Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - HEALTHCARE TRUST OF AMERICA, INC. | q32017earningsrelease.htm |
| 8-K - 8-K - HEALTHCARE TRUST OF AMERICA, INC. | hta201710268-k.htm |
99.1
MISSION MEDICAL OFFICE PORTFOIO
MISSION VIEJO, CA
Exhibit 99.2
Company Overview
Company Information 3
Third Quarter 2017 Highlights 4
Year-to-Date 2017 Highlights 5
Financial Highlights 6
Company Snapshot 8
Financial Information
FFO, Normalized FFO, Normalized FAD and Adjusted EBITDAre 9
Capitalization, Interest Expense and Covenants 10
Debt Composition and Maturity Schedule 11
Portfolio Information
Investment Activity 12
Regional Portfolio Distribution and Key Markets and Top 75 MSA Concentration 13
Development Summary and Capital Expenditures 14
Same-Property Performance and NOI 15
Portfolio Diversification by Type, Historical Campus Proximity and Ownership Interests 16
Historical Leased Rate, New and Renewal Leasing Activity and Tenant Lease Expirations 17
Key Health System Relationships and In-House Property Management and Leasing Platform 18
Health System Relationship Highlights 19
Financial Statements
Condensed Consolidated Balance Sheets 20
Condensed Consolidated Statements of Operations 21
Condensed Consolidated Statements of Cash Flows 22
Reporting Definitions 23
Forward-Looking Statements:
Certain statements contained in this report constitute forward-looking statements within the meaning of the safe harbor from civil liability provided
for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act). Such statements include, in particular, statements
about our plans, strategies, prospects and estimates regarding future medical office building market performance. Additionally, such statements
are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially and in
adverse ways from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future
periods. Forward-looking statements are generally identifiable by the use of such terms as “expect,” “project,” “may,” “should,” “could,” “would,”
“intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “opinion,” “predict,” “potential,” “pro forma” or the negative of such terms and
other comparable terminology. Readers are cautioned not to place undue reliance on these forward-looking statements. We cannot guarantee
the accuracy of any such forward-looking statements contained in this report, and we do not intend to publicly update or revise any forward-
looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Any such forward-looking
statements reflect our current views about future events, are subject to unknown risks, uncertainties, and other factors, and are based on a
number of assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, all of
which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such
forward-looking statements, including our ability to generate positive cash flow from operations, provide dividends to stockholders, and maintain
the value of our real estate properties, may be significantly hindered. Forward-looking statements express expectations of future events. All
forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and
they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from
those projected. Due to these inherent uncertainties, our stockholders are urged not to place undue reliance on forward-looking statements.
Forward-looking statements speak only as of the date made. In addition, we undertake no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time, except as required
by law. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed
on such statements. Additional information concerning us and our business, including additional factors that could materially affect our financial
results, is included herein and in our filings with the SEC.
Table of Contents
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 2
Company Information
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of medical office buildings (“MOBs”) in the United
States based on gross leasable area (“GLA”). We provide the real estate infrastructure for the integrated delivery of healthcare services in highly
desirable locations. Over the last decade, we have invested $7.0 billion primarily in MOBs and other healthcare assets comprising 24.2 million
square feet of GLA. Our investments are targeted in 20 to 25 key markets that we believe have superior healthcare demographics that support
strong, long-term demand for medical office space. We have achieved, and continue to achieve, critical mass within these key markets by
expanding our presence through accretive acquisitions, and utilizing our in-house operating expertise through our regionally located property
management and leasing platform.
Founded in 2006 and listed on the New York Stock Exchange in 2012, HTA has produced attractive returns for its stockholders that we
believe have significantly outperformed the S&P 500 and US REIT indices. More information about HTA can be found on the Company’s
website at www.htareit.com.
Company Overview
Executive Management
Scott Peters I Chairman, Chief Executive Officer and President
Robert Milligan I Chief Financial Officer, Secretary and Treasurer
Amanda Houghton I Executive Vice President - Asset Management
Ann Atkinson I Senior Vice President - Acquisitions
Contact Information
Corporate Headquarters
Healthcare Trust of America, Inc. I NYSE: HTA
16435 North Scottsdale Road, Suite 320
Scottsdale, Arizona 85254
480.998.3478
www.htareit.com
Investor Relations
Robert Milligan I Chief Financial Officer, Secretary and Treasurer
16435 North Scottsdale Road, Suite 320
Scottsdale, Arizona 85254
480.998.3478
info@htareit.com
Transfer Agent
Computershare
P.O. Box 505000
Louisville, KY 40233
888.801.0107
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 3
Third Quarter 2017 Highlights
Operating
• Net Income Attributable to Common Stockholders: Increased 114.1% to $13.8 million, compared to Q3 2016. Earnings per diluted
share increased 75.0% to $0.07 per diluted share, compared to Q3 2016.
• Funds From Operations (“FFO”): As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), increased 56.1%,
to $84.2 million, compared to Q3 2016. FFO per diluted share increased 7.9%, to $0.41 per diluted share, compared to Q3 2016.
• Normalized FFO: Increased 49.6%, to $85.4 million, compared to Q3 2016. Normalized FFO per diluted share increased 5.0%, to $0.42
per diluted share, compared to Q3 2016.
• Normalized Funds Available for Distribution (“FAD”): Increased 51.9%, to $74.8 million, compared to Q3 2016.
• Same-Property Cash Net Operating Income (“NOI”): Increased $2.2 million, or 2.9%, to $80.3 million, compared to Q3 2016.
Portfolio
• Investments: During the quarter, HTA had investments of $160.7 million, totaling approximately 314,000 square feet of GLA and which
were 99% leased as of the date of acquisition, bringing year-to-date investments to $2.7 billion, net of development credits received at the
closing of the Duke acquisition. These investments included the properties in the final closing associated with the Duke Realty healthcare
business (“Duke Assets”) and completion of the portfolio acquisition from a Tampa developer, which were announced in Q2 2017. HTA’s
investments for the quarter consisted of the following:
◦ Duke Assets: HTA acquired three additional properties in July for an aggregate purchase price of $131.7 million. These
properties total approximately 245,000 square feet of GLA and were 100% leased as of the date of acquisition.
◦ Tampa Developer: HTA acquired two additional properties in July and August for an aggregate purchase price of $29.0
million. These properties total approximately 68,000 square feet of GLA and were 98% leased as of the date of acquisition.
• Leasing: HTA entered into new and renewal leases on approximately 745,000 square feet of GLA, or 3.1%, of its portfolio. Tenant retention
for the Same-Property portfolio was 75% by GLA for the quarter, which included approximately 289,000 square feet of GLA of expiring
leases. Renewal leases included tenant improvements of $1.56 per square foot per year of the lease term and less than three days of free
rent per year of the lease term.
2017 Investments - Q3 Performance
• Investments: During 2017, HTA completed and closed $2.7 billion of investments, totaling approximately 6.6 million square feet of GLA,
including projects under development. These acquisitions included 93 in-service properties and seven development properties, including
four recently developed properties and three properties under development, but which were 100% pre-leased and expected to be completed
by Q2 2018. Approximately 89% of the GLA for these investments are located in HTA’s existing key markets, allowing HTA to manage and
service these properties with its existing property management, building services, and leasing platform, thereby generating additional cash
flow opportunities.
• Cash NOI: During the quarter, HTA generated $32.9 million of Cash NOI on its 2017 investments, including a partial period impact for
acquisitions that closed and developments that were completed during the period. As of September 30, 2017, HTA’s run rate yield on its
2017 investments was approximately 5.1%, which included the full quarter impact of acquisitions and developments closed and completed
in the period, and new leases that were signed but not yet occupied.
• Leasing: HTA entered into new leases on approximately 26,000 square feet of GLA for its 2017 investments, or 0.4% of the total acquired
GLA. HTA also entered into renewal leases totaling approximately 108,000 square feet of GLA. HTA executed these leases utilizing its
existing in-house leasing representatives which would have resulted in capitalized leasing commissions totaling $0.5 million, or 1.5% of third
quarter Cash NOI, if third party brokers had been used by HTA.
