Q3 2023 Ventas Inc Earnings Call
Thank you for standing by and welcome to the Ventas reports third quarter results Conference call I would now like to welcome Vijay Grant Senior Vice President of Investor Relations to begin the call P. J over to you.
Thank you Bonnie.
Morning, everyone and welcome to the Ventas third quarter financial results Conference call Yes.
Yesterday, we issued our third quarter earnings release supplemental investor package and presentation materials, which are available on <unk> website at IR <unk> com.
As a result 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 <unk> 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 investor package posted on the Investor Relations website.
And with that I'll turn the call over to Debra Cafaro, Chairman and CEO of Ventas.
Thank you BJ and good morning to all of our shareholders and other participants I'm happy to welcome you to <unk> third quarter 2023 earnings call.
We're pleased to deliver a strong quarter of normalized <unk> of 75 cents per share representing 6% year over year growth and total company same store cash NOI growth of nearly 8%.
Our results reflect the actions we've taken to drive performance and the powerful demand across our diversified portfolio that is unified in serving the needs of a large and growing ageing population.
We are also pleased to raise our full year 2023, normalized <unk> guidance midpoint to $2.98 per share.
Our senior housing operating portfolio fueled our performance proving the significant benefits that our communities and operators provide to residents and their families.
Same store year over year cash NOI growth exceeded 18% driven by then taxes operational insights platform in collaboration with our operators.
Our Canadian shop communities ended the quarter at nearly 96% occupancy and delivered 6% year over year NOI growth.
Across the shop business, moving significantly exceeded 2019 levels and the portfolio experienced broad based occupancy gains in both assisted and independent living.
Spot occupancy accelerated in the third gaining 180 basis points from the beginning to the end of the quarter.
The multiyear growth in recovery cycle in senior housing is in full swing.
In addition, our outpatient medical and research portfolio continues to distinguish itself by delivering solid compounding consistent growth in the third quarter.
As we step back and look across commercial real estate, we continue to believe that <unk> occupies an advantaged position.
Here are five key reasons why.
First because our portfolio is unified in serving the needs of the nations large and growing ageing population.
Demand is strong and getting stronger by.
By 2030, 20% of the U S population more than 70 million individuals will be 65 or older.
Over 80 population alone is expected to grow 24% in the next five years.
All of our asset classes benefit from these demographic demand trend and provide powerful tailwind to our enterprise in a variety of economic scenarios.
In senior housing, we're facing the most favorable supply demand fundamentals the industry has ever experienced.
Senior housing starts are at cyclical lows and likely to go lower due to tightening credit conditions.
In our shop markets, we have virtually no new starts.
This favorable supply demand relationship creates a compelling backdrop for multiyear growth ahead in senior housing occupancy and rate.
Particularly in light of the affordability of senior housing and the value proposition. It provides.
Second investment opportunities continue to grow in the senior housing space and we are well positioned to capitalize on these opportunities.
There's a huge pool of quality senior living communities with attractive return profiles that are coming to market as a result of debt maturity and higher debt service costs.
These communities tend to have meaningful runway for occupancy and NOI growth in the hands of well capitalized experienced and knowledgeable owners like venkat.
This trend should accelerate in 2024 and 2025.
We have the scale team relationships capital access analytical and operational insight and experience to expand our senior housing portfolio and create NOI growth.
Third we've continued to build out our Ventas investment management or Vim platform. Then provide ventana is another way to expand the opportunity set that benefits, our institutional investors and public shareholders are like this.
This quarter, we invested over $200 million through our open end fund.
Fourth Ventas has assembled the nation's leading business at the intersection of Medicine research and universities are high quality outpatient medical portfolio is well occupied and affiliated with leading healthcare systems across the country.
Our research business represents a differentiated credit driven model centered on serving the nation's top universities.
And our excellent internal property management and leasing functions enables us to deliver an outstanding experience to our tenants and drive leasing activity.
We continue to see meaningful institutional demand in our University based research portfolio and I'd like to give you just a few recent example.
Atrium health Wake Forest Baptist recently announced its intention to create a new 160000 square foot Eye Institute at a redevelopment site any innovation quarter at wake Forest.
