News Release: Healthpeak Properties Reports First Quarter 2023 Results and Declares Quarterly Cash Dividend on Common Stock

By eporter on April 27, 2023

DENVER, April 27, 2023 /PRNewswire/ — Healthpeak Properties, Inc. (NYSE: PEAK) today announced results for the first quarter ended March 31, 2023.

FIRST QUARTER 2023 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS

– Net income of $0.22 per share, Nareit FFO of $0.42 per share, FFO as Adjusted of $0.42 per share, AFFO of $0.38 per share, and blended Total Same-Store Portfolio Cash (Adjusted) NOI growth of 5.5%

Life Science and MOB Same-Store Portfolio Cash (Adjusted) NOI growth of 6.3% and 3.7%, respectively

– First quarter life science new and renewal lease executions totaled 311,000 square feet, with +55% cash releasing spreads on renewals

– Placed-in-service the remaining 19,000 square feet at 101 CambridgePark Drive

– Balance Sheet:

In January 2023, issued $400 million of 5.25% fixed rate 10-year senior unsecured notes
Net debt to Adjusted EBITDAre was 5.4x as of March 31, 2023

– On February 10, 2023, Healthpeak implemented a holding company reorganization to an Umbrella Partnership Real Estate Investment Trust (UPREIT)

– Board of Directors:

Kathy Sandstrom appointed Chair of the Board of Directors
Jim Connor appointed as an independent director

– Healthpeak’s Board of Directors declared today a quarterly common stock cash dividend of $0.30 per share to be paid on May 19, 2023, to stockholders of record as of the close of business on May 8, 2023

– Recent ESG accomplishments include:

Earned the 2023 ENERGY STAR® Partner of the Year Award from the U.S. Environmental Protection Agency and the U.S. Department of Energy, marking Healthpeak’s third time receiving the award
Ranked in the top 10% of companies by ISS for each of our environmental, social, and governance quality scores
Named a Women’s Forum of New York Corporate Champion for the fifth time

FIRST QUARTER COMPARISON

	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
(in thousands, except per share amounts)	Amount	Per Share	Amount	Per Share
Net income, diluted	$ 117,698	$ 0.22	$ 69,637	$ 0.13
Nareit FFO, diluted	230,443	0.42	245,783	0.45
FFO as Adjusted, diluted	231,881	0.42	237,186	0.43
AFFO, diluted	209,299	0.38	203,682	0.37

Nareit FFO, FFO as Adjusted, AFFO, Same-Store Cash (Adjusted) NOI, and Net Debt to Adjusted EBITDAre are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance and financial position of real estate investment trusts (see the “Funds From Operations” and “Adjusted Funds From Operations” sections of this release for additional information). See “March 31, 2023 Discussion and Reconciliation of Non-GAAP Financial Measures” for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP in the Investor Relations section of our website at http://ir.healthpeak.com/quarterly-results.

SAME-STORE (“SS”) OPERATING SUMMARY

The table below outlines the year-over-year three-month SS Cash (Adjusted) NOI growth.

Year-Over-Year Total SS Portfolio Cash (Adjusted) NOI Growth
	Three Month
	SS Growth %	% of SS
Life science	6.3 %	47.8 %
Medical office	3.7 %	41.5 %
CCRC	9.5 %	10.7 %
Total Portfolio	5.5 %	100.0 %

101 CAMBRIDGEPARK DRIVE DEVELOPMENT

During the first quarter, Healthpeak placed-in-service the remaining 19,000 square feet, representing $28 million of investment, at 101 CambridgePark Drive in Cambridge, Massachusetts.

101 CambridgePark Drive totals approximately 161,000 square feet, with the purpose-built lab space 100% leased. When combined with the adjacent life science holdings at 35 and 87 CambridgePark Drive, the flagship 450,000 square foot campus along CambridgePark Drive brings Healthpeak’s operating life science ownership in the Boston market to 2.6 million square feet. This portfolio was 99% occupied as of the end of the first quarter.

DISPOSITIONS AND LOAN REPAYMENTS

During the first quarter, Healthpeak received $158 million of seller financing and other loan repayments. Subsequent to the first quarter, Healthpeak received an additional $14 million of seller financing repayments.

As previously announced, in January 2023, Healthpeak closed on the sale of two held-for-sale life science buildings in Durham, North Carolina for $113 million.

In March 2023, Healthpeak and its joint venture partner sold a non-core MOB in the Tampa MSA for $32 million. Healthpeak’s share of the sales price was $16 million.

SORRENTO THERAPEUTICS UPDATE

As previously disclosed, on February 13, 2023, Sorrento Therapeutics, Inc. (“Sorrento”) commenced voluntary reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code (the “Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (the “Court”).

OPERATING LEASES UPDATE

Sorrento has four separate leases in Healthpeak operating assets totaling approximately 211,000 square feet. Sorrento is entitled to certain rights under the Code regarding the assumption or rejection of its lease obligations with Healthpeak but has not yet filed any motion with the Court indicating whether it will assume or reject the leases. As of April 27, 2023, Healthpeak has received all contractually-owed rent from Sorrento. During the first quarter, Healthpeak incurred an $8.7 million non-cash write-off of previously recognized straight-line rent receivable related to Sorrento and began recognizing rents on a cash basis. Healthpeak holds either a security deposit or a letter of credit pursuant to each of the four leases, totaling $2.6 million.

DEVELOPMENT LEASE UPDATE

On April 14, 2023, the Court approved Sorrento’s rejection of the lease on The Gateway at Directors Place, a 163,000 square foot development property located in Sorrento Mesa submarket of San Diego. On April 20, 2023, Healthpeak drew on the $2.3 million letter of credit held pursuant to this lease. Healthpeak is currently marketing the Class A property to new tenants and has revised the initial occupancy date to mid-2024. Healthpeak will continue capitalizing interest on the development for the balance of 2023.

CAPITAL MARKETS ACTIVITY

SENIOR UNSECURED NOTES

As previously announced, in January 2023, Healthpeak completed a public offering of $400 million 5.25% fixed rate senior unsecured notes due 2032. Net proceeds from the offering were used to repay a portion of the Company’s outstanding commercial paper and for general corporate purposes.

UPREIT CONVERSION

During the first quarter, Healthpeak implemented a holding company reorganization to restructure Healthpeak Properties, Inc. as an Umbrella Partnership Real Estate Investment Trust, or UPREIT. The UPREIT conversion aligns Healthpeak’s corporate structure with other publicly traded U.S. real estate investment trusts and supports external growth by offering real estate owners a tax-deferred alternative for disposing of properties.

For additional detail, please see the Current Report on Form 8-K12B that we filed with the SEC on February 10, 2023.

BOARD UPDATES

Healthpeak announced today that Kathy Sandstrom was appointed as independent Chair of the Board of Directors, succeeding Brian Cartwright, who continues to serve as an independent director. For more information, please see the press release dated April 27, 2023, which is available in the Investor Relations section of our website at http://ir.healthpeak.com.

As previously announced, on March 14, 2023, Healthpeak appointed Jim Connor as a new independent director to its Board of Directors. For more information about Mr. Connor, please see the press release dated March 14, 2023, which is available in the Investor Relations section of our website at http://ir.healthpeak.com.

DIVIDEND

Healthpeak’s Board declared today a quarterly common stock cash dividend of $0.30 per share to be paid on May 19, 2023, to stockholders of record as of the close of business on May 8, 2023.

2023 GUIDANCE

We are reaffirming the following guidance ranges for full year 2023:

Diluted earnings per common share of $0.52 – $0.58
Diluted Nareit FFO share of $1.70 – $1.76
Diluted FFO as Adjusted per share of $1.70 – $1.76

We are updating the following guidance range for full year 2023:

Total Portfolio Same-Store Cash (Adjusted) NOI growth from 2.75% – 4.25% to 3.00% – 4.50%

These estimates do not reflect the potential impact from unannounced future transactions. These estimates are based on our view of existing market conditions, transaction timing, and other assumptions for the year ending December 31, 2023. For additional details and assumptions underlying this guidance, please see page 36 in our corresponding Supplemental Report and the Discussion and Reconciliation of Non-GAAP Financial Measures, both of which are available in the Investor Relations section of our website at http://ir.healthpeak.com.

COMPANY INFORMATION

Healthpeak has scheduled a conference call and webcast for Friday, April 28, 2023, at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) to review its financial and operating results for the quarter ended March 31, 2023. The conference call is accessible by dialing (888) 317-6003 (U.S.) or (412) 317-6061 (international). The conference ID number is 8338797. You may also access the conference call via webcast in the Investor Relations section of our website at http://ir.healthpeak.com. An archive of the webcast will be available on Healthpeak’s website through April 28, 2024, and a telephonic replay can be accessed through May 5, 2023, by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (international) and entering conference ID number 6674490. Our Supplemental Report for the current period is also available, with this earnings release, in the Investor Relations section of our website.

ABOUT HEALTHPEAK

Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns, operates and develops high-quality healthcare real estate focused on the aging population and the desire for improved health.

FORWARD-LOOKING STATEMENTS

Statements contained in this release that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof. Examples of forward-looking statements include, among other things: (i) statements regarding timing, outcomes and other details relating to current, pending or contemplated acquisitions, dispositions, transitions, developments, redevelopments, densifications, joint venture transactions, leasing activity and commitments, capital recycling plans, financing activities, or other transactions discussed in this release; (ii) the payment of a quarterly cash dividend; (iii) the information presented under the heading “Sorrento Therapeutics Update” that is not historical information; and (iv) the information presented under the heading “2023 Guidance.” Pending acquisitions, dispositions, joint venture transactions, leasing activity, and financing activity, including those subject to binding agreements, remain subject to closing conditions and may not be completed within the anticipated timeframes or at all. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could significantly affect our future financial condition and results of operations. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this release, and such forward-looking statements are subject to known and unknown risks and uncertainties that are difficult to predict. These risks and uncertainties include, but are not limited to: macroeconomic trends, including inflation, interest rates, labor costs, and unemployment; the ability of our existing and future tenants, operators, and borrowers to conduct their respective businesses in a manner that generates sufficient income to make rent and loan payments to us; the financial condition of our tenants, operators, and borrowers, including potential bankruptcies and downturns in their businesses, and their legal and regulatory proceedings; our concentration of real estate investments in the healthcare property sector, which makes us more vulnerable to a downturn in a specific sector than if we invested across multiple sectors; the illiquidity of real estate investments; our ability to identify and secure new or replacement tenants and operators; our property development, redevelopment, and tenant improvement activity risks, including project abandonments, project delays, and lower profits than expected; changes within the life science industry; significant regulation, funding requirements, and uncertainty faced by our life science tenants; the ability of the hospitals on whose campuses our medical office buildings (MOBs) are located and their affiliated healthcare systems to remain competitive or financially viable; our ability to develop, maintain, or expand hospital and health system client relationships; operational risks associated with third party management contracts, including the additional regulation and liabilities of our properties operated through RIDEA structures; economic conditions, natural disasters, weather, and other conditions that negatively affect geographic areas where we have concentrated investments; uninsured or underinsured losses, which could result in significant losses and/or performance declines by us or our tenants and operators; our investments in joint ventures and unconsolidated entities, including our lack of sole decision making authority and our reliance on our partners’ financial condition and continued cooperation; our use of fixed rent escalators, contingent rent provisions, and/or rent escalators based on the Consumer Price Index; competition for suitable healthcare properties to grow our investment portfolio; our ability to foreclose or exercise rights on collateral securing our real estate-related loans; investment of substantial resources and time in transactions that are not consummated; our ability to successfully integrate or operate acquisitions; the potential impact on us and our tenants, operators, and borrowers from litigation matters, including rising liability and insurance costs; environmental compliance costs and liabilities associated with our real estate investments; epidemics, pandemics, or other infectious diseases, including Covid, and health and safety measures intended to reduce their spread; the loss or limited availability of our key personnel; our reliance on information technology systems and the potential impact of system failures, disruptions, or breaches; increased borrowing costs, including due to rising interest rates; 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, including due to rising interest rates, changes in our credit ratings and the value of our common stock, volatility or uncertainty in the capital markets, and other factors; our ability to manage our indebtedness level and covenants in and changes to the terms of such indebtedness; bank failures or other events affecting financial institutions; 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; laws or regulations prohibiting eviction of our tenants; the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid; legislation to address federal government operations and administrative decisions affecting the Centers for Medicare and Medicaid Services; our participation in the CARES Act Provider Relief Fund and other Covid-related stimulus and relief programs; our ability to maintain our qualification as a REIT; 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; ownership limits in our charter that restrict ownership in our stock; provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders; and other risks and uncertainties described from time to time in our Securities and Exchange Commission filings. Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.

CONTACT
Andrew Johns, CFA
Senior Vice President – Investor Relations
720-428-5400

Healthpeak Properties, Inc.
Consolidated Balance Sheets
In thousands, except share and per share data

	March 31, 2023	December 31, 2022
Assets
Real estate:
Buildings and improvements	$ 12,889,290	$ 12,784,078
Development costs and construction in progress	819,810	760,355
Land	2,674,942	2,667,188
Accumulated depreciation and amortization	(3,296,781)	(3,188,138)
Net real estate	13,087,261	13,023,483
Loans receivable, net of reserves of $6,152 and $8,280	243,149	374,832
Investments in and advances to unconsolidated joint ventures	714,679	706,677
Accounts receivable, net of allowance of $2,413 and $2,399	57,705	53,436
Cash and cash equivalents	59,235	72,032
Restricted cash	57,990	54,802
Intangible assets, net	391,956	418,061
Assets held for sale, net	—	49,866
Right-of-use asset, net	235,591	237,318
Other assets, net	754,723	780,722
Total assets	$ 15,602,289	$ 15,771,229

Liabilities and Equity
Bank line of credit and commercial paper	$ 556,000	$ 995,606
Term loans	496,168	495,957
Senior unsecured notes	5,056,543	4,659,451
Mortgage debt	345,167	346,599
Intangible liabilities, net	149,604	156,193
Liabilities related to assets held for sale, net	—	4,070
Lease liability	207,734	208,515
Accounts payable, accrued liabilities, and other liabilities	688,994	772,485
Deferred revenue	878,444	844,076
Total liabilities	8,378,654	8,482,952

Commitments and contingencies

Redeemable noncontrolling interests	85,902	105,679

Common stock, $1.00 par value: 750,000,000 shares authorized; 546,994,803 and 546,641,973 shares issued and outstanding	546,995	546,642
Additional paid-in capital	10,360,058	10,349,614
Cumulative dividends in excess of earnings	(4,316,038)	(4,269,689)
Accumulated other comprehensive income (loss)	18,721	28,134
Total stockholders’ equity	6,609,736	6,654,701

Joint venture partners	320,363	327,721
Non-managing member unitholders	207,634	200,176
Total noncontrolling interests	527,997	527,897

Total equity	7,137,733	7,182,598

Total liabilities and equity	$ 15,602,289	$ 15,771,229

Healthpeak Properties, Inc.
Consolidated Statements of Operations
In thousands, except per share data

	Three Months Ended March 31,
	2023	2022
Revenues:
Rental and related revenues	$ 392,431	$ 370,150
Resident fees and services	127,084	121,560
Interest income	6,163	5,494
Income from direct financing leases	—	1,168
Total revenues	525,678	498,372

Costs and expenses:
Interest expense	47,963	37,586
Depreciation and amortization	179,225	177,733
Operating	223,088	207,247
General and administrative	24,547	23,831
Transaction costs	2,425	296
Impairments and loan loss reserves (recoveries), net	(2,213)	132
Total costs and expenses	475,035	446,825
Other income (expense):
Gain (loss) on sales of real estate, net	81,578	3,856
Other income (expense), net	772	18,316
Total other income (expense), net	82,350	22,172

Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures	132,993	73,719
Income tax benefit (expense)	(302)	(777)
Equity income (loss) from unconsolidated joint ventures	1,816	2,084
Income (loss) from continuing operations	134,507	75,026

