HEALTHCARE REALTY TRUST INC - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
8-K - 8-K - HEALTHCARE REALTY TRUST INC	hr-2015630xearnings8xk.htm
EX-99.1 - EXHIBIT 99.1 - HEALTHCARE REALTY TRUST INC	exhibit991secondquarter201.htm

2Q | 2015

Supplemental Information

FURNISHED AS OF AUGUST 5, 2015 (UNAUDITED)

Table of Contents




3			Corporate Information

5			Historical Reconciliation of FFO

6			Statements of Income Information

7			Balance Sheet Information

8			Debt Metrics

9			Investment Activity

10			Portfolio by Market

11			Square Feet by Type, Provider and Building Size

12			Lease Maturity and Tenant Size

13			Occupancy Information

14			Same Store Properties

15			Reconciliation of NOI

16			Same Store Leasing Statistics

17			Components of Net Asset Value

18			Components of Expected 2015 FFO

Copies of this report may be obtained at www.healthcarerealty.com or by contacting Investor Relations at 615.269.8175 or communications@healthcarerealty.com.

Forward looking statements and risk factors:

This Supplemental Information report contains disclosures that are “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words and phrases such as “can,” “may,” “payable,” “indicative,” “annualized,” “expect,” “expected,” “future cash or NOI,” “deferred revenue,” “rent increases,” “range of expectations,” “components of expected 2015 FFO,” and other comparable terms in this report. These forward-looking statements are made as of the date of this report and are not guarantees of future performance. These statements are based on the current plans and expectations of Company management and are subject to a number of unknown risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those described in this release or implied by such forward-looking statements. Such risks and uncertainties include, among other things, the following: changes in the economy; increases in interest rates; the availability and cost of capital at expected rates; changes to facility-related healthcare regulations; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent and repay loans; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease space at similar rates as vacancies occur; the Company's ability to renew expiring long-term single-tenant net leases; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; the Company may be required under purchase options to sell properties and may not be able to reinvest the proceeds from such sales at rates of return equal to the return received on the properties sold; uninsured or underinsured losses related to casualty or liability; the incurrence of impairment charges on its real estate properties or other assets; and other legal and operational matters. Other risks, uncertainties and factors that could cause actual results to differ materially from those projected are detailed under the heading “Risk Factors,” in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2014 and other risks described from time to time thereafter in the Company's SEC filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.





HEALTHCARE REALTY I 2		2Q I 2015 SUPPLEMENTAL INFORMATION

Corporate Information

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 $3.2 billion in 197 real estate properties and mortgages as of June 30, 2015. The Company’s 196 owned real estate properties are located in 30 states and total approximately 14.1 million square feet. The Company provided leasing and property management services to approximately 9.5 million square feet nationwide.

Corporate Headquarters



Healthcare Realty Trust Incorporated
West End Avenue, Suite 700
Nashville, Tennessee 37203
Phone: 615.269.8175
Fax: 615.269.8461
E-mail: communications@healthcarerealty.com
Website: www.healthcarerealty.com

Executive Officers



David R. Emery		Chairman of the Board and Chief Executive Officer
John M. Bryant, Jr.		Executive Vice President and General Counsel
Scott W. Holmes		Executive Vice President and Chief Financial Officer
Todd J. Meredith		Executive Vice President - Investments
B. Douglas Whitman, II		Executive Vice President - Corporate Finance

Board of Directors



David R. Emery		Chairman of the Board and Chief Executive Officer, Healthcare Realty Trust Incorporated
Errol L. Biggs, Ph.D.		Director, Graduate Programs in Health Administration, University of Colorado
C. Raymond Fernandez, M.D.		Retired Chief Executive Officer, Piedmont Clinic
Edwin B. Morris III		Managing Director, Morris & Morse Company, Inc.
J. Knox Singleton		President and Chief Executive Officer, Inova Health System
Bruce D. Sullivan		Retired Audit Partner, Ernst & Young LLP
Roger O. West		Retired General Counsel, Healthcare Realty Trust Incorporated
Dan S. Wilford		Retired President and Chief Executive Officer, Memorial Hermann Healthcare System





HEALTHCARE REALTY I 3		2Q I 2015 SUPPLEMENTAL INFORMATION

Corporate Information

Professional Services



INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BDO USA, LLP
414 Union Street, Suite 1800, Nashville, Tennessee 37219
TRANSFER AGENT
Wells Fargo N.A., Shareowner Services
1110 Centre Pointe Curve, Suite 101, Mendota Heights, Minnesota 55120-4100

Stock Exchange, Symbol and CUSIP Number



SECURITY DESCRIPTION	STOCK EXCHANGE	SYMBOL	CUSIP NUMBER
Common Stock	NYSE	HR	421946104
Senior Notes due 2021	OTC	HR	421946AG9
Senior Notes due 2023	OTC	HR	421946AH7
Senior Notes due 2025	OTC	HR	421946AJ3

Dividend Reinvestment Plan



Through the Company’s transfer agent, Wells Fargo, named stockholders of record can re-invest dividends in shares at a 5% discount and may also purchase up to $60,000 of HR common stock per calendar year without a service or sales charge. For information, write Wells Fargo Shareowner Services, P.O. Box 64856, St. Paul, Minnesota 55164-0856, or call 1.800.468.9716. Information may also be obtained at the transfer agent’s website, www.shareowneronline.com.

Direct Deposit of Dividends



Direct deposit of dividends is offered as a convenience to stockholders of record. For information, write Wells Fargo Shareowner Services, P.O. Box 64856, St. Paul, Minnesota 55164-0856, or call 1.800.468.9716. Information may also be obtained at the transfer agent’s website, www.shareowneronline.com.

