Healthpeak Properties: Is the Recent Sell-Off a Strategic Entry Point for Income-Focused Investors?

The recent volatility in Healthpeak Properties (NYSE: DOC) has sparked debate among income-focused investors. With a Zacks Rank of #4 (Sell) and a stock price hovering near $16.66 as of December 2025, the company appears to be trading at a discount relative to its operational resilience and sector-specific tailwinds. This article evaluates whether the current sell-off represents a strategic entry point for value investors, balancing Healthpeak's financial performance, balance sheet strength, and the broader healthcare real estate landscape.

Mixed Earnings but Strong Operational Fundamentals

Healthpeak's third-quarter 2025 results revealed a dichotomy: while adjusted FFO per share of $0.46 exceeded estimates, net income fell short with a $0.17 loss per share. This discrepancy underscores the company's reliance on non-GAAP metrics to highlight performance, a common practice in real estate. However, the underlying operational metrics remain compelling. Same-store NOI grew 0.9% year-over-year, driven by a 9.4% increase in continuing care retirement communities (CCRCs) and 2.0% growth in outpatient medical properties. Outpatient medical leasing activity, in particular, has been robust, with 1.5 million square feet of new and renewal leases achieving +5.4% cash re-leasing spreads. These spreads reflect strong tenant demand, particularly for flexible spaces catering to cost-effective healthcare delivery models.

The company's balance sheet further supports its value proposition. With a net debt to adjusted EBITDA ratio of 5.3x and $2.7 billion in liquidity, Healthpeak maintains financial flexibility to pursue capital recycling initiatives. Management has outlined plans to generate up to $1 billion in proceeds from asset sales, a strategy that could enhance shareholder returns while reducing leverage. For income-focused investors, the $0.10167 monthly dividend (annualized at $1.22 per share) offers a yield of approximately 7.3% at current prices, significantly outpacing broader market benchmarks.

Sector-Specific Catalysts: Aging Population and Outpatient Care Shift

Healthpeak's business model is intricately tied to macro-level healthcare trends. The aging U.S. population-projected to see seniors aged 65+ account for 23% of the population by 2030-is a critical driver of demand for healthcare real estate. This demographic shift is accelerating the migration of care from inpatient hospitals to outpatient settings, a trend that directly benefits Healthpeak's portfolio. Medical office buildings (MOBs), which constitute a significant portion of its holdings, are experiencing sustained demand, with top 100 metro areas reporting 92.7% occupancy rates. Analysts note that limited new construction and the rise of outpatient care hubs-facilities offering diagnostics, urgent care, and behavioral health services-will further solidify this trend.

Technological advancements and labor shortages are also reshaping the sector. Healthcare providers are increasingly adopting AI-driven infrastructure, a development that could enhance the long-term value of Healthpeak's properties. Meanwhile, easing inflation and declining interest rates are expected to stabilize capital costs, enabling healthcare systems to fund new construction and facility upgrades. These factors collectively position Healthpeak as a beneficiary of structural growth, even as it navigates short-term earnings volatility.

Valuation Metrics and Risk Considerations

From a value investing perspective, Healthpeak's P/FFO multiple appears attractive. At $16.66 per share, the stock trades at approximately 9.0x 2025 guidance (FFO of $1.83 per share), well below historical averages for the sector. This discount is partly attributable to the recent earnings miss and mixed analyst ratings, but it may also reflect undervaluation of the company's capital recycling potential. For instance, the $1 billion in projected asset sale proceeds could be reinvested into higher-yielding opportunities or used to reduce debt, both of which would enhance long-term shareholder value.

However, risks remain. The lab segment's 3.2% NOI decline highlights exposure to cyclical demand, while the Zacks Sell rating reflects skepticism about near-term earnings recovery. Additionally, rising interest rates-though currently stabilizing-could pressure financing costs if the Federal Reserve reverses its easing trajectory. Investors must weigh these risks against the company's strong liquidity, defensive cash flows, and alignment with secular healthcare trends.

Conclusion: A Strategic Entry Point for Patient Investors

Healthpeak Properties' recent sell-off offers a compelling opportunity for income-focused investors willing to adopt a long-term horizon. The company's operational performance, resilient balance sheet, and alignment with structural healthcare trends-particularly the shift to outpatient care-justify a cautious bullish stance. While short-term earnings volatility and sector-specific risks warrant attention, the combination of an attractive dividend yield, undervalued P/FFO multiple, and $1 billion in capital recycling potential creates a margin of safety. For those seeking defensive, high-yield exposure to a sector poised for growth, Healthpeak's discounted valuation may represent a strategic entry point.