Healthpeak Properties Q4 2024: Unpacking Contradictions in Lab Demand, Merger Synergies, and Growth Guidance

These are the key contradictions discussed in Healthpeak Properties' latest 2024Q4 earnings call, specifically including: Lab Leasing and Tenant Demand, Merger Synergies, Investment Strategy and Guidance, and CCRC Growth Expectations:



FFO and AFFO Growth:
- Healthpeak reported FFO adjusted of $1.81 per share and AFFO of $1.60 per share for the full year of 2024, with a total portfolio same store growth of 5.4%.
- The growth was driven by strong performance in all three segments (Outpatient Medical, Lab, and CCRCs), merger synergies, and strategic acquisition and leasing activities.

Outpatient Medical Segment Performance:
- The Outpatient Medical segment achieved same store growth of 3.2%, exceeding expectations with 6.2 million square feet of leases and a tenant retention rate of 88%.
- This performance was attributed to the execution of leases with positive rent mark-to-market and strong relationships with health systems.

Lab Segment Success:
- The Lab segment saw same store growth of 5%, surpassing the high end of expectations, with rent mark-to-market on renewals at 11%.
- This strong performance was due to Healthpeak's competitive advantages, including scale, a high-quality portfolio, and industry relationships.

Investment and Capital Deployment:
- Healthpeak plans to deploy at least $500 million in investments in 2025, including the $75 million mortgage loan in Torrey Pines, with an expected weighted average yield of 8%.
- The strategic investments aim to capitalize on the vacuum in liquidity and create opportunities for accretive acquisitions in the life science sector.

Dividend Increase and Strategic Positioning:
- Healthpeak increased its dividend, reflecting strong earnings growth, with an expected AFFO payout ratio that remains conservative.
- The decision aligns with the company's total return strategy, leveraging its competitive advantage in life science and outpatient medical sectors.