WELL

Thank you for standing by. At this time, I would like to welcome everyone to the Welltower first quarter 2026 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers remarks their will be a question and answer session. If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad. In order to ensure full participation, we as to limit your question to one and requeue if you have follow up. I would now like to turn the conference over to Matt McQueen, Chief Legal Officer and General Counsel. The floor is yours.

Thank you and good morning. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Welltower believes any forward-looking statements are based on reasonable assumptions, the company can give no assurances that its projected results will be attained. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. With that, I'll hand the call over to Shankh Mitra for his remarks.

Thank you, Matt, and good morning, everyone. As usual, I'll review business trends and our capital allocation priorities, and the team will follow the usual cadence. We started the year on a strong note with the business continuing to fire on all cylinders. While the heightened geopolitical tension and macroeconomic volatility dominated the headlines, our niche, need-based, and private pay rental housing business did not miss a beat. Driven by a combination of strong organic growth and acquisition activity, our total revenue for the quarter increased 38% year-over-year, while adjusted EBITDA was up 36%. Most importantly, we delivered another quarter of strong bottom-line per share growth with FFO per share increasing 23% while we continue to deleverage our balance sheet and invest in people and systems. Our balance sheet provides us with substantial firepower and flexibility.

These results exceed our already high expectation coming into the year, enabling us to raise the midpoint of our full-year FFO per share guidance by $0.11-$6.28. The pronounced mix shift of our portfolio resulting from a transformative 2025 capital allocation activity has already began to manifest itself. During the first quarter of this year, we reported 16.4% total portfolio same store net operating income growth, by far the highest in our history. This is largely a function of combined strength from our Seniors Housing Operating portfolio, which now comprises 74% of our same-store NOI, up from 57% first quarter of last year. This is the first time in history the annualized in-place NOI from our SHOP portfolio exceeded $3 billion.

During the first quarter, U.S. outperformed from an occupancy perspective with nearly 400 basis points of year-over-year growth. On the other hand, Canada, with higher overall occupancy levels than U.S. and U.K., posted growth closer to 300 basis points but generated report growth of 6%, giving you some perspective of the art of the possible as our overall portfolio leases up. Ultimately, all three regions made strong contributions, and we achieved nearly 10% organic revenue growth in the quarter. The subdued expense growth driven by scaling and the Welltower Business System same store NOI growth increased 22%, marking 14th consecutive quarter in which SHOP growth exceeded 20%.

Drilling a bit farther, the growth of RevPOR, the unit revenue continued to exceed ExPOR or unit expenses by a wide margin, resulting in another quarter of significant operating margin expansion of 320 basis points. Perhaps the most remarkable stat of the quarter was the circa 20% NOI growth generated by the communities with 95%+ occupancy. While I consider our recent seniors housing results to be somewhat satisfactory, I'm convinced that the best years of this business are squarely in front of us. With the total seniors housing portfolio occupancy at 87%, there is significant capacity in the system for us to drive multiple years of outsized occupancy gains along with continued pricing opportunity. With the operating leverage inherent in our high fixed cost business, margins should continue to drift higher.

As we have talked about during our most recent calls, what we remain most excited about and our most meaningful opportunity to drive bottom line growth is through the expanded role that technology, data, and innovation will play in our business with the ultimate goal of improving the experience of our customers and site level employees. The structural change driven by the Welltower Business System should continue to impact virtually every revenue and expense line item, driving the margins even higher. This digital transformation, which we are striving for, coupled with in place above market compensation and benefits for our site level employees, should result in lower turnover and lead happier customers. As I mentioned last quarter, Munger Grant is a clear example of how we are putting these ideas into action.

As I've written extensively in my annual letter, which came out a few weeks ago, we have built a system of scaled economic shared among all participants in the ecosystem. While shareholders will certainly benefit as we extend the duration of our growth. We want our operating partners, site-level employees, residents, and their families to benefit meaningfully as well. This is the only way to build and sustain a network effect in a complex adaptive system like ours. Turning to investment activity, almost exactly a year after Liberation Day, the conflict in Middle East has led to another period of significant capital markets volatility, creating a dynamic similar to that of last year. Recently, a spike in interest rates and gapping out of spreads has resulted in retrading of deals and various parties walking away from their newfound love of seniors housing.

It is almost comical to see how predictable tourist capital's behavior can be. Many of our counterparties have seen this movie before and opted to bypass the theater and instead transacting with us directly in privately negotiated deals. However, some of the first-time sellers have learned the hard way that five to six months timeline required to reach a signed definitive agreement in real estate is an eternity in today's world. We behave exactly how we always have, running a first-class business in a first-class way and never walking from a handshake. Over the last 60 days, we have been busier than ever, generating an incredible amount of activity which Nikhil will describe to you shortly.

To provide some additional context, we completed $3.2 billion of investments during the quarter and have closed or are under contract to close an additional $7.3 billion of investments. Our investment pipeline remained robust, visible, and actionable in all three of our regions. In addition, often overlooked is our disposition activity, which totaled nearly $3 billion in the quarter as we continue to rotate capital into opportunities which we believe will both amplify and extend the revenue growth curve farther into the future. Overall, we have completed $11 billion of dispositions since the beginning of 2025, which has been meaningfully dilutive to our 2026 earnings per share. However, culling our portfolio of lower growth assets, we have meaningfully extended our growth curve on outer years.

For example, the assets we acquired in fourth quarter of last year are expected to deliver 10x level of growth in 2026 than the assets we have sold. Not selling this unprecedented volume of assets would have been easier, and frankly more fun, as 2026 FFO per share would have been meaningfully higher. We always have, and always will, choose hard over easy and long term over short term. We have a long and hard year of execution in front of us, but our team has never been more fired up as it is today. We shall see what the market gives us in this summer leasing season. With that, I'll pass it over to John.

Thank you, good morning, everyone. As Shankh mentioned, we are pleased with our start to the year, having delivered the portfolio same-store NOI growth of 16.4%, the highest level in our company's recorded history. Once again, our results were driven by our Seniors Housing Operating portfolio, which delivered a 14th consecutive quarter in which the same-store NOI growth exceeded 20%. During the first quarter, SHO portfolio year-over-year same-store revenue increased 9.5%, driven by 370 basis points of occupancy gains and strong pricing power, with RevPOR growth of 5%. Revenue growth was consistent across all three regions, led by the U.K. at 9.7%, followed by the U.S. at 9.5%, and Canada at 9.2%.

However, peeling back the onion, both the U.S. and U.K. reported occupancy growth of nearly 400 basis points and RevPOR growth just shy of 5%. On the other hand, as Shankh indicated, Canada reported occupancy growth of roughly 300 basis points, but RevPOR growth of nearly 6%. Ultimately, our goal is to provide a top-quality customer experience and to be fairly paid for it, and that's showing up through a combination of occupancy and rate growth. Moving to expenses, we remain encouraged by the trends we are observing across most line items, but particularly with respect to labor, which is almost 60% of SHO expenses. This is best reflected by CompOR, or compensation per occupied room, which increased 20 basis points year-over-year, near the lowest level of growth in recorded history.

As a result, expense per occupied room, or ExPOR, was up just 40 basis points. This is largely a function of scaled economics in the business whereby a growing number of communities are now either fully staffed or approaching those levels. As occupancy continues to grow, the need to add additional staff has moderated, leading to meaningfully higher flow-through or incremental margins. In fact, during the quarter, we achieved a flow-through margin of 64%, while our same-store NOI margin increased 320 basis points to 30.9%. As for the future, we believe that significant upside exists.

The combination of our same-store communities at 95% occupancy posting NOI growth of roughly 20% and approximately 45% of our same-store SHOP assets operating below 90% occupancy with the opportunity for materially increased revenue and NOI via occupancy gain create a potential for years of compounding per share growth ahead. While we take nothing for granted due to the operational intensity and persistent challenges which exist in the business, we are confident that through the efforts of our best-in-class operators and continued rollout of the Welltower Business System across the portfolio, we will continue to drive outsize levels of growth well into the future. It's still early in the year with the peak leasing season ahead. We will see what the market gives us. Our goal remains consistent, operating with our operators to deliver an exceptional resident employee experience.

Our Welltower operations and asset management teams, including the Tech Quad, continue to make leaps, non-incremental steps on this front, and remain committed to maintaining this momentum through a relentless focus on operational excellence. With that, I'll turn it over to Nikhil.

Thanks, John, and good morning, everyone. Since our last call, the macroeconomic and geopolitical backdrop has once again introduced meaningful volatility into the capital markets. Escalating conflict in the Middle East, combined with renewed stress in private credit, has driven a more pronounced risk-off tone, evidenced by higher Treasury yields, elevated volatility across risk assets, and growing signs of strain within private lending markets. Credit spreads have widened in recent weeks. Redemption activity in certain semi-liquid vehicles has increased, and defaults have continued to trend higher. As Shankh said, we have seen this movie before. In periods like this, when capital becomes less reliable and execution risk rises, our position strengthens. Our reputation as the highest quality counterparty, backed by our incredible balance sheet, becomes increasingly differentiated. Sellers place a premium on certainty of close. Lenders become more selective. When that happens, the opportunity set expands.

That is exactly what we are seeing today. As a result, we have seen a meaningful increase in our investment activity. Our investment volume for the year now stands at $10.5 billion, an increase of $4.8 billion since our last call in February. During the first quarter, we closed 41 transactions totaling $3.2 billion. Of these, 37 were sourced off-market, continuing to reflect the strength of our relationships and our origination platform. The majority of our acquisitions activity was highly granular, single-asset transactions where our teams operated as local sharpshooters, supported by insights from our data science and machine learning platform, Welltower.ai. These transactions added 37 communities and over 4,200 units to our seniors housing portfolio.

On the disposition side, during the quarter, we completed the remaining $520 million of the previously announced $1.3 billion of dispositions in our Integra JV, as well as an additional $1.3 billion of OM sales to Kayne Anderson. With $6.7 billion of sales now complete, we expect the remaining approximately $500 million to be completed during the second quarter. Turning to new activity, we have already closed on additional $4.2 billion of transactions in the second quarter, comprised primarily of our previously announced acquisition of Amica Senior Lifestyles in premium markets across the GTA and Vancouver. The incremental $3.1 billion of activity is comprised primarily of newer vintage seniors housing assets, with roughly 95% sourced off market across a number of transactions.

I'm also pleased to provide an update on our U.S. Seniors Housing Equity Fund. As I mentioned on our last call, we held our final LP close in the fourth quarter of 2025. Since then, consistent with the acceleration in activity on our balance sheet, the entire $2.5 billion of fund capital is now fully committed. While we were significantly oversubscribed, we made a deliberate decision to limit the size of the fund. Our focus was simple: raise the right amount of capital, not the maximum amount of capital. We also structured and are scheduled to deploy the fund in a way that avoids many of the common friction points for LPs. With 1.5 years still left in the investment period, capital is being put to work quickly in high conviction opportunity, minimizing the typical J-curve of returns.

In addition, we have avoided the use of subscription lines to manufacture IRRs, remaining focused instead on driving real equity value creation over time. I'll leave you with a few thoughts. What we're seeing in the market right now is not new, but it is meaningful. Periods of volatility separate long-term capital from short-term tourists. In these moments, speed, conviction in underwriting, and consistent execution aren't just advantages, they're differentiators. That's where we have focused our time. Our platform is built to identify opportunities at a very granular level, move with speed, and engage directly with counterparties. We are disciplined in how we deploy capital, valuing assets based on in-place performance, while keeping the value add from WBS for our shareholders. We remain price disciplined, with unlevered IRRs and discounts to replacement costs being our guiding principles, and with terms like accretion notably absent from our investment committee conversations.

Our focus on win-win outcomes and dogged pursuit of the truth rather than woven narratives continues to drive our ability to source opportunities off market and deploy capital thoughtfully, even in more uncertain environments. With that, I'll turn the call over to Tim to walk through our financial results.

Thank you, Nikhil. My comments today will focus on our first quarter 2026 results, performance of our triple net investment segments, our capital activity, a balance sheet liquidity update, and finally, an update to our full year 2026 outlook. Welltower reported first quarter net income attributable to common stockholders of $1.02 per diluted share and normalized funds from operations of $1.47 per diluted share, representing 22.5% year-over-year growth. We also reported year-over-year total portfolio same store NOI growth of 16.4%, driven by 22.1% growth in our SHOP portfolio, which now makes up 74% of our same store NOI. Turning to the performance of our triple net properties in the quarter.

