Healthpeak Properties Third Quarter 2026 Conference Call - HEALTHPEAK PROPERTIES INC

Financial Performance:

• Reported Adjusted FFO of $0.44 per share; raised full-year 2026 adjusted FFO guidance to $1.76–$1.78 per share (third increase of the year, +5 cents total).
• Total same-store cash NOI growth of 3.6%: Outpatient medical +2.5% to 3.0% (raised); Lab -3.0% to -6.0% (raised); Senior housing +16.0% to 19.0% (raised).
• Janus Living delivered same-store NOI growth of 26%, total revenue growth of 78%, and adjusted EBITDA growth of 101% in Q3.
• Net debt to adjusted EBITDA ratio stands at 4.7x; liquidity position is $3.8 billion as of October 30.
• Closed nearly $2.0 billion in stabilized outpatient sales/recaps/loan repayments earlier in the year at a blended 6% cap rate.
• Completed $2.2 billion in Janus Living acquisitions since IPO; year-to-date acquisition total reached $2.9 billion (69% ownership by HealthPeak).

Guidance and Future Outlook:

• Raised earnings guidance three times in 2026, citing strong operational execution and flow-through impact from Janus Living.
• Expects internal growth acceleration in 2027 for all-patient/outpatient business driven by recent lease executions and pipeline.
• Life science occupancy projected to recover significantly; 2026 full-year occupancy growth exceeded the 100 bps expectation (actual +270 bps YTD).
• Management anticipates material occupancy moves in outpatient and senior housing in 2027, driven by fewer expirations and a robust leasing pipeline.
• Life science acquisitions (Gateway Campus and three new assets) expected to stabilize yields of 9–10%, currently averaging 5%.

Business Segments and Product Lines:

• Outpatient Medical: Executed 846,000 sq ft of leases (218,000 new, 628,000 renewal) in Q3; unit executions reached 3.2 million sq ft; tenant retention at 81.7%; average new lease terms exceed 11 years with rents >$30/sq ft; ending occupancy 90.3%.
• Life Science (Lab): Executed 480,000 sq ft in Q3 (strongest quarter in >1 year); 70% of YTD volume was new leasing with biotech/R&D tenants; post-quarter end added 643,000 sq ft under LOI/execution; occupancy reached 79.8% (+130 bps QoQ); 125,000 sq ft signed at Gateway Campus in Q4 alone.
• Senior Housing: Same-store occupancy grew 300 bps; Janus Living completed 39 community acquisitions ($2.1B) and expanded operating partners from 2 to 13 to drive external growth.
• Acquisitions: Closed three strategic life science acquisitions (surrounding existing campuses) currently at 41% occupancy with 70% of vacant space already under lease discussion; total pipeline of ~$1B in strategic acquisitions.

Market and Competitive Landscape:

• Life science sector entering recovery with positive job growth; supply constrained as older lab buildings convert to alternative uses (AI, robotics) due to structural advantages (power, floor loads).
• Management positions HealthPeak as the only major player growing its footprint in life science while competitors remain stagnant; entered 2022 as #3 player, aiming to become the leading platform in recovery.
• Outpatient market fundamentals strengthened by aging demographics, record demand, and low new supply; health systems prioritizing cost-effective outpatient delivery.
• Capital availability in life science has shifted from abundant to constrained, creating buying opportunities for distressed assets at deep discounts (GPs/LPs/Lenders "upside down").
• Transaction market volatility observed due to interest rate fluctuations (Treasuries 4% to 5%+), causing pauses or repricing in other sectors, but HealthPeak honored committed prices.

Risks and Challenges:

• Interest rate volatility and refinancing costs for $1.4 billion in debt maturing in 2027; management has mitigated this via $900 million in delayed draw term loans priced at SOFR+80bps.
• Leasing cycle lag: Executed leases typically require 12–15 months to complete build-outs and commence rent, delaying earnings impact.
• Potential headwinds from rising borrowing costs impacting leveraged buyers and delaying broader transaction markets.
• Specific sub-market supply/demand imbalances; e.g., Boston faces greater pricing pressure compared to fully leased Torrey Pines (San Diego) or the Bay Area.

Management Commentary and Tone:

• Tone is highly confident and optimistic, emphasizing "strong fundamentals," "strategic mandate," and "exceptional execution."
• Management rejects "same-store" metrics as misleading for a dynamic portfolio, preferring a focus on bottom-line cash flow, total occupancy, and capex management.
• Emphasizes the unique convergence of buying cheap assets with strategic fit, leveraging unencumbered balance sheet and platform credibility to drive rapid leasing.
• Acknowledged that life science recovery takes time but asserts the company is well-positioned to outperform the sector due to scale and tenant networks.

Analyst Questions and Answers:

• Life Science Pipeline & Competition: Q: Why not more buyers? A: High losses in the sector over the last 4 years have scared off GPs/Lenders; HealthPeak's specialized platform and relationships are required to turn distressed assets around. Pipeline consists of ~$1B in strategic, adjacent acquisitions.
• Stabilization Timelines: Q: When will acquired assets stabilize? A: Underwritten on 2–3 year timelines; currently 70% of vacancy is in active negotiation.
• ROI & CapEx: Q: What are the returns? A: Acquisitions underwritten at 9–10% stabilized yields; CapEx expected to remain consistent with historical levels despite build-outs.
• Leasing Economics: Q: Are deals with existing tenants or new? A: Roughly 50/50 split between new and existing clients; demand coming from both internal expansion and external biotech/adjacent tech growth.
• Outpatient Growth: Q: Drivers for 2027 acceleration? A: Temporary drag from 2025/26 expirations clearing; pipeline is robust with fewer future expirations.

Other Key Points:

• Discussed "AI-adjacent" demand (robotics) converting older lab stock into new demand, removing potential future supply from the market.
• Highlighted the success of the Janus Living structure, aligning interests with operating partners to facilitate external growth.
• Confirmed three new acquisitions in life science are fee-simple deals, contrasting with previous mortgage/preferred equity structures used when prices were too high.
• Noted specific asset quality distinctions in acquisitions (e.g., HQ Point having larger floor plates than adjacent Director's Science Park).