Healthpeak Properties Inc
F:HC5
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
14.8
21.4
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
You don't have any saved screeners yet
Good morning and welcome to the Healthpeak Properties, Inc. Third Quarter conference call. All participants will be in listen-only mode. [Operator Instruction] After today's presentation, there will be an opportunity to ask questions. [Operator Instruction] Please note that this event is being recorded. I would now like to turn the conference over to Andrew John's Vice President Corporate Finance and Investor Relations. Please go ahead.
Welcome to Healthpeak 's third quarter of 2021 financial results conference call. 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, our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations.
A discussion of risks and risk factors is included in our press release and detailed in our fillings with the SEC. We do not undertake a duty to update any forward-looking statements. Certain non-GAAP financial measures will be discussed on this call. An exhibit to the 8-K referring to the SEC yesterday, we have reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements.
The exhibit is also available on our website. Also, last night we published a West Cambridge and South San Francisco transaction update presentation. This presentation can be found in the investor presentation section of our website. I will now turn the call over to our Chief Executive Officer, Tom Herzog.
Thanks A.J., and good morning everyone. On the call with me today are Scott Brinker our President and CIO, and Peter Scott, our CFO. Also on the line and available for the Q&A portion of the call are Tom Klaritch, our COO, and Troy McHenry our Chief Legal Officer and General Counsel. Our Q3 operating and earnings results were favorable. Meanwhile, we have been very active and productive in our transaction, development and leasing activities. Let me hit the high points. Starting with operations. Our Life Science and MOB businesses which represent close to 90% of our Q3 NOI continued to perform above expectations. While our combined CCRC and sovereign wealth funds JV performance was roughly in line with expectations. On the transaction front, we closed our remaining a $150 million of rental senior housing sales, bringing total sales since July of 2020, to $4 billion.
And we redeployed the entirety of the sales proceeds into our core Life Science and MOB acquisitions, and debt reduction. In Life Science, we announced a $625 million largely contiguous assemblage of operating and cover land investments in West Cambridge. With the strategic play, we've now captured the majority of the high-quality, developable land in this important submarket, and plan to develop multiple Class A Life Science properties over the next decade plus. In MOBs, we added three new acquisitions, bringing our year-to-date in MOB acquisitions to approximately $780 million, which are primarily on-campus. We were also awarded three new developments from HCA, two traditional medical office buildings, along with a standalone nursing school that will be fully leased by HCA. As I mentioned last quarter, we expect to continue to focus our MOB growth on full business to leverage our platform, scale, and relationships hid in accretive singles and doubles. Moving to development. Our Life Science development program continues to see positive momentum as fundamentals remained strong across our three core markets of San Francisco, Boston and San Diego.
A $1.2 billion active development pipeline is 87% pre -lease, with the remaining unleased space and active discussions. Given this, yesterday, we announced the commencement of our $393 million Vantage Phase 1 development in South San Francisco. But the scheduled closings of the remaining West Cambridge acquisitions, we will have aggregated 7 million square feet or 10 billion plus of embedded development and densification opportunities across our 3 businesses. And all fully under our ownership and control. One final comment, this quarter we added to our ESG recognition, with the GRESB Green Star designation, an inclusion in the FTSE4Good Sustainability Index. Both for the tenth consecutive year. We're proud that ESG has and will continue to be woven into the fabric of our corporate culture. With that, I will turn it over to Scott.
Thank you, Tom. I'll cover operating results, then discuss acquisitions and development. Starting with Life Science results. Virtually our entire footprint is in the three hotbeds of biotech innovation; Boston, San Francisco, and San Diego. Over the past four decades, these markets have developed an unmatched ecosystem of academics, capital, and scientific talent, placing them at the heart of the biotech revolution that's just getting started. We've purposefully chosen to concentrate our resources and build a strong position in these markets, which is driving strong performance. Year-to-date, we've signed 2.2 million square feet of leases, which is 2 times our full-year budget from the beginning of the year. The leasing success was broad-based across all 3 markets and included new developments, renewals, and expansions.
In the third quarter, we signed 406,000 square feet of renewals at a 20% cash mark-to-market that's in line with the current upside across our entire Life Science rent roll to of course, the mark-to-market can vary from quarter-to-quarter and year-to-year. Same-store cash NOI growth for the quarter was 6.8%, bringing year-to-date growth to 7.7%. The results were driven by contractual escalators, leasing activity and mark-to-market on renewals. Looking forward we have a leasing pipeline of nearly 600,000 square feet undersigned letters of intent, including new developments, renewals, and expansion with existing tax.
Our run rate, annual cash NOI for Life Science now exceeds $500 million and is in the $600 million range, including development leases that have been signed, but not yet commenced. Moving to Medical Office. Leasing activity continues to outperform our expectations. We had 700,000 square feet of commencements in the quarter. Mark-to-market on renewals was 2.3% and retention was strong at 80% for the trailing 12 months, both in mind with historical averages. We're seeing strong demand in Nashville, Seattle, Dallas, and Denver, all markets where you've seen us grow in recent quarters.
[Indiscernible] store cash, NOI growth, this quarter was 2.9% toward the high end of our historical range, driven by leasing activity, strong collections and parking income. We're also benefiting from our Green Investments to reduce carbon footprint and operating cost. Hospital inpatient and outpatient volumes are strong, and hospitals continue to invest in our affiliated properties, benefiting our unique on-campus portfolio. Finishing with CCRCs, our concentration in Florida is a long-term positive, but made for more challenging third quarter as the state was hit hard by the Delta variant. This had a temporary impact on occupancy, especially in assisted living and skilled.
Consistent with the national headlines, labor is a headwind. As a result, Same-Store cash NOI growth was negative 1.7% for the quarter, excluding CARES Act funding. Independent living represents 2/3 of the total unit count on our campuses, and demand for those units is strong. The number of entry fee sales in 3Q was nearly back to 2019 levels, and entry fee cash receipts in the quarter exceeded historical levels. We have strong pricing power in most of our markets supported by the housing market. Moving to medical office acquisitions. In September, we acquired 2 on-campus MOBs in Dallas affiliated with the Baylor Scott & White System for $60 million.
This was an off-market acquisition and expand our number one medical office market share in Dallas. In October, we acquired an MOB in Seattle for $43 million. The building expand our footprint on the campus of Swedish Medical Center to 600,000 square feet. We see potential to significantly densify the site over time, taking advantage of the land-locked location next to one of Seattle's leading hospital. Also in October, we acquired a 55,000 square foot MOB on the campus of an HCA Hospital in New Orleans for $34 million. Once again, this acquisition was done off-market. Turning to Life Science development. Lease up is exceeding our underwriting on both rate and timing. Our active development pipeline is now 87% pre -leased, excluding Vantage Phase 1 which commenced yesterday.
