Core Viewpoint - Healthpeak Properties, Inc. reported first-quarter 2025 funds from operations (FFO) as adjusted per share of 46 cents, meeting expectations and showing a slight increase from 45 cents in the prior year, driven by better-than-anticipated revenues despite higher interest expenses [1][2]. Financial Performance - The company generated revenues of $702.9 million, exceeding the Zacks Consensus Estimate of $691.9 million, representing a year-over-year increase of 15.9% [2]. - Healthpeak reported a 7% year-over-year growth in total merger-combined same-store cash (adjusted) net operating income (NOI) [3]. - The outpatient medical and lab segments experienced year-over-year growth of 5% and 7.7%, respectively, while the Continuing Care Retirement Communities (CCRC) segment reported a growth of 15.9% [3]. Lease Activity - In the reported quarter, Healthpeak executed lab new and renewal leases totaling 276,000 square feet, achieving a retention rate of 88% and +5% cash-releasing spreads on renewals [4]. - For the outpatient medical portfolio, new and renewal leases totaled 973,000 square feet, with a retention rate of 86% and +4% cash-releasing spreads on renewals [4]. Balance Sheet - As of March 31, 2025, Healthpeak had cash and cash equivalents of $70.6 million, down from $119.8 million at the end of 2024, with a net debt to adjusted EBITDAre ratio of 5.2X [5]. - The company repurchased 5.1 million shares at a weighted average price of $18.50, totaling $94 million, from the beginning of the year through April 24 [5]. 2025 Outlook - Healthpeak reaffirmed its guidance for 2025, expecting FFO as adjusted per share to be between $1.81 and $1.87, with the Zacks Consensus Estimate at $1.85 [6]. - The company anticipates total merger-combined same-store cash (adjusted) NOI growth in the range of 3-4% for the year [6].

Financial Data and Key Metrics Changes - In Q4 2024, the total portfolio same store NOI grew by 21.6% year over year, bringing full year 2024 same store NOI growth to 17.7% compared to 2023 [17][28] - The normalized funds from operation (NFFO) for Q4 was $0.40 per diluted share, resulting in full year 2024 NFFO of $1.41, which was within the guidance range [28][29] - The net debt to adjusted EBITDA ratio improved significantly from 8.5x at the end of 2023 to 4.3x at the end of 2024 [13][32] Business Line Data and Key Metrics Changes - The Trilogy segment achieved same store NOI growth of 28% year over year in Q4 2024, with full year growth at 23.8% [17][18] - The SHOP segment saw same store NOI growth of over 65% year over year in Q4 2024, with full year growth reaching a record 52.8% [20][21] - Trilogy and SHOP segments accounted for 71% of total NOI by the end of Q4 2024, with expectations for continued growth in these segments [11] Market Data and Key Metrics Changes - The aging population is projected to grow by over 700,000 individuals annually, while the senior housing industry has added less than 20,000 units on average each year since 2020, indicating a favorable demand-supply dynamic [9][10] - The company noted persistent barriers to new supply in the market, with construction starts decelerating despite increasing demand [22][23] Company Strategy and Development Direction - The company is focused on accretive external growth through RIDEA structured senior housing and care investments, leveraging its favorable cost of capital [12] - In 2024, the company invested over $650 million in external growth within its Managed Long Term Care segments and plans to continue this strategy in 2025 [12][26] - The company aims to enhance its portfolio quality by disposing of lower growth assets and targeting high-quality acquisitions [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term care landscape, citing strong demand fundamentals and limited new supply as key drivers for future growth [22][30] - The company anticipates double-digit growth in same store NOI for 2025, supported by strong occupancy and pricing strategies [30][31] - Management acknowledged potential headwinds from seasonal factors and regulatory changes but remains optimistic about operational performance [16][39] Other Important Information - The company has received inquiries regarding potential Medicaid policy changes but emphasized that any speculation is premature [15][56] - The company is under contract to acquire two new SHOP assets for approximately $70.5 million and plans to start several new Trilogy development projects in 2025 [26][13] Q&A Session Summary Question: Trends in January and February - Management noted that while Q1 2025 NOI is expected to be higher than Q1 2024, it may not see growth compared to Q4 2024 due to seasonal factors and resets in compensation-related expenses [35][38] Question: Acquisition Pipeline - The acquisition pipeline is robust, with a significant number of potential deals being evaluated, indicating a favorable environment for new opportunities [42][43] Question: Occupancy Tipping Point - Management indicated that occupancy levels are above pre-COVID levels, allowing for rate increases and margin expansion, particularly in the Trilogy segment [48][49] Question: Medicaid Exposure - The company has reduced its Medicaid exposure to about 21% of its revenue, and management believes that potential Medicaid cuts would have limited impact due to the strategic focus on higher-paying Medicare and private pay residents [54][56] Question: Trilogy Developments and Expansions - Management reported that several expansions and new projects are planned for 2025, with expectations for quicker stabilization of new campuses due to strong demand [82][90]