Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventas Q1 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one. I will now like to turn the call over to BJ Grant, Senior Vice President, Investor Relations. You may begin.
Thank you, Bailey. Good morning, everyone, and welcome to the Ventas Q1 2026 Results Conference Call. Yesterday, we issued our Q1 2026 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 in 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. With that, I'll turn the call over to Debra A. Cafaro, Chairman and Chief Executive Officer of Ventas.
Thank you, BJ, and good morning to all of our shareholders and other participants. I wanna welcome you to the Ventas Q1 2026 Earnings Call. Ventas continues to drive growth and outperformance as a leading participant in the longevity economy. We're already into our fifth consecutive year of double-digit annual growth in our senior housing operating portfolio, or SHOP. Even more exciting, this year represents a new and positive inflection point when demographic demand jumps and growth remains elevated for over a decade. Our business and team have been built to meet this moment and seize the unprecedented opportunity for multi-year growth and value creation. With SHOP as our engine, Ventas is now a $56 billion S&P 500 company with a portfolio of over 1,400 properties, serving a large and growing aging population.
We have developed a unique brand that stands for delivering for stakeholders and winning together. Our excellent Q1 results and improved full-year outlook demonstrate our competitive advantages, the impact of our differentiated platform, strong execution of our one, two, three strategy, and our momentum. In the quarter, Ventas delivered 9% year-over-year growth in total same-store property NOI and normalized FFO per share. SHOP NOI grew over 15%, and U.S. occupancy increased 370 basis points, fueled by broad-based demand and our Ventas OI initiatives. Accretion from senior housing investment activity further contributed to our growth in the quarter, showing our strategy in action. Notably, our liquidity reached record levels, and our financial position continued to strengthen.
Based on our Q1 results and our confidence, we have improved our outlook for the full year, increasing our midpoint guidance for FFO per share by $0.03- $3.86 per share, led by SHOP same-store growth of 16%. As a result of our strategy and execution, we have already grown senior housing to over 60% of our business, and our communities now serve nearly 100,000 residents. In a large and highly fragmented sector where most operators run 10 or fewer communities, our platform gives us unique advantages to drive out performance at scale through data and experiential insights. With our collaborative approach, Ventas OI also attracts many experienced operators who want to manage our communities and benefit from Ventas's aligned approach, people, and platform. We're just getting started.
In the investment market for SHOP, we have an outstanding private-to-public arbitrage opportunity. We have already closed $1.7 billion of attractive senior housing investments this year and over $6 billion since the beginning of 2024. Our number one capital allocation priority remains U.S. SHOP communities that meet our strategic framework and can deliver unlevered IRRs in the double-digit to mid-teens range at pricing below replacement cost. Interestingly, because there is significant existing and new investor interest in senior housing for all the obvious reasons, we are seeing more owners and potential sellers bringing assets to market and engaging in conversations with us about transacting. This trend is expanding our pipeline significantly. We are confident in our ability to capture more than our fair share of desirable deals because of our momentum in the market and our competitive moat.
We have now increased our 2026 investment volume guidance to $3 billion. We are focused on increasing our SHOP business organically and externally to drive our forward enterprise growth rate and serve the nearly 70 million baby boomers who start turning 80 in 2026. In the next five years alone, this group will grow nearly 30%. Yet, in the Q1, senior housing construction starts totaled only about 1,500 new units, and total senior housing communities under construction remained at historic lows. With at least a three-year start-to-finish development cycle, these favorable demand-supply trends provide our advantage platform with compelling and durable tailwinds. The Ventas team is unified and enthusiastic about outperforming at scale and the multi-year growth and value creation opportunity ahead.
We are excited about our improved outlook for 2026 and the setup for the coming years as we pursue our mission to help people live longer, healthier, and happier lives. With our unique brand standing for commitment to each other and our stakeholders, we are in it to win it together. In closing, I want to recognize our admired colleague, Pete Bulgarelli. Pete is retiring after an extraordinary four-decade career in commercial real estate and eight years leading our OMAR business with excellence and integrity. On behalf of all of us at Ventas, I thank Pete and wish him every continued success and happiness. With that, I'm pleased to turn the call over to Justin.
Thank you, Debbie. I'm pleased to join you today to discuss another strong quarter of execution in senior housing, reflecting continued momentum across both organic performance and external growth in our SHOP portfolio. I'll start with SHOP performance, provide updates on our active asset management and the full year outlook, and conclude with investments and capital deployment. Starting with SHOP. The Q1 results reflect both strong market fundamentals and sharp execution across the portfolio. In the Q1, SHOP same-store NOI increased over 15% year-over-year, kicking off our fifth consecutive year of double-digit NOI growth. This is driven by a powerful combination of occupancy growth, pricing strength, and operating leverage, and increasingly supported by the Ventas OI initiatives we are deploying with our operators. Occupancy continues to be the primary driver of performance.
Same-store average occupancy increased 310 basis points year-over-year, reaching 90.4%. Performance this quarter was particularly broad-based, with so many operators contributing to our success, there are too many to name. The results in the U.S. portfolio were especially strong. Where same-store occupancy increased 370 basis points year-over-year and outperformed the NIC top 99 markets by 150 basis points. On pricing, RevPOR increased 5% year-over-year, reflecting strong in-house rate increases that are running at nearly 8%, as well as continued improvement in street rates across geographies, operators, and product types. Operating expenses increased 5.8% year-over-year, which was largely driven by higher occupancy levels and winter storm-related costs.