• Property Management & Building Services: As of the end of the period, HTA provided property management services to 91% of its 2017
investments as measured by GLA. During the quarter, HTA earned over $1.0 million of property management fees related to these
properties which were included in total Cash NOI. On an annual basis, these properties generated a total of over $5.0 million in property
management fees. As of the end of the period, HTA provided building engineering services to approximately 64% of the multi-tenanted
properties included in its 2017 investments. In addition, during the quarter, HTA earned over $250,000 in expense recoveries from building
services which were included in total Cash NOI.
• Development: During the third quarter, HTA-Development completed two development projects located in Oxford, Mississippi and Dallas,
TX, with a total construction cost of $33.8 million. As such, four of the seven development properties acquired by HTA as a part of the Duke
acquisition have been completed, but are not all fully leased at this time. As of the end of the quarter, these four properties were 77%
leased and generated $0.6 million of Cash NOI. HTA is currently in the late stages of lease negotiations for an additional 38,000 square feet
of GLA that would bring the leased rate on these properties to 90% if completed. The remaining three properties under development are
100% pre-leased and are projected to be completed by Q2 2018. In total, the seven development properties are projected to generate
between $2.50 million and $2.75 million in quarterly Cash NOI upon completion and stabilization.
Capital Markets
• Equity: In September 2017, HTA entered into new equity distribution agreements with its various sales agents with respect to its at-the-
market (“ATM”) offering program of common stock with an aggregate sales amount of up to $500.0 million.
• Debt: In July 2017, HTA, as guarantor, and Healthcare Trust of America Holdings, LP (“HTALP”), as borrower, entered into an amended and
restated $1.3 billion unsecured credit agreement which increased the amount available under the unsecured revolving credit facility to $1.0
billion and extended the maturities of the unsecured revolving credit facility to June 30, 2022 and for the $300.0 million unsecured term loan
until February 1, 2023. The interest rate on the unsecured revolving credit facility is adjusted LIBOR plus a margin ranging from 0.83% to
1.55% per annum based on HTA’s credit rating.
Company Overview
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 4
Year-to-Date 2017 Highlights
Operating
• Net Income Attributable to Common Stockholders: Decreased 27.1% to $21.4 million, compared to year-to-date 2016. Earnings per
diluted share decreased 42.9% to $0.12 per diluted share, compared to year-to-date 2016. Total revenues increased $101.3 million due to
the continued growth in HTA’s operations, however, the increase in revenues was primarily offset as a result of the Duke acquisition by the
increase in transaction expenses and loss on extinguishment of debt related to bridge facility fees paid.
• FFO: As defined by NAREIT, increased 28.5%, to $198.7 million, compared to year-to-date 2016. FFO per diluted share remained stable at
$1.12 per diluted share, compared to year-to-date 2016.
• Normalized FFO: Increased 29.9%, to $215.2 million, compared to year-to-date 2016. Normalized FFO per diluted share increased 0.8%
to $1.21 per diluted share, compared to year-to-date 2016.
• Normalized FAD: Increased 27.3%, to $188.3 million, compared to year-to-date 2016.
• Same-Property Cash NOI: Increased $6.6 million, or 3.1%, to $217.8 million, compared to year-to-date 2016. Same-Property rental
revenue increased $4.1 million, or 1.7%, to $243.4 million, compared to year-to-date 2016.
Portfolio
• Investments: HTA completed investments of $2.7 billion, net of development credits received at the closing of the Duke acquisition, totaling
approximately 6.6 million square feet of GLA, including projects under development, and which were 92% leased as of the date of
acquisition and consisted of the following:
◦ As of September 30, 2017, HTA closed on Duke Assets of approximately $2.24 billion for 71 properties and a parcel of land,
including a 50% ownership interest in an unconsolidated joint venture, totaling approximately 5.2 million square feet of GLA,
including projects under development, and were 94% leased as of the date of acquisition. HTA’s only remaining obligations
related to the Duke acquisition are the potential acquisition of a land parcel in Miami, FL and a single property in Texas that
are each currently excluded from HTA’s purchase obligations due to current outstanding physical condition issues.
◦ In addition, HTA completed investments of $458.3 million, totaling approximately 1.5 million square feet of GLA that were 93%
leased as of the date of acquisition and which were located substantially in certain of HTA’s 20 to 25 key markets.
• Development Platform Acquisition: During the nine months ended September 30, 2017, HTA completed its acquisition of Duke’s
development and construction platform as part of the Duke acquisition. Prior to HTA’s acquisition, this best-in-class development platform,
renamed HTA-Development by HTA, had developed over $1.0 billion in medical real estate assets over the last 10 years.
• Dispositions: HTA completed the disposition of a medical office building located in Texas for a gross sales price of $5.0 million and which
totaled approximately 48,000 square feet of GLA.
• Leasing: HTA entered into new and renewal leases on approximately 2.0 million square feet of GLA, or 8.4%, of its portfolio. Tenant
retention for the Same-Property portfolio was 78% by GLA year-to-date, which included approximately 1.3 million square feet of expiring
leases. Renewal leases included tenant improvements of $1.51 per square foot of GLA per year of the lease term and less than five days of
free rent per year of the lease term.
• Leased Rate: As of September 30, 2017, HTA had a leased rate for its portfolio of 91.7% by GLA and 91.4% for its Same-Property portfolio.
Balance Sheet and Capital Markets
• Balance Sheet: As of September 30, 2017, HTA had total leverage of 31.9% measured as debt to total capitalization, and 6.2x measured as
debt to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for real estate (“Adjusted EBITDAre”). Total liquidity at the
end of the quarter was $928.9 million, including $919.5 million of availability under HTA’s unsecured revolving credit facility and $9.4 million
of cash and cash equivalents.
• Equity: During the nine months ended September 30, 2017, HTA issued and sold approximately $1.7 billion of equity at an average price of
$28.70 per share. Additionally, in September 2017, HTA entered into new equity distribution agreements with its various sales agents with
respect to its ATM offering program of common stock with an aggregate sales amount of up to $500.0 million.
• Debt: During the nine months ended September 30, 2017, HTA issued in a public offering approximately $1.2 billion in debt, which
consisted of $900.0 million in senior unsecured notes at an average interest rate of 3.4% per annum and an average duration of 7.7 years.
HTA also executed, as borrower, a $286.0 million promissory note with a 4.0% per annum interest rate with the seller in the Duke
acquisition. Additionally, in July 2017, HTA, as guarantor, and HTALP, as borrower, entered into an amended and restated $1.3 billion
unsecured credit agreement which increased the amount available under the unsecured revolving credit facility to $1.0 billion and extended
the maturity date to June 30, 2022, and extended the maturity date until February 1, 2023 under the $300.0 million unsecured term loan.
These transactions were used to substantially finance HTA’s 2017 investments and position its investment grade balance sheet for future
growth.
Subsequent Events
• Investments: In October 2017, HTA completed an investment with a purchase price of $8.3 million. As part of the acquisition, HTA issued
to the seller as a part of the acquisition consideration a total of 16,972 operating partnership units in HTALP with a market value at the time
of issuance of $0.5 million.
• Equity: Subsequent to September 30, 2017, HTA issued approximately $200.0 million of common stock under the ATM, including $75.0
million on a forward basis which will be issued over the next six months.
• Dividends: On October 24, 2017, HTA’s Board of Directors announced a quarterly dividend of $0.305 per share of common stock. The
dividends are to be paid on January 9, 2018 to stockholders of record of our common stock on January 2, 2018.
Company Overview
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 5
(1) Refer to pages 23 and 24 for the reporting definitions of NOI, Adjusted EBITDAre, FFO, Normalized FFO and Normalized FAD.
(2) Refer to page 15 for a reconciliation of GAAP Net Income to NOI.
(3) Refer to page 9 for the reconciliations of GAAP Net Income Attributable to Common Stockholders to FFO, Normalized FFO, Normalized FAD and Adjusted EBITDAre.
(4) Calculated as the increase in Same-Property Cash NOI for the quarter as compared to the same period in the previous year.
(5) Calculated as Adjusted EBITDAre divided by interest expense (excluding change in fair market value of derivatives) and scheduled principal payments.
(6) Calculated as the common stock price on the last trading day of the period multiplied by the total diluted common shares outstanding at the end of the period, plus total debt
outstanding at the end of the period. Refer to page 10 for details.
