Good morning, and welcome to the Healthpeak Properties and Physicians Realty Trust Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask questions, you may press star one on your touchtone phone. To withdraw the question, again, press star one. Please note that this event is being recorded. I would now like to turn the conference over to Andrew Johns, Senior Vice President, Investor Relations. Please go ahead. Thank you. Good morning, everyone. If you have not yet downloaded the press release or merger presentation related to this call, they are available on the Healthpeak and Physicians Realty's website under Investor Relations. This morning, you'll hear from Scott Brinker, President and CEO of Healthpeak, Peter Scott, CFO of Healthpeak, and John Thomas, President and CEO of Physicians Realty Trust. Today's conference call will contain certain forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations. Factors that could cause actual results to differ include, but are not limited to, the potential benefit of the proposed merger, the expected timing and likelihood of completion of the transaction, including the ability to obtain the requisite approval of Healthpeak and Physicians Realty shareholders, and the risk that the closing conditions are not satisfied. Please refer to the forward-looking statement notice in Healthpeak and Physicians Realty's 10-K and other SEC filings for information. Finally, this call contains financial measures. In accordance with GAAP, the company provides a reconciliation in their respective earnings packages. And with that, I'll turn the call over to Scott Brinker. Thank you, Andrew, and good morning, everyone. Very excited to be here with John to discuss the merger we announced this morning and the significant benefits to both companies. This combination will create the leading real estate platform dedicated to healthcare discovery and delivery, a large and attractive playing field with strong secular growth. We also announced strong Q3 earnings, including another increase to both same-store and earnings guidance. I'm going to ask Pete to summarize our results, then John will do the same for DOC, who also announced Q3 results this morning. Then I'll be back on with John to discuss the merger. Pete? Thanks, Scott. Despite the challenging capital markets environment, we continue to put up solid operating and financial results. I will be brief, so we can get back to the merger we announced. For the third quarter, we reported FFO as adjusted of $0.45 per share, AFFO of $0.40 per share, and total portfolio same-store growth of 6%. Some additional color on segment performance. Starting with outpatient medical, same-store growth was a solid 3.4%. During the quarter, we signed 2.2 million sq ft of leases, including a 20-year extension at our Medical City Dallas campus and 143,000 sq ft of leases in Philadelphia. Shifting to lab, same-store growth was a strong 3.3%. During the quarter, we executed 211,000 sq ft of leases, including converting all 196,000 sq ft of previously announced LOIs into leases. The significant deals included a 101,000 sq ft lease with Pliant Therapeutics to backfill a 2023 Amgen lease expiration at our Oyster Point campus, a 61,000 sq ft lease with Voyager Therapeutics to expand at our Hayden campus in Boston, and a 23,000 sq ft lease with Astellas at our Vantage Development, bringing that project to 52% pre-leased. All three tenants were existing tenants in our portfolio and underscores the superior competitive advantage that incumbent landlords have. Finishing with CCRCs, our strategic and operational initiatives are producing strong results. Same-store growth for the quarter was an exceptional 32.1%, driven by occupancy gains, reduced labor costs, and margin improvement. Turning now to our 2023 guidance, we are increasing our FFO as adjusted and AFFO guidance by $0.02 at the midpoints to $1.77 and $1.53, respectively. Additionally, we are increasing our full-year blended same-store guidance range by 75 basis points to 4.75% at the midpoint. Please refer to page 38 of our supplemental for additional detail on our guidance. With that, let me turn the call to John. Thank you, Pete. Before discussing the merger, I want to take a few moments to discuss Physicians Realty Trust performance during the Q3 of 2023. During this quarter, Physicians Realty Trust generated normalized funds from operations of $61.2 million or $0.25 per share. Our normalized funds available for distribution were $60.1 million or $0.24 per share. We paid our Q3 dividend of $0.23 per share on October 18th, which represented a payout ratio of 96%. We ended the quarter with the balance sheet in great shape. Our consolidated net debt to EBITDA ratio of 5.3 times, and less than 5% of our debt carries a variable interest rate. Of our $2 billion of consolidated debt, only about $85 million or 4% matures before 2026. Our revolving line of credit is completely undrawn, providing us with $1.2 billion of near-term liquidity when combined with our nearly $200 million of cash on the balance sheet. Operations remain strong, with the leasing team achieving positive absorption of 26,000 sq ft and renewal spreads of 6.7%. Outpatient medical same-store cash NOI grew 1.5% year-over-year, an improvement from prior quarters as the team works to re-lease the incremental vacancy incurred earlier in the year. New investments were modest at $16.8 million, including the funding of previous loan commitments on outpatient medical facilities under construction. We also remain on track for the G&A guidance of $41 million-$43 million. Our construction team is also managing to the guidance of $24 million-$26 million for recurring capital projects, and we don't expect any surprises there. We're also excited to report that Physicians Realty Trust earned a score of 78 out of 100, representing a 4% year-over-year increase and a Green Star designation in the 2023 GRESB Real Estate Assessment for Sustainability Reporting. I'll now pass it over to Scott to discuss the merger. Thank you, Pete and John. From day one, the discussion with John focused on whether both companies would be better together than as standalone entities. That was the only transaction either side was willing to do, and we accomplished that goal, as the merger is expected to be accretive to both companies from every important angle: scale, earnings, balance sheet, capabilities, team, and relationships. John and I will touch on each of these items. One of the benefits of this transaction that is most exciting to John and me is that we can combine the complementary strengths of the two companies, including DOC's internal property management and Peak's redevelopment and development expertise, just to name two. We expect this deal to fundamentally change the power of