Good day. Welcome to the Healthpeak Properties Incorporated Q2 conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference call over to Ms. Barbat Rodgers, Senior Director of Investor Relations. Ms. Rodgers, the floor is yours, ma'am.
Thank you, and welcome to Healthpeak's Q2 financial results conference call. Today's conference call will contain certain forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations.
A discussion of risks and risk factors is included in our press release and detailed in our filing with the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures will be discussed on this call in an exhibit of the 8-K we furnished with the SEC today. We have reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Regulation G requirements. The exhibit is also available on our website at www.healthpeak.com.
I will now turn the call over to our Chief Executive Officer, Tom Herzog.
Thank you, Barbat, and good morning, everyone. On the call with me today are Scott Brinker, our President and CIO, and Peter Scott, our CFO. Also on the line and available for the Q&A portion of the call are Tom Klaritch, our Chief Development and Operating Officer, and Troy McHenry, our Chief Legal Officer and General Counsel.
To summarize the Q2 , our results were generally in line with our expectations, and in some cases, better than expected. However, we are now five months into the pandemic, and there remains a great deal of uncertainty on its future penetration and duration.
As such, last night we provided an update to our 2020 earnings framework, which you can find on pages 44 through 46 of our supplemental report. I'll start with our current state of play. 66% of total Q2 NOI was generated by our life science and medical office businesses.
Inclusive of our small portfolio of well-covered hospitals, that total increases to 71%. All these businesses have enjoyed strong leasing and steady rent collections. In Life Science, sector fundamentals are healthy as demand for drug innovation remains at the forefront, especially with respect to the global efforts to develop COVID vaccines and treatments. During the Q2 , the sector reported a record high in equity capital raised.
Our year-to-date leasing is already ahead of our original full-year expectations, driven in part by the strong development pre-leasing we announced in our Boston and San Diego sub-markets. In Medical Office, our high quality, primarily on-campus portfolio has continued to show consistent favorable results. Bans on outpatient procedures have been lifted across all of our markets. Both new and renewal leasing came in above our expectations.
Our lease retention ended the quarter in the low 80% range, and we had high single-digit mark-to-market rents. 11% of total Q2 NOI was generated by our CCRC portfolio, where attrition is much lower than SHOP due to the average eight to 10-year length of stay, along with the non-refundable entry fees in place.
Our independent, assisted, and memory care CCRC occupancy end results were in line with our expectations. 9% of total Q2 NOI was generated by SHOP, which continues to experience a very tough operating environment due to COVID, combined with the inherent short length of stay.
However, monthly occupancy declined more slowly, and operating expenses rose less dramatically than the midpoints set forth in our previous outlook framework. Finally, 9% of total Q2 NOI was generated by senior housing triple net, which also faced a tough operating environment. Rent collections have remained stable.
Moving on to our balance sheet and liquidity. Simply put, they both continue to be in great shape. Our dividend, yesterday we announced it remained at $0.37 per share, which is $0.01 above our Q2 AFFO. We will continue to monitor our dividend as COVID progresses. On the ESG front, we have a decade plus history of commitment to corporate responsibility and sustainable business practices.
In June, we published our ninth annual ESG report highlighting our 2019 environmental, social, and governance achievements. For the second consecutive year, we were one of only five REITs named to Corporate Responsibility Magazine's 100 Best Corporate Citizens list.
We also have received GRESB's Green Star rating for eight consecutive years, as well as leadership awards from CDP and S&P's Dow Jones Sustainability Index for seven consecutive years each. In summary, the majority of our portfolio is performing quite well.
We've continued to take actions to improve our already strong balance sheet and have significant liquidity. Our team is working very productively from home, and we fully expect to come out the other side of this pandemic an even stronger company. With that, I'll turn it to Scott.
Okay. Thank you, Tom. I'll speak to operating results across the three business segments and finish with a transaction update. In life science, which represented 35% of our same-store pool, cash NOI grew 7.3% year-over-year, above the high end of our outlook. The results were driven by new leasing activity, mark-to-market on renewals, contractual escalators, and rent collections.
Tenant demand for space is strong across all three of our core markets. In 2Q, we had 278,000 sq ft of lease commencements, driving occupancy up 260 basis points to 97%. Our lease executions in the quarter included 125,000 sq ft of renewals at a 15% cash mark-to-market and a 74,000 sq ft lease at The Boardwalk, our flagship development campus in San Diego. Construction began in the Q1 . The project is already 39% pre-leased at rental rates above our underwriting.
We had one early termination in the quarter for 36,000 ft, which we did proactively with a watch list tenant to expand with one of our existing high-growth tenants. Another example of the importance of scale in the local market. Subsequent to quarter end, in July, we signed an additional 100,000 ft of leases, which included 20,000 ft of renewals at a 22% cash mark-to-market and 60,000 ft of new leasing at 75 Hayden in Boston.
That development project is now 100% pre-leased and outperformed underwriting on rental rates by more than 10%. We expect to complete the interior build-outs in 3Q 2021. Hayden is arguably Boston's premier suburban life science campus, given its scale, amenities, and prominent location near the intersection of Routes two and 128.
New leasing in July also included the final 22,000 sq ft at our Scripps Wateridge redevelopment in San Diego, where a genomics company urgently needed space to accommodate a COVID testing mandate received from the government. Our team was able to go from initial inquiry to a signed lease in just 14 days to win the business. The pipeline is solid as well, with 170,000 sq ft under letters of intent.
The near-term supply-demand outlook in all three markets remains favorable. Sublease vacancy remains in the very low single digits and hasn't changed since COVID. The new deliveries over the next two years are already more than 70% pre-leased in the aggregate. Rent collections continue to be strong, including more than 99% in July, while rent deferrals are de minimis. Just two tenants aggregating about $1 million of rent that's been deferred.
In both cases, a funding event got delayed due to COVID. Both tenants expect to close their funding this quarter and repay the deferred rent at that time. We do have some lease roll that will impact same store occupancy in the second half of the year. For example, July declined 60 basis points from three known vacates. We've already signed offer letters on about half the vacated space at 28% cash mark-to-market, and we have good activity on the remainder.
This should be a short-term blip. On the development front, COVID resulted in a one to two-month delay at most of our sites. Construction has now resumed in all of our markets and without any meaningful change in our underwritten returns. Additionally, we obtained final entitlements at our 101 Cambridge Park Drive development in West Cambridge.
