v3.25.2
The Merger
 6 Months Ended
Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
The Merger The Merger
On March 1, 2024 (the “Closing Date”), pursuant to the Agreement and Plan of Merger dated October 29, 2023 (the “Merger Agreement”), by and among the Company, DOC DR Holdco, LLC, a wholly owned subsidiary of the Company (“DOC DR Holdco”), DOC DR, LLC, a wholly owned subsidiary of Healthpeak OP (“DOC DR OP Sub”), Physicians Realty Trust, and Physicians Realty L.P. (the “Physicians Partnership”): (i) Physicians Realty Trust merged with and into DOC DR Holdco (the “Company Merger”), with DOC DR Holdco surviving as a wholly owned subsidiary of the Company (the “Company Surviving Entity”); (ii) immediately following the effectiveness of the Company Merger, the Company contributed all of the outstanding equity interests in the Company Surviving Entity to Healthpeak OP (the “Contribution”); and (iii) immediately following the Contribution, Physicians Partnership merged with and into DOC DR OP Sub (the “Partnership Merger” and, together with the Company Merger, the “Merger”), with DOC DR OP Sub surviving as a subsidiary of Healthpeak OP (the “Partnership Surviving Entity”). Subsequent to the Closing Date, the “Combined Company” means the Company and its subsidiaries.
On the Closing Date and in connection with the Merger, (i) each outstanding common share of beneficial interest of Physicians Realty Trust (“Physicians Realty Trust common shares”) (other than Physicians Realty Trust common shares that were canceled in accordance with the Merger Agreement) was automatically converted into the right to receive 0.674 (the “Exchange Ratio”) shares of the Company’s common stock, and (ii) each outstanding common unit of the Physicians Partnership was converted into common units in the Partnership Surviving Entity equal to the Exchange Ratio.
As a result of the Merger, the Company acquired 299 outpatient medical buildings. The primary reason for the Merger was to expand the Company’s size, scale, and diversification, in order to further enhance the Company’s competitive advantages and accelerate investment activities.
The Merger was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), which requires, among other things, the assets acquired and the liabilities assumed to be recognized at their acquisition date fair value. For accounting purposes, the Company was treated as the accounting acquirer of Physicians Realty Trust. The Company was considered to be the accounting acquirer primarily because: (i) the Company is the entity that transferred consideration to consummate the Merger; (ii) the Company’s stockholders as a group retained the largest portion of the voting rights of the Combined Company and have the ability to elect, appoint, or remove a majority of the members of the Combined Company’s board of directors; and (iii) its senior management constitutes the majority of management of the Combined Company.
The consideration transferred on the Closing Date was as follows (in thousands, except per share data):
March 1,
2024
Physicians Realty Trust common shares and Physicians Realty Trust restricted shares, PSUs, and RSUs exchanged(1)
240,699
Exchange Ratio0.674
Shares of Healthpeak common stock issued162,231
Closing price of Healthpeak common stock on March 1, 2024(2)
$17.10 
Fair value of Healthpeak common stock issued to the former holders of Physicians Realty Trust common shares, restricted shares, PSUs, and RSUs
$2,774,147 
Less: Fair value of share consideration attributable to the post-combination period(3)
(16,223)
Physicians Realty Trust revolving credit facility termination(4)
$175,411 
Settlement of Physicians Realty Trust’s transaction costs
23,913 
Payments made in connection with share settlement(5)
11,315 
Cash consideration
$210,639 
Consideration transferred$2,968,563 
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(1)Includes 241 million Physicians Realty Trust common shares and Physicians Realty Trust restricted shares outstanding as of March 1, 2024, inclusive of: (i) 200 thousand Physicians Realty Trust restricted shares; (ii) 1 million Physicians Realty Trust common shares issuable pursuant to outstanding Physicians Realty Trust performance-based restricted stock unit (“PSUs”) (reflected at the maximum level of performance); and (iii) 300 thousand Physicians Realty Trust common shares issuable pursuant to outstanding Physicians Realty Trust restricted stock units (“RSUs”).