Financial Highlights
(unaudited and dollars in thousands, except per share data)
Three Months Ended
3Q17 2Q17 1Q17 4Q16 3Q16
INCOME ITEMS
Revenues $ 175,994 $ 139,879 $ 124,347 $ 122,039 $ 118,340
NOl (1)(2) 119,663 96,419 85,327 83,587 81,455
Adjusted EBITDAre (1)(3) 457,716 442,316 319,132 312,340 311,776
FFO (1)(3) 84,248 54,185 60,231 60,944 53,972
Normalized FFO (1)(3) 85,449 69,643 60,133 59,513 57,132
Normalized FAD (1)(3) 74,767 60,618 52,865 52,197 49,222
Net income (loss) attributable to
common stockholders per diluted share $ 0.07 $ (0.03) $ 0.09 $ 0.11 $ 0.04
FFO per diluted share 0.41 0.30 0.41 0.42 0.38
Normalized FFO per diluted share 0.42 0.39 0.41 0.41 0.40
Same-Property Cash NOI growth (4) 2.9% 3.1% 3.2% 2.9% 3.3%
Fixed charge coverage ratio (5) 4.35x 4.39x 4.30x 4.20x 4.08x
As of
3Q17 2Q17 1Q17 4Q16 3Q16
ASSETS
Gross real estate investments $ 6,977,851 $ 6,796,889 $ 4,360,906 $ 4,320,613 $ 4,255,076
Total assets 6,413,522 6,366,758 3,753,017 3,747,844 3,715,890
CAPITALIZATION
Total debt $ 2,856,758 $ 2,784,162 $ 1,811,208 $ 1,768,905 $ 1,712,598
Total capitalization (6) 8,959,887 9,154,526 6,409,685 6,020,188 6,476,814
Total debt/total capitalization 31.9% 30.4% 28.3% 29.4% 26.4%
Company Overview
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 6
Financial Highlights
Company Overview
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 7
$0.43
$0.41
$0.39
$0.37
$0.35
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
$0.39 $0.39
$0.40 $0.40 $0.40
$0.41 $0.41
$0.39
$0.42
5.0x
4.5x
4.0x
3.5x
3.0x
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
3.77x
3.84x 3.85x
4.06x 4.08x
4.20x
4.30x
4.39x 4.35x
48%
44%
40%
36%
32%
28%
24%
20%
16%
12%
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
33.1%
31.4%
30.0%
26.2% 26.4%
29.4%
28.3%
30.4%
31.9%
4.0%
3.5%
3.0%
2.5%
2.0%
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
3.1% 3.1%
3.0%
3.1%
3.3%
2.9%
3.2%
3.1%
2.9%
Consistent Same Store Growth
Long-Term Expectation of 2% to 3% Same Store Growth
Increasing Normalized FFO Growth Fixed Charge Coverage
Debt/Total Capitalization
Investments in Real Estate (1) $ 7.0
Total portfolio GLA (2) 24.2
Leased rate (3) 91.7%
Same-Property portfolio tenant retention rate (YTD) (4) 78%
% of GLA on-campus/aligned 96%
% of invested dollars in key markets & top 75 MSAs (5) 93%
Investment grade tenants (6) 47%
Credit rated tenants (6) 61%
Weighted average remaining lease term for all buildings (7) 5.6
Weighted average remaining lease term for single-tenant buildings (7) 8.4
Weighted average remaining lease term for multi-tenant buildings (7) 4.6
Credit ratings (by Moody’s and Standard & Poor’s) Baa2(Negative)/BBB(Stable)
Cash and cash equivalents (2) $ 9.4
Debt/total capitalization 31.9%
Weighted average interest rate per annum on portfolio debt (8) 3.44%
Building Type Presence in Top MSAs (9)
Company Snapshot
(as of September 30, 2017)
Company Overview
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 8
(1) Amount presented in billions. Refer to page 23 for the reporting definition of Investments in Real Estate.
(2) GLA and cash presented in millions. Total portfolio GLA excludes GLA for development properties and includes 100% of the GLA for unconsolidated joint ventures.
(3) Calculations are based on percentage of total GLA, excluding GLA for development properties.
(4) Refer to page 24 for the reporting definition of Retention.
(5) Refer to page 23 for the reporting definition of Metropolitan Statistical Area.
(6) Amounts based on annualized base rent.
(7) Amounts presented in years.
(8) Includes the impact of interest rate swaps.
(9) Refer to page 13 for a detailed table of HTA’ s Key Markets and Top 75 MSA Concentration.
% of Portfolio (based on GLA) % of Portfolio (based on invested dollars)
Medical Office Buildings
95%
Hospitals
4%
Senior Care
1%
Additional Top 75
MSAs
40.8%
All Other Markets
6.7%
Dallas, TX
11.8%
Houston, TX
6.2%
Boston, MA
5.9%
Tampa, FL
5.0%
Atlanta, GA
4.7%
Indianapolis, IN
4.0%
Hartford/New
Haven, CT
3.9% Phoenix, AZ
3.8%
Denver, CO
3.5%
Orange County/Los
Angeles, CA
3.7%
FFO, Normalized FFO and Normalized FAD Three Months Ended Nine Months Ended
3Q17 3Q16 3Q17 3Q16
Net income attributable to common stockholders $ 13,763 $ 6,427 $ 21,390 $ 29,361
Depreciation and amortization expense related to investments in real estate 70,021 47,545 171,678 129,477
Gain on sale of real estate, net — — (3) (4,212)
Impairment — — 5,093 —
Proportionate share of joint venture depreciation, amortization and other
adjustments 464 — 506 —
FFO attributable to common stockholders $ 84,248 $ 53,972 $ 198,664 $ 154,626
Transaction expenses (1) 261 1,122 975 4,997
(Gain) loss on change in fair value of derivative financial instruments, net — (1,306) (884) 2,144
Loss on extinguishment of debt, net 774 3,000 11,192 3,022
Noncontrolling income from partnership units included in diluted shares 166 211 635 802
Other normalizing items, net (2) — 133 4,643 117
Normalized FFO attributable to common stockholders $ 85,449 $ 57,132 $ 215,225 $ 165,708
Other expense (income) 27 (95) 13 (220)
Non-cash compensation expense 1,654 2,103 5,493 5,136
Straight-line rent adjustments, net (3,009) (1,161) (5,834) (3,636)
Amortization of (below) and above market leases/leasehold interests and
corporate assets, net 683 323 1,467 1,476
Deferred revenue - tenant improvement related (12) 7 (23) —
Amortization of deferred financing costs and debt discount/premium, net 1,290 795 2,929 2,288
Recurring capital expenditures, tenant improvements and leasing
commissions (11,315) (9,882) (31,020) (22,866)
Normalized FAD attributable to common stockholders $ 74,767 $ 49,222 $ 188,250 $ 147,886
Net income attributable to common stockholders per diluted share $ 0.07 $ 0.04 $ 0.12 $ 0.21
FFO adjustments per diluted share, net 0.34 0.34 1.00 0.91
FFO attributable to common stockholders per diluted share $ 0.41 $ 0.38 $ 1.12 $ 1.12
Normalized FFO adjustments per diluted share, net 0.01 0.02 0.09 0.08
Normalized FFO attributable to common stockholders per diluted share $ 0.42 $ 0.40 $ 1.21 $ 1.20
Weighted average diluted common shares outstanding 204,795 143,138 177,410 138,314
Adjusted EBITDAre (3)
Three Months
Ended
3Q17
Net income $ 13,957
Interest expense and net change in fair value of derivative financial
instruments 26,188
Depreciation and amortization expense 70,491
Proportionate share of joint venture depreciation, amortization and other
adjustments 464
EBITDAre $ 111,100
Transaction expenses 261
Loss on extinguishment of debt, net 774
Non-cash compensation expense 1,654
Pro forma impact of acquisitions 640
114,429
Adjusted EBITDAre $ 457,716
FFO, Normalized FFO, Normalized FAD and Adjusted EBITDAre
(unaudited and in thousands, except per share data)
Financial Information
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 9
(1) For the three and nine months ended 3Q17, amounts have been adjusted to reflect the prospective presentation of the early adoption of ASU 2017-01 as of January 1, 2017.
