Healthpeak Properties at BofA Conference: Navigating Lab Oversupply

On Wednesday, 14 May 2025, Healthpeak Properties (NYSE:DOC) presented at the BofA Securities 2025 Healthcare Conference. The discussion, led by Vice Chair John Thomas, highlighted Healthpeak’s strategic focus on outpatient medical and life science properties while addressing challenges like lab space oversupply. The company is leveraging strong health system partnerships and aims for growth in outpatient medical facilities, despite a currently depressed lab market.

Key Takeaways

• Healthpeak focuses on outpatient medical (60%) and life science/lab (30%) properties.
• The company plans to exit its 10% stake in senior housing.
• Healthpeak is addressing lab space oversupply by investing in well-located, high-quality properties.
• The company boasts a 7% dividend yield based on its current stock price.
• Growth is expected through new outpatient medical developments and strategic investments in distressed lab assets.

Financial Results

• Average rent for outpatient medical space is approximately $23 per square foot, triple net.
• Occupancy rate for outpatient medical space stands at 93%.
• Healthpeak’s dividend yield is 7%, with a payout ratio of 70% of cash flow.
• Cash flow growth is at 3%, with rent increases ranging from 5% to 10%.
• Lease rental increases have moved from 2%-3% to 3%-4%.

Operational Updates

• Healthpeak’s business is divided into outpatient medical (60%), lab/life science (30%), and senior housing (10%).
• The company is focusing on leasing the remaining 15% of its lab space, which is currently 85% occupied.
• High retention rates in outpatient medical are between 80% and 90%.
• A development pipeline with health systems ranges from $300 million to $400 million.

Future Outlook

• Healthpeak anticipates continued growth in outpatient medical due to demographic trends and the shift towards outpatient care.
• The company plans to increase net operating income by $60 million to $75 million annually through leasing existing lab space.
• New outpatient medical developments are expected to be 90%-100% pre-leased.
• Healthpeak aims to capitalize on pharmaceutical companies’ need to replace revenue due to upcoming patent cliffs in 2027-2028.
• Strategic investments in distressed lab assets are planned through loans and other capital.

Q&A Highlights

• Healthpeak differentiates itself in the lab space by focusing on purpose-built facilities with specialized infrastructure.
• The company is less affected by government policy due to its focus on commercially insured and Medicare populations.
• Venture capital funding plays a crucial role in leasing demand for Healthpeak’s properties.

For a deeper understanding, readers are encouraged to refer to the full transcript below.

Full transcript - BofA Securities 2025 Healthcare Conference:

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: Thank you for joining us on day two of the BofA Healthcare Conference. My name is Farrell Granite, and I am the healthcare REIT analyst with Jeff Spector and the BofA REITs team. I am joined today by John Thomas, who is currently the vice chair of the board of Healthpeak Properties. He previously the President and CEO of Physicians Realty Trust until its merger with Healthpeak in 2024. I’ll pass it over to John for some opening remarks, and then we’ll follow-up with some questions.

John Thomas, Vice Chair of the Board, Healthpeak Properties: Thanks for having me, Farrell, and thanks for showing up. It’s a great healthcare conference. We don’t always get big participation, but Healthpeak’s a $25,000,000,000 or so real estate investment trust focused exclusively on primarily two areas of healthcare, outpatient medical, which is about 60% of our business, and we’re the largest owner of outpatient medical facilities in the world, if you will. About 10% of our business is senior housing, which is an area that Healthpeak historically has had a fairly large presence in, but has selling that off over time. It performs very well.

We’re very happy to have it, but at some point in the future, right time, right price, we’ll move out of that area of healthcare. And then the last part of our business, about 30% of our business is life science and lab in the three core markets of Cambridge, Boston, South San Francisco, and then San Diego. We’re the second or third largest owner of lab life sciences facilities in the world as well.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: Great. And given that we’re at a health care conference and DOC owns, develops, and manages real estate, can you explain how Healthpeak specifically fits inside the healthcare ecosystem?

