Healthpeak Properties, Inc.

to ask question. To ask a question, you may press star then one on your touchstone phone. To withdraw your question, please press star then one. 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 2024 Finance Results Conference Calls. Today's conference call contains certain forward-looking statements. Although we believe 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 risks and risk factors is included in our press release in detail in our filings of the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures that we discussed in this call in an exhibit to the 8K referred to the SEC yesterday, we have reconciled all non-GAAP financial measures to most directly comparable GAAP measures in accordance with regulatory requirements. The exhibit is also available on our website at healthpeak.com. I'm now going to call over to our President and Chief Executive Officer, Scott Brinker.

Okay, thanks, Andrew. Welcome to HealthPeak's fourth quarter and full year 2024 earnings call. Our CFO, Pete Scott, is here with me for prepared remarks, and the senior team is available for Q&A. I would like to thank our entire team for a year of operational excellence, in particular with merger integration, internalization, leasing, and senior housing operations. I'm confident that in 2024, we built the foundation for future outperformance with our improved capabilities, portfolio, and balance sheet. We also continue to grow earnings. Over the past three years, we've grown FFO per share by 12% and AFFO per share by 19%. Additional growth is implied in our 2025 guidance. Yesterday, we announced an increase to our dividend. The increase was made possible by our earnings growth and is an important part of our total return to shareholders. Beginning in April, we'll pay the dividend on a monthly basis to match the cadence of our monthly rental income. Our SSO payout ratio remains conservative, preserving free cash flow to reinvest into the business. We believe there's significant value and upside in our stock today when we look at our current multiple, overlaid with our earnings growth and 6% dividend yield, not to mention the underlying value of our real estate and our proven competitive advantage in both life science and outpatient medical. The merger with Physicians Realty closed less than a year ago and has already proven to be highly successful. The merger was accretive to our earnings, balance sheet, and platform. It highlighted our ability to execute and to exceed expectations, for example, with merger synergies and a common spirit renewal. We'll build on that momentum in 2025 by continuing to internalize property management across our portfolio, which is both financially and strategically accretive. We also have a significant development pipeline from the health system relationships that came over with JT and his team. In 2024, we closed $1.3 billion of asset sales at a compelling cap rate of 6.4%, primarily stabilized outpatient medical buildings where private market values have remained strong. Because of the asset sales, our balance sheet is currently under levered, and we believe 2025 is an opportune time to go on offense. Particularly in life science, we're overbuilding, and a lack of liquidity is creating opportunities for us. There's a very small handful of owners in the life science sector with a competitive advantage, and Health Peak is certainly on that list with our scale, track record, and capabilities. For the past several years, we had a conservative near-term outlook for the sector and chose not to commence any new development or to make any acquisitions. With new deliveries declining by 75% this year, new starts at nearly zero, and many new entrants and lenders feeling distressed, We see this as a great time to put our platform and balance sheet to work. Private credit has exploded in popularity, but there's a vacuum in my science today and therefore an opportunity for health peak. Our focus is loan investments that provide immediate accretion, more seniority in a capital stack, an attractive basis, and future acquisition rights of buildings in our core submarkets. The $75 million mortgage loan we announced yesterday is a good example of this targeted approach. The building is down the street from our existing 700,000 square foot campus in Torrey Pines, the premier sub market in San Diego. Our loan to cost is 60% with an 8% interest rate plus purchase option. In our outpatient medical business, our health system driven strategy generates sustainable internal and external growth. Our capabilities and relationships were built over the past two decades and continue to bring us proprietary opportunities. In the fourth quarter, we originated at $36 million development loan with purchase option on a development that's 100% pre-leased to McKesson and adjacent to a Baylor Scott and White Hospital in Dallas. Our current pipeline of similar highly pre-leased and accreted development projects exceeds $300 million. I'd like to make a few comments about our senior housing CCRC portfolio. Over the past several years, we've executed a strategy to structure our entry fees so that less than 20% of those fees are refundable to the resident. This is a huge contrast from the typical CCRC where the entry fee is more than 80% refundable to the resident. This strategy around refundability allowed us to keep the entry fee low so that we could target a wider audience. The result has been record sales and record net cash collections. Also, from an ownership perspective, these properties are now more comparable to rental senior housing than to a traditional CCRC. From a resident standpoint, the properties remain highly differentiated and attractive with vast indoor and outdoor amenities and large units with full kitchen to attract independent seniors. We've periodically received inbound interest from potential buyers for the portfolio, but not at prices we found compelling. Our current expectation is that we'll own the portfolio for the foreseeable future while retaining complete control and flexibility. Finally, the leadership changes and promotions announced yesterday. We have thorough succession plans and a deep bench for all senior positions. Kelvin Moses has been promoted to the executive team in recognition of his impact across the company since joining in 2018. Calvin will be EVP of investments and portfolio management. Tracy Porter has been a key member of our legal team since 2013 and will become EVP and general counsel on March 1. She's been well trained by Jeff Miller, who I've had the privilege of working with for the past two decades as he set the highest bar for teamwork and mentorship. Also March 1, Mark Thine will report to me as leader of our outpatient medical business. Mark was a co-founder of Physicians Realty and has two decades of experience in the outpatient sector. He takes the reins from Tom Klarich, who is one of the founding fathers of the outpatient real estate sector. Tom deserves enormous credit for the role he played in building a leading outpatient platform at HealthPeak over the past 25 years. Both Tom and Jeff have agreed to transition and consulting roles through year end to ensure a smooth handoff. On behalf of our team and board, I want to sincerely thank Tom and Jeff for their enormous impact, and congratulate Tracy, Calvin, and Mark for their increased role at the company. They're committed to our We Care core values and are eager to put in the work to build an industry leader together. Now Pete Scott will cover operating results, guidance, and the balance sheet.