PEAK - Earnings call transcript Q4 2018 | Healthpeak Properties, Inc.

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Operator

Good afternoon, good morning and welcome to the HCP, Inc., Fourth Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, today’s event is being recorded. At this time, I would like to turn the conference call over to Andrew Johns, Vice President of Finance and Investor Relations. Please go ahead.

Andrew Johns

to call. quarter welcome financial year and conference results you HCP’s and fourth end Thank call contain conference Today’s will certain forward-looking statements.

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

Tom Herzog

morning Klaritch, Chief differentiated our the portfolio with strategy. and here HCP and last Officer and restructuring years, Chief over Operating Brinker, us Tom everyone. today and Andrew Scott, for transitions, me Troy completed McHenry, operator leaving portfolio the our a available and a good Thanks, Chief X efforts Counsel. our well our Investment Pete and the positioned. General is balanced of Through Financial clear We our are call are Scott and Also Officer With our Officer. Q&A portion

have portfolio to activities. our Recent opportunities to is segments, over on in plenty from our positioned redevelopment made embedded we core to to rating create growth we with continue this and confirmed Moody’s our balance value upgrades strong the acquisition Across front. time capture three complementary development, and progress upside Additionally, our strategy. sheet S&P and see credit new support of and

tenant on-campus medical remains in for strong. office, properties Specifically, demand

We and the portfolio are positive rents. working to fill mark-to-markets vacancies on within seeing

portfolio X pipeline, We pipeline and data than make a also HCA success. work while and In our we to life In his you captured X commenced Phases funded. remaining a to compelling added and X the we Even sourcing for Phases is hard $XXX for the including $XXX just us XX% on-campus at normal our redevelopment The development create. for developments platform supporting see Shore partnership enhanced guidance. portfolio positioning mine have to worked years million continue of to our combined creating capabilities XXXX, in and actively to pre-leased Sierra continue In the program. complementary will X to our pipeline over almost in next working be additional year, is and housing, The costs business million for spent schedule already mix, opportunity X, with approximately in and are operator us, value incremental focused Point. X Shore, is of capture management for value but million senior our this pursue will science, team Late higher and our pipeline. to are and Scott The to acquisitions asset last which $XXX our is through us on expanded our improve and we with moves $X.X analytics. billion development allows resulting at a We have opportunities opportunities to

room is to for plenty we and pursue aggressively. last years, of X a still there We intend long them upside have the come improvement way additional in but and

solid reported growth total last our Moving for in to to XXXX. as we a portfolio outlook we same-store guiding XXXX, on night, are

months, Scott fundamentals. a communicated will the elaborate on Over for last in housing minute. our expectations senior near-term have chopping we

occupancy XXXX we Accordingly, and improve number portfolio senior pressure long-term. stabilize navigating position we but expect we will feeling intentional that are made it still and a the both We are of and on our anticipate for but noise results, shock over were expenses, engine growth be moves strong in business result the to housing also the fully of our a time. headwinds

maximize at have long-term volatility. in do each repositioning our to of reducing company short-term designed diversification build our deliberate portfolio very We growth recognize operates We been that a with while businesses to within continue its growth and focus deliver. vary, be our portfolio inevitably own cycle our the but primary accordingly will on can blended will rates to is growth HCP segment-specific and overall

to way are now formalizing turning certain in their the the together. fine-tune very and I senior place, With am teams to with players pleased our all major are come and leaders have team, the able Now, now we responsibilities.

to First, asked our his role I as platform addition Scott our Officer. Chief formally have science Pete Financial in life to lead

announcing senior life and a campus average tenure industry built Pete professionals are functioned as the Pete the and science today, of While that nearly transactions relationships with leading operations partners. quickly the he HCP key and leads was months team decade. lead of we the strategic has to and experienced that of life instrumental sale during the X last in have a very the including Shoreline customers at in science this for and an has X time,

Operating the Tom Officer. has Second, role in role Chief of Officer, his also as Development Klaritch Chief assumed addition to

consistent we all three redevelopment increased and have that are us businesses. we management allows development using we our resources As our our across of activities, scale practices Tom under determined and best centralizing ensure to

and team. housing expanded am that for Shawn President, who business. our our Glenn the Promotions Preston, within our joined medical our Shawn leadership office Third, Executive Chief HCP to leads Vice Glenn’s reflect Jeff announced responsibilities Miller pleased Accounting within assumed Johnston, promotions organization. have also we and I announce they recently Officer, and senior

roles brings and Counsel Officer. experience Chief he tremendous at a Jeff, know to including HCP, don’t Welltower General over spent Operating who you of those having For in decade

at finance teams housing business. is housing on to of Jeff and During HCP, his to for closely reports continues important At management directly with him excellent time Scott responsible day-to-day our an is housing Jeff our Scott bringing step strengthening and lead another just senior addition worked senior asset is senior Brinker. Welltower, Jeff platform. who operations and our in

provide the updates. I handing call Before governance and over to would to like sustainability Pete, few a board,

as Lydia Griffin, new During our Kathy Independent Kennard, XXXX, Kent we and Brian Sandstrom directors Cartwright our appointed to welcomed board Chairman. as and

adopted natural in We retirement mandatory practices refreshment. corporate policy governance for a with directors, board a line also and best of age that assures continued XX one

decade front, an to ago. leader made initiatives industry to focus continues itself build has social on the On HCP environmental, and proven over governance progress on the and sustainability since committing a

efforts the named GRESB again designation prominent a were Our seventh of and ESG recognized organizations achieved for reporting constituent the from and consecutive year, was recent FTSEXGood by Green Star the HCP Index.

we Leadership the the band. sixth consecutive Dow for for Additionally, are Index and year, named CDP’s Jones Sustainability

guidance. our ESG turn places in through hard overall cumulative ISS financial X it initiatives score X, have work this will XXXX Pete? initiative. pursuing the discuss to quarter social of I X. that, score and our score to Pete performance results resulted our Our over on environmental and reflect for an efforts the team These of an governance ESG With emphasis of quality and

