Q1 2025 Ventas Inc Earnings Call
Thank you for standing by my name is Amy and I will be your conference operator for today at this time I would like to welcome everyone to the Ventas first quarter 'twenty 25 earnings call. All participants have been placed in listen only mode. After the speaker's remarks, we will conduct a question and answer session.
And if you would like to join the queue to ask a question simply press star followed by the number one on your telephone keypad.
B.J. Grant: It is now my pleasure to turn the call over to B J Grant Senior Vice President of Investor Relations. Please begin.
Speaker Change: Thank you Amy and good morning, everyone and welcome to the Ventas first quarter 2025 results conference call.
Speaker Change: Yesterday, we issued our first quarter 2025 earnings release presentation materials and supplemental information package.
Speaker Change: Which are available on <unk> website at IR Dot Ventas REIT dotcom.
Speaker Change: As a reminder remarks today may include forward looking statements and other matters.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Certain non-GAAP financial measures will also be discussed on this call and for a reconciliation of these measures to the most closely comparable GAAP measures. Please refer to our supplemental information package posted on the Investor Relations website.
Speaker Change: And with that I'll turn the call over to Debra Cafaro, Chairman and CEO of Ventas.
Speaker Change: Thank you P J.
Speaker Change: I'd also like to welcome all of our shareholders and other participants to the Ventas first quarter 2025 earnings call today, we'll highlight our positive financial performance and growth are increasing and that's been activity and our advantage position capitalizing on the multi year NOI growth opportunity in senior housing.
Speaker Change: As we execute on our 123 strategy the value proposition for Ventas remains clear we are focused on delivering superior multiyear growth fueled by internal and external expansion in our senior housing business, which is benefiting from secular demographically driven demand.
Speaker Change: Catalyzed by our advantaged platform.
Speaker Change: We expect to be a top grower in the REIT space projecting 7% normalized <unk> per share growth 2025, we possess an atlas financial profile that is improving and we offer a 3% dividend yield that contributes to total return.
Speaker Change: Our strong first quarter results highlight our strength.
Speaker Change: And our favorable relative positioning across the broader real estate and corporate landscape.
Speaker Change: Dentists delivered 84 cents of normalized <unk> per share in the first quarter, an increase of approximately 8% powered by our senior housing operating portfolio.
Speaker Change: Shops, 14% year over year cash same store NOI growth resulted from meaningful increases in occupancy and rate.
Speaker Change: Compelling demand supply fundamentals have combined with our operational and portfolio initiatives to create an unprecedented expanded opportunity for us to generate multi year organic NOI growth.
Demand remains strong at the over 80 population is experiencing its highest ever gross and more residents and their families are choosing senior living for the benefits. It provides.
Speaker Change: The over 80 population is increasing by about half a million people this year and again next year.
Speaker Change: That number jumped to 900000, a year between 2027 and 2030.
Speaker Change: Meanwhile, on the supply side, the number of new senior housing units started in the first quarter of 2025 was the lowest on record.
Speaker Change: Only 1287 unit.
Speaker Change: Current supply constraints likely extended because of hard cost increases and labor scarcity, coupled with this step function in senior population growth creates strong and long tailwind for NOI and occupancy growth in senior housing.
Speaker Change: And our senior housing portfolio is positioned to capitalize on this unprecedented opportunity.
Speaker Change: Our communities are located in markets that exhibit over a thousand basis points of expected net absorption in the coming years.
Speaker Change: And resident affordability is outstanding.
Speaker Change: We also continue to increase our participation in this multiyear NOI growth opportunity by executing on our acquisition strategy focused on senior housing.
Speaker Change: Our investment momentum has continued into 2025 and we see compelling opportunities ahead.
Speaker Change: We have already closed most of our original billion dollar investment guidance and attractive senior housing communities and we are now increasing our full year volume expectations to a billion and a half dollars.
Speaker Change: These investments should enhance our future enterprise growth profile and our value for shareholders.
Speaker Change: Even more encouraging our pipeline is expanding as more sellers bring assets to market. Our skilled investment team has grown and we continue to leverage our data financial and relationship advantages to capture attractive opportunities.
Within senior housing, we are eager to deploy capital whenever we believe we can achieve compelling risk adjusted returns and create value.
Speaker Change: The balance of our portfolio led by our Lillibridge managed outpatient medical business continues to perform well.
Speaker Change: Outpatient medical delivered solid compounding grows and continues to benefit from outsized increases and the ovaries over 65 age group ongoing trends favoring lower cost care delivery settings, and our competitively advantaged lillibridge property management and leasing doesn't it.
Speaker Change: Finally, we are delivering on our commitment to financial strength and flexibility.
Speaker Change: Year to date, we've accelerated our progress on our credit profile, improving both our leverage and our liquidity.
Speaker Change: At this early stage of the year, we are pleased to reaffirm our normalized <unk> per share guidance of 7% growth and confirm our expectations that our shop business will represent over half of our NOI by year end.
Speaker Change: While acknowledging that the current macroeconomic backdrop presents a high degree of uncertainty.
Speaker Change: When you step back then pests occupies an enviable position in today's environment.
Speaker Change: Both sides of the senior housing demand supply imbalance are kept in our favor and those conditions should improve materially over an extended time horizon. We have the potential to continue to increase shop revenue from both rate and occupancy growth.
Speaker Change: Our business model has limited impacts from tariffs and global trade.
Speaker Change: We have access to attractively priced capital because that's excellent liquidity and a strong balance sheet and we are well positioned as a preferred acquirer, who will get more than our fair share of attractive investments.
Speaker Change: Coupled with our experience and platform, we're in an excellent position to outperform and as we've said the whole ventas team is in it to win it.
Justin: Justin I'm happy to turn the call over to you.
Justin: Thank you Debbie.
Justin: I'll provide updates on our first quarter senior housing performance and our investments.
Justin: I'm pleased that we delivered excellent results on both fronts.
Justin: I'm happy to report that shop delivered double digit NOI growth for the 11th consecutive quarter.
Justin: As we continue to execute through the <unk> platform, our efforts support real time community specific strategies that align with market demand and importantly are executed in partnership with our best in class operators.
Justin: Total shop same store cash NOI growth was 13, 6%.
Justin: Revenue growth was seven 4% led by occupancy and rate.
Justin: In terms of rate we.
Justin: We saw solid underlying pricing from internal rent increases, averaging 7% and very importantly street rates are trending favorably.
Justin: Expenses were roughly in line at 5% and.
Justin: And labor expenses were favorable.
Justin: Same store shop occupancy grew by 290 basis points led by the U S with occupancy growth of 330 basis points and NOI growth of 16%.
Justin: The U S also significantly outperformed Nic on both rate and occupancy year over year growth.
Justin: The incremental margin was about 50% for the first quarter driven by the operating leverage in the business as we grow occupancy.
Justin: Demand and move ins in the quarter were strong and year over year occupancy was very good.
Justin: However, we experienced some seasonality with elevated clinical move outs in March which causes our jumping off point for occupancy to be a bit lower than expected for the second quarter.
Justin: The sad part of our business and in fact life when people pass away.
Justin: It's also unpredictable.
Justin: That said per usual the key determinant of occupancy for the full year is the timing and slope of the key selling season, which starts today.
Justin: We are excited about the upcoming months as we expect strong move ins in the second quarter.
