Ventas, Inc. Price & Performance (VTR)

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 Ventas.

Thank you, BJ. I want to welcome all of our shareholders and participants to the Ventas fourth quarter and full year twenty twenty four earnings call. Ventas really delivered in 2024. Today, I'm happy to discuss our strong results, investment activity and growth powered by our increasing participation in the unprecedented multiyear growth opportunity in senior housing. With our momentum, I'm also pleased to introduce our favorable expectations for 2025. Building on our strong results and positive outlook, we've also increased our quarterly dividend to stockholders by 7%. We continue to focus on creating value for our stakeholders from our advantaged position within the longevity economy, as we enable exceptional environments that benefit a large and growing aging population. The company effectively executed on its 01/2023 strategy in 2024, and I'd like to thank my colleagues for their commitment and excellence. During the year, we took advantage of the unprecedented multiyear growth opportunity in We delivered significant Senior Housing NOI growth from our portfolio made value creating investments focused on senior housing and drove cash flow throughout our portfolio. Let's discuss 2024 results. Ventas delivered full year normalized FFO per share of $3.19 above the high end of our guidance range.

SHOP same store cash NOI grew nearly 16%. The third year in a row of double digit growth. As Justin forecast at the beginning of the year, 2024 was a year of occupancy outperformance with year over year occupancy increasing 300 basis points in our same [indiscernible] Compelling secular demand de minimis supply, well positioned communities in favorable markets, and Ventas' advantage platform came together to deliver results I also want to recognize the care providers for their outstanding service to residents and their families. Including their extraordinary actions during the recent California fires. In 2024, we also focused on senior housing. These investments met our well defined operational and financial criteria. And we're selected from a much bigger pipeline of opportunities using our competitive advantages in senior housing. Which includes data analytics, operator relationships, our experience knowledgeable team. These investments funded with equity increased our participation in the multiyear growth opportunity through expansion of our senior housing portfolio they added accretion, improved our FFO per share growth rate, accelerated deleveraging and created value. As a result of both organic and external growth, in shop in 2024, our scale grew significantly to $2,200,000,000 in annualized EBITDA, SHOP reached 43% of our NOI, and our leverage improved to enter our long term targeted range all by year end.

With nearly 8% total company same store cash NOI growth in 2024, We also achieved the third prong of our strategy, driving cash flow growth throughout the portfolio. Compounding NOI growth from outpatient medical research and our triple net lease portfolios supplemented our strong SHOP performance. We also increased our Ventas Investment Management Platform or VIM during the year. Started in 2020, VIM has over $5,000,000,000 in assets under management. Looking forward, we are excited about the opportunities ahead. To create value for stockholders, we intend intend to continue to drive shop growth and expand our shop footprint with accretive investments focused on senior housing. As a result, we expect our shop business to represent over 50% of our NOI by year end Our 2025 guidance anticipates normalized FFO per share growth of 7% at the midpoint led by SHOP. If achieved, this profile would put us in the upper echelon of And even as we focus on growth, we also expect further enhance our financial strength and flexibility during the year. All the while, we'll maintain our commitment to enabling exceptional environments that benefit a large and growing aging population. So our value proposition for investors Ventas Deliver top tier twenty twenty five FFO per share growth, property NOI growth and investment growth and top it off with a 7% increase in our quarterly dividend.

We are optimistic about 2025 and beyond. Conditions remain favorable for our continued success. And the company continues to build its competitive advantages. We are in it to win it. We are still in the early innings of this multiyear growth opportunity in senior housing. As the 80 population is surging, construction starts have fallen to historic lows and new developments generally are not feasible. We also expect to continue to benefit from compelling secular demand, a favorable pricing environment, robust attractive investment opportunities, positive operating leverage as occupancies rise and a terrific experienced team. Whose ranks continue to grow with top talent. With that, I'll turn it over to Justin. Thank you, Debbie.

I'll give updates on our strategy to deliver profitable organic growth, in our senior housing portfolio, and execute on value creating external growth. We had a very exciting and successful year on both fronts. Starting with organic growth. 2024 marked the third year in a row of double digit same store SHOP NOI growth. I'm very happy with the execution of our Ventas OI driven shop platform initiatives and collaborative relationships with our high performing operators. Our occupancy led results were delivered by and asset types. Total SHOP same store cash NOI growth was 16%, which is at the high end of the guidance range. Full year same store shop occupancy grew by 300 basis points versus our initial guidance of two fifty. In the fourth quarter, our U. S. Same store NOI grew 20% and occupancy grew three seventy basis points. We are outperforming our markets in occupancy growth. Our U. S. Shop communities in the Nicktop 99 markets grew three fifty basis points, beating the NIC benchmark by 140 basis points. These results were broad based across assisted living and independent living. Moving forward, we are highly optimistic about our senior housing business across multiple dimensions.

