Welltower Inc.

02/12/2026 | Press release | Distributed by Public on 02/12/2026 05:50

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Nature of Critical
Accounting Estimate 		Assumptions/Approach
Used
Stock Based Compensation
The recognition of stock based compensation expense for equity awards including stock options, restricted stock units and performance-based awards is based on the grant date fair value of the awards and is recognized over the requisite service period. Stock-based compensation requires management to make significant judgments and estimates used in (i) determining the fair value of awards at grant date and (ii) estimating the amount of expense to recognize over the service period.
Certain of the Executive & Key Employee LTIP Unit Awards have market conditions that determine the number of LTIP units earned by the executive officers and key employees at the end of the measurement period. The Executive & Key Employee LTIP Unit Awards also have certain service conditions that affect the timing of the employees' ability to redeem the LTIP units for common shares. We estimated the fair value of the Executive & Key Employee LTIP Unit Awards using a Monte Carlo valuation model, which incorporates various inputs and assumptions, including the risk-free rate, the grant date common share price, expected dividend yield and common share price volatility, as well as the expected volatility of comparative indices used in the measurement of award achievement. We recognized $1,556,732,000 in stock-based compensation expense during the year ended December 31, 2025, of which $1,408,672,000 was related to the Executive & Key Employee LTIP Unit Awards.
Allowance for Credit Losses on Loans Receivable
The allowance for credit losses is maintained at a level believed adequate to absorb potential losses in our loans receivable. The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments.
We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans we identified as having deteriorated credit quality, we determine the amount of credit loss on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, we may return these loans to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. For the remaining loans, we assess credit loss on a collective pool basis and use our historical loss experience for similar loans to determine the reserve for credit losses.
During the year ended December 31, 2025, we recognized provision for loan losses of $(9,416,000), which includes changes in the reserve based on our historical loss experience.
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