John Thomas, Vice Chair of the Board, Healthpeak Properties: Yeah, it’s a great question. So again, why am I at a healthcare conference? Well, a lot of our clients are here presenting. I’m here both underwriting and sourcing new business for us. HCA is our largest single tenant, but it’s only about 4% of our business.

But HCA, again, largest system largest for profit health system in the country, is our largest tenant. CommonSpirit, the largest non profit health system in the country is our second biggest tenant across the spectrum. So I came out of I was hired and got into this business. I was hired by a guy named George Chapman who started or was part of and led healthcare REIT for a number of years. The the largest, the oldest company in the healthcare space, in the real estate space, And when he recruited me to join them, I was general counsel of the Baylor Healthcare System in Dallas, and there are a lot of John Thomases in the world, and I didn’t really know why he was recruiting me because I was in the healthcare system as general counsel.

I was not a real estate person or a developer or anything like that, and he said the real estate part of our business is easy, is I wanna have somebody who understands what’s going on inside our buildings. That’s what makes our buildings valuable, and that’s what makes our investments valuable. And so he convinced me to move to Toledo, Ohio and go to work in that space, but it was my healthcare knowledge and my healthcare experience, and I did a lot of policy work, and still do a lot of policy work in Washington that was valuable to him, and so I worked for George for a number of years, helped grow their outpatient medical business until I had the opportunity in 2013 to do the craziest thing of all time is join a couple of guys who had a small amount of business in the outpatient medical space. 18 buildings, 500,000 square feet, and, maybe $10,000,000 in NOI, and we went public with one employee in 2013. That was Physicians Realty Trust.

We were able to get the stock symbol DOC, D O C, which is still our stock symbol even after the merger, and then we grew that business from, like I said, dollars 100,000,000 of quote value at the IPO to 6,000,000,000 the time of the merger. And when we merged with Healthpeak, the premise was our business was and today is still great, our underlying business. We collected 99% of our rent during the pandemic, true cash rent. We sent an invoice out, we got paid. And that’s the whole idea of investing in health care real estate is recession resilient, it’s pandemic resilient now, we can prove that.

And for twenty years, it’s been the one of two areas of commercial real estate that has grown NOI for twenty straight years. No other manufactured housing, was gonna ask you if you even knew what the other one was. Manufactured housing is the other one which is totally irrelevant for this But the whole idea of investing in healthcare real estate, and particularly outpatient medical and lab, and we’ll talk about that, it’s just the consistency, the reliability. You know, if in a recession you may not go to a mall, in a pandemic you may not go to senior housing, you may not go to a movie, but if your child’s sick or you’re sick, your mother’s sick, you’re gonna take them to the doctor and the doctor needs space to provide that care. They’re gonna pay their rent, and like I said, it’s just one of the most, it’s not an area where we have fast growth, we just have consistent, reliable growth, and we have for twenty straight years.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: Great, and you were just touching on in, especially with your past experience, can you explain how your outpatient medical portfolio has relationships within the healthcare system itself?

John Thomas, Vice Chair of the Board, Healthpeak Properties: Yeah, so we, how do we have relationships? And part of our core values is respect the relationship. We’ve grown our business, again, we went from 100,000,000 to 6,000,000,000 at physicians, and Healthpeak, again has a similar legacy where HCA actually built its own REIT inside of itself twenty five years ago and then Healthpeak bought that twenty five years ago. So we have this genesis, again that’s kind of my personal story, actually our corporate stories. We have this genesis of really kind of spinning out of or having these direct relationships with health systems, and then doing a lot of repeat business with those health systems.

So health peaks in our 10 largest markets are the markets you would think of and fast growing markets still today. Atlanta is our biggest, one of our biggest markets, Dallas where I was with Baylor, Houston, Phoenix, Seattle, Minneapolis, again markets that are still growing and our clients are the health systems in those markets and the dominant health systems in those markets. In Atlanta, it’s Northside Hospital, in Dallas we actually have large relations with HCA, Baylor and Presbyterian, THR, you know, that market. But at Physicians, like HCA in the Healthpeak deal twenty five years ago, Physicians in 2016, we did a $750,000,000 transaction with CommonSpirit, what’s now known as CommonSpirit, CHI. We bought 50 buildings in 12 markets.