The supply and demand dynamics in our sector are exceptionally favorable. Over the next five years, The U. S. Will experience an unprecedented surge in the senior population As the baby boomer generation begins turning 80, This 80 age group is projected to grow by 28% during this period driving significant demand for senior housing. Meanwhile, new construction in our markets remains constrained. With inventory growth at the lowest number on record and new construction starts at an all time low, These combined factors trade mix extraordinary net absorption opportunity in the upcoming years unlike anything we have seen before. We just finished the first lap of a long race as supply demand characteristics are projected to remain [indiscernible] over the next several years. Ventas is in a strong position to continue to drive growth in our shop portfolio.

We have favorable competitive positioning driven by Ventas which underscore portfolio actions and optimizes performance. Our expanding network of 29 shop operators has consistently delivered tremendous growth while capturing market share the respective regions. We are committed to working closely together with them to capture the immense We offer a differentiated approach through collaboration, and the aligned goal of delivering exceptional care services and performance. Continue to execute on our community refresh program improving the living, and working environments of our communities. And therefore improving competitive positioning. Have completed two twenty eight projects at year end including over 150 refreshed employee break rooms and over 4,500 modernized resident units. We are on pace to complete another 50 refresh projects by the key selling season this year, which should further enhance our ability to drive NOI. Speaking of driving NOI, as previously announced, we are excited to expand our shop portfolio by converting 45 large scale senior housing communities comprising of about 5,700 units from the triple net structure to shop. This is a great opportunity to reposition low occupied communities that are located in markets with strong projected net absorption. We have plans to transition these communities to five proven high performing operators with a strong track record of both transitioning and improving operating performance.

We plan to execute the Ventas OI playbook to drive occupancy, pricing, environmental improvements, and ultimately double the NOI of this 77 Assuming this conversion occurs by the end of the year, project our shop footprint to increase by 8% in number of units our shop portfolio to increase to account for over 50% of our enterprise NOI. Looking forward to 2025, we are excited to continue our multiyear growth trajectory as we embark on our fourth consecutive year of double digit NOI growth in our same store shop portfolio. [indiscernible] Same store shop is expected to grow NOI 11% to 16%. The midpoint of our range is driven by revenue growth of about 8%, average occupancy growth of about two seventy basis points, and continued strength in pricing driving RevPOR of around 4.5%. Furthermore, we expect operating expense growth of 5%. Per usual, the results will be highly dependent on a success key selling season and we are assuming a relatively stable inflationary outlook. Once again, we are expecting The U. S. To be the growth engine with continued accelerating occupancy performance with over 300 basis points of growth January occupancy is off to a strong start. Summarizing organic shop growth, we are coming off a strong year of occupancy driven results and we are excited about the opportunities ahead of our Advantage Shop platform.

Moving on to part two of our strategy. Continue to execute on value creating external growth focused on senior housing in the fourth quarter, and throughout 2024. For the full year, we closed on $1,900,000,000 of senior housing investments, including $1,400,000,000 in the fourth quarter alone. These investments fit squarely with our investment criteria including 7% to 8% expected year one NOI yield, Low to mid teens unlevered IRRs [indiscernible] This investment activity meaningfully expands our shop portfolio with the addition of 52 new communities and markets with strong projected net absorption, and communities are high performing with upside, including average in place occupancy of 90%. Even with this accelerated pace of external growth, we are maintaining our underwriting discipline 2024, we reviewed approximately $18,000,000,000 of senior housing opportunities, pursuing approximately $5,000,000,000 and ultimately closing on nearly 2,000,000,000 We have a rigorous data driven process that ensures we are and investing within our right market, right asset, right operator framework. Our experienced team remains focused on executing our external growth plans and we intend to expand the team. We expect our pipeline will continue to present a large set of compelling investment opportunities with potential deals coming from a range of owners and a variety of reasons for selling including debt and fund maturities.

Our investment activity also includes a range of seller profiles with transactions coming from balanced mix of owner operators, private equity, developers, and other institutional capital. Looking forward to 2025, we expect to keep our external growth momentum including line of sight on $1,000,000,000 of senior housing investments which are already in advanced stages. And we expect to be weighted in the first half of the year. Ventas a senior housing partner of choice with sellers, brokers and the entire investment community. This remains true Ventas there may be more competition for assets as others are seeing the favorable risk reward in senior housing our industry experience platform capabilities to manage scale, data science and transaction track record should help to propel our growth prospects moving forward. Our investment team capabilities are second to none. And we are continuously building on our strengths. With that in mind, I'm very excited to announce Alex Russo, joining our team as Senior Managing Director of Investments. During his eighteen year career at Lazard, Alex has demonstrated exceptional financial and investment acumen and I expect he will be an instrumental addition to the team as we continue to execute on our value creating external growth focused on senior housing.

