This earnings call does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, also with depletion of any vote or approval in connection with the proposed acquisition of New Senior Ventas filed with the SEC a registration statement on Form S-4 that includes a preliminary prospectus for the Ventas common stock that will be issued in the proposed acquisition and that also constitutes the preliminary proxy statement for a special meeting of New Senior stockholders to approve the proposed acquisition.
We posted $0.73 of normalized FFO per share, which is above the high end of our previously provided guidance.
I'm delighted that our same-store property portfolio grew 3.6%, sequentially.
Our outperformance was driven by SHOP, which produced a $111 million in quarterly NOI, a recovery of $50 million of annualized NOI, representing industry-leading growth in same-store cash NOI and occupancy.
In addition to strong cash flow coverage on our $1.3 billion leasehold position, our 10% equity stake in the Ardent enterprise is benefiting from excellent Ardent results and our prior purchase of $200 million of Ardent senior notes recently paid off with a $15 million prepayment fees, providing us with a 13% unlevered return on our investment in the Ardent notes.
In total, in 2021, we have over $3.5 billion in investments completed, pending or underway with another $1 billion life science research and innovation pipeline with our exclusive development partner Wexford, right behind that.
Our $2.3 billion pending investment in New Senior, announced in the second quarter is a great example.
In this deal, we are acquiring over a 100 high-quality independent living communities that are well invested and located in advantaged market, at compelling pricing.
The per unit cost is estimated to be 20% to 30% below replacement cost.
The 5% cash going in cap rate is expected to grow to a 6% cap rate on expected 2022 NOI with upside as the senior housing recovery continues, and the FFO multiple of less than 12 times post synergize 2022 estimated FFO are all attractive valuation metrics.
The Ventas life science portfolio now exceeds 9 million square feet.
It's located in three of the top five cluster market, includes three ongoing development projects and is affiliated with over 16 of the nation's top research universities.
We also have an incremental $1 billion in potential projects we are working on with Wexford.
The first and largest new life science project in the pipeline totaling about $0.5 billion in costs is gaining steam.
Expected to be 60% pre-leased to a major public research university that rank in the top 5% of NIH funding, this project will be located on the West Coast and should break ground in the first half of 2022.
The sharp recovery has begun and we've started capturing the significant upside embedded in our existing senior housing portfolio from both pandemic recovery and the 17.5% growth in the senior population projected over the next few years.
We are investing nearly $4 billion and announced deals and development projects and our access to and pricing up capital are positive.
In SHOP, leading indicators continue to trend favorably and accelerated during the quarter, as leads and move-ins each surpassed 100% of 2019 levels, while move-outs remain steady.
In the second quarter approximate spot occupancy from March 31 to June 30 increased 229 basis points, led by the US with growth of 313 basis points and accelerating leads and move-ins.
In Canada, the transfer more muted due to a slower vaccine rollout, for the approximate spot occupancy still increased during the second quarter, driven by 33 basis points of growth in June.
Same-store revenue in the second quarter increased sequentially by $3.5 million as strong occupancy growth was partially offset by the impact of a new resident move-in incentives on pricing, specifically at Atria.
Operating expenses declined sequentially by $9.2 million or 2.3% excluding the impact of HHS grants received in the first quarter, driven by a better than expected reduction of COVID-19 operating costs, partially offset by a modest increase in routine operating expenses.
For the sequential same-store pool, SHOP generated approximately $111 million of NOI received in the first quarter, which represents a sequential increase of $12.4 million or 12.6% when excluding the impact of HHS grants.
This marks the first quarter of sequential underlying NOI growth since the onset of COVID-19 and approximates a nearly $15 million NOI improvement on an annualized basis.
During the quarter, we saw solid contribution to sequential NOI growth in both revenue and operating expenses as average occupancy increased 110 basis points and COVID-19 costs declined substantially and ahead of expectations.
Sequential same-store cash NOI was largely stable in the second quarter and 98% of all contractual triple net rent was received from the Company's tenants.
Our trailing 12 month cash flow coverage for senior housing, which is reported one quarter in arrears is 1.2 times and down versus the prior quarter, reflecting the timing associated with coverage reporting which now includes effectively four full quarters of operations impacted by COVID.
