EUR 850.00 For Business Accounts Only

Morningstar | Strong Relationships and Leadership Distinguishes Welltower as the Premier Healthcare REIT

The top healthcare real estate stands to disproportionately benefit from the Affordable Care Act. There is an increased focus on higher-quality care in lower-cost settings. The best owners and operators in the industry, which can provide better outcomes while driving greater efficiencies, should see demand funneled to them from the best healthcare systems. Additionally, the baby boomer generation is starting to enter its senior years and the 80-and-older population, which spends more than 4 times on healthcare per capita than the national average, should almost double over the next 10 years. Long-term, the best healthcare companies are well-positioned to take advantage of these industry tailwinds.In our view, Welltower will benefit from these industry tailwinds because of its portfolio of high-quality assets connected to top operators. The company has pared its exposure to focus on high-quality assets in a diversified portfolio of senior housing, skilled nursing facilities, and medical office buildings. The company has also spent years forming and developing relationships with many of the top operators in each segment. These relationships allow Welltower to push revenue enhancing initiatives and cost-control efficiencies at the property level, creating net operating income growth above the industry average, and provide a natural pipeline of acquisition and development opportunities to meet the needs of its growing operating partners. Welltower's management team is forward-thinking and should be able to create value by promoting best practices to produce strong internal growth and forming creative combinations across the healthcare spectrum to produce accretive external growth.Increased national senior housing supply has dragged on the company as growth has slowed, though we remain optimistic about the sector’s longer-term prospects given that construction starts have been decelerating the past few quarters and the demographic boon is only a few years away. Despite the possibility of further changes to the ACA, we think any changes will still result in a coordinated value and outcome-based system that will provide Welltower’s current portfolio strong tailwinds.