Healthpeak Properties (DOC) 4 Aug 212021 Q2 Earnings call transcript

Company Profile

Participants

Andrew Johns	Vice President, Corporate Finance & Investor Relations
Tom Herzog	Chief Executive Officer
Scott Brinker	President and Chief Information Officer
Peter Scott	Chief Financial Officer
Tom Klaritch	Chief Operating Officer
Mike Dorris	Senior Vice President-Co-Head of Life Science
Scott Bohn	Senior Vice President-Co-Head of Life Science
Nick Yulico	Scotiabank
Juan Sanabria	BMO Capital Markets
Michael Carroll	RBC Capital Markets
Nick Joseph	Citi
Amanda Sweitzer	Baird
Jordan Sadler	KeyBanc Capital Markets\
Steven Valiquette	Barclays
Joshua Dennerlein	Bank of America
Vikram Malhotra	Morgan Stanley
Mike Mueller	JPMorgan
Lukas Hartwich	Green Street

Call transcript

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Operator

Good morning, everyone, and welcome to the Healthpeak Properties Inc.

Second 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 that, this event is being recorded. to Corporate conference Finance like Johns, to now President Vice and would turn over the Andrew I Investor Relations. ahead. go Please

Andrew Johns

Welcome financial XXXX call forward-looking second call. Healthpeak's statements. conference certain will results Today's contain to conference quarter

in discussion we release factors results in a SEC. to Certain detailed press are and We on statements the refreshed do from to be are update statements. exhibit to differ the our reasonable filings with call any that X-K will to is uncertainties and A statements our forward-looking on measures based not risks duty forward-looking non-GAAP materially the this believe and expectations to of our may discussed SEC undertake Although, risk financial in any subject forward-looking yesterday. included risks reflected and assumptions, cause expectations. actual

measures We now our This G the Officer, to most have directly is Reg Tom Chief website exhibit healthpeak.com. non-GAAP also our all GAAP with over requirements. Herzog. to in the on call at reconciled accordance financial Executive measures comparable turn mailed I'll

Tom Herzog

good everyone. Andrew, and morning, you, Thank

On Pete the portion Also are our our our Chief Klaritch, me General We've call start the and Brinker, the Counsel. on Scott, for and our maintained line strong available CFO. and of and CIO; the the are Troy McHenry, our Q&A Scott President with call COO; and Tom today year. Legal Officer to

perform businesses to CCRC MOB well. life Our and continue science

Our shape. balance is sheet in great

redeploying Our strong pipeline. built sales have exit we proceeds, a complete, and are having from senior excess good success substantially rental housing is acquisition and

in expectations. million rental contracts. sovereign which all wealth businesses our all across the senior housing interest results were us first quarter will final were JV, the which binding $XXX Operating $XXX of of points. our $XXX activity high the another to hit of our under leaves ahead we basis. July, combined our $XXX acquisitions our in of down me done million with core sales, which to This and in are on with We're Let acquired our We million, year-to-date million an MOB to partner. QX, with continue evaluate off-market of which MOBs and brings all three

pre-leasing the market On favorable. deliveries, and science life remain dynamics, all projected development side,

second signed our due for the bond green Callan campus Earlier quarter, also densification $XXX our announced science in is full million senior And offering. development a committed. spoken yesterday, pipeline pre-leased XXXX, Gateway During XX% we for, inaugural Sorrento lease to active unsecured this project. Ridge fully life bonds, our or we month, of issued in bringing

progress, the operational guidance FFO Given guidance the $X.XX midpoint. at raised we our by same-store at by adjusted basis our midpoint, XX and points

annual our Finally July, tenth ESG we in published report.

global to and Our results ESG meaningful program produce recognition. and continues industry received

continuing initiatives Our decade the are our long-term support in with goals. our we've team improve very made over and the pursue at invest ESG last overall that and Healthpeak progress is pleased to and performance

everything is With that, turn So Brinker. Scott to I'll it over progressing well. very

Scott Brinker

XXXX begin breakthroughs development or all-time Thank at of and real lows growth Starting continues past are is driving on record-setting biotech and on rent leading provide activities. with operating science. update with inflows scientific accelerating to vacancies over exceed Capital fundamentals. fueling XX% supply are estate year. the market Demand to raising. XXXX then to I'll results records. you, and our capital an Tom. those pace exceed life saw investment more

and bringing XQ to growth under we large is for year-to-date a strong feet leasing from quarter, XX% cash growth of the off XXX,XXX developments. mark-to-market X.X% XXXXXX have and prior and new renewals, feet feet The leasing plus renewals new escalators, at driven free budget Same-store our of In feet quarter the July and XXX,XXX off internal activity, and on currently including full new burn renewals XXX,XXX X.X%. of already on by leases. intent We've feet a we of to feet of rent results NOI a were of year was signed pipeline leasing letters signed mark-to-market During of start. we in-place XX,XXX the signed new exceeded XX,XXX leases year.

discussed call to same-store year half terminations benefit years. the second we and to of in moderate As the on expect that the will last future do comps early due difficult growth proactive

lease-up is still outpatient payments us with XX% NOI plan. Moving trailing by these now the completed this $XX in current negative was at pre-COVID representing few Same-store budget. XXX for year is the returned quarter. benefiting already development entering to properties that recently full collections CCRCs total occupancy June. Retention portfolio CARES to activity XX% which bit are was by was With the quarter of had fee feet end. quarter the levels. our XX% highest NOI future. a parking driven redevelopment the more cash Hospital on-campus was low more performance have same-store strong to of June. indicators driven Year-to-date portfolio at by months cash than quarter inpatient XXXX feet outperform. to least we at ahead medical continues are significant upside this rents continues Leasing to XX% on we've in up growth office. a portfolio. ad where levels last 'XX. for recent received unique leasing to XX% leasing points level XX% declined growth XX in XX commencements growth We our completed million occupancy XXX,XXX Act and since payments the capture gives line the X.X% driven positive of volumes quarter. income. Same-store internal strong activity including Absent XXXX basis with onetime plus capture that to and have XQ This acquisitions leading and opportunity. receipts Note Finishing Occupancy recover. basis XXX,XXX and lease-up, March Entry This from the NOI in points were in was in

of on both we maximum all projects rental we in on project Callan We've to on Turning building rising Ridge very development so full rate underwriting development our our and construction continues price our exposure densification Lease-up contracts In executed signed lease timing. June, have costs. exceed limited active to guaranteed San to a our Diego. pipeline.

