Welltower(WELL) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Welltower Inc.'s unaudited consolidated financial information for the quarter ended March 31, 2025 Item 1. Financial Statements (Unaudited) This section presents Welltower Inc.'s unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, with detailed notes for Q1 2025 Consolidated Balance Sheets This section details Welltower's financial position, presenting assets, liabilities, and equity as of March 31, 2025, and December 31, 2024 | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Assets: | | | | Net real estate investments | $46,085,728 | $43,851,677 | | Total assets | $53,293,614 | $51,044,308 | | Liabilities & Equity: | | | | Total liabilities | $18,711,637 | $18,471,722 | | Total equity | $34,304,516 | $32,316,366 | | Total liabilities and equity | $53,293,614 | $51,044,308 | - Total assets increased by $2.25 billion (4.4%) from December 31, 2024, to March 31, 2025, primarily driven by an increase in net real estate investments[8] Consolidated Statements of Comprehensive Income This section outlines Welltower's financial performance, showing revenues, expenses, and net income for the three months ended March 31, 2025 and 2024 | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Total revenues | $2,423,087 | $1,859,741 | +30.3% | | Total expenses | $2,224,380 | $1,718,840 | +29.4% | | Net income attributable to common stockholders | $257,957 | $127,146 | +102.9% | | Basic EPS | $0.40 | $0.22 | +81.8% | | Diluted EPS | $0.40 | $0.22 | +81.8% | | Dividends declared and paid per common share | $0.67 | $0.61 | +9.8% | | Total comprehensive income (loss) attributable to common stockholders | $308,141 | $109,469 | +181.5% | - Net income attributable to common stockholders more than doubled year-over-year, driven by significant revenue growth outpacing expense increases[9] Consolidated Statements of Equity This section details changes in Welltower's equity components, including common stock, capital in excess of par value, and cumulative income/dividends, for Q1 2025 | Equity Component | Balance at March 31, 2025 (in thousands) | Balance at January 1, 2025 (in thousands) | | :--------------------------------- | :------------------------------------- | :------------------------------------ | | Common Stock | $652,088 | $637,002 | | Capital in Excess of Par Value | $42,030,903 | $40,016,503 | | Cumulative Net Income | $10,354,681 | $10,096,724 | | Cumulative Dividends | $(18,751,105) | $(18,320,064) | | Total Welltower Inc. Stockholders' Equity | $33,956,759 | $31,956,208 | | Total Equity | $34,304,516 | $32,316,366 | - Total equity increased by approximately $1.99 billion during the three months ended March 31, 2025, primarily due to net proceeds from common stock issuance ($2.23 billion) and comprehensive income, partially offset by common stock dividends paid ($431 million)[11] Consolidated Statements of Cash Flows This section summarizes Welltower's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025 and 2024 | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Net cash provided from operating activities | $598,958 | $406,806 | +47.2% | | Net cash provided from (used in) investing activities | $(2,028,139) | $(580,931) | -249.1% | | Net cash provided from (used in) financing activities | $1,308,165 | $578,567 | +126.1% | | Cash, cash equivalents and restricted cash at end of period | $3,610,285 | $2,478,335 | +45.7% | - Operating cash flow increased significantly, while investing activities saw a substantial increase in cash used, primarily due to higher acquisitions. Financing activities provided more cash, largely from common stock issuances[12] Notes to Unaudited Consolidated Financial Statements 1. Business This note describes Welltower Inc.'s core business as an S&P 500 company focused on residential wellness and healthcare infrastructure - Welltower Inc. is an S&P 500 company focused on residential wellness and healthcare infrastructure, managing over 1,500 seniors and wellness housing communities and outpatient medical buildings in the US, UK, and Canada[14] - The company operates as an umbrella partnership REIT, with substantially all business conducted through Welltower OP LLC, in which Welltower Inc. held a 99.641% ownership interest as of March 31, 2025[15] 2. Accounting Policies and Related Matters This note outlines the accounting principles used for the unaudited financial statements and discusses the evaluation of new accounting standards - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, and management has included all necessary adjustments for fair presentation[16] - Welltower is evaluating the potential impact of new accounting standards: ASU 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024) and ASU 2024-03 (Expense Disaggregation Disclosures, effective after Dec 15, 2026)[17][18] 3. Real Property Acquisitions and Development This note details Welltower's real property acquisition and development activities, including significant transactions and future commitments for Q1 2025 | Segment | Total Assets Acquired (3 Months Ended March 31, 2025, in thousands) | Total Assets Acquired (3 Months Ended March 31, 2024, in thousands) | | :-------------------- | :----------------------------------------------------- | :----------------------------------------------------- | | Seniors Housing Operating | $1,429,307 | $81,191 | | Triple-net | $1,296,362 | $963 | | Outpatient Medical | $24,424 | $0 | | Total | $2,750,093 | $82,154 | - Total assets acquired increased significantly from $82.15 million in Q1 2024 