Ventas Inc (VTR) — Q4 2025 Earnings Call Transcript

Thank you, Jenny. Good morning, everyone, and welcome to the Ventas fourth quarter and full year 2025 results conference call. Yesterday, we issued our fourth quarter and full year 2025 earnings release, presentation materials, and supplemental information package, which are available on the Ventas website at ir.ventasreit.com. As a reminder, remarks today may include forward-looking statements and other matters. Forward-looking statements are subject to risks and uncertainties, and a variety of topics may cause actual results to differ materially from those contemplated in such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the Ventas website. Certain non-GAAP financial measures will also be discussed on this call and for a reconciliation of these measures to the most closely comparable GAAP measures, please refer to our supplemental information package posted on the Investor Relations website. And with that, I'll turn the call over to Debra Cafaro, Chairman and CEO of Ventas.

Thank you, BJ. I want to welcome all of our shareholders and other participants to the Ventas fourth quarter and full year 2025 earnings call. 2025 was an outstanding year for Ventas. We delivered strong results from the execution of our 1-2-3 Strategy focused on senior housing, as secular demand from a large and growing aging population strengthens and supply remains constrained. We are intent on the significant value creation opportunity ahead. We plan to use our advantaged position, proprietary Ventas operational insights platform, financial strength and industry relationships to capture the unprecedented multi-year growth opportunity in senior housing while we also help individuals live longer, healthier, and happier lives. In 2025, we drove growth at scale. Our normalized FFO per share increased by 9% and our same-store SHOP cash net operating income grew 15%, our fourth consecutive year of double-digit SHOP NOI growth. Our enterprise value exceeded $50 billion, and our fourth quarter annualized NOI and SHOP NOI reached $2.5 billion and $1.3 billion, respectively. We raised $7 billion of capital from a wide array of sources at attractive prices during the year. Our investment activity also accelerated as we closed $2.5 billion of high-quality senior housing investments that enhance our enterprise growth. By year-end, we owned over 83,000 SHOP units, and 53% of our NOI was generated by our SHOP community. Our investors were rewarded in 2025 as Ventas delivered total shareholder returns of 35%, significantly outperforming our industry benchmarks by wide margins and the S&P 500 in a year when it reached record highs. The Ventas team has been outstanding in its commitment to each other and to excellence as we've worked together to deliver value and performance across our stakeholder base. We are keenly focused on the multiyear NOI growth and value creation opportunities ahead. Let's start with the durable and powerful demand trends in senior housing. This year marks a historic demographic inflection point when baby boomers start to turn 80. This cohort of nearly 70 million individuals is the wealthiest generation ever. As the baby boomers age, the over-80 population should grow 28% in the next 5 years and double in 2 decades. Today, more people than ever are choosing senior housing for the valuable benefits it provides at an affordable cost that is comparable to the cost of staying at home. Senior housing is a consumer-driven private pay business that provides important support, socialization, and safety benefits to residents. We were once again reminded of the value of senior housing during the recent winter storms when care providers across the country kept residents safe, warm, and well cared for in our communities while many seniors living alone lost power and heat. Meanwhile, the new supply of senior housing continues to hover around all-time lows. To put this in context, there were only about 2,500 new senior housing units started in the fourth quarter of 2025 while we expect over 2 million people to turn 80 in 2026. Both sides of this demand-supply imbalance are weighted strongly in our favor, and Ventas is exceedingly well positioned to capitalize on this unprecedented opportunity. With a long runway ahead, we intend to continue executing our strategic vision of; one, delivering outsized senior housing organic growth; two, making value-creating investments focused on senior housing; and three, driving cash flow throughout our portfolio. We also want to extend our trajectory of enhanced financial strength and flexibility. Ventas has built a scale platform to drive outperformance. Our experienced team, proprietary analytics tools, strong balance sheet, data capture, and industry relationships give us a competitive moat in senior housing that continues to expand. With our vision, strategy, and market positioning in place, I'll close on our 2026 operating guidance, investment activities, and dividend increase. In 2026, we expect to deliver high single-digit growth in normalized FFO per share led by SHOP. We expect SHOP to produce our fifth consecutive year of double-digit same-store cash NOI growth with occupancy, rate, and margin, all showing healthy year-over-year increases. Our total company same-store cash NOI growth should be nearly 10% in 2026. On the investment front, our team and our pipeline are extremely active. Our number one capital allocation priority remains U.S. senior housing. We've already closed over $800 million in high-quality senior housing acquisitions year-to-date, and we are highly confident we can complete $2.5 billion of investments focused on senior housing this year. We intend to remain aggressive in expanding our senior housing business through investment activity that provides attractive risk-adjusted returns and enhances our enterprise growth rate. Finally, I'm pleased to share that our Board of Directors has approved an 8% increase in our quarterly dividend on the strength of our performance and positive multi-year outlook. Earnings and dividend growth are important components of the Ventas investment thesis. The whole Ventas team is aligned and focused on continued outperformance at scale, and we're in it to win it. With that, I'm happy to turn the call over to Justin.

