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Ventas Inc  (NYSE:VTR)
Q3 2018 Earnings Conference Call
Oct. 26, 2018, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to Third Quarter 2018 Ventas Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

(Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference Ryan Shannon, Investor Relations. Sir please begin.

Ryan Shannon -- IR

Thanks Norma. Good morning, and welcome to the Ventas conference call to review the company's announcement today regarding its results for the second -- third quarter ended September 30th, 2018.

As we start, let me express that all projections and predictions and certain other statements to be made during this conference call may be considered forward-looking statements within the meaning of the federal securities laws. The company cautions that these forward-looking statements are subject to many risks, uncertainties and contingencies and stockholders and others should recognize that actual results may differ materially from the company's expectations whether expressed or implied.

Ventas expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations. Additional information about the factors that may affect the company's operations and results is included in the company's annual report on Form 10-K for the year ended December 31th, 2017 and the company's other SEC filings.

Please note that quantitative reconciliations between each non-GAAP financial measure referenced on this conference call and its most directly comparable GAAP measure as well as the company's supplemental disclosure schedule are available in the Investor Relations section of our website at www.ventasreit.com.

I will now turn the call over to Debra A. Cafaro, Chairman and CEO of the company.

Debbie Cafaro -- Chairman & CEO

Thank you, Ryan, and good morning to all of our shareholders and other participants. It's great to be with you on today's Ventas third quarter earnings call. I'm also delighted to be joined by members of the Ventas team to report on another solid quarter and to highlight our financial strength, our investment in growth, expanded pipeline and partnerships, and commitment and recognition to ESG. After Bob provides detailed insights into our financial results, we'll be happy to answer your questions.

Let me start with our results and full year 2018 expectations. We're pleased to report normalized funds from operations of $0.99 per share this quarter, to improve our full year normalized FFO expectations and to confirm our same-store cash NOI expectations for the year.

Turning now to our enterprise and capital allocation strategy. We continued to enhance the long-term durability of Ventas by following our differentiated and deliberate approach of investing in our future growth with top-tier customers and extending and expanding our key partnerships. First, this quarter and immediately following, we invested approximately a $100 million in attractive medical office buildings and outpatient facilities with two key partners; Ardent and Pacific Medical.

We also announced our pending acquisition of a premier independent senior living community located in the appealing Battery Park neighborhood of downtown Manhattan; firmly establishing our leadership in the high-end senior living Manhattan market.

Second, we extended our exclusive partnership with Pacific Medical or PMB for a further 10-year term. With almost 50 years of experience in outpatient facility development with key US health systems, PMB's knowledge and expertise in development is extraordinary. The attractive MOB investments we made this quarter are an example of the benefits of our partnership with PMB; as is our trophy MOB development attached to Sutter's new flagship hospital in downtown, San Francisco which is on track to open in early 2019.

We're also happy to report on the great performance lease-up and delivery of our university-based research and innovation centers. Our forward pipeline of excellent projects is robust and growing. In light of strong university demand, our leading market position, and the positive risk/reward investment profile of this project, we intend to ramp up our investment activity in this space.

The attractiveness of our university-based development model was recently brought to life at a summit, hosted by Ventas and our partner Wexford. The buzz among attendees was palpable as we brought together leaders from universities and academic medical centers to share ideas and discuss innovative approaches to achieving their strategic goals.

Our partner Wexford is a trusted advisor, catering to university needs and enjoys an incredible track record and reputation for conceiving, building, leasing, and delivering powerful knowledge communities on university campuses that supercharge research and innovation. We are proud to partner with these leading universities and Wexford and to fund and own these knowledge communities for the long-term.

In this business, I'd like to note that one of our newest research and innovation buildings at Penn just opened. This project, which is on the precipice of already being 90% leased, further builds out our footprint in the attractive U City submarket. The success of this project follows on the heels of another recently owned project at WashU's Cortex Innovation district which we expect to be a 100% leased very shortly.

Finally, Atria Senior Living also continues to distinguish itself. In addition to Atria's consistent operational excellence in our portfolio, it just inked a $3 billion agreement with The Related Companies to develop high-end urban senior living projects in major markets. We are effectively a general partner in these potential projects through our one-third ownership interest in Atria. With Atria's expertise and Related's world-class development capabilities, we are excited about the potential for this deal.

I'd like to turn to another area where we are making significant investments, specifically Environmental, Social, and Governance or ESG matters. We believe that our commitment to ESG principles underpins our long-term success. This year, we have been recognized repeatedly by leading organizations for our positive impacts. Today, we are pleased to launch our inaugural Corporate Sustainability Report showing our leadership and commitment to ESG policies and practices.

I'd like to give a special shout out to our whole ESG team who worked long and hard at improving our ESG profile showcased in this excellent report. To my mind, sustainability starts with financial strength and resilient cash flows from a high-quality diverse portfolio. At Ventas, we are focused on both.

This quarter, we continued our proactive and successful efforts to build financial strength and reduce risk through debt refinancing and maturity extensions and our portfolio produced growing same-store cash NOI performance of 1.3% as a result of its quality and diversification in product types and operating models.

Looking at macro senior housing trends, we are very encouraged with the recently reported continued improvement in senior living starts which are at a five-year low. Importantly, in primary markets, net absorption in assisted living in the third quarter of 2018 was the strongest third quarter for net demand on record.

However, as has been widely documented, we expect to experience another year of elevated deliveries in 2019 as the industry works its way through the opening of new communities that were started in anticipation of the demographic demand that will accelerate in the coming years. If current trends continue, the current supply/demand equations will surely reverse in our favor and that's why our senior housing assets continue to be so highly valued.

Finally, we are always mindful that seniors live in our communities, patients are receiving healthcare in our facilities, and tens of thousands of employees are serving in our properties. Thus, we were heartened when all seniors, patients, physicians and employees were reported safe, despite the devastation of recent Hurricanes Florence and Michael.

We're thankful for the preparation and execution by our care providers, especially Ardent, whose team exercised extraordinary efforts in the face of the storm. We sincerely thank our operating partners for their preparedness and care.

