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Healthpeak Properties Reports Fourth Quarter and Year Ended 2023 Results

Healthpeak Properties, Inc. (NYSE: PEAK), a leading owner, operator, and developer of real estate for healthcare discovery and delivery, today announced results for the fourth quarter and full-year ended December 31, 2023.

FOURTH QUARTER 2023 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS

– Net income of $0.13 per share, Nareit FFO of $0.48 per share, FFO as Adjusted of $0.46 per share, AFFO of $0.36 per share, and Total Same-Store Portfolio Cash (Adjusted) NOI growth of 3.6%

– Fourth quarter new and renewal lease executions totaled 1.1 million square feet:

  • Outpatient Medical new and renewal lease executions totaled 743,000 square feet
  • Lab new and renewal lease executions totaled 312,000 square feet
  • Year-to-date 2024 Lab lease executions of 58,000 square feet with an additional 115,000 square feet under signed LOI

– Received entitlements for an additional 1.3 million square feet of lab development at the Vantage campus in South San Francisco

– Commenced two on-campus outpatient developments in our HCA Healthcare ("HCA") development program

– Entered into a new $236 million joint venture through the sale of a 65% interest in the Callan Ridge lab campus in the Torrey Pines submarket of San Diego in January 2024

– Net Debt to Adjusted EBITDAre was 5.2x for the quarter ended December 31, 2023

FULL-YEAR 2023 HIGHLIGHTS

– Net income of $0.56 per share, Nareit FFO of $1.79 per share, FFO as Adjusted of $1.78 per share, AFFO of $1.53 per share, and Total Same-Store Portfolio Cash (Adjusted) NOI growth of 4.8%

– Portfolio leasing summary:

  • Full-year outpatient lease executions totaled 4.1 million square feet, with +4% cash releasing spreads on renewals
  • Full-year lab lease executions totaled 985,000 square feet, with +23% cash releasing spreads on renewals

– Development highlights:

  • 2023 completions and new starts:
  • Nexus on Grand: Delivered the fully leased, 148,000 square foot, $161 million lab building in South San Francisco
  • Vantage: Delivered the fully leased, 154,000 square foot, $201 million first building of Phase I in South San Francisco
  • Callan Ridge: Completed core and shell work and delivered the space to the tenant for T.I. build out; the fully leased development in Torrey Pines totals 185,000 square feet with an expected total development cost of $146 million
  • HCA Development Program: Commenced construction on two new outpatient developments totaling 192,000 square feet with total expected development costs of $90 million
  • Land bank and future developments:
  • In September 2023, the Cambridge City Council unanimously approved a comprehensive rezoning to allow for greater density and developable heights in the West Cambridge neighborhood of Alewife where Healthpeak owns a total of 39 acres
  • In December 2023, Healthpeak received entitlements for an additional 1.3 million square feet of lab development at the Vantage campus

– Issued $750 million of senior unsecured notes at blended yield of approximately 5.35% and weighted average initial maturity of approximately 10 years

– Sold $130 million of non-core properties at an average trailing cash yield of 5.4% and received $205 million of seller financing and other loan repayments

– 2023 sustainability and responsible business recognitions include:

  • Received a Green Star rating from the Global Real Estate Sustainability Benchmark (GRESB) and named a constituent in the FTSE4Good Index for the twelfth consecutive year
  • Named to CDP's Leadership band for the eleventh consecutive year, named a constituent in the S&P Global Dow Jones Sustainability N. America Index for the eleventh consecutive year and World Index for the fourth time; and named to the S&P Global Sustainability Yearbook for the ninth consecutive year
  • Named an ENERGY STAR Partner of the Year for the third time
  • Named to Newsweek’s America’s Most Responsible Companies list for the fifth consecutive year
  • Named Winner for Best Proxy Statement (Mid Cap), and Finalist for Best ESG Reporting (Small to Mid Cap) by IR Magazine and Governance Intelligence
  • Certified a Great Place to Work for the fourth consecutive year; included in The Tennessean Top Workplaces for the second consecutive year; and a Middle Tennessee Top Workplace for the first time
  • Included in Fortune's Best Workplaces in Real Estate list for the second consecutive year

To learn more about Healthpeak's commitment to responsible business and view our 2022 ESG Report, please visit www.healthpeak.com/ESG.

