JAN Q3 2026 earnings call transcript, November 3, 2026

Good morning, and welcome to the Janus Living, Inc. Third Quarter 2026 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1, on your touchstone phone. To withdraw your question, please press star, then 1. Please note, this event is being recorded. I would now like to turn the conference over to Jonathan Hughes, Senior Vice President, Finance and Investor Relations. Please go ahead.

Thank you. As a reminder, certain statements made during this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Janus Living believes any forward-looking statements are based on reasonable assumptions, the company can give new issues. Assurances that its projected results will be attained, and we do not undertake a duty to update any forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. We will refer to certain non-GAAP financial measures during this call, which are reconciled to the most directly comparable GAAP measure in an exhibit to the 8K we furnished with the SEC yesterday in accordance with Reg G. I will now turn the call over to our President and Chief Executive Officer, Scott Brinker.

Good morning, and welcome. to our 3Q earnings call. Our third quarter results highlight that Janus Living is a unique and differentiated growth story, a pure play focus on U.S. senior housing, deep relationships to drive proprietary opportunities, a small denominator so that acquisitions move the needle on earnings, and the cleanest balance sheet in the REIT sector with zero debt at quarter end. The execution of the plan has been equally strong. We more than doubled the asset base this year without sacrificing quality or returns. and consistently increased guidance. FFO per share at current midpoint is up about 6% from what was implied in our original guidance in February, and the midpoint of same store growth is up 750 basis points from February. That same store portfolio is comprised entirely of our irreplaceable life plan communities, which are the foundation of Janus living. The assets cater to an active senior with an 8 to 10 year average length of stay and extremely high barriers to entry. In early 2020, we acquired the remaining 51% interest in those communities to gain full control of the portfolio. We immediately changed operators to LCS, who has been amazing partners, and invested strategic capital to create a compelling product in each local market. Revenues and entry fees have grown substantially since our acquisition, with cash NOI up almost 75% since 2019, even including the COVID downturn. The implied value of those assets today is many multiples of our

purchase price on the JV buyout. It's a phenomenal success story that speaks to our ability to create value in the sector. We've had some questions about the impact of the housing market, so I want to mention that we smashed our entry fee records for the third quarter, including the number of sales and at average prices 11% above the prior year. We've created strong demand with our product offering and it's broadly affordable with net entry fees equal to about 60% of the median local home value. Plus, home equity is far from the only source of payment given seniors network. Cash entry fees have exceeded the amortized amount we recognize in earnings for 22 consecutive quarters and by $17 million last quarter alone, which is more than 5 cents per share of earnings. The excess of cash entry fees over the amortized amount is the reason that our FFO has been consistently higher than our FFO. I'll wrap up with a few comments on acquisitions. When doing the business plan for Janice Living a year ago, we identified a select group of trusted the business plan. operators who we wanted to do business with. We've had incredible success bringing that select group into our portfolio. We now have 13 operating partners with a few more in the pipeline. Onboarding has been seamless as the underlying healthy platform is built for massively more complexity than anything Janice Living can throw at it. From a growth and opportunity standpoint, Jan resembles a startup, but from an infrastructure standpoint, Jan is a highly sophisticated owner with as much experience as anyone in the sector.

Year to date, our operating partners helped us source and collect. Those $2.9 billion of acquisitions were focused on acquiring single assets and small portfolios so that we can be super disciplined about the asset quality and returns for every building that comes into the portfolio on a blended basis. We're conservatively underwriting year one yields in the low sixes, improving to 7.5% or better by year three. Our cost basis on the acquisition is about $350,000 per unit, which is well below replacement costs. Three closing comments on questions we've heard. We've heard across the sector in recent weeks. First, the increase in interest rates recently should be good for us as it takes pressure off cap rate compression, especially from levered buyers, and it makes new development that much harder to pencil. Second, across our entire portfolio, occupancy in 3Q was just 86.5%, so we still have significant upside to capture on occupancy. And third, given our small denominator and deep relationships, our opportunity set is many multiples of our currency. I'll turn to Jonathan to share color on our three-tier results and improved outlook. Thank you, Scott. We had another strong quarter on both the operational and capital allocation front. For the third quarter 2026, consolidated revenues increased 78% year-over-year, adjusted EBITDA increased 101%, and FFOs adjusted per share increased 46%.