Justin: As we look at the balance of the year, we anticipate another excellent year of shop performance.
Justin: And we are reaffirming our same store full year guidance and our shop portfolio of cash NOI growth of 11% to 16%.
Justin: Now I'd like to highlight our approach enhancing our portfolio composition.
Justin: I've worked with my experience and very capable team through deliberate actions over time to ensure that we are located in the right markets right assets and with the right operators.
Justin: These deliberate actions all of which are underpinned by our <unk> data analytics platform include acquisitions dispositions conversions from triple net to shop transitioned to new operators.
Justin: Oh, I driven operational improvements.
Justin: Capex investments to improve our competitive position.
Justin: This journey to curate the portfolio has been well underway for a while however.
Justin: However.
Justin: All things considered equal the.
Justin: The best is yet to come.
Justin: Through our actions to date, our portfolio is positioned with significant embedded occupancy and NOI growth potential.
Justin: The design two thirds of the portfolio is in the low 80% occupancy with significant upside opportunity.
Justin: One example of how we are positioning the portfolio for future growth is our decision to convert 45 brookdale communities from Triple net to shop with new operators. Later. This year. These communities are performing really well year to date and offer significant upside.
Justin: We expect to double the NOI in these communities from approximately 50 million to 100 million plus over time.
Justin: The five operators, we have selected for the transitions are enthusiastic and highly engaged in the transition process.
Justin: We've also expanded our operator base from 10 to 33, enhancing our ability to grow in high demand markets. This includes a new shop relationship with an operator in the UK.
Justin: Growing our operator base is important since our 75% of senior housing operators manage fewer than 50 communities in what is a highly fragmented sector, adding.
Adding operator relationships is essential to obtaining scale and density in markets as well as expanding our relationship driven investment opportunity set.
Justin: Our community refresh program has progressed as planned we have completed over 250 community read that projects in the past two and a half years.
Justin: However, there is more work to be done with a 100 more projects expected to complete by year end strengthening our competitive positioning and setting the table for the opportunity to drive outsized NOI growth overtime.
Justin: As we look ahead.
Justin: Our enhanced portfolio of composition and provides a powerful foundation to capitalize on the historic demand growth unfolding in senior housing.
Justin: With a deep bench of high quality operators, a growing presence in the right markets and are well positioned asset base undergoing continual improvement.
Justin: We are strategically positioned to deliver strong sustainable performance.
Justin: Moving on to investments.
Justin: We continue to capitalize on our advantaged position as Vince has is a senior housing partner of choice with sellers brokers and the entire investment community.
Justin: We have continued to execute on our accelerating run of value, creating external growth focused on senior housing in the first quarter.
Justin: We've closed approximately 900 million in senior housing investments year to date and two 8 billion since the beginning of last year with most of that completed in the last six months. These.
Justin: These investments meet our key criteria of 7% to 8% expected year, one NOI yields low to mid teens, Unlevered IRR is accretive growth and pricing well below replacement costs.
Justin: The activity significantly expands our shop portfolio, adding 20 newer vintage communities across eight states, including 11 in high demand, Texas markets with strong net absorption potential and over 500 basis points of uncapped net demand over the next few years.
Justin: These communities offer a full continuum of care and are operated by six high quality managers, including three new operator relationships with strong local execution.
Justin: They are underwritten returns are attractive as we are expecting year, one NOI yields of around seven 2% on average and a 10 year unlevered IRR and low to mid teens.
Justin: We've also been encouraged by the initial post closing performance of the $1 8 billion in senior housing acquisitions closed in 2024.
Justin: Actual NOI is in line with underwriting at a blended yield of seven 7% in the first quarter of 2025.
Justin: Our investment pipeline is active and growing as we have now reviewed approximately $30 billion of senior housing senior housing investments.
Justin: Bid on $9 billion and closed on $2 8 billion all since the beginning of last year.
Justin: Approximately 75% of our close transactions were relationship driven and sourced off market.
Justin: We remain flexible and opportunistic pursuing a diverse set of senior housing investments across markets.
Justin: Asset types operators and return profiles, reflecting our strong pipeline, we are raising our full year investment guidance of $1 5 billion.
Justin: In summary.
Justin: We had a strong start to the year demonstrating.
Justin: Demonstrating solid execution across our senior housing platform.
Justin: We remain laser focused on advancing parts, one and two of our strategy.
Justin: First driving profitable organic growth by enhancing operating performance optimizing pricing and occupancy and leveraging our data driven <unk> platform and close collaboration with our high performing operators and.
Justin: And second capturing value through external growth with a targeted focus on high quality senior housing acquisitions that meet our strategic and financial criteria.
Justin: With favorable demand trends are well positioned portfolio and our.
Justin: Our robust investment pipeline, we are confident in our ability to create long term value and sustain our significant leadership position in the senior housing sector.
Justin: <unk>.
Thank you Justin I am pleased to report we're off to a strong start for the year.
Justin: I'll review, our first quarter performance discuss our reaffirmed 2025 guidance and close with our balance sheet liquidity and capital markets activities.
Justin: Starting with our overall enterprise performance.
Justin: We reported normalized <unk> of <unk> 84 per share.
Justin: Representing nearly 8% year over year growth.
Justin: Our total company same store cash NOI grew by 7%.
Justin: Led by sharp increasing approximately 14%.
Justin: Our outpatient medical and research business for Omar.
Justin: Reported same store cash NOI growth of one 3% year over year.
Justin: Adjusting for cash fees received in outpatient medical.
Speaker Change: Omar same store cash NOI increased by two 5% year over year.
Speaker Change: Outpatient medical grew by 3% adjusted for the aforementioned fees as fundamentals remain solid.
Speaker Change: Outpatient medical occupancy increased 30 basis points year over year.
Speaker Change: With first quarter, new leasing increasing 9% tenant retention a strong 85% in the quarter.
Speaker Change: Our research portfolio same store cash NOI contracted modestly year over year.
Speaker Change: This 200000 dollar reduction in NOI can be explained by 30 basis points of lower occupancy.
Speaker Change: Peter and team continue to see a solid research leasing pipeline, including from universities.
Speaker Change: We are reaffirming our full year Omar same store cash NOI guidance range of 2% to 3%.
Speaker Change: And that's a good segue to our updated 2025 full year outlook.
Speaker Change: After a good start to the year, we are reaffirming our previously issued guidance for full year 'twenty five including our earnings per share measures and property same store cash NOI ranges for each segment.
Speaker Change: As a reminder, our normalized <unk> midpoint of $3 41.
Speaker Change: Represents outstanding 7% year over year growth.
Speaker Change: And consistent with our communications in February.
Speaker Change: This increase continues to be led by sharp organic growth and accretive senior housing investment activity.
Speaker Change: Partially offset by higher net interest expense.
Speaker Change: <unk> and dilution from a higher share price.
Speaker Change: I would remind everyone that the all important senior housing key selling season begins in the second quarter and runs through September.
Speaker Change: We have updated our guidance for full year 2025 investments.
Speaker Change: Focused on senior housing from 1 billion to one 5 billion as a result of a growing pipeline of deals.
Speaker Change: We expect a $500 million increase in the investment guidance to close later in the year.
Speaker Change: So net net we expect the <unk> contribution of the incremental investment guidance to be minimal for 2025.
Speaker Change: We have already largely funded the increased investment guidance with $1 3 billion in aggregate equity raised.