FOURTH QUARTER COMPARISON

 

Three Months Ended December 31, 2023

 

Three Months Ended December 31, 2022

(in thousands, except per share amounts)

Amount

 

Per Share

 

Amount

 

Per Share

Net income, diluted

$

70,787

 

$

0.13

 

$

6,388

 

$

0.01

Nareit FFO, diluted

 

263,810

 

 

0.48

 

 

192,158

 

 

0.35

FFO as Adjusted, diluted

 

252,639

 

 

0.46

 

 

238,744

 

 

0.44

AFFO, diluted

 

196,622

 

 

0.36

 

 

194,414

 

 

0.36

FULL-YEAR COMPARISON

 

Year Ended

December 31, 2023

 

Year Ended

December 31, 2022

(in thousands, except per share amounts)

Amount

 

Per Share

 

Amount

 

Per Share

Net income, diluted

$

304,284

 

$

0.56

 

$

497,792

 

$

0.92

Nareit FFO, diluted

 

994,574

 

 

1.79

 

 

904,573

 

 

1.66

FFO as Adjusted, diluted

 

987,708

 

 

1.78

 

 

950,259

 

 

1.74

AFFO, diluted

 

847,358

 

 

1.53

 

 

790,296

 

 

1.45

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 "December 31, 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 full-year SS Cash (Adjusted) NOI growth.

Year-Over-Year Total SS Portfolio Cash (Adjusted) NOI Growth

 

Three Month

 

Full Year

 

SS Growth %

% of SS

 

SS Growth %

% of SS

Lab

2.7

%

47.1

%

 

3.7

%

46.6

%

Outpatient Medical

4.3

%

41.4

%

 

3.4

%

42.0

%

CCRC

4.7

%

11.5

%

 

15.6

%

11.5

%

Total Portfolio

3.6

%

100.0

%

 

4.8

%

100.0

%

CALLAN RIDGE LAB CAMPUS JOINT VENTURE SALE

As previously announced, in January 2024, Healthpeak formed a new strategic joint venture with Breakthrough Properties (“Breakthrough”) through a sale of a 65% interest in Healthpeak’s fully leased Callan Ridge lab campus in the Torrey Pines submarket of San Diego.

The formation of the 65% Breakthrough / 35% Healthpeak joint venture values Callan Ridge at $236 million, or $1,275 per square foot, and represents a stabilized cash capitalization rate of 5.3% based on the initial annual rental rate of approximately $67 per square foot. At closing, net proceeds to Healthpeak were approximately $130 million. Additionally, the formation of the joint venture reduces Healthpeak's future tenant improvement funding by approximately $20 million.

Healthpeak began construction on the 185,000 square foot Callan Ridge campus in 2021. The two-building campus is fully leased to Turning Point Therapeutics, Inc., a subsidiary of Bristol-Myers Squibb Company (NYSE: BMY), through April 2035.

DEVELOPMENT UPDATES

VANTAGE ENTITLEMENTS

As previously announced, in December 2023, Healthpeak received entitlements for an additional 1.3 million square feet of lab space at the Vantage campus, bringing the combined campus to approximately 1.7 million square feet upon full build out. The additional entitlements represent double the allowable density compared to when Healthpeak originally acquired the land. The long-term nature of the entitlements offers flexibility to deliver the balance of the development in phases to align with market demand.

Strategically located in the heart of South San Francisco and at the doorstep of Genentech’s headquarters, the 20-acre purpose-built lab campus offers tenants a highly amenitized, world-class campus setting with access to multiple modes of transportation including direct access to the Rails-to-Trails pathway, which provides a pedestrian connection to downtown South San Francisco's restaurant and retail corridor, as well as the Caltrain station, which recently completed a multi-year renovation.

