Financial Data and Key Metrics Changes - The company reported FFO as adjusted of $0.46 per share and AFFO of $0.44 per share, with total portfolio same store growth of 3.5% [19] - CCRC business reported same store growth of 8.6%, driven by rate growth of 5% and higher entrance fee sales [19] - Outpatient medical segment achieved 85% tenant retention, a positive rent mark to market of 6%, and same store cash NOI growth of 3.9% [20] Business Line Data and Key Metrics Changes - Outpatient medical segment showed strong performance with same store growth near record levels, driven by aging population and consumer preference for lower-cost settings [9][10] - CCRC portfolio generated approximately $200 million of annual NOI, which is 50% higher than in 2019 before the pandemic [14] - Lab R&D business is seeing positive indicators with new supply quickly going to zero, and regulatory changes promoting innovation [11][12] Market Data and Key Metrics Changes - The company has significant concentration in key markets such as Dallas, Houston, Nashville, Atlanta, Phoenix, and Denver, which are expected to drive future growth [10] - Recent broker reports indicated over 4 million square feet of inventory being removed from the supply pipeline in the lab sector [12] - The political and regulatory environment has improved, with favorable changes to drug pricing and tax treatment for research and manufacturing [5][6] Company Strategy and Development Direction - The company is focusing on internalizing property management to enhance tenant relationships and operational efficiency [7][8] - Strategic goals include deepening competitive advantages in core markets and capitalizing on outpatient medical development opportunities [10][11] - The company is also investing in AI capabilities to optimize operations and enhance asset performance visibility [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the outpatient medical segment and the potential for growth in the CCRC business due to strong market fundamentals [23][24] - There are concerns about occupancy declines in the lab sector due to tenant capital raising challenges, but recent positive market indicators are encouraging [39][46] - The company remains confident in its diversified portfolio and the ability to deliver results despite challenges in the lab sector [24][82] Other Important Information - The company has completed an enterprise-wide technology upgrade to improve data integration and productivity [4][5] - The balance sheet remains strong with a net debt to adjusted EBITDA of 5.2 times and nearly $2.3 billion of liquidity [22] - The company is monitoring the bond market for refinancing opportunities to strengthen its balance sheet further [22][23] Q&A Session Summary Question: Can you break down the occupancy decline in the lab segment? - Management indicated that the decline was due to lease expirations, tenant migrations, and some tenants unable to raise capital [28][29] Question: What are the latest thoughts on capital allocation? - Maintaining a strong balance sheet is the priority, with potential for opportunistic asset sales and stock buybacks [32][34] Question: How much impact do you expect from unsuccessful capital raises on occupancy? - There will be some headwinds from occupancy, but the overall portfolio remains diversified with a majority of credit tenants [41][42] Question: Can you provide insights on the development pipeline and capitalized interest? - Recent tenant capital raising challenges affected pre-leases, but capitalized interest is expected to trend down as projects come online [68][72] Question: What is the quality of space being returned from tenant move-outs? - The quality varies, with some spaces ready for re-leasing and others requiring capital investment [119]