Earnings call transcript: Ventas beats Q2 2025 earnings forecast with strong growth

Ventas Inc (VTR), a prominent player in the Health Care REITs industry with a market capitalization of $30.7 billion, reported better-than-expected earnings for the second quarter of 2025, with an EPS of $0.15, surpassing the forecast of $0.14. Revenue also exceeded expectations, reaching $1.42 billion compared to the anticipated $1.37 billion. The company’s stock price reacted positively, closing up by 1.1% at $66.48, though it saw a slight premarket dip of 0.87%. According to InvestingPro analysis, Ventas is currently trading near its 52-week high, with relatively low price volatility and a beta of 0.89.

Key Takeaways

• Ventas reported a 7.14% EPS surprise and a 3.65% revenue surprise.
• Full-year normalized FFO guidance was raised, reflecting an 8% year-over-year growth.
• The Senior Housing Operating Portfolio (SHOP) saw significant revenue and occupancy growth.
• Ventas holds record liquidity of $4.7 billion, with improved net debt to EBITDA ratios.

Company Performance

Ventas demonstrated robust performance in Q2 2025, with normalized FFO per share growing by 9% year-over-year. The company’s strategic focus on its SHOP portfolio resulted in an 8.2% revenue increase and a 5.3% rise in revenue per occupied room. Additionally, occupancy improved by 240 basis points over the past year. Ventas’ financial health is underscored by its record liquidity of $4.7 billion and a net debt to EBITDA ratio of 5.6x, improved by 40 basis points year-to-date.

Financial Highlights

• Revenue: $1.42 billion, up from the forecast of $1.37 billion
• Earnings per share: $0.15, surpassing the forecast of $0.14
• Normalized FFO per share: 9% year-over-year growth
• SHOP revenue: 8.2% growth

Earnings vs. Forecast

Ventas exceeded both earnings and revenue forecasts, with a 7.14% EPS surprise and a 3.65% revenue surprise. This marks a continuation of the company’s positive performance trend, reflecting strong operational execution.

Market Reaction

The market responded positively to Ventas’ earnings beat, with the stock closing 1.1% higher at $66.48. Despite a minor premarket decline of 0.87%, investor sentiment remains optimistic, supported by the company’s improved financial outlook. The stock has delivered impressive returns, with a year-to-date gain of 14.56% and a one-year total return of 25.76%. Analyst consensus is strongly bullish, with price targets ranging from $69 to $84 per share.

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Outlook & Guidance

Ventas raised its full-year normalized FFO guidance midpoint to $3.44 per share, indicating an 8% year-over-year growth. The company anticipates continued growth in its SHOP portfolio, with a projected 12-16% NOI increase for 2025. Ventas is targeting $2 billion in senior housing investments and expects to maintain its momentum in occupancy and revenue growth.

Executive Commentary

Justin, an executive at Ventas, expressed confidence in the company’s future, stating, "The best is yet to come as we face unprecedented favorable supply demand fundamentals." CEO Deborah Acuffaro highlighted Ventas’ role in the longevity economy, while CFO Bob noted the shift towards lower-cost settings for procedures as a growth driver.

Risks and Challenges

• Potential impacts of healthcare legislation could affect operations.
• Market volatility and macroeconomic pressures may pose challenges.
• The competitive landscape in senior housing requires strategic positioning.
• Supply chain issues could impact future growth and profitability.

Q&A

During the earnings call, analysts inquired about Ventas’ operating leverage in senior housing and its investment strategy. The discussion also touched on potential impacts of healthcare legislation and insights into the company’s acquisition pipeline.

Full transcript - Ventas Inc (VTR) Q2 2025:

Bella, Conference Operator: Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Vanta’s Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

I would now like to turn the conference over to Vijay Grant, Ventas’ VP of Investor Relations. You may begin.

Vijay Grant, VP of Investor Relations, Ventas: Thank you, Bella, good morning, everyone, and welcome to the Ventas Second Quarter twenty twenty five Results Conference Call. Yesterday, we issued our second quarter twenty twenty five 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. 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 Deborah Acuffaro, Chairman and CEO of Ventas.

Bella, Conference Operator: Thank you, Vijay, and happy birthday. I’d like to welcome all of our shareholders and other participants the Ventas second quarter twenty twenty five earnings call. We’re pleased to report strong earnings growth and again raise our guidance as we execute our one two three strategy. Ventas is an essential participant in the longevity economy and is well positioned to capitalize on the secular demand from the large and growing aging population our company serves. Both our advantage platform and our portfolio have been intentionally built to meet this moment and generate durable multiyear NOI growth driven by organic growth in our senior housing operating portfolio or SHOP and accretive senior housing investments.

This engine of our growth is being supplemented by compounding contributions from the balance of our portfolio and our continually improving balance sheet. Our one two three strategy is designed to deliver superior FFO per share growth, enhance our financial strength, and create value for our shareholders. The second quarter demonstrated the positive impact of our approach. Year over year normalized FFO per share grew 9%, and total company same store cash net operating income or NOI increased 7%. We also raised our full year normalized FFO guidance midpoint to $3.44 per share, representing 8% accelerating year over year FFO per share growth at the midpoint.

And we also improved our company wide same store year over year cash NOI growth expectations to 7% at the midpoint. If achieved, these growth rates would put us in the upper echelon of REIT growers. Underpinning our strong results and improved expectations are the three components of our strategy. Let me take you through them in order. One, drive organic growth in our shop communities using our platform advantages, data analytics, and experience.

Check. Our SHOP communities in The US delivered 18% same store cash NOI growth in q two, adjusting for a tax refund we received in the prior year. Revenue grew over 8% for the entire same store SHOP portfolio, and average year over year occupancy growth accelerated intra quarter and finished on a high note in June with 60 basis points of sequential improvement in average occupancy. In June, move ins reached their second highest level of any month in over five years. Two, make value creating investments in senior housing.

Check. We’ve raised our full year 2025 senior housing investment volume guidance to $2,000,000,000. Because of our advantage position and the increase in market activity, our pipeline of senior housing investments is growing, and we intend to build on our momentum as we identify and close compelling investments with low to mid teens unlevered IRR expectations, robust current performance, and significant upside potential. And three, maximize performance in the balance of our portfolio. Check.