Healthpeak is South San Francisco's largest investor-owned landlord with a portfolio that encompasses 4.9 million square feet, including some the submarket's most desirable campuses including The Cove, Portside at Oyster Point, The Shore, Vantage, and Pointe Grand, among others.

OUTPATIENT DEVELOPMENT PROGRAM WITH HCA

During the fourth quarter, Healthpeak added two on-campus outpatient developments with total expected development costs of $90 million to its program with HCA.

  • Galen Aurora: 72,000 square foot Class A medical training facility located on HCA’s Medical Center of Aurora hospital campus, a 325-bed acute care hospital in Denver, CO where Healthpeak currently owns three on-campus buildings totaling approximately 165,000 square feet. HCA nursing and professional education affiliates have pre-leased 100% of the development.
  • McKinney Medical Center: 120,000 square foot Class A outpatient building on the campus of HCA's Medical City McKinney campus, a 281-bed acute care hospital in McKinney, TX where Healthpeak currently owns two on-campus buildings totaling approximately 120,000 square feet. HCA affiliates have pre-leased approximately 62% of the development for future outpatient services, including oncology, orthopedic, cardiology, wound care, imaging, and other services.

Since 2019, Healthpeak’s development program with HCA has delivered 9 outpatient buildings totaling 785,000 square feet with total development costs of approximately $235 million and is under construction on an additional three buildings totaling 262,000 square feet with total expected development costs of $121 million.

MERGER WITH PHYSICIANS REALTY TRUST AND TERM LOAN UPDATE

As previously announced on October 30, 2023, Healthpeak and Physicians Realty Trust entered into a definitive agreement to combine in an all-stock merger of equals. Each company will hold its respective special meeting of stockholders on February 21, 2024. Subject to Physicians Realty Trust's stockholders approving the proposed merger and Healthpeak's stockholders approving the issuance of Healthpeak common stock in connection with the proposed merger, among other matters, as well as the satisfaction or waiver of customary closing conditions, the transaction is expected to close on March 1, 2024.

Additionally, Healthpeak expects to enter into a new $750 million 5-year unsecured term loan. Proceeds from the term loan are expected to fund the repayment of $210 million of Physicians Realty Trust private placement notes and to be used for general corporate purposes, including transaction costs and repayment of borrowings under Healthpeak's credit facility and commercial paper program. Healthpeak has entered into forward-starting swap agreements to fix the interest rate of the new term loan at approximately 4.5% for the full 5-year term of the loan.

DIVIDEND

On January 31, 2024, Healthpeak's Board declared a quarterly common stock cash dividend of $0.30 per share to be paid on February 26, 2024, to stockholders of record as of the close of business on February 14, 2024.

2024 OUTLOOK

For full year 2024, we have established the following outlook ranges, which are inclusive of the impact from the Physicians Realty Trust merger:

  • Diluted earnings per common share of $0.07 – $0.13
  • Diluted Nareit FFO per share of $1.54 – $1.60
  • Diluted FFO as Adjusted per share of $1.73 – $1.79  
  • Diluted AFFO per share of $1.50 – $1.56
  • Total Portfolio Same-Store Cash (Adjusted) NOI growth of 2.25% – 3.75%

This outlook assumes the merger with Physicians Realty Trust closes on March 1, 2024. These estimates are based on our view of existing market conditions, transaction timing, and other assumptions for the year ending December 31, 2024. Additionally, the outlook includes estimates for certain merger-related accounting adjustments, which will not be finalized until after the merger closes. For additional details and assumptions underlying this outlook, please see page 40 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.

CONFERENCE CALL INFORMATION

Healthpeak has scheduled a conference call and webcast for Friday, February 9, 2024, at 8:00 a.m. Mountain Time.