Now, I'll hand the call to Bob. Thank you, Justin. I'll share some highlights of our 2024 performance, and close with our 2025 outlook.

I'll start by saying we are pleased with all we accomplished in 2024. We finished 2024 strong. Attributable net income per share of $0.19 2024 normalized FFO per share of $0.81 in the fourth quarter and $3.19 for the full year represents a 7% year over year increase in both periods. The result exceeded the high end of our full year normalized FFO guidance range led by shop same store growth, and execution on our accretive senior housing investment pipeline.

Our total company same store cash NOI grew nearly eight reflecting broad based property NOI growth across our portfolio led by 16% growth in shop.

Our outpatient medical and research business delivered continued compounding growth of 3% in 2024. In line with our expectations. For the full year, research grew 4.6% and Outpatient Medical increased 2.6%.

As Justin described, we closed on approximately $1,900,000,000 of senior housing investments, funded all equity.

We raised $2,200,000,000 of total equity in 2024 and year to date 2025 including approximately $1,200,000,000 raised since the third quarter, at an average share price of 6,290. We currently have $250,000,000 of unsettled four available to fund senior housing investments in 2025. Consistent with our strategy, shop growth in all equity funded senior housing investments have further strengthened our balance sheet At six point zero times, our Q4 net debt to EBITDA is a 90 basis point improvement year over year, has now entered our long term targeted leverage range of five to six times. We expect continued leverage improvement in 2025 driven by senior housing growth. We ended 2024 with robust liquidity of nearly $4,000,000,000 which included proceeds from our third quarter twenty twenty four senior note issuance which we subsequently used to pay down $1,000,000,000 of maturing debt in the first quarter of twenty five. Let's conclude with our full year 2025 outlook. We expect normalized FFO to range from $3.35 to $3.46 per share or $3.41 per share at the midpoint which represents 7% year over year growth. In line with the SSL growth we posted in 2024. The $0.22 normalized FFO per share increase is driven by NOI growth in the shop business and accretive senior housing investment activity.

Partially offset by higher net interest expense FX dilution from a higher share price. Our twenty twenty five total company same store cash NOI guidance approximates 6.75% year over year. Growth at the midpoint led by SHOP. Our guidance includes senior housing investments of $1,000,000,000 in 2025, with clear line of sight and weighted to close in the first half of the year. We intend to principally equity fund these investments and have already raised $250,000,000 via equity forwards. For the year, we also expect to raise $200,000,000 through capital recycling efforts specific to increased net interest expense, A more fulsome discussion of our 2025 guidance assumptions, can be found in our Q4 supplemental and earnings presentation posted to our website. [indiscernible] To close, we are really pleased with our 2024 performance, are executing on our growth strategy and delivering advantage growth in normalized FFO per share. The entire Ventas team is determined to continue this momentum in 2025. With that, I'll turn the call back to the operator.

At this time, I would like to remind Okay.

So your first question Please go ahead.

Yes, good morning. So my question actually is about the medical office building side of things. Just looking at the quarter, some occupancy declines, it appears. But in your 2025 guidance, you have pretty strong same store NOI growth. So I'm just curious what the kind of trajectory is in that business, whether you're expecting occupancy gains, refilling of some of that space that may have vacated in the year? How do we kind of think about the fourth quarter results relative to the 2025 guidance?

Yes. Thanks, Tayo, for the question. Really, it started '24, we actually did more leasing. We had 15% more leasing than the prior year. And as you cycle through that, construction and they start coming online, start seeing meaningful results in your NOI. If you look at '24 we've or '25, we've already done 34% of our leasing plan which is a terrific start for mid February, So our plans for '25 assume occupancy gains and the corresponding NOI growth. Got you. Okay. That's helpful. And if I may ask one about the senior housing Again, everyone is very aware of what's happening in regards to demographic tailwinds and clearly showing up in your results. Curious at this point is what VOI is telling you guys in regards to strategically you should be doing anything different to kind of for the kind of capitalize on those demographic tailwinds, especially now you're kind of at the point where again occupancy is getting higher and things of that sort and demand supply demand fundamentals clearly are in your favor.