to $2.75 billion in Q1 2025, primarily driven by major acquisitions in Seniors Housing Operating and Triple-net segments[23] - Key acquisitions in Q1 2025 include 48 skilled nursing facilities for $990.9 million (Aspire Healthcare) and the finalization of the Care UK acquisition (136 seniors housing properties) with $20.2 million paid in 2025[24][25] - Welltower announced a definitive agreement to acquire 38 seniors housing communities and nine development parcels from Amica Senior Lifestyles for C$4.6 billion, expected to close in late 2025 or early 2026[30] 4. Intangible Assets and Goodwill This note provides a breakdown of Welltower's intangible assets and goodwill, highlighting changes due to acquisitions and adjustments | Intangible Asset | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Net acquired lease intangibles | $693,305 | $665,944 | | Net below market tenant leases | $24,877 | $17,967 | | Total Goodwill | $200,201 | $149,225 | - Goodwill increased by $50.98 million, primarily due to a $48.57 million acquisition measurement period adjustment related to the Care UK acquisition in the Seniors Housing Operating segment[28][34] 5. Dispositions, Real Property Held for Sale and Impairment This note details Welltower's real estate disposition activities, gains/losses, and impairment charges for the periods presented | Disposition Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Total dispositions (real estate) | $471,695 | $39,985 | | Gain (loss) on real estate dispositions, net | $51,777 | $4,707 | | Cash proceeds from real estate dispositions | $317,663 | $44,834 | - Real estate dispositions significantly increased year-over-year, with total dispositions rising from $39.99 million to $471.70 million, contributing to a higher net gain on dispositions[38] - The company substantially dissolved its Chartwell joint ventures in Canada, acquiring 23 properties and selling its interest in 16 properties, resulting in a $53.35 million gain[39][42] - Impairment charges for Q1 2025 were $52.40 million (6 Seniors Housing Operating, 4 Triple-net properties), compared to $43.33 million (10 Seniors Housing Operating properties) in Q1 2024[36] 6. Leases This note presents Welltower's lease-related financial information, including lease costs as a lessee and rental income as a lessor | Lease Expense Component | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total lease cost (as lessee) | $27,351 | $8,826 | | Rental income (as lessor) | $461,567 | $417,652 | | Revenue from residential seniors apartment leases | $185,225 | $130,565 | - Total lease cost as a lessee increased significantly to $27.35 million, while rental income as a lessor also grew to $461.57 million, with a notable increase in revenue from residential seniors apartment leases to $185.23 million[44][46][48] 7. Loans Receivable This note details Welltower's real estate and non-real estate loans receivable, including changes in balances and cash flow activities | Loan Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Real estate loans receivable, net | $1,772,708 | $1,805,044 | | Non-real estate loans receivable, net | $221,738 | $222,542 | | Total loans receivable, net | $1,994,446 | $2,027,586 | | Allowance for credit losses on loans receivable | $32,101 | $33,797 | | Loan Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Advances on loans receivable | $19,672 | $116,789 | | | Receipts on loans receivable | $100,372 | $36,472 | | | Net cash advances (receipts) on loans receivable | $(80,700) | $80,317 | | - Net loans receivable decreased slightly, with a significant shift from net cash advances ($80.32 million) in Q1 2024 to net cash receipts ($80.70 million) in Q1 2025, indicating more principal collected than advanced[51] 8. Investments in Unconsolidated Entities This note outlines Welltower's investments in unconsolidated entities across various segments, including new fund launches | Segment | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :----------------------------- | :----------------------------- | | Seniors Housing Operating | $1,453,611 | $1,412,708 | | Triple-net | $30,242 | $35,066 | | Outpatient Medical | $230,289 | $249,889 | | Non-segment/Corporate | $73,256 | $71,109 | | Total | $1,787,398 | $1,768,772 | - Total investments in unconsolidated entities increased slightly, with a new Seniors Housing Fund I LP launched in January 2025, holding an unconsolidated investment balance of $119.63 million as of March 31, 2025[56][58] 9. Credit Concentration This note identifies Welltower's significant tenant and operator relationships, detailing their contribution to consolidated Net Operating Income (NOI) | Relationship | Number of Properties | Total NOI (in thousands) | Percent of NOI | | :-------------------------- | :------------------- | :----------------------- | :------------- | | Cogir Management Corporation | 155 | $69,290 | 7% | | Sunrise Senior Living | 89 | $51,763 | 5% | | Integra Healthcare Properties | 117 | $47,841 | 5% | | Care UK | 169 | $45,670 | 5% | | Oakmont Management Group | 67 | $42,911 | 4% | | Remaining portfolio | 1,619 | $703,222 | 74% | | Totals | 2,216 | $960,697 | 100% | - The top five relationships accounted for 27% of total consolidated NOI for the three months ended March 31, 2025, with Cogir Management Corporation being the largest at 7%[60] 10. Borrowings Under Credit Facilities and Commercial Paper Program This note describes Welltower's credit facilities and commercial paper program, including outstanding balances and interest rate terms - As of March 31, 2025, Welltower had a $5 