Sunrise led the way with 627 basis points of spot occupancy growth in the low point in mid-March to the end of July, benefiting from a rejuvenated management team, significantly well invested communities and a balanced approach demonstrating very strong occupancy gains and pricing power.
Atria which benefits from a higher absolute occupancy of 81.8% at July end continues to deliver solid volume growth.
Spot occupancy in July increased 529 basis points since the low point in mid-March, resulting from the combination of their industry-leading vaccine mandate and strategic price incentives to capture movements.
Supporting all of this is Atria's industry leading vaccination rates, which are impressively high at nearly a 100% of both residents and employees.
Looking ahead, as Debbie mentioned, the third quarter is off to a strong start with July spot occupancy increasing 74 basis points versus June and lease continuing to stand strong at 105% of pre-pandemic levels.
Approximately 30% of our SHOP portfolio on a stabilized basis is located in Canada.
The senior housing sector in Canada has performed exceptionally well, with occupancy exceeding 90% every year from 2010 to 2020 and demand outpacing new supply in eight of that last 11 years.
As a foundation to these attractive fundamentals, the 75-plus population in Canada is projected to grow more than 20% over the next five years about twice the pace of the US.
Its margin has remained resilient in the 35% plus range during the COVID-19 and occupancy has weathered the pandemic, headwinds of approximately 80 basis points better than the NIC industry average.
Most recently, New Senior has seen strong sales trends as we progress through the early stages of the senior housing recovery with powerful upside as the portfolio occupancy grew 100 basis points in June.
Geographically, New Senior has a diverse presence across 36 states, which includes exposure to markets with high home values and high household income levels, ideal proximity to premium retail in high visibility locations and favorable supply outlooks versus industry averages.
We see New Senior's independent living assets is complementary to our existing high end major market portfolio as it provides a lower average resident age and longer length of stay at an accessible price point, with RevPOR of approximately $2700.
The purpose-built nature of these communities, which include consistent layout with 120 units per building also will strengthen our ability to effectively and efficiently redevelopment -- redevelop and invest in these assets over time.
We continue to drive value from our development pipeline through our relationship with Le Groupe Maurice, where we have opened three communities, with more than 1,000 units over the past year.
Both projects had substantial pre-leasing activity and have already stabilized at approximately 95% occupancy.
The third project, a 287 unit expansion of an existing Le Groupe Maurice community in Montreal, was delivered in June of this year.
Together these segments represent over 50% of Ventas' NOI.
He is now 18 months in.
He is also 18 months in.
Office, which includes our medical office and research and innovation segments performed well, delivering 10.5% sequential same-store growth.
Office quarterly same-store growth was 12.6% year-on-year.
The R&I portfolio benefited from a $12 million termination fee from a large tenant in the Winston-Salem innovation center anchored by Wake Forest.
Adjusted for the termination fee, office sequential same-store growth was 90 basis points and 2.8% per year-on-year same-store quarterly growth, a strong quarter.
Medical office same-store sequential growth was 80 basis points and year-on-year quarterly same store growth was 2.4%.
For the quarter, we executed 230,000 square feet in Office new leasing and 460,000 square feet year-to-date, a 78% improvement from prior year.
Medical office had strong same-store retention of 94% for the quarter and 85% for the trailing 12 months.
The result is the total MOB occupancy increased 20 basis points sequentially.
Total office leasing was 750,000 square feet for the quarter and 1.8 million square feet year-to-date.
We are also pleased that our annual escalators for the new MOB leases, averaged 2.9% for the quarter, which caused MOB same-store portfolio, annual rent escalators to increase from 2.4% to 2.6%.
Same-store sequential growth was 38.9%.
Adjusted for the termination fee, same store sequential growth was 1.1%.
Year-on-year quarterly same-store growth was 42.6%.
Adjusted for the termination fee, year-on-year quarterly same store growth was a strong 3.9%.
Quarterly same-store occupancy was now standing 94% with sequential occupancy increasing by 10 basis points.
Looking forward, we have three R&I buildings comprising of 1.2 million square feet of space under construction.
Collectively, they are 78% leased or committed.
Of the two buildings in our uCity complex, Philadelphia, the Drexel building is 100% leased, while one uCity Square is over 55% leased or committed.
We are oversubscribed for the remaining space with 11 above pro forma proposals currently outstanding.
