With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

World's Most Admired Companies

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

This year's Fortune 500 marks the 66th running of the list.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Get insights into Welltower including business profile, stock information, news, and rankings from Fortune.

Welltower (WELL): Company Profile, Stock Price, News, Rankings

legacy

Welltower

welltower

Thank you for standing by. My name is Kaylyn. I will be your conference operator today. At this time, I would like to welcome everyone to the Welltower First Quarter twenty twenty five 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 call over to Matt McQueen, Chief Legal Officer and General Counsel. You may begin.

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 obtained. 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 Sean for his remarks.

Thank you, Matt, and good morning, everyone. I'll review business trends and our capital allocation priorities, and the team will follow the usual cadence. I'm pleased to report that we began the year on a positive note, delivering approximately 19% growth in FFO per share, driven by better than expected results from our seniors housing operating portfolio and significant acquisition activity. These results and our refreshed outlook for the remainder of the year have enabled us to raise the midpoint of our full year FFO guidance by $0.10 per share to $4.97 Before getting into some of the details, I first want to mention that our achievements this quarter extend well beyond operational execution and attractive capital deployment. Our years of unrelenting effort culminated into an announcement of several major achievements, which I believe will allow us to both augment our growth and extend its duration even further into the future.

These achievements include: one, the launch of our private fund management business two, significant advancement in the Welltower business system, our proprietary end to end operating platform three, solidifying our leadership through several key promotions four, our successful rollout of a corporate rebranding that reflects WorldTower's transformation from a healthcare real estate deal shop to a data science and technology driven operating company in a real estate wrapper. And finally, and most recently, an upgrade to a credit rating by both S and P and Moody's to A minus and A three respectively. I'm humbled by this unwavering dedication of our team in achieving these major milestones. Turning to fundamentals. Seniors Housing operating business remains strong.

There is no diminution of the momentum, which we carried into the year as reflected by our tenth consecutive quarter in which same store net operating income growth has exceeded 20%. From an occupancy perspective, following a period of exceptional results in 2024, we reported 400 basis points of year over year growth in Q1, the highest level of growth we have witnessed in any quarter outside post COVID recovery. Perhaps even more impressive is that despite seasonal headwinds that we typically encounter early in the year, the portfolio's sequential average occupancy growth of 60 basis points was the strongest we have reported in the first quarter of any year in our recorded history. Please look at our Slide six of our business update to reflect on what kind of seasonal outlier Q1 was. The business also maintained strong pricing power with growth in RevPAR or unit revenue of nearly 6%, with 90% occupancy cohort experiencing seven plus percent growth.

Excluding the impact of leap year, RevPAR growth was still strong at 5.1% and export or unit expense would have been 1.3% and same store revenue growth of 9.9. With the spread between RevPAR and export remaining at the historically wide level, we achieved another period of outsized margin expansion of nearly 300 basis points year over year with a significant runway of further growth, which John will touch on shortly. As we look ahead, the demand supply backdrop for senior living sector continues to strengthen, setting us up for a multiyear period of attractive growth. And we continue to augment that growth by taking market share with our best in class operating partners and bolt on business system execution. Nonetheless, we're acutely aware of the rise in macroeconomic uncertainty, particularly as we approach the summer leasing season.

We're encouraged by the strong trends we have observed thus far in the year, but also need to see what market gives us during the all important summer leasing season. The need based private pay nature of our product provides optimism around our ability to outperform not only other forms of real estate, but also major asset classes. However, as you know, we have no dilution of certainty. Shifting to transaction environment. As we have discussed in recent quarters, the opportunity set for compelling investments has grown meaningfully, and our recent activity clearly reflects that momentum.

In mid February, we announced $2,000,000,000 of pro rata acquisitions. In March, we announced the CAD 4,600,000,000.0 acquisition of Amica Senior Living. Today, we're pleased to announce another $1,000,000,000 of additional acquisition, bringing our total pro rata acquisition activity to roughly CAD 6,200,000,000.0 for the year. To put this into perspective, we have closed $6,000,000,000 of investments in all of 2024. As we reached the April, we have already invested more of our precious capital this year than in any previous years in the company's history.

