‘clarity And Focus’: Inside Ventas’ Senior Living Operating Partner Playbook

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Ventas (NYSE: VTR) Executive Vice President of Senior Housing and CIO Justin Hutchens is not shy about the opportunity ahead for senior living operators.

As he has said before, the population of people aged 80 and older in the U.S. grew 4% in the years after the Great Financial Crisis. Between now and 2030, the population of people aged 80 and older is expected to grow 28%.

With that demand as the backdrop, Chicago-based Ventas is building up its growing senior housing operating portfolio (SHOP), with expectations for the segment to comprise half of its net operating income (NOI) by the end of this year, up from 43% now.

The company’s current senior living growth strategy centers on acquiring communities that are market leaders with relatively high occupancy but room to grow census and revenue even further. As Hutchens has also noted before, Ventas this year is poised to execute on a pipeline of opportunities worth $1 billion.

“Our criteria is selective, but it’s delivering growth opportunities,” Hutchens told Senior Housing News. “We have a healthy amount of occupancy upside in the existing SHOP portfolio.”

In recent years, real estate investment trusts (REITs) including Ventas have sought senior living growth in preparation for the industry’s big years ahead. In the last couple of years, REITs have shown preference for RIDEA contracts that align operator and owner so both can participate in a community’s upside. Oftentimes they are pairing such growth strategies with back-end business intelligence platforms and other insights to help operators make better decisions.

Hutchens has long stressed Ventas’ “right market, right asset, right operator” strategy as a differentiator. As the name implies, the REIT is seeking to pair quality operators with communities and markets they can succeed in.

Still, achieving the right results across such a large portfolio is not easy. Ventas has 29 different operating partners and 638 communities in its growing SHOP segment, and getting them to work in lockstep with the REIT is a sophisticated process. That is why the REIT gives its operators access to its “operational insights” slate of tools including guidance on performance benchmarks, digital marketing and pricing.

“We’ve been working for the past few years to make sure that we’re ready for this opportunity that we have ahead of us,” Hutchens said. “If you’re in the right market and the right asset, your operator is going to have a higher chance of success.”

Ultimately it is the REIT’s scale and back-office sophistication that gives Hutchens confidence in its ability to succeed in the coming years.

“We have a data science team and an analytics team that can rival anyone in real estate, and we’re putting that resource to work to try to help bring clarity and focus to operators,” Hutchens said.

Inside Ventas’ operator playbook

As Hutchens noted, Ventas’ plan to grow and add occupancy and revenue via senior living hinges on its operators’ performance. To that end, the company aims to give its partners tools to help them succeed in their local markets.

One such tool is digital marketing. In 2025, prospects and their loved ones – including now their adult grandchildren – are doing much of their research online before they ever reach out to a senior living community.

“Given the importance of digital marketing and digitally sourced leads, we find it to be a critical area of focus for operators,” Hutchens said.

Ventas assesses the websites of operating partners in its SHOP portfolio and coaches them on everything from how to stand out in online searches to the end user experience. The REIT is also comparing operators’ web presences with that of not only their local competitors, but also hotel and apartment companies.

“We’re giving detailed feedback, and that gives the operator opportunities to refine everything in terms of their web presence to help ensure that they’re getting higher quality leads, a higher quantity of leads and move-ins,” Hutchens said. “That’s pretty unique for a real estate company, and it’s been extremely popular among our operators.”

Ventas provides other data and information that its operating partners can use to set and advertise resident rates. Though that “takes a lot of effort” given all of the different moving parts involved, Hutchens said the company uses its analytics capabilities to help operators maximize occupancy and set resident rates in a way that does not affect move-in volume, an effort that it dubs “price volume optimization.”

Ventas’ stable of SHOP partners itself is also a source of operational insight. Though the company doesn’t share general best practices among operators, it does let its partners know where they stand in relation to the rest of the pack on an anonymous basis.

“That gives operators an opportunity to say, ‘Okay, I might be 90% occupied but … I’m not the best operator in the Ventas portfolio from a vacant unit standpoint. So, what actions can I take to try to fill units?’” Hutchens said.

Ventas’ management doesn’t just call shots from a corner office. The company’s corporate office has this year completed a collective 75 community visits to see conditions on the ground, with a focus on communities that have the most upside ahead for occupancy growth.

“We’re going to point you directly to the opportunity, where you can make the biggest impact the fastest,” he said. “The effort is very collaborative, and that’s important, because at the end of day, the managers are running this business.”

SHOP segment still evolving, growing in 2025

As Hutchens has previously noted, Ventas is looking to grow its SHOP segment by acquiring value-add communities and converting existing triple-net properties, including 45 communities previously covered under a master lease with Brookdale Senior Living (NYSE: BKD).

In the 45 Brookdale communities alone – now to be managed by five “high performing, local market-focused operators” – Ventas sees a roughly $50 million SHOP NOI upside ahead, provided it can grow the portfolio’s occupancy significantly above its current average of 77%.

In 2024, the REIT invested around $2 billion, primarily in senior housing. Those opportunities came at significant discount to replacement cost, with unlevered IRR expected in the low- to mid-teens and an expected year-one NOI yield of between 7% and 8%.

Last year, the company added seven new operators to its SHOP stable. If history is any indication, that expansion will continue in 2025. The company currently has “line of sight” on a pipeline of opportunities worth $1 billion and is “in the advanced stages” of executing on it, Hutchens said during the company’s recent 4Q24 earnings call.

In the end, Hutchens believes the industry must evolve to its next chapter in order to attract the baby boomers. He pointed to Ventas operating partner Le Groupe Maurice – which is currently expanding beyond its stomping grounds of Quebec for the first time – as an example of one operator he believes is doing just that.

Le Groupe Maurice communities usually are equipped with a range of amenities including golf simulators, bocce ball courts, large fitness centers, outdoor gardens and bowling alleys. They are also built with ground-floor space for restaurants, grocery stores, salons and other kinds of businesses that older adults of today likely frequented before moving in.

“When you walk in, you feel an instant energy,” Hutchens said. “That is where I see the future.”

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