Healthpeak Properties, Inc.

Good morning, and welcome to the HealthPeak Properties Incorporated second 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 touchtone phone. 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 of Investor Relations. Please go ahead.

Welcome to HealthPeak's second quarter 2023 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 risk and uncertainties that may call actual results to differ materially from our expectations. A discussion of risk and risk factors is included in our press release and detail in our filing to the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures will be discussed on the call. In an exhibit to the AKB furnished to the SEC yesterday, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. The exhibit is also available on our website at healthpeak.com. I'll now send a call over to our President and Chief Executive Officer, Scott Brinker.

Thanks, Andrew. Good morning and welcome to HealthPeak's second quarter earnings call. Joining me today for prepared remarks is Pete Scott, our CFO, and our senior team is here for Q&A. Last evening, we increased earnings guidance and reported 4.8% blended same-store growth. The balance sheet remains in great shape. Through streamlining and automation, our G&A for 2023 is expected to be 6% below our original 2022 guidance. We're operating in a volatile macro environment, but we have a strong handle on the things we can control. Fundamental driver of demand for our real estate is the desire for improved health, which is only growing. Equally important, we benefit from the impact of technology across our playing field of medical discovery and delivery. For example, progressive health systems now have 10 plus outpatient locations for every one hospital, with a strategic plan to grow that ratio to 20 plus. The hospital remains the epicenter, but much of the growth is outpatient, made possible by technology. This shift in delivery aligns with our strategy to capture the outpatient real estate needs of leading health systems. And with tighter profit margins because of the cost of labor, health systems will increasingly seek knowledgeable third-party capital like HealthPeak to expand their footprint. Similarly, technology will reinforce and expand the need for lab space. AI and machine learning will increase the probability of success in drug research and reduce development timelines. This will drive more capital into the sector. The data needed for the algorithms and the validations comes from the laboratory, which are highly regulated and controlled environments. A Nobel laureate in chemistry recently said that she's run her lab for 30 years and never experienced the accelerating discoveries we've seen in just the last five years alone. The science is building on itself, including our understanding of genetics and improved testing, which will transform health care delivery. Today, it's reactive. We seek therapeutics after a problem arises. Technology will drive the addition of proactive care, where we detect issues and seek care before a problem arises. This will shift the allocation of health care spending and expand the total pie. Our outpatient medical and lab buildings will be a critical part of this future. A few comments on portfolio performance, starting with outpatient medical, where we have an irreplaceable portfolio and deep relationships with leading health systems. More than half of our square footage is now leased directly to a health system, which is 2x the level from 20 years ago as their business model has shifted toward outpatient care, and we've become a partner of choice. I toured a number of our buildings in recent months and saw very active parking lots and lobbies, a great sign for current and future leasing. Our concentration in high-growth markets like Dallas, Houston, Phoenix, Vegas, and Nashville will benefit our portfolio for the next decade plus. Moving to our lab business where we have significant market share in key sub-markets, a diversified tenant base, and strong relationships. Biotechs have been doing what they should do in this environment, which is to conserve cash. So the default answer has been to make do with existing space. That mindset made perfect sense the past few quarters, but will naturally run in cycles. Despite that backdrop, we've had solid leasing activity, primarily with existing portfolio tenants who accounted for 89% of year-to-date leasing. In each case, the broader market either isn't seeing the prospect or is at a big disadvantage because we can tear up an existing lease in exchange for a larger, longer-term commitment. More recently, we've seen an uptick in leasing discussions, which may reflect the more benign outlook for the Fed and interest rates. I'll close with transactions. The market remains slow given the financing markets and inactivity from core funds and non-traded REITs, many of which have redemption queues. Despite that backdrop, we've sold $130 million of fully stabilized but less core real estate year-to-date at an attractive 5.4% cap rate and used the proceeds to accretively de-lever. We're currently having good discussions on a couple hundred million dollars of additional less core asset sales. Subject to closing, which isn't guaranteed in this environment, we'll have flexibility to either accretively pay down our line of credit or buy back stock. I'll turn it to Pete to cover financial results, balance sheet, and guidance.