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

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - HEALTHCARE REALTY TRUST INC	exhibit991fourthquarter201.htm
8-K - 8-K - HEALTHCARE REALTY TRUST INC	hr-20161231xearnings8xk.htm

4Q | 2016

Supplemental Information

FURNISHED AS OF FEBRUARY 15, 2017 (UNAUDITED)

Table of Contents




3			Highlights

5			Corporate Information

7			Balance Sheet Information

8			Statements of Income Information

9			FFO, Normalized FFO & FAD

10			Debt Metrics

11			Investment Activity

12			Portfolio by Market

13			Square Feet by Provider

14			Square Feet by Proximity

15			Lease Maturity, Size and Building Square Feet

16			Occupancy Information

18			Same Store Properties

19			Reconciliation of NOI & EBITDA

20			Same Store Leasing Statistics

21			Components of Net Asset Value

22			Components of Expected 2017 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,” "budget," “components of expected 2017 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, 2016 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 2		4Q 2016 SUPPLEMENTAL INFORMATION

Highlights

Salient quarterly highlights include:


•	Normalized FFO for the fourth quarter grew 14.6% year-over-year to $47.1 million.


•	For the trailing twelve months ended December 31, 2016, same store revenue grew 3.4%, operating expenses increased 0.7%, and same store NOI grew 5.0%:


•	Same store revenue per average occupied square foot increased 2.8%.


•	Average same store occupancy increased to 89.2% from 88.7%.


•	Leasing activity in the fourth quarter totaled 340,000 square feet related to 132 leases:


◦	235,000 square feet of renewals


◦	105,000 square feet of new and expansion leases


•	Four predictive growth measures in the same store multi-tenant portfolio:


◦	Contractual rent increases occurring in the quarter averaged 2.9%, and contractual rent increases for leases commencing in the quarter will average 3.2%.


◦	Cash leasing spreads were 3.9% on 216,000 square feet renewed:


•	1% (<0% spread)


•	4% (0-3%)


•	72% (3-4%)


•	23% (>4%)


◦	Tenant retention was 88.5%.


◦	The average yield on renewed leases increased 50 basis points.


•	Acquisitions totaled $63.8 million for the fourth quarter, comprising 212,000 square feet at an aggregate leased percentage of 91%:


◦	The Company purchased two medical office buildings on the University of Maryland Medical System's Upper Chesapeake Health Medical Center campus in Baltimore, Maryland for $36.3 million. The buildings total 114,000 square feet and are 92% leased.


◦	The Company purchased two medical office buildings on Providence Health's Swedish Edmonds campus in Seattle, Washington for $14.9 million. Collectively, the buildings total 50,000 square feet and are 83% leased. The Company now owns four properties on the Swedish Edmonds campus.


◦	The Company purchased a medical office building on HealthEast Care System’s St. John’s Hospital campus in St. Paul, Minnesota for $12.6 million. The building is 48,000 square feet and 94% leased.


•	Dispositions totaled $94.7 million for the quarter:


•	The Company sold three inpatient rehabilitation facilities for $68.0 million.


•	The Company sold three medical office buildings totaling 125,000 square feet for $26.7 million.


•	A dividend of $0.30 per common share was declared, which is equal to 73.2% of normalized FFO per share.



HEALTHCARE REALTY 3		4Q 2016 SUPPLEMENTAL INFORMATION

Highlights

Salient highlights for the year ended December 31, 2016 include:


•	Normalized FFO totaled $1.63 per diluted common share.


•	Annual leasing activity totaled 1,875,000 square feet related to 589 leases:


◦	1,301,000 square feet of renewals


◦	574,000 square feet of new and expansion leases


◦	102,000 square feet of net absorption


•	Tenant improvement commitments for leases in second generation space at the multi-tenant properties were:


◦	$1.55 per square foot per lease year for renewal leases


◦	$4.74 per square foot per lease year for new leases


•	Net investments totaled $192.5 million:


◦	$241.9 million of acquisitions, comprised of 10 on or adjacent-to-campus medical office buildings


◦	$45.3 million of development and redevelopment funding


◦	$94.7 million of dispositions


•	The Company issued $449.2 million of equity in 2016 to fund investment activity and reduce leverage. Leverage decreased from 41.8% at the end of 2015 to 33.9% at year-end 2016, and net debt to adjusted EBITDA decreased from 6.2x to 5.0x.


•	Dividends totaled $1.20 per common share, which is equal to 73.6% of normalized FFO per share and 95.2% of FAD per share.



HEALTHCARE REALTY 4		4Q 2016 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. As of December 31, 2016, the Company had gross investments of approximately $3.6 billion in 202 real estate properties in 27 states totaling approximately 14.6 million square feet. The Company provided leasing and property management services to approximately 10.3 million square feet nationwide.

Corporate Headquarters



Healthcare Realty Trust Incorporated
3310 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		Executive Chairman of the Board
Todd J. Meredith		President and Chief Executive Officer
John M. Bryant, Jr.		Executive Vice President and General Counsel
J. Christopher Douglas		Executive Vice President and Chief Financial Officer
Robert E. Hull		Executive Vice President - Investments
B. Douglas Whitman, II		Executive Vice President - Corporate Finance

Board of Directors



David R. Emery		Executive Chairman of the Board, Healthcare Realty Trust Incorporated
Nancy H. Agee		President and Chief Executive Officer, Carilion Clinic
C. Raymond Fernandez, M.D.		Retired Chief Executive Officer, Piedmont Clinic
Peter F. Lyle		Vice President of Health Systems, Pharma and Medical Practice Services, Medical Management Associates, Inc.
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
Dan S. Wilford		Retired Chief Executive Officer, Memorial Hermann Healthcare System





HEALTHCARE REALTY 5		4Q 2016 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 January 31, 2017, the Company declared a dividend of $0.30 per share, payable on February 28, 2017, to stockholders of record on February 14, 2017.

Analyst Coverage



BMO Capital Markets		JMP Securities LLC

BTIG, LLC		Morgan Stanley

Cantor Fitzgerald, L.P.		KeyBanc Capital Markets Inc.

Green Street Advisors, Inc.		Mizuho Securities USA Inc.

