Ventas, Inc.

Thank you for standing by. My name is Jeannie and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventos fourth quarter 2025 earnings 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to BJ Grant, Senior Vice President of Investor Relations. You may begin.

Thank you, Jeannie. Good morning, everyone, and welcome to the Ventos fourth quarter and full year 2025 results conference call. Yesterday, we issued our fourth quarter and full year 2025 earnings release, presentation materials, and supplemental information package, which are available on the Ventos website at ir.ventosread.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 topics 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 also be discussed on this call, and for a reconciliation of these measures to the most closely comparable GAAP measures, please refer to our supplemental information package posted on the Investor Relations website. And with that, I'll turn the call over to Deborah A. Cafaro, Chairman and CEO of Ventas.

Thank you, BJ. I want to welcome all of our shareholders and other participants to the Ventas fourth quarter and full year 2025 earnings call. 2025 was an outstanding year for Ventas. We delivered strong results from the execution of our 123 strategy focused on senior housing. As secular demand from a large and growing aging population strengthens and supply remains constrained, we are intent on the significant value creation opportunity ahead. We plan to use our advantage position proprietary Ventas operational insights platform, financial strength, and industry relationships to capture the unprecedented multi-year growth opportunity in senior housing, while we also help individuals live longer, healthier, and happier lives. In 2025, we drove growth at scale. Our normalized FFO per share increased by 9%. And our same-store shop cash net operating income grew 15%, our fourth consecutive year of double-digit shop NOI growth. Our enterprise value exceeded $50 billion, and our fourth quarter annualized NOI and shop NOI reached $2.5 billion and $1.3 billion, respectively. We raised $7 billion of capital from a wide array of sources at attractive prices during the year. Our investment activity also accelerated as we closed $2.5 billion of high-quality senior housing investments that enhance our enterprise growth. By year end, we owned over 83,000 shop units, and 53% of our NOI was generated by our shop communities. our investors were rewarded in 2025 as Ventus delivered total shareholder returns of 35%, significantly outperforming our industry benchmarks by wide margins and the S&P 500 in a year when it reached record highs. The Ventus team has been outstanding in its commitment to each other and to excellence, as we've worked together to deliver value and performance across our stakeholder base. We are keenly focused on the multi-year NOI growth and value creation opportunities ahead. Let's start with the durable and powerful demand trends in senior housing. This year marks a historic demographic inflection point when baby boomers start to turn 80. This cohort of nearly 70 million individuals is the wealthiest generation ever. As the baby boomers age, the over 80 population should grow 28% in the next five years and double in two decades. Today, more people than ever are choosing senior housing for the valuable benefits it provides at an affordable cost that is comparable to the cost of staying at home. Senior housing is a consumer-driven, private pay business that provides important support, socialization, and safety benefits to residents. We were once again reminded of the value of senior housing during the recent winter storms when care providers across the country kept residents safe, warm, and well cared for in our communities, while many seniors living alone lost power in heat. Meanwhile, the new supply of senior housing continues to hover around all-time lows. To put this in context, there were only about 2,500 new senior housing units started in the fourth quarter of 2025, while we expect over 2 million people to turn 80 in 2026. Both sides of this demand supply imbalance are weighted strongly in our favor. and Ventas is exceedingly well-positioned to capitalize on this unprecedented opportunity. With a long runway ahead, we intend to continue executing our strategic vision of, one, delivering outside senior housing organic growth, two, making value-creating investments focused on senior housing, and three, driving cash flow throughout our portfolio. We also want to extend our trajectory of enhanced financial strength and flexibility. Ventas has built a scale platform to drive our performance. Our experienced team, proprietary analytics tools, strong balance sheet, data capture, and industry relationships give us a competitive moat in senior housing that continues to expand. With our vision, strategy, and market positioning in place, I'll close on our 2026 operating guidance, investment activities, and dividend increase. In 2026, we expect to deliver high single-digit growth in normalized FFO per share, led by SHOP. We expect SHOP to produce our fifth consecutive year of double-digit same-store cash NOI growth. with occupancy, rate, and margin, all showing healthy year-over-year increases. Our total company same-store cash NOI growth should be nearly 10% in 2026. On the investment front, our team and our pipeline are extremely active. Our number one capital allocation priority remains US senior housing. We've already closed over $800 million and high-quality senior housing acquisitions year to date, and we are highly confident we can complete $2.5 billion of investments focused on senior housing this year. We intend to remain aggressive in expanding our senior housing business through investment activity that provides attractive risk-adjusted returns and enhances our enterprise growth rate. Finally, I'm pleased to share that our Board of Directors has approved an 8% increase in our quarterly dividend on the strength of our performance and positive multi-year outlook. Earnings and dividend growth are important components of the Ventas investment thesis. The whole Ventas team is aligned and focused on continued outperformance at scale, and we're in it to win it. With that, I'm happy to turn the call over to Justin.

