[Management View]
Healthpeak Properties reported stable core operating performance with notable resilience in the outpatient medical and CCRC segments. The life science portfolio faced occupancy pressure in Q2 2025 due to a challenging capital-raising environment for small-cap and private biotech tenants. Management confirmed completion of significant technology infrastructure upgrades designed to enhance operational efficiency and support advanced AI integration across business lines.

[Outlook]
Management reaffirmed operational guidance, noting that the CCRC business is on track to exceed the high end of segment expectations, with year-to-date same-store cash NOI growth of 12%. Outpatient medical segment is trending toward the high end of initial segment guidance for Q2 2025. New outpatient development projects, primarily in Atlanta, are expected to provide attractive risk-adjusted returns and are substantially preleased ahead of construction start.

[Financial Performance]
- FFO as adjusted: 46¢ per share for Q2 2025.
- AFFO: 44¢ per share for Q2 2025.
- Total portfolio same-store growth: 3.5% for Q2 2025.
- CCRC same-store growth: 8.6% for Q2 2025.
- Outpatient medical tenant retention: 85% for Q2 2025.
- Outpatient rent mark to market: 6% positive rent mark to market for Q2 2025.
- Outpatient same-store cash NOI growth: 3.9% for Q2 2025.
- Lab same-store growth: 1.5% for Q2 2025.
- Lab rent mark to market: 6% positive rent mark to market spread for Q2 2025.
- Lab tenant retention: 87% for Q2 2025.

[Q&A Highlights]
Question 1: On the lab segment and the same-store occupancy decline in the quarter, can you break it out more between expirations and tenant default issues?
Answer: Over the quarter, there was about 280-290 basis points of same-store occupancy decline. About a third of the impact was due to tenants with expiring leases, another third was due to tenant migration within the portfolio, and the remaining component was due to tenants unsuccessful in raising capital at the beginning of the year.

Question 2: How are you thinking about using the balance sheet right now, considering new developments in outpatient medical and paused debt investments in lab?
Answer: Maintaining a strong balance sheet is priority number one. We have done $300 million in buybacks over the past fifteen months and will continue to do so opportunistically. The two outpatient developments were extremely attractive, and we try to maintain a strong balance sheet to capitalize on such opportunities. Life science distress at the right time will be an enormous opportunity, and we will be patient and disciplined in terms of when we turn our attention to it.

Question 3: For tenants unsuccessful in capital raising, what is the outlook for the second half of the year regarding occupancy?
Answer: There have been positive events recently, such as strong M&A activity and the secondary market opening back up. However, it has been challenging for tenants to raise capital, and some tenants in our portfolio rely on raising capital at any given time. We will have some headwinds for the balance of the year from an occupancy perspective, but quantifying that at this point is challenging.

Question 4: Can you provide more details on the MOBs and the type of tenants that chose not to renew?
Answer: Our occupancy across the outpatient medical portfolio is very strong at 90-92%. Typically, we have 80% retention. Non-renewal tenants include those we cannot accommodate due to growth, retirements, and other factors. Our hospital retention is fantastic, and we focus on strong leasing results, retention, and lease renewal spreads.

Question 5: How much of the lab segment issues are backward-looking versus potential future challenges?
Answer: The tenants that didn't make it were not new companies; the average age was fifteen years. They had significant backing but couldn't raise money due to the capital raising environment. If the positive sentiment seen in the last thirty days continues, it will be important to reducing bad debt and turning the direction on new leasing.

Question 6: Can you provide more details on the development pipeline and capitalized interest going into next year?
Answer: On the director's place project, the tenant was unsuccessful in raising capital, resulting in preleasing coming down. Capitalized interest will trend down as projects come online, offset by leasing activity. We are entitling Vantage and Cambridge Point in Alewife, which will help reduce capitalized interest.

Question 7: Can you talk about the impact of AI on your business over the years to come?
Answer: We are building our business alongside the evolution of AI, focusing on creating practical efficiencies and empowering the team through enhanced decision-making. We are deploying commercially available AI applications and have a strategic roadmap to utilize structured data and accelerate our platform.

Question 8: Can you provide more details on the regulatory updates and their impact on your business?
Answer: The most favored nations list for prescription drug pricing is complex, but better cost-sharing of revenue and profit generation between the US and overseas could be beneficial. R&D expenses and manufacturing tax incentives are positive for the biopharma business. The inpatient-only rule change is targeted towards higher acuity outpatient centers, which is favorable for our portfolio.