Our outpatient medical and research portfolio is fueled by growth in the 65 population, which will represent 20% of The US population by 2030. Outpatient medical is powered by our competitively advantaged in house property management and leasing platform and is also benefiting from the accelerating trend toward outpatient activities. Our team delivered leasing and occupancy improvements both year over year and sequentially in Q2, and we expect year over year NOI growth to increase in the second half. Meanwhile, our institutionally based research portfolio, which is the smallest part of our business, represents about 8% of our NOI. Three quarters of that NOI comes from credit tenants under leases with a weighted average lease term of nearly ten years.

We continue to experience good institutional demand for our space, while the sliver of innovation and pre revenue tenancy remains subject to the macro challenges facing the sector. All in all, backed by compelling demand for the services and activities in our sites, our space users generally have staying power and are finding ways to adapt and continue their important work. Closing on senior housing, we are already in the fourth year of double digit NOI growth from our communities, and the multiyear NOI and occupancy growth opportunity ahead of us should continue for many years. The 80 population should grow 28% in the next five years by 4,000,000 individuals as the leading edge of the baby boomers turns 80 in 2026, and more seniors than ever are choosing senior living for the benefits it provides. In fact, the number of individuals projected to turn 80 increases every year through 2038.

At the same time, new starts in senior housing are hovering at record lows with construction starts approximating only 2,000 units in q two. We expect today’s significant supply constraints to persist for an extended period. This combination of secular demand, which is expected to grow beyond the next decade, and factors suppressing supply should elongate Ventas’ multiyear occupancy and NOI growth opportunity well into the future. Because we anticipated these conditions, we’ve taken focused actions to expand our SHOP footprint by 1,200 basis points in just over the last two years, and we expect SHOP NOI to represent over half our business by year end. And along the way, we’ve built a formidable platform that leverages our advantages to enable exceptional environments attractive to our senior residents, drive performance through active asset management, curate our portfolio, and maintain mutually supportive engagement with our operators.

Together, the highly favorable macro drop backdrop and our advantage capabilities should enable Ventas to thrive and create value for our shareholders over the near and the long term. Our whole team at Ventas is excited and aligned to go after these opportunities. And now I’m happy to turn the call over to Justin.

Justin, Executive (likely COO or similar), Ventas: Thank you, Debbie. Let me first start with the second quarter. Our SHOP same store portfolio delivered 8.2% revenue growth, driven by accelerating occupancy throughout the quarter and strong pricing, resulting in 5.3% RevPOR growth. The key selling season is off to a good start and bolstered by a very strong June and continued strength in July. Same store shop occupancy grew by two forty basis points led by The US with growth of two ninety.

Our operating partners, Atria, Sunrise, Discovery and Sincere led the way in The US, while the Group Maurice in Canada continues to stand out with occupancy over 98%. Move ins remained strong throughout the quarter and were exceptional in June, while move outs normalized. June sequential average occupancy growth versus May was particularly strong with 60 basis points led by the Holiday by Atria brand contributing 110 basis points sequentially. We outperformed the NIC industry averages as our communities located in The US top 99 markets outperformed NIC occupancy growth by 100 basis points year over year and 30 basis points sequentially. The SHOP portfolio delivered 13.3% NOI growth driven by 16% in The U.

S. When adjusting for the prior year tax refund, underlying NOI rose 15% with The U. S. Up 18%. Expenses were roughly in line with expectations.

A quick reminder, we raised SHOP guidance in May and still expect two seventy basis points of occupancy growth, 4.5% on RevPOR, 5% on expense and a range of 12% to 16% NOI growth. 2025 marks our fourth consecutive year of double digit NOI gains as we continue to take deliberate actions to capitalize on the multiyear opportunity in senior housing. Reminder, the primary determinant of occupancy for the full year is the timing and slope of the key selling season, which is performing well. We still have important months ahead, and we are working hard to finish strong. Moving on to senior housing strategic updates.

As you know, our strategy is focused on the right markets, right assets, right operators. Over the past five years, we have deployed the full range of portfolio actions underpinned by our Ventas OI data analytics to ensure that we are well positioned to deliver outsized growth in our senior housing platform. Those actions include over 130 conversions from triple net to SHOP, over two sixty transitions to new managers, over 110 dispositions, over 300 community refreshes and over 190 acquisitions. Our ongoing active asset management is driving performance and positions Ventas to capture the compelling multiyear growth opportunity ahead in senior housing. I’d like to take a few minutes to talk about aspects of the operator portion of the strategy.

Adding new operators is essential to obtaining scale and density in markets as well as expanding our relationship driven investment opportunity set. I’m really excited about the progress we have made growing our shop operator footprint, reaching 36 operators as of July from just ten five years ago. We selectively grow with top performing operators with strong local market clusters, specialized product expertise, and deep leadership talent embedded close to community operations. Our scalable advantaged platform enables us to match each community with the most effective operator, unlocking performance and growth across diverse markets. In a highly fragmented U.

S. Senior housing landscape, supporting and expanding a high performing operator pool is a key driver of our growth strategy. Importantly, these new relationships are also a major of proprietary deal flow as the majority of our transactions are relationship driven rather than broadly marketed, creating a compounding growth effect across the enterprise. We work with operators in a number of ways, including driving price volume optimization and community transitions. For example, we are hitting our stride managing occupancy and rate growth, driving RevPAR and move in volume.

The Ventas OI team is actively driving price and volume optimization by collaborating closely with our operating partners to ensure that our senior housing communities are dynamically priced. This strategy leverages data driven insights to strike the optimal balance between converting tours into move ins and achieving competitive rate positioning in each market. By continuously analyzing market demand, lead conversion trends and price elasticity, we’re aligning incentives and decision making to maximize both occupancy and rate performance as evidenced by our strong move in and REVPORT results, both among the best in the past several years. Another key area of focus is transitioning management. We remain committed to ensuring each community is aligned with the right operating partner and will continue to actively pursue transitions where we see an opportunity to enhance performance and achieve the optimal operator fit.

For example, I’ll give a quick update on our 26 independent living transition communities that we moved to three different operators by the 2023. Those communities are 84% occupied and are achieving an industry leading eight ninety basis points of occupancy growth year to date versus prior year. They have now caught up with our Holiday by Atria portfolio, which is also 84% occupied in The U. S, both with significant runway ahead for continued growth. Moving on to portfolio positioning.

