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Is It Wise to Hold Healthpeak Properties (DOC) Stock Now?
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Healthpeak Properties, Inc. (DOC - Free Report) is well-poised to benefit from its diversified and top-quality healthcare real estate assets in the high barrier-to-entry markets of the United States. Solid demand for lab assets amid the increasing need for drug innovation and developments is likely to drive its lab portfolio’s growth. Its continuing care retirement community (CCRC) portfolio is poised to gain from the rise in senior citizens’ healthcare expenditure. However, competition from industry players and a high interest rate environment add to its woes.
What’s Aiding DOC?
The increasing life expectancy of the U.S. population and biopharma drug development growth opportunities have promoted the lab real estate market fundamentals and led to a rise in demand for such assets.
Also, the use of artificial intelligence and machine learning is likely to increase the probability of success in drug research and lower the timeline for development, indicating a rise in the allocation of healthcare spending by healthcare research institutes in the upcoming years.
With a cluster strategy in three premier lab epicenters, namely San Diego, San Francisco and Boston, to assemble assets through acquisitions, developments and redevelopments, Healthpeak is gaining scale and is well-poised to meet the growing demand from lab tenants.
With the likelihood of the senior citizen population rising in the years ahead, Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, is positioned to benefit from the high healthcare expenditures incurred by this age cohort.
Healthpeak is making portfolio-repositioning efforts to focus on lab, outpatient medical and CCRC assets. As part of such efforts, in May 2024, it announced the acquisition of King Street Properties’ minority interest in the JVs in eight lab buildings in Cambridge and Lexington, MA.
Moreover, its merger with Physicians Realty Trust aids in broadening and deepening the industry-leading relationships that both companies already have with the top health systems, increasing opportunities for internal and external growth.
The company maintains a healthy balance sheet position and exited the first quarter of 2024 with around $2.92 billion of liquidity and a net debt-to-adjusted EBITDAre of 5.2X. It also enjoys long-term credit ratings of Baa1 (Stable) from Moody’s and BBB+ (Stable) from S&P Global as of Mar 31, 2024, rendering it easy access to the debt market at favorable costs. With a sound liquidity position, Healthpeak is well-placed to bank on growth opportunities.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have risen 9.8% compared with the industry's upside of 4.6%. The Zacks Consensus Estimate for Healthpeak Properties’ 2024 FFO per share has gained marginally upward over the past month to $1.79.
Image Source: Zacks Investment Research
What’s Hurting DOC?
Healthpeak operates in a competitive market and contends with several other companies providing similar healthcare services or alternatives. The company’s operators contend with peers for occupancy, which could limit its power to raise rents and affect revenues and profitability.
DOC’s development and redevelopment pipeline, although encouraging for long-term growth, exposes the company to the risks associated with rising construction costs in an inflationary environment. Over the recent years, increasing construction spending, along with the rising costs of capital, has affected the expected yields on the company’s development and redevelopment projects.
Additionally, a high interest rate environment is a concern for Healthpeak. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate. DOC has a substantial debt burden, and its net debt, as of Mar 31, 2024, was approximately $8.74 billion.
The Zacks Consensus Estimate for National Health Investors’ 2024 FFO per share has moved marginally upward over the past two months to $4.40.
The Zacks Consensus Estimate for Paramount Group’s current year FFO per share has moved marginally upward in the past two months to 78 cents.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Is It Wise to Hold Healthpeak Properties (DOC) Stock Now?
Healthpeak Properties, Inc. (DOC - Free Report) is well-poised to benefit from its diversified and top-quality healthcare real estate assets in the high barrier-to-entry markets of the United States. Solid demand for lab assets amid the increasing need for drug innovation and developments is likely to drive its lab portfolio’s growth. Its continuing care retirement community (CCRC) portfolio is poised to gain from the rise in senior citizens’ healthcare expenditure. However, competition from industry players and a high interest rate environment add to its woes.
What’s Aiding DOC?
The increasing life expectancy of the U.S. population and biopharma drug development growth opportunities have promoted the lab real estate market fundamentals and led to a rise in demand for such assets.
Also, the use of artificial intelligence and machine learning is likely to increase the probability of success in drug research and lower the timeline for development, indicating a rise in the allocation of healthcare spending by healthcare research institutes in the upcoming years.
With a cluster strategy in three premier lab epicenters, namely San Diego, San Francisco and Boston, to assemble assets through acquisitions, developments and redevelopments, Healthpeak is gaining scale and is well-poised to meet the growing demand from lab tenants.
With the likelihood of the senior citizen population rising in the years ahead, Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, is positioned to benefit from the high healthcare expenditures incurred by this age cohort.
Healthpeak is making portfolio-repositioning efforts to focus on lab, outpatient medical and CCRC assets. As part of such efforts, in May 2024, it announced the acquisition of King Street Properties’ minority interest in the JVs in eight lab buildings in Cambridge and Lexington, MA.
Moreover, its merger with Physicians Realty Trust aids in broadening and deepening the industry-leading relationships that both companies already have with the top health systems, increasing opportunities for internal and external growth.
The company maintains a healthy balance sheet position and exited the first quarter of 2024 with around $2.92 billion of liquidity and a net debt-to-adjusted EBITDAre of 5.2X. It also enjoys long-term credit ratings of Baa1 (Stable) from Moody’s and BBB+ (Stable) from S&P Global as of Mar 31, 2024, rendering it easy access to the debt market at favorable costs. With a sound liquidity position, Healthpeak is well-placed to bank on growth opportunities.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have risen 9.8% compared with the industry's upside of 4.6%. The Zacks Consensus Estimate for Healthpeak Properties’ 2024 FFO per share has gained marginally upward over the past month to $1.79.
Image Source: Zacks Investment Research
What’s Hurting DOC?
Healthpeak operates in a competitive market and contends with several other companies providing similar healthcare services or alternatives. The company’s operators contend with peers for occupancy, which could limit its power to raise rents and affect revenues and profitability.
DOC’s development and redevelopment pipeline, although encouraging for long-term growth, exposes the company to the risks associated with rising construction costs in an inflationary environment. Over the recent years, increasing construction spending, along with the rising costs of capital, has affected the expected yields on the company’s development and redevelopment projects.
Additionally, a high interest rate environment is a concern for Healthpeak. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate. DOC has a substantial debt burden, and its net debt, as of Mar 31, 2024, was approximately $8.74 billion.
Stocks to Consider
Some better-ranked stocks from the REIT sector are National Health Investors (NHI - Free Report) and Paramount Group (PGRE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for National Health Investors’ 2024 FFO per share has moved marginally upward over the past two months to $4.40.
The Zacks Consensus Estimate for Paramount Group’s current year FFO per share has moved marginally upward in the past two months to 78 cents.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.