PEAK - Earnings call transcript Q1 2021 | Healthpeak Properties, Inc.

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Operator

Good morning, and welcome to the Healthpeak Properties, Inc., First Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Andrew Johns, Vice President, Corporate Finance and Investor Relations. ahead. go Please

Andrew Johns

welcome Conference and forward-looking First XXXX Quarter Thank Today's to conference Results Call. certain call Financial you, Healthcare's will statements. contain

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

Tom Herzog

Andrew, morning, you, everyone. Thank good and

strong had CIO; Scott, Tom Klaritch, over are all COO; Officer our today to McHenry, aspects We communicated plan General a year Brinker, the with of start are the call few the we Troy available portion and and our quarters. Legal executing of call Chief the line the On me for Counsel. our on and past our continued on and and President the Scott Also and Pete CFO. the Q&A

the hit me high Let points.

of strong an senior core pipeline three of or Also, businesses on-campus off-market over closed expectations. ahead under for $XXX additional million affiliated and have of housing rental sales operations a under contract. purchase million we with billion fixed option. price acquisitions of of million We $X hard acquisitions. were or completed $XXX Our another all additional have We proprietary of sales our soft MOBs across $XXX on additional

projected Our a one our are Torrey new progress favorable. remained in development South And Diego, and interest Pines, Francisco start announced, leasing and from development pre-leasing San land pipeline in already seeing deliveries as bank San we densification previously we in added both. developed and in strong and

for As we of tender bonds. alluded to announced additional $XXX quarter, we an last yesterday, million

pennies stronger-than-expected our Our given very points by Brinker. With that, at report. Brinker publishing same-store guidance a commitment Everything couple of to ESG I'll by ESG over achievements. the well. FFO is midpoint. this to annual our the to progress, we decade-long continues progressing our provide will the adjusted basis Pete notable look midpoint it and and Scott And produce as guidance raised Later details. trends, tenth we timing and turn at operational month, transaction forward XX

Scott Brinker

growth I'll sales The rental strong results reported footprint, operating we're with Science and NOI. mark-to-market XX% leasing of Area, rates and San driven escalators, across saw Bay an comprise renewals. and which Diego by higher Life our results we acceleration of our occupancy rent as expectations activity above internal the on senior Boston, quarter, NOI were an Thank in investments. well our then provide you, industry Tom. start relationships Science, Life the X.X% same-store and on with very with first and We In fundamentals. cash positioned update housing

another XXX,XXX letter leases as feet square currently Our with XXX,XXX intent. of of into momentum we signed continued April under

robust. our digital XX%. quarter, commenced trailing of XX-month have We're renewals, on benefit Leasing escalators, mark-to-market as favorable quarter, feet initiatives virtual XXX,XXX to contributing NOI Turning to X% the than including leases demand X.X% Over by more for medical office. retention internal marketing forecast square the results and of rent renewals Same-store of MOB driven square expenses. rate grew feet The in increased on the a cash exceeded in first quarter. cash remains seeing tours first XXX,XXX our dramatically. the

Our is all digital will us. tour technology in COVID behind long three platform business benefit segments the after

low Turning sooner part XXXX COVID. December point across effective trends XX%, as NOI inflection growth rollout additional point quarter occurred strong we in portfolio points April. basis for initiatives. basis driven market nearly year-over-year XX.X% tours Entry and housing increased the 'XX. than are March The was XX from XX% fee digital our occupancy marketing driven vaccine and increased occupancy quarter in where first The and to expected continued at Same-store especially by negative XX in points a sales up to CCRCs. from the by encouraging, cash are by XQ support an The from the exceeded LCS, improvement. the declines levels

The consists of properties, pool first limits metric. just usefulness two quarter the the which of

just XQ properties same-store pool LCS The the XXXX. properties the Sunrise the become As result representative. quarterly a and entered remain fiscal year starting pool two in more in will will

were housing billion excluding closed recent at senior an are we additional lines since partners. joint dispositions. to NOI. hard on SHOP SHOP line $X NOI, on continue evaluate driven licensure The by of pricing the most revenue, letters a our agreements our We debt all remaining signed wealth our three-month of a venture triple-net time under of closing and assumption. X.X% annualized cap previous $X We in and CARES alongside rate disclosures. with The Act call. earnings cap contracts Overall with and pre-COVID with to rate and intent trailing sold Moving on majorities assets billion X.X% money last risk, or on remains sovereign purchase our properties

of and us, vast our asset of in behind transaction focus strategic able to segments, the opportunities. investments our to XXX% we're our sales core the now shift three business majority densification nearly With advancing

in generated to from occupancy the before Pines. San dig March in densification in interest development of million Torrey Ridge we $XXX high the projects commencement For the started million Callan example, have with Francisco foundations. Nexus we in Life tenants XXs, our the Science $XXX Both announced South and significant

feet totals XX that development completed than more also the Route the are campus We and XXX% and sits and XXX,XXX at Lexington, strategically leased. three at buildings across now two intersection square of XXX Hayden

of advance and on closed We Boulevard announced of parcels our existing acquisition holdings, close the phase continue land South on the year. should shadow April, this acquisition first with of The development In the previously we Combined heart we remaining densification in of Forbes Francisco. to our dominant pipeline. San the of nearly that later million landlord phased we and Francisco square of controlling branded the South project XX% submarket, in name Vantage. become remains will more. totaling in or robust, the lab prominent a inventory. the San X under development Demand owned site The highly XX-acre new position hold a feet

existing We ability submarket land have our over through bank time the and in opportunities. densification double to our the footprint

