J. Justin Hutchens
Executive Vice President, Senior Housing and Chief Investment Officer at Ventas
Thank you, Debbie. I'll start by covering our shop trends in the first quarter. Our SHOP portfolio continues to deliver exceptional results, exceeding our expectations with strong year-over-year growth driven by pricing power and cost control. SHOP NOI grew 17.4% as margin expanded 200 basis points. Notably, the U.S. led the way with 22.4% growth, attributable to strong performance in our legacy Atria and Sunrise portfolios and our transition communities with assisted living being the biggest contributor to the growth. Our Canadian portfolio, which grew 5%, continues to be a beacon of stability and high performance with exceptional margins and consistently high occupancy above 90% and in each and every quarter since the first quarter of 2019.
This portfolio remains a reliable source of growing cash flow, buoyed by Le Groupe Maurice performance. The revenue growth in our portfolio remains strong. With a notable 8% year-over-year increase, the revenue growth was largely driven by the continued acceleration of RevPOR, which is a testament to the strength of our business model and our operators' unwavering commitment to delivering exceptional value to their residents. Our pricing power continues to be a driving force behind our success. In fact, we've experienced the strongest year-over-year RevPOR growth we've seen in the last 10 years, with an impressive 6.8% increase. This growth was primarily due to in-house rent and care increases as well as improving re-leasing spreads.
In addition, we also saw a robust sequential RevPAR growth of 4.1% in spite of the fact that one of our large operators pulled forward their rent increases to the fourth quarter, which causes a less favorable comp. These results are a testament to our continued efforts to optimize pricing. Occupancy grew 80 basis points year-over-year and was down 90 basis points sequentially, in line with typical seasonality as expected. Moving on to expenses. Operating expenses grew 5% year-over-year, which is in line with expectations. Within opex, labor, which is 60% of the spend is playing out as expected. As the permanent employee base is increasing and replacing contract labor. That hiring has continued its positive trend for six consecutive quarters, causing contract labor to reduce by 59% year-over-year.
We believe there is still room for improvement in this area, which will result in cost reduction and also improve the consistency and quality of care delivery. At Ventas, we've been committed to staying ahead of the curve when it comes to optimizing our portfolio and executing on our strategy through our right market, right asset, right operator approach, which is anchored by Ventas OI, our best-in-class data analytics platform and informed by experiential insights. Through this approach, we're leveraging data and insights to select the most promising markets for capital investments and operational improvement by carefully selecting communities are well positioned for success within those markets, identifying specific operational improvements and partnering with the right operators to drive exceptional performance.
For instance, let's take a closer look at the strong performance in the U.S. I'd like to highlight that NOI growth of 22.4% was broad-based across the U.S. I'll discuss this in the context of our legacy portfolio which contains 234 long-held communities representing 71% of the U.S. same-store shop NOI and our transition portfolio, which contains 200 communities that have transitioned to new operators since the beginning of 2021 and represents 29% of the U.S. same-store shop NOI. A legacy portfolio had strong growth at 20% and our transition portfolio delivered an even better NOI growth rate of 30% on a lower NOI base. Our meticulous and strategic approach in selecting the right operators for the group of transition assets is backed by our Ventas OI methodology and capex investments, which is paying off and generating outstanding NOI growth.
Notably, Discovery Senior Living, Sedalis and Priority Life Care are among the numerous operators that contributed significantly to the growth in the first quarter. And the future growth prospects for this group of communities across all of our operators are truly exciting. I'll double-click on Discovery as an example of the value creation thus far backed by Ventas OI. We transitioned 16 assisted living communities to them in the fourth quarter of 2021. These communities are located in a tight geographic area and in existing discovery markets. When comparing the first quarter of 2022 to 2023, their portfolio achieved 770 basis points of occupancy growth, and grew NOI by many multiples thus far. We completed 13 of the 15 planned NOI-generating capex projects in this portfolio in the fourth quarter of 2022.
We look forward to more successful performance as these communities have benefited from a strong operational turnaround and should also benefit from the repositioning in their markets moving forward. We've seen similar results in the Priory Life and Sedalis portfolios. These are great examples of Ventas OI in collaboration with an operator with a strong regional focus delivering excellent results. We invested in the right markets with the right operators and ensure the assets are positioned well for success. We've also shared a few community-specific examples in our earnings deck. We are pleased to announce, as expected, that we are delivering over 100 NOI-generating capex projects in our SHOP portfolio, which when combined with the operational improvements that are already well underway, will significantly enhance the market position of our communities in terms of rate and occupancy over time.
We are already seeing excellent early returns, which is a testament to the effectiveness of our strategy and our commitment to delivering exceptional value creation, and we have more attractive opportunities planned in the near future. With the right investments and strategic focus, we believe that we have an extraordinary opportunity to drive NOI recovery in the SHOP portfolio that Debbie mentioned with the potential to generate over $1 billion in NOI when the portfolio reaches 88% occupancy and a 30% margin. While there is still work to be done to realize this potential, we're pleased with the progress we've made so far. In the first quarter of this year, our annualized run rate for NOI in the SHOP portfolio was $682 million, continuing a trajectory of growth and success.
Looking ahead, we are reaffirming our full year guidance of 15% to 21% NOI growth in our year-over-year SHOP same-store pool. We expect a significant occupancy ramp throughout the year, supported by an accelerating aging demographic and muted new supply. As we approach the key selling season, which starts now. We are encouraged by very strong lead volume year-to-date and the quarter is off to a good start. Now I'll comment on investment activity. Our pipeline remains active, and our team is evaluating a select group of potential investments. high-quality, stable assets and those trading below replacement costs with growth potential are still commanding relatively low cap rates of 5% to 6%.
We are seeing market disconnects as asset pricing is not fully reflecting the rising cost of capital. We are, however, seeing recent examples where the bid-ask spread is tightening, especially in Class A senior housing. We are prioritizing smaller, high-quality, high-performing relationship-oriented transactions. NOI generating capex remains our highest and best use of capital as we continue to drive the SHOP recovery.
With that, I'll hand over to Bob.