Cuộc họp báo cáo kết quả kinh doanh Quý 3/2026 của Healthcare Realty (HR): Nâng triển vọng kinh doanh nhờ NOI tăng 5,1%

Điểm tin chính

• Healthcare Realty báo cáo FFO chuẩn hóa quý 3/2026 đạt $0,42 mỗi cổ phiếu, FAD đạt $0,32 mỗi cổ phiếu và tăng trưởng NOI tiền mặt của các tài sản hiện hữu đạt 5,1%.
• Tỷ lệ lấp đầy của các tài sản hiện hữu đã tăng 30 điểm cơ bản so với quý trước lên 93,1%, được hỗ trợ bởi hơn 85.000 feet vuông diện tích hấp thụ ròng dương. Các hợp đồng thuê đã ký nhưng chưa bàn giao vượt quá 480.000 feet vuông.
• Công ty đã hoàn tất khoảng 1,5 triệu feet vuông diện tích cho thuê mới và gia hạn. Mức chênh lệch giá thuê tiền mặt đạt 8,6%, mức cao nhất trong gần một thập kỷ, trong khi tỷ lệ giữ chân khách thuê đạt 88%.
• Tỷ lệ cho thuê của danh mục tái phát triển đã cải thiện 500 điểm cơ bản so với quý trước lên 72%, nhờ hơn 110.000 feet vuông diện tích cho thuê mới.
• Ban lãnh đạo đã nâng dự báo năm 2026 lần thứ ba, tăng dự báo FFO chuẩn hóa lên $1,65-$1,67 mỗi cổ phiếu và dự báo tăng trưởng NOI tiền mặt của các tài sản hiện hữu lên 5,0%-5,25%.
• Healthcare Realty đã mua lại $75 triệu tiền cổ phiếu trong quý và tính đến hết tháng 10, nâng tổng giá trị mua lại từ đầu năm lên $250 triệu. Ban lãnh đạo tiếp tục ưu tiên mua lại cổ phiếu và thâu tóm liên doanh dựa trên lợi nhuận tương đối.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Các hệ thống y tế chiếm hơn 600.000 feet vuông diện tích cho thuê trong quý 3. Ascension St. Thomas đã ký 18.000 feet vuông hợp đồng thuê mới và gia hạn 185.000 feet vuông trong 10 năm tại Nashville. Healthcare Realty cũng lên kế hoạch cho dự án 35 triệu USD tái phát triển ba bất động sản tại Ascension St. Thomas West Campus.

Các thương vụ cho thuê đáng chú ý khác liên quan đến Cedars-Sinai, Trinity Health và Indiana University Health. Tổng quy mô hợp đồng cho thuê mới và gia hạn vẫn duy trì trên 3 triệu feet vuông, trong đó các hệ thống y tế chiếm khoảng một nửa.

Ban quản lý cho rằng đà tăng trưởng hoạt động đến từ nhu cầu khám chữa bệnh ngoại trú gia tăng, sự hạn chế trong việc xây dựng văn phòng y tế mới và chi phí cao hơn đối với các khách thuê tìm kiếm không gian thay thế. Công ty cho biết các mức tăng giá thuê theo hợp đồng thường ở mức tối thiểu 3%, với một số hợp đồng thuê tiệm cận 4% khi được cung cấp thêm nguồn vốn.

Healthcare Realty cũng báo cáo tiến triển trong việc tối ưu hóa danh mục đầu tư. Tính từ đầu năm đến nay, công ty đã chuyển nhượng thu về hơn 200 triệu USD giá trị tài sản, trong đó hơn 100 triệu USD đã ký hợp đồng hoặc nằm trong thư ngỏ ý định mua. Ban lãnh đạo dự kiến tỷ suất lợi nhuận thoái vốn trung bình năm 2026 sẽ nằm trong khoảng giữa 5%.

Công ty và KKR đã thâu tóm 8 tòa nhà văn phòng y tế và có thêm một bất động sản đang trong hợp đồng. Tổng giá trị giao dịch là 338 triệu USD, tương đương 67 triệu USD tính theo phần sở hữu của Healthcare Realty. Ban lãnh đạo cho biết các khoản đầu tư này mang lại tỷ suất sinh lời bằng tiền mặt ban đầu ở mức giữa 7% cho Healthcare Realty trước khi tính đến các lợi ích nền tảng bổ sung.

Dự báo của Ban lãnh đạo

Ban lãnh đạo cho biết triển vọng khả quan hơn phản ánh kết quả cho thuê tích cực và chênh lệch giá thuê bằng tiền mặt trên toàn danh mục đầu tư đạt mức giữa một chữ số. Nguồn tiền và mục đích sử dụng vốn tăng 85 triệu USD để bao gồm các đợt mua lại cổ phiếu bổ sung và phần thâu tóm của Healthcare Realty trong các liên doanh, với dự báo thoái vốn cũng được nâng lên một lượng tương ứng.

Dự báo này chỉ bao gồm các khoản thâu tóm, tái phát triển và các mục đích sử dụng vốn khác đã được công bố tính đến nay. Các khoản thâu tóm hoặc mua lại cổ phiếu bổ sung chưa được tính vào.

