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	exhibit991firstquarter2017.htm
8-K - 8-K - HEALTHCARE REALTY TRUST INC	hr-2017331xearnings8xk.htm

1Q | 2017

Supplemental Information

FURNISHED AS OF MAY 3, 2017 (UNAUDITED)

Table of Contents




3			Highlights

4			Corporate Information

6			Balance Sheet Information

7			Statements of Income Information

8			FFO, Normalized FFO & FAD

9			Debt Metrics

10			Investment Activity

11			Portfolio by Market

12			Square Feet by Health System

13			Square Feet by Proximity

14			Lease Maturity, Size and Building Square Feet

15			Occupancy Information

17			Same Store Properties

18			Reconciliation of NOI & EBITDA

19			Same Store Leasing Statistics

20			Components of Net Asset Value

21			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		1Q 2017 SUPPLEMENTAL INFORMATION

Highlights

Salient quarterly highlights include:


•	Normalized FFO for the first quarter grew 7.8% year-over-year to $44.9 million.


•	For the trailing twelve months ended March 31, 2017, same store revenue grew 3.3%, operating expenses increased 1.4%, and same store NOI grew 4.4%:


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


◦	Average same store occupancy increased to 89.1% from 88.6%


•	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 3.1%.


◦	Cash leasing spreads were 4.5% on 358,000 square feet renewed:


•	15% (<0% spread)


•	7% (0-3%)


•	37% (3-4%)


•	41% (>4%)


◦	Tenant retention was 79.2%.


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


•	Leasing activity in the first quarter totaled 560,000 square feet related to 154 leases:


◦	381,000 square feet of renewals


◦	179,000 square feet of new and expansion leases


•	The Company purchased for $13.5 million a 35,000 square foot, 100% leased medical office building on HealthEast Care System’s St. John’s Hospital campus in St. Paul, Minnesota.


•	Dispositions totaled $82.0 million for the quarter, including three inpatient rehabilitation facilities for $69.5 million.


•	A dividend of $0.30 per common share was declared, which is equal to 76.9% of normalized FFO per share.

Other items of note:


•	The Company sold three inpatient rehabilitation facilities for $68.0 million in December 2016 at a cap rate of 7.6%. FFO dilution of $0.01 per share in the first quarter of 2017 will continue until the proceeds are reinvested. FFO dilution is estimated to be approximately $0.01 per share per year once the proceeds are reinvested.


•	Three additional inpatient rehabilitation facilities were sold for $69.5 million on March 31, 2017 at a cap rate of 7.3%. FFO dilution is expected to be approximately $0.01 per share per quarter beginning in the second quarter of 2017. Once the proceeds are reinvested, FFO dilution is estimated to be approximately $0.01 per share per year.

•

In January, a lease for a 79,000 square foot, long-term acute care hospital in Pittsburgh, Pennsylvania was terminated. As a result, the Company realized a decrease in rental income of approximately $0.5 million in the first quarter. The Company reclassified the property, its only long-term acute care hospital, to assets held for sale. Additional information is available on page 25 of the Company's 2016 Form 10-K.


•	General and administrative expenses increased $0.7 million in the first quarter related to the non-cash amortization of non-vested stock awards granted in December 2016. In addition, there were first quarter-only administrative costs of $0.4 million. Additional information is available on page 27 of the Company's 2016 Form 10-K.

•

In the multi-tenant portfolio, four of the Company's property operating agreements expired during the twelve months ended March 31, 2017; one in April 2016, two in September 2016 and one in January 2017. The Company recognized $0.2 million of rental lease guaranty income in the first quarter of 2017 compared to $1.0 million in the first quarter of 2016 and $0.4 million in the fourth quarter of 2016. Additional information is available on pages 25 and 26 of the Company's 2016 Form 10-K and pages 15 and 20 of the Company's first quarter 2017 Form 10-Q.



HEALTHCARE REALTY 3		1Q 2017 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 March 31, 2017, the Company had gross investments of approximately $3.5 billion in 195 real estate properties in 27 states totaling approximately 14.3 million square feet. The Company provided leasing and property management services to approximately 10.8 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.
Todd Meredith		President and Chief Executive Officer, Healthcare Realty Trust Incorporated
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





HEALTHCARE REALTY 4		1Q 2017 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 May 2, 2017, the Company declared a dividend of $0.30 per share, payable on May 31, 2017, to stockholders of record on May 16, 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 5		1Q 2017 SUPPLEMENTAL INFORMATION

Balance Sheet Information ⁽¹⁾

(dollars in thousands, except per share data)



ASSETS

	2017												2016
Real estate properties:	Q1			Q4			Q3			Q2			Q1
Land		$193,101			$199,672			$206,647			$208,386			$201,157
Buildings, improvements and lease intangibles	3,327,529			3,386,480			3,322,293			3,235,744			3,181,748
Personal property	9,998			10,291			10,124			10,032			9,881
Construction in progress	16,114			11,655			45,734			35,174			31,669
Land held for development	20,123			20,123			17,438			17,438			17,434
Total real estate properties	3,566,865			3,628,221			3,602,236			3,506,774			3,441,889
Less accumulated depreciation and amortization	(841,296		)	(840,839		)	(835,276		)	(819,744		)	(790,819		)
Total real estate properties, net	2,725,569			2,787,382			2,766,960			2,687,030			2,651,070
Cash and cash equivalents	1,478			5,409			12,649			9,026			2,174
Restricted cash	104,904			49,098			—			—			—
Assets held for sale and discontinued operations, net	15,111			3,092			14,732			710			706
Other assets, net	192,174			195,666			197,380			185,298			187,665
Total assets		$3,039,236			$3,040,647			$2,991,721			$2,882,064			$2,841,615

