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What changed in Healthpeak Properties's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Healthpeak Properties's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+437 added−441 removedSource: 10-K (2025-02-04) vs 10-K (2024-02-09)

Top changes in Healthpeak Properties's 2024 10-K

437 paragraphs added · 441 removed · 319 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+15 added−10 removed84 unchanged
Biggest changeOur recent ESG highlights include: • Reported a reduction of 4.2% in Scope 1 and Scope 2 greenhouse gas emissions (“GHG”) in 2022 compared to 2021 on a like-for-like comparative basis (as defined below) • 4 LEED certifications and 132 new ENERGY STAR certifications obtained in 2023 • Named an ENERGY STAR Partner of the Year in 2023, marking our third time receiving the award • Received a Green Star rating from the Global Real Estate Sustainability Benchmark (“GRESB”) for the twelfth consecutive year, recognizing top ESG performance in our sector • Named to CDP’s Leadership band for our climate disclosure for the eleventh consecutive year, most recently with a score of “A-” in 2023 • Named to Newsweek ’s America’s Most Responsible Companies list for the fifth consecutive year • Named a constituent in the FTSE4Good Index for the twelfth consecutive year • Named a constituent in the S&P Global Dow Jones Sustainability World Index for the fourth time and S&P Global North America Dow Jones Sustainability Index for the eleventh consecutive year • Named to the S&P Global Sustainability Yearbook for the ninth consecutive year • Named Winner for Best Proxy Statement (Mid Cap), and Finalist for Best ESG Reporting (Small to Mid Cap) by IR Magazine and Governance Intelligence • Included in Fortune ’s Best Workplaces in Real Estate list for the second consecutive year Under our “like-for-like” methodology, direct and indirect GHG emissions are compared on a year-over-year rolling basis using Scope 1 and Scope 2 GHG emissions for the properties that we have owned for two full consecutive calendar years, excluding non-stabilized developments and redevelopments in each year of the calculation.
Biggest changeOur recent corporate impact highlights include: • Reported a reduction of 2.1% in Scope 1 and Scope 2 greenhouse gas emissions (“GHG”) in 2023 compared to 2022 on a like-for-like comparative basis (as defined below) • Obtained 6 new LEED certifications, 19 new ENERGY STAR certifications, and 150 ENERGY STAR recertifications in 2024 • Named an ENERGY STAR Partner of the Year for Sustained Excellence in 2024, marking our fourth time receiving the Partner of the Year award and first time being recognized for Sustained Excellence • Received a Green Star rating from the Global Real Estate Sustainability Benchmark (“GRESB”) for the thirteenth consecutive year, recognizing leading sustainability performance in our sector • Named to Newsweek ’s America’s Most Responsible Companies list for the sixth consecutive year • Named a constituent in the FTSE4Good Index for the thirteenth consecutive year • Named a constituent in the S&P Global Dow Jones Sustainability World Index for the fifth time and S&P Global North America Dow Jones Sustainability Index for the twelfth consecutive year • Named to the S&P Global Sustainability Yearbook for the ninth consecutive year 12 Table of Contents Under our “like-for-like” methodology, direct and indirect GHG emissions are compared on a year-over-year rolling basis using Scope 1 and Scope 2 GHG emissions for the properties that we have owned for two full consecutive calendar years, excluding non-stabilized developments and redevelopments in each year of the calculation.
Our portfolio is focused on lab and outpatient medical buildings, favorable sectors that benefit from the universal desire for improved health. We have built scale and fostered deep industry relationships, two unique factors that provide us with a competitive advantage.
Our portfolio is focused on outpatient medical and lab buildings, favorable sectors that benefit from the universal desire for improved health. We have built scale and fostered deep industry relationships, two unique factors that provide us with a competitive advantage.
Segments Lab Our lab properties, which contain laboratory and office space, are leased primarily to biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies, and other organizations involved in the life science industry.
Lab Our lab properties, which contain laboratory and office space, are leased primarily to biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies, and other organizations involved in the life science industry.
Other non-reportable segment At December 31, 2023, we had the following investments in our other non-reportable segments: (i) our unconsolidated joint venture with a sovereign wealth fund that owns 19 senior housing assets (which we refer to as our SWF SH JV) and (ii) loans receivable.
Other non-reportable segment At December 31, 2024, we had the following investments in our other non-reportable segments: (i) our unconsolidated joint venture with a sovereign wealth fund that owns 19 senior housing assets (which we refer to as our SWF SH JV) and (ii) loans receivable.
We conduct a regular employee engagement survey through an independent third party, measuring our progress on important employee issues and identifying opportunities for growth and improvement. • Training and Development: We conduct annual employee training on our Code of Business Conduct and Ethics, as well as annual training on harassment prevention or unconscious bias.
We conduct a regular employee engagement survey through an independent third party, measuring our progress on important employee issues and identifying opportunities for growth and improvement. • Training and Development: We conduct at least annual employee training on our Code of Business Conduct and Ethics, as well as annual training on harassment prevention or unconscious bias.
We partner with organizations that share our desire to support research, education, and other activities related to healthcare. For additional information on human capital matters, please see our most recent proxy statement or ESG report, each of which is available on our website at www.healthpeak.com. Available Information Our website address is www.healthpeak.com.
We partner with organizations that share our desire to support research, education, and other activities related to healthcare. For additional information on human capital matters, please see our most recent proxy statement or corporate impact report, each of which is available on our website at www.healthpeak.com. Available Information Our website address is www.healthpeak.com.
These laws include: (i) U.S. federal and state false claims acts, which, among other things, prohibit providers from filing false claims or making false statements to receive payment from Medicare, Medicaid, or other U.S. federal or state healthcare programs; (ii) U.S. federal and state anti-kickback and fee-splitting statutes, including the Medicare and Medicaid anti-kickback statute, which prohibit or restrict the payment or receipt of remuneration to induce referrals or recommendations of healthcare items or services; (iii) U.S. federal and state physician self-referral laws (commonly referred to as the “Stark Law”), which generally prohibit referrals by physicians to entities with which the physician or an immediate family member has a financial relationship; and (iv) the federal Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services.
These laws include: (i) U.S. federal and state false claims acts, which, among other things, prohibit providers from filing false claims or making false statements to receive payment from Medicare, Medicaid, or other U.S. federal or state healthcare programs; (ii) U.S. federal and state anti-kickback and fee-splitting statutes, including the Medicare and Medicaid anti-kickback statute, which prohibit or restrict the payment or receipt of remuneration to induce referrals or recommendations of healthcare items or services; (iii) U.S. federal and state physician self-referral laws (commonly referred to as the “Stark Law”), which, subject to certain exceptions, generally prohibit referrals of specifically designated health services by physicians to entities with which the physician or an immediate family member has a financial relationship; and (iv) the federal Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services and which authorizes the U.S.
Failure to comply with the new disclosure requirements could negatively affect our healthcare facility operators’ participation in Medicare and state Medicaid programs. Healthcare Licensure and Certificate of Need Certain healthcare facilities in our portfolio are subject to extensive national, federal, state, and local licensure, certification, and inspection laws and regulations.
Failure to comply with the new disclosure requirements could negatively affect our healthcare facility operators’ participation in Medicare and state Medicaid programs. 10 Table of Contents Healthcare Licensure and Certificate of Need Certain healthcare facilities in our portfolio are subject to extensive national, federal, state, and local licensure, certification, and inspection laws and regulations.
For a description of the risks associated with environmental matters, see “Item 1A, Risk Factors” in this report. Insurance We obtain various types of insurance to mitigate the impact of property, business interruption, liability, flood, windstorm, earthquake, fire, environmental, and terrorism-related losses.
For a description of the risks associated with environmental matters, see “Item 1A, Risk Factors” in this report. 11 Table of Contents Insurance We obtain various types of insurance to mitigate the impact of property, business interruption, liability, flood, windstorm, earthquake, fire, environmental, and terrorism-related losses.
Our Board of Directors oversees ESG matters, with the Nominating and Corporate Governance Committee overseeing sustainability and corporate governance matters, the Audit Committee overseeing risk management, and the Compensation and Human Capital Committee overseeing human capital management.
Our Board of Directors oversees corporate impact matters, with the Nominating and Corporate Governance Committee overseeing sustainability and corporate governance matters, the Audit Committee overseeing risk management, and the Compensation and Human Capital Committee overseeing human capital management.
Occasionally, we invest in outpatient medical buildings located on hospital campuses subject to ground leases. At December 31, 2023, approximately 65% of our outpatient medical buildings were triple-net leased (based on leased square feet) with the remaining leased under gross or modified gross leases.
Occasionally, we invest in outpatient medical buildings located on hospital campuses subject to ground leases. At December 31, 2024, approximately 76% of our outpatient medical buildings were triple-net leased (based on leased square feet) with the remaining leased under gross or modified gross leases.
Additionally, facilities will be required to disclose whether any entity on the enrollment form is a private equity company or REIT. CMS will make the information publicly available. This new disclosure requirement involves reporting extensive information and may complicate our healthcare facility operators’ efforts to comply with Medicare and Medicaid requirements.
Additionally, facilities are required to disclose whether any entity on the enrollment form is a private equity company or REIT. CMS makes the information publicly available. This new disclosure requirement involves reporting extensive information and may complicate our healthcare facility operators’ efforts to comply with Medicare and Medicaid requirements.
We use an integrated approach to ESG throughout our business to identify risks and opportunities, capture efficiencies and cost savings, and report on the issues most relevant to stakeholders.
We use an integrated approach to corporate impact throughout our business to identify risks and opportunities, capture efficiencies and cost savings, and report on the issues most relevant to stakeholders.
The business park and campus settings allow us the opportunity to provide flexible, contiguous/adjacent expansion to accommodate the growth of existing tenants. Our properties are located in well-established geographical markets known for scientific research and drug discovery, including San Francisco (50%) and San Diego (23%), California, and Boston, Massachusetts (25%) (based on total square feet).
The business park and campus settings allow us the opportunity to provide flexible, contiguous/adjacent expansion to accommodate the growth of existing tenants. Our properties are located in well-established geographical markets known for scientific research and drug discovery, including San Francisco (53%) and San Diego (17%), California, and Boston, Massachusetts (28%) (based on total square feet).
Services provided by our tenants and operators in hospitals are paid for by private sources, third-party payors (e.g., insurance and HMOs), or through Medicare and Medicaid programs. Our hospital property types include acute care, long-term acute care, and specialty and rehabilitation hospitals.
Services provided by our tenants and operators in hospitals are paid for by private sources, third-party payors (e.g., insurance and HMOs), or through Medicare and Medicaid programs. Our hospital property types include acute care, long-term acute care, and specialty and rehabilitation hospitals. All of our hospitals are triple-net leased.
Our outpatient medical buildings are typically multi-tenant properties leased to healthcare providers (hospitals and physician practices), with approximately 87% of our outpatient medical buildings located on or adjacent to hospital campuses and 98% affiliated with hospital systems as of December 31, 2023 (based on total square feet).
Our outpatient medical buildings are typically multi-tenant properties leased to healthcare providers (hospitals and physician practices), with approximately 78% of our outpatient medical buildings located on or adjacent to hospital campuses and 96% affiliated with hospital systems as of December 31, 2024 (based on total square feet).
Our workforce was made up of 48% female employees and 37% racially or ethnically diverse employees as of December 31, 2023. • Inclusion and Belonging: We promote a work environment that emphasizes respect, fairness, inclusion, and dignity.
Our workforce was made up of 59% female employees and 35% racially or ethnically diverse employees as of December 31, 2024. • Inclusion and Belonging: We promote a work environment that emphasizes respect, fairness, inclusion, and dignity.
We have other non-reportable segments that are comprised primarily of loans receivable and an interest in an unconsolidated joint venture that owns 19 senior housing assets (our “SWF SH JV”). These non-reportable segments have been presented on an aggregate basis herein.
We have other non-reportable segments that are comprised primarily of: (i) an interest in an unconsolidated joint venture that owns 19 senior housing assets (our “SWF SH JV”) and (ii) loans receivable. These non-reportable segments have been p resented on a combined basis herein.
We routinely have multiple transactions involving both individual properties and portfolios under consideration that are in varying stages of evaluation, underwriting, negotiation, and due diligence review, some of which, if consummated or completed, may have a material effect on our liquidity, results of operations, and financial condition.
We routinely have multiple transactions involving both individual properties and portfolios under consideration that are in varying stages of evaluation, underwriting, negotiation, and due diligence review, some of which, if consummated or completed, may have a material effect on our liquidity, results of operations, and financial condition. 6 Table of Contents Segments Outpatient Medical Our outpatient medical segment includes outpatient medical buildings and hospitals.
Our tenants and operators that participate in government reimbursement programs are subject to these laws and may become the subject of governmental enforcement actions or whistleblower actions if they fail to comply with applicable laws.
Additionally, violations of false claims acts can result in treble damages. Our tenants and operators that participate in government reimbursement programs are subject to these laws and may become the subject of governmental enforcement actions or whistleblower actions if they fail to comply with applicable laws.
Violations of U.S. healthcare fraud and abuse laws carry civil, criminal, and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement, payment suspensions, and potential exclusion from Medicare, Medicaid, or other federal or state healthcare programs.
Department of Health and Human Services to impose monetary penalties for certain fraudulent acts. Violations of U.S. healthcare fraud and abuse laws carry civil, criminal, and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement, payment suspensions, and potential exclusion from Medicare, Medicaid, or other federal or state healthcare programs.
The following table provides information about our most significant outpatient medical tenant concentration for the year ended December 31, 2023: Tenant Percentage of Segment Revenues Percentage of Total Revenues HCA Healthcare, Inc. (HCA) 23 % 8 % Our outpatient medical segment also includes nine hospitals.
The following table provides information about our most significant outpatient medical tenant concentration for the year ended December 31, 2024: Tenant Percentage of Segment Revenues Percentage of Total Revenues HCA Healthcare, Inc.
All of our hospitals are triple-net leased. 7 Table of Contents Continuing care retirement community, or CCRC CCRCs are retirement communities that include independent living, assisted living, memory care, and skilled nursing units to provide a continuum of care in an integrated campus.
Continuing care retirement community, or CCRC CCRCs are retirement communities that include independent living, assisted living, memory care, and skilled nursing units to provide a continuum of care in an integrated campus.
Our ability to compete may also be impacted by global, national, and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation, and population trends. 8 Table of Contents Income from our investments depends on our tenants’ and operators’ ability to compete with other companies on multiple levels, including: (i) the quality of care provided, (ii) reputation, (iii) success of product or drug development, (iv) price, (v) the range of services offered, (vi) the physical appearance of a property, (vii) alternatives for healthcare delivery, (viii) the supply of competing properties, (ix) physicians, (x) staff, (xi) referral sources, (xii) location, (xiii) the size and demographics of the population in surrounding areas, and (xiv) the financial condition of our tenants and operators.
Income from our investments depends on our tenants’ and operators’ ability to compete with other companies on multiple levels, including: (i) the quality of care provided, (ii) reputation, (iii) success of product or drug development, (iv) price, (v) the range of services offered, (vi) the physical appearance of a property, (vii) alternatives for healthcare delivery, (viii) the supply of competing properties, (ix) physicians, (x) staff, (xi) referral sources, (xii) location, (xiii) the size and demographics of the population in surrounding areas, and (xiv) the financial condition of our tenants and operators.
We also maintain directors and officers liability insurance, which provides protection for claims against our directors and officers arising from their responsibilities as directors and officers.
We also maintain directors and officers liability insurance, which provides protection for claims against our directors and officers arising from their responsibilities as directors and officers. Such insurance also extends to us in certain situations.
Such insurance also extends to us in certain situations. 11 Table of Contents Sustainability We believe that ESG initiatives are a vital part of corporate responsibility, which supports our primary goal of increasing stockholder value through profitable growth. We continue to advance our commitment to sustainability, with a focus on achieving goals in each of the ESG dimensions.
Sustainability and Corporate Impact We believe that corporate impact initiatives are a vital part of corporate responsibility, which supports our primary goal of increasing stockholder value through profitable growth. We continue to advance our commitment to sustainability, with a focus on achieving goals in each of the corporate impact dimensions.
We may also acquire all or substantially all of the securities or assets of other REITs, operating companies, or similar entities where such investments would be consistent with our investment strategies. We may co-invest alongside institutional or development investors through partnerships or limited liability companies.
We may also acquire all or substantially all of the securities or assets of other REITs, operating companies, or similar entities where such investments would be consistent with our investment strategies.
Government Regulation, Licensing, and Enforcement Overview Our healthcare facility operators (which include our TRS entities when we use a RIDEA structure) and tenants are subject to extensive and complex federal, state, and local healthcare laws and regulations relating to quality of care, licensure and certificate of need, resident rights (including abuse and neglect), consumer protection, government reimbursement, fraud and abuse practices, and similar laws governing the operation of healthcare facilities.
For a discussion of the risks associated with competitive conditions affecting our business, see “Item 1A, Risk Factors” in this report. 8 Table of Contents Government Regulation, Licensing, and Enforcement Overview Our healthcare facility operators (which include our TRS entities when we use a RIDEA structure) and tenants are subject to extensive and complex federal, state, and local healthcare laws and regulations relating to quality of care, licensure and certificate of need, resident rights (including abuse and neglect), consumer protection, government reimbursement, fraud and abuse practices, and similar laws governing the operation of healthcare facilities.
We monitor our investments based on the percentage of our total assets that may be invested in any one property type, investment vehicle, or geographic location, the number of properties that may be leased to a single tenant or operator, or loans that may be made to a single borrower.
We may co-invest alongside institutional or development investors through partnerships or limited liability companies. 5 Table of Contents We monitor our investments based on the percentage of our total assets that may be invested in any one property type, investment vehicle, or geographic location, the number of properties that may be leased to a single tenant or operator, or loans that may be made to a single borrower.
As noted above, we completed our Reorganization on February 10, 2023, and following that date, we hold substantially all of our assets and conduct our operations through the operating subsidiary, Healthpeak OP, LLC, a consolidated subsidiary of which we are the managing member. We are a Maryland corporation and qualify as a self-administered REIT.
We hold substantially all of our assets and conduct our operations through our operating subsidiary, Healthpeak OP, a consolidated subsidiary of which we are the managing member. We are a Maryland corporation and qualify as a self-administered REIT.
Under the lab and outpatient medical segments, we invest through the acquisition, development, and management of lab buildings, outpatient medical buildings, and hospitals. Under the CCRC segment, our properties are operated through RIDEA structures.
Under the outpatient medical and lab segments, we own, operate, and develop outpatient medical buildings, hospitals, and lab buildings. Under the CCRC segment, our properties are operated through RIDEA structures.
Reimbursement Sources of revenue for some of our tenants and operators include, among others, governmental healthcare programs, such as the federal Medicare programs and state Medicaid programs, and non-governmental third-party payors, such as insurance carriers and HMOs.
In some cases, attempted attacks and intrusions are designed not to be detected and, in fact, may not be detected. Reimbursement Sources of revenue for some of our tenants and operators include, among others, governmental healthcare programs, such as the federal Medicare programs and state Medicaid programs, and non-governmental third-party payors, such as insurance carriers and HMOs.
For short-term purposes, we may utilize our revolving line of credit facility or commercial paper program, arrange for other short-term borrowings from banks or other sources, or issue equity securities pursuant to our at-the-market equity offering program.
