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Good morning. My name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the Brookdale Senior Living First Quarter 2025 Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions] At this time, I would like to turn the conference over to Jessica Hazel, Vice President, Investor Relations. Please go ahead.

Thank you, and good morning. I'd like to welcome you to the first quarter 2025 earnings call for Brookdale Senior Living. Joining us today are Denise Warren, our Interim Chief Executive Officer and Chairman of the Board; Dawn Kussow, our Executive Vice President and Chief Financial Officer; and Chad White, our Executive Vice President-General Counsel and Secretary. All statements today which are not historical facts may be deemed to be forward-looking statements within the meaning of the federal securities laws. 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 yesterday as well as in the reports we file with the SEC from time to time, including the risk factors contained in our annual report on Form 10-K and quarterly reports on Form 10-Q. I direct you to the release of the full safe harbor statement. Also, please note that during this call, we will present non-GAAP financial measures. For reconciliations of each non-GAAP measure from the most comparable GAAP measure, I direct you to the release and supplemental information, which may be found at brookdaleinvestors.com and was furnished on an 8-K yesterday. Before I turn the call over to Denise, I want to briefly acknowledge that we are in receipt of director nominations from one of our shareholders as previously disclosed. We don't intend to comment further on that matter today. The purpose of today's call is to discuss our first quarter results and strategy. Accordingly, we ask that you keep questions limited to this area. I'll hand the call over to Denise.