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

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

Jefferies LLC		Wells Fargo Securities, LLC





HEALTHCARE REALTY 6		4Q 2016 SUPPLEMENTAL INFORMATION

Balance Sheet Information ⁽¹⁾

(dollars in thousands, except per share data)



ASSETS

										2016			2015
Real estate properties:	Q4			Q3			Q2			Q1			Q4
Land		$199,672			$206,647			$208,386			$201,157			$198,585
Buildings, improvements and lease intangibles	3,386,480			3,322,293			3,235,744			3,181,748			3,135,893
Personal property	10,291			10,124			10,032			9,881			9,954
Construction in progress	11,655			45,734			35,174			31,669			19,024
Land held for development	20,123			17,438			17,438			17,434			17,452
Total real estate properties	3,628,221			3,602,236			3,506,774			3,441,889			3,380,908
Less accumulated depreciation and amortization	(840,839		)	(835,276		)	(819,744		)	(790,819		)	(761,926		)
Total real estate properties, net	2,787,382			2,766,960			2,687,030			2,651,070			2,618,982
Cash and cash equivalents	5,409			12,649			9,026			2,174			4,102
Restricted cash	49,098			—			—			—			—
Assets held for sale and discontinued operations, net	3,092			14,732			710			706			724
Other assets, net ⁽²⁾	195,666			197,380			185,298			187,665			186,416
Total assets		$3,040,647			$2,991,721			$2,882,064			$2,841,615			$2,810,224

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and bonds payable ⁽²⁾		$1,264,370			$1,239,062			$1,414,739			$1,418,347			$1,424,992
Accounts payable and accrued liabilities	78,266			71,052			70,408			66,013			75,489
Liabilities of properties held for sales and discontinued operations	614			572			17			20			33
Other liabilities	43,983			46,441			46,452			64,236			66,963
Total liabilities	1,387,233			1,357,127			1,531,616			1,548,616			1,567,477
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	1,164			1,160			1,067			1,042			1,015
Additional paid-in capital	2,917,914			2,916,816			2,609,880			2,533,130			2,461,376
Accumulated other comprehensive loss	(1,401		)	(1,443		)	(1,485		)	(1,527		)	(1,569		)
Cumulative net income attributable to common stockholders	995,256			942,819			930,985			918,841			909,685
Cumulative dividends	(2,259,519		)	(2,224,758		)	(2,189,999		)	(2,158,487		)	(2,127,760		)
Total stockholders' equity	1,653,414			1,634,594			1,350,448			1,292,999			1,242,747
Total liabilities and stockholders' equity		$3,040,647			$2,991,721			$2,882,064			$2,841,615			$2,810,224



CAPITAL FUNDING
Re/development		$9,567		$10,939		$8,542		$16,758		$9,322
1st generation TI & planned capital expenditures for acquisitions ⁽³⁾	4,807		4,471		5,486		1,298		4,686
2nd generation TI	7,918		6,013		5,559		4,202		3,081
Leasing commissions paid	1,030		1,514		1,587		1,079		1,856
Capital expenditures	4,283		5,088		5,653		2,098		3,918


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


(2)	The Company adopted a new accounting standard (ASU 2015-03 - "Simplifying the Presentation of Debt Issuance Costs") on January 1, 2016 which resulted in a reclassification of deferred financing costs from Other assets to the Notes and bonds payable line item.


(3)	Planned capital expenditures for acquisitions include expected fundings that were contemplated as part of the acquisition.





HEALTHCARE REALTY 7		4Q 2016 SUPPLEMENTAL INFORMATION

Statements of Income Information

(dollars in thousands)




				2016									2015
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Revenues
Rental income		$104,736			$102,534			$101,472			$98,740			$97,466			$95,383			$95,450			$95,034
Mortgage interest	—			—			—			—			—			29			31			31
Other operating	573			1,125			1,170			1,281			1,116			1,313			1,227			1,391
	105,309			103,659			102,642			100,021			98,582			96,725			96,708			96,456
Expenses
Property operating	37,285			37,504			36,263			35,406			36,758			35,247			33,927			34,263
General and administrative	8,707			8,724			8,129			10,246			7,216			6,258			6,713			6,738
Depreciation	30,989			29,273			28,528			27,693			27,019			26,571			26,552			26,387
Amortization	3,033			2,712			2,762			2,700			2,556			2,386			2,474			2,667
Bad debts, net of recoveries	(13		)	(47		)	78			(39		)	9			(21		)	27			(207		)
	80,001			78,166			75,760			76,006			73,558			70,441			69,693			69,848
Other Income (Expense)
Gain on sales of real estate properties	41,037			—			1			—			9,138			5,915			41,549			—
Interest expense	(13,839		)	(13,759		)	(14,815		)	(14,938		)	(14,885		)	(15,113		)	(17,213		)	(18,322		)
Loss on extinguishment of debt	—			—			—			—			—			—			(27,998		)	—
Pension termination	—			—			(4		)	—			—			—			(5,260		)	—
Impairment of real estate assets	—			—			—			—			(1		)	(310		)	—			(3,328		)
Impairment of internally-developed software	—			—			—			—			—			—			(654		)	—
Interest and other income, net	74			123			93			86			78			72			147			91
	27,272			(13,636		)	(14,725		)	(14,852		)	(5,670		)	(9,436		)	(9,429		)	(21,559		)

Income From Continuing Operations	52,580			11,857			12,157			9,163			19,354			16,848			17,586			5,049

Discontinued Operations
Income (loss) from discontinued operations	(22		)	(23		)	(19		)	(7		)	(10		)	61			330			333
Impairments of real estate assets	(121		)	—			—			—			(686		)	—			—			—
Gain on sales of real estate properties	—			—			7			—			—			10,571			—			—
Income (Loss) From Discontinued Operations	(143		)	(23		)	(12		)	(7		)	(696		)	10,632			330			333
Net Income		$52,437			$11,834			$12,145			$9,156			$18,658			$27,480			$17,916			$5,382



NORMALIZED G&A
General and administrative expense		$8,707			$8,724			$8,129			$10,246			$7,216			$6,258			$6,713			$6,738
Acquisition costs	(915		)	(649		)	(232		)	(1,618		)	(1,068		)	(121		)	(167		)	(38		)
Severance expense	—			—			—			—			—			—			—			(141		)
Reversal of restricted stock amortization upon director / officer resignation	—			—			—			—			40			—			—			—
Revaluation of awards upon retirement	—			—			—			(89		)	—			—			—			—
Normalized G&A		$7,792			$8,075			$7,897			$8,539			$6,188			$6,137			$6,546			$6,559





HEALTHCARE REALTY 8		4Q 2016 SUPPLEMENTAL INFORMATION

FFO, Normalized FFO & FAD ^{(1) (2)}

(amounts in thousands, except for share data)




