Welltower Launches Private Funds Management Business: A Strategic Pivot for Growth

Welltower Inc. (NYSE: WELL), the world's largest owner of healthcare and wellness infrastructure, has announced the launch of its private funds management business. This strategic move, unveiled on January 29, 2025, is set to enhance Welltower's business model and competitive positioning by managing third-party capital in the healthcare and wellness real estate sectors. The new platform will focus on acquiring seniors housing portfolios in the United States, leveraging Welltower's industry-leading data science platform to identify and acquire stable or near-term stabilized properties with an ability to enhance cash flow profiles.

The Abu Dhabi Investment Authority (ADIA) is committing 20% (up to $400 million) as an anchor limited partner (LP) to the first fund managed by the new business. Welltower and its management are also contributing 20% of the LP capital, up to a total of $400 million. This matching commitment structure creates immediate scale while maintaining significant skin in the game for Welltower and its investors.

The first fund will seek to acquire seniors housing portfolios in the United States, focusing on properties that are either stable or have a near-term path to stabilization. The fund will aim to enhance the cash flow profile of these properties through Welltower's operating platform and the secular tailwinds of the industry. The new business will benefit from Welltower's expansive network of industry relationships and robust partnerships with many of the country's most astute seniors housing operators.

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. This results 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.

The immediate deployment into a $240 million portfolio with 92% occupancy and 31% NOI margins, plus the pending $900 million NorthStar portfolio acquisition, demonstrates the robust pipeline of opportunities for the new business. The innovative approach to carried interest allocation, directing it to emerging leaders while excluding executive officers, creates a powerful retention mechanism for key talent.

Welltower's launch of its private funds management business marks a transformative strategic pivot that significantly enhances its business model and competitive positioning. The new platform offers several advantages, including capital-efficient growth, diversified capital sources, monetization of proprietary data science capabilities, an attractive acquisition environment, immediate scale and pipeline, and talent retention. By leveraging these aspects, Welltower is well-positioned to capitalize on opportunities and mitigate risks in the current market conditions and competitive landscape in the healthcare and wellness real estate sectors.