The conference call can be accessed in the following ways:

  • Telephone: The participant dial-in number is (800) 715-9871.

An archive of the webcast will be available on Healthpeak's website through February 7, 2025, and a telephonic replay can be accessed through February 15, 2024, by dialing (800) 770-2030 and entering conference ID number 58822.

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, financing activities, or other transactions discussed in this release, including statements regarding our proposed merger with Physicians Realty Trust; (ii) the payment of a quarterly cash dividend; and (iii) the information presented under the heading "2024 Outlook." 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; risks associated with the proposed merger transactions with Physicians Realty Trust (the “Mergers”), including, but not limited to, our ability to consummate the Mergers on the proposed terms or on the anticipated timeline, or at all, potential loss or disruption of current and prospective commercial relationships due to the uncertainties about the Mergers, and the outcome of legal proceedings instituted against us, our Board of Directors, and others related to the Mergers; our ability to integrate the operations of the Company and Physicians Realty Trust successfully and realize the anticipated synergies and other benefits of the Mergers or do so within the anticipated time frame; changes within the industries in which we operate; significant regulation, funding requirements, and uncertainty faced by our lab tenants; factors adversely affecting our tenants’, operators’, or borrowers’ ability to meet their financial and other contractual obligations to us; the insolvency or bankruptcy of one or more of our major tenants, operators, or borrowers; 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 risks, including project abandonments, project delays, and lower profits than expected; 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; any requirement that we recognize reserves, allowances, credit losses, or impairment charges; 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; ESG and sustainability commitments and requirements, as well as stakeholder expectations; epidemics, pandemics, or other infectious diseases, including Covid, and health and safety measures intended to reduce their spread; human capital risks, including the loss or limited availability of our key personnel; our reliance on information technology systems and the possibility of a cybersecurity incident or cybersecurity threat affect our information systems or the information systems of our tenants, operators or borrowers; volatility, disruption, or uncertainty in the financial markets; 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, bank failures or other events affecting financial institutions; our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness; 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; our taxable REIT subsidiaries being subject to corporate level tax; tax imposed on any net income from “prohibited transactions”; changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions; calculating non-REIT tax earnings and profits distributions; ownership limits in our charter that restrict ownership in our stock; provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders; conflicts of interest between the interests of our stockholders and the interests of holders of Healthpeak OP common units; provisions in the operating agreement of Healthpeak OP and other agreements that may delay or prevent unsolicited acquisitions and other transactions; our status as a holding company of Healthpeak OP; and other risks and uncertainties described from time to time in our Securities and Exchange Commission filings. Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the proposed transaction, on December 15, 2023, Healthpeak and Physicians Realty Trust filed with the SEC a registration statement on Form S-4 containing a joint proxy statement/prospectus and other documents regarding the proposed transaction. The joint proxy statement/prospectus contains important information about the proposed transaction and related matters. The Form S-4 was declared effective, and each of Healthpeak and Physicians Realty Trust commenced mailing of the joint proxy statement/prospectus included as part of the Form S-4, on January 11, 2024.

STOCKHOLDERS ARE URGED AND ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT HEALTHPEAK, PHYSICIANS REALTY TRUST AND THE PROPOSED TRANSACTION.

Investors and security holders of Healthpeak and Physicians Realty Trust are able to obtain free copies of the registration statement, the joint proxy statement/prospectus and other relevant documents filed by Healthpeak and Physicians Realty Trust with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by Healthpeak with the SEC are also available on Healthpeak’s website at www.healthpeak.com, and copies of the documents filed by Physicians Realty Trust with the SEC are available on Physicians Realty Trust’s website at www.docreit.com.