The strategy of converting our lower occupied triple net communities to SHOP bolsters the long term growth potential in the SHOP portfolio. By design, two thirds of the portfolio is in the low 80% occupancy with significant upside opportunity. Balancing this approach, our investments in senior housing are focused largely on high performing market leading communities with upside around 90%. Recall, the next big conversion tranche is the 45 former Brookdale triple net communities. This portfolio is only 78% occupied, offering a long runway of growth ahead.

The five transition operators that will run these communities moving forward are highly engaged and excited about creating value in this portfolio through aligned management agreements. We have plans to refresh the portfolio with NOI generating CapEx, enhancing the competitive positioning of the communities. The portfolio is located in markets with strong tailwinds, and we continue to expect to double the NOI over time. Wrapping up shop, I continue to be energized by the strong performance and remain focused on the organic growth opportunity in the portfolio supported by our very capable team and our excellent operators. Turning to investments.

We’ve continued to execute on our strategy of acquiring attractive senior housing communities that are highly accretive relative to our cost of capital, improve our overall portfolio quality and increase the company’s growth rate. I’m pleased to once again raise guidance for the year to $2,000,000,000 as our pipeline is increasing at a remarkable rate. Building on our strong first quarter, we’ve now closed $1,100,000,000 in senior housing investments year to date and $3,000,000,000 since the beginning of last year. We also look to expand on our momentum as our pipeline continues to be very active. Year to date, we have reviewed 41% more investment opportunities

Bella, Conference Operator: by dollar volume than during the same period last year. While the market has become more competitive in recent months, Ventas is a partner of choice enabling us to source meaningful and attractive transaction volume meeting our targeted criteria.

Justin, Executive (likely COO or similar), Ventas: The senior housing investments closed to year to date have an expected year one cash yield of 7.2% and low to mid teens unlevered IRRs, in line with our historical senior housing investment activity over the past eighteen months. These assets complement and improve our broader portfolio, generally offer a full continuum of care and services, our newer vintage and are located in fast growing markets with projected demand well above the national average. In summary, I’m happy to see solid execution across parts one and two of our strategy. First, driving profitable organic growth by enhancing operating performance, optimizing pricing and occupancy and leveraging our data driven VentsOS OI platform in close collaboration with our high performing operators. And second, capturing value through external growth with a targeted focus on high quality senior housing acquisitions.

I truly believe the best is yet to come as we face unprecedented favorable supply demand fundamentals and we continue to improve upon our shop performance and leverage our advantage position to grow externally. Now I hand the call to Bob.

Bob, CFO, Ventas: Thank you, Justin. I’ll provide an update on our financial results, balance sheet and capital markets activities in the second quarter and close with our improved outlook for the year. Ventas delivered strong operating performance in the second quarter and posted normalized FFO of $0.87 per share, representing approximately 9% year over year growth. Our total company same store cash NOI grew nearly 7%, led by SHOP increasing over 13%. Our outpatient medical and research business, or Omar, reported same store cash NOI growth of 1.7% year over year, led by outpatient medical, which grew NOI by 2.2%.

Outpatient medical increased same store occupancy by 20 basis points sequentially and 30 basis points year over year to 90.1%. Leasing was robust with 1,000,000 square feet of new and renewal deals executed in the second quarter and tenant retention of strong 86%. Same store cash NOI in our research business, which represents 8% of declined less than 1% year over year or approximately $100,000 driven by lower rents on certain innovation flex space tenants as previously discussed. Our balance sheet strengthened further in the second quarter. Ventas reported second quarter net debt to EBITDA of 5.6 times, which represents a 40 basis point improvement since the start of the year and a 10 basis point sequential improvement from the first quarter.

We expect our leverage to continue to trend lower through a combination of the organic growth and equity funded investments in senior housing. Speaking of, we have effectively funded the $2,000,000,000 of investments now in our guidance with $1,800,000,000 of equity already raised and $160,000,000 in completed dispositions. We’re also holding a record level of liquidity at $4,700,000,000 as of June 30, bolstered by our revolving credit facility upsides completed in April and over $700,000,000 of available equity proceeds from unsettled equity forward agreements. This liquidity also includes $500,000,000 of senior notes proactively raised in May at 5.1%, thereby early refinancing our remaining twenty twenty five maturities, principally due at the August at a 2.7% rate. I’ll close with our updated guidance.

As a reminder, we increased our 2025 full year guidance in late May, led by our encouraging shop performance as we entered the key selling season in the second quarter. And we’re pleased to once again raise our guidance. We now income attributable to common stockholders $0.47 to $0.52 per fully diluted share. We have increased the midpoint of our full year normalized FFO guidance by $03 to $3.44 per share from the previous midpoint of $3.41 which represents approximately 8% year over year FFO growth. Our improved full year midpoint is driven by a $02 increase from lower net interest expense and a $01 improvement from increased senior housing investments.

FX, G and A and other items net out to complete the bridge. We’ve raised and narrowed our total company same store cash NOI to now approximate 7% year over year at the midpoint, seeing reaffirmed midpoints for SHOP and Omar and an improved midpoint for triple net. A final note on balance of the year FFO phasing. Diluted dispositions of non strategic post acute assets in the second quarter are approximately $00 FFO headwind per quarter sequentially versus the second. For additional 2025 guidance assumptions, please see our second quarter supplemental and earnings presentation deck posted to our website.

To close, we delivered differentiated growth in the 2025, led by the multiyear secular demand growth in our senior housing business. The entire Ventas team remains focused and committed to delivering superior performance for our shareholders. With that, I’ll turn the call back to the operator.

Bella, Conference Operator: Your first question comes from the line of Michael Carroll with RBC Capital Markets. Your line is now open. Please go ahead.

Michael Carroll, Analyst, RBC Capital Markets: Thanks. Justin, want to focus on the shop occupancy gains that you reported in the second quarter. I know the year over year trend improved throughout the quarter, but can you provide some additional color, like what was the sequential occupancy gain in 2Q twenty twenty five maybe versus 2Q twenty twenty four? Or maybe what is the year over year occupancy gain that you’re at for like the month of July? Because I believe that the documents continue to highlight that the strength of the occupancy you saw in 2Q continued into July.