Thank you, Debbie. I'm pleased to share the results of a successful 2025 with both organic and external growth in our senior housing business. I'll start with shop. We had a really strong fourth quarter in our shop same store portfolio. Revenue grew over 8% led by occupancy growth of 300 basis points year over year and 100 basis points sequentially, demonstrating strong demand and sales execution. The occupancy growth was led by the U.S. at 370 basis points with a particularly strong contribution from our independent living communities. Furthermore, our communities in the U.S. top 99 markets outperformed NIC by 160 basis points. REV4 grew 4.7%, even with the mixed impact of the outside occupancy growth in our lower-priced independent living portfolio. NOI grew 15.4% year-over-year in the fourth quarter, led by the U.S. with 18%. Margin grew 180 basis points to over 28%, driven by 50% incremental margin. A quick note as I reflect on the full year, I'm particularly proud about the occupancy. We achieved a better than expected 280 basis points of average occupancy growth across the portfolio, led by the U.S., with 350 basis points. Once again, we saw broad-based contributions to shop performance across our operating partners, such as Sunrise, Atria, Discovery, since Siri, senior lifestyles, and the group Maurice, who continue to deliver exceptional care and services to our senior population, and very strong financial results. Looking ahead, we see significant opportunities for growth across multiple areas. We have spent the past several years taking numerous actions to ensure we are ready to meet this moment of accelerating demand and senior housing. We are positioned for continued organic growth and occupancy rate and operating leverage across the SHOP portfolio. Our U.S. portfolio is well positioned for a long runway of growth at only 86% occupancy. We expect contributions to growth across the portfolio, and particularly, growth drivers will include our new high-quality, high-performing acquisitions, the 45 communities that were transitioned from the triple net lease with Brookdale to SHOP, and our evolving Ventas OI execution in collaboration with our operators across the broader portfolio. With this backdrop, I'm pleased to give our 2026 guidance for shop. We expect the same store NOI growth range of 13% to 17%, driven by occupancy growth of 270 basis points year-over-year and REV4 growth of 5%, supported by in-house rent increase assumptions of 8%. which are stronger than the past couple of years. Operating expenses are expected to grow 5% again this year as we continue to add occupancy. I'd note that we've included modestly higher expenses in the first quarter, reflecting the recent severe weather across the US. With these components and the positive operating leverage, we expect that margin will continue to expand in 2026. Summarizing guidance, We are looking forward to our fifth year in a row of double-digit shop NOI growth with 15% at the midpoint. I'll give a quick update regarding the 45 transitions of former Brookdale communities. They have fully converted the shop and are now operated by five experienced transition partners whose senior leadership teams are highly engaged. Capital refresh projects are underway with most expected to be completed ahead of the key selling season. While still early, we anticipate modest NOI growth in 2026 and remain confident in the long-term opportunity to double NOI across this group of communities. At the core of what we do is delivering a high quality living experience for our residents. Our communities support safety, connection, and independence while providing the amenities, professional care, and services that enhance daily life, creating peace of mind for the families of residents. That experience is deliberate at a compelling value proposition. On average, residents can afford to live in our communities almost seven times longer than the typical length of stay. The quality of care and services we provide is reflected in strong resident outcomes across our portfolio. For instance, at Atria Senior Living, we've seen a third consecutive year of improvement in net promoter scores. jiggling growing advocacy among residents and their families, and continued outperformance versus industry benchmarks. Le Groupe Maurice has also been recognized for the sixth consecutive year as the leading senior housing brand in Quebec, based on an independent survey evaluating safety, building quality, programming, service levels, and the quality of staff. More than 70% of Sunrise's communities earn the best senior living rating by U.S. News and World Report. further validating their strong customer engagement and ability to deliver a differentiated experience for residents and families. Furthermore, Discovery Senior Living achieved a number one JV Power customer satisfaction ranking, validating their ability to integrate communities, improve performance, and sustain resident experience. It's no wonder there is increasing demand for senior housing. Today, we partner with 43 operators across our shop portfolio, providing meaningful coverage across the senior housing continuum of care, diverse geographies, and a wide range of price points. Importantly, as more operators and communities are integrated into the platform, our data and analytics capabilities become increasingly powerful, reinforcing the network effects that drive performance and widening our competitive moat relative to other owners of senior housing. Our ability to manage senior housing at scale is a core competitive advantage. Our differentiated platform allows us to support a broad range of operators, enabling us to match the right operator with each community in each market and capture incremental growth opportunities. Ventos OI execution is at an all-time high. In 2025, we significantly deepened our collaboration with operators through site visits, senior management meetings, operator summits, and active asset management. This engagement enables us to work shoulder to shoulder with our operators on key priorities such as NOI driving CapEx, dynamic pricing, sales execution, and rigorous benchmarking across key operating metrics, all in support of our relentless pursuit of creating environments where seniors thrive and investments flourish. We plan to further elevate this engagement as we meaningfully expand the capabilities of our senior housing team and enhance our interdisciplinary approach to supporting and growing our network of high-performing operators. Furthermore, the Ventas OI platform is also technology agnostic, meaning operators can plug into Ventas OI from a wide variety of operating systems, contributing to our ability to scale. Now turning to investments. We concluded 2025 with two and a half billion of senior housing acquisitions. We really like what we've been buying. Our senior housing investments are squarely within our right market, right asset, right operator framework, improve Ventas' overall shop portfolio quality, are poised for outperformance due to favorable supply and demand dynamics, and increase the company's enterprise growth rate. In the aggregate, These investments have already created significant value based on the strong operating performance achieved under our ownership that is in line with our expectations. 2026 is off to a strong start with over 800 million of fully owned senior housing investments across seven transactions closed already this year. This brings our cumulative senior housing acquisitions to 4.8 billion in a little over a year. For the full year of 2026, We're providing guidance at $2.5 billion of investments focused on senior housing, and we have high confidence in achieving this amount given the momentum we continue to see in our pipeline. While competition for senior housing assets has increased as additional capital flows into the sector, Ventos is uniquely positioned to deploy capital where we have strong conviction and where we can fully leverage our differentiated competitive advantages, our scale, relationships, and operating expertise allow us to aggressively pursue opportunities where we believe we are best positioned to create value. We are seeing a broader and more diverse set of potential transactions in the market across a range of investment profiles. We seek senior housing investments that combine durable in-place cash flow and growth with the potential to generate attractive risk-adjusted returns consistent with our low double-digit to mid-teens unlevered IRR targets. Our relationship-driven approach to sourcing, structuring, and executing transactions, combined with a continually expanding network of high-quality operator relationships, continues to provide Ventas with differentiated access and the ability to win compelling opportunities. Ventas remains a senior housing partner of choice for operators, seeking the benefits of Ventas OI and the scale, capital, and operating support of our platform. Since 2024, over 70% of our transactions have been with pre-existing operator relationships. Sellers are equally focused on repeat business, reflecting our consistent execution and reliability as a counterparty, which in turn creates incremental opportunities for follow-on investments. Over the past year, more than 50% of our transactions were with repeat sellers. In closing, we are looking forward to an exciting 2026, as we continue to drive organic and external growth in our senior housing business. Now, I hand the call to Bob. Thank you, Justin.

