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On Tuesday, June 3, 2025, Ventas Inc. (NYSE:VTR) presented its strategic outlook at the Nareit REITweek: 2025 Investor Conference. The company outlined ambitious growth plans for its senior housing operating portfolio (SHOP), aiming for a 7% increase in FFO per share and significant investments in senior housing. While Ventas is optimistic about its future growth, challenges such as economic uncertainty and tariffs remain.
Key Takeaways
- Ventas projects a 7% FFO per share growth and a 12-16% increase in same-store SHOP growth for 2025.
- The company plans to invest $1.5 billion in SHOP, targeting it to represent over 50% of NOI by year-end.
- Occupancy gains are expected, with sequential increases of 30-50 basis points from March through May.
- Ventas is leveraging its OI platform for enhanced operational insights and pricing strategies.
- The senior housing sector shows resilience, driven by the growing 80+ population and favorable supply-demand dynamics.
Financial Results
- FFO Growth: Expected 7% increase in FFO per share for 2025.
- Same-Store Growth: SHOP growth rate projected at 12% to 16%.
- Occupancy Rates: Total SHOP portfolio occupancy is approximately 86%, with U.S. at 84% and Canada at 95%.
- NOI Growth: Achieved 15% growth in April, with plans to continue adding $100 million annually from organic growth.
- Investment Activity: Closed $2.8 billion in senior housing investments since last year, with $1.5 billion targeted for 2025.
Operational Updates
- Occupancy Trends: Q1 saw a 290 basis point increase year-over-year, with continued sequential gains.
- Portfolio Composition: Expanded operator pool to 33, with a focus on transitioning 5-10% of the portfolio to new management.
- Pricing Power: Communities with over 90% occupancy are experiencing double the RevPAR growth compared to others.
- VentasOI Platform: Emphasizes digital marketing, with 70% of move-ins driven by these efforts.
Future Outlook
- Demand Projections: The 80+ population is growing by 0.5 million annually, expected to rise significantly.
- Investment Strategy: Focus on high-performing communities with potential for 7-8% year-one yields.
- Pricing and Margins: Expects pricing improvements as occupancy rises, with incremental margins of 50-70% as occupancy increases.
Q&A Highlights
- Capacity to Pay: Seniors can afford Ventas’s offerings through income and assets seven times the cost.
- Funding and Leverage: Equity funding has improved leverage to 5.7 times.
In conclusion, Ventas’s strategic focus on senior housing and its robust investment plans position it well for future growth. For more details, refer to the full transcript below.
Full transcript - Nareit REITweek: 2025 Investor Conference:
Mike Carroll, Analyst, RBC Capital Markets: Okay. Welcome. This is the 145 presentation with Ventas. I’m Mike Carroll of RBC Capital Markets, and I cover the company.
To my right, I have Debbie Kofara, who is the CEO. Then I have Bob Probst, the CFO. And then Justin Hutchins, who is the EVP of Seniors Housing and CIO. So to start this off, I’ll flip it over to Debbie, and she can provide some opening remarks. Debbie?
Debbie Kofara, CEO, Ventas: Good afternoon, everyone. Great to be here with you. And Mike, thanks so much for hosting. Ventas is an S and P 500 company focused on the longevity economy, which is basically serving a large and growing aging population with powerful secular demand trends. I’m pleased to report we’ve recently improved our outlook for the company both on an FFO per share basis at expected 7% at the midpoint for 2025, and we increased our same store senior housing operating portfolio or SHOP expected growth rate to 12 to 16%.
Our entire strategy currently is a one two three strategy that’s focused on senior housing or SHOP, and really it’s to drive this multiyear NOI growth opportunity that we have that’s been really powered by secular demand, incredibly limited supply, and really the alpha is our platform on top. So as we look at this, we’re in about the fourth year of adding about a hundred million a year of NOI from our portfolio in organic growth, and that favorable supply demand trend should continue for an extended period. There’s virtually no supply, and the senior population is burgeoning and is looking to have a step increase in growth as we look to 2027 and beyond. So as Justin likes to say, the best is yet to come. We’re we also have about 86% occupancy as you look at our total SHOP portfolio, same store, non same store US and Canada.
