Healthpeak Properties, Inc. (DOC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: positive trends in the life science sector and strategic moves in outpatient medical and technology initiatives, but concerns over occupancy declines, lab segment challenges, and uncertain FFO outlook. The Q&A section highlights management's avoidance of specific details, which may raise investor skepticism. Given the lack of strong catalysts and management's cautious tone, the stock price is likely to remain stable, resulting in a neutral sentiment.
Key Financial Performance
FFO as adjusted (Q4 2025) $0.47 per share, with a year-over-year growth of approximately 3.9%. This growth was driven by strong performance in outpatient medical and senior housing segments.
AFFO (Q4 2025) $0.40 per share, reflecting stable performance across the portfolio.
Total portfolio same-store cash NOI growth (Q4 2025) 3.9%, attributed to strong leasing activity and operational efficiencies.
FFO as adjusted (Full Year 2025) $1.84 per share, with a year-over-year growth of 4%. This was supported by robust leasing activity and tenant retention in outpatient medical.
AFFO (Full Year 2025) $1.69 per share, reflecting consistent performance across the portfolio.
Outpatient medical leasing activity (2025) 4.9 million square feet, including 1 million square feet of new leasing, marking a record milestone for the company. Cash re-leasing spreads were 5% on renewals, with 79% tenant retention and 91% total occupancy.
Outpatient medical same-store growth (2025) 3.9%, exceeding the high end of the original guidance range, driven by strong sector fundamentals and tenant relationships.
Lab same-store growth (2025) 1.5%, with total occupancy at 77%. The recent Gateway portfolio acquisition in South San Francisco impacted occupancy by over 150 basis points.
Senior housing same-store growth (2025) 12.6%, with 16.7% growth in Q4 2025. This was driven by favorable supply-demand fundamentals and strong execution by the asset management team.
Net debt to adjusted EBITDA (2025) 5.2x, with $2.4 billion of liquidity, reflecting a strong balance sheet and disciplined capital allocation.
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Operating Highlights
Outpatient Medical Leasing: Achieved a record milestone of 1 million square feet of new leasing in 2025, with 4.9 million square feet of total leasing. Cash re-leasing spreads were 5% on renewals, and tenant retention was 79%.
Lab Segment Acquisition: Acquired a 1.4 million square foot campus in South San Francisco, with 500,000 square feet of vacancy, aiming to capitalize on recovery in the life science sector.
Outpatient Medical Sales: Sold $325 million of fully stabilized outpatient assets at a low 6% cap rate in Q4 2025, leveraging strong private market demand.
Senior Housing Expansion: Acquired a 46.5% interest in a 3,400-unit senior housing portfolio for $314 million and plans to transition 19 communities to new operators.
Corporate Automation: Investments in technology and process improvements to enhance investment management capabilities and streamline workflows.
Senior Housing Operational Growth: Achieved 17% same-store growth in Q4 2025, driven by highly amenitized campuses, asset management collaboration, and favorable supply-demand dynamics.
Janus Living IPO: Announced the creation of a pure-play senior housing REIT, Janus Living, to unlock shareholder value. Healthpeak will contribute its senior housing portfolio to Janus Living and manage the new company.
Life Science Sector Strategy: Positioned to acquire properties at compelling valuations as the sector recovers, leveraging past decisions to halt capital deployment in life sciences during downturns.
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Risk or Challenges
Life Science Segment Challenges: The operating environment in the life science segment has been challenging over the past four years, with a peak in intensity in early 2025. This has negatively impacted earnings, and the recovery is expected to lag due to the time required to build a pipeline, sign leases, and commence rent. Additionally, there is a supply overhang in the sector, although some buildings are pivoting to alternative uses.
Senior Housing IPO Risks: The planned IPO of Janus Living introduces potential risks, including the dilution of Healthpeak's ownership in the new company and reliance on the operating results and stock price of Janus Living for economic returns. The transition of 19 communities to new operators also carries execution risks.
Debt Refinancing and Interest Rate Impact: Healthpeak faces $1.1 billion of refinancing activity in 2026, including $650 million of senior unsecured notes and $440 million of secured mortgages. Refinancing at higher interest rates could impact financial performance.
Lab Segment Occupancy Decline: The lab segment has experienced a decline in occupancy, ending 2025 at 77%, which includes the impact of the Gateway portfolio acquisition. This has contributed to a reduction in earnings and poses challenges for re-leasing and operational costs.
Capital Recycling and Asset Sales: Healthpeak plans to execute $1 billion or more in asset sales, recapitalizations, and loan repayments in 2026. This strategy carries risks related to market conditions and the ability to achieve favorable terms.
