Healthpeak Properties (DOC) 31 Oct 182018 Q3 Earnings call transcript

Company Profile

Participants

Andrew Johns	HCP, Inc.
Thomas M. Herzog	HCP, Inc.
Peter A. Scott	HCP, Inc.
Scott M. Brinker	HCP, Inc.
Thomas M. Klaritch	HCP, Inc.
Michael Jason Bilerman	Citigroup Global Markets, Inc.
Juan C. Sanabria	Bank of America Merrill Lynch
Richard Anderson	Mizuho Securities USA LLC
Chad Christopher Vanacore	Stifel, Nicolaus & Co., Inc.
Omotayo Tejumade Okusanya	Jefferies LLC
John Piljung Kim	BMO Capital Markets (United States)
Vikram Malhotra	Morgan Stanley & Co. LLC
Jordan Sadler	KeyBanc Capital Markets, Inc.
Jonathan Hughes	Raymond James & Associates, Inc.
Drew T. Babin	Robert W. Baird & Co., Inc.
Michael Carroll	RBC Capital Markets LLC
Daniel M. Bernstein	Capital One Securities, Inc.
Lukas Hartwich	Green Street Advisors LLC
Todd Stender	Wells Fargo Securities LLC

Call transcript

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Operator

Good morning and welcome to the HCP, Inc.

Third Quarter Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Andrew Johns, Vice President, Finance and Investor Relations. ahead. go Please

Andrew Johns

welcome call. and statements. third financial quarter Thank conference to call conference Today's forward-looking will results you HCP's contain certain

Although materially our reflected based we that may to expectations forward-looking results uncertainties believe are to actual statements discussed exhibit differ at risk in non-GAAP and on over our Officer, will statements with forward-looking today's measures any assumptions, our is reconciled cause exhibit also are accordance from to subject reasonable financial the duty an we filings directly in A Chief to President not of release measures available and press www.hcpi.com. the discussion call in will SEC, X-K included be The all today our do statements. website forward-looking of now expectations. any We in on to update turn risk our with our Certain furnished Herzog. is undertake most SEC. call. and any measures risk factors the financial Executive GAAP and with the we In non-GAAP Reg Tom have detailed requirements. the comparable I the on G

Thomas M. Herzog

and our here McHenry, Chief portion good Thanks, Pete Investment our me Scott Troy Counsel. call everyone. are Financial the of and Chief Also Chief Brinker, Officer; Officer; our our today morning, Scott, Officer. Operating available for and Q&A are With Andrew, and the Klaritch, Tom General

debt. recognizable sold, a our the of we the years and Suite an HCP a of fully been cohesive transitioned The recruited expanded forth Including board. NOI. transaction balance sheet two announcement Let is refreshed clear assets. $XX restructured redevelopment reduced set These or last HCP and of just a over years actions whirlwind concentration today, $X.X new activity, development improved Shoreline today to me XX% company team. in C of a and have during of energized the couple our start saying, entirely with repaid by we We portfolio and of We we ago. Brookdale very the spun have installed We from of a XX% resulted which billion of have the from and strategy. and billion non-core We pipelines. our vastly

I let of current me challenges. So, describe the the starting with state how see play,

First, senior housing been headwind the sector. a new supply HCP for has entire and

pay confident, are business housing we over and be balanced estate. senior strong HCP's However, private time a healthcare will diversified portfolio within real of

from operators the forward half and least been reduced Brookdale the prior occupancy The Second, new to impact control. replacement operators have will assuming XXXX. to the painful transitions declined carry of first significantly performance at through

Fortunately, recapture majority complete communities upside the the and of finally significant remain seeing are in time. we over that will we a stabilization. the of transitions group engaged We and operators, vast hands are this to new of confident

redevelopment. Finally, experience lean the earnings our properties XXXX of growth this undergoing as downtime and year's sales temporary in recycling and capital earn from on completed redevelopment dilution activities we will

Next, what's going well.

with HCA XX% consistent portfolio program the our also today. relationship through We're from remained our stable. First, benefiting office decade-long devolvement medical announced we and on-campus

performing exceptionally continue science growing from life well is demand our tenants. we Second, significant see business to and

time, million $XXX fully on and current our is XX% already on budget, pipeline funded Third, development pre-leased.

the Sierra in evaluating additional phases Point. The strength of as projects and momentum certain at the acceleration such strong the With market, of we're the Shore

shareholders. XXXX these XXXX beginning creation flow will projects accelerating addition significant to expect in and our XXXX, and produce the to for realize and earnings, In cash NAV in we

stabilized returns X% We to about to to compares which X% deliver cap in rates of the range the market expect corresponding X%.

$X.XX credit BBB+ accretive creating will funding of fully invested. us acquisitions, dramatically be $X.XX what Technology significant support believe our shareholders pipeline, we which accretion Center to Mountain will million This market to once and to and the $XXX in we leverage metrics, like pricing share believe Shoreline View. value of robust represent in provide position and development by support transaction and of advantage took our for we value Finally, the per approximately monetizing reduce us FFO with FAD

momentum outlook As over you can this Pete a I'll and of our that, year. HCP. discuss remainder for to time tell, the the performance for is exciting turn we quarter have positive With it Pete? the very to financial and for

Peter A. Scott

update our we sheet Today Starting with Shoreline Technology the with guidance a results was a of result share per review delivered as the which of and, on cash results, Tom. growth, quarter I start transaction portfolio in line for finally, NOI an balance our as update will our and to the Thanks, for adjusted of the the expectation. our our quarter same-store FFO X.X% third year. reported with remainder and of $X.XX provide year-over-year

more provide me around Let details major our segments.

NOI X.X% cash by same-store office, driven over the in-place grew medical For prior lease escalators. year, primarily

medical for buildings. see office We to continue tenant demand strong

the driven our at Medical high the Dallas level. we for prior-year which our over and a positive the portfolio, in strong our where grew and performance to period. in is renewals cash Our hospital X%. segment, property expansion small over share is on is HCP had City performing year which success campus, This structure mark-to-market allows retention X.X% at primarily by the XX% other of NOI rate hospital, result Same-store our a of rent was our lease

integrated, campus a Medical in by in hospital is an over medical operated Dallas office medical square foot reminder, campuses entire includes hospital square our is fully The As campus XXX,XXX the one space. of feet portfolio. on-campus and the HCA trophy within XXX-bed This a X truly medical country. million of City office leading

driven NOI rents. same-store rent on over by cash contractual positive and grew mark-to-market For third the escalators quarter science, prior X.X% life year,

and development which progress have same-store incredible prior cash sciences, development our Excluding to life the mark-to-market From impact of approximately the X.X%. de-risked science on discussed have significantly a active leasing Rigel growth perspective lease, continue the of calls, life NOI would we been we within make have pipeline.

