Healthpeak Properties Reports Second Quarter 2023 Results and Declares Quarterly Cash Dividend on Common Stock
- Healthpeak reported a blended Total Same-Store Portfolio Cash (Adjusted) NOI growth of 4.8% for the second quarter of 2023.
- The company's new and renewal lease executions totaled 745,000 square feet, including 595,000 square feet for Outpatient Medical and 150,000 square feet for Lab.
- Healthpeak's Board of Directors declared a quarterly common stock cash dividend of $0.30 per share.
- The company published its 12th annual ESG report, showcasing its environmental, social, and governance initiatives and performance.
- None.
SECOND QUARTER 2023 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS
– Net income of
– Second quarter new and renewal lease executions totaled 745,000 square feet:
- Outpatient Medical new and renewal lease executions totaled 595,000 square feet
- Lab new and renewal lease executions totaled 150,000 square feet
- Signed letters of intent on an additional 196,000 square feet of lab leases
– Placed in service the
– Balance Sheet:
- In May 2023, issued
$350 million - Net debt to Adjusted EBITDAre was 5.1x as of June 30, 2023
– Updated full year 2023 diluted earnings guidance to a range of
– Healthpeak's Board of Directors declared today a quarterly common stock cash dividend of
– Published 12th annual ESG report covering environmental, social, and governance initiatives and performance
SECOND QUARTER COMPARISON
Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | |||||||
(in thousands, except per share amounts) | Amount | Per Share | Amount | Per Share | ||||
Net income, diluted | $ 51,750 | $ 0.09 | $ 68,057 | $ 0.13 | ||||
Nareit FFO, diluted | 247,754 | 0.45 | 238,506 | 0.44 | ||||
FFO as Adjusted, diluted | 251,540 | 0.45 | 238,829 | 0.44 | ||||
AFFO, diluted | 223,197 | 0.40 | 197,244 | 0.36 | ||||
YEAR TO DATE COMPARISON
Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | |||||||
(in thousands, except per share amounts) | Amount | Per Share | Amount | Per Share | ||||
Net income, diluted | $ 169,449 | $ 0.31 | $ 137,693 | $ 0.26 | ||||
Nareit FFO, diluted | 478,200 | 0.86 | 484,287 | 0.89 | ||||
FFO as Adjusted, diluted | 483,421 | 0.87 | 476,014 | 0.87 | ||||
AFFO, diluted | 433,195 | 0.78 | 400,921 | 0.74 | ||||
Nareit FFO, FFO as Adjusted, AFFO, Same-Store Cash (Adjusted) NOI, and Net Debt to 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, 2023 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 in 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 (Adjusted) NOI growth.
Year-Over-Year Total SS Portfolio Cash (Adjusted) NOI Growth | ||||||
Three Month | Year-To-Date | |||||
SS Growth % | % of SS | SS Growth % | % of SS | |||
Lab | 3.8 % | 47.9 % | 4.9 % | 47.6 % | ||
Outpatient Medical | 2.5 % | 41.0 % | 3.1 % | 41.4 % | ||
CCRC | 19.3 % | 11.1 % | 14.3 % | 11.0 % | ||
Total Portfolio | 4.8 % | 100.0 % | 5.1 % | 100.0 % | ||
NEXUS ON GRAND DEVELOPMENT
During the second quarter, Healthpeak placed in service Nexus on Grand, a
Prominently located on East Grand Avenue in the heart of South San Francisco, Nexus on Grand features state-of-the-art lab space and includes a café, fitness center, and several indoor and outdoor meeting areas within its entry plaza. Combined with Healthpeak's other South San Francisco properties, the campus brings our ownership in the submarket to over 4.5 million square feet with an approximate
LOAN REPAYMENTS
Healthpeak received
SORRENTO THERAPEUTICS UPDATE
As previously disclosed, on February 13, 2023, Sorrento Therapeutics, Inc. ("Sorrento") commenced voluntary reorganization proceedings under Chapter 11 of the
Sorrento has four separate leases with Healthpeak totaling approximately 211,000 square feet. Sorrento is entitled to certain rights under the Code regarding the assumption or rejection of its lease obligations with Healthpeak but has not yet filed any motion with the Court indicating whether it will assume or reject the four leases. As of July 27, 2023, Healthpeak has received all contractually-owed rent from Sorrento. Healthpeak holds either a security deposit or a letter of credit pursuant to each of the four leases, totaling
CAPITAL MARKETS ACTIVITY
SENIOR UNSECURED NOTES
As previously announced, in May 2023, Healthpeak completed an add-on offering of
ESG
In June 2023, Healthpeak published its 12th annual ESG Report, highlighting our ESG initiatives and performance, including a
Healthpeak was named an Executive Member of ENERGY STAR's Certification Nation for earning 45 new ENERGY STAR certifications in 2022, in addition to being included as a constituent in the FTSE4Good Index for the 12th consecutive year. Healthpeak also received several workplace recognitions, including Great Place to Work for the fourth consecutive year, Great Place to Work in
To learn more about Healthpeak's commitment to responsible business and view our 2022 ESG Report, please visit www.healthpeak.com/ESG.