Net net NOI grew over 15% year-over-year. We delivered meaningful operating leverage with NOI margins expanding 170 basis points year-over-year to 30% and incremental margins at 50%. As we continue to deploy our active asset management, we're executing in close partnership with our best-in-class operators and with a talented and recently expanded Ventas SHOP team that is driving performance at the unit, community, and portfolio level. Across the portfolio, we're focused on community-level execution alongside our operating partners, supported by the continued evolution of Ventas OI. We are deploying targeted initiatives, including refresh CapEx, price-volume optimization guidance, and a sharp focus on sales culture with the ultimate goal of achieving zero lost revenue days in our highly occupied communities.
We're also implementing unit-level sales strategies supported by boots on the ground site visits from our team, and we're doing it in collaboration with operators, delivering strong revenue and NOI growth while ensuring the senior living value proposition is realized for residents and families through the care, services, and peace of mind provided in our communities. This combination of active asset management and structural demand tailwinds has led us to increase our 2026 SHOP outlook, including same-store NOI growth of 16% at the midpoint, which is up from 15%. This is driven by a higher expectation of occupancy growth of approximately 300 basis points, which is leading to increased revenue growth expectations of approximately 8.75%. As we've discussed previously, the key selling season runs from May through September.
While we enter the season in a favorable position because of the Q1 strength, our success during the key selling season will determine the full year outcome. Looking ahead, there's real momentum building for us to expand on several key fronts. Over recent years, we've made intentional strategic moves to ensure Ventas stands ready to harness the growing surge in senior housing demand. Because of those efforts, we're confident that we'll continue to drive solid organic growth fueled by ongoing increases in occupancy and the operating leverage we're achieving across the SHOP portfolio. With our U.S. communities averaging about 87% occupancy, there's still significant runway for us to continue to drive out performance. Importantly, the strength we're seeing in the SHOP performance gives us confidence to continue leaning into external growth. Turning to investments.
2026 is off to an excellent start as we execute our external growth strategy with focus and intention. Year to date, we have completed $1.7 billion of high-quality senior housing acquisitions in the U.S., building on the fast start we saw in January. Based on this activity and our outlook for the remainder of the year, we are increasing our senior housing focused investment guidance from $2.5 billion-$3 billion for 2026. While there is heightened interest in senior housing investments as additional capital flows into the sector, Ventas remains competitively advantaged. Notably, of the $1.7 billion of investments closed year to date, more than 90% were relationship driven, over 60% were sourced off market, and more than 40% were completed with repeat sellers.
Since the Q4 of 2024, we have now completed over $5.7 billion of senior housing acquisitions, adding more than 17,000 units to the SHOP portfolio. These investments have been carefully selected to closely align with our right market, right asset, right operator framework, and they are performing in line with our underwritten expectations. We are buying communities that enhance portfolio quality, are located in attractive markets with strong demand growth, are insulated from future supply risk, and deliver low to mid-teens unlevered IRRs. Our investment strategy and team are focused on senior housing investment opportunities with different combinations of growth and yield that can produce attractive risk-adjusted returns. For example, earlier this month, we completed a $540 million acquisition of the Revel portfolio, which represents a value add lease up opportunity at scale.
This investment consists of newly built luxury independent living communities located in affluent high growth markets across the Western U.S. With average in-place occupancy in the mid 70% range, the combination of the newer assets, high barrier markets, and significant embedded occupancy upside creates a highly attractive growth profile. This portfolio was acquired at a significant discount to replacement costs, even with its quality scale and amenity set. The seller elected to retain a 25% interest in the portfolio to share in the strategic and financial benefits of implementing Ventas OI initiatives across the portfolio to drive unlevered IRRs in the mid-teens. Transactions like this underscore the advantages of scale, relationships, operating expertise, and decisiveness in today's market.
Excluding the Revel transaction, our remaining senior housing investments completed so far in 2026 are expected to generate a 6.9% year one NOI yield and low to mid-teens unlevered IRRs. These investments also allow us to expand our operator relationships. Our Ventas OI platform provides the capabilities to manage multiple operators at scale, enabling us to retain strong in-place operators and support their growth. Looking ahead, we plan to continue to pursue attractive senior housing investments that combine durable in-place cash flow, embedded growth, and attractive risk-adjusted returns. In closing, we are encouraged by the performance of the SHOP business in the Q1 and excited about the opportunities ahead. We are executing from a position of strength with strong organic growth, compelling external investment opportunities, and a long runway for value creation.
With that, I'll turn it over to Bob.
Thank you, Justin, good morning, everyone. I'll cover three areas this morning. First, our financial results for Q1. Second, our balance sheet and capital activity. Finally, our updated outlook for 2026. Starting with our overall enterprise performance, we delivered a strong start to the year, led by over 15% same-store cash NOI growth in our SHOP portfolio. Normalized FFO for the Q1 was $0.94 per share, up 9% year-over-year, driven by total company same-store property level growth of nearly 9% and accretive senior housing investments. Our outpatient medical and research portfolio, or OMAR, delivered 2.4% same-store cash NOI growth, led by outpatient medical growing 3.1% year-over-year. Occupancy in outpatient medical reached almost 91% in the Q1.
A 50 basis point increase year-over-year marks the 7th consecutive quarter of occupancy growth. Our triple net segment grew same-store cash NOI by 1.6% in the quarter, benefiting from the 35% Brookdale cash rent escalator, which went into effect January 1, 2026. This triple net result is in line with our expectations and supportive of our confirmed full year guidance for the segment. Turning next to our balance sheet. Our balance sheet continues to strengthen as a result of organic SHOP growth and equity funded senior housing investments. Net debt to EBITDA improved to 5 x at quarter end, a 20 basis point sequential improvement, with further improvement expected through the balance of the year. Liquidity is strong with $5.5 billion available at the end of the Q1, providing Ventas with significant financial flexibility.
