Good morning and welcome to the Health Peak Properties Inc. 4th quarter 2025 conference call. All participants will be in listen-only mode. Should they need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchstone phone. To withdraw your question, please press star then one.

Please note this event is being recorded i would now like to turn the conference over to andrew johns senior vice president investor relations you may begin welcome today's conference call obtained certain forward-looking statements although we believe expectations reflected in many forward-looking statements are based on reasonable assumptions these statements are subject to risk and uncertainties that may call actual results to differ materially from expectations the discussion of risk and risk factors is included in our press release in detail in our findings with the sec We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures we discussed on this call, an exhibit of the 8K with furnished to the SEC yesterday, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. The exhibit is also available on our website at healthpeak.com. I'll turn the call over to our President and Chief Executive Officer, Scott Brinkley.

Thanks, AJ, and welcome to Health Peak's fourth quarter earnings call. Joining me for prepared remarks is our CFO, Calvin Moses. First and most important, thank you to our entire team for battling through an historic life science environment to finish 2025 with earnings in line with the midpoint of our original guidance range and significant transaction activity that should drive future earnings growth. A couple of comments on our segments. Outpatient Medical represents just over 50% of our portfolio income. Kelvin will discuss our outstanding operating results in that segment, but I want to make some more general comments, including the benefits of the merger with Physicians Realty Trust. That merger created the best platform and portfolio in the outpatient sector and positioned us to quickly and profitably internalize property management across our entire outpatient and life science portfolio. $70-plus million of synergies certainly helped offset the life science environment. The outpatient sector is benefiting from the ongoing shift in care delivery to lower cost, more convenient outpatient settings. Policy changes from Washington also support demand, including CMS, allowing more and more surgeries to be done in outpatient settings. And new supply continues to be very low, given the cost of new construction. All of the above contribute to the favorable operating environment we spoke to when we announced the merger two and a half years ago. The private market is now recognizing this as well, which is driving down cap rates. We're taking advantage of that demand by selling fully stabilized, less core outpatient assets at strong prices, including $325 million in the fourth quarter at a low 6% cap rate. Turning to our lab segment, the operating environment over the past four years peaked in intensity in the first half of 2025, which is now fully impacting earnings. But in the last five months, we've seen continued improvement in capital raising and M&A. New deliveries will soon go to zero and will remain at zero for several years. Certain life science buildings are pivoting to alternative uses, which helps address the supply overhang. All of the above points to early signs of an inflection point. Naturally, earnings will lag the underlying recovery because of the time to build a pipeline, sign leases, and build off the space before rent commences. But the building blocks of a recovery are in place. Four years ago, we had the opposite view of the trajectory in the sector, and this team chose to cut off capital deployment in life science, which at the time was by far our largest business segment. That decision, combined with the merger and related synergies, has allowed us to grow the dividend and maintain earnings since 2022 when the downturn began, a significant accomplishment given the severity of the environment we've been up against. As the sector recovers, we now have opportunities to acquire properties that would have been untouchable in the past, and to do so on a compelling basis. While others in the sector are retrenching, we're strengthening our portfolio and platform, including the recent Gateway acquisition and hiring Dennis Sullivan to lead San Diego and Claire Brown to lead Boston. Our team was working hard over the new year. In late December and early January, we closed the outpatient medical sales and recycled that capital into a highly strategic 1.4 million square foot campus in South San Francisco. We see potential for significant upside as the sector recovers, as the campus has more than 500,000 square feet of vacancy in a prime location. We now own and control 210 acres in South San Francisco, which is roughly one third of the land in the entire submarket. We own 6.5 million square feet of space at various sizes and price points so we can provide unmatched solutions to current and future tenants. A recent report from a leading brokerage firm showed the Bay Area led all life science markets in the fourth quarter and full year 2025 in absorption and leasing activity and has the largest volume of current tenant demand. That broker report is consistent with our own leasing activity and pipeline and further supports the acquisition. Moving to senior housing, our fourth quarter results were outstanding with 17% same-store growth. We point to three factors driving the growth. First, our highly amenitized full continuum campuses that resonate with seniors. Second, our asset management team collaborates with our operating partners to develop and execute property-specific business plans. And third, favorable supply and demand fundamentals. We expect all three factors to drive another year of strong growth in 2026. Okay, I want to comment on the Janus living announcement from January 7. Our senior housing portfolio has been operating at a very high level, but was largely ignored inside Healthy, given its relative scale. In addition, we have significant expertise and relationships in the sector, two valuable resources that were being underutilized. Over the past several quarters, with a singular focus on generating shareholder value, we worked alongside our board and advisors to review a range of strategic alternatives to the status quo. We chose to pursue the creation of a pure play senior housing read. We believe the planned IPO is a unique and creative way to capture value in the near term through a higher multiple on our senior housing NOI and, as a significant shareholder in Janus Living, to participate in future value creation from internal and external growth. The transaction can be summarized as follows. Healthbeak intends to contribute its entire senior housing portfolio to Janus Living in exchange for all the shares in the new company. Shares in the new company will be sold to the public in the IPO, which will dilute Healthpeak's ownership. Janus Living will own 100% of its properties in a Radea structure. Healthpeak will be the manager for Janus Living, with strong alignment given our ownership interest in the new company. Simply put, our economics will be driven by Janus Living's operating results and stock price. Since making the announcement in January, we closed on the purchase of our joint venture partners' 46.5% interest in a 3,400-unit senior housing portfolio for $314 million. We now have full control of those 19 communities. Over the next few months, we expect to transition 11 communities to Pegasus Senior Living and eight communities to CL Senior Living under highly aligned management contracts. We have long and successful relationships with the principles of each company. Both Pegasus and CL have successfully underwritten and executed operator transitions, and they have strong track records in these regions. We have $360 million of additional relationship-driven acquisitions in our senior housing pipeline. These are newer vintage assets located in high-growth markets in Orlando and the northern suburbs of Atlanta, both markets that we know very well. We expect the acquisitions will close in the first quarter and be contributed to Janus Living. We're excited to add Jonathan Hughes to our team as SVP of Finance and Investor Relations. Jonathan knows the sector well and will lead our efforts with the street at Janus Living, while Andrew Johns will continue to lead that effort at Healthpeak. In terms of timing, we filed a confidential S11 with the SEC in December. The SEC process will determine the ultimate timing of the IPO, but our current expectation is to close the offering in the first half of this year. I'll turn it to Kelvin to review our 2025 results and 2026 outlook.