Dividends Declared



On August 4, 2015, the Company declared a dividend of $0.30 per share, payable on August 28, 2015, to stockholders of record on August 17, 2015.

Analyst Coverage



Cowen and Company, LLC		KeyBanc Capital Markets Inc.

Goldman, Sachs & Co.		Mizuho Securities USA Inc.

Green Street Advisors, Inc.		RBC Capital Markets, LLC

J.J.B. Hilliard W.L. Lyons, LLC		Stifel, Nicolaus & Company, Inc.

J.P. Morgan Securities LLC		SunTrust Robinson Humphrey, Inc.

JMP Securities LLC		Wells Fargo Securities, LLC





HEALTHCARE REALTY I 4		2Q I 2015 SUPPLEMENTAL INFORMATION

Historical Reconciliation of FFO ^{(1) (2)}

(amounts in thousands, except for share data)




	2015					2014											2013
	Q2			Q1		Q4			Q3			Q2			Q1		Q4			Q3
Net Income Attributable to Common Stockholders		$17,916			$5,382		$18,073			$3,991			$5,971			$3,852		$12,384			$19,765
Gain on sales of properties	(41,549		)	—		(9,280		)	—			(3		)	—		(2,748		)	(20,187		)
Impairments of real estate assets	—			3,328		995			4,505			3,105			3,425		—			6,259
Real estate depreciation and amortization	28,542			28,532		27,897			27,697			27,017			26,248		25,776			24,214
Total adjustments	(13,007		)	31,860		19,612			32,202			30,119			29,673		23,028			10,286
Funds from Operations Attributable to Commons Stockholders		$4,909			$37,242		$37,685			$36,193			$36,090			$33,525		$35,412			$30,051
Acquisition costs	167			38		471			188			49			—		681			504
Loss on extinguishment of debt	27,998			—		—			—			—			—		—			—
Pension termination	5,260			—		—			—			—			—		—			—
Impairment of internally-developed software	654			—		—			—			—			—		—			—
Severance expense	—			141		—			—			—			—		—			—
Security deposit recognized upon sale	—			—		(407		)	—			—			—		—			—
Reversal of restricted stock amortization upon director / officer resignation	—			—		(115		)	(445		)	—			—		—			—
Refund of prior year overpayment of certain operating expenses	—			—		—			—			(1,919		)	—		—			—
Gain on sale of cost method investment in real estate	—			—		—			—			—			—		(1,492		)	—
Normalized Funds from Operations Attributable to Common Stockholders		$38,988			$37,421		$37,634			$35,936			$34,220			$33,525		$34,601			$30,555
Funds from Operations per Common Share—Diluted		$0.05			$0.38		$0.38			$0.37			$0.38			$0.35		$0.37			$0.32
Normalized Funds from Operations Per Common Share—Diluted		$0.39			$0.38		$0.38			$0.37			$0.36			$0.35		$0.36			$0.32
FFO Weighted Average Common Shares Outstanding	99,945			99,137		98,086			97,329			95,978			95,585		95,485			94,836

(1)

Funds from operations (“FFO”) and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.”

(2)

FFO does not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs. FFO 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.





HEALTHCARE REALTY I 5		2Q I 2015 SUPPLEMENTAL INFORMATION

Statements of Income Information

(dollars in thousands)




	Three Months Ended
	2015						2014												2013
	Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3
Revenues
Rental income		$95,450			$95,034			$93,648			$92,095			$89,279			$86,502			$84,824			$77,301
Mortgage interest	31			31			32			44			969			2,621			2,411			3,926
Other operating	1,227			1,391			1,320			1,474			1,423			1,448			1,386			1,578
	96,708			96,456			95,000			93,613			91,671			90,571			88,621			82,805
Expenses
Property operating	33,927			34,263			33,386			34,204			33,635			32,831			31,227			31,758
General and administrative	6,713			6,738			5,990			5,185			5,661			5,972			5,758			5,577
Depreciation	26,552			26,387			25,881			25,345			24,491			23,667			23,074			21,449
Amortization	2,474			2,667			2,630			2,656			2,775			2,759			2,826			2,595
Bad debts, net of recoveries	27			(207		)	(92		)	3			73			47			61			109
	69,693			69,848			67,795			67,393			66,635			65,276			62,946			61,488
Other Income (Expense)
Gain on sales of properties	41,549			—			—			—			—			—			—			—
Gain on sale of cost method investment in real estate	—			—			—			—			—			—			1,492			—
Interest expense	(17,213		)	(18,322		)	(18,237		)	(18,192		)	(18,066		)	(17,918		)	(17,772		)	(17,043		)
Loss on extinguishment of debt	(27,998		)	—			—			—			—			—			—			—
Pension termination	(5,260		)	—			—			—			—			—			—			—
Impairment of real estate assets	—			(3,328		)	—			—			—			—			—			—
Impairment of internally-developed software	(654		)	—			—			—			—			—			—			—
Interest and other income, net	147			91			91			409			2,035			100			261			237
	(9,429		)	(21,559		)	(18,146		)	(17,783		)	(16,031		)	(17,818		)	(16,019		)	(16,806		)

Income From Continuing Operations	17,586			5,049			9,059			8,437			9,005			7,477			9,656			4,511

Discontinued Operations
Income (loss) from discontinued operations	330			333			729			221			108			(89		)	52			1,344
Impairments of real estate assets	—			—			(995		)	(4,505		)	(3,105		)	(3,425		)	—			(6,259		)
Gain on sales of properties	—			—			9,280			—			3			—			2,748			20,187
Income (Loss) From Discontinued Operations	330			333			9,014			(4,284		)	(2,994		)	(3,514		)	2,800			15,272

