Raymond James analyst Jonathan Hughes took a closer look at Welltower’s Integra Health skilled nursing facility joint venture transaction and came away with increased conviction that the outcome will be a success for all parties involved. He believes Welltower’s recent underperformance following a short report "presents an opportunity to add exposure." Skeptics are fixated on ProMedica’s negative EBITDAR/EBITDARM coverage and why Integra would pay 7% more rent to take over what appears to be an unsustainable rent burden, Hughes tells investors in a research note. However, he believes the skeptics are overlooking Welltower’s favorable investment basis in the ProMedica skilled nursing facilities, below-market rent/bed, above-average occupancy, and ProMedica’s "uniquely elevated expense structure." Hughes keeps an Outperform rating on Welltower.
Published first on TheFly
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