Thank you for standing by. At this time, I would like to welcome everyone to the Welltower first quarter 2026 earnings conference call and webcast. I would now like to turn the conference over to Matt McQueen, Chief Legal Officer and General Counsel. The floor is yours.
Thank you and good morning. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Welltower believes any forward-looking statements are based on reasonable assumptions, the company can give no assurances that its projected results will be attained. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. With that, I'll hand the call over to Shankh Mitra for his remarks.
Thank you, Matt, and good morning, everyone. As usual, I'll review business trends and our capital allocation priorities, and the team will follow the usual cadence. We started the year on a strong note with the business continuing to fire on all cylinders. While the heightened geopolitical tension and macroeconomic volatility dominated the headlines, our niche, need-based, and private pay rental housing business did not miss a beat. Driven by a combination of strong organic growth and acquisition activity, our total revenue for the quarter increased 38% year-over-year, while adjusted EBITDA was up 36%. Most importantly, we delivered another quarter of strong bottom-line per share growth with FFO per share increasing 23% while we continue to deleverage our balance sheet and invest in people and systems. Our balance sheet provides us with substantial firepower and flexibility.
These results exceed our already high expectation coming into the year, enabling us to raise the midpoint of our full-year FFO per share guidance by $0.11 to $6.28. The pronounced mix shift of our portfolio resulting from a transformative 2025 capital allocation activity has already began to manifest itself. During the first quarter of this year, we reported 16.4% total portfolio same store net operating income growth, by far the highest in our history. This is largely a function of combined strength from our Seniors Housing Operating portfolio, which now comprises 74% of our same-store NOI, up from 57% first quarter of last year. This is the first time in history the annualized in-place NOI from our SHOP portfolio exceeded $3 billion.
During the first quarter, U.S. outperformed from an occupancy perspective with nearly 400 basis points of year-over-year growth. On the other hand, Canada, with higher overall occupancy levels than U.S. and U.K., posted growth closer to 300 basis points but generated report growth of 6%, giving you some perspective of the art of the possible as our overall portfolio leases up. Ultimately, all three regions made strong contributions, and we achieved nearly 10% organic revenue growth in the quarter. The subdued expense growth driven by scaling and the Welltower Business System same store NOI growth increased 22%, marking 14th consecutive quarter in which SHOP growth exceeded 20%.
Drilling a bit farther, the growth of RevPOR, the unit revenue continued to exceed ExPOR or unit expenses by a wide margin, resulting in another quarter of significant operating margin expansion of 320 basis points. Perhaps the most remarkable stat of the quarter was the circa 20% NOI growth generated by the communities with 95% plus occupancy. While I consider our recent seniors housing results to be somewhat satisfactory, I'm convinced that the best years of this business are squarely in front of us. With the total seniors housing portfolio occupancy at 87%, there is significant capacity in the system for us to drive multiple years of outsized occupancy gains along with continued pricing opportunity. With the operating leverage inherent in our high fixed cost business, margins should continue to drift higher.
As we have talked about during our most recent calls, what we remain most excited about and our most meaningful opportunity to drive bottom line growth is through the expanded role that technology, data, and innovation will play in our business with the ultimate goal of improving the experience of our customers and site level employees. The structural change driven by the Welltower Business System should continue to impact virtually every revenue and expense line item, driving the margins even higher. This digital transformation, which we are striving for, coupled with in place above market compensation and benefits for our site level employees, should result in lower turnover and lead happier customers. As I mentioned last quarter, Munger Grant is a clear example of how we are putting these ideas into action.
As I've written extensively in my annual letter, which came out a few weeks ago, we have built a system of scaled economic shared among all participants in the ecosystem. While shareholders will certainly benefit as we extend the duration of our growth. We want our operating partners, site-level employees, residents, and their families to benefit meaningfully as well. This is the only way to build and sustain a network effect in a complex adaptive system like ours. Turning to investment activity, almost exactly a year after Liberation Day, the conflict in Middle East has led to another period of significant capital markets volatility, creating a dynamic similar to that of last year. Recently, a spike in interest rates and gapping out of spreads has resulted in retrading of deals and various parties walking away from their newfound love of seniors housing.
It is almost comical to see how predictable tourist capital's behavior can be. Many of our counterparties have seen this movie before and opted to bypass the theater and instead transacting with us directly in privately negotiated deals. Some of the first-time sellers have learned the hard way that five to six months timeline required to reach a signed definitive agreement in real estate is an eternity in today's world. We behave exactly how we always have, running a first-class business in a first-class way and never walking from a handshake. Over the last 60 days, we have been busier than ever, generating an incredible amount of activity which Nikhil will describe to you shortly.
To provide some additional context, we completed $3.2 billion of investments during the quarter and have closed or are under contract to close an additional $7.3 billion of investments. Our investment pipeline remained robust, visible, and actionable in all three of our regions. In addition, often overlooked is our disposition activity, which totaled nearly $3 billion in the quarter as we continue to rotate capital into opportunities which we believe will both amplify and extend the revenue growth curve farther into the future. Overall, we have completed $11 billion of dispositions since the beginning of 2025, which has been meaningfully dilutive to our 2026 earnings per share. However, culling our portfolio of lower growth assets, we have meaningfully extended our growth curve on outer years.
For example, the assets we acquired in fourth quarter of last year are expected to deliver 10x level of growth in 2026 than the assets we have sold. Not selling this unprecedented volume of assets would have been easier, and frankly more fun, as 2026 FFO per share would have been meaningfully higher. We always have, and always will, choose hard over easy and long term over short term. We have a long and hard year of execution in front of us, but our team has never been more fired up as it is today. We shall see what the market gives us in this summer leasing season. With that, I'll pass it over to John.
Thank you, good morning, everyone. As Shankh mentioned, we are pleased with our start to the year, having delivered the portfolio same-store NOI growth of 16.4%, the highest level in our company's recorded history. Once again, our results were driven by our Seniors Housing Operating portfolio, which delivered a 14th consecutive quarter in which the same-store NOI growth exceeded 20%. During the first quarter, SHO portfolio year-over-year same-store revenue increased 9.5%, driven by 370 basis points of occupancy gains and strong pricing power, with RevPOR growth of 5%. Revenue growth was consistent across all three regions, led by the U.K. at 9.7%, followed by the U.S. at 9.5%, and Canada at 9.2%.