Income (loss) from discontinued operations	—	317

Net income (loss)	134,507	75,343
Noncontrolling interests’ share in continuing operations	(15,555)	(3,730)
Net income (loss) attributable to Healthpeak Properties, Inc.	118,952	71,613
Participating securities’ share in earnings	(1,254)	(1,976)
Net income (loss) applicable to common shares	$ 117,698	$ 69,637

Basic earnings (loss) per common share:
Continuing operations	$ 0.22	$ 0.13
Discontinued operations	—	0.00
Net income (loss) applicable to common shares	$ 0.22	$ 0.13

Diluted earnings (loss) per common share:
Continuing operations	$ 0.22	$ 0.13
Discontinued operations	—	0.00
Net income (loss) applicable to common shares	$ 0.22	$ 0.13

Weighted average shares outstanding:
Basic	546,842	539,352
Diluted	547,110	539,586

Healthpeak Properties, Inc.
Funds From Operations
In thousands, except per share data

	Three Months Ended March 31,
	2023	2022
Net income (loss) applicable to common shares	$ 117,698	$ 69,637
Real estate related depreciation and amortization	179,225	177,733
Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures	5,993	5,135
Noncontrolling interests’ share of real estate related depreciation and amortization	(4,783)	(4,840)
Loss (gain) on sales of depreciable real estate, net	(81,578)	(3,785)
Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures	—	(279)
Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net	11,546	12
Taxes associated with real estate dispositions	—	(182)
Nareit FFO applicable to common shares	228,101	243,431
Distributions on dilutive convertible units and other	2,342	2,352
Diluted Nareit FFO applicable to common shares	$ 230,443	$ 245,783
Diluted Nareit FFO per common share	$ 0.42	$ 0.45
Weighted average shares outstanding – diluted Nareit FFO	554,400	546,903
Impact of adjustments to Nareit FFO:
Transaction-related items	$ 2,364	$ 296
Other impairments (recoveries) and other losses (gains), net⁽¹⁾	(1,272)	(8,909)
Casualty-related charges (recoveries), net⁽²⁾	348	—
Total adjustments	1,440	(8,613)
FFO as Adjusted applicable to common shares	229,541	234,818
Distributions on dilutive convertible units and other	2,340	2,368
Diluted FFO as Adjusted applicable to common shares	$ 231,881	$ 237,186
Diluted FFO as Adjusted per common share	$ 0.42	$ 0.43
Weighted average shares outstanding – diluted FFO as Adjusted	554,400	546,903

___________________________________________
(1)	The three months ended March 31, 2022 includes the following, which are included in other income (expense), net in the Consolidated Statements of Operations: (i) a $23 million gain on sale of a hospital under a direct financing lease and (ii) $14 million of expenses incurred for tenant relocation and other costs associated with the demolition of an MOB. The three months ended March 31, 2023 and 2022 includes reserves for loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.
(2)	Casualty-related charges (recoveries), net are recognized in other income (expense), net and equity income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations.

Healthpeak Properties, Inc.
Adjusted Funds From Operations
In thousands

	Three Months Ended March 31,
	2023	2022
FFO as Adjusted applicable to common shares	$ 229,541	$ 234,818
Stock-based compensation amortization expense	3,287	4,721
Amortization of deferred financing costs	2,821	2,689
Straight-line rents⁽¹⁾	(747)	(11,158)
AFFO capital expenditures	(22,789)	(22,839)
Deferred income taxes	(261)	261
Amortization of above (below) market lease intangibles, net	(5,803)	(5,768)
Other AFFO adjustments	1,610	(691)
AFFO applicable to common shares	207,659	202,033
Distributions on dilutive convertible units and other	1,640	1,649
Diluted AFFO applicable to common shares	$ 209,299	$ 203,682
Diluted AFFO per common share	$ 0.38	$ 0.37
Weighted average shares outstanding – diluted AFFO	552,575	545,078

____________________________________
(1)	The three months ended March 31, 2023 includes an $8.7 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 write-off is reflected as a reduction of rental and related revenues in the Consolidated Statements of Operations.

Posted in Breaking News, Companies & People, REIT Report

News Release: LTC Reports 2023 First Quarter Results and Discusses Recent Activities

By eporter on April 27, 2023

April 27, 2023 04:15 PM Eastern Daylight Time–(BUSINESS WIRE)–LTC Properties, Inc. (NYSE: LTC) (“LTC” or the “Company”), a real estate investment trust that primarily invests in seniors housing and health care properties, today announced operating results for the first quarter ended March 31, 2023.

	Three Months Ended
	March 31,
	2023		2022
	(unaudited)

Net income available to common stockholders	$	32,929	$	14,275
Diluted earnings per common share	$	0.80	$	0.36
NAREIT funds from operations (“FFO”) attributable to common stockholders	$	27,200	$	23,611
NAREIT diluted FFO per common share	$	0.66	$	0.60
FFO attributable to common stockholders, excluding non-recurring items	$	27,462	$	24,034
Funds available for distribution (“FAD”)	$	30,085	$	25,118
FAD, excluding non-recurring items	$	28,515	$	25,118

First quarter 2023 financial results were impacted by:

Higher rental income from transitioned portfolios, the acquisition of four skilled nursing centers during the 2022 second quarter, completed development projects and annual rent escalations. The increase in rental income was partially offset by 2023 first quarter sales, discussed below, and 2022 second quarter sale of three assisted living communities and a skilled nursing center.
Higher interest income from financing receivables due to the acquisition of 11 assisted living and memory care communities during 2023 first quarter, and three skilled nursing centers during the 2022 third quarter. These acquisitions are being accounted for as financing receivables in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
Higher interest income from mortgage loans resulting from mortgage loan originations in the 2023 first quarter and 2022 second quarter.
Higher interest and other income due to the payoff of two mezzanine loans and the related exit IRR and prepayment fee during the 2023 first quarter, and a mezzanine loan origination during the 2022 first quarter.
Higher interest expense due to a higher outstanding balance and higher interest rates on LTC’s revolving line of credit, and the issuance of $75.0 million senior unsecured notes during the 2022 second quarter, partially offset by scheduled principal paydowns on the Company’s senior unsecured notes.
Higher provision for credit losses resulting from more originations in the first quarter of 2023, than in the same quarter in 2022.
Higher general and administrative expenses due to higher non-cash compensation and increases in overall costs due to inflationary pressures and the timing of certain expenditures.
The recording of a $434,000 impairment loss related to a 70-unit assisted living community. See subsequent events below for further discussion.

During the first quarter of 2023, LTC completed the following:

As previously announced, invested $128.3 million in 12 assisted living and memory care communities as follows:
- Entered into a $121.3 million joint venture (“JV”) with an existing LTC operator, and contributed $117.5 million into the JV that purchased 11 assisted living and memory care communities with a total of 523 units. The communities are located in North Carolina and are operated under a 10-year master lease, with two five-year renewal options. The initial annual rent is at a rate of 7.25%, increasing to 7.50% in year three, then escalating thereafter based on CPI, subject to a floor of 2% and ceiling of 4%. The master lease provides the operator with the option to buy up to 50% of the properties at the beginning of the third lease year, and the remaining properties at the beginning of the fourth lease year through the end of the sixth lease year, with an exit IRR of 9.00% on any portion of the properties being purchased. LTC consolidates the joint venture’s acquired properties and the acquisition is accounted for as a financing receivable due to the seller’s purchase option. LTC expects to record consolidated GAAP and cash rent interest income from financing receivable during 2023 of $9.7 million and $8.8 million, respectively, related to the joint venture investment;
- Originated a $10.8 million mortgage loan secured by a 45-unit memory care community located in North Carolina. The loan carries a two-year term with an interest-only rate of 7.25% and an IRR of 9.00%;
As previously announced, invested $51.1 million in a 203-unit independent living, assisted living, and memory care community located in Georgia through participation in an existing senior mortgage loan by refinancing existing banks including LTC’s outstanding $7.5 million mezzanine loan. The rate on the senior mortgage loan, which expires in October 2024, is 7.50%, with an IRR of 7.75%;
As discussed above, a $7.5 million mezzanine loan was prepaid in connection with LTC’s $51.1 million investment in an existing mortgage loan. In connection with the mezzanine loan prepayment, LTC recorded $1.4 million of interest income related to the exit IRR;
As previously announced, received $4.5 million from a mezzanine loan prepayment, which includes a prepayment fee and the exit IRR totaling $190,000. The mezzanine loan was related to a 136-unit independent living community in Oregon;
As previously announced, sold two skilled nursing centers with a total of 235 beds located in New Mexico for $21.3 million, and recorded a gain on sale of $15.3 million;
Sold a 60-unit assisted living community in Kentucky for $11.0 million;
Provided $645,000 of abated rent to the same operator for which LTC has been providing assistance;
Paid $7.0 million in regular scheduled principal payments under the Company’s senior unsecured notes;
Borrowed $140.1 million under the Company’s revolving line of credit primarily for investments in 2023; and
Sold 48,500 shares of LTC’s common stock for $1.8 million in net proceeds under its equity distribution agreements.

Subsequent to March 31, 2023, LTC completed the following:

Sold a 70-unit assisted living community located in Florida for $4.9 million. In connection with the sale, LTC recorded a $434,000 impairment loss during the first quarter of 2023, as discussed above;
Repaid $6.0 million under its unsecured revolving line of credit;
Agreed to defer up to $1.5 million in interest payments due on a mortgage loan secured by 15 skilled nursing centers located in Michigan which are operated by Prestige Healthcare. The deferral will be available from May through September 2023 capped at $300,000 per month;
Agreed to defer each of April and May 2023 rent of $467,000 for an operator for whom LTC previously provided assistance. LTC is in the process of transitioning this portfolio of eight assisted living communities with a total of 500 units to another LTC operator, and expect to complete the transaction during the 2023 second quarter. After the portfolio is transitioned, cash rent will be based on mutually agreed fair market rent; and
Provided $215,000 of abated rent in April 2023 to the same operator for whom abated rent has been previously provided. LTC has agreed to provide rent abatements up to $215,000 for each of May and June 2023.

Conference Call Information

LTC will conduct a conference call on Friday, April 28, 2023, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time), to provide commentary on its performance and operating results for the quarter ended March 31, 2023. The conference call is accessible by telephone and the internet. Interested parties may access the live conference call via the following:

Webcast				www.LTCreit.com
USA Toll-Free Number				1-833-470-1428
Canada Toll-Free Number				1-833-950-0062
Conference Access Code				796837

Additionally, an audio replay of the call will be available one hour after the live call and through May 12, 2023 via the following:

USA Toll-Free Number				1-866-813-9403
Canada Local Number				1-226-828-7578
International Toll-Free Number				+44 204 525 0658
Conference Number				313430

About LTC

LTC is a real estate investment trust (REIT) investing in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending. LTC’s investment portfolio includes 212 properties in 29 states with 31 operating partners. Based on its gross real estate investments, LTC’s investment portfolio is comprised of approximately 50% seniors housing and 50% skilled nursing properties. Learn more at www.LTCreit.com.

Forward-Looking Statements

This press release includes statements that are not purely historical and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the Company’s expectations, beliefs, intentions or strategies regarding the future. All statements other than historical facts contained in this press release are forward-looking statements. These forward-looking statements involve a number of risks and uncertainties. Please see LTC’s most recent Annual Report on Form 10-K, its subsequent Quarterly Reports on Form 10-Q, and its other publicly available filings with the Securities and Exchange Commission for a discussion of these and other risks and uncertainties. All forward-looking statements included in this press release are based on information available to the Company on the date hereof, and LTC assumes no obligation to update such forward-looking statements. Although the Company’s management believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. The actual results achieved by the Company may differ materially from any forward-looking statements due to the risks and uncertainties of such statements.

LTC PROPERTIES, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited, amounts in thousands, except per share amounts)

	Three Months Ended
	March 31,
	2023			2022
Revenues:
Rental income	$	31,735		$	30,324
Interest income from financing receivables⁽¹⁾		3,751			—
Interest income from mortgage loans		11,244			9,636
Interest and other income		2,770			827
Total revenues		49,500			40,787

Expenses:
Interest expense		10,609			7,143
Depreciation and amortization		9,210			9,438
Impairment loss		434			—
Provision for credit losses		1,731			354
Transaction costs		117			32
Property tax expense		3,293			3,982
General and administrative expenses		6,294			5,808
Total expenses		31,688			26,757

Other operating income:
Gain on sale of real estate, net		15,373			102
Operating income		33,185			14,132
Income from unconsolidated joint ventures		376			375
Net income		33,561			14,507
Income allocated to non-controlling interests		(427	)		(95	)
Net income attributable to LTC Properties, Inc.		33,134			14,412
Income allocated to participating securities		(205	)		(137	)
Net income available to common stockholders	$	32,929		$	14,275

Earnings per common share:
Basic	$	0.80		$	0.36
Diluted	$	0.80		$	0.36

Weighted average shares used to calculate earnings per common share:
Basic		41,082			39,199
Diluted		41,189			39,349

Dividends declared and paid per common share	$	0.57		$	0.57

_______________
(1)		Represents rental income from acquisitions through sale-leaseback transactions, subject to leases which contain purchase options. In accordance with GAAP, the properties are required to be presented as financing receivables on our Consolidated Balance Sheets and the rental income to be presented as Interest income from financing receivables on our Consolidated Statements of Income.

Supplemental Reporting Measures

FFO and FAD are supplemental measures of a real estate investment trust’s (“REIT”) financial performance that are not defined by U.S. generally accepted accounting principles (“GAAP”). Investors, analysts and the Company use FFO and FAD as supplemental measures of operating performance. The Company believes FFO and FAD are helpful in evaluating the operating performance of a REIT. Real estate values historically rise and fall with market conditions, but cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. We believe that by excluding the effect of historical cost depreciation, which may be of limited relevance in evaluating current performance, FFO and FAD facilitate like comparisons of operating performance between periods. Occasionally, the Company may exclude non-recurring items from FFO and FAD in order to allow investors, analysts and our management to compare the Company’s operating performance on a consistent basis without having to account for differences caused by unanticipated items.

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), means net income available to common stockholders (computed in accordance with GAAP) excluding gains or losses on the sale of real estate and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company’s computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or have a different interpretation of the current NAREIT definition from that of the Company; therefore, caution should be exercised when comparing our Company’s FFO to that of other REITs.

We define FAD as FFO excluding the effects of straight-line rent, amortization of lease inducement, effective interest income, deferred income from unconsolidated joint ventures, non-cash compensation charges, capitalized interest and non-cash interest charges. GAAP requires rental revenues related to non-contingent leases that contain specified rental increases over the life of the lease to be recognized evenly over the life of the lease. This method results in rental income in the early years of a lease that is higher than actual cash received, creating a straight-line rent receivable asset included in our consolidated balance sheet. At some point during the lease, depending on its terms, cash rent payments exceed the straight-line rent which results in the straight-line rent receivable asset decreasing to zero over the remainder of the lease term. Effective interest method, as required by GAAP, is a technique for calculating the actual interest rate for the term of a mortgage loan based on the initial origination value. Similar to the accounting methodology of straight-line rent, the actual interest rate is higher than the stated interest rate in the early years of the mortgage loan thus creating an effective interest receivable asset included in the interest receivable line item in our consolidated balance sheet and reduces down to zero when, at some point during the mortgage loan, the stated interest rate is higher than the actual interest rate. FAD is useful in analyzing the portion of cash flow that is available for distribution to stockholders. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential. The FAD payout ratio, which represents annual distributions to common shareholders expressed as a percentage of FAD, facilitates the comparison of dividend coverage between REITs.

While the Company uses FFO and FAD as supplemental performance measures of our cash flow generated by operations and cash available for distribution to stockholders, such measures are not representative of cash generated from operating activities in accordance with GAAP, and are not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income available to common stockholders.