Hi, it's Justin. Yes, so the whole basis for Ventas OI is to really help us to focus on markets as [indiscernible] And the data from a market standpoint is extremely helpful because it really underscores all the decisions we make. It's the most important aspect of our investment decisions disposition decisions, decisions to invest in particular assets, And the key point really is it's hyper locally focused. And that really gives us a comfort and confidence that we make that investment we take certain actions that's going to deliver growth opportunity, and it's going to have sustained opportunity to perform well over time. And that's really the power of the platform. It's looking ahead near mid long term and ensuring that we're as well positioned.

Congrats on the quarter and the outlook. Thanks, Sarah.

Your next question comes from the line of Michael Griffin with Citi.

Please go ahead.

Thanks. It's Nick Joseph here with Michael. Just wanted to touch base on the acquisition strategy targeting more stabilized assets So I was hoping you could talk about kind of the return profile of those where you can kind of push rate versus the occupancy up side and what sort of going in yields and stabilized IRRs you could get there?

Yes, sure. So we find this to be a very unique opportunity right now where you can invest in high quality assets that have the combination of delivering yield and growth. Haven't really seen this before.

There are opportunities to invest in a variety of different senior housing. We had we mentioned we had $18,000,000,000 that we started to look at.

We only pursued $5,000,000,000 of that and really that's because we're being extremely focused on the criteria that we set forth.

Which has helped us to ensure that we're getting the combination we're looking for, yield growth, and then ultimately a high quality, high performing asset So the asset that we're pursuing is first and foremost is high performing. These are market leaders. They're 90% occupied but that doesn't mean they don't have occupancy upside. We have they're in markets that have strong absorption. There's another 10% occupancy opportunity. Plus pricing opportunity, which should only improve as scarcity value increases and that will come as occupancy continues to grow. Buying larger communities that have a mix of IL and AL and memory care services in markets that have strong absorption and a strong affordability and the unlevered IRRs are low to mid teens. And that's factoring in obviously growth and we tend to use the constant cap rates. So you can you can have an assurance that its growth that's really driving that IRR. So we like this opportunity. We're continuing the same investment criteria in 2025 that we used last year We mentioned the $1,000,000,000 that we're pursuing and that's lining up well with that criteria.

Thanks. That's very helpful. And then just the impact of that those acquisitions both identified and also potential in 2025. Could it meaningfully move the needle or is it more kind of future growth that we would see it on a per share basis?

Hey Nick, it's Bob.

Yes, good news. These acquisitions are accretive from the get go. All equity funded last year we did nearly $1,400,000,000 in the fourth quarter. So a lot of the activity last year was fourth quarter weighted.

And it was 78% yields is accretive. So that's certainly part of the 7% year over year growth in normalized FFO per share. [indiscernible] line of sight to the new $1,000,000,000 will have lesser contribution, obviously, just giving timing in the year. But again, we'll continue to strive to do what we did last year.

Thank you very much. Thank you.

Your next question comes from the line of John Kalachowski with Wells Fargo. Please go ahead.

Thank you. Maybe just circle back to that last question and talking about the $1,000,000,000 acquisition guide. I'm curious what deal flow looks like at this point right now versus maybe this time last year and and the fourth quarter? And then maybe how the competitive competitive environment is changing and the room for you all to drive acquisitions in the second half of twenty twenty five? Yes. Well, first of all, the the pipeline is bigger than it was this time last year. [indiscernible] Remember, we started last year's guide at $350,000,000 We ended up $2,000,000,000 dollars This year, we have confidence around $1,000,000,000 already. So So that in itself kind of demonstrates the pipeline, but we're seeing more activity We're seeing more competition. There's certain new players at the table and some some of that have been around before coming back to the sector again. But it's important that we emphasize why we have a competitive advantage in this asset class And there's a few reasons. One is the platform itself, the Ventas SOI, the data analytics, experience [indiscernible] capital to well positioned assets And then making sure that we are picking the right operators and one of the reasons I'm so proud of the amount of operators we have is because we are picking operators that have track records in their particular asset classes and in their market.

Not about how many, about delivering within local markets and we can manage that. So that's a differentiator most of the market that pursues senior housing. This is a platform that's take taken many years to to grow.

It's even turbocharged, I think, in recent period as we've reentered the competitive opportunity within senior housing and we we think we'll do well and we'll look forward to continuing to execute.

Got it. And then maybe if we could just jump to development here.

How close are we in the cycle to having development really start to pencil? Like what would Rev4 growth need to be in your models to get there? And then typical delivery time just so we could sketch out and maybe like a rate neutral environment when we think supply would likely inflect Right. So it doesn't seem like we're anywhere close. And it varies by market.

