Q2 2023 Welltower Inc Earnings Call
Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the WellTower 2nd Quarter 2023 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 at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star one. Thank you. It is now my pleasure to turn today's call over to Matt McQueen, General Counsel. Please go ahead.
Thank you and good morning. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Security's litigation reform act. Although Wells Howard believes any forward-looking statements are based on the reasonable assumptions that the company can give no assurances, but its projected results will be obtained.
Factors that the cause actually results that differ materially from those in the board looking statements are detailed in the company's violence with the FCC. And with that, I'll hand the call over to Sean for his remarks.
Thank you, Matt, and good morning, everyone. I'll review our second quarter results and describe high-level business trends and our capital allocation activities. John will provide an update on the performance of our senior housing operating and outpatient medical portfolios. Tim will walk you through our triple net businesses, balance sheet highlights, and revised guidance.
as well as outpatient medical segment. Let me first dig into the senior housing segment. The key drivers of this business, occupancy, rate, and expenses, all came in better than expected this quarter, supported by accelerating demand of our product and plummeting new deliveries.
From a top line perspective, a senior housing operating portfolio achieved approximately 10% growth on a same-store basis, and 17.8% growth on a total portfolio basis, driven by another solid quarter of year-over-year occupancy growth and significant pricing power.
Last quarter I discussed with you how the strong pricing trends along with moderating expenses are resulting in significant margin expansions that we have been all waiting for. I'm pleased to report to you that this trend intensified in the second quarter as we saw revenue per occupied room or REP for growth.
of 7.3% coupled with just 3.5% expense per occupied room or export growth, resulting in an approximate 25% operating margin, a level not seen since the onset of the pandemic. And while that still leaves significant upside before achieving
our pre-COVID NMI margin of above 30%, we expect to meaningfully exceed our pre-COVID level of profitability over time through John's build-out of the operating platform. All regions and product types contributed significantly with this quarter.
resulting a 24.2% on my growth for our senior housing operating segment. While assistant living continues to outperform independent living, driving exceptionally strong results in the U.S. and UK, Canada is also joining the party with 17.2% on my growth.
At the risk of sounding like a broken record, I want to reiterate our core belief on how to make risk adjusted return in senior housing. Unlike a lot of empirical hearsay in the business, which either focuses on the location or the operators, we believe it is a four dimensional optimization problem of location, product, price point, and operators. And we do this objectively through machine and statistical learning using our data science platform, Alpha. I am delighted to inform you that we made perhaps.
the most significant impact in this pursuit through a mutually beneficial restructuring of our joint venture with Rivera. Through a series of buy sales, we materially simplified our balance sheet and we matched specific products and locations with the right regional operators in order to achieve meaningful density in their local markets.
In the UK, we took 100% ownership of 29 premier communities, many of which are located in the greater London market and consider some of the best care homes in the country. We transitioned these care homes from Signature to Avery and believe we have a material upside in this virtually impossible to replicate portfolio.
at the beginning of June . Though two months does not make a trend, I am delighted to inform you that these communities are showing positive trends right off the bat under Lorna's leadership, with current occupancy around 73.5%.
two months does not make a trend, I am delighted to inform you that these communities are showing positive trends right off the bat under LONAS leadership with current occupancy around 73.5%. one in the US.
We do 100% ownership of in extremely well-look at it assets recently built by Sunrise in high barriers to entry sub-market in the West Coast, East Coast and South Florida at a favorable basis and sold a minority interest in 12 other assets.
As you can see in the case study on the page 32 of our business update, highlighting previous Oakmont transitions in California. Courtney's team has taken occupancy from 64 to 90% in two years at these communities. Though this occupancy has far surpassed their previous high occupancy of 86% in 2016, I fully expect these communities will hit mid-90's occupancy in near future.