Moving medical office, we've active opportunities acquisitions, proceeds. been finding to attractive housing to redeploy in senior sale

so more seven-year In on expands XXX,XXX business portfolio Inova Washington, acquisition and in upside stabilized regional The basis cases, medical North Minneapolis. Chicago; in All describe life rate than our cap to with in assets is billion done our in the MOB In around on health campus Los systems, of Stepping asset The most for we proprietary Fairview aspect weighted the which is office, effectively Secours risk model, a a important leading of million. through one including the campuses. properties, is senior creates significant some the all in relationships. The Angeles we were location, execution, campus scale with today feet strategically adding housing in D.C.; and/or science back, X.X%. swaps we're MOB trading three several in executed and acquired with Shore Xs. other or year one XX-property unique XXX% April, high on Virginia; and tax a rate square where at occupancy with we affiliated for relationships cap segments eliminated Bon of is across lease Healthpeak a and have portfolio three and $XXX single average I'll acquisitions same counterparty, transactions. term. HCA our cash There's of timing $X

in campus. XXX,XXX stabilized square will the a feet Medical we Hospital own. our we that at market-leading recently a delivers rate, the X April, stabilized foot acquired a across up of feet people XX,XXX which including our we X.X fourth the And most market-leading quarter, this rate, to the a Ridge own for square Denver. cap square developed square development on City ownership XX,XXX in recently Dallas This top feet. brings square recall in that located And X.X% campus in existing XXX,XXX feet Sky You'll campus cap acre X.X Nashville, MOBs on MOB foot on that acquired square MOB parcel helped we expansion, recently, nine acquired already on X% is to February, a the in Campus of at million support that million Centennial

sizable health system is well, as opportunities, strong balance pipeline agreement sheet. for affiliation. a to good in including option results good position segue a with which We're $XXX to acquisition these capitalize of on is financial cover and an the MOBs Our million

Peter Scott

Starting the review on adjusted and I'll with discussion results, sheet share our growth guidance. of financial results, first update a today activity of recent start as Thanks, blended per and X.X%. our XXXX an of with Scott. financial same-store FFO we our of reported our quarter, balance finish provide a $X.XX with

of a of $X.XX approximately for In XX, representing addition, first a April quarter. ratio XX% declared on dividend the our Board per payout share,

we sheet, EBITDA the ended with net balance adjusted of quarter our with our to times, to X.X expectations. Turning line in debt

use our senior near-term debt. proceeds previously to intended portion a to announced, we repay of disposition As housing

cash largely repayment are or quarter, of completed further planning the the XXXX such, repayment, purchase years. average to XXXX. sheet. bonds, housing Yesterday, million senior maturing to dilution As $X our has first completed the tender debt that bond during further repayments sitting we in $X.XX of the from billion beyond up our to weighted we allowing us on minimize any $XXX billion to announced. the offer improves balance improve of dispositions $XXX forma million we and complete, XXXX bonds maturity With now and been X.X for announced our Pro not

we Turning of the and segments our with performing year to note all a Scott our initial on Tom guidance, expectations. mentioned, above started as strong our have

NOI we at to growth $X.XX decision an X.XX%, result, midpoint. X.X% increase revised X% per Blended to at the XX midpoint. to to from the $X.XX share made points follows: guidance the same-store to have FFO per $X.XX of an to a to share, X.XX% from $X.XX revised $X.XX our of basis As increase adjusted increase as

of level a components Let me our the setting spend revised guidance. major all minute

in range. strong our had we mentioned, First, In both high very see Life three of $X.XX end and quarter. the a $X.XX our increase segments, low an we FFO all across from Scott guidance of as to improved performance roughly which Science, of impact first

increase an We X.X%, we our to increased campus XX,XXX we year modest the some progresses, as square a As foot expect have to XX deceleration result, lease basis year an same-store of points. full terminated range X.X% tenant plus basis points. of at proactively do rent our as over negatively positive existing same-store our City by a within will it The to XX grow to portfolio. XX%, an Redwood results XXXX result mark-to-market impact but allow is downtime,

a comp. demand continuing for of an outpatient same-store In moderated, XXXX range started of Based beyond. provides full CCRCs, entrance are medical we a first to to performance. an the to had points. more a have have it properties uptick have same-store benefit we We stronger-than-expected due quarter to vaccine to the first difficult fees. X.XX%, and year are rollout Recent elective we the exceeding to increased quarter forecast, procedures year-over-year favorable, X.XX% and and success improve. XXX% open significant with our However, basis office, to occupancy new our with originally we earnings beginning on trends and year in seeing improved expected challenging In performance expenses of see increase with are leasing the our XX

increased we the million of guidance portfolio LCS As a by midpoint range. range and have $X.X tightened the our result,

assess at are While as current we the pieces, still with lot still bit year seeing we there trends and progresses. pace, perhaps the moving our a forecast, a continue if the are ramp will conservative of to we are

Second, FFO from of to and timing the amount $X.XX see an acquisition $X.XX we from the proceeds. of increase sale activity roughly reinvestment in

an million, We the million. $XXX of have our lower to $XXX increased end of guidance acquisition increase

the bringing all a our our back assumed plan to X.X debt, reminder, of activity EBITDA at debt with times to issued As funding newly end. target net high acquisition

pipeline has we now, our the so have kept stay tuned. our assumptions end of high acquisition building, For although unchanged, been

portfolio additions. and the we last Third, completed a the XX repositioning with review operator, to the portfolio. provided winding have ticked item bit, our we increase the of key of our line Page so Interest XX Q&A, table our that, before to On up issuance assumption. comprehensive basis realigned rates summarizing our One a Q&A. our X.XX%, increased for have supplemental, have a supplemental prior rate open points down, an from of disclosures current let's expected With we

Operator

be will now question question-and-answer [Operator will the Yulico from begin We Nick The first of session. Scotiabank. Instructions]

Nick Yulico

question you're And land how on of the markets. in seeing lab particularly to yield development, stabilized a the what get Just is achieving first about hoping also life the bit of on then terms an you're update your space thinking in science development, projects underway. on

