Ozuna, Director of Investor Relations. Mike, please go ahead.

Welcome to the second quarter 2026 webcast for National Healthcare Properties, Inc. All participants will be in listen-only mode. Please note this event is being recorded. Also note that certain statements and assumptions in this webcast presentation, which are not historical facts, will be forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain assumptions and risk factors which would cause the company's actual results to differ materially from the forward-looking statements. The company refers you to its SEC filings, including its most recent form 10-K, for a detailed discussion of the risk factors that could cause these differences and impacts in its business. During today's call, the company will also discuss certain non-GAAP financial measures. These measures should not be considered in isolation or as a substitution for the financial results prepared in accordance with GAAP. The company will provide a reconciliation of these measures to the most directly comparable gap measure as part of its second quarter 2026 earnings supplemental on its website at www.nhpreet.com. A question and answer session will follow the prepared remarks. Also, please note that a replay of the webcast will be available on the company's website later today. I would now like to turn the call over to the company's executive management team. Please go ahead, Michael.

Thank you, Mike. Good afternoon and welcome to National Healthcare Property's second quarter 2026 earnings call. I am Michael Anderson, Chief Executive Officer of NHP, and I'm joined today by Drew Babin, our Chief Financial Officer, who will speak to our financial results and outlook in greater detail following my remarks. Last quarter, first earnings call was a publicly traded company. We laid out a straightforward agenda. Grow the shop portfolio through disciplined acquisitions with best-in-class operators, concentrate our capital in senior housing, and build a balance sheet consistent with an investment-grade unsecured issuer. Second quarter was one of substantial execution against each of those objectives. Beginning with operations, our shop segment delivered same-store cash NOI growth of 20.1% year-over-year, marking another quarter of double-digit growth driven by occupancy rate and margin. Same-store average occupancy reached 84.1%, and same-store cash NOI margin expanded 230 basis points to 22.4%. Importantly, the composition of that growth is maturing in a way we would expect, with both rate and operating leverage contributing to an increase in share as the portfolio approaches stabilization. Drew will walk through the detail. Our three operating partners, Senior Lifestyle, Discovery Senior Living, and Age Well Senior Living, now collectively manage our 56 shop communities. Each continues to demonstrate the quality of resident care and operational discipline that underpin these results, and we're grateful for their partnership as we continue to scale alongside them. Turning to external growth, the second quarter and the period immediately following, represented the most active stretch of investment activity in the company's history. In late June, we acquired two senior housing communities in the Midwest, totaling 211 units for a purchase price of $98 million, which are being managed by one of our trusted operating partners. In July, we closed on 17 communities, comprising 1,003 units across the Midwest, South, Mid-Atlantic, and Pacific Northwest for approximately $182 million. 13 of these communities were acquired through the joint venture with Discovery Senior Living we announced last quarter, in which we hold approximately 98.5% interest. As part of that transaction, we retain a right of first refusal and a purchase option on an additional 13 discovery managed communities, providing a defined pathway for continued growth with a partner that we know well. Taken together, our 2026 year-to-date acquisitions total 19 properties and 1,214 units for approximately $280 million at a blended year one yield of 7.9% and a projected year three yield of 9.7%. That spread between initial and stabilized yield is deliberate. We're underwriting assets where our operating partners and our asset management team can drive measurable improvement, and we're being paid to do that work. We also have a well-defined near-term pipeline. In late June, we entered into a definitive purchase and sale agreement to acquire three communities in Illinois with 178 units for $30 million. In July, we entered into a definitive agreement to acquire two communities in Florida with 200 units for $90 million. Each of these transactions is expected to close in the third quarter, subject to customary closing conditions and applicable regulatory approvals. In addition to the two previously referenced transactions, on August 4th, we were designated a stocking horse bidder for five shop communities to a bankruptcy proceeding. The acquisition of these communities is subject to an auction process. However, given our stocking horse designation, should we not be successful in acquiring these communities, we will be entitled to a breakup fee and expense reimbursement collectively in excess of 4.8 million dollars it's important to highlight that a majority of the transaction will be funded with nhp op units or reach shares further deleveraging the balance sheet and adding shock communities in which we have strong conviction around near and long-term growth on the capital recycling side we continue to advance the strategic rotation we announced in may our agreement to divest a portfolio of 86 outpatient medical facilities for a disposition price of approximately $528 million is now hard, the buyer's due diligence period expired in mid-July, and is only subject to lender consent for the loan assumption and other customary clothing conditions. We continue to explore strategic opportunities related to the remainder of our OMF portfolio as we focus on completing the reorientation into a full shop portfolio. We'll provide further updates as these processes advance. In addition, in May, we entered into a definitive purchase and sale agreement to sell one non-core shop community in California for approximately $42 million. That sale carries a 1.7% cap rate based on trailing 12-month results and further aligns the portfolio with our strategic focus on markets where we have the greatest opportunities for scale and growth. I would also note two items on governance that speak to the company's evolution. We announced the appointment of Al Campbell to our board of directors as an independent director, effective August 10th. Al recently retired from his role as chief financial officer of mid-america apartment communities a role he held for 14 years through tremendous growth and performance at mid-america he brings decades of public company leadership and experience to our board and we're very pleased to have him joining us we've also begun another board process to identify a new independent director further solidifying our commitment to continued enhancement of our company's governance i'll now hand the call over to drew bapman our chief financial officer thank you michael second quarter normalized ffo was approximately $10.9 million, or 18 cents per share.

