Earnings call transcript: Welltower Q3 2025 sees stock dip despite revenue beat

Welltower Inc. reported its third-quarter 2025 earnings, revealing a mixed bag of results that sent its stock dipping in after-hours trading. The company posted earnings per share (EPS) of $0.41, falling short of the forecasted $0.52, marking a surprise decline of 21.15%. However, Welltower exceeded revenue expectations with $2.69 billion, surpassing the anticipated $2.61 billion. The healthcare REIT giant, now commanding a market capitalization of $120.41 billion, has demonstrated impressive revenue growth of 31.96% over the last twelve months. Despite the revenue beat, the stock dropped 1.49% in regular trading to close at $182.61, though it rebounded slightly in premarket trading with a 4.59% uptick. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, with 14 additional exclusive insights available to subscribers.

Key Takeaways

• Welltower’s Q3 EPS fell short of expectations, missing by 21.15%.
• Revenue outperformed forecasts, coming in at $2.69 billion.
• Stock fell 1.49% post-earnings but showed recovery in premarket trading.
• Senior housing portfolio continues strong NOI growth, marking 12 straight quarters of over 20% growth.
• Launch of Welltower 3.0, focusing on technology and operational efficiency.

Company Performance

Welltower’s performance in Q3 2025 was highlighted by a robust growth in its senior housing portfolio, which achieved over 20% same-store net operating income (NOI) growth for the twelfth consecutive quarter. The company also reported a 10% organic revenue growth and a 400 basis point increase in occupancy. These results underscore Welltower’s strong positioning in the senior housing market, driven by an aging population and increased demand.

Financial Highlights

• Revenue: $2.69 billion, up from the forecasted $2.61 billion.
• Earnings per share: $0.41, below the expected $0.52.
• Normalized FFO: $1.34 per share, representing a 20.7% year-over-year growth.
• Total portfolio same-store NOI growth: 14.5%.
• Operating margins increased by 260 basis points.

Earnings vs. Forecast

Welltower’s Q3 2025 earnings showed a significant miss in EPS, which came in at $0.41 against a forecast of $0.52, a negative surprise of 21.15%. Despite this, the company managed to exceed revenue expectations, posting $2.69 billion compared to the anticipated $2.61 billion, a positive surprise of 3.07%. This mixed performance reflects Welltower’s ongoing challenges in managing operational costs while capitalizing on revenue opportunities.

Market Reaction

Following the earnings announcement, Welltower’s stock experienced a 1.49% decline, closing at $182.61. This movement contrasts with the company’s 52-week high of $189.53. However, in premarket trading, the stock showed signs of recovery, rising by 4.59% to $191. Despite market fluctuations, InvestingPro data reveals the stock has historically maintained low price volatility with a beta of 0.91, while delivering a remarkable 40.81% total return year-to-date. This volatility highlights investor uncertainty, possibly driven by the EPS miss despite strong revenue figures. Notably, the company maintains an impressive track record of 50 consecutive years of dividend payments, currently yielding 1.69%.

Outlook & Guidance

Looking ahead, Welltower has provided guidance for its normalized FFO to range between $5.24 and $5.30 per diluted share for 2025. The company anticipates total portfolio same-store NOI growth of 13.2% to 14.5% and expects senior housing operating growth to be between 20.5% and 22%. With an overall financial health score of "GREAT" according to InvestingPro’s comprehensive analysis, and strong liquidity evidenced by a current ratio of 3.22, Welltower remains committed to long-term value creation, with continued investments in technology and operational efficiency. Discover deeper insights about Welltower and 1,400+ other top stocks through InvestingPro’s exclusive Research Reports, transforming complex data into actionable intelligence.

Executive Commentary

CEO Shawn emphasized the company’s strategic focus, stating, "We like volatility. We’re trying to manage risk." He also highlighted the importance of customer and employee satisfaction, noting, "Duration of growth comes from happy customers and happy employees." These comments reflect Welltower’s commitment to leveraging human and technological resources to drive growth.

Risks and Challenges

• Potential for continued EPS underperformance if operational costs are not managed effectively.
• Market saturation in senior housing could limit growth opportunities.
• Economic downturns may impact occupancy rates and revenue.
• Regulatory changes in healthcare could affect operational costs.
• Competition in the senior housing market may pressure pricing and margins.

Q&A

During the earnings call, analysts inquired about Welltower’s capital allocation strategy, seeking clarity on the rationale behind recent asset sales and acquisitions. The company also addressed its compensation structure and talent retention strategies, emphasizing a strong focus on senior housing and operational excellence.

Full transcript - Welltower Inc (WELL) Q3 2025:

Call Moderator: Thank you for standing by. At this time, I would like to welcome everyone to today’s Welltower Third Quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you’d like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. If you’d like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Matt McQueen, Chief Legal Officer and General Counsel. Matt?

Matt McQueen, Chief Legal Officer and General Counsel, Welltower: 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 Shawn for his remarks.

Shawn, CEO, Welltower: Thank you, Matt, and good morning, everyone. Given the sheer volume of announcements last evening, we’ll keep our Q3 related comments concise. I’m pleased to report that it was another record quarter with occupancy, margins, and net operating income all exceeding our already very high expectations. It was a watershed period in our company’s history from two important perspectives: capital allocation and people. After I walk you through our significant capital allocation-related activities, the team will provide details of Q3 results. I’ll return to discuss my favorite topics of people, culture, incentive design, and the beginning of a new era for our firm, Welltower 3.0. Let’s start with acknowledging luck. Many of yesterday’s transaction announcements started six months ago at the height of uncertainty post-Liberation Day. We always believed that life is not about predicting; it is about positioning.

When the luck knocked on our door in April and May, we were positioned with our balance sheet, exceptional team, technology platform, and perhaps most importantly, courage to run towards this uncertainty and chaos. This positioning drove more than $23 billion in incremental transactions, resulting in year-to-date activity over $33 billion and bringing us closer than ever to realizing our decade-long ambition of transforming Welltower into a pure-play rental housing platform for the rapidly aging population. At the core of our offering will always be systems, process, technology, and data-driven insights to enhance the experience of our customers and site-level employees, not capital, which is ultimately a commodity. Every capital allocation decision made at Welltower is viewed through an opportunity cost prism, evaluating the value foregone by pursuing a specific course of action while considering all implications of those decisions well into the future.

