PEAK - Earnings call transcript Q1 2022 | Healthpeak Properties, Inc.

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Operator

Good morning and welcome to the Healthpeak Properties 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 that is being recorded.

Now, I'd like to turn the call over to Mr. President, Vice Senior Johns, Investor Relations. Andrew ahead go sir. Please

Andrew Johns

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

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

Tom Herzog

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

few highlights from a the First quarter.

had Life investment Leasing XX% strong represented A $XXX strong an year-over-year. with an up three CCRC new square along initial Life We MOBs fees Class XXX,XXX including of quarter ahead Science three entry feet on-campus new our momentum of remains operating leased represent of million, development investment across cash million. volumes with businesses Science MOB buildings, were and expectations. sales and our results an Our of XXX% delivered HCA $XX

our of growth densifications initiatives, our life number entitlements in advance core to continue development three and in developments, including a We HCA future pipeline. and markets science

starting business competitive life and conversion science in science our for versus us focused owners and entrants depth new Class current exclusively competitive positioning, and large As life of one-off almost with campuses with A advantage markets submarkets, on our providing we’re buildings. of

space. life strong supply scientific at have time. capital biotech and continued XX%, increased our portfolio growth. roughly and demand continues choppy, remained organic within advancements biotech new for NIH an long-term funding While and science life science and drive high, purpose-built growth rent mark-to-market is strong our supporting to will within has life estimate believe new the is and all-time venture markets public We continue to absorption portfolio been to rate technologies has opportunity science Today our occupancy has over we grow. support

are primarily MOBs their and high two with located with number very Our concentrations hospitals in on respective specialist well-positioned physicians. campus of or number one markets

HCA hospital with development and stabilization, constrained least almost predevelopment from would times The be our and competition portfolio's as our MOB of project costs XX are our currently strong is majority from to support at no cost values years and years competition our demand X require through basis. housing replacement CCRCs new on-campus an a growth of healthcare program. is properties from invitation system. New of requires through or CCRCs benefiting each three

strong portfolio a on Additionally, basis. yield for our is irreplaceable incredibly risk-adjusted the CCRC

significantly depending the more of last construction We to year, our that. the higher is inflation on XX% over were of than that development costs and impact building, location Turning land type other the up to and XX% program. factors, on estimate up

very XX% of our strong pre-leased, funded interest entire and This within are the our in is pipeline GMAX active have contracts plan already available place seeing space. fully development we on in $X.X is Fortunately, billion and remaining projects. we

With land the significantly. and sizable opportunities densification the of has rise increased in rapid land value our values,

billion development have the future reminder, As we $XX to a opportunities years. XX of roughly years embedded over XX next

and certain a costs new dampen higher see life construction new to being Going no but supply contemplated how as plays projects forward, out. we science entrants pencil, expect longer that would land we’ll will

Turning to our balance sheet.

net is debt Our current $X X.X to times, liquidity. we and of EBITDA billion

floating about We at target have in XX%. until and with rate line maturities XXXX bond our of no is XX%, long-term our debt

we of funding portfolio earnings, the higher our provides weigh through fixed bit debt Although average our will short-term percentage to floating on appropriate cost cycles. rates a and believe match near-term our lower also

debt-to-EBITDA net below we dry we high-Xs, have to our plenty Given of well target of mid are powder.

announced Finally, board appointed worked close Cartwright, Nominated of planning on of leadership will Independent week, succession. Kathy's and as Sandstrom Governance Chair role Chairman Corporate Governance various as Chair, Vice and board Kathy Board her Vice Brian the and Nominating role Chair And the Last future yesterday. as and with assist And in Kathy she by our was Chairman, we roles matters. in Committee. changes Board Committee, for Corporate new

running to As Heitman REIT domestic two of decades a leadership many ultimately know, spent and the of Investment With to Team. international turn of let Kathy businesses number me Scott. at that, you it in addition