entire developing treatments Global the of for IV with for biotech signed a The feet Phase blood-based on quarter, focused disorders. rapidly traded a XXX,XXX GBT publicly the During at growing company Cove. square is we Blood Therapeutics lease

pre-lease. We are square Sierra at MyoKardia square feet Francisco are at XXX,XXX now in-process the and The we to a company, our of entire that Shore South we and I feet pre-leased development Cove. across project, development announce other remaining executed of San high with pleased the Point, At major pharma now have entire quality Phase The leases XXX,XXX have XXX%

the Our science leasing the strength market. progress well Francisco San are expectations of see we is from ahead Shore momentum we and The at South life in benefiting and

have triple-net housing SHOP Brookdale. X.X% This was On same-store a our negative with cash in account finally, NOI our been the third growth cash in And Same-store quarter. senior announced line our X.X%. adjustment approximately expectations rent normalized in the basis, and was cash takes For X.X%. housing with same-store portfolio, NOI portfolio. grew senior would into triple-net quarter year-over-year for previously NOI the

performance As and grew an portfolio continues or momentarily. plan performance positive of additional the we to provide the will portfolio color the a X.X% our between and which senior housing our disparity core discussed quarter the during quarter, last Scott XX%. there operator update transitions transition to on which declined significant on we our sell be a in assets

across to the that the significantly proceeds we Initially, pay profile sale to $X interest blended $XXX bond we our Shoreline planned balance line rate the of debt. will X.X%. credit the of million proceeds $XXX balance intend from sheet The use transaction. repay million balance have result The our net of loan improved approximately reduce billion rate as the of credit. be average million we and is and sheet, net to term the an now to of of $XXX or we at used Turning a debt

adjusted will of mid-X our times X.X reported the be reduced repayment debt or net third the we of With range, a the down full-term quarter. EBITDA at times end from to the debt, nearly the to

expectation it during into stated, and our development XXXX we and of to portion redevelopment redeploy As will pipelines. Tom fund a this accretive capacity sheet that our acquisitions strategic balance select is

basis settle crystallized part a loss net incorporating run the of XXXX. rate adjusted capital. in late utilize range the Importantly, QCP will we that sale to expect high-X on our note, EBITDA spin-off reinvestment the this this remaining carry-forward debt we in Of as to of after times tax

Turning our dividend of cash board $X.XX quarterly declared XX, October dividend, of to a directors on per the share.

triple-net per share guidance life the science range We earning significant X.XX% also upside life science with expect By our which our the approximately in aggregate near-term. trending covered payout mid-XX% opportunity time, our escalators maintaining year segment: our dividend the future opportunity transition and of Over senior low-end guidance high-end the our range a the Finishing towards in now $X.XX pipeline, X.XX%. the SHOP and $X.XX as FFO ratio are office the range lease we to the are other expect the range. housing our segment, guidance, adjusted trending to trending of in in-place medical in remain our development our with are towards our fully and positive decline currently SPP towards middle; reaffirming X.XX%, benefit is full the portfolio. of to we of and to mark-to-market from and average from ranges;

details call With turn Scott. our like on capital found our with that, to supplemental. XX would of can pricing of I the related to Additional recycling, along our guidance, be and page timing to over

Scott M. Brinker

has like of been on $XXX In on-campus grow. sale the activity, we I'd an venture All percentage, right. to the whom closed Shoreline There tenant significant medical diversified trade Pete. improved That August, most recently for Thanks, Morgan our office we'll joint the with and our announced A-rated theme. added Stanley. with markets, capital campus allocation $X billion. the expand million

in point we for attractive highly at was foot Those for do best-in-class in accretive also off-campus health and development both by redeployed on site so spread on-campus this The million unique will capitalized a rate redeveloped exit Beach. property was We a to long-standing be an be with in have a basis at high-Xs. started August, square aggressive $XX into opportunity XXX proceeds on-campus development million a dated XX,XXX strategically now we partner. outcome Stabilized that the a recently yield additional will HCA, so anchored a we low-Xs, Myrtle price. captured MOB to cap yield, sold be system. in $XX financially. we and MOB buyer can in non-core the the Also The a multifamily, a

strategic science, highly few on life to markets. These potential are exceeding our expectations we're pipeline, to in profitable core in include acquisitions Moving development our $XXX on million and sale value-add flow, active an projects proceeds a and create from accretive Shoreline of us use Each acquisition cash use the stabilized densification to the our expertise value. to platform campus. and allowing of would opportunities, be addition

with quality asset in more by selling rapid the housing years, and our remaking $X.X reduce make totaling improved progress This diversification to two seek senior portfolio asset of In we're We very properties, value. last massive Brookdale opportunistically. continue billion and transitioning now finish over time, we've to so XXX or We close than undertaking the a our platform. concentration now to very, further position in but may to do Brookdale line. the is

the senior a began exists redevelopment with with initiative important million. an this spend the transition upside The substantial total Redevelopment part to of also plant eight and majority operator. where modernize We a our of portfolio. $XX of properties more housing focused assets is year, are physical revised

returns We to redevelopment the up by cost, given benefit line expect time financial takes years followed the on low-double-digit lease-up. but two

Occupancy X flat NOI share XX% below next month has in likely strong in properties senior portfolio are we they're very triple-net, and the the pleased next that X%. or essentially the payment receiving. and year-to-date. should now result underlying have were performance, loss the of included per core We're poor operator the the of been environment. NOI operating same-store housing but now transition in been their that rent done $X.XX transitions year. those and not to a results had growth are margin formerly been results, to XX at will two. The prior so and in with complete This performance XX year be is $X.XX final are given performance, rates up from the positive X.X% Moving

in this April. operations. confirms highlights that We wave to improved lost transitioned in the the turnaround through doesn't and that first recaptured overnight. March occupancy the upside to that eventually the income waiting transition pleased portfolio back particularly recapture and the properties be report in expect to This happen of months, increased past We're two

that occupancy. we transition negative So, late to expect in full continue do XXXX we results until a NOI year-over-year lap the around likely trough portfolio when in

expenses recapturing in certainly of simply Importantly, from incurred given lost we call turn which Q&A. place. the I'll occupancy from the now additional assets to service from upside driving higher sit the there's possible upside and where eliminating levels operator is to the now the rate, today, transitory up $XX for There's in transition back million NOI XXXX.

