J. Justin Hutchens
Executive Vice President, Senior Housing and Chief Investment Officer at Ventas
Thank you, Debbie. I'll start with our efforts to deliver profitable organic growth in senior housing. The third quarter same-store SHOP portfolio grew occupancy by an industry-leading 350 basis points year-over-year leading to our ninth consecutive quarter of double-digit NOI growth at over 15% and an overall operating margin of 26.3%, which is up 150 basis points year-over-year. We also had one of our best occupancy growth quarter sequentially with 140 basis points. Leading indicators of leads and tours have been outperforming all year and continue to do so in October. Revenue growth was around 9% across the portfolio and the U.S. NOI growth was 17.7%.
Sunrise, Sincere and Discovery continued to deliver excellent operating results in the U.S. Double clicking on our occupancy performance, our Canadian portfolio is an all-time high 97% occupied in September, led by Le Groupe Maurice and Atria. Occupancy outperformed the market. The U.S. spot occupancy grew 370 basis points year-over-year in the top 99 markets, which is 140 basis points faster than the NIC average. Furthermore, we grew 130 basis points in these markets, which is almost double the NIC average.
Moving on to guidance. As the third quarter exceeded our expectations and October is off to a good start, our average occupancy growth expectations have increased to about 290 basis points, which is up 40 basis points versus the original guidance. Year-to-date RevPOR growth has exceeded OpExPOR by 300 basis points and we expect a continued healthy spread as pricing continues to outpace the moderating inflationary pressures we have experienced this year. All of this considered, we are pleased to raise SHOP full year guidance expectations for the third time this year to 15%. Furthermore, we believe rate growth will be favorable into 2025 as we anticipate significant demand, well positioned communities and a value proposition that is attractive to seniors and their families.
Moving on to Ventas OI. Our SHOP performance stems from our right market, right asset, right operator approach enhanced by the Ventas OI platform, which leverages 1 billion operational and financial data points and experiential insights. This platform empowers our shop operators with advantages in sales, pricing, market positioning, capex and digital marketing to name a few. Key drivers include acquisitions, new shop operators, capex investment and strategic conversions from triple net to SHOP, all aimed at boosting occupancy and NOI amid favorable supply demand trends in senior housing.
The OI platform also enables us to segment the portfolio in ways designed to increase NOI and margin. We are all familiar with the rule of thumb, a 50% incremental margin flow through in communities that are between 80% and 90% occupancy and the 70% flow through in communities that are above 90% occupied. I don't think it's widely understood how higher occupied communities can power growth.
Let me walk you through a case study to highlight this opportunity. If you want to follow along, you can see this case study on Page 12 in our earnings deck. Our zero loss revenue day initiative aims for full occupancy across select communities in our portfolio minimizing vacancy and maximizing NOI growth. 40% of our shop portfolio is in the 90% plus occupied category offering substantial outperformance potential. Due to the operating leverage in our business, scarcity value and lack of frictional vacancy, we have significant opportunity to drive NOI growth in highly occupied communities.
It's important to note that we typically don't experience fictional vacancy in senior housing due to the relative small unit size, lengthy notice periods to vacate and low wear and tear on the units ultimately allowing for sufficient time to plan a unit turn. As occupancy grows across our portfolio, the benefits of highly occupied communities are materializing. I'll highlight eight communities in September that reached zero lost revenue days maintaining 100% occupancy every day of the month. These properties saw a 440 basis point occupancy increase over the last year, a 7% RevPOR improvement, 12% revenue growth and over 25% NOI growth. These communities all deliver market leading quality care and services, which is essential to attracting and retaining residents and employees.
The philosophy is simple. Full is full and it underscores the value of running every unit daily, maximizing NOI through operating leverage, scarcity value and zero vacancy. While not achievable for every property, we aim to continue to replicate this result with operators in targeted communities throughout our portfolio, including our new acquisitions. I'll summarize my SHOP commentary by highlighting our continued occupancy outperformance NOI growth. We truly are seeing momentum in the business.
Next, I'll comment on our triple net lease with Brookdale, which expires at the end of 2025. Brookdale has the option to renew by November 30 of this year. It is a well covered lease with strong and improving coverage comprised of underlying assets that sit in markets with 1,000 basis points of potential occupancy upside. Due to the strong underlying performance of the portfolio and compelling projected tailwinds, there are a variety of outcomes that are positive for Ventas, which could include full renewal, full transition to SHOP or something in between. We'll update you about the progress of this lease when we know more.
Now I'll move on to investments. We continue to execute on our focused strategy, which is to capture value creating external growth concentrated in senior housing. The market is presenting compelling opportunities. We are in a great position to capitalize on these opportunities given our advantaged position as a large owner of senior housing with financial strength and flexibility, far reaching senior housing sector relationships and a successful transaction track record. Our investment pace is accelerating with $1.7 billion of senior housing investments closed or under contract, which is $1 billion more than we stated a quarter ago. The $1.7 billion is comprised of 43 new senior housing communities, 16 different transactions with a median size of $47 million.
We have targeted high-performing communities with upside that have demonstrated market leading performance and should continue to grow NOI due to the strong market fundamentals, increased operating leverage and competitive pricing. The communities we have purchased are generally large scale offering a variety of services, including independent living, assisted living and memory care. We are purchasing communities at an attractive investment basis of $250,000 per unit, which is a significant discount to replacement costs. These investments are right in our strike zone.
Our stated financial criteria of 7% to 8% expected year one NOI yield, low to mid-teens unlevered IRR, and we continue to purchase below replacement cost. The affordability in the new markets we are entering is supportive where residents can afford greater than seven times our length of stay. We also expect a significant net absorption opportunity during the next few years as a result of growing demographics and minimal new supply in the markets we have selected. We continue to expand with our existing operator relationships as well as welcoming new high-performing operators in aligned management agreements.
I'll spotlight an investment where we acquired 20 senior housing communities currently operated by Grace Management. This strategic acquisition includes communities offering a mix of independent living, assisted living and memory care aligning with our focus on value creating growth in senior housing. These communities are located in markets that support significant potential occupancy growth and price opportunity over the next few years. At 92% occupancy, this investment should benefit from the high operating leverage opportunity as I noted earlier. We expect 7% to 8% year one yield and low mid-teen unlevered IRR is consistent with our target financial metrics. This investment expands our relationship with Grace who is a strong performing existing Ventas operator.
Our investment pipeline remains active as we continue to pursue high-performing senior housing communities with attractive financial returns. In summary, we are effectively executing on both our organic growth priority in senior housing and value creating senior housing investments.
Bob?
