Ventas Stock

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Ventas Second Quarter 2026 Earnings Call. [Operator Instructions].

I'd now like to turn the call over to BJ Grant, Senior Vice President, Investor Relations. BJ, you have the floor.

Thank you, Greg. Good morning, everyone, and welcome to the Ventas second quarter 2026 results conference call. Yesterday, we issued our second quarter 2026 earnings release, presentation materials and supplemental information package, 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 topics may cause actual results to differ materially from those contemplated in such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the Ventas website.

Certain non-GAAP financial measures will also be discussed on this call, and for a reconciliation of those measures to the most closely comparable GAAP measures, please refer to our supplemental information package posted on the Investor Relations website.

And with that, I'll turn the call over to Debra A. Cafaro, Chairman and CEO of Ventas.

Thank you, BJ, and happy birthday. Good morning to all of our shareholders and other participants. I'm pleased to welcome you to the Ventas second quarter 2026 earnings call.

Ventas delivered excellent results in the quarter, powered by strong growth in our senior housing operating portfolio and accelerating senior housing investment activity. With a decade of powerful demographic demand ahead, we intend to capture the unprecedented multiyear NOI growth and value creation opportunity by growing our SHOP footprint organically and externally and increasing our company growth rate.

Since we adopted our 1-2-3 strategy in late 2023, our team has executed it with commitment and excellence to deliver outstanding returns and build our financial strength. We've made enterprise-wide investments in our innovative platform and team to drive our performance and elevate our industry.

The results are clear. This quarter, we delivered 10% total company same-property NOI growth. U.S. SHOP led the way with 18% NOI and 360 basis points of occupancy growth year-over-year as we continue to outperform the industry. Our second quarter FFO per share of $0.97 represented 9% year-over-year growth. For the full year, we are again raising our normalized FFO expectations to $3.85 to $3.90 per share, equating to 8% to 10% growth, primarily because of our increased investment activity.

The Ventas investment engine is firing on all cylinders. We now expect to complete $4.5 billion of 2026 investments focused on senior housing from $3 billion previously. We are executing at significant scale, and we've completed over $8 billion in investments since the beginning of 2024, adding more than 23,000 units across 174 communities to our SHOP portfolio.

Our investment success has been enabled by the integration of our Ventas OI platform with our capital allocation decisions under Justin's leadership. Our #1 capital allocation priority remains U.S. senior housing, particularly acquisitions that combine attractive growth, yield and risk-adjusted return potential. Our investment pipeline is active and actionable, and we're using our competitive advantages to win deals that meet our strategic and financial criteria, including double-digit to mid-teens unlevered IRRs and discounts to replacement costs.

The private to public arbitrage opportunity for Ventas and senior housing is compelling, and we intend to use the power of our franchise to aggressively build on our investment momentum. Our investment activities and outlook, of course, are based upon the unprecedented demographic demand for senior housing. The leading edge of the nearly 70 million baby boomers has just begun turning 80 this year, ushering in a decade where the growth rate of the senior population more than doubles. Yet new starts remain at record lows.

With demand expected to substantially outrun supply and the persistence of elongated construction time lines and high cost, we foresee an exceptional opportunity for outsized growth and value creation in the coming years. We also expect to make more dispositions of nonstrategic assets in the back half of this year to improve our growth rate and expand our senior housing footprint. The combination of more SHOP investments, strong SHOP internal NOI growth and increased dispositions should make SHOP 60% of our $60 billion enterprise by year-end.

In closing, as you look across the investment landscape, Ventas offers investors an attractive combination of hard assets and growth from need-based secular demand, not correlated with the AI economy. With strong property and earnings growth, investment momentum, scale, financial strength and our differentiated platform, we are focused on delivering outperformance and winning together, while advancing our mission of helping people live longer, healthier, happier lives. Our whole Ventas team is in it to win it. And as Justin likes to say, the best is yet to come.

Now Justin, I'm pleased to turn the call over to you.

Thank you, Debbie. I'm pleased to join you today to discuss another quarter of strong execution in SHOP and investments. Ventas has never been better positioned to capture the multiyear growth opportunity in senior housing. With a differentiated platform, strong balance sheet, outstanding operators and talented team, we remain focused on creating value for residents, operators, team members and shareholders.

Our second quarter results reflect the strength of our portfolio, the effectiveness of our active asset management platform and the growing contribution of our senior housing acquisitions.

Starting with SHOP. We delivered another great quarter. Same-store SHOP NOI increased 16% year-over-year, representing one of the strongest quarterly growth rates in our recent history. NOI growth in the quarter was led by the U.S. with 18%. Occupancy remains the primary driver of our performance. During the second quarter, same-store average occupancy increased 300 basis points year-over-year led by the U.S., which continues to deliver excellent growth with 360 basis points.

Within the NIC Top 99 markets, Ventas same-store communities achieved approximately 150 basis points of occupancy outperformance versus industry averages, demonstrating the benefits of our focused operating execution and differentiated platform. More broadly, the key selling season is progressing well. As always, the May through September period remains the most important operating window of the year for senior housing.

We started the year strong, raised the occupancy guide from 270 bps growth to 300 bps, and now we've entered the key selling season, which is on track so far. RevPOR increased 5% year-over-year and pricing strength was realized across both in-place rent increases and move-in rents led by our highly occupied communities. The combination of the occupancy and RevPOR growth drove nearly 9% same-store revenue growth across the portfolio. At the same time, expense growth moderated. Same-store operating expenses increased 5%, contributing to margin expansion.

NOI margins expanded 210 basis points year-over-year to 31% and incremental margin flow-through reached 55%, highlighting the operating leverage embedded in the business as occupancy continues to rise. These results are the outcome of the work being done every day by our operators and the continued execution of the Ventas OI active asset management platform, which is fully deployed across our SHOP portfolio, and we are positioning our AI-ready tech stack to improve the execution of our insights.

I'd like to give a special thanks to our operating partners who continue to deliver great results as they embrace our culture of winning together. Atria and Sunrise are leading the U.S. and the Le Groupe Maurice continues to lead the way in Canada. Over the last several years, we have built a scalable operating framework that combines data analytics, benchmarking, active asset management and close collaboration with operators to drive performance at the community level.

Our teams continue to focus on initiatives with our operators that can create incremental value across hundreds of communities simultaneously. Those efforts include refreshed capital investments, dynamic pricing insights, sales culture enhancements and benchmarking programs throughout our portfolio. One example is our relentless focus on driving occupancy in our portfolio, which is a long runway ahead.

Our U.S. senior housing portfolio is 87% occupied, of which our non-same store is only 83% by design. We are well positioned in markets with a projected 1,200 basis points of net demand over the next few years. Our Ventas OI platform is deployed across our portfolio where we utilize real-time leading indicators to occupancy growth in partnership with our operators to drive price volume optimization contributing to our occupancy outperformance in the U.S.

On the other end of the spectrum is our cultural commitment to achieving 0 lost revenue days in our communities. Working alongside our operators, we are implementing a playbook design to drive occupancy in highly occupied communities by improving execution around resident retention and move-in timing.

Today, approximately 10% of our SHOP communities are operating at or near 100% occupancy with 2/3 located in the U.S. This demonstrates both the demand characteristics in our markets and our ability to translate that demand into operating results. It also provides the proof point for the lack of frictional vacancy in senior housing communities.

We are currently seeing outperformance in our higher occupied cohort. The community is currently 90% or more occupied delivered 25% NOI growth. This includes about half of our U.S. same-store communities. They have pushed price, occupancy and margin expansion. This performance demonstrates the long runway ahead of reaching stabilization, the top line growth potential and margin expansion opportunities in highly occupied communities as our portfolio continues to grow occupancy.

Wrapping up SHOP, I'm pleased to reaffirm our same-store SHOP guidance of 16% NOI growth at the midpoint. As a reminder, the slope and timing of the key selling season is the main determinant to the full year results, and we are in the middle of it right now.

Turning to investments. Based on the strength of our closed activity and the attractive senior housing acquisitions that we currently have under contract, we are raising our full year 2026 investment guidance, again, from $3 billion to $4.5 billion. Strong senior housing investment momentum is further expanding our SHOP footprint. Year-to-date, we have completed over $3 billion of investments focused on senior housing across 27 transactions. Further expanding the quality, reach and earnings power of our SHOP portfolio.

All of our year-to-date senior housing investments were underwritten to double-digit to mid-teens unlevered IRRs. Together, they have an average expected year 1 yield of 6.6% and required at significant discounts to replacement costs with an average price per unit of $358,000. The senior housing transaction market remains active, and our pipeline continues to offer a broad set of compelling opportunities.

While interest in the sector continues to grow among both new and existing sources of capital. Ventas is demonstrating the power of our differentiated competitive approach. Our relationships continue to be a defining advantage. More than 90% of our year-to-date investments were relationship-driven, including off-market transactions and marketed processes involving repeat sellers, existing operating partners or both.

These relationships create real process advantages, including the ability to preempt opportunities and compete effectively at the finish line. Each investment is selected through our right market, right asset, right operator framework with a clear focus on enhancing portfolio quality and positioning Ventas for durable long-term growth.

Our underwriting is benefiting from our substantial Ventas OI data analytics and allowing for a very efficient close process, which is approximating around 2 months start to finish, which is among the most efficient in the industry. Looking ahead, the senior housing investment opportunity set remains robust. We will continue to use our platform, relationships, data and execution capabilities to source and close attractive investments at scale.

In closing, I'm energized by the opportunities ahead. We continue to deliver strong organic growth as we expand our portfolio through accretive investment activity. We are doing so against the backdrop of powerful demographic tailwinds and historically limited new supply, while exercising the strength of our Ventas OI platform to drive outperformance. I couldn't be more excited as we create environments where residents choose to live and enjoy the valuable benefits of senior housing.

Bob?

Thank you, Justin, and good morning, everyone. I'll begin with our second quarter financial performance, then discuss our balance sheet and capital activity and conclude with our improved outlook for 2026.

Starting with our enterprise results. Ventas delivered another quarter of strong performance and growth. Net income attributable to common stockholders was $0.14 per share. Meanwhile, normalized FFO per share was $0.97, representing 9% year-over-year growth, driven by strong property performance across the portfolio, accretive senior housing investment activity and the continued execution of our 1-2-3 strategy.

Total company same-store cash NOI increased 10% year-over-year. Once again, SHOP is the primary driver of our performance, generating 16% same-store cash NOI growth with the balance of our portfolio, all contributing to double-digit growth in our overall same-store property portfolio.

Our outpatient medical and research portfolio or OM&R delivered 5% same-store cash NOI growth in the second quarter, led by outpatient medical. After adjusting for cash fee income, our outpatient medical same-store cash NOI increased 3% in the second quarter. This outpatient medical performance was led by a 50 basis point occupancy improvement year-over-year and was supported by strong tenant retention of 88%.

Our triple net portfolio generated 3% same-store cash NOI growth in the second quarter, and we expect the triple-net same-store year-over-year NOI growth rate to increase in the second half of the year.

Moving on to the balance sheet. Our financial position strengthened again during the quarter. Net debt to EBITDA improved to 4.7x. Our best leverage level in well over a decade, representing a 90 basis point year-over-year improvement and 30 basis point sequential improvement. The continued improvement in leverage demonstrates the power of our organic growth engine and the momentum in our equity funded investments.

Year-to-date, we have completed $3.4 billion of investments and have raised $4.2 billion of equity with $1.6 billion currently unsettled. As a result, liquidity of $4.9 billion at the end of the second quarter provides substantial financial flexibility for our investment and refinancing activity.

Last, I'll turn to our updated earnings outlook. Given our strong first half performance and continued momentum in external growth, we're once again raising our earnings outlook for 2026. We now expect full year net income to range from $0.58 to $0.63 per share or $0.61 per share at the midpoint.

We are once again increasing our full year normalized FFO per share guidance to now range from $3.85 to $3.90, which represents year-over-year growth of 8% to 10%. Our new guidance midpoint of $3.88 is a $0.02 per share improvement from our prior guidance midpoint. Bridging this improvement is a positive $0.03 contribution from higher accretive senior housing investment activity, net of increased capital recycling. This is partially offset by $0.01 from the impacts of higher interest rates and a higher share price. A detailed discussion of our guidance assumptions can be found in our Q2 supplemental and earnings presentation posted to our website.

To close, we are very pleased with our second quarter results and our performance through the first half of the year. Ventas is benefiting from a unique combination of powerful demographic tailwinds, industry-leading operating execution, a highly active investment platform and a strong financial position. The entire Ventas team remains focused on executing our strategy, creating value for our shareholders and extending our track record of outperformance.

And with that, I'll turn the call back to the operator.

[Operator Instructions] All right. Looks like our first question today comes from the line of Julien Blouin with Goldman Sachs.

So we've seen others in the sector sell either full OMS portfolios or sell JV stakes in portfolios. Just given the strength of the interest out there, is there anything holding you back from recycling capital out of outpatient medical and into senior housing and how do you think sort of the cap rate on your portfolio would compare to some of the ones that are out there?

Julien, Debbie here. Thanks for the question. Look, we've always taken the view that we'll strongly consider any transaction that we believe creates long-term value for shareholders, and we've proven that in the past with our SNF disposition and spin-off. We continue to evaluate our portfolio. Our strategy is very focused on expanding our SHOP footprint, and that's exactly what we're doing. And that's how we're really thinking about strategic opportunities.

Got it. And then Justin, at what level of sort of portfolio-wide same-store SHOP occupancy, do you think you could start to see same-store RevPOR kind of accelerate towards maybe the 6% or 7% range, let's say, how far from a portfolio-wide sort of RevPOR acceleration do you think you are currently?

Yes. I mentioned in my prepared remarks, I talked about this that half of our U.S. SHOP same-store portfolio is 90% occupied or more. That grew NOI 25% year-over-year. The RevPOR is 6%, so it's obviously bringing the average up across the portfolio in terms of NOI growth, in terms of RevPOR growth. Occupancy growth was really strong in that group as well on the better side of our average.

And so I think that's really encouraging as you think about 2 things. One is we have a really long runway to go. We're 87% occupied across SHOP. And to know that when we get to that kind of the first phase I'll call it the first destination, which is to break that 90% barrier, there's a lot of growth opportunity that we're proving is yet to come. So it's a tremendously large proof point of the growth opportunity in the 90-plus occupied group.

And our next question comes from the line of Jeff Spector with Bank of America.

I'm sorry if I missed this. Can you talk about the occupancy levels from June versus April and May? Was there an acceleration? Or did it maintain the same level of growth?

Sure. So we -- what I said in my remarks were we started the year with a 270 basis points guide. We've raised it to 300 basis points of growth year-over-year. We started the year really strong. We had 310 basis points in the first, we had 300 basis points in the second. So that means we need around 300 basis points for the rest of the year. We have good visibility into the key selling season. It's on track. There's good sales activity on the ground already in the quarter, good occupancy growth already in the quarter, and that's supporting our full year guide expectation of around 300 basis points with the knowledge that we have a long ways to go really to get through the rest of the key selling season. But so far, so good.

Okay. Great. And then sticking with occupancy, given that has been for us, at least the top incoming question from investors. I assume that's just people are debating on are things topping out or not. But Justin, of course, you talked about the lift in occupancy. I think you said that the same-store today around 83% roughly half the communities above -- already above 90%. I guess, could you provide a little bit more context around your opening remarks and occupancy over the coming years? I think you also said 10% today at full occupancy. I don't know if you've talked about where you see that reaching 25% or 50% over the coming years.

I really appreciate the question because it's a mission of ours to prove that stabilization is a much higher number than what we used to think it was traditionally. One of the proof points we talked about was the 90-plus percent occupied communities. Another one I mentioned is the 10% of our portfolio that is at or near 100% occupied. And that group is also delivering very strong NOI growth and is benefiting from rate growth even higher, around 7% RevPOR and has a 20-plus -- around 20% NOI growth as well in the U.S.

And by the way, 2/3 of those in that category are in the U.S. I think everyone knows we have a highly occupied Canada, but our U.S. is demonstrating that we can get all the way to 100% occupied in our communities. That's been a key part of our thesis as we talk about this multiyear growth opportunity. And now it's really pleasing to be able to show these proof points and demonstrate the NOI growth opportunity as we get into these higher occupancy bands.

And just a reminder, we're still only 87% across our SHOP portfolio. So -- and you mentioned this, the part that's 83% is our non-same store. That's about 25% of our NOI right now, 75% is in the same store. So the 83% has a long runway ahead, combining for 87%, long runway ahead. And when we get to this destination of 90% plus, really strong potential for NOI growth.

Justin's mission, I think, is to prove to everyone that in this new paradigm, we can get into the close to 100% occupied over the years.

Exactly.

And our next question comes from the line of David Rodgers with Raymond James.

I wanted to ask about the SHOP flow-through that's in the presentation. Obviously, you had a nice pickup in occupancy that helped drive a pretty big pickup in the flow-through from the last couple of years and even in the first quarter. You had a similar occupancy improvement, I think, from '24 to '25, but no real pickup in flow-through.

So Justin, is it just that you're getting those top 10% of the assets to full that's kind of driving the incremental component? Is there something operationally that you're doing where you'd continue to see that flow through improve as we go forward? Just a little bit of color on that would be helpful.

You bet. So one of the real positive aspects of the senior housing business model is its operating leverage. And what that really refers to is that as occupancies go higher, your expenses become more fixed.

So the difference between this year and last year is we're running at a higher occupancy, you have more operating leverage you're benefiting from, and then that's producing the opportunity for the better incremental margin that we're seeing. So 55% was good. And we would expect really the opportunity, all things considered equal, the opportunity for that to be even better as we move occupancy over time.

And then maybe a separate follow-up. With regard to investments, obviously, I'd love your opinion on where we are in the development cycle. You talked about discount to replacement costs, rents are below where they need to be to develop. I think from a new development standpoint, you haven't been particularly active.

Is that something as you look out over the next couple of years that you can see that gap closing with 5% RevPOR and 300 basis point pickup in margin where you want to be ahead of that curve. So I guess, maybe talk to me about where you think we are maybe in the cycle of development for Ventas in particular?

Yes. Well, if you don't mind, I'll kind of speak to big picture first, and I can talk about us because we're really focused on acquiring in place and growing cash flows. I mean that's our primary focus. But development is going to be needed. I mean Debbie made the point around demand, there's a need for supply over time. The reality is, is that -- there's not a lot of projects that would pencil at this current time. We think that current rents need to be up to 40% higher or even more than that in certain cases. Trended rents around 25% higher.

So we're a ways off from probably any big wave in development. There's also just construction costs and availability of labor as well as debt and equity cost and availability of capital. One thing on that, though, it's pretty clear that because of those dynamics, the projects that need -- that would -- that could pencil are those that are so disconnected from the market in terms of rent expectations that they would feel comfortable delivering and really introducing a new higher-end product to a market, which is a luxury product.

And we see these in our pipeline. I mean, those are the types of projects that developer/operators are trying to bring to market. It's a luxury product. And our primary focus right now is really to continue this acquisition program we've had. It delivered over $8 billion, and it's projected to deliver $4.5 billion this year, just based on what's been closed or under contract, at really attractive returns and with a really high-quality type of community that we've been acquiring. So we're going to keep that going.

And just to top that off, what we do know is that there were a little over 1,000 starts this quarter and there's 2 million people turning 80 just in 2026 and that demographic demand wave continues for a decade. And so when we look ahead, the near to intermediate-term multiyear growth and value creation opportunity is really an exceptional one for us.

And our next question comes from the line of Seth Bergey with Citi.

I guess just to start off with the kind of increased acquisition guidance and kind of the increased competition in the marketplace, has the number of deals that you guys are kind of looking at that funnel through to something you close on changed? And are there certain parts in terms of more stabilized versus value-add deals where you're seeing more competition? And just any color you can give on how pricing has also moved.

Sure. Yes. So I'm going to kind of start with the end part of your question. Pricing, we've mentioned in previous calls that there's -- the cap rates have drifted down on a year-over-year basis. Well, we've been really steady in the mid-6s in terms of our year 1 yield. And then we've consistently been low double-digit to mid-teens unlevered IRRs. And that continues in this next wave of $1 billion that's under contract. 2/3 of that's a value-add product with a higher growth profile. And we're expecting similar yields and similar IRRs in that group.

Also, we have a pipeline that's really active. So we have plenty under review and look forward to pressing our advantages moving forward in terms of external growth. And then I think that might have addressed your whole question. Did I miss anything?

Just is kind of less funneling through to close? In terms of the numbers of the deals that you're looking at that.

Yes. There's a couple of factors that work. First of all, the market is bringing a lot more assets so that it is -- there's more coming to market and in our relationship-driven pipeline. So that's really important because we have these competitive advantages that Justin mentioned the team experience, the sophistication, the relationships, most importantly, we are winning more than our fair share and expect to continue to.

Great. And then maybe just a second one on the guidance. The kind of midpoint implies a second half of kind of $0.98 a quarter, and you just did $0.97 in 2Q. I guess, just is there a level of conservatism in there just given that you closed the deal in the second quarter and do you see selling season seems to be going on track? Or are there any offsets we should be thinking about?

Yes, it's Bob. So the increase to the guide, the bridge is driven, though this is $0.02 net, but driven by investments up $0.04. That's $3.4 billion under our belt and roughly $1 billion to go. We also increased our dispositions and loan repayment guidance at a blended 7%. And so if you unpack, I called it $0.03 net, if you unpack that, it's $0.04 investments less $0.01 for the dispositions, and that's all happening in the back half of the year.

So that's -- the biggest piece and the last piece is higher interest rates, stronger dollar and our stronger share price, net of $0.01. I mean you're right to say that nets out to $0.98 on average for the back half of the year relative to our $0.97 in the second at the midpoint.

And our next question comes from the line of Vikram Malhotra with Mizuho.

And congrats on the strong print overall. I guess just on that strength, I was wondering what kept you -- I know you're early in the selling season. But what's kind of kept your same-store SHOP guide intact? Because if you just take your assumptions, you're pretty easily hitting 16%.

So I'm wondering, is it comps like in the back half of last year, you had an acceleration. Is it perhaps Canada again, facing tough comps with something to do with expenses. It seems like you had a very good print. So I'm wondering why not even modestly increase the SHOP guide?

Well, first of all, we just raised it last quarter. So we did take that step already based on the performance we saw playing out. We've proven that in the second quarter. And now we're in the key selling season, and we'll see how that continues to play out. But we already did raise. And now we have a lot of execution ahead of us and things are going well.

And just to underscore, the first half was 16% year-over-year NOI growth. We're holding 16% for the year. So it's pretty straightforward that 16% in the back half is our assumption.

Okay. I guess, Justin, I have high expectations. So second question, you've talked a lot about the senior housing opportunity set and the flow-through that's just now beginning on the incremental margin side. So I'm wondering if you look at the next 2 years, similar to a question that was asked like positioning the overall portfolio to kind of take that 10% FFO NOI growth that you're seeing overall and really translating that into 11%, 12%, 13% FFO and AFFO growth.

I'm just looking for updated thoughts on like Canada, you created a lot of value. Can you monetize that? Medical office, slow growth, asset pricing is very good in the private market. Can you monetize that? And then maybe just thoughts on life sciences on the university side. Like is there an opportunity set in other businesses to help take this FFO growth trajectory higher?

Vikram, it's Debbie. Let me take a couple of shots at that. First of all, we're in our fifth year of double-digit NOI growth from our SHOP portfolio and kind of the best is yet to come. We've got the last couple of years have really shown really good same property growth. As an enterprise, this quarter, it's 10%, the biggest offset to that in the past couple of years, including this year, as Bob just described, is the interest rate curve and FX, et cetera, macro factors, let's call it.

And so our strategy is really to continue driving that same property growth led by SHOP. And hopefully get an assist from the macro in terms of the rate environment and so on.

The emphasis of our strategy, again, as I said, is on SHOP, we expect to be already 60% of a $60 billion enterprise by the end of this year and our strategy of focusing on aggressively growing that internally and externally continues. So that's how I would answer your question.

In terms of Canada, just to touch on that for a minute, I would tell you that our dispositions are really focused on non-SHOP assets. We are doing more, as you saw in the guide. And Canada remains a significant contributor to our enterprise growth.

And our next question comes from the line of Jim Kammert with Evercore ISI.

I hope I'm not going too much on dead horse. But Justin, you mentioned again the cohort of the same-store pool is 90% plus occupied. You said certainly were driving 25% NOI growth, which is pretty impressive. But I think you also said it was 6% RevPOR growth for that pool.

And I'm just trying to understand how much of this is really pricing versus occupancy? I'm just trying to see -- we get to a steady state, let's say you have mid-90s across a lot of your portfolio, what do you think pricing can look like on an annual basis as you run out of occupancy opportunity?

Well, that's going to be the question that we look forward to answering over time. I can tell you what we're seeing so far. So that the 90% plus group is half the U.S. same-store portfolio. Huge sample, 6% RevPOR. The occupancy was even better than the average occupancy reported across the portfolio. So it's benefiting from occupancy and rate growth working together to drive the NOI growth and margin expansion.

We know that we get even higher occupied, you get up into that group that's like 99% occupied plus that I mentioned, 7% RevPOR growth. So more pricing power, there's the scarcity values playing out. Now it's important to note that this is all in an environment that's not as attractive as what's coming. That's one of the reasons, one of the many -- we keep saying the best is yet to come because we haven't even experienced the best demographic cycle yet. That's just starting now with the baby boomers turning 80, and with deliveries down and starts way down, we have this window of opportunity we've been looking forward to.

And the value proposition in senior housing is pretty amazing. And it's utilized regularly by our 90,000-plus residents, 100,000 across the whole portfolio. And we look forward to serving more seniors, and we look forward to demonstrating the value proposition. And with that, does come a price opportunity, we think.

And one small question or detail. On the acquisitions year-to-date, it looks like on average, about a 9% retained interest on the seller or sellers. Is that any part of some sort of financial alignment you're trying to create with those sellers or just really idiosyncratic that they had tax or other motivations to retain a piece of what they were owning?

I want to make sure I'm understanding the question. You're talking about sellers retaining ownership?

Yes. It looks like your own on your pro rata basis about 91% of the investment.

Yes, yes. So what you're looking at is actually -- remember, we have our fund that's focused on core plus investments across the various asset classes. We invest in 20% of what the fund invests in. And so you're seeing our share reflected in the sub. And we have -- we did do one joint venture that we talked about last quarter with Revel. We likely do more in the future, but mostly what you're seeing is the share between us and the fund.

And our next question comes from the line of Juan Sanabria with BMO Capital Markets.