On an absolute basis, NFFO increased year over year on higher NOI and interest income, as well as lower interest expense, net of higher G&A, primarily in the form of equity-based compensation. The increase in shares resulting from our highly deleveraging April IPO resulted, as expected, in sequential and year-over-year declines in NFFO per share. It's worth mentioning that normalized FFO for the second quarter of this year excludes to the benefit of $1.2 million, or $0.02 per share, offset the interest expense resulting from derivatives mark-to-market and terminations. Within the shop segment, same-store cash net operating income increased 20.1% on a year-over-year basis, driven by an increase in average occupancy, a meaningful pickup in year-over-year REF poor growth, and continued improvement in operating margins. Same-store average occupancy reached 84.1% for the quarter, a 140 basis point improvement relative to the second quarter of 2025. As we noted last quarter, the accelerating rate of year-over-year growth in occupancy is not unexpected given the rapid occupancy growth or portfolio experienced in 2024 and in 2025 on the heels of game-changing operator transitions. We nevertheless expect continued growth in occupancy with accelerating tailwinds from improving rates and margins. While the shop segment performed ahead of our NOI growth expectations in the second quarter on rate and margin outperformance, resulting in an increase in our full-year same-store cash NOI growth guidance, I will further detail momentarily, occupancy growth contributed less than we anticipated. The lag was centered within the AL segment as we supported an operator's strategic decision to upgrade certain key property-level leadership roles, including at the executive director and sales leadership levels during the quarter. We believe that this was the correct long-term decision in the interest of improving long-term NOI potential, and note that the same operator led occupancy gains across our portfolio in July and is still on track to produce NOI in line with their expectations heading into this year. Same-store REFPOR increased 5.9% year-over-year to $6,390, as new leasing activity provided a benefit to revenue beyond the roughly 5% average annual escalators that went into effect in January across nearly our entire portfolio. We're confident that our strategic focus on high-acuity care and private-pay residents, together with our willingness to invest capital in revenue-enhancing projects, position us to generate consistent mid-single-digit ref pool growth far into the cycle. Same-store cash on a line margin expanded 230 basis points year-over-year to 22.4% on moderation in the growth of compensation-related expenses as the portfolio approaches fully staffed levels and as growth in other expenses remains relatively benign. Looking to our outpatient medical facilities, a raw MS segment, same-store cash NOI decreased 0.4% year-over-year to $20.2 million, despite a 30 basis point sequential increase in occupancy and a 97% retention rate due to a one-time increase in utility and other non-reimbursable expenses during the quarter. Segment performance continues to track well within our same-store guidance range for this year. Before I move to full-year guidance, it is worth taking a moment to comment on the evolution of our balance sheet. Net debt to annualized further adjusted EBITDA declined sharply to 4.6 times in the second quarter versus 8.6 times in the first quarter as a result of our IPO. As announced yesterday, we recashed our trade facility, increasing the overall size from $550 million to $1.2 billion. It includes an incremental $150 million term loan, a new $150 million delayed draw term loan, and