Q1 2024 Ventas Inc Earnings Call

Thank you for standing by my name is Kathleen and I will be your conference operator today.

Kathleen: Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventas First Quarter 2020 Earnings Call. All lines have been placed on mute to prevent any background noise.

Kathleen: This time I would like to welcome everyone did event that is the first quarter 2024 earnings call.

Kathleen: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.

Kathleen: 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 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to PJ Grant, Senior Vice President of Investor Relations. Please go ahead.

Unknown Executive: Thank you I would like to turn the call over to B J Grant Senior Vice President of Investor Relations. Please go ahead.

Unknown Executive: Thank you Kathleen and good morning, everyone and welcome to the <unk> first quarter financial results Conference call.

PJ Grant: Thank you, Kathleen. Good morning, everyone, and welcome to the Ventas First Quarter Financial Results Conference. Yesterday, we issued our first quarter earnings release, supplemental investor package, and presentation materials, which are available on the Ventas website at ir.ventasreit.com. As a reminder, remarks today may include forward-looking statements and other matters. Forward-looking statements are subject to risks and uncertainties, and a variety of factors may cause actual results to differ materially from those contemplated in such statements.

PJ Grant: Yesterday, we issued our first quarter earnings release supplemental investor package and presentation materials, which are available on <unk> website at IR <unk> com.

PJ Grant: As a reminder, our remarks today may include forward looking statements and other matters are 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.

Unknown Executive: For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the Ventas website. Certain non-GAAP financial measures will also be discussed on this call, and for a reconciliation of these measures to the most closely comparable GAAP measures, please refer to our Supplemental Investor Package posted on the Investor Relations website. And with that, I'll turn the call over to the Chairman and CEO of Ventas, Debra A. Cafaro.

PJ Grant: For a more detailed discussion of those factors. Please refer to our earnings release for this quarter and to our most recent SEC filings all of which are available on the Ventas website.

Unknown Executive: 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.

Speaker Change: Please refer to our supplemental investor package posted on the Investor Relations website, and with that I'll turn the call over to the chairman and CEO Vince hasn't Debra Cafaro.

Debra A. Cafaro: Thank you, BJ. On behalf of all of my colleagues, I want to welcome our shareholders and other participants to the Ventas First Quarter 2024 earnings call. Today, I'll discuss our good start to the year, describe the actions we are taking to execute on our strategy and create value for our stakeholders, and share our improved outlook for 2024 as the multi-year growth opportunity and senior housing builds. As a reminder, our three-pronged Ventas strategy is composed of, first, delivering organic growth in our senior housing portfolio, second, capturing value through investments focused on senior housing, and third, driving cash flow We entered this year with momentum, and in Q1, our enterprise delivered $0.78 of normalized FFO per share and over $2 billion in annualized NOI.

Speaker Change: Thank you Vijay <unk> on behalf of all of my colleagues I want to welcome our shareholders and other participants to <unk> first quarter 2024 earnings call today I'll discuss our good start to the year describe the actions, we're taking to execute on our strategy and create value for our stakeholders.

Debra A. Cafaro: Here, our improved outlook for 2024, as the multiyear growth opportunity in senior housing Bill.

Debra A. Cafaro: As a reminder, our three pronged Ventas strategy is composed of first deliver organic growth in our senior housing portfolio.

Debra A. Cafaro: Capture value through investments focused on senior housing and third drive cash flow throughout our portfolio.

Debra A. Cafaro: We entered this year with momentum.

Debra A. Cafaro: Q1, our enterprise delivered 78 tenths of normalized <unk> per share and over $2 billion in annualized NOI.

Debra A. Cafaro: Our strong results came from nearly 7% same-store property NOI growth, led by SHOP, at over 15%. Notably, demand-driven occupancy gains in our SHOP portfolio are accelerating, fueled by favorable supply-demand fundamentals in our markets and the actions we've taken in concert with our care providers. Move-ins across the portfolio were elevated as we gained 240 basis points of occupancy in our same-store-shop portfolio year over year. As the second-largest owner of senior housing, we are benefiting from the multi-year senior housing growth opportunity that continues to gain traction from both demand-led occupancy and rent-for growth.

Debra A. Cafaro: Our strong results came from nearly 7% same store property NOI growth led by shop at over 15%.

Debra A. Cafaro: Notably demand driven occupancy gains in our shop portfolio accelerating fueled by favorable supply demand fundamentals in our markets and the actions we've taken in concert with our care providers move.

Debra A. Cafaro: Move ins across the portfolio were elevated as we gained 240 basis points of occupancy in our same store shop portfolio year over year.

Debra A. Cafaro: As the second largest owner of senior housing we are benefiting from the multiyear senior housing growth opportunity that continues to gain traction from both demand led occupancy and revpar growth.

Debra A. Cafaro: Accelerating demand for our senior housing communities underscores the valuable benefits they provide to residents and their families.

Debra A. Cafaro: Accelerating demand for our senior housing communities underscores the valuable benefits they provide to residents and their families. The over-80 population is expected to grow by 5 million individuals through 2030, yet new construction starts in senior housing are the lowest in over a decade, as is the percentage of inventory under construction. In our shop portfolio, 99% of Ventas' communities are free from competing construction starts.

Debra A. Cafaro: The over 80 population is expected to grow by 5 million individuals through 2030, yet new construction starts in senior housing are the lowest in over a decade.

Debra A. Cafaro: As a percentage of inventory under construction.

Debra A. Cafaro: In our shop portfolio, 99% of Ventas as communities are free from competing construction start.

Debra A. Cafaro: All of these trends combine to support a highly favorable long-term runway for growth in the biggest part of Ventas' business, senior housing. We also want to expand our footprint in senior housing by capturing value-creating investments in the space. On this second prong of our strategy, we are making good progress. Year-to-date, we have closed or placed under contract about $350 million of investments that meet our targets of going in yields, expected unlevered IRRs, occupancy growth potential, affordability, and pricing below replacement costs.

Debra A. Cafaro: All of these trends combined to support a highly favorable long term runway for growth and the biggest part of <unk> business senior housing.

Debra A. Cafaro: We also want to expand our footprint in senior housing by capturing value, creating investments in the space.

Debra A. Cafaro: The second prong of our strategy, we are making good progress.

Debra A. Cafaro: Year to date, we have closed or placed under contract about $350 million of investments that meet our target of going in yield expected unlevered IRR occupancy growth potential affordability and pricing below replacement cost.

Debra A. Cafaro: Over my career it has been rare to see such a compelling investment environment, where we can acquire attractive assets in favorable market at high going in yield and high growth.

Debra A. Cafaro: Over my career, it has been rare to see such a compelling investment environment where we can acquire attractive assets in favorable markets at high going-in yields and high growth. Due to market conditions, our efforts, and our team's relationship, our pipeline of investment opportunities continues to grow, and we expect to make further progress on our investment plan during the balance of the year. Across Ventas, we are also focused on the third element of our strategy, driving cash flow throughout our portfolio.

Debra A. Cafaro: Due to market conditions, our effort and our teams relationship our pipeline of investment opportunities continues to grow and we expect to make further progress on our investment plan in the balance of the year.

Debra A. Cafaro: Across <unk>. We are also focused on the third element of our strategy driving cash flow throughout our portfolio.

Debra A. Cafaro: In addition to SHOP, which is now generating over $800 million in annualized NOI, there are two other areas I'd like to cover. Kindred and our outpatient medical and research business. First, the Kindred lease for 23 LTCHs, representing approximately 5% of our NOI.

Debra A. Cafaro: In addition to shop, which is now generating over $800 million in annualized NOI. There are two other areas I'd like to cover.

Debra A. Cafaro: Kindred and our outpatient medical and research business.

Debra A. Cafaro: First respecting the kindred lease for 23, <unk>, representing approximately 5% of our NOI. The trailing rent coverage remains stable and kindred has projected improving revenue and expense performance strength for 2024.

Debra A. Cafaro: The trailing rent coverage remains stable, and Kindred has projected improving revenue and expense performance trends for 2024. We continue to have active discussions with Kindred and other parties to optimize Ventas' enterprise value and NOI from our properties following the April 2025 lease maturity. We and Kindred recently agreed to a one-month extension for the lease renewal notice date to the end of May.

Debra A. Cafaro: We continue to have active discussions with kindred and other parties to optimize ventas enterprise value and NOI from our property. Following the April 2025 lease maturity.

Debra A. Cafaro: We in Kindred recently agreed to a one month extension for the lease renewal notice date to the end of May.

Debra A. Cafaro: We know you are keenly interested in hearing the outcome of our discussion, and we look forward to providing you with more information as soon as we can. Our competitively advantaged outpatient medical and research business continues to shine and benefit from strong institutional demand, and it's delivering complementary compounding contributions to our enterprise. As a leader in senior housing, its portfolio is aligned around serving a large and growing aging population. Ventas is advantaged in commercial real estate because demand for our assets is strong and getting stronger.

Speaker Change: We know you are keenly interested in hearing the outcome of our discussions and we look forward to providing you with more information as soon as we can.

Debra A. Cafaro: Our competitively advantaged outpatient medical and research business continues to shine and benefit from strong institutional demand.

Debra A. Cafaro: And it's delivering complementary compounding contributions to our enterprise.

Debra A. Cafaro: As a leader in senior housing this portfolio is aligned around serving a large and growing ageing population.

Debra A. Cafaro: <unk> has this advantage across commercial real estate because demand for our assets is strong and getting stronger.

Debra A. Cafaro: The Ventas team is focused on the opportunity for value creation right in front of us. On that point, we are pleased to improve our outlook for the full year. We are raising Ventas' 2024 normalized FFO guidance to between $3.10 and $3.18 per share and increasing our full year 2024 total company same-store cash NOI guidance to 7% at the midpoint. And with that, I'm happy to turn the call over to just.

Debra A. Cafaro: The Ventas team is focused on the opportunity for value creation right in front of us.

Debra A. Cafaro: On that point, we are pleased to improve our outlook for the full year.

Just: We are raising fantastic 2020 for normalized <unk> guidance to between $3 10.

Just: And $3 18 per share and increasing our full year 2024 total company same store cash NOI guidance to 7% at the midpoint.

Just: And with that I'm happy to turn the call over to adjusted.

Just: Thank you Debbie.

Unknown Executive: I am pleased to report that our shop portfolio performance is off to a strong start. Total shop same-store cash NOI growth was 15.2 percent.

Just: I am pleased to report that our shop portfolio performance is off to a strong start.

Just: Total shop same store cash NOI growth was 15, 2%.

Unknown Executive: Our same-store-shop communities delivered solid results across all key metrics, including occupancy, RAV4, and OPA. First quarter same-store shop occupancy grew by 240 basis points year-over-year, led by the U.S., which saw 280 basis points of occupancy gain. We have had a strong start to the year with broad-based contributions across community types, geographies, and operators. In our same store portfolio in the US, move-ins were elevated at 113% versus the prior year, led by independent living move-ins at 127%. Outperforming Normal Seasonal Patterns. We have had nine consecutive months of tours outperforming prior year levels, contributing to the positive moving momentum we have been experiencing. Rev4 performed in line.

Just: Our same store shop communities delivered solid results across all key metrics, including occupancy Revpar and Opex.