Thank you, Debbie. I'm pleased to share the results of a successful 2025 with both organic and external growth in our senior housing business. I'll start with SHOP. We had a really strong fourth quarter in our SHOP same-store portfolio. Revenue grew over 8%, led by occupancy growth of 300 basis points year-over-year and 100 basis points sequentially, demonstrating strong demand and sales execution. The occupancy growth was led by the U.S. at 370 basis points, with a particularly strong contribution from our independent living communities. Furthermore, our communities in the U.S. top 99 markets outperformed NIC by 160 basis points. RevPOR grew 4.7%, even with the mix impact of the outsized occupancy growth in our lower-priced independent living portfolio. NOI grew 15.4% year-over-year in the fourth quarter, led by the U.S. with 18%. Margin grew 180 basis points to over 28%, driven by 50% incremental margin. A quick note, as I reflect on the full year, I'm particularly proud about the occupancy. We achieved a better-than-expected 280 basis points of average occupancy growth across the portfolio led by the U.S. with 350 basis points. Once again, we saw broad-based contributions to SHOP performance across our operating partners, such as Sunrise, Atria, Discovery, Sinceri, Senior Lifestyle and the Groupe Maurice, who continue to deliver exceptional care and services to our senior population and very strong financial results. Looking ahead, we see significant opportunities for growth across multiple areas. We have spent the past several years taking numerous actions to ensure we are ready to meet this moment of accelerating demand in senior housing. We are positioned for continued organic growth and occupancy rate and operating leverage across the SHOP portfolio. Our U.S. portfolio is well positioned for a long runway of growth at only 86% occupancy. We expect contributions to growth across the portfolio and particularly growth drivers will include our new high-quality, high-performing acquisitions, the 45 communities that were transitioned from the triple-net lease with Brookdale to SHOP and our evolving Ventas OI execution in collaboration with our operators across the broader portfolio. With this backdrop, I'm pleased to give our 2026 guidance for SHOP. We expect the same-store NOI growth range of 13% to 17%, driven by occupancy growth of 270 basis points year-over-year and RevPOR growth of 5% supported by in-house rent increase assumptions of 8%, which are stronger than in the past couple of years. Operating expenses are expected to grow 5% again this year as we continue to add occupancy. I'd note that we've included modestly higher expenses in the first quarter, reflecting the recent severe weather across the U.S. With these components and the positive operating leverage, we expect that margin will continue to expand in 2026. Summarizing guidance, we are looking forward to our fifth year in a row of double-digit SHOP NOI growth with 15% at the midpoint. I'll give a quick update regarding the 45 transitions of former Brookdale communities. They have fully converted to SHOP and are now operated by 5 experienced transition partners, whose senior leadership teams are highly engaged. Capital refresh projects are underway with most expected to be completed ahead of the key selling season. While still early, we anticipate modest NOI growth in 2026 and remain confident in the long-term opportunity to double NOI across this group of communities. At the core of what we do is delivering a high-quality living experience for our residents. Our communities support safety, connection and independence, while providing the amenities, professional care and services that enhance daily life, creating peace of mind for the families of residents that experience is delivered at a compelling value proposition. On average, residents can afford to live in our communities almost 7 times longer than the typical length of stay. The quality of care and services we provide is reflected in strong resident outcomes across our portfolio. For instance, at Atria Senior Living, we've seen a third consecutive year of improvement in Net Promoter Scores signaling growing advocacy among residents and their families and continued outperformance versus industry benchmarks. Le Groupe Maurice has also been recognized for the sixth consecutive year as the leading senior housing brand in Quebec based on an independent survey evaluating safety, building quality, programming, service levels and the quality of staff. More than 70% of Sunrise's communities are in the best senior living rating by U.S. News & World Report, further validating their strong customer engagement and ability to deliver a differentiated experience for residents and families. Furthermore, Discovery Senior Living achieved a #1 JD Power customer satisfaction ranking, validating their ability to integrate communities, improve performance and sustain resident experience. It's no wonder there is increasing demand for senior housing. Today, we partner with 43 operators across our SHOP portfolio, providing meaningful coverage across the senior housing continuum of care, diverse geographies, and a wide range of price points. Importantly, as more operators and communities are integrated into the platform, our data and analytics capabilities become increasingly powerful, reinforcing the network effects that drive performance and widening our competitive moat relative to other owners of senior housing. Our ability to manage senior housing at scale is a core competitive advantage. Our differentiated platform allows us to support a broad range of operators, enabling us to match the right operator with each community in each market and capture incremental growth opportunities. Ventas OI execution is at an all-time high. In 2025, we significantly deepened our collaboration with operators through site visits, senior management meetings, operator summits, and active asset management. This engagement enables us to work shoulder to shoulder with our operators on key priorities such as NOI driving CapEx, dynamic pricing, sales execution, and rigorous benchmarking across key operating metrics, all in support of our relentless pursuit of creating environments where seniors thrive and investments flourish. We plan to further elevate this engagement as we meaningfully expand the capabilities of our senior housing team and enhance our interdisciplinary approach to supporting and growing our network of high-performing operators. Furthermore, the Ventas OI platform is also technology agnostic, meaning operators can plug into Ventas OI from a wide variety of operating systems contributing to our ability to scale. Now turning to investments. We concluded 2025 with $2.5 billion of senior housing acquisitions. We really like what we've been buying. Our senior housing investments are squarely within our right market, right asset, right operator framework. Improved Ventas' overall SHOP portfolio quality are poised for outperformance due to favorable supply and demand dynamics and increase the company's enterprise growth rate. In the aggregate, these investments have already created significant value based on the strong operating performance achieved under our ownership that is in line with our expectations. 2026 is off to a strong start with over $800 million of wholly owned senior housing investments across 7 transactions closed already this year. This brings our cumulative senior housing acquisitions to $4.8 billion in a little over a year. For the full year of 2026, we're providing guidance of $2.5 billion of investments focused on senior housing and we have high confidence in achieving this amount given the momentum we continue to see in our pipeline. While competition for senior housing assets has increased as additional capital flows into the sector, Ventas is uniquely positioned to deploy capital where we have strong conviction and where we can fully leverage our differentiated competitive advantages, our scale, relationships, and operating expertise allow us to aggressively pursue opportunities where we believe we are best positioned to create value. We are seeing a broader and more diverse set of potential transactions in the market across a range of investment profiles. We seek senior housing investments that combine durable in-place cash flow and growth with the potential to generate attractive risk-adjusted returns consistent with our low double-digit to mid-teens unlevered IRR targets. Our relationship-driven approach to sourcing, structuring, and executing transactions, combined with the continually expanding network of high-quality operator relationships continues to provide Ventas with differentiated access and the ability to win compelling opportunities. Ventas remains a senior housing partner of choice for operators seeking the benefits of Ventas OI in the scale, capital, and operating support of our platform. Since 2024, over 70% of our transactions have been with pre-existing operator relationships. Sellers are equally focused on repeat business, reflecting our consistent execution and reliability of the counterparty, which in turn creates incremental opportunities for follow-on investments. Over the past year, more than 50% of our transactions were with repeat sellers. In closing, we are looking forward to an exciting 2026 as we continue to drive organic and external growth in our senior housing business. Now I'll hand the call to Bob.

