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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.00pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.10pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.10pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
conflicts+5
delay+4
adversely+3
volatility+2
divert+2
Positive rising
favorable+4
able+2
successful+2
enhanced+1
satisfied+1
Risk Factors (Item 1A)
28,425 words
Risk Factors Summary
Investors should consider the risks and uncertainties described below that may affect our business and future financial performance. These and other risks and uncertainties are more fully described in “Item 1A, Risk Factors” in this report. Additional risks not presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our business, financial condition or results of operations could be materially and adversely affected. As more fully set forth under “Item 1A, Risk Factors” in this report, principal risks and uncertainties that may affect our business, financial condition, or results of operations include:
• changes to regulatory, funding, staffing, trade, and other policies and actions by the U.S. political administration;
• macroeconomic trends that may increase borrowing, construction, labor, and other operating costs;
• changes within the life science industry, and significant regulation, funding requirements, and uncertainty faced by our lab tenants;
• factors adversely affecting our tenants’, operators’, or borrowers’ ability to meet their financial and other contractual obligations to us;
• the insolvency or bankruptcy of one or more of our major tenants, operators, or borrowers;
• our concentration of real estate investments in the healthcare property sector, which makes us more to a in that specific sector than if we invested across multiple sectors;
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+12
loss+7
closing+4
closed+4
termination+3
Positive rising
benefit+4
stabilized+4
innovation+1
MD&A (Item 7)
15,719 words
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information set forth in this Item 7 is intended to provide readers with an understanding of our financial condition, changes in financial condition, and results of operations. This section generally discusses the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Other than retrospective updates for changes to our reportable segments as more fully described in this Form 10-K, please refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 4, 2025 for a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023.
The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those which are discussed in “Item 1A, Risk Factors.” See also “Cautionary Language Regarding Forward-Looking Statements” preceding Part I.
The following discussion and analysis should be read in conjunction with our accompanying, consolidated financial statements and the notes thereto.
We will discuss and provide our analysis in the following order:
• our ability to identify and secure new or replacement tenants and operators;
• our property development, redevelopment, and tenant improvement risks, which can render a project less profitable or unprofitable and delay or prevent its undertaking or completion;
• the ability of the hospitals on whose campuses our outpatient medical buildings are located and their affiliated healthcare systems to remain competitive or financially viable;
• operational risks associated with our senior housing properties managed by third parties, including our properties operated through structures permitted by the Housing and Economic Recovery Act of 2008, which includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”);
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• the failure of our tenants, operators, and borrowers to comply with federal, state, and local laws and regulations, including resident health and safety requirements, as well as licensure, certification, and inspection requirements;
• required regulatory approvals to transfer our senior housing properties;
• compliance with the Americans with Disabilities Act and fire, safety, and other regulations;
• the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid;
• economic conditions, natural disasters, weather, and other conditions that negatively affect geographic areas where we have concentrated investments;
• uninsured or underinsuredlosses, which could result in a significant loss of capital invested in a property, lower than expected future revenues, and unanticipated expenses;
• our use of joint ventures may limit our returns on and our flexibility with jointly owned investments;
• our use of rent escalators or contingent rent provisions in our leases;
• competition for suitable healthcare properties to grow our investment portfolio;
• our ability to exercise rights on collateral securing our real estate-related loans;
• any requirement that we recognize reserves, allowances, credit losses, or impairment charges;
• investment of substantial resources and time in transactions that are not consummated;
• our ability to successfully integrate or operate acquisitions and/or internalize property management;
• the potential impact of unfavorable resolution of litigation or disputes and resulting rising liability and insurance costs;
• environmental compliance costs and liabilities associated with our real estate investments;
• environmental, social, and governance (“corporate impact”) and sustainability commitments and changing requirements, as well as stakeholder expectations;
• epidemics, pandemics, or other infectious diseases, and health and safety measures intended to reduce their spread;
• our past participation in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Provider Relief Fund and other Covid-related stimulus and relief programs;
• laws or regulations prohibiting eviction of our tenants;
• human capital risks, including the loss or limited availability of our key personnel;
• our reliance on information technology and any material failure, inadequacy, interruption, or security failure of that technology;
• the use of, or inability to use, artificial intelligence by us, our tenants, our vendors, and our investors;
• volatility, disruption, or uncertainty in the financial markets;
• increased interest rates and borrowing costs, which could impact our ability to refinance existing debt, sell properties, and conduct investment activities;
• cash available for distribution to stockholders and our ability to make dividend distributions at expected levels;
• the availability of external capital on acceptable terms or at all;
• an increase in our level of indebtedness;
• covenants in our debt instruments, which may limit our operational flexibility, and breaches of these covenants;
• volatility in the market price and trading volume of our common stock;
• adverse changes in our credit ratings;
• the pending Janus Living Offering (as defined below) may not be completed on the currently contemplated timeline or terms, or at all, and may not achieve the intended benefits;
• our economic exposure to shifts in the price of Janus Living common stock and our ability to control the assets and activities of Janus Living;
• potential conflicts of interest in our relationship with Janus Living;
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• our ability to maintain our qualification as a real estate investment trust (“REIT”);
• our taxable REIT subsidiaries being subject to corporate level tax;
• tax imposed on any net income from “prohibited transactions”;
• changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions;
• calculating non-REIT tax earnings and profits distributions;
• tax protection agreements that may limit our ability to dispose of certain properties and may require us to maintain certain debt levels;
• ownership limits in our charter that restrict ownership in our stock, and provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders;
• conflicts of interest between the interests of our stockholders and the interests of holders of Healthpeak OP, LLC (“Healthpeak OP”) common units;
• provisions in the operating agreement of Healthpeak OP and other agreements that may delay or prevent unsolicited acquisitions and other transactions; and
• our status as a holding company of Healthpeak OP.
Important Information Regarding Our Disclosure to Investors
We may use our website (www.healthpeak.com) and our LinkedIn account (https://www.linkedin.com/company/healthpeak) to communicate with our investors and disclose company information. The information disclosed through those channels may be considered to be material, so investors should monitor them in addition to our press releases, Securities and Exchange Commission (“SEC”) filings, and public conference calls and webcasts. The contents of our website or social media channels referenced herein are not incorporated by reference into this Annual Report on Form 10-K.
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PART I
ITEM 1. Business
General Overview
Healthpeak Properties, Inc. is a Standard & Poor’s (“S&P”) 500 company that owns, operates, and develops high-quality real estate focused on healthcare discovery and delivery in the United States (“U.S.”). Our company was originally founded in 1985. We are organized as an umbrella partnership REIT (“UPREIT”). We hold substantially all of our assets and conduct our operations through our operating subsidiary, Healthpeak OP, a consolidated subsidiary of which we are the managing member. We are a Maryland corporation and qualify as a self-administered REIT. We are headquartered in Denver, Colorado, with additional corporate offices in California, Tennessee, Wisconsin, and Massachusetts and property management offices in several locations throughout the U.S.
We have a diversified portfolio of high-quality healthcare properties across three core asset classes of outpatient medical, lab, and senior housing real estate. Under the outpatient medical and lab segments, we own, operate, and develop outpatient medical buildings, hospitals, and lab buildings. Under the senior housing segment, our properties are operated through RIDEA structures. We have other non-reportable segments that are comprised primarily of: (i) loans receivable, (ii) a preferred equity investment, and (iii) three other properties . These non-reportable segments have been p resented on a combined basis herein.
On March 1, 2024 (the “Closing Date”), we completed our merger with Physicians Realty Trust (the “Merger”). Subsequent to the Closing Date, the “Combined Company” means Healthpeak and its subsidiaries. As a result of the Merger, we acquired 299 outpatient medical buildings. See Note 3 to the Consolidated Financial Statements for additional information.
In December 2025, we confidentially submitted a draft registration statement on Form S-11 to the SEC relating to the proposed initial public offering (the “Offering” or “Janus Living Offering”) of shares of common stock of a newly formed company, Janus Living, Inc. (“Janus Living”), which will be dedicated to senior housing and which intends to elect and qualify to be taxed as a REIT. We will contribute our 34-community, 10,422-unit senior housing portfolio to Janus Living in exchange for a majority ownership interest in Janus Living. Immediately following the Janus Living Offering, we will serve as its external manager and we intend to retain a substantial majority interest in Janus Living, with new public shareholders owning the remaining interest. Based on the anticipated ownership share and terms of the management agreement, we expect to continue to consolidate Janus Living subsequent to the Offering. We expect to complete the Offering in the first half of 2026, subject to market conditions, receipt of regulatory approvals, completion of related financings, completion of the SEC’s review, and other customary conditions.
During the fourth quarter of 2025, in connection with the planned Offering of Janus Living, our chief operating decision maker (“CODM”), the President and Chief Executive Officer (“CEO”), began evaluating our life plan communities (formerly known as continuing care retirement communities, or CCRCs) and our unconsolidated joint venture with a sovereign wealth fund that owns 19 senior housing properties (our “SWF SH JV”) as a single operating and reportable segment, referred to as senior housing. Also during the fourth quarter of 2025, two other properties were reclassified from the outpatient medical segment to the other non-reportable segments as these properties are not representative of the characteristics of the outpatient medical segment and therefore, are no longer evaluated by the CODM in conjunction with the outpatient medical properties. Also included in other non-reportable segments as of December 31, 2025 is one other property that was acquired as part of the Gateway Crossing acquisition, as described below. Accordingly, all prior period segment information has been recast to conform to the current period presentation.
At December 31, 2025, our portfolio of investments, including properties in certain of our unconsolidated joint ventures, consisted of interests in 689 properties: (i) Outpatient medical – 507 properties; (ii) Lab – 145 properties; (iii) Senior housing – 34 properties; and (iv) Other non-reportable – 3 properties. The following table summarizes information for our reportable segments for the year ended December 31, 2025 (dollars in thousands):
Segment
Adjusted NOI by Reportable Segment (1)
Outpatient medical
Lab
Senior housing
(1) Our Adjusted NOI for our reportable segments, which we also refer to as Total Portfolio Adjusted NOI for our reportable segments, includes results of operations from disposed properties through the disposition date. See Note 16 to the Consolidated Financial Statements for a reconciliation of Adjusted NOI by reportable segment to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. See our Segment Analysis below for additional information.
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For a description of our significant activities during 2025, see “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Company Highlights” in this report.
Business Strategy
Our strategy is to own, operate, and develop high-quality real estate focused on healthcare discovery and delivery. We manage our real estate portfolio for the long-term to maximize risk-adjusted returns and support the growth of our dividends. Our strategy consists of four core elements:
(i) Our real estate : Our portfolio consists of high-quality properties in desirable locations. Our portfolio is primarily focused on outpatient medical and lab buildings, favorable sectors that benefit from the universal desire for improved health, as well as life plan community and senior housing facilities, which benefit from favorable demographic trends. We have built scale and fostered deep industry relationships, two unique factors that provide us with a competitive advantage.
(ii) Our financials : We maintain a strong investment-grade balance sheet with ample liquidity as well as long-term fixed-rate debt financing with staggered maturities to reduce our exposure to interest rate volatility and refinancing risk.
(iii) Our partnerships : We work with leading pharmaceutical, biotechnology, and medical device companies, as well as healthcare delivery systems, specialty physician groups, and other healthcare service providers and senior housing operators and managers, to meet their real estate needs. We provide high-quality property management services to encourage tenants to renew, expand, and relocate into our properties, which drives increased occupancy, rental rates, and property values.
(iv) Our platform : We have a people-first culture that we believe attracts, develops, and retains top talent. We continually strive to create and maintain an industry-leading platform, with systems and tools that allow us to effectively and efficiently manage our assets and investment activity.
Internal Growth Strategies
We believe our real estate portfolio holds the potential for increased future cash flows as it is well-maintained and in desirable locations. Our strategy for maximizing the benefits from these opportunities is to: (i) work with new or existing tenants to address their space and capital needs and (ii) provide high-quality property management services in order to motivate tenants to renew, expand, or relocate into our properties.
We expect to continue our internal growth as a result of our ability to:
• Build and maintain long-term leasing and management relationships with quality tenants. In choosing locations for our properties, we focus on the physical environment, adjacency to established businesses (e.g., hospital systems or life science submarkets) and educational centers, proximity to sources of business growth, and other local demographic factors.
• Replace tenants at the best available market terms and lowest possible transaction costs. We believe we are well-positioned to attract new tenants and achieveattractive rental rates and operating cash flow as a result of the location, design, and maintenance of our properties, together with our reputation for high-quality building services, responsiveness to tenants, and our ability to offer space alternatives within our portfolio.
• Extend and modify terms of existing leases prior to expiration. We selectively structure lease extensions, early renewals, or modifications, which reduce the cost associated with lease downtime, while securing the tenancy and relationship of our high-quality tenants on a long-term basis.
Investment Strategies
The discovery and delivery of healthcare services requires real estate and, as a result, tenants depend on our real estate, in part, to maintain and grow their businesses. We believe the healthcare real estate market provides investment opportunities due to the: (i) compelling long-term demographics driving the demand for healthcare services; (ii) specialized nature of healthcare real estate investing; and (iii) ongoing consolidation of the fragmented healthcare real estate sector.
While we emphasize healthcare real estate ownership, we may also provide real estate secured financing to, or invest in equity or debt securities of, healthcare operators or other entities engaged in healthcare real estate ownership. We may also acquire all or substantially all of the securities or assets of other REITs, operating companies, or similar entities where such investments would be consistent with our investment strategies. We may co-invest alongside institutional or development investors through partnerships or limited liability companies. In addition, as discussed above, following the Janus Living Offering, Janus Living will be externally managed by our wholly owned indirect subsidiary under the terms of a management agreement, and we will retain a substantial majority equity interest in Janus Living.
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We monitor our investments based on the percentage of our total assets that may be invested in any one property type, investment vehicle, or geographic location, the number of properties that may be leased to a single tenant or operator, or loans that may be made to a single borrower. In allocating capital, we target opportunities with the most attractive risk/reward profile for our portfolio as a whole. We may take additional measures to mitigate risk, including diversifying our investments (by sector, geography, and tenant), structuring transactions as master leases, requiring tenant or operator insurance and indemnifications, and/or obtaining credit enhancements in the form of guarantees, letters of credit, or security deposits.
We believe we are well-positioned to achieve external growth through acquisitions, development, and redevelopment. Other factors that contribute to our competitive position include:
• our reputation gained through decades of successful operations and the strength of our existing portfolio of properties;
• our relationships with leading pharmaceutical and biotechnology tenants, healthcare operators and systems, investment banks and other market intermediaries, corporations, private equity firms, not-for-profit organizations, and companies seeking to monetize existing assets or develop new facilities;
• our relationships with institutional buyers and sellers of high-quality healthcare real estate;
• our track record and reputation for executing acquisitions responsively and efficiently, which provides confidence to domestic and foreign institutions and private investors who seek to sell healthcare real estate in our market areas;
• our relationships with nationally recognized financial institutions that provide capital to the healthcare and real estate industries; and
• our control of land sites held for future development.
Financing Strategies
Our REIT qualification requires us to distribute at least 90% of our REIT taxable income (excluding net capital gains); therefore, we do not retain a significant amount of earnings. As a result, we regularly access the public equity and debt markets to raise the funds necessary to finance acquisitions and debt investments, develop and redevelop properties, and refinance maturing debt.
We may finance acquisitions and other investments in a variety of ways, including:
• cash flow from operations;
• sale or exchange of ownership interests in properties or other investments;
• borrowings under our credit facility or commercial paper program;
• issuance of additional debt, including unsecured notes, term loans, and mortgage debt; and/or
• issuance of common stock or preferred stock or its equivalent.
We maintain a disciplined investment-grade balance sheet by actively managing our debt to equity levels and maintaining access to multiple sources of liquidity. Our debt obligations are primarily long-term fixed rate with staggered maturities.
We finance our investments based on our evaluation of available sources of funding. For short-term purposes, we may utilize our revolving line of credit facility or commercial paper program, arrange for other short-term borrowings from banks or other sources, or issue equity securities pursuant to our at-the-market equity offering program. We arrange for longer-term financing by offering debt and equity, placing mortgage debt, and obtaining capital from institutional lenders and joint venture partners.
In addition, capital recycling through dispositions and redeployment through acquisitions, developments, and redevelopments is an important facet of our investment and financing strategies. We routinely have multiple transactions involving both individual properties and portfolios under consideration that are in varying stages of evaluation, underwriting, negotiation, and due diligence review, some of which, if consummated or completed, may have a material effect on our liquidity, results of operations, and financial condition.
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Segments
Outpatient Medical
Our outpatient medical segment includes outpatient medical buildings and hospitals. Outpatient medical buildings typically contain physicians’ offices and examination rooms, and may also include pharmacies, hospital ancillary service space, and outpatient services such as diagnostic centers, rehabilitation clinics, and day-surgery operating rooms. While these facilities have certain similarities to commercial office buildings, they require additional plumbing, electrical, and mechanical systems to accommodate multiple exam rooms that may require sinks in every room and specialized equipment such as x-ray machines and MRIs. Outpatient medical buildings are often built to accommodate higher structural loads for such specialized equipment and may contain vaults or other unique construction. Our outpatient medical buildings are typically multi-tenant properties leased to healthcare providers (hospitals and physician practices), with approximately 79% of our outpatient medical buildings located on or adjacent to hospital campuses and 96% affiliated with hospital systems as of December 31, 2025 (based on total square feet). Occasionally, we invest in outpatient medical buildings located on hospital campuses subject to ground leases. At December 31, 2025, approximately 72% of our outpatient medical buildings were triple-net leased (based on leased square feet) with the remaining leased under gross or modified gross leases.
The following table provides information about our most significant outpatient medical tenant concentration for the year ended December 31, 2025:
Tenant
Percentage of
Segment Revenues
Percentage of
Total Revenues
HCA Healthcare, Inc. (HCA)
CommonSpirit Health
During the year ended December 31, 2025, we had various other outpatient medical tenants that each represented 1% or less of total revenues.
Our outpatient medical segment also includes nine hospitals. Services provided by our tenants and operators in hospitals are paid for by private sources, third-party payors (e.g., insurance and HMOs), or through Medicare and Medicaid programs. Our hospital property types include acute care, long-term acute care, and specialty and rehabilitation hospitals. All of our hospitals are triple-net leased.
Lab
Our lab properties, which contain laboratory and office space, are leased primarily to biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies, and other organizations involved in the life science industry. While these properties have certain characteristics similar to commercial office buildings, they generally accommodate heavier floor loads and contain more advanced electrical, mechanical, heating, ventilating, and air conditioning systems. The facilities generally have specialty equipment including emergency generators, fume hoods, lab bench tops, and related amenities. In addition to improvements funded by us as the landlord, many of our lab tenants make significant investments to improve their leased space to accommodate biology, chemistry, or medical device research initiatives.
Lab properties are primarily configured in business park or campus settings and include multiple buildings. The business park and campus settings allow us the opportunity to provide flexible, contiguous/adjacent expansion to accommodate the growth of existing tenants. Our properties are located in well-established geographical markets known for scientific research and drug discovery, including San Francisco, California (59%), Boston, Massachusetts (22%), and San Diego, California (17%) (based on total square feet). At December 31, 2025, 89% of our lab properties were triple-net leased (based on leased square feet).
During the year ended December 31, 2025, we had various lab tenants that each represented 1% or less of total revenues.
Senior Housing
Our senior housing segment includes life plan communities and our SWF SH JV, an interest in an unconsolidated joint venture with a sovereign wealth fund that owns 19 senior housing assets. In January 2026, we acquired the remaining 46.5% interest in the SWF SH JV, bringing our ownership interest in these 19 senior housing properties to 100%.
Life plan communities are retirement communities that include independent living, assisted living, memory care, and skilled nursing units to provide a continuum of care in an integrated campus. Our life plan communities are owned through RIDEA structures, which is permitted by the Housing and Economic Recovery Act of 2008, and includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007. The services provided by our third-party manager-operators under a RIDEA structure at our properties are primarily paid for by the residents directly or through private insurance and are less reliant on government reimbursement programs such as Medicare and Medicaid.
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A RIDEA structure allows us, through a taxable REIT subsidiary (“TRS”), to receive cash flow from the operations of a healthcare facility in compliance with REIT tax requirements. The criteria for operating a healthcare facility through a RIDEA structure require us to lease the facility to an affiliate TRS and for such affiliate TRS to engage an independent qualifying management company (also known as an eligible independent contractor or third-party operator) to manage and operate the day-to-day business of the facility in exchange for a management fee. As a result, under a RIDEA structure, we are required to rely on a third-party operator to hire and train all facility employees, enter into third-party contracts for the benefit of the facility, including resident/patient agreements, comply with laws, including healthcare laws, and provide resident care.
Through our TRS entities, we bear all operational risks and liabilities associated with the operation of these properties, with limited exceptions, such as a third-party operator’s gross negligence or willful misconduct. These operational risks and liabilities include those relating to any employment matters of our operator, compliance with healthcare and other laws, liabilities relating to personal injury-tort matters, resident-patient quality of care claims, and any governmental reimbursement matters, even though we have limited ability to control or influence our third-party operators’ management of these risks.
The management agreements we have in RIDEA structures related to life plan communities have original terms ranging from 10 to 15 years, with mutual renewal options. There are base management fees and incentive management fees payable to our third-party operators if operating results of the RIDEA properties exceed pre-established thresholds. Conversely, there are also provisions in the management agreements that reduce management fees payable to our third-party operators if operating results do not meet certain pre-established thresholds.
Life plan communities differ from other housing and care options for seniors because they typically provide written agreements or long-term contracts between residents and the communities (frequently lasting the term of the resident’s lifetime), which offer a continuum of housing, services, and healthcare on one campus or site. Life plan communities are appealing as they allow residents to “age in place” and typically the individual is independent and in relatively good health upon entry.
The properties in our SWF SH JV are also owned through RIDEA structures and include independent living facilities and assisted living facilities, which cater to different segments of the elderly population based upon their personal needs. These facilities are often in apartment-like buildings with private residences ranging from single rooms to large apartments.
As third-party operators manage our RIDEA properties in exchange for the receipt of a management fee, we are not directly exposed to the credit risk of these operators in the same manner or to the same extent as a triple-net tenant.
Other non-reportable segments
At December 31, 2025, we had the following investments in our other non-reportable segments: (i) loans receivable, (ii) a preferred equity investment, and (iii) three other properties that are not representative of the characteristics of the outpatient medical and lab reportable segments discussed above .
Competition
Investing in real estate serving the healthcare industry is highly competitive. We face competition from other REITs, investment companies, pension funds, private equity investors, sovereign funds, healthcare operators, lenders, developers, and other institutional investors, some of whom may have greater flexibility (e.g., non-REIT competitors), greater resources, and lower costs of capital than we do. Increased competition and resulting capitalization rate compression, as well as the impacts of elevated interest rates, make it more challenging for us to identify and successfully capitalize on opportunities that meet our objectives. Our ability to compete may also be impacted by global, national, and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation, and population trends.
Income from our investments depends on our tenants’ and operators’ ability to compete with other companies on multiple levels, including: (i) the quality of care provided, (ii) reputation, (iii) success of product or drug development, (iv) price, (v) the range of services offered, (vi) the physical appearance of a property, (vii) alternatives for healthcare delivery, (viii) the supply of competing properties, (ix) physicians, (x) staff, (xi) referral sources, (xii) location, (xiii) the size and demographics of the population in surrounding areas, and (xiv) the financial condition of our tenants and operators. For a discussion of the risks associated with competitive conditions affecting our business, see “Item 1A, Risk Factors” in this report.
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Government Regulation, Licensing, and Enforcement
Overview
Our healthcare facility operators (which include our TRS entities when we use a RIDEA structure) and tenants are subject to extensive and complex federal, state, and local healthcare laws and regulations relating to quality of care, licensure and certificate of need, resident rights (including abuse and neglect), consumer protection, government reimbursement, fraud and abuse practices, and similar laws governing the operation of healthcare facilities. We expect the healthcare industry, in general, will continue to face increased regulation and pressure in the areas of fraud, waste and abuse, cost control, healthcare management, and provision of services, among others. Federal, state, and local officials are increasingly focusing their efforts on enforcement of these laws and regulations. In addition, our operators are subject to a variety of laws, regulations, and executive orders, including those relating to operators’ response to Covid and other infectious diseases, which can vary based on the provider type and jurisdiction, complicating compliance efforts. These regulations are wide ranging and can subject our tenants and operators to civil, criminal, and administrative sanctions, including enhanced or additional penalties, sanctions, and other adverse actions that may arise under new regulations adopted in response to Covid. Affected tenants and operators may find it increasingly difficult to comply with this complex and evolving regulatory environment because of a relative lack of guidance in many areas as certain of our healthcare properties are subject to oversight from several government agencies, and the laws may vary from one jurisdiction to another. Changes in laws, regulations, reimbursement enforcement activity, and regulatory non-compliance by our tenants and operators can all have a significant effect on their operations and financial condition, which in turn may adversely impact us, as detailed below and set forth under “Item 1A, Risk Factors” in this report.