Thank you, Scott. Before we get into the 2025 financial results, I want to briefly highlight one of our operational initiatives. We continue to make investments in technology, team, and process to deliver our investment management capabilities to a broader asset base even more efficiently than we have in the past. A component of this strategy is the acceleration of corporate automation, which will streamline our internal workflows and deliver a best-in-class experience to our clients. We're excited to welcome Omkar Joshi as our new Head of Enterprise Innovation to lead us through this next chapter of our growth. Omkar previously held leadership roles in both healthcare and real estate at Palantir. Now turning to the results. For the fourth quarter, we reported FFO as adjusted of $0.47 per share, AFFO of $0.40 per share, and total portfolio same-store cash NOI growth of 3.9%. For the full year, we reported FFO as adjusted of $1.84 per share, AFFO of $1.69 per share, and total same-store cash NOI growth of 4%. Starting with outpatient medical, We continued to deliver sector-leading results, and for the year, we executed 4.9 million square feet of leasing, including 1 million square feet of new leasing. This is the first time in company history that we have achieved this record milestone for new leasing. We also achieved cash releasing spreads of 5% on renewals, 79% tenant retention, and ended the year at 91% total occupancy. We also ended the year with same-store growth of 3.9%, which was above the high end of our original guidance range. These results reinforce our leadership position in outpatient medical, highlight our focus on deepening relationships with leading health system partners, and demonstrate our ability to capitalize on strong sector fundamentals. Most importantly, this reflects a tremendous team effort and a fantastic outcome for our platform. Moving to Lab, we ended the year with 1.5 percent same-store growth and total occupancy of 77 percent, inclusive of our recent Gateway Portfolio acquisition in South San Francisco, which depressed total occupancy by more than 150 basis points. For the full year, we completed nearly 1.5 million square feet of lease execution, including 562,000 square feet of new leasing and positive 5 percent cash releasing spreads on renewals. Since year-end, we have an additional 100,000 square feet of leasing activity either executed or under LOI. And finally, senior housing. We ended the year with 12.6 percent same-store growth, which was meaningfully above the high end of our original guidance range and includes 16.7 percent growth in the fourth quarter. Our 15 life plan communities that comprise our same-store pool have delivered tremendous industry results over the last five years, and our entire senior housing portfolio is well-positioned to take advantage of healthy sector fundamentals. Congratulations to Patrick Chang, our entire senior housing team, and operating partners for achieving a record year in entrance fee sales, highlighting excellence in execution, and underscoring the importance of aligning with the right operating partners that have the expertise to deliver leading results. Briefly on the balance sheet before moving on to guidance. We ended the year at 5.2 times net debt to adjusted EBITDA and $2.4 billion of liquidity. We maintain focus on the strength of our balance sheet and prioritize disciplined capital allocation to pursue strategic investments and fund portfolio growth. Now turning to 2026 guidance. We are forecasting FFOs adjusted to range from $1.70 to $1.74 per share. Our total same-store NLI growth is forecasted in the range of down 1% to up 1%. This assumes outpatient medical between 2% to 3%, lab down 5% to down 10%, and senior housing ranging from 8% to 12%. Our earnings guidance for 2026 reflects the life science environment over the past several The reduction in earnings is attributable to the loss of occupancy in lab, which, as we have noted, has a lagging impact to earnings. This equates to $0.12 of earnings from the lost base rent, OpEx, and capital to release the space, and includes the impact of a $68 million contractual purchase option exercised in Salt Lake City at an 11% cap rate. Strength in our outpatient medical and senior housing segments offsets the impact of balance sheet refinancing at higher rates, the receipt of loan proceeds of $150 million in 2025 at an approximately 10% interest rate, and drag from redevelopment and development. The leading indicator supporting each of our businesses gives us a foundation to grow from and an opportunity to capture demand as the life science sector recovers. Touching on sources and uses, we're off to a busy start to the year with transaction activity. So far in 2026, we've completed $464 million of acquisitions, including $314 million buyout of our joint venture partner in our senior housing rental portfolio and the acquisition of the remaining South San Francisco Gateway Lab portfolio. We have an additional $360 million of senior housing investments under LOI or purchase agreement. To fund these transactions, we are well underway on our opportunistic capital recycling plan, including $1 billion or more of asset sales, recapitalizations, and loan repayments in 2026. Given the strong private market for outpatient medical, we'll continue to take advantage of that demand as an attractive source of capital. And finally, we have approximately $1.1 billion of refinancing activity in 2026, including $650 million of senior unsecured notes maturing in July, and an additional $440 million of secured mortgages maturing throughout the year, which will either be refinanced or repaid. And finally, two housekeeping items related to Janus Living before we move into Q&A. With respect to our previously announced Janus Living IPO, the impact of the proposed formation and public offering are not reflected in our most recent supplemental materials or in earnings guidance we should know that we do not anticipate any meaningful impact on 2026 guidance from the transaction and one last point on this while we understand there will likely be many questions about the ipo we are limited in what we can discuss specifically and we'll focus our answers to information that we have previously disclosed on the transaction and operational information that we provide in the normal course for our senior housing segment operator with that you can open the line for q a thank you we will now begin the question and answer session