Our investment momentum has continued into 2026. To fund this growth, we raised approximately $2.4 billion of equity designated for 2026 investment activity.
Including $800 million settled during the Q1 and $1.6 billion currently available through forward equity sales agreements. Given our encouraging start to the year, we are improving our outlook for 2026. We now expect normalized FFO per share to range from $3.82- $3.89, or $3.86 at the midpoint, a $0.03 increase from our prior outlook. Bridging from our prior guidance midpoint, the $0.03 increase is driven by stronger organic property performance led by SHOP and accretive senior housing investment activity, which together contribute a $0.04 per share increase. These favorable items are partially offset by $0.01 from the higher forward interest rate curve.
We're also increasing our total company same store cash NOI growth outlook to nearly 10% at the midpoint, resulting from a 100 basis points higher SHOP midpoint of 16%. More fulsome discussion of our guidance assumptions can be found in our Q1 supplemental earnings presentation posted to our website. To close, we are very pleased with our start to 2026. The Q1 reinforces the strength of our organic performance, the durability of senior housing demand, and the embedded growth profile of our portfolio. With that, I'll turn the call back to the operator.
Thank you so much. At this time, I would like to remind everyone in order to ask a question, press star and the one on your telephone keypad. Your first question comes from the line of Julien Blouin with Goldman Sachs. Your line is open.
Yes. Thank you for taking my question. I just wanted to touch maybe on the $540 million Revel investment. I guess in your view, what had sort of driven the underperformance of that portfolio, keeping it in the mid 70% range? As we think of how Ventas OI sort of plugs in there, what are sort of the lowest hanging fruit that Ventas OI can sort of allow you to improve, and what are some of the longer term gains that the platform gives you?
Hi, Justin. Great question. I'll step back a little bit, answer your question, give you a little history, and then some of the attributes of the acquisition and the opportunity ahead. This is a portfolio that was built by Wolff Company, which is a large multifamily developer with a very long history. They're based in Scottsdale. They entered this senior housing sector with this really exciting development because this is a, it's a resort-like independent living product that would appeal to a very active senior, highly amenitized luxury setting. At the beginning, when they entered the space, they used third-party management. When they got into it, they realized that they were probably better off setting up their own platform.
They set up Revel, and that was a slow start. Now they have a team that is very talented really across the board. You know, it's probably obvious that one of the reasons they wanted to work with Ventas is the Ventas OI platform and the ability also to stay in through the joint venture so they could participate in some of the upside. What we like about it is the quality of the assets are really high. We're buying at below replacement cost. We see operational upside that's significant, and it's us and the Revel team. Our team's already been on the ground, you know, we're seeing pretty immediate, you know, sales upside. We're catching the portfolio at a time where it has pretty good momentum already.
We're facing a forward market that has 1,200 basis points in net demand over the next few years. We're playing into tailwinds as well. When you put the whole package together, it's a really exciting high growth investment opportunity of really high quality assets, sourced completely off market, it should, you know, generate really good returns for us moving forward.
Thank you. Then I guess just more generally on the current transaction environment, I mean, how would you describe the current level of competition in capital chasing transactions? Are you seeing a lot more bidders showing up when you are participating in sort of more widely brokered opportunities? Are you starting to see that reflected in some of the cap rates, and have you changed sort of your expectations at all on the cap rate front for the rest of the year?
I'm gonna step back again. It's another great question, but just important to frame it. You know, we just updated our investment guidance from two and a half to $3 billion. We're doing this in a period where there is more interest in the sector. You know, there's clearly new investors. There's a wide variety of PE that's entered the space, both large and small, owner-operators, other REITs. There's institutional capital. You know, and with that in mind, you know, we've updated our investment guidance to the highest we've had in three years with high confidence. The reason we can do that is because of all the advantages that Ventas has. You know, we have our competitive moat, which includes the Ventas OI platform, the ability to manage operators at scale in a highly fragmented sector.
We're up to 44 operators now. When we enter deals, we have no financing contingency. You know, the liquidity obviously is very high. Our track record of executing on deals has been excellent. I mentioned in the prepared remarks that, you know, 90% are relationship-oriented, 60% off market, 40% are repeat sellers. We have a growing pipeline. The broader market is bringing more to the market as well. We just have a track record of delivering on what we say we're gonna do. I mentioned on the previous call that, you know, there's a drift down in cap rates from the 7% and into the 6%. We printed in our supplemental, you know, around, you know, 6.5% all in, and that includes the Revel deal.
It's 6.9% without. When you look at the rest of the pipeline throughout the year, we're expecting high 6% moving forward, and that includes a mix of value add and high-performing communities with upside moving forward. One thing that's interesting is that even though the Cap rates have drifted down a bit, our IRRs have remained solid. That's because of Revel and some other value add opportunities we have that's delivering growth for us.
Thank you very much.
Your next question comes from the line of James Kammert with Evercore. Your line is open.
Good morning. Thank you. Justin, I think you mentioned, ex-export was 5.8% this quarter, if I'm not mistaken. Just generically, how much of that would you say is, say, recurring food and labor maybe, versus temporal, say, sales commissions or weather?
Yeah, it's actually, it wasn't poor. It was total expenses, 5.8%. You know, it was a lot of it was weather-related. We had a little bit of volume impact. The full-year guide is 5.5%, that includes the weather-related expense that in the Q1, but also some volume impacts throughout the rest of the year.
Yeah, the principal, drive to the OpEx guide from 5% to 5.5% is volume, Jim.
