Technology companies have been the early leaders in adopting AI. They are leveraging this powerful technology to increase efficiency, boost productivity, and enhance their growth. That has helped drive strong returns for tech stock investors.
However, tech stocks aren’t the only ones benefiting from AI-driven advances. The healthcare sector is starting to capitalize on this technology. That should benefit healthcare REIT Welltower (NYSE: WELL).
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Most REITs own real estate secured by long-term leases with tenants that occupy or operate those properties. Those leases provide the REIT with a stable income stream, which allows it to pay dividends and invest in new income-generating properties.
Welltower takes a different approach. While it owns an unmatched portfolio of more than 2,000 seniors and wellness housing communities across the U.S., U.K., and Canada, it doesn’t consider itself a real estate company. Welltower views itself as an operating company wrapped in real estate. Welltower believes that what happens in its buildings is more important than the outside wrapper of a well-located physical building.
Its strategy is two-fold. Welltower works with best-in-class operating partners who delight both residents and site-level staff. It aims to enhance these operations through its Welltower Business System, a complex adaptive system that balances people, processes, data, and technology.
Welltower has capitalized on RIDEA (REIT Investment Diversification and Empowerment Act) to partner with senior housing operators and share in the operational success of its facilities. This framework enables it to generate more revenue from these properties than from leases. The company recently introduced its RIDEA 6.0 contract to create even greater alignment with its key growth operators.
Leveraging technology, including AI, is a core aspect of the Welltower Business System. The REIT has spent the past decade building a proprietary data science and machine learning platform that now leverages AI. It trained its platform on irreplaceable data collected from over 100 senior housing operators over the past 15 years. This technology should make it an even better operator going forward.
In addition to its proprietary AI, Welltower will benefit from the impact of AI-driven medical advances will have on demand for seniors housing. This technology can detect early warning signs of disease well before a patient even realizes something is wrong. That can enable them to get treatment quicker, extending their lives.