Scott Brinker

percent the on cover really Tom add. pipeline development to our densification to two well. something But eight-plus Ridge, and yield that, is a bank, most have underwriting which Scott recent may here, I'll that. from as the an additions We're land Callan

X% just year. project to owned and market site, mean, a the through that able have couple And existing We at land, we've will the for still trades for X% a significantly seen value from to range, the recently. cost probably that's we've land realistically is probably on are building densify tenants of by quarter Now that in this the the that time the return current third of June. helped long in fact I start

existing that the bit would land. The second higher South had had pay project for achieve underwritten market in a the we strength yield Nexus is that San we if lower, and than recently little to is building. announced we there what still current value certainly although in we In the project, Francisco

early now We'll complete. XXXX. soon. now start or deliver that's quarter It's shovel-ready of probably site and obviously construction first should second So

good come And feet in land already intensification really lot terms the And on disclosed then interest square feel upside probably exceeds we supply/demand next, X sides. two shovel-ready if both given the versus The what So about on we're bank projects some opportunity are both that giving the what land dynamics. we've there's anything, yields of could today, of probably two priorities land Francisco, we the million we control. discretion. San in highest our essentially those sites, those And in at in South one feet. That shovel-ready. Mesa about in sites could totals of if square one start are Sorrento San really decisions. projects XXX,XXX haven't we start but Both Diego. that commenced, Tom, start seeing you'd made any just significant we other momentum on anything be it and those the go add? We we that ahead may well, as final And a

Tom Herzog

market, markets. or assuming yes, range markets. land point that's that at that say basis couple closer is a is we to probably Scott, cap things would Nick, land relative spread market, of those rates that probably in that to in XXX at XXX hundred how is And as competitive, XXX can a think year it point of knows. very But XX% But that's to couple It's it in spread, with compensate you our that got produces basis regardless risk really I spread significant the those is that encountered for funding bank you pipeline the a the advantage the that versus But accretive three markets when in yields strong well-positioned locations the we've XX% rates in to the a cap probably need will about have decade. and very land good-sized much development. even to drag bigger the think costs. and one land we core create NAV over really next money become we think about has which plus basis to we points certainly make densification everybody

Nick Yulico

helpful. That's Okay.

of bond the just activity. for dispositions, your Pete. tender, we're this make quarter terms is seller later But we netting of paid in question the about expecting million off year. on the maybe other acquisitions, plan, get think, second and also, correctly one then your understanding of this to you're the Just to balance that financing sure I some to want I sheet, get cash. to The $XXX

based trying taking as funding. Thanks. where your you I was and understand you now cash development well. to everything terms announced kind are up just know to of and mentioned of guys debt So right more do that a acquisition at also on in position go

Peter Scott

a in there's few items Yes, there.

current balance, quarter we'll that there's getting it, times the When call That's at what acquisitions, our close guidance. down $XXX would to built around X.X of say today. net we you revolver transactions actually which is still, $X million EBITDA, high I about regards other the think just mentioned. you I And the debt end million. at our come billion. back ended about about some into with to our think we've got That's plus we've $XXX tenders to bond of got

So revolver are I said, some in with our a And floating dry low feel I the revolver. built that X we leverage would times. where will debt the rate and the us about outstanding perspective, from tender from like powder around Xs, quite that's we into say amount on take down a because have good we

capacity million $XXX I about hopefully, on you don't an that's of any And take so helpful. So acquisition questions it from perspective, line, have to happy that. additional know if off

Operator

next of be Markets. from KeyBanc Capital question Jordan Sadler The will

Jordan Sadler

touch base good on Thanks, wanted I pipeline. to the acquisition morning.

good early looks be You guys a to good opportunity. like got off start pretty the year. seemed to pretty It MOBs a in

Just prepared curious rest flagged what your like Tom, remarks? this in the of you, looks pipeline

Tom Herzog

that. Yes, Jordan, on a few thoughts

sectors all very looked as a to us which on the been in So at. and the life land deals MOBs. of you've The well-located deals purpose-built science lab we're we've strong the both core transaction auction driving auction market in for currently down science pricing, markets the of maybe sure all stand I'm has lot of for opportunities and seeing that caused major life seen, has or

this us However, have our densification is, embedded plus for premium our the given in we locations. view, is land opportunities

But about high-quality in been to it's that opportunities I those side. that pipeline look also that the markets. especially auction if relationship competitive done for past driven. the decade And of been value the MOBs, entirely the have months. increases we've really and the challenging, completed land quite we all acquisition in several as got on have off-market Well, is MOBs deals just run that our a of So given

So front. good we quite on that feel

And a service we've lot each we bank build, with for life companies We're find deals CCRCs, our segments competition there, it's versus more major years. there's XX and it their of given a inception science in to stabilization X- buy and So our creates that but on build think building where to we want primarily period. capital about out blend got some partnership a for got the from those to build buy position development in opportunities generally relationship-based years partner yes, and our us. then yield about which is we've XX-year a natural And counterparty that also the have. campuses of constrained think densification I are three being of health time, buy versus land given to the a billion when capital where sum Jordan, build that our MOBs, and objectives, free. value-add as that it's value typical been three great the land in about has probably the them as to reduced $X.X help long achieve over a their delivery for up and where CCRC

that, I one it. that those to So components just all probably if would remark be was summarize in

Jordan Sadler

terms assuming sort the as relates tweak NOI here? or Okay. to revisions of expectation it So from year, sort what's your And LCS maybe upward of occupancy maybe of thoughts for on the in you're Scott, the to then what in embedded? guidance Pete the

Scott Brinker

just million. have Jordan, you to the start that the annualized $XX add. with reported, look you you NOI come if we can to Pete, may But at and first I about quarter, up that. something

year-end. is just we Our the particular, do guide range in we're fairly increase million materially improvement we occupancy to we saw XX%. in is but expect quarter, April, $XX in we through The And gave to above expecting XX% Today, $XX will that then first continue. are to the And XX%. new that million.

bit lot debt labor. the believe in is. in thought, and the upside were did But you lead a there's we quarter, that to might have even that some NOI quite than maybe insurance we of lower that and first a and bad expenses including So there

to make the So And the on just understood the shake exactly year. balance the out we workers thing conservatism other the wanted is we little maintain bit merit that of be expenses of tends increases a to sure for April to how X. would

and meaningful XXXX. in impact balance that the year So the that number is will obviously of

So hopefully, that helps.