For short-term purposes, we may utilize our revolving line of credit facility or commercial paper program, arrange for other short-term borrowings from banks or other sources, or issue equity securities pursuant to our at-the-market equity offering program. We arrange for longer-term financing by offering debt and equity, placing mortgage debt, and obtaining capital from institutional lenders and joint venture partners.
These laws are enforced by a variety of federal, state, and local agencies and in the U.S. can also be enforced by private litigants through, among other things, federal and state false claims acts, which allow private litigants to bring qui tam or “whistleblower” actions.
These laws are enforced by a variety of federal, state, and local agencies and in the U.S. can also be enforced by private litigants through, among other things, federal and state false claims acts, which allow private litigants to bring qui tam or “whistleblower” actions, in which individuals have tremendous financial gain in bringing a whistleblower claim as federal and state false claim acts provide that individuals receive between 15% and 30% of the money recouped.
The approval process related to state certificate of need laws may impact the ability of some of our tenants and operators to expand or change their businesses. 10 Table of Contents Product Approvals While our lab tenants include some well-established companies, other tenants are less established and, in some cases, may not yet have a product approved by the Food and Drug Administration, or other regulatory authorities, for commercial sale.
Product Approvals While our lab tenants include some well-established companies, other tenants are less established and, in some cases, may not yet have a product approved by the Food and Drug Administration, or other regulatory authorities, for commercial sale.
Our corporate headquarters are located in Denver, Colorado, and we have additional offices in California, Tennessee, and Massachusetts. Our strategy is to invest in and manage real estate focused on healthcare discovery and delivery. We have a diversified portfolio of high-quality healthcare properties across three core asset classes of lab, outpatient medical, and continuing care retirement community (“CCRC”) real estate.
We are headquartered in Denver, Colorado, with additional corporate offices in California, Tennessee, Wisconsin, and Massachusetts and property management offices in several locations throughout the U.S. We have a diversified portfolio of high-quality healthcare properties across three core asset classes of outpatient medical, lab, and continuing care retirement community (“CCRC”) real estate.
The services provided by our third-party manager-operators under a RIDEA structure at our properties are primarily paid for by the residents directly or through private insurance and are less reliant on government reimbursement programs such as Medicare and Medicaid.
The services provided by our third-party manager-operators under a RIDEA structure at our properties are primarily paid for by the residents directly or through private insurance and are less reliant on government reimbursement programs such as Medicare and Medicaid. 7 Table of Contents A RIDEA structure allows us, through a taxable REIT subsidiary (“TRS”), to receive cash flow from the operations of a healthcare facility in compliance with REIT tax requirements.
ITEM 1. Business General Overview Healthpeak Properties, Inc. is a Standard & Poor’s (“S&P”) 500 company that acquires, develops, owns, leases, and manages healthcare real estate across the United States (“U.S.”). Our company was originally founded in 1985.
ITEM 1. Business General Overview Healthpeak Properties, Inc. is a Standard & Poor’s (“S&P”) 500 company that owns, operates, and develops high-quality real estate focused on healthcare discovery and delivery in the United States (“U.S.”). Our company was originally founded in 1985. In 2023, we completed our corporate reorganization (the “Reorganization”) into an umbrella partnership REIT (“UPREIT”).
(the “Physicians Partnership”), and certain of our subsidiaries, pursuant to which, among other things, and through a series of transactions (the “Mergers”), (i) each outstanding common share of Physicians Realty Trust (other than Physicians Realty Trust common shares to be canceled in accordance with the Merger Agreement) will be automatically converted into the right to receive 0.674 (the “Exchange Ratio”) shares of our common stock, and (ii) each outstanding common unit of the Physicians Partnership will be automatically converted into and become common units in the successor entity to the Physicians Partnership equal to the Exchange Ratio.
On the Closing Date, each outstanding common share of Physicians Realty Trust (other than Physicians Realty Trust common shares that were canceled in accordance with the Merger Agreement) were converted into the right to receive 0.674 (the “Exchange Ratio”) shares of our common stock, and each outstanding common unit of the Physicians Partnership was converted into common units in the successor entity to the Physicians Partnership equal to the Exchange Ratio.
We selectively structure lease extensions, early renewals, or modifications, which reduce the cost associated with lease downtime, while securing the tenancy and relationship of our high-quality tenants on a long-term basis. 5 Table of Contents Investment Strategies The discovery and delivery of healthcare services requires real estate and, as a result, tenants depend on our real estate, in part, to maintain and grow their businesses.
We selectively structure lease extensions, early renewals, or modifications, which reduce the cost associated with lease downtime, while securing the tenancy and relationship of our high-quality tenants on a long-term basis.
Our Board of Directors, through its Compensation and Human Capital Committee, retains oversight of human capital management, including corporate culture, diversity, inclusion, talent acquisition, retention, employee satisfaction, engagement, and succession planning. We report on human capital matters at each regularly scheduled Board of Directors meeting and periodically throughout the year.
Human Capital Matters Our employees represent our greatest asset, and as of December 31, 2024, we had 387 full-time employees. Our Board of Directors, through its Compensation and Human Capital Committee, retains oversight of human capital management, including corporate culture, diversity, inclusion, talent acquisition, retention, employee satisfaction, engagement, and succession planning.
For a description of our significant activities during 2023, see “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Company Highlights” in this report.
For a description of our significant activities during 2024, see “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Company Highlights” in this report. 4 Table of Contents Business Strategy Our strategy is to own, operate, and develop high-quality real estate focused on healthcare discovery and delivery.
Base data utilized in the calculation of Scope 1 and Scope 2 GHG emissions is obtained from third-party invoices or estimates.
Base data utilized in the calculation of Scope 1 and Scope 2 GHG emissions is obtained from third-party invoices or estimates. For additional information regarding our corporate impact initiatives, methodologies, and approach to climate change, please visit our website at www.healthpeak.com/corporate-impact.
Where we have used a RIDEA structure, we are dependent on management companies to fulfill our compliance obligations, and we have developed a program to periodically monitor compliance with such obligations. 9 Table of Contents Laws and Regulations Governing Privacy and Security There are various U.S. federal and state privacy laws and regulations, including the privacy and security rules contained in the Health Insurance Portability and Accountability Act of 1996 (commonly referred to as “HIPAA”), that provide for the privacy and security of personal health information.
Investigation by a federal or state governmental body for violation of fraud and abuse laws or imposition of any of these penalties upon one of our operators could jeopardize that operator’s business, reputation, and ability to operate. 9 Table of Contents Laws and Regulations Governing Privacy and Security There are various U.S. federal and state privacy laws and regulations, including the privacy and security rules contained in the Health Insurance Portability and Accountability Act of 1996 (commonly referred to as “HIPAA”), that provide for the privacy and security of personal health information.
We arrange for longer-term financing by offering debt and equity, placing mortgage debt, and obtaining capital from institutional lenders and joint venture partners. 6 Table of Contents In addition, capital recycling through dispositions and redeployment through acquisitions, developments, and redevelopments is an important facet of our investment and financing strategies.
In addition, capital recycling through dispositions and redeployment through acquisitions, developments, and redevelopments is an important facet of our investment and financing strategies.
See “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for additional information regarding Adjusted NOI and see Note 15 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by segment to net income (loss).
See Note 16 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by reportable segment to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. See our Segment Analysis below for additional information.
The following table summarizes information for our reportable and other non-reportable segments for the year ended December 31, 2023 (dollars in thousands): Segment Total Portfolio Adjusted NOI (1) Percentage of Total Portfolio Adjusted NOI (1) Number of Properties Lab $ 617,541 51.3 % 146 Outpatient medical 452,725 37.6 % 297 CCRC 112,511 9.3 % 15 Other non-reportable 22,210 1.8 % 19 $ 1,204,987 100.0 % 477 _______________________________________ (1) Total Portfolio metrics include results of operations from disposed properties through the disposition date.
The following table summarizes information for our reportable segments for the year ended December 31, 2024 (dollars in thousands): Segment Adjusted NOI by Reportable Segment (1) Outpatient medical $ 748,730 Lab 590,606 CCRC 136,104 _______________________________________ (1) Our Adjusted NOI for our reportable segments, which we also refer to as Total Portfolio Adjusted NOI for our reportable segments, includes results of operations from disposed properties through the disposition date.
At December 31, 2023, 90% of our lab properties were triple-net leased (based on leased square feet).
At December 31, 2024, 88% of our lab properties were triple-net leased (based on leased square feet). During the year ended December 31, 2024, we had various lab tenants that each represented 1% or less of total revenues.
At December 31, 2023, our portfolio of investments, including properties in our unconsolidated joint ventures, consisted of interests in 477 properties.
At December 31, 2024, our portfolio of investments, including properties in certain of our unconsolidated joint ventures, consisted of interests in 697 properties: (i) Outpatient medical – 524 properties; (ii) Lab – 139 properties; (iii) CCRC – 15 properties; and (iv) Other non-reportable – 19 properties.
Removed
In 2020, we concluded that the dispositions of our senior housing triple-net and senior housing operating property (“SHOP”) portfolios represented a strategic shift that had a major effect on our operations and financial results. Therefore, the results of senior housing triple-net and SHOP assets are classified as discontinued operations in all periods presented herein.
Added
The Merger On March 1, 2024 (the “Closing Date”), pursuant to the Agreement and Plan of Merger dated October 29, 2023 (the “Merger Agreement”), by and among us, DOC DR Holdco, LLC, one of our wholly owned subsidiaries (“DOC DR Holdco”), DOC DR, LLC, a wholly owned subsidiary of Healthpeak OP (“DOC DR OP Sub”), Physicians Realty Trust, Physicians Realty L.P.
Removed
See Note 4 to the Consolidated Financial Statements for further information regarding discontinued operations. 4 Table of Contents The Merger Agreement On October 29, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Physicians Realty Trust, Physicians Realty L.P.
Added
(the “Physicians Partnership”): (i) Physicians Realty Trust merged with and into DOC DR Holdco (the “Company Merger”), with DOC DR Holdco surviving as our wholly owned subsidiary (the “Company Surviving Entity”); (ii) immediately following the effectiveness of the Company Merger, we contributed all of the outstanding equity interests in the Company Surviving Entity to Healthpeak OP (the “Contribution”); and (iii) immediately following the Contribution, Physicians Partnership merged with and into DOC DR OP Sub (the “Partnership Merger” and, together with the Company Merger, the “Merger”), with DOC DR OP Sub surviving as a subsidiary of Healthpeak OP.
Removed
Following the transactions contemplated in the Merger Agreement, the successor entities to Physicians Realty Trust and the Physicians Partnership will be direct and indirect subsidiaries of Healthpeak OP, respectively. In connection with the Mergers, we filed a Registration Statement on Form S-4 with the U.S.
Added
Subsequent to the Closing Date, the “Combined Company” means Healthpeak and its subsidiaries.
Removed
Securities and Exchange Commission (“SEC”) on December 15, 2023, as amended on January 9, 2024, and a definitive joint proxy statement/prospectus for the Company and Physicians Realty Trust on January 11, 2024 in connection with our respective special meetings of stockholders and shareholders, as applicable, which will be held on February 21, 2024.
Added
As a result of the Merger, we acquired 299 outpatient medical buildings. See Note 3 to the Consolidated Financial Statements for additional information.
Removed
Consummation of the Mergers are subject to the satisfaction or waiver of customary closing conditions, including the approval of our stockholders and the shareholders of Physicians Realty Trust. We expect the Mergers to close on March 1, 2024.
Added
Investment Strategies The discovery and delivery of healthcare services requires real estate and, as a result, tenants depend on our real estate, in part, to maintain and grow their businesses.
Removed
If the Mergers are not consummated by July 31, 2024 (unless extended under certain circumstances), either we or Physicians Realty Trust may terminate the Merger Agreement. Business Strategy Our strategy is to invest in and manage real estate focused on healthcare discovery and delivery.
Added
(HCA) 15 % 7 % CommonSpirit Health 6 % 3 % During the year ended December 31, 2024, we had various other outpatient medical tenants that each represented 1% or less of total revenues. Our outpatient medical segment also includes nine hospitals.
Removed
The following table provides information about our most significant lab tenant concentration for the year ended December 31, 2023: Tenants Percentage of Segment Revenues Percentage of Total Revenues Amgen, Inc. 6 % 2 % Outpatient Medical Our outpatient medical segment includes outpatient medical buildings and hospitals.
Added
Our ability to compete may also be impacted by global, national, and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation, and population trends.
Removed
A RIDEA structure allows us, through a taxable REIT subsidiary (“TRS”), to receive cash flow from the operations of a healthcare facility in compliance with REIT tax requirements.
Added
Where we have used a RIDEA structure, we are dependent on management companies to fulfill our compliance obligations, and we have developed a program to periodically monitor compliance with such obligations.
Removed
For a discussion of the risks associated with competitive conditions affecting our business, see “Item 1A, Risk Factors” in this report.
Added
Further, as reliance on technology has increased, so have the risks posed to those systems. Parties that provide us with services essential to our operations must continuously monitor and develop their networks and information technology to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and social engineering, such as phishing.
Removed
For additional information regarding our ESG initiatives, methodologies, and approach to climate change, please visit our website at www.healthpeak.com/ESG. 12 Table of Contents Human Capital Matters Our employees represent our greatest asset, and as of December 31, 2023, we had 193 full-time employees.
Added
Our tenants and management companies are continuously working, including with the aid of third-party service providers, to install new, and to upgrade existing, network and information technology systems, to create processes for risk assessment, testing, prioritization, remediation, risk acceptance, and reporting, and to provide awareness training around phishing, malware, and other cyber risks to ensure that our partners that provide us with services essential to our operations are protected against cyber risks and security breaches and that we are also therefore so protected.
Added
However, these upgrades, processes, new technology, and training may not be sufficient to protect us from all risks. Even the most well protected information, networks, systems, and facilities remain potentially vulnerable because the techniques and technologies used in attempted attacks and intrusions evolve and generally are not recognized until launched against a target.
Added
The approval process related to state certificate of need laws may impact the ability of some of our tenants and operators to expand or change their businesses. Changes in these laws and regulations could negatively affect the ability of our tenants to make lease payments to us.
Added
In some states, healthcare facilities are subject to various state certificate of need (“CON”) laws requiring governmental approval prior to the development or expansion of healthcare facilities and services.
Added
State CON laws often materially impact the ability of competitors to enter into the marketplace of our facilities and the repeal of CON laws could allow competitors to freely operate in previously closed markets.
Added
We report on human capital matters at each regularly scheduled Board of Directors meeting and periodically throughout the year.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

109 edited+43 added−72 removed206 unchanged
Biggest changeThe operating agreement further provides that, in the event of a conflict between the interests of Healthpeak OP or any member, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in our capacity as the managing member of Healthpeak OP, may give priority to the separate interests of our company or our stockholders (including with respect to tax consequences to members, assignees, or our stockholders), and, in the event of such a conflict, any action or failure to act on our part or on the part of our directors or officers that gives priority to the separate interests of our company or our stockholders that does not result in a violation of the contract rights of the members of Healthpeak OP under its operating agreement does not violate the duty of loyalty or any other duty that we, in our capacity as the managing member of Healthpeak OP, owe to Healthpeak OP and its members. 33 Table of Contents Additionally, the operating agreement provides that we generally will not be liable to Healthpeak OP or any member for any action or omission taken in our capacity as managing member, for the debts or liabilities of Healthpeak OP or for the obligations of Healthpeak OP under the operating agreement, except for liability for our fraud, willful misconduct, or gross negligence, pursuant to any express indemnity we may give to Healthpeak OP, or in connection with a redemption.
Biggest changeThe operating agreement further provides that, in the event of a conflict between the interests of Healthpeak OP or any member, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in our capacity as the managing member of Healthpeak OP, may give priority to the separate interests of our company or our stockholders (including with respect to tax consequences to members, assignees, or our stockholders), and, in the event of such a conflict, any action or failure to act on our part or on the part of our directors or officers that gives priority to the separate interests of our company or our stockholders that does not result in a violation of the contract rights of the members of Healthpeak OP under its operating agreement does not violate the duty of loyalty or any other duty that we, in our capacity as the managing member of Healthpeak OP, owe to Healthpeak OP and its members.
A downturn or slowdown in this sector would have a greater adverse impact on our business than if we had investments across multiple sectors, and could negatively impact the ability of our tenants, operators, and borrowers to meet their obligations to us, as well as the ability to maintain historical rental and occupancy rates, which could have a material adverse effect on our business, results of operations, and financial condition.
A downturn or slowdown in this sector would have a greater adverse impact on our business than if we had investments across multiple sectors, and could negatively impact the ability of our tenants, operators, and borrowers to meet their obligations to us, as well as their ability to maintain historical rental and occupancy rates, which could have a material adverse effect on our business, results of operations, and financial condition.
Our tenants’, operators’, or borrowers’ failure to comply with any of the laws, regulations, or requirements applicable to them could result in: (i) loss of accreditation; (ii) denial of reimbursement; (iii) imposition of fines; (iv) suspension or decertification from government healthcare programs; (v) civil liability; and (vi) in certain instances, suspension, or denial of admissions, criminal penalties, loss of license, or closure of the property and/or the incurrence of considerable costs arising from an investigation or regulatory action, which may have an adverse effect on properties that we own and lease to a third party tenant in our lab and outpatient medical segments, that we own and operate through a RIDEA structure in our CCRC segment or our SWF SH JV, or on which we hold a mortgage, and therefore may materially adversely impact us.
Our tenants’, operators’, or borrowers’ failure to comply with any of the laws, regulations, or requirements applicable to them could result in: (i) loss of accreditation; (ii) denial of reimbursement; (iii) imposition of fines and civil monetary penalties; (iv) suspension or decertification from government healthcare programs; (v) civil liability; and (vi) in certain instances, suspension, or denial of admissions, criminal penalties, loss of license, or closure of the property and/or the incurrence of considerable costs arising from an investigation or regulatory action, which may have an adverse effect on properties that we own and lease to a third party tenant in our outpatient medical and lab segments, that we own and operate through a RIDEA structure in our CCRC segment or our SWF SH JV, or on which we hold a mortgage, and therefore may materially adversely impact us.
We utilize software and cloud-based technology from third-party service providers, on whom our information systems depend. We rely on commercially available systems, software, tools, and monitoring to provide security for the processing, transmission, and storage of confidential tenant and customer data, including individually identifiable information relating to financial accounts, as well as building access, security, and operations.
We utilize software and cloud-based technology from third-party service providers, on whom our information systems depend. We rely on commercially available systems, software, tools, and monitoring to provide security for the processing, transmission, and storage of confidential employee, tenant and customer data, including individually identifiable information relating to financial accounts, as well as building access, security, and operations.
Environmental compliance costs and liabilities associated with our real estate-related investments may be substantial and may materially impair the value of those investments. Federal, state and local laws, ordinances, and regulations may require us, as a current or previous owner of real estate, to investigate and clean up certain hazardous or toxic substances released at a property.
Environmental compliance costs and liabilities associated with our real estate-related investments may be substantial and may materially impair the value of those investments. Federal, state and local laws, ordinances, and regulations may require us, as a current or previous owner of real estate, to investigate, monitor, and/or clean up certain hazardous or toxic substances released at a property.
We may not be able to offset additional costs caused by inflation, increased interest rates, or other macroeconomic trends by passing them through, or increasing the rates we charge, to tenants and residents. These increased costs may hinder our ability to execute on accretive acquisitions or otherwise adversely affect our business, results of operations, and financial condition.
We may not be able to offset additional costs caused by inflation, higher interest rates, or other macroeconomic trends by passing them through, or increasing the rates we charge, to tenants and residents. These increased costs may hinder our ability to execute on accretive acquisitions or otherwise adversely affect our business, results of operations, and financial condition.