Net Income	17,916			5,382			18,073			4,153			6,011			3,963			12,456			19,783
Less: Net income attributable to noncontrolling interests	—			—			—			(162		)	(40		)	(111		)	(72		)	(18		)
Net Income Attributable To Common Stockholders		$17,916			$5,382			$18,073			$3,991			$5,971			$3,852			$12,384			$19,765





HEALTHCARE REALTY I 6		2Q I 2015 SUPPLEMENTAL INFORMATION

Balance Sheet Information

(dollars in thousands, except per share data)



ASSETS

	2015						2014
Real estate properties:	Q2			Q1			Q4			Q3			Q2
Land		$186,231			$187,951			$183,060			$183,991			$183,581
Buildings, improvements and lease intangibles	3,033,213			3,077,828			3,048,251			3,030,960			3,014,422
Personal property	9,970			10,014			9,914			9,535			9,504
Construction in progress	8,284			—			—			—			—
Land held for development	16,952			21,376			17,054			17,054			17,054
Total real estate properties	3,254,650			3,297,169			3,258,279			3,241,540			3,224,561
Less accumulated depreciation and amortization	(730,125		)	(723,393		)	(700,671		)	(693,517		)	(675,890		)
Total real estate properties, net	2,524,525			2,573,776			2,557,608			2,548,023			2,548,671
Cash and cash equivalents	8,431			10,417			3,519			1,684			17,523
Mortgage notes receivable	1,900			1,900			1,900			1,900			4,858
Assets held for sale and discontinued operations, net	14,192			14,164			9,146			11,479			5,759
Other assets, net	191,524			188,198			185,337			178,238			173,299
Total assets		$2,740,572			$2,788,455			$2,757,510			$2,741,324			$2,750,110

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and bonds payable		$1,388,797			$1,444,555			$1,403,692			$1,403,379			$1,397,027
Accounts payable and accrued liabilities	57,143			50,144			70,240			60,017			72,460
Liabilities of discontinued operations	168			102			372			508			1,041
Other liabilities	66,035			64,469			62,152			57,913			60,232
Total liabilities	1,512,143			1,559,270			1,536,456			1,521,817			1,530,760
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding	—			—			—			—			—
Common stock, $.01 par value; 150,000 shares authorized	1,004			1,001			988			981			972
Additional paid-in capital	2,432,979			2,423,121			2,389,830			2,374,345			2,348,925
Accumulated other comprehensive income (loss)	(1,653		)	(3,242		)	(2,519		)	51			51
Cumulative net income attributable to common stockholders	863,547			845,631			840,249			822,176			818,185
Cumulative dividends	(2,067,448		)	(2,037,326		)	(2,007,494		)	(1,978,046		)	(1,948,783		)
Total stockholders' equity	1,228,429			1,229,185			1,221,054			1,219,507			1,219,350
Total liabilities and stockholders' equity		$2,740,572			$2,788,455			$2,757,510			$2,741,324			$2,750,110



OTHER INFORMATION
Capital additions
Revenue enhancing	$3,188	$781	$1,361	$187	$108
Routine and non-revenue enhancing	3,580	1,469	2,635	2,501	4,451
2nd generation tenant improvements	2,496	2,992	5,956	4,085	3,132
1st generation tenant improvements	1,150	3,463	4,475	3,351	10,693





HEALTHCARE REALTY I 7		2Q I 2015 SUPPLEMENTAL INFORMATION

Debt Metrics

(dollars in thousands)



SUMMARY OF INDEBTEDNESS
	Q2 2015 Interest Expense			Balance as of 6/30/2015		Weighted Months to Maturity	Effective Interest Rate
Senior Notes due 2017, net of discount		$2,422			$—	—	—
Senior Notes due 2021, net of discount	5,825			398,014		67	5.86	%
Senior Notes due 2023, net of discount	2,389			248,343		94	3.85	%
Senior Notes due 2025, net of discount⁽¹⁾	1,837			249,796		118	3.97	%
Total Senior Notes Outstanding	12,473			896,153		88	4.77	%
Unsecured credit facility due 2017	644			158,000		22	1.58	%
Unsecured term loan facility due 2019	825			200,000		44	1.63	%
Mortgage notes payable, net	1,970			134,644		62	5.36	%
Total Outstanding Notes and Bonds Payable		$15,912			$1,388,797	72	4.01	%
Interest cost capitalization	(33		)
Deferred financing costs	803
Unsecured credit facility fee	531
Total Quarterly Consolidated Interest Expense		$17,213

(1) The effective interest rate includes the impact of the $1.7 million settlement of an forward-starting interest rate swap that is included in accumulated other comprehensive income on the Company's Condensed Consolidated Balance Sheets.



SELECTED FINANCIAL DEBT COVENANTS ⁽²⁾
	Calculation	Requirement	Trailing Twelve Months Ended 6/30/2015
Revolving Credit Facility and Term Loan
Leverage Ratio	Total Debt / Total Capital	Not greater than 60%	41.6	%
Secured Leverage Ratio	Total Secured Debt / Total Capital	Not greater than 30%	4.0	%
Unencumbered Leverage Ratio	Unsecured Debt / Unsecured Real Estate	Not greater than 60%	42.7	%
Fixed Charge Coverage Ratio	EBITDA / Fixed Charges	Not less than 1.65x	3.0x
Unsecured Coverage Ratio	Unsecured EBITDA / Unsecured Interest	Not less than 1.75x	3.2x
Tangible Net Worth	Tangible Net Worth - Required Base	Greater than $0	$837,796
Construction and Development	CIP / Total Assets	Not greater than 15%	0.3	%
Asset Investments	Mortgages & Unimproved Land / Total Assets	Not greater than 20%	0.7	%

Senior Notes
Incurrence of Total Debt	Total Debt / Total Assets	Not greater than 60%	40.1	%
Incurrence of Debt Secured by Any Lien	Secured Debt / Total Assets	Not greater than 40%	3.9	%
Maintenance of Total Unsecured Assets	Unencumbered Assets / Unsecured Debt	Not less than 150%	249.5	%
Debt Service Coverage	EBITDA / Interest Expense	Not less than 1.5x	3.2x

Other
Debt to EBITDA	Total Debt / EBITDA	Not required	6.2x
Debt to Enterprise Value ⁽³⁾	Total Debt / Enterprise Value	Not required	36.6	%

(2) Does not include all financial and non-financial covenants and restrictions that are required by the Company's various debt agreements.

