Healthpeak Properties, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Merger Impact: The merger with Physicians Realty Trust created the best outpatient platform, enabling internalization of property management across the outpatient and life science portfolio, with $70 million in synergies. The outpatient sector benefits from care shift to lower-cost outpatient settings and low new supply, with strong sales of fully stabilized less core assets.
• Life Science Segment: The life science operating environment peaked in 2025 but shows inflection signs with improved capital raising, M&A, and new deliveries to zero. The Gateway Portfolio Acquisition in South San Francisco and opportunities to acquire properties at compelling basis are noted.
• Senior Housing IPO: Healthpeak intends to contribute its entire senior housing portfolio to Janus Living via an IPO, with Healthpeak as the manager. The IPO is expected in the first half of 2026, with recent completion of joint venture partner interest purchase and $360 million in additional acquisitions in the pipeline.
• Technology and Automation: Investing in technology, team, and process for better investment management, with the new head of enterprise innovation leading corporate automation efforts.

Segment Performance

• Outpatient Medical: Fourth quarter same-store cash NOI growth of 3.9%, exceeding the high end of guidance. Ended the year with 91% total occupancy, 79% tenant retention, and 5% cash releasing spreads on renewals. For the full year, executed 4.9 million square feet of leasing, including a record 1 million square feet of new leasing, reinforcing leadership in the outpatient medical sector.
• Lab: Ended the year with 1.5% same-store growth and 77% total occupancy (inclusive of the Gateway Portfolio Acquisition in South San Francisco). Full year lease execution totaled nearly 1.5 million square feet, with 562,000 square feet of new leasing and positive 5% cash releasing spreads on renewals. Since year-end, an additional 100,000 square feet of leasing activity was under letter of intent.
• Senior Housing: Fourth quarter same-store growth was 17%, and 12.6% for the full year, significantly above guidance. The 15 life plan communities in the same-store pool delivered strong results. Recently completed the purchase of a joint venture partner's 46.5% interest in a 3,400-unit senior housing portfolio for $314 million, with $360 million of additional senior housing acquisitions in the pipeline.

Guidance

• FFO Adjusted: Forecast range for 2026 FFO adjusted is $1.70 to $1.74 per share.
• Same-Store NOI Growth: Projected range of down 1% to up 1%, with outpatient medical expected to grow 2%-3%, lab down 5%-10%, and senior housing 8%-12%.
• Transaction Activity: $464 million of acquisitions in 2026, including senior housing and Gateway Lab portfolio. Plans for $1 billion+ of asset sales, recapitalizations, and loan repayments, with $1.1 billion of refinancing activity in 2026.

Risks

• Life Science Market: Occupancy and earnings lag due to time needed to build pipeline, sign leases, and start rent collection. Dependence on capital markets for recovery.
• Senior Housing Transitions: Potential short-term occupancy decline during operator transitions of properties from the sovereign wealth JV.
• Refinancing Risk: Impact of interest rate changes and timing of refinancing on financial results.

Q: Nicholas Yulico asks about how the Gateway acquisition complements the existing portfolio and the cadence of lab occupancy.

A: Scott Brinker responds that Gateway is complementary, with a large campus in a prime submarket, and lab occupancy is expected to improve by year-end 2026 depending on capital markets.

Q: Farrell Granath inquires about lab leasing pipeline and guidance assumptions.

A: Scott Brinker notes slower year-end processes but positive pipeline with more new leasing, and Kelvin Moses explains the disconnect between occupancy decline and NOI in Q4 and impact on 2026 guidance.

Q: Austin Wurschmidt asks about lab occupancy loss impact on 2026 FFO and lag between expiration and financial impact.

A: Kelvin Moses explains the impact includes lease expirations, refinancing costs, and loan proceeds, with occupancy loss having a penny to penny and a half impact per 100 basis points, and lag due to lease size and nature.

Q: Rich Anderson asks about Gateway recovery cadence and senior housing CapEx.

A: Scott Brinker says Gateway is breakeven on day one with upside in 2-3 years, and senior housing CapEx is operational with no massive plan, focusing on aligning with strong operators.

Q: Juan Sanabria asks about Q4 to Q1 NOI bridge and senior housing CapEx.

A: Kelvin Moses explains first quarter impact from occupancy shift and Scott Brinker details senior housing CapEx as operational with alignment to strong operators.

Q: Wes Golladay asks about lab watch list and exposure to preclinical companies.

A: Kelvin Moses notes reduced watch list due to improved capital markets, with minimal exposure to preclinical companies.

Q: Vikram Malhotra asks about Q4 to Q1 FFO impact and life science occupancy build.

A: Kelvin Moses provides context on FFO trajectory and Scott Brinker affirms occupancy expected to increase from year-end 2025 to 2026.

Q: Michael Mueller asks about AFFO CapEx and capitalized interest.

A: Kelvin Moses states CapEx is around $500 million, flat with prior year, and capitalized interest is flat.

Q: Omotayo Okusanya asks about Gateway transaction dynamics and Janus Living composition.

A: Scott Brinker explains Gateway as opportunistic with good yield and upside, and all senior housing assets including memory care go to Janus Living via IPO.

Q: James Kammert asks about appetite for opportunistic lab and Physicians Realty synergies.

A: Scott Brinker notes $1 billion+ acquisition plan, with remaining synergies mostly included in guidance, and disciplined approach to lab acquisitions.

Q: John Pawlowski asks about senior housing operator transitions and tenant composition in lab.

A: Scott Brinker expects minimal occupancy decline during transitions, and Scott Brinker describes lab tenant mix as cross-section of biotech companies.

Q: Jamie Feldman asks about 2026 being a FFO bottom and equity vs mezzanine investments.

A: Scott Brinker states 2026 likely a bottom, and explains equity acquisition vs mezzanine as different return profiles for unique opportunities.