If economic, financial, regulatory, or industry conditions continue to adversely affect the life science industry, we may be unable to lease or re-lease our lab properties in a timely manner or at profitable rates or with favorable terms.
If economic, financial, regulatory, or industry conditions adversely affect the life science industry, we may be unable to lease or re-lease our lab properties in a timely manner or at profitable rates or with favorable terms.
Potential difficulties associated with acquisitions include: (i) our ability to effectively monitor and manage our expanded portfolio of properties; (ii) the loss of key employees; (iii) the disruption of our ongoing business or that of the acquired entity; (iv) possible inconsistencies in standards, controls, procedures, and policies; and (v) the assumption of unexpected liabilities and claims, including: • liabilities relating to the cleanup or remediation of undisclosed environmental conditions; • unasserted claims of vendors, residents, patients, or other persons dealing with the seller; • liabilities, claims, and litigation, whether or not incurred in the ordinary course of business, relating to periods prior to our acquisition; • claims for indemnification by general partners, directors, officers, and others indemnified by the seller; • claims for return of government reimbursement payments; and • liabilities for taxes relating to periods prior to our acquisition.
Potential difficulties associated with acquisitions and property management internalizations include: (i) our ability to effectively monitor and manage our expanded portfolio of properties; (ii) the loss of key employees; (iii) the disruption of our ongoing business or that of the acquired entity; (iv) possible inconsistencies in standards, controls, procedures, and policies; and (v) the assumption of unexpected liabilities and claims, including: • liabilities relating to the cleanup or remediation of undisclosed environmental conditions; • unasserted claims of vendors, residents, patients, or other persons dealing with the seller; • liabilities, claims, and litigation, whether or not incurred in the ordinary course of business, relating to periods prior to the acquisition; • claims for indemnification by general partners, directors, officers, and others indemnified by the seller; • claims for return of government reimbursement payments; and • liabilities for taxes relating to periods prior to the acquisition.
We are subject to increased exposure to adverse conditions affecting the geographies in which our properties are located, including: (i) downturns in local economies and increases in unemployment rates; (ii) changes in local real estate conditions, including increases in real estate taxes and property insurance premiums; (iii) increased competition; (iv) decreased demand; (v) changes in state and local legislation, including changes affecting business or property taxes; (vi) local climate events and natural disasters and other catastrophic events, such as pandemics, earthquakes, hurricanes, windstorms, flooding, wildfires, and mudslides and other physical climate risks, including water stress and heat stress; and (vii) failures of regional banks.
We are subject to increased exposure to adverse conditions affecting the geographies in which our properties are located, including: (i) downturns in local economies or increases in unemployment rates; (ii) changes in local real estate conditions, including increases in real estate taxes and property insurance premiums; (iii) increased competition; (iv) decreased demand; (v) changes in political administrations, or federal, state, and local legislation, including changes affecting business or property taxes; (vi) local climate events and natural disasters and other catastrophic events, such as pandemics, earthquakes, hurricanes, windstorms, flooding, wildfires, and mudslides and other physical climate risks, including water stress and heat stress; and (vii) failures of regional banks.
If changes in the climate have material effects, such as property destruction, or occur for extended periods, this could have a material adverse effect on business, results of operations, and financial condition. Uninsured or underinsured losses could result in a significant loss of capital invested in a property, lower than expected future revenues, and unanticipated expense.
If changes in the climate have material effects, such as property destruction, or occur for extended periods, this could have a material adverse effect on business, results of operations, and financial condition. Uninsured or underinsured losses could result in a significant loss of capital invested in a property, lower than expected future revenues, and unanticipated expenses.
Even if we are able to successfully foreclose on the collateral securing our real estate-related loans, we may acquire properties for which we may be unable to expeditiously secure tenants or operators, if at all, or that are burdened with healthcare regulatory compliance issues that need to be addressed, or we may acquire equity interests that we are unable to immediately resell or otherwise liquidate due to limitations under the securities laws, either of which would adversely affect our ability to fully recover our investment.
Even if we are able to successfully exercise our rights on the collateral securing our real estate-related loans, we may acquire properties for which we may be unable to expeditiously secure tenants or operators, if at all, or that are burdened with healthcare regulatory compliance issues that need to be addressed, or we may acquire equity interests that we are unable to immediately resell or otherwise liquidate due to limitations under the securities laws, either of which would adversely affect our ability to fully recover our investment.
Failure to hedge effectively against interest rate risk could adversely affect our results of operations and financial condition. Additionally, increased borrowing costs and attendant negative impacts on our business can reduce the amount investors are willing to pay for our common stock.
Failure to hedge effectively against interest rate risk could adversely affect our results of operations and financial condition. Additionally, higher borrowing costs and attendant negative impacts on our business can reduce the amount investors are willing to pay for our common stock.
If a hospital whose campus is located near one of our outpatient medical buildings is unable to meet its financial obligations, and if an affiliated healthcare system is unable to support that hospital or goes bankrupt, the hospital may be unable to successfully compete or could be forced to close or relocate, which could adversely impact its ability to attract physicians and other healthcare-related users.
If a hospital whose campus is located near one of our outpatient medical buildings is unable to meet its financial obligations, and if an affiliated healthcare system is unable to support that hospital or goes bankrupt, the hospital may be unable to successfully compete or could be forced to close, relocate, or be sold to another provider, which could adversely impact its ability to attract physicians and other healthcare-related users.
This could require us to sell our interest in the joint venture when we might otherwise prefer to retain it. Any of the foregoing risks could have a material adverse effect on our business, results of operations, and financial condition. Rent escalators or contingent rent provisions in our leases could hinder our profitability and growth.
This could require us to sell our interest in the joint venture when we might otherwise prefer to retain it. Any of the foregoing risks could have a material adverse effect on our business, results of operations, and financial condition. 20 Table of Contents Rent escalators or contingent rent provisions in our leases could hinder our profitability and growth.
Any such impairment, reserve, allowance, or credit loss, or any change in any of the foregoing, could have an adverse impact on our results of operations and financial condition. 21 Table of Contents We may invest substantial resources and time in transactions that are not consummated. We regularly review potential transactions in order to maximize stockholder value.
Any such impairment, reserve, allowance, or credit loss, or any change in any of the foregoing, could have an adverse impact on our results of operations and financial condition. We may invest substantial resources and time in transactions that are not consummated. We regularly review potential transactions in order to maximize stockholder value.
We could also be required to expend funds to comply with the provisions of the ADA and similar state and local laws on behalf of tenants, which could adversely affect our results of operations and financial condition. In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations.
We could also be required to expend funds to comply with the provisions of the ADA and similar state and local laws on behalf of tenants, which could adversely affect our results of operations and financial condition. 30 Table of Contents In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations.
We and our senior housing operators (including operators of senior housing facilities that we have subsequently disposed of) received relief funds through several distributions. PRF funds are intended to reimburse eligible providers for unreimbursed health care-related expenses and lost revenues attributable to Covid and must be used only to prevent, prepare for, or respond to Covid.
We and our senior housing operators (including operators of senior housing facilities that we have subsequently disposed of) received relief funds through several distributions. 32 Table of Contents PRF funds are intended to reimburse eligible providers for unreimbursed health care-related expenses and lost revenues attributable to Covid and must be used only to prevent, prepare for, or respond to Covid.
If we have difficulties with any of these areas, or if we later discover additional liabilities or experience unforeseen costs relating to our acquired companies, we may not achieve the anticipated economic benefits from our acquisitions, and this may have a material adverse effect on our business, results of operations, and financial condition.
If we have difficulties with any of these areas, or if we later discover additional liabilities or experience unforeseen costs relating to our acquired companies or property management internalization, we may not achieve the anticipated economic benefits from our acquisitions or property management internalization, and this may have a material adverse effect on our business, results of operations, and financial condition.
Foreclosure or collections-related costs, high loan-to-value ratios, healthcare regulatory issues or consents, or declines in the value of the property, may prevent us from realizing an amount equal to our mortgage balance upon foreclosure or conclusion of litigation, and we may be required to record a valuation allowance for such losses.
Enforcement or collections-related costs, high loan-to-value ratios, healthcare regulatory issues or consents, or declines in the value of the property, may prevent us from realizing an amount equal to our loan balance upon enforcement or conclusion of litigation, and we may be required to record a valuation allowance for such losses.
Increases in interest rates result in increased interest costs for our variable rate debt and our new debt, which adversely affects our cost of capital and makes the financing of any acquisition and development activity more costly.
Elevated interest rates result in increased interest costs for our variable rate debt and our new debt, which adversely affects our cost of capital and makes the financing of any acquisition and development activity more costly.
Similarly, some business partners or tenants may use ESG factors to guide their business decisions and choose not to do business with us if they believe our ESG or sustainability policies are inadequate. Third-party providers of ESG ratings have increased in number, resulting in varied and, in some cases, inconsistent standards.
Similarly, some business partners or tenants may use corporate impact factors to guide their business decisions and choose not to do business with us if they believe our corporate impact or sustainability policies are inadequate. Third-party providers of corporate impact ratings have increased in number, resulting in varied and, in some cases, inconsistent standards.
The availability of external capital sources depends upon several factors, some of which we have little or no control over, including: • general availability of capital, including less favorable terms, rising interest rates, and increased borrowing costs; • the market price of the shares of our equity securities and the credit ratings of our debt and any preferred securities we may issue; • the market’s perception of our growth potential and our current and potential future earnings and cash distributions; • our degree of financial leverage and operational flexibility; • the financial integrity of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us, and our inability to replace the financing commitment of any such lender on favorable terms, or at all; • bank failures or other events affecting financial institutions, which could adversely affect our or our tenants’, operators’, and borrowers’ liquidity and financial performance; • the stability of the market value of our properties; • the financial performance and general market perception of our tenants and operators; • changes in the credit ratings on U.S. government debt securities or default or delay in payment by the U.S. of its obligations; • issues facing the healthcare industry, including healthcare reform and changes in government reimbursement policies; and • the performance of the national and global economies generally, including any economic downturn and volatility in the financial markets.
The availability of external capital sources is affected by several factors, some of which we have little or no control over, including: • general availability of capital, including our ability to raise capital on acceptable terms, higher interest rates, and increased borrowing costs; • the market price of the shares of our equity securities and the credit ratings of our debt and any preferred securities we may issue; • the market’s perception of our growth potential and our current and potential future earnings and cash distributions; • our degree of financial leverage and operational flexibility; • the financial integrity of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us, and our inability to replace the financing commitment of any such lender on favorable terms, or at all; • bank failures or other events affecting financial institutions, which could adversely affect our or our tenants’, operators’, and borrowers’ liquidity and financial performance; • the stability of the market value of our properties; • the financial performance and general market perception of our tenants and operators; • changes in the credit ratings on U.S. government debt securities or default or delay in payment by the U.S. of its obligations; • issues facing the healthcare industry, including healthcare reform and changes in government reimbursement policies; and • the performance of the national and global economies generally, including any economic downturn and volatility in the financial markets.
Our property development, redevelopment, and tenant improvement projects could be canceled, abandoned, delayed or, if completed, fail to perform in accordance with expectations due to, among other things: • the inability to obtain financing on favorable terms or at all, or the lack of liquidity we deem necessary or appropriate for the project; • legal and regulatory hurdles, including moratoriums on development and redevelopment activities; • the failure to obtain, or costs associated with obtaining, necessary zoning, entitlements, and permits; • cost increases; and • other factors over which we have limited or no control, including: (i) changes in market and economic conditions; (ii) natural disasters and other catastrophic events or physical climate risks, such as wildfires, earthquakes, and wind storms; (iii) pandemics or other health crises; (iv) labor conditions, including a labor shortage or work stoppage; (v) shortages of construction materials; (vi) environmental conditions; or (vii) civil unrest and acts of war or terrorism.
Our property development, redevelopment, and tenant improvement projects could be canceled, abandoned, delayed or, if completed, fail to perform in accordance with expectations due to, among other things: • the inability to obtain financing on favorable terms or at all, or the lack of liquidity we deem necessary or appropriate for the project; • legal and regulatory hurdles, including moratoriums on development and redevelopment activities, net zero or carbon neutrality requirements, or other building and energy performance requirements; • the failure to obtain, or costs associated with obtaining, necessary zoning, entitlements, and permits; • cost increases; and • other factors over which we have limited or no control, including: (i) changes in market and economic conditions; (ii) natural disasters and other catastrophic events or physical climate risks, such as wildfires, earthquakes, and wind storms; (iii) pandemics or other health crises; (iv) labor conditions, including a labor shortage or work stoppage; (v) shortages of construction materials; (vi) environmental conditions; or (vii) civil unrest and acts of war or terrorism.
In addition, such downturns could have a material adverse effect on the value of our properties and our ability to sell properties at prices or on terms acceptable or favorable to us. 16 Table of Contents The illiquidity of our real estate investments may prevent us from timely responding to economic or investment performance changes.
In addition, such downturns could have a material adverse effect on the value of our properties and our ability to sell properties at prices or on terms acceptable or favorable to us. The illiquidity of our real estate investments may prevent us from timely responding to economic or investment performance changes.
Internal Revenue Service (the “IRS”) would agree with our characterization of our properties or that we will always be able to take advantage of available safe harbors. Further changes to U.S. federal income tax laws could materially and adversely affect us and our stockholders.
Internal Revenue Service (the “IRS”) would agree with our characterization of our properties or that we will always be able to take advantage of available safe harbors. 34 Table of Contents Further changes to U.S. federal income tax laws could materially and adversely affect us and our stockholders.
Project costs may materially exceed original estimates due to, among other things: • increased interest rates; • increased costs for materials, transportation, environmental remediation, labor, or other inputs, including those caused by a shortage of construction materials or labor; • negligent construction or construction defects; • damage, vandalism, or accidents; and • increased operating costs, including insurance premiums, utilities, real estate taxes, and costs of complying with changes in government regulations or increases in tariffs.
Project costs may materially exceed original estimates due to, among other things: • higher interest rates; • increased costs for materials, transportation, environmental remediation, labor, or other inputs, including those caused by a shortage of construction materials or labor; • negligent construction or construction defects; 17 Table of Contents • damage, vandalism, or accidents; and • increased operating costs, including insurance premiums, utilities, real estate taxes, and costs of complying with changes in government regulations or increases in tariffs.
In addition, the presence of contamination or the failure to remediate contamination may materially adversely affect our ability to use, develop, sell, or lease the property or to borrow using the property as collateral. ESG and sustainability commitments and requirements, as well as stakeholder expectations, may impose additional costs and expose us to new risks.
In addition, the presence of contamination or the failure to remediate contamination may materially adversely affect our ability to use, develop, sell, or lease the property or to borrow using the property as collateral. Corporate impact and sustainability commitments and requirements, as well as stakeholder expectations, may impose additional costs and expose us to new risks.
Covenants that limit our operational flexibility, as well as defaults resulting from the breach of any of these covenants, could have a material adverse effect on our business, results of operations, and financial condition. The market price and trading volume of our common stock may be volatile.
Covenants that limit our operational flexibility, as well as defaults resulting from the breach of any of these covenants, could have a material adverse effect on our business, results of operations, and financial condition. 28 Table of Contents The market price and trading volume of our common stock may be volatile.
As a result of all these factors, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital and could materially adversely affect the value of our common stock. 31 Table of Contents Our taxable REIT subsidiaries (TRSs) may be subject to corporate level tax.
As a result of all these factors, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital and could materially adversely affect the value of our common stock. Our taxable REIT subsidiaries (TRSs) may be subject to corporate level tax.
The FOMC may continue to raise the federal funds rate or maintain a higher federal funds rate for a longer period of time, either of which would likely lead to higher short-term interest rates and the possibility of lower asset values, slowing economic growth and increasing the possibility of a recession.
The FOMC may maintain a higher federal funds rate for a longer period of time, or may determine to raise the federal funds rate again, either of which would likely lead to higher short-term interest rates and the possibility of lower asset values, slowing economic growth and increasing the possibility of a recession.
Furthermore, our TRS has exposure to professional liability claims that could arise out of resident claims, such as quality of care, and the associated litigation costs. 28 Table of Contents Required regulatory approvals can delay or prohibit transfers of our senior housing properties.
Furthermore, our TRS has exposure to professional liability claims that could arise out of resident claims, such as quality of care, and the associated litigation costs. Required regulatory approvals can delay or prohibit transfers of our senior housing properties.
Additionally, changing technologies and cultural trends could negatively impact future demand for our properties, which could have a material adverse effect on our business, results of operations, and financial condition. 14 Table of Contents Life science industry changes could have a material adverse effect on our business, results of operations, and financial condition.
Additionally, changing technologies, political and regulatory conditions, and cultural trends could negatively impact future demand for our properties, which could have a material adverse effect on our business, results of operations, and financial condition. 14 Table of Contents Life science industry changes could have a material adverse effect on our business, results of operations, and financial condition.
In addition, our reputation may be adversely affected if we do not meet stakeholder expectations to mitigate climate risk in a transition to a low-carbon economy. 23 Table of Contents We may be impacted by epidemics, pandemics, or other infectious diseases, including Covid, and health and safety measures intended to reduce their spread.
In addition, our reputation may be adversely affected if we do not meet stakeholder expectations to mitigate climate risk in a transition to a low-carbon economy. We may be impacted by epidemics, pandemics, or other infectious diseases, including Covid, and health and safety measures intended to reduce their spread.
In particular, (i) a significant portion of our lab development projects and approximately 67% of our lab portfolio (based on gross asset value as of December 31, 2023) was concentrated in California, which is known to be subject to earthquakes, wildfires, and other natural disasters, and (ii) approximately 69% of our CCRC portfolio (based on gross asset value as of December 31, 2023) was concentrated in Florida, which is known to be subject to hurricanes.
In particular, (i) a significant portion of our lab development projects and approximately 67% of our lab portfolio (based on gross asset value as of December 31, 2024) was concentrated in California, which is known to be subject to earthquakes, wildfires, and other natural disasters, and (ii) approximately 68% of our CCRC portfolio (based on gross asset value as of December 31, 2024) was concentrated in Florida, which is known to be subject to hurricanes.
Borrowers may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against our exercise of enforcement or other remedies, and/or bring claims for lender liability in response to actions to enforce mortgage obligations.
Borrowers and guarantors may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against our exercise of enforcement or other remedies, and/or bring claims for lender liability in response to actions to enforce borrower obligations.
The impacts of such events could be severe and far-reaching, and may impact our operations in several ways, including: (i) tenants could experience deteriorating financial condition and be unable or unwilling to pay rent on time and in full; (ii) we may have to restructure tenants' obligations and may not be able to do so on terms that are favorable to us; (iii) inquiries and tours at our properties could decrease; (iv) move-ins, new tenanting efforts, and re-letting efforts could slow or stop altogether; (v) move-outs and potential early termination of leases thereunder could increase; (vi) operating expenses, including the costs of certain essential services or supplies, including payments to third-party contractors, service providers, and employees essential to ensure continuity in our building operations, may increase; (vii) procedures normally conducted on our properties may be disrupted, adversely affecting the economic viability of our tenants; and (viii) costs of development, including expenditures for materials utilized in construction and labor essential to complete existing developments in progress, may increase substantially.
