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-2015930xearnings8xk.htm
EX-99.1 - EXHIBIT 99.1 - HEALTHCARE REALTY TRUST INC	exhibit991thirdquarter2015.htm

3Q | 2015

Supplemental Information

FURNISHED AS OF NOVEMBER 4, 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 and Building Size

11			Square Feet by Provider, Rank and Location

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		3Q 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 195 real estate properties as of September 30, 2015. The Company’s 195 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 9.6 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
Christann M. Vasquez		President, Dell Seton Medical Center at University of Texas
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		3Q 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 November 3, 2015, the Company declared a dividend of $0.30 per share, payable on November 30, 2015, to stockholders of record on November 16, 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		3Q I 2015 SUPPLEMENTAL INFORMATION

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

(amounts in thousands, except for share data)




	2015								2014											2013
	Q3			Q2			Q1		Q4			Q3			Q2			Q1		Q4
Net Income Attributable to Common Stockholders		$27,480			$17,916			$5,382		$18,073			$3,991			$5,971			$3,852		$12,384
Gain on sales of properties	(16,486		)	(41,549		)	—		(9,280		)	—			(3		)	—		(2,748		)
Impairments of real estate assets	310			—			3,328		995			4,505			3,105			3,425		—
Leasing commission amortization ⁽³⁾	879			846			838		810			753			705			732		599
Real estate depreciation and amortization	28,438			28,542			28,532		27,897			27,697			27,017			26,248		25,776
Total adjustments	13,141			(12,161		)	32,698		20,422			32,955			30,824			30,405		23,627
Funds from Operations Attributable to Common Stockholders		$40,621			$5,755			$38,080		$38,495			$36,946			$36,795			$34,257		$36,011
Acquisition costs	121			167			38		471			188			49			—		681
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		$40,742			$39,834			$38,259		$38,444			$36,689			$34,925			$34,257		$35,200
Funds from Operations per Common Share—Diluted		$0.41			$0.06			$0.38		$0.39			$0.38			$0.38			$0.36		$0.38
Normalized Funds from Operations Per Common Share—Diluted		$0.41			$0.40			$0.39		$0.39			$0.38			$0.36			$0.36		$0.37
FFO Weighted Average Common Shares Outstanding	99,997			99,945			99,137		98,086			97,329			95,798			95,585		95,485

(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.


(3)	In the third quarter of 2015, the Company began including an add-back for leasing commission amortization in order to provide a better basis for comparing its results of operations with those of others in the industry, consistent with the NAREIT definition of FFO. All periods presented have been adjusted.





HEALTHCARE REALTY I 5		3Q I 2015 SUPPLEMENTAL INFORMATION

Statements of Income Information

(dollars in thousands)




	2015									2014												2013
	Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4
Revenues
Rental income		$95,383			$95,450			$95,034			$93,648			$92,095			$89,279			$86,502			$84,824
Mortgage interest	29			31			31			32			44			969			2,621			2,411
Other operating	1,313			1,227			1,391			1,320			1,474			1,423			1,448			1,386
	96,725			96,708			96,456			95,000			93,613			91,671			90,571			88,621
Expenses
Property operating	35,247			33,927			34,263			33,386			34,204			33,635			32,831			31,227
General and administrative	6,258			6,713			6,738			5,990			5,185			5,661			5,972			5,758
Depreciation	26,571			26,552			26,387			25,881			25,345			24,491			23,667			23,074
Amortization	2,386			2,474			2,667			2,630			2,656			2,775			2,759			2,826
Bad debts, net of recoveries	(21		)	27			(207		)	(92		)	3			73			47			61
	70,441			69,693			69,848			67,795			67,393			66,635			65,276			62,946
Other Income (Expense)
Gain on sales of properties	5,915			41,549			—			—			—			—			—			—
Gain on sale of cost method investment in real estate	—			—			—			—			—			—			—			1,492
Interest expense	(15,113		)	(17,213		)	(18,322		)	(18,237		)	(18,192		)	(18,066		)	(17,918		)	(17,772		)
Loss on extinguishment of debt	—			(27,998		)	—			—			—			—			—			—
Pension termination	—			(5,260		)	—			—			—			—			—			—
Impairment of real estate assets	(310		)	—			(3,328		)	—			—			—			—			—
Impairment of internally-developed software	—			(654		)	—			—			—			—			—			—
Interest and other income, net	72			147			91			91			409			2,035			100			261
	(9,436		)	(9,429		)	(21,559		)	(18,146		)	(17,783		)	(16,031		)	(17,818		)	(16,019		)

