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Healthpeak Properties Reports Third Quarter 2023 Results and Declares Quarterly Cash Dividend on Common Stock

DENVER, October 30, 2023--(BUSINESS WIRE)--Healthpeak Properties, Inc. (NYSE: PEAK), a leading owner, operator, and developer of real estate for healthcare discovery and delivery, today announced results for the third quarter ended September 30, 2023.

THIRD QUARTER 2023 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS

Net income of $0.12 per share, Nareit FFO of $0.46 per share, FFO as Adjusted of $0.45 per share, AFFO of $0.40 per share, and blended Total Same-Store Portfolio Cash (Adjusted) NOI growth of 6.0%

Third quarter new and renewal lease executions totaled 2.3 million square feet:

Outpatient Medical new and renewal lease executions totaled 2.1 million square feet, an all-time quarterly high, including a 1.3 million square foot renewal at Medical City Dallas

Lab new and renewal lease executions totaled 211,000 square feet, including leases at three trophy campuses:

101,000 square feet at 331 Oyster Point in South San Francisco, California

61,000 square feet at 75 Hayden in Lexington, Massachusetts

23,000 square foot development lease at Vantage in South San Francisco, California, bringing the project to 52% pre-leased

In September 2023, the Cambridge City Council unanimously approved a comprehensive rezoning to allow for greater density and developable heights in the West Cambridge neighborhood of Alewife, where Healthpeak owns a total of 39 acres

Net debt to Adjusted EBITDAre was 5.2x as of September 30, 2023

Updated full year 2023 diluted earnings guidance to a range of $0.53 – $0.55 per share; increased the midpoint of 2023 FFO as Adjusted guidance by $0.02 per share and increased Total Portfolio Same-Store Cash (Adjusted) NOI growth guidance by 75 basis points at the midpoint

On October 29, 2023, Healthpeak's Board of Directors declared a quarterly common stock cash dividend of $0.30 per share to be paid on November 20, 2023, to stockholders of record as of the close of business on November 7, 2023

Received the GRESB Green Star designation for the twelfth consecutive year and recognized for leading corporate governance and ESG disclosures by Governance Intelligence and IR Magazine

THIRD QUARTER COMPARISON

Three Months Ended

September 30, 2023

Three Months Ended

September 30, 2022

(in thousands, except per share amounts)

Amount

Per Share

Amount

Per Share

Net income, diluted

$

64,048

$

0.12

$

355,721

$

0.65

Nareit FFO, diluted

252,566

0.46

227,426

0.42

FFO as Adjusted, diluted

251,647

0.45

235,504

0.43

AFFO, diluted

219,645

0.40

194,963

0.36

YEAR TO DATE COMPARISON

Nine Months Ended

September 30, 2023

Nine Months Ended

September 30, 2022

(in thousands, except per share amounts)

Amount

Per Share

Amount

Per Share

Net income, diluted

$

233,497

$

0.43

$

496,341

$

0.91

Nareit FFO, diluted

730,764

1.32

711,713

1.30

FFO as Adjusted, diluted

735,067

1.33

711,515

1.30

AFFO, diluted

652,839

1.18

595,883

1.09

Nareit FFO, FFO as Adjusted, AFFO, Same-Store Cash (Adjusted) NOI, and Net Debt to Adjusted EBITDAre are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance and financial position of real estate investment trusts (see the "Funds From Operations" and "Adjusted Funds From Operations" sections of this release for additional information). See "September 30, 2023 Discussion and Reconciliation of Non-GAAP Financial Measures" for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP in the Investor Relations section of our website at http://ir.healthpeak.com/quarterly-results.

SAME-STORE ("SS") OPERATING SUMMARY

The table below outlines the year-over-year three-month and year-to-date SS Cash (Adjusted) NOI growth.

Year-Over-Year Total SS Portfolio Cash (Adjusted) NOI Growth

Three Month

Year-To-Date

SS Growth %

% of SS

SS Growth %

% of SS

Lab

3.3

%

47.6

%

4.3

%

47.3

%

Outpatient Medical

3.4

%

41.1

%

3.2

%

41.5

%

CCRC

32.1

%

11.3

%

20.0

%

11.2

%

Total Portfolio

6.0

%

100.0

%

5.4

%

100.0

%

DEVELOPMENT UPDATES

VANTAGE PHASE I

In September 2023, Healthpeak signed an additional 23,000 square foot lease with a global pharmaceutical company at its Vantage Phase I development in South San Francisco, California, bringing the property to 52% pre-leased.