At Arizona State University, the National Institutes of health or NIH recently leased space for medical research demonstrating the desirability of our site and creating a magnet for other researchers.
In addition, Siemens medical solutions recently leased space at our half a billion dollar Charlotte North Carolina project, which is already 80% pre leased.
And last we are pleased to welcome Dr. Drew Weisman recent Nobel laureate to our Penn site at one year City later this year.
We are proud to serve these world class medical and scientific leaders as they pursue life changing discoveries.
Fifth and finally, we continue to demonstrate access to multiple capital markets at attractive pricing to maintain financial strength and flexibility.
We have raised nearly $3 billion year to date and various capital market ahead of the recent rise in interest rates.
These actions enhanced our liquidity and underscore the competitive advantages vantiv has because of our size scale and diversified enterprise.
Our cross Fantastic, we are laser focused on maximizing fundamental performance and generating superior total return for shareholders by enabling exceptional environments that meet the needs of individuals families and communities.
In closing we are pleased to improve our 2023 outlook and to see that while we certainly have more work to do our total returns to shareholders over the last one and three year periods and since the beginning of 'twenty three 'twenty to have outperformed both the health care REIT.
And the REIT indices.
The whole Ventas team remains intent on delivering outsized value to its shareholders and other stakeholders.
Now I'm happy to turn the call over to Justin.
Thank you Debbie.
I'll start by reporting our third quarter shop results, which were very good.
Broad based demand combined with the implementation of the Ventas, Oh, I active asset management playbook in collaboration with our operators delivered healthy top and bottom line growth and shop during the quarter.
Our shop portfolio continues to deliver double digit same store cash NOI growth for the fifth quarter in a row.
NOI growth of 18, 2% was led by the U S with 24% growth in our 95% occupied the Canadian portfolio contributed 6%.
Occupancy accelerated throughout the quarter with 180 basis points of spot occupancy from June to September led by the U S with 210 basis points.
U S shop occupancy growth was supported primarily by strong demand with move ins that were 120% of 2019 levels.
Furthermore, we saw 130 basis points of average sequential occupancy growth from the second quarter to the third.
Revenue growth was 676% year over year, driven by the occupancy growth as well as revpar growth of six 2%, which was led by the U S was six 4% as we continue to focus on optimizing price and volume to maximize NOI.
Revpar would have been 20 basis points higher if adjusted for the Sunrise Special assessment that occurred in the quarter last year Opex.
Opex performed well with 4% growth and margin expanded 230 basis points year over year.
Now I'll give an update on the holiday independent living communities. We are pleased with the performance across the portfolio. The 75 holiday by Atria U S. IL communities are benefiting from the broad based demand and soft spot occupancy increased by 190 basis points from July to September we continue to see good performance in this.
More streamlined portfolio, which allows for enhanced focused and with a renewed sense of urgency to execute them.
We will continue to closely monitor the performance.
The 26 IL communities that moved to proven operators grew spot occupancy by 140 basis points from July to September.
These three operators are making early improvements to service delivery and performance.
Our expert approach of moving communities to new operators ensures that lead banks are transferred immediately websites are integrated and management, including the Ceos have access to the community as well ahead of the transition date to enable quick execution and results.
We continue to advance the Oi platform and its impact on the portfolio.
I am pleased to see outsized performance in our Sunrise portfolio, where our move in volume is exceptionally high.
Transition communities are experiencing remarkable occupancy and revpar growth and our NOI generating Capex program, which is delivering initial returns of about 20%.
As we look to finish the year, we are expecting attractive top and bottom line shop same store cash NOI growth of 17% to 19% for the full year.
Key assumptions that drive the midpoint of our range, our average occupancy growth of about 110 basis points in revpar growth of about 6%, which was total revenue growth to at least seven 5%.
We expect operating expenses at around four 5% growth due to increased occupancy.
This of course implies continued margin expansion embedded in this guidance is the impact of the Sunrise special assessment that occurred in the third and fourth quarters of last year.