There's a wide range of rents that we think are needed. It could be it's being worked from 20% to 50% higher depending on the market you're looking at. We're not seeing development starts not really a big debt financing source for development. And it's on multiple fronts and that the barriers are on multiple fronts. Anywhere from land cost material costs, labor costs and then just the price that's needed really to justify the spend and it's it's a ways off based on what we're seeing now.

Thank you. Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Please go ahead.

Hi, good morning. Hoping you could talk a little bit about the R and I business and your views on risks around NIH funding changes as a result of policies by the new administration and the impact or lack thereof on Ventas' assets?

Good morning, Juan. It's Debbie. So I'll just briefly touch on that. As you know, because SHOP is growing at such an accelerated pace within our enterprise, Our consolidated research portfolio is about 8% of our total NOI with 18 distinct universities. And The U. S. Leads the world in biomedical research in part because of funding from the NIH and And so we generally feel positive about the long term prospects of biomedical research in The U. S. And there is, as you know, some noise around the NIH grants at the moment, but at the present time, any changes have been halted and therefore the grant recipients should continue to receive their full funding And these institutions generally have a very, very, very large research budget of which NIH funding is a minority portion And of that the only proposed changes are to small portion of that. So that hopefully frames it up for you.

And then just as my follow-up, maybe you could provide a little color on the $200,000,000 that's for capital recycling via dispositions, the strategy there You talked about selectively selling skilled nursing before. Is that kind of still on the bucket and yields we should expect on that 200,000,000 Yes. And you've been writing about this. So you know it well, which is we have had a strategy of disposing of the skilled nursing facilities we acquired a year or two ago and we've done quite a bit of that and have about $150,000,000 pending and would expect that to be the the big part of the $200,000,000 to which Bob referred. And we'll recycle that capital into senior housing investments Thanks again. Your next question comes from the line of Vikram Malhotra with Mizuho.

Good morning. Thanks for taking the question. Congrats on a strong quarter.

Maybe just first on the shop side, can you clarify in your guide, are you baking in sort of a typical seasonal pattern in 2025 kind of dipping in 1Q and then from 3Q to 4Q or are you baking in something different?

Yes, sure. So we [indiscernible] consider kind of a historically normal seasonal pattern. In our guide. And we have said we're off to a strong start in January.

We'll also be the first to admit that we had very strong counter seasonal results last year So the new normal could change as demand is picking up. But it doesn't really change one important fact and that is that we have a heavy reliance on the key selling season And obviously, I think we're well positioned to do well, but that's always the most important season because that's where a lot of the net moving activity happens.

Got it. So just to clarify, you're baking in typical like dips and pickups etcetera as we go through the year just as you've seen historically.

Yes, we're using historical season yes, historical seasonality in our And then in the same store, or the overall, I guess, shop portfolio, can you, A, just give us a bit of a sense of how pricing power evolved around kind of different occupancy bands and perhaps what percent of the portfolio is less than 80% occupied today. Yes, sure. So, I'll take the second one first.

About 25% below 80%.

I'd like to remind people that The U. S. Is 84% occupied.

So we have a lot of growth opportunity in terms of occupancy within the SHOP portfolio. In The U. S. [indiscernible] there's a direct relationship between higher occupancies and higher price. So we'll see the best being being 99% occupied or higher, we have by far and away could be up to 900 basis points better move in Ventas. Rev four is up 30%, 40% in that range. The next one down 90%, 99%, you're seeing exceptional pricing as well.

And it's really that kind of below 90% occupancy category where we're not pushing pricing as much. So if you think about where we're positioned, 84% Debbie mentioned 2024 is occupancy led. '25 we're expecting solid occupancy growth again with good pricing support And as we get into higher occupancies, we fully expect that they'll have the opportunity to push pricing more over time.

Got it. And then just last clarification on the fund business you have. Can you just talk about you've talked about the overall deal volume the pipeline for on balance sheet, but what about the fund and maybe MOBs or life sciences, senior housing, like how are you thinking about growing or tapping the fund?

Thanks. Our fund business has been very successful since its inauguration. And we are continuing to grow that It's been a good performer compared to its benchmarks And we would expect to continue to use vehicle for the benefit of the the institutional investors in it as well as Ventas because we are the general partner and an investor in it. So it's a nice additional tool that we have and have used, to benefit the overall the investors Ventas in the fund Great. Thanks and congrats again.

Thank you very much.

Your next question comes from the line of Richard Anderson with Wedbush. Please go ahead.

Hey, thanks. Good morning. So So Justin, I know the focus from an acquisition standpoint is high performing 90% ish type of occupancy, but you're kind of jumping out of your shoes talking about the Brookdale opportunity that's 77% you the focus is on sort of lower risk I could call that opportunities as opposed to more value add activity given we are in such a sweet spot in early stages of this fundamental cycle of senior housing?