And just after four weeks of operations under Oakmont, these properties are on a path to achieve approximately 100 basis points of occupancy growth in first month and are showing positive NOI traction in NOI out of the gate. And finally, Canada. Perhaps the most exciting part of this years-long effort to optimize our portfolio. Through, though there is a multidimensional value creation opportunity in this effort, I'm delighted to inform you that we're launching a new platform with our partner, Mathieu Deguerre, in English speaking Canada. As you know, Courgier, under Mathieu's leadership, is one of the best operators in the...
improved employee experience resulting in exciting long-term career growth opportunity. I predict this operating JV will witness rapid growth in very near future.
The series of steps which is known as Project Transformer inside Wiltower is one of the most complex yet value-accurate transactions we have ever done. Under Eddie Chung's leadership in Canada and UK and Russ Simons' leadership in the US, this multi-dimensional project will truly transform our company.
in the next chapter of its evolution. This transaction marks the conclusion of our seven-year journey of contract modernization as virtually all of our contracts are now in Redea 3.0 and Redea 4.0 structures.
I cannot emphasize enough how important this milestone is for our form as we have now full alignment with all of our key senior housing operating partners.
we think or swim together. To continue this team of capital allocation, the favorable transaction environment that I described to you last quarter has resulted in an incredibly active summer for us. We currently have approximately 2.3 billion of deals under contract.
in 26 different off-market privately negotiated transactions. Opportunities within similar housing segments represent the bulk of these transactions with approximately $2 billion deals comprised of 8,900 units across all three regions.
We estimate our investment in these deals to be very attractive 32-40% discount to today's replacement costs with a creative in-place cash flow and significant growth potential. While I don't like to get into individual transactions, I would like to highlight our transaction in Canada with our partner Kojiye.
where recapping cogees existing institutional investor at ProPCO in highly desirable ZAS portfolio and Matthew is investing is equity going forward. This $935, $1,000,000 transaction of both recently built and attractive stable assets are a testament to the power of a relationship in this industry.
Eddie and his team have been working tirelessly over the past two years on this transaction and we're delighted to inform you that we signed the definitive documents a few weeks ago.
Additionally, following the completion of this deal and others recently under contract, we have achieved another company milestone, having closed or signed over $11 billion of transactions since our pivot to office in the fourth quarter of 2020. But we're busier than ever with a robustsave champion.
visible and actionable pipeline of opportunities that we're underwriting right now. Again, heavily senior housing, but we're also seeing some outpatient medical and skilled nursing opportunities up and down the capital stack. All of which we expect to keep us very busy for rest of the year.
deal teams didn't get much of a summer vacation and looks like they won't get much of a Christmas holiday either as many of these deal will close in Q4.
As I described last quarter, both debt and equity capital continued to rapidly evaporate from the commercial real estate space. We're getting hit left, right and center from counterparties who truly appreciate our handshake approach to the business, where we can bring both cash and operator to the closing tables.
We are seeing that the banks are no longer willing to kick the can down the road and in fact are showing willingness to sell their loan books partially or completely. A handful of these transactions have taken place and many more are brewing. The increased capital requirement directed from the regulators last week will only intensify this trend.
and we're ready to help banks release their capital as they execute their other strategic priorities. Nikhil and Tim's cell phone number has been on full display in our full page ad of the American Banker magazine since the summer of 2020. Please give them a call. I promise you they will respond within hours, not days.
as it is a customarily acceptable standard in the senior housing industry. I predict that the World Tower will play a meaningful role in helping to recapitalize distressed commercial real estate loan portfolios that fall within our circle of confidence.
And lastly, at the risk of stealing Tim's thunder, I would like to point out that our meaningful strengthening of our balance sheet over the last few quarters.
Just in the last one year, our leverage has fallen from high sixes to mid fives through a combination of outsized organic growth and prudent capital allocation activity. We're now armed with approximately $7.6 billion of near-term liquidity to address upcoming debt maturities.
and fund our various capital deployment opportunities. In summary, we have never been more delighted with our operating performance and have never been busier on the deal side and built out of our platform. While no one knows what the future may hold, my partners and I remain as optimistic as ever on the future of our business.