DIVIDEND
Healthpeak's Board declared today a quarterly common stock cash dividend of
2023 GUIDANCE
We are updating the following guidance ranges for full year 2023:
- Diluted earnings per common share from
$0.52 $0.58 $0.49 $0.53 - Diluted Nareit FFO per share from
$1.71 $1.77 $1.72 $1.76 - Diluted FFO as Adjusted per share from
$1.71 $1.77 $1.73 $1.77 - Total Portfolio Same-Store Cash (Adjusted) NOI growth from
3.00% –4.50% to3.25% –4.75%
These estimates do not reflect the potential impact from unannounced future transactions. These estimates are based on our view of existing market conditions, transaction timing, and other assumptions for the year ending December 31, 2023. For additional details and assumptions underlying this guidance, please see page 38 in our corresponding Supplemental Report and the Discussion and Reconciliation of Non-GAAP Financial Measures, both of which are available in the Investor Relations section of our website at http://ir.healthpeak.com.
COMPANY INFORMATION
Healthpeak has scheduled a conference call and webcast for Friday, July 28, 2023, at 7:00 a.m. Mountain Time (9:00 a.m. Eastern Time) to review its financial and operating results for the quarter ended June 30, 2023. The conference call is accessible by dialing (888) 317-6003 (
ABOUT HEALTHPEAK
Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns, operates and develops high-quality real estate for healthcare discovery and delivery.
FORWARD-LOOKING STATEMENTS
Statements contained in this release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements regarding our and our officers' intent, belief or expectation as identified by the use of words such as "may," "will," "project," "expect," "believe," "intend," "anticipate," "seek," "target," "forecast," "plan," "potential," "estimate," "could," "would," "should" and other comparable and derivative terms or the negatives thereof. Examples of forward-looking statements include, among other things: (i) statements regarding timing, outcomes and other details relating to current, pending or contemplated acquisitions, dispositions, transitions, developments, redevelopments, densifications, joint venture transactions, leasing activity and commitments, capital recycling plans, financing activities, or other transactions discussed in this release; (ii) the payment of a quarterly cash dividend; (iii) the information presented under the heading "Sorrento Therapeutics Update" that is not historical information; and (iv) the information presented under the heading "2023 Guidance." Pending acquisitions, dispositions, joint venture transactions, leasing activity, and financing activity, including those subject to binding agreements, remain subject to closing conditions and may not be completed within the anticipated timeframes or at all. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could significantly affect our future financial condition and results of operations. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this release, and such forward-looking statements are subject to known and unknown risks and uncertainties that are difficult to predict. These risks and uncertainties include, but are not limited to: macroeconomic trends, including inflation, interest rates, labor costs, and unemployment; the ability of our existing and future tenants, operators, and borrowers to conduct their respective businesses in a manner that generates sufficient income to make rent and loan payments to us; the financial condition of our tenants, operators, and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings; our concentration of real estate investments in the healthcare property sector, which makes us more vulnerable to a downturn in a specific sector than if we invested across multiple sectors; the illiquidity of real estate investments; our ability to identify and secure new or replacement tenants and operators; our property development, redevelopment, and tenant improvement activity risks, including project abandonments, project delays, and lower profits than expected; changes within the industries in which we operate; significant regulation, funding requirements, and uncertainty faced by our lab tenants; the ability of the hospitals on whose