Ventas, Inc.

Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the VENTAS first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to B.J. Grant, Senior Vice President of Investor Relations. Please go ahead.

Thanks, Regina. Good morning, everyone, and welcome to the Ventas first quarter financial results conference call. Yesterday, we issued our first quarter earnings release, supplemental investor package, and presentation materials, which are available on the Ventas website at ir.ventasrete.com. As a reminder, remarks today may include forward-looking statements 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 in 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 Ventas website. Certain non-GAAP financial measures will be also discussed on this call, and for a reconciliation of these measures to the most closely comparable GAAP measures, please refer to our supplemental posted on the Investor Relations website. And with that, I'll turn the call over to Deborah A. Cafaro, Chairman and CEO.

Thanks, BJ, and good morning to all of our shareholders and other participants. Welcome to the Ventas first quarter 2023 earnings call. I'm excited to speak with you today as we recap an outstanding first quarter, underscore the momentum we have across our large and diverse enterprise, and reaffirm our full year normalized FFO guidance of $2.90 to $3.04 per share. Our diversified business is unified in serving a large and growing aging population. Within commercial real estate, we are highly advantaged due to favorable demographic demand, the unprecedented organic growth opportunity we are already starting to realize, and our scale liquidity and access to capital. As a team, we are enthusiastic about the future and focused on delivering superior performance. The success we achieved in the first quarter was powered by our high-quality shop business, where the U.S. communities grew 22%, bolstered by the growth of our highly occupied Canadian communities. Our other asset classes are also contributing reliable compounding growth with MOBs outperforming and our university-centered life science R&I business benefiting from strong tenant mix with significant demand from universities, health systems, investment-grade companies, and government institutions. The multi-year growth and recovery cycle in senior housing is well underway. we have already started to capture the significant NOI upside opportunity in our current results. Looking forward, we project an incremental $300-plus million of additional NOI opportunity available from simply reaching pre-pandemic margins and occupancy of 88% in the portfolio. Beyond that target, We believe that above 90% occupancy and higher margins are also attainable because current supply-demand conditions are materially more favorable than they were during the last peak period. With 99% of our shop communities located in markets without competing new supply, barriers to new construction starts, and our senior housing team using operational insights to collaborate with operators and drive results. These conditions present a compelling multi-year growth opportunity. Turning to capital, the $30-plus billion scale of our platform, our liquidity, and our diverse geographic footprint and business model give us access to multiple sources of attractive capital. We remain committed to a strong balance sheet and our BBB Plus ratings. our third-party institutional capital management business, VIM, is also a competitive advantage for Ventus. With over $5 billion in assets under management, VIM provides a way for us to capitalize on attractive investments through cycles. In the current environment, VIM provides us and our VIM stakeholders with interesting investment opportunities. Overall, on the investment front, were focused on assets with outsized embedded growth at or below replacement cost pricing and high-quality stabilized assets and portfolios with good risk-reward in a variety of economic conditions. Now let me spend a minute on results. First quarter normalized FFO was 74 cents per share. with year-over-year total company same-store cash NOI growth of over 8%. Our performance was fueled by significant property NOI growth led by shop. Pete Bulgarelli and his team once again delivered excellent MOB performance, generating our seventh consecutive quarter of year-over-year occupancy growth and industry-leading NOI margins. as well as extending our track record of over 3% same-store NOI growth to six of the last seven quarters. Now let me touch on some other key highlights of our enterprise. Our non-property strategic investments continue to generate value. We just closed on the partial sale of our equity investment in Arden Health Services, yielding approximately $50 million in total proceeds. This transaction is a testament to our partner Sam Zell's ability to make outstanding investments, attract quality investors, and find excellent management teams. The price represents a greater than four times equity multiple on Ventas' original investment basis. We retained an approximately 7.5% stake in Ardent with an implied valuation of $150 million. On May 1, we completed our previously announced plan to take ownership of the Santerra portfolio, consisting of MOBs, shop communities, and triple net lease healthcare facilities. We believe that the conversion of our cash pay mezzanine loan into real estate ownership should produce FFO within our previously announced guidance range, and that the value of the assets at March 31 approximated $1.5 billion, which is the sum of the debt stack. Our experienced team is now focused on maximizing both the value and the NOI of the portfolio over time. It's important to realize that the expected FFO contribution we are forecasting from this loan to own is substantially consistent with what we would have generated if our MES loan had been paid in full at maturity and we reinvested the proceeds in debt pay down. Our strong ESG practices also drive value for Ventasa stakeholders. We were proud to receive the 2023 Energy Star Partner of the Year Sustained Excellence in Energy Management Award, the highest honor awarded by Energy Star. We are also committed to best-in-class corporate governance practices and are proud of the excellence, independence, and diversity of our board. Finally, we were honored to recently celebrate Ventas' 25-year anniversary. I want to publicly thank all my Ventas colleagues and board members, past and present, partners and stakeholders, including those of you listening today, who have made this significant milestone possible. With our momentum and a cohesive experience team at Ventas, we are optimistic about the prospects for our next 25 years. And now I'll turn the call over to Justin.