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes and bonds payable		$1,278,662			$1,264,370			$1,239,062			$1,414,739			$1,418,347
Accounts payable and accrued liabilities	62,746			78,266			71,052			70,408			66,013
Liabilities of properties held for sales and discontinued operations	93			614			572			17			20
Other liabilities	44,444			43,983			46,441			46,452			64,236
Total liabilities	1,385,945			1,387,233			1,357,127			1,531,616			1,548,616
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	1,165			1,164			1,160			1,067			1,042
Additional paid-in capital	2,920,839			2,917,914			2,916,816			2,609,880			2,533,130
Accumulated other comprehensive loss	(1,358		)	(1,401		)	(1,443		)	(1,485		)	(1,527		)
Cumulative net income attributable to common stockholders	1,027,101			995,256			942,819			930,985			918,841
Cumulative dividends	(2,294,456		)	(2,259,519		)	(2,224,758		)	(2,189,999		)	(2,158,487		)
Total stockholders' equity	1,653,291			1,653,414			1,634,594			1,350,448			1,292,999
Total liabilities and stockholders' equity		$3,039,236			$3,040,647			$2,991,721			$2,882,064			$2,841,615



CAPITAL FUNDING
Re/development		$12,159		$9,567		$10,939		$8,542		$16,758
1st generation TI & planned capital expenditures for acquisitions ⁽²⁾	1,212		4,807		4,471		5,486		1,298
2nd generation TI	5,277		7,918		6,013		5,559		4,202
Leasing commissions paid	1,584		1,030		1,514		1,587		1,079
Capital expenditures	2,520		4,283		5,088		5,653		2,098


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


(2)	Planned capital expenditures for acquisitions include expected near-term fundings that were contemplated as part of the acquisition.





HEALTHCARE REALTY 6		1Q 2017 SUPPLEMENTAL INFORMATION

Statements of Income Information

(dollars in thousands)




	2017			2016												2015
	Q1			Q4			Q3			Q2			Q1			Q4			Q3			Q2
Revenues
Rental income		$104,088			$104,736			$102,534			$101,472			$98,740			$97,466			$95,383			$95,450
Mortgage interest	—			—			—			—			—			—			29			31
Other operating	481			573			1,125			1,170			1,281			1,116			1,313			1,227
	104,569			105,309			103,659			102,642			100,021			98,582			96,725			96,708
Expenses
Property operating	37,834			37,285			37,504			36,263			35,406			36,758			35,247			33,927
General and administrative	9,280			8,707			8,724			8,129			10,246			7,216			6,258			6,713
Depreciation	31,412			30,989			29,273			28,528			27,693			27,019			26,571			26,552
Amortization	3,040			3,033			2,712			2,762			2,700			2,556			2,386			2,474
Bad debts, net of recoveries	66			(13		)	(47		)	78			(39		)	9			(21		)	27
	81,632			80,001			78,166			75,760			76,006			73,558			70,441			69,693
Other Income (Expense)
Gain on sales of real estate properties	23,403			41,037			—			1			—			9,138			5,915			41,549
Interest expense	(14,272		)	(13,839		)	(13,759		)	(14,815		)	(14,938		)	(14,885		)	(15,113		)	(17,213		)
Loss on extinguishment of debt	—			—			—			—			—			—			—			(27,998		)
Pension termination	—			—			—			(4		)	—			—			—			(5,260		)
Impairment of real estate assets	(323		)	—			—			—			—			(1		)	(310		)	—
Impairment of internally-developed software	—			—			—			—			—			—			—			(654		)
Interest and other income, net	113			74			123			93			86			78			72			147
	8,921			27,272			(13,636		)	(14,725		)	(14,852		)	(5,670		)	(9,436		)	(9,429		)

Income From Continuing Operations	31,858			52,580			11,857			12,157			9,163			19,354			16,848			17,586

Discontinued Operations
Income (loss) from discontinued operations	(18		)	(22		)	(23		)	(19		)	(7		)	(10		)	61			330
Impairments of real estate assets	—			(121		)	—			—			—			(686		)	—			—
Gain on sales of real estate properties	5			—			—			7			—			—			10,571			—
Income (Loss) From Discontinued Operations	(13		)	(143		)	(23		)	(12		)	(7		)	(696		)	10,632			330
Net Income		$31,845			$52,437			$11,834			$12,145			$9,156			$18,658			$27,480			$17,916



NORMALIZED G&A
General and administrative expense		$9,280			$8,707			$8,724			$8,129			$10,246			$7,216			$6,258			$6,713
Acquisition costs ⁽¹⁾	(610		)	(915		)	(649		)	(232		)	(1,618		)	(1,068		)	(121		)	(167		)
Reversal of restricted stock amortization upon director / officer resignation	—			—			—			—			—			40			—			—
Revaluation of awards upon retirement	—			—			—			—			(89		)	—			—			—
Normalized G&A		$8,670			$7,792			$8,075			$7,897			$8,539			$6,188			$6,137			$6,546

(1)

The Company adopted ASU 2017-01 effective January 1, 2017. As a result of the adoption of this standard, the majority of the Company's acquisitions will be accounted for as asset acquisitions and therefore, incremental costs that are directly related to the asset acquisition will be capitalized. Beginning in the first quarter of 2017, acquisition costs also include direct incremental costs that were expensed during the period related to transactions that have not closed.





HEALTHCARE REALTY 7		1Q 2017 SUPPLEMENTAL INFORMATION

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

(amounts in thousands, except for share data)




