Tom Herzog, CEO of Healthpeak Properties, Inc. (NYSE: PEAK), participated in a video interview in conjunction with Nareit’s REITworld: 2021 Annual Conference.
With the exit from rental senior housing behind it, Healthpeak is now focused on three businesses. Life science represents 50% of the REIT’s portfolio, medical office building (MOB) accounts for 40%, and continuing care retirement communities (CCRCs) represent 10%. All properties are in high-barrier-to-entry markets that will benefit from the aging baby boomer demographic, Herzog said.
Healthpeak is active in the San Francisco, San Diego, and Boston life science markets, where “fundamentals are red hot,” Herzog said. Growth in life science will be largely through development as a limited amount of quality product trades each year, he noted. The company has a 7 million square feet development pipeline, representing $10 billion of spending over the next decade.
As for MOB, Healthpeak focuses on on-campus properties where specialists reside, Herzog said. Growth in this area will be through both development and acquisitions. He noted that operating on-campus requires an invitation from a health system, and fortunately for the REIT, it has “time-tested relationships” with large health systems.
In the CCRC segment, growth will be slower as product rarely comes to market, Herzog said. However, Healthpeak does has densification possibilities in this segment, he noted.
Herzog noted that despite the high level of competition in the life science segment, Healthpeak is uniquely positioned to “win more than our fair share” of tenants given the REIT’s scale, experience, deep tenant base, and control of a significant amount of land.