However, peeling back the onion, both the U.S. and U.K. reported occupancy growth of nearly 400 basis points and RevPOR growth just shy of 5%. On the other hand, as Shankh indicated, Canada reported occupancy growth of roughly 300 basis points, but RevPOR growth of nearly 6%. Ultimately, our goal is to provide a top-quality customer experience and to be fairly paid for it, and that's showing up through a combination of occupancy and rate growth. Moving to expenses, we remain encouraged by the trends we are observing across most line items, but particularly with respect to labor, which is almost 60% of SHO expenses. This is best reflected by CompOR, or compensation per occupied room, which increased 20 basis points year-over-year, near the lowest level of growth in recorded history.
As a result, expense per occupied room, or ExPOR, was up just 40 basis points. This is largely a function of scaled economics in the business whereby a growing number of communities are now either fully staffed or approaching those levels. As occupancy continues to grow, the need to add additional staff has moderated, leading to meaningfully higher flow-through or incremental margins. In fact, during the quarter, we achieved a flow-through margin of 64%, while our same-store NOI margin increased 320 basis points to 30.9%. As for the future, we believe that significant upside exists.
The combination of our same-store communities at 95% occupancy posting NOI growth of roughly 20% and approximately 45% of our same-store SHOP assets operating below 90% occupancy with the opportunity for materially increased revenue and NOI via occupancy gain create a potential for years of compounding per share growth ahead. While we take nothing for granted due to the operational intensity and persistent challenges which exist in the business, we are confident that through the efforts of our best-in-class operators and continued rollout of the Welltower Business System across the portfolio, we will continue to drive outsize levels of growth well into the future. It's still early in the year with the peak leasing season ahead. We will see what the market gives us. Our goal remains consistent, operating with our operators to deliver an exceptional resident employee experience.
Our Welltower operations and asset management teams, including the Tech Quad, continue to make leaps, non-incremental steps on this front, and remain committed to maintaining this momentum through a relentless focus on operational excellence. With that, I'll turn it over to Nikhil.
Thanks, John, and good morning, everyone. Since our last call, the macroeconomic and geopolitical backdrop has once again introduced meaningful volatility into the capital markets. Escalating conflict in the Middle East, combined with renewed stress in private credit, has driven a more pronounced risk-off tone, evidenced by higher Treasury yields, elevated volatility across risk assets, and growing signs of strain within private lending markets. Credit spreads have widened in recent weeks. Redemption activity in certain semi-liquid vehicles has increased, and defaults have continued to trend higher. As Shankh said, we have seen this movie before. In periods like this, when capital becomes less reliable and execution risk rises, our position strengthens. Our reputation as the highest quality counterparty, backed by our incredible balance sheet, becomes increasingly differentiated. Sellers place a premium on certainty of close. Lenders become more selective. When that happens, the opportunity set expands.
That is exactly what we are seeing today. As a result, we have seen a meaningful increase in our investment activity. Our investment volume for the year now stands at $10.5 billion, an increase of $4.8 billion since our last call in February. During the first quarter, we closed 41 transactions totaling $3.2 billion. Of these, 37 were sourced off-market, continuing to reflect the strength of our relationships and our origination platform. The majority of our acquisitions activity was highly granular, single-asset transactions where our teams operated as local sharpshooters, supported by insights from our data science and machine learning platform, Welltower.ai. These transactions added 37 communities and over 4,200 units to our seniors housing portfolio.
On the disposition side, during the quarter, we completed the remaining $520 million of the previously announced $1.3 billion of dispositions in our Integra JV, as well as an additional $1.3 billion of OM sales to Kayne Anderson. With $6.7 billion of sales now complete, we expect the remaining approximately $500 million to be completed during the second quarter. Turning to new activity, we have already closed on additional $4.2 billion of transactions in the second quarter, comprised primarily of our previously announced acquisition of Amica Senior Lifestyles in premium markets across the GTA and Vancouver. The incremental $3.1 billion of activity is comprised primarily of newer vintage seniors housing assets, with roughly 95% sourced off market across a number of transactions.
I'm also pleased to provide an update on our U.S. Seniors Housing Equity Fund. As I mentioned on our last call, we held our final LP close in the fourth quarter of 2025. Since then, consistent with the acceleration in activity on our balance sheet, the entire $2.5 billion of fund capital is now fully committed. While we were significantly oversubscribed, we made a deliberate decision to limit the size of the fund. Our focus was simple: raise the right amount of capital, not the maximum amount of capital. We also structured and are scheduled to deploy the fund in a way that avoids many of the common friction points for LPs. With 1.5 years still left in the investment period, capital is being put to work quickly in high conviction opportunity, minimizing the typical J-curve of returns.
In addition, we have avoided the use of subscription lines to manufacture IRRs, remaining focused instead on driving real equity value creation over time. I'll leave you with a few thoughts. What we're seeing in the market right now is not new, but it is meaningful. Periods of volatility separate long-term capital from short-term tourists. In these moments, speed, conviction in underwriting, and consistent execution aren't just advantages, they're differentiators. That's where we have focused our time. Our platform is built to identify opportunities at a very granular level, move with speed, and engage directly with counterparties. We are disciplined in how we deploy capital, valuing assets based on in-place performance, while keeping the value add from WBS for our shareholders. We remain price disciplined, with unlevered IRRs and discounts to replacement costs being our guiding principles, and with terms like accretion notably absent from our investment committee conversations.
Our focus on win-win outcomes and dogged pursuit of the truth rather than woven narratives continues to drive our ability to source opportunities off market and deploy capital thoughtfully, even in more uncertain environments. With that, I'll turn the call over to Tim to walk through our financial results.
Thank you, Nikhil. My comments today will focus on our first quarter 2026 results, performance of our triple net investment segments, our capital activity, a balance sheet liquidity update, and finally, an update to our full year 2026 outlook. Welltower reported first quarter net income attributable to common stockholders of $1.02 per diluted share and normalized funds from operations of $1.47 per diluted share, representing 22.5% year-over-year growth. We also reported year-over-year total portfolio same store NOI growth of 16.4%, driven by 22.1% growth in our SHOP portfolio, which now makes up 74% of our same store NOI. Turning to the performance of our triple net properties in the quarter.