They needed capital, we needed assets, It was the largest single transaction ever in this space between a REIT and a health system. And again, the next year that relationship went so well, the next year we bought another $200,000,000 of assets from them. And we got a billion dollars of assets with CommonSpirit, we’ve got probably 4,000,000,000, dollars 3 billion of assets with HCA and all of their markets. And for both of those, we continue to grow with new development. So we’ve got a 300 to $400,000,000 development pipeline with those health systems.

Not just those two, but they are part of that number. And again, outpatient medical continues to grow. Population, somebody quoted yesterday that population 65 and older is gonna be 20% of our population by 02/1930. Every day 12,000 people turn 65. So that demand is 8% to 10% just mathematically no matter what happens with Washington or commercial payers or anything else.

The demand and growth in healthcare services and the need for those healthcare services is growing every day.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: And so, on the topic of the supply and the demand, what is keeping other outpatient medical properties from just building their own or developing or partnering with you and expanding?

John Thomas, Vice Chair of the Board, Healthpeak Properties: Yeah, great question. So I’m gonna give you a couple of different statistics, but to answer your question. So the average rent across our 42,000,000 square feet of outpatient medical space, the average rent today in our portfolio is about $23 a foot, triple net. We’re about 93% occupied. To build new in this market between, you know, the past few years inflation, construction costs, cost of capital, the average rent for a similar building today that we would want to own in a health system and a physician would want to rent and that patients would wanna go to is closer to $35 to $40 And again, the buildings that we’re building for health systems are demand driven, meaning they don’t have an entry point, an access point in a demographic that they want, a suburban market that they want to be in, so they lead with an outpatient medical billing.

But today, that costs them $35 to $40 a foot, depending upon the market, Atlanta’s getting in that higher end range. Phoenix is a similar price point as well, while our in place buildings and rent is $12 cheaper. So unless you want to unless you have a growth need or a demand driven need to be in a specific location, you’re gonna stay in the building you are at $23 versus move next door for $35 right? It’s just the right economic decision. In the meantime, you know, as a landlord, we wanna raise our rents as much as we can, obviously, and a balanced way, because we wanna continue to grow with those health systems.

So getting a 5% or 10% renewal in kind of a mark to market is pretty common now. And for, as I said, the business has been so great for twenty years, but this is the first time in my twenty years in the business where we could grow rents more than two to 3%. We’re growing rents five to 10%, and the health systems are, and the physicians may not wanna pay that, as we were talking about before, is your apartment search, but at the same time, that’s a more economical decision for them to make than it is to go to a new, which used to be our competitor, right? And so retention is very high, 80 to 90%, it’s been very strong the last six, eight quarters, and our average mark to market’s been five to 10% every quarter in the last eight quarters. And the other key point about our business that’s been differentiated in the last few years, which I think will continue for a long time, as I said, rents have grown two to 3% contractually, annual increases for the last twenty years.

Now we’re moving everybody from two to 3% to three to 4%. And that’s just the gift that keeps on giving because we don’t sign overnight leases, we sign five year leases and ten year leases. So if we can sign a new lease, we mark to market up 5% and we can raise the increase in those leases from 2% to 3% or 3% to 3.5%, this is compounding growth over time.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: Great, and I guess now switching gears to your lab portfolio, and I’m sure many people are very focused on the biotech and biopharma area, but can you give a little bit of detail around the supply and demand landscape? And more importantly, how is DOC’s differentiated approach in capturing that demand?

