The commercial real estate sector has delivered lackluster returns for the past few years. That's due to the impact higher interest rates have on commercial real estate. They increase interest expenses, cutting into a property's cash flow. Higher rates also make lower-risk fixed-income investments more attractive. These factors weigh on the value of commercial real estate. However, the Federal Reserve has started cutting interest rates, and more reductions could be forthcoming. That could drive a rebound ...

Core Insights - The first batch of commercial real estate investment trusts (REITs) has been submitted and accepted by the exchange, marking a significant milestone in the development of China's public REITs market [1] - The launch of commercial real estate REITs by the China Securities Regulatory Commission signifies a new phase in the REITs market, enhancing the depth and breadth of capital market services for the real economy [1] Industry Overview - REITs play a crucial role in revitalizing existing assets and broadening investment channels for residents, contributing to the stable operation of the public REITs market over the past five years [1] - The essence of REITs is asset listing, allowing asset holders to share stable operating cash flows and capital gains with a broader range of institutional and individual investors [1][2] - The management and capital management of REITs are core values, enabling continuous sharing of stable investment returns for investors [2] Company Developments - Leading companies like Jinjiang and Shazhu have actively applied for the first batch of commercial real estate REITs, aiming to leverage their "assets, asset management, and capital" advantages for both internal and external development [3] - Jinjiang's REIT project, which includes 21 hotels across 18 cities, aims to diversify risk while meeting stable demand in core cities and growth potential in emerging cities [4] - Shazhu Group, a leader in the outlet industry, plans to use its REITs to strengthen its brand and expand its scale, focusing on quality improvement in the outlet sector [5] Market Expectations - Investors have shown positive interest in the REITs issued by industry leaders, focusing on the quality of the initial assets and the potential for continuous expansion of the REITs [5] - The industry anticipates that as the commercial real estate REITs market matures, leading REITs will play a more significant role in promoting high-quality development within the sector [5]

Revenue Segmentation - The Seniors Housing Operating segment accounted for 78%, 76%, and 72% of total revenues for the years ended December 31, 2025, 2024, and 2023, respectively[33]. - The Triple-net segment accounted for 11%, 10%, and 13% of total revenues for the years ended December 31, 2025, 2024, and 2023, respectively[38]. - The Outpatient Medical segment accounted for 7%, 10%, and 11% of total revenues for the years ended December 31, 2025, 2024, and 2023, respectively[40]. - For the year ended December 31, 2025, Care UK, Cogir Management Company, and Sunrise Senior Living accounted for 14%, 12%, and 10% of Seniors Housing Operating Segment revenues, respectively[33]. - As of December 31, 2025, 91% of the outpatient medical building portfolio was affiliated with health systems[39]. Financial Investments and Obligations - As of December 31, 2025, the company had outstanding construction investments of $738,859,000 and was committed to provide additional funds of approximately $493,027,000 to complete construction for consolidated investment properties[43]. - As of December 31, 2025, the company had outstanding loans, net of allowances, of $2,082,265,000 with an interest yield of approximately 8.9% per annum[44]. - Investments in unconsolidated entities amounted to $1,809,590,000 as of December 31, 2025[45]. - The company reported a principal balance of $12,700,485,000 in senior unsecured notes as of December 31, 2025, with a change in fair value of $(575,958,000)[443]. - The company has $4,064,010,000 in outstanding variable-rate debt, with a projected increase in annual interest expense of $40,640,000 if interest rates rise by 1%[443]. - The total principal amount of foreign currency debt obligations was $4,661,360,000 as of December 31, 2025, including $1,411,725,000 in Pounds Sterling and $3,249,635,000 in Canadian Dollars[445]. Operational Efficiency and Technology - The company operates a portfolio of over 2,500 properties, leveraging data science to enhance investment selection and predictive analytics[56]. - The data science platform has improved predictive analytics, allowing for better insights into demand and local labor market conditions[58]. - The company has integrated AI into its data science platform to extract insights from internal documents and improve operational efficiency[59]. - The company has implemented standardized data and technology practices to enhance operational efficiency across its seniors housing operating partner network[60]. - The company has streamlined performance management practices to create stronger connections between performance and compensation, fostering a culture of accountability[69]. Sustainability and Community Engagement - The company has committed to reducing greenhouse gas emissions, energy consumption, and waste production as part of its sustainability initiatives[61]. - The Welltower Charitable Foundation matches employee donations to verified organizations up to $2,500 per employee per year, promoting community engagement[64]. - The company maintained a top 30% ISS Quality Score ranking for both Environmental and Social categories, and preserved Prime status under the ISS-ESG Corporate Rating for the seventh consecutive year[65]. Employment and Organizational Structure - As of December 31, 2025, the company employed 712 individuals, with a focus on leadership development and organizational growth[67]. - The company transitioned back to a five-day in-office workweek to enhance collaboration and teamwork among employees[74]. Regulatory Compliance and Risks - Compliance with federal and state laws governing healthcare operations is critical, as violations can lead to substantial penalties and affect financial obligations[83]. - The implementation of new data privacy laws may require significant investment in compliance resources, impacting operational costs for healthcare providers[85]. - In the U.K., care home services are regulated under the Health and Social Care Act, requiring compliance with fundamental standards and inspections by relevant regulatory bodies[87]. - Non-compliance with regulatory standards in the U.K. can lead to enforcement actions, including suspension of registration and statutory penalties[88]. - The company is subject to the U.K. Bribery Act 2010, which includes strict liability offenses for failure to prevent bribery and tax evasion[92]. - The company must comply with the U.K. Modern Slavery Act 2015, publishing a statement on steps taken to prevent modern slavery in its business and supply chains[93]. Taxation and REIT Compliance - The company has undergone a reorganization, changing its name to Welltower OP Inc. and converting to a limited liability company, while maintaining its REIT status[98]. - The company intends to continue operating as a REIT, which allows it to avoid U.S. federal income tax on distributed taxable income[99]. - If the company fails to distribute at least 90% of its REIT taxable income, it will be subject to tax at regular corporate rates on the undistributed amount[101]. - The company must ensure that at least 75% of its gross income is derived from qualifying sources to maintain its REIT status, with specific tests for gross income and asset composition[114]. - At least 75% of the value of total assets must be represented by real estate assets, cash, and certain investments to comply with the 75% asset test[116]. - The company may face penalties if a subsidiary partnership takes actions that jeopardize its REIT status, potentially requiring asset disposal[108]. Market Risks and Financial Management - The company is exposed to market risks from adverse changes in interest rates and foreign currency exchange rates, which may affect financial condition and results of operations[439]. - The company seeks to mitigate interest rate fluctuations by matching new investments with long-term fixed-rate borrowings[439]. - The company has a risk of not being able to refinance existing indebtedness or that refinancing terms may not be favorable[442]. - The company has a strategy to manage foreign currency exposures through non-U.S. denominated borrowings and derivative contracts[444].