project square land. sheet the rental Xs term We $XXX deliver with San of the cost first half the low book development in to also gateway a the on in Diego. a million entire our based the signed XXXX expect yield we value on XXX,XXX foot of binding In for July, in

prices. play with on at today's to X% to on cost above If more core yields land expect the deliver of where range land we market, value we We X% to the our XXXX the a million at in in land. book the Those far rates. on construction in half achievable markets project of in mid-Xs is today's the costs mark based what's rental are yield yield first the $XXX our the and cost

MOBs medical to an Also The cap in we accommodate medical we off-market represents and initial feet X.X% million development. XXX% rate. $XX parcel a building acquisition leased our The in Wichita the in generally This on that Moving cash share that's HCA. In price Westside on stabilized million acquired Atlantic July, acquisition acquisition a New market. proximate asset leased Jersey. also up expands a on campus. rate to campus same one the Health. presence in located can investments. The MOB to is June, Morristown hospital campus is acquisition we that off-market in off-market our was acquired rate as regarded the in cash three of cap an existing hospital are Center closed included In this cash HCA's this expand the the a campus July, was office existing land the Fort number The Again, XX,XXX of a to and The initial $XX Lauderdale. the mid-Xs. of presence Medical X.X%. to cap square

we a to strategic available Against business using relationships opportunities development remain have focused segments. our across the forward, broader on compressing rates, our acquisition the market. create and of to Looking we cap backdrop not pipeline

business we all own. to We of next three segments, of on the our which already for also will densification across growth decade plus a be land continue advance source opportunities

come development naturally track. accretive Finally, value-creating are earnings we're that with immediately balancing acquisitions that short-term with opportunities

result, that ultimately opportunities The assets, lease-up yield a properties is plays. that, initial acquisition mix pipeline With stabilized relative and blended covered our turn land of mix the proceed. As it of will Pete. a I'll depend on to

Peter Scott

with with XXXX a review Thanks, discussion financial start recent finish our of Scott. sheet results. a update our on our balance an of with I'll and activity our provide Starting guidance. today results, financial

reported quarter, of For as blended Two we notable and FFO growth X.X%. the same-store share per $X.XX adjusted same-store items. of second

overall the pool same-store quarter operated XX% entered second First, of pool. for our quarterly LCS and CCRCs XX in accounted the the

grant mentioned, Second, the forma significantly as are in per performing. declared item of how our results quarterly of an the Board second payout growth CARES the portfolio quarter impacted CCRCs same-store we portfolio was share were blended in dividend believe XX% a AFFO more across the pro XX, same-store On representing for Scott Last grants Adjusting same-store for second of results. onetime overall Until full quarter operated of enter reflective the pool financial the $X.XX is XXXX. CCRCs received we our second XXXX, CARES year within July ratio approximately by LCS X.X%. our our Act Act quarter.

balance earnings in rate of sheet. We we call, issued green our million to five-year balance the loan maturing sheet. $XXX upon $XXX of of received X.XX%. repayment repayment last XXXX Turning fortress million completed financing early $XXX at the million completed a and we in to bonds our repayments. continue term Since of of $XXX million of seller our our bond We XXXX. maturing improve We

debt As with to activity, with our ended powder providing us a for dry the acquisitions. quarter sheet of we EBITDA of a balance result adjusted X.X times, net

slots maturities five-year We maturity have fund XXXX, open to debt February near-term with have XXXX transactions and XX-year debt. beyond, no us significant in allowing ample and until we XXXX and

Turning to guidance. our

guidance per X.XX% X.XX% our midpoint. to as X.XX% to increase to XX We per the revised $X.XX the share, $X.XX adjusted to Blended of NOI revised $X.XX $X.XX at follows: at an two are points increase basis growth, of to X.XX%, increasing an from share; same-store midpoint. FFO's $X.XX from

with the revised guidance. Let me FFO, as spend components a adjusted. minute of level-setting all major Starting our

grants. start had of We with the non-recurring share $X.XX CARES of strong to Act year, adjusted, FFO as inclusive per $X.XX a have

per have XXXX we $X.XX increased midpoint original to of by guidance. result, guidance the compared a share As our

revised feel it While maintain some conditions. higher end are we the the market uncertain trending given range, to conservatism, prudent of we towards our is guidance

acquisitions. to Turning

increased We of have acquisition recent transaction. million the of our closed guidance for increase our an $XXX to to $XXX million, low end account

our a get up transactions update further will firm timing better pricing. guidance and and for we We as sense

to we acquisitions debt intend X.X of fund leverage we reminder, with target a until As our hit times.

to CCRC. Turning

range NOI the million We $XX LCS CCRCs. for $XX are reaffirming the million to

been While last strong CARES it the Act have has performance costs. on grants. to COVID of too determined variant adjust and guidance, given increased Delta early uncertainty is One year-to-date, we the labor item

CARES have Q&A. year-to-date. reduced the we which balance grants upside the potentially could our $X CARES represent $X operator, year for We With Act for million would grants guidance to let's from Any Act receive funding million, additional we open that, be the have received for all of guidance. to the line

Operator

we session. begin will ahead. And Instructions] with Scotiabank. from [Operator Nick come you. will our Thank question And Please question-and-answer first the go Yulico today now

Nick Yulico

Hey, everyone.

you Are drove can The So year. it an Can what rents know I And raised that you also, over on for that? the issue? guidance next life for you grow give a can Is maybe a science spreads segment. re-leasing pushing lot quarter. on think mix just a you how feel you science. expectation us just this talk guess, rents just first bit life more? I a question about little improved