Speaker Change: Together with $200 million of disposition activity.
Speaker Change: Previously included in guidance and expected to close in the second quarter.
Speaker Change: Our balance sheet continues to strengthen as a result of shop organic growth and equity funded senior housing investments.
Speaker Change: Our Q1 net debt to EBITDA of five seven times.
Speaker Change: It represents a 30 basis point sequential improvement from year end 2024.
Speaker Change: And a full turn reduction versus prior year first quarter.
Speaker Change: We expect further leverage improvement in the balance of the year driven by our senior housing growth engine.
Speaker Change: We also repaid nearly $1 billion of senior notes in the first quarter at a rate of approximately 3%.
Speaker Change: Utilizing the proactive senior notes, we issued in September last year at approximately 5%.
Speaker Change: Our liquidity position is robust with available liquidity of $3 $6 billion as of April 2025.
Speaker Change: This liquidity was bolstered in April by a $750 million increase in our revolving credit facility to $3 5 billion to support our growing enterprise.
Speaker Change: We had robust subscription from our bank group, which demonstrates the strong support of our platform.
Speaker Change: For additional 2025 guidance assumptions.
Speaker Change: Please refer to our Q1 supplemental and earnings presentation posted to our website.
Speaker Change: To close we're pleased with our start to 2025.
Speaker Change: The entire Ventas team is enthusiastic about the future and focused on delivering superior performance for our shareholders.
Speaker Change: And with that I'll turn the call back to the operator.
Speaker Change: Thank you.
Speaker Change: The floor is now open for questions. If you would like to ask a question. Please press star followed by the number one on your telephone keypad to join the queue.
Speaker Change: I would like to withdraw your question again simply press star and the number one.
Speaker Change: If you called if you are called upon to ask your question and our listening on loud speaker on your device. We ask that you. Please pickup your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: The first call or first question comes from the line of James Cameron with Evercore. Your line is now open.
James Cameron: Good morning, Thank you Justin always give great statistics on the shop update and I'm just curious what other color can you provide about sort of the dynamic when you get to 80 580 788 type of occupancy how that translates to margin.
Speaker Change: Expansion pardon me.
James Cameron: Hi, one of my favorite topics.
Speaker Change: So we are.
Speaker Change: In this period of growing occupancy and facing a period of significant more occupancy growth given the demand that Debbie outline that we've been seeing over the past few years and especially over the upcoming years.
Speaker Change: So this question starts to become more relevant to higher occupied to get.
Speaker Change: What we tend to focus on is simple rules of thumb.
Speaker Change: <unk>.
Speaker Change: Is that when you get to 90% occupancy and you look backwards.
Speaker Change: You should have achieved around a 50% incremental margin during that journey from 88% to 90% occupancy.
Speaker Change: Same when you get to a 100.
Speaker Change: When he is 100% occupied and you look backward to 98, Youll see about a 70% incremental margin.
The operating leverage in the business is what allows for this at a certain point you are fully staffed multiyear expenses are fixed you have some variability in expenses, which is why theres still some margin.
Speaker Change: But it's one of the powerful aspects of the business model and as we grow occupancy certainly occupancy in itself is a great opportunity that margin expansion is as well as occupancy growth.
Speaker Change: Thanks, and then the Genesis of the question is I just kind of looking at you provided very helpful. Information on page 11 of the supplemental regarding the Canadian portfolio and maybe that's a decent proxy maybe it isn't I don't know if operating dynamics are that different.
Speaker Change: You're able to extract still perhaps double digit NOI growth, we had 95% actually because you seem to be getting.
Speaker Change: 6% Revpar growth.
Speaker Change: I'll point, you have no more oxygen to Jane but is it still achievable then to hit double digit NOI growth from the portfolio at that time.
Speaker Change: Well so first of all we're really happy to have a very high quality high performing Canadian portfolio. It's been an excellent contributor to NOI growth for us even at high Occupancies around 97%.
Speaker Change: It's still been delivering its one of my favorite examples around <unk>.
Speaker Change: Paul being full in this sector.
Speaker Change: 90% or 92% and 95% occupancy youre.
Speaker Change: Youre not fully yet in Canada is demonstrating this to your point so they're at 97%. They are still growing occupancy we've had relatively good rate performance we've had.
Speaker Change: Good increases, but we've also in terms of rent increases, but we've also had mix impact is as our assisted living portfolio in Ontario has picked up occupancy growth and Thats helped revpar as well.
Speaker Change: At some point, it's probably not a double digit grower you know this is something that's probably more clearly in the single digits.
Speaker Change: But.
Speaker Change: It's been encouraging to see the performance in recent years, even at high Occupancies and Justin Kim.
Kim Thanks for noticing page 12 is a good new page for investors.
Speaker Change: And could you touch on really the <unk> portfolio, where we are.
Speaker Change: We have significant occupancy upside in the margin in NOI growth in that because thats really a lot of where your efforts are focused with the team.
Speaker Change: Yeah. So on page 12, you will notice. This is one of my other favorite favorite topics.
Speaker Change: Because it's been a lot of work in the making to get to this point we decided.
Speaker Change: I'll call it five years ago.
Speaker Change: When we got to this point, where we are at today, we need to be well positioned to capitalize on the demand that we're seeing in the marketplace. You can see it coming we looked at our portfolio and we started taking actions to make sure that we are in the right markets first of all.
Speaker Change: That would generate strong net absorption and strong affordability and to do that.
Speaker Change: We acquired 190 communities, we sold over 100 communities we've transitioned.
Speaker Change: Over well over 100 communities from the Triple net structure to the.
Speaker Change: The shaft structure and what that did is it's brought in communities that have lower absolute occupancy. So what this graph shows is that groups, 79% occupied the rest of the U S is 84% Canada. When you include everything because outside of same store, we have some lease up communities there as well as 95%.
Speaker Change: The big opportunity for occupancy growth is in the U S and the portfolio as I said in our prepared remarks at low occupancy low ADR occupancy is well positioned for a lot of occupancy upside, but it's also in markets that should deliver that opportunity and then when you layer on the actions we've taken through investments in the assets.
Speaker Change: Making sure we have the right operators in place to deliver the successful outcome, we feel really good about how well positioned we are.
Speaker Change: Thank you for all that information and get off the line. Thank you.
Jim: Thanks, Jim.
Speaker Change: Your next question comes from the line of John killed Celski.
Jim: From Wells Fargo. Your line is now open.
Speaker Change: Good morning, Thank you.
Jim: I would just like to talk about the investments that you've made this quarter and just kind of looking at the change.
Jim: This quarter versus last quarter, and I wanted to ask about basis. It looks like your cost per bed took a meaningful step up I am curious if that's to do with the competitive landscape or just where you are buying and then also if you could give color on what's replacement costs and the markets that youre buying and I'd like to know if you are.
Jim: Youre operating sort of pretty.
Jim: Steep discount or if we're starting to buy above that.
Justin Kim: Hi, it's Justin Thanks, Great question.
Justin Kim: When you look at the profile of what we buy you mentioned.
Justin Kim: Our unit numbers it was around about $2 70 last year $3 50, and this recent tranche of 900 million. So there is a step up in the per unit values. A couple of drivers behind that one of them is that they are newer communities.
Justin Kim: <unk> had newer vintage communities that we bought in this tranche around seven years on average.
