Good day, ladies and gentlemen, and welcome to the Q3 2014 Ventas earnings conference call. My name is Mark, and I'll be your operator for today. (Operator Instructions) I would now like to turn the conference over to Lori Wittman, Senior Vice President of Capital Markets and Investor Relations. Please proceed, ma'am.

Thank you, Mark. Good morning, everyone, and welcome to the Ventas conference call to review the company's announcement today, regarding its results for the quarter ended September 30, 2014. As we start, let me express that all projections and predictions and certain other statements to be made during this conference call may be considered forward-looking statements within the meaning of the Federal Securities laws. These projections, predictions and statements are based on management's current beliefs, as well as on a number of assumptions concerning future events. The forward-looking statements are subject to many risks, uncertainties and contingencies, and stockholders and others should recognize that actual events may differ materially from the company's expectations, whether expressed or implied. We refer you to the company's reports filed with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2013, and the company's other reports filed periodically with the SEC for a discussion of these forward-looking statements and other factors that could affect these forward-looking statements. Many of these factors are beyond the control of the company and its management. The information provided today is as of this date only and Ventas expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations. Please note that the quantitative reconciliation between each non-GAAP financial measure contained in this presentation and its most directly comparable GAAP measure, as well as the company's supplemental disclosure schedule are available in the Investor Relations section of our website at www.ventasreit.com. I will now turn call over to Deborah A. Cafaro, Chairman and CEO of the company.

Thank you, Lori. And let me repeat to all of our shareholders and other participants a warm welcome for joining us this morning for our third quarter 2014 earnings call. It's great to be here with you to discuss our excellent third quarter results and share our continued growth and progress on numerous fronts, including closed and pending transactions. After Ray Lewis and Rick Schweinhart complete their remarks, we'll be happy to answer your questions. Our strong performance showcases Ventas' sustained ability to provide growth to our investors and to our customers. We delivered superior results on a repeatable basis, because of our dedicated team, our deep knowledge of healthcare and senior living, our diversified productive portfolio and our expansive base of leading care providers. These characteristics position Ventas for continued success and value creation. First, let me recap a few highlights. We achieved record normalized FFO for the quarter of $1.12 per share, 9% growth over the third quarter of last year, excluding non-cash items. We are also delighted to increase our full-year normalized FFO guidance, because of our excellent results to date and our expectations for the final quarter of 2014. Stepping back to look at our larger enterprise, Ventas annualized revenue for the quarter exceeded $3 billion and our adjusted annualized net operating income or NOI totaled nearly $1.9 billion. Our balance sheet and liquidity position remain outstanding. Pro forma for HCT, our annualized NOI is approximately $2 billion. In addition to driving outstanding results, the Ventas team turned in an incredibly productive quarter and achieved many significant goals. Among them, we closed the Holiday Retirement acquisition for CAD957 million and transition management of these 29 independent living communities to Atria. This is our second deal with Holiday and was favorably priced, given the high quality of…

Thank you, Debbie. The third quarter represented another quarter of consistent and strong performance from our diversified portfolio of seniors housing, medical office and post-acute properties, with same-store cash NOI for the portfolio growing by 3% year-over-year in local currency. Performance was good across the board. With our balanced portfolio of 1,468 SHOP, triple-net and MOB assets delivering reliable and growing cash flows, which I will now break down by segments. Let me start with our seniors housing operating portfolio, operated by Atria and Sunrise and now Brookdale. With the closing of our acquisition of 29 Canadian properties from Holiday, we now have 41 properties north at the border. In order to help you focus on property level performance, we are now providing enhanced disclosure in local currency and the SHOP statistics I will be providing in my prepared remarks will also be in local currency. Let me start with our total portfolio. This portfolio now stands at a total of 270 properties and accounts for approximately 30% of our portfolio NOI. The total portfolio produced $132 million of NOI after management fees in the third quarter of 2014, an increase of approximately 15% over the prior year. This increase is due to the impact of acquisitions and the steady performance of our same-store stable portfolio offset by decreases in our redevelopment portfolio due to units offline for refurbishment. NOI in the 217 properties in our same-store stable portfolio increased 4.4% year-over-year and occupancy grew by approximately 20 basis points to 92.1%. This is 180 basis points higher than the occupancy reported by NIC in its primary markets. RevPOR grew by 2.5% to over $5,600 per month, which is higher than the NIC primary market RevPOR by nearly 60%. The 12 properties in our Sunrise, Canada portfolio began to rebound…

