2025-07-25 15:02Financial 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, with 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 saw same store growth of 3.9%, with over 1,000,000 square feet of leases executed, including approximately 200,000 square feet of new leasing [20] - CCRC portfolio generated approximately $200,000,000 of annual NOI, which is 50% higher than in 2019 before the pandemic [14] - Lab R&D business is beginning to see positive indicators, with new supply quickly going to zero [11] Market Data and Key Metrics Changes - The company has significant concentration in markets like Dallas, Houston, Nashville, Atlanta, Phoenix, and Denver, which are expected to drive growth [10] - Recent broker reports indicated over 4,000,000 square feet of inventory being removed from the supply pipeline in the lab sector [12] - The occupancy in the outpatient medical portfolio remains strong at 91-92% [48] Company Strategy and Development Direction - The company is focusing on internalizing property management to enhance tenant relationships and operational efficiency [8] - A strategic plan is being implemented to enhance operating procedures and elevate service standards [18] - The company is optimistic about the regulatory environment, particularly the proposed rule from CMS that would allow more procedures to be performed in outpatient settings [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution from the team and the diversified portfolio, despite challenges in the lab sector [24] - The political and regulatory environment is improving, with favorable changes in drug pricing and tax treatment for research and manufacturing [7][10] - Management noted that the capital markets have shown signs of improvement, which could benefit tenants seeking to raise capital [40][56] Other Important Information - The company completed an enterprise-wide technology upgrade to improve data integration and productivity [5] - The internalization of property management is expected to generate profit and improve tenant satisfaction [9] - The company has nearly $2,300,000,000 of liquidity and ended the quarter with a net debt to adjusted EBITDA of 5.2 times [22] Q&A Session Summary Question: Can you break down the occupancy decline in the lab segment? - Management indicated that the occupancy decline was due to lease expirations, tenant migration, and some tenants unable to raise capital [28][29] Question: What are the thoughts on capital allocation and balance sheet usage? - Management emphasized maintaining a strong balance sheet and being opportunistic with asset sales and buybacks [32][34] Question: How much impact do you expect from unsuccessful capital raises on occupancy? - Management acknowledged some headwinds for occupancy but noted positive signs in the capital markets that could improve the situation [40][42] Question: Can you provide insights on the development pipeline and capitalized interest? - Management stated that capitalized interest will trend down as projects come online, with ongoing entitlement processes for large projects [76] Question: What are the expectations for the CCRC occupancy? - Management noted that the sequential dip in occupancy is typical seasonality, with strong performance in independent living [78][80] Question: How does the company view the regulatory changes and their impact? - Management expressed optimism about regulatory changes, particularly the shift towards outpatient settings, which aligns with the company's focus [10][106]