				2016									2015
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net Income Attributable to Common Stockholders		$52,437			$11,834			$12,145			$9,156			$18,658			$27,480			$17,916			$5,382
Gain on sales of real estate properties	(41,037		)	—			(8		)	—			(9,138		)	(16,486		)	(41,549		)	—
Impairments of real estate assets	121			—			—			—			687			310			—			3,328
Real estate depreciation and amortization	34,699			32,557			31,716			30,800			29,907			29,317			29,388			29,370
Total adjustments	(6,217		)	32,557			31,708			30,800			21,456			13,141			(12,161		)	32,698
Funds from Operations Attributable to Common Stockholders		$46,220			$44,391			$43,853			$39,956			$40,114			$40,621			$5,755			$38,080
Acquisition costs	915			649			232			1,618			1,068			121			167			38
Write-off of deferred financing costs upon amendment of line of credit facility	—			81			—			—			—			—			—			—
Pension termination	—			—			4			—			—			—			5,260			—
Loss on extinguishment of debt	—			—			—			—			—			—			27,998			—
Impairment of internally-developed software	—			—			—			—			—			—			654			—
Severance expense	—			—			—			—			—			—			—			141
Reversal of restricted stock amortization upon director / officer resignation	—			—			—			—			(40		)	—			—			—
Revaluation of awards upon retirement	—			—			—			89			—			—			—			—
Normalized Funds from Operations Attributable to Common Stockholders		$47,135			$45,121			$44,089			$41,663			$41,142			$40,742			$39,834			$38,259
Non-real estate depreciation and amortization	1,339			1,386			1,360			1,390			1,341			1,312			1,495			1,682
Provision for bad debt, net	(13		)	(47		)	78			(39		)	9			(21		)	26			(208		)
Straight-line rent receivable, net	(1,595		)	(1,684		)	(1,907		)	(1,948		)	(1,741		)	(2,119		)	(2,306		)	(2,663		)
Stock-based compensation	1,949			1,851			1,850			1,859			1,511			1,480			1,461			1,617
Provision for deferred post-retirement benefits	—			—			—			—			—			—			—			385
Non-cash items included in cash flows from operating activities	1,680			1,506			1,381			1,262			1,120			652			676			813
2nd Generation TI	(7,918		)	(6,013		)	(5,559		)	(4,202		)	(3,081		)	(3,627		)	(2,437		)	(2,923		)
Leasing commissions paid	(1,030		)	(1,514		)	(1,587		)	(1,079		)	(1,856		)	(1,050		)	(1,251		)	(3,347		)
Capital additions	(4,283		)	(5,088		)	(5,653		)	(2,098		)	(3,918		)	(3,402		)	(6,703		)	(2,219		)
Funds Available for Distribution		$35,584			$34,012			$32,671			$35,546			$33,407			$33,315			$30,119			$30,583
Funds from Operations per Common Share—Diluted		$0.40			$0.39			$0.42			$0.39			$0.40			$0.41			$0.06			$0.38
Normalized Funds from Operations Per Common Share—Diluted		$0.41			$0.39			$0.42			$0.41			$0.41			$0.41			$0.40			$0.39
Funds Available for Distribution Per Common Share - Diluted		$0.31			$0.30			$0.31			$0.35			$0.33			$0.33			$0.30			$0.31
Weighted Average Common Shares Outstanding - Diluted	115,408			115,052			104,770			102,165			100,474			99,997			99,945			99,137

(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 (including amortization of leasing commissions), and after adjustments for unconsolidated partnerships and joint ventures.”

(2)

FFO, Normalized 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 is not necessarily indicative of cash available to fund cash needs. FFO, Normalized 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.





HEALTHCARE REALTY 9		4Q 2016 SUPPLEMENTAL INFORMATION

Debt Metrics

(dollars in thousands)



SUMMARY OF INDEBTEDNESS
	Q4 2016 Interest Expense ⁽¹⁾	Balance as of 12/31/2016 ⁽²⁾	Weighted Months to Maturity	Effective Interest Rate
Senior Notes due 2021, net of discount	$5,833	$397,147	49	5.97	%
Senior Notes due 2023, net of discount	2,392	247,296	76	3.95	%
Senior Notes due 2025, net of discount⁽²⁾	2,468	247,819	100	4.08	%
Total Senior Notes Outstanding	$10,693	$892,262	70	4.89	%
Unsecured credit facility due 2020	415	107,000	43	1.77	%
Unsecured term loan facility due 2019	674	149,491	26	1.82	%
Mortgage notes payable, net	1,519	115,617	82	5.14	%
Total Outstanding Notes and Bonds Payable	$13,301	$1,264,370	64	4.28	%
Interest cost capitalization	(430)
Unsecured credit facility fee and deferred financing costs	968
Total Quarterly Consolidated Interest Expense	$13,839



SELECTED FINANCIAL DEBT COVENANTS ⁽³⁾
	Calculation	Requirement	Trailing Twelve Months Ended 12/31/2016
Revolving Credit Facility and Term Loan
Leverage Ratio	Total Debt / Total Capital	Not greater than 60%	33.9	%
Secured Leverage Ratio	Total Secured Debt / Total Capital	Not greater than 30%	3.1	%
Unencumbered Leverage Ratio	Unsecured Debt / Unsecured Real Estate	Not greater than 60%	34.6	%
Fixed Charge Coverage Ratio	EBITDA / Fixed Charges	Not less than 1.50x	3.8x
Unsecured Coverage Ratio	Unsecured EBITDA / Unsecured Interest	Not less than 1.75x	4.2x
Construction and Development	CIP / Total Assets	Not greater than 15%	0.4	%
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%	32.9	%
Incurrence of Debt Secured by Any Lien	Secured Debt / Total Assets	Not greater than 40%	3.0	%
Maintenance of Total Unsecured Assets	Unencumbered Assets / Unsecured Debt	Not less than 150%	309.9	%
Debt Service Coverage	EBITDA / Interest Expense	Not less than 1.5x	4.2x

Other
Net Debt to adjusted EBITDA ⁽⁴⁾	Net debt (debt less cash) / adjusted EBITDA	Not required	5.0x
Net Debt to Enterprise Value ⁽⁵⁾	Net debt (debt less cash) / Enterprise Value	Not required	25.8	%


(1)	The Company adopted a new accounting standard (ASU 2015-03 - "Simplifying the Presentation of Debt Issuance Costs") on January 1, 2016 which resulted in a reclassification of deferred financing costs from Other assets to the Notes and bonds payable line item. The Company adjusted the effective interest rates to reflect this change.


(2)	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.


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


(4)	Adjusted EBITDA is based on the current quarter results, annualized. See page 19 for a reconciliation of adjusted EBITDA.


(5)	Based on the closing price of $30.06 on January 27, 2017 and 116,440,289 shares outstanding.





