Healthpeak Properties Third Quarter 2026 Conference Call - HEALTHPEAK PROPERTIES INC

Explicit Guidance:

• FFO Adjusted: Raised midpoint by 2 cents for the current year (FY2026) to a range of $1.76–$1.78 per share.
• Same Store NOI Growth (2026): Midpoint increased to 0.5%–2.0%, broken down by segment:
  • Outpatient Medical: Increased by 25 bps to 2.5%–3.0%.
  • Life Science (Lab): Increased by 100 bps to -3.0% to -6.0%.
  • Senior Housing: Increased by 250 bps to 16.0%–19.0%.
• 2027 Outlook: No explicit numerical guidance provided for FY2027, though management notes "expect internal growth to accelerate in 2027" and anticipates a "material move" in total occupancy for outpatient in 2027.
• CapEx: Expects to remain "consistent with years past," with no expectation for CapEx to dramatically exceed current levels, despite ongoing TIs for new leases.
• Dividends/Buybacks: No specific changes or targets mentioned regarding share count, dividends, or buybacks.

Business-Segment Outlook:

• Outpatient Medical:
  • Growth: Internal growth expected to accelerate in 2027 driven by recent lease executions and pipeline.
  • Leasing Velocity: Expected to continue in Q4 2026 with an additional 269,000 sq. ft. of executed leases and 1.03 million sq. ft. of signed LOIs.
  • Occupancy: Total occupancy increased sequentially; management expects "fewer expirations" and a "terrific" leasing pipeline to drive a material occupancy increase in 2027.
  • Rents: Renewal rents averaging $72/sq. ft. with a modest 5.6% roll-down; new lease spreads approximately 5% above historical averages.
• Life Science (Lab):
  • Occupancy: Reported 79.8% total occupancy at quarter-end (up 270 bps YTD); expects total occupancy to grow by 100 bps in 2026 (previously projected 100 bps).
  • Leasing: Executed 480,000 sq. ft. in Q3 (strongest in over a year); 643,000 sq. ft. signed/executed post-quarter end.
  • Acquisitions (Gateway & 3 New Assets):
    • Gateway Campus (South San Francisco): 125,000 sq. ft. leased in Q4 alone; 100,000 sq. ft. under LOI/discussion.
    • New Acquisitions: 41% occupancy currently; underwriting assumes 2–3 year timeline to stabilization (90%+ occupancy) with yields moving from 5% (in-place) to 9%–10% (stabilized).
    • Leasing Progress: Strong leasing activity on 70% of acquired vacancy pre-close.
    • AI/Robotics: Significant demand from "AI-adjacent" users (robotics, etc.) soaking up vacancy in Torrey Pines and South San Francisco.
  • Sub-market Performance: Torrey Pines fully leased (100%) vs. 65% six months ago. Boston remains the most pressured sub-market; San Diego showing pricing power.
• Senior Housing (Janus Living):
  • Performance: Same-store NOI up 26%; revenue up 78%; Adjusted EBITDA up 101% in Q3.
  • M&A: Completed acquisition of 39 communities (~$2.1 billion) through October, bringing YTD acquisition total to $2.9 billion.
  • Strategy: Operating partners expanded from 2 to 13 to drive external growth; acquisition NOI trending in line or ahead of underwriting.
  • 2027 Driver: Janus Living's organic and external growth expected to be a key contributor to HealthPeak's earnings in 2027.

Market and Competitive Outlook:

• Life Science Supply/Demand: Supply and demand shifting in favor of HealthPeak; "quote-unquote life science buildings" being converted to alternative uses (AI/Robotics), reducing supply.
• Competitive Landscape: HealthPeak positioning as the "only company growing its footprint" in life science; entering recovery as a consolidator while competitors face distress.
• Acquisition Environment: Life science GPs, LPs, and lenders are "upside down"; capital availability shifted from "overly abundant to severely constrained," allowing HealthPeak to buy core assets at a basis with downside protection.
• Outpatient Sector: Aging population driving record demand; new supplies at historical lows; cost pressures on health systems creating a "strategic mandate" for outpatient delivery.
• Cap Rates: Transaction market volatility observed; senior housing less impacted by rates than lower-growth/longer-lease portfolios; HealthPeak transacting at ~6% blended cap rate on recent dispositions.