Rủi ro và các vấn đề cần theo dõi

• Ban lãnh đạo dự kiến mức hấp thụ trong quý 4 sẽ thấp hơn so với các quý gần đây, mặc dù không dự báo mức hấp thụ âm. Quý này cũng đối mặt với mức nền so sánh khó khăn hơn sau khi đạt mức hấp thụ mạnh vào cuối năm 2025.
• Lãi suất cao hơn có thể làm chậm hoạt động giao dịch khi bên mua và bên bán chờ đợi sự ổn định lớn hơn. Ban lãnh đạo cho biết các tài sản yếu hơn dễ bị ảnh hưởng hơn do các nhà đầu tư gia tăng giá trị phụ thuộc nhiều hơn vào đòn bẩy.
• Đóng góp lợi nhuận từ việc tái phát triển và lấp đầy diện tích cho thuê tập trung hiều hơn vào các giai đoạn sau. Một số hợp đồng cho thuê phòng khám ngoại trú lớn có thể mất khoảng 18 tháng trước khi việc cải tạo hoàn tất và người thuê dọn vào sử dụng.
• Chi phí xây dựng và hoàn thiện mặt bằng cho khách thuê vẫn ở mức cao. Healthcare Realty cho biết hoạt động cho thuê tái phát triển có thể đòi hỏi chi phí cải tạo cao hơn cho người thuê, mặc dù công ty có sự đóng góp vốn hạn chế đối với các hợp đồng cho thuê thông thường.
• Ban lãnh đạo mô tả việc phát triển dự án mới là làm pha loãng lợi nhuận trong điều kiện hiện tại và dự kiến hoạt động xây dựng văn phòng y tế sẽ tiếp tục bị hạn chế do chi phí cao và yêu cầu tỷ lệ cam kết thuê trước tăng lên.

Điểm nhấn phần Hỏi & Đáp với chuyên gia phân tích

Chênh lệch giá thuê và tỷ lệ lấp đầy: Ban lãnh đạo cho biết chênh lệch giá thuê bằng tiền mặt 8,6% đã hưởng lợi từ hoạt động tại West Campus của Ascension, nhưng vẫn sẽ vượt mức 6% nếu không có yếu tố này. Công ty đang hướng tới chênh lệch giá thuê khoảng 5% trở lên và nhận thấy cơ hội định giá lại theo thị trường của danh mục đầu tư ở mức giữa một chữ số hoặc cao hơn một chút. Các hợp đồng đã ký nhưng chưa dọn vào sử dụng có thể đưa tỷ lệ lấp đầy của tài sản hiện hữu tiến gần hơn đến 94% khi các hợp đồng này bắt đầu có hiệu lực.

Tăng trưởng NOI dài hạn: Nếu không có mức tăng về tỷ lệ lấp đầy, ban lãnh đạo xác định khoảng mức tăng tiền thuê 3% theo hợp đồng và chênh lệch giá thuê thực thu là nền tảng cho mức tăng trưởng NOI cùng cơ sở 3%-4%. Tỷ lệ hấp thụ, sự cải thiện biên lợi nhuận và hiệu quả kinh tế cho thuê tốt hơn có thể thúc đẩy tăng trưởng vượt khỏi khoảng này.

Phân bổ vốn: Healthcare Realty có kế hoạch linh hoạt điều chỉnh giữa việc mua lại cổ phiếu và thâu tóm thông qua liên doanh dựa trên giá trị tương quan. Ban lãnh đạo cho biết việc bán tài sản chiến lược có thể tài trợ cho cả hai ưu tiên này trong khi tỷ lệ đòn bẩy vẫn duy trì gần mục tiêu khoảng 5,5 lần.

FFO so với FAD: Việc gia hạn sớm các hợp đồng thuê lớn đã kéo dài thời hạn thuê bình quân có trọng số từ khoảng 50 tháng lên 65 tháng. Ban lãnh đạo cho biết các giao dịch này ban đầu mang lại lợi ích cho FFO và kỳ vọng tăng trưởng FAD sẽ theo sau khi bắt đầu thu tiền thuê bằng tiền mặt.

Nhu cầu dịch vụ ngoại trú: Ban lãnh đạo cho biết sự chuyển dịch từ chăm sóc nội trú sang ngoại trú đang tăng tốc và hỗ trợ nhu cầu về không gian văn phòng y tế. Các cuộc thảo luận hiện tại với các hệ thống y tế tập trung nhiều hơn vào việc cho thuê hiệu quả trong danh mục hiện có của Healthcare Realty hơn là phát triển dự án mới.

Các hợp đồng thuê hết hạn vào năm 2027: Ban lãnh đạo xem tỷ lệ giữ chân khách thuê ở mức từ 85% đến gần 90% là giả định thẩm định hợp lý cho diện tích sắp hết hạn, đồng thời coi việc đáo hạn hợp đồng thuê là cơ hội để cải thiện hiệu quả kinh tế thay vì chỉ đơn thuần là rủi ro trống diện tích.

Toàn văn biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Hello, everyone. Thank you for joining us, and welcome to Healthcare Realty Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions] I will now hand the conference over to Doris Lo. Doris, please go ahead.

Doris Lo

Thank you for joining us today for Healthcare Realty's Third Quarter 2026 Earnings Conference Call. A reminder that except for the historical information contained within, the matters discussed in this call may contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. These forward-looking statements represent the company's judgment as of the date of this call. The company disclaims any obligation to update this forward-looking material. .

Discussion of risks and risk factors are included in our press release and detailed in our filings with the SEC. Certain non-GAAP financial measures will be discussed on this call. A reconciliation of these measures to the most comparable GAAP financial measures may be found in the company's earnings press release for the quarter ended September 30, 2026. The company's earnings press release and earnings supplemental information are available on the company's website. I'd now like to turn the call over to our President and CEO, Pete Scott.

Peter Scott

Thanks, Doris. Joining me on the call today are Rob Hull, Dan Gabbay and Ryan Crowley. The third quarter was another strong quarter for Healthcare Realty. Higher interest rates have weighed on real estate stocks, including ours, but not on our fundamentals. Demand for our space is rising and so are our rents. Let me start with our results. Normalized FFO was $0.42 per share. Same-store NOI grew 5.1%. We signed 1.5 million square feet of leases including 430,000 square feet of new leases. Our redevelopment portfolio is now 72% leased, up 500 basis points sequentially.