HEALTHCARE REALTY 10		4Q 2016 SUPPLEMENTAL INFORMATION

Investment Activity

(dollars in thousands)



ACQUISITION ACTIVITY
Location	Campus Location	Distance to Campus	Health System Affiliation	Closing	Purchase Price	Acquisition Costs	Square Feet	Aggregate Leased %		Cap Rate ⁽²⁾
Seattle, WA ⁽¹⁾	ADJ	0.24 miles	UW Medicine	3/31/2016	$38,259	$1,620	69,712	100	%	5.5	%
Seattle, WA	ON	0.00 miles	UW Medicine	4/29/2016	21,615	362	46,637	100	%	5.9	%
Los Angeles, CA	ON	0.00 miles	HCA	5/13/2016	20,000	232	63,012	80	%	5.1	%
Seattle, WA	ON	0.00 miles	UW Medicine	9/12/2016	53,065	618	87,462	100	%	5.5	%
Washington, DC	ON	0.00 miles	Inova Health System	9/26/2016	45,225	31	103,783	100	%	5.6	%
Baltimore, MD ⁽³⁾	ON	0.00 miles	University of Maryland	10/11/2016	36,275	495	113,631	92	%	5.7	%
Seattle, WA	ON	0.00 miles	Providence Health	10/17/2016	9,750	207	29,753	96	%	5.6	%
Seattle, WA	ON	0.00 miles	Providence Health	12/21/2016	5,150	91	20,740	65	%	3.4	%
St. Paul, MN	ON	0.00 miles	HealthEast Care System	12/21/2016	12,600	122	48,281	94	%	7.0	%
2016 Activity					$241,939	$3,778	583,011	94	%	5.6	%



HISTORICAL INVESTMENT ACTIVITY
	Acquisitions⁽⁴⁾			Mortgage Funding			Construction Mortgage Funding			Re/Development Funding			Total Investments			Dispositions
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	187,216			—			—			27,859			215,075			157,975
2016	241,939			—			—			45,343			287,282			94,683
Total	$	826,139		$	1,900		$	138,272		$	83,194		$	1,049,505		$	480,792
% of Total	78.7		%	0.2		%	13.2		%	7.9		%	100		%



RE/DEVELOPMENT ACTIVITY
Location	Type ⁽⁵⁾	Campus Location	Square Feet	Budget	Amount Funded Q4 2016	Total Amount Funded Through 12/31/2016	Estimated Remaining Fundings	Aggregate Leased %		Estimated Completion Date
Construction activity
Nashville, TN ⁽⁶⁾	Redev	On	294,000	$56,620	$4,837	$50,612	$6,008	83	%	Q1 2017
Denver, CO	Dev	On	98,000	26,500	4,267	11,655	14,845	35	%	Q2 2017
Total construction activity			392,000	$83,120	$9,104	$62,267	$20,853	71	%

Pre-construction activity ⁽⁷⁾
Seattle, WA	Dev	On	151,000	64,120	463	463	63,657	44	%	Q4 2018

Total Re/development activity			543,000	$147,240	$9,567	$62,730	$84,510	63	%


(1)	Acquisition costs in Q1 2016 include seller credits related to a loan prepayment, brokerage commission and excise taxes.


(2)	Represents the forecasted first year NOI / purchase price plus acquisition costs and expected capital additions.


(3)	Includes two properties.


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


(5)	Redev - Redevelopment; Dev - Development


(6)	Includes $15.2 million for the addition of 70,000 rentable square feet, $21.3 million for a 907-space parking garage and associated land and $20.1 million for existing building upgrades and tenant improvement allowances associated with newly executed leases.


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





HEALTHCARE REALTY 11		4Q 2016 SUPPLEMENTAL INFORMATION

Portfolio by Market

(dollars in thousands)



BY MARKET
		SQUARE FEET
		MOB/OUTPATIENT (90.8%)				INPATIENT (5.6%)				OTHER (3.6%)
	Investment⁽¹⁾	Multi-tenant		Single-tenant Net Lease		Rehab		Surgical		Other		Total		% of Total
Dallas - Fort Worth, TX	$484,992	2,149,939				42,627		156,245				2,348,811		16.1	%
Seattle - Bellevue, WA	405,273	890,222		67,510								957,732		6.6	%
Charlotte, NC	168,032	820,457										820,457		5.6	%
Nashville, TN	137,619	766,523										766,523		5.3	%
Los Angeles, CA	162,914	551,383				63,000						614,383		4.2	%
Houston, TX	128,749	591,027										591,027		4.1	%
Richmond, VA	145,034	548,801										548,801		3.8	%
Des Moines, IA	133,845	233,413		146,542						152,655		532,610		3.7	%
San Antonio, TX	104,268	483,811				39,786						523,597		3.6	%
Memphis, TN	91,897	515,876										515,876		3.5	%
Roanoke, VA	49,039			334,454						126,427		460,881		3.2	%
Austin, TX	131,854	354,481				66,095				12,880		433,456		3.0	%
Indianapolis, IN	77,568	382,695										382,695		2.6	%
Denver, CO	110,780	346,335				34,068						380,403		2.6	%
Honolulu, HI	139,695	298,427										298,427		2.0	%
Washington, DC	75,222	286,619										286,619		2.0	%
Oklahoma City, OK	109,089	68,860		200,000								268,860		1.8	%
Chicago, IL	57,913	243,491										243,491		1.7	%
Miami, FL	54,081	241,980										241,980		1.7	%
Colorado Springs, CO	52,044	241,224										241,224		1.7	%
Detroit, MI	25,540	199,749								11,308		211,057		1.4	%
San Francisco, CA	89,029	210,621										210,621		1.4	%
South Bend, IN	43,991	205,573										205,573		1.4	%
Springfield, MO	111,293							186,000				186,000		1.3	%
Phoenix, AZ	48,445	179,963										179,963		1.2	%
Other (26 markets)	452,654	1,396,989		287,874		229,854				214,864		2,129,581		14.5	%
Total	$3,590,860	12,208,459		1,036,380		475,430		342,245		518,134		14,580,648		100.0	%
Number of Properties		169		13		8		2		10		202
Percent of Square Feet		83.7	%	7.1	%	3.3	%	2.3	%	3.6	%	100.0	%
Investment ⁽¹⁾		$2,916,780		$249,088		$135,326		$208,725		$80,941		$3,590,860
% of Investment		81.2	%	6.9	%	3.8	%	5.8	%	2.3	%	100.0	%



MSA BY RANK (% of total SF)
Rank	MOB / Outpatient		Total
Top 25	60	%	56	%
Top 50	84	%	79	%
Top 75	87	%	82	%
Top 100	92	%	88	%


