Ventas, Inc.

Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time, I would like to welcome everyone to the VINTA's first quarter 2026 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, again, press star and 1. I will now like to turn the call over to B.J. Grant, Senior Vice President of Investor Relations. You may begin.

Thank you, Bailey. Good morning, everyone, and welcome to the Ventos First Quarter 2026 Results Conference Call. Yesterday, we issued our First Quarter 2026 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 VENTOS 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, and good morning to all of our shareholders and other participants. I want to welcome you to the Ventas First Quarter 2026 Earnings Call. Ventas continues to drive growth and outperformance as a leading participant in the longevity economy. We're already into our fifth consecutive year of double-digit annual growth in our senior housing operating portfolio, or SHOP. Even more exciting, this year represents a new and positive inflection point when demographic demand jumps and growth remains elevated for over a decade. Our business and team have been built to meet this moment and seize the unprecedented opportunity for multi-year growth and value creation. With shop as our engine, Ventas is now a $56 billion S&P 500 company with a portfolio of over 1,400 properties, serving a large and growing aging population. We have developed a unique brand that stands for delivering for stakeholders and winning together. Our excellent first quarter results and improved full-year outlook demonstrate our competitive advantages, the impact of our differentiated platform, strong execution of our 1-2-3 strategy, and our momentum. In the quarter, Ventas delivered 9% year-over-year growth in total same-store property NOI and normalized FFO per share. Shop NOI grew over 15% and U.S. occupancy increased 370 basis points, fueled by broad-based demand and our Ventas OI initiatives. Accretion from senior housing investment activity further contributed to our growth in the quarter, showing our strategy in action. And notably, our liquidity reached record levels and our financial position continued to strengthen. Based on our first quarter results and our confidence, we have improved our outlook for the full year, increasing our midpoint guidance for FFO per share by $0.03 to $3.86 per share, led by shop same-store growth of 16%. As a result of our strategy and execution, we have already grown senior housing to over 60% of our business, and our communities now serve nearly 100,000 residents. In a large and highly fragmented sector where most operators run 10 or fewer communities, our platform gives us unique advantages to drive out performance at scale through data and experiential insights. With our collaborative approach, Ventas OI also attracts many experienced operators who want to manage our communities and benefit from Ventas' aligned approach, people, and platform. And we're just getting started. In the investment market for SHOP, we have an outstanding private to public arbitrage opportunity. We have already closed $1.7 billion of attractive senior housing investments this year. and over $6 billion since the beginning of 2024. Our number one capital allocation priority remains U.S. shop communities that meet our strategic framework and can deliver unlevered IRRs in the double-digit to mid-teens range at pricing below replacement costs. Interestingly, because there is significant existing and new investor interest in senior housing for all the obvious reasons, We are seeing more owners and potential sellers bringing assets to market and engaging in conversations with us about transacting. This trend is expanding our pipeline significantly. We are confident in our ability to capture more than our fair share of desirable deals because of our momentum in the market and our competitive moat. We have now increased our 2026 investment volume guidance to $3 billion. We are focused on increasing our shop business organically and externally to drive our forward enterprise growth rate and serve the nearly 70 million baby boomers who start turning 80 in 2026. In the next five years alone, this group will grow nearly 30%. Yet, in the first quarter, senior housing construction starts totaled only about 1,500 new units and total senior housing communities under construction remained at historic lows. With at least a three year start to finish development cycle, these favorable demand supply trends provide our advantage platform with compelling and durable tailwinds. The Ventas team is unified and enthusiastic about outperforming at scale and the multi-year growth and value creation opportunity ahead. We are excited about our improved outlook for 2026 and the setup for the coming years as we pursue our mission to help people live longer, healthier, and happier lives. With our unique brand standing for commitment to each other and our stakeholders, we are in it to win it together. In closing, I want to recognize our admired colleague, Pete Bolgarelli. Pete is retiring after an extraordinary four-decade career in commercial real estate and eight years leading our Omar business with excellence and integrity. On behalf of all of us at Ventas, I thank Pete and wish him every continued success and happiness. With that, I'm pleased to turn the call over to Justin.