And with that, I'll hand the call over to Jean-Pierre.
Thank you, Shalk. Another great quarter like last quarter. Just better.
Our total portfolio generated 12.7% same store NOI growth over the prior year's quarter led by the senior housing operating portfolio with 24.2% year-over-year growth.
These great results speak for themselves, so I will provide limited color on the quarterly results and focus more on the future, including the billions of dollars in value that are being unlocked as a result of the management transitions we announced last night.
First, on results, the medical office portfolio's second quarter SAME store NOI growth was 3.2% over the prior year's quarter.
Same store occupancy was 95.1% while retention remains extremely strong across the portfolio at 92.5% highlighting the stability of the relationships as well as the quality of the portfolio.
The 24.2% second quarter NOI increase in our same store senior housing operating portfolio was a function of 9.9% revenue growth driven by the combination of 7.3% rev 4 growth and a 190 basis point of occupancy. The
As a note, this number excludes the UK communities we recently transitioned to Avery that were originally included in the guidance.
These communities grew occupancy at 9% year over year, so including the communities, our total portfolio same store occupancy growth would have been 20 basis points higher at 210 basis points.
Though exclusion of these communities has a negative impact on our annual occupancy growth stats, we maintained our guidance given the market strength we are seeing.
Additionally, expenses remain in control, coming in at 5.8% for the quarter over the comparable prior year's quarter. More specifically, the pressure we experienced from a tight labor market over the past two years and broad-based use of agency has continued to abate.
In fact, agency expenses' percentage of total compensation for the quarter declined substantially from nearly 8% in the first quarter of last year. This outstanding revenue growth and expense growth led to substantial margin expansion of 290 basis points.
All three regions continue to show strong same-store revenue growth starting with Canada at 8.1% and the US and UK growing at 9.9% and 13% respectively.
The strong revenue growth in each region combined with the expense controls have led to fantastic NOI growth in Canada, the US and UK of 17.2%, 24.8% and 38.2% respectively.
On to the management transitions. We're very excited about the value being unlocked as a result of these transitions.
Having the right manager for an asset is critical.
A fact that Shonk has repeatedly stated. These transitions accomplish that objective while improving each operator's concentration of well-tarred assets in various markets, a key factor to operational excellence.
Concentration brings increased effectiveness and increased efficiency through
Improving the value proposition for customers in numerous ways, including greater choices and frictionless transfers.
improving the value proposition for employees, including improved training and career paths.
and improving the efficiency of vendors operating at multiple sites, translating into increased NOI growth.
The benefits of increased concentration, which show up in margins, have been proven many times over with the multifamily REITs.
Well tower is now beginning to harvest those benefits.
To provide you with one example, one of our operators with over 50 properties is fully and rapidly transitioning to our platform over the coming 3 to 12 months. We've been working with them over the past year via our aggressive asset management program, enabling them to increase occupancy over 600 basis points in the last year. As I've mentioned in the past, the platform isn't only about technology, it's about people, processes, data, and technology.
After seeing the amazing improvement in occupancy in the 12 months related to our focus on processes, they are fully embracing our entire platform. I'm grateful that they see the opportunity and benefit of pursuing operational excellence and I appreciate their partnership. Additionally, as Shank mentioned, we are partnering with Cogeer, the premier Canadian operator for the management of many of our Canadian transition assets.
The best outcomes are achieved by working with the best people and the best operators. I'm very excited about the opportunity department with Matthew and Frederick and their team at Cogear on this new venture and the incredible value we will create for our investors. More to come in the coming year. I'll now turn the call over to 10th.
Thank you, John . My comments today will focus on our second quarter 2023 results, performance of our triple net investment segments in the quarter, our capital activity, a balance sheet liquidity update, and finally, our updated full year 2023 outlook.
