HEALTHCARE INFLUENCER: Welltower Inc.
A number of strategic decisions have allowed Welltower Inc. to grow into a healthcare industry powerhouse, with an enterprise value in excess of $40 billion.
Healthcare REIT Welltower Inc.’s go-to market strategy is to concentrate on seniors housing, post-acute care and outpatient medical facilities in six urban markets: Boston, New York, Los Angeles, San Francisco, Seattle and Washington, DC.
Helmed by CEO and director Thomas DeRosa, Welltower is perhaps best known for its seniors housing footprint, having been one of the first companies of its kind to invest in the asset class. But it also invests in other healthcare assets such as its recent purchase of a 160,000-square-foot outpatient facility on the campus of Johns Hopkins Health System’s Howard County General Hospital in Columbia, MD, for $80 million. Lately it has been focusing on an emerging subcategory—luxury senior living—and is making investments in this area as well, in one case partnering with Hines to build a 140,000 square-foot, 17-story senior living and memory care facility in Manhattan’s Upper West Side.
Since DeRosa, who has been a director of the company since 2004, assumed his current position in April 2014 Welltower’s enterprise value has grown to over $40 billion. Much of the reason for the growth has been at least partially the result of strategic decisions he and the company’s executive bench have made, such as the interest in luxury senior housing and in recent years, a shift away from skilled nursing and towards private pay. DeRosa also oversaw the REIT’s acquisition of the Vintage Senior Living portfolio for $1.15 billion last year. Largely based in Southern California, the portfolio aligned neatly with Welltower’s strategic goals for the market.
Welltower has also been actively leveraging advanced technology to improve its operating performance, another initiative overseen by DeRosa. “A knowledge-based strategy aligned with our proprietary data and analytics capabilities is enabling Welltower to drive hundreds of basis points better relative operating performance from our senior housing assets even in a challenging new supply and labor environment,” he said recently during an earnings call.
Indeed the REIT is investing in its platform across the board — it has sold or restructured many of its holdings while completing some billions of dollars of investments and developments. It’s most notable deal this year was the $1.95 billion acquisition of Quality Care Properties, a complex transaction that included a separate agreement with ProMedica Health System in which ProMedica would acquire Quality Care’s troubled skilled nursing tenant HCR ManorCare and Arden Courts. Welltower is also building up its medical office investments, having made $500 million in deals for the third quarter. The REIT shows little signs of slowing down. Said DeRosa to investors during the earnings call: “In a sector that is seeing little capital deployed into long-term real estate assets, Welltower has completed approximately $3 billion of high-quality accretive investments and developments year-to-date and the year is not over.”
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