PEAK - Earnings call transcript Q1 2007 | Healthpeak Properties, Inc.

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Nick Yulico

Okay. It's 8:45, so we'll start. Welcome everyone to our next session with HCP. I am Nick Yulico, Head of the U.S. REIT Research Team at Scotiabank.

us of with care leading HCP REITs. have today, the one health We do I little why to what of is, Think I'll here. team don't company the Tom and the management the you Herzog turn give to a introduction and rest CEO, over it

Tom Herzog

Thanks good morning Great. Nick and everybody.

our team. is I'll and person Development Brinker, is our Rogers, Chief Investment my Officer, Pete Tom left Scott, And of all Barbat audience. front To his Scott First our to sitting row is left the further Klaritch, introduce our Officer. course Operating left CFO. In the and the in Chief in of IR our

housing the estate and start portfolio baby benefits in segments the place of in own San science XX% NOI Francisco, a So, a primarily of and in HCP. primarily of medical balance $XX office, with that our boomer are life primarily of We housing. segments pay from properties Boston. billion private population. life that's these science, Each of own growth San Diego, taking between campus and real the on I'll high-quality MOBs senior life from three currently are and summary is care we science. explosive and the our split MOBs located senior comes health

$X.X pipeline currently. On the external which front, we create significant billion pipeline is growth from our a development

warrants. and $XXX of our spend result a it will XX% our have future land million pre-leased of of development properties as million we'll over $XXX time plus that have properties already are in bank We through demand which Plus development been that has pipeline shadow we additional funded. or

strong. Our balance is sheet

as we'll the repositioning more three-year reporting net numerous our BaaX times. an awards now credit which a Corporate named industry EBITDA organizations. ESG run all from recently have a Corporate around of in virtually And focused Responsibility recognized Magazine's fives. had across recently ratings, just We've prominent Best to accretive decade-long toward massive it We Citizens List generally to effort we're and we're XXX on ESG. After We're X.X debt growth. was widely the ESG focus business received components high have leader BBB+ a all XXXX. of the But in

we've call, couple As raised last in quarters, the acquisitions new billion during the developments announced earnings and last of stated $X.X $X.XX of equity over billion and also that we've of we've new look leading acquisitions we Oakmont. portfolio at same senior closer senior XXXX two housing, our our activity, time operators managed rebalanced by Discovery housing period. of million $XXX Taking in and a year-to-date with

expect can housing in at to part XX% of us that we that the housing-related activities time as to remain concentration senior senior range. be within the You see will our noted portfolio. go in additional the housing senior disposition same are forward, our should but primarily though XX% pursue It opportunities non-core

in Boston as Science. Importantly, housing, our to new million have over time. of will to there and Year-to-date, great senior strong further modern plan with we announced toward acquisitions Shifting operators. some weighted and portfolio assets be increasingly we Life markets $XXX think expand about

we specifically addition acquisition development our South the pipeline is in and in million development In few our close activity Francisco. A life weeks, large science the portion $XXX Sierra Point $X.X San life next we'll billion. growth in through Towers science picking of up are

sake you've when new got with do development easier yield now sheet; balance that the are portfolio properties develop our our proprietary XXXX be makes HCA, rather are up such are But in three repositioning through risk-adjusted addition our program that investments XX% pre-leased. as a projects that about on That over program science $XXX of just expect are development anchor each completed delivering are office, starts the years. In spans leased now tenant, new of we well tenant currently program, are for that we will million growth. strong and balance for course through that demand are not to further the TSR medical HCA positioned going next HCA. of -- sum lot focused to project projects per of and strong an expanding very decades, the we relationship of life by XXX% spend. to With $XX lease HCA million three we year for in we accretive for delivering time. to which growth, In Our the XXXX to the that properties us drive development of few estimated with of XX% the

Nick, So with it over turn you to for I'll that Q&A.