In our seniors housing triple-net portfolio, same-store NOI increased 3.9% year-over-year, and trailing 12-month EBITDAR coverage is 1.23 times. Next, same-store NOI in our long-term post-acute portfolio grew 2.6% year-over-year, and trailing 12-month EBITDAR coverage is 1.32 times. Moving on to capital activity. In the first quarter, we raised $4.4 billion in gross proceeds through dispositions and equity issuance, allowing us to fund $3.3 billion of investment activity and end the quarter with a net debt to adjusted EBITDA ratio of 2.73 times. More than half a turn reduction from just a year ago.
Subsequent to quarter end, we used free cash flow to pay off $700 million unsecured bond maturity in April, highlighting the strength of our balance sheet and the cash flow generating capacity of the portfolio. We ended the first quarter with $4.9 billion of cash on hand, which together with approximately $1.4 billion of incremental disposition activity, along with assumed debt and funding of transaction activity with OP units, positions us to fund roughly $7.3 billion of investment activity through the remainder of the year, with a meaningful portion again expected to be sourced through capital recycling. Taken together, this net investment activity and continued cash flow growth from the in-place portfolio are expected result in year-end net debt to adjusted EBITDA of approximately 3 times, modestly below our prior expectations.
Before turning to our guidance, I want to come back to a point I highlighted last quarter around how our portfolio transformation, and what we describe as Welltower 3.0, is reshaping our growth profile. What we're seeing play out in the first quarter is a clear validation of the mix shift we spoke to. With Q1 marking the highest level of total portfolio same store NOI growth we've delivered in company history. Importantly, that growth is anchored by the strength of our in-place portfolio. Our initial guidance last quarter already reflected a high level of year-over-year visible earnings growth. Our updated outlook this quarter demonstrates the continued momentum we're seeing on the ground. As we continue to increase our concentration in seniors housing operating, we believe the Welltower 3.0 portfolio is positioned to deliver a meaningfully higher rate of sustainable compounding than its predecessor.
Moving on to guidance. Last night, we updated our full year 2026 outlook for net income attributable to common stockholders of $3.24 to $3.38 per diluted share, and normalized FFO of $6.21 to $6.35 per diluted share, or $6.28 at the midpoint. Our normalized FFO guidance represents an $0.11 increase at the midpoint from our prior normalized FFO range. This increase is composed of a $0.03 increase from senior housing operating NOI, a $0.07 increase from investment and financing activity, and a $0.01 increase from better than expected income tax and other, with some offset from higher G&A expectations.
Underlying this FFO guidance is an estimated total portfolio year-over-year same store NOI growth of 12.25%-16%, driven by sub-segment growth of outpatient medical 2%-3%, long-term post-acute 2%-3%, senior housing triple net 3%-4%, and finally, senior housing operating growth of 16.5%-21.5%. This is driven by the following midpoints of their respective ranges. Revenue growth of 9.2%, made up of RevPOR growth of 5% and year-over-year occupancy growth of 350 basis points, and expense growth of 5.3%, equating to ExPOR growth of just below 1.3%. With that, I will hand the call back over to Shankh.
Thank you, Tim. I would like to make 3 points before opening up the call. First, I want to take a moment to acknowledge the passing of David Simon, a true legendary figure, not just in real estate space, but all of corporate America. David was a visionary in every sense of the term, growing a small portfolio of regional malls into one of the most well-respected companies in the world. He was a legend, a true pioneer, recognizing the enduring value of highest quality real estate where shoppers and retailers could come together in vibrant environments. The Simon ecosystem thrived under his leadership. Just think of the long-term success of so many of America's great retailers, which would not have been possible without the setting that David created for them to grow and thrive.
Of many of his qualities, one I personally appreciated the most is that he was unapologetically himself. He spoke his mind with clarity and conviction and remained relentlessly focused on creating long-term value for his investors. The stellar returns Simon delivered for its shareholders under David leadership was no accident. He navigated the company through multiple recessions and structural changes in the industry via thoughtful countercyclical capital allocation, a focus on operational excellence, and maintaining utmost balance sheet discipline. He was unquestionably a stalwart and a true visionary, but also a friend, a mentor, and a fellow board member at Columbia. He was the one who encouraged me to take the leap from buy side to the corporate side, an advice which I'll forever be grateful for.
He leaves behind a legacy that extends far beyond the real estate sector, setting a standard for what great leadership looks like. Our deepest condolences to Simon family and those who are close to David. Second, roughly a year ago, we launched our private funds management business, establishing a capital-light revenue stream and another avenue to drive partial growth for existing investors. During the first quarter of this year, we identified another additional revenue through which to expand our capital-light business by unlocking from an existing balance sheet asset the monetization of our data science platform. As many of you know, since 2016, through the efforts of multidisciplinary team of PhD computer scientists, engineers, statisticians, and mathematicians, we have pioneered the application of data science and machine learning in real estate investing.
This was instrumental in driving over $80 billion of acquisition and disposition activity over the last 10 years. Given the modular and portable nature of the platform, we launched our first external partnership during the first quarter, licensing bespoke, supervised and unsupervised models to Public Storage and a leading global private equity firm. These models enabling the real-world application of AI by accelerating capital allocation decisions from 5 to 9 months to mere weeks and significantly increasing velocity to market. Our mission is to scale real estate investing, which is historically as an unscalable business. More to come on this front in months and quarters ahead, we have been incredibly busy since the announcement in March, as many highly respected real estate, non-real estate, and sovereign wealth funds have reached out to us to explore similar partnerships.
Lastly, as I described in my annual letter, we have recently witnessed a surge of talent density that we have been attracting to the company, particularly with respect to Tech Quad. Following our ethos that A hire A people, we have been successfully attracting the highest caliber technology and data science professionals to execute our vision. Aiding our effort is what is called SaaSpocalypse, or rapidly spreading narrative around who is the next on the disruptive path of AI, which is releasing an extraordinary pool of talent into the market. This talent pool is increasingly focused on identifying businesses that cannot be replaced by AI, including sectors classified as HALO, or hard asset low obsolescence, such as housing for a rapidly aging population. We're thrilled with the progress made by Tech Quad in reimagining our technology ecosystem to improve the resident and site level employee experience.
Our newest additions to our team will only accelerate these efforts. Nonetheless, our biggest opportunity to drive portfolio growth is through unlocking greater value for our existing assets, with the most immediate and impactful way of being the implementation of Welltower Business System, our end-to-end operating platform across our senior housing portfolio. In a maximum growth, maximum gain world, the fastest way to move the dial is to narrow the focus. Our relentless and maniacal focus on the digital transformation of the business and dramatically improving customer and site level employee satisfaction will be the force multiplier on the attractive beta of our business. With that, I'll open the call up for questions.
