Debra A. Cafaro
Chairman and Chief Executive Officer at Ventas
Thanks, BJ, and good morning to all of our shareholders and other participants. I want to welcome you to the Ventas second quarter earnings call. I'm delighted to be joined by my colleagues, including our newest addition BJ Grant, who has already made many contributions to Ventas in a short tenure. Today, I'll recap our strong second quarter results, highlight the momentum in our life science research and innovation business and address the macro trends in the economy and labor markets.
We believe that Ventas is in an advantage position to deliver value in this dynamic business environment because of our high-quality diversified portfolio and our team's industry insights and deep experience. Let's start with results, Ventas delivered a very positive second quarter with $0.72 of normalized FFO at the higher end of our guidance range. Property performance was at or above our expectations, led by 9% year-over-year SHOP same-store net operating income growth. I'm excited to showcase our differentiated life science research and innovation business, which now spans 11 million square feet and accounts for 10% of our property portfolio. This portfolio has significant momentum in deliveries, leasing, and investment activity.
With our strategic partner Wexford, Ventas enjoys the nation's leading track record and reputation at the large and growing intersection of research, medicine, and universities. Importantly, 77% of our rent is from high credit tenancy, with 50% from universities with a weighted average credit rating of Double-A and the balance from investment grade for a billion market cap companies. I'm really proud of what we've accomplished since 2016 when we began to invest in this business and how we've grown it since then.
Here are some examples of our strong R&I momentum, starting with deliveries we recently delivered the 100% leased Drexel University Health Science building on budget and ahead of schedule. This $280-plus million project located in the thriving new city Innovation District in Philadelphia was developed by our strategic R&I partner Wexford. Drexel Health Science building is ready to welcome Drexel School of Nursing and health professions, it's School of Medicine and it's graduate programs for medicine, when school opens this fall. The project is expected to provide a 7% cash and 10% GAAP yield.
We also intend to deliver One uCity Square by year-end. This 400,000 square-foot multi-tenant lab and research building continues to expand our presence in the uCity Innovation District in Philadelphia, adjacent to University of Pennsylvania and it is already 80% leased. We expect the building to exceed 90% leasing with highly regarded life science and institutional research tenants in early 2023. The lease-up pace and rental rates are both substantially ahead of our pro forma and the project is now expected to deliver over a 7% stabilized cash yield on cost of nearly $300 million.
We also see terrific leasing momentum across other portions of our life science R&I portfolio. Our portfolio caters to the top 5% of research universities in the nation, and these institutions are aggressively expanding their research functions, creating incremental demand for lab space. We are currently in discussions with a handful of universities about taking significant amounts of additional lab space. In addition, we are leasing space quickly and demand is high from commercial tenants who are attracted to university innovation centers. For example, at Pitt Phase II scheduled to open shortly, we recently signed a lease for 66% of the building with a premier global technology company.
In Miami, we've already leased or committed 80,000 square feet that expired mid-2022 to new tenants at higher rates. Finally, we have momentum in R&I investment opportunities that will create value and deliver future growth. Today, we announced two exciting new developments that are great examples. With these two projects, we currently have $1.6 billion of total R&I development in progress. All leverage our significant competitive advantage with Wexford at the intersection of research, medicine and universities. The first new project is the Pearl located in fast-growing Charlotte, North Carolina, sponsored by Atrium Health, a top 10 health system. The Pearl project will house research, lab, medical, and academic uses, including the Wake Forest University School of Medicine. Atrium Health, which is rated Aa3 is leasing 70% of the project and will be our 37% partner.
The Pearl will also serve as the exclusive North American headquarters for IRCAD, the French training institute in advanced surgical techniques and robotics for world-class surgeons. We expect delivery of the Pearl in 2025. On the West Coast, Wexford and Ventas have been selected by the University of Washington to develop a 300,000 plus square foot project, anchored by the university for its research programming and clean energy, medicine, and life science. Udab [Phontic] rated Aaa by Moody's is a world-class research university that receives more federal research funding than any other U.S. public university. Seattle is the number six life science market in the U.S. and this project will expand our RNAi footprint to six of the top seven life science markets. We look forward to sharing more details with you as this exciting project progresses.
Behind these new projects, our R&I development pipeline contains an additional $1 billion of potential development opportunities. I hope that gives you a picture of the momentum we see in our attractive life science R&I business. It is a great example of our ability to enter a new space thoughtfully, expand and grow it successfully through different market conditions and align with excellent partners. Regarding our capital allocation approach and activities, we've shown $1.3 billion of investment activity year-to-date, consistent with our stated priorities and balanced approach.
We've also announced additional investments in the senior housing space at an attractive yield with future growth potential and a fully leased medical office building, utilizing capital from our fund to acquire this stable MOB. As we look forward in the third quarter of 2022, we are again projecting that our earnings will benefit from outstanding year-over-year growth in our SHOP segment, which is expected to increase NOI 12% at the midpoint higher than second quarter's 9% year-over-year SHOP NOI growth rate. We do expect expenses and wages in Q3 to remain elevated, reinforced by today's jobs report.
We will also recognize the benefit of $20 million of HHS grants in the third quarter, which we received to reimburse us for a portion of the expenses we incurred to keep residents and workers safe during the pandemic. Although that benefit will be muted by a $0.02 impact we expect from higher interest rates as a consequence of the Fed's tightening. The demographic backdrop is supportive of our business and we believe we are well positioned to succeed. First, supply and demand conditions are favorable with acceleration and the growth of the 80-plus population.
Our senior housing product is highly affordable and need-based and the senior market we serve has significant resources. With senior housing starts and inventory under construction well below cyclical highs, particularly in independent living. Our senior housing business is set up for continued net absorption and pricing power. With this favorable supply-demand backdrop in senior housing, we will use the power of our high-quality diversified portfolio and our team's commitment, experience and insights to continue to create value for stakeholders.
Thanks for your time and I'll turn it over to Justin.