an increase of $350 million in the size of the revolver, all at improved spreads and term relative to our prior facility. We're appreciative of the banking group that understands not only our current portfolio and capital structure, but the overall strategic vision upon which we continue. We use the facility to repay at par approximately $332 million of Fannie Mae loans, which represented our only debt maturity for this year. We expect to further utilize the revolving credit facility from time to time to fund acquisitions in the redemption of our Series A and Series B preferred stock to the extent they occur prior to the closing of announced OMF dispositions. It remains our plan to achieve and maintain levels of financial leverage consistent with investment-grade unsecured issuers, particularly as our portfolio. We updated certain elements of our guidance to incorporate second-quarter results as well as our expectations for the remainder of the year. We increased our shop's same-store cash NLI growth guidance by 2% at both the low and high ends to 15% to 18% for approximately $51.6 to $52.9 million. It is worth noting that third quarter savings for NOI growth is expected to be negatively impacted by short-term incentives targeting communities with occupancy levels generally remaining below 85%. These concessions, which reduce revenue only in the one or two months they generally occur, may delay the typical seasonal ramping of revenue we see in the third quarter into the early fall months. We and our operators strongly believe that proactively increasing occupancy of these properties is the right strategy to accelerate their progress to the NOI levels we believe they can generate. As I mentioned before, rough-poor growth has outperformed our expectations year-to-date. Compensation-related expenses continue to moderate, and in addition, we'll begin to benefit from reduced property insurance premiums beginning in the third quarter. OMF same-store cash and ally growth guidance of 2.5% to 3.5%, or $81.2 to $82 million, is unchanged and does not account for expected OMF dispositions. Notably, steady revenue drivers and normalization of utility expenses and savings on property insurance are expected to contribute positively to growth in the back half of the year. While the speed of execution and pricing of our external growth has exceeded our prior expectations, we continue to expect $375 to $425 million of acquisitions in 2026 based on our updated disposition guidance of $570 million and where we would like to see our balance sheet positioned at year end. Given uncertainty related to the outcome of the auction for the pipeline properties Michael mentioned earlier, we have chosen not to include these in our acquisition guidance range. Should we acquire the facilities, at least half of the total consideration would be funded with NHP, OP units, or REIT shares issued to the seller pursuant to the terms of the agreement. We're increasing our total G&A and equity compensation guidance by $1 million each to $27 to $28 million and $6 to $7 million, respectively, due to an anticipated increase in non-cash and the ongoing refreshment of our Board of Directors. Her decision to proactively address maintenance capital expenditures across our portfolio in 2024 and 2025 in preparation for the IPO continues to result in a lower rate of recurring CapEx spend this year and a greater focus on revenue-enhancing projects of existing and acquisition properties. Her expectation for same-store recurring capital expenditures remains unchanged at $22 to $25 million, as we do generally expect same-store spending to be weighted. We plan to update this range as announced portfolio. Now I'll hand it back to Mike.