Reconciliation of FFO and FAD

The following table reconciles GAAP net income available to common stockholders to each of NAREIT FFO attributable to common stockholders and FAD (unaudited, amounts in thousands, except per share amounts):

		Three Months Ended
		March 31,
		2023				2022

GAAP net income available to common stockholders		$	32,929			$	14,275
Add: Impairment loss			434				—
Add: Depreciation and amortization			9,210				9,438
Less: Gain on sale of real estate, net			(15,373	)			(102	)
NAREIT FFO attributable to common stockholders			27,200				23,611

Add: Non-recurring items			262		⁽¹⁾		423		⁽⁴⁾
FFO attributable to common stockholders, excluding non-recurring items		$	27,462			$	24,034


NAREIT FFO attributable to common stockholders		$	27,200			$	23,611
Non-cash income:
Add: straight-line rental adjustment			465				234
Add: amortization of lease incentives			209				396		⁽⁵⁾
Less: Effective interest income			(1,608	)			(1,402	)
Net non-cash income			(934	)			(772	)

Non-cash expense:
Add: Non-cash compensation charges			2,088				1,925
Add: Provision for credit losses			1,731		⁽²⁾		354		⁽⁶⁾
Net non-cash expense			3,819				2,279

Funds available for distribution (FAD)		$	30,085			$	25,118

Less: Non-recurring income			(1,570	)	⁽³⁾		—
Funds available for distribution (FAD), excluding non-recurring items		$	28,515			$	25,118


⁽¹⁾	Represents the net of (2) and (3) below.
⁽²⁾	Includes $1,832 of provision for credit losses related to the $121,321 acquisition accounted for as a financing receivable and $61,900 of mortgage loan originations.
⁽³⁾	Represents the prepayment fee and exit IRR related to the payoff of two mezzanine loans.
⁽⁴⁾	Represents the sum of (5) and (6) below.
⁽⁵⁾	Includes a lease incentive balance write-off of $173 related to a closed property and subsequent lease termination.
⁽⁶⁾	Includes $250 of provision for credit losses related to the origination of a $25,000 mezzanine loan during 2022 first quarter.

Reconciliation of FFO and FAD (continued)

The following table continues the reconciliation between GAAP net income available to common stockholders and each of NAREIT FFO attributable to common stockholders and FAD (unaudited, amounts in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2023		2022

NAREIT Basic FFO attributable to common stockholders per share	$	0.66	$	0.60
NAREIT Diluted FFO attributable to common stockholders per share	$	0.66	$	0.60

NAREIT Diluted FFO attributable to common stockholders	$	27,200	$	23,611

Weighted average shares used to calculate NAREIT diluted FFO per share attributable to common stockholders		41,189		39,349


Diluted FFO attributable to common stockholders, excluding non-recurring items	$	27,462	$	24,171

Weighted average shares used to calculate diluted FFO, excluding non-recurring items, per share attributable to common stockholders		41,189		39,575


Diluted FAD	$	30,085	$	25,255

Weighted average shares used to calculate diluted FAD per share		41,189		39,575


Diluted FAD, excluding non-recurring items	$	28,515	$	25,255

Weighted average shares used to calculate diluted FAD, excluding non-recurring items, per share		41,189		39,575

LTC PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (amounts in thousands, except per share)

	March 31, 2023			December 31, 2022
ASSETS	(unaudited)			(audited)
Investments:
Land	$	123,338		$	124,665
Buildings and improvements		1,258,721			1,273,025
Accumulated depreciation and amortization		(390,013	)		(389,182	)
Operating real estate property, net		992,046			1,008,508
Properties held-for-sale, net of accumulated depreciation: 2023—$3,088; 2022—$2,305		4,075			10,710
Real property investments, net		996,121			1,019,218
Financing receivables,⁽¹⁾ net of credit loss reserve: 2023—$1,981; 2022—$768		196,096			75,999
Mortgage loans receivable, net of credit loss reserve: 2023—$4,569; 2022—$3,930		452,955			389,728
Real estate investments, net		1,645,172			1,484,945
Notes receivable, net of credit loss reserve: 2023—$469; 2022—$589		46,467			58,383
Investments in unconsolidated joint ventures		19,340			19,340
Investments, net		1,710,979			1,562,668

Other assets:
Cash and cash equivalents		5,538			10,379
Debt issue costs related to revolving line of credit		2,132			2,321
Interest receivable		48,079			46,000
Straight-line rent receivable		21,238			21,847
Lease incentives		1,571			1,789
Prepaid expenses and other assets		9,319			11,099
Total assets	$	1,798,856		$	1,656,103

LIABILITIES
Revolving line of credit	$	270,100		$	130,000
Term loans, net of debt issue costs: 2023—$455; 2022—$489		99,545			99,511
Senior unsecured notes, net of debt issue costs: 2023—$1,420; 2022—$1,477		531,400			538,343
Accrued interest		4,122			5,234
Accrued expenses and other liabilities		29,074			32,708
Total liabilities		934,241			805,796

EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2023—41,396; 2022—41,262		413			412
Capital in excess of par value		933,370			931,124
Cumulative net income		1,577,794			1,544,660
Accumulated other comprehensive income		7,357			8,719
Cumulative distributions		(1,680,111	)		(1,656,548	)
Total LTC Properties, Inc. stockholders’ equity		838,823			828,367
Non-controlling interests		25,792			21,940
Total equity		864,615			850,307
Total liabilities and equity	$	1,798,856		$	1,656,103

_______________
(1)		Represents acquisitions through sale-leaseback transactions, subject to leases which contain purchase options. In accordance with GAAP, the properties are required to be presented as financing receivables on our Consolidated Balance Sheets.

Posted in Breaking News, Companies & People, REIT Report

News Release: Healthpeak Properties Board Appoints Kathy Sandstrom as Chair

By admin on April 27, 2023

NEWS PROVIDED BY Healthpeak Properties, Inc.

Apr 27, 2023, 16:15 ET

DENVER, April 27, 2023 /PRNewswire/ — Healthpeak Properties, Inc. (NYSE: PEAK) announced today that Kathy Sandstrom was appointed as independent Chair of the Board of Directors. Ms. Sandstrom succeeds Brian Cartwright, who will continue to serve on the Board as an independent director.

“Regular rotation of board leadership promotes effective corporate governance and introduces fresh perspectives and energy to board processes,” said Mr. Cartwright. “After five years as Chair, the time is right for that rotation. Kathy’s experience and Board tenure make her ideally suited to take on the added responsibilities of Board Chair. I take great pride in the proactive positioning of the Company that occurred during my time as Chair, as well as our establishment of leading corporate governance practices. I look forward to continuing to contribute as a member of the Board.”

Scott Brinker, President and Chief Executive Officer, said, “On behalf of the executive management team, I would like to thank Brian for his steady and wise leadership. We will continue to benefit from his insight and experience as a Board member. At the same time, I am excited to partner with Kathy in her new role as we advance the Company’s strategic initiatives.”

Ms. Sandstrom added, “I am fortunate to follow in the footsteps of a gifted Board Chair who has fostered a collegial and disciplined Board culture. I look forward to leading the Board as it provides guidance and oversight to the experienced and highly energized team led by Scott Brinker.”

The Board of Directors is comprised of eight members, with an average tenure of approximately seven years.

ABOUT KATHY SANDSTROM

Ms. Sandstrom has over 20 years of real estate finance and investment experience. She served as Senior Managing Director and global head of Heitman LLC’s Public Real Estate Securities business from 2013 to 2018, and was a member of the firm’s Global Management Committee, the Board of Managers and the Allocation Committee. Since joining Heitman in 1996, Ms. Sandstrom held several senior leadership positions in multiple roles in the institutional real estate investment industry. She has served on Healthpeak’s Board since 2018 and as Vice Chair since 2022 and is a member of the boards of directors of EastGroup Properties, Inc. and Urban Edge Properties, both NYSE-listed REITs. Ms. Sandstrom is also a certified public accountant.

ABOUT HEALTHPEAK PROPERTIES

CONTACT

Andrew Johns, CFA
Senior Vice President – Investor Relations
720-428-5400

SOURCE Healthpeak Properties, Inc.

Posted in Breaking News, Companies & People, REIT Report

News Release: Healthpeak Properties Board Appoints Kathy Sandstrom as Chair

By eporter on April 27, 2023

DENVER, April 27, 2023 /PRNewswire/ — Healthpeak Properties, Inc. (NYSE: PEAK) announced today that Kathy Sandstrom was appointed as independent Chair of the Board of Directors. Ms. Sandstrom succeeds Brian Cartwright, who will continue to serve on the Board as an independent director.

The Board of Directors is comprised of eight members, with an average tenure of approximately seven years.

ABOUT KATHY SANDSTROM

ABOUT HEALTHPEAK PROPERTIES

Posted in Breaking News, Companies & People

News Release: Medical Properties Trust, Inc. Reports First Quarter Results

By eporter on April 27, 2023

Per Share Net Income of $0.05 and Normalized FFO of $0.37 in First Quarter

Recent Transactions Validate Underwritten Values;
Provides Additional Capital Flexibility

Declared Second Quarter Regular Dividend of $0.29 Per Share

BIRMINGHAM, Ala., Apr. 27, 2023–(BUSINESS WIRE)–Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW) today announced financial and operating results for the first quarter ended March 31, 2023, as well as certain events occurring subsequent to quarter end.

Net income of $0.05 and Normalized Funds from Operations (“NFFO”) of $0.37 for the 2023 first quarter on a per diluted share basis;
As previously announced, agreed in March to sell the Healthscope portfolio in Australia for AUD$1.2 billion with proceeds targeted for repayment of the Company’s Australian term loan;
Received notice in March that Prime Healthcare (“Prime”) will exercise its right to repurchase three hospitals in Kansas and Texas in the third quarter for roughly $100 million;
In April selectively added to existing portfolios five behavioral health facilities operated by Priory Group (“Priory”) in the U.K. for approximately £44 million and invested in three MEDIAN post-acute facilities in Germany for a total of roughly €70 million; and
Declared a regular quarterly dividend of $0.29 per share of common stock to be paid on July 13, 2023 to stockholders of record on June 15, 2023.

Edward K. Aldag, Jr., Chairman, President, and Chief Executive Officer, said, “We are pleased to report a first quarter that saw our core portfolio, as it has for nearly two decades, realize attractive and predictable growth driven by strong original underwriting and inflation-based cash rent escalators. This performance establishes a baseline level of profitability that supports our dividend payments and sets the table for continued growth.”

Aldag continued, “The terms of recently announced transactions including Springstone, the acquisition by CommonSpirit of Steward’s Utah operations, Healthscope and Prime, have valued our hospital investments near and in excess of our original purchase prices. This confirmation of our underwritten asset values by sophisticated market participants, as well as our existing liquidity and prudently planned debt structure, position us to have no debt maturities until 2025.”

Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, net income, and reconciliations of net income to NFFO and AFFO, including per share amounts, all on a basis comparable to 2022 results.

PORTFOLIO UPDATE

The Company did not acquire any new hospital real estate during the first quarter and expects aggregate acquisitions during the entire first half of 2023 of approximately $150 million. These are expected to be comprised of five behavioral hospitals acquired from and leased to Priory in England for approximately £44 million and three post-acute facilities in Germany acquired from and leased to MEDIAN for roughly €70 million.

As part of an expected series of Prospect Medical Holdings’ (“Prospect”) future strategic transactions, during the first quarter MPT provided $50 million in a loan instrument that is convertible into equity of Prospect’s managed care entity in anticipation of a larger Prospect financing transaction. Subsequent to quarter-end, Prospect received a binding commitment from a third-party lender that will provide significant liquidity for Prospect’s hospital and managed care businesses and will facilitate MPT’s conversion of certain existing and future real estate obligations of Prospect into additional managed care equity.

The Company has total assets of approximately $19.7 billion, including $13.7 billion of general acute care hospitals, $2.5 billion of behavioral health facilities and $1.7 billion of post-acute facilities. MPT’s portfolio includes 444 properties and approximately 45,000 licensed beds across the United States as well as in the United Kingdom, Switzerland, Germany, Australia, Spain, Finland, Colombia, Italy and Portugal. The properties are leased to or mortgaged by 54 hospital operating companies.

OPERATING RESULTS AND OUTLOOK

Net income for the first quarter ended March 31, 2023 was $33 million ($0.05 per diluted share) compared to $632 million ($1.05 per diluted share) in the year earlier period. Included in 2023 first quarter net income is approximately $90 million of impairment and other non-cash charges related to the expected sale of hospitals and no rent or interest revenue recognized from Prospect leases or loan investments, as compared to 2022 first quarter net income which included an approximate $452 million gain on sale, inclusive of a write-off of roughly $125 million of straight-line rent, related to the partnership transaction with Macquarie Asset Management.

NFFO for the first quarter ended March 31, 2023 was $222 million ($0.37 per diluted share) compared to $282 million ($0.47 per diluted share) in the year earlier period.

The Company is adjusting its 2023 calendar estimate of per share net income to $0.06 to $0.17 to account for first quarter results and announced transaction activity and is adjusting its estimate of per share NFFO to $1.50 to $1.61 to account for the impact of announced deleveraging asset sales (and expected $1.4 billion debt reduction). At their high-end, the ranges reflect management’s expectation that certain amounts related to Prospect are recognized as revenue during 2023, while their low-end accounts for the possibility that the entirety of this revenue is recognized subsequent to 2023. The estimates are based on an existing portfolio which includes the impact of binding disposition and leasing transactions and changes to lease terms but excludes expected future contributions from development and other capital projects.

These estimates do not include the effects, among others, of unexpected real estate operating costs, changes in accounting pronouncements, litigation costs, debt refinancing costs, acquisition costs, currency exchange rate movements, changes in income tax rates, interest rate hedging activities, write-offs of straight-line rent and in place lease intangibles, other impairments or other non-recurring/unplanned transactions. Moreover, these estimates do not provide for the impact on MPT or its tenants and borrowers from the global COVID-19 pandemic. These estimates may change if the Company acquires or sells assets in amounts that are different from estimates, market interest rates change, debt is refinanced or repurchased, new shares are issued or repurchased, additional debt is incurred, other operating expenses vary, income from equity investments vary from expectations, or existing leases or loans do not perform in accordance with their terms.

LITIGATION UPDATE

On March 30, MPT sued short seller Viceroy Research LLC and its principals, including Fraser Perring, in federal court for defamation and related wrongs arising from their campaign of malicious falsehoods calculated to reap profits for themselves at the expense of MPT and its shareholders. The lawsuit is available here.

Although Perring has publicly acknowledged the lawsuit, he has not appeared in the case. And rather than answer MPT’s allegations, Viceroy has filed motions to dismiss the claims before they reach a jury, arguing that they cannot be sustained because Viceroy’s assaults on the Company, though contained in “reports,” were not “fact” but mere “opinion” and “commentary . . . dominated by colorful, hyperbolic language,” and also claiming that the Court lacks jurisdiction. But as MPT’s complaint makes clear, the false, misleading, and defamatory statements repeatedly published by Viceroy, Perring and others are not “opinions” or “beliefs” but rather statements of purported fact, whose fundamental character cannot be altered by disclaimers. MPT looks forward to proving its claims and to obtaining from the defendants and others the documents, communications, and other discovery to which the law entitles it.

CONFERENCE CALL AND WEBCAST

The Company has scheduled a conference call and webcast for Thursday, April 27, 2023 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter ended March 31, 2023. The dial-in numbers for the conference call are 833-630-1956 (U.S.) and 412-317-1837 (International); there is no passcode requirement. Call participants are to ask the operator to be joined to the Medical Properties Trust, Inc. conference call upon dialing in. The conference call will also be available via webcast in the Investor Relations section of the Company’s website, www.medicalpropertiestrust.com.

A telephone and webcast replay of the call will be available beginning shortly after the call’s completion. The telephone replay will be available through May 11, 2023 using dial-in numbers 877-344-7529 (U.S.), 855-669-9658 (Canada) and 412-317-0088 (International) along with passcode 5178516. The webcast replay will be available for one year following the call’s completion on the Investor Relations section of the Company’s website.

The Company’s supplemental information package for the current period will also be available on the Company’s website in the Investor Relations section.