the combined platform and therefore our mutual growth opportunity. For the past year, since taking on this role at Healthpeak, I've talked about several initiatives we were focused on, including having a larger playing field, given the evolving nature of healthcare delivery, getting closer to our real estate, deepening our relationships, and streamlining our operations. This transaction accelerates every item on that list. There's an investor presentation on both company websites, but let me quickly describe the basics. This is a 100% stock merger based on the closing share price of each company as of Friday. Each DOC share will be converted into 0.674 shares of newly issued Healthpeak stock. The ownership split will be approximately 77% Healthpeak shareholders and 23% Physicians Realty shareholders. The company's name will be Healthpeak Properties, headquartered in Denver, with the ticker symbol D-O-C or DOC. We expect to maintain our dividend at $1.20 per share, resulting in an FFO payout ratio of 80% or below. Closing is expected to occur in the first half of 2024, subject to typical closing conditions, including shareholder votes. Let me clarify, this is not a sale for either company. There's no cash changing hands. This is a relative value trade that we believe is beneficial to both companies, and our transaction structure allows all shareholders to carry forward and participate in the immediate and future value creation. Let me touch on the financial highlights. There is immediate and compelling value creation opportunity that will grow over time. The year one run rate synergies should be at least $40 million, with the potential to reach $60 million by the end of year two. Any increase in occupancy or rate would be upside to those numbers. We expect the combination to be accretive, to stand-alone year one FFO for both companies. We also expect FFO accretion, though that number is subject to GAAP accounting adjustments that will be finalized just prior to closing. We're even more excited about the strategic benefits. First, we've already spent a huge amount of time thinking about the team and platform from top to bottom with a joint mindset that the status quo is never good enough. Both companies have already been operating at a high level. This is an opportunity to quickly go to the next level, combining the complementary talent and strengths of each company. Second, broader and deeper relationships. Together, we'll have relationships with each of the 10 largest health systems in the country, the vast majority of the world's largest biopharmas, and an exciting mix of innovative biotechs and regional health systems. Those relationships are the intangible that drives outperformance. Third is increased operating scale, with a combined 40 million sq ft of outpatient medical real estate, including concentration in high-growth markets like Dallas, Houston, Nashville, Phoenix, and many others. The combined footprint will deepen our competitive advantage in local markets, so we haven't included any of this potential upside in our numbers. Four, we'll retain DOC's internal property management platform and expect to internalize certain markets in our medical and lab portfolios. This will deepen our relationships and augment our local market knowledge. The internalization will also be accretive, and we've included those profits in our synergy numbers. Five, improved tenant diversification. The top 10 tenants will represent just 21% of annual base rent, and seven of those 10 are investment-grade credits. Only two tenants will represent more than 1% of our combined base rent. HTA will be our biggest tenant at 9%, and they are the largest for-profit health system in the country. It's also a highly strategic relationship that goes back more than two decades. CommonSpirit will move from 15% of DOC standalone down to 4% of the combined company. CommonSpirit is the largest not-for-profit system in the country and rated A- by S&P. We look forward to supporting the mission of these two organizations and many others in the sector in a broader way than we could as standalone companies. Six, this transaction will help accelerate the integration of our medical and lab operations. Independent of this merger, we're already moving toward a single operating platform as the daily blocking and tackling of property management, leasing, CapEx, forecasting, and accounting has enormous overlap between the two segments. We also see more and more of our health systems doing some level of R&D, where we can be a high value add partner, given our capabilities. Seven, increased scale and liquidity for equity investors, as both companies will benefit from a larger market cap. Eight is a bigger, more liquid balance sheet, with leverage expected to be in the low fives at closing and well staggered debt maturities. The balance sheet will be a competitive advantage as we move forward, positioning the company to go on offense when highly levered owners are searching for answers in this new environment. Nine, lower cost of capital through more efficient G&A and enhanced liquidity, making external growth more accretive. 10, we'll use the larger portfolio to become more active in recycling capital for our pipeline opportunities, whether through outright sales or private capital joint ventures. Medical and lab remain attractive asset classes to institutional investors, and no company will be better positioned to capitalize on their desire for exposure to the sector. Moving to the team and governance, John Thomas will join our board as Vice Chair and have an active role in strategy, business development, and relationships, areas where I've seen firsthand that he excels. John has proved himself time and again as a leading voice in the sector and was a driving force for growth at both Healthcare REIT and Physicians Realty. In addition, we're excited to retain the vast majority of the DOC operations and property management teams, many of whom are reimbursed by the tenants. Kathy Sandstrom will continue to be our Chairperson, and the Healthpeak board will be expanded to include five directors from Physicians Realty, including John and the former U.S. Secretary of Health and Human Services, Tommy G. Thompson. After closing, outpatient medical will represent approximately 50% of the combined company's NOI. Demand exceeds supply in the outpatient sector today, and we expect that dynamic to continue, given senior population growth and the high cost of new construction. We're also starting to see market rental rates catch up to inflation, which is a positive sign for future NOI growth. That being said, we do not have fixed portfolio allocation targets moving forward. We'll allocate capital based on opportunity and risk-adjusted returns, and we do expect the opportunity