Unknown Executive: First quarter same store shop occupancy grew by 240 basis points year over year.

Unknown Executive: Led by the U S. We saw 280 basis points of occupancy gains we have had a strong start to the year with broad based contributions across community types.

Unknown Executive: Geographies and operators.

Unknown Executive: Our same store portfolio in the U S move ins were elevated at 113% versus prior year led by independent living move ins at 127% outperforming.

Unknown Executive: Outperforming normal seasonal patterns.

Unknown Executive: We have had nine consecutive months of tours outperforming prior year levels contributing to the positive move and momentum we have been experiencing.

Unknown Executive: <unk> performed in line.

Unknown Executive: Operating expenses were lower than expected due to continued strength in net hiring and cost efficiencies realized by our operators. Leveraging insights from our VentasOI platform, OpEx 4 was 1.6%, 4.5% when adjusted for the leaf year. I'm really happy that our operators are delivering excellent care and services and great results. I'd like to highlight Sunrise, Sinceri, Discovery, and Le Group Maurice in particular for their superb all-around performance to start the

Unknown Executive: Operating expenses were lower than expected due to continued strength in net hiring and cost efficiencies realized by our operators leveraging insights from our fantastic <unk> platform Opex for was one 6% or 5% when adjusted for the leap year.

Unknown Executive: I'm really happy that our operators are deliberately delivering excellent care and services and great results.

Unknown Executive: I'd like to highlight Sunrise since.

Unknown Executive: In theory discovery and the Groupe Maurice in particular for their superb all around performance to start the year.

Unknown Executive: Like I said, we are experiencing broad-based contributions from our operators, and we continue to leverage Ventas' OIs, vast data sets, and powerful analytics and insights to drive performance outcomes. Notably, our shop portfolio delivered double-digit same-store cash NOI growth for the seventh consecutive quarter. Growth in the first quarter was led by our U.S. communities, which grew same-store cash NOI 18%.

Unknown Executive: I said, we are experiencing broad based contributions from our operators and we continue to leverage <unk> vast datasets and powerful analytics and insights to drive performance outcomes.

Unknown Executive: Notably our shop portfolio delivered double digit same store cash NOI growth for the seventh quarter in a row.

Unknown Executive: Growth in the first quarter was led by our U S communities, which grew same store cash NOI, 18%. This strong performance in the U S was complemented by our high quality Canadian portfolio, which is 95% occupied and continues to deliver a valuable and stable cash flow with 9% year over year grew.

Unknown Executive: This strong performance in the US was complemented by our high quality Canadian portfolio, which is 95% occupied and continues to deliver a valuable and stable cash flow with 9% year-over-year growth. Given the strong start to the year, we are happy to raise our full year guidance expectations for our same store shop portfolio, which we now expect to grow 12 to 16% in NOI year over year. The key assumptions that drive the midpoint of our range are average occupancy growth of about 270 basis points, up from 250, led by the U.S. with over 300 basis points, which is higher than we originally anticipated.

Unknown Executive: <unk>.

Unknown Executive: Given the strong start to the year, we are happy to raise our full year guidance expectations on a same store shop portfolio, which we now expect to grow 12% to 16% in NOI year over year.

Unknown Executive: The key assumptions that drive the midpoint of our range, our average occupancy growth of about 270 basis points up from $2 50.

Unknown Executive: Led by the U S with over 300 basis points, which is higher than we originally anticipated.

Unknown Executive: We still expect revpar growth of about 5%.

Unknown Executive: We still expect REVCOR growth of about 5%, which puts the total revenue growth at around 8%, and OPEX poor growth is expected to be slightly lower than previously forecasted at approximately 2.5%. Our total shop expectations were originally to add $118 million of NOI growth. And we have raised that expectation to $130 million. April occupancy is already off to a strong start, driven by both tours and move-ins, volumes that are higher than prior year levels, so we're optimistic about our ongoing occupancy performance. Remember that we are just now entering the critical key selling season, so we'll have to see how that plays out.

Unknown Executive: Which puts the total revenue growth at around 8% and Opex core growth is expected to be slightly lower than previously forecasted at approximately two 5%.

Unknown Executive: Our total shop expectations were originally to add $118 million of NOI growth and.

Unknown Executive: And we have raised that expectation to $130 million.

Unknown Executive: April occupancy is already off to a strong start driven by both tours and move ins volumes that are higher than prior year levels. So we're optimistic about our ongoing occupancy performance remember that we are just now entering the critical key selling season.

Unknown Executive: We'll have to see how that plays out.

Unknown Executive: Looking forward, we are energized by the 1000 basis points of potential occupancy upside in our markets over the course of the next few years. I'm excited about the very strong supply-demand fundamentals combined with well-invested properties and excellent operators supported by our Ventas OI platform to drive growth. Moving on to investments, senior housing is now just over half of the Ventas portfolio NOI, with shops representing 40% and growing due to exceptionally strong organic growth.

Unknown Executive: Going forward, we are energized by the 1000 basis points of potential occupancy upside in our markets over the course of the next few years IMAX.

Unknown Executive: I'm excited about the very strong supply demand fundamentals combined with well invested properties in excellent operators supported by our <unk> platform to drive growth.

Unknown Executive: Moving on to investments senior housing is now just over a half of events, our portfolio NOI with shop, representing 40% and growing due to the exceptionally strong organic growth and now we're expanding externally as well.

Unknown Executive: And now we are expanding externally as well. We have been actively capturing value and creating external growth opportunities focused on senior housing. So far, we have closed or are under contract for approximately 330 million in senior housing investments, of which 130 million is already closed.

Unknown Executive: We have been actively capturing value, creating external growth opportunities focused on senior housing. So far we have closed or under contract for approximately $330 million of senior housing investments of which $130 million has already closed.

Unknown Executive: These opportunities are exactly in our sweet spot. I am particularly excited by the unique opportunity to invest in relatively high-yielding, high-quality senior housing communities coupled with outsized growth. These investments have a blended going-in yield in the high sevens, coupled with mid-teens on levered IRRs. Additionally, we are investing at an attractive discount to replacement costs with an average cost of $241,000 per unit. Our approach to executing our investment strategy is guided by our right market, right asset, right operator framework.

Unknown Executive: These opportunities are exactly in our sweet spot.

Unknown Executive: I am, particularly excited by the unique opportunity to invest in relatively high yielding high quality senior housing communities, coupled with outsized growth.

Unknown Executive: These investments have a blended going in yield in the high sevens, coupled with mid teens Unlevered IRR.

Unknown Executive: Additionally, we are investing at an attractive discount to replacement cost with an average cost of 241000 per unit.

Unknown Executive: We're investing in markets with a compelling supply and demand profile, strong affordability, and meaningful expected net absorption. We prefer communities that are supported by need-driven demand and offer a combination of services, including independent living, assisted living, and memory care. These communities help us employ a strategic expansion of Ventas' strengths in our active, value-creating asset management playbook, driven through the Ventas OI platform, supported by our best-in-class data analytics. We are primarily expanding with existing operators with proven performance.

Unknown Executive: Our approach to executing our investment strategy is guided by our REIT market right asset right. Operator framework, we are investing in markets with a compelling supply demand profile strong affordability and meaningful expected net absorption.

Unknown Executive: We prefer communities that are supported by need driven demand and offer a combination of services, including independent living assisted living and memory care. These communities help us employ a strategic expansion of dental strengths in our active value, creating asset management playbook driven through the advance us our platform supported by our best in class data analytics.

Unknown Executive: We are primarily expanding with existing operators with proven performance.

Unknown Executive: Additionally, as part of our data-driven selection process, we welcome new operators with strong track records and capabilities tailored to the service offering at the community, as we have more than doubled our shop operator pool over the past few years. I'll highlight the Magnolia Springs acquisition, which includes seven communities that are ten years old on average. They're currently 89% occupied and are located in markets projected to grow around 1,100 basis points over the next few years, supporting more significant revenue growth.

Unknown Executive: Additionally, as part of our data driven selection process, we welcome new operators with strong track records with capabilities tailored to the service offering at the community as we have more than doubled our shop, operator pool over the past few years.

Unknown Executive: I'll highlight the Magnolia Springs acquisition, which includes seven communities that are 10 years old on average there.

Unknown Executive: They are currently 89% occupied and are located in market is projected to grow around 1100 basis points over the next few years supporting more significant revenue growth the.

Unknown Executive: The communities average 100 units each and offer a combination of assisted living and member care services in the Indianapolis, Cincinnati, and Louisville market areas. Affordability on average in the markets is very strong at a projected seven times length of stay. The going-in yield is projected to be low sevens, and the unlabored IRR is projected to be mid-teens. The discount to replacement costs is estimated to be around 40%.

Unknown Executive: The communities averaged 100 units each and offer a combination of assisted living and memory care services in the Indianapolis, Cincinnati and Louisville market areas.

Unknown Executive: Affordability on average in our markets is very strong at a projected seven times length of stay.

Unknown Executive: The going in yields projected to be low sevens in the Unlevered IRR is projected to be mid teens the.

Unknown Executive: The discount to replacement cost is estimated to be around 40%.

Unknown Executive: The community will be operated by <unk>, CRE, who has a proven track record of delivering outstanding care services and performance.

Unknown Executive: The communities will be operated by SINCERI, which has a proven track record of delivering outstanding care, services, and performance. Moving ahead, we plan to continue to execute on our growing pipeline of senior housing communities. We are actively evaluating many attractive opportunities. In summary, occupancy momentum is strong, and we are off to a strong start to the year. We look forward to continuing our organic growth and executing on our compelling investment pipeline.

Unknown Executive: Moving ahead, we plan to continue to escape execute on our growing pipeline of senior housing communities. We are actively evaluating many attractive opportunities.

Unknown Executive: In summary.

Unknown Executive: Occupancy momentum is strong and we are off to a strong start to the year, we look forward to continuing shop organic growth and executing on our compelling investment pipeline Bob.

Speaker Change: Thanks Joseph.

Unknown Executive: I'll share some highlights of our first quarter performance, provide an update on our balance sheet and capital activities, and close with our increased 2024 guidance. I'll start my first quarter comments with our outpatient medical and research segment, or OMAR, which reported same store cash NOI growth of nearly 5% in the quarter. In outpatient medical, the Beaton team executed 900,000 square feet of new and renewal leases in the first quarter, 50% higher than the prior year.

Unknown Executive: I'll share some highlights of our first quarter performance provide an update on our balance sheet and capital activities and close with our increased 2020 for guidance.

Unknown Executive: I'll start my first quarter comments, with our outpatient medical and research segment or Omar.

Unknown Executive: Which reported same store cash NOI growth of nearly 5% in the quarter.

Unknown Executive: In outpatient medical patent team executed 900000 square feet of new and renewal leases in the first quarter, 50% higher than prior year.

Unknown Executive: Meanwhile, the outpatient medical assets from the Equitize loan portfolio increased occupancy by 300 basis points since taking ownership last year due to the effective asset and property management initiatives from the Ventas team. Our university-based research, SameStore Cash NOI, increased over 5% in the first quarter with occupancy growth across the SameStore portfolio. Our overall new leasing pipeline has increased by 30% to 1.4 million square feet with strong institutional and university demand for a university-based life science building. In terms of first quarter enterprise results, we reported a net loss attributable to common stockholders of four cents per share.

