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

Attached files

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8-K - 8-K - HEALTHCARE REALTY TRUST INC	hr-2018630xearnings8xk.htm
EX-99.1 - EXHIBIT 99.1 - HEALTHCARE REALTY TRUST INC	exhibit991secondquarter201.htm

2Q2018

Supplemental Information

FURNISHED AS OF AUGUST 2, 2018 - UNAUDITED

FORWARD LOOKING STATEMENTS & 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,” “range of expectations,” "budget," 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, 2017 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.

Table of Contents



4		Highlights
5		Salient Facts
6		Corporate Information
7		Balance Sheet Information
8		Statements of Income Information
9		FFO, Normalized FFO & FAD
10		Capital Funding & Commitments
11		Debt Metrics
12		Investment Activity
13		Portfolio
14		Associated Health Systems
15		Top Tenants
16		MOB Proximity to Hospital
17		Lease Maturity, Lease & Building Size
18		Historical Occupancy
19		Occupancy Reconciliation
20		Same Store Leasing Statistics
21		Same Store Performance
22		Reconciliation of NOI
23		Reconciliation of EBITDA
24		Components of Net Asset Value
25		Components of Expected 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.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 3

Highlights

QUARTERLY HIGHLIGHTS

For the trailing twelve months ended June 30 2018, same store revenue grew 2.8%, operating expenses increased 2.1%, and same store cash NOI grew 3.2%:


•	Same store revenue per average occupied square foot increased 2.6%.


•	Average same store occupancy increased 30 basis points to 89.6% from 89.3%.

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


•	In-place contractual rent increases averaged 2.84%, up from 2.74% a year ago.


•	Weighted average cash leasing spreads were 6.4% on 229,000 square feet renewed:


◦	1% (<0% spread)


◦	7% (0-3%)


◦	57% (3-4%)


◦	35% (>4%)


•	Tenant retention was 84.4%.


•	The average yield on renewed leases increased 70 basis points.

Leasing activity in the second quarter totaled 480,000 square feet related to 122 leases:


•	346,000 square feet of renewals


•	134,000 square feet of new and expansion leases

Acquisitions totaled $70.4 million in the second quarter and comprised 371,000 square feet, including:


•	A medical office building adjacent to the Overlake Hospital Medical Center campus in Seattle for $7.8 million. The 13,000 square foot building is 100% leased and adjacent to a 191,000 square foot medical office development completed by the Company in 2011 and a 26,000 square foot medical office building purchased in 2017.

•

Two buildings adjacent to Catholic Health Initiatives' St. Anthony Hospital campus in Denver for $25.0 million. The 78% leased properties total 188,000 square feet on 13.0 acres of fee simple land. The buildings are adjacent to three on-campus medical office buildings totaling 287,000 square feet developed by the Company in 2011 and 2017, and a 48,000 square foot medical office building the Company purchased in 2015.


•	A medical office building adjacent to Integris Health's Baptist Medical Center campus in Oklahoma City for $11.4 million. The 83,000 square foot building is 96% leased.


•	A medical office building on MultiCare Health System's Allenmore Hospital campus in Seattle for $26.2 million. The 91% leased, 87,000 square foot building is attached to both the hospital and a 68,000 square foot medical office building acquired by the Company in 2008.

Dispositions totaled $55.7 million in the second quarter, including seven properties in Roanoke, Virginia for $46.2 million pursuant to the exercise of a fixed-price purchase option and five skilled nursing facilities in rural Michigan for $9.5 million.

A dividend of $0.30 per common share was declared, which is equal to 75.0% of normalized FFO per share.

Dividends paid as a percentage of funds available for distribution were 98.4% year-to-date.

OTHER ITEMS OF NOTE

During the second quarter, the Company disposed of 12 properties for$55.7 million at an average cap rate of 15.4% and reinvested the proceeds into five properties at an average cap rate of 5.9%. The partial period net FFO decrease recognized in the second quarter from these transactions was $0.8 million. The third quarter is expected to be impacted by an additional $0.5 million. Total dilution from these transactions is expected to be $1.3 million per quarter.

The Company traditionally experiences an increase in property operating expenses during the third quarter related to seasonal utilities. Over the past three years, third quarter same store cash NOI growth has been sequentially flat as revenue growth has been offset by increases in utility expenses averaging $1.5 million due to seasonally high temperatures.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 4

Salient Facts

AS OF JUNE 30, 2018



	Properties

	$3.9B invested in 201 properties
	14.9M SF owned in 27 states
	11.2M SF managed by Healthcare Realty
	92.9% medical office and outpatient
	87.2% on/adjacent to hospital campuses
	3.2% same store cash NOI growth (TTM)


	Capitalization

	$5.0B enterprise value as of 7/27/2018
	$3.7B market capitalization as of 7/27/2018
	125.2M shares outstanding
	$0.30 quarterly dividend per share
	BBB/Baa2 credit rating
	27.0% debt to enterprise value at 6/30/2018
	5.1x net debt to adjusted EBITDA




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 5

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 June 30, 2018, the Company owned 201 real estate properties in 27 states totaling 14.9 million square feet and was valued at approximately $5.0 billion. The Company provided leasing and property management services to 11.2 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

communications@healthcarerealty.com

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

ANALYST COVERAGE

BMO Capital Markets

BTIG, LLC

Cantor Fitzgerald, L.P.

CapitalOne Securities, Inc.

Green Street Advisors, Inc.

J.J.B. Hilliard W.L. Lyons, LLC

J.P. Morgan Securities LLC

Jefferies LLC

JMP Securities LLC

KeyBanc Capital Markets Inc.

Mizuho Securities USA Inc

Morgan Stanley

Stifel, Nicolaus & Company, Inc.

SunTrust Robinson Humphrey, Inc.

Wells Fargo Securities, LLC

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

Edward H. Braman

Retired Audit Partner

Ernst & Young LLP

Peter F. Lyle

Vice President

Medical Management Associates, Inc.

Todd J. Meredith

President and Chief Executive Officer

Healthcare Realty Trust Incorporated

Edwin B. Morris III

Retired Managing Director

Morris & Morse Company, Inc.

J. Knox Singleton

Retired 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

Seton Medical Center Austin

Seton Shoal Creek Hospital




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 6

Balance Sheet Information

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ASSETS
	2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017
Real estate properties
Land		$214,755			$201,090			$201,283			$196,217			$193,072
Buildings, improvements and lease intangibles	3,668,938			3,600,826			3,601,460			3,400,224			3,388,734
Personal property	10,355			10,205			10,314			10,300			10,155
Construction in progress	23,102			14,990			5,458			1,138			—
Land held for development	24,633			20,123			20,123			20,123			20,123
Total real estate properties	3,941,783			3,847,234			3,838,638			3,628,002			3,612,084
Less accumulated depreciation and amortization	(959,732		)	(924,304		)	(897,430		)	(888,875		)	(864,573		)
Total real estate properties, net	2,982,051			2,922,930			2,941,208			2,739,127			2,747,511
Cash and cash equivalents	7,414			3,796			6,215			196,981			2,033
Restricted cash	—			—			—			—			9,151
Assets held for sale, net	8,788			36,118			33,147			8,772			8,767
Other assets	216,437			220,576			213,015			200,824			191,036
Total assets		$3,214,690			$3,183,420			$3,193,585			$3,145,704			$2,958,498