set to be significant, driven by four major buckets and in no particular order. First is outpatient medical acquisitions from capital-constrained owners or health systems. Second is new development with leading health systems. Third is distressed acquisition opportunities in life science, driven by refinancing challenges or delayed lease-up. And fourth is activating our 5 million sq ft life science land bank when fundamentals are favorable. I'm excited for JT to provide his thoughts on the opportunity in front of us. Thank you, Scott. When John Tweed and Mark Theine asked me to join them just over ten years ago to create a new public company focused on outpatient medical investment, I was intrigued by the opportunity to work with them to build a new kind of organization with an intense focus on serving the current, but more importantly, the future needs of healthcare providers and their patients, as care continued to move from the inpatient setting to the outpatient setting. We didn't have an objective then or now to build a portfolio and sell it, but rather to build an organization built to last for the long term, one that would grow and evolve with clinical science, the needs of an aging US population, and resilient to macro and micro capital market conditions. We wanted a culture to drive those goals, and over time, came to capture that culture in the acronym CARE. We communicate and collaborate, we act with integrity, we respect the relationship, and we execute consistently. I've had the privilege to know and work with Scott since 2009, when we both had the opportunity to work together under a genuine mentor to both of us, George Chapman. We've worked with Pete since his days at Barclays and collaborated with him since he joined Healthpeak. We've had the opportunity over the past 10 years to get to know the Healthpeak team and more in recent weeks. We have common and consistent missions, goals, and more importantly, culture. Scott has articulated defined, achievable, measurable, and objective metrics we can and will achieve together. We are convinced this combination not only furthers our long-term objectives from our humble beginnings ten years ago, but provides the best-in-class scale and operating platform to achieve together for our combined providers and the patients they serve, far more than we can deliver separately. We are here to serve the best interests of our shareholders and stakeholders, and we believe, with all of our analysis and discussions, that one plus one in this context is not only more than three, but has the potential to be much, much more. In addition to Scott's earlier comments, there's an additional benefit to DOC's existing shareholders, as we are merging with the best-in-class lab portfolio with large footprints and lab investment platforms in Cambridge, Mass., South San Francisco, and San Diego. At an incredibly great valuation and time for investment in the existing lab platform, is what we believe is an outsized ROI for years to come. Healthpeak's Class A lab facilities are incredible real estate, hosting some of the world's leading scientists, clinicians, and discovery, sponsored by and backed by leading pharma, venture capital, and academic proximity and involvement. The combination of Healthpeak's lab teams and DOC's operational platform further enhances the value of these assets and relationships. I've toured Healthpeak's best-in-class lab and markets, and share the vision for the development of existing land owned by Healthpeak in Cambridge and South San Francisco, that should generate outsized growth for years to come, focus on lab and community development, but also outpatient medical access. Scott and I led, under George Chapman's leadership, a large investment in Cambridge lab real estate in 2010, and working together, learned lab real estate investment, development, and operations together. The results of that investment speak for themselves. Obviously, Scott has taken that experience and executed consistently as Healthpeak's leader. I'm very excited to partner with him and our collective team to further the combined company's future opportunities in lab and, of course, outpatient medical. In conclusion, DOC is not selling an outpatient medical portfolio to Healthpeak. Healthpeak is not selling lab or outpatient facilities to DOC. Rather, we believe we are combining the best of both organizations in an all-stock merger of equals, that we believe will benefit both shareholder bases and continues the mission, vision, and culture of each organization as one. This combination furthers each of our goals to have and build an organization built to last for the long term, one that would grow and evolve with clinical science, the needs of an aging U.S. population, and resilient to macro and micro capital market conditions. We believe this combination meets and exceeds all of those objectives. I look forward to working with Scott and our collective team and board, and as we say at DOC, "This is an opportunity to invest in better," as Healthpeak, and you'll be able to find us at the New York Stock Exchange under the stock symbol, DOC. Thank you. We'll now be happy to take your questions. Certainly. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, again, press star, then one. So that everyone has a chance to participate, we ask that participants please limit themselves to one question and one related follow-up. If you have additional questions, please queue. Our first question comes from the line of Michael Griffin with Citigroup. Your line is open. Great, thanks. I'm curious if you can kind of elaborate, maybe, Scott, just on the on- versus off-campus of the combined company. I mean, Peak historically has been more on-campus focused, DOC has been more off-campus. So is there going to be a strategy shift in terms of preference there? Yeah, I would just say that the portfolios are really complementary. I mean, there's a lot of overlap in the markets themselves, something in the range of 70% market overlap. They have huge concentration in a lot of our big markets, like Dallas and Houston, Phoenix. It's a pretty long list, as well as some new markets like Atlanta. We are higher on campus. That's been a good strategy over the years. It's produced good results. But I think DOC has high-quality assets in kind of a different and complementary way. Certainly, healthcare is moving more off-campus. Doesn't mean it's completely moving off-campus. Our hospitals are still busy. Those on-campus MOBs are still performing. But as you think about the trend in delivery, you know, progressive health systems today have 10 or more outpatient assets for every one hospital in their system, with oftentimes a strategic plan to move more towards a 20-1 ratio. And just almost by default, most of those new