Yes. I mean, good comment. I mean, really, we should be looking at aggregate portfolio composition. Just like an investor would look at their aggregate portfolio to look at risk reward growth, etcetera. And so I'll turn it over to Jess Clearly, when you can buy things that have great risk adjusted return, as we've been doing, we like that. But let's talk about overall portfolio construction.

Yes. And I mean, and that's exactly right because we have a lot of upside in our existing shop portfolio from an occupancy standpoint. We've taken a lot of actions over the years to make sure we're well positioned within that portfolio to be ready for really what we're seeing today, which is this growing demand environment.

And like I said, we're only 84% occupied in The U. S. If you looked at the non same store group, half of that's acquisitions, the other half is in the in the 70% occupancies. And so where do we get those communities? Well, we we moved a lot of them from triple net to shop through conversion. So even without Brookdale, we've already converted around 100 communities from TripleNet to shop and that's really been the source for this if you want to call it a value add opportunity where we can really deploy the Ventas OI playbook to the fullest And then a nice complement to that are these high performing acquisitions that we're that also have really good returns and growth.

Yes. I mean the investments meet the unlevered IRR expectations, low to mid teens are expected to deliver that. And so that's pretty good for an asset that is is well performing already.

Okay.

And then my second question is, I think someone asked what percentage of your portfolio is below 80%. You said that's 25.

What Ventas is currently running above whatever the pre disruption occupancy was, say, high 80s. I mean, where do we find proof that you think that the landing point for occupancy in SHOP is something meaningfully greater than the starting point prior to the pandemic and so on? I wonder if you could sort of give some give some color around that. Thanks. I mean, Yes, I mean, you can see well, the sector is basically there.

So you have the industry that's We have way over half of our portfolio has already done that. As we've said, we've been kind of moving communities in that we think have repositioning opportunity to deliver outsized growth for us. So that's part of the makeup of the portfolio. And I think the results we've had over the last few years is is demonstrating the growth opportunity and you're seeing our grow, you've seen our margin expand, And really just as we said it would. So we're right in the but I'll say this, Debbie said it and I said it different analogies. It's I said, we just finished like the first lap of a long race. Because we're just now like really now getting to the period where demographics become really strong. And it happens to be during a period when supply is completely muted. So it's been pretty good the last few years. We're looking forward to some more strength moving forward and and achieving our forecast.

Yes. Rich, I used the base Yes.

Appreciate it. [indiscernible] Your next question comes from the line of Michael Carrel with RBC Capital Markets. Please go ahead.

Yes, thanks. Justin, can you comment on the reason why Ventas might lose a Cedars housing transaction?

I know in the sub in your prepared remarks, you said that Ventas bidded on $5,000,000,000 of deals and closed about $2,000,000,000 So what are the reasons for those misses in 2024? Is it due to price or is there other reasons that Ventas decides not to move forward with that?

That? So there's a couple I'm going to start with why we win deals. [indiscernible] look out the $2,000,000,000 and the $1,000,000,000 that's coming, the obvious first thing is we're the highest bidder.

The next is that we had a unique opportunity. And a lot of these deals are owner operator driven, and they'll like to partner with Ventas as their next capital partner over the long term. And so that's helped us to be well positioned with certain deals that we've won We've had kind of quasi off market opportunities like that that have driven a lot of the opportunity for us. We have other opportunities where we've transacted with party before. They know who they're dealing with on the other side of the table. They know that we deliver on what we [indiscernible] and that really leads to confidence in transacting with us, which helps us to win opportunities. So generally, if we're not not winning a deal, There's obviously a disconnect in terms of what we think the value of the asset is versus player that bought it. So you get outbid in certain cases, certain times we may even expect that will happen. Because it might be a certain type of asset, but we have insights into the market that others might not have. So So we're We're liking our success rate We're usually not shocked if there's a deal that falls out on us and we usually have a lot of confidence the deals that are the right fit.

Okay. That's helpful. And who are the peers that typically beat you? Obviously, I don't have to name names, but are they like public REITs or private players? I mean, who are the main competition that you typically can't complete a deal because they outbid you? Well, Michael, I mean, this is Debbie. One of the things that Justin said which I think is very important is we may choose not to bid more because we don't value an asset the way maybe someone else does. Part of the secret sauce, of course, is bringing these assets on and adding the OI platform knowing what can be delivered under our offices. And so there are plenty in there that we just choose not to bid more because we we don't like the risk reward proposition. And I would say that's the most common characteristic. There are very few deals very few. Where if we won it, That's a much, much smaller number.

Okay, great. Thank you.

Your next question comes from the line of Rona Tandem with Morgan Stanley. Please go ahead.