That opportunity cost prism allows us to narrow our focus on technology-driven transformation of our niche housing business. There is always room in organizations to boost performance by amping up their pace and intensity. The fastest way to move the dial is to narrow the focus in a maximum growth, maximum gain war. This is why we’re exiting our outpatient property management business. While we’ll continue to own some outpatient medical assets, it will consume little management time and effort due to the triple-net nature of the retained properties. This is not to say a B2B business like OEM is not a good business. The intensity that is needed to achieve our audacious dream of transforming a tech-rich, poor, TAM-rich B2C industry like senior housing requires the laser focus of a hedgehog and the discipline to say no to hundreds of good ideas.

While our motivation to go all in on senior living with focus and opportunity to enhance the enterprise growth rate, we recognize that the direction of asset prices for what we are giving up is uncertain. Hence, we structured our large OEM sale with significant participating profit interest. While the deal structure reflects a degree of heightened creativity, it is by no means a novel approach within our firm. We applied a similar idea nearly five years ago when we wrote a participating senior credit note on HC-One assets in the UK with warrants and equity kicker at the height of Brexit and COVID uncertainty. I am delighted to inform you that the significant downside protector structure has generated a nearly 14% unlevered IRR at exit while providing us an opportunity for the seat at the table in a bilateral negotiation for this recap.

This recapitalization transaction marks the beginning of a new chapter of new operating income growth as our long-duration strategy unfolds for HC-One assets. Speaking of the UK, I’m delighted to announce that after six years of conversations, negotiation, and a near transaction, we’re finally the proud owner of Barchester Senior Living portfolio. We recognize that buying highly successful family-owned businesses requires patience, finesse, and a commitment to excellence that their legacy deserves. While a large checkbook that no counterparty ever questioned is necessary, it is by no means a sufficient condition. We have carefully studied many transactions that Warren and Charlie have completed over the years with family-owned businesses. I am delighted to inform you that this $7 billion negotiation was done during a single sitting resulting in a firm handshake. Our years of conversation and close familiarity with the Barchester assets and management were certainly helpful as preparation.

Equally important was the integrity and professionalism demonstrated by our counterparty. We’re proud to welcome Pete and Barchester’s management team to the Welltower operating partner family. Despite giving up in-place yield in HC-One and other loans and initial dilution incurred from 170 assets that are in lease-up from our recent acquisitions, together the dispositions and acquisitions are expected to be accretive to FFO per share in 2026. To be clear, we would have completed these deals even if they’re collectively near-term dilutive because of the significant opportunity of earnings and cash flow growth in 2027 and beyond, and due to the long-duration aspect of the transactions. These capital allocation decisions together are expected to change the near and long-term growth rate of our firm, despite the significant size of our asset base.

This speaks to the level of excitement and high expectations we have from this year’s $33 billion of transformative capital allocation activity. With that, I’ll pass it on to John.

John, Executive, Welltower: Good morning, everyone. I’ll keep my comments relatively brief this morning. As Shawn mentioned, we reported another fantastic quarter with no let-up in the strong momentum experienced in the first half of the year. While uncertainty persists for the direction of the broader economy, our business continues to gain strength given the needs-based and private pay nature of our business, while our asset management initiatives through the Welltower Business System, or WBS, continue to bear fruit. Our strong results this quarter were once again driven by the exceptional performance from our senior housing portfolio. In fact, Q3 marked the 12th consecutive quarter in which senior housing portfolio same-store NOI growth exceeded 20%. Attaining 20%+ NOI growth for any sector is an incredible achievement, but 12 consecutive quarters is truly exceptional and likely unprecedented.

Year-over-year organic revenue growth remains at approximately 10%, driven by a 400 basis point occupancy gain and strong pricing power. Our solid top-line results were led by our UK portfolio as a 550 basis point year-over-year ramp in occupancy drove a 10.4% increase in revenue. Operating margins across the same-store portfolio took another step higher, rising 260 basis points as growth in RevPor, or unit revenue, continues to solidly outpace growth in ExPor, or unit expense. While we’ve experienced a substantial recovery in margins over the past few years, we have a long runway for further expansion due to the scaling benefits achieved through higher occupancy, i.e., greater operating leverage, which will be further amplified by our far-reaching WBS initiatives aimed at transforming the senior housing business.

The backdrop for growth in 2026 and well beyond remains favorable as senior housing demand is expected to grow even stronger while supply remains dormant. The beta of the sector remains attractive. What truly sets us apart are our efforts to generate outsized alpha through operational excellence. With the exit of our outpatient medical property management business, we are doubling down our efforts, attention, and resources to our senior housing business with a singular focus of operational excellence through a digital transformation. This includes the appointment of Russ Simon as Executive Vice President of Operations. Russ has created tremendous value for Welltower shareholders as Co-Head of U.S. Investments, as well as partnering with me on asset management. Going forward, Russ will shift his focus to overseeing our Asset Management, Capital Planning, and Experiential Solutions initiatives.

Additionally, as Shawn will describe in greater detail, we are in the midst of a complete reimagination of our technology ecosystem. We’re delighted to have Jeff Stott join us from Extra Space Storage as our Chief Technology Officer, while Logan Griselle and Tucker Joseph have been appointed Chief Innovation Officer and Chief Information Officer, respectively. I’ll conclude by saying that we’ve never been more excited as we are today about the prospects for our company. The Welltower team continues to work tirelessly alongside our best-in-class operating partners to reinvent our business through the Welltower Business System and to elevate the experience of senior housing residents, their families, and the site-level employees. While I’m thrilled about the progress we’ve made today, our excitement truly lies in what’s to come as we enter Welltower 3.0, which will be defined by operations first. With that, I’ll turn it over to Nikhil.

Nikhil, Executive, Welltower: Thanks, John, and good morning, everyone. Since our last call three months ago, we have expanded our year-to-date transaction activity by $23 billion, including $14 billion of acquisitions and $9 billion of dispositions and loan payoffs. With today’s announcements, our year-to-date investment activity now totals $23.2 billion, up from the $9.2 billion announced on the second quarter call. Of this $23.2 billion, $5.4 billion closed through the end of the third quarter, and nearly another $11 billion has closed since, with the remaining $7 billion expected to close later this year and in the first half of next year. On the disposition front, we are under contract to sell an additional 18 million square foot outpatient medical portfolio for $7.2 billion, resulting in a $1.9 billion gain on sale.