However, as you know, our focus is not volume of investment, but the value they deliver. Transactions that we completed this quarter were secured at significant discount to replacement cost and are expected to meaningfully enhance our growth in coming years. This includes 38 community AMECA portfolio, the highest quality senior housing portfolio in North America. This trophy portfolio of 38 communities is located in highly affluent neighborhoods of Toronto, Vancouver and Victoria with an exceptional outlook for long term growth. Nikhil will provide more details, but we are thrilled to form a long term partnership with Robert, Jens and their team who share our vision of delivering a killer value proposition for residents and a dynamic environment for site level employees to grow and thrive.

If you want to look at another example of what great management does to thriving communities, please look at another Canadian example. In fourth quarter of twenty twenty three, we bought the Jazz portfolio for CAD885 million. While the portfolio was highly occupied at the time of acquisition, in last eighteen months, Matthew, Frederic and the team has taken the portfolio to 97% occupancy and 47% margin, well exceeding our high expectations. Another great example of similar win win success story is taking place in The U. S, our partnership with Timber Cannon and Legend.

Through our idea conversions, acquisitions and transition, we have collaboratively created a much bigger pie to share in together by expanding the portfolio to 53 communities. Legend has since grown the legacy portfolio cash flow to nearly 2.5x and also received non linear benefit as greater regional density drives higher management and incentive fees, higher real estate values and improved employee retention across all Legend communities. Before turning it over to John, I wanted to quickly touch base on our balance sheet. As I mentioned earlier, our efforts in recent years to reduce leverage and bolster our liquidity profile was recognized by S and P and Moody's through an upgrade of our credit rating. And during the quarter, our net debt to adjusted EBITDA further declined to just 3.3 times, another record low for the company as a result of prudent funding of our acquisition activity and strong cash flow growth.

Additionally, with nearly $9,000,000,000 of balance sheet liquidity, we are not only in position to endure any further capital market volatility, but also to deploy capital as opportunities arise. All in all, we're pleased with our execution so far in the year, but we have a long and busy year in front of us. With that, I'll pass it over to John. John?

Thank you, and good morning, everyone. As Shankh mentioned, the momentum that continued to build through the fourth quarter of twenty twenty four has carried into the early part of this year. We reported total portfolio same store NOI growth of 12.9 driven by another quarter of solid senior housing operating portfolio growth of 21.7%. I'll start with the outpatient medical segment, which remained steady posting 2.7% year over year same store NOI growth. Same store occupancy trended higher on both the year over year and sequential basis coming in at 94.5%, while tenant retention also remains healthy at over 94%.

Now shifting to the senior housing operating portfolio. We continue to be pleased with our performance with Q1 marking the tenth consecutive quarter in which year over year same store NOI growth exceeded 20%. This incredible feat isn't just a function of the attractive demand supply backdrop for senior housing however. Welltower's alpha continues to be driven more so by our best in class operating partners and deployment of the Welltower business system, our proprietary end to end operating platform and our focus on deepening regional density across the portfolio. These initiatives continue to bear significant fruit.

During the quarter, year over year same store revenue growth of 9.6% was clearly the highlight driven by remarkable 400 basis points of occupancy growth and strong RevPOR growth of nearly 6%. Revenue growth was generally consistent across all three of our regions led by The U. S. At 9.8% followed by The UK at 9.3% and Canada at 8.3 Importantly, we also reported nearly 300 basis points of year over year margin expansion during the quarter as revenue continues to solidly outpace unit expense growth. And while NOI margins remain below pre COVID levels, the inherent operating leverage in our business combined with widening of our moat through Welltower Business System position us well for substantial margin expansion well into the future.

Although I tend to keep quiet about various Welltower Business System initiatives for proprietary reasons, I have commented on the technology platform, which is foundational to the customer and employee experience as well as driving alpha. These efforts have continued and we're on pace with our 2025 rollout plans. Currently, multiple operators have some portion of their assets on our technology platform and we continue to add assets monthly collaboratively working with our operating partners to address pain points and drive efficiencies in the business. While it's early in the peak leasing season is ahead of us, we're pleased with our results thus far. The need based and private pay nature of the business has clearly proven its resilience, but we'll take nothing for granted and we'll continue to operate with the same level of dogged determination and vigilance across all aspects of operations with a focus on providing a delightful customer experience and driving site level employee satisfaction higher.