The following is a discussion of certain laws and regulations generally applicable to our operators, and in certain cases, to us.
Fraud and Abuse Enforcement
There are various extremely complex U.S. federal and state laws and regulations governing healthcare providers’ referrals, relationships and arrangements and prohibiting fraudulent and abusive practices by such providers. These laws include: (i) U.S. federal and state falseclaims acts, which, among other things, prohibit providers from filing falseclaims or making false statements to receive payment from Medicare, Medicaid, or other U.S. federal or state healthcare programs; (ii) U.S. federal and state anti-kickback and fee-splitting statutes, including the Medicare and Medicaid anti-kickback statute, which prohibit or restrict the payment or receipt of remuneration to induce referrals or recommendations of healthcare items or services; (iii) U.S. federal and state physician self-referral laws (commonly referred to as the “Stark Law”), which, subject to certain exceptions, generally prohibit referrals of specifically designated health services by physicians to entities with which the physician or an immediate family member has a financial relationship; and (iv) the federal Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or fraudulent claim for certain healthcare services and which authorizes the U.S. Department of Health and Human Services to impose monetary penalties for certain fraudulent acts. Violations of U.S. healthcare fraud and abuse laws carry civil, criminal, and administrative sanctions, including punitive sanctions, monetary penalties, imprisonment, denial of Medicare and Medicaid reimbursement, payment suspensions, and potential exclusion from Medicare, Medicaid, or other federal or state healthcare programs. These laws are enforced by a variety of federal, state, and local agencies and in the U.S. can also be enforced by private litigants through, among other things, federal and state falseclaims acts, which allow private litigants to bring qui tam or “whistleblower” actions, in which individuals have tremendous financial gain in bringing a whistleblower claim as federal and state false claim acts provide that individuals receive between 15% and 30% of the money recouped. Additionally, violations of falseclaims acts can result in treble damages. Our tenants and operators that participate in government reimbursement programs are subject to these laws and may become the subject of governmental enforcement actions or whistleblower actions if they fail to comply with applicable laws. Additionally, the licensed operators of our U.S. long-term care facilities that participate in government reimbursement programs are required to have compliance and ethics programs that meet the requirements of federal laws and regulations relating to the Social Security Act. In our senior housing segment, we are dependent on management companies to fulfill our compliance obligations, and we have developed a program to periodically monitor compliance with such obligations. Investigation by a federal or state governmental body for violation of fraud and abuse laws or imposition of any of these penalties upon one of our operators could jeopardize that operator’s business, reputation, and ability to operate.
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Laws and Regulations Governing Privacy and Security
There are various U.S. federal and state privacy laws and regulations, including the privacy and security rules contained in the Health Insurance Portability and Accountability Act of 1996 (commonly referred to as “HIPAA”), that provide for the privacy and security of personal health information. An increasing focus of the U. S. Federal Trade Commission’s (“FTC’s”) consumer protection regulation is the impact of technological change on protection of consumer privacy. The FTC, as well as state attorneys general, have taken enforcement action against companies that do not abide by their representations to consumers regarding electronic security and privacy. To the extent we or our affiliated operating entities are a covered entity or business associate under HIPAA and the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), compliance with those requirements require us to, among other things, conduct a risk analysis, implement a risk management plan, implement policies and procedures, and conduct employee training. In most cases, we are dependent on our tenants and management companies to fulfill our compliance obligations, and we have developed a program to periodically monitor compliance with such obligations. Because of the far reaching nature of these laws, there can be no assurance we would not be required to alter one or more of our systems and data security procedures to be in compliance with these laws. Our failure to protect health information could subject us to civil or criminal liability and adverse publicity, and could harm our business and impair our ability to attract new customers and residents. We may be required to notify individuals, as well as government agencies and the media, if we experience a data breach.
Further, as reliance on technology has increased, so have the risks posed to those systems. Parties that provide us with services essential to our operations must continuously monitor and develop their networks and information technology to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and social engineering, such as phishing. Our tenants and management companies are continuously working, including with the aid of third-party service providers, to install new, and to upgrade existing, network and information technology systems, to create processes for risk assessment, testing, prioritization, remediation, risk acceptance, and reporting, and to provide awareness training around phishing, malware, and other cyber risks to ensure that our partners that provide us with services essential to our operations are protected against cyber risks and security breaches and that we are also therefore so protected. However, these upgrades, processes, new technology, and training may not be sufficient to protect us from all risks. Even the most well protected information, networks, systems, and facilities remain potentially vulnerable because the techniques and technologies used in attempted attacks and intrusions evolve and generally are not recognized until launched against a target. In some cases, attempted attacks and intrusions are designed not to be detected and, in fact, may not be detected.
Reimbursement
Sources of revenue for some of our tenants and operators include, among others, governmental healthcare programs, such as the federal Medicare programs and state Medicaid programs, and non-governmental third-party payors, such as insurance carriers and HMOs. Our tenants and operators who participate in governmental healthcare programs are subject to government reviews, audits, and investigations to verify compliance with these programs and applicable laws and regulations. As federal and state governments focus on healthcare reform initiatives, and as the federal government and many states face significant current and future budget deficits, efforts to reduce costs by these payors will likely continue, which may result in reduced or slower growth in reimbursement for certain services provided by some of our tenants and operators. Governmental healthcare programs are highly regulated and are subject to frequent and substantial legislative, regulatory, and interpretive changes, which could adversely affect reimbursement rates and the method and timing of payment under these programs. Additionally, new and evolving payor and provider programs in the U.S., including Medicare Advantage, Dual Eligible, Accountable Care Organizations, Post-Acute Care Payment Models, SNF Value-Based Purchasing Programs, and Bundled Payments could adversely impact our tenants’ and operators’ liquidity, financial condition, or results of operations.
Effective January 16, 2024, Medicare and Medicaid nursing facilities are required to disclose new data about the facility’s ownership, management, and the owners of real property lessors upon initial enrollment and revalidation. In addition, the nursing facilities are required to timely report any changes, including in connection with any change of ownership. The Centers for Medicare and Medicaid Services (“CMS”) defines the disclosable parties to include members of the facility’s governing body, persons, or entities who are an officer, director, member, partner, trustee, or managing employee of the facility, persons, or entities that exercise operational, financial, or managerial control, lease or sublease real property to the facility, own a direct or indirect interest of five percent or greater of the real property, or provide management or administrative services to the facility. Additionally, facilities are required to disclose whether any entity on the enrollment form is a private equity company or REIT. CMS makes the information publicly available. This disclosure requirement involves reporting extensive information and may complicate our healthcare facility operators’ efforts to comply with Medicare and Medicaid requirements. Failure to comply with the disclosure requirements could negatively affect our healthcare facility operators’ participation in Medicare and state Medicaid programs.
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Healthcare Licensure and Certificate of Need
Certain healthcare facilities in our portfolio are subject to extensive national, federal, state, and local licensure, certification, and inspection laws and regulations. A healthcare facility’s failure to comply with these laws and regulations could result in a revocation, suspension, restriction, or non-renewal of the facility’s license and loss of a certificate of need, which could adversely affect the facility’s operations and ability to bill for items and services provided at the facility. In addition, various licenses and permits are required to handle controlled substances (including narcotics), operate pharmacies, handle radioactive materials, and operate equipment. Many states in the U.S. require certain healthcare providers to obtain a certificate of need, which requires prior approval for the construction, expansion, or closure of certain healthcare facilities. The approval process related to state certificate of need laws may impact the ability of some of our tenants and operators to expand or change their businesses. Changes in these laws and regulations could negatively affect the ability of our tenants to make lease payments to us.
In some states, healthcare facilities are subject to various state certificate of need (“CON”) laws requiring governmental approval prior to the development or expansion of healthcare facilities and services. State CON laws often materially impact the ability of competitors to enter into the marketplace of our facilities and the repeal of CON laws could allow competitors to freely operate in previously closed markets.
Product Approvals
While our lab tenants include some well-established companies, other tenants are less established and, in some cases, may not yet have a product approved by the Food and Drug Administration, or other regulatory authorities, for commercial sale. Creating a new pharmaceutical product or medical device requires substantial investments of time and capital, in part because of the extensive regulation of the healthcare industry. It also entails considerable risk of failure in demonstrating that the product is safe and effective and in gaining regulatory approval and market acceptance. If a lab tenant fails to obtain or experiences significant delays in obtaining such approvals, it may have a significant effect on the tenant’s operations and financial condition, which in turn may adversely impact us, as detailed below and set forth under “Item 1A, Risk Factors” in this report.
Entrance Fee Communities
Our life plan communities are operated as entrance fee communities. Generally, an entrance fee is an upfront fee or consideration paid by a resident, a portion of which may be refundable, in exchange for some form of long-term benefit, typically consisting of a right to receive certain personal or health care services. In certain states (including the ones in which we operate) entrance fee communities are subject to significant state regulatory oversight, including, for example, oversight of each facility’s financial condition, establishment and monitoring of reserve requirements and other financial restrictions, the right of residents to cancel their contracts within a specified period of time, the right of residents to receive a refund of their entrance fees, lien rights in favor of the residents, restrictions on change of ownership, and similar matters.
Americans with Disabilities Act (“ADA”)
Our properties must comply with the ADA and any similar state or local laws to the extent that such properties are “public accommodations” as defined in those statutes. The ADA may require removal of barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. To date, we have not received any notices of noncompliance with the ADA that have caused us to incur substantial capital expenditures to address ADA concerns. Should barriers to access by persons with disabilities be discovered at any of our properties, we may be directly or indirectly responsible for additional costs that may be required to make facilities ADA-compliant. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations pursuant to the ADA is an ongoing one, and we continue to assess our properties and make modifications as appropriate in this respect.
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Environmental Matters
A wide variety of federal, state, and local environmental and occupational health and safety laws and regulations affect healthcare facility operations. These complex federal and state statutes, and their enforcement, involve a myriad of regulations, many of which involve strict liability on the part of the potential offender. Some of these federal and state statutes may directly impact us. Under various federal, state, and local environmental laws, ordinances, and regulations, an owner of real property or a secured lender, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property). The cost of any required remediation, removal, fines, personal or property damages, and any related liability therefore could exceed or impair the value of the property and/or the assets. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the value of such property and the owner’s ability to sell or rent such property or to borrow using such property as collateral, which, in turn, could reduce our earnings. For a description of the risks associated with environmental matters, see “Item 1A, Risk Factors” in this report.
Insurance
We obtain various types of insurance to mitigate the impact of property, business interruption, liability, flood, windstorm, earthquake, fire, environmental, and terrorism-related losses. We attempt to obtain appropriate policy terms, conditions, limits, and deductibles considering the relative risk of loss, the cost of such coverage, and current industry practice. There are, however, certain types of extraordinary losses, such as those due to acts of war or other events, that may be either uninsurable or not economically insurable. In addition, we have a large number of properties that are exposed to earthquake, flood, and windstorm occurrences, which carry higher deductibles.
We maintain property insurance for all of our properties. Tenants under triple-net leases are required to provide primary property, business interruption, and liability insurance. We maintain separate general and professional liability insurance for our senior housing properties. Additionally, our corporate general liability insurance program also extends coverage for all of our properties beyond the aforementioned. We periodically review whether we or our RIDEA operators will bear responsibility for maintaining the required insurance coverage for the applicable senior housing properties, but the costs of such insurance are facility expenses paid from the revenues of those properties, regardless of who maintains the insurance.
We also maintain directors and officers liability insurance, which provides protection for claimsagainst our directors and officers arising from their responsibilities as directors and officers. Such insurance also extends to us in certain situations.
Sustainability and Corporate Impact
We believe that corporate impact initiatives are part of our corporate responsibility, which supports our primary goal of increasing stockholder value through profitable growth. We continue to advance our commitment to sustainability, with a focus on achieving goals in each of the corporate impact dimensions. Our Board of Directors oversees corporate impact matters, with the Nominating and Corporate Governance Committee overseeing sustainability and corporate governance matters, the Audit Committee overseeing risk management, and the Compensation and Human Capital Committee overseeing human capital management. We use an integrated approach to corporate impact throughout our business to identify risks and opportunities, capture efficiencies and cost savings, and report on the issues relevant to stakeholders.
Environment: Our environmental management program strives to make our buildings more sustainable and capture cost efficiencies that ultimately benefit our investors, tenants, business partners, and other stakeholders, while reducing our carbon footprint and providing a positive impact on the communities in which we operate. We regularly assess the climate-related risks and financial impacts to our business, including transition risks, physical climate risks, potential business disruption, and regulatory requirements, and work with our property managers, operators, and tenants to implement projects to mitigate these risks and impacts. For a description of the risks associated with climate risk matters, see “Item 1A, Risk Factors” in this report.
Social: See “—Human Capital Matters” below.
Governance: Our transparent corporate governance initiatives incorporate sustainability as a critical component in achieving our business objectives and properly managing risks.
Our recent corporate impact highlights include:
• Obtained 6 new LEED certifications, 14 new ENERGY STAR certifications, 135 ENERGY STAR recertifications, and 13 ENERGY STAR NextGen certifications in 2025
• Received a Green Star rating from the Global Real Estate Sustainability Benchmark (“GRESB”) for the fourteenth consecutive year, recognizing leading sustainability performance in our sector
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• Named to Newsweek ’s America’s Most Responsible Companies list for the seventh consecutive year
• Named to the S&P Global Sustainability Yearbook for the tenth consecutive year
Under our “like-for-like” methodology, direct and indirect GHG emissions are compared on a year-over-year rolling basis using Scope 1 and Scope 2 GHG emissions for the properties that we have owned for two full consecutive calendar years, excluding non-stabilized developments and redevelopments in each year of the calculation. Base data utilized in the calculation of Scope 1 and Scope 2 GHG emissions is obtained from third-party invoices or estimates.
For additional information regarding our corporate impact initiatives, methodologies, and strategy, please visit our website at www.healthpeak.com/corporate-impact.
Human Capital Matters
Our employees represent our greatest asset, and as of December 31, 2025, we had 411 full-time employees. Our Board of Directors, through its Compensation and Human Capital Committee, retains oversight of human capital management, including corporate culture, talent acquisition, retention, employee satisfaction, engagement, and succession planning. We report on human capital matters at each regularly scheduled Board of Directors meeting and periodically throughout the year. The most significant human capital measures or objectives that we focus on in managing our business and our related human capital initiatives include the following:
• Inclusion and Respect: We promote a work environment that emphasizes respect, fairness, inclusion, and dignity. We are committed to providing equal opportunity and fair treatment to all individuals based on merit, without discrimination based on race, color, religion, national origin, citizenship, marital status, gender (including pregnancy), gender identity, gender expression, sexual orientation, age, disability, veteran status, or other characteristics protected by law. We do not tolerate discrimination or harassment. All employees are required to attend a biennial training on unconscious bias.
• Engagement: High employee engagement and satisfaction are both critical to attracting and retaining top talent and benefit our business in many ways. We conduct a regular employee engagement survey through an independent third party, measuring our progress on important employee issues and identifying opportunities for growth and improvement.
• Training and Development: We conduct at least annual employee training on our Code of Business Conduct and Ethics, as well as annual training on harassmentprevention or unconscious bias. We also provide training and development to all employees, focusing on career development, professional development, and REIT essentials.
• Compensation and Benefits: We aim to ensure merit-based, equitable compensation practices to attract, retain, and recognize talent. We provide competitive compensation and benefit packages to our employees.
• Health, Safety, and Wellness: The health, safety, and wellness of our employees are vital to our success. We are committed to protecting the well-being and safety of employees through special training and other measures. We maintain a hybrid work model, which we believe maximizes company-wide productivity, and provide employees with resources, including virtual tools and ergonomic equipment, to maximize work-from-home efficiency.
• Community Partnership: Our Social Responsibility Committee is responsible for oversight of our charitable and volunteer activities. We partner with organizations that share our desire to support research, education, and other activities related to healthcare.
For additional information on human capital matters, please see our most recent proxy statement or corporate impact report, each of which is available on our website at www.healthpeak.com.
Available Information
Our website address is www.healthpeak.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available on our website, free of charge, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. Additionally, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov. References to our website throughout this Annual Report on Form 10-K are provided for convenience only and the content on our website does not constitute a part of this Annual Report on Form 10-K.
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ITEM 1A. Risk Factors
The section below discusses the risk factors that may materially adversely affect our business, results of operations, and financial condition. Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business.
As set forth below, we believe that the risks we face generally fall into the following categories:
• risks related to our business and operations;
• risks related to our capital structure and market conditions;
• risks related to the pending Janus Living Offering and our relationship with Janus Living if the Janus Living Offering is completed; and
• risks related to tax, including REIT-related risks, and related to our jurisdiction of incorporation and our structure as an UPREIT.
Risks Related to Our Business and Operations
Changes to regulatory, funding, staffing, trade, and other policies and actions by the U.S. political administration could adversely affect our business operations or the operations of our tenants or operators.
Recent and ongoing changes in U.S. federal government policy have introduced uncertainty to the capital markets, as well as within our industry and the industries of our tenants and operators. These policy changes include, but are not limited to, workforce reductions at federal agencies; executive actions impacting National Institutes of Health (“NIH”) grant funding; changes to visa policies affecting the scientific workforce; efforts to cap NIH indirect cost reimbursements; tariffs and potential tariff actions; and changes to drug pricing policies. For example, recent policy shifts and administration priorities affecting research funding, drug pricing, drug review and approval processes, and tariffs, among other policies, have created uncertainty in the life science ecosystem in which our lab tenants operate. This uncertainty has adversely impacted, and in the future may adversely impact, the ability of life science companies obtain investor funding, which could lead to setbacks in research and development timelines, advancement of drug pipelines, or achievement of commercial viability. In addition, competitive international biotech sectors, including in China, supported by favorable regulatory conditions and costs there, may also divert research and development activity and investment away from the U.S., reducing long-term demand for domestic life science real estate. These policy shifts and other dynamics may affect our lab tenants’ ability to make rent payments to us or expand within our properties, which, as a result, could negatively impact our operating and financial results.
Furthermore, reductions in Medicaid spending and cuts to Medicaid provider rates, the expiration of health insurance subsidies under the Patient Protection and Affordable Care Act, along with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), other potential changes to federal reimbursement policies, and other potential policy initiatives focused on medical care, including site-neutral payments and changes to reimbursement for certain outpatient services, could reduce patient volumes, increase uncompensated care, and put downward pressure on reimbursement rates for hospitals and outpatient medical facilities, which could have an adverse effect on our tenants’, operators’, and borrowers’ liquidity, financial condition, or results of operations. In particular, reduced funding for entitlement programs such as Medicare and Medicaid could result in increased costs and fees for programs such as Medicare Advantage Plans and additional reductions in reimbursements to providers.
In general, facilities in non-expansion states face a significantly higher financial risk due to Medicare / Medicaid and Affordable Care Act provisions in the One Big Beautiful Bill Act (“OBBA”). An expansion state is a U.S. state that chose to expand its Medicaid program under the Affordable Care Act, thereby extending coverage to nearly all low-income adults up to 138% of the federal poverty level and becoming eligible for enhanced federal funding. In contrast, a non-expansion state is a state that did not expand its Medicaid program under the Affordable Care Act. As Affordable Care Act subsidies have expired, non-expansion states with higher numbers of individuals not eligible for Medicaid who can no longer rely on purchasing coverage from the Affordable Care Act marketplace will be disproportionately affected unless the subsidies are extended. Accordingly, facilities in non-expansion states could face challenges in meeting operational costs if patients/residents lose the ability to purchase Affordable Care Act coverage. Amendments to the Affordable Care Act in whole or in part and decisions by the Centers for Medicare and Medicaid Services could impact the delivery of services and benefits under Medicare, Medicaid, or Medicare Advantage Plans and could affect our tenants and operators and the manner in which they are reimbursed by such programs. Because our outpatient medical segment depends on stable, long-term occupancy by healthcare providers, such adverse changes in U.S. healthcare policy could adversely affect our operating and financial results.
Tariffs and potential tariff actions have also led to market volatility, higher construction costs, and supply chain disruptions, which could delay or increase the cost of our development projects and impair our access to capital.
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We may be negatively impacted by macroeconomic trends that may increase borrowing, construction, labor, and other operating or administrative costs for us and our tenants, operators, and borrowers.
In recent periods, many of our costs, including borrowing, construction, labor, utilities, and other operating and administrative costs, have been adversely affected by macroeconomic trends, including higher interest rates, inflation, price volatility, and changes in unemployment, among other factors. These macroeconomic trends may also negatively impact consumer confidence and spending and have been exacerbated at times by domestic and international policy shifts; uncertainty in the regulatory landscape in which we, our tenants, and our operators operate; supply chain disruptions; geopolitical conflicts; federal government deficits; and other international and domestic events impacting the macroeconomic environment. If any of these adverse macroeconomic trends continue or recur in the future, our business and results of operations may be negatively impacted.
Furthermore, rising labor costs and personnel shortages may adversely impact us or our tenants, operators, and borrowers. Competitive pressures may require that we or our tenants, operators, or borrowers enhance pay and benefits packages to compete effectively for such personnel. To the extent we or our tenants, operators, or borrowers cannot hire a sufficient number of qualified personnel, we or they may need to utilize high-cost alternatives to meet labor needs, including contract and overtime labor, or our business may operate below capacity, which may affect our ability to effectively manage risk and pursue potential revenue and growth opportunities.
Additionally, changing technologies and cultural trends could negatively impact future demand for our properties, which could have a material adverse effect on our business, results of operations, and financial condition.
Life science industry changes could have a material adverse effect on our business, results of operations, and financial condition.
If economic, financial, regulatory, or industry conditions adversely affect the life science industry, we may be unable to lease or re-lease our lab properties in a timely manner or at profitable rates or with favorable terms. In addition, because lab property infrastructure improvements are typically significantly more costly than improvements to other property types due to their highly specialized nature, and lab tenants typically require greater lease square footage relative to outpatient medical tenants, repositioning efforts would have a disproportionateadverse effect on our lab segment performance. Further, our lab investments could face decreased demand from biotech and life science companies relative to supply, and life science industry consolidation could reduce the rentable square footage requirements of our client tenants and prospective client tenants, which may adversely impact our revenues from lease payments. Finally, our lab investments could also be adversely affected if the life science industry migrates from the U.S. to other countries that have seen accelerated growth in the biotech industry, or to areas outside of our primary lab markets in the greater South San Francisco, San Diego, and Boston areas.
Our lab tenants face significant regulation, funding requirements, and uncertainty.
Our lab tenants face substantial requirements for, and risks related to, the research, development, clinical testing, manufacture, and commercialization of their products and technologies, including:
• significant funding requirements, including for rent payments due to us that may not be available;
• federal, state, and foreign regulatory approvals that may be costly or difficult to obtain, may take several years and be subject to delay, may not be obtained at all, require validation through clinical trials that may face delays or difficulties, or ultimately be unsuccessful;
• product and technology efficacy risks;
• acceptance risks among doctors and patients;
• significant regulatory and liability risks, including the possible later discovery of safety concerns and other defects and potential loss of approvals, competition from new products, and the expiration of patent protection;
• new and emerging laws aimed at the life science/biotechnology industry, increasing regulatory requirements and compliance costs, as well as healthcare reforms and reimbursement policies of government or private healthcare payors, including price controls for prescription drug prices;
• intellectual property and technology risks under patent, copyright, and trade secret laws;
• economic conditions potentially restricting growth opportunities; and
• new or emerging technologies, such as artificial intelligence and automation, that introduce advanced computational technologies into tenants’ research and development programs, which could accelerate and streamline a number of research and development functions and lead to a reconfiguration in space requirements by our tenants or decrease in demand for space over time.
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Our lab tenants’ ability to raise capital depends on the actual or perceived viability of their products and technologies, their financial and operating condition and outlook, and the overall financial, banking, regulatory, and economic environment. If venture capital firms, private investors, the public markets, companies in the life science industry, the government, or other sources of funding are difficult to obtain or unavailable to support our tenants’ activities, including as a result of changes to regulatory policies and actions by the U.S. political administration (including those described earlier), general economic conditions, adverse market conditions, or uncertainty that negatively impact our tenants’ ability to raise capital, our tenants’ business would be adversely affected or could fail. In addition, several of our lab tenants build upon the earlier successful research conducted at research institutions and funded by NIH grants; sustained funding cuts to NIH grants could have long-lasting impacts to the industry and impede our tenants’ ability to build on such earlier successful research. If our lab tenants’ businesses are adversely affected, they may be unable to meet their financial obligations to us or expand within our properties, which could have a material adverse effect on our business, results of operations, and financial condition.
