Healthpeak Properties, Inc. · NYSE:DOC
Healthpeak Properties — HCP — Investor Presentation (September 2019)
52 slides from Healthpeak Properties's investor presentation, Sep 9, 2019
Slide 1: Investor Presentation September 2019
INVESTOR PRESENTATION September 2019 Discovery Village at Palm Beach Gardens (Palm Beach Gardens, FL)
Slide 2: Disclaimers
DISCLAIMERS This presentation is being presented solely for your information, is subject to change and speaks only as of the date hereof. This presentation is not complete and is only a summary of the more detailed information included elsewhere, including in our Securities and Exchange Commission (
Slide 3: Table of Contents
TABLE OF CONTENTS 1. Introduction to HCP 4 - 10 2. Recent Investments 11 - 21 3. Development Overview 22 - 27 4. Segment Overviews A. Life Science 29- 32 B. Medical Office 33 - 38 C. Senior Housing 39 - 44 5. Balance Sheet & Sustainability 45 - 50 Appendix 51-52 HCP, Inc. 3
Slide 4: Introduction to HCP
INTRODUCTION TO HCP HCP, Inc. The Cove and The Shore at Sierra Point | South San Francisco, CA
Slide 5: HCP at a glance
INTRODUCTION HCP at a glance DIVERSIFIED SCALE BALANCED PORTFOLIO 745 PROPERTIES 21 Million Sq. Ft. Medical Office $25 Billion in Enterprise Value(1) 8 Million Sq. Ft. Life Science $18 Billion in Market Cap(1) 27,200 Senior Housing Units HIGH-QUALITY PRIVATE PAY DIVERSIFIED INVESTMENT GRADE ESTABLIS
Slide 6: Senior Leadership
SENIOR LEADERSHIP TOM HERZOG President & Chief Executive Officer Mr. Herzog is our President and Chief Executive Officer, and a member of our Board of Directors. He became our Chief Executive Officer and a member of our Board in January 2017. From June 2016 to December 2016, Mr. Herzog served as our
Slide 7: The Opportunity
THE OPPORTUNITY HCP has a significant pipeline for future growth U.S. HEALTHCARE REAL ESTATE(1) HCP’s PRO FORMA PORTFOLIO INCOME(2)(3) Other owners of healthcare real estate Medical Office Senior Housing 30% 31% $1.1 $25B HCP Trillion Enterprise Other Value public REITs Other, 11% Life Science 28% _
Slide 8: HCP's Portfolio & Strategy Overview
HCP’S PORTFOLIO & STRATEGY OVERVIEW Strategic growth initiatives across segments As Baby Boomers Age, They Will Continue to Seek… Senior Housing communities Outpatient services and specialist New and innovative drugs, offering social activities, daily doctor visits performed more treatments, and hea
Slide 9: What Differentiates HCP
WHAT DIFFERENTIATES HCP • High-quality portfolio with a balanced emphasis on Medical Office, Life Science, and Senior Housing real estate • ~58% of portfolio NOI(1)(2) from on-campus Medical Office portfolio and premier Life Science properties, primarily in San Francisco, San Diego, and Boston • ~37
Slide 10: HCP's Premier Real Estate Portfolio
HCP’S PREMIER REAL ESTATE PORTFOLIO 9 portfolios representing ~30% of total company cash NOI The Cove At Oyster Point Life Science Medical City Dallas Medical Office Discovery Portfolio Senior Housing San Francisco, CA Stabilized / Dev. Dallas, TX Stabilized FL, GA, TX Recent Acquisition Hayden Rese
Slide 11: Recent Investments
RECENT INVESTMENTS HCP, Inc. The Hartwell Innovation Campus | Lexington, MA
Slide 12: Growing Our Balanced Portfolio of High-Quality Assets
GROWING OUR BALANCED PORTFOLIO OF HIGH-QUALITY ASSETS Recent Transactions Transaction Rationale $333M pending acquisition of 35 Increasing density in our core markets CambridgePark Drive (Boston) Capturing scale to satisfy demand from growing $228M acquisition of four-building tenants Hartwe
Slide 13: Life Science: Boston Footprint
LIFE SCIENCE: BOSTON FOOTPRINT Targeted focus on the West Cambridge and Lexington submarkets Hartwell Hayden CambridgePark Suburbs (Route 128) West Cambridge East Cambridge Market Size 3M sf Market Size 1M sf Market Size 8M sf Vacancy 5% Vacancy 8% Vacancy 1% Asking Rents PSF $50-$65 Asking Rents PS
Slide 14: Life Science: Boston Portfolio
