Welcome to the afternoon of day two of Citi's Global Property CEO Conference. I'm Michael Bilerman. I'm here with Nicholas Joseph from Citi Research, and we're extraordinarily pleased to have with us Ventas and CEO Debra Cafaro. This session is for CEOs for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are also available on the webcast. For those that are joining us in the webcast, to ask management any questions, simply type them into that question box, and they're going to come directly to both Nick and myself, and we'll do our best to weave those into the conversation. Debbie, I'm going to turn it over to you to introduce the company and the management team that's here with you today, and then we'll kick it off with some Q&A. Thank you. Good. Well, hello, everyone. It's great to be here with Citi, of course, Michael, you and Nick, as well as our investors and my colleagues, Justin Hutchens and Bob Probst. A couple notable openers. First of all, it was my 22nd year anniversary at Ventas yesterday. I remember showing up to this small, distressed healthcare company in Louisville in my jeans because they lost my luggage, trying to save the company and learn about healthcare at the same time. And it's been an incredible honor, really, to lead the company and build such a great team in the last 22 years and enjoy the relationships that I've had with the investors and with you over that period of time. It's really been an incredible privilege. And it's also a year, as we know, since the conference last year when this unknown pathogen named COVID-19 pierced our consciousness. I'm really proud of the year that we've had at Ventas, proud of the team, and proud of the big, strong, and diversified company that exceeds $30 billion in enterprise value that we've built over that period of time. During the year, of course, the team and the organization showed incredible resilience in the face of an unexpected external shock. And we're really proud that we were able to put seniors and our employees and workers first and throw everything we had, all of our resources and experience, to help us navigate successfully through the year. And here we are. And during that time, we also found great ways to expand our business, to achieve strategic goals, to grow our value-creating life science business, and really position the company to win the recovery. So where we stand today is, again, a large, diversified portfolio, high quality. We've got embedded upside from a cyclical and structural standpoint in our senior housing business, which represents about half the company. We are glad that we stuck with the diversified program because, of course, half our business grew 3% same-store last year, and we have a really exciting 9 million-plus sq ft life science business that we have grown over the last five years that's both university-based with leading research universities. It's also in cluster markets and three ongoing development opportunities, as well as a pipeline behind that. In terms of senior housing, we really see positive, encouraging signs that show the tailwinds that we can take advantage of as we look forward. The demand from seniors and their families has been incredibly powerful and strong. We definitely continue to see dramatically improving clinical conditions. We have the benefit of vaccinating almost our entire resident population, which is really exciting. Our leading indicators are strong, and we have favorable supply-demand fundamentals in that business. And so those are really setting the table for a powerful upside recovery in senior housing, coupled with our investments in life science development, senior housing development, with the tools that we've built in our third-party investment management business that gives us another way to expand our footprint and leverage the franchise that we have built. And so we really like our capital allocation strategy. It's been very, very consistent, and we are really well-positioned with the team that we have and the portfolio that we have to take advantage of both senior housing, life science, and the rest of our portfolio to come out of the recovery in a strong position. Thank you for that, Debbie. So we've started each of the CEO meetings by asking, coming out of the pandemic, and I recognize we're not fully out of this pandemic yet, but coming out of the pandemic, if an investor were to choose only one real estate stock to own, what are the three reasons why they should invest in Ventas? Well, I hit on a lot of it right now, but I would say that we have this unique and differentiated combination of an exciting life science business that we have been building that's incredibly value-creating with the tools that we've developed to seize those opportunities, the development pipeline, and, of course, the embedded upside in our significant senior housing business. That's a great combination. So that's one. I would say, in addition, the team that we have, a lot of experience guiding the company over a long period of time, very cohesive and skilled and committed to building value for shareholders. The last I would say is there is a real multiple expansion opportunity both within our space and more broadly as we think about our ability to grow that senior housing, grow that life science business in the coming period of time with the tailwinds supporting senior housing in particular. As we think about senior housing, you mentioned the leading indicators are positive. Maybe you can drill down a little bit about that, about what you're seeing that gives you that optimism of that fundamental recovery. Yes. And I'll turn it over to Justin for that. He won't be able to give you a 25-minute spiel given the limited time, but we have been so encouraged by the value proposition we offer seniors and their families. And even as clinical conditions were where they were, we just saw leads in January being the highest they've been since the pandemic. And that's a testament to what the operators offer. And so Justin will give you more specifics that give