Welltower (NYSE:WELL) reported second-quarter results marked by higher senior housing occupancy, pricing gains and continued investment activity, while raising its full-year normalized funds from operations outlook.
Chief Executive Officer Shankh Mitra said the company generated a record quarter as demand for needs-based senior housing remained resilient amid macroeconomic and geopolitical uncertainty. Normalized FFO increased approximately 25% year over year to $1.60 per diluted share, while net income attributable to common stockholders was $0.61 per diluted share.
Senior housing drives operating growth
Total portfolio same-store net operating income increased 15.5% year over year, led by 20.5% growth in the senior housing operating portfolio, or SHOP. Chief Operating Officer John Burkart said senior housing now accounts for approximately 70% of Welltower’s total NOI and recorded its 15th consecutive quarter of NOI growth exceeding 20%.
Organic revenue rose 9.2%, supported by a 330-basis-point year-over-year increase in same-store occupancy and a 5.2% increase in revenue per occupied room, or RevPOR. Sequential spot occupancy increased 100 basis points during the quarter, compared with an 80-basis-point increase in the same period last year.
Expense growth remained restrained. Expense per occupied room, or ExpPOR, rose 0.7%, while compensation per occupied room increased 0.8%, which Burkart described as among the lowest growth rates in the company’s history. The resulting operating margin expanded 300 basis points year over year to more than 32%, above pre-pandemic levels, while SHOP flow-through margins reached 65%.
Mitra said occupancy gains and constrained supply have increased pricing power, particularly in communities approaching or exceeding 90% and 95% occupancy. He also cited the wealth held by the Baby Boomer generation and its willingness to pay for differentiated senior housing experiences and services.
During the question-and-answer session, Mitra said the portion of the portfolio with occupancy above 95% generated RevPOR growth of more than 6% and NOI growth above 20%.
Acquisition pace reaches $15.5 billion
Welltower said it has completed or has under contract approximately $15.5 billion of investments in 2026. Chief Investment Officer Nikhil Chaudhri said the company completed more than 30 transactions totaling $6.2 billion in the second quarter, acquiring 138 communities across the U.S., Canada and the U.K. The median transaction size was $46 million, and approximately 96% of second-quarter activity was sourced off-market.
Through the end of the second quarter, Welltower had completed nearly $9.5 billion of investments. The remaining approximately $6 billion of announced activity consists primarily of newer senior housing properties across 26 transactions. Those properties have an average age of six years, average in-place occupancy of about 75%, and were acquired at roughly a 20% discount to replacement cost, according to Chaudhri.
Chaudhri said the company’s acquisition strategy focuses on pursuing specific assets and portfolios based on granular market and property-level research, including opportunities involving family businesses, local owners and generational transfers. Mitra said many owners have seen cash flow recover to pre-COVID levels and are considering retirement or other pursuits after a difficult period for the sector.
Mitra emphasized that Welltower is not focused on acquisition yields or “spread investing,” but on future cash flow and total returns. He said newly acquired properties with lower occupancy can offer substantial operating upside as they transition to Welltower’s operating platform and management partners.
Technology and operating platform expansion
Management highlighted continued deployment of the Welltower Business System, or WBS, which is intended to improve customer and employee experiences and automate certain back-office workflows. Burkart said operators using WBS have begun refining site labor models and shifting time previously spent on paper-based administrative work toward resident-facing activities.
Mitra said the system’s primary objective is not simply efficiency, but improving the completeness and timeliness of information from interactions among residents, families, caregivers and community employees. He said operator performance can vary widely, with NOI growth ranging from near zero or negative levels to 30% or 40% for different operators.
Welltower expects deployment across its existing portfolio to take about three additional years, based on the current pace. The company said WBS has already been deployed at roughly 250 communities.
Capital position and outlook
During the quarter, Welltower raised $3.9 billion through share issuance, operating partnership unit funding and capital recycling. The company used capital activity and internally generated cash flow to repay nearly $1 billion of senior unsecured notes and fund $6.3 billion of gross investment activity.
Net debt to adjusted EBITDAR ended the quarter at 2.99 times, in line with a year earlier. Welltower ended the period with $2.1 billion in cash and said its cash position, recent capital activity and $1.1 billion of incremental dispositions provide capacity to fund approximately $6 billion of additional investment activity, most of which it expects to close later in the year.
After quarter-end, the company issued CAD 1.15 billion of senior unsecured notes in Canada across two tranches at a blended coupon of 3.95%. S&P revised the outlook on Welltower’s A- credit rating to positive during the quarter, following Moody’s earlier decision to revise the outlook on its A3 rating to positive.
For 2026, Welltower expects total portfolio same-store NOI growth of 13.75% to 16%. Its outlook calls for SHOP NOI growth of 18.5% to 21.5%, based on midpoint assumptions of 9.3% revenue growth, 5.1% RevPOR growth, 350 basis points of occupancy growth and approximately 1% ExpPOR growth.
The board also increased the quarterly dividend 15% to $0.85 per share, marking the third consecutive annual dividend increase.
About Welltower (NYSE:WELL)
Welltower Inc (NYSE: WELL) is a real estate investment trust (REIT) that acquires and manages real estate serving the health care industry. The company specializes in healthcare infrastructure, owning and operating a diversified portfolio of senior housing, post-acute and long-term care communities, and outpatient medical properties. Welltower’s assets are designed to support the delivery of health care services through a combination of leased properties, joint ventures, and other capital arrangements with health care operators and providers.
The company’s property types include assisted living, memory care, independent living and skilled nursing facilities, as well as medical office buildings and other outpatient-care real estate such as ambulatory surgery centers and specialty clinics.