Thank you, Jessica, and good morning, everyone. Welcome to our first quarter 2025 earnings call. It's a pleasure to join you today as interim CEO. I'm also pleased to be accompanied by Dawn Kussow, our Chief Financial Officer; and Chad White, our General Counsel, both integral members of the office of the CEO. Today I will begin by reviewing our April 14th press release, after which I will discuss our strategy and how we are evaluating ways to unlock value at Brookdale. Following my remarks, Dawn will provide a comprehensive overview of our first quarter financial performance, annual guidance and outlook. Chad also will be answering questions and we are excited for you to get to know him better. Before we begin, I do want to note that we are pleased with the team's efforts in the quarter, which enabled us to deliver RevPAR and adjusted EBITDA that exceeded our expectations as well as positive adjusted free cash flow. And not to steal Dawn's thunder, but given the solid start to the year, we are happy to be able to raise our annual guidance. Now turning to our April 14th press release, as you read, the Board executed a planned leadership transition and initiated a search for a new CEO. Over the past several years, we made significant strides in streamlining our operations, simplifying our business model, rationalizing our lease portfolio and addressing our debt maturities. Although much progress has been made, there is more work ahead and the Board believed now was the right time to select our next leader. With our search well underway, we are focused on identifying a candidate with the proven experience and skills necessary to push continued operational improvements across our portfolio and the strategic vision to drive Brookdale into the next decade. By capitalizing on the intrinsic value of our owned real estate and by leveraging compelling industry dynamics, we are confident that the right leader will propel Brookdale to the next level. To that end, Spencer Stuart, whom we initially contacted in late 2024 to aid in succession planning, has compiled a robust list of potential candidates that the CEO search committee is carefully evaluating. While we are eager to conclude this process, our priority is ensuring we identify the right leader to lead Brookdale and unlocking the company's intrinsic value. We anticipate the search will take a minimum of six months. In the meantime, I am honored to have been asked to serve as Interim CEO. Working closely with Dawn and Chad in the office of the CEO, we are fully committed to managing day to day operations with the strength of the broader team while advancing Brookdale's strategy. I will elaborate further on our strategic plans shortly. In addition to the CEO transition, the Board continued its proactive refreshment by appointing two new independent directors, who bring expertise and insights that are already adding value. Josh Hausman is a seasoned healthcare investor and Mark Fioravanti is a veteran leader in hospitality and real estate. Additionally, we announced that long-term Director, Frank Bumstead, will not seek reelection at the 2025 Annual Meeting of Stockholders. We are grateful for Frank's many contributions to Brookdale. This ongoing update to our board, with four new independent directors appointed over the past 12 months, underscores our commitment to infusing fresh expertise and diverse perspectives. When Frank steps down at our annual meeting, our board will have an average tenure of less than four years. The board, the management team, and I, as interim CEO, are dedicated to executing Brookdale's strategy and to delivering meaningful shareholder value. We regularly assess the strategic options available to us to enhance shareholder value and we will continue to do so. Currently, we are focused on improving our operating performance, optimizing our real estate portfolio, reinvesting capital into our communities and reducing our leverage. We believe these are key to ensuring high quality environments for our residents and our associates as well as critical components to improving shareholder value. To review each, first improving operating performance. Operational excellence is critical. We believe enhanced performance ultimately driving higher occupancy, improved rates and robust cash flow will generate the capital necessary for reducing leverage and reinvesting in our business. Our primary goal is to accelerate profitable occupancy growth through improved revenue management, disciplined expense management, strengthened operational accountability and strategic investments to elevate the resident experience. Specifically rate we are piloting new pricing promotions to boost occupancy in select communities. We are intensifying efforts in communities at or above the 80% occupancy threshold to capture incremental gains in adjusted EBITDA and adjusted free cash flow as fixed costs are leveraged more effectively. And for select communities below 80% occupancy, we are deploying a SWAT team approach. Many of these communities are already assigned to a high opportunity response team established in late 2024 with the clear aim of reaching breakeven swiftly. Our tactics include exploring new lease up strategies, making targeted first impressions investments, and deploying support center resources to uncover further occupancy and rate improvements. Dawn will provide additional information, particularly on the below 70% occupancy communities in her remarks. We are conducting a thorough review of our cost structure to ensure we are appropriately managing expenses relative to our ongoing portfolio size. We are working to ensure that each location is led by a highly qualified executive director and are leveraging the recently launched training and certification program for executive directors. We are expanding our HealthPlus offering to 58 additional communities in 2025, which we expect will improve the quality of life and extend the length of stay of our residents. Second, optimizing our real estate portfolio. We consistently evaluate our portfolio to focus management's efforts on assets that can yield the greatest value for shareholders. At times there are assets that are better suited to other owners or lessees. Recall our portfolio once comprised of more than 1,000 communities, the majority of which were leased, we now operate 619 communities of which 236 are leased and 383 are owned. By year end, we expect to have exited another 55 leased communities and divested another 14 non-core owned communities, many with signed LOIs. As a result, by 2025 year-end, we expect 75% of our consolidated portfolio units will be owned. Recent leased restructurings also mitigated many unfavorable terms that existed in our previous lease agreements that track back to our pre-public days. We are happy to report that now our current leased portfolio generates positive adjusted free cash flow and we expect the cash generation potential of the leased portfolio to improve further following the Ventas 55 divestiture. In addition, our real estate team is reviewing another modest group of assets that may no longer align with our strategic model. The proceeds from asset sales will be directed toward debt repayment, capital reinvestment and liquidity enhancement. In parallel, on the acquisition front, we are continuously seeking assets that will enhance our adjusted EBITDA and adjusted free cash flow. Over the past six months, we acquired 41 previously leased communities that benefited our financial growth opportunity and provided us flexibility to better manage our portfolio. We also will consider strategic partnerships, joint ventures and other alternatives that we see as value creating opportunities. Third, capital reinvestment. As our operations improve and current asset sales are finalized, a portion of the proceeds will be reinvested in our communities. For example, in late 2024, we invested $5 million and currently plan to invest an additional $10 million in 2025 through our first impressions program to help accelerate occupancy and rate improvements. Our development team is also working on a plan to ensure that our communities remain competitively positioned in our core markets for the long-term. Please note our first impressions program is in addition to normal maintenance capital programs. Fourth reducing leverage. With the majority of our debt refinanced through the end of 2026, reducing leverage still remains a critical component of financial flexibility and resilience. While it will not happen overnight, we are working to reduce leverage meaningfully through continued adjusted EBITDA and cash flow growth and by applying a portion of proceeds from asset sales toward debt reduction. In preparation for the 2027 refinancing cycle, an operational SWAT team is working with each asset in our loan pool to optimize their collateral value. Fifth, ensuring high quality environments for our residents and associates. Delivering a high quality living and working environment is paramount. This commitment is evident in the various accolades we received, including four straight years of more communities being recognized in the U.S. News & World Report Best of Senior Living category than any other provider and by being named by Newsweek as a Most Loved Workplace for the second consecutive year. These recognitions speak to our dedication to excellence for both residents and associates. In every month of this year, we have improved our residents and family's likeliness to recommend rating over the prior year. In conclusion, our board is fully engaged in capitalizing on powerful industry dynamics and on unlocking the value we see in our portfolio. Our management team is energized by the opportunities ahead and we are grateful for the tremendous support and feedback we have received from our shareholders. Feedback is a gift and we will use it to grow and to improve. We look forward to continuing to update you throughout the year on our progress. Thank you for your time today and your continued support of Brookdale. Please do not hesitate to reach out at any time. With that, I'll now turn the call over to Dawn.