Scott Brinker

and Life of leases, we've your feet new square volume XXX,XXX and portfolio Thanks, square Science. have I'll activity cover The quarter space is of letters includes additional lease. this expansions much we tenants. don't results, Tom. leasing signed to first simply XX% Note will because leasing now Year-to-date, The existing operating we year an our occupied. naturally development, operating on with available intent. feet starting have lower renewals with be that XXX,XXX

we space. as space were We've tenant remainder. XXXX XXXX million already to of and significant signed space, We from improvement earnings the operations XXXX the market. below XX in that impact received have NOI is Growth signed and run in increase demand lab point wanting More tenant pre-leased. was downtime mid-April. immediately in very to in a expectations. well inbound the driven an maturities for XX% We that were XXX,XXX for and in pipeline heavier steps, rent in annual $X reposition is development calls contractual a note the rents rate. The we have and roughly XXXX important interest we're mark-to-market limited half beyond X.X% foot still in exceeded year, few $X.XX with had existing the Important available. have the rate square was space and this prior occupancy. an and several strong by the basis tenants. cease earnings a Same-store we and tenants LOI existing seeing The because comparison our therefore to we expect realize quarter in We do on very growth

to broad-based above is XXX,XXX on MOBs trending process the medical start quarter year renewals that's parking months to Medical a Moving guidance. budget. drivers X.X% so, second commencements Webster for March, expectations. of office. the and bad the quarter acquired the X% six a number are off for X.X% with initial through two of was Clear retention largest cash million. Leasing the debt. the occupancy, market. on and yield were $XX the with in suburb buildings campus including rent for a In currently high X% Same-store strong The in Mark-to-market NOI in our feet at one cash was XX%. is ad HCA exceeded in income, or is is great The over rent MOB Houston at of full Same-store and first The grew past mark-to-market, City Dallas bumps. been hospital square of roughly Lake, relationship-based we transaction, at our Texas, which end lower

Finishing LEED is buildings One of with the Platinum. CCRCs.

results the same-store Occupancy of points expectations quarter high our was exceeded were trending XXX guidance. and up First sequentially. basis above full end year

$X and positive recognized are Entry trending levels totaled continue, for a receipts million future we is amortization and in indicators, growth. XXXX amount Forward-looking the four now quarters, tours earnings favorably. the occurred fee expect in during million. it That we LEEDs has exceed earnings sign straight cash gap to which and quarter, exceeding $XX by including

have with or We strong discounting. continue power to no pricing little

increased sale nearly fee X% entry year-over-year. average year-over-year XX% and price increased RevPAR Our

market, to the financial and for and I'll the to in that, uncertainty be sheet. balance choosing the adjust not we're yet. cover Given With turn results labor Pete to same-store guidance now conservative it

Pete Scott

with financial results. our Scott. Starting Thanks,

first FFO the $X.XX of and of growth adjusted X.X%. same-store we portfolio per as total share For quarter, reported

forma Excluding the one-time portfolio same-store during pro was the total growth CARES X.X%. Act our quarter, grants received

Our industry item same-store the Last fundamentals business results strong reflect across of segments. all under results. our financial

For the dividend Board our share. $X.XX a per quarter, first of declared

balance Turning to sheet. our

debt-to-EBITDA, quarter liquidity, the a dry with net and time XX% rate us X.X billion As of over debt we powder. $X ample of floating Tom providing ended mentioned,

variable of debt rate remain our during account percentage million $XXX also XXXX. of to Our financing hedge helps certain debt A floating we rate outstanding. loans into rate floating portion provided equity forwards, seller which takes

our guidance. Turning now to

guidance per same-store adjusted to We $X.XX are share as reaffirming X.XX% X.XX%. guidance of of to per our share and blended FFO our $X.XX

you from As quarter results, the our performing our at very of and tracking can our the well are year. end are range see higher segments for guidance first

MEDCAP for reaffirmed have performance. medical to relocation initial predecessor in improved additional page our had in adjustments million We and forward the office supplemental on segment guidance. $XX walk offsets a when tenant non-recurring faster increased XX rates our guidance, this turning interest detail loss from our Q&A. which than implied However, have owned we before last incurred costs for our curve a item and years. of We building large FFO the One our quarter. setting few resulting Please our to XX-plus refer demolition

We structural during we, concluded along redevelopment issues life walls demolish a As the XXXX. quarter fourth late it we real on the up our rebuild phases safety opening began million redevelop. $XX we opposed of and structural that impairment some initial as with items appropriate to and to of year, represent last estate potential our discovered the determined during recorded engineers

in operator, With line million our gain Additionally, from from asset sale lease, it on hospital NAREIT a let's financing the recorded as direct $XX open this was adjusted. Q&A. for included a out backed we Since FFO is classified that, disposition. as FFO Frye

Operator

Thank you.

comes begin Nick Instructions] Joseph ahead. We will go Citi. First now with the session. [Operator question the question-and-answer Please from

Michael Griffin

of Michael future kind on Griffin touched This for leases side. on to tie system? there Hey. I to some more I'm know, a Brinker leasing Nick. push a CPI-based curious the it but of bit, is is on