In our seniors housing triple-net portfolio, same-store NOI increased 3.9% year-over-year, and trailing 12-month EBITDAR coverage is 1.23x. Next, same-store NOI in our long-term post-acute portfolio grew 2.6% year-over-year, and trailing 12-month EBITDAR coverage is 1.3x. Moving on to capital activity. In the first quarter, we raised $4.4 billion in gross proceeds through dispositions and equity issuance, allowing us to fund $3.3 billion of investment activity and end the quarter with a net debt to adjusted EBITDA ratio of 2.73x. More than half a turn reduction from just a year ago.

Subsequent to quarter end, we used free cash flow to pay off $700 million unsecured bond maturity in April, highlighting the strength of our balance sheet and the cash flow generating capacity of the portfolio. We ended the first quarter with $4.9 billion of cash on hand, which together with approximately $1.4 billion of incremental disposition activity, along with assumed debt and funding of transaction activity with OP units, positions us to fund roughly $7.3 billion of investment activity through the remainder of the year, with a meaningful portion again expected to be sourced through capital recycling. Taken together, this net investment activity and continued cash flow growth from the in-place portfolio are expected result in year-end net debt to adjusted EBITDA of approximately 3x, modestly below our prior expectations.

Before turning to our guidance, I want to come back to a point I highlighted last quarter around how our portfolio transformation, and what we describe as Welltower 3.0, is reshaping our growth profile. What we're seeing play out in the first quarter is a clear validation of the mix shift we spoke to. With Q1 marking the highest level of total portfolio same store NOI growth we've delivered in company history. Importantly, that growth is anchored by the strength of our in-place portfolio. Our initial guidance last quarter already reflected a high level of year-over-year visible earnings growth. Our updated outlook this quarter demonstrates the continued momentum we're seeing on the ground. As we continue to increase our concentration in seniors housing operating, we believe the Welltower 3.0 portfolio is positioned to deliver a meaningfully higher rate of sustainable compounding than its predecessor.

Moving on to guidance. Last night, we updated our full year 2026 outlook for net income attributable to common stockholders of $3.24-$3.38 per diluted share, and normalized FFO of $6.21-$6.35 per diluted share, or $6.28 at the midpoint. Our normalized FFO guidance represents an $0.11 increase at the midpoint from our prior normalized FFO range. This increase is composed of a $0.03 increase from senior housing operating NOI, a $0.07 increase from investment and financing activity, and a $0.01 increase from better than expected income tax and other, with some offset from higher G&A expectations.

Underlying this FFO guidance is an estimated total portfolio year-over-year same store NOI growth of 12.25%-16%, driven by sub-segment growth of outpatient medical 2%-3%, long-term post-acute 2%-3%, senior housing triple net 3%-4%, and finally, senior housing operating growth of 16.5%-21.5%. This is driven by the following midpoints of their respective ranges. Revenue growth of 9.2%, made up of RevPOR growth of 5% and year-over-year occupancy growth of 350 basis points, and expense growth of 5.3%, equating to ExPOR growth of just below 1.3%. With that, I will hand the call back over to Shankh.

Thank you, Tim. I would like to make three points before opening up the call. First, I want to take a moment to acknowledge the passing of David Simon, a true legendary figure, not just in real estate space, but all of corporate America. David was a visionary in every sense of the term, growing a small portfolio of regional malls into one of the most well-respected companies in the world. He was a legend, a true pioneer, recognizing the enduring value of highest quality real estate where shoppers and retailers could come together in vibrant environments. The Simon ecosystem thrived under his leadership. Just think of the long-term success of so many of America's great retailers, which would not have been possible without the setting that David created for them to grow and thrive.

Of many of his qualities, one I personally appreciated the most is that he was unapologetically himself. He spoke his mind with clarity and conviction and remained relentlessly focused on creating long-term value for his investors. The stellar returns Simon delivered for its shareholders under David leadership was no accident. He navigated the company through multiple recessions and structural changes in the industry via thoughtful countercyclical capital allocation, a focus on operational excellence, and maintaining utmost balance sheet discipline. He was unquestionably a stalwart and a true visionary, but also a friend, a mentor, and a fellow board member at Columbia. He was the one who encouraged me to take the leap from buy side to the corporate side, an advice which I'll forever be grateful for.

He leaves behind a legacy that extends far beyond the real estate sector, setting a standard for what great leadership looks like. Our deepest condolences to Simon family and those who are close to David. Second, roughly a year ago, we launched our private funds management business, establishing a capital-light revenue stream and another avenue to drive partial growth for existing investors. During the first quarter of this year, we identified another additional revenue through which to expand our capital-light business by unlocking from an existing balance sheet asset the monetization of our data science platform. As many of you know, since 2016, through the efforts of multidisciplinary team of PhD computer scientists, engineers, statisticians, and mathematicians, we have pioneered the application of data science and machine learning in real estate investing.

This was instrumental in driving over $80 billion of acquisition and disposition activity over the last 10 years. Given the modular and portable nature of the platform, we launched our first external partnership during the first quarter, licensing bespoke, supervised and unsupervised models to Public Storage and a leading global private equity firm. These models enabling the real-world application of AI by accelerating capital allocation decisions from five to nine months to mere weeks and significantly increasing velocity to market. Our mission is to scale real estate investing, which is historically as an unscalable business. More to come on this front in months and quarters ahead, we have been incredibly busy since the announcement in March, as many highly respected real estate, non-real estate, and sovereign wealth funds have reached out to us to explore similar partnerships.

Lastly, as I described in my annual letter, we have recently witnessed a surge of talent density that we have been attracting to the company, particularly with respect to Tech Quad. Following our ethos that A hire A people, we have been successfully attracting the highest caliber technology and data science professionals to execute our vision. Aiding our effort is what is called SaaSpocalypse, or rapidly spreading narrative around who is the next on the disruptive path of AI, which is releasing an extraordinary pool of talent into the market. This talent pool is increasingly focused on identifying businesses that cannot be replaced by AI, including sectors classified as HALO, or hard asset low obsolescence, such as housing for a rapidly aging population. We're thrilled with the progress made by Tech Quad in reimagining our technology ecosystem to improve the resident and site level employee experience.

Our newest additions to our team will only accelerate these efforts. Nonetheless, our biggest opportunity to drive portfolio growth is through unlocking greater value for our existing assets, with the most immediate and impactful way of being the implementation of Welltower Business System, our end-to-end operating platform across our senior housing portfolio. In a maximum growth, maximum gain world, the fastest way to move the dial is to narrow the focus. Our relentless and maniacal focus on the digital transformation of the business and dramatically improving customer and site level employee satisfaction will be the force multiplier on the attractive beta of our business. With that, I'll open the call up for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from Ronald Kamdem with Morgan Stanley. Your line is open.

Great. Hey, I just wanted to double-click on one of the comments you made on the 95% occupied portfolio and growing 20%. Wondering if we could sort of double-click and get some more color around whether RevPOR, ExPOR, margins, mix, anything that could be interesting. Thanks.

Thanks, Ron. first, I clearly don't want you to run with that idea that that's what we're suggesting will forever happen. But that is definitely something that I found in our data to be most surprising. A very significant part of our portfolio today is 95%+ occupied, give or take 50%. That portfolio grew circa 20% on a net operating income, as I said. Clearly for a couple of reasons, obviously, you got pricing power increases as capacity comes down in the system. That happened. That part of the portfolio had, give or take, 6% plus RevPOR growth. With the expenses, You know, major execution on the expense side that John mentioned through our operators and the contribution from Welltower Business System, it just landed to be an extraordinary number.

We were very happy about it. We do think that that sort of gives us confidence that we'll have a double-digit NOI growth for a long time to come in our portfolio as the portfolio leases up. We'll see, we'll see what market gives us as we sort of get through next few years as the portfolio leases up.

Thank you.

Your next question comes from John Kilichowski with Wells Fargo. Your line is open.

Hi, good morning. Shankh, you kind of hit on this at the end of your opening remarks, could you talk more about, you know, the talent density in the data science platform, given what you describe as a HALO sector, and how much this has accelerated the growth outlook of the business in your mind? If you could also maybe just talk to how investors should be thinking about the medium-term potential for earnings contribution from this business.

John, let me take the second part first, and then I'll go to the first part. If you just think about it, we built this data science capability, machine learning capability over the last 10+ years to deploy capital on our balance sheet, on our books. We realized recently at the really encouragement from some of our largest sovereign wealth partners in our fund business that there could be a much bigger, sort of application of this, which you have seen, our first partnership announcement. We're in the building mode of this business. Whether something substantial come out of or not, we will see in the future.

I can tell you that since the announcement was made on the early March on Public Storage, as well as the other PE firm I mentioned, our phones have been ringing off the hook. We have been exploring a lot of the opportunity with a lot of people. Real estate, you know, great real estate companies, many non-real estate companies such as banks and others, you know, major sovereign wealth funds, which I mentioned to you are the first ones who actually told us there could be a significant opportunity of that nature.

We'll see, we'll see where it goes, whether, you know, whether it remains a true major force behind our capital allocation and everything else sort of becomes a fun project, or we just sort of, you know, sort of take this as a whole new business. We'll see what happens, right? Going back to the first part of your question, I've never heard of this concept of HALO even, you know, say, 90 days ago. I heard that, as you know probably, that I personally interview most of the people who comes to our organization. You know, I heard that increasingly from the talent that was coming through. You know, and many of the businesses were just sort of impacted, or people are worried they're potentially impacted.

Frankly, you know, a different level of talent pool I've never seen. In just since the last call, we have hired, you know, either data scientists or software engineers with the backgrounds that we look for, whether it's computer science or math PhDs, hired from the top quant funds who we never thought that will come and work for a real estate company, let alone a senior living company. We started to see talent from, you know, people who are code breakers and three-letter agencies. You know, 90 days ago if you asked me, I would not have told you that we would attract talent from that kind of places. You know, it's a talent density is increasing.

We are trying to explore problems that we never thought that we will obviously, you know, we think about there's a granularity to those problems, right? You know, one granularity is obvious is, you know, we talk about housing prices, for example, in real estate. Housing prices of what? Most industry uses housing prices as a median house price in a zip code, right? We today use every housing prices in an entire area. Okay, that's an interesting idea. You think about what do you have hidden, you know, is there other hidden signals such as, I'm gonna make this up, the, you know, the price of wheat futures, the impact of that in housing assets in Great Plains. I totally made that up as we're going through.

Those are the hidden insight we want to discover and understand, and that kind of people are in the industry. Overall in the world, not in our kinds of industry. That's what we are trying to attract and see where we can take the business, right? We'll see what what happens, thank you for the question.

Your next question comes from Michael Goldsmith with UBS. Your line is open.

Good morning. Thanks a lot for taking my question. I'm here with [Justin Zale]. On the topic of capital allocation, Ventas recently acquired this Revel portfolio. Did you evaluate that opportunity? Maybe more broadly, you have the best cost of capital in this space. How do you think about accelerating accretive growth versus maintaining your discipline? Thanks.

We don't, Michael, we don't comment on other deals that our colleagues in the industry do. We did look at the Revel portfolio, and we think that it's a very high quality portfolio that our colleagues at Ventas will do very well with. I don't really want to get into it. When it was brought to us a few months ago, it was in a structure that was not something we find particularly at that point palatable. You know, I've mentioned many, many times that we have a problems with encumbrance on assets. When it was brought to us, there was an encumbrance of assets. Of existing operators and asset management and all of those kind of things, which I don't want to get to.

I think they're high quality real estate and our colleagues at Ventas will do very well. On your other part of your questions is accelerating capital allocation. I want you to understand this is what I wrote in my annual letter, which in under a section called Cognitive Dissonance of Acquisition Volume. I want you to understand that what we are trying not to do, it's not a deal shop. That's why Welltower is different from our predecessor company. We want to allocate capital in a particular product market niche where we think we can add significant value. This is not a cost of capital business for us. We don't compete on cost of capital.

We compete on ability on the data science side, on WBS side, and a network of extraordinary operators who, you know, can drive higher value for customers and employees and for us and themselves. That's the model. You know, not everything, you know, if the goal was to do more, we would not be selling $12 billion of assets in the last 12 months, right? You know, we're seeing everything like we always have. The, as Nikhil said, 90%, 95% of everything, you know, sort of we do comes to us off market. Frankly speaking, that makes sense, right?