The final phase of the shore is now 100% pre -leased and the rate on the final lease was 32% higher than the initial lease we signed at the shore just 3 years ago. [Indiscernible] South San Francisco with very strong leasing activity at our Nexus project next door. We chose to commence development at Vantage. A picture can say a 1,000 words, so please take a look at the investment deck we published yesterday. On page 7, you will see that the Vantage Campus sits in the heart of South San Francisco, adjacent to our Nexus and Pointe Grand (ph) campuses. Phase 1 will include 343,000 square feet and deliver in the second half of 2023. Upon completion of all phases, the Vantage Campus will include at least 1 million square feet, plus a lab, and potentially far more, subject to entitlements, which are ongoing.
Moving to San Diego, where we fully preleased a 540 thousand square feet of active development. In the third quarter, we secured the next phase of our growth, with a covered land play acquisition. The site sits between our existing Sorrento Gateway and Sorrento Summit campuses, all of which have excellent visibility and accessibility from Interstate 805. Once the site is developed, we'll have 700 thousand square feet across these three campuses. In Boston, our one-on-one Cambridge Park drive project in Alewife, delivered in 4Q 2022, and is now 88% preleased. The average lease rate is $99 per foot, or 27% above our underwriting. This project brings our footprint in the annualized submarket of West Cambridge to 1.1 million square feet across 18 acres.
And that brings us to the series of acquisitions we announced yesterday. In 8 separate transactions totaling $625 million of initial investments, we assembled 36 acres of largely contiguous land in Avroy submarket in West Cambridge. We now have a significant development opportunity on the East Coast to balance our enormous development pipeline in South San Francisco. The blended year one FFO yield is 4.2% with the potential for huge earnings and NAV upside in the future. Roughly one quarter of the $625 million investment represents stabilized cash flowing acquisitions. The remainder are covered land plays primarily single-story industrial and flex office that we intend to eventually replace with class and lab buildings in phases over the next decade plus. We'll be working with the City of Cambridge on the development plan and have more to share in coming quarters. If you turn to Page 4 of yesterday's investment deck, you'll see the assemblage is within walking distance to our existing holdings in Alewife. Both sites have commuter access by train, car, and bike. In particular, will be walking distance to the Alewife train station and adjacent to Route 2 and the Minuteman Bike Path, all of which connect Cambridge, downtown Boston in the western suburbs. These campus settings are a competitive advantage for leasing because we can provide world-class amenities, infrastructure, and flexibility for tenants to grow without relocating. This is very different than owning the single lab building in an isolated location. I'll turn it to Pete.
Thanks, Scott, starting with our financial results. For the third quarter, we reported FFO has adjusted of $0.40 per share and blended Same-Store growth of 3.2% Our strong results are driven by continued out performance, in both Life Science and Medical Office. And for the third quarter, our Board declared a dividend of $0.30 per share. Turning to our Balance Sheet, we finished the third quarter with a net debt to adjusted EBITDA of 5 times. We expect to reach our mid-5 times target leverage ratio by the end of the year, with the majority of our announced acquisition activity closing in the fourth quarter. During the quarter, we closed on an upsized $3 billion revolving credit facility, an increase of $500 million. The upsized revolver provides us with significant benefits. It increases our liquidity position, it extends our debt maturity profile, and it reduces our overall borrowing costs.
We had 100% of our banking group re-up their commitments, which is a testament to their confidence in our Company and our future. Also during the quarter, we raised net proceeds of approximately $320 million of equity under our ATM program at a blended gross stock price of approximately $35.60 per share. All of the equity was raised under 18-month forward contracts. Pro forma for the settlement of our equity forwards. Third quarter net debt to adjusted EBITDA is reduced to 4.7 times. Turning to our guidance. We are increasing our 2021 guidance as follows: 1. FFO has adjusted, revised from a $1.55 to a $1.61 per share, 2. A $1.58 to a $1.62 per share. An increase of two pennies at the midpoint. Blended Same-Store NOI growth revised from: 1. 2.25% to 3.75%, 2. 3.5% to 4%, an increase of 75 basic points at the midpoint. The major components of our revised guidance are as follows.
In life sciences, we have increased the midpoint of our same-store guidance by 75 basis points to 6.5% In medical office, we've increased the midpoint of our same-store guidance by 25 basis points to 2.75%. For our significant non-same-store portfolios, we have tightened our guidance range to $85 million to a $105 million, leaving the midpoint unchanged. Finishing with acquisitions, year-to-date, we have announced $1.6 billion of acquisition that have either closed or are under contract. Accordingly, we have updated our acquisition guidance to reflect this activity. Please refer to pages 41 and 42 of our supplemental for additional detail on our guidance revision. With that, Operator, let's open the line for Q&A.
We will now begin the question-and-answer session. [Operator Instructions] So that everyone may have a chance to participate, we ask the participants limit their questions to one to one and a related follow-up. If you have additional questions, please re-queue. The first question is from Rich Hill of Morgan Stanley. Please go ahead.
Good morning, guys. Long term -- long time listener, first-time caller. I wanted to just to talk about your recent acquisitions and maybe get a little bit more detail into the Cambridge market. Why you find that attractive? And if we can take a step back, your acquisitions are a healthy about amount above MFC. Just wondering if you have any other big land plays like this across the U.S. that you've maybe identified. What that -- what you can tell us about, not just '22 but '23, '24 as you think about your acquisition pipeline.
Hey, Rich, it's Tom Herzog. When you look at our land plays across the country, it does sum up to, at this point, for what we've acquired. And we are under a contract to acquire 7+ million square feet across Real Life Science business, $10 billion plus opportunity. So it is a massive opportunity over the next decade plus. I would think in terms of maybe 2.5 million square feet of that being in the East Coast now, in the greater Boston Area, primarily West Cambridge and probably $4.5 million of it sitting in South San Francisco, Brisbane, and then some down in Sorrento Mesa.
We have an enormous opportunity without any need to purchase additional land for a long time. These are going to be in what we would think of as very substantial campuses that create strong clusters over time, which is obviously, I think as you all know, vital to success in Life Science. It takes advantage of the virtuous cycle of aging population in new biologics live organism type drug discovery, the FDA approval time, the [Indiscernible] NIH, IPO funding, which has quadrupled in the last decade, along with the ecosystem of research universities and scientific talent. Like I said, all this venture capital be deeply engaged in these markets. We think that that's going to create an enormous opportunity for us across -- on both coasts.
