Shares in Welltower, the world’s most valuable real estate company, lost more than 5% of their value on Tuesday, even as investors focused on senior housing projected revenue and profits to continue rising at the end of the year.
The Toledo, Ohio-based REIT is the largest owner of senior housing in the US, acquiring 141,000 units as of 2020, and is accelerating its growth efforts with $21B of investment activity closed or contracted so far, according to an investor presentation published Monday.
Novelle Senior Living, a recently built senior housing community in San Jose, California, was acquired by Welltower for $100M in August.
Net operating income of Welltower’s senior housing operating portfolio in the third quarter increased 21% from a year earlier as occupancy increased from 87% to 90.2%.
“As the community fills in, the deliberate and methodical handover of occupancy to price as a driver of revenue growth is taking place below the surface,” Welltower CEO Shankh Mitra said on the call.
Senior housing has become one of the best-performing asset classes, as a growing elderly population collides with construction in the sector at a 15-year low.
NIC Map, which tracks fundamentals in the senior living sector, estimates that an additional 578,000 units will need to be built by 2030 to keep up with demand, but only 24,000 were built this summer.
Welltower raised net income and funds from operations, the main cash flow metrics, which the company now expects to grow by 23% this year from 2025.
The REIT’s quarterly revenue of $3.7B and profit of $415M increased by 38% and 47%, respectively, from Q3 2025. However, they came in below analyst expectations, sending the stock price down from $240 per share to less than $227 on Thursday, removing approximately $5B in value.
It is still the most valuable REIT with a market capitalization of $163.4B, ahead of Prologis, which has a market capitalization of $120B. Welltower shares are still up more than 21% this year and will nearly triple by 2021.
Last year Mitra was the second-highest compensated CEO of a public company, behind Elon Musk, The Wall Street Journal reported. Most of the $821M in compensation came in the form of stock bonuses determined in companies that hit certain growth metrics, a sticking point for investment advisers who criticized the package as “management friendly” and encouraging growth for growth’s sake.
In a call on Tuesday, Mitra said Welltower has been selective in its buying spree, highlighting the company’s “irreplaceable data science platform” and the deal execution process that closed 196 deals in 204 business days but rejected 97% of filtered opportunities.
“If we never buy another asset, I’ll be fine,” he said.
Among the purchases was the $100M acquisition of a newly built complex in San Jose, California, and a four-property portfolio in the suburbs of Philadelphia with Bain Capital and Capitol Seniors Housing.
Mitra also highlighted Welltower’s opportunity to continue buying properties in an increasingly competitive space. They pegged the amount of senior housing debt maturing in 2027 and 2028 at between $10B and $12B per year.
“A lot of this debt originates between 2020 and ’22 in a different rate environment,” he said. “Owners of these assets are faced with a critical decision: recapitalize or sell. While some owners may recapitalize, most will sell as the impact of rate increases offsets better industry fundamentals. That’s where Welltower comes in.”
Welltower and other traditional healthcare REITs like Ventas and National Healthcare Properties have gained market share this year, selling less profitable medical office buildings to buy assisted living and independent living communities. REITs account for 36% of all US senior housing deals this year, up from 15% in 2023, according to Walker & Dunlop.
But they are in an increasingly crowded place. There were $32.2B in sales in the 12 months ending in June, according to Walker & Dunlop, an annual jump of 74%. Wall Street figures like Morgan Stanley and BDT & MSD Partners bought portfolios, eager to take advantage of the “silver tsunami.” The first baby boomers, a generation of more than 70 million people, turned 80 this year.
Welltower, which works with on-the-ground operators to open resource-intensive properties, was a somewhat early mover for the trend, and has taken its lumps. The skilled nursing home operator it works with, Genesis Healthcare, filed for bankruptcy in 2024, and Welltower repaid $130M in senior debt just last quarter through restructuring.
At one point, Genesis represented 20% of Welltower’s revenue, Mitra said on the call. Most exited the relationship in 2021 but continued to restructure deep investments in corporate debt until this final payment.
“Genesis taught us the business of skilled nurses and many intricacies, allowing us to overcome the negative bias of the board through this experience,” said Mitra. “We learned to underwrite the operator, not just the building, and the structure for the downside, because we have lived.”
The company bought eight nursing home properties for a combined $850M during the third quarter, continuing its investment into the spectrum of the senior housing sector.
“The current generation is behind us,” Mitra said. “The lessons will stay with us for a long time.”