The impacts of such events could be severe and far-reaching, and may impact our operations in several ways, including: (i) tenants could experience deteriorating financial condition and be unable or unwilling to pay rent on time and in full; (ii) we may have to restructure tenants' obligations and may not be able to do so on terms that are favorable to us; (iii) inquiries and tours at our properties could decrease; (iv) move-ins, new tenanting efforts, and re-letting efforts could slow or stop altogether; (v) move-outs and potential early termination of leases thereunder could increase; (vi) operating expenses, including the costs of certain essential services or supplies, including payments to third-party contractors, service providers, and employees essential to ensure continuity in our building operations, may increase; (vii) procedures normally conducted on our properties may be disrupted, adversely affecting the economic viability of our tenants; and (viii) costs of development, including expenditures for materials utilized in construction and labor essential to complete existing developments in progress, may increase substantially. 24 Table of Contents Human capital risks, including the loss or limited availability of our key personnel, could disrupt or impair our operations.
In addition, the criteria by which companies’ ESG and sustainability practices are assessed are evolving, which could result in greater expectations for us to undertake costly initiatives to satisfy such new criteria.
In addition, the criteria by which companies’ corporate impact and sustainability practices are assessed are evolving, which could result in greater expectations for us to undertake costly initiatives to satisfy such new criteria.
In addition, infrastructure improvements for lab properties typically are significantly more expensive than improvements to other property types due to the highly specialized nature of the properties and the greater lease square footage often required by lab tenants.
In addition, infrastructure improvements for outpatient medical and lab properties typically are significantly more expensive than improvements to other property types due to the highly specialized nature of the properties, and with respect to lab properties, the greater lease square footage often required by lab tenants.
Alternatively, we may determine to sell a distressed loan for less than full value, in which event we may incur a loss on the investment. We may be required to recognize reserves, allowances, credit losses, or impairment charges.
Alternatively, we may determine to sell a distressed loan for less than full value, in which event we may incur a loss on the investment. 21 Table of Contents We may be required to recognize reserves, allowances, credit losses, or impairment charges.
See “Item 1, Business—Government Regulation, Licensing and Enforcement.” For example, to the extent that our tenants, operators, or borrowers, or assets owned in our CCRC segment or through the SFW SH JV, receive a significant portion of their revenues from governmental payors, primarily Medicare and Medicaid, they are generally subject to, among other things: • statutory and regulatory changes, including changes that impact state reimbursement programs, particularly Medicaid reimbursement and managed care payments; 29 Table of Contents • retroactive rate adjustments and recoupment efforts; • recovery of program overpayments or set-offs; • federal, state, and local litigation and enforcement actions, including those relating to Covid and the failure to satisfy the terms and conditions of financial relief; • administrative proceedings; • policy interpretations; • payment or other delays by fiscal intermediaries or carriers; • government funding restrictions (at a program level or with respect to specific properties); • reduced reimbursement rates under managed care contracts; • changes in reimbursement rates, methods, or timing under governmental reimbursement programs, including changes that impact state reimbursement programs, particularly Medicaid reimbursement and managed care payments; • interruption or delays in payments due to any ongoing governmental investigations and audits at such properties or due to a partial or total federal or state government shutdown for a prolonged period of time; and • reputational harm of publicly disclosed enforcement actions, audits, or investigations related to billing and reimbursements.
See “Item 1, Business—Government Regulation, Licensing and Enforcement.” For example, to the extent that our tenants, operators, or borrowers, or assets owned in our CCRC segment or through the SFW SH JV, receive a significant portion of their revenues from governmental payors, primarily Medicare and Medicaid, they are generally subject to, among other things: • statutory and regulatory changes, including changes that impact state reimbursement programs, particularly Medicaid reimbursement and managed care payments; • minimum staffing levels and other staffing and quality requirements; • retroactive rate adjustments and recoupment efforts; • recovery of program overpayments or set-offs; • federal, state, and local litigation and enforcement actions, including those relating to Covid and the failure to satisfy the terms and conditions of financial relief; • administrative proceedings; • policy interpretations; • payment or other delays by fiscal intermediaries or carriers; • government funding restrictions (at a program level or with respect to specific properties); • reduced reimbursement rates under managed care contracts; • changes in reimbursement rates, methods, or timing under governmental reimbursement programs, including changes that impact state reimbursement programs, particularly Medicaid reimbursement and managed care payments; • pre- and post-payment reviews and audits by governmental authorities, which could result in recoupments, denials or delay of payments; • interruption or delays in payments due to any ongoing governmental investigations and audits at such properties or due to a partial or total federal or state government shutdown for a prolonged period of time; and 31 Table of Contents • reputational harm of publicly disclosed enforcement actions, audits, or investigations related to billing and reimbursements.
Our lab tenants face substantial requirements for, and risks related to, the research, development, clinical testing, manufacture, and commercialization of their products and technologies, including: • significant funding requirements, including for rent payments due to us; • federal, state, and foreign regulatory approvals that may be costly or difficult to obtain, may take several years and be subject to delay, may not be obtained at all, require validation through clinical trials that may face delays or difficulties, or ultimately be unsuccessful; • product and technology efficacy risks; • acceptance risks among doctors and patients; • significant regulatory and liability risks, including the possible later discovery of safety concerns and other defects and potential loss of approvals, competition from new products, and the expiration of patent protection; • healthcare reforms and reimbursement policies of government or private healthcare payors, including pricing controls for prescription drug prices; • intellectual property and technology risks under patent, copyright, and trade secret laws; and • economic conditions restricting growth opportunities.
Our lab tenants face substantial requirements for, and risks related to, the research, development, clinical testing, manufacture, and commercialization of their products and technologies, including: • significant funding requirements, including for rent payments due to us; • federal, state, and foreign regulatory approvals that may be costly or difficult to obtain, may take several years and be subject to delay, may not be obtained at all, require validation through clinical trials that may face delays or difficulties, or ultimately be unsuccessful; • product and technology efficacy risks; • acceptance risks among doctors and patients; • significant regulatory and liability risks, including the possible later discovery of safety concerns and other defects and potential loss of approvals, competition from new products, and the expiration of patent protection; • new and emerging laws aimed at the life science/biotechnology industry, increasing regulatory requirements and compliance costs, as well as healthcare reforms and reimbursement policies of government or private healthcare payors, including price controls for prescription drug prices; • intellectual property and technology risks under patent, copyright, and trade secret laws; and • economic conditions potentially restricting growth opportunities.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our quarterly operating results, guidance, or distributions; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • issuance of additional equity securities; • actions by institutional stockholders; • the publication of research reports and articles (or false or misleading information) about us, our tenants, the real estate industry, or the industries in which our tenants operate; • speculation in the press or investment community and investor sentiment regarding commercial real estate generally, our industry sectors or other real estate sectors, the industries in which our tenants operate, and the regions in which our properties are located; • short selling of our common stock or related derivative securities; and • general market and economic conditions. 27 Table of Contents Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our quarterly operating results, guidance, or distributions; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • issuance of additional equity securities; • actions by institutional stockholders; • the publication of research reports and articles (or false or misleading information) about us, our tenants, the real estate industry, or the industries in which our tenants operate; • speculation in the press or investment community and investor sentiment regarding commercial real estate generally, our industry sectors or other real estate sectors, the industries in which our tenants operate, and the regions in which our properties are located; • short selling of our common stock or related derivative securities; and • general market and economic conditions.
Operational risks include, and our resulting revenues therefore depend on, among other things: (i) occupancy rates; (ii) the entrance fees and rental rates charged to residents; (iii) the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid, to the extent applicable, including changes to reimbursement rates; (iv) our operators’ reputations and ability to attract and retain residents; (v) general economic conditions and market factors that impact seniors, including general inflationary pressures; (vi) competition from other senior housing providers; (vii) compliance with federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations and standards; (viii) litigation involving our properties or residents/patients; (ix) the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles; and (x) the ability to control operating expenses.
Operational risks include, and our resulting revenues therefore depend on, among other things: (i) occupancy rates; (ii) the entrance fees and rental rates charged to residents; (iii) the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid, to the extent applicable, including changes to reimbursement rates; (iv) our operators’ reputations and ability to attract and retain residents; (v) general economic conditions and market factors that impact seniors, including general inflationary pressures; (vi) competition from other senior housing providers; (vii) compliance with federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations and standards; (viii) litigation involving our properties or residents/patients; (ix) the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles; and (x) the ability to control operating expenses. 18 Table of Contents Operators of our CCRCs and the SWF SH JV properties primarily depend on private sources for their revenues and the ability of their patients and residents to pay fees.
In addition, our outpatient medical and senior housing tenants, operators, and borrowers compete with certain companies that have superior resources and attributes and/or provide similar healthcare services or alternatives such as home health agencies, telemedicine, life care at home, community-based service programs, retirement communities, and convalescent centers. Furthermore, these tenants, operators, and borrowers face a competitive labor market.
In addition, our outpatient medical and senior housing tenants, operators, and borrowers compete with certain companies that have superior resources and attributes and/or provide similar healthcare services or alternatives such as home health agencies, telemedicine, life care at home, community-based service programs, retirement communities, and convalescent centers.
In addition, we may incur significant costs in attempting to comply with ESG policies or third party expectations or demands.
In addition, we may incur significant costs in attempting to comply with corporate impact policies or third-party expectations or demands.
Competitive pressures, including historically low unemployment, may require that we or our tenants, operators, or borrowers enhance pay and benefits packages to compete effectively for such personnel.
Competitive pressures may require that we or our tenants, operators, or borrowers enhance pay and benefits packages to compete effectively for such personnel.
In addition, changes in federal, state, and local legislation and regulation relating to climate change could require (i) increased capital expenditures to improve the energy efficiency or resiliency of our existing properties and increase the costs of new developments and (ii) increased compliance costs for us and our tenants, in each case without a corresponding increase in revenue.
In addition, changes in federal, state, and local legislation and regulation relating to climate change, net zero or carbon neutrality requirements, and building and energy performance standards could require (i) increased capital expenditures to improve the energy efficiency or resiliency of our existing properties and increase the costs of new developments and (ii) increased compliance costs for us and our tenants, in each case without a corresponding increase in revenue.
PRF program terms and conditions include limitations and requirements governing use of PRF funds, implementation of controls, retention of records, audit and reporting to governmental authorities, and other PRF program requirements. Failure to comply with program requirements may result in payment recovery or other enforcement actions.
PRF program terms and conditions include limitations and requirements governing use of PRF funds, implementation of controls, retention of records, audit and reporting to governmental authorities, and other PRF program requirements, the interpretation of which may change over time. Failure to comply with program requirements may result in payment recovery or other enforcement actions.
Physicians Realty Trust and the Physicians Partnership have also entered into similar tax protection arrangements with certain third parties and, as a result of the Mergers, we would inherit the obligations under such arrangements. Our charter contains ownership limits with respect to our common stock and other classes of capital stock.
Physicians Realty Trust and the Physicians Partnership had also entered into similar tax protection arrangements with certain third parties and, as a result of the Merger, we inherited the obligations under such arrangements. Our charter contains ownership limits with respect to our common stock and other classes of capital stock.
Potential difficulties the Combined Company may encounter in the integration process include the following: • the inability to successfully combine the operations of the Company and Physicians Realty Trust, including the integration of employees, customer records and maintaining cybersecurity protections, in a manner that permits the Combined Company to achieve the cost savings anticipated to result from the Mergers, which would result in the anticipated benefits of the Mergers not being realized in the time frame currently anticipated or at all; 36 Table of Contents • the inability to dispose of assets or operations that the Combined Company desires to dispose of; • the complexities associated with managing the combined businesses out of different locations and integrating personnel from the two companies; • the failure to retain key employees of either of the two companies; • potential unknown liabilities and unforeseen increased expenses, delays, or regulatory conditions associated with the Mergers; and • performance shortfalls as a result of the diversion of management’s attention caused by completing the Mergers and integrating the companies’ operations.
Potential difficulties we may encounter in the ongoing integration process include the following: • the inability to successfully combine the operations of the Company and Physicians Realty Trust, including the integration of employees, customer records and maintaining cybersecurity protections, in a manner that permits us to achieve the cost savings anticipated from the Merger, which would result in the anticipated benefits of the Merger not being realized in the time frame currently anticipated or at all; • the inability to dispose of assets or operations that we desire to dispose of; • the complexities associated with managing the combined businesses out of different locations and integrating personnel from the two companies; • the failure to retain key employees of either of the two companies; • potential disruptions and performance shortfalls due to the failure to successfully internalize the property management function; • potential unknown liabilities and unforeseen increased expenses, delays, or regulatory conditions associated with the Merger; and • performance shortfalls as a result of the diversion of management’s attention caused by integrating the companies’ operations.
U.S. government policies implemented to address inflation, including actions by the Federal Reserve System’s Federal Open Market Committee (the “FOMC”) to increase short-term interest rates, have led to increases in interest rates in the credit markets and other impacts on the macroeconomic environment.
Interest rates rose substantially in 2022 and 2023. U.S. government policies implemented to address inflation, including actions by the Federal Reserve System’s Federal Open Market Committee (the “FOMC”) to increase short-term interest rates, resulted in increases in interest rates in the credit markets and other impacts on the macroeconomic environment.
For example, in response to recent inflationary conditions, actions taken by the FOMC have led to rising interest rates, which may continue to rise and remain elevated for the foreseeable future.
For example, actions taken by the FOMC in response to recent inflationary conditions led to rising interest rates, which may continue to remain at elevated levels for the foreseeable future.
We may be unable to successfully foreclose or exercise rights on the collateral securing our real estate-related loans and, even if we are successful in our foreclosure or realization efforts, we may be unable to successfully operate, occupy, or reposition the underlying real estate.
We may be unable to successfully exercise rights on the collateral securing our real estate-related loans and, even if we are successful in exercising those rights, we may be unable to successfully operate, occupy, or reposition the underlying real estate.
Increased interest rates have caused, and may continue to cause, unfavorable financing terms and increased interest costs for variable rate debt and new debt. Further, actions by the FMOC to decrease short-term interest rates could lead to inflationary pressures.
Historically higher interest rates have caused, and may in the future cause, unfavorable financing terms and increased interest costs for variable rate debt and new debt. Further, actions by the FOMC to decrease short-term interest rates could lead to inflationary pressures.
No reported decision of a Maryland appellate court has interpreted provisions similar to the provisions of the operating agreement of Healthpeak OP that modify and reduce our fiduciary duties or obligations as the managing member or reduce or eliminate our liability to Healthpeak OP and its members, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the operating agreement that purport to modify or reduce the fiduciary duties and obligations that would be in effect were it not for the operating agreement.
No reported decision of a Maryland appellate court has interpreted provisions similar to the provisions of the operating agreement of Healthpeak OP that modify and reduce our fiduciary duties or obligations as the managing member or reduce or eliminate our liability to Healthpeak OP and its members, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the operating agreement that purport to modify or reduce the fiduciary duties and obligations that would be in effect were it not for the operating agreement. 36 Table of Contents Certain provisions in the operating agreement of Healthpeak OP or other agreements may delay or prevent unsolicited acquisitions of us or certain other transactions.
Intensifying natural disasters including climate change and extreme weather events, coupled with the current economic climate have directly affected the availability of insurance, premiums, deductibles, and capacity that insurers are willing to underwrite.
Intensifying natural disasters resulting from climate change and extreme weather events, coupled with macroeconomic factors, have directly affected the availability of insurance, premiums, deductibles, and capacity that insurers are willing to underwrite.
We do not control the cybersecurity systems and protocols put in place by our operators or other third parties, and such parties may have limited indemnification obligations to us, which could cause us to be negatively impacted as a result. 24 Table of Contents Cybersecurity incidents and cybersecurity threats affecting our or our operators’ or other third party providers’ information systems, including those caused by physical or electronic break-ins, computer viruses, malware, worms, attacks by hackers or foreign governments, ransomware attacks, disruptions from unauthorized access and tampering, including through social engineering such as phishing or vishing attacks, coordinated denial-of-service attacks, and similar breaches, could result in, among other things: (i) system disruptions; (ii) shutdowns; (iii) unauthorized access to or disclosure of confidential information, including as a result of impersonation of authorized users or manipulated communications; (iv) misappropriation of our or our business partners’ proprietary or confidential information; (v) breach of our legal, regulatory, or contractual obligations; (vi) inability to access or rely upon critical business records or systems; or (vii) other delays in our operations.
Cybersecurity incidents and cybersecurity threats affecting our or our operators’ or other third party providers’ information systems, including those caused by physical or electronic break-ins, computer viruses, malware, worms, attacks by hackers or foreign governments, ransomware attacks, disruptions from unauthorized access and tampering, including through social engineering such as phishing or vishing attacks, coordinated denial-of-service attacks, and similar breaches, could result in, among other things: (i) system disruptions; (ii) shutdowns; (iii) unauthorized access to or disclosure of confidential information, including as a result of impersonation of authorized users or manipulated communications; (iv) misappropriation of our or our business partners’ proprietary or confidential information; (v) breach of our legal, regulatory, or contractual obligations; (vi) inability to access or rely upon critical business records or systems; or (vii) other delays in our operations.
If access to capital is unavailable on acceptable terms or at all, it could have a material adverse impact on our ability to fund operations, repay or refinance our debt obligations, fund dividend payments, acquire properties, and make the investments in development and redevelopment activities, as well as capital expenditures, needed to grow our business. 26 Table of Contents Our level of indebtedness may increase and materially adversely affect our future operations.
If access to capital is unavailable on acceptable terms or at all, it could have a material adverse impact on our ability to fund operations, repay or refinance our debt obligations, fund dividend payments, acquire properties, and make the investments in development and redevelopment activities, as well as capital expenditures, needed to grow our business.
We also depend on the efforts of our executive officers for the success of our business. Although they are covered by our Executive Severance Plan and Change in Control Plan, which provide many of the benefits typically found in executive employment agreements, none of our executive officers have employment agreements with us.
Although they are covered by our Executive Severance Plan and Executive Change in Control Severance Plan, which provide many of the benefits typically found in executive employment agreements, none of our executive officers have employment agreements with us.
Accordingly, our operators of these properties depend on attracting seniors with appropriate levels of income and assets, which may be affected by many factors, including: (i) prevailing economic and market trends, including general inflationary pressures; (ii) consumer confidence; (iii) demographics; (iv) property condition and safety; (v) public perception about such properties; and (vi) social and environmental factors.
Accordingly, our operators of these properties depend on attracting seniors with appropriate levels of income and assets, which may be affected by many factors, including: (i) prevailing economic and market trends, including general inflationary pressures; (ii) consumer confidence; (iii) demographics; (iv) property condition and safety; (v) public perception about such properties; (vi) social and environmental factors; and (vii) changes in consumer preferences (such as favoring home health services instead of residing in a senior housing community).
We also may be subject to or incur costs related to PRF compliance activities, reporting, and financial audits, as well as government oversight and enforcement, including post-payment recovery and recoupment and government investigations, audits, enforcement activity, and penalties. Our current and former operators may similarly be impacted.
We also may be subject to or incur costs related to PRF compliance activities, as well as government oversight and enforcement, including post-payment recovery and recoupment and government investigations, audits, enforcement activity, and penalties. Our current and former operators may similarly be impacted. Differences in operators’ PRF policies and protocols may adversely impact availability of data and financial audits.
These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some of our stockholders or members of Healthpeak OP might consider such proposals, if made, desirable.
Provisions of the operating agreement of Healthpeak OP may delay or make more difficult unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some of our stockholders or members of Healthpeak OP might consider such proposals, if made, desirable.
If we fail to satisfy the expectations of investors, tenants, business partners or other stakeholders, or our announced goals and other initiatives are not executed as planned, our reputation and financial results could be adversely affected, and our revenues, results of operations and ability to grow our business may be negatively impacted.