We structured this investment to retain a $1.2 billion preferred equity stake, accompanied by a profits interest, giving us 25% of upside while protecting our downside through the buyer’s subordinated equity. We closed on the first $2 billion tranche of this transaction last week, with subsequent closings expected through next summer. Additionally, we will exit the OEM property management business with over 160 of our colleagues transitioning to Remedy Medical Properties, allowing them to continue their career growth. Following this transaction, our residual OEM portfolio will essentially consist of premium net leased assets to high-quality investment-grade tenants. The long-term absolute net nature of these leases requires minimal management intensity. Turning to acquisitions, we are pleased to announce the $1.2 billion acquisition of the HC-One portfolio in the UK.

Many of you will recall our courageous $540 million first mortgage investment in HC-One’s recapitalization at the height of COVID and Brexit uncertainty. That investment was structured with downside protection through a claim on HC-One’s real estate portfolio at a last pound basis of approximately $40,000 a bed, and upside participation through warrants and equity kickers. We have enjoyed a close working relationship with the company’s management and ownership and have supported the company’s growth through modest additional capital support. This investment has now delivered a profit of greater than £350 million over the last four-plus years, with an unlevered IRR of nearly 14% and a 1.6 times equity multiple. While the payoff of this high-yield loan is modestly dilutive near-term, the equity ownership of these assets adds significant duration to our returns.

By deploying significant value-add capital and leveraging Welltower Business System and the best practices from our broader UK business, we expect this transaction to generate an unlevered IRR in the low teens. Moving on to our $5.2 billion acquisition of Barchester, which spans three buckets. First, 111 assets under a highly aligned RIDIA 6.0 structure. These high-growth assets rank in the top quartile within the UK and have in-place occupancy in the high 70s due to 39 newly delivered assets. Second, 152 mature assets in a triple-net structure. These mature assets are 90% occupied, with strong coverage, 3.5% annual rent escalators, and the ability for Welltower to reset rent every five years to capture additional upside. Third, 21 assets that are currently being developed. In addition, through several other transactions, we are acquiring an additional nine assets under construction in the UK.

Given the significant non-purpose-built stock and negative net supply growth over the last 10 years in the UK, we are ecstatic about the significant growth opportunity embedded within this portfolio. While I have highlighted our larger transactions, our focus on granular activity remains unabated. The $14 billion of new investments announced today span more than 46,000 units across 700 plus communities across 50 different transactions. Our team spent the last few months walking every single one of these communities, conducting their diligence, and establishing business plans with our operating partners. 91% of this activity was sourced off-market. 16 of these transactions were in the UK, two in Canada, and the remaining 32 in the U.S. I expect that with our narrower focus and relentless pursuit of better outcomes, the transactions announced today will fundamentally enhance the long-term growth potential of our company’s earnings.

With yesterday’s announcements, we have added over 170 senior housing communities to our investment pipeline that are under development or are still in lease up. These communities will be a drag on near-term results, but as we detailed in our letter to our future shareholders, we will not hesitate to make capital allocation decisions, which are a drag today but have the potential to create significant value tomorrow. I’ll now turn the call over to Tim to walk through our financial results and updated earnings guidance.

John, Executive, Welltower: Thank you, Nikhil. My comments today will focus on our third quarter 2025 results, the performance of our triple-net investment segments, our capital activity, a balance sheet and liquidity update, and finally an update to our full year 2025 outlook. Welltower reported third quarter net income attributable to common stockholders of $0.41 per diluted share and normalized funds from operations of $1.34 per diluted share, representing 20.7% year-over-year growth. We also reported year-over-year total portfolio same-store NOI growth of 14.5%. Now turning to the performance of our triple-net properties in the quarter. As a reminder, our triple-net lease portfolio coverage stats are reported a quarter in arrears. These statistics reflect the trailing 12 months ending 6/30/2025. In our seniors housing triple-net portfolio, same-store NOI increased 3.1% year-over-year, and trailing 12-month EBITDA coverage increased to 1.21 times.

Next, same-store NOI in our long-term post-acute portfolio grew 2.7% year-over-year, and trailing 12-month EBITDA coverage was 2.02 times. Moving on to capital activity, we continue to capitalize our investment activity with predominantly equity, raising $2.9 billion of gross proceeds in the third quarter. Additionally, in August, we completed a follow-on issuance of $1 billion in senior unsecured notes across two tranches for a blended coupon of 4.875%. This capital, along with retained cash flow, allowed us to fund $1.7 billion in net investment activity and end the quarter with $7 billion of cash and restricted cash in the balance sheet, while driving net debt to adjusted EBITDA to 2.36 times, representing yet another record low leverage level for the company.

With our current capital position, near-term liquidity profile, and expected proceeds from asset sales and loan payoffs, we are fully funded for the entirety of our acquisition pipeline, including the $14 billion of new acquisition activity, which we announced last night. We expect run rate net debt to adjusted EBITDA to tick modestly higher by approximately one turn on a run rate basis for all of our announced transaction activity. Lastly, as I turn to our updated 2025 guidance, I want to remind you that we have not included any investment activity in our outlook beyond what has been closed or publicly announced to date. Last night, we updated our full year 2025 outlook for net income attributable to common stockholders of $0.82 to $0.88 per diluted share and normalized FFO of $5.24 to $5.30 per diluted share, or $5.27 at the midpoint.

There are two items I want to highlight in last night’s net income guidance that relate to fourth quarter activity and beyond. The first is our medical office portfolio sale, which, as Nikhil detailed earlier, is expected to have a total gain on sale of approximately $1.9 billion, $400 million of which is expected to be reflected in net income in the fourth quarter, with the remaining $1.5 billion expected in 2026. The second item relates to the 2035 10-year executive continuity and alignment program. We expect approximately $1.1 billion of upfront costs associated with the initiation of the plan to impact net income in the fourth quarter, which will be adjusted out of normalized FFO. In addition, the program will result in a recurring amortization expense stream that will flow through normalized earnings over the next decade, alongside the ongoing impact of the increased diluted share count.

Now turning to our normalized FFO guidance, last night’s increased range represents a $0.17 increase at the midpoint from our prior normalized FFO range. This increase is composed of a $0.05 increase from higher NOI in our seniors housing operating portfolio, $0.10 from accretive capital allocation activity, and a $0.02 increase from FX and income tax benefits. Underlying this FFO guidance is an estimate of total portfolio year-over-year same-store NOI growth of 13.2% to 14.5%, driven by subsegment growth of outpatient medical 2% to 3%, long-term post-acute 2% to 3%, seniors housing triple net 3.5% to 4.5%, and finally, seniors housing operating growth of 20.5% to 22%. This is driven by the following midpoints in their respective ranges: revenue growth of 9.6%, driven by increased expectations for occupancy growth of 390 basis points, and RevPor growth of 5.1%, and expense growth of 5.25%.