At Sunrise repeated the special assessment in 2023, our shop full year NOI guidance midpoint would've been 200 basis points higher this impact reverses out in Q1 2024 as Sunrise intends to return to the normal first quarter cadence during this rate increase cycle.
We expect the fourth quarter to exhibit normal seasonal patterns and are projecting sequential and year over year average occupancy growth.
The strong demand supporting our portfolio growth is indicative of the macro backdrop that Debbie described and most importantly, a testament to the high quality care and services that we're offering our residents and their families. Our operating partners are focused on delivering a valuable living experience for our residents.
A meaningful work experience for our employees and a value proposition that is attractive to our residents and their families as they choose to live in our communities.
Moving on to investments.
Made two investments in the quarter through our Vim platforms open ended fund.
We acquired a trophy portfolio consisting of two outpatient medical facilities totaling 281000 square feet located in Tucson, Arizona fully leased to double AA minus rated banner health the purchase price was $134 million.
These buildings are crucial and banners delivery of care and services, providing a multi specialty clinical care.
We also acquired two class a private pay senior housing assets with 181 units in Connecticut, and Massachusetts. The purchase price was $79 5 million. The assets were developed and sold by benchmark senior living and two private equity firms benchmark as a strong regional operator with a long standing reputation as a market leader.
In the northeast.
Our top investment priorities continue to be NOI generating capex in our existing real estate and.
In senior housing acquisitions.
Now I'll hand over to Bob.
Thank you Justin.
I'll share some highlights of the Q3 performance in our outpatient medical and research and <unk> loan portfolios turning to the enterprise results for the quarter discuss our balance sheet and close with our updated and improved 2023 guidance.
Starting with some highlights from our outpatient medical business outpace.
Outpatient medical continued its string of 3% or greater same store cash NOI growth in the quarter benefiting from operational excellence as evidenced by tenant satisfaction scores, which outperformed at 97% of our peers as surveyed by Kingsley.
Meanwhile, our University based arent I same store cash NOI increased three 3% with occupancy growing year over year on the back of strong demand for space from our University tenants.
This demand as evidenced by our recently completed developments at Penn in pit, which combined are already nearly 90% leased or committed.
Ventas has experienced asset management teams continue to drive performance and value across all asset classes and the recently <unk> loan portfolio or LP.
Underlying NOI performance in the LP outpatient medical Triple net and shop portfolios is trending well.
And our timing of taking the portfolio over is proving to be prescient.
Our 2023, ERP NOI expectation remains in line with last quarter.
We also pruned the LP portfolio through the sale of six skilled nursing assets for a gain in the quarter and then an attractive price of $60 million or 135000 per bed.
Our overall enterprise reported strong third quarter normalized <unk> per share of <unk> 75.
Representing an increase of nearly 6% year over year adjusting.
Adjusting for lapping <unk> in prior year HHS proceeds.
Total company same store cash NOI increased seven 9% year over year.
By our shop portfolio growth of over 18% in the quarter.
In terms of the balance sheet, our liquidity is significant.
We have $3 1 billion of available liquidity.
Which covers our 2024 maturities by over three times.
With our revolver, undrawn and $400 million of available cash on hand.
And I'm really pleased with how we realize that liquidity, namely through proactive capital raising well ahead of our 24 maturing debt and prior to the run up in base rates.
We first took action in Canada in April and.
And then raised over $1 8 billion in attractive convertible secured and bank debt in the summer and early fall.
As a result, we've now raised $2 8 billion of capital year to date at an average cash interest rate below 5%.
We've used these proceeds to reduce our 24 maturities less available cash to just $800 million we.
We extended our debt duration.
We entered pay fixed hedges at low points in base rates and.
And we reduced ventas as floating rate to just 8% from 18% earlier this year.
These are strong proof points of our advantage access to attractive capital and our skill in using that access to the benefit of our shareholders.
I will conclude with our updated and improved outlook for fiscal 'twenty three.
After another solid quarter, we are improving our full year normalized <unk> guidance to now range from $2 96 per share to $2 99 per share.
This guidance midpoint represents a one penny increase versus prior guidance and.
And 5% growth year over year ex HHS.
Led by broad based property strengths.
As we raised our normalized <unk> per share midpoint for the year.