Operator

is from of question Sweitzer Amanda next The Baird.

Amanda Sweitzer

biggest in think your segment made you Thanks, could that terminations, life science On outlook areas prove you're the aspects the beyond outlook good today? and your uncertainty morning. about underwriting And as conservative? voluntary thinking any where that there are that of are are

Scott Brinker

could start portion there us We've in that. that of upside of would that allow I with achieved some leasing exceed in We budget. always a some can our the be and speculative underwrite that, number XXXX level good the debt, to guidance.

their So and we've anything can on be do close upside should from out we pretty already, leasing to existing we sign as year full achieve leases. convert here those to especially LOIs if

on the have On sure, there how quality credit lot course, today about. managing great. but we're the mean for just less in number past tenant we're would small actively sector, there's number. doesn't than from of not the tenants years been portfolio, the concerned are money longer the couple that much no very, watch has of today. list actually very ago, given It's a of tenants list, raised a Watch the It which and is risk been a side, few very

average in really biggest The And those XQ X% good feel when at for So is just XQ. you the same-store from about quarters over probably coming XXXX comp. that the next three this are reported we're the challenge sure, the year up we We a to were up look bigger growth strong very against on variables. environment.

a comparable be against. quarter in very And addition? that have may that's up we'll difficult So Tom

Tom Herzog

do we for Scott line have on but -- want questions. the don't I

San add briefly, that and color, Francisco, that two color. and life science that co-leader on Diego seeing for you Scott, think plus. know I Mike for Any of for last would been just there quarter you're Boston, things are then have San the

Scott Brinker

ahead, Mike. Go

Michael Dorris

even had we a I'm San we're good terms hit, seeing just talked leading increased all those we a So the on net lot on if that Diego, And down velocity the really capital venture rent. the you last in to are happy Sure. let terms of again certainly market raises, feel and year about absorption San quarter in records we that based market standpoint For in first of from indicators talk Diego. I'll we Boston. about do to track fundamentals San potentially and here about Francisco so Scott,

Scott Brinker

No, I along would be that, same think to agree. go for record Boston. you're I mean as with tenant I continues significant on levels, would just it. comments I the fundraising follow demand and at well Francisco those San to seeing and

have certainly some So I we're today. showing do we think numbers in the upside

Amanda Sweitzer

That's than to slower guys I your amount then view in? seller of repaid expected. was Is financing of bit be there you any helpful. finally, stocks financing change of a in those think initially And seller collectability

Scott Brinker

No, I that. cover can

to that that still seller expect pretty in got in it. we repayment held do or financing. of lot still that's and we licensure closed. They receive that still big prepayment purposes. done, once one prepayment two of And a material There process, pool gets have We for are haven't properties expect that a up

by So under current that the discussions. half million. the about current is based $XXX surprise repaid got today It us balance on of in if just year-end wouldn't

Operator

The Rich with Anderson SMBC. from next question is

Rich Anderson

perhaps it in tenants renewal you of because nervous rents process the How coming the to feel much is early early gets in about on a So bit growth you the worse want leasing life activity. of lock them? before your and kind to for can total about science, of talk little

Scott Brinker

fact, by two renewals described XQ by in so you that space. just tenants much driven wasn't renewals. Rich, it's as more in the were, Scott. Most It of more early and wanted what

plus those. did expansion we on both mark-to-markets So, an a at renewal of

many more that's for renewals, what's just driving standalone early renewal. have us So as don't early a come to we really

Rich Anderson

a time? with question for that SHOP me is well? keep the that you long to opportunity Okay. the through on is just And Or partner something probably the is of to the for some there terms JV, as then come exposure lingering sell of to kind second sort your an

Tom Herzog

assessment. to do that that term happy very to sense, most partner. that if and them but both what identify them something a also happy something It's long currently good it's Rich, We're for different. solution working that's a is with to under hold works We're makes us. the for

can a on this say moment. that So at right probably I not more whole lot

Operator

from question next is Capital BMO Markets. Sanabria of Juan The

Juan Sanabria

Just hoping rates bit about markets, science whether an just in to little just acquisition at in research set. more markets new in the to how cap acquisition talk and/or given the either of explore from three a York your look opportunity you're tight life triangle business, university-based And City appetite New it's perspective? are kind the

Scott Brinker

done team acquisitions Tom And have have billion speaking. life more. $X Scott Juan, past we But may science. and almost the of over the two in years

and that today about at of really available pricing we certainly not transactions types good the aren't particularly those. feel we Those So pay.

and play more Not has The life to we those. sure, in areas market aren't of hope or many there oxygen that strong, and couple the pricey. a business we're a surprise. gotten can in to partners be of fundamentals we tended the Now are fronts. But relationship-driven, really on for They active find science. pretty

see valuations increase not the it's surprise a so So dramatically. to

time we add life to makes So that for more thinking in too sense. and densification, you'd anything that? because certainly are spending one development looking of our but find we're is Tom, may we science, about there acquisitions active in

Tom Herzog

out If we're looking into whether markets at a of various competition Actually, have at markets, new of We the it and we market, we core competitive three three get to coming about new advantage. always slug there we one, probably in outside markets. We competitive looking have secondary break some when we our in heavy everybody think, these supply, advantage else. clearly don't. with is

is new fact our interesting an we is Brinker, I it the XX% amount had seen in develop within are from existing had leased I of then space somewhere if range properties I that new think the that tenants that in And Is majority it stat was wrote that think that right? something the plus it leasing up, of Do that accurate? have maybe I tenants. that is that up space. our the biotech our you as or XXs growing written new

Scott Brinker

the in it's mid-XXs, Yes, Tom.

