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Hello, everyone. Thank you for joining us, and welcome to the Brookdale Senior Living First Quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Mike Grant, Brookdale's Vice President of Investor Relations. Mike, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Brookdale Senior Living's first quarter 2026 earnings call. Participating on today's call are Nick Stengle, Brookdale's Chief Executive Officer, Dawn Kussow, our Executive Vice President and Chief Financial Officer, and Chad C. White, our Executive Vice President, General Counsel and Secretary. On today's call, we will discuss first-quarter 2026 results as well as our financial guidance for the 2026 year. We'll also provide other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements.

Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued after market yesterday, as well as in our Securities and Exchange Commission filings, including the risk factors described in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the earnings release for the full safe harbor statement. Also, please note that during this call, management will discuss non-GAAP financial measures. For reconciliations of each non-GAAP measure to the most comparable GAAP measure, I direct you to the earnings release and to the company's quarterly supplemental financial information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. With that, it is my pleasure to turn the call over to our CEO, Nick Stengle.

Thank you, Mike, and good morning, everyone. I appreciate you for joining us on today's call and for your interest in Brookdale. Before I get into the details of the quarter, I would like to highlight that I have been Brookdale's CEO for just over seven months. During this time, we have continued the transformational pivot that began nearly a year ago towards Brookdale being first and foremost an operating company, while also acknowledging and taking advantage of the fact that we are a company that is built upon a foundation of specialized senior housing real estate that is becoming increasingly scarce with each passing quarter. Brookdale's pivot has included meaningful changes in our structure, which in turn define the company that we are.

While some of these changes were temporarily disruptive during the fourth quarter and the first couple months of 2026, as any structural change can be, they are absolutely critical in properly positioning our company for this very moment and for the future. As I will describe in more detail shortly, we are already seeing the positive impacts of these changes in our March and April results, and those results give us renewed confidence in the annual guidance and multi-year projections we presented earlier this year. Let me recap some of these changes. First, in October, we implemented our regional leadership structure and redefined reporting relationships at all levels of our company. We created six geographic regions, each led by a single regional vice president of operations and a dedicated regional leadership team encompassing all the key functions of a senior living company.

We reposition ourselves, in effect, as six companies of roughly 85 communities each, while still supported with the resources available from our corporate headquarters team. Second, in November, we hired Mary Sue Patchett to the role of Chief Operating Officer, Brookdale's first COO in over a decade. In short order, we further bolstered our operations first approach by formally aligning the operating model at every layer of the company. Practically, this means that our operations team, our sales team, and our clinical team share a common structure and alignment at every level of the company. At the executive level, this means that our head of sales and head of clinical now both report into our COO.

This improved structure makes a clear connection with a single line of enablement and a single line of accountability from our executive leadership team, namely me as the CEO, down into each of our communities. With this significant reorganization, many of our community executive directors and other key field leaders experienced a change in their reporting relationships. While absolutely critical for our future success, there is no doubt that the cumulative effect of all these changes did temporarily impact our results in Q4 and early Q1. In February, we also created a new position and hired our Senior Vice President of Strategic Operations. This new role consolidates 3 critical facets of any senior living company: our pricing, our labor management, and our capital deployment under a single accountable leader.

Through all of this, we have also continued to dispose of the leased and owned communities that were previously announced, as well as exiting much of our third-party managed business that I will describe in further detail shortly. From the start of 2025 through today, Brookdale has exited from over 100 communities, including owned, leased, and managed. That represents a lot of work and a lot of distraction for all our leaders. In short, after a year of near constant change, not to mention me stepping in as the third CEO to serve in that time period. The table is now set for Brookdale to fully capitalize on the supply and demand realities that exist in the senior living industry. We have the team we want. We have the portfolio of communities we want.

For all these reasons, we remain confident in our 2026 annual guidance of 8%-9% RevPAR growth and Adjusted EBITDA range of $502 million-$516 million, as well as with our multi-year growth outlook of mid-teens annual growth of Adjusted EBITDA. Jumping to our results. The quarter's occupancy got off to a slower start in January and into February. While facing the seasonal slowdown that typically occurs in these months, this year we also faced a combination of atypical events, including two meaningful winter storms, absorption of the significant annual in-place rate increase we implemented effective January 1, and our numerous ongoing leadership and structural changes and initiatives that I just described. Our consolidated first quarter occupancy of 82.1% improved by 280 basis points over the prior year's first quarter.

