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Thank you for standing by. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ventas Fourth Quarter 2025 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to BJ Grant, Senior Vice President of Investor Relations. You may begin.
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 #1 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 the 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 7x 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 noncash 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 $0.08 per share impact in both '25 and '26 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.
[Operator Instructions] And your first question comes from Jim Kammert with Evercore.
Bob, just finishing up on your comment there. On the Brookdale sort of reset on the triple net side, obviously, 4% is because of the rent bump. But prospectively, that's kind of -- it goes back to a 1% to 1.5% kind of business. Is that a reasonable assumption for the triple-net as a whole?
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 investment's 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.
Your next question comes from the line of Seth Bergey with Citigroup.
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. And -- that's a really good question. There has been national headlines around a flu season that was elevated at a point in time. We're not all the way through the winter season, so we'll see how that plays out.
In terms of our portfolio, there are a number of things that have changed that -- since the pandemic era that have improved infection control. One is simply that we're using more protective equipment such as masks. There's -- we're isolating. The general public is better at just staying away if they have infection, washing their hands.
There's a -- so therefore, I'd say, a heightened awareness around any kind of infection in our communities and the management of that is much better than it was at one point in time. Having said that, we're also experiencing minimal flu impacts. It's been very mild and very few reports of any kind of outbreak whatsoever at this stage.
Your next question comes from the line of Vikram Malhotra with Mizuho.
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. So in the 270, we've assumed seasonality. And that would include just normal seasonal impacts, and that could be weather, it could be flu related. That's in the guidance.
And I think you know how the seasonality works. Obviously, we'll have more -- usually more move-out activity, a little less move-in activity in the winter season, and that's the end of the year and the beginning of the year. And then the key selling season, May to September, is where we have outsized move-in activity and generally lower move-out activity. So that's the big opportunity every year, and we look forward to performing well within that and delivering the 270. That's the assumption.
The comment I made on the call was really referring to expenses. There was obviously some recent severe weather, and we've incorporated expenses related to that in the first quarter, which is also obviously baked into the 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. So there's a lot in there. I'll mention -- so first of all, we're always going to have some amount of pruning that we'll do within the portfolio, and there's a $200 million that's assumed. That would include some senior housing underperforming.
We still have -- there's always a bottom part of the portfolio that doesn't have the long-term potential that we like to see it have. So that creates disposition opportunities. In terms of Canada, one thing that's interesting about that, it's a very high-quality, high-performing portfolio. It doesn't grow as much as the U.S.
It's also much smaller. It was 30% of our SHOP portfolio just a few years ago. It's down to around 16% today. And that's because the U.S. is growing in every way organically and externally.
And so Canada has become kind of a smaller footprint. You mentioned the other markets. And what -- if you look at Page 11 of the sub, people that are following along. In the other markets, we have more of a mid-market product, and that is mostly independent living.
We also have assisted living. And a lot of those communities have benefited from our plans in terms of refresh, putting new operators in place and offer a growth opportunity. They're in good markets with strong net absorption and a lot of the actions that we've directed towards the portfolio have benefited that category, and it has relatively low occupancy. So we'll look forward to growth opportunity there.
Congrats on the strong results.
Thank you.
Your next question comes from the line of Julien Blouin with Goldman Sachs.
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. And we had a number of triple-net to SHOP conversions last year. The biggest part of that was the former Brookdale communities that were in the lease that moved to SHOP.
Those communities are -- have a lot of advantages. They're large scale. They're in markets that have strong net absorption. We have 5 new operators in place.
All of those operators have experienced transitioning. We have CapEx planned. A majority of them will have had their refreshes done by the key selling season. I'd say that's one of the biggest actions we're taking early.
And then we expect the performance to be good over time. It's not really a 2026 story per se, at least some modest growth there, but '27 and beyond is where we really expect to see ramped up performance and go after that doubling of the NOI that we've talked about.
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. So the sales cycle, it tends to be really short in assisted living. We could -- sometimes inside of 60 days of getting a lead, you would expect them to make a choice, whether it's with us or with another option that they're pursuing. Some move much faster than that, way inside of 30 days, sometimes even just a matter of days in terms of the sales cycle.