Unknown Executive: While the outpatient medical assets from the <unk> loan portfolio increased occupancy by 300 basis points since taking ownership last year.

Unknown Executive: Due to the effective asset and property management initiatives from the Ventas team.

Unknown Executive: Our University based research same store cash NOI increased over 5% in the first quarter with occupancy growth across the same store portfolio.

Unknown Executive: Our overall, new leasing pipeline has increased by 30% to $1 4 million square feet.

Unknown Executive: With strong institutional and University demand for.

Unknown Executive: For our University based life science buildings.

Unknown Executive: In terms of first quarter enterprise results, we reported a net loss attributable to common stockholders of <unk> <unk> per share.

Unknown Executive: Normalized FFO per share in Q1 was strong at 78 cents, representing 5% year-over-year growth. Our total company's same-store cash NOI grew nearly 7%. Led by Shopp, increasing 15%. Strong Shop Organic Growth also drove a 20 basis point sequential improvement in our net debt to EBITDA in the first quarter. Further supporting our leverage trajectory was $94 million in equity raised at an average price of $44.04 to fully fund senior housing investment. The shop growth included in the balance of the year guidance is expected to drive continuing leverage improvements in 2024.

Unknown Executive: Normalized <unk> per share in Q1 was strong at 78.

Unknown Executive: Representing 5% year over year growth.

Unknown Executive: Our total company same store cash NOI grew nearly 7%.

Unknown Executive: Bye bye shop, increasing 15%.

Unknown Executive: Strong shop organic growth also drove a 20 basis point sequential improvement in our net debt to EBITDA in the first quarter.

Unknown Executive: Further supporting our leverage trajectory was $94 million in equity raised at an average price of $44 <unk>.

Unknown Executive: To fully fund senior housing investments.

Unknown Executive: The shop growth included in the balance of the year guidance is expected to drive continuing leverage improvements in 2024.

Unknown Executive: We had some notable capital markets activity so far this year.

Unknown Executive: We have had some notable capital markets activities so far this year. First, we extended the maturity to 2028 on our $2.75 billion revolving credit facility with improved pricing and strong oversubscription from our banking partners, whom we thank for their support of our platform.

Unknown Executive: First we extended the maturity to 2028 or $2 75 billion revolving credit facility with improved pricing and strong oversubscription from our banking partners.

Unknown Executive: We thank for their support of our platform.

Unknown Executive: Second we raised $650 million in five year Canadian senior notes at five 1% in the first quarter.

Unknown Executive: Second, we raised $650 million in 5-year Canadian Senior Notes at 5.1% in the first quarter, taking some 2025 maturing debt off the table early at attractive rates. We also used cash on hand to repay a portion of recent maturing debt, leaving us $700 million of 2024 debt maturities left to refinance this year. I'll close with our updated 2024 guidance. We improved our outlook for net income attributable to common stockholders to now range from $0.03 to $0.11 per diluted share.

Unknown Executive: Taking some 2025 maturing debt off the table early at attractive rates.

Unknown Executive: We also used cash on hand to repay a portion of recent maturing debt.

Unknown Executive: Leaving us $700 million of 2024 debt maturities left to refinance this year.

Unknown Executive: I'll close with our updated 2020 for guidance.

Unknown Executive: We improved our outlook for net income attributable to common stockholders to now range from <unk> to <unk> 11 per diluted share.

Unknown Executive: We increased the midpoint of our full year normalized FFO guidance to $3.14 per share from the previous midpoint of three dollars and twelve and a half. The increase in our midpoint can be explained by a three cents per share improvement in organic shop NOI, partially offset by higher interest rates. We've also raised both our property NOI and same-store cash NOI year-over-year growth midpoint expectations for each of our segments. Total company same-store cash NOI is now expected to grow 7% year over year compared to our prior midpoint of 6.25%.

Unknown Executive: We increased the midpoint of our full year normalized <unk> guidance to $3 14 per share.

Unknown Executive: From the previous midpoint of $3 $12.05.

Unknown Executive: The increase in our mid point can be explained by a <unk> <unk> per share improvement in organic shop, NOI, partially offset by higher interest rates.

Unknown Executive: We've also raised both our property NOI and same store cash NOI year over year growth midpoint expectations for each of our segments.

Unknown Executive: Total company same store cash NOI is now expected to grow 7% year over year compared to our prior midpoint of six 5%.

Unknown Executive: We have not included any incremental investments in our outlook beyond the $350 million closed or under contract discussed today.

Unknown Executive: We have not included any incremental investments in our outlook beyond the $350 million closed or under contract discussed today. We're increasing our full-year capital recycling proceeds to $300 million as we enhance our portfolio and build additional sources to fund an attractive pipeline of senior housing investments. Finally, we expect to spend $250 million in FAD CapEx in 2024. For additional 2024 guidance assumptions. Please see our Q1 Supplemental and Earnings Presentation Deck posted on our website. With that, I'll turn the call back to the operator.

Unknown Executive: We're increasing our full year capital recycling proceeds to 300 million.

Unknown Executive: As we enhance our portfolio and build additional sources.

Unknown Executive: Fund, an attractive pipeline of senior housing investments.

Unknown Executive: Finally, we expect to spend $250 million and Fad Capex in 2024.

Unknown Executive: For additional 2024 guidance assumptions please.

Unknown Executive: Please see our Q1 supplemental and earnings presentation deck posted to our website.

Unknown Executive: With that I'll turn the call back to the operator.

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad <unk> and joined the queue and if you would like to withdraw your question simply press Star one again.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker or device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. Your first question comes from the line of James.

Operator: You are called upon to ask your questions and listening via loudspeakers device. Please speak up your handset and ensuring that your phone is not on mute when asking your question.

Operator: Again, Please press star one to join the queue.

James: Your first question comes from the line of James Cameron.

James Hall Kammert: Kammert of Evercore, please go ahead.

James: <unk> of Evercore. Please go ahead.

James Hall Kammert: Good morning. Thank you.

James Hall Kammert: Good morning, and thank you.

James Hall Kammert: I know, it's a bit fluid target, obviously, but Jeff you mentioned a couple of times.

James Hall Kammert: Domestic about the occupancy potential growth across your core markets.

James Hall Kammert: I guess, you're mentioning what sort of assumptions there regarding the pace of that in terms of incremental absorption.

James Hall Kammert: How many years would that take can be said about thousand points.

James Hall Kammert: And some of your core markets.

James Hall Kammert: Slide.

Unknown Executive: I know it's a bit of a fluid target, obviously, but Justin, you mentioned a couple times how optimistic you were about the occupancy potential growth across your core markets, right? If they, I guess you're making, what sort of assumptions are you making regarding the pace of that in terms of incremental absorption? And how many years would that take? I mean, you said about a thousand points and in some of your core markets, upside.

James Hall Kammert: Yes, sure so stepping back obviously theres been a lot of focus.

Unknown Executive: Those of us that participate in the senior housing sector on supply and demand, which has been excellent Debbie highlighted that.

Speaker Change: I think nicely in the opening remarks.

Unknown Executive: Added a page to our earnings that you've mentioned that that articulate 1000 basis points of upside in our markets over the next few years.

Unknown Executive: Yeah, sure. But, stepping back, obviously, there's been a lot of focus by those of us that participate in the senior housing sector on supply and demand, which has been excellent. Debbie highlighted that, you know, I think, nicely in the opening remarks. We've added a page to our earnings deck, as you mentioned, that articulates a thousand basis points of upside in our markets over the next few years. We use a variety of data sources to determine that and back testing, and those are proprietary, but we feel comfortable.

Unknown Executive: We use a variety of data sources to determine that and back testing and that those proprietary but we feel comfortable that that's a good outlook.

Unknown Executive: That's a good outlook. Clearly, we haven't included pacing, but we certainly like the opportunity to continue to perform well within those markets and then to expand into new markets through our external activities and capitalize on the exciting upside.

Unknown Executive: Clearly we haven't included pacing.

Unknown Executive: But.

Unknown Executive: Certainly like the opportunity to continue to perform well within those markets and then to expand into new markets through our external activities and capitalize on the exciting upside.

Unknown Executive: Thanks, and sort of a follow-on to that, if you had, for every 100 basis points of occupancy, is there any algorithm we can use to think about how that improves margin? Because there's obviously a fixed component cost that gets levered.

Unknown Executive: Sort of a follow on to that if you had for every 100 basis points of occupancy is there any algorithm. We can use to think about how that improves margin because there is obviously a fixed components cost it gets levered.

Speaker Change: Yes. So there is certainly a lot of margin expansion opportunity for us because we're overall.

Unknown Executive: Yeah, so there's certainly a lot of margin expansion opportunity for us because we're, you know, overall, you know, post-mid 80s, we're in the US around 80% occupied in our total shop portfolio, just under 80%, both in in-family living and assisted living. So there's a lot of occupancy upside ahead. And with that comes the operating leverage that we benefit from in our business. And so there's really good margin expansion ahead. There are some rules of thumb. Maybe we'll include that in some upcoming conferences. All right.

Unknown Executive: Mid <unk>.

Unknown Executive: In the U S around 80% occupied and our total shop portfolio, just under 80% ultimate living and assisted living so.

Unknown Executive: A lot of occupancy upside ahead and with that comes the operating leverage that we benefit from in our business and so there is there's really good margin expansion ahead. There are some rules of thumb.

Unknown Executive: Maybe we will include that at some upcoming conferences.

James Hall Kammert: All right. Thank you. I'll leave it there.

Speaker Change: Alright, Thank you I'll leave it there thanks.

Speaker Change: Thanks, Jim.

James Hall Kammert: Your next question comes from the line of Michael Carroll of RBC capital markets. Please go ahead.

Michael Albert Carroll: Your next question comes from the line of Michael Carroll of RBC Capital Markets. Please go ahead.

Michael Albert Carroll: Thanks. I wanted to touch on Kindred. I know you made some prepared remarks, Debbie, about it, but can you talk about the reasons for the extension option by one extra month? Is this something that Kindred asked for, that they needed more time kind of assessing if they wanted to exercise that option or not?

Michael Albert Carroll: Yes, Thanks, I wanted to touch on Kindred I know you made some prepared remarks, Debbie about it but can you talk about the reason for the extension option by one extra month is this something that kindred ask for that they needed more time kind of assessing if they wanted to exercise that option or not.

Debra A. Cafaro: Good morning, Mike. Happy to talk to you about it. I mean, look, we're engaged in active discussions with Kindred and others, and we're really working to get to the right outcome, and so we believe that it is really in the best interest of everyone to get to a good outcome, which we define as kind of optimizing Ventas value and NOI.

Debbie: Good morning, Mike Happy to happy to talk to you about it I mean look we're engaged in active discussions with kindred and others.

Debra A. Cafaro: And we're really working to get to the right outcome and so we believe that that was really in the best interest of everyone to get to a good outcome, which we define as kind of optimizing that has value and NOI.

Mike: Okay, and then just kind of on that I know in the past few quarters, you've kind of highlighted that kindred has been putting a new operational efficiency initiatives to deliver I guess better results has those bid and then put in place yet and are you seeing returns if you will.

