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Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Ventas Earnings Conference Call. At this time, all participant lines are in a listen-only mode. [Operator Instructions]. I would now like to turn the conference over to your speaker today, Mr. Juan Sanabrial.

Thanks, Cindy. Good morning and welcome to the Ventas conference call to review the Company's announcement today regarding its results for the first quarter ended March 31, 2020. As we start, let me express that our 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 Law. The Company cautions that these forward-looking statements are subject to many risks, uncertainties and contingencies and stockholders and others should recognize that actual results may differ materially from the Company's expectations, whether expressed or implied. Ventas expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations. Additional information about the factors that may affect the Company's operations and results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company's other SEC filings. Please note the quantitative reconciliations between each non-GAAP financial measure referenced on this conference call and its most directly comparable GAAP measure as well the Company's supplemental disclosure schedule are available in the Investor Relations section of our website, www.ventasreit.com. Before I hand the call off to Debra Cafaro, Chairman and CEO of the Company. I would like to note that, we posted an investor presentation this morning on our website, which includes a COVID-19 business update to this helpful information that the team will reference in our prepared remarks. With those formalities out of the way, I will hand it over to Debbie.

Thank you, Juan. and good morning to all of our shareholders and other participants and welcome to the Ventas' first quarter 2020 earnings call. I sincerely hope that, you and yours are safe and healthy. Today, the Ventas team is working remotely, but we are together in spirit as we outline our outstanding first quarter results, describe the challenging conditions in the markets, the economy and or Company brought on by the terrible COVID-19 pandemic, discuss near-term business trends and evaluate the macro outlook. At this time, we face unprecedented conditions nationally and globally created by the pandemic. Those of us in real estate has been around a long time have managed through many severe crises over the decades, including the 9/11 terrorist attacks and the great financial crisis, and the deep recession that followed both. Yet today's complex mix of public health, remote working, economic, operational and market conditions make this pandemic a uniquely challenging adversary. Let me begin today by setting the stage and then outlining the swift and decisive actions we have taken to ensure that Ventas remains strong and stable. As we rolled into March, we were excited to see how our previously announced initiatives were gaining traction and making an impact and how well our overall enterprise and each of our business lines were performing. You can see the power of our diversified business model in the strong normalized FFO per share results we reported today at $0.97 per share, inclusive of the financial impact of COVID-19 toward the end of the quarter. In short, we were hitting on all cylinders with terrific momentum. As soon as, we realized the potential scope and impact of the novel Coronavirus in February and early in March, we identified as our key priority that health and safety of…

Thanks, Debbie. Let me just start off by saying I'm extremely excited to be working with the Ventas team. Given the circumstances, I have certainly had the opportunity to jump right in and immediately put my operating experience to work. I'm also happy to be working again with long standing colleagues and industry leaders like Atria, Brookdale, SDL, Holiday, and Sunrise. COVID notwithstanding, I see great opportunities ahead for Ventas in its senior housing business. In my first Ventas earnings call, I would like to discuss the momentum of our SHOP, the same-store portfolio showed in the first quarter. Outline how Ventas has worked with integrity to support our tenants and operators during a very challenging time. Describe the operational and clinical environment in SHOP, in triple-net, delve into April and May trends and provide our outlook for safe and staged reopening in senior housing. Our SHOP portfolio started the year ahead of our expectations and with good momentum. Sequentially, NOI and our same-store SHOP portfolio grew 2.3% in the first quarter with COVID costs embedded. Without COVID impacts NOI grew 6% versus the fourth quarter, with credit due to solid sequential performance from Atria through strong rate growth and expense control, and some welcome stabilization from ESL. As expected, the year-over-year same-store SHOP comparisons were negatively affected by six million in COVID costs incurred in the quarter. The reduction in occupancy as a result of COVID in the back half of March as well as the previously discussed lower star point heading into 2020. Ex-COVID costs the year-over-year, same-store NOI would have declined 6.9%, better than our expectations given the difficult prior year comparison. While we are mostly focused on the impact of COVID-19 to our operating performance, it is worth noting new construction starts in senior housing continue…

Thanks Justin. We are certainly glad to have you and Carey on board. I will quickly touch on the first quarter results for our office segment, which represents 27% to Ventas NOI and then focus on the latest trends in our latest second quarter COVID framework. For the first quarter of 2020 office same-store cash NOI increased by 5.8% year-on-year. This outstanding results was fueled by our R&I portfolio, which grew 22% driven by strong lease up and complimented by strong performance from the MOB portfolio. In R&I, first quarter average rent per square foot was up 9.4% and occupancy was robust at just under 97%. Strong performance at our university based developments affiliated with University of Pennsylvania and Philadelphia and Washington University in St. Louis fueled our growth. Complimenting the fast growing R&I business is our MOB business. MOB same-store cash NOI for the first quarter of 2020 increased 1.9% year-on-year, also above our expectations. Now let's shift to the latest COVID trends we are seeing in our office portfolio. I will start with medical office. Our top priority has been to partner with our tenants and the associated health systems to ensure the safety of health professionals, patients and our employees. We have sourced substantial amounts of PPE, coordinated visitor screening, licensed short-term spaces, set up drive-through testing centers in our parking lots, provide a supplemental cleaning and otherwise supported our tenants during this challenging time. We are happy to report that all of our buildings are open and none of our site based employees have tested positively for COVID-19. We sincerely thank all of our on-site employees and partners who fight the fight every day. We are very proud of them. I will also say regarding our MOB business, that parking receipts have slowed and while safety…

Thank you Pete. I will start with our triple-net lease portfolio overall before I close with some enterprise level commentary. The triple-net portfolio grew same-store cash NOI by 3.9% year-over-year in the first quarter. Growth was driven by in-place lease escalations, and a $3 million cash fee received in the quarter from capital senior living. Trailing 12-months coverage as of the fourth quarter of 2019, for the overall triple-net portfolio for triple-net senior housing remains stable at 1.5 times and 1.1 times respectively. Post acute coverage declined sequentially by 10 basis points to 1.3 times, due to a decline in volumes at Kindred, driven by managed care and purposeful reduction of non-compliant patients. Adjusting for the 25% rent deferral program in senior housing, we collected close to 100% of our overall expected triple-net portfolio rents in April. We have already received almost a 100% of triple-net healthcare rent for May and we are on-track with triple-net senior housing May collections. We expect the impact of COVID on our triple-net healthcare rents from acute care providers to be muted in the second quarter. Acute care hospitals have been impacted by the reduction of elective procedures, but have had significant access to government funding and support. Additionally for Ardent, as of May 1st, all 10 of the Ventas owned hospitals have reopened or will reopen in May for elective procedures. For the post acute providers in our triple-net health care portfolio, volume trends have varied. Deltek, Ventas has been higher than budgeted, the costs have increased. We expect that the concern over respiratory disease will enhance Kindred Deltek business going forward. Urban census initially declined due to lower surgeries and acute care volumes, but census has improved since mid April. Smiths are experiencing notably higher mortality rates with census down dramatically and…

[Operator instructions] Your first question comes from Nick Joseph from Citi.

Thank you, I appreciate all the color and specifically on April and May rent collections for net lease. You addressed Holiday this morning, but you expect additional net lease restructurings over the next few months?

Good morning Nick its Debby. I'm going to ask Justin to comment on that.

Thank you Debby. First of all, I think it is important to know, our biggest priority is that our operators are looking out for the health and safety of our residents in our communities. That is priority number one, in the near-term. I will also point two, as I mentioned in our prepared remarks that we have already started to take action, we mentioned the rent deferral in April, we mentioned the opportunity for tenants to pay down rent - pay some of their rent with their cash escrows in May and that the Holiday restructuring. What we are committed to do is to take action that is going to give us the best opportunity to create value in a portfolio and work with our operators to determine the best outcome. It is still early, some uncertainty ahead of us still, but we will certainly be watching everything closely.

