Welltower (NYSE: WELL) CEO Shankh Mitra believes financial markets are riskier today than they were just 90 days ago. But he also thinks the company’s balance sheet is in an “enviable position,” and that it is acting accordingly by investing in a swath of new opportunities.
To that end, the Toledo, Ohio-based real estate investment trust (REIT) is making an aggressive investment push in the new year. Welltower has announced $6.2 billion worth of investments in 2025, which is already higher than the company’s entire 2024 investment total of $6 billion.
In March, Welltower acquired 38 communities and a minority stake in Amica Senior Lifestyles in a roughly $4.6 billion CAD deal. And on Tuesday, Mitra announced another $1 billion in acquisitions.
“As we reach the end of April, we have already invested more of our precious capital this year than in any previous years in the company’s history,” he said Tuesday during the company’s first-quarter 2025 call with investors and analysts.
Welltower has amassed about $9 billion in balance sheet liquidity, and looking ahead, Mitra believes the company is “not only in a position to endure any further capital market volatility, but also to deploy capital as opportunities arise.”
“Ultimately, we believe that the days of generating returns through financial wizardry and levered beta are over,” Mitra said. “As an operating company in a real estate wrapper, we’re convinced that the only path to delivering satisfactory returns will be through compounding of cash flow generated by superior operations and supplemented with capital allocation to sub-optimized assets.”
Welltower’s fundamentals currently remain robust and defensive due to its balance sheet being a “powerful differentiator,” according to BMO Capital Analysts Juan Sanabria and John Kim. As such, shares are expected to perform well, they wrote.
Welltower also raised its full-year funds from operations (FFO) guidance by 10 cents to rest at $4.97 per share.
Welltower has 2,336 communities, including 1,256 in its senior housing operating portfolio (SHOP) and 301 in its triple-net portfolio.
Welltower’s stock is currently priced at $151.48, up 1.6% from the previous close.
‘Notable expansion of capital deployment opportunities’
As Welltower Co-President and Chief Investment Officer Nikhil Chaudri has noted in the past, the current period of economic difficulty is rife with capital deployment opportunities. That is due to a variety of factors, including other companies grappling with debt, pension funds seeking more liquidity and companies reducing their exposure to commercial real estate.
“Our investment pipeline remains robust with recent capital markets volatility, presenting additional opportunities for us,” he said Tuesday during the earnings call.
The company in the first quarter of this year invested more than $2.6 billion. Included in that investment push were 23 senior housing operating (SHOP) properties and 16 triple-net senior living communities, according to a recent financial disclosure.
Welltower has already closed $660 million of its $1 billion acquisition total in 1Q25, with the remainder expected to close in the coming months.
Welltower’s current investment thesis rests on the fact that the company’s leaders believe agency lending is insufficient to address upcoming maturities, with reform of government-sponsored entities like Freddie Mac and Fannie Mae “adding further uncertainty,” the company noted in a first-quarter business update. That and more stringent agency underwriting has helped fuel a “dearth of liquidity.”
At the same time, “upcoming loan maturities remain underwater as underwritten NOI is resulting in lower interest coverage and loan proceeds than in-place debt.” Meanwhile, “acquisition financing remains constrained” and “new equity formation has been limited,” according to the business update.
Mitra believes much of senior living development is not currently feasible due to construction costs and asset prices.
“Higher interest rates, coupled with significant widening of credit spreads across investment grades, high yields and all asset based financing markets warrant caution as it relates to asset prices going forward,” he said during the company’s first-quarter call. “We expect higher rates, along with wider debt spreads, will put downward pressure on asset prices.”
Welltower’s strategy is one centered on acquiring communities below replacement cost and then driving better results through its “Welltower Business System,” which uses machine learning and other tech to help operators make better decisions on the ground.
The REIT also uses the platform to source new investments, with a “neighborhood-level view of any asset” that helps the company’s investment team strategize, Mitra said.
Rather than taking the estimated five to nine months it takes for real estate deals to close, Mitra said the data platform allows Welltower to “have a handshake on definite returns” within two weeks. Deals can then be closed within 45 to 60 days.
“We’re trying to bring down latency that is inherent in a glacially moving industry in a significant way,” he said. “This is a decade-long journey of transforming this industry and transforming the business.”
‘Operating company in a real estate wrapper’
Welltower recently updated its brand and logo to reflect its evolution in the last 10 years “from a healthcare real estate deal shop to a data science and technology-driven operating company in a real estate wrapper.”
By that, Mitra means the company has pivoted away from inking deals to helping its operating partners notch better results through insights gleaned through efforts like its Welltower Business System. The data science platform analyzes 10 million micro markets nationwide using data from over 100 senior housing operators.
Mitra said the company is seeking to grow its “network effect” – a phenomenon where a product becomes more available as more people access and buy it – similar to companies like Home Depot, Costco and Amazon. This allows Welltower’s size to aid, not hinder, its growth, Mitra added.
Welltower is also in the process of rolling out its Welltower business systems platforms across the portfolio with no reported pushback from operators to help smooth over any friction frontline staff may be facing by offering “real time, actionable business insights” and freeing up time for staff to “provide a real human touch” to residents.
John Burkart, vice chairman and chief operating officer of Welltower, said the company’s focus has been on deepening the regional density of its senior housing operating portfolio (SHOP). The segment has “borne significant fruit” with 9.6% same-store net operating income growth, 400 basis points of occupancy growth and 6% revenue per occupied room (RevPOR) over the past quarter, he said.
“As the business has grown, we want to reduce complexity,” Shankh Mitra, Welltower CEO, said. “We’re trying to deploy the Welltower business system across and grow with our operators.”
Moving forward, Mitra added Welltower will be looking at a slower cadence of operating partners as it focuses on its market density goals and is instead choosing to focus on existing operating partners that have performed well. If the company does take on new operating partners, they will have to share a view similar to what Welltower sees, he said, citing Amica as one example.
“We have a long journey in front of us to a much higher level of occupancy,” Mitra said.
