Welltower Q3 2026: normalized FFO per share up 24.6% to $1.67 as senior housing NOI rose 21%

Welltower, the largest US healthcare real estate investment trust (REIT), grew normalized funds from operations (FFO) per share 24.6% to $1.67 in the third quarter of 2026, from $1.34 a year earlier. As in every recent quarter, the engine was its Seniors Housing Operating portfolio (SHO): senior living communities where Welltower keeps the operating profit rather than collecting a fixed rent. At the 1,052 SHO communities it owned in both periods, property profit rose 21.0% as average occupancy climbed to 90.2% from 87.0% and revenue per occupied room rose 5.3%, while costs per occupied room rose less than 1%. Management raised full-year normalized FFO guidance to $6.47–$6.53 per share from $6.36–$6.44. The less flattering detail is that the costs Welltower leaves out of "normalized" FFO nearly doubled, and its guidance for the unadjusted FFO measure went down. This report is written from the October 26 earnings release (Exhibit 99.1 to the 8-K) and the company's supplemental package; the full 10-Q, with the cash flow statement and management's discussion, has not been filed yet.

Why FFO, not net income, is the number to watch

A REIT's GAAP profit is dragged down by depreciation, an accounting charge that assumes buildings lose value each year even when they don't, and is pushed around by one-time gains when properties are sold. FFO (funds from operations) adds depreciation back and strips out property-sale gains and impairments, so it tracks the cash the portfolio generates. Welltower's normalized FFO goes one step further and also removes items management considers unusual, such as transaction costs and debt-repayment charges. It is the figure management guides on and the one most analysts value Welltower by, which is why this report also checks how much is being left out of it.

Same-store NOI (net operating income: property revenue minus property operating costs, before corporate overhead, interest and depreciation) compares only properties owned through both periods, so it shows how the existing buildings performed without the effect of acquisitions.

The quarter in figures

Revenue grew 38.4%, but most of that is acquisitions, not existing buildings. Resident fees and services, the line that holds SHO revenue, rose 51.4% to $3.12 billion, while rental income fell 2.2% to $488.6 million as Welltower sold outpatient medical buildings (its outpatient medical portfolio shrank from 437 properties a year ago to 97). Same-store SHO revenue rose a more modest 9.1%.

The GAAP operating margin shown above fell because acquisitions bring depreciation (up 38.6% to $706.8 million) and because "other expenses" rose to $124.7 million from $44.7 million. Neither reflects how the buildings themselves are running; same-store SHO NOI margin widened 3.1 points.

Senior housing: occupancy did the heavy lifting this quarter

Same-store SHO occupancy has risen in each of the last four quarters: 87.0%, 88.2%, 88.4%, 89.0% and now 90.2%. The 1.2-point gain from Q2 to Q3 is the largest sequential step in that run. Pricing behaved differently. Revenue per occupied room was up 5.3% on the year but slipped slightly from Q2 ($6,074 to $6,066), so the sequential improvement came from more residents, not higher rates. Cost per occupied room was $4,147, up 0.8% on the year, which is why so much of the extra revenue reached profit.

The other segments grew far more slowly: same-store NOI rose 4.2% in Seniors Housing Triple-net (where operators pay Welltower a fixed rent), 2.4% in Outpatient Medical and 2.8% in Skilled Nursing. SHO now makes up about 74% of total same-store NOI ($604.3 million of $820.0 million), so the company's results are increasingly a bet on one business.

The acquired communities are a step behind. The 758 SHO properties not yet in the same-store pool ran at 84.3% occupancy and a 27.2% NOI margin in Q3, roughly unchanged from Q2 (84.5%, 27.4%), against 90.2% and 31.7% for the same-store group.

Deals and the balance sheet

Welltower completed $4.1 billion of pro rata gross investments in Q3, including $2.7 billion for 43 senior housing communities, and sold $284 million of properties plus $200 million of loan repayments. Year to date it has closed or contracted $21.0 billion of investments, $7.7 billion of it after quarter end. Funding came largely from new shares: common stock and capital in excess of par value rose by about $10.5 billion over twelve months. Net debt was 3.02 times annualized adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, excluding one-off items) and 9.2% of enterprise value, which is low leverage for a REIT. In July it issued C$1.15 billion of Canadian-dollar notes at a 3.95% weighted-average coupon. The board declared a $0.85 quarterly dividend, 51% of normalized FFO per share.