Debby it is Michael Bilerman.

Hey Michael.

I think Bob mentioned in his comments about sort of looking at all forms of cost within the enterprise. Can you sort of address corporate management sort of pay levels and whether that is on the docket and how investors should think about that interest in the governance perspective, whether there would be any changes from the chairman and CEO role which you continue to maintain?

Sure, and I'm happy to talk about that and turn it over to Bob, for a little bit more detail. But most of our executive compensation is very aligned with shareholders and is the vast majority of which is in the form of performance based equity compensation. When you think about the overall enterprise, I'm going to turn it over to Bob to talk about some of the insights he has about making sure that the company is efficient and cognizant of the environment that we are in.

Sure. This is an analysis Michael, that again pre-COVID that is the analysis of our SG&A. We are well underway in that analysis. Everything I would say is on the table, as we think about that. I would expect to have some more news this quarter as we are well underway on that analysis and we do see opportunity. But at the end of the day, we have a 20-year record of being efficient and effective and that continues to be our goal and we have a duty to make sure we are doing that.

And Debby is there anything on splitting the Chairman and CEO role?

I think that, consistent with the idea that one of the cost efficient, our expectation is that, I would continue to hold those roles, obviously serving at the pleasure of our shareholders and our Board of Directors.

Okay. Thank you.

Thank you.

Your next question comes from Rich Anderson from SMBC.

Hey, thanks. Good morning everyone and hello to you, Justin.

Hi, Rich.

Hey thanks. Good morning everyone and hello to you Justin. So, just on the on the Holiday and maybe an extrapolation from that. So EBITDA below rent, so it is obviously a dilutive transaction. But understanding kind of the thought process on taking Sabra’s roadmap on Holiday. And so, I'm curious in the aftermath of all this, do you feel like net lease is becoming an increasingly dying breed for Ventas and you want more control that goes through Brookdale and others or is this a one-off type of thing and you still think that there is a role for triple-net to play in senior housing in the aftermath of all this?

Good to talk with you, Rich. Let me take that. A couple of things. One is we are pleased with the Holiday transaction. We think it really does a lot of good things and we are happy to take a page out of our friends with matrices book, and we preserved that upside in the assets and a lot of operational flexibility. So, we feel good about that and look forward to optimizing that portfolio. In terms of the triple-net lease, what I would say is, triple-net leases are a little bit like mortgages in one sense, which is that they magnify ups and downs for the operators and in any challenging environment, they are going to be disfavored. And of course that is the situation we find ourselves in now. In other environments, they could be very attractive to both land owners as well as the operators. So, I think there is many tools in the bag, many I guess you would say clubs in the bag, tools in the toolkit, and the triple-net lease I think will continue to be one. And there are many ways that you can customize leases also to create alignment. So, we think the triple-net lease will survive and we think we will continue to be creative and collaborative in how we work with our operators, be they tenants or managers in optimizing our portfolio and then being good partners.

Okay. I prefer arrows in the quiver, but that is just me.

That is a good one too. Absolutely.

And then juxtapose U.S. to Canadian, particularly as it relates to your recent investment there. And how things are kind of performing relatively.

Yes. I mean, our investment most, we have a significant Canadian portfolio. Obviously, the pandemic has affected assets there as well. Those operators have also received significant government support and one thing we have liked about the Quebec portfolio with LGM is that they have a younger healthier population a longer lengths of stay. They are very rigorous and have been very active from early on working to protect the residents. Obviously, that portfolio will be effected as well. But there are some characteristics of the LGM portfolio that make it probably a better performer on a relative basis, despite being impacted by pandemic.

Okay, great. Thanks very much. Good luck everyone.

Thank you. great talking to you Rich.

Your next question comes from Nick Yulico from Scotiabank.

Good morning everyone. So, in terms of the Holiday restructuring just to make sure understanding how this is going to work. I guess in terms of the money that you are receiving from them the cash, and then the notes and are you going to be actually booking any income from those two items in the second quarter and in terms of the notes, the 9% rate is there any component that cash interest that you are receiving?

Great question. Yes, the cash and notes are effectively income and I think we mentioned this in the release and so those will be included in net income and yes we actually would expect as part of our ongoing this for ongoing notes we would expect to book and receive some amount of interest income as we go forward.

Is any of that cash income from those notes?

We would expect it to be cash. Yes.

Okay, thanks. And then I was just hoping to get a feel for you I know you gave us a coverage on Holiday as a trailing number. Is it possible to get the quarterly first quarter EBITDARM for those assets so we can understand exactly from an NOI standpoint as you now have this operating NOI. What the delta is going to be between the old 60 million of cash NOI you got on the lease versus on a real time basis, realizing things are going to move around still, but at least on the first quarter number record what that looks like from a operating EBITDARM basis?

Right, I mean we have had Holiday in the heat map, obviously and it had been below a 101 and EBITDARM basis. So, as we reported the last time and really what I would say is that just like everything else in the portfolio as you point out, it is really going to depend on how the pandemic really plays out and so I think we will just defer that as we get more real time information about the portfolio. I'm happy to talk to you about it as things progress.

Right, I guess, but I mean you guys do have an actual number I'm assuming that for the first quarter and so I was trying to see if we can least get that number so we can use that as a base to then build off some assumptions.

Yes, I mean, I think you should, you should look at about a 0.9 EBITDARM coverage, something like that in the first quarter, rough numbers.

Okay. Thank you. I appreciate it.

Thank you.

Your next question from Vikram Malhotra from Morgan Stanley.

Hello.

Sorry. I had myself on mute. I just hope everyone in the team is okay and doing well.

Thank you.

Debbie, you referenced the dividend in your prepared remarks and I just want to clarify one. I'm assuming the dividend is all cash today and just as we think about the dividend going to second quarter, what are sort of the metrics? What are you looking at? Maybe give us a sense of where AFFO versus the dividend could trend even just percentage wise. What are some of your put and takes if you think about the dividend?

Thank you. Yes, I mean, I think really want to just touch on the fact that, while we are in this period of uncertainty, we generally want to match our decision making speed with what is required. And our Board is going to look at all relevant information when it addresses the dividend, as I mentioned in mid to late June.

Okay. And the dividend is all cash currency.

It has been. Yes, Vikram.

Okay. And then just second, as you I think you and Bob outlaid the expectations for occupancy in the next few months and it was about a 100 basis points per month in the [RIDEA] (Ph) portfolio. Can you give it a sort of a broader sense of what the ins and outs are in terms of assumptions for move-ins versus move-out and as an aside, if we could request more monthly or more weekly updates, that would be great.

I'm going to ask Bob to address that Vikram.

Sure. I will give you some building blocks Vikram using April as our case study here. We saw move-ins approximately 25% of our historic levels or down 75%, to put the other way. The move-outs have trended pretty consistently with historical patterns and the net of that is approximately a 70 basis point impact on occupancy on a weekly basis. One way to think about revenue impact is that, and this is the Page 7 of the investor deck. If you haven't seen this is, a 100 basis points of occupancy generally, sequentially on average is about $2 million to $3 million of revenue per month. So, you can do math there. And we expect that trend as we see it right now to carry on into May. On the expense side, we mentioned about 10% OpEx increase, driven by labor and supplies including PP&E. We had about $125 million of monthly OpEx in our portfolio in SHOP. So, it gives you some more facts if you like to do the math.

Okay.

Vikram, we thought you love those rules of thumb.

I guess I was just trying to understand the move from the 330 basis points loss in the month of April down to a 100 per month. And I was just trying to understand more specifically like what are you assuming changes from April to May through June?