You know, we'll tell you as a seller within a day or two, you know, whether we want to transact and probably within three to five days, you know, well, give or take what we'll transact, at what price we'll transact at. Fundamentally, as a seller, you have nothing to lose by coming to us. That's how the business rolls, and we'll see what market gives us. If we never buy another asset or we go back to the period pre-COVID where we sold, we're net sellers and we sold $16 billion of asset, we will be just fine. Our goal is to grow per share value for existing investors, not do deals.

Your next question comes from Michael Mueller with JPMorgan. Your line is open.

Yeah, hi. First, that was a nice David tribute. When I think of Simon over time, one thing that stands out is David's ability to walk away from deals, whether it was Rouse or the first shot at Mills. Can you talk about an example or two of steering clear from a big transaction that didn't sit well with you?

Yeah. Thank you very much. You know, I was emailing back and forth with him a couple of months ago. David was the one on the best day and most exciting day of my buy side career, called me and said, "Your career has peaked today. Leave the industry and come join me on the dark side." That's how this whole thing started rolling. I think many of you I think we have had the conversations over a period of time. He was an extraordinary leader. Extraordinary leader and it was something I admired. I knew him for a long time. We were on the, we shared in the Columbia Business School board.

I was in awe with our leadership skills, not just his financial success of total returns and all of those things. One of the thing, as you mentioned, look, we, David's ability to walk away from deals, and many times he did it. Believe it or not, many times when you walk away from transaction and you do it in the right way so that, you know, you're not burning bridges, you tell people why you walked away, you know, you can still maintain the relationship. The largest transaction we have done in this company is Barchester. Believe it or not, I walked away from that deal, twice pre-COVID, right?

You know, I don't want to get into granular transaction. Every day of the week, our team walks away from transactions, tell the counterparties why we walked away, whether we walk away because we don't like the product market fit, we walk away because we don't like the income rents that I just mentioned or I've written extensively about. We're respectful to the marketplace, to the industry, and we're direct, right? Nobody will tell you that we have ever said something and we didn't do it. We're very direct to people. You know, it's just that we do a very small fraction of what we see. Nikhil, what do you think we our hit rate is?

Yeah, 10% or so.

10% or so. By definition, we walk away from 90% of what we see. Sometimes something like Barchester, we walk away and eventually it happens when the time is right from a pricing standpoint or from an industry structure standpoint. Very, very good question, Mike. Thank you.

Your next question comes from Michael Carroll with RBC Capital Markets. Your line is open.

Yeah, thanks. Shankh, I know that the WBS model continues to evolve. I mean, how beneficial are these new partnerships that you're creating with PSA and others, to take WBS to the next level? I mean, I'm assuming that Welltower is getting access to more new data that they didn't have access to before. I guess how beneficial could that be as you kinda refine those systems?

Yeah. Mike, we think about in our SHOP technology in two different, completely different segments, which, you know, obviously they interconnect at some levels. One is our data science platform, which is focused on allocation of capital and finding granular opportunity and changing the velocity that exists in this business from months to days, right? That's one idea. The other idea is the operational side of the business, which we call Welltower Business System, which, you know, we're building out. I mentioned about Tech Quad and how Jeff and Tucker and Swagat and Logan, all these, Ron, they are also taking that to a new level. Welltower Business System, which is the operational side of the business, is not something that we are collaborating with Public Storage.

Public Storage or, you know, people like that don't need our help to think about how operationally how they should run the business. That industry is years ahead. We're actually hiring from that industry who can help us to do it, right? On the other hand, our collaboration is on the data science side, which we have been at this for 10+ years, and that's why we have changed the real estate investing business where this latency of the system is five to nine months and we have taken that to days, right? I don't want you to confuse the two and understand how where the collaborations are coming. We have given you many examples on our business update, the kind of problems that we are going after that people are coming to us.

For example, you know, obviously, real estate examples are easy, and you can see it on examples, whether that's multifamily, that's other types of asset classes. Storage, obviously, you mentioned, or other types of asset classes. People are coming to us with problems that are location-type problems, but not necessarily specific real estate problems. For example, a big bank has come to us and asked us whether we can help them on predicting where their most profitable next branches, bank branches should be. These are the types of, you know, problems that we are exploring, and we'll see where we get to. Thank you for your question.

Your next question comes from James Kammert with Evercore ISI. Your line is open.

Thank you. Good morning. Shankh and team, is there a way to leverage the data science into other geographies, you know, beyond your core U.K., U.S. and Canada? Or are those markets just structurally don't have the, you know, private pay or other cultural issues that leave you a little unlikely to pursue in terms of external growth?

The short answer is yes, it can be. In fact, just for fun, we're having this conversation with an investor, a significant investor in Japan, and we built a, a model, you know, over three weeks our guys did, to show them, like, how to apply that in Japan, right? You know, I know obviously we don't have as much of a data and we haven't bought like, you know, gobs and gobs of data, but it is absolutely scalable across geographies and product types and beyond real estate product types that I just mentioned.

Thank you.

Your next question comes from Richard Anderson with Cantor Fitzgerald. Your line is open.

Good morning. You know, Shankh, you talked about doing the hard things, not the easy things and, you know, making decisions along with that mindset. I'm thinking of, you know, as you're talking about, data analytics and all these sort of tangential opportunities that sort of spawn out of senior housing platform. I think about Amazon, which once upon a time sold books, and now they're, you know, what they are today, or Berkshire Hathaway, which was insurance company and is what it is today. Do you have aspirations along those lines where senior housing because, you know, we can talk till we're blue in the face about how great it is, and you guys are doing a fantastic job.

You know, longer term, you know, this is not going to always be a 20% growing type of industry. Are you thinking about senior housing as sort of the, the, you know, a bed from which you grow other businesses outside of data centers or data analytics, if you get my point, right?

I do

like a diversified vehicle.

Yeah, I do.

Is that kind of in your mind today?

No. Let me answer that question. We are not trying to go from senior living to other asset classes in real estate. We're doing exact opposite, right? We are selling out of all other types of asset classes and focusing our balance sheet capital, if you will, our book, into one asset classes which we think we have competitive advantage. However, if you think about we have built capabilities, right? Such as this data business that we talked about could potentially become more than a platform that we use for our internal application. We'll see where we get to. We're not trying to become a diversified company. I do not believe in diversification. I believe diversification is the worst word that has been taught to investors, right?

If you think about it, you gave a Berkshire Hathaway example. If you think about, look at Berkshire, you will see they've made their almost entirety of their return in five things, five names, right? You think about it as we believe in concentration. We genuinely believe that, you know, capabilities, you cannot be good at five different things. Your question is a much more nuanced one, which is we, you know, right or wrong, our whole idea 10+ years ago was very much that we want to understand the truth. We noticed that the real estate business people talk in heuristics, you know, rule of thumb, and we wanted to know the truth, and that's what we found. I gave an example, right? You know, people use housing prices. Housing prices of what?

Housing prices and average housing prices, mean housing prices, median housing prices. We're talking about a block group. We're talking about zip code. What are we talking about, right? These are the things. Now, I can complicate this problem many times over, right? You can think about it depending on product, you know, how long people are willing to drive. You'll notice in real estate, people talk about distance as your competition, not drive time. Without getting into too much of this conversation, we do believe that our job, that what we are trying to do is to optimize over the optimize the duration of the growth over a very long period of time. That's what we're trying to do.

Today, a lot of that is obviously coming through the mix shift and everything, but we do believe that there are two other things that can potentially add pretty significantly. One is our asset-light businesses, which is fund management business, data, you know, the data science business. As you know, that we are obviously the fees we are getting, obviously that is a reflection of our data science business. It's the interconnected nature of it. The other thing, Rich, is there's something I want you to think about is, you know, untapped potential of our balance sheet, right? We are thinking about, you know, sort of years ahead of what this platform could look like.

We're thinking how do we deliver a significant per share growth opportunity for existing shareholders when things will not be as good in senior living as you might said. I do think that senior living as a business will remain our primary focus of where we deploy our own balance sheet capital.

Your next question comes from Vikram Malhotra with Mizuho. Your line is open.

Good morning. Thanks for taking the question. Shankh, I guess one of the thing in your letter I really enjoyed is reading about the hummingbird and how they fly very differently and achieve lift at a discount. In that vein of sort of a different approach, just I guess two questions. One, you know, going forward, is there something WBS or the team can do to sort of monitor, reduce CapEx levels in senior housing, something that usually bites people where there's too much CapEx load? Secondly, when you think about supply demand, on the supply side, we still have not seen it start. Is there something different about your relationships or your markets which can limit supply perhaps longer than people perceive? Thanks.

Second question was supply, and the first question was hummingbird.

CapEx on in senior housing.

CapEx and hummingbird. Okay. You know, the idea of hummingbird, I don't want to repeat it, I wrote extensively about it. You can read it, and sounds like you have read it. You know, the idea is continuous improvement of candles will not give you a light bulb. Or as, you know, Henry Ford will tell you that you can improve horse carriages as long as you want, but you're not gonna get a Model T, right? You gotta think about the business in a completely different way, which is reimagining what the entire value chain looks like. If you sort of take a first principle approach to say, "What are my goal is?" You start from the customer, right?

Solve, okay, how do I remove frictions of customers and the people who the customers see as product, which is the site level employees, you can get very far. How far we will get to, we'll see in the future. You know, now let's take the question of CapEx that you talked about, right? John got into this in detail. The CapEx in this business, because of the sort of short-term private equity type mentality, which I'm not actually, you know, denigrating private equity. If I got paid on short-term IRR, I would have done the same probably. If you just think about it's like people take a very piecemeal approach, right?

One year you do roof because you have to, then next year you go back and do the gutters, the next year you go back and fix your, you know, skylights. That's not how full cycle CapEx should work. On our particular, you know, if you look at our cash flow, you are obviously, Vikram, you are seeing that CapEx is improving, and it's improving for two reasons. One, CapEx is a concept that is not an idea that you should think about in terms of available, or, you know, occupied room. You should think about all available room. If you think about, you know, you are doing, say, first impression. It is not going to be whether you have 40 people in the community or 400 people in the community, right? It will be on all the rooms.

As the system is filling up, obviously you are getting the scaling effort. As the NOI is going up, you are getting the scaling effort. Second, CapEx today, two years ago, we obviously did all CapEx that was outsourced to operators. Today, we have 200 people team which works for us. And that team is working with our operators to figure out how to do CapEx the best, how to do think about life cycle cost, and executing where the best, you know, sort of execution we can get. And that's, you know, just started to see that scaling effort over last, say, six months. I think you're gonna see a lot more going forward. What was the second question? Did I answer both of the questions?

Supply.

Supply.

Yeah. The supply, yeah.

Yeah. Supply. Look, the fact of the matter is the supply currently is at very low starts. You are seeing, you know, I personally think about supply. You know, it's almost a Pavlovian response to participants in the market when we see the supply. It's sort of almost a third rail, and people think supply equals to oversupply. Why? That makes sense. Last decade, every unit of supply was oversupplied because demand was flat. I think about supply and the impact of supply in terms of oversupply. You can see the demand growth, and you can sort of think, okay, how long it takes to bring supply in the market. We have a slide on our presentation that sort of walks you through, and you can see sort of what's the oversupply, you know, sort of can be.

I personally think that supply will chase demand. For a long period of time, just because what the demand growth looks like and the constraint of supply that is in. In our markets, in senior living, one of the biggest constraint of supply, you know, on top of everything else that you can think about, is availability of quality operators, right? That's a big constraint of the market. No bank will lend to you if you have a Joe Schmoe operators, especially after what they have gone through last cycle. As you know, and this is something that, you know, you brought up, Vikram, that I don't think a lot of people have asked us over the last three years.

At the bottom of COVID, when we were the only people who were actually allocating capital and leaning into senior living, we forged 25-30 long-term partnership with our operators, different developers, who are mostly exclusive or near exclusive in nature, in our markets, which we believe will provide a governor on quality supply. We'll see how this plays out. Thank you for your question.

Your next question comes from Farrell Granath with Bank of America. Your line is open.

Good morning. Thank you for taking my question. I also wanted to touch on a comment that you made in your annual letter where you highlighted several operational heroes. What was some of the best operational advice you took away from those organizations, and how are you applying and executing on that advice across the portfolio?