I'll share highlights of our fourth quarter and full year 2025 performance, our recent capital raising activities, and we'll close with our 2026 outlook. We finished 2025 strong with 10% year-over-year growth in normalized FFO per share in the fourth quarter. This increase was driven by same-store property growth of 8% led by shop which increased 15%. Our outpatient medical and research, or OMAR, business grew same store cash NOI by nearly 4% year over year in the fourth quarter. Outpatient medical same store NOI increased by 4.5%. Occupancy in outpatient medical reached almost 91% in the fourth quarter, the sixth consecutive quarter of year over year occupancy growth. Our outpatient medical in-house property management teams have delivered six straight quarters of TTM retention exceeding 85% in very strong tenant satisfaction. Meanwhile, our research portfolio, which represents 8% of total NOI, through same store NOI by 30 basis points year over year, supported by occupancy gains from university tenants. Looking at our full year results, we delivered normalized FFO of $3.48 per share a 9% year-over-year increase and at the high end of our guidance range. This growth was achieved through solid execution of our 1-2-3 strategy, led by SHOP organic NOI growth and $2.5 billion of accretive senior housing investments. Strong organic growth and equity-funded investments also work together to improve our leverage to 5.2 times in the fourth quarter, the best it's been since 2012. Since the beginning of 2025, we demonstrated our advantage access to multiple pools of capital. We raised over $7 billion since the start of last year, including nearly $4 billion in bank, bonds, and mortgage debt, and $3.2 billion of equity issuance. We have $1.2 billion of unsettled equity to fund future investments. I'd highlight that our leverage pro forma for the unsettled equity is approaching five times, and our growth outlook in 2026 suggests the trend of lower leverage is expected to continue. Let's conclude with our full-year 2026 growth outlook. For 2026, we expect net income of 57 cents per share at the midpoint. We expect 2026 normalized FFO per share to range from $3.78 to $3.88, or $3.83 at the midpoint. This guidance midpoint represents 8% year-over-year growth on a comparable basis. The building blocks of our guidance are similar to 2025 and are driven by our strategy. The 8% growth in normalized FFO per share or 27 cents per share is expected to be led by shop NOI growth and a creative investment activity. Net it against offsets including the expiration of non-cash rental income from Brookdale and higher net interest expense from refinancing maturing debt. Our total company same store cash NOI guidance midpoint Increase of nearly 10% year over year is led by shop at 15%. Our Omar same store guidance midpoint of two and a half percent is consistent with our growth in 2025 and is led by growth in outpatient medical. Triple net is expected to grow over 4% led by cash rent increases in January for Brookdale in our triple net senior housing business. I'd note that beginning in 2026 and as reflected in guidance, Our normalized FFO will exclude non-cash stock-based compensation expense, which at $0.08 per share impact in both 2025 and 2026, as adjusted, has no effect on our year-over-year growth rate. Our guidance also includes equity-funded investments of $2.5 billion focused on senior housing. G&A growth in 2026 on a cash basis is generally aligned with the growth of our enterprise or in the low $150 million range in 2026. We are investing in our organization in support of the company's increased asset base and expanding asset management initiatives. More fulsome discussion of our guidance assumptions can be found in our Q4 supplemental and earnings presentation posted to our website. To close, we are extremely pleased with our 2025 performance. The entire Ventas team is determined to continue to deliver outperformance at scale and superior performance for our shareholders. With that, I'll turn the call back to the operator.

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from Jim Kamert with Evercore. Please go ahead.

Good morning. Thank you. Bob, just finishing up on your comment there, on the Brookdale sort of reset on the triple net side, obviously 4% is because of the rent bump. But prospectively, that's kind of goes back to a 1% to 1.5% kind of business. Is that a reasonable assumption for the triple net as a whole?

Yeah, Jim, I would say more like 3% on average for escalators. Obviously, the January percale increases is outsized, but that would be a run rate assumption outside of that.

Okay, that's great. And another housekeeping. In the guidance, obviously, you have the quest to continue to gradually deleverage And with the $503 million or so expected average shares for 26, what does it imply for the year-end count? Sort of like a $27.5 million kind of net incremental shares for the year. Is that in the ballpark, or where will we end the year, I guess, if you're providing that share count?

We haven't given a year ending. Maybe we'll do that later in the year. It depends a lot on timing. But what we have assumed is the Two and a half billion of investments are principally funded with equity, 1.2 of which is already in the bank. So when you look at the year-over-year increase in shares, it is that. It is a function of the investments, equity funded. So 503 is the number for the year.