Scott Brinker

last quarter-to-quarter, Hey, from here. obviously are over been our the renewals depending which given It XX% couple Yes, on portfolio in Nick. the or is others. spread XX% plus to leases upon minus a bigger years mark-to-market than renewing, Scott, just range. are the has across of there that varies some

across look that do guess percent least were high-teens. to in And at to whole at where XX%. is bounce XX-plus But foreseeable reflective XX-plus future. could obviously, continue grow. that core supply We going This Year-to-date, the our the across probably is exceed of over see in continuing overall. portfolio the our If quarter the the that's maturity to demand three we as with at the mark-to-market years portfolio. that's leases to current we're the around. we But mark-to-market past in all markets growing rents best year

metric. would continued on we to So expect have success that

Nick Yulico

looking the a what's How obviously, have Okay, well opportunities year, sheet you we very balance you're beyond, acquisitions comfort your portfolio above in think meaning, even near-term about your good done how at setting guidance, think guidance acquisitions. thanks, range raising the into is this you're right about the Scott. just coming should portfolios, those any guys further that would way and job I equity of opportunity done. second a behind pipeline, getting guess up question up, as of I on are in your if your now? to on mean, to you interested maybe as the segments, hit expand

Tom Herzog

Yeah. Hey obviously transactions. our And relationships We've of acquisition number Nick its scale. different a through Tom. seen off-market have and driven opportunities

business. grow would I to long We've an see triple. past, to our goal We a got and doubles of of the $XXX to would that out as to do to floor to singles trading hit to opportunities be we're X.X quite a as describe EBITDA. I've premium question way. back in a continue and debt plus as exclusively expressed was out put continue your alluded I been comment think expect at least in part lot lot guess, at the are that I has to activity occasional debt M&A would there. with We And that the to I million a minus other of times probably this or to get net our funded think NAV.

look you come doesn't just think We're and primary our business it. at focus that we everything or I always three that is But core because our know to or look market something, that aware everything could coming we pursue we'll at market. could of floor actually development. on mean transacts within is to And transact on guys businesses.

Nick Yulico

Okay. I appreciate. Thanks Tom.

Tom Herzog

Thanks You bet. Nick.

Operator

BMO ahead. question Capital next with our Please And Markets. will go from Sanabria come Juan

Juan Sanabria

morning. Good Hi.

that. a Life strategy joint a Just capital cap about, fund low Science tremendous stabilized allocate chasing obviously guys thought the to looking Have sector where the a of on acquisition or capital assets? lower amount kind of you rates very market, could cap venture are to type at question for you a rate competitive,

Tom Herzog

conversations to years. complicates Tom again, balance don't And investment had these Juan if We're it frankly many Hey through sheet -- out strong there, balance is again. too investment JVs want it you the sheet. a an we've we XXX% typically Yeah, on own believers organization. that, the on prefer

that So much. the fund aspect up to us us doesn't all light

obviously, lot and business There where consider that foot-in. As to in we Bulfinch ventures within build science with an move differently of we where grow transactions into. other to partners we of easily joint There's and disadvantageous are within King element ventures, can our felt Boston there expertise JVs to we is tapped clusters. Street, needed our clusters continuing because Boston. that in properties from And with way in the objective stand smooth biotechs the get life was a joint JVs between create the that would interest And that respect. allow really to in

of side. the do that on something looking life not a lot to that's So we're science

-- those ultimately occur of, and side always own own relationship us as those venture joint is has that make with and when They kind XXX%. driven time deals, the identifying relationships. lots we're development where of estate to money. player MOB a if are end, the are some, deal the prefer the prefer get we the we they're typically contacts, with attractive it deals, Of a on They back almost, We doing promote in come a to real sense use can those the On business. well. their a might

think we are consider. something how not JVs and would funds that's about we So that

Juan Sanabria

want just I why MOB about, that and essentially great just a you're pure-play to the question internalization management that? of maybe regards wouldn't housing to that savings then about strategy, begun on those great. day And it don't and And seniors exited latest split asset curious cost portfolio? the now the outsource manage own Okay, end as the you guess just on you've on types. just you do your a the customers. and get think But that can you to with the there. curious your mean, between guys the relationship if how office I of and headcount. at you if two the you have management with But own not have company thinking to just I aren't think it

Tom Herzog

it profit. It's least X.X that of -- a years within study and Yeah. that at you then of at ask. ago, we people have we and of of along One, masses really how in you expert. of lot And turn could Tom you've causes of historically the start we But about at real time. fairly -- I'm much you've a a doesn't long and years distraction is a looked for done with something number to lot couple give end and I'm done glad profitability we've It's a it, K that Klaritch up managing on in in did. you many you times who's not looked system did just have that something concluded -- Maybe there a a who's going color we've a Tom bit analysis this Tom his ways the Tom to times. both extensive then has it Klaritch it

Tom Klaritch

of you Well, Yeah. Juan said, in there's lot it. not profit as really a

in So that's the really -- manage properties two at about levels. a it. really We talked how big look we factor relationships. We in not we our

with maintaining level. the ground relationships have Those XX% an oversees as And on team are at to weekly. management property a guys hospitals team have that They XX% leasing with travel really dealing we are out things and time the asset and and the that the hospital You companies the basis. management, of then major property field. on meeting the day-to-day leasing managers the much the tenants they're in agents out as with meeting a

obviously lose VPs, don't we side, major systems. have aspect myself our really we that are the So it. And then system with the of on dealing

So really well. us negative that pretty of And it a allows I easily. those to relationships. don't really see maintain move and to having as structure just We real out markets in

having at of with very all into took past issues and did and Street, larger acquisitions overnight moved internalize months If we have Midwest the to personnel you the couple would if you over management that managing look we those it. literally those properties, markets, Harrison the to without easily deal portfolio you in the, the of we're two

So, always that way. to I've and third-party the we'll just manage like approach continue

Juan Sanabria

Thanks and that's helpful color.

Tom Herzog

Juan. Thanks,

Operator

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

Michael Carroll

next? Yeah. leasing Thanks. you new project done in on that? Tom do what you willing a you talk you But on know out on job, San maybe ground Francisco or Vantage start the to the some would could on to site, has another life projects. ground little great Scott, science bit development break to Would South able be to Grand I breaking need have about Nexus team be or on can a

Tom Herzog

is real we're on bottom-line we asset. supply development the that grand. structure that some to We've hard. that activity Scott answer simple is, based the But Bohn see demand that in And and yes, is on would as fundamentals seeing. working another consider we we Well, anchor Nexus the like had progress.