Justin Kim: Inherent in doing so youre going to spend more on a per unit basis.
Justin Kim: They also happen to be in.
Justin Kim: As good as the markets were that we entered last year. These are even better. So we have stronger affordability, we have better.
Justin Kim: Net absorption and uncapped net demand I mean, it's a 1000 basis points of net absorption uncapped demand of 500 basis points.
Justin Kim: They are in markets.
Justin Kim: That have.
Justin Kim: Those characteristics and then we also added some very high quality operators. So the quality of the portfolio I would say is a step up.
Justin Kim: Combined portfolio is going to deliver excellent outcomes for us.
Justin Kim: One other.
Justin Kim: The thing that you noted that I'll note is that there is clearly some cap rate compression because we were reporting year one.
Justin Kim: Yields of seven seven last year in fact, I mentioned in my remarks, we're realizing that as well.
Justin Kim: This year, we're pointing to a seven so there's compression.
Justin Kim: Having said that we're still investing within the range. So the weighted average obviously is it into the lower <unk>, but we're still seeing opportunities that are up towards eight.
Justin Kim: So it's a little bit of both in terms of replacement costs, we're still buying below replacement cost at a significant discount to replacement cost even at $3 50 a unit.
Speaker Change: Yeah, and as we as we've discussed the replacement cost is rising for a host of reasons, including hard cost inflation labor scarcity and so.
Speaker Change: And most of these cases, you would expect the replacement cost to start with the four.
Speaker Change: And.
So we're still bullish that buying.
Speaker Change: At a significant discount to that.
Speaker Change: With Unlevered return expectations in the low to mid teens, which obviously is important when we're looking at the risk reward proposition for these investments.
Speaker Change: Alright very helpful. Thank you adjusted just to confirm you said a seven two is roughly the number youre looking at for the entire one five guide or by Mr. Ensure that that's the 900 million that we close sorry. Other 900, okay. Thank you.
Speaker Change: You bet.
Speaker Change: Yes.
Speaker Change: Okay. Thank you. Your next question comes from the line of Michael Carroll with RBC capital markets. Your line is now open.
Michael Carroll: Yes, Thanks, Justin can you give us some more color on the performance of the Brookdale assets.
Speaker Change: Tom is going to be taking over or at least transitioning to the seniors housing operating portfolio.
Speaker Change: No I think youre prepared remarks, saying that the EBITDAR is around $50 million I believe last time in the update was in the mid fifties. So has that changed or should we expect that to change.
Speaker Change: When you start to transition those assets when that occurs.
Speaker Change: Yes so.
Speaker Change: I am probably going to hesitate to give you the exact number but we'll give you we'll update that when we get to the period of actually transitioning.
Speaker Change: But what I'm encouraged about is a couple of things first of all these are communities that are in transition. So there's always a heightened awareness of that and extra focus that we've put on our communities when thats happening.
Speaker Change: The 45 communities that are transitioning to new shop operators are actually outperforming.
Speaker Change: The leased assets that are staying behind in the lease.
Speaker Change: Thanks.
Speaker Change: Ali.
Speaker Change: Supportive of the decision we made but also just our encouragement around where they should be performing when we actually make the transition.
Speaker Change: A couple of things about that so we've been on the ground quite a bit in these communities. We've been engaged with the five new operators that are taking them on they have been in communities as well.
Speaker Change: I've visited several of these.
Speaker Change: And the theme is pretty consistent with exactly what we expected which is.
Speaker Change: When you have a <unk>.
Speaker Change: These communities very high quality communities that are located in <unk>.
Speaker Change: Great markets.
Speaker Change: But can benefit from some additional focus and especially investment into the asset to be competitively better positioned there is a lot of excitement around the ground when you tell that story.
Speaker Change: So it's been really fun to be interacting with the teams and laying out the game plan for when these transition later this year.
Speaker Change: Do you think it's notable to point out that they're outperforming the rest of the.
Speaker Change: The rest of the current portfolio that we have with Brookdale.
Speaker Change: And I know with most transitions usually there is a period of disruption where you could see EBITDAR dip lower as youre kind of moving in the new team.
Speaker Change: I mean should we expect that to happen with these specific assets or is it going to be more seamless than the historical examples.
Speaker Change: Well, it's a wait and see.
Speaker Change: But I can tell you that we have through.
Speaker Change: The number of well, let's see we've had almost 200 communities that have transitioned to new operators and our experience over the past several years and that experience, particularly in this circumstance where you have a.
Speaker Change: A community Thats performing behind market and will benefit from the new investment we've seen good growth opportunity, whether or not theres a little disruption in the period of transition we have seen growth to follow I'm going to give you. An example of this.
Speaker Change: We actually have a case study on that same page that Debbie highlighted page 12, we had 41 transitions that we completed in 2023. It was mostly independent living communities. Those communities are now in our same store pool as.
Speaker Change: So in the first quarter, we were able to report on year over year results and those results have been 820 basis points of occupancy growth.
Speaker Change: Outperform where we're located in the next top 99 markets, we've outperformed by 480 basis points and year over year NOI growth has been 40%.
Speaker Change: So when we look at the Brookdale opportunity, we have a lot of confidence in our ability to execute and we will do everything we can to try to mitigate any potential disruption.
Speaker Change: But of course disruption can be inherent in transitions, but the results that we've been realizing through our experience has been really good.
Speaker Change: Okay, great. Thank you.
Speaker Change: You bet.
Speaker Change: Your next question comes from the line of Vikram Malhotra with.
Speaker Change: Mizuho Your line is now open.
Vikram Malhotra: Morning, Thanks for taking the question just and I guess I wanted to dig in a bit more into the March comments, you made about sort of move outs I know it's unfortunate.
Vikram Malhotra: Is that you do like flu or some specific properties.
Vikram Malhotra: And has that trend continued into April.
Vikram Malhotra: Hi, Vikram.
Vikram Malhotra: It's ironic youre asking this question because we added we added an air accident in the last earnings call. It around this topic of seasonality.
Vikram Malhotra: And when we talked about it last time I was mentioning that.
Although there's been some periods, where we've had counter seasonal results.
Vikram Malhotra: Theres always the opportunity to experience seasonality and what I had in my mind at the time.
Vikram Malhotra: Was the flu season around the U S was elevated.
Vikram Malhotra: Interestingly there is no correlation.
Vikram Malhotra: These clinical move outs and the flu season and in fact, it's uncorrelated to any specific trend whatsoever.
Vikram Malhotra: It just happened.
Vikram Malhotra: And.
Vikram Malhotra: It's important that that our investors understand that our move in activity is very good.
Vikram Malhotra: It's in line with last year, which is one of our best years ever.
Vikram Malhotra: Tour activity move in activity that we anticipate in the key selling season should be very strong.
Vikram Malhotra: This was a move out issue and is entirely driven by these clinical move outs, which are unfortunate and it's a sad part of the business.
Vikram Malhotra: And they are unpredictable.
Vikram Malhotra: Really the color I have on it.
Speaker Change: No no it makes sense and you're absolutely right I did ask you. The question I think and you had said that you baked in normal seasonality into the guide. So this is obviously in line with.
Vikram Malhotra: With what you said.
Vikram Malhotra: Just maybe on the pricing side.
Vikram Malhotra: Your full year still is four and a half you had really good bumps.
