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DATE

Wednesday, Aug. 5, 2026 at 12:00 p.m. ET

CALL PARTICIPANTS

  • Senior Vice President, Finance and Investor Relations - Jonathan Hughes
  • President - Scott Brinker
  • Chief Financial Officer - Kelvin Moses
  • Asset Management - Patrick Cheng

TAKEAWAYS

  • FFO as Adjusted -- $0.24 per share, representing a 40% increase driven by organic growth and acquisition accretion.
  • Consolidated Revenues -- Janus Living, Inc. (JAN -2.02%) reported second quarter revenues of $216 million, an increase of 45% compared to the prior year.
  • Adjusted EBITDAre -- $79 million, representing a 34% increase due to portfolio expansion and operational gains.
  • Same-Store Adjusted NOI -- 19.2% growth, reflecting margin expansion of 2.5 percentage points during the quarter.
  • Total Acquisitions YTD -- $1.8 billion, including 18 communities acquired subsequent to the second quarter.
  • Third Quarter Acquisitions -- $1 billion completed through Aug. 3, 2026, across six separate transactions and six operating partners.
  • Follow-on Equity Offering -- $690 million in net proceeds generated in June 2026 to fund the acquisition and investment pipeline.
  • Full-Year FFO Guidance -- $0.95 to $0.98 per share, an increase from the previous range of $0.93 to $0.97 per share.
  • Same-Store NOI Guidance -- 13% to 17%, representing a 2 percentage point increase from the May 2026 outlook.
  • Same-Store Revenues -- 8.4% growth, driven by average occupancy gains of 2.6 percentage points and rate growth.
  • RevPOR Growth -- 5.1%, reflecting the value proposition at Life Plan communities and resident experience improvements.
  • Same-Store Expenses -- 4.8% increase, though expense per occupied unit rose only 1.7% due to operating leverage.
  • Available Liquidity -- $1.2 billion, consisting of $558 million in unrestricted cash and a $500 million revolving credit facility.
  • Asset Disposition -- $23 million gross proceeds from the sale of one community in Houston with a negative 1.3% trailing cash NOI yield.
  • Monthly Dividend -- $0.0475 per share, representing an annualized payout of $0.57 per share.
  • Independent Living Concentration -- 70% of total portfolio units, reflecting management's preference for lower labor-intensity product types.
  • Stabilized Occupancy Target -- 93% underwriting expectation for acquisitions compared to current mid-80s portfolio occupancy.
  • Non-Same-Store Occupancy -- 80.5%, primarily reflecting lease-up opportunities in 18 communities currently undergoing operator transitions.
  • Acquisition Yields -- 6% to 6.5% initial cash yields, with a target of 7.5% or higher by the third year of ownership.
  • Operating Partners -- 10 distinct partners as of Aug. 5, 2026, an increase from two partners at the start of the year.
  • Capital Expenditure -- $5.3 million in adjusted funds from operations capital expenditures during the second quarter.
  • Entrance Fee Sales -- $41 million in non-refundable entrance fee sales during the three months ended June 30, 2026.
  • Acquisition Pipeline -- $59 million currently under purchase agreement, anticipated to close during the third quarter of 2026.

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RISKS

  • Hughes stated, "Our current and prior guidance incorporates temporary occupancy and expense headwinds as part of normal course transition disruptions," referring to the transition of 18 communities to new operators.
  • Hughes noted, "a SNF occupancy declined sequentially. That's typical due to the seasonally lower summer months and some lower hospital census," identifying seasonal demand risks in the skilled nursing segment.

SUMMARY

Management reported an expansion of the senior housing portfolio through year-to-date acquisitions totaling $1.8 billion. The company raised its full-year earnings and organic growth guidance based on operational performance in occupancy and revenue per occupied room. The balance sheet remains debt-free with significant available liquidity following a recent follow-on equity offering. Strategic initiatives focused on diversifying the operator base to 10 partners and prioritizing Independent Living-centric assets with elevated stabilized occupancy targets.

  • Hughes stated, "we expect a similar trajectory here of 50-plus percent NOI growth potential over the next 2 to 3 years" for the portfolio currently undergoing operator transitions.
  • Brinker stated, "the biggest mistakes are made when the sector is on fire," emphasizing that the company is prioritizing asset quality over absolute volume.
  • Brinker noted that senior housing demand is growing 4% to 5% annually in target markets while new supply remains below 1%.
  • Brinker indicated that market rents may need to grow "anywhere from 10% to 30%" to justify the costs of new construction in the current economic environment.
  • Management confirmed the expansion of its operating partner network to 10 companies, including eight partners used for acquisitions completed year-to-date.
  • Brinker stated the company is "picking and choosing every property that comes into the portfolio" to ensure basis remains below replacement cost.