Same-store occupancy improved to 93.1%. Cash leasing spreads were 8.6%, and we are raising guidance for the third time this year. Let's turn to capital allocation. We remain disciplined and everything we do is aimed at improving our earnings growth. Earlier this year, we executed on $1.1 billion of debt refinancings at a blended interest rate of approximately 4%. Our balance sheet gives us the flexibility to be nimble across our 2 main external capital allocation priorities, stock buybacks and joint venture acquisitions. On stock buybacks during the quarter and through October, we repurchased $75 million of stock at an average price of approximately $17.75 bringing our year-to-date total to $250 million.

Our philosophy on buybacks is simple. Our stock must compete for capital like any other investment. When we trade at a meaningful discount as we do today, buying back our stock is one of the most accretive uses of our capital. On joint venture acquisitions, year-to-date, we have acquired 8 medical office buildings and have 1 more under contract for a total of $338 million or $67 million at our share. That is within the $50 million to $100 million range we outlined earlier this year. These investments carry a mid-7% initial cash yield to Healthcare Realty before accounting for meaningful additional platform benefits.

Together with our partners at KKR, we will pace our acquisitions with discipline. We will also continue to evaluate select asset sales to help systems that want to own strategic real estate on their hospital campuses and to private buyers who remain attracted to the strong tailwinds benefiting our sector. Year-to-date, we have monetized over $200 million of assets with over $100 million more under contract or LOI. For the year, we expect our average disposition yield to be in the mid-5% range. Opportunistically selling assets to fund buybacks and joint venture acquisitions is significantly accretive to earnings.

Shifting to the MOB sector and why we are so well positioned. First, growth. Medical office can deliver mid-single-digit growth with the tailwinds we are experiencing and our results show it. Tenant demand continues to rise with the needs of an aging population, site of care continues to shift to outpatient settings, while new MOB supply remains muted due to elevated construction and debt financing costs. Second, pricing power. Sector-wide occupancy is now nearly 93% at historical peaks. Rising tenant demand and constrained new supply are driving rents higher in our buildings. The evidence is cash leasing spreads in excess of 5% year-to-date and nearly 90% retention rates.

We have a best-in-class portfolio predominantly located in the nation's fastest-growing markets, which positions us well to continue to benefit from these powerful dynamics. Third, return on capital. Our leasing model is designed to drive ROI across the portfolio. Every leasing decision is made on economic returns, not volume. That rigor is paying off. Since we introduced the new model, lease IRRs have improved nearly 3,000 basis points and payback periods are down 25%. With higher occupancy and retention our capital burden is reduced and our profitability improved.

Our plan is to continue repeating this quarter after quarter. Fourth, focus. Healthcare Realty is a pure play the only public REIT focused exclusively on medical office. For others, it's an afterthought. For us, it is 100% of what we do. Our capital, our people and our attention are never divided. This laser focus is leading to better results across the board. We are outperforming that is by design. In finishing, with fundamentals firmly on our side, we will keep executing, putting up strong numbers, allocating capital with discipline, following through on our commitments and focusing on the things we can control. Healthcare Realty offers much better growth than our share price reflects. This motivates us every day. With that, let me turn the call over to Rob.

Robert Hull

Good morning, everyone, and thank you, Pete. Strong operating momentum continued in the third quarter. We completed approximately 1.5 million square feet of new and renewal leasing and produced more than 85,000 square feet of positive same-store absorption. Increasing occupancy 30 basis points sequentially to 93.1%. Retention came in strong at 88%. In addition, we had more than 480,000 square feet of signed nonoccupied leases at quarter end providing a clear path to further occupancy gains in the fourth quarter and into 2027. Cash leasing spreads were another bright spot at 8.6%.

The highest level for the company in nearly a decade. Health Systems accounted for more than 600,000 square feet of leasing this quarter. Within this activity, Ascension St. Thomas in Nashville, signed new leases totaling 18,000 square feet and renewed 185,000 square feet for 10 years. Along with these leases, our planned $35 million redevelopment of 3 properties on the Ascension St. Thomas West Campus in Nashville, strengthens our relationship, complements the hospital's $120 million investment in the same campus and positions these properties for long-term growth.

Other notable health system leases this quarter were with Cedars-Sinai in Los Angeles, Trinity Health in Columbus, Ohio and Indiana University Health in Indianapolis, underscoring the value of these long-term partnerships. We also made meaningful progress on redevelopment leasing. New leasing within this portfolio was over 110,000 square feet, nearly twice the second quarter level and increased the redevelopment portfolio's lease rate from 67% to 72%. The broader supply/demand backdrop in our sector remains very favorable. New medical outpatient construction is limited, while demand continues to benefit from health systems moving more care into lower-cost outpatient settings. These dynamics support increasing levels of occupancy and reinforce the positive environment for rent growth, bolstering our confidence in the leasing outlook.

Our new and renewal pipeline remains robust at more than 3 million square feet, with health systems representing approximately half of that opportunity. I'll now turn the call over to Dan to discuss financial results.

Daniel Gabbay

Thanks, Rob. Let me turn back to our financial performance. Our results remain consistently strong quarter-over-quarter with normalized FFO per share of $0.42, same-store cash NOI growth of 5.1% and FAD per share of $0.32 and a 76% payout ratio. In September and October, we repurchased $75 million worth of shares at a weighted average price of $17.74. This represents an accretive FFO yield in excess of 9% and an important component of our long-term capital allocation framework. Repurchases were funded with previously announced and closed dispositions such as the Kennestone Cancer Center for $36 million and our nearly complete exit from the Chicago market.

Leverage as of September 30 ticked down slightly to 5.5x consistent with our mid-5x target in our 2026 guidance. We have over $1.2 billion liquidity on our line of credit after netting out our commercial paper balances, plus an additional $400 million delayed draw term loan that backstops our July 2027 bond maturity. Our only floating rate debt today is our commercial paper and a $100 million of unswapped term loans as we swap the other $400 million earlier this year until 2029 at a 3.3% SOFR rate. We maintained significant flexibility and our capital structure was effectively locked in for the duration of our strategic plan period.