Operator

you. Thank

Citi. Our first will Smedes ahead. come from today Please question Rose of go

Michael Jason Bilerman

Michael Smedes. It's with here Hey. Bilerman

the transition potential NOI, start especially Scott, additional of of can the the is you sticking, core given think be understand assets, remaining eventual versus assets, so of the the year $XX and look we and can negative was million able SHOP page transition clearly I and the sup to Just wondering you at of in something you'd all out same-store transitioned assets assets breaking you and of pool, between what's sort the with impact around happening that provide? portfolio XX, this your upwards the the commentary if XX that

Scott M. Brinker

into amount the two as break it. NOI well NOI, In did rate. each growth from Hey, for, look revenue... Michael, We like, occupancy looking of of happy Scott. those to the are you as it's or out Certainly categories,

Michael Jason Bilerman

to, would be the a it's where I is potential because how than I a on and it at where other, impact was, the of number, trying a page in to get go those more this What a clearly, don't each trends say XX went granular more relate may where it look and question, little would helpful. than then big comment upside if is it basically given also they to just is just know table two things, issue, and see there's NOI just other the future, you're and the money, the one-quarter but... just can so we understanding Yeah. that more that bit actually history, so the having a revenue spending on having

Scott M. Brinker

That's Yeah. good.

portfolio down the XXX versus difference in still, portfolio on transition is So, – for you core quarter huge that, occupancy. basis modestly let that for the points more is the margin environment, in transition give and The this year-over-year, is and which at margin it I'll core higher actually mid-XXs get now us – was but was year-over-year, from portfolio I'll could just Michael, standpoint. looking there's results where as The a low the think, well. a low-XXs, a in in normal portfolio I

performing. portfolios So, sense provide it would you differently how make Tom, add on do two probably given to want even detail more anything? they're those

Thomas M. Herzog

that a I next It's good Yeah, point. think Herzog. it's Michael, we can add quarter.

Michael Jason Bilerman

the the Okay. think rent that that's differential, said the and of in assets that And you mentioned what triple-net up that were the terms SHOP, does differential what went below was. that quarter? to NOI out then, and you I those was in net Where – is are show coming

Peter A. Scott

that point mentioned, Michael. wanted is here. there into the Scott Hey, the XX They which actually in over As are It's Pete we we is of from roll-down. Yeah. out these not There's SPP are transitioned why triple-net you assets year. How're doing? the to pool, transitioned that course assets SHOP. a

rent roll-down as these a the the the $X.XX year. course between is Scott of transitioned throughout received part have year. We to of The mentioned. for $X.XX, assets somewhere We

that good we is capital the recoup Now, just time. lost will that, traditional news take recycling, we earnings. than different It these will think

So, that's we included in to today. the remarks why $X.XX the $X.XX

Michael Jason Bilerman

can we And that just XXXX, saying to sup. I'm put $X.XX context the type of into is and of to that annual actually the XXXX, $X.XX out trying where impact then, annual a you're grab

Thomas M. Herzog

$XX been higher it, to the sup, million NOI from Yeah. paying a than that we million we It's $X those was that. million It's $XX to why properties. not which There's talk But only in rents $X had million dollar huge amount. of the wanted is Michael. not about to

more performance So, is wanted it. why and SHOP, converts we that XXXX. And impact which a precipitously into roll-down quite really there us to when in off that's to the is falling raise why is

Michael Jason Bilerman

Okay. Thanks.

Operator

Our Sanabria of next Please Bank question come from of Juan will ahead. America. go

Juan C. Sanabria

perspective the $X.XX on third incremental I net to Michael's the hit the in question quarter Is that $X.XX drag wanted conversion to on into that a just third RIDEA. be from that fourth from go-forward triple-net or numbers from quickly, guess, quarter? from I quarter will to the follow-up

Peter A. Scott

transitioned Most assets these into slight the because There a this occurred some it the second we of Juan. over Yeah. although majority second the quarter already, fourth will quarter. third quarter. But roll vast quarter, occurred the of quarter the it did of in be down the chunk big happen in

Juan C. Sanabria

a of incrementally Okay, proceeds talking about great. or a from as should And drag year you of I will work. come given bit basis or or yet, on then mean, I risk just next RIDEA, from growth over-year guidance particularly FFO of give the and necessarily? but bigger can earnings normalized is as Should you're down? temporarily that are the getting to triple-net some it know put dividend, not think we there's XXXX year- well a like to you improve dividend sounds think coverage before do earnings it as in guys just to picture, not you growth a – wanting grow will numbers

Peter A. Scott

Yeah. It's Juan. question, a good

you it. tell It's I look me here. at Pete how Let

have point we'll some look plus start SPP in versus you as fourth it growth of and If our to portfolio about adjusted, think starting XXXX earn-ins, factor to a you'll guidance, you the see get within XXXX, our to we and perspective, reasonable at FFO when we've at the an you reported from look that also if development compare implied as ramp-up what natural we'll midpoint then, some we and next that, we've then annualize you well you to would about redevelopment quarter as benefits projects specifically then, into XXXX worked which of $X.XX Cove bigger on, else the our accretion been The the obviously, of XXXX and year accretion. the from way see of about $X.XX accretion as some actually working And talked something that transaction one in talked is And that, from projects that some we a to Shoreline earnings. their is rate today. other see

we spent dry get So, that quickly upside talking mention portfolio the then, that time opportunity the we transition some in powder we the did Scott how about put of amount that today. depend work. will in upon XXXX can can And to some lastly,

the call. way provide headed detail more at in quarter look We'll XXXX that's much obviously fourth we into on it So, our XXXX. earnings

Juan C. Sanabria

Okay.

one just me If you'd question. allow more

is there opportunity On relationship, with kind of a could MOBs of X% the opportunity new think potential terms yield developments is of you do new on-campus quantify about HCA in set? any to the to size good and that benchmark that

Thomas M. Klaritch

year Yeah. Hi, we're we're we'll – what this to the where There next low- are these now. Juan. right mid-X I is kind it. Yeah, with million looking low-X of years targeting of would guess be in million probably is number per to Tom in of each couple for at Klaritch, returns projects the the $XXX projects. $XX a of

Juan C. Sanabria

Thank you.

Thomas M. Herzog

higher could well, But as it go that from probably.

Thomas M. Klaritch

additional We'll program as continue to find moves MOBs the forward.

Thomas M. Herzog

Yeah.

Operator

from next Anderson Please Securities. ahead. of go question will come Mizuho Rich Our

Richard Anderson

Thanks.

guess, is that rate meaning You said below the the is the that right? on pay-down. this. cap I interest Shoreline missed accretive, Is the – I The X.X% rate average

Peter A. Scott

Yeah.

rate X.X%. billion we way is about a a will $X think approximately which is the good debt of blended we the billion the take $X rate on question. Initially, here's cap Rich. of and X.X we And that interest debt. will repay So, That's proceeds it,

Richard Anderson

Okay.