That's an interesting question. Farrell, some of the heroes we mentioned was not just operational, also capital allocation and culture and many other things. I will tell you, I personally believe, and probably because of the influence of Charlie, one of the most well-run operational company in this country is a company called Glenaire. It's a private company whose CEO, long-term CEO, Peter Kaufman, has been a great friend and mentor of mine over a long period of time. He's a true hardcore operator in the aerospace defense sector. First, you know, Peter will tell you know, first thing is, before you get advice from people, you need to understand the credibility of their advice.

Lots of people have lots of advice in things that they have no expertise in, right? I routinely see people who have never ran lemonade stand and have opinions on how multibillion-dollar company should be run. That's sort of first you have to have a filtering mechanism to understand who has expertise. Beyond that, the best operational advice that I actually got, that operations can be meaningfully improved from systems and process and technology, operations is not about any of those things. They can be enabler. Operations is all about people. If you have, you know, if you're in L.A. and you have an hour, let me know. I'll, you know, help you go visit Peter, you will see what a well-run factory could look like with all the focus of people.

Anyway, thank you for the question.

Thank you.

Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Your line is open.

Great, thanks. Good morning. Just going back to an earlier question about the portfolio of assets that are, you know, 95%+ occupied. I guess as we continue to understand, as you put it, the art of the possible within the 6% RevPOR growth for those assets, you indicated the benefits of capacity coming down and just pricing power. Are street rate increases exceeding increases on in-place customers within this subset of assets? Are you also seeing a greater benefit from, you know, high ROI ancillary income opportunities?

Austin, thank you so much. You are a little farther from your mic, but if I understand your question was on the 95%+, are we seeing even within the pricing, greater opportunities of what?

Street

Street rate versus, yes. You hit on something.

Other income opportunities.

Yeah. You hit on something extraordinarily important. I have a particular belief that, you know, just because you can doesn't mean you should. You know, this is something I'm boring you with repetition and details. Clearly, it sounds like you read my annual letter. There's a whole section on trade-offs that I would like you to go back to and will say, you know, many places, you know, in-place customer rate increases could be meaningfully higher than what we are comfortable with, and I'm fine with that. I'm fine with that. If you, if you are, if you say, "Okay, I'm not gonna give customers 15, 20% rent increases," how would the report change? It will change because of the point you just made, right? Which is not an existing customer increase, but it comes from the street rate.

This is a fundamental negative mark to market in this business because of the person who leaves versus the person who comes in. There's an acuity difference between the two. When you have in this kind of, you know, assets and its overall trading market, when everybody else is full, the street rate goes up, and that's the impact you see in the overall report, right? Which is a function of three different pricing, not just existing customer rate increase, including street rate. You picked up on something very important, and I think that will be a lot of driver as you sort of go forward in many, many of the markets. Ancillary opportunities such as, you know, a lot of the other, such as community fees and others also play an impact on that as well.

Your next question comes from Juan Sanabria with BMO Capital Markets. Your line is open.

Hi, good morning. Thanks for the time. I'm just curious if you could talk a little bit about market share and the opportunity that's still left to consolidate a fragmented industry, recognizing that you guys have a very targeted approach. Hoping you could help us understand how much is left to consolidate, if you will. There's been a little bit of political pushback in Canada, and there's overviews or reviews going on in the U.K. In, in that context, just hoping you could help us understand how you think about the addressable market and the opportunities that remaining.

Yeah. One, if you just take a step back and think about from a customer standpoint, roughly give or take, call it 7%-8% or call it 10%. Let's just do easy math. 10% of the people who can use our product, use our product. 90% of the people fundamentally don't use the product who can use our product, right? It's just a small portion of the, you know, your customers use the product. Within that small portion, we're probably 7% of the industry. We're a very small portion of even the existing product and, you know. Our, you know. From that standpoint, if you just think about it, a 7% of 10%, you can imagine, like, we're insignificant from a customer standpoint, right? They're just that, those are the numbers.

Having said that, if we're 7%, say, of the, you know, of an entire base of products, does that mean that our opportunity? As you mentioned that obviously it's an extraordinarily fragmented industry. I think the average, you know, operator or owner/operator has some, like, 10 communities or 1,000 units or something like that. It's a very small. Does that mean that we're 7% of the industry is our TAM is 15x? The answer is no, right? Our TAM is probably, we're very focused on, even within senior living, we're very focused on the highest price point or the highest quality assets in the market. Very much of the very focused on the highest end of this business.

That product market niche is what we have bet on, that probably is the TAM is probably 2x-3x, not 15x. That's how we kind of think about it. We see what the opportunities are, as I've mentioned in previous questions and in my annual letter. We would be comfortable if we never bought another asset. The goal is not asset aggregation. Goal is to, you know, pick where you think you can add significant value, and I think our team is doing a pretty good job of. We'll go forward with that and see what market gives us.

Thank you.

Your next question comes from Nick Yulico with Scotiabank. Your line is open.

Thanks. Good morning. I wanted to ask on the investment side, this quarter, you know, the loan funding was a little over 50% of the investment. If you could just remind us sort of what the approach is there and, you know, where you're able to get what type of yield on that loan funding. Then also, if you could also break out of the $7.2 billion of investments in April so far, what percentage of that is loan funding? Thanks.

Let me start, Nikhil, you go. First is, you are seeing that Nick, just to remind you that remember that when we did the Kayne transaction, we took back +$1 billion in a participating pref, and that's what showed up in the loan book, right? It's a, you know. It's not really a loan, it's a participating loan. It's with an equity derivative attached to it, that's what you're seeing. Rest of it, you can see, think about is as a refill of the HC-One loan and other loans that got paid off. Some of it is just a bridge to hard of some of the assets, the skilled nursing assets we sold. They will be gone as the, you know, hard takes a long time, as you know. When that happens, they will be gone.

Overall, that's the construct, is that Kayne piece that showed up. From your second part of your question, which is the $7.2 billion, I do not recall. Nikhil, you might recall.

Yeah, I think Nick's specific question was what's closed in the second quarter. Of the $4.2 billion that's closed, as I said in my prepared remarks, you know, Amica, which is north of $3 billion, is a vast majority of that. There might be one or two small loans, but it's been predominantly asset acquisitions.

I think he asked about the pipeline as well.

Same, same.

Primarily also same thing.

Same answer.

Just in one quarter, that Kayne piece landed, and that's what it looks like. It's elevated. As you look back in the whole year, you'll not see that.

Yeah. As we said, there's, you know, remaining $500 million of sales left as part of the Kayne Anderson transaction. As that happens, of course, that'll come with some additional participating prep funding.

Thank you.

Your next question comes from Seth Bergey with Citigroup. Your line is open.

Thanks. It is Nicholas Joseph here with Seth. I was hoping you could just touch on the transaction market more broadly. First, I guess the impact of competition, and then how prevalent is retrading deals and walking away because of the capital markets. Then, Shankh, I think you mentioned kind of time to close, and I was just curious, kind of Welltower's due diligence and time to close versus kind of the average for other buyers in the market.

Yes, I think let's start with the competition piece. You know, as I said in the prepared remarks, regardless of whatever period we look at, transactions that have closed, the pipeline, and I say this every single quarter as an update, that, you know, give or take our transaction activity is between 90%-95% off market.

You know, by definition in that regard, there is no competition. What we've seen is over the last couple of years as more capital has come into senior living, you know, previously when we would say no to one of those off-market opportunities, it wouldn't get done. Now what you're seeing is, given that there's a more robust marketplace, if we say no, more likely than not, somebody else will end up buying those assets. That's certainly happening. Your second question was about our speed. Well, I think as Shankh said earlier, it takes us, you know, couple of days to, within a very narrow range, have a view on what an asset should be priced.

Thereafter, you know, assuming there's a meeting of the minds, then it's the traditional diligence process, which, you know, involves site visits, finalizing business plans with operators, third parties, negotiating legal documents. We parallel path all of that. Just given, you know, upfront how much information we have from our data, you know, data platform on what to expect from an asset. We can parallel path all of that, and it takes us roughly 30 days from when we first see something to close something. In comparison to the broader market process, you know, Shankh wrote extensively in his last annual letter last year.

A typical process takes six months from, you know, starting to think about, "Hey, we're gonna sell something," to get BOVs from a bunch of different advisors, to then picking an advisor, to then, you know, populating all the information and creating a really pretty offering memorandum, to then negotiating NDAs, to then having a first round process, to then having a second round to the process, finally picking a winner. Then, you know, most transactions occur in a way that you first negotiate a contract, then you have a 30-60 day diligence period where you find financing for the asset and eventually close on it. You know, six months is a long time. If you think about what macro looked like six months ago versus it does today, a lot changes.

Given that the price or the buyer is not going hard until 30 days before closing, so five months into six months, there's a lot of uncertainty. We have, in the last two months, seen a lot of transactions that we liked but weren't comfortable with the pricing get away from us to then come back to us. That's certainly happening and happens all the time.

I'll just add two more things, right? We are, you know, one of the very few SHOP who actually goes and visit every single assets that we buy. That is not a percentage of, we visit every single asset that comes on our balance sheet. Walk on average 12 people from Welltower go walk assets, not just our investment team, our asset management team, structural engineers. We go and do this every single asset, which is very important for you to understand. And the second question is, from our standpoint, is our reputation is our currency of business. If we tell people we're gonna do something, we do it.

Might as well give people bad news upfront than try to drag them through the process and then five months later said, "These are the, you know, five different things. I didn't like the color of your nails, so it will be retraded," right? That's sort of what happens in this business every day. That's very standard. People accept it in real estate business to do. Well, we just don't do that, right? You know, we are always comfortable in the trade-off of, you know, short-term money versus long-term reputation. That works out, you know, for us over a period of time.

Hopefully, you know, overall our execution over the years will tell you that if you take a long-term approach, you take a reputation approach, if you take an approach of running a first-class business in first-class way, it generally works out for you.

Thank you.

Your next question comes from Omotayo Okusanya with Deutsche Bank. Your line is open.

Yes. Good morning, everyone. Shankh, I wanted to talk a little bit about just, again, the overall business model and again, the growth mode you're in. You know, you definitely need a specific type of operator and SHOP to kind of realize, you know, your strategy. I'm just curious, at this point, are you still seeing opportunities to bring more operators into the fold? Or does the strategy really become doubling down on the operators you have? If that's the case, again, what becomes kind of like the next level of incentive you can provide for your current operators to even have, you know, further better alignment?

Is it stuff like the Munger grants or kind of what else is kind of out there that can really kind of deliver the results you've been delivering?

Yeah. Thank you very much. It's a very, very important question that we reflect on and debate and talk about. Look, we sort of think about this business as a complex adaptive system. As we think about this business as a complex adaptive system, we have after years and years of thinking through this, every line item, we have sort of come to a point where we have a very good idea. If you were sitting, Tayo, in a, you know, in one of our sort of conference room, with one of our operating partners and our people, I guarantee you will not be able to say who works for Welltower, who works for this operator. They're all working very collaboratively and not trying to say, "This is your side, this is my side.

That type of collaboration trust takes a long time to build, which we have built with a handful of our operating partners, and we're doubling down with them every day. Having said that, are there a couple of people that we have long respected over time that we want to do business with? The answer is yes. At the same time, you will see, if your question is, are we in an expansion mode from a number of operators we do business with or we're in a, you know, sort of flat or we're shrinking? The answer is unequivocally our view is that we're shrinking. Right? The number of people that we business with. Because we are doubling down with our existing partners, we have built these collaborations.

You know, and we are not trying to be everything to every people, every product, every operator. We have found the like-minded, a lot of like-minded operating partners who are truly our partners. That's not sort of they take partnership very seriously. They're extraordinarily focused on excellence like we have. They want to treat their people right. They want to treat the residents right. They take reputation as their currency of business. Those are the type of cultural alignment, not just technological systems, money and everything, you know, financials and everything has to work out. The cultural element is the most important, and we're doubling down with them. You know, and sometimes we do find somebody like Amica that we tremendously respected over the time.

You know, when the stars align and, you know, we go together and meeting of the mind happen. The same applies for Barchester. Generally speaking, our goal is to do more with our existing partners where the alignment has already happened. It's an extraordinary question that we reflect on every day.

Thank you.

Your next question comes from Michael Stroyek with Green Street. Your line is open.