Financial Data and Key Metrics Changes - In 2025, the company achieved 36% revenue growth, 32% EBITDA growth, and 22% FFO per share growth while deleveraging its balance sheet [4][11] - The fourth quarter reported net income attributable to common stockholders of $0.14 per diluted share and normalized FFO of $1.45 per diluted share, representing 28.3% year-over-year growth [33] Business Line Data and Key Metrics Changes - The senior housing operating portfolio reported a same-store net operating income (NOI) growth of 20.4% in the fourth quarter, marking the 13th consecutive quarter of growth exceeding 20% [18][19] - Organic revenue growth remained around 10%, driven by 400 basis points of year-over-year occupancy gains and healthy rate growth [8][19] Market Data and Key Metrics Changes - The company noted a significant increase in occupancy, with 400 basis points of year-over-year growth, among the highest levels in its history [19] - The company expects strong occupancy upside in 2026, supported by a growing 80+ population and a favorable demand-supply picture [8][9] Company Strategy and Development Direction - The company is focused on transforming from a real estate deal-oriented business to an operations and technology-first model, emphasizing customer trust and employee experience [6][10] - A significant capital rotation was executed, with nearly $11 billion in net investment activity, primarily in high-growth senior housing properties [11][12] - The company launched its private funds management business and closed Senior Housing Equity Fund One, marking a significant expansion of its capital allocation strategy [17][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for senior housing products, anticipating continued growth despite macroeconomic uncertainties [8][9] - The company highlighted the importance of operational excellence and technology in driving future growth and enhancing customer experiences [22][24] Other Important Information - The company completed the sale of its outpatient medical business for $7.2 billion, which significantly contributed to its capital rotation strategy [11][12] - The management team has undergone significant changes, with a focus on attracting high-caliber talent to drive the company's transformation [23][24] Q&A Session Summary Question: Can you provide more quantitative insights on compounding and duration? - Management emphasized the focus on partial earnings and cash flow growth, indicating a belief in double-digit NOI growth for the long term [49][51] Question: What challenges remain in the senior housing space? - Management acknowledged that while the data science platform is mature, there is still significant work to be done in operational technology [55][56] Question: How does the Integra disposition frame the skilled nursing portfolio? - The skilled nursing strategy involves acquiring assets with operational turnaround stories, with a focus on high-quality operators [60][61] Question: What is the size and characteristics of the non-same store pool? - The non-same store portfolio is primarily composed of recently acquired assets, with characteristics similar to the same store portfolio but generally less occupied [63][64] Question: How is occupancy performance being driven? - Management highlighted the importance of marketing, customer experience, and operational execution in driving occupancy growth [68][69] Question: How long can the company continue to acquire unstabilized SHOP? - Management stated that acquisition opportunities depend on market conditions and emphasized the goal of creating value for shareholders [71][72]

