J. Justin Hutchens
Executive Vice President, Senior Housing at Ventas
Thank you, Debbie. We remain excited about delivering industry-leading occupancy and NOI growth, and we are encouraged about recent trends in the senior housing portfolio. Although we are still in the early stages of the recovery, we are off to a very strong start. Ventas is well positioned to benefit from significant senior housing tailwinds, including the sector recovery upside, supportive demand fundamentals and continued improvement in leading indicators.
I'll review three topics today. First, our second quarter performance. Second, our perspective on the senior housing operating environment. And third, our continued execution of our senior housing strategy. I'll start by covering our second quarter performance.
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. June marked the best month for leads and move-ins since the start of the pandemic and July has sustained a strong momentum. Strong sales activity has now driven five consecutive months of occupancy growth, inclusive of July. 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.
Leading indicators remain strong in our portfolio as the digital footprint of our operators has significantly expanded over the past year, casting a wider net as traditional high converting lead sources such as personal referrals, respite and professional referrals continue recovery.
Turning to SHOP operating results. 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. I will touch on that more in a minute. 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.
Turning to triple-net. 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.
Moving onto the current operating environment, which is full of green shoots. Our market leading operators continue to demonstrate their strong market position through broad occupancy gains. 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. We would like to congratulate Sunrise's CEO, Jack Callison for adding experience and depth to his management team with this recently announced hires.
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. Atria anticipates tightening incentives moving forward as pricing power recovers and occupancy stabilizes. 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. Our operators have been prioritizing resident safety and weathering several near term headwinds, including the Delta variant and transitory wage pressures from staffing shortages in select markets.
Underpinning our leading operating partner relationships and recent sales momentum is our attractive market footprint, which positions us to benefit from the compelling supply and demand outlook in the senior housing sector. Our communities in the US are poised for improving performance over time due to our strong presence in submarkets that outpaced the US national average in aging population growth and wealth demographics, but with significantly lower exposure to new construction starts and construction as a percentage of inventory.
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.
The Ventas team has been busy executing our senior housing strategy, driven by our experiential operating expertise and underpinned by our analytical capabilities to further strengthen our senior housing business. The underlying goal of our strategy is simply to execute portfolio actions that ensure we are located in the right markets, with the right operator, with assets, with strong local market positioning.
A notable example of our strategy execution is the New Senior transaction. New Senior has a track record of strong operating performance, benefits from a geographically diverse footprint with favorable exposure to compelling market fundamentals and demographics, and represents a well invested high quality portfolio catering to an attractive market segment. The acquisition also represents an excellent opportunity to further expand our relationships with two long-standing operators in Holiday Retirement and Atria Senior Living and with new relationships such as Hawthorne Senior Living.
New Senior will strengthen our existing senior housing business from several strategic perspectives. Operationally, New Senior will enhance Ventas' cash flow generation profile. 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. This transaction is a reflection of our focus on adding high-quality assets to our senior housing platform and maintaining balance across independent living and assisted living product types. 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. Moving on to new developments. 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. Two of the three developments were delivered in the fourth quarter of 2020. 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. Initial leasing activity has been strong with more than half of the new units occupied as of the end of July. Our plans across our broader SHOP portfolio includes significant deployment of refresh and redevelopment capital, strengthening our market leading position, where we expect to realize occupancy growth and pricing upside over the next few years. We continue to actively manage our portfolio with the disposition of non-strategic assets, and the transition of operators in select markets to position our senior housing business for long-term success.
In summary, our recovery is off to a strong start. We are well positioned in markets that benefit from outsized aging and wealth demographic, with rapid use of [Technical Issues] we are executing our senior housing strategy to help ensure success in the near and long term. I will now hand over to Pete.