Justin, Executive (likely COO or similar), Ventas: Sure. So let me just I’ll step back, and I’ll address your question as close as I can. So first of all, you know, we’ve had really strong movement activity all year. It was, as Debbie mentioned, particularly strong in June, having one of the best months that we’ve had in in a number of years. We had 60 basis points of sequential occupancy growth in June versus May.

July is off to a good start, and we would expect it to be sequentially as good or better in in the month of July. So good continued, momentum, strong tourist, strong movement activity, and, you know, the key selling season’s off to a good start.

Michael Carroll, Analyst, RBC Capital Markets: Great. And then just touching back on your comments on the transaction market. I know the competitive landscape is getting a little bit more, I guess, ratcheting up a little bit. So what are you seeing? Is is your hit rate going lower because you’re tracking more deals now just given that there’s more competition?

And or do you need to get a little bit more aggressive on your pricing for some of these deals? I mean, how has that trended?

Justin, Executive (likely COO or similar), Ventas: Yeah. So we’ve been, you know, really leaning in more. If you look at the transaction activity we’ve had, the 3,000,000,000 that that is closed, most of that is closed in the fourth quarter of last year and the first half of this year. And so, if anything, the momentum has been picking up, and we’ve been in this continuous kind of process of, you know, of being able to update our our investment volume guidance as a result. So the the the thing driving really the the pipeline is there’s just more deal activity in the market, period.

And we are leaning in, to the types of transactions that we wanna pursue. And those are the high performing communities with upside, the communities that are well positioned in markets with strong tailwinds. We’ve been buying newer communities, with well established track records with operators. They’re delivering excellent performance. And and when you’re when you’re buying communities that have strong performance, the operators have tremendous clout in the process.

And one of our greatest strengths is the relationships we have with our operators. And so that’s been playing well for us as well. So I would say, you know, there’s momentum in the investment activity, and, and there’s there’s also more available in the market. So we’re using our the strength of our platform to maximize that opportunity.

Seth Berge, Analyst, Citi: Right. Thanks.

Bella, Conference Operator: Your next question comes from the line of Jeff Spector with Bank of America. Please go ahead.

Jeff Spector, Analyst, Bank of America: Great. Thank you. My first question is on the record move ins you’ve been discussing. Can you tie that into some of your company initiatives to improve those move ins, maybe faster turnover? Thank you.

Justin, Executive (likely COO or similar), Ventas: Yeah. Sure. So, you know, the the the really, the power of the live platform is is three things working together. One is we have tremendous, you know, data analytics. And our data analytics are really geared across all the operating metrics, but we’re especially good at top line.

And our team is as well. So when when our team team is deploying, you know, the OI initiatives, we’re very top line focused, and we’ve been especially focused on independent living. So our independent living occupancy is on the better side of the of the trends that we’ve been discussing. One good example is with holiday, where, you know, it’s an independent living platform. Atria, leads that brand, and my team has really joined with their team to drive, sales, in recent months.

There’s a number of initiatives underway that we’ve worked on together, and, Lindsay and team have been completely plugged in with them. And so it’s it’s hands on as we’ve been in execution, and Atria has just been a tremendous partner in working with us to drive really exciting growth. You know, like I said, they they were that portfolio was a 110 basis points sequentially of growth in June versus May. So very, very good outcome. But we do work across the board with all of our operators, literally in a almost a day to day, but a week by week, update on on sales execution.

So it it’s very much real time.

Jeff Spector, Analyst, Bank of America: Great. Thank you. And then my second question is on, the big beautiful bill. Can you talk about your latest thoughts on the potential impact across maybe the broader potential changes across different health care asset classes and any changes in your thoughts in terms of opportunities or any of, you know, again, your exposure? Thank you.

Bella, Conference Operator: Jeff, this is Debbie. In terms of the the bill’s impact, I think the most important thing to note is that many of the aspects of the bill are on a very delayed implementation basis. And so in the immediate term, we’re expecting kind of minimal impact. And I’m speaking broadly now, not about Ventas, but just from a policy standpoint broadly, most of the changes will take effect over a long period of time. Some of them don’t even kick in until, fiscal year twenty twenty eight.

So that’s important. There may be changes or improvements, frankly, before some of the provisions even kick in. As I mentioned in my remarks, you know, our our biggest business outside of senior housing is outpatient medical. The biggest drivers of outpatient medical continued success is really the demand from the 65 population and then this trend toward outpatient, which actually could be furthered by some of the provisions in the bill. So we, that’s how we think about the impact there.

And that really, that’s all I have to say about it. I mean, it’s obviously gonna have effects. They’ll be extended over time. Most of the key providers are very expert at being resilient and adaptable to changes. That’s what they live with year in and year out, and those are the people we generally do business with.

So that’s how I would conclude.

Jeff Spector, Analyst, Bank of America: Okay. Thank you. Thank you.

Bella, Conference Operator: Your next question comes from the line of Jim Kamart with Evercore. Please go ahead.

Jim Kamart, Analyst, Evercore: Hi, good morning. Thank you. Give Justin a break perhaps. Thinking about the outpatient medical portfolio, just following on the following question in your opening remarks, Debbie. It looks like the portfolio on a total basis has been hovering very steadily in the 89%, 90% threshold.

What was the historical high for the outpatient medical occupancy wise?

Bob, CFO, Ventas: Historical high would be, you know this is Pete, by the way. Historical high is probably a percent or two higher. You know, 93, 94%. You know, we have buildings that have, you know, many tenants in each of the buildings, and so there is a structural occupancy. I kind of view, like, the maximum occupancy you could get in our portfolio is 95%.

So we’ve been a percent or two below that, and we’re I view it as opportunity actually from where we are today to where we can get to at 95%, and that’s gonna drive growth long term.

Jim Kamart, Analyst, Evercore: That’s helpful, Peter. And then just a follow on to that. What are your representative escalators on that portfolio today? If you’re signing up a new tenant or releasing space, what sort of annual escalators can you achieve?

Juan Cinabria, Analyst, BMO Capital Markets: Thank you.