We note that 2023 is unfolding directionally as we stated at the beginning of the year.
Marked by significant year over year property NOI growth.
Actually offset by the macro impact of higher interest rates and FX.
That's a full year guidance midpoint, the implied fourth quarter normalized <unk> of <unk> 75 per share is consistent with the third quarter.
With sequential property growth led by sharp.
Offset by higher interest rates FX and back half dispositions.
Total company full year same store cash NOI year over year growth is maintained at 8% at the midpoint.
Please see our investor presentation, and supplemental disclosure posted to our website for further guidance assumptions.
To close we are pleased with the strong quarter improved full year guidance and the commitment and skill of the Ventas team.
For Q&A, we ask each caller to stay to one question to be respectful to everyone on the line.
With that I'll turn the call back to the operator.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile any questions.
Again, if you would like to ask a question. Please press star one on your telephone keypad now.
Yeah.
Our first question comes from the line of Austin, <unk> with Keybanc capital markets. Please go ahead.
Yeah. Thanks, good morning, everybody.
Justin you highlighted the impact of the later timing on the renewal increases or the special assessments that you sent out the Sunrise last year is having on the portfolio. I'm curious is there anywhere else that you dialed back either the timing or magnitude of rate increases.
In order to drive occupancy here here recently.
Yeah sure. So first of all the price volume optimization is an ongoing focus for us.
You can see in our numbers the revpar growth year over year, it's been solid obviously, there was an impact from sunrise. So the $6 two would have been $6 four had not been for that that bad year over year comps, so strong pricing power.
Really strong volume in the third quarter. So we're really putting together I think the right balance of price and volume to drive growth.
It's important to note.
And that last year with GE.
Ordinary measure.
And so we.
Thank you.
Normalcy with GE.
January one.
Our next question comes from the line of Steve <unk> with Evercore ISI. Please go ahead.
Yes, thanks, good morning, Debbie or maybe just you talked about kind of growing acquisition opportunities I'm.
Im just wondering if you could kind of frame what kind of returns you might be seeing either with going in yields or unlevered IRR I guess marry that how do you sort of think about the funding of those is that going to be part of them or is that going to be done on balance sheet with a combination of equity and debt. Thank you.
Great Great question, we'll tag team that first of all.
We do see our cost of capital and the yield.
Of senior housing investments, which we're most attracted to coming into line. You noted a number of advantages that we have in terms of funding we have liquidity, we have the <unk> platform.
And of course, we do see.
The volume of senior housing coming to market and yields increasing so that we feel optimistic about the cost of capital and yields coming into an attractive focus and I'll just turn it over to Justin to talk about what kinds of opportunities.
Our building in the pipeline.
So we're seeing a number of opportunities.
<unk> are really building and particularly in recent months and weeks that includes a number of solid institutional sellers that are dealing with debt maturities or fund maturities.
And we're starting to see the returns.
Become more interesting to us we are seeing call it 6% to 8% in place and it really depends on the type of asset you are buying if it's something that has more growth might be.
Low to mid sixes that can grow to an eight or better.
And then a stabilized senior housing asset in the mid Sevens and.
And we target.
Low double digit and in some cases, even mid double digit Unlevered IRR is.
Our next question comes from the line of Nick Joseph with Citi. Please go ahead.
Thanks, maybe just following up on the acquisitions, we obviously si.
Medical office M&A deal announced this week. So curious your interest in growing on the medical office side, and how you're thinking about current pricing within that space relative to the IRR as you can get in the other asset types.
We really intend to lean into senior housing, where we have significant.
<unk> expertise and really.
It would be.
Right owner of senior housing with our platform and our relationships.
And as Justin said.
<unk> digit low to mid double digit IRR. So we're very interested in that area first and foremost you saw that we did close in the vim platform.
Our medical office building, which has advantages for the vim stakeholders in particular in terms of being reliable compounding cash flow.
Our next question comes from the line of one Santa Maria with BMO capital markets. Please go ahead.
Good morning.
Hoping you could talk a little bit about what youre seeing with kindred given the.