In Pittsburgh, our new building is 70% pre-leased, University of Pittsburgh and UPMC was significant activity on the remaining space.
At our recently opened project with Arizona State University in Phoenix, we are 86% leased or committed and expect to be 100% leased shortly.
During the second quarter, our healthcare triple net assets showed continued strength and reliability with 100% rent collections.
Second quarter same store cash NOI growth was 2.5% year-on-year.
Trailing 12 month EBITDARM cash flow coverage through June 30 was strong across the portfolio.
Health systems trailing 12 month coverage was an excellent 3.6 times in the first quarter, a 10 basis point sequential improvement.
IRF and LTAC coverage improved 20 basis points to 1.9 times in the first quarter, buoyed by strong business results.
Although skilled nursing declined 10 basis points to 1.8 times as the pandemic continued to impact centers, total post-acute coverage increased sequentially by 20 basis points to 1.9 times in the first quarter of '21.
Ventas recorded strong second quarter net income of $0.23 per share, normalized funds from operations of $0.73 per share.
Normalized FFO per share with $0.02 pennies above the high end of our initial guidance range of $0.67 to $0.71 for the quarter and is consistent with our June update to be at the high end or better than that original range.
First, following the announcement of the New Senior agreement, we raised $300 million of equity at an average gross price of approximately $58.60 per share under our ATM program.
The $300 million equity raise together with the $100 million of new equity to be issued New Senior shareholders for the fixed exchange ratio, and $1.2 billion of New Senior debt to be assumed or refinance constitutes the overall $2.3 billion funding of the New Senior transaction.
Second, through August 5th, we received $450 million of disposition proceeds through receipt of loan receivable.
Included in the $450 million received today, this repayment of two well structured loans in July, part of the investment of $200 million of 9.75% Senior Notes due 2026 and Holiday's repayment of $66 million or 9.4% notes due in 2025.
Medical office fully sold in the second quarter also resulted in proceeds to approximately $107 million.
Using proceeds from this division, in the third quarter, Ventas will improve its near-term debt maturity profile further by fully repaying as little as $664 million and 3.25% Senior Notes due August 2022, and 3.13% notes due June of 2023.
Reported Q2 net EBITDA was better than expectations improving 10 basis points sequentially to 7 times.
Within SMB point improvement underlying SHOP annualized EBITDA improved nearly $50 million or 25 basis point beneficial impact of the ratio in just one quarter.
Pro forma for announced ATM issuance of capital activities since of Q2 net debt to EBITDA on lower from 7 times to 6.8 times.
I would highlight that the New Senior transaction is expected to be 30 basis point level, are projected here 2020 NOI supported by the forecasted growth in cash flows from the New Senior portfolio.
Since assets liquidity totaling $3.3 billion as of our finished the Company at $2.7 billion of undrawn revolver capacity $600 million cash and no commercial paper outstanding.
Third quarter net income was estimate range from flat to $0.05 per fully diluted share.
Our guidance range for normalized FFO for Q3 is $0.70 to $0.74 per share.
Q3 FFO $0.72 can be bridged from Q2 of $0.73 by $0.02 benefit from the loan prepayment fee in Q3.
[indecipherable] in Q2, offset by $0.02 from lost interest income on the loan repayments and the July equity raise.
SHOP Q3 spot occupancy from June 30 to September 30 is forecast to increase between 150 to 250 basis points with the midpoint roughly continuation of occupancy growth trends there in July.
Now we can test for interesting to you're seeing in the third quarter sales performance is expected in the office and triple-net segments we continue to expect $1 billion in asset sales and move-in payments for the full year 2021 with line of sight for the remaining balance in the second half of this year.
Fully diluted share count is now 383 million shares reflecting in anticipation of New Senior.
New Senior transaction is expected to close in the second half of 2021 and the close is forecast to be between $0.09 to $0.11 accretive to normalized FFO per share in 2022.

Summary:
We posted $0.73 of normalized FFO per share, which is above the high end of our previously provided guidance.
Ventas recorded strong second quarter net income of $0.23 per share, normalized funds from operations of $0.73 per share.
Our guidance range for normalized FFO for Q3 is $0.70 to $0.74 per share.
Q3 FFO $0.72 can be bridged from Q2 of $0.73 by $0.02 benefit from the loan prepayment fee in Q3.