Let me clarify, just to make sure we are on the same page. The 330 basis points was the spot-to-spot effectively beginning to end of April, occupancy moves. And my 100 basis points was simply a rule of thumb to help you. So, that is an important clarification, beyond what we are seeing in April and early May, I'm not able to project what I think is going to be for the second quarter, for example. But those will give you some building blocks to make your own assumptions.

This is Justin. And I'm going to add a little color to that might be helpful and I will just preface this that I'm going to give you April average occupancy numbers that are presented by our operators and these are fully vetted, we only report these numbers. But I'm going to compare March first. So March average occupancy was 85%, April average is at 82.4%. So, there is 260 basis points difference. If you take New York and New Jersey out, as I did in my prepared remarks when I was using spot occupancy, March average is 85.1, April at 82.9. So, the 220 basis point change.

And that is shows the difference between really the quote and unquote spot, beginning of month to end of month versus the average occupancies for the month. So, let's carry on. Thank you.

Thank you.

Your next question comes from Michael Carroll from RBC Capital Markets.

Yes, thanks. Debbie, I just wonder if you could you add some color on the testing capabilities that you are providing your operators. I don't know if you said this, if I missed it, but are you able to provide enough tests for all the restaurants at the facilities or what in depth are you able to offer right now if that relationship?

Great. Good morning. So, we are very excited about this initiative and we are taking the first step with Atria and it is really to accelerate employee e-testing at Ventas buildings with select operators to make our communities safer, and facilitate thoughtful reopening and confidence and trust as Justin talked about. And so, we have this first compliment of 10,000 testing kits with Mayo Lab’s analysis, which is very important, they have a very high accuracy rate at Mayo, as you would imagine and we really think this is a great first step that we can make available. Atria has already done it, ESL will be next and we will make it available to select operators, principally for their employee testing program. Once we see how that goes again, we are early days are, still a lot of uncertainty, new testing and tools coming out all the time, we will determine if we want to are-up or if we want to take a different step moving forward, but we think this is a great opportunity to do the right thing and really have a differentiated partnership with our operators and really build that trust and confidence with residents and their families that is so sorely needed.

And then what is the turnaround time. How long does it take to get to tests and I guess if you have confidence that at least your employees are not affected by COVID. Is there discussion that you could reopen those communities or is it still too early to tell?

The turnaround is a day or two and it will indeed build confidence as a component of the thoughtful reopening and admissions plan.

And I will just add one other point to that. This is Justin. All of our operators are considering the move-in protocols at this point, and about 70% of our operators are operating in states that are starting to loosen their stay-at-home policy. So this is a very active conversation. And the advantage that testing gives you, obviously it gives you a lot more certainty around the potential for spread of infection. But the other advantage is, it is recognized in the CDC guidelines. If testing occurs, then it can accelerate the time that someone can move in, where the regular quarantine is around 14-days and the testing allows for something closer to two or three days.

Okay. Right. And that is a good point, because the test may also be available for new residents in certain cases. Thank you. Mike.

Okay. Great. Thanks.

Your next question comes from Jordan Sadler from KeyBanc Capital Markets.

Thank you, and I hope everybody is doing well.

Thanks Jordan. We are.

Okay. My first question I think is maybe for Bob, I will leave it to Debby to quarterback. But regarding the revolver draw down and I think some subsequent repayments post a senior note issuance in April. You did mentioned in your conversation that, Ventas is past the peak for mortality in your SHOP assets and in triple net. And so, I guess I'm kind of curious, I know you are waiting till the last minute to make a decision on a dividend, but what do you want to see these to be the virus before in order to sort of pay down those borrowings and sort of what is that sort of draw down, is that reflecting concerns around the ability to potentially borrow?

Well, I will turn it over to Bob, but one thing we know for sure is that, having went through many decades of this that, having assured liquidity is the number one, two and three attributes that you want to have to manage successfully through any kind of uncertainty. And so, we have that and that is kind of a golden rule, and it served us very, very well. In terms of the pass of the peak, again, there are numerous models. There is a lot of uncertainty, but as of a point in time, I'm glad that you noticed data that shows that a lot of our NOI in our senior housing on those triple-net and SHOP is in states where according to a single model as of a certain day, the peak of mortality is behind us. Now that could change again and that of course would affect our outlook.

That is helpful. I guess I'm trying to understand the difference between, that assured liquidity as it relates to sort of that revolver borrowing or draw downs versus the dividend that you actually pay. So, there is some uncertainty surrounding the potential to be able to draw or have access to cash. But, it seems like you are not yet willing to sort of cut the dividend down to zero in order to sort of stay off or protect yourself from any uncertainty or maybe I'm misreading that.

Yes. I mean, I think what we have said clearly about the dividends is that the board will make that decision at the right time, which are dividends is a July dividends historically and so that would basically defer that decision to be made by our board until mid to late June. So, do you have a question for Bob about the revolver draw just Jordon?

I think you answered it. But maybe you mentioned Justin. I wanted a welcome back to him back to REIT land. Unfortunately, under these crazy circumstances, but I would have asked him for a review of the portfolio probably not fully appropriate. Debbie, a couple years ago, you spun off the skilled nursing portfolio at a time when there was no real distress in that sector. Any thoughts surrounding, management and or the potential spin of the seniors housing portfolio or are we just that way too soon, I don't mean to be flippant at all in that question.

Yes, I think that under skilled nursing, I think I'm glad you reminded us that, that we really did that, at the absolute peak time in valuations at a seven cap on rent at that time. And we really continue to believe that was a very sound strategic decision, particularly as we look at infection mortality rates in skilled nursing now. I think we given all the uncertainty right now we are focused on health and safety as Justin said really just strong effort to keep Ventas strong and stable and get ready for any scenario and the opportunities in the future. So, we will defer that discussion if you don't mind.

Okay. That is fir. Thank you.

Thanks Jordan.

Your next question comes from Joshua Dennerlein from Bank of America.

Hey good morning everyone. Glad you are doing well.

I clearly had too many people with the first initial J in my life. Anyways go ahead I will try to get it right this time.

I'm just curious on the Holiday switch to the management contract. Was that something you were in discussion with before the pandemic or was it really the pandemic was the drivers that kind of got you going on that discussion?

Well, we have talked about Holiday for a while and have been pretty clear about what the performance was over the past couple of years. I think we were in a good spot, because Holiday remains current and paying full rent all the way through the first quarter and they have been great about that and we were the sole beneficiary of the guarantors. So, of course, we had a EBITDAR kind of one-to-one coverage. So, we felt like we were in a good spot. But we did feel mutually that it was the right time to take a different approach and we did so in a way that we think was beneficial for both and preserved upside and on operational flexibility. So, we are happy that we have done it, and we are going to optimize that portfolio especially now that Justin is here.

Okay, and then just on the senior housing triple-net rents. I see in your presentation you mentioned I guess sort of May rents are allowing up to 25% of the rent to get paid from the deposits, you expect two million or so to be paid. Do you have a sense of like I guess like back into it, but what percent of tenants are taking advantage of that and I guess later on would you require the tenants to kind of back fill those deposits?

Right Justin.

Yes. It is actually very low percentage, if you think about around 30 million of rent per month and only round two million or up to two million we think will be paid with the cash escrows s to carry deposits. So not a lot. I will mention two other things on the triple-net, one is that as we said it is our May collections are really right on track, so looking good in May. Also some of April tenants that took advantage of that deferral have already paid back. So that was good encouraging sign as well, and in that case, there were smaller operators that had advantage of government assistance. But our tap was to Allow some liquidity for operators during a very tough and uncertain time, and we are happy that some of the operators have taken advantage of that.

Thank you.

Your next question comes from John Kim from BMO Capital Markets.

Hey good morning everyone and welcome Justin.