Income From Continuing Operations	16,848			17,586			5,049			9,059			8,437			9,005			7,477			9,656

Discontinued Operations
Income (loss) from discontinued operations	61			330			333			729			221			108			(89		)	52
Impairments of real estate assets	—			—			—			(995		)	(4,505		)	(3,105		)	(3,425		)	—
Gain on sales of properties	10,571			—			—			9,280			—			3			—			2,748
Income (Loss) From Discontinued Operations	10,632			330			333			9,014			(4,284		)	(2,994		)	(3,514		)	2,800

Net Income	27,480			17,916			5,382			18,073			4,153			6,011			3,963			12,456
Less: Net income attributable to noncontrolling interests	—			—			—			—			(162		)	(40		)	(111		)	(72		)
Net Income Attributable To Common Stockholders		$27,480			$17,916			$5,382			$18,073			$3,991			$5,971			$3,852			$12,384





HEALTHCARE REALTY I 6		3Q I 2015 SUPPLEMENTAL INFORMATION

Balance Sheet Information ⁽¹⁾

(dollars in thousands, except per share data)



ASSETS

	2015									2014
Real estate properties:	Q3			Q2			Q1			Q4			Q3
Land		$186,108			$186,231			$187,951			$183,060			$183,991
Buildings, improvements and lease intangibles	3,042,367			3,033,213			3,077,828			3,048,251			3,030,960
Personal property	9,833			9,970			10,014			9,914			9,535
Construction in progress	15,455			8,284			—			—			—
Land held for development	17,475			16,952			21,376			17,054			17,054
Total real estate properties	3,271,238			3,254,650			3,297,169			3,258,279			3,241,540
Less accumulated depreciation and amortization	(737,398		)	(730,125		)	(723,393		)	(700,671		)	(693,517		)
Total real estate properties, net	2,533,840			2,524,525			2,573,776			2,557,608			2,548,023
Cash and cash equivalents	8,497			8,431			10,417			3,519			1,684
Mortgage notes receivable	—			1,900			1,900			1,900			1,900
Assets held for sale and discontinued operations, net	6,380			14,192			14,164			9,146			11,479
Other assets, net	192,969			191,524			188,198			185,337			178,238
Total assets		$2,741,686			$2,740,572			$2,788,455			$2,757,510			$2,741,324

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and bonds payable		$1,381,285			$1,388,797			$1,444,555			$1,403,692			$1,403,379
Accounts payable and accrued liabilities	65,839			57,143			50,144			70,240			60,017
Liabilities of discontinued operations	216			168			102			372			508
Other liabilities	65,648			66,035			64,469			62,152			57,913
Total liabilities	1,512,988			1,512,143			1,559,270			1,536,456			1,521,817
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	1,005			1,004			1,001			988			981
Additional paid-in capital	2,435,849			2,432,979			2,423,121			2,389,830			2,374,345
Accumulated other comprehensive income (loss)	(1,611		)	(1,653		)	(3,242		)	(2,519		)	51
Cumulative net income attributable to common stockholders	891,027			863,547			845,631			840,249			822,176
Cumulative dividends	(2,097,572		)	(2,067,448		)	(2,037,326		)	(2,007,494		)	(1,978,046		)
Total stockholders' equity	1,228,698			1,228,429			1,229,185			1,221,054			1,219,507
Total liabilities and stockholders' equity		$2,741,686			$2,740,572			$2,788,455			$2,757,510			$2,741,324



OTHER INFORMATION
Capital additions:
Revenue enhancing	$1,963	$3,188	$781	$1,361	$187
Routine and non-revenue enhancing	1,543	3,580	1,469	2,635	2,501
2nd generation tenant improvements	3,637	2,496	2,992	5,956	4,085
1st generation tenant improvements	3,959	1,150	3,463	4,475	3,351
Leasing commissions paid	1,037	1,251	2,416	2,920	1,287

(1) The balance sheet information is presented as of the last day of the quarter indicated.