(3) Based on closing price of $24.04 on July 31, 2015 and 100,418,862 shares outstanding.





HEALTHCARE REALTY I 8		2Q I 2015 SUPPLEMENTAL INFORMATION

Investment Activity

(dollars in thousands)



2015 INVESTMENT ACTIVITY

Location	Property Type	Closing	Purchase Price of Acquisition		Square Feet	Aggregate Leased %
Acquisitions
San Jose, CA	MOB	1/15/2015		$39,250	110,679	97	%
Seattle, WA	MOB	6/26/2015	13,900		35,558	93	%
Total				$53,150	146,237	96	%



HISTORICAL INVESTMENT ACTIVITY
	Acquisitions⁽¹⁾			Mortgage Funding			Construction Mortgage Funding			Re/Development Funding			Total Investments			Dispositions
2011		$150,312			$40,000			$61,931			$79,375			$331,618			$22,700
2012	94,951			—			78,297			5,608			178,856			91,384
2013	216,956			—			58,731			—			275,687			101,910
2014	85,077			1,900			1,244			4,384			92,605			34,840
2015	53,150			—			—			10,746			63,896			98,185
Total		$600,446			$41,900			$200,203			$100,113			$942,662			$349,019
% of Total	63.7		%	4.4		%	21.3		%	10.6		%	100.0		%



RE/DEVELOPMENT ACTIVITY
Location	Type ⁽²⁾	Square Feet	Budget		Amount Funded Q2 2015		Total Amount Funded Through 6/30/2015		Estimated Remaining Fundings		Aggregate Leased %		Estimated Completion Date
Construction activity
Birmingham, AL ⁽³⁾	Redev	138,000		$15,400		$1,607		$3,123		$12,277	100	%	Q4 2015
Nashville, TN ⁽⁴⁾	Redev	294,000	51,800		2,558		12,007		39,793		83	%	Q1 2017
Total		432,000		$67,200		$4,165		$15,130		$52,070

Pre-construction activity ⁽⁵⁾
Denver, CO	Dev	98,000		$26,500		$15		$15		$26,485
Austin, TX	Dev	12,900	5,200		56		56		5,144
Total		110,900		$31,700		$71		$71		$31,629


(1)	Net of mortgage notes receivable payoffs upon acquisition.


(2)	Redev - Redevelopment; Dev - Development


(3)	Includes $5.9 million for the addition of a 400-space parking garage and $9.5 million in tenant improvement allowances and commissions.

(4)

Includes $15.2 million for the addition of 70,000 rentable square feet, $18.9 million for a 907-space parking garage and associated land, $17.7 million for existing building upgrades and tenant improvement allowances associated with newly executed leases. The size of the garage increased 267 parking spaces with a corresponding budget increase of $4.0 million. The increase in size of the garage is to allow for future development on adjacent land.


(5)	Includes projects that are in the design phase, but are expected to begin construction once permits and final contracts are executed.





HEALTHCARE REALTY I 9		2Q I 2015 SUPPLEMENTAL INFORMATION

Portfolio by Market and Building Size

(dollars in thousands)



BY MARKET
			SQUARE FEET
			MOB/OUTPATIENT (89.3%)						INPATIENT (7.1%)						OTHER (3.6%)
	Investment⁽¹⁾		Multi-tenant			Single-tenant Net Lease			Rehab			Surgical			Other			Total			% of Total
Dallas - Fort Worth, TX		$471,112	2,149,939						42,627			156,245						2,348,811			16.6	%
Charlotte, NC	166,461		820,457															820,457			5.8	%
Nashville, TN	101,659		762,708															762,708			5.4	%
Houston, TX	128,264		591,027															591,027			4.2	%
Seattle - Bellevue, WA	206,120		489,499			67,510												557,009			3.9	%
Los Angeles, CA	136,119		488,371						63,000									551,371			3.9	%
Richmond, VA	145,486		548,801															548,801			3.9	%
Des Moines, IA	134,502		233,413			146,542									152,655			532,610			3.8	%
San Antonio, TX	101,729		483,811						39,786									523,597			3.7	%
Memphis, TN	90,522		515,876															515,876			3.6	%
Roanoke, VA	48,788					334,454									126,427			460,881			3.3	%
Austin, TX	124,690		351,725						66,095									417,820			3.0	%
Indianapolis, IN	76,709		382,695															382,695			2.7	%
Denver, CO	102,913		298,827						34,068									332,895			2.4	%
Honolulu, HI	133,731		298,427															298,427			2.1	%
Oklahoma City, OK	109,020		68,860			200,000												268,860			1.9	%
Chicago, IL	55,988		243,491															243,491			1.7	%
Miami, FL	51,433		241,980															241,980			1.7	%
Colorado Springs, CO	50,073		241,224															241,224			1.7	%
Phoenix, AZ	63,980		179,963						51,903									231,866			1.6	%
Detroit, MI	24,548		199,749												11,308			211,057			1.5	%
South Bend, IN	43,582		205,573															205,573			1.5	%
Springfield, MO	111,293											186,000						186,000			1.3	%
Washington, DC	31,083		182,836															182,836			1.3	%
Other (33 markets)	514,120		1,589,383			310,101			373,722						214,864			2,488,070			17.5	%
Total		$3,223,925	11,568,635			1,058,607			671,201			342,245			505,254			14,145,942			100.0	%
Number of Properties			159			15			11			2			9			196
Percent of Square Feet			81.8		%	7.5		%	4.7		%	2.4		%	3.6		%	100.0		%
Investment ⁽¹⁾				$2,504,334			$243,784			$191,815			$208,725			$75,268			$3,223,926
% of Investment			77.7		%	7.6		%	5.9		%	6.5		%	2.3		%	100.0		%