PARTICIPANTS IN THE SOLICITATION

Healthpeak, Physicians Realty Trust and their respective directors, trustees and executive officers may be deemed to be participants in the solicitation of proxies from Healthpeak’s stockholders and Physicians Realty Trust’s shareholders in respect of the proposed transaction. Information regarding Healthpeak’s directors and executive officers can be found in Healthpeak’s definitive proxy statement filed with the SEC on March 17, 2023. Information regarding Physicians Realty Trust’s trustees and executive officers can be found in Physicians Realty Trust’s definitive proxy statement filed with the SEC on March 23, 2023.

Additional information regarding the interests of such potential participants is included in the joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction. These documents are available on the SEC’s website and from Healthpeak and Physicians Realty Trust, as applicable, using the sources indicated above.

NO OFFER OR SOLICITATION

This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Healthpeak Properties, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data

 

 

December 31,

2023

 

December 31,

2022

Assets

 

 

 

Real estate:

 

 

 

Buildings and improvements

$

13,329,464

 

 

$

12,784,078

 

Development costs and construction in progress

 

643,217

 

 

 

760,355

 

Land and improvements

 

2,647,633

 

 

 

2,667,188

 

Accumulated depreciation and amortization

 

(3,591,951

)

 

 

(3,188,138

)

Net real estate

 

13,028,363

 

 

 

13,023,483

 

Loans receivable, net of reserves of $2,830 and $8,280

 

218,450

 

 

 

374,832

 

Investments in and advances to unconsolidated joint ventures

 

782,853

 

 

 

706,677

 

Accounts receivable, net of allowance of $2,282 and $2,399

 

55,820

 

 

 

53,436

 

Cash and cash equivalents

 

117,635

 

 

 

72,032

 

Restricted cash

 

51,388

 

 

 

54,802

 

Intangible assets, net

 

314,156

 

 

 

418,061

 

Assets held for sale, net

 

117,986

 

 

 

49,866

 

Right-of-use asset, net

 

240,155

 

 

 

237,318

 

Other assets, net

 

772,044

 

 

 

780,722

 

Total assets

$

15,698,850

 

 

$

15,771,229

 

 

 

 

 

Liabilities and Equity

 

 

 

Bank line of credit and commercial paper

$

720,000

 

 

$

995,606

 

Term loans

 

496,824

 

 

 

495,957

 

Senior unsecured notes

 

5,403,378

 

 

 

4,659,451

 

Mortgage debt

 

256,097

 

 

 

346,599

 

Intangible liabilities, net

 

127,380

 

 

 

156,193

 

Liabilities related to assets held for sale, net

 

729

 

 

 

4,070

 

Lease liability

 

206,743

 

 

 

208,515

 

Accounts payable, accrued liabilities, and other liabilities

 

657,196

 

 

 

772,485

 

Deferred revenue

 

905,633

 

 

 

844,076

 

Total liabilities

 

8,773,980

 

 

 

8,482,952

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

48,828

 

 

 

105,679

 

 

 

 

 

Common stock, $1.00 par value: 750,000,000 shares authorized; 547,156,311 and 546,641,973 shares issued and outstanding

 

547,156

 

 

 

546,642

 

Additional paid-in capital

 

10,405,780

 

 

 

10,349,614

 

Cumulative dividends in excess of earnings

 

(4,621,861

)

 

 

(4,269,689

)

Accumulated other comprehensive income (loss)

 

19,371

 

 

 

28,134

 

Total stockholders’ equity

 

6,350,446

 

 

 

6,654,701

 

 

 

 

 

Joint venture partners

 

310,998

 

 

 

327,721

 

Non-managing member unitholders

 

214,598

 

 

 

200,176

 

Total noncontrolling interests

 

525,596

 

 

 

527,897

 

 

 

 

 

Total equity

 

6,876,042

 

 

 

7,182,598

 

 

 

 

 

Total liabilities and equity

$

15,698,850

 

 

$

15,771,229

 

Healthpeak Properties, Inc.