us this confidence on both supply and demand and leading indicators. First of all, just the macro picture is very exciting. It's as good as it's looked. I think in my career, where you have an aging demographic that has finally arrived in a sense, and we've always talked about it, but it'll grow at 11 times the broader population. That 80-plus demographic will grow at 11 times the broader population. And the growth CAGR within that population is going to increase from 2% through this year and 3% next year and then 4 to 5% thereafter. So that you have aging demographic, you have starts down 71% from the fourth quarter of 2017, and therefore less competition that we're facing. So aging demographic up, starts down, less competition. And then a little bit on the sector recently, clearly the COVID exposure has been going down across the country. Within our setting, it's gone way down to where we're only at two cases per day over the recent week, which is against 40-plus thousand residents, very low. It's the lowest we've had since the beginning of the pandemic, and so the virus is being managed, and that's being helped by the vaccines. As Debbie mentioned, we're 100% vaccinated. By the end of this month, our residents will have gone through their second dose and employees. So that's supportive, and then leads were up to the highest level they've been in February, and they're still not all the way there yet. And we do think they'll benefit from part of the lead bank that's not fully developed yet as well. So it is encouraging. There's good backdrop, and then we're playing into an opportunity that's very exciting. Justin, there was a question that came in from investors in terms of just discounting. How similar or different would it be relative to multifamily on sort of free rent concessions relative to face rent discounts? Yeah. And do you want me to answer that, Debbie? The answer is it depends, and I'll put it like this. The clear trend that we've seen is, first of all, Canada in general has outperformed, and that's around 30% of our business and SHOP. So good occupancies, pricing's held, really good performance there. So you just set Canada aside, and then you get into the U.S. If you're a mid-market AL memory care provider, you're probably not using a lot of discounting or incentives. If you're an IL or a lower acuity AL, you're at the very top price point in your market, then you probably are, and the incentives that tend to get used are similar to multifamily where they hit you upfront. They give you a free month, or they give you half a month free, waive a community fee, and take the hit on the front end so that you can rely on some rental income growth throughout the length of stay. Really, just to finish that out, Bob, can you just talk about the revenue and cost side just to paint a complete picture? Well, and we've seen and will see in the first quarter nice revenue growth in terms of RevPOR sequentially based on the in-place increase. And as you know, that typically applies to almost all the population. So it speaks to the importance of getting folks into the communities and perhaps offering an incentive to do so. And then as we look forward in terms of the powerful upside to the business, it is really high operating leverage. And as we think about what we've seen in the last year, we've lost $300 million of SHOP NOI. Nearly 100% of that is revenue. In other words, costs were flat. And that's because COVID cost increases were offsetting reductions in variable costs. We hope to some degree that reverses on the other side and the upside. You're going to have COVID costs coming down over time. You'll have variable costs go up, some offset there. So the powerful margin upside driven by volume is really where the action is in terms of the recovery. So therefore, the importance of driving volume through smart pricing, especially in some of those segments we described. And how do you think about, I mean, Justin, I take your point on starts being down significantly over the last number of years. And it's unfortunate, but you have higher vacancy in the assets over the last year. It's not a good reason why that happened, but there's more vacancy. So how do you feel you can compete against the existing stock and the supply that's already there in assets? And is that going to limit some of that upside as everyone's got this vacancy that they're trying to fill? Yeah. I certainly agree. We have a lot of upside and would rather not have had the opportunity the way we got it. And what's interesting is I gave some of the building blocks in terms of the broader support from a supply-demand standpoint, as well as just our own performance within the portfolio. And take you back there again. In October, we netted positive occupancy. Our leads were only at 86% of pre-pandemic levels at that stage. There's a part of a lead bank that's missing, and that includes respites, and it includes personal and professional referrals. And those are really important sources that will come back to the sector and our portfolio. And when they come back, we think it could influence movements by another 25%-30%, which would actually put us over 100% of pre-pandemic run rate. We know that half our portfolio is already achieving that. So the demand at the doorstep, even throughout a pandemic, has been well-supported. And when you put that together, there definitely seems to be an opportunity for a recovery that's been better than the recovery that the sector's had in previous cycles. Justin, how do you think about as that occupancy builds back up, starts accelerating from there, right? So as some of that vacancy is eaten up, does that entice new supply just given the demographic trends are undeniable? Yeah. And certainly, it's an exciting space. And we study over 800 sub-markets within our portfolio. And by and large, across the board, over the next few years, we expect support for growth due to the supply-demand dynamics being solid. There's an exception here and there. Whether or not there's new entrants