Hi John.

I had question on your deposits, that were mentioned - deposits in senior housing, is there any difference regionally for the New York, New Jersey to have more of sure deposits than some of the other markets not impacted by the virus?

Hello, this is Justin. Let me just mention first of all, we don’t normally track deposits, because senior housing particularly assisted living, and memory care are what we focused is need driven. So tracking deposits is usually a very short-term indictor of move-in. But given the environment we started to track recently a lot of those deposits are in Sunrise and Sunrise has kind of a north east footprint with us. So there is certainly some New York and Massachusetts are few for our Sunrise footprint, a lot of those deposits are with them. There is another stab I will mention, that is round lead which is something that we do track regularly and leads have stabilized over the past few weeks about half of our lead volume, which is you know encouraging in a sense, because it shows that there is still ongoing demand. Even though we are not doing physical tours, and we are doing virtual tours and in-lue of those there is still ongoing demand and is ahead of that moving pace that we have been experiencing so far. But there is long answer to short question and that is not ready to really point out specific geographies except to say that Sunrise is a big part of those deposits.

And then Pete mentioned in his prepared remarks the high retention rate you guys had in the medical office business. Can you provide some terms on that, are these short-term, but month-to-month lease expansions and also what the cash leasing spreads were?

Pete.

So, John, let me just be sure that I understand what you are asking. Well, we talked about was 96% receipt of cash rents overall in the office portfolio. Is that what you are asking?

No. I was talking about the retention rates, the renewal rates.

I see. Okay, so of our retention rates, yes, the 90% for the quarter and 94% for March and for April is at 98%, which is a phenomenal set of numbers. And yes, I would say it is a mix in some cases are short-term where they are just uncertain about their future. And so they want to, just take a year extension. In other cases we use the opportunity to take advantage of maybe some rent relief in exchange for a couple years of additional term. So, we have been fairly entrepreneurial in doing that. And then there is also some practical reasons, I will tell you kind of an interesting story of an [OVGYN] (Ph), who was 70 something years old who was going to retire. But then he sat back and he thought you know what with his shelter at home, maybe there is going to be a lot of bursts next time, in nine-months from now. So, I'm going to extend for one more year. I'm going to work and cash in on this opportunity. So, it is been a mixture of things.

Great. Thank you.

Thanks John.

Your next question comes from Lukas Hartwich from Green Street Advisors.

Great, thanks. Whenever we do come out the other side of the COVID pandemic. I'm just curious what you think the recovery in SHOP looks like. Do you expect there to be pent up demand or expect do you expect something more gradual?

Well, I think our focus right now is really getting through the biggest part of the pandemic Lucas and then there remains really a lot of uncertainty about the depths and then the time period where it will be most active and then what the slope and pace to recovery will look like and those could very significantly affect what the recovery and senior housing looks like. So, we are really happy for the day when we can discuss that with more specificity in terms of timing, pay and slope. But right now, we are focused on maximizing during the course of the toughest period of pandemic.

Great and then the second one for me is just. Can you provide a little more color on the performance trends of the Sunrise shop portfolio?

Justin.

Yep, sure. So, I mentioned in my prepared remarks, the year-over-year stats that were down and the reasons for that, given the fact that we are starting off at a lower starting point. I also mentioned the strong sequential performance. That performance was driven by Atria and ESL. Sunrise was not as big acontributor to that. There are some less good performance from the sunrise portfolio during that time, so it was actually contributing on a sequential basis, closer to down around 9%.

Thank you.

Your next question comes from Omotayo Okusanya form Mizuho.

Yes. Good morning everyone. Justin, good to have you back from Jolly Old England old cap.

Hi.

Hi Debbie.

Good.

Good. I'm glad to hear that. A couple of questions. The first one is actually on the office side. The 96% of April rent collected, is there way you could help us break it down kind of what you know the rates of MOB versus Life Sciences or other differences there?

Hey Tayo. This is Pete. How are you? So, the 96% we are very, very pleased with, and one of the items I did want to point out is that those are receipts. Deferrals are not included in that number, and as a matter of fact for April, there were almost zero deferrals. We are talking like $150,000 worth of deferrals in April, and those were for retail tenants. So, this is true cash receipts and collected in a very positive way. The MOB Portfolio had a slightly higher collection rate for April and the R&I had a slightly lower number. But really nothing material. It is interesting that many of the universities are just - they do hand checks. They actually write checks out and it is a slower process in a normal month and it is a slower process in a turbulent month. So, that is my assessment.

Okay.

So. I mean those portfolios performed very well.

Gotcha. Okay. And then on the Life Sciences side, again very strong same-store NOI this quarter, again it has been a positive on the overall Ventas story. So I guess, a little bit surprised when we looked at the development pipeline that is the projects that were halted or all kinds of Life Science Wexford projects and there was one other projects also Life Sciences, where the completion date was deferred or pushed back a year. So, just kind of curious kind of thinking about that business that is such a big positive on your overall story. And again, a part of what is kind of happening on the development front later you know halting or delaying some of these development projects.

You are absolutely right. We are happy that, we have grown our office portfolio in particularly this exciting Life Science University based portfolio over the past years, it is really, you are seeing the benefit of that right now. Both in the fact that is where all the action is on the virus and the vaccines in the search for a cure, as well as the diversification benefits we are getting from that portfolio, within the broader Ventas Enterprise. And so, it is a significant capital allocation priority. We do have a number of ongoing projects with Arizona State and [Pitt] to name a few. And basically, what we did as a matter of I think, really good discipline and approach is that, when we really understood quickly the potential from this Coronavirus, we aggressively paused on the two developments that really were not yet significantly underway. And so the ones that are ongoing are going to be delivered and we will have our 80% pre-leased and the ones that are on the drawing board have been paused I think intelligently to take a look at capital conservation. And of course, as I mentioned, we will be able to make a decision on those at the appropriate time as to moving forward and timing and the life, we are happy to have this portfolio and it will continue to be an important part of the Ventas’ story.

Got you. Okay. One more if you would indulge me. So, when Justin was announced as joining the team and you guys announced your kind of plans around senior housing stock outperformed that day. Today, you announced solid plans around Holiday the stock is outperforming. So, clearly, I think the market is looking for you guys to kind of rectify potential issues that people see in the portfolio. Just kind of given that, I guess why you guys maybe not a little bit more aggressive in regards to kind of trying to address some of these issues, whether it is some of the triple-net portfolio that still has a weak rent coverage and things of that nature, it just kind of feels like the market is basically saying, do it. We are expecting you to do it, but in the near-term it is just doesn’t seem to be happening as quickly as I think some of us anticipating.

Well, I would say that we over a long period of time have a good track record of taking action, and that we think is going to be beneficial for our shareholders and we have taken many actions to evidence that whether they have been with Kindred or today with Holiday and we will continue to do that. We have made a ton of progress, we are proud of what we have done on the leadership front, as you mentioned along with the portfolio front and we will continue to do that with urgency and purpose. And hopefully we will continue to get rewarded for doing the right things at the right time.

Okay that is helpful. Well I just feel like the runway is clearly open and everyone is waiting for you guys to take off.

Well, thank you. We appreciate that support. Our wings are flapping. Thank you, Tayo.

Thank you. End of Q&A:

I think we have one more operator. Anything further? Okay, if we don't have any further questions, I want to sincerely thank you for your time, your attention, your interest in Ventas. We have a great team here that is really committed to protecting and preserving the Company and for really delivering for all the stakeholders who depend upon us. So, we look forward to seeing you on the other side of this terrible pandemic and until then, stay safe and strong. We will see you soon. Bye-bye.

