REIT Develops Peak Sites;
Its Tenants Fight the Virus
Healthcare real estate owner-developer Healthpeak Properties Inc. (NYSE: PEAK) is right in the middle of the coronavirus pandemic. With part of its focus on premium properties, it might be more ready than most to weather it.
Its tenants are “at the forefront in the battle against COVID-19, from vaccine research and development, to donation of supplies,” Healthpeak said.
The REIT implemented internal changes to mitigate financial impact and support work combatting the coronavirus and, in a March 24 update to investors, outlined those. It’s providing vacant space to hospitals and tenants to use for screening and isolation, while parking lots are being used for drive-thru testing, for instance.
“Longer term, we believe this pandemic will highlight the positive societal impact of the work being done by biotech companies, which will also benefit the industry.”
The company counts $20 billion in managed assets, totaling about 665 buildings in 40 states across three sectors: senior housing, medical office and life science.
Seven communities in its portfolio had confirmed COVID-19 cases as of late last month.
In each, “rigorous quarantine and isolation procedures have been implemented in close cooperation with local and state health authorities,” the company said in the update.
On the office and life science side, Healthpeak has been buying or building A-level product in key biotech markets including Boston and San Diego.
Corporately, it shifted to remote work March 16, and the company’s offices, including its Irvine headquarters, “are fully operational, virtually connected and well-positioned for business continuity throughout the COVID-19 crisis.”
Its shares have fallen 40% since mid-February to a $12 billion market cap.
—Katie Murar
Cash-Rich Sunstone Had Early Impact from Virus
With the hotel market approaching a peak in property valuations of late, Sunstone Hotel Investors Inc. (NYSE: SHO) had already turned to selling over buying. The Business Journal reported in November that since 2017 the hotel REIT had slimmed from 30 properties to 20 and from 14,300 rooms to 10,600.
Late last year, it sold an LAX-area hotel and shed its last two OC properties in 2017 and 2018. Its last acquisition was in Key West three years ago. As a result, it was sitting on roughly $700 million in cash, not to mention a fully loaded $500 million credit line.
Then things got just plain rough.
Sunstone was among the first hotel companies to begin reporting on the coronavirus pandemic’s effects, noting in a mid-February earnings report it had already seen $1 million worth of group business cancellations; by March 5 that had climbed to $11 million and Sunstone withdrew full-year earnings guidance.
Hotels nationwide are closing amid what’s essentially a travel moratorium, though the industry is growing agile in its response (see related story, page 3).
Sunstone shares are down 35% since markets began to drop in mid-February, to about a $1.9 billion market cap.
—Katie Murar