Financial Data and Key Metrics Changes - In 2025, the company achieved 36% revenue growth, 32% EBITDA growth, and 22% FFO per share growth while deleveraging its balance sheet [4][33] - The fourth quarter reported net income attributable to common stockholders of $0.14 per diluted share and normalized FFO of $1.45 per diluted share, representing 28.3% year-over-year growth [33][34] - Total portfolio same-store NOI growth was 15%, driven by 20.4% growth in the senior housing operating portfolio [18][33] Business Line Data and Key Metrics Changes - The senior housing operating portfolio reported 13 consecutive quarters of same-store net operating income growth exceeding 20% [7][18] - Organic revenue growth remained around 10%, supported by 400 basis points of year-over-year occupancy gains and healthy rate growth [8][19] - ExPOR (expenses per occupied room) growth increased by only 0.8%, leading to strong margin expansion of 270 basis points [20][21] Market Data and Key Metrics Changes - The demand for senior housing products continues to strengthen, with occupancy gains during a seasonally slower period [19] - The company noted that the 80+ population is expected to grow rapidly, enhancing end-market demand for its products [8][9] - New construction remains at low levels, contributing to a favorable supply-demand dynamic [9] Company Strategy and Development Direction - The company is focused on transforming from a real estate deal shop to an operations and technology-first business, emphasizing customer trust and employee experience [6][10] - A significant capital rotation was executed, with nearly $11 billion in net investment activity, primarily in high-growth senior housing properties [11][12] - The company launched its private funds management business and closed Senior Housing Equity Fund One, indicating a strategic expansion into capitalized businesses [17][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive outsized NOI growth and margin expansion in the coming years, despite macroeconomic uncertainties [21][24] - The company is committed to investing in technology and talent to enhance operations and customer experience [22][23] - Management highlighted the importance of operational execution and customer experience in driving occupancy and revenue growth [68] Other Important Information - The company completed the sale of its outpatient medical business for $7.2 billion, which significantly contributed to its capital rotation strategy [11][26] - The management team has undergone significant changes, with a focus on retaining top talent and enhancing incentive structures [39][40] Q&A Session Summary Question: Can you provide more quantitative insights on compounding and duration? - Management emphasized the focus on partial earnings and cash flow growth, indicating a belief in double-digit NOI growth for the long term [50][52] Question: What challenges remain in the senior housing space? - Management acknowledged that while the data science platform is mature, there is still significant work to be done in operational technology [54][55] Question: How does the Integra disposition frame the SNF portfolio for future acquisitions? - The skilled nursing strategy involves acquiring assets with operational turnaround potential, with proceeds from sales being opportunistically deployed [59][60] Question: What is the current status of the non-same store pool? - The non-same store portfolio is characterized by lower occupancy and is strategically focused on acquiring assets with significant upside potential [62][64] Question: How is occupancy performance being driven? - Management highlighted the importance of marketing, customer experience, and operational execution in driving occupancy growth [68][69]