Michael Albert Carroll: Okay, and then just kind of on that. I know in the past few quarters, you kind of highlighted that Kindred has been putting in new operational efficiency initiatives to deliver, I guess, better results. Have those been put in place yet?

Debra A. Cafaro: And are you seeing returns? I mean, if you look at the trillion 12-month EBITDARM coverage ratio in that portfolio for the past three quarters, it's kind of held steady at that point nine times. So it doesn't seem like coverage has yet picked up. But I know that's a thrilling number. So I didn't know if we had more recent data on the most recent quarter kind of highlighting some some upticks there

Debra A. Cafaro: Look at like the trailing 12 month EBITDAR coverage ratio on that portfolio for the past three quarters, it's kind of held steady at that 0.9 times. So it doesn't seem like coverages, yet picked up but I know that's a trailing number so I didn't know if we have more recent data on the most recent quarter kind of highlighting some some upticks there.

Michael Albert Carroll: I mean, you're right on the, you know, Kindred has initiatives underway to improve both revenue and expense performance, and we are seeing sequential improvement, but the heat map, of course, is a trailing look. And so that's really how you ought to think about it. So you hit the nail on the head.

Speaker Change: I mean, you are right on.

Michael Albert Carroll: Yes.

Michael Albert Carroll: Kindred has initiatives underway to improve.

Michael Albert Carroll: Both revenue and expense performance and we are seeing sequential improvement, but the heat map of course is a trailing.

Michael Albert Carroll: Look and so that's really how you ought to think about it. So you hit the nail on the head.

Speaker Change: Okay, great. Thank you.

Michael Albert Carroll: Okay, great. Thank you. Thank you. Your next question comes from the line of Michael.

Michael: Thank you.

Michael Albert Carroll: Your next question comes from the line of Michael Griffin of Citi. Please go ahead.

Michael Anderson Griffin: Your next question comes from the line of Michael Griffin of Citi. Please go ahead. Thanks. Maybe I'm just following up on Michael's question. Could there be an additional extension?

Michael Anderson Griffin: Thanks, maybe just following up on Michael's question.

Michael Anderson Griffin: Could there be an additional extension.

Michael Anderson Griffin: Convert here do you think end of May is.

Michael Anderson Griffin: When we will have a decision.

Michael Anderson Griffin: Yeah.

Debra A. Cafaro: Yeah, um, good morning. I think that we're in these active discussions with Kindred and others, and we're really focused on getting the right outcome for Ventas, for the enterprise, and also for the properties. And I would be, you know, we were working very hard to get to that kind of outcome, and so I'd be less focused on the notice date and just more focused on, you know, the work that we're doing.

Michael Anderson Griffin: Good morning, So I think that.

Debra A. Cafaro: We're in these active discussions with kindred and others.

Debra A. Cafaro: And we're really focused on getting the right outcome for Ventas for the enterprise and also for the properties.

Debra A. Cafaro: And I would be.

Debra A. Cafaro: <unk>.

Debra A. Cafaro: We're working very hard to get to that kind of outcome.

Debra A. Cafaro: So I'd be less focused on the notice date and just more focused on the <unk>.

Debra A. Cafaro: We have a great team working on it. We've been working on it for a while. This is very similar to what happened last time. And we're on it to get a resolution as soon as we can, and we look forward to telling you as soon as we can. Thanks. I probably should have said this is Nick here with Michael.

Debra A. Cafaro: Work that we're doing we have a great team working on it we've been working on it for a while.

Nick: This is very similar to what happened last time and we're on it too.

Debra A. Cafaro: Get a resolution net.

Nick: As soon as we can and we look forward to telling you as soon as we can.

Debra A. Cafaro: I guess the second question is, just if it is retentive as you talk to kind of other parties, what would the downtime be for the portfolio if it goes down that route? Right, if, you know, it's interesting to see that well-respected players like Ensign have now entered the LTAC space. It seems to be enjoying a bit of a moment, and that's positive. I would say that, you know, there would be a transition kind of on day one if there were other tenants for some or all of the property. So that's the way to think about it. It's there there's no downtime. It's not like, you know, outpatient medical or anything. There's a direct operational transfer if that were to occur.

Debra A. Cafaro: I, probably should've said this is Nick here with Michael I guess, the second question just if it is re tenanted as you talk to.

Debra A. Cafaro: Kind of other parties what would the downtime for.

Debra A. Cafaro: For the portfolio if it goes down that route.

Debra A. Cafaro: Great.

Debra A. Cafaro: It's interesting to see that.

Debra A. Cafaro: Well respected players like Ensign has now entered the <unk> space it seems to be enjoying a bit of a moment and that's positive I would say that there would be a transition kind of on day. One if there were other tenants for some or all of the properties.

Debra A. Cafaro: So.

Debra A. Cafaro: That's the way to think about it there's no downtime it's not like.

Debra A. Cafaro: Outpatient medical or anything.

Debra A. Cafaro: There is a direct operational transfer if that were to occur.

Speaker Change: Perfect. Thank you very much.

Speaker Change: Thank you.

Debra A. Cafaro: Your next question comes from the line of Tayo Okusanya from Deutsche Bank. Please go ahead.

Omotayo Tejamude Okusanya: Your next question comes from the line of Tayo Okusanya from Deutsche Bank.

Omotayo Tejamude Okusanya: Good morning, everyone. Congratulations on a great quarter. In terms of acquisitions, again, you have an interesting page in your deck just kind of talking about all the upcoming debt maturities in senior housing and how you look at that as a potential opportunity. Should we be thinking about acquisitions purely as fee-simple transactions or can we possibly see you doing more on the structured finance side as well?

Omotayo Tejamude Okusanya: Hi, Yes, good morning, everyone. Congrats on a great quarter.

Omotayo Tejamude Okusanya: Thanks.

Omotayo Tejamude Okusanya: Of course in terms of acquisition.

Omotayo Tejamude Okusanya: Again, javelin interesting paging redact with kind of talking about all the upcoming debt maturities in senior housing and how you look at that as a potential opportunity should we be thinking about acquisitions purely simple transactions or can we possibly see you doing more on the structured finance side as well.

Unknown Executive: You would primarily be simple, you know, that that maturity. This chart really articulates, The interesting opportunity because we have tremendously good fundamentals, but you have an asset that's refinancing generally at a lower LTV and higher cost so it's putting pressure on existing owners And it creates an opportunity for buyers like us to to make you know high quality acquisitions But with a better capital stack And, you know, there's a variety of sellers as well, you know, there's private equity sellers and operators and multifamily and institutional sellers that we've been seeing in our pipeline, including that which we've been executing.

Omotayo Tejamude Okusanya: You have primarily fee simple.

Unknown Executive: That debt maturity chart.

Unknown Executive: It really articulate.

Unknown Executive: The interesting opportunity because we have tremendously good fundamentals, but you have an asset that's refinancing generally at a lower LTV and higher <unk>.

Unknown Executive: So it is putting pressure on existing owners.

Unknown Executive: And it creates an opportunity for buyers like us to make high quality acquisitions.

Unknown Executive: With the better capital stack.

Unknown Executive: And Theres, a variety of sellers as well as private equity sellers and operators in multifamily and institutional sellers that we've been seeing.

Unknown Executive: In our pipeline, including that which we've been executing on.

Speaker Change: Okay. That's helpful. And then if I could sneak one more in in terms of Brookdale, which is the other.

Omotayo Tejamude Okusanya: Okay, that's helpful. And then, if I could sneak one more in, in terms of Brookdale, which is the other rent reset that's coming up, again, coverage is great and all that's fine, but curious if, structurally, that could change from being a triple net portfolio to much more of a redeer portfolio, just given how well your shop portfolio is doing and how strong senior housing fundamentals are generally.

Omotayo Tejamude Okusanya: We set thats coming up again.

Omotayo Tejamude Okusanya: Coverage is great.

Omotayo Tejamude Okusanya: And then all of that fine, but curious.

Omotayo Tejamude Okusanya: Structurally that could swing from being a triple net portfolio.

Omotayo Tejamude Okusanya: So much more of a RIDEA portfolio just given.

Omotayo Tejamude Okusanya: How will your shop portfolio is doing and how strong senior housing fundamentals are done with it.

Omotayo Tejamude Okusanya: Tayo.

Debra A. Cafaro: Tayo, thanks for asking that. You know, Brookdale is about 7% of our NOI, and you're right, the coverage has been improving, and it's about 1.3 times on a trailing basis. And again, the trends in those markets also support a lot of intermediate-term occupancy increases. And so there are lots of positive outcomes for Ventas as we think about that, which is, as you mentioned, at the end of 20

Debra A. Cafaro: Thanks for asking that Brookdale is about 7% of our NOI.

Debra A. Cafaro: You are right the coverage has been improving.

Debra A. Cafaro: About one three times on a trailing basis and again the trends in those markets also support a lot of intermediate term occupancy increases.

Debra A. Cafaro: And so there are lots of positive outcomes for Ventas as we as we think about that which is that as you mentioned at the end of 2025.

Debra A. Cafaro: So I guess structurally you expect it to stay the same.

Debra A. Cafaro: So, I guess, structurally, I expected it to stay the same for the Chippewa Nets.

Debra A. Cafaro: The triple net.

Debra A. Cafaro: Yes.

Debra A. Cafaro: You know, so when we say we have a lot of positive options, I mean, these communities are markets that also have tremendous upside from a supply-demand standpoint. The demand metrics are excellent. To the same point Debbie made on Kindred, you know, the trailing coverage is always a little out of date, so there's even better, you know, performance, I'm sure, to come. So we like the opportunity, really, in any structure to own these communities, and that's the positive opportunity that we're facing. Thank you.

Debra A. Cafaro: I think when we say we have a lot of positive options. I mean these communities are in markets that also have.

Debra A. Cafaro: Tremendous upside from a supply demand standpoint, the demand metrics are excellent.

Debra A. Cafaro: So the same point Debbie made on Kenya.

Debra A. Cafaro: Trailing coverages.

Debra A. Cafaro: <unk>.

Debra A. Cafaro: As always a little.

Debra A. Cafaro: Out of date, so theres, even better performance I'm sure to come so we like the opportunity really in any structure.

Debra A. Cafaro: One these communities.

Debra A. Cafaro: And that's the that's a positive opportunity that we're facing.

Debra A. Cafaro: Thanks.

Debra A. Cafaro: Yes.

Debra A. Cafaro: Okay.

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

Speaker Change: Your next question comes from the line of <unk> <unk> of BMO capital markets. Please go ahead.

Juan Carlos Sanabria: Hi, good morning.

Juan Carlos Sanabria: I just wanted to ask about acquisitions, and it seems like you've got another group of properties maybe you're looking at, how we should think about funding that, and how you think about your cost of capital with leverage still relatively high but definitely improving.

Juan Carlos Sanabria: I just wanted to.

Juan Carlos Sanabria: I just wanted to ask around the acquisitions in.

Juan Carlos Sanabria: It seems like you've got another group.

Juan Carlos Sanabria: Group of properties, maybe you are looking at how we should think about funding that and how you think about your cost of capital with beverage still relatively high but definitely improving.