Strategically located on Forbes Boulevard and at the doorstep of Genentech's headquarters, the purpose-built lab campus will feature state-of-the-art design, an amenity center, flexible and efficient floor plates, and building systems accommodating a broad range of lab uses.

WEST CAMBRIDGE

In September 2023, the Cambridge City Council unanimously approved a comprehensive rezoning to allow for greater density and developable heights in the West Cambridge neighborhood of Alewife. Healthpeak’s vision for the neighborhood incorporates Alewife’s historic heritage and its innovative future by creating an active public realm driven by world-class real estate including lab, R&D and multi-family residential. Healthpeak owns a total of 39 acres in Alewife.

GRAPHITE BIO LEASE MODIFICATION

In October 2023, Healthpeak modified an approximately 85,200 square foot lease with Graphite Bio (Nasdaq: GRPH) at the Nexus on Grand campus in South San Francisco, California. Under the terms of the modification, Graphite Bio’s lease expiration date was accelerated to December 31, 2024 in exchange for total consideration of $58 million, consisting of:

i.

$37 million cash payment, which is inclusive of the prepayment of Graphite Bio's 2024 contractual rent, including operating expense reimbursements, and termination and related fees; and

ii.

$21 million credit for future rent and operating expense reimbursements from the in-place 32,000 square foot subtenant; the subtenant has approximately one year remaining on the sublease, at which point it will become a direct tenant of Healthpeak with a lease term of approximately six years

The $58 million in total consideration is equivalent to approximately 5+ years of Graphite Bio’s original contractual rental payments, including operating expense reimbursements, and provides ample time for Healthpeak to release the remaining 53,000 square feet of fully built-out, Class A space to new tenants. Healthpeak retains the right to immediately release this space with no change in the payments due from Graphite Bio or the subtenant.

ESG

Healthpeak received the GRESB Green Star designation for the twelfth consecutive year. Healthpeak was also named a finalist by Governance Intelligence and IR Magazine for Best Proxy Statement for the fourth consecutive year and Best ESG Reporting for the second consecutive year, and included in Fortune's list of Best Workplaces in Real Estate for the second consecutive year.

To learn more about Healthpeak's commitment to responsible business and view our 2022 ESG Report, please visit www.healthpeak.com/ESG.

DIVIDEND

On October 29, 2023, Healthpeak's Board declared a quarterly common stock cash dividend of $0.30 per share to be paid on November 20, 2023, to stockholders of record as of the close of business on November 7, 2023.

2023 GUIDANCE

We are updating the following guidance ranges for full year 2023:

  • Diluted earnings per common share from $0.49 – $0.53 to $0.53 – $0.55

  • Diluted Nareit FFO per share from $1.72 – $1.76 to $1.76 – $1.78

  • Diluted FFO as Adjusted per share from $1.73 – $1.77 to $1.76 – $1.78

  • Total Portfolio Same-Store Cash (Adjusted) NOI growth from 3.25% – 4.75% to 4.25% – 5.25%

These estimates do not reflect the potential impact from unannounced future transactions. These estimates are based on our view of existing market conditions, transaction timing, and other assumptions for the year ending December 31, 2023. For additional details and assumptions underlying this guidance, please see page 38 in our corresponding Supplemental Report and the Discussion and Reconciliation of Non-GAAP Financial Measures, both of which are available in the Investor Relations section of our website at http://ir.healthpeak.com.

UPDATED CONFERENCE CALL INFORMATION

Healthpeak has scheduled a conference call and webcast for Monday, October 30, 2023, at 8:30 a.m. Eastern Time.

The conference call can be accessed in the following ways:

An archive of the webcast will be available on Healthpeak's website through October 30, 2024, and a telephonic replay can be accessed through November 6, 2023, by dialing (800) 770-2030 or (647) 362-9199 (international) and entering conference ID number 58822.

ABOUT HEALTHPEAK

Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns, operates and develops high-quality real estate for healthcare discovery and delivery.