billion unsecured revolving credit facility and a $1 billion unsecured term credit facility, with no outstanding borrowings under either or its $2 billion commercial paper program[61][62] - The revolving credit facility bears interest at 0.725% over adjusted SOFR, and the company pays a quarterly facility fee of 0.125% based on its credit ratings[61] 11. Senior Unsecured Notes and Secured Debt This note provides a detailed breakdown of Welltower's senior unsecured notes and secured debt, including principal balances, carrying values, and maturity profiles | Debt Type | Total Principal Balance (in thousands) | Carrying Value (in thousands) | | :---------------------- | :----------------------------------- | :---------------------------- | | Senior Unsecured Notes | $13,366,130 | $13,219,202 | | Secured Debt | $2,652,170 | $2,504,655 | | Total Debt | $16,018,300 | $15,723,857 | | Debt Maturity Year | Senior Unsecured Notes (in thousands) | Secured Debt (in thousands) | | :----------------- | :------------------------------------ | :-------------------------- | | 2025 | $1,260,000 | $89,404 | | 2026 | $700,000 | $244,318 | | 2027 | $1,882,470 | $358,379 | | 2028 | $2,494,060 | $187,060 | | 2029 | $2,085,000 | $417,569 | | Thereafter | $4,944,600 | $1,355,440 | | Total Principal | $13,366,130 | $2,652,170 | - The weighted average interest rate for senior unsecured notes (after swaps) was 3.79% at March 31, 2025, down from 3.94% at March 31, 2024. For secured debt, it was 4.08%, down from 4.62%[65] - Welltower OP has $2.07 billion in exchangeable senior unsecured notes (2028 and 2029 maturities), with the 2028 notes exchangeable as of March 31, 2025[68][69][71] 12. Derivative Instruments This note explains Welltower's use of derivative instruments to manage interest rate and foreign currency exchange rate risks - Welltower uses foreign currency forward contracts, cross currency swap contracts, interest rate swaps, and interest rate locks to manage foreign currency exchange rate and interest rate risks[74] | Derivative Type | Notional Amount (March 31, 2025, in thousands) | | :---------------------------------------------------- | :--------------------------------------------- | | Derivatives designated as net investment hedges (CAD) | $5,702,699 | | Derivatives designated as net investment hedges (GBP) | £1,980,708 | | Financial instruments designated as net investment hedges (CAD) | $250,000 | | Financial instruments designated as net investment hedges (GBP) | £1,050,000 | | Interest rate swaps designated as fair value hedges (USD) | $550,000 | | Foreign currency exchange contracts not designated (CAD) | $80,000 | - The company settled certain net investment hedges, generating cash proceeds of $36.67 million in Q1 2025, compared to $0.61 million in Q1 2024[81] 13. Commitments and Contingencies This note outlines Welltower's outstanding letter of credit obligations, construction commitments, and in-substance real estate investments - As of March 31, 2025, Welltower had $41.83 million in outstanding letter of credit obligations, $1.05 billion in construction in progress with an additional $467.65 million committed for completion, and $953.07 million in in-substance real estate investments with $87.84 million committed for additional funding[87] 14. Stockholders' Equity This note details Welltower's common stock activity, including authorized, issued, and outstanding shares, and proceeds from equity issuances | Equity Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Authorized Common Shares | 1,400,000,000 | 1,400,000,000 | | Issued Common Shares | 652,034,658 | 637,056,054 | | Outstanding Common Shares | 651,889,055 | 635,289,329 | | Common Stock Issuance Activity | Shares Issued (3 Months Ended March 31, 2025) | Gross Proceeds (in thousands) | | :------------------------------- | :-------------------------------------------- | :---------------------------- | | ATM Program issuances | 14,389,086 | $2,001,646 | | Equity issuance (treasury shares) | 1,563,904 | $240,075 | | Total Issuances | 16,599,726 | $2,242,904 | - Welltower issued 16.6 million common shares in Q1 2025, generating $2.24 billion in gross proceeds, primarily through its ATM Program and an equity issuance for property acquisition[92] - A quarterly cash dividend of $0.67 per share was declared for Q1 2025, an increase from $0.61 per share in Q1 2024[93] 15. Stock Incentive Plans This note describes Welltower's stock incentive plans, including authorized shares and stock-based compensation expense - The 2022 Long-Term Incentive Plan authorizes up to 10 million shares for issuance to non-employee directors, officers, and key employees, with vesting periods generally ranging from three to five years[95] - Stock-based compensation expense increased to $17.51 million for Q1 2025, up from $12.05 million in Q1 2024[95] 16. Earnings Per Share This note provides the calculation of basic and diluted earnings per share, including the numerators and denominators for the periods presented | EPS Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Numerator for basic EPS (NICS, in thousands) | $257,957 | $127,146 | | Numerator for diluted EPS (in thousands) | $258,907 | $126,821 | | Denominator for basic EPS (shares, in thousands) | 643,393 | 574,049 | | Denominator for diluted EPS (shares, in thousands) | 653,795 | 577,530 | | Basic EPS | $0.40 | $0.22 | | Diluted EPS | $0.40 | $0.22 | - Diluted EPS remained at $0.40 for Q1 2025, a significant increase from $0.22 in Q1 2024, despite an increase in diluted shares outstanding[97] 17. Disclosure about Fair