Vikram Malhotra: And you've kept that intact. So does that essentially suggest pricing powers sort of accelerates through the year on a year over year basis then.
Vikram Malhotra: You mind sort of giving us the view between Canada and the U S. Thanks.
Vikram Malhotra: Sure so.
Pricing like I said in my prepared remarks has been really good supported by installed rent increases are supported by our.
Vikram Malhotra: Our street rate growth as well.
Vikram Malhotra: In fact, when you adjust for the leap year.
Vikram Malhotra: Which is a simple calculation you just add the calculation for Revpar as revenue divided by occupied units you just.
Vikram Malhotra: Add a step and divide by days.
Vikram Malhotra: Which is important if you want to get to a good comparison when there is a leap year, because we do have one operator that actually builds on a daily basis.
Vikram Malhotra: So that number when you when you run that calculation is around 5%, so good pricing year over year and leap year adjusted basis around 5%.
Vikram Malhotra: We're off to a strong start.
Vikram Malhotra: No.
Vikram Malhotra: That's the rest of the year remains to be seen we have a lot of the year left to play out and it's in what's typically a good.
Vikram Malhotra: Very good.
Vikram Malhotra: The strongest demand season for us in the key selling season.
Vikram Malhotra: And then Canada you mentioned two so Canada has had good good pricing opportunity as well and we've had.
Vikram Malhotra: In Quebec, we've had a little bit more opportunity to pass along rent increases because.
Vikram Malhotra: The regulatory body that oversees that has lightened up.
Vikram Malhotra: The restrictions there, which has helped us to past expenses through which were which are always part of the <unk>.
Vikram Malhotra: Part of the operation every year, Ontario has always been a little bit better it's been a lot better for us though in recent years because of the lease up we've had in our assisted living portfolio, which has higher price points. So we're getting a mix impact as well.
Vikram Malhotra: But good pricing power and opportunity really across the board.
Speaker Change: Alright. Thank you. Your next question comes from the line of Jeff Spector with Bank of America. Your line is now open.
Jeff Spector: Great. Thank you.
Speaker Change: Debbie in your initial comments you did talk about the high degree of macro uncertainty I guess, but you guys have also discussed.
Jeff Spector: The.
Jeff Spector: Strong move in tour activity it sounds like.
Jeff Spector: Through April.
Jeff Spector: Can you just walk us through a bit.
Jeff Spector: This this leasing season and the importance of let's say housing or anything else, we should be watching.
Jeff Spector: As risk to the coming months.
Jeff Spector: To increasing that occupancy in senior housing. Thank you.
Jeff Spector: Yes, Hi, Jeff. So yes, there is a lot of macro uncertainty, we all know that but what we believe at Ventas is that senior housing is one of the if not the top asset class within real estate and Theres a lot of reasons for that is you mentioned that demographic demand is.
Jeff Spector: Extremely powerful.
Jeff Spector: Apply picture is as muted as it could be and if it's three years start to finish and you're seeing increased cost to build.
Jeff Spector: And you have a step function in the senior population growth starting in 2027, you can see why these strong tailwind should benefit us.
Jeff Spector: For a very extended period of time, and so we feel really good about that.
Jeff Spector: In terms of the demand at the doorstep as Justin likes to say we are seeing.
Jeff Spector: Strong demand and we this is the key selling season and so we have good expectations for strong activity in.
Jeff Spector: In terms of the housing market. There is modest correlation in the housing market actually just saw a big jump in pending home sales most seniors don't have mortgages on their homes and our residents you know when you think about that over 75 population.
Jeff Spector: The average net worth of those households is 1 million six so we continue to have good affordability and I said it was excellent. So all of these trends really combine to give us a lot of optimism about this extended multiyear NOI growth opportunity and senior housing that Justin and Nick.
Speaker Change: <unk> in collaboration with the operators is really focused on delivering.
Speaker Change: Great. Thank you and then clearly the focus is on senior housing.
Speaker Change: Can you talk a little bit more about the strategy around the research portfolio. Thank you.
Speaker Change: Yes, I mean, our 123 strategy is really focused on senior housing with this first of course being driving our organic growth the second being expanding our participation and elevating our growth rate by investing in senior housing and then the third is to maximize.
Speaker Change: Performance in the rest of the portfolio.
Speaker Change: Outpatient medical is at about 20% of that business and of our business and it is going to go.
Speaker Change: <unk> strong continuing to deliver that compounding growth.
Speaker Change: Research is the smallest it's a single digit kind of NOI contribution all in and our strategy is really what what number three years, which is to maximize the NOI opportunity there and what I would just leave you with on that is that we've built this life science portfolio differently.
Speaker Change: That is it said.
Speaker Change: Three quarters of the tenants are credit tenants and we have a nine to 10 year Walt.
Speaker Change: And so that.
Speaker Change: That portfolio really was was built to be steady and stable even during more challenging times.
Speaker Change: And so we feel we feel good about that even though that segment certainly has some challenges right now.
Speaker Change: So our strategy is to maximize NOI.
Speaker Change: It's a credit business and Pete and the team are are going about doing that.
Speaker Change: Okay. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Richard Anderson with Wedbush Your.
Speaker Change: Your line is now open thanks good morning.
Justin you talked about the Brookdale transitions right.
Speaker Change: The assets outperforming those that are staying behind in the net lease model.
Speaker Change: I guess the question is is how much money are you, leaving on the table. There did you foresee that.
Speaker Change: Delta when you made the deal with them and.
Speaker Change: Just curious.
Speaker Change: No.
Speaker Change: If you just sort of done everything all of that as opposed to summit, leaving something behind with Brookdale, if that would've been the better option.
Speaker Change: Okay.
Speaker Change: Hey, Rich you broke up.
Speaker Change: Let me go through I think.
Speaker Change: Scale I'll use my next one we'll take that offline, but I think it's fair to say that the the entire brookdale portfolio is generally improving in performance.
Speaker Change: We like to have 45 assets that were moving to shop and the remaining are also performing well in the way that we're improving NOI in that remaining lease is through a significant rent increase on lease renewal.
Speaker Change: Hey, Ryan.
Ryan: Question can you hear me now because it because you broke up offline. Thank you okay.
Speaker Change: Yeah.
Speaker Change: Alright. Your next question comes from the line of OMA Tayo Okusanya with Deutsche Bank. Your line is now open.
Speaker Change: Yes, good morning, everyone.
Speaker Change: So I guess focusing on shop would be clearly with the way the sockets before business morning, I think.
Speaker Change: Some concern just around same store NOI growth kind of slowing this quarter relative to the 15% plus is kind of been putting up.
Speaker Change: I don't know, whether you can kind of talk to that whether they will get some idiosyncrasies with this quarter. I think you had kind of mentioned some move out activity in March.
Speaker Change: Kind of going forward, how once you kind of think about.
Speaker Change: We're hitting it at the lower or higher end of your 11% to 16% full year guidance.
Rob: Yeah, Tyler, it's Rob I'll take that one so we're pleased with the first quarter 14%.
Rob: Very good start in fact above our expectation internally.
Rob: And that was really that was revpar that was labor. So a good a good start there.
Rob: And we've highlighted multiple times, so far that in terms of phasing, we expect the second half on a year over year basis to.
Rob: To be higher than the first half.
Rob: And as always beat the drum here, it's the key selling season that is that is the determinant of that so from where we sit strong start ahead.
