Janus Living, Inc. 2026 Q2 Earnings Call

Today's conference call will contain certain forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, these statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations. A discussion of risks and risk factors is included in our press release and detailed in our filings with the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures will be discussed on this call. In an exhibit of the 8-K we furnished with the SEC yesterday, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Regulation G requirements. The exhibit is also available on our website at janusreit.com. I will now turn the call over to our President and Chief Executive Officer, Scott Brinker.

Okay. Thanks, Jonathan. Good morning, welcome to the Janus Living second quarter earnings call. Thank you to our operating partners on the ground who work hard every day to deliver a great experience for the seniors who live in our communities. It's a 24-hour job every day of the year, they are the most important driver of Janus' performance. We'll be plenty of discussion today about the numbers from the quarter, we'll never lose sight that this is a people business, the residents, the staff, and the families. Okay. It was late last summer, about a year ago, that we were building the business plan for Janus Living. Certainly, there are other REITs that invest in senior housing, Janus was designed and built to be a unique and differentiated growth story.

Strong internal growth from a 100% SHOP portfolio that's concentrated in high growth, business-friendly states with low taxes, deep relationships to drive proprietary deal flow, the cleanest balance sheet in the entire REIT sector with zero debt, an asset base big enough to be public, small enough that we can really move the needle with acquisitions. Thanks to a lot of hard work by our team and a resounding response from operators in the street, we're outperforming that business plan in both speed and scale. We're on pace to double the size of the portfolio this year without compromising on asset quality or returns. Essentially, all of it is sourced directly from our target operating partners. Year to date, we've closed $1.8 billion of acquisitions with a significant pipeline behind that.

We're growing Janus Living by acquiring single assets and small portfolios, picking and choosing every property that comes into the portfolio. The year 1 yield is expected to be in the low sixes, improving to 7.5% or better by year 3. The yields are very accretive to our cost of capital, and our basis is well below replacement cost. In just 4 months since going public, we've increased the number of operating partners from 2 to 10, all handpicked as companies with strong cultures, track records, and capabilities. That growth would not be possible without the Healthpeak team, who brings the relationships and sector expertise to execute quickly and at scale. With an equity stake in Janus Living worth more than $6 billion, there's enormous alignment of interest between the two companies. Operationally, we had an outstanding 2Q, including significant growth in occupancy, rate, and margin.

Most important, our communities are providing value to the residents they serve, which allows us to grow revenue. We're only 4 months in as a public company, but Janus Living has some real momentum. I'll turn it to Jonathan to share color on our 2Q results and our improved earnings outlook.

Thank you, Scott. We had another strong quarter on both the operational and capital allocation front. For the second quarter 2026, consolidated revenues increased 45% year-over-year, adjusted EBITDA increased 34%, and FFO as adjusted per share increased 40%. This is driven by strong organic growth and the accretion from $800 million of senior housing acquisitions completed in the first and second quarter. Moving to performance. Same store revenues increased 8.4% year-over-year and 60 basis points sequentially. This was driven by 260 basis points of year-over-year occupancy growth, led by Independent Living that saw a 350 basis points increase. Sequentially, same store occupancy increased 10 basis points, which is an improvement from last year's performance, and we expect continued occupancy gains given the favorable supply-demand dynamics.

RevPOR increased 5.1% year-over-year, reflecting the value proposition at our life plan communities and high-quality resident experience provided by our operators. Same store expenses increased 4.8% year-over-year and on an expense per occupied unit or xPOR basis increased 1.7%. As occupancy grows, we expect to show continued operating leverage given the large scale of our life plan communities and more Independent Living focus. Same store NOI increased 19.2% year-over-year and margin expanded by 250 basis points. Within the non-same store portfolio, occupancy was approximately 80.5% and primarily reflects lease-up opportunity in the 18 transition communities. The operator transitions position the communities to capture embedded occupancy and NOI growth from improved operational performance. Our current and prior guidance incorporates temporary occupancy and expense headwinds as part of normal course transition disruptions.

The properties are in great shape, and the new operators are in place to deliver a better resident experience, which should translate to improved occupancy. Shifting to the balance sheet and capital allocation. In June, we completed a follow-on offering of Class A1 common stock, generating $690 million in net proceeds to pursue acquisition and investment opportunities. Despite a competitive environment, we're having no problem sourcing opportunities from our deep network of relationships. During the second quarter, we acquired two senior housing communities for $105 million and disposed of one community, generating $23 million of gross proceeds. Subsequent to quarter end and through August 3rd, we completed an additional $1 billion of acquisitions. Year to date, we've completed $1.8 billion of acquisitions and have another $59 million under purchase agreement. Initial yields across completed acquisitions are in the low sixes, improving towards 7.5% or higher by year three.

Ending with guidance. We are increasing our 2026 FFO as adjusted guidance range to $0.95 to $0.98 per share, up from $0.93 to $0.97 per share. We are also increasing our same store adjusted NOI growth guidance range by 200 basis points to 13%-17%. The updated range is 500 basis points higher than the initial guidance range provided by Healthpeak for the same portfolio in February, driven by outperformance. Our guidance also includes $1.6 billion of net capital sources from our IPO and follow-on offering. We expect to deploy that capital into acquisitions through year end.

Our guidance incorporates an earnings drag from cash on the balance sheet until that capital is fully deployed. Wrapping up, the team remains highly energized. We are focused on growing and collaborating with our operating partners to help them improve the resident experience and acquiring high-quality, durable real estate to outperform in all cycles. We continue to build the asset management and investment teams for the long term and creating value for our shareholders. We also have Kelvin Moses, Chief Financial Officer, on with us and available for questions. With that, operator, please open the line for Q&A.