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

Healthpeak Properties™ Reports Third Quarter 2020 Results


Healthpeak Propertie

iCrowdNewswire   Nov 5, 202011:39 AM ET

 Healthpeak Properties, Inc. announced results for the third quarter ended September 30, 2020. For the quarter, we generated a net loss of ($0.12) per share, NAREIT FFO of $0.31 per share, FFO as Adjusted of $0.40 per share and blended Total Same-Store Portfolio Cash NOI results of 2.8%.

 THIRD QUARTER 2020 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS 

–      The COVID-19 pandemic continues to evolve. In order to provide more up-to-date information about the impact of COVID-19 on Healthpeak, we have provided certain key operating metrics through October 2020 in a separate presentation posted on the investor relations section of our website at https://ir.healthpeak.com/investor-presentations.

–      Dispositions:

  • In various stages on the sales of more than $4 billion of SHOP and NNN transactions:
    • In July – November 2020, closed on the sales of 14 SHOP and NNN assets generating proceeds of approximately $100 million.
    • Approximately $1.5 billion under binding and non-binding purchase agreements across 8 separate transactions.
    • Approximately $2 billion under letters of intent across 6 separate transactions.
    • The majority of the remaining SHOP and NNN assets are actively being marketed for sale.
  • If the various sales are completed, we expect:
    • SHOP assets: a Trailing Twelve Month Pre-COVID (04/01/19 – 03/31/20) weighted average cash capitalization rate in the high 5% range and a third quarter annualized weighted average cash capitalization rate of approximately 3%.
    • NNN assets: a third quarter annualized weighted average lease yield in the high 7% range and EBITDAR yield in the high 5% range.
  • During the quarter, closed on the sales of $15 million of medical office and other assets.

–      Acquisitions:

  • In October 2020, executed a definitive agreement to acquire Cambridge Discovery Park, a 607,000 square foot life science campus in the West Cambridge submarket of Boston, MA for $664 million in an off-market transaction, which represents stabilized cash and GAAP capitalization rates of 5% and 6.5%, respectively. The site includes a future densification opportunity of approximately 100,000 square feet.
  • In October 2020, executed a definitive agreement to acquire approximately 12 acres of land for $128 million in an off-market transaction. The acquisition sites are located in South San Francisco, CA, adjacent to two sites currently held by Healthpeak as land for future development: Forbes Research Center (“Forbes”) and Modular Labs III. Healthpeak intends to entitle the acquisition sites for a new development of at least 500,000 square feet, which could join with our adjacent sites to create a multi-phase, scalable development campus totaling 1 million square feet or more.
  • In October 2020, acquired a 7-property medical office portfolio, totaling 439,000 square feet, for $169 million, which represents year-one cash and GAAP capitalization rates of 5.5% and 5.6%, respectively. Six of the seven properties are on-campus and all the properties are anchored by a #1 or #2 local health system.
  • In July 2020, acquired a two-story, 107,000 square foot medical office building in Scottsdale, AZ for $27 million in an off-market transaction, which represents year-one cash and GAAP capitalization rates of 7.1% and 7.7%, respectively.

–      Development:

  • In September 2020, signed a 10-year 118,000 square feet lease at our Boardwalk development project in San Diego, CA. The development is now 100% pre-leased, with initial occupancy expected in late 2021.
  • In September 2020, commenced construction on 101 CambridgePark Drive, a 159,000 square foot life science development project, located in the West Cambridge submarket of Boston, MA, with estimated total spend of approximately $174 million.
  • In September 2020, delivered a 119,000 square foot, six-story medical office building in Brentwood, TN. The development was 49% leased to HCA Healthcare (“HCA”) upon delivery.
  • In August 2020, delivered a 70,000 square foot, four-story Class A medical office building located on the Ogden Regional Medical Center campus in Ogden, Utah. The development was 69% leased upon delivery and is 78% leased today.

–      As of October 30, 2020, had $2.6 billion of liquidity including $2.4 billion of availability on Healthpeak’s $2.5 billion revolving credit facility and approximately $150 million of cash and cash equivalents.

–      Replaced Board of Directors age 75 retirement policy with a Director term limit of 15 years.

–      Declared quarterly common stock cash dividend of $0.37 per share to be paid on November 23, 2020, to stockholders of record as of the close of business on November 12, 2020.

–      Established new corporate headquarters in Denver, Colorado.