Thanks, Drew. Second quarter was a quarter of execution, turning the strategy and the capital we raised in April into assets, into a materially stronger balance sheet, and into a clear path to the portfolio we intend to have. Our shop segment delivered another quarter of 20% plus same-store growth, and the drivers of that growth are broadening from occupancy recovery to rate and margin. Transactions team, led by Tyler Bronner, closed or placed under contract to approximately $400 million of senior housing since the start of the second quarter at yields that we believe are highly accretive to our cost of capital. Our leverage now stands at 4.6 times. Our only 2026 maturity has been retired. Credit facility has been recast and upsized to $1.2 billion at improved pricing, and we've announced the full redemption of our preferred stock. The announced LMS disposition, when completed, will provide additional balance sheet flexibility to accelerate our growth strategy in the senior housing-focused portfolio we're executing on the plan we described to investors in april and we're doing so ahead of the pace we previously discussed importantly we remain disciplined in our approach with the right team and infrastructure in place to support our growth we look forward to updating our shareholders on continued progress in the quarters ahead with that i'll turn the call back to the operator for the question and answer session we will now begin the question and answer session please limit yourself to one question and one follow-up if you would like to ask a question please press star one to raise your hand.

To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of John Kilichowski with Wells Fargo. Your line is open. please go ahead.

Good afternoon. Thanks for taking my question. My first one, Drew, just, you know, the press that we're taking out post-quarter end, I know there's not an AFFO guidance, so it doesn't necessarily impact that, but could you talk about how that impacts your guidance or sort of the pro forma leverage and balance sheet outlook for the rest of the year? Especially, could you give us some color around maybe after the OMF sale and reaching a midpoint of guidance on the acquisition size?

Yeah. Hi, John. So back at Mayra, we put a slide in our deck that kind of laid out just based on the OMF disposition, the IPO and credit facility pay down, as well as our acquisition guidance, kind of where leverage would end up for the end of the year. And including preferred, it was, you know, call it low to mid fives. Since then, we announced the non-core shop disposition. So that probably helps that a little bit. really with the preferred redemption, you know, we're saving on costs. Obviously, the interest expense on our line of credit is lower than the preferred dividend rate. So there'll be that savings. But it really has the effect of just kind of converging our with and without preferred leverage ratios, kind of both to the low five, which is a place where, you know, we would like to be kind of going into next year and potentially a further rotation towards shop.

Okay, thank you. And then the deal that you're talking about in the auction, it sounded like you were saying that sits outside of guidance currently. So that would be, if that deal were to close, that would be above and beyond the $400 million point?

That's correct. And as we've said before, the restraint on our guidance, kind of stopping at $400 million or that range for acquisitions is really leverage and wanting our leverage to be kind of in a comfortable range at your end. You know, as Michael mentioned in his remarks, the pipeline is very robust, but we're, you know, hesitant to up our guidance until funding is spoken for. But, you know, with this deal, the funding is already kind of baked into it if we do win the option in the form of OP and re-units.

Very helpful.

Thanks, John.

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

Hey, great. Thanks so much for the time. Just starting with the same story and why and the guide raise and so forth. I think talk through some operator transitions and so forth. Just curious as you're taking a step back, if you could just comment on what you think sort of the upside, what's driving the upside and what sort of further could go from here. Thanks.

Hi, Ron. So to get started, I mean, the second quarter kind of outperformance relative to our guidance range is really the main reason why we increased it. As we said in the prepared remarks in the second quarter, you know, occupancy didn't come along as much as we thought it would. And as we also mentioned in the third quarter, we're really targeting properties at lower levels of occupancy and selectively applying concessions there really to try to get occupancy to a better place. We believe that's the right long-term decision for NOI. So, you know, subject to those things, you know, we'll keep the guidance range updated. We have seen expenses, especially on the compensation side, continue to moderate, which helps as well. But obviously, we'll watch these things as the year goes on and update guidance as we go.

And then if I could just, my quick follow-up, I think interesting you were talking about sort of funding. Maybe, can you just give us an update on the OMS sale? I know that the release, it's at 3Q or 4Q close, if any more visibility there. And then beyond this sort of first tranche, just what's the thinking on the next tranche on OMF sales, the fund, this robust acquisition pipeline?

Hey, Ron, it's Michael. Yeah, so as we mentioned, deal went hard in mid-July, and we expect that a portion of that will close in the third quarter. portion, likely early fourth quarter, but I think too early to tell just given the loan assumption process around that. And then as we think about the remaining portion of the OMF portfolio, there's certainly been no shortage of interest and inbound on that portfolio. I think you see it across OMF transactions, broadly speaking. So as we think about monetizing that side of the portfolio, it's really thinking about that relative to the acquisition pipeline. And And I think, you know, as Drew mentioned, robust pipeline right now. And so it's certainly front of mind for us.

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

Yeah, thank you for taking my question. Yeah, I appreciate the color on the drag on occupancy at some of those properties where there's leadership turnover. I guess, can you give us a sense of how we should think about occupancy growth over the back half of the year? and it sounds like you've already seen some occupancy pick up at some of those affected properties so far in the third quarter. Am I understanding that right, that that improvement is not baked into your current guidance? Your current guidance update only reflects the second quarter outperformance?

