60 Seconds with Swett: Welltower is on a Roll

Welltower came out with its first quarter earnings on Tuesday, and surprise, surprise, it was yet another great quarter, and its share price jumped 3.5% immediately upon the news. It was the tenth consecutive quarter in which same store SHOP NOI growth exceeded 20%, at 21.7% in the first quarter. Guidance for same store NOI growth also rose by 100 basis points to a midpoint of 19.0% for FY2025. On Tuesday’s call, Welltower did mention that SHOP margins remain below pre-pandemic levels, but they may not be for long. Also, that issue currently plagues thousands of communities in this country and was prevalent in the years before COVID too.

Perhaps that is why most of what we hear from owners, operators and NIC MAP is on the census recovery since the pandemic, which is usually rosier than the more important metrics of margin and cash flow. Welltower still showed a lot of strength on occupancy, with year over year gains in January, February and March at 380 basis points, 390 bps and 400 bps, respectively, with 400 bps being the highest level of year-over-year growth ever for the company, outside of the post-COVID recovery. Sequential occupancy growth for the quarter at 60 bps also bucked historical norms for first quarters, which in the five years pre-COVID always measured sequential losses in census. Our own study of historical quarterly census trends back in 2020 showed the same thing, but that is another good sign for Welltower.

The REIT also continues to dominate the M&A space in our industry, with $6.2 billion of pro rata gross acquisitions and loan funding year to date. Yes, just in 2025, alone, and there’s nearly $9 billion in near-term liquidity that opens the door to more deals. Despite Welltower’s caution surrounding the development market, we suspect they are one of the larger investors in new developments right now too, albeit at just $142 million of development funding in the first quarter. Right now, there are just too many more lucrative opportunities in the M&A space, including some larger portfolios that could be acquired below replacement cost. And Welltower has been best positioned for years, and in the near future, to take advantage. Will the party ever stop?