With that, I will hand the call back over to Shawn.

Shawn, CEO, Welltower: Thank you, Tim. Before we start Q&A, I want to highlight the most important announcements we made last night: the launch of Welltower 3.0, an operations and technology-first platform. This is the third iteration of our company after refounding our firm from a deal shop called Healthcare REIT. We took HCN down to its studs and built Welltower 1.0 with the goal of being a great capital allocator. We turned over half of the assets, the majority of the operators, and 95% of the people. We launched a data science platform that, in the words of a CIO from a leading private equity firm, has become synonymous with the category, much like Band-Aid or Kleenex. COVID came. With Charlie’s prodding, I realized we needed to recruit individuals from industries of high standards or the equivalent of short-haul trucking executives who addressed the challenges of the railroad industry decades ago.

The hiring of John Burkart from the multifamily industry and the subsequent hiring of hundreds of our colleagues who are focused on operations and asset management to delight customers and site-level employees marked the beginning of Welltower 2.0, a well-oiled capital allocation machine with high-performance compute power to sort through trillions of data points to buy one asset at a time. We brought in best-in-class operators under aligned contracts and provided them with an end-to-end asset management and technology platform while also building regional density. Things have been going on well in recent years, with performance which I would describe as being somewhat satisfactory. Yet again, we are disrupting our own firm from within, which we believe will create a leaping emergent effect culminating into Welltower 3.0, an operating company in a real estate wrapper.

This new era places operations and technology first, with a singular focus on delighting customers and prioritizing site-level employee satisfaction with complementary capital allocation actions to go deeper in our markets with a narrower focus. This phase starts with a complete retooling of our organization, not writing a manifesto. Many organizations hire management consultants, create pretty PowerPoint decks, announce new mission and vision statements, but ultimately change nothing about how they go about doing business. There is no place for consultants, silver-tongued bankers, or managerial layers at our shop. Only leaders who are willing to get their hands dirty by actually doing the work and building the business, laying one airtight brick at a time. We’re taking the best from our capital allocation side of our house, including Tim McHugh and Russ Simon to lead the next phase of our journey focused on operations, technology, and innovation.

Additionally, we are once again bringing in significant talent from industries with higher standards, which includes proven tech executives such as Jeff Stott, Logan Griselle, and Tucker Joseph to join the swagger to form our tech quad, which will serve at the core of Welltower 3.0’s growth engine. I’m convinced you will see a new wave of talent that will follow these leaders, similar to what we have witnessed in recent years on the capital allocation side of the house, which has become the envy of the real estate industry. This newly established tech quad will be key to reduce latency in a complex adaptive system like our business. As latency shrinks materially, the network effect will kick in high gear, creating a new paradigm of maximum growth and maximum gain that simply does not occur in an industry like ours, which changes at a glacial pace.

Lastly, today, I will describe a dramatic change which strikes at the heart of this company’s incentive structure. From my first day in this business, I’ve been bothered by the misalignment of the incentives between our company, the owner of our assets, and our operating partners, the manager of the community. I wish I could have said better things about the alignment between management and forever owners of a company like ours. Hence, you have seen a decade-long effort from us to fix and align external and internal incentives. As Charlie would constantly tell us, "Show me the incentives, and I’ll show you the outcome." Following years of deep structural changes in this area, I’m delighted to inform you that my utopian idea of everyone swimming or sinking together is finally taking shape, an ecosystem of internal and external participants where everybody is fully aligned and everybody is all in.

I would urge you to read our press release from last night carefully to fully grasp the changes that are taking place in three distinct steps to achieve the same goal of alignment and ownership: one, elimination of compensation for Welltower management and making them owners through performance-oriented Welltower stock; two, introduction of RIDIA 6.0 construct, where the operator wealth creation is now irrevocably tied to Welltower stock; and three, a $10 million annual grant for site-level employees for the 10 best-performing senior housing communities also in Welltower stock. All of them capture the five key tenets of the incentive design that we have previously laid out to you: simple, significant, non-gamable, earned as a team, and duration matched with the immediacy of a role’s impact: 10 years to forever for Welltower management, five to seven years for operating partners, and one year for site-level employees.

I would underscore that my colleagues are betting their prime years of their career on this idea, and so are many of my operating partners: Dan Hughes at StoryPoint, Matthew Duguay at Cogir, and Courtney Siegel at Oakmont. What we are embarking on embodies a unity of purpose, shared sacrifice, and perhaps some shared delusion, woven in a seamless web of deserved trust and mirrored reciprocation by a group of random employee people from different walks of life. They share two rare genetic qualities: a fiduciary gene representing their innate desire to put the interests of our owners ahead of their own, and a delayed gratification gene, which refers to their instinctive bias towards sacrificing an immediate reward for a much larger gain tomorrow.

While a long-winded person like me, with a long attention span, is perfectly capable of spending hours detailing every part of this plan, let’s focus on my favorite: the Welltower grant for site-level employees to honor the memory of Charlie Munger. Let’s start by inverting. Our ultimate goal is to delight customers and their family. Of course, they want a digital experience, the ability to find us easily in a crowded and rapidly changing digital world, and so on and so forth. More than anything, residents want a consistent and happy place who cares for them. Imagine a world where our site-level employees work in beautiful and inviting communities equipped with the most advanced and easy-to-use digital tools, freeing them from paperwork and administrative burdens. Not to mention meaningful career advancement opportunities in sister communities with the only regionally dense portfolio of scale in this business.

They get paid more than they otherwise would in a competitive community, sometimes in a significant and life-changing way due to the Welltower grant. Why would they leave? Cost to experience, over many decades, suggests perhaps they won’t. Instead, they will continue to delight our customers. Our reputation of happy customers will further attract even more customers who are willing to pay for that level of service in an industry where usually half of the phone calls go unanswered. That is network effect, pure and simple. The fruits of this network effect will silently compound over many years and decades to come. Charlie often said, "Take a simple idea and take it seriously." He would be happy to know today that we have taken the simple idea of Berkshire-style stewardship, along with Costco-style customer obsession, very, very seriously and betting our life on it.

With that, I’ll open the call up for questions.

Call Moderator: All right. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Once again, star one. In the interest of time, we ask that you please limit yourself to one primary question. If you have additional questions, you may rejoin the queue. We will pause just a moment to compile the Q&A roster. All right. Looks like our first question today comes from the line of Vikram Malhotra with Mizuho. Vikram, please go ahead.

