In This Article:
Welltower Inc.’s WELL senior housing operating (SHO) portfolio is well-poised to benefit from an aging population and a rise in healthcare expenditure by senior citizens. The outpatient medical (OM) segment is expected to benefit from the favorable outpatient visit trends in the near term. Its portfolio-restructuring initiatives and solid balance sheet strength augur well. However, competition in the senior housing market and elevated interest rates pose key concerns.
What’s Aiding Welltower?
The senior citizen population is expected to rise in the coming years. This age cohort constitutes a major customer base of healthcare services and incurs higher healthcare expenditures than the average population, poising Welltower’s SHO portfolio well to capitalize on this positive trend. In 2025, management anticipates the same-store SHO net operating income to grow within 15%-21%.
There has been a favorable outpatient visits trend compared with in-patient admissions. Banking on this, the company is optimizing its OM portfolio and growing relationships with health system partners and deploying capital in strategic acquisitions. Given the favorable secular trends and growing need for value-based care, its efforts to strengthen its OM footprint will boost long-term growth.
Restructuring initiatives have enabled the company to attract top-class operators, facilitating the company to improve the quality of its cash flows. It has also been actively banking on its growth opportunities through acquisitions. In March 2025, Welltower announced that it is under contract to acquire Amica Senior Lifestyles portfolio from the Ontario Teachers' Pension Plan for C$4.6 billion. The deal, subject to customary regulatory approvals, is expected to close in the fourth quarter of 2025.
Welltower has a healthy balance sheet position and ample liquidity to meet near-term obligations and fund its development pipeline. As of Dec. 31, 2024, it had $8.7 billion of available liquidity, including $3.7 billion of cash & restricted cash and full capacity under its $5 billion line of credit. As of Dec. 31, 2024, the net debt-to-adjusted EBITDA was 3.49X, improving from 5.03X year over year. Moreover, Welltower’s debt maturities are well-laddered, with a weighted average maturity of 5.9 years, thereby enhancing its financial flexibility.
What’s Hurting Welltower?
Welltower faces competition from other healthcare companies such as Ventas, Inc. VTR and Healthpeak Properties, Inc. DOC. Such competition is likely to limit the company’s power to adjust pricing and ink deals at attractive rates.