Good morning and thank you for joining us today. Brookdale had a strong start to the year driven by meaningful financial growth and operational improvements. Both RevPAR and adjusted EBITDA exceeded our expectations for the first quarter, giving us confidence to raise our annual guidance ranges. Additionally, adjusted free cash flow was positive, which is a significant milestone as adjusted free cash flow has generally been negative in the first quarter. We are excited about our achievements as we started 2025 and are optimistic about the remainder of the year. But before I speak to that, I'll walk you through details of our first quarter financials. I'll begin with first quarter revenue. Consolidated RevPAR, which is the basis for our annual guidance range, grew 4.9% in the first quarter, driven by an ongoing acceleration in year-over-year weighted average occupancy growth. First quarter move-ins were 3% above the prior year and 12% above the historic average. While move-out volume, both controllable and non-controllable, was also beneficial to the quarter. As a result, consolidated weighted average occupancy increased 140 basis points to 79.3% in the first quarter. Our year-over-year growth trend accelerated from the fourth quarter and the favorable GAAP to the prior year grew every month this year to date including April. First quarter consolidated RevPOR grew 3% over the prior year quarter, reflecting both resident rate increases as well as the ongoing trend of lower resident acuity. I'll now pivot to same community results. There are 59 communities included in our consolidated portfolio that are excluded from our same community portfolio. Of the 59, 55 are the Ventas communities that we will not be operating by year end. First quarter same community RevPAR increased 4.5% over the prior year driven by 130 basis points of occupancy growth and a 2.8% increase in RevPOR. Sequentially, same community RevPAR increased 4.55% from the fourth quarter, a growth rate that surpassed the large seniors housing REITs. Another significant achievement is our first quarter same community weighted average occupancy of 80%, which was flat to the fourth quarter occupancy, results that are significantly better than normal seasonality for this period. This is a milestone threshold that reflects our progress towards strong, consistent cash flow generation. Moving to expenses, same community expense per occupied unit or ExPOR increased just 1.6% over the prior year first quarter compared to the 2.8% RevPOR growth I just noted. Reflecting a favorable RevPOR to ExPOR spread. Same community labor expenses as a percent of revenue improved by 90 basis points versus the prior year. These positive first quarter labor results were a trend continuation of the year-over-year improvement we delivered in every quarter of 2024. Contributing to our favorable labor performance was the leverage of occupancy growth and the benefit we are reaping from meaningful improvements in reducing associate turnover over the last two years. As a percent of revenue first quarter same community other facility operating expense was flat to the prior year. While pleased with these results, we remain focused on driving ongoing improvements within our cost structure. First quarter same community operating income was 7.6% better than the prior year and operating income margin expanded 90 basis points year-over-year to a 29% margin which is the highest same community operating income margin achievement in five years. Sequentially, from the fourth quarter, same community operating income grew 14.6%, well above the growth rate of the large seniors housing REITs. There is seasonality associated with operating income margin, particularly as you compare first quarter to second quarter when our labor expense base is impacted by the fall impact of annual associate merit increases as well as an extra day of expenses. However, we are pleased with this achievement and remain optimistic that we will return to our historic margin levels. Now, moving beyond same community level results, first quarter general and administrative expense as reflected in our adjusted EBITDA results was relatively flat to the prior year quarter. As a percent of revenue general and administrative expense improved 20 basis points to the first quarter of 2024. We remain prudently focused on an appropriate cost structure for the expected changes in our portfolio and are seeing the benefits of these efforts reflected in our first quarter results. Lastly, cash operating lease payments were $57 million which was in line with our previously provided expectations. As reported in yesterday's press release, first quarter adjusted EBITDA was $124 million or 27% above the prior year quarter. We are pleased to have delivered this significant growth in the first quarter adjusted EBITDA which was above internal expectations and analyst consensus estimates and believe it is a reflection of the strategic initiatives that we are executing to grow profitable occupancy. To that end, the first quarter adjusted free cash flow increased $30 million over the prior year quarter to a positive $4 million which was also above our internal expectations and analyst consensus estimates. This meaningful year-over-year improvement was primarily a result of our strong adjusted EBITDA growth. As a result of the proactive and strategic management of our consolidated portfolio both owned and leased portfolios generated positive adjusted free cash flow in the first quarter. By delivering positive first quarter adjusted free cash flow, our confidence to achieve meaningfully positive adjusted free cash flow in 2025 is even stronger. As of March 31, total liquidity was $306 million. The primary driver in the liquidity bridge to December 31, 2024 was the use of cash to support the funding of completed acquisitions. As a reminder, in the fall of last year we announced the planned acquisition of 41 communities from three previously leased portfolios. We completed one of the three acquisitions in December 2024 for 11 communities, in February, we closed the remaining two acquisitions, which included 30 communities for a total purchase price of $310 million. This was funded with $69 million of cash on hand and $241 million of mortgage debt financing. Even with these transactions, our adjusted annualized leverage improved in the first quarter as a direct result of our significant increase in adjusted EBITDA. With meaningful adjusted EBITDA growth and the cash flow generation power that comes from 80 plus percent occupancy, we expect annualized leverage to significantly decline over the coming years. Another benefit from our recent acquisitions that will further unlock value is the execution of a capital recycling opportunity of certain communities, including some of those we recently acquired out of leases. As part of this, we identified 14 communities that are appropriate for disposition by the end of 2025. These communities were selected as being non-core, underperforming or more appropriately owned by a smaller operator. In general, they have fewer than 40 units each, they are in tertiary markets and they have weighted average occupancy below 70%. Collectively for the trailing four quarters, the 14 communities have negative adjusted EBITDA and negative unlevered cash flows. While the sales proceeds will be relatively