Morning. Thanks so much, and congrats for the strong results to all the transactions. Shawn, you’ve outlined a lot of changes: portfolio, personnel comp plan, et cetera. I’m just trying to understand, like you talked about Welltower 3.0, but things have been going really well for Welltower. The industry is, you’ve got leading results, stocks 2X, 3X, depending on when you measure it. I’m just trying to get a sense of, like ultimately, you know, two things. One, in general, is there a goal? Is there something you’re trying to prove? Kind of how should we think about the growth engine from a cash flow standpoint from here on?

Shawn, CEO, Welltower: Thank you, Vikram. We’re not trying to prove anything. I fundamentally believe, I personally fundamentally believe, that we’re here to contribute, but we have really nothing to prove. Fundamentally, what we are trying to do is to take away, if you just think about the agency problem from the system across the board, and try to align people to be owners, right? Align interests with our owners across the way through the whole ecosystem. That’s all we are trying to do. Bringing sort of the second question you asked, which is a very important one, which is, you know, how do we elongate the growth curve well into the future? Making real money is all about duration. Duration of growth is all that it matters. We’re too focused on near-term. We’re too short-term in this world.

If you think about, think through how real value creation works, it’s all about duration. A part of your question was, why if things are going well, why are we again disrupting it? Think about things that are going very well for Netflix when they’re killing it by sending people DVDs. Where would they be if that’s what they’re still doing today, right? If you don’t disrupt your organization from within, somebody else will do it for you. That’s what we are trying to do, thinking through what the future of this business will look like. We have taken it on ourselves to transform this business digitally to get to a better outcome for our customers and site-level employees. That’s all we are doing. We hope that will generate very significant growth and compounding of cash flow over a period of time for our owners.

Frankly speaking, that’s the journey we’re in.

Call Moderator: All right. Thank you, Vikram. My apologies for the delay. I had a network hiccup there. Our next question comes from the line of Jonathan Hughes with Raymond James. Jonathan, please go ahead.

Hi. Good morning. Thanks for the prepared remarks and commentary, and congrats on all the announcements. A lot to talk about, but hoping you can share more details. On this new comp plan, was that presented by the board as a team package, as an all-or-nothing proposal? Did it evolve into that? The three operators that are now similarly changing their incentive fee to take units, is that structure being offered to other partners as part of RIDIA 6.0 to further align them with shareholders, now management, and extend the duration of hopeful outperformance? Thank you.

Shawn, CEO, Welltower: OK. Let me answer the first question, and then we’ll go to your second question. Our board has spent an enormous amount of time with leading comp consultants, several law firms, and many consultants and advisors for months at this point and spent hundreds and hundreds of hours to come up with what they consider is the right plan, which you saw. I have really nothing to add to that other than the fact that it aligns with the five tenets of the incentive design that we have always talked about: simple, significant, earned as a team, duration matched, and non-gamable. That’s really what it is. As I said, the first three operators that we mentioned, they’re the founding class. They don’t necessarily have to be the only ones, right? We’re trying to simply align the interests of our operating partners with our owners.

Obviously, as you know, that regional density is very important to us. If there will be opportunities to bring in other operating partners into the fold, we’ll consider it. At this point in time, we only have the three partners who are the founding class of this new program, and we’ll see where the future gets us.

Call Moderator: All right. Thank you, Jonathan. Our next question comes from the line of John Kilichowski with Wells Fargo. John, please go ahead.

Thank you. Good morning. Shankh, in the past, you’ve talked about the various sources of capital available to the company. In the case of the acquisitions you announced yesterday, why not issue equity to fund some of those investments instead of the asset sales?

Shawn, CEO, Welltower: Good. Very, very good question. If you go to John, the first call I did as CEO, I laid out my belief on how capital allocation works. Most people think of capital allocation as a function of where capital goes or what you buy, in a very simplistic term. It is actually so much more intricate than that. You have to think about your source of capital, and you have to think about the relative cost of that capital. As you can think about what we are doing, if you fix the side, which is the buy, and just purely consider the sell, you are right, correct? We could have done it through equity. Frankly speaking, the spot cost of that equity is lower than the spot cost of that asset sales, which is like $9 billion of asset sales that Nikhil talked about.

It would have generated a higher near-term accretion, and it would have created a disaster for the long-term value creation of this company. In other words, if you think about our assessment of what we are giving up, you have to think about these things from an opportunity cost standpoint. What we are giving up, by definition, that we are not doing it through equity tells you that our view, which is a view you do not have to agree with, our view of our cost of equity is higher than the cost of the capital of the asset sales. You can come to the decision. Obviously, why is that? We have a higher view of growth and the duration of growth of that equity. It is an incredibly important question.

I have seen so many companies and their management get sucked into near-term FFO accretion math and dilute their shareholders without thinking through how long-term value creation works. Thank you for the question.

Call Moderator: Thanks, John. Our next question comes from the line of Michael Carroll with RBC Capital Markets. Michael, please go ahead.

Yep. Thanks. Shankh, I wanted to just circle up on the recent care home deals, the Barchester and HC-One. I mean, how do these portfolios compare to Welltower’s current portfolio in terms of asset quality and maybe the private pay %? Does that impact the growth outlook of those assets at all, or is it very similar to the current portfolio? Yeah, on an accumulated basis, it’s very, very similar. It’s similar quality assets. On a blended basis, similar metrics. Really no change there.

Thank you very much for that question. Our next question comes from the line of Farrell Granitz with Bank of America. Farrell, please go ahead.

Good morning, and thank you for taking my question. I know in the opening remarks you outlined a lot of the aspects of the MOB disposition, but I was wondering if you could discuss your decision why for the structure.

Shawn, CEO, Welltower: Yeah. Let me repeat, Farrell, what I said. If you just think about it, we are making an opportunity cost decision of two things. First, refocusing, and we entirely have a singular focus of management’s time and attention into this digital transformation of an industry called senior living. That’s what we are focusing on. That’s sort of one aspect of a strategic move that’s behind this. The second, obviously, is the cost of capital conversation we just had. Now remember, at the end of the day, we have no idea what the future looks like. We don’t have a crystal ball. It is entirely possible that the value of these assets tomorrow is significantly higher, right?

We obviously have a view that the next 10 years in a de-globalized world, it is going to look, obviously relative to the last 10 years when we had zero inflation, zero rates, it’s going to be different. We have no idea whether we’re right or not. The structure reflects that if values go up significantly, right, or value goes up at all, our shareholders will still reap the benefit of that value accretion that we are leaving behind today. That’s what the whole structure is about, is how do we sort of do what we are trying to do and focus that capital into high growth opportunities at the same time? We think very highly of Remedy as an operator. All our colleagues are going there. We think they will continue to create a lot of value.