HEALTHCARE REALTY I 7		3Q I 2015 SUPPLEMENTAL INFORMATION

Debt Metrics

(dollars in thousands)



SUMMARY OF INDEBTEDNESS
	Q3 2015 Interest Expense	Balance as of 9/30/2015	Weighted Months to Maturity	Effective Interest Rate
Senior Notes due 2021, net of discount	$5,826	$398,090	64	5.86	%
Senior Notes due 2023, net of discount	2,390	248,389	91	3.85	%
Senior Notes due 2025, net of discount⁽¹⁾	2,468	249,800	115	3.97	%
Total Senior Notes Outstanding	$10,684	$896,279	85	4.77	%
Unsecured credit facility due 2017	589	142,000	19	1.34	%
Unsecured term loan facility due 2019	815	200,000	41	1.39	%
Mortgage notes payable, net	1,867	143,006	58	5.28	%
Total Outstanding Notes and Bonds Payable	$13,955	$1,381,285	69	3.98	%
Interest cost capitalization	(80)
Deferred financing costs	734
Unsecured credit facility fee	504
Total Quarterly Consolidated Interest Expense	$15,113

(1) The effective interest rate includes the impact of the $1.7 million settlement of a 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 9/30/2015
Revolving Credit Facility and Term Loan
Leverage Ratio	Total Debt / Total Capital	Not greater than 60%	41.4	%
Secured Leverage Ratio	Total Secured Debt / Total Capital	Not greater than 30%	4.2	%
Unencumbered Leverage Ratio	Unsecured Debt / Unsecured Real Estate	Not greater than 60%	42.5	%
Fixed Charge Coverage Ratio	EBITDA / Fixed Charges	Not less than 1.65x	3.1x
Unsecured Coverage Ratio	Unsecured EBITDA / Unsecured Interest	Not less than 1.75x	3.3x
Tangible Net Worth	Tangible Net Worth - Required Base	Greater than $0	$841,952
Construction and Development	CIP / Total Assets	Not greater than 15%	0.6	%
Asset Investments	Mortgages & Unimproved Land / Total Assets	Not greater than 20%	0.6	%

Senior Notes
Incurrence of Total Debt	Total Debt / Total Assets	Not greater than 60%	39.8	%
Incurrence of Debt Secured by Any Lien	Secured Debt / Total Assets	Not greater than 40%	4.1	%
Maintenance of Total Unsecured Assets	Unencumbered Assets / Unsecured Debt	Not less than 150%	251.0	%
Debt Service Coverage	EBITDA / Interest Expense	Not less than 1.5x	3.4x

Other
Debt to EBITDA	Total Debt / EBITDA	Not required	6.1x
Debt to Enterprise Value ⁽³⁾	Total Debt / Enterprise Value	Not required	34.3	%

(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 the closing price of $26.36 on October 30, 2015 and 100,640,368 shares outstanding.





HEALTHCARE REALTY I 8		3Q I 2015 SUPPLEMENTAL INFORMATION

Investment Activity

(dollars in thousands)



2015 ACQUISITION ACTIVITY

Location	Property Type	Campus Location	Health System Affiliation	Closing	Purchase Price of Acquisition		Square Feet	Aggregate Leased %
San Jose, CA	MOB	Adj	Kaiser/Washington	1/15/2015		$39,250	110,679	97	%
Seattle, WA	MOB	On	CHI	6/26/2015	14,000		35,558	93	%
Seattle, WA	MOB	On	Providence	9/1/2015	28,000		52,813	100	%
Denver, CO	MOB	Off	N/A	9/14/2015	6,500		47,508	73	%
Total						$87,750	246,558	93	%



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	87,750			—			—			18,458			106,208			138,740
Total		$635,046			$41,900			$200,203			$107,825			$984,974			$389,574
% of Total	64.5		%	4.3		%	20.3		%	10.9		%	100		%