Just hoping, Justin, maybe you could talk a little bit about Canada and the RevPOR there? And if that should kind of educate us or be a lead for how the U.S. RevPOR could trend or if there's considerations, rent restrictions, whatever in Quebec that may be holding that back? And I know you talked about like the 99% occupancy communities in the U.S. in the RevPOR they've had there. But just how Canada could be a lead or not versus how -- relative to how the U.S. could perform?

Yes. So Canada has some structural differences. First of all, it's 97% occupied. We have a really high-quality portfolio there amongst a few different operators, Le Groupe Maurice is consistently to stand out. They're Quebec-based. And there are rent restrictions in place in Quebec. And then there's kind of social barriers around rent as well as in Ontario.

So we do experience pretty good RevPOR growth there. One of the reasons it stands out is because we have an independent living product. So you don't really have that re-leasing spread drag that you can experience with assisted living when the higher acuity residents move out and lower acuity residents move in. So the independent living RevPOR is really more stable in rent driven.

So pretty good print there. But we don't view it as the indicator for the future in the U.S. So what we're looking at for the future opportunity in the U.S. are the examples I gave around the 90% plus of 100% occupied communities, where we're already demonstrating across a huge sample size, higher RevPOR growth.

Yes. I mean in the U.S., we're looking at maximizing NOI growth through the calibration of rate and occupancy that Ventas OI is expert at while at the same time, making sure, as Justin said, we're offering that value proposition to seniors. And that's really how we've been growing the portfolio, and we see that continuing as scarcity potentially develops within the U.S. market.

And then just as a follow-up. You mentioned kind of focusing on some noncore dispositions. So hoping you could talk a little bit about what's in that bucket kind of why now? And maybe as part of that, I think there was a transaction with Scion and kind of the Kindred entity and how that may fit into that bucket, if at all?

Yes. Well, I'll start with the dispo assumption. Again, we increased that to $700 million. It's really outside of SHOP. So I think the rest of the asset classes and I would call it sort of the nonstrategic type assets in those asset classes, including loan repayments at quite a high yield. So about $100 million or so at 11% in terms of getting a loan repaid a really strong loan. So that's the net $700 million and really focused outside of SHOP.

Yes. And substantially all of the $8-plus billion of investments that we've completed since beginning of '24 have been in SHOP consistent with the strategy. We had a small opportunity to make a well structured investment in terms of a recycled loan capital because of our position in the capital structure and contractual rights, and we took it.

And our next question comes from the line of Michael Goldsmith with UBS.

Can you provide some color on the subsequent investment activity in the -- for the third quarter. It looks like the yields are relatively healthy at 6.2%, but the price per unit is quite high at $554,000 per unit. Is that still a discount to replacement, what are the occupancy at these facilities? What's the profile of these assets?

Yes, really good question. There's 3 communities there. And that -- by the way, one of those was purchased by our core plus fund. In fact, the community had the lowest going in cap rate was there. And so our share of that's reflected. And that was a Class A asset in Colorado.

We have 2 other really core like assets, 1 in California, 1 in Arizona, and they are really high-quality, strong performers in markets with really strong net demand. Good occupancy and -- but also high RevPOR and high price opportunity -- high price growth opportunity moving forward.

And so there's a portion of -- if you step back and just look at the way we've been allocating capital in senior housing, most of it's been going into either high-performing, with upside communities or value-add and there's a portion though that will put into certain markets where we have these really high-quality communities that we think will be market leaders for years to come. And these just happen to fall in that category.

So I wouldn't read into the 6.2%. We're expecting the $1 billion under contract to deliver around a 6.5%, consistent with what we've been delivering so far in what we've closed this year.

Got it. And just as a follow-up. I think there was a $300 million health care loan mentioned in the press release. I don't know if we've touched on it on the call. Could you provide a little bit more details around that?

Yes. I just touched on it with Juan, but it's just a recycling of -- we expect some loan repayments. As Bob talked about, we've recycled the capital into a well-structured loan investment based on our position in capital structure and contractual rights that we have.

And from one Michael to another. The next question is from Michael Carroll with RBC Capital Markets.

Justin, I want to turn back to the key selling season as you kind of highlighted that the occupancy gains really depends on the timing and the slope of that. So when did the occupancy slope start to inflect this year? And how does that compare versus your expectation in prior years? I mean, does the selling season start when you expected to start?

Yes. So it's a good question. So the key selling season time period, as always, May through September. There is kind of every year is a little different in terms of when you have your bigger months. We happen to have a really strong start to the year ahead of the key selling season. So that was what helped us to have the confidence to raise from 270 basis points to 300 basis points.

And then in the second quarter, we saw evidence that really supported the 300 basis points guide that we gave and what we're seeing so far in the third quarter is good occupancy growth, good sales activity on the ground. And so far, so good in terms of meeting our expectations so far with a lot to play out still.

Okay. And then should we expect going forward that the occupancy trend will start to track more in line these typical seasonal trends? I mean, albeit probably still well above what it was pre-COVID. I mean, I know the second quarter sequentially is usually up less than it is in the third quarter, just given how that key selling season slope starts. So should we expect that to happen just seems in the prior few years, we just kind of powered right through it. Are we kind of back to that typical seasonal trend of occupancy gains?

So you make a really good point, and recent seasonality has been a little different. The seasonality certainly still exists. It's just been more muted in the periods outside of the key selling season. The reason for that quite simply could be the higher demand that we're facing.

So perhaps we're in a new paradigm. I would expect seasonality to continue. And hopefully, hopefully, we can continue to see the muted seasons outside the key selling season. And and we hope to see RevPOR in key selling seasons moving forward, too. So we'll see. But we certainly like our opportunity given the demand characteristics and the strength of our platform.

And our next question comes from the line of Richard Anderson with Cantor Fitzgerald.

So obviously, the bar is high and the market is speaking, whether you agree with it or I'm sure you don't agree with it. It's a little exaggerated. But Justin, you described the selling season so far as being on track and perhaps the market was hoping for a better description. Is there anything underneath that comment that is sort of not particularly exciting to you? Is there anything that you're sort of monitoring?

I don't know really how to ask the question more directly than that. When you say it's on track, is it -- is there some hiccups going on behind the scenes that you can talk about?

I'm excited about 16% growth in SHOP.

Yes, 300 basis points of occupancy growth. I would -- I understand what you're asking, and what I would say is we're seeing broad-based contributions across the portfolio. Our same-store SHOP is same store for a reason. I'll just kind of -- for example, our non-same store is usually in a period of some kind of transition or redevs or the newer acquisitions. The same-store is -- that's the portfolio that it's been with us for a period of time in a form that is really, when it should be most competitive, we're experiencing that across the portfolio.

We're seeing good occupancy growth in independent living, assisted living across our markets, across our operators. So no, there's nothing within the portfolio that is of concern. We're really encouraged by the broad-based contributions.

And fair enough, I mean, you're right about the pace of growth. I just wanted to ask the question. Second, the 25% NOI growth for the 90-plus occupancies. Was that -- that was a U.S. portfolio observation, I assume?

That's right.

Okay. And then you said 10% of the portfolio is 100% occupied, and that's a 20% NOI growth story. Again, I assume the U.S. So is this informing you about the efficient frontier around occupancy? Because I know you have talked about a strategy of pursuing 100% occupied campuses, but maybe this is telling you that the efficient frontier is not 100%, and you shouldn't be really shooting for that, but something in the low to mid-90s. Is that a reasonable mathematical observation? Or is this just a point in time and not -- shouldn't be overly emphasizing it.

Yes. So the -- when I talked about in my prepared remarks, this cultural commitment to 0 loss revenue days, in order to get the performance we're talking about in this 90-plus group, you really have to be stretching to go full. We need as many communities that we can go to 100% occupancy.

You have the best opportunity for margin expansion in that group because of the operating leverage in the business. And it's not easy to do, but we have 10% of our portfolio. It's achieving it. We have half our portfolio that's in the U.S. in the same-store that's in that 90-plus group, and they are contributing a lot of growth and contributing growth because they're reaching for that ultimate goal of being 100% occupied.

So there's an opportunity in this asset class given the lack of frictional vacancy to achieve that result and we're proving it, and the goal would be to get as many communities full as possible.

And our next question comes from the line of John Kilichowski with Wells Fargo.

This is Jesus on for John. So with leverage now down to 4.7x and the balance sheet continues to improve, as you look beyond this year's investment plan, should we assume acquisitions are still primarily equity funded? Or will the funding mix likely become more tilted -- more balanced, I guess, going forward?

Yes, thanks for the question. I'm very proud and pleased at 4.7x, which is our leverage as of the second quarter. And when you look at unsettled equity, which will be used to fund investments we're in the mid-4s. So that's well over a turn from where we were last year.

And the playbook of the strategy has been equitizing investments in senior housing and that is both accretive and delevering, and that has been a powerful combination. And given the market backdrop and the situation we have, both in terms of investment opportunities and our cost of capital, I would expect that to continue. So without putting a number on it, we're going to keep running that playbook.

Excellent. And just a separate follow-up here. With the Brookdale transition is largely complete at this point. What are you seeing so far, the selling season in terms of leads, move-ins and pricing? And is what you're seeing today still support the opportunity to roughly double NOI over time for that portfolio?

Yes. So I'll start with the end. We absolutely believe in the opportunity to double the NOI in that portfolio. I want to make sure -- I want to put it in context for those that might not remember what this is.

So we have a non-same-store portfolio is 25% of the NOI in SHOP. That includes acquisitions, transitions, redevs primarily. The former Brookdale communities are large-scale communities that we thought would benefit from an operator change and investment in the asset to better position it and then executing off of what was a low occupancy in markets that have strong net demand.

All of those actions are underway this year. And we'll expect in the future the opportunity to go after that doubling the NOI. We also have opportunities like that across the rest of the non-same-store portfolio as well that we're working on. So those actions are underway and that will really fuel our future growth.

Our next question comes from the line of Mike Mueller with JPMorgan.

I guess in the research portfolio, there's some chunky occupancy loss in the quarter. Can you give a little bit of color on what's happening there and what do we expect on the go forward?

Sure. This was as expected. There were a few tenants that didn't renew in the portfolio. It is net-net-net, a $900,000 impact year-over-year. Pretty much in line with our expectation. I would emphasize that the second quarter in research is likely to reflect the balance of the year given that those move-outs. So that's it in short.

Got it. Okay. And then I guess looking at the U.S. SHOP portfolio, you had the biggest year-over-year occupancy gains and rev growth in the markets that you classified as other markets. So can you give a little color in terms of what falls into those buckets and kind of what's happening on the ground there that makes them relatively stronger?

Yes. So there is -- we've got the primary secondary in other markets. Obviously, I mean last year, secondary was outperforming. This year, we have really strong growth across primary and other. Other does have a lot of our independent living product that's either holiday or a holiday like community and they're delivering really strong growth for us this year in terms of occupancy and NOI growth. And so that's been a really big contributor for us.

And our next question comes from the line of Michael Stroyeck with Green Street.

Maybe going back to the development topic. I appreciate the comments on where you think rents need to go. Where do you think development yields are actually at today? And where do they need to be, in your opinion, for development to make a bit more sense.

Yes. So the kind of the standard underwriting and the development yield spread is around 150 to 200 basis points. So call it, 8% yield or so. So there's -- and that's usually what we use in our assumptions. We'll run sensitivities down to 7% and just to use the judgment in terms of what could happen in terms of development actually penciling, but that's the standard we're using, if you're wondering.

And I guess where do you think yields are at today? Like how far away are we from that 8%?

We're investing across the $4.5 billion, we're investing at 6.5%. So if you put the 150 to 200 basis points on top of that, so now you're at 8% to 8.5%. And that's just the standard underwriting you'd see -- you'd expect a development yield spread of 150 to 200 basis points over the expected year 1 yields and investments?

Sorry, I guess I meant more based on where rents are today, like where do you think a development yield would be? And how far away is it from that 8% development yield that would need to be required to pencil?

Go ahead, Justin.

Yes. I think here's another way to get -- so another way there -- the way we would look at it is what would a developer expect in terms of return, we think that's around 8%, give or take. Someone might reach for a lower yield. Some might be more comfortable higher than that, but let's just call it 8%.

And then it's what are the trended rents need to be in order to achieve that. And we think that's at least 25% higher, which means it's largely not achievable. The projects don't pencil to what developers would seek in terms of their typically underwritten yields.

The exception I mentioned earlier could be a luxury product, where they're introducing a much higher price point and entering a market as a bona fide leader, certain developers have land banks out there that can help that even though they're higher barrier markets.

So that's maybe the exception we'll see first, but we're not expecting any big waves of new development announcements. However, we are really low in terms of starts right now. So it's hard to imagine it getting much lower. So we'll see what happens.

Okay. Understood. And maybe just one on dispositions. How long should we expect elevated levels of dispositions? Is this just a second half of 2026 story? Or could we see multiple years of pruning the portfolio?

Yes. It's Bob. I would -- if you go back and look in time, $500 million is not a -- it's a normal kind of average. So we're slightly above that. But I would say it's in the neighborhood of what we would do just in terms of upgrading the portfolio and improving the overall growth rate. Good hygiene is the way I'd describe it. So this is of that ilk.

And our next question comes from the line of Ronald Kamdem with Morgan Stanley.

Great. I'll be quick. I know we're running long here. I just want to talk a little bit more about expenses. I think that obviously, the guidance is unchanged. Just a little color whether it's some of the labor costs. Just what do you think is the opportunity you're sort of breaking that expense curve, both the total same-store number as well as sort of expense to operating room?

Ron, yes, one thing just to note is that the portfolio is delivering about 9% revenue growth. So I do want to start there.

Yes. So yes, really good revenue growth. The expense growth that you see at 5% is really volume driven. Our OpEx hovers around 1.5%. So you're -- and that's because of the operating leverage and that kicks in this business model.

So the guide we have is 5.5%. We had a first quarter that was impacted by weather. We had elevated expenses in the first quarter at 5.8%. We're running, we're back in line with moderate expense growth around 5%, and then we left room in our guide for some expense growth in the second half of the year, which will be volume-driven but also very efficient to my point because there's margin expansion that would come with that.

And then my second one is just to circle back to sort of the Scion conversation. I think the presentation said the financial impact was already contemplated in guidance. Can you just provide any color of what that financial impact is? Because it seems like a good outcome that should have been beneficial.

It is a good outcome. And the principal driver is the loan. We show the rate, the $300 million at, call it, 10.5% effective rate. So that's the key driver and that was contemplated in previous guidance, as you say.

And our final question today comes from the line of Omotayo Okusanya with Deutsche Bank.

I just wanted to go back to Richard Anderson's question, this kind of idea of kind of lofty expectations. Again, some of your peers have done some large transformative transactions to have more SHOP exposure to ultimately accelerate the earnings growth profile. How do you guys kind of think about that again, things are going great. Earnings are clearly accelerating, but it does feel like the market is rewarding the names who are getting bigger faster in SHOP, if I may use those words. I'm just kind of curious how you're thinking about that strategically.

It's Debbie. Thanks for the question. Look, Billie Jean King said pressure is a privilege. And I believe that we have high expectations of ourselves. We're delivering really great results and we have this multiyear NOI growth and value creation opportunity ahead, and we've organized the company to really capitalize on that.

So we're all excited about what the future holds. We're building SHOP to be 60% of our portfolio by the end of this year on a $60 billion enterprise. The investment engine is firing on all cylinders, SHOP's delivering 16% NOI growth. We feel very optimistic about our prospects in the future and value creation for all of our stakeholders, and we're very focused on our performance at scale.

So we will keep focused on executing the strategy with excellence and delivering outsized returns over a multiyear time horizon.

And ladies and gentlemen, that does conclude the Q&A session. So I will now turn the call back over to Chairman and CEO, Debra Cafaro, for closing remarks. Debbie?

Thanks so much. I want to thank all of our participants for joining us this morning. We really appreciate your interest in and support of the company. Hope you have a great rest of the summer, and we look forward to seeing you soon.

Thanks, Debbie. And ladies and gentlemen, that does conclude today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventas First Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to BJ Grant, Senior Vice President of Investor Relations. You may begin.

Thank you, Bailey. Good morning, everyone and welcome to the Ventas First Quarter 2026 Results Conference Call. Yesterday, we issued our first quarter 2026 earnings release, presentation materials and supplemental information package, which are available on the 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 topics may cause actual results to differ materially from those contemplated in such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the 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 information package posted on the Investor Relations website.

And with that, I'll turn the call over to Debra A. Cafaro, Chairman and CEO of Ventas.

Thank you, BJ and good morning to all of our shareholders and other participants. I want to welcome you to the Ventas First Quarter 2026 Earnings Call. Ventas continues to drive growth and outperformance as a leading participant in the longevity economy. We're already into our fifth consecutive year of double-digit annual growth in our senior housing operating portfolio, or SHOP. Even more exciting, this year represents a new and positive inflection point when demographic demand jumps and growth remains elevated for over a decade. Our business and team have been built to meet this moment and seize the unprecedented opportunity for multiyear growth and value creation.

With SHOP as our engine, Ventas is now a $56 billion S&P 500 company with a portfolio of over 1,400 properties, serving a large and growing aging population. We have developed a unique brand that stands for delivering for stakeholders and winning together. Our excellent first quarter results and improved full year outlook demonstrate our competitive advantages, the impact of our differentiated platform, strong execution of our 1-2-3 strategy, and our momentum. In the quarter, Ventas delivered 9% year-over-year growth in total same-store property NOI and normalized FFO per share. SHOP NOI grew over 15% and U.S. occupancy increased 370 basis points, fueled by broad-based demand and our Ventas OI initiative.

Accretion from senior housing investment activity further contributed to our growth in the quarter, showing our strategy in action. And notably, our liquidity reached record levels, and our financial position continued to strengthen. Based on our first quarter results and our confidence, we have improved our outlook for the full year, increasing our midpoint guidance for FFO per share by $0.03 to $3.86 per share, led by SHOP same-store growth of 16%. As a result of our strategy and execution, we have already grown senior housing to over 60% of our business and our communities now serve nearly 100,000 residents. In a large and highly fragmented sector where most operators run 10 or fewer communities, our platform gives us unique advantages to drive out performance at scale through data and experiential insights.

With our collaborative approach, Ventas OI also attracts many experienced operators who want to manage our communities and benefit from Ventas' aligned approach, people and platform. And we're just getting started. In the investment market for SHOP, we have an outstanding private-to-public arbitrage opportunity. We have already closed $1.7 billion of attractive senior housing investments this year and over $6 billion since the beginning of 2024.

Our #1 capital allocation priority remains U.S. SHOP communities that meet our strategic framework and can deliver unlevered IRRs in the double-digit to mid-teens range at pricing below replacement cost. Interestingly, because there is significant existing and new investor interest in senior housing for all the obvious reasons, we are seeing more owners and potential sellers bringing assets to market and engaging in conversations with us about transacting. This trend is expanding our pipeline significantly.

We are confident in our ability to capture more than our fair share of desirable deals because of our momentum in the market and our competitive moat. We have now increased our 2026 investment volume guidance to $3 billion. We are focused on increasing our SHOP business organically and externally to drive our forward enterprise growth rate and serve the nearly 70 million baby boomers who start turning 80 in 2026. In the next 5 years alone, this group will grow nearly 30%. Yet in the first quarter, senior housing construction starts totaled only about 1,500 new units and total senior housing communities under construction remained at historic lows.

With at least a 3-year start to finish development cycle, these favorable demand supply trends provide our advantaged platform with compelling and durable tailwinds. The Ventas team is unified and enthusiastic about outperforming at scale in the multiyear growth and value creation opportunity ahead. We are excited about our improved outlook for 2026 and the setup for the coming years as we pursue our mission to help people live longer, healthier and happier lives. With our unique brand standing for commitment to each other and our stakeholders, we are in it to win it together.

In closing, I want to recognize our admired colleague, Pete Bulgarelli. Pete is retiring after an extraordinary 4-decade career in commercial real estate and 8 years leading our OMAR business with excellence and integrity. On behalf of all of us at Ventas, I thank Pete and wish him every continued success and happiness.

With that, I'm pleased to turn the call over to Justin.

Thank you, Debbie. I'm pleased to join you today to discuss another strong quarter of execution in senior housing, reflecting continued momentum across both organic performance and external growth in our SHOP portfolio. I'll start with SHOP performance, then provide updates on our active asset management and the full year outlook and conclude with investments and capital deployment.

Starting with SHOP. The first quarter results reflect both strong market fundamentals and sharp execution across the portfolio. In the first quarter, SHOP same-store NOI increased over 15% year-over-year, kicking off our fifth consecutive year of double-digit NOI growth. This is driven by a powerful combination of occupancy growth, pricing strength and operating leverage and increasingly supported by the Ventas OI initiatives we are deploying with our operators. Occupancy continues to be the primary driver of performance. Same-store average occupancy increased 310 basis points year-over-year, reaching 90.4%. Performance this quarter was particularly broad-based with so many operators contributing to our success, there are too many to name. The results in the U.S. portfolio were especially strong, where same-store occupancy increased 370 basis points year-over-year and outperformed the NIC Top 99 markets by 150 basis points.

On pricing, RevPOR increased 5% year-over-year, reflecting strong in-house rate increases that are running at nearly 8% as well as continued improvement in street rates across geographies, operators and product types. Operating expenses increased 5.8% year-over-year, which was largely driven by higher occupancy levels and winter storm-related costs. Net-net, NOI grew over 15% year-over-year, and we delivered meaningful operating leverage with NOI margins expanding 170 basis points year-over-year to 30% and incremental margins at 50%. As we continue to deploy our active asset management, we're executing in close partnership with our best-in-class operators and with a talented and recently expanded Ventas SHOP team that is driving performance at the unit, community and portfolio level.

Across the portfolio, we're focused on community level execution alongside our operating partners, supported by the continued evolution of Ventas OI. We are deploying targeted initiatives, including refresh CapEx, price volume optimization guidance and a sharp focus on sales culture with the ultimate goal of achieving 0 lost revenue days in our highly occupied communities. We're also implementing unit level sales strategies, supported by boots on the ground site visits from our team, and we're doing it in collaboration with operators, delivering strong revenue and NOI growth, while ensuring the senior living value proposition is realized for residents and families through the care, services and peace of mind provided in our communities.

This combination of active asset management and structural demand tailwinds has led us to increase our 2026 SHOP outlook, including same-store NOI growth of 16% at the midpoint, which is up from 15%. This is driven by a higher expectation of occupancy growth of approximately 300 basis points, which is leading to increased revenue growth expectations of approximately 8.75%. As we've discussed previously, the key selling season runs from May through September. While we enter this season in a favorable position because of the first quarter strength, our success during the key selling season will determine the full year outcome. Looking ahead, there's real momentum building for us to expand on several key fronts.

Over recent years, we've made intentional strategic moves to ensure Ventas stands ready to harness the growing surge in senior housing demand. Because of those efforts, we're confident that we'll continue to drive solid organic growth, fueled by ongoing increases in occupancy and the operating leverage we're achieving across the SHOP portfolio. And with our U.S. communities averaging about 87% occupancy, there's still significant runway for us to continue to drive outperformance. Importantly, the strength we're seeing in the SHOP performance gives us confidence to continue leaning into external growth.

Turning to investments. 2026 is off to an excellent start as we execute our external growth strategy with focus and intention. Year-to-date, we have completed $1.7 billion of high-quality senior housing acquisitions in the U.S., building on the fast start we saw in January.

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Based on this activity and our outlook for the remainder of the year, we are increasing our senior housing focused investment guidance from $2.5 billion to $3 billion for 2026. While there is heightened interest in senior housing investments as additional capital flows into the sector, Ventas remains competitively advantaged. Notably, of the $1.7 billion of investments closed year-to-date, more than 90% were relationship-driven, over 60% were sourced off market and more than 40% were completed with repeat sellers.

Since the fourth quarter of 2024, we have now completed over $5.7 billion of senior housing acquisitions, adding more than 17,000 units to the SHOP portfolio. These investments have been carefully selected to closely align with our right market, right asset, right operator framework and they are performing in line with our underwritten expectations. We are buying communities that enhance portfolio quality, are located in attractive markets with strong demand growth, are insulated from future supply risk and deliver low to mid-teens unlevered IRRs. Our investment strategy and team are focused on senior housing investment opportunities with different combinations of growth and yield that can produce attractive risk-adjusted returns.

For example, earlier this month, we completed a $540 million acquisition of the Revel portfolio, which represents a value-add lease-up opportunity at scale. This investment consists of newly built luxury independent living communities located in affluent high-growth markets across the Western U.S. With average in-place occupancy in the mid-70% range, the combination of the newer assets, high barrier markets and significant embedded occupancy upside creates a highly attractive growth profile. This portfolio was acquired at a significant discount to replacement cost, even with its quality, scale and amenity set. The seller elected to retain a 25% interest in the portfolio to share in the strategic and financial benefits of implementing Ventas OI initiatives across the portfolio to drive unlevered IRRs in the mid-teens.

Transactions like this underscore the advantages of scale, relationships, operating expertise and decisiveness in today's market. Excluding the Revel transaction, our remaining senior housing investments completed so far in 2026 are expected to generate a 6.9% year 1 NOI yield and low to mid-teens unlevered IRRs. These investments also allow us to expand our operator relationships. Our Ventas OI platform provides the capabilities to manage multiple operators at scale, enabling us to retain strong in-place operators and support their growth.

Looking ahead, we plan to continue to pursue attractive senior housing investments that combine durable in-place cash flow, embedded growth and attractive risk-adjusted returns. In closing, we are encouraged by the performance of the SHOP business in the first quarter and excited about the opportunities ahead. We are executing from a position of strength with strong organic growth, compelling external investment opportunities and a long runway for value creation.

With that, I'll turn it over to Bob.

Thank you, Justin and good morning, everyone. I'll cover 3 areas this morning. First, our financial results for Q1; second, our balance sheet and capital activity; and finally, our updated outlook for 2026.

Starting with our overall enterprise performance. We delivered a strong start to the year, led by over 15% same-store cash NOI growth in our SHOP portfolio. Normalized FFO for the first quarter was $0.94 per share, up 9% year-over-year, driven by total company same-store property level growth of nearly 9% and accretive senior housing investments. Our Outpatient Medical & Research portfolio, or OMAR, delivered 2.4% same-store cash NOI growth, led by outpatient medical growing 3.1% year-over-year. Occupancy in outpatient medical reached almost 91% in the first quarter, a 50 basis point increase year-over-year, marks the seventh consecutive quarter of occupancy growth. Our triple-net segment grew same-store cash NOI by 1.6% in the quarter, benefiting from the 35% Brookdale cash rent escalator, which went into effect January 1, 2026. This triple-net result is in line with our expectations and supportive of our confirmed full year guidance for the segment.