We were able to permit the project for 160,000 ft and could begin construction as soon as the Q4 . We were successful upsizing our entitlements to 130,000 ft at our highly prominent Modular Labs site on East Grand Avenue in South San Francisco. The site gives us additional capacity to build on our leading market share in this important sub-market.
Funding continues to flow into the biotech sector, driving additional tenant demand for space. The Q2 was the highest on record for venture capital at over $6 billion, while the public markets remain open to both IPOs and secondaries. From April through July, there were 32 IPOs in the sector, raising over $6 billion.
No surprise that biotechs based in our three core markets of Boston, San Francisco, and San Diego dominated the capital raising activity, and Healthpeak tenants accounted for five of the IPOs, netting over $1 billion.
Our leasing success and rent collections, combined with continued biotech capital raising success, gives us confidence to increase our same store cash NOI outlook by 100 basis points to 4%-5%, with potential upside from there if collections remain strong.
Turning to medical office, which represented 42% of our same store pool, cash NOI grew 1.3% year-over-year, which is 60 basis points above our expectations for the quarter. That growth was driven by higher occupancy, rent escalators, and 9% cash mark-to-market on renewals, offset by COVID-related reductions in parking income and ad rent. We leased 1 million sq ft in the quarter, including nearly 800,000 sq ft of renewals.
Looking at July, occupancy was unchanged for the month. We're 20 basis points ahead of our plan year to date. Tenant demand remains strong, leasing activity in March and April did slow down for obvious reasons, we'll likely see a temporary impact to lease commencements and occupancy in the Q3 . This was fully reflected in our outlook. Rent collections are stable and in line with our expectations at 99% for the Q2 and 98% for July.
To date, we approved $6 million in total rent deferrals, which we expect will be paid back monthly by year-end. We delivered the 52,000-ft on-campus MOB at Lee's Summit Medical Center in Missouri. Upon delivery, it was 51% leased by HCA, with active discussions on another 25%. Construction on our remaining seven HCA developments is progressing, with three expected to be completed in the second half of the year.
Our active pipeline is 49% pre-leased to HCA, 8% under signed offer letters, and 27% in active discussions. We recently saw a third-party report showing that PEAK was the country's largest medical office developer in the private sector in 2019. We view development as an attractive way to grow the portfolio. The pipeline is strong. In senior housing, performance was better than our framework that we provided in May due to expense savings and CARES Act funding.
Triple net same-store NOI grew 3.2% year-over-year due to rent escalators. We collected 97% of contractable rents in the Q2 , with the other 3% deferred with Capital Senior Living. Rent coverage after management fee was 1.02x on an as-reported basis, which is based on the industry standard of trailing 11 months and one quarter arrears.
Rent coverage declined to 0.77x for the three-month period from April through June due to COVID. SHOP same-store NOI declined 39% year-over-year. We incurred significant expense to help keep residents and staff as safe as possible under these extraordinary circumstances. Occupancy declined 560 basis points due to move-in restrictions and the inability to do in-person tours.
With operating margins in the high teens, there's a five to 6x multiplier effect on NOI for each $1 of lost revenue or increase in COVID-related expenses. The trend in leads, tours, and occupancy improved as we moved from April to May to June. These key indicators are still below historical levels, and the sector has not yet returned to business as usual. Moving to CCRCs.
$12.4 million of CARES Act funding only partially offset COVID expenses and significant declines in skilled nursing census, driven by low Medicare discharges as hospitals canceled elective surgeries in the Q2 . Performance for independent, assisted, and memory care was in line with our framework. Turning to transactions, it was a quiet quarter by design as we were intensely focused on operations.
In June, we did close on the previously announced sale of three MOBs in San Diego for $106 million, where the hospital exercised its purchase option. In addition, after a slowdown from March through May, the senior housing transaction market has become active again. We're making progress on a number of non-core asset sales that would further rebalance our portfolio toward life science and medical office. Now to our CFO, Peter.
Thanks, Scott. I'll start today with a review of our Q2 results, provide an update on our balance sheet activity, and finish with a discussion on our 2020 earnings outlook. Starting with our results. We reported FFO as adjusted of $0.40 per share for the Q2 . We continue to generate solid growth from our life science and medical office segments, which grew cash same store NOI at a blended 4%.
When combined with triple net and our small hospital portfolio, these four segments, representing roughly 90% of the same-store pool, grew 3.8%. As we expected, this growth was offset by performance from SHOP of -39% as we experienced a full quarter of COVID disruption, bringing total same-store cash NOI results to -2.2%. Our Q2 earnings were impacted by two important items related to COVID.
First, we experienced approximately $20 million, or $0.035 per share, of elevated expenses in our SHOP and CCRC portfolios. Second, we received approximately $15 million, or $0.025 per share, in CARES Act grants. These grants were based on pro-rata funding provided to all Medicare providers. As a reminder, we do not adjust our same-store NOI, FFO As Adjusted or AFFO for these items.
Turning to our balance sheet. In June, we opportunistically took advantage of robust debt capital markets to further improve liquidity and strengthen our balance sheet. We issued $600 million of long 10-year bonds at 2.875% to redeem a total of $550 million of bonds with a weighted average maturity of about two and a half years and a blended interest rate of 3.7%.
This transaction extended our weighted average maturity to over seven years and lowered our weighted average interest rate to 3.75%. Following these transactions, Healthpeak's next material debt maturity is over three years away in November 2023. We ended the quarter with nearly $2.9 billion of liquidity and reported a net debt to EBITDA of 5.4x . Our revolver remains completely undrawn, with $2.5 billion of borrowing capacity.
Our cash balance was approximately $350 million after factoring in the redemption of $300 million of bonds completed in early July. Suffice it to say, we remain in a rock-solid liquidity position and are well prepared to withstand the uncertainty from COVID.
Moving on to our earnings outlook. Similar to last quarter, on pages 44- 46 of our supplemental, we have included an updated outlook and earnings framework, which details some important items to assist with your modeling.
Starting with page 44, there are three items I would like to point out. First, for life sciences, we have increased our same-store outlook by 100 basis points to 4%-5%. We have experienced better than expected leasing, strong mark-to-markets, and lower bad debt. I would note that we're currently trending towards the high end of this range, but with so many unknowns, we feel it is prudent to maintain some cushion.