So think to anything there'll that. to you'll be you'd add? come like I on -- more Brinker,

Scott Brinker

mind, momentum as space open more. as shore that at the XX for keep And very remaining or strong, Nexus reiterate the Nexus. the at well doesn't in another No. months just I'd is at

the of So we feet the in and activity. we're phase XXX,XXX of while site seek on well on shovel-ready To-date pretty entitlements. balance entitlements with that the we are Vantage, increased first pleased

building really we look And to position like there. our yeah, it. So market forward

Tom Herzog

people Dorris this longer us. also status XX/X got you What's the Scott generally with directly. than demand how Bohn, for you call from feel -- at on we're of last on you're the the read should working hear Mike thing a this? supply where in decade. your I about just think Scott We've Bohn,

Scott Bohn

Tom. Thanks Sure.

of XXXX and And And the coming in significant of is of a demand. So everything looking not to Bay are the the activity end really continue now call of or record on pre-leased. that's the it supply probably between side amount LOIs Area, levels XX% that we still on XX% early XXXX at that's see released balance has it.

the and feel we supply/demand the in characteristics Area looking good So forward. really Bay about

Tom Herzog

is the Bohn Yeah. And I of base Scott huge tenant one tenant satisfy be San the in he to demand all able just South Francisco. from would say that with to new issues our deals

product So coming that's to make be we're to going demand. to market always looking sure we've got to that meet that

Michael Carroll

then San to kind buy provide land to break you able maybe And are can of And Boston that's that on the support ground that of Or you market? you you that can do Diego available sites and/or be sites case, that -- general maybe have highlight new if Great. in the to you new you're to need the anything views some developments? some working there that can on?

Tom Herzog

There provide the that the is just are some we yet. some that on the for could a some the land you lot a wait of of which things on. won't adjacent doing parcels that we're But Maybe been to just of work addition Vantage obviously Scott different – maybe working Brinker, insights into in we've obvious, to that. lot of site, next speak on conference

Scott Brinker

in strong Route years for the opportunity if there ago. density. that It a be a require be either the some on could acquisition, more that purchase excess It in we Yes, when that Waltham, I of of excess continues lot is example land entitlements. land, parking came surface made we demand we mean unimproved submarket to or in utilize always that XXX about one campus totally had to two with mind exactly. does the the did

our couple excess a campus, at the at came the sites. example process our of vacant Cambridge FAR. land purchase where that Park, So Discovery and some West Similar underway is with

made rate excess that additional the with on terms we basis. of time The was us. campus like intriguing could In entitlements sense. sense. over benefit be But the this pretty lot a densified price, The deal added geography land cap to having standalone purchase the of on a made of

like middle entitlement examples So have the in that we portfolio now. we're and do in of process that the

probably attractive economics land is land makes core much properties new at that and you're to that obviously able foot. $XXX developable for markets purchasing least per that's So without trading And across if three more the accretive. build the

Michael Carroll

Thank Great. you.

Tom Herzog

Thanks, Michael.

Operator

from go And Nick with ahead. Joseph Please come Citi. our next question will

Nick Joseph

look that you understand long guys you I through company obviously at and repositioning been have everything Tom, you've a and want it. where the process

when what financial, So do just you? about factors those the Is strategic? look most a opportunities, opportunities? you walk M&A at any are sure it's think for I'm it But how can important you you blend through of everything.

Tom Herzog

Yes. Nick very fair question.

always to that in have deal little that like my each that look of of by And and earnings is wish we're bigger singles are some for and on to you about. a allow a just what scale it's And there's maybe really at career, you we transaction our good company us because that sake is getting few not one whole company advantage and you when that things some scale. that have decisions. seeking looks of one just one very can triples So quickly. huge M&A the adding enticing believe you obviously, a huge of take consistent times already done one I've individually basis. the a you ensure of we maybe at those we to We're really a grow always assets grow more to your like have doubles you're and the But group with. occasional down didn't When

the the sure going gets do we it's environment, to when maybe a where is today's at M&A process you one in come you didn't. that won So you the up by point MOBs Oftentimes, as does which wouldn't. clearly Unless they winning competitive or would better if you you're in hot they to maybe not time be very And accretive, thing you almost that if all know. that you're wish end it deal commodity being are, the mind. are

cons. in? too. fit and portfolio consider does so a obvious things And how And out to so it So and real is, the it but strategic profile have you that to a and It's to with people We does recognize be career there's out got disadvantage. also it a how then their a as just than And much as the if on smaller for need tendency fit with look in, of the and playing just the always a group with. side an how find of would when really at their there's And you other estate are you scale how mean M&A that do lot figure see can trying fit get a of synergies. with I doesn't to we it's grow easier it well. to deal social that of oftentimes, then path a this move to pros issues our too, advantage, company that, different got but to big needle, that seems go huge. lot growth you've get you as comes whole

not make saying we're it sense. would some or against that, forward cases, it. I'm So In

types at. of it wouldn't, cases, things the Some but those we are look

Nick Joseph

How synergies, right, at either you a portfolio you from the or value very And you That's of platform? think kind MOBs add you then, level. operating about level asset an that do of kind just Thanks. to create about when helpful. your if existing think

Tom Herzog

and – Well, MOBs have synergies expertise, science. and provides systems, which the corporate benefits talking CapEx, these leasing, analysis life if transactions, to different businesses office existing synergies platform, we exist all we data MOBs between yet add our between do back

fact to cost addition true some bigger in lower scale that and with up end benefit of there's just we So the capital.

As at this to your question specifically, is our fully point. built-out platform

materially business that our increasing load. G&A grow easily could we without So

whole So the look advantage, that's an equation. when at you

Nick Joseph

you. Thank

Tom Herzog

Nick. Thanks, Thanks. Yep.

Operator

will question Baird. next our And with Please Amanda go come from Sweitzer ahead.