Tom Herzog

Yes.

can, lot are advantage and keep for us So when will bank big you where a then have at we -- in a one, that these that good-sized pretty to us a appreciate for in. keep It's markets competitive that point, while busy probably others a a for we've huge densification the that that scale. will land busy break longer got trying

focused highly there. we're So

Juan Sanabria

the just second MOB two assets. increase bunch And to geographic footprint. on where markets local question long-term look or portfolio, at you one Would the if Great. the then be a of scale? are goal because most vision have markets your quite There's three long-term And markets, thinking top or about so the on that are as of curious your just dense you four not as how some there. of approaching I

Tom Herzog

Yes.

formed turn in need So number and But massive think Rich. hospital each be line how was decades markets. a MidCap they to two we'll or that strategically. the is carried strong market, systems we one it has bottom number he on it as about be for to with forward But it to impact

could you maybe color. give Tom, So some

Tom Klaritch

relationships those look relationships markets with we've XX% and you Sure. either are our affiliated, acquired maintain portfolio, years. And or Juan. those systems how and driven over the if at on markets. we our Typically, buildings our normally, by on-campus the health at we're

system, and move we -- them. over likely to could expand of to those. the I but good a going with going we we're Probably or would two, exit some are basis. next as those look if So on not love in us to not for good market-type we they're expanding them, we and typically see markets do opportunities sell year forward We a to

Operator

Nick The next question of is Citi. Joseph from

Nick Joseph

MOB the about having that the you've mostly being and done talked off deals market. You pipeline

So sort off do open wondering, versus market? I'm yield what premium of those you have hit if the assets get market

Scott Brinker

Yes. auction. up going It's hard Nick, because say, to to end an not they

sellers So aren't opposite that the big wouldn't of think to it's reasonable who from a I discount. side if table. we're the on I going were buying we say accept we sophisticated know to

way able we think makes fair going some with more really particular case transaction you're to in the health both in material parties. there's that system, about create it ensure So for the of I that market office the and relationship is a a medical way We're The sense a it customize to valuation buildings. forward that know don't is able discount to value. that

versus an So on auction. doing are there's I more slight proprietary difference margin, drive, in maybe probably that and hard between that it's points an our auction at a points a the really an than an the ultimately acquisition basis view, think between differences valuation the more of softer on off-market the things important transaction,

Nick Joseph

then densification. on And just

You at CCRCs. talked opportunity about the the

you As at there, think the we recovery that actually about do look how executing opportunity? on

Scott Brinker

Yes. I Scott mean Nick, again. it's

least acres than XX have at campuses, we've or could those planning on acres densified, campuses what done those some more or occasions done. six properties. five level There's around We XXX could XXX actually across that be be of

particularly could least some or be decade, opportunity look level I would So memory underwriting. a independent campus that of as we some it's lack campuses. two the that or care. it's a in In cottages an which if would living continuum next lack year of at over high-rise. cases, actually we've out or the full But more to that building done building densify first assisted next some particular view to of more In successful cases, happens care

to that a over time. candidates It's probably X combination campuses are it's good So XX across. of things

Operator

Steven question The next from Valiquette of Barclays. is

Steven Valiquette

A couple of things here.

point a guidance overall and with on small only on part either congrats already First, XQ results to NOI. the behind I saw strength in to on of be the it's the some a in CCRCs, or of was supplement a who in quarter I MOBs the this and just seem and the guess it inflection the occupancy does XQ that occur peers question year, the point curious late first so science or in the life But for inflection in recognizing quarter.

payment, it's are Just maybe that curious for the larger upfront factors other time within whether line what longer slightly because with longer move-ins time the component. for some of drivers just CCRCs, a closing

to around quick hear thoughts curious that. Just your

Scott Brinker

the the time our to occupancy Yes, December XX outlook points. actually is conservatism because some it's March there Scott. And up in probably basis frame, is in CCRC

then in were actually basis well points the up housing, another point senior ahead rental was So inflection April. XX we of and

continues. that trajectory hopefully, So

Tom Herzog

guidance how Pete, Scott, looking just thinking moment maybe you and about you at take as you're could a were CCRCs?

Peter Scott

Yes. just Steve, touch mentioned. what Scott just on to

this actually the the Perhaps occupancy relative upcoming predict, that's in in would quarter those you think in first a little our say annualize the conservatism But quarter. performing is touch inflection guidance. well quite hard you results, we're supplemental although when about end XX, CFO we're on didn't tracking I it's there's If our high the to Page some numbers. occupancy, because we on to just

that. doing we better big actually beat just moderate. rest a expenses as at of is So again, the Brinker the year, a in first well quarter lot bit than that And was as expenses look seeing driver big a of that moderating. the as said, we're And

maybe some right guidance in but again, in what's there, we about So conservatism quite CFO good now. feel the

Steven Valiquette

into completely potentially question, asset to assets Or just on any whether ever earn-outs there wash around any other mindset these would I question other senior on a negotiate CCRCs, was housing process occupancy? sales to your was just consideration from housing move I the guess, senior in entire course. to than least just you One a some the of that to at before more recovery potential Okay. this the real your of there have of of back quick hands your to was participation moves the come final rearview part mirror. curious

Scott Brinker

Company three have the manage grow plan and and businesses so in about trajectory. growth an the clean with we're recognize talked those, exit exit change the the on if the that could going have a we core We our to -- a for move and balance and that moment we sheet business to forward

hang in not did order deals, modify want they upside. pricing, potentially we don't some no, done an to complicate get to So to of kind on hang on try to