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





HEALTHCARE REALTY 12		4Q 2016 SUPPLEMENTAL INFORMATION

Square Feet by Provider ⁽¹⁾



MOB SQUARE FEET
	System Rank ⁽³⁾	Credit Rating	ASSOCIATED (93.5%) ⁽²⁾								Total MOB SF	% of Total MOB SF
Top Health Systems	System Rank ⁽³⁾	Credit Rating	On		Adjacent ⁽⁴⁾		Anchored ⁽⁵⁾		Off		Total MOB SF	% of Total MOB SF
Baylor Scott & White Health	19	AA-/Aa3	1,834,256		129,879		163,188		—		2,127,323	16.1	%
Ascension Health	3	AA+/Aa2	1,017,085		148,356		30,096		—		1,195,537	9.0	%
Catholic Health Initiatives	7	A-/--	769,471		132,617		95,486		—		997,574	7.5	%
Carolinas HealthCare System	27	--/Aa3	353,537		98,066		313,513		—		765,116	5.8	%
HCA	2	BB/B1	389,931		177,155		157,388		—		724,474	5.5	%
Tenet Healthcare Corporation	6	B/B2	570,264		67,790		—		—		638,054	4.8	%
Bon Secours Health System	49	A/A2	548,801		—		—		—		548,801	4.1	%
Baptist Memorial Health Care	105	A-/--	424,306		—		39,345		—		463,651	3.5	%
Indiana University Health	22	AA-/Aa3	280,129		102,566		—		—		382,695	2.9	%
University of Colorado Health	73	AA-/Aa3	150,291		161,099		33,850		—		345,240	2.6	%
Providence Health & Services	9	AA-/Aa3	176,854		129,181		—		—		306,035	2.3	%
Trinity Health	8	AA-/Aa3	205,573		73,331		—		—		278,904	2.1	%
University of Washington	90	AA+/Aaa	194,536		69,712		—		—		264,248	2.0	%
Medstar Health	31	A-/A2	241,739		—		—		—		241,739	1.8	%
Advocate Health Care	26	AA/Aa2	142,955		95,436		—		—		238,391	1.8	%
Memorial Hermann	43	A+/A1	—		206,090		—		—		206,090	1.6	%
Community Health	4	B/B2	201,574		—		—		—		201,574	1.5	%
Mercy (St. Louis)	30	AA-/Aa3	—		—		200,000		—		200,000	1.5	%
Overlake Health System	343	A/A2	191,051		—		—		—		191,051	1.4	%
Other credit rated			1,052,529		560,499		90,607		—		1,703,635	13.0	%
Subtotal - credit rated ⁽⁶⁾			8,744,882		2,151,777		1,123,473		—		12,020,132	90.8	%
Non-credit rated			177,945		192,418		—		854,344		1,224,707	9.2	%
Total			8,922,827		2,344,195		1,123,473		854,344		13,244,839	100.0	%
% of Total			67.3	%	17.7	%	8.5	%	6.5	%



HEALTH SYSTEM ⁽²⁾⁽³⁾ BY RANK (% of total SF)
Rank	MOB / Outpatient		Total
Top 25	54	%	50	%
Top 50	71	%	67	%
Top 75	77	%	72	%
Top 100	80	%	76	%



LEASED SQUARE FEET
					LEASED SQUARE FEET
Top Health Systems	System Rank⁽³⁾	Credit Rating	# of Buildings	# of Leases	MOB	Inpatient / Other	Total	% of Total Leased SF		% of Total Revenue
Baylor Scott & White Health	19	AA-/Aa3	20	166	1,015,846	156,245	1,172,091	9.2	%	9.8	%
Mercy (St. Louis)	30	AA-/Aa3	2	2	200,000	186,000	386,000	3.0	%	4.4	%
Catholic Health Initiatives	7	A-/--	14	80	541,924	—	541,924	4.2	%	4.4	%
Carolinas HealthCare System	27	--/Aa3	16	78	591,259	—	591,259	4.6	%	4.3	%
Baptist Memorial Health Care	105	A-/--	6	16	111,002	—	111,002	0.9	%	2.3	%
Bon Secours Health System	49	A/A2	7	63	269,315	—	269,315	2.1	%	2.2	%
HCA	2	BB/B1	12	14	404,597	—	404,597	3.2	%	2.1	%
Ascension Health	3	AA+/Aa2	16	49	302,267	—	302,267	2.4	%	2.0	%
Indiana University Health	22	AA-/Aa3	3	38	255,347	—	255,347	2.0	%	1.9	%
Tenet Healthcare Corporation	6	B/B2	10	36	124,227	63,000	187,227	1.5	%	1.6	%
Total								33.1	%	35.0	%


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


(2)	Includes total square feet of buildings located on-campus, adjacent and off-campus/anchored by healthcare systems.


(3)	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.


(4)	The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.


(5)	Includes buildings where health systems lease 40% or more of the property.


(6)	Based on square footage, 90.8% of HR's MOB portfolio is associated with a credit-rated healthcare provider and 78.7% is associated with an investment-grade rated healthcare provider.



HEALTHCARE REALTY 13		4Q 2016 SUPPLEMENTAL INFORMATION

Square Feet by Proximity ⁽¹⁾⁽²⁾



MEDICAL OFFICE BUILDINGS BY LOCATION
	2016								2015
	Q4		Q3		Q2		Q1		Q4		Q3
On campus	67	%	67	%	66	%	66	%	67	%	67	%
Adjacent to campus ⁽³⁾	18	%	18	%	18	%	18	%	13	%	13	%
Total on/adjacent	85	%	85	%	84	%	84	%	80	%	80	%
Off campus - anchored by hospital system ⁽⁴⁾	9	%	8	%	9	%	9	%	9	%	9	%
Off campus	6	%	7	%	7	%	7	%	11	%	11	%
	100	%	100	%	100	%	100	%	100	%	100	%



MEDICAL OFFICE BUILDINGS BY DISTANCE TO HOSPITAL CAMPUS
									Ground Lease Properties
Greater than	Less than or equal to	Number of Buildings	Square Feet	% of Total		Cumulative %		Campus Proximity	Square Feet	% of Total
	0.00	113	8,922,827	67	%	67	%	On campus	6,977,999	90.4	%
0.00	250 yards	18	1,222,987	9	%	76	%	Adjacent ⁽³⁾	80,525	1.0	%
250 yards	0.25 miles	19	1,121,208	9	%	85	%	Adjacent ⁽³⁾	120,036	1.6	%
0.25 miles	0.50	2	130,025	1	%	86	%	Off campus	-	—	%
0.50	1.00	3	304,993	2	%	88	%		-	—	%
1.00	2.00	7	590,339	4	%	92	%		319,446	4.1	%
2.00	5.00	10	476,633	4	%	96	%		13,818	0.2	%
5.00	10.00	6	332,359	3	%	99	%		205,631	2.7	%
10.00		4	143,468	1	%	100	%		-	—	%
Total		182	13,244,839	100	%				7,717,455	100.0	%


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


(2)	Hospitals include acute care hospitals with inpatient beds. The Company does not consider inpatient rehab hospitals (IRFs), skilled nursing facilities (SNFs) or long-term acute care hospitals (LTACHs) to be hospital campuses for distance calculations.


(3)	Beginning in Q1 2016, the Company adopted a definition of an adjacent property as being no more than 0.25 miles from a hospital campus.


(4)	Includes total square feet of buildings located on-campus, adjacent and off-campus/anchored by healthcare systems.