Consolidated Statements of Operations

In thousands, except per share data

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

Rental and related revenues

$

412,332

 

 

$

392,245

 

 

$

1,631,805

 

 

$

1,541,775

 

Resident fees and services

 

136,341

 

 

 

125,873

 

 

 

527,417

 

 

 

494,935

 

Interest income

 

4,979

 

 

 

6,350

 

 

 

21,781

 

 

 

23,300

 

Income from direct financing leases

 

 

 

 

 

 

 

 

 

 

1,168

 

Total revenues

 

553,652

 

 

 

524,468

 

 

 

2,181,003

 

 

 

2,061,178

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Interest expense

 

52,784

 

 

 

49,413

 

 

 

200,331

 

 

 

172,944

 

Depreciation and amortization

 

188,544

 

 

 

179,157

 

 

 

749,901

 

 

 

710,569

 

Operating

 

224,401

 

 

 

220,492

 

 

 

902,060

 

 

 

862,991

 

General and administrative

 

21,556

 

 

 

57,872

 

 

 

95,132

 

 

 

131,033

 

Transaction and merger-related costs

 

14,417

 

 

 

3,217

 

 

 

17,515

 

 

 

4,853

 

Impairments and loan loss reserves (recoveries), net

 

(5,445

)

 

 

3,326

 

 

 

(5,601

)

 

 

7,004

 

Total costs and expenses

 

496,257

 

 

 

513,477

 

 

 

1,959,338

 

 

 

1,889,394

 

Other income (expense):

 

 

 

 

 

 

 

Gain (loss) on sales of real estate, net

 

 

 

 

(969

)

 

 

86,463

 

 

 

9,078

 

Other income (expense), net

 

2,600

 

 

 

(587

)

 

 

6,808

 

 

 

326,268

 

Total other income (expense), net

 

2,600

 

 

 

(1,556

)

 

 

93,271

 

 

 

335,346

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures

 

59,995

 

 

 

9,435

 

 

 

314,936

 

 

 

507,130

 

Income tax benefit (expense)

 

11,842

 

 

 

650

 

 

 

9,617

 

 

 

4,425

 

Equity income (loss) from unconsolidated joint ventures

 

3,558

 

 

 

(156

)

 

 

10,204

 

 

 

1,985

 

Income (loss) from continuing operations

 

75,395

 

 

 

9,929

 

 

 

334,757

 

 

 

513,540

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

 

 

 

873

 

 

 

 

 

 

2,884

 

 

 

 

 

 

 

 

 

Net income (loss)

 

75,395

 

 

 

10,802

 

 

 

334,757

 

 

 

516,424

 

Noncontrolling interests’ share in continuing operations

 

(4,451

)

 

 

(4,274

)

 

 

(28,748

)

 

 

(15,975

)

Net income (loss) attributable to Healthpeak Properties, Inc.

 

70,944

 

 

 

6,528

 

 

 

306,009

 

 

 

500,449

 

Participating securities’ share in earnings

 

(157

)

 

 

(140

)

 

 

(1,725

)

 

 

(2,657

)

Net income (loss) applicable to common shares

$

70,787

 

 

$

6,388

 

 

$

304,284

 

 

$

497,792

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

Continuing operations

$

0.13

 

 

$

0.01

 

 

$

0.56

 

 

$

0.92

 

Discontinued operations

 

 

 

 

0.00

 

 

 

 

 

 

0.00

 

Net income (loss) applicable to common shares

$

0.13

 

 

$

0.01

 

 

$

0.56

 

 

$

0.92

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

Continuing operations

$

0.13

 

 

$

0.01

 

 

$

0.56

 

 

$

0.92

 

Discontinued operations

 

 

 

 

0.00

 

 

 

 

 

 

0.00

 

Net income (loss) applicable to common shares

$

0.13

 

 

$

0.01

 

 

$

0.56

 

 

$

0.92

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

547,091

 

 

 

537,992

 

 

 

547,006

 

 

 

538,809

 

Diluted

 

547,361

 

 

 

538,396

 

 

 

547,275

 

 

 

539,147

 

Healthpeak Properties, Inc.