Thank you, Debbie. I'm pleased to join you today to discuss another strong quarter of execution in senior housing. reflecting continued momentum across both organic performance and external growth in our SHOP portfolio. I'll start with SHOP performance, then provide updates on our active asset management and the full year outlook, and conclude with investments and capital deployment. Starting with SHOP, the first quarter results reflect both strong market fundamentals and sharp execution across the portfolio. In the first quarter, SHOP same-store NOI increased over 15% year-over-year, kicking off our fifth consecutive year of double-digit NOI growth. This is driven by a powerful combination of occupancy growth, pricing strength, and operating leverage, and increasingly supported by the Ventas SOI initiatives we are deploying with our operators. Occupancy continues to be the primary driver of performance. Same-store average occupancy increased 310 basis points year-over-year, reaching 90.4%. Performance this quarter was particularly broad-based, with so many operators contributing to our success, there are too many to name. The results in the U.S. portfolio were especially strong, where same-store occupancy increased 370 basis points year-over-year and outperformed the NIC top 99 markets by 150 basis points. On pricing, Rev4 increased 5% year-over-year, reflecting strong in-house rate increases that are running at nearly 8%. as well as continued improvement in street rates across geographies, operators, and product types. Operating expenses increased 5.8% year-over-year, which was largely driven by higher occupancy levels and winter storm-related costs. Net-net, NOI grew over 15% year-over-year, and we delivered meaningful operating leverage, with NOI margins expanding 170 basis points year-over-year to 30%, and incremental margins at 50%. As we continue to deploy our active asset management, we're executing in close partnership with our best-in-class operators and with a talented and recently expanded Ventas Shop team that is driving performance at the unit, community, and portfolio level. Across the portfolio, we're focused on community-level execution alongside our operating partners, supported by the continued evolution of Ventas OI. We are deploying targeted initiatives, including refresh capex, price volume optimization guidance, and a sharp focus on sales culture with the ultimate goal of achieving zero loss revenue days in our highly occupied communities. We're also implementing unit level sales strategies supported by boots on the ground site visits from our team. And we're doing it in collaboration with operators, delivering strong revenue and NOI growth while ensuring the senior living value proposition is realized for residents and families through the care, services, and peace of mind provided in our communities. This combination of active asset management and structural demand tailwinds has led us to increase our 2026 shop outlook, including same-store NOI growth of 16% at the midpoint, which is up from 15%. This is driven by a higher expectation of occupancy growth of approximately 300 basis points which is leading to increased revenue growth expectations of approximately 8.75%. As we've discussed previously, the key selling season runs from May through September. While we enter the season in a favorable position because of the first quarter strength, our success during the key selling season will determine the full year outcome. Looking ahead, there's real momentum building for us to expand on several key fronts. Over recent years, we've made intentional strategic moves to ensure Ventas stands ready to harness the growing surge in senior housing demand. Because of those efforts, we're confident that we'll continue to drive solid organic growth fueled by ongoing increases in occupancy and the operating leverage we're achieving across the SHOP portfolio. And with our U.S. communities averaging about 87% occupancy, there's still significant runway for us to continue to drive out performance. Importantly, the strength we're seeing in the shop performance gives us confidence to continue leaning into external growth. Turning to investments, 2026 is off to an excellent start as we execute our external growth strategy with focus and intention. Year to date, We have completed 1.7 billion of high quality senior housing acquisitions in the U.S., building on the fast start we saw in January. Based on this activity and our outlook for the remainder of the year, we are increasing our senior housing focused investment guidance from 2.5 to 3 billion for 2026. While there is heightened interest in senior housing investments as additional capital flows into the sector, Ventas remains competitively advantaged. notably of the 1.7 billion of investments closed year to date more than 90 percent were relationship driven over 60 percent were sourced off market and more than 40 percent were completed with repeat sellers since the fourth quarter of 2024 we have now completed over 5.7 billion of senior housing acquisitions adding more than 17 000 units to the shop portfolio these investments have been carefully selected to closely align with our right market, right asset, right operator framework, and they are performing in line with our underwritten expectations. We are buying communities that enhance portfolio quality, are located in attractive markets with strong demand growth, are insulated from future supply risk, and deliver low to mid-teens unlevered IRRs. Our investment strategy and team are focused on senior housing investment opportunities with different combinations of growth and yield that can produce attractive risk adjusted returns. For example, earlier this month, we completed a $540 million acquisition of the rebel portfolio, which represents a value add lease up opportunity at scale. This investment consists of newly built luxury independent living communities located in affluent high growth markets across the western US. With average in-place occupancy in the mid-70% range, the combination of the newer assets, high barrier markets, and significant embedded occupancy upside creates a highly attractive growth profile. This portfolio was acquired at a significant discount to replacement costs, even with its quality scale and amenity set. The seller elected to retain a 25% interest in the portfolio to share in the strategic and financial benefits of implementing Ventas OI initiatives across the portfolio to drive unlevered IRRs in the mid-teens. Transactions like this underscore the advantages of scale, relationships, operating expertise, and decisiveness in today's market. Excluding the rebel transaction, our remaining senior housing investments completed so far in 2026 are expected to generate a 6.9% year one NOI yield in low to mid-teens on levered IRRs. These investments also allow us to expand our operator relationships. Our Ventas OI platform provides the capabilities to manage multiple operators at scale, enabling us to retain strong in-place operators and support their growth. Looking ahead, we plan to continue to pursue attractive senior housing investments that combine durable in-place cash flow, embedded growth, and attractive risk adjusted returns. In closing, we are encouraged by the performance of the shop business in the first quarter and excited about the opportunities ahead. We are executing from a position of strength with strong organic growth, compelling external investment opportunities, and a long runway for value creation. With that, I'll turn it over to Bob.

Thank you, Justin, and good morning, everyone. I'll cover three areas this morning. First, our financial results for Q1. Second, our balance sheet and capital activity. And finally, our updated outlook for 2026. Starting with our overall enterprise performance, we delivered a strong start to the year, led by over 15% same-store cash NOI growth in our shop portfolio. Normalized FFO for the first quarter was 94 cents per share, up 9% year-over-year, driven by total company same-store property-level growth of nearly 9% and accretive senior housing investments. Our outpatient medical and research portfolio, or OMAR, delivered 2.4% same-store cash NOI growth, led by outpatient medical growing 3.1% year-over-year. Occupancy in outpatient medical reached almost 91% in the first quarter. A 50 basis point increase year-over-year marks the seventh consecutive quarter of occupancy growth. Our triple net segment grew same store cash NOI by 1.6% in the quarter, benefiting from the 35% Brookdale cash rent escalator, which went into effect January 1st of 2026. This triple net result is in line with our expectations and supportive of our confirmed full year guidance for the segment. Turning next to our balance sheet, our balance sheet continues to strengthen as a result of organic shop growth and equity funded senior housing investments. Net debt EBITDA improved to five times at quarter end, a 20 basis point sequential improvement, with further improvement expected through the balance of the year. Equity is strong with $5.5 billion available at the end of the first quarter, providing Ventas with significant financial flexibility. Our investment momentum has continued into 2026. To fund this growth, we raised approximately $2.4 billion of equity designated for 2026 investment activity. including $800 million settled during the first quarter and $1.6 billion currently available through forward equity sales agreements. Given our encouraging start to the year, we're improving our outlook for 2026. We now expect normalized FFO per share to range from $3.82 to $3.89, or $3.86 at the midpoint, a 3 cent increase from our prior outlook. Bridging from our prior guidance midpoint, The $0.03 increase is driven by stronger organic property performance led by SHOP and a creative senior housing investment activity, which together contributed $0.04 per share increase. These favorable items are partially offset by one penny from the higher forward interest rate curve. We're also increasing our total company same-store cash NOI growth outlook to nearly 10% at the midpoint, resulting from a 100 basis point higher SHOP midpoint of 16%. More fulsome discussion of our guidance assumptions can be found in our Q1 supplemental presentation posted to our website. To close, we are very pleased with our start to 2026. The first quarter reinforces the strength of our organic performance, the durability of senior housing demand, and the embedded growth profile of our portfolio. With that, I'll turn the call back to the operator.

