Ventas, Inc. Q4 FY2024 earnings call

• 2024 Results: Ventas achieved full year normalized FFO per share above guidance, with shop same-store cash NOI growth of nearly 16% and occupancy up 300 basis points. Completed over $2 billion in accretive senior housing investments. Scale grew to $2.2 billion in annualized EBITDA, and leverage improved to enter the long-term targeted range.
• 2025 Outlook: Expect shop to represent over 50% of NOI. Normalized FFO per share growth midpoint at 7% led by shop. Increased quarterly dividend by 7%. Completed 228 community refresh projects, on pace for 50 more by key selling season. Plan to convert 45 large-scale senior housing communities to shop, projecting shop footprint increase by 8% in units and shop portfolio to account for over 50% of enterprise NOI.

In 2024, Ventas delivered full year normalized FFO per share of $3.19. Shop same-store cash NOI grew nearly 16%, with year-over-year occupancy increasing 300 basis points in same-store communities. Shop reached 43% of the company's NOI. Outpatient medical research and triple net lease portfolios had compounding growth. Ventas Investment Management (VIM) had over $5 billion in assets under management as of 2024.

• 2025 Normalized FFO per share range $3.35 to $3.46, midpoint $3.41, representing 7% year-over-year growth. Total company same-store cash NOI guidance approximates 6.75% year-over-year growth midpoint led by shop. Guidance includes ~$1 billion senior housing investments in 2025, weighted to first half. Expect continued leverage improvement and net income attributable to common stockholders midpoint $0.48 per share.

• Risks related to market conditions, including potential changes in competition and funding. Specifically, concerns about NIH funding changes affecting medical research assets, though current NIH grant recipients continue to receive full funding and research budgets are large with NIH funding being a minority portion.
• Risks associated with execution of growth strategies, such as potential challenges in the key selling season impacting shop growth projections.

Q: About medical office building occupancy declines and 2025 guidance A: Robert Probst states they did more leasing in 2024, with 15% more leasing than prior year, and have done 34% of 2025 leasing plan by mid-February, assuming occupancy gains and NOI growth Q: About senior housing demographic tailwinds and Ventas OI A: Justin Hutchens explains Ventas OI's role in hyper-local market analysis, helping with investment, disposition, and asset decisions, using data to ensure sustained growth opportunity Q: About acquisition strategy and return profile A: Justin Hutchens mentions investing in high-quality assets with yield and growth, meeting criteria of 7-8% year one NOI yield and low to mid-teens unlevered IRRs, with acquisitions accretive from start Q: About deal flow and competitive environment for acquisitions A: Justin Hutchens notes pipeline is bigger than last year, sees more competition but Ventas has competitive advantage with platform, data analytics, and operator relationships Q: About development cycle for senior housing A: Justin Hutchens states development not close, with barriers in land, material, labor costs and needed rents varying, development starts low and not a big debt financing source Q: About R&I business and NIH funding risks A: Debra Cafaro mentions research portfolio ~8% of total NOI, positive long-term prospects for biomedical research in US, with current NIH grant changes halted and recipients continuing to receive full funding Q: About capital recycling via dispositions and $200 million strategy A: Debra Cafaro states they have a strategy of disposing of skilled nursing facilities acquired earlier, with ~$150 million pending, recycling capital into senior housing investments Q: About shop guidance seasonality A: Robert Probst states they consider historical seasonal pattern in guidance, with strong start in January but reliance on key selling season Q: About shop portfolio occupancy and pricing A: Justin Hutchens says ~25% of portfolio below 80% occupied, with direct relationship between higher occupancies and higher pricing, seeing best results in 99%+ occupied communities with higher RevPAR Q: About fund business and growth A: Debra Cafaro mentions fund business successful since inauguration, continuing to grow, using it as tool to benefit institutional investors and Ventas Q: About reason for losing senior housing transactions A: Justin Hutchens says if not winning, often due to disconnect in asset value vs bid, while Ventas wins by being highest bidder, having unique opportunities, and trusted reputation Q: About labor market impact on expenses A: Justin Hutchens says expense forecast assumes current inflationary projections, labor market good with strong hiring and retention Q: About conversions and future opportunity A: Justin Hutchens says lease portfolio strong, may have some repurposing opportunities but focused on execution Q: About capital expenditures and Brookdale repositioning A: Robert Probst says CapEx increase due to more units from investments/conversions and inflation, expecting continued higher level as they buy more assets and make conversions Q: About competition and cap rates for senior housing investments A: Justin Hutchens says still finding opportunities meeting 7-8% year one yield and unlevered IRRs criteria, with ten-year rates up affecting but Ventas has access to favorable capital Q: About Santeria portfolio and MOB kick-in A: Peter Bulgarelli says EOP portfolio has 79 assets, leveraging Lillipridge playbook, with improved tenant satisfaction and occupancy in 2024 Q: About Brookdale transition impact on FFO A: Robert Probst says assets remain under triple net lease most of the year, transition impact more of 2026 story Q: About Brookdale transition and 2025 guidance confidence A: Justin Hutchens says mindful of key selling season driving growth, but much of year to play out Q: About new developments and stabilization A: Debra Cafaro says projects in Charlotte have high preleasing, with two buildings 80%+ preleased, expecting benefits from desirable tenants Q: About entry fee communities and senior housing A: Justin Hutchens says entry fee communities have opportunity, but Ventas is rental focused and sees good opportunities ahead Q: About RevPAR growth in senior housing A: Justin Hutchens explains RevPAR growth considering rent increases, move-in rents, anniversary increases, and level of care revenue, expecting improvement with demand and occupancy growth Q: About guidance and equity funding of acquisitions A: Robert Probst says expect continued improvement in net debt to EBITDA, acquisitions funded with equity, and $250 million raised under forward in guidance