Decreases in our tenants’, operators’, or borrowers’ revenues, or increases in their expenses, or other factors adversely affecting their ability to borrow money, could affect their ability to meet their financial and other contractual obligations to us.
Occupancy levels at, and rental income from, our outpatient medical facilities and senior housing properties depend on our ability and the ability of our tenants, operators, and borrowers to compete with respect to (i) the quality of care provided, (ii) reputation, (iii) price, (iv) the range of services offered, (v) the physical appearance of a property, (vi) family preference, (vii) referral sources, and (viii) location.
In addition, our tenants, operators, and borrowers compete with certain companies that provide similar healthcare services or alternatives such as home health agencies, telemedicine, life care at home, community-based service programs, retirement communities, and convalescent centers. There have been, and there are expected to continue to be, advances and changes in technology, payment models, healthcare delivery models, regulation, and consumer behavior, preferences, and perception that could reduce demand for on-site activities provided at our properties. If our tenants, operators, or borrowers are unable to adapt to long-term changes in demand, their financial condition could be materially impacted and our business, financial condition, and results of operations could be adversely affected.
Furthermore, these tenants, operators, and borrowers face a competitive labor market. A shortage of care givers or other trained personnel, shifts in immigration policy, union activities (including strikes, labor slowdowns, or contract negotiations), wage laws, or general inflationary pressures on wages may require our tenants, operators, and borrowers to enhance pay and benefits packages, or to use more expensive contract personnel, and they may be unable to offset these added costs by increasing the rates charged to residents or patients. An inability to attract and retain qualified personnel, including personnel possessing the expertise needed to operate in the life science, outpatient medical, and senior housing sectors, could negatively impact the ability of our tenants, operators, and borrowers to meet their obligations to us.
Our tenants, operators, and borrowers could also be adversely impacted by a bank failure or other event affecting financial institutions, including through disruptions in access to bank deposits or borrowing capacity, including access to letters of credit from certain of our tenants relating to lease obligations, and any resulting adverse effects to our tenants’, operators’, or borrowers’ liquidity or financial performance could affect their ability to meet their financial and other contractual obligations to us. Our tenants could also be adversely affected by tariffs, which could cause the import or export of materials, components, or specialized equipment they use to become prohibitively expense to use or sell.
Although we generally have the right under specified circumstances to terminate a lease, evict a tenant or terminate an operator, demand immediate repayment of outstanding loan amounts or other obligations to us, or draw on a letter of credit, we may be unable to enforce these rights or we may determine not to do so if we believe that doing so would be more detrimental than alternative approaches. If widespread default or nonpayment of outstanding obligations from our tenants, operators, or borrowers occurs at a time when terminating our agreements with them and replacing them would be difficult or impossible, we could elect instead to amend our agreements on materially less favorable terms to us. The failure of our tenants, operators, or borrowers to meet their financial and other contractual obligations to us could have a material adverse effect on our business, results of operations, and financial condition.
We may be negatively impacted by the insolvency or bankruptcy of, or the inability to obtain funding by, one or more of our major tenants, operators, or borrowers.
A downturn in our tenants’, operators’, or borrowers’ businesses has led, and could in the future lead, to voluntary or involuntarybankruptcy or similar reorganization, restructuring, or insolvency proceedings, including assignment for the benefit of creditors, liquidation, or winding-up. Bankruptcy and insolvency laws afford certain rights to a defaulting tenant, operator, or borrower that has filed for bankruptcy or reorganization that has, and in the future may, render certain of our remedies unenforceable or, at the least, delay our ability to pursue such remedies and realize any related recoveries.
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A debtor has the right to assume, or to assume and assign to a third party, or to reject its executory contracts and unexpired leases in a bankruptcy proceeding. We have been subject to rejection of our leases in the past and may experience such rejection in the future. When a debtor rejects its leases with us, obligations under such rejected leases cease. The claim against the rejecting debtor for remaining rental payments due under the lease is an unsecured claim limited by the statutory cap set forth in the U.S. Bankruptcy Code. This statutory cap may be substantially less than the remaining rent actually owed under the lease. In addition, a debtor may also assert in bankruptcy proceedings that certain leases should be re-characterized as financing agreements, which could result in our being deemed a lender instead of a landlord. A lender’s rights and remedies, as compared to a landlord’s, generally are materially less favorable, and our rights as a lender may be subject to lower priority for payment under the U.S. Bankruptcy Code.
Furthermore, the automatic stay provisions of the U.S. Bankruptcy Code preclude us from enforcing our remedies unless we first obtain relief from the court having jurisdiction over the bankruptcy case. This effectively limits or delays our ability to collect unpaid rent or interest payments, and we may ultimately not receive any payment at all. In addition, we have been, and may again be, required to fund certain expenses and obligations (e.g., real estate taxes, insurance, debt costs, and maintenance expenses) to preserve the value of our properties, avoid the imposition of liens on our properties, or transition our properties to a new tenant or operator.
If we are unable to transition affected properties, they would likely experience prolonged operational disruption, leading to lower occupancy rates and further depressed revenues. Publicity about the operator’s financial condition and insolvency proceeds may also negatively impact their and our reputations, decreasing customer demand and revenues. Any or all of these risks could have a material adverse effect on our revenues, results of operations, and cash flows. These risks could be magnified where we lease multiple properties to a single operator under a master lease, as an operator failure or default under a master lease would expose us to these risks across multiple properties.
We depend on real estate investments, particularly in the healthcare property sector, making us more vulnerable to events affecting the healthcare property sector, including a downturn or slowdown in that sector, or laws affecting REIT ownership of healthcare properties.
We concentrate our investments in the healthcare property sector. A downturn or slowdown in this sector would have a greateradverse impact on our business than if we had investments across multiple sectors, and could negatively impact the ability of our tenants, operators, and borrowers to meet their obligations to us, as well as their ability to maintain historical rental and occupancy rates, which could have a material adverse effect on our business, results of operations, and financial condition. Additionally, at various times, legislation potentially limiting REIT ownership and investment in the healthcare property sector has been introduced or is under discussion at the federal, state, and/or local level, including laws that would restrict REIT investment in the sector, reduce tax benefits for REITs that own healthcare properties, or require burdensome approvals for, or significantly delay the ability of, healthcare entities to transact with REITs. Such events impacting the healthcare property sector could have a material adverse effect on our ability to participate in the ownership of or investment in healthcare real estate, the value of our properties, or our ability to sell properties at prices or on terms acceptable or favorable to us.
The illiquidity of our real estate investments may prevent us from timely responding to economic or investment performance changes.
Our real estate investments can be relatively illiquid due to: (i) restrictions on our ability to sell properties under applicable REIT tax laws, (ii) other tax-related considerations, (iii) regulatory hurdles, and (iv) market conditions. As a result, we may be unable to recognize full value for any property that we seek to sell. Our inability to timely respond to economic or investment performance changes could have a material adverse effect on our business, results of operations, and financial condition.
Identifying and securing new or replacement tenants or operators can be time consuming and costly.
Healthcare properties can be highly customized, and the improvements generally required to conform a property to healthcare use are costly, sometimes tenant-specific, and may be subject to regulatory requirements. A new or replacement tenant or operator may require different features in a property, depending on that tenant’s or operator’s particular business. In addition, infrastructure improvements for outpatient medical and lab properties typically are significantly more expensive than improvements to other property types due to the highly specialized nature of the properties, and with respect to lab properties, the greater lease square footage often required by lab tenants. Therefore, we may incur substantial expenditures to modify a lab property and experience delays before we are able to secure a new or replacement tenant or operator or to accommodate multiple tenants or operators, which may have a material adverse effect on our business, results of operations, and financial condition.
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In addition, we may fail to identify suitable replacements or enter into leases, management agreements, or other arrangements with new tenants or operators on a timely basis or on terms as favorable to us as our current leases, if at all. We also may be required to fund certain expenses and obligations, such as real estate taxes, debt costs, insurance costs, and maintenance expenses, to preserve the value of, and avoid the imposition of liens on, our properties while they are being repositioned. In addition, we may incur certain obligations and liabilities, including obligations to indemnify the replacement tenant or operator. Identifying and securing new or replacement tenants or operators can be time consuming and costly, which could have a material adverse effect on our business, results of operations, and financial condition.
Property development, redevelopment, and tenant improvement risks can render a project less profitable or unprofitable and delay or prevent its undertaking or completion.
Our property development, redevelopment, and tenant improvement projects could be canceled, abandoned, delayed or, if completed, fail to perform in accordance with expectations due to, among other things:
• the inability to obtain financing on favorable terms or at all, or the lack of liquidity we deem necessary or appropriate for the project;
• legal and regulatory hurdles, including moratoriums on development and redevelopment activities, climate regulatory requirements or expectations (such as net zero or carbon neutrality), or other building and energy performance requirements;
• the failure to obtain, or costs associated with obtaining, necessary zoning, entitlements, and permits;
• cost increases; and
• other factors over which we have limited or no control, including: (i) changes in market and economic conditions; (ii) decline in demand, including after construction has commenced; (iii) natural disasters and other catastrophic events or physical climate risks, such as floods, wildfires, earthquakes, and wind storms; (iv) pandemics or other health crises; (v) labor conditions, including a labor shortage or work stoppage; (vi) shortages of construction materials; (vii) environmental conditions; or (viii) civil unrest and acts of war or terrorism.
Project costs may materially exceed original estimates due to, among other things:
• higher interest rates;
• increased costs for materials, transportation, environmental remediation, labor, or other inputs, including those caused by a shortage of construction materials or labor;
• negligent construction or construction defects;
• damage, vandalism, or accidents; and
• increased operating costs, including insurance premiums, utilities, real estate taxes, and costs of complying with changes in government regulations or increases in tariffs.
Delays in project completion also delay the commencement of related rental payments, including increases in rental payments following tenant improvement projects, and may provide tenants the right to terminate leases or cause us to incur additional costs, including through rent abatement.
Demand for a project may decrease prior to a project’s completion, and resulting lease-up rates, rental rates, lease commencement dates, and occupancy levels may fail to meet expectations. Tenants that have pre-leased at a project may file for bankruptcy or become insolvent, or elect to terminate their lease prior to delivery if they are acquired or for other reasons. Finally, a project may have defects that we do not discover through the inspection processes, including latent defects not discovered until after we put a property in service.
The foregoing risks could result in not achieving anticipated returns on investment and could have a material adverse effect on our business, results of operations, and financial condition.
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The hospitals on whose campuses our outpatient medical buildings are located and their affiliated healthcare systems could fail to remain competitive or financially viable, which could adversely impact their ability to attract physicians and physician groups to our outpatient medical buildings and our other properties that serve the healthcare industry.
The viability of hospitals depends on factors such as: (i) the quality and mix of healthcare services provided, (ii) competition for patients and physicians, (iii) demographic trends in the surrounding community, (iv) market position, (v) growth potential, and (vi) changes to the reimbursement system, as well as the ability of the affiliated healthcare systems to provide economies of scale and access to capital. In addition, hospitals could be negatively affected by widespread cancellations of elective procedures due to health and safety measures or otherwise. If a hospital whose campus is located near one of our outpatient medical buildings is unable to meet its financial obligations, and if an affiliated healthcare system is unable to support that hospital or goes bankrupt, the hospital may be unable to successfully compete or could be forced to close, relocate, or be sold to another provider, which could adversely impact its ability to attract physicians and other healthcare-related users. In addition, hospitals can also be adversely affected by increasing legal and regulatory scrutiny and hurdles, including requirements for hospitals to be able to engage in certain transactions or change owners or operators, which could impact the financial viability of the hospitals. Because we rely on our proximity to, and affiliations with, these hospitals to create tenant demand for space in our outpatient medical buildings, their inability to remain competitive or financially viable, or to attract physicians and physician groups, could adversely affect our outpatient medical building operations and have a material adverse effect on us.
We assume operational risks with respect to our senior housing properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations, and financial condition.
Although the RIDEA structure gives us certain oversight approval rights (e.g., budgets and material contracts) and the right to review operational and financial reporting information, our operators are ultimately in control of the day-to-day business of the property. As a result, we have limited rights to direct or influence the business or operations of our senior housing properties, all of which are under RIDEA structures, and we depend on our operators to operate these properties in a manner that complies with applicable law, minimizes legal risk, and maximizes the value of our investment.
Under a RIDEA structure, our TRS is ultimately responsible for all operational risks and other liabilities of the properties, other than those arising out of certain actions by our operator, such as gross negligence or willful misconduct. Operational risks include, and our resulting revenues therefore depend on, among other things: (i) occupancy rates; (ii) the entrance fees and rental rates charged to residents; (iii) the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid, to the extent applicable, including changes to reimbursement rates; (iv) our operators’ reputations and ability to attract and retain residents; (v) general economic conditions and market factors that impact seniors, including general inflationary pressures; (vi) competition from other senior housing providers; (vii) compliance with federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations and standards; (viii) litigation involving our properties or residents/patients; (ix) the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles; and (x) the ability to control operating expenses.
Operators of our senior housing properties primarily depend on private sources for their revenues and the ability of their patients and residents to pay fees. Costs associated with independent and assisted living services are not generally reimbursable under governmental reimbursement programs such as Medicare and Medicaid. Accordingly, our operators of these properties depend on attracting seniors with appropriate levels of income and assets, which may be affected by many factors, including: (i) prevailing economic and market trends, including general inflationary pressures; (ii) consumer confidence; (iii) demographics; (iv) property condition and safety; (v) public perception about such properties; (vi) social and environmental factors; and (vii) changes in consumer preferences (such as favoring home health services instead of residing in a senior housing community).
In addition, epidemics, pandemics, and severe flu seasons or any other widespread illness could result in early move-outs or delayed move-ins during quarantine periods or during periods when actual or perceived risks of such illnesses are heightened, and have reduced, and could continue to reduce, our operators’ revenues.
If our operators fail to effectively conduct operations on our behalf, or to maintain and improve our properties, it could adversely affect our business reputation as the owner of the properties, as well as the business reputation of our operators and their ability to attract and retain patients and residents in our properties, which could have a material adverse effect on our and our operators’ business, results of operations, and financial condition.
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Tenants, operators, and borrowers that fail to comply with federal, state, local, and international laws and regulations, including resident health and safety requirements, as well as licensure, certification, and inspection requirements, may cease to operate or be unable to meet their financial and other contractual obligations to us.
Our tenants, operators, and borrowers across our segments are subject to or impacted by extensive, frequently changing federal, state, and local laws and regulations; see “Item 1, Business—Government Regulation, Licensing and Enforcement—Healthcare Licensure and Certificate of Need” for a discussion of certain of these laws and regulations. Unannounced surveys, inspections, or audits occur frequently, including following a regulator’s receipt of a complaint about a facility, and these surveys, inspections, and audits can result in deficiencies and further adverse action. Our tenants’, operators’, or borrowers’ failure to comply with any of the laws, regulations, or requirements applicable to them could result in: (i) loss of accreditation; (ii) denial of reimbursement; (iii) imposition of fines and civil monetary penalties; (iv) suspension or decertification from government healthcare programs; (v) civil liability; and (vi) in certain instances, suspension, or denial of admissions, criminalpenalties, loss of license, or closure of the property and/or the incurrence of considerable costs arising from an investigation or regulatory action, which may have an adverse effect on properties that we own and lease to a third party tenant in our outpatient medical and lab segments, that we own and operate through a RIDEA structure in our senior housing segment, or on which we are a lender, and therefore may materially adversely impact us.
Furthermore, we are required under RIDEA to rely on our operators to oversee and direct these aspects of the properties’ operations to ensure compliance with applicable laws and regulations. If one or more of our healthcare properties fails to comply with applicable laws and regulations, our TRS would be responsible (except in limited circumstances, such as the gross negligence or willful misconduct of our operators, where we would have a contractual claim against them), which could subject our TRS to penalties including loss or suspension of licenses, certification or accreditation, exclusion from government healthcare programs (i.e., Medicare, Medicaid), administrative sanctions, and civil monetary penalties. Some states also reserve the right to sanction affiliates of a licensee when they take administrative action against the licensee, and require a licensee to report all healthcare-related administrative actions that have been brought against any of the licensee’s affiliates, even in other states. Additionally, when we receive individually identifiable health information relating to residents of our healthcare properties, we are subject to federal and state data privacy and security laws and rules, and could be subject to liability in the event of an audit, complaint, cybersecurity incident, or data breach. Furthermore, our TRS has exposure to professional liability claims that could arise out of resident claims, such as quality of care, and the associated litigation costs.
Required regulatory approvals can delay or prohibit transfers of our senior housing properties.
Transfers of senior housing properties to successor owners or operators are typically subject to regulatory approvals or ratifications, including change of ownership approvals for licensure and Medicare / Medicaid (if applicable) that are not required for transfers of other types of commercial operations and other types of real estate. Federal and state authorities have become increasingly focused on the review and potential regulation of healthcare transactions for impacts on costs, access to care, and quality, which could involve lengthy review and approval periods, enhanced disclosure obligations, impact analysis, public notices, and hearings. Such regulation could adversely impact the time and cost of completing transactions and, in certain circumstances, affect the feasibility of pursuing or completing such transactions. The sale of, or replacement of any operator at, our senior housing facilities could be delayed by the regulatory approval process of any federal, state, or local government agency necessary for the transfer of the property or the replacement of the operator licensed to manage the property, during which time the property may experience performance declines. We may also elect to use an interim licensing structure to facilitate such transfers, which structure expedites the transfer by allowing a third party to operate under our license until the required regulatory approvals are obtained, but could subject us to fines or penalties if the third party fails to comply with applicable laws and regulations and fails to indemnify us for such fines or penalties pursuant to the terms of its agreement with us.
Compliance with the Americans with Disabilities Act and fire, safety, and other regulations may require us to make expenditures that adversely affect our cash flows.
Our properties must comply with applicable ADA and any similar state and local laws. These laws may require removal of barriers to access by persons with disabilities in public areas of our properties. Noncompliance could result in the incurrence of additional costs associated with bringing the properties into compliance, the imposition of fines or an award of damages to private litigants in individual lawsuits or as part of a class action. We could also be required to expend funds to comply with the provisions of the ADA and similar state and local laws on behalf of tenants, which could adversely affect our results of operations and financial condition.
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In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations. New and revised regulations and codes may be adopted by governmental agencies and bodies and become applicable to our properties. For example, new safety laws for senior housing properties were adopted following the particularly damaging 2018 hurricane season. Compliance could require substantial capital expenditures, both for significant upgrades and for tenant relocations that may be necessary depending on the scope and duration of upgrades, and may restrict our ability to renovate our properties. These expenditures and restrictions could have a material adverse effect on our financial condition and cash flows.
The requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid may adversely affect our tenants’, operators’, and borrowers’ ability to meet their financial and other contractual obligations to us.
Certain of our tenants, operators, and borrowers, as well as our owned assets in the senior housing segment, are affected, directly or indirectly, by a complex set of federal, state, and local laws and regulations pertaining to governmental reimbursement programs. These laws and regulations are subject to frequent and substantial changes that are sometimes applied retroactively. See “Item 1, Business—Government Regulation, Licensing and Enforcement.” For example, to the extent that our tenants, operators, or borrowers, or assets owned in our senior housing segment, receive a significant portion of their revenues from governmental payors, primarily Medicare and Medicaid, they are generally subject to, among other things:
• statutory and regulatory changes, including changes that impact state reimbursement programs, particularly Medicaid reimbursement and managed care payments;
• staffing and quality requirements;
• retroactive rate adjustments and recoupment efforts;
• recovery of program overpayments or set-offs;
• federal, state, and local litigation and enforcement actions, including those relating to Covid and the failure to satisfy the terms and conditions of financial relief;
• administrative proceedings;
• policy interpretations;
• payment or other delays by fiscal intermediaries or carriers;
• government funding restrictions (at a program level or with respect to specific properties);
• reduced reimbursement rates under managed care contracts;
• changes in reimbursement rates, methods, or timing under governmental reimbursement programs, including changes that impact state reimbursement programs, particularly Medicaid reimbursement and managed care payments;
• pre- and post-payment reviews and audits by governmental authorities, which could result in recoupments, denials or delay of payments;
• interruption or delays in payments due to any ongoing governmental investigations and audits at such properties or due to a partial or total federal or state government shutdown for a prolonged period of time; and
• reputational harm of publicly disclosed enforcement actions, audits, or investigations related to billing and reimbursements.
We are unable to predict future changes to or interpretations of, or the intensity of enforcement efforts with respect to, these laws and regulations, including those that pertain to the Medicare and Medicaid programs. The failure to comply with the extensive laws, regulations, and other requirements applicable to their business and the operation of our properties could result in, among other challenges: (i) becoming ineligible to receive reimbursement from governmental reimbursement programs or being compelled to repay amounts received; (ii) becoming subject to prepayment reviews or claims for overpayments; (iii) moratoriums on admissions of new patients or residents; (iv) civil or criminalpenalties; and (v) significant operational changes, including requirements to increase staffing or the scope of care given to residents. These laws and regulations are enforced by a variety of federal, state, and local agencies and can also be enforced by private litigants through, among other things, federal and state falseclaims acts, which allow private litigants to bring qui tam or “whistleblower” actions. Any changes in the regulatory framework or the intensity or extent of governmental or private enforcement actions could have a material adverse effect on our tenants, operators, borrowers, and/or assets.
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In addition, the patient driven payment model utilized by the Centers for Medicare and Medicaid Services to calculate reimbursement rates for patients in skilled nursing properties (which is among the unit types in our life plan communities) could result in decreases in payments to our operators and tenants or increase our operators’ and tenants’ costs. We cannot make any assessment as to the ultimate timing or the effect that any future changes may have on our tenants’, operators’, and borrowers’ costs of doing business, or the cost of doing business for or the assets owned in our senior housing segment, and on the amount of reimbursement by government and other third-party payors. Any significant limits on the scope of services reimbursed, reductions in reimbursement rates and fees, or increases in provider or similar types of taxes, could materially adversely affect their ability to meet their financial and contractual obligations to us.
Economic conditions, natural disasters, weather, and other events or conditions that negatively affect geographic areas where we have concentrated investments could have a material adverse effect on our business, results of operations, and financial condition.
We are subject to increased exposure to adverse conditions affecting the geographies in which our properties are located, including: (i) downturns in local economies or increases in unemployment rates; (ii) changes in local real estate conditions, including increases in real estate taxes and property insurance premiums; (iii) increased competition; (iv) decreased demand; (v) changes in political administrations, or federal, state, and local legislation, including changes affecting business or property taxes; (vi) local climate events and natural disasters and other catastrophic events, such as pandemics, earthquakes, hurricanes, windstorms, flooding, wildfires, and mudslides and other physical climate risks, including water stress and heat stress; and (vii) failures of regional banks. These risks could significantly disrupt our businesses in the region, harm our ability to compete effectively, result in increased costs or construction delays, and divert management attention, any or all of which could have a material adverse effect on our business, results of operations, and financial condition.
In addition, significant climate changes in areas where we own property could result in extreme weather and changes in precipitation, temperature, and other weather patterns, all of which could result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions or delays in construction. Moreover, an increase in volatility and difficulty predicting adverse weather events, such as freeze events in warmer climates in recent years, as well as increased hurricane intensity, may result in additional losses. Intensifying natural disasters resulting from climate change and extreme weather events, coupled with macroeconomic factors, have directly affected the availability of insurance, premiums, deductibles, and capacity that insurers are willing to underwrite. As a result, we may determine to self-insure more of our exposures, absorb more below-deductible losses, and look for alternative means of risk transfer in order to avoid spiraling insurance costs. These events also have indirect effects on our business by increasing the costs of energy, maintenance, and snow removal at our properties. If changes in the climate have material effects, such as property destruction, or occur for extended periods, this could have a material adverse effect on business, results of operations, and financial condition.
Uninsured or underinsuredlosses could result in a significant loss of capital invested in a property, lower than expected future revenues, and unanticipated expenses.
A large number of our properties are located in areas exposed to earthquakes, hurricanes, windstorms, flooding, water stress, heat stress, and other common natural disasters and physical climate risks. In particular, (i) a significant portion of our lab development projects and approximately 69% of our lab portfolio (based on gross asset value as of December 31, 2025) was concentrated in California, which is known to be subject to earthquakes, wildfires, and other natural disasters, and (ii) approximately 69% of our life plan community portfolio (based on gross asset value as of December 31, 2025) was concentrated in Florida, which is known to be subject to hurricanes. While we maintain insurance coverage for earthquakes, fires, hurricanes, windstorms, floods, and other natural disasters and physical climate risks, we may be unable to purchase the limits and terms we desire on a commercially reasonable basis due to increased insurance costs or the unavailability of insurance for certain exposures in other regions. We maintain additional earthquake insurance for our properties that are located in the vicinity of active earthquake zones in amounts and with deductibles we believe are commercially reasonable. Because of our significant concentration in the seismically active regions of South San Francisco, California, and San Diego, California, an earthquake in these areas could damage a significant portion of our lab portfolio. Similarly, a hurricane in Florida could damage a significant portion of our life plan community portfolio. As a result, aggregate deductible amounts may be material, and our insurance coverage may be materially insufficient to cover our losses. Furthermore, there are certain exposures for which we do not purchase insurance because we do not believe it is economically feasible to do so or there is no viable insurance market.