Thank you, Justin. I'll share highlights of our fourth quarter and full year 2025 performance, our recent capital raising activities and we'll close with our 2026 outlook. We finished 2025 strong with 10% year-over-year growth in normalized FFO per share in the fourth quarter. This increase was driven by same-store property growth of 8%, led by SHOP, which increased 15%. Our Outpatient Medical and Research, or OMAR, business grew same-store cash NOI by nearly 4% year-over-year in the fourth quarter. Outpatient medical same-store NOI increased by 4.5%. Occupancy in outpatient medical reached almost 91% in the fourth quarter, the sixth consecutive quarter of year-over-year occupancy growth. Our outpatient medical in-house property management teams have delivered 6 straight quarters of TTM retention exceeding 85% and very strong tenant satisfaction. Meanwhile, our research portfolio, which represents 8% of total NOI grew same-store NOI by 30 basis points year-over-year supported by occupancy gains from university tenants. Looking at our full year results. We delivered normalized FFO of $3.48 per share, a 9% year-over-year increase and at the high end of our guidance range. This growth was achieved through solid execution of our 1-2-3 Strategy, led by SHOP organic NOI growth and $2.5 billion of accretive senior housing investments. Strong organic growth in equity funded investments also worked together to improve our leverage to 5.2x in the fourth quarter, the best it's been since 2012. Since the beginning of 2025, we demonstrated our advantaged access to multiple pools of capital. We raised over $7 billion since the start of last year, including nearly $4 billion in bank, bonds, and mortgage debt and $3.2 billion of equity issuance. We have $12 billion of unsettled equity to fund future investments. I'd highlight that our leverage pro forma for the unsettled equity is approaching 5x, and our growth outlook in 2026 suggests the trend of lower leverage is expected to continue. Let's conclude with our full year 2026 growth outlook. For 2026, we expect net income of $0.57 per share at the midpoint. We expect 2026 normalized FFO per share to range from $3.78 to $3.88 or $3.83 at the midpoint. This guidance midpoint represents 8% year-over-year growth on a comparable basis. The building blocks of our guidance are similar to 2025 and are driven by our strategy. The 8% growth in normalized FFO per share or $0.27 per share is expected to be led by SHOP NOI growth and accretive investment activity. Netted against offsets, including the expiration of non-cash rental income from Brookdale and higher net interest expense from refinancing maturing debt. Our total company same-store cash NOI guidance midpoint increase of nearly 10% year-over-year is led by SHOP at 50%. Our OMAR same-store guidance midpoint of 2.5% is consistent with our growth in 2025 and is led by growth in outpatient medical. Triple-net is expected to grow over 4%, led by cash rent increases in January for Brookdale in our triple-net senior housing business. I'd note that beginning in 2026 and as reflected in guidance, our normalized FFO will exclude noncash stock-based compensation expense, which had a $0.08 per share impact in both 2025 and 2026 as adjusted, it has no effect on our year-over-year growth rate. Our guidance also includes equity-funded investments of $2.5 billion focused on senior housing. G&A growth in 2026 on a cash basis is generally in line with the growth of our enterprise, or in the low $150 million range in 2026. We are investing in our organization in support of the company's increased asset base and expanding asset management initiatives. A more fulsome discussion of our guidance assumptions can be found in our Q4 supplemental and earnings presentation posted to our website. To close, we are extremely pleased with our 2025 performance. The entire Ventas team is determined to continue to deliver outperformance at scale and superior performance for our shareholders. With that, I'll turn the call back to the operator.