Thank you, Ray. The company invested $1.28 billion in the third quarter, repaid $632 million in debt and paid dividends of $214 million. Those amounts were funded by cash flows from operations of $324 million, debt issuances and assumptions of liabilities of $1.7 billion, and sales of real estate and other investments of $132 million. During the quarter, we borrowed $725 million in Canada on a one-year bank term-loan at CDOR plus 105 for our Canadian acquisition. Shortly there after, we refinanced the majority of the term loan with permanent financing, with the issuance of $580 million in senior notes in Canada with an average interest rate of 3.5%, and a weighted average maturity of seven years. The proceeds were used to reduce bank term loan. The $32 million of mortgage debt prepaid was at a weighted average interest rate of 7% and a GAAP rate of 3.7%. Normalized FFO was $1.12 per diluted share for the third quarter of 2014, an increase of 9%, excluding non-cash items and 8% as reported in each case compared to the third quarter of 2014 per share results. Normalized FFO increased 8% to $333 million compared to $307 million in the third quarter of 2013. Normalized FFO increased due to improvements in all three segments and the impact of accretive investments completed in 2014 and 2013. This strong performance was partially offset by the dilutive impact of asset sales and loan repayments we received in 2013 and 2014. We translate our revenue and net operating income from Canada to U.S. dollars reported in our financial statements. This quarter and year-to-date the U.S. dollar has strengthened against the Canadian dollar, which effectively reduces the U.S. dollar amount of that revenue in NOI in our financial statements compared to prior periods. However, because we also…

(Operator Instructions) And your first question comes from the line of Juan Sanabria from Bank of America.

I was just wondering if you could give us a little flavor for the relationship transactions you noted at the beginning of the call. And what you think could be a sustainable annual or quarterly run rate that investors could sort of pencil in going forward?

I would say that it's our view that this business that we do, that's follow on business with existing customers will certainly continue, but the timing and volume of acquisition activity will always be lumpy and difficult to predict. So we are trying to give you some great color on our year-to-date acquisitions, which again were 85% new business with our existing customers.

And then just on the dispositions that you noted, still having some I guess waiting to be sold around the timing of the HCT transaction, how much do you expect to close for the balance of the year and kind of maybe what's left over that you could look at, at disposing in 2015?

Well, I would say that it could be very end of this year, early next year, and we're looking at 200 plus or minus. And in terms of '15, we are working on that and are likely to provide some additional guidance on volume and yield, when we have to about 2015 projections. So I do think we have some opportunities in the market that will be attractive for us to dispose of some additional assets in 2015.

And then if I could get just a comment on what your views on cap rates are. Clearly 10-year treasuries and debt markets have been volatile, but maybe surprised some people and kind of headed down and there have been some big transactions. Sabra paid sub-6 cap rate for Holiday. What's your view on kind of where cap rates are, and maybe in particularly for senior housing assets? If you could comment, if you think the Sabra transaction sort of resets the market or that was more of a one-off in your discussions with potential sellers?

Well, one thing I would like to say is that we feel really good about the -- almost $4.5 billion that we are closing and underwrote this year between HCT, our Holiday deal and our other transactions that we described. I think the one thing that we some times see earlier than the analysts and the investors is where pricing is going, because we do see such a large volume of transactions. So I would say that healthcare assets continue to be attractive, because of their demand characteristics and so on. And the cap rates continue to be kind of in and around the 6% to 7% range, but can go lower based on specific characteristics of a given transaction. I mean as you mentioned about treasuries, I mean, I did comment at your conference and I think we said again today that we tend to ascribe a little bit to the PIMCO view that we are going to see a little bit persistently lower rates, because of the global economic situation.

