Thank you, Mandeep, and good morning, everyone, and welcome to the Ventas Full Year 2023 Results Conference Call. Yesterday, we issued our full year 2023 earnings release, presentation materials and supplemental investor 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 investor 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 2023 Earnings Call.

I'm pleased to share our strong results for 2023, discuss our advantaged position across commercial real estate, driven by large and growing demographic demand and introduce full year 2024 guidance as the senior housing multiyear growth opportunity continues to power our expectations. Let's start with results.

We reported favorable results for the fourth quarter and full year 2023. We produced full year normalized FFO of $2.99 per share, representing over 5% year-over-year growth, above the midpoint of the guidance range we initiated in February.

As anticipated, our results were fueled by unprecedented organic property growth in our SHOP portfolio, which grew same-store cash NOI over 18% last year. Enterprise same-store cash NOI growth was supported by compounding contributions from our outpatient medical and research and triple net lease portfolios.

We finished the year on a high note in the fourth quarter, delivering $0.76 of normalized FFO, representing 7% year-over-year growth and reporting accelerating same-store SHOP occupancy. During 2023, the Ventas team accomplished a great deal together.

We raised over $4 billion in attractively priced capital, took effective portfolio actions, invested CapEx in our assets to position our portfolio to capture demand in strong markets, made meaningful progress toward our ambitious ESG goals, successfully integrated a $1.6 billion portfolio and expanded our VIM business. As a result, we delivered over 15% 1-year total return to shareholders, posted 2 years in a row of TSR outperformance versus the health care REIT and broader REIT indices and achieved upper quartile performance for the last 3 years among health care REITs.

We still have more work to do. We are focused on driving total returns for our shareholders.

As durable demand fuels the multiyear growth opportunity in senior housing, we believe Ventas offers an attractive combination of growth and value. Let me provide a few reasons we believe we are uniquely positioned to create value.

We entered 2024 with momentum. Because our asset classes are benefiting from demographic demand that is strong and getting stronger, we are pleased to project another consecutive year of normalized FFO growth in the mid-single digits and the third consecutive year of same-store SHOP cash NOI growth in the double digits.

Notably, our projected 2024 normalized FFO growth of 5% per share puts us in the top 20% of all REITs that have issued guidance to date. In 2024, we expect to benefit from steady growth from our outpatient medical research and triple net lease portfolios.

As we look into 2025, we have 2 large lease renewals, one with Brookdale in senior housing and another with Kindred for a portion of our LTACs. In Brookdale's case, our communities are enjoying positive operating trends, and they have significant net absorption potential.

In Kindred's situation, rent coverage remains challenged, and it's too early to say what the ultimate outcome in 2025 will be. Kindred remains focused on performance improvements that could benefit 2024 and 2025 financial results.

In all cases, we are fully prepared to maximize NOI over time. In SHOP, January is already starting positively, with 200 basis points in year-over-year same-store occupancy growth.

In 2024, we expect year-over-year normalized FFO and SHOP same-store cash NOI growth to accelerate in the second half, with a SHOP NOI exit run rate that should support continued SHOP growth in 2025 and beyond. This highly positive context is supportive of growing our senior housing presence through both organic and inorganic growth.

In pursuit of delivering consistent superior performance, our strategy is to, one, continue to deliver compelling profitable organic growth in senior housing; two, capture value-creating external growth focused on senior housing; and three, drive strong execution and cash flow generation throughout our high-quality portfolio that serves a large and growing aging demographic. Our optimism for a long, durable growth opportunity in SHOP is founded on compelling supply/demand dynamics, led by a step function in growth of the over-80 population in 2024 and yet again in 2027, the lowest construction starts in senior housing since 2009 and our advantaged platform that has the team, tools, financial strength, data and operators to drive organic performance.

The Ventas platform should also enable us to invest successfully. As we discussed in November, we intend to build on our compelling organic growth opportunity by layering on value-creating external investments focused on senior housing.

There is a confluence of market factors giving us confidence that 2024 and 2025 should be rich with investment opportunities. We're already seeing our pipeline expand as high-quality senior housing communities in good markets with embedded growth come to market, and we have a line of sight to complete over $300 million of investments in the first half of this year.