Thank you so much. At this time, I would like to remind everyone in order to ask a question, press star and the number one on your telephone keypad. Your first question comes from the line of Julianne Boual with Goldman Sachs. Your line is open.

Yes, thank you for taking my question. I just wanted to touch maybe on the $540 million Rebel investment. I guess in your view, what had sort of driven the underperformance of that portfolio, keeping it in the mid-70% range? And then, As we think of how Ventas OI sort of plugs in there, what are sort of the lowest hanging fruit that Ventas OI can sort of allow you to improve, and what are some of the longer-term gains that the platform gives you?

Justin, great question.

So I'll step back a little bit, answer your question, give you a little history, and then some of the attributes of the acquisition and the opportunity ahead. So this is a portfolio that was built by Wolf Company, which is a large multifamily developer with a very long history. They're based in Scottsdale. They entered this senior housing sector with this really exciting development because this is a resort-like independent living products that would appeal to a very active senior, highly amenitized, luxury setting. And at the beginning, when they entered the space, they used third-party management. And when they got into it, they realized that they were probably better off setting up their own platform, so they set up Revel, and that was a slow start. Now they have a team that is very talented, really across the board. One of the, you know, it's probably obvious that one of the reasons they wanted to work with Ventas is the Ventas SOI platform and the ability also to stay in through this joint venture so they could participate in some of the upside. And what we like about it is the quality of the assets are really high. We're buying at below replacement costs. We see operational upside that's significant and it's us and the rebel team and our team already been on the ground and, you know, they're, you know, we're seeing pretty immediate, you know, sales upside. We're catching the portfolio at a time where it has pretty good momentum already. We're facing a forward market that has 1200 basis points in net demand over the next few years. Um, so we're playing into tailwinds as well. And so when you put the whole package together, it's a really exciting high growth investment opportunity, really high quality assets, sourced completely off market, and it should, you know, generate really good returns for us moving forward.

Thank you. And then I guess just more generally on the current transaction environment, I mean, how would you describe the current level of competition in capital chasing transactions? Are you seeing a lot more bidders showing up when you are participating in sort of more widely brokered opportunities? And are you starting to see that reflected in some of the cap rates? And have you changed sort of your expectations at all on the cap rate front for the rest of the year?

I'm going to step back again. It's another great question. But just important to frame it. So, you know, we just updated our investment guidance for two and a half to 3Billion. We're doing this in a period where there is more interest in the sector. You know, there's clearly new investors. There's a wide variety of PE that's entered the space, both large and small. Owner operators, other REITs, there's institutional capital and, you know, With that in mind, we've updated our investment guidance to the highest we've had in three years with high confidence. And the reason we can do that is because of all the advantages that Ventas has. We have our competitive moat, which includes the Ventas OI platform, the ability to manage operators at scale in a highly fragmented sector. We're up to 44 operators now. When we enter deals, we have no financing contingency. The liquidity, obviously, is very high. Our track record of executing on deals has been excellent. And I mentioned in the prepared remarks that 90% are relationship-oriented, 60% off-market, 40% repeat sellers. We have a growing pipeline. The broader market is bringing more to the market as well. And we just have a track record of delivering on what we say we're going to do. I mentioned on the previous call that there's a drift down in cap rates from the sevens and into the sixes. We printed in our supplemental around a six and a half all in, and that includes the REVL deal. It's six nine without. When you look at the rest of the pipeline throughout the year, we're expecting high sixes moving forward. And that includes a mix of value-add and high-performing communities with upside moving forward. One thing that's interesting is that even though the cap rates have drifted down a bit, our IRRs have remained solid. And that's because of REVL and some other value-add opportunities we have that's delivering growth for us.

Thank you very much.

Your next question comes from the line of Jim Kemmert with Evercore. Your line is open.

Good morning. Thank you. Justin, I think you mentioned X4 was 5.8% this quarter, if I'm not mistaken. But just generically, how much of that would you say is, say, recurring food and labor maybe versus temporal, say, sales commissions or weather?

Yeah, it actually wasn't poor. It was total expenses, 5.8%. Um, and you know, there's, it was a lot of it was weather related. Uh, we had a little bit of volume impact and then the full year guide is five and a half. And that includes, um, the weather related expense that in the first quarter, but also some volume impacts throughout the rest of the year. Yeah.

The principal, uh, drive to the OPEX guide from five to five and a half percent is volume, Jim. It's more. Okay.