Turning to guidance, which you can find on Page 10 of our supplemental report, we increased our full year normalized FFO per share guidance range to $1.65 to $1.67, up $0.02 at the midpoint to a $1.66. We also raised full year same-store cash NOI growth guidance to a range of 5% to 5.25%, up 75 basis points at the bottom end of the range and 25 basis points at the upper end. These results are driven by strong leasing outcomes and portfolio-wide mid-single-digit cash leasing spreads. Sources and uses of capital increased by $85 million to reflect the incremental share repurchases and JV acquisitions at share. Disposition guidance increased by the same amount.

Please recall our guidance only reflects acquisitions, redevelopments or other uses of capital announced to date. Operator, let's go ahead with Q&A.

Operator

[Operator Instructions] Your first question is from the line of Rich Anderson from Cantor Fitzgerald.

Phần hỏi đáp

Richard Anderson

Okay. So I want to first talk about the cash releasing spread number of $8.6 million. Obviously, you're guiding to something slightly lower in that mid-single digits. But how repeatable do you think this is -- should we be putting 5% or 6% cash releasing spreads in our 2029 numbers? And same question on same-store NOI growth, how much of that just occupancy that will run its course and then you're left with something lower. I'm just curious what we should think about on these 2 measures, in particular, as a long-term run rate for medical office and specifically HR?

Peter Scott

Sure. Rich, it's Pete here. A decent amount in that question, and let me hit each of those. One, I don't want to lose sight of the fact that we had a great quarter, and we are having a great year just across the board. We've raised guidance 3x including by $0.02 each of the last couple of quarters. And if you look back 1.5 years ago, our FFO was $1.56 if I am pulling up the right number. Off the top of my head today, we're at $1.66, and same-store occupancy 1.5 years ago was at 89%. Today, it's at 93%. So I think we've done a lot better than maybe we even expected. And along the way, fundamentals have absolutely improved.

And remember, two, we also sold $1 billion of assets and delevered almost a turn and still put up those kind of numbers. So as we think about cash leasing spreads, I think we've always been pretty consistent over the last year, 1.5 years that it needs to be better than what it historically has been. 8.6% is a great number. It is a great, great number. We did benefit from the West Campus and Ascension. So if you strip that out, we're still above 6%. And I think what we've said to investors and we'll say on this call is that we're going to keep trying to get in the 5% area, if not better. And I'm trying not to put a ceiling on anything because if I put a ceiling on occupancy 1.5 years ago, we'd be above that ceiling right now just based upon how fundamentals have improved.

So big picture, we feel really good about the backdrop and we're obviously going to push in every single area where we feel like we have pricing power.

Richard Anderson

Okay. And so maybe as a sort of a addition to that question, my second question here is on site-neutral payments. Obviously, a factor that's helping move more into lower-cost settings like yours. Do you have an expectation of that expanding further? And is that a part of your calculus as you go forward to? Are you seeing any sort of sort of evidence of that playing a role in your ability to have more pricing power and so on. Just curious what your thoughts are on that broader topic.

Peter Scott

Yes. I mean, absolutely. And I know we've been continuing to put out the shift to outpatient versus inpatient that chart in our investor decks. And I think people look at those charts. I know I look at those charts. And I believe that, that trend is here to stay. And I was actually reading a report yesterday that was sent across by one of the banks and in the inpatient-only rule, which is effectively what you're referring to right now, the amount of procedures coming off the inpatient-only list is rising at a very, very significant pace. And where is it going? It's going into outpatient facilities.

And then A couple of other examples I would just point to, you've had a few not-for-profits, actually start to acquire outpatient businesses. You look at Ascension St. Thomas bought AmSurg not that long ago. And then Bon Secours announced just this past week or last week that they were going to buy surgery partners. So the push into outpatient settings is accelerating in our view. And I think, again, it's just part of the fundamental backdrop that's working in our favor.

Richard Anderson

Awesome. Good quarter.

Operator

Your next question comes from the line of Michael Stroyeck from Green Street.

Michael Stroyeck

Could you maybe just provide some color on what you're seeing out in the transaction market. Has there been any repricing given higher rates? Or are you seeing bidding in at all as levered buyers pull back?

Peter Scott

Michael, it's Pete here. And I saw your note reducing cap rates. I'm glad you asked that question because I would like to address that. Look, from our perspective, we're still seeing core cap rates in the 5.5% to 6% area and core plus in the 6% to 6.5%. And area. So they've actually held in quite, quite well. The private bid for MOBs, which you did reference in your report, does remain very deep. And it's increasing. Transaction volumes are going up because private buyers see a lot of the same positive fundamentals that we see. Where I think you are seeing a bit of an impact is on the weaker assets in the marketplace, which, frankly, we don't traffic in that.

And you're probably seeing more of a shift in cap rates there. And the reason for that is weaker assets are basically value-add buyers and they're heavily, heavily dependent upon leverage. So if interest rates increase, like they have, cap rates are going to get impacted a lot more in the core to core plus areas of the market, buyers are not nearly as reliant upon debt as well. I think transaction volumes may slow a little bit. My guess is they're going to slow across the entire real estate industry as buyers and sellers wait for things to stabilize and that's just a natural thing. But we'll see what happens. I mean over the last couple of weeks, the treasuries have rallied so you've got your benchmark rates coming in, but I'm just telling you everything I know up and until this point. And obviously, it's still fluid.

Michael Stroyeck

Understood. Appreciate the color. Maybe a similar question on the acquisition side. So you called out the mid-7% initial cash yield on the JV deals. Can you just remind us where pricing is on those deals, excluding any JV fees? And I assume based on your answer there, there hasn't been any change in expectations on future deals, but -- just curious if that's still the same ballpark you expect to transact at in the future?