FORWARD-LOOKING STATEMENTS

Statements contained in this release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements regarding our and our officers' intent, belief or expectation as identified by the use of words such as "may," "will," "project," "expect," "believe," "intend," "anticipate," "seek," "target," "forecast," "plan," "potential," "estimate," "could," "would," "should" and other comparable and derivative terms or the negatives thereof. Examples of forward-looking statements include, among other things: (i) statements regarding timing, outcomes and other details relating to current, pending or contemplated acquisitions, dispositions, transitions, developments, redevelopments, densifications, joint venture transactions, leasing activity and commitments, capital recycling plans, financing activities, or other transactions discussed in this release; (ii) the payment of a quarterly cash dividend; and (iii) the information presented under the heading "2023 Guidance." Pending acquisitions, dispositions, joint venture transactions, leasing activity, and financing activity, including those subject to binding agreements, remain subject to closing conditions and may not be completed within the anticipated timeframes or at all. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could significantly affect our future financial condition and results of operations. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this release, and such forward-looking statements are subject to known and unknown risks and uncertainties that are difficult to predict. These risks and uncertainties include, but are not limited to: macroeconomic trends, including inflation, interest rates, labor costs, and unemployment; the ability of our existing and future tenants, operators, and borrowers to conduct their respective businesses in a manner that generates sufficient income to make rent and loan payments to us; the financial condition of our tenants, operators, and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings; our concentration of real estate investments in the healthcare property sector, which makes us more vulnerable to a downturn in a specific sector than if we invested across multiple sectors; the illiquidity of real estate investments; our ability to identify and secure new or replacement tenants and operators; our property development, redevelopment, and tenant improvement activity risks, including project abandonments, project delays, and lower profits than expected; changes within the industries in which we operate; significant regulation, funding requirements, and uncertainty faced by our lab tenants; the ability of the hospitals on whose campuses our outpatient medical buildings are located and their affiliated healthcare systems to remain competitive or financially viable; our ability to develop, maintain, or expand hospital and health system client relationships; operational risks associated with third party management contracts, including the additional regulation and liabilities of our properties operated through RIDEA structures; economic conditions, natural disasters, weather, and other conditions that negatively affect geographic areas where we have concentrated investments; uninsured or underinsured losses, which could result in significant losses and/or performance declines by us or our tenants and operators; our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners’ financial condition and continued cooperation; our use of fixed rent escalators, contingent rent provisions, and/or rent escalators based on the Consumer Price Index; competition for suitable healthcare properties to grow our investment portfolio; our ability to foreclose or exercise rights on collateral securing our real estate-related loans; investment of substantial resources and time in transactions that are not consummated; our ability to successfully integrate or operate acquisitions; the potential impact on us and our tenants, operators, and borrowers from litigation matters, including rising liability and insurance costs; environmental compliance costs and liabilities associated with our real estate investments; epidemics, pandemics, or other infectious diseases, including Covid, and health and safety measures intended to reduce their spread; the loss or limited availability of our key personnel; our reliance on information technology systems and the potential impact of system failures, disruptions, or breaches; increased borrowing costs, including due to rising interest rates; cash available for distribution to stockholders and our ability to make dividend distributions at expected levels; the availability of external capital on acceptable terms or at all, including due to rising interest rates, changes in our credit ratings and the value of our common stock, volatility or uncertainty in the capital markets, and other factors; our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness; bank failures or other events affecting financial institutions; the failure of our tenants, operators, and borrowers to comply with federal, state, and local laws and regulations, including resident health and safety requirements, as well as licensure, certification, and inspection requirements; required regulatory approvals to transfer our senior housing properties; compliance with the Americans with Disabilities Act and fire, safety, and other regulations; laws or regulations prohibiting eviction of our tenants; the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid; legislation to address federal government operations and administrative decisions affecting the Centers for Medicare and Medicaid Services; our participation in the CARES Act Provider Relief Fund and other Covid-related stimulus and relief programs; our ability to maintain our qualification as a REIT; changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions; calculating non-REIT tax earnings and profits distributions; ownership limits in our charter that restrict ownership in our stock; provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders; and other risks and uncertainties described from time to time in our Securities and Exchange Commission filings. Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.