Our criteria for investments include attractive going-in yields priced at below replacement costs with projected low to mid-teens unlevered IRRs that meet our right market, right asset, right operator framework. Our broader objectives are to drive enterprise NOI and normalized FFO per share growth, increase the scale of our SHOP business, deliver strong returns on capital, support stable and growing dividend capacity and maximize value for shareholders.

In sum, we delivered on our commitments in 2023, and we expect another year of normalized FFO per share and property performance growth in 2024. Our 5% projected normalized FFO growth favorably distinguishes Ventas across the REIT universe.

With an attractive valuation and the growth engine of senior housing, we are focused on enabling exceptional environments for a large and growing aging population and creating value for our shareholders. Now I'm happy to turn the call over to Justin.

Thank you, Debbie. I'm pleased to say our SHOP portfolio delivered double-digit same-store cash NOI growth for the sixth quarter in a row.

The same-store NOI growth for the year was led by our U.S. communities with 24.5% growth complemented by our high-quality Canadian portfolio, which is over 95% occupied and continues to deliver a valuable and stable cash flow.

Total SHOP same-store cash NOI growth was 18.3%, which was above same-store guidance midpoint expectations. We are happy with this attractive growth and strong finish to the year.

Double clicking on the year, the results were good. Our same-store SHOP communities outperformed our expectations across all key metrics, including occupancy, REVPOR, OpEx and margin expansion.

Full year same-store SHOP occupancy grew by 120 basis points. The U.S.

saw 140 basis points of occupancy gains, and Canada, although already highly occupied, grew by 90 basis points. Demand strength across geographies and asset types led to accelerating occupancy growth this quarter, with 170 basis points of year-over-year growth.

Furthermore, we saw 110 basis points of average sequential occupancy growth from the third quarter to the fourth. U.S.

SHOP occupancy growth was supported primarily by strong demand, with move-ins that were 109% of prior year levels in the fourth quarter. REVPOR grew over 6% for the year.

contributing to revenue growth of almost 8%. As a reminder, REVPOR would have been 40 basis points higher in 2023 and 130 basis points on the fourth quarter if adjusted for the Sunrise special assessment that occurred in 2022.

OpExPOR performed well and was led by the U.S. with 2% growth year-over-year and 2.6% overall.

Looking forward to 2024, we are excited to continue on our multiyear growth trajectory as we are expecting our third consecutive year of double-digit NOI growth in our same-store SHOP portfolio. Momentum ramped at the end of 2023, with fourth quarter occupancy accelerating, while strong pricing and higher move-ins fuel better than typical seasonal results and help 2024 to get off to a strong start.

Once again, we are expecting the U.S. to be the growth engine with continued accelerating occupancy performance, with over 300 basis points growth, and expected to drive NOI growth in the mid- to high teens year-over-year.

The overall SHOP portfolio is expected to grow NOI 10%, 15%. The growing demand at our doorstep continues to support strong price and volume growth and serves a testament to the high quality and care and services and value proposition our communities provide to seniors and their families.

The key assumptions that drive the midpoint of our range are average occupancy growth of about 250 basis points, REVPOR growth of about 5%, which puts the total revenue growth around 8%. January occupancy is already off to a strong start, delivering 200 basis points of occupancy growth year-over-year.

This performance demonstrates solid execution by our operators and continued demand. We expect the performance throughout the year to be bolstered by newly renovated properties and Ventas OI initiatives to drive a strong key selling season.

2024 OpExPOR is expected to grow in line with normal inflation. We structured our business around rate growth and occupancy growth.

We are entering the sweet spot where price and occupancy are moving together to drive revenue. Margin expansion will follow as higher occupancy creates operating leverage.

We have struck a balance where they are moving together, and we anticipate further margin expansion over time as higher occupancy creates operating leverage. We are capitalizing our active asset management playbook and our operators' execution, which delivered strong momentum to finish 2023 and will propel us into 2024.

We expect this to build sequentially throughout the year, which means we are poised for strong year-end NOI that should propel us even further in 2025 and beyond. We are delivering on the organic senior housing growth, which is the part 1 of our strategy and my #1 priority.

Part 2 is expanding our footprint. In addition to the success we are having in our existing portfolio, we look forward to capturing value-creating external growth focused on senior housing.

A key tenet of our investment strategy is our right market, right asset, right operator approach. We're bringing OI tools to investment activities to help the selection process.

Our top investment priorities continue to be NOI-generating CapEx in our existing real estate and senior housing acquisitions. Sellers are motivated to transact, creating numerous actionable deals.