On a same-community basis, our first quarter occupancy was 82.7%, up 170 basis points from 81.0% in the prior year quarter. Looking ahead, the key selling season in senior housing is roughly May through September. Historically, April occupancy tends to be up slightly sequentially, but this year we experienced a relatively stronger April. As we included in our earnings release, April consolidated occupancy increased 30 basis points sequentially to 82.3% on a consolidated basis, while we improved 30 basis points to 82.8% on a same-community basis. This strengthening occupancy in April is reflective of improved execution tied to the organizational changes we have made and continuing overall strengthening in market conditions.

Switching to the expense side, labor and other facility operating expenses declined year-over-year along with our reduction in units, but also showed minor de-leveraging as a percent of revenue based on lower occupancy and also due to the pace of changes at Brookdale, including our new operations organizational structure, our ERP implementation, and the many changes to our leadership team. Frankly, our expense and productivity management during the first two months of the quarter were negatively impacted by all of these changes, and we have taken decisive action steps. We are already seeing the initial positive impact of our efforts as our senior housing operating margin for March was on target after lagging our budget for the first two months of the quarter. We also made progress on overtime and contract labor sequentially, and there's more opportunity ahead to improve labor utilization as occupancy continues to grow.

Additionally, the winter storms which impacted our occupancy as previously discussed also impacted us on the cost side through elevated utility expenses, repair and maintenance expenses, including general repairs, snow removal, and tree work, and also food expenses. Total direct additional costs from the storm were approximately $3 million-$4 million during the quarter. I would like to take a moment to discuss our managed portfolio. While it is a small portion of our revenue and operating income, it will be helpful to provide some additional color. For some background, in managed communities, the manager earns a fee, typically a mid-single-digit percentage of revenue, meaning that the manager does not participate at a meaningful economic level in the upside or downside of a given community.

As our longer-term holders know, we have actively decreased our participation in managed contracts from 229 managed communities at the end of 2017 to just seven communities as of today, and we expect to reduce that number even further. As a result of our reduction of managed communities, you will see that during the first quarter, we booked an exit fee of $2.5 million in management fees. Looking forward, we anticipate management fees to be roughly $1 million for the remainder of 2026. We have already taken internal steps to ensure that our organizational structure and our G&A are right-sized to account for this reduction in management fees. We don't expect any impact to our Adjusted EBITDA guidance from this change.

Factoring in all the items I've just highlighted, Brookdale's Adjusted EBITDA improved 5.6% over the first quarter of 2025, despite a 14% year-over-year decrease in our weighted average consolidated unit count. Additionally, it is important to note that the underlying performance was better than that as the first quarter of 2025 benefited from early G&A rationalization that we took in advance of the revenue reduction that occurred later in the year with our planned dispositions of communities. Per my comments on management fees and additional G&A rationalization, the second quarter's Adjusted EBITDA growth will be in a similar range to that of the first quarter, and then we expect more robust improvement in the second half of the year. We have added a slide 12, to our quarterly investor presentation that speaks to the pacing of quarters in 2026.

Again, we remain confident with our guidance of 8%-9% RevPAR growth and $502 million-$516 million of Adjusted EBITDA for the full year of 2026. Turning now to our service delivery. Brookdale continues to define excellence in senior living. In early April, Brookdale had 294 of our communities recognized for the Best Senior Living Award by U.S. News & World Report. This is the 5th consecutive year that Brookdale has garnered the most awards of any senior living operator. We're incredibly proud of this recognition, and we are thankful to our over 30,000 community associates who deliver this outstanding level of service every day. In addition to this external validation, Brookdale's internally tracked metrics also have continued to strengthen.

Our February and March 2026 trailing 12-month Net Promoter Scores, or NPS, were our highest levels achieved since we resumed monthly surveys following the COVID pandemic in 2022. Similarly, our associate turnover and Key Three leader turnover have continued to improve and are now the lowest since the beginning of the COVID pandemic. These improved metrics are indicative of the success of our recent organizational changes and the cultural transformation we have undertaken. Taken together, they are leading indicators of the accelerating improvement in resident satisfaction, occupancy, and operating margin that we expect over the remainder of the year.

At Brookdale, we are truly excited for our future, both this year and in the coming years. Equally, we are appreciative for each of our residents, associates, and shareholders for your trust in our team. As a company, we remain on track to unlock the intrinsic value of Brookdale's specialized services and real estate assets. I will now turn the call over to Brookdale CFO Dawn Kussow for more details on our financial performance and outlook.

Thank you, Nick. This morning, I'll recap Brookdale's first quarter financial performance and our financial outlook for the year. I'll also discuss progress on our ongoing portfolio transition and other balance sheet improvements. Turning first to the first quarter financial results. Comparing our first quarter 2026 to the prior year quarter, we grew our consolidated occupancy by 280 basis points to 82.1% and our same community occupancy by 170 basis points to 82.7%. The first quarter marked the 17th consecutive quarter that Brookdale has delivered 100 basis points or more of year-over-year consolidated occupancy growth. Sequentially, our first quarter consolidated occupancy declined 40 basis points from the fourth quarter of 2025.