Scott Brinker

office medical and about to as that, I'll Tom well. cover I'll Michael, talk Hey, ask then

market those able you do Klaritch, quite want change have bit But in new push in office? leases we're Obviously, seen to tend X% more So mean, the a and at number science, Boston. We range I Bay the least to life generally other escalator Diego in in haven't landlords in cover escalator. to date, to and get and a Tom San markets renewals. fixed any X.X% rates we the actual we for been in Area, markets. on of the medical

Tom Klaritch

successful part, Yeah. pretty medical getting, X% for increases. office, In the we've been most the over years

and not do to typically pretty market get are – the the with the that If low We if that. get and want for X.X. right trying we push push end. most on maybe now, get X.XX, the push on increases, to CPI is we more a and right CPI-based a implementing we to doctor we'd just end, now, X% the those, be And wouldn't accepting on collar our end a some can the to really at success low call really markets, of X%, CPI The collar low X% pushing least them, wants upper we're into in sometimes leases. to having

to being, continue higher to time think at now. push the way we're that's least, the go bumps. going we fixed just for to And right So for

Michael Griffin

size Got growth how see sort touched curious, view of and to I'm on pipeline the relative development active Herzog the you the the within growing of embedded you. you in future? development could pipeline. then I bank And know now that where the maybe land total kind

Tom Klaritch

future right about $XXX of year, we're From that range bank occur activity, expect now, we slightly would looking development to less. which per we've in at including to years. over pure the the XX development it's got perspective, land maybe densification, XX $XX spend When million next just billion

in pipeline place. have a We development billion $X.X

deck, We development. but a pipeline, we a to have and number projects of fulsome continue to a do have on runway for intend long with future

Michael Griffin

for That’s Thanks for the Great. it time. me.

Tom Klaritch

Thanks, Mike.

Operator

of Deutsche go Thank you. The ahead. [ph] Please next Nick question comes Yulico Bank. from

Unidentified Analyst

Thanks. Hi, everyone.

up I development just guess future So following the pipeline. on

held Some is for land just development. of that

of I to you kind on upzoning -- able be the of of have value update mean, that of that's the it's projects. land, you -- an market do terms opportunity value might give that in the us of not in captured fair of supplemental. Some

helpful? Any for as we're -- be a Just about going there talked pretty lot. would up about market thinking additional you value thoughts land

Scott Brinker

balance, it's over. post Francisco of half Hey, than properties life or or Yeah. Francisco. San Vantage where the over you half feet under vacant past bank over Scott. represents campus in which million at we as When years just feet science portfolio that more San substantially into a it South story square land a of turn towers of that as Nick, represents or excess is building footage X-plus one the like start million land a could The or one. you I'll alone, noted, the the bit look X-plus in more like acquired on South time have little roll leases through the we that upzoning densification, square in two that land few on square

in on operating portfolio, And years. terms in XXX% land, been probably balance the of land if So square balance range, over massively interim. the the look sheet most towers. breakdown cases. the for even some for And the of vacant assets land value, the you then the the million where has mean more up then past that's virtually of general our literally our sheet it San at the Francisco probably came it's on is poster X-plus in feet. it XX% the somewhere land as South a ago. of the was for just in years. year other to some a escalated on bought Vantage, in two years land part have number nothing. of I In is like of Even values land case we and And of three certainly, In XX-plus cases, the

entitlements balance meaningful. and So, process gotten it's as land entitlement today. I don't that process, it our the we but haven't sheet more underway now, become significantly to go the which than valuable the zoning through is because a we is want number will through it put on yet, on

Unidentified Analyst

Okay. Thanks, Scott.

down sheet, Just program. the debt paper equity second rate the balance sounds it floating the like of question, forward Pete, guidance paying some on the the exposure, contemplates commercial

think that like the balance that plan think $X of that? to continue be of next paper, that to number year? trying terms billion a just is left. But How should to about little to in And just I over have in floating supplements exposure there a the still let $XXX over understand, commercial million. higher about rates the there's we rate,

Pete Scott

a Hey, good it's Pete Nick, That's Yes. here. question.