John Thomas, Vice Chair of the Board, Healthpeak Properties: Great question. So as I mentioned before, we’re in the three key submarkets, core markets for lab real estate and lab business, Boston, primarily Cambridge, West Cambridge, South San Francisco, and San Diego. For ten years, maybe fifteen years, lab was, I said, talked about how great outpatient medical’s been for twenty straight years. Lab is one of the best markets, best asset classes to be in in real estate from 02/2009 until 2021. And again, part of that was just the demand and the investment as a country we were making, but as an investment of private capital that we were making in innovation and research, and we’ve got the best scientists in the world, particularly concentrated in those three markets.

We take a very concentrated approach to kind of a campus community. Interestingly enough, lawyers, which I used to be one, and business people get all, you know, cranky about IP and, you know, secrecy and everything else. The scientists wanna collaborate with scientists. And we have, you know, whiteboards in parks and we have, you know, amenities in these buildings that just facilitate collaboration. And so scientists from two different organizations, it could be I’m just making up names, but these are some of our tenants, Amgen and, you know, some startup biotech firm, go down, have lunch, they’re really struggling with a problem and they just start talking about, hey, what can I do to, you know, kind of go to the next step with my science?

So it’s very collaborative and so those campuses, facilitate that and it facilitates demand from the scientists who, hey, I wanna be in those buildings, in that amenity, you know. We have golf simulators, we have bowling eyes, we have bars, we have, you know, kind of these great facilities. And one of the, you know, things about labs lab buildings is, you have we have over a million mice in our buildings on purpose. We have pigs in our buildings. We have all this very sophisticated space.

That’s why this real estate is so expensive. But we also have places for the scientists to convene and they want to be there. So these campus communities really facilitate that and the recruitment of businesses to pay our very expensive rent. These are very expensive buildings to build. The air in this building, this building probably, well, casinos probably replaced their air a good bit more than most commercial office buildings, but our air in our lab buildings is replaced every thirty seconds.

So they’re very sophisticated real estate. It’s not the back office for Amgen or Bristol Myers or Novo Nordisk, one of our biggest, you know, tenants in our buildings. It’s not the back office accounting space. This is where innovations is. It’s where when they buy a small biotech where they’re trying to, you know, increase their revenue because of the patent cliffs coming in 2728.

It’s where they want to be and where they collaborate, and again, we have we’re about 85% occupied in the lab. So long winded when the lab business was so good for so long, the pandemic fueled a huge need for more lab space to cure COVID and other things or try to find vaccines for COVID and other things like that, that so many people kind of piled into the lab business that when we came out of COVID, we all of a sudden had an oversupply and a lot of construction by people who’ve never been in the lab business, and again, these buildings are a thousand to $1,500 a foot to build, and there was a lot of spec buildings built in our three markets and other markets that created an oversupply of the need for lab. And so that has caused, you know, at least a temporary, and I’m sure it’s temporary, but a temporary, you know, kind of slow down in the ability to recruit tenants. Our retention’s just fine, but to recruit new tenants and then because the biotech market, and I’ve been sitting in these conferences, you know, for this last two days, you know, the amount of capital, again private capital, going into a biotech startup has slowed down because of what’s going on in the federal government, and so we’ve got this oversupply of lab real estate all of a sudden in those three markets in particular, and the ability to recruit new tenants and the lack of capital coming to invest in those tenants has slowed down.

We don’t have any NIH funded tenants, but tenants ten years from now are NIH funded. So if somebody gets NIH funding, major medical, you know, university, they prove their science, so they go out and get private funding, and that’s when they need our space. And so right now there’s a slowdown of of the future supply if you if NIH gets cut or they slow down and the government slows down research funding, but it’s a very temporary thing. Long term, this country’s got a dominant position, the dominant position in life science and innovation, and it’s just a matter of time before the lab business, the real estate lab business picks up even more. We pay a 7% dividend based on our current stock price, it’s crazy.

We have a low multiple because of this, you know, kind of depressed lab market, even though it’s 30% of our business. But if you wanna play life science and invest in a very safe, diverse, you know, real estate investment, but you wanna be in investing in life science, buy our stock, you get paid 7% to wait for the market to return. Our payout ratio is 70% of our cash flow. REITs have to distribute all their cash flow and we pay up about 70% of our cash flow goes to our dividend, to our shareholders. Today’s stock price is 7%.