Macro / Industry Outlook:

• Interest Rates: Rate volatility (Treasuries moving from 4% to 4.5% to 5%+ and back to ~5%) causing some commercial real estate transaction pauses/retrades.
• Biotech Capital Flows: Over $150 billion flowed into biotech between IPOs, M&A, and secondary offerings, improving tenant credit profiles and pipeline health.
• Refinancing: $1.4 billion in debt maturities scheduled for 2027; current cost of borrowing on maturing debt is ~3%, creating a drag vs. current market rates.
• FX/Regulation/Tariffs: Not explicitly discussed in the transcript.

Strategic Initiatives:

• Acquisitions (Life Science):
  • Three announced assets: Surrounded by existing portfolio; 41% occupancy currently, targeting 9–10% in-place yield to 9–10% stabilized yield.
  • Financing Structure: Shifted from structured deals (preferred stock/lending) to fee simple acquisitions in 2026 as prices have fallen to underwrite compelling returns.
  • Total Pipeline: $1+ billion (closed or in pipeline) of life science acquisitions that are strategic and low-priced.
• Dispositions:
  • Outpatient: $200 million of additional asset sales outlined; expected to close by year-end.
  • Q1 2027: $500 million term loan draw anticipated to refinance $1.4 billion in maturities.
• Joint Venture Recapitalizations: Nearly $2 billion closed earlier in the year (recaps, sales, loan repayments) at 6% cap rate; focus on partnering with Blue Chip LPs.
• Development/Redevelopment: Five buildings under redevelopment in outpatient (no health-for-sale assets); focus on converting "older" or "alternative use" buildings to lab space.

Risks and Headwinds to Outlook:

• Refinancing Costs: Higher interest rates on $1.4 billion in 2027 maturities (vs. ~3% current cost) will create earnings drag; need to utilize efficient tools (term loans, CP) to mitigate.
• Lease Commencement Lag: New lease executions require 12–15 months (including build-out and free rent periods) to flow into NOI and earnings.
• Transaction Market Volatility: Rate volatility may slow transaction volumes; deals currently closing were likely negotiated months ago.
• Life Science Recovery Timing: The sector is still recovering from a severe downturn (loss of 250 bps occupancy previously); timeline to full stabilization is 2–3 years.
• Same Store Pool Manipulation: Management warns that moving assets in/out of the same-store pool (due to CapEx, sales, redevelopment) creates "misleading" metrics and focuses on bottom-line cash flow rather than top-line NOI.

Management Tone on the Future:

• Confidence Level: High confidence in operational execution; described Q3 as "very strong" and "excellent results."
• Sentiment: Describes the current environment in life science as a "great time to be a buyer" due to distressed sellers; views the company as "on a trajectory to become the leading portfolio."
• Caveats: Acknowledges the "time" required for real estate (leasing -> commencement -> cash flow) and the volatility of rates.
• Comparison: Highlights that HealthPeak is the "only company growing its footprint" in life science and that they are "outperforming our own expectations."

Miscellaneous:

• Balance Sheet: Net debt to adjusted EBITDA at 4.7x; $3.8 billion liquidity as of Oct 30; $900 million delayed draw term loans initiated (400M in Q4 2026, 500M in Q1 2027).
• Lease Economics: New lease commencements averaged >11 years; renewal rents averaging $72/sq. ft.; releasing spreads approx. 5% above historical averages.
• Pipeline Health: Over 75% of current pipeline is biotech; AI/Robotics demand is "significant" and "incremental," particularly in San Francisco.