Peter A. Scott

of at the leverage would end into the year. is to expect that the our However, we mid-Xs, report which take where

We taking which talking to high-Xs, been Street. the leverage we've is the comfortable into about up what are the

would and that... acquisitions, of about powder $X.XX $XXX to accretively, to $X.XX have the million we work we for So, that's expect which put dry to

Richard Anderson

Thank you. then... got you. you, Got And

Thomas M. Herzog

once clear. on it's Rich, just run invested, And a be to basis, that's rate

Richard Anderson

Say that Tom. again,

Thomas M. Herzog

once rate invested, run That's be a clear. to basis just on it's

Richard Anderson

yeah, course. Oh, yeah. of Yeah,

Thomas M. Herzog

Yeah.

Richard Anderson

just something portfolio, course. and, on transition a – be of than we the On of it to better sort quarter portfolio portfolio, about little so the more quarter, X% quarter. of nature the X.X%, it was two repeatable is even positive glad in last I'm last the had should this elevated a the That sound But more there you it's performance very on? a core doing the me. bit of sober two-handle again, core performance that doesn't

Scott M. Brinker

It's Rich. pool. it's Hey, Scott. Yeah, a small

Richard Anderson

Yeah.

Scott M. Brinker

thought plus be the plus When It's reported quarter XX the report then we at we would this X.X% I last high year, X.X%, that quarter. point for properties.

point that said, there's spoke repeat are that quarter the will that's high That in portfolio. the don't positives plants, So, Brookdale, being Florida XQ new that some of a improvement year-over-year then, in rates. this now portfolio higher about And off number for of that's some we and of physical last I money over operator, that XXXX. growth we acquired Sonata higher real occupancy been year. that's from a assets a put in there There's and that the a really that couple the big took years to invested into think a ago, part in year. paid with and

So, in we're is happening I nice bit but results, But market. are that X.X% have that to were XXXX things and to think temporary, there anomalous it. this boost for a reported unusual happy core portfolio that little

Richard Anderson

you. just this accounting meaningful quantify you quick Got lease to one, at is And Pete. XXXX? Can you for Okay. new it point? How one

Peter A. Scott

we hit at beyond that's it's we right for to looking relatively probably how NAREIT more finalizing We'll it when standard Yeah. our do but next adoption, have that. can call still but our about now. around XXXX, a impact talk Overall, have with significant Good question, impact $X.XXX it little FFO us. not expect we're We're to lease guidance, Rich. in accounting

Richard Anderson

Thanks. Appreciate it.

Thomas M. Herzog

Thanks, Rich.

Operator

next come go from ahead. of will Our question Stifel. Vanacore Please Chad

Chad Christopher Vanacore

portfolio? your state the of guidance. from a X% in you there. flat to seems in transitional other from you Are would the that run us the attack gave core Hey, – and some I of XQ the of below expecting of side be you SHOP to down but numbers, range rate want NOI fall SHOP what growth bump side portfolio to

Thomas M. Herzog

negative we're I'd say portfolio. we're the expecting a in X.X%. bump Chad, XQ. SPP Year-to-date

I the transitions, be is from be inside temporary We're number that impact surprised still expecting in of So, range. not to We're bit wouldn't midst that's it's so down – a right in these XQ necessarily. again quite the if the XQ... better guidance

Chad Christopher Vanacore

Okay.

Thomas M. Herzog

...portfolio.

Chad Christopher Vanacore

how it that about second the And first the think lag bit half maybe the of we get get comps would year the at into as should It seems half easier? XXXX? year then, and like SHOP in better a trend

Thomas M. Herzog

rate, transition of the when a occupancy just That's and portfolio, these much We given bounce growth where in that's just and that's in of report, upside Chad. today, about quarters the different assets, NOI NOI. from talked we October. September it's definitely year-over-year we the really case where four was dollars where sit for But a And ago. nice was, was August. analysis, seen the trough a occupancy in actually and We've absolute

going positive the start chance a occupancy where sequential should to that's year-over-year start growth the late before we though next before to a year-ago showing be but it's improving realistic given sign, growth year So, NOI was, have really until even just that.

Chad Christopher Vanacore

you early Any with know mentioned transition stabilization Sonata? assets, those right. of fourth I signs quarter the All so into far

Thomas M. Herzog

And ones started to put it's systems the more that our is has Sunrise Sonata while Eclipse that core But over one in had quite that transition ago. a to earlier assets the and and enough been Discovery. of in are reason is have that new that transferred a have the were and and portfolio positive. the portfolio year and Atria group Well, and transferred really place to Yeah. those improve. so Those team culture, the them time properties

of those moving an higher. showing is transferred occupancy encouraging that why are properties that sign now So, early that's signs

balance will the expecting same. be the and hoping that we're So,

Chad Christopher Vanacore

All right. one Maybe one. just quick

XX properties So, slated last to quarter sold you to be reported Apollo.

properties like looks $XX it quarter in of This what's the difference that with you million XX, expected? three proceeds

Thomas M. Herzog

company to properties, waived, But wasn't the just They're doing related Apollo three waived. was would that get fine. had using were for is we restriction a didn't thought there portfolio, a management It Chad. but non-compete There actually Yeah. performance. that all get

those the assets. found we So, we've property third, we'll so And keep operators, being replacement for three Two, actively sale. is already them. marketed holding up ended

Chad Christopher Vanacore

for right. Thanks. All That's it me.

Thomas M. Herzog

Chad. Thanks,

Operator

Please Okusanya go Jefferies. Our come next Tayo from of question ahead. will

Omotayo Tejumade Okusanya

in California. morning Good there over Hi. Yes.

Thomas M. Herzog

Hi, Tayo.

Omotayo Tejumade Okusanya

– the For hi.

the on are some things could now, that's assets creating are kind of the I heavy growth? always bit NOI guess, seeing seeing For kind a things but transitions that SHOP talk right impact and I creating you transition drag of that's of shaky kind in curious, really what are of initially? pretty I'm just about you little of big what this you're just kind mean, like, thematically of this happen, kind same-store

Scott M. Brinker

to get properties to filled, expenses in increase repair time, maintenance certain temporary, the A think, we on it's in a a for couple things now, that, back NOI, Hey, up more is that depressed contract needed Tayo, that's to a The year-over-year; be and there's XX% labor, Yeah. is over And vacant pretty positions those huge capture at the it's of but up, it. basis to insurance point assets and it time, Can down transition. multiplier about expense, effect operating a big and add we in out. occupancy right debt a that lot off margin, XXX over part of about of significant things some big we written the pretty creates bad a account so NOI. Scott. that miscellaneous a standard, with like, insurance, then that points tail elevation had then, a also

that lot But number, major over. for driven are by of EDs occupancy, different go been a turned It's components. try turnover. are So, purely we talk the the part will large categories, the of and XX% those others have give then through the in can some that but to those you just just don't Tayo. we things away, but we normalize do, things. know transitory I the

one-time additional and that occupancy So, puts are then on in pressure just more nature. those that expenses

