Emily Meckler

Emily Meckler of Green Street Advisors asked if Welltower is observing a leasing slowdown in its wellness housing portfolio, given the softening in the broader housing market.

Answer

CEO Shankh Mitra stated they are not seeing a slowdown, with NOI growth remaining strong in the 10-12% range. He clarified that any apparent dip in sequential reported metrics was a technical result of the timing of new properties entering the same-store pool, not a reflection of weakening underlying leasing demand in the core business.

Emily Meckler asked what percentage of properties have adopted the Welltower operating platform and whether there has been any pushback from operators that has delayed the rollout.

Answer

Executive John Burkart stated there has been no pushback due to their collaborative approach with operators. He declined to provide a specific rollout percentage, noting various aspects of the platform are in use across the portfolio. CEO Shankh Mitra added that the full implementation is a multi-year process, suggesting it is still in its early phases.

Emily Meckler from Green Street asked how expected 2025 expense growth in the U.S. senior housing portfolio compares to the U.K. and Canada, and about the impact of increased U.K. employment taxes and minimum wage.

Answer

CFO Tim McHugh confirmed that operating expense growth is expected to be higher in the U.K. than in the U.S., driven by the combined impact of cost-of-living adjustments and insurance costs. However, he noted that strong top-line revenue growth in the U.K. is partially offsetting these pressures, resulting in continued positive NOI growth.

An analyst from Green Street requested more color on the PACS portfolio, including the potential to re-tenant facilities and how coverage levels have trended. The analyst also asked if Omega's underwriting criteria in the U.S. has shifted due to potential changes in Medicaid reimbursement.

Answer

CFO Bob Stephenson stated that the approximately 50 buildings in the PACS portfolio perform extremely well, and Omega is confident they could be re-tenanted at current or higher rents if needed, though no such changes are planned. CEO Taylor Pickett confirmed that underwriting criteria have not changed despite potential Medicaid uncertainties, but the company is monitoring the situation closely.

Emily Meckler inquired if increased employment taxes and minimum wage in the U.K. have impacted coverage levels and underwriting criteria, and also asked for the percentage of foreign-born workers in U.S. skilled nursing facilities.

Answer

CIO Vikas Gupta stated that there have been no dramatic changes to U.K. coverage levels due to the tax and wage changes. SVP of Operations Megan Krull responded that she did not have the data on the percentage of foreign-born workers in U.S. SNFs, but noted some operators have legally brought in workers to supplement the nursing force.

Emily Meckler asked about the reason for a $12 million increase in the expectation for first-generation tenant improvement spending and inquired about any significant known move-outs, aside from Steward, that could impact future occupancy.

Answer

Interim CFO Austen Helfrich stated that the increase in TI spending is a direct result of the strong leasing absorption achieved year-to-date. He also confirmed that there are no other significant known move-outs to call out at this time that would create a temporary drag on occupancy.