And that probably lines of South now for quite a while, with some very accretive opportunities with land that could not be replicated today. The land sites that we've picked up are in the heart of some of the best Life Science markets really in the world. And when we think about, we just acquired this assemblage in West Cambridge, that goes about a 6-month effort that we did not think we could put something together that substantial during that period of time, and fortunately we were able to. The vast majority of the strong developable land in that submarket, is going to pay great dividends to us, we believe. So, Brinker, anything you would add on that and how you're thinking about it?
Yeah, maybe I will try to also address that question about the location and what we found attractive about it. And it's a couple of things we point to. 1 is that it does have the Cambridge address, which is obviously an important factor for the tenants and yet it's $20 to $30 per foot cheaper than East Cambridge which realistically is sold out anyway. But economically more attractive. It does have a strong accessibility, which is obviously important in a big market like Boston, with Route 2, the Red Line, Bike Path. So really, no matter how you're commuting, you've got. good access to this location and then it does have an established reputation. It's not like we're breaking new ground here. There's a strong Life Science history in West Cambridge, around 2 million square feet today, of which were by far the biggest player. And then the fact that we're able to develop something in scale, was ultimately what was the deciding factor here. If it was just a single parcel with one building, it's not nearly as interesting.
There's a lot of new entrants doing that. There's a lot of conversions that can do that. But the ability to put together 36 acres with a Cambridge address is pretty much unheard of. And that was ultimately the deciding factor in deciding to proceed. We put together 8 separate transactions, but it was really 2 fairly big parcels that were the linchpin, the Mini Street campus, and then the Concord Avenue campus. And then once we got clarity that we could get those, we went to work and put together the surrounding parcels as well. And who knows? There might be more to do in that submarket.
I'm going to add 1 more thing is when you think in terms of from the City of Cambridge 's perspective and it feels coming together to create an aggregate whole and the -- aggregate for the overall assemblage that it's worth a whole lot more than the individual pieces. Think in terms of having a huge cluster being able to transfer FAR between the various parcels that we acquired, which really is going to give us a lot more developable capability. And then from the City of Cambridge 's perspective being able to have foot bridges across the tracks, multi-family development, vibrant mixed-use neighborhood, etc. A variety of goals that they've set forth that we can help them realize their dreams while we also take advantage of, I think quite an opportunity.
Great, that's helpful guys. And so if I just had to summarize all of this, this is a capital development pipeline over the next 5 to 10 years that doesn't require any additional acquisitions, it's just a matter of executing on that development.
Yeah, Rich. It's a good point. I would describe it even a little bit slightly differently. We have enough land and densification, covered land plays on our books now at $10 billion plus to keep us busy, not even for 5 to 10 years, but probably 10 to 12 years going forward without acquiring another single land or covered land asset if we chose not to.
Thank you, guys. I'll jump back in the queue. I really appreciate that -- the answer and the transparency.
Yeah. Thanks so much, Richard.
The next question is from Rich Anderson of SMBC. Please go ahead.
Good morning, everyone. So more on the West Cambridge deal. Aren't you now at least for as you take down these sites and do your work, you're -- also have to operate in office and industrial portfolio, right? You don't want these things to collect dust. Is that going to be shield out to somebody or are you going to do that?
I can address that Richard. Most of the portfolio, I know it's HFR parcels, is property managed by groups that we already work with and that happen property managing these campuses already. So there's not a ton of execution risk, it's obviously not our business to these two industrial or office tenants, but the intent is that as leases mature at these various campuses, we would not even seek to renew leases. So we don't have an expectation that we're going to operate these industrial or flex office buildings over the long-term.
Okay. So are they going to be tear-downs or office conversions in the case they are all office assets or a combination?
Yeah, it's a mix, Rich. There are a couple of buildings in the portfolio that we do not intend to tear down, like the Medical Office building that's leased to an affiliate of Beth Israel. That’s just one example. There's a lab building in the portfolio that's leased to an affiliate of Flagship, we don't have any intention of tearing that down. But virtually, all of the flex office and industrial, over the next couple of years, the expectation would be that we turned those down and rebuild something much different.
Okay. And [Indiscernible]
[Indiscernible]
One of the things you have to keep in mind is as we pull together these individual transactions, to varying degrees, there was significant FAR in some of the smaller parcels that were underutilized that FAR by right in the way that it setup can be transferred to other parcels within that master development, thereby increasing the density substantially and increasing the value of the greater whole assemblage that we put together versus the individual pieces. So that was a critical item.
Okay, great. And then my second question, just quickly, you called MOB a flow business and I get that singles and doubles, but I would think some of that flow would also come in the form of development with your health system partners. Do you see that becoming an increasingly part of your development pipeline in the future, or is it really going to be primarily an acquisitions game? Thanks.
Rich, that's a good point. In Life Science, just based on the reality of the business, there's so much ownership in the three major markets between Alexandria and BioMed and us that the acquisition market is not nearly as strong. Whereas our relationship acquisition business with hospitals and health institutions is quite a bit stronger. We have opportunity to grow accretively there as well. Klaritch and Justin Hill have been able to put together some quite strong development programs that do end up yielding in the low-to-mid 7s or sometimes even a little bit better. And so that is quite accretive, and these are on-campus developments that are often times anchor lease and quite profitable. And Tom Klaritch, maybe you could give some insight into how you see the growth of that business and the sustainability of that business for us.
I think we can have pretty decent growth in that area for the foreseeable future. We're working with HCA on a number of projects. Tom mentioned 2 of them on the call, two MOBs, 1 in Savannah, Georgia, 1 in Brandon, Florida that we're pretty far along with them on. We're also in discussions with them on 2 or 3 others in other parts of the country and we're always speaking with our other health system partners. We potentially we'll have some deals with some of our bigger partners in the next -- probably in the next year, but we're not far enough along with those 2 to really announce anything.
Okay. Good enough. Thanks.
Thanks, Rich.
The next question is from Juan Sanabria of BMO Capital Markets. Please, go ahead.
Hi. Good morning, and thanks for the time. Just curious on yields today or cap rates. Where do you see cap rates on a stabilized basis across both the MOBs and Life Science in the cluster markets you are focused on?
Yeah, I can try to address that. Scott here. In Life Science for the markets that we're in, which is almost entirely the big 3 -- Class A product is probably in the 4% range, maybe a little bit higher, but it's in that range in any of that, especially if you can acquire a controlling interest versus just selling non-controlling interest, even though as we've seen, those trade in the low 4s. Now, some of those buildings have Mark-to-market built into them, but often times, that's pretty far into the future. So that's probably still a pretty realistic cap rate. That's probably down 50 basis points at least, over the past 12 months, given the strength in the marketplace and the number of capital sources looking to invest in building presence in Life Science.