Takeaway: The operating story is as strong as it has been: same-store senior housing occupancy jumped 1.2 points in a single quarter and profit at those communities rose 21%. But part of the 24.6% normalized FFO growth comes from what Welltower chooses to leave out. Excluded costs rose to $0.25 per share from $0.14, and management cut its full-year NAREIT FFO guidance while raising the normalized figure. Investors should judge Welltower on both measures, not only the one it guides on.

What the headline numbers hide

• The adjusted measure is pulling away from the standard one. Normalized FFO per share rose 24.6%; NAREIT FFO per share rose 18.3%. The $187.7 million of normalizing items (up from $94.9 million) were mostly $124.7 million of "other expenses" (transaction costs and legal fees, including the HC-One restructuring), plus $9.8 million of casualty losses, $6.8 million of debt-repayment losses, $6.1 million of currency losses and $37.3 million attributed to joint ventures and minority partners. Year to date, other expenses total $242.8 million. Deal costs are arguably one-off for any single deal, but Welltower has done $21 billion of deals this year, so they are a regular cost of its growth model.
• Guidance shows the same split. The new full-year range raises normalized FFO to $6.47–$6.53 from $6.36–$6.44, but lowers NAREIT FFO to $6.07–$6.13 from $6.21–$6.29, because expected normalizing items rose to $298 million from $111 million.
• GAAP EPS is helped by property sales and hurt by deal costs. Gains on dispositions and acquisitions of controlling interests were $114.7 million against $4.0 million a year earlier; net of real estate impairments, they added about $81.2 million, roughly $0.11 per share. Higher other expenses took away about the same amount. So the 31.7% GAAP EPS growth is not far from the underlying trend, but for offsetting reasons.
• Share count is growing, not shrinking. Average diluted shares rose 10.1%. There were no buybacks; per-share growth happened despite dilution because the acquired properties and same-store growth increased FFO faster (36.9% in dollars) than the share count.
• Taxes did not help this quarter. Income tax expense was $7.1 million against $2.3 million. (Earlier in 2026, $71.3 million of tax benefits were excluded from normalized FFO.)
• Cash conversion can't be checked yet. The release has no cash flow statement; operating cash flow, dividends paid and any repurchases will be in the 10-Q.

On balance the quarter is flattered: the business itself is growing fast, but the headline 24.6% normalized FFO growth relies on excluding $0.25 per share of deal-related and other costs (up from $0.14), and on the standard NAREIT measure growth was 18.3%.

Did last time's read hold up?

Our Q2 2026 report said the raised guidance implied about $1.65–$1.69 of normalized FFO per quarter in the second half, and that Q3 would show whether same-store SHO occupancy kept rising and whether acquired portfolios' margins moved toward the same-store level. Two of those three held: Q3 came in at $1.67, the middle of that range, and same-store occupancy kept climbing (the pool was reset this quarter, so Q3's 90.2% compares with 89.0% for the same 1,052 communities in Q2). The third did not: the non-same-store SHO margin stayed at about 27%, with no move toward the 31.7% same-store level.

Outlook

Management's updated 2026 guidance:

• Normalized FFO of $6.47–$6.53 per diluted share (was $6.36–$6.44); NAREIT FFO $6.07–$6.13 (was $6.21–$6.29); GAAP net income $3.31–$3.37 per share (was $3.11–$3.19).
• Same-store SHO NOI growth of about 20.25%–21.75% (was 18.5%–21.5%), based on 9.3% revenue growth from 350 basis points of occupancy gain and 5.1% RevPOR growth, and 4.6% expense growth (was 5.0%). Blended same-store NOI growth of 15.0%–16.25%.
• G&A of $267–$272 million, and about $1.9 billion of disposition proceeds over the next twelve months. As usual, guidance includes only investments already announced or closed.

Management's bridge attributes most of the $0.10 midpoint increase to investment and financing activity ($0.055) rather than same-store SHO NOI ($0.03). Year-to-date normalized FFO is $4.74 per share, so the full-year range implies $1.73–$1.79 for Q4, a step up from $1.67 that relies on the $7.7 billion of post-quarter deals starting to contribute.

Our view: the same-store trend makes the raised range look achievable. The points to watch in Q4 are whether pricing resumes growing sequentially once occupancy passes 90% (fewer empty rooms are left to fill), whether the acquired communities' 27% margin starts closing the gap, and whether the excluded-cost line keeps growing. If Welltower keeps closing several billion dollars of deals a quarter, NAREIT FFO, which counts those costs, will be the more conservative guide to per-share growth.