Your next question comes from the line of Jack Meehan from Barclays.

I just want to start with the SHOP portfolio. Obviously, really impressive occupancy momentum in the third quarter and obviously Canada helped with that. But I was wondering if you could just touch on maybe were there any different strategies that were deployed this quarter with your operators there? And where did you end the quarter in terms of like a point in time occupancy number?

So Jack as you pointed out occupancy did improve sequentially. This is consistent with typical historical patterns. As we look back across the portfolio performance overtime, I think we've always seen in the third quarter that we get a bump. But we were also aided as you point out by Canada. I think the strategies that Sunrise has implemented as well as the new personnel that they put in place are starting to gain some traction and we're hopeful that that will continue. And then I think the last thing is that our operators are really pushing on the sales front. And we've seen the move-in trend to be pretty good relative to historical levels. And notably, the move-outs that have been higher in the first and the second quarter have abated. So I think all of that is feeding our occupancy growth rate sequentially.

And then I guess just on the move-outs, is there any real difference you see in the demographics of the people that are coming through? Like is there a change in the age -- and I'm not sure if this is something that you track, maybe the age of the people that are moving in to begin with?

Our operators haven't pointed that out to us a driver for the move-outs. I think they're really just saying that we had an unusually high number of move-outs in the first and the second quarter, but they haven't pointed to any particular demographic driver of that age or otherwise.

And then maybe last one is for Debbie. In the press release at the beginning, you mentioned the increase in the number of insured individuals. I was wondering obviously with health reform this year, everybody has got their eye on where that could help the healthcare REITs. I was wondering if there was any point in the portfolio where you have seen that show up, maybe in the MOBs or have you seen any sort of benefit yet?

Well, we are excited to see that we are expecting another $4 million of additional exchange enrollment in 2015; $2.5 million of which we expect to these previously uninsured individuals, and we do expect to see increased utilization from those trends. Actually Todd and I were talking about this as we got ready for the call, and I think we are starting to get anecdotal and more quantitative evidence of whether traffic is up in the MOBs and so on. We do expect 20% increase in outpatient business over the coming years. We also think that as hospital admissions increase from these trends, we may see a positive overflow impact into the post-acute business. And interestingly, the LTACs are starting to see some good increase in terms of a Medicaid population that they hadn't had before. So we are seeing some impacts from policy being the low cost, most clinically appropriate settings, and we expect that these numbers from the CBO and from other sources will start to translate into meaningful quantitative utilization statistics in the future.

Your next question comes from the line of Nick Yulico from UBS.

A couple of questions; first, kind of the big picture one on your senior housing operating segment. I mean, you're now in that 4% to 5% same-store NOI growth range for that portfolio. Seems like its a little bit more mature today, maybe less occupancy upside than the past. And what I am wondering is do you think about maybe pruning some of the assets in this segment, selling some of the more mature ones, taking advantage of the very low cap rate market for senior housing and maybe investing into more assets that maybe have more future occupancy growth to perhaps improve the growth rate of that portfolio.

I think as we look at our SHOP growth rate, same-store stable at 4.4%, kind of in line with our 3% to 5% expectations that we've consistently articulated for that portfolio, so that's good. But you're right, I mean we consistently look at our portfolio and evaluate properties based on their performance, their forward looking environment with respect to the markets, the physical characteristics of the asset and how they line up against their competitors. And I think we're always looking for opportunities to recycle, and we may in fact do some of that overtime. So I think that's a good observation. I would say, I still think there is good upside across the portfolio generally with respect to occupancy. We have tended to outrun the NIC occupancy a little bit earlier and our rates have been higher than NIC, but I think that's reflective of the quality of our portfolio and we expect that it can continue to perform well going forward.

I mean that really ties. We're right on the same wavelength, it ties to the comment I made earlier. Remember, they are still is expected to be positive absorption in senior housing in 2015. I would say that -- we've talked about before, one way that we make money for investors, obviously is to try to invest in the right segments at the right time. And so trying to make early cycle investments like we did in Atria, like we did in Lillibridge, where we saw the opportunity for cap rate compression and/or NOI increases, and that's how you obviously grow value for investors. And so really coupling the idea of portfolio optimization where you maybe pruning selectively and then redeploying that capital into earlier stage investments is very much top of mind, as we think about the go forward.