Bob, CFO, Ventas: Almost. They’re right around 3%. For the quarter, it was 3% in the annual escalators. I think the portfolio is just a hair below that, like 2.8%, 2.9 But we are we’re right there, and we’re trying to push it beyond.

Bella, Conference Operator: And, you know, of course, the the higher occupancy, the the charges get passed through, so the expenses are covered by the tenants. So that’s a pure bottom line impact, which is good. And Keith’s gonna keep working on that. We we talked in the presentation about the sequential and year over year occupancy growth, which we are hoping to continue.

Bob, CFO, Ventas: Yeah. I mean, one other fact you didn’t ask about, but also Walt’s eight years this quarter is fantastic. Really happy.

Jim Kamart, Analyst, Evercore: Great. Thank you, folks.

Bella, Conference Operator: Thank you. Your next question comes from the line of John Kochowski with Wells Fargo. Please go ahead.

John Kochowski, Analyst, Wells Fargo: Hi, thank you. Good morning. My first one is sort of on the makeup of your more stabilized portfolio and the RevPOR and incremental margins, let’s say, above 90% occupancy. More of an exercise in medium to long term growth for this portfolio. But how could we think about that and back it to what’s a a better run rate, you know, once this portfolio fully leases up?

Bella, Conference Operator: And that’s shop. Right?

John Kochowski, Analyst, Wells Fargo: Yes. Correct. That’s shop.

Bella, Conference Operator: Okay. Just Justin’s gonna take that.

Justin, Executive (likely COO or similar), Ventas: Okay. Yeah. So, you know, we are you know, we have just a little it’s one of my favorite topics, this margin expansion opportunity in senior housing because of the operating leverage in the business. So I we do use some rule of thumbs, and we test this on our portfolio, and they they definitely hold up. And we continue to test it as our occupancy has been growing.

We have a better representation of this outcome. And what it is is when, you know, you get higher occupancy due to the higher fixed costs that are in place, the higher therefore, operating leverage, you start having better flow through in your margin. You get over 90% occupied. Up to a 100%, you would see around 70% incremental margin, during that period. In the 80 to 90% band, you’ll see around 50% margin.

For those of us that like to track month to month and quarter to quarter performance, you know, there’s obviously one timers that can throw those those steps off here and there. But but over time, that’s the rule of thumb, and it’s it’s how it’s playing out in our portfolio. So if you think about our portfolio, in fact, that two thirds of it has low 80% occupancy, we are a long way off from what is the best part of the growth in the sec in this industry, which is, you know, when the operating leverage kicks in. And so when we talk about the best is yet to come, obviously, there’s really good supply and demand fundamentals, but our portfolio is also positioned for growth as well. And that’s that’s part of why why we’re positioned so well.

John Kochowski, Analyst, Wells Fargo: Thank you. And and I the other part of that was just the the Rev four component. I don’t know if you could speak to the difference of that at your lower occupied assets versus a delta.

Justin, Executive (likely COO or similar), Ventas: Yeah. There is. So, you know, couple ways to look at that. You know, one way we like to talk about it is RevPOR growth when you’re over 90% is two x what it is when you’re under 90% occupied. To bring some more specifics to that, know, if you’re in that 90 to 95% band, you’re around six or seven.

If you’re 75 to 90, you know, there’s a range of three to 5% RAV four growth. If you’re below 75% occupied, you’re around 1%. So as your occupancy goes up, and your scarcity value increases, your the Rev four moves with that.

John Kochowski, Analyst, Wells Fargo: Okay. That was very helpful. And my second question is just on TAM of the space. You announced the incremental $500,000,000 Obviously, we could look at all of senior housing, but you’ve made it clear there’s a certain quality of product that you’re interested in. So I’m curious if you’ve done the work and can speak to the size of the addressable market left out there out there today that is owned by the REITs that you’d be interested in transacting on.

Justin, Executive (likely COO or similar), Ventas: Yeah. I mean, it’s we’ve looked at it a lot of different ways, and it it generally comes down to this, know, the rezone, what, about 15% of that market. And, you know, about there’s probably about another 40 or 50% of the market that actually checks all of our general criteria, meaning it’s in the right type of market, right size of asset. And so there’s a lot to go after still. You usually see somewhere around 30,000,000,000, a year, of trading and senior housing.

And, you know, so there’s plenty for us to get our fair share each year, and that’s what we’ve been working on.

John Kochowski, Analyst, Wells Fargo: Very helpful. Thank you.

Bella, Conference Operator: Your next question comes from the line of Wes Golladay with Baird. Please go ahead.

Justin, Executive (likely COO or similar), Ventas: Hey. Good morning, everyone. Can you talk about the RevPOR growth acceleration? Was that more of a mix shift or is it higher movements? What’s going on there?

Yeah. Sure. So, you know, I mentioned in my prepared remarks that we’re focused on price volume optimization, and this is another another area where the OI team is highly engaged with the operators. I I think everyone knows that senior housing does not have good price transparency. So unlike multifamily, or apartments, it it’s harder to dynamically price.

But we found a way for data analytics to really focus in on the right price to do two things, either just get higher price or to drive volume. So that’s a continuous process, you know, with our data analytics and then the execution with the operators and then incorporating that with any feedback the operator is seeing on the ground. And we’ve been working on it for a few years, and the execution of that process is the best it’s been. And so the and and you ask about mix. Mix can definitely impact RevPOR, and it does.

But in the numbers we’re seeing today, it actually didn’t. We you know, it it was the mix is exactly really close to exactly what we had expected to see. So what what’s really driving the underlying trend are higher moving rents and then continued strength in our internal rent increases. And so that that’s, something we’ll stay very focused on, and we’re trying to pull both levers. We wanna see occupancy and rate grow, and we’re we’re we’ve made the best connection recently of both moving together.

Jeff Spector, Analyst, Bank of America: That’s it for me. Thank you.

Bella, Conference Operator: Thank you. Your next question comes from the line of Vikram Malhotra with Mizuho. Please go ahead.

Vijay Grant, VP of Investor Relations, Ventas0: Hi, this is Georgie on from Vikram. Thank you for taking my question. Just curious, how did the change in the same store pool impacted your same store growth during the quarter? And then the 21 assets change in the pool, were they part of the group that experienced occupancy losses in March?