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from Ronald Kamdem with Morgan Stanley. Your line is open.
Great. Hey, I just wanted to double-click on one of the comments you made on the 95% occupied portfolio and growing 20%. Wondering if we could sort of double-click and get some more color around whether RevPOR, ExPOR, margins, mix, anything that could be interesting. Thanks.
Thanks, Ron. first, I clearly don't want you to run with that idea that that's what we're suggesting will forever happen. But that is definitely something that I found in our data to be most surprising. A very significant part of our portfolio today is 95% plus occupied, give or take 50%. That portfolio grew circa 20% on a net operating income, as I said. Clearly for a couple of reasons, obviously, you got pricing power increases as capacity comes down in the system. That happened. That part of the portfolio had, give or take, 6% plus RevPOR growth. With the expenses, You know, major execution on the expense side that John mentioned through our operators and the contribution from Welltower Business System, it just landed to be an extraordinary number.
We were very happy about it. We do think that that sort of gives us confidence that we'll have a double-digit NOI growth for a long time to come in our portfolio as the portfolio leases up. We'll see, we'll see what market gives us as we sort of get through next few years as the portfolio leases up.
Thank you.
Your next question comes from John Kilichowski with Wells Fargo. Your line is open.
Hi, good morning. Shankh, you kind of hit on this at the end of your opening remarks, could you talk more about, you know, the talent density in the data science platform, given what you describe as a HALO sector, and how much this has accelerated the growth outlook of the business in your mind? If you could also maybe just talk to how investors should be thinking about the medium-term potential for earnings contribution from this business.
John, let me take the second part first, and then I'll go to the first part. If you just think about it, we built this data science capability, machine learning capability over the last 10-plus years to deploy capital on our balance sheet, on our books. We realized recently at the really encouragement from some of our largest sovereign wealth partners in our fund business that there could be a much bigger, sort of application of this, which you have seen, our first partnership announcement. We're in the building mode of this business. Whether something substantial come out of or not, we will see in the future.
I can tell you that since the announcement was made on the early March on Public Storage, as well as the other PE firm I mentioned, our phones have been ringing off the hook. We have been exploring a lot of the opportunity with a lot of people. Real estate, you know, great real estate companies, many non-real estate companies such as banks and others, you know, major sovereign wealth funds, which I mentioned to you are the first ones who actually told us there could be a significant opportunity of that nature.
We'll see, we'll see where it goes, whether, you know, whether it remains a true major force behind our capital allocation and everything else sort of becomes a fun project, or we just sort of, you know, sort of take this as a whole new business. We'll see what happens, right? Going back to the first part of your question, I've never heard of this concept of HALO even, you know, say, 90 days ago. I heard that, as you know probably, that I personally interview most of the people who comes to our organization. You know, I heard that increasingly from the talent that was coming through. You know, and many of the businesses were just sort of impacted, or people are worried they're potentially impacted.
Frankly, you know, a different level of talent pool I've never seen. In just since the last call, we have hired, you know, either data scientists or software engineers with the backgrounds that we look for, whether it's computer science or math PhDs, hired from the top quant funds who we never thought that will come and work for a real estate company, let alone a senior living company. We started to see talent from, you know, people who are code breakers and three-letter agencies. You know, 90 days ago if you asked me, I would not have told you that we would attract talent from that kind of places. You know, it's a talent density is increasing.
We are trying to explore problems that we never thought that we will-- Obviously, you know, we think about there's a granularity to those problems, right? You know, one granularity is obvious is, you know, we talk about housing prices, for example, in real estate. Housing prices of what? Most industry uses housing prices as a median house price in a zip code, right? We today use every housing prices in an entire area. Okay, that's an interesting idea. You think about what do you have hidden, you know, is there other hidden signals such as, I'm gonna make this up, the, you know, the price of wheat futures, the impact of that in housing assets in Great Plains. I totally made that up as we're going through.
Those are the hidden insight we want to discover and understand, and that kind of people are in the industry. Overall in the world, not in our kinds of industry. That's what we are trying to attract and see where we can take the business, right? We'll see what what happens, thank you for the question.
Your next question comes from Michael Goldsmith with UBS. Your line is open.
Good morning. Thanks a lot for taking my question. I'm here with Justin as week. On the topic of capital allocation, Ventas recently acquired this Revel portfolio. Did you evaluate that opportunity? Maybe more broadly, you have the best cost of capital in this space. How do you think about accelerating accretive growth versus maintaining your discipline? Thanks.
We don't, Michael, we don't comment on other deals that our colleagues in the industry do. We did look at the Revel portfolio, and we think that it's a very high quality portfolio that our colleagues at Ventas will do very well with. I don't really want to get into it. When it was brought to us a few months ago, it was in a structure that was not something we find particularly at that point palatable. You know, I've mentioned many, many times that we have a problems with encumbrance on assets. When it was brought to us, there was an encumbrance of assets. Of existing operators and asset management and all of those kind of things, which I don't want to get to.
I think they're high quality real estate and our colleagues at Ventas will do very well. On your other part of your questions is accelerating capital allocation. I want you to understand this is what I wrote in my annual letter, which in under a section called Cognitive Dissonance of Acquisition Volume. I want you to understand that what we are trying not to do, it's not a deal shop. That's why Welltower is different from our predecessor company. We want to allocate capital in a particular product market niche where we think we can add significant value. This is not a cost of capital business for us. We don't compete on cost of capital.
We compete on ability on the data science side, on WBS side, and a network of extraordinary operators who, you know, can drive higher value for customers and employees and for us and themselves. That's the model. You know, not everything, you know, if the goal was to do more, we would not be selling $12 billion of assets in the last 12 months, right? You know, we're seeing everything like we always have. The, as Nikhil said, 90%, 95% of everything, you know, sort of we do comes to us off market. Frankly speaking, that makes sense, right?
You know, we'll tell you as a seller within a day or two, you know, whether we want to transact and probably within three to five days, you know, well, give or take what we'll transact, at what price we'll transact at. Fundamentally, as a seller, you have nothing to lose by coming to us. That's how the business rolls, and we'll see what market gives us. If we never buy another asset or we go back to the period pre-COVID where we sold, we're net sellers and we sold $16 billion of asset, we will be just fine. Our goal is to grow per share value for existing investors, not do deals.