Bob, to wrap up your comment, regarding the Brookdale reset on the triple net side, the 4% is due to the rent increase. However, moving forward, it seems to revert to a growth rate of about 1% to 1.5%. Would you consider that a reasonable expectation for the overall triple-net sector?

Yes, Jim, I would say more like 3% on average for escalators. Obviously, the January Brookdale increase is outsized, but that would be a run rate assumption outside of that.

Okay. That's great. And then another housekeeping. In the guidance, obviously, you have the quest to continue to gradually deleverage. And with the 503 million or so expected average shares for '26, what does that imply for the year-end count, sort of like a 27.5 million kind of net incremental shares for the year? Is that in the ballpark? Or where will we end the year, I guess, if you're providing that share count?

We haven't given a year ending. Maybe we'll do that later in the year. It depends a lot on timing. But what we have assumed is the $2.5 billion of investments are principally funded with equity, $1.2 billion of which is already in the bank. So when you look at the year-over-year increase in shares, it is that. It is a function of the investments equity funded. So 503 million is the number for the year.

Fair enough. And so you're not going to try to get like above that, in other words, about 2.5 I got you're saying. I appreciate that.

It's Nick Joseph here with Seth. So just on the acquisition guidance of $2.5 billion, obviously, you're off to a good start. I think you're almost 1/3 or probably over 1/3 of the way there already. I think you mentioned high confidence in being able to hit that, but also that competition has increased. So just hoping you could kind of talk about what you're seeing in the market today. Is it more portfolios? And what would drive you below that $2.5 billion just given the pace you're already on?

It's Justin. Well, first of all, our pipeline is very active and has been. We described the investment activity we've had as having momentum, and we've really been pressing our advantages to execute on our pipeline and the opportunities that are a good fit for us. When it comes to the type of deals we do, we do a number of off-market deals. For instance, the $800 million that we've closed already, half of that was off market. When it comes to marketed deals, there is increased competition. And what we're finding is where we have our advantages, first of all, the track record of closing, which has caused repeat sellers to opportunities with us. Our operator relationships that have become really deep and strong and expanding those relationships and adding more operator relationships to the platform. There's plenty of activity as well overall in the U.S., and we're getting more than our fair share of that and like our opportunity to continue to do that.

And then just, I guess, unrelated, obviously, it's been a more disruptive flu season nationally, but it seems like occupancy is holding up well. What are you hearing from, I guess, your facilities or your operators on the flu season? And I guess, how have mitigation efforts changed post-COVID?

Yes, that's an important question. There have been national headlines about a flu season that was elevated at one point. We're not finished with the winter season yet, so we will see how that develops. Regarding our portfolio, several changes have improved infection control since the pandemic era. For instance, we are using more protective equipment, such as masks, and we are isolating individuals. The general public is now better at staying away when they are infected and washing their hands. Consequently, there is a greater awareness of infections in our communities, and the management of that situation has improved significantly. That said, we are currently experiencing minimal impacts from the flu. It has been mild, with very few reports of any outbreaks at this time.