(2) For the nine months ended 3Q17, other normalizing items include $4.6 million of compensation and severance payments to Duke employees pursuant to the Duke purchase agreements
in connection with the Duke acquisition that were included in transaction expenses on HTA’s condensed consolidated statements of operations. In addition, other normalizing items
excludes lease termination fees as they are deemed to be generated in the ordinary course of business.
(3) Refer to page 23 for the reporting definitions of EBiTDAre as defined by NAREIT and Adjusted EBITDAre as previously defined as Adjusted EBITDA.
.
Capitalization
Unsecured revolving credit facility $ 75,000
Unsecured term loans 500,000
Unsecured senior notes 1,850,000
Secured mortgage loans 454,022
Deferred financing costs, net (16,552)
Discount, net (5,712)
Total debt $ 2,856,758
Stock price (as of September 30, 2017) $ 29.80
Total diluted common shares outstanding 204,803
Equity capitalization $ 6,103,129
Total capitalization $ 8,959,887
Total undepreciated assets $ 7,387,088
Gross book value of unencumbered assets $ 6,230,451
Debt/total capitalization 31.9%
Debt/undepreciated assets 38.7%
Debt/Adjusted EBITDAre ratio 6.2x
Equity
68%
Secured
Debt
5%
Unsecured
Debt
27%
Financial Information
Capitalization, Interest Expense and Covenants
(as of September 30, 2017, dollars and shares in thousands, except stock price)
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 10
Interest Expense
Covenants
Three Months Ended Nine Months Ended
3Q17 3Q16 3Q17 3Q16
Interest related to derivative financial instruments $ 264 $ 552 $ 827 $ 1,856
(Gain) loss on change in fair value of derivative financial instruments,
net (1) — (1,306) (884) 2,144
Total interest related to derivative financial instruments, including net
change in fair value of derivative financial instruments
264 (754) (57) 4,000
Interest related to debt 25,924 16,386 59,688 44,503
Total interest expense $ 26,188 $ 15,632 $ 59,631 $ 48,503
Interest expense excluding net change in fair value of derivative
financial instruments $ 26,188 $ 16,938 $ 60,515 $ 46,359
Bank Loans Required 3Q17
Total leverage ≤ 60% 37%
Secured leverage ≤ 30% 6%
Fixed charge coverage ≥ 1.50x 4.35x
Unencumbered leverage ≤ 60% 35%
Unencumbered coverage ≥ 1.75x 4.42x
Senior Notes Required 3Q17
Total leverage ≤ 60% 40%
Secured leverage ≤ 40% 6%
Unencumbered asset coverage ≥ 150% 268%
Interest coverage ≥ 1.50x 4.43x
(1) In March 2017, HTA designated its derivative financial instruments as cash flow hedges.
Unsecured Revolving Credit Facility due 2022 Secured Mortgage Loans
Unsecured Senior Notes due 2021 Unsecured Senior Notes due 2022
Unsecured Term Loan due 2023 ($300M) Unsecured Senior Notes due 2023
Unsecured Term Loan due 2023 ($200M) Unsecured Senior Notes due 2026
Unsecured Senior Notes due 2027
$2,400,000
$2,200,000
$2,000,000
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
Remainder of 2017 2018 2019 2020 2021 Thereafter
Financial Information
Debt Composition and Maturity Schedule
(as of September 30, 2017, dollars in thousands)
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 11
Unsecured
Revolving
Credit Facility
due 2022 (1)
Secured
Mortgage
Loans
Unsecured
Senior Notes
due 2021
Unsecured
Senior Notes
due 2022
Unsecured
Term Loan
due 2023
Unsecured
Senior Notes
due 2023
Unsecured
Term Loan
due 2023
Unsecured
Senior Notes
due 2026
Unsecured
Senior Notes
due 2027 Total
Remainder of 2017 $ — $ 1,166 $ — $ — $ — $ — $ — $ — $ — $ 1,166
2018 — 100,827 — — — — — — — 100,827
2019 — 105,940 — — — — — — — 105,940
2020 — 144,892 — — — — — — — 144,892
2021 — 3,933 300,000 — — — — — — 303,933
Thereafter 75,000 97,264 — 400,000 300,000 300,000 200,000 350,000 500,000 2,222,264
Subtotal 75,000 454,022 300,000 400,000 300,000 300,000 200,000 350,000 500,000 2,879,022
Deferred financing
costs, net — (210) (1,634) (2,994) (2,525) (1,899) (1,727) (1,437) (4,126) (16,552)
Premiums
(discounts), net — 1,669 (1,235) (234) — (1,396) — (2,041) (2,475) (5,712)
Total $ 75,000 $ 455,481 $ 297,131 $ 396,772 $ 297,475 $ 296,705 $ 198,273 $ 346,522 $ 493,399 $ 2,856,758
Stated rate (2) 2.30% 4.31% 3.38% 2.95% 2.40% 3.70% 2.90% 3.50% 3.75% 3.41%
Hedged rate (3) 2.30% 4.46% 3.38% 2.95% 2.40% 3.70% 2.93% 3.50% 3.75% 3.44%
Debt Composition
(1) Rate does not include the 20 basis point facility fee that is payable on the entire $1.0 billion revolving credit facility.
(2) The stated rate on the debt instrument as of the end of the period.
(3) The effective rate incorporates any swap instruments that serve to fix variable rate debt, as of the end of the period.
Debt Maturity Schedule
$1,166
$100,827 $105,940 $144,892
$303,933
$2,222,264
(1)
Property Market Date Acquired
% Leased at
Acquisition Purchase Price (1) GLA (2)
MatureWell MOB College Station, TX January 100% $ 13,600 23
Medical Village of Tampa MOB Tampa, FL March 100 21,100 55
Dignity MOB (11 buildings) AZ & CA May 87 150,000 591
Northwest Houston MOB (4 buildings) Cypress/Houston, TX May 99 137,600 370
Texas Health MOB Fort Worth, TX May 100 38,500 78
Lake Norman MOB (3 buildings) Charlotte, NC June 54 16,590 143
Duke Asset Acquisition (71 properties & 1 land
parcel) (3) Various May/June/July 94 2,243,905 5,153
Optimal MOB (7 buildings) Tampa, FL June/July/August 99 76,835 197
Total $ 2,698,130 6,610
Portfolio Information
Investment Activity
(as of September 30, 2017, dollars and GLA in thousands)
2017 Acquisitions
Annual Investments (4)
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 12
(1) The total purchase price excludes development credits received at closing of the Duke acquisition.
(2) The total GLA includes the GLA of projects under development.
(3) includes HTA’s investment in an unconsolidated joint venture of $68.8 million as of the date of acquisition.
(4) Excludes real estate note receivables and corporate assets.
2017 Dispositions
As of September 30, 2017, HTA has invested $7.0 billion primarily in MOBs and other healthcare assets comprising 24.2 million square feet of GLA.
Property Market Date Disposed Disposition Price GLA
Baylor Medical MOB Waxahachie, TX February $ 5,000 48
Acquisitions Dispositions
$2,900,000
$2,300,000
$1,700,000
$1,100,000
$500,000
-$100,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
$413,150
$542,976 $455,950
$802,148
$68,314
($39,483)
$294,937
$397,826
$271,510
$439,530
$700,764
($35,685)($82,885) ($5,000)
$2,698,130
Region Investment % of Investment Total GLA (1) % of Portfolio
Annualized
Base Rent (2)
% of
Annualized
Base Rent
Southwest $ 2,612,365 37.4% 8,002 33.1% $ 177,013 33.8%
Southeast 1,988,162 28.5 7,273 30.1 158,094 30.1
Northeast 1,266,888 18.2 4,690 19.4 104,845 20.0
Midwest 1,104,893 15.8 4,167 17.3 83,817 16.0
Northwest 7,750 0.1 22 0.1 542 0.1
Total $ 6,980,058 100% 24,154 100% $ 524,311 100%
Portfolio Information
Regional Portfolio Distribution and Key Markets and Top 75 MSA Concentration
(as of September 30, 2017, dollars and GLA in thousands)
Regional Portfolio Distribution
Key Markets and Top 75 MSA Concentration (3)
(1) Total portfolio GLA excludes GLA for development properties and includes 100% of the GLA for unconsolidated joint ventures.
(2) Refer to page 23 for the reporting definition of Annualized Base Rent.
(3) Key markets are titled as such based on HTA’s concentration in the respective MSA.