Pete Scott

same-store markets provide blended $X.XX our adjusted update an I assumptions. and of our a per on today share review results, of quarter capital end of growth results, with discussion our guidance we and and Starting Thanks, will start activity reported recent related cash Tom. with XXXX our X.X%. a with of fourth FFOs NOI

range. share per year NOI cash XXXX, of guidance growth were blended full the For we of FFOs $X.XX midpoint X.X%, of and slightly our both adjusted of reported above which same-store

In office, represents we around our XX% reported of of in of on space, Let activity results. over X.X year in XXXX, we leases million NOI feet executed line X.X%, history. Medical with me the which provide cash highest our pool, which full guidance square more our was volume leasing of growth details the same-store range.

of cash the driven of we underscores lease our science life represents cash This a would to life same-store better current was science have which which and of normalized high-end range the guidance been NOI growth growth strength our occupancy. segment. of by On and excluding Rigel the pool, Turning above X.X%. basis, X.X%, XX% leasing reported the mark-to-market, NOI

which NOI growth Dallas primarily cash For we our our performance above of portfolio for driven property campus. at hospital segment, Medical other and same-store City high-end X.X%, our reported pool, is of the was was by the range. X% results our Strong of the year guidance our

in which In housing the XX% our pool, SHOP expected our housing senior on This better is NOI low-end of we was negative segment, driven our In X.X%, lease Sunrise same-store high-end growth of of our two-thirds cash the approximately portfolio, reported currently our portfolio. of in triple-net we which our X% same-store by to at was of this senior reported to range. rents guidance of our it NOI of than which growth was pool, that guidance which X%, segment, above emphasize important structured result range. represents Moving ad portfolio represents our arrangements. is

in into and previously $X portfolio. discussed, by transition Quick million the we Growth our between results from more X.X%. positive our differentiate $X portfolio. the fourth core year-over-year quarter was performance As portfolio, This our core of note NOI change. translated Those performance portfolio have XX%. on a at large is our percentage transition transition solid were which our declined portfolio it approximately for million. to important offset than to declined

of $X given pool, impact However, was only the million. the small the financial approximately size

in to assets encouraged in potential points, the performance. XXX were initial points by Additionally, from was transitioned new the Atria occupancy. to we sequential driven we XX growth basis by growth X of upside points and occupancy if This sequential the primarily stabilize growth operators basis

to net billion to At improving credit. we from X.Xx the repay actions the with profile. the quarter, of proceeds resulted and reducing fourth and the from balance made Apollo BBB+ to of S&P in positive we of the transaction used leverage billion and the line availability of under now These Fitch. sheet, In debt. our debt adjusted to and tremendous reported move quarter, our end had Moody’s, upgrades Shoreline $X.X of to progress EBITDA from outlook along $X.X we the CaaX from credit Turning a credit we

$XXX deal million million forward million, We and was This years. of our follow-on were the equity During equity structured a our on which ATM approximately quarter, majority offering. the $XXX first of also active $XXX follow-on X as in in we was in issuance, market. consisting the the raised

to Turning between now full to our we expect year share. range to $X.XX $X.XX XXXX FFOs adjusted XXXX guidance, per

we time over and superior growth diversified recycling a that believe we resulted risk-adjusted predictable During our This stream. generate completed portfolio transaction. major more in high-quality a capital XXXX, earnings will

activities as balance these disclosed, as However, from operator and previously ramp development our redevelopment in transition. there from improvements, as in we up our well and housing significant carryover a impact senior is XXXX activities our sheet

HCP, a XXXX of guidance. All these supplemental, assumptions positioned near-term will some take our in actions earnings. embedded four On the in would to result stronger, positive our moment Page the to included do of within items. a but in drag like expand XX have results I detailed on we better on

due midyear First, assumed a of $XXX notes February XXXX. we currently our refinancing have million X-X/X

we Second, to creation redevelopment significant million This in order opportunities. $XXX to and $XXX spent. assumed have relative elevated to amount of million capture XXXX is development value

X.X% cap $XXX cash we have a initial to of million million And assumed an $XXX blended rate assumed finally, activity sales cash of of X.X%. to asset have we at at rate. acquisition X% X.X% Third, cap

to We bolus XXXX. decisions expect per and $X.XX these million needs to our utilizing capacity. $X.XX remaining share the $XXX to through Combined, in excess of FFO equity four strategic debt our result about headwind our drawdown fund in of key capital

we a grow as said in is going to year forward. a of high-quality have create portfolio we base expect off our However, with consistently, that XXXX goal strong to

the assumptions, growth guiding SPP cash to blended NOI our to X.XX% of now X.XX%. Turning we are

senior science now We our at components some disclosure will on X.XX%; Finishing other range this update to X.X% follows: at The office reaffirm housing the X.XX% or life X% with at at X% positive X.X%. blended and as performance. year X%; to negative to medical based X%; items. to growth of throughout are rate additional

part have As reporting improve our for few the changes. of a our to we three usefulness important ongoing of business, core made commitment lines

and of with for senior First, portfolios to triple-net now we regard our combining purposes are guidance. housing, SHOP

X%. midpoint disclosed the have guidance triple-net SHOP was based of that and we negative However, expected growth X% of at on our positive derived range growth

the Second, we added a summary blended release. in table housing senior earnings our growth for SPP

our how have as XXXX For guidance. compares senior to SPP should year our the our basis full useful context XXXX, points. XX blended provide housing some been performance would XXXX to This positive

Third, housing we business. expanded disclosure for our senior

of quarterly This portfolio our additional Page and on XX quarter, SHOP we transition provided supplemental. have pertaining to our detail core

was within XXXX, fully reclassifying had Finally, with valued be we reporting segment. in surgically we and With would determined call peer turn assets City income consistent like private as Medical are we done disclosure medical effective Scott. January that Dallas market. these two not a MOB separate that, This I campus the the X, would past in into how or to to over is integrated the segments property our splitting the

Scott Brinker

Okay. Thank you, cover There to investment is lot the Pete. on a front.