That's helpful. And do you think, I mean, who knows, right. With labor costs, et cetera.

how does eventos educate its senior housing residents regarding that sort of expense dynamic vis-a-vis probable price increases do they think do you think residents understand that jim good morning it's debbie so one important point to start the conversation is that the the labor market has been you know pretty constructive um and so that's an important point given You know that we do hire caregivers to take care of the residents.

Yeah, and I think that the other point on that is really the value proposition that the residents are are realizing, and there's a wide variety. I mean, they're they're engaging with us because they're looking for safety, socialization, peace of mind, ease of living, the amenities. And you know the care delivery that they can receive in the assisted living and memory care settings. And you know, if you're delivering. services and care the right way and engaging with your residents and their families in a way that builds and maintains that trust, the value proposition is well understood and the price discussion is understood as well. And so there is certainly an active dialogue, particularly between our operators and the residents, around the cost of service and care delivery and then the prices that we charge in association with that.

I appreciate it. Thank you.

You bet.

Your next question comes from the line of Seth Berge with Citi. Your line is open.

Thanks. It's Nick Joseph here with Seth. Just in terms of your comments on increased competition or more interest in the sector and in your prepared remarks, you mentioned that supply and construction starts are still very low. So I guess the question is, at what point are you starting to see any of that capital as returns compress, or at least cap rates compress a bit, and you see more and more interest move into development, you know, particularly giving your comments on acquisitions versus replacement costs. You know, there's still a gap there, but are we getting closer to some of that capital becoming interested in starting new supply?

So, that's another really good question. Um, we're still 20 to 40% off in terms of where rents need to be to, for, you know, most developments to pencil. We've talked about this before, you know, when, when developments start to be delivered at some point, when you see starts announced, it's most likely going to be a very high price point product. That's so disconnected from the existing market that the, the underwriting, you know, support disposably, you know, high, high end market is available. Um, and, you know, but if we just look at across our, our markets, we see 20 to 40% higher rents needed to support new supply. Doesn't mean there's not an interest in it, you know, from potential capital players and operators and developers out there. Given the fundamentals are so strong and the demand outlook is so incredibly strong, it makes sense. I mean, we'll need it at some point, but it still doesn't seem near term.

Thank you. And then just maybe in terms of asset sales, obviously just given the strength of the transaction market and the interest there, what's the opportunity from the Ventos portfolio side to recycle any of your senior housing assets that maybe can harvest the value and redeploy into other opportunities?

You know, so we've been, you know, each year we have a small amount of targeted, you know, dispos, you know, usually a few hundred million or so, what we targeted. And there's always some. And some of it's still senior housing. One of the key parts of our strategy is to make sure that we're in the right markets with the right assets. And if we see anything that we don't think supports the growth profile that we're targeting, then we'll introduce it to the market as a sale. We've been doing that consistently over the past several years. And we'll continue to always look for that bottom part of the portfolio that we can sell.

Thank you.

Your next question comes from the line of Vikram Malhotra with Mizuho. Your line is open.

Morning. Thanks for the question. So I guess two for me. One, just going back to the Rebel deal, can you maybe give us a little bit of flavor, maybe more flavor as to why the occupancy kind of hasn't picked up and kind of the positioning of the portfolio in terms of the product mix? Are there more studios, for example, when people want larger studios? Is it a price point issue or a a labor issue in terms of the right people? What could get you trending higher in terms of occupancy of the next year or two?

Yeah, so good question. There's no structural issue. It's not a situation where you have studios in a one bedroom market, for instance. This is an investment that was well-built for the type of resident they're trying to serve. The one thing that's interesting when you visit is you don't see many residents hanging around their apartments. These are very active communities that have a significant focus on health and wellness, fitness, education around those topics. There's a social event with music playing. There's an activity at the bar. We're there in the afternoon. And it's just a great time. And so I think they've done a great job of introducing a product that will work and be real popular. And in many of the locations, it's already proven to deliver a stabilized occupancy, but a lot of the newer product is still in lease-up. And so we'll be targeting, you know, those communities and work with the team that's in place that has generated some momentum already to try to help improve on really sales delivery, you know, sales execution. Also, there's some price sophistication opportunities as well that we can bring through the Vents SOI platform.

Okay. And then just one more, I guess, you know, I'm wondering, is it time for Ventas to maybe use the fund it already has or create a new fund in the sense, monetize certain maybe core higher occupancy senior housing or maybe even some life sciences where, you know, you could perhaps get fees, promotes, et cetera. Just given where we are in the cycle and the deviation in, say, lifestyle versus senior housing, I'm wondering if there's an opportunity for Ventas in the fund business.

Vikram, this is Debbie. Thanks for the question. We do have a Ventas investment management business that includes an open-end fund and some other vehicles. And certainly with all the interest in senior housing and with Ventas' competitive advantages and brand, we're well positioned to continue to try to expand our footprint in senior housing in a variety of ways, which could include things like additional vehicles.

And your next question comes from the line of Austin Werschmitt with KeyBank Capital Markets. Your line is open.

Hey, good morning. Justin, the incremental margin within shop segment has remained around the 50% level, which I think you previously assumed in initial guidance. Has anything changed relative to what's assumed in the revised guidance? And I guess, you know, given occupancy within the same store pool is now above 90%. when do you think you could start to see that incremental margin improve into the 60, 70% range or better?

