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    WELL
    Earnings call· Sep 2025(Q3 FY25)

    WELLTOWER INC. WELL

    Oct 28, 2025 Source

    Executive summary

    Welltower Q3 FY25 — Record Quarter and Transformative Capital Allocation

    Welltower reported a record Q3 FY25, driven by strong senior housing performance and significant capital allocation activities totaling $23.2 billion year-to-date. The company is undergoing a strategic transformation to Welltower 3.0, focusing on operations and technology in senior living, supported by a new incentive structure aligning management and operating partners with shareholders. This shift aims to enhance long-term growth and operational excellence.

    Highlights

    5

    • Q3 Normalized FFO of $1.34 per diluted share, representing 20.7% YoY growth.

    • Total portfolio same-store NOI growth of 14.5% in Q3 FY25.

    • SHO portfolio same-store NOI growth exceeded 20% for the 12th consecutive quarter.

    • Year-to-date investment activity totals $23.2 billion, including $14 billion of acquisitions and $9 billion of dispositions.

    • Net debt to adjusted EBITDA reached a record low of 2.36x at quarter-end.

    Concerns

    2

    • Near-term dilution from the payoff of the HC-One high-yield loan and 170 assets in lease-up from recent acquisitions.

    • Upfront costs of approximately $1.1 billion associated with the 2035 Ten Year Executive Continuity and Alignment Program impacting Q4 net income.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year 2025 Net Income attributable to common stockholders per diluted share
    $0.82 to $0.88
    high materiality
    High
    Full-year 2025 Normalized FFO per diluted share
    $5.24 to $5.30
    high materiality
    High
    Full-year 2025 Total Portfolio Same-Store NOI Growth
    13.2% to 14.5%
    high materiality
    High
    Full-year 2025 Outpatient Medical Same-Store NOI Growth
    2% to 3%
    medium materiality
    High
    Full-year 2025 Long-Term Post-Acute Same-Store NOI Growth
    2% to 3%
    medium materiality
    High
    Full-year 2025 Senior Housing Triple Net Same-Store NOI Growth
    3.5% to 4.5%
    medium materiality
    High
    Full-year 2025 Senior Housing Operating (SHO) Same-Store NOI Growth
    20.5% to 22%
    high materiality
    High
    Full-year 2025 SHO Revenue Growth
    9.6%
    medium materiality
    High
    Full-year 2025 SHO Occupancy Growth
    390 basis points
    medium materiality
    High
    Full-year 2025 SHO RevPOR Growth
    5.1%
    medium materiality
    High
    Full-year 2025 SHO Expense Growth
    5.25%
    medium materiality
    High
    Run rate net debt to adjusted EBITDA
    modestly higher by approximately 1 turn
    high materiality
    Medium
    Accretion to FFO per share
    accretive
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Senior Housing Triple-Net
    Same-store NOI increased year-over-year.
    Trailing 12-month EBITDAR coverage: 1.21x
    		—3.1%——
    Long-Term Post-Acute
    Same-store NOI grew year-over-year.
    Trailing 12-month EBITDAR coverage: 2.02x
    		—2.7%——

    Operational metrics

    34
    Net income attributable to common stockholders per diluted share
    $0.41
    Q3 FY25

    Reported for the third quarter.

    Normalized FFO per diluted share
    $1.3420.7% YoY growth
    Q3 FY25

    Reported for the third quarter.

    Total portfolio same-store NOI growth
    14.5%YoY
    Q3 FY25

    Reported for the third quarter.

    Senior Housing Operating (SHO) portfolio same-store NOI growth
    20%+12th consecutive quarter
    Q3 FY25

    Exceptional performance from senior housing portfolio.

    Senior Housing Operating (SHO) organic revenue growth
    10%
    Q3 FY25

    Driven by occupancy gain and pricing power.

    Senior Housing Operating (SHO) occupancy gain
    400
    Q3 FY25

    YoY gain, driving top-line results.

    Senior Housing Operating (SHO) operating margins increase
    260
    Q3 FY25

    Driven by RevPOR outpacing ExpPOR.

    UK portfolio revenue increase
    10.4%
    Q3 FY25

    Led by occupancy ramp.

    UK portfolio occupancy ramp
    550YoY
    Q3 FY25

    Driving revenue increase.

    HC-One first mortgage investment
    GBP 540 million
    4+ years

    Investment structured with downside protection and upside participation.

    HC-One investment profit
    GBP 350 million
    4+ years

    Profit generated from the HC-One first mortgage investment.

    HC-One investment unlevered IRR
    14%
    4+ years

    Unlevered IRR at exit for the HC-One first mortgage investment.