	2017						2016									2015
	Q1			Q4			Q3			Q2			Q1			Q4			Q3			Q2
Net Income Attributable to Common Stockholders		$31,845			$52,437			$11,834			$12,145			$9,156			$18,658			$27,480			$17,916
Gain on sales of real estate properties	(23,408		)	(41,037		)	—			(8		)	—			(9,138		)	(16,486		)	(41,549		)
Impairments of real estate assets	323			121			—			—			—			687			310			—
Real estate depreciation and amortization	35,555			34,699			32,557			31,716			30,800			29,907			29,317			29,388
Total adjustments	12,470			(6,217		)	32,557			31,708			30,800			21,456			13,141			(12,161		)
Funds from Operations Attributable to Common Stockholders		$44,315			$46,220			$44,391			$43,853			$39,956			$40,114			$40,621			$5,755
Acquisition costs ⁽³⁾	610			915			649			232			1,618			1,068			121			167
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
Reversal of restricted stock amortization upon director / officer resignation	—			—			—			—			—			(40		)	—			—
Revaluation of awards upon retirement	—			—			—			—			89			—			—			—
Normalized Funds from Operations Attributable to Common Stockholders		$44,925			$47,135			$45,121			$44,089			$41,663			$41,142			$40,742			$39,834
Non-real estate depreciation and amortization	1,355			1,339			1,386			1,360			1,390			1,341			1,312			1,495
Provision for bad debt, net	66			(13		)	(47		)	78			(39		)	9			(21		)	26
Straight-line rent receivable, net	(1,595		)	(1,595		)	(1,684		)	(1,907		)	(1,948		)	(1,741		)	(2,119		)	(2,306		)
Stock-based compensation	2,614			1,949			1,851			1,850			1,859			1,511			1,480			1,461
Non-cash items	2,440			1,680			1,506			1,381			1,262			1,120			652			676
2nd Generation TI	(5,277		)	(7,918		)	(6,013		)	(5,559		)	(4,202		)	(3,081		)	(3,627		)	(2,437		)
Leasing commissions paid	(1,584		)	(1,030		)	(1,514		)	(1,587		)	(1,079		)	(1,856		)	(1,050		)	(1,251		)
Capital additions	(2,520		)	(4,283		)	(5,088		)	(5,653		)	(2,098		)	(3,918		)	(3,402		)	(6,703		)
Funds Available for Distribution		$37,984			$35,584			$34,012			$32,671			$35,546			$33,407			$33,315			$30,119
Funds from Operations per Common Share—Diluted		$0.38			$0.40			$0.39			$0.42			$0.39			$0.40			$0.41			$0.06
Normalized Funds from Operations Per Common Share—Diluted		$0.39			$0.41			$0.39			$0.42			$0.41			$0.41			$0.41			$0.40
Funds Available for Distribution Per Common Share - Diluted		$0.33			$0.31			$0.30			$0.31			$0.35			$0.33			$0.33			$0.30
Weighted Average Common Shares Outstanding - Diluted	115,507			115,408			115,052			104,770			102,165			100,474			99,997			99,945

(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.

(3)





HEALTHCARE REALTY 8		1Q 2017 SUPPLEMENTAL INFORMATION

Debt Metrics

(dollars in thousands)



SUMMARY OF INDEBTEDNESS
	Q1 2017 Interest Expense	Balance as of 3/31/2017	Weighted Months to Maturity	Effective Interest Rate
Senior Notes due 2021, net of discount	$5,833	$397,315	46	5.97	%
Senior Notes due 2023, net of discount	2,392	247,397	73	3.95	%
Senior Notes due 2025, net of discount⁽¹⁾	2,469	247,874	97	4.08	%
Total Senior Notes Outstanding	$10,694	$892,586	67	4.89	%
Unsecured credit facility due 2020	556	122,000	40	1.98	%
Unsecured term loan facility due 2019	740	149,550	23	2.18	%
Mortgage notes payable, net	1,557	114,526	79	5.15	%
Total Outstanding Notes and Bonds Payable	$13,547	$1,278,662	61	4.32	%
Interest cost capitalization	(237)
Unsecured credit facility fee and deferred financing costs	962
Total Quarterly Consolidated Interest Expense	$14,272



SELECTED FINANCIAL DEBT COVENANTS ⁽²⁾
	Calculation	Requirement	Trailing Twelve Months Ended 3/31/2017
Revolving Credit Facility and Term Loan
Leverage Ratio	Total Debt / Total Capital	Not greater than 60%	34.0	%
Secured Leverage Ratio	Total Secured Debt / Total Capital	Not greater than 30%	3.0	%
Unencumbered Leverage Ratio	Unsecured Debt / Unsecured Real Estate	Not greater than 60%	35.8	%
Fixed Charge Coverage Ratio	EBITDA / Fixed Charges	Not less than 1.50x	3.9x
Unsecured Coverage Ratio	Unsecured EBITDA / Unsecured Interest	Not less than 1.75x	4.3x
Construction and Development	CIP / Total Assets	Not greater than 15%	0.5	%
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%	33.1	%
Incurrence of Debt Secured by Any Lien	Secured Debt / Total Assets	Not greater than 40%	2.9	%
Maintenance of Total Unsecured Assets	Unencumbered Assets / Unsecured Debt	Not less than 150%	304.1	%
Debt Service Coverage	EBITDA / Interest Expense	Not less than 1.5x	4.3x

Other
Net Debt to adjusted EBITDA ⁽³⁾	Net debt (debt less cash) / adjusted EBITDA	Not required	5.0x
Net Debt to Enterprise Value ⁽⁴⁾	Net debt (debt less cash) / Enterprise Value	Not required	23.6	%


(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.


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


(3)	Adjusted EBITDA is based on the current quarter results, annualized. See page 18 for a reconciliation of adjusted EBITDA.


(4)	Based on the closing price of $32.80 on April 28, 2017 and 116,512,124 shares outstanding.





HEALTHCARE REALTY 9		1Q 2017 SUPPLEMENTAL INFORMATION

Investment Activity

(dollars in thousands)



ACQUISITION/DISPOSITION ACTIVITY
Location	Property Type ⁽¹⁾	Campus Location	Distance to Campus	Health System Affiliation	Closing	Purchase Price	Square Feet	Aggregate Leased %		Cap Rate ⁽²⁾
Acquisitions
St. Paul, MN	MOB	ON	0.00 miles	HealthEast	3/6/2017	$13,513	34,608	100	%	5.9	%
2017 Acquisition Activity						$13,513	34,608	100	%	5.9	%

Dispositions
Evansville, Indiana	OTH	NA	NA	NA	3/6/2017	$6,375	29,500	100	%	8.9	%
Columbus, Georgia	MOB	ADJ	0.22 miles	Columbus Reg	3/7/2017	625	12,000	0	%	(6.4	)%
Las Vegas, Nevada	MOB	OFF	1.38 miles	NA	3/30/2017	5,500	18,147	100	%	6.7	%
Texas (3 properties)	IRF	NA	NA	NA	3/31/2017	69,500	169,722	100	%	7.3	%
2017 Disposition Activity						$82,000	229,369	95	%	7.3	%