The lease exploration coming up there and as part of that if you could talk a little bit about how deep. The operator pool is if in fact, there is a transition that has to happen at some point.
And how we should think about the delta between EBIT and.
And EBITDAR coverage. Thank you.
That was a multi part question Juan good morning.
Okay.
Yeah.
So the a portion of the kindred lease for.
2023 L tax is.
Up for renewal in 2025.
We've we've talked about EBITDAR coverage being about nine and whats. Most important obviously is what the earnings capacity of these assets is likely to be post 2025 in terms of thinking about the outcomes right now.
You can see that kindred has adopted.
Initiatives for improving the operating performance, which we.
No our focus really on cost savings in particular labor and contract labor and we're seeing that even in the quarter to date. Those are beginning to show early signs of improvement and so that's how we're really thinking about the 2025.
Renewal slash maturity.
<unk> certainly have a pool of qualified operators across the country from publicly traded select to a variety of regional operators and we're familiar with all of those.
Our next question comes from the line of Mike Mueller with Jpmorgan. Please go ahead.
Yes, Hi, I was wondering can you talk a little bit about the pace of development leasing.
In the RNA portfolio that Youre seeing and has there been any material change in the past three months to six months in terms of the pace.
Uh-huh.
Yes, I mean, one of the things I talked about it at our largest project, which is in Charlotte North Carolina, which is it really at this intersection of universities and medicine and research.
Our largest project it's in one of the fastest growing cities and it is already 80% pre leased we just had Siemens sign a large lease there and we're really at kind of.
The mid construction phase.
And so that's the most significant that we are seeing other leasing activity. We only have a couple of other developments underway and we are seeing leasing activity there.
Our next question comes from the line of Rondel Camden with Morgan Stanley. Please go ahead.
Hey, just so last quarter, you had the operator transition and looked like that's progressing pretty well sell the question really is.
Have you guys sort of changed sort of the way you think about the relationship with operators and evaluating it and evaluating it and how do you sort of get comfortable that in 2024.
Or is it sort of another surprise on the transitions or that you feel pretty good about what's coming down.
Hi, it's Justin.
So first of all just backing up a little bit where we always start is evaluating are we on the right markets.
And so we've done a lot of work over the past few years to make sure that we're well positioned to benefit from the recovery.
If we're in markets that we didn't think we're going to provide attractive growth for our respective assets. We've we've had dispositions.
And we've used that part of the the toolbox in terms of making sure that the assets are well positioned.
We've obviously made investments into our communities.
And then we then have the operator selection and offer a selection has been just a regular part of our our toolbox.
<unk>.
Shouldnt be deemed as a surprise, if we're tweaking and trying to make sure. We have the right fit the best operated really to create value in those respective markets.
And assets.
And to your point, we are pleased with the results, we're getting and we had a recent transition we had a number of things that we worked on to make sure that we could get quick results and that was getting boots on the ground. We have the management teams and the and the Ceos of the companies in the communities right away. We secured the lead bank till we get to start executing on leads.
Right away Retrans for the website.
And.
The early results are good and we're going to stay close to it and we're really pleased with the execution thus far.
Our next question comes from the line of Joshua <unk> with Bank of America. Please go ahead.
Yes, hey, everyone. Good morning.
Kind of thinking about the shop shop business as we go forward. How are you guys thinking about pricing power I understand the dynamic thats going on with the Sunrise.
Timing, but just kind of thinking about just pricing power Broadway.
Hi, it's Justin so the pricing power over the past few years has really been very very good.
We have at a relatively low occupancy.
<unk> broad based demand is allowing for for appropriate pricing really to ensure that we can cover all the costs associated with delivering care and services and to deliver growth for the business and we remain very focused on that.
From an internal pricing standpoint and external.
And if we can get it right we tend to look for Revpar X force spread.
Usually around 2% to 3%.
And that's where we're focused in the price volume optimizations, working because we're really getting growth in revpar and were seeing the occupancy growth as well.
Our next question comes from the line of Rich Anderson with Wedbush. Please go ahead.
Good morning.
So I want to talk about capital adjusted you said top priorities are senior housing investing went through that.
And then Capex spending.