Amanda Sweitzer

And Can other any those how Diego one-time that your much there beyond quantify bad science then, Thanks. Redwood items City terminations second life you morning. holding half are science and debt are Hi. guidance? voluntary in impacting life like those San Good terminations, guidance? the are back

Scott Brinker

terminations one then Amanda, about of Hey, cover Pete in question, in that start then and but are proactive Redwood and feet. XXX,XXX your the aggregate, other Diego you it's Scott I'll in San mentioned City there the Yes. it's one two here. part let actually

that renew were we next years, going So expand. these markets to the to not and tenants releases that to we're had due expire looking one over tenants to in four those local growth

an easy both fees. early to get cases, it's terminations. In did very So economic standpoint, decision, termination those from do we a

So year, impacts made for the all we for new also we NOI the the in start. occupancy. same-store of But don't were of economically, and cash leases terms count it obviously, balance that until

terminations basis portfolio, So in the points. on answer of the proactive in the the XXX, and points in store. second is the in it's those XXX two NOI about represent basis those aggregate of about are the half alone And year XXX impact to your cash occupancy same question

material time. make So if managing half second portfolio We're on NOI, the were make the the Obviously, we decisions the managing it based not. same-store would to we but those not of to it's over year. best economic decisions, we're

twice add? to will So pretty be a and portfolio. material year, Unfortunately, of now a the drag guidance we second a still long-term to half able increase the strength it way in in balance you'd benefit. Pete, anything were due but the of the the

Pete Scott

within reasons perhaps modeled and debt, We been Yeah. model sciences far year of as you as that's asked we seen range. the of high year in remarks, I raise just do $X.XX. end are bad our is much as market and And as higher the set of I will to amongst conditions guidance uncertain firming at so reiterate, said guidance as the trending embedded guidance Amanda, bad as what's Obviously, we've in been our pipeline many this too the prepared the and transaction But bad end towards why one of the the our given we've life beginning about guidance our up. well revised we some both debt able when debt. we MOBs. to haven't

we now. that factored as in increase the things into the we right $X.XX So of sense all made a midpoint those equation felt

Amanda Sweitzer

you're potential acquisition dilution? are And are on proportion is acquisition land And potential there and sense to about Can activity remarks helpful. how any if on, come that your the comments balancing more makes That Yes. covered prepared or development the from about you have thinking following of in development? that opportunities. willing you around expand guardrails up then

Scott Brinker

we risk, scale. monitor but also exposure think to have when capital completion the from to time and two-year lines much their these development between given given that how we have mean tend that do just a buildings we the I internal be we business of thresholds standpoint about commencement both

are balance there it but the particular the it's we does have won't when I discussion a discussions sign thresholds. a Clearly, time how a certainly just but specifics our committee development a our into quite we this of next project unleased And have times the the call, a the portfolio. Diego, every So remaining share us fit portion around of few new in not we showing as we like is confidence to development momentum commence lease, gives project. pipeline year particularly feel little well. the more San it on like, great definitely

more with a trying So $XXX hopefully, accretive almost balance we'll have to acquisitions, of medical to done goal. terms near-term date. development starts. new But is news of that million more office We've in that report to

those X% achieve in not all they them range away. of Now but to right yields X% stabilize the

some and given then projects. deliver would there growth process. that earnings go earnings. but because portfolio and near-term as in as dilutive So acquisition with through to is of is in Covered a lease-up asset capital each generate certainly our it modestly potential some within be tremendous an individual value it's context have it evaluate well. comes cost creation desire might entitlement big of put own but its dilutive to an the that to it buy also addition, the vacant balance. We longer-term level And opportunity some not on as it land interesting to And these development big be to play you land of allows current a

all we we So, to different you'd as add? those capital. anything of Pete, deploy try metrics balance

Peter Scott

Yes.

into just from is to blended our we've the perspective a you of go And we releases I cap I announced think yield X%. thing for point provide around would is a out lot numbers earnings different the right Scott, there. in date, rates the just if acquisitions

pipeline, type we're CCRC. the from to from remaining digits high buying the upon to land X% can of depending the On investments yields anywhere range assets single

as remaining on there I just giving specifics put to some at wanted out pipeline but it guardrails we're to could So not the least what be.

Amanda Sweitzer

That’s helpful. .Appreciate your time

Scott Brinker

Amanda. Thanks,

Operator

ahead. Markets. Jordan Please Sadler next go KeyBanc will Capital with come Our question from

Jordan Sadler

with you the understand Maybe I'm first, Thanks. guide, how the the I'll coming just back trying because the Pete, I'm end, low get of stage to start you. to to low can even at game. end this

combined, $X.XX end? coming get How are contribution Act through grants the we do north interest CARES of the think, to those I sequentially. is the low upped from You expense lower

Peter Scott

end. a moving I the think end the Jordan a the point same-store different as XX different a raise them. to we Yes. are bunch are I within take I'll quarter XX low the at up higher sciences lot of again, did respectively. items, just the the a pages repeat builds lot since from encourage I what and But we out, of and There supplemental, a increase information trending this mean, you MOB of and and we give there. points look on XX few and $X.XX for of also said, detailed range high I One towards of XX pieces, I for basis comes life right?

the success that So a our lowered We bit then great. of And acquisition increased those moderately bond are interest guidance. expense deal. the businesses green doing we given

we the is at to annualized the some And the where be to $XX million. would be CCRC. $XX right look million year-to-date, what at we're would So where for first could areas we CCRCs LCS million you midpoint, if see two I'd today, it's say, risk $XX the on that are

million from built $XXX then lower And unidentified point this of would guidance. there to in. also down So you probably I end. to We've the $X.XX midpoint the got point at acquisition there's

increase two risk timing and the we be trending we'll and think the made at to the continue acquisition reevaluate sense, something firming I reiterate. of and this that's well pipeline the that year as as the yields again, I what up the a point is and want well CCRCs of as to $X.XX So items as felt we're like then on progresses. would But pipeline firms that and up

Jordan Sadler

strategy of pipeline the fair. guys all revamp investments again. just curious forward you to that through development that see reassessment investments pandemic to I and now going done to two have then these That's science growth profile you the year-to-date. been the shop. based deploy life invest, have of mean, And coming Obviously, on got very heavy the successful of you've sort full out yourself as have of Okay. let's how of well. about looking weigh, you But kind of a sort I'm MOB and of you But say, growth different as on you capital do $XXX think Tom sort businesses?