Omotayo Tejumade Okusanya

helpful. very That's Yeah.

you as some portfolio, like some Capital to Living in Senior thinking tenants about rent – XXXX more transition be in pressure on I'm triple-net your others? clients again, just should still coverages, we the your of see like With of any some may year even curious, RIDEA or a where

Scott M. Brinker

that's talked Those just note, transitioning converting we in clean about sense being material And shows us. to a the coverage to because payment are waterfall a it's structure makes report, think, rents times And up from SHOP. important go really to those paying risk as that They're denominator some the the ahead Tayo, triple-net X.X SHOP, Sunrise it I they're no and properties the the we NOI supplement. in of there's to up. earnings the of the below that rents that, those in the category complicated not part that today. lease is

X.X as You can leases. think of those really coverage time

draw So, will I but by those there's the conversion, conclusion be would at supplement. is, on no that think earnings which you not that's probably converted, risk looking the

note it's think I to that. important So,

I'm coverage sorry. with The tighter Go ahead. others –

Omotayo Tejumade Okusanya

Could again in the like why, you looks just explain less sup again, coverage. than X that it it's

it dilution should So, converting. earnings to there like be some seems

Scott M. Brinker

Yeah.

Omotayo Tejumade Okusanya

While there shouldn't you're saying be.

Scott M. Brinker

Exactly. Yeah. more coverage inherited due us. is the when rent contractual when complex higher rent CNL the supplement, rent... is we're the in they a acquired And the paying contractual structure years that's actually that that are ago. than a It's we we the based reporting on XX But we number than report

Omotayo Tejumade Okusanya

rent, Contractual okay. Got you.

Okay. Helpful.

Operator

will question Capital ahead. next Our Please BMO Kim come go from Markets. John of

John Piljung Kim

you you going fund, pension non-core buyer far first some Shoreline. that because was was as Did sale, originate essentially considered or other buyer? or did as on the it's PE, to question of office? morning. And kind Good the the a who can is describe or I'm three-part buyer, considered try it

Peter A. Scott

answer were in bought actually and EOP with there and Slough about it, I'll taken life more of campus purchased three-parter. XX% the from had At XXXX. John. back space. And time, acquired of tenants we more occupy XXXX. Google one try is Hey, the Shoreline campus. it that over has They we more space. couple the of that in the time Slough within parts The now science Over the

core great that your of the to of us and markets real to know we that hope own, to was but you of a and more one pricing suburban that I get what to of in, that be at for. us, the sense looking buyer. least not office capital into I answered was became that disclosing that piece estate got questions. most for to more the I we're it asset non-core But So, we're a recycle were made of able

John Piljung Kim

are? kind the of the maybe of buyer, they not but Well, name buyer the

Peter A. Scott

into get on details to going John. purchaser, specific not those the we're Yeah,

John Piljung Kim

Yeah.

leases on because page around just but On footnote that well scenario? reached on a you wondering coverage it have Okay. basically comment below that X.X% XX% one suggests the XX, not says that and that I'm and area, if coverage, developments has XX%, of of like that's could it's your

Scott M. Brinker

$X obviously speaking There is years Sure. is acquired we less small year. place This that ago, that lease three they rent about opened. million we properties, XXXX, it's so Scott per so It's in three was before well a than new assumed, portfolio the of a again. they're acquired small, in brand relatively them January

aren't leased have right couple these direction. – is amounts. trending up, the So, but A the of one the are of the in material buildings they not, other two

quarter XX-month on report a remember, one trailing and basis we So, in arrears.

what the coverage much coverage is higher the assets today better think, we that time at supplement. but in, So, isn't should than good are we are improve. the good reported good, moving in least and These over these markets

but it it, monitoring and worried that very one we're We're a long this So, about. good behind term. not credit we've lease got is

John Piljung Kim

That's you. Thank helpful.

Scott M. Brinker

Sure.

Operator

Our Malhotra will next come Morgan ahead. question Please of Stanley. go Vikram from

Vikram Malhotra

questions. the taking for Thanks

from talked settle mid-X you sheet, sort deployment The balance assume no EBITDA all of Just on down? the that if you just from include where does of about, leverage Cove on leverage fast-forward hereon, the kind the coming

Peter A. Scott

plus $XXX active out we'll funding from Cove development some Yeah, high-X then, end redeploy It's in talked year. which into Vikram. online, the in at Pete. ourselves times And Hey, we see assumes we funds see that from net-debt-to-EBITDA the dry probably settling about we that high-Xs. of and Shoreline powder. settling coming the Good earlier some fully million questions. we get pipeline, about, our And current developments next benefit as some is leverage

in assuming The that we of as Point in XXXX talked if better, about The get lot XXXX. do and IV XXXX, would a as III well and development? got more and for XXXX sure, you assumptions that Cove, didn't Sierra Phases it I your developments would, because we've come online Now, any at Phase Shore of For of

Vikram Malhotra

just you appetite market, you and a of in Okay. for And MOB obviously, then different acquisitions? bunch the MOB there about talk out redeploying, CNL. just portfolios about Can development, bigger here talked Landmark are your

Thomas M. Klaritch

didn't are frankly, market. there are out MOBs Tom right that out When at is quite one-off and of going the look we interesting the pricing ones markets, at just in the Klaritch. stretch on- We're we that This mix, the at were versus for. we any tenant really off-campus portfolios that the look find Yeah. expectations, now, that and, looking the them you percentage, to always

So, core to we're off-campus high markets. our hospital looking in tenancy, it if in have for and, some more happen on-campus properties, hopefully, they

those them. a of certainly when there's around, come point take time, this none there, we at we'll really know in out they but look So,

Thomas M. Herzog

that look to low if that a portfolio Yeah. we would likely and But with isn't really Herzog. to we'd I grow, is as add very large looking attached Tom to acquire. This going where have. we're us would it segments something in the XXXX it, that we at to for that current we core screen like three remains – yield I would probably a

looked come So, specifically and of couple at up the a your to portfolios question, have we've passed. that we've

Vikram Malhotra

I that's HCA been you really these they as as move why HCA Okay. and – off-campus buildings focus been and of that investments, credit more making on-campus of with sort not know why they the have a the on has The partner off-campus but off-campus them. improving Wondering space also outlined, partnership well. more of as bunch HCA take as in only take hospitals interesting,

