Healthpeak Properties(US:PEAK)2023-02-08 21:51Financial Performance - As of December 31, 2022, the total portfolio adjusted NOI was $1,106,263, with life science contributing 50% ($552,533), medical office 39% ($432,969), CCRC 9% ($103,841), and other non-reportable segments 2% ($16,920) across 480 properties[20]. - The company reported a net income applicable to common shares of $497.8 million for the year ended December 31, 2022, compared to $502.3 million in 2021[289]. - The company achieved Nareit FFO applicable to common shares of $895.2 million in 2022, an increase from $604.7 million in 2021[289]. - Total revenues for the year ended December 31, 2022, increased to $2,061,178,000, up from $1,896,184,000 in 2021, representing a growth of approximately 8.7%[314]. - Rental and related revenues rose to $1,541,775,000 in 2022, compared to $1,378,384,000 in 2021, marking an increase of about 11.8%[314]. - Net income attributable to Healthpeak Properties, Inc. for 2022 was $500,449,000, slightly down from $505,540,000 in 2021, reflecting a decrease of approximately 0.2%[314]. - The total comprehensive income for 2022 was $547,705,000, compared to $526,468,000 in 2021, reflecting an increase of about 4.0%[315]. - The company’s cash and cash equivalents decreased to $72,032,000 in 2022 from $158,287,000 in 2021, a decline of approximately 54.5%[313]. - The company reported a basic earnings per share of $0.92 for continuing operations in 2022, compared to $0.22 in 2021, showing a significant increase[314]. - The company’s interest expense for 2022 was $172,944,000, an increase from $157,980,000 in 2021, representing a rise of approximately 9.5%[314]. - The company reported acquisitions of real estate totaling $178,133,000 in 2022, significantly lower than $1,483,026,000 in 2021[323]. - Proceeds from sales of real estate in 2022 were $47,885,000, a sharp decline from $2,399,120,000 in 2021[323]. Corporate Structure and Strategy - The company is undergoing a corporate reorganization into a new holding company structure known as UPREIT, with the merger expected to be effective on February 10, 2023[22][23]. - The company expects to achieve external growth through acquisitions, development, and redevelopment, leveraging its relationships with healthcare operators and institutional investors[31]. - The company plans to convert from a Maryland corporation to a Maryland limited liability company named Healthpeak OP immediately following the merger[328]. - The company entered into a Merger Agreement on February 7, 2023, to reorganize into an Umbrella Partnership Real Estate Investment Trust (UPREIT) structure[326]. - The merger is expected to be effective as of February 10, 2023, with no requirement for stockholder approval[327]. Investment and Financing - The company maintains a strong investment-grade balance sheet with ample liquidity and long-term fixed-rate debt financing to reduce exposure to interest rate volatility[27]. - The company may also provide real estate secured financing or invest in equity or debt securities of healthcare operators, enhancing its investment strategies[29]. - The company had $142 million of variable rate mortgage debt swapped to fixed through interest rate swap instruments as of December 31, 2022[279]. - The company maintained approximately 85% of its consolidated debt as fixed rate debt as of December 31, 2022[279]. - The company had equity totaling $7.2 billion and a market value of equity securities of $13.9 billion as of December 31, 2022[280]. - Borrowings under bank line of credit and commercial paper amounted to $15,882,153,000 in 2022, compared to $16,821,450,000 in 2021[323]. Employee and Culture - The company emphasizes a people-first culture to attract and retain top talent, aiming to create an industry-leading platform for asset management[27]. - As of December 31, 2022, the company had 199 full-time employees, with a workforce comprising 46% female and 37% racially or ethnically diverse employees[67]. Regulatory and Compliance - The company is subject to extensive healthcare laws and regulations, which could impact the operations and financial condition of its tenants and operators[49]. - Compliance with privacy laws such as HIPAA is critical, and failure to protect health information could lead to civil or criminal liability[53]. - The company’s entrance fee communities are subject to significant state regulatory oversight, impacting financial conditions and resident rights[57]. - Revenue sources for tenants include governmental healthcare programs like Medicare and Medicaid, which are subject to regulatory changes that could affect reimbursement rates[54]. Sustainability and ESG Initiatives - The company is committed to sustainability and ESG initiatives, with a focus on reducing its carbon footprint and enhancing stakeholder value[63]. - The company received a Green Star rating from GRESB for the eleventh consecutive year, recognizing top ESG performance in its sector[67]. - The company regularly assesses risks posed by climate change and works with property managers to implement mitigation projects[64]. Real Estate and Asset Management - The life science properties are primarily located in San Francisco (49%), San Diego (24%), and Boston (24%), with 92% of these properties being triple-net leased[35]. - The medical office segment includes approximately 87% of properties located on or adjacent to hospital campuses, with 98% affiliated with hospital systems, and 65% of these properties were triple-net leased as of December 31, 2022[37]. - The management agreements for CCRCs have original terms ranging from 10 to 15 years, with provisions for base and incentive management fees based on operating results[42]. - The company has investments in an unconsolidated joint venture with a sovereign wealth fund that owns 19 senior housing assets[45]. - The properties in the joint venture include independent living and assisted living facilities, catering to different segments of the elderly population[46]. - The company’s reportable segments include life science, medical office, and CCRC, reflecting how it evaluates its business and allocates resources[386]. Market and Competitive Landscape - The healthcare real estate investment trust (REIT) faces significant competition from other REITs, private equity investors, and institutional investors, which may impact its ability to capitalize on opportunities[47]. Impairment and Valuation - The company’s evaluation of impairment of real estate assets involves significant judgment regarding future undiscounted cash flows and market conditions[2]. - The Company assesses the carrying value of real estate assets for impairment by comparing expected future undiscounted cash flows to the carrying value, recognizing impairment losses when carrying value exceeds fair value[364]. - The Company recognizes an allowance for credit losses at inception of a finance receivable, based on historical experience and future market expectations[353].