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HEALTHPEAK PROPERTIES, INC. (DOC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered diluted EPS of $0.01, Nareit FFO of $0.44 per share, FFO as Adjusted of $0.46 per share, AFFO of $0.40 per share, and Total Same-Store Cash (Adjusted) NOI growth of 5.4%; sequential FFO as Adjusted improved vs Q3 ($0.45), while AFFO dipped slightly ($0.41 → $0.40) .
  • Management raised the quarterly dividend by 1.7% to $0.305 and plans to convert to a monthly dividend (~$0.10167 per month) beginning April 2025, highlighting stable cash flows and investor-friendly capital returns .
  • Leasing momentum remained strong: 1.5 million square feet executed in Q4, including 652k lab square feet with +30% cash releasing spreads and 879k outpatient medical square feet with 83% retention and +2% cash releasing spreads; Net Debt to Adjusted EBITDAre at 5.2x supports a measured “offense” in capital deployment .
  • Initial 2025 guidance calls for FFO as Adjusted of $1.81–$1.87 per share and Total Merger-Combined SS Cash (Adjusted) NOI growth of 3–4%, underpinned by ~$500M of investments (8%+ yields) and signed-but-not-yet-occupied leases slated to aid earnings late-2025; management signaled continued synergy capture toward a ~$65M run-rate .

What Went Well and What Went Wrong

What Went Well

  • Record leasing and positive rent economics: Q4 lab renewals achieved +30% cash releasing spreads (incl. a 130k sf Torrey Pines renewal at +45%) and major deals at Portside (205k sf) and Vantage (63k sf) accelerated campus leasing .
  • Integration and synergies ahead of plan: ~$50M merger-related synergies achieved in 2024 (exceeding prior midpoint by $10M), with management targeting ~$65M run-rate after further internalizations in 2025; CommonSpirit early renewal strengthened outpatient cash flows .
  • Capital flexibility and pipeline: Credit facility maturity extended to 2029 and a targeted $500M 2025 investment plan at 8%+ yields (structured life science loans with purchase options, and highly pre-leased outpatient developments) .

What Went Wrong

  • GAAP profitability softness: diluted EPS fell to $0.01 in Q4 (from $0.12 in Q3; $0.13 in Q4 2023), driven by costs, depreciation/amortization, and casualty-related charges; Nareit FFO per share was down year-over-year (Q4 2024: $0.44 vs $0.48) .
  • Casualty costs: Hurricane Milton-related charges totaled ~$25.26M in Q4; management noted high deductibles in affected states and that portions above deductible would be insured but the booked charge reflects cost borne in the quarter .
  • Elevated TI and leasing drag timing: certain large renewals required higher TI to convert office-heavy layouts to lab, and several signed leases are not yet occupied, deferring earnings contribution into late-2025; lab occupancy recovery framed as multi-quarter (goal: mid/high 80s to low 90s) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$695.5 $700.4 $698.0
Diluted EPS ($)$0.21 $0.12 $0.01
Nareit FFO per Share ($)$0.44 $0.44 $0.44
FFO as Adjusted per Share ($)$0.45 $0.45 $0.46
AFFO per Share ($)$0.39 $0.41 $0.40
Same-Store Cash (Adjusted) NOI Growth (YoY %)4.5% 4.1% 5.4%
MetricQ4 2023Q4 2024
Total Revenues ($USD Millions)$553.7 $698.0
Diluted EPS ($)$0.13 $0.01
Nareit FFO per Share ($)$0.48 $0.44
FFO as Adjusted per Share ($)$0.46 $0.46
AFFO per Share ($)$0.36 $0.40

Segment Portfolio Cash Real Estate Revenues (trend):

SegmentQ2 2024Q3 2024Q4 2024
Outpatient Medical ($USD Thousands)$317,976 $302,229 $301,759
Lab ($USD Thousands)$205,546 $214,187 $210,612
CCRC ($USD Thousands)$140,890 $142,845 $145,963
Other ($USD Thousands)$21,360 $21,815 $21,751
Total Portfolio Cash Real Estate Revenues ($USD Thousands)$685,772 $681,076 $680,085

KPIs:

KPIQ4 2024
Lab leasing executed (sf)652,000
Lab renewal cash releasing spreads+30%
Outpatient medical leasing executed (sf); retention; renewal cash releasing spreads879,000 sf; 83%; +2%
Total new + renewal lease executions (sf)1.5 million
Net Debt to Adjusted EBITDAre5.2x
Dividend change$0.305 per quarter (+1.7%) and monthly dividend plan beginning April 2025 (~$0.10167/month)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPS per ShareFY 2025N/A$0.30 – $0.36 Initial
Diluted Nareit FFO per ShareFY 2025N/A$1.81 – $1.87 Initial
Diluted FFO as Adjusted per ShareFY 2025N/A$1.81 – $1.87 Initial
Total Merger-Combined SS Cash (Adjusted) NOI GrowthFY 2025N/A3.0% – 4.0% Initial
DividendQ1 2025 onward$0.300/qtr$0.305/qtr; monthly plan from April 2025 (~$0.10167/month) Raised; cadence changed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 2024)Trend
Capital deployment and balance sheetDispositions $1.2B at ~6.5% cap; CommonSpirit early renewal; net debt ~5.2x (Q2) . Raised 2024 guidance (Q3) .~$500M 2025 investments targeted at 8%+ yields; structured life science loans with purchase options; “under-levered” balance sheet to go on offense .Offensive capital posture with disciplined leverage.
Life science leasing and market supplyLOIs at Gateway/Vantage/Portside; major deals executed bringing Portside ~90% and Vantage ~70% leased (Q3) .2.1M sf full-year lab leases; Q4 renewals +30% spreads; deliveries expected down ~75% in 2025; focus on loans in core submarkets (e.g., Torrey Pines) .Strengthening rent economics; improved supply backdrop; selective structured investments.
Outpatient medical platformEarly renewal with CommonSpirit; developments with HCA (Q2) .Continued leasing strength and internalization; leader appointed to run outpatient platform (succession) .Platform depth and health system relationships driving growth.
Synergies and internalizationExpected ≥$45–$50M synergies in 2024 (Q2/Q3) .~$50M achieved in 2024; 2025 run-rate targeted ~$60–$65M as further internalizations complete .Upside tailwinds continuing into 2025.
CCRC strategyStrong YoY SS performance in 2024; entrance fee model (Q3) .Record cash collections; AFFO definition to include entrance fee cash collections beginning Q1 2025; portfolio expected to remain owned .Durable cash generation; reporting refined to reflect cash economics.

Management Commentary

  • “We built the foundation for future outperformance with our improved capabilities, portfolio and balance sheet… we announced an increase to our dividend. Beginning in April, we'll pay the dividend on a monthly basis” — Scott Brinker, CEO .
  • “With new deliveries declining by 75% this year… we see this as a great time to put our platform and balance sheet to work… focus is loan investments that provide immediate accretion… and future acquisition rights… $75M mortgage loan… in Torrey Pines… 8% interest rate plus purchase option” — Scott Brinker, CEO .
  • “We exceeded the midpoint of our original FFO as adjusted guidance by $0.05… balance sheet is in rock solid shape with net debt to EBITDA of 5.2x” — Peter Scott, CFO .
  • “Run rate total synergies… should be more in the $65 million range… you’re talking about $0.10 a share” — Scott Brinker, CEO .

Q&A Highlights

  • Capital deployment: ~$500M of investments assumed in guidance at 8%+ yields; mix of structured life science loans (3–4-year terms, 60% LTC example) and highly pre-leased outpatient developments; leverage targeted mid-5s at high end of guidance .
  • Lab outlook: Same-store drivers include 5–10% rent mark-to-market, low-3% escalators, flattish SS occupancy (97–98% SS pool) with total portfolio occupancy targeted to climb from mid/high 80s to low 90s over time .
  • TI levels and rent economics: Some large renewals require elevated TI to convert office-heavy space to lab; still achieving strong mark-to-market (e.g., +27% on a San Francisco HQ renewal), and TI is priced to earn 9–12% returns .
  • AFFO reporting change: 2025 AFFO to include entrance fee cash collections; midpoint illustrative: ~$1.65 new definition vs ~$1.60 old, reflecting cash economics of CCRCs .
  • Casualty charges: Hurricane Milton drove ~$25M of charges; insurance market/deductibles imply company will absorb portions; future capex may decline after roof replacements .

Estimates Context

  • Attempts to retrieve Wall Street consensus estimates via S&P Global were unavailable at the time of analysis due to API request limits; as a result, we cannot provide validated beats/misses vs consensus for Q4 2024. Values would normally be sourced from S&P Global.

Key Takeaways for Investors

  • FFO as Adjusted inflected sequentially (Q3: $0.45 → Q4: $0.46) while AFFO held near peak levels ($0.41 → $0.40), supported by robust SS NOI growth (5.4%); dividend raised and moving to monthly improves investor appeal .
  • Life science rent economics remain favorable (Q4 renewals +30% spreads) and supply should tighten materially in 2025 (deliveries down ~75%); DOC is positioned to capitalize via low-risk structured loans with purchase options in core submarkets .
  • Outpatient medical remains a stable cash engine with deep health system ties (e.g., CommonSpirit renewal) and a pipeline of highly pre-leased developments, providing visible internal and external growth .
  • Synergy tailwinds continue into 2025 (toward ~$65M run-rate), bolstered by internalization and platform efficiencies, offering incremental earnings support beyond same-store growth .
  • Net Debt/Adjusted EBITDAre at 5.2x affords flexibility to deploy ~$500M at attractive yields while maintaining disciplined leverage (mid-5s target at high end); balance sheet underpins offensive but prudent capital allocation .
  • Near-term earnings cadence reflects timing lag from signed-not-yet-occupied leases and elevated TI for strategic renewals; late-2025 should see tailwinds as commencements ramp .
  • With estimates data unavailable for formal beat/miss analysis, focus near term on execution of the $500M investment plan, leasing conversion of LOIs, and continued synergy capture as primary stock catalysts.