Healthpeak Properties Third Quarter 2026 Conference Call - HEALTHPEAK PROPERTIES INC

Financial Performance:

• Reported Adjusted Funds from Operations (FFO) of $0.44 per share; guidance raised to $1.76–$1.78 per share (midpoint), representing a cumulative five-cent increase YTD.
• Same-store cash NOI growth of 3.6% for the quarter; total same-store NOI guidance raised by 50 bps to 0.5%–2.0% midpoint.
• Outpatient medical drove significant value creation with $2B in stabilized sales/recaps at a 6% blended cap rate; Senior housing Same-Store NOI grew 26% and Revenue 78%.
• Life Science portfolio achieved 270 bps occupancy increase YTD; total occupancy ended Q3 at 79.8% (excluding recent acquisition reset).
• Net debt to Adjusted EBITDA stands at 4.7x; liquidity of $3.8B as of October 30, 2026.
• Leasing costs (TIs/Commissions) remained modest, averaging 9.5% of rent for renewals and 5% releasing spreads in outpatient.

Guidance and Future Outlook:

• FFO guidance raised for the third consecutive quarter, driven by strong leasing velocity and delayed disposition timing.
• Management expects internal growth acceleration in 2027 for outpatient medical and Life Science, fueled by executed leases and pipeline activity.
• Senior housing Same-Store NOI growth guidance increased to 16%–19%; Outpatient guidance improved to 2.5%–3.0%; Life Science guidance improved to -3% to -6% (narrower decline).
• Anticipate 12–15 month lag between lease execution and NOI flow-through due to TI requirements and free rent periods.
• Expect to see earnings acceleration in 2027 as occupancy gains in Life Science translate to rent payments.
• Plan to address $1.4B debt maturities in 2027 using proactive term loans ($400M in Q4, $500M in Q1 2027) to lock in SOFR + 80bps pricing.

Business Segments and Product Lines:

• Outpatient Medical: Executed 846,000 sq ft of leases (218k new, 628k renewal); total occupancy 90.3% (adjusted for Brookfield recap). Average new lease term >11 years; retention at 81.7%.
• Life Science: Executed 480,000 sq ft (strongest quarter in >1 year); 70% new leasing, 80% with Biotech/R&D tenants. Acquired 125k sq ft at Gateway Campus in Q4 alone; signed 100k sq ft LOI.
• Senior Housing: Janus Living delivered 26% Same-Store NOI growth; closed 39 communities ($2.1B) YTD, increasing total YTD acquisitions to $2.9B. Partner network expanded from 2 to 13.
• Acquisitions: Closed three strategic Life Science acquisitions (Gateway and two others) surrounded by existing HealthPeak assets; 41% current occupancy, 5% in-place yield targeting 9–10% stabilized yield.
• Dispositions: Sold four Southeast outpatient buildings for ~$200M at 7% cap rate; transaction reflects non-strategic assets below average quality.

Market and Competitive Landscape:

• Life Science sector entering recovery; 130 bps occupancy gain in Q3, 270 bps YTD. Supply constrained as labs convert to alternative uses (AI/Robotics) due to robust infrastructure.
• Healthcare Real Estate M&A: Buyers (GPs/LPs) largely "upside down" from 2021 peaks; capital availability severely constrained, allowing HealthPeak to buy core assets at distressed prices.
• Occupancy in Torrey Pines (San Diego) reached 100% from 65% six months prior; Boston market remains competitive but portfolio is mid-80s occupied with low rollover.
• HealthPeak positions as the only Life Science developer/GP growing its footprint; leveraging scale and unencumbered assets to lease faster than competitors.
• AI/Robotics demand identified as incremental, particularly in SF, absorbing space previously deemed unfit for traditional lab use.

Risks and Challenges:

• Interest rate volatility impacting refinancing costs; 2027 maturities carry higher costs than current 3% placed debt.
• Life Science sector recovery timeline dependent on tenant capital raising (IPOs/M&A) and build-out periods (12–15 months).
• Transaction market slowdown potential due to rate uncertainty and buyers attempting to retrade deals; however, HealthPeak honors committed prices.
• Leasing spreads in Life Science remain pressured in Boston compared to San Diego and Bay Area.
• Capital requirements for TI and renovations to convert vacant acquired assets to stabilized yields.

Management Commentary and Tone:

• Tone is highly confident and optimistic, with CEO Scott Brinker noting earnings guidance raised three times in one year.
• Management emphasizes "total occupancy" and "cash flow" over traditional Same-Store metrics, arguing the latter can be manipulated by accounting rules regarding CapEx and asset transfers.
• Strong conviction in the "buying opportunity" within Life Science due to distressed seller positions and HealthPeak's unique operating platform.
• Emphasis on the "network effect" of acquisitions: buying assets adjacent to existing campuses increases value of the entire local footprint.
• Confident that the Life Science turnaround is not just cyclical but structural, driven by the convergence of biotech and AI-adjacent tech demand.

Analyst Questions and Answers:

• Acquisition Pipeline: Confirmed ~$1B+ in acquisitions either closed or under contract; focus strictly on assets adjacent to existing campuses to leverage tenant networks.
• Stabilization Timeline: Underwritten at 2–3 year range to full lease-up; active negotiations exist on 70% of acquired vacancy pre-closing.
• Lease Economics: New lease starts in Life Science saw lower rates due to office-to-lab conversions, but renewals hit $72/sq ft with 5.6% roll-down; Bay Area seeing renewed bidding tension.
• Debt Strategy: Utilizing delayed draw term loans to manage $1.4B 2027 maturities; no immediate plan for aggressive equity raise, focusing on cost-effective refinancing.
• Same-Store Methodology: Reiterated rejection of Same-Store as a primary KPI; focus is on bottom-line cash flow and strategic asset allocation.
• Tenant Quality: Credit profile improved significantly due to $150B+ capital inflows into biotech; new leasing 50% new clients, 50% existing clients expanding footprints.

Other Key Points:

• Life Science job growth turned positive in Q3 2026, validating management's bullish stance.
• Janus Living's deal structure allows HealthPeak to capture value from external growth (acquisitions) via a unique operating partnership model.
• Management noted that while "same-store" is disclosed for regulatory compliance, internal decision-making ignores it to prioritize overall portfolio value creation.
• The company is transitioning from a "number three player" in Life Science (2022) to the clear leader in occupancy growth and platform expansion.