Irvine, CA-based Healthpeak Properties is making good on its previously indicated intentions of a potential exit of its senior housing operating portfolio and triple-net lease assets. The real estate investment trust announced Monday in its third-quarter earnings release that it is in various stages of selling more than $4 billion worth of seniors housing properties.
The REIT said that it had closed on the sale of 14 senior living properties, generating proceeds of approximately $100 million. The firm also has about $1.5 billion worth of assets across eight transactions under purchase agreements, and another approximately $2 billion under letters of intent across six different deals. The majority of Healthpeak’s remaining seniors housing and triple-net assets also are actively being marketed for sale, but the firm noted that it plans to keep its 17 continuing care retirement communities.
“We believe senior housing will remain a vital asset class in our society and will continue to serve the demand of the rapidly growing baby boomer demographic,” noted Healthpeak CEO Thomas Herzog, on the REIT’s third quarter earnings call Tuesday. “However, our focus going forward will be on growing in our three core businesses of life science, MOBs and CCRCs.”
The firm reported third-quarter funds from operations of 40 cents per share, in line with or surpassing the expectations of analysts. The REIT generated revenues of $597.7 million, up from the year-ago number of $537.9 million.
Further, Healthpeak declared a quarterly common stock cash dividend of 37 cents per share to be paid Nov. 23. In a note to investors Monday, however, Mizuho Securities USA analysts Omotayo Okusanya and Zachary Silverberg raised questions about the sustainability of the firm’s dividend payouts. They noted that lower near-term earnings could be likely as a result of the asset sales, potentially leading to a need for a dividend cut.
The analysts also pointed to what they said were worrying signs within the firm’s seniors housing portfolio. Cases of COVID-19 within the REIT’s portfolio rose to 97, compared with the 54 cases reported in September. October move-ins in the firm’s senior housing operating and CCRC portfolios declined 17% and 48%, respectively, month over month.
“This seems reflected in Healthpeak’s occupancy forecasts for the fourth quarter, but bears watching for downside given rising COVID cases,” the analysts concluded.