Ladies and gentlemen, this does conclude today's conference. Thank you for participating. You may now disconnect.Ventas, Inc. (VTR) Q1 2020 Results Conference Call May 08, 2020 10:00 AM ET

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Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Ventas Earnings Conference Call. At this time, all participant lines are in a listen-only mode. [Operator Instructions]. I would now like to turn the conference over to your speaker today, Mr. Juan Sanabrial.

Thanks, Cindy. Good morning and welcome to the Ventas conference call to review the Company's announcement today regarding its results for the first quarter ended March 31, 2020. As we start, let me express that our 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 Law. The Company cautions that these forward-looking statements are subject to many risks, uncertainties and contingencies and stockholders and others should recognize that actual results may differ materially from the Company's expectations, whether expressed or implied. Ventas expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations. Additional information about the factors that may affect the Company's operations and results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company's other SEC filings. Please note the quantitative reconciliations between each non-GAAP financial measure referenced on this conference call and its most directly comparable GAAP measure as well the Company's supplemental disclosure schedule are available in the Investor Relations section of our website, www.ventasreit.com. Before I hand the call off to Debra Cafaro, Chairman and CEO of the Company. I would like to note that, we posted an investor presentation this morning on our website, which includes a COVID-19 business update to this helpful information that the team will reference in our prepared remarks. With those formalities out of the way, I will hand it over to Debbie.

Thank you, Juan. and good morning to all of our shareholders and other participants and welcome to the Ventas' first quarter 2020 earnings call. I sincerely hope that, you and yours are safe and healthy. Today, the Ventas team is working remotely, but we are together in spirit as we outline our outstanding first quarter results, describe the challenging conditions in the markets, the economy and or Company brought on by the terrible COVID-19 pandemic, discuss near-term business trends and evaluate the macro outlook. At this time, we face unprecedented conditions nationally and globally created by the pandemic. Those of us in real estate has been around a long time have managed through many severe crises over the decades, including the 9/11 terrorist attacks and the great financial crisis, and the deep recession that followed both. Yet today's complex mix of public health, remote working, economic, operational and market conditions make this pandemic a uniquely challenging adversary. Let me begin today by setting the stage and then outlining the swift and decisive actions we have taken to ensure that Ventas remains strong and stable. As we rolled into March, we were excited to see how our previously announced initiatives were gaining traction and making an impact and how well our overall enterprise and each of our business lines were performing. You can see the power of our diversified business model in the strong normalized FFO per share results we reported today at $0.97 per share, inclusive of the financial impact of COVID-19 toward the end of the quarter. In short, we were hitting on all cylinders with terrific momentum. As soon as, we realized the potential scope and impact of the novel Coronavirus in February and early in March, we identified as our key priority that health and safety of…

Thanks, Debbie. Let me just start off by saying I'm extremely excited to be working with the Ventas team. Given the circumstances, I have certainly had the opportunity to jump right in and immediately put my operating experience to work. I'm also happy to be working again with long standing colleagues and industry leaders like Atria, Brookdale, SDL, Holiday, and Sunrise. COVID notwithstanding, I see great opportunities ahead for Ventas in its senior housing business. In my first Ventas earnings call, I would like to discuss the momentum of our SHOP, the same-store portfolio showed in the first quarter. Outline how Ventas has worked with integrity to support our tenants and operators during a very challenging time. Describe the operational and clinical environment in SHOP, in triple-net, delve into April and May trends and provide our outlook for safe and staged reopening in senior housing. Our SHOP portfolio started the year ahead of our expectations and with good momentum. Sequentially, NOI and our same-store SHOP portfolio grew 2.3% in the first quarter with COVID costs embedded. Without COVID impacts NOI grew 6% versus the fourth quarter, with credit due to solid sequential performance from Atria through strong rate growth and expense control, and some welcome stabilization from ESL. As expected, the year-over-year same-store SHOP comparisons were negatively affected by six million in COVID costs incurred in the quarter. The reduction in occupancy as a result of COVID in the back half of March as well as the previously discussed lower star point heading into 2020. Ex-COVID costs the year-over-year, same-store NOI would have declined 6.9%, better than our expectations given the difficult prior year comparison. While we are mostly focused on the impact of COVID-19 to our operating performance, it is worth noting new construction starts in senior housing continue…

Thanks Justin. We are certainly glad to have you and Carey on board. I will quickly touch on the first quarter results for our office segment, which represents 27% to Ventas NOI and then focus on the latest trends in our latest second quarter COVID framework. For the first quarter of 2020 office same-store cash NOI increased by 5.8% year-on-year. This outstanding results was fueled by our R&I portfolio, which grew 22% driven by strong lease up and complimented by strong performance from the MOB portfolio. In R&I, first quarter average rent per square foot was up 9.4% and occupancy was robust at just under 97%. Strong performance at our university based developments affiliated with University of Pennsylvania and Philadelphia and Washington University in St. Louis fueled our growth. Complimenting the fast growing R&I business is our MOB business. MOB same-store cash NOI for the first quarter of 2020 increased 1.9% year-on-year, also above our expectations. Now let's shift to the latest COVID trends we are seeing in our office portfolio. I will start with medical office. Our top priority has been to partner with our tenants and the associated health systems to ensure the safety of health professionals, patients and our employees. We have sourced substantial amounts of PPE, coordinated visitor screening, licensed short-term spaces, set up drive-through testing centers in our parking lots, provide a supplemental cleaning and otherwise supported our tenants during this challenging time. We are happy to report that all of our buildings are open and none of our site based employees have tested positively for COVID-19. We sincerely thank all of our on-site employees and partners who fight the fight every day. We are very proud of them. I will also say regarding our MOB business, that parking receipts have slowed and while safety…

Thank you Pete. I will start with our triple-net lease portfolio overall before I close with some enterprise level commentary. The triple-net portfolio grew same-store cash NOI by 3.9% year-over-year in the first quarter. Growth was driven by in-place lease escalations, and a $3 million cash fee received in the quarter from capital senior living. Trailing 12-months coverage as of the fourth quarter of 2019, for the overall triple-net portfolio for triple-net senior housing remains stable at 1.5 times and 1.1 times respectively. Post acute coverage declined sequentially by 10 basis points to 1.3 times, due to a decline in volumes at Kindred, driven by managed care and purposeful reduction of non-compliant patients. Adjusting for the 25% rent deferral program in senior housing, we collected close to 100% of our overall expected triple-net portfolio rents in April. We have already received almost a 100% of triple-net healthcare rent for May and we are on-track with triple-net senior housing May collections. We expect the impact of COVID on our triple-net healthcare rents from acute care providers to be muted in the second quarter. Acute care hospitals have been impacted by the reduction of elective procedures, but have had significant access to government funding and support. Additionally for Ardent, as of May 1st, all 10 of the Ventas owned hospitals have reopened or will reopen in May for elective procedures. For the post acute providers in our triple-net health care portfolio, volume trends have varied. Deltek, Ventas has been higher than budgeted, the costs have increased. We expect that the concern over respiratory disease will enhance Kindred Deltek business going forward. Urban census initially declined due to lower surgeries and acute care volumes, but census has improved since mid April. Smiths are experiencing notably higher mortality rates with census down dramatically and…

[Operator instructions] Your first question comes from Nick Joseph from Citi.

Thank you, I appreciate all the color and specifically on April and May rent collections for net lease. You addressed Holiday this morning, but you expect additional net lease restructurings over the next few months?

Good morning Nick its Debby. I'm going to ask Justin to comment on that.

Thank you Debby. First of all, I think it is important to know, our biggest priority is that our operators are looking out for the health and safety of our residents in our communities. That is priority number one, in the near-term. I will also point two, as I mentioned in our prepared remarks that we have already started to take action, we mentioned the rent deferral in April, we mentioned the opportunity for tenants to pay down rent - pay some of their rent with their cash escrows in May and that the Holiday restructuring. What we are committed to do is to take action that is going to give us the best opportunity to create value in a portfolio and work with our operators to determine the best outcome. It is still early, some uncertainty ahead of us still, but we will certainly be watching everything closely.