Can you talk about the cadence of how that might transpire from 2023 to 24 in terms of the types of dollars are thinking about spending and how much more could come in 2024, just trying to get a sort of a range or quantify that a bit and also if you comment on the shop guidance of 18 <unk>.
<unk> at the midpoint shop same store NOI guidance, how much of that is juice by the by the deployment of Capex. So you get the revenue benefit and the occupancy benefit, but you don't get the cost hit at least out of the gate. So I'm just curious if you could comment on that thanks.
Why don't I start with the second part of the question and then.
Bob will jump in on the first part so we have a number of projects that are underway. We are a 170 projects.
<unk> should complete by the end of this year, we started on this endeavor.
In October of 'twenty, two so relatively quick execution on a number of improvements across our communities, mostly mid market focused.
And also unit upgrades.
We do have.
The obviously the ability to measure the results and what we are what we do is we just simply take like communities and compare their results and those that have capex versus those who didn't and where we're seeing outperformance in our communities that have benefited from the capex of the early results are showing a 20% plus.
Roy.
But we're also seeing growth across the broader portfolio. So we're benefiting from the broad based demand across the portfolio. We are leaning into the markets and assets, where you wanted to improve our market position through investment and its all really coming together and working for us.
And it's a multi year recurring as well that that builds on itself.
And our multi year investment to answer that part of the question and page 20 of the Investor deck. I think is a good reference here rich because we really started this investment in 'twenty, two less really about a year ago.
And Theyre looking at completing about 170 projects by the end of this year and you see the increased redevelopment a capex spend of $230 million. This year as a consequence, we expect that to remain at a higher level next year as we finish out the suite of opportunities and with the returns just quoted we want.
Continuing to invest there.
But that will be finite and then overtime come back down to normal so that's the flow.
Our next question comes from the line of Corners Seversky with Wells Fargo. Please go ahead.
Hey, Good morning Heath Tucson for Tyler. This morning, Thanks for having me on the call today.
So just on the <unk> loan portfolio, how should we be thinking about the rest of the assets in the mix here. So how far along is Vince Hudson identifying them and processing the capex needs of the outpatient medical assets couple of quarters back you were talking about using a playbook from our previous portfolio. So I'm. Just wondering if you can quantify the amount and timing of those investments and how are these lease.
<unk> conversations progressing to the portfolio and just a quick follow up.
It looks like the SNP you guys had some pretty favorable cash yields on the assets sold any color on the coverage level.
Or remaining lease term on these assets thanks guys.
Good morning, he says I'm going to ask Pete.
Can you talk about the.
The opportunity in the medical office building portfolio outpatient medical that he has taken over and is deploying the <unk>.
Lillibridge playbook, and there's a lot of opportunity and we're obviously off to a good start there and.
Keith I will turn that over to you sure yes. Thanks.
We're really excited about the portfolio. So far we have transitioned 32 buildings onto our lillibridge platform.
Out of 88, so we've made great progress in the first quarter as it relates to leasing we have replaced about half of our leasing agents. We've replaced 12 out of 23 lease and leasing agents for people that we think are really going to run with this portfolio.
We started this this portfolio at 77% occupancy.
We just completed our first quarter of running this portfolio, we had an 85% retention rate and we've got 200000 square feet worth of new leasing in our pipeline. So we're very optimistic and I'll give you just to me. It's a fun anecdote. We have this building that we inherited called Eagle's landing in suburban Atlanta.
So 45000 square foot building it was empty zero percent occupancy when we.
Picked it up.
And it's now 30% leased and we just signed an LOI on another 20000 square feet in the building yesterday, so we're going to be a 75% occupancy.
Very shortly in that one building. So we're optimistic about the portfolio as it relates to capital we are investing some capital to improve.
Some of the the infrastructure of these buildings, Andrew well well underway on those as well.
Our next question comes from the line of Michael <unk> with Green Street. Please go ahead.
Good morning.
Can you just provide some additional color surrounding the decline in occupancy within the MLP portfolio.
Infill on the type of tenant and asset seen their decline and just what drove that would be helpful. Thanks.
Sure.
So look our occupancy is at 91, 7%.