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If one of our properties experiences a loss that is uninsured or that exceeds policy coverage limits, we could lose our investment in the damaged property as well as the anticipated future cash flows from such property. If the damaged property is subject to recourse indebtedness, we could continue to be liable for the indebtedness even if the property is irreparablydamaged. In addition, even if damage to our properties is covered by insurance, a disruption of business caused by a casualty event may result in loss of revenues for us. Any business interruption insurance may not fully compensate the lender or us for such loss of revenue. Our insurance coverage does not include damages as a result of a pandemic, including business interruption, loss of revenue or earnings, or any related effects (e.g., increased costs related to personal protective equipment, sanitization/sterilization of surfaces and equipment, and additional staffing). Insurance coverage for pandemics is not generally available; if it does become available again, it may not be on commercially reasonable terms and we may be unable to receive insurance proceeds that would compensate us fully for our liabilities, costs, and expenses in the event of a pandemic.
Our senior housing operators also face various forms of class-action lawsuits from time to time, such as wage and hour and consumer rights actions, which generally are not covered by insurance. These class actions could result in significant defense costs, as well as settlements or verdicts that materially decrease anticipated revenues from a property and can result in the loss of a portion or all of our invested capital. We may also incur significant out-of-pocket costs associated with legal proceedings or other claims from residents and patients at our properties. Any of the foregoing risks could have a material adverse effect on our business, results of operations, and financial condition.
In addition, the rise in outsized jury verdicts and/or intensifying natural disasters could threaten policy limits and/or sublimits, which may result in the exhaustion of available insurance coverage for the remainder of the policy year. These events could also have a material adverse effect on our business, results of operations, and financial condition.
Our use of joint ventures may limit our returns on and our flexibility with jointly owned investments.
From time to time, we develop, acquire, and/or recapitalize properties in joint ventures with other persons or entities when circumstances warrant the use of these structures. Our participation in joint ventures is subject to risks that may not be present with other methods of ownership, including:
• our joint venture partners could have investment and financing goals that are inconsistent with our objectives, including the timing, terms, and strategies for any investments, and what levels of debt to incur or carry;
• because we lack sole decision-making authority, we could experience impasses or disputes relating to certain decisions, including those related to budget approvals, entitlements, construction and development, acquisitions, sales of assets, debt financing, execution of lease agreements, and vendor approvals, which could result in delayed decisions and missedopportunities and could require us to expend additional resources on litigation or arbitration to resolve;
• our joint venture partners may have competing interests that create conflicts of interest in our markets;
• our ability to transfer our interest in a joint venture to a third party may be restricted;
• the market for our interest may be limited and/or valued lower than fair market value;
• our joint venture partners may be structured differently than us for tax purposes, and this could create conflicts of interest and risks to our REIT status or could restrict the ways in which we are able to exit investments;
• our joint venture partners might become insolvent, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital;
• our joint venture agreements may contain anti-competitive restrictions that impact certain of our non-joint venture assets and require us to manage the non-joint venture assets in a manner we otherwise would not;
• our joint venture agreements may in certain circumstances grant our partners a right of first refusal to acquire certain of our non-joint venture assets;
• our joint venture agreements may give our partners management rights that allow them to make operational or other decisions with which we disagree or that we would manage differently; and
• our joint venture agreements may impose limitations or caps on the property management fees that we otherwise would have been entitled to receive if the underlying property were wholly owned.
In addition, in some instances, our joint venture partner will have the right to cause us to sell our interest, or acquire their interest, at a time when we otherwise would not have initiated such a transaction. Our ability to acquire our partner’s interest will be limited if we lack sufficient capital resources. This could require us to sell our interest in the joint venture when we might otherwise prefer to retain it. Any of the foregoing risks could have a material adverse effect on our business, results of operations, and financial condition.
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Rent escalators or contingent rent provisions in our leases could hinder our profitability and growth.
We derive a significant portion of our revenues from leasing properties pursuant to leases that generally provide for fixed rental rates, subject to annual escalations. If inflation exceeds our annual escalations, our growth and profitability may be limited.
Additionally, some of our leases provide that annual rent is modified based on changes in the Consumer Price Index or other thresholds (i.e., contingent rent escalators). If the Consumer Price Index does not increase or other applicable thresholds are not met, rental rates may not increase as anticipated or at all, which could hinder our profitability and growth. Furthermore, if economic conditions result in significant increases in the Consumer Price Index, but the escalations under our leases with contingent rent escalators are capped or the increase in the Consumer Price Index exceeds our tenants’ ability to pay, our growth and profitability may also be limited.
Competition may make it difficult to identify and purchase, or develop, suitable healthcare properties to grow our investment portfolio, to finance acquisitions on favorable terms, or to retain or attract tenants and operators.
We face significant competition from other REITs, investment companies, private equity and hedge fund investors, sovereign funds, healthcare operators, lenders, developers, and other institutional investors, some of whom may have greater resources and lower costs of capital than we do. Increased competition and resulting capitalization rate compression make it more challenging for us to identify and successfully capitalize on opportunities that meet our business goals and could improve the bargaining power of property owners seeking to sell, thereby impeding our investment, acquisition, and development activities. Similarly, our properties face competition for tenants and operators from other properties in the same market, which may affect our ability to attract and retain tenants and operators, or may reduce the rents we are able to charge. The failure to capitalize on our development pipeline, identify and purchase a sufficient quantity of healthcare properties at favorable prices, finance acquisitions on commercially favorable terms, or attract and retain profitable tenants could have a material adverse effect on our business, results of operations, and financial condition.
We may be unable to successfully exercise rights on the collateral securing our real estate-related loans and, even if we are successful in exercising those rights, we may be unable to successfully operate, occupy, or reposition the underlying real estate.
If a borrower defaults under one of our real estate related loans, we may look to exercise our rights under the loan, including acquiring title to the collateral via deed in lieu of foreclosure, foreclosure, statutory or judicial foreclosure, or commencing collection litigation. In some cases, because our collateral consists of the equity interests in an entity that directly or indirectly owns the applicable real property or interests in other operating properties, we may not have full recourse with respect to assets of that entity, or that entity may have incurred unexpected liabilities, either of which would preclude us from fully recovering our investment. Borrowers and guarantors may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against our exercise of enforcement or other remedies, and/or bring claims for lender liability in response to actions to enforce borrower obligations. Because many of the properties securing our mortgage loans are health care facilities, we may need to navigate and comply with various healthcare regulatory matters in a variety of states in connection with any foreclosure effort. Enforcement or collections-related costs, high loan-to-value ratios, healthcare regulatory issues or consents, or declines in the value of the property, may prevent us from realizing an amount equal to our loan balance upon enforcement or conclusion of litigation, and we may be required to record a valuation allowance for such losses. Even if we are able to successfully exercise our rights on the collateral securing our real estate-related loans, we may acquire properties for which we may be unable to expeditiously secure tenants or operators, if at all, or that are burdened with healthcare regulatory compliance issues that need to be addressed, or we may acquire equity interests that we are unable to immediately resell or otherwise liquidate due to limitations under the securities laws, either of which would adversely affect our ability to fully recover our investment. We may also determine that substantial improvements or repairs to the property are necessary in order to maximize the property’s investment potential. Alternatively, we may determine to sell a distressed loan for less than full value, in which event we may incur a loss on the investment.
We may be required to recognize reserves, allowances, credit losses, or impairment charges.
Declines in the value of our properties or other assets or loan collateral, financial deterioration of our tenants, borrowers, or other obligors, or other factors may result in the recognition of reserves, allowances, credit losses, or impairment charges. Our determination of such reserves, allowances, or credit losses relies on estimates regarding the fair value of any loan collateral, which is a complex and subjective process. In addition, we evaluate our assets for impairments based on various triggers, including market conditions, our current intentions with respect to holding or disposing of the assets and the expected future undiscounted cash flows from the assets. Impairments, reserves, allowances, and credit losses are based on estimates and assumptions that are inherently uncertain, may increase or decrease in the future, and may not represent or reflect the ultimate value of, or loss that we ultimately realize with respect to, the relevant assets. Any such impairment, reserve, allowance, or credit loss, or any change in any of the foregoing, could have an adverse impact on our results of operations and financial condition.
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We may invest substantial resources and time in investments or transactions that are not consummated.
We regularly review potential investments and transactions in order to maximize stockholder value. Our review process may require significant management attention, and a potential transaction could be abandoned or rejected by us or the other parties involved after we expend significant expenses, resources, and time.
We may not be able to successfully integrate or operate acquisitions and/or internalize property management, or may incur unanticipated liabilities.
Successful integration of acquired companies and/or internalization of the property management function, as applicable, depends primarily on our ability to consolidate operations, systems, procedures, properties, and personnel, and to eliminate redundancies and reduce costs. We may encounter difficulties in these integrations and property management internalizations. Potential difficulties associated with acquisitions and property management internalizations include: (i) our ability to effectively monitor and manage our expanded portfolio of properties; (ii) the loss of key employees; (iii) the disruption of our ongoing business or that of the acquired entity; (iv) possible inconsistencies in standards, controls, procedures, and policies; and (v) the assumption of unexpected liabilities and claims, including:
• liabilities relating to the cleanup or remediation of undisclosed environmental conditions;
• unasserted claims of vendors, residents, patients, or other persons dealing with the seller;
• liabilities, claims, and litigation, whether or not incurred in the ordinary course of business, relating to periods prior to the acquisition;
• claims for indemnification by general partners, directors, officers, and others indemnified by the seller;
• claims for return of government reimbursement payments; and
• liabilities for taxes relating to periods prior to the acquisition.
In addition, acquired companies and their properties may fail to perform as expected, including with respect to estimated cost savings. Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues. Similarly, we may underestimate future operating expenses or the costs necessary to bring properties up to standards established for their intended use or for property improvements.
If we have difficulties with any of these areas, or if we later discover additional liabilities or experience unforeseen costs relating to our acquired companies or property management internalization, we may not achieve the anticipated economic benefits from our acquisitions or property management internalization, and this may have a material adverse effect on our business, results of operations, and financial condition.
We may be affected by unfavorable resolution of litigation or disputes and rising liability and insurance costs as a result thereof or other market factors.
Our tenants, operators, property managers, employees, and borrowers are from time to time parties to litigation, including, for example, disputes regarding the quality of care at healthcare properties or the operations of the properties. The effect of litigation may materially increase the costs incurred by our tenants, operators, property managers, and borrowers, including costs to monitor and report quality of care compliance. In addition, the cost of professional liability, medical malpractice, property, business interruption, general liability, and insurance policies can be significant and may increase or not be available at a reasonable cost or at all. Cost increases could cause our tenants and borrowers to be unable to make their lease or mortgage payments or fail to purchase the appropriate liability and malpractice insurance, or cause our borrowers to be unable to meet their obligations to us, potentially decreasing our revenues and increasing our collection and litigation costs. Cost increases could also lead our operators and property managers to increase the fees they charge, which could have a material adverse effect on our business, results of operations, and financial condition.
Furthermore, with respect to our senior housing properties, all of which are operated in RIDEA structures, we generally directly bear the costs of any such increases in litigation, monitoring, reporting, and insurance due to our direct exposure to the cash flows of such properties. We are responsible for these claims, litigation, and liabilities, with limited indemnification rights against our operators, which are typically based on the gross negligence or willful misconduct by the operator. Although our leases provide us with certain information rights with respect to our tenants, one or more of our tenants may be or become party to pending litigation or investigation of which we are unaware or in which we do not have a right to participate or evaluate. In such cases, we would be unable to determine the potential impact of such litigation or investigation on our tenants or our business or results. Moreover, negative publicity of any of our operators’, property managers’, or tenants’ litigation, other legal proceedings or investigations may also negatively impact their and our reputation, resulting in lower customer demand and revenues, which could have a material adverse effect on our financial condition, results of operations, and cash flows.
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We may also be named as defendants in lawsuits arising out of our alleged actions or the alleged actions of our tenants, operators, or property managers for which such tenants, operators, or property managers may have agreed to indemnify us. Unfavorable resolution of any such litigation, including an outsized jury verdict, particularly if it exceeds our insurance policy limits or is not covered by insurance at all, or negative publicity as a result of such litigation could have a material adverse effect on our business, results of operations, and financial condition. Regardless of the outcome, litigation or other legal proceedings may result in substantial costs, disruption of our normal business operations, and the diversion of management attention. We may be unable to prevail in, or achieve a favorable settlement of, any pending or future legal action against us.
Even when a tenant or operator is obligated to indemnify us for liability incurred as a result of a lawsuit pursuant to the terms of its agreement with us, the tenant may fail to satisfy those obligations and, in such event, we would have to incur the costs that should have been covered by the tenant, operator, or property manager and to determine whether to expend additional resources to seek the contractually owed indemnity from that tenant, operator, or property manager, including potentially through litigation or arbitration. In some instances, we may decide not to enforce our indemnification rights if we believe that enforcement of such rights would be more detrimental to our business than alternative approaches. Regardless, such an event would divert management attention and may result in a disruption to our normal business operations, any or all of which could have an adverse effect on our business, results of operations, and financial condition.
Environmental compliance costs and liabilities associated with our real estate-related investments may be substantial and may materially impair the value of those investments.
Federal, state and local laws, ordinances, and regulations may require us, as a current or previous owner of real estate, to investigate, monitor, and/or clean up certain hazardous or toxic substances released at a property. We may be held liable to a governmental entity or to third parties for injury or property damage and for investigation and cleanup costs incurred in connection with the contamination. The costs of cleanup and remediation could be substantial. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and the costs it incurs in connection with the contamination, and/or impose fines and penalties on the property owner with respect to such contamination.
Although we currently carry environmental insurance on our properties in an amount that we believe is commercially reasonable and generally require our tenants and operators to indemnify us for environmental liabilities they cause, such liabilities could exceed the amount of our insurance, the financial ability of the tenant or operator to indemnify us, or the value of the contaminated property. As the owner of a site, we may also be held liable to third parties for damages and injuries resulting from environmental contamination emanating from the site. We may also experience environmental costs and liabilities arising from conditions not known to us or disrupted during development. The cost of defendingagainst these claims, complying with environmental regulatory requirements, conducting remediation of any contaminated property, or paying personal injury or other claims or fines could be substantial and could have a material adverse effect on our business, results of operations, and financial condition. In addition, the presence of contamination or the failure to remediate contamination may adversely affect our ability to use, develop, sell, or lease the property or to borrow using the property as collateral.
Corporate impact and sustainability commitments and changing requirements, as well as varying stakeholder expectations, may impose additional costs and expose us to new risks.
Some investors, tenants, business partners and other stakeholders, as well as regulators and other groups, focus on our corporate impact and sustainability commitments and performance. Some investors use corporate impact factors to guide their investment strategies and, in some cases, may choose not to invest in us if our corporate impact commitment and performance do not satisfy their criteria. Similarly, some business partners or tenants may use corporate impact factors to guide their business decisions and choose not to do business with us if they believe our corporate impact or sustainability policies are inadequate. Third-party providers of corporate impact ratings have increased in number, resulting in varied and, in some cases, inconsistent standards. In addition, the criteria by which companies’ corporate impact and sustainability practices are assessed are evolving, which could result in greater expectations for us to undertake costly initiatives to satisfy such new criteria. At the same time, diverging and evolving views on corporate impact from regulators and other stakeholders may result in increased scrutiny of our corporate impact practices and political, regulatory, or reputational risk.
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We have established corporate goals to reduce greenhouse gas emissions, energy, water and waste in our operations, and various regions in which we own properties are establishing building performance standards. Our reputation may be adversely affected if we do not meet our announced goals or these external standards. In addition, metrics and quantitative data we disclose related to our corporate impact and sustainability commitments are based on and verified in accordance with standards that are different from U.S. generally accepted accounting principles. Such data and metrics may be subject to measurement uncertainties resulting from limitations inherent in the nature and the methods used for determining such data. The selection of different but acceptable measurement techniques can result in materially different measurements. If we fail to satisfy the expectations of investors, tenants, business partners or other stakeholders, or our announced goals and other initiatives are not executed as planned or there are changes in the measurement techniques (including any changes in estimates or assumptions underlying the measurements) or in the standards referenced for the measurement of data, our reputation and financial results could be adversely affected, and our revenues, results of operations and ability to grow our business may be negatively impacted. In addition, we may incur significant costs in attempting to comply with corporate impact policies or third-party expectations or demands.
In addition, changes in federal, state, and local legislation and regulation relating to climate change, net zero or carbon neutrality requirements, and building and energy performance standards could require (i) increased capital expenditures to improve the energy efficiency or resiliency of our existing properties and increase the costs of new developments and (ii) increased compliance costs for us and our tenants, in each case without a corresponding increase in revenue. In addition, our reputation may be adversely affected if we do not meet stakeholder expectations to mitigate climate risk in a transition to a low-carbon economy.
We may be impacted by epidemics, pandemics, or other infectious disease outbreaks, and health and safety measures intended to reduce their spread.
Epidemics, pandemics, or widespread or localized infectious disease outbreaks, as well as other health concerns, and the health and safety measures taken to reduce the spread or lessen the impact, could cause a material disruption to our industry or deteriorate the economy as a whole. The impacts of such events could be severe and far-reaching, and may impact our operations in several ways, including: (i) tenants could experience deteriorating financial condition and be unable or unwilling to pay rent on time and in full; (ii) we may have to restructure tenants' obligations and may not be able to do so on terms that are favorable to us; (iii) inquiries and tours at our properties could decrease; (iv) move-ins, new tenanting efforts, and re-letting efforts could slow or stop altogether; (v) move-outs and potential early termination of leases thereunder could increase; (vi) operating expenses, including the costs of certain essential services or supplies, including payments to third-party contractors, service providers, and employees essential to ensure continuity in our building operations, may increase; (vii) procedures normally conducted on our properties may be disrupted, adversely affecting the economic viability of our tenants; and (viii) costs of development, including expenditures for materials utilized in construction and labor essential to complete existing developments in progress, may increase substantially.
Our past participation in the CARES Act Provider Relief Fund and other Covid-related stimulus and relief programs could subject us or our operators to disruptive government and financial audits, enforcement actions, and recovery activity.
Under the CARES Act and subsequent Covid relief legislation, Congress allocated more than $178 billion to eligible health care providers through the Public Health and Social Services Emergency Fund (the “Provider Relief Fund” or “PRF”). The U.S. Department of Health and Human Services (“HHS”) distributed PRF awards through various general and targeted distributions. We and our senior housing operators (including operators of senior housing facilities that we have subsequently disposed of) received relief funds through several distributions. PRF funds were intended to reimburse eligible providers for unreimbursed health care-related expenses and lost revenues attributable to Covid and were used only to prevent, prepare for, or respond to Covid. PRF funds received under certain targeted distributions were further limited to specific uses. Additionally, the PRF program imposed certain distribution-specific eligibility criteria and required recipients to comply with various terms and conditions. PRF program terms and conditions included limitations and requirements governing use of PRF funds, implementation of controls, retention of records, audit and reporting to governmental authorities, and other PRF program requirements, the interpretation of which could change over time. Failure to comply with program requirements may result in payment recovery or other enforcement actions. Even though no new PRF program funds were received in 2025, we may still be subject to or incur costs related to PRF compliance activities, as well as government oversight and enforcement, including post-payment recovery and recoupment and government investigations, audits, enforcement activity, and penalties. Our current and former operators may similarly be impacted. Differences in operators’ PRF policies and protocols may adversely impact availability of data and financial audits.
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Laws or regulations prohibiting eviction of our tenants, even on a temporary basis, could have a material adverse effect on our revenues if our tenants fail to make their contractual rent payments to us.
Various federal, state, and local governments previously enacted, and may again enact, laws, regulations, and moratoriums or take other actions that could limit our ability to evict tenants until such laws, regulations, or moratoriums are reversed or lifted. While we generally have arrangements and other agreements that give us the right under specified circumstances to terminate a lease or evict a tenant for nonpayment of contractual rent, such laws, regulations, and moratoriums may restrict our ability to begin eviction proceedings even where no rent or only partial rent is being paid. Further, under current laws and regulations, eviction proceedings for delinquent tenants are already costly and time-consuming, and, if there are existing backlogs or backlogs develop in courts due to higher than normal eviction proceedings, we may incur significant costs and it may take a significant amount of time to ultimately evict any tenant who is not meeting their contractual rent obligations. If we are restricted, delayed, or prohibited from evicting tenants for failing to make contractual rent payments, it may have a material adverse effect on our business, results of operations, and financial condition.
Human capital risks, including the loss or limited availability of our key personnel, could disrupt or impair our operations.
We face elevated labor costs and increased competition for talent. Insufficient employee development, inadequate succession planning or an inability to successfully maintain a hybrid work model could negatively impact our business and operations. We also depend on the efforts of our executive officers for the success of our business. Although they are covered by our Executive Severance Plan and Executive Change in Control Severance Plan, which provide many of the benefits typically found in executive employment agreements, none of our executive officers have employment agreements with us. The loss or limited availability of the services of any of our executive officers, or our inability to recruit and retain qualified personnel, could, at least temporarily, disrupt, or impair our operations.
We rely on information technology in our operations, and any material failure, inadequacy, interruption, or security failure of that technology could harm our business.
We rely on information technology networks, enterprise applications, and other information systems to process, transmit, and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, to maintain personal identifying information and tenant and lease data, and to operate building management systems. We utilize software and cloud-based technology from third-party service providers, on whom our information systems depend. We rely on commercially available systems, software, tools, and monitoring to provide security for the processing, transmission, and storage of confidential employee, tenant and customer data, including individually identifiable information relating to financial accounts, as well as building access, security, and operations. Although we have taken steps to protect the security of our information systems, with multiple layers of controls around the data maintained in those systems, our safety and security measures cannot always prevent the systems’ improper functioning or damage, or the improper access of systems or disclosure of personally identifiable information such as in the event of cyber-attacks or other cybersecurity incidents. Our third-party service providers may also experience unexpected power losses, computer system failures, or data network disruptions, negatively impacting the systems or solutions we depend on. If our third-party providers face a security incident or other interruptions, or if there is a flaw or failed software update in the third-party software used in our systems, our information systems may become disabled or inaccessible. This could limit access to our data and business information, potentially causing significant disruptions to our operations.
Furthermore, because our operators as well as other third-party service providers with whom we and they do business (including vendors, software creators and cloud solution and cybersecurity providers) also rely on the Internet, information technology networks, enterprise applications, systems, and software, some data is vulnerable to cybersecurity incidents or cybersecurity threats involving our operators and third parties with whom we or they do business. We do not control the cybersecurity systems and protocols put in place by our operators or other third parties, and such parties may have limited indemnification obligations to us, which could cause us to be negatively impacted as a result.
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Cybersecurity incidents and cybersecurity threats affecting our or our operators’ or other third party providers’ information systems, including those caused by physical or electronic break-ins, computer viruses, malware, worms, attacks by hackers or foreign governments, ransomware attacks, disruptions from unauthorized access and tampering, including through social engineering such as phishing or vishing attacks, coordinated denial-of-service attacks, and similar breaches, could result in, among other things: (i) system disruptions; (ii) shutdowns; (iii) unauthorized access to or disclosure of confidential information, including as a result of impersonation of authorized users or manipulated communications; (iv) misappropriation of our or our business partners’ proprietary or confidential information; (v) breach of our legal, regulatory, or contractual obligations; (vi) inability to access or rely upon critical business records or systems; or (vii) other delays in our operations. In some cases, it may be difficult to anticipate or immediately detect such cybersecurity threats and cybersecurity incidents and the damage they cause. The risk of cybersecurity incidents and cybersecurity threats has generally increased as the number, intensity, and sophistication of attacks and intrusions affecting companies generally have increased, and we have seen a significant increase in cyber phishing attacks. The risk of security breaches has also increased under our hybrid work model. We may be required to expend significant financial resources to detect, protect against or remediate such cybersecurity incidents or cybersecurity threats. In addition, our technology infrastructure and information systems are vulnerable to damage or interruption from natural disasters, power loss, and telecommunications failures. Any failure to adequately train employees or to maintain proper function, security, and availability of our and our operators’ information systems and the data maintained in those systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties, harm our business relationships, or increase our security and insurance costs, which could have a material adverse effect on our business, financial condition, and results of operations.