If we fail to satisfy the expectations of investors, tenants, business partners or other stakeholders, or our announced goals and other initiatives are not executed as planned or there are changes in the measurement techniques (including any changes in estimates or assumptions underlying the measurements) or in the standards referenced for the measurement of data, our reputation and financial results could be adversely affected, and our revenues, results of operations and ability to grow our business may be negatively impacted.
The failure of our tenants, operators, or borrowers to meet their financial and other contractual obligations to us could have a material adverse effect on our business, results of operations, and financial condition. We may be negatively impacted by the insolvency or bankruptcy of one or more of our major tenants, operators, or borrowers.
The failure of our tenants, operators, or borrowers to meet their financial and other contractual obligations to us could have a material adverse effect on our business, results of operations, and financial condition.
Under certain leases, a portion of the tenant’s rental payment to us is based on the property’s revenues (i.e., contingent rent).
Under certain leases, a portion of the tenant’s rental payment to us is based on the property’s revenues (i.e., contingent rent). If a tenant’s revenue at a rental property with contingent rent declines, our rental revenues would decrease.
An inability to attract and retain qualified personnel, including personnel possessing the expertise needed to operate in the life science, outpatient medical, and senior housing sectors, could negatively impact the ability of our tenants, operators, and borrowers to meet their obligations to us. 15 Table of Contents Our tenants, operators, and borrowers could also be adversely impacted by a bank failure or other event affecting financial institutions, including through disruptions in access to bank deposits or borrowing capacity, including access to letters of credit from certain of our tenants relating to lease obligations, and any resulting adverse effects to our tenants’, operators’, or borrowers’ liquidity or financial performance could affect their ability to meet their financial and other contractual obligations to us.
Our tenants, operators, and borrowers could also be adversely impacted by a bank failure or other event affecting financial institutions, including through disruptions in access to bank deposits or borrowing capacity, including access to letters of credit from certain of our tenants relating to lease obligations, and any resulting adverse effects to our tenants’, operators’, or borrowers’ liquidity or financial performance could affect their ability to meet their financial and other contractual obligations to us.
Further, all distributions are made at the discretion of our Board of Directors in accordance with Maryland law and depend on: (i) our earnings; (ii) our financial condition; (iii) debt and equity capital available to us; (iv) our expectations for future capital requirements and operating performance; (v) covenants in our financial or other contractual arrangements, including those in our credit facility agreement; (vi) maintenance of our REIT qualification; and (vii) other factors as our Board of Directors may deem relevant from time to time.
Further, all distributions are made at the discretion of our Board of Directors in accordance with Maryland law and depend on: (i) our earnings; (ii) our financial condition; (iii) debt and equity capital available to us; (iv) our expectations for future capital requirements and operating performance; (v) covenants in our financial or other contractual arrangements, including those in our credit facility agreement; (vi) maintenance of our REIT qualification; and (vii) other factors as our Board of Directors may deem relevant from time to time. 27 Table of Contents If access to external capital is unavailable on acceptable terms or at all, it could have a material adverse effect on our ability to meet commitments as they become due or make investments necessary to grow our business.
We could be negatively impacted by legislation to address federal government operations and administrative decisions affecting the Centers for Medicare and Medicaid Services.
We could be negatively impacted by legislation to address federal government operations and administrative decisions affecting the Centers for Medicare and Medicaid Services or other legislative or regulatory changes affecting REITs or the industries in which we operate.
As set forth below, we believe that the risks we face generally fall into the following categories: • risks related to our business and operations; • risks related to our capital structure and market conditions; • risks related to the regulatory environment; • risks related to tax, including REIT-related risks, and related to our jurisdiction of incorporation and our structure as an UPREIT; • risks relating to the Mergers; • risks relating to the Combined Company following the Mergers; • risks relating to the status of Physicians Realty Trust as a REIT; and • risks relating to an investment in the Combined Company’s common stock following the Mergers and the transactions contemplated by the Merger Agreement.
As set forth below, we believe that the risks we face generally fall into the following categories: • risks related to our business and operations; • risks related to our capital structure and market conditions; • risks related to the regulatory environment; • risks relating to integration and property management internalization following our Merger with Physicians Realty Trust; • risks related to tax, including REIT-related risks, and related to our jurisdiction of incorporation and our structure as an UPREIT.
Increased interest rates could also negatively impact consumer spending and our tenants’, operators’, and borrowers’ businesses and future demand for our properties. Furthermore, rising labor costs and personnel shortages have increased, and may continue to increase, the cost of our, or our tenants’, operators’, and borrowers’, workforce.
Increased interest rates could also negatively impact consumer spending and our tenants’, operators’, and borrowers’ businesses and future demand for our properties. Furthermore, rising labor costs and personnel shortages may adversely impact us or our tenants, operators, and borrowers.
Any failure to adequately train employees or to maintain proper function, security, and availability of our and our operators’ information systems and the data maintained in those systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties, harm our business relationships, or increase our security and insurance costs, which could have a material adverse effect on our business, financial condition, and results of operations.
Any failure to adequately train employees or to maintain proper function, security, and availability of our and our operators’ information systems and the data maintained in those systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties, harm our business relationships, or increase our security and insurance costs, which could have a material adverse effect on our business, financial condition, and results of operations. 25 Table of Contents Our tenants and borrowers may also from time to time experience cybersecurity incidents or cybersecurity threats that compromise, damage or disrupt their information systems or result in the loss or misuse of confidential information, intellectual property or sensitive or personal information.
Moreover, negative publicity of any of our operators’, property managers’, or tenants’ litigation, other legal proceedings or investigations may also negatively impact their and our reputation, resulting in lower customer demand and revenues, which could have a material adverse effect on our financial condition, results of operations, and cash flows. 22 Table of Contents We may also be named as defendants in lawsuits arising out of our alleged actions or the alleged actions of our tenants, operators, or property managers for which such tenants, operators, or property managers may have agreed to indemnify us.
Moreover, negative publicity of any of our operators’, property managers’, or tenants’ litigation, other legal proceedings or investigations may also negatively impact their and our reputation, resulting in lower customer demand and revenues, which could have a material adverse effect on our financial condition, results of operations, and cash flows.
Certain of our tenants, operators, and borrowers, as well as our owned assets in the CCRC segment and SWF SH JV, are affected, directly or indirectly, by a complex set of federal, state, and local laws and regulations pertaining to governmental reimbursement programs, including the CARES Act and other similar relief legislation enacted as a result of the Covid pandemic.
Certain of our tenants, operators, and borrowers, as well as our owned assets in the CCRC segment and SWF SH JV, are affected, directly or indirectly, by a complex set of federal, state, and local laws and regulations pertaining to governmental reimbursement programs. These laws and regulations are subject to frequent and substantial changes that are sometimes applied retroactively.
Although we currently carry environmental insurance on our properties in an amount that we believe is commercially reasonable and generally require our tenants and operators to indemnify us for environmental liabilities they cause, such liabilities could exceed the amount of our insurance, the financial ability of the tenant or operator to indemnify us, or the value of the contaminated property.
In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and the costs it incurs in connection with the contamination, and/or impose fines and penalties on the property owner with respect to such contamination. 23 Table of Contents Although we currently carry environmental insurance on our properties in an amount that we believe is commercially reasonable and generally require our tenants and operators to indemnify us for environmental liabilities they cause, such liabilities could exceed the amount of our insurance, the financial ability of the tenant or operator to indemnify us, or the value of the contaminated property.
Our outstanding indebtedness as of December 31, 2023 was approximately $6.9 billion. We may incur additional indebtedness, which may be substantial. Any significant additional indebtedness would likely negatively affect the credit ratings of our debt and require us to dedicate a growing portion of our cash flow to interest and principal payments.
Any significant additional indebtedness would likely negatively affect the credit ratings of our debt and require us to dedicate a growing portion of our cash flow to interest and principal payments.
We may not be able to successfully integrate or operate acquisitions, or may incur unanticipated liabilities. Successful integration of acquired companies depends primarily on our ability to consolidate operations, systems, procedures, properties, and personnel, and to eliminate redundancies and reduce costs. We may encounter difficulties in these integrations.
Successful integration of acquired companies and/or internalization of the property management function, as applicable, depends primarily on our ability to consolidate operations, systems, procedures, properties, and personnel, and to eliminate redundancies and reduce costs. We may encounter difficulties in these integrations and property management internalizations.
The ownership limits may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.
The ownership limits may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders. 35 Table of Contents We are subject to certain provisions of Maryland law and our charter relating to business combinations that may prevent a transaction that may otherwise be in the interest of our stockholders.
If the Consumer Price Index does not increase or other applicable thresholds are not met, rental rates may not increase as anticipated or at all, which could hinder our profitability and growth.
Additionally, some of our leases provide that annual rent is modified based on changes in the Consumer Price Index or other thresholds (i.e., contingent rent escalators). If the Consumer Price Index does not increase or other applicable thresholds are not met, rental rates may not increase as anticipated or at all, which could hinder our profitability and growth.
Our credit ratings affect the amount and type of capital, as well as the terms of any financing we may obtain.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms. Our credit ratings affect the amount and type of capital, as well as the terms of any financing we may obtain.
Insurance coverage for pandemics is not generally available; if it does become available again, it may not be on commercially reasonable terms and we may be unable to receive insurance proceeds that would compensate us fully for our liabilities, costs, and expenses in the event of a pandemic. 19 Table of Contents Our CCRC and senior housing operators also face various forms of class-action lawsuits from time to time, such as wage and hour and consumer rights actions, which generally are not covered by insurance.
Insurance coverage for pandemics is not generally available; if it does become available again, it may not be on commercially reasonable terms and we may be unable to receive insurance proceeds that would compensate us fully for our liabilities, costs, and expenses in the event of a pandemic.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes the following: • a multidisciplinary team comprised of personnel from information technology (“IT”), internal audit, accounting, and legal, as well as third-party cybersecurity experts principally responsible for directing (i) our cybersecurity risk assessment processes, (ii) our security processes, and (iii) our response to cybersecurity incidents; • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment; • internal and third-party security tools to monitor our systems, identify cybersecurity risks, and test our IT environment; • the use of third-party cybersecurity experts, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • a cybersecurity incident response plan and business continuity plan; • cybersecurity training for employees and key business partners with access to our systems; • a third-party cybersecurity risk management process for service providers and vendors who access our systems; • requiring employees, as well as third parties who have access to our systems, to treat confidential and private information and data with care, including performing controls relating to such data; and • cybersecurity risk insurance.
Biggest changeOur cybersecurity risk management program includes the following: • a multidisciplinary team comprised of personnel from information technology (“IT”), internal audit, accounting, and legal, as well as third-party cybersecurity experts principally responsible for directing (i) our cybersecurity risk assessment processes, (ii) our security processes, and (iii) our response to cybersecurity incidents; • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment; • internal and third-party security tools to monitor our systems, identify cybersecurity risks, and test our IT environment; • the use of third-party cybersecurity experts, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • a cybersecurity incident response plan, business continuity plan, and established policies governing cybersecurity risk management at the corporate and property levels; • cybersecurity training for employees and key business partners with access to our systems; • a third-party cybersecurity risk management process for service providers and vendors who access our systems; • requiring employees, as well as third parties who have access to our systems, to treat confidential and private information and data with care, including performing controls relating to such data; and • cybersecurity risk insurance.
The CISO is primarily responsible for leading our cybersecurity risk assessment and management processes. This expert has experience having served as the chief information security officer for an international commercial real estate services company and currently serves as chief executive officer of a cybersecurity firm focused on commercial real estate.
The CISO is primarily responsible for leading our cybersecurity risk assessment and management processes. This expert has experience having served as the chief information security officer for an international commercial real estate services company and currently serves as chief information security officer of a cybersecurity firm focused on commercial real estate.
The Audit Committee periodically provides updates on these matters to the Board of Directors. 41 Table of Contents Our enterprise risk team consists of cross-functional professionals who collaborate with subject matter specialists, as necessary, including an independent third-party expert we have retained to functionally serve as a virtual chief information security officer (“CISO”), to identify and assess material risks from cybersecurity threats, their severity, and potential mitigation steps.
The Audit Committee periodically provides updates on these matters to the Board of Directors. 38 Table of Contents Our enterprise risk team consists of cross-functional professionals who collaborate with subject matter specialists, as necessary, including an independent third-party expert we have retained to functionally serve as a virtual chief information security officer (“CISO”), to identify and assess material risks from cybersecurity threats, their severity, and potential mitigation steps.

Item 2. Properties

Properties — owned and leased real estate

7 edited+3 added−3 removed1 unchanged
Biggest change(4) Excludes operating expenses related to corporate non-segment assets (see Note 15 to the Consolidated Financial Statements). 43 Table of Contents Occupancy and Annual Rent Trends The following table summarizes occupancy and average annual rent trends for our consolidated property and investments held under a direct financing lease (“DFL”) for the years ended December 31 (average occupied square feet in thousands): 2023 2022 2021 Lab: Average occupancy percentage 98 % 98 % 97 % Average annual rent per square foot (1) $ 82 $ 71 $ 66 Average occupied square feet 10,334 10,610 10,143 Outpatient medical (2) : Average occupancy percentage 90 % 90 % 90 % Average annual rent per square foot (1) $ 35 $ 33 $ 31 Average occupied square feet 21,337 21,472 21,046 CCRC: Average occupancy percentage 84 % 82 % 79 % Average annual rent per occupied unit (3) $ 88,524 $ 84,664 $ 80,391 Average occupied units 5,960 5,926 5,881 _______________________________________ (1) Presented as a ratio of revenues comprised of rental and related revenues and income from DFLs divided by average occupied square feet and annualized for acquisitions for the year in which they occurred.
Biggest change(3) Represents the combined amount of rental and related revenues and resident fees and services. 40 Table of Contents Occupancy and Annual Rent Trends The following table summarizes occupancy and average annual rent trends for our consolidated properties for the years ended December 31 (average occupied square feet in thousands): 2024 2023 2022 Outpatient medical: Average occupancy percentage (1) 92 % 90 % 90 % Average annual rent per square foot (2) $ 36 $ 35 $ 33 Average occupied square feet 32,431 21,337 21,472 Lab: Average occupancy percentage (1) 96 % 98 % 98 % Average annual rent per square foot (2) $ 87 $ 82 $ 71 Average occupied square feet 9,404 10,334 10,610 CCRC: Average occupancy percentage (1) 85 % 84 % 82 % Average annual rent per occupied unit (3) $ 94,103 $ 88,524 $ 84,664 Average occupied units 6,041 5,960 5,926 _______________________________________ (1) Average occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(2) The most recent month’s (or subsequent month’s, if acquired in the most recent month) base rent, including additional rent floors, annualized for 12 months. Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues). 44 Table of Contents ITEM 3.
(2) The most recent month’s (or subsequent month’s, if acquired in the most recent month) base rent, including additional rent floors, annualized for 12 months. Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues). 41 Table of Contents ITEM 3.
In evaluating potential investments, we consider a multitude of factors, including: • location, construction quality, age, condition, and design of the property; • geographic area, proximity to other healthcare facilities, type of property, and demographic profile, including new competitive supply; • whether the expected risk-adjusted return exceeds the incremental cost of capital; • whether the rent or operating income provides a competitive market return to our investors; • duration, rental rates, tenant and operator quality, and other attributes of in-place leases, including master lease structures and coverage; • current and anticipated cash flow and its adequacy to meet our operational needs; • availability of security such as letters of credit, security deposits, and guarantees; • potential for capital appreciation; • expertise and reputation of the tenant or operator; • occupancy and demand for similar healthcare facilities in the same or nearby communities; • availability of qualified operators or property managers and whether we can manage the property; • potential for environmentally sustainable and/or resilient features of the property; • potential alternative uses of the facilities; • the regulatory and reimbursement environment in which the properties operate; • tax laws related to REITs; • prospects for liquidity through financing or refinancing; and • our access to and cost of capital. 42 Table of Contents Properties The following table summarizes our consolidated property investments as of and for the year ended December 31, 2023 (square feet and dollars in thousands): Facility Location Number of Facilities Capacity (1) Gross Asset Value (2) Real Estate Revenues (3) Operating Expenses (4) Lab: (Sq.
In evaluating potential investments, we consider a multitude of factors, including: • location, construction quality, age, condition, and design of the property; • geographic area, proximity to other healthcare facilities, type of property, and demographic profile, including new competitive supply; • whether the expected risk-adjusted return exceeds the incremental cost of capital; • whether the rent or operating income provides a competitive market return to our investors; • duration, rental rates, tenant and operator quality, and other attributes of in-place leases, including master lease structures and coverage; • current and anticipated cash flow and its adequacy to meet our operational needs; • availability of security such as letters of credit, security deposits, and guarantees; • potential for capital appreciation; • expertise and reputation of the tenant or operator; • occupancy and demand for similar healthcare facilities in the same or nearby communities; • availability of qualified operators or property managers and whether we can manage the property; • potential for environmentally sustainable and/or resilient features of the property; • potential alternative uses of the facilities; • the regulatory and reimbursement environment in which the properties operate; • tax laws related to REITs; • prospects for liquidity through financing or refinancing; and • our access to and cost of capital. 39 Table of Contents Properties The following table summarizes our consolidated property investments as of and for the year ended December 31, 2024 (square feet and dollars in thousands): Facility Location Number of Facilities Capacity (1) Gross Asset Value (2) Real Estate Revenues (3) Operating Expenses Outpatient medical: (Sq.
Legal Proceedings See the “Legal Proceedings” section of Note 11 to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 3. ITEM 4. Mine Safety Disclosures None. 45 Table of Contents PART II
Legal Proceedings See the “Legal Proceedings” section of Note 12 to the Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 3. ITEM 4. Mine Safety Disclosures None. 42 Table of Contents PART II
(2) Represents gross real estate which includes the carrying amount of real estate after adding back accumulated depreciation and amortization. Excludes gross real estate of $123 million related to two lab buildings and one outpatient medical building classified as held for sale. (3) Represents the combined amount of rental and related revenues, resident fees and services, and government grant income.
(2) Represents gross real estate which includes the carrying amount of real estate after adding back accumulated depreciation and amortization. Excludes gross real estate of $11 million related to one outpatient medical building classified as held for sale .
ITEM 2. Properties Our strategy is to invest in and manage real estate focused on healthcare discovery and delivery.
ITEM 2. Properties Our strategy is to own, operate, and develop high-quality real estate focused on healthcare discovery and delivery.
Average annual rent excludes termination fees and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and DFL non-cash interest). (2) During the first quarter of 2022, we sold our remaining hospital under a DFL.
(2) Presented as a ratio of revenues comprised of rental and related revenues divided by average occupied square feet and annualized for acquisitions for the year in which they occurred. Average annual rent excludes termination fees and non-cash revenue adjustments (i.e., straight-line rents and amortization of market lease intangibles).
Removed
Ft.) California 115 8,094 $ 5,869,665 $ 629,657 $ (157,795) Massachusetts 19 2,613 2,795,913 240,029 (70,259) Other (1 State) 4 240 54,236 8,640 (1,576) Total lab 138 10,947 $ 8,719,814 $ 878,326 $ (229,630) Outpatient medical: (Sq.