HCP our relationships are expertise. and develop We well-located where using its and superior partners deep acquire have real to estate

million X-minute X% it stabilized example, property a Street, being produce done land our mark-to-market rate. a a a we comes In property King transaction, to the acquisition are acquired relationship at from with directly through but we near-term with we and a in Alewife Cambridge. In that acquisition related stop. $XX location Cambridge in in This Drive is Yes, For adjacent superb Cambridge. with a West Boston vacant cap separate science, should expanding opportunity XX also Park King walk parcel just in T life footprint their recapped the our has Street. January, West

Within second Class years, develop the we campus. a next few creating intend to building A a

also the In JV life Torrey assets West Diego. November, for the in premier four the are San science interest submarket located on two the We markets we Coast. X our million, are of in $XX partner’s acquired Pines, in in leading buildings minority expanding

South are are successful of buildings Francisco a nearing located and in San two end other the The redevelopment.

tremendous rate. campus surface majority contract is which development with more we X% to door The The achieve over square we momentum. capital a deployment, next on November, towers million, campus of Class rate have space a Sierra strategic already includes given than coordinated the is densify A vast stabilized X% our for X-property science went HCP us has the highly is are JV acquisition strategic acquire leased expect cap this towers the to Shore, the life Also We feet. and to $XXX X With cap Point stabilized excess the a in a so campus under to The at can time. project that parking, million and creating buyout.

of HCA. on on-campus to medical Moving office, number with we development potential working are a opportunities

working sold by We and because housing in compelling, new senior projects XX-year We winning is underway together in the expect systems. dilutive see, a In time. to $X.X Transformation to successfully. XXXX sold equally business necessary our new billion a announce and who but senior quality driven senior being the beyond portfolio. two We forward. to took higher the from we to HCP backward operators take housing history over while of XXXX. that transitioned to of harder real we previously. be actions XXXX, will last being portfolio, on in estate completely business absolutely steps take that existed earnings create the billion operators, XX addition What is steps in capturing to to deal upside. entire near-term, team to the focused embedded $X business a is decisive transformed: created properties The year housing and in markets, is structures, were The are that’s three unrecognizable housing non-core business had remains senior what

nice to in and wave the partners, in added be moving we lift will and senior a first seeing now We operating are improvement transitions these two LCS. forward. last our of best-in-class like March position went enhancement We contract success Relationships long-term. occupancy under perform continued We instrumental make Discovery from which help these older very assets put X our will to more redevelopment. relationships, over to small operator properties or but The We housing. exited building efficient. exit will platform the into XX well-located, expect

the being org built Miller we remade firsthand I Finally, addition senior to asset adding great is the winning out HCP. systems he to management. housing Jeff culture a including at and know that built chart, lead

in fundamentals with office the solid strong exceeding XXXX to and segments, medical remain science core Moving outlook remains in the fundamentals very demand supply. three life our

I housing senior additional about more XXXX. cautious be in that’s provide to will term there relevant. a color some if continue story longer is We

the but wages and to to at high in rents to expect grow X% likely well-trained for low unemployment least We grow due in are XXXX, X% staff. range demand

business Importantly, back encouraged are of though, senior many housing important of is trends. our number years. a very step in pressure SHOP three and by XXXX local will a will areas, occupancy. trade the Taking exceed deliveries in prior we new This

penetration the benefits rate are understood. better housing growing cognitive and First, of the is becoming as physical, senior social

in over X demand XXXX, at new in growth now next now and have beginning several to a slope Second, trough call should the upward balance XX years finally, the a Q&A. supply level declined the be gather actually turn the next XX+ of momentum and rate the more will which for for within as an for that a cohort, where will starts very And hit operator act the the years. is back I tailwind to decades.

Operator

Our first with from Yulico go Instructions] from comes [Operator question. ahead Scotiabank. Nick question Please your today

Nick Yulico

Thanks.

first guidance is spend development $XXX you left page $XXX on only spend development on to question the have and million that’s to on million listed million $XXX – have just So, you there. redevelopment, the everything you and of in talked

additional projects what you about being So, terms think are assuming should started, we in of how that?

Tom Klaritch

HCA Klaritch. project Tom have is look kicked development at we This that’s program, we off. now, announced. that Nick. one the have We Hey, Right

a great forward. the projects there Shore, discussions later. senior coming of behind is because housing several as we activity will Phases that schedules the move accelerated of or you been X there such science, and anticipated as start X there and leasing X with is has know We in that have that we be we Life the are X into got and pipeline there

being So because of at have years solid fairly a a would minimum. look year we a $XXX pipeline $XXX of range next year at then million and X the at $XXX X projects million acceleration to the we XXXX big million about those a for to the of

Nick Yulico

projects money NOI Okay. are start additional next when an from And about HCA if the that remind assuming I you some would how timing projects, think those year, projects us with I what, spending guess just you online of standpoint? to or mean, come benefit in other

Tom Klaritch

XX many have X leasing, shell improvements in starting tenant kind lease the the months. Usually X that X-year leasing longer those the on months Yes. about XX very the leasing. build months big stabilization. core. process so we have a core at, XXX% design. And looking to months development, Life on of build probably office activity, later so X It’s are look these a years the lease-up out to to lot It’s shell then and to leased and X in have activity we you to little and are are medical seen initial at science, better we about we to in projects or are and up similar, of and good on X then

Pete Scott

One This well, pipeline. all a within thing there investor Hey, you lot active BML-III. if there are life developments, is of Pete There other of here, that shadow active Nick. through goes a as A projects. too. not is look some pipeline that is sciences, is it our that’s also deck, at page but nice our

in site as well got our Francisco. South Forbes have San We

called Place, shadow that some near of Pines XXX will is Directors our got Park today. we into as in land well. have and another as Drive That’s as put we which then that announced Torrey Pines Torrey also well well pipeline We site piece Cambridge a land acquisition as

backfilling a the nice got also have pipeline. robust, pipeline, we active are but shadow So, we