to ask a question you may press star then one on your touchstone phone if you are using a speaker phone please pick up your handset before pressing the keys to withdraw your question please press star then one so that everyone may have a chance to participate we ask the participants to limit their questions to one and a related follow-up if you have additional questions please recue At this time, we will pause momentarily to assemble our roster. And our first question comes from the line of Nick Yolico with Scotiabank. Your line is open.

Thanks. Good morning. I guess first question, perhaps for Scott, you know, in terms of the gateway acquisition, can you just talk a little bit more about how you saw that as a complement to your existing portfolio in that market and how you were comfortable, you know, taking on more vacancy with the acquisition?

Oh, hey, Nick. Good morning. You're always first on the list. You must call in really early. It's all good. It gives us something to, we know what to expect. Nick is always first. Yeah, Gateway. No, we're really excited about the Gateway acquisition. We feel like decisions we've made over the past four years really positioned us to take advantage of these opportunities. It's a campus that never would have been available at the peak. I mean, this is either the number one or number one, a sub market in the whole country. We've got a huge footprint there already. This is complimentary. It really just gives Scott, Natalia and the team an additional 1.5 million feet of it's really opportunity is the way we're thinking about it. Not so much vacancy. And we're using proceeds from our outpatient sales where there's a really deep market. We're getting great prices, fully stabilized assets that have decent growth, but certainly not the type of potential growth that we see at this gateway campus and we really view it as one enormous campus at this point i mean it's six and a half million square feet you can park your car once and walk to the whole thing i mean it's pretty impressive in terms of what we can provide to our current tenants and most important perspective tenants we really are the market leader in south san francisco it had really a phenomenal 4q in terms of lease assign a lot of tenants in the market. It doesn't mean that all that vacancy goes away within a year, but the momentum is positive. Love the team that we have on the ground. And, you know, we see kind of a break-even year one yield with the opportunity to create some real growth over time at a basis that I think, you know, in the five, 10 years from now, people will look at and say, wow, that's an amazing buy at a time when there's really no one else at the table. So yeah, we're pretty excited about it, Nick.

Okay, great. Thanks. And then the second question is on the lab segment. And I wanted to see if there's any way you can give us a preview of how to think about occupancy, sort of total occupancy for lab, the cadence of that throughout the year. And then also, I think you've built in some cushion for some tenants where there may be a capital raise or not. So there's some contingency on that, if you could just sort of talk about?

Yeah, let's assume that the recent improvement in the capital markets and capital raising continues. We saw that commence around Labor Day in 25, and it's continued into the first month of the new year. The conversations we have with bankers, capital markets desks, venture capitalists are quite positive, so we are optimistic that that will continue. We do think total occupancy by year-end 26 should improve from where we ended the year in 2025, just with the caveat that the leases in Life Science are big. They're chunky. The average size is like 60,000 square feet. So, you know, it can jump around from quarter to quarter, but the pipeline is good. It's weighted more towards new leasing, which is a huge positive, and we don't have a ton of expirations this year. So it should be a good set up to start growing occupancy again. But again, it obviously depends on the capital markets can continue to be cooperative. All right. Thanks, Scott.

Our next question comes from the line of Pharrell Grenot with Bank of America. Your line is open.

Thank you. Good morning. This is Pharrell Grenot. I first also just wanted to dive in deeper with the lab leasing. And just thinking about it going forward, I believe you made the commentary around $100,000 of leasing activity under execution or LOI. Can you give us a little bit more background around that 100,000? It seems a little bit lower than potential past LOIs that we've been seeing that you've stated on calls. So are you seeing a slowdown in incoming, or is it just year-end processes that now we've picked back up heading into 26?

Hey, Farrell, it's got a phone. I can take that one. I mean, I mean, I think when you look at where we are in the calendar year, you know, you have the holidays towards the end of the year, which are always a little bit slower. And you roll right into the J.P. Morgan conference, which, you know, a lot of these companies, you know, spend a lot of time preparing for. So it's typically a slower time of the year. You know, we do feel good with the pipeline with where it is today, you know, a little over one and a half million square feet. You look at that compared to where we were last year, we're 50 percent higher starting the year. so our jumping off point going into 26 is much improved from where we were a year ago. I think what's important too on the pipeline as we look at it, the mix of that pipeline continues to shift towards new leasing versus being very heavy on the renewal side 9-12 months ago. So I think it's a good indicator where demand is broadening.

