The operator introduces the Ventas First Quarter 2024 Earnings Call and turns the call over to Bill Grant, Senior Vice President of Investor Relations. Grant reminds participants of the risks and uncertainties associated with forward-looking statements and non-GAAP financial measures. Chairman and CEO Debra Cafaro welcomes participants and discusses the company's positive start to the year, plans for executing their strategy and creating value, and improved outlook for 2024.

In the first quarter of the year, Ventas saw strong results with nearly 7% same-store property NOI growth, driven by a 15% increase in shop portfolio occupancy. This growth is expected to continue due to the increasing demand for senior housing and the limited new construction in the market. Ventas also plans to expand its presence in the senior housing market through value-creating investments.

Ventas has been successful in closing or placing under contract $350 million worth of investments that meet their targets for going in yields, expected returns, and affordability. The company expects to continue making progress on their investment plan for the rest of the year. They are also focused on driving cash flow throughout their portfolios, with their SHOP generating over $800 million in annualized NOI and their Kindred lease remaining stable. They are actively discussing ways to optimize their enterprise value and NOI following the lease maturity in 2025. Additionally, their outpatient medical and research business is performing well and contributing to the company's overall success.

Ventas, a leader in senior housing, is experiencing strong demand for its assets due to the growing aging population. As a result, they have improved their outlook for the full year and have raised their guidance for normalized FFO and same-store cash NOI. The SHOP portfolio, which includes senior housing communities, had a strong start to the year with 15.2% same-store cash NOI growth. Move-ins were elevated, REVPOR was in line, and operating expenses were lower than expected due to cost efficiencies. This was attributed to the positive move-in momentum and the use of insights from the Ventas OI platform. Overall, the operators are delivering excellent care and services and achieving great results.

In the first quarter, Sunrise, [Indiscernible], Discovery, and Le Groupe Maurice all performed well, contributing to the overall success of Ventas. The SHOP portfolio had double-digit growth for the seventh quarter in a row, led by strong performance in the U.S. and stable cash flow from the Canadian portfolio. As a result, full-year guidance for the same-store SHOP portfolio has been raised, with expected growth of 12% to 16% in NOI. April occupancy is already high and there is potential for further growth in the coming years.

Ventas is excited about the strong supply and demand for their senior housing properties and their partnership with operators through the Ventas-OI platform. They have been actively investing in senior housing opportunities, with a focus on high-quality communities with high yields and growth potential. Their investment strategy is guided by a framework that prioritizes the right market, asset, and operator. They also utilize their data analytics and asset management playbook to drive value and primarily work with proven operators.

The company has a data-driven selection process for new operators and has doubled their SHOP operator pool. They recently acquired Magnolia Springs, which includes seven communities with strong occupancy rates and projected revenue growth. The communities will be operated by a proven operator. The company plans to continue growing their pipeline of senior housing communities. In the first quarter, their Outpatient Medical & Research segment reported strong same-store cash NOI growth and executed a high volume of new and renewal leases.

The outpatient medical assets from the equitized loan portfolio have increased occupancy by 300 basis points due to effective asset and property management initiatives. University-based research same-store cash NOI increased by over 5% in the first quarter with overall new leasing pipeline increasing by 30%. Net loss attributable to common stockholders was $0.04 per share, but normalized FFO per share in Q1 was strong at $0.78, representing 5% year-over-year growth. Total company same-store cash NOI grew nearly 7%, led by SHOP. Capital markets activity included extending the maturity of a revolving credit facility and raising $650 million in senior notes. Updated 2024 guidance shows an improved outlook for net income attributable to common stockholders.

The company has increased its full-year guidance for normalized FFO and expects strong growth in property NOI and same-store cash NOI. They have also raised their expectations for senior housing investments and FAD CapEx in 2024. The company is optimistic about the potential for occupancy growth in their core markets, estimating a potential increase of 1,000 points. There has been a focus on supply and demand in the senior housing sector, which has been favorable.

The company has added a page to their earnings deck that outlines the potential for 1,000 basis points of upside in their markets over the next few years. They have used various data sources to determine this and feel confident in their outlook. They also have the opportunity to expand into new markets through external activities. There is potential for margin expansion as occupancy increases, and the company may provide more information on this in upcoming conferences. The extension option for Kindred was granted in order to allow for further discussions and reach the best outcome.

Ventas believes that it was in everyone's best interest to reach a good outcome for the company, which means maximizing value and NOI. Kindred has implemented initiatives to improve performance, but the results are still trailing. Ventas is actively working with Kindred and others to reach the best outcome for the company and properties. The focus is on the work being done, rather than the notice date.

The company is working on resolving a similar issue as before and will update investors as soon as possible. They are also looking at potential acquisitions in the senior housing market, primarily through fee simple transactions, due to upcoming debt maturities creating opportunities for buyers with better capital stacks.