LIFE SCIENCE: BOSTON PORTFOLIO In less than two years since re-entry into the Boston market, HCP has expanded to three core campuses with more than 1.3M square feet at an average stabilized yield of 6%+(1) HARTWELL HAYDEN CAMPUS CAMBRIDGEPARK DRIVE CAMPUS CAMPUS 45-55-65 75 Hayden Hartwell 101 CPD 3
Slide 15: Life Science: CambridgePark Drive Campus
LIFE SCIENCE: CAMBRIDGEPARK DRIVE CAMPUS Created a West Cambridge footprint through a series of strategic investments CAMPUS OVERVIEW HCP has executed a targeted expansion strategy, creating a scalable footprint in West Cambridge expected to reach 440K contiguous square feet through the following
Slide 16: Life Science: Expansion of CambridgePark Drive Campus
LIFE SCIENCE: EXPANSION OF CAMBRIDGEPARK DRIVE CAMPUS LEED Gold® property ACQUISITION OVERVIEW TRANSACTION RATIONALE Entered into a binding contract to acquire a 100% fee simple interest in a Highly strategic location; creating a scalable 224K square foot, five-story lab and R&D building located
Slide 17: Life Science: The Hartwell Innovation Campus
LIFE SCIENCE: THE HARTWELL INNOVATION CAMPUS Core life science campus of scale in a premier suburban lab cluster CAMPUS OVERVIEW In July 2019, completed the accretive acquisition of The Hartwell Innovation Campus for $228M which represents a 5.3% year one cash capitalization rate and ~6.5% GAAP ca
Slide 18: Life Science: The Hayden Research Campus
LIFE SCIENCE: THE HAYDEN RESEARCH CAMPUS Premier research and innovation campus in suburban Boston CAMPUS OVERVIEW 45, 55 and 65 Hayden (397K square feet) were acquired in December 2017 for $228M which represented a 6.5% stabilized cash capitalization rate(1) The development rights for 75 Hayden
Slide 19: Senior Housing Acquisitions: Oakmont Senior Living
SENIOR HOUSING ACQUISITIONS: OAKMONT SENIOR LIVING High-quality, recently-built communities in high-barrier markets with a best-in-class operator July 2019 May 2019 Combined Purchase Price $284M $113M $397M Mid-5% range Mid-5% range Cap Rate Mid 5-% range (year one)(1) (year one)(1) 5 3 # of Propert
Slide 20: Senior Housing Acquisitions: Discovery Senior Living
SENIOR HOUSING ACQUISITIONS: DISCOVERY SENIOR LIVING High-quality, recently-built communities with attractive future rights to grow our relationship with a top-tier operator TRANSACTION OVERVIEW FUTURE RIGHTS Purchase Price $445M 4 “Discovery Village” senior housing development properties: Low-4%
Slide 21: Medical Office: Growing Our HCA Development Program
MEDICAL OFFICE: GROWING OUR HCA DEVELOPMENT PROGRAM Grand Strand Lee’s Summit Brentwood Ogden Oak Hill • Myrtle Beach, SC • Kansas City, MO • Nashville, TN • Ogden, UT • Tampa, FL • 90,000 SF • 52,000 SF • 119,000 SF • 70,000 SF • 42,000 SF • $26M estimated • $16M estimated total • $37M estimated •
Slide 22: Development Overview
DEVELOPMENT OVERVIEW HCP, Inc. 75 Hayden (Rendering)| Boston, MA
Slide 23: Active Development Pipeline
ACTIVE DEVELOPMENT PIPELINE(1) Total Cost to Remaining Leasable Percent Est. Date of Est. Stab. Yield Est. Stab. Cash Project Market Costs ($M) Date(2)($M) Costs ($M) Area (000s) Leased Stab. Occ. Range(3) NOI ($M)(4) Ridgeview San Diego $73 $70 $3 306 SF 100% Q1 2020 6.5% - 7.0% $5 Sorrento Summit
Slide 24: Earnings Contributions from Active Development Pipeline
EARNINGS CONTRIBUTIONS FROM ACTIVE DEVELOPMENT PIPELINE ESTIMATED NET CONTRIBUTIONS TO FFO AS ADJUSTED PER SHARE(1)(2) (Based on HCP’s current active development pipeline) $0.11 $0.09 $0.07 Net Accretion: +$0.05 YOY Δ: +$0.02 Net Accretion: +$0.03 $0.05 YOY Δ: +$0.04 $0.03 $0.05 $0.04 $0.01 $0.01 ($
Slide 25: Value Creation from Development
VALUE CREATION FROM DEVELOPMENT ✔ Pipeline Expected to Drive ✔ In-Place Dev Yield Expected to Generate a ✔ Projects Totaling $440M are ~$400-600M of Value Creation ~200bps Spread Over Market Cap Rates 100% Pre-Leased ACTIVE DEVELOPMENT PIPELINE(1) ILLUSTRATIVE NAV CREATION FROM ACTIVE DEVELOPMENTS $