Okay, great. And then also on the lab guidance, the negative 5 to negative 10 percent same-store NOI growth. Can you walk through a few of the underlying assumptions within that range? I understand that a chunk of that is coming from the 25 expirations, but then also looking forward to 26. What elements are in that range that is building?

Yeah, Farrell, this is Kelvin. I'll take that one. I think what was probably most important from the fourth quarter results is that the disconnect between the occupancy decline and the NOI that we achieved for the quarter is probably important to note as you're looking into 2026 as you think about that five to ten percent decline to same store NOI occupancy today is in the high seventy seven percent area we do have the opportunity over the course of the year to improve that, as Scott and Scott just mentioned. But we're likely going to see in the first quarter some incremental impact to NOI and earnings as a result of the lower occupancy at the end of the year. So that trajectory is not clear in the Q4 numbers, but will become a little bit more clear in the first quarter as that occupancy starts to set into income.

Thank you very much next question comes from the line of austin wordsmith with key bank capital markets your line is open hey good morning everybody um kelvin kelvin i was hoping to better understand the impact that the lab occupancy losses are having on on 2026 ffoa and if the 12 cents that you highlighted is that specifically from the expirations that occurred in the fourth quarter of last year and and you know tenants that didn't renew or are there additional move outs in that figure um beyond maybe what was you know captured in the lease expiration schedule yeah so i think

it's a combination of things we've walked through the the component parts of that 12 cents impact there's the salt lake city transaction that we mentioned that's a component of that's about a penny from the 68 million dollar sale at 11 cash cap rate that's the component there's also outside of the lab portfolio our refinancing borrowing costs are just higher today than our in-place levels so that's another uh reduction to our 2026 ffo and we also received 150 million dollars of long proceeds at a 10 uh interest rate so that's offsetting the ffo performance in that that 12 penny number that we're talking about but specifically with respect to the lab occupancy we did lose about 600 basis points of total occupancy for the year. And for each 100 basis points of total occupancy, that's about a penny to a penny and a half impact on earnings. So that incorporates the base reduction, the op-ex that we will absorb with respect to the triple nets, and then some costs for releasing. So as we get into the first quarter again, 2026, you're looking at occupancy levels now that are more representative of where earnings are headed. So you'll start to see the income reduction in that first quarter and through the year. But again, when we get to the end of the year, we hope that occupancy will start to tick back up again and we'll start to be able to capture earnings and growth from there.

Can you just, you know, that was helpful, but can you just help me better understand what's driving the lag between, I guess, when the expiration occurs and the financial impact? Are these, you know, plan move outs where they've gone the month to month and you're still collecting, you know, rental income or, you know, what's driving that delay between, you know, what we're seeing, I guess, in the supplemental on, you know, the operating metrics and then what actually flows through to the financials? Thank you. Yeah.

Yeah. I mean, part of it also often you've got our reported occupancy is just at a point in time. It's just literally December 31st. So it can be a little misleading. And I get back to the point I made that our life science leases tend to be pretty big. They're 60,000 feet on average. So you did have a number of lease expirations in 4Q where we got the rent for most or all of 4Q, but then lost the occupancy the very last day of the year. So that's a material component. And then when we have an early termination, We generally do have security deposits, letters of credit. In some cases, there are modest termination fees. All of the above can help cover up for a quarter or two the impact of an early termination. But it's really kind of that forward 12 to 18 months where the full impact is realized. And of course, you're now putting capital into the building. So it's really a combination of all those things that explains the lag to the impact in earnings. You know, the same will be true on the way back up. As we sign MISAs and grow occupancy, it'll take a little bit of time for that to flow through earnings. So it does go both ways. Right now we're on the wrong side of it, obviously, but we feel like the building blocks are there to get on the right side of it as we, you know, look towards 2027.

I appreciate the clarification there. And just lastly, I guess on the 1.5 million square feet, can you characterize the types of tenants looking for space? Are these large established biotech companies or more smaller kind of early stage type tenants that, you know, may have a greater sensitivity to the capital market's backdrop? And that's all for me. Thanks for the time.

Hey, Austin. Scott Bowen. I mean, I can take that. I think if you look at the pipeline, it's a pretty good cross section of the industry. You know, we're from series A companies up through, you know, established public biopharmists. And some of that is new tenancy that would be to our portfolio. Some of that is tenancy renewing. Some of that is tenancy expanding within the portfolio. So it's a pretty wide range in the pipeline today.

Thanks, Austin. Next question comes from the line of Rich Anderson with Cantor Fitzgerald. Your line is open.

Good morning, everyone. So back to Gateway. And, Scott, you said in response to an earlier question, you know, five years from now, we'll look back. I don't think you were being scientific and saying that it's going to take five years for that, you know, that campus to recover. But when you guys were thinking when you were underwriting this, what was the cadence of the recovery at Gateway specifically? And how do you think that compares generally to life science overall? all? I mean, do you think it moves quicker or slower for whatever reason versus the entirety of the life science continuum?

Yeah, so I mean, the acquisitions break even on day one, just to be clear. So the upside probably gets captured over the next two to three years, best guess, incrementally. So yeah, the five years, 10 years, obviously, I'm not that wasn't intended to be a comment about the lease-up period. So I could clarify that if that was somehow misunderstood.