In sum, our cohesive team is confident in our enterprise and our continued success. This confidence is founded on the resiliency of our portfolio, our financial strength, our focus in increasing investment in our future growth, the quality of our partnerships and relationship, and accelerating demographic demand.

I'm now happy to turn the call over to our CFO, Bob Probst.

Rob Probst -- EVP & CFO

Thank you, Debbie. And congratulations on, once again, being named as one of the top 100 best performing CEOs in the world by Harvard Business Review. I'll begin with a review of our segment level performance, which on a combined basis, delivered solid portfolio same-store cash NOI growth of 1.3% in the third quarter.

Let me start the segment discussion with SHOP and the key leading indicator for future SHOP performance, namely the new construction starts. We are very excited that the trend line of lower new construction starts in our trade areas continued in the third quarter. In fact, new stores -- starts for our portfolio are at the lowest level observed in nearly five years.

Annualized new starts for the first three quarters of 2018 represent just 1.7% of inventory in our trade areas, well below the roughly 2% near-term demand growth rate for our senior target market. In terms of current performance, third quarter SHOP NOI performed in line with our expectations with same-store cash NOI lower versus the prior year by 2.7%.

Occupancy was ahead of our expectations while rate growth moderated, together delivering 1.2% revenue growth in the quarter. Occupancy in the third quarter reached 88%, a sequential improvement of 80 basis points, which is better than our normal seasonal trends and better than the industry overall as reported by NIC.

On a year-over-year basis, the gap in SHOP occupancy also improved in the third quarter to 60 basis points below Q3 of 2017. Third quarter REVPOR growth moderated to 1.8% as new competition drove wider releasing spreads. Operating expenses grew 3.1% in the third quarter. Wage cost per hour continue to run at roughly 4%, partially offset by more efficient staffing levels and reduced indirect costs.

At a market level, we're seeing strong NOI growth in Los Angeles and San Francisco. Meanwhile NOI is lower in market affected by new competition such as Atlanta and Chicago. Our SHOP 2018 full year same-store NOI guidance range remains unchanged at minus 1% to minus 3%.

Though we will give formal guidance in February, with the benefit of observing our year-end finish and early start to next year, we do expect elevated levels of new deliveries to continue in 2019. As a result, same-store SHOP NOI may evidence a similar year-over-year percentage decline in 2019 as in 2018. That said, with the positive trend of lower new starts together with accelerating demand, we do expect supply/demand fundamentals to offer powerful senior housing upside over time.

Our Valuable Office Reporting segment which comprises 26% of our portfolio increased same-store cash NOI by a robust 3.5% in the third quarter. The office segment was led by a terrific result from our university-based life science portfolio which grew same-store cash NOI by 12.4% in the third quarter as a result of strong lease-up activity. The total life science portfolio grew NOI by nearly 23% in the third quarter, fueled by exciting new projects at WashU, Duke and Penn.

For the full year, life science same-store pool in 2018, we continue to expect very robust same-store NOI growth in the range of 3% to 4%. Our reliable and valuable medical office business grew same-store NOI by 1.1% in the third quarter as a result of in place escalators approximately 3% and best-in-class tenant retention of nearly 87%.

Q3 operating expenses were 3% higher versus prior year due in part to timing of expenses. We continue to forecast a 1.5% to 2.5% full year NOI increase from our same-store medical office portfolio. Our combined office portfolio of life science and MOB assets' same-store cash NOI guidance range is also unchanged at 1.75% to 2.75% growth for the full year 2018.

A quick note on the recent hurricanes is appropriate here, as their principal impact was on two Ventas-owned MOBs and one Ardent-owned hospital in Panama City, Florida which were significantly damaged. It is too early to determine the financial impacts of the hurricanes and therefore they are not included in our guidance.

Moving on to our triple-net lease segment, which grew overall same-store cash NOI by 3% in the third quarter. In-place lease escalations were the primary driver of this increase. In terms of rent coverage, trailing 12-month EBITDARM coverage in our triple-net same-store seniors housing portfolio, held steady at 1.2 times through Q2; our latest available reporting period. Notably, the asset sales announced as part of the Brookdale transaction are progressing. We expect the first tranche of these sales to occur in 2019.

In our triple-net post-acute portfolio, cash flow coverage held steady at 1.4 times. We continue to expect our LTAC to generate improving results in the second half of 2018 with operational strategies mitigating LTAC criteria.

In health systems, Ardent coverage remains strong and steady at 2.9 times on the back of a solid second quarter. Momentum at Ardent continues and the business is performing exceptionally well. We are holding our 2018 same-store NOI guidance range for the triple-net portfolio overall to grow between 2.5% and 3%.

Finally our book of loans extended by Ventas now stands at 4% of NOI, down from 7% at the start of 2018 due to repayments of profitable loans. We expect further reductions to our loan investment book with maturities on existing loans of roughly $300 million in the second half of 2019, with proceeds earmarked to fund our exciting life science development pipeline.

Let's turn to our overall company third quarter financial results. Normalized FFO per share was $0.99 in the third quarter. This result was principally driven by two factors; first, the expected receipt of a $0.03 per share fee from Kindred's successful go-private transaction in July; and second, the dilutive net impact of $1.3 billion in disposition and loan repayment proceeds received in the first half of the year and used to reduce debt.

Stepping back, since 2005, we have completed nearly $8 billion in value-creating capital recycling activity. Over that same time period we've also been highly proactive in refinancing our debt maturities to extend duration and limit interest rate exposure.

In 2018 alone, we have retired or refinanced $3.2 billion in debt. As a result, we have a strategic asset in our sector-leading financial strength and flexibility. Some evidence from the third quarter; fixed charge coverage was 4.6 times at quarter end, our net debt-to-EBITDA ratio stood at 5.4 times; less than 12% of our total debt matures in the next three years, and we enjoyed liquidity of nearly $3 billion.

Our aggressive efforts to reduce debt, extend and stagger our maturity profile, and significantly reduce medium-term refinancing risk has already paid off as we completed these efforts prior to the recent strong move upwards in rates.

Let's close out the prepared remarks with our 2018 guidance for the company. For 2018, for the third time this year, we are improving our full year outlook for normalized FFO per fully diluted share which we now forecast to range between $4.03 and $4.07.