HEALTHCARE REALTY 14		4Q 2016 SUPPLEMENTAL INFORMATION

Lease Maturity, Size and Building Square Feet ⁽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
2017	599	1,990,989	18.6	%	5	334,454	16.1	%	604	2,325,443	18.2	%
2018	387	1,400,606	13.1	%	—	—	—	%	387	1,400,606	11.0	%
2019	454	1,972,965	18.4	%	9	371,805	17.9	%	463	2,344,770	18.3	%
2020	288	1,290,768	12.1	%	1	83,318	4.0	%	289	1,374,086	10.7	%
2021	278	1,089,943	10.2	%	—	—	—	%	278	1,089,943	8.5	%
2022	105	590,715	5.5	%	2	137,016	6.6	%	107	727,731	5.7	%
2023	128	738,186	6.9	%	—	—	—	%	128	738,186	5.8	%
2024	105	663,874	6.2	%	—	—	—	%	105	663,874	5.2	%
2025	58	460,558	4.3	%	2	91,561	4.4	%	60	552,119	4.3	%
2026	55	198,128	1.8	%	—	—	—	%	55	198,128	1.6	%
Thereafter	49	311,534	2.9	%	11	1,062,073	51.0	%	60	1,373,607	10.7	%



BY LEASE SIZE
	NUMBER OF LEASES
Square Footage	Multi-Tenant Properties ⁽²⁾	Single-Tenant Net Lease Properties
0 - 2,500	1,287	—
2,501 - 5,000	647	—
5,001 - 7,500	214	1
7,501 - 10,000	116	—
10,001 +	242	29
Total Leases	2,506	30



BY BUILDING SQUARE FEET
Size Range by Square Feet	% of Total		Total Square Footage	Average Square Feet	Number of Properties
>100,000	43.8	%	6,388,000	145,182	44
<100,000 and >75,000	23.5	%	3,431,868	85,797	40
<75,000 and >50,000	17.3	%	2,517,737	62,943	40
<50,000	15.4	%	2,243,043	28,757	78
Total	100.0	%	14,580,648	72,181	202


(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 4,273 square feet.





HEALTHCARE REALTY 15		4Q 2016 SUPPLEMENTAL INFORMATION

Historical Occupancy ⁽¹⁾

^{(dollars in thousands)}




							2016		2015
	Q4		Q3		Q2		Q1		Q4
Same store properties
Number of properties	169		170		169		166		166
Total building square feet	12,771,046		12,573,497		12,537,337		12,251,241		12,113,688
% occupied	89.3	%	90.0	%	90.0	%	90.0	%	89.8	%

Acquisitions
Number of properties	18		15		15		16		16
Total building square feet	1,087,260		1,003,876		921,069		1,094,760		1,177,703
% occupied	94.4	%	95.0	%	95.0	%	93.3	%	91.4	%

Development Completions ⁽²⁾
Number of properties	1		1		1		NA		NA
Total building square feet	12,880		12,880		12,958		NA		NA
% occupied	100	%	100.0	%	15.2	%	NA		NA

Reposition ⁽³⁾
Number of properties	14		16		17		17		16
Total building square feet	709,462		951,568		995,472		995,472		980,370
% occupied	52.8	%	59.3	%	57.0	%	56.5	%	56.7	%

Total
Number of properties	202		202		202		199		198
Total building square feet	14,580,648		14,541,821		14,466,836		14,341,473		14,271,761
% occupied	87.9	%	88.4	%	88.0	%	87.9	%	87.6	%


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


(2)	Development completions consist of one property that was completed in April 2016 and is currently 100% leased.


(3)	Reposition includes properties that meet any of the Company-defined criteria: properties having less than 60% occupancy that is expected to last at least two quarters; properties that experience a loss of occupancy over 30% in a single quarter; properties with negative net operating income that is expected to last at least two quarters; or condemnation.





HEALTHCARE REALTY 16		4Q 2016 SUPPLEMENTAL INFORMATION

Occupancy Reconciliation

^{(dollars in thousands)}



SEQUENTIAL
	PORTFOLIO						SAME STORE
	Occupied Square Feet		Total Square Feet		Occupancy		Occupied Square Feet		Total Square Feet		Occupancy
September 30, 2016	12,852,759		14,541,821		88.4	%	11,322,274		12,573,497		90.0	%
Acquisitions	192,029		212,405		90.4	%	—		—		—	%
Re/Development Completions ⁽¹⁾	—		49,089		—	%	—		49,089		—
Reclassifications:
Acquisitions	—		—		—	%	125,181		129,021		97.0	%
Development completions	—		—		—	%	—		—		—	%
Reposition	—		—		—	%	185,339		242,106		76.6	%
Dispositions ⁽²⁾	(222,667	)	(222,667	)	100.0	%	(222,667	)	(222,667	)	100.0	%
New leases/expansions	105,234		—		—	%	75,416		—		—
Move-outs/contractions	(104,957	)	—		—	%	(76,755	)	—		—
December 31, 2016	12,822,398		14,580,648		87.9	%	11,408,788		12,771,046		89.3	%



YEAR-OVER-YEAR
	PORTFOLIO						SAME STORE
	Occupied Square Feet		Total Square Feet		Occupancy		Occupied Square Feet		Total Square Feet		Occupancy
December 31, 2015	12,506,824		14,271,761		87.6	%	10,873,886		12,113,688		89.8	%
Acquisitions	549,836		585,767		93.9	%	—		—		—	%
Re/Development Completions ⁽¹⁾	—		61,969		—	%	—		49,089		—
Reclassifications:
Acquisitions	—		—		—	%	673,082		720,114		93.5	%
Development completions	—		—		—	%	—		—		—	%
Reposition	—		—		—	%	164,407		227,004		72.4	%
Dispositions ⁽²⁾	(335,938	)	(338,849	)	99.1	%	(333,877	)	(338,849	)	98.5	%
New leases/expansions	573,907		—		—	%	407,462		—		—
Move-outs/contractions	(472,231	)	—		—	%	(376,172	)	—		—
December 31, 2016	12,822,398		14,580,648		87.9	%	11,408,788		12,771,046		89.3	%


(1)	Includes the completion of 70,000 square feet vertical expansion that was completed in the fourth quarter of 2016. The net increase to total square feet was 49,089 due to a portion of the original building that was demolished to begin construction of the expansion.


(2)	Includes properties reclassified as held for sale.