LIABILITIES AND STOCKHOLDERS' EQUITY
	2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017
Liabilities
Notes and bonds payable		$1,335,732			$1,306,951			$1,283,880			$1,166,060			$1,203,146
Accounts payable and accrued liabilities	66,490			62,318			70,995			69,918			62,121
Liabilities of properties held for sale	340			201			93			59			398
Other liabilities	44,072			49,402			48,734			45,405			46,556
Total liabilities	1,446,634			1,418,872			1,403,702			1,281,442			1,312,221
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; 50,000 shares authorized	—			—			—			—			—
Common stock, $.01 par value; 300,000 shares authorized	1,252			1,252			1,251			1,249			1,165
Additional paid-in capital	3,178,514			3,175,809			3,173,429			3,173,167			2,923,519
Accumulated other comprehensive income (loss)	5			(639		)	(1,299		)	(1,274		)	(1,316		)
Cumulative net income attributable to common stockholders	1,065,256			1,027,528			1,018,348			1,055,499			1,052,326
Cumulative dividends	(2,476,971		)	(2,439,402		)	(2,401,846		)	(2,364,379		)	(2,329,417		)
Total stockholders' equity	1,768,056			1,764,548			1,789,883			1,864,262			1,646,277
Total liabilities and stockholders' equity		$3,214,690			$3,183,420			$3,193,585			$3,145,704			$2,958,498




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 7

Statements of Income Information

DOLLARS IN THOUSANDS




	2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017			4Q 2016			3Q 2016
Revenues
Rental income		$109,566			$110,229			$105,806			$105,078			$103,384			$102,709			$103,066			$101,250
Other operating	2,068			1,895			1,943			1,947			1,934			1,935			2,316			2,492
	111,634			112,124			107,749			107,025			105,318			104,644			105,382			103,742
Expenses
Property operating	41,737			41,818			40,590			40,627			38,184			37,852			37,307			37,528
General and administrative	8,373			9,101			8,272			8,022			8,005			8,694			7,622			7,859
Acquisition and pursuit costs ¹	120			277			302			507			785			586			1,085			865
Depreciation and amortization	40,130			39,573			37,324			35,873			34,823			34,452			34,022			31,984
Bad debts, net of recoveries	104			—			(17		)	4			105			66			(13		)	(47		)
	90,464			90,769			86,471			85,033			81,902			81,650			80,023			78,189
Other income (expense)
Gain on sales of real estate properties	29,590			—			—			(7		)	16,124			23,408			41,037			—
Interest expense	(13,069		)	(12,668		)	(13,707		)	(14,107		)	(14,315		)	(14,272		)	(13,839		)	(13,759		)
Loss on extinguishment of debt	—			—			(44,985		)	—			—			—			—			—
Impairment of real estate assets	—			—			2			(5,059		)	(5		)	(323		)	(121		)	—
Interest and other income, net	38			493			261			354			4			38			1			40
	16,559			(12,175		)	(58,429		)	(18,819		)	1,808			8,851			27,078			(13,719		)
Net income (loss)		$37,729			$9,180			($37,151	)		$3,173			$25,224			$31,845			$52,437			$11,834


1	Includes third party and travel costs related to the pursuit of acquisitions and developments.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 8

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

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA




	2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017			4Q 2016			3Q 2016
Net income (loss)		$37,729			$9,180			($37,151	)		$3,173			$25,224			$31,845			$52,437			$11,834
Gain on sales of real estate assets	(29,590		)	—			—			7			(16,124		)	(23,408		)	(41,037		)	—
Impairments of real estate assets	—			—			(2		)	5,059			5			323			121			—
Real estate depreciation and amortization	40,747			40,003			37,869			36,478			35,421			35,555			34,699			32,557
FFO		$48,886			$49,183			$716			$44,717			$44,526			$44,315			$46,220			$44,391
Acquisition and pursuit costs ³	120			277			302			507			785			586			915			649
Write-off of deferred financing costs upon amendment of credit facilities	—			—			21			—			—			—			—			81
Forfeited earnest money received	—			(466		)	—			—			—			—			—			—
Interest incurred related to the timing of issuance/redemption of senior notes	—			—			767			—			—			—			—			—
Loss on extinguishment of debt	—			—			44,985			—			—			—			—			—
Normalized FFO		$49,006			$48,994			$46,791			$45,224			$45,311			$44,901			$47,135			$45,121
Non-real estate depreciation and amortization	1,481			1,466			1,439			1,388			1,369			1,355			1,339			1,386
Provision for bad debt, net	104			—			(17		)	4			105			66			(13		)	(47		)
Straight-line rent receivable, net	(683		)	(1,330		)	(201		)	(1,156		)	(1,623		)	(1,595		)	(1,595		)	(1,684		)
Stock-based compensation	2,593			2,822			2,531			2,429			2,453			2,614			1,949			1,851
Non-cash items	3,495			2,958			3,752			2,665			2,304			2,440			1,680			1,506
2nd generation TI	(7,755		)	(5,867		)	(6,929		)	(4,481		)	(3,680		)	(5,277		)	(7,918		)	(6,013		)
Leasing commissions paid	(1,947		)	(1,851		)	(2,705		)	(1,826		)	(984		)	(1,584		)	(1,030		)	(1,514		)
Capital additions	(7,117		)	(4,184		)	(6,400		)	(4,203		)	(5,667		)	(2,520		)	(4,283		)	(5,088		)
FAD		$35,682			$40,050			$34,509			$37,379			$37,284			$37,960			$35,584			$34,012
Dividends paid		$37,569			$37,556			$37,467			$34,964			$34,961			$34,937			$34,761			$34,759
FFO per common share - diluted		$0.39			$0.40			$0.01			$0.37			$0.38			$0.38			$0.40			$0.39
Normalized FFO per common share - diluted		$0.40			$0.40			$0.38			$0.38			$0.39			$0.39			$0.41			$0.39
FFO weighted average common shares outstanding - diluted⁴	123,983			123,984			124,125			120,081			115,674			115,507			115,408			115,052

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.”

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	Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.

Diluted weighted average common shares outstanding for the three months ended June 30, 2018 includes the dilutive effect of nonvested share-based awards outstanding of 662,270. The diluted FFO weighted average common shares outstanding decreased in the second quarter as compared to the first quarter because of the impact of the treasury method of accounting applied to the Company's nonvested share-based awards. The Company did not repurchase any outstanding stock in the quarter.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 9

Capital Funding & Commitments

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ACQUISITION AND RE/DEVELOPMENT FUNDING
	2Q 2018		1Q 2018			4Q 2017		3Q 2017		2Q 2017
Acquisitions	$70,350		$	—		$246,568		$16,300		$50,786
Re/development	10,998		12,658			4,010		7,196		8,940
1st gen. TI & acq. cap. ex. ¹	4,668		1,194			1,271		1,586		1,380

MAINTENANCE CAPITAL EXPENDITURES
	2Q 2018		1Q 2018			4Q 2017		3Q 2017		2Q 2017
$ Spent
2nd generation TI	$7,755		$5,867			$6,929		$4,481		$3,680
Leasing commissions paid	1,947		1,851			2,705		1,826		984
Capital expenditures	7,117		4,184			6,400		4,203		5,667
	$16,819		$11,902			$16,034		$10,510		$10,331
% of NOI
2nd generation TI	11.2	%	8.5		%	10.4	%	6.9	%	5.6	%
Leasing commissions paid	2.8	%	2.7		%	4.0	%	2.8	%	1.5	%
Capital expenditures	10.3	%	6.1		%	9.6	%	6.5	%	8.7	%
	24.3	%	17.3		%	24.0	%	16.2	%	15.8	%

