Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Healthpeak Properties Inc (DOC, Financial) reported strong financial performance with FFO as adjusted of $0.46 per share and AFFO of $0.40 per share for the fourth quarter.
• The company achieved a total portfolio same-store growth of 5.4% for the full year 2024, exceeding the midpoint of their original FFO guidance.
• Healthpeak Properties Inc (DOC) announced an increase in their dividend, supported by earnings growth, and will begin paying dividends on a monthly basis.
• The merger with Physician Realty has been successful, contributing to earnings growth and providing significant merger synergies.
• The company has a robust pipeline of development projects, particularly in the outpatient medical and life science sectors, with over $300 million in highly preleased projects.

Negative Points

• Interest expense is expected to increase by approximately $15 million in 2025 due to refinancing maturing bonds and funding investments.
• The company faces a timing lag between when tenants sign leases and when earnings commence, impacting immediate earnings growth.
• Healthpeak Properties Inc (DOC) has a significant amount of redevelopment projects, which could be a drag on earnings in the short term.
• The company is experiencing challenges in the lab leasing market, with occupancy expected to remain flat in the same-store pool.
• There is uncertainty in the market regarding potential mergers and acquisitions, which could impact demand and tenant dynamics.

Q & A Highlights

Q: How does Healthpeak plan to utilize its significant dry powder for acquisitions, and has anything changed in the capital deployment landscape? A: Peter Scott, CFO, explained that Healthpeak has included $500 million in investment guidance for 2025, which is at the lower end of their expectations. They have more dry powder available and are confident in their ability to deploy capital as opportunities arise, particularly in life sciences and outpatient medical sectors.

Q: What is the current state of M&A activity in the life sciences sector, and how does it impact Healthpeak? A: Scott Brinker, CEO, noted that M&A activity has been relatively quiet due to FTC challenges, but there is potential for increased activity. This could positively impact the sector by upgrading tenant credit and recycling capital, which benefits investors and the sector overall.

Q: Can you provide an update on lab leasing and the pipeline for 2025? A: Peter Scott, CFO, reported strong lab leasing activity in 2024, with over 2 million square feet leased. They have over 300,000 square feet under LOI and significant ongoing activity. The focus is on capturing upside from lease-ups, with over 50% of the $60 million NOI upside already signed.

Q: What are the expected synergies from the merger, and how will they impact 2025 earnings? A: Scott Brinker, CEO, stated that the merger added $0.05 to $0.07 of earnings in 2024, with more synergies expected in 2025. They plan to internalize an additional 8 million square feet, aiming for $65 million in run-rate synergies by year-end, contributing significantly to earnings.

Q: How is Healthpeak approaching structured life science investments, and what are the expected returns? A: Scott Brinker, CEO, explained that they are targeting investments in core submarkets with strategic long-term ownership potential. The opportunity set is significant, with potential investments up to $1 billion. They focus on low-risk, high-return loans with purchase options, expecting compelling returns and strategic growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.