So just maybe on occupancy in the SHOP portfolio. You talked about sort of the weather impacting expense a little bit. Just can you walk us through a couple of things? Like how are you baking seasonality into the first and the fourth quarters? And does weather impact either occupancy or flu impacts, et cetera? What are you baking in as you go through the year for your occupancy guide?

Yes. In our guidance of 270, we've taken seasonality into account, which includes typical seasonal effects such as weather and flu-related issues. As you know, seasonality implies that we generally experience higher move-out activity and slightly lower move-in activity during the winter months, around the year's end and beginning. Conversely, the key selling season from May to September usually sees a significant increase in move-in activity while move-out activity tends to be lower. This period represents a major opportunity for us each year, and we aim to excel during it and achieve the 270 target. The comment I made earlier was specifically about expenses. Due to recent severe weather, we've factored in related expenses for the first quarter, which are also included in our full-year guidance.

Okay. Great. And then just obviously, the acquisition pipeline is very strong. I wanted to talk about dispositions potentially in senior housing, whether it's into your fund or elsewhere, like Canada, for example, now 97% occupancy. In the U.S., you have another bucket that's sort of underperforming, I guess, their Tier 3 markets. But maybe you can expand upon the future growth opportunities in both those buckets and whether anything there could be disposition candidates?

Yes, there's a lot to discuss. First, we will always engage in some level of pruning within our portfolio, and we're assuming around $200 million for that. This includes some underperforming senior housing. There will always be a segment of the portfolio that doesn't meet our long-term expectations, which creates opportunities for disposition. Regarding Canada, it's worth noting that we have a very high-quality, high-performing portfolio there, but it does not grow as rapidly as in the U.S. and is also much smaller. A few years ago, it comprised 30% of our SHOP portfolio, but now it's down to about 16%. This shift is due to the strong organic and external growth we're experiencing in the U.S., making Canada's footprint smaller. As for the other markets, if you check Page 11 of the supplemental materials, you'll see that we offer more mid-market products, primarily in independent living along with some assisted living. Many of these communities have benefited from our initiatives, such as refreshing the properties and placing new operators, which has created growth opportunities. They are located in strong markets with good net absorption, and our strategic actions have positively impacted this category, which currently has relatively low occupancy. We are optimistic about growth opportunities in this area.

Maybe, Justin, on the Brookdale transitions, can you give us a look under the hood, sort of what are the lowest sort of easiest hanging fruit that can help drive that immediate growth and improvement in 2026 you mentioned? And then maybe tying that to Ventas OI, how does that platform help your operators improve the performance of the newly transitioned assets?

Yes, great question. We had several triple-net to SHOP conversions last year, primarily involving the former Brookdale communities that transitioned to SHOP. These communities offer numerous advantages, including large scale and locations in markets with strong net absorption. We have five new operators on board, all of whom have experience with transitions. We have capital expenditures planned, and most of the communities will have completed their refreshes by the key selling season. This is one of our significant early initiatives. We anticipate performance will improve over time, with some modest growth expected before 2026, but we truly expect to see more significant improvements starting in 2027 and beyond as we work towards doubling the NOI we’ve discussed.

Got it. That's really helpful. And then I think in the past, you've talked about how the time to turn a unit is very short given the limited wear and tear in senior housing and in your portfolio. But I was wondering if you had any thoughts about the time it takes to secure a new resident to replace an outgoing one and sort of how that might have changed in the last 12 to 24 months, and sort of how waitlist lengths sort of play into that? Have they sort of grown over the last 12 to 24 months as supply has subsided?

Has what grown? I didn't hear that last part.

The length of waitlist?

Yes. The sales cycle in assisted living is typically very short. Often, within 60 days of receiving a lead, we expect a decision to be made, whether it be with us or another option. Some decisions are made even faster, sometimes in just a few days. In contrast, the sales cycle for independent living can be much longer since it’s more of a discretionary choice. The main driver of demand isn’t as much about the length of the sales cycle but rather the growing senior population that is utilizing our services. Our sales execution has been excellent, allowing us to outperform our markets consistently for many quarters and years. This success is attributed to our investments in our portfolio, the operators we've chosen, and the OI platform we've implemented to ensure solid performance. We are optimistic about our prospects as we move into the next phase where demand will be even stronger, putting us in a great position to continue increasing occupancy.

This is Sam speaking on behalf of Tayo. Many of my questions have already been addressed, so I'll ask this one. How should we consider the pacing of deals for the rest of the year?