HISTORICAL INVESTMENT ACTIVITY
	Acquisitions⁽³⁾			Mortgage Funding			Construction Mortgage Funding			Re/Development Funding			Total Investments			Dispositions
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
2017	13,513			—			—			12,159			25,672			82,000
Total	$	744,701		$	1,900		$	59,975		$	89,745		$	896,321		$	471,408
% of Total	83.1		%	0.2		%	6.7		%	10.0		%	100.0		%



RE/DEVELOPMENT ACTIVITY
Location	Type ⁽⁴⁾	Campus Location	Square Feet	Budget	Amount Funded Q1 2017	Total Amount Funded Through 3/31/2017	Estimated Remaining Fundings	Aggregate Leased %		Estimated Completion Date
Construction activity
Denver, CO	Dev	ON	98,000	$26,500	$4,459	$16,114	10,386	35	%	Q2 2017

Same store redevelopment
Charlotte, NC ⁽⁵⁾	Redev	ON	204,000	12,000	11	235	11,765	85	%	Q1 2019

Pre-construction activity ⁽⁶⁾
Seattle, WA	Dev	ON	151,000	64,120	205	668	63,452	60	%	Q4 2018

Total Re/development activity			453,000	$102,620	$4,675	$17,017	$85,603	66	%


(1)	MOB = Medical Office Building; IRF = Inpatient Rehabilitation Facility; OTH = Other


(2)	For acquisitions, cap rate represents the forecasted first year NOI / purchase price plus acquisition costs and expected capital additions. For dispositions, cap rate represents the next twelve month forecasted NOI / sales price.


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


(4)	Redev = Redevelopment; Dev = Development


(5)	Redevelopment project is a 38,000 square foot expansion to an existing medical office building.


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





HEALTHCARE REALTY 10		1Q 2017 SUPPLEMENTAL INFORMATION

Portfolio by Market

(dollars in thousands)



BY MARKET
		SQUARE FEET
		MOB/OUTPATIENT (92.9%)				INPATIENT (3.7%)				OTHER (3.4%)
	Investment⁽¹⁾	Multi-tenant		Single-tenant Net Lease		Rehab		Surgical		Other		Total		% of Total
Dallas - Fort Worth, TX	$470,475	2,149,939						156,245				2,306,184		16.1	%
Seattle - Bellevue, WA	405,453	890,222		67,510								957,732		6.7	%
Charlotte, NC	168,498	820,457										820,457		5.7	%
Nashville, TN	145,333	766,523										766,523		5.4	%
Los Angeles, CA	163,231	551,383				63,000						614,383		4.3	%
Houston, TX	129,135	591,027										591,027		4.1	%
Richmond, VA	145,310	548,801										548,801		3.8	%
Des Moines, IA	133,845	233,413		146,542						152,655		532,610		3.7	%
Memphis, TN	92,047	515,876										515,876		3.6	%
San Antonio, TX	94,039	483,811										483,811		3.4	%
Roanoke, VA	49,146			334,454						126,427		460,881		3.2	%
Indianapolis, IN	77,617	382,695										382,695		2.7	%
Denver, CO	111,192	346,335				34,068						380,403		2.7	%
Austin, TX	101,529	354,481								12,880		367,361		2.6	%
Honolulu, HI	140,628	298,427										298,427		2.1	%
Washington, DC	75,253	286,619										286,619		2.0	%
Oklahoma City, OK	109,105	68,860		200,000								268,860		1.9	%
Miami, FL	54,403	241,980										241,980		1.7	%
Colorado Springs, CO	52,136	241,224										241,224		1.7	%
Chicago, IL	56,208	238,391										238,391		1.7	%
Detroit, MI	25,703	199,749								11,308		211,057		1.5	%
San Francisco, CA	89,116	210,621										210,621		1.5	%
Minneapolis, MN	61,729	172,900		34,608								207,508		1.5	%
South Bend, IN	43,991	205,573										205,573		1.4	%
Springfield, MO	111,293							186,000				186,000		1.3	%
Other (23 markets)	418,624	1,404,052		287,874		90,123				185,364		1,967,413		13.7	%
Total	$3,525,039	12,203,359		1,070,988		187,191		342,245		488,634		14,292,417		100.0	%
Number of Properties		166		14		3		2		10		195
Percent of Square Feet		85.4	%	7.5	%	1.3	%	2.4	%	3.4	%	100.0	%
Investment ⁽¹⁾		$2,931,205		$262,397		$45,454		$208,725		$77,258		$3,525,039
% of Investment		83.2	%	7.4	%	1.3	%	5.9	%	2.2	%	100.0	%



MSA BY RANK (% of total SF)
Rank	MOB / Outpatient		Total
Top 25	60	%	57	%
Top 50	84	%	80	%
Top 75	87	%	83	%
Top 100	92	%	88	%