RE/DEVELOPMENT ACTIVITY
Location	Type ⁽²⁾	Campus Location	Square Feet	Budget	Amount Funded Q3 2015	Total Amount Funded Through 9/30/2015	Estimated Remaining Fundings	Aggregate Leased %		Estimated Completion Date
Construction activity
Birmingham, AL ⁽³⁾	Redev	Off	138,000	$15,400	$2,997	$6,119	$9,281	100	%	Q4 2015
Austin, TX	Dev	Adj	12,900	5,575	1,708	1,764	3,811	62	%	Q2 2016
Nashville, TN ⁽⁴⁾	Redev	On	294,000	51,800	2,398	14,959	36,841	83	%	Q1 2017
Total construction activity			444,900	$72,775	$7,103	$22,842	$49,933	88	%

Pre-construction activity ⁽⁵⁾
Denver, CO	Dev	On	98,000	26,500	63	79	26,421	35	%

Total Re/development activity			542,900	$99,275	$7,166	$22,921	$76,354	78	%


(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 and $17.7 million for existing building upgrades and tenant improvement allowances associated with newly executed leases.


(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		3Q I 2015 SUPPLEMENTAL INFORMATION

Portfolio by Market and Building Size

(dollars in thousands)



BY MARKET
		SQUARE FEET
		MOB/OUTPATIENT (89.2%)				INPATIENT (7.2%)				OTHER (3.6%)
	Investment⁽¹⁾	Multi-tenant		Single-tenant Net Lease		Rehab		Surgical		Other		Total		% of Total
Dallas - Fort Worth, TX	$473,751	2,149,939				42,627		156,245				2,348,811		16.7	%
Charlotte, NC	166,734	820,457										820,457		5.8	%
Nashville, TN	102,714	762,708										762,708		5.4	%
Seattle - Bellevue, WA	236,067	542,312		67,510								609,822		4.3	%
Houston, TX	128,039	591,027										591,027		4.2	%
Los Angeles, CA	136,576	488,371				63,000						551,371		3.9	%
Richmond, VA	145,694	548,801										548,801		3.9	%
Des Moines, IA	133,678	233,413		146,542						152,655		532,610		3.8	%
San Antonio, TX	102,052	483,811				39,786						523,597		3.7	%
Memphis, TN	90,802	515,876										515,876		3.7	%
Roanoke, VA	48,732			334,454						126,427		460,881		3.3	%
Austin, TX	124,765	351,725				66,095						417,820		3.0	%
Indianapolis, IN	76,775	382,695										382,695		2.7	%
Denver, CO	109,375	346,335				34,068						380,403		2.7	%
Honolulu, HI	134,623	298,427										298,427		2.1	%
Oklahoma City, OK	109,033	68,860		200,000								268,860		1.9	%
Chicago, IL	56,846	243,491										243,491		1.7	%
Miami, FL	51,662	241,980										241,980		1.7	%
Colorado Springs, CO	50,073	241,224										241,224		1.7	%
Phoenix, AZ	64,164	179,963				51,903						231,866		1.6	%
Detroit, MI	24,542	199,749								11,308		211,057		1.5	%
South Bend, IN	43,707	205,573										205,573		1.5	%
Springfield, MO	111,293							186,000				186,000		1.3	%
Washington, DC	31,173	182,836										182,836		1.3	%
Other (32 markets)	479,948	1,428,698		296,623		373,722				214,864		2,313,907		16.6	%
Total	$3,232,818	11,508,271		1,045,129		671,201		342,245		505,254		14,072,100		100.0	%
Number of Properties		159		14		11		2		9		195
Percent of Square Feet		81.8	%	7.4	%	4.8	%	2.4	%	3.6	%	100.0	%
Investment ⁽¹⁾		$2,518,651		$238,416		$191,815		$208,725		$75,211		$3,232,818
% of Investment		77.9	%	7.4	%	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	44.4	%	6,235,128	145,003	43
<100,000 and >75,000	23.0	%	3,241,537	85,304	38
<75,000 and >50,000	17.4	%	2,454,502	62,936	39
<50,000	15.2	%	2,140,933	28,546	75
Total	100.0	%	14,072,100	72,165	195