Our cash flow is growing 3%. You’re literally getting paid 10% in an asset backed cash flow to return today if you invest in us while you wait for the, you know, the biotech and the high returns you get in biotech to pick back up in time.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: So a lot to unpack there, a few points. Yeah. But first, when you’re discussing about the oversupply in the lab space, can you give a little bit of detail on, I’ve always seen the word zombie buildings, and I’ve driven around through some of the key markets,

John Thomas, Vice Chair of the Board, Healthpeak Properties: and

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: I’ve seen big, beautiful, brand new buildings that remain empty. So can you explain either what those are and maybe either why DOC is or is not within that segment?

John Thomas, Vice Chair of the Board, Healthpeak Properties: Happy to. So one of the smart decisions that Scott Brinker and the Healthpeak, our CEO and the Healthpeak leadership team did was three years ago they did see this glut of new entrants into the market, into the business. Office developers. Three years ago, you couldn’t, you know, offices were completely empty from work from home and there’s still a lot of empty office buildings in Manhattan and Boston from traditional corporate office environment, work from home. San Francisco, same thing.

South San Francisco, same thing. San Diego, same thing. And so office owners said, hey, lab is great. Look at the last ten years of what, you know, growing rents five to 10% every year in the lab business. And so a lot of new entrants got into the lab office building development or tried to take their building, said, I can’t convert it to residential, like a lot of people doing, UDR, you mentioned, But what I can do is convert my building, my office building into a lab building.

It looks just the same. The problem with that is, for lab, you’ve got gases in the walls, you got all this extra stuff for the replacing the air every thirty seconds, you gotta have places for mice, vivariums, you gotta have places for pigs, and you gotta have to have 14 feet of, shelves or space between the ceiling and the floor plates. And so a lot of office traditional office owners either try to develop new lab to quote unquote lab buildings or convert empty buildings, zombie buildings, into lab, and it’s just not working. And so a lot of the statistics about how much, quote, due supply there is in Boston, for example, if you you can look at some stats and say there’s 15,000,000 square feet of new development of lab space in the Boston market. Today, there’s about 60,000,000 square feet that’s occupied, and you see 15,000,000 quote unquote coming online.

Well, there’s not that there’s not much demand for 15,000,000 square feet, and a lot of that, like maybe 13,000,000 square feet of that number is either office buildings trying to convert to lab or office owners trying to build new buildings and make them call them lab. And so it’s really not competitive space. So the real blood, if you will, I hate to use that word, but the real excess supply in Boston is more like 2,000,000 square feet. We’re 95% occupied in Boston. The other two big incumbent lab companies are highly occupied in Boston as well.

You see stragglers, this new entrant in the market that either trying to convert buildings, repurpose buildings, or build new buildings and call them lab, who don’t have the experience, who don’t have the capital. So they got these buildings built, they don’t have money for TI. TI in our buildings is 400 to $500 a foot. Know, got a million square feet, 400 to $500 a foot of just TI is pretty expensive. We have the capital to provide that.

Brokers won’t even go to those buildings. So they’re zombie buildings for a number of reasons, but basically they’re empty, they’re gonna be empty for a long time, they’re not gonna be lab ever. So they really aren’t competitive supply to us. I said, we’re 95% occupied in Boston. If we need more space for a tenant, we can go buy, we can either or we can what we’ve been doing is providing some loans to those new developers who got into the space, ran out of money, can’t provide TI, can’t pay leasing commissions, as we talked about, which is important.

So we’ve been loaning some money in some very specific circumstances because we see the demand coming back, and so then we have an entry point to buy that building once a new lease is signed, we provide the happy money, the TI, once a lease is signed, and then we can grow our business that way.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: Great, and also you’d already touched on NIH funding and your exposure, but I guess generally that’s been a big topic in these panels about macro regulatory issues. Can you also address it in anything that would be a tailwind or a headwind in the outpatient medical field? And also, how is it impacting how tenants are looking to either sign or make decisions in executing leases?