Fair enough. And so you're not going to try to go, like, above that. In other words, above two and a half, I got what you're saying. I appreciate that. Thanks. Yeah. Yeah.

Thanks, Jim.

Your next question comes from the line of Seth Berge with Citigroup. Please go ahead.

Thanks. It's Nick Joseph here with Seth. So just on the acquisition guidance of $2.5 billion, obviously you're off to a good start. I think you're almost a third or probably over a third of the way there already. I think you mentioned high confidence in being able to hit that, but also that competition has increased. So just hoping you could kind of talk about what you're seeing in the market today. Is it more portfolios and, you know, what would – What would drive you below that $2.5 billion, just given the pace you're already on?

Hi, it's Justin. Well, first of all, our pipeline is very active and has been. It would describe the investment activity we've had as having momentum, and we've really been pressing our advantages, you know, to execute on our pipeline the opportunities that are a good fit for us. When it comes to the type of deals we do, we do do a number of off-market deals. For instance, the $800 million that we've closed already, half of that was off market. When it comes to marketed deals, there is increased competition. And what we're finding is where we have our advantages, first of all, the track record of closing, which has caused repeat sellers to opportunities with us. our operator relationships that have become really deep and strong and expanding those relationships and adding more operator relationships to the platform. There's plenty of activity as well overall in the U.S., and we're getting more than our fair share of that and like our opportunity to continue to do that.

Thank you. And then just, I guess, unrelated, obviously, it's been a more disruptive flu season nationally, but seems like occupancy is holding up well. What are you hearing from, I guess, your facilities or your operators on the flu season and, you know, I guess, how mitigation efforts change post-COVID?

Yeah, and, you know, that's a really good question. There has been national headlines around a flu season that was elevated at a point in time. We're not all the way through the winter season, so we'll see how that plays out. In terms of our portfolio, there are a number of things that have changed that, you know, since the pandemic era that have improved infection control. You know, one is simply that, you know, we're using more protective equipment such as masks. There's, you know, we're isolating. The general public is better at just staying away if they have infection, washing their hands. There's a, so therefore, I'd say a heightened awareness around any kind of infection in our communities and the management of that is much better than it was at one point in time. Having said that, we're also experiencing minimal flu impacts. It's been very mild and very few reports of any kind of outbreak whatsoever at this stage.

Thank you.

Your next question comes from the line of Vikram Malhotra with Mizuho. Please go ahead.

Good morning. Thanks for the questions. So just maybe on occupancy in the shop portfolio, you talked about, you know, sort of the weather impacting expense a little bit. Just can you walk us through a couple of things, like how are you baking seasonality to the first and the fourth quarters, and does weather impact either occupancy or, you know, flu impacts, et cetera? What are you baking in as you go through the occupancy guide?

Yep. So, you know, in the 270, we've assumed seasonality. And, you know, that would include, you know, just normal seasonal impacts, and that could be weather. It could be flu-related. That's in the guidance. And I think you know how the seasonality works. Obviously, we'll have, you know, more, usually more move-out activity, a little less move-in activity in the winter season. And that's the end of the year and the beginning of the year. And then the key selling season, May to September, is where we have outsized move-in activity and generally lower move-out activity. So, that's the big opportunity every year. And, you know, we look forward to, you know, you know, performing well within that and delivering the 270. That's the assumption. The comment I made on the call was really referring to expenses. There was obviously some recent severe weather, and we've incorporated, you know, expenses related to that in the first quarter, which is also obviously based into the full-year guidance.

Okay, great. And then just, you know, obviously the acquisition pipeline is very strong. I want to talk about dispositions potentially in senior housing, you know, whether it's into your fund or elsewhere, like Canada, for example, now 97% occupancy. In the U.S., you have another bucket that's sort of underperforming. I guess there are three markets, but maybe you can expand upon the future growth opportunities in both those buckets and whether anything there could be disposition candidates.

Yeah, so there's a lot in there. I'll mention, you know, so first of all, we're always going to have some amount of pruning that we'll do within the portfolio, and there's, you know, a few hundred million that's assumed. That would include some senior housing underperforming. We still have – there's always a bottom part of the portfolio that, you know, doesn't have the long-term potential that we like to see it have, so that creates disposition opportunities. In terms of Canada, you know, one thing that's interesting about that, you know, it's a very high-quality, high-performing portfolio. It doesn't grow as much as the U.S. It's also much smaller. You know, it was 30% of our shop portfolio just a few years ago. It's down to, you know, around 16% today, and that's because the U.S. is growing in every way, organically and externally, and so Canada's become a smaller footprint. You mentioned the other markets, and if you look at page 11 of the sub, people that have fallen along, In the other markets, we have more of a mid-market product, and that is mostly independent living. We also have assisted living. And a lot of those communities have benefited from our plans in terms of refresh, putting new operators in place, and offer a growth opportunity. You know, they're in good markets with strong net absorption. And a lot of the actions that we've directed towards the portfolio have benefited that category, and it has relatively low occupancy. We'll look forward to growth opportunity there.

Okay, thanks. Congrats on those strong results.

Thank you. Your next question comes from the line of Julian Blown with Golden Saks. Please go ahead.

Yeah, thank you for taking my question. Maybe Justin, on the Brookdale transitions, can you give us a look under the hood, sort of what are the lowest, sort of easiest hanging fruit that can help drive that immediate growth and improvement in 2026, you mentioned, and then maybe tying that to Ventas OI, how does that platform help your operators improve the performance of the newly transitioned assets?