BY BUILDING SQUARE FEET
Size Range by Square Feet	% of Total		Total Square Footage	Average Square Feet	Number of Properties
>100,000	44.9	%	6,355,031	144,433	44
<100,000 and >75,000	22.9	%	3,241,537	85,304	38
<75,000 and >50,000	17.0	%	2,401,689	63,202	38
<50,000	15.2	%	2,147,685	28,259	76
Total	100.0	%	14,145,942	72,173	196


(1)	Excludes gross assets held for sale, land held for development and corporate property.





HEALTHCARE REALTY I 10		2Q I 2015 SUPPLEMENTAL INFORMATION

Square Feet by Provider, Rank and Location ⁽¹⁾



BY PROVIDER
Top Providers	Health System Rank⁽²⁾	Credit Rating	Associated Buildings ⁽³⁾	Associated SF ⁽³⁾	% of Total SF⁽⁴⁾		Leased SF Total	% of Total SF
Baylor Scott & White Health	20	AA-/Aa3	26	2,366,944	16.7	%	1,133,059	8.0	%
Ascension Health	3	AA+/Aa2	16	1,167,438	8.3	%	270,953	1.9	%
Catholic Health Initiatives	7	A/A2	14	997,574	7.1	%	526,615	3.7	%
HCA	2	B+/B2	15	987,449	7.0	%	454,577	3.2	%
Carolinas HealthCare System	26	--/Aa3	16	765,116	5.4	%	580,533	4.1	%
Tenet Healthcare Corporation	11	B/B1	11	759,084	5.4	%	186,562	1.3	%
Bon Secours Health System	48	A-/A3	7	548,801	3.9	%	262,013	1.9	%
Baptist Memorial Health Care	93	A-/--	7	515,876	3.6	%	107,594	0.8	%
HealthSouth	86	BB-/Ba3	6	412,989	2.9	%	346,894	2.5	%
Mercy (St. Louis)	28	AA-/Aa3	2	386,000	2.7	%	386,000	2.7	%
Indiana University Health	22	AA-/Aa3	3	382,695	2.7	%	243,072	1.7	%
University of Colorado Health	78	AA-/Aa3	5	345,240	2.4	%	131,562	0.9	%
Hawaii Pacific Health	161	A/A2	3	298,427	2.1	%	59,606	0.4	%
Trinity Health	13	AA-/Aa3	2	278,904	2.0	%	180,131	1.3	%
Community Health Systems	5	B+/B1	5	242,356	1.7	%	69,368	0.5	%
Medstar Health	32	A-/A2	3	241,739	1.7	%	126,449	0.9	%
Advocate Health Care	24	AA/Aa2	2	238,391	1.7	%	75,224	0.5	%
Memorial Hermann	44	A+/A1	4	206,090	1.5	%	82,686	0.6	%
Providence Health & Services	6	AA-/Aa3	3	202,729	1.4	%	131,614	0.9	%
Other Credit Rated			15	1,186,226	8.4	%
Total - Credit Rated			165	12,530,068	88.6	%
Total			196	14,145,942	100.0	%



BY RANK (% of total SF)
	MSA				HEALTH SYSTEM ⁽²⁾⁽³⁾
Rank	MOB / Outpatient		Total		MOB / Outpatient		Total
Top 25	55	%	53	%	59	%	55	%
Top 50	82	%	77	%	75	%	71	%
Top 75	86	%	81	%	77	%	72	%
Top 100	91	%	87	%	85	%	82	%



MEDICAL OFFICE BUILDINGS BY LOCATION
			2015								2014
	Q2		Q1		Q4		Q3		Q2		Q1
On campus / adjacent	80	%	80	%	81	%	79	%	79	%	80	%
Off campus⁽⁵⁾	20	%	20	%	19	%	21	%	21	%	20	%
	100	%	100	%	100	%	100	%	100	%	100	%


(1)	Excludes mortgage notes receivable and assets classified as held for sale.


(2)	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database. The database includes nearly 500 out of approximately 1,500 health systems in the United States.


(3)	Associated buildings and square footage refers to on-campus, adjacent or off-campus/affiliated properties associated with these healthcare providers.


(4)	Based on square footage, 88.6% of HR's portfolio is associated with a credit-rated healthcare provider and 69.8% is associated with an investment-grade rated healthcare provider.


(5)	Approximately 45% of the off-campus square footage is anchored by a hospital system.