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 13
Key Markets Investment
% of
Investment Total GLA % of Portfolio
Annualized
Base Rent
% of
Annualized
Base Rent
Dallas, TX $ 824,024 11.8% 1,934 8.0% $ 46,690 8.9%
Houston, TX 430,979 6.2 1,512 6.3 31,201 6.0
Boston, MA 410,730 5.9 1,037 4.3 32,716 6.2
Tampa, FL 347,764 5.0 943 3.9 22,445 4.3
Atlanta, GA 325,186 4.7 1,088 4.5 22,575 4.3
Indianapolis, IN 281,768 4.0 1,396 5.8 24,312 4.6
Hartford/New Haven, CT 269,177 3.9 953 3.9 20,301 3.9
Phoenix, AZ 267,781 3.8 1,315 5.4 24,535 4.7
Orange County/Los Angeles, CA 255,042 3.7 578 2.4 15,141 2.9
Denver, CO 246,957 3.5 538 2.2 17,054 3.3
Miami, FL 223,537 3.2 996 4.1 21,239 4.1
Chicago, IL 190,778 2.7 382 1.6 11,220 2.1
Raleigh, NC 185,564 2.7 563 2.3 14,886 2.8
Albany, NY 179,253 2.6 881 3.7 16,152 3.1
Greenville, SC 179,070 2.6 965 4.0 17,613 3.4
Austin, TX 164,425 2.3 408 1.7 8,260 1.6
Milwaukee, WI 156,782 2.2 498 2.1 11,671 2.2
Orlando, FL 156,300 2.2 510 2.1 10,635 2.0
Pittsburgh, PA 148,612 2.1 1,094 4.5 20,508 3.9
White Plains, NY 126,144 1.8 333 1.4 7,570 1.4
Top 20 MSAs 5,369,873 76.9 17,924 74.2 396,724 75.7
Additional Top 75 MSAs 1,145,136 16.4 4,404 18.2 88,199 16.8
Total Key Markets & Top 75
MSAs $ 6,515,009 93.3% 22,328 92.4% $ 484,923 92.5%
Portfolio Information
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 14
Development Market Total GLA % Leased
Baptist Memorial Oxford MOB Oxford, TN 80 90%
BS&W EMC - Grand Prairie MOB Dallas, TX 27 100
Stabilized Total 107 93
Main Line Bryn Mawr MOB Philadelphia, PA 101 57%
Centegra Health MOB Chicago, IL 81 83
Unstabilized Total 182 69
UNC REX Holly Springs MOB Raleigh, NC 45 100
Memorial Hermann Plaza II MOB Houston, TX 99 100
Providence Facey MOB Orange County, CA 37 100
Construction in Progress total 181 100
Total 470 86%
Development
Completion/
Estimated
Completion
Total
Construction Cost
Construction in
Progress Costs to Complete
Baptist Memorial Oxford MOB 3Q17 $ 19,042 $ 17,618 $ 1,424
BS&W EMC - Grand Prairie MOB 3Q17 14,775 12,377 2,398
Stabilized Total 33,817 29,995 3,822
Main Line Bryn Mawr MOB 1Q17 32,296 30,779 1,517
Centegra Health MOB 1Q17 24,625 23,704 921
Unstabilized Total 56,921 54,483 2,438
UNC REX Holly Springs MOB 4Q17 14,534 13,627 907
Memorial Hermann Plaza II MOB 2Q18 20,674 2,462 18,212
Providence Facey MOB 2Q18 18,165 6,060 12,105
Construction in Progress total $ 53,373 $ 22,149 $ 31,224
Stabilized yield 6.8%
Total construction costs/gross real estate
investments 2.1%
Three Months Ended Nine Months Ended
3Q17 3Q17
Recurring capital expenditures $ 6,667 $ 13,685
Tenant improvements - 2nd generation 2,612 10,293
Lease commissions 2,036 7,042
Total recurring capital expenditures $ 11,315 $ 31,020
Capital expenditures - 1st generation/acquisition 354 2,264
Tenant improvements - 1st generation 1,382 3,667
Redevelopment 1,884 7,286
Total capital expenditures $ 14,935 $ 44,237
Development Summary and Capital Expenditures
(as of September 30, 2017, dollars and GLA in thousands)
Development Summary - Property Information
Development Summary - Financial Information
Capital Expenditures
Three Months Ended Sequential Year-Over-Year
3Q17 2Q17 3Q16 $ Change % Change $ Change % Change
Rental revenue $ 90,775 $ 90,293 $ 89,433 $ 482 0.5% $ 1,342 1.5%
Tenant recoveries 26,491 26,512 23,994 (21) (0.1) 2,497 10.4
Total rental income 117,266 116,805 113,427 461 0.4 3,839 3.4
Expenses 36,981 37,034 35,384 (53) (0.1) 1,597 4.5
Same-Property Cash NOI $ 80,285 $ 79,771 $ 78,043 $ 514 0.6% $ 2,242 2.9%
Rental Margin (1) 88.4% 88.3% 87.3%
As of
3Q17 2Q17 3Q16
Number of buildings 338 338 338
GLA 16,832 16,831 16,824
Leased GLA, end of period 15,389 15,442 15,440
Leased %, end of period 91.4% 91.7% 91.7%
NOI (2) Three Months Ended
3Q17 3Q16
Net income $ 13,957 $ 6,639
General and administrative expenses 8,283 7,293
Transaction expenses (3) 261 1,122
Depreciation and amortization expense 70,491 47,864
Interest expense and net change in fair value of derivative financial instruments 26,188 15,632
Loss on extinguishment of debt, net 774 3,000
Income from unconsolidated joint venture (318) —
Other expense (income) 27 (95)
NOI $ 119,663 $ 81,455
NOI percentage growth 46.9%
NOI $ 119,663 $ 81,455
Straight-line rent adjustments, net (3,009) (1,161)
Amortization of (below) and above market leases/leasehold interests, net and lease termination fees 214 3
Cash NOI $ 116,868 $ 80,297
Notes receivable interest income (503) (68)
Non Same-Property Cash NOI (36,080) (2,186)
Same-Property Cash NOI $ 80,285 $ 78,043
Same-Property Cash NOI percentage growth 2.9%
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 15
Portfolio Information
Same-Property Performance and NOI
(as of September 30, 2017, unaudited and dollars and GLA in thousands)
Same-Property Performance
(1) Rental margin percentage presents Same-Property Cash NOI divided by Same-Property rental revenue for the quarter.
(2) Refer to pages 23 and 24 for the reporting definitions of NOI, Cash NOI and Same-Property Cash NOI.
(3) For the period ended 3Q17, amounts have been adjusted to reflect the prospective presentation of the early adoption of ASU 2017-01 as of January 1, 2017.
As of
3Q17 2Q17 1Q17 4Q16 3Q16
Off-campus aligned 26% 26% 29% 30% 29%
On-campus 70 71 67 67 68
On-campus/aligned 96% 97% 96% 97% 97%
Off-campus/non-aligned 4 3 4 3 3
Total 100% 100% 100% 100% 100%
Number of
Buildings
Number of
States GLA (1)
% of Total
GLA
Annualized
Base Rent
% of
Annualized
Base Rent
Medical Office Buildings
Single-tenant 120 22 6,520 27.0% $ 149,070 28.4%
Multi-tenant 312 31 16,325 67.6 337,669 64.4
Other Healthcare Facilities
Hospitals 15 7 954 3.9 32,330 6.2
Senior care 3 1 355 1.5 5,242 1.0
Total 450 33 24,154 100% $ 524,311 100%
Number of
Buildings
Number of
States GLA (1)
% of Total
GLA
Annualized
Base Rent
% of
Annualized
Base Rent
Net-Lease/Gross-Lease
Net-lease 295 30 15,381 63.7% $ 341,094 65.1%
Gross-lease 155 20 8,773 36.3 183,217 34.9
Total 450 33 24,154 100% $ 524,311 100%
(1) Total portfolio GLA excludes GLA for development properties and includes 100% of the GLA for unconsolidated joint ventures.
(2) Percentages shown as percent of total GLA.
(3) Refer to page 24 for the reporting definitions of Off-campus/non-aligned and On-campus/aligned.
(4) Refer to pages 23 and 24 for the reporting definitions of Customary Health System Restrictions, Economic with Limited Restrictions, and Occupancy Health System Restrictions.
