Healthpeak Properties Q3 2026 Earnings Call Transcript

Healthpeak Properties (NYSE:DOC) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Healthpeak Properties, Inc. reported a strong operational quarter, increasing earnings guidance for the third time this year by a total of $0.05 per share at the midpoint.

The company’s outpatient medical segment saw positive net absorption, strong retention and leasing spreads, with significant lease executions totaling 3.2 million square feet year-to-date.

In the life sciences segment, occupancy increased by 130 basis points last quarter and 270 basis points year-to-date, driven by strategic new hires and strong real estate assets.

Healthpeak Properties closed nearly $2 billion in outpatient sales and recaps, with a focus on acquiring life science assets with significant upside potential.

The senior housing segment reported 300 basis points of occupancy growth and 26% NOI growth, with substantial acquisitions contributing to performance.

The company raised its FFO as adjusted guidance to a range of $1.76 to $1.78 per share, reflecting strong leasing and delayed dispositions.

Management highlighted the strategic advantage in acquiring life science assets at attractive prices due to constrained capital availability in the sector.

The balance sheet remains strong with a net debt to adjusted EBITDA of 4.7 times and approximately $3.8 billion of liquidity available.

Future growth is expected in outpatient medical and life science segments, with a focus on leveraging tenant networks and strategic real estate positioning.

Full Transcript

OPERATOR

Good morning and welcome to the Healthpeak Properties, Inc. third quarter 2026 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star one again.

Please note this event is being recorded. I would now like to turn the conference over to Andrew Johns, Senior Vice President, Investor Relations. Please go ahead.

Andrew Johns (Senior Vice President)

Welcome. As a reminder, certain statements made in this call may be deemed forward-looking statements in the meaning of the Private Securities Litigation Reform Act. Although Healthpeak believes any forward-looking statements are based on reasonable assumptions, the Company can give no assurances that its projected results will be attained and we do not undertake a duty to update any forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the Company’s filings with the SEC.

We refer to certain non-GAAP financial measures during this call, which are reconciled to the most directly comparable GAAP measures in an exhibit to the 8-K filed with the SEC yesterday in accordance with Reg G. I’ll now turn the call over to our President and Chief Executive Officer, Scott Brinker.

Scott Brinker (President and Chief Executive Officer)

Thanks, Andrew, and welcome to our 3Q earnings call. I want to congratulate the team here on a very strong quarter operationally, which allowed us to increase earnings guidance for the third time this year and by a total of $0.05 per share at the midpoint. The guidance raises this year were primarily driven by operations across the portfolio and the flow-through impact of Janus Living in Outpatient Medical. The strong fundamentals we spoke to with the merger three years ago continue to be validated.

Cost pressures are making outpatient delivery a strategic mandate for health systems across the country, and we play a vital role helping them address that mandate. The aging population is driving record demand, and new supply is at historical lows. Against that favorable backdrop, we created the leading platform and portfolio in the outpatient sector with the merger. Third quarter results included positive net absorption, strong retention and releasing spreads, and modest TIs and commissions.

These are the metrics that drive cash flow and value creation. We don’t focus on same-store because it ignores equally important items like Capex and moving properties in and out of the pool. Our outpatient business is stronger than ever, and we expect internal growth to accelerate in 2027, given our recent lease executions and pipeline. We’re also happy to have closed nearly $2 billion of fully stabilized outpatient sales, recaps, and loan repayments earlier this year at a blended 6% cap rate.

More than half of that amount was joint venture recaps with blue-chip LPs who chose to partner with Healthpeak given our platform. Moving to our life science business, earlier this year we shared our expectation of growing total occupancy by 100 basis points in 2026. That was not a consensus view at the time, but we saw early signs of an improving environment and we were confident we’d capture market share. Year to date, we’ve outperformed our own expectations. Total occupancy increased 130 basis points last quarter and by 270 basis points year to date. Not sure anyone else in the sector could make that same claim.

And why the success? We made strategic new hires, we own really good real estate, we have liquidity and credibility, and we can move quickly given our buildings are unencumbered by third-party debt. All of those factors will continue to drive leasing outperformance. Life science job growth turned positive in 3Q, which is consistent with the growing demand that we see in our pipeline. On the supply side, we continue to see certain quote unquote life science buildings go to alternative uses, which is soaking up some of the vacancy.

The robust infrastructure of a lab building is attractive to AI-adjacent users, including robotics. Because of power, floor loads, and ceiling heights, we’re seeing a lot of that type of demand in the marketplace. The net effect is that supply and demand are starting to move in our favor, albeit at different rates depending on the submarket. For example, we’re now fully leased in Torrey Pines versus 65% leased in that submarket just six months ago.

Strong occupancy will of course allow us to drive better economics on future leases. We continue to make good progress at the Gateway campus we acquired earlier this year, with 125,000 square feet of leases signed so far in the fourth quarter alone, plus 100,000 square feet under signed LOI or in active discussions. The three acquisitions announced yesterday are buildings surrounded by existing Healthpeak real estate and add to our competitive advantage in core submarkets. It’s a great time to be a buyer because most life science GPs, LPs, and lenders are upside down.