Turning next to our balance sheet. Our balance sheet continues to strengthen as a result of organic SHOP growth and equity funded senior housing investments. Net debt-to-EBITDA improved to 5x at quarter end, a 20 basis point sequential improvement with further improvement expected through the balance of the year. Liquidity is strong with $5.5 billion available at the end of the first quarter, providing Ventas with significant financial flexibility. Our investment momentum has continued into 2026. To fund this growth, we raised approximately $2.4 billion of equity designated for 2026 investment activity, including $800 million settled during the first quarter and $1.6 billion currently available through forward equity sales agreements.

Given our encouraging start to the year, we're improving our outlook for 2026. We now expect normalized FFO per share to range from $3.82 to $3.89 or $3.86 at the midpoint, a $0.03 increase from our prior outlook. Bridging from our prior guidance midpoint, the $0.03 increase is driven by stronger organic property performance led by SHOP and accretive senior housing investment activity, which together contributed a $0.04 per share increase. These favorable items are partially offset by $0.01 from the higher forward interest rate curve. We're also increasing our total company same-store cash NOI growth outlook to nearly 10% at the midpoint, resulting from a 100 basis point higher SHOP midpoint of 16%. A more fulsome discussion of our guidance assumptions can be found in our Q1 supplemental, earnings presentation posted to our website.

To close, we are very pleased with our start to 2026. The first quarter reinforces the strength of our organic performance, the durability of senior housing demand and the embedded growth profile of our portfolio.

With that, I'll turn the call back to the operator.

[Operator Instructions] Your first question comes from the line of Julien Blouin with Goldman Sachs.

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

It's Justin. Great question. So I'll step back a little bit, answer your question, give you a little history and then some of the attributes of the acquisition and the opportunity ahead. So this is a portfolio that was built by Wolff Company, which is a large multifamily developer with a very long history. They're based in Scottsdale. They entered this senior housing sector with this really exciting development because this is a -- it's a resort like independent living product that would appeal to a very active senior, highly amenitized, luxury setting.

And at the beginning, when they entered the space, they used third-party management. And when they got into it, they realized that they were probably better off setting up their own platform. So they set up Revel and that was a slow start. Now they have a team that is very talented, really across the board. One of the -- it's probably obvious that one of the reasons they want to work with Ventas is the Ventas OI platform and the ability also to stay into this joint venture, so they could participate in some of the upside.

And what we think about it is the quality of the assets are really high. We're buying at below replacement costs. We see operational upside that's significant and it's us and the Revel team. And our team already been on the ground and they're -- we're seeing pretty immediate sales upside. We're catching the portfolio at a time where it has pretty good momentum already. We're facing a forward market that has 1,200 basis points of net demand over the next few years. So we're playing into tailwinds as well. And so when you put the whole package together, it's a really exciting high-growth investment opportunity, really high-quality assets, sourced completely off market and it should generate really good returns for us moving forward.

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

So I'm going to step back again. It's another great question. But just important to frame it. So we just updated our investment guidance from $2.5 billion to $3 billion. We're doing this in a period where there is more interest in the sector. There's clearly new investors. There's a wide variety of PE that's entered the space, both large and small, owner operators, other REITs. There's institutional capital. And with that in mind, we've updated our investment guidance to the highest we've had in 3 years with high confidence. And the reason we can do that is because of all the advantages that Ventas has. We have our competitive moat, which includes the Ventas OI platform, the ability to manage operators at scale in a highly fragmented sector. We're up to 44 operators now. When we enter deals, we have no financing contingency. The liquidity, obviously, is very high.

Our track record of executing on deals has been excellent. And I mentioned in the prepared remarks that 90% are relationship-oriented, 60% off market, 40% repeat sellers. We have a growing pipeline. The broader market -- it has -- is bringing more to the market as well. And we just have a track record of delivering what we say we're going to do. I mentioned on the previous call that we had -- there's a drift down in cap rates from the 7s and into the 6s. We printed in our supplemental around 6.5% all-in and that includes the Revel deal. It's 6.9% without. When you look at the rest of the pipeline throughout the year, we're expecting high 6s moving forward and that includes a mix of value-add and high-performing communities with upside moving forward. One thing that's interesting is that even though the cap rates have drifted down a bit, our IRRs have remained solid and that's because of Revel and some other value-add opportunities we have that's delivering growth for us.

Your next question comes from the line of Jim Kammert with Evercore.

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

Yes. It's -- actually, it wasn't POR. It was total expenses 5.8%. And there's -- it was -- a lot of it was weather-related. We had a little bit of volume impact. And then the full year guide is 5.5% and that includes the weather-related expense in the first quarter but also some volume impacts throughout the rest of the year.

Yes. And the principal

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the OpEx guide from 5% to 5.5% is volume, Jim. It's more opportunistically.

That's helpful. And do you think -- I mean, who knows, right, with labor costs, et cetera, how does Ventas educate its senior housing residents regarding that sort of expense dynamic vis-a-vis probable price increases? Do they think -- you think residents understand that?

Jim, it's Debbie. So one important point to start the conversation is that the labor market has been pretty constructive. And so that's an important point given that we do hire caregivers to take care of the residents.

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

Your next question comes from the line of Seth Bergey with Citi.

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

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

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

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

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

So I guess 2 for me. One, just going back to the Revel deal. Can you maybe give us a little bit of flavor as to -- maybe a bit more flavor as to why the occupancy kind of hasn't picked up and kind of the positioning of the portfolio in terms of the product mix? Are there more studios, for example, when people want larger studios? Is it a price point issue or a labor issue in terms of the right people? What could get you trending higher in terms of occupancy over the next year or 2?

Yes. So it's a good question. So it's -- there's no -- there are -- there's no structural issue. It's not a situation where you have studios in a one bedroom market, for instance. This is an investment that was well built for the type of resident they're trying to serve. There -- the one thing that's interesting when you visit is, you don't see many residents hang around their apartments. I mean, these are very active communities that have a significant focus on health and wellness, fitness, education around those topics. There's a social event with music playing. There's a activity at the bar. We were there in the afternoon.

And it's just a great time. And so I think they've done a great job of introducing a product that will work and be real popular. And in many of the locations, it's already proven to deliver a stabilized occupancy but a lot of the newer product is still in lease-up. And so we'll be targeting those communities and work with the team that, that's in place that has generated some momentum already to try to help improve on really sales delivery, sales execution, also, there's some price sophistication opportunities as well that we can bring through the Ventas OI platform.

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

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

And your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

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

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

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

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

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

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

Well, I would just want to remind you that we're 87% occupied in the U.S. So we see our opportunity very much as volume-driven. We're happy that we're seeing good performance from both occupancy and from rate and that's delivering that 8.75% revenue guide that we made on the full year. So everything is contributing to the revenue growth and the improved outlook on revenue. However, volume remains the #1 focus. And we do know when you have higher occupied communities, that there's better opportunity for price performance, and we see that in our portfolio. But the opportunity really is to continue to drive occupancy in the U.S.

Right. And that's what sets up the multiyear growth and value creation opportunity from organic growth in SHOP is the rate and occupancy working together to deliver outperformance.

Okay. Great. Appreciate that. And then just circling back on potential developments. I mean, have there have been interesting development opportunities that cross -- crossed Ventas' desk that they're willing to pursue? Or is it still just mainly focused on acquisitions at this point?

We are certainly focused on acquisitions. This has been -- we're in our third year of a very successful run of acquiring communities that have attractive -- they're accretive year 1 and have a growth profile that's supporting low to mid-teen unlevered IRRs. And we -- and that pipeline has grown, and we're executing on it. So that's our first priority, along with, of course, continuing to drive organic performance across the SHOP portfolio and looking for opportunities to improve performance in those communities that we already own. Development opportunities, I'm sure there'll be some in the future but that's not our focus at the time.

Your next question comes from the line of Wes Golladay with Baird.

I just want to go back to the Revel portfolio. Just looking on the website a place for mom. Looks really highly rated. And so I just want to go back into what the game plan will be. Is it really leaning into this Ventas OI, given the new, I guess, the operator more data, advice on pricing? I'm just trying to see how near term -- what the near-term opportunity is? Will the portfolio be ready for the key leasing season?

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

And then when you look at the pipeline, I mean, is this a unique opportunity you have when you look at the future pipeline, are you seeing [Technical Difficulty] and then you get a nice dip in a few years.

Yes. I think what you -- you broke up a little bit but I think what you're asking is, is this a unique opportunity? And are there other value-add opportunities in the portfolio? We've had a number like this already. They've just been smaller. And so this is the first one at scale that we're pretty excited about. We have other value add opportunities in the $3 billion guide. So we're looking forward to delivering accretive investments with growth in a wide variety.

And your next question comes from the line of Juan Sanabria with BMO Capital.

Just a question on seniors. There's been press articles about given the tight markets about operators being able to charge entrance fees and maybe generate some revenue off of waitlist. So just curious on your approach and how that may or may not contribute to kind of the 100% occupancy goal or 0 days downtime.

Well, it starts with the value proposition. I think it's really interesting that this is, as you know, a private pay consumer-driven business that people are choosing for to -- where they want to live for the security it offers them and their families. So that is very encouraging, especially when coupled with the demographic demand that we see accelerating and then remaining elevated for a long period of time.

So that's really important to think about. And I'll turn it over to Justin really to talk about the different management of communities as they go up the curve in terms of occupancy, which we see happening and over time will happen more in our portfolio.

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

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

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

Your next question comes from the line of Farrell Granath with Bank of America.

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

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

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

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

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

Great quarter. Question #1 is, early on, Debbie, you said you're seeing increased engagement to do deals with Ventas. And I guess I'm curious why anyone would be a motivated seller with all -- everything just sort of starting to happen here. It's not like they're getting 5 caps on deals to get paid for the opportunity set going forward. So what is the -- I get the Revel deal but like what is in it for people to be a seller today? And along those lines, do you think there'll be more in the way of JV type of deals that you'll have to accommodate to continue to grow, maybe OP unit deals? I'm just curious how that dynamic might be playing into the future from an external growth standpoint.

Yes. I mean, as -- good question. It is true that more and more people are bringing assets to market, which is building our pipeline considerably and giving us a great opportunity set. And sellers come in different varieties, private equity sellers, other holders who have limited life vehicles or other holding periods that have been perhaps exceeded because of the last couple of years and who also want to make sure that they can achieve returns and then perhaps recycle capital.

We see a lot of that. We see some debt maturities and the truth is, when the assets get in our hands are likely to perform better. And so we may be having better returns than the seller could have and -- if they hold on to the asset. So it tends to be longer hold periods, different types of sellers, who maybe don't have the advantage platform that we have. This is a very difficult business to run in a just a one-off basis or in small scale. And that's why we're building this platform to be able to outperform at scale. So those are some of the reasons. I don't know if, Justin, you want to add any or did if that covered it.

Yes. Just -- there's a second part of the question regarding joint ventures. And what I would say is, the Revel deal is obviously a joint venture, is a strength-on-strength joint venture opportunity, go create value. In any investment we make, we're always looking for alignment. And we found it that way, in that case, through a joint venture and most of our senior housing investments, we're doing it through aligned management agreements. And so that's helping us to be on the same page with the operators from day 1 when we start a new relationship.

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

Okay. Next question is a lot of your -- a lot of REITs and others, again, to reiterate a recurring theme are sort of going after this opportunity, which you have to do, right? This is a great dynamic, supply-demand dynamic going forward for the next several years. But everyone is sort of standing on the same side of the boat. And when that happens, eventually the boat tips. And I'm wondering if -- do you see an opportunity of people that are buyers today that may be necessary sellers a couple of years from now when you think about development coming back into the fray, 20% below rents needed to justify development. Well, if you start today, 3 years from now, it might have made a whole lot of sense to start a development today. So I just wonder if you think that there is a second chapter of people that are buyers today, they will be sellers tomorrow for Ventas.

Yes. I mean I would -- I agree with you and the reason is more about the expertise and data that are necessary to really do well in this business. I do think some new entrants will find it more challenging, frankly and they will likely be sellers. Because you really have to know what you're doing, as Justin does from his decades in the industry, and we've spent 5 years building this platform and it's a very effective and differentiated. And if you don't have that, it's much harder to succeed. So I do think that will give us more opportunities as we look in the next couple of years.

Your next question is from Michael Goldsmith with UBS Financial.

It's Michael Goldsmith. I'm here with Justin Haasbeek. Maybe sticking with the Revel investment. It sounded like you've done some smaller lease-up or unstabilized acquisitions in the past. This one is clearly a bit bigger. So maybe the follow-up question to that is just, are you more willing now to be a buyer of these type of properties? And if so, is that driven by the improved backdrop or something else in the environment that makes this more attractive now?

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

Got it. And as a follow-up, maybe can you provide an update on the Brookdale transition, how those 45 assets are trending? Are you largely in line with your expectation of realizing $50 million of upside on those? And if so, what's the time line there?

Yes. So to remind everybody, we have 45 communities that we transitioned late last year, earlier this year from our Brookdale lease to our SHOP portfolio. These are large-scale communities that are located in markets with high demand. So tailwinds that we're playing into. They require additional investment to be competitive. We've completed -- will have completed by next month, the majority of those investments in the portfolio. So the CapEx deployment is really on track. All 5 operators are fully integrated now into the communities and they're getting handle on the operation and really focused on the key selling season. So that's going as planned. And then like I said before, we really viewed '26 as the year to put all the pieces in place, and then '27 is -- and beyond is really the NOI growth opportunity. And you're right, it -- we did see a double the NOI opportunity because it was around a $50 million run rate back at the end of '24 when we put this deal together, and we're anticipating over the next few years to be able to double that. And we've put all the pieces in place now to get started on that process.

Next question comes from the line of Michael Stroyeck with Green Street.

With the bidding trends getting more competitive, particularly within high-quality, well-stabilized product, have you seen meaningful declines in your win rates within that subset of the market?

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

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

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

So Debbie mentioned in her prepared remarks the fragmented nature of the sector. Most of the industry is operated by operators that have 10 or fewer assets. And so these are small operators. And then the large ones are usually around 100 or less. And so not particularly big. There's a few on the bigger side. So if you're going to invest in the space and you're going to do it at scale, you really need a platform that can accommodate multiple operators. And so we're very focused on doing that right. And it starts with the operating selection criteria to ensure that the operator has a strong local market focus and reputation. They have expertise in the particular product type that they're operating. The talent is experienced and the management team is a team that we can rely on to create value and deliver great care and services.

The culture in senior housing is critical, so ensuring that they're measuring customer satisfaction, they're measuring employee satisfaction. They have initiatives in place to improve on those fronts and have strong engagement with their residents and their families. And then that the managers can deliver growth. And are these operators that we can do repeat business with and have more growth moving forward as well.

And then will they engage with Ventas OI? And years ago, when we started putting the platform together, that was one of the big questions. It's no longer a question. It's become a competitive advantage and the engagement couldn't be more collaborative, more positive, more impactful than it is. So we really like our competitive advantage to have more operators. And we are at 44 now. Certainly, we continue to plan on growing within senior housing. And believe to do that, you have to be able to manage -- have a platform that can handle multiple operators.

Your next question comes from Michael Mueller with JPMorgan.

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

Well, remains to be seen. We have -- we've had outperformance in our IL occupancy growth. And Debbie mentioned the demand kind of profile and we're really not even to the point.

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for our business yet. It's not surprising to see independent living, we've seen better performance in independent living as the baby boom population started turning 80 this year. Assisted living has really strong demand as well. And we think both will have really strong demand. Both will probably surpass previous industry highs. And our goal is to outperform. So we'll tell you when we get there but we expect both categories to be well into the 90%.

Justin is a big believer in the 0 loss revenue day. So he won't be happy till every room is happily occupied by happy resident.

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

Your next question comes from the line of Nicholas Yulico with Scotiabank.

Just going back to Revel. I know you gave the stats on 6 years old on average, mid-70% occupancy on average. Can you just give us a feel, though, in terms of the vacancy? Is it more -- is it concentrated sort of evenly across the portfolio? Or is it more in like recent deliveries?

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

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

Great. Well, when we developed our 1-2-3 strategy in 2023, the focus is on basically growing SHOP organically and externally. That's number 1 and 2. And number 3 is really to drive performance in -- across the portfolio. And we have been successful in executing that strategy because as SHOP is growing fifth year double-digit NOI growth, and we're adding $6-plus billion of investments in SHOP, we're seeing that become a much larger part of our portfolio. Senior housing itself is over 60% and the -- by definition, the other parts of the portfolio are becoming a smaller portion of the overall enterprise. And that is all part of the strategy. As far as actions, we've shown a willingness over time to take actions, to modify the portfolio when we really think it's going to create long-term value, and we're certainly open to that. But right now, our real focus is on growing SHOP organically and externally and that we're devoting all of our efforts to -- with great effect to that because we think it's creating value for stakeholders.

And your next question comes from the line of Ronald Kamdem with Morgan Stanley.

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

The revenue guide obviously increased to about 8.75%, and Justin will comment on the in-place increases.

Yes. We've had another good year. It was around 8% all in, in January, which is where half the increases take place. It was around 7% last year. So we've seen improvement in that category. There's some underlying trends in move-in rents, which are very favorable as well. And as we get into a period where demand continues to pick up and occupancies continue to go up, we would expect that to continue. And still like all the occupancy upside opportunity though. So it's kind of volume first and then price

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opportunity with price down the road.

Got it. That's helpful. And I guess the -- just on the acquisition mix, I think a couple of years ago, you were much more focused on sort of the stabilized sort of assets. Obviously, with this Revel deal and maybe other deals upcoming, is this -- is there a sort of more of a shift to maybe taking on a little bit more lease-up risk given the better growth but given sort of your conviction in being to get those portfolios build? I'm just wondering if is there's sort of a shift down versus what you were doing 2 or 3 years ago.

Sure. So the focus has really been to use the market asset operator framework to determine where we make investments. And obviously, if you get the markets right and you have assets that can be competitive within those markets, you're well positioned. And then from there, it's finding the right operator, whether we're keeping operators in place or transition to new managers. And by the way, we're overwhelmingly keeping the operators. That's been our typical approach. And so once we get that right, then we're looking for the targeted returns, which at this stage are double digit to mid-teens. We've been delivering on low- to mid-teens...

Unlevered.

Unlevered IRRs over the past few years. We've had a wide variety of different types of senior housing communities deliver on our underwritten expectations so far and some of those did include value-add opportunities. This one just happens to be a little bit bigger. And so we're able to showcase it as a case study. And we'd anticipate really repeating the playbook moving forward.

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

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

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

Join us for the presentation of Ventas. I'm Dave Rogers, one of the senior REIT analyst here with Raymond James. Thanks for joining us. With me today, I'm excited to announce that the management team of Ventas is here, Chairwoman and CEO, Debra Cafaro, is here; Justin Hutchens, who is EVP of Operations and Senior Housing, and I have it written down here, but let me go back, EVP of Senior Housing and Chief Investment Officer, that's the one I was forgetting and then BJ Grant, SVP of Investor Relations. So thanks for being here, and we'll get started.

Debbie, I'm going to turn it over to you really to introduce Ventas and maybe even more than just an introduction of the company, wrap it into what's the value and kind of opportunity with Ventas today?

Okay. Well, thanks so much for being here. Thanks for hosting us. Ventas is an S&P 500 company focused on the megatrend of longevity. We serve a large and growing aging population, principally through the growth engine of senior housing. We've delivered 19% annual return since the year 2000. And we really are excited about everything that we've accomplished, particularly in the last several years since Justin has been here, and more importantly, looking forward over the next decade.

There are 3 key things that we really want to talk about. So one is the macro tailwinds of secular demand and limited supply that underpin the excitement we feel about the next decade. The second is really the machine that we've built at the company, the business that we've built, the platform that is designed to enable Ventas to outperform its scale and really capitalize on these unprecedented favorable macro trends fueled by the aging population.

And really, the third is our role as a consolidator and how all of those things together create a really compelling multiyear NOI growth opportunity as we look forward and a value creation opportunity for our shareholders. So let me touch on the first, the tailwinds. Justin came 6 years ago to the day. We focused on 2026 because that is the year that the baby boomers start to turn 80. And that wave of growth is inexorable. It's demand is strong and getting stronger as the population continues to grow looking forward. And at the same time, supply is incredibly muted. It's at historic lows. There are about 2,000 units of senior housing started in the fourth quarter. It's at least a 3-year cycle to delivery and yet 2 million people are going to have their 80th birthday in 2026. So very excited. Supply/demand very strongly kind of tipped in our favor.

Our U.S. portfolio of senior housing, our senior housing business, again, the engine of growth is over half of our business and growing, obviously, we're in the fifth year, we believe, in 2026 of double-digit NOI growth, and we expect that trend to continue. So these tailwinds are tipped strongly in our favor on both the demand and the supply side. We've built -- we have 86% occupancy in the U.S. So we see lots of room to run on occupancy rate, margin expansion in NOI. We've built the machine that Justin will talk about to capitalize on these trends. Data analytics team, industry relationships, AI, technology, all designed to help us outperform at scale and deliver alpha with the beta of these macro trends.

And then finally, we're a consolidator. We have acquired about $5 billion of senior housing investments over the past couple of years. We're leaning hard into the market. It's one of the best, if not the best, private to public arbitrage opportunities I've seen in my long career, and we're able to use this to further enhance our earnings growth per share, our dividend growth, our really delivery of value to shareholders. And the way we're funding the investments, we are also improving our balance sheet. So these investments are meeting our market asset operator framework, and they're delivering outstanding financial returns, low-teens, unlevered IRRs are expected from these investments. So a very, very attractive way to build on the engine of internal organic growth through consolidation.

And then again, it all comes together really so that we hope to outperform at scale, continue delivering TSR, continue to growing -- to deliver multiyear NOI growth and value creation. So that's the Ventas story, and now we'll be happy to take your questions.

Great. Thanks, Debbie. Let's dive in on a couple of those key points that you just talked about around operations. You mentioned 86% occupancy, and I think you also said more than 3 years of double-digit SHOP NOI growth that you've experienced. So talk about what you've done over the last handful of years to begin that engine of growth and then at 86% occupancy, I presume there's a little bit more growth in front of you as well. So talk about that opportunity, if you could.

Sure. And so you had started to introduce me as an operations person, and it happens to be that a lot of my background is operations in senior housing, running large operating companies. And I always refer to myself as an operator in REIT clothing. So you can make that my title any time you choose. I think it's a good fit potentially.

So on that note, when I joined exactly 6 years ago, Debbie had a vision to really turbocharge the senior housing business and reposition in a way that would put us into a great position as we are today to capitalize on these macro trends. And there was a handful of opportunities to do that. One was to really make sure that we had a platform that was positioned to deliver outsized performance.

And you think about this being an operating business and yet we're relying on managers to manage the day-to-day business for us. So how can we capitalize on the strengths we have in our platform that are complementary to the strengths that the operators have. The first place we look to is data. Historically, we had financial data. Now we have operational data that helps us to instead of looking backwards, we're looking forward and drive revenue trends, including sales and pricing-related trends. And there's an entire OI platform that I'm sure we'll get into that I'll describe that has positioned us to outperform.

And to your exact question around 86% occupied, the other thing we want to do is ensure that we have -- that we're well positioned in our markets to deliver growth. So the first thing we have to do is make sure we're in the right markets. And that's part of our market asset operator framework that Debbie described. We're in markets that have strong aging demographic and strong affordability. And we can't pick them anything we didn't want to be in, we're out of it, and we had 100 dispositions and over 200 acquisitions as we've been positioning within these markets.

And then the asset needs to be well positioned within those markets to be competitive. And so where needed, we've been investing into our communities. And then operator selection has been a key part of the plan because we've gone from 10 operators to over 40 operators now that we manage through our platform. Along the way, we found opportunities as we've been growing NOI and occupancy. We've had 4 years in a row of double-digit NOI growth in our SHOP portfolio. We have another one planned for this year. So 5 years in a row, but we've also been positioning ourselves for a longer runway of growth with lower relative occupancy. How do we do that? While we've been transitioning from the triple net structure of our portfolio over to the SHOP structure. There's been 150 communities that have come over in that fashion, at a lower relative occupancy that were generally undermanaged, in a lot of cases, underinvested and had lower than market occupancy.

And so we say -- we call it the double upside opportunity, which is the opportunity to outpace market and get back to market occupancy or beyond. And that's the opportunity in the SHOP portfolio. So that will be a key contributor to our growth. But the number you mentioned is that our U.S. occupancy through those actions is only 86% occupied at a time when demand has really had a big step function increase. So that's the excitement we have is just to take advantage of that opportunity.

You mentioned the OI platform, Ventas Operational Insights. I have 2 questions around that, maybe a 2-part single question. Talk about that platform, but I guess talk about it both from the context of how it's helping you operate better and select operators. And maybe to what you had mentioned a moment ago is how has it allowed you to buy assets better?

Yes. So the -- everything is important. So you have the market asset operator framework. The data that we use to make decisions organically within our portfolio from a market standpoint, is equally useful in -- on the investment side and the capital allocation side. So we're underwriting [ 15-minute ] drive times. And we have numerous data sources we use to determine that those particular markets we're entering are the right market for near, mid- and long-term success.

And then within the -- when you consider operators, there's -- we look at everything within an operator OI had to tell. We look at their relative capabilities in terms of running the day-to-day business and that's really underwriting a track record, underwriting their experience in their respective markets and the states in which they operate, the type of product because we have an unregulated independent living, we have a regulated assisted living memory care product. And we want to make sure that the operators have -- are really running the right type of community for us and in the right markets. What's the management team, what are their management team capabilities and it's important to understand senior housing that half the industry is operated by operators that have 10 or fewer assets.

So some of the smaller companies will have really good management teams that are focused on the day-to-day business, but they're not big enough yet to have every single professional discipline covered. They maybe outsourcing, maybe leaning into certain areas like clinical and risk management and sales, maybe they're not as strong in procurement yet, for instance. And so we're evaluating those capabilities. And then we're also making a judgment call about where can the Ventas OI platform plug in and be complementary. And that's important that we understand that. I can tell you that through the acquisitions that we find that there's a lot of revenue opportunity really across the board in the acquisitions that we're making, both from an occupancy and price standpoint.

So one of the first priorities is to plug in with the operators and put plans in place to really drive revenue, which, given the operating leverage in the business leads to the margin expansion opportunity. So we've had -- we had 10 operators 4 years ago. We have over 40 now. And we've been growing in the U.S. We are the #1 acquirer of senior housing in the U.S. in '25. we're #2 in '24. So it's all really kind of coming together at a point in time where the demand is picking up.

And OI stands for Operational Insights. I wanted to call it AI, so our stock would go up, and I was shut down on that. But it's Operational Insights. So -- and it's the real marriage of Justin and his team's operating experience with kind of technology-based and data-fueled insights. And you may not know, but in our business, we operate our assets, we get the P&L benefits for our shareholders, but we do it through these operators of senior housing, and that's part of the business.