And that gives us a base on which to drive occupancy and rate going forward, which is the way we would expect to participate in this compelling and really unprecedented multiyear NOI growth opportunity in SHOP. We’re adding to that by the second part of our strategy, which is to allocate capital to invest in senior housing. And we have about a $1,500,000,000 expectation for external growth focused on shop this year. The purpose of that is to expand our footprint, elevate our enterprise growth rate, and delever from the way that we’re funding the investment activity. So together, the organic growth and the external growth should make SHOP over 50% of our NOI by year end 2025.
And at the same time, we’re improving our balance sheet and overall with the goal being driving enterprise growth, driving multiple, driving TSR. So we’re excited about where we are. We have a a great story to tell across the REIT space, And we’re looking forward to our conversation today and to continuing to deliver for investors. Thank you.
Mike Carroll, Analyst, RBC Capital Markets: Great. Thank you very much. So I have a list of questions that we’re going to go through. And obviously, if anybody in the audience has questions, you can come up and we can answer those. So first off, I know that Ventas has provided a business update specifically on its seniors housing operating portfolio post earnings.
Maybe you can run through that of how that portfolio has really trended post earnings?
Bob Probst, CFO, Ventas: Yes, will do. Thank you, Mike. So we as Debbie mentioned, we did raise our guidance not only on FFO, but also on SHOP. So our new SHOP range same store cash NOI is to grow between 1216%. And that, as Debbie said, we’re entering our fourth year of double digit growth, which is fantastic.
Unpacking the confidence to raise our guidance in SHOP is really the year to date performance. Stepping back year to date, we’ve seen very favorable pricing, RevPOR in SHOP, and we’ve seen very favorable labor costs. And the combination of those two things have really driven the guidance raise. Of note, of course, important is always occupancy growth. We had a very strong first quarter on occupancy.
We’re up two ninety basis points year over year, which was great. We did have a higher level of mortality in our portfolio late in the quarter. That lowers the start point coming into the second quarter. We did update the market on how we’re performing since the quarter end. And the good news is we’ve seen strong demand all year and that strong demand has continued through May.
We’re about 28 we’re now thirty one days into the key selling season starting in May. We’re seeing sequential occupancy gains of 30 to 50 basis points from March through May. That really showing the proof points of the key selling season really starting to lift off. And we saw 15% growth on our NOI in the month of April, which is really good, again, led by the occupancy pricing and labor. And we also appear to be normalizing on the deaths in May as well.
So all in all, that gives us the confidence and the outlook and we’re really excited about the key selling season.
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: I’m going to add a few comments to what Bob and Debbie covered. First of all, as it pertains to the elevated mortality and the low jumping off point in occupancy, Responding to a comment I heard earlier in a meeting, Atrius Senior Living has absolutely nothing to do with either one of those data points. And I just want to clear that up. Also wanted to get into SHOP portfolio composition strategy, which really is a double click on positioning we’ve put in place to make sure that we’re taking advantage of this tremendous opportunity in senior housing. First of all, we always start by focusing on making sure that we’re in the right markets and the right assets and the right operators.
And we have a data analytics platform that we use to determine the favorability in markets as it pertains to the aging population, the wealth of the aging population, the affordability of the product that we’re going to in or retain in that market. The asset within that market needs to be competitive. And if we need to invest in the asset to improve the competitive position of the community, we’ll do so. We also have a great opportunity where we’re transitioning communities that we already own that are triple net structure over to the SHOP structure. I’ll come back to that.
And then we look at who’s the operator. We have grown our operator pool to 33, 30 two in The U. S. And Canada, One in The U. K.
In our SHOP portfolio. That’s up from 10 a handful of years ago. And that’s really given us great coverage to cover different markets, also a wide variety of price points and asset classes within senior housing. And we’ve become really skilled at transitioning two new operators. We had over 150 transitions that we’ve managed over the years.
And the goal of those transitions is always to improve operating performance, and we have a great track record doing that. We would anticipate that any given time we might have anywhere from five to 10% of our portfolio that work specific communities are eligible for transition to new management. Even with our very best operators, it could always be one or two that or three that we could move on to new management. It’s been a successful program for us. The other part that’s been successful, this is probably the most important point, and Debbie made the point around the 86% occupancy that we have in our total SHOP portfolio.