John Thomas, Vice Chair of the Board, Healthpeak Properties: Yeah, so I mentioned before, we got a lot of construction going on right now and the health systems who came out of the pandemic realized that one thing they probably didn’t have enough of was outpatient medical space. During the pandemic, as I mentioned, we were 99%, we collected 99% of our rent, we were 95% occupied. If you were sick, you went to the doctor. We did a we did a consumer survey. We hired a firm to go out and do this, an independent firm in our five biggest markets, and said if you’re you’re sick, where do you where are you gonna take your child or where where do you wanna go to get that care?

And 77% of the people said, I wanna go somewhere at least a mile away from a hospital because perception was all the COVID people are in the hospital. If my child injures their knee or arm or whatever or my mother, you know, has a heart issue, I don’t wanna take them to the hospital because that’s where the COVID people are. And so there’s been this growing demand for outpatient medical space for years. COVID really accelerated that because people were like, why am I going to the hospital unless I’m like in a car accident or, you know, have trauma or have a major transplant issue. You know, the care and hospitals, government policy and commercial insurers have been pushing care out of the hospitals since 1982 when the prospective payment system was created before you were born, and it’s been an evolution, so now there’s much more care provided in an outpatient setting than there is in an inpatient setting, and the pandemic really accelerated that because consumers didn’t wanna go anywhere near a hospital, and so the construction we’re doing is, there’s some on campus with new hospitals, with Northside in particular, Common Spirit, or HonorHealth in Scottsdale, but where the real demand there is for new locations and demographic areas, strong demographics, commercially insured, know, high Medicare populations, where we can build outpatient facilities, kind of build the demand for that area, and then hospitals will follow-up with an inpatient facility if they need one to meet that demand.

And so, as I said before, the demographics, 12,000 people turning 65 every day, 20% of the population is gonna be 65 by 02/1930, the growth in the top line revenue of health care is 8% a year. It’s just math. And the government does everything they can to shift that number, but the real shift is to incentivize care to be pushed to the outpatient setting, cheaper, newer facilities we’re building, and the care can be provided there safely, and frankly better and higher quality. And so that’s where the demand is. So government policy, you know, Medicaid’s important, ensuring everybody in the population’s important, but the services that we’re providing, that our healthcare system’s providing, where they make their money is commercial insurance, and they can make money on Medicare.

Medicare growth, again, continues regardless just because of the aging population. I mean, you’re legally entitled to benefit once you get to that age, so more and more people are becoming insured just from that aspect alone, and that’s just driving the demand for more outpatient real estate in particular.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: And then in the lab space, obviously with a bit of the overhang of the funding, how is that impacting how perhaps tenants are thinking about executing leases or with the renewals or signing of leases, how is that? Are you getting new entrants, current tenants? I guess like what’s the general

John Thomas, Vice Chair of the Board, Healthpeak Properties: Yeah, so 2020, it’s all about the capital markets and for new demand in lab space. I mentioned the cutback in NIH funding is not directly hurting us. You know, the real debate around NIH funding is the overhead factor, the indirect part of grants. The direct cost in a grant has not been slowing down. It’s really a debate about trying to carve back the 50%, seventy % kind of indirect cost overhead factor that go along with these grants.

But the direct cost is still getting funded. Rent is a direct cost. So future tenants for our buildings, they’re doing, you know, science in Boston, San Diego, South San Francisco, they’re still getting their research dollars. They’re still getting dollars included in that that pays the rent. Again, as I said, that’s not really a part of our focus of our business.