Second, for medical office, we have reaffirmed our prior outlook, but important to note that we are also trending towards the high end of the range. Perhaps some conservatism in our outlook, but with uncertainty around elective procedures, we've held our same-store outlook constant. Third, for sources and uses, we have increased our expected capital spend by $100 million as the COVID-related construction delays we experienced in the Q2 were shorter than expected.
At this point, all of our major development projects have restarted. Our prior outlook assumed a four-month delay on all construction activity when the actual delays were generally one to two months. Moving to page 45, I will focus my commentary on what has changed in our August outlook relative to our May outlook. In MOB, we see a $0.005 improvement due to stronger than expected leasing and lower bad debt.
In life sciences, we see a $0.01- $0.02 improvement driven by strong industry fundamentals and lower bad debt. For TI revenue recognition, we see a $0.015 improvement as a result of construction delays being shorter than anticipated. As a reminder, this is an FFO impact only. Finally, turning to page 46, we have updated our framework for SHOP and CCRCs.
For SHOP, our estimated monthly net attrition improves by 150 basis points, driven by improved move-ins and no change to move-outs. The net impact of this is that we expect occupancy to decline in the Q3 , but at a lower rate than the Q2 . For CCRCs, no change to our estimated monthly net attrition, with our improved 50 basis points increase in move-ins being offset by increased move-outs.
For senior housing expenses, we expect incremental expenses to be 0%-5% higher, which is a significant improvement from the 5%-15% in our previous framework. As a reminder, the earnings outlook and framework in the supplemental is based on our best available information as of the current date. As conditions change and we are in a position to provide updated information, we will make the appropriate disclosures.
Before going to Q&A, I'd like to point out two additional items we included in the supplemental this quarter on page 29. First, we have included a footnote detailing the preliminary occupancy and EBITDA coverage for our triple net portfolio as of the 12 months ending June 30th, 2020.
In accordance with standard industry convention, this data has historically been disclosed on a trailing 12 months basis and one quarter in arrears. Second, we have included a new column with the straight-line rent receivable information by operator. In the current operating environment, we felt the additional disclosures would be helpful. With that, operator, please open the line for any questions.
Thank you, sir. We will now begin the question and answer session. To ask a question, hit star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
To withdraw your question, please press star then two. That everyone may have a chance to participate, we ask that participants please limit yourself to one question and a single follow-up. If you have additional questions, please re-enter the question queue. At this time, we'll just pause momentarily to assemble our roster. The first question we have will come from Jordan Sadler of KeyBanc Capital Markets. Please go ahead.
Thank you. Good afternoon, good morning out there. My first question pertains to the senior housing operating portfolio. Curious about the deceleration in July move-ins. If you could speak to what you're seeing there specifically.
In that same context, just noticed in adjusting the ADC down 150 basis points sequentially on a monthly basis, it seems like June and July performed better than what you're sort of guiding toward for in your outlook. If you could speak to just both of those two trends.
Hey, Jordan. Scott here. Happy to take that one. A couple of things to point out. One is that June was particularly strong. Of course, that's a relative term in today's environment. If we look at April and May, June was substantially better. Our move-ins in June were up more than 50% from May and April.
Similarly, leads and tours were up pretty dramatically from April and May in the month of June. I think that's part of it is that June was just a really strong month. It's one reason that the move-ins were down a bit. Leads and tours were down low single digits versus June, so not a significant change. It was more the move-ins. Fortunately, move-outs continue to decline. We've had three consecutive months now that move-outs have declined. That's obviously helpful.
The other thing I would point to is that we did have an increase in COVID activity, no surprise, in very late June into early July, particularly in Florida and Texas and California, where we do have a presence. The good news is that the activity has started to trend down in recent weeks.
Similarly, in our portfolio, we did have occupancy in the second half of July that was stronger by far than the first half of July. I think the trends are actually better than what maybe shows up on that page. Important to note that we did improve our framework pretty significantly to the upside from the prior framework in terms of net attrition. Tom, anything to that?
No, I think you got it, Scott.
Okay. Perhaps as a follow-up, I'm curious about the dividend here. It looks like, I just did the per share math on AFFO in the quarter. I think you reported about $0.36, $0.37 dividend. The trend here in senior housing seems to be pretty soft for the balance of the year. Correct me if I'm wrong.
While that's supported by 70% of the portfolio that's been pretty stable to strong, you're already starting from a standpoint here in the Q2 that we seem to be in line with the dividend. Tom, I've heard in your comments, you did say that you would assess the dividend and continue to monitor its COVID risk. Can you maybe just speak to your expectations surrounding the dividend or how you're thinking about it for the balance of the year?
Yeah. Jordan, I sure can. You started it correctly. The dividend was $0.01 higher than our AFFO, which I acknowledged. As I said last quarter, we're comfortable for dividend modestly exceed our AFFO for some period of time because it just isn't going to be that material on an NAV basis.
I will say that if the virus remains a protracted issue, of course, we will need to go back and revisit our dividend in order to protect our credit ratings and our liquidity. Accordingly, we're going to continue to assess our dividend as the conditions unfold. As of this quarter, as we met with our board and discussed it, we felt comfortable with our $0.37 dividend for this quarter.
Would you be comfortable sort of overpaying it a little bit rather than sort of moving it around, like you said today, if it further deteriorated by another 10% sequentially? Are you kind of more cognizant? I'm just trying to think of how would you weigh sort of wanting to maintain the dividend versus trying to align it more so with natural cash flow?
Well, bottom line is, Jordan, it depends on how long we thought this could go. Our liquidity and our credit rating we consider vital. In order to be a blue-chip REIT in our sector, we think BBB+, Baa1 is very important. If we felt this was going to go on for a long time, then at some point it'll put pressure on net debt to EBITDA, and we have to take that into account.
At the same time, if the virus resolves itself more quickly or if senior housing recovers more quickly, the other, I mean, 71% of our business, as you know, is doing fantastic. It's really just senior housing and more specifically SHOP, which is 9% of our NOI. If that does recover.
More quickly, we'd be in a position where we wouldn't be covering. It would not be a long period of time, and that's less concerning. If this goes on a while, we would have to consider what actions to take.
Thanks for the thoughtful response.
Thank you.
Next, we have Vikram Malhotra of Morgan Stanley.