well term loan Weighted have, six as around that of efficient to the offset rate average exposure, my adjust about lease forwards. as best a the percentage do right little We debt floating is just floating And our we do and around the factor at is that's adjust total way for right our term maturity term think years. debt. we we average can in we our look XX% debt target. at about as as you target like you As rate average million. our that equity with deliver. to lease we rate in, for a five We do and When weighted around our projects I XX%, weighted as that's weighted debt average match very because we'll years. that developments, as liability. debt mention that that which variable $XXX We're try our floating and rate a did fund out is rate prepared floating receivables an bit we to remarks maturity

debt flexibility. creates us We to some rate over and average at it cycles, debt, also many with think relative that rate we look lower cost some floating it prepayment fixed and provides

increases. guidance XX% So our the target. did that include some right we'll We be higher-end around for year, in

towards we've our still perspective. I'd the from portfolio forward the expense offset our that. end to where performance we're higher in say trended, probably given improvements an interest has curve we're seen today, but guidance So within segment operating

want probably floating it's as So rate on I about as the say much to side.

Unidentified Analyst

right. That's Pete. helpful. Thanks, All

Pete Scott

Thanks Nick

Operator

will Wurschmidt Please next come go call Our KeyBanc. Austin from ahead. of

Austin Wurschmidt

Yes. Thanks everyone.

if you've additional the you a some CCRCs like portfolio, assumptions and both on detail bit seen that provide regarding some… it recovery around in Just touch wanted the see the to could sounds

Andrew Johns

we go lost we and the muted. to phone then re-queue if next you, up to maybe Austin, can we Operator, Austin. need you’re just question

Operator

moment please. you. Thank One

Carroll, from question Please Next Capital Markets. is Michael RBC go ahead.

Michael Carroll

this could Science I tenant analyze you seeing we're Life issue within wondering was through if your Thanks. in of Yes. of the credits what there. and you -- quarter. kind segment mentioned walk believe given the public Scott, markets your how private kind already specific And I the a you

Scott Brinker

comment start to on and ask Yes, Mike do then end. also come want it? at you I'll to I'm Dorris actually with in to the that, Mike, maybe going

Mike Dorris

of about risk we the talk to transaction. kind at lease -- bit look little how Happy Sure. evaluate any the of a

of kind it at really look dimensions. on We’re two

is also landlord magnitude investment of that itself, the of kind considering of required we're for the the One is the tenant those the but creditworthiness deal. and the nature of

the both at we So tenant when kind of on looking qualitative focus really quantitative itself, and metrics. we're

quantitative the that's to at four market group experienced of -- backed burn things a the you company consider that's that on the the for VC this at oversight, first to management Obviously, three built through likely firm known being We'd also -- buys friends us risk at also helps evaluate cash can by family, money, and is and or obviously also the raise of a We'll a in brought rate more the a of to is hand Is only that's partners. successfully, company rodeo. to give quality managerial got raised qualitative firms. consider cap, it it by measures, perspective. ability going the for side, past the from would which of sort an like a obviously, the and public here, to looking a a financial is carry competency and of this amount and team necessary. prospects, sense of in Is also to We'll them is landlord This months cash experience significant them this team. XX cash is company. backed on or next companies it investment like of with cash look things we're not VC the providing is than able be the or has but the exit mitigate quality years. if able look So less that's kind a

the breadth things things also goal, to Obviously, helps shots to Tenet several like We risk the prefer paths have Obviously, profitability, more on to so equal, of consider we of being all that portfolio. to speak. insolvency. mitigate having

somebody we're for looking a improvements that's it's opposed reusability into magnitude then to and as tenant that's the we're deal those important we'd it's looking are we putting taken heavier is And investment at nature investment investment from that's much more the are that is to made. to of if is required question it, But -- of a landlord not is tenant where tenant think the -- a kind So things a and all also on really the magnitude the Obviously, the be deal I of to evaluate important take sort a landlord. a as the of at to of as And any nature we be focusing is creditworthiness the pre-revenue money those and look perspective. we as tenants. bit creditworthiness focus of a it from less your little the accept as someone is? willing investment space also going of more

biology with chemistry configuration. even less obviously, they manufacturing helps space, reusability space on mitigate thoughtful little risk a to be spaces be those bit landlord So, basic any things to can But improved of and residual the like tend design space. the Vivariums, reusable more obviously the value

together side tenants we excellent you have kind magnitude that mindful risk but these be and located the assess the top to by of mitigate also real So, invest. quantitative going both reusability on and to factors markets, qualitative we're and take estate credit obviously metrics I that this in of and TI the all the and top one of having we're we think locations the

level high Scott, lease So, I more I at look summary think tenants add it's there? do how kind a to we these going of into don't know, you of transaction. a have