Thanks and good morning. I just want to go back to an earlier question on applying the data science platform to new geographies. Has the company underwritten any transactions in geographies outside of the U.S., U.K., or Canada? Are there any additional countries that, you know, Welltower could be interested in entering down the line on balance sheet?

Yeah, Michael, very, very good question. I'm glad that you asked the clarifying question. We have no desire to go to any other countries other than the three countries we are in from a capital perspective and balance sheet perspective. That comment was entirely on the capital light, on the data science side. You know, obviously we think that is eminently scalable across geographies, across asset classes. From our standpoint on a purely capital light basis, Everything we're doing should tell you we genuinely believe that in today's world, which is a maximum gain, maximum growth world, the fastest way to get to where we're trying to do is to narrow the focus, not extend the focus.

Yeah. Michael, to directly answer your question.

Yeah

No, we have not underwritten anything. I don't think we've even signed an NDA to get information beyond the three markets.

Great. Thanks for the time.

That concludes the Q&A session of the conference call. Thank you for your participation. You may now disconnect and have a wonderful rest of your day.

Hello and welcome to the Welltower Fourth Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Matt McQueen, Chief Legal Officer. You may begin.

Thank you, and good morning. A reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Welltower believes any forward-looking statements are based on reasonable assumptions, the company can give no assurances that its projected results will be attained. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. And with that, I'll hand the call over to Shankh for his remarks.

Thank you, Matt. And good morning, everyone. This morning, I'll provide some high-level thoughts on the business, our recent capital allocation priorities, and a recap of what proved to be a truly transformational year for our company. 2025 not only marked the ten-year anniversary of the refounding of our company by the current management, but also proved to be the most pivotal year in the company's history. We're pleased to have delivered 36% revenue growth, 32% EBITDA growth, and a 22% FFO per share growth, while deleveraging our balance sheet and investing significantly into our future systems and talent. We launched our private funds management business, overhauled our internal and external incentive structure, made substantial progress on Welltower Business System initiatives, and created our tech quad to take our technology journey to the next level. However, these exceptional achievements made across the business are frankly in the rearview mirror. Our focus is firmly and intensely on what comes next. What truly excites us is the deliberate actions we took in 2025, which we believe will meaningfully amplify the trajectory and duration of our long-term cash flow growth. These actions were part of a decade-long effort to transform our firm from a real estate deal shop when we arrived at the company to an operations and technology-first business, with the maniacal obsession of delighting residents and prioritizing site-level employee experience. There are very few businesses in which earning the trust of customers is more important than senior living. Each day, our team shows up with one question in mind: How do we support our best-in-class operators through the Welltower Business System to provide a killer value proposition to residents, their families, and site-level employees whom the residents rely on every day? As an operating company in a real estate wrapper, it is of utmost importance that we get this right. Only then do we have a shot at achieving our North Star: the long-term compounding of cash flow growth for our existing investors. Before providing some additional commentary on the events which led to this juncture, I'll quickly review our fourth-quarter results. In terms of our senior housing operating portfolio, we ended the strongest year in our company's history on a high note, reporting the thirteenth consecutive quarter in which same-store operating net operating income growth exceeded 20%. Our organic revenue growth continues to hover around 10%, driven by 400 basis points of year-over-year occupancy gains and healthy rate growth. And as Tim will outline for you shortly, we expect another year of strong occupancy upside in 2026 along with strong pricing power. Additionally, I would be remiss not to mention the continued outsized expansion in operating margins, increased by another 270 basis points in the fourth quarter. As John will describe to you shortly, we continue to see multiple opportunities to drive margins meaningfully higher in the coming years, including continued implementation of the Welltower Business System, our proprietary operator-tailored end-to-end operating platform. Looking to 2026 and beyond, against a macro and geopolitical backdrop fraught with uncertainty, the end market demand for our product is highly visible and only expected to improve as the 80-plus population continues its pace of rapid growth. And with new construction remaining at trough levels, and long-term interest rates and construction costs remaining stubbornly high, we continue to feel good about the supply side. While the demand-supply picture continues to improve each passing day, we're laser-focused on execution at the granular level alongside our operating partners with whom we stand shoulder to shoulder no matter what. Despite the true joy and satisfaction of helping residents to live well, the underlying business of senior living is a hard one. Needs are very different and nuanced from resident to resident. And our predecessor company, HCN, entered into equity ownership post-GFC from a historic lease or credit model without appreciating it was a completely different game. For the last decade, the current management team completely overhauled this organization, turned over two-thirds of our asset base and operators, 90% of the people, and transformed their contracts and so on and so forth. The transition has been and continues to be incredibly difficult. We built out a vertically integrated hardware plus software model to navigate this treacherous water. The hardware is our best-in-class real estate that we curated over the past decade. The software is comprised of the Welltower Business System, along with the execution of our best-in-class operating partner ecosystem. We see the light at the end of the tunnel, but we still have a long way to go even after almost two decades of accumulated battle scars and paying dumb taxes. This is not a complaint. The management team of this company, including yours truly, deliberately sought out this industry because it is a hard problem to solve. And our competition is forced to follow us in these difficult terrains. This vertically integrated software plus hardware model aims to reduce latency across the stack of decision-making and put network effects into operational execution. This directly feeds into our capital allocation flywheel, driving execution into high gear in 2025, which we are likely to observe again in 2026. We ultimately completed nearly $11 billion in net investment activity for the year, consisting primarily of high-growth senior housing properties across all our regions, which were funded in large part through the sale of our outpatient medical business for $7.2 billion. We thus far sold the first four tranches of the portfolio for $5.8 billion, significantly ahead of our prior expectations, with the remainder set to close in the first half of the year. And it's worth repeating that we were able to execute this massive capital rotation and shift in our long-term growth profile without incurring any near-term earnings dilution. Historically, in the corporate world, these types of mix shifts to higher growth businesses from lower growth ones almost invariably come with some degree of dilution, as lower growth businesses generally trade at lower multiples. It stands in stark contrast to what we pulled off. Importantly, we continue to be extremely discerning in our evaluation of prospective acquisitions, having passed on billions of dollars of opportunities which simply did not meet our criteria in terms of location, quality, operator contract, or pricing. We recently saw some high-quality assets where we wouldn't sign even an NDA because they are encumbered by long-term management contracts, wherein, in exchange for writing the entire equity check, you get the honor of sitting in second position on cash flow and a hope note that someone else will get it right. We do not buy assets with liens on them, which is exactly what long-term management contracts are. Nonetheless, we have started off 2026 with a bang, with $5.7 billion of acquisitions and with $2.5 billion of new deals completed or under contract in just the first six weeks of the year, and a robust pipeline that can be described as granular, visible, and highly actionable. Needless to say, 2026 is quickly shaping up to be another banner year for us in terms of acquisition activity. Importantly, capital allocation does not solely involve acquisitions but also includes disposition activity to methodically shape the portfolio for future growth. It is not about here and now, but the duration of growth that will be the key determinant of long-term success. And through these efforts, we have been able to intensify our focus on rental housing for the rapidly aging population. So in addition to the sale of our outpatient medical portfolio, which I mentioned earlier, we sold another $1.3 billion portfolio of skilled nursing assets, which marks one of the most successful full-circle transactions executed by our management team. We bought this portfolio as a part of the UCP transaction in 2018, which is the only public-to-public M&A transaction executed by this management team. As most of you are aware, the period from 2020 to 2022 was exceptionally challenging for that sector, driven by the impacts of the COVID pandemic and resulting labor shortages. However, due to the structure we created in 2018, including a parent guarantee, we did not lose a dollar of cash flow despite substantial cash flow deterioration incurred at the property level. At the time, many folks had encouraged us to simply rip the band-aid off and dispose of this portfolio given the headache it was creating for us in the public market. Instead, we rolled up our sleeves to determine the best path forward for the portfolio and for our owners, with the firm belief that volatility is not risk. Ultimately, we embarked on an arduous process of recapitalizing this portfolio with Integra, which then brought its network of regional and local operators to turn the portfolio around. And over the subsequent three and a half years, the portfolio witnessed a massive $500 million rebound in cash flow, which we believe is close to stabilization. The return achieved by the sale is a function of basis structuring and sheer grit and tenacity displayed by our team to achieve the best possible outcome for our owners. I would note that the unlevered IRR of 25% and a 3.1 times unlevered money multiple achieved on this portfolio over seven years compares highly favorably to a proxy of public SNF peers, whose equities, when levered, delivered an approximately 10 to 11% return over the same time. Collectively, these bold capital allocation moves, both acquisitions and dispositions, have enabled us to remove organizational complexity and narrow our focus on senior housing with the goal of elevating the customer and employee experience through better operations and technology. At the same time, we fundamentally enhanced the terminal and growth rate of our enterprise. Lastly, I'm pleased to announce the closing of Senior Housing Equity Fund One and the launch of Senior Housing Debt Fund One, our foray into capitalized businesses. Nikhil will provide you with more details, but this business vertical represents a natural extension of our balance sheet strategy, allowing us to jump-start a significant capital allocation business. We're incredibly grateful to Adia and our other LPs who have entrusted us with their capital in this new endeavor. And with that, I'll turn it over to John.

Thank you, and good morning, everyone. As Shankh described, 2025 marked a truly transformational year for Welltower. Not only did we deliver another period of exceptional results, but we also witnessed the benefits of our Welltower Business System initiatives starting to bear fruit. As we discussed in the past, the backdrop for growth remains, but our goal is to drive meaningful alpha for our owners through the full-scale modernization of the senior housing portfolio via the Welltower Business System. More on that shortly. In terms of our fourth-quarter results, we delivered total portfolio same-store NOI growth of 15%, driven once again by another quarter of strong senior housing operating portfolio growth of 20.4%. Remarkably, this marks the thirteenth consecutive quarter in which our portfolio same-store NOI growth has exceeded 20%. Demand for our needs-based and private-pay senior housing product continues to strengthen, as reflected by continued gains during a seasonally slower period of the year. From a year-over-year perspective, the portfolio delivered another quarter of 400 basis points of occupancy growth, amongst the highest levels achieved in our history, and combined with healthy levels of rate growth, we achieved same-store revenue growth of 9.6%. Notably, top-line growth was consistent across all three senior housing acuity levels. With respect to expenses, we continue to see favorable trends across key line items. Expense per unit growth increased 0.8%, one of the lowest levels achieved in our recorded history. As the spread between revenue per occupied room and expense per unit growth remains historically wide, we were able to post another quarter of strong margin expansion of 270 basis points. As Shankh mentioned, given the high fixed-cost nature of the senior housing business, we expect operational leverage inherent in our business to continue to play an important role in driving margins meaningfully higher in future years. Additionally, our regional densification efforts continue to create significant top and bottom-line synergies while we also recognize meaningful efficiencies from our Welltower Business System-driven initiatives. Going forward, we remain highly confident in our ability to continue to deliver outsized NOI growth. We take nothing for granted and remain intensely focused on driving excellence in all aspects of operations. Organic revenue growth should remain strong, with significant occupancy runway ahead coupled with healthy rate growth. Similarly, there is ample room for margin expansion from current levels for the reasons I noted a moment ago. As I think about the next few years and beyond, our focus is simple: People, optimizing the human interaction to provide a delightful experience; Processes, removing bottlenecks and streamlining flow; Data, providing our operating partners with robust objective data to drive positive outcomes; and Technology, leveraging technology to improve the customer and employee experience, automating processes, and providing personalized experiences. Reinventing a business like senior housing is by no means an easy one, and we have not been shy about adding necessary resources, including extraordinarily high-caliber talent, to effectuate this change. As Shankh described, the Welltower Business System, along with our operating partnership relationships, serve as the backbone of the software side of our vertically integrated hardware and software model. We are methodically removing time-consuming administrative burdens that employees contend with on a daily basis, freeing them to focus on what they signed up for: taking care of residents. In terms of recent talent we have brought into Welltower, we have already witnessed a strong impact from Jeff Stock, our new Chief Technology Officer from Extra Space Storage, along with his first prominent hire, Braun McCall, himself a former CTO of Extra Space. Together, they are leading the digital transformation of the business and integration of our enterprise systems, areas where they bring deep expertise and a strong track record from their prior roles. The early contributions from other members of our tech quad cannot be overstated either. Additionally, the decision to transition some of our strongest internal talent into operational roles, including Russ Simon, our EVP of Operations, is already being validated by the meaningful value they are creating. In our continued pursuit of higher standards across every aspect of the organization, particularly in operations, we remain fully committed to investing the time, talent, and resources necessary to deliver a truly superior experience for senior housing residents and the employees who serve them. The future of our company has never been brighter, driven by the dedication of our internal Welltower team and the unwavering commitment to our operating partners, who share our vision for transforming the industry. More to come in 2026. And with that, I'll turn the call over to Nikhil.