Okay. That's helpful. I mean, who knows, right, with labor costs, et cetera? How does Ventas educate its senior housing residents regarding that sort of expense dynamic vis-à-vis probable price increases? Do you think residents understand that?
Well, Jim, good morning. It's Debbie. One important point to start the conversation is that the labor market has been, you know, pretty constructive. That's an important point given, you know, that we do hire caregivers to take care of the residents.
I think that the other point on that is really the value proposition that the residents are realizing, and there's a wide variety. I mean, they're engaging with us because they're looking for safety, socialization, peace of mind, ease of living, the amenities, and, you know, the care delivery that they can receive in the assisted living and memory care settings. If you're delivering services and care the right way and engaging with your residents and their families in a way that builds and maintains that trust, the value proposition is well understood, and the price discussion is understood as well.
There is certainly an active dialogue, particularly between our operators and the residents around, you know, the cost of service and care delivery, and then the prices that we charge in association with that.
Appreciate it. Thank you.
You bet.
Your next question comes from the line of Seth Bergey with Citi. Your line is open.
Thanks. It's Nick Joseph here with Seth Bergey. Just in terms of your comments on increased competition or more interest in the sector, and, you know, in your prepared remarks, you mentioned that supply and construction starts are still very low. I guess the question is, you know, at what point are you starting to see any of that capital as returns compress or at least cap rates compress a bit, and you see more and more interest move into development, you know, particularly giving your comments on acquisitions versus replacement costs? I know there's still a gap there, but are we getting closer to some of that capital becoming interested in starting new supply?
It's another really good question. We're still 20%-40% off in terms of where rents need to be for, you know, most developments to pencil. We've talked about this before. You know, when developments start to be delivered at some point, when you see starts announced, it's most likely gonna be a very high price point product that's so disconnected from the existing market that the underwriting, you know, supports the supposedly, you know, high-end market that's available. You know, if we just look across our markets, we see 20%-40% higher rents needed to support new supply. Doesn't mean there's not interest in it, you know, from potential capital players and operators and developers out there.
Given the fundamentals are so strong and the demand outlook is so incredibly strong, it makes sense, and we'll need it at some point. It still doesn't seem near term.
Thank you. Just maybe in terms of the asset sales, obviously, just given the strength of the transaction market and the interest there, what's the opportunity from the Ventas portfolio side to recycle any of your senior housing assets that maybe you can harvest the value and redeploy into other opportunities?
You know, each year we have a small amount of targeted, you know, dispos, you know, usually a few hundred million or so what we targeted. And there's always some, and some of it's still senior housing. You know, one of the key parts of our strategy is to make sure that we're in the right markets with the right assets. You know, if we see anything that we don't think supports the growth profile that we're targeting, then we'll introduce it to the market as a sale. We've been doing that consistently over the past several years, and we'll continue to always look for that, you know, bottom part of the portfolio that we can sell.
Thank you.
Your next question comes from the line of Vikram Malhotra with Mizuho. Your line is open.
Morning. Thanks for taking the question. I guess two for me. One, just going back to the Revel deal. Can you maybe, you know, give us a little bit of flavor as to maybe a bit more flavor as to why the occupancy kind of hasn't picked up and kind of, you know, the positioning of the portfolio in terms of, you know, the product mix. Are there more studios, for example, when people want larger studios? Is it a price point issue or a labor issue in terms of the right people? What could, you know, get you trending higher in terms of occupancy over the next year or two?
Yeah. Good question. The, there's no structural issue. It's not a situation where you have, you know, the studios in a one-bedroom market, for instance. You know, this is an investment that it was, you know, well built for the type of resident they're trying to serve. The one thing that's interesting when you visit is you don't see many residents hanging around their apartments. I mean, these are very active communities that have a significant focus on health and wellness, fitness, education around those topics. You know, there's a social event with music playing. There's a activity at the bar. We were there in the afternoon. It's just a great time.
I think they've done a great job of introducing a product that will work and be real popular. In many of the locations, it's already proven to deliver a stabilized occupancy, but a lot of the newer product is still in lease-up. We'll be targeting, you know, those communities and work with the team that's in place that has generated some momentum already to try to help improve on really sales delivery, you know, sales execution. Also, there's some price sophistication opportunities as well that we can bring through the Ventas OI platform.
Okay. Just one more. I guess, you know, I'm wondering, is it time for Ventas to maybe use the fund it already has or create a new fund, in the sense monetize certain maybe core higher occupancy senior housing or maybe even some life sciences where, you know, you could perhaps get fees from malls, et cetera. Just given where we are in the cycle and the deviation in, say, life sci versus senior housing, I'm wondering if there's an opportunity for Ventas in the fund business.
Vikram, this is Debbie. Thanks for the question. We do have a Ventas Investment Management business that includes an open-end fund and some other vehicles. Certainly with all the interest in senior housing and with Ventas' competitive advantages and brand, we're well positioned to continue to try to expand our footprint in senior housing in a variety of ways, which could include things like additional vehicles.
Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is open.
Hey, good morning. Justin, the incremental margin within SHOP segment has remained around the 50% level, which I think you previously assumed in initial guidance. Has anything changed relative to what's assumed in the revised guidance? I guess, you know, given occupancy within the same-store pool is now above 90%, when do you think you could start to see that incremental margin improve, you know, into the 60%, 70% range or better?
Yep. Another one of our favorites. The incremental margin's around 50%. It's been that way for years in a row now, and that's as we were on that journey from the kind of mid-80s to 90% occupancy. The guidance really assumes that it's in the 1950s this year as we're at this 90% occupancy mark now. We know that in our portfolio, that communities that are in that kind of 90% plus range of occupancy that have not had an occupancy change year-over-year. They've had a flat occupancy. They deliver a 70% incremental margin.