Value of Financial Instruments This note explains Welltower's fair value measurement hierarchy and provides fair value disclosures for various financial instruments - Fair value measurements are categorized into a three-level hierarchy based on input transparency: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[101] | Financial Instrument | Carrying Amount (March 31, 2025, in thousands) | Fair Value (March 31, 2025, in thousands) | | :---------------------------------------------------- | :--------------------------------------------- | :---------------------------------------- | | Mortgage loans receivable | $1,551,674 | $1,624,540 | | Senior unsecured notes | $13,219,202 | $13,866,698 | | Secured debt | $2,504,655 | $2,469,743 | | Equity warrants | $67,381 | $67,381 | | Foreign currency forward contracts, interest rate swaps and cross currency swaps, net asset (liability) | $(22,194) | $(22,194) | - Equity warrants, measured using Level 3 inputs, increased in fair value from $62.32 million at the beginning of Q1 2025 to $67.38 million at period-end, primarily due to mark-to-market adjustments and foreign currency effects[112] 18. Segment Reporting This note presents Welltower's financial performance by operating segment and geographic region, based on total revenues, NOI, and assets - Welltower operates in three segments: Seniors Housing Operating, Triple-net, and Outpatient Medical, evaluating performance based on consolidated Net Operating Income (NOI)[114][115] | Segment | Total Revenues (3 Months Ended March 31, 2025, in thousands) | Consolidated NOI (3 Months Ended March 31, 2025, in thousands) | Total Assets (March 31, 2025, in thousands) | | :-------------------- | :----------------------------------------------------- | :----------------------------------------------------- | :------------------------------------------ | | Seniors Housing Operating | $1,867,871 | $483,187 | $31,598,061 | | Triple-net | $255,030 | $246,212 | $8,757,037 | | Outpatient Medical | $211,016 | $146,410 | $7,538,246 | | Non-segment/Corporate | $89,170 | $84,888 | $5,400,270 | | Total | $2,423,087 | $960,697 | $53,293,614 | | Geographic Region | Total Revenues (3 Months Ended March 31, 2025, in thousands) | Total Revenues (3 Months Ended March 31, 2024, in thousands) | Total Assets (March 31, 2025, in thousands) | | :------------------ | :----------------------------------------------------- | :----------------------------------------------------- | :------------------------------------------ | | United States | $1,889,335 | $1,546,896 | $41,525,349 | | United Kingdom | $375,507 | $161,508 | $6,412,025 | | Canada | $158,245 | $151,337 | $5,356,240 | | Total | $2,423,087 | $1,859,741 | $53,293,614 | - Revenues from the United Kingdom significantly increased by 132.5% year-over-year to $375.51 million (from $161.51 million), and Canadian assets grew by 68.2% from December 31, 2024, to March 31, 2025, reflecting strategic international investments[124] 19. Income Taxes and Distributions This note explains Welltower's REIT status, income tax considerations, and the evaluation of global minimum tax impacts - Welltower operates as a REIT, requiring distribution of at least 90% of taxable income to stockholders to avoid federal income tax, with differences between tax and financial statement income[125] - Income taxes primarily relate to U.S. federal, state, local, and non-U.S. income-based or withholding taxes on investments in jurisdictions outside the U.S., including operations within Taxable REIT Subsidiaries (TRSs)[127] - The company is evaluating the potential consequences of the Organization for Economic Co-operation and Development's proposed global minimum tax (Pillar 2) on its longer-term financial position[130] 20. Variable Interest Entities This note describes Welltower's consolidation of Variable Interest Entities (VIEs) and their financial impact on the consolidated statements - Welltower consolidates Variable Interest Entities (VIEs) where it is the primary beneficiary, primarily holding real estate assets in its Seniors Housing Operating and Triple-net portfolios[131] | VIE Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------- | :----------------------------- | :----------------------------- | | Total assets | $4,657,267 | $3,669,535 | | Total liabilities and equity | $4,657,267 | $3,669,535 | | Revenues from consolidated VIEs | $144,463 (Q1 2025) | $109,930 (Q1 2024) | - Assets of consolidated VIEs can only be used to settle their specific obligations, and their creditors do not have recourse to Welltower[131] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of Welltower's financial condition, operational results, liquidity, capital resources, and segment performance for Q1 2025 Executive Summary This section provides an overview of Welltower's business, strategic objectives, key transactions, and performance indicators for the quarter Company Overview This section describes Welltower Inc. as a leading residential wellness and healthcare infrastructure company with a diversified portfolio - Welltower Inc. is a leading residential wellness and healthcare infrastructure company, with a portfolio of over 1,500 seniors and wellness housing communities and outpatient medical buildings across the US, UK, and Canada[144] | Type of Property | NOI (3 Months Ended March 31, 2025, in thousands) | Percentage of NOI | Number of Properties | | :-------------------- | :------------------------------------------------ | :---------------- | :------------------- | | Seniors Housing Operating | $483,187 | 55.2% | 