And then in Medical Office, similar forces, given the interest in the sector. But the cap rate there for the quality product, are probably in the mid-4s to mid-5. A broader range because they are just more variability in the building by building in terms of who the tenants are, on-campus versus off-campus. But it's hard to find really high-quality buildings that fit our criteria or anything more than a 5 cap in today's market. Teekay (ph), anything you'd add?
No. That's pretty much right spot on.
And then just on the West Cambridge acquisition, you talked to a low for FFO yield, but just trying to think through from a modeling perspective how to think about that from an NOI perspective. And if you could help us bridge at the mechanics were have it to interplayer, or what's assumed to get to the FFO yield.
Yeah. Hey, Juan, it's Pete here. And it's a good question and we recognize it's a bit unique to disclose an FFO yield as opposed to cap rate. But given the unique nature of this portfolio, which is a combination of stabilized properties and covered land, we thought an FFO yield was most appropriate, so investors and yourselves on the research side could better understand the year 1 impact. Now, If you refer to page 5 of our investor deck, it provides details on each transaction. Of the 8 assets and $625 million purchase price, 3 of the assets we categorize as stabilize with a total purchase price of $187 million. That's 10 FAWCETT, 725 CONCORD, and 25 SPINELLI.
Plus the Concord Avenue Campus, which we do categorized as covered land, and which we acquired for $180 million. That asset is currently 100% lease to Raytheon for 6 more years. The stabilized asset plus the Concord Avenue Campus, which together totals around $370 million. The blended year 1 GAAP cap rates, so from an NOI GAAP, NOI perspective, is approximately a 5% yield across all of those. So the balance of the portfolio, which we call covered land, which is around $255 million, we will capitalize increase on those assets at approximately 3%. That's our current weighted average debt interest rate.
And since we started this effort about 6 months ago to assemble all of these assets, we've already -- we're well underway on our internal and external design team. and we're working towards entitlement planning and ultimate design of this campus over time. So we're capitalizing interest on those already. So if you add all that up, I know that's a lot, but I want to make sure you have all the pieces. That's around $370 million at a 5 cap, and that's around $255 million at a 3% capitalized interest with blends to afford 2. Maybe I'll turn over to Tom if you want to add anything to that.
The only comment I'll make just so there's no confusion on the call. If we've got covered land play that is also producing rental income, the cap interest ends up being recorded in accordance with GAAP, as we're required to do. But the income that's thrown off from those leases is treated as what's called ancillary income and reduces the basis of the assets if there's not a doubling up of income. You probably know that, but I just didn't want to have any confusion on that.
Thank you, guys.
Thank you.
The next question is from Nick Yulico of Scotiabank. Please go ahead.
Thanks. So I guess in terms of the recent development store Vantage and even thinking about the future opportunity here in Alewife, how should we think about how you guys are underwriting those new developments today? I mean, I know you do have that range of 6% to 8% you gave on a development page. But, some of the rents figure that you talked about with Alewife it sounds like the recent development there, Cambridge Discovery Park is actually going to be over 8 yield, just trying to understand kind of where you guys are shaking out in terms of development yields being underwriting since rents are growing so much.
Hey, Nick. Scott here. I think your note was correct for South San Francisco Class A rents today particularly for that location. We're probably in the low-to-mid 80s. Obviously, we're benefiting from our low land basis in that project, so keep that in mind. But the all-in costs, given our land basis today, for Vantage Phase 1 is in the $1100 to $1150 per foot range. And the simple math on that is that it's a mid-7s return on costs We'll end up getting a similar return on Nexus. It looks like, we're having really solid leasing momentum. We announced that project earlier this year. We were projecting more of a mid to high 6s return. It looks like we'll do quite a bit better than that. And then in West Cambridge, it is a bit more expensive to build there.
Not dramatically so, but the all-in cost for our underwriting is somewhere in the $1300 per foot range. And I say range because it's still a little unclear exactly how much we'll be able to build. And that will obviously impact our land prices. But a decent estimate will be $1300 per foot in West Cambridge if you were building today, given our land costs. And then obviously, we just announced, last night, that we signed leases at $99 per foot on average, within walking distance of that site. The simple math on that one is a mid-7s return on costs as well. Tom, you wanted to add something?
Yeah.
Okay. Great. Thanks. Just one other question on South San Francisco. Any update you can provide on when you think that potential up-zoning densification there could be addressed by the city?
Yes. A - Scott Bohn, you want to jump in?
Sure, my name is A - Scott Bohn. The city is working through the general plan update, and I think the current target is mid next year to complete that.
And is that -- the thought process there is similar to what you've talked about before in terms of the -- is it a -- it's a potential doubling of FAR? Is that right?
Potentially, yes. It depends on location and where each individual project is located. As you get further away from the train station and the transit, [Indiscernible] yet bearable decrease a little bit, but I think we look at our projects. We expect those to fall in that range.
Okay, great. Thanks everyone.
Just to follow up on the question, the first question that you asked, I think it's probably worthwhile to repeat something that Brinker said and give it just a little bit more context. Because I think it was an important question. We've talked about new supply in these two markets and how do we think about how they make money? And Brinker mentioned the $1300 a foot in West Cambridge, $1100 a foot to develop inclusive of land in San Francisco. West Cambridge, $100 rents, South San Francisco, $85 rents, producing something in the mid-7s.
Those are obviously returns that are higher than what somebody would achieve in the market today if they bought land at market, which we've seen a solid 30% to 50% increase in high-quality land as far as pricing, bringing those spreads down. If one was to do a market transaction today, if you could find the high-quality land, probably more back to the 150 to 200 basis points spread, in the midst is our cost to capital. If that held, that's a solid 300 plus basis points spread in 400 quarter cap type assets.
Do the math on that, and on the accretion and on the earnings accretion is quite substantial. And I'm not trying to speak to returns that will be years down the road, but when you think in terms of the value of having locked up some of the best land in some of the best sub-markets in the world, it really is going to allow us to be in a position where we're aware of new supply like everybody is. But if you've got -- if our land locations are in some of the hottest markets in the ecosystems with the greatest energy, we do think we'll get far more than our fair share of that leasing, and that that's going to be a profitable outcome for us for years to come. I think if we're starting from scratch we would have an absolute impossible time replicating that potential outcome. So I think it's a very strategic point that you've raised.
I appreciate Tom.
Yeah. Thanks, Nick.
The next question is from Steve Sakwa of Evercore ISI. Please go ahead.
Thanks. A lot of the questions have been asked, but I just wanted to get your thoughts on the spec versus pre -leased build-to-suit in the Life Science and I realized Tom you talked about the $7 million fee, $10 billion. How do we think about just a metering out of that over the next even say 5 years. And, it sounds like demand is great today. Everybody's getting into Life Science. But just -- what are your thoughts on broad dollar s per year over the next say 5 years?
