Is Welltower a Buy?
Healthcare real estate investment trust (REIT) Welltower (NYSE: WELL) is one of the largest players in a sector expected to have a bright future. The positive outlook here is backed by demographics, as an aging baby boomer population is destined to increase demand for healthcare services. That, in turn, will be good news for the landlords that house these businesses. Is that enough to make Welltower a buy?
Few REIT investors would argue that Welltower is a bad company. Most, in fact, would tell you it is a well run property owner with a large and diverse portfolio of enviable healthcare assets. The company generates roughly 45% of its net operating income from senior housing that it operates (technically it hires others to run the assets). This allows it to enjoy the upside of the properties. Another 18% comes from senior housing that is leased to others on a net lease basis, which means the lessees are responsible for most of the properties' costs. These assets are the clear core of Welltower's portfolio, and provide generally healthy seniors a place to live with a little bit of support.
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Source Fool.com
