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Healthpeak's (PEAK) FFO and Revenues Surpass Estimates in Q4

Healthpeak Properties, Inc. PEAK reported fourth-quarter 2022 funds from operations (FFO) as adjusted per share of 44 cents, beating the Zacks Consensus Estimate by a penny. The reported figure was up 7.3% from the year-ago quarter’s 41 cents.

The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) net operating income (NOI) was witnessed across the portfolio. The company issued its 2023 outlook.

The healthcare real estate investment trust (REIT) generated revenues of $524.5 million, outpacing the Zacks Consensus Estimate of $519.9 million. The figure was 8.5% higher than the prior-year quarter’s $483.2 million.

In 2022, FFO, as adjusted, was $1.74 per share, in line with the Zacks Consensus Estimate. The reported figure improved 8.1% year over year. Full-year revenues of $2.06 billion surpassed the Zacks Consensus Estimate of $2.05 billion. Moreover, the figure increased 8.7% from the previous year.

Healthpeak plans to implement a holding company reorganization to restructure Healthpeak Properties, Inc. as an Umbrella Partnership Real Estate Investment Trust (UPREIT) during first-quarter 2023. The reorganization is expected to be effective as of Feb 10, 2023. The conversion will align the company’s corporate structure with other publicly traded U.S. REITs and support external growth by offering real estate owners a tax-deferred alternative for disposing of properties.

Behind the Headlines

In the December quarter, Healthpeak reported 6.6% year-over-year growth in the same-store portfolio cash-adjusted NOI.

It witnessed 5.7% and 5.4% year-over-year growth in the same-store portfolio cash (adjusted) NOI for its life-science and medical office segments, respectively. Also, the same-store portfolio cash-adjusted NOI for the CCRC portfolio improved 15% from the prior-year quarter.

Portfolio Activity

During the reported quarter, Healthpeak executed life science new and renewal leases totaling 175,000 square feet with cash-releasing spreads on renewals of +64%.

The company placed in service 142,000 square feet of fully leased Class A development space at 101 Cambridge Park Drive in Cambridge, MA. This represented an investment of $145 million. The remaining 19,000 square feet are expected to be placed in service during 2023.

PEAK also completed the redevelopment of the fully leased 1150 Veterans building on the Oyster Point campus in South San Francisco for $44 million.

Balance Sheet

Healthpeak exited fourth-quarter 2022 with cash and cash equivalents of $72 million, down from $112.5 million as of Sep 30, 2022. Its net debt to adjusted EBITDAre was 5.3X as of Dec 31, 2022.

In December, PEAK settled all 9.1 million shares previously outstanding under the at-the-market (ATM) forward contracts at a weighted average net price of $34 per share. This resulted in net proceeds of $308 million.

2023 Outlook

Healthpeak issued its guidance for 2023.

It expects FFO as adjusted per share to lie between $1.70 and $1.76. The Zacks Consensus Estimate for the same is currently pegged at $1.79.

The same-store portfolio cash-adjusted NOI growth for the total portfolio is estimated to lie in the range of 2.75-4.25%.

Healthpeak currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Healthpeak Properties, Inc. Price, Consensus and EPS Surprise

Healthpeak Properties, Inc. price-consensus-eps-surprise-chart | Healthpeak Properties, Inc. Quote

Performance of Other REITs

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported fourth-quarter 2022 core FFO per share of $2.32, surpassing the Zacks Consensus Estimate of $2.28. The reported number improved 22.1% year over year.

This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also issued its outlook for 2023.

Alexandria Real Estate Equities, Inc. ARE reported fourth-quarter 2022 AFFO per share of $2.14, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.97.

ARE’s results reflected decent leasing activity and rental rate growth during the quarter.

Boston Properties Inc.’s BXP fourth-quarter 2022 FFO per share of $1.86 outpaced the Zacks Consensus Estimate of $1.84. The figure increased 18.7% year over year.

The quarterly figure also exceeded the mid-point of the company’s fourth-quarter guidance by a cent, reflecting portfolio outperformance. In addition, BXP experienced solid leasing activity in the quarter. The company revised its 2023 outlook for FFO per share.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

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