remains to be seen. And usually, there's a cost of construction and anticipated returns and availability of capital that'll have to play into it. But there does seem to be a runway. And that runway seems to be the next few years, and then we'll position ourselves for kind of the next part of the cycle. I had a couple of questions come through, really. It's a million-dollar question, the pace of the occupancy recovery, right? And so A, do you expect your operating update obviously shows the favorable kind of second derivative in February? When do you expect to see an occupancy trough given the vaccination rates that you talked about and these forward-leading indicators that are positive? And then B, how long does it take to regain the occupancy to get back to a pre-COVID level? One of the things that we talked about in our presentation here is that we had originally given guidance about first-quarter occupancy not even three weeks ago when we reported earnings. We're happy to say that we expect, as you noted, that our first-quarter sequential occupancy is likely to be at the midpoint of that guidance or better. I think as we have a lot of positive trends going on, we have or continue to watch the clinical environment in the broader across the country. That will be a part of what the pace and slope of recovery is. Everything is in place for robust recovery. The question of pace and slope are still to be determined. I know that's what everyone wants to hear and know, but stay tuned. That's good. Maybe on the expense side, as you think about entering a more normalized operating environment, how much of the increased expenses are transitory versus more permanent into the business? Bob. Yeah. Again, a little bit to be determined based on what the protocols ultimately end up being. But just thinking about where we are today, there should be significant improvement in the cost required to care for the resident. I mean, the vaccine being the key, of course. Things like supplies going forward, wearing masks are here to stay. I don't think there's any doubt. Good news is it probably can take down flu without a problem just wearing masks. But on the margin, those are relatively minor costs. So the hope is that we can get back to a much more normalized cost structure once this thing's behind us. Okay. Sure. Well, I wanted to shift over to the office side of both the R&I and the MOB side. What are you seeing from a leasing perspective for both of those businesses? Obviously, you've seen much steadier results in senior housing. But what are you seeing on the leasing side there? Obviously, life science has been one of the incredible value creators and winners in this environment. We're happy that we got into the business. We sort of swapped out of nursing homes and into life science about five years ago. It's been a really great business for us. We've built a great business. We can see in the cluster markets that even now in South San Francisco, where we bought a $1 billion asset this summer and in Cambridge, that there is a positive mark-to-market. We're seeing that those assets really have been quite stable when we acquired them. That's partly why they're in the fund. We're acquiring another one now at Johns Hopkins, which is really exciting kind of intersection between academic medicine and life science and universities. We feel like we're really well-positioned to capitalize on that space. And those assets are intended to be relatively stable, but we are seeing significant lease mark-to-market and significant demand, obviously, for the space. Are you seeing differences from the university side versus the more traditional life science? Yeah. I mean, I think it's a little bit of a different market. The university-based assets, the universities are voracious in their demand for lab space. And we see that fueling the development pipeline, among other things, and also leasing. And even in what you'll see is it's more of a credit play. It's more of a longer-term lease environment. But when space is vacated, we do see the universities having pretty voracious appetite for the space. We've seen that at Yale. We've seen that at Penn. We've seen that at Wake Forest. And so a little bit different model with different risk-reward, but a positive one as well. How should we think about the mix of development relative to acquisitions in life science for you? Yeah. I mean, Michael, I'm really happy to see we've been able to do both. And they both, again, bring different risk-reward opportunities to the stakeholders. The Johns Hopkins is a good example. It's in the high 4% cap. It's a stabilized asset that is going to be in the fund. The development we're doing to about a 7% stabilized yield. And we're doing about $1 billion now that's in progress. One of them opens, so $100 million of the first $1 billion. Then we have a $1 billion behind that. And we're talking today about one of the opportunities that's with the West Coast highly regarded research university that would be about a $500 million asset. And we're doing Le Groupe Maurice also development investing in Québec as well. So we see both acquisitions as well as the development side and have worked hard, as I said, to develop the kind of tools to accelerate and generate that capacity to grow in those ways. And both of those. And then I think stepping back just on all capital allocation, you've used the loan side of it to eventually maybe get a seat at the table if there was a transaction, right? So I think about when you had the piece of the BioMed Realty CMBS led to, obviously, the Wexford Science & Technology acquisition. You have the Ardent Health Services loan. You had the Colony Capital loan. I guess how many of these sort of seeds are still out there? And what's the likelihood of repayment relative to offering a further investment opportunity? Yeah. That's a great question. I think we've used the loan book really as a twofer, as you've described, to put some chips in some places where we think it's a well-structured investment. We'll be happy if