Juan Carlos Sanabria: Sterling I'll take that one thanks.

Unknown Executive: Everyone, I'll take that one. Thanks. You know, starting with the financial returns that we're seeing on these investments, which Justin articulated, are really, really attractive, even at the current cost of capital. We talked about that on the last earnings call about the fact that, you know, on balance sheet financing can work given those returns. And in fact, bake that into our guidance, and that's what we executed on in the first quarter. We fully funded those senior housing investments with equity.

Unknown Executive: Starting with the financial returns that we're seeing on these investments, which just articulated are really really attractive even at the current cost of capital.

Unknown Executive: We talked last earnings call about the fact that.

Unknown Executive: On balance sheet financing can work given those returns.

Unknown Executive: And in fact baked that into our guidance and Thats, what we executed on in the first quarter, we fully funded those senior housing investments with equity.

Unknown Executive: And as we look forward, given the pipeline, what we've incrementally added to guidance is more disposition proceeds as a source of funds. So another couple hundred million processed at classes as a source of funds, just because we see the opportunity in front of us. So pretty much doing what we said and building more dry powder would be my summary.

Unknown Executive: And as we look forward given the pipeline what we've incrementally added to guidance is more disposition proceeds as a source. So another couple hundred million.

Unknown Executive: Across asset classes as a source of funds just because we see the opportunity in front of us so pretty much doing what we said in building more dry powder would be my summary.

Speaker Change: Thanks Robyn.

Juan Carlos Sanabria: Thanks, Bob. And a follow-up question for Justin.

Speaker Change: Follow up for Justin.

Speaker Change: <unk> points.

Speaker Change: Occupancy upside on the U S portfolio.

Justin: On the 1,000 basis points of occupancy upside on the U.S. portfolio, I guess, first, is that a same-store comment or an overall portfolio comment and kind of where's the starting point now? And what do you see as the kind of structural ceiling for occupancy, knowing there's always some turnover of customers or seniors in and out of the community? Great question.

Justin: I guess first is that a same store comment or an overall portfolio comment and kind of where is the starting point now.

Justin: And where do you see as kind of a structural ceiling.

Justin: For for occupancy now and there is always some charter customers are seniors in and out of the communities.

Speaker Change: The great question. So first of all obviously U S focused.

Justin: Great question. So, first of all, it's obviously U.S. focused. It's a total shop, and we're running, you know, just under 80% occupied in both our independent living and assisted living products in the US. It's about two-thirds assisted living in the US. In our total shop portfolio, we do see a lot of upside. The structural upside opportunity, in my view, through experience and philosophically, is a hundred percent occupied. And we have several communities that are at 99 percent occupancy, and so, you know, there's nothing like a completely full community to really demonstrate the operating leverage and also just deliver great care and services.

Justin: And its total shop, and we're running just under 80% occupied and both are independent living and assisted living.

Justin: The products in the U S. It's about two thirds assisted living in the U S.

Justin: And our total shop portfolio.

Justin: We do see a lot of upside that's structural.

Justin: Upside opportunity.

Justin: In my view through experience and philosophically as a 100% occupied and we have several communities that are at 99, 100% occupancy.

Justin: And so theres.

Justin: There's nothing like a completely full community too to really demonstrate the operating leverage and also just deliver great care and services and so that's the that's the goal.

Justin: And so that's the goal. And we have operators that are starting to deliver on that goal, certainly in Canada, starting to happen in the US in certain markets. And we'll keep driving, and it's just great to have so much demand at our doorstep and to be able to look forward and have confidence around the opportunity.

Justin: And we have operators that are starting to deliver on that goal certainly in Canada, starting to happen in the U S in certain markets.

Justin: We will keep driving.

Justin: It's just great to have so much demand on our doorstep and to be able to look forward and have confidence around the opportunity.

Speaker Change: Thank you.

Justin: Okay.

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

Ronald Kamdem: Your next question comes from the line of Ronald Kamdem of Morgan Stanley. Please go ahead.

Ronald Kamdem: Great, just two quick ones. One, trying to connect the dots on the occupancy here, you put a lot of breadcrumbs in the presentation, obviously, starting with a, you know, thousand basis points of occupancy upside. Then we're seeing here that you finally hired a senior VP and senior housing, the Ventas OI, and sort of the occupancy gains you're getting on that CapEx investment. I guess the question to be direct is, is 275 to 300 basis points of occupancy gain in a year, is that the new normal? And if not, what would be the sort of stopping that?

Ronald Kamdem: Great just two quick ones.

Ronald Kamdem: So one China connect the dots on the occupancy here.

Ronald Kamdem: You've put a lot of breadcrumbs in the presentation, obviously, starting with Bob.

Ronald Kamdem: 1000 basis points of occupancy upside than we're seeing here that you finally hired senior VP in senior housing.

Ronald Kamdem: Ventas ally in sort of the occupancy gains youre getting on that on that Capex investment I guess the question to be direct is is $2 75 to 300 basis points of occupancy gain in a year is that is that the new normal and if not what would like what would be sort of stopping that.

Justin: So a couple comments in response here. So I mentioned that the U.S. is projected to have over 300 basis points of occupancy growth this year. So that's a stat to think about. I also mentioned that we're just at the beginning of the key selling season, so we'll be seeing how that plays out. You make a good point.

Justin: So, a couple of comments.

Speaker Change: So couple of comments and response here so.

Justin: I mentioned that our U S is projected to be over 300 basis points of occupancy growth this year.

Justin: Right.

Justin: SaaS to think about I also mentioned that we're just at the beginning of the key selling season. So we will be.

Justin: Seeing how that plays out.

Justin: We're optimistic about the trends leading into it, so we'll see where that goes. We have made a new hire, Senior VP of Senior Housing and Chief Revenue Officer for Senior Housing. So, really excited about the addition of the team and continuing this momentum and working with what is really a tremendous existing team. That's really been driving the live platform, and I think that the new addition will just make us even stronger.

Justin: You make a good point, we are optimistic about the trends leading into it so we'll see where that goes.

Justin: Have made a new hire senior VP of.

Justin: Of senior housing and Chief revenue Officer for senior housing.

Justin: This person will introduce when she starts in the first part of June.

Justin: But her job really will be the lead the shop platform that drive performance.

Justin: It has a very very strong background in top line performance.

Justin: In senior housing and in hospitality and she has held leadership roles in global Fortune 500 companies. So really excited about the addition to the team and continue this momentum in and work with what is really a tremendous existing team.

Justin: That's really been driving a lot of platform and I think that the new edition will just make us even stronger.

Justin: Okay.

Justin: Your next question comes from the line of Joshua <unk> of Bank of America. Please go ahead.

Joshua Dennerlein: Your next question comes from the line of Joshua Dennerlein of Bank of America. Please go ahead.

Joshua Dennerlein: Yeah, Hey, guys good morning, everyone.

Joshua Dennerlein: Yeah, hey, guys. Morning, everyone. Good morning.

Joshua Dennerlein: Good morning.

Joshua Dennerlein: Yes.

Joshua Dennerlein: Shop occupancy update on <unk> that was better than you guys were expecting and then <unk>.

Joshua Dennerlein: The outlook higher for the year my.

Joshua Dennerlein: My question revolves around is that driven by some market being better so like the beta drive being driven from the aging of America or is there some kind of like alpha.

Joshua Dennerlein: Alpha overlay that you guys are doing internally, that's driving better customer demand thats why youre getting this uplift.

Joshua Dennerlein: Oh, um, yeah, the shop occupancy rate updated one cue that was better than you guys were expecting. And then you revised the outlook higher for the year. My question revolves around is that driven by the market being better? So like the beta drive being driven from the aging of America? Or is there some kind of like, alpha overlay that you guys are doing internally that's driving better customer demand? That's why you're getting this uplift? If the latter, could you just maybe elaborate on what you're doing? Drive that alpha?

Joshua Dennerlein: The latter could you just maybe elaborate on what youre doing to drive that also.

Debra A. Cafaro: It's both. And, you know, I sort of take the macro, and then I defer to Justin on all of the kind of OI-driven actions and initiatives to deliver Outside Performance Within a Demand-Driven Macro.

Joshua Dennerlein: It's both and.

Debra A. Cafaro: I started to take the macro and then I defer to Justin.

Debra A. Cafaro: All of that kind of Oi, driven actions and initiatives to do.

Debra A. Cafaro: Deliver.

Justin: Outsized performance within a demand driven macro that's great and it all starts with the macro for sure and then within that we've been working for quite some time to make sure we're well positioned to take advantage of this great opportunity.

Debra A. Cafaro: That's great. And it all starts with the macro, for sure. And then within that, you know, we've been working for quite some time to make sure we're well positioned to take advantage of this great opportunity. Here are a couple examples. One is just price and volume optimization, and this is really the opportunity to ensure that we maintain our market position. A good example would be Sunrise and Atria, which are well-invested, well-established operators in local markets.

Debra A. Cafaro: Examples one is just price volume optimization.

Debra A. Cafaro: And this is really the opportunity to ensure that we really we maintain our market position. Good example would be sunrise and <unk>, which are well invested well established operators in local markets and as we adjust pricing over time, we want to make sure that we're maintaining the relative positioning in the market with <unk>.

Debra A. Cafaro: And as we adjust prices over time, we want to make sure that we're maintaining a relative position in the market. We've back-tested this, and over the past year, we've had big increases in average move-ins in those companies. We took action to invest in the properties and put the new operator in place, and then we tracked the performance relative to the market and their outperforming market. And so, that's an opportunity, you know, the overall CapEx investment we highlighted in our earnings deck, where we've had year-over-year growth of 470 basis points of occupancy and a street rate growth of over 9%. So it's a combination of a lot of activity and actions and helping to give our operators some strategic support as they do the great job of executing on a day-to-day basis.

Debra A. Cafaro: Tested this over the past year, we've had big increases in average move ins in those companies and then there is other examples sincerely jumps out to me as one where we made.

Debra A. Cafaro: We took actions.

Debra A. Cafaro: To invest in the properties and put in a new operator in place.

Debra A. Cafaro: And then we've tracked the performance relative to market and they're outperforming market.

Debra A. Cafaro: And so that's an opportunity the overall capex investment we highlighted in our earnings deck, where we've we've had year over year growth of 470 basis points of occupancy in our street rate growth of over 9%.

Debra A. Cafaro: So it's a combination of a lot of activity and actions helping.

Debra A. Cafaro: Helping to give our operators some strategic support as they do that the great job of executing on a day to day basis.

Joshua Dennerlein: On a different note, you guys have the Brookdale warrants. I know they're exercisable through the year 2025. How are you guys thinking about potentially exercising those? I know they're really in the money, but just how do you think about using those as a potential source of capital?

Speaker Change: On a different note.

Joshua Dennerlein: You guys have the brookdale warrants exercisable.

Joshua Dennerlein: Exercisable through year end 2025, just how are you guys thinking about potentially exercising those I know, they're they're really in the morning, which is how do you think about using those as a potential source of capital.

Speaker Change: Yes, I'll take that one you are right, we have $16 million warrants.

Unknown Executive: I'll take that one. You're right. We have 16.

Unknown Executive: I'll take that one. You're right.