We have also confirmed our total and segment-level same-store cash NOI guidance for the full year 2018. The assumptions within this guidance range are substantially the same as our previous guidance in July, including the previously described $1.3 billion in capital recycling and the related debt retirement.

To close out, the Ventas team is cohesive, determined and sharply focused on delivering against our financial commitments as we close out 2018.

With that, I will hand it back to the operator to open the line for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Smedes Rose of Citi. Your line is open.

Smedes Rose -- Citigroup -- Analyst

Hi, good morning.

Debbie Cafaro -- Chairman & CEO

Good morning.

Smedes Rose -- Citigroup -- Analyst

Good morning. I wanted to ask you just on your SHOP guidance for next year. So one of the things -- as you pointed out, this is about 7% of in-place inventory under construction in primary markets. Do you have a sense of what percentage will open over the course of 2019, which you think it would look similar to what -- kind of a similar 12 month trailing that you just mentioned? And just on that front, what are your operators telling you about wage increases going forward into next year, there expectations around that?

Rob Probst -- EVP & CFO

Sure. Hi Smedes, this is Bob here. First of all, just to clarify, early indication for SHOP of 2019 I would say as opposed to formal guidance, we'll give that in February. But there are things we now know standing here today which include deliveries. Having seen three quarters of the year, we have a pretty good view into delivery levels next year. And our view today is that they're roughly in line with where we're going to see 2018 pan out. So effectively, equivalent on the deliveries line.

And there, in light of the comment, to say, we expect performance in 2019 to look quite similar to 2018 in terms of year-over-year. And within that, of course the same themes I would highlight whether it'd be price, occupancy, wages; but the same themes will likely play out in 2019 as we saw in 2018. But again, we want to see the year-end, we want to see the rent letter and so on before we give formal guidance.

Smedes Rose -- Citigroup -- Analyst

Okay. And the just with -- your relationship with Atria, would you -- will you be investing more capital into that relationship now, given their announcement with Related or does that remain unchanged?

Debbie Cafaro -- Chairman & CEO

Hi, this is Debbie Smedes. The deal with Related is a really exciting one and has potential to be $3 billion of high-end urban senior living over time. And we will have the opportunity, of course, to invest capital in an effectively general partner position in those projects. And then, if there are other opportunities to invest capital in the projects that we see as attractive, those opportunities could manifest for us as well.

Smedes Rose -- Citigroup -- Analyst

Okay, Thank you guys.

Debbie Cafaro -- Chairman & CEO

Thank you.

Operator

Thank you. Our next question comes from Juan Sanabria of Bank of America. You line is open.

Juan Sanabria -- Bank of America Merrill Lynch -- Analyst

Good morning.

Debbie Cafaro -- Chairman & CEO

Good morning Juan.

Rob Probst -- EVP & CFO

Hi, Juan.

Juan Sanabria -- Bank of America Merrill Lynch -- Analyst

On holiday, I just wanted to ask about that. Some of your peers have been talking about having been approached about converting some of the leases to triple-net (inaudible). Can you confirm if you've been approached and how you're thinking about your exposure? And also as part of those broader discussions, are you interested in acquiring in the incremental holiday assets at this point in the cycle given that maybe some are available for sale?

Debbie Cafaro -- Chairman & CEO

So I'd like to put holiday into context for Ventas. It's about 3% of our NOI and as you know they did do a deal with new senior that is public that has a conversion of assets from a lease to management fee -- management structure with the payment of a large fee connected therewith. I think just like every other customer that we have, we would typically engage in conversation, just like we did with Brookdale, just like we've done with Kindred over the years. And we will be thoughtful, I think and have a lot of ways of coming up with optimal changes, should we believe they're appropriate.

Juan Sanabria -- Bank of America Merrill Lynch -- Analyst

Great, thank you. And just on the seniors housing on the regular side going back to that. Can you comment on how new and renewal spreads are trending? And if there has been any advancement between those two. Just looking at the sequential same-store numbers, it look like RevPAR did come down despite occupancy ticking up. I'm not sure if you could comment on what drove that specifically. I don't know if that was Eclipse related or not?

Rob Probst -- EVP & CFO

Sure Juan. So, I think you're referring to REVPOR which was 2.1% year-over-year in the second quarter, 1.8% in the third quarter and that is driven by what I call releasing spreads or new leasing spreads, if you want to refer to it that way. In other words, former resident to new resident, what does that look like? That -- I quoted last quarter it was about mid-single digits down and that has widened a bit. Again, that's one of the artifacts of new competition. So that's really what's driving that drift, sequentially.

Juan Sanabria -- Bank of America Merrill Lynch -- Analyst

Okay, thank you very much.

Debbie Cafaro -- Chairman & CEO

Thank you.

Operator

Thank you. Our next question comes from Michael Carroll of RBC Capital Markets. You line is open.

Michael Carroll -- RBC Capital Markets -- Analyst

Yes, thanks. Bob, the quarterly run rate, FFO run rate has bounced around this year and the guidance is currently implying that there's going to be another drop in the fourth quarter even if you exclude the Kindred fee this quarter. Can you kind of provide some color on what is the correct run rate of FFO and what's driving the drop between 4Q and 3Q?

Debbie Cafaro -- Chairman & CEO

Okay. We've been asked to repeat the questions. I understand there may be some static on the operator's line for which we apologize. So I think in sum, the question is really to discuss the fourth quarter of normalized FFO rate implied in our 2018 guidance?

Rob Probst -- EVP & CFO

Right. And I'll just frame that again, the third quarter FFO was $0.99. That included a $0.03 Kindred fee, which we were very explicit about last quarter. In fact we see, as of this call last quarter that's in the third quarter. When you adjust for that, that's $0.96. As you say, the implied midpoint, when we look at the fourth quarter is approximately $0.94.

What's going on there -- the key, as we think about, and this is a first half to second half conversation but most evident in the fourth quarter is the cumulative impact of the dispositions that we've seen over the last year, including the LHP repayment, including the Kindred dispositions of last year and effectively using those proceeds to retire debt. And so that now really is complete. It was complete as of the end of the second quarter and therefore we're seeing that run rate impacts really manifest in the fourth quarter

Michael Carroll -- RBC Capital Markets -- Analyst

Okay, great. And then last question for me. Debbie, I think in your prepared remarks that you highlighted that you expect a ramp up investment within the Wexford platform? Can you quantify what that ramp up means? It seems like the investment has been trending between $300 million to $500 million. Will 2019 exceed that pace?