Nick Yulico

I'll to off, any right. Great. as questions to ask have the start we'll go those then and All room we some us in if well.

the So we about things we development segment. to why like think you of off exposure Science expanding your stories the And have don't a I start is pipeline. one this segment? with Life

right done go are redevelopment You've Science well. projects opportunities, the you future demand Pete, some through also as some Maybe have Life What are the sort do of a trends? little your And segment interesting now? have exposures? kind that Remind development you some us market bit? underway acquisitions very what of want to

Pete Scott

Thanks, take Yes. happy that. to

San three far, in Francisco, Diego markets: is Francisco South is Francisco. market in San concentrated especially Boston. and portfolio biggest our our San So by San

five there. with million projects It's some four our We of have square about development feet. growing million to

We we've have The now leased that fully delivered phases. the two which and first Cove,

And Cove then our a XX-minute The is deliver which about The third have Shore, called to walk there. phase is away from fourth will The delivering now. we development cousin year. The phase next

We've that Diego, interest million square have that two the phase The project. this in In from and phases accelerated of at on and about pre-leased is San fully point time. tenants first well of million, a lot it's second third feet. as X.X

then year think area we More that's some the new HCP had started square And didn't have a we Pines We Boston That is or well exposure as which we'll market for look the well big next redevelopments at exposure in on project; of development in-place the us. that. we're submarket market so, kick market. as we We And and feet overall When doing big us. couple two submarket, I well any ago, Boston The about that which have to calling Boardwalk. half top have is as XXX,XXX in where an quite our market is come to a a opportunities years within and off about there. Torrey there. over now properties the of development for

there. with ground. the be our like We scale us. and our in with get local boots they each to Partners that one quite grow can We They're to at to grow to partnership scale. grow We think have a important on satisfy it's as of to markets would tenant to King continue within Street demand market

a certainly earmarked additional market that's So we've growth. some for

Nick Yulico

we mean, And right the those housing, do mix about senior now how science, you three medical mix life company think Tom as think about the forward? I going the office, you have of appropriate segments between

Tom Herzog

Yeah, Nick.

more tighter office, I product MOB has pricing us. have been the bank. In the said to The and with baby that for product, in development huge HCA. we I a for I we between been bit government stick XX% with don't over with housing. finding earlier of XX% pipeline time science pan office. there's always it boomer more But grow those those growth with Currently, probably risk easier But tended segments so than creating those balance like sit bit in opportunities a believe mix and the than components We've you, private office, that's look to opportunistically, that medical demand proportions. current somewhere time. opportunities goes of different medical the really on-campus feels think But care little as had we it will lot as prefer We toward roughing the we the fewer, the land through today. and opportunity stay development little medical have the science today. we'll really in we so splits intent life that of three a the in will through comes we tell our for real-estate pay We in life segments. here forward senior like type have three reimbursed-type great will stroke stick will of the health

Nick Yulico

time. Housing, Senior it know, but with Discovery investment right now? what's By fundamentals recently. you acquisition? felt also your some your it impact the we're biggest whether I mean, you to And was of recycling you what's excited a going senior made about going with as whether senior are got housing senior ease. trough debate is in on was view housing housing capital, it acquisition near in – I like about on the Discovery on a what what supply

Scott Brinker

housing in would the a the we Yeah. wasn't in driver Last are And than the did senior of previous senior would – months and acquisitions I favorable quarter but ago, fairly business after XX acquisition. have more primary make being outlook big today years. our two for they in the say fundamentals three the the housing on that seller large been

of senior and leader about the unique in campuses. They've care like Florida that do for One by or done particular has successfully a a operator performer market large is performance property been They in wide been either in strong and the housing of two continuum really throughout. very the to they've Southeast things in disparity Discovery it particular type. decades by

exactly say So for entry will high campuses long real-estate the modern time. high-growth years markets, was Discovery importantly old, and it's but I that want of we excellent barrier it and period operating it's that, at be by own, it's to fact to would more a markets driven three what

time. a good how this example business incrementally our and of HCP a intending So we senior view and remake as to ownership over we're decade-plus housing for

we the looking the acquired than would've sit For sure months XX the today do are strong fundamentals growth like do as of also portfolio feel from some they And quarter. we portfolio Oakmont to as better where out second well ago. been see that in we that expect front we

