Welcome to Citi's 2026 Global Property CEO Conference. I'm Nick Joseph, here with Seth Bergey with Citi Research. We're pleased to have with us Ventas and CEO Debra Cafaro. This session is for Citi clients only, and disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit any questions. Debbie, I'll turn it over to you to introduce the company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.
Thank you, Nick. We're delighted to be here at Citi this year. Thank you all for coming. I will provide some introductory remarks. I'm happy to be joined by my colleagues here, who will participate in the Q&A. Ventas is an S&P 500 company focused on the longevity economy, which means we serve a large and growing aging population. We have scale with $50 billion-plus of enterprise value and about 1,400 properties that serve that large and growing aging population. Senior housing, which is more than half of our business, is the engine of our growth. We are projecting the fifth consecutive year of double-digit NOI growth in our SHOP, or Senior Housing Operating Portfolio, this year.
What's really interesting is that Ventas provides a compelling multiyear NOI growth and value creation opportunity for investors while we, at the same time, help people live longer, healthier, and happier lives. Let me break down a little bit how we will deliver that multiyear NOI growth and value creation opportunity. First, the macro tailwinds are strong and getting stronger. Let me start with demand. Baby boomers are turning 80 starting in 2026. This year, we expect two million baby boomers to have a birthday of 80 years in 2026. That demand is secular, it's strong, and it's going to get stronger as we look forward over the next decade. At the same time, in senior housing, supply is at historic lows. We saw only about 2,000 units of senior housing started in the fourth quarter of 2025.
We have really unprecedented tailwinds favoring our business. More importantly, at Ventas, we've kind of built the business and a platform to capitalize on these tailwinds. Justin will talk more about the platform that we've spent the last five years building really to meet this moment and enable the company to outperform at scale. We'll talk more about that in the presentation. When you think about those characteristics, the engine of Ventas' growth is organic growth from the senior housing portfolio. We've done a lot. I mentioned we're in, hopefully, the fifth year of double-digit NOI growth, and we think that the fundamentals support a long runway for growth in the future. Secondly, we're a consolidator. We are adding incrementally to that internal growth by acquiring multiple billions of senior housing assets, which is our number one capital allocation priority.
Those investments are really interesting. It is a unique, and in my experience, one of the best private-to-public arbitrage opportunities I've seen in my long career. Those acquisitions are driving growth in the enterprise, driving earnings growth per share. They're accretive going in, and they provide significant growth with low to mid-teens unlevered IRRs expected. Organic growth, inorganic growth, and then, as you look forward, you can say that we basically have, you know, the scale to compete. We have competitive advantages. We have the team, the data analytics, a platform really to outperform. That's giving us that multiyear NOI growth opportunity. The three reasons really to own our stock are the macro tailwinds, the business we've built to capitalize on those tailwinds, and really the consolidation opportunity that remains one of the best that we've seen and we're leaning into.
That's great. Thank you. Well, why don't we dive into each of those different topics? It feels like the number one question that we get, I think most people see the strong growth in senior housing right now. They see the next few years as being incredibly strong. The question is always: When will supply come back? Ultimately, it's when would oversupply come? You talked about the demand and the number of people turning 80. So we can certainly frame it in terms of the amount of stock that's needed. How do you think about, just broadly across senior housing, kind of the building blocks of what would bring supply back, and how far away are we from that actually occurring?
I'll start, and Justin will elaborate. In the U.S., Ventas has occupancy in our senior housing portfolio of 86%. That, you know, gives us this multiyear NOI growth going forward, that's based on occupancy growth, rate growth, and margin expansion. What that would tell you is that rents have to go up 20%-40% in our estimation to make most developments pencil. Developments generally take at least three years start to finish, sometimes more. It's very clear in this near to intermediate term window that the supply-demand is tipped strongly in our favor. Again, we have the competitive advantages to really outperform in that market. Take advantage of those tailwinds and outperform.
I'll turn it over to Justin to talk about the sheer numbers of demand are just overwhelming, and that is really the big takeaway from the macro. I'll turn it to Justin to talk about how we think about it at Ventas.