(2)The fair value of Healthpeak common stock issued to former holders of Physicians Realty Trust common shares and Physicians Realty Trust restricted shares, PSUs, and RSUs was based on the per share closing price of Healthpeak common stock on March 1, 2024.
(3)Represents the fair value of unvested Physicians Realty Trust restricted shares, PSUs, and RSUs attributable to post-combination services that were converted into Healthpeak common stock on the Closing Date in accordance with the Merger Agreement. Although no future service after the Closing Date is required, the value attributable to post-combination services reflected the incremental fair value provided to the Physicians Realty Trust equity award holders and the accelerated vesting of such awards at the Closing Date in accordance with the Merger Agreement. This amount was recognized as transaction and merger-related costs on the Consolidated Statements of Operations.
(4)Represents the Company’s cash repayment of all outstanding balances under Physicians Realty Trust’s revolving credit facility on the Closing Date in connection with the related termination.
(5)Includes cash settlement of: (i) tax liability related to holdback elections made under the pre-existing terms and conditions of Physicians Realty Trust’s equity programs and (ii) fractional share consideration.
Purchase Price Allocation
For the Company’s real estate acquisitions that are accounted for as business combinations, such as the Merger, the Company allocates the acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, and noncontrolling interests at fair value as of the acquisition date. Any excess of the consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill. Acquisition costs related to business combinations are expensed as incurred. The estimated fair values of the assets acquired, liabilities assumed, and noncontrolling interests were based on information that was available at the Closing Date. The fair values were determined using standard valuation methodologies, such as the cost, market, and income approach. These methodologies require various assumptions, including those of a market participant.
The following table summarizes the fair values of the assets acquired, liabilities assumed, and noncontrolling interests at the Closing Date (in thousands):
Preliminary Amounts Recognized on the Closing Date
Measurement Period Adjustments
Amounts Recognized on the Closing Date (As Adjusted)
ASSETS 
Real estate: 
Buildings and improvements$3,199,884 $(6,889)$3,192,995 
Development costs and construction in progress68,171 — 68,171 
Land and improvements435,353 — 435,353 
Real estate3,703,408 (6,889)3,696,519 
Loans receivable118,908 — 118,908 
Investments in and advances to unconsolidated joint ventures58,636 — 58,636 
Accounts receivable, net(1)
9,536 (254)9,282 
Cash and cash equivalents30,417 — 30,417 
Restricted cash
1,007 — 1,007 
Intangible assets(2)
890,827 — 890,827 
Right-of-use asset191,415 (113)191,302 
Other assets44,691 (668)44,023 
Total assets$5,048,845 $(7,924)$5,040,921 
LIABILITIES AND EQUITY 
Term loans$402,320 $— $402,320 
Senior unsecured notes1,139,760 — 1,139,760 
Mortgage debt
127,176 — 127,176 
Intangible liabilities(3)
149,875 — 149,875 
Lease liability97,160 (113)97,047 
Accounts payable, accrued liabilities, and other liabilities72,864 (2,976)69,888 
Total liabilities$1,989,155 $(3,089)$1,986,066 
Redeemable noncontrolling interests1,536 1,573 3,109 
Joint venture partners(4)
20,109 (3,043)17,066 
Non-managing member unitholders(5)
116,618 — 116,618 
Total noncontrolling interests$136,727 $(3,043)$133,684 
Fair value of net assets acquired and liabilities assumed, net of noncontrolling interests$2,921,427 $(3,365)$2,918,062 
Goodwill47,136 3,365 50,501 
Total purchase price$2,968,563 $— $2,968,563 
_______________________________________
(1)Includes $14 million of gross contractual accounts receivable.
(2)The intangible assets acquired had a weighted average amortization period of 6 years (see Note 9).
(3)The intangible liabilities acquired had a weighted average amortization period of 9 years (see Note 9).
