TOLEDO,
Ohio, Jan. 29, 2025 /PRNewswire/ -- Welltower
Inc. (NYSE: WELL) (the "Company"), the world's largest owner of
healthcare and wellness infrastructure and a pioneer in the
application of data science to real estate, today announced the
launch of its private funds management business to manage third
party capital. The new business will pursue opportunities to
invest across the capital structure in the healthcare and wellness
real estate sectors. A wholly owned subsidiary of the Abu
Dhabi Investment Authority ("ADIA") is committing, as an anchor LP
to the first fund managed by the new business, 20% or up to
$400 million of capital for the first
fund. Welltower and Welltower's management is also
contributing 20% of the LP capital up to a total of $400 million.
Through the use of Welltower's industry-leading data science
platform, the first fund will seek to identify and acquire seniors
housing portfolios in the United
States, focusing on properties that are either stable or
have a near-term path to stabilization with an ability to enhance
the cash flow profile through Welltower's operating platform and
the secular tailwinds of the industry. As the largest owner
of seniors housing properties with nearly $20 billion of capital deployment since the
fourth quarter of 2020, Welltower has established an expansive
network of industry relationships through which opportunities for
the new business are expected to be sourced. The new business will
also benefit from Welltower's robust partnerships with many of the
country's most astute seniors housing operators. Given the large
opportunity set, Welltower will continue to acquire unstabilized
assets on its balance sheet, consistent with its strategy over the
last few years.
Welltower believes the backdrop for acquisitions within the
seniors housing sector remains attractive, with capital deployment
opportunities having expanded further in recent quarters.
Despite the sharp improvement in seniors housing fundamentals
following the COVID pandemic, challenging capital markets
conditions - characterized by substantially higher interest rates
and a dearth of debt availability - continue to persist, resulting
in a further rise in motivated sellers with a need to address
upcoming debt maturities and other capital structure issues.
Additionally, ownership of seniors housing remains fragmented,
which Welltower believes provides significant longer-term
acquisition opportunities.
"We are delighted to announce the formation of Welltower's
private funds management business," said Shankh Mitra, Welltower's
CEO. "We have been patiently awaiting the optimal environment
to launch this platform as the right fund vintage is a key
component to driving success of the business. Not only do we
believe we are in the early stages of a protracted period of
compounding cash flow growth for the seniors housing sector, but
also expect our near and long-term capital deployment opportunities
to expand meaningfully. Importantly, we expect that Welltower's
operating platform and proprietary data science capabilities will
serve as a critical resource and competitive advantage for the
private funds management business."
Mohamed Al Qubaisi, Executive
Director of the Real Estate Department at ADIA, said: "Welltower
has a successful track record in the healthcare and wellness real
estate sector, based on its operational expertise and an extensive
network of operating partners. Its data science-led approach is a
key differentiator and will play an important role in the
identification and evaluation of opportunities for the new funds
management business."
The initial investments by the new business will include a
portfolio of six high-quality seniors housing communities for a
total purchase price of $240 million,
which was acquired through a privately negotiated off-market
transaction. With an average age of eight years, the
portfolio includes 778 units and is located in attractive
micro-markets in which Welltower maintains strong regional density
with communities expected to be transitioned to existing Welltower
operators. Current portfolio occupancy and NOI margins stand at 92%
and 31%, respectively.
In addition, an affiliate of Welltower is under contract to
acquire NorthStar Healthcare Income, Inc., comprising a portfolio
of 40 seniors housing communities (the "NorthStar Portfolio"), for
an enterprise value of approximately $900
million. The portfolio includes 4,886 units and has
been significantly renovated in recent years. Additional
details regarding the portfolio will be provided following
completion of the transaction, which is subject to a "go-shop"
period and customary closing conditions. Subject to satisfaction of
such closing conditions and closing of such transaction, Welltower
anticipates that the NorthStar Portfolio will be allocated to an
entity affiliated with the funds management business at such
closing or some time thereafter.
Mr. Mitra added, "We believe that our fellow shareholders will
strongly benefit from the creation of a new business vertical for
the Company. Our funds management business is intended to
result in significant revenue generation opportunities, including
asset management fees and potential carried interest upon achieving
certain performance hurdles. The new business is also intended to
provide a secure source of capital during varying economic cycles
to capitalize on potential capital allocation opportunities."