Our tenants and borrowers may also from time to time experience cybersecurity incidents or cybersecurity threats that compromise, damage or disrupt their information systems or result in the loss or misuse of confidential information, intellectual property or sensitive or personal information. Any resulting financial impact to our tenants or borrowers, including liability claims or regulatory penalties, increased security and insurance costs as well as business impacts resulting from any damage to their reputation or harm to their business relationships, could negatively impact the ability of our tenants and borrowers to meet their financial and other contractual obligations to us, which could have a material adverse effect on our business, financial condition and results of operations.
The use of, or inability to use, artificial intelligence by us, our tenants, our vendors, and our investors presents risks and challenges that may adversely impact our business and operating results or the business and operating results of our tenants and vendors or may adversely impact the requirements and demand for properties.
We use generative artificial intelligence and/or machine learning (collectively, “AI”) tools in our investment and capital allocation decisions and operations, including commercially available AI applications or AI features available through our existing software or technology platforms. If AI tools used by our peers to optimize decisions or operations are used more broadly or effectively than the AI tools we use, we may be competitively disadvantaged. However, while AI tools may facilitate optimization and operational efficiencies, they also have the potential for inaccuracy, bias, infringement or misappropriation of intellectual property, and risks related to data privacy and cybersecurity. The use of AI tools may introduce errors or inadequacies that are not easily detectable, including deficiencies, inaccuracies, or biases in the data used for AI training, or in the content, analyses, or recommendations generated by AI applications. The results of such errors or inadequacies may adversely affect our business, financial condition, and results of operations. The legal requirements relating to AI continue to evolve and remain uncertain, including how legal developments could impact our business and ability to enforce our proprietary rights or protect againstinfringement of those rights, and may expose us to claims, inquiries, demands and proceedings by private parties and global regulatory authorities and subject us to legal liability as well as reputational harm. New laws and regulations governing AI use are being adopted, and existing laws and regulations may be interpreted in ways that would affect our business operations and the way in which we use AI. While we have adopted a governance framework concerning use of AI tools and provide training to our employees to guard against the aforementioned risks, there can be no assurance that we will realize the anticipated benefits or mitigate such risks of using AI tools.
Cybersecurity threat actors may utilize AI tools to automate and enhance cybersecurity attacks against us. We utilize software and platforms designed to detect such cybersecurity threats, including AI-based tools, but these threats could become more sophisticated and harder to detect and counteract, which may pose significant risks to our data security and systems. Such cybersecurity attacks, if successful, could lead to data breaches, loss of confidential or sensitive information, and financial or reputational harm.
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The integration of AI tools in the healthcare industry may present significant opportunities and risks, including for our tenants. For example, in the life science industry, AI predictive models have the potential to be utilized broadly across various stages of drug development. Physicians in our outpatient medical portfolio may use AI tools to run comprehensive diagnostic tests. However, the adoption of AI tools also introduces a complex risk landscape for our tenants, similar to those risks described above. Moreover, the adoption of AI tools by our tenants may lead to infrastructure requirements that our buildings currently do not accommodate, such as increased power needs for high-performance computing. Infrastructure upgrades may require significant capital expenditures and could potentially impact the environmental footprint of our building operations. The adoption of AI tools by our tenants may also lead to a reconfiguration in space requirements by our tenants or decreased in demand for space over time. If we are not able to offset any material reduction in demand through leasing or re-leasing efforts, repurposing space, property dispositions, or other means, there could be a material adverse effect on our business, results of operations, and financial condition.
Our vendors may use AI tools in their products or services without our knowledge, and the providers of these tools may not meet the evolving regulatory or industry standards for privacy and data protection. Consequently, this may inhibit our or our vendors’ ability to uphold an appropriate level of service and data privacy. If we, our vendors, or other third parties with which we conduct business experience an actual or perceived breach of privacy or security incident due to the use of AI, we may be adversely impacted, losevaluable intellectual property or confidential information, and incur harm to our reputation and the public perception of the effectiveness of our security measures.
In addition, investors, analysts, and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us. The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.
Risks Related to Our Capital Structure and Market Conditions
Volatility, disruption, or uncertainty in the financial markets may impair our ability to raise capital, obtain new financing or refinance existing obligations, and fund acquisition and development activities.
Increased or prolonged market disruption, volatility, or uncertainty could have a material adverse effect on our ability to raise capital, obtain new financing or refinance our existing obligations as they mature, and fund acquisition and development activities. Our lenders and other financial institutions could also require us to agree to more restrictive covenants, grant liens on our assets as collateral, and/or accept other terms that are not commercially beneficial to us in order to obtain financing. One or more of our lenders under our credit facility could refuse or fail to fund their financing commitment to us as a result of lender liquidity and/or viability challenges, which financing commitments we may not be able to replace on favorable terms, or at all. In addition, the failure of a bank, or events involving limited liquidity, defaults, non-performance or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, or concerns or rumors about such events, could lead to disruptions in access to our bank deposits, our inability to access our bank deposits in excess of the Federal Deposit Insurance Corporation (FDIC) limits, or otherwise adversely impact our liquidity and financial performance, and our tenants, operators, and borrowers could be similarly adversely affected. Market volatility could also lead to significant uncertainty in the valuation of our investments and those of our joint ventures, which may result in a substantial decrease in the value of our properties and those of our joint ventures. As a result, we may be unable to recover the carrying amount of such investments and the associated goodwill, if any, which may require us to recognize impairment charges in earnings.
Increased interest rates and borrowing costs could materially adversely impact our business and ability to refinance existing debt, sell properties, and conduct investment activities.
U.S. government policies implemented to address inflation, including actions by the Federal Reserve System’s Federal Open Market Committee (the “FOMC”) to increase short-term interest rates, resulted in increases in interest rates in the credit markets and other impacts on the macroeconomic environment. Interest rates may remain elevated above historical levels for extended periods or rise again. The FOMC may not reduce the federal funds rate in the amounts or on the timeline currently anticipated, which could result in a higher federal funds rate for a longer period of time, or the FOMC may determine to raise the federal funds rate again, either of which would likely lead to higher short-term interest rates and the possibility of lower asset values, slowing economic growth and increasing the possibility of a recession. Further, actions by the FOMC to decrease short-term interest rates could lead to inflationary pressures.
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We currently have and may incur additional debt obligations that have variable interest rates and related payments that vary with the movement of certain indices, and we may not be able to offset additional costs caused by inflation, higher interest rates, or other macroeconomic trends by passing them through, or increasing the rates we charge, to tenants and residents. These increased costs have caused, and in the future may cause, unfavorable financing terms and may hinder our ability to execute on accretive acquisitions or otherwise adversely affect our business, results of operations, and financial condition. Elevated interest rates could also negatively impact consumer spending and our tenants’, operators’, and borrowers’ businesses and future demand for our properties. In addition, elevated interest rates have lowered, and could continue to lower, the amount third parties are willing to pay for our properties, thereby negatively impacting our ability to reposition our portfolio promptly in response to changes in economic or other conditions.
Higher borrowing costs could limit our ability to refinance existing debt when it matures, or cause us to pay higher interest rates upon refinancing and increased interest expense on refinanced indebtedness.
We manage a portion of our exposure to interest rate risk by accessing debt with staggered maturities and through the use of derivative instruments, primarily interest rate cap and swap agreements. These agreements involve risk, including that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may cause us to incur higher debt service costs than would otherwise be the case. Failure to hedge effectively against interest rate risk could adversely affect our results of operations and financial condition.
Additionally, higher borrowing costs and attendant negative impacts on our business can reduce the amount investors are willing to pay for our common stock. Because REIT stocks are often perceived as high-yield investments, investors may perceive less relative benefit to owning REIT stocks as borrowing costs increase.
Cash available for distribution to stockholders may be insufficient to make dividend distributions at expected levels and are made at the discretion of our Board of Directors.
Decreases in cash available for distributions may result in us being unable to make dividend distributions at expected levels. Our failure to make distributions commensurate with market expectations would likely result in a decrease in the market price of our common stock. Further, all distributions are made at the discretion of our Board of Directors in accordance with Maryland law and depend on: (i) our earnings; (ii) our financial condition; (iii) debt and equity capital available to us; (iv) our expectations for future capital requirements and operating performance; (v) covenants in our financial or other contractual arrangements, including those in our credit facility agreement; (vi) maintenance of our REIT qualification; and (vii) other factors as our Board of Directors may deem relevant from time to time.
If access to external capital is unavailable on acceptable terms or at all, it could have a material adverse effect on our ability to meet commitments as they become due or make investments necessary to grow our business.
We periodically rely on external sources of capital (including debt and equity financing) to fulfill our capital requirements. The availability of external capital sources is affected by several factors, some of which we have little or no control over, including:
• general availability of capital, including our ability to raise capital on acceptable terms, higher interest rates, and increased borrowing costs;
• the market price of the shares of our equity securities and the credit ratings of our debt and any preferred securities we may issue;
• the market’s perception of our growth potential and our current and potential future earnings and cash distributions;
• our degree of financial leverage and operational flexibility;
• the financial integrity of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us, and our inability to replace the financing commitment of any such lender on favorable terms, or at all;
• bank failures or other events affecting financial institutions, which could adversely affect our or our tenants’, operators’, and borrowers’ liquidity and financial performance;
• the stability of the market value of our properties;
• the financial performance and general market perception of our tenants and operators;
• changes in the credit ratings on U.S. government debt securities or default or delay in payment by the U.S. of its obligations;
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• issues facing the healthcare industry, including healthcare reform and changes in government reimbursement policies; and
• the performance of the national and global economies generally, including any economic downturn and volatility in the financial markets.
If access to capital is unavailable on acceptable terms or at all, it could have a material adverse impact on our ability to fund operations, repay or refinance our debt obligations, fund dividend payments, acquire properties, and make the investments in development and redevelopment activities, as well as capital expenditures, needed to grow our business.
Our level of indebtedness may increase and materially adversely affect our future operations.
Our outstanding indebtedness as of December 31, 2025 was approximately $9.8 billion. We may incur additional indebtedness, which may be substantial. Any significant additional indebtedness would likely negatively affect the credit ratings of our debt and require us to dedicate a growing portion of our cash flow to interest and principal payments. Greater demands on our cash resources may reduce funds available to us to pay dividends, conduct development activities, make capital expenditures and acquisitions, or carry out other aspects of our business strategy. Increased indebtedness can also make us more vulnerable to general adverse economic and industry conditions and create competitive disadvantages for us compared to other companies with comparatively lower debt levels. Increased future debt service obligations may limit our operational flexibility, including our ability to finance or refinance our properties, contribute properties to joint ventures, or sell properties as needed. In addition, any changes to benchmark rates, or uncertainty as to the nature of such potential changes, may increase the cost of our variable rate debt or cost of funds, adversely affect the trading market for our securities, have an unpredictable impact on the financial markets or otherwise affect our financial condition and results of operations.
Covenants in our debt instruments limit our operational flexibility, and breaches of these covenants could result in adverse actions by our creditors.
The terms of our current secured and unsecured debt instruments require us to comply with a number of customary financial and other covenants, such as maintaining leverage ratios, minimum tangible net worth requirements, REIT status, and certain levels of debt service coverage. Our ability to incur additional debt and to conduct business in general is subject to compliance with these covenants, which limits our operational flexibility. For example, mortgages on our properties contain customary covenants such as those that limit or restrict our ability, without the consent of the lender, to further encumber or sell the applicable properties, or to replace the applicable tenant or operator. Breaches of certain covenants may result in defaults under the mortgages on our properties and cross-defaults under certain of our other indebtedness, even if we satisfy our payment obligations to the respective obligee. Covenants that limit our operational flexibility, as well as defaults resulting from the breach of any of these covenants, could have a material adverse effect on our business, results of operations, and financial condition.
The market price and trading volume of our common stock may be volatile.
The market price of our common stock has been, and may in the future be, highly volatile and subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. The stock market has experienced extreme price and volume fluctuations that have affected the market price of many companies in industries similar or related to ours and that have been unrelated to these companies’ operating performances. If the market price of our common stock declines significantly, you may be unable to resell your shares at a gain. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:
• actual or anticipated variations in our quarterly operating results, guidance, or distributions;
• changes in market valuations of similar companies;
• adverse market reaction to any increased indebtedness we may incur in the future;
• issuance of additional equity securities;
• actions by institutional stockholders;
• the publication of research reports and articles (or false or misleading information) about us, our tenants, the real estate industry, or the industries in which our tenants operate;
• speculation in the press or investment community and investor sentiment regarding commercial real estate generally, our industry sectors or other real estate sectors, the industries in which our tenants operate, and the regions in which our properties are located;
• short selling of our common stock or related derivative securities; and
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• general market and economic conditions.
Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms.
Our credit ratings affect the amount and type of capital, as well as the terms of any financing we may obtain. The credit ratings of our senior unsecured debt are based on, among other things, our operating performance, liquidity and leverage ratios, geographic and tenant concentration, and pending or future changes in the regulatory framework applicable to our operators and our industry. If we are unable to maintain our current credit ratings, we would likely incur higher borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. An adverse change in our outlook may ultimately lead to a downgrade in our credit ratings, which would trigger additional borrowing costs or other potentially negative consequences under our current credit facilities and debt instruments. Also, if our credit ratings are downgraded, or general market conditions were to ascribe higher risk to our ratings, our industry, or us, our access to capital and the cost of any future debt financing will be further negatively impacted. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect. There is no guarantee that debt or equity financings will be available in the future to fund future acquisitions, developments, or general operating expenses, or that such financing will be available on terms consistent with our historical agreements or expectations.
Risks Related to the Pending Janus Living Offering and Our Relationship with Janus Living if the Janus Living Offering is Completed
The pending Janus Living Offering may not be completed on the currently contemplated timeline or terms, or at all, and may not achieve the intended benefits.
In December 2025, we confidentially submitted a draft registration statement on Form S-11 to the SEC relating to the proposed Janus Living Offering. Although we expect to complete the Janus Living Offering in the first half of 2026, unforeseen developments, including related to market conditions, receipt of regulatory approvals, completion of related financings, completion of the SEC’s review, and other customary closing conditions, could delay or prevent the Janus Living Offering or cause it to occur on terms or conditions that are less favorable or different than anticipated. The conditions required to complete the Janus Living Offering may not be satisfied on the timeline anticipated or at all. In addition, expenses incurred to accomplish the Janus Living Offering could be significantly higher than we currently anticipate.
We may not realize the expected benefits of the Janus Living Offering, including due to macroeconomic trends that may increase operating costs; the effects of economic conditions and market conditions in the markets in which we operate and in which Janus Living will operate; our concentration of real estate investments in the healthcare property sector and Janus Living’s planned concentration of real estate investments in the senior housing sector, which makes us and Janus Living more vulnerable to a downturn in those specific sectors than if we and Janus Living invested across multiple sectors; or a lack of recognition by the market of the value of our senior housing portfolio. In addition, the Janus Living Offering may demand significant time and attention from our senior management and employees and may divert their attention from operating and growing our business.
We will have significant economic exposure to shifts in the price of Janus Living common stock and our ability to control the assets and activities of Janus Living may be limited.
Following the Janus Living Offering, we intend to externally manage and retain a substantial majority interest in Janus Living, with new public shareholders owning the remaining interest. We will also be entitled to nominate certain directors for election to Janus Living’s board of directors.
As the majority owner of Janus Living common stock, we will have a significant economic exposure to shifts in the price of Janus Living common stock, which may not correspond to the financial performance of Janus Living. As a publicly traded security, the market price and liquidity of the market for shares of Janus Living common stock may be significantly affected by numerous factors, including market volatility, some of which are beyond our control and the control of Janus Living and may not be directly related Janus Living operating performance. In the future, we may be unable to dispose of shares of Janus Living common stock on favorable terms, which may adversely affect the value we realize from our investment in Janus Living.
In addition, if we were to cease to serve as external manager to Janus Living, our ability to control the assets and activities of Janus Living may be limited. In such case, we may not be able to effectively mitigate our exposure to Janus Living’s financial condition and performance, which could adversely impact our business, results of operations and financial condition.
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There are conflicts of interest in our relationship with Janus Living and our officers and/or directors who are also officers and/or directors of Janus Living.
We may be subject to conflicts of interest arising out of our relationship with Janus Living and our officers and/or directors who are also officers and/or directors of Janus Living. Transactions between us and Janus Living are subject to approval by the independent members of the board of directors of Janus Living.
Conflicts may include, without limitationconflicts arising from: the entry into transactions between us and Janus Living; enforcement of agreements between us and Janus Living; termination of the management agreement with Janus Living; and the amount of time that our officers and employees spend on our affairs versus Janus Living’s affairs. Our directors and officers have duties to our company under applicable Maryland law, and our directors and officers who are also directors or officers of Janus Living also have duties to Janus Living under applicable Maryland law. Those duties may come in conflict from time to time. Janus Living’s manager is our wholly owned indirect subsidiary. Our interests, as well as the interests of our stockholders, may differ from the interests of Janus Living’s stockholders in certain respects. In this regard, sales or other dispositions of Janus Living’s properties may have adverse tax implications for us, our affiliates and/or stockholders.
Risks Related to Tax, Including REIT-Related Risks, and Related to Our Jurisdiction of Incorporation and Our Structure as an UPREIT
Loss of our tax status as a REIT would substantially reduce our available funds and would have materially adverse consequences for us and the value of our common stock.
Qualification as a REIT involves the application of numerous highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for which there are limited judicial and administrative interpretations, as well as the determination of various factual matters and circumstances not entirely within our control. We intend to continue to operate in a manner that enables us to qualify as a REIT. However, our qualification and taxation as a REIT depend upon our ability to meet the various qualification tests imposed under the Code, through actual annual operating results, asset diversification, distribution levels, and diversity of stock ownership.
For example, to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying sources, and we must make distributions to our stockholders aggregating annually to at least 90% of our REIT taxable income, excluding net capital gains. Rents we receive from a TRS in a RIDEA structure are treated as qualifying rents from real property for REIT tax purposes only if (i) they are paid pursuant to a lease of a “qualified healthcare property” and (ii) the operator qualifies as an “eligible independent contractor,” as each term is defined in the Code. If either of these requirements is not satisfied, then the rents we receive from the TRS will not be qualifying rents and we may not satisfy the REIT gross income requirements. Furthermore, new legislation, regulations, administrative interpretations, or court decisions could change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is materially adverse to our stockholders. Accordingly, we cannot assure you that we have operated or will continue to operate in a manner so as to qualify or remain qualified as a REIT.
If we lose our REIT status, we will face serious tax consequences that will substantially reduce the funds available to make payments of principal and interest on the debt securities we issue and to make distributions to stockholders. If we fail to qualify as a REIT:
• we will not be allowed a deduction for distributions to stockholders in computing our taxable income;
• we will be subject to corporate-level income tax on our taxable income at regular corporate rates;
• we will be subject to increased state and local income taxes; and
• unless we are entitled to relief under relevant statutory provisions, we will be disqualified from taxation as a REIT for the four taxable years following the year during which we fail to qualify as a REIT.
As a result of all these factors, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital and could materially adversely affect the value of our common stock.
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Our taxable REIT subsidiaries (TRSs) may be subject to corporate level tax.
Certain of our subsidiaries have elected or will elect with us to be treated as TRSs. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT that the parent REIT could not provide directly. TRSs are taxed as regular C corporations, and are thus generally required to pay regular corporate income tax, and potentially the alternative minimum tax, on their earnings. Any taxes paid by our TRSs will reduce the amounts that our TRSs could otherwise distribute to us. Furthermore, new legislation, regulations, administrative interpretations, or court decisions could change the tax laws or interpretations of the tax laws regarding our ability to continue to use one or more TRSs or other structures or arrangements in such a manner that could be materially adverse to us.
The tax imposed on any net income from “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
We will be required to pay a 100% tax on any net income from prohibited transactions. Prohibited transactions are, in general, sales or other taxable dispositions of property, other than foreclosure property, held as inventory or primarily for sale to customers in the ordinary course of business. A sale will not be considered a prohibited transaction, however, if it meets certain safe harbor requirements. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business (other than through a TRS), such characterization is a factual determination and no guarantee can be given that the U.S. Internal Revenue Service (the “IRS”) would agree with our characterization of our properties or that we will always be able to take advantage of available safe harbors.
Further changes to U.S. federal income tax laws could materially and adversely affect us and our stockholders.
The present federal income tax treatment of REITs and various transactional structures that we utilize may be modified, possibly with retroactive effect, by legislative, judicial, or administrative action at any time, which could affect the federal income tax treatment of an investment in us. The federal income tax rules dealing with U.S. federal income taxation and REITs are constantly under review by persons involved in the legislative process, the IRS, and the U.S. Treasury Department, which results in statutory changes as well as revisions to regulations and interpretations. We cannot predict how changes in the tax laws might affect our investors or us. Revisions in federal tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT, as well as the tax considerations relevant to an investment in us, or could cause us to change our investments and commitments.
Potential deferred and contingent tax liabilities from corporate acquisitions could limit or delay future property sales.
If, during the five-year period beginning on the date we acquire certain assets or companies in certain tax deferred transactions, we recognize a gain on the disposition of any property acquired, then, to the extent of the excess of (i) the fair market value of such property as of the acquisition date, over (ii) our adjusted income tax basis in such property as of that date, we will be required to pay a corporate-level federal income tax on this gain at the highest regular corporate rate. These potential tax effects could limit or delay future property sales. In addition, the IRS may assert liabilities against us for income taxes of certain entities we acquire for taxable years prior to the time that we acquire such entities, in which case we will owe these taxes plus interest and penalties, if any.
There are uncertainties relating to the calculation of non-REIT tax earnings and profits (“E&P”) in certain acquisitions, which may require us to distribute E&P.
In order to remain qualified as a REIT, we are required to distribute to our stockholders all of the accumulated non-REIT E&P of certain C corporations that we acquire, prior to the close of the first taxable year in which the acquisition occurs. Failure to make such E&P distributions could result in our disqualification as a REIT. The determination of the amount to be distributed in such E&P distributions is a complex factual and legal determination. We may have less than complete information at the time we undertake our analysis, or we may interpret the applicable law differently from the IRS. We currently believe that we have satisfied the requirements relating to such E&P distributions. There are, however, substantial uncertainties relating to the determination of E&P, including the possibility that the IRS could successfully assert that the taxable income of the companies acquired should be increased, which could increase our non-REIT E&P. Thus, we might fail to satisfy the requirement that we distribute all of our non-REIT E&P by the close of the first taxable year in which the acquisition occurs. Although there are procedures available to cure a failure to distribute all of our E&P, we cannot now determine whether we will be able to take advantage of these procedures or the economic impact on us of doing so.
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Tax protection agreements may limit our ability to sell or otherwise dispose of certain properties and may require us to maintain certain debt levels that otherwise would not be required to operate our business.
We acquired in the past and in the future may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for units in our DownREITs or Healthpeak OP. In connection with these transactions, our DownREITs have entered and, with Healthpeak OP, may in the future enter into tax protection agreements that enable contributing partners to defer the recognition of taxable gain resulting from the sale or other disposition of the contributed properties. Tax protection agreements may make it economically prohibitive to sell any properties that are subject to such agreements even though it may otherwise be in our stockholders’ best interests to do so. In addition, under these agreements, we may be required to maintain a minimum level of indebtedness throughout the term of the agreements regardless of whether such debt levels are otherwise required to operate our business. Physicians Realty Trust and Physicians Realty L.P. (the “Physicians Partnership”) had also entered into similar tax protection arrangements with certain third parties and, as a result of the Merger, we inherited the obligations under such arrangements.
Our charter contains ownership limits with respect to our common stock and other classes of capital stock.
Our charter contains restrictions on the ownership and transfer of our common stock and preferred stock that are intended to assist us in preserving our qualification as a REIT. Under our charter, subject to certain exceptions, no person or entity may own, actually or constructively, more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of our common stock or any class or series of our preferred stock.
Additionally, our charter has a 9.9% ownership limitation on the direct or indirect ownership of our voting shares, which may include common stock or other classes of capital stock. Our Board of Directors, in its sole discretion, may exempt a proposed transferee from either ownership limit. The ownership limits may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.
We are subject to certain provisions of Maryland law and our charter relating to business combinations that may prevent a transaction that may otherwise be in the interest of our stockholders.
We are subject to the Maryland Business Combination Act (the “MBCA”), which provides that unless exempted, a Maryland corporation may not engage in certain business combinations with an “interested stockholder” or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. In addition to the restrictions on business combinations contained in the MBCA, our charter also requires that, except in certain circumstances, “business combinations” with a “related person” must be approved by the affirmative vote of the holders of at least 90% of our outstanding voting stock. These restrictions on business combinations may delay, defer, or prevent a change of control or other transaction even if such transaction involves a premium price for our common stock or our stockholders believe that such transaction is otherwise in their best interests.
Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of Healthpeak OP common units, which may impede business decisions that could benefit our stockholders.
Conflicts of interest may exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and Healthpeak OP or any member thereof, on the other. Our directors and officers have duties to our company under Maryland law in connection with their management of our company. At the same time, we, as the managing member of Healthpeak OP, have certain fiduciary duties and obligations to Healthpeak OP and its members under Maryland law and the operating agreement of Healthpeak OP in connection with the management of Healthpeak OP. Our fiduciary duties and obligations as the managing member of Healthpeak OP may come into conflict with the duties of our directors and officers to our company.
Under Maryland law, a managing member of a Maryland limited liability company has fiduciary duties of loyalty and care to the limited liability company and its members and must discharge its duties and exercise its rights as managing member under the operating agreement or Maryland law consistent with the obligation of good faith and fair dealing. The operating agreement provides that, to the maximum extent permitted under the Maryland Limited Liability Company Act, the only duties that the managing member owes to Healthpeak OP, any member, or any other person, fiduciary or otherwise, are to perform its contractual obligations as expressly set forth in the operating agreement consistently with the implied contractual covenant of good faith and fair dealing. The operating agreement further provides that, in the event of a conflict between the interests of Healthpeak OP or any member, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in our capacity as the managing member of Healthpeak OP, may give priority to the separate interests of our company or our stockholders (including with respect to tax consequences to members, assignees, or our stockholders), and, in the event of such a conflict, any action or failure to act on our part or on the part of our directors or officers that gives priority to the separate interests of our company or our stockholders that does not result in a violation of the contract rights of the members of Healthpeak OP under its operating agreement does not violate the duty of loyalty or any other duty that we, in our capacity as the managing member of Healthpeak OP, owe to Healthpeak OP and its members.
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Additionally, the operating agreement provides that we generally will not be liable to Healthpeak OP or any member for any action or omission taken in our capacity as managing member, for the debts or liabilities of Healthpeak OP or for the obligations of Healthpeak OP under the operating agreement, except for liability for our fraud, willful misconduct, or gross negligence, pursuant to any express indemnity we may give to Healthpeak OP, or in connection with a redemption. Healthpeak OP generally must indemnify us, our directors and officers, officers of Healthpeak OP, and our designees from and against any and all claims that relate to the operations of Healthpeak OP, unless (i) an act or omission of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and deliberatedishonesty, (ii) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful, or (iii) the person actually received an improper personal benefit in money, property, or services. Healthpeak OP must also pay or reimburse the reasonable expenses of any such person in advance of a final disposition of the proceeding upon its receipt of a written affirmation of the person’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking to repay any amounts paid or advanced if it is ultimately determined that the person did not meet the standard of conduct for indemnification. Healthpeak OP is not required to indemnify or advance funds to any person with respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under the operating agreement) or in respect of any proceeding in which the person is found to be liable to Healthpeak OP if the proceeding was one by or in the right of Healthpeak OP.
No reported decision of a Maryland appellate court has interpreted provisions similar to the provisions of the operating agreement of Healthpeak OP that modify and reduce our fiduciary duties or obligations as the managing member or reduce or eliminate our liability to Healthpeak OP and its members, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the operating agreement that purport to modify or reduce the fiduciary duties and obligations that would be in effect were it not for the operating agreement.
Certain provisions in the operating agreement of Healthpeak OP or other agreements may delay or prevent unsolicited acquisitions of us or certain other transactions.
Provisions of the operating agreement of Healthpeak OP may delay or make more difficult unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some of our stockholders or members of Healthpeak OP might consider such proposals, if made, desirable.
Certain provisions in the operating agreement of Healthpeak OP or other agreements may delay or prevent unsolicited acquisitions of us or certain other transactions.
These provisions include, among others:
• redemption rights of qualifying parties;
• a requirement that we may not be removed as the managing member of Healthpeak OP without our consent;
• transfer restrictions on common units;
• our ability, as managing member, in some cases, to amend the operating agreement and to cause Healthpeak OP to issue additional membership interests with terms that could delay, defer, or prevent a merger or other change of control of us or Healthpeak OP without the consent of our stockholders or the members of Healthpeak OP; and
• the right of the non-managing members of Healthpeak OP to consent to certain transfers of our managing membership interest (whether by sale, disposition, statutory merger or consolidation, liquidation, or otherwise).
Our charter and bylaws, the operating agreement of Healthpeak OP, and Maryland law also contain other provisions that may delay, defer, or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.
In addition, provisions of certain agreements with our partners may delay or make more difficult certain other transactions, including involving issuances of common units.
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We are a holding company with no direct operations and, as such, we will rely on funds received from Healthpeak OP to pay liabilities, and the interests of our stockholders will be structurally subordinated to all liabilities and obligations of Healthpeak OP and its subsidiaries .
We are a holding company and conduct substantially all of our operations through Healthpeak OP. We do not have, apart from an interest in Healthpeak OP, any independent operations. As a result, we rely on distributions from Healthpeak OP to continue to pay any dividends we might declare on shares of our common stock. We also rely on distributions from Healthpeak OP to meet any of our obligations, including any tax liability on taxable income allocated to us from Healthpeak OP. In addition, because we are a holding company, stockholder claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of Healthpeak OP and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation, or reorganization, our assets and those of Healthpeak OP and its subsidiaries will be available to satisfy the claims of our stockholders only after all of our and Healthpeak OP’s and its subsidiaries’ liabilities and obligations have been paid in full.
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• Results of Operations
• Liquidity and Capital Resources
• Non-GAAP Financial Measures Reconciliations
• Critical Accounting Estimates
• Recent Accounting Pronouncements
Market Trends and Uncertainties
Our operating results have been and will continue to be impacted by global and national economic and market conditions generally and by the local economic conditions where our properties are located.
We continuously monitor the effects of domestic and global events on our operations and financial position, and on the operations and financial position of our tenants, operators, and borrowers, to enable us to remain responsive and adaptable to the dynamic changes in our operating environment. These events include, but are not limited to, the following, any of which could negatively impact our business: inflation; recession; interest rates; challenges in the financial markets; availability of private capital and funding in the life science industry; and actions by the U.S. political administration and regulatory agencies that affect healthcare policy, life science research and innovation, labor supply, procurement and construction costs, and general economic conditions (such as budget reconciliation actions, tariff actions, changes in healthcare regulation, decreases in government funding and staffing, and immigration reform).
To the extent our tenants and/or operators have experienced, or will experience, increased costs, liquidity constraints, and financing difficulties due to the foregoing macroeconomic and market conditions, they may be unable or unwilling to make payments or perform their obligations when due, and occupancy of our properties could be adversely affected.
In addition, uncertainty in public and private equity and fixed income markets and elevated interest rates have directly led to increased costs and limitations on the availability of capital to us. Elevated interest rates have and could continue to adversely impact our borrowing costs, the fair value of our fixed rate instruments, transaction volume, and real estate values generally, including our real estate.
We have also been affected by increased costs relating to tenant improvements and construction, which, together with higher costs of capital and tariff actions (or potential tariff actions), have adversely affected, and in the future may adversely affect, construction starts and the expected yields on our capital projects, including our developments and redevelopments.
See “Item 1A, Risk Factors” in this report for additional discussion of the risks posed by macroeconomic conditions, as well as the uncertainties we and our tenants, operators, and borrowers may face as a result.
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Company Highlights
Real Estate Transactions
• During the year ended December 31, 2025, we completed the Gateway Crossing acquisition where we acquired 100% of a lab building in South San Francisco, California for consideration paid, net of discounts and closing costs, of $295 million and a 50% interest in a joint venture that owns five lab buildings and one other property on the same campus (the “Gateway Crossing JV”) for consideration paid, net of discounts and closing costs, of $132 million. In January 2026, we acquired the remaining 50% interest in the Gateway Crossing JV for consideration paid, net of discounts and closing costs, of $132 million, bringing our equity ownership in these six buildings to 100%.
• During the year ended December 31, 2025, we also acquired: (i) a portfolio of three outpatient medical buildings in New York for $17 million, (ii) a lab land parcel in Cambridge, Massachusetts for $20 million, (iii) nine suites within an outpatient medical building in Atlanta, Georgia for $7 million, and (iv) an outpatient medical land parcel in Huntsville, Alabama for $7 million, and (v) formed two outpatient medical development joint ventures.
• During the year ended December 31, 2025, we sold: (i) one outpatient medical land parcel for $4 million, (ii) nine outpatient medical buildings for $160 million, and (iii) a portfolio of 16 outpatient medical buildings for $182 million.
• In January 2026, we acquired the remaining 46.5% interest in the SWF SH JV for $312 million, bringing our ownership interest in the 19 senior housing properties to 100%.
• In January 2026, we acquired one lab land parcel in Cambridge, Massachusetts for $25 million.
• In Januar y 2026, we sold four lab buildings subject to a purchase option for $68 million.
Development and Redevelopment Activities
• During the year ended December 31, 2025, the following projects were placed in service: (i) a portion of three lab development projects with total project costs of $162 million, (ii) two outpatient medical development projects with total project costs of $73 million, (iii) two lab development buildings held in our unconsolidated Callan Ridge JV of which our share of total project costs was $63 million, (iv) a portion of two outpatient medical development projects with total project costs of $32 million, (v) two lab redevelopment buildings held in our unconsolidated South San Francisco JVs of which our share of total project costs was $26 million, (vi) three lab redevelopment projects with total project costs of $23 million, (vii) a portion of two lab redevelopment projects with total project costs of $20 million, and (viii) one outpatient medical redevelopment project with total project costs of $12 million.
Financing Activities
• In February 2025, we repaid $348 million aggregate principal amount of 3.40% senior unsecured notes at maturity.
• In February 2025, we issued $500 million aggregate principal amount of 5.38% senior unsecured notes due 2035.
• In June 2025, we repaid $452 million aggregate principal amount of 4.00% senior unsecured notes at maturity.
• In August 2025, we issued $500 million aggregate principal amount of 4.75% senior unsecured notes due 2033.
• During the year ended December 31, 2025, we repurchased 5.09 million shares of our common stock under the 2024 Share Repurchase Program (as defined below) at a weighted average price of $18.50 per share for a total of $94 million.
• In January 2026, we made a $103 million early full repayment of mortgage debt secured by two life plan communities with original maturities in December 2026.
Other Activities
• In February 2025, we made a preferred equity investment in a joint venture that holds a lab campus under development in San Diego, California (the “HQ Point Preferred Equity Investment”). This investment is entitled to a preferred return, and we had committed to fund up to a total investment of $50 million, all of which was funded as of December 31, 2025.
• During the year ended December 31, 2025, we received full repayment of two seller financing loans receivable secured by senior housing assets with an aggregate principal balance of $106 million.
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• In December 2025, we confidentially submitted a draft registration statement on Form S-11 to the SEC relating to the proposed Janus Living Offering. Following the Janus Living Offering, Janus Living will be externally managed by a wholly owned indirect subsidiary of Healthpeak under the terms of a management agreement, and Healthpeak will retain a substantial majority equity interest in Janus Living, with new public shareholders owning the remaining interest. Based on the anticipated ownership share and terms of the management agreement, we expect to continue to consolidate Janus Living subsequent to the Offering. We expect to complete the Janus Living Offering in the first half of 2026, subject to market conditions, receipt of regulatory approvals, completion of related financings, completion of the SEC’s review, and other customary conditions.
Dividends
Common stock cash dividends during 2025 aggregated to $1.22 per share. Our Board of Directors declares our common stock cash dividends on a quarterly basis. Commencing in April 2025, our Board of Directors transitioned from paying the common stock cash dividend on a quarterly basis to a monthly basis. On January 4, 2026, our Board of Directors declared a monthly common stock cash dividend of $0.10167 per share for each of January, February, and March 2026, payable on January 30, 2026, February 27, 2026, and March 31, 2026, respectively, to stockholders of record as of the close of business on January 16, 2026, February 13, 2026, and March 17, 2026, respectively.
Results of Operations
We evaluate our business and allocate resources among our operating segments: (i) outpatient medical, (ii) lab, (iii) senior housing, (iv) loans receivable, (v) a preferred equity investment, and (vi) three other properties, which are comprised of two properties previously included in our outpatient medical operating segment and one property acquired in connection with the Gateway Crossing acquisition. Our reportable segments, as determined in accordance with ASC 280, Segment Reporting , are as follows: (i) outpatient medical, (ii) lab, and (iii) senior housing. Under the outpatient medical and lab segments, we own, operate, and develop outpatient medical buildings, hospitals, and lab buildings. Our senior housing properties are operated through RIDEA structures. The loans receivable, preferred equity investment and the three other properties are non-reportable segments that have been presented on a combined basis herein. We evaluate performance based upon property adjusted net operating income (“Adjusted NOI” or “Cash NOI”) in each segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2 to the Consolidated Financial Statements.
Non-GAAP Financial Measures
Adjusted NOI
Adjusted NOI is a non-U.S. generally accepted accounting principles (“GAAP”) supplemental financial measure used to evaluate the operating performance of real estate. Adjusted NOI represents real estate revenues (inclusive of rental and related revenues, resident fees and services, and government grant income and exclusive of interest income), less property level operating expenses; Adjusted NOI excludes all other financial statement amounts included in net income (loss) as presented in Note 16 to the Consolidated Financial Statements. Adjusted NOI eliminates the effects of straight-line rents, amortization of market lease intangibles, termination fees, operator transition costs, and actuarial reserves for insurance claims that have been incurred but not reported. Adjusted NOI is calculated as Adjusted NOI from consolidated properties, plus our share of Adjusted NOI from unconsolidated joint ventures (calculated by applying our actual ownership percentage for the period), less noncontrolling interests’ share of Adjusted NOI from consolidated joint ventures (calculated by applying our actual ownership percentage for the period). We utilize our share of Adjusted NOI in assessing our performance as we have various joint ventures that contribute to our performance. Our share of Adjusted NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, our financial information presented in accordance with GAAP.
Adjusted NOI is oftentimes referred to as “Cash NOI.” Management believes Adjusted NOI is an important supplemental measure because it provides relevant and useful information by reflecting only income and operating expense items that are incurred at the property level and presents them on an unlevered basis. We use Adjusted NOI to make decisions about resource allocations, to assess and compare property level performance, and to evaluate our Merger-Combined Same-Store (“Merger-Combined SS”) performance, as described below. We believe that net income (loss) is the most directly comparable GAAP measure to Adjusted NOI. Adjusted NOI should not be viewed as an alternative measure of operating performance to net income (loss) as defined by GAAP since it does not reflect various excluded items. Further, our definition of Adjusted NOI may not be comparable to the definitions used by other REITs or real estate companies, as they may use different methodologies for calculating Adjusted NOI.
As described in Note 16 to the Consolidated Financial Statements, our CODM evaluates the performance of our operating segments based on Adjusted NOI. Certain of our operating segments are reportable segments for which we disclose Total Portfolio Adjusted NOI. For further information, including information reconciling our Adjusted NOI for reportable segments to our income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures, refer to Note 16 to the Consolidated Financial Statements.
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Operating expenses generally relate to leased outpatient medical and lab buildings, as well as senior housing facilities. We generally recover all or a portion of our leased outpatient medical and lab property expenses through tenant recoveries, which are recognized within rental and related revenues.
Merger-Combined Same-Store Adjusted NOI
Merger-Combined Same-Store Adjusted NOI includes legacy Physicians Realty Trust properties that met the same-store criteria as if they were owned by the Company for the full analysis period. This information allows our investors, analysts, and us to evaluate the performance of our property portfolio under a consistent population by eliminating changes in the composition of our portfolio of properties, excluding properties within the other non-reportable segments. We include properties from our consolidated portfolio, as well as properties owned by our unconsolidated joint ventures in Adjusted NOI (see Adjusted NOI definition above for further discussion regarding our use of pro-rata share information and its limitations). Merger-Combined Same-Store Adjusted NOI excludes government grant income under the CARES Act, amortization of deferred revenue from tenant-funded improvements, and certain non-property specific operating expenses that are allocated to each operating segment on a consolidated basis.
Properties are included in Merger-Combined Same-Store once they are fully operating for the entirety of the comparative periods presented. A property is removed from Merger-Combined Same-Store when it is classified as held for sale, sold, placed into redevelopment, experiences a casualty event or has a planned operator transition that significantly impacts operations, or a significant tenant relocates from a Merger-Combined Same-Store property to a Merger-Combined non Same-Store property and that change results in a corresponding increase in revenue. We do not report Merger-Combined Same-Store metrics for our other non-reportable segments.
Management believes that continued reporting of the same-store portfolio for only pre-merger Healthpeak Properties, Inc. offers minimal value to investors who are seeking to understand the operating performance and growth potential of the Combined Company. The Company was provided access to the underlying financial statements of legacy Physicians Realty Trust and other detailed information about each property, such as the acquisition date. Based on this available information, the Company was able to consistently apply its same-store definition across the combined portfolio. As a result of the Merger, approximately 95% of the combined portfolio is represented in the Merger-Combined Same-Store presentation for the outpatient medical segment for the year ended December 31, 2025.
For a reconciliation of Merger-Combined Same-Store to total portfolio Adjusted NOI and other relevant disclosures by segment, refer to our Segment Analysis below.
Nareit FFO . Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“Nareit”), is net income (loss) applicable to common shares (computed in accordance with GAAP), excluding gains or losses from sales of depreciable property, including any current and deferred taxes directly associated with sales of depreciable property, impairments of, or related to, depreciable real estate or land held for development, plus real estate-related depreciation and amortization, and adjustments to compute our share of Nareit FFO from joint ventures. Adjustments for joint ventures are calculated to reflect our pro rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of Nareit FFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. For consolidated joint ventures in which we do not own 100%, we reflect our share of the equity by adjusting our Nareit FFO to remove the third-party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. Our pro rata share information is prepared on a basis consistent with the comparable consolidated amounts, is intended to reflect our proportionate economic interest in the operating results of properties in our portfolio and is calculated by applying our actual ownership percentage for the period. We do not control the unconsolidated joint ventures, and the pro rata presentations of reconciling items included in Nareit FFO do not represent our legal claim to such items. The joint venture members or partners are entitled to profit or loss allocations and distributions of cash flows according to the joint venture agreements, which provide for such allocations generally according to their invested capital.
The presentation of pro rata information has limitations, which include, but are not limited to, the following: (i) the amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses and (ii) other companies in our industry may calculate their pro rata interest differently, limiting the usefulness as a comparative measure. Because of these limitations, the pro rata financial information should not be considered independently or as a substitute for our financial statements as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP financial statements, using the pro rata financial information as a supplement.
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We believe Nareit FFO applicable to common shares and diluted Nareit FFO applicable to common shares are important supplemental non-GAAP measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets utilizes straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. The term Nareit FFO was designed by the REIT industry to address this issue.
Nareit FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income (loss). We compute Nareit FFO in accordance with the current Nareit definition; however, other REITs may report Nareit FFO differently or have a different interpretation of the current Nareit definition from ours. For a reconciliation of net income (loss) to Nareit FFO and other relevant disclosures, refer to “Non-GAAP Financial Measures Reconciliations” below.
FFO as Adjusted. In addition, we present Nareit FFO on an adjusted basis before the impact of non-comparable items including, but not limited to, transaction, merger, and restructuring-related costs, other impairments (recoveries) and other losses (gains), prepayment costs (benefits) associated with early retirement or payment of debt, litigation costs (recoveries), casualty-related charges (recoveries), deferred tax asset valuation allowances, and changes in tax legislation (“FFO as Adjusted”). These adjustments are net of tax, when applicable, and are reflective of our share of our joint ventures. Adjustments for joint ventures are calculated to reflect our pro rata share of both our consolidated and unconsolidated joint ventures. We reflect our share of FFO as Adjusted for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our FFO as Adjusted to remove the third-party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. See “Nareit FFO” above for further disclosures regarding our use of pro rata share information and its limitations. Transaction, merger, and restructuring-related costs include expenses incurred as a result of mergers, acquisitions, operator transitions, severance, and other investment pursuit costs. Prepayment costs (benefits) associated with early retirement of debt include the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of debt. Other impairments (recoveries) and other losses (gains) include interest income associated with early and partial repayments of loans receivable and other losses or gains associated with non-depreciable assets including goodwill and loans receivable. Management believes that FFO as Adjusted provides a meaningful supplemental measurement of our FFO run-rate and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT. At the same time that Nareit created and defined its FFO measure for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe stockholders, potential investors, and financial analysts who review our operating performance are best served by an FFO run-rate earnings measure that includes certain other adjustments to net income (loss), in addition to adjustments made to arrive at the Nareit defined measure of FFO. FFO as Adjusted is used by management in analyzing our business and the performance of our properties and we believe it is important that stockholders, potential investors, and financial analysts understand this measure used by management. We use FFO as Adjusted to: (i) evaluate our performance in comparison with expected results and results of previous periods, relative to resource allocation decisions, (ii) evaluate the performance of our management, (iii) budget and forecast future results to assist in the allocation of resources, (iv) assess our performance as compared with similar real estate companies and the industry in general, and (v) evaluate how a specific potential investment will impact our future results. Other REITs or real estate companies may use different methodologies for calculating an adjusted FFO measure, and accordingly, our FFO as Adjusted may not be comparable to those reported by other REITs. For a reconciliation of net income (loss) to FFO as Adjusted and other relevant disclosure, refer to “Non-GAAP Financial Measures Reconciliations” below.
Adjusted FFO (“AFFO”). AFFO is defined as FFO as Adjusted after excluding the impact of the following: (i) stock-based compensation amortization expense, (ii) amortization of deferred financing costs and debt discounts (premiums), (iii) straight-line rents, (iv) deferred income taxes, (v) amortization of above (below) market lease intangibles, net, (vi) non-refundable entrance fees collected in excess of (less than) the related amortization, and (vii) other AFFO adjustments, which include: (a) lease incentive amortization (reduction of straight-line rents), (b) actuarial reserves for insurance claims that have been incurred but not reported, and (c) amortization of deferred revenues, excluding amounts amortized into rental income that are associated with tenant funded improvements owned/recognized by us and up-front cash payments made by tenants to reduce their contractual rents. Also, AFFO is computed after deducting recurring capital expenditures, including second generation leasing costs and second generation tenant and capital improvements (“AFFO capital expenditures”). All adjustments are reflective of our pro rata share of both our consolidated and unconsolidated joint ventures (reported in “other AFFO adjustments”). We reflect our share of AFFO for unconsolidated joint ventures by applying our actual ownership percentage for the period to the applicable reconciling items on an entity by entity basis. We reflect our share for consolidated joint ventures in which we do not own 100% of the equity by adjusting our AFFO to remove the third-party ownership share of the applicable reconciling items based on actual ownership percentage for the applicable periods. See “Nareit FFO” above for further disclosures regarding our
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use of pro rata share information and its limitations. We believe AFFO is an alternative run-rate performance measure that improves the understanding of our operating results among investors and makes comparisons with: (i) expected results, (ii) results of previous periods, and (iii) results among REITs more meaningful. AFFO does not represent cash generated from operating activities determined in accordance with GAAP and is not indicative of cash available to fund cash needs as it excludes the following items which generally flow through our cash flows from operating activities: (i) adjustments for changes in working capital or the actual timing of the payment of income or expense items that are accrued in the period, (ii) transaction-related costs, (iii) litigation settlement expenses, and (iv) restructuring and severance-related charges. Furthermore, AFFO is adjusted for recurring capital expenditures, which are generally not considered when determining cash flows from operations or liquidity. Other REITs or real estate companies may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to those reported by other REITs. Management believes AFFO provides a meaningful supplemental measure of our performance and is frequently used by analysts, investors, and other interested parties in the evaluation of our performance as a REIT, and by presenting AFFO, we are assisting these parties in their evaluation. AFFO is a non-GAAP supplemental financial measure and should not be considered as an alternative to net income (loss) determined in accordance with GAAP and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP. For a reconciliation of net income (loss) to AFFO and other relevant disclosures, refer to “Non-GAAP Financial Measures Reconciliations” below.
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
Overview
The following table summarizes results for the years ended December 31, 2025 and 2024 (1) (in thousands):
Year Ended December 31,
Change
Net income (loss) applicable to common shares
Nareit FFO applicable to common shares
FFO as Adjusted applicable to common shares
AFFO applicable to common shares
(1) For the reconciliation of non-GAAP financial measures, see “Non-GAAP Financial Measures Reconciliations” below.