Operator

question is Malhotra next Vikram Morgan Stanley. from of The

Vikram Malhotra

Just bigger maybe ones. picture two

focused what started off-campus or your dabbling on I'd also on MOB peers of side, have First, call the recently off-campus. some on on-campus more who've

more done it Some have through them more selectively. JVs or looking at

life wanted would -- the on sense term if just I you're seem us the you sustainable kind of near quarter. give and just results would out, And how basis? for this then some on to NOI the envision base you could thinking further looking strong. improve color of were grow just demand remains specially business -- kind same-store If what's to get given a But MOB kind about on one of years every trajectory supply, science, three not? at or tight So your more why the to potential second, And off-campus even

Tom Herzog

Let's on And don't your with -- start one, Klaritch, start MOBs. why view you will that that. on

Tom Klaritch

you just physicians, predecessor over either a to we the on-campus departments about and the if off-campus always hospital, country. perform off-campus study obviously we might of -- you outpatient but treatment strategy part on then had XX-year hospital when adjacent fairly not close good pretty off-campus. consistent, those, employed hospital frankly, affiliated, they also period, looked cancer a Yes. also as at look, the such that, in while we quite building or in service outperformed. did over we over imaging back time has whatever make Off-campus they as XXXX two as the fit relationships, our We a as adjacent, that period, XXX on-campus, up growth but in recently, sure into our the But on-campus like, was quite on-campus well. as or one Obviously, than we you of develop Thinking certainly which surrounding them, did to wanted number look certainly with started has quite outperformed heavy number We of top have a better company, been properties key focus that to affiliated or our and in end off-campus, And frankly, area. and which want on-campus MedCap also unaffiliated that hospital at when are our presence the years. with it the always metrics.

classification we do move forward. So certainly that look we'll assets, we and to continue at as that

Tom Herzog

of in we would of, with call to a assets, unaffiliated I we've NAREIT, over of in you structure a real studies we're on-campus, going to some clean provide it, summary and show and add strict XXX that, time how some the a in prolonged assets that go to these were affiliated some group do a measured. intend off-campus, to of portfolio very results that period and very done

has results that what think. you and assets bring on-campus those results whatnot. more unaffiliated just to don't better we'll find second is affiliated going go results. pools You pulled in you're Off-campus a The produced get that vacant areas. would that out the the been biases are of think has and I and But of And steady are much the third.

So tuned that on one. stay

Brinker. and you're Vikram, couple you your The second correctly. supply the to that years the so, out, around demand if as we pointing years, we question was question life had I out, that strong, I'll look do if next captured three for think it looks science one of And think turn about how as forward I quite but

Scott Brinker

mean our high I yes, Vikram, today occupancy is in the XXs.

of although occupancy. to -- of average feet, being to with say, business. source office in just today. run certainly in there, is medical than, the escalator rent Xs higher an size easier not low frictional leases upside There's so vacancy arguably, big So less of consistent the a primary, the high the with XX,XXX there's ton it's growth. most a The We're

in for, don't know, low, So given The rents bit a that that in markets run. should row. portfolio in mark-to-market much escalator, three range. than being certainly That's faster all rents have with five they XX% continue. a is somewhere current our so the I continue it's And which at least to probably the have vacancy much continued growing how across possible years conservative will

expenses exposure operating So that's of Most probably blocks. ton a of we anyway. the leases are the building have to so don't triple-net,

Operator

Capital Markets. The next question Carroll RBC is of from Michael

Michael Carroll

one little any some done of clusters? have need to a that some you projects? are activity? you How life in mean break about the at your to science just in know new have an spec either leasing Or clusters. willing talk bit ground of overall you market? have I willing to I developments you many in project going activity do in start those those second Are you see do three each main of uptick to one on. on a one want particular to I you have

Tom Herzog

both. of we've Michael, some done

in things come a spec put heavy-duty touch these out after feel do get points to can shovel and market current leased. the when with begins. we quite something in We they spec, in least the the we ground before their out Sometimes all can come the convinced they have and that pre-leasing market we and that demand the on supply that at work find

We lead would we we little bit Vantage ready Directors a to strong, go we and or as go heavy good outcome could was leasing probably and could even in Boston really as the a a or on Place. actually set now anytime feel on called Forbes We're that third projects and where us. pick all quite soon up time that looks to and previously one build-to-suits longer what for that's up more have couple have a And be pre-leasing.

they're quite great will for be a outcome dilution That from yes, pull produces couple as it the So from long trigger the pre-leased. we because on us. a will as drag small the or it more

Michael Carroll

that And deals? to guess exercise a $XXX might one Can bit last think we mean, should I of lose little those those talk and I subject are how for that is a option that? you me. a that going Or the million big systems we about purchase MOBs that Great. health are risk Okay. to about option?

Scott Brinker

there's happen. mean something the leases more I contingent being risk health that system. always could with It's upon a signed

it, but XXX% we expecting can't assets. have certainly there's purchase until clarity So opportunity the we're on going to those I count that there, guess we're to

Operator

Sakwa ISI. of Evercore is next Steve The question from

Steve Sakwa

both traditional and private growing life owners quick concerns office any of sort of office on of your companies of science, in you hearing the from have One conversion sort I conversion? the about what do guess around into public questions. discussions science two we're markets the life

Tom Herzog

you and Scott, Why why off? that the fair past. start this a kick But go in go then to amount ahead Brinker don't of don't we'll have and done with we who

Scott Brinker

any conversions major across Steve, do we new We study carefully supply or include redevelopments all certainly markets. three numbers. those in

with any don't most just going a matter end the you're are event, of yet part. compromised. It's I projects product ignore some we more than and competitive a the mean somewhat to So in for up compromised others. how

up aren't better isolated not landlords but than Some and in bit plant some it core better other some the are than sub a be being end of going physical cases, others well. They locations compromised, and being pretty as great. others submarkets. at up ends the the In severely are to

emphasizing on maybe their markets. comment conversions black-and-white a much how specific with A and the and up make be commentary to seems on comment harder risk. that to to bringing overemphasizing market, weighted just towards it's market Class those we over but So locations competitive the end the products certainly, the to But I'll the are ask guys

