We are at the precipice of one of the most pronounced demographic shifts in history, with extraordinary growth in the 80+ population across the US, UK, and Canada. The expected surge in demand for seniors housing in the coming years coupled with scarce new supply should result in an extraordinary growth backdrop for the sector (the “beta”). However, we remain focused on the bigger prize: our opportunity to deliver unprecedented outperformance (or “alpha”) to our existing shareholders. Paramount to doing so relies on sustaining the “flywheel effect” which we have created, consisting of superior operational performance, access to a wide range of attractive capital sources, and disciplined execution on external growth opportunities. While we have produced satisfactory results in recent years, continued momentum of the flywheel through our relentless pursuit of higher standards in all aspects of our organization is critical to generating sustained alpha for our existing owners.
Access to a plurality of capital sources including common equity, private equity, unsecured and secured debt, and exchangeable notes
Ability to opportunistically pivot between each capital source based upon cost and availability
Robust near-term available liquidity (including cash on hand, line of credit capacity, expected loan payoffs and disposition proceeds) can fully fund announced acquisitions
Internal Growth
Long-term demographic tailwinds and significant decline in new supply expected to drive continued outsized growth for extended period
RevPOR growth (unit revenue) expected to continue to outpace ExpPOR growth (unit expense), resulting in further operating margin expansion
Industry-leading results being driven by Welltower’s superior micro-market locations, disciplined capital allocation strategy, and highly aligned partners with significant regional density
Capital Allocation
Macroeconomic uncertainty and capital markets dislocation creating opportunities to acquire assets at increasingly attractive basis, going-in yields, and unlevered IRRs
Granular approach to capital allocation provides opportunity to acquire assets at deep discounts to replacement cost while complementing Welltower’s regional density strategy
Completed over $17 billion of investments since 4Q2020 at attractive high-single-digit to low-double-digit unlevered IRRs with potential for further upside from WELL platform enhancements
Superior Ability to Capitalize the Opportunity
Access to a plurality of capital sources including common equity, private equity, unsecured and secured debt, and exchangeable notes
Ability to opportunistically pivot between each capital source based upon cost and availability
Robust near-term available liquidity (including cash on hand, line of credit capacity, expected loan payoffs and disposition proceeds) can fully fund announced acquisitions
Internal Growth
Long-term demographic tailwinds and significant decline in new supply expected to drive continued outsized growth for extended period
RevPOR growth (unit revenue) expected to continue to outpace ExpPOR growth (unit expense), resulting in further operating margin expansion
Industry-leading results being driven by Welltower’s superior micro-market locations, disciplined capital allocation strategy, and highly aligned partners with significant regional density
Capital Allocation
Macroeconomic uncertainty and capital markets dislocation creating opportunities to acquire assets at increasingly attractive basis, going-in yields, and unlevered IRRs
Granular approach to capital allocation provides opportunity to acquire assets at deep discounts to replacement cost while complementing Welltower’s regional density strategy
Completed over $17 billion of investments since 4Q2020 at attractive high-single-digit to low-double-digit unlevered IRRs with potential for further upside from WELL platform enhancements
Superior Ability to Capitalize the Opportunity
Access to a plurality of capital sources including common equity, private equity, unsecured and secured debt, and exchangeable notes
Ability to opportunistically pivot between each capital source based upon cost and availability
Robust near-term available liquidity (including cash on hand, line of credit capacity, expected loan payoffs and disposition proceeds) can fully fund announced acquisitions
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Welltower's Competitive Advantages
Data Science ML/AI
Welltower Business System
Best in Class Operators
Industry-Leading Operational Results
Unprecedented External Growth Opportunity
Access to Capital
Seniors Housing: Alpha vs. Beta
A Reflection on the Fat Tails
While our optimism regarding the multiyear growth prospects of our business continues to grow, it is also important to recognize that a rising tide does not necessarily lift all boats when it comes to the seniors housing business. This is not a commodity business. That is, despite the immense personal rewards of caring for the elderly population, our business is undoubtedly a challenging one, given its operational intensity that we are working tirelessly to solve through the buildout of our operating platform. This operational intensity has resulted in a wide dispersion of performance across the sector – or the fat tails in the parlance of statistics – a far cry from other commercial real estate sectors such as multifamily in which performance spreads are meaningfully tighter. The operators with whom we continue to grow are ones with a track record of success and a vision for sustaining that performance going forward. They also share a mindset and culture that mirrors our own where employees thrive on the constant internal debate of how to continuously improve, adapt, and lead the future of this business.