Seasonally, the 1st quarter typically declines from the 4th quarter due to higher levels of flu and other winter illnesses, the impact of winter weather, holiday timing, and also as a result of our annual in-place rate increases, which occurs on January 1st each year. Occupancy during the 1st quarter was modestly behind our expectations, reflecting the impact of the winter storms in the quarter. In contrast, our April occupancy sequential growth of 30 basis points was stronger than our historical average post-COVID April sequential occupancy improvement of 10-20 basis points. This level of sequential occupancy growth speaks to our improving execution under the new operating structure. For the 1st quarter, resident fees of $722 million declined 7.1% from the 1st quarter of last year.

The key factors underpinning the revenue decline versus last year were a 14.2% reduction in our consolidated average units, partially offset by an 8.2% RevPAR increase. As a reminder, we guided to 8%-9% RevPAR growth for 2026, and we're within that range to start the year. We expect year-over-year RevPAR growth to accelerate over the remainder of the year based on improving community-level execution and the positive mix impact of dispositions. The 8.2% year-over-year increase in RevPAR was driven by a balance of rate improvement and the 280 basis point increase in weighted average occupancy.

Note that the unit mix, which stems from our decision to exit a number of communities, including many that were underperforming, also positively impacted our reported RevPAR, leading to a consolidated RevPAR increase of 8.2% versus a same community RevPAR increase of 5.5%. Resident rate increases were also beneficial to the quarter, as revenue per occupied room, or RevPOR, essentially a realized pricing metric, increased 4.5% year-over-year. We successfully implemented a high single-digit in-place rate increase on January 1st. Note that the 1st quarter of 2026 year-over-year RevPOR comparison was impacted by strategic rate concessions taken starting in the 2nd quarter of 2025 to accelerate occupancy. Sequentially, our RevPOR grew 6% from the 4th quarter of 2025, reflecting the benefit from the rate increase.

While we typically expect RevPOR to decline throughout a given year, for 2026, we expect our year-over-year RevPOR performance, especially for the second half of the year, to be better than our typical seasonal trends as we annualize concessions embedded in the prior year periods. Now let's turn to expenses. As Nick mentioned, the first quarter expense impact of significant winter storms was approximately $3 million-$4 million. On a consolidated basis, first quarter expense per occupied unit, or ExPOR, increased 3.2% over the first quarter of 2025. Our 4.5% increase in RevPOR exceeded the 3.2% increase in ExPOR, generating 130 basis point positive spread between realized revenue and expenses per occupied unit.

Beyond the storm impact, we did see modest same community margin compression due to the operating leverage impact of the seasonal occupancy decline. We expect a resumption of positive margin trends as we first grow occupancy through the year and second, move lower occupied communities up the occupancy bands and realize the associated operating income flow through. On a consolidated basis, senior housing operating income grew 14% sequentially with margin expansion of 330 basis points. Year-over-year operating margin improved 80 basis points while operating income declined 4% on a 14% decline in units since the prior year. Labor is our single largest cost item at 64% of total facility operating expenses during the quarter.

First quarter, same community labor expense as a percent of revenue improved 20 basis points year-over-year, and we expect to realize additional leverage over labor costs as occupancy increases in coming quarters. We continue to make progress on reducing labor turnover and improving labor utilization, and we project a stable and predictable labor cost environment for 2026. Other facility operating expenses increased 40 basis points as a % of revenue on a same community basis. Utility costs were higher year-over-year, mainly from the storms, as were food expenses. We expect these costs to moderate during the year. For the quarter, despite the $3 million-$4 million expense impact of the storms, we expanded our Adjusted EBITDA by $7 million to $131 million, a 5.6% increase over the first quarter of 2025.

As relates to the year-over-year expected mid-teens growth rate, recall that our 2026 mid-teens Adjusted EBITDA growth guidance is from our 2025 baseline Adjusted EBITDA of $445 million, not from the as reported $458 million. The $445 million baseline nets out the timing benefit of Brookdale's first half 2025 G&A reduction associated with the planned Ventas community dispositions which occurred during the third and fourth quarters of 2025. If we were to normalize G&A in the prior year to create a baseline quarter, our year-over-year increase in Adjusted EBITDA for the first quarter would have been approximately 11%.