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Guidance & Outlook
Outpatient Medical Sector: The outpatient sector is benefiting from the ongoing shift in care delivery to lower-cost, more convenient outpatient settings. Policy changes from Washington support demand, including CMS allowing more surgeries in outpatient settings. New supply remains low due to high construction costs. The company is selling fully stabilized, less core outpatient assets at strong prices, including $325 million in Q4 at a low 6% cap rate.
Lab Segment: The lab segment is showing early signs of recovery. New deliveries will soon go to zero and remain at zero for several years. Certain life science buildings are pivoting to alternative uses, addressing the supply overhang. The company sees opportunities to acquire properties on a compelling basis as the sector recovers. A recent acquisition in South San Francisco offers significant upside potential with 500,000 square feet of vacancy in a prime location.
Senior Housing Segment: The company expects another year of strong growth in 2026, driven by highly amenitized campuses, collaboration with operating partners, and favorable supply-demand fundamentals. The planned IPO of Janus Living, a pure-play senior housing REIT, is expected to capture near-term value and future growth. The company has $360 million of senior housing acquisitions in the pipeline, expected to close in Q1 2026 and be contributed to Janus Living.
2026 Financial Guidance: Forecasting FFO as adjusted to range from $1.70 to $1.74 per share. Total same-store NOI growth is forecasted between -1% to +1%, with outpatient medical expected to grow 2%-3%, lab expected to decline 5%-10%, and senior housing expected to grow 8%-12%. The reduction in earnings is primarily due to the lagging impact of the life science environment on the lab segment.
Capital Recycling and Refinancing: The company plans $1 billion or more of asset sales, recapitalizations, and loan repayments in 2026. Approximately $1.1 billion of refinancing activity is planned, including $650 million of senior unsecured notes maturing in July and $440 million of secured mortgages maturing throughout the year.
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Shareholder Return Plan
Dividend Growth: The company has managed to grow its dividend since 2022 despite challenges in the life science environment.
Share Buyback Program: No mention of a share buyback program was made in the transcript.
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Key Q&A
Q:Can you discuss the Gateway acquisition and its complement to your existing portfolio?
A:The Gateway acquisition is seen as a significant opportunity, complementing the existing portfolio in South San Francisco. The campus is 6.5 million square feet, allowing for seamless tenant access. The acquisition is breakeven in year 1 with potential for significant growth over time. The company is optimistic about the market momentum and views the acquisition as a strategic buy at a favorable time.
Q:How should we think about lab segment occupancy and its cadence throughout the year?
A:Total occupancy by year-end 2026 is expected to improve compared to 2025. The pipeline is strong, weighted towards new leasing, and there are not many expirations this year. However, occupancy may fluctuate quarter-to-quarter due to the large size of life science leases.
Q:Can you provide more details on the 100,000 square feet of lab leasing activity under execution or LOI?
A:The 100,000 square feet of leasing activity is lower than past levels due to the slower year-end period and preparation for the JPMorgan conference. However, the pipeline is strong, starting the year 50% higher than the previous year, with a shift towards new leasing rather than renewals.
Q:What are the underlying assumptions for the negative 5% to negative 10% same-store NOI growth in the lab segment?
A:The decline is primarily due to lower occupancy at the end of 2025, which will impact NOI and earnings in the first quarter of 2026. Occupancy is currently in the high 77% range, and the trajectory will become clearer as the year progresses.
Q:What is the impact of lab occupancy losses on 2026 FFOA?
A:The $0.12 impact on 2026 FFOA is due to a combination of factors, including lab occupancy losses, higher refinancing and borrowing costs, and the Salt Lake City transaction. Each 100 basis points of total occupancy loss impacts earnings by $0.01 to $0.015.
Q:What is causing the lag between lease expirations and financial impact?
A:The lag is due to factors such as leases expiring at the end of the year, early termination fees, and security deposits. The financial impact of lease expirations is realized over 12 to 18 months, and the same applies to occupancy growth.
Q:Can you characterize the types of tenants in the 1.5 million square feet pipeline?
A:The pipeline includes a mix of Series A companies, established public biopharmas, new tenants, renewals, and expansions. It represents a broad cross-section of the industry.
Q:What is the expected recovery timeline for the Gateway campus?
A:The Gateway campus is expected to achieve incremental upside over the next 2 to 3 years. The acquisition is breakeven on day 1, and the upside will be captured gradually.
Q:What is the strategy for addressing debt maturities in 2027-2029?
A:The company plans to be opportunistic in accessing the market for refinancing. There is no current plan to accelerate 2027 maturities into 2026.
Q:What percentage of 2026 life science expirations is expected to move out, and what is the status of negotiations?
A:There are 450,000 square feet of expirations in 2026, which will be offset by commencements. Some renewals have already been addressed, and negotiations for later expirations are ongoing.
Q:Has there been any change in the leasing pipeline conversion timelines?
A:The leasing process is taking longer than during the peak due to cautious decision-making by boards and CEOs. However, the current pipeline is more credible, with higher confidence in transactions.