The company has been seeing a diverse mix of private equity sellers, operators, and institutional sellers in their pipeline. They are also executing on these opportunities. The analyst asks about the potential for a change in structure for the Brookdale rent lease, but the company states that they have positive options and are open to any structure. The analyst also asks about funding for potential acquisitions, to which the company does not provide a clear answer.

Robert Probst and Justin Hutchens discuss the financial returns of investments and the company's cost of capital with leverage still relatively high but improving. They mention fully funding senior housing investments with equity and adding more disposition proceeds to build dry powder. Justin also mentions a potential 1,000 basis points of occupancy upside for the company's U.S. portfolio, with a goal of reaching 100% occupancy.

The speaker discusses their goal of increasing occupancy rates in Canada and the U.S., with some markets already seeing success. They express confidence in the opportunity for growth and mention a new hire who will focus on driving performance and increasing revenue. The company has seen positive trends and is optimistic about the future.

The speaker states that the addition to their company will make them stronger. The next question is about the SHOP occupancy update in 1Q and the revised outlook for the year. The speaker explains that the better-than-expected performance is due to a combination of market conditions and internal initiatives. Examples of these initiatives include price volume optimization and investing in properties and operators to outperform the market.

The company has seen significant growth in their CapEx investment, with a 470 basis point increase in occupancy and a 9% growth in street rate. They also have 16 million warrants that are deeply in the money and could be used as a source of capital. The focus for the company is on investing in seniors housing, and they are executing their strategy to drive organic growth. They plan to continue growing their portfolio in the future.

Debra Cafaro, CEO of a company that owns senior housing, discusses the company's plans for growth in this sector. She mentions that they are the second largest owner and have access to capital, which will allow them to expand externally. She also notes the high returns and growth potential in the market for senior housing, and their commitment to making acquisitions in this area. The company's focus on senior housing is already over half of their overall portfolio and is expected to continue growing. In response to a question about the timeline for accretion, the CFO explains that while the investments may not be immediately accretive, they offer attractive growth potential and mid-teens IRRs, which will drive near-term accretion. The next question is directed to the company's COO, Justin, and is not summarized.

Justin Hutchens and Vikram Malhotra discuss the acceleration trends in occupancy and same-store NOI growth at SHOP. They clarify that occupancy is accelerating and that the strong start to the first quarter has changed the trajectory of expectations for the year. They also mention the start of the key selling season and how they want to see how that plays out before making any further predictions. Robert Probst adds that there will be incremental year-over-year occupancy growth embedded in the forecast and that the range for NOI has gone up at the midpoint. The discussion then turns to the Kindred outcome, with Debbie potentially extending the timeline by 1 month and mentioning the possibility of other interested parties.

Debra Cafaro, CEO of Ventas, discusses the company's active discussions with Kindred and other players regarding the renewal of their properties. She states that it is more likely that Kindred will be part of a solution going forward. Justin Hutchens, COO, talks about the pressure tick and how they focus on entering the right markets and finding the best operators for their need-driven assisted living and memory care properties. He also mentions that they do not make decisions to cause delays.

The company is focused on improving performance by transitioning to new managers. They have had success with this in the past, but there is always some risk involved. The decision to transition managers is based on what will drive the best performance. The company has funded its actions so far with equity, but they plan to dispose of some assets, including outpatient medical and research properties, in order to upgrade their portfolio and generate growth. These dispositions are expected to have a mid-single digit cap rate, similar to the company's current AFFO yield. The company is focused on capital recycling as another source of funds. Michael Mueller of JPMorgan asked a question about the company's plans for capital recycling.

Justin Hutchens, CEO of Ventas, discusses the outlook for the company's Senior Housing Operating Portfolio (SHOP) and Independent Living (IL) segments. He notes that most of the company's NOI growth is coming from AL, with IL expected to contribute more in 2025. The occupancy trends for IL are strong, and the company expects to benefit from operating leverage in the future. Regarding the $19 billion in loans, Hutchens does not provide specific details on potential refinancing issues or changes in the level of distress over the past six months.

The paragraph discusses the current state of the real estate market, specifically in terms of interest rates and the recovery from COVID-19. It also mentions a decline in occupancy in the outpatient medical business during the quarter, but notes that overall leasing was strong.

The speaker is pleased to report that the health system has recovered and is performing well financially. They have been able to re-lease a significant portion of the lost occupancy, often to the same entities. The speaker gives two examples of this. The IL sector has outperformed in terms of occupancy gains, which could be due to increased demand or improved operations.

The company has seen good momentum in its independent living portfolio and has made an effort to improve performance in these communities. The company has used various strategies to achieve this, such as sales oversight, price optimization, and capital investments. The company is confident in its projected REVPOR growth for the year, but has left room for adjustments based on the selling season.

The speaker, Debra Cafaro, thanks everyone for participating in the conference call and summarizes the discussion by highlighting the expected 5% growth and the focus on optimizing prices and occupancy to drive revenue and NOI. She also thanks her colleagues for their contributions.

The speaker expresses gratitude for the listener's attention and interest in Ventas and mentions looking forward to seeing them soon. The operator then concludes the call and thanks everyone for joining.

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