And so Operational Insights the platform that, again, is designed to help us outperform at scale. It's taking all of the resources that Ventas has at this kind of top side, all the data and kind of giving it to the managers on an as-needed basis, customized to each manager, to each market, to each community to drive that performance. And they have not heretofore had access to that kind of sophisticated data thinking, experience, technology. And that's why when you look at our deck, you'll see that the proof has been in the pudding that the portfolio that we own, that they manage has outperformed on occupancy for many years running now and also NOI. So that's what it is. I just didn't want to skip kind of the foundational piece for you.

That's really helpful. I wanted to continue to talk about external growth acquisitions. You mentioned 100 assets sold, 200 acquired. It's been over $5 billion of investments in the last 5 quarters. What does that outlook look like in terms of the opportunity set in front of you to continue to acquire across the landscape of the different businesses you're in, but particularly in seniors housing.

Yes. So we've had, like I said, a good run of being a top acquirer of senior housing in the U.S. The platform is well positioned to be competitive for a number of reasons. One is our financial strength and flexibility is near the top of all potential acquirers of senior housing.

The platform that we've been describing is we're the only one that has a platform that's operational focus in the way that we've described. We have a track record where 70% of our deals have come from repeat business with existing operators, 40% with repeat sellers, which is important because we're obviously good citizens and our handshake is delivered upon when we do deals, and that's resulted in repeat opportunities. We've reviewed $35 billion of senior housing investments last year.

In the fiscal year, we delivered $2.5 billion. But if you started in the late '24 to early '26, it's $4.6 billion during that period. So that indicates that some momentum that's been picking up. We've already closed $800 million this year. We have a guide out at $2.5 billion. And there's more interest in the space, but it's also -- it would take many, many years to put the platform together, that we've done it and to be able to play and compete in the space in the way which we do, which is really required given the fragmented nature of the industry.

So we're very confident that we're well positioned to continue to compete and find external opportunities. Key point on those opportunities is that they're accretive initially because the year 1 yield has been really attractive, plus the opportunities to deliver growth. And that's the opportunity that Debbie mentioned earlier, where we just haven't seen this in our career where you have the opportunity of the accretion at the level we've had, plus growth, that's delivering on that -- those unlevered IRRs of low to mid-teens, given the growth profile of the -- beta of the growth profile opportunity, but then our opportunity to turbocharge that and outperform within our markets.

So competition is rising. We hear that all the time. You've still been successful, and you addressed that a little bit. So we can go down that road a little bit further, but also talk about the net lease conversions that you've done, the opportunity you see there. Is that something both within the portfolio and maybe in acquisitions that you see as a potential for conversion from net lease to operating business?

Well, regardless of structure, we're really looking for being in the right markets, the right asset, the right operator. We have 125 communities that are still in the triple net structure within Ventas. Those are well-covered leases. I would say that we've probably picked most of the low-hanging fruit in that regard. So there may not be as much to go for internally.

As we're looking externally, most of what we're buying is going to be owned by friends and family equity or private equity or pension and therefore, a good fit for our SHOP structure. Initially, we're not really seeing a triple net to SHOP conversion opportunity in the market. But we are seeing opportunity to make an acquisition, have a well-aligned management agreement with the managers, which is compensating for both NOI and revenue growth and paying for outperformance and then layering on the OI platform, and we're off to the races.

And in the -- I do want to emphasize that in these conversions, as we call it, where you take an asset that's in the right market, and you get rid of the triple net lease and you move it to this within our platform, that's where we're getting the outsized growth. I'll just give you one example. And that's all still in front of us. So the conversion may have occurred, but the NOI growth is still ahead. So we took 45 assets with by January 1 of this year. There's a little over $50 million of net operating income there. The occupancies are in the high 70s. There's been -- there is a huge opportunity. We change managers. We basically dispersed among 5 proven local focused operators that we do business with. We're going to invest in the assets.

And we think over time, the $50 million becomes $100 million. So that's also fueling some of this multiyear opportunity that we have. And we're really just at the beginning of that.

When you look at this opportunity, 2 things come to mind and often, we get questions on them as well. One would be around resident affordability. And then two is where you play in the spectrum of kind of the assisted living, independent living, memory care space? And I guess there's a lot of ways that you could fragment it or think about it. But what's your preferred area to play in? And how do you think about affordability for where you are?

Well, in terms of affordability, first and foremost, I don't know if we've said this yet, it's not lost on us the importance of delivering exceptionally good care and services within our setting. And when we're considering the acquisitions or managing our existing portfolio and working with operators, it all starts there. It's a consumer-driven business. People can take their money anywhere they want. We need to be delivering best-in-class care and service as well as providing a work environment that is extremely competitive. So everything really starts there.

Having said that, we've also make sure we entered markets that have strong aging demographic, strong affordability, plus many other characteristics, but those are the two that I'll focus on. So if you have an aging demographic, they certainly need to be able to afford your services. And we measure this by a metric that we call the affordability metric, which is really just a multiple of the length of stay that someone stays on average. And that is in assisted living, 2 years and independent living 3 years. Our metric is 7x in our markets at the median. So it's not being flattered by high income, the averages' being pulled up. This is the median number. And so that means that at the median, the 80-plus population in our markets can pay for 14 to 21 years length of stay, although on average, they would only stay for 2 to 3 years.

So that means easily affordable. These are people that have limited expenses at home. They are very comparable to what they'll be paying in our setting as well. So it's really not an additional cost. It's a trade-off they're making from living at home and paying for a lot of other things like maintenance and sometimes care and your property tax and all your expenses you have to go away when you become a tenant in our community and then you add on the care and services that they're purchasing.

So it's actually -- the value proposition, key point is really attractive. And that's demonstrated through the demand we've had. We've also had relatively strong rent increases as demand has picked up, even at relatively lower occupancies in the U.S., we had 8% rent increases in January. And so I think that's a testament to the quality of the service but also to the demand in our markets.

In terms of the product types, we have independent living. The definitions by NIC, National Investment Center for Senior Housing, is based on majority. So if you have a majority independent living units, which are unlicensed, then call it independent living. If you have a majority of assisted living, which is a licensed product that delivers care and services, medication, administration, activities of daily living, will also be called assisted living. So we're half and half.

And I think we like the mix. There's different dynamics facing each of them. The independent living is the higher-margin business. It's more of a discretionary decision. It is a longer length of stay, and it serves a slightly younger resident moving in. And then assisted living is need-driven. It has the benefits of being able to deliver some nursing and care delivery, activity, socialization plus memory care services, which are in very high need and it's a regulated business that's regulated by the states.

So having a mix of both has really worked well for us. And in this kind of earlier stage of baby boomers aging, we've seen independent living outperforming from an occupancy standpoint. And as we move ahead, we'll expect really both to deliver strong performance. The combined result was 370 basis points of occupancy growth in the U.S. for us last year.

So one more question for me and then we'll turn it over to the audience. But maybe Debbie and Justin, you kind of wrap this all up for us. What does this look like? I think you mentioned 19% annualized return over the last 26 years, if I remember right, what you said, 25. How does this all build up into the future for Ventas to continue this kind of trend of strong total shareholder return, earnings growth, dividend growth and the like?

Mean we're very, very focused as a management team on kind of winning together on -- for our stakeholders and first and foremost among those are our investors. And we've been able to deliver that through -- there's been a lot that's happened over the last 25 or 26 years, and we believe in the mission of the company to serve a large and growing aging population. We have to do that well, as Justin emphasized.

We have really worked hard to build the machine to capitalize on the secular demand trends and we're constantly improving that. We're an organization of constant improvement, and we're going to continue doing everything we can to outperform at scale, which will benefit the seniors in our communities and obviously, our shareholders, as we see this really unprecedented value creation opportunity as we look ahead for 10 years.

Great. Do we have any questions from the audience?

I know you have to have some, thank you.

What's the flow-through of independent [indiscernible]. And then what's [indiscernible].

So the question is what is -- it's kind of a question related to aging in place. And the question was regarding the flow-through of independent to assisted living. And I'd say the way it realistically plays out is people stay in their existing setting as long as possible. So if you're in like a pure independent living setting, there's oftentimes a relationship with a rehab provider so that residents can work on their physical mobility and stay active and healthy. Sometimes there might be home health services that move in. There can be a move to assisted living and particularly that happens if it's all under the same 4 walls. It's not really a stat we track per se. And -- but I'd say it's actually happening less frequently than you might think.

And there tends to be an agent place component and a stay-in-place kind of behavior that occurs with the residents.

If you characterize the [indiscernible] describe and how you differentiate on the operational side. How we can differentiate yourself when it comes to [indiscernible].

Well, we have significant competitive advantages on the acquisition side as well. It's certainly -- I think we have the capability of both identifying assets that are in the right -- have the right characteristics to outperform. And then once in our hands, we have the ability to help make those assets deliver the underwriting.

In the market itself, I mean, we're getting -- we have a super active pipeline. Justin mentioned, we were a top buyer senior housing. We see all the deals. We are able to have great access to and cost of capital. We are -- have a reputation and a track record, attractive to sellers and a lot of the operators who may or may not own part of the asset being sold, really respect Justin and his team, respect the company and want to be aligned with this kind of win together platform.

And so these are very significant competitive advantages that you still have to pay, but we're getting more than our fair share of deals that we want. And if we really want to go after something, our kind of success rate, I would say, is extremely high.

Any comments on challenges in finding [indiscernible] support facilities [indiscernible].

Yes. Well, the market for labor on site has gotten substantially better over the last couple of years. The environment is very constructive, I would say, on the ability to find labor and the cost per unit of labor. Justin, do you want to carry on this?

Yes. So there was -- if you rewind a few years ago when you were in that period of high inflation, the sector was really -- our wages were relatively low compared to other entry-level jobs and other sectors. One of the things the industry did is we caught up with other sectors at that time and we paid the inflation on top of that. And so there is a lot of cost increase during that period, which has made us more competitive. And the driving force behind that is that we were using temporary staffing, which was very expensive. And so there is incentive to get our wages set right so we can be competitive. That's been done.

And since then, our costs have been increasing around 5% a year on 8% revenue growth and that's really volume driven. If you adjust for volume, our operating expenses on a per occupied room basis has actually been around 2%. And we have no agency anymore. And so it has been a really constructive hiring environment for us.

So the cost per hour have been going up at or below inflation. There is I mean can you talk about retention?

Yes. So I mean there's always an ongoing emphasis on retention, and that's a natural consequence of having a part of your workforce that is kind of at the lower end of the wage spectrum. And like I said, we know how important it is to be delivering high-quality care service outcome for our residents, and we're doing that. And that's one of the key proof points that's all working for us. And if that works, then all of these -- the financial results that we've been reporting on have come to fruition.

And part of our capital CapEx initiatives, honestly are focused on making sure the community is a welcome place to work and can attract and retain labor, including things like focusing on break rooms and things that will make good employees want to come to work and want to work there and want to stay there.

Great. With that, I want to thank everybody for joining us. We'll have a breakout session afterwards. But Debbie, Justin, BJ, thanks for being here, and thank you for joining us.

Thank you.

Thank you. Appreciate it.

Welcome to Citi's 2026 Global Property CEO Conference. I'm Nick Joseph here with Seth Bergey with Citi Research. I'm pleased to have with us Ventas and CEO, Debra Cafaro. The session is for Citi clients only and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit any questions. Debbie, I'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.

Thank you, Nick. We're delighted to be here at Citi this year. Thank you all for coming. I will provide some introductory remarks. I'm happy to be joined by my colleagues here who will participate in the Q&A. Ventas is an S&P 500 company focused on the longevity economy, which means we serve a large and growing aging population.

We have scale with $50 billion plus of enterprise value and about 1,400 properties that serve that large and growing aging population. Senior housing, which is more than half of our business, is the engine of our growth, and we are projecting the fifth consecutive year of double-digit NOI growth in our SHOP or senior housing operating portfolio this year. So what's really interesting is that Ventas provides a compelling multiyear NOI growth and value creation opportunity for investors, while we, at the same time, help people live longer, healthier and happier lives.

Let me break down a little bit how we will deliver that multiyear NOI growth and value creation opportunity. First, the macro tailwinds are strong and getting stronger. Let me start with demand. Baby boomers are turning 80 starting in 2026. This year, we expect 2 million baby boomers to have a birthday of 80 years in 2026. That demand is secular, it's strong, and it's going to get stronger as we look forward over the next decade.

At the same time, in senior housing, supply is at historic lows. We saw only about 2,000 units of senior housing started in the fourth quarter of '25. So we have really unprecedented tailwinds favoring our business. More importantly, at Ventas, we've kind of built the business and a platform to capitalize on these tailwinds. And Justin will talk more about the platform that we've spent the last 5 years building really to meet this moment and enable the company to outperform at scale and we'll talk more about that in the presentation.

When you think about those characteristics, the engine of Ventas' growth is organic growth from the senior housing portfolio. And we've done a lot. I mentioned we're in, hopefully, the fifth year of double-digit NOI growth, and we think that the fundamentals support a long runway for growth in the future. Secondly, we are a consolidator. We are adding incrementally to that internal growth by acquiring multiple billions of senior housing assets, which is our #1 capital allocation priority.

Those investments are really interesting. It is a unique -- and in my experience, one of the best private to public arbitrage opportunities we have seen -- I've seen in my long career. And so those acquisitions are driving growth in the enterprise, driving earnings growth per share. They're accretive going in, and they provide significant growth with low to mid-teens unlevered IRRs expected.

So organic growth, inorganic growth. And then as you look forward, you can say that we basically have the scale to compete. We have competitive advantages. We have the team, the data analytics, the platform really to outperform, and that's giving us that multiyear NOI growth opportunity. So the 3 reasons really to own our stock are the macro tailwinds, the business we've built to capitalize on those tailwinds and really the consolidation opportunity that remains one of the best that we've seen and we're leaning into.

That's great. Thank you. Well, why don't we dive into each of those different topics, but it feels like the #1 question that we get, I think most people see the strong growth in senior housing right now. They see the next few years as being incredibly strong. But the question is always when will supply come back. And ultimately, it's when would oversupply come. And you talked about the demand and the number of people turning 80, so we can certainly frame it in terms of the amount of stock that's needed. But how do you think about just broadly across senior housing, kind of the building blocks of what would bring supply back? And how far away are we from that actually occurring?

I'll start and Justin will elaborate. So in the U.S., Ventas has occupancy in our senior housing portfolio of 86%. So that gives us this multiyear NOI growth going forward, that's based on occupancy growth, rate growth and margin expansion. What that would tell you is that rents have to go up 20% to 40% in our estimation to make most developments pencil. Developments generally take at least 3 years start to finish, sometimes more. So it's very clear in this near to intermediate-term window that the supply/demand is tipped strongly in our favor.

And again, we have the competitive advantages to really outperform in that market, so take advantage of those tailwinds and outperform. So we -- I'll turn it over to Justin to talk about -- the sheer numbers of demand are just overwhelming, and that is really the big takeaway from the macro. And I'll turn it to Justin to talk about how we think about it at Ventas.

Yes. And just to elaborate some of the other considerations as it pertains to new development. So rents need to be 20% to 40% higher. The lender appetite from a development standpoint is very low. [ Nick ] tracks the lender sentiment and lenders are very -- still not interested in pursuing funding of development senior housing. There's not really been a large-scale developer in the space. The only 2 I can really think of were building communities 20 and 30 years ago. There was a homogenous product by Sunrise and by Holiday. That's long gone -- those capabilities are long gone.

So it's hard to really imagine any big development player making a big move into senior housing. You're going to see more kind of one-off local small developers and regional operators that are trying to establish themselves again in that -- from that perspective. The fundamentals are phenomenal. And so therefore, the need will be there. And whenever this need does get delivered, they'll be hitting this wall of demand that is -- will be the best we've seen. If you think about 3 to 5 years from now, the demand is just now picking up where the baby boomers is turning 80 this year. It will be even better in the upcoming years.

So I think we're well positioned to continue to have the strong organic growth we've had in senior housing, invest into that platform to get -- to capture even more potential growth and then absorb supply if -- not really if, but when it does enter the sector again.

That's helpful. And so it sounds like at least for the, let's say, for at least the next 3 years and just given the margin expansion as occupancy grows and you hit 90% in a lot of these communities, your current kind of same-store kind of organic growth could look similar, if not accelerate from here?

Well, taking it a year at a time, we've had 4 years in a row now of double-digit NOI growth. This year, we've projected 15% NOI growth at the midpoint, and that's being flattered by even stronger growth in the U.S., 270 basis points of occupancy growth, 5% of RevPOR, 5% expense, which is just a continuation of what's been a really good run we've been on from an organic growth standpoint. And like Debbie said, we've constructed the portfolio to have an occupancy runway by positioning ourselves for lower occupied communities, a lot of which came from our triple net structure that we converted to SHOP. We grew occupancy 370 basis points last year in the U.S. and we're considering a similar run rate as part of that 270 guide this year. So we're really anticipating more opportunity. And we'll talk about '27 and beyond when we get there.

And then you put out a deck for the conference and then just the quarter-to-date kind of what you're seeing out there. Can you just walk us through kind of that and what you're kind of seeing in terms of demand for the first quarter?

Sure. Yes. So we had a good start to the year on occupancy. We reaffirmed all of our guidance that Justin just highlighted, only 2 months in at this stage. But seasonally, you'll know, oftentimes in the first quarter, it can be softer in terms of demand. We've seen continued demand strength broad-based, again, notable in independent living, which has been a trend. As expected and incorporated in our guidance, we have seen some higher expenses due to weather, the severe weather events in the first quarter, but that's embedded in our guidance. So a good start to the year and especially on the occupancy side.

And then maybe just going to Ventas OI and kind of the operating platform that you've invested in. What's the current penetration rate across the portfolio? How quickly when you acquire a new asset, can you roll that out to the asset? And then just in terms of stages of where we are, are we in early stages? Is there still opportunity that you see to kind of grow the platform and drive operating margins for the business? Can you just touch on all that with Ventas OI?

Sure. So I'm going to step back first and get to your specific questions. We have a platform that's been in development for several years. It's become clear to us that it's a massive competitive advantage for us. And pretty certain that we own the space in this regard. There's no one else that's done this yet in terms of creating an operating platform that's designed to drive outperformance in our portfolio and capital allocation decisions and particular focus on top line revenue management, including occupancy and pricing.

So I'll walk you through basically what that is. And so first of all, the framework we always look to, whether we're talking about organic growth and/or capital allocation is around the market, asset and operator. So the first thing we wanted to make sure we did is ensure that we're in strong markets. And the markets really strength are defined by a number of factors, but high level, some of the most important are the 80-plus aging demographic, the density in the market, the ability for the prospective residents in the market to pay for our care and services.

And through all the actions we've taken on the portfolio, which include dispositions and acquisitions over time, we're very well positioned in that regard. We have a strong aging demographic. We have very strong affordability, which is measured by the number of length of stays that people can pay 7x at the median in the market.

So it's not an average stat being flattered by the higher income people at the median, if you think about our length of stay being 2 to 3 years, regardless of what about -- whether you're talking about assisted living or independent living products, that means that a resident can stay for 14 to 21 years and afford to pay and use their income stream and their other sources of net worth to do that and the increasing aging demographic working together for us.

So as we've positioned our portfolio through those actions and through acquisitions, we've improved our opportunity to perform at scale. Market positioning is critical. Asset positioning is also critical as well, and we use a data-informed approach to determine where and when to invest, refresh capital to drive outperformance. And we've had a really good opportunity given that there's been about 150 communities that we had transitioned from triple net to SHOP over time and acquisitions that we've made and some refresh in some of our legacy portfolio to go for outsized growth to literally reposition a community's respective market position and drive occupancy and price upside.

And then ultimately, it's the operators that we're working with that are responsible for driving that day-to-day performance. And so probably the most powerful part of the platform is bringing to bear the data analytics and our experiential insights that we're bringing to the operators in collaboration to drive performance in areas such as occupancy, overall revenue management, pricing and expense management, benchmarking across the board, digital marketing, all designed to drive outperformance in our markets, which we've been doing for -- we've been outperforming for many years in a row now.

And so the AI has been a key component in this as well. Occupancy forecasting, for instance, from the ground up is assisted by AI, which you can imagine across 750 communities from the owner's seat, is a very sophisticated forecasting process and also informing our price volume optimization in an industry that lacks price transparency where we've become really excellent at pulling both the price and volume levers and moving towards that overall revenue growth that we've achieved.

So I'd say that the platform is well underway for many years. It's continually evolving. The adoption rate amongst the operators is extremely high. In fact, we're -- just a side statistic, in the $5 billion we've deployed in the U.S. in senior housing over the last 2 years, 70% of that business has been with repeat operators.

The operators want to be on this platform. They want to have a Ventas relationship. That's been an advantage for us. And we'll look forward to onboarding our new operators that we've brought on through acquisition. And it can take -- there's a really strong initial push to get certain operating metrics and insights underway. And then within 6 to 9 months, our operators are fully onboarded onto the platform.

And then as you kind of have these insights that you can bring to your operators, how do you kind of structure the RIDEA contracts? And how has that kind of maybe evolved to kind of align the operators to be incentivized with Ventas?

Yes. So one thing I didn't mention yet, it's Bob's favorite topic in this regard because we partnered together to develop this data platform that we have. And that is that it's extremely flexible, meaning we can meet the operator wherever they're at in terms of systems they use and the delivery of the data to us. And then we've standardized the operational and the financial data on our side. So we made it easy for them, and then we give the information back to the operators with insights around where there's opportunity to drive performance. And so that's a key point. But what was your...

Management contract.

Yes. So the management contract -- meanwhile, the management agreements are well aligned. They're driven -- the fees are driven by a percentage of NOI and revenue, plus we pay incentives for outperformance. We have flexibility around termination and which has been useful because we're constantly looking for to make sure we have the right fit across the portfolio, the perfect manager fit. And the operators are really benefiting from this outsized NOI growth that they're helping to drive. So their management fee growth is reflecting this performance that they've been driving with us in our portfolio.

And then just can you remind us what the margin flow-through is as occupancy kind of continues to grow from here just with the inherent operating leverage within the business?

Yes. So that's one of the most powerful parts of the senior housing business is the operating leverage you get as occupancy gets higher. In the fourth quarter, we had 50% incremental margin. In our guide in '26, 15% is the midpoint for NOI growth. We'll have higher than 50% incremental margin that drives that this year. And that's just a reflection of really needing less variable cost as your occupancy goes up. And we would expect to see that number get closer to 70% as our occupancy grows between 90% and 100% occupied, and that will be a key driver of growth over time.

And has that -- just trying to get at kind of the outperformance that Ventas OI can kind of provide. But as you think about kind of the margin expansion, is there a way to kind of quantify how much of that is operating leverage versus kind of the outperformance that you're able to drive with Ventas OI?

Honestly, the easiest way to really demonstrate the outperformance we've had, there's a page in our deck, it's Page 14 of our -- for those of you that have the recent deck we put out for this conference. And it demonstrates the outperformance that we've had indexed against the NIC top 99 markets in which we're located. And it's been significant. We had 160 basis points outperformance in the fourth quarter year-over-year versus the NIC top 99, and that's consistently been happening since the beginning of 2023. So there's -- that's the best proof point I can really give.

And that's an occupancy stat.

It's an occupancy stat, right?

And then as AI tools become more accessible and maybe someone can go out and use AI to kind of develop software where previously they would have had to hire a software engineer, how do you think about the competitiveness with Ventas OI? Does your -- does the data scale you have kind of provide more of a moat? Or do you see other peers able to compete with Ventas?

The data is proprietary, and this is -- we do have a competitive moat of data that is enabling us both to pick the markets where we want to have a presence to be able to -- once we have the assets, help drive performance. And really, it's all part of the platform. But it took years really to gain all this proprietary data that we're utilizing in order to make decisions and feed into the systems and that competitive moat is large and should grow over time.

And I'd just add to that, that our scale is a big advantage, too. There's only one other that has scale like ours in the U.S. So that's the key source of the data is having the scale that we have and the exposure across different asset classes, type -- senior housing asset classes in different markets.

And then the other thing, too, is it's not just about the data, it's the delivery of the information as well. And we're using our -- we have operating expertise in-house. We're using that expertise combined with the analytics to bring to the operators, we're not just asking questions around trending. We're bringing answers to them, which is really engaging and helpful for operators to prioritize which levers to pull to drive performance quickly in a pretty sophisticated operating business that's open 24/7. And so we're trying to make this as easy as possible for our operating partners to make a difference and not just taking great care of people, but also driving great outcomes for the shareholders.

Debbie, we've seen, I guess, really over the past few years, pretty substantial changes across other health care REITs, obviously, including you, but probably more moving away from diversification moving more towards single property sector REITs or at least maybe fewer 1 or 2. You remain diversified, has benefits that probably has some drawbacks. How do you think about kind of the current portfolio composition today, why be diversified? I recognize we're asking the questions, but the whole focus is on senior housing. The growth outlook looks really good for senior housing. What's the benefit of not being more senior housing right now and maybe lightening up on some of the other asset types?

Well, several years ago, we agree that there is a significant benefit to expanding our senior housing footprint. And we announced a strategy that we've been executing to lean into the opportunity there, which is compelling and somewhat unprecedented, frankly. And we've grown our business in senior housing to be well over half our business. It's going to continue to grow significantly through organic growth and external growth where we're focused on deploying capital in the senior housing business.

And so we have seen the great growth potential that's in the asset class, coupled with the machine that we have built with Justin and his team to really drive this outperformance at scale, and we are leaning in aggressively to continue to build that. And by definition, that you're sort of growing that senior housing business and the other segments are holding their own and they're contributing, but there -- senior housing is really the engine of the company and the principal reason we should continue to outperform.

So it's over 50% now. But if you had the opportunity to sell a large MOB portfolio, large life science, would that be of interest? Is there a benefit to being diversified? I understand the growth is more on the senior housing side, but it's -- still nearly 50% is not.

Yes. And again, that 50-plus percent is going to continue to grow. I think we've demonstrated over the years our intense focus on doing things that create long-term value for shareholders. And that includes, for example, the large spin-off of skilled nursing that we did. And we continue to challenge ourselves with the portfolio to consider actions that we think would create long-term value. And right now, the energy is really all around growing the senior housing business. But if something makes sense, we will absolutely consider it.

Are there synergies across the different businesses?

There is a benefit to scale in both the equity markets and the debt markets. And I mentioned at the beginning, of course, we're $50-plus billion. That really is helpful in certain areas, including making internal investments in AI and other technology and people and really attracting best and brightest and also attracting capital. And so that's how I think about the synergies. And there certainly are efficiencies internally from that scale.

