Michael Stroyeck: Thanks and good morning. Maybe one on the outpatient medical business. What drove the sequential occupancy decline during the quarter, whether in terms of tenant credit, asset quality or anything you can provide? And then what were the consistent themes with those move-outs, if any, compared with the recent tenant move-outs we saw second half of last year.
Justin Hutchens: Yes. Thanks for the question. We’re actually really happy with our leasing. In the first quarter, we did 900,000 square feet of leasing, 50% more than prior year, which is terrific. And what I’m also happy to talk about is health system health has really come back. If you look at the [Indiscernible] data, the financials for the health systems are almost 40% higher than what they were a year ago. So they’re back. They’re executing on their strategy, and they’re upgrading their facilities and converting nonclinical space to clinical space. Now to your point about the 40 basis points, that equates to about 72,000 square feet worth of lost occupancy. I can tell you that almost immediately, we re-leased 55,000 square feet of that 72,000.
And in many cases, it’s to essentially the same entity. I’ll just give you two examples. One example is with a health system where an independent practice moved out and the health system who is associated with that practice and immediately lease the space back again. We have to build out the space. So occupancy goes down, but it’s essentially re-leased. Another example is a health system had on a particular floor, a bunch of small suites, they wanted to just let all those go and re-lease the space as one suites, so they can have larger and more efficient practice. So those types of things are going on as vacancy, we’re losing a little bit of occupancy as a health systems exit strategy and then that will result in better leasing, better rents later in the year or next year.
Debra Cafaro: Thank you.
Michael Stroyeck: Okay. That’s helpful. Maybe a second question, if I may. Going back to that IL versus AL discussion. So IL meaningfully outperformed in terms of occupancy gains during the quarter. Is that a reflection of just greater demand for the IL product are more attributable to an improvement in the operations of that holiday by Atria portfolio?
Justin Hutchens: Yes. So we’ve had — we definitely have had good recent momentum in our independent living portfolio that includes some Holiday communities includes former Holiday communities and include some of our existing mostly other ILs operated by our legacy Atria within our legacy Atria portfolio. So there’s been an intense effort to work with our operators to ensure that we’re getting the best performance within those communities, and that continues. And the whole playbook really has been used, everything from sales oversight insights, price volume optimization, CapEx investment and then the operators just really executing. And so we’re really happy to see the good results and look forward to more growth.
Michael Stroyeck: So just to clarify, it’s pretty broad-based across the IL portfolio.
Justin Hutchens: Yes, it is broad-based across IL portfolio.
Debra Cafaro: Yes.
Michael Stroyeck: Great. Thanks for the time.
Debra Cafaro: Sure, thanks.
Operator: Your next question comes from the line of Austin Wurschmidt of KeyBanc Capital Markets. Please go ahead.
Austin Wurschmidt: Great, thanks. I just wanted to hit on REVPOR. You guys assumed a firm, the REVPOR growth for the year which does imply acceleration similar to occupancy in the quarters ahead, just kind of what gives you that confidence? And is that acceleration coming from primary markets that have kind of lagged the overall portfolio? Or is it other buckets that are driving that improvement?
Justin Hutchens: Yes. One thing I just want to point out is when we gave the metrics that are supporting the SHOP guidance, you’ll notice a lot of tilt [ph]. So it’s approximately 8% revenue, approximately 5% REVPOR approximately 2.70 of occupancy lift. And then we have an NOI range. And so we left a little room for movement amongst those metrics and see how the key selling season plays out. So I don’t think we’re necessarily saying we’re going from 4.7% to 5%. We’re just saying we expect to be around 5% and which was consistent with what we saw in the first quarter.
Austin Wurschmidt: Got it. That’s helpful. And then just on the street rate growth, broad-based for overall same-store portfolio. I mean, given some of the leading indicators you’ve pointed to showing strength, the occupancy acceleration. I mean what would lead you to kind of lean into that and maybe kind of test the waters on pushing that a little harder if you continue to see the strength in the demand that you see now for the last couple of quarters?
Justin Hutchens: Yes. So the part of the price volume optimization is really making sure we’re priced right and where there’s more demand in a market, an opportunity to move with market pricing more aggressively, we do that. So there’s certain markets and certain highly occupied communities that are attracting a higher street rate, higher move-in rate. So that’s definitely part of the plan. Now having said that, we have a lot of occupancy upside, and that’s the big opportunity for us is to continue to play into the demand drive volume. Balance it so that we’re getting the best out of just total revenue growth and then drive NOI.