Thanks for taking the questions. Hope everyone is well and safe. It's still a pretty tough environment. Just maybe on the triple net side, the Brookdale coverage, which is in arrears, turning towards one on an EBITDA basis. I'm just wondering if you can give us some sense of any potential conversions,
Restructurings, or if you feel you're going to keep things intact for now, given kind of what near-term COVID trends are and performance of broadly senior housing. Just give us some sense of the triple net business. If you could just clarify on triple net, you gave information on straight line. I'm just wondering if you took any write-offs or reserves.
That sounds good, Vikram. This is Scott. I'll start, and then I think Peter and/or Tom may have some commentary as well. Yeah, with Brookdale, we've worked hard over the past three years to bring that concentration down all the way from the mid-30s to about 6% today. Most of it is in that triple net portfolio.
It's about 4% of our NOI today, around $40 million per year of rent. The most recent transaction closed in February, where we basically cut that portfolio in half. We think we kept a higher quality portfolio in terms of locations and performance, at least historically. It is a master lease now with more than seven years left on the term and a corporate guarantee.
From a security standpoint, we're in a much better position today than we would have been historically, in addition to the size just being a lot smaller. We think the right coverage in a normal operating environment is sufficient, especially given the security of that master lease and the corporate guarantee.
We've got a good history with Brookdale now of figuring out win-win transactions if the time or the situation required it. We're comfortable with where that triple net lease is today, and there's certainly no ongoing discussions to do anything differently. SHOP would not be on the receiving end of that as an alternative. Peter, do you want to cover the accounting question?
Yeah, sure. Hey, Vikram, it's a good question. Look, I'll just broadly cover write-offs generally. Given the strong rent collections in life science MOBs and hospitals, it seems that any future write-offs are unlikely to be material. In the triple net senior housing side, as we said on page 29 of the supplemental, we have around $45 million of straight line rent balances, and that's really just Aegis at $6 million and Brookdale at $36 million.
And to follow on what Scott said, we've been very proactive the last couple of years to improve the quality of the assets and the coverage of this portfolio. And for Aegis, we're still well covered. And while it will continue to decline with COVID, these are good assets with a very strong tenant and reasonable rents that are supported the long term.
For Brookdale, the coverage on those assets is a bit tighter than Aegis, but we believe the liquidity behind their corporate guarantee is sufficient to get them past the worst of the pandemic. That's our view on the triple net portfolio there. Of course, we'll continue to monitor it closely as the pandemic unfolds.
Okay, thanks. Just my follow-up. On the SHOP side, maybe correct me if I'm wrong, I think you mentioned June was better than April and May, definitely. I'm just wondering your view on how July shaped up versus your expectation given the move-in numbers seem down both for CCRCs and for SHOP, census is down another 100+ basis points.
Can you give us a sense of how these have shaped up relative to your expectations? Related to that, given the case loads have increased in several states, what are you hearing from operators in terms of the need to have broad shutdowns as opposed to targeted kind of shutdowns in terms of move-ins?
Hey, Vikram. Scott, I'll take that as well. Yeah, a lot of this was also covered in the discussion with Jordan, but I think it's important to take a step back and think about the results in July in maybe a broader sense because we far exceeded in July the net attrition from the original framework that we provided in May.
We also exceeded the framework that we just provided today in the month of July. The results in June were actually extremely strong. When you look at July just in isolation against, say, April or May, SHOP move-ins were up more than 50% in July versus April and May. In CCRCs, the move-ins in June were more than 100% of the move-in activity in both April and May.
You had huge activity at quarter end in both portfolios that had we reported a month ago, this page would have looked dramatically different. I think it's just important to keep that in mind. We've always said that it's tough to talk about the senior housing business on a quarter-to-quarter basis. 90 days just isn't enough.
Now we're talking about it on a 30-day basis. It just becomes very difficult. We reported the numbers. They are what they are. I think it does require some context, because we still feel like the trends are pretty positive, which is why we changed our framework. Importantly, the COVID activity in those three markets that I talked about has started to come down, in some cases pretty dramatically.
Like in Florida, I saw that the case loads or positive tests yesterday were 50% of where they were two weeks ago. There are some very positive trends that, if you take a step back, I think it becomes more evident than just focusing on that one page and month-over-month data.
Just on the operators.
Go ahead, Vikram. Sorry.
My question is on the operators and how they're thinking about move-ins in states where we've seen a pickup in COVID cases.
As of July 31st, CCRCs were at 93%, except in move-ins and in SHOP for at 86%. That's actually slightly better than where we were at the end of June. From that standpoint, we're in better shape today than we were even two months ago.
Okay, great. Just to clarify that even though cases have picked up in, say, Texas and California and Florida, the operators, just business is open and they're not needing to shut down either because they just understand how to deal with it, or maybe the demographics are different. Recently you haven't heard operators say, "Oh, we need to have company-wide bans again.
Yeah, that's correct. I would just make sure it's the past tense, had, when you're talking about your COVID cases, because it really was early July. The current state is that they've really started to decline pretty dramatically in some cases. The last half of July was actually much, much better for us than the H1 of July.
Great. Thanks so much.
Thanks, Vikram.
Next is Nick Joseph of Citi.
Thanks, Rocco. It's Michael Bilerman here with Nick. Scott, I want to pick up on one of your prepared remarks where you talked about a number of non-core asset sales within senior housing that would further rebalance your portfolio towards life science and medical office, two of the stronger areas within the healthcare sector.
I guess how much are you planning to sell? I guess strategically, is there a thought process of a larger type of transaction that would see you completely exit out of the senior housing business and be a focused life science and medical office building REIT? I don't know how the CCRCs will play into that or not.
Can you sort of talk a little bit about how you're thinking about portfolio construction different from where, let's say, a year ago, you were probably in a third to third to third type structure?
Nick, I'm going to take this one. This is Tom, Nick and Michael. Let me describe it this way. We intend for the majority of our future growth to be in life science and medical office, which already accounts for the majority of our asset value, I think as you know. As we've pointed out our NOI attached cap rates for that, you could easily compute that the majority of our asset value is in those businesses.
The development of life science and our relationship development with MOBs has become more and more an important part of our growth story. On the senior housing side, we do like that CCRC play, the 8-10 year length of stay, the high barrier to entry, the average campus size of 50+ acres, which makes it virtually impossible to have much new supply ever come up against it.
We do like that play. It is our view that SHOP and triple net have become a more challenging place for public REITs. I still feel strongly, as does our team, that this real estate is still going to remain vital long term. There will still be seniors that have memory care needs or daily living needs, and senior housing provides those services.