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





HEALTHCARE REALTY I 10		3Q I 2015 SUPPLEMENTAL INFORMATION

Square Feet by Provider, Rank and Location ⁽¹⁾



BY PROVIDER
			ASSOCIATED				LEASED
Top Providers	Health System Rank⁽²⁾	Credit Rating	Buildings ⁽³⁾	SF ⁽³⁾	% of Total SF⁽⁴⁾		SF	% of Total SF
Baylor Scott & White Health	20	AA-/Aa3	26	2,366,944	16.8	%	1,115,800	7.9	%
Ascension Health	3	AA+/Aa2	16	1,167,438	8.3	%	290,122	2.1	%
Catholic Health Initiatives	7	A/A2	14	997,574	7.1	%	525,810	3.7	%
HCA	2	B+/B1	14	867,546	6.2	%	488,933	3.5	%
Carolinas HealthCare System	26	--/Aa3	16	765,116	5.4	%	586,552	4.2	%
Tenet Healthcare Corporation	11	CCC+/B1	11	759,084	5.4	%	183,228	1.3	%
Bon Secours Health System	48	A-/A3	7	548,801	3.9	%	264,638	1.9	%
Baptist Memorial Health Care	93	A-/--	7	515,876	3.7	%	105,419	0.7	%
HealthSouth	86	BB-/Ba3	6	412,989	2.9	%	412,989	2.9	%
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	2.5	%	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	%	130,902	0.9	%
Providence Health & Services	6	AA-/Aa3	4	255,542	1.8	%	131,614	0.9	%
Medstar Health	32	A-/A2	3	241,739	1.7	%	127,079	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	%
Community Health Systems	5	B+/B1	4	201,574	1.4	%	69,514	0.5	%
Other Credit Rated			15	1,214,538	8.6	%
Total - Credit Rated			164	12,450,508	88.4	%
Total			195	14,072,100	100.0	%



BY RANK (% of total SF)
	MSA				HEALTH SYSTEM ⁽²⁾⁽³⁾
Rank	MOB / Outpatient		Total		MOB / Outpatient		Total
Top 25	56	%	54	%	58	%	54	%
Top 50	83	%	78	%	75	%	71	%
Top 75	86	%	81	%	76	%	72	%
Top 100	91	%	87	%	84	%	82	%



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


(1)	Excludes mortgage notes receivable, construction in progress 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 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, 88.4% of HR's portfolio is associated with a credit-rated healthcare provider and 70.9% is associated with an investment-grade rated healthcare provider.


(5)	Approximately 44% of the off-campus square footage is anchored by a hospital system.





HEALTHCARE REALTY I 11		3Q I 2015 SUPPLEMENTAL INFORMATION

Lease Maturity and Tenant Size ⁽¹⁾

(dollars in thousands)



LEASE MATURITY SCHEDULE
	MULTI-TENANT				SINGLE-TENANT NET LEASE				TOTAL
	Number of Leases	Square Feet	% of Square Feet		Number of Leases	Square Feet	% of Square Feet		Number of Leases	Square Feet	% of Total Square Feet
2015	196	611,281	6.3	%	0	0	—	%	196	611,281	5.1	%
2016	385	1,286,559	13.3	%	2	69,749	3.1	%	387	1,356,308	11.4	%
2017	335	1,459,410	15.1	%	5	334,454	14.6	%	340	1,793,864	15.0	%
2018	284	1,415,854	14.7	%	0	0	—	%	284	1,415,854	11.9	%
2019	269	1,252,878	13.0	%	9	371,805	16.3	%	278	1,624,683	13.6	%
2020	167	994,268	10.3	%	1	83,318	3.6	%	168	1,077,586	9.0	%
2021	82	437,234	4.5	%	2	143,868	6.3	%	84	581,102	4.9	%
2022	83	600,675	6.2	%	2	137,016	6.0	%	85	737,691	6.2	%
2023	95	754,915	7.8	%	1	75,000	3.3	%	96	829,915	6.9	%
2024	53	395,935	4.1	%	1	51,903	2.3	%	54	447,838	3.7	%
Thereafter	40	449,401	4.7	%	11	1,017,634	44.5	%	51	1,467,035	12.3	%



AVERAGE TENANT SIZE
	NUMBER OF LEASES
Square Footage	Multi-Tenant Properties ⁽²⁾	Single-Tenant Net Lease Properties
0 - 2,500	938	0
2,501 - 5,000	559	0
5,001 - 7,500	182	1
7,501 - 10,000	104	1
10,001 +	206	32
Total Leases	1,989	34


(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 4,856 square feet.