He continued, "We also believe the new business will play a
critical role in supporting the career goals of key talent at both
Welltower and our operating partners, an important aspect to
sustaining our current growth trajectory. At Welltower,
following years of training, mentorship and development of our team
members, we have created a deep leadership bench, which is
instrumental to driving our growth - but this effort has not gone
unnoticed as we've fostered the most sought-after talent in the
real estate space. In our commitment to retaining the next
generation of leadership at the Company, management's portion of
any carried interest earned from the fund will be fully allocated
to our next generation of emerging leaders. While Welltower's
executive officers will participate in the new business as
investors, they will be ineligible to receive any carried
interest. This action constitutes the second step of
Welltower's long-term talent retention strategy as outlined in our
press release dated January 2,
2025. Additionally, we expect the assets targeted by the
funds management business to further enhance the deep regional
density that Welltower has created over many years. Our regional
densification strategy is especially important to providing career
growth opportunities for site level employees and reducing the
employee turnover that has long plagued our industry. These actions
drive a better experience and higher satisfaction for key
stakeholders – the residents and the employees in all our
communities in the regional area."
Mr. Mitra added, "The data accumulated from acquired properties
will further enhance the network effect we have already created
within our data science platform, resulting in a wider and deeper
moat for Welltower. Over the past decade, we have built a unique
data science platform, the first of its kind in the real estate
industry, powered initially by machine learning, then deep
learning, and finally by AI - all prior to these terms entering the
mainstream vernacular. The funds business represents our first
foray into creating a capital light monetization of our data
science platform.
Mr. Mitra concluded, "As evidenced by our recent announcements,
including the strengthening of our leadership team and today's
launch of our private funds management business, Welltower will
continue to pursue all opportunities to extend the duration of our
long-term compounding of per share cash flows for our existing
owners."
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any security, nor shall there be
any sales of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
Forward-Looking Statements and Risk Factors
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
When Welltower uses words such as "may," "will," "intend," "seek,"
"should," "believe," "expect," "anticipate," "project," "estimate"
or similar expressions that do not relate solely to historical
matters, Welltower is making forward-looking statements.
Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties that may cause Welltower's
actual results to differ materially from Welltower's expectations
discussed in the forward-looking statements. This may be a result
of various factors, including, but not limited to: the status of
the economy; the status of capital markets, including availability
and cost of capital; issues facing the health care industry,
including compliance with, and changes to, regulations and payment
policies, responding to government investigations and punitive
settlements and operators'/tenants' difficulty in cost effectively
obtaining and maintaining adequate liability and other insurance;
changes in financing terms; competition within the health care and
seniors housing industries; negative developments in the operating
results or financial condition of operators/tenants, including, but
not limited to, their ability to pay rent and repay loans; the
success of Welltower's efforts to establish and develop new teams
and strategies; the ability of Welltower's investment teams to
identify appropriate investment opportunities; the conditions
impacting the private fund management industry, including its
competitiveness and the level of regulation on private fund
managers; Welltower's ability to successfully compete for private
fund investors, professional talent and investment opportunities,
and to effectively manage investor withdrawals; Welltower's ability
to appropriately manage conflicts of interest; the expected
concentration of private fund investments in healthcare properties;
Welltower's ability to transition or sell properties with
profitable results; the failure to make new investments or
acquisitions as and when anticipated; natural disasters, health
emergencies (such as the COVID-19 pandemic) and other acts of God
affecting Welltower's properties; Welltower's ability to re-lease
space at similar rates as vacancies occur; Welltower's ability to
timely reinvest sale proceeds at similar rates to assets sold;
operator/tenant or joint venture partner bankruptcies or
insolvencies; the cooperation of joint venture partners; government
regulations affecting Medicare and Medicaid reimbursement rates and
operational requirements; liability or contract claims by or
against operators/tenants; unanticipated difficulties and/or
expenditures relating to future investments or acquisitions;
environmental laws affecting Welltower's properties; changes in
rules or practices governing Welltower's financial reporting; the
movement of U.S. and foreign currency exchange rates; Welltower's
ability to maintain its qualification as a REIT; key management and
investment personnel recruitment and retention; and other risks
described in Welltower's reports filed from time to time with the
SEC. Welltower undertakes no obligation to update or revise
publicly any forward-looking statements, whether because of new
information, future events or otherwise, or to update the reasons
why actual results could differ from those projected in any
forward-looking statements.
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SOURCE Welltower Inc.