Peter A. Scott

would certainly sponsorship look hospital, at all mentioned, I work we off-campus. don't think HCA, you on we're not off-campus, When would just saying kind we though, that look do a by buildings interested we're those. in of at at the strong we with

one off-campus certainly of announced in we have In is significant development there we want amount do. a to large it, that's development hospital this one going to fact, and outpatient in departments that's program,

it in at we the kind to So, metrics have of look that off-campus, us the interest do but has class. asset

Vikram Malhotra

couple Okay. And time. it's You've on the back Scott, if made, the just ramp-up, going comment, I could clarify times ramp said I take of to one you up, a potential just think,

you couple these should any maybe last it's timeframe? points really the just XXX not this three-year year, years in assets. view up but basis We back in overall next of two- we a clear, XXXX to expect expect it shouldn't much to transition ramp material So, be lost higher this over like year much, and

Scott M. Brinker

thanks for yeah, asking Well, question. the

of it. So, two transitions we later. or that to seeing occupancy, are comment. absolute sooner ways look in think around take that try that. to and But do look We quarters for just basis. two trough fallen. the growth the a occupancy likely at bounce-back One a ago. given to second report is start to is that improve way three we'll in don't occupancy, sign, full to than couple a wait is how number have to we year-over-year lap full-year I a to years a rate positive We're There a clarify how which will it because dollars we happened at the on that do have just start much different already show the to it's to the And see

Vikram Malhotra

Got it.

you. Okay. That helps. Thank

Thomas M. Herzog

Yeah.

performing where those Just Vikram, prior that's back the to the to assets to to, spoken to million. Scott clear, And add, were be question, bring $XX to transition. they that your the just to is recovery

that that time. is better operators, about new potential could perform too obviously and As we do think that over than we think they engaged there

were to they So, the I where didn't to period. transition limit to performing just it prior recovery from the want

Vikram Malhotra

it. Got

helps. Okay. you. Thank That

Operator

question KeyBanc. come ahead. Sadler And go Please Jordan next will our with from

Jordan Sadler

Thank Couple on questions you. Shoreline, Pete, Tom.

million. curious, gain, that I'm that do So, shelter $XXX you first, how

Peter A. Scott

a It's Jordan. Yeah. good question,

completed we was about the was crystalized, was a $X.X a when tax loss NOL spin-off remember, or it carry-forward billion. that you if in that So, XXXX,

over We which that NOLs, capacity sale, we're you the half little gain occurs probably natural And tap can't we able also of But with NOLs, years have into the well. that, use maybe NOLs. few if have, so remaining these as you this to that utilizing with bit about year, last utilize utilized more. we have will a some these every

fully gain from So, sale. the shelter we the can

Jordan Sadler

done. Well Okay.

So, is locations? this some Durham, – opportunities at know or I like exit City, to Lake Salt there Poway. life are there Redwood have science Hayward, additional City, assets you additional non-core guys

Thomas M. Herzog

portfolio. Yes. Yeah, No, it. we've a number Herzog trophies the got again. I in Jordan, obviously, is get of This

core our to have going maybe are the presents portfolio be forward. those we the what a literally presentation core that fact, to a of Most we In of of the investor want will hold we number want hold or to to in of them forward going going be page majority balance to them.

not these was think, we're good a core assets case want something, and and, I So, I long-term. it but we'll choose think of the to was different pattern. match to to business was really life likely. of In to we our a Shoreline, but find could science – fact certainly harvest rest are the it it assets, therefore, hold less going It

Peter A. Scott

about get to Jordan, thing shelter pleased actually the back too talked about the add, that is, were a while. would out release had other today, that. One this press us this fact. really We And credit separate in and open, very confirming metrics, the put we Yeah. for Shoreline, a we we we've gain, I clearly, but wanted ability to we to importantly, BBB+ ratings before S&P morning, upgraded talked

this great and our not felt the we price, With shelter upgrade, able So, was which part important. credit only confident but thinking. we'd get that could be it a also gains was to of transaction, it was was we that also a another

Thomas M. Herzog

to more the add gain world. of NOL, we're just remainder most thing it, is one utilize going annual forward I'll with we And rest the a once capacity the of now an in like – position manage need of to the REIT to

So, trophy Section factor. like implications another don't so, just the again, that XXXXs as we I and harvesting significant proceeds consider with have far as tax think would we'd and which, will, come to

Jordan Sadler

place now like and where now? where's general some realize, seeing the been in I'm core I your brighten later put to at Okay. this transition portfolio, it for better. good year, SHOP? more the best don't like it not stage only to to curious right work put to time you've the but in – portfolio But money the gets really you're the in And prospects, a the maybe SHOP much the – looks for it in in Is so seems cautious on money I recovery then, cycle. know Scott, the of improvement

Scott M. Brinker

Yeah.

Phase now pipeline talked exciting profitable of almost allocation. medical Point, life the I. before We've a We Phase science. II fully buildings an capital in just We two open to big to about got development and accelerating we're and thinking about we're that announced how in even already be Here's Sierra ways add very years may III on There development that. pre-leased office. program

at may today's As at. sit million $XXX And we science that office, not on for rates, and very market. that's at X.X% would think use Tom trades it But change. we're platform we there focused be look where our at accretive more to to grow at way be us could cap a unique return, put pretty in from to X% that you'll well see more opportunities a mentioned, and unique in medical that a acquisitions would active year value value-add own. today, portfolio capture be starting today, us least could very as don't time. low very big already I do about and you'll I we continue life opportunities will allow And to create there point, do because right some assets over at other well focused the operating don't been tomorrow, capturing a the to time. see landscape I quite to on of think grow But value, housing, in quite is from senior yield. business. think are that to external in that's opportunity dramatically and environment but perhaps to the we will us And growth We've then, changing space that tremendous some factors. the positioning be think ourselves

Jordan Sadler

Thank you.