Capital availability in this sector has gone from overly abundant to severely constrained. As a result, we can now buy core assets at a basis with both downside protection and significant upside. Current occupancy across the acquisitions is 41% with a 5% in-place yield going to 9 to 10% at stabilization. And these are not passive investments. We’re bringing our relationships and expertise to the table, and we already have strong leasing activity on 70% of the acquired vacancy.

When we acquire quality real estate in our core submarkets, there’s a network effect that increases the value of our entire local footprint as we become the easy button for tenants and brokers. More broadly, we entered the sector downturn in 2022 as the number three player in life science real estate. We’re entering the recovery as the only company growing its footprint and adding talent. More work to do, but we’re on a trajectory to become the leading portfolio and platform in the life science real estate sector.

In senior housing, the lifestyle and value of our communities is driving higher occupancy and revenue. Our same-store portfolio had 300 basis points of occupancy growth and 26% NOI growth in the quarter. Entry fee sales in 3Q were simply incredible, achieving a new all-time high for the quarter. We’ve closed $2.2 billion of acquisitions since the IPO, and the NOI on these deals is trending in line or ahead of underwriting. Most important in the long-term strategy, we’ve gone from two operating partners to 13, which dramatically increases Jan’s external growth as those partners are now bringing us proprietary acquisitions.

Jan’s success is also driving earnings growth and value creation at Healthpeak given our unique and creative deal structure that aligns the interests of both companies. I’ll turn it to Kelvin.

Kelvin Moses (Chief Financial Officer)

Thank you, Scott. Each of our business segments are running ahead of the plan we set in February, and our team on the ground has delivered excellent results, leveraging our relationships to convert demand into executed leases and drive total occupancy gains. Our operating results in the third quarter reflect that execution. We reported FFO as adjusted of $0.44 per share, total same-store cash NOI growth of 3.6%, and net debt to adjusted EBITDA of 4.7 times.

Beginning with outpatient medical, for the quarter we executed 846,000 square feet of leases, including 218,000 square feet of new leasing and 628,000 square feet of renewals. That brings our year-to-date executions to 3.2 million square feet. We delivered another quarter of positive net absorption with new lease commencements that averaged over 11 years and included two large health system and physician practice master leases at attractive rents north of $30 per square foot on a triple net basis.

Tenant retention increased from last quarter to 81.7%, and we achieved cash re-leasing spreads of approximately 5% above our historical averages. Importantly, these renewals come with modest leasing costs of 9.5% of rents on average. We ended the quarter with total occupancy of 90.3%, which reflects the negative 50 basis points impact from the Brookfield recapitalization and asset sales. On a comparable basis, total occupancy increased sequentially heading into the fourth quarter.

We expect our leasing velocity to continue with an additional 269,000 square feet of executed leases and 1.03 million square feet of signed LOIs. Turning to lab, during the quarter we executed 480,000 square feet of leases, our strongest quarter in over a year. That brings our year-to-date executed leases total to over 1 million square feet. These executions represent approximately 70% new leasing, over 80% with biotechnology and R&D tenants, and over 40% on vacant space. Subsequent to quarter end, we had an additional 643,000 square feet of executed leases and signed LOIs. From a commencement perspective, we achieved a third consecutive quarter of positive net absorption.

The lower rent per square foot on commencements this quarter reflects two large office leases signed in 2025 that carry lower starting rents than lab space but also require significantly lower TIs. Renewal rents this quarter increased to an average of $72 per square foot, up from last quarter, with a modest 5.6% roll-down on a small sample size caused by a single renewal. Total occupancy during the third quarter increased by 130 basis points sequentially, ending the period at 79.8%.

This represents a 270 basis points increase since the start of the year. As we close on the acquisition Scott referenced, our reported total occupancy base will reset lower given these campuses are 41% occupied today. We view that availability as embedded upside to capture in submarkets where we have considerable scale and a deep tenant network to draw from. And in senior housing, for the quarter, Janus Living delivered same-store NOI growth of 26%, total revenue growth of 78%, and adjusted EBITDA growth of 101%. During the quarter and through October, Janus Living completed the acquisition of 39 communities totaling approximately $2.1 billion, bringing the year-to-date acquisition total to $2.9 billion. Healthpeak’s ownership totaled 69% of the outstanding shares of Janus Living, which represents roughly $6.1 billion of market value.

We’ll take a moment on the balance sheet before moving on to guidance. While our credit spreads have largely held, borrowing costs have increased through the year due to Treasuries, and we have taken proactive measures to utilize efficient tools to help mitigate our near-term refinancing costs. Year to date, we have originated two delayed-draw term loans: a $400 million term loan which we expect to draw in the fourth quarter and a $500 million term loan which we expect to draw in the first quarter of 2027, both priced at SOFR plus 80 basis points, which is inside of where we could issue bonds today.

