Welltower Increases Exposure To Shop, Ceo Warns It’s Harder Than It Looks

Welltower (NYSE: WELL) has in recent years transformed itself with RIDEA as the cornerstone of that change —but building a senior housing operating portfolio is harder than it looks, according to CEO Shankh Mitra.

Senior living REITs including LTC Properties (NYSE: LTC), National Health Investors (NYSE: NHI), Healthpeak (NYSE: DOC) and CareTrust (NYSE: CTRE) are all-in on the SHOP structure in 2026, not to mention other similar companies, like Ventas (NYSE: VTR), which embraced RIDEA over a decade ago. While Mitra believes the senior housing REITs and private funds currently standing up senior housing operating (SHO) portfolio segments are “capable organizations” that will “find their niche to do well,” his personal belief is that “writing credit checks is very different from owning equity in a complex and operational intensive business.”

He referenced the past challenges of Welltower’s predecessor, Health Care REIT, as a cautionary tale of those making the transition toward operations support linked with financial performance.

“These are full-cycle lessons and will be learned as such,” Mitra said. “Exposure alone does not define success in this challenging terrain.”

Toledo, Ohio-based Welltower’s SHO portfolio grew to comprise an even larger segment of the company’s NOI with its $1.3 billion sale of its share of a joint venture investment in Integra Health. The move “is further simplifying [Welltower] to a pure-play SHOP REIT,” wrote BMO Capital Markets analysts Juan Sanabria and John Kim in a Feb. 10 note to investors.

Also accelerating its investment pace is the fourth-quarter closing of its inaugural private fund vehicle, Seniors Housing Fund I, which secured about $2.5 billion of total equity commitments. Welltower also launched its first senior housing debt fund during the quarter.

In the fourth quarter of 2025, Welltower’s 875-community same-store senior housing operating portfolio added 20.4% to its net operating income compared with the same period in 2024. Occupancy for the segment increased to 89.5% in 4Q25, representing a gain of 400 basis points compared with 4Q24.

Fourth quarter 2025 funds from operations (FFO) attributable to common stockholders of $1.45 per diluted share, an increase of 28.3% over the fourth quarter of 2024.

Company leaders also during the company’s fourth-quarter 2025 earnings call expanded on “Welltower 3.0,” the company’s next phase of blending real estate with operational and technological capacity.

Welltower stock gained $7.04 on Wednesday, an increase of 3.51% to rest at $207.88 per share.

More growth on tap for senior housing operating portfolio

In 2025, Welltower completed $11 billion of net new investments, including acquisitions of over 900 senior living communities, thanks partly to its data science platform identifying opportunities across the country. To get there, the operator offloaded more than 300 medical office properties last year.

Welltower is starting off 2026 with a similar eye for growth via M&A, with $5.7 billion of deals closed or under contract to close this year. The REIT executed 37 transactions in the first six weeks of this year alone.

“The opportunity set is very robust in front of us, as long as we can make money through our operational and technological progress and our ability to allocate capital, we’ll do it,” Mitra said.

Currently, 59% of Welltower’s cash flow stems from its senior housing operating portfolio. The REIT is seeking to grow that share to 72% in the future and increase its total exposure to senior housing to 85% in that time.

Welltower expects further concentrating its holdings in senior housing will grow NOI and FFO “despite opportunistic dispositions to realize significant value,” the company wrote in an investor presentation.

All told, Welltower expects to close $3.5 billion of dispositions in 2026, including its Integra portfolio sales and $260 million of additional outpatient medical dispositions.

In the fourth quarter, Welltower closed a private fund vehicle, Seniors Housing Fund 1, netting $2.5 billion of equity commitments.

In 2025, Welltower also expanded its Fellowship Grant program to incentivize performance and reward execution on revenue goals. The grant program is now offering incentives that are 70% payouts that are performance based.

“We’re expanding this program beyond the originally announced 10 communities, and are exploring mechanics to expand internationally,” Mitra said.

This comes as Welltower has “designed longer, highly aligned incentive plans” to retain staff and reduce turnover at various vice president-level positions, Mitra added.

Technology and operations remain priorities

Welltower’s transformation into a SHOP powerhouse is part of a “decade-long” effort to “transform” the company from a “real estate deal shop” toward an “operations and technology first business.”

In 2026, Mitra sees the continued growth and rollout of the company’s Welltower Business System, the company’s “end-to-end” operating platform.

“The sheer complexity of scaling and unscalable business is where our value-add lies,” Mitra said.

To form the “Tech Quad,” Welltower named Jeff Stott, former senior vice president at Extra Space Storage, as Welltower’s Chief Technology Officer combined with Chief Data Science Officer Swagat Banerjee to bring new insights to bear . The other half of the quad includes recently appointed Chief Innovation Officer Logan Grizzel and Chief Information Officer Tucker Joseph to shape the company’s data infrastructure and scale tech platforms.

“As we further intensify our focus on senior housing we believe Welltower 3.0 is positioned to compound cash flows at a meaningfully higher rate than the portfolio’s prior growth profile.”

Mitra said he feels that while the company’s data science platform is “mature,” he noted there’s “a lot of work to do.” He pointed to success in the company’s funds management business that launched last year as proof of the “capability of that data science platform.”

In operations, Mitra said the company’s technology and data analysis efforts were “mediocre” or “mediocre-minus” with capabilities still being developed in how senior living providers interact with Welltower’s data science capabilities.

“We have a long way to go in that journey,” Mitra said. “I think this is a long journey in front of us.”

Looking ahead, Mitra said the industry would “never see us” sell its operating platform software to companies that could compete with Welltower, meaning only communities owned by the REIT would have access to data analysis and other insights.

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