Debbie Cafaro -- Chairman & CEO

Well, as I mentioned, we're seeing a lot of good projects. The timing -- they're large and they're high-quality projects with elite institutions either existing customers or new universities. And the timing is harder to predict with certainty, but I could see that substantially increasing.

Michael Carroll -- RBC Capital Markets -- Analyst

Alright, thank you.

Debbie Cafaro -- Chairman & CEO

Thank you.

Operator

Thank you. Our next question comes from Steve Sakwa of Evercore ISI. Your line is open.

Steve Sakwa -- Evercore ISI -- Analyst

Thanks. I guess, I just want to follow-up on that last line of questioning. Bob, you made a comment that most of the dispositions were sort of done by the end of the second quarter. So I would've thought that the negative impact would have been felt fully in the third quarter and therefore there wouldn't be a further drop from Q3 to Q4. So can you just maybe help me understand, were all those really not done by the second quarter or is there something else that's kind of dragging down Q4?

Rob Probst -- EVP & CFO

Sure, Steve. The question is why's does $0.96 go to $0.94 third quarter to fourth quarter sequentially when adjusted for the Kindred fee? And I would point to seasonality particularly in SHOP for that difference. That's the key item. The fourth quarter on a dollar's basis is seasonally lowest at that stage and that's really the biggest driver, Steve.

Debbie Cafaro -- Chairman & CEO

And that really has to do with senior's behavior moving in and around the holidays and things like that. So that's a typical pattern.

Steve Sakwa -- Evercore ISI -- Analyst

Got it. Okay, thank you.

Rob Probst -- EVP & CFO

You bet.

Debbie Cafaro -- Chairman & CEO

You're welcome.

Operator

Thank you. And our next question comes from Rich Anderson of Mizuho Securities. Your line is open.

Richard Anderson -- Mizuho Securities -- Analyst

Woohoo. So, if I could get back to the run rate question, I think Mike asked earlier. So if you take $0.94 and multiply it by 4 you're at $3.76; consensus for next year is $4. I know you're not giving guidance, but let me may be frame the question this way. I know you also said that you're ready to do some more on the life science side, but is this the time to be a buyer in senior housing as well before this inevitable turn starts to happen? I think everybody on this call is waiting for the next big thing for Ventas and I'm wondering how you feel about that in context with what the Street is currently thinking about you guys for 2019?

Debbie Cafaro -- Chairman & CEO

Okay. So I'll try to repeat the question. I think it started with Woohoo, but the question is really around buying senior housing, is that -- if I could summarize Rich, yes?

Richard Anderson -- Mizuho Securities -- Analyst

Well yes. The noise just went down a little bit. So when you annualized your $0.94 run rate, you get to a lower number for '19 versus what the Street is currently expecting. And I'm wondering if perhaps the missing variable is you know something going on. Is this the time for Ventas to be buying senior housing before the recovery actually starts to take shape?

Debbie Cafaro -- Chairman & CEO

Well, good question. So I would say that we are, for example, buying the trophy Battery Park asset because we do see strength there. The good news, as I said, is our assets are very highly valued, so there continues to be a very strong bid in senior housing for the inevitable upturn. And we are continuing to look at investment opportunities that we think are -- would do something for Ventas strategically, accretively and so very open to value creating transactions. And so, as always, we'll be opportunistic and if there's a next big thing, you'll be the first to know.

Richard Anderson -- Mizuho Securities -- Analyst

Okay. And then, if I could just get a reconciliation, and explanation. Bob, you reiterated the same-store guidance of 75 basis points to 1.5%. But on the back of the supplemental, the range in the more detailed breakout is lower 0.6% to 1.3% what is the difference?

Debbie Cafaro -- Chairman & CEO

Rich, can you refer us again to the page? We didn't hear you?

Richard Anderson -- Mizuho Securities -- Analyst

Oh it's the last sort of guidance breakout page in the supplemental. And if you look at it, the total same-store growth is 0.6% to 1.3% and I'm just curious what the difference is between the public and same-store outlook?

Debbie Cafaro -- Chairman & CEO

Yes, our total company outlook which has been reaffirmed is the 0.75% to 1.5%.

Rob Probst -- EVP & CFO

The difference Rich, you'll see a line item there which is called fees; that's the Brookdale cash fee we received in the year and if you adjust for that item. That's included in the guidance but we want to show it with and without that item and that's the difference.

Richard Anderson -- Mizuho Securities -- Analyst

I see. Okay, that's all I needed. Thanks Bob.

Operator

Our next question comes from Jordan Sadler of KeyBanc Capital Markets. You line is open.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Thank you, good morning.

Debbie Cafaro -- Chairman & CEO

Good morning.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Good morning. Yes, looks like there may be a little bit of an increased appetite for traditional MOBs? Any insight you could offer there and maybe a little bit of a compare and contrast on what was sold versus purchased since the end of the last quarter?

Debbie Cafaro -- Chairman & CEO

So the question was really about our investments in outpatient and MOBs. We have built a great business here which is a 19% 20% of our portfolio. We like this business. It's been a very steady grower, very reliable and then I'm going to turn to be Pete Bulgarelli our new leader of the business to talk about what we like about the investments that we made.

Pete Bulgarelli -- EVP, Office; President & CEO of Lillibridge Healthcare Services

Sure, thanks Debbie. As Debbie said in her opening remarks, we're being very optimistic and careful with our investments. But these five assets that we bought and the one additional we felt fit our operating thesis very well. They're in great locations, primarily in California, Arizona and Texas associated with great hospitals Baylor, Dignity and Tenant. They're essentially fully leased. And very importantly, they're associated with key partners of ours.

One of them is associated with Ardent and we have an existing MOB on that same campus and five others are with PMB, our key development partner. And the last piece is that all these transactions were off market and so they were very attractively priced.