From a modeling perspective, this is Bob. I would assume over the course of the year sort of ratably would be a good modeling assumption.

Thank you.

On the assets that you're acquiring, I assume they're coming in at kind of like low 90% occupancy. How much more occupancy upside is possible there? I know you mentioned you have SHOP properties that are 100% occupied and you're underwriting or use. What are you assuming on the occupancy upside?

Yes. First of all, we have various types of senior housing profiles in our pipeline. This includes some value-add opportunities and high-quality options that currently have lower occupancy, which we've managed to find. We anticipate even greater occupancy potential once we close those investment opportunities. Our preference has been for high-performing stabilized properties. If a property is at 90% occupancy, there’s still 10% left to capture. With markets expected to reach full occupancy over the next few years, that’s a reasonable expectation. We will focus on the significant occupancy potential we have, as we are currently 86% occupied in the U.S. This improvement has been primarily achieved by transitioning our triple-net communities to SHOP and acquiring these high-quality newer communities. We are very pleased with our portfolio positioning and the opportunity to increase occupancy.

Got it. We touched on this a bit, but I'd like to ask more specifically about competition. You mentioned that some of the blended cap rates of your acquisitions at the start of the year were below 7%. Historically, these rates have typically been in the 7% to 8% range. Should we anticipate that you will remain in the sub-7% range for the rest of the year, or are you seeing a shift to somewhere between 6.5% to 7.5% instead of the historical 7% to 8%? I'm trying to understand where the market is heading.

It’s not surprising that there is significant interest in this asset class due to its quality. This has certainly led to increased competition. However, it hasn’t impacted us adversely, given our strong positioning. We are observing a decline in cap rates, as indicated by our reported rate being under 7%. As we close more deals, we will share our expectations moving forward.

As Justin mentioned, we have a significant competitive advantage in acquiring senior housing.

Good luck in 2026.

Thank you.

I just wanted to build off of the seniors housing valuation question. I mean, obviously, private market valuations have improved. I mean how difficult is it to buy assets under or at replacement cost today? I mean, is there an idea of like how big of the discount is today versus it was maybe 1 to 2 years ago?

It depends on what you're purchasing. We've been consistently buying below replacement cost. Some properties have been closer to replacement cost, typically depending on their age. We have acquired some high-quality, newer communities that are priced closer to replacement costs, while others remain significantly below. We aim to maintain our investment criteria at or below these levels, and we've successfully achieved that consistently.

Rents would still need to grow significantly to justify new construction.

Okay. Great. And then just on the pipeline that you have today, I mean, I know that you have a $2.5 billion target for the year. You already completed about $840 million. I also know how conservative Ventas is with putting investments within their guidance ranges. So of the $1.7 billion unidentified deals, I mean, should we assume that there's a pretty good horizon or line of sight on completing those specific deals?

So we're describing it as high confidence. So you can interpret that. Yes, and the pipeline keeps growing as well.

My first question is around the balance sheet and G&A really. When I look at what you gave in terms of same-store and the acquisition number, they are both great numbers and maybe the FFO was slightly below where we would have expected. And I think part of that was some higher interest expense and maybe some G&A that we're not thinking about. Could you walk us through the building blocks there and the assumptions, maybe there's some conservatism because you've already prefunded, I believe, $500 million, but maybe there's more there that we're not considering.

Sure. Let me unpack a little bit. So there are 2 key drivers as you look at the year-over-year growth of 8% outside of the tremendous growth in SHOP and external growth. And that is, first and foremost, the expiration of the noncash Brookdale amortization we disclosed that ad nauseam. That's $0.04 year-over-year. And so that's one item to note. The second is refinancing maturing debt. We do have $2.2 billion of debt to mature this year. That's higher than the last couple of years. And obviously, there's a refinancing increase relative to debt on the books. Those 2 alone explain the difference between 8% and 10%. I mentioned in my prepared remarks, G&A. We are investing in the enterprise. As you would expect us to do, we're growing scale in senior housing. We're investing behind the platform. Meanwhile, we are very, very focused on efficiency and effectiveness at the same time. But believe that we've got the right balance there. But we do have growth in our G&A in the guide as well.

Got it. That's very helpful. And then my next one is on the 15% same-store guide. What does this imply in terms of U.S. growth? And then just overall, how much of this is just you capturing the opportunity in front of you? And how much can you attribute this to like what you talked about in your opening remarks with Ventas OI?