Underneath that is a U. S. Portfolio that that excludes these conversions from triple net to SHOP that’s 84%. The group that we’ve been converting from the triple net structure to the SHOP structure is only 79% occupied. And that includes 130 conversions we’ve already done, includes another 45 that are coming later this year as part of the deal that we worked out with Brookdale.
And so when you look at that, you combine it with a very strong stable Canada that’s 95% occupancy. And then the acquisition approach, which is to acquire high performing communities with upside that are around 90% occupied, but in strong markets with strong affordability, price opportunity and a much longer runway for more occupancy growth as well. We have a really good combination of enduring growth through this lower occupied community and this lower occupied portfolio of 86%, which will benefit from the multiyear demand cycle that we’re facing, but also the new acquisitions, which is improving on the quality and given us outsized returns, given the risk adjusted return profile of those communities. Altogether, we’re really well positioned within our portfolio of senior housing.
Mike Carroll, Analyst, RBC Capital Markets: Okay, great. That’s a good backdrop. I guess, Justin, can you talk a little bit about the pricing power that you have right now within the seniors housing operating portfolio? Maybe kind of differentiate that between the communities that are in the mid-80s versus the mid-90s. I guess how much more pricing power do you have as this occupancy builds within this portfolio?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Sure. So the first thing I’ll just reinforce a comment that Bob made, know, that is that we’re outperforming on RevPOR. So we’re having good experience in terms of pricing this year, and that’s really taking place in both in The U. S. And in Canada.
In The U. S, what we’re seeing is good in house rent increases. It’s consistent with last year around 7%. But we’re also seeing a trend where our street rates are increasing as well. In this industry, there’s always been a bit of a gap between in house and street rates.
We’re starting to see that catch up, and so that’s supporting strong Rev four growth. And we would anticipate that that opportunity will continue as occupancy goes higher. And where we see the proof point is in our portfolio where we have 90% plus occupied communities. Those communities are generating outsized RevPAR growth. It’s 2x what the rest of the portfolio does.
So as we face our markets, which where we project 1,000 basis points of net absorption and 1,500 basis points of net demand because
Bob Probst, CFO, Ventas: there’ll
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: be supply shortages in the future, the price opportunity should only get better because we’re really just at the beginning scarcity value of the asset. We have increasing demand, and we know that we’re delivering a very valuable and important service to seniors that certainly the demand will continue moving forward.
Mike Carroll, Analyst, RBC Capital Markets: Great. And then maybe can you provide an update on the incremental margins that a resident has coming into the community, how that changes from 80 to 90, even if it’s fully occupied? How different is that flow through margin?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Right. So that is one of the most powerful parts of the senior housing business model is that, you know, as occupancy gets higher, your costs become more fixed. Labor is 60% of the cost and there’s variable cost as well. So when you are on that journey from 80% to 90% occupancy and you’re at 90%, you look backwards at your performance, we would expect to see around a 50% incremental margin. And the same can be said for that journey from 90% to 100% occupancy.
You would look back and you would expect even better incremental margin of around 70% because your costs have become even more fixed. The incremental revenue that you’re adding has drops more to the bottom line. And so there’s this margin expansion opportunity that occurs at the higher occupied communities.
Mike Carroll, Analyst, RBC Capital Markets: Okay. And then just kind of looking at the current uncertainty that we have in this market related to the tariffs. I mean, does that flow through to seniors housing? I mean, with some of the tariffs or the macro uncertainty, does that cause any delays in move ins or anything like that, or is there any type of weakness that you’d expect to see?
Debbie Kofara, CEO, Ventas: So one of the things we really like about our business and like about our our company, frankly, is that it is strategy and our company are very well positioned to outperform in the current environment. We’re mostly domestic. We have limited exposure to tariffs. We have pricing power so that if there is inflation, we’re able to pass that through as long as we’re providing the right value proposition to seniors and their families. And we we feel really good about our installed base because we think replacement cost Mhmm.