The term loans will reduce our commercial paper balances and provide flexibility as we look to refinance our $1.4 billion in maturities in 2027. We ended the quarter at 4.7 times net debt to adjusted EBITDA, and as of October 30th we had approximately $3.8 billion of liquidity. And finally, guidance. We raised our FFO as adjusted guidance for the third consecutive quarter by $0.02 at the midpoint to a range of $1.76 to $1.78 per share. The update to our guidance reflects stronger leasing across the portfolio, the delayed timing of our remaining dispositions, and highlights the strength of our operating performance year to date, including a 50 basis point increase to total same store at the midpoint to a range of 0.5% to 2.0%.

Our increase to same store includes a 25 basis points increase in outpatient medical to 2.5% to 3%, a 100 basis points increase in lab down 3% to down 6%, and a 250 basis points increase in senior housing to 16% to 19%. With that, operator, please open the line for Q&A.

OPERATOR

We will now begin the question and answer session. In the interest of time, callers will be limited to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one. Again, we ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Your first question is from the line of Rich Anderson from Cantor Fitzgerald. Your line is now open. Please go ahead.

Rich Anderson (Analyst)

Hey, thanks. Good morning, team. So, Scott, I wanted to ask you about the life science acquisition strategy. These are unique in the way that they kind of blend into what you already have. I’m curious if you could sort of communicate a pipeline of opportunities, whether you get 0 or 100% of them in the future. How active is the pipeline coming at you, given that you’re kind of the only game in town in terms of being a reasonable acquirer of life science assets?

Scott Brinker (President and Chief Executive Officer)

Thanks, Rich. Yeah, I think the common overlap in the acquisitions we’ve done year to date, as well as what’s under contract, is that they’re cheap on a price per foot basis, but also strategic. Usually when you’re buying assets, you get one but not the other. If it’s strategic, it’s usually expensive. If it’s cheap, it’s usually not strategic. It’s just kind of a unique point in time in life science in particular, where we can buy assets that are cheap and strategic.

And that’s what we’ve done. So a billion dollars, plus or minus, of acquisitions either closed or in the pipeline—if you look at them on a map, they’re essentially part of an existing Healthpeak campus. We really have no interest in going into submarkets where we have no competitive advantage. The whole idea here is to buy things cheaply that are not leasing up today for one reason or another and bring our team, our tenant network, our balance sheet, our credibility to the table to lease them up.

It is working. We made tremendous progress at Gateway, the campus in South San Francisco, with Scott and the team, and we expect to do the exact same with these three acquisitions. The fact is, these are unique in that we have significant leasing traction on about 70% of the acquired vacancy, in some cases before we even formally close the acquisition. So really amazing traction on those. And we feel like at the price that we’re buying these, there’s just a significant margin of safety, and we’re underwriting them at today’s rents. I think you can paint a compelling picture, given the difficulty of bringing new development anytime soon—given replacement costs versus rents—that there’s a lot of room for rents to run once occupancy does recover.

And it’s clearly on that trajectory. So we’ve said for a while we’re going to be a consolidator. That’s proven to be correct. We’ve got a highly valued outpatient business that’s allowing us to recap at really strong prices and redeploy into assets at essentially the same initial yield with vastly higher stabilized yields. We’re making great progress towards that goal. So, next question.

OPERATOR

Your next question is from the line of Michael Carroll from RBC Capital Markets. Your line is now open. Please go ahead.

Michael Carroll (Analyst)

Thanks, Scott. I wanted to touch on your comment answering that last question, and I believe you said that Healthpeak Properties has good targets on 70% of the acquired vacancy. How far are those conversations, and in your underwriting, when do you assume that these assets reach stabilized occupancy?

Scott Brinker (President and Chief Executive Officer)

We’re generally underwriting these in the two to three year range to fully lease up, and we’re pretty far along in those conversations. So I would call it active negotiations comprising that 70%. Next question.

OPERATOR

Your next question is from the line of Jamie Feldman from Wells Fargo. Your line is now open. Please go ahead.

Jamie Feldman (Analyst)

Great. Maybe just to add to the prior line of questioning, as we think about 2027, can you talk us through what’s baked in, in terms of leases that have been signed, when they come in, and the net of move-outs—just what that NOI stream is going to look like from some of the acquisition activity or even just some of the leasing activity?

Kelvin Moses (Chief Financial Officer)

Hey, this is Kelvin. I’ll jump in there. We’ve done a pretty tremendous job, I’d say, this year from a leasing perspective. We’ve got about a million square feet of lease executions year to date, and as we mentioned in the prepared remarks, another 640,000 square feet under LOI or executed post quarter end. So pretty tremendous progress. And these leases probably require 12 to 15 months, depending on the buildout of the space and the specific requirements of that tenant, before they’re able to flow through into NOI and subsequently earnings.

