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Healthpeak (PEAK) Q3 FFO & Revenues Miss Estimates, NOI Down
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Healthpeak Properties, Inc. reported third-quarter 2020 funds from operations (FFO) as adjusted of 40 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. However, the reported figure compared unfavorably with FFO as adjusted of 44 cents per share in the prior-year quarter.
The healthcare real estate investment trust (REIT) generated revenues of $597.7 million, missing the Zacks Consensus Estimate of $606.8 million. Nonetheless, the figure was higher than the year-ago number of 537.9 million.
Higher operating expenses and the dismal performance of its senior housing segment affected results.
Behind the Headlines
Healthpeak witnessed a 2.8% year-over-year decline in the three-month cash same-store portfolio (SPP) net operating income (NOI). It registered 5.5% growth in life-science cash NOI, a 3.3% rise in the medical office segment and 0.8% advancement in other non-reportable segments. However, senior-housing segment cash NOI declined 6.3%.
Portfolio Activity
During the July-September period, the company acquired a 7-property medical office portfolio, spanning 439,000 square feet, for $169 million and another medical office building, spanning 107,000 square feet, in Scottsdale, AZ for $27 million.
During the September-end quarter, Healthpeak closed sales medical office and other assets for $15 million. Moreover, it is in various stages for the sale of more than $4 billion of senior housing operating portfolio (“SHOP”) and triple-net leased (“NNN”).
In September 2020, the company signed a 10-year lease for 118,000 square feet at the Boardwalk life-science development project in San Diego, CA. Notably, the 192,000-square-foot development project is now fully pre-leased.
Liquidity
Healthpeak had cash and cash equivalents of $197.1 million as of Sep 30, 2020, up from $144.2 million recorded at the end of 2019.
Moreover, as of Oct 30, 2020, the company’s $2.6-billion liquidity consisted of $2.4 billion of availability on its $2.5-billion revolving credit facility, and around $150 million of cash and cash equivalents.
Dividend Update
On Nov 2, the company announced a quarterly cash dividend of 37 cents per common share. The dividend will be paid out on Nov 23 to shareholders of record as of Nov 12, 2020.
Outlook
Same-store NOI at the company’s life science segment is projected to be up 5.25-5.75% year over year, as compared with 4-5% mentioned earlier. Strong leasing, robust mark-to-market and owe-than-expected bad debts have driven the increase.
Same-store NOI for the medical office segment is expected to improve 1.75-2.25% year over year, as compared with 1-2% mentioned earlier. Moreover, same-store NOI for the company’s other segment is expected to improve 1.75-2.50% year over year, unchanged from the prior outlook. Guidance remains withdrawn for the senior housing segment and the total portfolio.
Total stabilized SHOP occupancy is expected to fall 100-200 basis points (bps) in the fourth quarter. Moreover, COVID-19 related expenses for SHOP is projected to be $5 million in the December-end quarter.
October 2020 Preliminary Updates
At its life science segment, occupancy for October was 96.7%, up 40 bps since Sep 30. October rent payments were in line with September collections, with the company receiving 99% of rents for the month.
At its medical office segment, occupancy for October was 90.7%, stable as compared with Sep 30. The company collected 98% of contractual rents for the month, which is marginally better than September receipts.
In its senior housing operating portfolio, it continued to witness a decline in move-ins, move-outs, leads and tours. This likely resulted in occupancy declining 10 bps from September to 75.1%.
At its senior housing CCRC portfolio, total occupancy declined 20 bps from September to 79.4%. Further, at its triple-net lease portfolio, the company received 97% of rents and has deferred 3%.
We now look forward to the earnings releases of other REITs like Lexington Realty Trust (LXP - Free Report) , National Storage Affiliates Trust (NSA - Free Report) and Ventas, Inc. (VTR - Free Report) . While Lexington Realty and National Storage Affiliates are slated to report third-quarter earnings on Nov 5, Ventas will release results on Nov 6.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Healthpeak (PEAK) Q3 FFO & Revenues Miss Estimates, NOI Down
Healthpeak Properties, Inc. reported third-quarter 2020 funds from operations (FFO) as adjusted of 40 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. However, the reported figure compared unfavorably with FFO as adjusted of 44 cents per share in the prior-year quarter.
