Fully integrated real estate investment trust (REIT) Healthpeak Properties, Inc. (PEAK) operates in Science, Medical Office, and Continuing Care Retirement Communities (CCRC) healthcare asset classes. Shares of the company have declined 11.4% so far this year. PEAK’s recent fourth-quarter numbers were a mixed bag, with its bottom-line falling short of the Street’s estimates.
Revenue jumped 11.6% year-over-year to $477.3 million, beating estimates by $4.4 million. Earnings per share at $0.05 lagged expectations by $0.03. Notably, during this period, the company achieved same-store cash net operating income (NOI) growth of 5.4% and 3.6% in the Life Science and Medical Office verticals, respectively.
Further, in January, PEAK acquired an office building on a five-acre land parcel in San Diego for $24 million. With these developments in mind, let us take a look at the changes in PEAK’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Healthpeak’s top risk category is Finance & Corporate, contributing 16 of the total 45 risks identified for the stock.
In its recent report, the company has added one key risk factor under the Production risk category. Compared to a sector average of 4 risk factors, PEAK has 6 risk factors under the Production category.
PEAK highlighted that it obtains a substantial portion of its revenue by leasing properties, where leases usually provide for fixed rates of rentals, subject to annual escalations. The risk remains that if the consumer price index rises in excess of the annual escalations then PEAK’s growth and profitability may suffer.
Additionally, for some leases, a part of the tenant’s rental is based on the revenue from the property. If weak economic conditions persist, then lower property revenue may also mean lower rental revenue for PEAK. Further, if the consumer price index does not increase, then PEAK’s rental income may not increase as anticipated.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in Healthpeak Properties by 427.9 thousand shares in the last quarter, indicating a negative hedge fund confidence signal in the stock based on activities of 4 hedge funds.
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