Keep in mind, as we execute these leases, there are free rent periods as well that factor into the timeline of when you start to see that cash flow in. But from an earnings perspective, you’ll see, over the next couple quarters, the executions that we’ve had over the last few quarters start to flow in. But it’s a 12 to 15 month process to get those spaces into a position for occupancy.

OPERATOR

Your next question is from the line of Ronald Kamdem from Morgan Stanley. Your line is now open. Please go ahead.

Ronald Kamdem (Analyst)

Hey, great. Just staying on the lab piece. Just looking at the same-store NOI and asking the question in a different way, does this feel like it’s an inflection point from here? As you talked about leases commencing—obviously 12 to 15 months—but any other sort of puts and takes as you’re thinking about the same-store NOI going forward, and is it sort of an inflection point? Thanks.

Kelvin Moses (Chief Financial Officer)

Hey, Ron, this is certainly a base that we can grow from. I think we’ve been saying our focus, for purposes of really guiding investors towards NOI growth and subsequently earnings growth, has been total occupancy. And to be able to achieve 130 basis points of occupancy capture this quarter, 270 basis points on the year, certainly puts us in the position to see NOI growth over the subsequent quarters as these leases commence and the tenants start paying rent.

So we’re certainly on the right path for future NOI growth here in the lab business.

OPERATOR

Your next question is from the line of Nick Yulico from Scotiabank. Your line is now open. Please go ahead.

Scott Brinker (President and Chief Executive Officer)

Yeah, there were a few questions there I’ll try to address. Most of them may ask Scott Bowen to jump in as well. But we think we’re buying opportunity at a really cheap price, so the more we can do, the better because we are trending positively and there’s a lot of upside to capture here. I’m not sure how many commercial real estate sectors there are where you can buy super core assets that stabilize in the 9% to 10% range. I mean, that sounds like a development plus plus type return with a lot less risk.

And you have to think about these local markets as ecosystems. What’s happening in the Bay Area has nothing to do with what’s happening in San Diego or Boston. And the more local scale we have, the more competitive our entire footprint is. So it’s not a single asset, although each of these could stand alone as strong investments. You have to think about the impact on our entire ecosystem. Like I said earlier, we’re the only group that’s actually growing. We’re doing it pretty significantly in markets where we already have a strong competitive position, and that’s only getting stronger with these transactions. You asked about HQ Point, that’s a bigger building, bigger floor plates, bigger users than we can accommodate at our Director’s Place campus that’s right next door. So that’s an easy way to distinguish that building from what we have in the marketplace today.

The building in South San Francisco is a smaller availability vacancy in terms of the size of the building, so that’s really not competing with our existing development/redevelopment portfolio. And there’s a tenant in the building already that’s growing pretty fast, so that’s a totally unique building. And then the building in Cambridge, remember we were in a JV, but we were not leasing or property managing that portfolio. So when that transaction closes, we’ll be able to take over the leasing and the property management and hopefully drive better leasing outcome.

There’s also financing on that deal today, which, as I said in the earlier answer, does restrict an owner’s ability to move quickly and make decisions and kind of meet the market where it is. So hopefully having an unencumbered property, as well as the fact that we’ll be leasing it and property managing, will be the difference maker there. Okay, next question.

OPERATOR

Your next question is from the line of Juan Sanabria from BMO Capital Markets. Your line is now open. Please go ahead.

Juan Sanabria (Analyst)

Good morning, thanks for the time. Clearly things are improving in lab leasing, but hoping you could talk a little bit about any known move-outs or how the tenant credit profile, any sort of bad debt updates you could provide as an offset just to make sure we’re correctly tempering our enthusiasm going forward. If you could just keep calling on those two items, that’d be great.

Scott Bowen

Juan. Yeah, happy to jump in. I’d say at this point we’re working towards continuing to execute on our kind of stated leasing objectives, really looking at 2027 and working through renewals that we can pull forward. We’ve done a really great job of that over the last 15 or so months, really addressing some of the early renewals there, so that plan continues. And then from a credit perspective, I’d say there’s probably been over $150 billion of capital flowing into the biotech space between IPOs, M&A, secondary offerings. And we’re certainly seeing that benefit in the demand and our pipeline. The pipeline has been strong, extremely healthy, and our existing tenants have been able to access the capital markets where they’ve had positive data outcomes in their business. So the credit profile overall within our lab portfolio has meaningfully improved.

And, you know, we’re looking forward to kind of capitalizing on that pipeline, or rather further capitalizing on that pipeline to drive net absorption through the business. So a lot of positives that we’ve been seeing. We’ve been echoing that same sentiment for the balance of the year and it continues.

OPERATOR

Your next question is from the line of Sidney McEntee from J.P. Morgan. Your line is now open. Please go ahead.

Sidney McEntee (Analyst at J.P. Morgan)

Hi, guys. So on the transaction market, given the recent rate volatility, have you guys seen cap rates move across the different asset classes, and has it changed at all how you think about sourcing more distressed deals or the composition of the pipeline overall?