campuses our outpatient medical buildings are located and their affiliated healthcare systems to remain competitive or financially viable; our ability to develop, maintain, or expand hospital and health system client relationships; operational risks associated with third party management contracts, including the additional regulation and liabilities of our properties operated through RIDEA structures; economic conditions, natural disasters, weather, and other conditions that negatively affect geographic areas where we have concentrated investments; uninsured or underinsured losses, which could result in significant losses and/or performance declines by us or our tenants and operators; our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners' financial condition and continued cooperation; our use of fixed rent escalators, contingent rent provisions, and/or rent escalators based on the Consumer Price Index; competition for suitable healthcare properties to grow our investment portfolio; our ability to foreclose or exercise rights on collateral securing our real estate-related loans; investment of substantial resources and time in transactions that are not consummated; our ability to successfully integrate or operate acquisitions; the potential impact on us and our tenants, operators, and borrowers from litigation matters, including rising liability and insurance costs; environmental compliance costs and liabilities associated with our real estate investments; epidemics, pandemics, or other infectious diseases, including Covid, and health and safety measures intended to reduce their spread; the loss or limited availability of our key personnel; our reliance on information technology systems and the potential impact of system failures, disruptions, or breaches; increased borrowing costs, including due to rising interest rates; cash available for distribution to stockholders and our ability to make dividend distributions at expected levels; the availability of external capital on acceptable terms or at all, including due to rising interest rates, changes in our credit ratings and the value of our common stock, volatility or uncertainty in the capital markets, and other factors; our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness; bank failures or other events affecting financial institutions; the failure of our tenants, operators, and borrowers to comply with federal, state, and local laws and regulations, including resident health and safety requirements, as well as licensure, certification, and inspection requirements; required regulatory approvals to transfer our senior housing properties; compliance with the Americans with Disabilities Act and fire, safety, and other regulations; laws or regulations prohibiting eviction of our tenants; the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid; legislation to address federal government operations and administrative decisions affecting the Centers for Medicare and Medicaid Services; our participation in the CARES Act Provider Relief Fund and other Covid-related stimulus and relief programs; our ability to maintain our qualification as a REIT; changes to
CONTACT
Andrew Johns, CFA
Senior Vice President – Investor Relations
720-428-5400
Healthpeak Properties, Inc. | ||||
Consolidated Balance Sheets | ||||
In thousands, except share and per share data | ||||
June 30, 2023 | December 31, 2022 | |||
Assets | ||||
Real estate: | ||||
Buildings and improvements | $ 13,039,278 | $ 12,784,078 | ||
Development costs and construction in progress | 775,836 | 760,355 | ||
Land | 2,661,963 | 2,667,188 | ||
Accumulated depreciation and amortization | (3,379,874) | (3,188,138) | ||
Net real estate | 13,097,203 | 13,023,483 | ||
Loans receivable, net of reserves of | 214,030 | 374,832 | ||
Investments in and advances to unconsolidated joint ventures | 731,956 | 706,677 | ||
Accounts receivable, net of allowance of | 53,467 | 53,436 | ||
Cash and cash equivalents | 103,780 | 72,032 | ||
Restricted cash | 56,745 | 54,802 | ||
Intangible assets, net | 364,453 | 418,061 | ||
Assets held for sale, net | 8,282 | 49,866 | ||
Right-of-use asset, net | 234,050 | 237,318 | ||
Other assets, net | 739,574 | 780,722 | ||