I'd like to take a moment to commend both our internal Welltower team and our world class operating partners for their efforts in generating our industry leading results. We remain relentlessly focused on operational excellence as we strive to deliver an unmatched service offering for residents and their families while making our communities the most desirable places to work in the industry. I'll now turn the call over to Nikhil.

Thanks, John. As we've discussed over the past few quarters, we have observed a noticeable expansion in capital deployment opportunities resulting not only from debt driven challenges, but also from pension funds seeking liquidity and other institutions reducing exposure to commercial real estate.

This backdrop has resulted in year to date investment activity, which has already surpassed our acquisition volume for all of last year, which in itself was a record year for the company. In addition, our investment pipeline remains robust with recent capital markets volatility presenting additional opportunities for us. Turning to the quarter, we completed $2,660,000,000 of new investments in the first quarter. On our last call in February, we had previously announced $2,000,000,000 of year to date activity. And since then, in the last two and a half months, we have expanded our investment activity by 4,200,000,000.0 bringing our total year to date balance sheet investment activity to $6,200,000,000 This additional activity is comprised of the USD 3,200,000,000.0 acquisition of Amica Senior Lifestyles announced last month and an additional $1,000,000,000 plus of new granular activity.

Of this additional $1,000,000,000 6 60 million dollars has already closed in Q1 with the remaining transactions expected to close in the coming months. Zooming in on our Amica transaction, which is expected to close around year end, we are already, and incredibly excited to announce our partnership with one of the strongest seniors housing operators in Canada. Alongside Cozier, one of Welltower's most valued growth partners, Amica's inclusion in our portfolio further enhances our partnership with best in class operators in the country. As Shankh mentioned earlier, the quality of the Amica portfolio is simply unparalleled as demonstrated by its locations within highly affluent neighborhoods and its performance track record. This ultra luxury portfolio that is comprised of 38 locations in Vancouver, Victoria, and the Greater Toronto area, boasts home values of 2 to $4,000,000 within the immediate vicinity of the communities, or three to four times the average home values in those respective provinces.

Living in an Amica building is a matter of great pride and prestige for the residents, and the service offering and the food quality are truly five star. The total consideration of 4,600,000,000.0 Canadian dollars is comprised of the following components. 31 in place operational assets with an average age of 11 years. These properties include 24 in service assets with in place occupancy in the mid nineties. These assets have sustained occupancy at these levels for a long period of time and both margins in the low to mid forties.

Given their strong reputation, these assets have demonstrated CAGR rep for growth of nearly 7% during the last five years. Beyond the stable 24, there are seven in place assets that are newly built and currently in lease up with average in place occupancy of approximately 70%. Amica has demonstrated an incredible lease up track record with their last 10 development projects leasing up in just eighteen months on average. The next bucket includes seven projects that are currently under construction and will be acquired at a preset price upon construction completion without well tower bearing any construction and cost related risk. These projects are expected to be completed between 2025 and 2027.

The final real estate component includes nine development parcels, which have gone through elongated multiyear entitlement processes. These parcels comprise of expansion opportunities for existing AMCA buildings or de novo developments in the most desirable and supply constrained locations in Vancouver, Victoria and the Greater Toronto Area. In addition to these components, the transaction includes the assumption of CAD $560,000,000 of CMHC debt priced attractively at 3.6% and an approximately one third ownership of the Amica management company along with an Align Dry DF five point o contract. The non development components of the transaction are underwritten to generate expected from the expansion and development projects as their respective business plans are executed over the coming years. Zooming back out to our first quarter activity, 93% of our activity was off market and 75% of this was with repeat counterparties.

Our activity was comprised of 26 different transactions with a median size of 55,000,000. I want to let this sink in. 26 different transactions in thirteen weeks or on average two transactions a week. We acquired 88 properties comprising nearly 10,000 units across all three countries and asset classes that we invested. Just within The US, we invested capital across 23 states in the first quarter.

With team members sitting across just three offices in The US and one office each in The UK and Canada, we're able to invest in a granular manner due to the strength of our data science and machine learning platform. Our data science solutions, which have been created over the past decade by Swagat and his team, provide us with a unique view of the terrain, giving us a neighborhood level view of 10 plus million micro markets in The US, allowing us to attain a level of scale which is truly unprecedented in real estate. When combined with our investment team's intellectual curiosity and relentless drive to get it right, not just to be right, with the disciplined execution of our high performing operating partners backed by the proven strength of the Welltower business system, we are able to get the air just right. This setup enables us to create significant value and consistently deliver strong returns and durable growth for our investors. I will now pass the call over to Tim to cover our financial results and updated guidance for 2025.

