As Denver-based Healthpeak Properties continues disposing of its rental senior housing portfolio, the real estate investment trust said Monday that its commitment to expanding its portfolio of continuing care retirement communities is stronger than ever.
In an investor presentation prepared for the Citi 2021 Global Property CEO Conference, the firm praised CCRCs as irreplaceable real estate and a unique property type that allows older adults to age in place by offering a full continuum of services and care in very large communities.
“Residents are invested since they pay a non-refundable entrance fee and are assured care for life,” according to the presentation.
The company also pointed to the sector’s densification potential, noting that all 15 Healthpeak-owned CCRCs sit on more than 100 acres of undeveloped land each, allowing for expansion with no incremental land cost. This potential could allow more than $500 million growth opportunity for the CCRC portfolio, primarily in Florida, Houston, Philadelphia and Washington, DC.
Outside of growth opportunities, Healthpeak also noted that CCRC occupancy has outperformed rental senior housing by an average of 330 basis points (3.3%) for the past five years, and the outperformance accelerated to an average of 600 basis points (6%) during the pandemic.
Still, the REIT looks quite different than it did five years ago, when two-thirds of Healthpeak’s portfolio income was made up of skilled nursing, senior living communities and CCRCs. Now, CCRCs make up 11% of the firm’s portfolio income, with medical office buildings and life sciences properties making up with rest.
“Over the past five years, we have taken deliberate actions to reposition Healthpeak, focusing on ownership of non-commoditized real estate where we have scale and expertise, creating a competitive advantage,” the firm wrote in its presentation. “This transformation has created a differentiated REIT that is positioned to generate consistent and stable earnings and dividend growth for years to come.”
Yet some investors who chose to back the firm as a mostly seniors housing REIT still may be a bit wary.
“At this point, Healthpeak is no longer a diversified REIT,” said a Million Acres analysis of the firm Friday. “It’s a medical office REIT, and that changes things for investors.”