Added
Ft.) Texas 103 9,333 $ 2,103,743 $ 295,840 $ (99,990) Florida 39 2,206 584,475 72,769 (25,323) Pennsylvania 15 1,613 456,194 42,747 (17,205) Tennessee 25 2,348 441,428 71,504 (23,695) Colorado 23 1,443 425,430 54,562 (32,255) Georgia 14 1,418 398,723 43,848 (14,281) Other (36 States) 288 17,682 4,646,540 624,474 (193,244) Total outpatient medical 507 36,043 $ 9,056,533 $ 1,205,744 $ (405,993) Lab: (Sq.
Removed
Ft.) Texas 75 7,638 $ 1,549,757 $ 220,805 $ (75,159) Pennsylvania 4 1,270 367,434 34,321 (15,603) Colorado 19 1,311 362,822 47,697 (18,366) California 15 862 355,026 40,057 (17,206) South Carolina 18 1,105 340,073 27,851 (5,315) Florida 25 1,438 309,246 41,609 (14,994) Other (29 States) 139 9,977 2,586,334 341,139 (116,489) Total outpatient medical 295 23,601 $ 5,870,692 $ 753,479 $ (263,132) CCRC: (Units) Florida 9 4,783 $ 1,398,609 $ 343,971 $ (275,781) Other (5 States) 6 2,314 631,199 183,630 (137,691) Total CCRC 15 7,097 $ 2,029,808 $ 527,601 $ (413,472) Total properties 448 $ 16,620,314 $ 2,159,406 $ (906,234) _______________________________________ (1) Excludes capacity associated with developments.
Added
Ft.) California 106 7,862 $ 5,919,953 $ 632,860 $ (162,212) Massachusetts 19 2,613 2,838,593 241,376 (73,290) Other (1 State) 4 240 54,239 7,216 (4,118) Total lab 129 10,715 $ 8,812,785 $ 881,452 $ (239,620) CCRC: (Units) Florida 9 4,774 $ 1,395,819 $ 367,604 $ (282,500) Other (5 States) 6 2,286 649,297 200,871 (146,748) Total CCRC 15 7,060 $ 2,045,116 $ 568,475 $ (429,248) Total properties 651 $ 19,914,434 $ 2,655,671 $ (1,074,861) _______________________________________ (1) Excludes capacity associated with developments.
Removed
Tenant Lease Expirations The following table shows tenant lease expirations for the next 10 years and thereafter at our consolidated properties, assuming that none of the tenants exercise any of their renewal or purchase options, and excludes properties in our CCRC segment and assets held for sale as of December 31, 2023 (dollars and square feet in thousands): Expiration Year Segment Total 2024 (1) 2025 2026 2027 2028 2029 2030 2031 2032 2033 Thereafter Lab: Square feet 10,303 537 1,065 618 1,407 681 806 1,334 1,393 866 531 1,065 Base rent (2) $ 608,770 $ 36,709 $ 50,557 $ 30,694 $ 66,918 $ 36,728 $ 50,104 $ 94,051 $ 84,727 $ 55,504 $ 36,642 $ 66,136 % of segment base rent 100 6 8 5 11 6 8 16 14 9 6 11 Outpatient medical: Square feet 21,414 2,848 2,830 2,049 1,870 2,539 1,419 1,310 1,637 1,357 918 2,637 Base rent (2) $ 546,589 $ 85,359 $ 68,994 $ 57,376 $ 51,438 $ 56,996 $ 38,197 $ 36,069 $ 40,803 $ 28,096 $ 27,376 $ 55,885 % of segment base rent 100 16 13 11 9 10 7 7 7 5 5 10 Total: Base rent (2) $ 1,155,359 $ 122,068 $ 119,551 $ 88,070 $ 118,356 $ 93,724 $ 88,301 $ 130,120 $ 125,530 $ 83,600 $ 64,018 $ 122,021 % of total base rent 100 11 10 8 10 8 8 11 11 7 5 11 _______________________________________ (1) Includes month-to-month leases.
Added
Tenant Lease Expirations The following table shows tenant lease expirations for the next 10 years and thereafter at our consolidated properties, assuming that none of the tenants exercise any of their renewal or purchase options, and excludes properties in our CCRC segment and assets held for sale as of December 31, 2024 (dollars and square feet in thousands): Expiration Year Segment Total 2025 (1) 2026 2027 2028 2029 2030 2031 2032 2033 2034 Thereafter Outpatient medical: Square feet 33,278 3,788 4,090 3,066 3,930 3,177 2,237 2,590 2,710 1,668 1,494 4,528 Base rent (2) $ 873,741 $ 104,756 $ 116,522 $ 85,332 $ 96,518 $ 92,462 $ 60,431 $ 65,266 $ 63,952 $ 47,918 $ 38,004 $ 102,580 % of segment base rent 100 12 13 10 11 11 7 7 7 6 4 12 Lab: Square feet 9,167 675 401 1,030 694 844 1,143 1,050 969 594 693 1,074 Base rent (2) $ 572,298 $ 35,987 $ 28,059 $ 55,900 $ 37,850 $ 53,436 $ 79,287 $ 70,497 $ 63,067 $ 47,263 $ 52,233 $ 48,719 % of segment base rent 100 6 5 10 7 9 14 12 11 8 9 9 Total: Base rent (2) $ 1,446,039 $ 140,743 $ 144,581 $ 141,232 $ 134,368 $ 145,898 $ 139,718 $ 135,763 $ 127,019 $ 95,181 $ 90,237 $ 151,299 % of total base rent 100 10 10 10 9 10 10 9 9 7 6 10 _______________________________________ (1) Includes month-to-month leases.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+1 added−2 removed4 unchanged
Biggest changePeriod Covered Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1-31, 2023 — $ — — $ 444,018,701 November 1-30, 2023 — — — 444,018,701 December 1-31, 2023 — — — 444,018,701 — $ — — $ 444,018,701 _______________________________________ (1) On August 1, 2022, our Board of Directors approved a share repurchase program under which we may acquire shares of our common stock in the open market up to an aggregate purchase price of $500 million (the “Share Repurchase Program”).
Biggest changePeriod Covered Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1-31, 2024 — $ — — $ 500,000,000 November 1-30, 2024 — — — 500,000,000 December 1-31, 2024 — — — 500,000,000 — $ — — $ 500,000,000 _______________________________________ (1) On July 24, 2024, our Board of Directors approved the 2024 Share Repurchase Program under which we may acquire shares of our common stock in the open market or other similar purchase techniques (including in compliance with the safe harbor provisions of Rule 10b-18 under the Exchange Act or pursuant to one or more plans adopted under Rule 10b5-1 promulgated under the Exchange Act), up to an aggregate purchase price of $500 million.
Purchases of common stock under the Share Repurchase Program may be exercised at our discretion with the timing and number of shares repurchased depending on a variety of factors, including price, corporate and regulatory requirements, and other corporate liquidity requirements and priorities.
Purchases of common stock under the 2024 Share Repurchase Program may be exercised at our discretion with the timing and number of shares repurchased depending on a variety of factors, including price, corporate and regulatory requirements, and other corporate liquidity requirements and priorities.
Total cumulative return is based on a $100 investment in Healthpeak common stock and in each of the indices at the close of trading on December 31, 2018 and assumes quarterly reinvestment of dividends before consideration of income taxes. Stockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns.
Total cumulative return is based on a $100 investment in Healthpeak common stock and in each of the indices at the close of trading on December 31, 2019 and assumes quarterly reinvestment of dividends before consideration of income taxes. Stockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns.
Code Section 1061 is generally applicable to direct and indirect holders of “applicable partnership interests.” For the year ended December 31, 2023, the “One Year Amounts” and “Three Year Amounts” are each zero, since all capital gains relate to Code Section 1231 gains.
Code Section 1061 is generally applicable to direct and indirect holders of “applicable partnership interests.” For the years ended December 31, 2024 and 2023, the “One Year Amounts” and “Three Year Amounts” are each zero, since all capital gains relate to Code Section 1231 gains.
(2) For the years ended December 31, 2023, 2022, and 2021, the amount includes $0.036256, $0.017760, and $0.379960, respectively, of unrecaptured Code Section 1250 gain. Pursuant to Treasury Regulation Section 1.1061-6(c), we are disclosing additional information related to the capital gain dividends for purposes of Section 1061 of the Code.
(2) For the years ended December 31, 2024, 2023, and 2022, the amount includes $0.215960, $0.036256, and $0.017760, respectively, of unrecaptured Code Section 1250 gain. Pursuant to Treasury Regulation Section 1.1061-6(c), we are disclosing additional information related to the capital gain dividends for purposes of Section 1061 of the Code.
The common stock dividend will be paid on February 26, 2024 to stockholders of record as of the close of business on February 14, 2024. 46 Table of Contents Issuer Purchases of Equity Securities The following table sets forth information with respect to purchases of our common stock made by or on our behalf during the three months ended December 31, 2023.
The common stock cash dividend will be paid on February 26, 2025 to stockholders of record as of the close of business on February 14, 2025. 43 Table of Contents Issuer Purchases of Equity Securities The following table sets forth information with respect to purchases of our common stock made by or on our behalf during the three months ended December 31, 2024.
For the year ended December 31, 2022, all $0.872948 of ordinary dividends qualified as business income for purposes of Code Section 199A. For the year ended December 31, 2021, the amount includes $0.137064 of ordinary dividends qualified as business income for purposes of Code Section 199A and $0.015272 of qualified dividend income for purposes of Code Section 1(h)(11).
For the year ended December 31, 2023, the amount includes $0.882312 of ordinary dividends qualified as business income for purposes of Code Section 199A and $0.027380 of qualified dividend income for purposes of Code Section 1(h)(11). For the year ended December 31, 2022, all $0.872948 of ordinary dividends qualified as business income for purposes of Code Section 199A.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange under the symbol “PEAK.” As of February 5, 2024, we had 6,797 stockholders of record, and there were 283,417 beneficial holders of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange under the symbol “DOC.” As of January 29, 2025, we had 6,645 stockholders of record, and there were 447,008 beneficial holders of our common stock.
The following table shows the characterization of our annual common stock distributions per share: Year Ended December 31, 2023 2022 2021 Ordinary dividends (1) $ 0.909692 $ 0.872948 $ 0.152336 Capital gains (2)(3) 0.116992 0.183208 0.379960 Nondividend distributions 0.173316 0.143844 0.667704 $ 1.200000 $ 1.200000 $ 1.200000 ______________________________________ (1) For the year ended December 31, 2023, the amount includes $0.882312 of ordinary dividends qualified as business income for purposes of Code Section 199A and $0.027380 of qualified dividend income for purposes of Code Section 1(h)(11).
The following table shows the characterization of our annual common stock distributions per share: Year Ended December 31, 2024 2023 2022 Ordinary dividends (1) $ 0.720440 $ 0.909692 $ 0.872948 Capital gains (2)(3) 0.295060 0.116992 0.183208 Nondividend distributions 0.184500 0.173316 0.143844 $ 1.200000 $ 1.200000 $ 1.200000 ______________________________________ (1) For the year ended December 31, 2024, all $0.720440 of ordinary dividends qualified as business income for purposes of Code Section 199A.
(3) For the years ended December 31, 2023, 2022, and 2021, 100%, 10.3292%, and 100%, respectively, of the capital gain distributions represent gains from dispositions of U.S. real property interests pursuant to Code Section 897 for foreign shareholders. On January 31, 2024, we announced that our Board of Directors declared a quarterly common stock cash dividend of $0.30 per share.
(3) For the years ended December 31, 2024, 2023, and 2022, 100%, 100%, and 10.3292%, respectively, of the capital gain distributions represent gains from dispositions of U.S. real property interests pursuant to Code Section 897 for foreign shareholders.
The Share Repurchase Program expires in August 2024 and may be suspended or terminated at any time without prior notice. During the year ended December 31, 2022, we repurchased 2.1 million shares of our common stock at a weighted average price of $27.16 per share.
The 2024 Share Repurchase Program expires in July 2026 and may be suspended or terminated at any time without prior notice. As of December 31, 2024, no shares have been repurchased under the 2024 Share Repurchase Program.
Amounts do not include the shares of our common stock withheld under our equity incentive plans to offset tax withholding obligations as discussed in footnote 1. 47 Table of Contents Performance Graph The graph and table below compare the cumulative total return of Healthpeak, the S&P 500 Index, and the Equity REIT Index of Nareit, from January 1, 2019 to December 31, 2023.
Therefore, at December 31, 2024, $500 million of the Company’s common stock remained available for repurchase under the 2024 Share Repurchase Program. 44 Table of Contents Performance Graph The graph and table below compare the cumulative total return of Healthpeak, the S&P 500 Index, and the Equity REIT Index of Nareit, from January 1, 2020 to December 31, 2024.
RATE OF RETURN TREND COMPARISON JANUARY 1, 2019–DECEMBER 31, 2023 (JANUARY 1, 2019 = $100) Performance Graph Total Stockholder Return December 31, 2019 2020 2021 2022 2023 FTSE Nareit Equity REIT Index $ 128.66 $ 122.07 $ 172.49 $ 129.45 $ 144.16 S&P 500 131.47 155.65 200.29 163.98 207.04 Healthpeak Properties, Inc. 129.11 119.21 147.52 106.94 89.40 48 Table of Contents ITEM 6. [Reserved]
RATE OF RETURN TREND COMPARISON JANUARY 1, 2020–DECEMBER 31, 2024 (JANUARY 1, 2020 = $100) Performance Graph Total Stockholder Return December 31, 2020 2021 2022 2023 2024 FTSE Nareit Equity REIT Index $ 94.88 $ 134.06 $ 100.62 $ 112.04 $ 117.56 S&P 500 118.39 152.34 124.73 157.48 196.85 Healthpeak Properties, Inc. 92.33 114.25 82.83 69.24 75.37 45 Table of Contents ITEM 6. [Reserved]
Removed
For the year ended December 31, 2021, the “One Year Amounts” and “Three Year Amounts” are each zero, since all capital gains relate to Code Section 1231 gains.
Added
On February 3, 2025, our Board of Directors declared a quarterly common stock cash dividend of $0.305 per share, reflecting an increase from $0.30 to $0.305 per share.
Removed
During the year ended December 31, 2023, there were no repurchases; therefore, at December 31, 2023, $444 million of our common stock remained available for repurchase under the Share Repurchase Program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

130 edited+55 added−35 removed43 unchanged
Biggest changeThe decrease in net income (loss) applicable to common shares was partially offset by: • an increase in NOI generated from our lab and outpatient medical segments related to: (i) development and redevelopment projects placed in service during 2022 and 2023, (ii) new leasing activity during 2022 and 2023 (including the impact to straight-line rents), and (iii) 2022 acquisitions of real estate; • an increase in gains on sale of depreciable real estate related to lab and outpatient medical building sales during 2023 as compared to 2022; • a decrease in general and administrative expenses, primarily as a result of: (i) severance-related charges associated with the departures of our former Chief Executive Officer and our former Chief Legal Officer and General Counsel in the fourth quarter of 2022 and (ii) charges incurred in connection with the downsizing of our corporate headquarters in Denver, Colorado in the fourth quarter of 2022; • a decrease in depreciation related to the deconsolidation of seven previously consolidated lab buildings in South San Francisco, California during the third quarter of 2022; • a decrease in other expenses for tenant relocation and other costs associated with the demolition of an outpatient medical building, which were incurred in the first quarter of 2022; • an increase in income tax benefit primarily as a result of a $14 million tax benefit recognized in connection with the reversal of a deferred tax asset valuation allowance during the fourth quarter of 2023; • a decrease in loan loss reserves primarily as a result of principal repayments on seller financing; • an increase in equity income from unconsolidated joint ventures; and • a decrease in casualty-related charges from a hurricane during the third quarter of 2022. 54 Table of Contents Nareit FFO increased primarily as a result of the aforementioned events impacting net income (loss) applicable to common shares, except for the following, which are excluded from Nareit FFO: • gain upon change of control; • gain on sales of depreciable real estate; and • depreciation and amortization expense.
Biggest changeThe decrease in net income (loss) applicable to common shares was partially offset by: • an increase in Adjusted NOI generated from our lab and outpatient medical segments related to: (i) assets acquired as part of the Merger, (ii) development and redevelopment projects placed in service during 2023 and 2024, and (iii) new leasing activity during 2023 and 2024 (including the impact to straight-line rents); • an increase in gain on sales of depreciable real estate sales during 2024 as compared to 2023; • a gain upon change of control related to the sale of a 65% interest in two lab buildings in San Diego, California to a third-party in January 2024; and • an increase in interest income related to mezzanine and secured loans receivable acquired as part of the Merger and seller financing provided in connection with the disposition of 61 outpatient medical buildings in 2024.
Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the REIT industry to address this issue. Nareit FFO .
Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term Nareit FFO was designed by the REIT industry to address this issue.
AFFO does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, and (iv) restructuring and severance-related charges.
AFFO does not represent cash generated from operating activities determined in accordance with GAAP and is not indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, and (iv) restructuring and severance-related charges.
Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as Adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to Nareit FFO and FFO as Adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below. Adjusted FFO (“AFFO”).
Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as Adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to FFO as Adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below. Adjusted FFO (“AFFO”).
Shelf Registration In February 2024, the Company and Healthpeak OP jointly filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires on February 8, 2027 and at or prior to such time, we expect to file a new shelf registration statement.
Shelf Registration On February 8, 2024, the Company and Healthpeak OP jointly filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires on February 8, 2027 and at or prior to such time, we expect to file a new shelf registration statement.
Purchases of common stock under the Share Repurchase Program may be exercised at our discretion with the timing and number of shares repurchased depending on a variety of factors, including price, corporate and regulatory requirements, and other corporate liquidity requirements and priorities.
Purchases of common stock under the 2024 Share Repurchase Program may be exercised at our discretion with the timing and number of shares repurchased depending on a variety of factors, including price, corporate and regulatory requirements, and other corporate liquidity requirements and priorities.
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale. (5) Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale. (5) Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
Other impairments (recoveries) and other losses (gains) include interest income associated with early and partial repayments of loans receivable and other losses or gains associated with non-depreciable assets including goodwill, DFLs, undeveloped land parcels, and loans receivable.
Other impairments (recoveries) and other losses (gains) include interest income associated with early and partial repayments of loans receivable and other losses or gains associated with non-depreciable assets including goodwill, undeveloped land parcels, and loans receivable.
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale. (5) Represents average occupied units as reported by the operators for the twelve-month period.
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale. (5) Represents average occupied units as reported by the operators for the twelve-month period.
Financing Cash Flows Our cash flows from financing activities are generally impacted by issuances of equity, borrowings and repayments under our bank line of credit and commercial paper program, senior unsecured notes, term loans, and mortgage debt, net of dividends paid to common shareholders.
Financing Cash Flows Our cash flows from financing activities are generally impacted by issuances and/or repurchases of equity, borrowings and repayments under our bank line of credit and commercial paper program, senior unsecured notes, term loans, and mortgage debt, net of dividends paid to common shareholders.
Accordingly, during the year ended December 31, 2023, we recognized the reversal of a portion of the associated valuation allowance and recognized a corresponding income tax benefit. See Note 16 to the Consolidated Financial Statements for additional information.
Accordingly, during the year ended December 31, 2023, we recognized the reversal of a portion of the associated valuation allowance and recognized a corresponding income tax benefit. See Note 17 to the Consolidated Financial Statements for additional information.
During the year ended December 31, 2023 , we did not issue any shares of our common stock under any ATM program. At December 31, 2023, $1.5 billion of our common stock remained available for sale under the ATM Program.
During the year ended December 31, 2024 , we did not issue any shares of our common stock under any ATM program. At December 31, 2024, $1.5 billion of our common stock remained available for sale under the ATM Program.
