Janus Living, Inc. (JAN) Q2 2026 Earnings Call Transcript

Good morning, and welcome to the Chanice Living, Inc. second quarter, 2026 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchstone phone. To withdraw your question, please press star, then 1. 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.

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 8K 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 and Chief Executive Officer, 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 Jan's 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 zero 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 one yield is expected to be in the low sixes, improving to 7.5% or better by year three. The yields are very We are creative to our cost of capital, and our basis is well below replacement cost. In just four months since going public, we've increased the number of operating partners from two to ten, all hand-picked 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 two 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 four months in as a public company but janice living has some real momentum i'll turn it to jonathan to share color on our 2q results and our improved earnings outlook 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 percent year over year adjusted ebitda increased 34 percent and ffo

is adjusted per share increased 40 percent this is driven by strong organic growth in the accretion from 800 million dollars of senior housing acquisitions completed in the first and second quarter. Moving to performance, same-store revenues increased 8.4% year-over-year and 60 basis points sequentially. This was driven by 260 basis points of year-over-year occupancy growth led by independent living that saw 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. REV4 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 ex-por 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 A1 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 two senior housing communities for $105 million and disposed of one community, generating $23 million of gross proceeds. Subsequent to quarter end and through August 3rd, we completed an additional $1 billion of acquisitions. Year-to-date, we've completed $1.8 billion of acquisitions and have another $59 million under purchase agreement. Initial yields across completed acquisitions are in the low sixes, improving towards 7.5% or higher by year three. As of August 3rd 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 95 cents to 98 cents per share, up from 93 to 97 cents per share. We are also increasing our same-store adjusted NOI growth guidance range by 200 basis points to 13 to 17 percent. The updated range is 500 basis points higher than the initial guidance range provided by HealthPeak for this 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.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchstone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 1. In the interest of time, callers will be limited to one question. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Farrell Granite with Bank of America. Farrell, your line is open. Please go ahead.

Thank you so much. My question is largely around the ramping of your operators, especially when thinking about Janice's 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 and continue to manage these relationships going forward.

Hey, Farrell, 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.

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 you know we started the year with essentially two 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 six 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 creative. 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 creative acquisitions. That's with eight 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, you know, our expectation is they would come to us first to 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 don't really don't need to just given our scale, but we knew that we wouldn't be able to maximize your business plan with just the two.

Your next question comes from the line of Ronald Camden with Morgan Stanley. Ronald, your line is open. Please go ahead.

Just on the, you know, you talk about the same store guidance up 500 basis points, you know, 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, you know, 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 that means in terms of pricing and margins as well, as you're thinking about this business over the next three to five.

Thanks.

Hey, Ron, we're in the mid 80s today across the total portfolio, but obviously trending higher, 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% or 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 percent 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 percent full, but we're not underwriting that as an expectation. Jonathan, anything to add?

Yeah, Ron, I'll say just on the margin question, obviously, as occupancy surpasses 90 percent, that incremental flow-through margin improves. We saw a delta – NOI margin expansion this year of 250 bps.

The delta between REV4 and X4 is expected to be pretty similar going forward, and so as occupancy continues to grow, and given our more IL focus with lower labor intensity, that incremental margin profile should only improve. okay thanks ron next question your next question comes from the line of john kilachowski with wells fargo john your line is open please go ahead hi good afternoon um jonathan you gave some helpful color in the opening remarks could you just talk us through the noi margins both of the same store and the total portfolio pools here we saw a step down quarter of a quarter of the year but your number looks great but i'm just curious you know what's driving that i know there's some seasonality

the life plan portfolio and then you have the brookdale transitions could you just kind of walk us through both which 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 yeah thanks john so on same store noi that did decrease uh sequentially margin compressed 40 bips that's driven by typical seasonality uh 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 uh 2026 sales objectives and then i think on the transition portfolio keep in mind those were completed april 1st both operators are making significant progress there um i i laid out the occupancy 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 you know 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 noy growth potential over the next two to three years. Hopefully that's helpful.

Thanks, Jonathan. Okay, next question.

Your next question comes from the line of Austin Orschmidt with KeyBank Capital Markets. Austin, your line is open. Please go ahead.