Is going to continue to increase as we look at new construction. So we have incredibly favorable supply demand fundamentals right now with virtually no new supply, and we think that the tariff situation with raw materials in particular and also with labor, which isn’t strictly a tariff issue but a public policy issue, should enhance our position as we look forward. And it’s part of the reason that we continue to try to take advantage of what’s a pretty compelling external growth opportunity as well to buy more assets that serve this population at below replacement cost.
Mike Carroll, Analyst, RBC Capital Markets: And then if you think about, like, I know this is a need based business, so a lot of seniors, when they need to move in, how long could they delay decisions? So like if there’s concerns that we would have in the marketplace, like the inability to sell one home, does that cause seniors to delay? Does that have any type of potential impact on demand that you could foresee? Or is the demographic tailwinds just too strong?
Debbie Kofara, CEO, Ventas: The sheer numbers are really overwhelming. When you look at the 80 population, it was growing a hundred thousand or so a year a couple years ago. Now it’s in the half a million a year, and it’s likely to step function up to eight to 900,000 a year, whereas the starts in the first quarter in senior housings were in literally the 1,000 type units. So we feel really good about the demand. I’ll I’ll defer to Justin in terms of the time to move in and the elasticity of this secular demand, and it it may differ by product type as well.
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: I I just wanna make sure I understand the question in terms of the time to move in. What do you what was that part of the question?
Mike Carroll, Analyst, RBC Capital Markets: Just like if there is any economic weakness on the macro side, like maybe a weaker housing market, I mean, do seniors delay decisions? I mean, I’m assuming they’re gonna have to move in no matter what, but how how long are they able to delay decision if something like that happens?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Well, so I mean, if you just look back at history, there’s been two times where, you know, really demand has been impacted in the sector. One was the great financial crisis, was a very, very deep housing crisis. So that was pretty extreme. And even through that, senior housing ended up being one of the most resilient asset classes in real estate. So that was an example of occupancy being impacted.
The other one was the health crisis, and that was a direct hit in terms of the pandemic. And even during that period, we were really pleasantly surprised by the amount of demand we had at the doorstep. It was really more around restrictions and regulatory requirements and operators taking on certain policy around potential move ins that caused a lower occupancy. So when you consider that, those two extremes, this is a very resilient asset class. And we don’t usually see little shocks.
And so I would expect that little shocks along the way wouldn’t interrupt as much, and that’s been the experience that we’ve had in the sector. And to Debbie’s point, you know, the demand’s only increasing significantly.
Debbie Kofara, CEO, Ventas: Yeah. One just proof point of that in the deck is that in April, with all of the controversy and disruption in the macro environment, our move ins were a 2% of prior year, which was a very strong year. And, again, I think it’s the the secular demand overwhelming kind of these intervening type of circumstances.
Mike Carroll, Analyst, RBC Capital Markets: And then maybe we should stick on a little bit on the the update you provided the opening remarks regarding what happened in March and through the key selling season. Maybe can you spend a little bit of time of what happened to the occupancy trend in March? Maybe how big were the increased move outs? And then as we’re entering the key selling season, are you seeing those move ins kind of ramp up as you would expect just given the better part of the year?
Bob Probst, CFO, Ventas: Sure. So move ins through the year, April through May, have been strong. And we just quoted 102% in April, but demand has been strong through the year. The dynamic we saw was not one of move ins, but move outs. And notably elevated deaths in our portfolio late in the quarter.
And just putting some numbers on this, we year over year in the first quarter our occupancy was two ninety basis points higher than the prior year. In our release through May, we’ve updated that our average through May in the second quarter is two basis points higher year over year. So a 60 basis point impact. Putting some numbers around that, we have about 52,000 occupied units in our portfolio. That 60 basis points equates to about three hundred elevated deaths.
And that’s just a sad fact of the business. It does bounce around. That was a very unusual number for us. But the result of this is a lower start point in terms of occupancy. That being said, the demand led by the move ins and starting in May in the key selling season are strong.
May through September is the key period in senior housing, and we’ve had a very good start.
