The operator welcomes participants to the Ventas Fourth Quarter 2023 Earnings Call and introduces BJ Grant, Senior Vice President of Investor Relations. BJ highlights the availability of materials on the Ventas website and reminds participants of the potential risks and uncertainties associated with forward-looking statements. CEO Debra Cafaro then discusses the company's strong results for 2023 and introduces full year 2024 guidance, emphasizing the growth potential in the senior housing market.

In 2023, Ventas achieved over 5% year-over-year growth in normalized FFO due to strong organic growth in the SHOP portfolio. They also raised over $4 billion in capital, made progress towards ESG goals, and expanded their VIM business. As a result, they delivered a 15% total return to shareholders and outperformed the health care REIT and broader REIT indices. Looking ahead, they project another year of mid-single digit FFO growth and double digit same-store SHOP cash NOI growth.

The company is projecting a 5% growth in normalized FFO for 2024, which puts them in the top 20% of all REITs. They expect steady growth from their outpatient medical research and triple net lease portfolios. They have two large lease renewals in 2025, one with Brookdale and one with Kindred, and are prepared to maximize NOI. January has already shown positive growth in the SHOP sector and they expect accelerated growth in the second half of 2024. They plan to continue delivering profitable organic growth in senior housing, capture external growth opportunities, and focus on strong execution and cash flow generation to serve the growing aging demographic.

The paragraph discusses the reasons for the company's optimism for long-term growth in the senior housing market. These include favorable supply/demand dynamics, a strong platform, and potential for external investments. The company has already seen an increase in their pipeline and plans to make over $300 million in investments in the first half of the year. Their objectives include driving growth, increasing scale, and maximizing value for shareholders. They have delivered on their commitments in 2023 and expect further growth in 2024. The company's projected 5% growth in normalized FFO sets them apart in the REIT industry, and they aim to create value for shareholders while providing exceptional environments for the aging population.

In the sixth quarter in a row, the SHOP portfolio delivered double-digit same-store cash NOI growth. The U.S. communities had the highest growth at 24.5%, while the Canadian portfolio remained stable at over 95% occupancy. Total same-store cash NOI growth was 18.3%, exceeding expectations. All key metrics, including occupancy, REVPOR, OpEx, and margin, outperformed expectations. The U.S. saw the most significant occupancy gains, driven by strong demand and increased move-ins. REVPOR grew by 6% for the year, with a potential increase of 40 basis points if adjusted for a special assessment. OpExPOR also performed well, with a 2% growth in the U.S. and 2.6% overall. The company is expecting a third consecutive year of double-digit NOI growth in the same-store SHOP portfolio in 2024.

In the fourth quarter of 2023, the momentum of the company increased due to strong pricing and higher move-ins, leading to a strong start for 2024. The U.S. is expected to be the main driver of growth, with a projected 300 basis points increase in occupancy and mid- to high-teens growth in NOI. The company's high-quality care and services continue to attract demand, and January occupancy has already shown strong growth. The company expects further growth throughout the year, driven by renovated properties and initiatives to drive a strong key selling season. Operating expenses are expected to grow in line with inflation, and the company anticipates margin expansion as higher occupancy creates operating leverage. The company's active asset management and strong execution by operators will continue to drive momentum in 2024.

The company expects to see strong year-end NOI growth, driven by their focus on organic senior housing growth and expanding their footprint. They are using OI tools to help with investment selection and are targeting opportunities with low to mid-teen unlevered IRRs. They are primarily expanding with existing partners and are looking to increase their presence in the fast-growing IL, AL memory care combination communities. Their pipeline is growing and they have several potential investments in the works. Overall, they are confident in the demand for their services and are expecting a successful year ahead.

In this paragraph, Robert Probst discusses the highlights of the company's performance in 2023, including a 7% increase in normalized FFO per share and over 5% growth year-over-year. He also mentions the significant growth in SHOP total NOI and total company same-store cash NOI. Probst also praises the continuous compounding growth in the outpatient medical and research segment, driven by strong retention and leasing activity. He also mentions the high tenant satisfaction in Ventas' property management business. Finally, he briefly touches on the company's strong balance sheet.

In 2023, the company raised over $4 million in capital and used it to pay off maturing debt, resulting in a strong liquidity position of $3.2 billion. The growth in the SHOP business also improved the company's net debt-to-EBITDA ratio. The company expects another year of normalized FFO growth and double-digit same-store SHOP cash NOI growth in 2024. The company's 2024 guidance includes a $0.14 increase in FFO per share, led by property growth and offset by higher interest expenses and capital recycling. The company also plans to make new senior housing investments of $350 million.

The low and high end of the company's FFO guidance range is primarily influenced by property NOI expectations and potential changes in interest rates. The company expects same-store cash NOI and normalized FFO growth to increase throughout the year, driven by higher interest expenses and occupancy acceleration. The company's Kindred lease renewal in 2025 is dependent on the earnings capacity of the assets at that time, and Kindred has communicated initiatives to improve operating performance.