minor given their below average size, these dispositions are expected to result in favorable financials including improvements in adjusted EBITDA, adjusted free cash flow and leverage. Given that the sales process often takes time and we are still in the early stages for these communities, this expected benefit is not built into our 2025 guidance ranges. We are selectively evaluating additional disposition opportunities to further unlock value from our owned assets in the future and will provide visibility into these considerations when appropriate. Lastly, before turning to our guidance, I wanted to comment on our commitment to more quickly address the less than 70% occupancy band as shown on Page 3 of our financial supplement. We are highly focused on these 143 low occupied communities within our portfolio. We have addressed 28 of the communities in this band through the Ventas lease negotiation or asset recycling that I just spoke to and would not expect the assets to be in our portfolio by year end. Of the remaining 115 communities in this band in the first quarter, 27% or 31 communities were part of a high opportunity group that was established near year end. More specifically, we formed a multidisciplinary, critical response team to improve the performance from occupancy down through cash flows of 65 total communities which were largely across the lower occupancy bands. While only several months in, the program has already started delivering impressive results and we are replicating the high opportunity response team program in additional communities beginning this quarter to drive operational improvements more broadly throughout the portfolio. For the remaining 84 communities that were in the first quarter less than 70% occupancy band, more than one third of those need only one, two or three units filled to achieve 70% or higher occupancy and Denise has spoken to the action plans we are taking to drive accelerated occupancy growth in these and other communities. The opportunity is large, we see the positive momentum from our recent actions and we believe the payoff will be significant as we fill these communities and benefit from the higher flow through as we leverage our fixed cost structure. Now, turning to our 2025 expectations. As reflected in yesterday's press release, given our strong first quarter results, we have improved our annual guidance for both year-over-year RevPAR growth and for adjusted EBITDA. We now expect 2025 consolidated RevPAR growth in the range of 5% to 5.75% over the prior year. Teams throughout our organization are committed to the plans Denise spoke about to accelerate occupancy growth and we have reflected that commitment in our expectations. Also reflected in our RevPAR guidance range is a normal, sequential step down in RevPOR dollars each quarter of the year as newer residents generally move in with lower acuity and therefore have a lower care rate than existing residents. We remain optimistic that both weighted average occupancy and RevPAR growth compared to the respective prior year quarters will be even stronger in the fourth quarter of 2025 than we just delivered in the first quarter. Our raised 2025 adjusted EBITDA guidance range of $440 million to $450 million incorporates these favorable top line expectations. We remain diligent in our focus on profitable occupancy growth and as a result we expect continued leverage from our increasing occupancy given the high fixed cost nature of our industry. When thinking about our annual guidance, and specifically when modeling the second quarter expectations compared to the first quarter results, it's important to remember three seasonal factors as shown on the last page of our investor presentation. First, when considering the day count for each quarter of the fiscal year, the first quarter includes the fewest number of workdays and the quarterly day count increases from there. This is important because our revenue is largely based upon monthly resident fees, whereas our expense structure is driven by daily expenses largely in labor but also in other operating expenses. Next is the consideration of the timing of our annual associate merit increases, of which the second quarter is the first full quarter of increased labor expense related to this. The third seasonal factor between the first and second quarters is the variability and utilities expense. We benefit sequentially from lower second quarter utilities expense, which helps to offset some of the impact from the extra day and the annual merit increases. We estimate the net impact from these three seasonal factors to be approximately $10 million of an adjusted EBITDA headwind between the first and second quarters. Even considering these normal seasonal factors as reflected in our raised guidance ranges, we are optimistic about our full year expectations. We believe the plans we’ve introduced, the confidence we have for sustainable growth and the cash generation power of our communities will support substantial value creation from shareholders and deliver meaningful benefits to our company, including the ability to reinvest in our communities and further reduce leverage. Specific to 2025, we expect to deliver positive adjusted free cash flow in the range of $30 million to $50 million assuming relatively neutral working capital for the year and our current estimate for 2025 transaction, legal and organizational restructuring costs, which include costs related to stockholder relations advisory matters. As we set these revised annual guidance ranges, we have worked to balance our optimism for the potential to deliver even better annual results than our raised guidance as a result of our year-to-date progress with a tempered outlook from the elevated near term uncertainty associated with the global macroeconomic environment. We are confident in our plans, but we are acutely aware that these are uncertain times and believe our guidance ranges are appropriate. Lastly, I’d like to highlight three other factors that may influence our actual 2025 results. First, I’ll note our guidance reflects a normalized natural disaster season. Second, as I shared last earnings call, our guidance assumes an October 1 disposition date for all Ventas non-renewal communities. If the timing of these community dispositions varies from this guidance assumption, there may be variability in results either positive or negative. Third, the disposition timing of the 14 communities we have in varying stages of the sales process could also modestly impact our 2025 results. These dispositions generally take time and for the majority of these communities we are in the early stages, but there is a possibility for fourth quarter impact that is not currently reflected in our annual guidance. In closing, we are pleased with our first quarter results and are confident in our strategic and operational plans to support another year of solid adjusted EBITDA growth. Positive adjusted free cash flow in the first quarter provided us even more optimism about our 2025 cash flow expectations and our ability to generate growing cash flow in the years to come. We are operating with purpose and are confident in our ability to build sustainable, long-term value for our shareholders. Operator, we will now open the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We’ll go first to Ben Hendrix at RBC.