We are targeting opportunities with low to mid-teen unlevered IRRs. We seek senior housing communities that are located in submarkets with compelling supply-demand profile, strong affordability and meaningful expected net absorption projections.

We are primarily expanding with existing partners with proven performance for Ventas, and plan to increase our footprint in the fast-growing IL, AL memory care combination communities. Our pipeline is growing, as we have several interesting potential investments in our sites.

Our team is actively working on transactions exceeding 300 million that meet our criteria, and I look forward to adding to that as the year progresses. In summary, demand is at our doorstep.

We are pleased to see the SHOP growth engine continue to be led by the U.S. and complemented by the low beta, high quality and highly valuable Canada portfolio with compounding growth.

2024 is rich with opportunities through organic growth and external acquisitions. The growth on both fronts throughout the year should support value creation in 2025 and beyond.

I'm looking forward to the exciting year ahead. Bob?

Thank you, Justin. I'm going to share some highlights on our '23 performance, touch on our balance sheet and close with our 2024 outlook.

I'll start by saying we are pleased with all we accomplished in 2023. We finished the year strong, with reported normalized FFO per share of $0.76 in the fourth quarter, a 7% increase versus the prior year, adjusting for the promote received in Q4 of '22.

For the fiscal year '23, we delivered normalized FFO of $2.99 per share or over 5% growth year-over-year when adjusting the prior year for unusual items. The multiyear senior housing growth trajectory was in full display in '23, with SHOP total NOI increasing year-over-year by approximately $100 million.

We also reported total company same-store cash NOI growth of over 8% year-over-year, which is one of the fastest organic growth rates in our company's history. Our 2023 normalized FFO of $2.99 per share was at the high end of our previous $2.96 to $2.99 guidance range, and included $0.01 per share cybersecurity revenue impact in the fourth quarter in our Ardent OpCo investment that was not contemplated in prior guidance.

Pete Bulgarelli and our outpatient medical and research team delivered another year of continuous compounding growth, with same-store cash NOI increasing nearly 3% in 2023, at the high end of our guidance range. Continued strong retention and leasing activity in outpatient medical led the way.

A key driver of that result is the remarkable record of tenant satisfaction in Ventas' Lillibridge property management business, which notched its fourth consecutive year of top quartile tenant satisfaction. In 2023, Lillibridge reached the 97th percentile for overall tenant satisfaction, placing it among the top 5 property managers.

I'd also like to share a few comments on our balance sheet. Throughout 2023, we used our scale and access to diverse sources of capital, raised over $4 million of attractively-priced capital across multiple markets and geographies.

This capital raising in 2023 in part refunded 2024 maturing debt at attractive rates. As a result, we had a robust year-end 2023 liquidity position of $3.2 billion and have relatively modest 2024 maturing debt of $800 million net of cash on hand.

The attractive NOI and EBITDA growth in our SHOP business also improved Ventas' net debt-to-EBITDA ratio to 6.9x in the fourth quarter, a trend we expect to continue in 2024 and beyond led by the multiyear SHOP NOI growth opportunity. Let's conclude with our full year 2024 outlook.

Because our asset classes are benefiting from powerful demographic demand, we are pleased to project another consecutive year of normalized FFO growth in the mid-single digits, and the third consecutive year of same-store SHOP cash NOI growth in the double digits. For 2024, we expect net income attributable to common stockholders of $0.06 per share at the midpoint.

Our 2024 normalized FFO guidance range is $3.07 to $3.18 or $3.13 per share at the midpoint, which represents 5% year-over-year growth. The $0.14 FFO per share increase year-over-year can be bridged by 3 items.

We expect a $0.28 per share contribution from outstanding year-over-year property growth led again by SHOP, which is expected to grow NOI by over $100 million for the second consecutive year. This property growth is partially offset by an $0.11 per share increase in higher interest expense and the $0.03 impact of 2023 capital recycling.

In terms of same-store, we expect our total company same-store cash NOI to grow between 5% and 7.5% in 2024 led by SHOP same-store cash NOI growth of 10% to 15%. Our guidance also includes new senior housing investments of 350 million, which Justin mentioned in his remarks.

The low and high end of our FFO guidance range are largely described by our property NOI expectations and potential changes in interest rates. A final note on phasing.

