Welltower Made $2.2B of Acquisitions in Q3 and a 23% Net Income Increase

Welltower (WELL), a real estate investment trust (REIT) specializing in senior housing, reported strong third-quarter earnings Tuesday, as the firm said it has closed $2.2 billion worth of transactions and saw the net operating income of its senior housing portfolio increase 23 percent in the third quarter, the eighth consecutive quarter in which growth surged past 20 percent. 

The third quarter marked the first time in the company’s history that quarterly revenue exceeded $2 billion — reaching $2.05 billion, an increase from $1.6 billion in the third quarter of 2023. 

Funds from operations (FFO) — a proxy for cash flow — increased 21 percent per share quarter-over-quarter, according to the firm, whose stock price was $135.90 as of Tuesday afternoon. Welltower’s stock price has increased about 66 percent from its Oct. 30, 2023, price of $81.87. To this end, the firm raised its full-year FFO per diluted share guidance from a high of $4.21 to $4.33, its fourth guidance raise in 2024. 

Welltower also experienced 160 basis points of sequential occupancy growth across its portfolio, reaching 88.8 percent. Strong occupancy totals allowed the firm’s revenue for its senior housing portfolio to increase 8.9 percent year-over-year in the third quarter of 2024

“I’m once again pleased to report another very strong quarter across the board at Welltower from operations to capital deployment, a further trimming of our balance sheet, and continued progress on our operating platform all out,” Shankh Mitra, CEO of Welltower, said during a Tuesday earnings call. “Overall, we’re delighted with our results and believe we’re carrying significant momentum in 2025, as tailwinds which we have listed for our business continue to strengthen.” 

The firm was busy on the acquisitions front in the third quarter. Welltower has completed $2.2 billion worth of acquisitions in the last three months, and has either acquired or agreed to acquire an additional $1.2 billion worth of assets, according to the firm’s earnings guidance. 

Welltower’s year-to-date investment activity reached $6.2 billion. 

These recent acquisitions include a $969 million deal with Affinity Living Communities to purchase 25 active adult living communities comprising nearly 3,900 units in the Pacific Northwest. The firm also opened nine development facilities that include partial conversions and expansions of existing properties. Most notably, Welltower also began converting 52 properties into senior housing operating structures under the REIT Investment Diversification and Empowerment Act, federal legislation that allows REITs to restructure health care real estate income.

All told, Welltower completed 15 transactions across 13 different operating partners in the third quarter, with a median size of $56 million. 

“This growth underscores the strength of our market position and the abundance of opportunities we are pursuing,” said Nikhil Chaudhri, Welltower’s executive vice president and chief investment officer. “Acquiring quality assets at a reasonable basis with significant cash flow growth prospects remains at the core of our investment strategy.” 

Mitra pointed to several forward-looking trends in the senior housing sector that he anticipates will boost growth going forward. First, new construction starts for senior housing dropped in the third quarter and reached the second-lowest level on record since the second quarter of 2009. 

Mitra emphasized that the high cost of financing, as well as the lengthy time it takes to build senior housing facilities, means that Welltwoer might not face competition from new supply for many years to come.

Then he pointed to demographics. Starting next year, 5,000 Americans are expected to turn 80 daily, with that demographic pattern continuing into the 2030s, according to Mitra. 

“We’re only at the front end of this trend, with the crest of the ‘Silver Tsunami’ not being seen until well into the future,” Mitra said. “We have had a couple years of solid growth, but we believe we are still in the very early stages of an extended period of extraordinary growth for the senior housing sector.”

Brian Pascus can be reached at bpascus@commercialobserver.com.