Executive Summary

Strong Q3: normalized FFO/share rose 20.7% YoY to $1.34, total SSNOI grew 14.5% YoY, with SHO SSNOI up 20.3% and 260 bps margin expansion on 400 bps occupancy gain and 4.8% SS RevPOR growth .
Guidance pivot: GAAP net income guidance cut to $0.82–$0.88 (driven by one‑time costs), but normalized FFO raised to $5.24–$5.30; blended SSNOI outlook lifted to 13.2–14.5% (SHO 20.5–22.0%) .
Portfolio transformation: announced ~$23B of transactions (closed/under contract), incl. £5.2B Barchester and £1.2B HC‑One acquisitions, and ~$7.2B OM portfolio sale with retained 8% preferred equity and profits interest; management expects accretion to normalized FFO in 2026 with long‑run growth upside .
Balance sheet/liquidity: Net Debt/Adj. EBITDA at 2.36x and ~$11.9B of liquidity; variable‑rate debt ~11.3% share, positioning company to fund pipeline without equity .
Potential stock catalysts: raised normalized FFO guidance, double‑digit SHO growth durability, and “Welltower 3.0” operating/tech alignment and 10‑year management incentive realignment .

What Went Well and What Went Wrong

What Went Well

SHO outperformance: 12th consecutive quarter of 20%+ SHO SSNOI growth; Q3 SHO SSNOI +20.3% YoY on 400 bps occupancy and 4.8% SS RevPOR growth; same‑store margin +260 bps .
Guidance raised for normalized FFO and SSNOI: 2025 normalized FFO/share increased to $5.24–$5.30 and blended SSNOI lifted to 13.2–14.5%; SHO SSNOI raised to 20.5–22.0% .
Strategic realignment: $23B program intensifies focus on seniors housing; OM exit is structured to retain upside via preferred equity and profits interest, balancing opportunity cost and future optionality .

Management quotes

“This new era places operations and technology first…Welltower 3.0, an operating company in a real estate wrapper.”
“We structured [the OM sale] with significant participating profit interest…so shareholders will still reap the benefit if values go up.”

What Went Wrong

GAAP EPS guidance lowered materially: 2025 net income/share cut to $0.82–$0.88 (from $1.86–$1.94) due primarily to the 10‑year executive program accounting and timing of OM sale gains; fourth‑quarter ~$1.1B upfront non‑cash charge expected .
Revenue slightly below consensus in Q3: total revenue of $2.686B was modestly under S&P consensus, though EBITDA exceeded; see Estimates Context .
Near‑term dilution/drag: management acknowledged initial yield give‑ups and lease‑up drag from 170+ recently acquired communities; accretion expected in 2026 and beyond .

Financial Results

Summary financials and trends

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenue ($B)	$2.423	$2.548	$2.686
Net Income Attrib. to Common ($M)	$257.96	$301.89	$280.56
Diluted EPS ($)	$0.40	$0.45	$0.41
Normalized FFO/Share ($)	$1.20	$1.28	$1.34
Total SSNOI YoY (%)	12.9%	13.8%	14.5%
SHO SSNOI YoY (%)	21.7%	23.4%	20.3%

Segment breakdown – same‑store NOI growth YoY

Segment SSNOI YoY	Q1 2025	Q2 2025	Q3 2025
Seniors Housing Operating	21.7%	23.4%	20.3%
Seniors Housing Triple‑net	5.1%	5.1%	3.1%
Outpatient Medical	2.7%	2.6%	4.0%
Long‑Term/Post‑Acute Care	2.8%	2.7%	2.7%

KPIs – SHO operating metrics

KPI	Q1 2025	Q2 2025	Q3 2025
SHO Total Occupancy (%)	85.1%	85.6%	86.9%
SHO SS RevPOR YoY (%)	5.9%	4.9%	4.8%
SHO SSNOI Margin Expansion (bps)	+290	+330	+260

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Income per Diluted Share	FY 2025	$1.86–$1.94	$0.82–$0.88	Lowered
Normalized FFO per Diluted Share	FY 2025	$5.06–$5.14	$5.24–$5.30	Raised
Blended SSNOI Growth	FY 2025	11.25%–13.25%	13.2%–14.5%	Raised
SHO SSNOI Growth	FY 2025	18.5%–21.5%	20.5%–22.0%	Raised
SH Triple‑net SSNOI Growth	FY 2025	3.5%–4.5%	3.5%–4.5%	Maintained
OM SSNOI Growth	FY 2025	2.0%–3.0%	2.0%–3.0%	Maintained
LT/Post‑Acute SSNOI Growth	FY 2025	2.0%–3.0%	2.0%–3.0%	Maintained
G&A Expense	FY 2025	$243–$249M	$243–$249M	Maintained
Stock‑Based Comp	FY 2025	~$52M (ex‑SPO/OPP)	~$52M (ex‑SPO/OPP/10‑yr program)	Maintained (scope noted)
Development Funding	2025	~$212M	~$80M	Lowered
Disposition Proceeds (pro rata)	Next 12 months	~$0.34B @ ~6.9% yield	~$9.0B @ ~7.1% blended yield	Raised

Dividend: $0.74/share declared for Q3; 218th consecutive quarterly dividend .