Yeah, another one of our favorites. So the incremental margin is around 50%. It's been that way for years in a row now. And that's as we were on that journey from the mid 80s to 90% occupancy. And the guidance really assumes that it's in the 50s this year as we're, you know, we're at this 90% occupancy mark now. We know that in our portfolio that communities that are, you know, in that kind of 90% plus range of occupancy that have not had an occupancy change year over year. So they've had a flat occupancy. They deliver a 70% incremental margin. And, you know, obviously, we have a group of communities that we're still in lease up across our US portfolio, which is only 87% occupied. So, we still have a lot of communities that are delivering occupancy growth, but when you isolate those that didn't deliver occupancy growth year over year, that rule of thumb we've talked about is certainly achievable. And our goal over time is going to be to get as many communities in that category as possible.

That's helpful. And then, you know, you reiterated kind of that the May to September key selling season is really going to determine how the year plays out. But you did go ahead and increase occupancy given, you know, I guess the lack of seasonality you saw in 1Q. How much of that occupancy guide and increase was specific to 1Q versus, you know, flowing through, I guess, a better outcome through the balance of the year?

Yeah, so that, you know, it's this key selling season hasn't even started yet. And we do have, you know, optimism heading into it, you know, because of the strong start we had. But I would really think about it as the strong start, really delivering the increase from 270 to 300 on the full year. And knowing that we have a lot of, you know, execution left, you know, during the most important part of the year, which is the key selling season.

Thank you. Very helpful.

Your next question comes from the line of Michael Carroll with RBC Capital Markets. Your line is open.

Yeah, thanks. With seniors housing occupancy now above 90%, I mean, does it make more sense for operators to push for higher rates as opposed when occupancy was in the low 80% range, I guess? Or said another way, does the improved occupancy level allow these operators to be a little bit more aggressive for their operating strategy trying to push for higher rates?

Well, I would just want to remind you that we're 87% occupied in the U.S., so we see our opportunity very much as volume-driven. We're happy that we're seeing good performance from both occupancy and from rate, and that's delivering the 8.75% revenue guide that we made on the full year. Everything's contributing to the revenue growth and the improved outlook on revenue. However, volume remains the number one focus. We do know when you have higher occupied communities that there's better opportunity for price performance, and we see that in our portfolio. But the opportunity really is to continue to drive occupancy in the U.S.

Right, and that's what sets up the multi-year growth and value creation opportunity from organic growth in shops. Is the rate and occupancy working together to deliver outperformance?

Okay, great. I appreciate that. And then just circling back on potential developments, I mean, have there been interesting development opportunities across Ventas' desk that they're willing to pursue, or is it still just mainly focused on acquisitions at this point?

We are, we are certainly focused on acquisitions. This has been, we're in our third year of a very successful run of acquiring communities that have attractive, they're creative year one, and have a growth profile that's supporting low to mid teen unlevered RRs. And we, and that pipeline has grown and we're executing on it. So that's, that's our first priority. Along with, of course, continuing to drive organic performance across the shop portfolio. and looking for opportunities to improve performance in those communities that we already own. Development opportunities, I'm sure there'll be some in the future, but that's not our focus at the time.

Okay, great. Thanks.

Thanks, Meg.

Your next question comes from the line of Wes Coladay with Bayard. Your line is open.

Hey, good morning, everyone. I just want to go back to the Revel portfolio, just looking on the website, a place for mom. It looks really highly rated, and so I just want to go back into what the game plan will be. Is it really leaning into this Ventas OI, giving the new, I guess, the operator more data, advice on pricing, just trying to see how near-term, what the near-term opportunity is. Will their portfolio be ready for the key leasing season?

Yeah, well, I'll start with the last part is absolutely ready for the key selling season. These are just really well constructed resort like communities that will be very competitive. And as we met with Wolf in the early stages, it became very clear quickly that the combination of these great communities, high demand markets, their newly reinvigorated, you know, talented management team and the Ventas LI platform, which concludes the benefit of all of our data analytics, but also our boots on the ground approach, which has already started that we can really create value in this together. That's why the joint venture was a great fit. And we'll look forward to doing that. Obviously, the biggest opportunity is to continue to drive sales and and also

you're working on sales price and volume always work together so we'll bring our expertise in both areas to the platform and then when you look at the pipeline you know we it's just a unique opportunity you have you wouldn't look at the the future pipeline are you seeing the next of these where you have the the stuff that's in core a little higher yield with you also have these you know just plug it into the oi and then you get a nice stuff in a few years

Yeah, I think what you're you broke up a little bit, but I think what you're asking is, is this the unique opportunity? And are there other value add opportunities in the in the portfolio? We've had a number like this already. They've just been smaller. And so this is the first one at scale that we're pretty excited about. We have other value add opportunities in the three billion dollar gap. So we're yeah, we're looking forward to to Christopher Ptomey, Delivering you know you know, a creative investments with growth.

Christopher Ptomey, And why I didn't break up yeah sorry about breaking up and you did get the question, thank you.

Christopher Ptomey, yeah good great thanks.

And your next question comes from the line of Juana Santa Bria with dmo capital your line is open.

Hi good morning just a question on seniors you know there's been press articles about. given the tight markets about operators being able to charge entrance fees and maybe generate some revenue off of wait lists. So just curious on your approach and how that may or may not contribute to kind of the 100% occupancy goal or zero days downtime.

Well, it starts with the value proposition. I think it's really interesting. that this is, as you know, a private pay consumer driven business that people are choosing where they want to live for the security it offers them and their families. So that is a very encouraging, especially when coupled with the demographic demand that we see accelerating and then remaining elevated for a long period of time. So that's really important to think about. And I'll turn it over to Justin really to talk about the, you know, different management of communities as they go up the curve in terms of occupancy, which we see happening and over time will happen more in our portfolio.