Yeah, great question. And we had, you know, a number of TripleNet, the shop conversions last year, the biggest part of that was the former Brookdale communities that were in the lease that moved to shop. Those communities are, you know, have a lot of advantages. You know, they're large scale. They're in market theft, strong net absorption. We have five new operators in place. All of those operators have experienced transitioning. We have CapEx planned. A majority of them will have had their refreshes done by the key selling season. I'd say that's one of the biggest actions we're taking early. And then we expect the performance to be good over time. You know, it's not really a 2026, you know, story per se. There'll be some modest growth there. But 2027 and beyond is, you know, where we really expect to see ramped up performance and go after that doubling of the NOI that we've talked about.

Got it. That's really helpful. And then I think in the past, you've talked about how the time to turn a unit is very short given the limited wear and tear in senior housing and in your portfolio. But I was wondering if you had any thoughts about the time it takes to secure a new resident to replace an outgoing one and sort of how that might have changed in the last 12 to 24 months and sort of how waitlist length sort of play into that? Have they sort of grown over the last 12 to 24 months as supply has subsided?

Has what grown? I didn't hear that last part.

The length of wait list?

Yeah. Yeah. So the sales cycle, you know, it tends to be really short in assisted living. We could, you know, sometime inside of 60 days of getting a lead, you would expect them to make a choice, you know, whether it's with us or with another you know, another option that they're pursuing. Some move much faster than that, you know, way inside of 30 days, sometimes even just a matter of days in terms of the sales cycle. Independent living can be much longer. It's more of a discretionary choice. And we are seeing, you know, really the big demand driver isn't as much about the sales cycle as it is just the increasing, you know, senior population that's accessing our services. And then our sales execution has obviously been excellent because we've been able to outperform our markets, you know, for many, many orders and years in a row now. And why is that? Well, it's because of the investment in our portfolio, the operators we've selected, the OI platform that we've layered on to ensure that we have good performance. And we really like our opportunity, probably very obviously, moving into this next phase where we have even better demand. You know, we're just really well positioned to continue to drive occupancy.

Great. Thank you.

Your next question comes from the line of Omoteo Akasanya with Deutsche Bank. Please go ahead.

Yeah. Hey, guys. This is Sam . A lot of my questions have been asked already, so I guess I'll throw this one out there. I guess, can we, how do you guys, how should we think about the cadence of deals for the remainder of the year?

Yeah, from a modeling perspective, this is Bob. I would assume, you know, over the course of the year, sort of, would be a good modeling assumption.

Okay, that makes sense. That's all I got. Thanks, guys. Appreciate it. Okay. Thank you.

Your next question comes from the line of Michael Goldsmith with UBS. Please go ahead.

Good morning. Thanks a lot for taking my questions. On the assets that you're acquiring, you know, I assume they're coming in at kind of like low 90% occupancy. How much more occupancy upside is possible there? I know you mentioned you have shop properties that are 100% occupied and you're underwriting or use, you know, what are you assuming on the occupancy upside?

Yeah, so we – well, first of all, you know, we do have, you know, a number of different types of, you know, kind of senior housing profiles in our pipeline. And that can include some value-add opportunities, really high-quality opportunities that actually have a lower occupancy that we've managed to source. So we'll expect even more occupancy runway, you know, if and when we close those investment opportunities in our pipeline. We've had, you know, our favorite has been the kind of the high-performing, stabilized. If you're 90%, you have 10% to go. And when you have markets that are projected to go all the way to 100% occupancy over the next few years, that's a very reasonable expectation. So we're going to focus on – we have a lot of occupancy upside. You know, we're 86% occupied in the U.S. That's been, you know, designed – largely by moving our triple net communities over to shop. And then we've been buying these high quality newer communities as well. So we really like, you know, the portfolio positioning and the opportunity to grow occupancy.

Got it. Thanks for that. And we kind of touched on this a little bit, but just maybe ask more discreetly, you know, you talked a little bit about competition, you know, the portfolio, some of the blended cap rates of your acquisitions to start the year were So, and I know historically, it's kind of been in that 7% to 8%. So, like, should we expect, you know, kind of being remaining the year in that like sub 7% range? Or, you know, and that shifting down and say 50 basis points like six and a half to seven and a half versus seven to eight that may be historically just trying to get a sense of where the market has moved. Thanks.

Well, you know, it's not surprising given the quality of this asset class that there's a lot of interest in it. So, there certainly is more competition. Clearly, it hasn't slowed us down at all given how, you know, strongly we're positioned. There's a drifting down in cap rates. You can see it, you know, in our stuff. You know, we reported under seven. And, you know, I would say, you know, we'll report our expectations as we close deals moving forward.

And as Dustin said, we remain – we are, you know, highly competitively advantaged in making acquisitions in senior housing.

Thank you very much. Good luck in 2026.

Thank you.

Your next question comes from Michael Carroll with RBC Capital Markets. Please go ahead.

Thanks. I just wanted to build off of the seniors housing valuation question. I mean, obviously, private market valuations have improved. I mean, how difficult is it to buy assets under or at replacement cost today? I mean, is there an idea of, like, how big of a discount it is today versus it was maybe one to two years ago?

You know, it depends on what you're buying. You know, so, you know, we've had – we've been buying consistently, you know, under replacement costs. There's been some that have been a little closer to replacement costs, and it's really just a function of the age of the property usually. So we've had some really nice high-quality newer communities that you're buying closer to replacement costs. We have others that are way below still. So we're looking to try to stay at or below in terms of our investment criteria, and we've been able to do that really consistently.

And rents would still have to – Rents would still have to grow significantly to justify new construction.