Independent living could be much longer. It's more of a discretionary choice. And we are seeing really the big demand driver isn't as much about the sales cycle as it is just the increasing senior population that's accessing our services. And then our sales execution has obviously been excellent because we've been able to outperform our markets for many, many quarters, in years in a row now.
And why is that? Well, it's because of the investment in our portfolio, the operators we selected, the OI platform that we've layered on to ensure that we have good performance. And we really like our opportunity, probably very obviously, moving into this next phase where we have even better demand. We're just really well positioned to continue to drive occupancy.
Your next question comes from the line of Omotayo Okusanya with Deutsche Bank.
This is Sam on for Tayo. A lot of my questions have been asked already, so I guess I'll throw this one out there. Do you guys have any -- I guess, can you -- how do you guys -- how should we think about the cadence of deals for the remainder 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.
I appreciate it.
Okay.
Thank you.
Your next question comes from the line of Michael Goldsmith with UBS.
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. So we -- first of all, we do have a number of different types of kind of senior housing profiles in our pipeline. And that can include some value-add opportunities, really high-quality opportunities that actually have a lower occupancy that we've managed to source. So we'll expect even more occupancy runway if and when we close those investment opportunities in our pipeline.
We've had -- our favorite has been the kind of the high-performing stabilized. If you're 90%, you have 10% to go. And when you have markets that are projected to go all the way to 100% occupancy over the next few years, that's a very reasonable expectation. So we're going to focus on -- we have a lot of occupancy upside.
We're 86% occupied in the U.S. That's been designed largely by moving our triple-net communities over to SHOP, and then we've been buying these high-quality newer communities as well. So we really like the portfolio positioning and the opportunity to grow occupancy.
Got it. And we kind of touched on this a little bit, but just maybe ask more discretely. You talked a little bit about competition. The portfolio -- some of the blended cap rates of your acquisitions to start the year were sub-7%.
So it is -- and I know historically, it's kind of been in that 7% to 8%. So like should we expect kind of being -- remaining the year in that like sub-7% range or -- and that's shifting down, let's say, 50 basis points, like 6.5% to 7.5% versus 7% to 8% maybe historically? Just trying to get a sense of where the market has moved.
Well, it's not surprising given the quality of this asset class that there's a lot of interest in it. So there certainly is more competition. Clearly, it hasn't slowed us down at all given how strongly we're positioned. There's a drifting down in cap rates. You can see it in our sub -- we reported under 7%. And I would say we'll report our expectations as we close deals moving forward.
And as Justin said, we remain -- we are highly competitively advantaged in making acquisitions in senior housing.
Good luck in 2026.
Thank you.
Your next question comes from Michael Carroll with RBC Capital Markets.
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 buying. So we've had -- we've been buying consistently under replacement cost. There's been some that have been a little closer to replacement cost, and it's really just a function of the age of the property usually. So we've had some really nice high-quality newer communities that you're buying closer to replacement costs.
We have others that are way below still. So we're looking to try to stay at or below in terms of our investment criteria, and we've been able to do that really consistently.
And rents would we still have to -- and rents would still have 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.
Your next question comes from the line of John Kilichowski with Wells Fargo.
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?
So we're not really giving U.S. and Canada separate. But clearly, U.S. was 18% in '25. It gives you a feel for the outsized growth potential that we have in the U.S. The -- we really, like I said before, we like how the portfolio is positioned. It's well invested.
We have the right operators in place. We continually take actions. You mentioned Ventas OI. I'll just give you a flavor for some things we did in '25 as a proxy for the types of actions we take.
So we added 12 operators last year. And so our platform is designed to onboard operators, bring them into the OI platform, help them to really be able to focus on the day-to-day execution. We had 88 redevs that helped to improve our competitive positioning. We had 26 communities that transitioned to new SHOP operators, and then we converted 74 from triple-net to SHOP to position ourselves with that lower occupied opportunity and long runway of growth.
