Good morning, and welcome to the Janus Living Inc. Third Quarter 2026 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then one. Please note, this event is being recorded. I would now like to turn the conference over to Jonathan Hughes, Senior Vice President, Finance and Investor Relations. Please go ahead.
Thank you. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Janus Living believes any forward-looking statements are based on reasonable assumptions, the company can give no assurances that its projected results will be attained, and we do not undertake a duty to update any forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. We will refer to certain non-GAAP financial measures during this call, which are reconciled to the most directly comparable GAAP measure in an exhibit to the eight-K we furnished with the SEC yesterday in accordance with Reg G. I will now turn the call over to our President and Chief Executive Officer, Scott Brinker.
Good morning, and welcome to our 3Q earnings call. Our third quarter results highlight that Janus Living is a unique and differentiated growth story. A pure play focus on U.S. senior housing, deep relationships to drive proprietary opportunities, a small denominator so that acquisitions move the needle on earnings, and the cleanest balance sheet in the REIT sector, with zero debt at quarter end. The execution of the plan has been equally strong. We more than doubled the asset base this year without sacrificing quality or returns, and consistently increased guidance. FFO per share at current midpoint is up about 6% from what was implied in our original guidance in February, and the midpoint of same store growth is up 750 basis points from February. That same store portfolio is comprised entirely of our irreplaceable life plan communities, which are the foundation of Janus Living.
The assets cater to an active senior with an eight to 10 year average length of stay and extremely high barriers to entry. In early 2020, we acquired the remaining 51% interest in those communities to gain full control of the portfolio. We immediately changed operators to LCS, who has been amazing partners, and invested strategic capital to create a compelling product in each local market. Revenues and entry fees have grown substantially since our acquisition, with cash NOI up almost 75% since 2019, even including the COVID downturn. The implied value of those assets today is many multiples of our purchase price on the JV buyout. It's a phenomenal success story that speaks to our ability to create value in the sector.
We've had some questions about the impact of the housing market, so I want to mention that we smashed our entry fee records for the third quarter, including the number of sales and at average prices 11% above the prior year. We've created strong demand with our product offering, and it's broadly affordable, with net entry fees equal to about 60% of the median local home value. Plus, home equity is far from the only source of payment given seniors' net worth. Cash entry fees have exceeded the amortized amount we recognize in earnings for 22 consecutive quarters, and by $17 million last quarter alone, which is more than $0.05 per share of earnings. The excess of cash entry fees over the amortized amount is the reason that our AFFO has been consistently higher than our FFO. I'll wrap up with a few comments on acquisitions.
When doing the business plan for Janus Living a year ago, we identified a select group of trusted operators who we wanted to do business with. We've had incredible success bringing that select group into our portfolio. We now have 13 operating partners with a few more in the pipeline. Onboarding has been seamless, as the underlying Healthpeak platform is built for massively more complexity than anything Janus Living can throw at it. From a growth and opportunity standpoint, Janus resembles a startup, but from an infrastructure standpoint, Janus is a highly sophisticated owner with as much experience as anyone in the sector. Year to date, our operating partners helped us source and close $2.9 billion of acquisitions. We're focused on acquiring single assets and small portfolios so that we can be super disciplined about the asset quality and returns for every building that comes into the portfolio.
On a blended basis, we're conservatively underwriting year one yields in the low 6s, improving to 7.5% or better by year three. Our cost basis on the acquisitions is about $350,000 per unit, which is well below replacement cost. Three closing comments on questions we've heard across the sector in recent weeks. First, the increase in interest rates recently should be good for us, as it takes pressure off cap rate compression, especially from levered buyers, and it makes new development that much harder to pencil. Second, across our entire portfolio, occupancy in 3Q was just 86.5%, so we still have significant upside to capture on occupancy. Third, given our small denominator and deep relationships, our opportunity set is many multiples of our current size. I'll turn it to Jonathan Hughes to share color on our 3Q results and improved outlook.
