Scott Brinker
President and Chief Executive Officer at Healthpeak Properties
Thanks, Andrew. Good morning, and welcome to Healthpeak's second quarter earnings call. Joining me today for prepared remarks is Pete Scott, our CFO and our senior team is here for Q&A. Last evening, we increased earnings guidance and reported 4.8% blended same-store growth. The balance sheet remains in great shape. Through streamlining and automation, our G&A for 2023 is expected to be 6% below our original 2022 guidance. We're operating in a volatile macro environment. We have a strong handle on things we can control.
The fundamental driver of demand for our real estate is the desire for improved health, which is only growing. Equally important, we benefit from the impact of technology across our playing field of medical discovery and delivery. For example, progressive health systems now have 10 plus outpatient locations for every one hospital, with the strategic plan to grow that ratio to 20-plus. The hospital remains the epicenter, but much of the growth is outpatient, made possible by technology.
The shift in delivery aligns with our strategy to capture the outpatient real estate needs of leading health systems. And with tighter profit margins because of the cost of labor, health systems will increasingly seek knowledgeable third-party capital like Healthpeak to expand their footprint. Similarly, technology will reinforce and expand the need for lab space. AI and machine learning will increase the probability of success in drug research and reduce development timelines. This will drive more capital into the sector. The data needed for the algorithms and the validation comes from the laboratory, which are highly regulated in controlled environments.
A Nobel Laureate in chemistry recently said that she has run her lab for 30 years and never experienced the accelerating discoveries we've seen in just the last five years alone. The science is building on itself, including our understanding of genetics and improved testing, which will transform healthcare delivery. Today, it's reactive. We seek therapeutics after the problem arises. Technology will drive the addition to proactive care, we detect issues and seek care before a problem arises. This will shift the allocation of healthcare spending and expand the total pie. Our outpatient medical and lab buildings will be a critical part of this future.
A few comments on portfolio performance, starting with outpatient medical. We have an irreplaceable portfolio and deep relationships with leading health systems. More than half of our square footage is now leased directly to a health system, which is 2x the level from 20 years ago as business model has shifted toward outpatient care and we've become a partner of choice. I toured a number of our buildings in recent months and saw very active parking lots and lobbies, a great sign for current and future leasing. Our concentration in high growth markets like Dallas, Houston, Phoenix, Vegas, and Nashville, will benefit our portfolio for the next decade plus.
Moving to our lab business, where we have significant market share in key submarkets, a diversified tenant base and strong relationships. Biotech's have been doing what they should do in this environment, which is to conserve cash. So the default answer [Phonetic] has been to make due with the existing space. That mindset made perfect sense for the past few quarters, but will naturally run in cycles. Despite that backdrop, we had solid leasing activity, primarily with existing portfolio tenants, who accounted for 89% of year-to-date leasing. In each case, the broader market either isn't seeing the prospect or is it a big disadvantage because we can tear up an existing lease in exchange for a larger, longer-term commitment. More recently, we've seen an uptick in leasing discussions, which may reflect a more benign outlook for the Fed in interest rates.
I'll close with transactions, the market remains slow, given the financing markets and inactivity from core funds and non-traded REITs, many of which have reduction queues. Despite that backdrop, we sold $130 million of fully stabilized, but less core real estate year-to-date at an attractive 5.4% cap rate and used the proceeds to accretively delever. We're currently having good discussions on a couple of $100 million of additional less core asset sales, subject to closing, which isn't guaranteed in this environment, we'll have flexibility to either accretively pay down our line-of-credit or buyback stock.
I'll turn it to Pete, to cover financial results, balance sheet, and guidance.