General and administrative expense, excluding non-cash stock-based compensation expense and transaction, legal, and organizational restructuring costs, declined 3.8% year-over-year to $40.6 million for the 1st quarter. Recently, we removed additional G&A costs to reflect both disposition activity as well as our scaled back managed community portfolio. As you may have noted, the guidance provided in our updated investor deck now assumes $157 million in full year G&A, a decrease from our previous guidance of $162 million. We expect to realize the incremental benefit of reducing G&A starting toward the end of the 2nd quarter with most of the savings realized in the 2nd half of this year.

Cash facility operating lease payments during the first quarter of 2026 were $44.7 million, down a significant $12 million from $56.7 million in the prior year quarter, primarily as a result of the Ventas lease dispositions, which occurred in the second half of last year, coupled with the contractual step up on lease payments on the retained Ventas leases. Now I want to shift to Brookdale's progress on our portfolio optimization strategy, which includes the planned dispositions of non-strategic or underperforming owned and leased communities. We previously shared that we expect to sell 29 communities comprised of 2,364 units during 2026, with the majority of those transactions to occur during the second quarter.

During the first quarter of this year, we completed the sale of seven communities with 330 units for proceeds of $22 million net of transaction costs. During the second quarter through today, we've closed on the sale of three additional communities comprising 545 units for $88 million in net proceeds. The dispositions of most of the remaining 19 communities comprising 1,438 units are tracking close during the second quarter, though a small number may close later in the year. We continue to estimate total proceeds for our planned community disposition in 2026 to be approximately $200 million. During the first quarter, we also exited two communities with 152 units through lease terminations.

Once the remaining 19 dispositions are complete, we do not foresee significant changes to Brookdale's consolidated portfolio on a forward-looking basis. Looking ahead, we remain comfortable in Brookdale's ability to deliver both on our 2026 earning guidance and on our multi-year outlook through 2028 that we provided at our January Investor Day and reiterated on our previous earnings call. As a reminder, for 2026, we expect to deliver 8%-9% RevPAR growth and mid-teens Adjusted EBITDA growth from our 2025 baseline of $445 million, a level that translates to $502 million-$516 million of 2026 Adjusted EBITDA. Through 2028, we expect to maintain mid-teens Adjusted EBITDA growth, and we also believe we can decrease annualized leverage to below 6x by the end of 2028.

Our 2026 guidance sets forth annual targets. We describe our quarterly pacing outlook for units, RevPAR, and Adjusted EBITDA for 2026 on slide 12 of our investor presentation. Remember, the comparability of the first 2 quarters of 2026 against 2025 periods are impacted by disposition activity, the timing of the related G&A cost savings, and managed business timing, which results in smaller growth rates on reported results for the first 2 quarters. We expect our underlying business to still deliver the 2026 and multi-year growth that we have previously outlined. We just reported first quarter Adjusted EBITDA year-over-year growth of 5.6%. We expect second quarter Adjusted EBITDA growth versus the prior year as reported results to be in the low to mid-single-digit range.

Remember, when baseline G&A timing in the prior years considered, our growth would have been up in the low double-digit range. With improved occupancy levels and the associated operating income flow through and as cost initiatives take hold, year-over-year Adjusted EBITDA growth in the 3rd quarter is expected to return to our longer term mid-teens growth rate level, and 4th quarter growth should be even stronger than that. We expect other seasonal factors, as outlined on the last page of our investor deck, to remain consistent with historical trends, with the exception of RevPOR. RevPOR typically declines slightly over the course of the year. For 2026, we expect RevPOR to decline slightly in the 2nd quarter, but then to remain relatively firm in the back half of the year, helped in part by the mixed impact of our dispositions.

As I mentioned earlier in my remarks, we now estimate General and Administrative expense excluding non-cash, stock-based comp, and transaction, legal, and restructuring costs of approximately $157 million, down from our previous estimate of $162 million for 2026. We continue to expect that cash facility operating lease payments should be approximately $180 million during 2026, and management fees for the 2Q through the 4Q to be a total of approximately $1 million. Looking now at the balance sheet, our annualized leverage continues to improve, and we finished the quarter at 8.8 times. As of March 31, 2026, Brookdale's total liquidity was $369 million.

On the topic of leverage, I'd like to highlight that on March 31st, we refinanced a significant portion of our remaining 2027 mortgage debt maturities, effectively extending those maturities to April 2033. Through this transaction, we obtained $185 million of non-recourse mortgage debt secured by 7 of our communities, and we repaid $191 million of mortgage debt secured by 11 communities. We appreciate our banking partners for their confidence in our business and their ongoing support. Coupled with the refinancing of the entirety of our 2026 mortgage debt and another portion of our 2027 debt that we completed at the end of the fourth quarter of 2025, our team continues to proactively manage Brookdale's balance sheet and extend our more imminent maturities.

