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Here's Why it is Wise to Retain Healthpeak (PEAK) Stock Now

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Healthpeak Properties, Inc.’s PEAK life-science real estate portfolio is witnessing decent demand on the back of drug innovations and developments. While the company is recycling capital through non-core dispositions of senior housing assets to expand the core portfolio, the near-term dilutive impacts on earnings from such sales are unavoidable.

The increasing life expectancy of the U.S. population and biopharma drug development growth opportunities have promoted the life-science real estate market fundamentals. Moreover, in light of the global efforts to develop vaccines and treatments for the coronavirus, there is a higher demand for drug innovation. This is driving sector fundamentals, leasing activity and rent growth.

Amid the favorable environment, the healthcare REIT is making concerted portfolio-repositioning efforts to focus on life-science, medical office and continuing care retirement community (“CCRC”) assets.

Healthpeak follows a cluster strategy in three premier life-science epicenters — San Diego, San Francisco and Boston — to assemble assets through acquisitions, developments and redevelopments. On the back of these moves, the company is gaining scale and is well-poised to meet the growing demand from life-science tenants. It is using proceeds from the senior housing operating portfolio (SHOP) and triple-net leased asset sales to acquire and fund the development of life science and medical office assets in high barrier-to-entry markets.

Healthpeak’s decent balance sheet position also supports such growth moves. The company had cash and cash equivalents of $96.9 million as of Jun 30, 2021. It ended the quarter with a net debt to adjusted EBITDA of 4.6 times and has no significant debt maturities until February 2025. Hence, with its sound liquidity position and limited near-term capital needs, the company is anticipated to sail efficiently through any unexpected negative externalities in the future.

Shares of this Zacks Rank #3 (Hold) company have gained 8.7% over the past three months, outperforming the industry's growth of 6.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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However, the coronavirus pandemic continues to adversely impact the company’s senior housing portfolio.

Also, over the past few years, Healthpeak has significantly reduced the size of both SHOP and triple-net portfolios. Although such efforts are strategic fits for the long term, the dilutive impact on earnings and reduced cash flows in the near term from the sale of assets is unavoidable.

Key Picks

The Zacks Consensus Estimate for Arbor Realty Trust’s ABR ongoing year’s FFO per share has been raised 7.5% over the past month. The company carries a Zacks Rank of 2 (Buy), currently.

The Zacks Consensus Estimate for CubeSmart’s CUBE 2021 FFO per share has moved 1% upward in the past week. The company currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Extra Space Storage Inc.’s EXR current-year FFO per share has moved marginally north in the past week. The company carries a Zacks Rank of 2 at present.

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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Extra Space Storage Inc (EXR) : Free Stock Analysis Report

CubeSmart (CUBE) : Free Stock Analysis Report

Arbor Realty Trust (ABR) : Free Stock Analysis Report

Healthpeak Properties, Inc. (PEAK) : Free Stock Analysis Report

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