Multower reported second quarter net income attributable to common stockholders of 20 cents per diluted share and normalized funds from operations of 90 cents per diluted share, representing 4% year over year growth or 16% growth after adjusting for HHS.
and the year-over-year impact from a stronger dollar and higher base rates on floating rate debt.
We also reported total portfolio same store and OI growth of 12.7% year over year.
Now turns the performance of our triple net properties in the corner.
Your next question is from the line of Michael Griffin with Citi. Your line is open.
Michael Griffin your line is open.
Your next question comes from line of Austin, where Schmidt with Keybanc capital markets. Your line is open.
Thanks, and good morning, everybody.
I just want to understand so with well no longer having an investment in the Sunrise management company.
Sort of dissolving the joint venture relationship with Rivera are the remaining Sunrise operated assets still revenue base management contracts and if so I guess, how does that change the owner operator relationship moving forward and.
Or is there more restructuring to do over time with that portfolio specifically.
The answer is.
This sunrise contracts are not what you described we restructure a contract with Sunrise in 2011, 2021, sorry, 2021, and Sunrise is fully aligned with us with defensible philosophically that we think can swing together.
So many years ago I have described that our fundamental philosophy under my team's leadership has changed from owning.
Part of management companies equity too.
New contract that's what we have described and as you can see one in one of the slides. We have described the seven year long effort to transform all our contracts from sort of topline focused contracts to bottomline focus contract why we think in swim together.
And virtually all of our contracts out there today, so that sort of hopefully gives you the answer to your question, we do not believe and we haven't done in <unk>.
Having influence on our communities through owning part of management contracts.
Order management companies, we do it through a contract and that's where you can see in the evolution of those contracts.
Your next question is from the line of Michael Carroll with RBC capital markets. Your line is open.
Yes, Thanks, I wanted to touch on the <unk> I guess operating relationship I mean, how is that relationship going to work and how should we think about the growth of that platform. I mean, when you are growing into new markets are you going to be doing that with <unk> or another operator or would you be doing that yourself.
As far as for how it works so I'll talk about that I'll, let Sean talk about the expansion, but as.
As far as how it works, it's working fantastic right now.
Partnering up with Frederick and we're working together really all the vision the strategy.
Oversight.
Cause years handling all the execution on the daily decisions at all of that type of stuff and what you have is a very synergistic team were both extremely excited about re envisioning the opportunity to reposition these assets and so we're excited about what we're creating there, but I wont be involved in the daily aspects of it.
They're a fantastic operator, there's no value there.
Focus to get on the bigger picture items.
But from an expansion standpoint, my comment that I made.
This is this joint venture will have rapid growth that comment obviously means that you will see that we're expanding our very excited about Canada and doing lots of expansions in Canada that will come we're focused think about innovate simplistic terms.
Platform that we're launching will be focused on English speaking, Canada Korea has a tremendous brand in the French Canada, and we will work together on that now what we do in the U S is a different conversation this understand that.
Our <unk> is an independent living and majority of our exposure in independent living is in Canada. That's why we're starting this.
Your next question is from the line of Vikram Malhotra with Mizuho. Your line is open.
Hi, Thanks for taking the question.
And maybe Sean or Tim you talked a lot about.
Stress in senior housing referencing obviously, Fannie Mae delinquencies.
Im wondering if you can just and then you outlined the $30 billion decade opportunity.
I'm wondering if you can give us more color on kind of how you think about the funnel in terms of all these distressed opportunities coming whether it's operational or balance sheet distress, but.
But how do you think about the funnel and filtering it down too.
What is actually actionable for work or whether it is.
Analytics, driven our strategic driven.
And then just combining that actionable pipeline you mentioned.
With sort of the long term earnings power you talked about double digit NOI growth, but are there any tea leaves you can share on kind of the earnings the underlying asset for us.
Likely to grow over over a longer time period.
Let me see if I can answer your five part question.
Likely I will forget some pieces so because frankly speaking if we just take a step back and understand what's happening there.