Hey, I just had two quick ones. Just wondering if you could touch on expenses a little bit give us a sense of what the labor markets are looking at and if if that's something that is a concern as we think about going forward Yes. In the shop business, the The expense forecast really assumes kind of current inflationary projections.

We have 5% all in because that includes wage increases plus it includes the volume impact of the occupancy Obviously, the flow through is very strong, which is great. Importantly, the hiring opportunity has been very good for operators. We're on a long trend now of having the ability to fill roles, retention [indiscernible] So am going to knock on wood and say the labor market for us is been about as good as we've seen in some time.

Great. That's helpful. And then just on the conversions, I think you talked about you've done 100 and there's this Brookdale. Just as you look at the portfolio, how much more opportunity do you think there is in the next call it, three to five years and more conversions, I know they're tricky, but That's a good question. And I have to say that the least portfolio that remains very strong performing, good coverage, good assets, tenants that are happy with their relative position. There may be some that we can [indiscernible] to repurpose into a different structure, but But I think we've picked most of the opportunities and now we're really focused on execution.

Great. That's it for me. Thanks so much.

Thank you.

Your next question comes from the line of John Pawlowski with Green Street. Please go ahead.

Thanks for the time. My first question is on capital expenditures. The $285,000,000 in fab CapEx, it's up about 15% year over year. Is that just level? Should we expect this level to continue for the next few years?

And is the Brookdale repositioning Brookdale in included in this figure or is that a separate kind of redevelopment CapEx bucket? Above the bad CapEx Yes, I'll take that one. It's Bob.

So we were about $250,000,000 in $2,024,000,000 dollars on FAD CapEx.

The guide at two eighty five call it $30,000,000 higher, is really two thirds more units from all the activity we just talked about, whether it's investments or conversions from triple net and one third just inflation It kind of describes the difference. So I would expect as we continue to buy more assets and make conversions, including the Brookdale, that will will continue a higher level, but it's really principally volume based. More units.

Okay. And then Justin, a follow-up on one data point you threw out that I missed. Was it tranche properties versus low occupancy.

Is that RevPAR growth rates are 30% to 40% higher? Did I catch that right? Or could you expand on that? Yes, good question. It's a RevCore growth rate. [indiscernible] it demonstrates really what we think is a Very exciting opportunity around price in the future, as we get our occupancy up over time. Okay.

Thank you.

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

Please go ahead.

Hey, good morning, everyone. You mentioned competition maybe picking up a little bit for senior housing. Are you starting to see any signs of cap rate compression?

Good question. So we're [indiscernible] squarely in the range that we've been targeting all through last year and so far this year that 7% to 8% year one yield and their unlevered IRRs are basically the same. And so we're still finding opportunities that meet that criteria.

And it's been so far so good focusing on those targeted returns.

And as you know, ten year rates are up over 100 basis points. Basis points since even September. So that bears on it as well.

Yeah. We got to get the better And that's another that's another area of advantage for us is the access to and pricing of capital.

Fair point. One last one for me would be the Santander Are you starting to see that kick in this year? Is that more of a 2026 thing? Yes. Hey, thanks for the question, Wes. This is Pete.

Yes, the EOP portfolio we're really happy with. We've got 79 assets. We Leverage the Little Bridge playbook and the Little Bridge team What was really solid in 2024 was we had a material impact on tenant satisfaction went from lowest quartile of tenant satisfaction to the third quartile, which is a terrific step up We also had great retention last year of 82%, TTM Occupancy was up two ten basis points. And also NOI was up substantially about 4% So we expect that to carry through Okay. Thanks for the time.

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

Yes. Just first one on the Brookdale transition. Are you assuming any any headwind or benefit to FFO from transitioning those assets to SHOP from triple net in the back half of this year? And just curious what that assumes in the underlying NOI that you identified in the release.

I think it was mid $50,000,000 range?

Yes. Thanks, Austin. Yes. I'll take it. It's Bob. So the assumption in the plan in the guidance is that for the vast majority of the year, the assets remain under the triple net lease. That's the way the deal was structured. We can begin to transition them towards the end of the year. But effectively think of it as a triple net segment NOI asset for the vast majority of the year.

Where we'll really start to hopefully see some impact is on CapEx as we start to be transitions it's really more of a 26 story to be honest. Is the way I would think about it.

Understood. I was thinking September those started the transition. Just high level, Justin, you started last year 50 basis points of occupancy gains assumed in shop revenue guidance. Clearly exceeded that. And this year, you're starting at two seventy bps of upside. So I guess with that comment earlier about historic seasonality assuming guidance, what gives you that increased confidence this year? And do you still think that if the key selling season delivers and you don't see that [indiscernible] historically seasonal pattern occur could there be similar upside?