The healthcare real estate investment trust (REIT) generated revenues of $597.7 million, missing the Zacks Consensus Estimate of $606.8 million. Nonetheless, the figure was higher than the year-ago number of 537.9 million.
Higher operating expenses and the dismal performance of its senior housing segment affected results.
Behind the Headlines
Healthpeak witnessed a 2.8% year-over-year decline in the three-month cash same-store portfolio (SPP) net operating income (NOI). It registered 5.5% growth in life-science cash NOI, a 3.3% rise in the medical office segment and 0.8% advancement in other non-reportable segments. However, senior-housing segment cash NOI declined 6.3%.
Portfolio Activity
During the July-September period, the company acquired a 7-property medical office portfolio, spanning 439,000 square feet, for $169 million and another medical office building, spanning 107,000 square feet, in Scottsdale, AZ for $27 million.
During the September-end quarter, Healthpeak closed sales medical office and other assets for $15 million. Moreover, it is in various stages for the sale of more than $4 billion of senior housing operating portfolio (“SHOP”) and triple-net leased (“NNN”).
In September 2020, the company signed a 10-year lease for 118,000 square feet at the Boardwalk life-science development project in San Diego, CA. Notably, the 192,000-square-foot development project is now fully pre-leased.
Liquidity
Healthpeak had cash and cash equivalents of $197.1 million as of Sep 30, 2020, up from $144.2 million recorded at the end of 2019.
Moreover, as of Oct 30, 2020, the company’s $2.6-billion liquidity consisted of $2.4 billion of availability on its $2.5-billion revolving credit facility, and around $150 million of cash and cash equivalents.
Dividend Update
On Nov 2, the company announced a quarterly cash dividend of 37 cents per common share. The dividend will be paid out on Nov 23 to shareholders of record as of Nov 12, 2020.
Outlook
Same-store NOI at the company’s life science segment is projected to be up 5.25-5.75% year over year, as compared with 4-5% mentioned earlier. Strong leasing, robust mark-to-market and owe-than-expected bad debts have driven the increase.
Same-store NOI for the medical office segment is expected to improve 1.75-2.25% year over year, as compared with 1-2% mentioned earlier. Moreover, same-store NOI for the company’s other segment is expected to improve 1.75-2.50% year over year, unchanged from the prior outlook. Guidance remains withdrawn for the senior housing segment and the total portfolio.
Total stabilized SHOP occupancy is expected to fall 100-200 basis points (bps) in the fourth quarter. Moreover, COVID-19 related expenses for SHOP is projected to be $5 million in the December-end quarter.
October 2020 Preliminary Updates
At its life science segment, occupancy for October was 96.7%, up 40 bps since Sep 30. October rent payments were in line with September collections, with the company receiving 99% of rents for the month.
At its medical office segment, occupancy for October was 90.7%, stable as compared with Sep 30. The company collected 98% of contractual rents for the month, which is marginally better than September receipts.
In its senior housing operating portfolio, it continued to witness a decline in move-ins, move-outs, leads and tours. This likely resulted in occupancy declining 10 bps from September to 75.1%.
At its senior housing CCRC portfolio, total occupancy declined 20 bps from September to 79.4%. Further, at its triple-net lease portfolio, the company received 97% of rents and has deferred 3%.
Healthpeak currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Healthpeak Properties, Inc. Price, Consensus and EPS Surprise
Healthpeak Properties, Inc. price-consensus-eps-surprise-chart | Healthpeak Properties, Inc. Quote
We now look forward to the earnings releases of other REITs like Lexington Realty Trust (LXP - Free Report) , National Storage Affiliates Trust (NSA - Free Report) and Ventas, Inc. (VTR - Free Report) . While Lexington Realty and National Storage Affiliates are slated to report third-quarter earnings on Nov 5, Ventas will release results on Nov 6.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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