Debbie Kofara, CEO, Ventas: Bob, the spot occupancy projection from the March to
Bob Probst, CFO, Ventas: Is 30 to 50 basis points is the range that we’ve given, yes, sequentially from March to May.
Mike Carroll, Analyst, RBC Capital Markets: Okay, great. And then just sticking on the March move outs, and then we’ll move on from that. Is there I know you said it wasn’t Atria. Was there any specific operator or geographic concentration? Or was just kind of broad based one of those anomalies that occurred within the portfolio?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: You want write that down, Dan? Yes. There was it was uncorrelated to anything. You know, there was a handful of operators. There was no correlation to any kind of flu season, no correlation to particular asset class or geography.
They just happened and had absolutely nothing to do with h three senior living at all. One thing that I’ll also say though is we’ve moved into the key selling season is that the growth we’re anticipating is more broad based though. So broad based growth across asset classes, across geographies and encouraged to be on the better side of things again.
Mike Carroll, Analyst, RBC Capital Markets: Great. Let’s move to investment activity because obviously, you’re seeing a pretty big uptick in investment activity over the past few years. I mean can you kind of qualify what are you seeing in your pipeline right now? And how quickly is that opportunity set continues to expand from what you guys are looking at?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Yes, sure. I’ll talk about it. So we’ve been from basically from a standing start at the beginning of last year, we have close $2,800,000,000 of senior housing investments. That’s been targeted towards communities that we call high performing with upside, around 90% occupancy. They’ve established market leadership.
They’re high quality. They’re in markets that have strong net absorption and strong affordability. We’re buying below replacement costs. We’re targeting seven to eight year one yields, low to mid teen unlevered IRRs. So the risk adjusted return profile is very attractive.
You’re getting good yield, you’re getting growth and high quality all in one package. So that’s been a good opportunity. We’ve continued that. And this year, we’ve increased our line of sight to $1,500,000,000 When we give a line of sight, that’s where we’re certain we’re going to close on a certain amount. It’s not putting a ceiling on the pipeline opportunity.
It’s actually putting a floor on it. The opportunity set we’re seeing is multiple billions and the multiple the opportunity set in our pipeline has been growing. And so we anticipate to continue to execute on the investment strategy and continue to expand our footprint in senior housing.
Mike Carroll, Analyst, RBC Capital Markets: And then how are you typically sourcing these transactions? And like what does the competitive landscape look like as you’re pursuing these deals?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Well, the sources are are I mean, 70% of them or so have been relationship oriented. So we’ll have a strong relationship with operators. And we have operators that are performing well. They certainly have big influence over the process, whether they’re in the ownership or in the structure with the seller in another capacity. And so that’s really served us well, where we’ve had off market opportunities where operators are really choosing to work with Ventas.
We also have the classic broker transactions as well. The competition is going to increase because just listen to the fundamentals that we’re speaking to and the demand profile, which is extraordinary. I mean this is a red hot asset class. So there’ll be more competition coming in. We’ve seen that in the deal flow as well.
But I just it’s a good opportunity to remind everybody why Ventas is so well positioned to compete in this asset class. First of all, you know, you know, we have 33 operators, but and that will probably grow. And the reason that’s important is because this is a fragmented sector. Know, half the industry’s operators have 10 or fewer assets. 80% have less than 100.
So these aren’t big institutional players you’re working with. It’s a high touch business. We’re highly engaged in asset management through our VentasoI platform. We’re highly engaged in the improvement of the assets through our CapEx refresh program. And so if you’re going to own this at scale, you really need to have a platform that can back it up.
So that gives us a wide variety of different investment options that new entrants would it will take years for them to get to that place.
Mike Carroll, Analyst, RBC Capital Markets: And then with the the OI platform that you’re talking about, I mean, do you have operators that choose to do deals with you or expand with you specifically because you help them operate their business or help guide them on what to look for? Is that kind of a competitive advantage to kind of lock up some of those relationships?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Well, I’m really proud to say and humbly say that it’s become clear that a competitive advantage for Ventas is the relationships that we formed with our operators and potential operators. It is definitely played a role in our ability to grow. The way we engage with operators for through our Ventas platform has been highly collaborative. It’s high touch. My team has made over 400 site visits this year.