Just a follow-up on that. When we look at, you reported the top 20 market performance for that portfolio, and then your overall in the top 20 markets are outperforming their 70% of that portfolio. What's going on in those non-top 20 markets, which seem like they're performing a little bit worse, and is that where you'd maybe look to, as asset sale candidates?

Nick, that's a great observation. We noticed that as we were preparing for the call as well. We went back and looked at it. And I think there really wasn't any pattern that we could draw from it. I think there were some circumstances of isolated and episodic underperformance in some of the non-top 20 markets, but you're right. I mean, that is a pool, where if we see some patterns or trends there that emerge where we may look to dispose off some assets over time.

Just one last one on the guidance. There was this new $4 million to $5 million add-back to your normalized FFO for a change in fair value of financial instruments, which was new this quarter. Can you just explain what's going on there?

Yes. That's just a non-cash charge that relates to movements and swaps and things like that. It's not a cash item.

But that was not in your prior guidance, right? And I am just trying to wonder --

Yes. We do. We have always excluded those items, because we do have them on a fairly regular basis.

Your next question comes from the line of Michael Bilerman from Citi.

Debbie, a question just in terms of the MOB portfolio that you sort of want to list in, it sounded like the fourth quarter and potential continued asset sales. Can you talk a little bit about sizing of how much you would like to raise from those sales?

I think with respect to the MOB portfolio, we are in that $200 million plus or minus range. And then in terms of 2015, again, we'll provide additional detail on that going forward.

But I guess is there a certain, now as the portfolio continues to grow, would you seek to sell down further assets and how large could sale activity be as you continue to hone in on the portfolio?

Right. Well, that's what we're evaluating now for 2015. And I would guess, it could be 250-ish to 750-ish, but really we haven't settled in on a specific plan and we'll be happy to provide more detail on that as we do.

And then just a question in terms of global, you talk in the press release about building Ventas to be the leading global brand in healthcare. And I know you have spent a lot of time talking about global opportunities, global trends. Clearly you are in Canada; you have had some toehold or at least a pinky toehold in the U.K. Can you talk a little bit about, as Ventas as a brand, clearly you're not operating the assets, your name is not on the buildings. Can you talk a little bit about what you sort of envision in building Ventas to be a global brand? And how quickly you want to and how wide you would look globally? And what you sort of really mean by, maybe I'm reading too much into it being in the first sentence, but it just caught my eye.

Well, we are aspirational as you know and always set the bar high at Ventas in terms of our wanting to be excellent and continuing to provide our investors with good growth and good channels for continued growth. So part of that has been the evolution of our thought process around international investing, which as you know Simon has done, and many of the other REITs have pursued successfully. I would say that our brand, the Ventas brand is a business-to-business brand; and when we think about it as a leading global brand, we think about it in terms of what investors, capital sources to Ventas think about us, so our equity investors, our fixed income invertors, et cetera. And then what our customers and potential customers think about Ventas as a partner and capital provider. So that is the brand, not a consumer-type brand, but one that is recognized and respected by our business-to-business peers. And we also do that by obviously building the brands of our operating partners like Lillibridge and Atria. So on the focus question of international, we do have a fairly refined sense of the types of jurisdictions that we would consider investing in. They have to have the right demographics. They have to have the right -- if it's a reimbursement-type asset, they have to have the right policy supports for funding of those assets, including cultural support. And we obviously care about political risk and obviously the efficiency of the capital markets in those jurisdictions. So those are some of the things that we look at. And when you go through our criteria set, you end up with a handful or so of potential jurisdictions, where we would consider committing capital.

And I guess, is there anything, I don't know, if I want to say imminent, but is that spending more of your time x U.S. versus in U.S. today?