Unknown Executive: At $3 a share so clearly deeply in the money.

Unknown Executive: And that is again another source of funds as we think about the opportunity to both create value recognized gains and invest behind senior housing real estate.

Unknown Executive: We have 16 million warrants at $3 a share. So clearly, deeply in the money. And that is, again, another source of funds as we think about the opportunity to both create value recognized gains and invest in senior housing and real estate. And obviously, about a year and a half left in terms of duration, but a clear opportunity.

Unknown Executive: And obviously, a year and a half left in terms of duration, but a clear opportunity.

Unknown Executive: Yes.

Speaker Change: Thanks for the time.

Unknown Executive: Your next question comes from the line of Nick <unk> of Scotiabank. Please go ahead.

Nicholas Philip Yulico: Your next question comes from the line of Nick Yulico of Scotiabank. Please go ahead.

Nicholas Philip Yulico: Thanks, Good morning, everyone, maybe just a bigger picture question on kind of a focus for the company right now in terms of.

Nicholas Philip Yulico: Thanks. Good morning, everyone.

Nicholas Philip Yulico: Maybe just a bigger picture question on kind of the focus for the company right now in terms of, you know, there is a lot of opportunity to invest in senior housing. If we fast forward a year from now, would Ventas be a larger company, more assets owned, higher senior housing exposure? How should we think about, you know, that sort of investment pipeline and how you could capitalize on it? Because I think year to date or what's in the pipeline is somewhat neutral. You know, you have acquisitions and dispositions roughly matched. You know, how do you think about sort of growing the portfolio right now?

Nicholas Philip Yulico: There is a lot of opportunity to invest in seniors housing.

Nicholas Philip Yulico: If we fast forward a year from now.

Nicholas Philip Yulico: <unk> is going to be a larger company more assets on hire senior housing exposure, how should we think about.

Nicholas Philip Yulico: That sort of investment pipeline, and how you could capital and capitalize on it because I think year to date or what's in the pipeline is somewhat neutral you have acquisitions dispositions.

Nicholas Philip Yulico: Roughly matched.

Nicholas Philip Yulico: How are you how are you thinking about sort of growing the portfolio right now.

Nicholas Philip Yulico: Yes, I mean, we're again, we're executing on this strategy.

Debra A. Cafaro: Yeah, I mean, we're again executing on the strategy that the driver of organic growth is obviously driving the bus; we're going to be the second largest owner of senior housing with the platform that we have and access to capital. We're layering on external growth focused on senior housing; that part of the portfolio is definitely going to grow. And we're committed to taking advantage of this multi-year opportunity and the kind of returns that we're seeing in the market for good assets at high yields with high growth potential.

Debra A. Cafaro: Driver of organic growth is obviously.

Debra A. Cafaro: Driving the bus we're going to as the second largest owner of senior housing with the platform that we have an access to capital.

Debra A. Cafaro: We're layering on external growth focus in senior housing.

Debra A. Cafaro: That part of the portfolio is definitely going to grow.

Debra A. Cafaro: We're committed to taking advantage of this multiyear opportunity and the kind of returns that we're seeing in the market for good assets at high yields with high growth potential we're going to find a way to make those acquisitions and make senior housing a larger part of our.

Debra A. Cafaro: We are, we are gonna find a way to make those acquisitions and make senior housing a larger part of our overall portfolio. I mean, it's already over half, with jobs at forty percent and growing, and I think you're gonna see those trends continue.

Debra A. Cafaro: Overall portfolio I mean, it's already over a half with chop at 40% and growing and I think youre going to see those trends continue.

Debra A. Cafaro: Yes.

Nicholas Philip Yulico: Okay, thanks for that, Debbie. The second question is just, you know, I know you have the slide in there again on, you know, the attractive time to invest in senior housing. And, you know, it talks about year one FFO per share neutral slash accretive for the investments, realizing that, obviously, there's a long runway here when you're thinking in the long term, but, you know, how should we think about, you know, your focus on, you know, at what point is it year two? You know, how should we think about, you know, accretion happening? Because obviously, earnings growth is important, and people focus on that. Thanks.

Speaker Change: Okay. Thanks for that Debbie second question is just I know you have the slide in there again on the attractive time to invest in senior housing.

Nicholas Philip Yulico: It talks about year, one <unk> per share neutral slash accretive for the investments realizing that obviously, there's a long runway here when you're thinking the long term but.

Nicholas Philip Yulico: How should we think about your focus on.

Nicholas Philip Yulico: What point is it year or two.

Nicholas Philip Yulico: How should we think about.

Nicholas Philip Yulico: Accretion happening because obviously your earnings growth is important people focus on that.

Unknown Executive: Definitely, and we are too, Bob.

Debbie: Definitely and we are too Bob Yes, I think going in yields.

Unknown Executive: Yeah, I think going in yields, you know, relative to cost of capital, roughly neutral, so not in the, you know, immediately accretive. But I would point you to the IRRs and the growth potential in these investments, you know, mid-teens in an example used, that says there's attractive growth, you know, in the near term, which would drive accretion. Yes. And that's what's so exciting to us, and it would be near-term accretion near-term.

Unknown Executive: Relative to cost of capital roughly neutral so not an immediately accretive.

Unknown Executive: But I would point you to the IRR and the growth potential in these investments you know mid teens and in an example used that says there is.

Unknown Executive: <unk> growth.

Unknown Executive: In the near term, which would drive accretion yes.

Unknown Executive: And that's what's so exciting to us and it would be near term accretion near term.

Unknown Executive: near-term accretion

Speaker Change: Alright, thanks for that.

Speaker Change: Thank you.

Unknown Executive: Your next question comes from the line of Vikram Malhotra of Mizuho. Please go ahead.

Vikram L. Malhotra: Your next question comes from the line of Vikram Malhotra of Mizzou. Please go ahead.

Vikram L. Malhotra: Good morning, congrats on a strong quarter. Just two questions, maybe just Justin one for you.

Vikram L. Malhotra: Good morning, Congrats on the strong quarter.

Vikram L. Malhotra: Just two questions maybe.

Vikram L. Malhotra: Maybe just Justin one for you I guess I wanted to speak Lear.

Vikram L. Malhotra: The acceleration trends, you mentioned last quarter and at prior conferences.

Justin: I guess I wanted to speak about the acceleration trends you mentioned last quarter and at prior conferences. In shop, is that occupancy or is that same strength of growth as you go through the year because you had a really strong one last quarter, but the midpoint of the guide still suggests, you know, some deceleration through the year. And I know you're being conservative, but I just want to understand the mechanics behind it. Is it occupancy acceleration or shop acceleration or both?

Vikram L. Malhotra: And shop is that occupancy or is that same store NOI growth as you go through the year because you.

Justin: <unk> had a really strong <unk>, but the midpoint of the guide still suggests.

Justin: Some day sell through the year, and I know youre being conservative, but I just wanted to understand the mechanics behind is it occupancy acceleration our shop acceleration of our book.

Justin: Well, first of all, occupancy is accelerating. It's been underway, and that's part of the guidance expectation we gave. Good point. We had a really strong start to the first quarter from an NOI standpoint, so that kind of changes the trajectory of what we're expecting in terms of stepping up throughout the year. And also, another good point: the key selling season starts right now, so we'll give ourselves time to see how that plays out and go from there.

Speaker Change: Well first of all occupancy is accelerating.

Justin: It's been underway and that's part of the guidance expectations that we gave.

Justin: Good point, we had a real strong start to the first quarter from an NOI standpoint, so that kind of changes the trajectory of what we're expecting in terms of.

Justin: Stepping up throughout the year and also another good point key selling season.

Justin: Art's right now so we'll give ourselves time to see how that plays out and go from there.

Vikram L. Malhotra: So, so sorry, just to clarify, are you still, like you said last quarter, just, I want to make sure, is it same-strain OI growth acceleration or is it occupancy acceleration? You just said the trajectory, but are you still anticipating accelerating same-strain OI growth?

Speaker Change: So sorry, just to clarify.

Vikram L. Malhotra: Are you still like you said last quarter I guess I want to make sure is it same store NOI growth acceleration or is it the.

Vikram L. Malhotra: The occupancy acceleration you just said.

Vikram L. Malhotra: But are you still anticipating accelerating same store NOI growth.

Vikram L. Malhotra: Yes, I would point you to first off occupancy we posted 240, so far year to date, we've got 270 year over year, So clearly theres going to be incremental year over year.

Justin: Yeah, I would point you to first off occupancy. We, you know, we posted 240 so far year to date, and we've got 270 year over year. So clearly, there's going to be incremental year over year occupancy growth embedded in the forecast. Our range has gone up at the midpoint to 14% on NOI. We posted 15% in the first quarter, pretty close. You know, I think we keep coming back to this notion of the key selling season. You know, we're just starting that. We want to see how that one plays out.

Justin: Occupancy growth embedded in the forecast.

Justin: Our range has gone up at the mid point to 14% on NOI, we posted 15%.

Justin: In the first quarter pretty close I think we keep coming back to this key selling season notion.

Justin: We're just starting that we want to see how that one plays out.

Vikram L. Malhotra: Got it. Okay. And then, Debbie, I don't know if you can maybe throw us some more tea leaves here, just on the Kindred outcome. I guess, is it fair to assume the fact that you've extended And by one month, and you mentioned, you know, there are potentially other parties, it's unlikely that I mean, or it's more likely that Kindred is part of the solution, meaning it's like an all renewal or partial with other players, Well, again,

Speaker Change: Got it okay.

Vikram L. Malhotra: And then Debbie if I don't know if you can maybe throw some more D leaves here just on the kindred outcome.

Vikram L. Malhotra: Is it fair to assume.

Vikram L. Malhotra: The fact that you've extended and.

Vikram L. Malhotra: By one month and you mentioned.

Vikram L. Malhotra: There are potentially other parties.

Vikram L. Malhotra: Unlikely that.

Vikram L. Malhotra: It's more likely that kindred is part of the solution, meaning it's taken all renewal or partial with other players in them just not renewing it all is off the table just given the fact that you extended it by another month.

Debbie: Well again.

Debra A. Cafaro: Well, again, happy to give as many tea leaves and more as soon as we can. But I would say that, you know, we are in active discussions with Kindred and others. It's more likely that Kindred would be part of a solution going forward, but we're continuing to work on every alternative so that we can reach the goal, which, again, is optimizing value for Ventas shareholders and the NOI from these properties. So we're very focused, and we're very committed to it.

Debra A. Cafaro: Happy to give.

Debra A. Cafaro: Any tea leaves and more as soon as we can I would say that.

Debra A. Cafaro: We're in active discussions with kindred and others.

Debra A. Cafaro: It's.

Debra A. Cafaro: More likely that kindred would be part of the solution going forward, but we're continuing to keep.

Debra A. Cafaro: Working on every alternatives. So that we can reach the full which again is optimizing value for ventas shareholders.

Debra A. Cafaro: Otherwise from these properties. So we're very focused and we're very honest.

Speaker Change: Great. Thank you.

Debra A. Cafaro: Your next question comes from the line of Richard Anderson of <unk>.

Richard Charles Anderson: Your next question comes from the line of Richard Anderson of Wedbush Security.

Richard Charles Anderson: Wedbush Securities.