    HC-One investment equity multiple
    1.6x
    4+ years

    Equity multiple for the HC-One first mortgage investment.

    HC-One equity ownership unlevered IRR
    low teens
    long-term

    Expected unlevered IRR from equity ownership of HC-One assets after recapitalization.

    Barchester acquisition value
    GBP 5.2 billion
    Q3 FY25

    Acquisition spanning 3 buckets of assets.

    Barchester RIDEA 6.0 assets
    111
    Q3 FY25

    High-growth assets in the top quartile within the U.K.

    Barchester mature triple-net assets
    152
    Q3 FY25

    Assets with strong coverage and upside potential.

    Barchester assets under development
    21
    Q3 FY25

    Part of the Barchester acquisition.

    Additional UK assets under construction
    9
    Q3 FY25

    Acquired through several other transactions.

    New investments announced
    $14 billion
    Q3 FY25

    Granular activity across multiple regions.

    Equity raised
    $2.9 billion
    Q3 FY25

    Gross proceeds from predominantly equity capitalization.

    Senior unsecured notes issuance
    $1 billion
    August

    Follow-on issuance across two tranches.

    Net investment activity
    $1.7 billion
    Q3 FY25

    Funded by capital raised and retained cash flow.

    Cash and restricted cash balance
    $7 billion
    Q3 FY25 end

    Balance sheet position at quarter-end.

    Net debt to adjusted EBITDA
    2.36xrecord low
    Q3 FY25 end

    Representing a record low leverage level for the company.

    Medical office portfolio sale gain on sale
    $1.9 billion
    total

    Total gain on sale from the 18 million square foot outpatient medical portfolio.

    Medical office portfolio sale preferred equity stake
    $1.2 billion
    Q3 FY25

    Retained as part of the OM portfolio sale, accompanied by profits interest.

    Medical office portfolio sale net proceeds
    $6 billion
    Q3 FY25

    Net proceeds after factoring in the preferred equity stake.

    Medical office portfolio sale cap rate
    6.25%
    Q3 FY25

    Approximate cap rate for the OM portfolio sale.

    Welltower 1.0 asset turnover
    half
    decade

    Turned over half of the assets during Welltower 1.0.

    Welltower 1.0 operator turnover
    majority
    decade

    Turned over majority of the operators during Welltower 1.0.

    Welltower 1.0 people turnover
    95%
    decade

    Turned over 95% of the people during Welltower 1.0.

    RIDEA 6.0 operator share of SHO NOI
    20%
    Q3 FY25

    Represents the share of SHO NOI from the three founding operators under RIDEA 6.0.

    Average duration of stay in senior living
    20 months
    average

    Implies residents typically experience one rent increase during their stay.

    Industry KPIs

    8
    MetricValueDetails
    Exppor growth5.25%%
    Revpor growth5.1%%
    Coverage ratios1.21xx
    Senior housing occupancy400bps
    Revpor minus exppor spreadSolidly outpacing
    Operator tenant concentration3operators
    Same store noi growth by segment14.5%%
    Investment volume and sourcing mix$14 billionUSD

    Orderbook & backlog

    2
    Senior housing communities in investment pipeline (under development or lease-up)170Q3 FY25

    Expected to be a drag on near-term results but create significant value long-term.

    Outpatient Medical portfolio under contract to sell$7.2 billionQ3 FY25

    18 million square feet. First $2 billion tranche closed, remaining expected through next summer.

    Deals & partnerships

    3
    Remedy Medical PropertiesSale of 18 million square foot outpatient medical portfolio and exit of OM property management business.$7.2 billion

    First $2 billion tranche closed last week. Over 160 Welltower colleagues transitioning to Remedy Medical Properties.

    HC-OneAcquisition of HC-One portfolio in the U.K.GBP 1.2 billion

    Builds on a close working relationship and prior investment. Significant value-add capital deployment and leveraging Welltower Business System expected.

    Barchester Senior LivingAcquisition of Barchester Senior Living portfolio in the U.K.GBP 5.2 billion

    Spans 111 assets under RIDEA 6.0 (high 70s occupancy), 152 mature triple-net assets (90% occupied, 3.5% annual escalators), and 21 assets under development. Negotiation done in a single sitting with a firm handshake.

    Capital programs

    1
    2035 Ten Year Executive Continuity and Alignment Programunderway
    Period spend: $1.1 billion
    Start: Q4 FY25

    Upfront costs impacting Q4 net income, adjusted out of normalized FFO. An additional $200 million will be amortized over the next 10 years.

    Risks & headwinds

    4
    Near-term dilution from new acquisitionsnear-term

    Modest dilution

    Mitigation: Management views these as long-duration transactions with significant opportunity for earnings and cash flow growth in FY27 and beyond.