Well, I still go back to the fact that we have a $1 trillion healthcare market here in the U.S. that is really fragmented and dynamic. And I believe that the majority, we might even say the lion's share of our investment activity will likely continue to be in the U.S., and we have lots of opportunities here. So unlike some of the other sectors that are very concentrated here, we don't need to go abroad. It's more of an evolution, a natural evolution of our continued growth and diversification and continued efforts, as I said, to provide long-term growth.

Just last question, because you did mention Simon in terms of their global. One of the things that they did in Europe is buy a 30% stake in another public company.

Yes.

I guess, as you think about going global, would you examine different ways of doing it rather than doing wholly-owned portfolio deals or whole company. Would you actually think about some sort of tie-up like that I mean or you're referencing it more?

I would say that we are very creative and experienced in terms of deal structuring, and we would be open to good opportunities. The one thing I do think is very interesting about Ventas and the healthcare REIT model is, typically, when U.S. REITs go abroad to operate, people talk about, well, don't you need a local partner, right. That's a very common reframe when you go abroad. Well, healthcare REITs like Ventas are always working with a local partner. So it's a very natural way I think for us. For example, with Spire, they are our local partner and our local operator, and that's a very consistent structure to what we're used to in our business model. But yes, we would consider equity investments and other type investments in entities in a way that Simon did with Klépierre, should they feel like they're attractive investment opportunities.

Your next question comes from the line of Tayo Okusanya from Jefferies.

Couple of questions from our end. The first one is around HCT, and you guys are definitely expressing a lot of confidence about the deal closing in December. Just curious, if there is any insight in regards to how HCT shareholders ultimately will vote, whether you're kind of getting any sense of that around the deal? And then, second of all, if they do vote yes and the deal gets done, because of the large amount of retail investors they have in the name that typically tends to sell after these type of transactions, if you have any concern about a lot of selling in Ventas shares from these shareholders kind of post the merger?

We started to get a little visibility into their shareholder base, and I do believe that the shareholders will approve the transaction. I have every expectation of that. I would say that this is a little bit different from some of the other private REIT transactions, in terms of post closing sales dynamics, and what I mean by that is this was already a public company, and I think the patterns will tend to follow more along the normal kind of M&A arb type lines, then they will be more private REIT be getting liquidity type lines. And so we expect a pretty conventional public-to-public M&A pattern. And I think we should potentially get some lift from the closing of the transaction, because we should get reweighted in the indices upon issuance of the 1.8 billion to 2 billion shares to the HCT shareholder base.

And then second of all, the recent Germany transaction that MPW announced. Just kind of curious whether that's something you looked at, at any point and if you kind of have any comments generally about that portfolio if it's something you are familiar with?

Again, I think that you should assume that Ventas had seen the tremendous volume of deal activity, certainly domestically, and now I would say internationally. And I think we just feel really good about talking about the $4.5 billion of deals that we're doing.

Last one for me. Just going back to the SHOP portfolio again and looking at the U.S. and the slowdown in the same-store NOI to 4.5% this quarter versus 6.6% last quarter, and that's a sort of stabilized portfolio. I wanted to understand the comments you made earlier about the higher amount of redevelopment going on in the portfolio, if that impacted the stable same-store NOI or whether there is something else that's kind of going on that created that slowdown quarter-over-quarter in regards to the same-store NOI growth for the stabilized portfolio?

No. The stable portfolio does not include the redevelopment assets. Really what's going on in the stable portfolio is normal patterns that we've seen, where the third quarter has typically grown less than other quarters in the year. And I think it was similar to last year. We just have, as I said, an extra day in the quarter, higher expenses, those sorts of things and I think we may have seen a little bit more of that on the expense side this year. So that is what I would attribute it to, Tayo.

Tayo, I think that this is very much in line with our expectations. And when we talked in the second quarter, which was only, I don't know, two-and-a-half months ago, we talked about the seasonal patterns that that Ray is referring to.

Your next question comes from the line of Rich Anderson from Mizuho Securities.

So I'm sorry, I may have missed this, and I'm never afraid to ask a dumb question. But when did Brookdale get added to your RIDEA portfolio and how?

It got added this quarter.

