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Shares of Welltower (NYSE:WELL) are down about 6% in pre-open Wednesday after short seller Hindenburg Research said it has taken a short position in the healthcare real estate investment trust (REIT).
The short seller described Welltower as “an overpriced-to-perfection” REIT. The company’s largest tenant is a non-profit health system “ProMedica,” warns Hindenburg. Given that it accounts for 12% of its total net operating income (NOI), Welltower reportedly said ProMedica’s financial position poses a “key risk factor” to its finances.
As a result, Welltower announced last month the establishment of a joint venture (JV) with ProMedica to operate 147 skilled nursing facilities. WELL shares soared on the announcement.
“Despite the high praise from Welltower’s management and claims of being a well-experienced operator, Integra seems to barely exist. The entity was registered 6 months ago, according to Delaware corporate records,” the short seller said in today’s report.
“Integra’s CEO, 29-year-old David Gefner, appears to have no background in the skilled nursing space at all. Integra has no employees on LinkedIn except for Gefner, who claims to have worked at the 6-month-old entity for 11 months,” it further stated.
Hindenburg also noted that WELL trades at a premium despite “an industry in turmoil.”
“Overall, we think Welltower is an overpriced-to-perfection REIT obfuscating its distressed assets, raising questions about both its portfolio and the credibility of management as it attempts to raise capital from investors,” the report concluded.