Yeah. Just to elaborate some of the other, you know, considerations as it pertains to new development. Rents need to be 20%-40% higher. The lender appetite from a development standpoint is very low. Nick tracks the lender sentiment, lenders are very still not interested in pursuing funding of development senior housing. There's not really been a large scale developer in this space. The only two I can really think of were building communities 20 and 30 years ago. There was a homogenous product by Sunrise and by Holiday. That's long gone. Those capabilities are long gone. It's hard to really imagine any big development player making a big move into senior housing.
You're gonna see more kind of one-off local small developers and regional operators that are trying to establish themselves again in that from that perspective. The fundamentals are phenomenal. Therefore, the need will be there. Whenever this need does get delivered, they'll be hitting this wall of demand that will be the best we've seen. You know, if you think about three to five years from now, the demand is just now picking up where the baby boomers are turning 80 this year. It'll be even better in the upcoming years. I think we're well-positioned to continue to have the strong organic growth we've had in senior housing, invest into that platform to capture even more potential growth, and then absorb supply, you know, not really if, but when it does, you know, enter the sector again.
That's helpful. It sounds like at least for the, let's say, for at least the next three years, and just given the margin expansion as occupancy grows, and you hit 90% at a lot of these communities, your current kind of same store kind of organic growth could look similar, if not accelerate from here.
Well, you're taking it a year at a time. You know, we've had four years in a row now, double-digit NOI growth. This year, we've projected 15% NOI growth at the midpoint, and that's being flattered by, you know, even stronger growth in the U.S., 270 basis points of occupancy growth, 5% of RevPAR, 5% expense. Which is just a continuation of what's been a really good run we've been on from an organic growth standpoint. Like Debbie said, we've constructed the portfolio to have an occupancy runway by positioning ourselves with lower occupied communities, a lot of which came from our triple net structure that we converted to SHOP. We grew occupancy 370 basis points last year in the U.S.
We're considering a similar run rate as part of that 270 guide this year. We're really anticipating, you know, more opportunity. We'll talk about 2027 beyond when we get there.
You put out, you know, a deck for the conference, and then just the quarter to date, kind of what you're seeing out there. Can you just walk us through kind of that and what you're kind of seeing in terms of demand for the first quarter?
Sure. Yeah. We had a good start to the year on occupancy. We reaffirmed all of our guidance that Justin just highlighted, only two months in at this stage. Seasonally, you'll know oftentimes in the first quarter, it can be softer in terms of demand. We've seen continued demand strength, broad-based. Again, notable in independent living, which has been a trend. As expected and incorporated in our guidance, we have seen some higher expenses due to weather, the severe weather events in the first quarter, but that's embedded in our guidance. A good start to the year, and especially on the occupancy side.
Maybe just going to Ventas OI and kind of the operating platform that you've invested in. You know, what's the current penetration rate across the portfolio? How quickly when you acquire a new asset, can you roll that out to the asset? You know, just in terms of stages of where we are, you know, are we in early stages? Is there still, you know, opportunity that you see to kind of grow the platform and drive operating margins for the business? Can you just touch on all that with the, with Ventas OI?
Sure. I'm gonna step back first and get to your specific questions. We have a platform that's been in development for several years. It's become clear to us that it's a massive competitive advantage for us, and pretty certain that we own the space in this regard. There's no one else that's done this yet in terms of creating a operating platform that's designed to drive outperformance in our portfolio and capital allocation decisions. Particular focus on top-line revenue management, including occupancy and pricing. I'll walk you through, you know, basically what that is. First of all, the framework we always look to, whether we're talking about organic growth and-or capital allocation, is around the market asset and operator. The first thing we wanted to make sure we did is ensure that we're in strong markets.
The markets really are defined by a number of factors, but high level, some of the most important are the 80+ aging demographic, the density in the market, the ability for the prospective residents in the market to pay for our care and services. Through all the actions we've taken on the portfolio, which include dispositions and acquisitions over time, we're very well-positioned in that regard. We have a strong aging demographic. We have very strong affordability, which is measured by the number of length of stays that people can pay seven times at the median in the market. It's not an average stat being flattered by, you know, the higher income people.