HEALTHCARE REALTY I 12		3Q I 2015 SUPPLEMENTAL INFORMATION

Occupancy Information ⁽¹⁾

^{(dollars in thousands)}



OCCUPANCY
								2015				2014
	Investment at 9/30/2015		Square Feet at 9/30/2015	Q3		Q2		Q1		Q4		Q3
Multi-Tenant
Same store properties ⁽²⁾		$2,068,277	9,598,055	87.4	%	87.4	%	86.8	%	87.1	%	87.0	%
Acquisitions	307,808		1,060,291	89.9	%	90.7	%	90.5	%	90.3	%	88.7	%
Reposition	193,008		1,129,007	51.4	%	50.7	%	50.7	%	53.6	%	53.2	%
Total		$2,569,093	11,787,353	84.2	%	84.2	%	83.8	%	83.7	%	83.9	%

Single-Tenant Net lease
Same store properties ⁽²⁾		$561,137	2,050,679	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Acquisitions	102,588		234,068	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total		$663,725	2,284,747	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Total
Same store properties ⁽²⁾		$2,629,414	11,648,734	89.6	%	89.5	%	89.1	%	89.3	%	89.2	%
Acquisitions	410,396		1,294,359	91.7	%	93.0	%	93.1	%	93.1	%	92.1	%
Reposition	193,008		1,129,007	51.4	%	50.7	%	50.7	%	53.6	%	53.2	%
Total		$3,232,818	14,072,100	86.8	%	86.7	%	86.6	%	86.4	%	86.6	%

# of Properties
Same store properties ⁽²⁾				160		159		162		160		167
Acquisitions				17		18		18		18		14
Reposition				18		19		18		20		19
Total				195		196		198		198		200


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


(2)	Historical percentages are adjusted to include development conversions that are now included in the same store properties.





HEALTHCARE REALTY I 13		3Q I 2015 SUPPLEMENTAL INFORMATION

Same Store Properties

(dollars in thousands)



QUARTERLY ⁽¹⁾⁽²⁾
	Q3 2015		Q2 2015		Q1 2015		Q4 2014		Q3 2014		Q2 2014		Q1 2014		Q4 2013
Multi-tenant
Revenues	$65,273		$64,546		$63,980		$63,482		$62,909		$62,451		$61,770		$61,008
Expenses	28,672		27,528		27,887		27,598		28,546		28,221		27,800		26,892
NOI	$36,601		$37,018		$36,093		$35,884		$34,363		$34,230		$33,970		$34,116
Occupancy	87.4	%	87.8	%	87.4	%	87.5	%	87.4	%	86.2	%	85.9	%	85.7	%
Number of properties	128		128		128		128		128		128		128		128

Single-tenant net lease
Revenues	$14,378		$14,283		$14,332		$14,135		$13,860		$13,803		$13,756		$13,702
Expenses	413		390		390		427		345		498		507		535
NOI	$13,965		$13,893		$13,942		$13,708		$13,515		$13,305		$13,249		$13,167
Occupancy	100.0	%	100.0	%	98.2	%	98.2	%	98.2	%	98.2	%	98.2	%	98.2	%
Number of properties	32		32		32		32		32		32		32		32

Total
Revenues	$79,651		$78,829		$78,312		$77,617		$76,769		$76,254		$75,526		$74,710
Expenses	29,085		27,918		28,277		28,025		28,891		28,719		28,307		27,427
Same Store NOI	$50,566		$50,911		$50,035		$49,592		$47,878		$47,535		$47,219		$47,283
Occupancy	89.6	%	90.0	%	89.6	%	89.4	%	89.3	%	88.4	%	88.1	%	87.9	%
Number of properties	160		160		160		160		160		160		160		160
% NOI year-over-year growth	5.6	%	7.1	%	6.0	%	4.9	%