Debbie Cafaro -- Chairman & CEO

Thanks Pete.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Pete, can you just expand on maybe the asset that was sold? I know it was a -- I think you had a 40% stake in that one, but the cap rate there was a bit higher relative to the going in cap-rate on the acquisition. So just talk about the quality or the caliber of that asset?

Debbie Cafaro -- Chairman & CEO

Yes, this is Debbie. Real quickly Jordan, the question was about a sold asset not what's pursuant to a purchase option?

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay, that makes sense. Lastly a quick -- one more quick one for Bob. Hey Bob, can you just clarify the releasing spread count that you've quoted? Does that include concessions or is that just straight face value-to-face value?

Rob Probst -- EVP & CFO

That's base rent, face value to face value and -- but it's actuals. So it's not like a street price against, which there are significant discounts, it's actuals. So I think it's a pretty clean number.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from John Kim of BMO Capital Markets. Your line is open

John Kim -- BMO Capital Markets -- Analyst

Thank you. On your early indication for SHOP next year, can you provide some color on some of the components of this? In other words, may occupancy be higher offset by lower rate growth and higher expenses?

Debbie Cafaro -- Chairman & CEO

Good morning, John.

Rob Probst -- EVP & CFO

Sure I'll summarize the question. Could we have some insight into year '19 early indications as we look through the P&L? And I would say the theme is, again, very similar. And if you just look at the third quarter P&L, I think it's a nice guide as we think about next year in the sense of year-over-year occupancy has been improving albeit still a gap to prior year.

Some moderating pricing. I expect we'll still have nice priced increases on the in-place annual rent letters that we get in the beginning of the year, but I do expect we'll have some of the continued pressure through releasing spreads through the balance of the year.

And then, on the operating expense line, certainly the tight labor market wage pressure will carry on as we think about next year. The operators have done a wonderful job this year, as I've said repeatedly, in the staffing models and how they've managed that cost. I do expect there is some run way to continue there as we think about next year, but again you have to look at that relative to the occupancy line also. So very schematically, similar to the P&L, as we look at the third quarter.

John Kim -- BMO Capital Markets -- Analyst

Thank for that. And Bob for this year's guidance your CapEx to get the FAD is $145 million at the midpoint, but year-to-date your FAD CapEx is $79 million. Are these two comparable figures?

Rob Probst -- EVP & CFO

Great question. So we typically -- the question is the ramp on FAD CapEx in the fourth quarter and is it achievable would be my interpretation of the question because it is a significant ramp. We typically do have seasonality in the fourth quarter, a significant increase. That hill to climb this year is a bit steeper. So all else equal, perhaps we have a little bit of quote opportunity there. But seasonally, we do expect a significant increase in the fourth.

John Kim -- BMO Capital Markets -- Analyst

Okay. And finally, the feedback from the NIC Conference seems to be there's an abundant amount of capital looking at the healthcare space. I'm wondering if you agree with this characterization that it's increased and also what verticals that may impact about (ph)?

Debbie Cafaro -- Chairman & CEO

So the question really is about the capital that's interested in our business lines and the answer is yes they're over there 20 years when I couldn't get anyone to talk to me about healthcare at the beginning to now where it has been a highly institutionally attractive business for all the qualities we discussed, whether it's MOBs and the core like returns that you get there; the demographic demand in the asset classes that we have; the private pay nature of senior housing and multi-family shared characteristics.

We are very attractive and therefore capital is coming our way and that continues to enhance and improve the value of our assets as people look to the coming years when, not too long from now, 20% of the population will be in the senior category. So you are a 100% right with the interest in our verticals.

John Kim -- BMO Capital Markets -- Analyst

But is that broad-based or is it a specific sector that may benefit more than others?

Debbie Cafaro -- Chairman & CEO

It is fairly broad-based at the moment. I do think that the highest interest from institutional capital is in senior leaving and MOB out-patient, but we also see significant interest in the hospital space for example as we look to the performance of the public and rate increases that have started in the fourth quarter. So it's fairly broad-based.

John Kim -- BMO Capital Markets -- Analyst

Great, thank you.

Debbie Cafaro -- Chairman & CEO

Thank you.

Operator

Thank you. Our next question comes from Chad Vanacore of Stifel. Your line is open.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

Yes, that's a lot and good morning.

Debbie Cafaro -- Chairman & CEO

Good morning.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

Alright, just a couple quick ones here. One point of clarification, your supplement shows $1.5 billion dispositions year-to-date, but guidance only assumes $1.3 billion. Because it doesn't seem to refer to net dispositions, what's the difference there?

Rob Probst -- EVP & CFO

Sure. The question is on the sup, we show $1.5 billion of growth dispositions our guidance says $1.3 billion. The difference is our share, Chad, of that. So it's not all 100% owned, so that's the net difference.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

Okay. And then, just looking at your segment guidance. Your overall NOI guidance which you gave, the -- your SHOP looks a little bit lower and then non-segment it's higher. So what's pushing that non-segment guidance higher?

Debbie Cafaro -- Chairman & CEO

Just, the question is about our segment guidance which again we've reconfirmed from the July 27th guidance and Bob can speak specifically if there's anything further you'd like to add.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

What's pushing that non-segment guidance higher?

Rob Probst -- EVP & CFO

Yes, some small amount of acquisitions -- the net impact is small amount of acquisitions that we built in now is in non-same-store. So that's the difference.

Debbie Cafaro -- Chairman & CEO

Okay?

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

All right. And what assets are in there?

Rob Probst -- EVP & CFO

Those that we reported in the sup -- Oh I'm sorry, those that have been reported in the supplemental that's the impact.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

All right, let's move on. So, just -- any update on your selling of Brookdale leased assets, you know earlier in the year, you had agreed to mark it up, the $30 million of rents?

Debbie Cafaro -- Chairman & CEO

Yes, good. Yes, we -- as you recall, did a deal with Brookdale that extended the leases and had some other components in it including asset sales of about 15% of the portfolio to prune the portfolio and improve the quality. And that does represent probably about $30 million in rents. And so, as Bob mentioned in his remarks, those are starting to get under way.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

All right. Just early in the marketing stages right now?

