Healthpeak Properties’ SWOT analysis: life science REIT stock faces challenges, opportunities

Healthpeak Properties, Inc. (NYSE:DOC), a healthcare real estate investment trust (REIT) with a market capitalization of $12.94 billion specializing in life sciences, medical offices, and continuing care retirement communities (CCRCs), has recently attracted attention from analysts due to its underperformance and potential for recovery. According to InvestingPro analysis, the company maintains a "GOOD" overall financial health score, suggesting strong fundamentals despite recent market challenges. This comprehensive analysis examines the company’s current position, future prospects, and the factors influencing its stock performance.

Company Overview

Healthpeak Properties has established itself as a significant player in the healthcare REIT sector, with a diversified portfolio focusing on three key segments: life sciences, medical offices, and CCRCs. This strategic positioning allows the company to capitalize on various healthcare real estate trends while mitigating risks associated with overexposure to a single subsector.

Recent Performance

In recent months, Healthpeak has experienced notable underperformance compared to its peers. Analysts report that DOC has lagged behind competitors such as HR and ARE by approximately 15% over the past three months. Additionally, the stock has underperformed the healthcare REIT average by more than 700 basis points during the same period.

The primary driver behind this underperformance has been a significant decline in occupancy within the company’s life science segment. This downturn has raised concerns among investors and analysts about the near-term prospects of the life science real estate market.

Future Prospects

Despite the recent challenges, analysts maintain a cautiously optimistic outlook for Healthpeak Properties. The company is actively working to improve its lab leasing fundamentals, with a solid pipeline of potential tenants and positive trends in venture capital fundraising for the biotech sector.

Analysts project that occupancy rates in the life science segment may continue to trend downward through 2027. However, they also note that improvements in biotech capital markets and increased leasing demand could potentially alter this trajectory. Healthpeak aims to increase lab occupancy from the mid-80s to low-90s percentages, which could significantly boost the company’s performance if achieved.

The company’s management has also identified redevelopment opportunities that could contribute to earnings upside in 2026 and beyond. This forward-looking approach demonstrates Healthpeak’s commitment to long-term value creation for shareholders.

Financial Outlook

Healthpeak’s financial position remains relatively strong, despite recent challenges. The company has maintained dividend payments for 41 consecutive years, currently offering a well-covered dividend yield of 6.69%. With a strong current ratio of 4.01, indicating liquid assets well exceed short-term obligations, this REIT may attract income-focused investors in the current market environment.

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Analysts highlight the strength of Healthpeak’s balance sheet, noting that it is well-positioned to support up to $1 billion in investments with limited competition. This financial flexibility provides the company with options for strategic growth initiatives or potential share buybacks, as evidenced by a $500 million buyback authorization.

The company’s loan book is also building a future pipeline, with at least $500 million of investments planned for 2025. These investments are targeting lab lending opportunities with potential double-digit yields, which could contribute significantly to future revenue growth.

Industry Trends

The healthcare REIT sector, particularly the life science subsector, is experiencing a period of transition. While there are near-term challenges, such as smaller deal sizes and delayed decision-making due to regulatory and political uncertainties, the long-term outlook remains generally positive.

Analysts note that leasing improvements are expected to continue, albeit at a slower pace than in previous years. Rents in the life science segment are reported to be stable, with an estimated 5-10% mark-to-market potential, suggesting room for growth as leases are renewed or new tenants are secured.

The biotech capital markets, which play a crucial role in driving demand for life science real estate, are showing signs of improvement. This trend could potentially lead to increased leasing activity and occupancy rates in Healthpeak’s portfolio over time.

Bear Case

How might further deterioration in life science fundamentals impact DOC?

While analysts suggest that the current valuation of DOC appears to account for some deterioration in life science fundamentals, a more severe downturn could pose significant risks. If occupancy rates continue to decline beyond current projections, or if the recovery in biotech capital markets fails to materialize, Healthpeak could face prolonged pressure on its revenue and profitability.

The company’s focus on improving lab occupancy from mid-80s to low-90s percentages may become increasingly challenging in a weakened market environment. This could lead to lower rental income, increased expenses related to tenant improvements or concessions, and potentially impact the company’s ability to maintain its current dividend yield.

What risks does regulatory uncertainty pose to DOC’s leasing activities?

Regulatory and political uncertainties are already impacting leasing activities, leading to smaller deal sizes and delayed decision-making among potential tenants. If these uncertainties persist or intensify, Healthpeak may face difficulties in securing long-term leases or attracting new tenants to its properties.

Changes in healthcare policies or regulations could also affect the demand for medical office spaces and CCRCs, potentially impacting multiple segments of Healthpeak’s portfolio. While the company’s exposure to proposed Medicaid cuts is reported to be minimal due to its focus on private pay revenues, broader regulatory changes in the healthcare sector could still pose risks to the company’s operations and financial performance.

Bull Case

How could improvements in biotech capital markets benefit DOC?

A significant improvement in biotech capital markets could be a major catalyst for Healthpeak’s recovery and growth. Increased funding for biotech companies typically leads to expanded research and development activities, driving demand for lab spaces and life science real estate.

If this trend materializes, Healthpeak could see accelerated leasing activity, potentially reversing the recent occupancy declines in its life science portfolio. This could lead to higher rental income, improved occupancy rates, and potentially allow the company to achieve its goal of increasing lab occupancy to the low-90s percentages sooner than expected.

Furthermore, a robust biotech funding environment could support Healthpeak’s strategy of investing in lab lending opportunities, potentially generating higher yields and contributing to overall revenue growth.

What potential does DOC’s undervaluation present for investors?

Analysts suggest that DOC’s current valuation is attractive both in absolute terms and relative to its peers. The stock’s recent underperformance has created a potential opportunity for investors seeking exposure to the healthcare REIT sector.

With a well-covered 6.7% dividend yield and trading at what analysts describe as an attractive 7.4% implied cap rate, DOC may offer a compelling value proposition for income-focused investors. Additionally, the company’s strong balance sheet and potential for strategic investments or share buybacks could provide catalysts for future stock price appreciation.

If Healthpeak successfully executes its strategies to improve occupancy rates and capitalize on redevelopment opportunities, investors who enter at current levels could potentially benefit from both income generation and capital appreciation. The company’s impressive revenue growth of 15.91% over the last twelve months demonstrates its execution capability. According to InvestingPro’s Fair Value analysis, DOC currently appears undervalued, suggesting potential upside for investors.

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SWOT Analysis

Strengths:

• Diversified portfolio across life sciences, medical offices, and CCRCs
• Strong balance sheet with capacity for significant investments
• Well-covered 6.7% dividend yield
• Strategic focus on high-potential lab spaces and life science real estate

Weaknesses:

• Recent underperformance compared to peers
• Occupancy decline in the life science segment
• Exposure to cyclical biotech and life science industries

Opportunities:

• Potential improvements in biotech capital markets driving demand
• Lab leasing fundamentals showing signs of recovery
• Redevelopment projects with earnings upside potential in 2026 and beyond
• Investment opportunities in lab lending with attractive yields

Threats:

• Continued deterioration in life science fundamentals
• Regulatory and political uncertainties affecting leasing decisions
• Competitive pressures in the healthcare REIT sector
• Potential economic downturns impacting healthcare spending and real estate demand

Analysts Targets

• Raymond James: $20 (September 15th, 2025)
• BMO Capital Markets: $25 (February 20th, 2025)

This analysis is based on information available up to September 17, 2025, and reflects the most recent analyst reports and market data provided.

InvestingPro: Smarter Decisions, Better Returns

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