Total assets | $ 15,603,540 | $ 15,771,229 | ||
Liabilities and Equity | ||||
Bank line of credit and commercial paper | $ 329,000 | $ 995,606 | ||
Term loans | 496,382 | 495,957 | ||
Senior unsecured notes | 5,399,504 | 4,659,451 | ||
Mortgage debt | 343,766 | 346,599 | ||
Intangible liabilities, net | 140,060 | 156,193 | ||
Liabilities related to assets held for sale, net | 52 | 4,070 | ||
Lease liability | 204,489 | 208,515 | ||
Accounts payable, accrued liabilities, and other liabilities | 682,764 | 772,485 | ||
Deferred revenue | 881,870 | 844,076 | ||
Total liabilities | 8,477,887 | 8,482,952 | ||
Commitments and contingencies | ||||
Redeemable noncontrolling interests | 63,792 | 105,679 | ||
Common stock, | 547,053 | 546,642 | ||
Additional paid-in capital | 10,384,982 | 10,349,614 | ||
Cumulative dividends in excess of earnings | (4,428,423) | (4,269,689) | ||
Accumulated other comprehensive income (loss) | 31,453 | 28,134 | ||
Total stockholders' equity | 6,535,065 | 6,654,701 | ||
Joint venture partners | 316,247 | 327,721 | ||
Non-managing member unitholders | 210,549 | 200,176 | ||
Total noncontrolling interests | 526,796 | 527,897 | ||
Total equity | 7,061,861 | 7,182,598 | ||
Total liabilities and equity | $ 15,603,540 | $ 15,771,229 | ||
Healthpeak Properties, Inc. | ||||||||
Consolidated Statements of Operations | ||||||||
In thousands, except per share data | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenues: | ||||||||
Rental and related revenues | $ 409,967 | $ 387,079 | $ 802,398 | $ 757,229 | ||||
Resident fees and services | 130,184 | 125,360 | 257,268 | 246,920 | ||||
Interest income | 5,279 | 5,493 | 11,442 | 10,987 | ||||
Income from direct financing leases | — | — | — | 1,168 | ||||
Total revenues | 545,430 | 517,932 | 1,071,108 | 1,016,304 | ||||
Costs and expenses: | ||||||||
Interest expense | 49,074 | 41,867 | 97,037 | 79,453 | ||||
Depreciation and amortization | 197,573 | 180,489 | 376,798 | 358,222 | ||||
Operating | 221,837 | 215,044 | 444,925 | 422,291 | ||||
General and administrative | 25,936 | 24,781 | 50,483 | 48,612 | ||||
Transaction costs | 637 | 612 | 3,062 | 908 | ||||
Impairments and loan loss reserves (recoveries), net | 2,607 | 139 | 394 | 271 | ||||
Total costs and expenses | 497,664 | 462,932 | 972,699 | 909,757 | ||||
Other income (expense): | ||||||||
Gain (loss) on sales of real estate, net | 4,885 | 10,340 | 86,463 | 14,196 | ||||
Other income (expense), net | 1,955 | 2,861 | 2,727 | 21,177 | ||||
Total other income (expense), net | 6,840 | 13,201 | 89,190 | 35,373 | ||||
Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures | 54,606 | 68,201 | 187,599 | 141,920 | ||||
Income tax benefit (expense) | (1,136) | 718 | (1,438) | (59) | ||||
Equity income (loss) from unconsolidated joint ventures | 2,729 | 382 | 4,545 | 2,466 | ||||
Income (loss) from continuing operations | 56,199 | 69,301 | 190,706 | 144,327 | ||||
Income (loss) from discontinued operations | — | 2,992 | — | 3,309 | ||||
Net income (loss) | 56,199 | 72,293 | 190,706 | 147,636 | ||||
Noncontrolling interests' share in continuing operations | (4,300) | (3,955) | (19,855) | (7,685) | ||||
Net income (loss) attributable to Healthpeak Properties, Inc. | 51,899 | 68,338 | 170,851 | 139,951 | ||||
Participating securities' share in earnings | (149) | (281) | (1,402) | (2,258) | ||||
Net income (loss) applicable to common shares | $ 51,750 | $ 68,057 | $ 169,449 | $ 137,693 | ||||
Basic earnings (loss) per common share: | ||||||||
Continuing operations | $ 0.09 | $ 0.12 | $ 0.31 | $ 0.25 | ||||
Discontinued operations | — | 0.01 | — | 0.01 | ||||
Net income (loss) applicable to common shares | $ 0.09 | $ 0.13 | $ 0.31 | $ 0.26 | ||||
Diluted earnings (loss) per common share: | ||||||||
Continuing operations | $ 0.09 | $ 0.12 | $ 0.31 | $ 0.25 | ||||
Discontinued operations | — | 0.01 | — | 0.01 | ||||
Net income (loss) applicable to common shares | $ 0.09 | $ 0.13 | $ 0.31 | $ 0.26 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 547,026 | 539,558 | 546,936 | 539,456 | ||||
Diluted | 547,294 | 539,815 | 547,204 | 539,701 | ||||
Healthpeak Properties, Inc. | |||||||||
Funds From Operations | |||||||||
In thousands, except per share data | |||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||
