Welltower Stock Slumps Despite $21B Buying Spree, Soaring Income
Shares in Welltower, the world’s most valuable publicly traded real estate firm, lost more than 5% of their value on Tuesday, despite the senior housing-focused investor projecting revenue and profits to keep rising through the end of the year.
The Toledo, Ohio-based REIT is the largest owner of senior housing in the U.S., acquiring 141,000 units since 2020, and it is accelerating its growth efforts with $21B of investment activity closed or under contract so far this year, according to an investor presentation published Monday.
Google Maps Novelle Senior Living, a recently built senior housing community in San Jose, California, acquired by Welltower for $100M in August
The net operating income of Welltower’s senior housing operating portfolio in the third quarter rose 21% from a year prior as occupancy grew from 87% to 90.2%.
“As communities are filling up, the deliberate and methodical handover from occupancy to pricing as the driver of revenue growth is taking place under the surface,” Welltower CEO Shankh Mitra said on the call.
Senior housing has been one of the top-performing asset classes, as the growing elderly population is colliding with construction in the sector hitting a 15-year low.
NIC Map, which tracks fundamentals in the senior living sector, estimates that an additional 578,000 units need to be built by 2030 to keep up with demand, but just 24,000 were under construction this summer.
Welltower raised its projected net income and funds from operations, a key metric of cash flow, which the firm now expects to grow 23% this year from 2025.
The REIT’s quarterly revenue of $3.7B and profit of $415M grew 38% and 47%, respectively, from Q3 2025. Even so, they came in below analyst expectations, sending its stock price falling from $240 per share to less than $227 on Thursday, wiping out roughly $5B in value.
It is still the most valuable REIT by far at a $163.4B market capitalization, ahead of Prologis, which has a $120B market cap. Welltower’s stock is still up more than 21% this year and has nearly tripled in value since 2021.
Mitra last year was the second-highest compensated public company CEO, behind Elon Musk, The Wall Street Journal reported. The vast majority of his $821M compensation came in the form of stock bonuses presaged on the company hitting certain growth metrics, a sticking point for investment advisers who have criticized the package for being “egregiously management-friendly” and encouraging growth for growth’s sake.
On the call Tuesday, Mitra said Welltower has been selective in its buying spree, highlighting his company’s “irreplaceable data science platform” and deal execution process that closed 196 deals in 204 business days but rejected 97% of the opportunities screened.
“If we never buy another asset, I’ll be completely fine,” he said.
Among its purchases were a $100M acquisition of a newly built complex in San Jose, California, and a four-property portfolio in the Philadelphia suburbs with Bain Capital and Capitol Seniors Housing.
Mitra also highlighted the opportunity Welltower has to keep buying properties in an increasingly competitive space. He pegged the amount of senior housing debt maturing in 2027 and 2028 at between $10B and $12B each year.
“Much of this debt was originated between 2020 and ’22 in a fundamentally different rate environment,” he said. “The owners of these assets face a critical decision: recapitalize or sell. While some owners may recapitalize, most will sell as the impact of rising rates offsets improved industry fundamentals. That is where Welltower comes in.”
Welltower and other traditional healthcare REITs like Ventas and National Healthcare Properties have gobbled up market share this year, selling less profitable medical office buildings to purchase assisted and independent living communities. REITs have accounted for 36% of all U.S. senior housing deals this year, up from 15% in 2023, according to Walker & Dunlop.
But they are in an increasingly crowded space. There were $32.2B of sales in the 12 months ending in June, according to Walker & Dunlop, a 74% annual jump. Wall Street stalwarts like Morgan Stanley and BDT & MSD Partners are buying up portfolios, eager to take advantage of the ”silver tsunami.” The first baby boomers, a generation of more than 70 million people, turn 80 this year.
Welltower, which works with on-the-ground operators to run the resource-intensive properties, was a somewhat early mover to the trend, and it has taken its lumps. A skilled nursing home operator it worked with, Genesis Healthcare, filed for bankruptcy in 2024, and Welltower was paid back its $130M senior loan only last quarter via the restructuring.
At one point, Genesis represented 20% of Welltower’s earnings, Mitra said on the call. It largely exited the relationship in 2021 but continued restructuring its deep investment in the company’s debt until this final payoff.
“Genesis taught us the skilled nursing business and its many intricacies, allowing us to overcome our negative bias of the space through this experience,” Mitra said. “We learn to underwrite operators, not just buildings, and to structure for the downside, because we had lived it.”
The company bought eight nursing home properties for $850M combined during the third quarter, continuing its investment into that spectrum of the senior housing sector.
“Genesis is now behind us,” Mitra said. “The lessons will stay with us for a very long time.”
Source: www.bisnow.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.