No, no, not at all. I figured that. Just wanted to put it on record. And so that, okay, so to, you know, call it two plus years to sort of recapture some of that vacancy or a lot of that 500,000 square feet of vacancies. Is that about right? I mean, rough guess right now. Who knows?

Yeah. I mean, it's not going to go to 100%, but yes.

Yeah. Gotcha. Second question for me, different topic for Kelvin. You got the 1.1 billion of refinancing activity for this year at a 4% rate. But then you look at your debt maturity schedule, you got some chunkiness in the aftermath in 27, 28, 29, mostly at lower rates than the 4%. And I'm wondering, is there a strategy around any of that, you know, preemptively for this year, or do you let that ride out and see what the day brings, you know, this time next year for future debt expirations?

Yeah, I think just like in years past, Rich, we'll be very opportunistic and access the market when we see the best pricing opportunity. This year, we'll focus on our maturities that are ahead of us. The in-place rates are fairly attractive relative to the new issue pricing, so we'll continue to try to be opportunistic throughout the year. But there's no plan currently to accelerate some of our 2027 maturities into 2026. Okay. Thanks.

Next question comes from the line of Seth Bergy with Citi. Your line is open.

Thanks. It's Nick Joseph here with Seth. Jeff, just on the 2026 expirations for life science, what percentage of that do you know is moving out, and where are you on negotiations with the remainder?

I can start there. This is Kelvin. So for 2026, we have about 450,000 square feet of exploration, and that will be fully offset by commencements throughout the year. I think we did a great job of pulling forward some of our renewals into 2025 to really pull that number down as we head into 2026. And a substantial majority of our explorations are actually in South San Francisco, our biggest market, where we have the deepest tenant relationships. So we feel good about being able to capture some of those renewals. But, Scott, maybe I'll kick it to you to add some more context.

Yeah, I know. I think, as Kelvin said, we did address some of the 2026 expirations already in 2025. So some of the ones we're working on that are later in the year are still TBD, still probably a little bit too early to sell on some of those.

Thanks. That's helpful.

And then just as you've been going through the leasing process, have there been any changes to the pipeline in terms of converting to executed leasing and conversion timelines um yeah i think you're still working through a process where you know it's different than it was in the peak when there was no space no space available and people were making very quick decisions uh you know people are being uh boards and ceos are being a little bit more cautious and taking the time to make sure that they you know have the plans fully baked and the economics fully baked um so it is the duration is still you know longer than it used to be but you I think what we're seeing today is the credibility of the pipeline is much stronger in so much that we have more confidence in that the pipeline will transact versus, as you went back to two years ago, it was a lot of tire kicking versus deals that we're actually going to turn into transactions.

Next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open.

Hi. Good morning. And just going back to the kind of the bridge from fourth quarter to first quarter with regards to the occupancy loss being back unloaded, can you comment on like what that NOI bridge, like was there any, can you quantify how much one-timers there were in the fourth quarter that are going away and what like the pro forma NOI is on the lab side just so we can have a clear or clean runway to start modeling for the full year?

Yeah, this is Kelvin Juan. I think maybe I'll start, and it's a lot to unpack, but, you know, I think starting with total occupancy at around 77 percent, we came down about 375 basis points sequentially. And from an NOI perspective, that shift in NOI will be a lot more pronounced in the first quarter, as we mentioned. if you think about our guide between you know down five percent to down ten percent for the segment that should give you some context for you know the decline that we'll expect in that first quarter from a same store NOI perspective as Scott mentioned there were a number of other items that don't impact same store as well that we got the benefit of in 2025 that you won't see in 2026. So there's incrementally more of an impact with respect to earnings. So if you look at from an earnings perspective, the midpoint of our guidance range at $1.72, if you take that over the four quarters, it'll probably be a little bit higher in the first quarter and the fourth quarter, and it'll be a little bit lower in the second and third quarters, plus or minus a penny. as you think about it but hopefully that gives you a little bit of direction in the trajectory that we're expecting okay great and then just a question on seniors housing i know you guys kind of commented that you'd rather not get into specifics but just curious on the previous

sovereign wealth jv how we should think about capex for that business and what kind of deferred capex there may be uh associated with that portfolio with the transitions upcoming i'm not sure what kind of unit per year of spend has been uh put into those assets but just curious on how we should think about capex for that that piece of the portfolio yeah hey one um it's scott and it's not that we don't want to talk about it we just have to focus our comments on health peak Just to be clear.

So this is totally fair game. These are assets mostly in Houston, in Denver. So big markets, we think they've underperformed, not the capital. There will be some normal transition stuff that we have to put into the buildings, technology, signage, stuff like that. But it's not like there's some massive CapEx plan to revitalize these. We think this is more operational in nature. so we're glad to have full control of the assets again, and we've already moved decisively after that buyout to align ourselves with two groups that we've got a good track record with, and we have high confidence that they're going to turn these around over the next two to three years, so there's significant opportunity in these buildings, so we're excited to capture it.

Thank you.

Next question comes from the line of West Galladay with Baird. Your line is open.

Hey, good morning, everyone. Can you unpack the lab watch list? You know, how much has that list changed from a year ago? Obviously flushed out a lot of the tenants in the last few quarters. And I guess maybe can you quantify the exposure to, call it, higher risk preclinical phase one companies?