The Company uses, and intends to continue to use, the Investor Relations page of its website, which can be found atwww.medicalpropertiestrust.com, as a means of disclosing material nonpublic information and of complying with its disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the Investor Relations page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospital real estate with 444 facilities and approximately 45,000 licensed beds in ten countries and across four continents. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “estimate”, “target”, “anticipate”, “believe”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our strategies, objectives, future expansion and development activities, and expected financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the economic, political and social impact of, and uncertainty relating to, potential impact from health crises (like COVID-19); (ii) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us, especially as a result of the adverse economic impact of the COVID-19 pandemic, and government regulation of hospitals and healthcare providers in connection with same (as further detailed in our Current Report on Form 8-K filed with the SEC on April 8, 2020); (iii) our expectations regarding annual guidance for net income and NFFO per share; (iv) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions and investments; (v) the nature and extent of our current and future competition; (vi) macroeconomic conditions, such as a disruption of or lack of access to the capital markets or movements in currency exchange rates; (vii) our ability to obtain debt financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and pay down, refinance, restructure or extend our indebtedness as it becomes due; (viii) increases in our borrowing costs as a result of changes in interest rates and other factors; (ix) international, national and local economic, real estate and other market conditions, which may negatively impact, among other things, the financial condition of our tenants, lenders and institutions that hold our cash balances, and may expose us to increased risks of default by these parties; (x) factors affecting the real estate industry generally or the healthcare real estate industry in particular; (xi) our ability to maintain our status as a REIT for federal and state income tax purposes; (xii) federal and state healthcare and other regulatory requirements, as well as those in the foreign jurisdictions where we own properties; (xiii) the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis; (xiv) the ability of our tenants and operators to operate profitably and generate positive cash flow, comply with applicable laws, rules and regulations in the operation of the our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract patients; (xv) potential environmental contingencies and other liabilities; (xvi) the risk that the expected sale of three Connecticut hospitals currently leased to Prospect does not occur; (xvii) the risk that Steward’s anticipated sale of its Utah operations and MPT’s expected lease with CommonSpirit Health are not executed as announced; (xviii) the risk that MPT’s expected sale of its Australian portfolio does not occur; (xix) the risk that other property sales, loan repayments, and other capital recycling transactions do not occur; and (xx) the risks and uncertainties of litigation, including our lawsuit against Viceroy Research LLC and its principals.

The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and as updated in our quarterly reports on Form 10-Q. Forward-looking statements are inherently uncertain and actual performance or outcomes may vary materially from any forward-looking statements and the assumptions on which those statements are based. Readers are cautioned to not place undue reliance on forward-looking statements as predictions of future events. We disclaim any responsibility to update such forward-looking statements, which speak only as of the date on which they were made.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

*(Amounts in thousands, except for per share data)*
				March 31, 2023		December 31, 2022
Assets				(Unaudited)		(A)
	Real estate assets
		Land, buildings and improvements, intangible lease assets, and other		$ 13,092,510		$ 13,862,415
		Investment in financing leases		1,582,416		1,691,323
		Real estate held for sale		881,587		–
		Mortgage loans		346,446		364,101
			Gross investment in real estate assets	15,902,959		15,917,839
			Accumulated depreciation and amortization	(1,207,699	)	(1,193,312	)
			Net investment in real estate assets	14,695,260		14,724,527

	Cash and cash equivalents			302,321		235,668
	Interest and rent receivables, net			169,511		167,035
	Straight-line rent receivables			810,911		787,166
	Investments in unconsolidated real estate joint ventures			1,506,474		1,497,903
	Investments in unconsolidated operating entities			1,310,460		1,444,872
	Other loans			276,367		227,839
	Other assets			578,853		572,990
Total Assets				$ 19,650,157		$ 19,658,000

Liabilities and Equity
	Liabilities
		Debt, net		$ 10,438,151		$ 10,268,412
		Accounts payable and accrued expenses		595,269		621,324
		Deferred revenue		29,391		27,727
		Obligations to tenants and other lease liabilities		144,092		146,130
			Total Liabilities	11,206,903		11,063,593

	Equity
		Preferred stock, $0.001 par value. Authorized 10,000 shares; no shares
			outstanding	–		–
		Common stock, $0.001 par value. Authorized 750,000 shares; issued and
			outstanding – 598,302 shares at March 31, 2023 and 597,476	598		597
			shares at December 31, 2022
		Additional paid-in capital		8,541,414		8,535,140
		Retained (deficit) earnings		(25,413	)	116,285
		Accumulated other comprehensive loss		(74,919	)	(59,184	)
			Total Medical Properties Trust, Inc. Stockholders’ Equity	8,441,680		8,592,838

		Non-controlling interests		1,574		1,569
			Total Equity	8,443,254		8,594,407
Total Liabilities and Equity				$ 19,650,157		$ 19,658,000

	(A) Financials have been derived from the prior year audited financial statements.

	MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

	Consolidated Statements of Income
	(Unaudited)

*(Amounts in thousands, except for per share data)*			For the Three Months Ended
			March 31, 2023			March 31, 2022

Revenues
	Rent billed		$	248,157		$	263,402
	Straight-line rent			56,693			61,044
	Income from financing leases			13,195			51,776
	Interest and other income			32,166			33,578
		Total revenues		350,211			409,800

Expenses
	Interest			97,654			91,183
	Real estate depreciation and amortization			83,860			85,316
	Property-related (A)			7,110			8,598
	General and administrative			41,724			41,424
		Total expenses		230,348			226,521

Other (expense) income
	Gain on sale of real estate			62			451,638
	Real estate and other impairment charges			(89,538	)		(4,875	)
	Earnings from equity interests			11,352			7,338
	Debt refinancing and unutilized financing costs			–			(8,816	)
	Other (including fair value adjustments on securities)			(5,166	)		14,762
		Total other (expense) income		(83,290	)		460,047

	Income before income tax			36,573			643,326

		Income tax expense		(3,543	)		(11,379	)

	Net income			33,030			631,947
	Net income attributable to non-controlling interests			(236	)		(266	)
	Net income attributable to MPT common stockholders		$	32,794		$	631,681

	Earnings per common share – basic and diluted:
		Net income attributable to MPT common stockholders	$	0.05		$	1.05

		Weighted average shares outstanding – basic		598,302			598,676
		Weighted average shares outstanding – diluted		598,310			598,932

	Dividends declared per common share		$	0.29		$	0.29

(A) Includes $4.2 million and $6.3 million of ground lease and other expenses (such as property taxes and insurance) paid directly by us and reimbursed by our tenants for the three months ended March 31, 2023 and 2022, respectively.

	MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

	Reconciliation of Net Income to Funds From Operations
	(Unaudited)

*(Amounts in thousands, except for per share data)*			For the Three Months Ended
			March 31, 2023	March 31, 2022

FFO information:
	Net income attributable to MPT common stockholders		$ 32,794	$ 631,681
	Participating securities’ share in earnings		(515)	(402)
		Net income, less participating securities’ share in earnings	$ 32,279	$ 631,279

	Depreciation and amortization		101,960	99,459
	Gain on sale of real estate		(62)	(451,638)
	Real estate impairment charges		52,104	–
		Funds from operations	$ 186,281	$ 279,100

	Write-off (recovery) of unbilled rent and other		39,626	(2,271)
	Other impairment charges		–	4,875
	Litigation and other		7,726	–
	Non-cash fair value adjustments		(4,121)	(8,023)
	Tax rate changes and other		(7,305)	–
	Debt refinancing and unutilized financing costs		–	8,816
		Normalized funds from operations	$ 222,207	$ 282,497

	Share-based compensation		11,829	11,804
	Debt costs amortization		5,121	5,613
	Rent deferral, net		2,413	(3,716)
	Straight-line rent revenue and other		(62,589)	(77,333)
		Adjusted funds from operations	$ 178,981	$ 218,865


Per diluted share data:
	Net income, less participating securities’ share in earnings		$ 0.05	$ 1.05
	Depreciation and amortization		0.17	0.17
	Gain on sale of real estate		–	(0.75)
	Real estate impairment charges		0.09	–
		Funds from operations	$ 0.31	$ 0.47

	Write-off (recovery) of unbilled rent and other		0.07	–
	Other impairment charges		–	–
	Litigation and other		0.01	–
	Non-cash fair value adjustments		(0.01)	(0.01)
	Tax rate changes and other		(0.01)	–
	Debt refinancing and unutilized financing costs		–	0.01
		Normalized funds from operations	$ 0.37	$ 0.47

	Share-based compensation		0.02	0.02
	Debt costs amortization		0.01	0.01
	Rent deferral, net		–	(0.01)
	Straight-line rent revenue and other		(0.10)	(0.12)
		Adjusted funds from operations	$ 0.30	$ 0.37

Notes: (A) Certain line items above (such as depreciation and amortization) include our share of such income/expense from unconsolidated joint ventures. These amounts are included with all activity of our equity interests in the “Earnings from equity interests” line on the consolidated statements of income. (B) Investors and analysts following the real estate industry utilize funds from operations (“FFO”) as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the National Association of Real Estate Investment Trusts, or Nareit, which represents net income (loss) (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairment charges on real estate assets, plus real estate depreciation and amortization, including amortization related to in-place lease intangibles, and after adjustments for unconsolidated partnerships and joint ventures. In addition to presenting FFO in accordance with the Nareit definition, we disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs (if any not paid by our tenants) to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our results of operations or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity. We calculate adjusted funds from operations, or AFFO, by subtracting from or adding to normalized FFO (i) straight-line rent, (ii) non-cash share-based compensation expense, and (iii) amortization of deferred financing costs. AFFO is an operating measurement that we use to analyze our results of operations based more on the receipt, rather than the accrual, of our rental revenue and on certain other adjustments. We believe that this is an important measurement because our infrastructure-type assets generally require longer term leases with annual contractual escalations of base rents, resulting in the recognition of a significant amount of rental income that is not billable/collected until future periods. Our calculation of AFFO may not be comparable to AFFO or similarly titled measures reported by other REITs. AFFO should not be considered as an alternative to net income (calculated pursuant to GAAP) as an indicator of our results of operations or to cash flow from operating activities (calculated pursuant to GAAP) as an indicator of our liquidity.

MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES

2023 Guidance Reconciliation
(Unaudited)

		2023 Guidance – Per Share⁽¹⁾
		Low	High

Net income attributable to MPT common stockholders		$ 0.06	$ 0.17
Participating securities’ share in earnings		–	–
	Net income, less participating securities’ share in earnings	$ 0.06	$ 0.17

Depreciation and amortization		1.14	1.14
Gain on sale of real estate		–	–
Real estate impairment charges		0.09	0.09
Funds from operations		$ 1.29	$ 1.40

Other adjustments		0.21	0.21
Normalized funds from operations		$ 1.50	$ 1.61

(1) The guidance is based on current expectations and actual results or future events may differ materially from those expressed in this table, which is a forward-looking statement within the meaning of the federal securities laws. Please refer to the forward-looking statement included in this press release and our filings with the Securities and Exchange Commission for a discussion of risk factors that affect our performance.

Posted in Breaking News, Companies & People, REIT Report

News Release: CBRE Group, Inc. Reports Financial Results for First-Quarter 2023

By eporter on April 27, 2023

GAAP EPS Declined 68% to $0.37
Core EPS Declined 34% to $0.92

DALLAS, Apr. 27, 2023–(BUSINESS WIRE)–CBRE Group, Inc. (NYSE:CBRE) today reported financial results for the first quarter ended March 31, 2023.

Consolidated Financial Results Overview

The following table presents highlights of CBRE performance (dollars in millions, except per share data; totals may not add due to rounding):

							% Change
	Q1 2023			Q1 2022			USD		LC⁽¹⁾
Operating Results
Revenue	$	7,411		$	7,333		1.1	%	4.4	%
Net revenue ⁽²⁾		4,181			4,376		(4.5	) %	(1.2	) %
GAAP net income		117			392		(70.2	) %	(68.6	) %
GAAP EPS		0.37			1.16		(68.1	) %	(66.4	) %
Core adjusted net income ⁽³⁾		290			469		(38.3	) %	(35.9	) %
Core EBITDA ⁽⁴⁾		533			732		(27.2	) %	(25.1	) %
Core EPS ⁽³⁾		0.92			1.39		(34.0	) %	(31.2	) %

Cash Flow Results
Cash flow used in operations	$	(745	)	$	(394	)	89.3	%
Less: Capital expenditures		60			42		43.3	%
Free cash flow ⁽⁵⁾	$	(805	)	$	(436	)	84.8	%

“Our first quarter results were slightly better than we expected going into the year, but still down significantly from last year’s strong first quarter. Our performance relative to our expectations was led by the cyclically resilient elements of our business and our cost management efforts, which more than offset a greater-than-expected decline in property sales,” said Bob Sulentic, CBRE’s president and chief executive officer.

“Although we anticipate pressure on our transactional businesses to intensify further this year, we are maintaining our earnings outlook for full-year 2023, with core earnings per share expected to decline by low-to-mid double digits this year, but then exceed the prior peak in 2024. Our full-year outlook is supported by the same dynamics we saw in the first quarter – benefits from the diversification of our business and our intense focus on cost. There is more uncertainty in our outlook than there was 60 days ago, with our expectations underpinned by our view that a recession this year will be moderate and that an eventual easing of the Fed’s monetary policy will spur a rebound in economic activity in 2024.”

The cyclically resilient elements of CBRE’s business include its entire Global Workplace Solutions business, loan servicing, property management, valuations and the asset management component of its investment management business. Revenue from these businesses, collectively, rose nearly 10% in the first quarter and they are expected to generate more than 50% of the company’s business segment operating profit this year, a record high.

Advisory Services Segment

The following table presents highlights of the Advisory Services segment performance (dollars in millions; totals may not add due to rounding):

							% Change
	Q1 2023			Q1 2022			USD		LC
Revenue	$	1,854		$	2,248		(17.5	) %	(15.1	) %
Net revenue		1,831			2,231		(17.9	) %	(15.5	) %
Segment operating profit ⁽⁶⁾		270			466		(42.1	) %	(40.1	) %
Segment operating profit on revenue margin ⁽⁷⁾		14.5	%		20.7	%	(6.2 pts	)	(6.1 pts	)
Segment operating profit on net revenue margin ⁽⁷⁾		14.7	%		20.9	%	(6.1 pts	)	(6.1 pts	)

Note: all percent changes cited are vs. first-quarter 2022, except where noted.

Property Leasing

Global leasing revenue declined 8% (6% local currency). The current-quarter decline was against a particularly strong first quarter of 2022, when leasing revenue was up 49% versus first-quarter 2021.
The decline was largely driven by the Americas, where revenue fell 10% (same in local currency).
Foreign currency headwinds masked growth in overseas markets. Combined EMEA/APAC leasing revenue was up 6% in local currency, but down 2% in U.S. dollars.
Global leasing revenue declined across all major property types, except retail, which was driven by strength in EMEA.

Capital Markets

Sales revenue fell 41% (38% local currency) due to severely constrained capital availability and especially difficult comparisons with first-quarter 2022. In first-quarter 2022, sales revenue was up 58% from first-quarter 2021.
In the Americas, sales revenue fell 43% (same local currency) from last year’s robust level, when year-over-year first-quarter sales revenue rose 59%. EMEA sales revenue declined 43% (39% local currency) while APAC sales fell 30% (22% local currency).
Most debt capital sources sharply curtailed their lending activity. As a result, global mortgage origination revenue declined 51% (same local currency). Loan origination volume was down markedly with nearly all private and public sector capital sources.

Other Advisory Business Lines

Loan servicing revenue rose 5% (same local currency). Excluding prepayment fees, loan servicing revenue increased 11% compared with first-quarter 2022. The servicing portfolio ended the quarter at approximately $386 billion, up 1% from year-end 2022 and 14% since first-quarter 2022.
Property management net revenue edged up 1% (4% local currency), driven by the Americas and Pacific.
Valuations revenue declined 9% (5% local currency).

Global Workplace Solutions (GWS) Segment

The following table presents highlights of the GWS segment performance (dollars in millions; totals may not add due to rounding):

							% Change
	Q1 2023			Q1 2022			USD		LC
Revenue	$	5,338		$	4,806		11.1	%	14.8	%
Net revenue		2,130			1,866		14.1	%	18.3	%
Segment operating profit		230			203		13.3	%	18.4	%
Segment operating profit on revenue margin		4.3	%		4.2	%	0.1 pts		0.1 pts
Segment operating profit on net revenue margin		10.8	%		10.9	%	(0.1 pts	)	— pts

Note: all percent changes cited are vs. first-quarter 2022, except where noted.