LEASING COMMITMENTS
	2Q 2018		1Q 2018			4Q 2017		3Q 2017		2Q 2017
Renewals
Square feet	346,539		309,665			394,721		420,603		279,738
2nd generation TI/square foot/lease year	$2.48		$1.86			$1.67		$1.38		$2.30
Leasing commissions/square foot/lease year	$0.57		$0.56			$0.59		$0.28		$0.39
WALT (in months) ²	75.6		51.8			46.0		35.8		37.3

New leases
Square feet	95,542		140,884			111,788		109,038		134,590
2nd generation TI/square foot/lease year	$4.04		$5.42			$4.74		$3.92		$2.10
Leasing commissions/square foot/lease year	$0.84		$1.06			$0.92		$0.46		$0.47
WALT (in months) ²	63.8		93.8			90.7		68.4		103.8

All
Square feet	442,081		450,549			506,509		529,641		414,328
2nd generation TI/square foot/lease year	$2.77		$3.47			$2.77		$2.22		$2.18
Leasing commissions/square foot/lease year	$0.62		$0.79			$0.71		$0.34		$0.44
Leasing commitments as a % of annual net rent	15.8	%	20.7		%	16.0	%	12.3	%	12.8	%
WALT (in months) ²	73.0		64.9			55.9		42.6		58.9


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


2	WALT = weighted average lease term.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 10

Debt Metrics

DOLLARS IN THOUSANDS



SUMMARY OF INDEBTEDNESS AS OF JUNE 30, 2018
	INTEREST EXPENSE	PRINCIPAL BALANCE	BALANCE ¹	MONTHS TO MATURITY	CONTRACTUAL RATE		EFFECTIVE RATE
Senior notes due 2023	$2,395	$250,000	$247,909	58	3.75	%	3.95	%
Senior notes due 2025 ²	2,469	250,000	248,160	82	3.88	%	4.08	%
Senior notes due 2028	2,771	300,000	294,977	114	3.63	%	3.84	%
Total senior notes outstanding	$7,635	$800,000	$791,046	86	3.74	%	3.95	%
$700 million unsecured credit facility due 2020	1,642	235,000	235,000	25	LIBOR + 1.00%		3.09	%
Unsecured term loan facility due 2022 ³	1,230	150,000	149,081	54	LIBOR + 1.10%		3.33	%
Mortgage notes payable, net	1,886	160,409	160,605	62	5.06	%	4.83	%
Total outstanding notes and bonds payable	$12,393	$1,345,409	$1,335,732	69	3.74	%	3.84	%
Interest cost capitalization	(285)
Unsecured credit facility fee and deferred financing costs	961
Total quarterly consolidated interest expense	$13,069



SELECTED FINANCIAL DEBT COVENANTS ⁴
	CALCULATION	REQUIREMENT	TTM ENDED 6/30
Revolving credit facility and term loan
Leverage ratio	Total debt/total capital	Not greater than 60%	33.1	%
Secured leverage ratio	Total secured debt/total capital	Not greater than 30%	3.9	%
Unencumbered leverage ratio	Unsecured debt/unsecured real estate	Not greater than 60%	33.6	%
Fixed charge coverage ratio	EBITDA/fixed charges	Not less than 1.50x	4.1x
Unsecured coverage ratio	Unsecured EBITDA/unsecured interest	Not less than 1.75x	4.7x
Construction and development	CIP/total assets	Not greater than 15%	0.7	%
Asset investments	Mortgages & unimproved land/total assets	Not greater than 20%	1.0	%

Senior notes ⁵
Incurrence of total debt	Total debt/total assets	Not greater than 60%	32.9	%
Incurrence of debt secured by any lien	Secured debt/total assets	Not greater than 40%	3.9	%
Maintenance of total unsecured assets	Unencumbered assets/unsecured debt	Not less than 150%	309.4	%
Debt service coverage	EBITDA/interest expense	Not less than 1.5x	4.7x

Other
Net debt to adjusted EBITDA ⁶	Net debt (debt less cash)/adjusted EBITDA	Not required	5.1x
Debt to enterprise value ⁷	Debt/enterprise value	Not required	27.0	%


1	Balances are reflected net of discounts and deferred financing costs and include premiums.


2	The effective interest rate includes the impact of the $1.7 million settlement of a forward-starting interest rate swap that is included in accumulated other comprehensive income on the Company's Condensed Consolidated Balance Sheets.


3	The effective interest rate includes the impact of interest rate swaps on $25.0 million and $50.0 million of the outstanding balance at a rate of 2.18% and 2.46%, respectively (plus the applicable margin rate, currently 110 basis points).


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


5	The senior note covenants calculations apply to the senior notes due 2025 and 2028. The senior notes due 2023 have similar covenants but contain a less restrictive definition of total assets.


6	Adjusted EBITDA is based on the current quarter results, annualized. See page 23 for a reconciliation of adjusted EBITDA.


7	Based on the closing price of $29.08 on June 30, 2018 and 125,233,695 shares outstanding.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 11

Investment Activity

DOLLARS IN THOUSANDS



ACQUISITION ACTIVITY
LOCATION	TYPE ¹	MILES TO CAMPUS	HEALTH SYSTEM AFFILIATION	CLOSING	PURCHASE PRICE	SQUARE FEET	LEASED %		CAP RATE ²
Seattle, WA	MOB	0.04	Overlake Health	5/4/2018	$7,750	13,314	100	%	5.0	%
Denver, CO	MOB	0.06	CHI	5/18/2018	12,068	93,992	70	%	5.5	%
Denver, CO	OFC	0.06	CHI	5/18/2018	12,932	93,869	87	%	7.3	%
Oklahoma City, OK	MOB	0.10	Integris Health	5/21/2018	11,400	82,647	96	%	5.9	%
Seattle, WA	MOB	0.00	MultiCare Health	6/29/2018	26,200	86,942	91	%	5.7	%
2018 acquisition activity					$70,350	370,764	86	%	5.9	%



DISPOSITION ACTIVITY
LOCATION	TYPE ¹	MILES TO CAMPUS	HEALTH SYSTEM AFFILIATION	CLOSING	SALES PRICE	SQUARE FEET	LEASED %		CAP RATE ³
Virginia ⁴	MOB, OFC	Various	HCA	4/26/2018	$46,236	460,881	75	%	13.3	%
Michigan ⁵	SNF	NA	NA	6/27/2018	9,516	121,672	100	%	25.5	%
2018 disposition activity					$55,752	582,553	80	%	15.4	%



RE/DEVELOPMENT ACTIVITY
LOCATION	TYPE ¹	CAMPUS LOCATION	SQUARE FEET	BUDGET	2Q 2018 FUNDING	TOTAL THRU 6/30/2018	REMAINING FUNDINGS	AGGREGATE LEASED %		COMPLETION DATE
Same store redevelopment
Charlotte, NC ⁶	MOB	ON	204,000	$12,000	$2,930	$7,936	$4,064	87	%	Q1 2019
Development
Seattle, WA	MOB	ON	151,000	64,120	5,182	15,467	48,653	60	%	Q2 2019
2018 re/development activity			355,000	$76,120	$8,112	$23,403	$52,717	76	%



HISTORICAL INVESTMENT ACTIVITY
	ACQUISITIONS ⁷		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	327,167		—			—		32,305			359,472		122,700
YTD 2018	70,350		—			—		23,656			94,006		55,752
Average (2013-2017)	211,671		380			11,995		21,978			246,024		102,422
% of Average	86.0	%	0.2		%	4.9	%	8.9		%	100.0	%


1	MOB = Medical office building; OFC = Office; SNF = Skilled nursing facility.


2	For acquisitions, cap rate represents the forecasted first year cash NOI / purchase price plus acquisition costs and expected capital additions.


