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J. Justin Hutchens

Thank you, Debbie. I’ll provide updates on first quarter senior housing performance and our investments. I’m pleased that we delivered excellent results on both fronts. I’m happy to report that SHOP delivered double-digit NOI growth for the 11th consecutive quarter as we continue to execute through the OI platform. Our efforts support real time community specific strategies that align with market demand and importantly are executed in partnership with our best-in-class operators.
Total SHOP same store cash NOI growth was 13.6%. Revenue growth was 7.4% led by occupancy and rate. In terms of rate, we saw solid underlying pricing from internal rent increases averaging 7%, and very importantly, street rates are trending favorably. Expenses were roughly in line at 5%, and labor expenses were favorable.
Same store shop occupancy grew by 290 basis points led by the US with occupancy growth of 330 basis points and NOI growth of 16%. The US also significantly outperformed NIC on both rate and occupancy year over year growth. The incremental margin was about 50% for the first quarter driven by the operating leverage in the business as we grow occupancy.
Demand and move ins in the quarter were strong, and year over year occupancy was very good. However, we experienced some seasonality with elevated clinical move outs in March, which causes our jumping off point for occupancy to be a bit lower than expected for the second quarter. The sad part of our business and in fact, life, when people pass away. It’s also unpredictable.
That said, per usual, the key determinant of occupancy for the full year is the timing and slope of the key selling season, which starts today. We are excited about the upcoming months as we expect strong move ins in the second quarter.
As we look at the balance of the year, we anticipate another excellent year of SHOP performance, and we are reaffirming our same store full year guidance in our SHOP portfolio of cash NOI growth of 11% to 16%.
Now I’d like to highlight our approach enhancing our portfolio composition. I’ve worked with my experienced and very capable team through deliberate actions over time to ensure that we are located in the right markets, right assets, and with the right operators. These deliberate actions, all of which are underpinned by our OI data analytics platform, include acquisitions, dispositions, conversions from triple-net to SHOP, transitions to new operators, OI driven operational improvements, and CapEx investments to improve our competitive position.
This journey to curate the portfolio has been well underway for a while. However, all things considered equal, the best is yet to come. To our actions to date, our portfolio is positioned with significant embedded occupancy and NOI growth potential.
By design, two thirds of the portfolio is in the low 80% occupancy with significant upside opportunity. One example of how we are positioning the portfolio for future growth is our decision to convert 45 Brookdale communities from triple-net to SHOP with new operators later this year. These communities are performing really well year to date and offer significant upside. We expect to double the NOI in these communities from approximately $50 million to $100 million plus over time. The five operators we have selected for the transitions are enthusiastic and highly engaged in the transition process.
We’ve also expanded our operator base from 10 to 33, enhancing our ability to grow in high demand markets. This includes a new shop relationship with an operator in the UK. Growing our operator base is important since our 75% of senior housing operators manage fewer than 50 communities in what is a highly fragmented sector. Adding operator relationships is essential to obtaining scale and density in markets as well as expanding our relationship driven investment opportunity set.
Our community refresh program has progressed as planned. We’ve completed over 250 community redev projects in the past 2.5 years. However, there is more work to be done with a 100 more projects expected to complete by year end, strengthening our competitive positioning and setting the table for the opportunity to drive outsized NOI growth over time.
As we look ahead, our enhanced portfolio composition provides a powerful foundation to capitalize on historic demand growth unfolding in senior housing. With a deep bench of high quality operators, a growing presence in the right markets, and a well positioned asset base undergoing continual improvement, we are strategically positioned to deliver strong, sustainable performance.
Moving on to investments. We continue to capitalize on our advantage position as Ventas is a senior housing partner of choice with sellers, brokers, the entire investment community. We have continued to execute on our accelerating run of value creating external growth focused on senior housing in the first quarter.
We’ve closed approximately $900 million in senior housing investments year to date and $2.8 billion since the beginning of last year, with most of that completed in the last six months. These investments meet our key criteria of 7% to 8% expected year one NOI yields, low to mid-teens unlevered IRRs, accretive growth, and pricing well below replacement costs.
The activity significantly expands our SHOP portfolio, adding 20 newer vintage communities across 8 states, including 11 in high demand Texas markets, with strong net absorption potential and over 1,500 basis points of uncapped net demand over the next few years. These communities offer a full continuum of care and are operated by six high quality managers, including three new operator relationships with strong local execution.
The underwritten returns are attractive as we are expecting year one NOI yields of around 7.2% on average and a ten-year unlevered IRR in low to mid-teens. We’ve also been encouraged by the initial post-closing performance of the $1.8 billion in senior housing acquisitions closed in 2024. Actual NOI is in line with underwriting at a blended yield of 7.7% in the first quarter of 2025.
Our investment pipeline is active and growing as we have now reviewed approximately $30 billion of senior housing, bid on $9 billion, and closed on $2.8 billion, all since the beginning of last year. Approximately 75% of our close transactions were relationship driven and sourced off market.
We remain flexible and opportunistic, pursuing a diverse set of senior housing investments across markets, asset types, operators, and return profiles. Reflecting our strong pipeline, we are raising our full year investment guidance to $1.5 billion.
In summary, we had a strong start to the year, demonstrating solid execution across their senior housing platform, we remain laser focused on advancing parts one and two of our strategy. First, driving profitable organic growth by enhancing operating performance, optimizing pricing and occupancy, and leveraging our data-driven Ventas OI platform in close collaboration with our high performing operators. And second, capturing value through external growth with a targeted focus on high quality senior housing acquisitions that meet our strategic and financial criteria.
With favorable demand trends, a well-positioned portfolio, and a robust investment pipeline, we are confident in our ability to create long term value and sustain our significant leadership position in the senior housing sector. Bob?

