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Healthpeak (PEAK) to Raise $445.3M With Senior Notes Offering

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Healthpeak Properties, Inc. PEAK has priced its $450 million of 1.350% senior unsecured notes due 2027. This marks the company’s first green bond offering and the price to investors was 99.877% of the principal amount of the notes.

The net proceeds of the offering, after deducting the underwriting discount, original issue discount and fees and expenses, are estimated to be $445.3 million. Healthpeak plans to deploy the entire net proceeds from the offering to its prior buyout of Cambridge Discovery Park in the West Cambridge submarket of Boston, MA. Notably, the company closed the buyout of the $664-million life-science asset property, spanning 607,000 square feet, during the fourth quarter of 2020. This facility has received LEED Gold certification and qualifies as an eligible green project.

Alternatively, the REIT might go for allocation or reallocation of net proceeds to finance or refinance, one or more other eligible green projects wholly or partially. In case, the allocation or reallocation remains pending, the company intends to utilize the proceeds for its debt repayment.

Markedly, Healthpeak is seeing robust demand for its life-science properties in key markets. Last month, the company signed a long-term lease with Turning Point Therapeutics, Inc. for the entire Callan Ridge densification project that was announced in March.

Notably, the aging demography and increasing life expectancy of the U.S. population are driving the demand for life-changing therapies and cures. In addition, life-science assets have grabbed the limelight amid the increasing need for effective diagnostics, therapies and vaccines to fight the coronavirus pandemic, thereby, fueling growth and strengthening the fundamentals of the life sciences real estate market. Also, favorable drug approval trends and high life-science funding have been positives. Amid this, with an existing biotech-heavy tenant base, Healthpeak is seeing decent demand and retention at its lab properties.

Over the past few years, Healthpeak has significantly reduced its seniors housing exposure through divestitures. This will reduce pandemic-related operational uncertainty in the near term, offer stability to earnings and increase capital allocation to targeted businesses. However, the dilutive impact on earnings in the near term from such dispositions is unavoidable.

Shares of this Zacks Rank #3 (Hold) company have gained 15.3% over the past six months, underperforming the industry’s rally of 24.4%.

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Key Industry Picks

Mack-Cali Realty Corporation’s CLI Zacks Consensus Estimate for 2021 FFO per share moved up 1.8% over the past week. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Geo Group Inc’s GEO Zacks Consensus Estimate for the current-year FFO per share moved marginally north in the past month. The company carries a Zacks Rank of 2, at present.

BRAEMAR HOTELS & RESORTS INC.’s BHR FFO per share estimate for the ongoing year has been revised upward by 4.5% in the past month. The company carries a Zacks Rank of 2, currently.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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