INDUSTRY GLOSSARY

  • SHOP: Senior Housing Operating Portfolio, where the REIT receives the benefit of all community cash flow but also bears all operating expenses.
  • RevPOR: Revenue Per Occupied Room, a metric measuring the average revenue generated per occupied unit in a senior housing community.
  • ExPOR: Expense Per Occupied Unit, representing the operating costs associated with each occupied unit.
  • NOI: Net Operating Income, calculated as total revenues less operating expenses.
  • FFO: Funds From Operations, a non-GAAP metric used by REITs to measure cash flow from operations.
  • EBITDAre: Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate.
  • RIDEA: REIT Investment Diversification and Empowerment Act, which allows REITs to participate in the operating income of their properties.
  • Life Plan Community: A retirement community that offers a continuum of care, including independent living, assisted living, and skilled nursing.
  • SNF: Skilled Nursing Facility, providing high-level medical care and rehabilitation.
  • IL: Independent Living, a housing arrangement for seniors who require little to no daily medical assistance.

Full Conference Call Transcript

Operator: Good morning, and welcome to the Janus Living, Inc. Second Quarter 2026 Conference Call. [Operator Instructions] Please note this event is being recorded. I would like to now turn the conference over to Jonathan Hughes, Senior Vice President, Finance and Investor Relations. Please go ahead.

Jonathan Hughes: Thank you. Today's conference call will contain certain forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations. A discussion of risks and risk factors is included in our press release and detailed in our filings with the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures will be discussed on this call. In an exhibit of the 8-K we furnished with the SEC yesterday, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements.

The exhibit is also available on our website at janusreit.com. I will now turn the call over to our President.

Scott Brinker: Okay. Thanks, Jonathan. Good morning, and welcome to the Janus Living second quarter earnings call. And thank you to our operating partners on the ground who work hard every day to deliver a great experience for the seniors who live in our communities. It's a 24-hour job every day of the year, and they are the most important driver of Janus' performance. There'll be plenty of discussion today about the numbers from the quarter, but we'll never lose sight that this is a people business, the residents, the staff and the families. Okay. It was late last summer, about a year ago that we were building the business plan for Janus Living.

Certainly, there are other REITs that invest in senior housing, but JAN was designed and built to be a unique and differentiated growth story. Strong internal growth from a 100% SHOP portfolio that's concentrated in high-growth, business-friendly states with low taxes, deep relationships to drive proprietary deal flow, the cleanest balance sheet in the entire REIT sector with 0 debt and an asset base big enough to be public, but small enough that we can really move the needle with acquisitions. Thanks to a lot of hard work by our team and a resounding response from operators in the Street, we're outperforming that business plan in both speed and scale.

We're on pace to double the size of the portfolio this year without compromising on asset quality or returns. Essentially, all of it is sourced directly from our target operating partners. Year-to-date, we've closed $1.8 billion of acquisitions with a significant pipeline behind that. We're growing Janus Living by acquiring single assets and small portfolios, picking and choosing every property that comes into the portfolio. The year 1 yield is expected to be in the low 6s, improving to 7.5% or better by year 3. The yields are very accretive to our cost of capital, and our basis is well below replacement cost.

In just 4 months since going public, we've increased the number of operating partners from 2 to 10, all handpicked as companies with strong cultures, track records and capabilities. That growth would not be possible without the Healthpeak team who brings the relationships and sector expertise to execute quickly and at scale. And with an equity stake in Janus Living worth more than $6 billion, there's enormous alignment of interest between the 2 companies. Operationally, we had an outstanding 2Q, including significant growth in occupancy, rate and margin. And most important, our communities are providing value to the residents they serve, which allows us to grow revenue.

We're only 4 months in as a public company, but Janus Living has some real momentum. I'll turn it to Jonathan to share color on our 2Q results and our improved earnings outlook.

Jonathan Hughes: Thank you, Scott. We had another strong quarter on both the operational and capital allocation front. For the second quarter 2026, consolidated revenues increased 45% year-over-year. Adjusted EBITDA increased 34% and FFO as adjusted per share increased 40%. This is driven by strong organic growth and the accretion from $800 million of senior housing acquisitions completed in the first and second quarter. Moving to performance, same-store revenues increased 8.4% year-over-year. This was driven by 260 basis points year-over-year more than $6 billion led by independent living consolidating into a 350 basis points increase. Sequentially, same-store occupancy increased 10 basis points, which is an improvement from last year's performance, and we expect continued occupancy gains given the favorable supply-demand dynamics.