Robert Probst

Thank you, Justin. I’m pleased to report we’re off to a strong start for the year. I’ll review our first-quarter performance, discuss our reaffirmed 2025 guidance, and close with our balance sheet, liquidity, and capital markets activities.
Starting with our overall enterprise performance, we reported normalized FFO of $0.84 per share, representing nearly 8% year-over-year growth. Our total company’s same store cash NOI grew by 7%, led by SHOP increasing approximately 14%.
Our outpatient medical and research business, or OM&R, reported same store cash NOI growth of 1.3% year over year. Adjusting for cash fees received in outpatient medical, OM&R same store cash NOI increased by 2.5% year over year.
Outpatient medical grew by 3%, adjusted for the aforementioned fees as fundamentals remain solid. Outpatient medical occupancy increased 30 basis points year over year with first quarter new leasing increasing 9% and tenant retention a strong 85% in the quarter.
Our research portfolio same store cash NOI contracted modestly year over year. This $200,000 reduction in NOI can be explained by 30 basis points of lower occupancy. Pete and team continue to see a solid research leasing pipeline, including from universities.
We are reaffirming our full year OM&R same store cash NOI guidance range of 2% to 3%. And that’s a good segue to our updated 2025 full year outlook.
After a good start to the year, we are reaffirming our previously issued guidance for full year ’25, including our earnings per share measures and property same store cash NOI ranges for each segment. As a reminder, our normalized FFO midpoint of $3.41 represents outstanding 7% year-over-year growth. And consistent with our communication in February, this FFO increase continues to be led by SHOP organic growth and accretive senior housing investment activity, partially offset by higher net interest expense, FX, and dilution from a higher share price.
I would remind everyone that the all important senior housing key selling season begins in the second quarter and runs through September. We have updated our guidance for full year 2025 investments focused on senior housing from $1 billion to $1.5 billion as a result of a growing pipeline of deals.
We expect the $500 million increase in the investment guidance to close later in the year. So net net, we expect the FFO contribution of the incremental investment guidance to be minimal for 2025.
We’ve already largely funded the increased investment guidance with $1.3 billion in aggregate equity raised together with$ 200 million of disposition activity, previously included in guidance and expected to close in the second quarter.
Our balance sheet continues to strengthen as a result of SHOP organic growth and equity funded senior housing investments. Our Q1 net debt to EBITDA of 5.7 times represents a 30 basis point sequential improvement from year end 2024 and a full turn reduction versus prior year first quarter. We expect further leverage improvement in the balance of the year, driven by our senior housing growth engine.
We also repaid nearly $1 billion of senior notes in the first quarter at a rate of approximately 3%, utilizing the proactive senior notes we issued in September at approximately 5%. Our liquidity position is robust with available liquidity of $3.6 billion as of April 2025. This liquidity was bolstered in April by a $750 million increase in our revolving credit facility to $3.5 billion to support our growing enterprise. We had robust subscription from our bank group, which demonstrates their strong support of our platform.
For additional 2025 guidance assumptions, please refer to our Q1 supplemental and earnings presentation posted to our website. To close, we’re pleased with our start to 2025. The entire Ventas team is enthusiastic about the future and focused on delivering superior performance for our shareholders. And with that, I’ll turn the call back to the operator.

Question and Answer Session

Operator

(Operator Instructions) James Cammer, Evercore.

James Cammer

Good morning. Thank you. Justin, you always give great statistics on the SHOP update. And I’m just curious, what other color can you provide about sort of the dynamic when you get to 85, 87, 88 type occupancy? How that translates to margin -- expansion?

J. Justin Hutchens

One of my favorite topics. So, we are -- in this period of growing occupancy and facing a period of significant more occupancy growth given the demand that Debbie outlined that we’ve been seeing over the past few years and especially over the upcoming years. So this question starts to become more relevant the higher occupied you get.
What we tend to focus on is simple rules of thumb, one is that when you get to 90% occupancy and you look backwards, you should have achieved around 50% incremental margin during that journey from 80% to 90% occupancy. Same when you get to a 100%. When you get to 100% occupied and you look backward to 90%, you’ll see about a 70% incremental margin.
The operating leverage in the business is what allows for this. At a certain point, you’re fully staffed. Most of your expenses are fixed. You have some variability in expenses, which is why there’s still some margin. But it’s one of the powerful aspects of the business model. And as we grow occupancy -- certainly, occupancy in itself is a great opportunity, but margin expansion is as well as occupancy growth.

James Cammer

Thanks. And then the genesis of the question is I was kind of looking at you need to provide very helpful information on the page 11 of the supplemental regarding the Canadian portfolio. And maybe that’s a decent proxy, maybe it isn’t. I don’t know if the operating dynamics are that different.
But you’re able to extract still perhaps double-digit NOI growth at 95% occupancy because you seem to be getting 5% to 6% RevPAR growth. But at some point, you have no more occupancy to gain. But is it still achievable then to get double digit NOI growth from a portfolio at that time?

