Back to top

Image: Bigstock

Reasons to Add Healthpeak Properties (DOC) to Your Portfolio Now

Read MoreHide Full Article

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 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. A healthy balance sheet position augurs well.

Shares of this Zacks Rank #2 (Buy) company have rallied 36.7% over the past six months, outperforming its industry's growth of 11.6%. Given the strength in its fundamentals, there seems to be additional room for growth of this stock.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Factors That Make Healthpeak Properties a Solid Pick

Solid Demand for Lab Assets: 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.

In the second quarter of 2024, the lab portfolio witnessed year-over-year growth of 3% in the total merger-combined same-store cash (Adjusted) NOI.

Favorable CCRC Portfolio: 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.

In the second quarter of 2024, occupancy in its CCRC portfolio was 85.4%, increasing 20 basis points sequentially.

Portfolio-Repositioning Efforts: Healthpeak is making portfolio-repositioning efforts to focus on lab, outpatient medical and CCRC assets. As part of such efforts, the company recycled capital through non-core dispositions of SHOP and triple-net leased assets to acquire and fund the development of lab and outpatient medical assets in high barrier-to-entry markets.

In the six months ended Jun 30, 2024, the company placed in service a part of one lab development project, one outpatient medical development project held in a consolidated joint venture, one lab redevelopment project, part of one lab redevelopment project and part of one lab redevelopment building held in one of the company’s unconsolidated South San Francisco JVs.

Balance Sheet Strength: The company maintains a healthy balance sheet position. It exited the second quarter of 2024 with around $3.08 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 Jun 30, 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.

 

Other Stocks to Consider

Some other top-ranked stocks from the REIT sector are Four Corners Property Trust (FCPT - Free Report) and Global Medical REIT (GMRE - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Four Corners’ 2024 FFO per share stands at $1.72, indicating an increase of 3% from the year-ago reported figure.

The Zacks Consensus Estimate for Global Medical’s 2024 FFO per share is pinned at 94 cents, suggesting year-over-year growth of 3.3%.

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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Healthpeak Properties, Inc. (DOC) - free report >>

Four Corners Property Trust, Inc. (FCPT) - free report >>

Global Medical REIT Inc. (GMRE) - free report >>

Published in