Yeah, I'll get that started, Julian. I think you're right in that the guidance increase has more to do with the second quarter actual performance. I think with the moving parts contributing the same store NOI growth, obviously revenue can be driven in two different ways. And I think as concessions are applied to the extent occupancy improves, just in the third quarter, you may see it come out of rep poor to some degree temporarily. And certainly the expense moderations continue. And so again, as we monitor these different moving parts, we'll update guidance. But to your point, the increase in guidance had a lot more to do with the second quarter. And again, we'll update it as we execute over the rest of the year.

Yeah. And Julian, just to add on that, as Drew mentioned in his remarks, those communities where we made some strategic changes in the second quarter, we saw the benefit of that starting in July. Those communities actually led the occupancy gains in July for us. And so I think as we've traditionally seen Q2, Q3 be the strongest seasons for leasing. I think we're expecting that Q3 and into Q4 will actually be strong for us, given the impact of those executive leadership changes. And then, as Drew mentioned, we're really focused on communities that have sub-85% occupancy. It's a limited number within the portfolio. And on the other end of the spectrum, we've got communities within the portfolio that are highly occupied. And over the last several months, we've been dynamically changing street rates with 3% to 5% increases over in-place street rates mid-year. So I think we're seeing a lot of strong demand across the board. And I think that the strategic changes made by the operators will certainly benefit us in the back half of the year.

That's helpful. And then I believe you recently tied down Tyler Bronner as EVP's investment. Well, one, is that correct? And then how should we think about additional hires and sort of filling out that investment team from here as you hopefully start to approach the kind of cost of capital that could allow you to be even more active on the acquisition front?

Yeah, we did bring Tyler on full-time. He is EGP of Investments, joined us in July. We're happy to have him on board and certainly been a valuable member of the team even before joining us as a full-time employee. I think Tyler, together with some other individuals on the team that have been in the medical healthcare space for decades, have a lot of strong relationships with brokers, with owner operators, with operating partners. And so we continue to see a lot of deal flow from our existing operators, but also from the incoming operators. And I think you should expect to see some additional operators in the mix beginning this month with a three-pack that we're closing in Illinois. We'll be bringing Priority Life as the operator on that deal. And similarly, they would be the operator on the five packs that's subject to the auction. And so they've been a good source of flow since we've begun those conversations. And Lindsay and the team have been in pretty deep conversations with a number of other operators that I think will ultimately be added to the roster.

Okay, great. Thank you so much, team.

Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open. Please go ahead.

Hi, this is Robin Hanalan, sitting with Juan. I was just curious on the potential acquisitions going through the auction. What's the expected yield here, and what's the status of the operations of the facilities, and where's occupancy at?

Yeah. Hey, Robyns, Michael. This portfolio is sitting somewhere mid to high 80s occupancy. Really struggled over the last few years, but I think with some new operators, they've turned it around, I think there's a lot of upside still yet to be realized there. That's a kind of low to mid-seven year one and then kind of touching a nine year three. So we see a lot of quick growth in those. There also tend to be newer vintage communities. And so I think we're optimistic about the outcome. You know, certainly put a lot of work and diligence into those five assets. And I think they would be a nice addition to the portfolio.

It's Drew here. I think it's safe to say that the yields kind of in the first year, but also year three, will not be materially different than kind of the blended numbers that we've talked about and reported.

Agreed. Got it. And on Discovery Rofer, where do we stand on that? I'm just kind of curious what the later thoughts are.

Yeah, we continue to receive monthly financial updates from them on those 13, not at a place that we're ready to execute on today. But given the fixed purchase price and the option, that price per unit is very similar to the 13 that we closed on. And so it's a very attractive basis for us. But we'd like to see some continued improvement in the occupancy and margin.

Thank you.

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

Yeah, thanks. I wanted to circle back on the specific operator that has elected to make some leadership changes at the ED level and the sales level. I mean, how widespread were these changes? I know it sounds like it was pretty widespread since you're calling it out here as the reasoning that could have impacted the 2Q results. So, like, how many communities did it impact, and what's the reason for them electing to make this upgrade?