Net income (loss) applicable to common shares decreased primarily as a result of the following:
• other-than-temporary impairment charges on certain lab unconsolidated joint ventures in 2025;
• a decrease in gain on sales of real estate related to fewer real estate dispositions in 2025;
• a decrease in gain upon change of control related to the sale of a 65% interest in two lab buildings in San Diego, California to a third-party in January 2024;
• an increase in interest expense related to: (i) debt assumed as part of the Merger, including $1.25 billion aggregate principal amount of senior unsecured notes, $400 million aggregate principal amount of the 2028 Term Loan, and $128 million aggregate principal amount of mortgage debt, (ii) borrowings under the 2029 Term Loan, which closed in March 2024, (iii) the issuance of $500 million aggregate principal amount of 5.38% senior unsecured notes due 2035, which closed in February 2025, (iv) the issuance of $500 million aggregate principal amount of 4.75% senior unsecured notes due 2033, which closed in August 2025, and (v) higher borrowings under the commercial paper program;
• an increase in noncontrolling interests’ share in earnings as a result of increased income from consolidated joint ventures acquired as part of the Merger;
• an increase in income tax expense related to: (i) an increase in operating income associated with our life plan communities and (ii) the tax benefit from casualty-related losses recognized in 2024; and
• an increase in depreciation related to: (i) assets acquired as part of the Merger and (ii) development and redevelopment projects placed in service during 2024 and 2025.
The decrease in net income (loss) applicable to common shares was partially offset by:
• a decrease in transaction and merger-related costs incurred in 2025 compared to 2024 in connection with the Merger;
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• an increase in Adjusted NOI generated from our outpatient medical and lab segments related to: (i) assets acquired as part of the Merger, (ii) development and redevelopment projects placed in service during 2024 and 2025, and (iii) new leasing activity during 2024 and 2025 (including the impact to straight-line rents), partially offset by: (i) dispositions of real estate in 2024 and 2025 and (ii) assets placed into development and redevelopment in 2024 and 2025;
• an increase in Adjusted NOI generated from our senior housing segment related to: (i) increased rates for resident fees and (ii) higher occupancy;
• a decrease in casualty-related losses from Hurricane Milton which occurred in 2024;
• an increase in interest income related to: (i) seller financing provided in connection with the disposition of 61 outpatient medical buildings during 2024, (ii) secured loans funded in 2024 and 2025, and (iii) mezzanine and secured loans receivable acquired as part of the Merger;
• a decrease in impairment charges associated with an asset impaired under the held for sale model that was recognized in 2024;
• a decrease in loan loss reserves under the current expected credit losses model, which is primarily due to (i) reserves recognized in 2024 on loans receivable acquired as part of the Merger, (ii) changes in operating performance and fair values of the underlying collateral of the Company’s loans receivable and (iii) recoveries related to loans repaid in 2024 and 2025;
• a decrease in income tax expense related to: (i) income tax expense incurred in connection with the sale of a 65% interest in two lab buildings in San Diego, California to a third-party in January 2024 and (ii) the income tax benefit from an other-than-temporary impairment charge on a lab unconsolidated joint venture;
• a decrease in interest expense related to: (i) the repayment of $348 million aggregate principal amount of 3.40% senior unsecured notes in February 2025 and (ii) the repayment of $452 million aggregate principal amount of 4.00% senior unsecured notes in June 2025; and
• a decrease in general and administrative expenses due to: (i) lower compensation expense and (ii) merger-related synergies.
Nareit FFO applicable to common shares increased primarily as a result of the aforementioned events impacting net income (loss) applicable to common shares, except for the following, which are excluded from Nareit FFO applicable to common shares:
• other-than-temporary impairment charges;
• gain on sales of real estate;
• taxes associated with real estate dispositions;
• gain upon change of control; and
• depreciation and amortization expense.
FFO as Adjusted applicable to common shares increased primarily as a result of the aforementioned events impacting Nareit FFO applicable to common shares, except the following, which are excluded from FFO as Adjusted applicable to common shares:
• transaction, merger, and restructuring-related items;
• casualty-related losses; and
• loan loss reserves (recoveries).
AFFO applicable to common shares increased primarily as a result of the aforementioned events impacting FFO as Adjusted applicable to common shares, except for the impact of: (i) amortization of below market lease intangibles, (ii) amortization of deferred financing costs and debt discounts (premiums) on amounts recognized in connection with the Merger, (iii) deferred income taxes, (iv) higher AFFO capital expenditures during the period, and (v) straight-line rents, which are excluded from AFFO applicable to common shares.
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Segment Analysis
The following tables provide selected operating information for our Merger-Combined Same-Store and total property portfolio for each of our reportable segments. For the year ended December 31, 2025, our Merger-Combined Same-Store consists of 597 properties representing properties fully operating on or prior to January 1, 2024 and that remained in operation through December 31, 2025. For the year ended December 31, 2024, our Merger-Combined Same-Store consists of 642 properties representing properties fully operating on or prior to January 1, 2023 and that remained in operation through December 31, 2024. Legacy Physicians Realty Trust properties that met the definition of Merger-Combined Same-Store are included in both periods presented as if they were owned by the Company for the full analysis period. See “Non-GAAP Financial Measures” above for additional information. Our total property portfolio consisted of 689, 697, and 477 properties at December 31, 2025, 2024, and 2023, respectively.
From our 2024 segment presentation in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 4, 2025, 19 properties were added to the senior housing segment as a result of a change in the reportable segment. Additionally, we removed two properties that were reclassified from the outpatient medical segment to the other non-reportable segments. Also included in other non-reportable segments as of December 31, 2025 is one other property that was acquired as part of the Gateway Crossing acquisition, as described above, which has no impact on prior period information presented for the lab segment.
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Outpatient Medical
The following table summarizes results at and for the years ended December 31, 2025 and 2024 (dollars and square feet in thousands, except per square foot data):
Merger-Combined SS (1)
Total Portfolio (2)
Year Ended December 31,
Year Ended December 31,
Change
Change
Rental and related revenues
Operating expenses
Healthpeak’s share of unconsolidated joint venture revenues less expenses
Noncontrolling interests’ share of consolidated joint venture revenues less expenses
Adjustments to NOI (3)
Adjusted NOI
Pre-Merger legacy Physicians Realty Trust Adjusted NOI (4)
Less: Merger-Combined Non-SS Adjusted NOI
Merger-Combined SS Adjusted NOI
Adjusted NOI % change
Property count (5)
End of period occupancy (6)
Average occupancy (6)
Average occupied square feet
Average annual rent per occupied square foot (7)
Average annual base rent per occupied square foot (8)
(1) Merger-Combined Same-Store includes legacy Physicians Realty Trust properties that met the definition of Merger-Combined Same-Store as if they were owned by the Company for the full analysis period. Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store.
(2) Total Portfolio includes results of operations from disposed properties through the disposition date. 2024 Total Portfolio includes results of operations for legacy Healthpeak prior to the Closing Date and results of operations for the Combined Company after the Closing Date.
(3) Represents adjustments we make to calculate Adjusted NOI in accordance with our definition of Adjusted NOI, which is used by our CODM to evaluate performance of our reportable segments. See Note 16 to the Consolidated Financial Statements for further information, including information reconciling our Adjusted NOI for reportable segments to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. Refer also to “Non-GAAP Financial Measures” above for the definition of Adjusted NOI.
(4) Represents Adjusted NOI for legacy Physicians Realty Trust properties prior to the Closing Date.
(5) From our 2024 presentation of Merger-Combined Same-Store, we added: (i) four stabilized acquisitions and (ii) four stabilized redevelopments placed in service, and we removed: (i) 22 assets that were sold, (ii) five buildings that were placed into redevelopment, and (iii) two assets that were classified as held for sale.
(6) Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(7) Average annual rent is total revenues less termination fees and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
(8) Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
Merger-Combined Same-Store Adjusted NOI increased primarily as a result of the following:
• mark-to-market lease renewals;
• annual rent escalations; and
• increased percentage-based rents; partially offset by
• higher operating expenses, net of savings from our internalization of property management; and
• decreases in base rent on certain new and existing tenants.
Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned impacts to Merger-Combined Same-Store and the following Merger-Combined Non-Same-Store impacts:
• Adjusted NOI from the Merger-Combined Non-Same-Store outpatient medical buildings acquired as part of the Merger in 2024;
• increased Adjusted NOI from outpatient medical buildings acquired in 2025; and
• increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by
• decreased Adjusted NOI from our 2024 and 2025 dispositions.
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The following table summarizes results at and for the years ended December 31, 2024 and 2023 (dollars and square feet in thousands, except per square foot data):
Merger-Combined SS (1)
Total Portfolio (2)
Year Ended December 31,
Year Ended December 31,
Change
Change
Rental and related revenues
Operating expenses
Healthpeak’s share of unconsolidated joint venture revenues less expenses
Noncontrolling interests’ share of consolidated joint venture revenues less expenses
Adjustments to NOI (3)
Adjusted NOI
Pre-Merger legacy Physicians Realty Trust Adjusted NOI (4)
Less: Merger-Combined Non-SS Adjusted NOI
Merger-Combined SS Adjusted NOI
Adjusted NOI % change
Property count (5)
End of period occupancy (6)
Average occupancy (6)
Average occupied square feet
Average annual rent per occupied square foot (7)
Average annual base rent per occupied square foot (8)
(1) Merger-Combined Same-Store includes legacy Physicians Realty Trust properties that met the definition of Merger-Combined Same-Store as if they were owned by the Company for the full analysis period. Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store.
(2) Total Portfolio includes results of operations from disposed properties through the disposition date. 2024 Total Portfolio includes results of operations for legacy Healthpeak prior to the Closing Date and results of operations for the Combined Company after the Closing Date.
(3) Represents adjustments we make to calculate Adjusted NOI in accordance with our definition of Adjusted NOI, which is used by our CODM to evaluate performance of our reportable segments. See Note 16 to the Consolidated Financial Statements for further information, including information reconciling our Adjusted NOI for reportable segments to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. Refer also to “Non-GAAP Financial Measures” above for the definition of Adjusted NOI.
(4) Represents Adjusted NOI for legacy Physicians Realty Trust properties prior to the Closing Date.
(5) From our 2023 presentation of Merger-Combined Same-Store, we added: (i) 290 properties acquired as part of the Merger, (ii) eight stabilized developments placed in service, (iii) five stabilized redevelopments placed in service, and (iv) four stabilized acquisitions, and we removed: (i) 72 assets that were sold, (ii) two assets that were reclassified to the other non-reportable segments, and (iii) one asset that was classified as held for sale.
(6) Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(7) Average annual rent is total revenues less termination fees and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
(8) Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
Merger-Combined Same-Store Adjusted NOI increased primarily as a result of the following:
• mark-to-market lease renewals;
• higher average occupancy; and
• annual rent escalations; partially offset by
• higher operating expenses, net of savings from our internalization of property management.
Total Portfolio Adjusted NOI increased primarily as a result of the aforementioned impacts to Merger-Combined Same-Store and the following Merger-Combined Non-Same-Store impacts:
• Adjusted NOI from the Merger-Combined Non-Same-Store outpatient medical buildings acquired as part of the Merger in 2024;
• increased occupancy in former redevelopment and development properties that have been placed into service; partially offset by
• business interruption proceeds received in 2023 related to a demolished asset; and
• decreased Adjusted NOI from our 2023 and 2024 dispositions.
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Lab
The following table summarizes results at and for the years ended December 31, 2025 and 2024 (dollars and square feet in thousands, except per square foot data):
Merger-Combined SS
Total Portfolio (1)
Year Ended December 31,
Year Ended December 31,
Change
Change
Rental and related revenues
Operating expenses
Healthpeak’s share of unconsolidated joint venture revenues less expenses
Noncontrolling interests’ share of consolidated joint venture revenues less expenses
Adjustments to NOI (2)
Adjusted NOI
Less: Merger-Combined Non-SS Adjusted NOI
Merger-Combined SS Adjusted NOI
Adjusted NOI % change
Property count (3)
End of period occupancy (4)
Average occupancy (4)
Average occupied square feet
Average annual rent per occupied square foot (5)
Average annual base rent per occupied square foot (6)
(1) Total Portfolio includes results of operations from disposed properties through the disposition date.
(2) Represents adjustments we make to calculate Adjusted NOI in accordance with our definition of Adjusted NOI, which is used by our CODM to evaluate performance of our reportable segments. See Note 16 to the Consolidated Financial Statements for further information, including information reconciling our Adjusted NOI for reportable segments to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. Refer also to “Non-GAAP Financial Measures” above for the definition of Adjusted NOI.
(3) From our 2024 presentation of Merger-Combined Same-Store, we added: (i) three stabilized redevelopments placed in service and (ii) one stabilized development placed in service, and we removed: (i) six assets that were classified as held for sale and (ii) three buildings that were placed into redevelopment.
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(5) Average annual rent is total revenues less termination fees and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
(6) Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
Merger-Combined Same-Store Adjusted NOI increased primarily as a result of the following:
• annual rent escalations; partially offset by
• higher operating expenses, net of savings from our internalization of property management; and
• lower average occupancy.
Total Portfolio Adjusted NOI decreased primarily as a result of the following:
• decreased Adjusted NOI from our 2024 dispositions; and
• decreased Adjusted NOI from buildings undergoing development and redevelopment in 2024 and 2025; partially offset by
• the aforementioned increases to Merger-Combined Same-Store.
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The following table summarizes results at and for the years ended December 31, 2024 and 2023 (dollars and square feet in thousands, except per square foot data):
Merger-Combined SS
Total Portfolio (1)
Year Ended December 31,
Year Ended December 31,
Change
Change
Rental and related revenues
Operating expenses
Healthpeak’s share of unconsolidated joint venture revenues less expenses
Noncontrolling interests’ share of consolidated joint venture revenues less expenses
Adjustments to NOI (2)
Adjusted NOI
Less: Merger-Combined Non-SS Adjusted NOI
Merger-Combined SS Adjusted NOI
Adjusted NOI % change
Property count (3)
End of period occupancy (4)
Average occupancy (4)
Average occupied square feet
Average annual rent per occupied square foot (5)
Average annual base rent per occupied square foot (6)
(1) Total Portfolio includes results of operations from disposed properties through the disposition date.
(2) Represents adjustments we make to calculate Adjusted NOI in accordance with our definition of Adjusted NOI, which is used by our CODM to evaluate performance of our reportable segments. See Note 16 to the Consolidated Financial Statements for further information, including information reconciling our Adjusted NOI for reportable segments to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. Refer also to “Non-GAAP Financial Measures” above for the definition of Adjusted NOI.
(3) From our 2023 presentation of Merger-Combined Same-Store, we added: (i) six stabilized developments placed in service, (ii) two stabilized redevelopments placed in service, and (iii) two buildings that previously experienced a significant tenant relocation, and we removed: (i) 15 buildings that were placed into redevelopment and (ii) seven assets that were sold.
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(5) Average annual rent is total revenues less termination fees and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
(6) Base rent does not include tenant recoveries, additional rents in excess of floors, and non-cash revenue adjustments (i.e., straight-line rents, amortization of market lease intangibles, and deferred revenues).
Merger-Combined Same-Store Adjusted NOI increased primarily as a result of the following:
• annual rent escalations; partially offset by
• higher operating expenses, net of savings from our internalization of property management; and
• lower average occupancy.
Total Portfolio Adjusted NOI decreased primarily as a result of the following:
• decreased Adjusted NOI from our 2023 and 2024 dispositions; and
• decreased Adjusted NOI from buildings placed into development and redevelopment in 2023 and 2024; partially offset by
• the aforementioned increases to Merger-Combined Same-Store.
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Senior Housing
The following table summarizes results at and for the years ended December 31, 2025 and 2024 (dollars in thousands, except per unit data):
Merger-Combined SS
Total Portfolio
Year Ended December 31,
Year Ended December 31,
Change
Change
Resident fees and services
Operating expenses
Healthpeak’s share of unconsolidated joint venture revenues less expenses
Adjustments to NOI (1)
Adjusted NOI
Plus (less): Merger-Combined Non-SS adjustments
Merger-Combined SS Adjusted NOI
Adjusted NOI % change
Property count (2)
Average occupancy (3)
Average occupied units (4)
Average annual rent per occupied unit
(1) Represents adjustments we make to calculate Adjusted NOI in accordance with our definition of Adjusted NOI, which is used by our CODM to evaluate performance of our reportable segments. See Note 16 to the Consolidated Financial Statements for further information, including information reconciling our Adjusted NOI for reportable segments to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. Refer also to “Non-GAAP Financial Measures” above for the definition of Adjusted NOI.
(2) From our 2024 presentation of Merger-Combined Same-Store, we removed 19 properties that have planned operator transitions that are expected to significantly impact operations. From our 2024 presentation of Total Portfolio included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 4, 2025, 19 properties were added in connection with the change in the senior housing reportable segment.
(3) Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(4) Represents average occupied units as reported by the operators for the twelve-month period.
Merger-Combined Same-Store Adjusted NOI and Total Portfolio Adjusted NOI increased primarily as a result of the following:
• increased rates for resident fees; and
• higher occupancy; partially offset by
• higher costs of compensation and property management, repairs and maintenance, utilities, and other operating expenses.
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The following table summarizes results at and for the years ended December 31, 2024 and 2023 (dollars in thousands, except per unit data):
Merger-Combined SS
Total Portfolio
Year Ended December 31,
Year Ended December 31,
Change
Change
Resident fees and services
Government grant income (1)
Operating expenses
Healthpeak’s share of unconsolidated joint venture revenues less expenses
Adjustments to NOI (2)
Adjusted NOI
Plus (less): Merger-Combined Non-SS adjustments
Merger-Combined SS Adjusted NOI
Adjusted NOI % change
Property count (3)
Average occupancy (4)
Average occupied units (5)
Average annual rent per occupied unit
(1) Represents government grant income received under the CARES Act, which is recorded in other income (expense), net in the Consolidated Statements of Operations.
(2) Represents adjustments we make to calculate Adjusted NOI in accordance with our definition of Adjusted NOI, which is used by our CODM to evaluate performance of our reportable segments. See Note 16 to the Consolidated Financial Statements for further information, including information reconciling our Adjusted NOI for reportable segments to income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures. Refer also to “Non-GAAP Financial Measures” above for the definition of Adjusted NOI.
(3) From our 2023 presentation of Merger-Combined Same-Store and Total Portfolio, we added 19 properties in connection with the change in the senior housing reportable segment.
(4) Refer to “Non-GAAP Financial Measures” above for the definition of Merger-Combined Same-Store. Total Portfolio occupancy excludes any of the following: (i) developments, (ii) significant redevelopments, (iii) newly completed properties under lease-up, and (iv) properties held for sale.
(5) Represents average occupied units as reported by the operators for the twelve-month period.
Merger-Combined Same-Store Adjusted NOI and Total Portfolio Adjusted NOI increased primarily as a result of the following:
• increased rates for resident fees; and
• higher occupancy; partially offset by
• higher costs of compensation and property management, food, and other operating expenses.
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Other Income and Expense Items
The following table summarizes the results of our other income and expense items for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31,
Change
Interest income and other
Depreciation and amortization
Interest expense
General and administrative
Transaction and merger-related costs
Impairments and loan loss reserves (recoveries), net
Gain (loss) on sales of real estate, net
Other income (expense), net
Income tax benefit (expense)
Equity income (loss) from unconsolidated joint ventures
Noncontrolling interests’ share in earnings
Interest income and other
Interest income and other increased for the year ended December 31, 2025 primarily as a result of: (i) seller financing provided in connection with the disposition of 61 outpatient medical buildings during 2024, (ii) secured loans funded in 2024 and 2025, and (iii) mezzanine and secured loans receivable acquired as part of the Merger, partially offset by principal repayments on loans receivable in 2024 and 2025.
Depreciation and amortization
Depreciation and amortization expense increased for the year ended December 31, 2025 primarily as a result of: (i) assets acquired in 2025 and as part of the Merger in 2024 and (ii) development and redevelopment projects placed in service during 2024 and 2025, partially offset by: (i) dispositions of real estate in 2024 and 2025 and (ii) assets placed into development and redevelopment in 2024 and 2025.
Interest expense
Interest expense increased for the year ended December 31, 2025 primarily as a result of: (i) the issuance of $500 million aggregate principal amount of 5.38% senior unsecured notes due 2035, which closed in February 2025, (ii) the issuance of $500 million aggregate principal amount of 4.75% senior unsecured notes due 2033, which closed in August 2025, (iii) debt assumed as part of the Merger, including $1.25 billion aggregate principal amount of senior unsecured notes, $400 million aggregate principal amount of the 2028 Term Loan, and $128 million aggregate principal amount of mortgage debt, (iv) borrowings under the 2029 Term Loan, which closed in March 2024, and (v) higher borrowings under the commercial paper program, partially offset by: (i) the repayment of $348 million aggregate principal amount of 3.40% senior unsecured notes in February 2025 and (ii) the repayment of $452 million aggregate principal amount of 4.00% senior unsecured notes in June 2025.
General and administrative
General and administrative expenses decreased for the year ended December 31, 2025 primarily as a result of (i) lower compensation expense and (ii) merger-related synergies.
Transaction and merger-related costs
Transaction and merger-related costs decreased for the year ended December 31, 2025 primarily as a result of higher costs of combining operations with Physicians Realty Trust in 2024 compared to 2025, partially offset by costs incurred in 2025 related to: (i) investment pursuit costs and (ii) the planned Janus Living Offering.
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Impairments and loan loss reserves (recoveries), net
Impairments and loan loss reserves (recoveries), net decreased for the year ended December 31, 2025 primarily as a result of: (i) impairment charges associated with an asset impaired under the held for sale model that was recognized in 2024 and (ii) a decrease in loan loss reserves under the current expected credit losses model, which is primarily due to (i) reserves recognized in 2024 on loans receivable acquired as part of the Merger, (ii) changes in operating performance and fair values of the underlying collateral of the Company’s loans receivable and (iii) recoveries related to loans repaid in 2025, partially offset by new and extended loans during 2024 and 2025.
Gain (loss) on sales of real estate, net
Gain on sales of real estate, net decreased during the year ended December 31, 2025 primarily as a result of the $72 million gain on sales from: (i) one outpatient medical land parcel for proceeds of $4 million, (ii) nine outpatient medical buildings for proceeds of $160 million, and (iii) a portfolio of 16 outpatient medical buildings for $182 million, which were sold during the year ended December 31, 2025, as compared to the $179 million gain on sales from: (i) a portfolio of 61 outpatient medical buildings sold for proceeds of $697 million, (ii) 14 outpatient medical buildings sold for proceeds of $220 million, (iii) a portfolio of seven lab buildings sold for proceeds of $180 million, and (vi) a portfolio comprised of a land parcel and various vacant buildings on certain of our life plan community campuses sold for proceeds of $12 million, which were sold during the year ended December 31, 2024. Refer to Note 5 to the Consolidated Financial Statements for additional information regarding dispositions of real estate and the associated gain (loss) on sales recognized.
Other income (expense), net
Other income decreased for the year ended December 31, 2025 primarily due: (i) to a gain upon change of control related to the sale of a 65% interest in two lab buildings in San Diego, California to a third-party in January 2024, partially offset by casualty-related losses from Hurricane Milton during the fourth quarter of 2024.
Income tax benefit (expense)
Income tax expense increased for the year ended December 31, 2025 primarily as a result of: (i) an increase in operating income associated with our life plan communities and (ii) the tax benefit from casualty-related losses recognized in 2024, partially offset by: (i) income tax expense incurred in connection with the sale of a 65% interest in two lab buildings in San Diego, California to a third-party in January 2024 and (ii) the income tax benefit from an other-than-temporary impairment charge on a lab unconsolidated joint venture.
Equity income (loss) from unconsolidated joint ventures
Equity loss from unconsolidated joint ventures increased for the year ended December 31, 2025 primarily as a result of other-than-temporary impairment charges on certain lab unconsolidated joint ventures, partially offset by the preferred return on the HQ Point Preferred Equity Investment.
Noncontrolling interests’ share in earnings
Noncontrolling interests’ share in earnings increased for the year ended December 31, 2025 primarily as a result of increased income from consolidated joint ventures acquired as part of the Merger.
Liquidity and Capital Resources
We anticipate that our cash flows from operations, available cash balances, and cash from our various financing activities will be adequate for the next 12 months and for the foreseeable future for purposes of: (i) funding recurring operating expenses; (ii) meeting debt service requirements; and (iii) satisfying funding of distributions to our stockholders and non-controlling interest members. Distributions are made using a combination of cash flows from operations, funds available under our bank line of credit (the “Revolving Facility”) and commercial paper program, proceeds from the sale of properties, and other sources of cash available to us.
In addition to funding the activities above, our principal liquidity needs for the next 12 months are to:
• fund capital expenditures, including tenant improvements and leasing costs;
• fund future acquisition, transactional, and development and redevelopment activities; and
• fund loans receivable and other investment commitments.
Our longer term liquidity needs include the items listed above as well as meeting debt service requirements.
