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Healthpeak's (PEAK) Q2 FFO & Revenues Beat, Same-Store NOI Up

·4 min read

Healthpeak Properties, Inc. PEAK reported second-quarter 2022 funds from operations (FFO) as adjusted per share of 44 cents, surpassing the Zacks Consensus Estimate by a whisker. The reported figure was up 10% from the year-ago quarter’s 40 cents.

The healthcare real estate investment trust (REIT) generated revenues of $517.9 million, outpacing the Zacks Consensus Estimate of $505.8 million. The figure was 8.8% higher than the prior-year quarter’s $476.2 million.

The performance was backed by solid top-line growth. However, weakness in the continuing care retirement communities (CCRC) portfolio was witnessed during the quarter.

Behind the Headlines

In the June-ended quarter, Healthpeak reported 3.7% year-over-year growth in the same-store portfolio cash adjusted net operating income (NOI).

It witnessed 4.3% and 4.5% year-over-year growth in the same-store portfolio cash (adjusted) NOI for its life-science and medical office segments, respectively. However, the same-store portfolio cash adjusted NOI for the CCRC portfolio declined 2.1% from the prior-year quarter.

Portfolio Activity

In May 2022, Healthpeak acquired an on-campus medical office building (MOB) encompassing 68,000 square feet for $26 million. The property is directly attached to Northwest Medical Center, a 128-bed full-service hospital in Bentonville, AR. Further, the MOB is 98% leased with a weighted average remaining lease term of roughly 4.5 years.

During the reported quarter, it placed in service the remaining 74,000 square feet at The Boardwalk, located in the Torrey Pines submarket of San Diego. This represented an investment of $48 million.  

Moreover, the company placed in service 160,000 square feet at Phase II of The Shore at Sierra Point, located in Brisbane, CA. This represented an investment of $184 million. The remaining 36,000 square feet in Phase II, which is yet to be placed in service, is expected to have initial occupancy in the fourth quarter of 2022. It is 100% leased and has a total expected development cost of $47 million.

During the quarter, PEAK also disposed of three non-core MOB assets, which generated proceeds of $26 million.

Balance Sheet

Healthpeak exited second-quarter 2022 with cash and cash equivalents of $73.01 million, down from $89.06 million as of Mar 31, 2022.

As of Jun 30, 2022, it had $2 billion of liquidity, which included the net proceeds from the future settlement of shares sold under equity forward contracts during the third quarter of 2021. Its net debt to adjusted EBITDAre was 5.1X as of the same date.

2022 Outlook

Healthpeak reaffirmed its FFO guidance for 2022.

It expects FFO as adjusted per share to lie between $1.68 and $1.74. The Zacks Consensus Estimate for the same is pegged at $1.73.

The same-store portfolio cash-adjusted NOI growth for the total portfolio was revised upward from 3.25-4.75% to 3.5-5.0%. The same for the MOB portfolio was raised to 2.5-3.5% from 1.75-2.75%.

Healthpeak currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Healthpeak Properties, Inc. Price, Consensus and EPS Surprise

Healthpeak Properties, Inc. Price, Consensus and EPS Surprise
Healthpeak Properties, Inc. Price, Consensus and EPS Surprise

Healthpeak Properties, Inc. price-consensus-eps-surprise-chart | Healthpeak Properties, Inc. Quote

Performance of Other REITs

Mid-America Apartment Communities, Inc. MAA, commonly referred to as MAA, reported second-quarter 2022 core funds from operations (FFO) per share of $2.02, surpassing the Zacks Consensus Estimate of $2.00. The reported number improved 19.5% year over year.

This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also increased its outlook for core FFO growth for the year.

Alexandria Real Estate Equities, Inc. ARE reported second-quarter 2022 adjusted funds from operations (FFO) per share of $2.10, surpassing the Zacks Consensus Estimate of $2.06. The reported figure also compared favorably with the year-ago quarter’s $1.93.

Alexandria witnessed continued healthy leasing activity and rental rate growth during the quarter.

Boston Properties Inc.’s BXP second-quarter 2022 funds from operations (FFO) per share of $1.94 beat the Zacks Consensus Estimate of $1.85. The figure also compared favorably with the year-ago quarter’s $1.72.

BXP’s quarterly results reflect growth in the bottom line. Also, it experienced strong leasing activity during the quarter.

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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