Healthpeak Properties, Inc.

Healthpeak Properties, Inc. (NYSE: DOC) owns and develops outpatient medical and lab properties and controls the separately listed senior housing business Janus Living. It consolidates Janus's financial results and reports the portion owned by other investors as a noncontrolling interest.

Third-quarter results

The table compares the three months ended September 30. Amounts are USD millions, except per-share figures.

FFO, or funds from operations, adds back real estate depreciation and removes specified property gains and losses. Adjusted FFO makes further adjustments for selected transaction and other costs. Last year's reported loss included substantial impairments in real estate joint ventures.

Lab leasing and occupancy

Reported lab occupancy was 79.8% at September 30, versus 78.5% at June 30. It excludes two HQ Point buildings acquired on September 30. Including those buildings, Healthpeak puts September occupancy at 78.8%. The figures are weighted for the company's economic ownership, with other exclusions defined in its occupancy measure.

Healthpeak executed 480,000 square feet of new and renewal lab leases in Q3, versus 381,000 in Q2. Same-store adjusted cash property income, which compares operating properties over comparable periods, fell 0.7% from a year earlier.

The annual lab income forecast remains negative: a 3% to 6% decline on the same-store adjusted cash measure. New leases and the filling of recently acquired space will show how far the recovery extends.

Completed and pending lab investments

On September 30, Healthpeak acquired the construction loan and remaining equity interest in HQ Point, a two-building lab campus in San Diego, in a combined transaction valued at approximately $105 million. The 236,000-square-foot campus is 29% occupied.

The company is under contract to buy a 145,000-square-foot South San Francisco building for approximately $92 million. It is 49% occupied. It also plans to buy the remaining 51% of 100 Acorn Park Drive in Cambridge for approximately $36 million. That 129,000-square-foot building is 53% occupied. Both transactions are expected to close in Q4 or early 2027.

The three-campus package totals approximately $233 million and is 41% occupied. Its current estimated cash yield is about 5%; the expected stabilized yield is 9% to 10%. Healthpeak has not set a calendar date for that stabilized target.

Senior housing and outpatient medical

Same-store adjusted cash property income rose 25.9% in senior housing and 3.1% in outpatient medical properties. Total same-store growth was 3.6%.

Healthpeak's ownership of Janus Living was 69% at September 30, versus 73.6% in June. Its holding of 214.7 million shares and operating partnership units was unchanged. Janus completed approximately $1.75 billion of acquisitions in Q3, including the $1 billion already disclosed by August 3. It completed another approximately $370 million through October 30 and had approximately $82 million under binding purchase agreements.

In October, Healthpeak completed the $38 million purchase of Westway One, a medical training facility in Houston. It is fully leased to HCA Healthcare affiliates, with 11 years remaining, at an initial capitalization rate of approximately 7.4%.

In July, Healthpeak sold a 49% interest in an 86-property outpatient portfolio to Brookfield affiliates for approximately $1.025 billion, based on a $2.1 billion portfolio valuation. Healthpeak retained 51%. This transaction was already disclosed with the August results.

Outlook, cash and financing

Annual adjusted FFO guidance increased to $1.76 to $1.78 a share from $1.73 to $1.77 in August. GAAP earnings guidance fell to $0.39 to $0.41 from $0.48 to $0.52, mainly because of depreciation and amortization from Janus acquisitions. Those expenses are added back in FFO.

The annual same-store adjusted cash property-income forecast increased to growth of 0.5% to 2.0%, versus 0% to 1.5% in August.

At September 30, consolidated cash was $514.3 million and the carrying value of consolidated debt was $9.382 billion. Healthpeak reported net debt equal to 4.7 times its adjusted annualized earnings, unchanged from June. That earnings measure starts with profit before interest, taxes, depreciation and amortization, then adjusts for property transactions and selected other items. The debt measure includes its share of joint ventures.

Healthpeak added a $500 million delayed-draw term loan in October, maturing in October 2030. It was undrawn when the facility closed. Reported liquidity was $3.8 billion at October 30, including cash, credit-line availability and undrawn loan commitments.

The monthly common dividend declared for October through December is $0.10167 a share.