Justin, Executive (likely COO or similar), Ventas: Hi. It’s Justin. So

John Kochowski, Analyst, Wells Fargo: first

Justin, Executive (likely COO or similar), Ventas: of all, 80% of our community of our shop NOI is in the same store pool. So it’s a great reflection of the performance of the portfolio. So any way you look at it, it’s a reflection of the performance of the portfolio. So that’s the first part. You know, the second part, there was absolutely no relationship, at all, whatsoever, between the communities that we transitioned to some move outs that we experienced during the year.

So, no there. But since we’re on the topic, let me just talk about what we transitioned. So we we transitioned communities to an operator. If you met with us at NAREIT, you probably heard us talk about Discovery Senior Living, and they had had 45 communities with us. They’ll be much higher as we go throughout the year because they’re gonna be in the sixties with their the recent transition.

They have thirty years of experience. They’re a large operator, but they manage multiple local brands. And so one of the things I like about them is the talent pool they have close to the field is is good, if not better, than anybody in the industry. And and we’re they operate communities for us in at least five of their different brands. And we’re really excited to get more communities in their hands because they’ve delivered outsized results for us.

And that’s what that was really the plan. It’s just to really we’re always tinkering with five to 10% of our portfolio in through management transitions. It’s a it’s part of the strategy we have of right market, right asset, right operator, get the right operators in place in the right communities. And we saw an opportunity, so we took it. We’re looking forward to great results with discovery.

Vijay Grant, VP of Investor Relations, Ventas0: That’s helpful. Thank you. And just another quick one for me. How things are shaping up for the Brookdale transition and what we what should we assume for the fall of NOI in the fourth quarter, within the triple net segment before we get the 16,000,000 rent bump in 01/1926?

Justin, Executive (likely COO or similar), Ventas: I’ll take the first part, and then Bob, you know, help me

Bella, Conference Operator: with the second part.

Justin, Executive (likely COO or similar), Ventas: So on the on the first part, the, the Brookdale transition, you know, the this is the conversion of 45 communities from the triple net to the shop structure. One of our favorite, you know, strategies because it takes assets we already own that have lower occupancy, puts it in shop. These are 78% occupied. They happen to be in really strong markets, and they have opportunity through refresh CapEx to be better positioned, and they’re good fits for five operators that we selected to transition. So the NOI growth opportunity that we’ve been talking about is really more of a long term comment, which is, you know, two x, the the run rate that they had in late last year.

And so we think we’ll double the NOI. It was around 50,000,000 at the time. We think it goes to a 100,000,000. But the the answer to the the the specific question, question, it’s going really well. So our operators are already fully engaged with all of the communities.

We’ll start having transitions happen in the upcoming months. And by the end of the year, everything, if not almost everything everything or close to everything, I should say, will have been transitioned. And, you know, Brookdale’s been good to work with, and all the new operators are very excited about, you know, working with the new communities. So I’d say, so far, so good.

Bob, CFO, Ventas: I would just add in terms of modeling in the fourth quarter, we’ll start sprinkling in the shop assets from the conversion on the ’45. But the financial effect really is not until ’26, frankly. The majority, vast majority is triple net for the year, that’s how it’s modeled.

Vijay Grant, VP of Investor Relations, Ventas0: Great. Thank you very much.

Bella, Conference Operator: Thank you. Your next question comes from the line of Seth Berge with Citi. Please go ahead.

Seth Berge, Analyst, Citi: Thanks for taking my question. You kind of talked about the operating leverage in the business and the incremental margin opportunity as occupancy continues to grow. Do you have a sense of how much of a margin expansion in the SHOP portfolio is a result of occupancy gains versus execution and the opportunity that you guys have with Ventas OI platform?

Justin, Executive (likely COO or similar), Ventas: I mean, it’s a really good question, and I I have to say it remains to be seen, because we’re we’re entering a new era where demand is gonna be, you know, the best we’ve ever experienced, and the supply demand dynamic will also be the best we’ve ever experienced. So we know a couple things about the business. It’s it’s it’s playing out very clearly in our our portfolio. We know that if you have higher occupancy, you have better pricing opportunity. And so as we have more communities move into the higher occupancy band, we’ll expect the RevPOR component to play a bigger role moving forward.

We also know that given the supply demand and the the OI platform that we have and our our our operators working together that we have tremendous occupancy opportunity as well. And so our platform is really designed around driving growth in both occupancy and rate. We think there’s opportunity in both places. Our our portfolio is positioned for that. So I’ll have to ask you to wait and see how it plays out, you know, and, we’ll we’ll be driving both metrics, and and hopefully, the margin expansion rule of thumb gets even better over time.

Seth Berge, Analyst, Citi: Great. And just kind of going back to occupancy. Last year, the occupancy build from 2Q to 3Q was, I think, 140 basis points. Just given the strength that you’ve seen in July, do you think that you’ll be on track to kind of surpass that? And just kind of what are the puts and takes from where you sit today to kind of hit the low end of the 12% versus the 16% on shop?

Justin, Executive (likely COO or similar), Ventas: Okay. So on the occupancy, you know, the the best I can tell you is that, you know, is the July number I shared earlier, which is, you know, we we expect to be as good or better than than the June sequential growth versus May, which is 60 bps. And, you know, we’re in the kinda really the key part of the key selling season. And, you know, we have a lot a lot to play out still, but we’re encouraged by the by the very strong movements we had throughout the year and exceptionally strong movements we’ve we’ve had as of late. And then what was the second part of the question?

Bob, CFO, Ventas: The high end of the range.

Justin, Executive (likely COO or similar), Ventas: Yeah. So the high end of the range I I’m not gonna really comment on the low end of the range, but the the high end of the range is really driven by two things. One is revenue growth, and that would be clearly, obviously, occupancy rate moving together and and having a exceptionally strong key selling season and then continued favorability in labor costs.

Seth Berge, Analyst, Citi: Great. Thank you.

Bella, Conference Operator: Thank you. Your next question comes from the line of Juan Cinabria with BMO Capital Markets. Please go ahead.

Juan Cinabria, Analyst, BMO Capital Markets: Hi, good morning. Sorry to belabor the point, but just on the SHOP same store occupancy, could you provide the year over year change for the month of June, the average or period end, just to give us a sense of higher tracking versus that full year guidance?