Financial Data and Key Metrics Changes - Welltower reported a 36% revenue growth, 32% EBITDA growth, and 22% FFO per share growth in 2025, while also deleveraging its balance sheet [3][4] - The company ended the year with a net income attributable to common stockholders of $0.14 per diluted share and normalized FFO of $1.45 per diluted share, representing a 28.3% year-over-year growth [32] Business Line Data and Key Metrics Changes - The senior housing operating portfolio achieved a same-store NOI growth of 20.4%, marking the 13th consecutive quarter of growth exceeding 20% [17][18] - Organic revenue growth remained around 10%, driven by 400 basis points of year-over-year occupancy gains and healthy rate growth [6][18] - The company reported a same-store revenue growth of 9.6% across all geographies and senior housing acuity levels [18] Market Data and Key Metrics Changes - The demand for senior housing products continues to strengthen, with occupancy gains of 400 basis points year-over-year, among the highest levels in the company's history [18] - The company noted that new construction remains at trough levels, contributing to a favorable supply-demand picture [6] Company Strategy and Development Direction - Welltower is focused on transforming from a real estate deal shop to an operations and technology-first business, emphasizing customer trust and employee experience [4][5] - The company launched its private funds management business and made significant investments in technology and talent to enhance operational efficiency [3][16] - Welltower aims to continue driving meaningful alpha for shareholders through the full-scale modernization of its senior housing portfolio via the Welltower Business System [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the high visibility of end-market demand for senior housing, particularly as the 80+ population continues to grow [6] - The company anticipates another year of strong occupancy upside in 2026, along with strong pricing power [6][19] - Management acknowledged the challenges of the senior living business but emphasized the importance of execution and operational excellence [8][20] Other Important Information - Welltower completed nearly $11 billion of net investment activity in 2025, primarily in high-growth senior housing properties [10] - The company sold its outpatient medical business for $7.2 billion, which significantly contributed to its capital rotation strategy [10][25] - Welltower launched its Senior Housing Equity Fund One, raising approximately $2.5 billion in equity commitments, marking a significant expansion of its capital allocation strategy [30] Q&A Session Summary Question: Can you provide more quantitative insights on compounding and duration? - Management emphasized that the focus is on partial earnings and cash flow growth rather than just same-store metrics, indicating a belief in double-digit NOI growth for the long term [48][49] Question: What challenges remain in the senior housing space? - Management acknowledged that while the data science platform is mature, there is still significant work to be done on the operational technology side [53][54] Question: How does the Integra disposition frame the SNF portfolio for future acquisitions? - Management described the skilled nursing portfolio as a structured credit investment, focusing on acquiring assets with operational turnaround stories [57][58] Question: How long can the company continue to acquire unstabilized SHOP? - Management stated that acquisition opportunities depend on market conditions and emphasized the goal of creating value for existing shareholders [67][69]

February 10, 2026 Forward Looking Statements and Risk Factors This document contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "pro forma," "estimate" or similar expressions that do not relate solely to historical matters, Welltower is making forward-looking statements. These statements include, among others, management's expectations regar ...

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Core Insights - Welltower (WELL) reported $3.18 billion in revenue for Q4 2025, a year-over-year increase of 41.3% [1] - The EPS for the same period was $1.45, compared to $0.19 a year ago, indicating significant growth [1] - The revenue exceeded the Zacks Consensus Estimate of $2.71 billion by 17.24%, while the EPS surprise was 0.81% above the consensus estimate of $1.44 [1] Revenue Breakdown - Interest income was reported at $54.44 million, which is below the two-analyst average estimate of $59.86 million, reflecting a year-over-year decline of 23.4% [4] - Rental income reached $523.85 million, surpassing the average estimate of $479.66 million, marking a year-over-year increase of 35.6% [4] - Other income was reported at $46.66 million, significantly above the average estimate of $28.19 million, with a year-over-year increase of 47.7% [4] Stock Performance - Welltower's shares have returned +5.7% over the past month, while the Zacks S&P 500 composite showed no change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Welltower (WELL) reported quarterly funds from operations (FFO) of $1.45 per share, exceeding the Zacks Consensus Estimate of $1.44 per share, and up from $1.13 per share a year ago [1] - The company achieved an FFO surprise of +0.81% for the quarter, and has surpassed consensus FFO estimates in all four quarters of the past year [2] - Welltower's revenues for the quarter reached $3.18 billion, surpassing the Zacks Consensus Estimate by 17.24%, compared to $2.25 billion in the same quarter last year [3] Financial Performance - The FFO for the previous quarter was $1.34 per share, which was also above the expected $1.30, resulting in a surprise of +3.08% [2] - The company has consistently exceeded revenue estimates over the last four quarters [3] Stock Performance - Welltower shares have increased approximately 6.3% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The current consensus FFO estimate for the upcoming quarter is $1.41 on revenues of $2.77 billion, and for the current fiscal year, it is $6.02 on revenues of $11.88 billion [8] - The estimate revisions trend for Welltower was mixed prior to the earnings release, which may influence future stock performance [7] Industry Context - The REIT and Equity Trust - Other industry, to which Welltower belongs, is currently ranked in the bottom 27% of over 250 Zacks industries, suggesting potential challenges ahead [9]