Funds From Operations

In thousands, except per share data

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2023

 

2022

 

2023

 

2022

Net income (loss) applicable to common shares

 

$

70,787

 

 

$

6,388

 

 

$

304,284

 

 

$

497,792

 

Real estate related depreciation and amortization

 

 

188,544

 

 

 

179,157

 

 

 

749,901

 

 

 

710,569

 

Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures

 

 

6,723

 

 

 

8,642

 

 

 

24,800

 

 

 

27,691

 

Noncontrolling interests’ share of real estate related depreciation and amortization

 

 

(4,610

)

 

 

(4,709

)

 

 

(18,654

)

 

 

(19,201

)

Loss (gain) on sales of depreciable real estate, net

 

 

 

 

 

986

 

 

 

(86,463

)

 

 

(10,422

)

Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures

 

 

 

 

 

45

 

 

 

 

 

 

134

 

Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net

 

 

 

 

 

 

 

 

11,546

 

 

 

12

 

Loss (gain) upon change of control, net(1)

 

 

 

 

 

 

 

 

(234

)

 

 

(311,438

)

Taxes associated with real estate dispositions

 

 

 

 

 

 

 

 

 

 

 

29

 

Nareit FFO applicable to common shares

 

 

261,444

 

 

 

190,509

 

 

 

985,180

 

 

 

895,166

 

Distributions on dilutive convertible units and other

 

 

2,366

 

 

 

1,649

 

 

 

9,394

 

 

 

9,407

 

Diluted Nareit FFO applicable to common shares

 

$

263,810

 

 

$

192,158

 

 

$

994,574

 

 

$

904,573

 

Diluted Nareit FFO per common share

 

$

0.48

 

 

$

0.35

 

 

$

1.79

 

 

$

1.66

 

Weighted average shares outstanding - diluted Nareit FFO

 

 

554,635

 

 

 

543,879

 

 

 

554,559

 

 

 

546,462

 

Impact of adjustments to Nareit FFO:

 

 

 

 

 

 

 

 

Transaction and merger-related items(2)

 

$

10,842

 

 

$

3,215

 

 

$

13,835

 

 

$

4,788

 

Other impairments (recoveries) and other losses (gains), net(3)

 

 

(4,407

)

 

 

9,702

 

 

 

(3,850

)

 

 

3,829

 

Restructuring and severance-related charges(4)

 

 

 

 

 

32,749

 

 

 

1,368

 

 

 

32,749

 

Casualty-related charges (recoveries), net(5)

 

 

(3,424

)

 

 

298

 

 

 

(4,033

)

 

 

4,401

 

Recognition (reversal) of valuation allowance on deferred tax assets(6)

 

 

(14,194

)

 

 

 

 

 

(14,194

)

 

 

 

Total adjustments

 

 

(11,183

)

 

 

45,964

 

 

 

(6,874

)

 

 

45,767

 

FFO as Adjusted applicable to common shares

 

 

250,261

 

 

 

236,473

 

 

 

978,306

 

 

 

940,933

 

Distributions on dilutive convertible units and other

 

 

2,378

 

 

 

2,271

 

 

 

9,402

 

 

 

9,326

 

Diluted FFO as Adjusted applicable to common shares

 

$

252,639

 

 

$

238,744

 

 

$

987,708

 

 

$

950,259

 

Diluted FFO as Adjusted per common share

 

$

0.46

 

 

$

0.44

 

 

$

1.78

 

 

$

1.74

 

Weighted average shares outstanding - diluted FFO as Adjusted

 

 

554,635

 

 

 

545,704

 

 

 

554,559

 

 

 

546,462

 

_______________________________________

(1)

The year ended December 31, 2022 includes a gain upon change of control related to the sale of a 30% interest to a sovereign wealth fund and deconsolidation of seven previously consolidated lab buildings in South San Francisco, California. The gain upon change of control is included in other income (expense), net in the Consolidated Statements of Operations.

