Healthpeak Properties (DOC) Q2 FY26 earnings call: guidance and Q&A

Healthpeak has strategically redefined its company, including a $5 billion merger and $1 billion IPO, and is now rolling out an 'agentic operating platform.' The company formed joint ventures with Blackstone and Brookfield, which allow Healthpeak to maintain control of strategic buildings and tenant relationships while providing alternative sources of equity capital. These partnerships are expected to grow, with the Brookfield JV establishing a replicable framework for future growth opportunities across the business.

The company's balance sheet is stronger than ever, with net debt-to-EBITDA below 5x and $4.1 billion of available liquidity. This strength provides flexibility for capital allocation, including funding highly pre-leased outpatient development projects, pursuing outpatient acquisitions through JVs, and capitalizing on life science acquisition opportunities. Healthpeak also executed a $100 million stock buyback in April at an FFO yield over 10%, demonstrating opportunistic capital deployment. Management emphasized patience in utilizing dry powder given current debt costs.

The outpatient medical segment continues to exhibit strong fundamentals, with a 5% cash re-leasing spread and modest tenant improvements. Total occupancy increased by 20 basis points sequentially to 90.7%. The leasing pipeline suggests that internal growth in the outpatient portfolio is expected to accelerate in 2027. A new development agreement with Northside in Atlanta for a 565,000 sq ft project further solidifies Healthpeak's market share in the region.

The life science sector is showing clear signs of recovery, with public capital raising at its highest since Q2 2021 and record-breaking M&A activity. Healthpeak's lab portfolio saw an 80 basis point sequential increase in total occupancy to 78.5%, marking a 140 basis point increase since year-end 2025. The company executed 381,000 square feet of leases, with 60% new leasing and 50% on vacant space. Torrey Pines in San Diego is a standout, with lease percentage (including LOIs) increasing from 65% at year-end 2025 to 97%.

Healthpeak's ownership interest in Janus Living now stands at 74%, representing approximately $6.5 billion of equity value. The same-store portfolio delivered robust performance in Q2, with 260 basis points of occupancy growth and 19% NOI growth. The company has closed $1.8 billion in senior housing acquisitions since January 1, effectively doubling its portfolio size and increasing operating partners from 2 to over 10, aiming to complete a 3-year business plan in 12 months.

Management believes the current environment presents a unique 'acquisition game' for life science, shifting from a prior development focus. Healthpeak is actively pursuing opportunities in core markets where its operating platform and strong balance sheet can add value, particularly in situations requiring lease-up. The Gateway acquisition is highlighted as a successful example, with significant leasing progress since its purchase. The majority of current targets are fee simple acquisitions, though loan structures with options to buy may be considered in unique cases.

Demand in the lab sector is strongest in the Bay Area and San Diego, with Torrey Pines demonstrating exceptional performance driven by homegrown client expansion. Boston remains the most challenged market due to a significant supply overhang, though market activity in Q2 2026 alone equaled 80% of all activity in 2025. Healthpeak's assets in West Cambridge and Lexington are well-leased, and the company leverages its scale and relationships in core markets to capture off-market deals and maintain pricing power.