Healthpeak Properties, Inc. (DOC)

Total return at 5 years: 16.0%/year = 10.3% appreciation + 5.7% dividend. The target price ($31) is ex-dividend; the $6 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $42 · Multiples $30) exceeds the market price ($19).

Today — fairly valued: at $19 trades ~37.8% below its value discounted to today (~$30); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Muy infravalorado: the target price ($31) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$20.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($19) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-14.7%/year) than we project (2.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.5 bn of owner earnings in year 5 (vs ~$1.3 bn of our base case). It recalculates if the DCF assumptions are edited.

A REIT is valued on price/Core-FFO (not P/E: the accounting depreciation of the property is not an economic cost). ⚠️ The real cash is AFFO (owner earnings), substantially lower than Core FFO —it subtracts recurring capex and non-cash straight-line rent—, and the dividend consumes almost all of the AFFO. It returns capital via dividend; it may issue equity to fund development. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Healthpeak Properties is valued as a diversified healthcare real estate REIT, on P/adjusted FFO over the aggregate metric (≈P/AFFO, reit band 15-20×). Year 0 (TTM to Jun-2026) results from FY2025 adjusted for the difference between H1 2026 and H1 2025 reported in the release of 4-Aug-2026. Year +1 starts from the FY2026 guidance issued in that same release (adjusted FFO per share US$1.73-1.77, midpoint US$1.75; same-store NOI 0%-1.5%), which implies a year-over-year decline of ~8% against the TTM on the deterioration in occupancy of the laboratory segment (88.2% at the close of FY2025, against 97.5% a year earlier, on properties in development/re-lease). It is a declared trough-and-recovery, not a monotonic deceleration: from year +2 the path resumes growth of ~3.5-6% a year as the laboratory portfolio completes its re-lease (seniors housing has been growing same-store NOI +12.6% in FY2025 under RIDEA structures, and outpatient medical +3.8%, both sustained). AFFO per share (real owner earnings, after recurring maintenance capex) runs systematically below adjusted FFO (~92% of adjusted FFO in FY2025) and is the basis of the dividend. The base exit multiple is set near the floor of the reit band (15.2×), reflecting an eroding moat (falling laboratory occupancy, a return on capital below the 10% bar) and not the upper part of the band. The dividend per share has grown barely over the last four fiscal years (US$1.20 to US$1.22) and is projected with moderate growth, picking up pace only when adjusted FFO recovers from the 2026 trough. The recent net buyback (~US$100 million TTM) is modest but material (~0.5-1%/year) and is modeled in the share path.

Today's multiple compresses on its own going forward as the metric per share grows. The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $31 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $19, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $31 in 5 years plus $6 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $30. Against the current market price ($19), the margin of safety is 37.8% (trades below the maximum → there is margin) and the total return at that price would be 16.0% annually.

• Entry multiple. The stock trades at an adjusted FFO multiple at the low end of the historical range for healthcare real estate REITs, consistent with the recent deterioration in lab occupancy.
• Dividend yield. The current dividend yield (~6%) is high for the sector and is covered by a payout on AFFO near 70%, with room to hold even in the adverse scenario.
• Multiple compression toward year 5. The base case's exit multiple stays near the floor of the reit band, reflecting that the expected return depends more on FFO recovery than on multiple expansion.

• ✕ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (297%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Cash generation. Operating cash flow grew steadily FY22-25 (US$900 million to US$1,232 million TTM), although AFFO per share (true owner earnings) consistently runs below adjusted FFO due to recurring maintenance capex.
• Return on invested capital. ROIC of approximately 3.1% is far below the 10% bar, reflecting a capital base weighed down by the accumulated depreciation of the real estate portfolio.
• Reinvestment runway. The lab relaunch and the consolidation of the senior housing joint venture show the company keeps finding places to deploy capital, though with uneven results across segments.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Healthpeak's three operating drivers are rent per square foot (medical outpatient and lab) and rent per unit (senior housing), each multiplied by its own occupancy rate to arrive at net operating income per segment. The available extraction covers only FY2024 and FY2025 with rent per sq ft/unit detail; prior years are not broken out by segment in the sections reviewed and are declared as gaps rather than estimated.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Senior housing. Comparable net operating income growth of 12.6% in FY2025, the portfolio's strongest engine and the one that best sustains the base case's recovery path.
• Medical outpatient. Stable comparable NOI growth (3.8% in FY2025), consistent with contractual escalators and occupancy sustained above 92%.
• Lab. Comparable NOI growth fell to 1.5% in FY2025 and already turned negative (-3.2%) year-over-year in the second quarter of 2026, the main drag on the consolidated path.