Peter Scott

Yes. I would say the core plus cap rate range I just articulated, the 6% to 6.5% that would be the blended cap rate for all the assets that we bought within that range. And obviously, we get an asset management fee on top of that, which gets us into the seventh before you get any additional other platform benefits. We talked to KKR all the time. They are a wonderful partner, and we look forward to doing more with them. As I said before, I think the transaction market may slow a little bit towards the end of the year, but it can turn back on pretty quickly too, if you get stability in interest rates. So we do not guide to acquisitions. So anything we would do either from an acquisition standpoint or from a stock buyback standpoint, is not included in our guidance right now. .

Operator

Your next question is from the line of Omotayo Okusanya from Deutsche Bank.

Omotayo Okusanya

Yes. Solid quarter there. Question around tenant improvements and leasing commissions. I know you guys are kind of focusing on overall on improving at least in economics. Can you just kind of talk a little bit about what you're kind of seeing on that end and how you're kind of working to kind of have less drag from that in your bottom line cash flow numbers?

Peter Scott

Yes. I did mention a little bit of this in the prepared remarks, but I will touch on it again. About 1.5 years ago, we did completely revamp our leasing model within the organization, and it coincided with significant changes within our asset management group, and we are economics driven and not volume driven. And I think prior to that, there was a very big push within this organization to be volume-driven probably to the detriment of your question around capital costs. And we've been very, very mindful to limit the amount of capital that we put out into deals, it ticked up a little bit this quarter. We got a few questions on that, but I will point the fact everybody back to, we did a heck of a lot of leasing deals in our redevelopments, which are likely to have slightly higher tenant improvement costs associated with that just given the fact that these are buildings and I've said this before, that have been underinvested into for probably decades.

When I think about regular way TIs, we have been holding the line on that despite the fact that construction costs continue to go up across the board. And building out medical space is more and more expensive today. So where is the money coming from, if we're not providing it to them, the tenants are coming out of pocket for that. Again, that's another area where we think we have a little bit of pricing power today. And it's also another reason why you're seeing retention go up so much in this space is one that really is not a development option for tenants to go to with development having like dropped off a cliff.

And then two, if a tenant wanted to move the build-out of their space is very, very expensive. And if expensive to move equipment. So the retention is working in our favor from that perspective. And the more tenants you retain, the less capital you put out the door, the more profitable the lease deal is to us. And that's another reason why you're seeing our IRRs go up, as I said, probably nearly 3,000 basis points when you look at deals we're doing now versus what was done a couple of years ago.

Omotayo Okusanya

Got you. And then another quick one on occupancy again. 93.1% as you mentioned a little earlier the industry felt was at 93% so you're kind of in line. But I think again, you guys have always held yourselves out of owning kind of premium assets in great locations. So just curious in regards to the outflow you feel you can get occupancy-wise kind of relative to where the overall industry is.

Peter Scott

Yes. I think our portfolio is situated in a way that we'd like to do better than market. But remember, we were at 89% and now we're at 93%. And I'm talking same-store with those numbers, just to be clear. So we've made some pretty good strides over the last 1.5 years. As Rob said in his script, we've got a pretty good snow pipeline. If you think about our snow pipeline today, that would get us closer to 94% as those leases commence. So we would like to do better than market. Believe me, we don't sit around here within this organization. and say, let's get to market and then job well done. We'd like to do better than that. But there will be a little bit of natural vacancy. I don't think we're going to be able to get up to 100%, but I certainly think we can do better than 93%.

I would also point out, too, and I know you know this because I saw your forecasting and you've got the redevelopment lease-up in there. We also look at total occupancy, right? And total occupancy today is trending towards, I think, right around 91%. I want to get total occupancy up to the market level numbers, not just same-store occupancy, and that's going to be a big driver of earnings over the next 1 to 2 years.

Operator

Your next question is from the line of Nick Yulico from Scotiabank.

Nicholas Yulico

I wanted to just turn to the next slide you have in the investor presentation on Page 21, the portfolio optimization update. In terms of the lease-up unstabilized bucket and the redevelopment bucket, you gave the NOI at the strategic plan, 2025 and stabilized NOI. So the gap there was the upside. How much of that -- is any of that upside already been captured? And how should we think about incremental upside being able to capture sort of now through the end of next year. .

Daniel Gabbay

It's Dan here. I'll take that one. And great question. Page 21 in that deck is something that we will update on a regular basis and that NOI that's second to last row of NOI is how we're currently trending. As we've always talked about with the redevelopment, especially in the lease-up portfolio, over the course of the 3-year plan, is this was more back-end weighted. If I go back to Pete's original comments, we talked about $50 million of NOI in the strat plan that we were looking to recapture that was lost in some of these assets post merger. And some of that was going to come after the strategic plan. We're looking to get $40 million of that $50 million back over the course of the 3-year plan.

And it is more back-end weighted just when you think about, again, we're leasing these up. It takes time to put the improvements in place. We talked about some of the ASCs earlier this year that can take 18 months on some of those large leases we signed in the Redact portfolio. So it is a little bit more back-end weighted. It's an upward curve. And I think these are good indications where we're currently trending in the back half of this year, and we'll continue to provide more guidance on these numbers as we have more leasing updates. But think about it as back-ended over those 3 years. So as you think about getting later into '27 into '28, a lot more of this comes online.

Nicholas Yulico

Okay. And then my second question is just on the difference between FFO and FAD, where you're seeing more FFO benefit than FAD growth right now. I know Peter already talked about some of the leasing CapEx issues. But my other question is if you look on the adjustments there, like your straight loan adjustment is pretty large this year versus last year, even though revenue is down. So I don't know if there's a free rent issue sort of going on. But can you just talk about that line item and how think about that, if that impact reduces, which would also help going forward, which could help your FAD.

