Healthpeak Properties Q2 Earnings Call Highlights

Healthpeak Properties Q2 Earnings Call Highlights

Healthpeak raised its full-year adjusted FFO guidance by $0.02 to $1.73–$1.77 per share after reporting $0.46 in second-quarter adjusted FFO per share, supported by improved expectations for lab and senior housing NOI. Outpatient medical leasing remained solid, with 1.2 million square feet leased during the quarter and occupancy rising to 90.7%. A Brookfield recapitalization generated $1 billion in cash while Healthpeak retained a 51% stake in the 5.6 million-square-foot portfolio. Lab occupancy increased to 78.5% as leasing activity continued, particularly in San Diego and the Bay Area. Healthpeak also strengthened its balance sheet, repaid $900 million of debt, and expanded senior housing through $1.8 billion of acquisitions, with Janus Living reporting strong revenue, EBITDA and NOI growth.

Healthpeak Properties NYSE: PEAK reported second-quarter adjusted funds from operations of $0.46 per share and raised its full-year adjusted FFO guidance by $0.02 to a range of $1.73 to $1.77 per share, citing improved same-store net operating income expectations in its lab and senior housing businesses. Chief Executive Officer Scott Brinker said the company’s strategy during the life science downturn—including a $5 billion merger, a $1 billion IPO and additions to its operating platform—has positioned Healthpeak to benefit as sector fundamentals improve. He said the company has also internalized property management in much of its portfolio and is rolling out an agentic operating platform.

“As the life science pendulum finally starts to swing back in our favor,” Brinker said, the company is stronger and has additional capabilities to pursue growth.

Healthpeak reported continued strength in its outpatient medical portfolio. During the second quarter, the company executed 1.2 million square feet of leases, including about 327,000 square feet of new leasing, bringing year-to-date leasing volume to 2.3 million square feet. Tenant retention was 80%, while cash re-leasing spreads were 5%. Total outpatient medical occupancy increased 20 basis points sequentially to 90.7%. Since July 1, Healthpeak has executed another 204,000 square feet of leases and has about 882,000 square feet under letters of intent, according to Chief Financial Officer Kelvin Moses. The company also announced another development agreement with Northside in Atlanta for a new outpatient medical project. It will be the fifth project Healthpeak has undertaken with Northside, with the projects totaling approximately 565,000 square feet.

Healthpeak completed an outpatient medical recapitalization with Brookfield, retaining a 51% interest in a 5.6 million-square-foot portfolio while raising $1 billion in cash proceeds. Moses said the transaction represented a trailing cash capitalization rate of 5.9%. After seven years, Healthpeak will have a limited number of rights to repurchase Brookfield’s noncontrolling interest at a price designed to provide Brookfield with a 6.5% unlevered return. Healthpeak will continue to provide asset management, property management and leasing services for the portfolio.

Brinker said the Brookfield partnership and a separate arrangement with Blackstone expand the company’s alternative sources of equity capital. Healthpeak holds a 20% interest in its Blackstone venture, compared with 51% in the Brookfield venture. Brinker said he expects Healthpeak to pursue further opportunities with both partners.