Yes, there's some back office, but I'd highlight the debt scale, the importance of noncorrelated cash flows to our credit, for example. So there's clearly a benefit of scale. There's no question about it.

And we feel pretty good about giving same-store full company property growth in '26 expectation -- 10%. We feel good about that, and we're going to keep leaning into senior housing.

Makes sense. How is the transaction market changing, particularly on the senior housing side? Just are you seeing more competition? Is it different buyer types? Obviously, you're expecting to be active again this year, but you have been over the past few years. So how much has it changed?

Well, I'll repeat what I believe, which is Justin and I have been doing this probably for -- in senior housing for like 70 combined years. But it is still kind of the best private to public arbitrage opportunity that we've seen. And the pipeline is very large. It's growing. It's active. It's diverse within -- but focused on senior housing, obviously. And Justin, do you want to talk more about...?

Yes. So it's been obviously a key area of focus. The one thing I want to mention we've been obviously very U.S. focused. We were #1 in the U.S. in 2025 in capital allocation to senior housing. We were #2 in 2024. So we've established ourselves as a market leader, investing in U.S. senior housing. What amazing opportunity it is to actually buy attractive yield, which is -- means we're going to have immediate accretion in our investment activity and have growth and be able to underwrite the low -- the kind of 10% to 15% unlevered IRRs, which are consistently there for us on our investment activity, and we're still leaning into it.

And it's -- we have every strength working for us to be able to deliver on that as well. We have the financial strength and flexibility -- the -- I mentioned that we had 70% repeat business with operators. We also had 40% repeat business with sellers because we've proven to be an excellent counterparty and have positioned ourselves for repeat business. And then being one of the largest owners of senior housing in the space, having a live platform and being the operators' partner of choice has positioned us to continue to compete even in a market that's attracting a lot of new capital.

And that's why we feel confident projecting $2.5 billion of investments of that [ ilk ] that meet the market asset operator framework, meet that financial profile in 2026.

To get to that $2.5 billion, what's -- how much do you underwrite total? What percentage of what you underwrite actually gets closed?

What percentage of what?

So you're doing $2.5 billion, but you're obviously looking at a lot more. So what's the total amount you're underwriting? And then the next question is going to be, why do you pass on the deal? Like what is the reason why Ventas doesn't acquire it if -- once you're looking at it?

So we had -- we reviewed $35 billion of senior housing investments last year. We had $2.5 billion that we ultimately closed. About half of that we actually pursued with some interest. And there's -- like I said before, we're very focused on right market, right asset, right operator. And so the first -- the very first thing we look at when we screen an investment is the market and make sure that it has everything that we're looking for to drive near- and long-term success from a senior housing perspective.

The asset is obviously really important. We've been buying larger assets, most of which offer a continuum of independent assisted living and memory care or a combination of at least 2 other products. And we've had a good opportunity to find those and continue to see those opportunities. And then the operator part has been an interesting area of focus, too, because we've added -- we have 43 operators now in our SHOP portfolio, and that's up from 10 4 years ago.

And that's because through our acquisition activity, if we can underwrite a track record that has on a growth trajectory, and we see the opportunity to continue that growth trajectory, we're going to stay with the existing operator. And so that's led to an opportunity to build new relationships, also expand with some of those newer relationships we brought into the portfolio as well. Yes. So it's just been -- we're very well positioned, and we're going to continue to push our strengths.

I want to just get to a question that came in. I guess the question is just on employee turnover at the property level. And so are you hearing from your operators as employee -- have employee turnover rates and retention rates changed much? And how does that impact operating margins?

Well, the employment environment at the communities is very constructive at the present time. And the retention of employees has improved dramatically since, say, 2022. So those trends have been positive.

And I mentioned recently on our earnings call, the customer satisfaction results that we're getting in our portfolio amongst our various operators. which is critical. This is a private pay consumer-driven business. Our residents are relying on our employees to deliver these excellent services and care. And by their feedback, the results have been great. So we -- it is a constructive environment from a labor perspective and hiring trends have been really positive. The ultimate delivery of the care and service has been at a very high standard, and we like how we're positioned today.

And then one of your criteria is the right operator, how do you kind of evaluate which operators to partner with? You mentioned 70% of your acquisitions are with existing operators. So when you bring on those 30% that might be with a new operator, what are you looking at in terms of performance to go forward with that relationship?

Just one clarification. The 70% are technically existing, but they're repeat deals with operators. And some of those were new the first time like in '24, then we did a repeat deal with them in 2025. We have an extremely comprehensive review process of the operator that evaluates every single thing they do across the -- from a back-office standpoint, from a risk management standpoint, from a revenue management standpoint, from a technical systems standpoint.

And we have -- you can imagine in a fragmented sector, we're dealing with operators that are somewhat institutional, that are large scale, and we're dealing with operators that are relatively smaller that operate 10-or-so assets and all of them are delivering great care and services.

But they have a different capability from an institutional standpoint. And so we're looking for our opportunity to make sure they can deliver great results on the ground. but that we can plug in the Ventas OI platform and help to institutionalize their approach moving forward and improve upon performance. And so that's what we're looking for. And then what will happen over time is they'll kind of move up the scale in terms of our assessment of their overall capabilities.

Great. Well, we have our rapid-fire questions to end the session. What will same-store NOI growth be for senior housing overall next year in 2027?

Well, what we do know is that the secular demand from the over 80 population is strong and getting stronger as we move into 2027.

It will be hard to put into a spreadsheet. Is it about the same as this year?

You can do it. You can do it. I have confidence in you.

More or fewer of the same number of health care REITs a year from now.

I'm going to go more.

Great. Thank you very much.

Thank you very much.

Thank you for standing by. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventas Fourth Quarter 2025 Earnings Call.

[Operator Instructions] I would now like to turn the call over to BJ Grant, Senior Vice President of Investor Relations. You may begin.

Thank you, [indiscernible]. Good morning, everyone, and welcome to the Ventas Fourth Quarter and Full Year 2025 Results Conference Call. Yesterday, we issued our fourth quarter and full year 2025 earnings release, presentation materials and supplemental information package which are available on the Ventas website at ir.ventasreit.com.

As a reminder, remarks today may include forward-looking statements and other matters. Statements are subject to risks and uncertainties, and a variety of topics may cause actual results to differ materially from those contemplated in such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the 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 information package posted on the Investor Relations website. And with that, I'll turn the call over to Debra Cafaro, Chairman and CEO of Ventas.

Thank you, BJ. I want to welcome all of our shareholders and other participants to the Ventas Fourth Quarter and Full Year 2025 Earnings Call. 2025 was an outstanding year for Ventas. We delivered strong results from the execution of our 123 strategy focused on senior housing as secular demand from a large and growing aging population strengthens and supply remains constrained.

We are intent on the significant value creation opportunity ahead. We plan to use our advantaged position, proprietary Ventas operational insights platform, financial strength and industry relationships to capture the unprecedented multiyear growth opportunity in senior housing while we also help individuals live longer, healthier and happier lives.

In 2025, we drove growth at scale. Our normalized FFO per share increased by 9% and and our same-store SHOP cash net operating income grew 15%, our fourth consecutive year of double-digit SHOP NOI growth. Our enterprise value exceeded $50 billion and our fourth quarter annualized NOI and SHOP NOI reached $2.5 billion and $1.3 billion, respectively.

We raised $7 billion of capital from a wide array of sources at attractive prices during the year. Our investment activity also accelerated as we closed $2.5 billion of high-quality senior housing investments that enhance our enterprise growth. By year-end, we owned over 83,000 SHOP units and 53% of our NOI was generated by our SHOP community.

Our investors were rewarded in 2025 as Ventas delivered total shareholder returns of 35%, significantly outperforming our industry benchmarks by wide margins and the S&P 500 in a year when it reached record highs. The Ventas team has been outstanding in its commitment to each other and to excellence as we've worked together to deliver value and performance across our stakeholder base.

We are keenly focused on the multiyear NOI growth and value creation opportunities ahead. Let's start with the durable and powerful demand trends in senior housing. This year marks a historic demographic inflection point when baby boomers start to turn 80. This cohort of nearly 70 million individuals is the wealthiest generation ever. As the baby boomers age, the over-80 population should grow 28% in the next 5 years and double in 2 decades.

Today, more people than ever are choosing senior housing for the valuable benefits it provides at an affordable cost that is comparable to the cost of staying at home. Senior housing is a consumer-driven private pay business that provides important support, socialization and safety benefits to residents. We were once again reminded of the value of senior housing during the recent winter storms, when care providers across the country kept residents safe, warm and well cared for in our communities, while many seniors living alone lost power and heat.

Meanwhile, the new supply of senior housing continues to hover around all-time lows. To put this in context, there were only about 2,500 new senior housing units started in the fourth quarter of 2025. While we expect over 2 million people to turn 80 in 2026. Both sides of this demand-supply imbalance are weighted strongly in our favor, and Ventas is exceedingly well positioned to capitalize on this unprecedented opportunity.

With a long runway ahead, we intend to continue executing our strategic vision of, one, delivering outsized senior housing organic growth; two, making value-creating investments focused on senior housing; and three, driving cash flow throughout our portfolio. We also want to extend our trajectory of enhanced financial strength and flexibility. Ventas has built a scale platform to drive outperformance. Our experienced team, proprietary analytics tools, strong balance sheet, data capture and industry relationships give us a competitive moat in senior housing that continues to expand.

With our vision, strategy and market positioning in place, I'll close on our 2026 operating guidance, investment activities and dividend increase. In 2026, we expect to deliver high single-digit growth in normalized FFO per share led by SHOP. We expect SHOP to produce our fifth consecutive year of double-digit same-store cash NOI growth with occupancy, rate and margin, all showing healthy year-over-year increases.

Our total company same-store cash NOI growth should be nearly 10% in 2026. On the investment front, our team and our pipeline are extremely active. Our #1 capital allocation priority remains U.S. senior housing. We've already closed over $800 million in high-quality senior housing acquisitions year-to-date and we are highly confident we can complete $2.5 billion of investments focused on senior housing this year.

We intend to remain aggressive in expanding our senior housing business through investment activity that provides attractive risk-adjusted returns and enhances our enterprise growth rate. Finally, I'm pleased to share that our Board of Directors has approved an 8% increase in our quarterly dividend on the strength of our performance and positive multiyear outlook. Earnings and dividend growth are important components of the Ventas investment thesis. The whole Ventas team is aligned and focused on continued outperformance at scale, and we're in it to win it.

With that, I'm happy to turn the call over to Justin.

Thank you, Debbie. I'm pleased to share the results of a successful 2025 with both organic and external growth in our senior housing business. I'll start with SHOP. We had a really strong fourth quarter in our SHOP same-store portfolio. Revenue grew over 8%, led by occupancy growth of 300 basis points year-over-year and 100 basis points sequentially, demonstrating strong demand and sales execution. The occupancy growth was led by the U.S. at 370 basis points, with a particularly strong contribution from our independent living communities.

Furthermore, our communities in the U.S. top 99 markets outperformed NIC by 160 basis points. RevPOR grew 4.7%, even with the mix impact of the outsized occupancy growth in our lower-priced independent living portfolio. NOI grew 15.4% year-over-year in the fourth quarter, led by the U.S. with 18%. Margin grew 180 basis points to over 28% driven by 50% incremental margin.

A quick note as I reflect on the full year, I'm particularly proud about the occupancy. We achieved a better-than-expected 280 basis points of average occupancy growth across the portfolio led by the U.S. with 350 basis points. Once again, we saw broad-based contributions to SHOP performance across our operating partners, such as Sunrise, Atria, Discovery, Sinceri, senior lifestyles and the group Maurice, who continue to deliver exceptional care and services to our senior population and very strong financial results.

Looking ahead, we see significant opportunities for growth across multiple areas. We have spent the past several years taking numerous actions to ensure we are ready to meet this moment of accelerating demand in senior housing. Organic growth and occupancy rate and operating leverage across the SHOP portfolio. Our U.S. portfolio is well positioned for a long runway of growth at only 86% occupancy. We expect contributions to growth across the portfolio and particularly growth drivers will include our new high-quality, high-performing acquisitions, the 45 communities that were transitioned from the triple net lease with Brookdale to shop and our evolving Ventas OI execution in collaboration with our operators across the broader portfolio.

With this backdrop, I'm pleased to give our 2026 guidance for SHOP. We expect the same-store NOI growth range of 13% to 17%, driven by occupancy growth of 270 basis points year-over-year and RevPAR growth of 5% supported by in-house rent increase assumptions of 8%, which are stronger than the past couple of years.

Operating expenses are expected to grow 5% again this year as we continue to add occupancy. I'd note that we've included modestly higher expenses in the first quarter, reflecting the recent severe weather across the U.S. With these components and the positive operating leverage we expect that margin will continue to expand in 2026.

Summarizing guidance, we are looking forward to our fifth year in a row of double-digit SHOP NOI growth with 15% at the midpoint. I'll give a quick update regarding the 45 transitions of former Brookdale communities. They have fully converted the SHOP and are now operated by 5 experienced transition partners whose senior leadership teams are highly engaged.

Capital refresh projects are underway with most expected to be completed ahead of the key selling season. While still early, we anticipate modest NOI growth in 2026 and and remain confident in the long-term opportunity to double NOI across this group of communities. At the core of what we do is delivering a high-quality living experience for our residents.

Our communities support safety, connection and independence while providing the amenities, professional care and services that enhance daily life, creating peace of mind for the families of residents that experience is delivered at a compelling value proposition. On average, residents can afford to live in our communities almost 7x longer than the typical length of stay. The quality of care and services we provide is reflected in strong resident outcomes across our portfolio.

For instance, at Atria Senior Living, we've seen a third consecutive year of improvement in Net Promoter Scores [indiscernible] growing advocacy among residents and their families and continued outperformance versus industry benchmarks. [indiscernible] has also been recognized for the sixth consecutive year as the leading senior housing brand in Quebec based on an independent survey evaluating safety, building quality, programming, service levels and the quality of staff.

More than 70% of Sunrise's communities are in the best senior living rating by U.S. News & World Report, further validating their strong customer engagement and ability to deliver a differentiated experience for residents and families. Furthermore, Discovery Senior Living achieved a #1 JD Power customer satisfaction ranking, validating their ability to integrate communities, improve performance and sustain resident experience.

It's no wonder there is increasing demand for senior housing. Today, we partner with 43 operators across our SHOP portfolio, providing meaningful coverage across the senior housing continuum of care diverse geographies and a wide range of price points. Importantly, as more operators and communities are integrated into the platform, our data and analytics capabilities become increasingly powerful reinforcing the network effects that drive performance and widening our competitive moat relative to other owners of senior housing.

Our ability to manage senior housing at scale is a core competitive advantage. Our differentiated platform allows us to support a broad range of operators, enabling us to match the right operator with each community in each market and capture incremental growth opportunities. Ventas OI execution is at an all-time high.

In 2025, we significantly deepened our collaboration with operators through site visits, senior management meetings, operator summits and active asset management. This engagement enables us to work shoulder to shoulder with our operators on key priorities such as NOI driving CapEx, dynamic pricing, sales execution and rigorous benchmarking across key operating metrics, all in support of our relentless pursuit of creating environments where seniors thrive and investments flourish.

We plan to further elevate this engagement as we meaningfully expand the capabilities of our senior housing team and enhance our interdisciplinary approach to supporting and growing our network of high-performing operators. Furthermore, the Ventas aid platform is also technology agnostic meaning operators can plug into Ventas OI from a wide variety of operating systems contributing to our ability to scale.

Now turning to investments. We concluded 2025 with $2.5 billion of senior housing acquisitions. We really like what we've been buying. Our senior housing investments are squarely within our right market, right asset, right operator framework, Improved Ventas' overall SHOP portfolio quality are poised for outperformance due to favorable supply and demand dynamics and increase the company's enterprise growth rate.

In the aggregate, these investments have already created significant value based on the strong operating performance achieved under our ownership that is in line with our expectations. 2026 is off to a strong start with over $800 million of wholly owned senior housing investments across 7 transactions closed already this year. This brings our cumulative senior housing acquisitions to $4.8 billion in a little over a year. For the full year of 2026, we're providing guidance of $2.5 billion of investments focused on senior housing and we have high confidence in achieving this amount given the momentum we continue to see in our pipeline. While competition for senior housing assets has increased as additional capital flows into the sector, Ventas is uniquely positioned to deploy capital where we have strong conviction and where we can fully leverage our differentiated competitive advantages, our scale, relationships and operating expertise allow us to aggressively pursue opportunities where we believe we are best positioned to create value.

We are seeing a broader and more diverse set of potential transactions in the market across a range of investment profiles. We seek senior housing investments that combine durable in-place cash flow and growth with the potential to generate attractive risk-adjusted returns consistent with our low double-digit to mid-teens unlevered IRR targets. Our relationship-driven approach to sourcing, structuring and executing transactions, combined with the continually expanding network of high-quality operator relationships continues to provide Ventas with differentiated access and the ability to win compelling opportunities.

Ventas remains a senior housing partner of choice for operators seeking the benefits of Ventas OI in the scale, capital and operating support of our platform. Since 2024, over 70% of our transactions have been with pre-existing operator relationships. Sellers are equally focused on repeat business, reflecting our consistent execution and reliability of the counterparty which in turn creates incremental opportunities for follow-on investments. Over the past year, more than 50% of our transactions were with repeat sellers. In closing, we are looking forward to an exciting 2026 as we continue to drive organic and external growth in our senior housing business.

Now I'll hand the call to Bob.

Thank you, Justin. I'll share highlights of our fourth quarter and full year 2025 performance, our recent capital raising activities and we'll close with our 2026 outlook. We finished 2025 strong with 10% year-over-year growth in normalized FFO per share in the fourth quarter. This increase was driven by same-store property growth of 8%, led by SHOP, which increased 15%.

Our outpatient medical and research, or OMAR, business grew same-store cash NOI by nearly 4% year-over-year in the fourth quarter. Outpatient medical same-store NOI increased by 4.5%. Occupancy in outpatient medical reached almost 21% in the fourth quarter, the sixth consecutive quarter of year-over-year occupancy growth. Our outpatient medical in-house property management teams have delivered 6 straight quarters of TTM retention exceeding 85% and very strong tenant satisfaction. Meanwhile, our research portfolio, which represents 8% of total NOI grew same-store NOI by 30 basis points year-over-year supported by occupancy gains from university tenants.

Looking at our full year results. We delivered normalized FFO of $3.48 per share a 9% year-over-year increase and at the high end of our guidance range. This growth was achieved through solid execution of our 123 strategy, led by SHOP organic NOI growth and $2.5 billion of accretive senior housing investments. Strong organic growth in equity funded investments also worked together to improve our leverage to 5.2x in the fourth quarter, the best it's been since 2012.

Since the beginning of 2025, we demonstrated our advantaged access to multiple pools of capital. We raised over $7 billion since the start of last year. including nearly $4 billion in bank bonds and mortgage debt and $3.2 billion of equity [indiscernible]

We have $12 billion of unsettled equity to fund future investments. I'd highlight that our leverage pro forma for the unsettled equity is approaching 5x, and our growth outlook in 2026 suggests the trend of lower leverage is expected to continue.

Let's conclude with our full year 2026 growth outlook. For 2026, we expect net income of $0.57 per share at the midpoint. We expect 2026 normalized FFO per share to range from $3.78 to $3.88 or $3.83 at the midpoint. This guidance midpoint represents 8% year-over-year growth on a comparable basis. The building blocks of our guidance are similar to 2025 and are driven by our strategy. The 8% growth in normalized FFO per share or $0.27 per share is expected to be led by shop NOI growth and accretive investment activity.

Netted against offsets, including the expiration of noncash rental income from Brookdale and higher net interest expense from refinancing maturing debt. Our total company same-store cash NOI guidance midpoint increase of nearly 10% year-over-year is led by SHOP at 50%. Our OMAR same-store guidance midpoint of 2.5% is consistent with our growth in 2025 and is led by growth in outpatient medical.

Triple-net is expected to grow over 4%, led by cash rent increases in January for Brookdale in our triple-net senior housing business. I'd note that beginning in 2026 and as reflected in guidance, our normalized FFO will exclude noncash stock-based compensation expense, which had $0.08 per share impact in both '25 and '26 as adjusted, it has no effect on our year-over-year growth rate.

Our guidance also includes equity funded investments of $2.5 billion focused on senior housing. G&A growth in 2026 on a cash basis is generally in line with the growth of our enterprise or in the low $150 million range in 2026. We are investing in our organization in support of the company's increased asset base and expanding asset management initiatives. A more fulsome discussion of our guidance assumptions can be found in our Q4 supplemental and earnings presentation posted to our website.

To close, we are extremely pleased with our 2025 performance. The entire Ventas team is determined to continue to deliver outperformance at scale and superior performance for our shareholders. With that, I'll turn the call back to the operator.

[Operator Instructions] And your first question comes from Jim Kammert with Evercore.

Bob, just finishing up on your comment there. On the Brookdale sort of reset on the triple-net side, obviously, 4% is because of the rent bump -- but prospectively, that's kind of -- it goes back to a 1% to 1.5% kind of business. Is that a reasonable assumption for the triple net as a whole?

Yes, Jim, I would say more like 3% on average for escalators. Obviously, the January Brookdale increase is outsized, but that would be a run rate assumption outside of that.

Okay. That's great. And then another housekeeping. In the guidance, obviously, you have the quest to continue to gradually deleverage. And with the $503 million or so expected average shares of '26, would it imply for the year-end count sort of like a $27.5 million kind of net incremental shares for the year. Is that in the ballpark? Or where will we end the year, I guess, if you're providing that?

We haven't given a year ending. Maybe we'll do that later in the year. It depends a lot on timing. But what we have assumed is the $2.5 billion of investments are principally funded with equity, $1.2 billion of which is already in the bank. So when you look at the year-over-year increase in shares, it is that. It is a function of the investments equity funded. So 503 is the number for the year.

Fair enough. And so you're not going to try to get like above that, in other words, about 2.5 I got you're saying.

Your next question comes from the line of Seth Bergey with Citigroup.

It's Nick Joseph here with Seth. So just on the acquisition guidance of $2.5 billion. Obviously, you're off to a good start. I think you're almost 1/3 or probably over 1/3 of the way there already. I think you mentioned high confidence in being able to hit that, but also that competition has increased. So just hoping you could kind of talk about what you're seeing in the market today? Is it more portfolios? And what would drive you below that $2.5 billion, just given the pace you're already on?

It's Justin. Well, first of all, our pipeline is very active and has been -- we described the investment activity we've had is having momentum. And we've really been pressing our advantages to execute on our pipeline and the opportunities that are a good fit for us. When it comes to the type of deals we do, we do a number of off-market deals. For instance, the $800 million that we've closed already half of that was off market. When it comes to marketed deals, there is increased competition. And what we're finding is where we have our advantage is, first of all, the track record of closing, which has caused repeat sellers to opportunities with us. our operator relationships that have become really deep and strong and expanding those relationships and adding more operator relationships to the platform. There's plenty of activity as well overall in the U.S., and we're getting more than our fair share of that and like our opportunity to continue to do that.

And then just, I guess, unrelated, obviously, it's been a more disruptive flu season nationally, but it seems like occupancy is holding up well. what are you hearing from, I guess, your facilities or your operators on the flu season? And I guess, how have mitigation efforts changed post COVID?

Yes. And that's a really good question. There has been national headlines around a flu season that was elevated at a point in time. We're not all the way through the winter season, so we'll see how that plays out. In terms of our portfolio, there are a number of things that have changed that since the pandemic era that have improved infection control. One is simply that we're using more protective equipment such as masks, there's -- we're isolating the general public is better at just staying away if they have infection washing their hands. There's a -- so therefore, I'd say it awareness around any kind of infection in our communities and the management of that is much better than it was at one point in time. Having said that, we're also experiencing minimal flu impacts. It's been very mild and very few reports of any kind of outbreak whatsoever at this stage.

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

So just maybe on occupancy in the SHOP portfolio, you talked about sort of the weather impacting expense a little bit. Just -- can you walk us through a couple of things like how are you baking seasonality into the first and the fourth quarter? And does weather impact either occupancy or flu impacts, et cetera, what are you baking in as you go through the pay occupancy guide?

Yes. So in the $270 million, we've assumed seasonality and that would include just normal seasonal impacts and that could be weather, it could be flu related. That's in the guidance. And I think you know how the seasonality works. Obviously, we'll have more -- usually more move-out activity, a little less movement activity in the winter season, and that's the end of the year and the beginning of the year. And then the key selling season May to September, is where we have outsized movement activity and generally lower move-out activity. So that's the big opportunity every year. And we look forward to performing well within that and delivering the 270. That's the assumption. The comment I made on the call was really referring to expenses. There is obviously some recent severe weather, and we've incorporated expenses related to that in the first quarter. which is also obviously baked into the full year guidance.

Okay. Great. And then just -- obviously, the acquisition pipeline is very strong. I wonder talk about dispositions potentially in senior housing, whether it's into your fund or elsewhere, like Canada, for example, now 97% occupancy in the U.S., you have another bucket that's sort of underperforming, I guess, their Tier 3 markets. But maybe you can expand upon the future growth opportunities in both those buckets and whether anything there could be disposition candidates?

Yes. So there's a lot in there. I'll mention -- so first of all, we're always going to have some amount of pruning that we'll do within the portfolio, and there's a few hundred million that's assumed -- that would include some senior housing underperforming. We still have -- there's always a bottom part of the portfolio that doesn't have the long-term potential that we like to see it have. So that creates disposition opportunities. In terms of Canada, one thing that's interesting about that, it's a very high-quality, high-performing portfolio. It doesn't grow as much as the U.S. It's also much smaller. It was 30% of our SHOP portfolio just a few years ago. It's down to around 16% today, and that's because the U.S. is growing in every way, organically and externally. And so Canada has become in a smaller footprint. You mentioned the other markets and what -- if you look at Page 11 of the [indiscernible], people have fallen along. In the other markets, we have more of a mid-market product. And that is mostly independent living. We also have assisted living, and a lot of those communities have benefited from our plans in terms of refresh, putting new operators in place and offer a growth opportunity. They're in good markets with strong net absorption and a lot of the actions that we've directed towards the portfolio benefited that category, and it has relatively low occupancy. So we'll look forward to growth opportunity there.

Congrats on the strong results.

Your next question comes from the line of Julien Blouin with Goldman Sachs.

Maybe Justin on the Brookdale transition. Can you give us a look under the hood sort of what are the lowest sort of easiest hanging fruit that can help drive that immediate growth and improvement in 2026 you mentioned? And then maybe tying that to Ventas OI, how does that platform help your operators improve the performance of the newly transitioned assets?