In what fashion you bought or transitioned? I didn't see anything, I was looking.

We acquired an asset that was through a relationship we got with NHP that is being managed by our friends at Brookdale.

A single asset, is that right?

Correct.

On HCT, how do you feel about the MOB portfolio, given that it's 70% off-campus?

I wish you had been here last quarter, because I waxed eloquent about that very subject. So we feel really good and think that that the MOB portfolio in HCT is one of the big attractions of the portfolio, because it's about 50% of the portfolio. And Todd is very excited to bring those into the fold. So a couple of characteristics that make us like them are: they're 97% occupied; have longer lease terms of over eight years; and half the buildings were newly constructed. So each of those metrics will improve those same metrics in our existing market leading MOB portfolio. They're 90% affiliated or on-campus with strong hospital sponsorship and credit quality is strong. And so the key point about them is that they are affiliated with leading regional health systems like Advocate, Baylor, Memorial Hermann, UC Davis, they are larger building sizes, averaging over 50,000 square feet. And they are comprehensive or specialty outpatient centers that essential hubs for the affiliated health systems care network. So we really like that they are really at leading edge of kind of successful population health management trends. So we also see an opportunity in the multi-tenant ones to bring management inside and leverage a lower bridge platform. So those are all aspects that we really like about it, and Todd is sort of chomping at the bit to get to the closing, so we can bring them into the fold. Aren't you glad you asked?

In Canada, RevPOR went from $7,200 in the second quarter to $7,900 in the third quarter. How did that happen in such fast pace?

I mean, again I think Rich that it's a new staff in there, new sales people, focus on nuts and bolts. I mean if you look at it they had improvement in all of the key metrics, right. So your occupancy went up, your rate went up, and your expenses went down. And that to me is just blocking and tackling and executing. And I am hopeful that they can continue to do that.

And remember, again as we said last call, these were the top performing assets, it's an irreplaceable top quality portfolio, and so it should be able to do better.

And then the last question is on the MOBs that you're selling, I think that was $200 million or so. What do they look like? Are they under occupied? How below the radar screen are they in terms of quality relative to the rest of your MOB portfolio? And do you still think you can get a 6-ish type of cap rate on it?

I mean, I think that portfolio is a combination of stabilized properties that have consistent cash flow, and then properties that are in lease-up that have upside in them and between those two, I think that will be very attractive to buyers, who want to be able to generate additional value going forward out of the portfolio. So I think the 6 cap is pretty reasonable, if you take into consideration the upside that might be embedded in those assets.

Your next question comes from the line of Michael Knott from Green Street Advisors.

Debbie, just wanted to ask you about your new investment activity was fairly modest. And I'm just curious if that's maybe because asset values have risen so much in the private market that it is so much more competitive or maybe a view of your cost of capital maybe trading probably pretty close to NAV these days. Just curious how you are thinking about new investment activity?

Well, my dad was a mailman and $4.5 billion was far from modest in a year for him. So I'm feeling like we're doing a lot. So I would say in the quarter, we closed $1.1 billion and we also invested a total of $1.3 billion, including development and redevelopment. So we're feeling good about that. I think the allocation to capital to a redevelopment and development business is a good risk adjusted return that we see continued capital allocation too. And as I said, we are good investors, we're consistent investors. We've created a lot of value over a long period of time. And we think when we pick our spots, we can continue to invest accretively and strategically, and we'll continue to be smart investors.

And then on your comment to Michael Bilerman about the range of potential asset sales next year, I think you mentioned the top-end could be as high as 750. Just curious, if you got to that high and I appreciate you're going to talk more about this on the next call, but would that sort of be a change in sort of your philosophy on recycling capital, if you got to that high?

I want to strongly caution all of you from running with any of those numbers. What we will be happy to do is when we come to you about 2015, we'll be happy to give you some visibility into expected asset sales. I do think and we've been talking about it for some time now and we're starting to implement with the MOB sale that we talked about, a strategy to recycle capital, optimize the portfolio. And those are all positive sort of typical real estate activities. And I think we can probably provide more color on that, which we'll be happy to do in the yearend call.