We expect same-store cash NOI and normalized FFO year-over-year growth to ramp through the year, driven by higher interest expense in the first half of '24 versus '23, and the occupancy acceleration in the key selling season in SHOP, resulting in an exit run rate that should enable attractive SHOP growth '25 and beyond. A more fulsome discussion of our '24 guidance assumptions can be found in the earnings and outlook presentation posted to our website.

To close, the entire Ventas team is ready to win together with all of our stakeholders. And that concludes our prepared remarks.

[Operator Instructions]. With that, I'll turn the call back to the operator.

Debbie, can you provide some additional color on your Kindred lease? I know in the business update Ventas has highlighted, Kindred has implemented some improvement -- or performance improvement initiatives, and you also highlighted that Select Medical had some really strong EBITDAR growth in 2Q and 3Q of '23.

I mean are you implying that Kindred can grow into this coverage ratio? Or is that just kind of data points highlighting that there is some improvement in that coverage that could occur over the next handful of quarters?

Right. Mike, I would tell you that obviously, the most important thing we think about in the renewal in 2025 is about what the earnings capacity of those assets is at that time and beyond.

And the -- Kindred has communicated to us that they have significant initiatives underway on those revenue and expense to improve operating performance incentives. Some of those, we can see are starting to take hold.

We give Select as an example because it's a public company in the same business, and it shows that significant improvements are possible. And it's really too early to say, whether and to the extent Kindred's initiatives will, in fact, take hold to improve EBITDAR in 2024 and 2025.

But they are surely working on it.

Maybe just a question on the guidance for Bob. In terms of the interest expense going up this year, is there anything you can just sort of give us there in terms of some of the assumptions on refinancing?

I wasn't also sure if you're assuming any change in leverage in terms of debt reduction, but perhaps you could just unpack that a little bit more.

Sure, Nick. Yes.

So I mentioned the $0.11 year-over-year. A big piece of that is refinancing our debt into a higher rate environment.

We have $1.2 billion of debt coming due this year, and you call it in the mid-3s kind of range from having issued that debt quite -- years ago. So refinancing that in the current environment is dilutive.

The volume of debt also, we have a year-over-year impact of the ELP transaction midyear last year, so we have effectively, the first half of that, that we're lapping in '24. So together, those 2 things describe the increase year-on-year on interest expense.

I'd note we've included interest expense guidance, which is new to us, in order to try to help analysts' model that because I know it can be tricky, but those are the drivers.

Speaking of Kindred, but also Brookdale and Santerre process, if I can call it that. What are the chances that there could be some activity in 2024 to sort of reset the situation in that -- those portfolios, such that maybe there will be a temporary drag to deal with this year, so that when 2025 does come around, you've kind of addressed that and you won't have sort of this other issue to deal with in 2025, sort of make next year more of a cleaner picture.

Are you thinking that you could do some -- have some activity this year preemptively on any one of those 3 buckets?

Rich, it's Justin. Let me start with Brookdale.

So Brookdale has the opportunity to extend the lease at the end of this year, to let us know, and then the lease will run through the end of '25, and we have a new lease starting in '26. That portfolio is performing well.

As I said, continued improvement, has good coverage, is growing coverage and resides in markets that we think have around 1,000 basis points of upside over the next few years. So we're in a strong position there.

We'll see how that plays out, but it's a good situation.

The Santerre situation, understanding you're kind of working through, but maybe there's some incremental work that has yet to be done. There's asset sales, there's things that you don't want long term.

I'm just curious if there could be some preemptive work there as well?

Yes. I mean, as you know, kind of Santerre's gotten off to a favorable start, and we are -- we've already sold some assets at favorable pricing.

I think we'll continue to pick our spots and be opportunistic on that. And then in terms of Kindred, I think we'd be able to certainly say that we'll have more visibility this year, whether or not the financial impact of this year or next year.

Right now, we're thinking about next year. But that -- it's too early to say, really, what form that would take, but we have the benefit of a lease that runs into May of 2025, and that's a valuable asset.

Kind of just building actually on Rich's question. In a hypothetical, if Kindred were to not extend come this May, what would the process be and how much has Ventas investigated sort of alternative operators?

And what maybe cost might be associated with that, or any transitional worries that might arise as you kind of shift the portfolio again? Hypothetical, just trying to better understand.

Jim, yes, it's kind of funny to be talking about this 25 years after I started, because this is what I was doing 25 years ago. But look, we are really well prepared.

