Analyst Note| Kevin Brown, CFA |
Healthpeak reported third-quarter earnings that were slightly ahead of our expectations, leading us to reaffirm our $36 per share fair value estimate for the no-moat firm. Same-store net operating income growth was once again highest for the life science segment, which was up 6.8% year over year and outperformed our expectation of 5.0% growth. Same-store NOI for the medical office segment was up 2.9% in the third quarter, better than our estimate of 2.1%. The continuing care retirement community (CCRC) segment, though, saw another decline in the third quarter, down 9.0% when government grants received from the CARES Act are included in 2020 results and down 1.7% when those grants are excluded. Still, the CCRC portfolio represented only 10.7% of Healthpeak's total NOI in the third quarter. As such, total company same-store NOI grew 4.1% when the grants are excluded and 3.2% when the grants are included--both of which were slightly ahead of our 2.8% growth estimate. Even so, Healthpeak's adjusted reported FFO in the third quarter was in line with our $0.40 per share estimate, leaving us with relatively few material changes to our model from the quarter.