Steve, if we rolled back a half a dozen years, we were spending on just on pure development, I'm not talking redev, about $100 million a year in development. That's ramped up, that's easily in the 400+ range at this point. We would see that ramping up further to probably $600 million a year and maybe overtime higher. But one of the things that we do pay a lot of attention to as the demand -supply work that we're doing. So that we can time it appropriately. We look at pre -leasing, we look at funding risk in being very clear on where funding is going to come from, and Peter Scott has done a lot of work on that that we got the internal work towards glad to share it on how we -- we think about that. But I would see that ramping up. I think it's realistic, Steve, that we're not going to be sitting at 99% occupancy at South San Francisco forever.
That just won't happen. So, you're going to have some diminution of occupancy over time and that would be natural. So then it comes down to, is the land locations that we have, that we'll be providing our new product, Class A product? Is that going to be highly sought after, which we think it will be? And if some of it -- if you have -- if you returned a little bit more toward a normal vacancy, is it still profitable? And we've got so much caution in our numbers, that the answer is yes, it would still be profitable, very profitable. So those are things we're paying a lot of attention to. We spend a lot of time with our Board over the last couple of board meetings, going through the risks, how we mitigate those risks, and why we're comfortable that this is very sound play.
The other thing I'd point out is even though we're talking about $600 million year of development, it could be $700 million or $800 million at some point, or $900 million, or it could drop back down to $300 million or $400 million. It's not like we've got a gun to our head as far as timing and putting that product out so pre -leasing demand and supply or something that we're working on a monthly basis to have our thumb on the pulse of what's going on in the market.
Great, thanks. And I know the CCRC a pretty small piece of the business, but I'm just curious what you can comment on as it relates to just labor, how that's either impacting or maybe not impacting those assets and what are your expectations for labor costs moving forward and the impact on margins?
Yeah. I can start with that one, Steve. I think we have a little exposure to that business. It's about 8% to 10% of our NOI, so not huge, but big enough to talk about for sure. We have the big concentration in Florida which we think is a good thing. It's primarily an independent living business. So most of the economics in CCRC are driven through the entry fee and fortunately the contracts there are really strong. So the fundamental demand for that business is good and the underlying profit center, which is the independent living, is strong as well. But definitely we had headwinds on labor in the third quarter in particular. So we had a pretty significant increase in expenses if you just look sequentially, we were up almost $5 million, that's about 5% just sequentially, and most of that was driven by labor.
Now there's a labor shortage nationwide, but in Florida, it's particularly acute. And then on the healthcare side, it's been particularly meaningful. So we don't see that changing overnight, at the same time it's unlikely the last indefinitely. So for sure we have a short-term impact on margin, we even had to reduce admissions in some cases So it impacted revenue as well but we do see that improving, but it's going to take some time. That's a year plus process where I think it will slowly decline to more normalized levels.
Great, thanks. That's it for me.
Thanks Steve.
The next question is from Nick Joseph of Citi. Please go ahead.
Thanks. You talked about the GAAP yield or NOI yield on the acquisition. What's the cash yields for the West Cambridge assembly deal?
Yeah, it's probably about 100 basis points less from a GAAP perspective when you back out some of the mark-to-market on rents and things like that. That's probably the best guidance I can give you. It will depend upon each individual asset, but they have 100 basis points to add.
Yeah, it's in the mid to high 2s. That would be there the share cash NOI.
And you got to recognize that some of the leases that we picked up were far below market at this point. And we're glad to have that in place where we're doing all the entitlement work and getting ready to do the expansion and densification that we're interested in doing, but if some of that space is released it would be at much, much higher rates.
Thanks. And then just looking at the map in the presentation, can you walk through what else is existing that you don't own in the submarket and is there any competitive Life Science supply already there?
On the map, it's in the Investor picture, looking north at the top of the page, and we obviously have the east and west side of that page pretty well covered all the way from Concord Avenue, which is what gives you direct access to Route 2 all the way up to the MBTA red line and there's quite a bit in between it's a primarily lab today there's some flex office as well, but it's 2 primary owners. Their names are all that relevant but both companies that we have good relationships with. So I'd say it's possible over time we could expand this footprint.
Hey, Herzog, it's Bilerman. Just come back on understanding cash versus GAAP. So it sounds like going in on a cash basis, you're saying high 2's on the totality of the $630 million of initial investment. And then obviously, from a GAAP perspective, you're going to capitalize but not count the income from those covered land plays. And so is it basically just a push on a cash basis, at least initially, until you actually start development and then be able to earn those higher yields?
Yes, I think that's right, Michael. It's Peter here. If we think about it being able to acquire all of that and from a cash perspective, has it be essentially neutral or a push. We looked at that as something that was quite attractive. When we think about the actual FFO accretion as we go into next year, we are funding this as well with debt capacity, so that's one thing to just mention there. So there actually is a little bit of accretion as you think about earnings from this year as we head into next year.
And Michael, I'm going to add something at the -- I think you're aware of this. I don't know if all the lesser -- listeners are as tuned into this, but keep in mind that cap interest is always an unusual thing. It's a closet cash, non-cash thing. GAAP has you take cap interest into GAAP net income, you do pay the cash out. One of the things that you have to keep in mind is that when you have interest expense that you're paying while something's under-development, it is deemed to be a direct cost of development. And the reason is, is because it's been determined over the many, many years, that you could've avoided that interest expense if you hadn't made that acquisition to develop that asset. So under GAAP, it is treated as a cash item and it's throughout [Indiscernible] world, the cap interest ends up being included in AFFO. I think you know that, but I just want to make sure that there aren't listeners that didn't catch that nuance.
Yeah, I think that's -- and that's where I was trying to get at the difference between lining up our GAAP versus cash accretion. And obviously, as a -- this transaction has a fair amount of future development, and at least you're getting some income to be able to offset that cash interest that you are paying, because you are borrowing to do the transaction. But the initial yield on the totality of that $625 million is you said, it was high 2s, mid-2s, just from a cash basis again?
It's in the high 2s.
So we've gotten them -- high 2s. Okay.
In the high 2s.
And then when would be -- when is the first large capital outlay to start future development like in next year, should we expect -- how much capital, more capital will be pushed towards this project?