J. Justin Hutchens

Well, so first of all, we’re really happy to have a very high quality, high performing Canadian portfolio. It’s been an excellent contributor to NOI growth for us, even at high occupancies, around 97%. It’s still been delivering. It’s one of my favorite examples around being full in this sector. You know, if you’re 90% or 92% or 95% occupancy, you’re not full yet. And Canada is demonstrating this to your point.
So they’re at 97%. They’re still growing occupancy. We’ve had relatively good rate performance. We’ve had good increases, but we’ve also -- in terms of rent increases, but we’ve also had mix impact as our assisted living portfolio in Ontario has picked up occupancy growth. And that’s helped RevPAR as well.
At some point, it’s probably not a double-digit grower. You know, this is something that’s probably more clearly in the single digits, but it’s been encouraging to see the performance in in recent years even at high occupancies.

Debra Cafaro

Jim, thanks for noticing page 12. It’s a good news page for investors. And Justin, could you touch on really the two-thirds of the portfolio where we have significant occupancy upside in the margin and NOI growth in that because that’s really a lot of where your efforts are focused with the team.

J. Justin Hutchens

Yeah. So the on page 12, you’ll notice, this is one my other favorite topics because it’s been a lot of work in the making to get to this point. We decided few -- I’ll call it five years ago, when we got to this point where we are at today, we need to be well positioned to capitalize on the demand that we’re seeing in the marketplace.
You could see it coming. We looked at our portfolio, and we started taking actions to make sure that we’re in the right markets, first of all, that would generate strong net absorption and strong affordability. And to do that, you know, we acquired 190 communities. We sold over a 100 communities. We’ve transitioned well over 100 communities from the triple-net structure to the SHOP structure. And what that did is it’s brought in communities that have lower absolute occupancy.
So what this graph shows is that group’s 79% occupied. The rest of the US is 84%. Canada, when you include everything because it’s outside of same store, we have some lease up communities there as well, 95%.
The big opportunity for occupancy growth is in the US. And the portfolio, as I said in my prepared remarks, that low 80%s occupancy is well positioned for a lot of occupancy upside, but it’s also in markets that should deliver that opportunity.
And then when you layer on the actions we’ve taken through investments in the assets and making sure we have the right operators in place to deliver the successful outcome, we feel really good about how well positioned we are.

James Cammer

Thank you for all that information. I'll get off the line. Thank you.

Debra Cafaro

Thanks, Jim.

Operator

John Kilichowski, Wells Fargo

John Kilichowski

Good morning. Thank you. I would just like to talk about the investments that you made this quarter and just kind of looking at the change this quarter versus last quarter. And I wanted to ask about basis. It looks like your cost per bed took a meaningful step up.
I’m curious if that’s to do with the competitive landscape or just where you’re buying. And then also if you could give color on what’s replacement cost in the markets that you’re buying in. I’d like to know if you know you’re operating still at a pretty steep discount if we’re starting to buy above that.

J. Justin Hutchens

Hi. It’s Justin. Thanks. Great question. So when you look at the profile of what we bought, you mentioned, the per unit numbers.
It was around, what, 270 last year, 350 in this recent tranche of $900 million. So there’s a step up in the per unit values. A couple drivers behind that.
One of them is that they’re newer communities. So we’ve had newer vintage communities that we bought in this tranche around 7 years on average. Inherent in doing so, you're going to spend more on a per unit basis.
They also happen to be as good as the markets were that we entered last year. These are even better. So we have stronger affordability. We have better net absorption and uncapped net demand. I mean it's 1,000 basis points in net absorption, uncapped demand of 1,500 basis points.
They're in markets that have those characteristics, and then we also added some very high quality operators. So the quality of the portfolio, I would say, is a step up. The combined portfolio is going to deliver excellent outcomes for us.
One other thing that you noted that I'll know is that there's clearly some cap rate compression because we were reporting year one yields of [7.7%] last year. In fact, I mentioned in my remarks, we're realizing that as well, this year we're pointing to a [7.2%]. So there's compression.
Having said that, we're still investing within the range. So the weighted average obviously is into the lower [7%], but we're still seeing opportunities that are up towards [8%]. So it's a little bit of both.
In terms of replacement cost, we're still buying below replacement costs. A significant discount to replacement cost even at the 350 a unit.

Debra Cafaro

Yeah. And as we’ve discussed, the replacement cost is rising for a host of reasons, including hard cost inflation, labor scarcity. And so, you know, in most of these cases, you would expect the replacement cost to start with the 4. And so we’re still buying at a significant discount to that. And with unlevered return expectations in the low to mid-teens, which obviously is important when we’re looking at the risk reward proposition for these investments.

John Kilichowski

Alright, very helpful. Thank you. And just to confirm, you said a 7.2 is roughly the number you're looking at for the entire $1.5 million guide, or am I misconstruing that?

J. Justin Hutchens

Yeah. It’s the $900 million that we closed.

John Kilichowski

The $900 million. Okay.

Operator

Michael Carroll, RBC Capital Markets.

Michael Carroll

Yeah, thanks. Justin. Can you give us some more color on the performance of the Brookdale assets that Ventas is going to be taking over or at least transitioning to the seniors housing operating portfolio? I know I think your prepared remarks saying that the EBITDAR is around $50 million, I believe last time the update was in the mid $50 million. So has that changed or should we expect that to change, when you start to transition those assets, when that occurs?

