Ventas, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Ventus first quarter 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star then one on your telephone. If you require any further assistance, please press star zero and an operator will come back on to assist you. I would now like to hand the conference over to your first speaker today. Sarah Whitford, Director of Investor Relations. Please go ahead.

Good morning and welcome to the Ventas first quarter financial results conference call. Earlier this morning, we issued our first quarter earnings release, supplemental and investor presentation. These materials are available on the Ventas website at ir.ventasree.com. As a reminder, remarks made today may include forward-looking statements, including certain expectations related to COVID-19 and other matters. Forward-looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the Ventos website. Certain non-GAAP financial measures will also be discussed in this call. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to our supplemental posted on the Investor Relations section of our website. I will now turn the call over to Deborah A. Cafaro, Chairman and CEO.

Thank you, Sarah. And good morning to all of our shareholders and other participants, and welcome to the Ventas First Quarter 2021 Earnings Call. Let me start by saying that we believe the macro environment and the Ventus outlook have turned an important corner and that the worst of the pandemic is behind us. You have no idea how good it feels to say those words, even though we recognize that significant uncertainty remains. The whole Ventus team is actively engaged in taking steps to win the recovery for our stakeholders. These steps include making smart portfolio and capital allocation decisions, capturing the embedded upside in our high-quality senior housing portfolio, focusing on operational excellence and initiatives, investing in value-creating development and acquisition opportunities across our demographically driven asset classes, attracting diverse, attractive capital, and maintaining financial strength and flexibility. I also think it's important to reiterate our gratitude and optimism. The widespread administration and efficacy of COVID-19 vaccines have dramatically benefited the health and wellbeing of our senior residents and their caregivers, and also laid the foundation for sustained economic recovery. Let me first address senior housing trends and results. With respect to health and safety, I'm thrilled to report that our confirmed new resident cases in SHOP have fallen to literally a single person per day out of a resident population of 40,000. And all our communities are now open to new move-ins, and most have reintroduced expanded visitation and communal activities. As a result, the natural, resilient, and demographically-based demand for senior living has revived, and we reached the cyclical pandemic occupancy bottom in our shop portfolio in mid-March. Since then, led by our U.S. shop communities, which posted 280 basis points of growth, We grew shop spot occupancy 190 basis points through April 30th to nearly 78%. Our Canadian shop portfolio, which has maintained occupancy of over 91%, tempered the full shop occupancy growth because Canadian clinical conditions and regulatory measures are currently lagging those in the U.S. We do expect those to catch up over time. Notably, for the whole portfolio, March and April were the first two consecutive months when shopped move-ins exceeded both pre-pandemic move-in levels and move-outs since the start of the pandemic. In fact, move-ins during April at 1,880 totaled more move-ins in a single month than we've experienced at any time since June 2019. While many of these positive trends began in the first quarter and therefore did not fully benefit first quarter results, we are also pleased with those results. Our first quarter normalized FFO per share and shop performance came in ahead of our expectations. and our shop occupancy gains were at or above those reported by other market participants to date. The resilient and robust demand we are seeing for senior housing once again validates the need-based nature of our communities and the crucial role care providers play in facilitating longer, healthier lives for this portion of the nation's population, which is set to grow by over 2 million individuals over just the next few years. Supply trends in senior housing are also highly favorable. This combination of growing demographic demand and constrained supply creates a favorable backdrop for senior housing recovery, which represents an incredibly significant value creation opportunity for our shareholders. The high quality of our senior housing portfolio, as Justin will describe, makes us well positioned to recapture NOI and realize this upside. Turning to our capital allocation approach, we are confident of our ability to recycle about a billion dollars through property disposition in the second half of this year. And those are expected to enhance our enterprise. On the investment side, our attractive life science, research and innovation business continues to provide us with value creating opportunities to invest capital. The Ventas portfolio, which now exceeds 9 million square feet, is located in three of the top five cluster markets and is affiliated with over 15 of the nation's top research universities. We are also investing in our active and just-delivered ground-up developments in life science research and innovation, which total nearly $1 billion in project costs. And I'm pleased to report that we also have another $1 billion in potential projects affiliated with major universities right behind the four developments currently underway. We look forward to sharing more information on our exciting development pipeline with you later this year. We recently expanded our life sciences business through our investment in a Class A portfolio of life science assets anchored by Johns Hopkins Medical, which we purchased at an attractive valuation of $600 per square foot. Located in the fourth largest life science cluster in the U.S., Hopkins is a global leader in research and medicine and the number one recipient of government research funding. This acquisition leverages our unique expertise at the intersection of universities, life sciences, and academic medicine. In addition, we continue to invest capital in senior housing with our partner Le Groupe Maurice in Quebec. LGM maintains a first-class brand, product, and financial model for success. Our two most recently completed high-end communities with LGM opened in the fourth quarter and have already achieved 87% occupancy. We have three additional developments underway with LGM, representing nearly $300 million in aggregate project costs. Looking at the broader investment market, deal volume is again trending toward normalized levels. In a typical year, our deal team reviews over $30 billion in investment opportunities. Our pipeline of potential investments across our asset classes is active and growing, and we are on our front foot from an external growth standpoint. We have access to significant liquidity and a wide array of capital sources to fund deals. Our investment philosophy continues to be focused on growing reliable cash flow and favorable risk-adjusted returns, taking into account factors such as market position and trajectory of the asset in business, cost per square foot or unit, downside protection, and ultimate potential for cash flow growth and asset appreciation. In closing, we believe we've turned an important corner and key metrics in our business are showing meaningful improvement. The positive investment thesis for all of our demographically driven asset classes and for Ventas is pointing firmly positive. As a team at Ventas, we're really happy about the strength and stability we've shown and the recent upswing in the economic, clinical, and operating environment. We have an abiding commitment to win the recovery for all our stakeholders, and we are confident we're taking the right steps to do so. Thank you. Now to Justin.