It is entirely possible that cap rates come down, interest rates come down. We’re totally wrong about our macro views. If all of those things happen, you have to sort of think about, OK, did I sell these assets in the wrong time in the cycle, right? Just sort of think about an opportunity cost from a strategic standpoint, also an opportunity cost from a capital standpoint. That’s how we came to this conclusion.

Call Moderator: All right. Thanks for the question, Farrell. Our next question comes from the line of Nick Yulico with Scotiabank. Nick, please go ahead.

Thanks. Yeah, just following back up on the outpatient medical sale, just a few questions there. I mean, you guys in the sub give that held for sale NOI. I just wanted to make sure that that’s sort of apples to apples to apply that to the sale of the $7.2 billion. That looks like it’s at a 6.25% cap rate. I just want to see if that’s right. Also, on the preferred, if you could just talk about what the yield is you’re getting on the preferred, and if you guys are offering any seller financing as part of the transaction. Thanks. Sure. I’ll start kind of backwards. On the preferred, the coupon is 8%. It’s $1.2 billion, and that’s really all we’re leaving behind. That’s why the $7.2 billion transaction results in net proceeds of $6 billion. No seller financing. This will be financed through bank financing.

To answer your question about the yield, that 6.25% is in the right ballpark. That includes some property management and profitability as well. The real estate yield is a little bit lower. Obviously, if you think about the net yield, once you factor in the reinvestment of the pref, that’s closer to 6%.

Thanks, Nick. Our next question comes from the line of Omotayo Okusanya. Omotayo, please go ahead.

Yes. Good morning, Shawn Masoumi. More high-level question for you guys. When your numerous press releases hit last night, I couldn’t help but go back to Shankh’s annual letter, where you really kind of doubled down on this idea that you can actually grow faster at a bigger size and that because of various network effects you would get. You also kind of talked a lot about doubling down on data design because of just kind of improved latency and how it would just kind of help you do business with better operational efficiency. Could you talk a little bit about, just to get, Welltower 3.0 and everything that’s going on, whether it’s RIDIA 6.0 or this alignment with management confrontation, how you kind of just see all that fitting together? Exactly what does that set you up for going forward?

Shawn, CEO, Welltower: Yeah. Very, very good question. To think about, let’s take it simplistically, right? Let’s talk about, obviously, we laid out in my annual letter how sort of a growth curve for an organization works, right? We sort of talked about, first, you get a team of people together in close proximity, which is obviously I talked about how that works according to Newton’s law of gravitation. You got it. Obviously, that force is proportional to the inverse of proportion to the square of the distance. It’s a very important factor that you bring this team as tight and close as possible. Why? Because a tight team is where you have very, very little latency. Let’s think about that a little bit more about how that reflects, right? You think about, OK, let’s just take easy examples, dumb examples, right? This is a business.

John talked a lot about, if you call a community, there is a pretty good chance that 50% of the chance that you will not hear back. If you do hear back, there’s a pretty good chance that you will hear back in two business days. Now think about where Welltower Business System has been deployed. Our customers, prospective customers, are hearing back in single-digit minutes, which is still not acceptable to me. At least they’re hearing back in single-digit minutes instead of two days. That’s significantly reducing latency. Think about, historically, this business room turned happened in 37 days. Now it’s happening in 11. Still, significantly higher than what John did or Jerry did, which was three to five days, but we’re getting there. That’s latency. That’s you are taking latency out of the system, right? You think about, we just talked about, right?

In our company, I’ll give you a third corporate-level example. In our company, there is no management layer. It’s not like things flow through layers from A to B to C to D, and finally, it comes to the executive, and we make decisions. That’s not how this organization works. We actually do the work with our bare hands, sitting down, and making decisions on the spot, right? You think about that’s taking latency out of the system, and you make decisions fast, right? That’s how you get these kind of results. When latency comes down in a system, that’s when network effect kicks into gear, high gear. You get into a world of maximum gain, maximum growth in otherwise what is a glacially moving pace of doing business. That’s what we’re trying to do.

We have done that, as I have talked about in my annual letter, on the transaction side, deal side of the house, right? Think about how many people have. Think about the comment Nikhil made. We have bought 700 communities. I’m going to repeat what he said. We have walked every single one of these communities. That is not given. How do we do that, right? How do we take the latency out of the system is a lot of technology initiative, a lot of decades of effort. That’s kind of what we do. If you just think about it, the hiring of Jeff and Tucker and Logan, and what is the next step of that is to do that in the operations. I expect someday that no calls will go unanswered. Every call, if it goes, it will be returned immediately. That will be taking latency to zero.

Those days of operations are coming.

Call Moderator: All right. Thank you for the question, Omotheyu. Our next question comes from the line of Michael Goldsmith with UBS. Michael, please go ahead.

Good morning. Thanks a lot for taking my question. Lots of exciting news today. I’ll ask something maybe more holistic in that. How do you go about managing the execution risk of everything announced today, including acquisitions, dispositions, new leaders? Where are you focused from an operational perspective to ensure these changes are implemented successfully? What could go wrong here?

Shawn, CEO, Welltower: Oh, that’s a very, very broad question. The fact of the matter is, how do we manage risk on the deal side of the house? We have a very, very large team, which obviously has more experience in doing transactions than pretty much any team in this business, right? That doesn’t require an asterisk. It does. You think about it, that’s obviously that happens. That team has done, even during COVID, incredible execution. When you couldn’t fly, you couldn’t do all of those things. That’s sort of it. That team is Tim’s and Nikhil’s team, our deal tax, deal accounting, and deal law, sort of on the legal side. There’s a very, very strong team combined, whether it’s U.S., Canada, and UK.

On the operations side, reducing risk in operations is a purely function of what we talked about, building out Welltower Business System and trying to put that into high gear. We are constantly evolving that, right? We’re bringing in executives from industries of higher standards. We obviously talked about a few. That process is evolving. Our view of what the opportunity is, we’re getting more and more and more excited about it every day. We’re bringing people who are looking at ourselves and say, what kind of skills we’re missing? We’re bringing in people to complement that and take this thing forward. That’s really what it is. That’s what we are doing. Remember, business is all about people. Spreadsheets don’t do business with spreadsheets. Legal documents don’t do business with legal documents. It is entirely a people-driven business. Most businesses, I believe, are a people-driven business.

