Cypress Village in Jacksonville, FL, is one of 15 CCRCs in Healthpeak’s portfolio.

Healthpeak Properties President and CEO Scott Brinker said the real estate investment trust’s continuing care retirement community portfolio isn’t on the market — yet — but that a potential sale is something the company “will continue to evaluate.”

During a third-quarter earnings call on Wednesday, Brinker said that the 15-property CCRC portfolio is not a “perfect fit” for the Denver-based REIT and that the firm will be “opportunistic and open-minded” if a good opportunity to exit it ever existed. 

Brinker, formerly president and chief investment officer, recently succeeded Tom Herzog as CEO, keeping the title of president as well. Brinker said during the earnings call that the REIT is not making any major changes and will continue to prioritize its other business lines, life sciences and medical office buildings, in its capital allocations.

Other than CCRCs, Healthpeak exited its senior housing business with $4 billion in proceeds in 2020 and 2021. Brinker said that although Healthpeak did not view the senior housing business negatively, the business did not “produce a story” that was marketable to its investors. 

Brinker also mentioned that Healthpeak “dramatically” reduced its Brookdale Senior Living concentration in 2019, giving the REIT strategic control in the CCRC portfolio and a strong operating partner in Life Care Services. In early 2021, the REIT sold 24 Brookdale communities to Hunt Valley, MD-based REIT Omega Healthcare Investors.

As of Sept. 30, Healthpeak’s CCRC portfolio included 13 LCS communities and two Sunrise Senior Living communities. CCRCs represent 7.8% of income in Healthpeak’s overall portfolio, according to information on the REIT’s website.

Despite a “challenging economic background,” Chief Financial Officer Pete Scott said Wednesday, the REIT’s CCRC portfolio has continued to deliver strong results.

In the third quarter, same-store growth increased 4.1%, driven by a 110-basis-point increase in occupancy in the independent living, assisted living and memory care units. Occupancy for the third quarter was 82%, with 90 basis points in sequential growth and 250 basis points in year-over-year growth.

Scott said that the CCRC portfolio had experienced its strongest quarter of occupancy gains since the beginning of the COVID-19 pandemic.

Topline revenue trends are “encouraging,” the CFO said, but expense pressures remain a challenge, particularly for labor, food and insurance. Although labor costs are easing from highs earlier this year, he said, those costs remain elevated.

Hurricane Ian update

Healthpeak portfolio properties in Florida, including CCRCs, experienced approximately $5 million in damage due to Hurricane Ian, which Scott described as “modest.” The CFO said there was no loss of life or major injuries to residents or staff members. 

Due to that damage, however, Scott said that Healthpeak anticipates temporary lower occupancy and sales at its CCRCs.