Operator

Jonathan Our next from will James. Please come ahead. question of go Raymond Hughes

Jonathan Hughes

next imbalance be the would you open flipping that or upside triple-net could few to for to now, flip much once out? capture to more the housing SHOP over what to like you if SHOP years senior currently maybe works to or quantify Question itself company I of senior how was wondering supply-demand of so of thanks the XX% that's Scott. Hey, percentage housing time. for maybe the

Scott M. Brinker

been because two-thirds past growth good three a for quite a to portfolio today HCP senior it's EBITDA so that we've it us the Everybody's good triple-net housing declining. underlining paid it Yeah, portfolio, has about been Of question. year-over-year years day in and insulated bit. able the that's the despite rent, of attractive a is show

them. triple-net. mix of that would two-thirds out research also that of The that quite the with third-party the are analysts partners operating two than number SHOP that things you'd are SHOP, A a validated stronger agree to the high markets and primarily and objective strong, good, in actually have to asset nice a we look number that's are to for relationship. been very quality. frankly. is in And been it's So, those quality I try by portfolio point establish

So, be it topic. declining to to to in materially. at for it off right to quite going time been we're rental couple doing in that be then take XXXX some you're three interesting time of will. the when next our large, these, a Deliveries open-minded obviously convert that portfolio forward the has that. now may business a but about of starts these And elevated straight some again, starts quarters still cases really are for matter of sector of pretty It's and which and steady just stream the looking totally having of income recognized an SHOP years, it convert and to on

that XX next growth look And that quite bit demographic, going beyond the X a a attractive, the XXXX and of a demand dynamics deliveries, really the this So, to as current you start out rate more trough. is accelerate years. it's especially lot supply look given it's in wave to over start to to

pretty steady start from some forward. to growth point this we'll see So,

Jonathan Hughes

flip housing already And triple-net in think to to mean, assumed the matures as I opposed would ahead it next look portfolio XX% you makes senior upswing. acceleration with that sense are after or of the do so demand? that, mean, XXXX. in mean, to then, at I of year trough the it maybe sticking that maybe I I things on

Scott M. Brinker

opportunistic. and three very leases in XXXX, that say, some mature are the very see. operators some estate. we I'd and ability to high-quality good quality there real flexible We'll have there be The

in be may, it opportunity (XX:XX:XX). convert an fact, So, to

operators. nothing so, may make if dialogue of sense. we There's it. with And one triple-net active our we'll So, well every have do imminent, it but

Jonathan Hughes

three on those coverage Okay. operators? And what's or three leases

Scott M. Brinker

X.X, is one X.X. slightly One above around comfortably is is below right very One X.X. and

Jonathan Hughes

Okay. right. All

you and mature more versus year, almost expiring. to just color cash to market-level something can any XX% at and of switching renew this those a next of next rent down XX% me, one about leases their life great. Just were sense be science, out to from of saw for Is quarter that Are we I urgency that spreads space spread renewals XX% and there avoid expect future year? would be seeing tenants looking losing early growth, on

Peter A. Scott

of Pete. look of tenant's and there's we just it sort probably XX% of I you expiring. XX%, Yeah. perspective, have urgency to not are which about couple of years a in If that point would Hey, LOI positive at that think at vacancy. From XX%. there's because a We mark-to-market certainly, little leases discussions renew we we'd said, than a mark-to-market better little a could signed from this we just say about in can It's Jonathan. perspective actually what and/or time. lot is, right next XX% now, think next year, a on it do bit a we're bit to be think we leases the the

And, these of it's under discussions, again, spoken within think, LOI. I about some are X% expiring have, do see we either of opportunity in while we that. a next revenues So, or for, year, real lot

Jonathan Hughes

segment lease Rigel there could growth purchase did there, are kind or this And option an like great. what lease? NOI to one-time no maybe That's the see basis, the mid-single Okay. return it Rigel ex on quarter we the of like items that in digits the so

Peter A. Scott

of things what number, for is is reasons do range about Yeah. probably appropriate of the give I'm you that see couple one talk next going in not to why an more we what the the years. Rigel ex described. it's we but And exact like to that, just

Jonathan Hughes

That's it. taking great. my Appreciate questions. for Thanks Okay.

Thomas M. Herzog

a a in mark you. the one-hour and number Thank people we of note. We've hit queue. the just Hey, still have

If stay a call. and so with question you two-hour don't could, we'd we probably related, one better have one

that basis, continue, but we let's So, on if please. could,

Operator

ahead. go will from Please of next Our Babin Baird. Drew come question

Drew T. Babin

morning. good Hey,

Thomas M. Herzog

Drew. Hey,

Drew T. Babin

I'll keep this quick.

most you just you with is office, own, lease, with But duration, sometimes CapEx of leasing exploring fluctuates. opportunities of FFO. decent forward? the obviously, as obviously MOB on are expenses HCA, Stanley the what the an forward or emphasis can and was expect medical maybe should type TIs, we commissions as going work of with I JV, gross longer within shorter considering curious amount on sometimes Focusing well duration more of against lease going same more triple-net leases Morgan

Peter A. Scott

or we at do of Yeah, benefit that mean, actually lease time you a a leases, six if of leases you look on the the – expense the portfolio years. like five in base range our fixed expense from our lease reductions, and when of X.X% of those. to you're successful to been really XXXX expense XXXX only profile, kind the increases have at done we period is, expenses in over in pretty reductions hurt the of past We've were vast I X.X% fixed most years, in are year, timeframe. increases our the kind holding or top get on majority so

Dallas about have there. those our City only of leases lease where XX% Medical do it's of look don't campus, So, the standard intend closer we and we a triple-net. the we at like kind get of unless lot pure the almost year market, format, portfolio, to across base to no When all recoveries, XX%, to you a the gross we of expense to XX% to in are we those switch portfolio specific at

So...

Drew T. Babin

Okay.

more activity forward So, follow-up, and same. look HCA just sounds going it a with the like growth quick likely like Morgan of Stanley

Thomas M. Herzog

excellent does as Morgan Yeah. well. would I out for program, HCA, what a plays there. the same certainly is say, of create so see with us, so we'll an Stanley that more there partner

value, other working be as far that we and similar structures would the As certainly Scott are create on could all team those. time. those that entertain

Drew T. Babin

me. Thank for all That's you. Great. right. All

Thomas M. Herzog

Thanks.

Operator

next Michael Carroll Our come Please of ahead. will RBC Markets. Capital from go question

Michael Carroll

good Francisco a (XX:XX:XX) Seattle, bit base example, other Scott talk San Cambridge. in kind into Thanks. that? Southern have desire you markets, I science for I do about about expanding platform. pretty with do any top I Tom, you're Yeah. and to, to life cluster you know mean, any a mean, of your Street similar Main I to or of have you little like, these get guys think how want

Thomas M. Herzog

you don't them? why take Pete,

Peter A. Scott

Sure. Hey, Mike.