For us, it is all about bringing in and attracting the best talent and retaining the best talent. That’s all we are trying to do. That’s your ultimate risk mitigation through building a real, vibrant culture where everybody is all in and they behave like owners.

Call Moderator: All right. Thank you for the question, Michael. Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Ronald, please go ahead.

Great. Quick two-parter from me. On the incentive structure for Welltower 3.0, the presentation mentioned the five named executive officers. Far down in the release, it also notes that management is working with the board on long-term incentive and retention for two existing and five newly promoted EVPs. My first question is, was it possible for all 12 to go all in on the incentive structure? My quick follow-up is just on competition over the next 10 years, whether it’s talent or technology. As more capital comes to the space, how do you think about protecting Welltower’s moat over that time period? Thanks.

Shawn, CEO, Welltower: Yeah. Thank you, Ron. Those two questions are actually fairly correlated. Let’s start with your first question. As we said, we are working with our board to come up with a strategy to retain our colleagues who are actually doing all the work. We absolutely are doing all these things. Hopefully, you guys are pleased with our execution. That’s not because of me or Tim or Nikhil. That’s our group of team. This is a team game. We’re all putting a tremendous amount of effort 24/7. This has been 10 years in a row. This has been obviously for us that retaining that group of people that you mentioned is extremely important. How we go about it, it’s a broad process.

As I mentioned in the previous question, our board has gone through an enormous amount of effort with their lawyers and bankers and comp consultants to come up with a process that has been satisfactory for us. We’ll hope that that same process will unfold and we’ll get to the satisfactory answer for the rest of our colleagues here that you mentioned. As far as I’m concerned, as you know, I only believe in one way of living. Go all in and do it in that manner, right? Do very few things. The only thing I like to do is to go absolute all in. That will be my hope. Think about it, the second point of your question, as more capital comes in, there’s a structural element to that question. As you think about it, a lot of capital is structured in GP/LP style.

Frankly speaking, LPs don’t pay GP enough to spend the hundreds of millions of dollars that we spend on technology to get there, because there’s no way to get that money back, frankly speaking. We shall see how that happens. It needs to be done by Paramount Capital. From a Paramount Capital standpoint, you need a mindset. It’s not a question of money. You just need a mindset to say, how do I transform a business? How do I invest today where I may or may not see the benefits of which for a long time to come? That’s the question of long attention span. You guys don’t remember, but when we went after this, sort of the data science approach, where in those days, it was not called AI or something. We called it machine learning, supervised learning, unsupervised learning. We got nothing out of it for three years.

We kept investing, right? Kept going around and seeing if we can get there. Ultimately, it’s exciting to talk about after five years, we got something out of it and what it has done to today for latency in our farm. It requires years of investment. That sort of evolves the needs of the organization, the talent of the organization. We are constantly trying to move the ball forward. We’ll welcome other people to do, most people, so that we want to see what the art of the possible looks like. If other people come up with good stuff, we have no problem to copy. Unfortunately, in this world, most people don’t have long attention span. Instant gratification is how most of the companies work. As I said, GP/LP structure is actually not very amenable to long-term innovations. It needs to come from forever capital.

Call Moderator: All right. Thanks for the question, Ronald. Our next question comes from the line of Seth Berge with Citi. Seth, please go ahead.

Thanks. It’s Nick. Shawn, just one question, obviously, on the strategy change. Curious if you could touch on the balance between going more all in on seniors housing versus the earnings volatility as Welltower becomes less diversified going forward.

Shawn, CEO, Welltower: Very good question. Nick, I would refer you to sort of understand how we think about this topic, starting from our foundational document, which is called the Letter to Future Shareholders. You will see that there’s a whole section I wrote about this topic of volatility versus risk. We are not concerned about volatility. We’re concerned about risk. Risk is the probability of losing Paramount Capital. For your first question, if you just think about how we behave, let’s take an example of the last five years. What are the two periods of volatility? One was COVID, right? And sort of what happened subsequent to that COVID, whether it’s labor or another inflation issue, all. What did we do? We ran towards it, not ran from it. We like volatility. What happened six months ago? Liberation Day, exact same thing.

If you think about where we built our organization, we built through the bouts of volatility. We love volatility. On the other hand, risk mitigation, that’s why you are seeing we’re running a balance sheet impossibly low leveraged, right? Risk management is not just you have to think through. You can do it from the asset side, the asset mix, or you can do it through the liability side. That’s something I would like you to sort of think about, some kind of belts and suspenders we have built into it. Second is operational. Think about what we are doing in this business from an operational standpoint to meaningfully reduce risk to get into to understand how this business works, right? Obviously, it is a business where it’s a complex adaptive system. Different people got obviously results are almost always on the tails.

I wrote about that for many years in my annual letters. We know how to manage that tail risk. That’s what we are doing. Everything we are doing to build out our operating systems, Welltower Business System, is to manage that risk. We like volatility. We’re trying to manage risk. That comes in both forms. One is to manage the risk through balance sheet and managing operational risk through Welltower Business System, which is where we’re putting all the efforts. Hopefully, that answered your question.

Call Moderator: All right. Thank you for the question, Seth. Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Juan, please go ahead.

Hi. Good morning. Thanks for the time. Just on the investment side, curious on your thoughts on both single-family and manufactured housing and opportunities or lack thereof in those two food groups relative to the seniors and active adults.

Shawn, CEO, Welltower: Very, very good question. Finally, somebody gave me an easy question to answer. I remain within my circle of competence. I don’t comment on things that I don’t know anything about. That’s one of our key tenets of our business that we are very much focused on, you know, what we know and our circle of competence. You know, what do I know about manufactured housing? Nothing. We’ll remain within our circle of competence, keep doing what we do.

Call Moderator: Great. Thanks, Juan. Our next question comes from the line of Rich Anderson with Cantor Fitzgerald. Richard, please go ahead.

Thanks. Good morning, everyone. The investments in hard assets are real interesting and headline-grabbing and all that. I think you would agree the most important investments you’re making are, I don’t even know, I don’t have to guess, in people, but also in operating systems and technology. I want you to reconcile something for me and how you’re approaching this. Your incremental tech investment is requiring a requisite return on that investment for it to be a reasonable investment. For all the customer experience that you’re talking about and happy customers, happy associates, and all that sort of stuff, do you have concern about fatigue at the rent level? In other words, everyone’s happy, but then they see a 10%, 12% increase in their rent every year.

At what point are you kind of watching it to make sure it’s not happening and to maybe have to sort of scale back some of these internal investments that are really what are going to sustain you for the next 5, 10 years? I’m just curious how you approach that line of sight. Thanks.