Debbie Cafaro -- Chairman & CEO

I would say just emerging, yes. Pre-marketing, I would say, at this point. So, we expect those to happen -- those sales to happen overtime, and as you recall, they would basically be effectively at a 6.25 to Ventas.

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

Alright, thanks for taking the questions.

Debbie Cafaro -- Chairman & CEO

Alright, thanks for taking the questions.

Operator

Thank you. Our next question comes from Tayo Okusanya of Jefferies. Your line is open.

Tayo Okusanya -- Jefferies & Company -- Analyst

Yes, good morning. Please indulge--

Debbie Cafaro -- Chairman & CEO

Hi Tayo.

Tayo Okusanya -- Jefferies & Company -- Analyst

Good morning. I might ask one additional question if you don't mind.

Debbie Cafaro -- Chairman & CEO

Absolutely, go right ahead.

Tayo Okusanya -- Jefferies & Company -- Analyst

But the first one again is, I think and Rob kind of alluded to this earlier on. When people just kind of take a look at the run rate. It almost kind of implies that something did has to happen next year in order for Ventas to get closer toward consensus numbers. And you talked a little bit about university MOBs being an area you wanted to put more money to work in.

Just curious; one, is that some where you're going to actually grow fairly quickly, like just say, a Wexford type transaction available in that group? And if it's not a university MOB-type deal, would you possibly consider hospitals where again the yields there are pretty attractive relative to your cost of capital?

Debbie Cafaro -- Chairman & CEO

So the question really is about the fourth quarter run rate and how that may relate to analyst consensus numbers. I mean, I would just say that when we provide guidance, we typically do so with limited to no acquisitions in them and we will obviously do so consistent with our practice in February. And other than that I think I would just repeat what Bob said about the fourth quarter 2018 run rate.

Tayo Okusanya -- Jefferies & Company -- Analyst

Okay, that's helpful. But as when we think on the acquisition and outlook, again, on the MOB side is there is something big that would happen outside of the traditional say -- I'm sorry the university life science side allow Wexford or is it a hospital type transaction that could make up the difference if you're still actively looking at that space?

Debbie Cafaro -- Chairman & CEO

Well, as you know -- I mean our acquisitions and investments are always difficult to predict which is -- and they're lumpy. We've done more than our share over the years. We have these great relationships that we are able to leverage to find good strategic, accretive acquisitions and they could be across the board of our asset classes.

I do want to remind you that our number one capital allocation priority is really in the development of these university-based knowledge communities. And so, when we talk about investing in future growth, those are assets that we will deploy capital into. We will ramp that capital and that generally takes multiple years in order to produce cash flow EBITDA, but we are thereby creating a very high-quality company, very high-quality portfolio and investing in future growth.

So I think that's an important other aspect as you think about our investment priorities going forward. We'll continue to be opportunistic. We'll continue to look across the board, as we have in the past, and those -- but those tend to be, again, unpredictable and therefore we generally don't attempt to predict them while you guys sometimes try to.

Tayo Okusanya -- Jefferies & Company -- Analyst

That's fair enough I appreciate that.

Debbie Cafaro -- Chairman & CEO

Thank you.

Tayo Okusanya -- Jefferies & Company -- Analyst

And then, another quick one for Bob and again, I'm sure there is something that I'm just missing. But the big jump in the triple-net leased rental income from 2Q to 3Q, just trying to understand what that was?

Debbie Cafaro -- Chairman & CEO

Tayo, we're having some bad feedback too, so could you repeat the question please?

Tayo Okusanya -- Jefferies & Company -- Analyst

Yes it's one for Bob. The triple-net leased rental income; there was a big jump in 3Q versus 2Q of about $23 million? I'm just trying to understand what that was? Did you get that?

Rob Probst -- EVP & CFO

Tayo, can you hear me? We got a write-off of about $22 million as a result of -- basically the closure of a JV that we had that had Brookdale -- pardon me the Brookdale lease extension pardon me, was approximately $21 million that we wrote off in the quarter, second quarter last year or last second quarter.

Tayo Okusanya -- Jefferies & Company -- Analyst

Just last quarter, OK I --

Rob Probst -- EVP & CFO

And we don't have that sequentially, so it's that -- that set item.

Tayo Okusanya -- Jefferies & Company -- Analyst

Okay, so it's just that one time? Okay

Rob Probst -- EVP & CFO

Yes, it's a one time (multiple speakers)

Debbie Cafaro -- Chairman & CEO

Yes, remember that. And then just to repeat, that's a non-cash item.

Rob Probst -- EVP & CFO

Right.

Tayo Okusanya -- Jefferies & Company -- Analyst

Yes. Yes, alight, excellent. Thank you.

Debbie Cafaro -- Chairman & CEO

Thank you.

Operator

Thank you. Our next question comes from Lukas Hartwich of Green Street Advisors. You line is open.

Lukas Hartwich -- Green Street Advisors -- Analyst

Hi good morning.

Debbie Cafaro -- Chairman & CEO

Good morning.

Lukas Hartwich -- Green Street Advisors -- Analyst

So, given the tight coverage on triple-net senior housing, I'm just curious how comfortable you guys are that those properties are receiving the necessary CapEx to not only maintain but also compete effectively with all the new supply growth?

Debbie Cafaro -- Chairman & CEO

So, let me repeat the question. I think it was about the triple-net senior housing portfolio and CapEx expenditures. So most of our leases have minimum CapEx required expenditures, most if not all. And -- so we monitor that and that's the way we ensure that the assets continue to be in good market position. I would also add that the Brookdale portfolio, which of course is 40%-plus of that portfolio that does have minimum expenditure requirements and we also agreed with Brookdale that for other CapEx that we think would keep the assets in excellent market positioning and so on and so forth that we would consider funding additional CapEx for a market return. And so there are two different ways really that I could give as examples of the way we can ensure that those triple-net assets continue to maintain market positioning.

Lukas Hartwich -- Green Street Advisors -- Analyst

Great, very helpful Thanks. And then just one another quick one, can you provide some color on the strong print for life science NOI growth?