Slide 26: Life Science Land Bank and Entitlements
LIFE SCIENCE LAND BANK AND ENTITLEMENTS Land bank is comprised of sites located in the life science markets of San Francisco, San Diego and Cambridge Plan to strategically activate land bank over time as leasing progress and market conditions warrant KEY FUTURE LIFE SCIENCE DEVELOPMENT OPPORTUNI
Slide 27: Redevelopment Opportunity
REDEVELOPMENT OPPORTUNITY • Our portfolio has approximately $75 to $100 million per year of redevelopment potential over the next few years • Cash-on-cash returns average 9% to 12% BEFORE AFTER LIFE SCIENCE Wateridge San Diego, CA $16M project cost MOB Yorktown 50 Fairfax, VA $7M project cos
Slide 28: Segment Overviews
SEGMENT OVERVIEWS HCP, Inc. Plano MOB III | Plano, TX
Slide 29: Life Science
LIFE SCIENCE HCP, Inc. Scripps Wateridge | San Diego, CA
Slide 30: Life Science: Demographic trends driving health care needs
LIFE SCIENCE Demographic trends driving health care needs The combination of people living longer with an associated increase in chronic conditions and escalating healthcare costs is driving growth in the life science industry U.S. AVERAGE LIFE EXPECTANCY CHRONIC DISEASE MORTALITY (Years) 80 79 72 ~
Slide 31: Life Science Continues to Attract Investors
LIFE SCIENCE CONTINUES TO ATTRACT INVESTORS U.S. VENTURE CAPITAL INVESTMENT ($ in billions) 2018 investments of approximately $20B set a record high $5.0 More than double 10-year historical average $2.5 +70% of all dollars deployed to CA & MA 1H 2019 investment levels in-line with 2017, the
Slide 32: Life Science: Class A real estate in premier epicenters
LIFE SCIENCE Class A real estate in premier life science epicenters 13281% / 94% 27 9.5M 96% $330M PropertiesOn-Campus(1) / AffiliatedCampuses(1) Square Feet(1) Occupancy CASH NOI(2) San Francisco San Diego Boston 4.6M 5.4M 2.0M 2.3M 960K 1.3M Total Square Feet(1) Total Square Feet Total Square Feet
Slide 33: Medical Office
MEDICAL OFFICE HCP, Inc. East Mesa | Phoenix, AZ
Slide 34: Medical Office: Point of care evolution driven by aging patients
MEDICAL OFFICE Point of care evolution driven by aging patients Demand for outpatient care has outpaced inpatient services since 2015, as an older patient population that requires more frequent care has recognized the advantages of shorter duration, lower price-point outpatient visits AGE 65+ POPULA
Slide 35: Industry-Leading On-Campus Medical Office Portfolio
INDUSTRY-LEADING ON-CAMPUS MEDICAL OFFICE PORTFOLIO Top ten markets represent 67% of segment cash NOI 21M 80%+ 84% / 95% 92%+ Specialty Focused square feet On-Campus / Affiliated Consistent Occupancy Physicians(1) Seattle Salt Philadelphia Lake City Denver Louisville Nashville Greenville Phoenix Dal
Slide 36: Medical Office: Strong relationships drive steady performance
MEDICAL OFFICE Strong relationships drive steady performance HISTORICAL SAME-PROPERTY OCCUPANCY KEY RELATIONSHIPS Occupancy % 95% 90% 85% . Largest for-profit hospital 91% 92% 93% 91% 91% 92% 92% 92% operator in the U.S. . 80% 40% of HCP’s medical office square footage affiliated with HCA 75% 2011 2
Slide 37: Medical Office Tenant Mix
MEDICAL OFFICE TENANT MIX Focus on specialty physicians differentiates our portfolio • Our disproportionately high percentage of specialty physicians reflects our on-campus focus and insulates our portfolio from evolving lower acuity healthcare delivery locations such as neighborhood urgent care cen
Slide 38: Medical City Dallas
MEDICAL CITY DALLAS Fully-integrated, highly-specialized, two million square foot campus anchored by HCA 5 2.1M 96% $39M Properties Square Feet Occupancy 2019 Cash NOI(1) Building A A Building B B D C $202 $210 $183 $186 $189 $194 Building C $170 $179 C B A Building D D ___________________________ N
Slide 39: Senior Housing
SENIOR HOUSING HCP, Inc. Aegis Dana Point | Dana Point, CA
Slide 40: Senior Housing Demand Fundamentals Are Strong
