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Welltower(WELL) - 2024 Q4 - Earnings Call Transcript
WELLWelltower(WELL)2025-02-12 18:47
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Financial Data and Key Metrics Changes - Welltower reported a normalized FFO per share increase of 18% year-over-year, driven by the senior housing operating portfolio [6][15] - The company achieved total portfolio same-store NOI growth of 12.8% for Q4 2024 [33][66] - For the full year of 2024, Welltower experienced 23% revenue growth, 26% EBITDA growth, and nearly 20% FFO per share growth [15][66] Business Line Data and Key Metrics Changes - The senior housing operating portfolio saw same-store NOI growth of nearly 24% in Q4, marking the ninth consecutive quarter of growth exceeding 20% [8][33] - The outpatient medical business reported stable same-store NOI growth of 2% year-over-year, with an occupancy rate of 94.3% [34][66] - The senior housing triple net portfolio experienced a same-store NOI increase of 5.1% year-over-year [68] Market Data and Key Metrics Changes - The favorable end-market environment contributed to strong occupancy growth, with the SHARP portfolio achieving average same-store occupancy growth of 120 basis points sequentially and 310 basis points year-over-year [8][10] - The company noted that over a quarter of the portfolio remains sub-80% occupied, indicating potential for future growth [97] Company Strategy and Development Direction - Welltower's strategy focuses on capital deployment, with 7billionofcapitaldeployedin2024andarobustpipelinefor2025[21][58]−Thecompanyaimstoenhanceitsoperatingplatformthroughdigitaltransformationandinternalexpertise,whichisexpectedtodrivefurthermarginexpansion[25][41]−Asixthgrowthpillarwasintroduced,focusingonthelaunchofaprivatefundsmanagementbusiness,whichisanticipatedtocreatesignificantrevenueopportunities[29][116]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismfor2025,expectinganotheryearofexceptionalnetoperatingincomegrowth[13][47]−Thecompanyhighlightedthestrongfundamentalsoftheseniorhousingbusiness,whichareexpectedtoweathereconomicheadwindsbetterthanothersectors[19][20]−Managementacknowledgedthechallengesinthecommercialrealestatedebtmarketbutemphasizedtheopportunitiesforacquiringhigh−qualitypropertiesatattractivevaluations[50][55]OtherImportantInformation−Welltower′snetdebttoadjustedEBITDAratioimprovedto3.49times,reflectingasignificantreductionfromthepreviousyear[70]−Thecompanyhasaliquiditypositionof7 billion of capital deployed in 2024 and a robust pipeline for 2025 [21][58] - The company aims to enhance its operating platform through digital transformation and internal expertise, which is expected to drive further margin expansion [25][41] - A sixth growth pillar was introduced, focusing on the launch of a private funds management business, which is anticipated to create significant revenue opportunities [29][116] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting another year of exceptional net operating income growth [13][47] - The company highlighted the strong fundamentals of the senior housing business, which are expected to weather economic headwinds better than other sectors [19][20] - Management acknowledged the challenges in the commercial real estate debt market but emphasized the opportunities for acquiring high-quality properties at attractive valuations [50][55] Other Important Information - Welltower's net debt to adjusted EBITDA ratio improved to 3.49 times, reflecting a significant reduction from the previous year [70] - The company has a liquidity position of 9 billion, providing ample capacity for future growth [28] Q&A Session Summary Question: Can you provide insights on pricing power across occupancy bands within the SHARP portfolio? - Management indicated that RevPAR growth is strong at 90%+ occupancy, while assets below 70% occupancy are roughly flat, with a gradient of growth observed between these bands [96][97] Question: How does the reduction in new deliveries impact the acquisition of lease-up properties? - Management believes that their long-term track record of success in finding under-performing buildings will continue, despite fewer new deliveries [101][104] Question: How does Welltower approach talent retention? - Management emphasized that retaining talent is a top priority, and there is currently no retention problem, but proactive measures are being taken to maintain a positive culture [110][111] Question: Can you discuss the targeted IRRs for stabilized versus non-stabilized assets in the private funds management business? - Management stated that no further details could be provided at this time, but they are fundamentally focused on growth investments rather than yield investments [115][116] Question: What is the expected performance of non-same-store assets in terms of NOI growth? - Management did not provide specific guidance on non-same-store assets but indicated that there is potential for better performance compared to same-store guidance [118]