<unk> stressed that we see are not cash flow driven the strength that we see a balance sheet driven and the balance sheet driven comes in many forms there is a significant lack of equity and debt capital today. In fact, when we say that that market is functioning not functioning most people assume that sort of the debt market remains.
And it's not growing it remains fairly flat that's not what's happening to the debt market banks are under significant pressure from regulators to shore up capital, which means they are actually selling the shrinking.
Then you add on top of that a lot of the construction that happened between 15, and 19 timeframe there on sulfur baseload around LIBOR based loans and given how much that base rates have gone up right.
Plus basis point just in the last 12 months is putting tremendous pressure you think about it where.
A LIBOR plus 300 5400 is today you are at eight 9% rates.
And you just cannot mill these capital structures, we're not envisioned for that kind of rate environment. So you got massive pressure on that then youll see when people, who put Florida caps.
Lot of these Florida caps are coming off second half of this year next year, So and you add insult to injury majority of senior housing loans actually come with personal guarantees. So I can go on and on and on but Thats not the point what Youre asking is this very simply these assets are not stressed the balance sheet behind assets are stressed.
And we are ready and willing and to do this execution you just you need two things you need cash because we're.
We're not showing up with subject to financing, we're showing up with cash and other very important thing is operating partners you need both to solve people's problems their balance sheet problems and they go forward problems and that's why we're doing it now we're not going to get into on this call a multiyear.
Sort of a earnings growth projection as Tim has alluded to this year's earnings growth is significantly impacted by obviously, our floating rate debt as well as strong dollar you know what those numbers are we appointed out unless you believe rates are going from five five to 11 again, you should not have those kind of impacts going forward.
So from the NOI growth with that you can figure it out what that looks like but from my comments.
Comment.
You can figure out that we're very excited about and accelerating.
Our earnings and cash flow growth trajectory as we look into 'twenty four.
Your next question is from the line of Nick <unk> with Scotiabank. Your line is open.
Thanks, Good morning in terms of the $2 3 billion of investments.
Second quarter.
I know you talked about the discount to replacement cost in some of the.
IRR expectations, but can you just give us a feel for what these look like on a first year.
Cap rate basis, and then stabilized yield.
Potential calling out a couple of years.
And any comments on your occupancy or other drivers that are creating some of the NOI upside for the assets.
Yeah. So.
I'll start with the last obviously these assets have both occupancy and significant margin growth potential with the occupancy obviously as you understand sort of the flow through mechanics of this business majority of the profitability in the business is after call it 80% occupancy because there's very significant fixed cost so.
Incremental margin if you will after 80% occupancy is call. It 70 plus percent margin and then as you get closer to 90% 90 above 90% occupancy you are at kind of $90 million in your incremental margins approach, 90% rates a majority of the profit with the hockey stick profitability in that kind of 10% plus occupancy range.
So that's what's the driver of the growth that we think baked into there so we like buying low basis.
Lower occupancy.
In our portfolio is that sort of what we do we do not like to pay a cash flow on a highly occupied.
Hi, NOI, which drives into obviously results into high basis assets. We just don't do that here. So that sort of gives you the answer to the second question. Let's just talk about the first question, which is a very simple question you should assume a year one in this batch of acquisition roughly around 6%.
Okay.
Going into seven plus following the math I just described to you.
Okay.
Yeah.
Your next question is from the line of Jim Cameron with Evercore. Your line is open.
Thank you good morning.
Looking at the business update on the Rivera transition pages nine and Ken could you just provide what is a reasonable timeline for that NOI capture and what capital you might have to spend.
Capture that NOI Delta. Thank you.
Yes so.
We have never gotten into that timeline of a bridge. This is part of our bridge obviously.
We'll leave you to determine when we think stable occupancy will come and so thats part.
Part of your sort of answer to first part of your caution in the second part I just wanted to point out one thing is what we are suggesting here is that $120 million. We mentioned is part of that $414 million or so of the bridge, but that's what it is.