Moving to performance, same-store revenues increased 9.8% year-over-year and 2.4%. Sequentially, this was driven by 300 basis points of year-over-year occupancy growth led by independent living. Sequentially, same-store occupancy increased 110 basis points. Occupancy is approaching 90%, and we expect continued gains given the favorable supply-demand dynamics. REV4 increased 6.5% year-over-year or 4.4% excluding non-refundable entrance fee amortization as our operators continued to deliver. quality resident care and value. We also achieved record third quarter non-refundable entrance fee sales of $47 million. Same-store expenses increased 4.6% year-over-year, and on an expense per occupied unit or export 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 25% year-over-year and margin expanded by 360 basis points year-over-year and 80 basis points sequentially. Within the non-same-store portfolio, occupancy was approximately 84% and includes communities acquired this year and transitions. Occupancy is starting to stabilize across the 18 community transition portfolio as those new operators execute community specific business plans. Shift into the balance sheet and capital allocation, in August, we completed a follow on offering of class A1 common stock generating $513 million in net proceeds. In September, we upsized our unsecured revolving credit facility to $1.25 billion and terminated our $100 million delayed draw term loan. We continue to source opportunities directly from our deep network of operator relationships. Year to date, we've completed $2.9 billion of acquisitions,

during the third quarter, we completed $1.75 billion of acquisitions. Subsequent to quarter end, we completed an additional $370 million of acquisitions, and we have another $82 million under binding purchase agreements. Year one cash NOI yields across completed acquisitions are in the low 6% range, improving to 7.5% or higher by year three. As of October 30th, we had approximately 1.2 billion dollars of available liquidity, including unrestricted cash and available credit facility capacity. And ending with guidance, we are increasing our 2026 FFO as adjusted guidance range from 95 cents to 98 cents to 97 cents to 99 cents per share. We are also increasing our same store adjusted NOI growth guidance range by 250 basis points at the midpoint to 16%. The updated midpoint is 750 basis points higher than the initial guidance range provided by HealthPeak for the same portfolio in February, driven by outperformance across occupancy rate and expenses. And our updated guidance now includes $2.3 billion of capital sources from our IPO follow on offerings and credit facility and $2.3 billion of post IPO acquisitions. The momentum had.

Janus living has only accelerated since our March IPO. Our priorities remain unchanged and focused on partnering closely with our operators to elevate the experience for our residents and staff, and adding high quality durable communities to our portfolio that are built to perform through every cycle. With that operator, please open the line for Q&A.

We will now begin the question and answer session. Please limit yourself.

to one question. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then one. In the interest of time, callers will be limited to one question. At this time, we'll pause momentarily to assemble our roster. Your first question comes from the line of Ronald

Camden with Morgan Stanley. Ronald, your line is open. Please go ahead.

Great, thanks. Look, the 26% same story on why clearly a big upside surprise in the quarter. I guess I'd love to double click on that and get some thoughts on both in terms of occupancy and pricing, just what you see going on in the portfolio and how sustainable that is as we flip the calendar to next year. So again, occupancy and pricing thoughts on what's happening and thoughts. So you flip the calendar. Thanks. Yeah, Ron, this is Jonathan. On occupancy, I mean, you continue to see improvement there. The supply demand dynamics are pretty well known and speak for themselves. And I think the value and lifestyle provided by our life plan communities is very attractive to that resident cohort. Supply, you know, is very low. I would say on the rate side, you saw a pickup there from last quarter. Even excluding entrance fees. So that's, again, reflective of the supply demand backdrop. You know, as we look ahead to next year, we're not providing guidance yet. We'll provide that in a couple of months, but everything is continuing to run pretty similar and we would expect similar metrics for next year. Scott? Yeah, yeah. I mean, 3Q was really high. I mean, our midpoint of 26 same stores, like 17 and a half percent. 3Q at 26.5%. I mean, it's a phenomenal quarter. Don't get me wrong. Phenomenal on all aspects. But we also had a fairly low comp in 3Q of 25. It was like plus 10%. So it was our easiest comp, too. That does play a factor. And it's a relatively small portfolio. It was just the 15 life plans. Now, all these acquisitions that we made in 2026, those will start to come into the pool in 2027. So the composition will change.

But the growth. Profile of those acquired assets should be relatively similar, just given the occupancy in place around 86, 87% for those acquired assets. So they should have similar dynamic to what we're seeing in the life plan portfolio right now.

