What happened
Shares of Healthpeak Properties (DOC 2.51%) jumped 10.3% in November, according to data provided by S&P Global Market Intelligence. Driving up shares of the real estate investment trust (REIT) was its third-quarter report.
So what
Healthpeak Properties posted solid third-quarter results last month. Its adjusted funds from operations (FFO) of $0.43 per share were right on the money with analysts' expectations. While adjusted FFO per share declined from $0.44 per share in the prior quarter, they were up from $0.40 per share in the year-ago period.
Driving the healthcare REIT's year-over-year increase was improving net operating income (NOI) across its portfolio. Total NOI grew by 5.1% year over year, with faster growth in life sciences properties (5.4%) than in its medical office building portfolio (4.9%).
The REIT's solid quarter gave it the confidence to boost the low end of its full-year outlook. Healthpeak now sees adjusted FFO in the range of $1.72-$1.74 per share, up from $1.68-1.74 per share.
The company's performance in the period led Evercore ISI analyst Steve Sakwa to upgrade the stock from "in line" to "outperform." However, the analyst maintained his $28 price target. The analyst noted that Healthpeak stock had underperformed other healthcare REITs this year. The analyst also pointed to the strength of its life science and medical office building portfolio, which should enable it to provide investors with reasonable growth in 2023 and 2024.
However, not all analysts felt as optimistic about Healthpeak's stock last month. Morgan Stanley analyst Ronald Kamdem lowered the investment bank's price target from $27 to $23 per share while maintaining an "equal weight" rating. The analyst believed the REIT would deliver in-line third-quarter results (which it did) and that higher interest rates and other costs would weigh on its 2023 adjusted FFO growth.
Now what
Even after last month's rally, shares of Healthpeak are down about 30% this year. This means the REIT believes it trades at an attractive price. That led it to launch a $500 million share repurchase program earlier this year. It bought back $56 million of its shares during the third quarter.
Meanwhile, the sell-off has pushed its dividend yield up to 4.7%. That high-yielding payout looks like it's on a firm foundation. The REIT has a conservative dividend payout ratio (less than 70% in the third quarter), is growing FFO, and has a solid balance sheet. Those features make it look like an attractive option for those seeking to collect passive income.
