Healthpeak Properties: A New Era of Growth

CEO Khai Intela
Left to Right: Peter Scott, CFO; Lisa Alonso, chief human resources officer; Scott Brinker, president & CIO; Tom Herzog, CEO; Thomas Klaritch, chief development & operating officer; Troy McHenry, chief legal officer, general counsel &...

Healthpeak C-Suite officers Left to Right: Peter Scott, CFO; Lisa Alonso, chief human resources officer; Scott Brinker, president & CIO; Tom Herzog, CEO; Thomas Klaritch, chief development & operating officer; Troy McHenry, chief legal officer, general counsel & corporate secretary.

If you haven't heard of Healthpeak Properties, Inc. (NYSE: PEAK), you're not alone. The 35-year-old company underwent a complete rebranding in late 2019, including a new name, ticker, and website. This transformation followed a multi-billion-dollar portfolio rationalization, solidifying Healthpeak's position as a leading player in the real estate investment trust (REIT) industry.

Based in Irvine, California, Healthpeak boasts over $20 billion in managed assets. CEO Tom Herzog is confident that the company is well-positioned to offer consistent long-term growth opportunities for investors. With a strong focus on the life science, medical office building (MOB), and senior housing private-pay segments within the premium healthcare space, Healthpeak owns approximately 650 assets in over 40 states.

According to Herzog, Healthpeak's strategic mix of assets within these three core segments ensures stability and future earnings and dividend growth. "Each of our segments will benefit from the same aging baby-boom demographic trend while operating within their own individual cycles," explains Herzog.

Healthpeak's journey began in 1985 as Health Care Property Investors with an initial public offering on the New York Stock Exchange. Under the leadership of Ken Roath, the company experienced tremendous growth and success, eventually becoming a leading healthcare REIT. In 2005, the company changed its name to HCP, and in 2008, it joined the S&P 500 index.

While same-store/total net operating income (NOI) growth has been inconsistent in recent years, Healthpeak's life science and MOB portfolios have balanced out the challenges faced by its senior housing and previously-owned skilled nursing (SNF) portfolios. Jonathan Hughes, Vice President of Real Estate Equity Research at Raymond James & Associates, highlights the positive impact of the company's portfolio rationalization, which was largely completed in early 2019. Hughes notes that Healthpeak's improved balance sheet has allowed them to pursue acquisitions worth approximately $2.4 billion and dispositions worth about $1.4 billion, all at attractive yields.

Discovery Village, Palm Beach Gardens, Florida Discovery Village, Palm Beach Gardens, Florida

Thoughtful Evolution

So why the name change? According to CEO Tom Herzog, the rebranding to Healthpeak Properties signifies the culmination of efforts to reposition the company's strategy, team, portfolio, and balance sheet. In recent years, Healthpeak has become more disciplined in its investment approach, focusing on the three primary private-pay healthcare segments. As an innovative company at the forefront of providing high-quality real estate to the evolving healthcare industry, Healthpeak is committed to delivering value to shareholders, customers, and employees.

Lukas Hartwich, a senior analyst at Green Street Advisors, commends Healthpeak's current management team, led by Herzog, for successfully addressing the challenges inherited from the past. They have strengthened tenant relationships, improved the portfolio's quality, repaired the balance sheet, and made wise capital allocation decisions. This progress has been rewarded by investors, evident in Healthpeak's higher valuation.

Healthpeak Properties is embarking on a new era of growth, armed with a well-positioned portfolio and a team dedicated to delivering value in the healthcare real estate market. As the company continues to evolve and adapt to an ever-changing industry, investors can expect continued success and opportunities for long-term growth.

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