We thought that's all we're going to get we would not have done it in other words the bridge the fundamental tenant of the bridge is we go back to fourth quarter of 19 occupancy. If you look at page 32.
It sort of shows one of these transitions we have done not only.
The first six that we.
No we gave it to ultimate exactly two years ago today is actually exactly two years.
These occupancies above 90% what the prior peak was 86 and change in 2016 that gets you in I expect fully expect to believe there'll be in mid nineties and next few months that gives you a sense of why we think the occupancy will go and what the margin will follow for example, let me give you another X.
Ample the Canadian example.
Rivera properties that we mentioned I believe one of the pages said is like.
Low seventy's occupancy that portfolio is sitting at 23% margin give or take today I've mentioned to you that cause year runs in their Canadian portfolio of 40 plus.
<unk> margin that sort of gives you a sense of where we think that these properties can go one 'twenty is part of the bridge that shows the four 2014.
But if we taught one 'twenty is all we're going to get we wouldn't have done it.
Your next question is from the line of Juan Sanabria with BMO capital markets. Your line is open.
Hi, good morning, Shockwave or John maybe if you could just talk about what youre thinking or seeing or you're discussing with your operators with regard to the ramp bumps here. This fall or next year I'm not sure. If it's too early but just curious on your thoughts on how that could change relative to last year is pretty sizeable increases in that.
Different inflationary environment.
Yes, so one we're not going to sit here and try to predict what will happen six months from now, but I expect a very strong rate environment.
In 2024 as well.
Will that be exactly depends on a lot of things, but I have no reason to believe in a better environment of demand and supply we're not going to have strong pricing power, but we will see when we get there.
Okay.
Your next question is from the line of John Pawlowski with Green Street. Your line is open.
Ken.
Question on funding and going forward I know funding secured for the deals you've announced that are under contract I'm. Just curious what you think the optimal funding mix.
$1 billion to external growth.
Yes, Jonathan consistent with how we've done in the past.
Funding is going to be from the most attractive source, we have whether thats.
Public equity debt or disposition proceeds will continue to apply fund as we move along so we hesitate to provide to you for guidance on that to be made.
Whatever last month time that we're funding.
Okay.
Hum.
Your next question is from the line of Ronald Camden with Morgan Stanley . Your line is open.
Hey, just can we dig into the expenses a little bit what you're seeing is trending better than expected.
Historically, it's been on the labor that surprise, but going for maybe can you talk about what are the biggest drivers that youre going to be looking at and what areas do you have conviction and where could you be surprised up or down.
We have a lot of conviction on both continued to optimizing the labor side and other expenses I would rather not get into.
What drivers you might get in next six months versus 12 months, but I will point out that the.
On the utility side the energy side last fall was very very significant hit so at least as we lap going into 'twenty four we should get from year over year perspective, and frankly energy prices have come down we should see some benefit.
But we're not going to sit here and just try to predict.
What might or might not play out Ron but I will say that you apart from our prepared remarks that we feeling very good about continued margin expansion not just sort of going back to pre COVID-19, but we do think that Jon will take these margins much higher.
Over a period of time.
Your next question is from Mike Mueller with Jpmorgan. Your line is open.
Yes, hi for the loan portfolio.
Assets that Youre looking at.
Should we be thinking of those as being.
Street debt deals that discounts or just more specifically targeted toward.
Portfolios, where you can ultimately get to the real estate.
So first thing is I'm going to elaborate again, I think I've done it before and just going to tell you. We don't lend against assets that we don't want to own at the last dollar basis that we are loans headset, so that sort of the fundamental premise that we have.
Having said that.
Different transactions come in different forms we're here to help people provide sort of we're here to help owners and borrowers with liquidity that they might need or institutions, which owns already owns the land and those loans how different transaction will play out whether it's an existing loan.
Our we're coming in to provide capital I don't know that yet where archrock us investors and simple debt yield.