We're not providing separate figures for the U.S. and Canada, but the U.S. showed an 18% growth in 2025, indicating significant growth potential in the market. We are pleased with how our portfolio is positioned; it is well invested, and we have the right operators in place. We consistently take actions to drive growth. In 2025, we added 12 new operators to our platform, which is designed to integrate them effectively and support their daily operations. We undertook 88 redevelopment projects to enhance our competitive stance and transitioned 26 communities to new SHOP operators. Additionally, we converted 74 properties from triple-net to SHOP to capitalize on lower occupancy opportunities and long-term growth potential. We regularly make portfolio adjustments while also focusing on operational enhancements, which showcases the strength of our platform. Our operators manage the daily business, and we provide robust support to identify improvement opportunities across various areas like sales and pricing. We will continue to leverage this advantage and execute effectively in 2026.

So allow me to be pain in the you know what with my 2 questions. First, on supply. I guess, Debbie, you said rents need to grow significantly to justify new construction. Well, they are growing significantly, as you guys have pointed out. And I'm wondering how supply doesn't become a relatively near-term concern just around the narrative. We've seen it happen in industrial and data centers and multifamily when that was growing at 20%. So to what degree are you sort of preparing for that and because the senior housing was oversupplied before the pandemic as some of us remember. So I'm just curious, I know it's great now, but what's the strategy over the next 5 years to keep sort of that reality in line of sight?

Thank you, Rich. The opportunity for multiyear NOI growth is extensive, primarily driven by the significant increase in the over 80 population, which constitutes our customer base. Currently, the number of starts is around 2,000 per quarter. By 2026, over 2 million people will be turning 80, and this trend is set to continue. We are aware that development costs are high, including labor and materials, and there is approximately a three-year cycle involved. Our projections indicate that even if new development begins, there will be a notable surge in demand in the next three to five years. This demand is expected to exceed any additional new supply. Our perspective is that the senior population growth, which previously saw flat to low single-digit increases, is anticipated to reach 28% over the next five years. Therefore, we believe the best opportunities are still ahead.

That's a good insight. My second question relates to the affordability comment. I recall someone mentioning that individuals could afford to stay seven times longer than the average duration, which is an interesting statistic. However, I believe it's affordable only for those who can actually pay for it, and I must point out that a significant portion of seniors likely cannot afford this product. I'm unsure about the penetration rates or the method of calculating them, but I suspect they're quite low. I am curious if you've considered developing a more affordable product to reach a wider segment of seniors who could use it. I know some other companies are already exploring this approach, so I'm interested to know if you're adjusting your strategy to cater to the majority of seniors who, in my opinion, are unable to afford this product.

Rich, Debbie here. So yes, Justin did quote, and I talked about the fact that our industry provides a very important valuable benefit to seniors and their families in our communities at an affordable cost. And we have a page in the deck that's actually very illuminating on this Page 16. And I also mentioned that baby boomers who are starting to turn 80 are the wealthiest generation ever, and they control about half the country's wealth. And what's really important is, as Justin said, our residents can afford senior housing almost 7 times what it actually costs for them to live there. And more importantly, it's effectively a replacement expense for what seniors are paying to live in their homes alone and get any kind of modicum of in-home care similar to what's provided in the senior living communities. And on top of that, the seniors aren't alone, they're getting the socialization and safety and support of a communal setting. So we really do believe that the product provides valuable benefits. Anyone who's ever used it in their families is understands that and that it truly is an affordable cost to this generation that will be the resident base and is starting to become the resident base starting in 2026.

Can I give you my mother's phone number so you can call her and tell her that.

We do it all the time. We get calls all the time because it's a very needed benefit that we provide in our business.

This is Farrell Granath. My first question is around your pipeline. I know you've added some additional color and a lot of questions about it. But just when thinking about entering into '26, is there a quantifiable difference between what your pipeline is today versus what it was 1 year ago for '25?

We shared that our pipeline in U.S. senior housing is $35 billion, which includes some deals closed last year, some already completed this year, and others still in our high confidence category that we mentioned earlier. I would say the pipeline is expanding and becoming larger. We are noticing an increase in midsized deals and ongoing business flow. Therefore, there are definitely more opportunities available compared to a year ago.

Okay. And then also when looking at your same-store SHOP occupancy, you've now reached around that 90% threshold, and your margins are around 28% or mid-28s. I'm just curious about now that you're stepping into a higher RevPOR growth and also layering in Ventas OI, where can we potentially see this margin number move? Are you seeing additional revenue growth or margin expansion from the layering of the Ventas OI?

We had a 50% incremental margin in the fourth quarter. For our 2026 guidance, we anticipate that the margin will be in the 50s, indicating further margin expansion opportunities. This year, rent increases were 8%, up from 7% last year, and we are observing a positive trend in move-in rents as well. This suggests strong support for better pricing in the future, which aligns with the supply-demand dynamics that Debbie discussed, as well as the increase in occupancy across more communities.