Rob Probst -- EVP & CFO

Sure. The question was the strong quarter we had in life science, so the 12% growth. And that was really, first and foremost, lease-up particularly in one of our newer communities that we have with Brown in Rhode Island which is now a 100% occupied, performing incredibly well. I mean that is really the driver for the quarterly pool. On the full year pool basis, we continue to do incredibly well also over 4% growth on the full year pool. So strong every -- which way you look at it.

Debbie Cafaro -- Chairman & CEO

Thank you.

Lukas Hartwich -- Green Street Advisors -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Karin Ford of MUFG Securities. You line is open.

Karin Ford -- MUFG Securities Americas Inc. -- Analyst

Hi, good morning.

Debbie Cafaro -- Chairman & CEO

Hi Karen.

Karin Ford -- MUFG Securities Americas Inc. -- Analyst

Hi, wanted to ask about the Battery Park acquisition, what type of value creation opportunity do you see there? How do you expect the 5% cap rate to trend and would you like additional scale in your footing?

Debbie Cafaro -- Chairman & CEO

Great. So, the question is really about the pending Battery Park asset acquisition. That is a deal that we're excited about. We've been in Manhattan senior living market really since 2011 and we think that the pricing on this asset is well below replacement cost. So we could foresee, with the attractive demographics in New York and the unique positioning of this asset that we would have obviously just stabilized NOI growth going forward, and there are potential redevelopment and licensing opportunities over time that could provide additional opportunities for really great returns. So we have multiple paths to success is what I would conclude.

Karin Ford -- MUFG Securities Americas Inc. -- Analyst

Great, thanks for that. And second question is just a follow-up on John's question from earlier. Are you seeing any change in the cap rates in any of your segments and have you changed your return expectations with the move up in base rates or with your increasing excitement about the university life science investment?

Debbie Cafaro -- Chairman & CEO

So the question is really on cap rates, I'm sitting across from John Cobb our Chief Investment Officer and I would say that the -- this amount of capital that is attracted to our space for all the reasons previously mentioned, is continuing to keep valuations high and cap rates relatively in the same range that they've been for several years now.

And in terms of the way we underwrite assets, we obviously are always looking at our cost to capital we're looking at the growth rate of the asset, the reliability of the expected cash flows. And as we look at the university-based life science, as we said at the beginning, there is a range of stabilized yields that we would expect that are in the -- frankly 6% to 8% or 8.5% range, depending on the profile of the asset.

And as we've discussed before, I'll give you an example. If you have a 100% preleased building with a AA credit that is in a great location, that's going to be on the lower-end of that. If you have a 20% pre-leased building that obviously would have a different expected stabilized cap rate.

So that's how we're looking at these opportunities but the big takeaway is at the end of the day, as we grow this part of our portfolio, it is increasing and improving the overall age, quality, and reliability of our portfolio with these highly rated really elite institutions. So, I hope that's responsive Karen.

Karin Ford -- MUFG Securities Americas Inc. -- Analyst

Yes, it was. Thank you.

Debbie Cafaro -- Chairman & CEO

Good, thank you.

Operator

Thank you. Our next question comes from Todd Stender of Wells Fargo. Your line is open

Todd Stender -- Wells Fargo Securities -- Analyst

Alright, thanks, good morning.

Debbie Cafaro -- Chairman & CEO

Good morning, Todd.

Todd Stender -- Wells Fargo Securities -- Analyst

Back to the MOB transactions, the cap rates shown on the four that you acquired was a 56 (ph). Does that include any fees you paid PMB or maybe you could talk about some of the economics around your relationship with PMB and just how do you get that what I would consider above market yield?

Debbie Cafaro -- Chairman & CEO

Right. As Pete said, the question is about the yields on the acquired MOBs you know, and as Pete said; because these were assets that we acquired through existing relationships, we do think the pricing is very attractive. In terms of the NOI, to the extent that there is a management fee for the asset, that's embedded in the cap rate already.

Todd Stender -- Wells Fargo Securities -- Analyst

Okay. And how about same-store expectations for these four? I think Pete may have said there were California exposure or maybe Texas, I forgot the other states. So maybe a range of NOI expectations?

Debbie Cafaro -- Chairman & CEO

Again, what we like about the MOBs is the core-like returns and the steady returns. And so, we would expect that type of normal MOB year-over-year growth rate.

Todd Stender -- Wells Fargo Securities -- Analyst

Okay, great. Thank you.

Debbie Cafaro -- Chairman & CEO

Thank you.

Operator

Thank you. Our next question comes from Daniel Bernstein of Capital One. You line is open.

Daniel Bernstein -- Capital One Securities -- Analyst

Hi, how you're doing?

Debbie Cafaro -- Chairman & CEO

Hi, Dan.

Daniel Bernstein -- Capital One Securities -- Analyst

Hey, good morning. I'll sort of switch it up just a little bit and just ask about how ESL is doing and whether that was the outlook for 2019. I know it's a preliminary outlook includes ESL performance in that?

Rob Probst -- EVP & CFO

Yes. So ESL now, I guess, eight months old-or-so maybe 10. Continuing to roll out operational initiatives I'd say. Kai and team are deep into that right now things like the staffing model and the operating model and really bringing best practice there. So they're on it. Certainly we've seen some transition impact in terms of NOI, that's always expected. But again I think we've stabilized on that and we're looking forward to the impact of those initiatives as these rolling them out.

Daniel Bernstein -- Capital One Securities -- Analyst

Okay, I'm just trying to ask -- are they performing better or worse in the general Ventas previous SHOP portfolio? I'm just trying to, are they -- do you have positive NOI or just the negative NOI that we're seeing?

Debbie Cafaro -- Chairman & CEO

Yes, I think again, when you -- this is Debbie, when you have a transition you basically are getting to a stabilization point which as Bob said we're at a stabilization point and then overtime you would expect it to perform basically in line with the industry, but offset to the positive potentially as operating initiatives take hold. So directionally, you would expect from here to be the same. But again, with some upside as we've discussed before from operating and occupancy improvements overtime.

Daniel Bernstein -- Capital One Securities -- Analyst

Okay, OK. And one last quick one here on life science. We've always talked about hospitals and universities and just monetizing MOBs. Is there any opportunity to buy life science assets rather than just develop? Any discussions with universities to monetize your existing life science assets?