We've had some really nice gains over the last couple of quarters in occupancy, we're really happy with our retention retention was 82% TTM and 88% for the quarter. We got a very strong new leasing pipeline of 600000 square feet for the AUM portfolio and we have.
Two off campus Nonstrategic 30000 square foot buildings that were considering selling.
And if those were not in our portfolio occupancy the essentially flat.
Thanks Pete.
Our final question comes from the line of Vikram Malhotra with Mizuho. Please go ahead.
Thanks for taking the question.
Just considering the success you've had with the <unk>.
In addition that holiday I'm wondering.
Is there a.
Glad to maybe take another bucket.
And transition them.
Or are there any signs that there's maybe incrementally.
Incrementally.
Group debt ABC sort of Bbs at BP performance, given how successful the transitions have been and just related to that transition can you also just address where you stand on.
On the Brookdale lease, which you think is due in a couple of years.
Okay, Hi, Justin let me start with the first question. So we do have we have 75 communities in our same store that are operated by holiday by Atria those communities, where we're performing relatively better and they continue to do that.
I can tell you that that they are now managing a more streamlined and focused portfolio with a high sense of urgency.
They want to do well I mean this is the company is very focused on this.
They've they've been extremely focused on sales execution and getting to our conversion's up and they've had good results in the third quarter.
And we're going to stay very close to this and monitor it closely.
And I expect to see good results.
And then in terms of Brookdale, we are really happy to see improved performance across our portfolio and it's been consistently improving.
And has coverage good coverage in and we will look for more progress in that portfolio moving forward.
Yes.
Our next question comes from the line of Nick <unk> with Scotiabank. Please go ahead.
Thanks, I just wanted to ask a little bit more about.
Pricing trends and how to think about going forward, particularly in the in the IL segment. If we're just seeing kind of a broader.
This has come down from an inflationary standpoint.
Is there a dynamic there on pricing for independent living that may be different versus assisted living going forward and any any thoughts on that.
Sure.
We certainly track the relationship between pricing and multifamily across all of our markets and.
Particularly as it pertains to independent living.
But quite frankly the <unk>.
Price volume optimization I was speaking to has been working for us and we've seen really both move together price and volume moving together and so I would say the pricing power remains.
Significant and were pleased to see the pick up in occupancy as well.
Okay.
Thanks, Nick.
And our next question does come from Michael Carroll with RBC capital markets. Please go ahead.
Yes. Thanks, I just wanted to circle back on the investments I know that Ventas has been kind of highlighting that there is more investment opportunities, but how active can the company be I guess over the next year or so I mean.
Are there larger portfolios out there that you're interested in or tracking or can you actually start pursuing some smaller deals and maybe kind of lump them in with some of your current operators that might want additional scale in their specific markets.
Yes, sure. So we are looking at smaller opportunities.
So really continue to expand our existing relationships.
And add new relationships and using a variety of different sources of capital to do that I mentioned benchmark.
Citing new relationship for us.
And certainly we have the capability to do larger transactions as well. So we see most of what's on the market and a lot of what's not on the market in <unk>.
Very interested in expanding in senior housing.
We do have another question from the line of Austin worse Smiths with Keybanc capital markets. Please go ahead.
Great. Thanks for taking the question I just wanted to circle back on the public to public M&A deal. This week I know you said now a couple of times you want to lean into senior housing, but just curious I mean are you underwriting that transaction and is it something that you'd be interested in pursuing.
At this point.
We'd love to help you out, but we have a firm policy of not commenting on others' transactions.
We have a.
Great.
Outpatient medical and research business as I described and we're really interested in investing in senior housing and <unk>.
So I think you should.
You should defer those questions to the companies themselves.
I would now like to turn the call over to Ventas management team for closing remarks.
Thanks, So much and we're very pleased to deliver strong quarter for our shareholders and improve our outlook.
And all of US at dentist really appreciate your attention your interest in our company and we look forward to seeing you in Los Angeles. Thanks.
I'd like to thank our speakers for today's presentation and thank you all for joining US. This now concludes today's call and you may now disconnect.
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Okay.
Okay.
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Yes.