Thanks, John, and good morning, everyone. As I reflect on 2025, it was a marquee year for the company, one that fundamentally changed the long-term growth profile of our business. We deployed $11 billion of net investment capital and, together with strong organic NOI growth, increased our SHOP concentration by roughly 12 percentage points to circa 70%. On the investment side, we closed 90 different transactions, acquiring over 1,000 properties, more than 175 of which are either under construction or recently delivered. While these assets are not meaningful contributors to near-term results, they are expected to significantly bolster our already industry-leading growth for many years to come and were underwritten to achieve attractive risk-adjusted returns. To put the quality of our recent acquisitions in context, the average age of our SHOP portfolio today is sixteen years, compared to nineteen years in 2021. On the disposition side, we continue to create shareholder value by monetizing mature or slower-growing assets and redeploying capital into higher growth, higher total return opportunities. As a result, the assets we acquired are budgeted to generate approximately 10 times more growth in 2026 than the assets we sold. Our previously announced $7.2 billion outpatient medical sale to Kayne Anderson, which generated a $1.9 billion gain on sale, remains on track and ahead of schedule. To date, we have closed approximately $5.8 billion, with the remaining assets expected to close during the first half of the year as tenant estoppels and ground letter of consents are finalized. I also want to highlight our progress on the Integra portfolio, or what some of you may remember as the former ProMedica QCP, or HCR Medicare portfolio. We have entered into $1.3 billion of asset sales across 12 different transactions, representing approximately half of the portfolio. With these sales, as Shankh mentioned, we have achieved an unlevered IRR of approximately 25% or a 3.1 times unlevered multiple on invested capital. Returns that are exceptionally difficult to generate at this scale. Candidly, this transaction has not always been a popular one with many of you. The initial announcement in 2018 was met with skepticism, and during our restructuring period in 2022, many investors would have preferred that we exit the assets at bottom-of-cycle values. Our team took a different view. We went back to first principles and asked whether the underlying thesis had changed: owning assets at an attractive basis in a supply-constrained sector with durable, needs-based demand. It hadn't. Rather than reacting to sentiment, we focused on execution, stabilizing operations, partnering with strong regional operators, maintaining a conservative rent load, and aligning incentives across the platform. Following these sales, the remaining Integra assets continue to perform well, with in-place EBITDAR coverage greater than two times. Staying the course wasn't the easiest decision in the moment, but it was a disciplined one, and it reflects how we approach capital allocation over full cycles, not short-term pressure. Turning to 2026, we are off to a great start. While the back half of the fourth quarter can often be a quieter period for deal activity, our momentum carried through the holidays and into the New Year. We have already closed on or are under contract to close on $5.7 billion of total acquisitions, including the previously announced $3.2 billion Amica Senior Lifestyle transaction, and new activity of $2.5 billion over the last few weeks. This new activity spans more than 30 different transactions and is comprised primarily of newer vintage assets with blended occupancy in the low 80% range. Most of these transactions were sourced off-market, which continues to reflect the strength of our relationships and origination platform. I am pleased to provide an update on our private funds management business, which we launched roughly one year ago. As we have mentioned several times, our approach to capital-light strategies is simple. We are moneymakers, not asset gatherers, and we seek opportunities that are compelling, durable, and complementary to our balance sheet. We are thrilled about adding another business vertical, which we believe will benefit our existing owners over the long term. We recently held the final close of our US Seniors Housing Fund One with approximately $2.5 billion of equity commitments, marking one of the largest recent first-time real estate fund launches. The fund was significantly oversubscribed, which we believe is a reflection of our data science capabilities and capital allocation track record. The fund includes approximately $2.1 billion of third-party capital with blended management fees of 1.35% and eight third-party limited partners representing some of the most thoughtful and significant global capital providers. We are already approximately 50% deployed and, similar to our balance sheet strategy, investing in opportunities where we have high conviction. Building on the success of our equity fund, during the fourth quarter, we also launched and held the first close of the Welltower US Senior Housing Credit Fund. I'll close with this. Our mandate is simple: From the moment we wake up to the moment we go to sleep, we aim to create value for our shareholders. Our entire organization is focused on unlocking additional value, whether that comes from the assets we already own through operations and disciplined portfolio management, or through thoughtful capital allocation, acquiring, lending, selling, or building assets, and by growing our capital-light business. Our thesis is straightforward: When we stay focused on simple goals, apply discipline, and keep emotion out of decision-making, good outcomes tend to follow. With that, I'll turn the call over to Tim to walk through our financial results and 2026 earnings guidance.

Thank you, Nikhil. My comments today will focus on our fourth-quarter 2025 results, performance of our triple net investment segments, our capital activity, our balance sheet and liquidity update, and finally, the introduction of our full-year 2026 outlook. Welltower reported fourth-quarter net income attributable to common stockholders of 14¢ per diluted share and normalized funds from operations of $1.45 per diluted share, representing 28.3% year-over-year growth. We also reported year-over-year total portfolio same-store NOI growth of 15%, driven by 20.4% growth in our SHOP portfolio, which now makes up circa 70% of our in-place NOI. Now turning to the performance of our triple net properties in the quarter. In our senior housing triple net portfolio, same-store NOI increased 2.6% year-over-year, and trailing twelve-month EBITDAR coverage was 1.19 times. Next, same-store NOI in our long-term post-acute portfolio grew 2.6% year-over-year, and trailing twelve-month EBITDAR coverage is 1.53 times. Moving on to capital activity. We financed our investment activity in the quarter with dispositions and equity, with $9.5 billion of combined gross proceeds. This allowed us to fund $13.8 billion of investment activity and end the quarter with a net debt to adjusted EBITDA ratio of 3.03 times, representing a roughly half-turn reduction from 2024. We ended the year with $5.2 billion of cash on hand, together with approximately $3.5 billion of disposition activity we expect to complete during the year, providing funding for roughly $5.7 billion of investment activity. This includes the $2.5 billion of net investment activity closed in Q1 or under contract to close, as we announced last night, and the $3.2 billion Amica transaction that was put under contract last year. Taken together, this net investment activity, continued cash flow growth from the in-place portfolio, should leave us exiting 2026 at a net debt to EBITDA level consistent with where we finished this year. Before turning to our guidance, I want to highlight how our recent portfolio activity is changing the growth profile of our enterprise. Even with the same initial growth outlook for our senior housing operating portfolio as we started last year, 18% at the midpoint, our total portfolio same-store NOI growth is more than 200 basis points higher. This faster growth reflects the continued mix shift towards higher growth senior housing communities and the flow-through impact this has on organic cash flow growth. In turn, this is driving a higher FFO growth assumption versus last year. As we further intensify our focus on senior housing, we believe Welltower 3.0 is positioned to compound cash flows at a meaningfully higher rate than the portfolio's prior growth profile. As I turn to our initial 2026 guidance, which was introduced last night, I want to remind you that despite the robust pipeline that both Nikhil and Shankh described, we have not included any investment activity in our outlook beyond the $5.7 billion that has been closed or publicly announced to date. Last night, we introduced a full-year 2026 outlook for net income attributable to common stockholders of $3.11 to $3.27 per diluted share and normalized FFO of $6.09 to $6.25 per diluted share, or $6.17 at the midpoint. Our normalized FFO guidance represents an 88¢ per share increase at the midpoint from our 2025 full-year results. This increase is composed of a 58¢ increase from higher year-over-year senior housing operating NOI, a 30¢ increase from investment and financing activity, and 2¢ from higher triple net income. This 90¢ of growth is then against 2¢ of G&A offsets. For context, the net G&A assumption, we expect general administrative expenses to be approximately $265 million at the midpoint, with stock-based compensation expense of approximately $60 million or an 8¢ per share drag to normalized FFO. Underlying this FFO guidance is an estimated total portfolio year-over-year same-store NOI growth of 11.25% to 15.75%, driven by subsegment growth of outpatient medical, 2% to 3%, long-term post-acute, 2% to 3%, senior housing triple net, 3% to 4%, and finally, senior housing operating growth of 15% to 21%. This is driven by the following midpoints of their respective ranges: revenue growth of 9%, made up of RevPOR growth of 4.8% and year-over-year occupancy growth of 350 basis points, and expense growth of 5.5%, equating to expense per unit growth of just below 1.5%. And with that, I will hand the call back over to Shankh.

Thank you, Tim. Before we open the call up for questions, I'd like to discuss two topics that many of you have recently asked about: one, talent density and incentive design, and two, increased competition for acquisitions. I'll address the first topic in two parts: Wall Street and Main Street. After announcing the ten-year executive continuity and alignment program last quarter, I sat down with the majority of our large shareholders. While we received significant support for the plan's philosophical underpinnings, we have also heard a desire for expanding the group of participants and increasing the performance-based portion of the total plan. I'm delighted to inform you that, working with our board of directors, we swiftly applied this feedback. We broadened the plan to include seven additional leaders, with 70% of the payout now performance-based, up from 50% that was announced in Q3. This group also gave up a substantial portion of the promoted interest in our first fund vehicle and all of their interest going forward, with those economics redirected towards attracting and retaining talent at the next level of leaders within the organization. We expect little to no turnover at NEO and EVP levels over the next decade and have designed long-term, highly aligned incentive plans to retain the strongest talent at all levels of our organization. Make no mistake, this is a team game. In terms of Main Street, the Welltower grant, which was announced in Charlie's memory, has been a huge hit with our operating partners and at our communities. We're expanding this program beyond the originally announced 10 communities and are exploring mechanics to expand it internationally. Engaging with these frontline employees about Charlie and his philosophy of compounding has, in many cases, prompted them to think for the first time about investing and long-term wealth creation beyond just wages alone. And it has been personally extremely gratifying for me. We believe we're onto something here. Regarding the announcement of several healthcare REITs and private funds jumping onto the SHOP bandwagon, I would offer the following observations, strictly my personal opinion. These are capable organizations, and many will find their niche to do well. Others will appreciate that writing credit checks is very different from owning equity in a complex and operationally intensive business that cannot be addressed simply by hiring a few asset managers to manage the managers, as HCN did. These are full-cycle lessons and will be learned as such. I have repeated this point for a decade and perhaps will continue to do so for another one, like a broken record. Exposure alone does not define success in these challenging terrains. As I've mentioned in my earlier remarks, we deliberately sought out this industry because it is a hard business. Even in highly competitive industries with largely undistinguished end products, elite long-term compounders still emerge. Costco, McDonald's, Glenair, QuikTrip, Cintas exist for a reason. If we take a step back and look into the relatively nascent senior housing industry, with evolving standards to meet the expectations of baby boomers, you will notice that there is virtually no scale capital focused solely on this business. To the contrary, the end-source capital, including some of the world's largest pools of sovereign-type funds, actually want to be part of the Welltower flywheel. But this is not a discussion of capital. As Charlie said, any fool can write a check. In 2025, we targeted and evaluated several thousand acquisitions using our data science platform, and from those, curated a portfolio of roughly a thousand communities that we engaged and transacted with sellers, mostly off-market. We onboarded this massive haul into the Welltower operating partner network, with the help of the Welltower Business System, as a complex adaptive system with little disruption to customer service. The sheer complexity of scaling an unscalable business is where our value-add lies. Yes, we can point you towards many examples, such as the Integra JV, that prove our capital allocation capabilities to be somewhat satisfactory. But it is not in addition to the operating and technology prowess of our network and that of our operating partners, but because of it. And that moat is expanding, not shrinking, as the network effect of our data and insights on our platform grows exponentially. We welcome our competition to chase us into these challenging terrains. They keep us on the edge and paranoid every day to show up to win. Having said that, we're not a competition-centric organization. We're a customer-centric organization. In rare cases where we engage in a market-based process, our competition for acquisition remains financial organizations who are fixated on cap rates, financing, and spread investing, while our obsession lies with the customer journey and employee experience. Our primary business remains off-market, privately negotiated transactions with owners who are trying to solve a bespoke problem or embarking on a different opportunity. We have no crystal ball to determine which model will ultimately prove to be more successful. While the change of our business model over the past decade ensures that we'll not need to buy another asset to drive strong cash flow growth well into the future, an expanding operational and technology moat is uncovering more and more acquisition opportunities for us. 2026 will be no different. With that, I'll open the call up for questions.