We're experienced on this. We have lots of plans and subplans, I would say.

It's only really 23 assets in total, so I think that, that makes it kind of manageable. And of course, we will try to optimize the NOI of the assets.

And it's a puzzle, and we have lots of tools that we've used before, and that's really what we're focused on. And I can assure you there are -- will always be kind of alternatives that we have and are ready to execute in this scenario.

It's Nick Joseph here with Michael. Just on the acquisition opportunities that you're seeing, you mentioned mid-teens IRRs, but just curious what the going-in yields are.

I'm sure it's a range, but just kind of what you're thinking there? What the discount to replacement costs you're seeing on opportunities is?

And then just what the funding plans would be for any external growth in 2024?

It's Justin. I'll start with the first part.

We are seeing good opportunities in senior housing. We do target opportunities that have a discount to replacement costs.

We're seeing around 20% to 30% discounts in the pipeline. In terms of return expectations, you mentioned the low to mid-teens in unlevered IRRs.

We also -- obviously, there is -- the cap rate is a component of that. We tend to see around 7% right now, and there's a little bit of movement up and down, depending on the growth of the asset.

So the goal is to be neutral or accretive year 1 and then have growth in the asset, which is supported by this strong and growing demand in the senior housing sector.

And maybe I'll touch on the funding question. Given those returns, Nick, we think that can be an attractive proposition for shareholders.

And indeed, we've built into our guidance about $350 million of investments and on balance sheet financing in order to do that. And we think we can achieve both attractive investment alternatives and delevering in the process with those types of investments.

Just a question on, I guess, the other line items below kind of interest expense. Anything unusual between '23 or '24 or any changes, I should say, that we should be thinking about?

I think about some of the Brookdale noncash amortization that's running through the numbers that presumably goes away on that lease, the initial lease, matures, correct me if I'm wrong. But just trying to see if there's any kind of unusual items from the fourth quarter of '23 that maybe you're skewing results relative to expectations from the Street.

And if you wouldn't mind commenting on expectations on FAD. You gave normalized FFO, but any piece parts on the FAD would be great as well.

Sure. So in terms of, as you say, below the line items, first thing to say is the guidance doesn't assume any changes in the '25 lease situation.

And so it's business as usual in '24 in our guidance assumptions. You're correct to say there is Brookdale amortization from the consideration we received in that restructure a number of years ago being amortized.

If and to the extent we have a restructured deal there, that would be affected, but ultimately, it could be an outcome that depends on the deal itself. In terms of FAD, I would say FAD growth -- this is operating FAD, I would expect to grow in line with FFO year-over-year.

I was just looking at the presentation you put out, and I saw on Slide 40, it looks like there's a footnote related to class action litigation in your SHOP segment. Can you go over just what that's related to?

Josh, sure.

Yes, it's Justin. So -- the -- it's an issue in California, and the adjustment relates primarily to the class action suit, involves some of our SHOP properties.

We don't really view suits like this to be as ordinary course in our business. They do come up from time to time, especially in California.

Because they don't relate to the core business performance, we think adjustment to the FFO is appropriate.

Looking at the SHOP occupancy guide for this year. Can you just talk a little bit about the, I guess, the cadence of occupancy?

Does it assume more of a normal year for sort of seasonality? Or how does it compare to what you experienced in '23?

It's Justin. So great question.

I appreciate it. There's a Page 8 in the deck for anyone that has that in front of them.

It helps to articulate this. So we had 120 basis points of occupancy growth year-over-year in 2023.

We had acceleration of move-ins and occupancy in the third quarter, which led to solid growth in the fourth quarter, which was at 170 basis points year-over-year in January. We're already starting at 200 basis points of occupancy year-over-year, and we are seeing better than typical seasonal results ending the fourth quarter and starting the year so far, which is really encouraging and supportive of the 250 basis points at the midpoint that we included in our SHOP guidance.

So we have a good run of occupancy growth, and also, move-ins have been really strong as well. I mentioned that they're around 110% versus prior year in the fourth quarter.

We've continued to see a strong move-ins at the beginning of the year as well.

So going back to Kindred, and I'll try to ask this in a slightly different way. I know it's too early to say what the ultimate outcome will be, but hypothetically, if you did go down this path, as of today, what magnitude of rent reductions do you believe will be required in the near future in order to return those rents to a sustainable level, either for Kindred or the next operator assuming operations on those properties?