Okay, great. And then just on the pipeline that you have today, I mean, I know that you have a $2.5 billion target for the year. You already completed about $840 million. I also know how conservative Ventos is with putting investments within their guidance ranges. So of the 1.7 billion unidentified deals, I mean, should we assume that there's a pretty good horizon or line of sight on completing those specific deals?

So we're describing it as high confidence. So you can interpret that. Yeah, and the pipeline keeps growing as well.

Okay, great. Thank you.

Your next question comes from the line of John Kilichowski with Wells Fargo. Please go ahead.

Hi, Ro. Good morning. My first question is around the balance sheet and G&A, really. You know, when I look at what you gave in terms of same store and the acquisition number, they were both great numbers. And maybe the FFO was slightly below where we would have expected. And I think part of that was some higher interest expense and maybe some G&A that we're not thinking about. Could you walk us through the building blocks there and the assumptions maybe there's some conservatism? Because you've already pre-funded, I believe, 500 million. But maybe there's more there that we're not considering.

Sure. Let me unpack a little bit. So there are two key drivers as you look at the year-over-year growth of 8% outside of the tremendous growth in shop and external growth. And that is, first and foremost, the expiration of the non-cash Brookdale or amortization. We disposed that ad nauseum. That's $0.04 year-over-year. And so that's one item to note. The second is refinancing maturing debt. We do have $2.2 billion in of debt to mature this year that's higher than the last couple years. And obviously, there's a refinancing increase relative to the debt on the books. Those two alone explain the difference between 8% and 10%. You know, I mentioned in my prepared remarks, G&A, we are investing in the enterprise. As you would expect us to do, we're growing scale in senior housing. We're investing behind the platform. Meanwhile, we are very, very focused on efficiency and effectiveness at the same time. But believe that we've got the right balance there. But we do have growth in our G&A in the guide as well.

Got it. That's very helpful. And then my next one is on the 15% same-store guide. What does this imply in terms of U.S. growth? And then just overall, how much of this is just you capturing the opportunity in front of you? And how much can you attribute this to like what you talked about in your opening remarks with Ventas OI?

So, you know, we're not really giving U.S. and Canada separate, but clearly, you know, U.S. was 18%, you know, in 25. It gives you a feel for the outsized growth potential that we have in the U.S. The You know, we really, like I said before, we like how the portfolio is positioned. It's well invested. We have the right operators in place. We continually take actions. You mentioned Ventos OI. I'll just give you a flavor for some things we did in 25 as a proxy for the types of actions we take. You know, so we added 12 operators last year. And so our platform, you know, is designed to onboard operators, bring them into the OI platform. helped them to really be able to focus on that day-to-day execution. We had 88 redevs that helped to improve our competitive positioning. We had 26 communities that transitioned to new shop operators. And then we converted 74 from triple net to shop to position ourselves with that lower occupied opportunity and long run way of growth. And so we're always taking portfolio actions But on top of that, we're also taking, you know, operational type actions. And this is where I think the power of the platform really, really comes into play. And our operators have the responsibility for running the day to day business, we have this powerful platform to help really highlight for them opportunities to improve. And that can be anywhere from sales, pricing, and other operational, you know, benchmark improvement opportunities. So, we'll continue to kind of press that advantage and execute in 26. Got it.

Thank you.

Your next question comes from the line of Rich Anderson with Cantor Fitzgerald. Please go ahead.

Hey, thanks. Good morning. So, allow me to be a pain in the, you know, what with my two questions. On supply, I guess, Debbie, you said rents need to grow significantly to justify new construction. Well, they are growing significantly, as you guys have pointed out. And I'm wondering how supply doesn't become a relatively near-term concern just around the narrative. I mean, we've seen it happen in industrial and data centers and multifamily when that was growing at 20%. So to what degree are you sort of preparing for that and because senior housing was oversupplied before the pandemic, as some of us remember. So, I'm just curious, you know, I know it's great now, but what's the strategy, you know, over the next five years to, you know, to keep sort of that reality in the line of sight?

Yep. Thanks, Rich. The multi-year NOI growth opportunity has a really long runway. And it's principally driven by demand because of the absolute explosion of the over 80 population, which is our customer base. And as I mentioned, you know, the starts are literally in the 2000, a quarter level right now. There's over 2 million people turning over 80 in 2026. And that continues to grow as far as the eye can see. And we know that the costs to develop are high, labor, materials, et cetera. We know there's about a three-year cycle. And what we project is that even if new development starts, that there is a surge, a step function in demand as you look forward in three, four, five years. And so the demand overwhelms or should overwhelm, you know, any incremental new supply. So that's how we're looking at it. And you've referred to earlier periods. The senior population growth was very flat to low single digits. We expect it to be 28% over the coming five years. So we think the best is yet to come.

Okay. That's a perfectly good color. Thank you for that. Second question is, On the affordability comment, I think somebody said maybe it was Justin, they could afford to stay seven times longer than the average length of stay, which is an interesting stat. But in my mind, it's affordable to people who can afford it. That sounds silly to say, but I would argue the vast majority of seniors cannot afford this product. I don't know what the penetration rates are, how you calculate that, but it's got to be – at the very low end of the scale. So I'm just curious if you've given any thought to a more affordable product to sort of capture a broader range of seniors as we go through this that can afford it. I know that's being done in some other companies are doing that. I'm just wondering if you're sort of modifying your strategy to some degree to get at what is the majority of the senior population, my opinion, that can't afford this product. So thank you.