I would like to be able to answer that for you, but I'd be making predictions that could change, because it's so dictated by supply and demand and timing of entitlement, which we're going to be working very closely with the City of Cambridge. The other thing I'd point out is, if you were to go to the other map that we've shown in the deck that we provided on Page 7. You'll see that -- on that page, you'll see the shore, you'll see the Coal Peak Oyster Point, Nexus Vantage Pointe Grand. On the shore we have very significant development opportunity and that vacant land space that we're able to pick up Sierra Point Towers. And that's substantial in Vantage. That's an enormous piece of land that we're going to be developing out. Nexus, we've got very, very strong traction, not quite enough to have announced it on this call.
But as far as lease up of that space, which inspired us to kick up the Vantage Project and Pointe Grand, we're going to be having a few of those buildings that are coming due at the end of 2022 on the leases, thank goodness. So we can start taking advantage of that huge densification opportunity asset by the asset, when that thing was built at a 0.5 FAR away back in the day, and that likely goes to [Indiscernible] fill the number out, but something much, much higher. So when you start looking at -- and then we have opportunities in San Diego as well or Sorrento Mesa.
So when you start looking at what we have in West Cambridge, we have in South San Francisco, we have in Sorrento Mesa, we have to look at pre -leasing, we have to look at demand and supply, we have to look at where we have tenants that are seeking to grow that need space sooner to be able to sequence as we take -- as we move each of these projects forward, and how quickly. I do think, Michael to your point, we're going to get the entitlement work done as quickly as we can. A lot of the soft work done and move forward with West Cambridge. That's not something that's going to sit out there for a long period of time.
But we may have some other projects that have more immediacy in their ability to meet the demand of our tenants and the demands of our non-tenants in those particular markets. I don't know that the answer to that yet, but you can be sure over the next few years that we will have clearer and clearer answers as the markets play out.
Right, that's helpful. And Tom one last one for you. In terms of if I think about the transactions and how much of the call has been focused on Life Science and the significant amount of growth opportunity you now have embedded within the Company given all these land plays and development opportunities. Medical office obviously is, you said singles and doubles. You've historically said, M&A is not your cup of tea for a whole host of reasons. Is that still the case or either are you thinking about balancing out the portfolio to add more MOBs just given for much Life Science you now have potential to add over the next 10 years?
I think, Michael, we're going to continue to have MOB growth through our relationship, investing primarily with our hospital relationships and obviously, the infrastructure scale, reputation, etc. I don't think it's going to be difficult for us to have annual accretive growth transaction by transaction in MOBs. I think it'll lose pace to the Life Science business naturally over time. We are okay with that. But over time is -- all these businesses go in cycles and there may be a period of time where MOB looks more attractive and we get even more aggressive on that side. But to your point, we do see using our relationships, our off-market transactions, to hit singles and doubles, and as far as doing something very significant that could change the landscape of what our portfolio looks like, I think you could feel rest assured we're not going to do that at this point. Never say never. Who knows what the conditions look like in the future. But that's where we stand today.
Right, because your relationships can also expand the capital relationships, right? So if you were presented with some sort of opportunity, you can go look for the best structure capital partner, rather than just your relationships on the health system side. So something could work. I just -- I guess the perspective of doesn't sound like you are highly attracted to wanting to go out on the spectrum right now on MOB to make a big push given your views of Life Science and maybe where the MOB business is. I'm just trying to understand the appetite if something was available, how aggressive you'd want to be at this juncture. If you can get the right partners and the right structure and things like that.
I go back to never say never, because obviously at some point the economics could be so attractive that one can't ignore that, but in today's environment for the opportunity in front of us I think our better plays in Life Science and then continue slow, steady accretive growth and MOBs. But it's always nice to have the optionality with really 2 big businesses and then 1 much, much smaller business. As the logo through cycles to be able to have some growth in each and pivot as market conditions change. So you can see that happen at some point in the future, but we're not seeing it right now.
So you're saying there's a chance. Okay. Have a great day.
Your take off is there is a chance, I'm saying I wouldn't think there's a chance at this point in time but that's obvious a long time, Mike.
All right. Have a good one.
Alright. Thanks.
The next question is from Jordan Sadler of KeyBanc Capital Markets. Please go ahead.
Thank you and good morning out there. I wanted to follow up on Michael's question, but we're a little bit of a different angle. And I'm curious. Could you parse the relative returns or return hurdles you are looking at for MOBs versus Life Science?
Yes, we totally can. Brinker, do you want to start?
Yeah. Could be there where we spend a lot of time on that exact question, Jordan. Today MOBs high-quality, probably coming at 50 to 100 basis point higher cap rate, so the initial yield. There is a little bit more CapEX drag on MOB in general, probably in the 20% range, just on average, CapEX -- total CapEx as a percentage of NOI. Obviously, some billings will be higher or lower, but that's a decent average across the portfolio and we've had 2.5 type percent growth for a decade or more. So the economics of that business are pretty straightforward. And when we compare that to Life Science, if you're starting at a forecast just as an example in today's market, high-quality building it would fit within our strategy and portfolio.
The contractual escalators in that business, tend to be in the 3% to 3.5% range depending on which market you're in. South San Francisco being at the high-end, Boston and San Diego will be more in the 3% range. The escalator is higher, just the contractual growth with lower capex. In theory obviously that would lead to a lower initial cap rate, which is exactly what you see, what has really triple charged the Life Science returns over the past decade, of course is the dramatic escalation in rents. They are up at least 10%, arguably closer to 20% over the past 12 months in our 3 core markets, which has obviously helped our mark-to-market across the portfolio that today is in the 20% range.
That's on a $500+ million base. So that's a lot of upside to capture as leases roll over the next decade or so. So you combine all of that, you start with a lower yield in Life Science, but obviously a much higher growth rate, that today you probably come out to a higher IRR realistically, in Life Science, but we're not assuming that rents are going to grow at 10% to 20% forever in Life Science we think it's a great business. We think we have great locations, great team and really strong market position. But it's probably not realistic to think that rents grow at +10% forever. So we do still like the stability of that MOB business, but we don't think all MOBs are created equal. So we're pretty careful about exactly what we put into the portfolio. And I think that is something that when you compare the different companies, you will increasingly see that play out in the returns when that -- from that business.
Can you give us a sense of what you are underwriting in terms of rent escalation over sort of like a 5 to 10 year period in Life Science? I think we know what it is in MOBs, as you referenced.
Over the last decade, it's been more in the 5% to 7% range across the 3 markets, so that's the 10-year history. Obviously, it's been even stronger over the past couple of years. There is a fair amount of new supply coming into the marketplace, so that could potentially weigh on rent growth. At the same time, the escalation in demand is equally off the charts. We thought 2020 was a strong year for venture capital and IPOs. And in an annualized basis, it looks like 2021 is going to be 50% higher than 2020. And all of that capital leads to more real estate demand, obviously. It varies by Company, but our math is that on average, every million dollars of VC and IPO that get raised, translates to about 400 square feet of additional space. So a $100 million raise is another 40 thousand feet of space.