Scott Brinker (President and Chief Executive Officer)

Yeah, it’s definitely been volatile. The ten-year goes from four to four and a half to five plus and now back to around five. I wouldn’t be surprised if the transaction market slows down a little bit across all commercial real estate, but including healthcare, given that volatility and people just trying to understand what their cost of capital is, especially a levered buyer that’s using 60%, 70% financing; that big impact on asset values. So I wouldn’t be surprised to see a bit of a slowdown.

I think some sectors will be more impacted than others. You think about a lower-growth, longer lease term portfolio or asset, that probably is more impacted by the change in rates. A sector like senior housing, probably a little bit less just given the growth profile. But TBD, there has been a lot of volatility, and these transactions take, I don’t know, six months plus or minus from start of discussions until a closing. So anything that’s happening now was negotiated a long time ago.

It’s hard to say or be precise, but we certainly are aware of a lot of transactions across commercial real estate that are being put on pause or buyers attempting to retrade. We have not done that. We commit to something and we honor the price that we provided. But we think that we negotiated a really compelling price in the first place, which allows us to move forward. Next question.

OPERATOR

Your next question is from the line of Michael Goldsmith from UBS. Your line is now open. Please go ahead.

Michael Goldsmith (Analyst)

Good morning. Thanks a lot for taking my question. Scott, you mentioned AI and robotics uses as an emerging source of demand. Can you give us a sense of how meaningful that is within the current pipeline? And is that truly incremental demand for space that would otherwise compete with traditional users, or is it primarily absorbing space that would be more difficult to lease? Thanks.

Scott Bowen

Michael, this is Scott Bowen. I can take that one. You know, from a demand perspective, leasing to biotech still our bread and butter. Right. If you look at our pipeline, it’s still over 75% biotech, whether it be public or private. But there is a significant amount of increased demand from the AI and robotics across all three markets. I think the epicenter of that is San Francisco, where we’ve seen the most of it. So there is purely incremental demand from that.

In taking additional space, we’re in active discussions and deals on several of those users where we’ve got space that, you know, was either in shell condition or wasn’t built out as lab that we can do a deal at a much lower TI and a very competitive rent. Economics make sense to do a deal like that. And it’s also taking a lot of the spaces, buildings that were set to be converted to lab kind of in the periphery that probably never should have been converted to lab, frankly, and taking those out of the new supply number.

OPERATOR

Your next question is from the line of Farrell Granite from Bank of America. Your line is now open. Please go ahead.

Farrell Granite (Analyst)

Good morning. Thank you for taking my question. I want to go back to the three transactions that we’ve been speaking about. If you can touch on the pricing dynamics as well as really the equity and debt or basis that you were able to really structure these deals. And how does that give you a preference, I guess, going forward, of how you would like to potentially do other opportunistic deals?

Scott Brinker (President and Chief Executive Officer)

Yeah, for the last two to three years, when we considered making investments in life science, they tended to be more structured investments because we didn’t feel like the prices to buy an asset fee simple had fallen by enough to make it worthwhile for us. So we did some mortgage lending. We did one preferred stock investment. We feel like in 2026, the prices have come down to a point on a per-foot basis that, even at today’s market rents, we can underwrite a really compelling stabilized return, and therefore we’ve shifted towards doing fee simple acquisitions.

In 2026, the dynamics of each deal were a little different. The lender in Cambridge essentially gets out at par, but with very little left for the equity. And on the other two transactions, the lenders, the first mortgage lenders, took a modest loss. So we were negotiating directly with them. Next question.

OPERATOR

Your next question comes from the line of Nick Joseph from Citi. Your line is now open. Please go ahead.

Nick Joseph (Analyst)

Thanks. You mentioned it’s a great time to be a buyer. You talked about the attractive stabilized returns and the timeline for achieving that. Why don’t you think you’re seeing more competition for life science assets? Maybe you can just touch on kind of the buyer pool broadly and the lending environment.

Scott Brinker (President and Chief Executive Officer)

Hey, Nick. I think it’s mostly that so many people lost so much money in the last four years. It became a pretty hot sector to participate in, say starting in 2017, 2018, 2019, and then got turbocharged in 2020 and 2021. So there are a lot of new entrants, both GPs, LPs, and lenders. And obviously they did not have a good outcome. Some did okay, but a lot of people certainly lost a lot of money, and it will take time for those scars to heal. It’s still kind of a bad word, life science, in most real estate shops around the country, and maybe for good reason.

If they came in without a platform to drive performance and the competitive advantage that a company like Healthpeak Properties has, I think they’re gonna have a hard time even in today’s market, which is clearly improving. So I think it’s just a niche business that requires an existing footprint to give tenants flexibility, to have the credibility to own, operate, develop very specialized real estate. And then the tenant relationships, not just the tenants, but the venture capital firms themselves who are driving a lot of those decisions. I think all of that just makes this a unique business where it’s not just real estate, it’s not just having capital. Those things are important.