HEALTHCARE REALTY I 11		2Q I 2015 SUPPLEMENTAL INFORMATION

Lease Maturity and Tenant Size ⁽¹⁾

(dollars in thousands)



LEASE MATURITY SCHEDULE
	MULTI-TENANT ("MT")				SINGLE-TENANT NET LEASE ("STNL")				TOTAL
	Number of Leases	Square Feet	% of Total MT Square Feet		Number of Leases	Square Feet	% of Total STNL Square Feet		Number of Leases	Square Feet	% of Total MT & STNL Square Feet
2015	320	1,007,506	8.5	%	—	—	—	%	320	1,007,506	7.1	%
2016	342	1,112,721	9.4	%	2	69,749	2.8	%	344	1,182,470	8.3	%
2017	337	1,451,200	12.3	%	5	334,454	13.5	%	342	1,785,654	12.5	%
2018	266	1,377,454	11.7	%	—	—	—	%	266	1,377,454	9.6	%
2019	266	1,264,991	10.7	%	9	371,805	15.0	%	275	1,636,796	11.5	%
2020	137	906,216	7.7	%	1	83,318	3.4	%	138	989,534	6.9	%
2021	80	431,507	3.7	%	2	143,868	5.8	%	82	575,375	4.0	%
2022	80	588,656	5.0	%	2	137,016	5.5	%	82	725,672	5.1	%
2023	92	665,198	5.6	%	1	75,000	3.0	%	93	740,198	5.2	%
2024	52	394,972	3.3	%	2	65,381	2.6	%	54	460,353	3.2	%
Thereafter	36	420,943	3.6	%	11	1,017,634	41.1	%	47	1,438,577	10.1	%



AVERAGE TENANT SIZE
	NUMBER OF LEASES
Square Footage	Multi-Tenant Properties ⁽²⁾	Single-Tenant Net Lease Properties
0 - 2,500	961	—
2,501 - 5,000	560	—
5,001 - 7,500	178	1
7,501 - 10,000	104	1
10,001 +	205	33
Total Leases	2,008	35


(1)	Excludes mortgage notes receivable, land held for development, construction in progress, corporate property and assets classified as held for sale.


(2)	The average lease size in the multi-tenant properties is 4,792 square feet.





HEALTHCARE REALTY I 12		2Q I 2015 SUPPLEMENTAL INFORMATION

Occupancy Information ⁽¹⁾

^{(dollars in thousands)}



OCCUPANCY
						2015						2014
	Investment at 6/30/2015		Square Feet at 6/30/2015	Q2		Q1		Q4		Q3		Q2
Multi-Tenant
Same store properties, as reported ⁽²⁾		$2,006,981	9,432,232	87.4	%	86.8	%	87.1	%	87.0	%	85.9	%
Acquisitions	350,391		1,245,696	90.7	%	90.5	%	90.3	%	88.7	%	93.0	%
Reposition	197,461		1,169,789	50.7	%	50.7	%	53.6	%	53.2	%	52.6	%
Total		$2,554,833	11,847,717	84.2	%	83.8	%	83.7	%	83.9	%	83.2	%

Single-Tenant Net lease
Same store properties, as reported ⁽²⁾		$455,212	1,878,157	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Acquisitions	213,881		420,068	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total		$669,093	2,298,225	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Total
Same store properties, as reported ⁽²⁾		$2,462,193	11,310,389	89.5	%	89.1	%	89.3	%	89.2	%	88.3	%
Acquisitions	564,272		1,665,764	93.0	%	93.1	%	93.1	%	92.1	%	95.5	%
Reposition	197,461		1,169,789	50.7	%	50.7	%	53.6	%	53.2	%	52.6	%
Total		$3,223,926	14,145,942	86.7	%	86.6	%	86.4	%	86.6	%	86.1	%

# of Properties
Same store properties, as reported ⁽²⁾				159		162		160		167		168
Acquisitions				18		18		18		14		13
Reposition				19		18		20		19		19
Total				196		198		198		200		200


(1)	Excludes mortgage notes receivable, land held for development, construction in progress, corporate property and assets classified as held for sale.


(2)	Properties previously disclosed as development conversions are now included in the same store properties. As reported except for the inclusion of development conversion properties.





HEALTHCARE REALTY I 13		2Q I 2015 SUPPLEMENTAL INFORMATION

Same Store Properties

(dollars in thousands)



QUARTERLY⁽¹⁾⁽²⁾
	Q2 2015		Q1 2015		Q4 2014		Q3 2014		Q2 2014		Q1 2014		Q4 2013		Q3 2013
Multi-tenant
Revenues	$63,150		$62,542		$62,005		$61,547		$61,114		$60,255		$59,623		$57,958
Expenses	27,136		27,397		27,039		28,099		27,716		27,342		26,414		27,682
NOI	$36,014		$35,145		$34,966		$33,448		$33,398		$32,913		$33,209		$30,276
Occupancy	87.4	%	87.0	%	87.1	%	87.0	%	85.8	%	85.4	%	85.3	%	84.7	%
Number of properties	127		127		127		127		127		127		127		127

Single-tenant net lease
Revenues	$12,035		$12,083		$11,885		$11,625		$11,601		$11,553		$11,509		$11,488
Expenses	444		414		449		373		531		519		535		530
NOI	$11,591		$11,669		$11,436		$11,252		$11,070		$11,034		$10,974		$10,958
Occupancy	100.0	%	100.0	%	98.1	%	98.1	%	98.1	%	98.1	%	98.1	%	98.1	%
Number of properties	32		32		32		32		32		32		32		32

Total
Revenues	$75,185		$74,625		$73,890		$73,172		$72,715		$71,808		$71,132		$69,446
Expenses	27,580		27,811		27,488		28,472		28,247		27,861		26,949		28,212
Same Store NOI	$47,605		$46,814		$46,402		$44,700		$44,468		$43,947		$44,183		$41,234
Occupancy	89.5	%	89.2	%	88.9	%	88.8	%	87.8	%	87.5	%	87.4	%	87.0	%
Number of properties	159		159		159		159		159		159		159		159
% NOI year-over-year growth	7.1	%	6.5	%	5.0	%	8.4	%



TRAILING TWELVE MONTHS ^{(1) (2)}
	Twelve Months Ended June 30,
	2015		2014		% Change
Multi-tenant
Revenues	$249,244		$238,950		4.3	%
Expenses	$109,671		$109,154		0.5	%
NOI	$139,573		$129,796		7.5	%
Revenue per occupied square feet	$30.42		$29.83		2.0	%
Average occupancy	86.9	%	84.9	%
Number of properties	127		127