So we’re not sitting behind a desk somewhere directing traffic. We’re in the field interacting, finding opportunities to improve and how and and also ways we can support the operators to be successful. So I would say that is is a is a big advantage for us, and I would expect for that to continue as we move ahead. Mhmm.
Mike Carroll, Analyst, RBC Capital Markets: And then as you kinda utilize your OI platform to kinda talk to these operators, how receptive are they for advice that you may give them on how to drive better results?
Justin Hutchins, EVP of Seniors Housing and CIO, Ventas: Well, as you might imagine, there’s always skepticism that we faced when we started introducing this concept because most high quality operators feel as though they have a good handle on running their business. They’re not looking for advice. So what we’ve had to do is focus on areas where it’s truly value add. There’s three core areas we focus on. One is benchmarking.
We benchmark operating metrics across the board on an itemized basis and we’re able to, you know, compare revenue and expense related metrics. And that gives operators just a good check-in terms of where they can improve, you know, where they’re performing well, where they can improve across the board. We also focus and so that’s like the benchmarking approach. We also have a heavy emphasis on digital marketing where 70% of the move ins are derived. And so we have technical analysis and also sales support and oversight that is very significant and significantly focused in that area.
And it’s an area that all us and operators can easily agree on is important and needs extra support and focus all the time to remain maintain your competitive edge. And then the other one is price volume optimization. There is no price transparency in the space. So to the extent that we’re able to use our analytics platform to bring to operators some guidelines in terms of where to set pricing on a from a per unit and a per community and per market basis. We don’t set the pricing, but we give guidance based on our analytics platform that’s proven to be very valuable and helpful to the success of the business.
Mike Carroll, Analyst, RBC Capital Markets: I want to see if there’s we have a few minutes left. I have a handful of questions, but if anybody in the audience wants to ask a question, just want to offer that opportunity.
Debbie Kofara, CEO, Ventas: So the question is how to think about senior housing NOI growth with the capacity to pay. And that’s a really, really important question. I’m glad you raised it because we haven’t expounded on it, and it’s one of our key investment criteria. So I’ll just start by saying that anyone who’s had a loved one who’s used senior housing understands and appreciates the value it provides to the senior and their family, not only for care but also for socialization. And it really is designed to help people live longer, healthier, happier lives.
So that’s really a starting point. Secondly, all the data show that if you’re a single individual living in your home, it’s about the same cost to live in senior housing because when you move into senior housing, you don’t have upkeep, you don’t have taxes, you don’t have insurance, you you know, all of the things that you pay for, you’re no longer paying for. You’re really just paying to reside in the community. So that’s the second important point. And then the third point is that, and this is a quantitative one.
We’re very careful when we invest about affordability. And in our markets, a senior can afford to live through both income and assets in our setting seven times what it actually costs for them to live there. So if a length of stay is two years, that would imply that a senior has could live there for fourteen years. And that’s an important metric that we look at very closely when we acquire things because it is important for continued pricing power and the ability of seniors and their families to be able to take advantage of our settings.
Mike Carroll, Analyst, RBC Capital Markets: All right. I guess we have one more question just if we have fifty seconds left. I mean, Bob, maybe can you talk about how you plan on funding these investments? What’s the primary source of funding on the acquisition activity that you guys are pursuing?
Bob Probst, CFO, Ventas: Yeah. So the strategy of, first of all, growing organically with senior housing and then secondly, investing in senior housing to grow our participation in that asset class, Equity funded has been the playbook over the last year and a half and a very successful one because we’re seeing not only growth in our earnings, but also improved leverage, most recently at 5.7 times, which is a full turn of leverage improvement in the last year. And that even all equity funded, the returns, as Justin were describing, are very attractive. So the strategy is working together with the funding to really drive TSR, a stronger portfolio, stronger growth and better leverage.
Mike Carroll, Analyst, RBC Capital Markets: Just as soon as you finished that question, the light started blinking red. We’ll end
Bob Probst, CFO, Ventas: think it was the right answer.
Mike Carroll, Analyst, RBC Capital Markets: Yeah. We’ll end the session there. Thank you, everybody, for joining us, and thank you guys for your showing.
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