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Healthpeak Properties, Inc. reported fourth-quarter 2020 funds from operations (FFO) as adjusted of 41 cents per share, surpassing the Zacks Consensus Estimate of 40 cents. However, the reported figure compared unfavorably with FFO as adjusted of 44 cents per share recorded in the prior-year quarter.
The healthcare real estate investment trust (“REIT”) generated revenues of $431.7 million, missing the Zacks Consensus Estimate of $596 million. Nonetheless, the figure was 35% higher than the year-ago number.
Higher operating expenses and the dismal performance of its senior housing segment affected results. Moreover, the company slashed dividends for first-quarter 2021 and issued guidance for the ongoing year.
For 2020, Healthpeak reported FFO as adjusted of $1.64 per share, down 6.8% from the prior year’s $1.76 but beat the Zacks Consensus Estimate of $1.63. Total revenues of $1.6 billion jumped 33% year over year.
Behind the Headlines
Beginning fourth-quarter 2020, Healthpeak reported operating results from its hospitals in the medical office segment and its unconsolidated senior housing operating portfolio (“SHOP”) joint venture in other non-reportable segments. Taking account into these changes, the company registered 7.8% growth in the three-month cash same-store portfolio net operating income (NOI) for its life-science segment and a 1.2% rise in the medical office segment.
Moreover, on Dec 31, 2020, the company inferred that the operating results related to its SHOP and senior housing triple-net assets should be regarded as discontinued operations and hence have been removed from the same-store portfolio. Pro forma the aforementioned reporting update, Healthpeak witnessed a 25.8% year-over-year decline in the three-month cash same-store portfolio NOI for its SHOP segment, while senior housing triple-net registered 3.6% growth.
Portfolio Activity
During the fourth quarter, the company closed the buyout of the $664-million life-science asset Cambridge Discovery Park. The property, spanning 607,000 square feet, is located in Boston.
Moreover, in 2020, Healthpeak initiated a strategy to dispose of its senior housing triple-net and SHOP assets worth $4 billion. Making significant progress on this strategy, the company closed 12 transactions for gross proceeds of $2.5 billion.
Liquidity
Healthpeak had cash and cash equivalents of $44.2 million as of Dec 31, 2020, down from $80.4 million recorded at the end of 2019.
This January, the company used proceeds from its senior housing sales to repay debt of $1.45 billion, consisting of senior unsecured notes with maturity dates in 2023 and 2024, and a weighted average coupon of roughly 4%.
Pro forma this debt repayment, the company has no senior unsecured notes maturing until February 2025, thereby extending weighted average debt maturity to 7.2 years. Further, weighted average interest rate has been reduced to 3.5%.
Dividend Update
On Feb 9, the company announced a quarterly cash dividend of 30 cents per common share. The dividend will be paid out on Mar 5 to shareholders of record as of Feb 22, 2021. Notably, the dividend amount is around 19% lower than the previous dividend of 37 cents. The dividend adjustment will result in $150 million of annual dividend savings.
Outlook
The company expects FFO as adjusted per share of $1.50-$1.60 for 2021. The Zacks Consensus Estimate for the same is $1.61.
Same-store cash NOI growth for 2021 is expected to be 1.5-3% for the total portfolio. Same-store NOI at the company’s life science segment is projected to be up 4-5% year over year, while the same for the medical office segment is expected to improve 1.5-2.5%. However, continuing care retirement community (“CCRC”) is anticipated to witness a decline of 15-30%.
We now look forward to the earnings releases of other REITs like SBA Communications Corporation (SBAC - Free Report) , PS Business Parks, Inc. and Extra Space Storage (EXR - Free Report) , whichare slated to report fourth-quarter earnings on Feb 22.
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) Beats Q4 FFO Estimates, Slashes Dividend
Healthpeak Properties, Inc. reported fourth-quarter 2020 funds from operations (FFO) as adjusted of 41 cents per share, surpassing the Zacks Consensus Estimate of 40 cents. However, the reported figure compared unfavorably with FFO as adjusted of 44 cents per share recorded in the prior-year quarter.
The healthcare real estate investment trust (“REIT”) generated revenues of $431.7 million, missing the Zacks Consensus Estimate of $596 million. Nonetheless, the figure was 35% higher than the year-ago number.
Higher operating expenses and the dismal performance of its senior housing segment affected results. Moreover, the company slashed dividends for first-quarter 2021 and issued guidance for the ongoing year.
For 2020, Healthpeak reported FFO as adjusted of $1.64 per share, down 6.8% from the prior year’s $1.76 but beat the Zacks Consensus Estimate of $1.63. Total revenues of $1.6 billion jumped 33% year over year.
Behind the Headlines
Beginning fourth-quarter 2020, Healthpeak reported operating results from its hospitals in the medical office segment and its unconsolidated senior housing operating portfolio (“SHOP”) joint venture in other non-reportable segments. Taking account into these changes, the company registered 7.8% growth in the three-month cash same-store portfolio net operating income (NOI) for its life-science segment and a 1.2% rise in the medical office segment.
Moreover, on Dec 31, 2020, the company inferred that the operating results related to its SHOP and senior housing triple-net assets should be regarded as discontinued operations and hence have been removed from the same-store portfolio. Pro forma the aforementioned reporting update, Healthpeak witnessed a 25.8% year-over-year decline in the three-month cash same-store portfolio NOI for its SHOP segment, while senior housing triple-net registered 3.6% growth.
Portfolio Activity
During the fourth quarter, the company closed the buyout of the $664-million life-science asset Cambridge Discovery Park. The property, spanning 607,000 square feet, is located in Boston.
Moreover, in 2020, Healthpeak initiated a strategy to dispose of its senior housing triple-net and SHOP assets worth $4 billion. Making significant progress on this strategy, the company closed 12 transactions for gross proceeds of $2.5 billion.
Liquidity
Healthpeak had cash and cash equivalents of $44.2 million as of Dec 31, 2020, down from $80.4 million recorded at the end of 2019.
This January, the company used proceeds from its senior housing sales to repay debt of $1.45 billion, consisting of senior unsecured notes with maturity dates in 2023 and 2024, and a weighted average coupon of roughly 4%.
Pro forma this debt repayment, the company has no senior unsecured notes maturing until February 2025, thereby extending weighted average debt maturity to 7.2 years. Further, weighted average interest rate has been reduced to 3.5%.
Dividend Update
On Feb 9, the company announced a quarterly cash dividend of 30 cents per common share. The dividend will be paid out on Mar 5 to shareholders of record as of Feb 22, 2021. Notably, the dividend amount is around 19% lower than the previous dividend of 37 cents. The dividend adjustment will result in $150 million of annual dividend savings.
Outlook
The company expects FFO as adjusted per share of $1.50-$1.60 for 2021. The Zacks Consensus Estimate for the same is $1.61.
Same-store cash NOI growth for 2021 is expected to be 1.5-3% for the total portfolio. Same-store NOI at the company’s life science segment is projected to be up 4-5% year over year, while the same for the medical office segment is expected to improve 1.5-2.5%. However, continuing care retirement community (“CCRC”) is anticipated to witness a decline of 15-30%.
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 SBA Communications Corporation (SBAC - Free Report) , PS Business Parks, Inc. and Extra Space Storage (EXR - Free Report) , whichare slated to report fourth-quarter earnings on Feb 22.
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.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
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