You know, obviously we have a group of communities that we're still in lease up, you know, across our U.S. portfolio, which is only 87% occupied. We still have a lot of communities that are delivering occupancy growth. When you isolate those and that didn't deliver occupancy growth year over year, that rule of thumb we've talked about is certainly achievable. Our goal over time is gonna be to get as many communities in that category as possible.
That's helpful. You know, you reiterated that the May to September key selling season's really gonna determine how the year plays out. You did go ahead and increase occupancy given, you know, I guess, the lack of seasonality you saw in 1Q. How much of that occupancy guidance increase was specific to 1Q versus, you know, flowing through, I guess, a better outcome through the balance of the year?
Yeah. The, you know, the key selling season hasn't even started yet. We do have, you know, optimism heading into it, you know, because of the strong start we had. I would really think about it as the strong start really delivering the increase from $2.70- $3.00 on the full year, knowing that we have a lot of, you know, execution left to, you know, during the most important part of the year, which is the key selling season.
Thank you. Very helpful.
Your next question comes from the line of Michael Carroll with RBC Capital Markets. Your line is open.
Yeah, thanks. With seniors housing occupancy now above 90%, I mean, does it make more sense for operators to push for higher rates, as opposed when occupancy was in the low 80% range, I guess? Said another way, does the improved occupancy level allows these operators to be a little bit more aggressive with their operating strategy trying to push for higher rates?
Well, I would just wanna remind you that we're 87% occupied in the U.S. We see our opportunity very much as volume driven. We're happy that we're, you know, we're seeing good performance from both occupancy and from rate, and that's delivering that 8.75% revenue guide that we made on the full year. Everything's contributing to the revenue growth and the improved outlook on revenue. However, volume remains the number one focus. We do know when you have higher occupied communities that there's better opportunity for price performance, and we see that in our portfolio. The opportunity really is to continue to drive occupancy in the U.S.
Right. That's what sets up the multiyear growth and value creation opportunity from organic growth in SHOP is the rate and occupancy working together to deliver outperformance.
Okay, great. I appreciate that. Just circling back on potential developments. I mean, have there been interesting development opportunities that crossed Ventas' desk that they're willing to pursue, or is it still just mainly focused on acquisitions at this point?
We are certainly focused on acquisitions. We're in our third year of a very successful run of acquiring communities that have attractive, like, they're accretive year one, and have a growth profile that's supporting low-to-mid teen unlevered IRRs. That pipeline has grown, and we're executing on it. That's our first priority, along with, of course, continuing to drive organic performance across the SHOP portfolio, and looking for opportunities to improve performance in those communities that we already own. Development opportunities, I'm sure there'll be some in the future, but that's not our focus at the time.
Okay, great. Thanks.
Thanks, Mike.
Your next question comes from the line of Wesley Golladay with Baird. Your line is open.
Hey. Good morning, everyone. I just wanna go back to the Revel portfolio. Just looking on the website, A Place for Mom looks really highly rated. So I just wanna go back into, you know, what the game plan will be. Is it, you know, is it really leaning into this Ventas OI given the new, I guess, the operator of more data advice on pricing? I'm just trying to see, you know, what the near-term opportunity is. Will their portfolio be ready for the key leasing season?
Yeah. Well, I'll start with the last part. It is absolutely ready for the key selling season. You know, these are just really well-constructed resort-like communities that will be very competitive. You know, as we met with the, you know, with Wolff, in the early stages, it became very clear quickly that the combination of these great communities, high demand markets, their newly reinvigorated, you know, talented management team, and the Ventas OI platform, which includes the benefit of all of our data analytics, but also our boots on the ground approach, which has already started, that we can really create value in this together. That's why the joint venture was a great fit. We'll look forward to doing that. Obviously, the biggest opportunity is to continue to drive sales.
Also when you're working on sales, price and volume always work together. We'll bring our expertise in both areas to the platform.
Okay. Then when you look at the pipeline, you know, I mean, is this a unique opportunity you have when you look at the, like, future pipeline? Are you seeing any cities where, you know, you have the stuff that's core, a little bit higher yielding, but you can also have these, you know, just plug it into the OI, and then you get a nice dip in a few years?
Yeah. You broke up a little bit, but I think what you're asking is this a unique opportunity, and are there other value add opportunities in the portfolio? We've had a number like this already. They've just been smaller. This is the first one at scale that we're pretty excited about. We have other value add opportunities in the $3 billion guide. We're looking forward to delivering accretive investments with growth in a wide variety-
Okay. I did break up. Yeah, sorry about breaking up.
Yeah.
You did get the question. Thank you.
All right. Good. Great. Thanks.
Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open.
Hi, good morning. Just a question on seniors. You know, there's been press articles about given the tight markets about operators being able to charge entrance fees and maybe generate some revenue off of waitlists. Just curious on your approach and how that may or may not contribute to kind of the 100% occupancy goal or zero days downtime.
Well, it starts with the value proposition. I think it's really interesting that this is, as you know, a private pay consumer-driven business that people are choosing where they want to live for the security it offers them and their families. That is a very encouraging, especially when coupled with the demographic demand that we see accelerating and then remaining elevated for a long period of time. That's really important to think about, and I'll turn it over to Justin really to talk about the, you know, different management of communities as they go up the curve in terms of occupancy, which we see happening, and over time will happen more in our portfolio.
