Welltower (NYSE: WELL) CEO Shankh Mitra believes monetary markets are riskier at present than they had been simply 90 days in the past. However he additionally thinks the corporate’s steadiness sheet is in an “enviable place,” and that it’s performing accordingly by investing in a swath of recent alternatives.
To that finish, the Toledo, Ohio-based actual property funding belief (REIT) is making an aggressive funding push within the new yr. Welltower has introduced $6.2 billion value of investments in 2025, which is already larger than the corporate’s complete 2024 funding complete of $6 billion.
In March, Welltower acquired 38 communities and a minority stake in Amica Senior Life in a roughly $4.6 billion CAD deal. And on Tuesday, Mitra introduced one other $1 billion in acquisitions.
“As we attain the tip of April, we’ve got already invested extra of our valuable capital this yr than in any earlier years within the firm’s historical past,” he stated Tuesday through the firm’s first-quarter 2025 name with traders and analysts.
Welltower has amassed about $9 billion in steadiness sheet liquidity, and searching forward, Mitra believes the corporate is “not solely ready to endure any additional capital market volatility, but additionally to deploy capital as alternatives come up.”
“In the end, we consider that the times of producing returns by way of monetary wizardry and levered beta are over,” Mitra stated. “As an working firm in an actual property wrapper, we’re satisfied that the one path to delivering passable returns will probably be by way of compounding of money stream generated by superior operations and supplemented with capital allocation to sub-optimized property.”
Welltower’s fundamentals at present stay sturdy and defensive as a consequence of its steadiness sheet being a “highly effective differentiator,” in keeping with BMO Capital Analysts Juan Sanabria and John Kim. As such, shares are anticipated to carry out properly, they wrote.
Welltower additionally raised its full-year funds from operations (FFO) steering by 10 cents to relaxation at $4.97 per share.
Welltower has 2,336 communities, together with 1,256 in its senior housing working portfolio (SHOP) and 301 in its triple-net portfolio.
Welltower’s inventory is at present priced at $151.48, up 1.6% from the earlier shut.
‘Notable growth of capital deployment alternatives’
As Welltower Co-President and Chief Funding Officer Nikhil Chaudri has famous previously, the present interval of financial problem is rife with capital deployment alternatives. That is because of a wide range of elements, together with different firms grappling with debt, pension funds in search of extra liquidity and firms decreasing their publicity to business actual property.
“Our funding pipeline stays sturdy with current capital markets volatility, presenting further alternatives for us,” he stated Tuesday through the earnings name.
The corporate within the first quarter of this yr invested greater than $2.6 billion. Included in that funding push had been 23 senior housing working (SHOP) properties and 16 triple-net senior dwelling communities, in keeping with a current monetary disclosure.
Welltower has already closed $660 million of its $1 billion acquisition complete in 1Q25, with the rest anticipated to shut within the coming months.
Welltower’s present funding thesis rests on the truth that the corporate’s leaders consider company lending is inadequate to handle upcoming maturities, with reform of government-sponsored entities like Freddie Mac and Fannie Mae “including additional uncertainty,” the corporate famous in a first-quarter enterprise replace. That and extra stringent company underwriting has helped gas a “dearth of liquidity.”
On the identical time, “upcoming mortgage maturities stay underwater as underwritten NOI is leading to decrease curiosity protection and mortgage proceeds than in-place debt.” In the meantime, “acquisition financing stays constrained” and “new fairness formation has been restricted,” in keeping with the enterprise replace.
Mitra believes a lot of senior dwelling growth shouldn’t be at present possible as a consequence of building prices and asset costs.
“Greater rates of interest, coupled with vital widening of credit score spreads throughout funding grades, excessive yields and all asset based mostly financing markets warrant warning because it pertains to asset costs going ahead,” he stated through the firm’s first-quarter name. “We count on larger charges, together with wider debt spreads, will put downward stress on asset costs.”
Welltower’s technique is one centered on buying communities beneath substitute price after which driving higher outcomes by way of its “Welltower Enterprise System,” which makes use of machine studying and different tech to assist operators make higher selections on the bottom.
The REIT additionally makes use of the platform to supply new investments, with a “neighborhood-level view of any asset” that helps the corporate’s funding staff strategize, Mitra stated.
Moderately than taking the estimated 5 to 9 months it takes for actual property offers to shut, Mitra stated the info platform permits Welltower to “have a handshake on particular returns” inside two weeks. Offers can then be closed inside 45 to 60 days.
“We’re attempting to convey down latency that’s inherent in a glacially shifting trade in a big method,” he stated. “This can be a decade-long journey of reworking this trade and reworking the enterprise.”
‘Working firm in an actual property wrapper’
Welltower just lately up to date its model and emblem to mirror its evolution within the final 10 years “from a healthcare actual property deal store to a knowledge science and technology-driven working firm in an actual property wrapper.”
By that, Mitra means the corporate has pivoted away from inking offers to serving to its working companions notch higher outcomes by way of insights gleaned by way of efforts like its Welltower Enterprise System. The info science platform analyzes 10 million micro markets nationwide utilizing knowledge from over 100 senior housing operators.
Mitra stated the corporate is in search of to develop its “community impact” – a phenomenon the place a product turns into extra accessible as extra individuals entry and purchase it – much like firms like Dwelling Depot, Costco and Amazon. This permits Welltower’s dimension to help, not hinder, its progress, Mitra added.
Welltower can be within the technique of rolling out its Welltower enterprise programs platforms throughout the portfolio with no reported pushback from operators to assist clean over any friction frontline workers could also be dealing with by providing “actual time, actionable enterprise insights” and releasing up time for workers to “present an actual human contact” to residents.
John Burkart, vice chairman and chief working officer of Welltower, stated the corporate’s focus has been on deepening the regional density of its senior housing working portfolio (SHOP). The phase has “borne vital fruit” with 9.6% same-store internet working revenue progress, 400 foundation factors of occupancy progress and 6% income per occupied room (RevPOR) over the previous quarter, he stated.
“Because the enterprise has grown, we need to scale back complexity,” Shankh Mitra, Welltower CEO, stated. “We’re attempting to deploy the Welltower enterprise system throughout and develop with our operators.”
Shifting ahead, Mitra added Welltower will probably be taking a look at a slower cadence of working companions because it focuses on its market density objectives and is as a substitute selecting to deal with current working companions which have carried out properly. If the corporate does tackle new working companions, they should share a view much like what Welltower sees, he stated, citing Amica as one instance.
“We’ve an extended journey in entrance of us to a a lot larger stage of occupancy,” Mitra stated.