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





HEALTHCARE REALTY 11		1Q 2017 SUPPLEMENTAL INFORMATION

Square Feet by Health System ⁽¹⁾



MOB SQUARE FEET
	System Rank ⁽³⁾	Credit Rating	ASSOCIATED (93.6%) ⁽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	20	AA-/Aa3	1,834,256		129,879		163,188		—		2,127,323	16.0	%
Ascension Health	3	AA+/Aa2	1,017,085		148,356		30,096		—		1,195,537	9.0	%
Catholic Health Initiatives	7	BBB+/--	769,471		180,125		95,486		—		1,045,082	7.9	%
Carolinas HealthCare System	31	--/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	5	B/B2	570,264		67,790		—		—		638,054	4.8	%
Bon Secours Health System	61	A/A2	548,801		—		—		—		548,801	4.1	%
Baptist Memorial Health Care	109	A-/--	424,306		—		39,345		—		463,651	3.5	%
Indiana University Health	26	AA-/Aa3	280,129		102,566		—		—		382,695	2.9	%
University of Colorado Health	76	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	40	AA+/Aaa	194,536		69,712		—		—		264,248	2.0	%
Medstar Health	36	A-/A2	241,739		—		—		—		241,739	1.8	%
Advocate Health Care	33	AA+/Aa2	142,955		95,436		—		—		238,391	1.8	%
Memorial Hermann	42	A+/A1	—		206,090		—		—		206,090	1.6	%
Community Health	4	B/B2	201,574		—		—		—		201,574	1.5	%
Mercy (St. Louis)	35	AA-/Aa3	—		—		200,000		—		200,000	1.5	%
Overlake Health System	333	A/A2	191,051		—		—		—		191,051	1.4	%
Hawaii Pacific Health	187	A+/A1	173,502		—		—		—		173,502	1.3	%
Other credit rated			913,635		560,499		90,607		—		1,564,741	11.8	%
Subtotal - credit rated ⁽⁶⁾			8,779,490		2,199,285		1,123,473		—		12,102,248	91.2	%
Non-credit rated			177,945		144,910		—		849,244		1,172,099	8.8	%
Total			8,957,435		2,344,195		1,123,473		849,244		13,274,347	100.0	%
% of Total			67.4	%	17.7	%	8.5	%	6.4	%



HEALTH SYSTEM ⁽²⁾⁽³⁾ BY RANK (% of total SF)
Rank	MOB / Outpatient		Total
Top 25	51	%	49	%
Top 50	68	%	66	%
Top 75	76	%	74	%
Top 100	80	%	77	%



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	20	AA-/Aa3	20	163	1,017,440	156,245	1,173,685	9.3	%	9.8	%
Mercy (St. Louis)	35	AA-/Aa3	2	2	200,000	186,000	386,000	3.1	%	4.4	%
Carolinas HealthCare System	31	--/Aa3	16	78	591,259	—	591,259	4.7	%	4.3	%
Catholic Health Initiatives	7	BBB+/--	14	81	547,327	—	547,327	4.4	%	4.3	%
Bon Secours Health System	61	A/A2	7	61	264,843	—	264,843	2.1	%	2.2	%
HCA	2	BB/B1	12	14	404,597	—	404,597	3.2	%	2.1	%
Indiana University Health	26	AA-/Aa3	3	38	255,347	—	255,347	2.0	%	1.9	%
Ascension Health	3	AA+/Aa2	14	50	306,022	—	306,022	2.4	%	1.9	%
Baptist Memorial Health Care	109	A-/--	6	15	111,002	—	111,002	0.9	%	1.9	%
Tenet Healthcare Corporation	5	B/B2	10	36	124,227	63,000	187,227	1.5	%	1.6	%
Total								33.6	%	34.4	%


(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, 91.2% of HR's MOB portfolio is associated with a credit-rated healthcare provider and 79.2% is associated with an investment-grade rated healthcare provider.



HEALTHCARE REALTY 12		1Q 2017 SUPPLEMENTAL INFORMATION

Square Feet by Proximity ⁽¹⁾⁽²⁾



MEDICAL OFFICE BUILDINGS BY LOCATION
	2017		2016								2015
	Q1		Q4		Q3		Q2		Q1		Q4
On campus	67	%	67	%	67	%	66	%	66	%	67	%
Adjacent to campus ⁽³⁾	18	%	18	%	18	%	18	%	18	%	13	%
Total on/adjacent	85	%	85	%	85	%	84	%	84	%	80	%
Off campus - anchored by hospital system ⁽⁴⁾	9	%	9	%	8	%	9	%	9	%	9	%
Off campus	6	%	6	%	7	%	7	%	7	%	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	8,957,435	67	%	67	%	On campus	6,850,236	90.2	%
0.00	250 yards	18	1,222,987	9	%	76	%	Adjacent ⁽³⁾	80,525	1.1	%
250 yards	0.25 miles	19	1,121,208	9	%	85	%	Adjacent ⁽³⁾	120,036	1.6	%
0.25 miles	0.50	1	124,925	1	%	86	%	Off campus	-	—	%
0.50	1.00	3	304,993	2	%	88	%		-	—	%
1.00	2.00	6	590,339	4	%	92	%		319,446	4.2	%
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		180	13,274,347	100	%				7,589,692	100.0	%


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


(2)	Proximity to hospital campus includes 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 buildings where health systems lease 40% or more of the property.





HEALTHCARE REALTY 13		1Q 2017 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		% of Base Revenue ⁽²⁾
2017	440	1,505,725	14.0	%	5	334,454	18.6	%	445	1,840,179	14.7	%	14.1	%
2018	413	1,477,928	13.7	%	—	—	—	%	413	1,477,928	11.8	%	11.3	%
2019	471	2,034,971	18.9	%	8	342,305	19.0	%	479	2,377,276	18.9	%	18.1	%
2020	315	1,348,250	12.4	%	1	83,318	4.7	%	316	1,431,568	11.4	%	11.4	%
2021	281	1,093,748	10.2	%	—	—	—	%	281	1,093,748	8.8	%	8.6	%
2022	157	845,002	7.9	%	1	58,285	3.2	%	158	903,287	7.2	%	7.2	%
2023	104	565,892	5.3	%	—	—	—	%	104	565,892	4.5	%	4.6	%
2024	112	683,944	6.4	%	—	—	—	%	112	683,944	5.4	%	5.0	%
2025	58	460,596	4.3	%	2	91,561	5.1	%	60	552,157	4.4	%	4.3	%
2026	59	217,856	2.0	%	—	—	—	%	59	217,856	1.7	%	1.7	%
Thereafter	76	523,011	4.9	%	8	887,173	49.4	%	84	1,410,184	11.2	%	13.7	%
Total leased	2,486	10,756,923	86.1	%	25	1,797,096	100.0	%	2,511	12,554,019	87.8	%	100.0	%
Total building		12,495,321	100.0	%		1,797,096	100.0	%		14,292,417	100.0	%



BY LEASE SIZE
	NUMBER OF LEASES
Square Feet	Multi-Tenant Properties ⁽³⁾	Single-Tenant Net Lease Properties
0 - 2,500	1,267	—
2,501 - 5,000	644	—
5,001 - 7,500	211	1
7,501 - 10,000	119	—
10,001 +	245	24
Total Leases	2,486	25



BY BUILDING SQUARE FEET
Size Range by Square Feet	% of Total		Total Square Footage	Average Square Feet	Number of Properties
>100,000	44.7	%	6,395,112	148,724	43
<100,000 and >75,000	23.5	%	3,353,137	85,978	39
<75,000 and >50,000	16.7	%	2,390,642	62,912	38
<50,000	15.1	%	2,153,526	28,714	75
Total	100.0	%	14,292,417	73,294	195


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


(2)	Represents the current annualized minimum rents on in-place leases, excluding the impact of potential lease renewals and sponsor support payments under financial support arrangements and straight-line rent.