Michael, remember, we own the assets and we own the EBITDAR in those assets. And that's an important -- that's very important.

And again, it's too early to say. We have favorable trends in the Brookdale situation, and in Kindred, we hope to have favorable trends as you look out to 2025.

So there's a lot more that goes into it when you think about what the outcome is going to be, and we'll be happy to share more with you as the facts develop.

I want to jump back to a conversation on the Q2 '23 earnings call in regard to the equitized loan portfolio, specifically the outpatient medical assets. You outlined that you were going to put in place a capital improvement plan to bring occupancy back into those assets.

So I'm wondering, at this time, if you could quantify what that capital improvement plan looks like, what occupancy expectations are for those outpatient medical assets, and then what a return profile could look like for that capital improvement plan?

I mean I think the key point, the topic sentence, and we'll get to the answer is, those assets overlap with our own portfolio in many respects. Our portfolio is over 90% occupied and managed by Pete and the team very effectively.

This was under 80%. So there was -- there is and was significant occupancy upside as we get in there and self-manage those assets.

And now I'll turn it over to the team to take your questions.

Yes. Thanks, Connor.

This is Pete. Yes, we're excited for the ELP portfolio.

It gives us, I think, over the long haul, upside. We've been extremely active in absorbing that portfolio and renewing that portfolio.

We've transitioned 44 of our locations to Lillibridge management using the Lillibridge playbook. We've surveyed all the tenants.

We have specific asset plans for each of the buildings. And we're really happy with the results so far.

We have increased occupancy by about 1%, and we're also well above plan in our underwriting. So as it relates to how we look forward on this portfolio, we expect in '24 to have about a 3% increase in occupancy.

And so we're very happy about that. And I wouldn't -- we will do some upgrades in the common areas and so forth.

And you've seen some of the ICE capital in the supplemental here. We'll do a bit more of that.

And we'll have kind of normal as-you-go tenant improvements and commissions. So I don't expect anything extraordinary out of the capital being used for that -- for the ELP portfolio.

Just two quick, I guess, senior housing questions, if you can indulge me. First, just the comments about exit into '24 looking better, or I guess, acceleration.

I'm wondering kind of what gives you that confidence, because I may be wrong, but I think the occupancy comp will get harder and the expense comp also gets harder. So I'm just wondering what gives you the confidence of acceleration, number one.

And just number two, on senior housing. You guys had a great investment in Canada a while ago through the Maurice investment.

I'm just wondering, though, the portfolio is now generating like 4% same-store arguably into next year. Is there an opportunity in your minds to recycle that into, say, maybe a U.S.

asset where you could get higher growth?

It's Justin. So let me start with the jumping off point at the end of the year.

So what's happening this year is we have significant occupancy growth in our plan. Occupancy, as you know, a lot of it comes from the key selling season.

We're off to a pretty good start because we're already outperforming just typical seasonality. But what's most important is what's coming next, which is that kind of May to September period, which provides occupancy growth.

Typically, we see the numbers that the demand is there, we see in the underlying performance that we're executing on the demand. So that gives us the confidence that we'll be able to grow occupancy.

And then when you have the build during the year, clearly, that you end up ending the year at a higher NOI. And that NOI, the point we're making is it's a good launching pad for 2025 growth when you run that through and then you start adding more occupancy on top of that.

The other thing that happens is margin expansion. We're in a place right now, we're in the -- you mentioned Canada.

It's 95% occupied. U.S.

is around 80%, 81%. Well a lot -- most of our occupancy growth is in the U.S.

And when you -- we're just at the early stage of that occupancy band where margin starts to grow, and we're at an inflection point, and so we're also looking forward to next year as well as we -- as occupancy grows, the operating leverage goes up, margin expansion could or should be more in '25. So we think there's good support for this growth, and we're executing, and it's not -- it should help the '25 number, and then the demand is such that the runway should be even longer.

So we like what we're seeing there. In terms of Canada, we do have a really, really good portfolio there.

And I'm really glad you asked about it because it is a core light asset, very high quality physically. It's very high quality in terms of execution, in occupancy and margin.

It's been a consistent performer for us. There's good demand in these markets.

It's a great operator. Primarily most of the NOI is Le Groupe Maurice in Canada.

And we look forward to continuing with that, and with that relationship and the compounding growth that it can offer and also opportunities to expand that footprint over time.