And so we're always taking portfolio actions, but on top of that, we're also taking operational type actions. And this is where I think the power of the platform really comes into play. And our operators have the responsibility for running the day-to-day business. We have this powerful platform to help really highlight for them opportunities to improve, and that could be anywhere from sales, pricing and other operational benchmark improvement opportunities.
So we'll continue to kind of press that advantage and execute in '26.
Your next question comes from the line of Rich Anderson with Cantor Fitzgerald.
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?
Yes. Thanks, Rich. The multiyear NOI growth opportunity has a really long runway, and it's principally driven by demand because of the absolute explosion of the over 80 population, which is our customer base. And as I mentioned, the starts are literally in the 2,000 a quarter level right now.
There's over 2 million people turning over 80 in 2026, and that continues to grow as far as I can see. And we know that the -- the cost to develop are high, labor, materials, et cetera. We know there's about a 3-year cycle. And what we project is that even if new development starts that there is a surge, a step function in demand as you look forward in 3, 4, 5 years.
And so the demand overwhelms or should overwhelm any incremental new supply. So that's how we're looking at it. And you've referred to earlier periods. The senior population growth was very flat to low single digits.
We expect it to be 28% over the coming 5 years. So we think the best is yet to come.
Okay. That's perfectly good color. Second question is on the affordability comment. I think somebody said maybe it was Justin 7x -- they could afford to stay 7x longer than the average length of stay, which is an interesting stat.
But in my mind, it's affordable to people who can afford it if that -- it sounds silly to say, but I would argue the vast majority of seniors cannot afford this product. I don't know what the penetration rates or how you calculate that, but it's got to be at the very low end of the scale. So I'm just curious if you've given any thought to a more affordable product to sort of capture a broader range of seniors as we go through this that can afford it. I know that's being done in a way and some other companies are doing that.
I'm just wondering if you're sort of modifying your strategy to some degree to get at what is the majority of the senior population, in my opinion, that can 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 7x 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.
Your next question comes from the line of Farrell Granath with Bank of America.
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 disclosed that our pipeline in U.S. senior housing is $35 billion. And that -- some of which we closed last year, some of which is still in the pipeline. Some of it closed this year already and some of it is still in this high confidence group that we described earlier. And I would describe the pipeline as growing.
It's certainly becoming larger. We're seeing more midsized deals. We continue to see flow business as well. So yes, there's more opportunities than we had 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?
Yes. So just like really in a very focused way, I would say we had 50% incremental margin in the fourth quarter. We expect in our numbers -- our guidance number of '26 that, that will be in the 50s. So more margin expansion opportunity in '26. I mentioned the rent increases in my prepared remarks were 8% this year.
They were 7 last year. So we're starting to see higher in-house rent. We do have underlying improving trends in move-in rents as well. So there's good support for better pricing moving forward, which makes perfect sense given the supply-demand dynamic that Debbie described, and then also just having more communities that are becoming higher occupied.
Your next question comes from the line of Juan Sanabria with BMO Capital Markets.
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. I would -- I mean, we've been working on dynamic -- everything Ventas OI related, we've been working on really since 2022. And it's an evolving platform. The capabilities are improving every way. They're being more technically proficient and also really importantly, way better at executing in the field.
And I would say that's one of the areas that really helped in '25, and we look forward to really expanding and pressing upon in '26. And in order to be able to deploy Ventas OI, you have to have high adoption from our operators. And they are highly engaged with us. So I couldn't be more happy with their willingness to work with us and therefore, execute moving forward. So I would say we're -- I'll always say we're early stages because it's an evolution and the goal is to get even better at it, whether you're talking about dynamic pricing or just execution across the whole platform.
And as Bob said, we're putting more resources behind it. And so we're going to continue to just get even better at it moving forward.
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 gets better, the higher the occupancy goes because the operating leverage kicks in. Like I said, in '26 as we kind of hover around this low 90s percent, we're expecting incremental margin in the 50s. And then we would expect that over time, as we move up the ladder towards 100% higher incremental margin, usually around 70% or so, the higher you get. So we'll have -- that's really one of the most powerful aspects of senior housing is that high operating leverage, and we expect to benefit from that over the course of the next few years.