TRAILING TWELVE MONTHS ^{(1) (2)}
	Twelve Months Ended September 30,
	2015		2014		% Change
Multi-tenant
Revenues	$257,281		$248,138		3.7	%
Expenses	$111,685		$111,459		0.2	%
NOI	$145,596		$136,679		6.5	%
Revenue per average occupied square foot	$30.63		$30.03		2.0	%
Average occupancy	87.5	%	86.1	%
Number of properties	128		128

Single-tenant net lease
Revenues	$57,128		$55,121		3.6	%
Expenses	$1,620		$1,885		(14.1	)%
NOI	$55,508		$53,236		4.3	%
Revenue per average occupied square foot	$28.06		$27.37		2.5	%
Average occupancy	99.3	%	98.2	%
Number of properties	32		32

Total
Revenues	$314,409		$303,259		3.7	%
Expenses	$113,305		$113,344		0.0	%
Same Store NOI	$201,104		$189,915		5.9	%
Revenue per average occupied square foot	$30.13		$29.51		2.1	%
Average occupancy	89.6	%	88.2	%
Number of Properties	160		160


(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		3Q I 2015 SUPPLEMENTAL INFORMATION

Reconciliation of NOI

(dollars in thousands)



QUARTERLY
	Q3 2015			Q2 2015			Q1 2015			Q4 2014			Q3 2014			Q2 2014			Q1 2014			Q4 2013
Rental income^(a)		$95,383			$95,450			$95,034			$93,648			$92,095			$89,279			$86,502			$84,824
Property lease guaranty revenue ^(b)	999			937			1,102			1,029			1,100			1,160			1,141			1,124
Exclude straight-line rent revenue	(2,309		)	(2,475		)	(2,832		)	(3,122		)	(3,046		)	(2,504		)	(2,297		)	(2,939		)
Revenue	94,073			93,912			93,304			91,555			90,149			87,935			85,346			83,009
Property operating expense	(35,247		)	(33,927		)	(34,263		)	(33,386		)	(34,204		)	(33,635		)	(32,831		)	(31,227		)
NOI		$58,826			$59,985			$59,041			$58,169			$55,945			$54,300			$52,515			$51,782
Less:
Acquisitions	(6,822		)	(6,322		)	(6,181		)	(5,310		)	(4,816		)	(3,189		)	(1,661		)	(987		)
Reposition	(1,331		)	(1,264		)	(1,275		)	(1,703		)	(1,524		)	(1,843		)	(1,838		)	(1,622		)
Dispositions / other	(107		)	(1,488		)	(1,550		)	(1,564		)	(1,727		)	(1,733		)	(1,797		)	(1,890		)
Same store NOI		$50,566			$50,911			$50,035			$49,592			$47,878			$47,535			$47,219			$47,283

(a) Rental income reconciliation:
Property operating		$76,960			$75,470			$74,654			$73,153			$71,847			$71,029			$69,274			$67,015
Single-tenant net lease	16,114			17,505			17,548			17,373			17,202			15,746			14,931			14,870
Straight-line rent	2,309			2,475			2,832			3,122			3,046			2,504			2,297			2,939
Total consolidated rental income		$95,383			$95,450			$95,034			$93,648			$92,095			$89,279			$86,502			$84,824

(b) Other operating income reconciliation:
Property lease guaranty revenue		$999			$937			$1,102			$1,029			$1,100			$1,160			$1,141			$1,124
Interest income	144			156			157			163			246			130			192			173
Other	170			134			132			128			128			133			115			89
Total consolidated other operating income		$1,313			$1,227			$1,391			$1,320			$1,474			$1,423			$1,448			$1,386



TRAILING TWELVE MONTHS
	Twelve Months Ended September 30,
	2015	2014
NOI	$236,021	$214,542
Less:
Acquisitions	(24,635)	(10,653)
Reposition	(5,573)	(6,827)
Dispositions / other	(4,709)	(7,147)
Same store NOI	$201,104	$189,915