Yes, great question. We had a number of triple net to SHOP conversions last year. The biggest part of that was the former Brookdale communities that were in the lease that moved to SHOP. Those communities are -- have a lot of advantages. They're large scale. They're in markets that have strong net absorption. We have 5 new operators in place. All of those operators have experienced transitioning. We have CapEx planned. Majority of them will have had their refreshes done by the key selling season. I'd say that's one of the biggest actions we're taking early. And then we expect the performance to be good over time. It's not really a 2026 story per se, it be some modest growth there. But '27 and beyond where we really expect to to see ramped up performance and go after that doubling of the NOI that we've talked about.

Got it. That's really helpful. And then I think in that, you've talked about how the time to turn a unit is very short, given the limited wear and tear in senior housing and in your portfolio. But I was wondering if you had any thoughts about the time it takes to secure a new resident to replace now going on and sort of how that might have changed in the last 12 to 24 months? And sort of how waitlist length sort of play into that? Have they sort of grown over the last 12 to 24 months as supply is subsided?

It's what grown? I didn't hear that last part.

The length of [indiscernible]

Yes. So the sales cycle tends to be really short in assisted living. We could -- sometimes, we're inside of 60 days of getting a lead, you would expect them to make a choice, whether it's with us or with another option that they're pursuing. Some move much faster than that. Way inside of 30 days, sometimes even just a matter of days in terms of the sales cycle. Independent living could be much longer. It's more of a discretionary choice. And we are seeing really the big demand driver isn't as much about the sales cycle as it is just the increasing senior population that's accessing our services. And then our sales execution has obviously been excellent because we've been able to outperform our markets for many, many orders and years in a row now. And why is that? Well, it's because of the investment in our portfolio, the operators we selected, the OI platform that we've layered on to ensure that we have good performance and we really like our opportunity probably very obviously moving into this next phase where we have even better demand. We're just really well positioned to continue to drive occupancy.

Your next question comes from the line of [indiscernible] with Deutsche Bank.

This is Sam on for [indiscernible]. A lot of my questions have been asked already, so I guess I'll throw this one out there. Do you guys have any -- I guess, can we -- how do you guys -- how should we think about the cadence of deals for the remainder of the year?

From a modeling perspective, this is Bob. I would assume over the course of the year, sort of ratably would be a good modeling assumption.

Your next question comes from the line of Michael Goldsmith with UBS.

On the assets that you're acquiring, I assume they're coming in at the kind of like low 90% occupancy. How much more occupancy upside is possible there? I know you mentioned you have shop properties that are 100% occupied in your underwriting or use. What are you assuming on the occupancy upside?

Yes. So we -- first of all, we do have a number of different types of kind of senior housing profiles in our pipeline. And that includes some value-add opportunities, really high-quality opportunities that actually have a lower occupancy that we've managed to store. So we'll expect even more occupancy runway if and when we close those investment opportunities in our pipeline. We've had our favorite has been the kind of the high-performing stabilized. And if you're 90%, you have 10% to go. And when you have markets that are projected to go all the way to 100% occupancy over the next few years, that's a very reasonable expectation. So we're going to focus on -- we have a lot of occupancy upside. We're 86% occupied in the U.S. That's been designed largely by moving our triple-net communities over to SHOP, and then we've been buying these high-quality newer communities as well. So we really like the portfolio positioning and the opportunity to grow occupancy.

Got it. And we kind of touched on this a little bit, but just maybe ask more discretely. You talked a little bit about competition, the portfolio -- some of the blended cap rates of your acquisitions to start the year were sub-7%. So -- and I know historically, it's kind of been in that 7% to 8%. So like should we expect kind of being -- remaining of the year in that like sub-7% range and that's shifting down, say, 50 basis points, like 6.5% to 7.5% versus 7% to 8%, maybe historically. Just trying to get a sense of where the market has moved.

Well, it's not surprising given the quality of this asset class that there's a lot of interest in it. So there certainly is more competition. Clearly, it hasn't slowed us down at all given how strong we're positioned there's a drifting down in cap rates. You can see it in [indiscernible] we reported under 7. And I would say, we'll report our expectations as we close deals moving forward.

And as Jason said, we remain -- we are highly competitively advantaged in making acquisitions in senior housing.

Your next question comes from Michael Carroll with RBC Capital Markets.

Just wanted to build off of the seniors housing valuation question. I mean, obviously, private market valuations have improved how difficult is it to buy assets under or at replacement cost today? I mean is there an idea of like how big at the discount it is today versus it was maybe 1 to 2 years ago?

It depends on what you're buying. So we've had -- we've been buying consistently under replacement costs. There's been some that have been a little closer to replacement costs, and it's really just a function of the age of the property usually. So we've had some really nice high-quality, newer communities that you're buying closer replacement costs. We have others that are way below still. So we're looking to try to stay at or below in terms of our investment criteria, and we've been able to do that really consistently.

And we still have -- rents would still have to grow significantly to justify new construction.

Okay. Great. And then just on the pipeline that you have today, I mean, I know that you have a $2.5 billion target for the year. You already completed about $840 million. I also know how conservative Ventas is with putting investments within their guidance ranges. So of the $1.7 billion unidentified deals, I mean, should we assume that there's a pretty good horizon or line of sight on completing those specific deals?

So we're describing it as high confidence. So you can interpret that. Yes. And the pipeline keeps growing as well.

Your next question comes from the line of John Kilichowski with Wells Fargo.

My first question is around the balance sheet and G&A really. When I look at what you gave in terms of same-store and the acquisition number, they are both great numbers and maybe the FFO was slightly below where we would have expected. And I think part of that was some higher interest expense and maybe some G&A that we're not thinking about. Could you walk us through the building blocks there and the assumptions, maybe there's some conservatism because you've already pre-funded, I believe, $500 million, but maybe there's more there that we're not considering?

Sure. Let me unpack a little bit. So there are 2 key drivers as you look at the year-over-year growth of 8% outside of the tremendous growth in SHOP and external growth. And that is, first and foremost, the expiration of the cash Brookdale amortization, we disclosed that at nauseam. That's $0.04 year-over-year. And so that's one item to note. The second is refinancing maturing debt. We do have $2.2 billion of debt to mature this year that's higher than the last couple of years. And obviously, there's a refinancing increase relative to debt on the books. Those 2 alone explain the difference between 8% to 10%. As I mentioned in my prepared remarks, G&A, we are investing in the enterprise as you would expect us to do, we're growing scale in senior housing. We're investing behind the platform. Meanwhile, we are very, very focused on efficiency and effectiveness at the same time. But I believe that we've got the right balance there. But we do have growth in our G&A in the guide as well.

Got it. That's very helpful. And then my next 1 is on the 15% same-store guide what does this imply in terms of U.S. growth? And then just overall, how much of this is just you capturing the opportunity in front of you? And how much can you attribute this to like what you talked about in your opening remarks with Ventas OI.

So we're not really giving U.S. and Canada separate, but clearly, U.S. was 18% in '25. It gives you a feel for the outsized growth potential that we have in the U.S. We really -- like I said before, we like how the portfolio is positioned. It's well invested. We have the right operators in place. We continually take actions. You mentioned Ventas. I'll just give you a flavor for some things we did in '25 as a proxy for the types of actions we've taken. So we added 12 operators last year. And so our platform is designed to onboard operators, bring them into the live platform, help them to really be able to focus on the day-to-day execution. We had 88 redevs to help to improve our competitive positioning. We had 26 communities that transitioned to new shop operators and then we converted 74 from triple net to shop to position ourselves with that lower occupied opportunity and a long runway of growth. And so we're always taking portfolio actions, but on top of that, we're also taking operational type actions. And this is where I think the power of the platform really comes into play. And our operators have the responsibility for running the day-to-day business. We have this powerful platform to help really highlight for them opportunities to improve. And that could be anywhere from sales pricing and other operational benchmark improvement opportunities. So we'll continue to kind of press that advantage and execute in '26.

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

So allow me to be painting you know well with my 2 questions. First, on on supply. I guess, Debbie, you said rents need to grow significantly to justify new construction. Well, they are growing significantly, as you guys have pointed out. And I'm wondering how supply doesn't become a relatively near-term concern just around the narrative. I mean we've seen it happen in industrial and data centers and multifamily when that was growing at 20%. So to what degree are you sort of preparing for that and because the senior housing was oversupplied before the pandemic as some of us remember. So I'm just curious, I know it's great now, but what's the strategy over the next 5 years to keep sort of that reality in the line of sight.

Yes. Thanks, Rich. The multiyear NOI growth opportunity has a really long runway, and it's principally driven by demand because of the absolute explosion of the over 80 population which is our customer base. And as I mentioned, the starts are literally in the 2000 quarter level right now. There's over 2 million people turning over 80 in 2026, and that continues to grow as far as the eye can see. And we know that there -- the cost to develop are high labor materials, et cetera. We know there's about a 3-year cycle. And what we project is that even if new development starts that there is a surge, a step function in demand as you look forward in 3, 4, 5 years. And so the demand overwhelms or should overwhelm any incremental new supply. So that's how we're looking at it. And you've referred to earlier periods, the senior population growth was very flat to low single digits. We expect it to be 28% over the coming 5 years. So we think the best is yet to come.

Okay. That's perfectly good color. Second question is on the ability comment. I think somebody said maybe it was just in 7x they could be to stay 7x longer than the average length of stay, which is an interesting stat. But in my mind, it's affordable to people who can afford it, if that it sounds silly to say. But I would argue the vast majority of seniors cannot afford this product. I don't know what the penetration rates or how you calculate that, but it's got to be at the very low end of the scale. So I'm just curious if you've given any thought to a more affordable product to sort of capture a broader range of seniors as we go through this that can afford it. I know that's being done in some other companies are doing that. I'm just wondering if you're sort of modifying your strategy to some degree to get at what is the majority of the senior population in my opinion, that can afford this product.

Rich, Debbie here. So yes, Justin did quote, and I talked about the fact that our industry provides a very important valuable benefits to seniors and their families and our communities at an affordable cost. And we have a page in the deck that's actually very illuminating on this Page 16. And I also mentioned that baby boomers who are starting to turn 80 are the wealthiest generation ever and they control about half the country's wealth. And what's really important is, as Justin said, our residents can afford senior housing almost 7x what it actually costs for them to live there. And more importantly, it's effectively a replacement expense for what seniors are paying to live in their homes alone and get any kind of modicum of in-home care, similar to what's provided in the senior living communities. And on top of that, the seniors aren't alone, they're getting the socialization and safety and support of a communal setting. So we really do believe that the product provides valuable benefits. Anyone who's ever used it in their families is understands that and that it truly is an affordable cost to this generation that will be the resident base and is starting to become the resident base starting in 2026.

Can I give you my mother's phone numbers so you can call her and tell that because...

We do it all the time. We get calls all the time because it's a very needed benefit that we provide in our business.

Your next question comes from the line of [indiscernible] with Bank of America.

This is [indiscernible]. My first question is around your pipeline. I know you've added some additional color and a lot of questions about it. But just when thinking about entering to '26, is there a quantifiable difference between what your pipeline is today versus what it was 1 year ago for '25?

We disclosed our pipeline in U.S. senior housing, $35 billion. And that -- some of which we closed last year. some of which is still in the pipeline. So this year already and some of it is still in this high confidence group that we described earlier. And I would describe the pipeline as is growing. It's certainly becoming larger. We're seeing more midsized deals. We continue to see flow business as well. So yes, there's more opportunities than we had a year ago.

Okay. And then also when looking at your same-store shop occupancy, you've now reached around that 90% threshold. And your margins are around 28% or mid- I'm just curious about now that you're stepping into a higher RevPOR growth and also layering in Ventas OI, where do we potentially see this margin number move? Are you seeing additional revenue growth and margin expansion from the layering of the Ventas OI?

Yes. So just like really in a very focused way, I would say we have 50% incremental margin in the fourth quarter. We expect in our numbers, our guidance number '26 that that will be in the 50s. So more margin expansion opportunity in '26. I mentioned the rent increases in my prepared remarks were 8% this year. There were 7 last year. So we're starting to see higher in-house rent we do have underlying improving trends and moving rents as well. So there's good support for better pricing moving forward, which makes perfect sense given the supply-demand dynamic that Debbie described and then also just having more communities that are becoming higher occupied.

Your next question comes from the line of Juan Sanabria with BMO Capital Markets.

All right. Justin, you mentioned dynamic pricing in the context of Ventas OI. So just curious if you can give us a sense of where you are in the process and the ultimate goal on how you expect and hope to price these units over time.

Yes. I would -- I mean we've been working on dynamic -- everything Ventas OI-related, we've been working on really since 2022. And it's an evolving platform, the capabilities are improving every way. They're being more technically proficient and also, really importantly, way better at executing in the field. And I would say that's one of the areas that really helped in '25, and we look forward to really expanding and pressing upon in '26. And in order to be able to deploy the SOI, you have to have high adoption from our operators. And they are highly engaged with us. So I couldn't be more happy with their willingness to work with us and therefore, execute moving forward. So I would say we're -- I always say we're early stages because it's an evolution and the goal is to get even better at it, whether you're talking about dynamic pricing or just execution across the whole platform. And as Bob said, we're putting more resources behind it. And so we're going to continue to just get even better at it moving forward.

And then just a quick follow-up to Farrell's question. On the flow-through margins kind of -- can you remind us how those should trend as you get higher and higher occupancy, I think 90% is like a critical number where you don't necessarily have to add really any incremental head count from a labor perspective. So if you could just remind us on how that may or should change as occupancy continues to grow at higher.

It gets better, the higher the occupancy goes because the operating leverage kicks in. Like I said in '26 as we kind of hover around this low 90s percent, we're expecting incremental margin in the 50s. And then we would expect that over time, as we move up the ladder towards 100% higher incremental margin, usually around 70% or so. the higher you get. So we'll have -- that's really one of the most powerful aspects of senior housing is a high operating leverage and we expect to benefit from that over the course of the next few years.

Your next question comes from the line of Michael Stroyeck with Green Street.

One question on the acceleration in RevPAR growth expected in '26. Is this a function of assets that were already seeing good growth, growing even quicker or more properties that were laggards starting to catch up? Any color on where that step up in growth is coming from would be helpful.

It's really -- yes, sure. And it's really just broad-based, and it's primarily driven -- one of the biggest drivers is obviously in-house rent increases and have that be around 8% versus around 7% a year ago is a big boost to RevPOR. And we always like to use [indiscernible] oversimplified rule of thumb and that is that RevPOR 2/3 of the in-house rent increase amount. So that puts you just under 5%. But we're also seeing solid underlying trends in terms of moving rents as well. So Honestly, this is another category that just kind of seems like we're at the beginning here. And we're pleased with the results. But as we move ahead into this strong demand environment, we look forward to performing even better on that front.

Got it. That's helpful. And then maybe one on the outpatient research business. The [indiscernible] '26 guidance assume any additional occupancy loss within the research portfolio? And do you expect that NOI has troughed in that business?

Yes. This is Bob. I'll take it. So looking at '25 is a perfect analogy, I would say, as we think about '26. So in '25, overall, OMAR delivered same-store 2.5%. Within that, the MOBs were over 3%. Modest decline in research given the backdrop there. That's a pretty good example of what we think is going to happen to continue on in '26, very, very similar. We kept the midpoint the same. So led by outperformance in outpatient medical and hanging in there on the research business.

Your next question comes from the line of Mike Mueller with JPMorgan.

Bob, can you give us some more color on the decision to exclude noncash stock comp going forward from FFO? And then what's embedded in the guide for G&A expense this year?

Sure. So first and foremost, just to be very crystal clear, it's $0.08 of noncash stock-based compensation expense in both '25 and '26. We want to make sure [indiscernible] understands that. We've modeled that in terms of our growth rate on a like-for-like basis. Why are we doing that to your question? We think that's getting to where the market is in terms of health care REITs and therefore, making it more comparable for you, the investor, as you look at our earnings. So that's the reason. In terms of G&A, I mentioned in my prepared remarks, we are investing in the platform. We are growing the platform. Low $150 million range on the cash G&A and that's on a growth rate in line with our enterprise growth rate is the expectation.

Your next question comes from the line of Ronald Kamdem with Morgan Stanley.

Just 2 quick ones. I couldn't help notice the occupancy delta between the IL and AL product I guess, just wondering, is that all acuity-driven? And strategically, do you have a preference? Or is there an optimal mix as you're buying new assets versus IL and AL?

Yes, sure. So we did have some outperformance in our independent living portfolio. We'll expect that to continue to some degree in '26. I mean we're performing really well across both independent living and assisted living. But that's been an area of strength in terms of occupancy growth and we'll continue to press on that. We're about half and half by unit independent living and assisted living. And when we target acquisitions. We do like a mix. We do like that continuum of care offering not exclusively, but when we see it, we definitely give a higher priority because it offers independent living assisted and [indiscernible] together or at least 2 of those 3 together, which just going to attract a broader audience in terms of demand and also service offering.

Great. And then can you just spend 2 seconds on just labor cost event, maybe the CapEx -- maybe CapEx per unit even because I saw the numbers were up, but presumably there was more units. But just just broad these trends on labor costs and CapEx per unit for the product would be great.

Yes. I'll take those. So on labor cost, we're assuming effectively just on a per hour basis, kind of normal inflation nothing unusual there. And we are seeing, of course, significant volume growth when you look at the 5% OpEx guide that is really a function of the volume but that would be a good proxy for per hour on wages specifically. On CapEx, we did give the FAD guide that is up year-on-year from about $300 million to $400 million. You nailed it. It's led by more units, some inflation as well, but that's the driver.

Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Justin, just going back to the 8% in-house rent increase. Have you seen any increase in move-outs as a result of the higher increase this year? And then could you just speak a little more broadly to some of those leading indicators?

Yes, sure. So first of all, it all starts with the quality of care and service delivery is paramount. And I mentioned in my prepared remarks, is really rewarding to be able to highlight some of the -- just the industry-leading recognition we're getting in our operators that we work with in that regard. That's what's most important and we're delivering really good services. We've established trust with residents and their families. And therefore, the value proposition is recognized by the customer. And therefore, we're not seeing anything unusual in terms of financially driven move-outs.

That's helpful. And then I just wanted to go back with the follow-up to the noncash comp question. And wondering if going forward, should we be expecting any change to the composition of cash versus noncash comp moving forward? Because obviously, there's implications then on the year-on-year comparison for growth.

No, in '25 and '26, I mentioned, both are $0.08, and I wouldn't expect going forward there to be anything unusual as it relates to the noncash piece.

Your next question comes from the line of Wes Golladay with Baird.

I just have a quick question on development. I guess when do you think it would start to pick up, albeit off of a low level? And then how would Ventas like to participate? Would you like to [indiscernible] just waiting by afterwards?

Okay. Good question. So we like acquisitions. We like buying durable well-established in-place cash flow that will grow. That's been our priority from an investment standpoint. In terms of development, First of all, we think rents need to be 20% to 30% higher and that's even at a relatively modest development yield. There's -- this is a tremendously well-supported business, though in every way, as we described on this earnings call. So it's very reasonable to expect that there will be new supply. We would also expect that the first to come that you would see announced in terms of starts would be ultra-premium products. And that's a product that is so differentiated in terms of price when they enter a market that they don't -- they're well positioned to be the price leader. So that would be the kind of the exception that you would see come early. And then -- but it's still going to take some time. rents need to catch up. And when they do, as Debbie mentioned, you have a 3-year runway. And when that supply opens, you're hitting this tremendous amount of demand. So we really, really like the outlook in that regard.

I will now turn the call back over to Debra Cafaro, Chairman and CEO of Ventas for closing remarks.

Well, everyone, I do want to say we had a great year at Ventas in 2025, and we look forward to having another one this year. I want to thank you for joining today's call and for your interest in the company. We look forward to seeing you soon.

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

Thank you for standing by. My name is Van and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventas Third Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to BJ Grant, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Van. Good morning, everyone, and welcome to the Ventas Third Quarter 2025 Results Conference Call. Yesterday, we issued our third quarter 2025 earnings release, presentation materials and supplemental information package, 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 topics may cause actual results to differ materially from those contemplated in such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the 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 information package posted on the Investor Relations website.

And with that, I'll turn the call over to Debra A. Cafaro, Chairman and CEO of Ventas.

Thank you, BJ. I'd like to welcome all of our shareholders and other participants to the Ventas Third Quarter 2025 Earnings Call. Building on our momentum, Ventas delivered excellent performance and growth in the quarter as we continue to execute on our 123 strategy. Our strategy is based on the megatrend of longevity. As one of the world's largest owners and acquirers of private pay senior housing, we are positioned to capitalize on the sustained growth in demand from a large and expanding aging population. Our strategy emphasizes growing our private pay SHOP business organically and by investing in senior housing. We are doing both as we expect 2025 to be our fourth year of double-digit SHOP NOI growth, and we anticipate closing $2.5 billion of private pay U.S. senior housing investments during the year.

Most importantly, we foresee at least another decade of accelerating demand for senior housing. The Ventas strategy, organization and team have been built to meet this moment and capitalize on the favorable external demand backdrop. Over the past several years, we have added expertise, acquired over $4 billion of senior housing communities, converted communities from triple net to SHOP, expanded our SHOP operator base, made significant strategic dispositions, increased our scale and improved our financial profile. As a result, our enterprise is now delivering $2.5 billion of net operating income. Our SHOP percentage of NOI has increased nearly 2,000 basis points to represent half our business. We are working with over 40 SHOP operators. We have created significant occupancy and NOI upside potential in our 85% occupied U.S. SHOP portfolio through our deliberate portfolio composition, and our leverage has improved by 2 full turn.

These actions and outcomes are designed to take advantage of powerful secular tailwinds in senior housing where supply and demand are tipped strongly in our favor, and we have this scale, platform and financial strength to win. Demographic demand is accelerating as baby boomers are starting to turn 80 this coming year and more people than ever are choosing senior housing for the valuable benefits it provides. The over-80 population is expected to surge into the coming decade and grow 28% just in the next 5 years. Yet senior housing supply is at record lows in both inventory growth and the number of new construction starts with just over 1,200 units started in the third quarter. Our strategy is producing strong results, increasing our enterprise growth rate and building financial strength.

Let's now turn to the highlights of our quarterly results and latest 2025 guidance increase, our outsized organic growth in our senior housing operating portfolio and are active and increasing investment activities. Normalized FFO per share grew 10% year-over-year, and total company Same-Store Cash NOI increased 8%. SHOP once again powered our results, enjoying a strong key selling season. We saw broad-based demand for our communities and excellent RevPOR and revenue strength. Our U.S. communities led the way with 19% Same-Store Cash NOI growth and 340 basis points of occupancy growth. I want to extend a sincere thanks to our operators and the Ventas team to deliver this performance while helping seniors live longer, healthier and happier lives.

We're pleased once again to increase our full year guidance, driven by our SHOP performance and increased senior housing investment activity. We now expect year-over-year growth of 9% in normalized FFO per share and 7.5% total company Same-Store Cash NOI at the midpoint of our improved guidance. These growth rates will put us in the top tier of companies across the REIT landscape, if achieved.

On the investment front, we are seeing a strong upward trend in transaction activity and our pipeline continues to grow with quality investment opportunities in senior housing. We are accelerating our senior housing investment activities to expand the Ventas SHOP portfolio and increase our enterprise growth rate. Private pay U.S. senior housing is the company's #1 capital allocation priority. The environment is highly favorable, private to public arbitrage opportunities are increasing, our strong and broad-based industry relationships are generating significant deal flow, and our capabilities, track record and financial strength provide meaningful competitive advantages. We've already closed $2.2 billion of senior housing acquisitions in the U.S. year-to-date and we've increased our 2025 investment guidance to $2.5 billion. We intend to build on our momentum. Following our right market, right asset, right operator framework, we are prioritizing investment opportunities in private pay senior housing that have different combinations of growth and yield to produce attractive risk-adjusted returns for our shareholders.

Next, I'd like to highlight a key SHOP growth initiative. The previously announced transactions relating to 121 Triple-Net lease senior housing communities are well underway. We've already converted from Triple-Net to SHOP 27 of the 45 senior housing communities slated for management transitions by year-end. We continue to expect to achieve significant occupancy and NOI upside in these communities over time. For the 65 communities remaining under the lease, cash rent will increase 33% beginning in 2026, and the disposition of the remaining 11 assets is in progress, with sale proceeds to be retained by Ventas.

A final note on our research portfolio, which is generating only 8% of our enterprise NOI. Our portfolio has been constructed in a unique way. Within this small portion of our business, about 3/4 of our base rents are from creditworthy institutional leaders in medicine, pharma and research with a weighted average lease term of over 9 years. Making this portion of our NOI relatively well insulated from current market challenges. Importantly, only about 10% of our research portfolio is leased to pre-revenue or co-working tenants. We have no ground-up development in progress. And we continue to see institutional demand in new and renewal leasing from university, medical and global pharma tenants.

In conclusion, we have built Ventas to meet this moment and capitalize on the secular demand from a large and growing aging population. We are executing our strategy to grow senior housing and delivering outstanding results, and we are well positioned to increase our deal activity. The future is bright as we use our many competitive advantages, to deliver value for stakeholders and seize the unprecedented multiyear growth opportunity ahead. The entire Ventas team is in it to win it.

And now I'm happy to turn the call over to Justin.

Thank you, Debbie. I'm excited to share an update on how 2025 has been progressing as we continue to execute on our strategy to drive both organic and external growth in our senior housing business. Let's start with SHOP.

Our SHOP Same-Store portfolio delivered 16% NOI growth year-over-year in the quarter, led by the U.S. with 19% growth. Margin grew 200 basis points to 28% driven by over 50% incremental margin. Revenue grew 8% due to strength in both occupancy and pricing. We saw broad-based contributions to SHOP performance across our operating partners, delivering exceptional care and services to our senior population and very strong financial results with Sunrise and Atria, leading the way. RevPOR grew 4.7% as our dynamic pricing continues to strike the balance between price and volume. Average occupancy grew 270 basis points year-over-year, led by the U.S. at 340 basis points with a particularly strong contribution from our independent living communities. We had industry-leading sequential occupancy growth of 160 basis points overall and 200 basis points in the U.S. Furthermore, we expect sequential average occupancy growth to continue into the fourth quarter.

Moving on to SHOP guidance. I am pleased to raise SHOP guidance again with an NOI growth range of 14% to 16%. We continue to anticipate occupancy growth of 270 basis points in higher RevPOR driven by strong pricing as move-in rents and in-house rates are both increasing year-over-year.