Thank you, Nikhil. My comments today will focus on our first quarter twenty twenty five results, performance of our triple net investment segments, our capital activity, our balance sheet and liquidity update, and finally an increase to our full year 2025 outlook. Welltower reported first quarter net income attributable to common stockholders of $0.40 per diluted share and normalized funds from operations of $1.2 per diluted share, representing 18.8% year over year growth. We also reported year over year total portfolio same store NOI growth of 12.9%. Now turning to the performance of our triple net properties in the quarter.

As a reminder, our triple net lease portfolio coverage stats reported a quarter in arrears. So these statistics reflect the trailing twelve months ending twelvethirty onetwenty twenty four. In our seniors housing triple net portfolio, same store NOI increased 5.1% year over year and trailing twelve month EBITDAR coverage increased to 1.16 times. Coverage in this portfolio continues to strengthen, now well exceeding pre pandemic levels, as fundamentals align with those of our operating portfolio, a trend we expect to continue going forward. Next, same store NOI in our long term post acute portfolio grew 2.8% year over year and trailing twelve month EBITDAR coverage is 1.56 times.

Moving on to capital activity. During the quarter, we funded $2,300,000,000 of net investment activity with equity and retained cash flow. We issued $2,200,000,000 of equity in the quarter with over 10% of our investment activity funded through the issuance of units directly to sellers, ultimately ending the quarter with $3,600,000,000 of cash and lower leverage than we had at year end. As Shankh mentioned, we ended the quarter with net debt to adjusted EBITDA ratio of 3.33 times, the lowest level recorded in Welltower's history. As a result of our current capital position and the improvement in the outlook for full year operating results announced last night, we still expect run rate net debt adjusted EBITDA to end the year at 3.5 times, while adding $4,200,000,000 to our planned 2025 acquisition activity since our initial balance sheet guidance was provided in February.

Before we dive into our updated guidance, I want to quickly spotlight a key milestone from this past quarter, the credit upgrades we received from both S and P and Moody's. A strong balance sheet has always been a pillar of our strategy, not just in terms of lower leverage, but also in the quality of our asset base. Well before the onset of the pandemic, we initiated deliberate transformation of our business, repositioning the portfolio, driving greater alignment in our operating agreements and building out our asset management capabilities, resulting in a platform with a risk profile that is virtually unrecognizable compared to where we started. It's gratifying to see that transformation recognized by both agencies. Importantly, we have never managed to a rating and there's no finish line here.

This is an ongoing deliberate effort to ensure we are optimally positioned for whatever lies ahead. That discipline gives us the strongest possible foundation for uninterrupted compounding through any market environment. Lastly, as I turn to our updated 2025 guidance, we have not included any investment activity in our outlook beyond the $6,200,000,000 that has been closed or publicly announced to date. And as a reminder, there is no expected earnings contribution in 2025 from our acquisition of the Amica portfolio, which is expected to close at year end. Last night, we updated our full year 2025 outlook for net income attributable to common stockholders of $1.7 to $1.84 per diluted share and normalized FFO of $4.9 to $5.04 per diluted share or $4.97 at the midpoint.

Our normalized FFO guidance represents a $0.10 increase at the midpoint from our prior normalized FFO range. This increase is composed of $02 increase from higher NOI in our senior housing operating portfolio, dollars $0.07 increase from accretive capital allocation activity, zero two increase from FX and income taxes offset by $01 from higher expected G and A in the year. Underlying this FFO guidance is an estimate of total portfolio year over year same store NOI growth of 10% to 13.25% driven by sub segment 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 16.5% to 21.5%. This is driven by the following midpoints of their respective ranges. Revenue growth of 9%, driven by increased expectations for both full year REVPOR and occupancy growth now at five percent and three fifty basis points respectively and expense growth of 5.25.

And with that, I will hand the call back over to Shankh.

