WELLTOWER INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Business Trends: Ended 2024 on a high note with strong Q4 results, normalized FFO per share up 18% y/y driven by senior housing. Momentum carried into 2025 with expectation of exceptional growth.
• Capital Deployment: Closed $2.2 billion of transactions in Q4, opportunity set expanding due to sector challenges. Acquisitions accretive with strategic benefits like regional densification and data accumulation.
• Growth Pillars: Five original growth pillars (demand-supply, capital allocation, capital-light transactions, digital transformation, unleveraged balance sheet) plus sixth pillar (private funds management) added.
• Operating Platform: Progress on build-out of tech platform, capital team expertise, value-add renovations, with margin expansion potential.

Segment Performance

• Senior Housing Operating: Fourth quarter delivered nearly 24% same-store NOI growth, marking the ninth consecutive quarter of net operating income growth exceeding 20%. Sequential occupancy growth in Q4 was 120 basis points, year-over-year was 310 basis points. RevPAR and unit expense trends moved in favor, with a spread of 460 basis points (highest in recorded history) and operating margin expanding 320 basis points. Full year 2024: 23% revenue growth, 26% EBITDA growth, nearly 20% FFO per share growth.
• Outpatient Medical: Stable in Q4 with year-over-year same-store NOI growth of 2%. Occupancy was 94.3%, and tenant retention was 93.6%. 2025 expected same-store NOI growth 2% to 3%.

Guidance

• 2025 normalized FFO per share guidance $4.79 to $4.95 per diluted share, midpoint $4.87, a $0.55 increase from 2024. Total portfolio same-store NOI growth expected 9.25% to 13%. $2 billion of acquisitions under contract at start of 2025.

Risks

• Capital markets challenges affecting sector owners, debt maturities, high rates. Labor market concerns in senior housing. Uncertainty in external factors like policy changes affecting GSEs.

Question and Answer

Q: Can you kind of give us a sense of the pricing power across occupancy bands within the SHARP portfolio?

A: On the second question, as is that at 90-plus percent occupied, the RevPAR growth has been well into the sixes. On the other hand, where the assets are below 70% occupied, they're roughly flat.

Q: As we move through this development cycle and see increasingly fewer deliveries, which is obviously a good thing for existing properties, does that make buying properties with lease-up more challenging?

A: If you look at the activity, that would suggest the answer is no. Because, candidly, it's a complex operating business. And, you know, without the right tool kits, you don't get the same outcomes from, you know, every provider that's running the buildings. So, you know, we've had a long-term track record of success in finding under-operating buildings.