Thomas Herzog
Thomas Herzog

Healthpeak Properties continued its substantial exit from rental senior housing in the second quarter, as well as a strategic acquisition and development pipeline across all of its business segments, CEO Thomas Herzog said Wednesday during a second-quarter earnings call.

Herzog said the Denver-based real estate investment trust is down to its final $150 million of rental senior housing sales, which are all under binding contracts. The sales continue the REIT’s progress on its planned exit from senior housing, other than continuing care retirement communities. 

Healthpeak has grossed $3.8 billion on closed sales in senior housing since July, including the sale of 116 senior housing operating portfolio (SHOP) assets, 50 triple-net lease assets and two legacy CCRCs owned in a joint venture with and managed by Brookdale Senior Living. The REIT is under contract on the remaining sales. 

Previously disclosed transactions closed during the second quarter include the $564 million sale of 12 properties operated by Oakmont Senior Living and the $334 million sale of a10 properties operated by Discovery Senior Living. Through five separate transactions, Healthpeak previously closed on the sale of two leased properties operated by Next Step Senior Care and eight properties operated by several operators: Sonata, Milestone, Capital Senior Living and Brookdale.

CCRC portfolio

President and Chief Investment Officer Scott Brinker said occupancy in Healthpeak’s CCRC portfolio is up 90 basis points from May to June. Occupancy rates as of June 30 are 80.6% for assisted living, independent living and memory care, and 73.7% for skilled nursing.

The company received $500,000 in Coronavirus Aid, Relief, and Economic Security (CARES) Act funding in the second quarter, whereas COVID-related expenses were $1.5 million during the quarter. 

Development

Brinker said Healthpeak has an active strategic acquisition and development pipeline across all of its business segments — CCRCs, medical office buildings and life sciences — remaining focused on existing relationships to create opportunities not available to the broader market.

One benefit of having investments in three segments, Herzog said, is being able to “smooth out the inevitable cyclical nature of each of the three businesses.”

In its CCRC segment, from an acquisition and development perspective, Herzog said, “We have a lot of adjacent developable land to expand on huge parcels — we’ve got over 150 acres of land connected with 15 different mega campuses and locations that are irreplaceable.”

The company intends to proceed with some of those developments where it has waiting lists for independent living units, he added. “Those will be profitable,” Herzog said.