Thank you, Tim. Before I open the call up for questions, I wanted to quickly reflect on the current macroeconomic environment. Please note that during our second quarter call last year, we described our base case macro view for next few years. Without fully repeating my comments, I'll summarize them by saying that we appear to be entering a potentially long period of higher inflation and higher interest rate, a stark contrast to the market conditions over the past forty years. As a result of that shift, the tailwind which have lifted asset prices, including that of real estate, for the past few decades are not just subsiding, but also may well very well turn into a headwind.

Additionally, the current macro uncertainty may introduce another layer of complexity in the near term. Cyclical pressure on economic growth unfolding against the backdrop of elevated rates and persistent inflation that you can observe in the consumer confidence and other high frequency economic data. While we are not in the business of forecasting economic trends, we are keen observers of market based signals. Higher interest rates, coupled with significant widening of credit spreads across investment grade, high yield and all asset based financing markets warrant cautions as it relates to asset prices going forward. Said in another way, in our world of real estate, we expect higher rates along with wider debt spreads will put downward pressure on asset prices.

On our recent calls, while we have repeatedly discussed the wall of debt maturities and lack of credit availability, the other trend we are paying close attention to is on the equity side. Following the slow return of capital to LPs this cycle and the impact of denominator effects, after many years of pension funds and endowments steadily marching towards the Yale Swanson model, many large pools of capitals are reducing their exposure to private assets, including private real estate. This phenomenon has potential to exacerbate the negative credit driven impact of asset prices, which I just described. We at Welltower are focused on risk, reward, and duration when deploying capital, and we perceive a high level of risk than we did ninety days ago. While we hope that these clouds will pass, we do not believe hope is a strategy.

We believe capital allocation is all about positioning, not predicting. And to that point, I want to thank Tim and our Capital Markets team for putting us in an enviable position in terms of our balance sheet strength and liquidity to protect our owners' capital on one hand and take advantage of the market opportunities that may arise on the other. Ultimately, we believe that the days of generating returns through financial wizardry and levered beta are over. Instead, as an operating company in a real estate wrapper, we're convinced that the only path to delivering satisfactory returns will be through compounding of cash flow generated by superior operations and supplemented with capital allocation to sub optimize assets, further growing our network effect. And with that, I will open the call for questions.

Our first question comes from the line of Vikram Malhotra with Mizuho. Your line is open.

Good morning. Thanks for taking the question and congrats on the strong internal and external results. I wanted to focus on the platform or the business systems that you've been talking about for a while. I mean, you're clearly having very strong internal and external activity. And I'm wondering how business system overlay now, you know, I think it's been two years.

How does that, parlay into both sort of the margins but also CapEx control? Just, I guess, accentuating both the magnitude and the duration of the performance. If you could kind of help frame it perhaps with some numbers or just give us more details, that would be helpful. Thanks.

Thank you, Vikram. So the margin expansion possibilities that we have talked about, Vikram, which is not unique to our asset class, it's just that we're the last ones. And from an asset class standpoint, you could observe in multi families in the nineties and February and self storage industry, single family rentals and so on and so forth. And that's true institutionalization of these asset classes. And we're sort of the last one going through this, our asset classes going through this.

I'll tell you whether whether we're successful in this journey or not, and how far we're successful will matter both on our side on Walter Business System execution, as well as our best in class operating, you know, operators who'll who are doing this, obviously, this execution on a day to day basis and a hand to hand combat, frankly. It's a complex business. It's not an easy business to pull off. But we are with our operating partners shoulder to shoulder no matter what. But if you just think about reflecting a little bit on what what what our business system is or what is designed to be, it is a complex adaptive system that aims to balance chaos and order and can self organize based on dynamic feedback loop and adapt to changing conditions.

That's what we are focused on. Right? So if you think about just sort of what I mentioned that we're not you know, we're relied on our operating partners who have great talent pool in these companies, and we're augmenting that talent pool with our talent pool with coming in to solve their problems, customers' problem, employee pain points, etcetera. So ultimately, the goal of Walter Business System is to bring system level thinking to remove bottlenecks, streamline flow, and minimize friction in all human interactions that you see in these communities, which is, you know, family to residents and obviously our caregivers and our, employees. And it's sort of in a round robin manner.

Right? So that's sort of what we are focused on to streamline that flow and minimize that friction in all those human interactions and focus solely in areas where scalability creates a strategic advantage, while relying on our operating partner to solve the unremovable complexities that are inherent in our business. So what do we mean by that? So we are focused on providing Walter Business System to offer site level employees that, you know, John mentioned, obviously, his early college days of Costco experience last call. Walter Business System to provide site level employees with real time actionable business insights, and free up valuable time to provide a real human touch to our residents.