Richard Charles Anderson: Thanks, Good morning, everyone.

Richard Charles Anderson: Thanks. Good morning, everyone.

Richard Charles Anderson: So Jeff you talked a little bit about what you do with assets once you own them.

Justin: So, Justin, you talked a little bit about what you do with assets once you own them, price optimization, investing in the properties, and also perhaps transitioning to other operators that are proving themselves to be worthy. If you do a billion dollars, how much do you think will fall in the transition category? And would you be expecting any meaningful downtime, where you get the full benefit maybe not this year but a year from now?

Justin: This optimization investing in the properties.

Justin: And also.

Justin: Perhaps transitioning to other operators that are proving themselves to be worthy.

Justin: If you do a $1 billion how much do you think will fall in the transition category and would you be expecting any meaningful downtime, whereas you would get the full benefit maybe not this year, but a year from now.

Justin: Good question, so I'm going to step back and just talk a little bit about the approach. We take so obviously, we've talked a lot about markets and first step is always to make sure. We're entering the right markets to support upside opportunity in.

Justin: Good question. So I'm going to step back and just talk a little bit about the approach we take. So obviously, we've talked a lot about markets, and the first step is always to make sure we're entering, you know, the right market to support upside opportunity and affordability. And then from there, we focus on the particular asset; we're focused on need-driven, you know, assisted living and memory care. And a lot of the campuses also include independent living, high growth, need-driven product; then it's who's really in the best position to manage that.

Justin: And affordability.

Justin: And then from there we focus on that particular asset where focus on knee driven.

Justin: Living in memory care and a lot of the campuses also included independent living high growth need driven.

Justin: Correct.

Justin: <unk>, who is really in the best position to manage that.

Justin: And we make the decision, really not because we're trying to cause a delay; it's because we're trying to cause better performance sooner. So when we move a new manager in, that's our expectation. We've had very good results with transitions. However, there's always risk associated with a transition. Obviously, we have a lot of experience having transitioned well over 150 communities over the past few years, managing through that, and getting good outcomes, and it's going to come down to the decision really is going to be, putting ourselves in the best position to drive performance in that community.

Justin: And we make the decision really not because.

Justin: We're trying to cause a delay it's because we're trying to cause.

Justin: Better performance sooner.

Justin: So when we move a new manager and Thats, our expectation we've had very good results with transitions.

Justin: There's always risk associated with the transition obviously, we have a lot of experience having transitioned well over 150 communities over the past few years Matt.

Justin: Managing through that and getting good outcomes and so it's going to come down too.

Justin: The decision really is going to be.

Justin: Putting ourselves in the best position to drive performance in that community.

Justin: Okay.

Richard Charles Anderson: Okay. And then the second question, I think Bob, you mentioned, you know, a lot of what's been or everything that's been done so far has been funded with equity. Just on the back of the envelope, I'm looking at like an AFFO yield of about 6%. But then when you talked about dispositions, and I think you called it OMAR, which is a new one, with how much, how comparable are disposition cap rates to your equity costs, in your view? And how much of it comes out of OM, and how much comes out of R? Like, I'm curious. Yeah, it's a memorable acronym, OMAR, Outpatient Medical and Research.

Speaker Change: And then second question I think Bob you mentioned.

Richard Charles Anderson: A lot of what's been for everything Thats been done so far has been funded with equity.

Richard Charles Anderson: Back of the envelope I'm looking at like an <unk>.

Richard Charles Anderson: ASO yield of about 6%, but then when you talked about dispositions I think you called it Omar.

Richard Charles Anderson: As a new one.

Richard Charles Anderson: How much.

Richard Charles Anderson: Comparable are.

Richard Charles Anderson: Disposition cap rates to your equity cost and you're in your view and how much of it comes out of.

Richard Charles Anderson: And how much comes out of our lives.

Richard Charles Anderson: Yes.

Richard Charles Anderson: Yes.

Richard Charles Anderson: It's a memorable acronym Omar outpatient medical and research is correct.

Unknown Executive: The A is for Ann. Yeah, Ann, Omar, easier to remember.

Richard Charles Anderson: Yes.

Unknown Executive: Mark.

Unknown Executive: If you remember.

Unknown Executive: So the guide to Dispose of $300 million includes Omar, but it's also across asset classes, including senior housing and others. So I would say the blended cap rate is roughly mid-single digits on that, not dissimilar to the number you quoted. So again, as we think about reinvesting, maybe neutral in the short run, but again, upgrading the portfolio with the growth potential in the investments really created over time. So hence, capital recycling increases and other sorts of funds that we're very focused on.

Unknown Executive: So the fact that the guide of dispose of $300 million includes Omar.

Unknown Executive: But it is also across asset classes, including senior housing and others. So I would say the blended cap rate is roughly mid single digits on that not dissimilar to the number you quoted so again as we think about about reinvesting maybe neutral in the short run, but again upgrading the portfolio and with the growth potential.

Unknown Executive: And the investments really accretive over time, so hence capital recycling increases another source of funds.

Unknown Executive: Funds that were very focused on.

Richard Charles Anderson: Have you asked Omar's wife how she feels about this?

Unknown Executive: Have you asked homeowners wise, how she feels about this.

Richard Charles Anderson: Yes.

Richard Charles Anderson: I sent the headline in there somewhere, Rich, for you. Thank you. Your next question

Richard Charles Anderson: Yes.

Speaker Change: I think the headline in there somewhere risk for you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Richard Charles Anderson: Your next question comes from the line of Michael Mueller of Jpmorgan. Please go ahead.

Michael William Mueller: Your next question comes from the line of Michael Mueller of J.P. Morgan. Please go ahead. Yeah, hi. I was wondering...

Michael William Mueller: Yes, Hi, I was wondering can you give us some high level color on how the shop outlook varies maybe from the al to the <unk> segment.

Michael William Mueller: Yes sure.

Justin: Yeah, sure. So, you know, most of our NOI growth is coming from AL. We have, you know, that's going to be on the much higher end of the average, particularly in the U.S. So, you know, Illinois growth. Really, there'll be some growth and some contribution this year, but really more of a 2025 opportunity than we would see in terms of big contributions in the U.S. Occupancy trends have been excellent across our independent living portfolio.

Michael William Mueller: So.

Justin: Most of our NOI growth is coming from al.

Speaker Change: We have.

Justin: <unk>.

Justin: That's going to be on.

Justin: The much higher end of the average.

Justin: Particularly in the U S.

Justin: So.

Justin: The IL growth.

Justin: Really there'll be some growth in some contribution this year, but.

Justin: Really more of a 2025 opportunity that we say it in terms of big contributions in the U S.

Justin: Occupancy trends have been excellent across our independent living portfolio in the U S. I mentioned that we ran at a 127% of prior year move ins in the U S. In the first quarter in independent living.

Justin: In the U.S., I mentioned that we ran at 127% of prior year move-ins in the U.S. in the first quarter of independent living. We've had multiple months of occupancy growth. April looks good for independent living, and so there are good leading indicators in that portfolio that will ultimately drive the NOI, but AL is really leading the way right now in the U.S.

Justin: We've had multiple months of occupancy growth.

Justin: April looks good in independent living and so theres, good leading indicators in our portfolio.

Justin: That will ultimately drive the NOI, but.

Justin: But al is really leading the way right now in the U S.

Speaker Change: Got it thank you thank.

Speaker Change: Thank you.

Justin: Your next question comes from the line of Wes Golladay of Baird. Please go ahead.

Wes Calde: Your next question comes from the line of Wes Calde of Perd. Please go ahead. Hey, good morning, everyone. I just want to follow up on that last question regarding the IL, you know, picking up next year. Is that just more operating leverage kicking in next year? Yeah.

Wesley Keith Golladay: Hey, good morning, everyone I just wanted to follow up on that last question regarding the IL picking up next year is that just more so operating leverage kicking in next year.

Justin: Yeah, exactly. So IELTS is a high-margin business. It has relatively high fixed costs because you're not delivering care; you're offering more limited services. So the operating leverage is very, very high. And the higher the occupancy, the more you benefit from that. And we have a long runway in terms of occupancy upside. So we look forward to some continued growth there and then see how that plays out, you know, driving NOI moving forward. Okay, and I want to go back to that slide.

Wesley Keith Golladay: Yes, exactly so.

Justin: High margin business.

Justin: <unk> relatively high fixed costs.

Justin: Youre not delivering care, you're offering more limited services. So the operating Leverages very very high.

Justin: The higher the occupancy the more you benefit from that and we have a long runway ahead in terms of occupancy upside. So we look forward to some continued growth there and then see how that plays out driving NOI moving forward.

Speaker Change: Okay, and then want to go back to that slide you have about the $19 billion of loans how much of those loans do you think will have some issues on the refinancing front and has your view on the amount of distress changed over the last call. It six months on one hand, you have rates continue to grind higher within the recovery is also accelerating.

Speaker Change: Right I would say that.

Debra A. Cafaro: Right, I would say that there is a large percentage of those loans that have some difficulty in refinancing without additional equity contributions. The assets are good, the markets can be good, the growth can be good, but because LTVs are lower, and, as you say, rates are higher, and the NOIs, you know, many of them have not recovered to pre-COVID levels, or they were construction, newly constructed assets that really were delivered in COVID, and therefore aren't meeting their original pro formas.

Debra A. Cafaro: There are there is a large percentage of those loans.

Debra A. Cafaro: It has.

Debra A. Cafaro: Yes.

Debra A. Cafaro: Some difficulty in refinancing without additional equity contribution.

Debra A. Cafaro: Assets are good the markets can be good growth can be good, but because ltvs are lower and as you say rates are higher and the NOI.

Debra A. Cafaro: Many of them have not recovered to pre COVID-19 levels or they were construction newly constructed assets that really were delivered in COVID-19 and therefore arent meeting their original pro format.

Debra A. Cafaro: There's really good upside, but the refinancing math doesn't necessarily work without significant paydowns. And so those owners, which again, I think is a significant percentage of the 19 billion, either have to decide if they want to reach into their pocket and put more equity in, or if they can sell them for a reasonable value and just move on, whether that's really where they want to go. And that's really part of that opportunity. But, as Justin said, there are many other market forces that are pushing sellers to market, and that are creating the overall pipeline opportunity that we're seeing.

Debra A. Cafaro: There's really good upside, but the refinancing mass doesn't necessarily work without significant paydowns and so those owners, which again I think.

Debra A. Cafaro: Significant percentage of the $19 billion either has to decide if they want to reach in their pocket and put more equity in or if they can sell them for a reasonable value and just move on whether that's really where.

Debra A. Cafaro: Where they want to go and that's that's really part of that opportunity that as Justin said there are many other market forces that are pushing sellers to market and that are creating the overall pipeline opportunity that we're seeing.

Speaker Change: Thanks for the time everyone.

Speaker Change: Thank you.

Debra A. Cafaro: Your next question comes from the line of Michael <unk> of Green Street. Please go ahead.

Michael Lee Stroyeck: Your next question comes from the line of Michael Stroyeck of Green Street. Please go ahead.

Michael Lee Stroyeck: Thanks, and good morning.