Portfolio Information
Portfolio Diversification by Type, Historical Campus Proximity and Ownership Interests
(as of September 30, 2017, dollars and GLA in thousands)
Portfolio Diversification by Type
Historical Campus Proximity (2)(3)
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 16
Ownership Interests (4)
Number of
Buildings GLA (1)
Annualized
Base Rent
% of
Annualized
Base Rent
As of (2)
3Q17 2Q17 1Q17 4Q16 3Q16
Fee Simple 309 15,058 $ 328,369 63% 62% 62% 69% 68% 68%
Customary Health System
Restrictions 126 8,106 175,049 33 34 34 26 26 26
Economic with Limited
Restrictions 5 262 6,736 1 1 1 1 2 2
Occupancy Health System
Restrictions 10 728 14,157 3 3 3 4 4 4
Leasehold Interest Subtotal 141 9,096 195,942 37 38 38 31 32 32
Total 450 24,154 $ 524,311 100% 100% 100% 100% 100% 100%
Total GLA Average Term (2)
Average Base Rent (3) Tenant
Improvements (3)
Leasing
Commissions (3) Expiring Starting
1Q 2017
New Leases 172 5.5 $ 21.60 $ 22.51 $ 18.09 $ 2.28
Renewal Leases 604 4.9 23.18 22.64 7.16 1.24
Total 1Q 2017 776 5.0 23.07 22.63 9.62 1.48
2Q 2017
New Leases 107 5.8 24.76 23.97 20.46 1.75
Renewal Leases 412 4.4 21.92 22.19 6.64 0.94
Total 2Q 2017 519 4.7 22.19 22.36 9.49 1.11
3Q 2017
New Leases 224 6.2 22.65 22.74 17.18 1.92
Renewal Leases 521 5.5 21.76 22.24 8.58 1.02
Total 3Q 2017 745 5.7 21.94 22.34 11.18 1.29
YTD 2017
New Leases 503 5.8 22.89 22.97 18.18 2.01
Renewal Leases 1,537 5.0 22.41 22.39 7.50 1.09
Total YTD 2017 2,040 5.2 $ 22.47 $ 22.46 $ 10.15 $ 1.32
As of
3Q17 2Q17 1Q17 4Q16 3Q16
Total portfolio leased rate 91.7% 92.0% 91.8% 91.9% 91.8%
On-campus/aligned leased rate 91.7% 92.0% 91.8% 91.9% 91.8%
Off-campus/non-aligned leased rate 92.5% 92.3% 90.3% 90.1% 90.8%
Total portfolio occupancy rate 90.6% 91.1% 91.0% 91.2% 91.3%
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 17
Portfolio Information
Historical Leased Rate, New and Renewal Leasing Activity and Tenant Lease Expirations
(as of September 30, 2017, dollars and GLA in thousands)
New and Renewal Leasing Activity
Historical Leased Rate (1)
Expiration
Number of
Expiring Leases
Total GLA of
Expiring Leases
% of GLA of
Expiring Leases
Annualized Base
Rent of Expiring
Leases
% of Total
Annualized
Base Rent
Month-to-month 127 245 1.1% $ 4,932 0.9%
2017 165 472 2.1 10,590 2.0
2018 542 2,199 9.9 48,615 9.3
2019 508 2,314 10.5 59,781 11.4
2020 422 1,920 8.7 45,870 8.7
2021 488 2,539 11.5 55,910 10.7
2022 370 2,157 9.7 50,428 9.6
2023 158 1,329 6.0 26,953 5.1
2024 162 1,894 8.6 43,492 8.3
2025 134 958 4.3 20,405 3.9
2026 133 1,088 4.9 21,809 4.2
Thereafter 303 5,032 22.7 135,526 25.9
Total 3,512 22,147 100% $ 524,311 100%
Tenant Lease Expirations
(1) Calculations are based on percentage of total GLA, excluding GLA for development properties and including 100% of the GLA for unconsolidated joint ventures.
(2) Amounts presented in years.
(3) Amounts presented per square feet.
Health System
Weighted
Average
Remaining
Lease Term (2)
Credit
Rating
Total Leased
GLA
% of
Leased
GLA
Annualized
Base Rent
% of
Annualized
Base Rent
Baylor Scott & White Health 8 Aa3 851 3.9% $ 22,611 4.3%
Highmark-Allegheny Health Network (3) 5 Baa2 914 4.1 17,615 3.4
Greenville Health System 6 A1 798 3.6 15,415 2.9
Community Health Systems (TN) 6 B2 737 3.3 15,369 2.9
Tufts Medical Center 10 Aa2 252 1.1 10,251 2.0
Steward Health Care System 9 B2 380 1.7 9,418 1.8
Hospital Corporation of America 3 B1 356 1.6 9,049 1.7
Tenet Healthcare System 8 B2 385 1.7 8,997 1.7
Providence St. Joseph Health 2 Aa3 262 1.2 8,942 1.7
Ascension Health 2 Aa2 288 1.3 8,285 1.6
Harbin Clinic 10 N/A 313 1.4 6,601 1.3
Aurora Health Care 7 A2 277 1.3 6,385 1.2
Adventist Health 4 Aa2 289 1.3 6,365 1.2
Mercy Health 9 Aa3 251 1.1 6,184 1.2
Carolinas Medical Center 3 Aa3 190 0.9 5,598 1.1
Total 6,543 29.5% $ 157,085 30.0%
As of September 30, 2017, HTA’s in-house property management and leasing platform operated approximately 22.2 million square feet of GLA, or 92%, of
HTA’s total portfolio.
Portfolio Information
Key Health System Relationships and In-House Property Management and Leasing Platform
(as of September 30, 2017, dollars and GLA in thousands, except as otherwise noted)
Key Health System Relationships (1)
In-House Property Management and Leasing Platform
(1) The amounts in this table illustrate only direct leases with selected top health systems in the HTA portfolio and is not inclusive of all HTA’s health system tenants.
(2) Amounts presented in years.
(3) Credit rating refers to Highmark, Inc.
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 18
HTA Properties
Existing Property Management Offices
New Property Management Offices
Adventist Health (Aa2), headquartered in Roseville, California, serves more than 75 communities in the western states. Adventist Health
consists of 20 hospitals, more than 280 clinics, 14 home care agencies, 7 hospice agencies, 4 joint-venture retirement communities, and
approximately 5,000 medical staff. In 2016, Adventist Health had more than 6.3 million patient visits.
Ascension Health (Aa2), located in St. Louis, Missouri, is the largest non-profit health system in the United States which includes
approximately 150,000 associates and 36,000 aligned providers. Ascension Health operates 2,500 sites including 141 hospitals and 30 senior
living facilities located in 22 states and the District of Columbia. In 2016, Ascension Health had over 39 million patient visits to their care
locations.
Baylor Scott & White Health (Aa3), headquartered in Dallas, Texas, is the largest not-for-profit health care system in Texas. Baylor Scott &
White Health was started in 2013 with the combination of Baylor Health Care System and Scott & White Healthcare. BS&W includes 48
hospitals, more than 1,000 patient care sites, and more than 9,600 active physicians. BS&W provides inpatient, outpatient, rehabilitation, and
emergency medical services helping 5.1 million patients annually.
Community Health Systems (TN) (B2), headquartered in Franklin, Tennessee, is one of the nation’s leading operators of general acute care
hospitals. The organization includes 137 affiliated hospitals in 21 states with approximately 123,000 employees and 20,000 physicians.
Affiliated hospitals are dedicated to providing quality healthcare for local residents and contribute to the economic development of their
communities. Based on the unique needs of each community served, these hospitals offer a wide range of diagnostic, medical and surgical
services in inpatient and outpatient settings.
Greenville Health System (A1), located in Greenville, South Carolina, is a public not-for-profit academic healthcare delivery system committed
to medical excellence through clinical care, education and research. GHS is a health resource for its community and a leader in transforming
the delivery of healthcare for the benefit of people and communities served. The University of South Carolina School of Medicine Greenville is
located on GHS’ Greenville Memorial Medical Campus. The medical school is focused on transforming healthcare by training physicians to
connect with communities, patients, colleagues and technology in a new, more progressive way.
