Ventas, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Focus: Emphasized the 1-2-3 Strategy for senior housing, leveraging secular demand from an aging population, proprietary Ventas operational insights platform, financial strength, and industry relationships.
• 2025 Performance: Delivered strong results with normalized FFO per share up 9%, same-store SHOP cash NOI up 15% (fourth year of double-digit growth), enterprise value over $50B, raised $7B in capital, closed $2.5B in senior housing investments, owned over 83,000 SHOP units, 53% of NOI from SHOP communities, and total shareholder returns 35%.
• 2026 Guidance: Expected high single-digit growth in normalized FFO per share led by SHOP, SHOP same-store cash NOI growth 13%-17%, total company same-store cash NOI growth nearly 10%, $2.5B of senior housing investments planned, and an 8% increase in the quarterly dividend.
• Operational Insights: Utilized the Ventas OI platform, collaborated with operators, allocated capital to U.S. senior housing, maintained strong operator relationships, and executed portfolio actions like acquisitions, conversions, and CapEx projects.

Segment Performance

• Senior Housing Operations Platform (SHOP): In 2025, normalized FFO per share increased by 9%, and same-store SHOP cash net operating income grew 15% (fourth consecutive year of double-digit growth). Fourth quarter annualized SHOP NOI reached $1.3 billion. For Q4 2025, revenue grew over 8% led by occupancy growth, NOI grew 15.4% year-over-year, margin grew 180 basis points to over 28%. Full year 2025 average occupancy growth was 280 basis points, with U.S. leading at 350 basis points.
• Outpatient Medical and Research (OMAR): Fourth quarter same-store cash NOI grew nearly 4%, outpatient medical same-store NOI increased by 4.5%, occupancy in outpatient medical reached almost 91% (sixth consecutive quarter of growth). The research portfolio (8% of total NOI) same-store NOI grew 30 basis points year-over-year supported by university tenant occupancy gains.

Guidance

• 2026 normalized FFO per share is expected to range from $3.78 to $3.88, with a midpoint of $3.83, representing an 8% year-over-year growth.
• SHOP same-store cash NOI growth is projected to be in the range of 13% to 17%.
• Total company same-store cash NOI growth is expected to be nearly 10%.
• The company plans to invest $2.5 billion in senior housing in 2026.
• A quarterly dividend increase of 8% was approved.

Risks

• Competition: Increasing competition for senior housing assets as more capital flows into the sector.
• Weather and Flu Impacts: Potential impacts on occupancy and expenses due to weather and flu season.
• New Supply: Concerns about new supply in senior housing affecting market dynamics if not managed properly.

Question and Answer

Q: Jim Kammert on Brookdale rent bump and triple-net outlook A: Robert Probst on average escalators, stating more like 3% on average for escalators with the January Brookdale increase being outsized Q: Seth Bergey on acquisition guidance and competition A: Justin Hutchens on pipeline being very active, with half of $800M closed already being off-market and increased competition but Ventas' track record and operator relationships giving advantages Q: Vikram Malhotra on occupancy seasonality and dispositions A: Justin Hutchens on baking seasonality into guidance, including weather and flu impacts, and $200M assumed dispositions including underperforming senior housing and growth opportunities in Canada and other markets Q: Julien Blouin on Brookdale transitions and Ventas OI A: Justin Hutchens on Brookdale transitions having large-scale communities in strong markets, 5 new operators, CapEx planned, and Ventas OI platform helping operators improve performance Q: Michael Goldsmith on occupancy upside and cap rates A: Justin Hutchens on occupancy upside in portfolio with 86% U.S. occupancy, drifting down in cap rates, and Ventas being competitively advantaged in acquisitions Q: John Kilichowski on balance sheet and G&A A: Robert Probst on key drivers of FFO growth including expiration of noncash Brookdale amortization and higher interest expense from refinancing, and G&A growth in line with enterprise growth while investing in the platform Q: Richard Anderson on supply and affordability A: Debra Cafaro on senior population growth (28% over 5 years) outpacing new supply, and affordability as senior housing provides valuable benefits at affordable cost for baby boomers Q: Farrell Granath on pipeline and SHOP margins A: Justin Hutchens on pipeline growing to $35B, and SHOP margins expected to expand with 50% incremental margin in 2026 and higher in-house rent increases Q: Juan Sanabria on dynamic pricing and occupancy leverage A: Justin Hutchens on Ventas OI platform evolving with high operator adoption, and higher occupancy leading to better operating leverage with incremental margin expected to increase as occupancy rises Q: Michael Stroyeck on RevPOR growth A: Justin Hutchens on RevPOR growth driven by in-house rent increases (8% vs 7% prior year) and underlying move-in rent trends Q: Michael Mueller on noncash stock comp and G&A A: Robert Probst on excluding noncash stock comp for comparability, and G&A in low $150 million range in line with enterprise growth Q: Ronald Kamdem on occupancy mix and labor/CapEx A: Justin Hutchens on mix of independent living and assisted living, targeting continuum of care acquisitions, and labor costs and CapEx per unit trending with volume growth Q: Austin Wurschmidt on rent increases and move-outs A: Justin Hutchens on no unusual move-outs due to quality care and service delivery, and leading indicators showing strong performance Q: Wesley Golladay on development and participation A: Justin Hutchens on preference for acquisitions, expecting new supply to come in ultra-premium products first with rents needing to increase 20%-30% for development to pick up