Senior housing now makes up about half of internet working revenue at Ventas (NYSE: VTR), and the corporate is constructing on its momentum to reap demand within the subsequent decade.
The Chicago-based actual property funding belief (REIT) has because the center of 2024 accomplished $4.1 billion in senior housing investments. Due to these and different acquisitions, Ventas has elevated the scale of its senior housing working portfolio (SHOP) by 20% in the previous few years.
Ventas leaders have beforehand outlined how a much bigger SHOP section provides the corporate extra capability to assist its working companions’ pricing, gross sales, expense management and capital expenditures. And looking out forward, the REIT is planning extra “formidable” progress according to current years, based on CEO Debra Cafaro.
“We’re going to proceed to attempt to quickly develop that enterprise from inner and exterior funding exercise,” Cafaro mentioned throughout the REIT’s third-quarter earnings name Thursday.
The corporate’s acquisition pipeline is accelerating, with 2025 anticipated to be the fourth consecutive 12 months of double-digit SHOP NOI progress, based on Ventas Chief Funding Officer Justin Hutchens, who leads the REIT’s senior housing portfolio with a twin position as govt vice chairman.
“We’ve seen the chance to purchase property which are delivering vital progress potential and that’s the place we’re leaning in and we’re utilizing the market, asset, operator framework to assist decide the place to focus,” mentioned Hutchens.
In an analyst observe from BMO Capital Markets, Managing Director Juan Sanabria highlighted Ventas’ “modest earnings beat” with the corporate’s SHOP section reporting “stable however not spectacular outcomes.”
“We anticipate the shares to react effectively with SHOP steerage assumptions largely maintained,” Sanabria wrote.
Ventas peer REIT Welltower earlier this week bought an 18 million sq. foot portfolio of outpatient medical actual property property for $7.2 billion in a number of tranches by mid-2026. In response to Cafaro, Ventas is “all the time evaluating totally different portfolio actions.
“Presently, our fundamental focus is aggressively rising our non-public pay SHOP enterprise,” she mentioned throughout the earnings name.
Ventas inventory rose $4.58 in the present day to relaxation at $74.36, a rise of 6.56%. The corporate additionally reported normalized funds from operations (FFO) per share of $0.88 for the third quarter.
Ventas now has a portfolio of over 850 senior residing properties.
‘Momentum in our pipeline’
Senior housing REITs have been on a shopping for spree in 2025 because the monetary math for brand spanking new improvement initiatives stays robust to pencil out. Heading into the top of the 12 months, Ventas “has momentum in our pipeline,” Hutchens mentioned. Cafaro famous that the corporate seeks to “aggressively” develop the corporate’s SHOP section.
This 12 months, Ventas has made senior housing investments totaling 20 transactions for 50 communities with roughly 6,200 models throughout 15 states.
Ventas additionally this 12 months established a SHOP relationship with U.Okay.-based operator CCG after changing 11 triple-net communities within the London space within the U.Okay. to SHOP and fashioned a relationship with the turnaround operator. However Hutchens mentioned the corporate’s “first, second and third” priorities lie with investing within the U.S.-based communities regardless of the corporate’s holdings in Canada and the U.Okay.
“The U.S. is the place all of the motion is,” he added.
Ventas should buy properties by as a lot as half beneath present substitute prices, Hutchens added.
Fueling the corporate’s growth are optimistic operational leads to its SHOP section. U.S. SHOP occupancy rose 340 foundation factors within the third quarter of 2025 in comparison with the identical interval final 12 months to a median occupancy of roughly 85%. Total, the corporate’s senior housing occupancy improved to 89% as lease per occupied room elevated 5% within the third quarter. Ventas reported a margin of 28%, a rise of 200 foundation factors and RevPOR progress of 4.7% and income progress of 8% within the third quarter.
“When you begin getting over 90%, you begin to see the next incremental margin nearer to 70%,” Hutchens mentioned.
However Hutchens famous that Ventas doesn’t view 90% occupancy as stabilized in markets with internet absorption alternative. He added that occupancy acquire alternatives lie within the conversions from Brookdale to different operators as a few of these communities have been decrease occupied.
“We transitioned the decrease occupied communities from triple-net to SHOP, and we now have an extended runway,” Hutchens mentioned.
Whereas Hutchens wouldn’t predict 2026 efficiency indicators, he famous the corporate has alternatives to extend occupancy and lease although its dynamic pricing strategy with our operators, which reinforces momentum for income per occupied room (RevPOR). Dynamic pricing can also be helping in RevPOR progress in balancing price exercise throughout the corporate’s senior residing portfolio.
“We’re working collectively by our dynamic pricing strategy with our operators to ship that consequence. And one of many issues we’re equally as happy about is that we’re placing a very good steadiness of additionally driving occupancy and value collectively, which is what this dynamic pricing has approached is designed to do.”
Brookdale transitions, CapEx conversions, tech enhancements
Aside from rising its SHOP section, Ventas additionally has its collective eye on bettering the efficiency of its working companions.
Ventas is transitioning 45 communities previously managed by Brookdale Senior Dwelling (NYSE: BKD) to 5 native market-focused operators as triple-net lease conversions proceed. As of the third quarter, Ventas has accomplished 27 of these transitions, with the rest to vary arms in 4Q25.
Operators taking on the portfolio section embrace Discovery Senior Dwelling, Grace Administration, Precedence Life Care, Senior Life-style and Sinceri Senior Dwelling..
Ventas will deploy CapEx {dollars} for routine refreshes within the communities, together with issues like frequent space upgrades, new paint, up to date furnishings, fixtures and tools, with a purpose of minimizing disruptions on the communities from building.
Throughout Thursday’s name, Ventas leaders mentioned each operator within the firm’s portfolio runs end-to-end know-how for issues like security monitoring, care and compliance, remedy administration, buyer relationship administration, meals service and upkeep, with most of them being AI-enhanced now, Hutchens mentioned.
The corporate’s “Ventas OI” information platform has allowed Ventas to pursue dynamic pricing efforts in widespread markets whereas additionally managing CapEx initiatives and efficiency administration.
Coming off a brief blip in mortality-driven move-outs within the spring, Ventas maintained its full-year steerage of 270 foundation factors in occupancy beneficial properties and reported one of the best promoting season within the final 4 years. The prime promoting season typically runs from spring to summer season.