Facilities management net revenue rose 12% (16% local currency), supported by significant growth with technology and healthcare clients.
Project management net revenue rose 18% (23% local currency), driven by large project mandates.
GWS had its strongest first quarter for new business since 2019. The pipeline also rose to a record level with growth across nearly all key client sectors.
GWS segment operating profit improved 13% (18% local currency) aided by project management’s outstanding performance and continued strong growth in Local and Enterprise accounts.

Real Estate Investments (REI) Segment

The following table presents highlights of the REI segment performance (dollars in millions):

					% Change
	Q1 2023		Q1 2022		USD		LC
Revenue	$	224	$	284	(21.1	) %	(17.0	) %
Segment operating profit		131		167	(21.3	) %	(21.4	) %

Note: all percent changes cited are vs. first-quarter 2022, except where noted.

Real Estate Development

Development operating profit⁽⁸⁾ totaled $90 million, driven by large industrial asset sales in January. The $17 million decline in operating profit primarily reflected a difficult comparison against particularly robust asset sale activity in first-quarter 2022.
The in-process portfolio ended first-quarter 2023 at $17.3 billion, up $0.4 billion from year-end 2022, as certain projects, primarily industrial and residential, moved from the pipeline. The pipeline increased $0.2 billion during the quarter to $13.1 billion.

Investment Management

Revenue edged up 3% in local currency but fell 2% in U.S. dollars to $147 million.
Asset management fees were up 5% in local currency but were unchanged in U.S. dollars.
Operating profit decreased 31% (29% local currency) to $43 million, due to modest co-investment losses versus significant gains in first-quarter 2022. Excluding co-investments, operating profit was roughly flat with first-quarter 2022.
Assets Under Management (AUM) totaled $148.9 billion, a decrease of $0.4 billion from year-end 2022. The decrease was largely attributable to lower asset values, which offset net capital inflows and positive currency movement.

Corporate and Other Segment

Non-core operating loss totaled $26 million, primarily due to the lower fair-value of the company’s investment in Altus Power, Inc. (NYSE:AMPS), reflecting a decline in the share price during the quarter.
Net corporate overhead expenses decreased by 5%, or roughly $5 million, driven by lower stock compensation expense, partially offset by higher salary and benefits expenses.

Capital Allocation Overview

Free Cash Flow – During the first quarter of 2023, free cash outflow was $805 million. This reflected cash used in operating activities of $745 million, less total capital expenditures of $60 million⁽⁹⁾.
Stock Repurchase Program – The company repurchased approximately 1.4 million shares for $114 million ($83.48 average price per share) during the first quarter of 2023. There was approximately $2.0 billion of capacity remaining under the company’s authorized stock repurchase program as of March 31, 2023.
Acquisitions and Investments – CBRE completed five in-fill acquisitions during the first quarter, including four in the GWS business, totaling $65 million in cash and deferred consideration.

Leverage and Financing Overview

Leverage – CBRE’s net leverage ratio (net debt ⁽¹⁰⁾to trailing twelve-month core EBITDA) was 0.56x as of March 31, 2023, which is substantially below the company’s primary debt covenant of 4.25x. The net leverage ratio is computed as follows (dollars in millions):

	As of
	March 31, 2023
Total debt	$	2,746
Less: Cash ⁽¹¹⁾		1,231
Net debt ⁽¹⁰⁾	$	1,515

Divided by: Trailing twelve-month Core EBITDA	$	2,725

Net leverage ratio	0.56x

Liquidity – As of March 31, 2023, the company had approximately $3.7 billion of total liquidity, consisting of approximately $1.2 billion in cash, plus the ability to borrow an aggregate of approximately $2.5 billion under its revolving credit facilities, net of any outstanding letters of credit.

Conference Call Details

The company’s first quarter earnings webcast and conference call will be held today, Thursday, April 27, 2023 at 8:30 a.m. Eastern Time. Investors are encouraged to access the webcast via this link or they can click this link beginning at 8:15 a.m. Eastern Time for automated access to the conference call.

Alternatively, investors may dial into the conference call using these operator-assisted phone numbers: 877.407.8037 (U.S.) or 201.689.8037 (International). A replay of the call will be available starting at 1:00 p.m. Eastern Time on April 27, 2023. The replay is accessible by dialing 877.660.6853 (U.S.) or 201.612.7415 (International) and using the access code: 13737347#. A transcript of the call will be available on the company’s Investor Relations website at https://ir.cbre.com.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2022 revenue). The company has more than 115,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

Safe Harbor and Footnotes

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company’s future growth momentum, operations and business outlook. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this press release. Any forward-looking statements speak only as of the date of this press release and, except to the extent required by applicable securities laws, the company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: disruptions in general economic, political and regulatory conditions and significant public health events, particularly in geographies or industry sectors where our business may be concentrated; volatility or adverse developments in the securities, capital or credit markets, interest rate increases and conditions affecting the value of real estate assets, inside and outside the United States; poor performance of real estate investments or other conditions that negatively impact clients’ willingness to make real estate or long-term contractual commitments and the cost and availability of capital for investment in real estate; foreign currency fluctuations and changes in currency restrictions, trade sanctions and import/export and transfer pricing rules; our ability to compete globally, or in specific geographic markets or business segments that are material to us; our ability to identify, acquire and integrate accretive businesses; costs and potential future capital requirements relating to businesses we may acquire; integration challenges arising out of companies we may acquire; increases in unemployment and general slowdowns in commercial activity; trends in pricing and risk assumption for commercial real estate services; the effect of significant changes in capitalization rates across different property types; a reduction by companies in their reliance on outsourcing for their commercial real estate needs, which would affect our revenues and operating performance; client actions to restrain project spending and reduce outsourced staffing levels; our ability to further diversify our revenue model to offset cyclical economic trends in the commercial real estate industry; our ability to attract new user and investor clients; our ability to retain major clients and renew related contracts; our ability to leverage our global services platform to maximize and sustain long-term cash flow; our ability to continue investing in our platform and client service offerings; our ability to maintain expense discipline; the emergence of disruptive business models and technologies; negative publicity or harm to our brand and reputation; the failure by third parties to comply with service level agreements or regulatory or legal requirements; the ability of our investment management business to maintain and grow assets under management and achieve desired investment returns for our investors, and any potential related litigation, liabilities or reputational harm possible if we fail to do so; our ability to manage fluctuations in net earnings and cash flow, which could result from poor performance in our investment programs, including our participation as a principal in real estate investments; the ability of our indirect subsidiary, CBRE Capital Markets, Inc., to periodically amend, or replace, on satisfactory terms, the agreements for its warehouse lines of credit; declines in lending activity of U.S. GSEs, regulatory oversight of such activity and our mortgage servicing revenue from the commercial real estate mortgage market; changes in U.S. and international law and regulatory environments (including relating to anti-corruption, anti-money laundering, trade sanctions, tariffs, currency controls and other trade control laws), particularly in Asia, Africa, Russia, Eastern Europe and the Middle East, due to the level of political instability in those regions; litigation and its financial and reputational risks to us; our exposure to liabilities in connection with real estate advisory and property management activities and our ability to procure sufficient insurance coverage on acceptable terms; our ability to retain, attract and incentivize key personnel; our ability to manage organizational challenges associated with our size; liabilities under guarantees, or for construction defects, that we incur in our development services business; variations in historically customary seasonal patterns that cause our business not to perform as expected; our leverage under our debt instruments as well as the limited restrictions therein on our ability to incur additional debt, and the potential increased borrowing costs to us from a credit-ratings downgrade; our and our employees’ ability to execute on, and adapt to, information technology strategies and trends; cybersecurity threats or other threats to our information technology networks, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; our ability to comply with laws and regulations related to our global operations, including real estate licensure, tax, labor and employment laws and regulations, fire and safety building requirements and regulations, as well as data privacy and protection regulations and ESG matters, and the anti-corruption laws and trade sanctions of the U.S. and other countries; changes in applicable tax or accounting requirements; any inability for us to implement and maintain effective internal controls over financial reporting; the effect of implementation of new accounting rules and standards or the impairment of our goodwill and intangible assets; and the performance of our equity investments in companies that we do not control.

Additional information concerning factors that may influence the company’s financial information is discussed under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Cautionary Note on Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2022, our latest quarterly report on Form 10-Q, as well as in the company’s press releases and other periodic filings with the Securities and Exchange Commission (SEC). Such filings are available publicly and may be obtained on the company’s website at www.cbre.com or upon written request from CBRE’s Investor Relations Department at investorrelations@cbre.com.

The terms “net revenue,” “core adjusted net income,” “core EPS,” “business line operating profit,” “segment operating profit on revenue margin,” “segment operating profit on net revenue margin,” “core EBITDA,” “net debt” and “free cash flow,” all of which CBRE uses in this press release, are non-GAAP financial measures under SEC guidelines, and you should refer to the footnotes below as well as the “Non-GAAP Financial Measures” section in this press release for a further explanation of these measures. We have also included in that section reconciliations of these measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods.

Totals may not sum in tables in millions included in this release due to rounding.

Note: We have not reconciled the (non-GAAP) core earnings per share forward-looking guidance included in this release to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, carried interest incentive compensation and financing costs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results

(1)		Local currency percentage change is calculated by comparing current-period results at prior-period exchange rates versus prior-period results.
(2)		Net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients. These costs are reimbursable by clients and generally have no margin.
(3)		Core adjusted net income and core earnings per diluted share (or core EPS) exclude the effect of select items from GAAP net income and GAAP earnings per diluted share as well as adjust the provision for income taxes and impact on non-controlling interest for such charges. Adjustments during the periods presented included non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities, certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue, the impact of fair value adjustments to real estate assets acquired in the acquisition of Telford Homes plc in 2019 (the Telford acquisition) (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, write-off of financing costs on extinguished debt, integration and other costs related to acquisitions, asset impairments, provision associated with Telford’s fire safety remediation efforts, and costs associated with efficiency and cost-reduction initiatives. It also removes the fair value changes and related tax impact of certain strategic non-core non-controlling equity investments that are not directly related to our business segments (including venture capital “VC” related investments). Note: Core adjusted EPS has been renamed core EPS for simplicity.
(4)		Core EBITDA represents earnings, inclusive of non-controlling interest, before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization, asset impairments, adjustments related to certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, integration and other costs related to acquisitions, provision associated with Telford’s fire safety remediation efforts, and costs associated with efficiency and cost-reduction initiatives. It also removes the fair value changes, on a pre-tax basis, of certain strategic non-core non-controlling equity investments that are not directly related to our business segments (including venture capital “VC” related investments).
(5)		Free cash flow is calculated as cash flow provided by operations, less capital expenditures (reflected in the investing section of the consolidated statement of cash flows).
(6)		Segment operating profit is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources to each segment and assessing performance of each segment. Segment operating profit represents earnings, inclusive of non-controlling interest, before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization and asset impairments, as well as adjustments related to the following: certain carried interest incentive compensation expense (reversal) to align with the timing of associated revenue, fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in the period, costs incurred related to legal entity restructuring, costs associated with workforce optimization, transformation initiatives and integration and other costs related to acquisitions, provision associated with Telford’s fire safety remediation efforts, and costs associated with efficiency and cost-reduction initiatives.
(7)		Segment operating profit on revenue and net revenue margins represent segment operating profit divided by revenue and net revenue, respectively.
(8)		Represents line of business profitability/losses, as adjusted.
(9)		For the three months ended March 31, 2023, the company incurred capital expenditures of $60.3 million (reflected in the investing section of the condensed consolidated statement of cash flows) and received tenant concessions from landlords of $0.5 million (reflected in the operating section of the condensed consolidated statement of cash flows).
(10)		Net debt is calculated as cash and cash equivalents less total debt (excluding non-recourse debt).
(11)		Cash represents cash and cash equivalents (excluding restricted cash).

CBRE GROUP, INC. OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (in thousands, except share and per share data) (Unaudited)

	Three Months Ended March 31,
	2023		2022
Revenue:
Net revenue	$	4,180,790	$	4,376,029
Pass through costs also recognized as revenue		3,230,324		2,956,904
Total revenue		7,411,114		7,332,933

Costs and expenses:
Cost of revenue		6,006,413		5,752,194
Operating, administrative and other		1,208,904		1,065,996
Depreciation and amortization		161,491		149,032
Asset impairments		—		10,351
Total costs and expenses		7,376,808		6,977,573

Gain on disposition of real estate		3,059		21,592

Operating income		37,365		376,952

Equity income from unconsolidated subsidiaries		141,682		42,871
Other income (loss)		2,475		(14,464	)
Interest expense, net of interest income		28,414		12,826
Income before provision for income taxes		153,108		392,533
Provision for (benefit from) income taxes		28,036		(3,738	)
Net income		125,072		396,271
Less: Net income attributable to non-controlling interests		8,180		3,974
Net income attributable to CBRE Group, Inc.	$	116,892	$	392,297

Basic income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.38	$	1.18
Weighted average shares outstanding for basic income per share		310,464,609		331,925,104

Diluted income per share:
Net income per share attributable to CBRE Group, Inc.	$	0.37	$	1.16
Weighted average shares outstanding for diluted income per share		315,358,147		337,140,325

Core EBITDA	$	532,589	$	732,063

CBRE GROUP, INC. SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 (in thousands, totals may not add due to rounding) (Unaudited)

	Three Months Ended March 31, 2023

	Advisory Services		Global Workplace Solutions		Real Estate Investments			Corporate ⁽¹⁾			Total Core		Other			Total Consolidated
Revenue:
Net revenue	$	1,831,289	$	2,129,977	$	223,846		$	(4,322	)	$	4,180,790	$	—		$	4,180,790
Pass through costs also recognized as revenue		22,579		3,207,745		—			—			3,230,324		—			3,230,324
Total revenue		1,853,868		5,337,722		223,846			(4,322	)		7,411,114		—			7,411,114

Costs and expenses:
Cost of revenue		1,126,761		4,842,639		38,538			(1,525	)		6,006,413		—			6,006,413
Operating, administrative and other		522,866		323,060		252,095			111,014			1,209,035		(131	)		1,208,904
Depreciation and amortization		78,443		63,556		6,460			13,032			161,491		—			161,491
Total costs and expenses		1,728,070		5,229,255		297,093			122,521			7,376,939		(131	)		7,376,808

Gain on disposition of real estate		—		—		3,059			—			3,059		—			3,059

Operating income (loss)		125,798		108,467		(70,188	)		(126,843	)		37,234		131			37,365

Equity income (loss) from unconsolidated subsidiaries		1,002		341		166,674			—			168,017		(26,335	)		141,682
Other income (loss)		1,938		490		115			(55	)		2,488		(13	)		2,475
Add-back: Depreciation and amortization		78,443		63,556		6,460			13,032			161,491		—			161,491
Adjustments:
Integration and other costs related to acquisitions		—		7,424		—			10,710			18,134		—			18,134
Carried interest incentive compensation reversal to align with the timing of associated revenue		—		—		6,978			—			6,978		—			6,978
Costs associated with efficiency and cost-reduction initiatives		62,541		49,388		21,459			4,859			138,247		—			138,247
Total segment operating profit (loss)	$	269,722	$	229,666	$	131,498		$	(98,297	)			$	(26,217	)	$	506,372

Core EBITDA											$	532,589

_______________

⁽¹⁾

Includes elimination of inter-segment revenue.

