In line with its portfolio-repositioning strategy to focus on life-science assets in key markets, Healthpeak Properties, Inc. PEAK recently announced two developments, one each in South San Francisco and the Torrey Pines submarket of San Diego.
The class-A development in South San Francisco will be called Nexus on Grand and is located on 233 East Grand Avenue. The development will comprise a five-floor building spanning 141,000 square feet of space. It will be purpose-built, enabling it to accommodate a number of life science uses.
Further, the notable location of the property will likely attract decent demand. This marks the company’s third ground-up development in the market since 2015 following The Cove at Oyster Point and The Shore at Sierra Point.
Also, Healthpeak has announced its plan to densify its Callan Ridge campus at 3020-3030 Callan Road in the Torrey Pines submarket of San Diego to double the current leasable area. The company will replace the existing outdated 90,000-square-foot building with a new class A life science campus consisting of two buildings with a total of 185,000 square feet of space.
The property is located in the center of Healthpeak-owned Torrey Pines Science Park that spans more than 20 acres and will continue to cater San Diego's life-science tenants’ needs.
It has another ground-up development in the Torrey Pines submarket — The Boardwalk — which is expected to be delivered for initial occupancy in fourth-quarter 2021.
The aging demography and increasing life expectancy of the U.S. population is driving demand for life-changing therapies and cures. This is offering scope for scientific innovation and biopharma drug development by biotechs.Moreover, in light of global efforts to develop vaccines and treatments for coronavirus, there is higher demand for drug innovation.
The underlying demand drivers are strengthening life science fundamentals, leasing activity and rent growth.Also, favorable drug approval trends and high life-science funding have been positives. Amid this, with an existing biotech-heavy tenant base, Healthpeak is seeing decent demand and retention at its lab properties.
Shares of this Zacks Rank #3 (Hold) company have gained 8.2% over the past three months compared with the industry’s growth of 6.1%.
Notably, over the past few years, Healthpeak has significantly reduced its seniors housing exposure through divestitures. This will reduce pandemic-related operational uncertainty in the near term, offer stability to earnings and increase capital allocation to targeted businesses. However, the dilutive impact on earnings, as well as reduced cash flows and net operating income in the near term from such dispositions, is unavoidable.
Stocks to Consider
Alpine Income Property Trust, Inc.’s PINE funds from operations (“FFO”) per share estimates for the current year have moved up 3.8% to $1.61 in the past month. The company sports a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Extra Space Storage Inc.’s EXR Zacks Consensus Estimate for 2021 FFO per share has moved up 8.1% to $5.97 in the past month. The company currently carries a Zacks Rank of 2 (Buy).
Global Net Lease, Inc. GNL has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 4% upward to $2.10 in a month’s time.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Healthpeak (PEAK) Announces Two Life-Science Developments - Yahoo Finance
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