Your next question comes from Michael Mueller with J.P. Morgan. Your line is open.
Yeah, hi. First, that was a nice David tribute. When I think of Simon over time, one thing that stands out is David's ability to walk away from deals, whether it was Rouse or the first shot at Mills. Can you talk about an example or two of steering clear from a big transaction that didn't sit well with you?
Yeah. Thank you very much. You know, I was emailing back and forth with him a couple of months ago. David was the one on the best day and most exciting day of my buy side career, called me and said, "Your career has peaked today. Leave the industry and come join me on the dark side." That's how this whole thing started rolling. I think many of you I think we have had the conversations over a period of time. He was an extraordinary leader. Extraordinary leader and it was something I admired. I knew him for a long time. We were on the, we shared in the Columbia Business School board.
I was in awe with our leadership skills, not just his financial success of total returns and all of those things. One of the thing, as you mentioned, look, we, David's ability to walk away from deals, and many times he did it. Believe it or not, many times when you walk away from transaction and you do it in the right way so that, you know, you're not burning bridges, you tell people why you walked away, you know, you can still maintain the relationship. The largest transaction we have done in this company is Barchester. Believe it or not, I walked away from that deal, twice pre-COVID, right?
You know, I don't want to get into granular transaction. Every day of the week, our team walks away from transactions, tell the counterparties why we walked away, whether we walk away because we don't like the product market fit, we walk away because we don't like the income rents that I just mentioned or I've written extensively about. We're respectful to the marketplace, to the industry, and we're direct, right? Nobody will tell you that we have ever said something and we didn't do it. We're very direct to people. You know, it's just that we do a very small fraction of what we see. Nikhil, what do you think we our hit rate is?
Yeah, 10% or so.
10% or so. By definition, we walk away from 90% of what we see. Sometimes something like Barchester, we walk away and eventually it happens when the time is right from a pricing standpoint or from an industry structure standpoint. Very, very good question, Mike. Thank you.
Your next question comes from Michael Carroll with RBC Capital Markets. Your line is open.
Yeah, thanks. Shankh, I know that the WBS model continues to evolve. I mean, how beneficial are these new partnerships that you're creating with PSA and others, to take WBS to the next level? I mean, I'm assuming that Welltower is getting access to more new data that they didn't have access to before. I guess how beneficial could that be as you kinda refine those systems?
Yeah. Mike, we think about in our SHOP technology in two different, completely different segments, which, you know, obviously they interconnect at some levels. One is our data science platform, which is focused on allocation of capital and finding granular opportunity and changing the velocity that exists in this business from months to days, right? That's one idea. The other idea is the operational side of the business, which we call Welltower Business System, which, you know, we're building out. I mentioned about Tech Quad and how Jeff and Tucker and Swagat and Logan, all these, Ron, they are also taking that to a new level. Welltower Business System, which is the operational side of the business, is not something that we are collaborating with Public Storage.
Public Storage or, you know, people like that don't need our help to think about how operationally how they should run the business. That industry is years ahead. We're actually hiring from that industry who can help us to do it, right? On the other hand, our collaboration is on the data science side, which we have been at this for 10-plus years, and that's why we have changed the real estate investing business where this latency of the system is 5-9 months and we have taken that to days, right? I don't want you to confuse the two and understand how where the collaborations are coming. We have given you many examples on our business update, the kind of problems that we are going after that people are coming to us.
For example, you know, obviously, real estate examples are easy, and you can see it on examples, whether that's multifamily, that's other types of asset classes. Storage, obviously, you mentioned, or other types of asset classes. People are coming to us with problems that are location-type problems, but not necessarily specific real estate problems. For example, a big bank has come to us and asked us whether we can help them on predicting where their most profitable next branches, bank branches should be. These are the types of, you know, problems that we are exploring, and we'll see where we get to. Thank you for your question.
Your next question comes from James Kammert with Evercore ISI. Your line is open.
Thank you. Good morning. Shankh and team, is there a way to leverage the data science into other geographies, you know, beyond your core U.K., U.S. and Canada? Or are those markets just structurally don't have the, you know, private pay or other cultural issues that leave you a little unlikely to pursue in terms of external growth?
The short answer is yes, it can be. In fact, just for fun, we're having this conversation with an investor, a significant investor in Japan, and we built a, a model, you know, over three weeks our guys did, to show them, like, how to apply that in Japan, right? You know, I know obviously we don't have as much of a data and we haven't bought like, you know, gobs and gobs of data, but it is absolutely scalable across geographies and product types and beyond real estate product types that I just mentioned.
Thank you.
Your next question comes from Richard Anderson with Cantor Fitzgerald. Your line is open.
Good morning. You know, Shankh, you talked about doing the hard things, not the easy things and, you know, making decisions along with that mindset. I'm thinking of, you know, as you're talking about, data analytics and all these sort of tangential opportunities that sort of spawn out of senior housing platform. I think about Amazon, which once upon a time sold books, and now they're, you know, what they are today, or Berkshire Hathaway, which was insurance company and is what it is today. Do you have aspirations along those lines where senior housing because, you know, we can talk till we're blue in the face about how great it is, and you guys are doing a fantastic job.
You know, longer term, you know, this is not going to always be a 20% growing type of industry. Are you thinking about senior housing as sort of the, the, you know, a bed from which you grow other businesses outside of data centers or data analytics, if you get my point, right?
I do
like a diversified vehicle.
Yeah, I do.
Is that kind of in your mind today?
No. Let me answer that question. We are not trying to go from senior living to other asset classes in real estate. We're doing exact opposite, right? We are selling out of all other types of asset classes and focusing our balance sheet capital, if you will, our book, into one asset classes which we think we have competitive advantage. If you think about we have built capabilities, right? Such as this data business that we talked about could potentially become more than a platform that we use for our internal application. We'll see where we get to. We're not trying to become a diversified company. I do not believe in diversification. I believe diversification is the worst word that has been taught to investors, right?
If you think about it, you gave a Berkshire Hathaway example. If you think about, look at Berkshire, you will see they've made their almost entirety of their return in five things, five names, right? You think about it as we believe in concentration. We genuinely believe that, you know, capabilities, you cannot be good at five different things. Your question is a much more nuanced one, which is we, you know, right or wrong, our whole idea 10 plus years ago was very much that we want to understand the truth. We noticed that the real estate business people talk in heuristics, you know, rule of thumb, and we wanted to know the truth, and that's what we found. I gave an example, right? You know, people use housing prices. Housing prices of what?