Scott Brinker

Thanks. Mike. comprehensive that's No,

Michael Carroll

about maybe? next another should then anybody issue list you your Is quarters? watch few on your talk we list? popping else And mean about watch be the can I up concerned there over

Scott Brinker

mean a list. a take watch always it's million portfolio with year approaching can I I we I per one NOI. of Mike. that $XXX have mean

in So, got the percent to that's a been you've going be at least biotech lot of pre-revenue. tenants. it's some always clearly business, And

ever want lot range. them a that Those preclinical. percentage companies a think high percentage certainly landlord, closer to end a investment-grade you XXX% very of tenants. needing X%, I It's but percentage it's that's not of be We don't small at their and to want the be least we'd space a zero. less have than number up XX% not incumbent but to

something to it, a significant we're more that starting One, couple then significant in seeing of locations quickly quality date in companies of many and at make to the fact the like mark-to-market. spend time it we we to little in list Difficulty] a portfolio opportunity Boston, real over [Technical the reasons. a always of There mark-to-market in quarter of good space least at very that over least more estate that a couple it's doesn't very -- shrink and have that, watchlist, bad the very one particular. demand the a public backfill certainly had years the if on markets tenant because are happened markets on for last capital significant such the We the that that [Technical we're watch watch standpoint. carefully, credit in from feel a but certainly cases So, past that debt Difficulty] what have at management and shrunk past we've ton of time over

Michael Carroll

Okay. Great. Thanks guys.

Scott Brinker

Mike. Thanks,

Operator

Thank you.

Please from Stanley. is call Rich Hill, ahead. Morgan Next go

Rich Hill

to selling talk nice markets MOB attractive it's seems this traditional be for or really for sciences The morning about good think you context maybe in to a life some I like quickly. Have your the mall think I engine. medical want There growth private markets are MOB renewed in your -- portfolio? really guys. income. thought as using portfolio I which Hi, a office. the about reducing fixed portfolio, And seems about public your just attractive interest surrogate real of

Tom Herzog

we and it Yes above decades campuses our business to to in expect trophy average the Rich, MOB and first, replicated time that take the -- deliver and on-campus consistent I'll today. like that high portfolio never one. literally returns took we be more due over typical MOB to percentage the We than build and could

We life also and think that ability leasing have other more program stable which the like proprietary of the And shared And of as have cash functions to HCA, on CapEx lot. a business us have flows due with in to there accretive or MOB Life top aggressive corporate development program. development on the then program, data transaction, we a whole place, office a just that, our that's lot platform and we science our back be we resources give our development growing robust synergies systems areas. is vast with and we majority are Science the analysis of the

like matched up cost believe Through against business efficiencies. capital cycles, science for it do and good to we us synergies a business. G&A So, and the We irreplaceable. it's of also creates very is life the have MOB

portfolio MOB the having like Healthpeak. much very our we part of a diversified at play as So,

Rich Hill

bumps in now, or way that point world some CPI maybe open helpful right Do not in becomes think maybe those that the more to where Got but a little Is you're I market be might it the kicker just a that would question negotiate that there past at the in inflationary more future to to has more environment And do way environment a that tenants an growth you naive the have an as it. prior them? thinking for guys. medical bit going getting you office. changed to be about maybe the over That's would of recognize it, just leases that. -- to seem about back three certainly months like four the accustomed

Scott Brinker

spreads office, I Yes. you years if at our mid-Xs. medical the were last the mean, look re-leasing XX in in

a was Our in NOI where mid-Xs the growth in decade X%. era CPI was or below

So, rate good think for a where stability, at reputation and CPI. have history growth exceeded I of just a we decade have for our least we also our portfolio but

Now certainly it's sectors, a at on every contracts year with average that, we're term day if either term, long some years not inflation four continues the a average lease five to lease super the and not four to like five repricing our to escalator. has expectation our pace it market with would construction costs growth reflect at that that and the eventually be true is but rapid increase, would same been rents that continue

rents the So But I And see adjust. think at that at inflation CPI that would it's if asking pace too early escalators to to for it ups. MOB continues start I start X% ramp let's is. if so, would expect

Rich Hill

appreciate. guys. very That’s helpful I

Tom Herzog

during X/X keep always of being of is, MOBs involved these the toward inflationary expenses are were an moved that period expense largely far a triple-net, that from toward are has big overtime in add leases. sheltered And of our part as has types moved them. I'd thing reimbursements any as other mind solid so -- in One portfolio a

Rich Hill

you, Thank guys.

