HEALTHCARE REALTY TRUST INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - HEALTHCARE REALTY TRUST INC	g27815e8vk.htm
EX-99.2 - EX-99.2 - HEALTHCARE REALTY TRUST INC	g27815exv99w2.htm

Exhibit 99.1

HEALTHCARE REALTY
Doug Whitman
EVP, Corporate Finance
P 615.269.8175
www.healthcarerealty.com

NEWS RELEASE

HEALTHCARE REALTY TRUST ANNOUNCES SECOND QUARTER RESULTS

NASHVILLE, Tennessee, August 8, 2011 — Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the second quarter ended June 30, 2011. FFO for the three months ended June 30, 2011 totaled $0.31 per diluted common share. FAD for the three months ended June 30, 2011 totaled $0.33 per diluted common share.

For the three months ended June 30, 2011, revenues totaled $73.3 million, income from continuing operations totaled $1.5 million, and net income attributable to common stockholders totaled $2.0 million.

Salient highlights for the quarter include:

		• On June 29th, the Company entered into an agreement to acquire eight medical office buildings associated with Bon Secours Health System in Richmond, Virginia for $173.5 million. The acquisition of the first building closed on June 30th for a total consideration of $34.8 million, including prepaid ground rent of $2.9 million. The Company will assume existing mortgage debt of approximately $58.4 million and invest an additional $80.3 million to close on the seven remaining buildings in the third quarter. The portfolio is 96% leased, totals 595,000 square feet, and includes seven on-campus properties.

		• Also on June 30th, the Company entered into construction mortgage loans to fund the development — and acquisition upon completion — of two build-to-suit healthcare facilities associated with Mercy Health of Saint Louis. The facilities include a 200,000 square foot medical office building in Oklahoma and a 186,000 square foot orthopedic surgical facility in Missouri. Construction is expected to be completed in 28 months. Mercy Health, with a “AA-” credit rating, will fully lease both facilities upon completion.

		• Occupancy in the Company’s stabilized properties remained steady at 87%, compared to 86% in the first quarter.

		• Interest expense declined by $4.9 million from the first to second quarter of 2011 due to the early repayment of the May 2011 Senior Notes in March 2011.

		• In the second quarter, the Company raised $134.0 million in equity to fund new investments. Subsequent to the quarter’s end, the Company raised an additional $27.7 million in equity. Year to date, the Company has raised $251.6 million in equity.

		• Overall leverage declined to 45.6% on June 30, 2011 from 48.1% on March 31, 2011.

Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $2.7 billion in 216 real estate properties and mortgages as of June 30, 2011, excluding assets classified as held for sale and including an investment in one unconsolidated joint venture. The Company’s 203 owned real estate properties, excluding assets classified as held for sale, are located in 28 states and total approximately 13.4 million square feet. The Company provides property management services to approximately 9.2 million square feet nationwide.

The Company directs interested parties to its Internet site, www.healthcarerealty.com, where information is posted regarding this quarter’s operations. Please contact the Company at 615.269.8175 to request a printed copy of this information.

In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2010 under the heading “Risk Factors,” and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company’s judgment as of the date of this release. The Company disclaims any obligation to update forward-looking statements.

HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Operations (1)
(Dollars in thousands, except per share data)
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010

REVENUES
Master lease rent	$	14,434		$	13,879		$	29,452		$	27,938
Property operating		53,849			46,760			106,203			92,290
Straight-line rent		1,110			725			2,396			1,326
Mortgage interest		1,825			469			3,474			1,107
Other operating		2,054			2,102			4,358			4,272

		73,272			63,935			145,883			126,933

EXPENSES
General and administrative		5,158			3,542			10,939			8,270
Property operating		28,477			24,237			56,572			48,435
Bad debt, net		93			(279	)		272			(478	)
Depreciation		19,120			16,450			38,015			32,654
Amortization		1,770			1,332			3,540			2,633

		54,618			45,282			109,338			91,514

OTHER INCOME (EXPENSE)
Loss on extinguishment of debt		—			—			(1,986	)		(480	)
Interest expense		(17,344	)		(15,570	)		(39,618	)		(31,880	)
Interest and other income, net		203			1,176			431			1,612

		(17,141	)		(14,394	)		(41,173	)		(30,748	)


INCOME (LOSS) FROM CONTINUING OPERATIONS		1,513			4,259			(4,628	)		4,671

DISCONTINUED OPERATIONS
Income from discontinued operations		498			730			988			2,281
Impairment		—			—			(147	)		—
Gain on sales of real estate properties		—			1,525			36			4,221

INCOME FROM DISCONTINUED OPERATIONS		498			2,255			877			6,502


NET INCOME (LOSS)		2,011			6,514			(3,751	)		11,173
Less: Net income attributable to noncontrolling interests		—			(40	)		(27	)		(105	)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	2,011		$	6,474		$	(3,778	)	$	11,068


BASIC EARNINGS (LOSS) PER COMMON SHARE
Income (loss) from continuing operations	$	0.02		$	0.07		$	(0.07	)	$	0.08

Discontinued operations		0.01			0.04			0.02			0.10


Net income (loss) attributable to common stockholders	$	0.03		$	0.11		$	(0.05	)	$	0.18


DILUTED EARNINGS (LOSS) PER COMMON SHARE
Income (loss) from continuing operations	$	0.02		$	0.07		$	(0.07	)	$	0.08

Discontinued operations		0.01			0.03			0.02			0.10

Net income (loss) attributable to common stockholders	$	0.03		$	0.10		$	(0.05	)	$	0.18


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — BASIC		72,035,154			61,340,739			69,109,543			60,654,907