I'd like to turn your attention to Page 12 in the earnings presentation. On the left side of the page, you'll note, we have consistently outperformed the NIC Top 99 markets. The third quarter resulted in 120 basis points of outperformance versus NIC Top 99, both year-over-year and sequentially. On the right side of the page, you can see the key selling season was excellent with 230 basis points growth, representing our best key selling season performance in a number of years.

Now I'll comment on portfolio strategy. Our portfolio strategy executed through our Ventas OI platform is centered on what we call the right market, right asset, right operator approach is a disciplined framework that ensures every investment we make in every partnership that we pursue, enhances long-term value creation. We've spent years building a platform that's ready for this wave of demand in senior housing. We now have sophisticated data analytics and the ability to deliver those insights directly to our operators through our Ventas OI platform. We've enhanced our CapEx management, optimized dynamic pricing and developed a broader platform capabilities needed to effectively drive performance and support 40 operators managing our communities and that number continues to grow. Equally important, we have tremendous respect and appreciation for the critical role our operators play in delivering care and services to seniors and achieving market-leading performance. Having walked in their shoes, we understand the importance of what they do, and we place the quality of our relationships with our operators among our highest priorities. This level of readiness doesn't happen overnight. It's a result of a deliberate multiyear evolution of our platform that positions us to capture the significant opportunities ahead.

We have taken numerous actions over the past 5 years to ensure success in our senior housing business. Those actions include 215 acquisitions, 116 dispositions, 295 transitions to new managers, 307 community refreshes and 157 conversions of low occupied communities from Triple-Net to SHOP. The net result is a much larger and well-positioned SHOP portfolio, fueling double-digit NOI growth with embedded occupancy upside. This framework drives our underlying decision-making in our senior housing business why our portfolio is well positioned to grow. It's a focused, data-driven approach and it's working.

For example, I'd like to refer you to Page 9 of the earnings presentation where we lay out our Ventas OI performance management strategy. I want to make it clear our SHOP portfolio is well positioned for occupancy growth as our U.S. portfolio is only 85% occupied due primarily to our deliberate actions converting underperforming communities from the Triple-Net structure to SHOP. Our U.S. portfolio is well positioned to achieve substantial upside in markets that offer significant net demand over the next several years and will benefit from operational enhancements driven through our Ventas OI platform.

As we've been expanding our SHOP footprint to half of the company's NOI, our Ventas OI capabilities continue to evolve, and we have been deliberate in positioning the portfolio for significant occupancy and NOI upside. Our most recent example of the Triple-Net to SHOP conversion is the 45 communities which are 78% occupied converting from the Brookdale lease to SHOP and transitioning to 5 aligned, proven, high-performing local market-focused operators with significant transition experience and track records of delivering excellent results. This transition is well underway. We have completed 27 of the transitions through October, and we expect to be finished by the end of the year. The communities have performed well year-to-date with both occupancy and NOI growth. We have already made progress with the read-out plans with a significant number of the projects expected to complete by the key selling season of 2026. We continue to expect greater than $50 million of NOI upside over time as the new operators execute and reinvest NOI-generating CapEx of around $2 million per building.

Senior housing is a high-touch business, and I'm pleased to report that in the communities that have already transitioned, there is a strong level of engagement between local management teams and the new operators along with a great deal of enthusiasm. I'd like to note that this transition is occurring with the full cooperation and support of Brookdale, which is greatly appreciated. Furthermore, we look forward to collaborating with Brookdale on the 65 assets where the lease has been renewed.

Moving on to investments. We continue to build on our momentum and our relationship-driven capital allocation plan targeting private pay senior housing in the U.S., and we have now completed $4.1 billion of senior housing investments since the middle of last year, of which $3.5 billion closed during the past 4 quarters. We have closed $2.2 billion of senior housing acquisitions year-to-date. We have a robust pipeline that continues to expand, and our latest guidance for 2025 is now $2.5 billion. Our senior housing flow business is in full swing as our year-to-date senior housing investments totaled 20 transactions for 50 communities with approximately 6,200 units across 15 states. The average deal size is $110 million, including a range of singles, doubles, triples together with select larger portfolio deals. These properties improve our SHOP portfolio quality, increase the company's enterprise growth rate and are located in attractive markets that are poised for outperformance due to favorable supply and demand dynamics. We continue to have an advantaged position to source and close meaningful and attractive senior housing transactions and the opportunity set is growing at an accelerating rate.

We look for a range of senior housing investment opportunities, each with its own balance of growth and yield, so we can deliver attractive returns that align with our targeted low to mid-teens [ unlevered IRRs ]. It has become clear that Ventas is a senior housing partner of choice across our many transactions. Our growing stable of strong operator relationships provides us with preferred access and the opportunity to win deals. Our transaction execution track record has also created opportunities for repeat business with sellers.

In summary, we have conviction in our strategy, and we are intensifying our efforts to drive outperformance in our senior housing business, and the best is yet to come. I'm confident in our ability to execute and create value for our stakeholders in senior housing and investments execution, including a valuable living experience for residents, valuable workplace experience for the tens of thousands of dedicated community staff and ultimately leading to significant value creation for our shareholders.

Now I'll hand the call to Bob.

Thank you, Justin. I'll start with our third quarter performance, highlight our balance sheet and conclude with our improved guidance for the year.

Starting with our enterprise performance. Ventas delivered normalized FFO per share of $0.88 in the third quarter, which represents a 10% increase year-over-year, driving the strong year-over-year growth with total company Same-Store Cash NOI of 8% led by SHOP growth of 16%. Our outpatient medical and research business, or [ OMAR ], reported Same-Store Cash NOI growth of 3.7% year-over-year, led by outpatient medical. Outpatient Medical third quarter occupancy improved 50 basis points year-over-year to 90.6%, a 20 basis point sequential increase versus the second quarter. TTM tenant retention was a strong 87% in the third quarter, an increase of 200 basis points year-over-year, reflecting tenant satisfaction scores in the 95th percentile. Our research business represents 8% of our NOI. In the third quarter, research Same-Store Cash NOI was $400,000 lower year-over-year driven by lower rents on certain innovation flex space tenants as previously discussed.

Next, turning to our balance sheet and liquidity. Our net debt to EBITDA of 5.3x in the third quarter represents a full turn improvement from third quarter of 2024. This leverage reduction was driven by a combination of organic growth and equity funded senior housing investments consistent with our strategy. I would note that this significant improvement in leverage was achieved while delivering normalized FFO per share growth in the top echelon of REITs.

We've already fully funded -- equity funded our $2.5 billion investment guidance for 2025 with $2.6 billion of equity raised, including $0.5 billion of unsettled equity forwards. We have over $4 billion of liquidity as of September 30, which supports Ventas' growth and financial flexibility.

I'll close with our updated and improved 2025 guidance. We expect net income attributable to common stockholders to range from $0.49 per share to $0.52 per share. We are also improving our full year normalized FFO guidance midpoint by $0.03 to $3.47 per share. This improved 2025 guidance midpoint represents 9% year-over-year growth in normalized FFO per share. Approximately 2/3 of our $0.03 guidance increase at the normalized midpoint can be explained by our improved SHOP performance in senior housing investments completed year-to-date, with the final 1/3 representing improvements across the balance of the enterprise.

We've also raised our total company Same-Store Cash NOI growth by 50 basis points to 7.5% year-over-year, led by the SHOP Same-Store NOI midpoint improving by 100 basis points to 15%. In our updated guidance with the 45 Brookdale conversions now underway, we are reflecting the shift in NOI from these conversions from our Triple-Net segment to our SHOP segment. Because cash rent on these 45 conversion assets approximates current NOI at the assets, the net impact on 25 FFO is de minimis. I would point you to our earnings presentation deck and supplemental for more detail on these and other assumptions underpinning our guidance.

To close, we are pleased with the results both in the quarter and so far this year. The entire Ventas team is determined to build on our momentum and to continue delivering superior performance for our shareholders. And with that, I'll turn the call back to the operator.

[Operator Instructions] Our first question comes from the line of Jonathan Hughes, Raymond James.

Good morning. Thank you for the prepared remarks and commentary. I was hoping you could talk more about underwriting criteria. I know the acquisition volume guidance is $2.5 billion from [ $1 billion ] at the start of the year, and you've been very consistent on buying properties with 7% yields. But with the lower cost of capital today, it seems like you'd now be able to make the math work to buy some lower initial yielding properties that come with higher growth, but still low to mid-teens IRRs. I guess, are there any plans to lower those initial yield requirements, maybe get more aggressive to buy properties with more growth given the outlook for seniors housing supply, demand is so strong over the next 5, 10 years?

Jonathan, it's Debbie. We are certainly going to be ambitious in our goal to grow our senior housing business as we have over the last couple of years and build on our momentum.

It's Justin. Yes, and we -- like I said in my prepared remarks, $3.5 billion of [indiscernible] have been over the past 4 quarters. So the volume has been accelerating. We have momentum in our pipeline and the execution on that pipeline. And we are really happy with the returns we've been getting. The primary metric we target are unlevered IRRs. Everything has been in the range of low to mid-teens. And there's a variety of way to getting there, and it's really yield and growth, and we've seen the opportunity to buy assets that are delivering significant growth potential. And that's where we're leaning in and we're using the market asset operator framework to help determine where to focus. And we've had plenty to do, and we look forward to doing as much more of it as we possibly can.

Okay. I'll ask 1 more, if I can. On the leverage, it's great to see that improvement. Can you just remind us of the target leverage, how you weigh equity and debt to fund this external growth, especially given that cost of equity capital today is really attractive?

Yes, I'll take that, Jonathan. We're really pleased with the leverage improvement, [ 5.3x ] for the quarter. That's a full turn and the strategy that we set out quite a while ago now of organic growth plus equity funded investments given the returns has really been working. And so we're going to continue to run that play as long as the market gives us the opportunity. We are obviously trending favorably in terms of leverage, I would expect that to continue should the market conditions exist. And that just gives us more flywheel and more opportunity to continue to invest. So that's the strategy and that's the approach. We are clear eye that equity is very precious and therefore, making sure that we're investing in the best assets as Justin described, but we're really pleased with the way the playbook is working.

Our next question comes from the line of Michael Carroll, RBC Capital Markets.

I wanted to quickly touch on the Brookdale SHOP transitions and the revenue-generating CapEx that Ventas plans to putting into these assets. And can you give us a few examples on what type of investments these will be? And how disruptive will that be the current results? I mean, is it just trying to get these done before the key selling season, and that's just the key to minimize this disruption?

Yes. So I'm going to start with kind of the plans we have in place to help ensure smooth transitions. First thing, just to reiterate something I said in that is that the performance has been really good. So we're receiving the communities with -- in a place where they've had really good occupancy and NOI growth over the past year. There's been a very high-touch approach with my team, our team here at Ventas, but also the operators, the CEOs of the operators have been personally engaged in the communities on the ground right away, assessing the situation and the opportunity to improve on operations, and also help us to solidify our plans to invest the refresh CapEx. The types of projects that we're focused on are mainly kind of -- I call them like routine refreshes. We're repositioning through common area refresh, paint paper, furniture fixture as we refresh all the lighting, first impression type investments. And we've become pretty expert at doing this with as little disruption as possible.

There's a few projects that are much larger that we have. We have the [ Hallmark ] in Chicago, which will get a full readout, that's a really exciting, high-rise that has been a market leader for years, and we're going to take it to a new level with the new operations and the investment. But most of them are pretty routine, projects that we have immense experience delivering.

Okay. Great. And then just lastly for me. I know the SHOP portfolio, at least on the Same-Store side, has really delivered some good margin expansion of about 200 basis points year-over-year. Just given that occupancy now for the Same-Store portfolio is 89% and presumably next year, it's going to get above 90%, how much faster can that margin expand? Because I know, Justin, you've always talked about that you get more incremental margins as occupancy improves. So like where it's a good kind of ballpark of how much that could pick up?

Yes. So it's one of our favorite topics, margin expansion and incremental margin. And we've experienced really over the past full 2 years, 50% incremental margin in our SHOP performance and that's a [ rule of thumb ] that we've articulated many times. And that [indiscernible] really applies for that journey from 80% to 90% occupancy. But once you start getting over 90% and our way to 100%, you start to see a higher incremental margin closer to 70% because that operating leverage has really kicked in.

So that will be an opportunity -- just simply through operating leverage and growing occupancy to have [indiscernible] . The other opportunity is through price. And you've heard so far in our prepared remarks, we have good experience in terms of RevPOR growth. That's driven by underlying rent increases and move-in rents. And in both cases, the higher occupancy you get, the stronger that result is. We get 2x the RevPOR growth. We get 2x the move-in rents in communities that are over 90% occupied versus the rest of the portfolio. So that will create opportunities to help push margin as well.

Our next question comes from the line of Farrell Granath from Bank of America.

I first wanted to address the comment in the opening remarks about occupancy is expected to increase sequentially or at least quarter-over-quarter. I was just wondering if that has to do with anything coming into the Same-Store at a higher occupancy? Or if you're seeing things in market trends right now?

So it is -- this is about just a strong end to the third quarter and that carrying into the fourth quarter. And we have good visibility into that, obviously, so far. So it's an organic outcome driven by strong demand and strong move-in volume that we're seeing.

And I also wanted to ask about as your pipeline right now is all U.S. SHOP, what's your comfortability of potentially expanding that into the U.K. or in other areas as well?

Great question. I'm sitting here with Justin to -- I think it's the only REIT executive who actually ran a U.K. large senior living company. So I'll let him take that question.

Yes. So I would say our first, second and third priorities are to invest in private pay senior housing in the U.S. We were -- we like the footprint we have in Canada, don't have meaningful plans to expand there. The U.K. is interesting. One thing we did do there is set up our SHOP platform earlier this year with a new operator, [ CCG ] who's been delivering excellent results so far. So we look forward to expanding our footprint in the U.K. over time, but the U.S. is where all the action is.

Our next question comes from the line of Vikram Malhotra from Mizuho.

Congrats on the strong results. Just 2 questions. I guess, one, a lot of your peers are engaging in, I guess, strategic portfolio shifts, whether it's selling MOBs or some MOBs or moving into the U.K. and our peers, I mean, just a broader health care set. I'm wondering sort of as you think of the portfolio today with the life -- university exposure, medical office, but then this outsized growth in SHOP, like is there thinking about like bigger picture change in the portfolio, number one? And then just going back to specifically on Canada, you've had really good results there. But what's the appetite to sort of monetize the investment and the returns maybe into a fund or just outright selling?

Thanks, Vikram. Of course, we're always willing to consider, and we're always evaluating different portfolio actions that we think will create long-term value for the company, and you've seen us do that over the years, and we'll continue to actively monitor our portfolio for those types of actions. Currently, our main focus, which I'm sure is coming across is really in aggressively growing our private pay shop business, which we've increased 2,000 basis points to have the company over the last couple of years, and we're going to continue to try to rapidly expand that business from internal and external investment activity.

Our next question comes from the line of Michael Goldsmith from UBS.

You raised your SHOP RevPOR growth guidance from 4.5% to greater than 4.5%. It seems like every quarter, we see less and less supply growth. Can you just talk about the change to greater than 4.5% and how much visibility you have into 2026, given pricing power should strengthen in occupancy increases and further do you think higher RevPOR growth can somewhat offset any slower occupancy growth in the future?

Sure. So our -- we've been really pleased with our underlying pricing, both in terms of rent increases this year as well as the movement rent trends, which are up year-over-year. And they're working together through our dynamic pricing approach with our operators to deliver that result. And one of the things we're equally as pleased about is that we're striking a really good balance of also driving occupancy and price together, which is what this dynamic pricing has approached is designed to do.

In terms of the opportunity moving forward, it's a -- we're not going to really get into 2026 right now. But some of the things I mentioned earlier, I think earlier are really relevant. And that is that in higher occupied communities, we've seen better price outcomes, both in-house and through move-in rents. Obviously, demand has been really good, and we have more scarcity value across our portfolio. So over time, that should create an opportunity. And when it's time to get into 2026, we'll do that, but this isn't the time yet.

I appreciate the response. And as a follow-up, you acquired $2.2 billion of stabilized senior housing year-to-date at a 10 new local-focused operator relationships. It appears these are good operators because occupancy is already at 91%. But can you talk about what you look for when assessing whether a new operator is the Ventas platform and then the average price per unit on the year-to-date activity was $381,000. So is that still a discount to replacement cost? And if so, how much if you had to estimate?

Yes. So we've consistently been buying below replacement costs, and it varies anywhere from 10% to 50%, depending on which particular investment we're talking about.

One thing I want to clear up is, you mentioned the word stabilized, and we really don't of 90% occupancy is being stabilized. There's -- we're sitting in markets that have net absorption projection of 1,000 basis points plus over the next few years. So we have not only good operational opportunity, but a tailwind that is unprecedented that we're facing. We have -- and then we have the price opportunity of reiterated that comes with that as well. So we see a lot of growth ahead in these assets.

And just to reiterate another strategic point I made. On top of the acquisitions, we also have had the strategy of moving our Triple-Net communities over to SHOP. And those communities were lower occupied. The most recent example is Brookdale, 78% occupied. And what that's delivered for us is a U.S. occupancy that's 85%. So we're buying these high-performing communities through acquisitions. We transitioned the lower occupied communities from Triple-Net to SHOP, and we have a long runway ahead of growth opportunity with tailwinds to support it and a platform designed to deliver on that.

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

Our next question comes from the line of Seth Bergey from Citi.

It's Joseph here with Seth. Debbie, I just want to go back to the question on diversification and kind of the benefits of being more diversified versus more of a pure play. Is it -- do you think there are synergies between the businesses? Is it just a matter of pricing? And if you had the right pricing, you'd look to get more pure play? What -- how do you think about kind of the portfolio composition, the company composition overall and ultimately, how that attracts equity capital relative to the other health care companies out there?

Yes. Overall, as I mentioned, the company's portfolio is unified by the megatrend of longevity. And of course, the senior housing business caters to the over 80 population, which is growing -- is large and growing and should be accelerating in growth over the next decade, as I mentioned, just 28% over the next 5 years.

And so -- we are leaning heavily into our senior housing business, and that is our #1 priority to grow that. By doing so, both internally and through external investments, we are increasing the growth rate of the enterprise, which we believe increases our return to shareholders. And we're going to continue leaning into that strategy. We're always evaluating the merits of all of our businesses, all of our assets, and we're open-minded to considering portfolio changes, and we'll continue to be aggressive in looking for ways to create value for shareholders.

And then just as you think about that growth, I think you said the first, second and third priority is in the U.S. Are you seeing different amount of competition for senior housing assets in the U.S. versus anything internationally that you do look at?

Well, I mean, senior housing [indiscernible] obviously a strong performing asset class. There's new capital entering the market. We've seen more competition. We've seen a much bigger pipeline though. So we -- it's not surprising that I'd be more interested in the asset class given the fundamentals but we really like our ability to compete. As I mentioned, the platform is designed to manage a large number of operators. That's important because 75% of the sector is operated by operators [indiscernible] assets. So if you're going to grow at scale in this sector, you need a platform that can manage multiple operators. And we do that as well as anybody and we're positioned through that through OI platform as well as our transaction experience and track record and our financial strength and flexibility that has positioned us to continue to grow. So we like our ability to compete, whether it's the U.S. or in other markets.

Our next question comes from the line of Richard Anderson, Cantor Fitzgerald.

So not to bring up what was a source subject at the time. But back in March, you had this sort of surprise uptick in debts that caused some disruption in the sort of the transition to the following quarter. And I'm wondering if that has sort of smoothed out over the course of 2025, whereas it sort of slowed down, hopefully, where the full year 2025 might look like a lot of other years? And is that playing any role in your optimism in terms of sequential occupancy growth into '20 -- into the fourth quarter? Or is it sort of a normal pace now? Just wondering if that's playing a role at all.

Richard, it's Justin. Yes, so the bottom line is that we never backed off our full year occupancy guidance. It was [ 270 ] the whole time. We alerted the market to kind of intermittent change in the occupancy run rate. We have the key selling season ahead of us. We've delivered on one of the best key selling seasons that we've had. You can see it on Page 12 in the deck. We had 230 basis points of growth within the key selling season, best in the past 4 years.

The third quarter, it was a leader amongst the industry versus -- and peers in terms of sequential occupancy growth. That was driven by higher than move-ins versus prior year. So the move-in strength has been very strong. The move-outs have moderated, and we're growing occupancies. So it's old news, and we've stuck with 270 and we're delivering on it.

Okay. Fair enough. Second question, you talked about a growing investment pipeline, which is great to hear. But I'm wondering about the finiteness of the external growth story here. When I think about senior housing, I don't know, maybe there's 30 million apartment units in the United States, but is there 2 million senior housing, I don't know. And you're certainly buying as a group as the REITs faster than product is being developed. So do you -- what would you say is the time line where you've sort of getting to the point where you've seen and considered what you kind of want to have and that we'll start to see external growth start to sort of materially slow down but you've done a good job in terms of acquiring into that market. So it's such that the story transitions much more to an organic growth story, still sort of drafting off of all this aging of the population, but more of a internal growth story, maybe a couple of years from now and less of an external growth story.

Rich, we feel very confident about our ability to build on our investment momentum and to accelerate investment activity and quality U.S. senior housing for the foreseeable future. And we're very happy, as you mentioned, that we have a really outstanding internal growth story in this very large and growing senior housing business.

Yes. And I would just say, really explicitly, we're not even close to seeing the slowdown from an external standpoint. The institutional ownership, long-term ownership is still in the mid-teens in the sector. And so you have a lot of private equity [ friends and family equity ] to own assets that trade assets routinely. And we anticipate participating in those trades.

Our next question comes from the line of Omotayo Okusanya from Deutsche Bank.

This is Sam on for Tayo. I hope I don't miss this, but can you guys provide an update on the performance update on the [ 27 assets ] that have been converted from Triple-Net to SHOP?

Yes, sure. Yes. So you're referring to the transition -- the Triple-Net to SHOP transition from Brookdale. We've had -- there's 45 in total. And those communities have performed really well year-over-year, and they've -- their NOI really approximates the run rate now. So that was a good outcome, and there's 27 that have transitioned as of October. Everything is going really well. We've had boots on the ground from Ventas team members and most importantly, from the senior leadership of [indiscernible] operators to ensure that there's a smooth transition that's underway, and there's a lot of enthusiasm around the attention that the communities are getting, both from the new management, but also around the refresh capital that we're going to be putting in to help better position the communities and deliver occupancy growth over time.

And sorry, what was you said after -- since October, [indiscernible] transitioned, I think I missed that.

There's 27 that have transitioned so far.

And the remainder of the 45 should transition in the coming months.

Our next question comes from the line of Juan Sanabria from BMO Capital Markets.

Just hoping you could talk a little bit about the independent living pool in the U.S. You kind of highlighted that as an outperformer. If you could just give us some color as to what's driving that and maybe as a subset of that how holiday, the X holiday assets or the Atria holiday assets are performing as a part of that?

Yes. So most of our independent living footprint in the U.S. is Holiday or former Holiday communities. We had 340 basis points of occupancy growth in the U.S. IL was stronger. So the -- that was 390 basis points. And so we've had really good growth in that IL product and pleased that it's outperforming. And as it has a long way to go, too. It's part of that U.S. opportunity for occupancy growth and it's delivering and has a long runway. So we're really pleased with the performance.

And how is the IL growth and the outperformance you've seen there impacted RevPOR growth? And is there any impact in terms of the mix there? And how should we think about that into '26 versus what you delivered year-to-date?

Yes. So I'm not going to get into 2026, but the IL growth because it runs at a lower RevPOR and therefore, the outperformance in IL at a lower RevPOR does cause a mix impact on the RevPOR metric. So it does pull it down. And it's a high-class problem because it means you're growing more occupancy higher and faster, but it happens to be in a product that has slightly lower rent. So that's all in the numbers. And the goal will be to continue to grow with broad-based performance across the whole platform and both in terms of occupancy and rate.

Our next question comes from the line of John [ Klicowski ] from Wells Fargo.

Justin, in last quarter, we discussed kind of the building blocks of your higher occupied assets and that margin profile. I know we talked about it earlier on the call. But if we look at your Canadian portfolio, you're at mid-90s occupancy, and we would kind of expect to see that sort of layout on margin or -- and RevPOR. I'm just curious why that Same-Store NOI number is maybe a little lower than we would expect given the building blocks that you walked us through? I think it would probably get us to mid-teens, and we're seeing [ 7.4 ] this quarter. Is there anything to point out there?

Yes. So the Canadian portfolio has very, very high occupancy. I mean -- and it has -- there are some limitations around how much and where you can push pricing. There's also a mix issue that happens at times. We have a Sunrise product that's very high RevPOR and if there's any volatility in those 12 communities that can impact the operating metrics.

But we would really kind of view Canada as a high single-digit grower. I mean, that's what it's been for us. It's a reason why we're not looking to expand in Canada. You just don't have the same organic NOI growth opportunity in Canada. So -- but it's solid and it's a good opportunity.

The U.S. opportunity is different. You have the opportunity to really deliver a better [ RevPOR OpEx ] for spread in the U.S. over time. You have less limitations on the top end in terms of where you can push rent. We're located in markets that have high income and wealth demographics and very strong supply and demand in the U.S. as well. So we do like that opportunity better and would expect better growth in the U.S.

Okay. That was very helpful. And then my second question is just on the acquisition pipeline. A couple of times on the call, you've said you have clear visibility on the ability to accelerate your acquisition cadence. Are there any near-term risks that you're monitoring that could possibly sort of uproot that thesis? Or is it pretty reasonable for investors to start expecting higher investment volumes in '26 and in '25?

Well, I mean, structurally, we don't see anything limiting us now. We have the track record. We have the platform, we have the cost of capital, and we have momentum. So all of that's working together to have this accelerating investment pace that we've been delivering -- and we'll [indiscernible] to continue that. .

Our next question comes from the line of Ronald Kamdem from Morgan Stanley.

Just 2 quick ones for me. Just going back to the operator conversation a little bit. You've added some more operators. Now you've had a lot of experience working with different operators. I was wondering if you could just talk through in terms of their ability to use data, use the platform as well as our capacity to take on more facilities, like where are all these operators in that journey, right? Is it early innings? Is it middle innings? Is it late innings? Just trying to get a sense of the potential efficiency an upside potential over the next 3 to 5 years.

That's a great question. So let me start with this. Every single 1 of our operators and their communities have end-to-end [ tech, ] all of them do. It's an industry standard. And what that means is that they have tech in place for safety monitoring, care and compliance, med administration managing their CRM, food services, maintenance, delivery, all of that is managed through tech. And most of it is AI enhanced now. So that's the starting point.

Believe it or not, technology is widely used in senior housing. And certainly, our operators are deploying that technology to help deliver more efficient and also most importantly, high quality and care and service delivery to the residents and to manage the business better.