Nick Yulico

Okay, thanks that. for

guidance assumes hasn’t raised is question it dividend, last year The while. on been in not Just it’s for a again. raised the the

dividend talked about I just was getting end year, is growth and have the be the this to there how You think returning dividend about of wondering growth back it how at eventually wouldn’t transition why about year also that – assumed this any raise? even dividend thinking mean, should is you are growth. to we board

Tom Herzog

recur stand Yes, we here. is into the that Fair Tom than grow dividend Nick, we and a right will we coverage we the income restructuring now higher ideal consider Herzog with that growth little question, would dividend this in XXXX. was starts as to back is where did, what

but So XXXX, to another I we make coverage year some future we as a additional go is assessment increase year before into would will decision. board into as have we the probably guess, is even that say get this we but dividend next capture we my

Nick Yulico

Okay. Thank you, Tom.

Tom Herzog

bet. Thanks You Nick.

Operator

question Markets. ahead Jordan comes KeyBanc next go from your Please with Sadler Our question. Capital from

Jordan Sadler

how to around baked then in base touch guidance on wanted I assets just that what be and at? looking already the for types of of would already acquisition some of there Curious you. activity is of Thank much disposition baked acquisitions XXXX. sorry, types what the you’re into assets and

Pete Scott

don’t The million, sales adds draw-down got sources so if the It’s some Jordan. additional in to within hundred about guidance, the funding mid-point $X.XXX spent. Scott our of perspective We the forward Yes, hi, Why equity billion add couple guidance, a a, at uses and of through our up we’ve on of our mid-Xs. balance to the some non-cores we and billion. balance of within is $XXX year of and the and then I get get just but in can That jump to color capital from quickly and uses, he is ended Pete. development of million; additional million; acquisitions the which and that we has was touch the $XXX then dispositions, that million said, $XXX all redevelopment have. and of, $X.XXX of on capacity then the I’ll hit acquisitions of $XXX, to

the combined. of today, Cambridge XXX, go about to well the already of you acquisitions When think $XXX have Drive Towers. Point We Sierra announced Park as and acquisition that’s million some XX million, We announced. $XXX as the about up high-Xs. capacity into been That’s

we’re disclose. a specific is now, the nothing things that that at balance in So, got of looking and spec, to we’ve pipeline million right nice $XXX

the that million non-core It in $XXX And closed had is On $XXX stuff, within $XXX is side, housing some of piece million. Poway million that actually UK closed. then already this about senior the was and then the we land disposition final already. January

So, within but just pruning $XXX general think components. million those important the of balance is to the portfolio, about just

Tom Herzog

that And been identified. of I would add, has Jordan, that most

ready but provide we details, that. the plan have not to game do a We’re around

Jordan Sadler

me Okay. I’m And positive correctly. it for I or a a then housing. just on seemed to greater to seeing else as a the into reading follow-up process of way lines. level extent? at gone portfolio sensed as if optimism might little way making a the operators of transitioning that you more more transitioning you to looking between little reading, through that I’m just out but Scott, bit through a your the that wondering offer the this you’re and tone I Anything senior know new you it property and were future, have

Scott Brinker

wide Yes, to markets be to pretty there disparity Jordan. say operators. cover mean, I among that, and continues would I happy

current of have We the to of we the environment. is lot which challenging the transitions, because are number for to which for at recaptured. overall, in are least one year be a HCP, impact performing But starting that still a show there improvement, reasons carryover upside a There’s even optimism. part well, quite of in as the of XXXX see

see end are on almost chance be be into XX. least certainly XXXX to portfolio hopefully first that. to improvement a of than sequentially, start I by seeing the for rather XXXX, increase will there’s NOI I to at year-over-year and just negative rate But in that clear will good the improvement I the year would point and of in year-over-year start the that think out half just XXXX. sequential and we XXXX you’ll growth the down growth think we that in see

start in You percentage to materially small see growth, again, increases but dollars. a absolute amount relatively dollar some it’s positive for

We’re but growth $X million sure about only in the rate transition that in portfolio sticks out. talking XQ,

of in We’re well, in with optimistic that out, number it. stick a front it will but positive XXXX as XXXX,

XXXX more XXXX, is into and looking the So, Jordan. optimism

is almost think, anyone difficult, I well That, amazingly, think off year-over-year. in the of would core one the growth reason roughly compare Maybe ‘XX we’re did into net portfolio were the is still XQ, rate in is contractual projecting portfolio we’re portfolio. just We sector, great X% of XXXX that much I’d about see because in the performance which increases in where final the in the optimistic pretty X% part I got two-thirds we’ve core core had is XXXX. less up rate a triple point tail in and to make for XXXX. growth but we about portfolio which,

a net. triple you to it’s something? waiting toward Tom, to think a time good wanted have So, I add

Tom Herzog

potential You know, at some what the some there’s that as strong more certainly with senior for I do, would and add, business, our housing comes Jordan, we’ve to upside. looked work clearly,

aspects. apart is it, literally rebuilding all think I the business and optimism that taken that you’re hearing in that we have are systematically

team. the rebuilt have We

We dramatically. to we’re time infrastructure do years what announce ready The portfolio that we’re systems looks With like but and data nothing in working looked changed it The like on today been have over will. and has not ago. more operator mix to few and we have place yet, put that reporting. work and things a

process, very maybe the some this some you’re systematic to on the going being one, That’s We’d hearing inefficient, there we are business a a we been because and can it’s the long we So, that quite game good playing be create are meaning believe definitely business so a we that’s very and group of within see that like business, that good. long-term optimism well the be prospects probably do not part well. in does comments. because well this that in to

Jordan Sadler

Thank you. Got it.