Tom Herzog

next future a tenant that base demand there land we it's do working think continued the at mix. supply opportunity actually our some what a that's be two in I could we as three be opportunistic constantly least to call biotech natural substantial boom within science. there's that that densification the And arises. on life demand within in of growth opportunities the built-in element that Jordan, on the going to characteristics, based foreseeable built We're companies, and There the years. those believe the from for bank to comes clusters

strong business. an relationships comes feel system want that So growth you hospital. health relationships MOB critical, or for invitation the or on-campus it affiliated types strongly to In have that to the because the to assets in we'll substantially side, are have either add we have down of we the MOB from that Those off-campus.

We've are three so, continuously. that with the got this business. Klaritch in working good have been in got that just success And decades. people that. we business Tom those We've decades relationships people about for had have

we'll fair I others. think he out about we everybody knows with our there, get share. just think Hill, that Justin And more than

with be development our we're when compete MOB well capital as of our and the as some in as can and times come program our through cost to health that that side, profile. scale fit and at that HCA out development with to investment our being able others assets systems, of on some working go So with market

up get competitive CCRC it's that positioned transactions or X% with to we a capitalization, we're or pops XX% their for-profit, types no And or well-capitalized the out and go like could And that, then, to even those. are but fair we're our natural X%, those about on could very that, that than it FFO there. yields based a of entity connect going a be to to. in question So identify player when there would that certainly three more not-for-profit There's to be occasionally, there two be well will share. yield

infill and thing We've think from same development applies I from three we've yes, in And opportunities So, acquisition of, got CCRCs. to call, connected fronts, acres expand different huge parcels. land lot the on irreplaceable. developable XXX an perspective. got in a about just both we’ll locations with a what that We've are over campuses XX adjacent got different of land these mega and

got lists we're -- going living move independent as going those of for those us we've units couple forward been and to in well, we've where our profitable to So too. are on be waiting a developments

that plays probably, we're looking are Jordan, the those to So make.

Jordan Sadler

And last one, maybe for Brinker.

anything build had Just Diego. up terms or Is you've to anything here scale there on lot in San available a success is else of THAT available else What recently? to of new?

Scott Brinker

opening projects commenced some three -- construction. before in before last even starting in pre-leased the XXX% Yes, year Right. all cases,

our to and add? do you'd And Pines opportunity look additional tenant Mike, that So we is had for does that we find land to some work And available. grow, but great footprint The market that that have longer-term a up outstanding. is in to base anything vacant take we is to Sorrento a Torrey space. like team more. that trying continues the intermediate-term the have at submarket, or densification given we'd hard Mesa do it's opportunities,

Mike Dorris

market We've build got to we think are hit assets on to I working potential for the us more. embedded Scott. more opportunities our No, own densification we some scouring opportunities that ability certainly on, an you it, are but provide

Tom Herzog

to like Mike. add I'd But

You're not standing a from starting stop either.

great your create of You're keep that that. and middle could us of a acquisition certainly deals in have opportunities on within progress number to busy had the pipeline

So think some sound on add have those I don't to not underway you'd want we'll that? like identifying on well and success. we're anything Mike, it make I opportunities

Mike Dorris

No. right. exactly That's

Tom Herzog

Okay.

Jordan Sadler

Scott Thanks,

Scott Brinker

Jordan. Thanks,

Operator

with Valiquette Steven from come go will question ahead. Please next Barclays. our And

Steven Valiquette

Hello, All right. Great. Thanks. everyone.

or just how quickly showed, forward hear non-campus the strategy your week this The is much the about rigidly you this more on headline back spent in wanted about study detail you on properties. divestitures you look may will Could this that curious particular. in circle an unaffiliated a REIT just term perspective? back you near it. to June to back and/or more MOB shape focus was in development upgrade that some so than going I near-term guess, results from performed additional portfolio, conducting just MOBs as more obviously, the So to what presented acquisition I prompt better greater I time at MOB off-campus

Tom Herzog

the question. Yes. like Steve, I

off-campus on-campus about Just done to been update extensive a had as study. quarter within people across or It asset our entire on refresh forget every had outcome returns we to to across memories, intuition would total get knowledge return. flow entire a XX-year growth has is versus us, wanted off-campus just now portfolio complete like the And to We on-campus. very up we a But look at portfolio took to to NOI that less to what X.X% our our study a answer at I portfolio the what good our unaffiliated. we ended affiliated pretty portfolio a versus our it plus based and cash what on be. as had a CapEx for for sense done the

unaffiliated nature stickiness especially on those had beginning a of far a affiliated that couple on-campus in tenants off-campus, also of the MedCap different the in view approach off-campus off-campus new the from one fact it the perform during well lease For can that of that the off-campus mercy so for at X.X%. the for unaffiliated the to which could recognize and or always in affiliated since where sample better has and of But we would then a can And property net And others specialists, empty very acquired due the dictated would we've lease the adding and off-campus on the are supply. that before of minus X.X%. the unaffiliated was period outcomes. perform end up based have difficulty was was there positive MedCap tenant. -- do fewer And decades extensive great our it single you're some size pretty I our triple exposure lease a it tenant the quite

So Off-campus affect It in that value and us not that on of those unaffiliated direction. forward? that we seeking going Brinker to topic you to a color additional was on-campus rare But going I'm to in pretty see does have and change the affiliated might very lean would off-campus don't fundamental you for to turn see assets. What us? first. be of types how why our big does view Tom if Klaritch, will it you'll on jump – that us especially, because this

Tom Klaritch

at existing forward Sure. or at And looking we portfolio. the if looking -- were our moving just this you asked

Two MOBs properties. exercised. we of be are and today the a ones we If likely purchase actually going have have in you away one has would so those option be that XX for only sale they'll non-system-affiliated at the look held off-campus

that So The we'd of pretty actually X% be under just range to maybe at performing down well. point. rest are the X% buildings the in

probably Scott moving them know of to as we So have to them. said divesting operate affiliated don't if Tom else you in in of off-campus I see we'll targeting I just the add. But continue near-term, don't certainly forward, not acquisitions. would anything

Scott Brinker

signed off-campus Health campus. Atlantic hospital the showing they their Yes, but to affiliated. and their on mile I portfolio would just just from quickly all XX-year than that highly a an lease that less technically flagship It's three add dedication buildings was