Peter Scott

Yes. it, I would probably I would encourage you to look at our lease expiration table alongside the straight-line rent comment. I do agree that you will start to see some nice FAD growth catch up to FFO. We had made a conscious effort to look out over the next couple of years. And look at large lease deals that we could accelerate. If you go back to the first quarter call, we talked about some significant large deals, almost 1 million square feet where they had maturities over the next couple of years, and we bundled them together and did one large renewal. We've been doing a lot of that within this organization. So if you look at our weighted average lease term, 1.5 years ago, it was like 50 months, today, it's somewhere in the range of like 65 months, and that's the result of getting out of some leases much earlier on before expiration. And you do get an initial FFO benefit and the FAD benefit is going to follow suit.

Operator

Your next question is from the line of Jamie Feldman from Wells Fargo.

Unknown Analyst

This is [ Jesus ] on for Jamie. Just with your current sources and uses already spoken for, how large is the remaining disposition pool that could fund additional JV investments or buybacks, particularly after the asset sales you've already completed in 2025 to strengthen the balance sheet.

Peter Scott

Yes. Maybe I'll jump in. I think I understand your question. As we think about additional JV investments and buybacks since we're right around that mid-5x net debt to EBITDA, a source of capital would certainly be strategic sales. We don't guide to that, just like we don't guide to capital allocation number. So as I said in my prepared remarks, we're certainly open-minded to selling more assets to the extent that we continue to trade at a discount to NAV and at the moment, a pretty significant discount to NAV, and we'll recycle that capital accretively into our 2 main external capital allocation priorities, that being buybacks and JV acquisitions, and it will be accretive.

Unknown Analyst

And the updated range implies roughly $0.40 to $0.42 of normalized FFO here in 4Q. What keeps the quarter for moving above that level despite all the additional buybacks and acquisition activity we've done. .

Daniel Gabbay

This is Dan. I'll take that question. It's a great question. I think as we've said all year long, we look to outperform. I think we've done that consistently through the course of the year. You're getting a little bit into the law of small averages as you get into fourth quarter. We feel good about our business across the board and have put out a range that we think is consistent with how we've been guiding over the course of this year. We feel good about our progress in Q4, and we'll look forward to providing those results as we get into February next year. We feel good about the business.

Operator

Your next question is from the line of Connor Mitchell from UBS.

Unknown Analyst

I'd kind of like to just continue on with that question line there. First, with the updated guidance, it seems like the same-store NOI may be a slight deceleration in the fourth quarter after some very healthy results at this point. Can you just provide some of the building blocks or maybe what will get you to the upside or even the downside for the updated guidance for NOI growth?

Peter Scott

Yes. I'll touch on that. I mean, look, we've had 6 straight quarters above 5%, which, for the way this business has historically generated same-store NOI, I'd say that's pretty good, right? And I think that's evidence that fundamentals have improved. When you think about the fourth quarter, I would just say that we're not forecasting as much absorption. I repeat that again. We are not forecasting as much, it's not that we're saying there's going to be no absorption or there's going to be negative absorption. It's just not as much in the fourth quarter. And perhaps that's a conservative number as we have a big snow pipeline and we try and get leases commenced.

And also, we have more pricing power today than we've ever had before with CLS. So with our CLS improving so I think that's probably the best way I can describe the way that our guidance works at the moment for the fourth quarter. And obviously, we always try and hit the high end of our guidance ranges.

Daniel Gabbay

And I'll just add, I mean, if you think about the building blocks, you commented on that. We talked about that a lot as well this year. It's 3% escalators in place and those cash leasing spreads. So if you're not picking up occupancy, we've always talked about delivering 3% to 4% same-store NOI. And the occupancy and pushing on our margins is how we drive above that as well as our leasing activity, absorption and cash leasing spreads. So just have the building blocks. I think we have a great fundamental business. But as Pete said, it's not as much absorption necessarily forecasted for Q4, and it's our toughest comp when you think about how much absorption we picked up in late last year as the new asset management model really gained steam after the change is middle of 2025.

Unknown Analyst

Okay. Really appreciate all the color. And then second, on the dispositions as well. I know you said that there's kind of a pipeline there, but it's not a commitment. But I'm just curious about kind of the process and that -- maybe how many of some of your targeted disposition assets are either ones that are either marketed or potentially just having conversations versus some that are more inbound request, either from the private buyers that you mentioned, or some of the partnerships with the health systems that are looking at the MOB assets that are on their campus already? Just kind of getting a sense of how that process and how the conversations kind of work for the dispositions.

Peter Scott

Yes. If you're selling back to a health system, you're not running a process and they're calling you, telling you their interest to buy back real estate. And I think it's probably as simple as that. We don't have any large portfolios or even small portfolios out with brokers at the moment. So we'd like to do our deals off market where we can, and I think that's the best execution. .

Operator

Your next question is from the line of Seth Bergey from Citi.

Seth Bergey

I just wanted to kind of go back to some of your comments on capital allocation. Just can you talk about kind of the decision with your JV partner to go out and acquire more assets? Is there just constraints on the amount of kind of capacity you can do? Or is it really kind of deal by deal specific in terms of what you would look to acquire in the future?

Peter Scott

Yes. Seth, I mean, obviously, our conversations are ongoing with our partner, and we screen everything that fits the underwriting criteria. It doesn't mean we're going to pursue it necessarily. I would maybe just focus a little bit on just numbers to date, right? So year-to-date, we've committed about $70 million into joint venture acquisition. That's our share. And year-to-date, we bought back $250 million worth of stock. So the way I look at those numbers is at times where we feel like our stock is trading a little bit better, we'll probably lean in more to doing JV acquisitions and at times where we feel like there's a disconnect between the public and private markets. We can shift and we can buy back stock, right?