Thank you, Scott. We had another strong quarter on both the operational and capital allocation front. For the third quarter 2026, consolidated revenues increased 78% year-over-year, adjusted EBITDAre increased 101%, and FFO as Adjusted per share increased 46%. Moving to performance, same store revenues increased 9.8% year-over-year and 2.4% sequentially. This was driven by 300 basis points of year-over-year occupancy growth, led by independent living. Sequentially, same-store occupancy increased 110 basis points. Occupancy is approaching 90%, and we expect continued gains given the favorable supply-demand dynamics. RevPOR increased 6.5% year-over-year, or 4.4% excluding non-refundable entrance fee amortization, as our operators continued to deliver quality resident care and value. We also achieved record third quarter non-refundable entrance fee sales of $47 million. Same-store expenses increased 4.6% year-over-year, and on an expense per occupied unit, or ExPOR basis, increased 1.7%.
As occupancy grows, we expect to show continued operating leverage given the large scale of our life plan communities and more independent living focus. Same-store NOI increased 25.9% year-over-year, and margin expanded by 360 basis points year-over-year, and 80 basis points sequentially. Within the non-same-store portfolio, occupancy was approximately 84% and includes communities acquired this year and transitions. Occupancy is starting to stabilize across the 18-community transition portfolio as those new operators execute community-specific business plans. Shifting to the balance sheet and capital allocation. In August, we completed a follow-on offering of Class A-1 common stock, generating $513 million in net proceeds. In September, we upsized our unsecured revolving credit facility to $1.25 billion and terminated our $100 million delayed-draw term loan. We continue to source opportunities directly from our deep network of operator relationships.
Year to date, we've completed $2.9 billion of acquisitions. During the third quarter, we completed $1.75 billion of acquisitions. Subsequent to quarter end, we completed an additional $370 million of acquisitions, and we have another $82 million under binding purchase agreements. Year one cash NOI yields across completed acquisitions are in the low 6% range, improving to 7.5% or higher by year three. As of October 30th, we had approximately $1.2 billion of available liquidity, including unrestricted cash and available credit facility capacity. Ending with guidance. We are increasing our 2026 FFO as Adjusted guidance range from $0.95-$0.98 to $0.97-$0.99 per share. We are also increasing our same-store Adjusted NOI growth guidance range by 250 basis points at the midpoint to 16%-19%.
The updated midpoint is 750 basis points higher than the initial guidance range provided by Healthpeak for the same portfolio in February, driven by outperformance across occupancy rate and expenses. Our updated guidance now includes $2.3 billion of capital sources from our IPO, follow-on offerings, and credit facility, and $2.3 billion of post-IPO acquisitions. The momentum at Janus Living has only accelerated since our March IPO. Our priorities remain unchanged and focused on partnering closely with our operators to elevate the experience for our residents and staff, and adding high-quality, durable communities to our portfolio that are built to perform through every cycle. With that, operator, please open the line for Q&A.
We will now begin the question and answer session. Please limit yourself to one question. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then one. In the interest of time, callers will be limited to one question. At this time, we'll pause momentarily to assemble our roster. Your first question comes from the line of Ronald Kamdem with Morgan Stanley. Ronald, your line is open. Please go ahead.
Great. Thanks. Look, the 26% same-store NOI, clearly a big upside surprise in the quarter. I guess I would love to double-click on that and get some thoughts on both in terms of occupancy and pricing, just what you see going on in the portfolio and how sustainable that is as we flip the calendar to next year. Again, occupancy and pricing, thoughts on what is happening and thoughts as you flip the calendar. Thanks.
Yeah, Ron, this is Jonathan. On occupancy, I mean, you continue to see improvement there. The supply and demand dynamics are pretty well known and speak for themselves, and I think the value and lifestyle provided by our life plan communities is very attractive to that resident cohort. Supply is very low. I would say on the rate side, you saw a pickup there from last quarter, even excluding entrance fees. That is again reflective of the supply-demand backdrop. As we look ahead to next year, we are not providing guidance yet. We will provide that in a couple of months, but everything is continuing to run pretty similar, and we would expect similar metrics for next year. Scott?