Great. Thank you very much. I was hoping to get a little bit more color on your pricing strategy. Brookdale has operated the last couple of years with pretty solid pricing discipline and just wanted to kind of talk about the pricing promotions you’re putting through for the rest of the year and how you’re thinking about the guardrails around rate at the local level and how much flexibility you can add into pricing and still hit that 80% occupancy threshold in a profitable way.

Yes, hi Ben, this is Dawn. That’s a great question. I would start with if you look at our same-store, we’re excited that year-over-year, our RevPOR grew 2.8%, which was over our RevPOR of 1.6%. So, reflecting the price increase that we successfully put in January. I think as we think about the year and the guardrails, Denise had some specific comments around how we’re thinking about pricing. I would say that it’s more targeted in smaller areas. We’re doing some piloting of some of the pricing strategies in order to increase occupancy or to leverage off of where we can get increased occupancy at that 80% level to see a larger flow through. So I think the guardrails are either at the community level or they will be escalated up depending upon what that strategy is. But certainly making sure that we are growing our RevPAR while we’re protecting our rate and certainly very aware of making sure that we’re getting rate in excess of our expense growth.

Thank you. Just following up on that, looking at a little longer term, just the fresh impressions investment initiatives. How do you – kind of what’s the timeline that you expect that to impact rates and should we expect on the back of those type of investments some increase in RevPOR, maybe in line with 2024 levels, perhaps next year? Thanks.

Yes, a couple things. I think on the fresh impressions we certainly have included that in our CapEx guidance of $175 million to $180 million. It will be very targeted as we started last quarter on those targeted investments at the community level to increase occupancy. We’ll get to our 2026 rate as we start our budgeting process, which won’t be until mid to the end of the year as we work through that budgeting process. But nothing yet that I would comment on the rate increase for 2026.

Ben, I would say – this is Chad, I would say that it’s really – we’re very optimistic about the long-term prospects here for what we’re doing with the fresh impressions and first impressions program. What’s more important, I think, for that is that it’s really helping us to accelerate our occupancy growth. And so I think as we think about it, it’s really with the supply demand dynamics that we’re in in the market, it’s a real tool that we can use to make sure that our product is competitive and is actually growing occupancy.

Great. Thanks very much and congrats on the quarter.

Thank you, Ben.

We’ll take our next question from Brian Tanquilut at Jefferies.

Hey, good morning guys. And congrats on a good quarter. Maybe just to follow-up on some of Ben’s questions. So, as we think about maybe some of the question comments you made, Dawn, on the seasonality of margins, just curious how we should be thinking about the progression of that over the course of the year, understanding that you have some, what do you call this, basic bonus payments, incentive adjustments that kick in, in Q2. So curious how to think about seasonality of expenses and margins over the course of the year.