3	For dispositions, cap rate represents the next twelve month forecasted cash NOI / sales price.


4	Includes five single-tenant net lease medical office buildings and two multi-tenant buildings.


5	Includes five single-tenant net lease skilled nursing facilities. Sales price includes $0.5 million of forfeited earnest money from a prior terminated transaction.


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


7	Net of mortgage notes receivable payoffs upon acquisition.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 12

Portfolio

DOLLARS IN THOUSANDS



MARKETS (BY SQUARE FEET)
				MOB 92.9%				NON-MOB 7.1%
MARKET	MSA RANK	INVESTMENT ¹	COUNT	MULTI-TENANT		SINGLE-TENANT		INPATIENT REHAB ²		INPATIENT SURGICAL		OFFICE		TOTAL		% OF TOTAL
Dallas, TX	4	$479,046	25	2,004,574						156,245		145,365		2,306,184		15.5	%
Seattle, WA	15	467,037	19	1,049,651		67,510								1,117,161		7.5	%
Charlotte, NC	22	168,998	16	820,457										820,457		5.5	%
Nashville, TN	36	160,887	5	766,523										766,523		5.2	%
Denver, CO	19	153,943	9	540,284				34,068				93,869		668,221		4.5	%
Los Angeles, CA	2	183,506	12	594,163				63,000						657,163		4.4	%
Houston, TX	5	132,014	8	533,857								57,170		591,027		4.0	%
Richmond, VA	45	147,168	7	548,801										548,801		3.7	%
Des Moines, IA	89	134,621	7	197,994		181,961						152,655		532,610		3.6	%
Memphis, TN	42	95,116	7	515,876										515,876		3.5	%
Atlanta, GA	9	188,807	8	476,054		19,732								495,786		3.3	%
San Antonio, TX	24	95,436	7	483,811										483,811		3.3	%
Indianapolis, IN	34	75,099	3	382,695										382,695		2.6	%
Austin, TX	31	105,087	5	375,333										375,333		2.5	%
Oklahoma City, OK	41	120,592	3	151,507		200,000								351,507		2.3	%
Washington, DC	6	100,814	4	348,998										348,998		2.3	%
Chicago, IL	3	86,188	3	337,917										337,917		2.3	%
Honolulu, HI	54	141,948	3	298,427										298,427		2.0	%
San Francisco, CA	11	117,474	3	286,270										286,270		1.9	%
Miami, FL	8	56,809	4	241,980										241,980		1.6	%
Colorado Springs, CO	79	52,340	3	241,224										241,224		1.6	%
Other (22 markets)		625,497	40	1,840,048		322,482		165,123		186,000				2,513,653		16.9	%
Total		$3,888,427	201	13,036,444		791,685		262,191		342,245		449,059		14,881,624		100.0	%
Number of properties				180		11		4		2		4		201
% of square feet				87.6	%	5.3	%	1.8	%	2.3	%	3.0	%	100.0	%
Investment¹				$3,287,871		$239,384		$53,605		$208,725		$98,842		$3,888,427
Quarterly cash NOI				$55,911		$4,831		$1,665		$4,698		$1,348		$68,453
% of cash NOI				81.6	%	7.1	%	2.4	%	6.9	%	2.0	%	100.0	%



BY BUILDING TYPE
	MOB TOTAL		MULTI-TENANT		SINGLE-TENANT		TOTAL
Number of properties	191		184		17		201
Square feet	13,828,129		13,485,503		1,396,121		14,881,624
% of square feet	92.9	%	90.6	%	9.4	%	100.0	%
Investment¹	$3,527,255		$3,386,713		$501,714		$3,888,427
Quarterly cash NOI	$60,742		$57,259		$11,194		$68,453
% of cash NOI	88.7	%	83.6	%	16.4	%	100.0	%


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


2	Includes inpatient rehab facilities, a behavioral health facility and a skilled nursing facility.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 13

Associated Health Systems ¹



MOB PORTFOLIO (BY SQUARE FEET)
			ASSOCIATED 94.9%²
HEALTH SYSTEM	SYSTEM RANK ³	CREDIT RATING	ON		ADJACENT ⁴		ANCHORED ⁵		OFF CAMPUS		TOTAL MOB	% OF TOTAL MOB
Baylor Scott & White Health	19	AA-/Aa3	1,834,256		142,759		163,188		—		2,140,203	15.5	%
Ascension Health	3	AA+/Aa2	1,065,798		156,328		—		—		1,222,126	8.8	%
Catholic Health Initiatives	8	BBB+/Baa1	807,182		274,117		95,486		—		1,176,785	8.5	%
Atrium Health	33	AA-/Aa3	353,537		98,066		313,513		—		765,116	5.5	%
Tenet Healthcare Corporation	6	B/B2	621,077		67,790		30,096		—		718,963	5.2	%
Bon Secours Health System	79	A/A2	548,801		—		—		—		548,801	4.0	%
WellStar Health System	83	A/A2	476,054		—		—		—		476,054	3.4	%
Baptist Memorial Health Care	92	BBB+/--	424,306		—		39,345		—		463,651	3.4	%
HCA	2	BB+/Ba2	177,340		177,155		78,305		—		432,800	3.1	%
Indiana University Health	26	AA/Aa2	280,129		102,566		—		—		382,695	2.8	%
University of Colorado Health	66	AA-/Aa3	150,291		161,099		33,850		—		345,240	2.5	%
Trinity Health	5	AA-/Aa3	267,952		73,331		—		—		341,283	2.5	%
Providence St. Joseph Health	4	AA-/Aa3	176,854		129,181		—		—		306,035	2.2	%
UW Medicine (Seattle)	49	AA+/Aaa	194,536		102,540		—		—		297,076	2.1	%
Medstar Health	37	A/A2	241,739		—		—		—		241,739	1.7	%
Advocate Health Care	25	AA+/Aa2	142,955		95,436		—		—		238,391	1.7	%
Overlake Health System	299	A/A2	191,051		39,659		—		—		230,710	1.7	%
Memorial Hermann	44	A+/A1	—		206,090		—		—		206,090	1.5	%
Community Health	9	CCC+/Caa2	201,574		—		—		—		201,574	1.5	%
Mercy (St. Louis)	35	AA-/Aa3	—		—		200,000		—		200,000	1.4	%
MultiCare Health System	105	AA-/Aa3	154,452		33,169		—		—		187,621	1.4	%
Other (20 credit rated systems)			1,034,511		619,977		110,339		—		1,764,827	12.8	%
Subtotal - credit rated⁶			9,344,395		2,479,263		1,064,122		—		12,887,780	93.2	%
Non-credit rated			238,710		—		—		701,639		940,349	6.8	%
Total			9,583,105		2,479,263		1,064,122		701,639		13,828,129	100.0	%
% of total			69.3	%	17.9	%	7.7	%	5.1	%


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, 83.4% is associated with an investment-grade rated healthcare provider.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 14