Yeah, and you, Juan, you mentioned entrance fees. I'm going to reframe it and call it community fees, which is a fee that's been really a fee that's been part of the industry pricing package for many years. In more competitive periods, it would be reduced or waived. In this period where we have increased demand, it's actually going up. So we are seeing higher community fees across our portfolio. So that's consistent with what you're reading about. And we're also starting to see wait lists form. Now, we've had them for many years already in Canada. That's where our longest wait list exists in Quebec. And we're starting to have some wait lists in the US and, you know, there's certainly deposits, you know, that are required for wait lists. And in some cases, you can charge to be on a wait list. And we're at the front end of that, you know, but, you know, there's demand. And as Debbie mentioned, the value proposition is very appealing to those that are interested. So it has supported better pricing.

and just going back to uh development or supply that's come up a couple times curious on the appetite to structure something um either with maybe a preferred or mezz type component to where you guys could earn a return during the build out or lease up historically you guys haven't done us development uh in seniors housing so just curious if that is something that would be of interest i mean a couple of the leading operators including sunrise have talked about looking at development so it seems like it's coming near term so just curious on your appetite, maybe not traditional fee simple, but in other structures to where you could earn a return during that initial phase?

Well, you know, so there certainly are structures that can, you know, that we can utilize that makes sense. And, you know, when it comes to development and we can, you know, with the right opportunity, can underwrite returns. And we have a lot of partners that would be qualified to do that with. it's just not a big area of focus for us. We're focused on acquisitions, you know, as described, you know, they're delivering, you know, the creative growth opportunities, but also the unlevered IRRs that are in the limited to mid-teens. And so I know that's not quite what you're asking. The answer is yes, there's a way to do it. But it's also important to know that that's really not where we're focused at in scale at this point.

Thank you.

Your next question comes from the line of Pharrell Granath with the Bank of America. Your line is open.

Hi, good morning. This is Pharrell Granath. I first just wanted to ask about the increase in the cash GMA. I know you had mentioned about adding some staff as well on the SHOP platform. I was curious if there's any other contributing factors or if there are any initiatives that are also going into that figure.

Yeah, I'll take that one. For cash G&A, we mentioned in February, and you see it in the numbers in the first quarter, we are investing behind the business. We're obviously growing and scaling the platform, and so investing behind that people, process, technology in order to be able to accelerate that growth is definitely part of the playbook. We continue to believe that growth on cash G&A will be in line with the growth of the enterprise. We continue to stay focused on efficiency and effectiveness, but, you know, the first quarter is representative, I think, of the plan.

Great. And also on the rollout of Ventus OI, is that fully integrated with all your operators currently on your shop platform, or is there an additional rollout that we could expect?

Yeah, it's fully integrated. If you're new to us, there's a period of time that has to pass before you're fully integrated. We have a number of newer operators that have joined us in the recent months. But, yeah, this is a fully integrated platform across all of our operators, across all of our geographies, primarily in the U.S. And, you know, combining the advantage of the data analytics platform and the experiential insights that we deliver through a number of avenues, including booths on the ground site visits with our operators.

Great. Thank you so much.

Your next question comes from the line of Rich Anderson with Cantor Fitzgerald. Your line is open.

Thanks. Good morning. Great quarter. Question number one is early on, Debbie, you said, you know, you're seeing increasing engagement to do deals with Ventas. And I guess I'm curious why anyone would be a motivated seller with everything just sort of starting to happen here. it's not like they're getting five caps on deals to get paid for the opportunity set going forward. I get the Revel deal, but what is in it for people to be a seller today? And along those lines, do you think there'll be more in the way of JV type of deals that you'll have to accommodate to continue to grow? Maybe OP unit deals? I'm just curious how that dynamic might be playing into the future for an external growth standpoint?

I mean, as good, you know, good question. It is true that more and more people are bringing assets to market, which is building our pipeline considerably and giving us a great opportunity set. And, you know, sellers come in different varieties, you know, private equity sellers, other holders, who have limited life vehicles or other holding periods that have been perhaps exceeded because of the last couple of years and who also want to make sure that they can achieve returns and then perhaps recycle capital. We see a lot of that. We see some debt maturities. And, you know, the truth is when the assets get in our hands, they're likely to perform better. And so, you know, we may be having better returns than the seller could have, you know, if they hold on to the asset. So it tends to be longer hold periods, different types of sellers who maybe don't have the advantage platform that we have. This is a very difficult business to run in a, you know, just a one-off basis or in small scale. And that's why we're building this platform to be able to outperform at scale. So those are some of the reasons. I don't know if, Justin, you want to add any or if that covered it.

There's a second part of the question regarding joint ventures. And what I would say is the REVL deal is obviously a joint venture. It's a strength-on-strength joint venture opportunity to go create value. In any investment we make, we're always looking for alignment. And we found it that way, you know, in that case through a joint venture and most of our senior housing investments were doing it through a line management agreement. And so that's helping us to, you know, be on the same page with the operators, you know, from day one when we started a new relationship.

The rest of our expected investment activity is 100% equity ownership by Ventus.

Okay. Next question is, you know, a lot of your a lot of REITs and others, again, to reiterate a recurring theme, are sort of going after this opportunity, which you have to do, right? This is a great, great dynamic, supply-demand dynamic going forward for the next several years. But everyone is sort of standing on the same side of the boat. And when that happens, eventually the boat tips. And I'm wondering if, do you see an opportunity of people that are buyers today that may be necessary sellers a couple of years from now, when you think about development coming back into the fray, you know, 20% below rents needed to justify development. Well, if you start today, three years from now, it might have made a whole lot of sense to start a development today. So I just wonder if you think that there's a second chapter of people that are buyers say there'll be sellers tomorrow for Ventus. Thanks.

