Welltower Inc (April 2025)
Business
Welltower Inc., a member of the S&P 500 and headquartered in Toledo, Ohio, is a real estate investment trust (REIT) focused on senior housing and healthcare real estate. The company partners with senior housing operators, post-acute care providers, and health systems to fund and own the real estate infrastructure needed for their operations.
Welltower generates 79% of its revenue from the U.S., 6% from Canada, and 15% from the U.K.
The company operates across three key segments:
Seniors Housing Operating:
The segment includes:
Seniors apartments (55+ residents capable of independent living)
Independent living and supportive living communities (with services like meals, housekeeping, transportation, and activities)
Continuing care retirement communities (combining independent living, assisted living, and long-term care on one campus)
Assisted living (providing daily living support such as medication management, bathing, dressing, and eating assistance)
Alzheimer’s/dementia care (specialized properties for residents with memory loss)
Many of these properties are held in joint ventures with local operating partners. This segment contributed 76%, 72%, and 72% of total revenue in 2024, 2023, and 2022, respectively.
As of December 31, 2024, Welltower worked with 53 operating partners. The largest partners by revenue contribution in this segment were:
Sunrise Senior Living (13%)
Cogir Management Company (11%)
Oakmont Management Group (11%)
Triple-Net Leased Properties
Under this segment, Welltower leases properties to operators under long-term, triple-net leases — meaning tenants are responsible for operating costs, maintenance, taxes, and insurance. Leases typically run 10–20 years with renewal options.
This segment generated 10%, 13%, and 13% of total revenue in 2024, 2023, and 2022.
Outpatient Medical
This portfolio primarily consists of multi-tenant medical office buildings leased to healthcare providers. Leases generally include rent escalations and expense reimbursements.
As of year-end 2024, the average remaining lease term was 7 years. This segment contributed 10%, 11%, and 12% of total revenue in 2024, 2023, and 2022. No single tenant accounted for over 20% of revenue.
Occupancy Rates:
Interestingly, senior housing occupancy rates are lower than I initially expected. I assumed these assets would have 90%+ occupancy, but industry data shows that senior housing rentals aren't as "stable" as one might think.
List of properties for Welltower:
Finanacials
Welltower reported $8.73 billion in annualized revenue for 2024. Like most REITs, net income can understate true profitability due to aggressive depreciation schedules.
For example, the Seniors Housing segment generated $6 billion in revenue but recorded $1.1 billion in depreciation — implying a property life of under 6 years, which seems unrealistic.
While Funds From Operations (FFO) is commonly used in REIT analysis, I believe fully ignoring depreciation is overly optimistic. I won’t be take FFO profitability metric neither.
The “true earning” is likely to be in between Net income and FFO. For lack of good estimation of the real depreciation, let’s just take half of the depreciation into account and I think that’s better than either FFO or Net income.
Using this method:
Adjusted Net Income = Net Income + 50% of Depreciation
Estimated Adjusted Net Income:
2024: $1.8 billion
2023: $1.06 billion
2022: $0.8 billion
Meanwhile, Welltower’s balance sheet appears healthy, with over 60% of assets financed by equity and minimal exposure to preferred shares or perpetual bonds.
Valuation
As of this writing, Welltower has a market cap of ~$93 billion and a dividend yield of ~1.8%.
Using Welltower’s own investment cap rate of 7.5% and NOI of $2.8 billion, a reasonable valuation might be closer to $42 billion — suggesting the stock is expensive at current levels.
That said, I like the long-term thesis of senior housing and healthcare real estate. If the price becomes more attractive, I’d be happy to pick up shares for a long-term hold.