we get paid back. That's always kind of the number one aspect to it. But where we can kind of stay in front of the net and see where things go and maybe find an asset here, an asset there, a different avenue to an investment. And that's how we see really the Ardent bonds and the Colony mezz loan that we have. And it's worked very effectively for us. We also have a loan as part of the Holiday investment. And those can lead a lot of different directions. Is the Colony subject to a prepayment? Is it fully prepayable, or do you guys get to say if? In the starting second half of 2021, it's prepayable, I believe. That's my recollection. Yeah. And then as BioMed went through their recap, did you play a part in that go-shop at all, or was it just too big for Ventas and even if you had partners to participate? I have to say I have tremendous admiration for my friends at Blackstone, and they know how to do a go-shop in a good way, and we're happy that we have the Johns Hopkins asset out of it. We try to, again, find a place where it works for us and where we have good relationships of trust that can help us grow our business. As you think about that growth and investing capital, can you just sort of outline some of the balance sheet and leverage levels? You obviously have a lot of funding that you have now on the plate, just sort of tying out all the sources and uses, especially with the reduced cash flow today, just given the lower operating occupancies. Yes. Bob will be happy to. I can take that. I mean, first of all, liquidity is really good. That's our start point, and we're in good shape there. As we think about sources and uses for the year, we've got $1 billion of dispositions in our guidance focused on senior housing and MOBs, low cap rate type opportunities there. The uses of that source are twofold. One is debt reduction, and one is investment to drive future growth and development and redevelopment, kind of 50/50, so that's the overview of the year. We clearly have growth capital and sources of third-party in the form of third-party capital through our third-party capital management platform, as well as an improving cost of capital giving us lots of optionality. So multiple clubs in the bag. What would be the sort of leverage target, either debt to EBITDA, debt to GAV? Yep. The long-stated leverage goal is five to six times net debt to EBITDA, clearly above that in light of the senior housing impact from the pandemic. The $300 million I referenced earlier coming back would put us right back in the sweet spot of that. So in the meantime, we're just being smart as we look for the timing of that recovery, but taking advantage of opportunities where we can. Debt to GAV has stayed really strong in the between 35% and 39%, something like that. So it stayed very good. How do you think about raising common equity, just given I mean, everything that's reopening is traded up pretty significantly, including your shares. How does sort of common fit into the equation? It's clearly more attractive than it was a year ago, and appropriately so. We mentioned margin expansion as one of the differentiators upfront. Obviously, we still think there's upside by definition, but it's going to require. It's depending on the use, Michael. That's really going to dictate where and how we go in terms of sources. For the value creation and the development pipeline, how do you think about funding that versus contributing to JVs, giving away some of the value, but also lightening the funding of the build-out? Yep. So let's talk about the GIC JV for a second in that context because when we think about the strategy behind that, it was really the ability to accelerate our R&I development pipeline, and that's really manifest in this example that we described, this new $1 billion of opportunity, being able to accelerate a $500 million type of transaction through our partnership with them, so that's really, really bearing fruit. The forward commitments, in addition to that, funding those, again, will be the same things we just described. As we get more timing and texture around those projects, we can be more definitive on the sources for those, but the JV itself has been fundamental to being able to accelerate those opportunities. The thematic, of course, around the fund and the GIC JV and the dispositions is the ability really to diversify capital sources and not be overly reliant on one, in particular, common equity at whatever price. We like to have these other sources of well-priced large pools of capital that are available to us for appropriate situations. And how do you manage those different relationships from the institutional capital program versus on balance sheet? How do those conversations go and try to? I mean, I can tell you, Nick, as consistent with my University of Chicago, I killed a lot of brain cells measuring three times upfront to really understand where we could set up situations that were really good for the counterparty and attractive and also beneficial to our public shareholders and what the kind of guardrails around those opportunities were and how to think about them. And so far, those have been very clear and have been well executed within those guardrails. And so it's been consciously, intentionally, but relatively easily managed because of all the work and structure that we did upfront to think about exactly where those overlaps were for both parties. And as you think about the enterprise overall, you've seen both of your large cap diversified peers really kind of change their allocations, some more substantially, some more on the margin. How do you think about where Ventas should be in a few years from a property type perspective? And are there any property types that may be opportunistic that you may look to enter? I would certainly say what you're going to see is hopefully the upside in senior housing plays out, the embedded upside that we have. So that's going to grow that part of the pie, obviously. And then we'll continue to grow the life science business through both development