Yes, it’s a great question. Thanks, Brian. As you know, if you look back to our historical quarters, our first quarter is generally always our largest margin, because as I said in my prepared remarks, we have our revenue that’s billed on a monthly basis and expenses on a daily basis. And so of course, the first quarter has the least number of days. And so typically we’ve seen that as our highest margin. So as I think about that for the rest of the year, what I would point back to is the seasonality that we’ve laid out in the investor presentation and the expense, the expense seasonality that we would expect with more days in Q2 through Q4. The largest I spoke to in my prepared remarks is the $10 million headwind related to days and then the merit increase that we see that comes in Q2.

Got it. And then as I think about, Dawn, the RevPOR performance here, obviously good during the quarter. I mean, is this a sign that you’re gaining pricing power, or is there less discounting and promoing happening in the market that you’re in, is that what that is?

Yes. I mean, we are excited about the long-term impact of the supply and demand that Chad just spoke to and certainly are looking at making sure that we’re balancing pricing power and occupancy as we’re determining what our rate increases are, particularly for next year, but certainly looking at making sure that we’re focused on – again, our pricing power is – our prices are in excess of our expense growth. That’s important to get the margin expansion that we expect and that we would be leaning in end markets and more targeted markets where we think that we can do that.

Awesome, thank you.

Thanks, Brian.

We’ll move next to Andrew Mok at Barclays.

Hi, good morning. A couple of follow-ups here. On some of the initiatives that you mentioned to accelerate occupancy in the prepared remarks, I'm trying to get a better sense of which initiatives were already underway and contributing to the better occupancy results that you've already delivered and which are more forward looking actions that haven't yet impacted results? So it sounds like pricing promotions is kind of one of the forward looking ones, but I think there are a number of other initiatives. So I'm just trying to get a better sense of that? Thanks.

Yes. I'd say that, they've been evolving. We talked about, I think, the Denise talked about the high opportunity, the SWAT Groups that had started – that was underway late 2024. And so with the positive results that we've seen, it is proof of concept. We are rolling out more SWAT teams with more communities, so that that piece is underway. So that was underway and still ongoing. The dynamic pricing and the initiatives, we've always done a level of initiatives with targeted pricing. I think that that has been we've been more active with that. And so I think that that is something that is probably scaled up a little bit. And then the first impressions, we talked about $5 million that we spent at the end of last year and identified another $10 million that we would, have with that increased investment in the first quarter, so that is underway as well.

Great. And RevPAR finished the quarter at 4.9% toward the low end of the guidance range, but you increased the guidance assumption for the full year. So can you talk about the underlying drivers and visibility into higher RevPAR for the balance of the year? Thanks.

Yes. The one thing I'd say about that, Andrew, is remember we expect our fourth quarter year-over-year RevPAR and occupancy to be better than first quarter year-over-year. So we expect that RevPAR to be better – that year-over-year RevPAR growth to be better in the fourth quarter with the expected increased occupancy we expect through the year.

So that's both on the same store basis and the result of the divestitures? Like, both of those should be driving RevPAR up in the fourth quarter?

Yes. We – remember, we guide on consolidated. We are not guiding on same store.

Yes. With the one thing I'll mention on same store, it excludes the Ventas, but there is an assumption in our consolidated RevPAR range that says the Ventas communities will transition on 10/01. We know that that is not realistic, but to the extent that it significantly varies, there could be some level of variability, but that is the assumption on our RevPAR guidance.

Great. And I wanted to follow-up on kind of the dynamic pricing strategy. So curious to hear, like, why now is the right time to get more active here when it seems like strong demand and pricing power is working more to your advantage. So can you talk to the specific characteristics of these markets? Are you not seeing as much pricing power? Are there different competitive dynamics versus the rest of the portfolio? Thanks.

Yes. I would say that; we have always been looking at repricing our communities up or down. And so there's an opportunity to go up or down as we're looking at all of the different markets. I think more actively as we're – as we're looking at things a little bit different, looking at different markets and whether there's some sort of strategies that we can roll out. I don't think it's anything significantly different, just maybe a little bit more active on some of the thoughts around that repricing. Again, that would be either up or down that we're doing this.

Great. Thanks for all the color.

Great. Thank you.

We'll move next to Tao Qiu at Macquarie.

Thank you. Good morning. I'd like to drill down on the low 70% bucket. I think, Dawn, you mentioned the sizable portion is 1%, 2%, 3% away from 70%. For the remainder, what percentage have structural challenges such as smaller assets, traffic geography similar to the 14 assets you identified for sale. In other words, why not be more aggressive with the dispositions, and what is the market appetite for these assets today?