(3)	The average lease size in the multi-tenant properties is 4,327 square feet.





HEALTHCARE REALTY 14		1Q 2017 SUPPLEMENTAL INFORMATION

Historical Occupancy ⁽¹⁾

^{(dollars in thousands)}




	2017												2016
	Q1			Q4			Q3			Q2			Q1
Same store properties
Multi-tenant
Investment	$	2,493,309		$	2,438,564		$	2,300,520		$	2,284,072		$	2,256,745
Number of properties	138			139			136			135			133
Total building square feet	10,801,498			10,690,819			10,288,750			10,252,590			10,166,494
% leased	87.7		%	87.3		%	87.8		%	87.8		%	87.9		%

Single-tenant
Investment	$	524,268		$	617,908		$	677,171		$	673,865		$	581,856
Number of properties	24			30			34			34			33
Total building square feet	1,762,488			2,080,227			2,284,747			2,284,747			2,084,747
% leased	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Total same store properties
Investment	$	3,017,577		$	3,056,472		$	2,977,691		$	2,957,937		$	2,838,601
Number of properties	162			169			170			169			166
Total building square feet	12,563,986			12,771,046			12,573,497			12,537,337			12,251,241
% leased	89.4		%	89.3		%	90.0		%	90.0		%	90.0		%

Acquisitions ⁽²⁾
Investment	$	405,975		$	431,859		$	402,267		$	331,992		$	396,344
Number of properties	18			18			15			15			16
Total building square feet	1,011,189			1,087,260			1,003,876			921,069			1,094,760
% leased	93.0		%	94.4		%	95.0		%	95.0		%	93.3		%

Development Completions ⁽³⁾
Investment	$	5,353		$	5,353		$	5,057		$	4,817		NA
Number of properties	1			1			1			1			NA
Total building square feet	12,880			12,880			12,880			12,958			NA
% leased	100.0		%	100.0		%	100.0		%	15.2		%	NA

Reposition ⁽⁴⁾
Investment	$	96,134		$	97,176		$	148,489		$	153,878		$	152,351
Number of properties	14			14			16			17			17
Total building square feet	704,362			709,462			951,568			995,472			995,472
% leased	52.5		%	52.8		%	59.3		%	57.0		%	56.5		%

Total
Investment	$	3,525,039		$	3,590,860		$	3,533,504		$	3,448,624		$	3,387,296
Number of properties	195			202			202			202			199
Total building square feet	14,292,417			14,580,648			14,541,821			14,466,836			14,341,473
% leased	87.8		%	87.9		%	88.4		%	88.0		%	87.9		%


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


(2)	Acquisition include properties acquired within the last 8 quarters of the period presented and are excluded from same store.


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


(4)	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 15		1Q 2017 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
December 31, 2016	12,822,398		14,580,648		87.9	%	11,408,788		12,771,046		89.3	%
Portfolio Activity
Acquisitions	34,608		34,608		100.0	%	NA		NA		NA
Re/Development completions	—		—		—	%	—		—		—	%
Dispositions ⁽²⁾	(317,739	)	(322,839	)	98.4	%	(317,739	)	(317,739	)	100.0	%
Reclassifications to same store:
Acquisitions	NA		NA		NA		106,299		110,679		96.0	%
Development completions	NA		NA		NA		—		—		—	%
Reposition	NA		NA		NA		—		—		—	%
Subtotal	12,539,267		14,292,417		87.7	%	11,197,348		12,563,986		89.1	%
Leasing Activity
New leases/expansions	178,722		NA		NA		166,816		NA		NA
Move-outs/contractions	(163,970	)	NA		NA		(133,294	)	NA		NA
Net Absorption	14,752		NA		NA		33,522		NA		NA
March 31, 2017	12,554,019		14,292,417		87.8	%	11,230,870		12,563,986		89.4	%



YEAR-OVER-YEAR
	PORTFOLIO						SAME STORE
	Occupied Square Feet		Total Square Feet		Occupancy		Occupied Square Feet		Total Square Feet		Occupancy
March 31, 2016	12,607,454		14,341,473		87.9	%	11,023,613		12,251,241		90.0	%
Portfolio Activity
Acquisitions	514,732		550,663		93.5	%	NA		NA		NA
Re/Development completions ⁽¹⁾	—		61,969		—	%	—		49,089		—	%
Dispositions⁽²⁾	(653,677	)	(661,688	)	98.8	%	(653,677	)	(656,588	)	99.6	%
Reclassifications to same store:
Acquisitions	NA		NA		NA		605,513		634,234		95.5	%
Development completions	NA		NA		NA		—		—		—	%
Reposition	NA		NA		NA		192,069		286,010		67.2	%
Subtotal	12,468,509		14,292,417		87.2	%	11,167,518		12,563,986		88.9	%
Leasing Activity
New leases/expansions	598,149		NA		NA		485,269		NA		NA
Move-outs/contractions	(512,639	)	NA		NA		(421,917	)	NA		NA
Net Absorption	85,510		NA		NA		63,352		NA		NA
March 31, 2017	12,554,019		14,292,417		87.8	%	11,230,870		12,563,986		89.4	%


(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 16		1Q 2017 SUPPLEMENTAL INFORMATION

Same Store Properties

(dollars in thousands)