Top Tenants ¹




					LEASED SQUARE FEET
HEALTH SYSTEM	SYSTEM RANK ²	CREDIT RATING	# OF PROPERTIES	# OF LEASES	MOB	INPATIENT	TOTAL	% OF TOTAL LEASED		% OF TTM REVENUE
Baylor Scott & White Health	19	AA-/Aa3	20	165	1,017,353	156,245	1,173,598	9.0	%	9.6	%
Atrium Health	33	AA-/Aa3	16	80	611,304	—	611,304	4.7	%	4.2	%
Mercy (St. Louis)	35	AA-/Aa3	2	2	200,000	186,000	386,000	2.9	%	4.2	%
Catholic Health Initiatives	8	BBB+/Baa1	16	67	530,091	—	530,091	4.1	%	3.7	%
Ascension Health	3	AA+/Aa2	11	66	382,719	—	382,719	2.9	%	2.5	%
Bon Secours Health System	79	A/A2	7	63	274,927	—	274,927	2.1	%	2.1	%
Indiana University Health	26	AA/Aa2	3	39	261,159	—	261,159	2.0	%	2.0	%
Tenet Healthcare Corporation	6	B/B2	14	37	152,865	63,000	215,865	1.6	%	1.7	%
UW Medicine (Seattle)	49	AA+/Aaa	5	23	177,995	—	177,995	1.4	%	1.7	%
University of Colorado Health	66	AA-/Aa3	5	13	160,156	—	160,156	1.2	%	1.4	%
WellStar Health System	83	A/A2	7	42	268,984	—	268,984	2.1	%	1.2	%
								34.0	%	34.3	%


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.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 15

MOB Proximity to Hospital ^{1, 2}



MEDICAL OFFICE BUILDINGS BY LOCATION
	2Q 2018		1Q 2018		4Q 2017		3Q 2017		2Q 2017		1Q 2017
On campus	69.3	%	69.1	%	69.1	%	68.4	%	67.9	%	67.4	%
Adjacent to campus ³	17.9	%	17.6	%	17.6	%	17.5	%	17.4	%	17.7	%
Total on/adjacent	87.2	%	86.7	%	86.7	%	85.9	%	85.3	%	85.1	%
Off campus - anchored by health system ⁴	7.7	%	7.7	%	7.7	%	8.4	%	8.4	%	8.5	%
Off campus	5.1	%	5.6	%	5.6	%	5.7	%	6.3	%	6.4	%
	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



DISTANCE TO HOSPITAL CAMPUS
									GROUND LEASE PROPERTIES
GREATER THAN	LESS THAN OR EQUAL TO	# OF PROPERTIES	SQUARE FEET	% OF TOTAL		CUMULATIVE %		CAMPUS PROXIMITY	SQUARE FEET	% OF TOTAL
	0.00	123	9,583,105	69.3	%	69.3	%	On campus	7,536,206	89.7	%
0.00	250 yards	22	1,345,175	9.7	%	79.0	%	Adjacent ³	80,525	1.0	%
250 yards	0.25 miles	20	1,134,088	8.2	%	87.2	%	Adjacent ³	120,036	1.4	%
0.25 miles	0.50	1	124,925	0.9	%	88.1	%	Off campus	124,925	1.5	%
0.50	1.00	2	280,873	2.1	%	90.2	%		—	—	%
1.00	2.00	6	590,339	4.3	%	94.5	%		319,446	3.8	%
2.00	5.00	8	338,246	2.4	%	96.9	%		13,818	0.2	%
5.00	10.00	5	275,189	2.0	%	98.9	%		205,631	2.4	%
10.00		4	156,189	1.1	%	100.0	%		—	—	%
Total		191	13,828,129	100.0	%				8,400,587	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	The Company defines 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	2Q 2018 SUPPLEMENTAL INFORMATION 16

Lease Maturity, Lease & Building Size ¹



LEASE MATURITY SCHEDULE
	MULTI-TENANT				SINGLE-TENANT				TOTAL
	# OF LEASES	SQUARE FEET	% OF SQUARE FEET		# OF LEASES	SQUARE FEET	% OF SQUARE FEET		# OF LEASES	SQUARE FEET	% OF TOTAL SQUARE FEET		% OF BASE REVENUE ²
2018	371	1,269,348	10.9	%	—	—	—	%	371	1,269,348	9.7	%	10.0	%
2019	597	2,253,434	19.3	%	2	153,123	11.0	%	599	2,406,557	18.4	%	18.1	%
2020	466	1,733,894	14.8	%	1	83,318	6.0	%	467	1,817,212	13.9	%	13.8	%
2021	368	1,290,662	11.0	%	—	—	—	%	368	1,290,662	9.8	%	9.6	%
2022	311	1,352,072	11.6	%	1	58,285	4.2	%	312	1,410,357	10.8	%	10.6	%
2023	235	1,077,436	9.2	%	—	—	—	%	235	1,077,436	8.2	%	8.0	%
2024	153	856,424	7.4	%	—	—	—	%	153	856,424	6.5	%	6.1	%
2025	83	609,943	5.2	%	2	91,561	6.5	%	85	701,504	5.4	%	5.2	%
2026	68	235,766	2.0	%	—	—	—	%	68	235,766	1.8	%	1.8	%
2027	60	292,940	2.5	%	2	342,245	24.5	%	62	635,185	4.9	%	7.4	%
Thereafter	117	718,750	6.1	%	9	667,589	47.8	%	126	1,386,339	10.6	%	9.4	%
Total leased	2,829	11,690,669	86.7	%	17	1,396,121	100.0	%	2,846	13,086,790	87.9	%	100.0	%
Total building		13,485,503	100.0	%		1,396,121	100.0	%		14,881,624	100.0	%
WALTR (months) ³		42.6				103.2				49.1
WALT (months) ³		89.9				163.2				97.8



# OF LEASES BY SIZE			BY BUILDING SIZE
LEASED SQUARE FEET	MULTI-TENANT ⁴	SINGLE-TENANT	BUILDING SQUARE FEET	% OF TOTAL		TOTAL SQUARE FOOTAGE	AVERAGE SQUARE FEET	# OF PROPERTIES
0 - 2,500	1,501	—	>100,000	41.3	%	6,158,609	146,634	42
2,501 - 5,000	700	—	<100,000 and >75,000	26.8	%	3,982,683	86,580	46
5,001 - 7,500	221	—	<75,000 and >50,000	17.1	%	2,540,775	63,519	40
7,501 - 10,000	139	—	<50,000	14.8	%	2,199,557	30,131	73
10,001 +	268	17	Total	100.0	%	14,881,624	74,038	201
Total Leases	2,829	17


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	WALTR = weighted average lease term remaining; WALT = weighted average lease term.