J. Justin Hutchens

Yeah. So I’m probably going to hesitate to give you the exact number. We’ll give you -- we’ll update that when we get to the period of actually transitioning. But what I’m encouraged about is a couple things. First of all, you know, these are communities that are in transition. So there’s always, you know, heightened awareness of that and extra focus that we put on communities when that’s happening.
The 45 communities that are transitioning to new shop operators are actually outperforming the least assets that are staying behind in a lease. That’s exceptionally supportive of the decision we made, but also just our encouragement around where they should be performing when we actually make the transition. A couple things
So we’ve been on the ground quite a bit in these communities. We’ve been engaged with the five new operators that are taking them on. They’ve been in communities as well. I’ve visited several of these, and it seems pretty consistent with exactly what we expected, which is, when you have a these communities, very high quality communities that are located in rate markets, but can benefit from some additional focus and especially investment into the asset to be competitively better positioned, there’s a lot of excitement on the ground when you tell that story.
So it’s been really fun to be interacting with the teams and laying out the game plan for when these transition later this year. And I do think it’s notable to point out that they’re outperforming the rest of the current portfolio with the that we have with Brookdale.

Michael Carroll

And I know with most transitions, usually there's a period of disruption where you could see EBITDAR dip lower as you’re kind of moving in the new team. I mean, should we expect that to happen with these specific assets or is it going to be more seamless than the historical examples?

J. Justin Hutchens

Well, it's a wait and see. But I can tell you that we have -- through the number of -- let’s see -- we’ve had almost 200 communities that have transitioned to new operators in our experience over the past several years. In that experience, particularly in this circumstance where you have a community that’s performing behind market and will benefit from the new investment, we’ve seen good growth opportunity. Whether or not there’s a little disruption in the period of transition, we have seen growth to follow.
I’m going to give you an example of this. We actually have a case study on that same page that Debbie highlighted, page 12. We had 41 transitions that we completed in 2023. It was mostly independent living communities. Those communities are now in our same store pool. So in the first quarter, we were able to report on year over year results. And those results have been 820 basis points of occupancy growth.
They’ve outperformed where we’re located in the next top 99 markets. We’ve outperformed by 480 basis points. And year over year NOI growth has been 40%. So when we look at the Brookdale opportunity, we have a lot of confidence in our ability to execute. And we’ll do everything we can to try to mitigate any potential disruption. But, of course, disruption can be inherent in transitions, but the results that we’ve been realizing through our experience have been really good

Michael Carroll

Okay, great. Thank you.

J. Justin Hutchens

You bet.

Operator

Vikram Malhotra, Mizuho.

Vikram Malhotra

Good morning. Thanks for taking the question. Justin, I want to dig in a bit more into the March comments you made about sort of move outs. I know it’s unfortunate. Is that due to like flu or some specific properties? And has that trend continued into April?

J. Justin Hutchens

Hi, Vikram. It’s ironic you’re asking this question because we had an interaction on the last earnings call around this topic of seasonality. And when we talked about it last time, I was mentioning that -- we -- although there’s been some periods where we’ve had counter seasonal results, there’s always the opportunity to experience seasonality.
And I had in my mind at the time was the flu season around the US was elevated. Interestingly, there’s no correlation in these clinical move outs and the flu season. In fact, it’s uncorrelated to any specific trend whatsoever. It just happened.
And it’s important that that our investors understand that our move in activity is very good. It’s in line with last year, which is one of our best years ever. The tour activity, move in activity that we anticipate in the key selling season should be very strong. This was a move out issue, and it’s entirely driven by these clinical move outs, which are unfortunate. It’s a sad part of the business, and they’re unpredictable. That’s really the color I have on it.

Vikram Malhotra

No. Makes sense. You’re absolutely right. I did ask you the question, I think, and you had said that you baked in normal seasonality into the guide. So, this is obviously in line with what you said. Just maybe on the pricing side, your full year still is 4.5%. You had really good bumps, and you’ve kept that intact. So does that essentially suggest pricing power sort of accelerates through the year on a year over year basis? And do you mind sort of giving us a view between Canada and the US? Thanks.

J. Justin Hutchens

Sure. So, you know, pricing, like I said in my prepared remarks, has been really good. Supported by internal rent increases. It’s supported by our street rate growth as well. In fact, you know, when you adjust for the leap year, which is a simple calculation, you just add the calculation for RevPOR is revenue divided by occupied units.
You just add a step and divide by days, which is important, you know, if you want to get to a good comparison when there is a leap year because we do have one operator that actually builds on a daily basis. So that number, when you run that calculation, is around 5%.
So good pricing year over year. On a leap year adjusted basis around 5%. We’re off to a strong start. So, you know, that’s -- the rest of the year remains to be seen. We have a lot of the year left to play out, and it’s in -- what’s typically very good. It’s the strongest demand season for us in the key selling season.
And then Canada, you mentioned too. So, Canada has had good pricing opportunity as well. And we’ve had - you know, in Quebec, we’ve had a little bit more opportunity to pass along rent increases because the regulatory body that oversees that has lightened up.
The restrictions there, which has helped us to pass expenses through, which are always part of the operation every year. Ontario has always been a little bit better. It’s been a lot better for us, though, in recent years because of the lease up we’ve had in our assisted living portfolio, which is higher price points.
So we’re getting a mixed impact as well. But good pricing power, an opportunity really across the Board.

Operator

Jeff Spector, Bank of America.

Jeffrey Spector

Great, thank you. Debbie, in your initial comments, you did talk about the high degree of macro uncertainty, I guess -- but you guys have also discussed the strong movement tour activity. It sounds like -- through April, can you just walk us through a bit this leasing season and the importance of let's say housing or anything else we should be watching as risk to the coming months to increasing that occupancy in senior housing. Thank you.