Hey, Wes, I'll start. This is Kelvin, and then I'll probably ask Scott to jump in as well. But I think if you start looking back at the capital markets activity over the last four months. We are certainly encouraged by the volume of activity, both from an M&A perspective and equity capital markets perspective. The IPO backlog is building. Secondary equity offerings have been far more prevalent than what we saw for the first three quarters of 2025. M&A activity is picking back up again. So, there's a good amount of capital recycling again in the biotech sector, which is very important to see. And as a result, our watch list has reduced considerably as tenants have raised capital. So we're encouraged by that. That being said, in our portfolio, we're still monitoring tenants as we always do. It's just a part of this business. And there's some folks that, you know, we expected to vacate in the fourth quarter that didn't, that could come out of our portfolio. So we're still keeping our eye on specific names. You know, we could be surprised to the upside as well where they you know continue to engage in bd discussions and engage in strategic discussions that could bring capital into their businesses and allow them to continue uh beyond our expectations so i don't know scott if you had anything more yeah i think just from the industry perspective too which is fueling the capital markets i mean you know that the interest rate cuts you know the three cuts last year the The two in the fourth quarter were really helpful for the industry in a policy perspective in D.C.

You know, they reached MFN deals with 14 companies. Those deals had little to no impact on share prices of those biopharma companies. So the read-through is – the general impact on those deals is going to be pretty minimal on biopharma, which is, you know, helpful to understand and just get some more clarity And then you look at the FDA. The FDA approved 52 drugs last year, which is right in line with the 10-year average, a little bit below the five-year average, but given all the chaos and change there, it provides reassurance to the industry that the agency is still functioning and hitting dates and processing approval. We talked to our CEOs. I talked to 30 different CEOs at the J.B. Morgan Conference and asked the question to virtually all of them, and the response was that the feedback they're receiving from the agency is normal and responsive you know and the FDA again if you look at the commissioner speaking they're talking about process improvements and streamlining reviews and lowering costs which are all changes you know helpful changes to the industry which you know again isn't directly correlated to the capital markets but you know certainly helping the sentiment behind the industry and to go back to answer the first part of your question to the less than 10% of our AVR on the life on the lab side is is from pre-clinical Okay, thank you for that.

And then when you look at your leasing pipeline, is that starting to shift more towards some of the redevelopment and development properties?

Yeah, we had a good quarter on the dev and redev side. We executed 121,000 square feet of leases on our redevelopment properties in the quarter. Additionally, we completed 100,000 square feet of TI's and deliver space, both at combined advantage uh in gateway in san diego so you know certainly we have more credible activity again and ongoing discussions on those development and redevelopment spaces today than we've had in a while uh but nothing far enough to talk about in in detail today okay thank you next question comes from the line of vikram malhotra with miserable your line is open good morning thanks for getting the questions um i guess just two clarification so first of all i guess kelvin can you just confirm or clarify, fourth quarter, I think you had between two or four cents of, you know,

whether it was termination income or the benefit from the occupancy lag versus the income hit, et cetera, you know, like you mentioned in terms of security deposits. So that's like the, you know, 12, 13 cents, but how much of that is actually still flowing into 1Q? Because you You mentioned 1Q FFO is likely higher before we see the full impact, just because $0.03 is a lot in the quarter. So I just want to make sure we understand how much of that $0.02 to $0.03 kind of percolates into 1Q.

Yeah, and maybe just to jump to first quarter FFO, it's probably down three pennies from where we ended the year, so $0.47 to something closer to $0.43. So, you know, maybe that helps give a little bit of context. I think the numbers that were benefiting the fourth quarter will naturally come out as we start in the first quarter. But, Vic, I think that should give you some context in terms of the trajectory between Q4 to Q1, just to get right to it.

So there's some security deposit slash, you know, letters of credit that still benefit Q and 1Q, and then they fully go away in 2Q onwards. Is that fair?

I think they largely go away in the fourth quarter, but you'll see the benefits that we got in the fourth quarter that were not related to vacates in our portfolio included some free rent burn-offs, so that benefit's coming in in the first quarter as well. So there are other natural benefits, escalation from leases in 4Q that started to provide some incremental earnings benefit you'll start to see in the first quarter as well. So not just those items that we were talking about around terminations and letters of credit, but, you know, that should hopefully give you enough context relative to the year, how the first quarter will start.

Okay. And then just on the life science occupancy build, just to maybe give us a bit more context, do you mind giving us kind of where occupancy is, either portfolio-wide or same-store, like leased versus, you know, economic today? day. And then just clarify again, I think you made a comment on expirations, like what do you actually have baked in for renewal on the expirations in 2026? Thanks.

A lot of questions in there.

What was the first question?

We didn't catch it. Just the like leased versus, like what's the leased versus occupied or like economic versus leased rate. So like what you've actually leased, which may not be like, which may have been leased but not commenced. So there's a difference between the two. So I think you had 77-ish total portfolio.

Yeah, we've got a couple hundred basis points of leases that have been signed that haven't yet commenced that should start in 27. That probably offsets most of the non-renewals, although Scott already said we don't have full clarity on the renewals. A lot of them are back-end weighted, so I'll just repeat that. And I'll also repeat what I said earlier, is we think total occupancy should increase from year-end 25 to year-end 2026. That is what is in our guidance. Okay.