assets are off-campus, trying to make care more convenient, more accessible, more affordable. So we still like on-campus real estate, but we think we have to complement it and serve our health, health system partners more comprehensively, and off-campus just has to be part of that strategy. If you look at the segment or the sector in the aggregate, it's probably only 30% on campus, so it's just not realistic to think that you can be a true partner of choice with health systems if you're only serving that 30% of the real estate footprint. Gotcha. That's helpful. And then I'm just curious if you could maybe, you know, kind of give us a little color on sort of how these talks came to be, the mergers of equals, you know, kind of over time, how did things evolve, or anything there would be pretty helpful. Yeah, I mean, we'll, we'll put out the proxy with all of that background information in the next month or two, Michael, but I'll probably defer that answer until that's made public. Okay. Well, that's it for me. Thanks for the time. Yeah, thanks. Our next question comes to the line of Austin Wurschmidt with KeyBanc. Your line is open. Thanks. Good morning, everyone. I was hoping you could provide some additional detail around the synergy components within the $40 million-$60 million that you flagged, and do you expect it'll be accretive immediately upon closing? And can you give us a sense about the magnitude of accretion you expect, in the first year? Yeah. Hey, Austin, it's Pete here. It's a good question. You know, as we said, we do expect the transaction to be accretive to both AFFO and FFO per share. I will note, and I think everybody knows this at this point, but FFO has a lot of accounting adjustments, including a mark-to-market of the debt, and that won't be finalized until the deal closes. But everything I've just said is based on our best estimates as of today, and importantly, those accounting adjustments do not impact AFFO. You know, the accretion of $40 million-$60 million, I think that the biggest components of that are compensation savings. There will be some redundancies within, you know, both organizations. There's also corporate overhead savings notably some significant professional fee savings from having one public company as opposed to two. And then the increased NOI from internalizing property management across the portfolio. So those are the biggest pieces. But to answer your initial part of the question, we do expect it to be accretive in year one. No, that's, that's helpful. And then I'm just curious, so with the combined companies, the Peak team has kind of highlighted the potential mark-to-market growth opportunity, I think it's in 2025, within the lab space segment. And DOC, you know, has talked about, I think it's 2026, when you've got the significant maturities with an attractive mark-to-market as well. I'm just curious how you thought about sort of how this would dilute that growth in the years ahead, and then kind of how you backfill that through some of the other opportunities that you've discussed and highlighted. Yeah. Hey, Austin, I'll take a shot at that, and Pete and John may have comments as well. But overall, we view this transaction as augmenting our internal growth profile, certainly making it less volatile, more predictable. But in addition to just the initial synergies that Pete just described, our capabilities in serving our clients is gonna increase pretty materially. Whether it's our development, redevelopment capabilities, internal property management, the additional scale in the local markets, it just brings us closer to the real estate, closer to our tenants. That should drive better economics. And if you think about the last 10 years in lab versus the last 10 years in medical, it's not necessarily gonna repeat itself. I mean, from where we sit, our medical growth over the past decade has been in the mid 2% range, so slightly above inflation. But we have five to six year lease terms on average, and we are starting to see market rental rates catch up to inflation. There's obviously a lag, given that weighted average lease term, but we are starting to see some pretty significant rent rental rate growth, and DOC has been reporting the same. So I think if you look at the go forward, we're pretty optimistic about the growth rate within outpatient medical. We see demand exceeding supply really across the entire industry, including in our local market. So it should be a pretty compelling future growth rate that might look different than the last 10 years in that medical business. No, that's very helpful. Thank you. Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open. Hi, guys, congrats on getting the deal done. Just a question on asset management, I guess, for Scott Brinker. I mean, you guys had tremendous scale, particularly in the lab markets, and just curious on kind of why the change of strategy about embracing the internal property management. And if you could dive a little into, like, how should we think about how much NOI that business generates, just from a synergy or accretion perspective? Yeah. Happy to take that one, Juan. Really, in the last year, one of the major initiatives that we've been pushing as a leadership team is to bring our company closer to our real estate, closer to our buildings, local markets, and relationships. And having the internal property management allows us to be that much closer to our tenants in our buildings. And we feel like we're a little bit redundant, maybe one step removed in some cases, with third-party property managers, and we think we can eliminate that, improve the relationship, improve our local market knowledge. And doing it off the back of DOC's existing platform just allows us to do it faster, it's less execution risk, and it will have a higher margin just given we don't have to start from scratch. So it's a pretty significant part of the synergy number that Pete described. Some of that comes immediately, because there are a number of markets that we've already identified that we can internalize right away. And then over time, depending upon how it goes, we could increase that number. So it's one of the really interesting and intriguing parts of this merger, that it's not only financially accretive in a pretty meaningful way, but it's strategically important in that it brings us that much closer to our real estate. Yeah, Juan, it's JT. I just to add to that, you know, in the six largest overlapping markets for outpatient medical, Healthpeak's always had a great high-performing team and, and organization, organizational structure and approach, to on the ground boots—you know, boots on the ground, operation, property management. We have, we have DOC team members, in each of those large markets already, so there's just a