Yeah, I mean, 3Q was really high. I mean, our midpoint of 26, same store is like 17.5%. 3Q at 26.5%. I mean, it was a phenomenal quarter, don't get me wrong. Phenomenal in all aspects. But we also had a fairly low comp in 3Q of 2025. It was like +10%. So it was our easiest comp too. That does play a factor, and it is a relatively small portfolio. It is just the 15 life plans. Now, all these acquisitions that we made in 2026, those will start to come into the pool in 2027. So the composition will change, but the growth profile of those acquired assets should be relatively similar, just given the occupancy in place around 86%-87% for those acquired assets. So they should have similar dynamic to what we are seeing in the life plan portfolio right now.
Your next question comes from the line of Farrell Granath with Bank of America. Farrell, your line is open. Please go ahead.
Hi. Thank you for taking my question. I just wanted to dig in a little bit deeper, especially about the stabilized NOI yields that we are seeing across the quarters. It took a step down in this 3Q, the 7.5%-8.5% targeted NOI yield for the volume that you disclosed. Just curious about what are some of the puts and takes or composition of what was acquired that maybe drove that yield lower, and if you have more confidence at that stabilizing at that level, just given current interest rates.
Yeah. I mean, our underwriting really hasn't changed. There's going to be quarter-to-quarter volatility, just given the size of the company. We're buying single assets, small portfolios. Each one is going to be a little bit different in terms of asset quality, how much risk we're taking. But generally speaking, we're doing everything at a 7.5% or better by year three. That's just kind of the base case underwriting in addition to a market that we like, a price per unit that we like, and obviously an operator that we want to do business with. I wouldn't say the underwriting has really changed at all. Frankly, the spreads have gotten better as our cost of capital has improved.
There may be a quarter-to-quarter differential in stabilized returns, but if anything, the spread on investment today is even better than it was in 1Q, certainly when we did the IPO. We feel pretty good about the ability to make an impact on earnings through external growth right now.
Your next question comes from the line of Jamie Feldman with Wells Fargo. Jamie, your line is open. Please go ahead.
Hey. Good afternoon. This is Jesus on for Jamie Feldman. Thanks for taking the question. You guys previously expected the transition communities to build momentum in the second half. Can you just talk about the progress that that portfolio made, I guess, during the third quarter?
Yeah. Happy to do that. I am glad we made the change. I mean, we all wish we could have done it sooner. There is always some short-term disruption, but we did have the JV partner. When we bought them out in the first quarter, we were able to then complete the operator transition. So we saw the noise that you would expect. It looks like occupancy is starting to stabilize. We are expecting some progress through year-end and into 2027. But it takes some time. Technology, in some cases leadership teams, but just different cultures and facility-specific business plans. So we are making good progress, and there is a lot of upside to capture in that portfolio. And most importantly, we think providing a better environment and product to those local markets. Next question.
Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael, your line is open. Please go ahead.
Yeah. Thanks. Scott, how many of the acquisitions in 3Q 2026 does Janus plan, or did they actually do an operator transition? And in those cases, how do you underwrite the disruption when that happens? Do you underwrite that a new operator, there is a small disruption at the beginning before they pull it back up? And I am assuming that is reflected in their yields, but just trying to get a better understanding of that.
Yeah. Thanks, Mike. For the most part, our acquisitions are being sourced by our operating partner. In most cases, they are the incumbent operator. They are just looking for a recap of a building that they are already in. So ± 80% of the acquisitions year to date have no operator change. In the situations where there is a change, we are obviously less aggressive in year one on the underwriting, in some cases backing down occupancy fairly meaningfully. For the most part, that is not something we have to worry about. The vast majority of the time, the operator is bringing the deal to us and staying in. Okay, next question.
Your next question comes from the line of Sydney McEntee with JPMorgan. Sydney, your line is open. Please go ahead. As a reminder, make sure to unmute yourself locally. Sydney, your line is open.