Yeah. Juan, you mentioned entrance fees. I'm gonna reframe it and call it community fees, which is a fee that's been really a fee that's been part of the industry pricing package for many years. In more competitive periods, it would be reduced or waived. In this period, where we have increased demand, it's actually going up. We are seeing, you know, higher community fees, you know, in across our portfolio, so that's consistent with what you're reading about. We're also starting to see, you know, waitlists form. Now we've had them for many years already in Canada. That's where our longest waitlist exists in Quebec.
We're starting to have some waitlists in the U.S. and, you know, there's certainly, deposits, you know, that are required for waitlists, and in some cases, you can charge to be on a waitlist. We're at the front end of that. You know, there's demand and as Debbie mentioned, the value proposition is very appealing to those that are interested. It has supported better pricing.
Just going back to development or supply that's come up a couple times. Curious on the appetite to structure something, either with maybe a preferred or mez type component to where you guys could earn a return during the build out or lease up. Historically, you guys haven't done U.S. development in seniors housing. Just curious if that is something that would be of interest. I mean, a couple of the leading operators, including Sunrise, have talked about looking at development, so it seems like it's coming near term. Just curious on your appetite, maybe not traditional fee simple, but in other structures to where you could earn a return during that initial phase.
Well, you know, there certainly are structures that can, you know, that we can utilize that makes sense and, you know, when it comes to development and we can, you know, with the, with the right opportunity can underwrite returns, and we have a lot of partners that would be qualified to do that with. It's just not a big area of focus for us. We're focused on acquisitions, you know, as described, you know, they're delivering, you know, the accretive growth opportunities, but also the unlevered IRRs that are in the limited to mid-teens. I know that's not quite what you're asking. The answer is yes, there's a way to do it. It's also important to know that that's really not where we're focused at in scale at this point.
Thank you.
Your next question comes from the line of Farrell Granath with Bank of America. Your line is open.
Hi, good morning. This is Farrell Granath. I first just wanted to ask about the increase in the cash G&A. I know you had mentioned about adding some staff as well on the SHOP platform. I was curious if there's any other contributing factors or if there are any initiatives that are also going into that figure.
Yeah, I'll take that one. For cash G&A, we mentioned in February, and you see it in the numbers in the Q1, we are investing behind the business. We're obviously growing and scaling the platform, and so investing behind that people process technology in order to be able to accelerate that growth is definitely part of the playbook. We continue to believe that growth on cash G&A will be in line with the growth of the enterprise. We continue to stay focused on efficiency and effectiveness, but, you know, the Q1 is representative, I think, of the plan.
Great. Also on the rollout of Ventas OI, is that fully integrated with all your operators currently on your SHOP platform, or is there an additional rollout that we could expect?
Yeah, it's fully integrated. If you're new to us, there's a period of time that has to pass before you're fully integrated. We have a number of newer operators that have joined us in the recent months. Yeah, this is a fully integrated platform across all of our operators, across all of our geographies, primarily in the U.S. You know, combining the advantage of the data analytics platform and the experiential insights that we deliver through a number of avenues, including boots on the ground site visits with our operators.
Great. Thank you so much.
Your next question comes from the line of Rich Anderson with Cantor Fitzgerald. Your line is open.
Thanks. Good morning. Great quarter. Question number one is, early on, Debbie, you said, you know, you're seeing increased engagement to do deals with Ventas. I guess I'm curious why anyone would be a motivated seller with everything just sort of starting to happen here. You know, it's not like they're getting five caps on deals to get, you know, paid for the opportunity set going forward. You know, what is the I get the Revel deal, but, like, what is in it for people to be a seller today? Along those lines, do you think there'll be more in the way of JV type of deals that you'll have to accommodate to continue to grow? Maybe OP unit deals? I'm just curious how that dynamic might be playing into the future for external growth standpoint.
Yeah. I mean, good, you know, good question. It is true that more and more people are bringing assets to market, which is building our pipeline considerably and giving us a great opportunity set. You know, sellers come in different varieties, you know, private equity sellers, other holders who have limited life vehicles or other holding periods that have been perhaps exceeded because of, you know, the last couple years, and who, also, you know, wanna make sure that they can, you know, achieve returns and then perhaps, you know, recycle capital. We see a lot of that. We see some debt maturities. You know, the truth is, when the assets get in our hands, they're likely to perform better.
You know, we may be having better returns than the seller could have in, you know, if they hold on to the asset. It tends to be longer hold periods, different types of sellers who maybe don't have the advantage platform that we have. This is a very difficult business to run in a, you know, just a one-off basis or in small scale. That's why we're building this platform, to be able to outperform at scale. Those are some of the reasons. I don't know if, Justin, you wanna add any?
Yeah.
If that covered it?
there's a second part of the question regarding joint ventures. What I would say is, you know, the Revel deal is obviously a joint venture. It's a strength on strength joint venture opportunity. Go create value. In any investment we make, we're always looking for alignment. We found it that way, you know, in that case through a joint venture. In most of our senior housing investments, we're doing it through aligned management agreements. So that's helping us to, you know, be on the same page with the operators, you know, from day one when we start a new relationship.
The rest of our expected investment activity is 100% equity ownership by Ventas.
Okay. Next question is, you know, a lot of your, you know, a lot of REITs and others, again, to reiterate a recurring theme, are sort of going after this opportunity, which you have to do, right? This is a great dynamic, supply-demand dynamic, going forward for the next several years. You know, everyone is sort of standing on the same side of the boat. When that happens, you know, eventually, you know, the boat tips. I'm wondering if, you know, do you see an opportunity of people that are buyers today that may be necessary sellers a couple of years from now? When you think about development coming back into the fray, you know, 20% below rents needed to justify development.
