DOC Healthpeak Properties
Defensive healthcare cash flows at a 7% AFFO yield, but lab overhang and rates cap the multiple.
The story
Healthpeak is now a scaled outpatient medical and life-science landlord post-Physicians Realty merger, with revenue up ~11% CAGR but operating margin compressed to ~21% on merger D&A and lab softness. FFO of $1.30B (~$1.88/share) funds the dividend, but lab oversupply in biotech hubs and 8.9% cost of equity cap upside. Balance sheet is manageable; the story is stable cash flow, not growth.
Revenue momentum (+4.6% last year) and stabilized margins support ~4% near-term FFO growth, while lab supply and tenant credit cap terminal growth at 2.5%, well under the 4.72% risk-free rate. AFFO/FFO of 0.78 reflects normal recurring capex for medical/lab assets; beta at 0.92 matches the sector anchor and healthcare's defensive tilt.
Value drivers
| AFFO growth (Y1) | 4.0% |
| Terminal AFFO growth | 2.5% |
| AFFO / FFO ratio | 78.0% |
| Beta | 0.92 |
| Failure probability | 3.0% |
| Cost of equity | 8.9% |
Valuation bridge
| PV of AFFO (explicit) | 7.80B |
| PV of terminal value | 9.66B |
| Equity value | 16.93B |
| ÷ shares → per share | $24.55 |
News
bullish +0.60 · 8 articles
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- Healthpeak Properties (DOC) On Raised Guidance And The Undervalued Narrative
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- Should Healthpeak’s Raised 2026 EPS Guidance and Profitability Shift Require Action From Healthpeak Properties (DOC) Investors?
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 1.36B | 1.06B | 4.0% | 971.77M |
| 2 | 1.41B | 1.10B | 3.8% | 926.90M |
| 3 | 1.46B | 1.14B | 3.7% | 882.68M |
| 4 | 1.51B | 1.18B | 3.5% | 839.22M |
| 5 | 1.56B | 1.22B | 3.3% | 796.61M |
| 6 | 1.61B | 1.26B | 3.2% | 754.95M |
| 7 | 1.66B | 1.29B | 3.0% | 714.31M |
| 8 | 1.71B | 1.33B | 2.8% | 674.76M |
| 9 | 1.75B | 1.37B | 2.7% | 636.37M |
| 10 | 1.80B | 1.40B | 2.5% | 599.20M |
Key risks
- Life-science lab oversupply in Boston/SF suppressing rents and lease-up
- Tenant credit deterioration in outpatient medical (post-Steward legacy exposure)
- Elevated rates keep cap-rate expansion and refinance costs punishing
Catalysts
- Lab leasing announcements de-risking the development pipeline
- Fed easing compressing cost of equity and re-rating the 7% AFFO yield