And if we think we can do this, we have a long runway of margin expansion in our business.

And your next question comes from the line of John Kieliczewski with Wells Fargo. Your line is open.

Thank you. Good morning. Shankh, we really enjoyed your annual shareholder letter this year. Something we found particularly interesting was the section on how your data science platform has improved your velocity to market in the transaction process. Would you mind walking us through the process in a bit more detail?

And then also maybe giving some color around what percentage of your pipeline you believe this proprietary technology is directly responsible for?

Yes. So I'm not gonna walk you through. I wrote in a very detailed format of how jail market sort of structure works in a a marketed transaction. But if you go back and read it, you will see the path is sort of a real estate is a very glacially moving slow business. Right?

So if you just think about what the whole process looks like, John, when you say you are a seller, you are looking to sell something, you hire a broker, you go through all this to ultimately, you close the deal. That whole process takes about five to ten months depending on whether the, you know, the counterparty needs financing or not financing and all of those kind of things. Right? So if you just think about, you know, in our business, let's just say that focus on just our business, market participants in our business, not most, all of them are focused on sort of Nick 99 or that kind of information, which is sort of, you know, that's not great level of information, but that's kind of what you have. Level of information that sort of MSA level information, and then sort of that whole process rolls out.

For us, as Nikhil mentioned, you know, our proprietary platform analyzes 10 plus million micro markets nationwide, leveraging a unique and nonreplicable dataset accumulated over a hundred plus senior housing operators over twenty years. Right? So this granular machine learning approach, powered by long time series of data across diverse properties and operators, enables us to take a neighborhood level view of any asset and provide initial interest, within our team within a few minutes. And it determines a narrow range of predicted performance within a day. It used to be two to three days.

We have brought it down, with significant more compute power within a day, allowing us to provide initial, you know, sort of preliminary pricing feedback within a week that we can live with. Subsequently, to the assets and have a handshake on definitive terms within two weeks that we can again, we can stand by. Remember, at Worlds Out, we have nowhere walked away from a handshake. Right? So it's not just a question, oh, we'll look at our broker proforma and give people or throw people a number.

That's how real estate industries work. Right? So ultimately, close that deal in forty five to sixty days. So just think about that velocity to market makes us the first call to more sellers. Because frankly speaking, and obviously our reputation that we never walk away from a handshake, has fundamentally upended the status quo in this business, the real estate industry, which hasn't changed in decades.

Right? Because if you're a seller, what do you have to lose? If you don't like your answer within a week, you go go do that process anyway. Right? That we described that will take you five to ten months.

So think about so what are we trying to do? We're trying to bring down latency that is inherent in a glacially moving industry in a significant way. And latency is a very important concept when you study network effect. In most industries that move in that glacial phase, no different in our industry, as I said, in real estate. And that is a very, very thing that we're trying to disrupt by reducing latency in our system by completely turning the velocity to market in its head.

And as latency shrinks, materially as we talked about just talked about, the network effect kicks into high gear, creating a new paradigm of maximum growth, maximum gain that simply doesn't occur in businesses and industries that moves at a glacial pace. Right? So that's how it works. If you think about the journey of our journey of, you know, what we have been able to achieve, and you wanna point out to one thing, as Tim mentioned, you can't point out to one thing. This is a long decade long journey of transforming this industry and the transforming the business.

But if you want to point out one thing that will be reducing that latency. Right? That's how you sort of go into a paradigm of maximum growth, maximum gain, and that sort of create another level of, you know, network effect that kicks into the high gear.

And your next question comes from the line of Farrell Grunoff with Bank of America. Your line is open.

Hi. Good morning. Thanks for taking the question.

I was curious, just given your current size, how can you frame how you continue to think about of sustained growth going forward?

Farrell, that's a really, really good question. If World Tower was a spread investing vehicle that that is relied on financial engineering, I would say growth at some point should be a problem. Size and the growth should be somewhat inversely correlated at some point. And I don't know what that is, frankly speaking, and you can see different industries and come to different conclusions. However, if we can see, as I've mentioned before, we have changed this company, which frankly was that what exactly you are describing, it was a real estate deal shop, which was reliant you know, capital markets and, frankly speaking, cost of capital.