We're not looking to be the largest platform out there. We're looking to do smart, disciplined capital allocation moves that maximize our earnings growth. and getting all of our asset sales done last year, deleveraging the balance sheet, putting ourselves in a position where we have flexibility to shift between one and the other was absolutely essential, and we're benefiting from that now.

Seth Bergey

Great. And I appreciate the comments earlier on the cash leasing spreads, but I know you kind of focus holistically on the rest of the lease economics as well. So as you kind of see fundamentals continuing to improve, where are you kind of pushing the most on lease economics and where are you focused on there?

Peter Scott

Yes. Good question. I mean, as we think about pricing power, it's not just cash leasing spreads. I think it's a combination of a few different things. Cash leasing spreads being one of them, escalators being another and then retention being another as well. And all 3 are moving in the right direction. On cash leasing spreads, we put up an 8.6% number this quarter, one of our strongest quarters ever. It's been a big focus of ours. That's up from 4.2% in the first quarter, and then we had 4.8% in the second quarter. So it's sequentially improving as the year has gone along.

On escalators, I'd say 3% is now the floor, not the ceiling. It's very rare for us to sign a deal below 3%. In fact, it's typically only because there's a renewal option in place, and the tenant had locked that in many, many years ago. But absent that, 3% is a minimum and in some select circumstances, if we have to provide additional capital, we're actually getting upwards close to 4%. And I think with inflation increasing, it's obviously something we're going to continue to try and push on our tenants. And I think on retention, I touched on it before, but we've averaged the high 80s. And again, I think that's really a function of the fact that there's not a lot of places for tenants to go at the moment. And it's also expensive for tenants to move. So it's working in our favor. So I think about pricing power is a combination of all of those and they're all trending in the right direction.

Operator

Your next question is from the line of Austin Wurschmidt from KeyBanc Capital Markets. [Operator Instructions]

Your next question comes from the line of Juan Sanabria from BMO Capital Markets.

Robin Haneland

This is Robin Haneland sitting in for Juan. I was just curious on health systems consolidation has definitely strengthened your outpatient demand. I'm just kind of curious where this consolidation is that could create overlapping locations, less space requirements and thus sort of strengthen tenant negotiation levels?

Peter Scott

Health system consolidation -- sorry, we couldn't hear you as well, but I think we understand the gist of the question. I can start and then if Rob wants to jump in. We have seen some consolidation. And also, as I mentioned before, we've also seen health systems expand their platforms with a couple of deals, I said with Ascension St. Thomas and Bon Secours earlier. I would say there's almost no overlap in this consolidation. It's not like they're consolidating to shut down business lines. It's consolidation to get bigger as an organization, consolidation to get synergies on their own cost side. But it's not about like getting out of a market, it's about expanding within that market. So I'd say it's complementary to what we are seeing out in the market.

And if anything, I think their profitability improving allows us, I think, to extract maybe even better lease deals. I would say these negotiations, though, with health systems, we do half our deals with health systems like it's not easy, right? Like it certainly work because we're changing what was a complacent market probably for many, many decades of everybody doing just like, hey, let's just do the cash leasing spread deal. So we're doing something different. It requires some explaining with the health systems. But from a consolidation perspective, I would say that we're seeing, if anything, only a benefit as a result of it.

Robin Haneland

That's helpful. And then as a follow-up on the 8.6% leasing spreads. Just curious what that suggests about the remaining sort of mark-to-market opportunity as we head into 2027?

Peter Scott

Yes. Look, as we think about the mark-to-market opportunity today, I would probably say somewhere in the mid-single digits, if not slightly better. And that's a number that we've been consistently quoting.

Operator

Your next question is from the line of -- from JP Morgan.

Unknown Analyst

Maybe following up on the occupancy question from earlier. Are there any particular markets where the remaining lease-up opportunities are concentrated to push the total portfolio and same-store number higher, as you mentioned? I don't know that I would say it's particularly concentrated. I would say that not all markets are equal in the medical office space. where we're having more success is certainly in the Southeast markets and a little bit up in Seattle. Where I think we've got some upside in front of us from an occupancy perspective. I would say Phoenix has always been little bit more of a challenging market. And then I would say some pockets down in Texas as well. So those would be 2 areas that we're certainly focused on. But I would say where we're seeing real outperformance is in our markets in the Southeast. And it's no coincidence that as you look at the assets we have been acquiring and it's typically in markets where we're having a lot of success.

Operator

Your next question is from the line of Dave Rodgers from Raymond James.

David Rodgers

Pete, you talked earlier about working the expiration schedule lower, I think, down to 3.1 million square feet for next year. So maybe you or Rob can give us a little bit of color now that you're getting kind of into that period of re-leasing or renewing space for 2027, what kind of the outlook, if you could give us a little peak into next year in terms of kind of the confidence around spaces, what you know is leaving and what you have pretty good confidence in keeping.

Peter Scott

Yes. Thanks, Dave. Good question. And we're proud of the fact that we've really worked our way through that lease expiration schedule. I got a lot of questions on that early on when I first started, and we've meaningfully improved it. I would say for next year, even though it would be great to sign every one of those leases tomorrow and have that number say 0, it just does take some time to get leasing done, but my view on retention would be no different than the retention numbers that I've quoted in the mid- to high 80s being a good underwriting assumption for what we think will happen with that expiring square footage. I also look at it sometimes people look at these tables and they think about it as like, Oh, there's a problem, I think just given what's happened in our space, lease roll is sometimes an opportunity as well. And so I'd say we're looking at it more as an opportunity and not as a problem that we're facing. So we feel quite good about it.

