Healthpeak Earnings: Same-Store NOI Growth for Life Science and CCRC Segments Higher Than Expected

Healthpeak PEAK reported first-quarter results that were slightly better than we anticipated, leading us to reaffirm our $33.50 fair value estimate for the no-moat company. Same-store net operating income, or NOI, for the life science segment grew 6.3% in the first quarter, slightly better than our estimate of 5.6% growth. The medical office segment saw 3.7% same-store NOI growth, in line with our estimate. Finally, same-store NOI for the continuing care retirement community segment grew 9.5%, better than our estimate of 4.3% growth. Combined, total same-store NOI grew 5.5% in the first quarter, which beat our estimate of 4.4% total growth. Healthpeak reported adjusted funds from operations, or FFO, of $0.42 per share in the quarter, in line with our estimate for the company.

While Healthpeak reported same-store NOI growth above our forecast for the first quarter, we believe that our full-year estimate is still in line with management’s guidance. Management did increase total same-store NOI growth by 25 basis points to a new range of 3.0%-4.5% from the prior range of 2.75%-4.25% after the strong first-quarter results. After incorporating the first-quarter outperformance into our estimates, our new estimate of 3.7% is near the midpoint of the updated guidance range. Additionally, our adjusted FFO estimate of $1.76 per share remains at the high end of management’s guidance range of $1.70-$1.76, which remained unchanged in the quarter. Therefore, we remain confident in both our short-term and long-term forecasts for the company.