Housing prices and average housing prices, mean housing prices, median housing prices. We're talking about a block group. We're talking about zip code. What are we talking about, right? These are the things. Now, I can complicate this problem many times over, right? You can think about it depending on product, you know, how long people are willing to drive. You'll notice in real estate, people talk about distance as your competition, not drive time. Without getting into too much of this conversation, we do believe that our job, that what we are trying to do is to optimize over the optimize the duration of the growth over a very long period of time. That's what we're trying to do.
Today, a lot of that is obviously coming through the mix shift and everything, but we do believe that there are two other things that can potentially add pretty significantly. One is our asset-light businesses, which is fund management business, data, you know, the data science business. As you know, that we are obviously the fees we are getting, obviously that is a reflection of our data science business. It's the interconnected nature of it. The other thing, Rich, is there's something I want you to think about is, you know, untapped potential of our balance sheet, right? We are thinking about, you know, sort of years ahead of what this platform could look like.
We're thinking how do we deliver a significant per share growth opportunity for existing shareholders when things will not be as good in senior living as you might said. I do think that senior living as a business will remain our primary focus of where we deploy our own balance sheet capital.
Your next question comes from Vikram Malhotra with Mizuho. Your line is open.
Good morning. Thanks for taking the question. Shankh, I guess one of the thing in your letter I really enjoyed is reading about the hummingbird and how they fly very differently and achieve lift at a discount. In that vein of sort of a different approach, just I guess two questions. One, you know, going forward, is there something WBS or the team can do to sort of monitor, reduce CapEx levels in senior housing, something that usually bites people where there's too much CapEx load? Secondly, when you think about supply demand, on the supply side, we still have not seen it start. Is there something different about your relationships or your markets which can limit supply perhaps longer than people perceive? Thanks.
Second question was supply, and the first question was hummingbird.
CapEx on in senior housing.
CapEx and hummingbird. Okay. You know, the idea of hummingbird, I don't want to repeat it, I wrote extensively about it. You can read it, and sounds like you have read it. You know, the idea is continuous improvement of candles will not give you a light bulb. Or as, you know, Henry Ford will tell you that you can improve horse carriages as long as you want, but you're not gonna get a Model T, right? You gotta think about the business in a completely different way, which is reimagining what the entire value chain looks like. If you sort of take a first principle approach to say, "What are my goal is?" You start from the customer, right?
Solve, okay, how do I remove frictions of customers and the people who the customers see as product, which is the site level employees, you can get very far. How far we will get to, we'll see in the future. You know, now let's take the question of CapEx that you talked about, right? John got into this in detail. The CapEx in this business, because of the sort of short-term private equity type mentality, which I'm not actually, you know, denigrating private equity. If I got paid on short-term IRR, I would have done the same probably. If you just think about it's like people take a very piecemeal approach, right?
1 year you do roof because you have to, then next year you go back and do the gutters, the next year you go back and fix your, you know, skylights. That's not how full cycle CapEx should work. On our particular, you know, if you look at our cash flow, you are obviously, Vikram, you are seeing that CapEx is improving, and it's improving for 2 reasons. 1, CapEx is a concept that is not an idea that you should think about in terms of available, or, you know, occupied room. You should think about all available room. If you think about, you know, you are doing, say, first impression. It is not going to be whether you have 40 people in the community or 400 people in the community, right? It will be on all the rooms.
As the system is filling up, obviously you are getting the scaling effort. As the NOI is going up, you are getting the scaling effort. Second, CapEx today, 2 years ago, we obviously did all CapEx that was outsourced to operators. Today, we have 200 people team which works for us. And that team is working with our operators to figure out how to do CapEx the best, how to do think about life cycle cost, and executing where the best, you know, sort of execution we can get. And that's, you know, just started to see that scaling effort over last, say, 6 months. I think you're gonna see a lot more going forward. What was the second question? Did I answer both of the questions?
Supply.
Supply.
Yeah. The supply, yeah.
Yeah. Supply. Look, the fact of the matter is the supply currently is at very low starts. You are seeing, you know, I personally think about supply. You know, it's almost a Pavlovian response to participants in the market when we see the supply. It's sort of almost a third rail, and people think supply equals to oversupply. Why? That makes sense. Last decade, every unit of supply was oversupplied because demand was flat. I think about supply and the impact of supply in terms of oversupply. You can see the demand growth, and you can sort of think, okay, how long it takes to bring supply in the market. We have a slide on our presentation that sort of walks you through, and you can see sort of what's the oversupply, you know, sort of can be.
I personally think that supply will chase demand. For a long period of time, just because what the demand growth looks like and the constraint of supply that is in. In our markets, in senior living, one of the biggest constraint of supply, you know, on top of everything else that you can think about, is availability of quality operators, right? That's a big constraint of the market. No bank will lend to you if you have a Joe Schmoe operators, especially after what they have gone through last cycle. As you know, and this is something that, you know, you brought up, Vikram, that I don't think a lot of people have asked us over the last three years.
At the bottom of COVID, when we were the only people who were actually allocating capital and leaning into senior living, we forged 25 to 30 long-term partnership with our operators, different developers, who are mostly exclusive or near exclusive in nature, in our markets, which we believe will provide a governor on quality supply. We'll see how this plays out. Thank you for your question.
Your next question comes from Farrell Granath with Bank of America. Your line is open.
Good morning. Thank you for taking my question. I also wanted to touch on a comment that you made in your annual letter where you highlighted several operational heroes. What was some of the best operational advice you took away from those organizations, and how are you applying and executing on that advice across the portfolio?
That's an interesting question. Farrell, some of the heroes we mentioned was not just operational, also capital allocation and culture and many other things. I will tell you, I personally believe, and probably because of the influence of Charlie, one of the most well-run operational company in this country is a company called Glenaire. It's a private company whose CEO, long-term CEO, Peter Kaufman, has been a great friend and mentor of mine over a long period of time. He's a true hardcore operator in the aerospace defense sector. First, you know, Peter will tell you know, first thing is, before you get advice from people, you need to understand the credibility of their advice.