And then if I can just ask a disclosure question. I think on the last call someone had asked about foreign exchange and you mentioned that you typically reflect foreign exchange impact at exchange rates. And then this time, I think you're sort of front and center NOI growth presentation on sort of the first page of the supplement, second page was in local exchange rates. And we appreciate the enhanced disclosure in the middle of the supplemental package. But just curious on the philosophy, will we see the local currency be now more of the focus, whereas in the past it was U.S. dollars?

Again, we're trying to provide great visibility into property level performance. And if you look at the supplemental page, its 13 and 14, you'll see that we've presented them in both. I don't know if it's 13 and 14 or 12 and 13. But we've presented them in both, and we're talking about them in local, because it gives you that visibility into performance. And we really talked about in our guidance saying that we're assuming sort of a constant exchange rate. And so reporting in local currency is just a different way of saying the same thing.

And then, Michael remember that the way that we hedge currency is through borrowing, and that shows up below the NOI line. So I think the best way to look at the property level performance, particularly now that we have 29 more properties in Canada, is to look at local currency. It's starting to become a bigger driver, and I think you'll get a much better picture of the true underlying performance in local currency.

And then last one for me, just housekeeping. Debbie, I think on this call and also the last one I think you mentioned 65% Q mix for what I think you termed your post-acute. And then on Page 2 of the supplement for the skilled nursing portfolio, it shows a 51% Q mix. So I'm assuming the delta there is just you're somehow bifurcating your skilled-nursing portfolio. Is there anything else on this?

No. Actually, it's much better than that, because the long-term acute care hospitals and IRFs are part of the post-acute continuum. And so we have a tremendously high quality portfolio there. And so we're basically taking the whole post-acute continuum and quoting a very high attractive quality mix. So it's actually a great statistic for about 26% of our NOI. So that's a good question, thank you for asking. But we're going to have to hustle here, because there are a couple more people we want to make sure we get to, Michael.

Your next question comes from the line of Daniel Bernstein from Stifel.

I just want to ask a quick question on the ETT SHOP portfolio. Obviously, can't talk about probably the third quarter results, but how is that ETT SHOP portfolio performance-wise compared to what the existing Atria or Sunrise assets have done? And maybe compare the growth rate of the two over time and where you expect that to be?

I think we talked about some statistics of the senior living portfolio. I mean in particular the managed portfolio, last time, there are 29 managed senior living assets and eight operators, who will be new care providers and customers for us. And they have about 94% occupancy and NOI per unit per year of about 17,000. So they are very high quality, and compare favorably with NIC and other kind of wholly private-pay portfolios that don't have skilled-nursing beds or super high acuity all timers in them.

So essentially that probably I should expect a similar growth rate to what your existing SHOP portfolio can do?

Yes. I think that that's what we were underwriting and suggesting to the Street.

And then when I think about your development portfolio, you talked a little bit more about the potential for some ground-up development, Class A ground-up development. How do you see -- right now your development is mainly tilted toward RENAV? Do you see your development portfolio tilting a little bit more towards ground-up development over the next, say, 12 or 24 months and how big could that get as a percentage, maybe not as a percentage, but on a dollar amount on the development side?

I mean, we really like the redevelopment, because we think its great risk-adjusted return, there're small slugs of capital with existing customers, it improves our portfolio, helps our assets win in the marketplace and our tenant operators win. But focusing on kind of ground-up development, I think we are super selective. And we have done ground-up development in Cape Cod with Atria and that's gone really well. We'll do pre-leased MOBs, and we have the in-house capability and partnership capability of doing that really better than any one. And I think if we find kind of, as I said, really compelling projects that have ground-up development and meet the characteristics that we believe are appropriate, then I think we will pull the trigger. But there is a very high bar for us for ground-up development.

And then in terms of these seniors housing industry itself, we have seen a lot of interest in development, in construction, but not a lot of that's translated into new starts. How long do you think the seniors housing fundamentals can remain strong as to where they are now? I mean, how would you characterize where we are in the cycle? Are we near peak in industry fundamentals? Do we still have a couple of more years to go? How are you thinking about the seniors housing industry broadly?

