First-quarter results in Healthpeak Properties’ continuing care retirement community segment “exceeded our expectations,” the real estate investment trust’s president and chief investment officer, Scott Brinker, said Wednesday during the Denver-based company’s first-quarter earnings call.

Occupancy was up, according to a supplemental report released in conjunction with the earnings call. It was 80.9% in the first quarter of 2022 compared with 79% in the fourth quarter of 2021 and 78.7% in the first quarter of 2021. By sector, first-quarter 2022 occupancy was 80.8% in independent living/assisted living/memory care and 81.3% in skilled nursing.

“Forward-looking indicators, including leads and tours, exceed 2019 levels and are trending favorably,” Brinker said, adding that entry fee cash receipts totaled $21 million during the quarter, exceeding the amortization amount Healthpeak recognized in earnings by $2 million.

“That gap has now occurred in four straight quarters, and we expect it to continue, which is a positive sign for future earnings growth,” he said.

CCRC entry fees had a strong quarter, CEO Tom Herzog said, with cash sales volumes up 42% year over year.

The communities, Herzog said, “are benefiting from strong demand and supportive housing values with almost no new competition.”

“CCRCs require 8 years to 10 years from pre-development through stabilization, and our portfolio’s replacement cost would be at least three times our cost basis,” he said. “Additionally, the yield for our irreplaceable CCRC portfolio is incredibly strong on a risk-adjusted basis.”

The REIT continues to have strong pricing power with little or no discounting, Brinker said.

“Our average entry fee sale price increased 18% year over year, and RevPOR [revenue per occupied room] increased nearly 5% year over year,” Brinker said. Healthpeak reported that RevPOR was $7,190 in the first quarter, up from $6,770 in the fourth quarter of 2021.

Because labor challenges remain, however, the REIT is being conservative with its financial expectations for the segment, Brinker said.

As of March 31, CCRCs account for 10.9% of Healthpeak’s portfolio income compared with its other two business segments, life science (47.4%) and medical office buildings (38.2%).

The 15 CCRCs in Healthpeak’s portfolio have an average age of 31 years. Life Care Services operates 13 of the properties, and Sunrise Senior Living operates the other two. The top three major markets in which it operates are Tampa, FL, Philadelphia and Houston.

Healthpeak reported that its investment in the portfolio is approximately $2.3 billion and that net operating income from the portfolio is approximately $31 million. The REIT currently has not publicized plans for any acquisitions, development or redevelopment in its CCRC business.