4	The average lease size in the multi-tenant properties is 4,132 square feet.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 17

Historical Occupancy ¹

DOLLARS IN THOUSANDS



SAME STORE PROPERTIES
	2Q 2018		1Q 2018		4Q 2017		3Q 2017		2Q 2017
Multi-tenant
Investment	$2,738,045		$2,708,228		$2,665,547		$2,547,282		$2,492,031
Number of properties	144		143		142		138		137
Total building square feet	11,221,175		11,236,857		11,203,468		10,937,805		10,764,672
Period end % occupied	88.3	%	87.9	%	88.0	%	88.0	%	88.0	%
Single-tenant
Investment	$481,727		$473,636		$486,602		$524,444		$524,444
Number of properties	15		14		19		24		24
Total building square feet	1,341,781		1,306,362		1,428,034		1,762,488		1,762,488
Period end % occupied	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total same store properties
Investment	$3,219,772		$3,181,864		$3,152,149		$3,071,726		$3,016,475
Number of properties	159		157		161		162		161
Total building square feet	12,562,956		12,543,219		12,631,502		12,700,293		12,527,160
Period end % occupied	89.6	%	89.2	%	89.4	%	89.7	%	89.7	%

PROPERTIES NOT IN SAME STORE
	2Q 2018		1Q 2018		4Q 2017		3Q 2017		2Q 2017
Acquisitions ²
Investment	$557,434		$526,129		$563,499		$428,579		$445,164
Number of properties	27		24		25		18		19
Total building square feet	1,644,315		1,383,200		1,452,912		1,056,118		1,113,659
Period end % occupied	92.7	%	92.7	%	93.0	%	92.3	%	94.0	%
Development completions
Investment	$28,970		$31,929		$31,627		$30,537		$26,967
Number of properties	1		2		2		2		2
Total building square feet	99,957		112,837		112,837		112,837		112,837
Period end % occupied	29.9	%	34.9	%	34.9	%	22.7	%	11.4	%
% leased	41.8	%	48.4	%	45.4	%	45.4	%	42.4	%
Reposition ³
Investment	$82,251		$66,538		$60,179		$70,310		$97,766
Number of properties	14		13		13		15		15
Total building square feet	574,396		471,604		435,281		561,708		714,500
Period end % occupied	48.5	%	47.6	%	47.7	%	39.7	%	53.5	%

TOTAL PROPERTIES
	2Q 2018		1Q 2018		4Q 2017		3Q 2017		2Q 2017
Investment	$3,888,427		$3,806,460		$3,807,454		$3,601,152		$3,586,372
Number of properties	201		196		201		197		197
Total building square feet	14,881,624		14,510,860		14,632,532		14,430,956		14,468,156
Period end % occupied	87.9	%	87.7	%	88.1	%	87.4	%	87.6	%


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


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


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




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 18

Occupancy Reconciliation

SQUARE FEET



SEQUENTIAL
	PORTFOLIO						SAME STORE
	OCCUPIED		TOTAL		%		OCCUPIED		TOTAL		%
Beginning March 31, 2018	12,733,020		14,510,860		87.7	%	11,186,862		12,543,219		89.2	%
Portfolio activity
Acquisitions	320,485		370,764		86.4	%	NA		NA		NA
Re/development completions	—		—		—	%	—		—		—	%
Dispositions ¹	—		—		—	%	—		—		—	%
Same store reclassifications
Acquisitions	NA		NA		NA		91,264		109,649		83.2	%
Development completions	NA		NA		NA		12,880		12,880		100.0	%
Reposition to same store	NA		NA		NA		—		—		—	%
Reposition from same store	NA		NA		NA		(62,499	)	(102,792	)	60.8	%
	13,053,505		14,881,624		87.7	%	11,228,507		12,562,956		89.4	%
Leasing activity
New leases/expansions	133,750		NA		NA		111,574		NA		NA
Move-outs/contractions	(100,465	)	NA		NA		(85,848	)	NA		NA
Net absorption	33,285		NA		NA		25,726		NA		NA
Ending June 30, 2018	13,086,790		14,881,624		87.9	%	11,254,233		12,562,956		89.6	%

YEAR-OVER-YEAR
	PORTFOLIO						SAME STORE
	OCCUPIED		TOTAL		%		OCCUPIED		TOTAL		%
Beginning June 30, 2017	12,677,514		14,468,156		87.6	%	11,235,981		12,527,160		89.7	%
Portfolio activity
Acquisitions	970,193		1,076,001		90.2	%	NA		NA		NA
Re/development completions	—		—		—	%	—		—		—	%
Dispositions ¹	(500,340	)	(662,533	)	75.5	%	(456,126	)	(456,126	)	100.0	%
Same store reclassifications
Acquisitions	NA		NA		NA		495,648		545,345		90.9	%
Development completions	NA		NA		NA		12,880		12,880		100.0	%
Reposition to same store	NA		NA		NA		154,590		154,590		100.0	%
Reposition from same store	NA		NA		NA		(151,777	)	(220,893	)	68.7	%
	13,147,367		14,881,624		88.3	%	11,291,196		12,562,956		89.9	%
Leasing activity
New leases/expansions	568,681		NA		NA		502,662		NA		NA
Move-outs/contractions	(629,258	)	NA		NA		(539,625	)	NA		NA
Net absorption	(60,577	)	NA		NA		(36,963	)	NA		NA
Ending June 30, 2018	13,086,790		14,881,624		87.9	%	11,254,233		12,562,956		89.6	%


1	Includes properties reclassified as held for sale.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 19

Same Store Leasing Statistics¹




	2Q 2018		1Q 2018		4Q 2017		3Q 2017		2Q 2017		1Q 2017		4Q 2016		3Q 2016
Average in-place contractual increases
Multi-tenant	2.84	%	2.81	%	2.80	%	2.78	%	2.74	%	2.72	%	2.69	%	2.68	%
Single-tenant	2.13	%	2.12	%	2.12	%	2.10	%	2.04	%	1.98	%	1.78	%	1.84	%
	2.73	%	2.71	%	2.69	%	2.65	%	2.61	%	2.59	%	2.50	%	2.49	%
Multi-tenant renewals
Cash leasing spreads	6.4	%	5.2	%	3.7	%	4.6	%	9.5	%	4.5	%	3.9	%	4.3	%
Tenant retention rate	84.4	%	81.5	%	81.9	%	80.5	%	90.3	%	79.2	%	88.5	%	90.1	%



AVERAGE IN-PLACE CONTRACTUAL INCREASES ²
	MULTI-TENANT				SINGLE-TENANT				TOTAL
	% INCREASE		% OF BASE RENT		% INCREASE		% OF BASE RENT		% INCREASE		% OF BASE RENT
Annual increase
CPI	2.21	%	1.36	%	2.07	%	55.20	%	2.09	%	9.41	%
Fixed	2.96	%	93.11	%	2.39	%	16.49	%	2.94	%	81.66	%
Non-annual increase (annualized)
CPI	1.24	%	1.09	%	0.50	%	2.50	%	1.03	%	1.30	%
Fixed	1.26	%	3.00	%	2.25	%	25.81	%	1.86	%	6.41	%
No increase
Term > 1 year	—	%	1.44	%	—	%	—	%	—	%	1.22	%
Total ²	2.84	%	100.00	%	2.13	%	100.00	%	2.73	%	100.00	%



TYPE AND OWNERSHIP STRUCTURE (% OF SQUARE FEET)
	MULTI-TENANT		SINGLE-TENANT		TOTAL
Tenant type
Hospital	45.9	%	81.6	%	50.2	%
Physician and other	54.1	%	18.4	%	49.8	%

Lease structure
Gross	13.6	%	—	%	12.0	%
Modified gross	29.7	%	—	%	26.1	%
Net	56.7	%	—	%	49.9	%
Absolute net ³	—	%	100.0	%	12.0	%

Ownership type
Ground lease	61.0	%	13.5	%	55.9	%
Fee simple	39.0	%	86.5	%	44.1	%


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


2	Excludes leases with terms of one year or less.


3	Tenant is typically responsible for operating expenses and capital obligations.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 20