Yeah, I mean, I agree with you. And the reason is more about the expertise and data that are necessary to really do well in this business. I do think some new entrants will find it more challenging, frankly, and they will likely be sellers. Because you really have to know what you're doing, as Justin does from his decades in the industry. And we've spent you know, five years building this platform, and it's very effective and differentiated. And if you don't have that, it's much harder to succeed. So I do think that will give us more opportunities as we look in the next couple of years.

Okay, great. Thanks very much.

Thank you, Rich.

Your next question is from Michael Goldsmith with UBS Financial. Your line is open.

Hey, it's Michael Goldsmith. I'm here with Justin Hasbeak. Thanks a lot for taking our questions. Maybe sticking with the Revo investment, it sounded like you've done some smaller lease up or unstabilized acquisitions in the past. This one's clearly a bit bigger. So maybe the follow-up question to that is just, are you more willing now to be a buyer of these type of properties? And If so, is that driven by the improved backdrop or something else in the environment that makes us more attractive now? Thanks.

Yeah, I mean, we've been really from the beginning of this investment run we've been on, which started in 24, we've been focused on unlevered IRRs in the low to mid teens. We have been delivering on that through a variety of different types of investments in senior housing. And certainly, you know, a value-add opportunity is great because it'll support, you know, more growth. And in this particular one, it hits the mid-teens on levered IRRs. And so, you know, we like that opportunity. There's other smaller opportunities like that that we've had. We've had others that are in the pipeline in the $3 billion that we've mentioned that That will deliver some more more close to the mid teens as well. And you're really pulling 2 levers to get there, right? You have the going in your 1 yield. And then the expected growth profile, the asset over time and. And those are working together and everything we've been investing in to deliver the that we're targeting.

Justin Capposian, You know, as a follow up, maybe, can you provide an update on the brookdale transitions how those 45 assets are trending are you largely in line with your expectation of realizing $50 million of upside on those and, if so, what's the timeline there.

Jason Schifferman, yeah yeah so remind everybody that 45 communities that we transitioned late last year earlier this year from our brookdale least to our shop portfolio, these are large scale communities that. are located in markets with high demand. So tailwinds that we're playing into, they require additional investment to be competitive. We've completed, we'll have completed by next month a majority of those investments in the portfolio. So the CapEx deployment is really on track. All five operators are fully integrated now into the communities and they're getting handled on the operation and really focused on the key selling season. So that's going as planned. And then, like I said before, we really viewed 26 as the year to put all the pieces in place. And then 27 is and beyond is really the NOI growth opportunity. And you're right. We did see a double the NOI opportunity because it was around a $50 million run rate back at the end of 24 when we put this deal together. And we're anticipating over the next few years to be able to double that. And we've put all the pieces in place now to get started on that process.

Thank you very much. Good luck in the second quarter.

Thank you.

Your next question comes from the line of Michael Stroyek with Green Street. Your line is open.

Thanks, and good morning. With the bidding tents getting more competitive, particularly within high-quality, well-stabilized product, have you seen meaningful declines in your win rates within that subsect of the market?

You know, interestingly enough, our win rate has been pretty consistent, and, you know, the pipeline has become bigger. The actual pipeline is a little bigger, and then our win rate is consistent. Therefore, that's why we've raised our investment guidance. And so, yeah, there's exceptional deals here and there that go for some pretty aggressive cap rates. But like I said, we've been able to exploit all the strengths that we have and the great track record and continue to have confidence in our ability to execute within the market.

And our win rates stayed high, too, because a lot of the deals are really off market and bilateral in nature. And so that helps give us an advantage.

Got it. Makes sense. Maybe a separate question. You've highlighted the growth in operator count over the years. Just philosophically, how does the company think about operator count? What are the gives and takes of greater operator diversification? And do you expect your operator count to grow or contract from here?

So Debbie mentioned in her prepared remarks that the fragmented nature of the sector. Most of the industries operate by operators that have 10 or fewer assets. And so these are small operators. And then the large ones are usually around 100 or less. And so not particularly big. There's a few on the bigger side. So if you're going to invest in the space and you're going to do it at scale, you really need a platform that can accommodate multiple operators. And so we're very focused on doing that right. And it starts with the operating selection criteria to ensure that, you know, that the operator has a strong local market focus and reputation. They have expertise in the particular product type that they're operating. The talent is experienced and you know that the management team is is is a team that we can rely on to create value and deliver great care and services. The culture and senior housing is critical, so ensuring that they're measuring customer satisfaction, they're measuring employee satisfaction. They have initiatives in place to improve on on those fronts and have strong engagement with their residents and and their families. And then that you know they the managers can deliver growth and there are these operators that we can do repeat business with and have more growth moving forward as well. And then, you know, will they engage with Ventas OI? And years ago when we started putting the platform together, that was one of the big questions. It's no longer a question. It's become a competitive advantage and the engagement could be more collaborative, more positive, more impactful than it is. And so we really like our competitive advantage to have more operators. And we're at 44 now. Certainly, you know, we continue to plan on growing within senior housing, and we believe to do that, you have to be able to manage, you know, have a platform that can handle multiple operators.

Great. Thanks for the time.

Your next question comes from Michael Mueller with JPMorgan. Your line is open.

Yeah, hi, just one here. For the U.S. portfolio, what are your current thoughts on where your AL and IL occupancy should be able to max out to over time?