(2)

The three months and year ended December 31, 2023 include costs related to the proposed merger with Physicians Realty Trust, which are primarily comprised of legal, accounting, tax, and other costs that were incurred prior to year-end, partially offset by termination fee income associated with Graphite Bio, Inc., for which the lease terms have been modified to accelerate expiration of the lease to December 2024. Termination fee income is included in rental and related revenues on the Consolidated Statements of Operations.

(3)

The three months and year ended December 31, 2022 include $7 million of charges incurred in connection with the downsizing of the Company’s corporate headquarters in Denver, Colorado, which are included in general and administrative expenses in the Consolidated Statements of Operations. The year ended December 31, 2022 also includes the following, which are included in other income (expense), net in the Consolidated Statements of Operations: (i) $14 million of expenses incurred for tenant relocation and other costs associated with the demolition of an outpatient medical building and (ii) a $23 million gain on sale of a hospital under a direct financing lease. The three months and years ended December 31, 2023 and 2022 include reserves and (recoveries) for expected loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.

(4)

The three months and year ended December 31, 2022 include $32 million of severance-related charges associated with the departures of our former Chief Executive Officer and former Chief Legal Officer and General Counsel in the fourth quarter of 2022. These expenses are included in general and administrative expenses in the Consolidated Statements of Operations.

(5)

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.

(6)

In conjunction with classifying the assets related to the Callan Ridge JV as held for sale as of December 31, 2023, we concluded it was more likely than not that we would realize the future value of certain deferred tax assets generated by the net operating losses of taxable REIT subsidiaries. Accordingly, during the three months and year ended December 31, 2023, we recognized the reversal of a portion of the associated valuation allowance and recognized a corresponding income tax benefit.

Healthpeak Properties, Inc.

Adjusted Funds From Operations

In thousands

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2023

 

2022

 

2023

 

2022

FFO as Adjusted applicable to common shares

$

250,261

 

 

$

236,473

 

 

$

978,306

 

 

$

940,933

 

Stock-based compensation amortization expense

 

3,513

 

 

 

1,903

 

 

 

14,480

 

 

 

16,537

 

Amortization of deferred financing costs

 

3,088

 

 

 

2,812

 

 

 

11,916

 

 

 

10,881

 

Straight-line rents(1)

 

(1,677

)

 

 

(12,346

)

 

 

(14,387

)

 

 

(49,183

)

AFFO capital expenditures

 

(47,332

)

 

 

(33,407

)

 

 

(113,596

)

 

 

(108,510

)

Deferred income taxes

 

117

 

 

 

(355

)

 

 

(816

)

 

 

(4,096

)

Amortization of above (below) market lease intangibles, net

 

(5,525

)

 

 

(5,851

)

 

 

(25,791

)

 

 

(23,380

)

Other AFFO adjustments

 

(7,486

)

 

 

3,536

 

 

 

(9,335

)

 

 

520

 

AFFO applicable to common shares

 

194,959

 

 

 

192,765

 

 

 

840,777

 

 

 

783,702

 

Distributions on dilutive convertible units and other

 

1,663

 

 

 

1,649

 

 

 

6,581

 

 

 

6,594

 

Diluted AFFO applicable to common shares

$

196,622

 

 

$

194,414

 

 

$

847,358

 

 

$

790,296

 

Diluted AFFO per common share

$

0.36

 

 

$

0.36

 

 

$

1.53

 

 

$

1.45

 

Weighted average shares outstanding - diluted AFFO

 

552,810

 

 

 

543,879

 

 

 

552,734

 

 

 

544,637

 

_______________________________________

(1)

The year ended December 31, 2023 includes an $8.7 million write-off of straight-line rent receivable associated with Sorrento Therapeutics, Inc., which commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code. This activity is reflected as a reduction of rental and related revenues in the Consolidated Statements of Operations.

 

Contacts

Andrew Johns, CFA

Senior Vice President – Investor Relations

720-428-5400

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