Yeah, I think it was six communities within the Arvon portfolio. You know, we've spoken pretty extensively about the tremendous growth that we saw once that operator transition took place. But as we looked at the long-term growth potential in that portfolio with our operating partner there, I think we all came to the conclusion that there needed to be some new blood to really take performance to the next level. And so we started to see that pretty quickly. You know, that portfolio led the way in occupancy gains in July for us. And so I think it was, you know, good team to start with, but even better now and ultimately the right decision for us.

And then I think you said earlier that you plan on adding new sales, like expanding the sales teams at those communities. Is that more at a community level, a portfolio wide level within Artem? I guess how should we think about that?

Yeah, so that was part of the conversations that we had in Q2 with the operator. As a result, they've added some additional regional sales leadership and then actually hired a divisional sales leader, which is, you know, as we think about kind of the most senior salesperson within that brand. So certainly an enhancement to the community level leadership, but also some additional commitment from our operating partner around more senior personnel in that portfolio.

Okay, great. And then just if I can speak one last one in, when did those transitions actually occur? So I guess it sounds like it was an impact in 2Q, but given your comments on July, it's no longer an impact going forward and maybe more of a benefit.

Yeah, those were mostly kind of mid-Q2 changes, and so we're starting to see the benefit of those, and certainly they were the leader in the clubhouse in our July results.

And it's Drew here. I'll say, too, that in the third quarter, the properties that we're targeting at the concessions, it's not that same operator. It's not just that same operator. it's kind of across the board just looking at our portfolio and identifying properties where you know we can kind of raise the floor as far as where our portfolio as a whole sits and get those properties to to a better place where you know rate can be driven a little better and the expenses you know flow through begins to uh to improve um so it's not necessarily the same situation you know a bit of a separate effort than what we saw in the second quarter okay great thanks i appreciate it your next question comes from the line of austin werschmidt with key bank Capital Markets.

Your line is open. Please go ahead.

Yeah, thank you. Just sticking with the shop theme here, you know, last quarter you talked about the spot occupancy, you know, north of 85% at quarter end, and clearly there were some, you know, some impacts to the portfolio as well as some industry factors maybe that have led to less sequential improvement in occupancy than might have been anticipated.

If you break out the six assets, I mean, is there a significant NOI growth differential between you know the remainder of the pool and and those six assets specifically yeah i think the main reason why you saw the occupancy um you know if you look back i don't think we disclosed the same story but if you look back in our past supplementals we break out occupancy by that type and the sequential increases we had in occupancy between 1q and 2q last year were call it 300 350 basis points for for al and memory care so obviously it's hard to kind of you know repeat that type of sequential gain um but you know what we did see is is better ref poor growth um and to michael's point earlier um with street rates i will see that pick up which is obviously what you want to see when occupancy is higher um we're seeing margins continue to improve um and so you know i think again i think the occupancy piece is just one piece of the puzzle um and one that you know has lagged a little bit um seasonally versus what we normally see But very little change in our forecast as far as where we think things are going to end up, you know, into the fourth and getting there on the occupancy.

Yeah, that's helpful. And I know kind of concessions played in, I think, some burned off maybe from the first quarter, the second quarter, which may have helped drive that acceleration. So how do we think about the year-over-year rev poor growth now into the third quarter, given the usage of concessions and, you know, that presumably kind of helping lift occupancy towards the back half of the areas you've talked about?

Yeah, I think there'll be a tension between better rate growth that we're seeing on higher occupied properties with better street rates and, you know, the concessions that I mentioned at some properties. It's TBD kind of which will win out. But, you know, if we see a little bit of deceleration in Rev4 in the interest of gaining occupancy at some of these lower occupancy properties, again, we think that's the right thing to do to maximize NOI.

And then just last one, is the usage of concessions, is there competing product within this market, or has it just been a little bit, you know, slower to see the occupancy improvement that some of the broader industry has? what's sort of the biggest driver for, you know, using concessions, given what's otherwise, you know, a pretty good, you know, fundamental backdrop? Thanks.

