Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - HEALTHCARE REALTY TRUST INC | exhibit992supplementalinfo.htm |
| 8-K - 8-K - HEALTHCARE REALTY TRUST INC | hr-2018930xearnings8xk.htm |
Carla Baca
Director of Corporate Communications
P: 615.269.8175
News Release
HEALTHCARE REALTY TRUST REPORTS RESULTS FOR THE THIRD QUARTER
NASHVILLE, Tennessee, November 1, 2018 - Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the third quarter ended September 30, 2018. The Company reported net income of $6.5 million, or $0.05 per diluted common share for the quarter. Normalized FFO for the three months ended September 30, 2018 totaled $48.2 million, or $0.39 per diluted common share.
Salient quarterly highlights include:
• | Same store cash NOI for the third quarter increased 3.1% over the third quarter of 2017. For the trailing twelve months ended September 30, 2018, same store revenue grew 2.6%, operating expenses increased 2.1%, and same store cash NOI grew 2.9%: |
◦ | Same store revenue per average occupied square foot increased 2.6%. |
◦ | Average same store occupancy remained stable at 89.7%. |
• | Predictive growth measures in the same store multi-tenant portfolio include: |
◦ | In-place contractual rent increases averaged 2.88%, up from 2.78% a year ago, partially attributable to future annual contractual increases of 3.76% for leases commencing in the quarter. |
◦ | Weighted average cash leasing spreads were 3.8% on 481,000 square feet renewed: |
◦ | 8% (<0% spread) |
◦ | 7% (0-3%) |
◦ | 53% (3-4%) |
◦ | 32% (>4%) |
◦ | Tenant retention was 87.0%. |
• | Leasing activity in the third quarter totaled 687,000 square feet related to 172 leases: |
◦ | 573,000 square feet of renewals |
◦ | 114,000 square feet of new and expansion leases |
• | In September, the Company acquired a medical office building adjacent to Catholic Health Initiatives' St. Anthony Hospital campus in Denver for $4.2 million. The 100% leased, 17,000 square foot building is adjacent to six buildings totaling 523,000 square feet owned by the Company. |
• | In August, the Company sold one off-campus medical office building in St. Louis for $9.8 million. |
• | A dividend of $0.30 per common share was declared, which is equal to 76.9% of normalized FFO per share. |
• | Dividends paid as a percentage of funds available for distribution were 99.5% year-to-date. |
• | Leverage remained steady with net debt to adjusted EBITDA at 5.1 times. |
 | HEALTHCAREREALTY.COM | PAGE 1 OF 6 |
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 September 30, 2018, the Company owned 201 real estate properties in 27 states totaling 14.8 million square feet and was valued at approximately $5.0 billion. The Company provided leasing and property management services to 11.1 million square feet nationwide.
Additional information regarding the Company, including this quarter's operations, can be found at www.healthcarerealty.com. Please contact the Company at 615.269.8175 to request a printed copy of this information.
In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2017 under the heading "Risk Factors," and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims any obligation to update forward-looking statements. A reconciliation of all non-GAAP financial measures in this release is included herein.
HEALTHCARE REALTY TRUST INCORPORATED | HEALTHCAREREALTY.COM | PAGE 2 OF 6 |
Condensed Consolidated Balance Sheets 1 |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
ASSETS | |||||||
SEPTEMBER 30, 2018 | DECEMBER 31, 2017 | ||||||
Real estate properties | |||||||
Land | $217,322 | $201,283 | |||||
Buildings, improvements and lease intangibles | 3,669,852 | 3,601,460 | |||||
Personal property | 10,454 | 10,314 | |||||
Construction in progress | 26,960 | 5,458 | |||||
Land held for development | 24,645 | 20,123 | |||||
Total real estate properties | 3,949,233 | 3,838,638 | |||||
Less accumulated depreciation and amortization | (989,585 | ) | (897,430 | ) | |||
Total real estate properties, net | 2,959,648 | 2,941,208 | |||||
Cash and cash equivalents | 10,027 | 6,215 | |||||
Assets held for sale, net | 8,826 | 33,147 | |||||
Other assets, net | 222,582 | 213,015 | |||||
Total assets | $3,201,083 | $3,193,585 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
SEPTEMBER 30, 2018 | DECEMBER 31, 2017 | ||||||
Liabilities | |||||||
Notes and bonds payable | $1,344,759 | $1,283,880 | |||||
Accounts payable and accrued liabilities | 72,927 | 70,995 | |||||
Liabilities of properties held for sale | 141 | 93 | |||||
Other liabilities | 43,004 | 48,734 | |||||
Total liabilities | 1,460,831 | 1,403,702 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock, $.01 par value; 300,000 shares authorized; 125,237 and 125,132 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 1,252 | 1,251 | |||||
Additional paid-in capital | 3,181,263 | 3,173,429 | |||||
Accumulated other comprehensive income (loss) | 473 | (1,299 | ) | ||||
Cumulative net income attributable to common stockholders | 1,071,804 | 1,018,348 | |||||
Cumulative dividends | (2,514,540 | ) | (2,401,846 | ) | |||
Total stockholders' equity | 1,740,252 | 1,789,883 | |||||
Total liabilities and stockholders' equity | $3,201,083 | $3,193,585 | |||||
1 | The Condensed Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. |
HEALTHCARE REALTY TRUST INCORPORATED | HEALTHCAREREALTY.COM | PAGE 3 OF 6 |
Condensed Consolidated Statements of Income 1 |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA |
THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Revenues | |||||||||||||
Rental income | $111,452 | $105,078 | $331,247 | $311,171 | |||||||||
Other operating | 2,010 | 1,947 | 5,973 | 5,816 | |||||||||
113,462 | 107,025 | 337,220 | 316,987 | ||||||||||
Expenses | |||||||||||||
Property operating | 44,135 | 40,628 | 127,691 | 116,663 | |||||||||
General and administrative | 8,504 | 8,021 | 25,977 | 24,720 | |||||||||
Acquisition and pursuit costs | 141 | 507 | 538 | 1,878 | |||||||||
Depreciation and amortization | 42,061 | 35,873 | 121,764 | 105,148 | |||||||||
Bad debts, net of recoveries | (62 | ) | 4 | 42 | 175 | ||||||||
94,779 | 85,033 | 276,012 | 248,584 | ||||||||||
Other income (expense) | |||||||||||||
Gain (loss) on sales of real estate assets | 1,288 | (7 | ) | 30,879 | 39,525 | ||||||||
Interest expense | (13,464 | ) | (14,107 | ) | (39,202 | ) | (42,694 | ) | |||||
Impairment of real estate assets | — | (5,059 | ) | — | (5,387 | ) | |||||||
Interest and other income, net | 41 | 354 | 571 | 396 | |||||||||
(12,135 | ) | (18,819 | ) | (7,752 | ) | (8,160 | ) | ||||||
Net Income | $6,548 | $3,173 | $53,456 | $60,243 | |||||||||
Basic earnings per common share - Net income | $0.05 | $0.02 | $0.42 | $0.50 | |||||||||
Diluted earnings per common share - Net income | $0.05 | $0.02 | $0.42 | $0.50 | |||||||||
Weighted average common shares outstanding - basic | 123,300 | 119,098 | 123,281 | 116,181 | |||||||||
Weighted average common shares outstanding - diluted | 123,352 | 119,181 | 123,336 | 116,277 | |||||||||
1 | The Condensed Consolidated Statements of Income do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. |
HEALTHCARE REALTY TRUST INCORPORATED | HEALTHCAREREALTY.COM | PAGE 4 OF 6 |
Reconciliation of FFO, Normalized FFO and FAD |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA - UNAUDITED |
THREE MONTHS ENDED SEPTEMBER 30, | |||||||
2018 | 2017 | ||||||
Net income | $6,548 | $3,173 | |||||
Gain on sales of real estate assets | (1,288 | ) | 7 | ||||
Impairment of real estate asset | — | 5,059 | |||||
Real estate depreciation and amortization | 42,723 | 36,478 | |||||
Funds from operations | $47,983 | $44,717 | |||||
Acquisition and pursuit costs 1 | 141 | 507 | |||||
Rapid vesting/revaluation for retiring officer | 70 | — | |||||
Normalized funds from operations | $48,194 | $45,224 | |||||
Non-real estate depreciation and amortization | 1,506 | 1,388 | |||||
Provision for bad debt, net | (62 | ) | 4 | ||||
Straight-line rent receivable, net | (413 | ) | (1,156 | ) | |||
Stock-based compensation | 2,605 | 2,429 | |||||
Non-cash items | 3,636 | 2,665 | |||||
2nd generation TI | (6,950 | ) | (4,481 | ) | |||
Leasing commissions paid | (1,139 | ) | (1,826 | ) | |||
Capital additions | (6,229 | ) | (4,203 | ) | |||
Funds available for distribution | $37,512 | $37,379 | |||||
Funds from operations per common share - diluted | $0.39 | $0.37 | |||||
Normalized funds from operations per common share - diluted | $0.39 | $0.38 | |||||
FFO weighted average common shares outstanding - diluted 2 | 124,192 | 120,081 | |||||
1 | Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments. |
2 | Diluted weighted average common shares outstanding for the three months ended September 30, 2018 includes the dilutive effect of nonvested share-based awards outstanding of 839,990 shares. |
HEALTHCARE REALTY TRUST INCORPORATED | HEALTHCAREREALTY.COM | PAGE 5 OF 6 |
Reconciliation of FFO, Normalized FFO and FAD |
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA - UNAUDITED |
Management considers funds from operations ("FFO"), FFO per share, normalized FFO, normalized FFO per share, funds available for distribution ("FAD") and FAD per share to be useful non-GAAP measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure historical financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors.
The non-GAAP financial measures presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs.
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.” The Company defines Normalized FFO as FFO excluding acquisition-related expenses and other normalizing items that are unusual and infrequent in nature. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense and provision for bad debts, net; and subtracting maintenance capital expenditures, including second generation tenant improvements and leasing commissions paid and straight-line rent income, net of expense. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. FFO, Normalized FFO and 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 an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity. FFO, Normalized FFO and FAD should be reviewed in connection with GAAP financial measures.
Management believes FFO, FFO per share, Normalized FFO, Normalized FFO per share, and FAD provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, including depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, gains or losses from sales of real estate, and other normalizing items that are unusual and infrequent, FFO, FFO per share, Normalized FFO, Normalized FFO per share and FAD can facilitate comparisons of operating performance between periods. The Company reports these measures because they have been observed by management to be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because these measures are consistently reported, discussed, and compared by research analysts in their notes and publications about REITs.
HEALTHCARE REALTY TRUST INCORPORATED | HEALTHCAREREALTY.COM | PAGE 6 OF 6 |