So, hospital long-term we that right think affiliated investments. the system tremendous be right with the and assets can with like

to So, well. for we'll those as look continue

Tom Klaritch

add money affiliated off-campus with to that assets want also assets. even I in right can make or you the unaffiliated certainly

a And of in based some they which telemedicine for that the about -- healthcare there ours. portfolio that view different have So well couldn't of seem positioned may we've this view. care strategy But very other reasons to by their we and indicates how to our point But our make have also dramatic on of point increase as is feel view costs. from our influenced our continued obvious with and that but increased way been expand a differs point it contain a urgent the to want peers do be this. they've peers of like that study has that I strategies good don't

Steven Valiquette

follow-up guess The a the percentage care help REIT industry you that question Okay. mad prior focus just of the a its about around peak portfolio given this ago also rather versus versus quick the reiterating other management and talked I the real just external any just And at other week just internal differentiated ways MOB XX%. to assets that It's this. you on just be strategy of discussion on on second notwithstanding our have may in at on-campus health in you highest profit REITs is worth everything this. highlighted type

you If mind. it just out there but pops your covered that's anything fine throw everything else in

Tom Herzog

Tom. ahead Go

Tom Klaritch

you big we've -- mean two actually to satisfaction the MOB satisfaction continue tenant been well I hit highly tenant And and index we other one scores the been differentiators. above Yes. our of have I'd say years is grow. focus. the for always and

the So area hospital affiliated very focused that's differentiated and relationships. think tenant I another on we're

Tom Herzog

anything got to you add? Scott,

Scott Brinker

think it. I covered you've No,

Steven Valiquette

Great. Thanks.

Tom Herzog

Thank you.

Operator

Please Bank ahead. question Dennerlein go America. from next with come Our of will Joshua

Joshua Dennerlein

hi Yes, everyone.

Just wanted on one of up to comments about covered follow Scott's land plays.

this the strategy? opportunities? to fit utilize kind Is then science? life more you're or side would seeing how Just MOB broader of your where best you the it curious on And into

Scott Brinker

are business. specific Yes, not the to in or highly project cases lease some and are until start. the plays Life ground definitely we're is closing medical generally, land targeted on ready with those hospitals the With acquisitions covered the land office in development partners Science or almost those signing

hospital. a different very and life much development the shorter office time strong versus generally a There's it's sponsorship it's always from science significant pre-leasing line. So, development profile. Medical

So core find a three not markets and market maintain there. our in science, life we really in particular submarkets if all the we recovered of big But to to do that no continue want compelling have we land plays in presence grow to be share.

be to the of Josh. covered the tend focus land those So plays,

Joshua Dennerlein

revenue quick going back second Is today? across on kind the to is trend to one the parking Where still portfolio. just normal, of then medical is year? half the higher or And of it Okay. it office one

Tom Klaritch

for up obviously well Hey, was X.X% Klaritch. Josh, not points our the you parking About second at this is results look the quarter average improvement XXX Tom It's levels of if basis X% But pre-COVID actually to is. from this X% pretty has significantly. where It point. of popped back is revenue. ahead typical in of that at to

but we so we'll see it's So far with see on to And restrictions in done big continue grow, we more visitors there's still it But it's restrictions factor. well. to that. on year-to-date, continue so probably the a very watch certain Obviously visitors. would increase cases,

Joshua Dennerlein

Okay. Thanks, Appreciate the Tom. color.

Tom Klaritch

Thanks, Josh.

Operator

question from go Morgan Vikram with And ahead. Please come our next Malhotra Stanley. will

Vikram Malhotra

taking death, the questions. for I side beaten ones. MOB just been to has two Thanks know quick but the

your second, portfolio? years us portfolio? started maybe update are inflation you you that know I with all, program think had X.X ago. CapEx And of just thoughts redevelopment, years maybe on you transformation for the two First a Can where an how MOB high-level give impacts for your you

Tom Herzog

to turn I'll start Klaritch. then and I'll it

As of are much when terms far longer Vikram, a the CapEx redevelopment, that think it improvements has in added through redev. as you life to MOB, an

low-XXs happy product, in IRR. maintain and property those trying we can very on then before it an how redev high-quality the on-campus and if after an last we're and on you it have makes went and years. toured MOB it and very, from capture when us where to apparent with that hospital would And as in improvements a real an partner MOB, do So become anywhere a as rents far somewhere you a difference produces the the out

spend and at a less somewhere it in a range that on in little we've it's does So projecting maybe bit $XX a we with returns long-term happy been million be in little been to IRR. that could real that produce have about that but and been range. year We've times more, quite that

that's broad in think terms As of always far I question. MOBs, general. kind in as of inflation a inflation REITs with on

Inflation has you a deep take topic and think not going but REITs stock they not drives informed take bond take. elements just it puts everyone term on well. on any rates it bond I moment over pretty everybody to I'm that are view, are in is I don't both bit of informed a simply this has maybe and which my time, like. my into also as because only too but give call get view that rental higher opinion, the on act why pressure the this REIT on short So There pretty like I'll little but as a same a like

becomes I be you impossible. the based back on it that was Real almost impossible to. and So an two outstanding creates and is. ago and into of of a study tangible a to thought age I the way nice that Sakwa hedge components. what apart and retirement want pretty want [ph] whenever produces different he I break by interaction But kind six obvious out the And sectors had on about quite inflation to its lined for do months their what of three, the yield. they opportunity yield figure a assets. when about out against known to estate where you thought estate that people do real It's this historical do how think come on impact how then it. it. of of stock studied you again hedge produces been. think continue intangible it's inflation I I It and those to it's But to interaction talked I inflation -- interesting. like they assets want has are reasons. bond it like Steve well they was will the it's money

process. noise and in just I that out very becomes over inflation be that time. will the balances strong think time I it a over investment So, But think

Operator

JPMorgan. Please ahead. go Mike will And with question from our next come Mueller

Mike Mueller

Hi.

just split or I over you Just science that MOBs. a heavily the pipeline, allocated science had between versus bit when do here. new with question roughly out see be know a development projects. staying dollars look curious can years little towards the skewed But life life at developments to it's big-ticket quick the And you MOBs next science? I'm more balancing life XX/XX