Yeah, it's not really a competing product issue. I think it's mostly, you know, strategic personnel changes. And, you know, having turned rooms, wanting to fill those rooms, our view is that in the long term, using a one-month concession to lock in a 24-month stay and increase margin, increase NOI is the right thing. And so bringing some of those sub, it's a pretty limited number of properties that sit at sub 85% for us. And being able to bring those properties north of 85% where we start to see that margin flow through really enhance is kind of the strategy around that. And I think that we'll see that play out, but we think ultimately that's the right play on that. And And then, as we mentioned, you know, around nine or ten of our communities, we've been seeing three to five percent in place kind of dynamic changes, even above new rates that were reset in January. So we're seeing, you know, where we have highly occupied properties, we're seeing a lot of pricing power in those markets. And ultimately, that's the direction that we'd like to see the entire portfolio move.

I appreciate the added detail. Thank you.

Your next question comes from the line of Rob Stevenson with Huntington. Your line is open. Please go ahead.

Good afternoon, guys. Just one for me. How much CapEx are you expecting to put into the $400 million of second and third quarter announced and completed acquisitions at this point, given a preliminary run through?

Yeah, here, Rob. So on the Discovery deal, we talked a bit before where there's about $6 million or so of CapEx going into that one. You know, on other properties, I think that, you know, in the aggregate, maybe a similar amount. You know, I think we're not excited about buying things that need true deferred maintenance. I think most of what we're buying, you know, we're most excited about revenue enhancing type opportunities that are there. But, you know, I wouldn't say it's that material or that much kind of in excess of, you know, the $6 million we have on Discovery. Maybe in the aggregate, it's another $5 million to $10 million.

Okay, that's helpful. And then I guess when you're looking at the stuff that hasn't been specifically announced, as well as what's in the pipeline, what type of mix are you looking at there between the various buckets? Is it, I assume it's the vast majority of it's assisted, but is there more independent living in this stuff, or is it basically almost all, you know, assisted living and memory Yeah, I think it's going to be pretty similar to what we currently own.

You know, we're not standalone IL buyers. It's not really where we focus. And, you know, we also like to maintain a very high percentage of private pay beds where, you know, our pipeline really looks a lot like our. current portfolio. So I think AIL will continue to be kind of the main thread to our pipeline. To the extent we have AIL, it's more of a feeder within the same properties. And memory care is a valuable business and an important business that mixes in as well. But you shouldn't see too much of a change in the composition of our portfolio as we grow.

Okay. Thanks, guys. Thank you.

Your next question comes from the line of Wesley Galladay with Baird. Your line is open. please go ahead.

Hey, good afternoon, everyone. Just a quick question on the back half of the year on the compensation front. How does it look versus what you originally planned for the year with all these changes you made?

Yeah, so it's, we upped the stock comp portion of it a bit, obviously adding out of the board. There's some shares there. And, you know, anytime a director exits, as we had that situation earlier this year, there can be accelerated vesting. And so there's been some impact there but as michael mentioned earlier um we're continuing on um you know recruiting additional board members um and to the extent you know we have new new board members joining throughout the year um there could be additional grants so really that's kind of the only adjustment there i'll make one more comment that total gna guidance does not really contemplate any changes as a result of kind of remixing our business and so to the extent you know directionally we move out of the OMF segment, there could be some potential savings there, but we feel better quantifying that once some of these transactions have closed. And as our portfolio reconstitution kind of further materializes, we'll update it as the year goes on.

I appreciate all that. I was actually looking for the shop side, being that you've made some changes on the staffing there versus your expectations, but I do appreciate the GNA answer as well that was helpful for sure yeah so um we already contemplated the additions to the um the shop team um in guidance last quarter um there's really no change related to that okay thank you very much no i'll say no meaningful changes in terms of shop comp expense as a result of some of the strategic changes that we made in the in the second quarter at those communities Okay, thank you. Thanks, Les.

We've reached the end of the Q&A session. I will now turn the call back to Michael Anderson for closing remarks.

Thank you. Thank you all for joining us this afternoon. We're excited about the results from this quarter, excited about the direction that we see the second half of the year continuing towards, and we really look forward to sharing additional updates as we have them over the course of the year and appreciate the time this afternoon. Thanks.

This concludes today's call. Thank you for attending. You may now disconnect.