And that's the combination of your, like, you hope it's a macro comment, but it's also based on kind of micro where you look at the pipeline today and you can see a higher conversion rate perhaps than prior. Is that fair? Like, it's not just sort of a macro, you need the macro to stay where it is, but you actually also see specific conversion?

Yeah, it's certainly fair to say. We're looking at the macro, the sub-market, the lease. I mean, from top to bottom, the government putting together our guidance. We're looking at all those components. Yes, that is fair to say. Thank you.

Next question comes from the line of Mike Muller with JP Morgan. Your line is open.

Yeah, hi. Quick question, Selvin. What's for ASFO, CAPEX, and capitalized interest for 2026, and how does that CAPEX split between the segments?

Yeah, maybe I'll start in our guidance. We had just over $500 million of CAPEX in our plan, and that's a combination of redevelopment capital, non-recurring capital, development capital. So it incorporates everything. The timing of that spend is, you know, actually throughout the course of the year. Last year we had about $600 million. This year it's come down a decent amount and we'll be executing on that plan throughout the year. So the amount, I don't have it specifically in front of me just for the AFFO component of that, but I think we're going to be lighter on the capital spend this year than we were in 2025.

There's no material change in AFFO, CapEx, and 26 versus 25, Mike. So if you just look at the supplemental and the disclosure there, that's a good run rate for all three business segments.

Got it. Okay. What about capitalized interest?

Yeah, cap interest is flat, actually. So no change to cap interest.

Okay. Appreciate it. Thanks.

Next question comes from the line of Omatayo Okusanya with Deutsche Bank. Your line is open.

Yes. Good morning, everyone. I wanted to go back to the gateway transaction and really kind of understanding it's almost a little bit to Rich's question, trying to understand exactly how you expect that to kind of ramp up over the next few years. And I guess I ask the question in the context of, you know, you're kind of buying it at 60 percent occupied according to media reports and also buying it from kind of two other well-known you know players in the space so it's like just kind of curious exactly like what are you seeing versus like they're kind of exiting and you're kind of doubling down and i'm just trying to understand those dynamics a little bit and ultimately kind of you know when you look at this investment three to five years down the road how do you expect it to be performing Yeah, well, you know, can't necessarily speak for others.

I mean, they're in a joint venture. I think they made it public. They're looking to raise money in 2026 to fund various things, development pipelines, You know, we're in a much different situation. You know, we're being opportunistic. Balance sheet's in great shape. We don't have the big development pipelines. So we're in a position to opportunistically acquire assets with a lot of upside, but also good current yield. So I think that's the right way to think about it. Low six is going in. A lot of capital has already been put into these buildings. The future capital that we would need to invest is really good news capital tied to leasing. So that's a positive thing. If we're investing capital into these buildings, it means we signed a lease. And we see high single digit unlevered type return opportunity in this market as it stabilizes. So that's pretty compelling in comparison to the things that we're selling.

That's actually a very helpful context. And if I would just ask one more about, you know, just like picturing around Janice, I just, I mean, is all your CCRT assets going to be going into this thing, or is it just the senior housing stuff and then the skilled nursing and the memory care still kind of remained at Healthy?

Yeah, Tyrell, let me clarify that. So when we complete the IPO, all of our senior housing assets, whether entry fee or rental, would be contributed into Janus Living. So going forward, Health Peak will not own any senior housing real estate. We'll just have an ownership interest in the stock of Janus Living. So the memory care and all the other stuff, that's part of the CCRC is also going into janet that's right yeah those are campuses that we can't break them up that that's that's one asset um they can't be broke broken on that's all right and i guess over time you'll you'll kind of share more details about the external management contract and things like that uh that's right outside of what has already been made public tile so if you have a question about what's been made public i'm happy to address that here okay all right sounds good all the best thank Thanks, Tyle.

Next question comes from the line of Jim Kammerich with Evercore. Your line is open.

Thank you. With the gateway transaction behind you, what is the appetite, just generically, you still have some guidance in terms of billion plus or minus of acquisitions in 26. What's your appetite for opportunistic lab now that you've already got gateway under your belt?

Yeah, hey, Jim, we've got $1 billion of acquisition and stock buyback built into our guidance. We've already closed or under contract to just over $800 million between the gateway transaction and the senior housing opportunities that should close here in the first quarter. So you're right, there's a little dry powder, you know, not significant. But we do have a pretty large pipeline of asset recycling, whether outright sales, recaps, loan repayments. So there's at least the potential for that billion dollars to grow depending on whether we can recycle capital. We're obviously not looking to issue equity at our current stock price. But if we're more successful in selling assets or recapping assets, we would have additional dry powder to look at opportunistic life science investments. There's a number that we're keeping our eye on, but certainly nothing that is ready to be disclosed or under contract. But fair to say that we'll be very disciplined in which assets, in which submarkets we would pursue. That was the case even in the peak. We did not get overly aggressive. we stay disciplined, our entire portfolio is in the three core markets, that will continue. So anything we do, I think, would have a lot of crossover or similarities to what we just did in Gateway. We're in a known sub-market, a team that can execute, and what we feel is a real competitive advantage to drive lease-up.