Tom Klaritch

is Yes. Thanks, This Scott. Klaritch.

many, we've more there's as a Still In Area, read Bay talk as think not conversions, show of lot lot of a out started. frankly. of you the actually there may about So Boston, conversions I is action, think been of in in seen being not I there. -- Boston, terms frankly

But to lot speak. being converted been not and today. -- or the have of lot actual a there's from office lot contained of so think I that a a truly being words market flyers life science, of the buildings

Michael Dorris

mentioned. couple thousand in lot for But We've that of I a I Scott Diego, hundred had fuel up that. this you the kind square And But points. general, Scott hit we've think, of all little feet a San of of in sort Brinker, the Mike. market, has seen ourselves. in more probably is bit say Yes, would a for here than as down done

shipping opportunities of monitoring to make yields, you lot line But checks sense have but things closely. configured at terms standpoint, price you sort You we're these they a physical floor can that And of get can you got in to structural the it's from can it it being floor buy those stars the and that way the of a and such there. represent for in appropriate us. lines, something add a you and get facility integrity, heights, if to have get a very that in boxes to really can a receiving all where align the certainly

Steve Sakwa

guess, then and on how currently is and really are might rising going material underwriting? costs that And I of Okay. And seeing what's around What question, inflation yields? that you're yields risk kind you forward? things second development the to future impact

Tom Klaritch

Klaritch. year rolling during ramp at actually down. is to construction there, abundance up, pandemic And of flat out pricing been Pricing due as to the kind quickly halt, with production was bit relatively an little odd This construction had down created down. year-end, Tom kind and a It's the then were Things pandemic. along a ground of just the to construction things of and pandemic. an back been supplies production ramp shut hit then

pretty X% that, is out high lumber, demand of have basic have certain increases. But materials there, is of steel, flat. that. what categories So had quite because Lighting significant the seeing X.X%. all for increases frankly, we've cost had fixtures we're other been relatively Cement around

make up only at the the been of both the building, picking and at the seeing for ramping pricing, may although of So about we lot science as starts supply about significantly projects, again of construction X%. X% we'll increase production life and of getting XX% if biggest up, products, obviously it's a to X.X%, cost flat. about pretty again, supplies up MOB that see kind -- the has X.X%. normalize. since up up of on last those from which up significant the it's labor actually about that's February. the mixed two seeing probably a March, bag. a our at of makes cement you've that's and side, And fairly the have but side this been kind only tick of the the relatively then balanced, been this of been look flip also March surge the building, that got And And structure Still side, about construction areas steel, We're really and which think a kind you once point, are

yields of have we frankly, year did yields. ago. any And quite We're the rate kind a increases don't as see we major our life forecasting it a science, impact same our in still about been increase projects, the on matched construction. in So to

So we're pretty where sit. comfortable right now yields those

Operator

next of of Dennerlein question from Bank Joshua is America. The

Joshua Dennerlein

projects do or Curious, about you pipeline development pulling of forward like governor XX-year your guys on the rather? how in think the pipeline some

Tom Herzog

Is the I'm Governor sorry. of --

Joshua Dennerlein

do how XX have you forward on to science as campus? the about governor the over guys Yes, life pulling projects you you development your think the work years densify next of some

Tom Herzog

about the dramatically where densification pretty expand opportunity a for to it offering we huge older our the you're it's because properties, referring they're some and Movement if is the us. densification to, of how and that's feel opportunity fantastic what of

had more sense. certainly of the by on opportunity quickly add land South move Brinker, further makes a pressure to for parts haven't Diego, in and located anything certain forward we that? to of creating than Francisco, densify San But obviously, what that's Boston best San this us. We economic think some you'd windfall

Scott Brinker

we the Nexus two last months, between in I that square Director's probably If up XXX,XXX development announce XXX,XXX Those shovel-ready another of the did mean, governor conversation is about doing are the with more, Can feet and and and next. additional Ridge Vantage on Place.

because could is XXXX On we it the start soonest have just is really earnest existing that, the in densification, probably that leases.

us also plenty seek that's space. by and in of a time and approvals. meeting to And So there's that timing element bit tenants and of control a outside entitlements the gives driven interim their our

Joshua Dennerlein

these on Okay. to out have before leasing. the Yes, you potentially start I that any -- People knock would you curious on was a projects the down. move to could comment of made building

I science on something kind wanted side, I have on and your remarks, a MOB So all then, follow campus cluster campus invested prepared how cluster in life but you're mentioned does classes Scott, the up to understand help that mentioned you in the of -- model. side. asset a three how you model

Scott Brinker

Medical NOI as and When on retention, a a cases, landlord around strong drive town, two Yes. having City those if party. flexibility TK, driving And presence campus all at satisfaction you a not the things as or Dallas flow in just add when decades hospital well. we've for, mark-to-market, rates And tenant and have that? that Ridge as the Centennial, the time TK assets you to a against cash competing tenants over the certainly are outperformed. well greater performance around I'll moving more you or or owned particularly in thoughts like ask only with XXX-plus rental certainly you're his Sky assets third some look

Tom Klaritch

an could example. I give Yes.

of square feet a we campus, For square our the and and we Nashville, additional just now example, brand-new that XX,XXX they into the on of allowed campus in are space adding two major and to our that several have Campus needed XXX,XXX in on Centennial -- on space buildings other new we're the into tenant announced moving feet that building, buildings expand the one in building in a own that vacating. with campus. They on are about development, addition new another that's we XXX the tenants

move campus, life it's ability and expanding So some tenants most to science cases, around the let moving expand buildings but and you that on so parts, other contract, similar them to type into and they're in model. have similar and model, campus