We have it was a decade long effort for us to change this company into a operating company in a real estate wrapper. So if you just think about as an operating company, the opposite trend actually happens due to network effect that I was just talking about to John's question earlier. As we have grown, just think about that for a second. Right? We capture more and more data, and two of our key competitive advantage, our data science platform and Walter Business System, continues to strengthen, further expanding our mode and driving a wider performance gap between ourselves and our competitors.

So you think about that what you are describing, which happens in some of these of levered beta spread investing vehicles, you will see as they get bigger, their performance spread to market actually shrinks. If you go back and see that we had our Investor Day in 2018, and there, in that Investor Day, I talked about this topic. And I said that despite our outperformance to our competitors, up to leading up to that point, that will widen. And if you just see what happened since then, it has widened. Our market our performance to market has widened.

And that happened because we had transformed this company from a real estate deal shop to an operating company and a real estate wrapper. And and, you know, I would like to tell you that's unique. It's not. If you just look at all operating companies, you will see they have achieved success because of their success. Look at Home Depot.

Look at Costco. Look at Amazon. Not in spite of their success. And that's because of the network effect, and that's because of the impact these companies have and the data capture and everything else I talked about to John's question earlier, where your size becomes positive to your growth, not negative. But it's an extraordinarily important question.

And your next question comes from the line of Omotayo Okusanya with Deutsche Bank. Your line is open. We'll go ahead and go to our next question with Jonathan Hughes with Raymond James Financial Inc. Your line is open.

Hi, good morning. Thank you for the prepared remarks and commentary. Tim, you reiterated the 3.5 turn leverage target by year end, that's up from 3.3 today. So implying the levering up in the next few quarters, I guess, why utilize debt when your cost of equity is arguably lower and would be more accretive and it never has to be refinanced? I'm just trying to better understand that near term leverage target and how you think about you know, the right capital structure or or target capital structure on a longer term or normalized basis?

Jonathan, before Tim gives you an answer, I'll I'll just say that we fundamentally disagree with your, assumption that our cost of equity is, lower than our cost of debt. Our cost of equity is much higher than you think. And that's probably because we think our potential growth rate in our long term business is much higher. Right? You gotta think about your cost of equity on a long term mark, not just your spot cost of equity.

And I just say the the what's driving our view on leverage higher is putting the cash to work off the balance sheet. It's not it's not the assumption that we're issuing debt. It's just part of the mechanics of the cash coming off the balance sheet, putting it to work. With the guidance we provided last night, we're fully funded for all the all the capital activity. In fact, we're even paying off, 1,250,000,000.00 in debt in those assumptions.

And your next question comes from the line of Ronald Kamdem with Morgan Stanley. Your line is open.

Hey, just my question is, look, clearly occupancy jumped off the page this quarter and you guys put a couple of slides in the presentation, including the acceleration from January, February to March. I guess I'd love to sort of I know occupancy and pricing matters, but just staying on the occupancy front, just internally, what are expectations sort of long term for your markets? And then is this phase sustainable? Could it accelerate? Just how are you guys thinking about that?

Ron, I would just say our expectation of what we think occupancy growth this year is Tim just described to you, so I have nothing to add to that. Long term, we believe that as we sort of optimize this business with fewer and fewer operating partners who increasingly have a much greater regional density, we believe that frictional vacancy is a lot lower than we thought. And John talked about this in the call, I believe, two, three calls ago. And so we believe we have a long journey in front of us, to a much higher level of occupancy. And obviously, I'm not I'm not

about current portfolio because remember, Nikhil continues to add a lot of under occupied buildings. So so we think we have a long journey in front of us. And but we're just think about this year. Right? We're giving you our best guess.

Remember, it's a guess. And our business is a June to October type of a business. Right? It's of a summer leasing season business. We'll go through summer and we'll tell you what we see.

But if we didn't feel good about the current pace of activity, current pace of, you know, sort of future resident engagement, we would not have raised guidance in Q1 for both occupancy and rates, right? But that's what we see today. We'll see what tomorrow brings us.

And your next question comes from the line of Austin Gutchmidt with KeyBanc. Your line is open.