Good luck to the rest of the year.
Thanks, Juan.
Your next question comes from the line of Michael Stroyeck with Green Street.
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 -- yes, sure. And it's really just broad-based, and it's primarily driven -- one of the biggest drivers is obviously in-house rent increases and have that be around 8% versus around 7% a year ago is a big boost to RevPOR. And we always like to use a rule of simple -- really simple rule -- oversimplified rule of thumb, and that is that RevPOR is 2/3 of the in-house rent increase amount. So that puts you just under 5%.
But we're also seeing solid underlying trends in terms of move-in rents as well. So honestly, this is another category that just kind of seems like we're at the beginning here. And we're pleased with the results. But as we move ahead into this strong demand environment, we look forward to performing even better on that front.
Got it. That's helpful. And then maybe one on the outpatient research business. Does 2026 guidance assume any additional occupancy loss within the research portfolio? And do you expect that NOI has troughed in that business?
Yes. This is Bob. I'll take it. So 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.
Your next question comes from the line of Mike Mueller with JPMorgan.
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.
Your next question comes from the line of Ronald Kamdem with Morgan Stanley.
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.
Great. And then can you just spend 2 seconds on just labor costs and then maybe the CapEx -- maybe CapEx per unit even because I saw the numbers were up, but presumably there's more units. But just broad-based trends on labor costs and CapEx per unit for the product would be great.
Yes, I'll take those. So on labor costs, we're assuming effectively just on a per hour basis, kind of normal inflation. Nothing unusual there. And we are seeing, of course, significant volume growth when you look at the 5% OpEx guide, that is really a function of the volume, but that would be a good proxy for per hour on wages specifically.
On CapEx, we did give the FAD guide. That is up year-on-year from about $300 million to $400 million. You nailed it. It's led by more units, some inflation as well, but that's the driver.
Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.
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, sure. So first of all, it all starts with the quality of care and service delivery. That is paramount. And I mentioned in my prepared remarks; it was really rewarding to be able to highlight some of the -- just the industry-leading recognition we're getting in our operators that we work with in that regard.
That's what's most important. We're delivering really good services. We've established trust with residents and their families. And therefore, the value proposition is recognized by the customer.
And therefore, we're not seeing anything unusual in terms of financially driven move-outs.
That's helpful. And then I just wanted to go back with a follow-up to the noncash comp question. And wondering if going forward, should we be expecting any change to the composition of cash versus noncash comp moving forward? Because obviously, there's implications then on the year-on-year comparison for growth.
No. In '25 and '26, I mentioned both are $0.08, and I wouldn't expect going forward there to be anything unusual as it relates to the noncash piece.
Appreciate the time.
Thank you.
Your next question comes from the line of Wes Golladay with Baird.
I just have a quick question on development. I guess when do you think it would start to pick up, albeit off of a low level? And then how would Ventas like to participate? Would you like to lend develop or just wait and buy them afterwards?
Okay. Good question. So we like acquisitions. We like buying durable, well-established in-place cash flow that will grow.
That's been our priority from an investment standpoint. In terms of development, first of all, we think rents need to be 20% to 30% higher, and that's even at a relatively modest development yield. There's -- this is a tremendously well-supported business, though, in every way as we described on this earnings call. And so it's very reasonable to expect that there will be new supply.
We would also expect that the first to come to -- that you would see announced in terms of starts would be ultra-premium products. And that's a product that it is so differentiated in terms of price when they enter a market that they don't -- they're well positioned to be the price leader. So that would be the kind of the exception that you would see come early. And then -- but it's still going to take some time.
Rents need to catch up. And when they do, as Debbie mentioned, you have a 3-year runway. And when that supply opens, you're hitting this tremendous amount of demand. So we really, really like the outlook in that regard.
I will now turn the call back over to Debra Cafaro, Chairman and CEO of Ventas, for closing remarks.
Well, everyone, I do want to say we had a great year at Ventas in 2025, and we look forward to having another one this year. I want to thank you for joining today's call and for your interest in the company. We look forward to seeing you soon.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.