We have sold $5 billion of senior housing over the last four years, and we had disposition guidance of another half a billion in our original 2020 guidance. We have had some inquiries from a number of PE players, and depending on pricing, you could see us lighten up a bit. I will say it's too early to comment on that at this point. I'll just leave it at that, Nick and Michael.
Right. It could, when you think about the development and the acquisition side on MOBs and life science, in evaluating potential buyers that would take a larger subset of your senior housing portfolio, that strategic shift driven by what's happened in the pandemic could become a reality.
I think it becomes, as we go forward, where do we want our growth to be? That is in the MOB and life science businesses. We do like, again, the CCRCs, but it's hard to grow very quickly there because they rarely trade hands. On the SHOP and triple net side, that's not an area that we're going to focus as much growth. As to what takes place if we lighten up a bit more, that's yet TBD.
Nick, have a follow-up too.
Thanks. Yes, Scott, in your opening comments, you mentioned that the senior housing business is not back to business as usual.
Do you actually expect it to go back to business as usual before there's either a vaccine or treatment, or until then, do you expect continued disruption?
Nick, it probably is until there's a vaccine before we're truly back to business as usual. We're getting back in some apps or phases. As of today, just over half the portfolio is at least allowing some level of activities again. Use of the gyms or the pools, group activities, it's just done on a much more limited basis with smaller groups.
At least the residents aren't quarantined in their rooms anymore for a good portion of their portfolio. Similarly, about half of the portfolio is now doing dining again, as opposed to just eating in their rooms. Again, it's being done with reservations and social distancing in smaller groups. Same with visitation, which is obviously a really important part here, so that family and friends can come visit grandparents or parents, as the case may be.
Again, we're at about 50%, 60% of the portfolio is allowing some level of visitation. That's a huge improvement from where we were two months ago on those important things. Until we get back to 100%, it's hard to say that it's business as usual, and it does feel like a vaccine is going to be the ultimate step in getting business there.
That being said, clearly the industry and our portfolio in particular, has made enormous strides with just dramatically improved testing. Over the past three months, that's made a big difference, as well as the fact that PPE is just a normal part of the business at this point. There have been actions taken that have allowed the portfolio to get at least closer to a normal operating environment.
We're not there yet, and I don't think that's going to happen in the next 30 days. The drug industry is making pretty dramatic progress on the some 30 different potential vaccines in human trials. It does feel like there's optimism that the normal operating environment is, although not 30 days away, it's probably not a year away either. Tom, anything that you would add?
I think you covered almost everything I would've said. There'd be two things I would add, Nick. One of the things that we've noted, this goes back to what I said before, what is business as usual or back to usual? There is a waiting line at many communities, as they reopened, as there were need-based seniors that just really could not effectively live at home anymore.
That became a factor and the concept of virtual marketing is something that allows effective video tours, virtual tours to take place. That's not back to usual, but it's a whole lot better than just having communities closed off as they were for a period of time last quarter.
Thank you.
Thank you.
Next we have Richard Anderson, SMBC.
Hey, good morning, everybody. Thanks for all the detail as usual. I guess a question for whomever. When you think about the spread that has happened and perhaps you've had to sort of change your radar screen about where problems were existing, Florida, Texas, and California, as you mentioned, and hopefully you're right, Scott, that we are getting close to some recovery there as well.
In the absence of that, I think of life science, you got a lot of clarity there, medical office clarity. You think Q3 occupancy in SHOP will decline at a slower rate. I'm wondering if in your mind, on the topic of guidance, could you have provided some more concrete guidance, if not for the Florida, Texas, California situation? Were you almost ready to do that except for that variable that entered into the equation?
I'll stop there and see if you can respond to that, or is it just still too soon even in that case?
Hey, Rich, it's Peter here. Maybe I'll just add to that. Obviously, our outlook and framework is pretty detailed. It's based basically on the best information we have as of today. To your point, there still remains significant uncertainty around COVID.
That could result in delays in elective surgeries, construction, admission bans at senior housing communities, all of which could impact our results. It's basically unknowable at this time. We made the decision to update our outlook and framework as opposed to reinstating formal guidance.
Okay. On the topic of elective surgeries, that became the conversation piece for medical office in the late May, June, when they started to get turned on again. Has that sort of reversed course on you? Have you seen that? Is it starting to turn off, and is that a forward-thinking issue within medical office that has you a bit concerned that that could be sort of a reversal to the negative?
Hey, Richard. This is Tom Klaritch. With the rise in cases in June and July, we did see a little bit of limitation in the hotspot areas of Texas, Florida, and Arizona, but not all of our facilities restricted admissions. It was really based on what capacity they had in their hospitals, and most of our affiliated hospitals kind of had 20%, 15% capacity. We did see some restrictions on inpatient. What did happen though, is there were no restrictions on
Outpatient procedures. Many of our tenants actually saw a benefit of procedures being shifted from the inpatient side to outpatient, either in our physicians' offices, ambulatory surgery centers, or hospital outpatient areas. While there was some decline on the inpatient side, we saw a benefit on the outpatient side.
Okay, great. Two questions, I promise.
Yeah. Thanks, Richard.
Next we will have John Kim of BMO Capital Markets.
Thanks. Good morning. Scott, on the asset sales of the non-core senior housing, can you discuss how pricing has changed either on a cap rate or a price per unit basis?
Yeah, it's hard to say because the non-core sales that are underway really aren't trading on a cap rate basis anyway. They're more trading on a replacement value or price per unit basis. I think it's hard to say. From a practical standpoint, NOI is going to be a lot lower than it would have been, say, six months ago, for at least the next 12 months or so.
There's just a present value of money concept that would impact valuation, and then presumably some level of risk premium to get back to the original NOI. It's hard to really comment on whether or not valuations for more stabilized products have changed meaningfully because at least at this point, that's just really not what we're selling.
Okay. Tom, I guess just following up on what seems to be a shift in strategy towards life science and MOBs. Can you just maybe elaborate on what is or what will be the tipping point to make that change final? Is it the potential impact it has on your credit rating? You said in your prepared remarks that that's something you really value. Is it really just, you see a slower road to recovery for SHOP than what was anticipated before the pandemic hit?