Hi. Sorry.
[inaudible]
I just wanted to ask about how you are thinking about the funding options in front of you between debt and equity. What right now would make you tap the debt markets and give up that debt-free stat? If you were to tap the debt market or term loan market today, where do you estimate your current cost of debt would sit relative to the 6%-ish initial yields you are seeing on acquisitions?
Hey, Sydney. This is Kelvin. I will jump in on that one. I think we have been successful and supported in the equity markets, which has allowed us to do three transactions on the equity side, including the IPO this year. That continues to be the primary source of capital to help us fund our external growth. We will certainly utilize the balance sheet strategically. We have positioned ourselves to have more capacity on balance sheet. You probably noticed the upsize of our revolving credit facility to $1.25 billion. That gives us a considerable amount of flexibility on an interim basis to utilize that. Going into 2027, we will pursue an investment-grade credit rating for the business to provide incremental options and more flexibility on balance sheets as we think about long-term financing options for Janus Living.
Quite a bit of optionality that we will have in front of us. We will continue to utilize equity as a source of capital. With regards to the cost of term loans, I think simplistically, the swapped term loan will be in the, call it, mid-fives. That is probably a good indication of where that debt would price, but it still would be accretive relative to our initial yields on acquisitions in that kind of 6% area. A lot of optionality for us, a lot of flexibility with the balance sheet being largely unlevered today.
Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Austin, your line is open. Please go ahead.
Great. Thanks. Scott, as you guys continue to scale the platform, can you just talk about the approach towards technology and just the operating efficiencies and things that you're doing to drive those efficiencies? I know you made some hires recently. Would just love to know some of those initiatives and efforts that are underway. Thanks.
Yeah. This is one area where Janus Living, as a relatively small company, has benefited from the affiliation with Healthpeak, who has made significant investments in technology. People in particular are doing a phenomenal job. I won't add to the AI commentary of how it's redefining business, but frankly, it is. We're using it in just about every area of our business imaginable. We did a presentation to our operating partners at the NIC Conference a week or two ago, and I think they were pretty well blown away by the things that we're doing. They will become available to them. We're not jamming it down their throat. They don't have to use it, but it's available to them, and I think we'll get a pretty strong uptake rate, because it's pretty phenomenal.
I think the most amazing thing, in my view, is that technology that would have taken years and years to build and cost an awful lot of money and require a lot of data is just not necessary anymore. The speed at which you can build a phenomenal project that's completely tailored to what you want is mind-boggling. In some ways, we benefit from being a startup in that we don't have the existing bowl of spaghetti technology that we have to work our way around. We can actually start from scratch, and just given where technology is today, that may actually turn out to be an advantage. So we're pretty excited about what we're working on and the team that we've hired and its ability to differentiate Janus Living from a number of the peers.
We'll find the right avenue to share that progress with the public markets like we did with the operators a couple weeks ago. Okay, next question.
Your next question comes from Michael Stroyeck with Green Street. Michael, your line is open. Please go ahead.
Thanks, and good morning. I know you mentioned entrance fees are up double digits. Is that similar on more of a same property basis, or is that impacted by the mix of assets that are seeing more move-in activity? I guess, how does that rate growth on entrance fees vary across the communities? Maybe some color on growth for the higher occupied facilities versus lower occupied would be helpful.
Well, it's the same portfolio, so it's not like there's a change in the mix. It's the same 15 life plan communities throughout, so it's a pure apples- to- apples comparison. You do have various price points throughout the portfolio. I mean, we have projects in suburban Washington, D.C., at a higher price point than what you would find in, say, Orlando or Tampa. You have one bedrooms versus three bedrooms. So there are things that will impact the price change from quarter to quarter. But the reality is we had phenomenal sales throughout the portfolio on both the number of sales, but also the price point in 3Q.
