Healthpeak Properties™ Reports Second Quarter 2020 Results – Wire Real Estate

Healthpeak Properties™ Reports Second Quarter 2020 Results




Aug 7, 2020

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Healthpeak Properties, Inc. announced results for the second quarter ended June 30, 2020. For the quarter, we generated net income of $0.09 per share, NAREIT FFO of $0.34 per share, FFO as Adjusted of $0.40 per share and blended Total Same-Store Portfolio Cash NOI results of (2.2%).

 SECOND QUARTER 2020 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS 

–   The COVID-19 pandemic continues to evolve rapidly. In order to provide more up-to-date information about the impact of COVID-19 on Healthpeak, we have included certain key operating metrics through July 2020 in this release.

–   Balance sheet and liquidity:

  • In June 2020, issued $600 million of 2.875% senior unsecured notes due 2031 and used proceeds to redeem all of Healthpeak’s outstanding $300 million 3.150% senior unsecured notes due August 2022 and to repurchase $250 million of Healthpeak’s 4.250% senior unsecured notes due November 2023, pursuant to a tender offer completed in June 2020. Healthpeak incurred losses on debt extinguishment of $26 million in June and approximately $18 million in July in connection with the refinancings. Following these transactions, Healthpeak has no material scheduled debt maturities until November 2023.
  • As of July 31, 2020, had $2.85 billion of liquidity including full availability on Healthpeak’s $2.5 billion revolving credit facility and approximately $350 million of cash and cash equivalents.

–   Transactions:

  • In June 2020, closed on the previously announced sale of the three Frost Street medical office buildings in San Diego, CA, generating proceeds of approximately $106 million, representing a cash capitalization rate of 6.0%.
  • In April 2020, closed on the previously announced $320 million life science acquisition of The Post, a 426,000 square foot life science property located within the Route 128 submarket of Boston, Massachusetts. The stabilized cash and GAAP capitalization rates are 5.1% and 6.5%, respectively.

–   Development completion:

  • Delivered a 52,000 square foot, three-story Class A medical office building, located on HCA’s campus of Lee’s Summit Medical Center, in Lee’s Summit, Missouri. The development was 51% leased to HCA upon delivery.

–   Development leasing:

  • In July 2020, signed two leases totaling 60,000 square feet, with a weighted average lease term of 8.5 years, bringing the 75 Hayden Avenue development to 100% leased. The project is expected to be completed and delivered in the third quarter of 2021.
  • In June 2020, signed a 17-year lease with a full-building user totaling 74,000 square feet at our Boardwalk development project in San Diego, California. The 190,000 square foot Class A, three-building development is now 39% pre-leased.

–   Declared quarterly common stock cash dividend of $0.37 per share to be paid on August 25, 2020, to stockholders of record as of the close of business on August 14, 2020.

–   Published 9th annual ESG Report covering 2019 environmental, social and governance (ESG) initiatives and progress; and named to Corporate Responsibility Magazine’s 100 Best Corporate Citizens List for the second consecutive year.

SECOND QUARTER COMPARISON

 

Three Months Ended
June 30, 2020

 

Three Months Ended
June 30, 2019

 

(in thousands, except per share amounts)

Amount

 

Per Share

 

Amount

 

Per Share

 

Net income (loss), diluted

$

51,131

   

$

0.09

   

$

(13,991)

   

$

(0.03)

   

NAREIT FFO, diluted

182,367

   

0.34

   

199,906

   

0.41

   

FFO as Adjusted, diluted

216,547

   

0.40

   

214,385

   

0.44

   

AFFO, diluted

193,790

       

196,551

       

NAREIT FFO, FFO as Adjusted, AFFO, Same-Store Cash NOI, Net Debt and Adjusted EBITDAre are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance and financial position of real estate investment trusts (see the “Funds From Operations” and “Adjusted Funds From Operations” sections of this release for additional information). See “June 30, 2020 Discussion and Reconciliation of Non-GAAP Financial Measures” for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP on the Investor Relations section of our website at http://ir.healthpeak.com/quarterly-results.

SAME-STORE (“SS”) OPERATING SUMMARY

The table below outlines the year-over-year three-month and year-to-date SS Cash NOI growth: 

Year-Over-Year Total SS Portfolio Cash NOI Growth

 
 

Three Month

Year-To-Date

% of SS

 

Medical office

1.3%

1.8%

42.5%

 

Life science

7.3%

5.3%

34.6%

 

Senior housing(1)(2)

(21.2)%

(6.2)%

19.2%

 

Other non-reportable segments (“Other”)

2.9%

4.1%

3.8%

 

Total Portfolio(1)(2)

(2.2%)

1.4%

100.0%

 
     

(1)

Same-Store year-over-year three-month Portfolio Cash NOI growth includes government grants under the CARES Act of $1.9 million and identifiable COVID-19 expenses of $6.3 million in the SHOP portfolio.

 

(2)

Same-Store year-over-year year-to-date Portfolio Cash NOI growth includes government grants under the CARES Act of $0.4 million and identifiable COVID-19 expenses of $4.1 million in the SHOP portfolio.