RevPOR increased 5.1% year-over-year, reflecting the value proposition at our Life Plan communities and high-quality resident experience provided by our operators. Same-store expenses increased 4.8% year-over-year and on an expense per occupied unit or ExPOR basis increased 1.7%. As occupancy grows, we expect to show continued operating leverage given the large scale of our Life Plan communities and more independent living focus. Same-store NOI increased 19.2% year-over-year, and margin expanded by 250 basis points. Within the non-same-store portfolio, occupancy was approximately 80.5% and primarily reflects lease-up opportunity in the 18 transition communities. The operator transitions position the communities to capture embedded occupancy and NOI growth from improved operational performance.

Our current and prior guidance incorporates temporary occupancy and expense headwinds as part of normal course transition disruptions. The properties are in great shape and the new operators are in place to deliver a better resident experience, which should translate to improved occupancy. Shifting to the balance sheet and capital allocation. In June, we completed a follow-on offering of Class A-1 common stock, generating $690 million in net proceeds to pursue acquisition and investment opportunities. Despite a competitive environment, we're having no problem sourcing opportunities from our deep network of relationships. During the second quarter, we acquired 2 senior housing communities for $105 million and disposed of 1 community generating $23 million of gross proceeds.

Subsequent to quarter end and through August 3, we completed an additional $1 billion of acquisitions. Year-to-date, we have completed $1.8 billion of acquisitions and have another $59 million under purchase agreement. Initial yields across completed acquisitions are in the low 6s, improving towards 7.5% or higher by year 3. As of August 3 and subsequent to the completed acquisitions I just referenced, we had $558 million of unrestricted cash and no outstanding debt, leaving us with $1.2 billion of available liquidity. And ending with guidance, we are increasing our 2026 FFO as adjusted guidance range to $0.95 to $0.98 per share, up from $0.93 to $0.97 per share.

We are also increasing our same-store adjusted NOI growth guidance range by 200 basis points to 13% to 17%. The updated range is 500 basis points higher than the initial guidance range provided by Healthpeak for the same portfolio in February, driven by outperformance. Our guidance also includes $1.6 billion of net capital sources from our IPO and follow-on offering. We expect to deploy that capital into acquisitions through year-end. Our guidance incorporates an earnings drag from cash on the balance sheet until that capital is fully deployed. Wrapping up, the team remains highly energized.

We are focused on growing and collaborating with our operating partners to help them improve the resident experience and acquiring high-quality durable real estate to outperform in all cycles. We continue to build the asset management and investment teams for the long term and creating value for our shareholders. We also have Kelvin Moses, Chief Financial Officer, on with us and available for questions. With that, operator, please open the line for Q&A.

Operator: [Operator Instructions] Your first question comes from the line of Farrell Granath with Bank of America.

Farrell Granath: My question is largely around the ramping of your operators, especially when thinking about Janus' original IPO, very limited number. And as you've been building this pipeline as well as executing on these acquisitions, we've noticed that your number of operators has been increasing. So I wanted to know if you could dive deeper on how you think about scaling [Technical Difficulty]. Sorry -- and continue to manage these relationships going forward.

Scott Brinker: You kind of cut out. I don't know if that was on your end or on our end. I think you were asking about scaling the number of operators.

Farrell Granath: Yes. Yes.

Scott Brinker: Yes. Yes. So I mean, part of the business plan was to develop relationships with 10 or more high-quality operators that we had existing track records with. They've been in the business for a long time, history of success, great integrity, culture to really drive performance over the long term, and we've had great success converting that business plan into reality. We started the year with essentially 2 partners, one of them being LCS, who was plus or minus 90% of the portfolio. They do a fantastic job. I mean they have been incredible partners for the last 6 years since they took over the Life Plan portfolio.

They just crushed it in every way, most importantly on kind of resident satisfaction inside the buildings, which is really driving revenue. And yet to grow the business, obviously, we had to diversify. We're still doing things with LCS. We prefer -- we would like to grow that relationship as well. But senior housing is unique in that the operators really control a lot of the deal flow. And part of the business plan, of course, is external growth that's accretive. So we needed multiple partners to really maximize the opportunity set. And that's what you're seeing. I mean, year-to-date, we've closed $1.8 billion of accretive acquisitions. That's with 8 separate operating partners, 12 separate transactions.