Question 9: How did tenants in the life science space get out of their lease if their technology was bought?
Answer: They either went through the bankruptcy process or the ABC process, allowing them to start over from a liability standpoint.

Question 10: What is the quality of the space being returned from move-outs, and how will it be positioned for release?
Answer: It is a mix of spaces ready to be released and those requiring capital investment. The submarket itself is high-quality, and the portfolio will release with some requiring capital.

Question 11: Are you seeing much AI leasing demand in submarkets?
Answer: AI demand is low as a percentage of total demand in core markets. However, our buildings work well for other R&D uses, including dry lab and robotics.

Question 12: What submarkets would recover first and have the biggest upside?
Answer: Bay Area and South Jersey have stable demand, San Diego has seen an uptick in tour activity, and Boston's top-tier submarkets of Cambridge and Lexington have the greatest demand.

Question 13: Can you provide more details on the 413,000 square feet coming due next year?
Answer: The bulk of it falls in the back half of the year, so it is too early to give great guidance.

Question 14: What percentage of the tenant base needs capital in the very near term?
Answer: The 10% of small cap and private biotech tenants is not the watch list. There are a number of companies within that 10% with a huge amount of cash on their balance sheet.

Question 15: Can you provide more details on rents for new lease signings in the quarter?
Answer: New rents were slightly over the prior quarters, attributed to a larger deal with a 15% increase over the in-place rent of the previous tenant.

Question 16: Can you provide more details on the tenant base having cash flow problems?
Answer: We analyze cash runway based on data from tenants and communicate with them about forward-looking estimates. It is a small subset of tenants we are monitoring closely.

Question 17: Can you provide more details on the slowdown in cash same-store NOI growth for CCRCs?
Answer: The slowdown is due to the burden of how we account for entry fees. On a true cash basis, the growth rate is talking 20-25%.

Question 18: Can you provide more details on post Q2 leasing for life sciences and MOB portfolios?
Answer: For the lab portfolio, 85% of leasing was renewal, with a strong pipeline of new leases. Outpatient medical has a heavier percentage of renewals but also great new leasing activity.

Question 19: Are you closer to hitting the pivot point for acquisitions?
Answer: The opportunity set is there, and we are two months closer to deployment.

[Sentiment Analysis]
Analysts and management maintained a cautiously optimistic tone, acknowledging the challenges in the life science segment while highlighting strong performance and growth potential in outpatient medical and CCRC segments. Management expressed confidence in their strategic initiatives and the resilience of their diversified portfolio.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|---------------------------------|---------|---------|------------|
| FFO as adjusted | 46¢ | 45¢ | +2.2% |
| AFFO | 44¢ | 43¢ | +2.3% |
| Total portfolio same-store growth| 3.5% | 3.2% | +0.3% |
| CCRC same-store growth | 8.6% | 15% | -6.4% |
| Outpatient medical tenant retention| 85% | 84% | +1% |
| Outpatient rent mark to market | 6% | 5.5% | +0.5% |
| Outpatient same-store cash NOI growth| 3.9%| 3.7% | +0.2% |
| Lab same-store growth | 1.5% | 1.2% | +0.3% |
| Lab rent mark to market spread | 6% | 5.8% | +0.2% |
| Lab tenant retention | 87% | 86% | +1% |

[Risks and Concerns]
- Life science occupancy decline due to natural lease expirations and tenant departures after unsuccessful capital raises.
- Future headwinds in life science from an occupancy perspective.
- Concentration of at-risk tenants in small-cap and private biotech with cyclical risk tied to capital market conditions.
- Uncertainty in the regulatory environment impacting the life science sector.

[Final Takeaway]
Healthpeak Properties demonstrated resilience in its outpatient medical and CCRC segments, despite facing occupancy pressure in the life science portfolio due to a challenging capital-raising environment. Management's strategic initiatives, including technology upgrades and AI integration, are expected to enhance operational efficiency and support future growth. The company maintained robust liquidity and moderate leverage, positioning itself well to capitalize on future opportunities. While risks remain in the life science segment, positive developments in the regulatory environment and capital markets provide a cautiously optimistic outlook for the remainder of the year.