At the median, if you think about our length of stay being two to three years, regardless of what you're talking about, whether you're talking about assisted living or independent living products, that means that a resident can stay for 14 to 21 years and afford to pay and use their income stream and their other sources of net worth to do that, the increasing aging demographic working together for us. If we, as we've positioned our portfolio through those actions and through acquisitions, we've improved our opportunity to perform at scale. Market positioning is critical. Asset positioning is also critical as well. We use a data-informed approach to determine where and when to invest refresh capital to drive outperformance.
We've had a really good opportunity given that there's been about 150 communities that we had transitioned from triple net to SHOP over time, and acquisitions that we've made, and some refresh in some of our legacy portfolio to go for outsized growth, to literally reposition a community's respective market position and drive occupancy and price upside. Ultimately, you know, it's the operators that we're working with that are responsible for driving that day-to-day performance. Probably the most powerful part of the platform is bringing to bear the data analytics and our experiential insights that we're bringing to the operators in collaboration to drive performance in areas such as occupancy, overall revenue management, pricing, and expense management, benchmarking across the board, digital marketing, all designed to drive outperformance in our markets, which we've been doing for.
We've been outperforming for many years in a row now. You know, the, you know, AI has been a key component in this as well. Occupancy forecasting, for instance, from the ground up, is assisted by AI, which you can imagine across 750 communities from the owner's seat is a very, very sophisticated forecasting process, and also informing our price-volume optimization, in an industry that lacks price transparency, where we've become really excellent at pulling both the price and volume levers and moving towards that overall revenue growth that we've achieved. I'd say that the platform is well underway for many years. It's continually evolving. The adoption rate amongst the operators is extremely high.
In fact, we're, just a side statistic, in the $5 billion we've deployed in the U.S. in senior housing over the last two years, 70% of that business has been with repeat operators. The operators wanna be on this platform. They wanna have a Ventas relationship that's been an advantage for us. We'll look forward to onboarding our new operators that we've, you know, brought on through acquisition. It can take, you know, there's a really strong initial push to get, you know, certain operating metrics and insights underway. Then, you know, within six to nine months, our operators are fully onboarded onto the platform.
As you kind of have these insights that you can bring to your operators, you know, how do you kind of structure the right data contracts and how has that kind of maybe evolved, to kind of align the operators to be incentivized, with Ventas?
You know, one thing I didn't mention yet, it's Bob's favorite topic in this regard because we partnered together to develop this, you know, data platform that we have. That is that it's extremely flexible, meaning we can meet the operator wherever they're at in terms of systems they use and the delivery of the data to us, and then we've standardized the operational and the financial data on our side. We've made it easy for them, and then we give the information back to the operators with insights around where there's opportunity to drive performance. That's a key point. The management contract. The management contract. Meanwhile, you know, the management agreements are well aligned. They're driven...
The fees are driven by a percentage of NOI and revenue, plus we pay incentives for outperformance. We have flexibility around termination, and which has been useful because we're constantly looking for, to make sure we have the right fit across the portfolio, the perfect manager fit. The operators are really benefiting from this outsized NOI growth that they're helping to drive. You know, their management fee growth is reflecting this performance that they've been driving with us in our portfolio.
You know, just can you remind us what the margin flow-through is as occupancy kind of continues to grow from here just with the inherent operating leverage within the business?
That's one of the most powerful parts of the senior housing business is the operating leverage you get as occupancy gets higher. In the fourth quarter, we had, you know, 50% incremental margin. In our guide in 2026, 15% is the midpoint for NOI growth. We'll have higher than 50% incremental margin that drives that this year. That's just a reflection of really needing less variable costs as your, as your occupancy goes up. We would expect to see that number get closer to 70% as our occupancy grows, you know, between 90% and 100% occupied. And that will be a key driver.