Rob: Ahead of expectation in the quarter and the phasing consistent with what we've been saying.
Speaker Change: Okay, I guess the pushback is even if it does kind of take a look at seasonally in <unk> 'twenty for you were kind of above your current same store NOI growth and I don't know whether its.
Speaker Change: So it's harder to get year over year occupancy gains I guess I'm, just trying to figure it out of.
Speaker Change: Getting people comfortable with the idea that the higher end is achievable.
Speaker Change: Yeah.
Speaker Change: Alright, let me.
Speaker Change: Address that as Justin so.
Speaker Change: Yes.
Speaker Change: As we look ahead like I was saying we have.
Speaker Change: Significant occupancy upside in the portfolio there are various things that impact performance of different times I remember last year, we had agency coming out of the system that was benefiting expenses and so that gave us an opportunity for outsized performance what.
Speaker Change: What we have happening now and I was trying to articulate earlier is a lot of action that's underway, but the best is yet to come so we have a strong conviction around the growth opportunity.
Speaker Change: I said, we have 100 more projects that we're refreshing this year that are underway.
Speaker Change: All these new operators that we've added a lot of which.
Speaker Change: They are coming through acquisitions, others that we're bringing in through transitions over time that we've done there.
Speaker Change: Theyre fine Theyre sea legs, and so and we're never.
Speaker Change: Ever staffing focusing on trying to improve performance I mean this is this will be a continuous improvement and performance opportunity my team's fixated on that so we're not ready to say we haven't seen the that we've already seen the best we're going to see I mean, we're just now also getting into the strongest period of demand at the <unk>.
Speaker Change: Sectors ever seen by a long shot so.
Speaker Change: So I think the best is hopefully that all things considered equal the vessels yet to come.
Speaker Change: Alright I appreciate those.
Speaker Change: Those comments from me ask one more just on the on the life Sciences.
Speaker Change: Part of the business again, Debbie just with this potential change in NIH funding.
Speaker Change: The indirect cost of asks from the federal government and get capped at 15%.
Speaker Change: Taking a look at just how high that number has been at all the universities you involved in on whether that could become a real issue going forward.
Speaker Change: Thanks Tayo, yes.
Speaker Change: We do business with the leading biomedical research institutions in the country and you know we have a detailed understanding of the so called indirect costs.
Speaker Change: I would tell you that.
Speaker Change: First of all the proposal that the administration put forward is on hold until it has not been pushed through.
Speaker Change: If it were to be pushed through.
Speaker Change: There would be.
Speaker Change: And impact that would be.
Speaker Change: On average maybe a mid single digit impact to the overall.
Speaker Change: Research budget for most of the leading universities.
Speaker Change: And.
Speaker Change: That is manageable in light of the double a credit rating that we have in our portfolio for the university tenant as well as the nine to 10 year Walt.
Speaker Change: These are juggernauts.
Speaker Change: Thank you Tayo.
Speaker Change: Thank you. Your next question comes from the line of one Santa Maria with.
Speaker Change: BMO capital markets. Your line is now open.
Speaker Change: Hi.
Speaker Change: Just on the acquisition front, given the 500 incremental that's added to the guidance that you said is back half loaded is there the expectation or should we be thinking that there is maybe.
Speaker Change: Maybe a temporary pause until deals.
Speaker Change: Our reloaded.
Speaker Change: Is that fair to kind of assume just given the timing of your guidance or is there other stuff that could fill the interim that could happen pretty quickly here.
Justin Kim: Hi, it's Justin so.
Speaker Change: Yeah.
Speaker Change: Just stepping back for a minute one thing I highlighted in my prepared remarks intentionally was the amount of the $2 8 billion that we've done most of that over the past year.
Speaker Change: Being in last year.
Speaker Change: Happened over the last six months and so we've had this acceleration of investment activity.
Speaker Change: We.
Speaker Change: Add another $500 million.
Speaker Change: Good line of sight on the 500 million, we have a pipeline that is much bigger than that so we're going to keep working at finding opportunities within the pipeline and some that are maybe not there yet.
Speaker Change: That have.
Speaker Change: Criteria that we like which is.
Speaker Change: Yes.
Speaker Change: First and foremost.
Speaker Change: An asset that will deliver strong IRR.
Speaker Change: Low to mid teen Unlevered IRR is.
Speaker Change: We're flexible with the.
Speaker Change: With the type of assets. We're looking forward. We're looking for good combination of high quality strong market growth. That's all completely continuing one it can be lumpy.
Speaker Change: Yes.
Speaker Change: You have a period of time, where.
Speaker Change: You know you are working.
Access a deal and then you work to close close the deals and so there can be lumpiness in terms of when you actually deliver.
Speaker Change: To close and I think that's the point, we're trying to make.
Speaker Change: Just if I could ask a follow up on the shop in the our clinical move outs.
Speaker Change: You've noticed noted a kind of a lower endpoint or starting point for the second quarter would you guys be able to or can you provide the march 31st year over year figure or what the occupancy was for the same store pool. Just so we can calibrate and kind of fully take into account that debt.
Speaker Change: Yes.
Speaker Change: So I want to make the first point, which is move ins strong first quarter expected to be strong second quarter.
Speaker Change: We were 290 year over year first quarter, we reaffirmed $2 70 full year balance of the year.
Speaker Change: Clearly the jumping off point or start point of the second quarter is lower because of the mortality.
Speaker Change: That Justin mentioned and clearly in reaffirming the guide if you just do the math balance of the year, it's below that 290 number.
Speaker Change: But I think it's.
Speaker Change: Right to say, we Shouldnt look at spot numbers, we should look at trends, we should look at the year.
Speaker Change: And really focus on the on the move into the key selling season, which is right in front of us. So that's how we think about it.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Seth grocery with Citi. Your line is now open.
Seth grocery: Hi, guys. Thanks for taking my question.
Speaker Change: Kind of going back to the yields is there any thought about acquiring more titles for a plus assets versus.
Seth grocery: The newer.
Seth grocery: May be better positioned in the market assets, where you can leverage that then toss that firm.
Seth grocery: Work of operators and <unk> to kind of drive a higher yield.
Debbie: Uh-huh Hi, Seth it's Debbie.
Speaker Change: Definitely confirms that we are.
Debbie: Eager to deploy capital.
Speaker Change: When.
Speaker Change: The acquisition or investment opportunity provides good risk adjusted return.
Speaker Change: When it provides that kind of low to mid teens.
Speaker Change: <unk> IRR is that we're looking for which is which is paramount when we can buy below replacement cost.
Speaker Change: And our aperture for investments is.
Speaker Change: Pretty broad based and we certainly will consider different types of profiles to get to that unlevered IRR, they could be lower occupied higher occupied but it's all about the risk adjusted return that we see in the asset and the replacement cost.
Speaker Change: That's really where our investment team is focused.
Speaker Change: Great. Thanks.
Your next question comes from the line of Austin, <unk> with Keybanc capital markets. Your line is now open.
Speaker Change: Great, Thanks, and Hello, everybody.
Speaker Change: You hit a little bit on my first question, which was going to be that the comment you had previously made about expecting same store growth in senior housing to be better in the second half versus the first half can you just give us what the biggest drivers of that improvement is because clearly you alluded to occupancy being lower so is it revpar growth re accelerating versus the first half of the year.