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We anticipate satisfying these future needs using one or more of the following:
• cash flows from operations;
• sale of, or exchange of ownership interests in, properties or other investments;
• borrowings under our Revolving Facility and commercial paper program;
• issuance of additional debt, including unsecured notes, term loans, and mortgage debt; and/or
• issuance of common or preferred stock or its equivalent, including sales of common stock under the ATM Program (as defined below).
Our ability to access the capital markets impacts our cost of capital and ability to refinance maturing indebtedness, as well as our ability to fund future acquisitions and development through the issuance of additional securities or secured debt. Changes in general market and economic conditions as well as credit ratings impact our ability to access capital and directly impact our cost of capital. Our 2029 Term Loan, our 2027 Term Loans, our 2028 Term Loan, and our Revolving Facility accrue interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin that depends on the credit ratings of our senior unsecured long-term debt. We also pay a facility fee on the entire commitment under our Revolving Facility that depends upon our credit ratings. As of January 30, 2026, we had long-term credit ratings of Baa1 from Moody’s and BBB+ from S&P Global, and short-term credit ratings of P-2 from Moody’s and A-2 from S&P Global.
A downgrade in credit ratings by Moody’s or S&P Global may have a negative impact on (i) the interest rates of our Revolving Facility, 2027 Term Loans, 2028 Term Loan, and 2029 Term Loan, (ii) facility fees for our Revolving Facility, and (iii) the pricing of notes issued under our commercial paper program and senior unsecured notes. While a downgrade in our credit ratings would adversely impact our cost of borrowing, we believe we would continue to have access to the unsecured debt markets, and we could also seek to enter into one or more secured debt financings, issue additional securities, including under our ATM Program, or dispose of certain assets to fund future operating costs, capital expenditures, or acquisitions, although no assurances can be made in this regard. Refer to “Market Trends and Uncertainties” above for a more comprehensive discussion of the potential impact of economic and market conditions on our business.
Material Cash Requirements
Our material cash requirements include the below contractual and other obligations.
Debt. As of December 31, 2025, we had total debt of $9.8 billion, including notes outstanding under our commercial paper program, senior unsecured notes, term loans, and mortgage debt. Of our total debt, the total amount payable within twelve months is comprised of $650 million of senior unsecured notes and $345 million of mortgage debt. Commercial paper borrowings are backstopped by the availability under our Revolving Facility. As such, we calculate the weighted average remaining term of our commercial paper borrowings using the maturity date of our Revolving Facility. Future interest payments associated with borrowings under our senior unsecured notes, term loans, and mortgage debt total $1.7 billion, $336 million of which are payable within twelve months. Future interest payments associated with commercial paper borrowings payable within the next twelve months total $44 million, assuming no change in interest rates and borrowings remain outstanding for the next twelve months.
Development and redevelopment commitments. Our development and redevelopment commitments represent construction and other commitments for development and redevelopment projects in progress and includes certain allowances for Company-owned tenant improvements that we have provided as a lessor. As of December 31, 2025, we had $168 million of development and redevelopment commitments, $134 million of which we expect to spend within the next twelve months.
Lease and other contractual commitments. Our lease and other contractual commitments represent our commitments, as lessor, under signed leases and contracts for operating properties and include allowances for Company-owned tenant improvements and leasing commissions. These commitments exclude allowances for Company-owned tenant improvements related to developments and redevelopments in progress for which we have executed an agreement with a general contractor to complete the tenant improvements, which are recognized as development and redevelopment commitments and are discussed further above. As of December 31, 2025, we had total lease and other contractual commitments of $54 million, $49 million of which we expect to spend within the next twelve months.
Construction loan commitments. As of December 31, 2025, we are obligated to provide additional loans up to $99 million for redevelopment and capital expenditure projects, for which the related loans have maturities through 2029. See Note 8 to the Consolidated Financial Statements for additional information.
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Ground and other operating lease commitments. Our ground and other operating lease commitments represent our commitments as lessee under signed operating leases. As of December 31, 2025, we had total ground and other operating lease commitments of $833 million, $21 million of which are payable within twelve months. See Note 7 to the Consolidated Financial Statements for additional information.
Other investment commitments. As of December 31, 2025, we had made aggregate investments of $3 million in funds that make venture capital investments in various early-stage technology solutions (“Other Equity Investments”). At December 31, 2025, our remaining funding commitment related to the Other Equity Investments was $14 million, which is expected to be funded over the next six years. See Note 19 to the Consolidated Financial Statements for additional information.
Redeemable noncontrolling interests. As of December 31, 2025, the redemption value of our redeemable noncontrolling interests was $160 million. The values of these redeemable noncontrolling interests are subject to change based on the assessment of redemption value at each redemption date. As of December 31, 2025, the estimated redemption value of the redeemable noncontrolling interests that have met the conditions for redemption was $14 million, the estimated redemption value of the redeemable noncontrolling interests that will meet the conditions for redemption upon completion of each of the related development projects was $13 million, and the estimated redemption value of the Gateway Crossing JV was $132 million. In January 2026, we acquired the remaining 50% interest in the Gateway Crossing JV for $132 million, terminating the Put Option of the noncontrolling interest holder. See Note 13 to the Consolidated Financial Statements for additional information.
Distribution and dividend requirements. Our dividend policy on our common stock is to distribute a percentage of our cash flow to ensure that we meet the dividend requirements of the Code, relative to maintaining our REIT status, while still allowing us to retain cash to fund capital improvements and other investment activities. Under the Code, REITs may be subject to certain federal income and excise taxes on undistributed taxable income. In February 2025, our Board of Directors declared an increase in the quarterly common stock cash dividend, from $0.300 to $0.305 per share, resulting in an annualized dividend of $1.220 per share. Commencing in April 2025, our Board of Directors also transitioned to a practice of paying the quarterly common stock cash dividend on a monthly basis, which are declared quarterly. Our future common stock cash dividends, if and as declared, may vary and will be determined by the Board based upon the circumstances prevailing at the time, including our financial condition.
Off-Balance Sheet Arrangements
We own interests in certain unconsolidated joint ventures as described in Note 9 to the Consolidated Financial Statements. Four of these joint ventures have aggregate mortgage debt of $903 million, of which our share is $210 million. Our risk of loss is limited to our investment in the applicable joint venture. Additionally, as of December 31, 2025, we had 16 outstanding letter of credit obligations totaling $16 million. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.
Inflation
A significant portion of our revenues are derived from leases that generally provide for fixed rental rates, subject to annual escalations. A period of high inflation could result in increases in the Consumer Price Index in excess of our fixed annual escalations. Certain of our leases provide that annual rent is modified based on changes in the Consumer Price Index or other thresholds.
Most of our outpatient medical leases require the tenant to pay a share of property operating costs such as real estate taxes, insurance, and utilities. Substantially all of our lab leases require the tenant or operator to pay all of the property operating costs or reimburse us for all such costs.
Labor costs, costs of construction materials, interest, utilities, and other operating costs may increase during periods of inflation. Inflationary increases in expenses will generally be offset, in whole or in part, by the tenant expense reimbursements and contractual rent increases described above.
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Cash Flow Summary
The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
The following table sets forth changes in cash flows (in thousands):
Year Ended December 31,
Change
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Operating Cash Flows
Our cash flows from operations are dependent upon the occupancy levels of our buildings, rental rates on leases, our tenants’ performance on their lease obligations, the level of operating expenses, and other factors. Our net cash provided by operating activities increased $181 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily as a result of: (i) a decrease in merger-related costs, (ii) an increase in Adjusted NOI from properties acquired as part of the Merger and acquisitions of real estate in 2025, (iii) developments and redevelopments placed in service during 2024 and 2025, (iv) annual rent increases, and (v) new leasing and renewal activity. The increase in net cash provided by operating activities was partially offset by: (i) an increase in cash paid for interest and (ii) a decrease in Adjusted NOI from dispositions of real estate in 2024 and 2025.
Investing Cash Flows
Our cash flows from investing activities are generally used to fund acquisitions, developments, and redevelopments of real estate, net of proceeds received from sales of real estate, and repayments on loans receivable. Our net cash used in investing activities increased $921 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily as a result of the following: (i) an increase in cash used for real estate asset acquisitions, (ii) a decrease in proceeds from sales of real estate, (iii) an increase in cash used for development and redevelopment of real estate, (iv) proceeds received from the Callan Ridge JV transaction in 2024, and (v) an increase in cash used for investments in unconsolidated joint ventures. The increase in net cash used in investing activities was partially offset by: (i) cash paid in connection with the Merger in 2024, (ii) an increase in proceeds received from insurance recoveries, and (iii) higher net repayments on loans receivable.
Financing Cash Flows
Our cash flows from financing activities are generally impacted by issuances and/or repurchases of equity, borrowings and repayments under our bank line of credit and commercial paper program, senior unsecured notes, term loans, and mortgage debt, net of dividends paid to common shareholders. Our net cash provided by financing activities increased $1.08 billion for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily as a result of the following: (i) higher net borrowings under the commercial paper program, (ii) an increase in proceeds received from the issuances of senior unsecured notes, (iii) lower repurchases of common stock under our share repurchase programs, (iv) lower distributions to noncontrolling interests, (v) lower payments for deferred financing costs, and (vi) higher contributions from noncontrolling interests. The increase in net cash provided by financing activities was partially offset by: (i) an increase in cash used to repay senior unsecured notes that reached maturity in 2025, (ii) a decrease in proceeds received from the issuance of term loans, and (iii) an increase in dividends paid on common stock.
Debt
In February 2025, we repaid $348 million aggregate principal amount of 3.40% senior unsecured notes at maturity. Also in February 2025, we issued $500 million aggregate principal amount of 5.38% senior unsecured notes due 2035. In June 2025, we repaid $452 million aggregate principal amount of 4.00% senior unsecured notes at maturity. In August 2025, we issued $500 million aggregate principal amount of 4.75% senior unsecured notes due 2033. In January 2026, we made a $103 million early full repayment of mortgage debt secured by two life plan communities with original maturities in December 2026.
See Note 11 to the Consolidated Financial Statements for additional information about our outstanding debt.
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Approximately 88% and 97% of our consolidated debt was fixed rate debt as of December 31, 2025 and 2024, respectively. At December 31, 2025, our fixed rate debt and variable rate debt had weighted average effective interest rates of 4.20% and 4.18%, respectively. At December 31, 2024, our fixed rate debt and variable rate debt had weighted average effective interest rates of 4.04% and 5.56%, respectively. As of December 31, 2025, we had the following swapped to fixed rates through interest rate swap instruments: (i) the $750 million 2029 Term Loan, (ii) the $500 million 2027 Term Loans, (iii) the $400 million 2028 Term Loan, and (iv) $142 million of variable rate mortgage debt. These interest rate swap instruments are designated as cash flow hedges. For purposes of classification of the amounts above, variable rate debt with a derivative financial instrument designated as a cash flow hedge is reported as fixed rate debt due to us having effectively established a fixed interest rate for the underlying debt instrument. For a more detailed discussion of our interest rate risk, see “Item 7A, Quantitative and Qualitative Disclosures About Market Risk” below.
Supplemental Guarantor Information
Healthpeak OP is the issuer of senior unsecured notes that were offered and sold on a registered basis under the Securities Act. The obligations of Healthpeak OP to pay principal, premiums, if any, and interest on such senior unsecured notes are guaranteed on a full and unconditional basis by the Company, DOC DR Holdco, LLC, one of our wholly owned subsidiaries (“DOC DR Holdco”), and DOC DR, LLC, a wholly owned subsidiary of Healthpeak OP (“DOC DR OP Sub”). Additionally, DOC DR OP Sub is the issuer, as successor to the Physicians Partnership upon the Merger, of the senior unsecured notes issued by the Physicians Partnership prior to, and assumed by Healthpeak as part of, the Merger. See Note 11 to the Consolidated Financial Statements for more information. The obligations of DOC DR OP Sub to pay principal, premiums, if any, and interest on such senior unsecured notes are guaranteed on a full and unconditional basis by the Company, Healthpeak OP, and DOC DR Holdco.
Subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the parent guarantee is “full and unconditional”, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and consolidated financial statements of the parent company have been filed. Accordingly, separate consolidated financial statements of Healthpeak OP, DOC DR Holdco, and DOC DR OP Sub have not been presented.
As permitted under Rule 13-01 of Regulation S-X, we have excluded the summarized financial information for the Company, Healthpeak OP, DOC DR Holdco, and DOC DR OP because the Company, Healthpeak OP, DOC DR Holdco, and DOC DR OP have no material assets, liabilities, or operations other than the debt financing activities described in the first paragraph of Note 11 to the Consolidated Financial Statements and their investments in non-guarantor subsidiaries, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
Equity
At December 31, 2025, we had 695 million shares of common stock outstanding, equity totaled $8.1 billion, and our equity securities had a market value of $11.4 billion.
At-The-Market Program
In February 2023, we terminated our previous at-the-market equity offering program and established a new at-the-market equity offering program (the “ATM Program”) that allows for the sale of shares of common stock having an aggregate gross sales price of up to $1.5 billion. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of our shares of common stock under our ATM Program. The ATM Program was most recently amended in February 2025 to add certain banks as sales agents, a forward seller, and a forward purchaser under the ATM Program.
During the year ended December 31, 2025 , we did not issue any shares of our common stock under any ATM program.
At December 31, 2025, $1.5 billion of our common stock remained available for sale under the ATM Program. Actual future sales of our common stock will depend upon a variety of factors, including but not limited to market conditions, the trading price of our common stock, and our capital needs. We have no obligation to sell any shares under our ATM Program.
See Note 13 to the Consolidated Financial Statements for additional information about our ATM Program.
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Noncontrolling Interests
Healthpeak OP . During the year ended December 31, 2025, certain of our employees (“OP Unitholders”) were issued approximately 2 million noncontrolling, non-managing member units in Healthpeak OP (“OP Units”). When certain conditions are met, the OP Unitholders have the right to require redemption of part or all of their OP Units for cash or shares of our common stock, at our option as managing member of Healthpeak OP. The per unit redemption amount is equal to either one share of our common stock or cash equal to the fair value of a share of common stock at the time of redemption. We classify the OP Units in permanent equity because we may elect, in our sole discretion, to issue shares of our common stock to OP Unitholders who choose to redeem their OP Units rather than using cash. As of December 31, 2025, there were approximately 4 million OP Units outstanding, and 275 thousand had met the criteria for redemption.
DownREITs. At December 31, 2025, non-managing members held an aggregate of approximately 11 million units in eight limited liability companies for which we hold controlling interests and/or are the managing member. The DownREIT units are exchangeable for an amount of cash approximating the then-current market value of shares of our common stock or, at our option, shares of our common stock. At December 31, 2025, the outstanding DownREIT units were convertible into approximately 13 million shares of our common stock.
Share Repurchase Program
On July 24, 2024, our Board of Directors approved a new share repurchase program (the “2024 Share Repurchase Program”) to supersede and replace our previous program. Under the 2024 Share Repurchase Program, we may acquire shares of our common stock in the open market or other similar purchase techniques (including in compliance with the safe harbor provisions of Rule 10b-18 under the Exchange Act or pursuant to one or more plans adopted under Rule 10b5-1 promulgated under the Exchange Act), up to an aggregate purchase price of $500 million. Purchases of common stock under the 2024 Share Repurchase Program may be exercised at our discretion with the timing and number of shares repurchased depending on a variety of factors, including price, corporate and regulatory requirements, and other corporate liquidity requirements and priorities. The 2024 Share Repurchase Program expires in July 2026 and may be suspended or terminated at any time without prior notice. During the year ended December 31, 2025, we repurchased 5.09 million shares of our common stock at a weighted average price of $18.50 per share for a total of $94 million. At December 31, 2025, $406 million of the Company’s common stock remained available for repurchase under the 2024 Share Repurchase Program.
Shelf Registration
On February 8, 2024, the Company and Healthpeak OP jointly filed a prospectus with the SEC as part of a registration statement on Form S-3, using an automatic shelf registration process. This shelf registration statement expires on February 8, 2027 and at or prior to such time, we expect to file a new shelf registration statement. On February 5, 2025, the Company and Healthpeak OP jointly filed a post-effective amendment to the shelf registration statement to add certain subsidiaries of the Company as co-registrants and register their guarantees of the debt securities of the Company and/or Healthpeak OP as additional securities that may be offered under the prospectus included in the shelf registration statement. Under the “shelf” process, we may sell any combination of the securities described in the prospectus through one or more offerings. The securities described in the prospectus include future offerings of: (i) the Company’s common stock, preferred stock, depositary shares, warrants, debt securities, and guarantees by the Company and certain of its subsidiaries of debt securities issued by Healthpeak OP, and (ii) Healthpeak OP’s debt securities and guarantees by Healthpeak OP and certain other subsidiaries of the Company of debt securities issued by the Company.
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Non-GAAP Financial Measures Reconciliations
The following is a reconciliation from net income (loss) applicable to common shares, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Nareit FFO, FFO as Adjusted, and AFFO (in thousands):
Year Ended December 31,
Net income (loss) applicable to common shares
Real estate related depreciation and amortization
Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures
Noncontrolling interests’ share of real estate related depreciation and amortization
Loss (gain) on sales of depreciable real estate, net
Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net
Loss (gain) upon change of control, net (1)
Taxes associated with real estate dispositions (2)
Impairments (recoveries) of real estate, net (3)
Nareit FFO applicable to common shares
Distributions on dilutive convertible units and other
Diluted Nareit FFO applicable to common shares
Impact of adjustments to Nareit FFO:
Transaction, merger, and restructuring-related costs (4)
Other impairments (recoveries) and other losses (gains), net (5)
Casualty-related charges (recoveries), net (6)
Recognition (reversal) of valuation allowance on deferred tax assets (7)
Total adjustments
FFO as Adjusted applicable to common shares
Distributions on dilutive convertible units and other
Diluted FFO as Adjusted applicable to common shares
FFO as Adjusted applicable to common shares
Stock-based compensation amortization expense
Amortization of deferred financing costs and debt discounts (premiums)
Straight-line rents (8)
AFFO capital expenditures
Life plan community entrance fees
Deferred income taxes
Amortization of above (below) market lease intangibles, net
Other AFFO adjustments
AFFO applicable to common shares
Distributions on dilutive convertible units and other
Diluted AFFO applicable to common shares
Refer to footnotes on the next page.
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(1) The year ended December 31, 2024 includes a gain upon change of control related to the sale of a 65% interest in two lab buildings in San Diego, California. The gain upon change of control is included in other income (expense), net in the Consolidated Statements of Operations.
(2) The year ended December 31, 2024 includes non-cash income tax expense related to the sale of a 65% interest in two lab buildings in San Diego, California, partially offset by income tax benefit related to the disposition of a portfolio comprised of a land parcel and various vacant buildings on certain of our life plan community campuses.
(3) The year ended December 31, 2025 includes other-than-temporary impairment charges on certain unconsolidated real estate joint ventures, which are recognized in equity income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations. The year ended December 31, 2024 includes an impairment charge related to an outpatient medical building that was classified as held for sale to write down the building’s carrying value to its fair value, less estimated costs to sell. This impairment charge was recognized in impairments and loan loss reserves (recoveries), net, on the Consolidated Statements of Operations.
(4) The years ended December 31, 2025, 2024, and 2023 include costs related to the Merger, which are primarily comprised of advisory, legal, accounting, tax, information technology, post-combination severance and stock compensation expense, and other costs of combining operations with Physicians Realty Trust that were incurred during the years then ended. The year ended December 31, 2025 also includes costs incurred related to the formation and planned Janus Living Offering and investment pursuit costs. For the years ended December 31, 2024 and 2023, these costs were partially offset by termination fee income associated with Graphite Bio, Inc., which later merged with LENZ Therapeutics, Inc. in March 2024, for which the lease terms were modified to accelerate expiration of the lease to December 2024. This termination fee income is included in rental and related revenues on the Consolidated Statements of Operations, but is excluded from FFO as Adjusted.
(5) The years ended December 31, 2025, 2024, and 2023 include reserves and (recoveries) for expected loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.
(6) During the year ended December 31, 2024, we incurred casualty-related charges associated with Hurricane Milton. Casualty-related charges (recoveries), net are recognized in other income (expense), net, equity income (loss) from unconsolidated joint ventures, and noncontrolling interests’ share in earnings in the Consolidated Statements of Operations.
(7) The year ended December 31, 2024 includes the release of a valuation allowance and recognition of a corresponding income tax benefit in connection with a merger of certain taxable REIT subsidiaries. During the year ended December 31, 2023, in conjunction with classifying the assets related to the Callan Ridge JV (see Note 9 to the Consolidated Financial Statements) as held for sale as of December 31, 2023, we concluded it was more likely than not that we would realize the future value of certain deferred tax assets generated by the net operating losses of taxable REIT subsidiaries. Accordingly, during the year ended December 31, 2023, we recognized the reversal of a portion of the associated valuation allowance and recognized a corresponding income tax benefit. See Note 17 to the Consolidated Financial Statements for additional information.
(8) The year ended December 31, 2023 includes a $9 million write-off of straight-line rent receivable associated with Sorrento Therapeutics, Inc., which commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code. This activity is reflected as a reduction of rental and related revenues in the Consolidated Statements of Operations.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires our management to use judgment in the application of critical accounting estimates and assumptions. We base estimates on the best information available to us at the time, our experience, and on various other assumptions believed to be reasonable under the circumstances. These estimates could affect our financial position or results of operations. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Below is a discussion of accounting estimates that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. For a more detailed discussion of our significant accounting policies, including those related to critical accounting estimates further discussed below, see Note 2 to the Consolidated Financial Statements.
Business Combinations
For a real estate acquisition accounted for as a business combination, we allocate the acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, and noncontrolling interests at fair value as of the acquisition date. Any excess of the consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill. Acquisition costs related to business combinations are expensed as incurred.
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We make estimates as part of our process for allocating acquisition consideration to the various identifiable assets, liabilities, and noncontrolling interests based upon the relative fair value of each asset, liability, or noncontrolling interest. These fair values are determined using standard valuation methodologies, such as the cost, market, and income approach. These methodologies require various assumptions, including those of a market participant. We utilize available market information in our assessment, such as capitalization and discount rates and comparable sale transactions. The most significant components of our allocations are typically buildings as-if-vacant, land, and lease intangibles. In the case of allocating fair value to buildings and intangibles, our fair value estimates will affect the amount of depreciation and amortization we record over the estimated useful life of each asset acquired. In the case of allocating fair value to in-place leases, we make our best estimates based on our evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions, and costs to execute similar leases. Our assumptions affect the amount of future revenue and/or depreciation and amortization expense that we will recognize over the remaining useful life for the acquired in-place leases.
Our fair value estimates for loans receivable and debt consider market-based information, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs). Our fair value estimates for joint ventures consider ownership interests, subordination characteristics, redemption values, discounts for lack of control (as applicable), and hypothetical liquidation waterfalls.
Impairment of Long-Lived Assets
We assess the carrying value of our real estate assets and related intangibles (“real estate assets”) when events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverability of real estate assets is measured by comparing the carrying amount of the real estate assets to the respective estimated future undiscounted cash flows. The estimated future undiscounted cash flows reflect external market factors, and based on the specific facts and circumstances, may be probability-weighted to reflect multiple possible cash-flow scenarios, including selling the assets at various points in the future. Additionally, the estimated future undiscounted cash flows are calculated utilizing the lowest level of identifiable cash flows that are largely independent of the cash flows of other assets and liabilities. In order to review our real estate assets for recoverability, we make assumptions such as those regarding external market conditions (including capitalization rates), forecasted cash flows (primarily lease revenue rates, expense rates, forecasted occupancy, and growth rates) and sales prices, and our intent with respect to holding or disposing of the asset. If our analysis indicates that the carrying value of the real estate assets is not recoverable on an estimated future undiscounted cash flow basis, we recognize an impairment charge for the amount by which the carrying value exceeds the fair value of the real estate assets.
Determining the fair value of real estate assets, including assets classified as held for sale, involves significant judgment and generally utilizes market capitalization rates, comparable market transactions, estimated per unit or per square foot prices, negotiations with prospective buyers, forecasted cash flows, and discount rates. Our ability to accurately predict future operating results and resulting cash flows, and estimate fair values, impacts the timing and recognition of impairments. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our consolidated financial statements.
Impairment of Unconsolidated Joint Ventures
On a quarterly basis, we review our equity method investments for indicators of impairment. If an equity method investment shows indicators of impairment, we compare the fair value of the equity method investment to its carrying value. When we determine a decline in fair value below carrying value is other-than-temporary, an impairment is recorded. In our evaluation, we consider various factors, including the performance of each investment, our investment strategy, and market conditions, including the impact to market rents, capitalization rates, and supply and demand for rentable space.
The fair values of our equity method investments are determined based on discounted cash flows which are subjective and consider assumptions such as forecasted occupancy, market rents, capitalization rates, discount rates, expected capital expenditures, and land values. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for the impact of new accounting standards.