Yes. What I would say, I think it's a great question, Tao. I think, when we look at that bucket, there's 20% of those communities that we just absolutely will not be operating by the end of the year. It's either they're in the Ventas transition bucket or dispositions. The other – there's another 22% that are already in a high opportunity group that we're focused on. And then there's a third of the remaining 84 communities that are in the 1%, 2% or 3% bucket. And so if, you kind of do that math, the residual amount you're always going to have a level of your communities that are below 70%. I think that we spoke to kind of the – a real estate strategy and not leaning in on what that look is going to be. But it's certainly something that we would look at as part of that real estate strategy that Denise talked about.

Yes, Tao. Good morning. Denise mentioned that one of our key initiatives that we're focused on is optimizing our real estate portfolio. We see tremendous intrinsic value here at Brookdale that we are going to work to continue to unlock. And so one of the things we talked about is we're working on disposition transactions involving 14 non-core or underperforming owned communities. That's an initial group that we've already identified that we're working on. Early stages there overall, but we expect those to be completed by year end. I'll say many of those are already under LOI and some are even further along in the process than that, so that's a good thing. The sales proceeds for that group are relatively minor. But as a group, the disposition of those communities will improve our adjusted EBITDA, our adjusted free cash flow and our leverage. It's a win-win for unlocking value as you generate cash proceeds and improve the performance of the remaining portfolio, just to your question there. So we've already also begun work on identifying additional opportunities for portfolio optimization. There's a modest group of other non-core owned assets that we believe can be monetized to further unlock value. So we're looking at that, and as you and obviously, that is looking at occupancy rates, performance, NOI opportunities, et cetera, markets. We take a variety of factors to look at, but that is something we're actively working on. It's too early for us to share additional details on that next group of assets, but it is something that we're really focused on.

Got it. I appreciate the color. So just to clarify, so none of the disposition benefits from either from an EBITDA or cash flow perspective is in the guidance, right?

Correct.

Okay. My second question is for Dawn. Could you, for Denise, sorry. Could you share with us your thoughts on the CEO search? What kind of experience and skill set is the board prioritizing today? And how should we think about the shift in business strategy going forward?

Yes. I can do that. So as I stated in my remarks, we have – we started late last fall working with Spencer Stuart outlining succession planning that the company might need. And so when we are looking at the candidates, which we've already had a good look at about, I think, 15 or 16 candidates already. And the board search committee is in the process of narrowing those down into the ones that we want to interview and to push forward through the process. So we are really looking for someone that can give us the operational expertise because we do believe there's a lot more work that can be done on the operations, down in the community level, while at the same time getting someone that has the strategic vision that can really propel Brookdale into the future, that can look out and see what Brookdale will be in five to ten years.

Got it. Thank you.

Thank you, Tao.

And we'll go next to Joanna Gajuk at Bank of America.

Hi, good morning. Thanks so much for taking the question. So I guess first, just to clarify, so you raised your EBITDA guidance by $7.5 million. So is that essentially for your outperformance in the first quarter?

That's exactly right, Joanna. When we looked at our outperformance in the first quarter, our occupancy was down 10 basis points when you'd normally see it down 70 basis points to 80 basis points. So we saw that favorability in our occupancy and then of course our expense management. And so as we look at that outperformance, we certainly re-forecasted the full year and lifted the – felt comfortable lifting the range by 2%. Now the one thing that I would add is that there is and we're acknowledging as we thought about the guide range or the guidance raise, there is a backdrop of macroeconomic uncertainty that we certainly didn't ignore, just acknowledging where we're at and what that impact could potentially be on the full year just because there's a lot of unknown. But we're very optimistic about our plans and wanted to balance that with – the global uncertainty with our forecast.

That was my other follow-up on that comment about macro factors. It sounds like you're a little bit more cautious there as you look out. But is there something that you're seeing currently, say in April? I mean, it sounds like occupancy in April was very good, so it's really hard to say. But is there something you already see, or is it more sort of, like things might kind of, I guess, turn for the worst during the season that's usually very busy for senior housing, right, during the summer months from June through, I guess, September. So is that's how you're thinking about it? That as of now, you're not seeing it, but things might change, and that's going to be during the time when – the time that's actually critical?

Joanna, that's exactly right. I think, just acknowledging the level of macroeconomic uncertainty, I would, again, point to, as you did, our April occupancy was up 30 basis points sequentially and 90 basis points year-over-year. The last time we saw April occupancy with that level of favorability was coming out of the pandemic. So we obviously were pleased with that. We will continue to stay focused on our expense management, but making sure that we are cautious as we thought about our guidance for the full year.

Thank you. And if I may, last, a follow-up on these SWAT teams. And sounds like you're getting already some traction and you're seeing any Q1 results on the occupancy front. So can you give us some examples of what exactly was done differently that was not done before in this particular community that allowed, I guess what you call some early indication of success there? Thank you.