Single-tenant net lease
Revenues	$47,628		$46,151		3.2	%
Expenses	$1,680		$2,115		(20.6	)%
NOI	$45,948		$44,036		4.3	%
Revenue per occupied square feet	$25.66		$25.06		2.4	%
Average occupancy	98.8	%	98.1	%
Number of properties	32		32

Total
Revenues	$296,872		$285,101		4.1	%
Expenses	$111,351		$111,269		0.1	%
Same Store NOI	$185,521		$173,832		6.7	%
Revenue per occupied square feet	$29.54		$28.94		2.1	%
Average occupancy	88.9	%	87.1	%
Number of Properties	159		159


(1)	Excludes recently acquired or disposed properties, mortgage notes receivable, construction in progress, land held for development, corporate property, reposition properties and assets classified as held for sale.


(2)	Properties previously disclosed as development conversion are now included in the same store properties.





HEALTHCARE REALTY I 14		2Q I 2015 SUPPLEMENTAL INFORMATION

Reconciliation of NOI

(dollars in thousands)



QUARTERLY
	Q2 2015			Q1 2015			Q4 2014			Q3 2014			Q2 2014			Q1 2014			Q4 2013			Q3 2013
Rental income^(a)		$95,450			$95,034			$93,648			$92,095			$89,279			$86,502			$84,824			$77,301
Property lease guaranty revenue ^(b)	937			1,102			1,029			1,100			1,160			1,141			1,124			1,383
Exclude straight-line rent revenue	(2,475		)	(2,832		)	(3,122		)	(3,046		)	(2,504		)	(2,297		)	(2,939		)	(2,371		)
Revenue	93,912			93,304			91,555			90,149			87,935			85,346			83,009			76,313
Property operating expense	(33,927		)	(34,263		)	(33,386		)	(34,204		)	(33,635		)	(32,831		)	(31,227		)	(31,758		)
NOI		$59,985			$59,041			$58,169			$55,945			$54,300			$52,515			$51,782			$44,555
Less:
Acquisitions	(9,805		)	(9,613		)	(8,728		)	(8,207		)	(6,442		)	(5,143		)	(4,347		)	(478		)
Reposition	(1,290		)	(1,313		)	(1,715		)	(1,528		)	(1,880		)	(1,898		)	(1,693		)	(1,163		)
Dispositions / other	(1,285		)	(1,301		)	(1,324		)	(1,510		)	(1,510		)	(1,527		)	(1,559		)	(1,680		)
Same store NOI		$47,605			$46,814			$46,402			$44,700			$44,468			$43,947			$44,183			$41,234

(a) Rental income reconciliation:
Property operating		$75,470			$74,654			$73,153			$71,847			$71,029			$69,274			$67,015			$62,241
Single-tenant net lease	17,505			17,548			17,373			17,202			15,746			14,931			14,870			12,689
Straight-line rent	2,475			2,832			3,122			3,046			2,504			2,297			2,939			2,371
Total consolidated rental income		$95,450			$95,034			$93,648			$92,095			$89,279			$86,502			$84,824			$77,301

(b) Other operating income reconciliation:
Property lease guaranty revenue		$937			$1,102			$1,029			$1,100			$1,160			$1,141			$1,124			$1,383
Interest income	156			157			163			246			130			192			173			102
Other	134			132			128			128			133			115			89			93
Total consolidated other operating income		$1,227			$1,391			$1,320			$1,474			$1,423			$1,448			$1,386			$1,578



TRAILING TWELVE MONTHS
	Twelve Months Ended June 30,
	2015			2014
NOI	$233,140			$203,152
Less:
Acquisitions	(36,353		)	(16,410		)
Reposition	(5,846		)	(6,634		)
Dispositions / other	(5,420		)	(6,276		)
Same store NOI		$185,521			$173,832





HEALTHCARE REALTY I 15		2Q I 2015 SUPPLEMENTAL INFORMATION

Same Store Leasing Statistics ⁽¹⁾




			2015		2014 ⁽²⁾								2013
	Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Contractual increases for in-place leases ("annual bumps")
Multi-tenant properties	3.1	%	3.0	%	2.9	%	3.0	%	3.0	%	2.9	%	3.1	%	3.0	%	3.2	%
Single-tenant net lease properties	2.2	%	0.7	%	6.9	%	3.5	%	2.1	%	1.7	%	3.0	%	2.2	%	2.1	%
Cash leasing spreads for renewals, multi-tenant properties	5.0	%	3.6	%	4.0	%	1.4	%	2.5	%	2.0	%	1.6	%	2.7	%	1.0	%
Tenant retention rate, multi-tenant properties	87.3	%	83.1	%	88.6	%	85.9	%	89.7	%	77.4	%	78.4	%	85.2	%	77.5	%




	As of 6/30/2015
Multi-Tenant Contractual Rental Rate Increases by Type
Annual increase	84.9	%
Non-annual increase	7.6	%
No increase (term < 1 year)	3.9	%
No increase (term > 1 year)	3.6	%

Tenant Type
Multi-Tenant properties
Hospital	45.6	%
Physician and other	54.4	%
Single-Tenant net lease properties
Hospital	79.9	%
Other	20.1	%

Lease Structure, multi-tenant only
Gross	17.6	%
Modified gross	34.1	%
Net	48.3	%

Ownership Type
Ground lease	58.8	%
Fee simple	41.2	%


(1)	Excludes mortgage notes receivable, construction in progress, land held for development, corporate property, reposition properties and assets classified as held for sale.


(2)	Reflects amounts reported in prior periods.