David Rodgers

Great. And then maybe just a follow-up on capital deployment. We've talked about, obviously, acquisitions and then the stock. Are there any other opportunities or avenues besides whether it's the JV wholly owned or back into your own stock? Are there opportunities to do development funding mortgage funding in the space, lending to some of the partners in a bigger way, the health systems as well. Any partnership opportunities you're seeing is obviously the capital markets tighten up a little bit.

Peter Scott

Yes. We've done a little bit of debt financing and in select circumstances. It makes sense for sure. I think if there was one area I would focus on, and we've said this a few times, I would expect us to increase our percent of NOI towards joint ventures going forward. Obviously, we want to grow the venture if we could do other joint ventures as well. And I'm not necessarily referring to this as like a recapitalization joint venture like we don't need to go and do that as a defensive move to delever. But if there was a way for us to utilize capital that likes this space, and we're a really good platform to bolt on to -- and we're one of the only public REIT that's actually looking to grow in the space.

We could be a really good partner for capital trying to enter the space. And so we will certainly continue to look at those types of opportunities because I think our assets trade pretty efficiently. And unless we're trading at a pretty significant premium to NAV, it's hard to make acquisitions accretive, right? And maybe one day, we will be trading at that kind of premium, and there's certainly plenty we can do. But in the interim, if we're not, if we want to grow our square footage, it's likely to come through additional joint ventures.

Operator

Your next question is from the line of Austin Wurschmidt from KeyBanc Capital Markets.

Austin Wurschmidt

All right. Great. So I guess, with tenants kind of having fewer options available today and just tying that back to the cash leasing spreads this quarter over 8% in the mid-single-digit kind of range you've pointed us to looking forward. How much is that mark-to-market narrowing versus where rents would underwrite on a new development, both on the starting rent. And then also, as you look to where that ends up 5 years or so down the line?

Peter Scott

Yes. That's a great question, Austin. Actually, we did add a slide to our investor presentation. this quarter. I know there's a lot of information that goes out when we put these earnings releases out. But I would point you to Page 17. And if anything, that spread just continues to widen and that's a function of construction costs continue to increase. So I see a lot of runway in front of us between new construction rental rates and in-place rental rates, and that's something we're going to draft off of. So it's a great question, and it is something we added additional disclosures on.

Austin Wurschmidt

I appreciate that. And then I'm also curious, just going back to the conversation around cap rates and some of the answers that you gave on core and core plus product, but when you talk to your partners, what's kind of your view on putting capital out at the cap rates you quoted for both of those product types. And then to the point -- on the last question, what are development yields today then that you would need, I guess, to justify the risk the risk of development and what's going on with interest rates as well?

Peter Scott

Yes. I think our development in -- the yields you are going to want to achieve is a function of the pre-leasing amounts, right? And I would say developers across the board have begun to require much higher preleasing amounts from health systems to do development. So I think a lot of health systems is doing them on their own today. But they're in effect, build-to-suit for themselves. And they've also got to be putting in typically expansion business lines that are very, very profitable to make that math pencil.

So as much as I'd like to say, developments will pick up. It's dilutive do developments right now. We have a few, we are working on at the moment. Nothing that's far enough along that we can announce but also no guarantee that we do those. But if we did, you should expect pretty good rental rates and a lot of pre-leasing within those developments. So I'm not too concerned about developments picking up anytime soon. I mean, especially with where construction costs have gone. I think it's going to remain quite low and depressed for a long time.

Operator

Your last question is from the line of Michael Carroll from RBC Capital Markets.

Michael Carroll

Pete, I have a bigger picture question. How are your discussions going on with your key health system relationships. And I'm just trying to understand what is their growth mindset and do the bigger better health systems? Do they want to grow? And if so, where is that focused at? Is that focused at the hospital campus or is that focused more off-campus?

Peter Scott

Yes, it's a combination of the 2, especially as you think about like outpatient surgery centers and so on and so forth. It's not always going to be on campus. So I would say they're looking at both avenues. I just thought -- it's a good question. Maybe I'll spend a second just broadly on health system relationships. One of the benefits of us being able to really get out in front of our strategic plan and putting up good numbers is, I've been able to spend a lot more time with health systems. I mean that's where I spend the majority of my time at the moment. And every conversation we have with the health system, we learned something new and we're able to come up with a lot of win-win type transactions.

And I think the evidence is in the volume of leases we've gotten done and then ultimately in the results that are coming out of those leases. So they are critical, important partners of us. We've highlighted deals we've done with Common Spirit. Deals we've done with Ascension recently in our latest investor deck. We continue to do a lot of lease deals. Baylor. We continue to do a lot of lease deals. I'm not going to name every health system, but like it's picked up a lot. And so I feel like that's one of the benefits we've had of getting through the cleanup faster than we thought is I can spend my time where shareholders want me to spend my time, which is with the health systems because better leasing turns into better profitability and better earnings, right, as opposed to dealing with like cleaning up a legacy portfolio. So I would say that, that's really been a big focus of ours, and the results underscore the benefits of all those conversations.

Michael Carroll

That's great. And then when you're partnering with these health systems, are you able to -- when you get a new relationship or you expand, are you able to utilize your existing portfolio where they can expand to? Or is it going to be more of like a development where our health system needs to go to some place where an asset doesn't exist and then HR needs to help them develop that or redevelop an existing building in that area.

Peter Scott

Yes. I think it's more the former than the latter at the moment. It's not to say that we aren't having conversations on the latter, but it's much more focused on how do we efficiently lease space inside of our existing portfolio.

Operator

There are no further questions at this time. I will now turn the call back to Peter Scott for closing remarks.

Peter Scott

Great. Thanks, everybody, for joining us for the third quarter call. Like I said, it was a great quarter. We're having a great year. I look forward to seeing many of you in Atlanta in the coming weeks, and we look forward to finishing out a strong year. Talk soon. Bye. .

Operator

This concludes today's call. Thank you for attending. You may now disconnect.