Debby it is Michael Bilerman.

Hey Michael.

I think Bob mentioned in his comments about sort of looking at all forms of cost within the enterprise. Can you sort of address corporate management sort of pay levels and whether that is on the docket and how investors should think about that interest in the governance perspective, whether there would be any changes from the chairman and CEO role which you continue to maintain?

Sure, and I'm happy to talk about that and turn it over to Bob, for a little bit more detail. But most of our executive compensation is very aligned with shareholders and is the vast majority of which is in the form of performance based equity compensation. When you think about the overall enterprise, I'm going to turn it over to Bob to talk about some of the insights he has about making sure that the company is efficient and cognizant of the environment that we are in.

Sure. This is an analysis Michael, that again pre-COVID that is the analysis of our SG&A. We are well underway in that analysis. Everything I would say is on the table, as we think about that. I would expect to have some more news this quarter as we are well underway on that analysis and we do see opportunity. But at the end of the day, we have a 20-year record of being efficient and effective and that continues to be our goal and we have a duty to make sure we are doing that.

And Debby is there anything on splitting the Chairman and CEO role?

I think that, consistent with the idea that one of the cost efficient, our expectation is that, I would continue to hold those roles, obviously serving at the pleasure of our shareholders and our Board of Directors.

Okay. Thank you.

Thank you.

Your next question comes from Rich Anderson from SMBC.

Hey, thanks. Good morning everyone and hello to you, Justin.

Hi, Rich.

Hey thanks. Good morning everyone and hello to you Justin. So, just on the on the Holiday and maybe an extrapolation from that. So EBITDA below rent, so it is obviously a dilutive transaction. But understanding kind of the thought process on taking Sabra’s roadmap on Holiday. And so, I'm curious in the aftermath of all this, do you feel like net lease is becoming an increasingly dying breed for Ventas and you want more control that goes through Brookdale and others or is this a one-off type of thing and you still think that there is a role for triple-net to play in senior housing in the aftermath of all this?

Good to talk with you, Rich. Let me take that. A couple of things. One is we are pleased with the Holiday transaction. We think it really does a lot of good things and we are happy to take a page out of our friends with matrices book, and we preserved that upside in the assets and a lot of operational flexibility. So, we feel good about that and look forward to optimizing that portfolio. In terms of the triple-net lease, what I would say is, triple-net leases are a little bit like mortgages in one sense, which is that they magnify ups and downs for the operators and in any challenging environment, they are going to be disfavored. And of course that is the situation we find ourselves in now. In other environments, they could be very attractive to both land owners as well as the operators. So, I think there is many tools in the bag, many I guess you would say clubs in the bag, tools in the toolkit, and the triple-net lease I think will continue to be one. And there are many ways that you can customize leases also to create alignment. So, we think the triple-net lease will survive and we think we will continue to be creative and collaborative in how we work with our operators, be they tenants or managers in optimizing our portfolio and then being good partners.

Okay. I prefer arrows in the quiver, but that is just me.

That is a good one too. Absolutely.

And then juxtapose U.S. to Canadian, particularly as it relates to your recent investment there. And how things are kind of performing relatively.

Yes. I mean, our investment most, we have a significant Canadian portfolio. Obviously, the pandemic has affected assets there as well. Those operators have also received significant government support and one thing we have liked about the Quebec portfolio with LGM is that they have a younger healthier population a longer lengths of stay. They are very rigorous and have been very active from early on working to protect the residents. Obviously, that portfolio will be effected as well. But there are some characteristics of the LGM portfolio that make it probably a better performer on a relative basis, despite being impacted by pandemic.

Okay, great. Thanks very much. Good luck everyone.

Thank you. great talking to you Rich.

Your next question comes from Nick Yulico from Scotiabank.

Good morning everyone. So, in terms of the Holiday restructuring just to make sure understanding how this is going to work. I guess in terms of the money that you are receiving from them the cash, and then the notes and are you going to be actually booking any income from those two items in the second quarter and in terms of the notes, the 9% rate is there any component that cash interest that you are receiving?

Great question. Yes, the cash and notes are effectively income and I think we mentioned this in the release and so those will be included in net income and yes we actually would expect as part of our ongoing this for ongoing notes we would expect to book and receive some amount of interest income as we go forward.

Is any of that cash income from those notes?

We would expect it to be cash. Yes.

Okay, thanks. And then I was just hoping to get a feel for you I know you gave us a coverage on Holiday as a trailing number. Is it possible to get the quarterly first quarter EBITDARM for those assets so we can understand exactly from an NOI standpoint as you now have this operating NOI. What the delta is going to be between the old 60 million of cash NOI you got on the lease versus on a real time basis, realizing things are going to move around still, but at least on the first quarter number record what that looks like from a operating EBITDARM basis?

Right, I mean we have had Holiday in the heat map, obviously and it had been below a 101 and EBITDARM basis. So, as we reported the last time and really what I would say is that just like everything else in the portfolio as you point out, it is really going to depend on how the pandemic really plays out and so I think we will just defer that as we get more real time information about the portfolio. I'm happy to talk to you about it as things progress.

Right, I guess, but I mean you guys do have an actual number I'm assuming that for the first quarter and so I was trying to see if we can least get that number so we can use that as a base to then build off some assumptions.

Yes, I mean, I think you should, you should look at about a 0.9 EBITDARM coverage, something like that in the first quarter, rough numbers.

Okay. Thank you. I appreciate it.

Thank you.

Your next question from Vikram Malhotra from Morgan Stanley.

Hello.

Sorry. I had myself on mute. I just hope everyone in the team is okay and doing well.

Thank you.

Debbie, you referenced the dividend in your prepared remarks and I just want to clarify one. I'm assuming the dividend is all cash today and just as we think about the dividend going to second quarter, what are sort of the metrics? What are you looking at? Maybe give us a sense of where AFFO versus the dividend could trend even just percentage wise. What are some of your put and takes if you think about the dividend?

Thank you. Yes, I mean, I think really want to just touch on the fact that, while we are in this period of uncertainty, we generally want to match our decision making speed with what is required. And our Board is going to look at all relevant information when it addresses the dividend, as I mentioned in mid to late June.

Okay. And the dividend is all cash currency.

It has been. Yes, Vikram.

Okay. And then just second, as you I think you and Bob outlaid the expectations for occupancy in the next few months and it was about a 100 basis points per month in the [RIDEA] (Ph) portfolio. Can you give it a sort of a broader sense of what the ins and outs are in terms of assumptions for move-ins versus move-out and as an aside, if we could request more monthly or more weekly updates, that would be great.

I'm going to ask Bob to address that Vikram.

Sure. I will give you some building blocks Vikram using April as our case study here. We saw move-ins approximately 25% of our historic levels or down 75%, to put the other way. The move-outs have trended pretty consistently with historical patterns and the net of that is approximately a 70 basis point impact on occupancy on a weekly basis. One way to think about revenue impact is that, and this is the Page 7 of the investor deck. If you haven't seen this is, a 100 basis points of occupancy generally, sequentially on average is about $2 million to $3 million of revenue per month. So, you can do math there. And we expect that trend as we see it right now to carry on into May. On the expense side, we mentioned about 10% OpEx increase, driven by labor and supplies including PP&E. We had about $125 million of monthly OpEx in our portfolio in SHOP. So, it gives you some more facts if you like to do the math.

Okay.

Vikram, we thought you love those rules of thumb.

I guess I was just trying to understand the move from the 330 basis points loss in the month of April down to a 100 per month. And I was just trying to understand more specifically like what are you assuming changes from April to May through June?