Debra Cafaro

Yes. Hi, Jeff. So, yes, there is a lot of macro uncertainty. We all know that. But what we believe at Ventas is that senior housing is one of the, if not the top asset class within real estate. And there's a lot of reasons for that.
As you mentioned, the demographic demand is extremely powerful. The supply picture is as muted as it could be. And if it's 3 year start to finish and you're seeing increased costs to build and you have a step function in the senior population growth starting in 2027, you can see why these strong tailwinds should benefit us for a very extended period of time.
And so we feel really good about that in terms of the demand at the doorstep. As Justin likes to say, we are seeing, strong demand. And we -- this is the key selling season, and so we have good expectations for strong activity.
In terms of the housing market, there is modest correlation. And the housing market actually just saw a big jump in pending home sales. Most seniors don't have mortgages on their homes, and our residents, when you think about the over 75 population, the average net worth of those households is $1.6 million, so we continue to have good affordability. I said it was excellent.
So all of these trends really combine to give us a lot of optimism about this extended multi-year NOI growth opportunity and senior housing that Justin and the team, in collaboration with the operators, is really focused on delivering.

Jeffrey Spector

Great, thank you. And then clearly the focus is on senior housing. Can you talk a little bit more about the strategy around the research portfolio? Thank you.

Debra Cafaro

I mean, our one, two, three strategy is really focused on senior housing with the first, of course, being driving organic growth; the second being expanding our participation and elevating our growth rate by investing in senior housing; and then the third is to maximize performance in the rest of the portfolio.
The outpatient medical is at about 20% of that business, and it’s of our business. And it is going strong, continuing to deliver that compounding growth.
Research is the smallest. It’s a single digit kind of NOI contribution all in. And our strategy is really what number three is, which is to maximize the NOI opportunity there. And what I would just leave you with on that is that we’ve built this life science portfolio differently. And that is, it’s a -- three quarters of the tenants are credit tenants, and we have a nine-to-ten-year wall.
And so that portfolio really was built to be steady and stable even during more challenging times. And so we feel good about that even though that segment certainly has its some challenges right now. So our strategy is to maximize NOI. And it’s a credit business, and Pete and the team are going about doing that.

Jeffrey Spector

Okay. Thank you.

Debra Cafaro

Thank you.

Operator

Richard Anderson, Wedbush.

Richard Anderson

Good morning. Justin, you talked about the Brookdale transitions to RIDEA, the assets outperforming those that are staying behind in the net lease model. I guess the question is, how much money are you leaving on the table there? Did you foresee that delta, when you made the deal with them? And, just curious, if you had just sort of done everything all of it as opposed to some leaving some behind with Brookdale, if that would have been the better option.

J. Justin Hutchens

Hey Rich, you broke up.

Debra Cafaro

Rich, we’ll take that offline, but I think it’s fair to say that the entire Brookdale portfolio is generally improving in performance. We like the 45 assets that we’re moving to SHOP and that are remaining are also performing well. And the way that we’re improving NOI in that remaining lease is through a significant rent increase on lease renewal. So we’ll come back and get back to your question because you broke up offline. Thank you.

Operator

Omotayo Okusanya, Deutsche Bank.

Omotayo Okusanya

Yes. Good morning, everyone. So I guess focusing on shop, I mean, clearly, the way the stock is before business morning, I think there’s some concern just around same store NOI growth kind of slowing this quarter relative to the 15%-plus you’ve kind of been putting up.
I don’t know whether you can kind of talk to that, whether there were just some idiosyncrasies with this quarter. I think you just kind of mentioned some move out activity in March. And kind of going forward, how once you kind of think about, you know, hitting it to the lower or higher end of your 11% to 16% full year guidance?

Robert Probst

It’s Bob. I’ll take that one. So we’re pleased with the first quarter, 14%. Very good start. In fact, above our expectation internally. And that was really -- that was RevPOR, that was labor, a good a good start there.
And we’ve highlighted multiple times so far that in terms of phasing, we expect the second half on a year over year basis to be higher than the first half. And as always, you know, beat the drum here. It’s the key selling season that is the determinant of that.
So from our -- where we sit, strong start, ahead of expectation in the quarter and the phase inconsistent with what we’ve been saying.

Omotayo Okusanya

Okay, I guess the pushback is if you just kind of take a look at seasonally in 1Q '24, you were kind of above your current same store NOI growth. And I don’t know whether it’s again -- whether it’s just harder to get you over your occupancy gains. I guess just trying to figure it out of getting people comfortable with the idea that the higher end is achievable.

J. Justin Hutchens

Alright. Let me address this, Justin. So, you know, as we look ahead, like I was saying, we have significant occupancy upside in the portfolio. There’s various things that impact performance at different times. I remember last year, we had agency coming out of system. That was benefiting expenses. And so that gave us an opportunity for outsized performance.
What we have happening now, and I was trying to articulate earlier, is a lot of action that’s underway, but the best is yet to come. So we have a strong conviction around the growth opportunity. Like I said, we have a hundred more projects that we’re refreshing this year that are -- they’re underway.
We have all these new operators that we’ve added, a lot of which are coming through acquisitions, others that we’re bringing in to through transitions over time that we’ve done. They’re getting -- they’re finding their sea legs.
And so -- and we’re never ever stopping focusing on trying to improve performance. I mean, this is -- this will be a continuous improvement in performance opportunity. My team fixated on that. So we’re not ready to say we haven’t seen the that we’ve already seen the best we’re going to see.
I mean, we’re just now also getting into the strongest period of demand that the sector’s ever seen by a long shot. So, I think the best is -- hopefully all things considered equal, the best is yet to come.