Obviously, sometimes it will be more, some less, but on average, that's a pretty significant amount of real estate that's needed to meet the growing demand. And given the success that these VCs have had, they'll obviously have an equally enormous success raising their next funds, which will fund the next round of growth on top of the NIH funding, which continues to grow. And that's really the first wave of capital in the pipeline that over the next 5 to 10 years, all that NIH funding that's really basic science, will start turning into the next clinical candidate, that is really the sweet spot for our business. Tom, anything [Indiscernible]?
I think you've covered -- a couple of things I'd add, when you look at the last 3 years, we've been following very closely the NIH, VC, SEO partnership funding, which helps drive Life Science, it's quadrupled in the last decade. But in the last 3 years, it's up 50%, obviously driving a lot of funding to do lab work. We've seen a 20% growth and supply during this time, as far as space vacancy is obviously falling to practically 0 on most of these -- of the big 3 markets and the better locations. So not surprised that you've seen rent growth that has been in the 5% to 7% CAGR range. You've seen land rise rapidly in price along with labor and construction costs, which will put some pressure on the spreads that these are developed at unless you already own the land and you own it right. So we do think that that is probably our great opportunity within this is this massive land holding. So I think that's just an add-on to the comments that Brinker made that are probably important.
And then lastly to follow-up, Tom. While I have it, you did sort of frame up $10 billion, 10 to 12 years. But it sounds like you're still interested in adding capacity in places like San Diego and maybe even incrementally in West Cambridge maybe other submarket. Could you see yourselves launching or starting upwards of a billion dollars a year of Life Science development?
Jordan, in over time, certainly we could -- but it would take place over time. It's not like we're going to make some massive leap on one year, and create a whole bunch of dilution, year-over-year that like -- like you're not going to see us bump it up to a billion dollars next year or the year after. It's a very fair point. If we continue seeing this demand and then the -- just look at what took place with the pandemic and vaccines and CRISPR technologies, and all these cancer treatments, and large molecule live organism drugs that are curing diseases that we simply used to die from, that demand is going to continue fueling.
We believe there's continued growth in the biotech companies, and with that there's going to be a lot of demand for space. And to be able to have these new start-ups especially and then grow within these -- the hottest biotech markets where the energy or the scientific talent, DC, etc., are located. There's just a -- there's a big opportunity. It's almost hard to measure. Now we -- so could it get bigger? I think it probably will get bigger over time, maybe because we're going to keep an [Indiscernible] close eye on supply and demand, and funding and everything else to make sure that we don't get over our skis, but there's certainly that possibility.
Thank you.
Yeah. Thank you.
The next question is from Steven Valiquette of Barclays. Please go ahead.
Great. Thanks. Hello everybody.
Hey Steve.
And just a question here on measurable census in Life Science, which I know they weren't really talked about that much just given the strength in your Life Science portfolio with lease occupancy in the high 90s. I guess I'm just curious when we do hear about traditional office REITS. Talking about measurable sensors still only in the 20%, 50% range across major markets like San Fran and Boston. Do you have any data points you can share just on the percent physical occupancy of employees in person within your Life Science office space or do you not even focus on that because of the strong supply - demand characteristics.
Yeah. Steve, just to make sure I understand the question, you're talking about, utilization versus occupancy? Yeah.
Exactly.
Yes, it varies by market. On average today, we're probably in the 60% range. San Diego is probably the higher end of that. San Francisco because of the politics there, is probably more at the lower end, with Boston somewhere in the middle, but it's ramping up pretty significantly. Most of the scientists have been working on-site throughout, with more than back-office still working from home. But that's starting to change. I know we're back in the office today so that's good. And we're [Indiscernible] here that more of our tenants are doing the same, so the amenity centers are back open, the on-site dining is back open. Obviously, there's more and more reasons to come back to the office. I mean we're starting to see that happen.
Got it, okay. One other real quick follow-up, I know it has been talked about a lot on this call already, but just with your current land bank of 7 million plus feet, obviously positive when thinking about future growth. When we hear about one of the largest public traditional office REIT Company highlighting their 5 million with land bank dedicated specifically to Life Science out of their 17 million total land bank. I'm just curious on your latest thoughts on competition from just traditional office REIT competitors and also just attempts at converting traditional office space to Life Science. If can just relay the latest temperature on that as well. Thanks.
Steven, it certainly there could be some competition from that. We don't believe that it's generally going to be EMD main and main locations for Life Science and I won't repeat everything I just said about that and why the biotechs want to grow with the experience landlords that have the deep clusters, the deep experience. Certainly there'll be more competition and obviously you can't have occupancy rates that set at 98%, 99% for ever, there will be competition. So then it comes down to who was able to provide the deliveries that create the purpose-built -- experienced purpose-built product within the campuses in the areas that have the energy that the biotech startups and the biotech companies that are growing want to build their businesses and we think that we're going to get far more than our fair share of that type of business. So I'm not discounting that there will be some new competition, there will. Of course if you have 99% occupancy in a market there will be competition, but we think we're well-suited to be able to do well in that environment.
Okay. All right. Thanks.
Thanks, Steve.
The next question is from Michael Carroll of RBC Capital Markets. Please go ahead.
I think -- Tom, I know you've been mainly focused on the 3 largest lifelines cluster markets. But given the attractive backdrop and maybe the difficulty to find land in some of these markets. It doesn't make sense to kind of look at some new clusters? Is that something they are starting to look at right now given the -- given the long -- the stronger trends over time?
I think it makes tons of sense for somebody else to go do. I think if we didn't have such a massive competitive high barrier to entry position on the three major markets, maybe we'd be looking at that too because I would imagine we could scrape another 50 basis points of yield. But it takes a long time to create a vibrant cluster that has the ecosystem of the scientists, the venture capital, to critical mass of land, all the different things that we've talked about. So from where we sit right now, that's not the play that we're seeking to make, but I'm quite sure others will.
Okay. Then can you talk a little about your strategy in San Diego. I know you have a small acquisition you announced, I guess today. When could you start that development project? I guess when does that lease expire? And then off of that, is there other sites in San Diego that you're looking at? Because I think we're starting to run low on your land banking and land market.
Yeah. Mike Dorris, I might ask you to jump in and then I'm happy to add anything.
Sure. Thanks, Scott. Yes, with respect to the acquisition we just announced, realistically, you got to design and permitting period that [Indiscernible] spend a lot of next year [Indiscernible] going through. So it's probably more of a mid-23 type of start. And in terms of longer term, land bank continue. We're certainly looking for opportunities to refill that platform [Indiscernible]. Scott, do you have anything else?