Same Store Performance ¹

DOLLARS IN THOUSANDS, EXCEPT PER SQUARE FOOT DATA




	TTM 2018		2Q 2018		1Q 2018		4Q 2017		3Q 2017		TTM 2017		2Q 2017		1Q 2017		4Q 2016		3Q 2016
Multi-tenant
Revenues	$333,340		$84,035		$83,029		$82,709		$83,567		$324,061		$82,449		$81,013		$80,245		$80,354
Expenses	136,623		33,963		34,188		33,510		34,962		133,622		33,357		33,140		32,942		34,183
Cash NOI	$196,717		$50,072		$48,841		$49,199		$48,605		$190,439		$49,092		$47,873		$47,303		$46,171
Revenue per occ SF ²	$33.61		$33.94		$33.52		$33.38		$33.65		$32.76		$33.18		$32.74		$32.50		$32.62
Margin	59.0	%	59.6	%	58.8	%	59.5	%	58.2	%	58.8	%	59.5	%	59.1	%	58.9	%	57.5	%
Average occupancy	88.4	%	88.3	%	88.3	%	88.3	%	88.5	%	88.2	%	88.6	%	88.2	%	88.0	%	87.8	%
Period end occupancy	88.3	%	88.3	%	88.2	%	88.4	%	88.3	%	88.8	%	88.8	%	88.4	%	88.0	%	88.0	%
Number of properties	144		144		144		144		144		144		144		144		144		144
Single-tenant
Revenues	$44,816		$11,256		$11,257		$11,239		$11,064		$43,652		$10,706		$11,092		$10,790		$11,064
Expenses	1,730		378		439		427		486		1,831		426		492		468		445
Cash NOI	$43,086		$10,878		$10,818		$10,812		$10,578		$41,821		$10,280		$10,600		$10,322		$10,619
Revenue per occ SF ²	$33.62		$33.70		$33.84		$33.79		$33.26		$32.80		$32.18		$33.35		$32.44		$33.26
Average occupancy	99.3	%	99.6	%	99.2	%	99.2	%	99.2	%	99.2	%	99.2	%	99.2	%	99.2	%	99.2	%
Number of properties	15		15		15		15		15		15		15		15		15		15
Total
Revenues	$378,156		$95,291		$94,286		$93,948		$94,631		$367,713		$93,155		$92,105		$91,035		$91,418
Expenses	138,353		34,341		34,627		33,937		35,448		135,453		33,783		33,632		33,410		34,628
Cash NOI	$239,803		$60,950		$59,659		$60,011		$59,183		$232,260		$59,372		$58,473		$57,625		$56,790
Revenue per occ SF ²	$33.61		$33.91		$33.56		$33.43		$33.61		$32.76		$33.06		$32.81		$32.49		$32.70
Margin	63.4	%	64.0	%	63.3	%	63.9	%	62.5	%	63.2	%	63.7	%	63.5	%	63.3	%	62.1	%
Average occupancy	89.6	%	89.5	%	89.4	%	89.5	%	89.7	%	89.3	%	89.7	%	89.4	%	89.2	%	89.0	%
Number of properties	159		159		159		159		159		159		159		159		159		159



SAME STORE GROWTH
	YEAR-OVER-YEAR
	TTM 2018		2Q 2018		1Q 2018		4Q 2017		3Q 2017
Multi-tenant
Revenue per occ SF ²	2.6	%	2.3	%	2.4	%	2.7	%	3.2	%
Avg occupancy (bps)	+20		-30		+10		+30		+70
Revenues	2.9	%	1.9	%	2.5	%	3.1	%	4.0	%
Expenses	2.2	%	1.8	%	3.2	%	1.7	%	2.3	%
Cash NOI	3.3	%	2.0	%	2.0	%	4.0	%	5.3	%
Single-tenant
Cash NOI	3.0	%	5.8	%	2.1	%	4.7	%	(0.4	%)
Total
Revenues	2.8	%	2.3	%	2.4	%	3.2	%	3.5	%
Cash NOI	3.2	%	2.7	%	2.0	%	4.1	%	4.2	%


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.


2	Revenue per occ SF is calculated by dividing revenue by the average of the occupied SF for the period provided. Quarterly revenue per OCC SF is annualized.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 21

Reconciliation of NOI

DOLLARS IN THOUSANDS



BOTTOM UP RECONCILIATION
	2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017			4Q 2016			3Q 2016
Net income (loss)		$37,729			$9,180			($37,151	)		$3,173			$25,224			$31,845			$52,437			$11,834
Other income (expense)	(16,559		)	12,175			58,429			18,819			(1,808		)	(8,851		)	(27,078		)	13,719
General and administrative expense	8,373			9,101			8,272			8,022			8,005			8,694			7,622			7,859
Depreciation and amortization expense	40,130			39,573			37,324			35,873			34,823			34,452			34,022			31,984
Other expenses ¹	1,939			1,968			2,522			1,921			2,204			1,979			2,431			1,488
Straight-line rent revenue	(1,074		)	(1,722		)	(1,205		)	(1,332		)	(1,783		)	(1,751		)	(1,754		)	(1,223		)
Other revenue ²	(1,268		)	(1,438		)	(1,258		)	(1,327		)	(1,196		)	(785		)	(1,218		)	(1,420		)
Cash NOI		$69,270			$68,837			$66,933			$65,149			$65,469			$65,583			$66,462			$64,241
Acquisitions/development completions	(6,980		)	(6,593		)	(4,402		)	(3,241		)	(2,778		)	(2,316		)	(2,132		)	(197		)
Reposition	(524		)	(612		)	(594		)	(642		)	(672		)	(705		)	(664		)	(622		)
Dispositions/other	(816		)	(1,973		)	(1,926		)	(2,083		)	(2,647		)	(4,089		)	(6,041		)	(6,632		)
Same store cash NOI		$60,950			$59,659			$60,011			$59,183			$59,372			$58,473			$57,625			$56,790

TOP DOWN RECONCILIATION
	2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017			4Q 2016			3Q 2016
Property operating		$96,419			$95,294			$91,523			$90,935			$88,869			$86,682			$85,686			$83,974
Single-tenant net lease	12,073			13,213			13,078			12,811			12,732			14,276			15,626			16,053
Straight-line rent revenue	1,074			1,722			1,205			1,332			1,783			1,751			1,754			1,223
Rental income	109,566			110,229			105,806			105,078			103,384			102,709			103,066			101,250
Property lease guaranty income	146			175			182			168			153			224			354			817
Parking income	1,819			1,626			1,705			1,669			1,669			1,568			1,867			1,500
Exclude straight-line rent revenue	(1,074		)	(1,722		)	(1,205		)	(1,332		)	(1,783		)	(1,751		)	(1,754		)	(1,223		)
Exclude other revenue ³	(1,165		)	(1,345		)	(1,201		)	(1,218		)	(1,085		)	(642		)	(1,123		)	(1,245		)
Revenue	109,292			108,963			105,287			104,365			102,338			102,108			102,410			101,099
Property operating expense	(41,737		)	(41,818		)	(40,590		)	(40,627		)	(38,184		)	(37,852		)	(37,307		)	(37,528		)
Exclude other expenses ⁴	1,715			1,692			2,236			1,411			1,315			1,327			1,359			670
Cash NOI		$69,270			$68,837			$66,933			$65,149			$65,469			$65,583			$66,462			$64,241
Acquisitions/development completions	(6,980		)	(6,593		)	(4,402		)	(3,241		)	(2,778		)	(2,316		)	(2,132		)	(197		)
Reposition	(524		)	(612		)	(594		)	(642		)	(672		)	(705		)	(664		)	(622		)
Dispositions/other	(816		)	(1,973		)	(1,926		)	(2,083		)	(2,647		)	(4,089		)	(6,041		)	(6,632		)
Same store cash NOI		$60,950			$59,659			$60,011			$59,183			$59,372			$58,473			$57,625			$56,790



TTM ENDED 6/30/2018 - CASH NOI
	2018		2017		% CHANGE
Same store cash NOI		$239,803		$232,260	3.2	%
Reposition	2,372		2,663		(10.9	%)
		$242,175		$234,923	3.1	%
Acquisitions/development completions	21,216		7,423		185.8	%
Dispositions/other	6,798		19,409		(65.0	%)
Cash NOI		$270,189		$261,755	3.2	%


1	Includes acquisition and development expense, bad debt, above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.


2	Includes management fee income, interest, mortgage interest income, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.