And also, as we do new investments, obviously, the percentage that, that represents of the overall SHOP portfolio and Ventas will shrink because the denominator will be growing and emphasized on U.S. senior housing.

So that will change the impact as well.

Yes. And actually, I'll take this opportunity to make one of my other favorite points.

And that is that the U.S., okay, that grew 24.5% in -- for us last year in our same-store pool, and we're expecting mid- to high teens NOI growth in '24. That's the growth engine.

And that's comparable to the other portfolio. They have similar upside and less stability, where Canada is what it is.

It's high quality and stable. But when you blend the 2, obviously, it hampers our growth a little bit, and it's being hampered by a very high-quality, high-performing portfolio, and the U.S.

is growing as well as anyone.

Great. It sounds like Kindred's a no-go here, but at least after all these years, I guess it's only 5% of NOI for this master lease and not 50% plus.

So, Debbie...

'99.

That's even before my time. But you did highlight -- I want to hit on the acquisition piece a little bit.

And you highlighted $300 million of investments you have confidence in completing in the first half of this year. And there's a chance it sounds like maybe that could increase, given the target-rich environment that you kind of laid out.

I guess can you or Bob discuss about the funding plans for those assets and maybe where equity fits into the plan? And I'm just curious, given that line of sight, why not issue under the ATM late last year given kind of the favorable move in the stock and more attractive cost of capital you had?

Well stated. I think, Bob, Bob, do you want to talk about funding?

Yes. As I mentioned earlier, look, the returns on these investments that we're seeing make this attractive from day 1 to our shareholders in our view, even at the current cost of capital when you look at the numbers.

And we started this discussion with investors really late last year at NAREIT where cap rates have changed. And I think the consensus view at that point continues to be that's a good investment.

And so effectively, we've built that into our guidance in this $350 million. And I mentioned the opportunity of over-equitizing alongside that, that is also assumed.

That being said, in a very disciplined way. And I think that's the important part of the narrative.

And so there is some -- there are assumptions around that, but we will be very prudent in all, always, a function of the market.

And I'm glad you asked it, too, because I think with Ventas really giving FFO guidance into '24, that really is in the top 10 of all REITs, that we are aiming to have an improved multiple that benefits and reward shareholders, and it represents a cost of capital that could be very effective as we build on the organic growth story and layer on attractive investments focused on senior housing.

Just a two-parter for me. Just was looking through the deck.

One, I realize that the slide on the NOI recovery opportunity, it looks like you guys removed it, which was a pretty helpful slide. So I guess the question #1 would be that conviction of getting back to $1 billion.

Presumably the occupancy still feels pretty good with the guidance, but has anything changed about either the views on the margins or the occupancy and the recovery story to sort of pull that slide? And then question #2, sort of part 2, is really, it's a sources and uses question because I don't see the redevelopment CapEx or the asset dispositions guidance that you guys provided last time.

So could you be a little bit more specific? We know you're going to do $300 million plus or minus of acquisitions, but maybe a little bit more specificity about how you're thinking about redevelopment CapEx, dispositions and even an equity issuance.

I liked that Slide, too, but I'll give it to Justin to answer.

Yes. I like it.

But what really dawned on us, quite frankly, is it's not high enough. It really is -- we're focused on 80% occupancy and getting back to prepandemic cash flows, and we're kind of moving beyond that because we see the ceiling can be a lot higher and the demand backdrop supports that.

So we don't want to put a ceiling on the opportunity. We think it's more over time.

We've got a good run rate established. We're putting up $100 million -- around $100 million a little bit more per year in the SHOP portfolio.

So we decided to move on, try to focus on looking forward. One of the things that, before I'll hand over to Bob, I just want to mention on the -- you mentioned CapEx projects.

I just want to throw in something on the senior housing. We did complete 167 projects by the end of '23, and that those started in October of '22.

And so we had a really strong run of getting our portfolio refreshed. We think there's about another 70 that completes by this May for the key selling season and then another group of 82 or so, hopefully, by the beginning of next year's key selling season.

So we're well past halfway done and like the opportunity to do more and increase our opportunity to be competitive.

That's a good segue to some of the assumptions you asked about in our guidance, especially redev. Let's start there.

So we said our #1 use of cash is investing behind senior housing redevs. You're seeing the growth that's coming from that in the attractive returns.

