Welltower(US:WELL)2025-10-28 14:02Financial Data and Key Metrics Changes - Welltower reported a net income attributable to common stockholders of $0.41 per diluted share and normalized funds from operations (FFO) of $1.34 per diluted share, representing a year-over-year growth of 20.7% [23] - The total portfolio same-store net operating income (NOI) growth was 14.5% year-over-year [23] - Year-over-year organic revenue growth remained at approximately 10%, driven by a 400 basis point occupancy gain and strong pricing power [13] Business Line Data and Key Metrics Changes - The senior housing portfolio achieved same-store NOI growth exceeding 20% for the 12th consecutive quarter, marking an exceptional performance [12] - Operating margins across the same-store portfolio increased by 260 basis points, with growth in unit revenue (RevPor) outpacing unit expense growth (ExPor) [13] - The seniors housing triple-net portfolio's same-store NOI increased by 3.1% year-over-year, with trailing 12-month EBITDA coverage at 1.21x [24] Market Data and Key Metrics Changes - The U.K. portfolio saw a 550 basis point year-over-year increase in occupancy, leading to a 10.4% revenue increase [13] - The backdrop for growth in 2026 and beyond remains favorable, with senior housing demand expected to grow stronger while supply remains dormant [14] Company Strategy and Development Direction - Welltower is transitioning to a pure-play rental housing platform for the aging population, focusing on technology-driven transformation and operational excellence [5][14] - The company is exiting the outpatient property management business to concentrate on senior living, which is seen as a high-growth opportunity [6][14] - The launch of Welltower 3.0 emphasizes operations and technology, aiming to enhance customer experience and employee satisfaction [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and the potential for significant growth and cash flow compounding over time [44] - The company is focused on aligning interests across its ecosystem to enhance long-term value creation [43] - Management acknowledged the uncertainty in the broader economy but highlighted the strength of their business model driven by needs-based and private pay nature [11] Other Important Information - Welltower's year-to-date transaction activity reached $33 billion, with $23 billion in incremental transactions reported [5][16] - The company announced the acquisition of the Barchester Senior Living portfolio for $5.2 billion, which is expected to be accretive to FFO per share in 2026 [9][20] - A new compensation plan was introduced to align management and operating partners' interests with shareholders [36] Q&A Session Summary Question: What is the goal behind the changes and how should growth be viewed? - Management clarified that the focus is on aligning interests across the ecosystem rather than proving anything, emphasizing the importance of duration in growth [43][44] Question: Was the new compensation plan presented as a team package? - The board spent significant time developing the plan, which aligns with the company's incentive design principles [48] Question: Why not issue equity for acquisitions instead of asset sales? - Management explained that the cost of equity was viewed as higher than the cost of asset sales, emphasizing long-term value creation over short-term gains [52][54] Question: How do the new care home deals compare to the current portfolio? - The new portfolios are similar in asset quality and private pay percentage, maintaining a consistent growth outlook [56] Question: How is execution risk managed for the announced changes? - Management highlighted the importance of a strong team with extensive transaction experience and a focus on attracting and retaining top talent to mitigate risks [76]