HEALTHCARE REALTY 17		4Q 2016 SUPPLEMENTAL INFORMATION

Same Store Properties

(dollars in thousands)



QUARTERLY ⁽¹⁾
	Q4 2016		Q3 2016		Q2 2016		Q1 2016		Q4 2015		Q3 2015		Q2 2015		Q1 2015
Multi-tenant
Revenues	$75,794		$76,565		$75,453		$74,392		$74,070		$72,810		$71,900		$71,356
Expenses	32,368		32,732		31,839		31,360		33,387		32,018		30,727		31,268
NOI	$43,426		$43,833		$43,614		$43,032		$40,683		$40,792		$41,173		$40,088
Occupancy	87.3	%	87.3	%	87.0	%	87.3	%	87.0	%	86.4	%	86.7	%	86.3	%
Number of properties	139		139		139		139		139		139		139		139

Single-tenant net lease
Revenues	$14,842		$15,118		$15,116		$15,198		$15,191		$15,132		$15,033		$15,069
Expenses	451		411		383		447		479		417		395		393
NOI	$14,391		$14,707		$14,733		$14,751		$14,712		$14,715		$14,638		$14,676
Occupancy	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Number of properties	30		30		30		30		30		30		30		30

Total
Revenues	$90,636		$91,683		$90,569		$89,590		$89,261		$87,942		$86,933		$86,425
Expenses	32,819		33,143		32,222		31,807		33,866		32,435		31,122		31,661
Same Store NOI	$57,817		$58,540		$58,347		$57,783		$55,395		$55,507		$55,811		$54,764
Occupancy	89.3	%	89.3	%	89.1	%	89.3	%	89.1	%	88.6	%	88.9	%	88.5	%
Number of properties	169		169		169		169		169		169		169		169
% NOI year-over-year growth	4.4	%	5.5	%	4.5	%	5.5	%



TRAILING TWELVE MONTHS ⁽¹⁾
	Twelve Months Ended December 31,
	2016		2015		% Change
Multi-tenant
Revenues	$302,204		$290,136		4.2	%
Expenses	$128,299		$127,400		0.7	%
NOI	$173,905		$162,736		6.9	%
Revenue per average occupied square foot	$32.46		$31.35		3.5	%
Average occupancy	87.1	%	86.6	%
Number of properties	139		139

Single-tenant net lease
Revenues	$60,274		$60,425		(0.2	%)
Expenses	$1,692		$1,684		0.5	%
NOI	$58,582		$58,741		(0.3	%)
Revenue per average occupied square foot	$28.97		$29.15		(0.6	%)
Average occupancy	100.0	%	99.6	%
Number of properties	30		30

Total
Revenues	$362,478		$350,561		3.4	%
Expenses	$129,991		$129,084		0.7	%
Same Store NOI	$232,487		$221,477		5.0	%
Revenue per average occupied square foot	$31.82		$30.95		2.8	%
Average occupancy	89.2	%	88.7	%
Number of Properties	169		169


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





HEALTHCARE REALTY 18		4Q 2016 SUPPLEMENTAL INFORMATION

Reconciliation of NOI & EBITDA

(dollars in thousands)



QUARTERLY NOI
	Q4 2016			Q3 2016			Q2 2016			Q1 2016			Q4 2015			Q3 2015			Q2 2015			Q1 2015
Rental income^(a)		$104,736			$102,534			$101,472			$98,740			$97,466			$95,383			$95,450			$95,034
Property lease guaranty revenue ^(b)	354			817			885			1,002			851			999			937			1,102
Exclude straight-line rent revenue	(1,754		)	(1,223		)	(2,091		)	(2,132		)	(1,929		)	(2,309		)	(2,475		)	(2,832		)
Revenue	103,336			102,128			100,266			97,610			96,388			94,073			93,912			93,304
Property operating expense	(37,285		)	(37,504		)	(36,263		)	(35,406		)	(36,758		)	(35,247		)	(33,927		)	(34,263		)
NOI		$66,051			$64,624			$64,003			$62,204			$59,630			$58,826			$59,985			$59,041
Less:
Acquisitions / Development completions	(6,210		)	(3,948		)	(3,542		)	(2,374		)	(1,991		)	(994		)	(554		)	(550		)
Reposition	(484		)	(201		)	(144		)	(150		)	(328		)	(202		)	(160		)	(187		)
Dispositions / other	(1,540		)	(1,935		)	(1,970		)	(1,897		)	(1,916		)	(2,123		)	(3,460		)	(3,540		)
Same store NOI		$57,817			$58,540			$58,347			$57,783			$55,395			$55,507			$55,811			$54,764

(a) Rental income reconciliation:
Property operating		$87,362			$85,264			$83,283			$80,501			$79,466			$76,960			$75,470			$74,654
Single-tenant net lease	15,620			16,047			16,098			16,107			16,071			16,114			17,505			17,548
Straight-line rent	1,754			1,223			2,091			2,132			1,929			2,309			2,475			2,832
Total consolidated rental income		$104,736			$102,534			$101,472			$98,740			$97,466			$95,383			$95,450			$95,034

(b) Other operating income reconciliation:
Property lease guaranty revenue		$354			$817			$885			$1,002			$851			$999			$937			$1,102
Interest income	107			129			115			123			123			144			156			157
Other	112			179			170			156			142			170			134			132
Total consolidated other operating income		$573			$1,125			$1,170			$1,281			$1,116			$1,313			$1,227			$1,391



TRAILING TWELVE MONTHS NOI
	Twelve Months Ended December 31,
	2016		2015		% Change
Same store NOI		$232,487		$221,477	5.0	%
Reposition	979		877		11.6	%
Subtotal		$233,466		$222,354	5.0	%
Acquisitions / Development completions	16,074		4,089		293.1	%
Dispositions / other	7,342		11,039		(33.5	%)
NOI		$256,882		$237,482	8.2	%



EBITDA
	Q4 2016			Q3 2016		Q2 2016			Q1 2016		Trailing Twelve Months
Net income		$52,437			$11,834		$12,145			$9,156		$85,572
Interest expense	13,839			13,759		14,815			14,938		57,351
Depreciation and amortization	34,022			31,984		31,290			30,393		127,689
Acquisition costs	915			649		232			1,618		3,414
Gain on sales of real estate properties	(41,037		)	—		(8		)	—		(41,045		)
Impairments on real estate assets	121			—		—			—		121
EBITDA		$60,297			$58,226		$58,474			$56,105		$233,102
Timing impact of acquisitions and dispositions ⁽¹⁾	(901		)	1,284		190			547		1,120
Stock based compensation	1,949			1,851		1,850			1,859		7,509
Adjusted EBITDA		$61,345			$61,361		$60,514			$58,511		$241,731


(1)	Adjusted to reflect quarterly EBITDA from properties acquired or disposed in the quarter.





HEALTHCARE REALTY 19		4Q 2016 SUPPLEMENTAL INFORMATION

Same Store Leasing Statistics ⁽¹⁾




							2016								2015
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Contractual rent increases occurring in the quarter
Multi-tenant properties	2.9	%	2.8	%	2.9	%	2.9	%	3.0	%	2.9	%	3.1	%	3.0	%
Single-tenant net lease properties	2.5	%	1.7	%	2.2	%	1.0	%	1.6	%	2.6	%	2.2	%	0.7	%
Total	2.9	%	2.5	%	2.7	%	2.5	%	2.8	%	2.8	%	2.9	%	2.6	%

Multi-tenant renewals
Cash leasing spreads	3.9	%	4.3	%	6.3	%	7.2	%	3.7	%	2.1	%	5.0	%	3.6	%
Tenant retention rate	88.5	%	90.1	%	81.2	%	87.2	%	91.2	%	82.4	%	87.3	%	83.1	%

