FAD Growth and Dividend
Q: What's your outlook for FAD growth and dividend policy?
A: Management expects strong Funds Available for Distribution (FAD) growth, driven by continued focus on long-term value-add projects with attractive returns. - Cash flow has recovered meaningfully from COVID lows, boosting confidence in the senior housing recovery. - They are actively discussing the current dividend policy with the Board, indicating potential for dividend increases. -

Acquisitions and Funding Plans
Q: Discuss the $2.6B acquisitions and future funding.
A: The $2.6 billion in acquisitions are entirely in senior housing and wellness housing, with expected returns similar to previous quarters despite higher interest rates. - They've raised capital to fund these transactions, and their pipeline remains robust beyond the $2.8 billion of deals closed or under contract. - Management agrees they are under-leveraged and plans to utilize the balance sheet to drive earnings growth post-Fed cycle. -

Expense Guidance and NOI Growth
Q: Was there a change in same-store operating expense guidance?
A: Yes, expenses underlying the initial budget were at 6.5%, but the revised outlook has decreased to 6%, reducing expenses by 50 basis points. - This positively impacts NOI growth expectations. -

Potential Risks and Rent Controls
Q: How do you anticipate potential risks and rent control concerns?
A: While 25% NOI growth is impressive, management notes the industry's profitability remains challenging, with margins below pre-COVID levels and the peak in 2015. - They emphasize the need to restore margins through rates and occupancy. - Rent growth has been around 8–9%, not double digits, and employee costs are up 30–40% over the last 5 years. - They focus on long-term value creation and are vigilant about potential risks. -

Development and Capital Investment
Q: Are you seeing more competition or new supply in development?
A: No, there is no influx of new capital, and debt markets are effectively closed. - This limits competition and reduces new development activity. Instead, some developers are abandoning projects and disbanding teams. -

Senior Housing Strategy
Q: Are NOI gains driven by strategy or cyclical factors?
A: Broad-based outperformance is attributed to a deliberate strategy of deep partnerships with operators rather than cyclical factors. - This approach enhances employee retention and customer experience, ultimately driving financial results. -

Investments in Analytics and Operations
Q: Elaborate on investments in analytics and operations teams.
A: Investments in analytics tools and operations teams enable handling a large volume of transactions efficiently. - These tools are crucial in screening properties, predicting stabilized NOI, and matching operators. - Operational excellence at scale allows for more effective processes, driving value. -

Rent Increases and Lease Rates
Q: How are early rent increases impacting retention and lease rates?
A: Rent increases have proceeded smoothly with minimal pushback, as residents understand cost pressures. - Robust market demand supports renewals and new lease rates, with strong supply-demand fundamentals and appreciated value proposition. -

International Opportunities
Q: Is the $19B opportunity domestic, and what's the outlook abroad?
A: The $19 billion opportunity is domestic. - Similar situations exist internationally, particularly in the UK, where the market and debt availability are more challenging than in the U.S.. - Management anticipates engaging in numerous transactions in the UK to capitalize on these conditions. -

Transition Assets and Growth
Q: How will transition assets affect growth when added to same-store?
A: Many transition assets will enter the same-store pool towards the end of the year or in 2025. - Management expects strong growth from these assets, which may be additive to overall growth, though it's too early to say definitively. - The Canadian assets transitioned in Q4 will re-enter same-store in 2025. -

Skilled Nursing Investments
Q: How are you accounting for EBITDA reductions in skilled nursing?
A: They approach skilled nursing as structured credit with short-duration capital, focusing on basis and downside protection. - Potential EBITDA reductions have minimal impact due to the protective structure of their investments. -

Operating Platform Efficiencies
Q: Can you provide more color on operating platform improvements?
A: They are advancing plans to create efficiencies by reducing administrative burden through a unified system. - This reduces errors and wasted time, enabling staff to focus on care and leveraging technology to drive value. -

Cogir Portfolio Performance
Q: How is the Cogir PLR portfolio in Canada performing?
A: The partnership with Cogir is performing very well, with assets and teams embracing Cogir management. - Expectations for the portfolio are strong, and significant leasing activity is starting now in Canada. -

SHOP Guidance and Leasing Season
Q: Any updates on SHOP guidance and peak leasing season?
A: It's too early in the year to comment definitively on guidance. - Annual results will be defined by the summer leasing season. - Management remains cautiously optimistic and aims to capture more than their fair share of the market. -