Yes, your question in itself almost kind of demonstrates the consideration because there's a lot of what ifs in there. If we outperform the winter and then we outperform the summer.

And so we're we're mindful of of how much business is obtained during that key selling season and that really drives a lot of that growth we're projecting. So certainly, if all that we check all those boxes, you could see more, but there's a lot of the year play out still. And and we'll go focus on executing and where we can get Your next question comes from the line of Mike Mueller with JPMorgan. Please go ahead.

On the four new developments that are underway, I guess first for the Atrium project that's 100% leased, that's being completed this year. Why is the stabilization in 2027 And then just kind of an update for the other three that are still leasing up?

Right. So we kind of think of three projects basically. And of those three projects, There are two buildings that are very exciting that are in the Charlotte market that are 80% pre leased. And so that's really driving the stabilization date because they're we're consolidating them basically. And so one is 100% pre leased and the other one is 60% pre leased. So those are going well and We expect to get benefits from that and they have an incredible really desirable tenants, including Atrium Health, obviously, that's the name. And so that's the update on that. And the other two are kind of coming online and have significant pre leasing as well.

And we're going to continue to to try to achieve targeted leasing.

Got it. And maybe if I could squeak one other one in there.

You talked a little bit about looking at larger properties with AL, IL and memory care in there. I guess what are the high level thoughts on entry fee communities today?

Yes. So there's I mean, if you just step back, you have an 80 plus population that is surging. So everything every service offering that's facing that should have opportunity.

That includes interest fee communities. We don't invest in those currently. Clearly, they have a place in the market and they've done well. So I would expect that there's opportunities there. We're rental focused and obviously we've had a lot of growth and we expect good opportunities moving ahead.

Got it. Thank you.

Thank you. Your last question comes from the line of Nick Yulico with Scotiabank.

Please go ahead.

Thanks. I just wanted to see if you could give us a bit of a refresher here about how to think about RevPAR growth in senior housing So you talk about the 7% January rent increases And then for the year, I think the guidance is 4.5% on Rev4. So what's sort of the The difference there, imagine something on new lease pricing and how should we think about I guess the ability for that dynamic to change Yeah. Justin is going to answer that. I mean, generally, it's about two there's kind of a two thirds relationship between the RevPOR and the the January increases, but I'll let Dustin unpack that a little bit for you.

Yes, great. It's a great question. It's a big topic. Because it's not simple. So So first of all, in The U. S, headline number is actually 8% The U. S. In terms of rent increases. That's similar to what we did exactly what we did last year. We feel good about The U. S. Rent increases The rest of the year, we'll have anniversary rent increases and usually that's kind of been in a range around 6% to 8% or so.

And here's how it works. And so you have a rent increase The rent increase in January is really only impacting about half the population. There's a percentage of the population that were new move ins in the fourth quarter and aren't getting an increase.

And then you have anniversary increases the rest of the year, so they'll blend in over time. Assisted living and memory care, you have level of care revenue, And that level of care revenue is like 20%, assisted living, 30% and memory care grows over time during the length of stay of the resident When they're replaced with a new resident, that new resident is coming at a lower acuity and therefore paying a lower level of care charge. And so you have that that's kind of that's a drag on your potential [indiscernible] Another thing that is an area that of opportunity really for the sector is to see move in rents actually equal in house rent increases. And we expect to see the improvement in that metric over time, but generally it lags.

And so that's how you're getting to that two thirds result that Debbie is describing.

And but we think that having said that, there's a lot of opportunity given the affordability of the market, the demand at the doorstep, and the fact that occupancies are going up and scarcity values being created.

Okay. That's very helpful. Thanks. Acquisitions being funded with equity. So there is a higher share accounting guidance To be clear, should we be modeling $1,000,000,000 of equity raise in guidance? And then Bob, I don't know if you have a year end net debt to EBITDA sort of outlook? Yes. So on the latter point, we definitely expect to continue to to improve net debt to EBITDA We're now at the high end of the range. And we're going to continue to strive to to drive that even further down. So that's and that's driven by senior housing both organically and inorganically. So yes, Check. Terms of the funding, all equity funding, senior housing investments, has been a winning formula. And that is our assumption effectively in the model and as I mentioned, already $2.50 raised under forward. So we're in good shape in that regard. The number on the share count reflects that. All right. Thank you.

All right. Well, I just want to thank everyone for joining us today. We appreciate your interest and support of Ventas Ventas going to continue to try to have an excellent year in 2025. Thank you so much. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect and have a nice day everyone. Thank you.