All right. Justin, you mentioned dynamic pricing in the context of Ventas OI. So just curious if you can give us a sense of where you are in the process and the ultimate goal on how you expect and hope to price these units over time?

Yes, we've been working on everything related to Ventas OI since 2022, and it’s an evolving platform. The capabilities are improving, becoming more technically proficient, and importantly, much better at executing in the field. This has been a significant factor in 2025, and we anticipate expanding on it in 2026. To effectively deploy Ventas OI, we need strong adoption from our operators, who are highly engaged with us. I am very pleased with their willingness to collaborate and execute moving forward. I would describe this as early stages since it's an ongoing evolution, aiming to enhance both dynamic pricing and execution across the entire platform. As Bob mentioned, we are allocating more resources to this effort, and we will continue to improve in the future.

And just a quick follow-up to Farrell's question. On the flow-through margins kind of can you remind us how those should trend as you get higher and higher in occupancy? I think 90% is like a critical number where you don't necessarily have to add really any incremental headcount from a labor perspective. So if you could just remind us on how that may or should change as occupancy continues to grind higher.

It improves as occupancy increases because of operating leverage. By 2026, with occupancy hovering in the low 90s percent range, we anticipate incremental margins in the 50s. As we approach 100%, we generally expect higher incremental margins, typically around 70%. This high operating leverage is one of the most significant advantages of senior housing, and we believe we will gain from it in the coming years.

Good luck to the rest of the year.

Thanks, Juan.

One question on the acceleration in RevPOR growth expected in '26. Is this a function of assets that were already seeing good growth growing even quicker or more properties that were laggard starting to catch up? Any color on where that step-up in growth is coming from would be helpful.

Yes, it's really broad-based, and one of the biggest drivers is in-house rent increases, which are around 8% compared to about 7% last year, giving a significant boost to RevPOR. We often use a simple rule of thumb that RevPOR is about two-thirds of the in-house rent increase, which brings it just under 5%. Additionally, we're seeing solid underlying trends in move-in rents. Honestly, it feels like we're just at the beginning with this, and we are pleased with the results. As we move into this strong demand environment, we look forward to even better performance in this area.

Yes. This is Bob. Looking at '25 is a perfect analogy, I would say, as we think about '26. So in '25, overall, OMAR delivered same-store 2.5%. Within that, the MOBs were over 3 modest decline in research given the backdrop there. That's a pretty good example of what we think is going to happen and continue on in '26, very, very similar. We kept the midpoint the same. So led by outperformance in outpatient medical and hanging in there on the research business.

Bob, can you give us more color on the decision to exclude noncash stock comp going forward from NFFO? And then what's embedded in the guide for G&A expense this year?

Sure. So first and foremost, just to be very crystal clear, it's $0.08 of noncash stock-based compensation expense in both '25 and '26. We want to make sure everyone understands that we've modeled that in terms of our growth rate on a like-for-like basis. Why are we doing that to your question? We think that's getting to where the market is in terms of health care REITs and therefore, making it more comparable for you, the investor, as you look at our earnings. So that's the reason. In terms of G&A, I mentioned in my prepared remarks, we are investing in the platform. We are growing the platform. Low $150 million range on the cash G&A, and that's on a growth rate in line with our enterprise growth rate is the expectation.

Just 2 quick ones. I couldn't help but notice the occupancy delta between the IL and AL product. I guess just wondering, is that all acuity driven? And strategically, do you have a preference? Or is there an optimal mix as you're buying new assets versus IL and AL?

Yes, sure. So we did have some outperformance in our independent living portfolio. We'll expect that to continue to some degree in '26. I mean, we're performing really well across both independent living and assisted living. But that's been an area of strength in terms of occupancy growth, and we'll continue to press on that. We're about half and half by units, independent living and assisted living. And when we target acquisitions, we do like a mix. We do like that continuum of care offering, not exclusively, but when we see it, we definitely give a higher priority because it offers independent living, assisted, and memory care together or at least 2 of those 3 together, which just can attract a broader audience in terms of demand and also service offering.

Justin, just going back to the 8% in-house rent increase, have you seen any increase in move-outs as a result of the higher increase this year? And then could you just speak a little more broadly to some of those leading indicators?

Yes, absolutely. First and foremost, the quality of care and service delivery is essential. In my prepared remarks, I noted how gratifying it was to mention some of the significant industry recognition our operators have received in this area. This is what truly matters. We are providing excellent services, and we have built trust with residents and their families. As a result, our value proposition is well acknowledged by our customers, and we are not experiencing any unusual trends in financially driven move-outs.