Omotayo Okusanya

I appreciate that those comments. If I may ask one more just on the on the life sciences, the part of the business. Again, Debbie, just with this potential change in NIH funding where the indirect cost match from the federal government can get capped at 15%, have you taken a look at just how high that number has been at all the universities you’re involved in and whether that could become a real issue going forward?

Debra Cafaro

Yes. We do business with the leading biomedical research institutions in the country. And we have a detailed understanding of the so called indirect cost. I would tell you that first of all, the proposal that the administration put forward is on hold, and so it has not been pushed through.
If it were to be pushed through, there would be an impact that would be, on average, maybe a mid single digits impact to the overall research budget for most of the leading universities. And that is manageable in light of the AA credit rating that we have in our portfolio for the university tenants as well as the nine-to-ten-year walls. So these are juggernauts who have a lot of resources to weather the storm.

Omotayo Okusanya

I appreciate that. Thank you.

Operator

Juan Sanabria, BMO Capital Markets.

Juan Sanabria

Hi, just on the acquisition front, given the $500 million incremental that's added to the guidance that you said is back half loaded, is there the expectation or should we be thinking that there's maybe a temporary pause until deals that are reloaded? Is that fair to kind of assume just given the timing of your guidance, or is there other stuff that could fill the interim that could happen pretty quickly here?

J. Justin Hutchens

So I am just stepping back for a minute. One thing I had in my prepared remarks intentionally was the amount of the $2.8 billion that we've done, most of that over the past year, including being last year, happened over the last 6 months. And so we've had this acceleration of investment activity.
We added another $500 million we. Have a good line of sight on the $500 million. We have a pipeline that that is much bigger than that. So we're going to keep working on finding opportunities within the pipeline and some that are maybe not there yet that have the criteria that we like, which is, first and foremost, an asset that will deliver strong IRRs, low to mid teen unlevered IRRs.
And we're flexible with the type of assets. We're looking for a good combination of high quality, strong markets growth. That's all completely continuing one. It can be lumpy because you have a period of time where you are working -- you access the deal and then you work to close the deals. And so there can be lumpiness in terms of when you actually deliver deals to close. And I think that's the point we're trying to make.

Juan Sanabria

If I could ask a follow up on the shop and the clinical move outs, you noticed -- noted a kind of a lower end point or starting point for the second quarter. Would you guys be able to or can you provide the March 31 year over year figure or what or what the occupancy was on for the same store pool just so we can calibrate and kind of fully take into account that move out impact?

Robert Probst

So I want to make the first point which is move ins strong. First quarter, expect to be strong. Second quarter, we were 290 year over year. First quarter, we reaffirmed 270 full year balance of the year. Clearly, the jumping off point or start point of the second quarter is lower because of the mortality that Justin mentioned. And clearly in reaffirming the guide, if you just do the math balance of the year, it's below that 290 number.
But, I think it's right to say, we shouldn't not look at spot numbers, we should look at trends. We should look at the year and really focus on the moves and the key selling season which is right in front of us. So that's how we think about it.

Juan Sanabria

Thank you.

Operator

Seth Bergey, Citi.

Seth Bergey

Hi guys, thanks for taking my question. Kind of going back to the yields, is there any thought about acquiring more type of 4-plus assets versus the newer -- maybe better position in the market assets where you can leverage the Ventas platform, your network of operators, and Ventas OI to kind of drive a higher yield.

Debra Cafaro

Hi, Seth, it's Debbie. I would definitely confirm that we are eager to deploy capital when the acquisition or investment opportunity provides good risk adjusted return, when it provides the kind of low to mid-teens, unlevered IRRs that we're looking for, which is paramount when we can buy below replacement costs. And our aperture for investments is pretty broad based, and we certainly will consider different types of profiles to get to that unlevered IRR.
They could be lower occupied, higher occupied. But it's all about the risk adjusted return that we see in the asset and the replacement cost. And that's really where our investment team is focused.

Operator

Austin Wurschmidt, KeyBanc Capital Markets.

Austin Wurschmidt

Great, thanks, and hello everybody. Bob, you hit a little bit on my first question, which is going to be the comment you previously made about expecting the same sort of growth in senior housing to be better in the second half versus the first half. Can you just give us what the biggest drivers of that improvement is because clearly you alluded to occupancy being lower.
So is it RevPOR growth re accelerating versus the first half of the year? Is it something on the expense side that's driving that re-acceleration or just changes to the same store pool? Just any color you can shed on that. Thanks.

Robert Probst

Well, I'd really point to what we saw in the first quarter so far and the balancing items. Obviously, the demand was strong in the form of move-ins, and the key selling season is the vast majority of the full year move-in. So that's point one.
As you down to the P&L, we mentioned RevPOR was favorable in the first quarter, both in terms of in place and street, both performing well. I would highlight on the OpEx, which we really haven't talked about. 5% on OpEx in the first quarter, year over year, in line with our full year guide.
When you unpack that and we gave this in the deck, you can see labor versus non-labor actually trending quite favorably, and that's very encouraging. And so as we look at it, the composition of it, that first quarter is encouraging. And I'm going to be going back to the key selling season, but that's what we saw so far.

Austin Wurschmidt

Got it. And then Justin, maybe what do you attribute to the re-acceleration and RevPOR growth on a leap year adjusted basic basis? Is it more mix related to the assets where you're growing occupancy, or is it more function of the street rate growth you guys have highlighted a few times?