Maybe I'll just reinforce that our footprint in San Diego is really concentrated in Torrey Pines, in Sorrento Mesa. So those are sort of key targets where we can build on our existing footprint. We've had almost too much success in the development for 540,000 feet that's already pre -leased in some cases before we even started construction. So we have been hard at work to try to find the next leg of growth for Mike and his team in San Diego. So hopefully this one that we announced yesterday is just the first step, in doing more in that market which really has been, seeing excessively strong demand.
And then just last one from me real quick on the recent San Diego acquisition is that a scrape and a ground-up development and how big of a project can you put on that site?
Yeah, that one is scraped and redeveloped. As Mike said, that's probably a 2023 type event. By the time leases mature and we seek entitlements, but we're doing some other things in and around that site that it probably ends up being a fairly material campus that hopefully we'll have more to talk about in the coming quarters.
Okay, great. Thank you.
Thanks, Mike.
The next question is from Joshua Dennerlein of Bank of America. Please go ahead.
Yeah, hey, good morning everyone. I just want to ask on the labor issue, or just maybe broaden that out from the earlier question. How are you thinking about it as far as impacting G&A going forward and then any potential impact on Life Science MOBs?
Yeah. Josh, very fair question. I imagine every decent sized Company in the country is talking about this one. Certainly from a personnel perspective, one has to look at the fact that there's been inflation. There are labor market pressures. And so I would imagine us and every other reap that's thinking hard about it is going to be taken into account. It's something we've been working on in our CCRC business. It affects more so the sniff beds probably as you know, CCRCs have a certain number of sniff beds to have the full continuum of care, and provide those types of guarantees to the residents. We have had more contract labor than average by a luncheon. And that created higher expense load, which weighed a little bit on our same-store growth, which was to be expected nets a short-term item for us, it did cause us to pull back in a few assets on the admissions and sniff beds because obviously as, you're no longer making money on filling in bed, you get to go back and revisit whether you leave a few beds empty for a period of time.
But we consider that to be a short-term issue and one that we will resolve. Those are the types of things that we're looking at on labor front. It's a real problem. Labor costs in senior housing in general, have been rising pretty dramatically. So when you've got occupancy, then one has to keep an eye on, but also, you can't spend revenue, you can spend NOI at the end of the day. So one has to look to, what is the NOI and what's the Same-Store growth? And those are things that we're tracking very carefully.
And what about maybe internally on the G&A front. Are you seeing more pressure there than you would in in prior years?
Well, yes, there's more pressure because there's been an exited from the -- exited from the labor market in part and across various different functions you've had some inflation in wages across the country. And we and everybody listening in this call, have been reading about this in the Wall Street Journal, New York Times whatever, on a weekly basis. So that's no secret. So we're putting a lot of time in making sure that we approach this appropriately and then we have a fair response to our team on this front.
And that applies to senior housing as well and CCRCs. You have to pay people appropriately for the conditions. And the cost of living has gone up and the labor pool has shrunk some and that's going to have some impact. That's just a reality of doing business and those are things that we're dialing into what we're forecasting. It's nothing unique to our business, but I think we and everybody else are dealing with that issue right now.
Got it. Thanks, Tom.
Thank you, Josh.
The next question is from John Pawlowski of Green Street. Please go ahead.
Thanks for keeping the call going. Tom just a follow-up to one remarks you had on land values increasing 30% to 50%. What time frame were you referring to?
First of all, John, hello and welcome aboard to Healthcre -- Healthpeak and Healthcare REIT Wealth. As far as the time period Brinker, I think we're talking over the last probably 20 -- 20 months or something like that, since COVID began, you saw a lot of demand coming during that period of time for this land. The others market started to slowdown, you -- there's just an awful lot of interest and we saw that inflation in land and it's so specific, John. You could have one particular location where the land values might have gone up 10%, you could have another where they've gone up well over 50%. So it depends on the location and the particular transaction.
Okay. I understand and appreciate the welcome to the sector. Maybe final question, Scott, on the entitlement risk for West Cambridge assemblage, what percentage of parcels are already entitled for whatever the future dream would be, and what percentage of sites do you still need to work through?
Yeah, we'll be seeking entitlements on off sites. Certainly we could build lab today on any of the individual parcels, but not at the density that we would seek. So we'll be undertaken a pretty comprehensive plan with the city, which we think will be advantageous in that given our scale we have the ability to help deliver things to the city that are one-off owner wouldn't be able to accomplish. In addition to the fact that with so many different parcels, we can move square footage around. Just as an example, if the City of Cambridge wants a multi-family to be included, obviously, we wouldn't do that, but we could partner with somebody who's really good at delivering something like that. And we can place things like multi-family or parking, or move streets in a way that would help the city accomplish its objective as well. That's something that a single-owner simply couldn't do.
Okay. Are there any other regulatory hurdles that are making you hold your breath, that might need you to pivot the plan several years from now?
Nothing unusual. I mean, it's the City of Cambridge. So that's one of the benefits of doing this. Once you actually develop the site, it's not an easy place to build, but we've actually been delivering a lot of development in some pretty high barrier markets for quite a while with good success so nothing unusual here, John.
John, one of the thing I'd add is the City of Cambridge has got goals as well. They labeled it Envision Alewife in their late 2019 blueprint. So they have aggressive goals of their own. And I can assure you we're going to try to help them achieve those goals.
Okay. Great. Well, thank you for your time.
Thank you.
The next question is from Mike Moira of JP Morgan. Please go ahead.
Yeah. Hi, just a quick one on, I guess, West Cambridge covered land place. How quickly can you get to the real estate once you have projects that are ready to go, I think you had mentioned Raytheon 1 building with 6 year lease, but what about the others?
Yes, there is some parcels where the remaining lease maturities more in the one to two year range which actually coincides pretty well, with the entitlement time periods that's probably, fastest possible timeline to start construction anywhere?
And is 6 years the outside?.
No, I mean, we would view this as a decade plus opportunity depending on supply and demand, it could come quicker. That Raytheon lease is at the high end, so if you're just focused on the outstanding leases driving the timing then yes, that would be outside date.
Yeah, that's what I was looking for. Okay. That was it. Thank you.
Thanks
This concludes our question and answer session. I would like to turn the conference back over to Tom Herzog for closing remarks.
Okay. Well, thank you Kate, and thanks for everybody for joining our call today. We appreciate as always, your continued interest. Also, I think we'll be meeting with many of you at NAREIT and we look forward to that. So good luck with the rest of your earnings seasons and we will talk to you soon. Bye bye.
The conference has now concluded. Thank you for attending today's presentation. You may no w disconnect.