    Uncertainty in broader economyongoing

    Unquantified

    Mitigation: Company's business is needs-based and private pay, providing strength. Welltower Business System (WBS) initiatives continue to bear fruit.

    Asset prices for divested OM portfoliofuture

    Unquantified

    Mitigation: Structured the OM sale with significant participating profit interest (25% upside) to benefit from potential future value appreciation, protecting against selling at the 'wrong time in the cycle'.

    Execution risk of Welltower 3.0 and new initiativesongoing

    Unquantified

    Mitigation: Focus on building a strong team with extensive transaction experience, bringing in executives from high-standard industries, and fostering a vibrant culture where everyone behaves like owners. WBS is continuously evolving to reduce operational risk.

    What to watch in Q4 FY25

    5

    Accretion from dispositions and acquisitions

    FY26
    CurrentNear-term dilutive
    TargetAccretive to FFO per share

    Why it matters

    Verifying the combined financial impact of the significant capital allocation activities on FFO per share, as guided for the next fiscal year.

    To be clear, we would have completed these deals even if they are collectively near-term dilutive because of the significant opportunity of earnings and cash flow growth in '27 and beyond and due to the long duration aspect of the transactions. These capital allocation decisions together are expected to change the near- and long-term growth rate of our firm despite the significant size of our asset base.

    Q&A highlights

    6

    Why disrupt a successful company with Welltower 3.0, and how will it impact future cash flow growth?

    Management believes in continuous disruption to avoid stagnation, citing Netflix as an example. The goal is to remove agency problems, align interests, and elongate the growth curve by focusing on duration of growth rather than short-term gains. Digital transformation of the senior housing business is expected to generate significant compounding cash flow.

    “If you don't disrupt your organization from within, somebody else will do it for you. And so that's what we are trying to do, thinking through what the future of this business will look like, and we have taken it on ourselves to transform this business digitally to get to a better outcome for our customers and site-level employees.”

    asked by Vikram Malhotra · answered by Shankh Mitra

    2 min read5 chapters

    Detailed Narrative

    01

    Welltower 3.0: Operations and Technology First

    Welltower announced the launch of Welltower 3.0, a strategic evolution focused on becoming an operations and technology-first platform. This iteration follows Welltower 1.0 (capital allocation) and 2.0 (asset management with WBS), aiming for a 'leaping emergent effect' by prioritizing customer delight and site-level employee satisfaction through digital transformation. The company is retooling its organization, bringing in talent from high-standard industries, and eliminating managerial layers to foster direct execution.

    02

    Transformative Capital Allocation Strategy

    The company executed over $23 billion in incremental transactions, bringing year-to-date activity to over $33 billion. This includes $14 billion in acquisitions and $9 billion in dispositions and loan payoffs. The strategy is driven by an 'opportunity cost prism,' narrowing focus on technology-driven transformation of the niche housing business, particularly senior living. These capital allocation decisions are expected to change the near- and long-term growth rate of the firm, despite significant asset base size.

    03

    Outpatient Medical (OM) Portfolio Divestiture

    Welltower is exiting its outpatient property management business and selling an 18 million square foot OM portfolio for $7.2 billion, realizing a $1.9 billion gain on sale. The deal is structured to retain a $1.2 billion preferred equity stake with 25% upside participation, protecting downside while allowing for future value accretion. This divestiture allows for laser focus on senior living, with residual OM assets becoming premium net lease properties requiring minimal management.

    04

    Strategic UK Acquisitions: HC-One and Barchester

    The company acquired the HC-One portfolio for GBP 1.2 billion, building on a prior GBP 540 million first mortgage investment that generated a nearly 14% unlevered IRR. Additionally, Welltower acquired the Barchester portfolio for GBP 5.2 billion, spanning 111 RIDEA 6.0 assets (high 70s occupancy), 152 mature triple-net assets (90% occupied with 3.5% annual escalators), and 21 assets under development. These acquisitions capitalize on significant growth opportunities in the UK senior housing market.

    05

    New Incentive Structure and Talent Acquisition

    Welltower introduced a dramatic change to its incentive structure, eliminating compensation for management in favor of performance-oriented Welltower stock. A new RIDEA 6.0 construct irrevocably ties operator wealth creation to Welltower stock, and a $10 million annual grant in Welltower stock is established for site-level employees at the 10 best-performing senior housing communities. The company also announced key technology hires, including a Chief Technology Officer, Chief Innovation Officer, and Chief Information Officer, forming a 'tech quad' to drive digital transformation.

    AI-generated summary of the company’s earnings call. Not investment advice.