So it's really asset by asset, which is allowing us to, I think, get really great pricing, but also to handpick exactly which buildings come into the portfolio and which operators. And we have future opportunity with every one of them. They control a pretty big footprint of real estate that over time, they'll either be recapping or looking for acquisitions in their local markets that our expectation is they would come to us first of those opportunities, which is exactly what's happening. So it's mutually rewarding. Their business grows, our business grows. It's really a positive relationship for both companies. So I don't think you'll see us get to 50 operators.

We really don't need to just given our scale, but we knew that we wouldn't be able to maximize our business plan with just the 2.

Operator: Your next question comes from the line of Ronald Kamdem with Morgan Stanley.

Ronald Kamdem: Just on the -- you talked about the same-store guidance up 500 basis points since the initial guide, which is pretty impressive. I guess I'd love to hear some thoughts as you're sort of looking at the business, where you guys are thinking that peak occupancy is for your portfolio for this industry versus maybe at the start of the year, given what you've seen? And if you could add some comments of what you think that means in terms of pricing and margins as well as you're thinking about this business over the next 3 to 5?

Scott Brinker: Ron, we're in the mid-80s today across the total portfolio, but obviously trending higher at 200-plus basis points year-over-year. We certainly think we can get into the 90s over the next couple of years, just given the demand is growing 4%, 5% per year, depending on the market, given the population growth. and supply is less than 1%. Eventually, that will pick up, it will take several years. So just the math alone would suggest there's a lot of occupancy upside. I think our buildings are in great condition to attract residents, and I definitely believe we have great operators on the ground delivering that experience for the residents to capture market share.

So into the 90s for sure, generally speaking, we're doing our underwriting at kind of 93%, plus or minus as a stabilized occupancy. Is it possible to do better? Of course. I mean we've acquired some assets year-to-date that are essentially 100% full, but we're not underwriting that as an expectation. Jonathan, anything to add?

Jonathan Hughes: Yes, Ron, I'll say just on the margin question, obviously, as occupancy surpasses 90%, that incremental flow-through margin improves. We saw a delta NOI margin expansion this year of 250 bps. The delta between RevPOR and ExPOR is expected to be pretty similar going forward. And so as occupancy continues to grow and given our more IO focus with lower labor intensity, that incremental margin profile should only improve.

Operator: Your next question comes from the line of John Kilichowski with Wells Fargo.

John Kilichowski: Jonathan, you gave some helpful color in the opening remarks. Could you just talk us through the NOI margins, both for the same-store and the total portfolio pools here? We saw a step down quarter-over-quarter. The year-over-year number looks great. But I'm just curious what's driving that? I know there's some seasonality in the Life Plan portfolio and then you have the Brookdale transition. Could you just kind of walk us through both what we should be expecting going forward from a seasonality perspective in the same-store pool? And then on the total portfolio side, how that Brookdale transition should progress?

Jonathan Hughes: Yes. Thanks, John. So on same-store NOI, that did decrease sequentially, margin compressed 40 bps. That's driven by typical seasonality due to timing of labor increases in April, more expense days and lower sales. Occupancy increased 10 bps sequentially, but IL occupancy actually increased 50 basis points. Both of those are an improvement from last year's performance. Yet a SNF occupancy declined sequentially. That's typical due to the seasonally lower summer months and some lower hospital census. The margin trend was also an improvement from last year's performance. Our Life Plan communities typically see strong occupancy growth in 4Q and 1Q. That's kind of the opposite of a traditional rental senior housing.

But the resident lead pipeline remains robust, positions the business well to achieve 2026 sales objectives. And then I think on the transition portfolio, keep in mind, those were completed April 1. Both operators are making significant progress there. I laid out the occupancy of the non-same-store pool in my prepared remarks. But we think that the new operators and the capital plans that are underway are positioned to deliver a better resident and staff experience that should drive improved occupancy. When LCS came into our Life Plan portfolio, it was a similar sequencing and playbook.

That portfolio track record since then speaks for itself, and we expect a similar trajectory here of 50-plus percent NOI growth potential over the next 2 to 3 years. Hopefully, that's helpful.