CBRE GROUP, INC. SEGMENT RESULTS—(CONTINUED) FOR THE THREE MONTHS ENDED MARCH 31, 2022 (in thousands, totals may not add due to rounding) (Unaudited)

	Three Months Ended March 31, 2022

	Advisory Services			Global Workplace Solutions		Real Estate Investments			Corporate ⁽¹⁾			Total Core			Other			Total Consolidated
Revenue:
Net revenue	$	2,230,670		$	1,866,490	$	283,757		$	(4,888	)	$	4,376,029		$	—		$	4,376,029
Pass through costs also recognized as revenue		17,778			2,939,126		—			—			2,956,904			—			2,956,904
Total revenue		2,248,448			4,805,616		283,757			(4,888	)		7,332,933			—			7,332,933

Costs and expenses:
Cost of revenue		1,312,291			4,373,967		70,053			(4,114	)		5,752,197			(3	)		5,752,194
Operating, administrative and other		480,255			239,386		246,752			97,363			1,063,756			2,240			1,065,996
Depreciation and amortization		74,887			61,969		3,856			8,320			149,032			—			149,032
Asset impairments		10,351			—		—			—			10,351			—			10,351
Total costs and expenses		1,877,784			4,675,322		320,661			101,569			6,975,336			2,237			6,977,573

Gain on disposition of real estate		—			—		21,592			—			21,592			—			21,592

Operating income (loss)		370,664			130,294		(15,312	)		(106,457	)		379,189			(2,237	)		376,952

Equity income (loss) from unconsolidated subsidiaries		9,756			863		157,440			—			168,059			(125,188	)		42,871
Other (loss) income		(4	)		1,489		(92	)		(6,918	)		(5,525	)		(8,939	)		(14,464	)
Add-back: Depreciation and amortization		74,887			61,969		3,856			8,320			149,032			—			149,032
Add-back: Asset impairments		10,351			—		—			—			10,351			—			10,351
Adjustments:
Integration and other costs related to acquisitions		—			8,121		—			—			8,121			—			8,121
Carried interest incentive compensation expense to align with the timing of associated revenue		—			—		22,856			—			22,856			—			22,856
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period		—			—		(1,696	)		—			(1,696	)		—			(1,696	)
Costs incurred related to legal entity restructuring		—			—		—			1,676			1,676			—			1,676
Total segment operating profit (loss)	$	465,654		$	202,736	$	167,052		$	(103,379	)				$	(136,364	)	$	595,699

Core EBITDA												$	732,063

_______________

⁽¹⁾

Includes elimination of inter-segment revenue.

CBRE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited)

	March 31, 2023		December 31, 2022
Assets:
Cash and cash equivalents	$	1,231,325	$	1,318,290
Restricted cash		88,464		86,559
Receivables, net		5,468,926		5,326,807
Warehouse receivables ⁽¹⁾		792,294		455,354
Contract assets		522,700		529,106
Income taxes receivable		200,393		133,438
Property and equipment, net		833,269		836,041
Operating lease assets		980,741		1,033,011
Goodwill and other intangibles, net		7,086,757		7,061,088
Investments in unconsolidated subsidiaries		1,295,088		1,317,705
Other assets, net		2,530,140		2,415,990

Total assets	$	21,030,097	$	20,513,389

Liabilities:
Current liabilities, excluding debt and operating lease liabilities	$	6,042,870	$	6,915,857
Warehouse lines of credit (which fund loans that U.S. Government Sponsored Enterprises have committed to purchase)⁽¹⁾		782,637		447,840
Revolving credit facility		1,209,000		178,000
4.875% senior notes, net		596,704		596,450
2.500% senior notes, net		489,564		489,262
Current maturities of long term debt		433,433		427,792
Other debt		17,153		42,914
Operating lease liabilities		1,285,192		1,309,976
Other long-term liabilities		1,531,134		1,499,566

Total liabilities		12,387,687		11,907,657

Equity:
CBRE Group, Inc. stockholders’ equity		7,859,834		7,853,273
Non-controlling interests		782,576		752,459

Total equity		8,642,410		8,605,732

Total liabilities and equity	$	21,030,097	$	20,513,389

_______________

⁽¹⁾

Represents loan receivables, the majority of which are offset by borrowings under related warehouse line of credit facilities.

CBRE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	125,072		$	396,271
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		161,491			149,032
Amortization of financing costs		1,161			1,663
Gains related to mortgage servicing rights, premiums on loan sales and sales of other assets		(23,481	)		(28,422	)
Asset impairments		—			10,351
Net realized and unrealized losses, primarily from investments		319			16,690
Provision for doubtful accounts		3,969			3,303
Net compensation expense for equity awards		18,113			36,863
Equity income from unconsolidated subsidiaries		(141,682	)		(42,871	)
Distribution of earnings from unconsolidated subsidiaries		177,710			146,743
Proceeds from sale of mortgage loans		2,166,609			3,336,084
Origination of mortgage loans		(2,494,589	)		(3,221,312	)
Increase (decrease) in warehouse lines of credit		334,797			(105,326	)
Tenant concessions received		528			2,114
Purchase of equity securities		(2,137	)		(8,902	)
Proceeds from sale of equity securities		2,120			20,750
Increase in real estate under development		(5,943	)		(41,358	)
Increase in receivables, prepaid expenses and other assets (including contract and lease assets) ⁽¹⁾		(73,437	)		(156,061	)
Decrease in accounts payable and accrued expenses and other liabilities (including contract and lease liabilities)		(73,960	)		(108,355	)
Decrease in compensation and employee benefits payable and accrued bonus and profit sharing		(843,509	)		(725,216	)
(Increase) decrease in net income taxes receivable/payable		(56,713	)		17,722
Other operating activities, net		(21,195	)		(93,270	)
Net cash used in operating activities		(744,757	)		(393,507	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(60,284	)		(42,056	)
Acquisition of businesses, including net assets acquired and goodwill, net of cash acquired		(44,653	)		(16,792	)
Contributions to unconsolidated subsidiaries		(28,998	)		(44,387	)
Distributions from unconsolidated subsidiaries		14,794			12,101
Other investing activities, net		4,074			(4,487	)
Net cash used in investing activities		(115,067	)		(95,621	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility		1,660,000			210,000
Repayment of revolving credit facility		(629,000	)		—
Proceeds from notes payable on real estate		48			19,368
Repayment of notes payable on real estate		—			(13,954	)
Repurchase of common stock		(129,808	)		(367,863	)
Acquisition of businesses (cash paid for acquisitions more than three months after purchase date)		(60,034	)		(13,556	)
Units repurchased for payment of taxes on equity awards		(46,161	)		(31,395	)
Non-controlling interest contributions		567			210
Non-controlling interest distributions		(101	)		(213	)
Other financing activities, net		(34,474	)		(11,606	)
Net cash provided by (used in) financing activities		761,037			(209,009	)
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash		13,727			(49,015	)

NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(85,060	)		(747,152	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT BEGINNING OF PERIOD		1,404,849			2,539,781
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, AT END OF PERIOD	$	1,319,789		$	1,792,629

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	39,379		$	12,826
Income tax payments, net	$	82,059		$	88,649

_______________

⁽¹⁾

First-quarter 2022 operating cash flows include the negative impact of approximately $133 million associated with the timing of certain cash tax payments and refunds.

Non-GAAP Financial Measures

The following measures are considered “non-GAAP financial measures” under SEC guidelines:

(i)		Net revenue
(ii)		Core EBITDA
(iii)		Business line operating profit/loss
(iv)		Segment operating profit on revenue and net revenue margins
(v)		Free cash flow
(vi)		Net debt
(vii)		Core net income attributable to CBRE Group, Inc. stockholders, as adjusted (which we also refer to as “core adjusted net income”)
(viii)		Core EPS

These measures are not recognized measurements under United States generally accepted accounting principles (GAAP). When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with GAAP. Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.

Our management generally uses these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. The company believes these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. The company further uses certain of these measures, and believes that they are useful to investors, for purposes described below.

With respect to net revenue, net revenue is gross revenue less costs largely associated with subcontracted vendor work performed for clients. We believe that investors may find this measure useful to analyze the company’s overall financial performance because it excludes costs reimbursable by clients that generally have no margin, and as such provides greater visibility into the underlying performance of our business.

With respect to Core EBITDA, business line operating profit/loss, and segment operating profit on revenue and net revenue margins, the company believes that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the accounting effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income tax and the accounting effects of capital spending. All of these measures may vary for different companies for reasons unrelated to overall operating performance. In the case of Core EBITDA, this measure is not intended to be a measure of free cash flow for our management’s discretionary use because it does not consider cash requirements such as tax and debt service payments. The Core EBITDA measure calculated herein may also differ from the amounts calculated under similarly titled definitions in our credit facilities and debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt. The company also uses segment operating profit and core EPS as significant components when measuring our operating performance under our employee incentive compensation programs.

With respect to free cash flow, the company believes that investors may find this measure useful to analyze the cash flow generated from operations after accounting for cash outflows to support operations and capital expenditures. With respect to net debt, the company believes that investors use this measure when calculating the company’s net leverage ratio.

With respect to core EBITDA, core EPS and core adjusted net income, the company believes that investors may find these measures useful to analyze the underlying performance of operations without the impact of strategic non-core equity investments (Altus Power, Inc. and certain other investments) that are not directly related to our business segments. These can be volatile and are often non-cash in nature.

Core net income attributable to CBRE Group, Inc. stockholders, as adjusted (or core adjusted net income), and core EPS, are calculated as follows (in thousands, except share and per share data):

	Three Months Ended March 31,
	2023			2022

Net income attributable to CBRE Group, Inc.	$	116,892		$	392,297

Plus / minus:
Non-cash depreciation and amortization expense related to certain assets attributable to acquisitions and restructuring activities		49,168			41,048
Integration and other costs related to acquisitions		18,134			8,121
Carried interest incentive compensation expense to align with the timing of associated revenue		6,978			22,856
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period		—			(1,696	)
Costs incurred related to legal entity restructuring		—			1,676
Asset impairments		—			10,351
Net fair value adjustments on strategic non-core investments		26,217			136,364
Impact of adjustments on non-controlling interest		(10,170	)		(9,063	)
Costs associated with efficiency and cost-reduction initiatives		138,247			—
Tax impact of adjusted items, tax benefit attributable to legal entity restructuring, and strategic non-core investments		(55,773	)		(132,718	)

Core net income attributable to CBRE Group, Inc., as adjusted	$	289,693		$	469,236

Core diluted income per share attributable to CBRE Group, Inc., as adjusted	$	0.92		$	1.39

Weighted average shares outstanding for diluted income per share		315,358,147			337,140,325

Core EBITDA is calculated as follows (in thousands, totals may not add due to rounding):

	Three Months Ended March 31,
	2023		2022

Net income attributable to CBRE Group, Inc.	$	116,892	$	392,297
Net income attributable to non-controlling interests		8,180		3,974
Net income		125,072		396,271

Adjustments:
Depreciation and amortization		161,491		149,032
Asset impairments		—		10,351
Interest expense, net of interest income		28,414		12,826
Provision for (benefit from) income taxes		28,036		(3,738	)
Integration and other costs related to acquisitions		18,134		8,121
Carried interest incentive compensation expense to align with the timing of associated revenue		6,978		22,856
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period		—		(1,696	)
Costs incurred related to legal entity restructuring		—		1,676
Costs associated with efficiency and cost-reduction initiatives		138,247		—
Net fair value adjustments on strategic non-core investments		26,217		136,364
Core EBITDA	$	532,589	$	732,063

Core EBITDA for the trailing twelve months ended March 31, 2023 is calculated as follows (in thousands):

	Trailing Twelve Months Ended March 31, 2023

Net income attributable to CBRE Group, Inc.	$	1,131,965
Net income attributable to non-controlling interests		20,796
Net income		1,152,761

Adjustments:
Depreciation and amortization		625,547
Asset impairments		48,362
Interest expense, net of interest income		84,587
Write-off of financing costs on extinguished debt		1,862
Provision for income taxes		266,004
Impact of fair value adjustments to real estate assets acquired in the Telford acquisition (purchase accounting) that were sold in period		(3,419	)
Costs incurred related to legal entity restructuring		11,771
Integration and other costs related to acquisitions		50,715
Carried interest incentive compensation expense to align with the timing of associated revenue		(20,106	)
Costs associated with efficiency and cost-reduction initiatives		255,783
Provision associated with Telford’s fire safety remediation efforts		185,921
Net fair value adjustments on strategic non-core investments		65,005

Core EBITDA	$	2,724,793

Revenue includes client reimbursed pass-through costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients. Reimbursement related to subcontracted vendor work generally has no margin and has been excluded from net revenue. Reconciliations are shown below (dollars in thousands):

	Three Months Ended March 31,
	2023		2022
Consolidated
Revenue	$	7,411,114	$	7,332,933
Less: Pass through costs also recognized as revenue		3,230,323		2,956,904
Net revenue	$	4,180,791	$	4,376,029

	Three Months Ended March 31,
	2023		2022
Property Management Revenue
Revenue	$	463,774	$	455,872
Less: Pass through costs also recognized as revenue		22,579		17,778
Net revenue	$	441,195	$	438,094

	Three Months Ended March 31,
	2023		2022
GWS Revenue
Revenue	$	5,337,722	$	4,805,616
Less: Pass through costs also recognized as revenue		3,207,745		2,939,126
Net revenue	$	2,129,977	$	1,866,490

	Three Months Ended March 31,
	2023		2022
Facilities Management Revenue
Revenue	$	3,680,162	$	3,800,688
Less: Pass through costs also recognized as revenue		2,284,959		2,558,159
Net revenue	$	1,395,203	$	1,242,529

	Three Months Ended March 31,
	2023		2022
Project Management Revenue
Revenue	$	1,657,560	$	1,004,929
Less: Pass through costs also recognized as revenue		922,786		380,968
Net revenue	$	734,774	$	623,961

Below represents a reconciliation of REI business line operating profitability/loss to REI segment operating profit (in thousands):

	Three Months Ended March 31,
Real Estate Investments	2023			2022
Investment management operating profit	$	42,522		$	61,293
Global real estate development operating profit		89,672			106,705
Segment overhead		(696	)		(946	)
Real estate investments segment operating profit	$	131,498		$	167,052

Posted in Breaking News, Companies & People, REIT Report

News Release: Montecito Medical Acquires Another Medical Office Property in Virginia

By eporter on April 27, 2023

ROANOKE, Va., Apr. 27, 2023 — Montecito Medical, a leading acquirer of medical office properties nationwide, has acquired a 209,000-square-foot medical office property in Roanoke, Virginia.The two-story building is tenanted by Carilion Children’s Clinic. “This is a remarkable medical real estate asset located in an attractive market area,” said Rus Gudnyy, Senior Vice President of Investments at Montecito Medical. “We are thrilled to have the opportunity to establish a long-lasting relationship with Carilion Clinic.”The Carilion Clinic is in the heart of the Tanglewood Center, an 800,000-square-foot mixed-use center that includes retail, dining and entertainment venues for the Roanoke community. The mall property was not part of Montecito’s acquisition.Based in Roanoke, Carilion Clinic is a non-profit, integrated healthcare organization that provides care for nearly one million Virginians and West Virginians. Carilion is a dominant health system in Southwest Virginia, owning and operating seven hospitals as well as Radford University Carilion and a joint venture medical school and research institute with Virginia Tech. The transaction expands Montecito’s extensive Virginia footprint that includes four other properties acquired in the past year. “We have deep roots in Virginia and are excited by the opportunities here to invest in medical real estate while helping providers build wealth and serve their patients more effectively,” said Chip Conk, CEO of Montecito Medical.

Posted in Breaking News, Companies & People, Outpatient Projects

News Release: $78 million financing secured for 19-property healthcare portfolio

By admin on April 26, 2023

JLL Capital Markets arranged the financing for healthcare portfolio spanning nine states

DALLAS, April 26, 2023 – JLL Capital Markets announces today that it has arranged $78 million through multiple financings for a 19-property healthcare portfolio totaling 319,424 square feet in nine states.

JLL worked on behalf of the borrower, Montecito Medical Real Estate to secure loans from multiple lenders across various geographic regions including the Southeast, Mid-Atlantic, Midwest, and North Texas.

The JLL Capital Markets Debt Advisory team was led by Managing Director John Chun, Director Anthony Sardo, Managing Director Tim Joyce, Managing Director Chris Hew and Senior Director Bobby Norwood.

The properties average an occupancy level of 95% with double-digit weighted average remaining lease term and are located in Texas, Kansas, Missouri, Alabama, Indiana, Maryland, Ohio, Pennsylvania and Virginia.