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — DILUTED		73,149,232			62,382,409			69,109,543			61,690,322


(1)		The Condensed Consolidated Statements of Operations do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Cash Flows (1)
(Dollars in thousands)
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010


Cash flows from operating activities:
Net income (loss)	$	2,011		$	6,514		$	(3,751	)	$	11,173
Non-cash items:
Depreciation and amortization — real estate		20,410			17,563			40,592			35,000
Depreciation and amortization — other		1,654			1,513			3,327			2,924
Provision for bad debt, net		93			(258	)		287			(457	)
Impairment		—			—			147			—
Straight-line rent receivable		(1,109	)		(734	)		(2,395	)		(1,319	)
Straight-line rent liability		149			103			246			206
Stock-based compensation		661			566			1,602			1,320
Provision for deferred post-retirement benefits		459			346			918			782
Other non-cash items		—			(542	)		—			(542	)

Total non-cash items		22,317			18,557			44,724			37,914

Other items:
Accounts payable and accrued liabilities		9,067			136			2,649			5,187
Other liabilities		5,081			(1,484	)		6,299			(488	)
Other assets		(1,655	)		(692	)		(5,376	)		(162	)
Gain on sales of real estate properties		—			(1,525	)		(36	)		(4,221	)
Loss on extinguishment of debt		—			—			1,986			480
Payment of partial pension settlement		—			(342	)		—			(342	)

Total other items		12,493			(3,907	)		5,522			454

Net cash provided by operating activities		36,821			21,164			46,495			49,541

Cash flows from investing activities:
Acquisition and development of real estate properties		(57,574	)		(28,789	)		(83,111	)		(54,057	)
Funding of mortgages and notes receivable		(34,361	)		(800	)		(83,141	)		(2,890	)
Proceeds from sales of real estate		—			4,035			3,775			23,623
Proceeds from mortgages and notes receivable repayments		40			33			58			69

Net cash used in investing activities		(91,895	)		(25,521	)		(162,419	)		(33,255	)

Cash flows from financing activities:
Net borrowings (repayments) on unsecured credit facility		(41,000	)		(27,000	)		123,000			(30,000	)
Repayments on notes and bonds payable		(810	)		(587	)		(1,616	)		(1,111	)
Repurchase of notes payable		—			—			(280,201	)		(8,556	)
Dividends paid		(22,325	)		(18,953	)		(42,570	)		(37,370	)
Proceeds from issuance of common stock		134,033			44,404			224,045			59,449
Purchase of noncontrolling interests		—			—			(1,591	)		—
Common stock redemptions		—			—			(51	)		—
Debt issuance costs		—			—			(356	)		(515	)
Capital contributions received from noncontrolling interest holders		—			37			—			670
Distributions to noncontrolling interest holders		(55	)		(134	)		(281	)		(249	)

Net cash provided by (used in) financing activities		69,843			(2,233	)		20,379			(17,682	)


Increase (decrease) in cash and cash equivalents		14,769			(6,590	)		(95,545	)		(1,396	)
Cash and cash equivalents, beginning of period		3,007			11,045			113,321			5,851

Cash and cash equivalents, end of period	$	17,776		$	4,455		$	17,776		$	4,455


(1)		The Condensed Consolidated Statements of Cash Flows do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

RECONCILIATION OF FUNDS FROM OPERATIONS (1) (2):
(Dollars in thousands, except per share data)
(Unaudited)


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011			2010

Net Income (Loss) Attributable to Common Stockholders	$	2,011	$	6,474		$	(3,778	)	$	11,068

Gain on sales of real estate properties		—		(1,525	)		(36	)		(4,221	)
Real estate depreciation and amortization		20,410		17,435			40,464			34,768

Total adjustments		20,410		15,910			40,428			30,547


Funds From Operations	$	22,421	$	22,384		$	36,650		$	41,615


Funds From Operations Per Common Share — Basic	$	0.31	$	0.36		$	0.53		$	0.69


Funds From Operations Per Common Share — Diluted	$	0.31	$	0.36		$	0.52		$	0.67


Weighted Average Common Shares Outstanding — Basic		72,035,154		61,340,739			69,109,543			60,654,907


Weighted Average Common Shares Outstanding — Diluted		73,149,232		62,382,409			70,225,998			61,690,322

RECONCILIATION OF FUNDS AVAILABLE FOR DISTRIBUTION (2):
(Dollars in thousands, except per share data)
(Unaudited)


	Three Months Ended
	June 30, 2011

Net Income Attributable to Common Stockholders	$	2,011

Gain on sales of real estate properties		—
Total non-cash items included in cash flows from operating activities (3)		22,317


Funds Available For Distribution	$	24,328


Funds Available For Distribution Per Common Share — Diluted	$	0.33


Weighted Average Common Shares Outstanding — Diluted		73,149,232


(1)		Funds from operations (“FFO”) is calculated according to the definition of the National Association of Real Estate Investment Trusts and is comprised primarily of net income (loss) attributable to common stockholders and depreciation from real estate, but is not adjusted for certain non-cash income and expense items. Gains on the sale of real estate properties are excluded from FFO and FFO per share, while impairments are included in FFO and FFO per share.

(2)		FFO and Funds Available For Distribution (“FAD”) do not represent cash generated from operating activities determined in accordance ‘with accounting principles generally accepted in the United States of America and are not necessarily indicative of cash available to fund cash needs. FFO and FAD should not be considered alternatives to net income attributable to common stockholders as indicators of the Company’s operating performance or as alternatives to cash flow as measures of liquidity.

(3)		See the Condensed Consolidated Statements of Cash Flows that are included in this earnings release.

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