–      Received “Prime” rating from ISS ESG Corporate Rating, recognizing top ESG performance within our sector; nominated for the Corporate Governance Awards 2020 – Best Proxy Statement (Large Cap Company) by Corporate Secretary and IR Magazine; and for the ninth consecutive year, named a constituent in the FTSE4Good Index.

THIRD QUARTER COMPARISON

 

Three Months Ended
September 30, 2020

 

Three Months Ended
September 30, 2019

 

(in thousands, except per share amounts)

Amount

 

Per Share

 

Amount

 

Per Share

 

Net income (loss), diluted

$

(63,768)

   

$

(0.12)

   

$

(46,249)

   

$

(0.09)

   

NAREIT FFO, diluted

164,603

   

0.31

   

183,266

   

0.37

   

FFO as Adjusted, diluted

215,381

   

0.40

   

222,160

   

0.44

   

AFFO, diluted

183,791

       

191,922

       

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 “September 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

3.3%

2.3%

46.8%

 

Life science

5.5%

5.7%

38.5%

 

Senior housing(1)(2)

(6.3)%

(5.8)%

10.5%

 

Other non-reportable segments (“Other”)

0.8%

3.0%

4.1%

 

Total Portfolio(1)(2)

2.8%

2.7%

100.0%

 
     

(1)

Same-Store year-over-year three-month Portfolio Cash NOI growth includes identifiable COVID-19 expenses of $0.6 million in the SHOP portfolio.

 

(2)

Same-Store year-over-year year-to-date Portfolio Cash NOI growth includes identifiable COVID-19 expenses of $1.5 million in the SHOP portfolio.

 

ACQUISITIONS

CAMBRIDGE DISCOVERY PARK ACQUISITION

In October 2020, executed a definitive agreement to acquire Cambridge Discovery Park, a four-building Class A life science and research campus, for a $664 million purchase price ($720 million gross valuation), which represents stabilized cash and GAAP capitalization rates of 5% and 6.5%, respectively. In conjunction with the transaction, Healthpeak entered into a 49% / 51% minority joint venture on 1 of the 4 buildings with The Bulfinch Companies, Inc., a well-established Boston-based owner, manager and developer of life science and medical office real estate. Healthpeak will own an 100% interest in the other 3 buildings.

The 607,000 square foot campus is located walking distance from Healthpeak’s CambridgePark Drive holdings in the West Cambridge submarket of Boston, MA. The campus is 94% leased to a diversified tenant base of biotechnology, pharmaceutical and research companies with a weighted average remaining lease term of approximately 7.5 years. The site also includes a future densification opportunity of approximately 100,000 square feet.

The transaction strengthens Healthpeak’s leading market share in West Cambridge, and expands our greater Boston footprint to 2.4 million square feet (including the 101 CambridgePark Drive development). The transaction is expected to close in the fourth quarter 2020.

SOUTH SAN FRANCISCO LAND SITE ACQUISITION

In October 2020, executed definitive agreements to acquire approximately 12 acres of land in South San Francisco for $128 million. Located directly adjacent to Healthpeak’s Forbes development site and Healthpeak’s Modular Labs III development site, the assemblage includes sites that are currently utilized as industrial buildings that are subject to short-term leases, as well as a vacant land parcel.

Upon closing of the acquisition, Healthpeak intends to entitle the sites for future development as a life science campus that, when combined with Healthpeak’s Forbes and Modular Labs III sites, could allow for a campus with an estimated minimum size of approximately 1 million square feet over 20 acres. The future developments will strengthen Healthpeak’s leading market position in South San Francisco and provide an opportunity to build another campus of significant scale to meet the growth needs of Healthpeak’s existing and potential tenants.   

MIDWEST MEDICAL OFFICE PORTFOLIO ACQUISITION

In October 2020, acquired a 7-property medical office portfolio, totaling 439,000 square feet, for $169 million, which represents year-one cash and GAAP capitalization rates of 5.5% and 5.6%, respectively. The properties are located across 3 states: Indiana (5), Missouri (1) and Illinois (1). The portfolio is 92% leased with a weighted average lease term of 4.1 years and 2.5% average annual escalators. Additionally, 6 of the 7 properties are located on-campus with a physical connection to the host hospital.

The transaction supports Healthpeak’s MOB growth strategy of investing in on-campus and highly anchored properties affiliated with #1 or #2 local hospitals and health systems.