It’s when they advance their science and get private funding is when they come knocking on our door and when we’re recruiting them to move into our buildings. So last year, we signed more leases than we’ve ever signed, and the kicking point for that, we have about eleven, twelve million square feet of of lab business, but the kicking point for that was the capital markets, the IPO market, you know, was slow to come about, but the capital markets generally, the amount of venture capital funding was better in 2024 than it was in 2019. So it’s kind of been a five year inflection point. That drove a lot of leasing for us. This year, with all the rhetoric or however you want to put it around lab and how much we’re gonna invest through the NIH and how much we’re gonna fund the FDA to approve drugs and through clinical trials has slowed down the fuel, the capital fuel in venture capital and otherwise.

We still have a good leasing pipeline. It’s not as strong as the Wells last year, but we still have a good leasing pipeline where people are looking for space, they need to expand, they need to grow, and again, they’re looking at our buildings because the zombie buildings owners can’t actually fund the TI that they need to build out their space, in particular, and we just have these dominant positions, particularly in San Francisco and Boston, to provide that space for them. And so it’s really fueled by the capital markets. Once the capital markets open back up, more funding into round a, round b, IPOs, for those tenants of ours, those biotech firms that are working through their science, they hit their scientific milestones, they get more money. When they get more money, they need more space.

And it’s just a perpetual, you know, reliable kind of connection between capital markets funding and the growth in the lab, growth in the lab space that’s needed for those tenants.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: I think our last question here, so looking ahead, if you could quickly go through the growth avenues for Healthpeak for 2025 and beyond.

John Thomas, Vice Chair of the Board, Healthpeak Properties: So, we’re 85% occupied our lab business, so the real growth for us is leasing the last 15% of our space. At some point in the not too distant past, we were 100% occupied. There’s probably 60 to $75,000,000 a year rent NOI if we lease up that last 15 space, so there’s real organic growth just sitting there to be had. We just need a little bit of, you know, momentum in the capital markets behind biotech, maybe eliminate some of the rhetoric in Washington, and I got one more point about that in a second. You know, to help generate, we need some IPOs of biotechs.

In 2027, ’20 ’20 ’8, we have a huge patent cliff pipeline, or a cliff for the major pharmas. They have to replace that revenue. They gotta replace it by buying some of our tenants who’ve proven out their science and getting their phase three commercialization approvals from the FDA. So that’s the big growth driver there. As I said, we’re very strategically investing in some of these zombie buildings, if you will, through loans and other capital, happy money to help those tenants, those landlords provide the money to tenants that need the space where we don’t have the space available to do them, that’s another area of growth for us.

On the outpatient side, it’s just, again, we’ve got the largest portfolio or largest platform today in the world. We’ve the best platform from a service perspective. We, our own employees take care of the tenants who come into those buildings, take care of the patients to get to the care that they need, so we continue to grow that business primarily through construction, new development with our health system clients, 90 to 100% pre leased buildings, and then, you know, can interest rates and other things converge, we’ll start acquiring more buildings as well. We’re best positioned to grow in those three ways. The point I wanted to make about the government is, it was a really good point yesterday that captured my attention more than anything in the lunch panel with the health policy experts, was NIH funding, FDA funding, there’s only so much the administration can do to cut it back if Congress has funded it.

I mean, there’s a very clear Supreme Court case about this. Once Congress funds it, the administration, you know, has to distribute it that way. And so if we go, if we pass the legislation that’s current funding, that’s fine. Most of our hospital systems, HCA and Tennant yesterday said it’s not as bad as we thought it was gonna be with Medicaid. In fact, it’s better than we thought it would be.

So that’s really not an issue for us and our health systems. But if the life science business, NIH funding and FDA funding that comes out of appropriations comes through a continuing resolution versus this Congress actually cutting those dollars back, then we actually Washington is growing the amount of funding going into life science, growing into NIH. Then it’s just a matter of the administration distributing the dollars that are legally required to do. I think there’s a very positive catalyst for our clients, our future clients and innovation in The United States.

Farrell Granite, Healthcare REIT Analyst, BofA REITs team: Well, that’s a great, great place to end. So thank you, everyone. Thank you, John.

John Thomas, Vice Chair of the Board, Healthpeak Properties: Thank you. Thanks, Farrell. Thanks, everybody.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.