Net income (loss) applicable to common shares | $ 51,750 | $ 68,057 | $ 169,449 | $ 137,693 | |||||
Real estate related depreciation and amortization | 197,573 | 180,489 | 376,798 | 358,222 | |||||
Healthpeak's share of real estate related depreciation and amortization from unconsolidated joint ventures | 5,893 | 5,210 | 11,887 | 10,345 | |||||
Noncontrolling interests' share of real estate related depreciation and amortization | (4,685) | (4,844) | (9,470) | (9,685) | |||||
Loss (gain) on sales of depreciable real estate, net | (4,885) | (12,903) | (86,463) | (16,688) | |||||
Healthpeak's share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures | — | 129 | — | (150) | |||||
Noncontrolling interests' share of gain (loss) on sales of depreciable real estate, net | — | — | 11,546 | 12 | |||||
Loss (gain) upon change of control, net | (234) | — | (234) | — | |||||
Taxes associated with real estate dispositions | — | 16 | — | (166) | |||||
Nareit FFO applicable to common shares | 245,412 | 236,154 | 473,513 | 479,583 | |||||
Distributions on dilutive convertible units and other | 2,342 | 2,352 | 4,687 | 4,704 | |||||
Diluted Nareit FFO applicable to common shares | $ 247,754 | $ 238,506 | $ 478,200 | $ 484,287 | |||||
Diluted Nareit FFO per common share | $ 0.45 | $ 0.44 | $ 0.86 | $ 0.89 | |||||
Weighted average shares outstanding - diluted Nareit FFO | 554,584 | 547,132 | 554,494 | 547,018 | |||||
Impact of adjustments to Nareit FFO: | |||||||||
Transaction-related items | $ 581 | $ 596 | $ 2,944 | $ 893 | |||||
Other impairments (recoveries) and other losses (gains), net(1) | 2,432 | 139 | 1,159 | (8,770) | |||||
Restructuring and severance-related charges | 1,368 | — | 1,368 | — | |||||
Casualty-related charges (recoveries), net(2) | (591) | (411) | (243) | (411) | |||||
Total adjustments | 3,790 | 324 | 5,228 | (8,288) | |||||
FFO as Adjusted applicable to common shares | 249,202 | 236,478 | 478,741 | 471,295 | |||||
Distributions on dilutive convertible units and other | 2,338 | 2,351 | 4,680 | 4,719 | |||||
Diluted FFO as Adjusted applicable to common shares | $ 251,540 | $ 238,829 | $ 483,421 | $ 476,014 | |||||
Diluted FFO as Adjusted per common share | $ 0.45 | $ 0.44 | $ 0.87 | $ 0.87 | |||||
Weighted average shares outstanding - diluted FFO as Adjusted | 554,584 | 547,132 | 554,494 | 547,018 | |||||
_______________________________________ | |
(1) | The six months ended June 30, 2022 includes the following, which are included in other income (expense), net in the Consolidated Statements of Operations: (i) a |
(2) | Casualty-related charges (recoveries), net are recognized in other income (expense), net and equity income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations. |
Healthpeak Properties, Inc. | ||||||||
Adjusted Funds From Operations | ||||||||
In thousands | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
FFO as Adjusted applicable to common shares | $ 249,202 | $ 236,478 | $ 478,741 | $ 471,295 | ||||
Stock-based compensation amortization expense | 4,245 | 5,300 | 7,532 | 10,021 | ||||
Amortization of deferred financing costs | 2,954 | 2,689 | 5,774 | 5,377 | ||||
Straight-line rents(1) | (4,683) | (12,713) | (5,431) | (23,872) | ||||
AFFO capital expenditures | (19,444) | (27,906) | (42,233) | (50,745) | ||||
Deferred income taxes | (242) | (1,188) | (503) | (927) | ||||
Amortization of above (below) market lease intangibles, net | (8,838) | (5,885) | (14,641) | (11,653) | ||||
Other AFFO adjustments | (2,339) | (1,180) | (730) | (1,871) | ||||
AFFO applicable to common shares | 220,855 | 195,595 | 428,509 | 397,625 | ||||
Distributions on dilutive convertible units and other | 2,342 | 1,649 | 4,686 | 3,296 | ||||
Diluted AFFO applicable to common shares | $ 223,197 | $ 197,244 | $ 433,195 | $ 400,921 | ||||
Diluted AFFO per common share | $ 0.40 | $ 0.36 | $ 0.78 | $ 0.74 | ||||
Weighted average shares outstanding - diluted AFFO | 554,584 | 545,307 | 554,494 | 545,193 | ||||
_______________________________________ | |
(1) | The six months ended June 30, 2023 includes an |
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SOURCE Healthpeak Properties, Inc.
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