You also have to have the platform. And we’ve got all three. Next question.

OPERATOR

Your next question comes from the line of Michael Strojek from Green Street. Your line is now open. Please go ahead.

Michael Strojek (Analyst at Green Street)

Thanks. Good morning. Maybe one question on the $200 million of additional outpatient asset sales outlined in the presentation. Can you just provide a bit of color on the types of assets you’re selling and how they compare to your in-place portfolio? And then you guys called out 7% cap rates on those assets. I imagine they were negotiated several months ago. Do you think if they were negotiated today, you’d be able to achieve similar pricing?

Scott Brinker (President and Chief Executive Officer)

Hard to say, Michael. That’s a hard contract with money at risk. So we felt comfortable publishing it. But we had a portfolio kind of in the Southeast where the health system was debating whether or not to renew the lease. It’s actually four buildings and we ultimately decided rather than renewing the lease that we’d go ahead and sell those. They weren’t particularly strategic for us in the scheme of things, and they offered a fair and reasonable price for those particular assets.

I’d say they’re below average in terms of asset quality and we were willing to transact at that price. So that one should be done by year end. Next question.

OPERATOR

Your next question is from the line of Dave Rogers from Raymond James. Your line is now open. Please go ahead.

Dave Rogers (Analyst at Raymond James)

Yeah, good morning. Obviously getting more comfortable putting equity into the life science acquisitions that you’ve done probably tells us that you’re also getting a little more comfortable with where pricing for lease deals is. So I’m kind of curious. I think in the quarter you said negative 5.6 was the lab spread, but maybe that was one deal that Kelvin noted as opposed to kind of a broader, you know, transaction market for you guys. So can you give us a better sense for where, you know, maybe face rates and where economic rents have moved or are moving in the life science business and how that compares to where you guys see your existing in place rents across the three major markets?

Scott Bowen

Sure, I could take that one. This is Scott Bowen. I think I’d probably start in Boston. Probably the most pressure on deal economics still in Boston, just given that supply demand imbalance is probably still the greatest there, I would say. Our portfolio there is mid‑80s occupied, very little lease rollover over the next 12 to 18 months. So we feel like we’re in a good position now and our assets are in the top submarkets where the lion’s share of the demand has been.

So we’ve actually been able to do pretty well in the leasing we’ve done there. San Diego, as Scott mentioned, we’ve brought Torrey Pines to 100% in our portfolio. So we’ll have additional pricing power there as we look to any renewals kind of in the near term in that market. And then in the Bay Area we continue to work through our dominant position there. And a lot of the deals we do in the Bay Area are deals that are with our existing tenants, kind of moving pieces around the chessboard, and where we tend to do better than the market on the rental rates.

So I think there’s signs of evening out a little bit on the landlord and tenant side in pockets. But it’s very deal dependent. You know, you’re still looking at every deal is different, depending on the tenant, the space, how much capital is going in, term, and all those things. So it’s hard to paint with a pretty broad brush on market rents across the market because it is very deal specific today.

Scott Brinker (President and Chief Executive Officer)

We’ve had even a few situations in recent months where we have multiple tenants bidding for the same suite or building, which we haven’t seen in many years. So, you know, the market doesn’t have to get back to 95% to create that dynamic. It’s a tenant that wants to be in our portfolio or has an existing lease with us. It does help create tension on the leasing economics that should turn favorable for us. And I just reiterate that we’re underwriting the acquisitions to today’s current market rents and TIs. So it’s not like we’re underwriting some big improvement, although we do think that’s possible in the years ahead. Next question.

OPERATOR

As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Your next question is from the line of Austin Wurschmidt from KeyBanc Capital Markets. Your line is now open. Please go ahead.

Austin Wurschmidt (Analyst)

Hi, good morning, everyone. I have a two‑parter. One, just clarifying, what do the 9% to 10% stabilized returns assume for stabilized occupancy? And then separately, maybe Kelvin is, you know, based on the 4Q implied guidance of $0.42, getting to an annualized rate of $1.68. Realize you’re not providing guidance, but any high‑level thoughts that you could share around puts and takes next year that we should be thinking about? Thanks.

Scott Brinker (President and Chief Executive Officer)

Yeah, Austin, on the occupancy and then I’ll turn it to Kelvin. Like, we underwrote Gateway in the mid‑80s. I think these three were more in the 90% range. But just given the size of leases in the life science space, the more likely scenario is you’re either 100% or you’re something below 75%. They tend to be chunky. But we have built in a pretty sizable vacancy in most of these acquisitions we’ve done. Kelvin.

Kelvin Moses (Chief Financial Officer)

Yeah. And Austin, maybe on just the performance so far this year and how that might translate next year. We’ve done a pretty phenomenal job throughout the year. We had the opportunity to increase guidance due to the operating results of each of our businesses. So that’s outpatient, lab, and senior housing that are outperforming our initial expectations. We continue to get the benefit from Janus Living from its organic growth and external growth. So that’s a contributor to Healthpeak going into 2027.