Rich, Debbie here. So, yes, Justin did quote, and I talked about the fact that our industry provides a very important, valuable benefit to seniors and their families in our communities at an affordable cost. And we have a page in the deck that's actually very illuminating on this, page 16. And I also mentioned that baby boomers who are starting to turn 80 are the wealthiest generation ever. and they control about half the country's wealth. And what's really important is, as Justin said, our residents can afford senior housing almost seven times what it actually costs for them to live there. And more importantly, it's effectively a replacement expense for what seniors are paying to live in their homes alone and get any kind of modicum of in-home care similar to what's provided in the senior living communities. And on top of that, the seniors aren't alone. They're getting the socialization and safety and support of a communal setting. So we really do believe that the product provides valuable benefits. Anyone who's ever used it in their families understands that and that it truly is an affordable cost. to this generation that will be the resident base and is starting to become the resident base starting in 2026.

Can I give you my mother's phone number so you can call her and tell her that?

We do it all the time. We get calls all the time because, you know, it's a very needed benefit that we provide in our business.

Thanks very much.

Your next question comes from the line of Pharrell Granath with Bank of America. Please go ahead.

Hi. Good morning. This is Pharrell Granath. My first question is around your pipeline. I know you've added some additional color and a lot of questions about it, but just when thinking about entering into 26, is there a quantifiable difference between what your pipeline is today versus what it was one year ago for 25?

So we disclosed that, you know, our pipeline in U.S. senior housing is $35 billion. And, you know, that, you know, some of which we closed last year, some of which is still in the pipeline. Some of it closed this year already, and some of it is still, you know, in this high-confidence group that we described earlier. And I would describe the pipeline as growing. it's certainly becoming larger. We're seeing more mid-sized deals. We continue to see flow business as well. So, yeah, there's more opportunities than we had a year ago.

Okay, thank you. And then also when looking at your same store, shop, occupancy, you've now reached around that 90% threshold, and your margins are around 28% or mid-28s. I'm just curious about now that you're stepping into a higher REV4 growth, and also layering in Ventas OI, where can we potentially see this margin number move? Are you seeing additional revenue growth and margin expansion from the layering of the Ventas OI?

Yeah, so just like really in a very focused way, I would say, you know, we had 50% incremental margin in the fourth quarter. We expect in our numbers, our guidance numbers for 26, that that will be in the 50s. So more margin expansion opportunity in 26. I mentioned the rent increases in my prepared remarks were 8% this year. They were 7% last year. So we're starting to see higher in-house rent. We do have underlying improving trends in moving rents as well. So there's good support for better pricing moving forward, which makes perfect sense, you know, given the supply-demand dynamic that Debbie described, and also just having more communities that are becoming higher occupied.

Thank you.

Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Please go ahead.

Hi. Thanks for the time. Justin, you mentioned dynamic pricing in the context of Ventus OI. I'm just curious if you can give us a sense of where you are in the process and the ultimate goal on how you expect and hope to price these units over time.

Yeah, I mean, we've been working on dynamic, everything event SOI related, we've been working on really since 2022. And it's an evolving platform. The capabilities are improving in every way. They're being more technically proficient. And also, really importantly, way better at executing in the field. And I would say that's one of the areas that really helped in 25, and we look forward to really expanding and pressing upon in 26. And in order to be able to deploy Vents SOI, you have to have high adoption from our operators. And they are highly engaged with us. So I couldn't be more happy with their willingness to work with us and, and therefore execute moving forward. So I would say we're, I'll always say we're early stages. Because it's an evolution. And the goal is to get even better at it, whether you're talking about dynamic pricing, or just execution across the whole platform. And as Bob said, we're putting more resources behind it. And so we're going to continue to just get even better at it moving forward.

And just a quick follow-up to Farrell's question. On the flow through margins kind of, can you remind us how those should trend as you get higher and higher in occupancy? I think 90% is like a critical number where you don't necessarily have to add really any incremental headcount from a labor perspective. So, if you could just remind us on how that may or should change as occupancy continues to grind higher.

It gets better the higher the occupancy goes because the operating leverage kicks in. Like I said, 26 is we kind of hover around this low 90% we're expecting incremental margin in the 50s. And then we would expect that over time as we move up the ladder towards 100% higher incremental margin, usually around 70% or so, the higher you get. So, you know, we'll have that's really one of the most powerful aspects of senior housing is that high operating leverage. And we expect to benefit from that over the course of the next few years.

Thank you. Good luck in the rest of the year.

Thanks, Juan. Your next question comes from the line of Michael Soyuk with Green Street. Please go ahead.

Good morning. Thanks for the time. One question on the acceleration in rev4 growth expected in 26. Is this a function of assets that were already seen good growth growing even quicker or more properties that were laggard starting to catch up? Any color on where that step up in growth is coming from would be helpful.

Yeah, it's really – yeah, sure. And it's really just broad-based, and it's primarily driven – one of the biggest drivers is obviously in-house rent increases. And to have that be around 8% versus around 7% a year ago is a big – a big boost to Rev4. And we always like to use a really simple rule, oversimplified rule of thumb. And that is that Rev4 is two-thirds of the in-house rent increase amount. So that puts you at just under 5%. But we're also seeing, you know, solid underlying trends in terms of moving rents as well. So honestly, this is another category that just kind of seems like we're at the beginning here. And we're pleased with the results. But, you know, as we as we move ahead into this strong demand environment. We look forward to performing even better on that front.

Got it. That's helpful. And then maybe one on the outpatient research business. Does 2026 guidance assume any additional occupancy loss within the research portfolio, and do you expect that NOI has dropped in that business?

