Janus Living Second Quarter 2026 Conference Call

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 accretive 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 Health Peak 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 Levin 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% year over year, adjusted EBITDA increased 34%, and FFOs adjusted per share increased 40%. This is driven by strong organic growth in the increase 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 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 percent 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 percent year-over-year and on an expense per occupied unit or X-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 dollars and disposed of one community generating 23 million dollars of gross proceeds subsequent to quarter end and through august 3rd we completed an additional 1 billion dollars of acquisitions year to date we've completed 1.8 billion dollars of acquisitions and have another $59 million under purchase agreement. Initial yields across completed acquisitions are in the low sixes, improving towards seven and a half percent 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 $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 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 one 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 one. 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 with, sorry, and continue to manage these relationships going forward.

Hey, 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. Is that right? Yes.

Yeah. 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 we had to diversify we're still doing things with lcs uh we prefer we would like to grow that relationship as well but senior housing is unique and that the operators really control a lot of the deal flow um and part of the business plan of course versus 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 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 hand-tick 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 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 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 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 was 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% plus or minus as a stabilized occupancy. Is it possible to do better?

I mean, we've acquired some assets year to date that are essentially 100% full. uh but we're not underwriting that um as an expectation jonathan yeah yeah ron i'll say uh just on the margin question obviously as occupancy surpasses 90 percent that incremental flow through margin improves um and we saw a delta to noi margin expansion this year of 250 bps the delta between rev4 and export 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 in the life plan portfolio, and then you have the Brookdale transitions. 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?

Yeah, thanks, John. So on same store NOI, that It did decrease sequentially, margin compressed 40 BIPs, that's driven by typical seasonality due to timing of labor increases in April, more expense days, and lower sales. Occupancy increased 10 BIPs sequentially, but IL occupancy actually increased 50 basis 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 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 1st. 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 ny growth potential over the next two to three years hopefully that's helpful thanks johnson okay next question your next question comes from the line of austin or schmidt with key bank capital markets austin your line is open please go ahead great thank you um i was just wondering about your thoughts around you know uh deploying capital to 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 six percent. 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 uh the one asset that we have under contract um so you know continue to be prudent with the balance sheet here having no debt is an advantage and we'll utilize it strategically um as we see uh 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 um on all these transactions so we're not in a hurry uh 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 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, 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 uh continuum where you can charge there 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 that make sense today at least on a piece of paper uh again so i think that's where you're going to see the first wave of development it's going to take time you know 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, 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's 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 bits 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 they 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've mentioned a couple times on the call to

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 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 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 any terminal margins in mind as you look forward in the business for IELTS?

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 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 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. 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 Blowen with Goldman Sachs. Julian, your line is open. Please go ahead.

Hey, thanks for the time. 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 in those cases, do the operators have more negotiating leverage?

Yeah, fair. 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. 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?

Yeah. On the piece of alignment, I think that's the key of 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 in addition to alignment culture integrity 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 they 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 dropped briefly.

I apologize that this was asked already, but I'm curious, Christy, 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?

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 for us. 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.