Core Insights - The real estate market is currently experiencing a correction, with values down approximately 25% and showing signs of stabilization, suggesting a potential transition into a recovery phase by 2026 [2][5]. Real Estate Market Overview - Since August, real estate values have been flatlining, with various sectors showing different performance metrics; for instance, data center REITs are down nearly 16% year-to-date, while malls have increased by about 4% [2][3]. - The capital markets have faced dislocation due to significant events, leading to a pause in decision-making among major players, particularly affecting industrial real estate [5][6]. Sector Performance - Class-A office buildings and data centers are identified as areas of strength within the real estate sector, particularly in urban centers like New York City [7]. - Residential real estate, especially senior housing, is undersupplied and is viewed as a necessity-based sector, making it a favorable investment opportunity [8]. Senior Housing Insights - The population aged 80 and above is expected to grow by 50% over the next five years, indicating a significant demand for senior housing, which is currently being built at only half the required rate [10][11]. - There is a concentration of wealth within the senior population, which may enhance their ability to afford senior housing options [11][12]. Affordability Considerations - The affordability of senior housing is a critical issue, as not all seniors will be able to pay for assisted living; however, many have accumulated wealth through home appreciation, which may enable them to afford such services [14][16]. - The market for senior housing is diverse, with different segments catering to various price points, and the adoption of technological innovations is expected to reduce service costs [17][18].

Financial Data and Key Metrics Changes - Core FFO improved to $0.69 from $0.68, primarily due to an increase in SHOP NOI and a decrease in interest expense [5][6] - Core FAD improved by $0.04 to $0.72 compared to $0.68 last year, influenced by similar factors affecting core FFO [5] - Pro forma debt to annualized adjusted EBITDA for real estate was 4.7 times, and annualized adjusted fixed charge ratio was 4.6 times [7] - Pro forma liquidity stands at nearly $500 million [7] - Full year 2025 core FFO guidance increased by $0.01, now standing at $2.69-$2.71 [8] Business Line Data and Key Metrics Changes - SHOP segment closed about 85% of the projected $460 million investment pipeline, with over $290 million in SHOP segment investments [3] - SHOP portfolio now includes 21 properties with five operators, three of which are new to LTC, with a gross book value of $447 million [9] - SHOP NOI guidance for 13 properties increased to $10.9-$11.3 million, up from $9.4-$10.3 million [10] - Expected fourth quarter NOI for the remainder of the SHOP portfolio is $4.8-$5.2 million [10] Market Data and Key Metrics Changes - The current opportunity set stands at roughly $1 billion, with nearly $110 million under LOI targeted to close in January 2026 [12] - The average vintage of SHOP acquisitions in 2025 is 2019, indicating a focus on newer assets [39] Company Strategy and Development Direction - The company is focused on expanding its SHOP platform, deepening operator partnerships, and driving long-term accretive returns [16] - The strategy includes recycling capital from non-core assets and adding new operators to enhance portfolio quality [9] - The company aims to build a portfolio of newer assets with competitive advantages as the industry evolves [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting strong momentum and a solid foundation for growth [16] - The company is positioned to capitalize on favorable demand fundamentals and supply constraints in the senior housing market [3] - Management expects continued strong SHOP NOI growth due to the competitive position of SHOP assets [10] Other Important Information - The company completed the sale of a portfolio of seven skilled nursing assets, generating net proceeds of approximately $120 million and a gain of $78 million [11] - A non-cash write-off of $41.5 million was taken related to Prestige's straight-line effective interest receivable balance [6] Q&A Session Summary Question: Guidance assumptions for core FFO range - Management clarified that the low range includes all closed investments, while the high range includes expected closings within the next 60 days [20] Question: Focus on SHOP deals versus other opportunities - The primary focus is on SHOP deals, although other opportunities will be considered [21] Question: Expected yields and growth for pipeline deals - Initial yields for the $110 million deal are guided at 7% [25] Question: Funding incremental capital - Proceeds from loan payoffs and equity from the ATM will fund investments, with a disciplined approach to equity issuance [28] Question: Growth profile after SHOP investments - Management expects more than 3% growth with targeted low double-digit IRRs due to supply-demand imbalances [37][38] Question: Transitioning operators and potential disruptions - Most acquisitions have retained existing operators, with careful planning to avoid disruptions [50] Question: Prestige's prepayment option and performance - Prestige needs to improve performance to exercise the purchase option, with positive indications for future outcomes [54][57] Question: Opportunities for earnings growth in skilled nursing - The company remains selective in skilled nursing, focusing on transitional care and newer assets [64]