Tom Herzog

you. Thank

Operator

you. Thank

from ahead. Next Please Capital question Markets. comes Juan Sanabria go BMO

Tom Herzog

the line? on you are Juan

Juan Sanabria

Sorry you unmute would I would Apologies. to now learned think have by myself.

maybe Just curious related that's stickiness environment? or recessionary on significantly business a sense less market an on And of the what Science apprehension or a tell a to IPO you Life as liquidity result start-up down part would in guess I of of any rents tenants? question, history of potential providing not slowdown the the a

Scott Brinker

we're our range to months. love repeatedly, that three we XX-plus are well. over start But Yes. it. And us to that can were X% that our going position over But XX% commentary and Juan, rents up forever. team not I XX% you've to have heard the underwriting in say up with probably the the are and markets. may XX love market They we past think the XX% at some I as business rents last of in within decade, grow core percent

funding as continues quite years that two sources to the flowing year. that continues you collaborations to they slowed have. that to the are past NIH expect well funding funds the future into to because pick But as quite and public you per volumes weak. funds as So, XXXX, of by Certainly, already both probably here slowed diverse. are about markets to which still in think be well certainly Capital And the valuations strong as And down into think although have start We escalate standards. about investment, those Venture over would a deploying X% markets bit Venture at a have are part are about historical Capital funding down it. the things firms if when for back realistically the M&A, R&D segment bit? the those remain the public strong high. the up so equity partnerships Yes, were

In terms of demand, much available to space we lease. don't have

and that's whether within good we still And of have it's operating we're still having redevelopment yet or course do marketplace that thing. So We've and development available space the the of we're active ton a the seen in portfolio. a success.

signed. part versus is by the gross driven some of a markets numbers in the are that huge the softer of XQ but maybe fact In demand three got prior leases quarter that across terms a big the we're bit in, that

online. those So the but numbers the of out up helped they active new supply that of category came some was demand coming take

it's XXXX core certainly of it's in really you well. terms and good XX% our about in if San rollover portfolio the our for the within significant. So, markets almost have Francisco, zero. I think on extremely over San balance. interest years. about demand the And modest. into feeling Diego, Not bit Boston, we're awfully three a In pipeline strong South huge and but in pre-leased that's it's a ton next not XXXX mean supply still lease In with of portfolio we development as three our

And some densified. torn buildings redeveloped being end of those or up down and will

down a slow we for bit. years So things actually lease of do if three rollover the a next lot have don't whole

new higher entrants. really that the than are than well the supply development that past XX% And when two significantly to versus doing newbuilds of conversions, good, into two questions next of we've that's look One range over conversions. are in And markets the like purpose-built what So new things for years worth we're And we developments that almost it the Healthpeak over when less next that about as two new supply, new the range from pre-leasing analysis assets. things coming new PEAK XX% then thing XX% pre-leasing incumbents still emerged is consistent dive think lot is a with years. the two of a the how Again, at level I feeling two pretty in new years deep a got And for our less the for the the about entrants. as purpose-built at we talked And noting. our are for confident. XX% we that have are second a like than we entirely they're higher because we're for new kind is the entrants. incumbents conversions so important. the found emerged than on far And did percentage versus at market coming all

way business we're So, think given I but the surprises none us functions that passing along. of that

Juan Sanabria

And then, just as follow-up. a

time to of development to On I the typical the What's target? have the kind the been it the release deliveries. new I XX%, delivered a how would a be frame in projects think getting of fair remaining that space? terms XX%, your presume on are other which previously And HCA lease budgeted that up pipeline, XX%

Scott Brinker

the completed. come is until from from doesn't We the a a that Yeah. of point. Typically at lot more fiscally lot interest party interest tenants doctors building third see

you our was is now effectively that XXX% building at, for building Myrtle -- and which is the Beach Grand If look leased. complete, Strand that first example,

think year about that's and get stabilized took we XXs what a be occupancy upper to the building that get and from of the half to XXs the depending other a to kind on of and market it a about of number we And factors. anywhere to typically there. initial could after year two size of upper rate and years So, a opening half

Juan Sanabria

Thanks, Scott.

Scott Brinker

Thanks, Juan.