Bob, CFO, Ventas: You know what? I would I would go back to we were two forty over in the in the second year over year. We’re seeing improvement in that as we go into the third quarter, and we’ve maintained our two seventy guidance.

Bella, Conference Operator: And we were two ninety in the first.

Bob, CFO, Ventas: And we were two ninety in the first to complete the story. So, yeah, you know, we’re we’re seeing the continued improvement year over year in, led by June.

Juan Cinabria, Analyst, BMO Capital Markets: We’ll leave it a mystery. Second question just on the R and I platform and the developments. Just curious on how we should think about the implications on capitalized interest and other moving pieces given, you know, a fair chunk of of what was in process has now been completed.

Bob, CFO, Ventas: I can say capitalized interest is absolutely de minimis, so nothing to really report there. It’s really about the commercial performance of the of the developments.

Jim Kamart, Analyst, Evercore: Mhmm.

Jeff Spector, Analyst, Bank of America: Thank you.

Bella, Conference Operator: Thanks. Your next question comes from the line of Matteo Okusanya with Deutsche Bank. Please go ahead.

Vijay Grant, VP of Investor Relations, Ventas1: Yes. Good morning. Again, congrats on the quarter. Debbie and team, a lot of good stuff happening with kind of the acceleration in shop. You guys are talking about increased acquisition outlook.

Just kind of curious why that does not translate to also the high end of guidance being increased. I think in two quarters in a row now you’ve raised the low end, but you haven’t really done anything on the high end. Are there things in the back half of ’25 that are kind of causing some offsets, or is this some of the traditional conservatism that we sometimes see from management? Just curious your thoughts on that.

Bella, Conference Operator: Mhmm. Well, just, I’ll I’ll take the first and turn it over to Bob. Thanks for the question. We are happy about the the results and the the outlook. And so we raised guidance in May.

The midpoint, we raised again now. We’re looking at, you know, again, the midpoint’s up. We’re looking at 8%. If achieved at the midpoint, year over year FFO growth per share, which is pretty awesome and accelerating from 2024. And in terms of the modeling impact, Bob touched on a couple things, but I’ll, he he can elaborate on the specifics.

Bob, CFO, Ventas: And maybe I’ll frame it first half, second half. FFO was one seventy one in the first half. The midpoint would be one seventy three to get to the full year three 40 ’4. And that’s if you think sequentially, that growth is shop growth and partially offset by refinancing at higher rates and the dispositions of post acute I referred to, which are a headwind in the in the balance of the year. So that gets you to the midpoint sort of equation.

Of course, the upside is is a shop upside, as much as anything, and Justin talked about the components to get there.

Vijay Grant, VP of Investor Relations, Ventas1: K. That’s helpful. And then, quick question on Canada and and the shop portfolio. Again, big disparity in regards to shop growth in US and Canada this quarter in particular. I mean, occupancy is already at ninety six five, but curious how want to kind of think about opportunities to drive further stop, same store NOI growth in Canada.

Justin, Executive (likely COO or similar), Ventas: Yeah. Sure. So, you know, Canada, obviously, does have eye It does have more occupancy opportunity. And to believe that, you just have to look at the group Maurice portfolio, which is over 98% occupied, and they have several communities that are running a 100%. So the next step is for the other operators to to to start pushing into that territory, some more occupancy growth.

The, one of the drivers of growth has has been we have a some assisted living presence in in Canada with Sunrise, which is higher rep for. So as that continues to to fill, there’s some growth opportunity from from that perspective. And then pricing has been a little bit better, there as well. So we we were always focused, you know, on revenue across the board, but, you know, price is an opportunity that’s emerging in Canada.

Jim Kamart, Analyst, Evercore: Thank you.

Bella, Conference Operator: Thanks, Tayo. Your next question comes from the line of Michael Storjek with Green Street. Please go ahead.

Jeff Spector, Analyst, Bank of America: Thanks, and good morning. Maybe on the, outpatient side. So with CMS’s proposal to do away with inpatient only procedure list, how impactful could this realistically be in terms of health systems expanding their outpatient footprint just given that’s already been such a persistent trend for some time now?

Bob, CFO, Ventas: Yeah. Thanks thanks for the question. You know, it had it has been a push for for actually quite a while both from the, you know, the private payers as well as the government payers. But, I would say it stepped up a level or two here, And you can’t read modern health care on any day without an article about a health system expanding their ambulatory portfolio or their integrated care network. I mean, it’s clear.

Government payers, private payers wanna push procedures into lower cost settings.

Bella, Conference Operator: And that’s good for our business.

Bob, CFO, Ventas: It’s great for our business.

Seth Berge, Analyst, Citi: Got it. That that makes sense. And

Jeff Spector, Analyst, Bank of America: maybe one on the post acute portfolio. There’s a

Justin, Executive (likely COO or similar), Ventas: a nice uptick in coverage and occupancy during the quarter. Should we expect continued improvement there,

Jeff Spector, Analyst, Bank of America: and where do you ultimately expect that portfolio to stabilize?

Bella, Conference Operator: Mhmm. Yes. As we expected, and this is only really through the first quarter reported as we typically do for triple net. Performance is improving. That’s good.

And we would expect as we we add the assets that we acquired last year and occupancies increase that performance could continue to tick up.

Jim Kamart, Analyst, Evercore: Thanks for the time.

Bella, Conference Operator: Thank you. Your next question comes from the line of Ronald Keemdem with Morgan Stanley. Please go ahead.

Jeff Spector, Analyst, Bank of America: Hey, just two quick ones. Last quarter you talked about maybe some cap rate compression on the acquisition side. Just I think acquisition has come up already, but I’d love to hear a little bit more commentary on sort of cap rate trends and IRR trends, as this pipeline expands. Thanks.

Bob, CFO, Ventas: Mhmm.

Bella, Conference Operator: So, on on that front, I would say in terms of the unlevered IRRs, we’re still driving toward low to mid teens unlevered IRRs.

Justin, Executive (likely COO or similar), Ventas: Yeah. And that’s the key metric. This is Justin. So, you know, the unlevered IRRs are are very consistent over the last eighteen months as we’ve embarked on this, you know, external growth run we’ve been on. The you know, you know, that there’s obviously input into that.

