Welltower (NYSE: WELL) within the second quarter of 2025 grew same-store NOI by 23.4% in its senior housing working portfolio, marking 11 consecutive quarters with senior dwelling NOI progress at or above 20%.
On the identical time, the corporate reported normalized funds from operations (FFO) per share within the quarter of $1.28, prompting the Toledo, Ohio-based actual property funding belief (REIT) to extend its FFO steerage for the yr to $5.10, up from $4.97 beforehand.
The REIT additionally surpassed two different milestones within the quarter as internet working revenue for its senior housing working portfolio (SHOP) belongings surpassed $2 billion and total firm second quarter annualized income exceeded $10 billion for the primary time in its historical past.
Welltower has aggressively invested in senior dwelling properties in 2025, with a $9.2 billion acquisition pipeline of “extremely engaging” properties throughout all of its areas, together with within the U.S. and overseas based on CEO Shankh Mitra.
Constructive working and monetary outcomes drove the sturdy quarter for Welltower, he added. The corporate has ironed out some earlier hassle spots giving him extra confidence of the street forward, together with the Vacation by Atria portfolio that Welltower transitioned to 6 different operators final yr in a method centered on dividing up the portfolio into regional clusters.
Welltower introduced on the previous Vacation properties in 2021 in an acquisition valued at $1.58 billion and made together with operator Atria. However that acquisition represents “a failure to date, and our greatest disappointment over the previous decade,” Mitra famous throughout Tuesday’s earnings name.
“We now have growing conviction that our preliminary execution plan and structuring was flawed,” he mentioned.
Welltower has 1,309 properties in its SHO phase, and 303 communities below triple-net leases.
Welltower’s inventory value rose to $165.96 by the point buying and selling ceased Tuesday, up 4.9% from the earlier market shut.
Welltower’s portfolio pivots and progress
Final yr, Welltower transitioned its 89-property Vacation by Atria portfolio to 6 operators that included Arrow Senior Dwelling, Cogir, Discovery Senior Dwelling, QSL, Sagora and StoryPoint.
Transitioning the previous Atria properties to different operators “was not a straightforward feat, given the dimensions of the portfolio, geographic dispersion, and the challenges inherent in any working operator transition, coupled with the value-add nature of the unique marketing strategy,” Mitra mentioned.
After transitioning the portfolio from Atria to different operators, the REIT reorganized neighborhood administration and gross sales efforts on the regional stage, renovated frequent areas and models to enhance resident satisfaction and refined the pricing technique for communities to higher match native tendencies and amenity-based attributes.
Welltower’s enhancements have already helped its working companions develop occupancy for the portfolio by 560 foundation factors for the reason that begin of 2025. Primarily based on the early outcomes, Mitra is optimistic in regards to the portfolio’s NOI “turning the nook” by the fourth quarter.
“Whereas we’ve got a protracted technique to go, we’re inspired by the early outcomes,” he added.
Welltower has offered $16 billion in belongings over the previous decade, and Welltower’s funding pipeline this yr has already exceeded the corporate’s complete acquisition slate for 2024, when the corporate invested $6 billion in acquisitions, based on Nikhil Chaudhri, co-president and chief funding officer. The corporate’s present funding totals are its highest-ever, he mentioned.
The present $9.2 billion allotted for investments contains $3.7 billion that closed within the first half of the yr, with the remaining $5.5 billion below contract and anticipated to shut within the coming months. Amongst Welltower’s notable latest transactions is its acquisition of the Amica Senior Life portfolio in Canada, the rest contains 26 transactions, 90% of which had been privately negotiated and are predominantly centered on seniors housing, Chaudhri mentioned.
He added Welltower sourced $900 million in transactions within the second quarter on an off-market foundation. These new transactions are for belongings with a median occupancy of 76% and a median age of three years.
“This newer classic portfolio is effectively positioned to ship sturdy money stream progress and compounding as we execute our enterprise plans alongside our greatest at school working companions,” Chaudhri mentioned.
Different properties Welltower acquired this yr embody The Virginian, a life plan neighborhood in Fairfax, Virginia; The Preston of Rockwood, a former Kisco neighborhood in Rockwood, Maryland; and Fountainwood at Lake Houston in Atascocita, Texas.
Underpinning the corporate’s philosophy of working with operators is a “utopian” imaginative and prescient for the longer term the place everybody from frontline staff to house owners work in alignment with a aim of high-quality operations and enhancing the shopper and worker expertise. The corporate additionally is continuous to spend money on its Welltower Enterprise System, which offers operators and the REIT with better visibility into operations, amongst different issues.
“It’s simpler for a crew to do actually laborious issues that matter, to do straightforward issues that don’t matter, Mitra mentioned. “I really imagine that audacious goals inspire folks.”
Shifting focus and margins
Welltower is within the technique of shifting a few of its operational and expertise focuses to higher slot in with the shopper expertise. So far, Welltower has skilled greater than 8,000 site-level staff who presently profit from utilizing the corporate’s enterprise system.
“The extra time we spend with our working companions going into the main points of the enterprise, the extra alternatives we determine to enhance the shopper and worker expertise and handle quite a few inefficiencies which exist within the business,” mentioned Welltower COO John Burkart in the course of the earnings name.
Welltower is also bringing tech to bear in its future funding technique, and Mitra believes the corporate’s information science platform can use AI to shut transaction offers inside 45 and 60 days, in comparison with the 5 to 10 months by means of conventional gross sales processes.
Trying forward, Welltower continues to see “substantial alternative” for additional margin enlargement, evaluating the potential to the multifamily business when it was “professionalized,” based on Burkhart. To perform this, the operations crew is frequently combing by means of bills and slicing particular person line objects the place it will possibly.
Nevertheless, Mitra believes further income might be a better think about how far the REIT’s margins can go.
“Margin enlargement, no matter it may be, we’re clearly optimistic about what it will possibly get to, might be a perform of, I can’t be stunned, considerably extra contribution comes from income than bills,” Mitra mentioned.
