Healthpeak Properties

Component assessment and weights: Switching costs 85/100 (30% weight). On‑campus adjacency and clinical integration make migration costly and operationally risky for health systems; DOC’s outpatient portfolio is ~96% on‑/adjacent‑campus with 5.2‑year average remaining lease term that reinforces stickiness. Efficient scale 75/100 (25% weight).

The company is a top owner in key metros with barriers to entry and has internalized property management across large footprints, improving service and cost-to-serve. Intangibles 70/100 (20% weight). Long relationships and reputation with leading health systems and biopharma tenants support renewals and development access.

Cost advantage 65/100 (20% weight). Investment‑grade balance sheet and platform scale lower its capital costs versus smaller peers, though not uniquely so. Network effects 20/100 (5% weight). Real estate lacks classic network dynamics; benefits come from scale and relationships rather than user‑driven network externalities.

Weighted together this yields ~78. Key erosion risks: hospital system consolidation or distress that reduces campus demand, reimbursement pressure, and prolonged softness in life science leasing; mitigating factors include diversified tenant mix and constrained supply in core clusters.

Outpatient medical leases typically include ~3% annual escalators and in 2025 achieved +5.0% cash releasing spreads on renewals, indicating room for steady rent growth. Lab renewals showed modest negative cash spreads in Q4 2025 as the sector digested new supply and funding volatility, though management frames 2026 as near an inflection.

Senior housing (life plan) achieved double‑digit same‑store NOI growth, but this is more operations‑driven than rent pricing. Overall, embedded escalators provide baseline pricing power, with upside as life‑science demand normalizes; risk remains if capital costs or tenant funding pressures persist.

Predictability is supported by long‑dated outpatient leases, on‑campus location, and diversified, creditworthy tenants that behave like toll‑road cash flows. 2025 merger‑combined same‑store cash NOI grew 4.0% (outpatient +3.9%), and management guides 2026 FFO as adjusted to 1.70–1.74 per share with same‑store growth of negative 1% to positive 1% as lab recovers gradually.

Exposure to life science introduces cyclicality tied to funding and supply cycles, which reduces overall predictability versus pure outpatient peers. Geographic and tenant diversification across leading U.S. markets offsets single‑market risk.

DOC exits 2025 with net debt to adjusted EBITDAre of ~5.2x, investment‑grade ratings (Baa1/BBB+), approximately 2.7 billion of liquidity, and a 4.7‑year weighted average debt maturity at a 4.2% weighted average interest rate.

The company extended its 3.0 billion revolver to 2029 and issued 500 million of 4.75% notes due 2033 in 2025, further laddering maturities. Roughly 45% floating‑rate exposure remains a watch item, though management has demonstrated proactive refinancing and capital recycling.

The 2025 dividend of 1.22 per share represents about a 72% payout of TTM AFFO of 1.69 per share, leaving a modest cushion.

Post‑merger integration exceeded synergy targets in 2024, with continued internalization of property management improving operating leverage.

In late 2025 and early 2026, DOC acquired a 1.4 million square foot South San Francisco campus at a low‑6% going‑in yield to position for a lab upturn, bought out a senior housing JV stake for 314 million, and outlined over 1 billion of 2026 asset sales and recapitalizations to recycle into higher‑return opportunities or repurchases.

The planned Janus Living senior housing IPO in 1H 2026 aims to simplify the portfolio and surface value while maintaining alignment via retained ownership. Balance between growth and prudence is reasonable, with measured development and select acquisitions in core submarkets.

Execution risk around the Janus IPO and lab recovery keeps the score short of best‑in‑class.

CEO Scott Brinker and the team have repositioned Healthpeak toward outpatient and life science over several years and executed the Physicians Realty Trust merger, integration, and synergy capture ahead of schedule. Governance and reporting cadence are solid with detailed quarterly supplements.

Leadership is taking decisive steps to ring‑fence senior housing volatility via a planned IPO and continues to recycle capital into higher‑quality, higher‑growth assets. Track record is good though not flawless, and the next test is delivering on 2026 guidance and the separation while navigating a choppy lab market.