You know, one of that is the year one yield. You know, another is just the growth profile of the asset. When we calculate IRRs, I think everyone knows this. We use constant cap rates on entry and exit, so that the IRRs truly reflect our expectation for just the overall, you know, delivery of of returns. The from a from a operational and organic standpoint.

So last year, we’re kinda running in the mid sevens. It we’re drifting a little lower, you know, lower sevens year one yields this year. It is a more competitive environment, but the profile of what we’re buying is also different as well. And and we are leaning in, you know. So, you know, we’re getting a newer asset.

We’re getting even stronger markets. So I would say, you know, all that’s working together to to deliver what is our targeted unlevered IRRs of low to mid teens.

Jeff Spector, Analyst, Bank of America: Helpful. And then just a quick one on operator transitions. As you sort of take a step back, I mean, what what do you think, you know, you guys need to do to just unlock more of these transitions and and work with the operators and so forth because it does look like a pretty big value creation. So I’m wondering what you think you need to do to unlock more and or is this sort of all all the fruits has been picked? Thanks.

Vijay Grant, VP of Investor Relations, Ventas1: Mhmm. Mhmm.

Justin, Executive (likely COO or similar), Ventas: Yeah. So it it’s a, you know, it it’s a clear as a large owner of senior housing and and others that that are as well, it’s clearly part of the the playbook. And what you’re really doing is, you’re trying to make sure that you have the we know we’re in the right markets, and and if we know that we have well positioned assets and we’re investing in our communities, then we’re looking for the right operator fit. And that is an ongoing process. And we may always have, you know, a few that we think could be move over to a different operator, you know, where they could, you know, make more impact.

And Discovery is an operator where they’ve proven it across multiple brands and multiple geographies that they can make impact for us. There’s we’ve transitioned to a lot of others as well on a selective basis. And it’s all about trying to find the right fit, and we’re really just trying to work really hard to to maximize performance. And part of that is is the operator component. And so step one is always to work with the operator to create the best outcome.

And if we’re not finding the right fit, then we’ll we’ll work with someone that can in it in the in the nicest possible way. I think we’ve done a great job of maintaining great relationships across the board. Mhmm.

Jim Kamart, Analyst, Evercore: Thanks so much.

Bella, Conference Operator: Your next question comes from the line of Nick Yulico with Scotiabank. Please go ahead.

Vijay Grant, VP of Investor Relations, Ventas2: Hi, thanks for the questions. This is Elmer Chang on with Nick. I was just wondering how should we think about timing of incremental announced transactions in the second half of the year and and pricing relative to the shop assets you acquired quarter to date, given comments about rising buyer competition and the opportunity for significant growth potential within, you know, the growing pipeline?

Bob, CFO, Ventas: I’ll do a modeling answer. My colleagues can join from there. But we have a billion 1 in the bank. 2,000,000,000 is the guide. We raised by a penny, the guidance on the back of investments, and that’s really both volume and timing, I.

E. Earlier timing and higher volume. Obviously, there’s only six months left to go. So the the contribution of the increment is is smaller, and the returns are very similar to that, which we’ve done. That’s how I would model it.

Bella, Conference Operator: The incremental 500 would typically be more back end weighted.

Bob, CFO, Ventas: More back end weighted.

Bella, Conference Operator: Yeah. Yeah. And then in terms of character, it’s it’s very consistent with what we’ve been doing. So we’re happy about that.

Vijay Grant, VP of Investor Relations, Ventas2: Okay. Thank you. And and then second question and then second question is, for the small percentage of pre revenue biotech tenants within your research portfolio, What’s the sense that you get from those tenants in terms of whether the capital raising environment has improved or worsened in the last couple of quarters? And do you expect any downside risk, maybe that’s not factored into guidance, that could arise in in the second half?

Bella, Conference Operator: Yeah. I mean, any downside risk that we we, would be aware of, it it would already be factored into guidance. And then in terms of the fundraising environment, there are some glimmers, I would say, but the you know, the there’s there’s a way to go to overcome kind of the the macro factors for that sliver of tenancy. We are seeing some, you know, tenants raise venture capital money. We’ve seen different, you know, royalty type deals, but those are generally for for more mature companies.

So there’s a way to go, but a a few glimmers.

Vijay Grant, VP of Investor Relations, Ventas2: Alright. Thanks so much.

Bella, Conference Operator: Thank you. Your last question comes from the line of Mike Mueller with JPMorgan. Please go ahead.

Bob, CFO, Ventas: Yes. Hi. Just a quick one. Justin, I think you mentioned that aisle occupancy trends have been better than the averages. So how does it compare when you’re talking about RevPort growth when you’re comparing IL versus AL?

Jim Kamart, Analyst, Evercore: Is that dynamic kind of similar as well?

Justin, Executive (likely COO or similar), Ventas: Yeah. So both price and volume have been good in IL. One thing that you have to remember about the independent living is, it doesn’t have the care component. And so, you know, there’s a frictional aspect to assisted living. When you have someone that moves out on higher acuity, they’re paying more, so you’re replacing that, and there’s a releasing spread impact from that.

The independent living portfolio doesn’t doesn’t, you know, participate in that process because they don’t deliver care. So so you’re really just replacing rents. And, you know, moving rent trends have been good in independent living. There there’s a we have a range of different independent living products. You know, some are more price sensitive than others, but, generally, price has been good.

But it’s been, I’d say, you know, a better result on the volume side, and that’s where we’re focused. Like I said, the you know, most of our US portfolio that has upside is around 84% occupied in the living, and so we’re really leaning in there to try to to drive occupancy up and get to the period to the point in time where you’re benefiting from that operating leverage we talked about earlier.

Bella, Conference Operator: Yep.

Vijay Grant, VP of Investor Relations, Ventas2: Got it.

Jeff Spector, Analyst, Bank of America: Okay. Thank you.

Bella, Conference Operator: Good. Yep. So, BJ, any more questions?

Seth Berge, Analyst, Citi: Nope.

Bella, Conference Operator: Okay. Well, on behalf of all of us at Ventas, I wanna thank you for your interest in the company. We hope you and yours have a safe and happy rest of the summer, and we look forward to seeing you in the fall. That concludes today’s call. Thank you all for joining.

You may now disconnect. Everyone, have a great day.

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