Healthpeak Properties, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data

September 30,
2023

December 31,
2022

Assets

Real estate:

Buildings and improvements

$

13,097,282

$

12,784,078

Development costs and construction in progress

863,341

760,355

Land and improvements

2,657,602

2,667,188

Accumulated depreciation and amortization

(3,498,077

)

(3,188,138

)

Net real estate

13,120,148

13,023,483

Loans receivable, net of reserves of $8,023 and $8,280

225,881

374,832

Investments in and advances to unconsolidated joint ventures

745,381

706,677

Accounts receivable, net of allowance of $2,077 and $2,399

59,085

53,436

Cash and cash equivalents

63,478

72,032

Restricted cash

50,449

54,802

Intangible assets, net

339,191

418,061

Assets held for sale, net

8,277

49,866

Right-of-use asset, net

233,480

237,318

Other assets, net

757,164

780,722

Total assets

$

15,602,534

$

15,771,229

Liabilities and Equity

Bank line of credit and commercial paper

$

424,000

$

995,606

Term loans

496,603

495,957

Senior unsecured notes

5,401,461

4,659,451

Mortgage debt

342,349

346,599

Intangible liabilities, net

133,668

156,193

Liabilities related to assets held for sale, net

39

4,070

Lease liability

204,762

208,515

Accounts payable, accrued liabilities, and other liabilities

687,650

772,485

Deferred revenue

879,174

844,076

Total liabilities

8,569,706

8,482,952

Commitments and contingencies

Redeemable noncontrolling interests

49,016

105,679

Common stock, $1.00 par value: 750,000,000 shares authorized; 547,072,311 and 546,641,973 shares issued and outstanding

547,072

546,642

Additional paid-in capital

10,401,994

10,349,614

Cumulative dividends in excess of earnings

(4,528,508

)

(4,269,689

)

Accumulated other comprehensive income (loss)

36,747

28,134

Total stockholders’ equity

6,457,305

6,654,701

Joint venture partners

313,402

327,721

Non-managing member unitholders

213,105

200,176

Total noncontrolling interests

526,507

527,897

Total equity

6,983,812

7,182,598

Total liabilities and equity

$

15,602,534

$

15,771,229

Healthpeak Properties, Inc.

Consolidated Statements of Operations

In thousands, except per share data

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

Revenues:

Rental and related revenues

$

417,075

$

392,301

$

1,219,473

$

1,149,530

Resident fees and services

133,808

122,142

391,076

369,062

Interest income

5,360

5,963

16,802

16,950

Income from direct financing leases

1,168

Total revenues

556,243

520,406

1,627,351

1,536,710

Costs and expenses:

Interest expense

50,510

44,078

147,547

123,531

Depreciation and amortization

184,559

173,190

561,357

531,412

Operating

232,734

220,208

677,659

642,499

General and administrative

23,093

24,549

73,576

73,161

Transaction costs

36

728

3,098

1,636

Impairments and loan loss reserves (recoveries), net

(550

)

3,407

(156

)

3,678

Total costs and expenses

490,382

466,160

1,463,081

1,375,917

Other income (expense):

Gain (loss) on sales of real estate, net

(4,149

)

86,463

10,047

Other income (expense), net

1,481

305,678

4,208

326,855

Total other income (expense), net

1,481

301,529

90,671

336,902

Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures

67,342

355,775

254,941

497,695

Income tax benefit (expense)

(787

)

3,834

(2,225

)

3,775

Equity income (loss) from unconsolidated joint ventures

2,101

(325

)

6,646

2,141

Income (loss) from continuing operations

68,656

359,284

259,362

503,611

Income (loss) from discontinued operations

(1,298

)

2,011

Net income (loss)

68,656

357,986

259,362

505,622

Noncontrolling interests’ share in continuing operations

(4,442

)

(4,016

)

(24,297

)

(11,701

)

Net income (loss) attributable to Healthpeak Properties, Inc.

64,214

353,970

235,065

493,921

Participating securities’ share in earnings

(166

)

(604

)

(1,568

)

(2,523

)

Net income (loss) applicable to common shares

$

64,048

$

353,366

$

233,497

$

491,398

Basic earnings (loss) per common share:

Continuing operations

$

0.12

$

0.66

$

0.43

$

0.91

Discontinued operations

0.00

0.00

Net income (loss) applicable to common shares

$

0.12

$

0.66

$

0.43

$

0.91

Diluted earnings (loss) per common share:

Continuing operations

$

0.12

$

0.65

$

0.43

$

0.91

Discontinued operations

0.00

0.00

Net income (loss) applicable to common shares

$

0.12

$

0.65

$

0.43

$

0.91

Weighted average shares outstanding:

Basic

547,062

538,417

546,978

539,105

Diluted

547,331

546,015

547,247

544,852

Healthpeak Properties, Inc.