And naturally, as you know well, we’re managing the balance sheet prudently. We have $1.4 billion maturing next year on balance sheet. We’ve taken some proactive measures to kind of position ourselves well and have maximum flexibility to address those. But, you know, quite a bit of work to do on the balance sheet front going into 2027. So want to make sure we highlight that given that our cost of borrowing that’s maturing is around 3%, and that’s certainly much lower than where the market is today.

Scott Brinker (President and Chief Executive Officer)

Okay, next question.

OPERATOR

Your next question comes from the line of Jim Kammert from Evercore ISI. Your line is now open. Please go ahead.

Jim Kammert (Analyst at Evercore ISI)

Good morning. Thank you. You know, again, back on the lab leasing and your constructive comments. Can you sort of quantify? Are these tenants, you know, new to market on average in the transactions you’re engaged on, leases done and discussions underway, or are they, you know, beggar‑thy‑neighbor from neighboring assets? I’m just curious what the overall tone for the market is, please.

Andrew Johns (Senior Vice President)

I can give a little bit of context, Jim. From both an execution standpoint and the pipeline, I’d say 50% of our executions and active discussions are with existing clients, 50% are with new clients. So the demand is developing from within our portfolio and it’s, you know, coming from the marketplace. As Scott mentioned earlier, you’re getting the benefit of, you know, just continued improvement in biotechnology demand, but also the spillover technology‑adjacent demand that is attracted to our buildings that are highly flexible, that can accommodate those uses.

So the demand is certainly widespread geographically across each of our markets. It’s probably proportional, I would say, to our footprint in those markets. We see quite a bit of activity in the Bay Area, just given our scale. But San Diego has been quite interesting as you look at the way in which we’ve been able to lease in Torrey Pines and the demand that’s coming in behind that, that’s now, you know, eyeing and circling around our western Sorrento Mesa portfolio.

So a lot of, you know, positive indications in that pipeline that we’ve been seeing, and now the team is hard at work trying to convert that into LOIs and executions.

OPERATOR

Your next question is from the line of Rich Anderson from Cantor Fitzgerald. Your line is now open. Please go ahead.

Rich Anderson (Analyst)

Hey, sorry to keep this going, but I did—I wanted to follow up with something you said early, Scott, about same‑store and you not focusing on same‑store because it’s a, you know, fungible calculation depending on, you know, what’s going on at any present moment. How would you describe, you know, the sort of the process of taking assets out of the pool and into the pool and redevelopment, held for sale, all those sort of, you know, forces at work?

How does that impact your—even though you’re not focusing on same‑store, how does it impact your same‑store pool, particularly in medical office? You know, what would be your comment around those observations? Thanks.

Scott Brinker (President and Chief Executive Officer)

Yeah, I mean we have 500 plus buildings in the outpatient space. I think we have five buildings under redevelopment. We have nothing in held for sale. So the—I don’t know what percentage of that, 99%, I don’t know, it’s really high—is not in redevelopment or held for sale. If the building needs to be redeveloped, it does happen. It’s more likely in lab where you’ve got a full building that’s been used for 20 years and you just have to start over from the base building all the way through the TIs.

And that’s a process that is a lot of money and it makes sense to put a building like that in redevelopment. A multi‑tenant medical office building, like, it’s more rare. On occasion we do spend a fair amount of money. We’ve got a handful of them; we’ve had great success leasing them up. But I’ve always felt like this whole concept of moving stuff in and out of the pool is just very misleading. I understand why same‑store became a metric that the real estate community monitored, but I just think it’s been abused. So I’ve had a very strong desire to move the culture of Healthpeak to being a healthcare real estate company and making the best real estate decisions to drive bottom‑line cash flow and away from more of a finance accounting mindset of moving things from one bucket to the next.

And CapEx is another example of that. You can make the releasing spread wherever you want—just give the tenant a massive amount of same‑store TI and it bumps up the retention in the same‑store—and it all impacts the top line but not the bottom line. And we’re only focused on the bottom‑line cash flow and that’s how we run the business. And I think it’s a disservice to the whole sector that people are so focused on same‑store, but we’ll provide it because the sector requires it.

But we don’t run our company that way. Next question.

OPERATOR

Your next question is from the line of Jamie Feldman from Wells Fargo. Your line is now open. Please go ahead.

Jamie Feldman (Analyst)

Great, thank you. I was hoping to dig a little deeper into the comments you made on debt maturities. So can you just, you know, give us a little bit more of your thoughts on the debt coming due, what your options are, what you think the earnings drag might be to refi at the higher rates? And then I guess taking a step back, just kind of capital needs in general. You’ve done a lot of leasing. It sounds like you’ll have a decent amount of CapEx to get to that NOI in 12 to 15 months.