This section generally discusses the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022. For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7.
This section generally discusses the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7.
The years ended December 31, 2023, 2022, and 2021 include reserves and (recoveries) for expected loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.
The years ended December 31, 2024, 2023, and 2022 include reserves and (recoveries) for expected loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.
Refer to Note 4 to the Consolidated Financial Statements for additional information regarding dispositions of real estate and the associated gain (loss) on sales recognized.
Refer to Note 5 to the Consolidated Financial Statements for additional information regarding dispositions of real estate and the associated gain (loss) on sales recognized.
(2) The year ended December 31, 2022 includes a gain upon change of control related to the sale of a 30% interest to a sovereign wealth fund and deconsolidation of seven previously consolidated lab buildings in South San Francisco, California. The gain upon change of control is included in other income (expense), net in the Consolidated Statements of Operations.
The year ended December 31, 2022 includes a gain upon change of control related to the sale of a 30% interest to a sovereign wealth fund and deconsolidation of seven previously consolidated lab buildings in South San Francisco, California. Gains upon change of control are included in other income (expense), net in the Consolidated Statements of Operations.
The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At December 31, 2023, the outstanding DownREIT units were convertible into approximately 7 million shares of our common stock.
The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock (subject to certain adjustments, such as stock splits and reclassifications). At December 31, 2024, the outstanding DownREIT units were convertible into approximately 14 million shares of our common stock.
Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale. (5) Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, DFL non-cash interest, and deferred revenues).
(6) Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale. (7) Average annual total revenues does not include non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
NOI and Adjusted NOI are calculated as NOI and Adjusted NOI from consolidated properties, plus our share of NOI and Adjusted NOI from unconsolidated joint ventures (calculated by applying our actual ownership percentage for the period), less noncontrolling interests’ share of NOI and Adjusted NOI from consolidated joint ventures (calculated by applying our actual ownership percentage for the period).
Adjusted NOI is calculated as Adjusted NOI from consolidated properties, plus our share of Adjusted NOI from unconsolidated joint ventures (calculated by applying our actual ownership percentage for the period), less noncontrolling interests’ share of Adjusted NOI from consolidated joint ventures (calculated by applying our actual ownership percentage for the period).
See Note 12 to the Consolidated Financial Statements for additional information about our ATM Program. 64 Table of Contents Noncontrolling Interests Healthpeak OP . Immediately following the Reorganization, Healthpeak Properties, Inc. was the initial sole member and 100% owner of Healthpeak OP.
See Note 13 to the Consolidated Financial Statements for additional information about our ATM Program. 61 Table of Contents Noncontrolling Interests Healthpeak OP . Immediately following the Reorganization, Healthpeak Properties, Inc. was the initial sole member and 100% owner of Healthpeak OP.
(7) In conjunction with classifying the assets related to the Callan Ridge JV (see Note 8 to the Consolidated Financial Statements) as held for sale as of December 31, 2023, we concluded it was more likely than not that we would realize the future value of certain deferred tax assets generated by the net operating losses of taxable REIT subsidiaries.
During the year ended December 31, 2023, in conjunction with classifying the assets related to the Callan Ridge JV (see Note 9 to the Consolidated Financial Statements) as held for sale as of December 31, 2023, we concluded it was more likely than not that we would realize the future value of certain deferred tax assets generated by the net operating losses of taxable REIT subsidiaries.
FFO, as defined by the National Association of Real Estate Investment Trusts (“Nareit”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate, plus real estate and other real estate-related depreciation and amortization, and adjustments to compute our share of Nareit FFO and FFO as Adjusted (see below) from joint ventures.
Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“Nareit”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate, plus real estate-related depreciation and amortization, and adjustments to compute our share of Nareit FFO from joint ventures.
We use NOI and Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Same-Store (“SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to NOI and Adjusted NOI.
We use Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Merger-Combined Same-Store (“Merger-Combined SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to Adjusted NOI.
Our two senior unsecured delayed draw term loans with an aggregate principal amount of $500 million (the “Term Loan Facilities”) and our Revolving Facility accrue interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin that depends on the credit ratings of our senior unsecured long-term debt.
Our 2029 Term Loan, our two senior unsecured delayed draw term loans with an aggregate principal amount of $500 million (the “2027 Term Loans”), our 2028 Term Loan, and our Revolving Facility accrue interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin that depends on the credit ratings of our senior unsecured long-term debt.
The obligations of Healthpeak OP to pay principal, premiums, if any, and interest on such senior unsecured notes are guaranteed on a full and unconditional basis by the Company.
The obligations of Healthpeak OP to pay principal, premiums, if any, and interest on such senior unsecured notes are guaranteed on a full and unconditional basis by the Company, DOC DR Holdco, and DOC DR OP Sub.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements. Non-GAAP Financial Measures Net Operating Income NOI and Adjusted NOI are non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measures used to evaluate the operating performance of real estate.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements. Non-GAAP Financial Measures Adjusted NOI Adjusted NOI is a non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measure used to evaluate the operating performance of real estate.
AFFO is defined as FFO as Adjusted after excluding the impact of the following: (i) stock-based compensation amortization expense, (ii) amortization of deferred financing costs, net, (iii) straight-line rents, (iv) deferred income taxes, (v) amortization of above (below) market lease intangibles, net, and (vi) other AFFO adjustments, which include: (a) non-cash interest related to DFLs and lease incentive amortization (reduction of straight-line rents), (b) actuarial reserves for insurance claims that have been incurred but not reported, and (c) amortization of deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents.
AFFO is defined as FFO as Adjusted after excluding the impact of the following: (i) stock-based compensation amortization expense, (ii) amortization of deferred financing costs and debt discounts (premiums), (iii) straight-line rents, (iv) deferred income taxes, (v) amortization of above (below) market lease intangibles, net, (vi) non-refundable entrance fees collected in excess of (less than) the related amortization, and (vii) other AFFO adjustments, which include: (a) lease incentive amortization (reduction of straight-line rents), (b) actuarial reserves for insurance claims that have been incurred but not reported, and (c) amortization of deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents.
We also pay a facility fee on the entire commitment under our Revolving Facility that depends upon our credit ratings. As of February 7, 2024, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global, and short-term credit ratings of P-2 from Moody’s and A-2 from S&P Global.
We also pay a facility fee on the entire commitment under our Revolving Facility that depends upon our credit ratings. As of January 31, 2025, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global, and short-term credit ratings of P-2 from Moody’s and A-2 from S&P Global.
From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain.
In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain.
Share Repurchase Program On August 1, 2022, our Board of Directors approved the Share Repurchase Program under which we may acquire shares of our common stock in the open market up to an aggregate purchase price of $500 million.
Share Repurchase Programs On August 1, 2022, our Board of Directors approved a share repurchase program under which we could acquire shares of our common stock in the open market up to an aggregate purchase price of $500 million (the “2022 Share Repurchase Program”).
Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes NOI and Adjusted NOI are important supplemental measures because they provide relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and present them on an unlevered basis.
Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presents them on an unlevered basis.
We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our AFFO to remove the third party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods (reported in “other AFFO adjustments”).
We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our FFO as Adjusted to remove the third-party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods.
As permitted under Rule 13-01 of Regulation S-X, we have excluded the summarized financial information for the operating subsidiary because the Company and Healthpeak OP have no material assets, liabilities, or operations other than debt financing activities and their investments in non-guarantor subsidiaries, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
As permitted under Rule 13-01 of Regulation S-X, we have excluded the summarized financial information for the Company, Healthpeak OP, DOC DR Holdco, and DOC DR OP because the Company, Healthpeak OP, DOC DR Holdco, and DOC DR OP have no material assets, liabilities, or operations other than the debt financing activities described in the first paragraph of Note 11 to the Consolidated Financial Statements and their investments in non-guarantor subsidiaries, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
Our tenants and operators have also experienced increased costs, liquidity constraints, and financing difficulties due to the foregoing macroeconomic and market conditions, which could cause them to be unable or unwilling to make payments or perform their obligations when due.
To the extent our tenants and/or operators have also experienced increased costs, liquidity constraints, and financing difficulties due to the foregoing macroeconomic and market conditions, they may be unable or unwilling to make payments or perform their obligations when due.
A property is removed from Same-Store when it is classified as held for sale, sold, placed into redevelopment, experiences a casualty event that significantly impacts operations, a change in reporting structure or operator transition has been agreed to, or a significant tenant relocates from a Same-Store property to a non Same-Store property and that change results in a corresponding increase in revenue.
A property is removed from Merger-Combined Same-Store when it is classified as held for sale, sold, placed into redevelopment, experiences a casualty event that significantly impacts operations, or a significant tenant relocates from a Merger-Combined Same-Store property to a Merger-Combined non Same-Store property and that change results in a corresponding increase in revenue.
At December 31, 2023, our fixed rate debt and variable rate debt had weighted average interest rates of 3.70% and 5.72%, respectively. At December 31, 2022, our fixed rate debt and variable rate debt had weighted average interest rates of 3.46% and 4.91%, respectively.
At December 31, 2023, our fixed rate debt and variable rate debt had weighted average effective interest rates of 3.70% and 5.72%, respectively.
A downgrade in credit ratings by Moody’s or S&P Global may have a negative impact on the interest rates of our Revolving Facility and Term Loan Facilities and facility fees for our Revolving Facility, and may negatively impact the pricing of notes issued under our commercial paper program and senior unsecured notes.
A downgrade in credit ratings by Moody’s or S&P Global may have a negative impact on (i) the interest rates of our Revolving Facility, 2027 Term Loans, 2028 Term Loan, and 2029 Term Loan, (ii) facility fees for our Revolving Facility, and (iii) the pricing of notes issued under our commercial paper program and senior unsecured notes.
NOI is defined as real estate revenues (inclusive of rental and related revenues, resident fees and services, income from direct financing leases, and government grant income and exclusive of interest income), less property level operating expenses; NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 15 to the Consolidated Financial Statements.
Adjusted NOI represents real estate revenues (inclusive of rental and related revenues, resident fees and services, and government grant income and exclusive of interest income), less property level operating expenses; Adjusted NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 16 to the Consolidated Financial Statements.
For a more detailed discussion of our interest rate risk, see “Item 7A, Quantitative and Qualitative Disclosures About Market Risk” below. Supplemental Guarantor Information Healthpeak OP has issued the senior unsecured notes described in Note 10 to the Consolidated Financial Statements.
For a more detailed discussion of our interest rate risk, see “Item 7A, Quantitative and Qualitative Disclosures About Market Risk” below. 60 Table of Contents Supplemental Guarantor Information Healthpeak OP has issued the senior unsecured notes issued by Healthpeak prior to the consummation of the Merger as described in Note 11 to the Consolidated Financial Statements.
In January 2024, we entered into forward-starting interest rate swap instruments that are designated as cash flow hedges that will effectively establish a fixed interest rate for the 2024 Term Loan at a blended contractual rate of 4.5%.
In January 2024, we entered into forward-starting interest rate swap instruments that are designated as cash flow hedges that effectively established a fixed interest rate for the 2029 Term Loan at a blended effective interest rate of 4.66%.
Liquidity and Capital Resources We anticipate that our cash flow from operations, available cash balances, and cash from our various financing activities will be adequate for the next 12 months and for the foreseeable future for purposes of: (i) costs incurred to consummate the Mergers and the other transactions contemplated in the Merger Agreement; (ii) funding recurring operating expenses; (iii) meeting debt service requirements; and (iv) satisfying funding of distributions to our stockholders and non-controlling interest members.
Liquidity and Capital Resources We anticipate that our cash flows from operations, available cash balances, and cash from our various financing activities will be adequate for the next 12 months and for the foreseeable future for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying funding of distributions to our stockholders and non-controlling interest members.
Same-Store Same-Store NOI and Adjusted (Cash) NOI information allows us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our portfolio of properties, excluding properties within the other non-reportable segments.
This information allows our investors, analysts, and us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our portfolio of properties, excluding properties within the other non-reportable segments.
Adjusted NOI is calculated as NOI after eliminating the effects of straight-line rents, DFL non-cash interest, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.
Adjusted NOI eliminates the effects of straight-line rents, amortization of market lease intangibles, termination fees, actuarial reserves for insurance claims that have been incurred but not reported, and the impact of deferred community fee income and expense.
We include properties from our consolidated portfolio, as well as properties owned by our unconsolidated joint ventures in Same-Store NOI and Adjusted NOI (see NOI definition above for further discussion regarding our use of pro-rata share information and its limitations). Same-Store NOI and Adjusted NOI exclude government grant income under the CARES Act.
We include properties from our consolidated portfolio, as well as properties owned by our unconsolidated joint ventures in Adjusted NOI (see Adjusted NOI definition above for further discussion regarding our use of pro-rata share information and its limitations).
As of December 31, 2023, we had total debt of $6.9 billion, including borrowings under our Revolving Facility and commercial paper program, senior unsecured notes, term loans, and mortgage debt. Of our total debt, the total amount payable within twelve months is comprised of $7 million of mortgage debt.
As of December 31, 2024, we had total debt of $8.7 billion, including notes outstanding under our commercial paper program, senior unsecured notes, term loans, and mortgage debt. Of our total debt, the total amount payable within twelve months is comprised of $800 million of senior unsecured notes and $7 million of mortgage debt.
These estimates could affect our financial position or results of operations. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements.
If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions.
We classify the OP Units in permanent equity because we may elect, in our sole discretion, to issue shares of our common stock to OP Unitholders who choose to redeem their OP Units rather than using cash. None of the outstanding OP Units met the criteria for redemption as of December 31, 2023. DownREITs.
We classify the OP Units in permanent equity because we may elect, in our sole discretion, to issue shares of our common stock to OP Unitholders who choose to redeem their OP Units rather than using cash. As of December 31, 2024, there were approximately 3 million OP Units outstanding, 76 thousand of which had met the criteria for redemption.
Termination fee income is included in rental and related revenues on the Consolidated Statements of Operations.
Termination fee income is included in rental and related revenues on the Consolidated Statements of Operations, but is excluded from FFO as Adjusted.
We anticipate satisfying these future needs using one or more of the following: • cash flow from operations; • sale of, or exchange of ownership interests in, properties or other investments; • borrowings under our Revolving Facility and commercial paper program; 60 Table of Contents • issuance of additional debt, including unsecured notes, term loans, and mortgage debt; and/or • issuance of common or preferred stock or its equivalent, including sales of common stock under the ATM Program (as defined below).
We anticipate satisfying these future needs using one or more of the following: • cash flows from operations; • sale of, or exchange of ownership interests in, properties or other investments; • borrowings under our Revolving Facility and commercial paper program; • issuance of additional debt, including unsecured notes, term loans, and mortgage debt; and/or • issuance of common or preferred stock or its equivalent, including sales of common stock under the ATM Program (as defined below). 57 Table of Contents Our ability to access the capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt.
Rising interest rates, high inflation, supply chain disruptions, ongoing geopolitical tensions, and increased volatility in public and private equity and fixed income markets have led to increased costs and limited the availability of capital.
Increased interest rates, ongoing geopolitical tensions, and volatility in public and private equity and fixed income markets have led to increased costs and limitations on the availability of capital.
Our share of NOI and Adjusted NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, our financial information presented in accordance with GAAP.
We utilize our share of Adjusted NOI in assessing our performance as we have various joint ventures that contribute to our performance. Our share of Adjusted NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, our financial information presented in accordance with GAAP.
In addition, increased interest rates have negatively affected our borrowing costs, the fair value of our fixed rate instruments. and real estate values generally, including our real estate.
In addition, increased interest rates have and could continue to adversely impact our borrowing costs, the fair value of our fixed rate instruments, transaction volume, and real estate values generally, including our real estate.
Accordingly, separate consolidated financial statements of Healthpeak OP have not been presented.
Accordingly, separate consolidated financial statements of Healthpeak OP, DOC DR Holdco, and DOC DR OP Sub have not been presented.
Development and Redevelopment Activities • During the year ended December 31, 2023, the following projects were placed in service: (i) portions of two lab development projects with aggregate costs of $233 million, (ii) one lab development project with total costs of $171 million, (iii) a portion of one lab redevelopment project with total costs of $43 million, (iv) four outpatient medical redevelopment projects with aggregate costs of $42 million, (v) a portion of one lab redevelopment building held in one of our unconsolidated South San Francisco JVs of which our share of total project costs was $32 million, (vi) one lab redevelopment building held in one of our unconsolidated South San Francisco JVs of which our share of total project costs was $15 million, (vii) one lab redevelopment project with total costs of $14 million, and (viii) one CCRC redevelopment project with total costs of $7 million.
Development and Redevelopment Activities • During the year ended December 31, 2024, the following projects were placed in service: (i) a portion of two lab development projects with total project costs of $83 million, (ii) two outpatient medical development projects with total project costs of $62 million, (iii) one outpatient medical development project held in a consolidated joint venture of which our share of total project costs was $22 million, (iv) one lab redevelopment building held in one of our unconsolidated South San Francisco JVs of which our share of total project costs was $15 million, (v) one lab redevelopment project with total project costs of $14 million, (vi) a portion of one lab redevelopment project with total project costs of $13 million, and (vii) a portion of one lab redevelopment building held in one of our unconsolidated South San Francisco JVs of which our share of total project costs was $9 million.
Our net cash provided by operating activities increased $56 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily as a result of: (i) developments and redevelopments placed in service during 2022 and 2023, (ii) annual rent increases, (iii) higher nonrefundable entrance fee collections, and (iv) new leasing and renewal activity.
Our net cash provided by operating activities increased $114 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily as a result of: (i) an increase in Adjusted NOI from properties acquired as part of the Merger, (ii) developments and redevelopments placed in service during 2023 and 2024, (iii) annual rent increases, and (iv) new leasing and renewal activity.
We have other non-reportable segments that are comprised primarily of: (i) an interest in our unconsolidated SWF SH JV and (ii) loans receivable. These non-reportable segments have been presented on an aggregate basis herein. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment.
The SWF SH JV and loans receivable are non-reportable segments that have been presented on a combined basis herein. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 8, 2023.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 9, 2024. The discussion below contains forward-looking statements that involve risks and uncertainties.
As of December 31, 2023, we had $142 million of variable rate mortgage debt and the $500 million Term Loan Facilities swapped to fixed rates through interest rate swap instruments. These interest rate swap instruments are designated as cash flow hedges.
As of December 31, 2024, we had the following swapped to fixed rates through interest rate swap instruments: (i) the $750 million 2029 Term Loan, (ii) the $500 million 2027 Term Loans, (iii) the $400 million 2028 Term Loan, and (iv) $142 million of variable rate mortgage debt. These interest rate swap instruments are designated as cash flow hedges.
See FFO for further disclosure regarding our use of pro rata share information and its limitations. We believe AFFO is an alternative run-rate earnings measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods, and (iii) results among REITs more meaningful.
We believe AFFO is an alternative run-rate performance measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods, and (iii) results among REITs more meaningful.
Equity At December 31, 2023, we had 547 million shares of common stock outstanding, equity totaled $6.9 billion, and our equity securities had a market value of $11.0 billion.
Equity At December 31, 2024, we had 699 million shares of common stock outstanding, equity totaled $9.1 billion, and our equity securities had a market value of $14.5 billion.
The following table sets forth changes in cash flows (in thousands): Year Ended December 31, 2023 2022 Change Net cash provided by (used in) operating activities $ 956,242 $ 900,261 $ 55,981 Net cash provided by (used in) investing activities (576,754) (876,343) 299,589 Net cash provided by (used in) financing activities (337,299) (116,532) (220,767) Operating Cash Flows Our cash flows from operations are dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors.