I would say they're two separate things, John. The credit rating involves the leverage of the company, the net debt to EBITDA, and whether there would be de-leveraging required if COVID went on for a long period. We've modeled that 18 different directions to make sure that we'll be ahead of it and not chasing it. If that occurs, and it may not, we hope it doesn't, but if it does, we'll be ready for it.
That's one item, is protecting our BBB+/Baa1 credit rating. As to the portfolio reallocation, that just depends. It depends on the direction of where the virus goes, how much government stimulus, whether that becomes a part of healthcare real estate that is more government reimbursed, whether that impacts how we think about it, how long that recovery is.
If we conclude it's a long-term recovery, we may very well choose to play through that. That might be the answer. If the pricing is strong, it's something that we could choose to lighten up a bit more. That's just all PBD. We don't have an answer on that yet, but something we're just at least aware of and paying attention to, and so we'll see where it goes.
Sounds good with you. Thank you.
Thank you.
Next we have Michael Carroll with RBC Capital Markets.
Yeah, thanks. Tom, I kind of wanted to touch on your last comment regarding seniors housing grants. I know that your seniors housing portfolio that has some more government reimbursements already got some funds. I guess, do you expect those specific communities will get more funds? Are you hearing on a broader picture of will private pay senior housing facilities, could they potentially get stimulus?
Hey, Michael, it's Scott. I'll take that one. The industry trade associations and some of the big operators are certainly lobbying to get funding for the private pay senior housing. I don't have any better information than anyone else as to what the government is ultimately going to do.
From a fairness standpoint, it does seem appropriate given that the government has provided stimulus to a lot of different businesses, that senior housing would be on the list, given the profile of the communities and the residents, and the fact that the industry is taking pretty dramatic actions on both the cost side as well as the revenue side by shutting down admissions in many cases to protect residents, that it would be the beneficiary of federal stimulus.
As we sit here today, we can't say for sure that there will be any stimulus or how much or when, but they're certainly actively lobbying for that stimulus.
Okay, your assets that government reimbursed, the CARES Act funds that you kind of reported in 2Q, there's nothing that was received in July or August to date, right?
That's correct. The funding is from the Q2 .
Okay, great. Just real quick on, can you talk about the senior housing tenants, I think it was with HRA, that requested a deferral, I guess earlier during the pandemic, though you made that comment in your prepared remarks, but how are you thinking about that specific tenant, and do you have deferral discussions going on with them?
We do not have any active dialogue with them. Fortunately, that's one that we were proactive and got ahead of it more than a year ago. Historically, we have 15 buildings with HRA. Today, we're down to eight because we've proactively redone that lease in a pretty dramatic way to get rid of the lower quality properties,
As well as to combine all the properties into a single master lease with a 10-year term and improve our corporate guarantee. We're in a much better position today than we would have been a year ago, dramatically so, fortunately. That being said, on the entire senior housing portfolio, we're watching it carefully. No active dialogue right now about electorate for us, no, Michael.
Great. Thanks, Scott.
Next, we have Steven Valiquette of Barclays.
Thanks. Hello, Tom, Ian, Scott, thanks for taking the question.
Thanks, Steven.
The data points on slide 46 are definitely helpful on the occupancies, et cetera. With the move-in projections on that slide 46, do you assume that the % of properties accepting move-ins to stay about the same throughout the whole quarter? Right now, it's 86% of properties within SHOP and 93% in CCRCs, as far as accepting move-ins. Does that have to increase further to hit those move-in projections on slide 46?
Hi, Steven. Scott here. We do not need to have a higher percentage of communities open for move-in to hit those projections. In fact, we exceeded this framework in the month of July, even though there were some questions about whether July was a weak month. We did finish the month for both CCRCs and SHOP ahead of the framework. We're not anticipating or expecting a big improvement in that percentage in order to meet this framework.
Maybe just as a quick reminder, as far as the various policies in place that trigger when a facility discontinues move-ins, versus when they will once again accept move-ins again. I don't know if it's different operator by operator or state by state. I'm sure there's some commonalities. Maybe just give us a little more of a flavor of how that is set up right now today.
Right. Well, the ultimate decision is the state and the local health authority. They could make the decision to have a property closed down to new admissions. Assuming that that does not occur, it would be up to the operator. There is some consistency, although it's not 100%, but in general, it's based on the amount of COVID activity inside of the property,
Both the percentage of residents and/or staff, but also the timing and whether it was three days ago or 14 days ago. Then secondarily, the activity in the local market for the population at large. Those are generally the three things that most impact whether or not a property is open to move-ins, Steven.
I guess the final quick follow-up just on that last point then would be, for the facilities that are not accepting move-ins yet, for that remainder, how much of that is sort of forced by a state policy versus kind of more voluntarily not accepting move-ins? Does it gravitate heavily towards one side or the other as far as the remaining ones that are not accepting move-ins?
Yeah. It's a very small percentage now that is being dictated by the state or local health systems. It's primarily the operator's decision based on their own safety policies.
Okay. That's perfect. Okay. All right. Appreciate the extra color. Thanks.
Next we have Daniel Bernstein of Capital One.
Hi. Good morning. Excuse me. Nobody's really touched on margins yet, so I wanted to go back to that. You had what? SHOP margins, or I guess SHOP NCC expenses were only up 1.6% versus, I guess, the 5%-15%. Wanted to understand what was behind that, and has that continued into 3Q or been impacted by some of the increase in COVID that we've seen in Texas and Florida? Kind of how you're thinking about margins for the rest of the year? Thanks.
Hey, Daniel. It's Scott. Margins are more likely than not going to decline, although for the framework we just put out, it's going to be more driven by revenue and occupancy, in particular, than by expense. When we gave the framework in May, we thought it would be a pretty even balance between expense and revenue that was causing NOI to decline.
As it's turned out, the expenses have not increased by as much as we thought. That's obviously good. We are spending a lot on supplies, PPE in particular. The testing, although we're doing it in a pretty dramatic way across the portfolio, has not been a big cost increase because in most cases, the state's either paying for it directly or insurance is paying for it. We haven't seen a huge increase there, which is good.
The other thing is we have had some substantial savings on repair and maintenance as well as marketing, although that will start to ramp back up now. Certainly, the number of admissions that are being paid is lower than it had been, and the number of activities from a marketing standpoint has declined, just given that it's all being done virtually at this point. We have had some good success on the expense front.