lot of synergy and scale that's already—we can put in place day one, and, and we'll be working, you know, during the, during the process towards closing to, to get that plan in place and, and, assume those responsibilities, you know, together, day one, and then there's many more markets to come. Just a lot of upside opportunity, both financially, but also, as Scott said, to, you know, get people just connected to the real estate. Just as a follow-up, I guess, it maybe a little two-parter here. Is the exchange ratio fixed, or is that variable? And then is there any planned dispositions or exit of any markets with the combined company? So the exchange ratio is fixed. In terms of dispositions, it would only be opportunistic. The balance sheet's in great shape today for both companies. It will be even stronger post-closing. We have a very high-quality portfolio. We toured the vast majority of DOC's portfolio and feel the same. Anything we do would be opportunistic. There's no forced sales as a part of this transaction, given the strength of the balance sheet. But I did make comments in my prepared remarks that we would expect to be more active in capital recycling, so doing things opportunistically, whether it's outright sales or recaps with joint venture partners. We do think that we'll be a partner of choice to the private capital community as well. We already have a number of those relationships, and we think we could have more, as we see a significant pipeline opportunity, as I described, really across the lab and medical business. And if the stock is not trading at a creative level, we could certainly look to recycle assets to capitalize that growth pipeline. Thank you. Our next question comes from the line of Vikram Malhotra with Mizuho. Your line is open. Thanks for taking the questions and, and congrats on the deal. I guess just first one, you know, when, you know, two of your peers merged, one of the thesis was that this creates a much larger, acquisition opportunity set, and theoretically, the AFFO FFO growth is higher. I think there was a 500-600 basis point number at that time. Is that part of the rationale here? Do you see a bigger acquisition set and just ultimately higher. You said steadier growth, but I'm curious if you also see higher growth. Yeah, well, certainly on the external growth front, we do think that our balance sheet will be even more attractive to lenders, so our cost of capital should benefit. Clearly, our G&A, as a percentage of assets, will go down, so our cost of capital should improve. Hopefully, hopefully, the market responds to the strategic benefits of this transaction, and our cost of equity improves as well. So certainly we would expect that the external growth opportunity will be more attractive, given the doc relationships and the Healthpeak relationships on top of that improved cost of capital. But that, that's not part of any of the accretion or synergy numbers that, that we've outlined. That would be all upside, Vikram. Okay. That's helpful. I guess just, you know, one more just, you know, following up on the whole, you know, the, I guess, the off versus on campus. You know, part of what you mentioned is that the strategy, the consumer, the hospitals are going more off campus, but I guess that could be—you know, that has been going on for a while. I'm just sort of wondering why today? You know, as part of this, do you still see... You mentioned disposition, so do you still see a path where more of the dispositions are off-campus weighted? No, it would just be opportunistic, Vikram. It's not gonna be by design. But I think really from day one, 12 months ago, this management team has described the desire to have a wider playing field. If we're not servicing our tenants and health system partners in the medical business, we're not gonna be, we're not gonna find maximum success. And just given the emphasis of their strategy and growth plans, we have to be a participant in that. Okay. So I guess just to clarify, the dispositions would then still be, like, more broad-based, including potentially the CCRCs that you've always had on that list? Yeah, I would put CCRCs in a totally different bucket. That, that's a business that is performing well. We think it's a great asset class. We've got a great portfolio and internal team running it, as well as a great third-party property manager in LCS. So the feedback and strategy on that portfolio hasn't really changed. When the financing markets make sense and we get a fair price, that's one that we'd be willing to sell and recapitalize or recycle into our core businesses. But on your specific point about on versus off campus or lab, that will just be completely opportunistic. Wherever we get the best pricing is where we would look to transact. Okay, great. Thanks to, again, you and John and both teams. Thanks, Vikram. Thanks, Vikram. Our next question comes from the line of Rich Anderson with Wedbush. Your line is open. Hey, good morning. So congrats to everybody. You're making it clear no one's buying the other and so on. But the fact is, Healthpeak is issuing, if my math is right, 168 million shares. If I'm also doing my math right, the implied cap rate on DOC is in the kind of low to mid sevens. And so if you do a, you know, a cost of equity, if you just do an inverse of your AFFO multiple to keep it simple, it's kind of 9-ish. So I guess the question is: you need that $40 million of synergies to be able to talk about accretion. It's. Without it, it is at least marginally dilutive out of the gate to Healthpeak earnings. Is that a fair mathematical approach? I'm not sure. There was a lot there, Rich. I'll do it again if you want. 168 million shares, implied cap rate on DOC of 7.25%-7.5%, something like that. So based on those two forces, it's dilutive without the synergies, correct? Yeah. Well, they're very different portfolios. I mean, we're not a pure play medical portfolio today. We have the CCRCs, we have lab, and NOI is one metric you could think about. It's certainly one that real estate investors tend to point to, but it's certainly not the only metric. I mean, when you think about CapEx and volatility of earnings, but CapEx in particular, given the nature of their portfolio, just has a very low CapEx burden relative to ours. So that certainly drives a lot of the accretion as well on an AFFO basis, which feels more like a cash economics analysis to us. And I'm not sure that I would agree with your point on, in terms of AFFO, kind of the true economics of the deal. I think there's probably some accretion, even without all the synergies, Rich. Our next question comes from the line of Omotayo Okusanya with Deutsche Bank. Your line is open. Yes. Can you all hear me? Yes. Yeah. Excellent. So, question just around the transaction. I mean, summer