QUARTERLY ⁽¹⁾
	Q1 2017		Q4 2016		Q3 2016		Q2 2016		Q1 2016		Q4 2015		Q3 2015		Q2 2015
Multi-tenant
Revenues	$76,498		$75,785		$76,489		$75,406		$74,373		$73,963		$72,839		$71,818
Expenses	31,478		31,473		32,657		31,099		30,620		32,701		31,392		30,154
NOI	$45,020		$44,312		$43,832		$44,307		$43,753		$41,262		$41,447		$41,664
Occupancy	87.7	%	87.3	%	87.4	%	87.1	%	87.1	%	87.1	%	86.5	%	86.8	%
Number of properties	138		138		138		138		138		138		138		138

Single-tenant net lease
Revenues	$13,001		$12,655		$12,924		$12,802		$12,836		$12,837		$12,782		$12,657
Expenses	430		404		373		343		401		439		370		356
NOI	$12,571		$12,251		$12,551		$12,459		$12,435		$12,398		$12,412		$12,301
Occupancy	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Number of properties	24		24		24		24		24		24		24		24

Total
Revenues	$89,499		$88,440		$89,413		$88,208		$87,209		$86,800		$85,621		$84,475
Expenses	31,908		31,877		33,030		31,442		31,021		33,140		31,762		30,510
Same Store NOI	$57,591		$56,563		$56,383		$56,766		$56,188		$53,660		$53,859		$53,965
Occupancy	89.4	%	89.1	%	89.1	%	88.9	%	88.9	%	88.9	%	88.4	%	88.7	%
Number of properties	162		162		162		162		162		162		162		162
% NOI year-over-year growth	2.5	%	5.4	%	4.7	%	5.2	%



TRAILING TWELVE MONTHS ⁽¹⁾
	Twelve Months Ended March 31,
	2017		2016		% Change
Multi-tenant
Revenues	$304,178		$292,993		3.8	%
Expenses	$126,707		$124,867		1.5	%
NOI	$177,471		$168,126		5.6	%
Revenue per average occupied square foot	$32.26		$31.26		3.2	%
Average occupancy	87.3	%	86.8	%
Number of properties	138		138

Single-tenant net lease
Revenues	$51,382		$51,112		0.5	%
Expenses	$1,550		$1,566		(1.0	%)
NOI	$49,832		$49,546		0.6	%
Revenue per average occupied square foot	$29.16		$29.01		0.5	%
Average occupancy	100.0	%	100.0	%
Number of properties	24		24

Total
Revenues	$355,560		$344,105		3.3	%
Expenses	$128,257		$126,433		1.4	%
Same Store NOI	$227,303		$217,672		4.4	%
Revenue per average occupied square foot	$31.77		$30.90		2.8	%
Average occupancy	89.1	%	88.6	%
Number of Properties	162		162


(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 17		1Q 2017 SUPPLEMENTAL INFORMATION

Reconciliation of NOI & EBITDA

(dollars in thousands)



QUARTERLY NOI
	Q1 2017			Q4 2016			Q3 2016			Q2 2016			Q1 2016			Q4 2015			Q3 2015			Q2 2015
Net income		$31,845			$52,437			$11,834			$12,145			$9,156			$18,658			$27,480			$17,916
Loss (income) from discontinued operations	13			143			23			12			7			696			(10,632		)	(330		)
Income from continuing operations	31,858			52,580			11,857			12,157			9,163			19,354			16,848			17,586
General and administrative expense	9,280			8,707			8,724			8,129			10,246			7,216			6,258			6,713
Depreciation expense	31,412			30,989			29,273			28,528			27,693			27,019			26,571			26,552
Amortization expense	3,040			3,033			2,712			2,762			2,700			2,556			2,386			2,474
Bad debts, net of recoveries	66			(13		)	(47		)	78			(39		)	9			(21		)	27
Mortgage interest income	—			—			—			—			—			—			(29		)	(31		)
Other income (expense)	(8,921		)	(27,272		)	13,636			14,725			14,852			5,670			9,436			9,429
Straight-line rent adjustments	(1,588		)	(1,590		)	(1,685		)	(1,906		)	(1,948		)	(1,743		)	(2,121		)	(2,287		)
Interest and other income	(256		)	(219		)	(308		)	(285		)	(279		)	(265		)	(314		)	(290		)
Amortization of leasing costs⁽¹⁾	(6		)	88			(30		)	(48		)	(148		)	(267		)	(185		)	(248		)
Lease termination fees	(14		)	(75		)	(75		)	(118		)	(22		)	(15		)	—			(24		)
Amortization of acquired above/below market leases	646			173			123			46			64			54			45			53
NOI		$65,517			$66,401			$64,180			$64,068			$62,282			$59,588			$58,874			$59,954
Acquisitions / Development completions	(5,589		)	(5,598		)	(3,302		)	(2,858		)	(1,706		)	(1,341		)	(340		)	(10		)
Reposition	(668		)	(553		)	(343		)	(259		)	(227		)	(380		)	(262		)	(217		)
Dispositions / other	(1,669		)	(3,687		)	(4,152		)	(4,185		)	(4,161		)	(4,207		)	(4,413		)	(5,762		)
Same store NOI		$57,591			$56,563			$56,383			$56,766			$56,188			$53,660			$53,859			$53,965



TRAILING TWELVE MONTHS NOI
	Twelve Months Ended March 31,
	2017		2016		% Change
Same store NOI		$227,303		$217,672	4.4	%
Reposition	1,823		1,086		67.9	%
Subtotal		$229,126		$218,758	4.7	%
Acquisitions / Development completions	17,347		3,397		410.7	%
Dispositions / other	13,693		18,543		(26.2	%)
NOI		$260,166		$240,698	8.1	%



EBITDA
	Q1 2017			Q4 2016			Q3 2016		Q2 2016			Trailing Twelve Months
Net income		$31,845			$52,437			$11,834		$12,145			$108,261
Interest expense	14,272			13,839			13,759		14,815			56,685
Depreciation and amortization	34,452			34,022			31,984		31,290			131,748
EBITDA		$80,569			$100,298			$57,577		$58,250			$296,694
Acquisition costs	610			915			649		232			2,406
Gain on sales of real estate properties	(23,408		)	(41,037		)	—		(8		)	(64,453		)
Impairments on real estate assets	323			121			—		—			444
Debt Covenant EBITDA		$58,094			$60,297			$58,226		$58,474			$235,091
Timing impact of acquisitions and dispositions ⁽²⁾	(1,260		)	(901		)	1,284		190			(687		)
Stock based compensation	2,614			1,949			1,851		1,850			8,264
Adjusted EBITDA		$59,448			$61,345			$61,361		$60,514			$242,668


(1)	Leasing costs include lease inducements, tenant improvement overages and leasing commissions.