Tom Herzog

Jordan. Thanks,

Operator

BMO Please John Markets. question. Capital from ahead next from with Our go Kim comes question your

John Kim

XX. your on I question a Good on had morning. Thank you. development disclosure page

and stabilized economic there’s a provide date months later You a your footnote stabilization. then you’ll saying six developments, occupancy have for

stabilization and this which the So, months after, occupancy contribution? at is FFO contribution six looking is three to should the AFFO be date, the the as is

Tom Herzog

plus That’s – way a it if to stabilized answers after XX probably get good is similar at it. Really Each question. the segment a office that look The bit for to projects starts completion. to occupancy these longer medical little six for in stabilization, at on we range, almost take the could a that normally life the when months gets science. occupancy consider

John Kim

Ridgeview Well and year? going the to Cove, is the that for are this to instance, going contribute FFO to those

Tom Herzog

There the will the toward is of half some, yes, latter it year.

there the component leases typically in pre-rent life a Now, sciences. within is

So, so but it FFO, FAD. there’s to it six-month then or will a typically to contribute lag contributes first before

John Kim

your peers don’t then of And on guidance, acquisitions guidance. follow-up their Okay. a some include your in

Pete Is said wondering with this some that’s cost figure of and by conservative is is number So, it this realistic? capital? $XXX which sort of how million, I’m announced, driven your of much a of this been already

Tom Herzog

would it that acquisitions Typically, this the as wouldn’t raised I equity in of XXXX put down a below function, issuance. capital, debt forward and took future our way. in we place optimal when you’re guidance, aware, that to certain but lot we level paid be describe the had we a we actions well considered we to

typically exclude just to you’re you see would access numbers as provide funds to didn’t case the a to have obviously totality. them, It’s we Therefore, working direction coming raised We available, in we if only we had of make do have Otherwise, that proceeds. these our we been would of to different them. on plan. a already sense it that utilize line you funds part the typically number trying because transactions this our in would bigger we’ve that would and understand we acquisitions particular in so if been those are have

John Kim

Thank helpful. you. That’s

Tom Herzog

Thanks.

Operator

from Drew Baird. comes ahead with Our question. question go Please next from Babin your

Drew Babin

deliver? on as those the development the as and they the in on Oyster some a of sequencing little projects, infrastructure can about phases on of what question Cove of over remaining at talk go projects, kind kind specifically, Quick these lot the yields morning. I should build through pipeline The at those? the know a was Sierra you of Point good with that initial put time, and yields expect of Point, you more Hi we phases but

Tom Herzog

phases, The the look are normally various last garage. or there you with if parking Yes, amenities as Cove, the no at phase,

Shore The Sierra in higher at on the is Xs. Point. in Sierra the So, true much we’re return The overall The yield at looking on is Point that a same of low Xs. upper

parking the look, none Phase had the will has II again, phase, final Phase the you that. package. And III, If amenity Phase garage. of have I

III in Xs. while two other in phases low Phase X the more range the low So, the the is are

Drew Babin

that? just on portfolio, And Page X% revenues could about that specifically the of like the XX one the I looks about might more overall that’s wondering supplemental, little of deal guarantee, lease with then when one just net it Okay, done with what on question talk it be what X.XXx your and you that’s coverage, if about expires, no triple is profile is, with helpful. in a there was to corporate

Scott Brinker

here. Scott Yes, I that. will cover

ago payment on complicated that’s would the works. put with the that years. the think than a I EBITDA despite waterfall are years some the rent But XX more calls because convert Sunrise referring rent the you heard way to At ad leases of property. that complicated previous matures end of Sunrise conversion. inherited the rent into leases the the receives XX the potential to be talk of SHOP. ad potential the a of is our about to that It’s generated and schedule the would on have that in of quite at coverage you about lease category X.XX up the I consistent diluted one structure the we as earnings the showing rent us day, not in HCP

Drew Babin

Sunrise. Okay. up follow And one topic I guess just on more the of

Could potentially if some, you’re of this, it’s SHOP into do this potentially triple-net how all, with you where all talked a asset fee, management CapEx to think be a of net things the SHOP? more paying play rent to kind triple be costs XXXX, to look stay go do obviously you or about to payment, converting if As I in on it out burden? maturities a just about might a the not lower economical you’re SHOP. guess you’ve the cycle better, as considered, taking before it CapEx troughing

Scott Brinker

which would the two there in. in same. those quality to we the you waterfall complicated the be Across the to into Yes, works, check boxes, if us unlikely would a of operating you estate real is convert be candidate highly situations so Not Sunrise leakage there. rent, higher it that the and board, not SHOP, see If particular, net we it that don’t it’s for I triple depends. most can paid convert And in we are be then an lot confidence CapEx have look partner assured SHOP. the on is of before think all any way because the actually structure likely the SHOP conversion, would that the

Tom Herzog

think that’s of a that again assets, Sunrise structure its to add SHOP conversion you it’s place. I would about the those taken has dated. when

motivation because confusing to think you. So, And a relatively that’s with operator it’s when major it less look are headache. less would an earnings and us it’s lot it, it. do it’s arrangements these I creates all a our a perspective, at about alignment that’s from you different; to Frankly, push, confusing our to how

Drew Babin

all you. that’s Thank helpful. Okay, very

Tom Herzog

Thank you.

Operator

from RBC go comes Our question. Please ahead Capital Markets. Michael next from question with Carroll your

Michael Carroll

on remarks I Scott, know the you and things departures touch in wanted in, confirm, been and assets executive you comments. and made declines director just those transition employee prepared stabilized quick, have had thanks. wanted like I your some guess, Yes, that? real to SHOP seen already, to turnover I I portfolio

Scott Brinker

We in stabilized. definitely transitioned call not would I them total. XX

wave The of March, transitions first occurred half of the second transitions in nearly XXXX. of the in half but occurred

just a ones a normal or and expenses to is to crazy quarter there’s that increase earlier recur. nice that we least are transition getting So, to have are the going where the signs quite occupancy still return to fourth performance, occupancy third see transitioned down, started still levels that not a divergence, through hasn’t and recover. at yet started transitioned just period some The expenses in have increases they and will within and even will in normal closer And that portfolio way in that assets the levels.