That's understood. And then something we haven't talked about, are most of the synergies relating to the physician's realty on the outpatient medical side, Are those synergies basically in run rate today, or late 25, I guess you should say, or should we sort of have some maybe a little further margin implications for the outpatient medical across 26?

We've got another $2 or $3 million of square feet that we could internalize property management over the next one to two years, so there's still a little bit of opportunity, but it's not material. You know, most of that $70-plus million of synergies are basically included in our not only fourth quarter 25 run rate, but our 2026 guidance as well, Jim. Okay.

Thank you, guys.

Next question comes from the line of John Polosky with Green Street. Your line is open.

Hey, thanks for the time. My first question is on the operator transition of the assets held in the Sovereign Wealth JV. Do you expect occupancy declines in the near term as the new operators take over, and how long do you expect for the properties to reach more of a stabilized market type of occupancy level? Hey, John. Scott here.

Hopefully, we can get those transitions done by April 1st. That's at least the target. Teams are working hard to do that, including the operators, so we appreciate their cooperation. There could be a small decline in occupancy, but I don't think it's material. We see significant upside, 50% plus NOI growth potential in the next two to three years, in our view. Highly aligned management contracts and operators that have a really good track record with us and in these markets.

So pretty optimistic about the upside, but yeah, there could be a quarter or two of transition-related occupancy loss, Joan. okay and then last question maybe for scott bone i want to better understand the composition of tenants that have uh other sign leases or that are in your pipeline kind of the post labor day um can you give me like rough ballpark what proportion of tenants are more the traditional wet lab users versus other perhaps ai or almost quasi traditional office users yeah it's a pretty good mix.

You know, we did have some office-related, you know, users sign leases in the fourth quarter. We did, you know, one GMP manufacturing type space with an existing tenant of ours in a redevelopment project, and then several wet lab spaces. So, pretty good mix. You know, we also signed one lease with a group who, you know, we announced it on social media, but it was actually a drone manufacturer who just raised $600 million at, I think it was a $6 billion market cap, you know. So a wide variety of uses, and I think that, you know, underscores the ability, you know, within our buildings to capitalize on the robust infrastructure that is in those buildings and be able to play, you know, cast a wide net in our leasing, you know, and especially in the Bay Area where we've seen a real convergence, you know, office demand increasing um you know ai and ai adjacent both in you know office space but also on the lab on the lab front as well maybe a follow-on there as as you see that convergence what are the implications for the rents those tenants are paying are they are they decently all else equal are they decently lower than the wet lab users going to pay yeah i mean if you're just looking at a straight office space which you know we don't have all all that much of. I mean, that's obviously going to be a lower rent than a lab space, but each deal is different. Overall rents and economic – or net effect is a tick down a little bit, but we've seen a little bit more free rent in certain deals in certain markets, but it's all deal specific. I mean, it depends on the space. It depends on the build out of the space. We have been able to control the TI's quite well. If you look at our second-generation leasing and our renewal leasing, they're close to And our TI's on our new leasing ticked down as well. So I think you've got to look at a little bit more than just the face rate on these It's the total economic package. That's how we think about it.

Thanks for the time.

Our last question comes from the line of Jamie Feldman with Wells Fargo. Your line is open.

Great. Thanks for taking the question. and I'm pinch-hitting for John Kilachowski here. So we appreciate all the, you know, the guidance and all the moving pieces on 26 for the key line items. As we think about, you know, how those move throughout the year, is it safe to assume that 26 is a bottom for FFO, or do you think it can still be lower in 27? I know you, I mean, I'm not really asking to give guidance, but how should we think about, like, the key line items and how they progress throughout the year and what that means for 27?

Oh, hey, Jamie. Yeah, so two-thirds of the portfolio is doing really well. Even if we're successful with the IPO, most of those earnings will still flow through HealthPeak's financial statement. So there really isn't any impact from the IPO there, which is one reason we really liked it as an alternative outcome for shareholders. there's the outpatient fundamentals are very strong. If anything, the growth outlook in 27 looks even more favorable, just given the leasing trajectory and occupancy trajectory. And we obviously see life science coming down. I mean, we've said throughout this call, we see occupancy increasing a bit from year in 25 to year in 26. That should be a positive. The variables are obviously what happens with interest rates. As Rich pointed out, we still have some refinancing to do over the coming years. Um, but the, the building blocks of the actual portfolio sure feel like, uh, 26 absolutely would be a bottom.

Okay, great. That's super helpful. And then just how do you think about doing, um, you know, an equity acquisition like you did versus some of the higher yielding meds or loan to own deals you had done in the past at higher yields? Like why the transition to put so much capital into that type of investment versus more fixed income type stuff?

Yeah, I mean, we only did two of the loans. Those are just unique situations in San Diego about a year ago. We do like those in terms of the risk profile versus the return. So if those were opportunities in 26, we'd continue to look at those. This was just a unique opportunity to buy a campus we absolutely wanted to own from day one at a break-even yield with the ability to capture a bunch of upside. So it's just different dynamics. The two loans we did those buildings were essentially empty um so just a very different return profile where we thought the loan with a a pathway to ownership was the right structure for those two particular deals okay all right great thank you for taking the question yeah thanks jamie this concludes our question and answer session i would like to turn the conference back over to scott brinker for any closing remarks uh thanks for your time everyone uh hopefully we'll we'll see you uh tomorrow in Florida. Take care.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.