Nick Yulico

you a talk the you're lot capital And market? at that a capital as looking sense transactions bit in the that Senior of we've a you're about with amount Senior wants And Housing. there's right into can gotten competing get that now of to little Housing

cap the make to how competitive rates? is mark operators with are So business? What are it? up build a that able you and and And line how

Scott Brinker

mean core of in low campus markets Xs. I to most asset Life have bid trends our recent really. into interest low if going three strong be in the be there's Xs, classes the on Yes. all the continues the science in to mean office still medical I -- been not below. is

mean I the strong interest of mid-X REITs interest the their And capital is big for a favorable. fact those from segments the one interest underscores And cost public the in of So -- a it a a the big more assets. saw in two Housing you of Senior primarily is cap. REITs. did Those me is that segment. good lot In there announced at the yesterday acquisition to are sure.

really good of stabilization two mid-Xs acquisitions we've other high-Xs, assets so if with feel quality seen well made branded X%. the recently it properties to age we rates about as given us The assets locations old Senior years XX made That's mid-Xs, the XX cap the activity that for and are even yields the in in up as product. the for in the and the Housing higher the maybe that

Nick Yulico

your almost maybe that? with little Senior feels cap It we're of a compression in in Would like health you and rate starting agree aspects me Housing that care other estate. Yes. real of to to -- bit -- see

Scott Brinker

especially cost equity private sure in which Yes. is Senior there's the one Housing been buyer of I'm to may debt is of has where them. really not and attractive the big today be compression if pools always low there

private more that but for been Housing of or in raised are of years is broader specifically pool. there's part account investment So KKRs Senior it the or for Senior the Housing two billion the equity targeting TPGs than doesn't last even and that a $XX Apollos the

of lot up. certainly cap a I not So rates have know gone going if there certainly they're down but don't demand, are

Nick Yulico

about As have medical HCAs with talk came we opportunity the what's think that partnership about office business, the a going Tom little forward? the bit you how and about

Tom Klaritch

-- It Beach. a we a we demand would space where able Sure. Myrtle really a pre-leased. The building -- XX% that be in for this the three almost They additional pre-leased recently in started very country. work program would And need office to for portfolio another started we that that has about -- their campuses. their we on HCA it well. of build discussions the we've gone number in across had out asset. been the they quarter. with started pent-up And projects medical put That were to the had with assumption to with where We're across XX% year. And past project one the together

Looking anticipate million next four the $XXX point. program to years $XX million spend at we about to forward over that to in develop this five at development least

Nick Yulico

the that? And you're on yields getting

Tom Klaritch

been those. yields pretty on have the range, so strong yields in The to X% X.X%

Nick Yulico

Okay. I to a bit. big are health guess often. for turning operators topic operators I maybe in mean a care

of an senior Brookdale. asset a as some of rest sales about that sits? still conversion whether operators deal there's the update RIDEA You lease you've have more Maybe -- maybe us on done exposure? meaningful where with relationship about as how net to And can that exposure should address or we the to then, you to people you give have, think housing think

Tom Herzog

Herzog, Scott It's I'm to going to Brinker. and over start turn I'll then it Tom

our at of in XX% As a our year-end three growth fall into will to that as Brookdale, below buckets. down I concentration break result portfolio.

SHOP exposure, something is the X%. have less which than We

the have the X% it low assets with or looks than we credit, call an we quantify perspective, our kept well. Brookdale it millions and greater has We the have sold which hundreds be of of The have SHOP, have to and from Brookdale SHOP is do we Brookdale have to we the of these in then CCRCs. something that assets And dollars feel manage could shape. some pools exposure, triple-net of in have that you really those fine which billions the portfolio From opportunity within best the triple-net X.X%.