The following table sets forth changes in cash flows (in thousands): Year Ended December 31, 2024 2023 Change Net cash provided by (used in) operating activities $ 1,070,497 $ 956,242 $ 114,255 Net cash provided by (used in) investing activities (113,799) (576,754) 462,955 Net cash provided by (used in) financing activities (941,416) (337,299) (604,117) Operating Cash Flows Our cash flows from operations are dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors.
Same-Store Adjusted NOI also excludes amortization of deferred revenue from tenant-funded improvements and certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis. 51 Table of Contents Properties are included in Same-Store once they are stabilized for the full period in both comparison periods.
Merger-Combined Same-Store Adjusted NOI excludes government grant income under the CARES Act, amortization of deferred revenue from tenant-funded improvements, and certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis. 48 Table of Contents Properties are included in Merger-Combined Same-Store once they are fully operating for the entirety of the comparative periods presented.
More specifically, recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements (“AFFO capital expenditures”) excludes our share from unconsolidated joint ventures (reported in “other AFFO adjustments”). Adjustments for joint ventures are calculated to reflect our pro rata share of both our consolidated and unconsolidated joint ventures.
Also, AFFO is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements (“AFFO capital expenditures”). All adjustments are reflective of our pro rata share of both our consolidated and unconsolidated joint ventures (reported in “other AFFO adjustments”).
Our ground and other operating lease commitments represent our commitments as lessee under signed operating leases. As of December 31, 2023, we had total ground and other operating lease commitments of $542 million, $17 million of which are payable within twelve months. See Note 6 to the Consolidated Financial Statements for additional information. 61 Table of Contents Redeemable noncontrolling interests.
As of December 31, 2024, we had total ground and other operating lease commitments of $834 million, $22 million of which are payable within twelve months. See Note 7 to the Consolidated Financial Statements for additional information. Redeemable noncontrolling interests.
At December 31, 2023, non-managing members held an aggregate of approximately 5 million units in seven limited liability companies (“DownREITs”) for which we are the managing member.
At December 31, 2024, non-managing members held an aggregate of approximately 11 million units in eight limited liability companies for which we hold controlling interests and/or are the managing member.
Our net cash used in investing activities decreased $300 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily as a result of the following: (i) a reduction in acquisitions of real estate, (ii) a reduction in development and redevelopment of real estate, (iii) an increase in proceeds from the sales of real estate, (iv) an increase in proceeds from principal repayments on loans receivable and marketable debt securities, and (v) an increase in proceeds from insurance recoveries.
Our net cash used in investing activities decreased $463 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily as a result of the following: (i) an increase in proceeds from sales of real estate, (ii) a reduction in cash used for development and redevelopment of real estate, (iii) proceeds received from the Callan Ridge JV transaction, (iv) a reduction in investments in unconsolidated joint ventures, and (v) a reduction in cash used for acquisitions of real estate.
Noncontrolling interests’ share in continuing operations Noncontrolling interests’ share in continuing operations increased for the year ended December 31, 2023 primarily as a result of a gain on sale of an outpatient medical building in a consolidated joint venture that was sold during the second quarter of 2023.
Noncontrolling interests’ share in continuing operations Noncontrolling interests’ share in continuing operations decreased for the year ended December 31, 2024 primarily as a result of a gain on sale of an outpatient medical building in a consolidated joint venture in the first quarter of 2023, partially offset by increased income from consolidated joint ventures acquired as part of the Merger.
If our analysis indicates that the carrying value of the real estate assets is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the carrying value exceeds the fair value of the real estate assets. 67 Table of Contents Determining the fair value of real estate assets, including assets classified as held for sale, involves significant judgment and generally utilizes market capitalization rates, comparable market transactions, estimated per unit or per square foot prices, negotiations with prospective buyers, and forecasted cash flows (primarily lease revenue rates, expense rates, and growth rates).
Determining the fair value of real estate assets, including assets classified as held for sale, involves significant judgment and generally utilizes market capitalization rates, comparable market transactions, estimated per unit or per square foot prices, negotiations with prospective buyers, and forecasted cash flows (primarily lease revenue rates, expense rates, and growth rates).
Depreciation and amortization Depreciation and amortization expense increased for the year ended December 31, 2023 primarily as a result of development and redevelopment projects placed in service during 2022 and 2023, partially offset by: (i) assets placed into redevelopment in 2023, (ii) dispositions of real estate in 2022 and 2023, and (iii) lower depreciation related to the deconsolidation of seven previously consolidated lab buildings in South San Francisco, California during the third quarter of 2022.
Depreciation and amortization Depreciation and amortization expense increased for the year ended December 31, 2024 primarily as a result of: (i) assets acquired as part of the Merger and (ii) development and redevelopment projects placed in service during 2023 and 2024, partially offset by: (i) assets placed into development and redevelopment in 2023 and 2024 and (ii) dispositions of real estate in 2023 and 2024.
The securities described in the prospectus include future offerings of (i) the Company’s common stock, preferred stock, depositary shares, warrants, debt securities, and guarantees by the Company of debt securities issued by Healthpeak OP and/or by the Company’s existing and future subsidiaries, and (ii) Healthpeak OP’s debt securities and guarantees by Healthpeak OP of debt securities issued by the Company and/or by Healthpeak OP’s existing and future subsidiaries. 65 Table of Contents Non-GAAP Financial Measures Reconciliations The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Nareit FFO, FFO as Adjusted, and AFFO (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) applicable to common shares $ 304,284 $ 497,792 $ 502,271 Real estate related depreciation and amortization 749,901 710,569 684,286 Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures 24,800 27,691 17,085 Noncontrolling interests’ share of real estate related depreciation and amortization (18,654) (19,201) (19,367) Loss (gain) on sales of depreciable real estate, net (1) (86,463) (10,422) (605,311) Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures — 134 (6,737) Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net 11,546 12 5,555 Loss (gain) upon change of control, net (2) (234) (311,438) (1,042) Taxes associated with real estate dispositions — 29 2,666 Impairments (recoveries) of depreciable real estate, net — — 25,320 Nareit FFO applicable to common shares 985,180 895,166 604,726 Distributions on dilutive convertible units and other 9,394 9,407 6,162 Diluted Nareit FFO applicable to common shares $ 994,574 $ 904,573 $ 610,888 Impact of adjustments to Nareit FFO: Transaction and merger-related items (3) $ 13,835 $ 4,788 $ 7,044 Other impairments (recoveries) and other losses (gains), net (4) (3,850) 3,829 24,238 Restructuring and severance-related charges (5) 1,368 32,749 3,610 Loss (gain) on debt extinguishments — — 225,824 Casualty-related charges (recoveries), net (6) (4,033) 4,401 5,203 Recognition (reversal) of valuation allowance on deferred tax assets (7) (14,194) — — Total adjustments $ (6,874) $ 45,767 $ 265,919 FFO as Adjusted applicable to common shares $ 978,306 $ 940,933 $ 870,645 Distributions on dilutive convertible units and other 9,402 9,326 8,577 Diluted FFO as Adjusted applicable to common shares $ 987,708 $ 950,259 $ 879,222 FFO as Adjusted applicable to common shares $ 978,306 $ 940,933 $ 870,645 Stock-based compensation amortization expense 14,480 16,537 18,202 Amortization of deferred financing costs 11,916 10,881 9,216 Straight-line rents (8) (14,387) (49,183) (31,188) AFFO capital expenditures (113,596) (108,510) (111,480) Deferred income taxes (816) (4,096) (8,015) Amortization of above (below) market lease intangibles, net (25,791) (23,380) (17,978) Other AFFO adjustments (9,335) 520 (1,532) AFFO applicable to common shares 840,777 783,702 727,870 Distributions on dilutive convertible units and other 6,581 6,594 6,164 Diluted AFFO applicable to common shares $ 847,358 $ 790,296 $ 734,034 Refer to footnotes on the next page. 66 Table of Contents ________________________________ (1) This amount can be reconciled by combining the balances from the corresponding line of the Consolidated Statements of Operations and the detailed financial information for discontinued operations in Note 4 to the Consolidated Financial Statements.
The securities described in the prospectus include future offerings of: (i) the Company’s common stock, preferred stock, depositary shares, warrants, debt securities, and guarantees by the Company of debt securities issued by Healthpeak OP and/or by the Company’s existing and future subsidiaries, and (ii) Healthpeak OP’s debt securities and guarantees by Healthpeak OP of debt securities issued by the Company and/or by Healthpeak OP’s existing and future subsidiaries. 62 Table of Contents Non-GAAP Financial Measures Reconciliations The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Nareit FFO, FFO as Adjusted, and AFFO (in thousands): Year Ended December 31, 2024 2023 2022 Net income (loss) applicable to common shares $ 242,384 $ 304,284 $ 497,792 Real estate related depreciation and amortization 1,057,205 749,901 710,569 Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures 44,961 24,800 27,691 Noncontrolling interests’ share of real estate related depreciation and amortization (18,328) (18,654) (19,201) Loss (gain) on sales of depreciable real estate, net (178,695) (86,463) (10,422) Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures — — 134 Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net — 11,546 12 Loss (gain) upon change of control, net (1) (77,548) (234) (311,438) Taxes associated with real estate dispositions (2) 9,633 — 29 Impairments (recoveries) of depreciable real estate, net 13,118 — — Nareit FFO applicable to common shares 1,092,730 985,180 895,166 Distributions on dilutive convertible units and other 16,211 9,394 9,407 Diluted Nareit FFO applicable to common shares $ 1,108,941 $ 994,574 $ 904,573 Impact of adjustments to Nareit FFO: Transaction and merger-related items (3) $ 115,105 $ 13,835 $ 4,788 Other impairments (recoveries) and other losses (gains), net (4) 9,381 (3,850) 3,829 Restructuring and severance-related charges (5) — 1,368 32,749 Casualty-related charges (recoveries), net (6) 25,848 (4,033) 4,401 Recognition (reversal) of valuation allowance on deferred tax assets (7) (11,196) (14,194) — Total adjustments $ 139,138 $ (6,874) $ 45,767 FFO as Adjusted applicable to common shares $ 1,231,868 $ 978,306 $ 940,933 Distributions on dilutive convertible units and other 16,061 9,402 9,326 Diluted FFO as Adjusted applicable to common shares $ 1,247,929 $ 987,708 $ 950,259 FFO as Adjusted applicable to common shares $ 1,231,868 $ 978,306 $ 940,933 Stock-based compensation amortization expense 15,543 14,480 16,537 Amortization of deferred financing costs and debt discounts (premiums) 28,974 11,916 10,881 Straight-line rents (8) (41,276) (14,387) (49,183) AFFO capital expenditures (115,784) (113,596) (108,510) CCRC entrance fees (9) 53,697 43,453 22,095 Deferred income taxes 6,176 (816) (4,096) Amortization of above (below) market lease intangibles, net (30,755) (25,791) (23,380) Other AFFO adjustments (7,778) (9,335) 520 AFFO applicable to common shares 1,140,665 884,230 805,797 Distributions on dilutive convertible units and other 16,211 6,581 6,594 Diluted AFFO applicable to common shares (9) $ 1,156,876 $ 890,811 $ 812,391 Refer to footnotes on the next page. 63 Table of Contents ________________________________ (1) The year ended December 31, 2024 includes a gain upon change of control related to the sale of a 65% interest in two lab buildings in San Diego, California.
Equity income (loss) from unconsolidated joint ventures Equity income from unconsolidated joint ventures increased for the year ended December 31, 2023 primarily as a result of increased income from the South San Francisco JVs and the SWF SH JV.
Equity income (loss) from unconsolidated joint ventures Equity income from unconsolidated joint ventures decreased for the year ended December 31, 2024 primarily as a result of losses on unconsolidated joint ventures acquired as part of the Merger, partially offset by increased income from the South San Francisco JVs.
Our development and redevelopment commitments represent construction and other commitments for development and redevelopment projects in progress and includes certain allowances for Company-owned tenant improvements that we have provided as a lessor. As of December 31, 2023, we had $152 million of development and redevelopment commitments, $135 million of which we expect to spend within the next twelve months.
Development and redevelopment commitments. Our development and redevelopment commitments represent construction and other commitments for development and redevelopment projects in progress and includes certain allowances for Company-owned tenant improvements that we have provided as a lessor.
(6) Casualty-related charges (recoveries), net are recognized in other income (expense), net and equity income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations.
(6) During the year ended December 31, 2024, we incurred casualty-related charges associated with Hurricane Milton. Casualty-related charges (recoveries), net are recognized in other income (expense), net, equity income (loss) from unconsolidated joint ventures, and noncontrolling interests’ share in earnings in the Consolidated Statements of Operations.
Future interest payments associated with borrowings under our Revolving Facility, senior unsecured notes, term loans, and mortgage debt total $1.4 billion, $220 million of which are payable within twelve months.
Future interest payments associated with borrowings under our senior unsecured notes, term loans, and mortgage debt total $1.5 billion, $304 million of which are payable within twelve months. Future interest payments associated with commercial paper borrowings payable within the next twelve months total $7 million, assuming no change in interest rates and borrowings remain outstanding for the next twelve months.
Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.
We believe Nareit FFO applicable to common shares and diluted Nareit FFO applicable to common shares are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time.
Inflationary increases in expenses will generally be offset, in whole or in part, by the tenant expense reimbursements and contractual rent increases described above. 62 Table of Contents Cash Flow Summary The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
Cash Flow Summary The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
We compute Nareit FFO in accordance with the current Nareit definition; however, other REITs may report Nareit FFO differently or have a different interpretation of the current Nareit definition from ours. 52 Table of Contents FFO as Adjusted .
We compute Nareit FFO in accordance with the current Nareit definition; however, other REITs may report Nareit FFO differently or have a different interpretation of the current Nareit definition from ours. For a reconciliation of net income (loss) to Nareit FFO and other relevant disclosures, refer to “Non-GAAP Financial Measures Reconciliations” below. FFO as Adjusted.
(3) From our 2022 presentation of Same-Store, we added: (i) 25 stabilized acquisitions and (ii) 2 stabilized developments placed in service, and we removed: (i) 2 assets that were sold and (ii) 1 asset that was classified as held for sale. (4) Refer to “Non-GAAP Financial Measures” above for the definition of Same-Store.
(5) From our 2023 presentation of Same-Store, we added: (i) 290 properties acquired as part of the Merger, (ii) 8 stabilized developments placed in service, (iii) 5 stabilized redevelopments placed in service, and (iv) 4 stabilized acquisitions, and we removed: (i) 72 assets that were sold and (ii) 1 asset that was classified as held for sale.
(3) From our 2022 presentation of Same-Store, we added: (i) five stabilized acquisitions, (ii) three stabilized buildings that previously experienced a significant tenant relocation, (iii) two stabilized redevelopments placed in service, and (iv) one stabilized development placed in service, and we removed: (i) six buildings that were placed into redevelopment, (ii) one asset that was placed into land held for development, and (iii) one building that experienced a significant tenant relocation.
(3) From our 2023 presentation of Same-Store, we added: (i) 6 stabilized developments placed in service, (ii) 2 stabilized redevelopments placed in service, and (iii) 2 buildings that previously experienced a significant tenant relocation, and we removed: (i) 15 buildings that were placed into redevelopment and (ii) 7 assets that were sold.
The Merger Agreement Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of Physicians Realty Trust will be converted into the right to receive 0.674 shares of our common stock when the Mergers are consummated.
The Merger Pursuant to the terms set forth in the Merger Agreement, on the Closing Date, each outstanding share of Physicians Realty Trust (other than Physicians Realty Trust common shares that were canceled in accordance with the Merger Agreement) automatically converted into the right to receive 0.674 shares of our common stock.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed5 unchanged
Biggest changeAt December 31, 2023, $142 million of our variable rate mortgage debt and our $500 million Term Loan Facilities were swapped to fixed rates through interest rate swap instruments.
Biggest changeAt December 31, 2024, we had the following sw apped to fixed rates through interest rate swap instruments: (i) the $750 million 2029 Term Loan, (ii) the $500 million 2027 Term Loans, (iii) the $400 million 2028 Term Loan, and (iv) $142 million of variable rate mortgage debt.
Our remaining variable rate debt at December 31, 2023 was comprised of borrowings under our commercial paper program and certain of our mortgage debt. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing.
Our remaining variable rate debt at December 31, 2024 was comprised of borrowings under our commercial paper program and certain of our mortgage debt. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt and assets until their maturity or earlier prepayment and refinancing.
Derivatives are recorded on the Consolidated Balance Sheets at fair value (see Note 21 to the Consolidated Financial Statements). To illustrate the effect of movements in the interest rate markets, we performed a market sensitivity analysis on our hedging instruments.
Derivatives are recorded on the Consolidated Balance Sheets at fair value (see Note 22 to the Consolidated Financial Statements). To illustrate the effect of movements in the interest rate markets, we performed a market sensitivity analysis on our hedging instruments.
The interest rate swap instruments are designated as cash flow hedges, with the objective of managing the exposure to interest rate risk by converting the interest rates on our variable rate debt to fixed interest rates. At December 31, 2023, both the fair value and carrying value of the interest rate swap instruments were $21 million.
The interest rate swap instruments are designated as cash flow hedges, with the objective of managing the exposure to interest rate risk by converting the interest rates on our variable rate debt to fixed interest rates. At December 31, 2024, both the fair value and carrying value of the interest rate swap instruments were $35 million.
Assuming a one percentage point increase in the interest rates related to our variable rate debt, and assuming no other changes in the outstanding balance at December 31, 2023, our annual interest expense would increase by approximately $7 million.
Assuming a one percentage point increase in the interest rates related to our variable rate debt, and assuming no other changes in the outstanding balance at December 31, 2024, our annual interest expense would increase by approximately $3 million.
Lastly, assuming a one percentage point decrease in the interest rates related to our variable rate loans receivable, and assuming no other changes in the outstanding balance at December 31, 2023, our annual interest income would decrease by approximately $2 million. 68 Table of Contents
Lastly, assuming a one percentage point decrease in the interest rates related to our variable rate loans receivable, and assuming no other changes in the outstanding balance at December 31, 2024, our annual interest income would decrease by approximately $1 million. 66 Table of Contents
At December 31, 2023, a one percentage point increase or decrease in the underlying interest rate curve would result in a corresponding increase or decrease in the fair value of the derivative instruments by up to $18 million. Interest Rate Risk At December 31, 2023, our exposure to interest rate risk was primarily on our variable rate debt.
At December 31, 2024, a one percentage point increase or decrease in the underlying interest rate curve would result in a corresponding increase or decrease in the fair value of the derivative instruments by up to $53 million. 65 Table of Contents Interest Rate Risk At December 31, 2024, our exposure to interest rate risk was primarily on our variable rate debt.
At December 31, 2023, a one percentage point increase in interest rates would decrease the fair value of our fixed rate debt by approximately $255 million and a one percentage point decrease in interest rates would increase the fair value of our fixed rate debt by approximately $272 million. These changes would not materially impact earnings or cash flows.
Additionally, at December 31, 2024, a one percentage point increase or decrease in interest rates would change the fair value of our fixed rate loans receivable by approximately $15 million. These changes would not materially impact earnings or cash flows.
Added
At December 31, 2024, a one percentage point increase in interest rates would decrease the fair value of our fixed rate debt by approximately $241 million and a one percentage point decrease in interest rates would increase the fair value of our fixed rate debt by approximately $259 million.

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