Because we still expect occupancy to decline roughly 150 basis points by month. It's the midpoint of our framework. There is that multiplier effect that I mentioned on the earnings call. It's just a mathematical reality for every portfolio. Today in the same store, we're in the high teens. For the portfolio at large, we're in the mid-teens. We do think that's going to continue to come down.
Tom, is there anything you'd like to add?
Scott, I think you've completely covered that, and I think this goes without saying, but obviously with the outsized impact of COVID on SHOP, the natural place to want to talk is about the SHOP results. I just remind you guys, 71% of our portfolio's life science MOBs and hospitals are doing fantastically.
CCRCs have a far, far superior outcome than SHOP does due to the length of stay. I would note, due to the diversification in our portfolio mix, you should note that our first half same store results across our entire portfolio were +1.4% year to date. It just does highlight that don't forget to look at the overall makeup of our portfolio. I think you all know that, but it probably bears reminding.
Daniel, I know you have other questions, and they can be SHOP-related, but I thought I would throw that in while it was top of mind.
No. Actually, my other question is life science related.
Well, there you go.
Again, just trying to switch it up versus what people are asking. Actually, did want to ask about the mark-to-markets, obviously seem very strong right now in life science. Looking out to 2021, 2022, and some of those expirations, how are you thinking about the mark-to-market for those at this point?
Yeah, the mark-to-market across the portfolio, Daniel, is in the 10% range, but it does vary by year, depending on the particular lease that matures. This year was expected to be a strong mark-to-market year, and it has been to date. We were at 15% in the Q1 , 15% here in the Q2. We're off to a great start in July, as I mentioned in the prepared remarks, and we would expect that to continue. 2021,
We think is another year of positive mark-to-market, although maybe not quite as strong as this year. So much of that depends, of course, on whether or not certain leases are renewed and the strength of the market at that time. I think a little bit too early to comment with a specific number, but we do think it's positive.
As you look out to 2022 and beyond, I think it's just too far in the future to comment. We'll just have to see where the market is.
Okay. I do have about an hour worth of SHOP questions, so yeah. Maybe another time.
Thank you, Daniel.
Take care. Thanks.
Next, we have Lucas Hartwich with Green Street Advisors.
Thanks. Hey, guys. I was hoping you could comment on monthly SHOP NOI decline since April. Is that something you could provide, or at least a range?
Hey, Lucas. It's Scott in last week's meeting.
I'm just curious as you get how did NOI fare, did clients fare in April, May, June, July? Whatever you can provide on that front would be helpful.
Yeah. Certainly, NOI has declined sequentially because we've continued to lose occupancy from month-over-month. That part is clear. In terms of the degree, the percentage change, the most dramatic month was April, obviously, when we lost almost 400 basis points of occupancy.
When you compare that to June and July, where at least from an ADC standpoint, it was closer to 50 basis points in July. The rate of decline has come down pretty dramatically, but we're still losing NOI, obviously, with occupancy falling.
Right. I'm guessing that April result was also driven by the higher than the other months in terms of the OpEx spend. Is that fair?
Yes, but not dramatically.
Okay. Great. The other question I have is just, obviously we saw pre-leasing progress at The Boardwalk development in San Diego. Can you remind us what the expected stabilized yield is for that project, and has that changed at all?
Hey, Lucas. This is Tom Klaritch. The yield on The Boardwalk project, give me just one second. Sorry. I have such small letters here, it's just taking me a second.
Lucas, it should be around 7%, was our expectation.
That's roughly what I was saying.
Yeah. It's just under 7%. It's 6.8%. Yeah.
Great. Thanks so much.
Sure.
Yeah, the beauty of that one was there was a good amount of pre-leasing that ended up occurring, so that was a positive.
Next we have Omotayo Okusanya of Mizuho.
Yes. Good morning, everyone. My first question is, the senior housing portfolio the last few months, the rate of move-outs declining. I guess the question I have is, you would think in senior housing, there's just kind of a natural attrition that happens in that business because of the age of the residents.
Your recent numbers seem to kind of indicate, at least from an occupancy perspective, seem to kind of suggest that rate of attrition that I would have expected, given that they typically live there from 30-36 months. That doesn't seem to be showing up in your numbers because your occupancy numbers are kind of dropping a little less than kind of like that 2%-3% drop you would expect every quarter.
Hey, Omotayo . Yeah, hey, Omotayo , I might ask you to rephrase the question. I wasn't exactly sure.
Sure. I'm just trying to understand if not much is happening by way of move-ins and there's a natural attrition that happens in the portfolio for move-outs given, again, the age of the residents, and it's typically there from 30- 36 months. I would have been expecting kind of occupancy drops of about 300, about 2%- 3% a month. Your occupancy drops are kind of coming in much less than that. Is that just because you are seeing some move-in activity or-
All right.
Yeah. Because your move-out activity seems to be getting better, I just don't quite understand that if you should kind of be losing 3% per month naturally.
Yeah. Tom, you want to comment?
I can just jump in quickly, Omotayo . We're going to get lumpiness in the actual results number if you were looking at the June and July results from what we put out today and previously. It's not going to go in a straight line. To put this in the most simple terms in SHOP, when you've got a, let's just say, two-year average length of stay for a portfolio, you're going to have about 4% move-out attrition per month, and that's going to be relatively consistent.
It's going to bounce around from one month to the next just based on natural discrepancies between months. We haven't changed our view on that for SHOP. If that's your question, which I think it is, the actual activity that you're seeing is going to differ a bit from what we know will be a mathematical outcome over time.
The big driver becomes what are the move-ins that result as a result of the marketing, the virtual marketing that we're doing, and the waiting line that occurs for need-based seniors as they desire to move in, and the ability to move them in as those properties are opened. That's the much bigger driver that will dictate the net attrition for ultimate stabilization of those properties. Scott, anything you would add to that?
Just to clarify Omotayo 's question about move-ins. They're certainly not zero. The original framework was 0%-2% per month of move-in activity. We just increased that to 1.5%-3.5% per month. That's below the historical average, which is closer to 4% per month, but it's certainly not zero. There is positive move-in activity, Omotayo .
Great. That's helpful. Then lastly, just a broader question. Tom, your comments earlier on just about, again, the longer this goes on and there's more uncertainty and you would have to kind of reassess dividend against that kind of backdrop.