call is and envelope example, million a that of they’re we on the are I be mean, normal maintenance % up like an think enormous NOI. and an year-over-year, XXx transitory $X of absurd $X in I normalizing just and XX this numbers of repair is as back up XX%, and number. that reasonably nature expenses of of exercise stuff, of level. contract was all base labor insurance could Just could the would the million you I it mean, through

this the just those normalize going a but So, such trying are any recapture such to with of small this but such expenses things, we is matter are to numbers of that dollars, say we didn’t ugly, quarter a we that. keep elevated unusual It’s time. small pool with

Michael Carroll

prior where a still $XX on estimate number stabilizing about you that think and highlighted can these assets go? you NOI. incremental I by these And NOI call that Okay. a million assets that good of generate stabilizing can Is for

Scott Brinker

I number going I didn’t that’s we a ‘XX, to The some start some the At assets seeing question those of are there’s any and think until We’ve is estimate. XX real and redevelopment, ‘XX, XXXX. ‘XX. in big improvement XXXX, diluted benefit late in will think we upside time, transition into time. the in in and Yes, good the put start still timing, seven take on like redevelopment. to it’s but see of assets actually massive year, same the those, Then and a

Tom Herzog

$X might correct to $X use, corporate, into have is The Scott, me on could the correct? the be We higher, just but built a it for difficult wrong. $X which of lower. I’m or numbers, million $XX million $X determine, to timing analysts probably our could for if spent be is And to basis

Scott Brinker

Correct.

Michael Carroll

And the Okay, about is development great. that to budget $XX of your XX the complete million has those? in total the page, redevelopment that then

Scott Brinker

That’s right.

Michael Carroll

Okay, Thanks, good. Scott.

Operator

question. next Joseph from Our Nick go Please question from Citi. ahead your with comes

Nick Joseph

the with the the repayment refinancing nadir? early Thanks. debt then there I behind understand the thought is associated coupon, and to the of just want XXXX process given low a cost

Pete Scott

Pete Nick. It’s here. Hey,

a that It the say there now. a low I actually trades bond is to given trades just what wouldn’t discount at be cost that So, about that at. coupon par would

of take it pay too. on and we’ve pay have to above that, par if So, we but But out part beyond we par. anyways, to early, nothing maturity

have anyways it our some think cooperating pay As would but in do refinancing guidance, choose. it in low we rate that you markets if to incorporating about as early love keep obviously as gives so debt By something to XXXX. long us earlier, that to we the that, we are flexibility back bond if possible,

would an between issue? that. to We again, the we also do as our goal X%, better although market to Somewhere very debt, are do higher but, from the there, well, the mid-year tenor, the today, the rate is perspective something we Maybe little of so the it have a in perspective. we typically bit XX-year From X% where we tenor, do if but issuance secured bond I choose longer rate. a assumed a could unsecured and right on would a depends say middle basis, refinance of probably we upon that. little today,

Nick Joseph

Thanks.

Operator

And Stanley. Please question. from question from Morgan our next Vikram your with Malhotra comes go ahead

Vikram Malhotra

of over very guidance the you next Great. to I’m expirations to give can Thanks where those rent X just certainly the more life color market? continues occupancy question. and bit for you taking suggests spreads wondering that given do science be that. are segment components think strong; on a same-store the of the if between the The sort NOI years relative

Tom Herzog

the really across and Vikram. was year question, performing that board good is industry. Yes, well, a the XXXX banner Obviously market for

Our beyond the on Rents normal the high is gone being the majority San already occupancy last rents. of vast around same-store mid-to-high of the expect in you XXs, what especially our mark-to-market that and markets, up would escalators pretty growth quite the from years is dramatically in Francisco. so have of couple all above X%

about say below look it couple the in to XX% expiring what we XX% from mark-to-market And next of years, perspective at would market. I rents a ‘XX are ‘XX and the so as

comfort year that part beyond, segment. of So, perhaps the within year which while a doing another this things and guidance, at us for year with this life least to we’re persisting having regards some our as trend in we’re developments nice gives see sciences we other

Vikram Malhotra

the Okay. do to developments new clarify into that, same-store? And roll when

Scott Brinker

stabilization period. it’s Typically, it a after hits year about its

wrap around this our to wait really for So, right good none We full-year for a now Phase for don’t example, The year-over-year in is II projects, least, I at at of same-store comparison. Phases think a actually Cove point time. I in

Vikram Malhotra

Okay, great.

Tom Herzog

Exactly. that. apply on don’t judgment We

be go that so you If stabilization we you’ll sub to on you very don’t there’s glossary to judgment back just – specifically, apply. the on able think our our read period,

Vikram Malhotra

the and on candidate that expirations clarification just XXXX, the mostly is and a is RIDEA? what expiration as for then referenced. restructuring And were you Sunrise, that referring restructuring, potential great. Okay, to The into triple-net you restructuring a in

Scott Brinker

we’re point. be shows it’s at assured and Vikram, mentioned The from near-term The nothing have the Sunrise that so ongoing maturities to but maturity, asset up XXXX Hey, like dialogs XX is Drew report this XXXX it with of actively plus each lease years those Scott. a operators, managing now.

Vikram Malhotra

So, different just $XX combination of a bunch big operators? million, is a that of that

Scott Brinker

Yes, Not one that’s operator. correct.

Vikram Malhotra

be Okay, There could not Is be RIDEA? there is right each? too are to for – and could it converting like some any different tell early now? or outcomes majority

Scott Brinker

sale of very a are that handful real the would a good are candidate is likely majority candidates. say there that be and I’d estate for more high-quality that conversion

Vikram Malhotra

Thank great. you. Okay,

Scott Brinker

Thank you.

Operator

Please with Stifel. question. Our next Chad question your from comes from Vanacore ahead go

Chad Vanacore

Alright, thanks.

to want platform. the just to back housing roll I the operating So, on comments senior

that that’s I that just not think rate Scott, expectation place, is overall right? in X% gave is of and you us

Scott Brinker

Correct.