Operator

Thank you.

question ahead. comes Barclays. Steven go next from Valiquette Our Please of

Steven Valiquette

everybody. landscape. medical lot of on Couple the Great. office just Thanks a questions

those So really you relationships you takes two for I'll implications M&A medical any REIT announcements on have I'll health out last and anything or puts one your let for on Are own topic able it that when high-level, among a a answer it's other? peers. just activity the office not changing opportunities, different thinking your comment just medical you, then way announcement a about earnings some system you or call, obviously, another office. follow-up to on regarding major or throw of or there, to, your since at proposed been

Tom Herzog

Yes. again. this is Tom Herzog, Steven, Yes.

last news So the the three interesting, couple, obviously, over days.

questions are on did or with filings, merger have any the we're us had financing HCA, we Party related were in to asked for we providing any involved sign nor conversations F, which deal, other able be Party to clear, nor Party are this the were in last any we D As that answer of party To been not not those HR. which indicated quarter, we C, we NDA now call. named

transactions, involves drive the lots on strategy relationships HCA primarily our and development a hitting about focus our well science as talking our life quite Our That identification with while, as for been acquisition program. remains one-off side, using development and is to market doubles. our scale that singles in and but where and of we've

press. plays it We'll been lot us, Healthpeak. not impact see all but how has of certainly out, for whole interesting So a on it

Steven Valiquette

helpful Okay. That's clarify to that.

health a systems around seeing is health many this the on any on whatsoever, have at just the other or far real own with, pressure estate costs, with not some corner you of outpatient, decisions, talk operators, you The or medical we from XXXX, impacting now it variable all real your dynamics skilled office, so their labor expansion announcements. medical, impact, really of among just as for these Are question, labor of your view? labor health have HCA system with really XX system the estate, relationships still reduction page particularly right own landscape look major current supplement relationships elevated for in

Tom Klaritch

is This Tom Yes. Hey. again.

results the far you as up, impact any when were as little fairly the surgeries hospital up. the But Obviously, they the Their quarter lower actually kind of labor. look were We side. the from on seen for haven't at side, quarter a had revenue the HCA from admissions good year. a guidance report did

from a business So they're standpoint great. doing

any kind expense of they'll a I But correct issues. facilities. think, our we problem their in not have seen

services a to it's actually fact, benefit, in and sometimes provided acute In like more now are a cheaper building setting those and ours. provide because more in it's the outpatient services

anything, time demand as So, for might our the in moves buildings space if it forward. boost

Steven Valiquette

great. That's Okay.

on check box to wanted Thanks. the that. Just

Tom Herzog

Steven. Thanks,

Operator

Mueller of Next Please, ahead. question go comes Mike JPM. from

Mike Mueller

returns guess, in costs comments construction land kept higher, Yes. Hi. considerably have expectation lower returns to and relatively or keep those today, your given your it XXXX I up place about that Tom, have your rents XXXX that would costs is somewhat and than what's moving starts stable? anticipate you market development enough

Tom Klaritch

Yes. Great. are land obviously have Market up dramatically. rents risen, have costs costs certainly helped, but

we forever. course, Fortunately, that amount continue of hold bank that know land while said a as it massive in cost. through densification And you we've our opportunities. But as can't on our a far been as mid-Xs of yield quite for said, land can't. we've We've the

exists of the some estimated as of place as land the yield most country. hottest best markets in we on forward, in own would not So shaping some but projects the because going we the that much already be

that it the our shave range, X.X% if now back, probably were current right you swagging pipeline. we would X.X% would Brinker in what versus we So somewhere in say yields

right? Sound about,

Scott Brinker

the sounds Yes right, land to if that you mark market certainly, Tom.

Tom Klaritch

time, land Yes. higher because than we've may historical that returns costs. that holding But that our at we're be same at got the

about still on get as we we our demand keeping program aggressive in and how that development into account, supply a and we're in feel development starts markets taken the and in have our on market each quite and market three all very So, close timing. good eye to separately each

Mike Mueller

Got it.

just I quick and just starts any then missed in case on And is there follow-up. update potential it, Okay. timing? terms of tailwave In a some

Tom Herzog

Scott, to Yes, want take do that? you

Scott Brinker

something with mean it's still team going we're and creating engaged on to work take way about with mean legislative to particularly Actually can I I mechanism the local group its we closely an working will alignment proposed it. recommendations zoning which agree neighborhood is not It's that make just is that the pretty a Yes, process. group. making what that. with basis the a like a excited our We're something Yes. policy what we will on stakeholders with. look look does rezoning focused would become. order I is that to be expect put through regular on for anyway. acre the together, neighborhood, ultimately It is like to

with So earning the to we're progress the interim, we're be to investment. in happy that that pleased with continue date yield on the

Mike Mueller

it. Got

you. Thank Okay.

Tom Herzog

Thanks, Mike.