So last year was $210 million round numbers of redev. Because the projects are starting to come down, and I'd mentioned in previous calls we're going to normalize over time, we would expect some reduction in that redev spend this year.

I'll call it $175 million in 2024. And again, that should normalize over time as these projects complete.

Other assumptions, capital recycling, we are assuming, after $450 million of dispositions last year, our current guidance is $100 million. So a significant reduction, and those are very focused on some senior housing noncore assets in that $100 million.

And then finally, on the equity assumption. To just underscore what I mentioned earlier, we do have, in our assumption, both investments and the funding of that.

The share count is listed in the assumptions that comes out of that.

Sorry to keep things going, but what the heck. I want to ask perhaps an unanswerable question.

So you guys lead the league in kind of normalization between NAREIT FFO and normalized FFO. There's a lot in there.

You have $0.13 of normalizing factors in your guidance. To what degree can we -- does that offer an opportunity for -- I don't know, if something were to materialize during the year, it sort of allows you to maintain your guidance?

I'm -- there's a lot of movement in your presentation that's really difficult to model, let's put it that way. Is there a way to either tighten it up, or does it offer opportunity to say, well, we can do something with Kindred this year, and we're not going to have to change our guidance in the process.

I know, unanswerable, but I do feel like it's way more complicated than perhaps it needs to be, is the main point.

I mean one part I would comment on is that we are very disciplined about it and don't lead the league in any -- and this is an area we don't want to lead the league in, and we can talk about that further. It's a very defined category, and we use it as such.

So, Bob...

[Indiscernible] measuring between NAREIT FFO and normalized FFO across peers, I would suggest to you that they're very similar in terms of our numbers. And by benchmark, well, I would [indiscernible]...

You would say benchmark [indiscernible].

How often do you hit that number? How confident you are to hit that $0.13 number, I guess, is the question.

How predictable is that to you?

Which $0.13 number, Rich?

The [indiscernible] between NAREIT and normalized FFO.

I see. Some of those are market-based, importantly.

I'll just highlight one, which is Brookdale warrants. We have $16 million of Brookdale warrants, and that is mark-to-market every quarter, and there's a lot of volatility in that.

And that flows through between NAREIT and FFO normalized [indiscernible] adjustment, and that's impossible to predict. But we think in terms of portraying the underlying performance of the business is absolutely the right adjustment to make it normalized.

So that's a good example.

I just wanted to clarify the legal costs that were normalized. Is that -- are those just legal fees, but there's -- is there like an associated potential fine that Ventas may be liable for, and is this hard to know?

Or is that just a one-off and we won't hear more about it from here on? Number one.

And number two, if you could just clarify the $300 million acquisition, how should we think about accretion going forward in terms of like potential cap rates and how you see that flowing to the bottom line?

Okay. It's a typical litigation reserve and it affects us and other REITs.

And in terms of the acquisition investment opportunities, I think, again, looking at the pipeline that we have, I think Justin talked about 7% plus or minus going in cap rates, which is affected by the growth rate, leading to low to mid-teens IRRs, which, depending on how we fund, will be -- that's how the accretion, obviously, in year 1 will be determined. We're not counting on a lot of accretion into year 1, but rather enhancing our growth rate over time.

And we think that those IRRs are attractive, and we want to expand our presence in U.S. senior housing.

Just a quick follow-up for me, focused around dispositions again. I was curious if you have a bit of a background on the 2 R&I assets disposed of in the fourth quarter as to why you chose to sell those.

The cap rates looked a little elevated from the outsider's perspective. And then just curious if -- what your latest thoughts on the Santerre SNF business is?

Are you kind of happy to hold what's remaining there, which is still fairly substantial, I guess, and comfortable with that SNF exposure? Or how are you thinking about that?

Yes. So on the latter part, as I mentioned, I think we'll be -- we'll pick our spots on disposing of certain of the Santerre assets over time.

Including the SNF. We've been -- we've sold some at very attractive per bed valuations, and we're happy with that.

And on the -- what was the -- the others were embedded purchase options that we got in the acquired portfolio with universities who have a better cost of capital than God. So they chose to exercise them.

So that's all that was.

All right. Mandeep, thank you very much, and I want to thank everyone for joining us today.

It's a pleasure to speak with you and have a chance to answer your questions. We really appreciate your interest in Ventas, your support of Ventas, and we look forward to seeing you again soon.