“Despite well documented headwinds in the capital market space, we were able to secure accretive financing terms from a variety of lending sources thanks to JLL’s direct presence in each of these markets. The high-quality portfolio of medical office buildings assembled by Montecito allowed for a competitive environment that helped to drive optimal loan terms,” said Chun.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales and advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.

For more news, videos and research resources, please visit JLL’s newsroom.

– ends –

About Montecito Medical Real Estate

Montecito Medical is one of the nation’s largest privately held companies specializing in medical real estate acquisitions and partnering with providers and developers to fund development of new properties. The company also supports providers with a suite of AI-powered technology solutions that increase revenues, reduce costs and build physician wealth. Since 2006, Montecito has completed more than $5 billion in medical and veterinary real estate transactions. Headquartered in Nashville, TN, the company has been named for five consecutive years as a “key influencer in healthcare real estate” by GlobeSt.com and the editors of Real Estate Forum. For more information, please visit montecitomac.com.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $20.9 billion, operations in over 80 countries and a global workforce of more than 103,000 as of December 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.

Contact: Alli Semans, Public Relations, Associate
Phone: +1 330 329 6750
Email: Alli.Semans@jll.com

Posted in Breaking News, Companies & People, Transactions

News Release: Office Properties Income Trust Announces First Quarter 2023 Results

By admin on April 26, 2023

April 26, 2023 04:15 PM Eastern Daylight Time

NEWTON, Mass.–(BUSINESS WIRE)–Office Properties Income Trust (Nasdaq: OPI) today announced its financial results for the quarter ended March 31, 2023, which can be found at the Quarterly Results section of OPI’s website at https://www.opireit.com/investors/financial-information/default.aspx.

A conference call to discuss OPI’s first quarter results will be held on Thursday, April 27, 2023 at 10:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 328-1172 or (412) 317-5418 (if calling from outside the United States and Canada); a pass code is not required. A replay will be available for one week by dialing (412) 317-0088; the replay pass code is 1986161. A live audio webcast of the conference call will also be available in a listen only mode on OPI’s website, at www.opireit.com. The archived webcast will be available for replay on OPI’s website after the call. The transcription, recording and retransmission in any way are strictly prohibited without the prior written consent of OPI.

About Office Properties Income Trust:

OPI is a national REIT focused on owning and leasing high quality office and mixed-use properties in select growth-oriented U.S. markets. As of March 31, 2023, approximately 63% of OPI’s revenues were from investment grade rated tenants. OPI owned and leased 157 properties as of March 31, 2023, with approximately 20.9 million square feet located in 30 states and Washington, D.C. In 2023, OPI was named as an Energy Star® Partner of the Year for the sixth consecutive year. OPI is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $37 billion in assets under management as of March 31, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. OPI is headquartered in Newton, MA. For more information, visit opireit.com.

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

Contacts
Kevin Barry, Director, Investor Relations
(617) 219-1410

Posted in Breaking News, Life Sciences, REIT Report

News Release: Increase in Lab Vacancy in Q1 Opens More Options for Life Sciences Companies

By admin on April 26, 2023

Press Release

FOR IMMEDIATE RELEASE

Life sciences employment and average rental rates are up, while venture capital is down in first quarter

Dallas – April 26, 2023 – Lab vacancy increased across the top 13 U.S. life sciences markets in the first quarter, providing relief for companies that had found little available space in recent years, according to a new report from CBRE.

Average vacancy of 6.7% in the first quarter marked an increase of 170 basis points from a year earlier. That compares to an average of 7.7% in the first quarter of 2020, before the pandemic sparked a wave of activity in the life sciences sector. The low point for vacancy – 4.6% – came in the second quarter of 2022.

Other measures differed in the first quarter, indicating a sector cooling to red hot from white hot. Despite announcements of layoffs, U.S. life sciences employment increased by 3.5% in February from a year earlier, exceeding the overall job-growth rate of 2.9%. Average rental rates increased by 3.2% from the fourth quarter to a record $65.62 per sq. ft. in the first.

Meanwhile, venture capital funding for life sciences companies declined in the first quarter from the fourth amid banking sector turmoil, which constrained capital availability for the tech and life sciences industries. Venture capital investment in life sciences now is on-par with 2019 levels.

Developers had more than 40 million sq. ft. of lab space under construction in the 13 markets in the first quarter, with 25% of it preleased.

“Most measures of the life sciences market remain at or above pre-pandemic levels, demonstrating that this is a market buttressed by demand,” said Matt Gardner, CBRE Americas Life Sciences Leader. “There is a lot of promising science in the pipeline, and the sector likely will regain momentum once the lending market recovers. Meanwhile, companies of all sizes are likely to find at least a few available spaces in markets where there previously was little or no such availability.”

Top Life Sciences Markets: Select Q1 Stats

To read the full report, click here.

About CBRE Group, Inc.

Contact:
Kris Hudson
+1 214 863 3650
kris.hudson@cbre.com

Posted in Breaking News, Life Sciences

News Release: NexCore Group Names Michael Ray Chief Investment Officer

By eporter on April 26, 2023

Michael Ray joins NexCore Group, bringing over 20 years of transactional, legal, and capital formation experience to the Denver-based firm.

DENVER, April 26, 2023 (Newswire.com) – Denver-based NexCore Group, a national healthcare, science and technology, and seniors housing developer, announced that Michael Ray joined the firm as Chief Investment Officer.

Michael Ray is a senior real estate investment executive with over 20 years of experience developing investment strategies for companies of all stages and sizes. With a strong focus on joint ventures and capital formation, Michael has extensive expertise in managing high-value assets and positioning companies for optimal growth. “I am especially excited to join the NexCore Group team because of the company’s creative and collaborative environment,” shared Ray. ” I look forward to being a member of a dynamic team driving strategic growth and investment that impacts everyone involved.”

Ray comes to NexCore from McWhinney, where he served initially as Executive Vice President and General Counsel and then Chief Operating Officer, Funds Management. He directed legal functions and capitalization strategies for more than $900 million in investment pipelines during his tenure there. He also managed the creation and establishment of the company’s investment fund business and institutional investment platform.

Jarrod Daddis, NexCore Group’s President and Managing Partner, said, “Michael’s extensive background in transactions and investments is an invaluable asset to NexCore as we continue to grow the company and develop healthcare, science & technology, and seniors housing projects. His leadership and years of industry experience will help NexCore continue to make strategic investments that make an impact.”

Mr. Ray holds a B.A. in Political Science from Rhodes College and a J.D. from Southern Methodist University Dedman School of Law.

Posted in Breaking News, Companies & People

News Release: Montecito Medical Acquires Medical Office Building in Phoenix Area

By eporter on April 25, 2023

NASHVILLE, Tenn., Apr. 25, 2023 –(BUSINESS WIRE)–Montecito Medical, a leading acquirer of medical office properties nationwide, has acquired a 68,000-square-foot medical building in Peoria, Arizona.

The building is 100% occupied by Banner Health, a leading health system in the Southwest headquartered in Phoenix.

“We are excited to add this outstanding medical asset to our portfolio and to build on the relationship we have established with Banner Health,” said Bryan Brown, Senior Vice President of Acquisitions at Montecito Medical.

The JLL Healthcare Capital Markets Advisory team, consisting of Mindy Berman, Matt Dicesare, and John Chun, along with Phoenix market leader Pat Williams, represented the seller.

At the property, which includes a multi-specialty ambulatory surgery center (ASC), Banner Health provides surgical and clinical services, advanced imaging, and primary care.

Operating 30 hospitals across six states, Banner Health is the largest private employer in Arizona and one of the largest secular nonprofit health systems in the United States.

“We are thrilled to expand our extensive medical real estate footprint in the Phoenix market, an area known for its thriving healthcare industry and growing population,” said Chip Conk, CEO of Montecito Medical. “We look forward to announcing more acquisitions in the coming months.”

About Montecito Medical

Montecito Medical is one of the nation’s largest privately held companies specializing in healthcare-related real estate acquisitions and partnering with physicians and developers to fund development of medical real estate. The company also supports providers with a suite of AI-powered technology solutions that increase revenues, reduce costs and build physician wealth. Since 2006, Montecito has completed transactions involving more than $5 billion in medical real estate. Headquartered in Nashville, TN, the company has been named for five consecutive years as a “key influencer in healthcare real estate” by GlobeSt.com and the editors of Real Estate Forum. For more information, please visit www.montecitomac.com.

Posted in Breaking News, Companies & People, Outpatient Projects

News Release: BXP Announces First Quarter 2023 Results; Reports Q1 EPS of $0.50 and FFO Per Share of $1.73

By admin on April 25, 2023

Commenced Development of Two Fully Pre-Leased Life Sciences Projects Totaling More Than 800,000 Square Feet in Cambridge, Massachusetts

April 25, 2023 04:12 PM Eastern Daylight Time

BOSTON–(BUSINESS WIRE)–BXP (NYSE: BXP), the largest publicly traded developer, owner, and manager of premier workplaces in the United States, reported results today for the first quarter ended March 31, 2023.

Financial highlights for the first quarter include:

Revenue increased 6.5% to $803.2 million for the quarter ended March 31, 2023, as compared to $754.3 million for the quarter ended March 31, 2022.
Net income attributable to common shareholders of $77.9 million, or $0.50 per diluted share (EPS), for the quarter ended March 31, 2023, compared to $143.0 million, or $0.91 per diluted share, for the quarter ended March 31, 2022. The decrease compared to Q1 2022 is primarily due to:
- $22.7 million of higher gains on sales recorded in Q1 2022;
- greater depreciation expense of $31.1 million in Q1 2023 primarily due to development activities and asset acquisitions; and
- higher interest expense of $33.0 million partially offset by higher contributions from portfolio operations of approximately $21.7 million in Q1 2023.
Funds from Operations (FFO) of $272.0 million, or $1.73 per diluted share, for the quarter ended March 31, 2023, compared to FFO of $286.1 million, or $1.82 per diluted share, for the quarter ended March 31, 2022. The decrease from Q1 2022 is primarily due to higher interest expense of $33.0 million, partially offset by higher contributions from portfolio operations of approximately $21.7 million.
EPS for the first quarter fell short of the mid-point of BXP’s guidance by $0.03 primarily due to accelerated depreciation associated with the redevelopment of 300 Binney Street.
FFO per diluted share exceeded the mid-point of BXP’s guidance by $0.06 due to portfolio outperformance primarily as a result of lower-than-projected operating expenses.

BXP also provided updated guidance for second quarter 2023 EPS of $0.59 – $0.61 and FFO of $1.79 – $1.81 per diluted share, and full year 2023 EPS of $2.30 – $2.36 and FFO of $7.14 – $7.20 per diluted share.

See “EPS and FFO per Share Guidance” below.

First quarter and recent business highlights include:

Executed approximately 660,000 square feet of leases with a weighted-average lease term of 7.7 years.
Further expanded BXP’s life sciences portfolio in Cambridge, Massachusetts, the largest and most important cluster of life sciences companies and research space in the U.S., by commencing the development/redevelopment of two fully pre-leased projects:
- 290 Binney Street, an approximately 566,000 square foot laboratory/life sciences property, which is 100% pre-leased to AstraZeneca for a lease term of 15 years.
- 300 Binney Street, an approximately 195,000 net rentable square foot premier workplace that is being redeveloped into approximately 236,000 net rentable square feet of laboratory/life sciences space, which is 100% pre-leased to the Broad Institute for a lease term of 15 years.
Completed the acquisition of a 50% interest in a joint venture that owns 13100 and 13150 Worldgate Drive located in Herndon, Virginia for a gross purchase price of approximately $17.0 million. The acquisition was completed with available cash. The joint venture intends to redevelop the property for residential use. There can be no assurance that the joint venture will commence the development as currently contemplated or at all.
On January 4, 2023, BPLP closed on a $1.2 billion unsecured term loan facility that matures in May 2024, with one, twelve-month extension option subject to the satisfaction of customary conditions. As of January 4, 2023, the term loan bore interest at a variable rate equal to adjusted Term SOFR plus 0.85% per annum. A portion of the proceeds were used to repay in full BPLP’s $730.0 million term loan that was scheduled to mature in May 2023, resulting in incremental net proceeds of approximately $464.0 million.
On April 21, 2023, a joint venture in which BXP has a 50% interest exercised an option to extend by one year the maturity date of its $252.6 million construction loan collateralized by its 7750 Wisconsin Avenue property. The completed 734,000 square foot build-to-suit, premier workplace is located in Bethesda, Maryland and is 100% leased to an affiliate of Marriott International, Inc. Effective June 1, 2023, the financing will bear interest at a variable rate equal to Term SOFR plus 1.35% per annum and now matures on April 26, 2024, with a one-year extension option, subject to certain conditions.
Continued BXP’s leadership and ongoing commitment to ESG and sustainability performance:
- named to Newsweek’s List of America’s Most Responsible Companies in 2023 for the third consecutive year, ranking first in the Real Estate & Housing category
- named to the Dow Jones Sustainability Index (DJSI) North America for the second consecutive year, one of eight real estate companies that qualified and the only office REIT in the index
- received the 2023 ENERGY STAR Partner of the Year—Sustained Excellence Award from the U.S. Environmental Protection Agency and the U.S. Department of Energy for the third consecutive year
- published, In April 2023, BXP’s 2022 ESG Report, which highlights that, among other things, BXP achieved its energy and water reduction targets in 2022 and remains on track to achieve carbon-neutral operations by 2025. In conjunction with the publication, BXP announced its second annual ESG Investor Update Webcast to be held on May 31, 2023.

The reported results are unaudited and there can be no assurance that these reported results will not vary from the final information for the quarter ended March 31, 2023. In the opinion of management, BXP has made all adjustments considered necessary for a fair statement of these reported results.

EPS and FFO per Share Guidance:

BXP’s guidance for the second quarter 2023 and full year 2023 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. Except as described below, the estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, interest rates, the timing of the lease-up of available space, the timing of development cost outlays and development deliveries, and the earnings impact of the events referenced in this release and those referenced during the related conference call. The estimates do not include (1) possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, (2) the impacts of any other capital markets activity, (3) future write-offs or reinstatements of accounts receivable and accrued rent balances, or (4) future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense, impairment losses on depreciable real estate, and any gains or losses associated with disposition activity. BXP is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO does not include real estate-related depreciation and amortization, impairment losses on depreciable real estate, or gains or losses associated with disposition activities. There can be no assurance that BXP’s actual results will not differ materially from the estimates set forth below.

	Second Quarter 2023				Full Year 2023
	Low		High		Low		High
Projected EPS (diluted)	$	0.59	$	0.61	$	2.30	$	2.36
Add:
Projected Company share of real estate depreciation and amortization		1.20		1.20		4.84		4.84
Projected FFO per share (diluted)	$	1.79	$	1.81	$	7.14	$	7.20

BXP will host a conference call on Wednesday, April 26, 2023 at 10:00 AM Eastern Time, open to the general public, to discuss the first quarter 2023 results, provide a business update, and discuss other business matters that may be of interest to investors. Participants who would like to join the call and ask a question may register at https://register.vevent.com/register/BI9b503bc560604b2a83e1db1271fc2c2d to receive the dial-in numbers and unique PIN to access the call. There will also be a live audio, listen-only webcast of the call, which may be accessed in the Investors section of BXP’s website at https://investors.bxp.com/events-webcasts. Shortly after the call, a replay of the call will be available on BXP’s website at https://investors.bxp.com/events-webcasts for up to twelve months following the call.

Additionally, a copy of BXP’s first quarter 2023 “Supplemental Operating and Financial Data” and this press release are available in the Investors section of BXP’s website at investors.bxp.com.

BXP (NYSE: BXP) is the largest publicly traded developer, owner, and manager of premier workplaces in the United States, concentrated in six dynamic gateway markets – Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. BXP has delivered places that power progress for our clients and communities for more than 50 years. BXP is a fully integrated real estate company, organized as a real estate investment trust (REIT). Including properties owned by unconsolidated joint ventures, BXP’s portfolio totals 54.5 million square feet and 192 properties, including 15 properties under construction/redevelopment. For more information about BXP, please visit our website or follow us on LinkedIn or Instagram.