Speaker Change: Is it something on the expense side, that's driving that reacceleration or just changes to the same store pool, just any color you can shed on that thanks.
Speaker Change: Well I would really point to what we saw in the first quarter, so far and kind of.
Speaker Change: The balancing items, obviously the demand was strong in the form of move ins.
Speaker Change: And the key selling season is the vast majority of the full year move in so that's.
Speaker Change: That's 0.1 as you go down through the P&L, We mentioned Revpar was was favorable.
Speaker Change: In the first quarter, both both in terms of in place and street, both performing well.
Speaker Change: I'd highlight on the on the Opex, which we really haven't talked about 5% on opex in the first quarter year over year in line with our full year guide when you unpack that and we gave this in the in the deck you can see labor versus non labor.
Speaker Change: <unk> trending quite favorably.
Speaker Change: That's very encouraging and.
Speaker Change: And so as we look at it the composition of it you know that first quarter as is.
Speaker Change: It is encouraging and I'm going to be.
Speaker Change: Going back to the key selling season, but that's what we saw so far.
Speaker Change: Okay.
Speaker Change: Got it and then Justin maybe what do you attribute to the re acceleration in Revpar growth.
Speaker Change: Keep your adjusted basic basis is it more mix related to the assets, where youre growing occupancy or is it more a function of the street rate growth you guys have highlighted a few times.
Justin Kim: Yes, so we have a very deliberate effort through our <unk> platform and the team that delivers those insights to our operators to focus on price volume optimization.
Justin Kim: And in doing so we're looking for quite frankly, just to be priced right. We all set pricing, but we give guidance in terms of where we think the opportunity is to either obtain.
Justin Kim: Obtain price or to deliver.
Justin Kim: Occupancy growth and through those efforts we're seeing.
Justin Kim: Encouragingly.
Justin Kim: Moving rents have been.
Justin Kim: Stronger than we've seen in recent years, so were starting to see a pickup from a street rates slash moving rent standpoint, we had 7% internal rent increases and I always like to remind everyone Debby, especially does too that we still have relatively low occupancy.
Justin Kim: We're having good price opportunity even in occupancy.
Justin Kim: Around 84% in the U S. Canada has also benefited from those trends, but its also benefited from the mix shift as well, but the U S. As is more around the deliberate actions that that our operators have taken with some insights from us as well.
Justin Kim: To deliver better pricing.
Speaker Change: Thank you. Your next question comes from the line of Michael Australia with Green Street. Your line is now open.
Michael Australia: Thanks, and good morning, maybe going back to the research segment can you just remind us how much of the tenant base is in the traditional biotech sectors.
Speaker Change: What's the average wall is.
Specifically on those leases.
Speaker Change: I'm going to turn it over to my colleague peak for a second but again, 75% of that single digit NOI that we get kind of all in from research is credit tenants with.
While it's between nine and 10% so in some senses, Michael it's the inverse of that but I'll turn it over to Peter.
Speaker Change: Provide more specifics.
Sure, Yes, so as Debbie said.
Speaker Change: Three quarters that tenants are investment grade.
Speaker Change: And 50% are universities with that double a rating. So it's really strong tenancy very different the most and just to give you a perspective.
Speaker Change: Sure we have about 6 million square feet of space in the research portfolio and only a 148000 square feet.
Speaker Change: Or in the three most stress cities, which is San Francisco, Cambridge, and San Diego. So, it's a very different portfolio portfolio thats been built having said that.
Speaker Change: About the remaining 25% is a mix of retail.
Speaker Change: <unk>.
Speaker Change: Flexible innovation space, and so forth and about half of that are revenue generating you know they are they're kind of passed their inflection points. So we think about roughly 12% of our portfolio as is.
Speaker Change: One of the earlier stage biotech or innovation flex space and lease terms for those are typically for the for the innovation space as those are 10 years plus and for the.
Speaker Change: The pre revenue biotechs. They are usually five to seven years and Michael One final point on this I mean.
Speaker Change: I believe Bob mentioned, it but we are continuing to see really good institutional demand.
Speaker Change: For the portfolio and that really runs across.
Speaker Change: Our highly rated University users medical research and medical users.
Speaker Change: Some of our some of our non cluster markets, which has basically no new supply.
Speaker Change: So that when I mentioned that these organizations are juggernauts nave that 50 to 100 year plan and we really are.
Speaker Change: In a good position because we're seeing very current.
Speaker Change: <unk> leasing active activity in other interest from these institutional users in the portfolio and we're trying to take.
Speaker Change: To capitalize on that so then the near term on those users continues to show.
Speaker Change: Good activity and interest.
Speaker Change: Got it that's helpful. Maybe just sticking with that point then.
Speaker Change: Or do you expect occupancy to trend over the next 12 months within the research portfolio.
Speaker Change: Well again right now, we're reaffirming that Omar same store cash NOI growth of 2% to 3%.
Speaker Change:
Speaker Change: Okay.
Speaker Change: I would I would highlight in the total research portfolio that we have a number of the assets up in redevelopment mode, notably in Philly.
Speaker Change: Which is having an impact on occupancy but.
Speaker Change: We believe that those redevelopment is going to be value, creating and so that's a it's a timing issue.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The next question comes from the line of Ron Camden with Morgan Stanley. Your line is now open.
Ron Camden: Great Hey, just two quick ones for me.
Speaker Change: Clearly the conversion is really jump out and the success that you've had I think I asked this last quarter as well, but as youre sort of re looking at the energy portfolio.
Speaker Change: As there are ways to creatively create more conversion opportunities just can you talk us through just.
Speaker Change: The puts and takes there because it would seem like financially it would make a lot of sense to do more.
Justin Kim: Yes, hi, it's Justin So we certainly have put a lot of energy into that given the number of conversions we've had.
Speaker Change: We've talked about Brookdale when we haven't talked about yet is the UK I mentioned in the prepared remarks that we have a new operator and that came by way of of converting triple net to shop.
Speaker Change: There's 11, London area in Southeast, England area care homes that were in a triple net portfolio. There now shop. They are operated by CCG.
Speaker Change: Who is an operator, who has who is known for turnaround readout.
Speaker Change: They have grown their enterprise to 100 locations across England, Scotland. So we have that right operator, we're in some markets that I'm, particularly excited about.
Speaker Change: One is.
Speaker Change: Right in between Walton on terms enrichment on terms and if you know that that part of the of England, you might know Hampton Palace, which is a great place to visit smiles stomping ground.
Speaker Change: Our location is right near the river, Great campus, very well run care home.
Speaker Change: That has particularly very strong price and occupancy opportunity with investment.
Speaker Change: So with the right operator, and with the right investment and as a community Im really excited about that and several of the other locations.
Speaker Change: And I'm also excited to have a shop portfolio in the UK now so we can.
Speaker Change: Can lean in a little bit over time into that market, which also has very strong fundamentals having.
Speaker Change: Having said that.
Speaker Change: The U S remains our are our first and foremost priority and we have tremendous opportunity in the U S. But we do keep looking for opportunities to convert from triple net to shop and that's the most recent example.
Speaker Change: Great helpful. And then I just wanted to go back to the acquisition slide in question.
Speaker Change: I think the slide makes it looks like cap rates compressing 50 basis points, which this may not be apples to apples, but I guess I'd love to hear.