Chad Vanacore

X% was that just labor was up the then expenses and portion of that wage And expenses? or Alight.

Scott Brinker

as really it in well. be XXXX expense compensation is driving that elevated of most going that but and both, insurance bit expense it’s is It’s to a

So, should for in be the, mid-Xs both labor total say, and operating XXXX. expenses

Chad Vanacore

just thinking a then of question are occupancy drop that, expecting? Okay. a level of occupancy, component given that we because – on a would still Is kind that that us that deeper And about you Alright. right drop. are what imply leaves occupancy –

Scott Brinker

the XXXX. core portfolio. separate about Brookdale of And second mentioned and occupancy transitions, quarters the about core the pool in X trailed that that XX% core of half Yes, I’ll off from and representing of I being portfolio

that our we today, that’s But year-over-year new to more from current the portfolio where pool, core best to sit flat the we see it’s guess. The basis supply points impacting our change. is likely actually in markets. year-over-year, given have occupancy best And XXX being some be local portfolio trends. points a transition the basis small could down do we So, XXX guess,

Chad Vanacore

difference overall think we about – What’s dragging the how transitional the core You down the should performance? and portfolio? that between transitional Alright. same-store think is that between NOI

Tom Herzog

by throughout single-digits get of positive just the sort more is just hopefully down to low better show the XXXX year-over-year a X% expect mid-point, said number that pool, would We and I of end portfolio XX%, and be a roughly in then and XX%. nice would better year, large the core throughout XX% let do yes, the of bit bit the you likely year. from bit, transitions negative very of likely basis There’s a them mind whereas pools. A If But that small worse, than with X% quarter-to-quarter. very the are know. something a differences that keep a the again, I’ll with portfolio it. core core And will of is keep start at changes, in Transitions on bit. a saying lot but we’ll pretty it, variability out both

Chad Vanacore

in about it. ramp-up second that just seasonality recover question Got expect How that half. expect faster Should half trend in be half? we in should Normal well, kind dip the that. then would the and one a should then second year? the And think throughout we of a we or the following final first on

Tom Herzog

quarter days daily is rates paid mean, are there hourly in the monthly I because fall a the is an to tend basis, first whereas and quite usually it on first pay from time good – you same housing quarter expenses occupancy so fewer the and Yes, NOI At does standpoint, senior seasonal usually. most in quarter. or are for the

NOI strong occupancy. see So, even quarter first we as the quite on weak on it’s though being usually

that somewhat But it a terrible see necessarily wanted point to to the I first going out actually quarter. If be – I we counterintuitive. just it’s quarter aren’t anything, So, might okay. be that

Chad Vanacore

Alright. the in queue. I’ll Thanks. hop back

Tom Herzog

Yes.

Operator

your Please question. question Jefferies. from Tayo next from with Our comes Okusanya go ahead

Tayo Okusanya

Hi. Good afternoon or morning in California.

Tom Herzog

Hi, Tayo.

Tayo Okusanya

this said you or annualized when is an kind in about, – was million portfolio. want I’m transition XQ number? of focus but making to from this be million in that cash moving the and you a if on $XX all of you could done, could potentially me NOI SHOP said talked wrong, $X that piece Still ‘XX, The and quarter correct idea of NOI you in

Tom Klaritch

roughly are clarify XX pool. properties, me of in are because different let XX and same-store components. the Yes, those transitioned there We

So, XX pool. roughly there in are properties are not the that same-store

of fourth quarter. around is So, million the today annualized out pool that NOI the in $XX

million, if it up So, it’s we million $XX think annualize to there. closer there’s of to you $XX from and upside

Tayo Okusanya

$XX okay, plus non-same-store? million same-store quarter So, is so both the a the for

Tom Klaritch

Correct.

Tayo Okusanya

$XX And you to then the million the that’s whole year million year gets and a a for Okay. $XX upside portfolio?

Tom Klaritch

Correct. rough Yes, numbers.

Tayo Okusanya

excellent. Okay,

to a little this what $XX what in gain trigger? this points has OpEx you from move could occupancy? basis about to to reducing Is just Now, is happen $XX like XXX million Is that talk million? bit

Tom Klaritch

roughly from the Yes, mentioned ones And including That the transitory X,XXX occupancy. basis it’s call million recapturing ago. in NOI lost and years points eliminating from transitory primarily we the recapturing when $XX of portfolio about earlier down I eliminating X expenses. the the talked mostly was is expenses, the recapture, then it and occupancy

Tayo Okusanya

it. Got

And on could big project you a the Okay, of this Could it’s with time? thank great side over kind starting kind you. about off again, them. become of us potentially HCA kind remind to how see then things, the and again itself relationship of of

Tom Klaritch

Tom Sure. goes is many, years. again. many This relationship Klaritch back The

In And Properties, MedCap in in together office spin-off Properties. XXXX, HCA’s for the building portfolio. and ‘XXs HCA which then put back did a I’ve development MedCap look for the HCA personally, CFO was lot both of been you example, HealthTrust. we If HCP work medical helped of kind both and acquired

affiliated been ‘XXs. the I’ve company of kind since the So, late with

have So, we good it’s very a there. relationship

were about If then. potential what we projects at out a We the pipeline, talking projects, about would first $XXX million and started since right the given $XXX years. it X that’s the you years year spend when look we’re in probably was that grown actually in now to on the working what’s million X a next to program be on for to that million $XX pipeline anticipate

Tayo Okusanya

bit sense. of That makes

that’s it you. Alright, me. Thank for Okay.

Tom Klaritch

Thanks, Tayo.