Operator

One. from Daniel Capital The question next of Bernstein be will

Daniel Bernstein

And as everything I wanted the think to me seems there? natural you other land costs costs would and up that how maybe you on then on books inflation the hedge? is is costs? development steel, is have a side of on just to understand and commodity it follow land a else the the much kind consider cement, part better guess hedging I on of I development just like

Scott Brinker

the to it's on pretty variable move around well the plus parameters upon land costs development prices developers those and up XX% market based pretty happening are match dramatically minus, a That with or question with return, what's budget. specific targeting tend and it's of to and probably return again, land, construction tends land vary because biggest are. and rents where of the first Right, will

reasonable probably environment? the the for for the variable. higher that sure. last over line item is seen most biggest is It's normal it moving fluctuation XX% So course in the But a estimate we've a year, just

Daniel Bernstein

Okay. consider that I want but development so... traders, be you hedging a And of commodity costs have would involved side just development? you the to lot other on in you the commodity line, on are

Scott Brinker

all Yes. of GMP, contracts into these Dan, entering on we're maximum price projects. guaranteed

construction exposure. We have to much our proceed in were steel than business did So like don't a activity. ton we've we the But highly preordered otherwise, gone that have when cases, we don't at not really commodities. hedged we In of likely some Nexus it's ahead project.

Daniel Bernstein

could Okay. I then quick go -- And if ahead, one sorry. question,

Tom Herzog

to going of was like say did type wasn't steel, steel is it against. steel I several really of ago, it the that rolled which hedge we actually feasible. we is could really against, the that can you what look one things you into years wasn't And and more hedge -- buy

us wasn't So our to in construction. available really it

Daniel Bernstein

looked Or MOBs some in and And to one kind if increasing, is just leases into like science? question TI CapEx it related just And is was function of well? pushing both like as inflation increasing me up. the side as per could I of square a there it foot that there well, life was looked the of length the

Scott Brinker

number was comment a what this couple more on and speak of to that that's ask by was quarter comment medical sign office normal. Yes, some outlier it science life go long driven a quarter. higher that Dan, really the to more life do But We did you want Tom, and TIs an I'll science to office? to but medical science on bit currently on TK this we new spaces life than of ahead So more drove were leases office. were that leasing, convert

Tom Klaritch

to on and Sure. basis, that usually range renewals year of to kind Medical $X for new. per $X XXX for foot XXX office, range square per in we offer a TI typically

than One, we're renewals, That we had three because had little higher was typical large of items. renewals the $X.XX. for two a at quarter, that a reconfigured really This space. tenant

little So they We gave little pay then in a a that renewal expansion. we did was bit And more an a coupled them more had rent. TI. with

was it the we a drove though TI of -- the was renewal. even of price it called renewal, that combination all it So

out, numbers. And at $X.XX If new been right items much leasing averaged in is we've line in would so. you historical we past XXXX. around the $X or with been for have take year those two pretty where We the

there. off far too weren't really we So

Operator

of question Morgan. The is JP from Mueller next Mike

Mike Mueller

$X.X you in number you If changes the next Do that look billion at the either billion, development process redevelopment think down, pipeline, about up over number or now. $X.X materially, -- it's right say, years? five

Tom Herzog

it's those probably so the carefully increase five densification of think would development plays I we what grow, continues I out have the as to where see one four maybe next $XX redevelopment see the We've to I'll it call irreplaceable a XX-year on probably IRR -- lot But I although get got million spend. years. due that expenditure. Company you of don't these the on to in that's some, so questions Mike, and opportunities. think over average, think campuses, to the real have, XX-, year off-campus these lives, a assets they its a

economical when there the have in effort And really actually We've successful to with leases proper time are and hospitals coordinated so it it quite for MOBs. a turning. us it's

all with probably year. because funding that of is I there's know like every over pre-leasing. demand not coming yes, you always and sure that to and see from make we're I time, double see think going slowly to but and development monsters at looking We where development surprise we program down advance supply. you'll grow we'll the think plenty we're But

that we it carefully think way. can grow over time we so And

Operator

of Green The Hartwich Street. next question is from Lukas

Lukas Hartwich

front, acquisition you Or consider CCRC your the would is adding the to portfolio? On that off table?

Tom Herzog

can pick all, me, start at I'll then -- excuse the at Lukas, it table It's the up. and or not it's table all. not Mike off off Brinker apologize. No,

scale, you in it's business expertise hard start requires build infrastructure, a edge business real in that real to that it it really can't competitive a and have real by so We because CCRC development.

capital value-add, properties that not form really of of might on partner to that forces that are we're got candidate mission-driven growth us is and the those turn plenty means to up in their short So best in operator on that. to needs And for profits and funds, that and fully LCS or what ideal the join in it that them, business to be that stabilized some the with acquisition, with business there are want occur the be can through but retain we've have mission.

barrier stronger difficult. time case every We're than a that the deal, we'd do But percentage some than comes a annual be enter going strong, toward that that we other basis outsized darn to we that it not business do see no on like a bigger that is the probably so would an what today. to some is with we're to So typically make growth. business, is quite than activity it yield see really working just to entry

Operator

back would turn Herzog our closing now I concludes to for this remarks. question-and-answer like over conference session. And to any the Tom

Tom Herzog

Well, everyone, thank you.

months. Klaritch, and coming some the and continued you many, in today. thank virtually joining I if you events seeing forward thank -- First, again look the particular interest on other on of are not your always us to call NAREIT as industry Healthpeak. NAREIT And all the for this up We coming you, that do of appreciate at in

soon. we'll so to Thank you talk So all much. you

Operator

has concluded. Thank Thank attending now today's you conference all for The you. presentation.

You may a day. lines. now disconnect great your Have

Healthpeak Properties (DOC) 5 May 212021 Q1 Earnings call transcript