 

JULY 2020 PRELIMINARY UPDATES (Life Science, Medical Office and Hospitals)

July 2020 data is based on preliminary information and is subject to change. (SF = square feet)

Indicator

As of, or for the month ended, July 31, 2020
(unless otherwise noted)

Commentary

LIFE SCIENCE

Occupancy

96.3%

Down 60 bps since June 30 due to known vacates

Leasing

102,000 SF of executed leases (82,000 SF of new leasing)

Year-to-date ahead of original expectations

Letters of Intent

169,000 SF of executed LOIs in lease documentation (78,000 SF of new leasing)

96% of new leasing commitments driven by existing tenants looking to expand

July Rent Payments

99% received

Ahead of June collections

Rent Relief Requests

No new material requests in July

In June, finalized short-term deferrals with 2 tenants totaling approximately $1 million

     

MEDICAL OFFICE

Occupancy

91.1%

Unchanged from June 30

Leasing

230,000 SF of executed leases (28,000 SF of new leasing)

Year-to-date ahead of original expectations

Letters of Intent

367,000 SF of executed LOIs in lease documentation (121,000 SF of new leasing)

Slightly lower than monthly average but YTD above 2019

July Rent Payments

98% of contractual rents received

Deferral program represents previously announced program done in conjunction with HCA

Rent Deferral Payments

96% of rent deferrals due in July have been paid

$6 million in total rent deferrals (267 tenants); $1 million to be paid back per month

     

HOSPITALS

July Rent Payments

100% received

 

JULY 2020 PRELIMINARY UPDATES (Senior Housing)

July 2020 data is based on preliminary information and is subject to change. (SF = square feet)

Indicator

As of, or for the month ended, July 31, 2020
(unless otherwise noted)

Commentary

SENIOR HOUSING: SHOP(1)(2)(3)

Occupancy

Spot occupancy (July 31): 77.8%
Average Daily Census (July): 77.8%

Spot declined 110 bps vs. June 30
Average Daily Census declined 50 bps vs. June

Move-ins

Declined 62% vs. July 2019; Declined 32% vs. June 2020

86% of our properties are now accepting move-ins

Move-outs

Declined 19% vs. July 2019; Declined 1% vs. June 2020

July is the third consecutive month move-outs declined

Leads

Declined 31% vs. July 2019; Declined 2% vs. June 2020

Operators continue to prioritize digital marketing platforms

Tours

Declined 52% vs. July 2019; Declined 8% vs. June 2020

Tours were almost entirely virtual / digital

     

SENIOR HOUSING: CCRC(1)(2)(3)

 

Spot Occupancy
(July 31)

Average Daily Census
(July)

 

IL/AL/MC Occupancy 

82.7%

82.9%

 

SNF Occupancy 

62.7%

60.2%

Total spot occupancy decreased 20 bps vs. June 30

Total Occupancy

79.3%

79.1%

Total average daily census declined 40 bps vs. June

IL/AL/MC Move-ins

Declined 78% vs. July 2019; Declined 72% vs. June 2020

93% of our IL/AL/MC properties are now accepting move-ins. For CCRCs the last month of a quarter is typically a stronger leasing month

IL/AL/MC Move-outs

Declined 28% vs. July 2019; Declined 12% vs. June 2020

July is the second consecutive month move-outs declined

IL/AL/MC Leads

Declined 17% vs. July 2019; Declined 2% vs. June 2020

Operators continue to prioritize digital marketing platforms

IL/AL/MC Tours

Increased 43% vs. July 2019; Increased 94% vs. June 2020

Tours were almost entirely virtual / digital

     

SENIOR HOUSING (SHOP and CCRC) EXPENSE UPDATE

Q2 2020 Expense Results
(July not yet available)

The COVID-19 impact on total expenses was ~1.6%

Second quarter total expenses were incrementally ~1.6% higher than original 2020 expectations, which is below the low end of the outlook range of 5-15% provided in May. COVID-19 related expenses were in-line with expectations, with the favorable expense variance driven by lower than expected compensation, marketing and repairs and maintenance.

SENIOR HOUSING: NNN TENANT UPDATES

July Rent Payments

97% received + 3% deferred

 
     

SENIOR HOUSING: KNOWN COVID-19 POSITIVE CASES

Based on the reports Healthpeak receives from its operators across 218 properties, as of July 31, 2020, Healthpeak had 111 properties managed by 15 different operators with confirmed resident COVID-19 cases, and 59 of those affected properties had experienced resident deaths.

New COVID positive resident cases in our senior housing facilities as of late July have declined by more than 50% from the peak in mid-April. 80 of our 111 COVID-19 resident positive properties are 14 or more days from the most recent exposure.

       
     

(1)

Properties that are held for sale, in redevelopment or in development are excluded from reporting statistics.

 

(2)

Move-in and move-out data exclude skilled nursing beds in our SHOP and CCRC portfolios given the Medicare residents usually have lengths of stay of 30 days or less.

 

(3)

Skilled nursing units in our portfolio received $14.9 million of Coronavirus Aid, Relief, and Economic Security (“CARES”) Act funding in 2Q20. This represents pro rata funding provided to all Medicare providers.

 

2020 OUTLOOK UPDATE

Please see pages 44 – 46 in the Second Quarter 2020 Supplemental Report for a revised outlook and earnings framework.

COMPANY INFORMATION

Healthpeak has scheduled a conference call and webcast for Wednesday, August 5, 2020, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to present its performance and operating results for the second quarter ended June 30, 2020. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (international). The conference ID number is 3883068. You may also access the conference call via webcast in the Investor Relations section of our website at http://ir.healthpeak.com. An archive of the webcast will be available on Healthpeak’s website through August 5, 2021, and a telephonic replay can be accessed through August 12, 2020, by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (international) and entering conference ID number 10145906. Our Supplemental Report for the current period is also available, with this earnings release, in the Investor Relations section of our website.

ABOUT HEALTHPEAK

Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns and develops high-quality real estate in the three private-pay healthcare asset classes of Life Science, Senior Housing and Medical Office, designed to provide stability through the inevitable industry cycles.  At Healthpeak, we pair our deep understanding of the healthcare real estate market with a strong vision for long-term growth. For more information regarding Healthpeak, visit www.healthpeak.com.

See Campaign: http://www.healthpeak.com.
Contact Information:
www.healthpeak.com.

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