Let me clarify, just to make sure we are on the same page. The 330 basis points was the spot-to-spot effectively beginning to end of April, occupancy moves. And my 100 basis points was simply a rule of thumb to help you. So, that is an important clarification, beyond what we are seeing in April and early May, I'm not able to project what I think is going to be for the second quarter, for example. But those will give you some building blocks to make your own assumptions.

This is Justin. And I'm going to add a little color to that might be helpful and I will just preface this that I'm going to give you April average occupancy numbers that are presented by our operators and these are fully vetted, we only report these numbers. But I'm going to compare March first. So March average occupancy was 85%, April average is at 82.4%. So, there is 260 basis points difference. If you take New York and New Jersey out, as I did in my prepared remarks when I was using spot occupancy, March average is 85.1, April at 82.9. So, the 220 basis point change.

And that is shows the difference between really the quote and unquote spot, beginning of month to end of month versus the average occupancies for the month. So, let's carry on. Thank you.

Thank you.

Your next question comes from Michael Carroll from RBC Capital Markets.

Yes, thanks. Debbie, I just wonder if you could you add some color on the testing capabilities that you are providing your operators. I don't know if you said this, if I missed it, but are you able to provide enough tests for all the restaurants at the facilities or what in depth are you able to offer right now if that relationship?

Great. Good morning. So, we are very excited about this initiative and we are taking the first step with Atria and it is really to accelerate employee e-testing at Ventas buildings with select operators to make our communities safer, and facilitate thoughtful reopening and confidence and trust as Justin talked about. And so, we have this first compliment of 10,000 testing kits with Mayo Lab’s analysis, which is very important, they have a very high accuracy rate at Mayo, as you would imagine and we really think this is a great first step that we can make available. Atria has already done it, ESL will be next and we will make it available to select operators, principally for their employee testing program. Once we see how that goes again, we are early days are, still a lot of uncertainty, new testing and tools coming out all the time, we will determine if we want to are-up or if we want to take a different step moving forward, but we think this is a great opportunity to do the right thing and really have a differentiated partnership with our operators and really build that trust and confidence with residents and their families that is so sorely needed.

And then what is the turnaround time. How long does it take to get to tests and I guess if you have confidence that at least your employees are not affected by COVID. Is there discussion that you could reopen those communities or is it still too early to tell?

The turnaround is a day or two and it will indeed build confidence as a component of the thoughtful reopening and admissions plan.

And I will just add one other point to that. This is Justin. All of our operators are considering the move-in protocols at this point, and about 70% of our operators are operating in states that are starting to loosen their stay-at-home policy. So this is a very active conversation. And the advantage that testing gives you, obviously it gives you a lot more certainty around the potential for spread of infection. But the other advantage is, it is recognized in the CDC guidelines. If testing occurs, then it can accelerate the time that someone can move in, where the regular quarantine is around 14-days and the testing allows for something closer to two or three days.

Okay. Right. And that is a good point, because the test may also be available for new residents in certain cases. Thank you. Mike.

Okay. Great. Thanks.

Your next question comes from Jordan Sadler from KeyBanc Capital Markets.

Thank you, and I hope everybody is doing well.

Thanks Jordan. We are.

Okay. My first question I think is maybe for Bob, I will leave it to Debby to quarterback. But regarding the revolver draw down and I think some subsequent repayments post a senior note issuance in April. You did mentioned in your conversation that, Ventas is past the peak for mortality in your SHOP assets and in triple net. And so, I guess I'm kind of curious, I know you are waiting till the last minute to make a decision on a dividend, but what do you want to see these to be the virus before in order to sort of pay down those borrowings and sort of what is that sort of draw down, is that reflecting concerns around the ability to potentially borrow?

Well, I will turn it over to Bob, but one thing we know for sure is that, having went through many decades of this that, having assured liquidity is the number one, two and three attributes that you want to have to manage successfully through any kind of uncertainty. And so, we have that and that is kind of a golden rule, and it served us very, very well. In terms of the pass of the peak, again, there are numerous models. There is a lot of uncertainty, but as of a point in time, I'm glad that you noticed data that shows that a lot of our NOI in our senior housing on those triple-net and SHOP is in states where according to a single model as of a certain day, the peak of mortality is behind us. Now that could change again and that of course would affect our outlook.

That is helpful. I guess I'm trying to understand the difference between, that assured liquidity as it relates to sort of that revolver borrowing or draw downs versus the dividend that you actually pay. So, there is some uncertainty surrounding the potential to be able to draw or have access to cash. But, it seems like you are not yet willing to sort of cut the dividend down to zero in order to sort of stay off or protect yourself from any uncertainty or maybe I'm misreading that.

Yes. I mean, I think what we have said clearly about the dividends is that the board will make that decision at the right time, which are dividends is a July dividends historically and so that would basically defer that decision to be made by our board until mid to late June. So, do you have a question for Bob about the revolver draw just Jordon?

I think you answered it. But maybe you mentioned Justin. I wanted a welcome back to him back to REIT land. Unfortunately, under these crazy circumstances, but I would have asked him for a review of the portfolio probably not fully appropriate. Debbie, a couple years ago, you spun off the skilled nursing portfolio at a time when there was no real distress in that sector. Any thoughts surrounding, management and or the potential spin of the seniors housing portfolio or are we just that way too soon, I don't mean to be flippant at all in that question.

Yes, I think that under skilled nursing, I think I'm glad you reminded us that, that we really did that, at the absolute peak time in valuations at a seven cap on rent at that time. And we really continue to believe that was a very sound strategic decision, particularly as we look at infection mortality rates in skilled nursing now. I think we given all the uncertainty right now we are focused on health and safety as Justin said really just strong effort to keep Ventas strong and stable and get ready for any scenario and the opportunities in the future. So, we will defer that discussion if you don't mind.

Okay. That is fir. Thank you.

Thanks Jordan.

Your next question comes from Joshua Dennerlein from Bank of America.

Hey good morning everyone. Glad you are doing well.

I clearly had too many people with the first initial J in my life. Anyways go ahead I will try to get it right this time.

I'm just curious on the Holiday switch to the management contract. Was that something you were in discussion with before the pandemic or was it really the pandemic was the drivers that kind of got you going on that discussion?

Well, we have talked about Holiday for a while and have been pretty clear about what the performance was over the past couple of years. I think we were in a good spot, because Holiday remains current and paying full rent all the way through the first quarter and they have been great about that and we were the sole beneficiary of the guarantors. So, of course, we had a EBITDAR kind of one-to-one coverage. So, we felt like we were in a good spot. But we did feel mutually that it was the right time to take a different approach and we did so in a way that we think was beneficial for both and preserved upside and on operational flexibility. So, we are happy that we have done it, and we are going to optimize that portfolio especially now that Justin is here.

Okay, and then just on the senior housing triple-net rents. I see in your presentation you mentioned I guess sort of May rents are allowing up to 25% of the rent to get paid from the deposits, you expect two million or so to be paid. Do you have a sense of like I guess like back into it, but what percent of tenants are taking advantage of that and I guess later on would you require the tenants to kind of back fill those deposits?

Right Justin.

Yes. It is actually very low percentage, if you think about around 30 million of rent per month and only round two million or up to two million we think will be paid with the cash escrows s to carry deposits. So not a lot. I will mention two other things on the triple-net, one is that as we said it is our May collections are really right on track, so looking good in May. Also some of April tenants that took advantage of that deferral have already paid back. So that was good encouraging sign as well, and in that case, there were smaller operators that had advantage of government assistance. But our tap was to Allow some liquidity for operators during a very tough and uncertain time, and we are happy that some of the operators have taken advantage of that.

Thank you.

Your next question comes from John Kim from BMO Capital Markets.