Will determine where we get to digest a coupon is less interesting for us will start obviously, probably we're thinking about how do we can get equity returns. If we just go in and 100 cents on the dollar when we are actually loaning into a situation that doesn't have that or if it is existing debt. We're going to have to think about what type of.
Discount gives us the right return, assuming we get our money back and if we don't we're comfortable owning the asset at that last dollar basis philosophically that we think about it every transaction is different.
Okay.
Your next question is from the line of Joshua generally with Bank of America. Your line is open.
Yeah morning, everyone.
John Lastly, last quarter, you mentioned you have rolled out a pilot program for drawing it leads to a couple of senior housing properties and I think if I recall correctly I guess the big.
First challenge was just the sheer volume of leads.
Whats the latest on that pilot program and maybe just how is that impacting pricing power.
Yes, so the comments if I remember correctly myself.
CLO called US and it was funny to me said Gee you've done so much to increase leads were struggling getting our hands around that.
Pilot and they definitely did get their hands around it.
Staffing staffing opportunity there.
We are.
Continuing to rollout.
<unk> moved from pilot to rollout.
So we're pressing forward as I mentioned, we have another operator, thats jumping on 100% onboard and we will be pushing forward our third platform up with.
Venture up in Canada, as well, we're seeing terrific results.
Through the marketing efforts that we're applying and what that does to pricing power in essence.
Our focus is on maximizing NOI right. So we're looking at combination between price between occupancy recognizing that occupancy comes with a price. So yes, we will push a little bit more on price and find the right point there but.
It's what's providing our outstanding results.
Your next question comes from the line of Michael Griffin with Citi. Your line is open.
Great. Thanks, I know you've talked in the past about redevelopment initiatives you've undertaken at some properties I was just curious if you can give us an update on these redevelopment kind of what the expectation for growth in this platform is going forward and any commentary there would be helpful.
Yes.
That's really a great question and I think it's something that is.
We haven't talked about it that much.
The reality, though I think it's completely underappreciated as far as the future earnings potential of this portfolio.
You look at our portfolio, it's roughly 20 years old in the senior housing.
The business and that is the sweet spot for renovation, it's what I would typically call fluff and Bath because what you have is your infrastructure plumbing and roofing. This kind of stuff is typically good order.
But what is in good order is the first impressions amenities units in that type of thing. So I have been aggressively building out renovation team and housing at well tower.
Experts and we are launching with you what Youll see is we'll start launching on.
Pretty massive renovation programs West Coast East Coast, Canada U K.
All of these things are lining up and we're at the.
Beginning stages, but the impact should be very positive on NOI for certain obviously, increasing occupancy first and can be occupancy and rate.
Value proposition opportunity is significant award numerous properties in all the regions.
Yes.
It's clearly a very big opportunity and having the expertise that we're bringing to the table.
Truly changed the game and the renovation of senior housing.
Your next question is from the line of John Hello Scheme with Green Street. Your line is open.
Thanks, John just curious within your U S portfolio can you give me a sense for how the shortfall in independent living occupancy versus 2019 compares to the gap in your assisted living portfolio.
We had to have to get back to you on that but generally speaking.
You have assisted living fail farther so obviously it has longer to come back independent living didn't fall that far but it has been coming back slowly sort of slowly, but specifically our portfolio has changed materially since 19 as far as independent living and assisted living is consensus wrapped.
And those numbers and get back to you, but generally speaking I will tell you the assisted living continued to outperform.
We are seeing independent living is starting to come back and frankly speaking independent living for us like 75%, 80% is Canada and it just sort of a more of a can it I don't know its a product comment our startup it's a country commentary, we're seeing very strong performance finally coming out of Canada, and we expect that we'll get.
Better as all this sort of optimization that we're talking about around these assets will play out but I cannot tell you John is it that if a product thing by just a country thing because majority of our independent living portfolio sits in Canada.
Okay.
There are no further questions at this time, ladies and gentlemen, thank you for participating. This concludes today's call you may now disconnect.
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