Great, thank you. I was just wondering about your thoughts around, you know, deploying capital today and just whether, you know, 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, you know, have assumed in the back half of the year or the quality of opportunities in front of you? Just kind of speak to, you know, how you're thinking about funding and, you know, the willingness, I guess, to lean into that debt capacity today.

Hey, Austin. This is Kelvin. I'll start. I think we've done a pretty exceptional job to start the year. It's only been four 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 sixes 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 a $500 million revolver that can be upsized with an accordion feature to a billion and a half. We have a $100 million delay 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, you know, $400-plus million after you account for the one asset that we have under contract. So, you know, 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.

So that's the capital raising side. And then on the deployment side, I would just add to that, Austin that, you know, the biggest mistakes are made when the sector's on fire. You know, we've seen that through history in senior housing and in other sectors. So we're being extremely disciplined. In my view, told the team we'd rather do a billion dollars of super high quality deals rather than five billion of, you know, 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 okay next question your next question comes from the line of rich hightower with barclays rich your line is open please go ahead hey good morning out there guys um i guess just to back up on the um maybe the long-term supply question do you have an estimate of where that spread between sort to current market rents and the level that would be required to justify new construction, you know, especially in the sort of, you know, higher growth but easier to build Sunbelt type markets?

Yeah, 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, 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. 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 element 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 Mark. 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. Okay, next question.

Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael, your line is open. Please go ahead.

Yep, thanks. Scott, how has, I guess, Janice's 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 Janice 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?

Yeah, 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 replacement cost hasn't changed. So, no, I don't think anything's changed other than the spread on investment is just more positive.

Okay, next question. your next question comes from the line of michael stroik with green street michael your line is open please go ahead good morning thanks for the time um rev4 growth excluding non-refundable entrance fees it did kick down a bit sequentially can you just provide some colors what's causing that and do you still expect that figure to re-accelerate towards the longer term average of cpi plus 200 bips or so yeah i think the important thing to notice is that our our view on rev4 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 um our updated outlook for the year you know i wish i could say it was driven by one thing in particular but it was across everything, REV4, 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.

Okay, your next question. Your next question comes from the line of David Rogers with Raymond James. David, your line is open. Please go ahead.

Yeah, hi, everybody. You mentioned a couple times on the call the focus on kind of the independent living aisle side of the business. And I know that's where you've been historically with the life plan. It sounds like that's where you want to continue to be much more like aisle centric. So I guess if that's the case, are you seeing more acquisition opportunities versus peers by being a little bit more aisle centric? Would you say, are you seeing more or less deal flow versus maybe some of the AL centric peers? And then maybe just the tie on to independent living would be, do you see an ultimately better margin opportunity there as well? And do you kind of have Have any terminal margins in mind as you look forward in the business for IO?

Yeah, 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 Giannis Living. Most of what we're buying is it's more that we like to continue on. 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 three product types, but at a minimum, two 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. So it's more market-driven and operator-driven are the other kind of criteria in addition to obviously returns and price per unit. Okay, next question.

Your next question comes from the line of Julian Blown with Goldman Sachs. Julian, your line is open. Please go ahead.

Hey, thanks for the time. It's been a busy couple 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 in those cases, do the operators have more negotiating leverage?

Yeah, fair. uh thanks for the question julian i'll comment and patrick chang 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 um there are of course performance expectations um but it's a volatile business um 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 uh between uh day-to-day performance um and and just the acknowledging the reality that there is going to be some variability in the business but certainly if uh somebody is underperforming for a period of time we would always have contractual rights to make a change um if we thought it made sense patrick do you want to comment yeah on on the piece of alignment i think that's 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 and creating a great resident and staff experience and part of that too is also it's like the 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've already had success in these markets.

So, it's an evaluation of them that was done not just when they took over the asset, but you have a track record of that success your next question comes from the line of mike mueller with jp morgan mike your line is open please go ahead yeah hi hi i uh dropped briefly i apologize that this was asked already but i'm curious what was the story behind the asset he sold in the quarter with negative noi and is there anything else like that that you know could be an imminent sale in the future hey 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. It would not have been easy to find another operator for that particular product type. So we just sold it. 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. But no, there's really nothing else in the portfolio that we're looking to monetize.

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