Healthpeak Properties, Inc. (NYSE:PEAK) Q2 2023 Earnings Call Transcript

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Austin Wurschmidt: Fair. And then just last one for me, just going to MOBs a little bit, you touched on what drove the 2Q guidance bump. But last quarter, you referenced the company’s track record, increasing MOB guidance through the year. Clearly, success doing that this quarter. But what levers are left to pull in the back half of the year that could get you or maybe said differently, could get you to the high end of the range.

Thomas M. Klaritch: Well, we continue to see really good activity on leasing. We’ve got our lease commencements are a little bit above where we expected to be for the year, and we have quite a few executions — executed leases as well as LOIs in place. So occupancy is going to be a piece of it. As I said earlier, the escalators and mark-to-market, we’re at the upper end of our typical range on mark-to-market. So that’s going to help some. And then Medical City continues to do well and if they have another couple of strong quarters, that will definitely push us up to the higher end.

Scott M. Brinker: Austin, we’re also having what’s interesting in both segments, lab and medical conversations with tenants or prospects about much bigger leases and spaces than we had over the last 18 months. It felt like a lot of the activity was smaller spaces. We’ll see if anything proceeds, but I think that’s another sign that Boards and management teams are more willing to make big commitments today than they would have been over the past 18 months. Now I don’t know any of that translates into 2023 earnings or same store, but if you look forward into 2024 and beyond, obviously, it’s a great sign.

Austin Wurschmidt: Yeah, that’s helpful. Thanks Scott.

Operator: The next question comes from Nick Yulico from Scotiabank. Please go ahead.

Nicholas Yulico: Thanks, good morning. I guess first question is just in terms of — as you think about the portfolio and some of the lease expirations and lab this year, next year, is there any way to just quantify what piece of that you think are tenants that you expect to maybe not renew or those that you would proactively look to re-tenant because of some potential credit issues or other factors kind of facing the tenant base, just trying to understand like how we should think about some of the phasing of occupancy in the portfolio over the next year?

Scott M. Brinker: Roughly half of it is Oyster Point and Pointe Grand. So I assume that half of the remaining 2023 and 2024 lease maturities in lab are going into redevelopment because the billings just need to be redeveloped to remain competitive. For the remaining 50% maybe I’ll ask Scott Bohn to comment.

Scott R. Bohn: Yes. I mean we’ve only got about 250,000 square feet of unaddressed maturities through 2024, excluding the Amgen buildings that we talked about going into redevelopment. And the bulk of that rollover doesn’t come until the back half of 2024. So we’re really just getting into the renewal windows on those leases over the next few months. So kind of more to come in upcoming quarters, but very manageable lease rollover across the portfolio, the balance of this year and into 2024.

Nicholas Yulico: Okay, great, thank you. And second question is just in terms of when you talked earlier about the mark-to-market on the portfolio, I guess, in lab any thoughts on what you’re seeing kind of across the markets right now, it feels like maybe South San Francisco, Greater Boston, Cambridge is where there is some more vacancy that’s just hit the market, realizing you guys are — seem like you’re outperforming the market, but just any sort of viewpoint on whether market rents are going to remain stable, are they correct, are you going to see just more competitive leasing concessions in the market?

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