Debbie Cafaro -- Chairman & CEO

So the question is about acquisitions of university-based kind of research and innovation life science assets and the answer is that was and has been a trend in medical office for several decades and we are seeing that as well in the universities in the life science space.

Daniel Bernstein -- Capital One Securities -- Analyst

Okay, OK. That's it, thank you.

Debbie Cafaro -- Chairman & CEO

Good, alright, thank you.

Operator

Thank you. (Operator Instructions) Our next question comes from Smedes Rose with Citi. Your line is open.

Michael Bilerman -- Citigroup -- Analyst

Hey, it's Michael Bilerman here with Smedes. I don't know if I talk slower if the noise won't be as bad. I had a couple of questions. The first is just on senior housing supply, and you talked in your opening comments about how you were pleasantly surprised by the reduction in the growth rate, but at the same time, you talked about and you see both Related too (ph) and with Atria launching $3 billion of high-end senior housing. I guess what gives you confidence that the supply is not going to stop anytime soon especially with that demographic wave that would come out in the future?

Debbie Cafaro -- Chairman & CEO

Michael you snuck in there, we thought this was Smedes. So we'll open and close with -- the call with Citi, I guess. So the question is really about senior housing supply and I think the key data points are around new starts which are very encouraging in the sense that they are at a five year low. And as we were able to predict years ago that supply would be coming at this moment.

I think based on the data that we now see, one could expect we can predict a big upside as we look at the data sitting here today in the coming years. So it is true that there continues to be interest in the assets and interest in developing as we talked about with The Related high-end urban developments. And that continues, but if these trends continue that we are seeing now with starts, then we feel very optimistic and upbeat about the supply/demand fundamentals being very much in our favor.

Michael Bilerman -- Citigroup -- Analyst

Just a couple of others -- Bob, just on the loan portfolio running at about $800 million. Is there are any maturities that we should be aware of or prepayments that you're aware of as we think about 2019?

Rob Probst -- EVP & CFO

Yes Michael we have $300 million approximately of loans maturing in 2019, in the back half of 2019. That is all that matures next year. So that means today we have 4% of NOI. The implication obviously is that we would have a lower percentage now of our loan book in our -- as a percent of NOI next year.

Michael Bilerman -- Citigroup -- Analyst

And as we think about when you do provide guidance, your assumption around that would be that that gets repaid and not replenished and that capital just goes to repay debt or you would make an assumption that you would find other loans to invest in?

Rob Probst -- EVP & CFO

You know, right now we're earmarking that Michael for reinvestment into the life science development pipeline.

Michael Bilerman -- Citigroup -- Analyst

Okay. And then, actually on the pipeline from a redevelopment and development standpoint, your gross pipeline right now stands at about $1,730,000,000 your share and you recently completed about $200 million of development and redevelopment. How should we think about the tailwind that those investments give you as we go through 2019?

Clearly, not all the assets are going to be stabilized by then, but a number of them -- a lot of them are going to start producing income in 2019. How should we think about the yield on that call, $1 billion of in-process and completed developments at your share?

Rob Probst -- EVP & CFO

So you're right on Michael. We will start to see starting in 2019 but really accelerating from there the income benefit of these developments, in particular in life science. Some of which have recently opened but we mentioned for example WashU, Penn, to name a few. Those will really starting to pick up steam in the back half of '19 and into '20. So certainly a tailwind as we come out in February with the puts and takes that's certainly on the good side. We're excited about that but it really takes off in '20.

Michael Bilerman -- Citigroup -- Analyst

And then, on the redevelopment, it would be helpful just like you have the dates for the development. This is Page 20 in you supplemental. Just so on the redevelopment side when -- because that's obviously a big chunk almost $0.5 billion -- when those start to become income-producing from a date perspective, the same way that you have it on Page 21 for the active development pipeline?

Debbie Cafaro -- Chairman & CEO

Okay. So, Michael, good. So if I could just repeat that for everyone's benefit the idea of including some more completion information for investors and analysts on the redevelopment page in terms of deliveries. I think we can look at that, it's a good suggestion, as we provide guidance going forward. I would add, you do have to distinguish between senior housing developments and office developments because in senior housing while you're going through the post-opening lease-up period, you actually have some negatives EBITDA as you have operating expenses and -- until you get to lease-up and break even.

So it's important if we provide that information that we also make sure people understand what the different impacts are of the different asset class developments and redevelopments as they start to come online. But this is very good input and we appreciate it.

Michael Bilerman -- Citigroup -- Analyst

Right. You know just there is a lot of moving parts as we transition. Clearly to fourth quarter has the seasonally that Bob talked about on senior housing side. As you roll into '19 you have the same store pulling back modestly like it did this year. You have the investments that you're making which will start to earn income. There is just a lot of pieces to 2019 that we need to be taking into consideration.

Debbie Cafaro -- Chairman & CEO

Yes Michael is observing, so those of you who can't hear, that there are a lot of moving pieces to '19 which we've noticed recently actually and we'll look forward to enunciating those in February.

And with that, I really want to certainly reaffirm how confident the team is and how aligned we are about going to get these opportunities and we want to thank everyone for your support and attention and we'll look forward to talking with you further at NAREIT. Thank you.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Have a wonderful day.

Duration: 67 minutes

Call participants:

Ryan Shannon -- IR

Debbie Cafaro -- Chairman & CEO

Rob Probst -- EVP & CFO

Smedes Rose -- Citigroup -- Analyst

Juan Sanabria -- Bank of America Merrill Lynch -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

Richard Anderson -- Mizuho Securities -- Analyst

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Pete Bulgarelli -- EVP, Office; President & CEO of Lillibridge Healthcare Services

John Kim -- BMO Capital Markets -- Analyst

Chad Vanacore -- Stifel, Nicolaus & Company -- Analyst

Tayo Okusanya -- Jefferies & Company -- Analyst

Lukas Hartwich -- Green Street Advisors -- Analyst

Karin Ford -- MUFG Securities Americas Inc. -- Analyst

Todd Stender -- Wells Fargo Securities -- Analyst

Daniel Bernstein -- Capital One Securities -- Analyst

Michael Bilerman -- Citigroup -- Analyst

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