HEALTHCARE REALTY I 15		3Q I 2015 SUPPLEMENTAL INFORMATION

Same Store Leasing Statistics ⁽¹⁾




					2015		2014								2013
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4
Contractual increases for in-place leases ("annual bumps")
Multi-tenant properties	2.9	%	3.1	%	3.0	%	2.9	%	3.0	%	3.0	%	2.9	%	3.1	%
Single-tenant net lease properties	2.6	%	2.2	%	0.7	%	6.9	%	3.5	%	2.1	%	1.7	%	3.0	%
Cash leasing spreads for renewals, multi-tenant properties	2.1	%	5.0	%	3.6	%	4.0	%	1.4	%	2.5	%	2.0	%	1.6	%
Tenant retention rate, multi-tenant properties	82.4	%	87.3	%	83.1	%	88.6	%	85.9	%	89.7	%	77.4	%	78.4	%




	As of 9/30/2015
Multi-Tenant Contractual Rental Rate Increases by Type
Annual increase	84.1	%
Non-annual increase	7.7	%
No increase (term < 1 year)	4.8	%
No increase (term > 1 year)	3.4	%

Tenant Type
Multi-Tenant properties
Hospital	46.4	%
Physician and other	53.6	%
Single-Tenant net lease properties
Hospital	82.2	%
Other	17.8	%

Lease Structure, multi-tenant only
Gross	17.4	%
Modified gross	31.7	%
Net	50.9	%

Ownership Type
Ground lease	57.8	%
Fee simple	42.2	%


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





HEALTHCARE REALTY I 16		3Q I 2015 SUPPLEMENTAL INFORMATION

Components of Net Asset Value

(dollars in thousands)




Asset Type	Q3 2015 Same Store NOI⁽¹⁾	Q3 2015 Acquisitions NOI	Q3 2015 Reposition NOI⁽²⁾	Timing Adjustments⁽³⁾	Q3 2015 Adjusted NOI	Annualized Adjusted NOI	% of Adjusted NOI
MOB / Outpatient	$40,649	$5,728	$1,384	$2,117	$49,878	$199,512	81.8	%
Inpatient rehab	4,503	274	—	—	4,777	19,108	7.8	%
Inpatient surgical	4,426	—	—	—	4,426	17,704	7.3	%
Other	988	820	104	—	1,912	7,648	3.1	%
Total NOI	$50,566	$6,822	$1,488	$2,117	$60,993	$243,972	100.0	%

TOTAL SHARES OUTSTANDING (AS OF OCTOBER 30, 2015) 100,640,368



DEVELOPMENT PROPERTIES
	Land held for development		$17,475
	Construction in progress	15,455
	Subtotal		$32,930

OTHER ASSETS
	Assets held for sale⁽⁴⁾		$6,331
	Reposition properties (net book value)⁽²⁾	10,772
	Cash and other assets⁽⁵⁾	90,063
	Subtotal		$107,166


DEBT
	Unsecured credit facility		$142,000
	Unsecured term loan	200,000
	Senior notes	896,279
	Mortgage notes payable	143,006
	Other liabilities⁽⁶⁾	96,278
	Subtotal		$1,477,563


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

(2)

Reposition properties includes 18 properties, which comprise 1,129,007 square feet. The NOI table above includes 11 of these properties comprising 884,438 square feet that have generated positive NOI totaling approximately $1.5 million. The remaining 7 properties, comprising 244,569 square feet, have generated an NOI loss of approximately $0.2 million and are reflected at a net book value of $10.8 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 two 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 $8.5 million and other assets of $81.6 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 $64.1 million and above-market intangible assets (net) of $17.4 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 $66.0 million, pension plan liability of $19.6 million, security deposits of $6.4 million, market-rate lease intangibles of $3.9 million, and deferred operating expense reimbursements of $0.4 million. Also, excludes deferred revenue of $35.4 million.





HEALTHCARE REALTY I 17		3Q 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			$175,000
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
Leasing commissions	4,000			6,000

Cash Yield
Acquisitions	5.75		%	6.25		%
Dispositions	5.25		%	5.75		%
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		3Q I 2015 SUPPLEMENTAL INFORMATION

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