Adjusted Free Cash Flow for the first quarter was a seasonal outflow of $12 million, reflecting, among other factors, use of cash for changes in working capital, including the payment of annual incentive compensation and an increase in non-development capital expenditures. In conclusion, we're excited about the underlying strength we saw to end the first quarter and into the start of the second quarter. As we look forward to the balance of 2026 and beyond, we remain confident that we have the right team in place and that we are pursuing the correct strategic and operational plans. The Brookdale team remains highly confident in our ability to create durable, long-term growth and value for our shareholders. Operator, we will now open the call for questions.

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brian Tanquilut with Jefferies. Brian, your line is open. Please go ahead.

Hey, good morning. Maybe Mike, thanks for putting these slides together. I'll reference one of these slides. Dawn Kussow, when I look at slide 12, where you have the quarterly cadence on EBITDA growth, even with baseline, just curious how you're thinking about that ramp because it looks like there's a ramp implied in here and where that confidence comes from, especially given your comment about RevPOR trend over the course of the year.

Yeah. Thank you. Thanks, Brian, for the question. Yes, slide 12 is a new slide that just talks to and is explicit about how we're thinking about the quarterly pacing. As we talked about in our prepared remarks, Adjusted EBITDA, in particular, 5.6% growth year-over-year on an as-reported basis. What we expect for the second quarter is that low to mid-single-digit year-over-year growth on an as-reported basis. You know, what's really driving that is two things, our seasonal trends that we outlined on the last page of the investor deck. We have a full quarter of merit additional days and holidays that normally come into the quarter.

The managed property, the disposition of the managed property is going away and the fact that the cost savings are really kind of coming in the back half of the year, so that timing difference. You know, important to look at the last item, as Nick and I both talked about in our prepared remarks.

That low to double-digit year-over-year growth on really kind of the underlying business, we do expect to accelerate throughout the year. appreciate the, you know, the question on that quarterly pacing. I think Nick will comment on the confidence in the guidance.

Thanks, Brian. Nick here. A lot of this has to do with our results despite all the changes and disruption that we had to do. We really are on a transformative kind of path here. Some of it predates me, this started maybe about a year ago. Even in the last 7 months that I've been in role, I did share some of these details during the prepared remarks, it bears repeating. We have undergone many changes. First and foremost, it's organizationally how we're structured and it truly defines who we are as a company. The line of connection between the executive leadership team, me namely as the CEO, all the way down to communities has been reset.

There's a much just a cleaner line of enablement, a cleaner line of accountability than we've had in many, many years, and a lot of it has to do with hiring a COO, layering up our sales team and our clinical team under that COO and doing the same thing at every layer of the organization. At the same time, you know, we need to keep sight of this, is we've disposed and exited over 100 communities in that time period, which is very much the right decision. It's also very disruptive. A lot of effort, a lot of work of leaders going into making that as seamless as it has been, which it has been quite seamless. That is now mostly behind us.

We do have a few communities as we've shared that we still have to get out of in Q2 and potentially just a handful later in the year. The reality is, that is now mostly behind us, and we're now in a position to really lean into the company and operate the company as the operating company that we are. I do wanna point out our April results. Again, one data point, you know, no need to start doing victory laps quite yet, but it is a very strong data point in our April occupancy growing 30 basis points when historically it's been closer to flat, maybe 10, 20 basis points.

To have that happen, at the beginning, at the early stages of the selling season, which in senior living industry is typically May, June, July, August, September, is reflective of our confidence and of all the changes that we made.

Yeah, appreciate that. Then maybe, Nick, I'll use that as a segue. When I look at slide 9, again, love these slides. Controllable move-outs obviously ticked up in Q1. Just curious what your philosophy is or how you're thinking about the balancing act between RevPAR or RevPAR growth and move-outs, right? 'Cause I think, you know, move-outs aren't necessarily negative in this sense when your RevPOR and RevPAR are growing as much as they are. Just curious how you would walk us through that thought process.

Yeah. No, very, very, very good insightful question there, Brian. Fundamentally, RevPAR is the number we all need to lean around. Obviously we reported the 8.2%, feel good about that RevPAR and what that looks like for our guidance for the rest of the year. It truly is a balance between rate and occupancy, and we're always monitoring that. It's always a constant mix. Obviously, as occupancy goes up, then we can lean more on rate. As occupancy is not going up and is stagnant in the subset of communities, we have to lean on rate in a different direction. As far as the move-outs for Q1, we feel very good about it in light of the large in-place rate increase that we were able to push on January first.