Earnings Call Themes & Trends

Topic	Q1 2025	Q2 2025	Q3 2025	Trend
Operations/Tech focus (Welltower 3.0)	Building WBS, recruiting ops talent	WBS roadmap; margin expansion via ops leverage	Launch of Welltower 3.0; tech quad (CTO/CIO/CInO); ops first	Intensifying
Incentive alignment	–	–	10‑year executive “all‑in” equity program; RIDIA 6.0 linking operator upside to WELL stock; $10M site grants	New framework
Portfolio mix/OM exit	OM stable peer‑leading occupancy	OM retention/occupancy strong	OM property management exit; retain 8% pref/profits interest	Shift to SHO
UK platform expansion	–	Amica Canada agreement noted earlier in year	Barchester (£5.2B) and HC‑One (£1.2B) acquisitions; long‑duration cash flows	Expanding
Capital allocation & leverage	Upgrades to A-/A3; low leverage	Net Debt/Adj. EBITDA 2.93x; liquidity build	2.36x; fully funded pipeline; asset sale vs equity rationale	Prudent/creative

Management Commentary

“This new era places operations and technology first…Welltower 3.0, an operating company in a real estate wrapper.”
“We’re exiting our outpatient property management business…to narrow focus and accelerate our digital transformation of senior living.”
“Together the dispositions and acquisitions are expected to be accretive to FFO per share in 2026…significant opportunity of earnings and cash flow growth in 2027 and beyond.”
“Our residual OM portfolio will essentially consist of premium net‑leased assets to investment‑grade tenants…minimal management intensity.”
On OM sale structure: “Preferred coupon is 8%…net yield after reinvestment is closer to 6%.”

Q&A Highlights

Funding choice (asset sales vs equity): management chose OM asset sales over equity to maximize long‑term value; spot equity might be cheaper near‑term but higher opportunity cost given growth duration expectations .
OM sale economics/structure: ~$7.2B value; 8% $1.2B preferred retained; no seller financing; estimated cap rate ~6.25% including management profitability; retained upside via profits interest .
Seniors focus vs volatility: comfortable with volatility, mitigate risk via ultra‑low leverage and WBS operational controls; focus on duration of growth .
Execution risk: deep internal deal/ops bench; WBS deployment and tech hires intended to reduce latency and drive network effects .
RIDIA 6.0 scope: founding class operators represent ~20% of SHO operating NOI; potential to expand .

Estimates Context

Q3 2025 vs S&P Global consensus:

Metric	Consensus	Actual	Result
Primary EPS ($)	0.508	0.546	Beat
Revenue ($B)	2.703	2.686	Miss (small)
EBITDA ($B)	1.013	1.059	Beat

Values retrieved from S&P Global.*

Prior context:

Q2 2025: Revenue $2.548B vs est. $2.500B; EBITDA $0.984B vs est. $0.942B (beats) . Values retrieved from S&P Global.*
Q1 2025: Revenue $2.423B vs est. $2.425B (inline/slight miss); EBITDA $0.913B vs est. $0.865B (beat) . Values retrieved from S&P Global.*

Implications: modest top‑line miss in Q3 offset by EBITDA beat suggests better flow‑through and operating leverage; raised normalized FFO guidance should prompt upward estimate revisions for 2025 FFO/SSNOI and 2026 accretion expectations .

Key Takeaways for Investors

SHO engine remains powerful: double‑digit SSNOI growth with occupancy and margin expansion continues; durability looks strong into 2026 amid constrained supply .
Guidance quality improved: normalized FFO raised while GAAP EPS reduced due to non‑cash, one‑time program costs; focus on cash earnings/SSNOI trajectory .
Portfolio re‑mix is intentional: exiting OM management and recycling into seniors housing (UK/US) enhances long‑duration NOI growth; retained upside in OM via 8% preferred/profits interest .
Low leverage/ample liquidity: 2.36x Net Debt/Adj. EBITDA and ~$11.9B liquidity fully fund the pipeline without equity—optionality preserved .
2026 setup: management telegraphed 2026 normalized FFO/share accretion from the transaction slate; near‑term lease‑up drag is a trade‑off for higher terminal growth .
Execution focus: Welltower 3.0 (ops/tech) and incentive realignment (10‑year plan, RIDIA 6.0) aim to compress latency and create network effects—monitor KPIs like conversion times, room turns, and SHO margins .
Trading lens: beat on EPS/EBITDA with raised normalized FFO guidance and transformational capital recycling are positive narratives; GAAP EPS optics could create noise—buy dips if thesis centers on cash growth and 2026+ compounding .

Appendix: Notable Transaction and Balance Sheet Details

Barchester (UK): ~£5.2B comprising 111 RIDEA communities, 152 triple‑net (3.5% escalators; 5‑yr reset at WELL’s election), and 21 developments; blended occupancy high‑70s with growth runway; underwritten to low‑double‑digit unlevered IRR .
HC‑One (UK): £1.2B acquisition; prior loan repaid (£660M); historic ~14% unlevered IRR on credit investment; now long‑duration ownership .
OM portfolio sale: ~$7.2B value; first $2B tranche closed in Oct; preferred equity $1.2B at 8% and profits interest retained; staged closings through mid‑2026 .
Leverage/coverage: Net Debt/Adj. EBITDA 2.36x; net debt to enterprise value 7.6%; adjusted fixed charge coverage ~6.2x for Q3 .

Footnotes:

Values retrieved from S&P Global (consensus and actuals for EPS, revenue, EBITDA).

WELLTOWER INC. (WELL)·Q3 2025 Earnings Summary