Yes. I think what I would say is we certainly have, as you have a SWAT team, and focus on something removing of barriers. As Chad talked about some of the fresh impression or the CapEx deployment or the speed at which a role is filled or the speed at which we've moved on pricing. I think removing some of the barriers is probably the biggest thing that I would point to just because as you have one group focused and available to react quickly on 619 properties, that we had 65 communities in the group, that was helpful in getting results quicker.

Well, and importantly we're taking the learnings that we had from that group and rolling that out to additional communities so that we can further accelerate our occupancy improvement. And that is something we're all committed to as a management team to continuing to improve our operating results. We're very pleased with where we were in the first quarter and the progress we're making. And that was a big part of it with the early impressive results from that first work group, and we're moving forward.

And I guess those actions are sustainable? I think, like once the SWAT team is gone, whatever they kind of identify. But I mean, I understand, like, CapEx being deployed, like that's sustainable, but maybe these other items, like, how sustainable those changes are? Thank you.

Yes. We think that they absolutely are sustainable. We think that the reaction that we have or if we – if we've done like a common area of renovation, like, that – those are things that are long-term and helpful. And, I think that – we think that everything that it would be absolutely sustainable, which is why we're scaling it.

Thank you.

Thanks, Joanna.

Next we'll move to Josh Raskin at Nephron Research.

Hi, thanks. Good morning. The big picture question to start with is, can you speak to the process around strategy and operational improvements and sort of who's leading that charge? how that's being done? And also, how does this ongoing CEO search impact that? Does that accelerate the need to make changes before? Or is there some thought around slowing things down to incorporate the new CEO, et cetera?

Yes. I can start, and then Denise or Chad can add if they, feel? But I think, the office of the CEO, the strategy has not changed from focusing on occupancy and growth. What I would say is the office of the CEO, Chad and I, are on the ground working through with the operations team and the back office to ensure that we haven't lost focus, to ensure that we are meeting – more meeting regularly in order to make sure that we have visibility into the results as we're looking at the operational deployment of some of the strategies that Denise talked about. The broader team is very excited and very engaged. And I think that as a management group, we are very focused on moving forward. And, again, that is the day-to-day with Chad and I. Denise is in the office every day as well, focusing a lot on that high level and moving forward, with some of the initiatives that she talked about as well in making sure that the teams are motivated and have the tools that they need in order to move forward.

All right. Sounds like a team sport.

Yes. Very much. This is Denise, Josh. It very much is a team sport. One of the things I have, has been amplified since I've been here, and this is my fourth week, is how great the team is. We have an exceptional leadership team, and they work very well together. They're excited. They're engaged and everybody is pushing forward. Changes we make will be tweaks to operations like the high opportunity response teams. They will start to have a true operations person engaged in that team and we will be digging deeper down into those communities for the true operational improvements, which to I believe Joanna's question earlier of the sustainability of that initiative. So we will do that. We are working very closely with Teddy and his team on portfolio optimization. There are assets in the portfolio that would be better owned by someone else or have a different lessee. And so we will be working on pulling that together. We did have great results from [indiscernible] in the first quarter. And I think by embedding more operations folks into that and looking at the next segment of opportunity will really push us forward and drive it. My background is operations and finance. And so I guess for now, I'm the operations person that will push that forward. On the CEO search, we think it will take six months. I laugh and tell people I live on the beach and the view from my porch is a lot better than the view of the Brookdale parking lot. But I am here for the team and will be through the summer. And so I'll probably get back home just in time for the wintertime. But that's okay because this is a great company and we have great people, we have great assets, and we have so much intrinsic value that needs to be opened up and released here that it is worth spending my summer here.

All right. I'm a fan of Nashville, so I'll put that in there. But my micro – my more micro question is the magnitude of these pricing, these piloting, the new promotions to boost the occupancy in select communities, like, is there a way to give us some sense of magnitude, like, number of months of rent and just any sort of parameters that you have in terms of what it takes to induce more occupancy in some of these select communities you talked about?

Yes. Josh, what I would say is more – it's more targeted. I would say that we are conscious of, as I had mentioned before, pricing up or down. I think that it is more targeted and that we're looking at where is our rate where we have the opportunity to do some pricing. That's one of the things I would mention to – mention about on the high opportunity where we were at a little bit of a higher than our consolidated rate in order to make sure that we could reduce rate to again protect our RevPOR ensuring that our rate was in excess of our expense growth. It's one of the things that we're highly focused on. So I wouldn't over index on the efforts that we have. We always have ongoing efforts on re-pricings, and we've been doing that for a year – I think for the years. I would just say it's maybe a little bit more targeted and accelerated a little bit more, but I wouldn't over index on that.

Okay. Thanks.