HEALTHCARE REALTY I 16		2Q I 2015 SUPPLEMENTAL INFORMATION

Components of Net Asset Value

(dollars in thousands)




Asset Type	Q2 2015 Same Store NOI⁽¹⁾	Q2 2015 Acquisitions NOI	Q2 2015 Reposition NOI⁽²⁾	Timing Adjustments⁽³⁾	Q2 2015 Adjusted NOI	Annualized Adjusted NOI	% of Adjusted NOI
MOB / Outpatient	$40,026	$6,345	$1,393	$2,681	$50,445	$201,780	82.0	%
Inpatient rehab	4,525	274	—	—	4,799	19,196	7.8	%
Inpatient surgical	2,076	2,320	—	—	4,396	17,584	7.1	%
Other	978	866	73	—	1,917	7,668	3.1	%
Total NOI	$47,605	$9,805	$1,466	$2,681	$61,557	$246,228	100.0	%

TOTAL SHARES OUTSTANDING (AS OF JULY 31, 2015) 100,418,862



	Land held for development		$16,952
	Construction in progress	8,284
	Mortgage notes receivable	1,900
	Subtotal		$27,136

+	ADD: OTHER ASSETS
	Assets held for sale⁽⁴⁾		$24,706
	Reposition properties (net book value)⁽²⁾	10,879
	Cash and other assets⁽⁵⁾	89,614
	Subtotal		$125,199


-	SUBTRACT: DEBT
	Unsecured credit facility		$158,000
	Unsecured term loan	200,000
	Senior notes	896,153
	Mortgage notes payable	134,644
	Other liabilities⁽⁶⁾	87,239
	Subtotal		$1,476,036


(1)	See Same Store Properties schedule on page 14 for details on same store NOI.

(2)

Reposition properties includes 19 properties, which comprises 1,169,789 square feet. The NOI table above includes 12 of these properties comprising 937,569 square feet that have generated positive NOI totaling approximately $1.5 million. The remaining 7 properties, comprising 232,220 square feet, have generated a NOI loss of approximately $0.2 million and are reflected at a net book value of $10.9 million in the table below.


(3)	Same store NOI is adjusted to reflect quarterly NOI from properties acquired during the prior five quarters and development conversions adjustments represent an estimated full annual stabilization rate of $27.5 million.


(4)	Assets held for sale includes three real estate properties that are excluded from same store NOI and reflect net book value or the contractual purchase price, if applicable.


(5)	Includes cash of $8.4 million and other assets of $81.2 million that are expected to generate future cash or NOI and assets that are currently causing non-cash reductions to NOI. Other assets include prepaid assets of $64.0 million and above-market intangible assets (net) of $17.2 million.

(6)

Includes only liabilities that are expected to reduce future cash or NOI and that are currently producing non-cash benefits to NOI. Included are accounts payable and accrued liabilities of $57.3 million, pension plan liability of $19.6 million, security deposits of $5.8 million, market-rate lease intangibles of $4.1 million, and deferred operating expense reimbursements of $0.5 million. Also, excludes deferred revenue of $36.1 million.





HEALTHCARE REALTY I 17		2Q I 2015 SUPPLEMENTAL INFORMATION

Components of Expected 2015 FFO

(dollars in thousands, except per square foot data)



SAME STORE QUARTERLY RANGE OF EXPECTATIONS
	Low			High
Occupancy
Multi-Tenant	87.0		%	89.0		%
Single-Tenant Net Lease	100.0		%	100.0		%

Revenue per Occupied Square Foot
Multi-Tenant		$29.00			$32.00
Single-Tenant Net Lease		$25.00			$26.00

Multi-Tenant NOI Margin	55.0		%	60.0		%

Multi-Tenant Contractual Rent Increases by Type (% of SF)
Annual Increase	80.0		%	90.0		%
Non-annual Increase	7.5		%	10.0		%
No Increase (term < 1 year)	3.0		%	5.0		%
No Increase (term > 1 year)	4.0		%	6.0		%

Contractual increases for in-place leases ("annual bumps")
Multi-Tenant	2.9		%	3.1		%
Single-Tenant Net Lease	2.0		%	3.0		%

Multi-Tenant Cash Leasing Spreads	1.0		%	5.0		%

Multi-Tenant Lease Retention Rate	75.0		%	90.0		%

ANNUAL RANGE OF EXPECTATIONS
	Low			High
Same Store NOI Growth
Multi-Tenant ⁽¹⁾	6.0		%	8.0		%
Single-Tenant Net Lease ⁽²⁾	3.0		%	4.0		%

Normalized G&A	$24,500			$26,500

Funding Activity
Acquisitions	$100,000			$150,000
Dispositions	(125,000)			(150,000)
Development	10,000			20,000
Redevelopment/Reposition	30,000			40,000
Capital Additions
Revenue enhancing	6,000			10,000
Routine and non-revenue enhancing	8,000			12,000
1st Generation Tenant Improvements	10,000			15,000
2nd Generation Tenant Improvements	12,000			18,000

Cash Yield
Acquisitions	5.75		%	6.25		%
Dispositions	5.75		%	6.25		%
Development (stabilized)	6.75		%	8.00		%
Redevelopment (stabilized)	7.50		%	8.50		%

Leverage (Debt/Cap)	40.0		%	45.0		%


(1)	The expected same store NOI growth of the multi-tenant properties include the effect of the development conversion properties that were added to same store in the first quarter of 2015. Long-term same store NOI Growth, excluding changes in occupancy, is expected to range between 2% and 4%.


(2)	The expected long-term same store NOI growth of the single-tenant net lease properties is expected to range between 2% and 3%.





HEALTHCARE REALTY I 18		2Q I 2015 SUPPLEMENTAL INFORMATION

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