Typically, January 1st, you always have, in January and February for that matter, you do have a slightly increased pace of move-outs, specifically for financial reason, and we monitor all the different categorizations because of the in-place rate increase. That happens every January, every February, every year. This year was slightly higher, based on the higher in-place rate increase that we pushed through, but it was well within our expectations. In fact, if anything, it showed the stickiness of that in-place rate increase. We feel really good about what we did. We feel really good about our pricing power. The net result of that move-out pace was as expected, and in line with what we actually kind of hoped to see, with the stickiness of that, in-place rate increase.

That makes sense. If I may ask just one quick question. Slide 19, you show these community renovation CapEx projects. Just curious, how should we be thinking about the pipeline of these projects and what you're seeing? Obviously, the ROIs look good here in this slide. If you could just walk us through that. Thank you.

Yep. Yeah, I'm glad you pointed that out. That is another new slide in our investor deck. Take a look at slide 19 for those that didn't note it. For those that joined us at our Investor Day, we did a tour of another community where we did a very meaningful CapEx investment. Obviously beautiful building, great results. We wanted to kind of share even more details since part of our story has been our CapEx spend. We are projecting a spend of between $175 million to $195 million of CapEx this year. We want to do that because we see the results. Slide 19 shows 3 very specific examples where those results exist. We have a pipeline.

I alluded to or I mentioned earlier in my prepared remarks, we have hired a new role to our company, the Senior Vice President of Strategic Operations, and that team, that leader deploys this capital. We have a program, we have a prioritized list of communities where we build a pro forma, we monitor our results, and we project seeing results very similar to what you see on slide 19. We have dozens of projects, large, deliberate, comprehensive investments of capital to improve the overall performance of the communities and get returns that achieve our hurdles.

Awesome. Thank you.

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

Thank you very much. Very much appreciate the slide on pacing, slide 12 here. Just wanted to drill in a little bit on the expectation for RevPAR acceleration in the second half. I know you've noted here both the disposition impact and also the core occupancy growth. Maybe we can help us parse that out a little bit more. Any notes you can give us on the overall occupancy profile and performance profile of those 19 facilities still, you know, pending disposition, and then so we can kind of get an idea of the kind of the core growth and the mix there impact. Thanks.

Yeah, Ben, great question. Digging into the slide, you know, we've outlined the RevPAR growth we expect, you know, on the 8.2% here in the first quarter. We expect that to be similar in the second quarter. Really what's driving that, of course, is our occupancy and RevPOR. From an occupancy perspective, we expect our occupancy growth really to be directional with historical seasonal trends. We've gotten the disposition of the 19 communities. I think they're relatively small communities. The largest one really went on April 1st. Relatively small communities. They're lower performing communities, but not moving the needle. We're getting a little bit of accretion on the back half, but I would say occupancy is directional with the historical trend.

The RevPOR, as I mentioned in our prepared remarks, how we're thinking about the second quarter, we normally see our RevPOR step down after we do our January 1st rate increase. We expect that step down to be slight in the second quarter, in the third and fourth quarter, as I said in my prepared remarks, we expect that RevPOR to remain firm, just because you get the accretion benefit that's offsetting kind of that normal step down, and that's what's going to drive that RevPOR growth that we've outlined on that slide. Or excuse me, the RevPAR growth that we've outlined in the slide.

Great. Thank you. Just almost along the same lines, just if you could kind of give us a little bit of detail on kind of the sources and pacing of the incremental G&A savings. It makes sense that maybe you would see a little pickup there in savings from getting rid of some of these smaller communities. Just wanted to kind of get an idea of where that's coming from and how we should think about that layering on through the balance of the year. Thanks.

Of course. As we said in our prepared remarks, we've taken our G&A, our expectations down by $5 million. Most of that we expect to see in the second half. From a pacing perspective, my expectation is G&A is gonna be relatively the same in Q2 as it was in Q1, because remember, you get a little bit of extra expense with more days, and then our merit increase that comes in in the second quarter, that's gonna offset that little bit of savings that we'll get. Most of that $5 million is gonna be in Q3 and Q4.

Your next question comes from the line of Joanna Gajuk with Bank of America. Joanna, your line is open. Please go ahead.

Good morning. Thanks so much. I guess, maybe a different question, a little bit. At your Investor Day, you mentioned your interest to add some assets strategically, you know, talking about tuck-in acquisition, small things. With all of, a lot of interest from the REITs and private equity to consolidate in the industry, does it mean, you know, you're seeing more competition or that's still kind of on the table?