So congrats to LCS as the on-the-ground operator, but that's five years in process to create that outcome and investments that we made into the portfolio, both the units as well as the amenities, and then obviously the programming on the ground by LCS. That doesn't happen overnight. That's multiple years of work to get from where we were to where we are today.
Your next question comes from the line of Rob Simone with Compass Point. Rob, your line is open. Please go ahead.
Hey, guys. Thanks for taking the question. With the acquisitions in 3Q, the bed mix shifted a little bit more towards AL and memory care. I guess, as you guys continue to scale the platform, in your mind's eye, do you have kind of a targeted bed mix between IL and AL memory care? Anything you could share there would be really helpful. Thanks a lot.
We do not have a targeted mix in mind. I think the difference between the two product types is sometimes less significant than what the words on the page might suggest in terms of what the resident profile looks like or what the building looks like. What we do like is the bigger communities. We've averaged ± 150 units per building that we've acquired, and the vast majority have some level of continuum, at least two service types, if not all three. That's more the criteria. Today, we do have a heavier skew towards independent living than maybe most of the peers, closer to 50/50. That's not by design. That's just the types of projects that were presented to us that made sense from a pricing and return standpoint. There's no predetermined mix.
We actually like both, and preferably to have both service types on one campus.
Your next question comes from the line of Dave Rodgers with Raymond James. Dave, your line is open. Please go ahead.
Yeah. Hey, guys. Just wanted to follow up on acquisition volumes. I know you don't really give a target in the outlook, but just given that you've gone from the two to the 13 operators now, how many of those operators do you want to continue to grow with, or might they have another decent-sized portfolio that they're operating where you can grow? Seasonality-wise, what are you seeing?
Well, every one of them. Yeah, Dave, every one of them. We wouldn't bring them into the portfolio if we didn't have a growth expectation, and that's one reason they have a desire to work with us. We help them grow, they help us grow. Mutually beneficial. Across the board, that's one reason that our pipeline is only getting bigger as we add new operators to the portfolio. There's a few more in the pipeline. That's an important part of the business plan. At the same time, we're probably ± 20 is the, at least near-term, game plan. There are benefits to having that number versus the two that we started the year from, just from a diversification standpoint, more growth opportunity, with more partners bringing us opportunities and acquisitions. At the same time, we don't necessarily want 50 operators.
At some point, at least for a company our size, you start to hit diseconomies of scale and operators tripping over themselves and conflicts in local markets. We'll be thoughtful, but we've been pretty amazed to go from two to 13 in essentially seven months, and we have a few more by year end. Most important is the quality of the groups that have come into the portfolio, really providing exceptional service on the ground to drive a sustainable business model, not just in this high-demand, low-supply environment, but throughout. They're just people that we want to do business with. Probably the most rewarding part of everything that we've done here to date. Next question.
Your next question comes from the line of Marc Akinbi with Barclays. Marc, your line is open. Please go ahead.
Great. Thank you for taking the question. At the beginning of the call, you mentioned that same-store RevPOR growth, excluding NREF, accelerated. How much of that was due to contractual rate increases relative to CPI versus changes in market rate pricing?
Yeah, I mean, CPI, the life plans for existing residents, you are capped at CPI + 2%. You did see inflation accelerate. It is a bit of a lagged calc, but inflation has moved a little bit hotter and higher this year, so that is a benefit to that number you are seeing there. But I think importantly, the demand for the product in the third quarter, I mean, it was a record in terms of sales and dollars of entrance fees. It is effectively a private pay business, and there is all this demand in there, and if you are more fully occupied, you can charge a better price and a higher price. Of course, the care and the value has got to be there in terms of delivering, but the strong demand is what is reflected mostly within that RevPOR growth figure.
Yeah, we do not have a lot of turnover. I mean, it is an eight- to 10-year length of stay, so for the most part, the RevPOR is driven by in-place residents, just given the long length of stay. There are only so many new residents in the portfolio in any given year. Okay, next question.
That concludes the Q&A session. This concludes today's conference call. Thank you for your participation. You may now disconnect.