Healthpeak Properties, Inc. PEAK is slated to report first-quarter 2023 results on Apr 27, after market close. While the quarterly results are expected to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a decline.
In the last reported quarter, this healthcare real estate investment trust (REIT) posted FFO per share of 44 cents, surpassing the Zacks Consensus Estimate by a penny. The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) net operating income (NOI) was witnessed across the portfolio.
In the preceding four quarters, Healthpeak’s FFO as adjusted per share beat the Zacks Consensus Estimate on three occasions and met the same once, the average being 1.76%. The graph below depicts this surprise history:
Factors at Play
The life-science industry has been benefiting from the increasing life expectancy of the United States population and biopharma drug development growth opportunities.
As a result, higher demand for life science real-estate assets is expected to have driven demand for Healthpeak’s life-science real-estate portfolio, leading to healthy leasing activity and rent growth during the first quarter.
In addition, the company’s life-science portfolio comprises a well-diversified tenant base. This is likely to have led to steady rental revenue generation during the to-be-reported quarter.
Further, PEAK’s life-science development activities are expected to have been accretive to net operating income (NOI). Our estimate for the life-science portfolio cash-adjusted NOI is pegged at $119.2 million, indicating a rise of 3.8% year over year.
Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, is anticipated to have benefited from higher healthcare expenditures incurred by senior citizens compared with the average population.
Per the March Investor Presentation, the average daily census (ADC) occupancy for January 2023 was 82.6%, up 30 basis points from ADC occupancy recorded in December 2022. We expect CCRC portfolio occupancy to be 82.6% for first-quarter 2023.
Amid these tailwinds, the company’s top line is expected to have improved. The Zacks Consensus Estimate for first-quarter total revenues is pegged at $516.8 million, indicating a rise of 3.7% from the year-ago reported number. Our estimate for the same is pegged at $515.9 million, suggesting an increase of 3.5%.
Healthpeak is expected to have maintained a robust balance sheet during the first quarter, supporting its acquisitions and development activities.
However, increasing interest expenses might have cast a pall on the company’s performance during the quarter. We expect first-quarter 2023 interest expenses to have risen 30.8% year over year.
Healthpeak’s activities during the to-be-reported quarter were not adequate to garner analysts’ confidence. The Zacks Consensus Estimate for the FFO per share has been unchanged at 42 cents over the past month. On a year-over-year basis, the figure suggests a decline of 2.3%.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a surprise in terms of FFO per share for PEAK this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: Healthpeak has an Earnings ESP of -1.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PEAK currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
VICI Properties VICI is slated to report quarterly numbers on May 1. VICI has an Earnings ESP of +3.34% and carries a Zacks Rank #2 (Buy) presently.
Welltower WELL is scheduled to report first-quarter earnings on May 2. WELL has an Earnings ESP of +0.35% and a Zacks Rank #3 currently.
Host Hotels & Resorts HST is scheduled to report first-quarter earnings on May 3. EQIX has an Earnings ESP of +0.47% and a Zacks Rank #3 currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.