SENIOR HOUSING DEMAND FUNDAMENTALS ARE STRONG AND GETTING EVEN BETTER An aging population, declining caregiver ratio, and increasing penetration rate will drive a dramatic increase in demand DECLINING ADULT CHILD STEADILY INCREASING AGE 80+ POPULATION CAREGIVER RATIO PENETRATION RATE(1) (in Millions
Slide 41: SHOP Asset Quality Transformation
SHOP ASSET QUALITY TRANSFORMATION Strategic and disciplined acquisitions, dispositions, and operator transitions have led to a dramatic improvement in asset quality and operator diversification IMPROVED ASSET QUALITY Reduction in average building age, despite 39% increase in monthly RevPOR passage o
Slide 42: SHOP Asset Quality Transformation (Cont'd)
SHOP ASSET QUALITY TRANSFORMATION (CONT’D) Strategic capital allocation has led to a dramatic shift towards concentration in high growth and affluent markets IMPROVED REAL ESTATE MARKETS STRONGER DEMOGRAPHICS % of SHOP Cash NOI(2) Improved 80+ population growth, household income, and home value Top
Slide 43: HCP SHOP Local Market 5-Year Outlook
HCP SHOP(1) LOCAL MARKET 5-YEAR OUTLOOK Favorable supply and demand fundamentals should drive occupancy growth in our local markets within the next 18 months and beyond 5-Mile 80+ Population Growth(2) 5-Mile Inventory Growth(4) 4.0% 5.0% Strong Population Growth 3.5% 4.0% 3.3% Increasing Penetration
Slide 44: Continuing Care Retirement Community (CCRC) Portfolio
CONTINUING CARE RETIREMENT COMMUNITY (CCRC) PORTFOLIO PORTFOLIO OVERVIEW 15-property JV; HCP owns 49% and Brookdale owns 51% Significant scale - average size is 485 units per property CCRCs are a lifestyle choice where residents move in at a younger age and have much longer lengths of stay tha
Slide 45: Balance Sheet & Sustainability
BALANCE SHEET & SUSTAINABILITY HCP, Inc. Centerpoint | Kansas City, MO
Slide 46: Improved Credit Profile
IMPROVED CREDIT PROFILE Strong, investment grade balance sheet with ample liquidity STRONG FINANCIAL POSITION CAPITAL STRUCTURE HIGHLIGHTS • Investment grade balance sheet Metric 2Q 2019 • Primarily fixed rate, unsecured borrowings Net Debt-to-Annualized Adjusted EBITDAre 5.7x • Low overall average
Slide 47: Debt Maturity Schedule
DEBT MATURITY SCHEDULE(1)(2) No material maturities through 2021 Improved liquidity with upsized revolver capacity Extended weighted average maturity at ~6.5 years $3,600 $3,300 $3,000 $2,700 $2,400 $2,100 $1,800 New Unsecured Notes $650M due 2026 $1,500 $1,404 $1,372 $650M due 2029 ($ ($ in m
Slide 48: Spotlight on HCP's Green Accomplishments and Buildings
SPOTLIGHT ON HCP’S GREEN ACCOMPLISHMENTS AND BUILDINGS(1) 115 2.6M ft.2 223 8 Years 8 Times ENERGY STAR Properties with LEED® Certified GRESB Green NAREIT Leader Certified Common Area Properties Star Rating in the Light Buildings LED Lighting Retrofits Soledad, San Diego, CA Sky Ridge, Lone Tree, CO
Slide 49: Commitment to Sustainability
COMMITMENT TO SUSTAINABILITY As a proven industry leader for over a decade, HCP is doing its part to help the environment through sustainable initiatives Excellent progress on our long-term environmental goals(1) 27% 17% 9% 8% Decrease in Increase in Decrease in Decrease in Greenhouse Gas Recycled W
Slide 50: Commitment to Social and Governance Initiatives
COMMITMENT TO SOCIAL AND GOVERNANCE INITIATIVES Our mission to be an upstanding corporate citizen is underscored by our commitment to diversity, inclusion, engagement, transparency and accountability Board Diversity Workforce Diversity Tenant Engagement 50% 47% 3 Female Consecutive Years Female Inde
Slide 51: Appendix
APPENDIX HCP, Inc. 87 CambridgePark Drive | Cambridge, MA
Slide 52: Reconciliation Q2-2019 Portfolio Income
RECONCILIATION Q2-2019 Portfolio Income Senior Housing Medical Triple-net SHOP Life Science Office Other Total Portfolio Income 53,806,772 40,382,308 74,501,838 90,547,906 37,618,071 296,856,895 Asset sales and transitions to SHOP(1) (13,338,927) 6,768,566 (92,354) (684,388) (5,084,170) (12,431,273)