Healthpeak Properties, Inc. DOC is well positioned to benefit from its diversified and high-quality healthcare real estate in US markets with high barriers to entry. Solid demand for laboratory assets should drive growth in its laboratory portfolio. Its nursing home (CCRC) portfolio should benefit from the increase in healthcare spending for seniors. A healthy balance sheet position bodes well.

Shares of this Zacks Rank #2 (Buy) company have gained 36.7% over the past six months, outperforming the industry’s growth of 11.6%. Given the strength of its fundamentals, there appears to be further room for growth for this stock.

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Factors that make Healthpeak Properties a solid choice

Solid demand for laboratory equipment: The increasing life expectancy of the US population and the growth opportunities in biopharmaceutical drug development have strengthened the fundamentals of the laboratory real estate market and led to increasing demand for such assets.

In addition, the use of artificial intelligence and machine learning is expected to increase the probability of success in drug discovery and reduce development time, suggesting that health research institutes will spend more money in healthcare in the coming years.

In the second quarter of 2024, the Laboratory Portfolio reported 3% year-over-year growth in total merger-combined same-store and adjusted same-store NOI.

Affordable CCRC portfolio: With the number of seniors expected to increase in the coming years, Healthpeak’s CCRC portfolio – which refers to senior residences with assisted living facilities, assisted living and nursing homes – is well positioned to capitalize on the high healthcare spending of this age group.

In the second quarter of 2024, CCRC portfolio utilization was 85.4%, an increase of 20 basis points sequentially.

Efforts to reposition the portfolio: Healthpeak is undertaking efforts to rebalance its portfolio to focus on laboratory, outpatient medical and CCRC assets. As part of this effort, the Company has recycled capital through the divestiture of non-core SHOP and triple net lease assets to acquire and fund the development of laboratory and outpatient medical assets in markets with high barriers to entry.

During the six months ended June 30, 2024, the Company commissioned a portion of a laboratory development project, an outpatient medical development project in a consolidated joint venture, a laboratory remodeling project, a portion of a laboratory remodeling project and a portion of a laboratory remodeling building in one of the Company’s unconsolidated joint ventures in South San Francisco.

The story continues

Balance sheet strength: The company has a healthy balance sheet. It ended the second quarter of 2024 with liquidity of approximately $3.08 billion and a net debt to adjusted EBITDAre ratio of 5.2X. It also has long-term credit ratings of Baa1 (stable) from Moody’s and BBB+ (stable) from S&P Global as of June 30, 2024, giving it easy access to the credit market at favorable costs. With a solid liquidity position, Healthpeak is well positioned to capitalize on growth opportunities.

Other stocks to consider

Some other highly valued stocks from the REIT sector are Four Corners Real Estate Trust FCPT and Global Medical REIT GMRE, all of which currently have a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Four Corners’ FFO per share in 2024 is $1.72, representing an increase of 3% from the prior year.

The Zacks Consensus Estimate for Global Medical’s FFO per share in 2024 is 94 cents, indicating year-over-year growth of 3.3%.

Note: All earnings figures presented in this article represent funds from operations (FFO), a widely used metric to assess the performance of REITs.

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