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of the words “anticipates,” “believes,” “budgeted,” “could,” “estimates,” “expects,” “guidance,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “will,” and similar expressions that do not relate to historical matters. These statements are based on our current plans, expectations, projections and assumptions about future events. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond BXP’s control. If our underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, actual results could differ materially from those expressed or implied by the forward-looking statements. These factors include, without limitation, the risks and uncertainties related to the impact of changes in general economic and capital market conditions, including continued inflation, increasing interest rates, supply chain disruptions, labor market disruptions, dislocation and volatility in capital markets, potential longer-term changes in consumer and client behavior resulting from the severity and duration of any downturn in the U.S. or global economy, general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases on favorable terms, changes in client preferences and space utilization, dependence on clients’ financial condition, and competition from other developers, owners and operators of real estate), the impact of geopolitical conflicts, including the ongoing war in Ukraine, the immediate and long-term impact of the outbreak of a highly infectious or contagious disease, such as the COVID-19 global pandemic on our and our clients’ financial condition, results of operations and cash flows (including the impact of actions taken to contain the outbreak or mitigate its impact, the direct and indirect economic effects of the outbreak and containment measures on our clients, and the ability of our clients to successfully operate their businesses), the uncertainties of investing in new markets, the costs and availability of financing, the effectiveness of our interest rate hedging contracts, the ability of our joint venture partners to satisfy their obligations, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, the impact of newly adopted accounting principles on BXP’s accounting policies and on period-to-period comparisons of financial results, the uncertainties of costs to comply with regulatory changes (including potential costs to comply with the Securities and Exchange Commission’s proposed rules to standardize climate-related disclosures) and other risks and uncertainties detailed from time to time in BXP’s filings with the SEC. These forward-looking statements speak only as of the date of issuance of this report and are not guarantees of future results, performance, or achievements. BXP does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise, except as otherwise required by law.

Financial tables follow.

BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
	March 31, 2023			December 31, 2022
	(in thousands, except for share and par value amounts)
ASSETS
Real estate, at cost	$	24,314,813		$	24,261,588
Construction in progress		618,770			406,574
Land held for future development		626,137			721,501
Right of use assets – finance leases		237,503			237,510
Right of use assets – operating leases		166,699			167,351
Less: accumulated depreciation		(6,424,547	)		(6,298,082	)
Total real estate		19,539,375			19,496,442
Cash and cash equivalents		918,952			690,333
Cash held in escrows		45,330			46,479
Investments in securities		32,099			32,277
Tenant and other receivables, net		85,603			81,389
Related party note receivable, net		78,544			78,576
Sales-type lease receivable, net		13,028			12,811
Accrued rental income, net		1,297,767			1,276,580
Deferred charges, net		720,174			733,282
Prepaid expenses and other assets		141,933			43,589
Investments in unconsolidated joint ventures		1,752,617			1,715,911
Total assets	$	24,625,422		$	24,207,669
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	3,273,553		$	3,272,368
Unsecured senior notes, net		10,240,967			10,237,968
Unsecured line of credit		—			—
Unsecured term loan, net		1,194,916			730,000
Lease liabilities – finance leases		250,567			249,335
Lease liabilities – operating leases		204,435			204,686
Accounts payable and accrued expenses		397,798			417,545
Dividends and distributions payable		171,427			170,643
Accrued interest payable		114,400			103,774
Other liabilities		465,276			450,918
Total liabilities		16,313,339			15,837,237

Commitments and contingencies		—			—
Redeemable deferred stock units		5,599			6,613
Equity:
Stockholders’ equity attributable to Boston Properties, Inc.:
Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding		—			—
Preferred stock, $0.01 par value, 50,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.01 par value, 250,000,000 shares authorized, 156,908,693 and 156,836,767 issued and 156,829,793 and 156,757,867 outstanding at March 31, 2023 and December 31, 2022, respectively		1,568			1,568
Additional paid-in capital		6,549,314			6,539,147
Dividends in excess of earnings		(467,159	)		(391,356	)
Treasury common stock at cost, 78,900 shares at March 31, 2023 and December 31, 2022		(2,722	)		(2,722	)
Accumulated other comprehensive loss		(18,214	)		(13,718	)
Total stockholders’ equity attributable to Boston Properties, Inc.		6,062,787			6,132,919
Noncontrolling interests:
Common units of the Operating Partnership		691,627			683,583
Property partnerships		1,552,070			1,547,317
Total equity		8,306,484			8,363,819
Total liabilities and equity	$	24,625,422		$	24,207,669

BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Three months ended March 31,
	2023			2022
	(in thousands, except for per share amounts)
Revenue
Lease	$	756,875		$	718,120
Parking and other		24,009			21,734
Hotel revenue		8,101			4,557
Development and management services		8,980			5,831
Direct reimbursements of payroll and related costs from management services contracts		5,235			4,065
Total revenue		803,200			754,307
Expenses
Operating
Rental		291,308			270,255
Hotel		6,671			4,840
General and administrative		55,802			43,194
Payroll and related costs from management services contracts		5,235			4,065
Transaction costs		911			—
Depreciation and amortization		208,734			177,624
Total expenses		568,661			499,978
Other income (expense)
Income (loss) from unconsolidated joint ventures		(7,569	)		2,189
Gains on sales of real estate		—			22,701
Interest and other income (loss)		10,941			1,228
Gains (losses) from investments in securities		1,665			(2,262	)
Unrealized gain (loss) on non-real estate investment		259			—
Interest expense		(134,207	)		(101,228	)
Net income		105,628			176,957
Net income attributable to noncontrolling interests
Noncontrolling interests in property partnerships		(18,660	)		(17,549	)
Noncontrolling interest—common units of the Operating Partnership		(9,078	)		(16,361	)
Net income attributable to Boston Properties, Inc.	$	77,890		$	143,047
Basic earnings per common share attributable to Boston Properties, Inc.
Net income	$	0.50		$	0.91
Weighted average number of common shares outstanding		156,803			156,650
Diluted earnings per common share attributable to Boston Properties, Inc.
Net income	$	0.50		$	0.91
Weighted average number of common and common equivalent shares outstanding		157,043			157,004

BOSTON PROPERTIES, INC. FUNDS FROM OPERATIONS ⁽¹⁾(Unaudited)
	Three months ended March 31,
	2023			2022
	(in thousands, except for per share amounts)
Net income attributable to Boston Properties, Inc.	$	77,890		$	143,047
Add:
Noncontrolling interest – common units of the Operating Partnership		9,078			16,361
Noncontrolling interests in property partnerships		18,660			17,549
Net income		105,628			176,957
Add:
Depreciation and amortization expense		208,734			177,624
Noncontrolling interests in property partnerships’ share of depreciation and amortization		(17,711	)		(17,653	)
Company’s share of depreciation and amortization from unconsolidated joint ventures		25,645			22,044
Corporate-related depreciation and amortization		(469	)		(404	)
Less:
Gains on sales of real estate		—			22,701
Unrealized gain on non-real estate investment		259			—
Noncontrolling interests in property partnerships		18,660			17,549
Funds from operations (FFO) attributable to the Operating Partnership (including Boston Properties, Inc.)		302,908			318,318
Less:
Noncontrolling interest – common units of the Operating Partnership’s share of funds from operations		30,957			32,182
Funds from operations attributable to Boston Properties, Inc.	$	271,951		$	286,136
Boston Properties, Inc.’s percentage share of funds from operations – basic		89.78	%		89.89	%
Weighted average shares outstanding – basic		156,803			156,650
FFO per share basic	$	1.73		$	1.83
Weighted average shares outstanding – diluted		157,043			157,004
FFO per share diluted	$	1.73		$	1.82

(1)

Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”), we calculate Funds from Operations, or “FFO,” by adjusting net income (loss) attributable to Boston Properties, Inc. (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but we believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO per share can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies.

Our calculation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently.

In order to facilitate a clear understanding of the Company’s operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. as presented in the Company’s consolidated financial statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to the Company’s financial information prepared in accordance with GAAP.

BOSTON PROPERTIES, INC. PORTFOLIO LEASING PERCENTAGES
	% Occupied by Location ⁽¹⁾		% Leased by Location ⁽²⁾
	March 31, 2023	December 31, 2022	March 31, 2023	December 31, 2022
Boston	90.7 %	90.2 %	92.5 %	92.7 %
Los Angeles	86.0 %	88.3 %	86.2 %	88.6 %
New York	87.2 %	86.8 %	90.7 %	90.9 %
San Francisco	88.4 %	88.5 %	89.3 %	88.8 %
Seattle	87.9 %	88.3 %	90.5 %	90.9 %
Washington, DC	88.1 %	88.7 %	91.5 %	93.0 %
Total Portfolio	88.6 %	88.6 %	91.0 %	91.5 %

(1)		Represents signed leases for which revenue recognition has commenced in accordance with GAAP.
(2)		Represents signed leases for which revenue recognition has commenced in accordance with GAAP and signed leases for vacant space with future commencement dates.

Contacts

AT BXP
Michael LaBelle
Executive Vice President,
Chief Financial Officer and Treasurer
mlabelle@bxp.com

Helen Han
Vice President, Investor Relations
hhan@bxp.com

Posted in Breaking News, Companies & People, REIT Report

Feature Story: Q1 MOB sales plunge to near historic low of $1.4B

By admin on April 25, 2023

But occupancy rates in the top metros have hit a new high, Revista says

By John B. Mugford

Based on preliminary data, Revista found that first quarter (Q1) MOB transactions volume was the lowest since 2014. (Slide courtesy of Revista)

Medical office building (MOB) sales in the first three months of the year dropped to the lowest first quarter volume for any year since 2014. But such a statistic does not necessarily reflect the overall strength of the product type and the market.

The first quarter (Q1) saw MOB sales totaling just $1.4 billion, a precipitous drop of about 74 percent from just a year earlier, when the MOB sales market was flying high and the Q1 2022 volume totaled $5.9 billion.

The current lull in sales – which is a continuation of a slowdown that started in the second half of 2022 – is most likely a reflection of what is taking place in the overall economy and the current rising interest-rate environment, as the U.S. Federal Reserve Bank continues to raise its target fund rate in an effort to stave off inflation.

The MOB sales market, in fact, might be lying low before returning to what can be considered a more normal volume in the months ahead. That’s according to a number of sector professionals who listened in on Arnold, Md.-based Revista’s Q1 2023 subscriber webcast that took place last Thursday, April 20.

A poll taken during the hour-long webinar indicated that a majority of the listeners believe the MOB sales volume will return to “normal,” which is typically about $3 billion per quarter, by early 2024.

The webinar was hosted by Revista Principals Mike Hargrave and Hilda Martin. Joining them was experienced healthcare real estate (HRE) investment sales broker Gino Lollio of Cushman & Wakefield. He, Travis Ives and Sushil Puria are executive directors and co-leaders of Cushman’s Healthcare Capital Markets. Mr. Lollio was on hand to provide, as Ms. Martin noted, some “boots-on-the-ground” perspective to the statistics presented by Revista.

As noted, the big news conveyed during the webinar was Continue reading “Feature Story: Q1 MOB sales plunge to near historic low of $1.4B”

Posted in Feature Story

News Release: Topping-Off Ceremony Marks New Phase and Mission of St. Vincent Health Sciences Center

By admin on April 25, 2023

April 25, 2023

On a bright, sun-splashed morning at St. John’s University’s Queens, NY, campus, the final piece of steel in the construction of the innovative St. Vincent Health Sciences Center was hoisted three stories above a cheering crowd. Gathered to witness the milestone event on April 25 were an eclectic mix of clergy, Trustees, dignitaries, University administrators, faculty, members of the design and construction teams from Shawmut Design and Construction and CannonDesign, and organized labor partners—all united in the mission of advancing health-care education.

That shared mission was invoked by Rev. Brian J. Shanley, O.P., President, who addressed the crowd by saying, “St. John’s is making a major investment in the health sciences and the people—like nurses and health-care providers who deliver extraordinary service to others—thus living the Vincentian mission.”

Scheduled to open in the Summer of 2024, the new 70,000-square-foot new home for existing and future health sciences programs ushers in a new educational era at St. John’s. The construction project, being completed by Shawmut Design and Construction and CannonDesign, is estimated to cost $106 million and is a major generator of economic activity in Queens County and beyond.

During the construction process, the last steel beam placed is a major milestone in the evolution of a building project. This milestone is commemorated by painting the beam white and having the steel construction team, designers, property owners, and dignitaries sign it for posterity.

Reminiscent of old-fashioned barn-raising celebrations, in the United States the beam in a topping-off ceremony is typically adorned with a small evergreen tree and an American flag. This custom celebrates the construction process and is viewed as the first introduction of the building to the public.

The tree is the key symbol in the steel trade as it signifies construction has reached the sky without injury and it bodes well for the future inhabitants of the building. Throughout history, the tree appears to have conveyed different meanings to diverse cultures and is believed to date back to the belief of Indigenous People who believed no structure should be taller than a tree.

Fr. Shanley paused to acknowledge that construction of the St. Vincent Health Sciences Center would not be accomplished without the generosity and commitment of benefactors like Peter P. D’Angelo ’78MBA, ’06HON, and Margaret LaRosa D’Angelo ’70Ed ’22HON, and the late Nickolas “Nick” Davatzes ’62C, ’64G, ’95HON, Trustee Emeritus, cable television pioneer, and his late wife Dorothea Hayes Davatzes ’66Ed.

“We depend on our generous benefactors to help us to help our students and to live our mission,” he said.

Dave Margolius, Executive Vice President of the New York Metro Region, Shawmut Design and Construction, recalled first being exposed to the extraordinary mission of St. John’s when he attended the 25th Annual President’s Dinner last October. “It was an incredible opportunity to see St. John’s values in action,” he said. “Not only was this spirit talked about, but it was made clear how these qualities are lived by everyday folks who do extraordinary things for the St. John’s community and far, far beyond. These are the things we think of when we look at the foundation and structure of this building.”

Turning toward a group of laborers donned in hard hats and safety vests, he shared, “On behalf of the builders and tradespeople here, we are proud and thankful to play our part in bringing to life compassion and service, and to serve your mission to educate the next generation of caretakers—who will undoubtedly do extraordinary things for our families and our communities.”

During his remarks, Simon G. Møller, Ph.D., Provost and Vice President for Academic Affairs, University Distinguished Professor, and Provost Endowed Chair, observed, “When completed, the St. Vincent Health Sciences Center will feature state-of-the-art classrooms, cutting-edge laboratories, patient simulation facilities, and transformative virtual reality technology that is redefining what is possible in the health-care industry. It will include collaborative spaces, outdoor terraces, breathtaking vistas, and so much more. But above all, it will be an amazing home for generations of caregivers, health-care professionals, and individuals who are committed to improving the lives of others.”

After the beam was blessed with holy water by Rev. Aidan R. Rooney, C.M., M.Div., M.Th. ’78NDC, Executive Vice President for Mission, select guests were invited to individually sign the beam. The variety of names immortalized on the radiant white beam include Fr. Shanley; the D’Angelos; Honorable Donovan Richards Jr., Borough President of Queens; senior campus leaders; members of the Real Estate Advisory Committee; the Nursing Initiative Executive Team; and the College of Pharmacy and Health Sciences’ Advisory Board.

Against the backdrop of a clear blue sky, a crane slowly lifted the special beam and gingerly placed it into its permanent location as a rousing cheer erupted from the crowd. The radiant beam joins 1,137 columns and beams and 875 tons of steel being utilized in the foundation of the innovative learning space.

At a postevent reception that followed the ceremony, Brian Baumer, Associate Vice President of Campus Facilities and Services, flanked by his colleagues Jacques Theus, Executive Director of Design and Construction, and Tobias Bisharat, Project Director of Space Management, proudly gazed upon the now-completed skeleton of the building.

“Good things are happening here,” he reflected. “A year from now this building will be almost ready to open and dramatically change the campus landscape and the learning environment at St. John’s.”

Posted in Breaking News, Life Sciences

News Release: Healthpeak Properties Reports First Quarter 2023 Results and Declares Quarterly Cash Dividend on Common Stock