Operator: Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Austin Wurschmidt: I was just wondering about your thoughts around deploying capital today and just whether the funding options in front of you between debt and equity, clearly, liquidity isn't a limiting factor. But is there anything that's kind of holding back the acquisition pace from even accelerating versus the $400 million incremental that you have assumed in the back half of the year or the quality of opportunities in front of you? Just kind of speak to how you're thinking about funding and the willingness, I guess, to lean into that debt capacity today.

Kelvin Moses: Austin, this is Kelvin. I'll start. I think we've done a pretty exceptional job to start the year. It's only been 4 months, and we've been able to deploy the cash that we've raised through the IPO and a good chunk of it from the follow-on offering into accretive acquisitions. So the acquisition pipeline is very healthy. The opportunity set is pretty significant, as Scott had mentioned earlier. And we'll continue to think about our sources of capital based on what's the most accretive deployment for the platform.

Right now, the cash that we have on balance sheet is certainly highly accretive to deploy into acquisitions with going-in yields in the low 6s or around 6%, and we'll continue to utilize that source of capital while we have it. We have a substantial amount of available capacity on balance sheet. Today, we have about $500 million revolver that can be upsized with an accordion feature to $1.5 billion. We have a $100 million delayed draw term loan that is currently undrawn. So access to ample liquidity in addition to the cash on balance sheet, which Jonathan mentioned is about $400-plus million after you account for the one asset that we have under contract.

So continue to be prudent with the balance sheet here, having no debt is an advantage, and we'll utilize it strategically as we see the need to do so over time.

Scott Brinker: Yes. So that's the capital raising side. And then on the deployment side, I would just add to that, Austin, that the biggest mistakes are made when the sector is on fire. We've seen that through history in senior housing and in other sectors. So we're being extremely disciplined. In my view, I told the team, we'd rather do $1 billion of super high quality deals rather than $5 billion of some marginal deals. And that's the approach that we're taking on all these transactions. So we're not in a hurry. Our small denominator allows us to be super disciplined and still really move the needle with acquisitions.

Operator: Your next question comes from the line of Rich Hightower with Barclays.

Richard Hightower: I guess just to back up on the -- maybe the long-term supply question. Do you have an estimate of where that spread between sort of current market rents and the level that would be required to justify new construction, especially in the sort of higher growth, but easier to build Sun Belt type markets?

Scott Brinker: Yes, happy to take that. There's no simple answer. I think most of the new supply, at least the initial wave is going to be more at the super high end. Luxury end of the product continuum where you can charge or at least on a piece of paper, you can charge the super high rental rates. Obviously, the demand pool at those extreme levels gets a little bit tighter, but those are the ones that make sense today, at least on a piece of paper again. So I think that's where you're going to see the first wave of development, but it's going to take time.

It's a process to get the entitlements, to buy the land, to do all the drawings and then to actually build it. And by the way, you've got to find the debt and equity, which is not easy. It's getting easier, but it's not easy. So I think you're still several years away from any meaningful amount of new supply being delivered. In the meantime, demand is still growing at 4% to 5%, but certainly, as occupancy grows, rates grow, arguably cap rates come down, although we'll see with interest rates. The development math starts to make more sense, but it's still not easy for a lot of reasons.

But where do rents need to grow? -- that's harder to answer by market. It could be anywhere from 10% to 30%. It just depends on the situation. But in any event, it's higher than where in-place rents are.

Operator: Your next question comes from the line of Michael Carroll with RBC Capital Markets.

Michael Carroll: Scott, how has, I guess, Janus' investment strategy evolved, I guess, since -- I mean the IPO, I know that was only a handful of months ago. But I know the cost of capital has improved pretty meaningfully. I mean, does this allow Janus to go after newer, bigger buildings in primary markets? I know that you've always been looking at the bigger buildings in primary markets. But does this allow you to go up the next realm to kind of get up some of those higher-quality type assets?

Scott Brinker: Yes, I don't think the investment strategy has really changed. I mean it just makes it more profitable, which is good. But in terms of what we're targeting, the operators, the markets, the product type hasn't really changed. The return profile hasn't really changed. Discount to replacement cost hasn't changed. So no, I don't think anything has changed other than the spread on investment is just more positive.

Operator: Your next question comes from the line of Michael Stroyeck with Green Street.

Michael Stroyeck: RevPOR growth, excluding nonrefundable entrance fees, it did tick down a bit sequentially. Can you just provide some color as to what's causing that? And do you still expect that figure to reaccelerate towards the longer-term average of CPI plus 200 bps or so?