I think our view is that we're still in a very good spot in the seniors housing cycle. I think you're right to point out that we haven't seen a tremendous amount of construction relative to the inventory in place. The demand fundamentals remain very good. And so I think we still got a couple of years here of good visibility into positive net absorption in the space.

And one more last quick question. I'm not specifically commenting on the Germany transaction that MPW did, but you and others have not done a lot of investments or any investments really on the European continent, really sticking to the U.K. so how do you think about the opportunities on the continent itself versus the U.K.?

Well, some of the countries within the euro zone do meet the criteria that I outlined; really great capital markets, efficient, you can borrow very efficiently, and they do have the policy support for healthcare and favorable demographic, so some of those countries would fit within the criteria and framework that I outlined.

If the right opportunity popped up, okay.

Yes.

I'll hop off. I know we're getting late in the call.

Thank you, Dan. We want to make sure everyone has a chance to ask their questions.

Your next question comes from the line of Vincent Chao from Deutsche Bank.

I just have a simple question, I apologize for being a little dense here, but understanding that the same-store NOI trends here in the quarter were consistent with your expectations and given some seasonal impacts in the SHOP portfolio. I am just curious why would seasonal impacts impact your year-over-year trends. Seems like they would be similar in both periods?

Yes. I think as I mentioned when I answered the question, we did have a little bit more of the expenses in this year than we've seen in previous years, and so I think that's sort of a difference there.

So that should moderate in the fourth quarter?

We hope so.

Your next question comes from Karin Ford with KeyBanc Capital Markets.

I just had one question, just a follow-up to Tayo's question earlier on the deceleration in the U.S. SHOP portfolio. Based on the performance that you've seen here in the fourth quarter so far, do you expect that deceleration to continue here into the fourth quarter and do you care to comment on the possibility for re-acceleration into 2015?

I would say, last year that the third quarter was the lowest year-over-year growth, and we would expect the fourth quarter to be kind of flattish, and potentially a little bit up. Those are the patterns that we have historically followed.

Based on the industry dynamics that Ray just talked about, do you think there is a possibility that growth could reaccelerate as you look a little further into the future?

Certainly, as we finish our redevelopments and lease those up; we continue to work in Canada, continue to focus there to get that turned and back to where it should be. And as we work with our operators to push rates where we can and manage our expenses, give rope and drive occupancy where we need to, I think that we can see some reacceleration in the growth rates.

Remember, the Holy Grail too from a big picture standpoint is to increase kind of the capture rate, if you think one in seven seniors or so uses a senior living community, if the industry can increase that even slightly, that obviously generates a whole new level of demand. And I would say that, that really is the challenge and opportunity for our industry, is to continue attracting more seniors to senior living and making the statistical case that it's better for health and wellness, longevity and frankly long-term costs for the overall system.

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

Its looks like the Sunrise portfolio in Canada, they were able to quickly stabilize those assets. Did they implement anything special to stabilize that so quickly?

Yes. I don't think, Michael, that those are stabilized yet. I still think there is a way for those to go, to get back to their strong historical levels of performance. But I will say we're pleased with the progress that was made during the quarter. The basic things, as I said, were getting the right staff in place at the buildings and executing and blocking and tackling. And I think if they can continue to do that, they should be able to build on that momentum and get them back to where they have been, which is 94%-plus occupancy and strong year-over-year rate growth with best-in-portfolio margins. And there is still room to run there.

As my mother said, sometimes when you just pay attention, you do better. So I think that it's a good story, and hopefully, more to follow. Anything else, Michael?

No. That's good.

Thank you so much this morning for all your patience and your interest in the company. We really look forward to seeing you in Atlanta, and give you chance to meet our new CFO, Bob Probst, and we are very excited that the conference will come right as he begins. And since this is Rick Schweinhart's last Ventas earnings call, I want to thank him again for his tremendous leadership and partnership over the last 12 years. So with that, we'll say goodbye, and look forward to seeing everyone in Atlanta. Thank you.