SCOTTSDALE GATEWAY ACQUISITION

In July 2020, acquired a two-story, 107,000 square foot medical office building in Scottsdale, AZ for $27 million, which represents year-one cash and GAAP capitalization rates of 7.1% and 7.7%, respectively.

The property is currently 96% leased to four tenants and has a weighted average remaining lease term of 5 years with 2% average annual escalators.

Located adjacent to the HonorHealth Scottsdale Shea Medical Center, where Healthpeak already owns 173,000 square feet, the transaction will expand Healthpeak’s presence to approximately 800,000 square feet in the Phoenix MSA.

DEVELOPMENT UPDATES

101 CAMBRIDGEPARK DRIVE

In September 2020, Healthpeak and its joint venture partner, King Street Properties, commenced construction on 101 CambridgePark Drive, a $174 million life science development project located in the West Cambridge submarket of Boston, MA.

Totaling approximately 159,000 square feet, the five-story Class A laboratory building will allow Healthpeak to create a 450,000 square foot flagship campus in West Cambridge, when considered with our holdings at 35 and 87 CambridgePark Drive.

Completion is expected in third quarter of 2022, and upon stabilization, the development is projected to generate an estimated yield on cost of 7.5%.

MEDICAL OFFICE DEVELOPMENT PROGRAM WITH HCA

  • BrentwoodIn September 2020, delivered a 119,000 square foot, six-story medical office building in Brentwood, TN. The $37 million development was 49% leased to HCA upon delivery and is projected to generate a stabilized yield in the low to mid 8% range.
  • Ogden: In August 2020, delivered a 70,000 square foot, four-story Class A medical office building located on the Ogden Regional Medical Center campus in Ogden, Utah. The $18 million development was 69% leased upon delivery and is 78% leased today. The property is projected to generate a stabilized yield in the low to mid 7% range.

THE BOARDWALK DEVELOPMENT LEASING

In September 2020, signed a 10-year, 118,000 square foot lease with a publicly-traded biotechnology company at our Boardwalk life science development project in San Diego, CA. The 192,000 square foot development project is now 100% pre-leased to two tenants, with a weighted average lease term of over 13 years.

Initial occupancy is expected in the fourth quarter of 2021, and upon stabilization, the campus is projected to generate an estimated yield on cost of 7.1%.

BOARD OF DIRECTORS RETIREMENT POLICY UPDATE

In October 2020, Healthpeak revised its Board of Directors retirement policy by providing for a Director term limit of 15 years, replacing the prior policy mandating retirement at the age of 75. One Director who has been on our Board for more than 15 years will be allowed to remain on our Board until the age of 75, so as not to accelerate retirement due to the revised policy. The revised policy maintains diversity across Healthpeak’s Board and further promotes long-term Board refreshment.

DIVIDEND

On November 2, 2020, Healthpeak announced that its Board declared quarterly common stock cash dividend of $0.37 per share to be paid on November 23, 2020, to stockholders of record as of the close of business on November 12, 2020.

NEW CORPORATE HEADQUARTERS

In November 2020, Healthpeak established a new corporate headquarters in Denver, CO to create a more centralized geographic location relative to Healthpeak’s portfolio locations and existing offices in Irvine, CA and Franklin, TN, which will continue to operate.

ESG

Healthpeak’s position as a leader in environmental, social and governance (ESG) performance has been recognized by various organizations around the world. For the ninth consecutive year, Healthpeak was named a constituent in the FTSE4Good Index. Healthpeak also received “Prime” rating from ISS ESG Corporate Rating for its top ESG performance. Healthpeak was also nominated for the Corporate Governance Awards 2020 – Best Proxy Statement (Large Cap Company) by Corporate Secretary and IR Magazine for its best-in-class proxy disclosure. More information about Healthpeak’s ESG efforts, including a link to our ESG Report, is available on our website at www.healthpeak.com/esg.

2020 OUTLOOK UPDATE  

Please see pages 45-47 in the Third Quarter 2020 Supplemental Report for a revised outlook and earnings framework.

COMPANY INFORMATION

Healthpeak has scheduled a conference call and webcast for Tuesday, November 3, 2020, at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) to present its performance and operating results for the third quarter ended September 30, 2020. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (international). The conference ID number is 4391911. 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 November 3, 2021, and a telephonic replay can be accessed through November 17, 2020, by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (international) and entering conference ID number 10147622. 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, Medical Office and Senior Housing, 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.   

CONTACT

Barbat Rodgers
Senior Director – Investor Relations
949-407-0400

Contact Information:

www.healthpeak.com


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