Highmark-Allegheny Health Network (Baa2), based in Pittsburgh, Pennsylvania, is a diversified healthcare partner that serves members
across the United States through its businesses in health insurance, dental insurance, vision care and reinsurance. In 2013, Highmark and
West Penn Allegheny combined to create an integrated care delivery model which they believe will preserve an important community asset that
provides high-quality, efficient health care for patients. Highmark’s mission is to deliver high quality, accessible, understandable and affordable
experiences, outcomes and solutions to their customers.
Hospital Corporation of America (B1), based in Nashville, Tennessee, HCA was one of the nation’s first hospital companies. Today, they are
a company comprised of locally managed facilities that includes approximately 171 hospitals, 118 freestanding surgery centers in 20 states and
the United Kingdom employing approximately 233,000 people. Approximately four to five percent of all inpatient care delivered in the country
today is provided by HCA facilities. HCA is committed to the care and improvement of human life and strives to deliver high quality, cost
effective healthcare in the communities they serve.
Providence St. Joseph Health (Aa3), based in Seattle, Washington and Irvine, California, is held together by Providence Health and Services
and St. Joseph Health, a not-for-profit health and social services system that will serve as the parent organization for more than 100,000
caregivers (employees) across seven states.
Steward Health Care System (B2), located in Boston, Massachusetts, is a community-based accountable care organization and community
hospital network with 3,000 physicians, 10 hospital campuses, 24 affiliated urgent care providers, home care, hospice and other services. The
system serves more than one million patients annually in over 150 communities in the greater Boston area. Other Steward Health Care entities
include Steward Medical Group, Steward Health Care Network, and Steward Home Care.
Tenet Healthcare System (B2), located in Dallas, Texas, is a leading health care services company. Through its network, Tenet operates 80
hospitals, over 470 outpatient centers and has over 130,000 employees. Across the network, compassionate, quality care is provided to millions
of patients through a wide range of services. Tenet is affiliated with Conifer Health Solutions, which helps hospitals, employers and health
insurance companies improve the efficiency and performance of their operations and the health of the people they serve.
Portfolio Information
Health System Relationship Highlights
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 19
As of
3Q17 4Q16
ASSETS
Real estate investments:
Land $ 480,850 $ 386,526
Building and improvements 5,788,837 3,466,516
Lease intangibles 648,591 467,571
Construction in progress 59,573 —
6,977,851 4,320,613
Accumulated depreciation and amortization (973,566) (817,593)
Real estate investments, net 6,004,285 3,503,020
Investment in unconsolidated joint venture 68,303 —
Cash and cash equivalents 9,410 11,231
Restricted cash and escrow deposits 17,469 13,814
Receivables and other assets, net 206,030 173,461
Other intangibles, net 108,025 46,318
Total assets $ 6,413,522 $ 3,747,844
LIABILITIES AND EQUITY
Liabilities:
Debt $ 2,856,758 $ 1,768,905
Accounts payable and accrued liabilities 159,070 105,034
Derivative financial instruments - interest rate swaps 1,441 1,920
Security deposits, prepaid rent and other liabilities 61,402 49,859
Intangible liabilities, net 69,852 37,056
Total liabilities 3,148,523 1,962,774
Commitments and contingencies
Redeemable noncontrolling interests 4,692 4,653
Equity:
Preferred stock, $0.01 par value; 200,000,000 shares authorized; none issued and
outstanding — —
Class A common stock, $0.01 par value; 1,000,000,000 shares authorized; 200,686,673 and
141,719,134 shares issued and outstanding as of September 30, 2017 and December 31,
2016, respectively 2,007 1,417
Additional paid-in capital 4,386,224 2,754,818
Accumulated other comprehensive loss (615) —
Cumulative dividends in excess of earnings (1,212,051) (1,068,961)
Total stockholders’ equity 3,175,565 1,687,274
Noncontrolling interests 84,742 93,143
Total equity 3,260,307 1,780,417
Total liabilities and equity $ 6,413,522 $ 3,747,844
Financial Statements
Condensed Consolidated Balance Sheets
(unaudited and in thousands, except share data)
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 20
Three Months Ended Nine Months Ended
3Q17 3Q16 3Q17 3Q16
Revenues:
Rental income $ 175,431 $ 118,252 $ 438,949 $ 338,646
Interest and other operating income 563 88 1,271 243
Total revenues 175,994 118,340 440,220 338,889
Expenses:
Rental 56,331 36,885 138,874 105,299
General and administrative 8,283 7,293 25,178 20,879
Transaction 261 1,122 5,618 4,997
Depreciation and amortization 70,491 47,864 172,900 130,430
Impairment — — 5,093 —
Total expenses 135,366 93,164 347,663 261,605
Income before other income (expense) 40,628 25,176 92,557 77,284
Interest expense:
Interest related to derivative financial instruments (264) (552) (827) (1,856)
Gain (loss) on change in fair value of derivative financial instruments,
net — 1,306 884 (2,144)
Total interest related to derivative financial instruments, including net
change in fair value of derivative financial instruments (264) 754 57 (4,000)
Interest related to debt (25,924) (16,386) (59,688) (44,503)
Gain on sale of real estate, net — — 3 4,212
Loss on extinguishment of debt, net (774) (3,000) (11,192) (3,022)
Income from unconsolidated joint venture 318 — 381 —
Other (expense) income (27) 95 (13) 220
Net income $ 13,957 $ 6,639 $ 22,105 $ 30,191
Net income attributable to noncontrolling interests (194) (212) (715) (830)
Net income attributable to common stockholders $ 13,763 $ 6,427 $ 21,390 $ 29,361
Earnings per common share - basic:
Net income attributable to common stockholders $ 0.07 $ 0.05 $ 0.12 $ 0.22
Earnings per common share - diluted:
Net income attributable to common stockholders $ 0.07 $ 0.04 $ 0.12 $ 0.21
Weighted average common shares outstanding:
Basic 200,674 138,807 173,189 134,905
Diluted 204,795 143,138 177,410 138,314
Dividends declared per common share $ 0.305 $ 0.300 $ 0.905 $ 0.890
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Healthcare Trust of America, Inc. I 21
Financial Statements
Condensed Consolidated Statements of Operations
(unaudited and in thousands, except per share data)
Nine Months Ended
3Q17 3Q16
Cash flows from operating activities:
Net income $ 22,105 $ 30,191
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other 169,057 128,728
Share-based compensation expense 5,493 5,136
Bad debt expense 635 508
Impairment 5,093 —
Income from unconsolidated joint venture (381) —
Gain on sale of real estate, net (3) (4,212)
Loss on extinguishment of debt, net 11,192 3,022
Change in fair value of derivative financial instruments (884) 2,144
Changes in operating assets and liabilities:
Receivables and other assets, net (20,489) (14,051)
Accounts payable and accrued liabilities 29,566 3,598
Prepaid rent and other liabilities 7,158 (6,807)
Net cash provided by operating activities 228,542 148,257
Cash flows from investing activities:
Investments in real estate (2,357,570) (532,527)
Investment in unconsolidated joint venture (68,839) —
Development of real estate (19,163) —
Proceeds from the sale of real estate 4,746 23,368
Capital expenditures (42,990) (34,064)
Restricted cash, escrow deposits and other assets (3,655) 2,143
Net cash used in investing activities (2,487,471) (541,080)
Cash flows from financing activities:
Borrowings on unsecured revolving credit facility 515,000 513,000
Payments on unsecured revolving credit facility (528,000) (704,000)
Proceeds from unsecured senior notes 900,000 347,725
Borrowings on unsecured term loans — 200,000
Payments on unsecured term loans — (155,000)
Payments on secured mortgage loans (75,444) (98,453)
Deferred financing costs (16,902) (3,039)
Debt extinguishment costs (10,391) —
Security deposits 1,932 862
Proceeds from issuance of common stock 1,624,222 418,891
Repurchase and cancellation of common stock (3,413) (2,425)
Dividends paid (145,877) (116,655)
Distributions paid to noncontrolling interest of limited partners (4,019) (2,724)
Redemption of redeemable noncontrolling interest — (491)
Net cash provided by financing activities 2,257,108 397,691
Net change in cash and cash equivalents (1,821) 4,868
Cash and cash equivalents - beginning of period 11,231 13,070
Cash and cash equivalents - end of period $ 9,410 $ 17,938
Financial Statements
Condensed Consolidated Statements of Cash Flows
(unaudited and in thousands)
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Healthcare Trust of America, Inc. I 22
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Healthcare Trust of America, Inc. I 23
Reporting Definitions
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“Adjusted EBITDAre”): As previously defined as
Adjusted EBITDA, Adjusted EBITDAre is presented on an assumed annualized basis. HTA defines Adjusted EBITDAre as EBITDAre (computed
in accordance with NAREIT as defined below) plus: (i) transaction expenses; (ii) gain or loss on extinguishment of debt; (iii) non-cash compensation
expense; (iv) pro forma impact of our acquisitions/dispositions; and (v) other normalizing items. HTA consider Adjusted EBITDAre an important
measure because it provides additional information to allow management, investors, and our current and potential creditors to evaluate and
compare our core operating results and our ability to service debt.
