong SHO NOI Growth

WELL’s Resident Fees Power Revenue Growth

Resident fees and services increased 51.4% year over year to $2.98 billion, accounting for most of the top-line expansion. The rise reflected a larger SHO footprint and continued organic growth across the portfolio.

Other revenue lines were comparatively smaller and moved in a mixed fashion. Rental income declined 4.8% to $459.7 million. Interest income grew 24.7% to $77.4 million, while other income fell 29.6% to $22.6 million.

Welltower’s SHO Portfolio Extends Strong Run

The SHO portfolio delivered SSNOI growth of 20.5% in the second quarter of 2026, marking the 15th consecutive quarter of at least 20% growth. SSNOI increased to $584.8 million from $485.3 million in the prior-year period.

Same-store revenues rose 9.2% year over year to $1.82 billion, supported by a 330 basis points increase in average occupancy to 89.4% and same-store revenue per occupied room (RevPOR) growth of 5.2%.

Recent acquisitions further expanded the broader SHO portfolio. Total SHO portfolio revenues reached $3.03 billion compared with $2.01 billion a year earlier, while NOI increased to $872.9 million from $543.1 million. Total occupancy improved to 87.6% from 85.6%.

WELL Expands Margins Through Operating Leverage

SHO same-store operating expenses increased 4.5% to $1.24 billion, well below revenue growth. The favorable revenue-expense spread drove a 300 basis point expansion in the SSNOI margin to 32.1%.

Companywide, total portfolio SSNOI increased 15.5%, with Seniors Housing Triple-net up 5.2%, Outpatient Medical up 2.4% and Long-Term/Post-Acute Care up 2.9%.

WELL’s Expenses Rise

At the consolidated level, property operating expenses increased 41.9% to $2.15 billion. General and administrative expenses rose 5.2% to $67.5 million, while interest expense increased 28.9% to $181.9 million.

WELL Accelerates Investment & Asset Recycling

Welltower completed $6.3 billion of pro rata gross investments during the second quarter, including development funding. Acquisitions and loan funding totaled $6.23 billion at a 6% yield, led by $4.27 billion invested in SHO assets.

The company also completed $842.7 million of pro rata dispositions and loan repayments. This included $561.2 million of outpatient medical dispositions and $155 million of loan repayments, supporting the continued repositioning of the portfolio toward seniors housing.

Since the beginning of the year through July 27, 2026, WELL closed or is under contract to close $15.5 billion of pro rata gross investments, excluding development funding. Of that amount, $9.4 billion closed during the first half of 2026, while $6.1 billion closed or remained under contract after quarter-end.

WELL Maintains Low Leverage & Ample Liquidity

Net debt to Adjusted EBITDA was 2.99x as of June 30, 2026, while available liquidity totaled about $9.5 billion. Net debt to consolidated enterprise value improved to 8.9% from 10.1% a year earlier.

The company repaid $700 million of senior unsecured notes with free cash flow in April 2026. In July 2026, it issued C$1.15 billion of Canadian dollar-denominated senior unsecured notes at a weighted-average coupon of 3.95%, adding financial flexibility for its investment pipeline.

Cash and cash equivalents stood at $1.97 billion at quarter-end. Total assets increased to $69.88 billion from $55.83 billion a year earlier, reflecting the company’s elevated acquisition activity.

WELL Raises 2026 FFO Outlook & Dividend

Management raised its 2026 normalized FFO guidance to $6.36-$6.44 per share from $6.21-$6.35. The new midpoint of $6.40 is 12 cents above the prior midpoint, reflecting stronger SHO performance and investment activity. The Zacks Consensus Estimate for 2026 normalized FFO per share is pegged at $6.32.

Welltower now expects average blended SSNOI growth of 13.75-16%. The SHO is expected to rise 18.5-21.5%, while the Seniors Housing Triple-net is projected to grow 3.5-4.5%. Outpatient Medical and Long-Term/Post-Acute Care are each expected to grow 2-3%.

The board also raised the quarterly dividend by 15% to 85 cents per share. The dividend is payable Aug. 20, 2026, to shareholders of record as of Aug. 12, 2026.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

SL Green Realty Corp. SLG reported second-quarter 2026 FFO per share of $1.43, which beat the Zacks Consensus Estimate of $1.19 by 20.17%. However, FFO declined 12.3% from $1.63 in the year-ago quarter.

Net rental revenues of $171.85 million surpassed the consensus estimate of $171.48 million by 0.22% and increased 16.5% year over year. SLG’s results reflected stronger Manhattan leasing, higher occupancy and growth in same-store cash net operating income.

Crown Castle Inc. CCI reported second-quarter 2026 adjusted funds from operations (AFFO) per share of $1.13, up 10.8% year over year. The metric surpassed the Zacks Consensus Estimate of $1.00 by 13%.

Results reflected a rise in AFFO per share, driven by a decrease in interest expense and an increase in interest income resulting from the use of proceeds from the sale of CCI’s Fiber and Small Cell businesses.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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