South and Diego San we sciences San believe Francisco, is San and Francisco, Francisco. foothold San life we have Our the platform in right now dominant especially Boston,

share and to opportunities now we your question we into Boston. a of markets. I think a certainly going have We Philadelphia. our see within We plenty markets, Seattle, market re-entered just new To nice in core San have do answer Diego, about in lot right

New come up more York has now.

to us is to three we our a us, think We getting markets. when we the we've into to campus For appropriate enter where Hayden. versus right riskier we we'd have try have bigger, right a frankly, get markets, those like to the be do be will done. said and within would to certainly But and It have a market that. was it in with now our toehold core for there be the expand, XXX,XXX if we'd that compensate an we'd Boston, it's square feet what for and, yield to in now, markets like like core plenty pipeline there's there play

mini like its So, certainly of to kind do we'd little it's market present opportunities themselves. more in to But expand if that cluster. own

Michael Carroll

think sites? land Are to you I really that those growing existing just, develop that. you you focused one sites to maximize And you Pete, Thanks. Are last question platform, find and those How to new on before on? looking to first markets? currently you have sites about trying related guess, try new within Yeah. the do find to

Peter A. Scott

risk. about to talk value-add. some X.X% to good also That then, we've which makes blended within campus, that the development. that there around had of a more there asset as was we the And we probably where, yield we value-add that It's Yeah. we The a think, purchased across in lease-up since We core a yields purchase, on an bought I bought us. Hayden was got or asset. those two where land sense a option and, low-X example X%.

of as low opposed opportunities. which, as just at the we'll buying as our doesn't rate to capital us So, cost look of cap opportunities to some frankly, exciting look core because that other like of assets current

Thomas M. Herzog

in you, we addition a $XXX pipeline, sizable well. as already remind just future shadow I'd our constitutes again. a here do Herzog that pipeline have Michael, And to million

that of to So, that make pipeline, we when complete current it's not the we're pipeline just active clear. that I opportunities. wanted out

Michael Carroll

Understood. Thanks. Great.

Thomas M. Herzog

Thank you.

Operator

go Bernstein One. Capital Please Daniel ahead. will question of from Our next come

Daniel M. Bernstein

I to might but have actually to unrelated promise I Hi. two. keep questions, it two

Thomas M. Herzog

No problem.

Daniel M. Bernstein

in One, space. instance, everybody's warning wages, accelerating. of I senior it's you for on look think, the focused on housing Labor, Department But at occupancy the

and, any So, improve portfolio really something or particular, contract changes my on that the labor in that here assets. Have or labor question could transition from revolves or in that you employee around the seen next the margins might signal XX turnover months?

Thomas M. Herzog

one was that like expenses in that in be part in being expenses labor, the that it's Daniel. rate about We and positions. has labor-related Yeah. so time year-over-year contract should growth elevated by temporary and vacant negative. reason Hey, have driven NOI been occupancy over we talked down, but also filling

of turnover of see one at amount these properties. is a in we lot the that significant of So, communities. reasons leadership also teams of of the particular that each a There upside was

also NOI the was that reported that driving we've year. growth So, this

Daniel M. Bernstein

that But stabilized now?

Thomas M. Herzog

Well, the transitioned some of recently. assets only were

So...

Daniel M. Bernstein

Okay.

Thomas M. Herzog

to ...that's in the it put primarily assets place. why is ago the seen occupancy that I trend the take systems from some team, culture and new that time and seven say six improvement months because does that we've from

Daniel M. Bernstein

Okay, okay.

development seen a of of the of labor topic, REITs, change, pencil about labor how delays necessarily and you not particularly other another in you any as REITs, talked have that, healthcare area, forward? going in shortages, construction with the construction deliveries Some have

Thomas M. Klaritch

Klaritch. Tom is This

seen haven't we So, in delays any construction.

Cove, budget. projects now, on right ahead The If time, it's have budget. Shore you at same look in we're thing, Sierra Point, little the with The at where that, ahead of a place we on actually moving

really So, delays. any seen haven't we

Daniel M. Bernstein

Okay. you. Yeah. I'll take that. Thank

Thomas M. Herzog

you. Thank

Operator

come Our Advisors. Lukas next of go will question Green from Please Hartwich Street ahead.

Lukas Hartwich

is opportunity rents cap asset? Shoreline Hey, Can on color market some Are a or those guys. that there just the provide below more redevelopment in you raise? Thanks.

Peter A. Scott

Lukas. Good question, Yeah.

market. though, XX%. are I would is is to So, below term probably say, They're average What the about four the XX% weighted leases lease years.

taxes factor but rate So, low on pretty a that underwrite years. If that to a cap about in we in market that increase if has nothing a about big to probably tax Xs, there's basis then any can rent, you've mark-to-market in also in do asset four got in the property the the purchaser right because you low is for another now. think so you factor

important X.X% So, you today, term, basis. years Xs four have to of low factor on a more probably But which into lease is that. market

Lukas Hartwich

you. Thank Great.

Thomas M. Herzog

Thanks.

Operator

Mueller question next JPMorgan. Please from ahead. Michael Our will of go come

Unknown Speaker

Mueller. Mike for on (XX:XX:XX) Sarah is This Hi.

participate you City you that with in elaborate and Medical your Could it how can unique mentioned investments. portfolio? that is your You on

Thomas M. Herzog

louder? you couldn't I'm it that. Could or it say please sorry. restate capture just I

Unknown Speaker

sure. Sure,

call the your City You you guys investment. Medical mentioned with earlier further participate can in that

So, could and guys it you your unique that how a talk more is bit little about in portfolio?

Thomas M. Herzog

Yes.

For Medical City Dallas. Yeah, Tom?

Thomas M. Klaritch

piece when structure fairly in City Medical share the we to real is the hospital, Tom does where always that This of a rent it, growth the so – Yeah, City Medical the Hi. comes do revenue that's hospital get but like low upside. is lease base we of from, the a is has, Klaritch. well, its

Unknown Speaker

Right.

Operator

from question Please ahead. next Wells Stender of will go Todd Fargo. Our come

Todd Stender

Hi. staying on. Thanks for

gains of know I offsetting generated I special losses naturally the this a chance decline rent you is taxable because a mentioned, ask will year, of Just your volume there that you you've those you which sales, dividend? with into then rate? asset run question coverage, next brings FAD kind dividend so year regular just into from special the dividend and stuff, comments any on your level, a have that these maybe got of

Thomas M. Herzog

Todd. I'll a of dividend. this No, special Herzog. no intention doing It's one. Hey, take there's

to We're into position, mid-XXs. balance that think, as in be no Our a portfolio, on dividend I in the our remarks, Pete, and and mentioned a sheet, our stronger based with us reason for land comfortable we'll grow coverage, the will will do coverage certainly there special.

Todd Stender

Got it. you. Thank

Thomas M. Herzog

Thanks. Yeah.

Operator

any conference closing At our the Tom conclude back to this question-and-answer like session. Herzog turn time, over I'd will for to This remarks.

Thomas M. Herzog

Well, guess, thank today. bunch for San you, and in soon. you next guys thanks everyone talk I week. seeing operator, of be Francisco And to we'll joining we'll you us a for

so forward look So, Thanks much. that. to

Operator

thank is you The We today's presentation. concluded. now attending conference for

disconnect You lines. your may now

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