Speaker Change: As more competition cap rate trends, just a little bit more color on that on what youre seeing in the pipeline.
Speaker Change: Yes.
Speaker Change: These are you know when you compare the activity of last year to the activity. This year. These are two big samples.
Speaker Change: What we are what we are able to demonstrate in the market 177 last year at 7%. This year. So clearly there is a cap.
Speaker Change: Rate compression.
Speaker Change: But it's also still in our stated range that quite frankly, we established a year and a half ago of seven to eight and then unlevered ours IRR still remain.
Speaker Change: Exactly where they were which is low to mid teens.
Speaker Change: Great opportunity to acquire both yield and growth in these these community that we've been purchasing there is more competition clearly given how strong the senior housing fundamentals are in the sector and is a standout asset class amongst real estate more players are coming to the table, but thats when the advantage.
Speaker Change: <unk> platform that <unk> has really started to shine.
Speaker Change: We entered deals.
Speaker Change: With the track record of having close.
Speaker Change: All of these recent.
Speaker Change: Transactions and a credibility of delivering what we say we're going to do we deny a financing contingency when we enter deals we have a platform to manage scale and senior housing that is is unrivaled.
Speaker Change: By the entire capital sector that faces the the industry except for one here.
Speaker Change: And therefore, we feel very good about our opportunity to continue to compete.
Speaker Change: We are also benefiting from the relationships we have in the portfolio like I said, 75% of our deals have been born of these relationships and that's advantage us as well so yes.
Speaker Change: We will see more competition.
Speaker Change: We'll also be ready to continue to compete.
Speaker Change: Thank you. Your next question comes from the call of Nic use leash you list.
Speaker Change: Thank you and you're like Okay, Here's Charles.
Speaker Change: Your line is now open.
Speaker Change: Yes, so I've experienced in my life and good morning, everyone. So.
Speaker Change: I guess, just maybe just going back to the commentary on the <unk>.
Speaker Change: Move outs.
Speaker Change: In March the clinical outcomes.
Speaker Change: I was just hoping to get a little bit more of maybe the math, if you could flesh that out a little bit because I think what.
Speaker Change: We and some others are kind of struggling with right. Now is if you have 60000 units in your senior housing same store pool, how could mathematically your occupancy really be affected by some level of clinical move outs.
Speaker Change: I mean, it's.
Speaker Change: Yes.
Speaker Change: Not probably going to get into the exact numbers, but the.
Speaker Change: The simple answer is our move out activity was consistent with last year, our move out activity was higher and is driven by.
Speaker Change: By the mortality rate being high so you just have a relative to our original expectation.
You have a.
Speaker Change: A lower jumping off point and they happened late in the quarter and that that's what impacts the jumping off point so.
Speaker Change: It does have an impact I mean, just conversely, the key selling season, which was which is substantially all of the net move in activity happens.
Speaker Change: That has the opposite impact we tend to see around 10% more move ins during that period, usually see around 5% less move outs together Thats <unk>.
Speaker Change: Selling season delivers made of September and delivers all of that occupancy growth that we hope to see you again. This year. So that's just how the seasonality tends to play out.
Speaker Change: Okay, and then I guess.
Speaker Change: Just going back to I know you.
Speaker Change: We're a company others in the industry have moved away from wanting to give.
Speaker Change: Monthly data and.
Speaker Change: It was asked earlier about where it was march occupancy and so I guess I'll try asking again about if theres any way you could give a feel for how March occupancy is how April is trending in the reason I'm asking is that I think you guys kind of open the door to.
Speaker Change: This being a natural question when you said that the jumping off point is lower to start in the second quarter. So as everyones looking at.
Speaker Change: Testing your guidance assumptions I know you've already said that you feel good about your full year guidance, but people are thinking about.
Speaker Change: Impacts potentially to the guidance or even how you could exceed guidance it would be pretty helpful too to understand where March and April occupancy for the portfolio.
Speaker Change: Yes, I think youre right, Nick to say that the industry has gone away from that sort of timing in light of the fact is we should all be focusing on the trends.
Speaker Change: I will say again, you can do the math and say 291st quarter $2 70 full year plug.
Speaker Change: And that gives you a number which is the start point on it.
Speaker Change: Reasonable approximation of the Star point so.
Speaker Change: Beyond that I would just keep our eyes focused on on.
Speaker Change: On the trends in the longer term, notably the key selling season right right ahead of us.
Speaker Change: Okay. Thank you.
Thank you Nick you Rico.
Speaker Change: Thank you and then the final question comes from the line of <unk> with Baird.
Speaker Change: Your line is now open.
Speaker Change: Thank you and good morning, everyone.
Speaker Change: Do you expect independent living occupancy growth to continue outpacing assisted living throughout 2025, and what the GAAP be consistent with first quarter.
Justin Kim: As Justin so.
Justin Kim: Historically, and currently and across the sector independent living does tend to have a higher absolute occupancy. It's also been a strong.
Justin Kim: Contributor of growth for us in the U S. Around 370 basis points were assisted living was which was also very strong with 300 basis points.
So we've had a lot of portfolio actions have been directed towards independent living.
Justin Kim: Operators and investments in the portfolio, but it's also been the case for assisted living so.
So we would anticipate growth really in both categories of senior housing moving ahead and hope that they both continue to be really strong as we get into this key selling season.
Justin Kim: Great and have you seen a notable difference in competition for independent living versus assisted living product.
Justin Kim: And do you mean.
Speaker Change: From a consumer standpoint or from a accurate yes, yes.
Justin Kim: From an acquisition standpoint.
Justin Kim: Acquisition standpoint acquisitions, yes.
Speaker Change: Yeah. So so we've been focusing by and large on campuses that offer a combination of services independent living assisted living memory care for the most part it's been it's been those those three services on a campus sometimes there's it's an assisted living memory care combination there's been some independent living that are freestanding that was <unk>.
Speaker Change: Purchase as well I'm talking about over 70 communities that we've invested in over the past since the beginning of last year. So.
Speaker Change: Yes.
Speaker Change: There is competition for the highest quality assets, which is what we've been pursuing.
Speaker Change: Pursuing communities, they're high performing with upside.
Speaker Change: One of the things that really helps us to compete is the preference among our operator relationships.
Speaker Change: Thats been Thats play a key role for us and that is that they want to work with us and continue to work with us and there's a lot of new operators, we've had as well.
Speaker Change: So when we find ourselves in a competitive situation.
Speaker Change: That's one aspect that has helped us to win deals.
Speaker Change: Obviously, our financial strength and flexibility is another aspect and then our track record.
Speaker Change: With Counterparties as an acquirer of assets is excellent. So we like our opportunity to continue to compete and even for the best the best assets.
Speaker Change: Great. Thanks, everyone.
Thank you that's all the time that we have questions for today. So I'd like to please turn this back to Vince <unk>, Chairman and CEO Debra Cafaro for closing remarks.
Speaker Change: Thanks, Jamie so to conclude Ventas delivered strong results in the first quarter.
Speaker Change: For senior housing is strong and getting stronger and supply remains highly constrained.
Speaker Change: To your NOI growth opportunity driven by senior housing is well underway with 11 quarters in a row of double digit NOI growth and yet the best is still ahead. So we look forward to seeing all of you soon to discuss.
Speaker Change: This anymore and hope to see you in New York. Thanks.
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