1,212 | | Triple-net | $246,212 | 28.1% | 633 | | Outpatient Medical | $146,410 | 16.7% | 371 | | Totals | $875,809 | 100.0% | 2,216 | Business Strategy This section outlines Welltower's objectives to enhance stockholder value through consistent dividends and diversified investments, while mitigating payment risk - Welltower's primary objectives are to protect and enhance stockholder value through consistent cash dividends and increased dividend payments, achieved by investing across seniors housing and healthcare real estate and diversifying its portfolio[147] - The company mitigates payment risk by monitoring investments, reviewing financial statements, assessing creditworthiness, conducting property inspections, and structuring operating leases and loans with credit enhancements like guarantees and cross-collateralization[149][151] - Resident fees and services (77%) and rental income (19%) were the primary revenue sources for Q1 2025, with operating leases often featuring escalating rent structures[152] Key Transactions This section highlights significant financial activities, including equity issuances, debt extinguishments, acquisitions, and dispositions during Q1 2025 - Welltower entered into a new ATM Program in March 2025, allowing the sale of up to $7.5 billion in common stock, and sold 14.39 million shares for $2.00 billion in gross proceeds during Q1 2025[156] - In Q1 2025, the company extinguished $119.83 million of secured debt at a 3.52% average interest rate and assumed $316.87 million of secured debt at a 3.21% average interest rate[156] | Investment Activity | Properties Acquired (Q1 2025) | Book Amount (in thousands) | Capitalization Rates | | :-------------------- | :---------------------------- | :------------------------- | :------------------- | | Seniors Housing Operating | 47 | $1,414,070 | 6.6% | | Triple-net | 64 | $1,296,362 | 8.3% | | Outpatient Medical | 1 | $24,365 | 5.8% | | Totals | 112 | $2,734,797 | 7.3% | | Disposition Activity | Properties Disposed (Q1 2025) | Proceeds (in thousands) | Book Amount (in thousands) | Capitalization Rates | | :-------------------- | :---------------------------- | :---------------------- | :------------------------- | :------------------- | | Seniors Housing Operating | 24 | $342,569 | $289,755 | 7.8% | | Triple-net | 6 | $180,435 | $181,940 | 8.5% | | Totals | 30 | $523,004 | $471,695 | 8.1% | Key Performance Indicators, Trends and Uncertainties This section presents Welltower's key operating and credit strength metrics, along with concentration risks, for the periods presented | Operating Performance Metric | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Net income (loss) | $257,266 | $131,634 | +95% | | NICS | $257,957 | $127,146 | +103% | | FFO | $765,197 | $556,703 | +37% | | NOI | $960,697 | $762,828 | +26% | | SSNOI | $650,832 | $576,049 | +13% | | Diluted NICS per share | $0.40 | $0.22 | +82% | | Diluted FFO per share | $1.17 | $0.96 | +22% | | Credit Strength Metric | March 31, 2025 | March 31, 2024 | | :----------------------------------- | :------------- | :------------- | | Net debt to book capitalization ratio | 26% | 29% | | Net debt to undepreciated book capitalization ratio | 21% | 24% | | Net debt to enterprise value ratio | 11% | 17% | | Interest coverage ratio | 6.14x | 4.29x | | Fixed charge coverage ratio | 5.58x | 3.98x | | Concentration Risk (NOI) | March 31, 2025 | March 31, 2024 | | :------------------------- | :------------- | :------------- | | Seniors Housing Operating | 55% | 50% | | Triple-net | 28% | 31% | | Outpatient Medical | 17% | 19% | | United Kingdom | 12% | 10% | | California | 11% | 11% | | Texas | 9% | 8% | | Florida | 7% | 8% | | Canada | 7% | 7% | Corporate Governance This section affirms Welltower's commitment to high ethical business practices and corporate governance guidelines - Welltower's Board of Directors and management are committed to high ethical business practices and corporate governance guidelines, which are available on the company's website[164] LIQUIDITY AND CAPITAL RESOURCES This section analyzes Welltower's cash flow sources and uses, off-balance sheet arrangements, contractual obligations, and capital structure Sources and Uses of Cash This section details Welltower's primary cash inflows and outflows from operating, investing, and financing activities, and capital improvement spending - Primary cash sources include resident fees, rent, interest, short-term deposits, credit facilities, debt/equity issuances, investment dispositions, and loan principal payments[165] - Primary cash uses include dividends, debt service, real property investments (acquisitions, capex, construction), loan advances, and operating/administrative expenses[165] | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Net cash provided from operating activities | $598,958 | $406,806 | +47% | | Net cash used in investing activities | $(2,028,139) | $(580,931) | -249% | | Net cash provided from financing activities | $1,308,165 | $578,567 | +126% | | Cash, cash equivalents and restricted cash at end of period | $3,610,285 | $2,478,335 | +46% | - Cash provided from operations exceeded cash distributions to stockholders for both periods[166] | Capital Improvement Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :---------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | New development | $126,187 | $231,763 | -45.6% | | Recurring capital expenditures, tenant improvements and lease commissions | $74,743 | $51,616 | +44.8% | | Renovations, redevelopments and other capital improvements | $165,607 | $80,893 | +104.7% | | Total | $366,537 | $364,272 | +0.6% | Off-Balance Sheet Arrangements This section describes Welltower's investments in unconsolidated entities and outstanding letter of credit obligations - Welltower has investments in unconsolidated entities (10%-95% ownership) and uses financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure[170] - As of March 31, 2025, the company had 19 outstanding letter of credit obligations totaling $41.83 million[87][170] Contractual Obligations This section provides a detailed schedule of Welltower's contractual obligations, including debt, lease liabilities, and purchase commitments | Contractual Obligation | Total (in thousands) | 2025 (in thousands) | 2026-2027 (in thousands) | 2028-2029 (in thousands) | Thereafter (in thousands) | | :------------------------------------ | :------------------- | :------------------ | :----------------------- | :----------------------- | :------------------------ | | Senior unsecured notes and term credit facilities | $13,366,130 | $1,260,000 | $1,382,470 | $4,579,060 | $6,300,040 | | Secured debt (consolidated) | $2,652,170 | $89,404 | $602,697 | $604,629 | $1,355,440 | | Secured debt (unconsolidated) | $637,503 | $508,441 | $93,236 | $22,036 | $13,790 | | Contractual interest obligations | $3,785,227 | $460,446 | $1,028,558 | $696,640 | $1,599,583 | | Financing lease liabilities | $454,502 | $5,970 | $15,173 | $10,694 | $422,665 | | Operating lease liabilities | $2,321,784 | $60,333 | $165,999 | $165,471 | $1,929,981 | | Purchase obligations | $571,660 | $398,814 | $161,334 | $411 | $11,101 | | Total Contractual Obligations | $23,788,976 | $2,783,408 | $4,649,467 | $6,078,941 | $10,277,160 | Capital Structure This section discusses Welltower's debt covenants, capital structure, and recent shelf registration for future debt and equity offerings - Welltower maintains compliance with debt covenants and a capital structure consistent with its current profile, with no debt agreement provisions for acceleration triggered by debt ratings[172] - The company filed a new universal shelf registration statement (Form S-3) in March 2025 for future offerings of debt and equity securities, including an enhanced dividend reinvestment plan (DRIP) for up to 15 million common shares[173] - As of April 25, 2025, Welltower had approximately $7.17 billion remaining capacity under its ATM Program, with no outstanding forward sales agreements[175] Supplemental Guarantor Information This section clarifies Welltower Inc.'s full and unconditional guarantee of Welltower OP's unsecured notes and the omission of separate financial statements - Welltower Inc. fully and unconditionally guarantees all unsecured notes issued by Welltower OP, which it majority-owns (99.641% as of March 31, 2025)[180] - Due to Welltower Inc.'s guarantee and its lack of material assets/liabilities outside Welltower OP, separate financial statements for Welltower OP are omitted per SEC Rule 13-01 of Regulation S-X[180] RESULTS OF OPERATIONS This section provides a detailed analysis of Welltower's financial performance, breaking down revenues, expenses, and key metrics by segment Summary This section summarizes Welltower's overall financial performance, presenting key metrics like net income, FFO, NOI, and coverage ratios for Q1 2025 - Welltower's primary revenue sources are resident fees and services, rent, and interest income, while key expenses include property operating, depreciation, interest, and general & administrative costs[181] | Performance Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Net income (loss) (in thousands) | $257,266 | $131,634 | +95% | | NICS (in thousands) | $257,957 | $127,146 | +103% | | FFO (in thousands) | $765,197 | $556,703 | +37% | | EBITDA (in thousands) | $882,578 | $651,006 | +36% | | NOI (in thousands) | $960,697 | $762,828 | +26% | | SSNOI (in thousands) | $650,832 | $576,049 | +13% | | Diluted NICS per share | $0.40 | $0.22 | +82% | | Diluted FFO per share | $1.17 | $0.96 | +22% | | Interest coverage ratio | 6.14x | 4.29x | +43% | | Fixed charge coverage ratio | 5.58x | 3.98x | +40% | Seniors Housing Operating This section details the financial performance of Welltower's Seniors Housing Operating segment, including revenues, expenses, NOI, and occupancy trends | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Resident fees and services | $1,864,530 | $1,360,274 | +37% | | Total revenues | $1,867,871 | $1,361,737 | +37% | | Property operating expenses | $1,384,684 | $1,019,347 | +36% | | NOI | $483,187 | $342,390 | +41% | | Net income (loss) attributable to common stockholders | $135,451 | $43,350 | +212% | | SSNOI at Welltower's share | $364,858 | $298,617 | +22.2% | - Revenues and NOI in the Seniors Housing Operating segment grew significantly, primarily due to acquisitions (e.g., Care UK), construction conversions, and the transition of Triple-net properties to RIDEA structures, alongside steady increases in occupancy and rates[184] - Average occupancy for Seniors Housing Operating properties increased to 85.1% in Q1 2025 from 82.5% in Q1 2024[184] - The segment recorded $23.60 million in impairment charges in Q1 2025 (down from $43.33 million in Q1 2024) and completed $132.21 million in construction conversions[185][187] Triple-net This section analyzes the financial performance of Welltower's Triple-net segment, focusing on rental income, NOI, and debt changes | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Rental income | $252,688 | $221,744 | +14% | | Total revenues | $255,030 | $222,943 | +14% | | NOI | $246,212 | $212,126 | +16% | | Net income (loss) attributable to common stockholders | $130,379 | $136,919 | -5% | | SSNOI at Welltower's share | $153,152 | $147,451 | +3.9% | - Rental income increased due to acquisitions and annual rent escalations, with 20 leases experiencing a weighted average increase of 4.8% in Q1 2025[189] - Net income attributable to common stockholders decreased by 5% year-over-year, partly due to a $28.80 million impairment charge on four properties in Q1 2025[189][192] - The segment's secured debt ending balance increased to $333.77 million in Q1 2025 from $38.02 million in Q1 2024, with a weighted average interest rate of 3.44% (down from 4.39%)[193] Outpatient Medical This section reviews the financial performance of Welltower's Outpatient Medical segment, highlighting rental income, NOI, and construction conversions | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Rental income | $208,879 | $195,908 | +7% | | Total revenues | $211,016 | $198,310 | +6% | | NOI | $146,410 | $135,847 | +8% | | Net income (loss) attributable to common stockholders | $84,230 | $66,993 | +26% | | SSNOI at Welltower's share | $132,822 | $129,981 | +2.2% | - Rental income and NOI increased due to acquisitions and construction conversions, with new leases and renewals signed for 464,895 square feet at a weighted-average term of 8 years and a rate of $44.53 per square foot[194] - The segment completed $175.05 million in construction conversions in Q1 2025 and saw its secured debt ending balance decrease to $64.73 million from $228.33 million year-over-year[196][197] Non-Segment/Corporate This section covers the financial performance of Welltower's Non-Segment/Corporate activities, including interest income, other income, and general and administrative expenses | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Interest income | $60,379 | $52,664 | +15% | | Other income | $28,791 | $24,087 | +20% | | Total revenues | $89,170 | $76,751 | +16% | | Consolidated net operating income (loss) | $84,888 | $72,465 | +17% | | Net income (loss) attributable to common stockholders | $(92,103) | $(120,116) | +23% | | General and administrative expenses | $63,758 | $53,318 | +20% | - Interest income increased by 15% to $60.38 million due to increased advances on loans receivable, and other income rose by 20% to $28.79 million from interest earned on deposits[199] - Non-segment/Corporate interest expense decreased by 7% year-over-year, primarily due to the net effect of senior unsecured notes issuances and extinguishments, and foreign exchange rate movements[200] - Net loss attributable to common stockholders improved by 23% year-over-year, from $(120.12) million to $(92.10) million[198] OTHER This section discusses Welltower's use of non-GAAP financial measures, critical accounting policies, and cautionary statements regarding forward-looking information Non-GAAP Financial Measures This section defines and reconciles Welltower's non-GAAP financial measures, such as FFO, NOI, SSNOI, and EBITDA, to U.S. GAAP net income - Welltower uses non-GAAP measures like FFO, NOI, SSNOI, EBITDA, and Adjusted EBITDA to supplement U.S. GAAP net income, providing additional insights into operating performance and credit strength[203][204][206] | FFO Reconciliation | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | September 30, 2024 (in thousands) | June 30, 2024 (in thousands) | March 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------------------- | :--------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders | $257,957 | $119,971 | $449,849 | $254,714 | $127,146 | | Depreciation and amortization | $485,869 | $480,406 | $403,779 | $382,045 | $365,863 | | Impairment of assets | $52,402 | $23,647 | $23,421 | $2,394 | $43,331 | | Loss (gain) on real estate dispositions, net | $(51,777) | $(8,195) | $(272,266) | $(166,443) | $(4,707) | | Noncontrolling interests | $(9,468) | $(6,667) | $(5,801) | $(6,348) | $(11,996) | | Unconsolidated entities | $30,214 | $27,978 | $36,835 | $27,411 | $37,066 | | FFO | $765,197 | $637,140 | $635,817 | $493,773 | $556,703 | | FFO per diluted share | $1.17 | $1.00 | $1.03 | $0.82 | $0.96 | | NOI Reconciliation | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | September 30, 2024 (in thousands) | June 30, 2024 (in thousands) | March 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------------------- | :--------------------------- | :----------------------------- | | Net income (loss) | $257,266 | $123,753 | $456,800 | $260,670 | $131,634 | | Depreciation and amortization | $485,869 | $480,406 | $403,779 | $382,045 | $365,863 | | Interest expense | $144,962 | $154,469 | $139,050 | $133,424 | $147,318 | | General and administrative expenses | $63,758 | $48,707 | $77,901 | $55,565 | $53,318 | | Consolidated NOI | $960,697 | $841,530 | $842,962 | $713,587 | $762,828 | | NOI by segment (Seniors Housing Operating) | $483,187 | $430,689 | $378,135 | $360,467 | $342,390 | | NOI by segment (Triple-net) | $246,212 | $185,032 | $219,304 | $131,587 | $212,126 | | NOI by segment (Outpatient Medical) | $146,410 | $142,361 | $142,217 | $136,052 | $135,847 | | NOI by segment (Non-segment/Corporate) | $84,888 | $83,448 | $103,306 | $85,481 | $72,465 | | SSNOI Reconciliation (Welltower Share) | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Seniors Housing Operating | $364,858 | $298,617 | | Triple-net | $153,152 | $147,451 | | Outpatient Medical | $132,822 | $129,981 | | Total SSNOI | $650,832 | $576,049 | Critical Accounting Policies and Estimates This section highlights Welltower's