Your next question coming from the line of Farrell Granite with Bank of America. Farrell, your line is open. Please go ahead.

Hi, thank you for taking my question. I just wanted to. Dig in a little bit deeper especially about the stabilized NOI yields that we're seeing across the quarters. It took a step down in this 3Q, the 7.5 to 8.5 targeted NOI yield for the volume that you disclosed. Just curious about what are some of the puts and takes or composition of what was acquired that maybe drove that yield lower and if you have more confidence at that stabilizing at that level just given current interest rates.

Yeah, I mean, our underwriting really hasn't changed. So there's going to be quarter to quarter volatility just given the size of the company. We're buying single assets, small portfolios. Each one is going to be a little bit different in terms of asset quality, how much risk we're taking. But generally speaking, we're doing everything at a seven and a half or better by year three. That's just kind of the base case underwriting in addition to a market that we like, a price per year. That we like and obviously an operator that we want to do business with. I wouldn't say the underwriting has really changed at all. Frankly, the spreads have gotten better as our cost of capital has improved. So there may be a quarter to quarter differential and stabilized returns. But if anything, the spread on investment today is even better than it was in one queue, certainly when we did the IPO. So we feel pretty good about the ability to make an impact on earnings through external growth right now. Your next question.

It comes from the line of Jamie Feldman with Wells Fargo. Jamie, your line is open. Please go ahead.

Hey, good afternoon. This is Jesus on for Jamie. Thanks for taking the question. You guys previously expected the transition communities to build momentum in the second half. Can you just talk about the progress that that portfolio made, I guess, during the third quarter? Yeah, happy to do that. I'm glad we made the change. I mean, we all wish we could have done. It sooner. There's always some short term disruption, but we did have the JV partner when we bought them out in the first quarter. We were able to then complete the operator transition. So we saw the noise that you would expect. It looks like occupancy is starting to stabilize. We're expecting some progress through year end and into 2027. But it takes some time. Technology, in some cases, leadership teams, but just different cultures and facility specific business plans. So we're making good progress. And there's a lot of upside to capture in that portfolio. And most importantly, just, we think, providing a better environment and product to those local markets. Next question.

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

Your next question comes from the line.

of Sydney McEntee with J.P. Morgan. Sydney, your line is open. Please go ahead. As a reminder, make sure to unmute yourself locally. Sydney, your line is open. Hi, sorry. No worries. So I just wanted to ask about how you're thinking about the funding options in front of you between debt and equity. Like what right now would make you tap the debt markets and give up, you know. At debt free stat. And if you were to tap the debt market or term loan market today, where do you estimate your current cost of debt would sit relative to the like sixish initial yields you're seeing on acquisitions?

Hey, Sydney, this is Kelvin. I'll jump in on that one. I think we've we've been successful and supported in the equity markets, which has allowed us to do, you know, three transactions on the equity side, including the IPO this year. And that continues to be the primary. source of capital to help us fund our external growth, but we'll certainly utilize the balance sheet strategically, and we've positioned ourselves to have more capacity on balance sheet, probably noticed the upsize of our revolving credit facility to $1.25 billion. That gives us a considerable amount of flexibility on an interim basis to utilize that. And then going into 2027, we will pursue an investment grade credit rating. for the business to provide incremental options and more flexibility on balance sheet as we think about long term financing options for Janus living. So quite a bit of optionality that we'll have in front of us. We'll continue to utilize equity as a source of capital. With regards to the cost of term loans, I think, you know, simplistically, the swapped term loan will be in the call it mid fives. So that's probably a good indication of, you know, where that debt would price, but it still would be accretive relative to our initial yields on acquisition in that kind of 6% area. So a lot of optionality for us, a lot of flexibility with the balance sheet being largely unlevered today.

Your next question comes from the line of Austin Wertschmidt with T-Bank Capital Markets. Austin, your line is open. Please go ahead.

Your next question comes from Michael Stroyek with Green Street. Michael, your line is open. Please go ahead.

Your next question comes from Orion of Rob Simone with Compass Point. Rob, your line is open. Please go ahead.

Your next question comes from the line of Dave Rogers with Raymond James. Dave, your line is open. Please go ahead.

Your next question comes from the line of Mark Akinby with Barclays. Mark, your line is open. Please go ahead.

That concludes the Q&A session. This concludes today's conference call. Thank you for your participation. You may now disconnect.