Funds From Operations

In thousands, except per share data

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

Net income (loss) applicable to common shares

$

64,048

$

353,366

$

233,497

$

491,398

Real estate related depreciation and amortization

184,559

173,190

561,357

531,412

Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures

6,190

8,704

18,076

19,049

Noncontrolling interests’ share of real estate related depreciation and amortization

(4,571

)

(4,464

)

(14,042

)

(14,487

)

Loss (gain) on sales of depreciable real estate, net

5,280

(86,463

)

(11,408

)

Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures

239

89

Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net

11,546

12

Loss (gain) upon change of control, net(1)

(311,438

)

(234

)

(311,438

)

Taxes associated with real estate dispositions

197

31

Nareit FFO applicable to common shares

250,226

225,074

723,737

704,658

Distributions on dilutive convertible units and other

2,340

2,352

7,027

7,055

Diluted Nareit FFO applicable to common shares

$

252,566

$

227,426

$

730,764

$

711,713

Diluted Nareit FFO per common share

$

0.46

$

0.42

$

1.32

$

1.30

Weighted average shares outstanding - diluted Nareit FFO

554,614

546,015

554,535

546,677

Impact of adjustments to Nareit FFO:

Transaction-related items

$

49

$

681

$

2,993

$

1,573

Other impairments (recoveries) and other losses (gains), net(2)

(602

)

2,897

557

(5,874

)

Restructuring and severance-related charges

1,368

Casualty-related charges (recoveries), net(3)

(367

)

4,514

(610

)

4,103

Total adjustments

(920

)

8,092

4,308

(198

)

FFO as Adjusted applicable to common shares

249,306

233,166

728,045

704,460

Distributions on dilutive convertible units and other

2,341

2,338

7,022

7,055

Diluted FFO as Adjusted applicable to common shares

$

251,647

$

235,504

$

735,067

$

711,515

Diluted FFO as Adjusted per common share

$

0.45

$

0.43

$

1.33

$

1.30

Weighted average shares outstanding - diluted FFO as Adjusted

554,614

546,015

554,535

546,677

(1)

The three and nine months ended September 30, 2022 include a gain upon change of control related to the sale of a 30% interest to a sovereign wealth fund and deconsolidation of seven previously consolidated lab buildings in South San Francisco, California. The gain upon change of control is included in other income (expense), net in the Consolidated Statements of Operations.

(2)

The nine months ended September 30, 2022 includes the following, which are included in other income (expense), net in the Consolidated Statements of Operations: (i) a $23 million gain on sale of a hospital under a direct financing lease and (ii) $14 million of expenses incurred for tenant relocation and other costs associated with the demolition of an outpatient medical building. The three and nine months ended September 30, 2023 and 2022 include reserves and (recoveries) for expected loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.

(3)

Casualty-related charges (recoveries), net are recognized in other income (expense), net and equity income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations.

Healthpeak Properties, Inc.

Adjusted Funds From Operations

In thousands

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

FFO as Adjusted applicable to common shares

$

249,306

$

233,166

$

728,045

$

704,460

Stock-based compensation amortization expense

3,434

4,614

10,966

14,635

Amortization of deferred financing costs

3,054

2,691

8,828

8,069

Straight-line rents(1)

(7,279

)

(12,965

)

(12,710

)

(36,837

)

AFFO capital expenditures

(24,031

)

(24,358

)

(66,264

)

(75,103

)

Deferred income taxes

(430

)

(2,814

)

(933

)

(3,741

)

Amortization of above (below) market lease intangibles, net

(5,626

)

(5,876

)

(20,267

)

(17,528

)

Other AFFO adjustments

(1,123

)

(1,144

)

(1,852

)

(3,017

)

AFFO applicable to common shares

217,305

193,314

645,813

590,938

Distributions on dilutive convertible units and other

2,340

1,649

7,026

4,945

Diluted AFFO applicable to common shares

$

219,645

$

194,963

$

652,839

$

595,883

Diluted AFFO per common share

$

0.40

$

0.36

$

1.18

$

1.09

Weighted average shares outstanding - diluted AFFO

554,614

544,190

554,535

544,852

(1)

The nine months ended September 30, 2023 includes an $8.7 million write-off of straight-line rent receivable associated with Sorrento Therapeutics, Inc., which commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code. This write-off is reflected as a reduction of rental and related revenues in the Consolidated Statements of Operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231030819874/en/

Contacts

Andrew Johns, CFA
Senior Vice President – Investor Relations
720-428-5400