Financial Data and Key Metrics Changes - The company reported a net income per share of $0.79, down 2.5% from the prior year [24] - NAREIT FFO per share increased by 0.8% to $1.19, while normalized FFO per share rose by 3.4% to $1.22 compared to the prior year [24] - FAD for the quarter increased by 8.1% to $56 million [25] - The company raised the midpoint of its normalized FFO guidance per share by $0.09 to $4.80, representing year-over-year growth of 8.1% [7][31] Business Line Data and Key Metrics Changes - SHOP NOI increased by over 29% year-over-year to $3.8 million [18][25] - The annualized SHOP NOI increased by approximately $8.8 million or 57% following the transition of seven properties from leases to SHOP [8] - SHOP revenues for the six months ended June 30 increased by 5.7% to $28.2 million [25] Market Data and Key Metrics Changes - The company has approximately $130 million in unsigned LOIs expected to close in the next few months, including a SHOP deal valued at approximately $74 million [11] - The liquidity at the end of the quarter was approximately $760 million, which includes escrowed forward equity and cash [29] Company Strategy and Development Direction - The company is focusing on expanding its SHOP portfolio, which is believed to provide the highest growth potential with the best risk-adjusted returns [9] - The company aims to maintain a leverage-neutral approach while also having the flexibility to utilize equity for funding investments [41][43] - The company is committed to improving governance and has made significant board changes in response to shareholder feedback [14] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth opportunities and confidence in capitalizing on these opportunities [13] - The company expects double-digit NOI growth for the SHOP segment in 2026 [17] - Management noted some recent softness in occupancy but remains optimistic about reversing this trend [19][52] Other Important Information - The company announced a dividend increase of 2.2%, marking the first increase since 2021 [30] - The company completed the acquisition of a senior housing portfolio for $63.5 million during the quarter [27] Q&A Session Summary Question: What is driving the delay in closing some investments? - Management characterized it as a timing issue, with a robust pipeline still in place [36][37] Question: Are there larger portfolio transactions being evaluated? - Management confirmed that larger deals are being evaluated but emphasized the importance of having the right operating partner [39][40] Question: How is the relationship with Discovery being managed? - Management indicated that Discovery remains a partner and that there is ongoing NOI growth within that portfolio [48] Question: What caused the recent softness in occupancy? - Management attributed it to changes in local leadership and higher than normal move-outs, expecting a return to normal trends [52][53] Question: Can you provide an update on NHC discussions? - Management confirmed ongoing discussions and noted that NHC's coverage has improved to over four times [66][67]

Portfolio Overview - As of December 31, 2022, the company's portfolio consisted of investments in 192 properties [39] - The annualized adjusted NOI for contracts in place at December 31, 2022, was $2368 million [15] - Skilled nursing facilities represent 36% of the asset class [16] - Entrance fee assisted living represents 22% of the asset class [16] Financial Performance - Total revenue for Q4 2022 was $70669 thousand, compared to $69668 thousand in Q4 2021 [39] - Rental revenue (GAAP) for Q4 2022 was $53764 thousand [39] - Normalized FFO per diluted common share was $085 in Q4 2022 [39] - Regular dividends declared per common share were $090 in Q4 2022 [39] Capital Structure - Total debt as of Q4 2022 was $1147511 thousand [39] - The company targets a 60/40 equity/debt funding mix [31] - Secured debt accounted for 67% of total debt [47] - Unsecured debt accounted for 933% of total debt [47]