The speaker gives Select as an example of a company in the same business as Kindred that has shown significant improvements. They mention that it is too early to determine if Kindred's initiatives will improve their EBITDAR in 2024 and 2025, but they are working on it. The next question is about the guidance for Bob and the interest expense going up this year. Bob explains that a big part of the increase is due to refinancing debt into a higher rate environment and the impact of the ELP transaction from last year. They have included interest expense guidance to help analysts model it. The following question is about Kindred, Brookdale, and the Santerre process.

Justin Hutchens and Debra Cafaro discuss potential activity in 2024 to address the situation with Brookdale, Santerre, and Kindred portfolios. They mention the possibility of extending the lease for Brookdale, selling assets for Santerre, and evaluating the financial impact of Kindred in the next year. They also mention having a valuable lease for Kindred that runs until May 2025.

During a conference call, a question was asked about the potential impact of Kindred not extending their contract in May. Ventas CEO Debra Cafaro responded by saying they are well prepared and have plans in place to optimize the NOI of the 23 affected assets. She also mentioned that they have experience in this type of situation and have multiple alternatives ready to execute. Later in the call, another question was asked about acquisition opportunities and CFO Justin Hutchens responded by saying they are seeing good opportunities in senior housing with discounts to replacement costs of 20-30% and targeting low to mid-teens in unlevered IRRs.

The company expects a 7% cap rate and neutral or accretive returns in the first year of their investments in the senior housing sector, with growth supported by strong demand. They plan to invest $350 million on balance sheet financing and believe it will be an attractive proposition for shareholders. There are no unusual items expected in the '23 or '24 line items, and the guidance assumes no changes in the '25 lease situation. There is Brookdale amortization from a previous restructure, but it is not factored into the guidance.

The speaker discusses the potential impact of a restructured deal on FAD growth and mentions a footnote in the presentation related to a class action lawsuit. They also address a question about the occupancy guide for the SHOP segment and explain the year-over-year growth in 2023.

The speaker discusses the positive occupancy and move-in growth in the fourth quarter and the beginning of the year, which supports their SHOP guidance. They also mention the potential outcome of the Kindred situation and the importance of owning the assets and EBITDAR. The speaker also mentions a previous conversation about a capital improvement plan for equitized loan portfolio assets.

Debra Cafaro and Peter Bulgarelli discuss the capital improvement plan, occupancy expectations, and return profile for the outpatient medical assets that overlap with their own portfolio. The portfolio was previously under 80% occupied, but they expect a 3% increase in occupancy by 2024 through implementing the Lillibridge playbook and conducting upgrades. There will be normal tenant improvements and commissions, and the capital used for the ELP portfolio will not be extraordinary. Vikram Malhotra then asks two questions about senior housing.

The speaker is discussing the company's confidence in their exit strategy for 2024 and their plans for accelerating growth. They mention that occupancy and expense competition will be challenging, but they are confident in their ability to grow occupancy during the key selling season. They also mention the potential for margin expansion and compare occupancy rates in Canada and the US.

The company is at an early stage of occupancy growth and expects margin expansion in 2025. The demand for their Canada portfolio is strong and they have a good relationship with their operator, Le Groupe Maurice. As the company continues to make new investments, the impact of the Canada portfolio will decrease, and the US portfolio is the main growth engine for the company.

The operator introduces a question from an analyst about Kindred and the company's recent investments. The analyst asks about the funding plans for the investments and why the company did not issue under the ATM late last year. The CEO and CFO discuss the attractive returns on the investments and the company's disciplined approach to funding. They also mention the assumption of over-equitzing alongside the investments.

Debra Cafaro and Justin Hutchens of Ventas discuss the company's FFO guidance and aim to improve their multiple and reward shareholders. They also address a question about the NOI recovery opportunity slide being removed and the sources and uses of funds. Hutchens explains that they removed the slide because they believe the potential for recovery is even higher than initially thought.

The company is investing $100 million per year in the SHOP portfolio and is focusing on future opportunities. They have completed 167 projects and plan to complete more in the coming year. They also expect a reduction in redev spending and capital recycling, and have factored in equity assumptions in their guidance. An analyst from Wedbush has a question about these assumptions.

Richard Anderson asks a question about Ventas' normalization between NAREIT FFO and normalized FFO, and how it affects their guidance. Debra Cafaro responds that they are disciplined in this area and use it as a defined category. Robert Probst adds that their numbers are similar to peers and some factors, such as the Brookdale warrants, are market-based and subject to volatility.

The speaker discusses the normalization of NAREIT and FFO, as well as the company's recent legal costs and a $300 million acquisition. They also mention a focus on expanding their presence in U.S. senior housing and the sale of two R&I assets in the fourth quarter.

The speaker discusses their plans for the Santerre SNF business, stating that they will pick and choose which assets to sell over time. They have already sold some at good prices and are happy with that. They also mention that they had purchase options with universities that were exercised. The speaker thanks everyone for their support and interest in Ventas and concludes the call.

This summary was generated with AI and may contain some inaccuracies.