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




HEALTHCARE REALTY 18		1Q 2017 SUPPLEMENTAL INFORMATION

Same Store Leasing Statistics ⁽¹⁾




	2017								2016						2015
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Contractual rent increases occurring in the quarter
Multi-tenant properties	2.9	%	2.9	%	2.8	%	2.9	%	2.9	%	3.0	%	2.9	%	3.1	%
Single-tenant net lease properties	2.1	%	2.5	%	1.7	%	2.2	%	1.0	%	1.6	%	2.6	%	2.2	%
Total	2.8	%	2.9	%	2.5	%	2.7	%	2.5	%	2.8	%	2.8	%	2.9	%

Multi-tenant renewals
Cash leasing spreads	4.5	%	3.9	%	4.3	%	6.3	%	7.2	%	3.7	%	2.1	%	5.0	%
Tenant retention rate	79.2	%	88.5	%	90.1	%	81.2	%	87.2	%	91.2	%	82.4	%	87.3	%

Multi-tenant 2nd Generation TI Commitments
Renewals
Square feet	308,873		215,742		313,925		227,840		335,216		219,791		368,645		166,433
$ / square feet / lease year	$1.96		$1.88		$1.12		$1.65		$2.21		$1.08		$1.07		$1.85
% of annual rent	5.9	%	5.7	%	3.5	%	5.7	%	6.8	%	3.4	%	3.5	%	6.2	%

New Leases
Square feet	70,029		52,897		63,729		56,927		44,252		63,838		56,287		95,952
$ / square feet / lease year	$4.81		$4.63		$4.70		$3.62		$5.81		$4.23		$3.81		$3.08
% of annual rent	16.9	%	13.7	%	16.6	%	12.3	%	19.2	%	14.4	%	13.3	%	10.7	%




	As of 3/31/2017
	Multi-tenant		Single-tenant Net Lease
Leased Square Feet	9,468,382		1,762,488

Contractual Rental Rate Increases by Type
Annual increase
CPI	1.9	%	60.3	%
Fixed	84.9	%	19.2	%
Non-annual increase
CPI	2.1	%	6.9	%
Fixed	3.8	%	13.6	%
No increase
Term < 1 year	4.4	%	—	%
Term > 1 year	2.9	%	—	%

Tenant Type
Hospital	45.1	%	79.1	%
Physician and other	54.9	%	20.9	%

Lease Structure
Gross	15.0	%	—	%
Modified gross	29.1	%	—	%
Net	55.9	%	100.0	%

Ownership Type
Ground lease	62.5	%	10.3	%
Fee simple	37.5	%	89.7	%


(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 19		1Q 2017 SUPPLEMENTAL INFORMATION

Components of Net Asset Value

(dollars in thousands)




	Q1 2017
Asset Type	Same Store NOI⁽¹⁾		Acquisitions/Development Completions NOI ⁽²⁾		Reposition NOI⁽³⁾		Timing Adjustments⁽⁴⁾		Adjusted NOI		Annualized Adjusted NOI		% of Adjusted NOI
MOB / Outpatient		$49,989		$5,589		$741		$1,299		$57,618		$230,472	88.2	%
Inpatient rehab	1,422		—		—		—		1,422		5,688		2.2	%
Inpatient surgical	4,489		—		—		—		4,489		17,956		6.9	%
Other	1,691		107		22		—		1,820		7,280		2.8	%
Total NOI		$57,591		$5,696		$763		$1,299		$65,349		$261,396	100.1	%

TOTAL SHARES OUTSTANDING (AS OF APRIL 30, 2017) 116,512,124



DEVELOPMENT PROPERTIES
	Land held for development		$20,123
	Construction in progress	16,114
	Subtotal		$36,237

OTHER ASSETS
	Assets held for sale⁽⁵⁾		$23,649
	Reposition properties (net book value)⁽³⁾	6,354
	Cash and other assets⁽⁶⁾	170,294
	Subtotal		$200,297


DEBT
	Unsecured credit facility		$122,000
	Unsecured term loan	150,000
	Senior notes	900,000
	Mortgage notes payable	113,903
	Other liabilities⁽⁷⁾	71,848
	Subtotal		$1,357,751


(1)	See Same Store Properties schedule on page 17 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 704,362 square feet. The NOI table above includes 9 of these properties comprising 528,869 square feet that have generated positive NOI totaling approximately $0.8 million. The remaining 5 properties, comprising 175,493 square feet, have generated negative NOI of approximately $0.1 million and are reflected at a net book value of $6.4 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 three 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 $1.5 million, restricted cash of $104.9 million, and prepaid assets of $63.9 million that are expected to generate future cash or NOI and assets that are currently causing non-cash reductions to NOI.


(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 $62.8 million, security deposits of $6.3 million and deferred operating expense reimbursements of $2.7 million. Also, excludes deferred revenue of $31.8 million.





HEALTHCARE REALTY 20		1Q 2017 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	(0.5		%)	1.0		%

ANNUAL RANGE OF EXPECTATIONS
	Low			High

Normalized G&A ⁽³⁾	$33,000			$35,000

Funding Activity
Acquisitions	$175,000			$225,000
Dispositions	(82,000)			(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	5.25		%	6.00		%
Dispositions	7.50		%	8.50		%
Re/development (stabilized)	6.75		%	8.00		%

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 21		1Q 2017 SUPPLEMENTAL INFORMATION

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