So those years. lease terms are X-plus X- to

the And supply are to there. fine And a those. job coming nice done on the the CCRCs new exposed feel we they've less So operating market. that's

team. for the working and with comfortable Cindy we're closely her So being we're time and

standpoint that to you? as how some upside. at and be it, we're plays you're don't looking go From turn through of so hoping over that forward. I There's well the And to going that we certainly why Scott, operators

Scott Brinker

reduce make XX to to XX down pool more Yes. we've XX not we on barbell where is A to but from operators operators. did over XXX average new couple want a strategy, but to of it historically comments and what had they're or as XX. piece, properties, have was better had to forward we a one, XX We referred We not important it with them that And small our each sure they or year like or the -- on time and of very barbell one going goals we're then and one ownership. have relationships over to leadership, operators over two worse new end and extreme and XX as of have that us. to with And seen high the overconcentration. visits want concentration of operators the two critical mass with new new one important get to to strategic really past XX we

all trying asked -- Brookdale. triple-net That's to majority the portfolio our that. about by about exposure. RIDEA. a to be lease accommodate job the High-quality in of next operators, which have tenants was modestly We from talked That managing renew is Brookdale. them lease, rent and Aegis California. triple-net that assets Coast, a year, housing assets West And vast when and portfolio conversions and major strong and expect was we're So triple-net three One Last announced the we the a is closer our you actually has two-third cover Brookdale is were triple-net high-quality HCP's contracts Seattle but is Historically, accretive, that to our necessity; matures about was really them. think owning maintain mix conversions And provider still choice, then should properties about RIDEA Those Tom XX%, to of it's good to not happy flexibility of senior by the not really balance so good you Aegis, primarily with the we're done a Oakmont. to it on existing rent triple-net high-quality and quarter, dilutive. in continue it's Sunrise two and Brookdale. from beyond outcome to we addition those does and which in today XX-XX.

We so to and rent million And about $XX lease roughly agreement, HRA going have does half with end has create portfolio restructured a that We'll holding forward. and of other we we've more similar another the the assets. a HRA. with half job also it that good Aegis of actually selling can lease master those stable up

within And to with year, separate That's a successfully $XX lease So little we a in million is Living. Most like below which forward. rent, the portfolio then And the we've leases. And actually covers move Capital rent meaningful the that is October. one the two the feel of final X.X. restructured bit matures that's next about Senior all supplemental.

Capital and no there are have there deal assets. secrets those dialogue So active Senior about how to we with best Living with

lease will likelihood renew up operator performers. others are a that their be think And feel buildings positioned don't and to we the but that we geographically is maybe like the would would selling think manage that they assets of that actually long-term them. we I not another end better like handful

with triple-net around not So accounts XX% the likely And that. I rent that's think of the that more. if outcome

So I'll probably leave it at that.

Nick Yulico

balance lot the interesting aspects to think the of So on is I -- you've one company, with the done sheet. a

the with. can lot growth, next path done like couple of to the some Maybe are you drive that's years. what some back earnings to get that towards you talk feels about address as the going on You've issues It over operator components to deal a you had you're of growth. dividend

should segments? those growth about much how help? may deliveries, within core And development we wealth think have how perhaps acquisitions -- We the

Tom Herzog

Yeah.

put strategy, that look portfolio was the as at and a a last the restart. of over sold $XX company modified billion we to together board. we our put we we C-Suite, as really new we've together seeking we It So, in the a team place were few came delevered the years refreshed we within assets as

said quality Our of like I with prospects. vision in three estate estate would And we within own private would the segments clearly long-term we earlier, was growth high that care. business real be core health real pay

degree of lot of and So on place have that we because a dilutive But discipline a came lot to a that. took moves get pain. that with the of turned these corner to were

we we that a growth. expect we good do forward high-quality will As look have produce portfolio now,