of 2022, we have the HR, HTA transaction go down. A lot of questions around someone who's primarily on campus, buying someone who has a lot of off-campus. A lot of questions around someone who has a higher same-store NOI group, so the MOB portfolio, buying someone who has a lower same-store NOI group profile. A lot of questions around pricing. Again, your implied cap rate today is higher than the implied cap rate for DOC. A lot of questions around, again, someone who has, you know, externally managed their portfolio externally, buying someone who's managing it internally. It just seems like there's a lot of similarities, you know, a year and a half ago, when people were kind of struggling with the HTA-HR deal. How do you convince shareholders this time around that the DOC-Healthpeak transaction is different, especially when, again, it seems to be taking away a little bit from the life science story that you guys have been trying to tell, for the past few years? Yeah. Hey, Tayo, it's JT. You know, the, we couldn't be more excited about this opportunity and, you know, Scott and Pete and our teams, you know, sat down and kind of evaluated the, the opportunity. We looked at it as really combining the best parts of both organizations and, kind of the, the different strategies. Everything was on the table to evaluate what was the best go-forward strategy for, you know, all the questions you just asked. As you know, I've talked about a lot, this, this question has come up a lot today, is, you know, DOC's always been had the reputation as the off-campus outpatient medical REIT. You know, we're 50% on and 50% off. The assets we've helped finance to develop over the last five years have been off campus and have won awards and are full and, you know, leased to the best health systems in the country. Peak's been doing the same thing, so it's really not a difference in strategy. It is adding relationships, adding, in a lot of cases, mutual. Honor Health is a great mutual client of ours in Scottsdale, and we're doing more growth with them on and off campus. So it's really what meets the needs of the providers and the patients that they're serving. And you know, during the pandemic, you know, you've heard me talk about this a lot. We did a survey, and people didn't want to go anywhere near a hospital for their routine care if they didn't have COVID, and that really has driven a lot of health systems to evaluate their strategies. As I mentioned before, you know, kind of 10 off-campus, outpatient, facilities for every hospital, and that just continues to grow, and the pandemic showed the need for, for even more of that. So it's not so much as, you know, changing one strategy to the other. It's about, it's about, looking at each other's strategies and maximizing the combined, opportunities that we have in, in front of us. So it's a, you know, we're not gonna, don't really need to talk about, other transactions. I would just say very different structures, very different way to put the companies together, very different strategies. You know, this opportunity makes sense for all of us, without leasing one more foot, 'cause we, you know, effectively are 95% leased already. You know, the outpatient, or excuse me, the lab business is highly leased as well, so it's a great opportunity for the DOC shareholders to, you know, work with the, invest in one of the best lab businesses and portfolios, you know, in the world, and opportunity for the Peak shareholders to get the combined strengths of both teams. Okay. Uh- Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Your line is open. Hey, guys. It's Adam Kramer on for Ron. Congrats on the deal. Congrats to everyone involved here. Look, just, you know, it's been covered a little bit, but maybe I'll ask it a little bit of a different way, which is, you know, look, obviously, this deal is focused on outpatient medical. Wondering kind of what read-throughs we should have, if any, towards the legacy Healthpeak life science business? Yeah, I mean, it really is completely independent of the lab business, which, you know, our confidence in that platform and portfolio and segment has never been stronger. This was just a unique opportunity to make the company better in pretty much every important way: balance sheet, capabilities, relationships, scale. It's a pretty long list, so I wouldn't make any read-through to the lab business. This is just something that made sense independently. It's a unique opportunity that fortunately, because of our balance sheet and relationships, we were able to put together and execute. So no read-through at all to the lab business. Got it. That, that's helpful. And then just on kind of the go-forward financing, kind of growth plan. You know, I guess kind of how do you think your cost of capital, you know, in terms of the kind of the combined entity, you know, or is this kind of more of a kind of capital recycling story, right? Bigger asset base now, and you can kind of focus more on capital recycling, you know, or versus kind of a cost of capital kind of accretion plan. Yeah, I think one of the things we haven't talked about yet that's a very big, you know, competitive rationale for doing this, was the combination of our two balance sheets. I mean, DOC has a great balance sheet. We think we have a sector-leading balance sheet as well, and we're not levering up to do this. In fact, if anything, we're modestly de-leveraging with the synergy. So we have a little bit of dry powder. But when you look at a combined basis, we've got a weighted average interest rate of less than 4%. We've got a weighted average debt maturity of greater than five years, almost no secured debt, liquidity of, you know, approximately $3 billion. We did put a new term loan in place, which enhances the liquidity of the pro forma combined company, and our net debt to EBITDA is in the low fives. And as Scott mentioned, we've got less G&A, improved cost to capital. So, from a balance sheet perspective, from a cost of capital perspective, this is a big win for both companies and for shareholders and for our bondholders as well. Great. Thanks so much for the time, and congrats again. Our next question comes from the line of James Kammert with Evercore. Your line is open. Thank you. Good morning. Appreciate all the color regarding the potential synergies on the OM side, but I just wondering, could you just help me walk through kind of the math a little bit? I mean, Peak just reported first quarter—pardon me, Q3, I think, 3.4% same-store NOI growth from the medical office, and I believe DOC just reported about, 1.5% for the third quarter. So on a pro forma basis, are you suggesting that, you know, the overall combined portfolio could be, you know, at kind of like Healthpeak's operating, performance level