reliance on critical accounting estimates and assumptions, which are reviewed with the Audit Committee - Welltower's financial statements rely on critical accounting estimates and assumptions, particularly for highly uncertain matters, which are reviewed with the Audit Committee[217] - Management believes current assumptions are appropriate, but actual experience differing from estimates could materially impact financial results[217] Cautionary Statement Regarding Forward-Looking Statements This section advises that the report contains forward-looking statements subject to various risks and uncertainties, with no obligation to update them - The report contains forward-looking statements subject to risks and uncertainties, including economic conditions, capital markets, healthcare industry issues, financing terms, competition, and operator/tenant performance[218] - Welltower disclaims any obligation to update or revise forward-looking statements publicly[218] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Welltower's exposure to market risks, primarily from interest rate fluctuations and foreign currency exchange rates, and outlines mitigation strategies - Welltower is exposed to interest rate and foreign currency exchange rate risks, which it mitigates through derivative contracts and matching new investments with long-term fixed-rate borrowings[219] | Fixed Rate Debt | Principal Balance (March 31, 2025, in thousands) | Change in Fair Value (1% Interest Rate Increase, in thousands) | | :-------------------- | :--------------------------------------------- | :------------------------------------------------------------ | | Senior unsecured notes | $12,182,280 | $(506,702) | | Secured debt | $2,413,920 | $(110,515) | | Totals | $14,596,200 | $(617,217) | - A hypothetical 1% increase in interest rates would result in an estimated $14.22 million increase in annual interest expense for variable rate debt (as of March 31, 2025)[222] - A 10% change in Canadian Dollar or British Pounds Sterling exchange rates would impact annualized net income from these investments by less than $16 million[223] - A 1% change in the U.S. Dollar's strength against foreign currencies would impact the obligation to cash settle foreign currency debt by approximately $25.78 million and cross-currency interest rate swaps by approximately $65.75 million[224][225] Item 4. Controls and Procedures Management, including the CEO and Co-President & CFO, evaluated the effectiveness of Welltower's disclosure controls and procedures as of March 31, 2025, concluding they are effective in ensuring timely and accurate financial reporting - Welltower's disclosure controls and procedures were deemed effective as of March 31, 2025, providing reasonable assurance for timely and accurate SEC reporting[227] - No material changes to internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025[227] PART II. OTHER INFORMATION This section provides additional information on Welltower's legal proceedings, risk factors, equity security sales, other disclosures, and exhibits Item 1. Legal Proceedings Welltower is involved in various legal proceedings in the ordinary course of business, but management believes their resolution will not have a material adverse effect on the company's business, results of operations, or financial condition - Management does not believe current legal proceedings will materially adversely affect Welltower's business, results of operations, or financial condition[229] - Third parties (tenants, operators, managers) are contractually obligated to indemnify Welltower in some legal matters, though their ability to satisfy these obligations could impact the company[229] Item 1A. Risk Factors There have been no material changes to the risk factors previously identified in Welltower's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors were identified from the Annual Report on Form 10-K for the year ended December 31, 2024[230] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, Welltower acquired common stock from employees to satisfy tax withholding obligations and redeemed OP Units for common shares. The company did not repurchase shares under its $3 billion Stock Repurchase Program | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--------------------------------------- | :----------------------------- | :--------------------------- | | January 1, 2025 through January 31, 2025 | 15,283 | $127.26 | | February 1, 2025 through February 28, 2025 | 26,525 | $150.73 | | March 1, 2025 through March 31, 2025 | 1,280 | $138.18 | | Totals | 43,088 | $142.03 | - Welltower redeemed 554,681 OP Units for common shares during Q1 2025[232] - No shares were repurchased under the $3 billion Stock Repurchase Program during Q1 2025[233] Item 5. Other Information No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or Section 16 officers in Q1 2025[234] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including long-term incentive programs, equity distribution agreements, certifications, and XBRL documents - Key exhibits include the 2025-2027 Long-Term Incentive Program, Equity Distribution Agreement (March 28, 2025), Rule 13a-14(a)/15d-14(a) Certifications, and XBRL Instance Document[236] Signatures The Quarterly Report on Form 10-Q was duly signed on April 29, 2025, by Shankh Mitra (CEO), Timothy G. McHugh (Co-President and CFO), and Joshua T. Fieweger (Chief Accounting Officer) - The report was signed by the Chief Executive Officer, Co-President and Chief Financial Officer, and Chief Accounting Officer on April 29, 2025[240]