Lots of people have lots of advice in things that they have no expertise in, right? I routinely see people who have never ran lemonade stand and have opinions on how multibillion-dollar company should be run. That's sort of first you have to have a filtering mechanism to understand who has expertise. Beyond that, the best operational advice that I actually got, that operations can be meaningfully improved from systems and process and technology, operations is not about any of those things. They can be enabler. Operations is all about people. If you have, you know, if you're in L.A. and you have an hour, let me know. I'll, you know, help you go visit Peter, you will see what a well-run factory could look like with all the focus of people.
Anyway, thank you for the question.
Thank you.
Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Your line is open.
Great, thanks. Good morning. Just going back to an earlier question about the portfolio of assets that are, you know, 95%+ occupied. I guess as we continue to understand, as you put it, the art of the possible within the 6% RevPOR growth for those assets, you indicated the benefits of capacity coming down and just pricing power. Are street rate increases exceeding increases on in-place customers within this subset of assets? Are you also seeing a greater benefit from, you know, high ROI ancillary income opportunities?
Austin, thank you so much. You are a little farther from your mic, but if I understand your question was on the 95% plus, are we seeing even within the pricing, greater opportunities of what?
Street
Street rate versus, yes. You hit on something.
Other income opportunities.
Yeah. You hit on something extraordinarily important. I have a particular belief that, you know, just because you can doesn't mean you should. You know, this is something I'm boring you with repetition and details. Clearly, it sounds like you read my annual letter. There's a whole section on trade-offs that I would like you to go back to and will say, you know, many places, you know, in-place customer rate increases could be meaningfully higher than what we are comfortable with, and I'm fine with that. I'm fine with that. If you, if you are, if you say, "Okay, I'm not gonna give customers 15, 20% rent increases," how would the report change? It will change because of the point you just made, right? Which is not an existing customer increase, but it comes from the street rate.
This is a fundamental negative mark to market in this business because of the person who leaves versus the person who comes in. There's an acuity difference between the two. When you have in this kind of, you know, assets and its overall trading market, when everybody else is full, the street rate goes up, and that's the impact you see in the overall report, right? Which is a function of three different pricing, not just existing customer rate increase, including street rate. You picked up on something very important, and I think that will be a lot of driver as you sort of go forward in many, many of the markets. Ancillary opportunities such as, you know, a lot of the other, such as community fees and others also play an impact on that as well.
Your next question comes from Juan Sanabria with BMO Capital Markets. Your line is open.
Hi, good morning. Thanks for the time. I'm just curious if you could talk a little bit about market share and the opportunity that's still left to consolidate a fragmented industry, recognizing that you guys have a very targeted approach. Hoping you could help us understand how much is left to consolidate, if you will. There's been a little bit of political pushback in Canada, and there's overviews or reviews going on in the U.K. In, in that context, just hoping you could help us understand how you think about the addressable market and the opportunities that remaining.
Yeah. One, if you just take a step back and think about from a customer standpoint, roughly give or take, call it 7%-8% or call it 10%. Let's just do easy math. 10% of the people who can use our product, use our product. 90% of the people fundamentally don't use the product who can use our product, right? It's just a small portion of the, you know, your customers use the product. Within that small portion, we're probably 7% of the industry. We're a very small portion of even the existing product and, you know. Our, you know. From that standpoint, if you just think about it, a 7% of 10%, you can imagine, like, we're insignificant from a customer standpoint, right? They're just that, those are the numbers.
Having said that, if we're 7%, say, of the, you know, of an entire base of products, does that mean that our opportunity? As you mentioned that obviously it's an extraordinarily fragmented industry. I think the average, you know, operator or owner/operator has some, like, 10 communities or 1,000 units or something like that. It's a very small. Does that mean that we're 7% of the industry is our TAM is 15x? The answer is no, right? Our TAM is probably, we're very focused on, even within senior living, we're very focused on the highest price point or the highest quality assets in the market. Very much of the very focused on the highest end of this business.
That product market niche is what we have bet on, that probably is the TAM is probably 2x-3x, not 15x. That's how we kind of think about it. We see what the opportunities are, as I've mentioned in previous questions and in my annual letter. We would be comfortable if we never bought another asset. The goal is not asset aggregation. Goal is to, you know, pick where you think you can add significant value, and I think our team is doing a pretty good job of. We'll go forward with that and see what market gives us.
Thank you.
Your next question comes from Nick Yulico with Scotiabank. Your line is open.
Thanks. Good morning. I wanted to ask on the investment side, this quarter, you know, the loan funding was a little over 50% of the investment. If you could just remind us sort of what the approach is there and, you know, where you're able to get what type of yield on that loan funding. Then also, if you could also break out of the $7.2 billion of investments in April so far, what percentage of that is loan funding? Thanks.
Let me start, Nikhil, you go. First is, you are seeing that Nick, just to remind you that remember that when we did the Kayne transaction, we took back $1 billion plus in a participating pref, and that's what showed up in the loan book, right? It's a, you know. It's not really a loan, it's a participating loan. It's with an equity derivative attached to it, that's what you're seeing. Rest of it, you can see, think about is as a refill of the HC-One loan and other loans that got paid off. Some of it is just a bridge to hard of some of the assets, the skilled nursing assets we sold. They will be gone as the, you know, hard takes a long time, as you know. When that happens, they will be gone.
Overall, that's the construct, is that Kayne piece that showed up. From your second part of your question, which is the $7.2 billion, I do not recall. Nikhil, you might recall.
Yeah, I think Nick's specific question was what's closed in the second quarter. Of the $4.2 billion that's closed, as I said in my prepared remarks, you know, Amica, which is north of $3 billion, is a vast majority of that. There might be one or two small loans, but it's been predominantly asset acquisitions.
I think he asked about the pipeline as well.
Same, same.
primarily also same thing.
Same answer.
Just in one quarter, that Kayne piece landed, and that's what it looks like. It's elevated. As you look back in the whole year, you'll not see that.
Yeah. As we said, there's, you know, remaining $500 million of sales left as part of the Kayne Anderson transaction. As that happens, of course, that'll come with some additional participating prep funding.
Thank you.
Your next question comes from Seth Bergey with Citigroup. Your line is open.
Thanks. It is Nicholas Joseph here with Seth. I was hoping you could just touch on the transaction market more broadly. First, I guess the impact of competition, and then how prevalent is retrading deals and walking away because of the capital markets. Then, Shankh, I think you mentioned kind of time to close, and I was just curious, kind of Welltower's due diligence and time to close versus kind of the average for other buyers in the market.