Well, if you start today, three years from now, it might have made a whole lot of sense to start a development today. I just wonder if you think that there's a second chapter of people that are buyers today that'll be sellers tomorrow for Ventas. Thanks.
I mean, I agree with you and the reason is more about the expertise and data that are necessary to really do well in this business. I do think some new entrants will find it more challenging, frankly, and they will likely be sellers. Because you really have to know what you're doing, as, you know, Justin does from his decades in the industry. We've spent, you know, five years building this platform and it's very effective and differentiated, and if you don't have that, it's much harder to succeed. I do think that will give us more opportunities as we look in the next couple of years.
Okay. Great. Thanks very much.
Thank you, Rich.
Your next question is from Michael Goldsmith with UBS Financial. Your line is open.
Hey, it's Michael Goldsmith. I'm here with Justin Hutchens. Thanks a lot for taking our questions. Maybe sticking with the Revel investment, it sounded like you've done some smaller lease up or unstabilized acquisitions in the past. This one's clearly a bit bigger. Maybe the follow-up question to that is just, are you more willing now to be a buyer of these type of properties? If so, is that driven by the improved backdrop or something else in the environment that makes this more attractive now? Thanks.
Yeah. I mean, we've been, really from the beginning of this investment run we've been on, which started in 2024, we've been focused on unlevered IRRs in the low to mid-teens. You know, we have been delivering on that through a variety of different types of investments in senior housing. Certainly, you know, a value add opportunity is great because it'll support, you know, more growth. This particular one hits the mid-teens unlevered IRRs, you know, we like that opportunity. There's others, smaller opportunities like that that we've had. We've had others that are in the pipeline in the $3 billion that we've mentioned, that will deliver some, you know, more close to the mid-teens as well.
You're really pulling two levers to get there, right? You have the going in year one yield. Then the expected growth profile of the asset over time. Those are working together in everything we've been investing in to deliver the IRRs that we're targeting.
Got it. As a follow-up, you know, maybe can you provide an update on the Brookdale transitions, how those 45 assets are trending? Are you largely in line with your expectation of realizing $50 million of upside on those? If so, what's the timeline there?
Remind everybody, we got 45 communities that we transitioned late last year, earlier this year from our Brookdale lease to our SHOP portfolio. These are large scale communities that are located in markets with high demand. Tailwinds that we're playing into, they require additional investment to be competitive. We'll have completed by next month, a majority of those investments in the portfolio. The CapEx deployment's really on track. All five operators are fully integrated now into the communities, and they're getting a handle on the operation and really focused on the key selling season. That's going as planned. Like I said before, we really viewed 2026 as the year to put all the pieces in place, and 2027 and beyond, is really the NOI growth opportunity.
You're right, we did see a double the NOI opportunity because it was around a $50 million run rate back at the, you know, the end of 2024 when we put this deal together. We're anticipating over the next, you know, few years to be able to double that. We've put all the pieces in place now to get started on that process.
Thank you very much. Good luck in the Q2.
Thank you.
Your next question comes from the line of Michael Stroyeck with Green Street. Your line is open.
Thanks, and good morning. With the bidding trends getting more competitive, particularly within high quality, well-stabilized product, have you seen meaningful declines in your win rates within that subset of the market?
You know, interestingly enough, our win rate has been pretty consistent, you know, the pipeline's become bigger. The actual pipeline is a little bigger, and our win rate is consistent, therefore that's why we've raised our investment guidance. You know, there's exceptional deals here and there that go for, you know, some pretty aggressive cap rates. Like I said, we've been able to exploit all the strengths that we have and the great track record and continue to have confidence in our ability to execute within the market.
Our win rates stayed high too because a lot of the deals are really off market and bilateral in nature, and so that helps give us an advantage.
Got it. Makes sense. Maybe a separate question. You've highlighted the growth in operator count over the years. Just philosophically, how does the company think about operator count? What are the gives and takes of, you know, greater operator diversification, and do you expect your operator count to grow or contract from here?
Debbie mentioned in her prepared remarks the fragmented nature of the sector. You know, most of the industries operate by operators that have 10 or fewer assets, and these are small operators. The large ones are usually around 100 or less. You know, not particularly big. There's a few on the bigger side. If you're gonna invest in the space and you're gonna do it at scale, you really need a platform that can accommodate, you know, multiple operators. We're very focused on doing that right, and it starts with the operating selection criteria to ensure that, you know, that the operator has a strong local market focus and reputation. They have expertise in the particular product type that they're operating.
The talent is experienced, and, you know, the management team is a team that we can rely on to create value and deliver great care and services. The culture in senior housing is critical. Ensuring that they're measuring customer satisfaction, they're measuring employee satisfaction, they have initiatives in place to improve on those fronts and have strong engagement with their residents and their families. That, you know, the managers can deliver growth, and are these operators that we can do repeat business with and have more growth moving forward as well. You know, will they engage with Ventas OI? Years ago when we started putting the platform together, that was one of the big questions. It's no longer a question.
It's become a competitive advantage, and the engagement couldn't be more collaborative, more positive, more impactful than it is. So we really like our competitive advantage to have more operators. We're at 44 now. Certainly, you know, we continue to plan on growing within senior housing, and we believe to do that, you have to be able to manage, you know, have a platform that can, that can handle multiple operators.
Great. Thanks for the time.
Your next question comes from Michael Mueller with JP Morgan. Your line is open.
Yeah, hi. Just one here. For the U.S. portfolio, what are your current thoughts on where your AL and IL occupancy should be able to max out to over time?