Great. Thanks. Shankh, just kind of wanted to hit on your comments that you wrapped up in the prepared remarks. You discussed this period of potentially higher inflation with cyclical pressure on economic growth, as well as the potential for a negative impact on asset prices from the reliance on credit over the last few decades. I guess with many seniors utilizing savings and equity from their homes and retirement in that backdrop, how do you think senior housing performs based on what you outlined?

So that's a really, really good question. Why don't I start and then jump in as you see fit? You know, we have a pretty good case study of how that might turn out. We can see obviously a lot of senior wealth is not in the equity market, right, clearly. Majority of them actually not.

And they are in, other fixed income or, housing type assets. And, we believe that, you know, we don't see a case of why housing prices will collapse like it has during GFC. But let's just say that we're wrong. And you can see, even during, global financial crisis, which was driven by housing, and even and housing, you know, collapsed 50%. You could see even then how the asset classes held up.

Right? So look, the thing is the future is uncertain by definition. And it's a redundant statement, but it's a very important one. And we fundamentally believe that life is about positioning, not predicting. And, you know, given where we are, whether the near term, you know, we go into I believe that the asset class will hold up better than all real estate and many, many other industries.

We'll see what happens, you know. And if as you have seen from our, you know, our track record, that if there is disruption and again, that's not my base case view, there will be disruption. But if there's disruption, you know how we'll behave. We're perfectly predictable. That's why we have a terrific balance sheet for.

Right? And if there is disruption, you will see, obviously, that will put more pressure in asset prices, more pressure on people who have sixty, seventy, 80 percent leverage. Our leverage is, what, 10%. Right? And we will go lean into it.

We are very optimistic about our business for next, you know, five, ten, fifteen, twenty, thirty years. And frankly speaking, we'll welcome disruption. But that's not our best case scenario.

And your next question comes from the line of Seth Berge with Citi. Your line is open.

Hi, good morning. You kind of mentioned in the opening remarks that the pipeline is expanding given the capital markets dislocation. Can you kind of quantify the expansion and kind of what portion of that expansion would be type of the type of assets that you would be interested in potentially acquiring?

Seth, we are not going to sit here and try to speculate on what our pipeline may or may not do. We do believe that when this kind of capital markets disruption happen, people who absolutely looking for liquidity, whether that's the equity driven or debt driven that Nikhil talked about, will need to access liquidity. And and if it is that their expectation is commensurate with the today's reality of rates and spreads, we'll provide them that liquidity. And if not, we'll not. We know we're not in the business of doing deals.

We're an operating company. We only add assets in our, you know, in our markets and in our micro markets where we feel we can build retail density. So if we can, we will do it. If not, we'll just sit here and wait. Thank you.

Yeah. I think the only thing I'd add to that is, you know, we talked earlier about what wall towers, you know, pace of execution is versus what the conventional market timeline is to bring a transaction home. And that six to ten months that we talked about, just think about what has happened in the last six to ten months, you know, between, you know, fed rate cuts, the election, liberation day. And so just think about, you know, sellers that chose to work with somebody else, and, you know, they did not have ultimate price certainty from then to until now. And just given how macro has changed, imagine the ups and downs and the deal fatigue that they've gone through.

And so there's a lot of broken deals. And when there's broken deals, we we get the call. So we're actively looking at a lot. But as Shankh mentioned, we are squarely focused on playing in places that we have high conviction in our in markets that we already have a lot of scale in.

And your next question comes from the line of Rich Anderson with Wedbush. Your line is open.

Hey, thanks and good morning. Great quarter, of course. So Shankh, you said something fewer operating partners that are deeper and more densified in their geographies. I'm paraphrasing, but something like that. So where do you see that sort of that optimal sort of cadence in terms of how big of a pie chart of operating partners is the right number for you guys, call it three, five years from now?

And out of curiosity, do you sense any sort of pushback given the current climate doing business with operators in Canada and The U. K? What are some of the sort of variables as it relates to that ultimate plan to reduce your operator the number of your operators in your portfolio? Thanks.

Yes. That's a very good question. It's a question that we reflect on in our shop all the time. So let's just take a step back and think about so the the if you are looking for a numeric answer, I'll just say it's fewer. And that sort of noise, no question that we are, focusing on regional density, focusing more and more concentrating concentrating on our existing partners who have performed performed really well.

Welltower (WELL) Q1 2025 Earnings Call Transcript

Company Participants