Yes, I think let's start with the competition piece. You know, as I said in the prepared remarks, regardless of whatever period we look at, transactions that have closed, the pipeline, and I say this every single quarter as an update, that, you know, give or take our transaction activity is between 90% to 95% off market.
You know, by definition in that regard, there is no competition. What we've seen is over the last couple of years as more capital has come into senior living, you know, previously when we would say no to one of those off-market opportunities, it wouldn't get done. Now what you're seeing is, given that there's a more robust marketplace, if we say no, more likely than not, somebody else will end up buying those assets. That's certainly happening. Your second question was about our speed. Well, I think as Shankh said earlier, it takes us, you know, couple of days to, within a very narrow range, have a view on what an asset should be priced.
Thereafter, you know, assuming there's a meeting of the minds, then it's the traditional diligence process, which, you know, involves site visits, finalizing business plans with operators, third parties, negotiating legal documents. We parallel path all of that. Just given, you know, upfront how much information we have from our data, you know, data platform on what to expect from an asset. We can parallel path all of that, and it takes us roughly 30 days from when we first see something to close something. In comparison to the broader market process, you know, Shankh wrote extensively in his last annual letter last year.
A typical process takes six months from, you know, starting to think about, "Hey, we're gonna sell something," to get BOVs from a bunch of different advisors, to then picking an advisor, to then, you know, populating all the information and creating a really pretty offering memorandum, to then negotiating NDAs, to then having a first round process, to then having a second round to the process, finally picking a winner. Then, you know, most transactions occur in a way that you first negotiate a contract, then you have a 30-60 day diligence period where you find financing for the asset and eventually close on it. You know, six months is a long time. If you think about what macro looked like six months ago versus it does today, a lot changes.
Given that the price or the buyer is not going hard until 30 days before closing, so 5 months into 6 months, there's a lot of uncertainty. We have, in the last 2 months, seen a lot of transactions that we liked but weren't comfortable with the pricing get away from us to then come back to us. That's certainly happening and happens all the time.
I'll just add 2 more things, right? We are, you know, 1 of the very few SHOP who actually goes and visit every single assets that we buy. That is not a percentage of, we visit every single asset that comes on our balance sheet. Walk on average 12 people from Welltower go walk assets, not just our investment team, our asset management team, structural engineers. We go and do this every single asset, which is very important for you to understand. And the 2nd question is, from our standpoint, is our reputation is our currency of business. If we tell people we're gonna do something, we do it.
Might as well give people bad news upfront than try to drag them through the process and then five months later said, "These are the, you know, five different things. I didn't like the color of your nails, so it will be retraded," right? That's sort of what happens in this business every day. That's very standard. People accept it in real estate business to do. Well, we just don't do that, right? You know, we are always comfortable in the trade-off of, you know, short-term money versus long-term reputation. That works out, you know, for us over a period of time.
Hopefully, you know, overall our execution over the years will tell you that if you take a long-term approach, you take a reputation approach, if you take an approach of running a first-class business in first-class way, it generally works out for you.
Thank you.
Your next question comes from Omotayo Okusanya with Deutsche Bank. Your line is open.
Yes. Good morning, everyone. Shankh, I wanted to talk a little bit about just, again, the overall business model and again, the growth mode you're in. You know, you definitely need a specific type of operator and SHOP to kind of realize, you know, your strategy. I'm just curious, at this point, are you still seeing opportunities to bring more operators into the fold? Or does the strategy really become doubling down on the operators you have? If that's the case, again, what becomes kind of like the next level of incentive you can provide for your current operators to even have, you know, further better alignment?
Is it stuff like the Munger grants or kind of what else is kind of out there that can really kind of deliver the results you've been delivering?
Yeah. Thank you very much. It's a very, very important question that we reflect on and debate and talk about. Look, we sort of think about this business as a complex adaptive system. As we think about this business as a complex adaptive system, we have after years and years of thinking through this, every line item, we have sort of come to a point where we have a very good idea. If you were sitting, Tayo, in a, you know, in one of our sort of conference room, with one of our operating partners and our people, I guarantee you will not be able to say who works for Welltower, who works for this operator. They're all working very collaboratively and not trying to say, "This is your side, this is my side.
That type of collaboration trust takes a long time to build, which we have built with a handful of our operating partners, and we're doubling down with them every day. Having said that, are there a couple of people that we have long respected over time that we want to do business with? The answer is yes. At the same time, you will see, if your question is, are we in an expansion mode from a number of operators we do business with or we're in a, you know, sort of flat or we're shrinking? The answer is unequivocally our view is that we're shrinking. Right? The number of people that we business with. Because we are doubling down with our existing partners, we have built these collaborations.
You know, and we are not trying to be everything to every people, every product, every operator. We have found the like-minded, a lot of like-minded operating partners who are truly our partners. That's not sort of they take partnership very seriously. They're extraordinarily focused on excellence like we have. They want to treat their people right. They want to treat the residents right. They take reputation as their currency of business. Those are the type of cultural alignment, not just technological systems, money and everything, you know, financials and everything has to work out. The cultural element is the most important, and we're doubling down with them. You know, and sometimes we do find somebody like Amica that we tremendously respected over the time.
You know, when the stars align and, you know, we go together and meeting of the mind happen. The same applies for Barchester. Generally speaking, our goal is to do more with our existing partners where the alignment has already happened. It's an extraordinary question that we reflect on every day.
Thank you.
Your next question comes from Michael Stroyek with Green Street. Your line is open.
Thanks and good morning. I just want to go back to an earlier question on applying the data science platform to new geographies. Has the company underwritten any transactions in geographies outside of the U.S., U.K., or Canada? Are there any additional countries that, you know, Welltower could be interested in entering down the line on balance sheet?
Yeah, Michael, very, very good question. I'm glad that you asked the clarifying question. We have no desire to go to any other countries other than the three countries we are in from a capital perspective and balance sheet perspective. That comment was entirely on the capital light, on the data science side. You know, obviously we think that is eminently scalable across geographies, across asset classes. From our standpoint on a purely capital light basis, Everything we're doing should tell you we genuinely believe that in today's world, which is a maximum gain, maximum growth world, the fastest way to get to where we're trying to do is to narrow the focus, not extend the focus.
Yeah. Michael, to directly answer your question.
Yeah
No, we have not underwritten anything. I don't think we've even signed an NDA to get information beyond the three markets.
Great. Thanks for the time.
That concludes the Q&A session of the conference call. Thank you for your participation. You may now disconnect and have a wonderful rest of your day.