Q:What is the pro forma NOI for the lab segment, and how should we model it for 2026?
A:Occupancy declined by 375 basis points sequentially, and the NOI impact will be more pronounced in the first quarter of 2026. Same-store NOI is expected to decline by 5% to 10%.
Q:What is the CapEx outlook for the senior housing portfolio?
A:The senior housing portfolio does not require significant deferred CapEx. Transition-related costs will include technology and signage, but the focus is on operational improvements rather than capital revitalization.
Q:How has the lab watch list changed over the past year?
A:The lab watch list has reduced significantly due to improved capital markets activity. Less than 10% of ABR is from preclinical tenants, and the company is monitoring specific names for potential vacates.
Q:Is the leasing pipeline shifting towards redevelopment and development properties?
A:Yes, there has been credible activity in redevelopment properties, with 121,000 square feet of leases executed in the quarter. Discussions on development and redevelopment spaces are ongoing.
Q:What is the expected performance of the Gateway acquisition in 3 to 5 years?
A:The Gateway acquisition is expected to stabilize with high single-digit unlevered returns. The company sees significant upside due to the low acquisition basis and strong market position.
Q:What is the status of synergies from the Physicians Realty acquisition?
A:Most synergies from the Physicians Realty acquisition are already reflected in the 2025 run rate and 2026 guidance. There is still some opportunity to internalize property management over the next 1 to 2 years.
Q:What is the expected impact of operator transitions in the senior housing portfolio?
A:Occupancy may decline slightly during the transition, but there is significant upside potential, with 50%+ NOI growth expected over the next 2 to 3 years.
Q:What is the composition of tenants in the leasing pipeline post-Labor Day?
A:The pipeline includes a mix of traditional wet lab users, AI-related tenants, and office-related users. The ability to attract diverse tenants highlights the flexibility of the portfolio.
Q:What is the outlook for FFO in 2026 and beyond?
A:2026 is expected to be the bottom for FFO, with outpatient and senior housing segments performing well. Life science occupancy is expected to improve, and refinancing will be a key variable.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the pro forma NOI for the lab segment, the exact percentage of 2026 life science expirations expected to move out, and the detailed composition of tenants in the leasing pipeline. Additionally, they did not clarify the exact financial impact of operator transitions in the senior housing portfolio or the specific timeline for Gateway campus recovery.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AJ Healthpeak
Area life
IPO
Janus Living
Pegasus
SEC
San Francisco
Senior Living
South San
acquisition housing
announcement
building
campus
cap rate
community
creation
delivery
effort
exhibit
foot
housing portfolio
leasing activity
life science
merger
outpatient sector
outpatient setting
ownership
partner
property
recovery
science environment
shareholder
supply
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tenant
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DOC Transcript
Healthpeak Properties, Inc. (DOC) Q4 2025 Earnings Call Transcript
Unknown2-3
The earnings call reveals mixed signals: positive trends in the life science sector and strategic moves in outpatient medical and technology initiatives, but concerns over occupancy declines, lab segment challenges, and uncertain FFO outlook. The Q&A section highlights management's avoidance of specific details, which may raise investor skepticism. Given the lack of strong catalysts and management's cautious tone, the stock price is likely to remain stable, resulting in a neutral sentiment.
Healthpeak Properties, Inc. (DOC) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings call highlights strong performance in key areas like the CCRC portfolio and outpatient medical business, with positive sentiment from AI-driven lab demand. While there are concerns about lab occupancy and non-cash impairments, the company's strategic recycling plan, robust leasing pipeline, and strong demand for assets suggest a positive outlook. Despite some management hesitance in guidance, the overall tone is optimistic, indicating potential stock price growth.
First Citizens BancShares, Inc.(FCNCA) Q2 2025 Earnings Conference Call Transcript
Unknown7-25
The earnings call presents a mixed picture: strong financial metrics like share repurchases and deposit growth, but with cautious guidance on loan growth and competition. The Q&A reveals cautious optimism about SVB's business and venture capital activity, but also highlights uncertainties in the economic environment and competition. The refusal to provide guidance on Web3 services and debt issuance adds some negative sentiment. Overall, the balanced positive and negative elements suggest a neutral stock price reaction over the next two weeks.
Healthpeak Properties, Inc. (DOC) Q2 2025 Earnings Call Transcript
Positive7-25
The earnings call summary and Q&A reveal a generally positive outlook. The company shows strong financial performance with significant NOI growth, strategic capital allocation, and promising regulatory updates. Despite some challenges in the Lab segment, such as occupancy decline due to capital raising issues, the overall outlook is optimistic with strong outpatient medical performance and effective use of AI. The company's strategic focus on asset sales, stock buybacks, and selective investments also supports a positive sentiment.
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