Well, that remains to be seen. It, you know, we've had outperformance in our IL occupancy growth. You know, Debbie mentioned the demand kind of profile. We're really not even to the point. It worked for our business yet. It's not surprising to see independent living. You know, we've seen better performance in independent living as the baby boom population started turning 80 this year. Assisted living has really strong demand as well, we think both will have really strong demand. Both will probably, you know, surpass, you know, previous industry highs. Our goal is to outperform. We'll tell you when we get there, we expect both categories to be well into the 90%.
Justin's-
Okay, thanks.
...a believer in the zero last revenue day.
Yeah.
He won't be happy till every room is happily occupied by a happy resident.
Yeah. Keyword is happy, because if you're delivering best in class care and services, then, you know, I think it's a mandate that, you know, people should live with us. We're gonna do our best to deliver on that.
Thanks, Mike.
Your next question comes from the line of Nicholas Yulico with Scotiabank. Your line is open.
Thanks. Good morning. Just going back to Revel, I know you gave the stats on, you know, six years old on average, mid-70% occupancy on average. Can you just give us a feel though, in terms of the vacancy? Is it concentrated sort of evenly across the portfolio? Is there, you know, in more in like recent deliveries?
Yeah, it's a little. The vacancy is more in the more recent deliveries. We have, you know, there's a handful that are stabilized. Then there's the more recent deliveries that have the most upside. We were able to look at the track record of some of the early developments and see their lease up once they got the new management team in place and anticipate, you know, leveraging that approach combined with the OI platform to deliver more occupancy growth where we have vacancy.
Okay, thanks. My second question is for you, Debbie. You know, we spent, I don't know, the vast majority of this call talking about senior housing. It's where you're having a lot of operating success. You're expanding your portfolio, but it's still SHOP is, you know, 56% of NOI. My question is about, you know, the rest of the portfolio and how are you thinking about it. Because, you know, when we look at outpatient medical research, IRFs, LTACs, health systems, they're not, you know, realizing this was sort of these were legacy investments when there was diversification within healthcare REITs. There's a move away from that now. They're kind of not adding to your growth rate or your multiple.
My question is, you know, how are you thinking about that? Is there opportunity to JV assets, sell them? How are you thinking about, you know, that, and what would be the sort of the trigger where you would look to perhaps reduce exposure there? Thanks.
Great. Well, when we developed our one, two, three strategy in 2023, the focus is on basically growing SHOP organically and externally. That's number one and two . Number three is really to, you know, drive performance across the portfolio. We have been successful in executing that strategy because as SHOP is growing, you know, fifth year, double-digit NOI growth, and we're adding, you know, $6+ billion of investments in SHOP, we're seeing that, you know, become a much larger part of our portfolio. Senior housing itself is over 60%. The, by definition, the other parts of the portfolio are becoming a smaller portion of the overall enterprise. That is all part of the strategy.
As far as, you know, actions, we've shown a willingness over time to take actions to modify the portfolio when we really think it's gonna create long-term value. You know, we're certainly open to that. Right now, our real focus is on growing SHOP organically and externally, and that we're devoting, you know, all of our efforts to, with great effect to that because we think it's creating value for stakeholders.
Okay, thanks.
Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Your line is open.
Hey, just two quick ones. Just going back to pricing. I know the RevPAR guide was unchanged, but if you could talk about where the operators put out increases this year, maybe versus last year. Maybe talk about how the philosophy about, you know, new versus renewal pricing and where you think you could push.
The revenue guide obviously increased to about eight and three quarters. Justin will comment on the in-place increases.
Yeah. We've had, you know, another good year. It was around 8% all in the January, which is where half the increases take place. It was around seven last year, so we've seen improvement in that category. There's some underlying trends in move-in rents, which are very favorable, as well. As we get into a period where demand continues to pick up and occupancies continue to go up, we would expect that to continue. Still like all the occupancy upside opportunity though. It's kind of volume first and then prices. Opportunity with price down the road.
Got it. That's helpful. I guess the, just on the acquisition mix, I think a couple years ago, you were much more focused on sort of the, you know, stabilized sort of assets. Obviously, with this Revel deal and maybe other deals upcoming, is there sort of more of a shift to maybe taking on a little bit more lease-up risk, you know, given the better growth, but given sort of your conviction in being to get those portfolios filled? I'm just wondering if there's sort of a shift down versus what you were doing two or three years ago. Thanks.
Sure. The, you know, the focus has really been to, you know, use the market asset operator framework to determine where we make investments. We obviously, if you get the markets in right, and you have assets that can be competitive within those markets, you're well-positioned. From there, it's finding the right operator, whether we're keeping operators in place or transitioning to new managers. By the way, we're overwhelmingly keeping the operators. That's been our typical approach. You know, once we get that right, then we're looking for the targeted returns, which at this stage are double digits to mid-teens. We've been delivering on low to mid-teens.
Unlevered
U nlevered IRRs over the past few years. We've had a wide variety of different types of senior housing communities deliver on our underwritten expectations so far, and some of those did include value add opportunities. This one just happens to be a little bit bigger, and so we're able to showcase it as a case study. We'd anticipate, you know, really repeating the playbook moving forward.
Thanks so much.
Thank you.
There are no further questions at this time. I will now hand the call back over to Debra A. Cafaro, Chairman and Chief Executive Officer of Ventas, for closing remarks.
Thanks, Bailey, thanks to all of you for joining us today and for your interest in Ventas as we, you know, drive forward on this multi-year growth and value creation opportunity. We look forward to seeing you in person soon.
Thank you. This concludes today's conference call. You may now disconnect.