We types partners with with some to be have good sheet have to as do folks quality out that in allow the this we the going balance relationships we we with is to portfolio folks want work way there the high operators in positive of with a us safe do and real to a able grow over to a on continue our that to of business And long-term. place basis. very

same set So type we for it at and standpoint REIT a is at so we're that REIT grow premium as we do there the as bent time I will trading how And at many But a plan. from think and a do is forth with has we a with game investors can go accretively. a good bit that the approach for of growth think place that we the of a we prospects of conservative we to it. business, that a

it going we're at how that's So

Nick Yulico

are questions see, any we room? don't Why the in there are

Unidentified Analyst

[Indiscernible]

Tom Herzog

Did I repeat I'll think that. -- I

San in I'll that Klaritch. Tom and development land about Pete and how Francisco question? Scott turn potential South and like. values the to You're the demand the and we're that talking feeling Is about

Pete Scott

Shore and Its Yeah. The I and mentioned Cove question good The before.

XXXX. around in return and underwritten that Cove, of the we we project, The project on So, XXXX in began began was When X%. development cost the the land bought

the because where we and amenities had phase of the the the garage X% success project, phases two leasing and in the we're built There be to phases, infrastructure actually rates the Given gone in. rental two have looking deliver are lower some will we've in low Xs. well. fourth there's phase up And then that in actually going the the we put returns also that the and all north second that the on out in third now are at work of phase first first as Parking Xs.

When cap strong the still to So, on relative that yields quite yields value that. rates. our we over in At construction really land really, you we low was basis high been more The owned to mid-Xs a a the on market That's of on the were if is the land. yields mid-Xs at are decade. project. low on the have a look in to quite basis on cost Shore, would've which started that, that for that there, And strong to

Xs. higher the Although strong even the basis, it's quite in still with

Unidentified Analyst

you. are What and business? your the Life you between key differences in Alexandria Science Thank

Pete Scott

about Science you our HCP. business, differentiator think big a When it's Yeah. Life for actually

a dominant have San actually in within We South concentration Francisco. the landlord We significant market. are that

San the have we about think Diego a you San Diego market, If strong the market. in presence

in in that focusing development Cambridge, the East being Cambridge We're there. as the Although, size the number then mentioned, Boston, focusing other. well relative perspective our large Lexington location we've being on a I being We're markets, other properties three one, accumulating the the of And BioMed Hayden market. we're as landlords to suburban started probably on not as West Alexandria the from market.

Boston. sum up, a not an in We're landlord dominant clearly Francisco, So, us. big that in of market. But that's strong our in growth growing competitors for position to as position a some South area in Diego San of as and it San

Nick Yulico

the a on just question Maybe dividend.

stable like transformation. You've worked your portfolio. years had some you company through if a for have growth feels few embedded a the dividend you've It in

about think going dividend potential we growth should forward? for how So,

Peter Scott

is This again. take a that. at Pete can I stab

mid-XXs, in is Our the although covered. $X.XX now. the payout Annually, dividend at fully is ratio right

back we see the get the would growth the too driven in We the is pre-leased. XXs. development ratio they're especially look well to growth our we deliveries lot see in as forward. of into relative XXXX like that a XXXX, to do and payout pipeline XXXX by as earnings fact as earnings We that As

the Board, ultimately not Obviously, something to of lockstep it's the we determines the earnings. our and dividend with would I as we'll evaluate year get anticipate with have growing who discussions end So dividend.

Nick Yulico

the you to Any investors final the with in guys leave room? thoughts want

Tom Herzog

Well, it myself. team we and transformation HCP. positioned a of And I place sheet a be through went in portfolio, the quite balance perspective, would have along in really guess I we But repeating a evolution a with grow do headed. lot cut and very we having well We're to of systems where we're future. built place about us have a that positions carefully, we're to in so but excited the very think got going from

you guys Much for thank So attending. appreciated.

Healthpeak Properties (DOC) 5 Jun 192007 Q1 Earnings call transcript