(4)Includes six consolidated joint ventures in which the Company held ownership interests ranging from 56.7% to 99.7% on the Closing Date.
(5)In connection with the Merger, Physicians Partnership merged with and into DOC DR OP Sub with DOC DR OP Sub surviving as the Partnership Surviving Entity. The Company controls the Partnership Surviving Entity via its ownership of its managing member, and the Partnership Surviving Entity is consolidated by the Company.
The measurement period adjustments recorded through December 31, 2024 are final and were primarily the result of additional information obtained during the measurement period by the Company related to certain assets acquired and liabilities assumed and updated valuations of noncontrolling interests, resulting in an increase to goodwill of $3 million.
Based on the final purchase price allocation of fair value, approximately $51 million has been allocated to goodwill. The recognized goodwill was attributable to expected synergies, cost savings, acquired workforce, and potential economies of scale benefits from outpatient medical property management and tenant and vendor relationships following the closing of the Merger. None of the goodwill recognized is expected to be deductible for tax purposes.
Merger-Related Costs
During the three and six months ended June 30, 2025, the Company incurred approximately $3 million and $8 million of merger-related costs, respectively, including severance, legal, accounting, tax, information technology, and other costs of combining operations with Physicians Realty Trust. During the three months ended June 30, 2024, the Company incurred approximately $7 million of merger-related costs, including approximately $5 million of legal, accounting, tax, information technology, and other costs of combining operations with Physicians Realty Trust and approximately $3 million of severance expense related to legacy Healthpeak employees. During the six months ended June 30, 2024, the Company incurred approximately $114 million of merger-related costs, which primarily related to advisory, legal, accounting, information technology, tax, post-combination severance and stock compensation expense, and other costs of combining operations with Physicians Realty Trust. Included in this amount was: (i) $38 million of fees paid to investment banks and advisors to help the Company negotiate the terms of the transactions contemplated by the Merger Agreement and to advise the Company on other merger-related matters, inclusive of $21 million of success-based fees incurred upon consummation of the Merger, (ii) $26 million of severance expense due to certain Physicians Realty Trust dual-trigger severance arrangements that were required to be recognized as post-combination expense in accordance with ASC 805, (iii) $16 million of post-combination stock compensation expense for the accelerated vesting of Physicians Realty Trust equity awards pursuant to the terms of the Merger Agreement, based on the fair value of Healthpeak common stock issued to holders of Physicians Realty Trust equity awards, (iv) $23 million of legal, accounting, tax, information technology, and other costs, and (v) $10 million of severance expense related to legacy Healthpeak employees. These merger-related costs are included in transaction and merger-related costs on the Consolidated Statements of Operations.
Unaudited Pro Forma Financial Information
The Consolidated Statements of Operations for the three months ended June 30, 2024 include $146 million of revenues and $18 million of net loss applicable to common shares associated with the results of operations of legacy Physicians Realty Trust. The Consolidated Statements of Operations for the six months ended June 30, 2024 include $194 million of revenues and $38 million of net loss applicable to common shares associated with the results of operations of legacy Physicians Realty Trust from the Closing Date to June 30, 2024.
The following unaudited pro forma information presents a summary of the results of operations for the Combined Company, as if the Merger had been consummated on January 1, 2023 (in thousands). There are no pro forma adjustments for the three and six months ended June 30, 2025 as the Merger was completed on March 1, 2024. The following unaudited pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the unaudited pro forma financial information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.
 
Three Months Ended
June 30, 2024
Six Months Ended
June 30, 2024
Total revenues$688,293 $1,386,995 
Net income (loss) applicable to common shares154,577 242,286 
The unaudited pro forma financial information above includes nonrecurring significant adjustments made to account for certain costs incurred as if the Merger had been completed on January 1, 2023. Transaction and merger-related costs of $7 million and $114 million that were incurred during the three and six months ended June 30, 2024, respectively, were excluded from the unaudited pro forma financial information for the three and six months ended June 30, 2024, respectively, as if they were incurred on the pro forma completion date of January 1, 2023.