Hey good morning everyone and welcome Justin.

Hi John.

I had question on your deposits, that were mentioned - deposits in senior housing, is there any difference regionally for the New York, New Jersey to have more of sure deposits than some of the other markets not impacted by the virus?

Hello, this is Justin. Let me just mention first of all, we don’t normally track deposits, because senior housing particularly assisted living, and memory care are what we focused is need driven. So tracking deposits is usually a very short-term indictor of move-in. But given the environment we started to track recently a lot of those deposits are in Sunrise and Sunrise has kind of a north east footprint with us. So there is certainly some New York and Massachusetts are few for our Sunrise footprint, a lot of those deposits are with them. There is another stab I will mention, that is round lead which is something that we do track regularly and leads have stabilized over the past few weeks about half of our lead volume, which is you know encouraging in a sense, because it shows that there is still ongoing demand. Even though we are not doing physical tours, and we are doing virtual tours and in-lue of those there is still ongoing demand and is ahead of that moving pace that we have been experiencing so far. But there is long answer to short question and that is not ready to really point out specific geographies except to say that Sunrise is a big part of those deposits.

And then Pete mentioned in his prepared remarks the high retention rate you guys had in the medical office business. Can you provide some terms on that, are these short-term, but month-to-month lease expansions and also what the cash leasing spreads were?

Pete.

So, John, let me just be sure that I understand what you are asking. Well, we talked about was 96% receipt of cash rents overall in the office portfolio. Is that what you are asking?

No. I was talking about the retention rates, the renewal rates.

I see. Okay, so of our retention rates, yes, the 90% for the quarter and 94% for March and for April is at 98%, which is a phenomenal set of numbers. And yes, I would say it is a mix in some cases are short-term where they are just uncertain about their future. And so they want to, just take a year extension. In other cases we use the opportunity to take advantage of maybe some rent relief in exchange for a couple years of additional term. So, we have been fairly entrepreneurial in doing that. And then there is also some practical reasons, I will tell you kind of an interesting story of an [OVGYN] (Ph), who was 70 something years old who was going to retire. But then he sat back and he thought you know what with his shelter at home, maybe there is going to be a lot of bursts next time, in nine-months from now. So, I'm going to extend for one more year. I'm going to work and cash in on this opportunity. So, it is been a mixture of things.

Great. Thank you.

Thanks John.

Your next question comes from Lukas Hartwich from Green Street Advisors.

Great, thanks. Whenever we do come out the other side of the COVID pandemic. I'm just curious what you think the recovery in SHOP looks like. Do you expect there to be pent up demand or expect do you expect something more gradual?

Well, I think our focus right now is really getting through the biggest part of the pandemic Lucas and then there remains really a lot of uncertainty about the depths and then the time period where it will be most active and then what the slope and pace to recovery will look like and those could very significantly affect what the recovery and senior housing looks like. So, we are really happy for the day when we can discuss that with more specificity in terms of timing, pay and slope. But right now, we are focused on maximizing during the course of the toughest period of pandemic.

Great and then the second one for me is just. Can you provide a little more color on the performance trends of the Sunrise shop portfolio?

Justin.

Yep, sure. So, I mentioned in my prepared remarks, the year-over-year stats that were down and the reasons for that, given the fact that we are starting off at a lower starting point. I also mentioned the strong sequential performance. That performance was driven by Atria and ESL. Sunrise was not as big acontributor to that. There are some less good performance from the sunrise portfolio during that time, so it was actually contributing on a sequential basis, closer to down around 9%.

Thank you.

Your next question comes from Omotayo Okusanya form Mizuho.

Yes. Good morning everyone. Justin, good to have you back from Jolly Old England old cap.

Hi.

Hi Debbie.

Good.

Good. I'm glad to hear that. A couple of questions. The first one is actually on the office side. The 96% of April rent collected, is there way you could help us break it down kind of what you know the rates of MOB versus Life Sciences or other differences there?

Hey Tayo. This is Pete. How are you? So, the 96% we are very, very pleased with, and one of the items I did want to point out is that those are receipts. Deferrals are not included in that number, and as a matter of fact for April, there were almost zero deferrals. We are talking like $150,000 worth of deferrals in April, and those were for retail tenants. So, this is true cash receipts and collected in a very positive way. The MOB Portfolio had a slightly higher collection rate for April and the R&I had a slightly lower number. But really nothing material. It is interesting that many of the universities are just - they do hand checks. They actually write checks out and it is a slower process in a normal month and it is a slower process in a turbulent month. So, that is my assessment.

Okay.

So. I mean those portfolios performed very well.

Gotcha. Okay. And then on the Life Sciences side, again very strong same-store NOI this quarter, again it has been a positive on the overall Ventas story. So I guess, a little bit surprised when we looked at the development pipeline that is the projects that were halted or all kinds of Life Science Wexford projects and there was one other projects also Life Sciences, where the completion date was deferred or pushed back a year. So, just kind of curious kind of thinking about that business that is such a big positive on your overall story. And again, a part of what is kind of happening on the development front later you know halting or delaying some of these development projects.

You are absolutely right. We are happy that, we have grown our office portfolio in particularly this exciting Life Science University based portfolio over the past years, it is really, you are seeing the benefit of that right now. Both in the fact that is where all the action is on the virus and the vaccines in the search for a cure, as well as the diversification benefits we are getting from that portfolio, within the broader Ventas Enterprise. And so, it is a significant capital allocation priority. We do have a number of ongoing projects with Arizona State and [Pitt] to name a few. And basically, what we did as a matter of I think, really good discipline and approach is that, when we really understood quickly the potential from this Coronavirus, we aggressively paused on the two developments that really were not yet significantly underway. And so the ones that are ongoing are going to be delivered and we will have our 80% pre-leased and the ones that are on the drawing board have been paused I think intelligently to take a look at capital conservation. And of course, as I mentioned, we will be able to make a decision on those at the appropriate time as to moving forward and timing and the life, we are happy to have this portfolio and it will continue to be an important part of the Ventas’ story.

Got you. Okay. One more if you would indulge me. So, when Justin was announced as joining the team and you guys announced your kind of plans around senior housing stock outperformed that day. Today, you announced solid plans around Holiday the stock is outperforming. So, clearly, I think the market is looking for you guys to kind of rectify potential issues that people see in the portfolio. Just kind of given that, I guess why you guys maybe not a little bit more aggressive in regards to kind of trying to address some of these issues, whether it is some of the triple-net portfolio that still has a weak rent coverage and things of that nature, it just kind of feels like the market is basically saying, do it. We are expecting you to do it, but in the near-term it is just doesn’t seem to be happening as quickly as I think some of us anticipating.

Well, I would say that we over a long period of time have a good track record of taking action, and that we think is going to be beneficial for our shareholders and we have taken many actions to evidence that whether they have been with Kindred or today with Holiday and we will continue to do that. We have made a ton of progress, we are proud of what we have done on the leadership front, as you mentioned along with the portfolio front and we will continue to do that with urgency and purpose. And hopefully we will continue to get rewarded for doing the right things at the right time.

Okay that is helpful. Well I just feel like the runway is clearly open and everyone is waiting for you guys to take off.

Well, thank you. We appreciate that support. Our wings are flapping. Thank you, Tayo.

Thank you. End of Q&A:

I think we have one more operator. Anything further? Okay, if we don't have any further questions, I want to sincerely thank you for your time, your attention, your interest in Ventas. We have a great team here that is really committed to protecting and preserving the Company and for really delivering for all the stakeholders who depend upon us. So, we look forward to seeing you on the other side of this terrible pandemic and until then, stay safe and strong. We will see you soon. Bye-bye.

Ladies and gentlemen, this does conclude today's conference. Thank you for participating. You may now disconnect.