Thank you. If you would like to withdraw your question, simply press star 1. In the interest of time, please limit yourself to one question and rejoin the queue if needed. Thank you. Your first question comes from Vikram Malhotra with Mizuho. Your line is open.

Congrats on the strong quarter. Shankh, I guess I just want to build on what you just said about compounding and duration. I know you said you have a lot of acquisitions, you know, ultimately, that reloads the same-store pool. We've seen this in other sectors. But I'm hoping you can give us a bit more quantitative or framework to think about this compounding aspect. The portfolio is at 90% on same-store. Should we think about, like, a stabilized portfolio in terms of RevPOR margin, then overlaying the Welltower Business System? Maybe anecdotes of some numbers would be helpful.

Yep. Vikram, look. I'm not gonna sit here and try to speculate what the future might hold, but I will just say that focus on a couple of things that I've mentioned, which is first is sort of the idea we're not after same-store. Right? If you just think about what our North Star is, what we have said that we're focused on is cash flow earnings and cash flow growth. And that comes from very different places. Right? So just let's just think about it as mix shift is a very important part. We said that we believe that we'll be able to drive double-digit NOI growth for a long period of time. So I'm just it's very hard for me to say your focus is two years from now, five years from now, seven years from now. So instead of that, let's just focus on the fact that a lot of things matter is just obviously as assets leased up and get over 90%, we're seeing significant pricing power higher than assets with, say, less than 80% occupancy. Right? That's just basic supply and demand. But also, I would like you to think about a couple of other things from the standpoint of earnings and cash flow growth. One is a very important factor: mix shift. Just think about it in simple terms. Right? You know, two quarters ago, our SHOP was 59% of our overall portfolio. Right? Obviously, probably four years ago, that was 35%, something like that. Now you think about it. Okay. 60% grows 20%. 80% grows 15%, or 100% grows 12%. You have the same exact impact on cash flow earnings. Just as a point of reference. Right? Then sort of think about okay. What's going on with free cash flow generation? What can you do with that free cash flow, whether it's acquisitions, whether it's return on capital? You know, because the marginal cost of your free cash flow is zero. So all of these as sort of you think about it, you have you can get to and obviously, with an unlevered balance sheet, will someday will use it for growth as well. And you put all of these with the framework of what we think could be a long, you know, sort of journey ahead of us of margin expansion. And, you know, we think the growth algorithm, you don't have to be a genius to figure out that it could be a very and very strong one. How exactly what numbers, what year, it's just hard to speculate right here. Sitting here. But I will say that, you know, the future looks very bright to us whether we're right or wrong. Only the future will say. But you can see that 12 of our colleagues have bet their entire lives for the next decade on this. Because we think the future is very strong. We'll see what the market gives us.

Your next question comes from John Kilachowski with Wells Fargo. Your line is open.

Hi, good morning, everyone. My question is on the tech quad. You've already made such progress with Welltower Business Systems and with your data science platform. I'm just curious, what challenges are there left in the senior housing space to tackle? You're still hiring significantly. And then maybe an extension of that would be, are you building something that would eventually be monetizable?

So let me answer that question. I think I addressed this before. There are two ways I think about our technology platform. One is our data science platform, which is mature, but there's a lot of work to do. And as you can see, what Nikhil mentioned, the economics that we received on a fund business that suggest to you, which is significantly higher, many would claim two times higher than many others have received in the fund management business is a pure function of our capability of that data science platform. Right? You know? So one, you can see sort of the monetization of that platform is actually coming through. Now if your question is, on the operational side, operational technology side, I wouldn't even call us mediocre. I would call us mediocre minus. So, you know, we have a long way to go in that journey, and just because we are better than in a business where we sought out because we thought there's a lot of opportunity and we're doing fine does not make us really great. So we have a long way to go, and you can see that we are continuing to hire terrific leaders across different industries from different expertise, and we continue to double down on that. And I think this is a long, you know, sort of a journey in front of us. Now if your question is, will we monetize these platforms? In terms of other capitals to use, right, and think about sort of LRO of what Arstone and EQR did many years ago, or third-party management in self-storage. Just things of that nature. If that's a question is with that angle, then I would say that that will never happen. Our operating capabilities of our core investment cycle will always remain within the bounds of this company. Now we're bringing our capital and others into this platform. We're open to helping our partners who are on the platform thinking about investment in real estate in many different ways. But we will never see us sell our operating software to someone else so that they can compete with us. We'll never do that.

Your next question comes from Farrell Granath with Bank of America. Your line is open.

Good morning. Thank you for the question. This is Farrell. Just wanted to touch on the Integra disposition. Given the sale of the SNF portfolio and really the highlight of the source of funds and the value harvesting, does this now frame your SNF portfolio in total as a source of funds for future disposition or future acquisitions?

Yeah, Farrell. I think the way to think about our skilled nursing portfolio, as we described it in the past, is a structured credit investment. Right? Structured credit investments by default are relatively short-dated in nature. The definition of that is in the eyes of the beholder, but our skilled nursing strategy is to acquire assets that have an operational turnaround story behind them, bring in really sharp regional operators, and then turn the performance around, harvest value. And our fundamental view is, you know, these high-quality operators, they should be the end owners of skilled nursing businesses, skilled nursing assets. Because there is attractive HUD financing available, and once you've executed the business plan, that is the right stable capitalization of the assets. So, you know, we will continue to acquire, stabilize, exit. And, you know, then what we do with the proceeds and how we redeploy it is purely opportunity dependent. Don't have allocations in our mind of what how big or small each bucket needs to be. We have good opportunities, we'll invest capital. If we don't, we don't. And it'll depend on what is the best use of capital depending on the time period.

Your next question comes from Omotayo Okusanya with Deutsche Bank. Your line is open.

Yes. Good morning, everyone. And again, congrats on a really incredible outlook. Couple of questions, if I may just ask one or two. The first one, the SHOP portfolio, could you just help us understand at this point how large the non-same-store pool is, some general characteristics of that pool, like, I know, occupancy or wherever that is, and just we're trying to understand a little bit about how that's growing relative to the stabilized portfolio.

Yeah. I'll start with that. So, you think about our same-store portfolio right now, makes up over half of our total portfolio, and a lot of that is just because of how acquisitive we were last year. So it takes five quarters for something we acquire to come in the same store. I would describe the growth we're seeing in that portfolio as consistent with what we have in our same-store portfolio. The characteristics of that portfolio, it is less occupied. Think about it, of our that's strategic on our side. We continue to buy that we believe there are, there's, you know, significant upside on the balance sheet. And then just given the nature of our acquisitions last year, a lot of it UK-focused in the back half of the year, I'd characterize too that it's heavier, kind of non-same-store is heavier in the UK than relative to the same-store portfolio.

Your next question comes from Ronald Kamdem with Morgan Stanley. Your line is open.

Thanks so much. Hey. Just wanted to double click on some of the occupancy performance both last year and sort of the guidance into going into '26? Just I'd love some updated thoughts in terms of how you guys drive sort of move-ins versus move-outs and how much is the Welltower Business System contributing to the outperformance versus the industry? Thanks.

I will take the last part of that, and, John, perhaps you can address what Ron is trying to get on the first part. You know, what sort of our peers or NIC data or others sort of reported, I believe, you know, for NIC '99, the occupancy growth last year was something like 250 or something like that, and we did 400. So that gives you the answer to the first code win or last question. John, what sort of or how do you answer the first one?

Yeah. You're asking what's driving the occupancy. I mean, there's a combination of items, and it starts all the way from focusing on the marketing all the way through the speed to lead, how we're answering the calls, etcetera, etcetera. And it's an execution business. And that's what's changing rapidly as we isolate and focus on each component there and optimize at each site, which has enabled us to outperform market share.

Your next question comes from Michael Goldsmith with UBS. Your line is open.

Morning. Thanks a lot for taking my question. You had a robust year of acquisitions in 2025. 2026 is starting off very strong. How long can you continue to acquire unstabilized SHOP in the 75% to 85% occupied range? At what point is there none of that left or that benefits from industry trends? And does that pose a problem now given that you now have a fund vehicle buying more stabilized assets? Thanks.

Yeah. I'm not doing a good job of explaining my point, so I'm gonna try to do it again. How long is a pure function of market opportunities? So I can't sit here and tell you how long the acquisitions opportunities will be there. The goal is to create value on a cash flow basis for existing investors and not do transactions. Right? That's sort of the first and foremost point I want you to walk away from. And so, you know, we will see. Our goal is to create value. Right? So if we can create value by buying, we'll do it. If not, we'll not do it. We can create value by selling just like you saw, right, I've said this several times, making money is hard. Making money at scale is much harder. And we continue to do it. So the goal is to create value for existing shareholders on a cash flow basis. I sort of see a Pavlovian response to acquisitions activity or investment amount. I historically sort of that why that made sense because it was fundamentally a triple net model, and the only way companies draw earnings is by buying properties because, you know, effectively, all their earnings were straight-lined and there was no growth. And I understand that for many existing companies in the sector or triple net sectors and others, I just want you to emphasize this and understand that that does not matter to us anymore. That makeshift of this company is at a place and continues at a pace that we'll never have to buy another asset. We'll see what the market gives us. Having said that, after answering your question philosophically, I'll answer it tactically. Tactically, we have never been busier. As you can sort of I think you heard from Nikhil, in the first six weeks of the year, we have done 37 different transactions. That's about a, you know, about a transaction a day. Right? So it feels like the opportunity set is very robust in front of us as long as we can make money. Through, you know, sort of our operational and technological prowess and our ability to allocate capital, we'll do it. If not, we'll do what you just saw we did on the Integra portfolio.

Michael, I'll just add one thing really quickly. You know, you started by talking about occupancy. That's not the only lever of driving growth out of assets. Right? It's a complex operating business where spending $70 of a $100 you're collecting on expenses. And so even in highly occupied buildings that we're buying, we're creating significant value through the Welltower Business System. So that's just, you know, one way of looking at it, but there's just so many different ways to create value in the business.

Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Your line is open.

Great. Thanks. Hoping you guys could contextualize the SHOP occupancy growth and RevPOR growth guidance versus last year. I mean, you're at a higher occupancy today, but you're initially assuming higher growth occupancy than you did at the outset of last year. And I know last year had a leap year comparison, but just how should we think of the balance between RevPAR growth and occupancy growth in the setup going into 2026 versus where you were a year ago?

Let me try to start and then Tim will jump in. So, obviously, it is our guess. So you have to understand that what we are telling you at this point, and we'll see how the year plays out. From a RevPOR point is the one I'll take up, say, you picked up on one. You have to think about on a leap year adjusted basis. The other thing you have to think about is the massive pool change that happened in the fourth quarter. I think I talked about this six months ago, that 90 plus assets are gonna get into the fourth quarter, which is holiday. Those assets are still in an occupancy journey. And until the occupancy journey gets occupancy is stabilized, we're not gonna get onto a substantial rate journey. Just that change, pool channel, alone was a 30 basis point drag on fourth quarter RevPOR. That obviously is carrying through 2026 guidance numbers. But as I said, you know, Austin, I'll highly encourage you to think about these are for a large company, large portfolio with or same-store RevPOR, expense per unit, NOI. These are all sort of markers towards the ultimate goal. And that ultimate goal is cash flow growth. Right? So forget about how these things all combine into an optics. Just think about how much underlying cash flow growth we are driving that our initial, you know, FFO guidance we started at, what, 16, 17%. Don't know, Tim, you wanna add anything to that?

Good. Okay.

Your next question comes from Nick Yulico with Scotiabank. Your line is open.

Thanks. I guess maybe just a sort of related question on the guidance for how to think about like that spread between RevPOR and expense per unit growth. I know you guys have the chart in the presentation. It's been a wide spread. Is it are you guys assuming that spread is actually shrinking a bit this year? Because the reason I'm asking is I think you're saying expense per unit growth is going to be, you know, somewhere below 1.5%. And I think it was below 1% last year. So just trying to understand that dynamic and if there's also sort of an element of conservatism built in there? Thanks.