Shawn, CEO, Welltower: Yeah. Very, very good question, Rich. If you just think about the two questions inside your question, first is the technology investments, whether it’s technology itself or it’s people around technology, we almost have an unlimited appetite to do it. The way we see that returns, it’s a significantly higher return than real estate returns. You see that returns come through a real estate P&L. I hope you are seeing that. Look at your performance relative to the industry performance or relative to anybody, and you will see that. These performances are not coming through because we have easy comps. We have very, very hard comps. Despite that, these results are coming through. You are getting back that ROI, which is significantly higher than, as I said, real estate ROI through the P&L. That’s sort of the first question.

Second question is a nuanced question, much more nuanced question, which is if you think about, I’ve said this before, you know we like to think about how this business works. Obviously, if you have no rooms to sell, by nature of demand supply, rents go up. However, we have always kept rents sort of in high single-digit level. We think that’s sustainable in that sense. We have no problem leaving money on the table today for tomorrow, right? One of the things that in senior living business, if you think about sort of how long people stay in a community on average of, say, 20 months, you only get one of those rent increases, right? From your perspective, I’m thinking people are getting the first 10, 12 is not something we send people. Regardless, if you’re thinking, OK, what if somebody gets 10% rent increase for five years?

That’s not really how it works, right? An average duration is, call it, 18 to 24 months. You usually get one rent increase. Put all of those things together, just know philosophically if the question is a philosophical question. I’ve said this, that delayed gratification gene is part of this organization’s ethos. We’ll always leave money on the table today for a greater gain tomorrow. That’s just how this place works. We’re not in a hurry. We want the duration of that growth. Duration of the growth comes from happy customers and happy employees. That’s what we’re focused on.

Call Moderator: Great. Thanks, Richard. Our next question comes from the line of Jim Kammert with Evercore. Jim, please go ahead.

Good morning. Thank you. Apologies. A bit of a pedestrian question, but maybe for Tim. How was the $1.1 billion non-cash charge for the comp plan calculated? Just trying to understand some of the accounting mechanics here, please. Yeah, Jim. The plan is, as I read in our 10-Q, essentially broken up into two pieces. There’s an upfront expense piece of it, which is the $1.1 billion that you’re alluding to. There’s another $200 million that will be amortized over the following 10 years of the plan.

OK. Thank you very much, Jim. Our next question comes from the line of Wes Goliday with Baird. Wes, please go ahead.

Hey, good morning, everyone. Do you see similar opportunities for the Welltower Business System in the UK as you do in the U.S.? Is it pretty much plug and play?

Shawn, CEO, Welltower: It is nothing but plug and play. Yes, we do enormous opportunity. Just think about, generally speaking, there’s a tremendous amount of opportunity overall in this business from an operations and operations sophistication point. Active,

Call Moderator: That’s an exciting opportunity that exists in the UK as well, very much so. Our operating partners are welcoming us to bring in new ideas, new technology, new processes. Business systems is about business first, systems later. It’s about process and first, technology later. Still, all of those things, we’re enormously excited about that opportunity in the UK. Nikhil, you want to add anything to that or John?

Matt McQueen, Chief Legal Officer and General Counsel, Welltower: No, I think that covers it. It’s really the same opportunities.

Call Moderator: One of the things I’ve just mentioned, you know, from a UK standpoint, as you have seen hopefully in the quote on our press release, the UK government is meaningfully welcoming us to bring that technology, that operational sophistication to the care sector. That’s also a very much of a strong angle that we have been working with the government.

Shawn, CEO, Welltower: Great, thanks for the question, Wes. Our next question comes from the line of John Kilichowski with Green Street. John, please go ahead.

John, Executive, Welltower: Hey, thanks for the time. Can you help frame how NOI is performing on the 2024 vintage of seniors housing acquisitions versus expectations at underwriting?

Call Moderator: John, generally speaking, we have, let’s just talk about where it’s not performed. We’ve, obviously, very big in Holiday, right? Other than Holiday, I would say most, not just as an individual, but also as an aggregate, acquisitions have performed in line to higher than what we underwrote. Nikhil, would you say that?

Matt McQueen, Chief Legal Officer and General Counsel, Welltower: Yeah, that’s absolutely correct.

Shawn, CEO, Welltower: All right, thank you, John. Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Austin, please go ahead.

John, Executive, Welltower: Great, thanks. I’m just curious what % of the seniors housing operating portfolio NOI the three operators under RIDIA 6.0 represent, and I guess as you continue to grow, how do you keep a large % of the seniors housing operating portfolio NOI under that new alignment? I’m just curious if there are hurdles to adding other operators to the structure in the near term?

Call Moderator: Yeah, I don’t really have that information.

Matt McQueen, Chief Legal Officer and General Counsel, Welltower: Yeah, it should be in the SOP. I don’t have the number off the top of my head.

Shawn, CEO, Welltower: 20%.

Call Moderator: That’s that. Austin, that’s the answer, 20%. Remember, as I’ve answered in the previous question, this doesn’t have to be, that was the founding class. This doesn’t have to be only those three operating partners. You know what we are trying to do is to run a regional density of a business, bring in our operators, operating partners to focus on what they do. This is a business that has unremovable complexity at the customer level, which our operating partners do an exceptional job of providing their care and handling that complexity. On the other hand, we are only focused on where scalability creates a strategic advantage, right? That’s sort of how the responsibilities are being divided. We’re both, as I know, as I mentioned several times, our interests are aligned and we’re all trying to get to the same place, right?

If that’s the case, we don’t see a lot of issues to get there. As operational issues come up, we’re obviously solving it together. We’ll see where we get to.

Shawn, CEO, Welltower: All right, thank you, Austin. Our final question today comes from the line of Mike Mueller with JPMorgan. Mike, please go ahead.

Nikhil, Executive, Welltower: Yeah, hi. Just a quick one on the announced investments. You’ve talked about IRRs, but can you just give a sense as to the overall initial blended yield on the $14 billion and maybe parameters for how wide the range was between the different components?

Matt McQueen, Chief Legal Officer and General Counsel, Welltower: Yeah, Mike, you know, we never really disclose yields until the transactions close, and then it shows up in the SOP. In general, the activity is not that dissimilar to our activity in the last couple of years.

Nikhil, Executive, Welltower: Okay, thank you.

Shawn, CEO, Welltower: All right, thank you, Mike, and thank you all for your questions today. Ladies and gentlemen, this does conclude today’s call. Again, thanks for joining in. You may now disconnect. Have a great day everyone.

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