Well, that remains to be seen. You know, we've had outperformance in our IL occupancy growth. And, you know, Debbie mentioned the demand kind of profile. And we're really not even to the point for our business yet. It's not surprising to see independent living. We've seen better performance in independent living as the baby boom population started turning 80 this year. Assisted living has really strong demand as well, and we think both will have really strong demand. Both will probably surpass previous industry highs, and our goal is to outperform. So we'll tell you when we get there, but we expect both categories to be well into the 90%.

Justin's a big believer in the zero loss revenue day, so he won't be happy until every room is happily occupied by a happy resident.

Yeah, and keyword is happy, because if you're delivering best-in-class care and services, then I think it's a mandate that people should live with us, and so we're going to do our best to deliver on that.

Thanks, Mike. Your next question comes from the line of Nicholas Uliko with Scotiabank. Your line is open.

Thanks. Good morning. Just going back to Revel, I know you gave the stats on six years old on average, mid-70s occupancy on average. Can you just give us a feel, though, in terms of the vacancy? Is it concentrated sort of evenly across states? the portfolio? Is there, you know, and more in like recent deliveries?

Yeah, it's a little bit vacancies more in the more recent deliveries. We have, you know, there's a handful that are stabilized. And then there's the more recent deliveries that have the most upside. And so we were able to look at the track record of some of the early developments and see their lease up once they got the new management team in place. And and anticipate, you know, leveraging that approach combined with the OI platform to deliver more occupancy growth where we have vacancy.

Okay, thanks. And then my second question is for you, Debbie. You know, we spent, I don't know, the vast majority of this call talking about senior housing. It's where you're having a lot of operating success. You're expanding your portfolio, but it's still shop is, you know, 56% of NOI. So my question is about, you know, the rest of the portfolio. And how are you thinking about it? Because, you know, when we look at outpatient medical research, IRFs, LTACs, health systems, they're not, you know, realizing it's just sort of, these are legacy investments when there was diversification within healthcare REITs. There's a move away from that now. They're kind of not adding to your growth rate or your multiple. So my question is, you know, how are you thinking about that? And is there an opportunity to JV assets sell them How are you thinking about you know that and what would be the sort of trigger where you would? Look to perhaps reduce exposure there.

Thanks. Mm-hmm great well when we developed our one two three strategy and 2023 the focus is on basically growing shop organically and externally that's number one and two and And number three is really to, you know, drive performance across the portfolio. And we have been successful in executing that strategy because as SHOP is growing, you know, fifth year double-digit NOI growth, and we're adding, you know, six plus billion of investments in SHOP, we're seeing that, you know, become a much larger part of our portfolio. Senior housing itself is over 60%. And by definition, the other parts of the portfolio are becoming a smaller portion of the overall enterprise. And that is all part of the strategy. As far as actions, we've shown a willingness over time to take actions to modify the portfolio when we really think it's going to create long-term value. And we're certainly open to that. But right now, our real focus is on growing SHOP. organically and externally in that we're devoting all of our efforts with great effect to that because we think it's creating value for stakeholders.

Okay, thanks.

And your next question comes from the line of Ronald Kadeem with Morgan Stanley. Your line is open.

Hey, just two quick ones. Just going back to pricing, I know the REFPOR guide was unchanged, but if you could talk about where the operators put out increases this year, maybe versus last year, and maybe talk about how the philosophy about new versus renewal pricing and where you think you could push.

The revenue guide obviously increased to about eight and three quarters, and Justin will comment on the in-place increases.

Yeah, we've had, you know, you know, another good year is it was around 8%, you know, all in and in the January, which is where half the increases take place. It was around seven last year, so we've seen improvement in that category. There's, you know, some underlying trends and moving rents, which are very favorable as well. And as we get into a period where demand continues to pick up and occupancies continue to go up, you expect that to continue. And, you know, still like all the occupancy upside opportunity though. So, you know, it's kind of volume first and then, you know, prices opportunity with price down the road.

Got it. That's helpful. And I guess the, just on the acquisition mix, I think a couple years ago, You were much more focused on sort of the, you know, stabilized sort of assets, obviously with this rebel deal and maybe other deals upcoming. Is this is there sort of more of a shift to maybe taking on a little bit more lease up risk, you know, given the better growth, but given sort of your conviction and being to get those those portfolios filled? I'm just I'm just wondering if there's sort of a shift down versus what you were doing two or three years ago. Thanks.

Sure. So the, you know, the focus has really been to, you know, use the market asset operator framework to determine where we make investments. And we obviously, if you get the markets right, and you have assets that can be competitive within those markets, you're well positioned. And then from there, it's finding the right operator, whether we're keeping operators in place or transitioning to new managers. And by the way, we're overwhelmingly keeping the operators. That's been our our typical approach. And so once we get that right, then we're looking for the targeted returns, which at this stage are double digit to mid-teens. We've been delivering on low to mid-teens, unlevered IRRs over the past few years. We've had a wide variety of different types of senior housing communities. TAB, Mark McIntyre, deliver on our underwritten expectations so far, and some of those did include value add opportunities, this one just happens to be a little bit bigger and so we're able to showcase it as a as a case study. TAB, Mark McIntyre, And we anticipate you know really repeating the playbook moving forward.

TAB, Thanks so much.

TAB, Thank you. And there are no further questions at this time. I will now hand the call back over to Debra A. Caffaro, Chairman and CEO of Ventas, for closing remarks.

Thanks, Bailey. And thanks to all of you for joining us today and for your interest in Ventas as we, you know, drive forward on this multi-year growth and value creation opportunity. And we look forward to seeing you in person soon.

Thank you. This concludes today's conference call. You may now disconnect.