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Shares of Healthpeak Properties, Inc. have gained 10.4% in the quarter-to-date period, outperforming the industry’s rally of 2.3%.
Headquartered in Denver, CO, the healthcare real estate investment trust (REIT) reported third-quarter 2022 funds from operations (FFO) as adjusted per share of 43 cents, in line with the Zacks Consensus Estimate. The reported figure was up 7.5% from the year-ago quarter’s 40 cents.
The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) net operating income (NOI) was witnessed across all three segments.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price.
Healthpeak has a diversified, high-quality and well-balanced portfolio across three core asset classes of life science, medical office and continuing care retirement communities (CCRC) real estate.
The life-science industry has been benefiting from the increasing life expectancy of the United States population and biopharma drug development growth opportunities. As a result, the demand for life science real-estate assets has been soaring.
Healthpeak has been focusing on enhancing its life-science real-estate assets to capitalize on this positive trend. In the third quarter of 2022, it executed life science leases totaling more than 500,000 square feet.
The life science portfolio’s top 25 tenants represented 50% of the annualized base rent (ABR) as of Sep 30, 2022. As of the same date, publicly-traded tenants accounted for 73% of the ABR. This has enabled the company to generate steady revenues.
Senior citizens constitute a major customer base of healthcare services and incur higher healthcare expenditures than the average population.
Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, has been benefiting from the expenditure trend.
PEAK’s capital-recycling efforts have enabled it to acquire and fund the development of life science and medical office assets in high barrier-to-entry markets, which bode well.
As of Sep 30, 2022, Healthpeak had five life science development projects underway, with an estimated total cost of $1.03 billion and one medical office building development project in process with an aggregate estimated cost of nearly $33 million.
PEAK’s robust balance-sheet position enabled it to capitalize on long-term growth opportunities. It exited third-quarter 2022 with $2.4 billion of liquidity and a net debt-to-adjusted EBITDAre of 5.3X. Also, long-term credit ratings of Baa1(Stable) from Moody’s and BBB+ (Stable) from S&P Global and Fitch as of Oct 31, 2022, render the company easy access to the debt market at favorable costs.
The company’s trailing 12-month return on equity (ROE) is 7.28% compared with the industry’s average of 4.65%, indicating that it is more efficient in using shareholders’ funds than its peers.
Healthpeak revised its guidance for 2022. Management expects FFO as adjusted per share between $1.72 and $1.74, revising upward from $1.68 and $1.74 stated earlier. The Zacks Consensus Estimate for the same is pegged at $1.74, which is within the guided range.
Same-store portfolio cash-adjusted NOI growth for the total portfolio was revised upward from 3.5-5% to 4.5-5.5%.
Analysts, too, seem bullish about this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for the company’s 2022 FFO per share indicates a favorable outlook as it has increased marginally upward over the past month.
Nonetheless, intense competition from other industry players in the healthcare services sector and rising interest rates are key concerns for the company.
Image: Bigstock
Key Reasons Why Healthpeak (PEAK) Stock Jumped 10.4% QTD
Shares of Healthpeak Properties, Inc. have gained 10.4% in the quarter-to-date period, outperforming the industry’s rally of 2.3%.
Headquartered in Denver, CO, the healthcare real estate investment trust (REIT) reported third-quarter 2022 funds from operations (FFO) as adjusted per share of 43 cents, in line with the Zacks Consensus Estimate. The reported figure was up 7.5% from the year-ago quarter’s 40 cents.
The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) net operating income (NOI) was witnessed across all three segments.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price.
Healthpeak has a diversified, high-quality and well-balanced portfolio across three core asset classes of life science, medical office and continuing care retirement communities (CCRC) real estate.
The life-science industry has been benefiting from the increasing life expectancy of the United States population and biopharma drug development growth opportunities. As a result, the demand for life science real-estate assets has been soaring.
Healthpeak has been focusing on enhancing its life-science real-estate assets to capitalize on this positive trend. In the third quarter of 2022, it executed life science leases totaling more than 500,000 square feet.
The life science portfolio’s top 25 tenants represented 50% of the annualized base rent (ABR) as of Sep 30, 2022. As of the same date, publicly-traded tenants accounted for 73% of the ABR. This has enabled the company to generate steady revenues.
Senior citizens constitute a major customer base of healthcare services and incur higher healthcare expenditures than the average population.
Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, has been benefiting from the expenditure trend.
PEAK’s capital-recycling efforts have enabled it to acquire and fund the development of life science and medical office assets in high barrier-to-entry markets, which bode well.
As of Sep 30, 2022, Healthpeak had five life science development projects underway, with an estimated total cost of $1.03 billion and one medical office building development project in process with an aggregate estimated cost of nearly $33 million.
PEAK’s robust balance-sheet position enabled it to capitalize on long-term growth opportunities. It exited third-quarter 2022 with $2.4 billion of liquidity and a net debt-to-adjusted EBITDAre of 5.3X. Also, long-term credit ratings of Baa1(Stable) from Moody’s and BBB+ (Stable) from S&P Global and Fitch as of Oct 31, 2022, render the company easy access to the debt market at favorable costs.
The company’s trailing 12-month return on equity (ROE) is 7.28% compared with the industry’s average of 4.65%, indicating that it is more efficient in using shareholders’ funds than its peers.
Healthpeak revised its guidance for 2022. Management expects FFO as adjusted per share between $1.72 and $1.74, revising upward from $1.68 and $1.74 stated earlier. The Zacks Consensus Estimate for the same is pegged at $1.74, which is within the guided range.
Same-store portfolio cash-adjusted NOI growth for the total portfolio was revised upward from 3.5-5% to 4.5-5.5%.
Analysts, too, seem bullish about this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for the company’s 2022 FFO per share indicates a favorable outlook as it has increased marginally upward over the past month.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nonetheless, intense competition from other industry players in the healthcare services sector and rising interest rates are key concerns for the company.
Stocks to Consider
Some better-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , Lamar Advertising (LAMR - Free Report) and Equity Commonwealth (EQC - Free Report) .
The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is pegged at $1.92. VICI currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share is pegged at $7.34. LAMR has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Equity Commonwealth’s ongoing year’s FFO per share is pegged at 33 cents. EQC presently sports a Zacks Rank #1.
Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.