Yeah. Thanks for the question, Joanna. Our strategy, and we articulated this, as you mentioned on the Investor Day, on the acquisition side is very small, deliberate, single 1, 2, 3 community type acquisitions in markets that we already exist. When we're in 41 states today, no desire to be in a 42nd or 43rd state. We're in about 125 different markets, no desire to be in 126, 127. That is a strategy for some of our peers, but that's not our strategy. Our strategy is to be in markets we already are in. On Investor Day, we used Kansas City and Dallas-Fort Worth as illustrative examples where we are looking to make a very deliberate strategic target acquisition.

Typically, you know, our big tier REITs are not doing single community type transactions. They're looking for larger, you know, things where they can really take their team and invest and make larger acquisitions. I do not feel, and we do not feel based on the pipeline that we're looking in and currently contemplating that we're competing against large REITs because we're basically deploying different acquisition strategies based on our needs and based on their needs.

Thank you. And I guess coming back to the discussion around rate increases. It sounds like you pushed like a high single digits renting increases this year and the financial movements were higher, but not out of, you know, ordinary, so to speak. We're also hearing a lot about higher community fee. Is that also another lever you can pull, especially when you have communities with higher occupancy?

Yeah, no, for sure. We don't talk about community fees a lot, and I'm glad you brought that up. That is one of the features in our industry, and for sure at Brookdale, where we do have an upfront non-refundable community fee. As your occupancy goes up, you collect on that far more regularly, and you can even increase the community fee.

As your occupancy is lower and you need to drive move-ins, that's one of potentially one of the first things you would discount because it's a one-time thing and you're not locking in for a year or 2 years worth of rates. It's an easy concession to give to a prospective resident. Our community fees are strong. In fact, they continue to grow. As our occupancy grows, our overall RevPOR is obviously growing the monthly rate that we get paid. Even the community fees, that upfront non-refundable community fee, we collect and we can increase.

Okay, great. Last one, thank you for taking these questions. I guess, talking about the occupancy and these different buckets. Looks like, what? 15% of your consolidated communities are above 95%. Can you talk about margins and growth in those highly occupied assets? Are the street increases, you know, rate increases, much higher than the in-place customers, when you have such highly occupied assets?

Yes, for sure. We've been communicating this high single digit in-place rate increase that we pushed through on January 1st. The reality that is not a, not every community got the same number. I, that's an aggregated number. The more highly occupied communities actually had a low double digit increase, while the lower occupied communities had a, call it a mid-single digit increase. The net effect is what we've been communicating. For sure, you have very strong pricing power that exists as your occupancy goes up. In fact, on slide 18, we updated the numbers, and it's a slide that we've had for a while, where you can see the EBITDA per available unit.

It increased meaningfully as you compare it to last quarter's slide 18 or whatever the equivalent slide number was. Because of that in-place rate increase, additional in-place rate increase we were able to achieve in the more highly occupied communities.

Yeah, exactly. I like that slide. That, that 20, I guess 1,000, you know, EBITDA per unit. That's what I was getting at. Thank you so much for taking the question.

Yep. Yep. Awesome. Thanks for pointing that out. Thank you, Anna.

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

Hi, good morning. The same store RevPOR, which should cut through the noise of divestitures, was up about 3.4% in the quarter for the senior housing community. You called out annualizing concessions as weighing on that metric in the quarter. Can you give us a sense for how same store RevPOR is tracking in your higher occupancy or non-discounted communities? Just to be clear, we should expect same store year-over-year RevPOR growth to also accelerate in the back half as you anniversary those pricing sessions, correct?

Correct. Thanks for the question, Andrew. We generally are bifurcating out the RevPOR growth between the occupancy bands. As we just had on the last call, we're looking at the occupancy bands where we're giving you Adjusted EBITDA on a per unit basis. From a RevPOR perspective, we absolutely expect as we're thinking about our RevPOR to follow that normal trending that I talked about, with our RevPOR to kind of do the normal stepping down, but we expect the RevPOR to the ExPOR growth to certainly be expanding throughout the year as we think about our labor costs and getting As the compression releases and you get that additional incremental margin growth.

Got it. Okay. Just to follow up on the winter storms. I think you sized total direct cost of about $3 million-$4 million in the quarter. Do you have a more comprehensive impact that would include both the revenue and cost side of things? Thanks.

We didn't quantify the revenue and the cost side. We talked about the occupancy impact and the slowness of the occupancy in the first couple of months. We thought it would be helpful at least just to quantify, you know, those direct costs. Most of those costs, of the $3 million-$4 million, you can see them in our other facility operating expenses. A lot of it was our utilities. I'd say about two-thirds in our other facility operating expenses, and then the other one-third maybe up in our labor expense. We didn't quantify the top line just because I think it becomes a little bit more fungible, especially when you're talking about the pacing of the occupancy growth and things of that nature.