and external growth. And those are the two I would see growing the fastest. We obviously have a great medical office business that we're tweaking plus and minus over time. It's been a really reliable value part of the business. And Ardent's been a great investment. So that is, that's an area where we would like to grow if we could find things of a similar quality and even yield to what we got when we invested there. So we like the diversified strategy. Again, it's served us well. And we would see it more. It's been great for offense and defense because we've always, through cycles, found places where we can invest for value creation. And at the same time, it's protected shareholder capital in times like we saw this last year. How do you think about the kind of coming out of COVID, medium and longer term, what the right growth rate is on a per-share basis of earnings? What should the enterprise be growing at? We want it to grow. That's really what every act we're taking is designed to promote that. Bob, do you want to take a crack at that? I'm going to give you the hot potato. No, thanks very much. Look, I just keep quoting $300 million of what we've lost. That's $1 a share round numbers. So the upside, obviously, just getting back to where we were in terms of growth is material. And the fundamentals beyond that, the medium term, as Justin was describing, are as good as they've ever been. So on an organic basis, I think the growth therefore is quite exciting. Layer on top of that, then inorganic, and that's what really gets us fired up. Wanted to ask on ESG. What are your top three priorities to improve your ESG score next year? Well, we have been committed to ESG for a long time. And I don't know about the score, but I know what our commitments are. And we've gotten lots of ESG accolades, and we outline them, and we're proud of them. But the key point is ESG is really doing the right thing. And so we started diversifying and elevating our board years ago. I think our board's a great asset. We now have four women out of 12 and two Black directors. And as we have diversified, the board has become even more excellent. And that is really what the goal is. And so we'll continue along those lines. We have been committed to diversity, equity, and inclusion through philanthropy, through hiring, through the board, through community actions. And we really are committed to driving lasting change in our company, our country, our industry going forward in our communities. So we have a framework that we intend to operationalize this year to really make sure that we are taking this opportunity to promote racial equality and justice. That is a key priority for us. Then, of course, on the sustainability side, we have goals to reduce emissions and energy usage by 25% by 2025 over the next several years. We hope that we are able to achieve those goals as well. You're on mute, Michael. Sorry. Now I'm on. Debbie, over the course of the pandemic, I think you were a much more reassuring voice just in terms of taking everything seriously, especially I think back to last June when everyone thought, "Everything's reopening, and everything's going to be back to normal by Labor Day." And I remember those meetings. And I remember it in November. I guess, how do you characterize your own sort of viewpoint of where we sit here today relative to people's expectations? Yep. Well, as I said, I feel cautiously but very optimistic, and I think that the vaccine rollout, the doctors and scientists have saved us. I mean, I am so grateful beyond belief. Justin and I are incredibly grateful that literally all of our residents have been double vaccinated, and now you're seeing what we need to do. We saw 3 million shots in arms as of yesterday. We need, though, to stay the course in terms of behaviors. The pathogen is still out there. We still need to mask. We still need to wash hands and take this seriously because we want to end it. We don't want to extend it, and we're all enthusiastic about getting out there. I actually feel better about senior housing because we are ahead of the curve now in the vaccination rollout, but I want the whole economy to be able to reopen. And in order to do that, we got to stay the course. We've got to be patient. We've got to be disciplined. And if we are, I'm very optimistic that the Administration's efforts on vaccines, the economic stimulus, and that we can literally start to reopen on a sustained basis. Yep, so our rapid fire. As we said before, we've got to get there, and we've got to stay the course. So I encourage everyone to do that. So to close out the session, when we are sitting physically together, we hope, in Florida a year from today, what will be the one thing that will have surprised people the most about your business over the prior 12 months? I'm hopeful that we'll be able to say, "I told you so," that we will see this embedded growth and a sustained recovery in senior housing and our continued ability to deliver on our growth in life science at Ventas. Hopefully, no surprises, just delivering on the promise that we feel at this stage of the cycle. What do you think your corporate travel budget will be in 2022 as a rough% of 2019? I'm going to say 75% because we're going to want to be out there with our partners and with our stakeholders. But I think some of the efficiency of virtual activities will become permanent. Nick, how are you asking the same-store when people have multiple property types? We'll do on the senior housing side. So, same-store NOI growth for the senior housing sector overall, the entire thing in 2022. And I know you always say it's not for our company. And I always say that we'll take a pass on that one and tell you in 2022. What will the 10-year Treasury yield be a year from today? So 155. I think I'll call it 185. Okay. Great. Thank you so much. I really appreciate it. It's great seeing you. I can't wait to see you in person. And have a great rest of the conference. Stay well, and we appreciate the opportunity. Thank you, Nick. Thank you.