Thanks, Nick. I think the right way to think about it is, you know, beginning of the year outlook, as we sat here, you know, last February, we actually had a similar outlook for expense per unit as we have today. Where we ended the year, we drove more occupancy. Expense per unit is a direct beneficiary of occupancy and being able to scale cost. So I think, you know, sitting here today, conservatism isn't a word we kind of use when we think about our guidance. But it is just in our business a disproportionate amount of the year-over-year growth is driven over a six-month period. So consistent with how we've talked about guidance in the past, you know, when we sat here in February, and that those six months kind of kick off in April and May, it's just the appropriate kind of view of probability of what or possibilities of what could happen in the year. And framing it in a way now that, certainly, hope we can outperform. And I'll leave it at that.

Your next question comes from Rich Anderson with Cantor Fitzgerald. Your line is open.

Thanks. Good morning. Congrats, and congrats to the 12 employees. I hope you don't get sick of one another in the next ten years. So my question is, everything's great. Great growth, all that sort of stuff. I have a question about the main problem with Welltower, if there is one, and that is everyone owns it. And it's, you know, everyone's full on Welltower. You gotta own it and everything else. So I'm curious. Can you talk about the company's outreach to a broader swath of investors, generalists, international? Can you talk about success you've had just sort of getting the word out beyond the confines of the REIT industry to sort of make sure, you know, you're getting your fair share if you're not already, of course, but you, you know, in the future, get your fair share of upside for all the successes that you're having as a company? Thanks.

Rich, I don't really know how to answer the question. We manage the business. We work twenty-four seven, all of us together, to create what we think drives shareholder value over a period of time, which is cash flow earnings and cash flow growth. We believe we can do that. We're a tiny company in the context of, you know, US or international capital markets. Then, you know, investors will find us. Right? That's not our job. Our job is to execute. It's a hard business. I don't think I want I don't want you to walk away with this idea that everything is great. Right? You guys see we have a large portfolio. You see on average what's going on in our portfolio, and that does look good. I'm not gonna say it doesn't. Having said that, it's a very hard business. Fighting challenges every day. And our job is to execute with our operating partners from capital allocation to operations to everything in between. And, you know, if we can drive cash flow earnings and cash flow growth, I don't worry about that we don't have enough investors who will not find us. It's a matter of growth. Right? So I will keep this organization focused on growth, delivering actual operational and capital allocation outcomes, and I don't worry about that. Having said that, the company has sort of gotten to a size finally where it is showing up as sort of a, you know, from a size standpoint with a lot of investors who didn't know we exist, despite the fact, you know, we sort of don't get into what a lot of companies do. Get on CNBC, Bloomberg, etcetera. We never do that. However, a lot of investors are sort of seeing that this has become just from a size standpoint, market cap standpoint has become large enough. They're sort of finding what is this company about and reaching out to us, and we have a very good capital market team. Very capable team. Sort of tease them how we think about the business. And there is enough material on us that we have written over the time that it's not a hard business to understand from that perspective. But I will leave it there, and we can have, you know, future conversations about this topic.

Your next question comes from Seth Bergey with Citi. Your line is open.

I guess just going back to the funds business, you announced debt funds, you've deployed some of the equity funds, kind of and you've talked a little bit about the funds business as a way to kind of monetize some of the Welltower systems and successes you've had with the data science platform. You know, how do you see the trajectory of that funds business? And, you know, should we expect that to be kind of a larger piece of the story over time?

Yeah. I think, you know, Seth, as I said in my prepared remarks, you know, it's opportunistic as tactical. Right? We're not asset gatherers. If there are opportunities that are complementary to our balance sheet where we can make money for our capital partners, we will continue to do more. If there aren't, we won't. Right? So there's no mandate beyond that. The simple mandate is to make money. There's interesting opportunities to go do so. That being said, you know, just like the debt fund, there was an opportunity for that that, you know, one of our LPs reached out to us about. And based on their suggestions, we created a strategy that was appealing to several folks.

Yeah. I just I don't want to repeat what Nikhil said, but I will. I have a significant problem with a lot of fund management businesses that have become just plain straight asset gatherers, and I never want this company to become that. Right? So we, as we have said, that we could have we have had this fund significantly bigger than where it was. Right? Because we had our demand, you know, meaningfully outpaced what we were trying to do. And from a size standpoint, we want to remain what Nikhil said that, you know, we take our LP investors' capital as seriously as we take our, you know, public market investors' capital. We will take capital only if we think we can make a significant return on it. Otherwise, we won't. We have no desire to become asset allocators and become a big fund management business where, in my personal humble opinion, a lot of these places have become capital-raising places instead of actually making money businesses, which they used to be. We'll never let this company become that.

Your next question comes from Juan Sanabria with BMO Capital Markets. Your line is open.

Hi. Good morning. Congrats on the results. Just curious on the capital side. With regards to CapEx for seniors housing, how we should think about that? Both the recurring and other CapEx in SHOP has been fairly significant. And so just curious kind of what you're doing at the asset level to maybe try to future-proof these assets versus your competition. Or what the capital is largely going to given the assets are generally newer that you're acquiring?

Yeah. No. That's a great question. When you look at, you know, starting with what we're acquiring, at this point, we're acquiring very good assets, and they're younger assets. And you can actually see that pretty easily when you look at the average age of the assets and the fact that every year, I get a year older, but our portfolio has actually stayed the same. And so that really tells you, you know, the quality of the assets that Nikhil is buying. And then so I do want to highlight that. At the same time, some of these assets are bought where there's been issues in the capital stack, which drives cash flow. And that also drives decisions by the previous owners to hold back a little bit. So even though they're newer, some of them need a certain amount of capital to get them up to the appropriate standards. From what we're doing, we're really reinventing how the world's looked at it. And Russ is heavily involved in this. I'm involved in it, others are involved with it. Looking at it from a life cycle cost, what is the life cycle cost? How do we provide a great customer experience and manage things throughout the entire life cycle? So whether it's flooring, whether it's siding, whether it's how we paint wrought iron, every aspect of the business, we're turning upside down and saying, what would the smart person do if they're gonna own this asset and they wanted to maintain it? That does require, in many cases, upfront cost. Higher upfront cost, but what you're looking to do is to lower the run rate over time. And that's exactly what's happening. I don't want to get too much into the weeds and give out some of our secrets, but it's exactly where we're going after it is looking at each component, what is the lifetime cost.

Oh, and I'll add two things as you sort of look at near-term historic and forward CapEx. Two anomalies you have to think about. One is holiday, which we talked about. We bought holiday, obviously, at a very, very low basis. And when we bought it, we said that you'll require investment. We're sort of coming to the tail end of the investment cycle. So that's very important. And remember what we said last call on HC1. That will require that kind of, you know, investments. And we, again, bought it at a very meaningful, I think, like, what, ninety-five, $6,000 per bed. And we would require investment into that probably $20.25, $30,000 something like that. And you just think about the total that will still be these assets for less than $100 or $125,000 per bed, which you know is a very meaningful discount to where assets today trade at or it requires to build. So just sort of think about these two anomalies. Generally speaking, other than that, you know, we're buying two, three-year-old assets which do not require a lot of work. But these two large portfolios, one is, you know, sort of falling off from that spend perspective. One is just taking off.

Your next question comes from Michael Carroll with RBC Capital Markets. Your line is open.

Yep. Thanks. I wanted to circle back on the spread between RevPOR and expense per unit topic. I mean, how wide has that spread gotten in the recent past? And should we think about that spread continuing to widen out over the next few years, just given that operators gain pricing power when occupancy is above 90% and the natural scale that the space has when occupancy starts to exceed 90%? I mean, how wide could that spread get?

If you have a stable portfolio, right, that is growing from, say, 90% to 95% occupancy, and all things being equal, your answer should be yes. Right? So let's just go into sort of the little bit deeper. Let's double click on that conversation and then go a little bit deeper. You should gain pricing power as assets lease up. There's no question about it. And, obviously, your ability to scale your cost, particularly labor, will come into play. Right? But on the other hand, just think about there are other costs outside labor that are obviously problematic for every single owner of real estate, whether you are a single-family housing or you are owners of commercial assets like ours, you know, at line items such as utility cost. Right? So that sort of is a headwind to that taxes. Finally, you would have to think about real estate taxes. Finally, cash flows are recovering, and that has an impact. But generally speaking, as we sort of think about if we think about two main drivers of scaling labor versus your pricing power, you will think that that gap will widen or stay very wide as we move forward. But just remember, Mike, that a lot of things happening on our reported numbers, you have to think about how large this portfolio is, what we are buying, how same changes, and all of that. That's why I said, you just think about it. At the end of the day, what matters is bottom-line growth. Right? And look at the bottom-line growth. In the fourth quarter, we pulled off, you know, FFO per growth in high twenties and cash flow per share growth in high twenties. Right? So that sort of it tells you that all optics aside, the portfolio is firing on all cylinders.

Your next question comes from Michael Ostroyak with Green Street. Your line is open.

Morning. Thanks for the time. Can you just put brackets around the levels of NOI growth expected in 2026 across the U.S. SHOP, UK, Canada, and active adult businesses?

Yeah. Overall, you say bracket. So the overall portfolio is 15% to 21%. We don't provide guidance on the sub-portfolios.

Your next question comes from James Kammert with Evercore. Your line is open.

Hi. Good morning. Thank you. I've read in some trade publications in the senior housing industry that today's independent living and increasingly maybe even the AL customer prefers larger residential units. I'm just curious, does Welltower detect or agree with that assertion? And if so, how do you think your portfolio is positioned to maybe, you know, address the shifting pace of the boomers coming into your portfolio? Thank you.

Yeah. So I will I I'm gonna, you know, I think someday you guys are gonna get really bored of me saying the same thing. Again and again and again. You're picking up on something very important here, Jim. Which is I've said this several times that this is a business optimization of location, product, price point, and operating overlay. What we mean by product that treat the two different ways you should think about senior housing as a product which is IL, AL memory care. What services do you offer? And is it a two-bedroom, one-bedroom, or a studio? Right? So there's two ways you can think about product. There is no in my mind that that product optimization along with location price point, and operating overlay, is very, very important. We have said this several times that we have seen because of our say, you know, probably wrongly interpreted view that we focus as the largest owner of the space on price per unit, a lot of developers have built a lot of studios. And, you know, studios is a as a function of a large building, is completely fine. You know, you think about you have a 100 unit buildings. And you have 20 studios. That's okay. I have seen many, many buildings that I consider functionally obsolete that has 60 units of studio. Recently, saw one that has 66 units of studio out of 98. Right? So you're picking up on something absolutely very good. And these are the reasons that, you know, sort of you can see that we remain one of the very few who actually understood the business from the perspective of that optimization and not a perspective of location maximization, which most real estate investors think about. And our results speak for themselves. But you have to think about optimization of all four and not just pick one. In this case, you are picking obviously on larger units versus smaller units and run with it.

Your next question comes from Mike Mueller with JPMorgan. Your line is open.

Yeah. Hi. For a quick follow-up on the fund vehicles. Is the capital in the debt fund going to be focused on assets that Welltower would ultimately like to own? Or do you just see it as an in-and-out lending vehicle?

Yeah. Mike, it's not set up as a loan-to-own strategy. These are, you know, we're lending on existing cash-flowing, you know, covering assets. That being said, our general philosophy is we wouldn't lend on, you know, assets that we don't like as equity owners. But it's not a loan-to-own strategy. Like, you know, Shankh said, we're just talking about studios and, you know, buildings that are functionally obsolete or don't make sense. Those buildings are not a fit for anything we do. Whether it's debt, equity, whatever it is, we're not gonna touch. So we only lend on products we like. But it's a, you know, lending on quality products that's covering cash flow.

It's lending on quality products with strong sponsors that are, you know, these are all this is an acquisition credit vehicle. Right? So in-place cash flow and all. It's a simple lending business. That one of our most important LPs came to us and said, should we wanna build a product together? With this idea? And we thought that makes sense. That's what we're doing. It's a very, very simple do I do a lot of creative credit structures, Mike? I do. You know? Nikhil, Patrick, and I have been, you know, sort of on the journey for a long time. You know, Andrew loves it as well. So we do it. Yes. We do. You have seen one of them is HC1. Right? But there are many others. But you will see some, you know, we will sort of retain those for on our balance sheet for all this experimentation on the structures that we do. This is a simple, you know, first mortgage lending on assets that are acquisition cycle with strong sponsors.

This concludes the question and answer session and will conclude today's conference call. Thank you for joining. You may now disconnect.