Healthpeak Plans To Spin Off Senior Housing REIT

Healthpeak Properties is planning to spin off its senior housing portfolio into a new publicly traded REIT, but it isn't parting with the properties. 

The Denver-based medical property giant plans to create Janus Living, a publicly traded REIT backed by 34 senior housing communities, sometime in the first half of the year. Healthpeak plans to retain majority ownership of the REIT and positioned the spin-off as an opportunity to realize differentiated value across the multiple healthcare sectors where it operates. 

“Given its relative scale within Healthpeak, it has been difficult for the public markets to recognize our senior housing platform’s capabilities and properly value the portfolio,” Healthpeak CEO Scott Brinker said in a statement. 

Healthpeak’s stock was up more than 3% in early trading Wednesday, but it missed earnings expectations in September and is down roughly 14% in the last year, in part because of significant exposure to the lagging life sciences sector.  

Brinker will also lead Janus Living, which would be set up under a legal framework that allows REITs to partner directly with property operators.

The new REIT would start with 10,422 senior living units and continue buying and developing projects under the Janus Living banner, including roughly $675M worth of investments that the company said has already been committed through letters of intent or purchase agreements. Janus Living would be launched with less than one turn of debt leverage.

“This IPO is intended to enable Healthpeak to unlock that value, leverage our industry expertise, and more effectively pursue our active pipeline of senior housing acquisition opportunities,” Brinker said.

Healthpeak employees will run Janus Living, which will pay a $10M annual fee to its parent company. Healthpeak executives Patrick Cheng and Jonathan Hughes would help guide the REIT’s strategy, and former executive Jeff Miller is coming back as general counsel.  

Janus Living would be governed by a five-member board made up of Brinker, Healthpeak board Chair Kathy Sandstrom and three independent directors who haven’t been named. 

Plans aren’t final, and Healthpeak could ultimately opt to hold on to the assets or delay an initial public offering if equity markets don’t look welcoming.

The company posted a $117M loss for the third quarter, compared to a $85M profit during the same period a year earlier. Management said at the time that it sensed a palpable shift in sentiment across the biopharma space that would lift revenues. 

The REIT has been selling off assets to raise funds and plans to use proceeds from the Janus Living IPO to pay for pending acquisitions, pay down debt and fund general corporate operations.