• Diversification by property type. Three segments with distinct demand dynamics (hospital, life sciences, senior demographics) reduce dependence on a single sector cycle, though they do not prevent one of the three from dragging down the consolidated result.
• Contractual structure. 72-89% of the medical outpatient and lab portfolio under triple-net leases transfers operating and maintenance risk to the tenant, protecting the company's margin.
• Tenant concentration. The single largest tenant (HCA Healthcare) represents only 7% of total revenue, a manageable concentration for a REIT of this size.
• Lab occupancy. A decline of nearly 10 percentage points in one year (97.5% to 88.2%) is the portfolio's sharpest sign of deterioration and the direct driver of lower FFO guidance.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✕Portfolio quality (occupancy + same-store NOI)Occupancy 86.7% · same-store NOI +4.9%
• ✓Dividend coverage (payout over AFFO)70% of AFFO

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Net debt to adjusted EBITDAre of 4.7x as of the second quarter of 2026, a level typical for an investment-grade REIT but without wide room if the FFO trough extends.
• Credit rating. Baa1 from Moody's and an implied BBB+, with sustained access to long-term debt markets despite recent lab weakness.
• Liquidity. Cash and short-term investments of US$1,627 million as of the second quarter of 2026, a reasonable margin of solvency against short-term debt maturities.

• Capital discipline. Active buybacks at prices below the current one (US$18.50 average in FY2025) are a sign of reasonable capital allocation during a period of depressed valuation.
• Dividend policy. The dividend was practically frozen over the last four fiscal years, a conservative stance that protects solvency but does not reward the shareholder with income growth.
• Ownership transparency. The ownership proxy could not be verified in this run due to an inconsistency in the reported share structure; it remains a declared gap, not an invented figure.

• Motivated sellers: FY2026 guidance shows an approximately 8% year-over-year decline in adjusted FFO per share, a GAAP and adjusted result depressed by the lab occupancy decline that punishes the multiple more than a business with stable NOI would
• Missing buyers: a typical cycle trough where panic over the lab occupancy decline weighs more on the price than the offsetting strength of senior housing
• Motivated sellers: the lab REIT market as a whole is going through a sector-wide oversupply, and Healthpeak is dragged down by negative sentiment toward the entire subsector even though only 30% of its NOI comes from lab

The market is pricing in that the lab weakness will extend indefinitely, while the company's own guidance already treats it as a transitory trough with recovery expected from 2027.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +13%/year (+85% total): the margin of safety protects the downside. The bull (+19%/year, +137% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Lab occupancy. The risk with the greatest direct impact on the valuation path: if it does not recover within the five-year horizon, the adverse scenario better describes the outcome than the base case.
• Medicaid and Medicare regulation. Reimbursement cuts or site-neutral payments could pressure medical outpatient tenants beyond what is assumed in guidance.
• Operating risk in RIDEA. The company assumes the operating and legal liability risk of senior housing despite not managing day-to-day operations.
• Geographic climate concentration. ~69% of the lab portfolio in California (earthquakes, fires) and ~69% of senior housing in Florida (hurricanes).

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: narrow moat, eroding.

• Peter Lynch Growth at a reasonable price (GARP)

  A slow grower growing 2% at a multiple/growth of 5.5 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -15% vs our 2%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +7%/yr, bull-scenario ceiling +13%/yr over 5y → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, eroding; sources: efficient scale, intangibles, cost advantage, switching costs, network effects → fails the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -15%, within what we project (2%) — the story squares with the numbers.