Just how do we think about the puts and takes on your capital needs over the next year or so, and then your leverage targets as well, and how you think that puzzle all fits together?

Kelvin Moses (Chief Financial Officer)

All right, I’ll try to unpack the questions there. But maybe holistically to start, you know we ended the quarter with 4.7 times net debt to EBITDA, which is a very strong balance sheet to begin with. We certainly have some maturities coming in 2027 that we mentioned, about $1.4 billion, that we’re working towards. We’ve made some proactive early decisions to kind of position ourselves with $900 million of delayed draw term loan that we can access over the next two quarters.

The first will be drawn in December and the second at some point in the first quarter of next year, which will help us reduce our CP balances and then work towards the maturities that are really coming forward in the first quarter. We have about $1.1 billion maturing in Q1, and from a strategy standpoint I would say we’re obviously focused on the most cost-effective tools available to us that make sense for our business at the time, to be able to kind of think about the long-term debt that we are comfortable with on balance sheet.

So too early to give you exactly what those tools will be that we’re utilizing. But the bank debt market has been supportive and that is certainly the first step. And then we’ll be able to utilize CP on an interim basis as we work through the decision-making around the balance sheet and long-term financing needs there. So quite a bit of flexibility that our team has put us in the position to have as we work towards those maturities. And then from a capital standpoint I would say you should expect capex kind of consistent with years past. We brought capital down considerably from 2025 to 2026 with the leasing that does come with TIs. So there will be some capital invested back in the buildings as we secure the occupancy, but don’t have an expectation for capex dramatically in excess of where we are today.

Scott Brinker (President and Chief Executive Officer)

Okay, thanks, Jamie.

OPERATOR

Your next question is from the line of Omotayo Okusanya from Deutsche Bank. Your line is now open. Please go ahead.

Omotayo Okusanya (Analyst)

Yes, good morning everyone, and congrats on the solid quarter and outlook. Again, realize we’re not giving ’27 guidance yet, but again just thinking we take a look at consensus numbers. Consensus is not really implying any real earnings growth. ’27 versus your updated ’26 guidance. We’ve kind of talked about some of the drag from interest expense, but again, we’ve also kind of talked about really strong operating results heading into ’27. So I’m just curious a little bit what you kind of think about that—kind of where some of the puts and takes could be to end up, you know, with you guys starting to kind of generate an earnings acceleration, which has always been a goal after the past few years of not a lot of earnings growth.

Scott Brinker (President and Chief Executive Officer)

That was a pretty severe downturn in life science to lose 2,500 basis points of occupancy. I mean, I think some companies in that sector, earnings are down 50% in four years. I mean we’re essentially flat. I think we’ve done a remarkable job in light of what happened in life science, which was more than 50% of our business four years ago. So I think we’ve done a pretty remarkable job to keep earnings where they’re at. Obviously interest rates have changed pretty dramatically. That is a headwind. There’s a lot of volatility, so hard to predict. But it’s certainly a higher refinancing cost than we have in place. But Kelvin and the team are doing a great job to position us for as much flexibility with as many options as possible.

But this life science, it does take time. I mean we were still losing occupancy in 2025. And there’s just a reality in real estate—the great pipeline that turns into executions, that turns into commencements, that turns into cash paid rent. I mean that’s a process and it takes time because of the buildout in particular Kelvin mentioned earlier, a plus or minus 12-month buildout for a lot of these spaces. So it just takes time for those lease executions to turn into rent, and obviously there’s a capital cost in the interim.

So I think all of that is playing into the timing of earnings growth. But I’ll just note that we’ve increased guidance three times year to date and by 5 cents in total. So I think we’re making the most of the environment we’re in, and the team’s doing a great job, and really happy with the momentum across all three of our businesses.

OPERATOR

Your last question.

Scott Brinker (President and Chief Executive Officer)

There’s one more.

OPERATOR

Your last question is from the line of Juan Sanabria from BMO Capital Markets. Your line is now open. Please go ahead.

Juan Sanabria (Analyst)

Hi. I think at the top of the call you talked about MOB core growth accelerating. So hoping you could maybe frame that and the drivers of that pickup or acceleration for outpatient?

Scott Brinker (President and Chief Executive Officer)

Yeah, we had quite a few big lease expirations in ’25 and ’26 that we knew about. That had a temporary impact on our growth rate in that business. But we’re still in the 2.5% to 3% range for the outpatient business. We’re still getting great releasing spreads with very modest TIs—important to put those two things together. And we’ve grown occupancy the last two quarters. Set aside the impact of transactions like the recap, but Mark and the team have actually grown total occupancy two straight quarters.

Fourth quarter may be closer to flat, plus or minus, but we see a real chance to materially move total occupancy higher in 2027. We have fewer expirations and the leasing pipeline is terrific. So we feel really good about the trajectory of that business, both on the top line but also the bottom line. Okay. Any more questions? Operator,

OPERATOR

That was the last question. And the conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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