Robert Probst: That’s a good segue to some of the assumptions you asked about in our guidance, especially redev. Let’s start there. So we said our #1 use of cash is investing behind senior housing redevs. You’re seeing the growth that’s coming from that in the attractive returns. So last year was $210 million round numbers of redev. Because the projects are starting to come down, and I’d mentioned in previous calls we’re going to normalize over time, we would expect some reduction in that redev spend this year. I’ll call it $175 million in 2024. And again, that should normalize over time as these projects complete. Other assumptions, capital recycling, we are assuming, after $450 million of dispositions last year, our current guidance is $100 million.
So a significant reduction, and those are very focused on some senior housing noncore assets in that $100 million. And then finally, on the equity assumption. To just underscore what I mentioned earlier, we do have, in our assumption, both investments and the funding of that. The share count is listed in the assumptions that comes out of that.
Operator: Our next question comes from the line of Rich Anderson with Wedbush.
Richard Anderson: Sorry to keep things going, but what the heck. I want to ask perhaps an unanswerable question. So you guys lead the league in kind of normalization between NAREIT FFO and normalized FFO. There’s a lot in there. You have $0.13 of normalizing factors in your guidance. To what degree can we — does that offer an opportunity for — I don’t know, if something were to materialize during the year, it sort of allows you to maintain your guidance? I’m — there’s a lot of movement in your presentation that’s really difficult to model, let’s put it that way. Is there a way to either tighten it up, or does it offer opportunity to say, well, we can do something with Kindred this year, and we’re not going to have to change our guidance in the process. I know, unanswerable, but I do feel like it’s way more complicated than perhaps it needs to be, is the main point.
Debra Cafaro: I mean one part I would comment on is that we are very disciplined about it and don’t lead the league in any — and this is an area we don’t want to lead the league in, and we can talk about that further. It’s a very defined category, and we use it as such. So, Bob…
Robert Probst: [Indiscernible] measuring between NAREIT FFO and normalized FFO across peers, I would suggest to you that they’re very similar in terms of our numbers. And by benchmark, well, I would [indiscernible]…
Debra Cafaro: You would say benchmark [indiscernible].
Richard Anderson: How often do you hit that number? How confident you are to hit that $0.13 number, I guess, is the question. How predictable is that to you?
Robert Probst: Which $0.13 number, Rich?
Richard Anderson: The [indiscernible] between NAREIT and normalized FFO.
Robert Probst: I see. Some of those are market-based, importantly. I’ll just highlight one, which is Brookdale warrants. We have $16 million of Brookdale warrants, and that is mark-to-market every quarter, and there’s a lot of volatility in that. And that flows through between NAREIT and FFO normalized [indiscernible] adjustment, and that’s impossible to predict. But we think in terms of portraying the underlying performance of the business is absolutely the right adjustment to make it normalized. So that’s a good example.
Operator: Our next question comes from the line of Vikram Malhotra with Mizuho.
Vikram Malhotra: I just wanted to clarify the legal costs that were normalized. Is that — are those just legal fees, but there’s — is there like an associated potential fine that Ventas may be liable for, and is this hard to know? Or is that just a one-off and we won’t hear more about it from here on? Number one. And number two, if you could just clarify the $300 million acquisition, how should we think about accretion going forward in terms of like potential cap rates and how you see that flowing to the bottom line?
Debra Cafaro: Okay. It’s a typical litigation reserve and it affects us and other REITs. And in terms of the acquisition investment opportunities, I think, again, looking at the pipeline that we have, I think Justin talked about 7% plus or minus going in cap rates, which is affected by the growth rate, leading to low to mid-teens IRRs, which, depending on how we fund, will be — that’s how the accretion, obviously, in year 1 will be determined. We’re not counting on a lot of accretion into year 1, but rather enhancing our growth rate over time. And we think that those IRRs are attractive, and we want to expand our presence in U.S. senior housing.
Operator: Our final question comes from the line of Juan Sanabria with BMO Capital Markets.
Juan Sanabria: Just a quick follow-up for me, focused around dispositions again. I was curious if you have a bit of a background on the 2 R&I assets disposed of in the fourth quarter as to why you chose to sell those. The cap rates looked a little elevated from the outsider’s perspective. And then just curious if — what your latest thoughts on the Santerre SNF business is? Are you kind of happy to hold what’s remaining there, which is still fairly substantial, I guess, and comfortable with that SNF exposure? Or how are you thinking about that?
Debra Cafaro: Yes. So on the latter part, as I mentioned, I think we’ll be — we’ll pick our spots on disposing of certain of the Santerre assets over time. Including the SNF. We’ve been — we’ve sold some at very attractive per bed valuations, and we’re happy with that. And on the — what was the — the others were embedded purchase options that we got in the acquired portfolio with universities who have a better cost of capital than God. So they chose to exercise them. So that’s all that was.
Operator: I would now like to turn the call over to Debra Cafaro, Chairman and CEO, for closing remarks.
Debra Cafaro: All right. Mandeep, thank you very much, and I want to thank everyone for joining us today. It’s a pleasure to speak with you and have a chance to answer your questions. We really appreciate your interest in Ventas, your support of Ventas, and we look forward to seeing you again soon.
Operator: This concludes today’s call. You may now disconnect.