Great. Thank you.

Your next question comes from the line of Raj Kumar with Stephens. Raj, your line is open. Please go ahead.

Hi. Good morning. Maybe just kind of focusing on the capital investments and, you know, you kind of reiterated your CapEx guidance for this year. As I kind of think about, you know, what you highlight during Investor Day with the kind of core initiatives and just kind of thinking about, you know, how many communities are underway for 2026 with those efforts and, you know, in terms of the average investment size. Are you seeing, you know, a bigger investment on a per community basis in terms of the portfolio and, you know, what remains requires a bigger, you know, lift from that perspective? I guess also on that front, are you also integrating Brookdale HealthPlus as a part of that process to boost the offering at those, at those communities?

Raj Kumar, I think what we can say on the. Good morning. This is Chad C. White. What we can say on the CapEx front, I think is we have a number of projects underway across the portfolio. As Nick Stengle talked about when he came on, we had a shift in strategy as we think about our CapEx program. Instead of doing sort of piecemeal projects here, adding, you know, fix, adding some new furniture or whatever, we've really focused to say, "Let's prioritize our CapEx spend in places where we can drive a great return," as you see on the slide we've included in the investor deck, but also prioritize larger community refreshes. We've not given you an exact number of that. The budget's included in our overall CapEx guidance we've given for the year.

I think it's in our way of looking at it is if we can do some more of these refreshes in markets where we can drive additional growth, we think that will drive better returns and ultimately help our performance and help us achieve the guidance that we've given, the multi-year guidance that we've given. As it relates to Brookdale HealthPlus, we have it in around 180 communities across the portfolio. We think it's still a very innovative program that is something that our competitors don't offer. It allows us to play in the value-based care space in a way.

It also really provides benefits for the residents and their family members in the way of reduced hospitalizations, reduced ER visits, et cetera. We think as that goes and that matures, that program matures, we'll continue to drive good results, hopefully and as we expect leading to longer lengths of stay. We've got a lot of good things going on in the portfolio. One other thing Nick mentioned in his call was the progress in his prepared remarks, the progress we've made on net promoter score and turnover. Those are really key leading indicators that I think are going to help us really achieve the results that we've talked about today. We're very excited about where the company's going.

Great. Then as my follow-up, you know, appreciate the kind of disclosures on the occupancy bands and the, you know, with the own portfolio. As I kind of think about the lease portfolio and the kind of bifurcating that opportunity, any way of kind of framing kind of that, you know, portfolio's progression in 2026 and kind of what's embedded in guidance as we kind of think about that piece of the portfolio?

Thank you, Raj for the question. We obviously have a separate slide 11, in our supplement that has the lease portfolio economics. We're pleased with the margin growth that we've seen in the portfolio itself. I don't know that we would call it anything specific other than, you know, we are pleased with the progress that we've made on our lease portfolio. It is Adjusted Free Cash Flow positive. You know, we just talked a little bit about the CapEx deployment. We have a significant number of CapEx reimbursement opportunities with our landlords that we are taking advantage of. You know, we expect that portfolio to continue to progress just as we expect our own portfolio to progress.

Yeah. All that fundamentally is accretive to the business and maybe for the, you know, for the first time in many years. In fact, if you look at the specific performance of our lease portfolio, it actually did quite well from an occupancy NOI expansion perspective year-over-year. We feel really good about our portfolio mix, and it's the overall portfolio mix. We're gonna be, what, 76% owned, 24% leased. Managed is just a tiny sliver on the management side.

Again, it's one of these transformational shifts that we have undergone over the last year that I alluded to, and this is a big part of it. Now we have the right portfolio in the right locations, in the right markets with the right buildings, and we have the right team. Again, I, Raj, appreciate the question. We feel really good about our lease portfolio just as much as we feel really good about the assets we own, which is that scarce real estate.

Great. Thanks.

We have reached the end of the Q&A session. I will now turn the call back to Nick Stengle, CEO, for closing remarks.

Excellent. Thank you, Samantha. I'd be remiss if I didn't just take a moment and thank all our associates. Over 30,000 associates who at this very moment are caring for all our residents. I'd also like to thank all our residents, their loved ones who have put their trust, or their family members who have put their trust in their loved ones. I'd also like to thank all our stakeholders, all our investors, our banking partners, all the different partners who work with us. Excited by what the rest of the year brings now that we have pivoted our company, now that we are on the tail end of all the transformational changes that we've undergone over the last year, and excited by what 2026 will bring. With that, Samantha, I think we can end the call.

This concludes today's call. Thank you for attending. You may now disconnect.