Multi-tenant 2nd Generation TI Commitments
Renewals
Square feet	215,742		313,925		227,840		335,216		219,791		368,645		166,433		246,126
$ / square feet / lease year	$1.88		$1.12		$1.65		$2.21		$1.08		$1.07		$1.85		$0.84
% of annual rent	5.7	%	3.5	%	5.7	%	6.8	%	3.4	%	3.5	%	6.2	%	3.1	%

New Leases
Square feet	52,897		63,729		56,927		44,252		63,838		56,287		95,952		48,999
$ / square feet / lease year	$4.63		$4.70		$3.62		$5.81		$4.23		$3.81		$3.08		$3.29
% of annual rent	13.7	%	16.6	%	12.3	%	19.2	%	14.4	%	13.3	%	10.7	%	11.4	%




	As of 12/31/2016
	Multi-tenant		Single-tenant Net Lease
Contractual Rental Rate Increases by Type
Annual increase
CPI	2.0	%	56.3	%
Fixed	84.2	%	26.4	%
Non-annual increase
CPI	2.1	%	5.8	%
Fixed	3.9	%	11.5	%
No increase
Term < 1 year	4.7	%	—	%
Term > 1 year	3.1	%	—	%

Tenant Type
Hospital	45.0	%	80.9	%
Physician and other	55.0	%	19.1	%

Lease Structure
Gross	15.9	%	—	%
Modified gross	28.6	%	—	%
Net	55.5	%	100.0	%

Ownership Type
Ground lease	64.7	%	8.7	%
Fee simple	35.3	%	91.3	%


(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.





HEALTHCARE REALTY 20		4Q 2016 SUPPLEMENTAL INFORMATION

Components of Net Asset Value

(dollars in thousands)




Asset Type	Q4 2016 Same Store NOI⁽¹⁾		Q4 2016 Acquisitions/Development Completions NOI ⁽²⁾		Q4 2016 Reposition NOI⁽³⁾		Timing Adjustments⁽⁴⁾		Q4 2016 Adjusted NOI		Annualized Adjusted NOI		% of Adjusted NOI
MOB / Outpatient		$48,314		$6,320		$559		$1,475		$56,668		$226,672	85.6	%
Inpatient rehab	3,385		—		—		—		3,385		13,540		5.1	%
Inpatient surgical	4,489		—		—		—		4,489		17,956		6.8	%
Other	1,629		—		13		—		1,642		6,568		2.5	%
Total NOI		$57,817		$6,320		$572		$1,475		$66,184		$264,736	100.0	%

TOTAL SHARES OUTSTANDING (AS OF JANUARY 27, 2017) 116,440,289



DEVELOPMENT PROPERTIES
	Land held for development		$20,123
	Construction in progress	11,655
	Subtotal		$31,778

OTHER ASSETS
	Assets held for sale⁽⁵⁾		$6,080
	Reposition properties (net book value)⁽³⁾	4,119
	Cash and other assets⁽⁶⁾	138,569
	Subtotal		$148,768


DEBT
	Unsecured credit facility		$107,000
	Unsecured term loan	150,000
	Senior notes	900,000
	Mortgage notes payable	114,934
	Other liabilities⁽⁷⁾	88,037
	Subtotal		$1,359,971


(1)	See Same Store Properties schedule on page 18 for details on same store NOI.


(2)	Adjusted to reflect quarterly NOI from properties acquired or developments completed during the full eight quarter period that are not included in same store NOI.

(3)

Reposition properties includes 14 properties which comprise 709,462 square feet. The NOI table above includes 10 of these properties comprising 582,820 square feet that have generated positive NOI totaling approximately $0.6 million. The remaining 4 properties, comprising 126,642 square feet, have generated negative NOI of approximately $0.1 million and are reflected at a net book value of $4.1 million in the table above.


(4)	Timing adjustments related to current quarter acquisitions and the difference between leased and occupied square feet on previous re/developments.


(5)	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.


(6)	Includes cash of $5.4 million, restricted cash of $49.1 million, and other assets of $84.1 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 $65.0 million and above-market intangible assets (net) of $19.1 million.


(7)	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 $75.9 million, security deposits of $6.4 million, market-rate lease intangibles of $3.7 million, and deferred operating expense reimbursements of $2.0 million. Also, excludes deferred revenue of $32.4 million.





HEALTHCARE REALTY 21		4Q 2016 SUPPLEMENTAL INFORMATION

Components of Expected 2017 FFO

(dollars in thousands, except per square foot data)



SAME STORE QUARTERLY RANGE OF EXPECTATIONS
	Low			High
Occupancy
Multi-Tenant	87.5		%	89.0		%
Single-Tenant Net Lease	95.0		%	100.0		%

TTM Revenue per Occupied Square Foot ⁽¹⁾
Multi-Tenant		$31.00			$33.00
Single-Tenant Net Lease		$28.50			$29.50

Multi-Tenant TTM NOI Margin⁽¹⁾	57.0		%	59.0		%

Multi-Tenant Contractual Rent Increases by Type (% of SF)
Annual Increase	80.0		%	90.0		%
Non-annual Increase	5.0		%	7.0		%
No Increase (term < 1 year)	4.0		%	6.0		%
No Increase (term > 1 year)	2.0		%	4.0		%

Contractual Increases Occurring in the Quarter
Multi-Tenant	2.8		%	3.0		%
Single-Tenant Net Lease	1.0		%	3.0		%

Multi-Tenant Cash Leasing Spreads	3.0		%	6.0		%

Multi-Tenant Lease Retention Rate	75.0		%	90.0		%

TTM NOI Growth ⁽¹⁾
Multi-Tenant ⁽²⁾	4.5		%	6.0		%
Single-Tenant Net Lease	(1.0		%)	0.5		%

ANNUAL RANGE OF EXPECTATIONS
	Low			High

Normalized G&A ⁽³⁾	$33,000			$35,000

Funding Activity
Acquisitions	$175,000			$225,000
Dispositions	(75,000)			(125,000)
Re/Development	35,000			55,000
1st Generation TI and Planned Capital Expenditures for Acquisitions	9,000			12,000
2nd Generation Tenant Improvements	20,000			25,000
Leasing Commissions	4,000			7,000
Capital Expenditures	11,000			22,000

Cash Yield
Acquisitions	5.5		%	6.0		%
Dispositions	7.5		%	8.5		%
Re/development (stabilized)	6.8		%	8.0		%

Leverage (Debt/Cap)	32.0		%	35.0		%
Net Debt to Adjusted EBITDA	5.0x			5.5x


(1)	TTM = Trailing Twelve Months


(2)	Long-term same store NOI Growth, excluding changes in occupancy, is expected to range between 2% and 4%.


(3)	Normalized G&A excludes acquisition expenses and includes amortization of non-cash share-based compensation awards of $8.5 million inclusive of $4.3 million related to 2016 performance and transition awards.





HEALTHCARE REALTY 22		4Q 2016 SUPPLEMENTAL INFORMATION

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