Operator

Daniel Instructions] your Capital Our Please question. [Operator next ahead One. from from Bernstein question comes go with

Daniel Bernstein

out of and versus you positivity versus trying to Hi. for little longer-term housing. to senior the indifferent kind triple-net, bit your fundamentals – just are RIDEA different if mix Do housing stick senior structures for having or bit where given XXXX, peers then XXXX you which structure XX% other? to or around see the triple-net like be years – the And is X you were RIDEA me the versus today? are indifferent implies you’re Do little the guidance combined I’m of went we to rather XX%, versus years, reconcile more X one you very want to a going triple-net? you your SHOP you would it to guys a to truly you’ve we

Scott Brinker

to think Tom say interests I wouldn’t to and estate would indifferent. more We of in, we I that operator think that the same if put and into pull very properties has a property usually investment the be I We have comments it was, to successful typically it’s real time. start a between I’ll a the and structure. period and Scott, assets confidence triple-net. happy we’re over it would triple-net we to of we those can if it’s think structure if we’re that happy be well, be have Dan, align say operator an that was housing a do happy the into but interest, not we’d as RIDEA and high-quality structure senior long operator, as Hey, well. some operators owner high does

terms older a triple-net. to think in us would confidence assets, B is on much as make maybe the of combining. likely and in, that candidates structure for don’t And those more distinction be about more we I have Class real the ownership guidance think comment for properties more I and operators the Tom wanted

Tom Herzog

perspective we three et think is look want talking housing, lines allocation three from we the how business: those it to Just a last won along science, business. guidance, asset and drive perspective, look that the it tell at the about business. MOBs, been capital how X of the we’ve we is we In the across a years, you, lines cetera business, management really our from and did team And reporting about life We manage. that when we at reflect for the Dan, X housing senior we years. reporting I’ll of how business senior

to reporting reflected the So, information modeling the same any some for of we or At components. have understanding lose you not have did we to your want want purposes that did your that. time,

addition of between disclosure it And in of quarterly have of So, course, give to triple-net. information core, three to that you in all buckets we’ve same adding additional the transition, guided place, some way. we and left you the course,

thought is higher way that those a wants and that to at profitability that with came at we the it the useful at point that a our from have little vantage continue prefer we that grow little tendency manage somebody as conclusion So, it it and that look we continue around to to we more would of to with how company look bit look for a it detail. more to be

in is So, all that information there.

Daniel Bernstein

Okay. that. I appreciate

time, in I’ll think interest hop the I off. Thanks of

Tom Herzog

Thank you.

Operator

with go next Fargo. comes Please question. Wells Our from from Todd your question Stender ahead

Todd Stender

versus Hi, there acquired, yield of Pines just going thanks. assets Torrey were forecasting? the imagine at When Can perspective? Yes, South the fees interest. are you What kind going the and yields tucked be? for San just venture I you earning were a in you management returns some Francisco forward to you there me. on compare that what joint out partner you a what took you’re look quick you one

Tom Klaritch

great for of was use one. Yes, I’m that a capital take happy this We HCP. to thought

and We stabilized. these are are own consolidate San The largely of Diego XXX% in four to assets. happy two

XXX% in year They really XX% and or San committed. The in for is Francisco are been no now two undergoing had redevelopment leased there change the So so. returns. past

place fully So should be when rate that the about cap we talked in X% by XXXX. stabilized

Todd Stender

some tucked sound there Because management any I real you lose, fees It Okay. Thanks, imagine Scott. there? is? doesn’t like change in that you had will

Scott Brinker

was setup with that not joint a asset HCP years ago Slough venture there of was even actually that any No, Todd. Hey, about really Yes. and XX fees management that associated note. were bought before

Todd Stender

Thank Okay, you. got it.

Scott Brinker

Thanks.

Operator

from with Mueller And Michael our from go next Please question. ahead question JPMorgan. comes your

Michael Mueller

Thanks.

bucket in curious I have the Med Just on City to same-store MOB X.XX one, XXXX quick impact Dallas was X.XX a the for material putting any guide?

Tom Klaritch

material No, This it at it impact is on have all. Klaritch, Michael. Tom a really didn’t

just XX points. I basis think was it around

So, that it. was

Scott Brinker

perspective. it Mike, yes. the from more is appropriate putting we that segment Okay, moving the within cap rate – think a around

Class with a segment, it it in but office fact, cap go In was better away our building, typically rate under tucked might a rate than actually hospital have growth think It A that a to we medical getting in same-store didn’t over cap and we do and how that impact would XXXX. facility anything for of was integrated moved didn’t that it type there. appropriate it

Michael Mueller

Okay.

Tom Herzog

pretty with our that conference one portfolio investor a and a structure. special gems we few of it’s talk take Yes, it’s kind that familiar – one. worth in one it’s a understanding. that’s are future at unique of one minutes If you of and the about the not It’s should

Michael Mueller

same-store asking, rundown I think I other, were you you Yes. very good when for having about flagged because was that XXXX one performance. talking the as

you. thank Okay,

Scott Brinker

Thanks.

Operator

go comes with [Operator your ahead Please Instructions] Our next Green question from Lukas Advisors. question. Hartwich from Street

Lukas Hartwich

Hey, Thanks. guys.

how that XX portfolio portfolio? is assets, below far me, total Just for SHOP NOI so one peak the the

Scott Brinker

were I The triple-net generally SHOP those the SHOP XX assets then the lot redevelopments X% be about that XX handy. and don’t to very so the same-store sale. XX, and marketed number the you consistent below that can current for about conversions portfolio balance would a that that to those performed actively are to tell are at Then and of with are I in the NOI SHOP that assets, conversions that pool. same-store are there of balance have misleading of XXXX. are in being look in balance a assets

I follow-up more Lukas. with best the off but that’s can do my the can head, top of specifics, we So

Lukas Hartwich

Thanks. Great.

Operator

to for any remarks. like over questions. gentlemen, conference management showing would closing no and turn I this am And at to the additional I call ladies back time

Tom Herzog

your time and appreciate look to Bye-bye. today. your talking Thanks company for you continued interest and all thank we soon. the Much in you forward all to

Operator

Ladies do conclude call. thank We you today’s conference that today’s and gentlemen, presentation. attending does for

now may disconnect your You lines.

Healthpeak Properties (DOC) 14 Feb 192018 Q4 Earnings call transcript