Healthpeak Properties, Inc.

Good morning and welcome to the HealthPeak Properties, Inc. fourth quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Andrew Johns, Senior Vice President, Investor Relations. Please go ahead.

Welcome to HealthPeaks Fourth Quarter 2022 Financial Results Conference Call. Today's conference call will contain certain forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations. A discussion of risk and risk factors is included in our press release in detail in our filings to the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures will be discussed on this call. In an exhibit to the AK reference to the SEC yesterday, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with regulatory requirements. The exhibit is also available on our website at healthpeak.com. I'll now turn the call over to our President and Chief Executive Officer, Scott Brinker.

Thanks, Andrew. Good morning, and welcome to HealthPeak's fourth quarter earnings call. Joining me today for prepared remarks Pete Scott, our CFO, and Scott Bone, our CDO. The senior team will be available for Q&A. Through all economic cycles, our business is driven by two fundamentals, the aging population and the desire for improved health. Demand for our real estate led to an estimated 17 million visits to our MOBs last year. Our buildings are critical to outpatient health care delivery in Dallas, Houston, Denver, Nashville, and many other attractive markets. Biotech tenants are producing life-changing therapeutics for cancer, heart disease, sickle cell, and many other diseases. It's clear our buildings have an impact not often seen in real estate, and we expect that impact to grow, driven by the ongoing push to outpatient care and exciting advances in personalized medicine and drug discovery. Certainly, there will be periods of belt tightening in biotech, But HealthPeak is in great shape with only a modest amount of space to lease, both this year and next. Our new developments are fully funded and 78% pre-leased. We didn't chase non-core sub-markets or conversions and kept our pipeline in check. Most important, we finished the quarter at 99% occupancy and continue to sign leases when we do have availability, often with existing relationships. Our significant scale in each of our submarkets is a competitive advantage against small landlords and second-tier product. And in recent weeks, there's been positive momentum in the public markets for biotech. A sustained improvement could lead to reacceleration in demand. Moving to operating results, which were strong across the company. Full-year same-store NOI grew 5.1% in life science and 4% in medical office. We achieved those results despite difficult comps as we had best-in-sector same-store growth in 2020 and 21 in both segments. Our fourth quarter results exceeded the full-year growth rates, a positive way to close out 2022. Last quarter, we increased earnings guidance by two pennies, and we finished the year at the high end of that new range. We're projecting another solid year of operations and development deliveries in 2023, offset by the change in interest rates and some non-economic timing issues that Pete will cover. The underlying business is strong, and the NOI growth opportunity that we described in our November investor presentation is unchanged. We're in great shape from both a leverage and liquidity standpoint. The attractive spread on our January bond issuance reflects our strong balance sheet and support in the credit markets. The $113 million sale of two R&D buildings in Durham for a five cap is a good transaction comp in an otherwise quiet market. The price was negotiated in December and closed last week to an unlevered buyer. Also, the rents are at market, whereas most life science sales comps have below market rents that make the cap rate less relevant. The sale was opportunistic given we recently signed a long-term lease extension and had maximized the value creation. We're progressing entitlements across our core markets. But it's possible for the first time in several years that risk-adjusted returns on acquisitions will be more attractive than development. This could impact capital allocation in 2023. We'll have to see where cap rates and cost of capital settle and what happens with construction costs as the economy slows. Either way, our balance sheet allows us to be opportunistic, and the land bank provides optionality. In South San Francisco, our sovereign wealth partner has agreed to allow HealthBeat to continue owning 100% of the Vantage Development Campus. A lot has changed since the agreements were signed a few quarters ago, including a 2x increase in the allowable density and less clarity around the timing of commencement given the environment. As a result, it made more sense for HealthPeak to own 100% of the project. Nothing has changed from the standpoint that we'll utilize third party capital if and when it makes sense for our shareholders. The pending conversion to an upgrade announced yesterday aligns us with peers and will provide a more flexible structure to grow the company through acquisitions. I would like to congratulate Ankit Patadia, who was promoted to our executive team. Ankit is a 13-year veteran of Healthdig and runs Treasury and FP&A with great skill and leadership. He'll continue to report to Pete Scott. We have a strong bench and continue to promote from within. Finally, we're advancing sustainability initiatives across the portfolio and are proud of our ESG recognition. That includes being named the CDP's leadership band for the 10th consecutive year and being named a best managed company by the Wall Street Journal. I'll turn it to Scott Bone to expand on life science results and fundamentals.