or greater? Just trying to understand how the synergies work through and what you're quantifying, what the impact is. Thanks. Yeah, I think we'll bring the same store growth rate more in line over time. I mean, there's a couple of differences. We do have a higher base escalator than DOC. We're in the high 2s, they're more in the mid 2s, just given the nature of their portfolio. But over time, as we restrike leases, we'd expect to bring those escalators more in line. They have had better re-leasing spreads than us, in part because they have the lower escalator, so there's just a bigger mark-to-market opportunity. Those things usually go together, obviously. But we do have the redevelopment capabilities. As some of their older properties mature, we would expect that we would bring our redevelopment capabilities to this portfolio as well, which means that they're really not part of the same-store pool, either on the downside or the upside, and DOC just has a different model. So I think that that will change as well. And then clearly, the internalization of the property management should be a benefit to the portfolio as well. So I do think you'll see those two numbers look more in line and consistent among the two portfolios over time, Jim. Okay, great. Thank you. If I could, a second one. You know, I think you've touched upon this in different aspects on the call, but is there not potentially more distress, if you will, valuation-wise in lab? Just trying to figure out how the company came to the decision to, maybe it's just the opportunity is presenting itself, but, you know, pivot a little bit incremental exposure to OM. My perception is that the, you know, distress component is less so in OM versus lab. Just curious why now to make that kind of allocation? Yeah. There's been the opportunities in both segments. I think having a bigger balance sheet and cost of capital just allows us to be better positioned to take advantage of those opportunities, whether it's in lab or medical. But no question, in lab, we will start to see distressed opportunities, whether it's from refinancing risk or delayed lease-up. So that hasn't started in earnest yet, but I would expect over the next 12-24 months that there will be quite a bit of opportunity. And I just don't see any way that our company isn't better positioned to capitalize on those opportunities as a result of this deal, just given the balance sheet, the improved G&A, improved liquidity. So I view this as a positive step in positioning ourselves for that distress, which I think is coming, but we haven't really seen much of it yet. And then in medical, I wouldn't call it operational distress, but there will be plenty of refinancing-related risk in the coming years in that sector, just given what's happened with interest rates and cap rates. It was harder for us to compete, or DOC to compete, for that matter, when secured financing rates were in the 3%-4% range and LTVs were at 70%. But guess what? Like, that world is long gone, and a lot of the private market has in-place financing with those exact terms, and it's not gonna look like that even remotely when they refinance. So I think you'll see a lot, a lot of opportunity there as well, but more driven by refinancing than operational distress. So Jim, we're gonna be opportunistic across the whole portfolio. I wouldn't view it as one or the other. Hopefully, we're positioning ourselves to do both. Terrific. Thank you. Our next question comes from the line of Nick Yulico with Scotiabank. Your line is open. Thanks. Yeah, just first question is on the Healthpeak side, related to just the existing portfolio. I was hoping to get an update on just Oyster Point. If you could remind us how much, you know, square footage is still you have to lease there, and, you know, how you're thinking about rents on that space. And then also for Sorrento, you know, if you have any update on, you know, outcome you, you're expecting from the bankruptcy, and then also any activity you're seeing on the development asset there? Yeah, maybe Nick, I'll hit on Sorrento first, and then I'll have Scott Bohn touch on Oyster Point. On Sorrento, you know, we got our rents paid in October. No update yet, since it's still October, on November rents. No matter what happens on that outcome, you know, we're prepared to release those assets, and we have a plan. We think the rents are, you know, still below market on those operating assets. At this point in time, we've received our rents, but no additional update beyond that. Obviously, we did announce a nice lease at our Oyster Point campus, a 100,000 sq ft lease with Pliant Therapeutics. I'll turn it to Scott. He can talk about what else is going on, on that campus. Yeah. I mean, Nick—yeah, I mean, with the lease with Pliant on the campus, we took another 100,000 sq ft off the table there. So, you know, the 940,000 sq ft campus, we've now completely leased on about 70% of that. We've got the 170,000 sq ft building that's currently in redev that we got back at the end of last year. And now we have two buildings that total about 189,000 sq ft that we'll get back in January of 2024. But both of those buildings will go into a relatively extensive redev, you know, nine to 12 months. So, you know, we're talking about not leasing it until 2025, so some time there. All right. Thanks, guys. Second question is just, again, on the Healthpeak side. If you could tell us a little bit more about, you know, how the board thought about this decision to do M&A right now, versus, you know, whether there were other options considered, right? Like, you know, to maximize shareholder value. I mean, in these situations where, you know, stock price has been impacted, you know, were there other considerations about maybe trying to sell your company or selling assets, doing, you know, something else, besides this M&A as a way to kind of address the future of the company? Thanks. Yeah, we've already had some asset sales this year. We have other things that are potentially in process. So certainly with the stock trading where it's at, capital recycling has been on the list of priorities. It's not a highly liquid market today, just given the financing environment. But, you know, neither company is viewing this as a sale. This is just a combination based on relative value that made sense in and of itself. It's a unique opportunity. So no, this isn't a situation where we're considering a broad range of options. We just thought this was highly compelling for all the reasons that we mentioned, both strategically and financially. Nick? Thanks, Scott. Our next question comes from John Petersen with Jefferies. Your line is open. Great, thanks. As we do these merger models, we have to deal with some annoying GAAP accounting rules. So I realize this is