Ventas executives were pleased with earnings growth in the second quarter, led by what they described as “powerful” growth in its senior housing operating portfolio, but during a second-quarter earnings call Thursday, they said that “the best is yet to come.”
“We are experiencing an unprecedented multiyear growth opportunity in senior housing, driven by secular demand from a large and growing aging population, historically low new supply and an attractive product offering that is valuable to seniors,” Ventas Chairman and CEO Debra A. Cafaro said in a news release. “Our advantaged platform enables us to drive performance in our existing communities and make compelling investments in senior housing.”
The Chicago-based real estate investment trust announced that it has closed on $1.1 billion in senior living community purchases year to date, including $350 million closed during the second quarter and to date in the third quarter. The investments involved 29 communities across 11 states, with a total of approximately 3,400 independent living (27%), assisted living (53%) and memory care (20%) units.
The communities averaged eight years old, with in-place occupancy of about 91%. Average acquisition price per unit was $342,000.
The purchases involved nine operators, including five that marked new relationships for the REIT.
The company expects to increase its investment volume to $2 billion for 2025, up from a previous estimate of $1.5 billion.
Justin Hutchens, executive vice president of senior housing and chief investment officer, said that the REIT has an active pipeline and has reviewed 41% more investment opportunities by dollar volume year to date compared with the same period last year.
Revenue growth exceeds 8%
Ventas’ overall SHOP saw revenue growth of more than 8% in the second quarter, and average year-over-year occupancy growth sped up during the quarter, finishing on a high note for the quarter in June with 60 basis points of sequential average occupancy improvement.
Overall SHOP (US and outside of the US) average occupancy growth of 240 basis points grew rapidly during the quarter, led by US SHOP same-store average occupancy growth of 290 basis points; independent living same-store average occupancy grew 320 basis points, and assisted living same-store average occupancy grew 280 basis points.
June overall average occupancy was 88.1%. Ventas said that June had the highest number of move-ins in almost two years and was the first month to exceed pre-COVID occupancy of 88%. June average occupancy in the REIT’s Le Groupe Maurice senior living portfolio in Canada was 98%.
Amid a backdrop of a growing aging population and construction starts in senior living hovering at record lows, Cafaro said, Ventas anticipates that there will be multiyear occupancy and net operating income growth opportunities “well into the future.”
To capitalize the growing older adult population, she said, the REIT focused on expanding its total SHOP footprint by 1,200 basis points in just the past two years, and expects SHOP NOI to represent more than half of its business by year end. Ventas, Cafaro said, has almost quadrupled its pool of high-performing total SHOP operators in the past five years, from 10 in 2020 to 36 in 2025.
Hutchens said that the overall SHOP same-store portfolio saw revenue growth of 8.2% in the second quarter, driven by improving occupancy and “strong” pricing.
Data lead to growth
Over the past five years, Ventas has used its Ventas OI data analytics platform to work toward growth in its senior living portfolio. During that time, the REIT converted 130 senior living communities from triple net leases to the SHOP, transitioned more than 260 communities to new managers, sold 110 communities, conducted more than 300 community refresh projects and acquired more than 190 communities in its overall portfolio.
The Ventas OI team is optimizing price and volume through incentives, Hutchens said.
“I truly believe the best is yet to come as we face unprecedented favorable supply-demand fundamentals and we continue to improve upon our SHOP performance and leverage our advantage position to grow externally,” he said.