Healthcare REIT eyes coronavirus impact

Healthpeak Properties, a diversified real estate investment trust that owns and develops healthcare real estate, has released an announcement on their perspectives on the COVID-19 impact on their company’s three core business segments and have shared their balance sheet. The $14 billion firm specializes in life science, senior housing and medical office tenants. Through February 2020, Healthpeak’s senior housing operating performance was in-line with their expectations. They were expecting disruptions due to the pandemic resulting in a deterioration in performance, the extent of which will depend on the spread of the virus. They expect their occupation rates to decline due to reduced move-ins and potentially due to an increased level of deaths. Their previous guidance issued on February 11 did not include any adverse impacts from the COVID-19 outbreak. Now they are recognizing that the impact will vary across their diversified portfolio, with life science, medical office, and hospital categories as their lowest risk assets. Medical office and life science assets are at a lower risk because their long-term lease agreements, averaged between four to six years. Hospitals are at lower risk as a result of triple-net leases with the rent coverage above 3.7 times earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR). Healthpeak’s senior housing developments, however, are at a increased risk because of 50% annual resident turnover and relatively low operating margins. As of this week, there was only one 50-unit Healthpeak senior housing community in Washington that has had a confirmed case. The resident was transferred to a hospital last Tuesday and only subsequently tested positive. Healthpeak believes that the operator is following all quarantine protocols in that community, including those prescribed by local authorities. Healthpeak has observed that residents and family members has responded positively to the many proactive and professional measures and communications undertaken by their operating partners. Their operating partners have not experienced been any material staffing issues to date, but the recent closing of schools will likely have an adverse impact on staffing availability, they added.

Healthcare REIT eyes coronavirus impact

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