What's really powerful about the AI platform is that we designed it to plug into any system. It doesn't matter what they're using on the CRM side and from a financial side to get the operating metrics and the financial metrics we need. We designed our platform to be flexible. We pulled the data in and then we can access and utilize the data in OI platform. And the powerful aspect is that we then deliver that back to the operators. And what we're doing and doing so is articulating opportunities to improve across all the key metrics, revenue and expenses and in a very targeted way, and we get down literally to the unit level and we have price strategies, sales strategies, expense efficiency opportunities that are identified in a granular detail in a way that the operators can really take it and deliver a plan to improve performance. And so it's a very collaborative effort. It's data-rich, but in a very focused consumable way, and that's how the OI platform plugs in. And it's only going to get much better. One of the things that you hear me talk about is the best is yet to come, and that's referring to a number of fronts. And one of those fronts is the ability to execute on performance to the OI platform will only get better over time.

Really helpful. And then my second question was just I wanted to ask the competition question sort of a different way because we've been thinking a lot about that as well. Because when I look at sort of low to mid-teens [ levered IRR ], I think the demographic trends are clear. I mean, I think if you could be a little bit more specific in terms of why do you think private equity specifically has not come into the space, right? Is it that they're here and [ there's enough product ] to go out? Just like what are the reasons that this pool of capital is not coming for the sort of low to mid-teens unlevered IRR with a good supply/demand backdrop? Just what are you hearing?

So I mean, there is private equity in the space. I mean, they -- quite frankly, they own much more of the sector than the public companies do. And so they're in the space. But in terms of -- and when I say that I'm referring to [ private equity and friends of family equity ].

The reality is, though, if you're an institutional private equity player and you want to enter the space and scale, everything I've described that we do that you don't flip a switch and just make that happen. And the ideal -- it seems like the ideal private equity investment would be a lineup with a large-scale operator and help that operator to improve and expand and grow. But to grow in this space, you're usually not going to find many of those opportunities because it's a collection of smaller operators and senior housing, as I mentioned. And so our platform is designed to buy communities operated by multiple operators, and it's [ 40% ] and growing. And I do think that creates a barrier to entry issue for some private equity. Having said that, I mean, the -- we would expect that there'll be plenty of interest from a variety of capital sources in the sector given the strong fundamentals.

Your next question comes from the line of Michael Stroyeck from Green Street.

Thanks. Can you quantify what the potential opportunity for Triple-Net to SHOP transition looks like within the current portfolio? How many more assets do you expect to transition over the next, call it, 6 to 12 months or so outside of the Brookdale portfolio? And what's the rough range of NOI upside you typically underwrite on those?

Yes. I mean, we've had, quite frankly, most of that plan has been executed. We [ had 150 ] already that we thought that we've moved into SHOP from Triple-Net. That's created that awesome occupancy upside opportunity we're seeing in the U.S. We've had -- we do have some very high-performing leases that are left. One of those is with Brookdale, I mentioned that. There [indiscernible] plans to do anything different with that portfolio. There's a couple of other smaller ones, one of which we just made an acquisition through one of our tenants -- and bought some new really high-performing, high-quality assets as part of the pipeline and move those to SHOP. And so that was a way to leverage that relationship. But really, the plan at this point is to deliver on the organic growth opportunity that is embedded in our portfolio through all those efforts we've had in place over the past few years and continue to grow externally.

Got it. And then maybe 1 on the research business. Can you just quantify the magnitude of bad debt during the quarter? And are these onetime rent deferrals or more permanent rent cuts to tenants? Just help us understand how long the credit issues during the quarter may actually weigh on NOI growth in that business.

Yes. This is Pete. Thanks for the question. The typical character of some of the restructurings we've done to give people additional runway is to initially reduce their rents, have a climb back up and then have some participation opportunities later as their business improves. And so that's a playbook we've been running. It's been working well. And it's hard to say when it's going to end, but we're pretty pleased with the results. .

Our next question comes from the line of Michael Mueller from JPMorgan.

I'll just keep it to 1 here. As the [indiscernible] Population surges, do you expect to see a widening of performance between AL memory care and the younger population IL portfolio?

I want to make sure I [indiscernible]

Yes, I think I do. So the 80-plus population, the baby boomers start turning 80 next year, that's really our customer base and senior housing. The truth is that both AL and IL ages are relatively consistent with each other. And so we would expect both to be benefited by this broad-based demand. It's really just a different type of resident with whatever type of needs that they have when they move into senior housing.

And the age is relatively consistent between the 2. You can get a little bit younger skewing in the independent living, which is one of the benefits to that asset class. But overall, both are going to be benefiting from this broad-based and growing demand.

I will now turn the call back over to Debra Cafaro, Chairman and CEO of Ventas for closing remarks.

All right, Van. Thanks. And I want to thank everyone who joined us on a busy day for your interest in and support of Ventas. We wish you and -- a good holiday season, and we look forward to seeing you soon. Thank you. .

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

All right. We can kick it off. Thank you, everyone, for joining. Welcome to the Ventas meeting. My name is Farrell Granath, and I'm the co-lead for Healthcare REITs with Jeff Spector and the BofA REIT team. I'm joined today with the Ventas team, and I'll kick it off and send it over to Debbie to introduce the team. And then we can enter into some Q&A. Please, everyone, raise your hand or just jump in if you have any questions. So Debbie?

Thank you, Farrell. So nice to see everyone here today. It's a pleasure to be with you with my colleague, Justin Hutchens, BJ Grant and Amit, who are doing all the work for us.

We're here to talk about the Ventas value creation opportunity. As you know, we're a $45 billion S&P 500 REIT. That's really in the midst of the megatrend of longevity. And our business is really fueled by demographic demand that's strong and getting stronger, principally from the over 80 population that's set to accelerate in 2026 as the baby boomers enter the over 80 population.

In the senior housing business, which is a principal part of our business, we have this accelerating demand, coupled with historically low supply, which is creating long and strong tailwinds in our favor. And on top of that, we've really built the company to capitalize on these trends. And so we have built a platform, a team and a portfolio really to meet the moment and capitalize on the trends of demand that we see accelerating.

So when you look at the company, our guidance is 8% FFO per share growth this year. We're in the top echelon of REIT growers. And at the same time, we have a multiple that could see expansion. We could see dividend growth in the future. And that really coupled with a strong and getting better balance sheet gives us an important opportunity for value creation for investors. These results are being driven by our 1, 2, 3 strategy. The first is really organic growth from SHOP.

We're in the senior housing operating portfolio. We're in the fourth year of double-digit NOI growth, and we're really just getting started because of this acceleration we see in the forward environment for the over 80 population. We've given an update in the deck that we put out yesterday, and that's really on occupancy. We're seeing quarter-to-date estimated year-over-year occupancy increase of 270 basis points, right in line with our full year guidance.

And so -- and we're also seeing within our portfolio, the beginning of the transitions of the Brookdale conversions to SHOP, and we'll talk a little bit more about that later. The second part of the strategy is to increase our enterprise growth rate by making external acquisitions that are accretive, that meet our financial and strategic criteria. Our guidance this year is $2 billion. We're $1.8 billion into it with very attractive opportunity set.

And we've provided incremental information that we have a line of sight to an additional $0.5 billion of senior housing investments on top of the $2 billion of 2025 guidance. And then lastly, the rest of the portfolio, we're driving performance hard and that the rest of our portfolio is continuing to perform well.

And all the while, we have great and improving financial strength and flexibility with leverage in the mid-5s and expected to go lower as we equitize investment activity, and we have strong organic growth. So we're excited about that as well. So again, good value creation opportunity from accelerating demand, limited supply and potential multiple and dividend expansion opportunity on a strong balance sheet.

So with that, we're ready for questions.

Well, I think we can kick it off with your occupancy update. I know at the beginning of the year, that was a very big topic in this last quarter, you gave very outsized growth with record move-ins. I was curious in what we have for the balance of the year, we're currently in peak leasing season and for where your guidance is now, you're averaging out about in line.

So can you walk us through your confidence in your guidance and what you're seeing today also within your move-ins and move-outs?

Sure. Yes. So we -- during the second quarter, we talked about the acceleration we had throughout the second quarter due to very high move-in activity. And what that did was really set up this strong third quarter that we're experiencing. We've had 130 basis points quarter-to-date of occupancy growth comparing to the second quarter. We're at 270 basis points year-over-year, which is in line with the full year guide.

So we had confidence in the second quarter, which is why we stay with the full year guidance number. Now we're pleased to be able to report on the actual results and that we're in line. Move-ins have been really strong all year. They've been broad-based, meaning that we've had contributions across all geographies, and we've had strong contributions in both assisted living and the independent living asset classes.

And so in terms of the acceleration that you were seeing in the second quarter, are you seeing that continue going forward?

We've had a great key selling season. So the key selling season, as we define it, is May to September. And we had a great second quarter and a very good third quarter as well as we've seen this occupancy continue to grow. So, so far, so good in terms of the key selling season.

And is this all or mostly coming in with your U.S. portfolio, given the Canadian portfolio is mostly occupied?

Yes. The 270 is overwhelmingly brought up by -- the average is brought up by the U.S. performance. We do have occupancy growth in Canada, but it fails in comparison to the U.S. contributions.

And then also with your other update on the acquisitions. I was hoping if we can walk through what was the new incremental and potentially what did that -- what assets of that -- what was made up of, including what you're targeting when you're looking at some of these acquisitions? Are you -- you've been primarily mostly in AL. Is that continuing to be your target?

So we have -- in the deck, we have the page of the $1.8 billion that we've closed in senior housing investments year-to-date, and it's been very consistent. And it really starts with the framework of right market, right asset, right operator. And then the financial criteria have been well established. And what we've closed year-to-date and what we have a line of sight to are very consistent.

So unlevered IRRs in the low to mid-teens, going in 7-plus yields, below replacement cost. And so we feel really good about that private to public arbitrage opportunity that we have so that even if it's fully equitized. It's accretive from day 1, and then it increases the enterprise growth rate. And Justin, why don't you touch on some of the deals that there's a case study of what we just closed and the pipeline and characteristics.

Yes, sure. So if we just look at the types of communities, senior housing communities we've been buying in 2025, we tend to prefer, not surprisingly, markets that have strong net absorption or net demand opportunity, and we've entered markets that have about 1,400 basis points of net demand, which means potential occupancy growth over the next few years of 1,400 basis points.

And considering we're buying communities that are around 90% occupied, that means we'll probably have markets that will actually be -- will be 100% occupied during that period. There are large campuses. We tend to prefer a continuum of care. We have independent living, assisted living and memory care working together to provide services in a residential setting to seniors, newer, 8 years old on average.

We've added -- we have 11 operators involved, including 7 new operators. And when we underwrite the operators, we're looking for a demonstrated track record in the asset class, a strong clustering or experience within the geography. And when you're buying the type of communities we're buying, which are high-performing communities with upside, there's a track record of performance that you're underwriting as well. And so we're happy to add more operators into the platform and have them to continue to operate and drive more growth moving forward in those communities.

An example of this type of deal is a recent acquisition we made. It's a Bristol Long Island portfolio. This is Class A senior housing, really good locations on Long Island. It was 6 communities with 856 units, strong -- like very high barrier markets. If you know Long Island, you know that to be true, but also strong price opportunity as the communities will also grow occupancy, we think, and we have price opportunity moving forward.

The operator has been in place since the beginning. They've developed all of these communities and have operated them and they have a very, very good track record in New York and a deep management team. And so we look forward to seeing growth in these communities, and we are pleased to really to win this opportunity to own this Class A portfolio.

Great. And you made a comment about in your acquisitions are about 90% occupied. I was hoping you could remind everyone of comments I've heard made before about the operating leverage and the step-ups that you receive as occupancy passes the 90% and as it rises.

Sure. So I'm happy to address operating leverage, some of my favorite topics. It's really one of the most powerful parts of the senior housing business model. And there's a few different ways to address that, and I'll give you some rules of thumb, and then I'm going to repeat something I talked about on the earnings call.

The rule of thumb in terms of operating leverage is due to the high fixed cost nature of the business, when you have gone through that journey of being 80% to 90% occupied, you should expect somewhere around a 50% incremental margin. And then it gets only gets better when you go from 90% to 100% occupied, you expect around a 70% incremental margin.

So due to the high flow-through at the high occupancies, you have -- you can continue to have very strong NOI growth even when you're starting at 90% occupancy. Another metric I shared on the earnings call is just what the growth rate of the RevPOR was based on occupancy bands. And so pricing opportunity goes up as scarcity goes up, which is very logical and it's absolutely the case in senior housing.

And now that we're getting to higher occupancies, it will become even more relevant. So in our portfolio, if you're 90% to 95% occupied, your RevPOR growth was between 6% and 7%. If you're 75% to 90% occupied, your RevPOR growth was between 3% and 5%. And if you're below 75% occupied, you have 1% RevPOR growth. So there's obviously a direct relationship between higher occupancy, less vacant units and price opportunity.

How far can that RevPOR growth go? So say you're in the 98% to 100% occupied market?

So it's unproven because we're in new territory because the demand characteristics in the sector will be the best we've ever seen. Next year, we're entering a year where demand -- we've had a good run of multiyear double-digit NOI growth and strong demand helping to drive that. But next year, the baby boomer population starts to turn 80.

So it should only get better and market occupancies are higher and market demand will be stronger. So we'll wait and see and answer that question as we move into this next phase.

Two points I'd like to make, one on the pricing point. So when we underwrite these investments and look at our markets, affordability is very important. And as things stand right now in our portfolio, if a senior living resident lives in the community 2 to 3 years, let's just say 2 years, they can afford to live there for 12 to 14 years.

So that shows that there's a lot of headroom in pricing because of -- it is a highly affordable product compared to the wealth and the income of the senior residents. So that's really important to know that, that headroom exists. And then secondly, I would refer you to Page 17 of our deck because we're talking about the investments and the margins that we could get from pricing power. And that's really just a complement to the powerful internal growth that we're in the midst of this multiyear growth opportunity.

And the left-hand side of the page really shows that in the U.S. our senior housing portfolio is between 80% and 85% occupied. So we would expect for that even bigger part of our portfolio that we have a near and intermediate and potentially long-term runway for both occupancy and rate growth. And that's really the powerful engine of this multiyear growth opportunity. So they work together.

And if I just add one other, just to finish the whole point. It's important to remember, and we probably don't talk about this enough, what the underlying service is and the importance of it in terms of the care and service delivery to seniors. It's a consumer-driven business. So seniors are writing us checks and to stay in our communities and to have the services delivered to them.

And so it's incredibly important that we do a great job. And when we select operators, we're ensuring that the track record is such that they do deliver best-in-class services to their residents. And that's a key component, obviously, in driving the demand to select your community to begin with, but also to retain residents as we're moving pricing throughout their stay.

And I guess, generally, when we're looking at where pre-COVID occupancy and margins were, where do we sit today with margins? And do you think that there is the potential to set a new normal of where margins sit within the senior housing business?

Yes. So I would say the margin opportunity, if you were to step back and look at margins like right around, we'll call it the pre-pandemic era, so the last kind of stabilized number that you could point to, we had around 30% margin, 88% occupancy. And I remember saying 5 years ago that I thought the margin expansion opportunity would be bigger that when we got to around the same occupancy that we would have better margins than we did at that time.

And the only thing that got in the way was in 2022, we had a very, very, very high inflation. And so you had assisted living wages needed to catch up with market and then we had inflation on top of that. So there was a little bit of a structural change in the underlying cost in delivering the services. that's way past us now, and now we're at a place where we have that price opportunity that I was describing.

And so I would expect all things considered equal, that margin expansion will be better than we've ever seen because we'll have a better relationship between our RevPOR and our OpEx than we have historically. And particularly in this period where we don't have demand entering our new supply entering our markets, there's a pretty good runway really between now and the end of the decade of very strong net demand and net absorption to support my hypothesis.

Okay. And this is kind of a bigger picture question. Looking further out, there's been obviously the SHOP opportunity. I feel like SHOP is the hottest word, and everyone is now trying to grab some of these assets, start their own platforms. I'm curious, in a multiyear looking forward, do you think that there is a potential for a bifurcation when you're looking at the type of assets? And at what point is that inflection point?

When you say bifurcation...

More in -- the potential for further growth versus receiving more of a downside and the ability to either push rate or maintain that rate.

I mean I think it's -- first of all, I'm really happy that SHOP is a hot topic. I've been waiting my whole career for that. Yes, now finally, finally. So I think there is -- given the runway ahead of supply and demand, there's a good run of experiencing -- if it's managed well and you -- like we always talk about the right markets, right assets, right operators, and you have a platform that can manage it at scale the way we do, then you should have -- you should experience growth.

And like I said, we've had really good growth over the past 4 years, but we've done it during a period where the supply and demand isn't even as good as what it will be. And our platform capabilities are significantly more advanced than they have been. And one other thing, too, if you're entering the space and you're trying to set up a shop platform, there's a lot of catching up to do. We have -- we've been working on this for years.

We have the sophisticated data analytics, the delivery of those analytics. the CapEx management, price volume optimization and the broader platform capability to manage almost 40 operators now and growing. And so there's -- that's -- you don't just flip a switch and put that in place. That's been an evolution of our platform over a number of years.

Maybe just one follow-up on that. Posted [indiscernible] I think he said -- asked about he said housing, he said specifically senior housing. I know we've asked a lot about competition getting growing. I mean trying to enter the space in a big way...

Well, it is a hot asset class, and there's good reason for that because you go where the demand is, right, and particularly where there's incredibly low supply. When we look at our pipeline, our pipeline of -- has been growing, and it's very active. There is -- yes, the acquisition pipeline. There is more competition because people are attracted to the space, but we have significant competitive advantages that should -- and that includes everything from the data analytics that Justin described of the relationships in the market, the experience and the track record that enable us to get in our cost of capital more than, I would say, our fair share or more. And those are all worthy competitors.

We've had -- we've been in a competitive environment really our whole careers. And again, we're experts in the space. We have the platform. It is a little bit hard to compete with that. But the main thing is more assets are coming to market. So it's remaining in balance, enabling us to get these really attractive returns and arbitrage and make money for shareholders. So that's continuing.

So at this point, let's say [indiscernible] to keep the pace.

Because we have this opportunity for value creation, we have our foot on the accelerator because we know that opportunities never last forever for a variety of reasons, and we're experienced enough to know that, and we know that we're going to capitalize on those opportunities that are present. But I do think we -- in this business, we can compete and win. And we'll continue to do that as long as the criteria that we've -- the relationship between cost of capital, returns, risk, et cetera, remains in a positive space, and we're going to continue to harvest this opportunity aggressively.

[indiscernible] the pension money.

Absolutely. We do have a fund and we have a joint venture, our VIM Ventas Investment Management platform has over $5 billion of assets under management. It's been a big success. Our issue is not finding money because everybody is knocking at our door to give us money. It's more we want to make sure we're aggressively pursuing the right opportunities for value creation.

[indiscernible] because everything you describing sounds pretty positive and the total return is pretty positive.

It is.

[indiscernible] quite an attractive way buying how is that loss in [indiscernible] how do you [indiscernible].

Well, so we've got -- so 80% of our transactions have had some kind of relationship orientation to them. And the way that works is we'll have -- we do have some off-market opportunities that we've had half of our $3.8 billion that we've closed was really 3 deals. One was totally off market. The other 2, one was kind of quasi off market. And the other one, we had an advantage where the operator was influential in staying in the process and wanted to work with Ventas in the long term.

So all things considered equal, we were going to win that deal. That does help. It plays a big role because you have to think about the sellers here in the kind of assets we're buying, we're buying high performing with upside. And therefore, the operator that's in place is really important. They've been creating that value to date. they want to stay in place, and they're concerned about who their next capital partner is. And it's a long-term decision. I mean we hold for the long term, and they're well aware of that. And so they're very focused on who that player is going to be.

We've established a reputation amongst the senior housing community as being influential in performance through our Ventas OI platform, collaborative and also we deliver on and execute on transactions and with no surprises and on time and with no financing contingencies. So between the relationships with the operators and our repeat transactions we've had with sellers, that relationship component has played well for us. So that's a big part of it.

Yes. Okay.

Specifically monetizing some or all of that [indiscernible].

So did everyone hear the question? The question is about the outpatient medical. So outpatient medical is about, call it, 20% of our NOI. It's a core like asset that is a reliable compounding growth asset class. We have a competitively advantaged property management and leasing company within Ventas that manages that portfolio.

And we are growing around it. So through the internal growth and external growth we described, that's all focused on senior housing. we -- that by definition, that part of our portfolio is becoming a smaller part of the overall business. We're more than open to selling assets when it makes sense to do so. The overall economic impact to us of disposing of those assets is kind of a push. And so we have a business that's working and delivering what it's supposed to deliver.

We're growing around it in a way that's increasing our enterprise growth rate. And we certainly would be willing to sell assets from time to time as we've proven in the past should really compelling opportunities present themselves.

[indiscernible].

It's a good -- no, it's a very important question that we consider all the time and continue to monitor. Right now, again, we've been over-equitizing investments in a way that is initially accretive. And remember, these acquisitions are intended to deliver low to mid-teens unlevered returns.

So it makes sense, particularly when debt costs are relatively high by comparison. As we continue to improve leverage towards 5 and as debt rates change and so on, the whole -- the calculus remains subject to kind of review. But so far, it's been working to create value.

Fixed income [indiscernible] equity issuance.

And I'll turn it back over to the -- your pipeline. And I'm curious, can you give us a little bit more color and maybe compare to 2024, what you're seeing in terms of deal flow and what's crossing your desk and how much you're actually evaluating? Is there potential for that to pick up?

Right. So our pipeline has been -- I'll start with this, we're pretty much buying very similar communities to what we did last year. They're actually just a little newer this year, quite frankly, slightly newer, slightly stronger markets. So there's -- that's been great. We're really happy with what we bought last year, and we're even happy with what we've been buying this year so far.

So pretty consistent outcome overall, though, in terms of all the qualities I described earlier in terms of the pipeline. We own about, what, 5% of the market, and we're getting more than 5% of our pipeline that we're seeing in terms of senior housing each year and what we think the broader pipeline is in the sector.

So we're punching above our weight in that regard. We should be #1 or #2 in the U.S. in senior housing investments, U.S.-focused senior housing. That's a good place to be. We had the $3.7 billion we closed over the last 18 months from a standing start. We already gave guidance that we closed another $2 billion. So that puts at $4 billion plus we have line of sight to another $500 million. And so we've been really on a role in accelerating our investment volume. And there's a lot of activity in the pipeline. So the goal is to continue to run that playbook.

And is that coming from -- or I guess what I'm more getting at, are you seeing more things come to market? And is that giving you a broader opportunity set? Or has it been a consistent level?

I think there's -- it's been -- the pipeline has grown. The pipeline this year was bigger than last year. There are more deals coming to market or coming to us if they're off market. And there's been -- we just had an industry conference, the NIC conference that a lot of participants attend. And I would say the buzz there is that there's a lot more coming.

Yes, deals beget deals.

Exactly.

Good to hear. And I know we mentioned it right in the beginning about the update with the triple net conversions and Brookdale. So I was hoping if we can address that also in terms of the CapEx that's required for some of these conversions and some of the building blocks of what we can expect for 2026 in terms of NOI and ramping online.

So the Brookdale portfolio is being bifurcated into a lease portfolio that Brookdale is retaining, where rent is going up, call it, 35%. So we're taking advantage of the growth opportunity on that part of the portfolio that way. Then Justin and the team identified 45 assets that we're going to take and convert to SHOP.

And the key point there is that over time, we would expect to get over $100 million of NOI from those 45 assets. There's a lot of work to get from here to there. So Justin is in charge of that work and has started -- we're happy to report we did first 11 transitions in September. And Justin, why don't you talk about what the intermediate-term plan is for the assets and kind of getting from here to there?

Yes. So first of all, because we've had so much transition activity over the past several years, we've had 260 transitions from 2 new managers. And we have 5 operators that have done multiple transitions with us.

Those operators were selected for these Brookdale transitions. They've all been engaged in the assets already, met with the families and residents and employees and management. We've already started transitioning. We've had 11 that transitioned already on September 1.

My team has been engaged in the CapEx assessment already. So we're ready to hit the ground running when the operators start management and the goal is to have as much of that redev refresh work done by the beginning of the key selling season in 2026. We're planning to spend around $2 million per asset on average. And we're planning on taking a $50 million NOI number to over $100 million over time. So really good return on that spend. These communities are high 70% occupancy, and they're in markets that have very strong net absorption, similar to what I described earlier.

So we like the opportunity to improve the operation with new operators, improve the asset to make it more competitive, drive occupancy and then ultimately deliver a better service, but deliver financial returns that are attractive.

And I also want to ask also a little bit bigger picture for where we sit today, if you were to look back a year ago, what's the most surprising item across senior housing?

Surprised question there.

Yes. What's the most surprising?

From a performance or investment or...

You can go any avenue.

You can go wherever you want to go.

I'm going to say the biggest surprise in senior housing probably has to do with the net demand versus net absorption opportunity. And so we track net absorption, and that's just simply considering the supply-demand characteristics over the next few years.

And we had to add the metric net demand because we have markets that several of them we've underwritten that will go -- that will be 100% occupied. And so the demand actually will exceed the net absorption opportunity for our communities and what we're seeing in the market.

And although we knew the demographics were strong, you can see it coming. But when you literally get to that place where we're at now where we're saying, okay, there may not be any vacant units in these markets within kind of the midterm, that's a bit of a surprising stat to consider.

And Justin, we call that uncapped net demand, right?

Yes.

Exactly. Speaks to the pricing power.

Biggest surprise is you can still buy Ventas at less than a 20x multiple.

And to conclude, we have 3 rapid-fire questions. So number one, when the Fed starts to cut, do you expect borrowing rates for long-term debt to decline, stay flat or potentially rise? Choose one, please.

When short-term rates decline.

For the long term.

What's going to happen on the long side? I'm going to just go with relatively stable.

Okay. Last year, the majority of companies stated that they are ramping up spending on AI initiatives. How would you characterize your plans over the next year, higher, flat or lower?

Say it again.

For spending for AI, spend more....

For AI?

Yes.

Higher.

Okay. Do you believe that same-store NOI for your whole sector, not just sector, will be higher, lower or the same next year?

So we have a policy of deferring on that question until we provide guidance.

Look, the main -- I know, I know, this is...

It's for a big industry participant.

Yes, I do want to close on that, though, because it's exactly where we started. We're 4 years into a multiyear growth opportunity. We have a great runway ahead, we believe, and it's fueled by demand that's strong and getting stronger. And that's where investors really want to be, and we've built a great company to take advantage of it. So thank you for having us.

Great. Thank you so much.