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:
- Healthpeak’s website:
https://ir.healthpeak.com/news-events
- Webcast: https://events.q4inc.com/attendee/292488797. Joining
via webcast is recommended for those who will not be asking
questions.
- 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240208718917/en/
Andrew Johns, CFA Senior Vice President – Investor Relations
720-428-5400
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