Could you just kind of talk about, maybe a little early to talk about 2021, but if we do kind of end up in a world where in the fall COVID gets worse, God forbid, but if we have the world we're kind of living in, how does one really start to really think about this transition of your business that is kind of heavily impacted by COVID heading into 2021?
Omotayo , first let's hope that this has a quicker resolution, but none of us can predict that, and that's why we put our framework out. Your question is a very fair one. What happens if this becomes a protracted problem? As I stated earlier, our liquidity and our credit ratings we consider to be quite important relative to a blue-chip REIT.
We would revisit our leverage and our dividend as necessary to maintain the strength of the right-hand side of our balance sheet and our liquidity. I would expect that many high-quality REITs would be, especially any of those that are in sectors that are being heavily impacted by COVID, which are plenty of us, are going to be doing the same calculus.
To me, it's just responsible management to stay a step ahead of this and not get behind to a point where all at once we've got credit rating issues, we've got liquidity issues. We're not going to let that occur. Bottom line is, all I'm doing is acknowledging is if this becomes a protracted issue, you can expect us to be doing lots of analysis, lots of execution with clear disclosure as to what we're up to and why. Bottom line.
Great. That's helpful. Thank you.
You bet. Thanks, Omotayo .
Next we have Joshua Dennerlein of Bank of America.
Hey, guys. Thanks for the question. I guess I just wanted to touch base on a comment I heard from Scott in his prepared remarks about the life science, I think it related to the same story, NOI. It sounded like you could see some upside from that 4%-5% range if rent collections remain strong.
Curious on what you budgeted in there for, I guess, the back half of the year on rent collections, and just trying to get a sense of maybe the upside that could be in there if rent collections remain high.
Yeah. Hey, Joshua. That is the primary source of upside versus the 4%-5% outlook. I hesitate to give a specific number just given reality of discussions with different tenants. I would say there's at least 100 basis points of potential upside there depending upon our success. We're at nearly 100% rent collections in the month of July. Pretty incredible. Only ended up deferring rents for two tenants on the $1 million in the aggregate.
Really small numbers, and it's really a credit to the team who spent an enormous amount of time on this topic in March, April, May, and really into June, so that we ultimately only had the two tenants with deferrals, and there was a significant amount of analysis done to make sure that we were comfortable providing them that deferral.
Ultimately, their company is in growth mode, and they need to raise capital, and they're in the middle of capital raising. They think they'll get home based on discussions we've had. At that point, the rents would be paid back. There's still five months left in the year. Can't really comment on specific numbers, but there is the potential upside to the 4%-5%.
Oh, okay. Yeah, no, that's great color. I appreciate that, Scott. Maybe one more from me. I think it was kind of touched on with maybe some other questions, but I wanted to maybe ask it a different way. I guess, you mentioned move-in declined in June, July, and a lot of that maybe was driven by Florida and Texas.
Are the less move-ins relative to a month ago, is that driven more by folks maybe getting a little bit more nervous about putting their loved one in a senior housing? Or was it more just senior housing communities maybe not being open to new residents at that point because they got a case or two?
I think it's more just the reality of people moving around less when there are periods of outbreaks. I think all of us, me included, probably you included, take extra precautions when the local community is seeing a high number of cases, and it just leads to less activity, period. It's obviously a pretty dramatic move to put a senior into a senior living community. It's not one person that's making that move.
There's an awful lot of activity attached to that decision. If you can wait a week or two weeks, I think it's just much more likely that you would do that given the choice. I think it's more related to that. It wasn't that we had a huge percentage of our communities that all of a sudden in early July couldn't admit residents. That's not what drove it.
As I mentioned earlier, we're actually at a higher % today than our accepted move-ins than we did in mid-June. I think it's more just the amount of activity in the environment and in particular the people making the decisions, which is usually the adult children and not the senior themselves.
Great. Thanks, Scott.
Appreciate it. Over.
Next we have Sarang Tayal of JP Morgan.
Hi, good morning. This is Sara for Michael Gambardella. Just one question on my end. Could you talk about the occupancy cadence in the second half of July?
Sure. This is Scott speaking. In the SHOP portfolio, we ended July with a spot occupancy that's exactly in line with the average daily census for July. That suggests that the H2 of July was actually a fairly strong move-in activity, fewer move-out. Although we did decline in the month of July,
Most of that occurred in the first half of the month, and then we recaptured all of it in the second half of the month. That was a positive. The CCRC portfolio was similar, although there was a 20 basis point gap between the spot occupancy and the average daily census for the month. Enough in SHOP to completely offset the first half of the month, but not quite in CCRC.
Nonetheless, clearly the second half was stronger than the H1 , Sarang.
Tom Klaritch and Scott, maybe mention the MOB and life science occupancy as well. Those are much bigger businesses and also driving our results dramatically. Tom, maybe on MOBs first.
Sure. On MOB, actually our leasing activity has been very strong for the year. We had great commencements in the Q2 at 1 million sq ft versus 600,000 in the Q1 , so that's done very well. Our occupancy is about 70 basis points ahead of where we expected it to be.
You will recall last quarter I said that new leasing, we saw some declines in prospects in the months of April and May. That has since improved, but there is a four to six month delay in getting occupancy from those tours and prospects. We likely will see a slight decline in occupancy in the Q3 . Since new leasing's picked up, I think that'll reverse itself later in the year.
Scott?
Yeah, I mean, in life science in the Q2 , we were up about 250 basis points over the previous quarter. July, we were down 60 basis points from June 30th because of three known vacates. In some cases, we proactively terminate leases in order to grow existing clients. That drives some of it.
Importantly, we've already re-leased 60% of the space that we lost in the month of July. It's more of a timing issue in certain cases than the day that existing tenant stops paying rent, it impacts occupancy. Looking forward, we do have a replacement tenant and in this case, a positive mark-to-market. When you're looking forward, it's actually a very positive story even though we lost a bit of occupancy short-term.
Operator, any other questions?
No, no, sir. We're showing no further questions at this time. If okay, we'll go ahead and conclude the question-and-answer session. Mr. Herzog, I'd like to hand the conference back over to you, sir, for any closing remarks.
Yes. Thank you, operator. Thank you everybody for joining our call today and your continued interest in Healthpeak. I hope you all stay safe, and we'll talk to you soon. Thank you.
We thank you, sir, also for your time and to the rest of the management team. The conference call is now concluded. At this time, you may disconnect your lines. Thank you again, everyone. Take care and have a great day.