Tom Herzog

Right Tom. life toward skewed heavily again it's science. now it's Mike

form current cluster costs. to us. base, concept the bank exceed has fortunately, product modeling at price inability and that We're buy still growing at science have reasonable some XXX amazingly got even With of a and a typically tenant land densification while life return to points tremendous XXX the produced you for and land even a we've basis development quality today.

it's forward. in involved relationships with in science. I health capturing way lot natural invest work way natural life of that with a a it's to MOBs to would systems, we in development MOB identifying pretty there's if invest them those So, front too you the a say but relationship -- opportunities I think will continue moving been and We've too. now in look successful good a do and at to that have right And that sized pipeline opportunities pipeline our of grow.

or add us MOB the that portfolio. may think more though I to sense what continue would see development life will Scott opportunity. probably across modify? activity acquisition And that science Brinker for be you we larger the to makes side a on side the

Scott Brinker

I don't know how much add. to

could think higher. office go I medical

sheer say that cost to per down there's is are a opportunity life the industry, opportunity. We and and starting but grow. real area COVID continue that I we'd prioritizing the by slowed an But it's just activity like an that scale as foot market. that in some it we're growth Things of plus to during to science to see fair dramatic larger think in

going would be not more it certainly XX%. be it might So, forward, would but I expect than XX/XX

Mike Mueller

it. Got

you. Thank Okay.

Tom Herzog

Thanks Mike.

Operator

from Hartwich ahead. next our Street. will Please go come Green question And Lukas with

Lukas Hartwich

Thanks.

keep to before a consider go values being moving And higher science have up. how I'm life much just curious you they'd seller? So,

Tom Herzog

always somewhere. The things the whatnot, the what decline about go for special but Lucas of inevitable to growth And the the the real in to the there's looking good supply out tell and I'll in business. of be we to real because even dynamic and not if want a life has continues estate and always one in two cyclical with science the to the business CCRCs demand a then dividends money to to is the at. the strong. nature that that's would be question. fact in rates cap and we each That's a estate between being really I be smooth continuing seller opportunity we're you three I've said diversify businesses is opportunities rents recognize, typically have third of businesses. the play is that is

the in I the absolutely and look same call always a that there be willing somebody refuse I there's for But pay is price play. at can cannot when such you enormous thing. into that quality time, because is there obviously then good means it's becomes the these at low to time, product demand grow. recognize when cap this comes So, clusters. quality gone just some let's harder rates, science in the, life has it product that and four NAV times to it up a for And our At an that same that's within

a high-quality product So, we've demand. pipeline our meet to to thank grow got good-sized tenant densification goodness

a don't the I you talked that's a a because just and would answer XX-minute if thought it, respond. you it's probably about -- about could give topic quick add? of question. I've But how a that's So too Brinker, lot you've you this what I this I was to might conversation, great know

Scott Brinker

I math, science to NOI when compelling and absolute equity then, on And relative return. basis although those initial And sectors an and bond growth real there's and total basis, on do is estate necessary life to a seem much even pretty cap rate. that estate real like awfully an other broader cap there's produce how it a other the how or still On low. mean I rates compare feels markets, the to CapEx you does think there's Yes. IRR, around the sectors. considerations

sense. business focus on still to just rate. cap in a of you think growth lot a that capture So, We initial can't and there's of lot that will long-term returns make

Tom Herzog

I'd add thing true is the same MOBs. of

big make One a the piece thing darling some at too MOB and classes. back, it I science of other For in office look against some life high. years still some and years, any sectors. cap entry Green hot remember a make science today in very relative to the especially capture just of on-campus the high of number the the are different rates asset can said and markets doesn't much and Street other argument probably other irreplaceable life with child wrote same businesses, and sense to some It have high MOB of wasn't are that really cap value sectors equate the the sectors. to quality and these barrier for clusters, MOBs three to to rates that two in

investors you value So up again that's quite decide, that that's is feel we analysts still upside. on on guys those the screen are in and that further assets an that, the there and to but and the for there's experts item comfortable arguable

Lukas Hartwich

Great. the science your Appreciate it. then, traction supply you mostly still, can or an you provide in life seeing pipeline are shadow there? And update on markets? noise Is for that

Tom Herzog

time, Cambridge just I'm underway that will not there's Scott the getting are deliver sure, at delivers that It's for we But ask on and it about go We're least through square I'd year-end in you development Mike Drive Boston late pre-leased one that estimate in great might call I'll XXXX. comment traction XXX I in feet to Park counts a million at best 'XX. our that XXXX. noise, you too. six give delivering if XX-plus the about but have. market percent

good we So the near-term really outlook. about feel

Now, six obviously timing shadow another million is there less square that of is a pipeline The of certain. feet.

Some indefinitely. projects delayed get may some pushed back, may get

market And though product don't even occupied some And three ignore include be happen as for to be probably numbers many by lab that case tenants past. tenants. conversions the the that It of cases to competitive, the core tech aren't them up end go We've them. tech really will in in these will because, quote that we continues markets, all seen in we may some this continue certainly strong. that being of do tech those

square about XXXX. there's two XXXX, Bay In we're through great into everything So our Boston And some outlook. Virtually, in today, the XXXX delivering the really underway. traction getting that's year-end Area, that's is of on million pre-leased. feet deliveries

same So in well underway. square as pipeline there's two outlook our the totaling our made Diego, comments is almost a about the three preleased. subject Area. are XXX% about Boston. estimate, to feet shadow it's San really Bay all there There million three pre-leased. projects, about about feet next feel over XXX,XXX then good years to And XX% I the Most two naturally. square million feet, By importantly, three we It's the about

relevant a the keeping feet our potential the in increased on. supply. very San monitor continue most and Diego to eye shadow And all regular applies is very, something two again, a of three certainly that square there close detailed million a That there for of but about It's that's that we're from So pipeline lot standpoint. markets, right? a to demand, basis. we There's very is on

Lukas Hartwich

much. so Thanks

Tom Herzog

Thanks, Lukas.

Operator

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

Tom Herzog

operator, Well, you talk events. look industry of in to appreciate interest to thank to and joining you us for all upcoming the you at you We continued your forward Bye-bye. seeing many and of thanks all soon. today. Healthpeak We'll

Operator

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

now disconnect lines may at your this You time.

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