REITs, obviously including you, but probably more moving away from diversification, moving more towards, you know, single property sector REITs, or at least maybe fewer, you know, one or two. You remain diversified, as benefits. That probably has some drawbacks. How do you think about kind of the current portfolio composition today? You know, why be diversified? I recognize we're asking the questions, but the whole focus is on senior housing. The growth outlook looks really good for senior housing. What's the benefit of not being more senior housing right now and maybe lightening up on some of the other asset types?
Well, several years ago, we agree that there is a significant benefit to expanding our senior housing footprint, and we announced a strategy that we've been executing to lean into the opportunity there, which is compelling and somewhat unprecedented, frankly. We've grown our business in senior housing to be, you know, well over half our business. It's gonna continue to grow significantly through you know, organic growth and external growth where we're focused on deploying capital in the senior housing business.
You know, we have seen the great growth potential that's in the asset class, coupled with the machine that we've built with Justin and his team to really drive this outperformance at scale, and we are leaning in aggressively to continue to build that. You know, that you're sort of, you know, growing that senior housing business and, you know, the other segments are holding their own and they're contributing, but their senior housing is really the engine of the company and the, you know, the principal reason we should continue to outperform.
It's over 50% now, but if you had the opportunity to sell a large MOB portfolio, a large life science-
Yeah.
Would that be of interest? Is there a benefit to being diversified? I understand the growth is more on the senior housing side-
Yeah.
It's still nearly 50% is not.
Yeah. Again, that 50%+ is gonna continue to grow. I think we've demonstrated over the years our intense focus on doing things that create long-term value for shareholders, and that includes, for example, the large spin-off of skilled nursing that we did. We continue to challenge ourselves with the portfolio to consider actions that we think would create long-term value. Right now, the energy is really all around growing the senior housing business. If something makes sense, we will absolutely consider it.
Are there synergies across the different businesses?
There is a benefit to scale in both the equity markets and the, and the debt markets. I mentioned at the beginning, of course, we're, you know, $50+ billion. That really is helpful in certain areas, including making internal investments in AI and other technology and people, in really attracting the best and brightest and also attracting, you know, capital. That's, that's how I think about the synergies. There certainly are efficiencies internally from that scale.
Yeah, there's some back office. I'd highlight the debt, scale, the importance of non-correlated cash flows to our credit, for example.
Mm-hmm.
There's clearly a benefit of scale. There's no question about it.
You know, we feel pretty good about giving same-store full company property growth in 2026 expectations.
Nearly 10%? Yeah.
10%. We feel good about that, we're gonna keep leaning into senior housing.
Makes sense. How, how's the transaction market changing, particularly on the senior housing side? You know, just are you seeing more competition? Is it different buyer types? Obviously, you're expecting to be active again this year, but you have been over the past few years, so how much has it changed?
Well, I'll repeat what I believe, which is, you know, Justin and I have been doing this probably in senior housing for, like, 70 combined years. It is still kind of the best private-to-public arbitrage opportunity that we've seen. The pipeline is very large. It's growing. It's active. It's diverse within, you know, but focused on senior housing, obviously. Justin, do you wanna talk more?
Yeah. It's been obviously a key area of focus. You know, one thing I wanna mention, we've been obviously very U.S.-focused. We were number one in the U.S. in 2025 in capital allocation to senior housing. We were number two in 2024.
Mm-hmm.
We've established ourselves as a market leader investing in U.S. senior housing. What an amazing opportunity it is to actually buy attractive yield, which is means, you know, we're gonna have immediate accretion in our investment activity and have growth and be able to underwrite the, you know, the low, you know, the kind of 10%-15% unlevered IRRs, which are been consistently there for us in our investment activity. We're still leaning into it. It's We have every strength working for us to be able to deliver on that as well. We have the financial strength and flexibility. The, you know, I mentioned that we had 70% repeat business with operators. We also had 40% repeat business with sellers.
Mm-hmm.
Because we've proven to be an excellent counterparty and have positioned ourselves for repeat business. Being one of the largest owners of senior housing in the space, having that live platform, and being the operators', you know, partner of choice has positioned us to continue to compete, even in a market that's attracting a lot of new capital.