J. Justin Hutchens

Yes, so we have a very deliberate effort through our OI platform and the team that delivers those insights to our operators to focus on price volume optimization. And in doing so, we're looking for, quite frankly, just to be priced right. We don't set pricing, but we give guidance in terms of where we think the opportunity is to either obtain price or to deliver occupancy growth.
And through those efforts, we're seeing encouragingly move in rents have been stronger than we've seen in recent years. So we're starting to see a pick up from a street rate/ move in rent standpoint. We had 7% internal rent increases. And I always like to remind everyone, Debbie, especially does too, that we still have relatively low occupancy. So we have good price opportunity even in occupancy that's around 84% in the US.
Canada is also benefited from those trends, but it's also benefited from the mix shift as well. But the US is more around the deliberate actions that that our operators have taken, with some insights from us as well, to deliver better pricing.

Operator

Michael Stroyeck, Green Street.

Michael Stroyeck

Thanks and good morning. Maybe going back to the research segment, can you just remind us how much of the tenant base is in the traditional biotech sectors and what the average wall is specifically on those leases?

Debra Cafaro

I'm going to turn it over to my colleague, Pete, for a second, but again, 75% of the single-digit NOI that we get kind of all in from research is credit tenants with wealth between 9% and 10%. So in some senses, Michael, it's the inverse of that, but I'll turn it over to Pete to provide more specifics.

Peter Bulgarelli

Sure, yeah, so as Debbie said, about three-fourth of the tenants are investment grade. And 50% are universities with that AA rating, so it's really a strong tendency, very different than most. And just to give you a perspective, at share we have about 6 million square feet of space in the research portfolio and only 148,000 square feet are in the three most stressed cities, which is San Francisco, Cambridge, and San Diego.
So it's a very different portfolio that's been built. Having said that, about the remaining 25% is a mix of retail, biotech, flexible innovation space and so forth. And about half of that are revenue generating. They're kind of past their inflection points. So we think about roughly 12% of our portfolio is kind of the earlier stage biotech or innovation flex space. And at least terms for those are typically, for the innovation spaces, those are 10 years plus, and for the pre revenue biotechs, they’re usually five to seven years.

Debra Cafaro

And Michael, one final point on this, I believe Bob mentioned it, but we are continuing to see really good institutional demand for the portfolio, and that really runs across highly rated university users, medical research, and medical users, and some of our non-cluster markets which have basically no new supply.
So when I mentioned that these organizations are juggernauts, I mean they've got 50 to 100 year plans. And we really are in a in a good position because we're seeing very current. LOIs, leasing activity, and other interests from these institutional users in the portfolio. And we're trying to take -- trying to capitalize on that. So the near term on those users continues to show a good activity and interest.

Michael Stroyeck

Got it. That’s helpful. Maybe just sticking with that point then, where do you expect occupancy to trend over the next 12 months within the research portfolio?

Debra Cafaro

Well, again, right now, we’re reaffirming the OM&R same store cash NOI growth of 2% to 3%.

Robert Probst

I would highlight in the total research portfolio that we have a number of the assets up in redevelopment mode, notably in Philly, which is having an impact on occupancy, but we believe that those redevelopments are going to be value creating and so it's the timing issue.

Operator

Ron Kamden, Morgan Stanley.

Ronald Kamdem

Just two quick ones for me. Clearly the conversions really jump out and the success that you've had. I think I asked this last quarter as well. But as you're sort of relooking the NNN portfolio. Is there ways to create more conversion opportunities? Just can you talk us through just the puts and takes there because it would seem like financially it would make a lot of sense to do more.

J. Justin Hutchens

Yeah, it's Justin. So we certainly have put a lot of energy into that given the number of conversions we've had. We've talked about Brookdale. What we haven't talked about yet is the UK. I mentioned in the prepared remarks that we have a new operator, and that came by way of converting triple-net to SHOP.
There's 11 London area and Southeast England area care homes that were in a triple-net portfolio. They're now SHOP. They're operated by CCG who is an operator who has -- who's known for turnaround, redev. And they've grown their enterprise to 100 locations across England, Scotland. So we have a right operator.
We're in some markets that I'm particularly excited about. One is, we're right in between Walton-on-Thames and Richmond-on-Thames. And if you know that part of the of England, you might know Hampton Palace, which is a great place to visit. It's my old stomping grounds.
Our location is right near the river, great campus, very well run care home that has particularly very strong price and occupancy opportunity with investment. So with the right operator and with the right investment in the community, I'm really excited about that and several of the other locations. And I'm also excited to have a SHOP portfolio in the UK now. So we can lean in a little bit over time into that market, which also has very strong fundamentals.
Having said that, the US remains our first and foremost priority, and we have tremendous opportunity in the US. But we do keep looking for opportunities to convert from triple-net to SHOP and that's the most recent example.

Ronald Kamdem

Great, helpful. And then I just want to go back to the acquisition slide in question. I think the slide makes it looks like cap rates are compressing 50 basis points, which -- this may not be apples to apples, but I guess I'd love to hear, it's more competition, cap rate trends. Just a little bit more color on that on what you're seeing in the pipeline. Thanks.