in cash, but, you know, I know we're gonna have to mark-to-market DOC's debt. If you have any thoughts on what the interest rate there might be? It seems to me like it would be probably very high sixes today. And then I was just curious on the revenue side, if you, you know, are those rents below market? Do we think there would be any significant revenue mark-to-market that we would have to think about from a GAAP accounting perspective? Again, I realize this is not cash. Yeah. No, no problem, John. This is Pete. I'll take that. You know, first of all, we do have to re-straight line the rents as of when we would anticipate this deal to close. I know DOC has some public disclosures out there that you guys could do your best to come up with some estimates there. But, you know, straight lining is almost always a positive when you do it in these types of transactions. Second, you know, the lease mark-to-market, you know, where you do compare in-place rents to market rents, and more often than not, in these deals, there is a positive adjustment. We do think there will be a positive adjustment as part of this as well, although not as significant as perhaps the straight-line rent adjustment. The third one you mentioned, which, you know, works against you, is the debt mark-to-market. Importantly, though, you mark that to our cost of debt, not to DOC's cost of debt. I think we would be sort of in the 6.25%-6.75% range, depending upon the term. That's as of today. We will do that mark-to-market as of the date of the close, so that will fluctuate between now and the closing date, but that's probably the best guidance I can give you. From an assumption perspective, I would say our hope is to assume all of DOC's debt, except for the private placement notes. There's no ability to assume those, but our goal would be to assume all the bonds that are outstanding, absent the private placement notes, and then the term loan as well. We take on the secured debt, you know, a lot of that, which is encumbering the joint venture portfolios. Gotcha. Very thorough, very helpful. Thank you. Yep. Our next question is a follow-up from Rich Anderson with Wedbush. Your line is open. Thanks. And I was gonna say, Scott, I totally got you on the AFFO response to my previous question, but I got knocked off. I wanna know if there was, what, what happens between now and closing? You mentioned just—Scott, you just went through some of these accounting adjustments, transaction costs, break fee. Co- you know, what's to stop a third party to kind of come in and take a look? Or, or what, how, how would you, respond to some of those, you know, potential events between now and closing? Hey, Rich, it's J.T. I think we're gonna be focused on, you know, again, integrating the team, integrating processes, taking, I don't know if you, if you heard, if you got knocked off, but, you know, we have six markets that overlap, where we already have DOC team on the ground, and we will put those markets all in our internal management going forward and be planning to do that hopefully, you know, day one or very early on, you know, right after closing. Besides that, we'll just be working through the process with the SEC and get our shareholder vote. Yeah. I think just on some of the specifics there, Rich, in addition to what JT just said, you know, the merger agreement will get filed in the next couple of days, and you should expect a proxy to get filed probably late November, early December. You'll get a lot of information in that. Our anticipated closing would be in the first half of next year. We'd all prefer it to be the earlier part of the first half of next year, to help with the integration and to kick that off as quickly as possible. I think the best guidance we can give right now is first half of 2024. Okay. Sounds good. Thanks. Yep. Our final question comes from the line of Steve Sakwa with Evercore ISI. Your line is open. Yeah, thanks. Sorry to beat a dead horse on the synergies. I just wanna be 100% clear. The $40 million-$60 million that you're talking about, is that cash savings, and then anything on mark-to-market, FAS 141, and then the debt mark-to-market would be pluses and minuses on top of that? The GAAP adjustments are on top of the $40 million-$60 million. The vast majority of the $40 million-$60 million is cash. There's a small, you know, non-cash comp component that would not flow into AFFO, but I'd say, you know, the $40 million-$60 million, all of it would hit effectively AFFO. You have the GAAP adjustments on top of that, and then, you know, the vast majority of those synergies hit AFFO. Does that make sense, Steve? Yes. Great. Yes, it does. Thanks. I know this is kind of far in the future, just given the challenges we're seeing in life sciences today, but you did get these approvals for the Alewife, you know, land and the upzoning. Is just any comments around that, what it might mean? You know, do you jumpstart anything with multifamily? Just, you know, what are the, I guess, forward look on that project now that you've gotten these new entitlements? Yeah, the team really did a fantastic job with the entitlement process, to really become and establish a partnership with not only the city and the city councilors, but a lot of the local stakeholders and neighborhood advocates. Just really proud of what our team has done in a high-barrier market like Cambridge. We think it's a great outcome for the city, in terms of the mixed use and infrastructure that will come into that sub-market and the residential housing, in addition to the over time lab opportunity. So just a really, really great outcome. But now that the rezoning is done, that was the big discretionary entitlement that we needed. So we would look sooner than later to recycle some of the multifamily parcels. That's obviously not our core business, and we have no intention of being a multifamily developer. But there's a lot of recent apartment development in that submarket that's been highly successful. So we do think that there will be a long list of participants that are eager to participate. Sorry, and just one quick follow-up on that. Scott, would you look to actually monetize those, or would you stay in as a joint venture partner or just sell them outright? The multifamily parcels, we would sell outright, Steve. Okay, great. Thanks. That's it for me. Okay, thanks. The Q&A session has now ended. I will now turn the call back over to our presenters for closing remarks. All right. Well, thank you for your interest today. We're really excited about this and look forward to speaking to you, if not this week and next, and hopefully in Los Angeles at the conference here in mid-November. Have a great week. This concludes today's conference. We thank you for your participation. You may now disconnect.