Mm-hmm. That's why we feel confident projecting $2.5 billion of investments of that ilk that meet the market asset operator framework, meet that financial profile in 2026.
To get to that $2.5 billion, how much do you underwrite total? What percentage of what you underwrite actually gets closed?
What percentage of what? I'm.
You're doing $2.5 billion , but you're obviously looking at a lot more.
Right.
You know, what's the total amount you're underwriting? Then the next question is gonna be, why do you pass on the deal? Like, what is the reason why Ventas doesn't acquire it once you're looking at it?
We reviewed $35 billion of senior housing investments last year. We had $2.5 billion that we ultimately closed. About half of that we actually pursued with some interest. You know, like I said before, we're very focused on right market, right asset, right operator. The very first thing we look at when we screen an investment is the market and make sure that it has everything that we're looking for to drive, you know, near and long-term success from senior housing perspective. The asset is obviously really important, and we've been buying larger assets, most of which offer a continuum of independent assisted living and memory care or a combination of at least two of the products.
We've had a good opportunity to find those and continue to see those opportunities. The operator part, it's been an interesting area of focus too, because we've added. We have 43 operators now in our SHOP portfolio, and that's up from 10 four years ago. That's because through our acquisition activity, if we can underwrite a track record that's, has it on a growth trajectory, and we see the opportunity to continue that growth trajectory, we're gonna stay with the existing operator. That's led to an opportunity to build new relationships, also expand with some of those, newer relationships we've brought into the portfolio as well. Yeah, it's just been. We're very well-positioned, and we're gonna continue to, you know, push our strengths.
I wanna just get to a question that came in. I guess the question is just on employee turnover at the property level. Are you hearing from your operators, have employee turnover rates, and retention rates changed much? And how has that impacted operating margins?
Well, the employment environment at the communities is very constructive at the present time, and the retention of employees has improved dramatically since, say, 2022.
Mm-hmm.
Those trends have been positive.
I mentioned recently on our earnings call the customer satisfaction results that we're getting in our portfolio amongst all our various operators, which is critical. You know, this is a private pay, consumer-driven business. Our residents are relying on our employees to deliver these, you know, these excellent services and care. By their feedback, the results have been great. You know, it is a constructive environment from a labor perspective. Hiring trends have been really positive. The ultimate delivery of the care and service has been at a very high standard, and, you know, we like how we're positioned today.
One of your, you know, criteria is the right operator. You know, how do you kind of evaluate which operators to partner with? You mentioned 70% of your acquisitions are with existing operators. When you bring on those 30% that might be with a new operator, what are you looking at in terms of performance to go forward with that relationship?
Just one clarification. The 70% are technically existing, but they're repeat deals with operators, and some of those were new the first time, like in 2024.
Mm-hmm.
We did a repeat deal with them in 2025. We have a extremely comprehensive review process of the operator that evaluates every single thing they do, from a back office standpoint, from a risk management standpoint, from a revenue management standpoint, from a technical systems standpoint. You can imagine in a fragmented sector, we're dealing with operators that are somewhat institutional, they're large scale, and we're dealing with operators that are relatively smaller, that operate, you know, 10 or so assets. All of them are delivering great care and services, but they have a different you know, capability from an institutional standpoint.
We're looking for our opportunity to make sure they can deliver great results on the ground, but that we can plug in the Ventas OI platform and help to institutionalize their approach moving forward and improve upon performance. That's what we're looking for. What will happen over time is they'll kind of move up, you know, the scale in terms of our assessment of their overall capabilities.
Great. Well, we have our rapid fire questions to end the session. What will same store and NOI growth be for senior housing overall next year in 2027?
Well, what we do know is that the secular demand from the over 80 population is strong and getting stronger as we move into 2027.
It'd be hard to put into a spreadsheet. Is it about the same as this year?
You can do it. You can do it. I have confidence in you, Nick.
More, fewer, the same number of healthcare REITs a year from now?
I'm gonna go more.
Great. Thank you very much.
Thank you so much.
Thank you very much.