Operator

[Operator ahead. comes John Instructions] Our Pawlowski, from next Please go question Green Street's.

John Pawlowski

Thanks.

more systemic building, acquired? apologize for you MOB I buildings few of I trigger portfolio?. missed of could Pete, the a vintages the question And MOB and one color of age potentially just Just in of your terms whether on review little more give this me. certain comments it us across the demolition. Could when a was a bit there's

Tom Herzog

Tom you that one. take maybe Klaritch, could

Tom Klaritch

as know part of Healthpeak actually late that health Yes MedCap MedCap as not XXXX And we you in purchased or may acquired building was Sure. may in -- the transaction back XXXX. XXXX.

operations first portfolio hospital occurrence. I the about years. XX been in been office a and It or campus. And seen it's the medical either side been It sits kind ever for for and hospital redevelop involved I've almost the XX went this. We was MOB So odd with side years. the to building. it's of building like on great something time, the an on construction

given those equipment vacate quarter. just could third cost said, and happened prudent to building on and move any it check think some campus We have years did to the in issues noticed same forensic in moving the that to the all able and on probably was it other over of It contractor building, the have campus. the demolished, of the that we we but the We're them thought now. it, the just the tenants. started irregularities floor we the and older was built contractor building. an XX As are two other facade of did buildings in of a It's and to -- in -- engineer age XX not check we those been out more old. one I the were by out. design fix buildings at brought We the of it's ultimately a we When the plate to some take were little least building fixed,

fluke it throughout was our don't just I that a So to we be recurring got expect occurrence think and portfolio.

Tom Herzog

I have been would would been it to maybe have of add not it built would fixed, standards the but new. what that full

it all our assessed if tenants of felt answer. better those safety that building for there's it is that did the was possibility to down. remaining that preference and the our relocated life any the we thing right physicians So We've and said take

safety but So we us risks. never bucks, obviously few a take life would it costs

was that our So decision on that one.

John Pawlowski

time. your for Thanks Okay.

Tom Herzog

Yeah. Thank you.

Operator

Next question Instructions] Anderson, ahead. Rich [Operator comes Please from SMBC. go

Rich Anderson

morning. Hey, thanks. Good

developing the side? the and And hard imagine really science in this steps on involved hard and clear of as cetera happening it Healthpeak of So as be a was about much as Tom, of going major you XX company by of Welltower some the this et type large to tone that. where on of but saga of Has MOB your and lack years were involvement ago. type a see made point? consolidating go-forward relationships that are perhaps thinking boy exclusively should the HTA, were we and with the changed are something made years almost some continuing the tackling transaction be a that appreciate at type the investing But blocking et going XX, mentality along are you named within Is some about like life cetera, about of M&A it's many a point and all type entity in because know the you pretty way pre-Healthpeak that a HR, of and consolidator back of company to we stakes basis. to to being today -- the it's what and you

Tom Herzog

the to future. us go it scrubbed and it in a might three sit as where outcome a our an the We expand. what of do eliminated taking of we it we a today three and on we business low excellent as all into so irreplaceable literally cost inferior even will and businesses and have such fact a is are Rich. and in we today's have a densification in describe next assets. of that's over very in and potential all opportunities produce we relationships in the the problem that up way, global have that we through significant an leaves we opportunities that place place where forward expansion number vital strategy have all and basis our when here MOBs, half effort Yeah, consider businesses competitive have competitive down risk would to years interesting why three replicated. we we very years question would edge I had we look portfolio land a in can't something that to large businesses advantage, represent CCRCs, with and We at be be ended to dozen And insightful society environment this moving spent

So our the to has view continued let's execute strategy. be,

to something continue that that currently be execute have. enormous distracted get going Let’s a the not we're to forward on and it be loser, and going we winner, with could a could plan

Rich Anderson

Great. Appreciate that. Fair enough.

Tom Herzog

Thank you, Rich.

Operator

closing Thank back for like Tom to Mr. remarks. you. That call concludes our call. Please turn Herzog go I'd over the to ahead.

Tom Herzog

you, in your industry appreciate upcoming do over the Yeah, thank of you seeing coming for Healthpeak hopefully everybody the of you, many We to us events joining all operator. months. at you And look forward and thank today. interest continued

soon. so So, we'll and thank talk much you Bye-bye. to you

Operator

Thank you concluded. today's now for is call presentation. attending The

disconnect. now may You

Healthpeak Properties (DOC) 4 May 222022 Q1 Earnings call transcript