J. Justin Hutchens

Yeah, it's -- these are -- when you compare the activity of last year to the activity this year, these are two big samples, of what we're -- what we were able to demonstrate in the market. One was 7.7% last year, 7.2% this year. So clearly there's cap rate compression. But it's also still in our stated range that quite frankly, we established 1.5 years ago of 7% to 8%.
And then our IRR still remain really exactly where they were, which is low to mid-teens. And great opportunity to acquire both yield and growth in these communities that we've been purchasing.
There is more competition, clearly, given how strong the senior housing fundamentals are in the sector and the standout asset class amongst real estate. More players are coming to the table, but that's when the advantage platform that Ventas has really starts to shine.
We enter deals with the track record of having closed all these recent transactions and the credibility of delivering what we say we're going to do. We do not have financing contingency when we enter deals. We have a platform to manage scale and senior housing that is unrivaled by the entire capital sector that faces the industry except for one tier. And therefore we feel very good about our opportunity to continue to compete.
And we are also benefiting from the relationships we have in the portfolio. Like I said, 75% of our deals have been born of these relationships, and that's advantage us as well. So yeah, we'll see more competition, and we'll also be ready to continue to compete.

Operator

Nick Yulico.

Nick Yulico

Yeah, I've experienced that a lot in my life. Good morning, everyone. So, I guess just maybe just going back to the commentary on the move out in March, the clinical outcomes, I was just hoping to get a little bit more of maybe the math, if you could flesh that out a little bit because I think what we and some others are kind of struggling with right now is if you have, 60,000 units in your senior housing same sort of pool, how could mathematically your occupancy really be affected by some level of clinical move outs?

J. Justin Hutchens

I mean, we're not probably going to get into the exact numbers, but the simple answer is our movement activity was consistent with last year. Our move out activity was higher, and it's driven by the mortality rate being high.
So you just have a relative to our original expectation. You have, a lower jumping off point. And they happen late in the quarter and that's what impacts the jumping off point.
So it does have an impact. I mean, just like conversely, the key selling season, which is substantially all of the net movement activity happens, that has the opposite impact. We tend to see around 10% more movements during that period, usually see around 5% less move out. Together that's what the key selling season delivers, May to September, and delivers all that occupancy growth that we hope to see again this year. So that's just how the seasonality tends to play out.

Nick Yulico

Okay, and then just going back to -- I know your company others in the industry have moved away from wanting to give monthly data. And I think it was asked earlier about where was March occupancy, and so I guess I'll try asking again about if there's any way you could give a feel for how March occupancy is? How April's trending? And the reason I'm asking is that, I think, you guys kind of opened the door to this being a natural question when you said that the jumping off point is lower to start in the second quarter.
So as everyone's looking at testing your guidance assumptions I know you've already said that you feel good about your full year guidance, but people are thinking about impacts potentially to the guidance or even how you could exceed guidance, it would be pretty helpful to understand where March and April occupancy is for the portfolio.

Robert Probst

Yeah, I think you're right, Nick, to say that the industry has gone away from that timing in light of the fact that we should all be focused on the trends. I'll say again, you can do the math and say 290, first quarter; 270, full year plug. And that gives you a number, which is the start point and on a reasonable approximation of the start point. So, beyond that, I would just keep our eyes focused on the trends in the longer term, notably the key selling season right ahead of us.

Nick Yulico

Okay. Thank you.

Operator

Mason Guell, Baird.

Mason Guell

Thank you. Good morning, everyone. Do you expect independent living occupancy growth to continue outpacing assisted living throughout 2025, and would the GAAP be consistent with the first quarter?

J. Justin Hutchens

As Justin. So historically and currently across the sector, independent living does tend to have a higher absolute occupancy. It's also been a strong contributor of growth for us in the US around 370 basis points for assisted living, which was also very strong with 300 basis points.
So, we've had a lot of portfolio actions that have been directed towards independent living, including, operators and investments in the portfolio, but it's also been the case for assisted living. So we'll anticipate growth really in both categories of senior housing moving ahead, and hope that they will continue to be really strong as we get into this key selling season.

Mason Guell

Great. And have you seen a notable difference in competition for independent living versus assisted living product?

J. Justin Hutchens

And you mean in --

Debra Cafaro

In investment?

J. Justin Hutchens

From a consumer standpoint or from an acquisition?

Mason Guell

From an acquisition standpoint.

J. Justin Hutchens

Yeah, so we've been focusing by and large on campuses that offer a combination of services, independent living, assisted living, memory care. For the most part, it's been those three services on a campus. Sometimes it's an assisted living memory care combination. There's been some kind of living that are freestanding that we purchased as well. I'm talking about over 70 communities that we've invested in over the past -- since the beginning of last year.
Yeah, we -- there's competition for the highest quality assets, which is what we've been pursuing. And we've been pursuing communities that are high performing with upside. One of the things that really helps us to compete is the preference among our operator relationships. That's been -- that's played a key role for us. And that is that they want to work with us and continue to work with us. And there's a lot of new operators we've added as well. So when we find ourselves in a competitive situation, that's one aspect that's helped us to win deals.
Obviously our financial strength and flexibility is another aspect. And then a track record with counterparties as an acquirer of assets is excellent. So we like our opportunity to continue to compete and even for the best assets.

Operator

Thank you. That's all the time that we have questions for today. So I'd like to please turn this back to Ventos Chairman and CEO, Deborah Cafaro, for closing remarks.

Debra Cafaro

Thanks, Amy. So to conclude, Ventas delivered strong results in the first quarter. Demand for senior housing is strong and getting stronger and supply remains highly constrained. The multi-year NOI growth opportunity driven by senior housing is well underway with 11 quarters in a row of double-digit NOI growth, and yet the best is still ahead. So we look forward to seeing all of you soon to discuss this and more, and hope to see you in New York. Thanks.