Jonathan Hughes: Yes. I think the important thing to notice is that our view on RevPOR is unchanged. You're still going to see that mid-single digits type of growth on a year-over-year basis. Sequential comparisons get a little wonky due to seasonality to a degree. But the demand is there, the value that our communities provide to residents is still there. That hasn't changed. Our updated outlook for the year I wish I could say it was driven by one thing in particular, but it was across everything, RevPOR, occupancy, expenses all were a little bit better, which drove the increase. So I think there's really no change in that seasonal comparison makes it difficult sequentially.

Operator: Your next question comes from the line of David Rodgers with Raymond James.

David Rodgers: You mentioned a couple of times on the call the focus on kind of the independent living, IL side of the business. And I know that's where you've been historically with Life Plan. It sounds like that's where you want to continue to be much more like IL-centric. So I guess if that's the case, are you seeing more acquisition opportunities versus peers by being a little bit more IL-centric, would you say? Are you seeing more or less deal flow versus maybe some of the AL-centric peers? And then maybe just to tie on to independent living would be, do you see an ultimately better margin opportunity there as well?

And do you kind of have any terminal margins in mind as you look forward in the business for IL?

Scott Brinker: Yes. We do have a unique portfolio in that 70% or so of the units are independent living. That's really driven by the entry fee portfolio just because it's such a big part of the base for Deana Living. Most of what we're buying is it's more that we like the continuum. It's not that we're emphasizing just independent living. The vast, vast majority of what we own -- and what we continue to acquire has a continuum of some sort, preferably all 3 product types, but at a minimum, 2 of the product types. But year-to-date on the $1.8 billion, plus or minus 60% of that is independent living.

So that is the majority, but I wouldn't characterize it as we're only looking to do independent living. That's not really the case. It's more that we like the bigger buildings. We like the continuum. It's more market-driven and operator-driven are the other kind of criteria in addition to, obviously, returns and price per unit.

Operator: Your next question comes from the line of Julien Blouin with Goldman Sachs.

Julien Blouin: It's been a busy couple of days for you guys. As you bring on new operators on board, how long do you give them in terms of assessing their performance before deciding whether it's time to pivot? And then when operators bring you deals, does that generally impact the kind of management contract termination rights you have at those properties? Or those cases, do the operators have more negotiating leverage?

Scott Brinker: Yes. Thanks for the question, Julien. I'll comment and Patrick Cheng, who runs Asset Management, may have comments as well. But across the board, we're trying to structure contracts with great alignment with our partners so that their fee is primarily driven by the performance at the property over time so that there's mutual alignment to create a great long-term environment to live in, to generate revenue. and obviously, profit opportunity as well. So that's a given across all the contracts. There are, of course, performance expectations, but it's a volatile business. There are going to be things that move around from quarter-to-quarter, if not month-to-month, just given the operational intensity.

So we'll try to find the right balance between day-to-day performance and just acknowledging the reality that there is going to be some variability in the business. But certainly, if somebody is underperforming for a period of time, we would always have contractual rights to make a change if we thought it made sense. Patrick, do you want to comment?

Patrick Cheng: Yes. On the piece of alignment, I think that's the key of it here. It's like these are principles and operators -- principles of these operators and operators who have alignment with us in creating a great resident and staff experience. And part of that, too, is also a question of how long do we give them to evaluate. These are folks as part of that operator underwriting process in addition to alignment culture, integrity, innovation, but also success in the markets and specifically the products in those markets that they've done, right, whether that's Life Plan, independent living, AO memory care, like they already have success in these markets.

So it's an evaluation of them that was done not just when they took over the asset, but they have a track record of that success.

Operator: Your next question comes from the line of Mike Mueller with JPMorgan.

Michael Mueller: I dropped briefly. I apologize if this was asked already. But I'm curious, what was the story behind the asset that you sold in the quarter with negative NOI? And is there anything else like that, that could be an imminent sale in the future?

Scott Brinker: Michael, no, that was a one-off. It's just a unique property. In Houston, it had some skilled nursing. It's a high rise. Brookdale had been managing it. It has not been profitable for a long time. Unfortunately, they haven't been able to turn it around despite a lot of effort. So we thought it made more sense to just sell it. We had -- it would not have been easy to find another operator for that particular product type. So we just sold it. And I think we got a great price, certainly relative to the NOI that's in place or what's been in place for the last 10 years. So that should be a good outcome for us.

But no, there's really nothing else in the portfolio that we're looking to monetize.

Operator: This concludes the question-and-answer session of the conference call. Thank you for your participation. You may now disconnect.