Annualized Base Rent: Annualized base rent is calculated by multiplying contractual base rent for the end of the period by 12 (excluding the
impact of abatements, concessions, and straight-line rent).
Cash Net Operating Income (“Cash NOI”): Cash NOI is a non-GAAP financial measure which excludes from NOI: (i) straight-line rent adjustments
and (ii) amortization of below and above market leases/leasehold interests. Contractual base rent, contractual rent increases, contractual rent
concessions and changes in occupancy or lease rates upon commencement and expiration of leases are a primary driver of HTA’s revenue
performance. HTA believes that Cash NOI, which removes the impact of straight-line rent adjustments, provides another measurement of the
operating performance of its operating assets. Additionally, HTA believes that Cash NOI is a widely accepted measure of comparative operating
performance of real estate investment trusts (“REITs”). However, HTA’s use of the term Cash NOI may not be comparable to that of other REITs
as they may have different methodologies for computing this amount. Cash NOI should not be considered as an alternative to net income or
loss (computed in accordance with GAAP) as an indicator of our financial performance. Cash NOI should be reviewed in connection with other
GAAP measurements.
Credit Ratings: Credit ratings of our tenants or their parent companies.
Customary Health System Restrictions: Ground leases with a health system lessor that include restrictions on tenants that may be considered
competitive with the hospital, which may include provisions that tenants must have hospital privileges.
Economic with Limited Restrictions: Ground leases that are primarily economic in nature and contain no material restrictions on tenancy.
Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”): In September 2017, NAREIT issued a white paper
defining EBITDA for real estate which HTA effectively adopted as of September 30, 2017. NAREIT defines EBITDAre as net income or loss
(computed in accordance with GAAP) plus: (i) interest expense and net change in the fair value of derivative financial instruments; (ii) income
tax expense (not applicable to HTA); (iii) depreciation and amortization; (iv) impairment; (v) gain or loss from sale of real estate; and (vi) and
proportionate share of joint venture depreciation, amortization and other adjustments.
Funds from Operations (“FFO”): HTA computes FFO in accordance with the current standards established by NAREIT. NAREIT defines FFO
as net income or loss attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real
estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and
after adjustments for unconsolidated partnerships and joint ventures. HTA presents this non-GAAP financial measure because it considers it
an important supplemental measure of its operating performance and believes it is frequently used by securities analysts, investors and other
interested parties in the evaluation of REITs. Historical cost accounting assumes that the value of real estate assets diminishes ratably over
time. Since real estate values have historically risen or fallen based on market conditions, many industry investors have considered the
presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Because FFO
excludes depreciation and amortization unique to real estate, among other items, it provides a perspective not immediately apparent from net
income or loss attributable to common stockholders.
Gross Leasable Area (“GLA”): Gross leasable area (in square feet).
Investments in Real Estate: Based on acquisition price.
Leased Rate: Leased rate represents the percentage of total GLA that is leased (excluding GLA for properties under development), including
month-to-month leases and leases which have been executed, but which have not yet commenced, as of the date reported.
Metropolitan Statistical Area (“MSA”): Is a geographical region with a relatively high population density at its core and close economic ties
throughout the area. MSAs are defined by the Office of Management and Budget.
Net Operating Income (“NOI”): NOI is a non-GAAP financial measure that is defined as net income or loss (computed in accordance with GAAP)
before: (i) general and administrative expenses; (ii) transaction expenses; (iii) depreciation and amortization expense; (iv) impairment; (v) interest
expense and net change in fair value of derivative financial instruments; (vi) gain or loss on sales of real estate; (vii) gain or loss on extinguishment
of debt; (viii) income or loss from unconsolidated joint venture; and (ix) other income or expense. HTA believes that NOI provides an accurate
measure of the operating performance of its operating assets because NOI excludes certain items that are not associated with the management
of its properties. Additionally, HTA believes that NOI is a widely accepted measure of comparative operating performance of REITs. However,
HTA’s use of the term NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount.
NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial
performance. NOI should be reviewed in connection with other GAAP measurements.
3Q 2017 I Supplemental Information
Healthcare Trust of America, Inc. I 24
Reporting Definitions - Continued
Normalized Funds Available for Distribution (“Normalized FAD”): HTA computes Normalized FAD, which excludes from Normalized FFO: (i)
other income or expense; (ii) non-cash compensation expense; (iii) straight-line rent adjustments; (iv) amortization of below and above market
leases/leasehold interests and corporate assets; (v) amortization of deferred financing costs and debt premium/discount; and (vi) recurring
capital expenditures, tenant improvements and leasing commissions. HTA believes this non-GAAP financial measure provides a meaningful
supplemental measure of our operating performance. Normalized FAD should not be considered as an alternative to net income or loss attributable
to common stockholders (computed in accordance with GAAP) as an indicator of our financial performance, nor is it indicative of cash available
to fund cash needs. Normalized FAD should be reviewed in connection with other GAAP measurements.
Normalized Funds From Operations (“Normalized FFO”): HTA computes Normalized FFO, which excludes from FFO: (i) transaction expenses;
(ii) gain or loss on change in fair value of derivative financial instruments; (iii) gain or loss on extinguishment of debt; (iv) noncontrolling income
or loss from partnership units included in diluted shares; and (v) other normalizing items, which include items that are unusual and infrequent
in nature. HTA presents this non-GAAP financial measure because it allows for the comparison of our operating performance to other REITs
and between periods on a consistent basis. HTA’s methodology for calculating Normalized FFO may be different from the methods utilized by
other REITs and, accordingly, may not be comparable to other REITs. Normalized FFO should not be considered as an alternative to net income
or loss attributable to common stockholders (computed in accordance with GAAP) as an indicator of our financial performance, nor is it indicative
of cash available to fund cash needs. Normalized FFO should be reviewed in connection with other GAAP measurements.
Occupancy Health System Restrictions: Ground leases with customary health system restrictions whereby the restrictions cease if occupancy
in the buildings/on-campus fall below stabilized occupancy, which is generally between 85% and 90%.
Off-Campus/Non-Aligned: A building or portfolio that is not located on or adjacent to a healthcare or hospital campus or does not have a majority
alignment with a recognized healthcare system.
On-Campus/Aligned: On-campus refers to a property that is located on or adjacent to a healthcare or hospital campus. Aligned refers to a
property that is not on a healthcare or hospital campus, but anchored by a healthcare system.
Recurring Capital Expenditures, Tenant Improvements and Leasing Commissions: Represents amounts paid for: (i) recurring capital expenditures
required to maintain and re-tenant our properties; (ii) second generation tenant improvements; and (iii) leasing commissions paid to secure new
tenants. Excludes capital expenditures and tenant improvements for recent acquisitions that were contemplated in the purchase price or closing
agreements.
Retention: Represents the sum of the total leased GLA of tenants that renewed a lease during the period over the total GLA of leases that
renewed or expired during the period.
Same-Property Cash Net Operating Income (“Same-Property Cash NOI”): To facilitate the comparison of Cash NOI between periods, HTA
calculates comparable amounts for a subset of its owned properties referred to as “Same-Property”. Same-Property Cash NOI excludes
properties which have not been owned and operated by HTA during the entire span of all periods presented, excluding properties intended for
disposition in the near term, notes receivable interest income and certain non-routine items. Same-Property Cash NOI should not be considered
as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance. Same-Property Cash
NOI should be reviewed in connection with other GAAP measurements.