Yeah, this is Bob. I'll take it. Looking at 25 is a perfect analogy, I would say, as we think about 26. So in 25, overall, OMAR delivered same sort of 2.5%. Within that, the MOBs were over 3, modest decline in research given the backdrop there. That's a pretty good example of what we think is going to happen and continue on in 26, very, very similar. We kept the midpoint the same. So led by outperformance in outpatient medical and hanging in there on the research business.

Got it. Thank you.

Your next question comes from the line of Mike Miller with JP Morgan. Please go ahead.

Yeah, hi. Bob, can you give us more color on the decision to exclude noncash.com going forward from NFFO? And then what's embedded in the guide for G&A expense this year?

Sure. So first and foremost, just to be very crystal clear, it's $0.08 of non-cash stock-based compensation expense in both 25 and 26. We want to make sure everyone understands that. We've modeled that in terms of our growth rate on a like-for-like basis. Why are we doing that to your question? We think that's getting to where the market is in terms of healthcare REITs, and therefore, you know, making it more comparable for you, the investor, as you look at our earnings. So that's the reason. In terms of G&A, I mentioned in my prepared remarks, we are investing in the platform. We are growing the platform. Low $150 million range on the cash G&A, and that's on a growth rate in line with our enterprise growth rate is the expectation.

Okay.

Thank you.

Thanks, Mike.

Your next question comes from the line of Ronald Camden with Morgan Stanley. Please go ahead.

Hey, just two quick ones. Couldn't help but notice the occupancy delta between the IL and AL product. I guess just wondering, is that all acuity driven? And strategically, do you have a preference or is there an optimal mix as you're buying new assets versus IL and AL?

Yeah, sure. So, we did have some outperformance in our independent living portfolio. We'll expect that to continue to some degree in 26. I mean, we're performing really well across both independent living and assisted living. But that's been an area of strength in terms of occupancy growth, and we'll continue to press on that. We're about half and half by units, independent living and assisted living. And when we target acquisitions, we do like a mix. We do like that continuum of care offering, not exclusively, but when we see it, we definitely give it higher priority because it offers independent living assisted and member care together, or at least two of those three together, which just can attract a broader audience in terms of demand and also service offering.

Great. And then can you just spend two seconds on just labor costs and then maybe the CapEx, maybe CapEx per unit even? Because I saw the numbers were up, but presumably there's more units. But just broad-based trends on labor costs and CapEx or unit for the product would be great. Thanks.

Yep. I'll take those. So, on labor costs, we're assuming effectively just on a per-hour basis, kind of normal inflation. Nothing unusual there. And we are seeing, of course, significant volume growth when you look at the 5% OpEx guide that is really a function of the volume. but that would be a good proxy for per hour on wages specifically. On CapEx, we did give the FAD a guide. That is up year on year from about 300 million to 400 million. You nailed it. It's led by more units, some inflation as well, but that's the driver.

Thanks so much.

Your next question comes from the line of Austin Worshmith with KeyBank Capital Markets. Please go ahead.

Thanks. Good morning. Justin, just going back to the 8% in-house rent increase, have you seen any increase in move outs as a result of the higher increase this year? And then can you just speak a little more broadly to some of those leading indicators?

Yeah, sure. So, you know, first of all, it all starts with the quality of care and service delivery. That is paramount. And I mentioned, you know, in my prepared remarks, it was really rewarding to be able to highlight some of the, just the industry-leading you know, recognition we're getting in our operators that we work with in that regard. That's what's most important. You know, we're delivering really good services. We've established trust with residents and their families. And therefore, you know, the value proposition is recognized by the customer. And therefore, we're not seeing, you know, anything unusual in terms of financially driven move-outs.

That's helpful. And then I just wanted to go back with the follow-up to the non-cash comp question and wondering if going forward, should we be expecting any change to the composition of cash versus non-cash comp moving forward? Because obviously, there's implications then on the year-on-year comparison for growth.

No. In 25 and 26, I mentioned both are $0.08, and I wouldn't expect going forward there to be anything unusual. as it relates to the non-cash piece.

Thanks, Bob.

Appreciate the time. Thank you.

Your next question comes from the line of Wes Galladay with Baird. Please go ahead.

Hi, everyone. I just have a quick question on development. I guess once you think it would start to pick up, albeit off of a low level, and then how would Ventas like to participate? Would you like to lend developer just waiting by afterwards?

Okay, good question. We like acquisitions. We like buying durable, well-established, in-place cash flow that will grow. That's been our priority from an investment standpoint. In terms of development, first of all, we think rents need to be 20% to 30% higher, and that's even at a relatively modest development yield. This is a tremendously well-supported business, though, in every way, as we described on the earnings call. And so it's very reasonable to expect that there will be new supply. We would also expect that the first to come to, you know, that you would see announced in terms of starts would be ultra premium products. And that's a product that is so differentiated in terms of price when they enter a market that they're well positioned to be the price leader. So that would be the kind of the exception that you would see come early. But it's still going to take some time. You know, rents need to catch up. And when they do, as Debbie mentioned, you have a three-year runway. And when that supply opens, you're hitting, you know, this tremendous amount of demand. So we really, really like the outlook in that regard.

Okay. Thanks for the time.

Thank you. I will now turn the call back over to Deborah Cafaro, Chairman and CEO of Ventos, for closing remarks.

Well, everyone, I do want to say we had a great year at Bentos in 2025, and we look forward to having another one this year. I want to thank you for joining today's call and for your interest in the company. We look forward to seeing you soon.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.