Michael Lee Stroyeck: Thanks and good morning. Maybe one on the outpatient medical business, what drove the sequential occupancy decline during the quarter, whether it's in terms of tenant credit, asset quality, or anything you can provide? And then what were the consistent themes with those move outs, if any, compared with the recent tenant move outs we saw in the second half of last year?

Michael Lee Stroyeck: Maybe one on the outpatient medical business.

Michael Lee Stroyeck: Drove the sequential occupancy decline during the quarter, whether in terms of tenant credit and asset quality.

Michael Lee Stroyeck: Anything you can provide.

Michael Lee Stroyeck: And then.

Michael Lee Stroyeck: What were the consistent themes that those move outs, if any compared with our recent tenant tenant move outs, we saw second half of last year.

Michael Lee Stroyeck: Yes.

Speaker Change: Yes, yes.

Unknown Executive: Yeah, thanks for the question. You know, we're actually really happy with our leasing. In the first quarter, we did 900,000 square feet of leasing, 50% more than the prior year, which is terrific. And what I'm also happy to talk about is health system health is really coming back. If you look at the Kauffman Hall data, you know, the financials for the health systems are almost 40% higher than what they were a year ago.

Speaker Change: Yes, thanks for the question.

Unknown Executive: We're actually really happy with our leasing we've.

Unknown Executive: First quarter, we did 900000 square feet of leasing.

Unknown Executive: 50% more than prior year, which is terrific.

Unknown Executive: And what I'm also happy to talk about is health system Health is has really come back if you look at the <unk> data.

Unknown Executive: The financials for the health systems are.

Unknown Executive: Almost 40% higher than what they were a year ago. So they are back they are executing on their strategy and they're upgrading their facilities and converting non clinical space to political space.

Unknown Executive: So they're back, they're executing on their strategy, and they're upgrading their facilities and converting non-clinical space to clinical. Now, to your point about the 40 basis points. That equates to about 72,000 square feet of lost occupancy. I can tell you that...

Unknown Executive: Now to your point about the 40 basis points.

Unknown Executive: That equates to about 72000 square feet worth of lost occupancy I can tell you that.

Unknown Executive: Almost immediately, we released 55,000 square feet of that 72, and in many cases, it's essentially the same entity. I'll just give you two examples. One example is with a health system where an independent practice moved out, and the health system who's associated with that practice immediately leased the space back again. We have to build out the space, so occupancy goes down, but it's essentially been re-leased. Another example is a health system that had, on a particular floor, a bunch of small suites.

Unknown Executive: Almost immediately we re leased 55000 square feet of that 72 and in many cases is to essentially the same entity I'll just give you two examples one examples with a health system more than an independent practice moved out.

Unknown Executive: The health system, who is associated with that practice and newly leased this space back again, we have to build out the space. So occupancy goes down but it is essentially released. Another example is a health system had on a particular floor a bunch of small suites.

Unknown Executive: They wanted to just let all those go and release the space as one suite so they could have a larger, more efficient practice. So those types of things are going on. It's frictional vacancy. We're losing a little bit of occupancy as the health systems execute on their strategy. And then that'll result in better leasing, and better rents later in the year or next year.

Unknown Executive: They wanted to just let all those go.

Unknown Executive: And re lease the space is one suite.

Unknown Executive: Could have a larger a more efficient practice. So those types of things are going on as frictional vacancy, we're losing a little bit of occupancy as a health system's execute and execute on their strategy and then that will result in better leasing better rents later in the year or next year.

Speaker Change: Thank you.

Speaker Change: Okay. That's helpful.

Unknown Executive: Okay, that's helpful. Maybe a second question, if I may, going back to that IL versus AL discussion. So IL meaningfully outperformed in terms of occupancy gains during the quarter. Is that a reflection of just greater demand for the IL product or more attributable to an improvement in the operations of that Holiday by Atria portfolio?

Speaker Change: Maybe a second question, if I may going back to that IL versus al discussion.

Unknown Executive: Meaningfully outperformed in terms of occupancy gains during the quarter is that a reflection of just greater demand for the IL product are more attributable to an improvement in the operations of that holiday by atria portfolio.

Justin: Yeah, so we've definitely had, you know, good recent momentum in our independent living portfolio that includes, you know, some holiday communities, includes former holiday communities, and includes some of our existing, you know, mostly, most of our other ILs operated by our legacy atria within our legacy atria portfolio. So, you know, there's been an intense effort to work with our operators to ensure that we're getting the best performance within those communities, and that continues, and the whole playbook really has been used, everything from sales oversight insights, price volume optimization, CapEx investment, and then the operators just really executing, and so we're really happy to see the good results and look forward to.

Speaker Change: Yes, So we've had we definitely have had.

Justin: Good recent momentum and our independent living.

Justin: Portfolio that includes some holiday communities includes former holiday communities and includes some of our existing.

Justin: Mostly.

Justin: Most of our other ILS operated by our legacy Atria.

Justin: Within our legacy ATF portfolio. So there has been.

Justin: Intense.

Justin: To work with our operators to ensure that we're getting the best performance within those communities and that continues.

Justin: The whole playbook really has been used everything from.

Justin: Sales oversight insights price volume optimization Capex investment and then the operators just really executing.

Justin: So we're really happy to see.

Justin: Good results and look forward to more growth.

Speaker Change: Alright, so just to clarify it's pretty broad based.

Justin: All right, so just to clarify, it's pretty broad-based across the ILO portfolio. Yeah, it is broad-based across the ILO. Yeah. Great, thanks for the time.

Speaker Change: Across the portfolio it is broad based across yep.

Speaker Change: Yes, yes.

Speaker Change: Okay, great. Thanks for the time.

Speaker Change: Sure. Thanks.

Justin: Your next question comes from the line of Austin <unk> of Keybanc capital markets. Please go ahead.

Austin Todd Wurschmidt: Your next question comes from the line of Austin Wurschmidt of KeyBank Capital Market. Please go ahead.

Austin Todd Wurschmidt: Thanks. I just wanted to hit on REV4. You guys assumed, or affirmed, the REV4 growth for the year, which does imply acceleration similar to occupancy in the quarters ahead. Just kind of what gives you that confidence, and is that acceleration coming from primary markets that have kind of lagged the overall portfolio, or is it other buckets that are driving that improvement?

Austin Todd Wurschmidt: Great. Thanks, just wanted to hit on <unk> for you guys assumed affirmed excuse me the revpar growth for the year.

Austin Todd Wurschmidt: Which does imply acceleration similar to occupancy in the quarters ahead, just kind of what gives you that confidence in is that acceleration coming from primary markets that have kind of lagged the overall portfolio or or is it other buckets that are that are driving that improvement.

Speaker Change: Yes, one thing I just wanted to point out is when we gave the metrics that are supporting the shop guidance Youll notice a lot of told us.

Justin: You know, one thing I just want to point out is, you know, when we gave you the metrics that are supporting the SHOP guidance, you'll notice a lot of tildes. So, it's approximately 8% revenue, approximately 5% REV4, approximately 270, you know, of occupancy lift, and then we have an NOI range.

Justin: So there is approximately 8% revenue approximately 5% Rev for.

Justin: Approximately $2 70 of occupancy lift.

Justin: And so, we left a little room for movement amongst those metrics and see how the key selling season plays out. So, I don't think we're necessarily saying we're going from 4.7 to 5. We're just saying we expect to be around 5, which was consistent with what we saw in the first place.

Justin: And.

Justin: And then we have NOI range and so we left a little room for movement amongst those metrics and see how the key selling season plays out.

Justin: So I don't I don't think we're necessarily saying, we're going from four seven to five we're just saying we expect to be around 5%.

Justin: Which was consistent with what we saw in the first quarter.

Speaker Change: Got it that's helpful. And then just on the street rate growth broad based firm for overall same store portfolio I mean, given some of the leading indicators you pointed to.

Austin Todd Wurschmidt: Got it. That's helpful. And then just on street rate growth, you know, broad based, you know, for the overall same store portfolio, I mean, given some of the leading indicators you've pointed to showing strength, the occupancy acceleration, I mean, what would lead you to kind of lean into that and maybe kind of test the waters on pushing that a little harder if you continue to see the strength and the demand that you've seen now for the last couple of quarters?

Austin Todd Wurschmidt: <unk> showing strength the occupancy acceleration.

Austin Todd Wurschmidt: What would lead you to kind of lean into that and maybe kind of test the waters on pushing that a little harder. If you continue to see the strength in the demand that you've seen now for the last couple of quarters.

Justin: Yeah, so the part of the price volume optimization is really making sure we're priced right, and where there's more demand and in a market and opportunity to move with market pricing more aggressively, we do that. So there are certain markets and certain highly occupied communities that are attracting a higher street rate and higher move-in rate. So that's definitely part of the plan. Now, having said that, we have a lot of occupancy upside, and that's the big opportunity for us to continue to play in the demand-driven volume, balance it so that we're getting the best out of just total revenue growth and then drive NOI. Thank you, Austin.

Speaker Change: Yes, so the part of the price volume optimization is really making sure we're priced right and where there is more demand.

Justin: In a market an opportunity to move with market pricing more aggressively we do that.

Justin: So there are certain markets in certain highly occupied communities that are.

Justin: Attracting a higher street rate higher move in rate so.

Justin: Thats definitely part of the plan now having said that we have a lot of occupancy upside.

Justin: And Thats the big opportunity for US is to continue to play in the demand drive volume balance. It. So that we're getting the best out of out of just total revenue growth and then drive NOI.

Austin: Thank you I'll ask guidance I was just wondering does the guidance assume that that 7% kind of stays steady.

Austin Todd Wurschmidt: I was just going to say, does the guidance assume that that 7% kind of stays steady to your point about kind of the occupancy upside?

Austin: To your point on kind of the occupancy upside.

Austin: I mean, it's.

Justin: It's a year-over-year stat, you know, so I think you'll probably see a little bit of movement within the metric, but what we're expecting to see is growth in street rates, growth in moving rents, and growth in occupancy.

Austin Todd Wurschmidt: It's.

Speaker Change: It's a year over year stat, So I think you'll probably see a little bit of movement within the metric but.

Justin: We're expecting to see is growth in street rates growth in moving rents and growth in occupancy.

Speaker Change: Got it that's helpful. Thanks for the time that <unk> been <unk>.

Austin Todd Wurschmidt: Got it. That's all.

Austin Todd Wurschmidt: That's a good threesome, yes.

Austin Todd Wurschmidt: Yes.

Austin: Austin Thank you.

Debra A. Cafaro: That concludes our Q&A session. I will now turn the conference back over to Debra Cafaro, Chairman and CEO of Ventas, for closing remarks.

Austin Todd Wurschmidt: That concludes our Q&A session I will now turn the conference back over to Debra Cafaro, Chairman and CEO of <unk> for closing remarks.

Debra A. Cafaro: Great, great. I want to thank all my colleagues and also all of our shareholders, analysts, and the other participants today. We very much appreciate your attention and your interest in Ventas and look forward to seeing you soon.

Debra A. Cafaro: Great Great I want to thank all my colleagues and also all of our shareholders analysts and other participants today, we very much appreciate your attention and your interest in <unk> and look forward to seeing Houston.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

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

Operator: [music].

Operator: Okay.

Operator: No.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Thanks.