3	Includes above and below market lease intangibles, lease inducements, lease terminations and TI amortization.


4	Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 22

Reconciliation of EBITDA

DOLLARS IN THOUSANDS




	TTM			Q2 2018			Q1 2018		4Q 2017			3Q 2017
Net income		$12,931			$37,729			$9,180		($37,151	)		$3,173
Interest expense	53,551			13,069			12,668		13,707			14,107
Depreciation and amortization	152,900			40,130			39,573		37,324			35,873
EBITDA		$219,382			$90,928			$61,421		$13,880			$53,153
Other amortization expense ¹	7,812			2,018			1,817		1,983			1,994
Gain on sales of real estate properties	(29,583		)	(29,590		)	—		—			7
Impairments on real estate assets	5,057			—			—		(2		)	5,059
EBITDAre ²		$202,668			$63,356			$63,238		$15,861			$60,213

EBITDA		$219,382			$90,928			$61,421		$13,880			$53,153
Acquisition and development expense	1,206			120			277		302			507
Gain on sales of real estate properties	(29,583		)	(29,590		)	—		—			7
Impairments on real estate assets	5,057			—			—		(2		)	5,059
Loss on extinguishment of debt	44,985			—			—		44,985			—
Debt Covenant EBITDA		$241,047			$61,458			$61,698		$59,165			$58,726
Other amortization expense	7,812			2,018			1,817		1,983			1,994
Timing impact ³	3,071			(249		)	—		2,761			559
Stock based compensation	10,375			2,593			2,822		2,531			2,429
Adjusted EBITDA		$262,305			$65,820			$66,337		$66,440			$63,708


1	Includes leasing commission amortization, above and below market lease intangible amortization, deferred financing costs amortization and the amortization of discounts and premiums on debt.


2	Earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") is an operating performance measure adopted by NAREIT. NAREIT defines EBITDAre equal to “net income (computed in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, impairments and minus gains on the disposition of depreciated property.”


3	Adjusted to reflect quarterly EBITDA from properties acquired or disposed in the quarter and the out-of-period impact of a ground lease straight-line rent adjustment recorded in the fourth quarter of 2017.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 23

Components of Net Asset Value

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



NOI BY PROPERTY TYPE
	2Q 2018
ASSET TYPE	SAME STORE NOI ¹		ACQ./DEV. COMPLETIONS NOI ²		REPOSITION NOI ³		TIMING ADJUSTMENTS ⁴		ADJUSTED NOI		ANNUALIZED ADJUSTED NOI		% OF ADJUSTED NOI
MOB/outpatient		$53,381		$6,838		$631		$889		$61,739		$246,956	88.7	%
Inpatient rehab	1,665		—		—		—		1,665		6,660		2.4	%
Inpatient surgical	4,697		—		—		—		4,697		18,788		6.8	%
Office	1,207		141		—		121		1,469		5,876		2.1	%
Total NOI		$60,950		$6,979		$631		$1,010		$69,570		$278,280	100.0	%



DEVELOPMENT PROPERTIES
Land held for development		$24,633
Construction in progress	23,102
Unstabilized development ⁵	28,970
		$76,705

OTHER ASSETS
Assets held for sale ⁶		$8,699
Reposition properties (net book value) ³	3,049
Cash and other assets ⁷	72,851
		$84,599

DEBT
Unsecured credit facility		$235,000
Unsecured term loan	150,000
Senior notes	800,000
Mortgage notes payable	160,409
Other liabilities ⁸	66,178
		$1,411,587



TOTAL SHARES OUTSTANDING
As of July 27, 2018			125,232,465










IMPLIED CAP RATE
	STOCK PRICE		IMPLIED CAP RATE
As of 7/27/2018		$29.21	5.67	%

Q2 2018 high		$29.08	5.69	%
Q2 2018 low		$26.31	6.12	%


1	See Same Store Performance schedule on page 21 for details on same store NOI.


2	Adjusted to reflect quarterly NOI from properties acquired or stabilized developments completed during the full eight quarter period that are not included in same store NOI. Stabilized developments include developments completed during the full eight quarter period that are not included in same store, but are 90% occupied or greater.

Reposition properties includes 14 properties which comprise 574,396 square feet. The NOI table above includes 11 of these properties comprising 423,161 square feet that have generated positive NOI totaling approximately $0.6 million. The remaining 3 properties, comprising 151,235 square feet, have generated negative NOI of approximately $0.1 million and are reflected at a net book value of $3.0 million in the other assets table above.


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


5	Unstabilized development includes the gross book value of one property that was completed on June 30, 2017. The building is 42% leased and 30% occupied as of June 30, 2018.


6	Assets held for sale includes one real estate property that is excluded from same store NOI and reflects net book value.


7	Includes cash of $7.4 million and prepaid assets of $65.5 million that are expected to generate future cash or NOI and assets that are currently causing non-cash reductions to NOI.


8	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 $59.0 million, security deposits of $6.9 million, and deferred operating expense reimbursements of $0.3 million.




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 24

Components of Expected FFO

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



SAME STORE QUARTERLY RANGE OF EXPECTATIONS
	EXPECTED 2018				ACTUAL
	LOW		HIGH		2Q 2018
Occupancy
Multi-tenant	87.5	%	89.0	%	88.3	%
Single-tenant	95.0	%	100.0	%	100.0	%
TTM revenue per occupied square foot
Multi-tenant	$33.00		$34.00		$33.61
Single-tenant	$33.50		$34.50		$33.62
TTM Multi-tenant cash NOI margin	58.5	%	60.0	%	59.0	%
Multi-tenant contractual rent increases by type (% of base rent)
Annual increase	92.0	%	95.0	%	94.5	%
Non-annual increase	4.0	%	5.0	%	4.1	%
No increase (term > 1 year)	1.0	%	2.0	%	1.4	%
Multi-tenant cash leasing spreads	3.0	%	6.0	%	6.4	%
Multi-tenant lease retention rate	75.0	%	90.0	%	84.4	%
TTM cash NOI growth
Multi-tenant	3.0	%	4.5	%	3.3	%
Single-tenant	1.0	%	3.0	%	3.0	%
Total	3.0	%	4.0	%	3.2	%

ANNUAL RANGE OF EXPECTATIONS
	LOW		HIGH		YTD
G&A	$33,000		$34,500		$17,473
Funding activity
Acquisitions	75,000		125,000		70,350
Dispositions
YTD dispositions	(55,752)		(55,752)		(55,752)
Remaining dispositions	(20,000)		(70,000)		—
Re/development	30,000		50,000		23,656
1st generation TI and acq. cap. ex.	8,000		10,000		5,862
2nd generation TI	22,000		26,000		13,622
Leasing commissions	7,000		9,000		3,798
Capital expenditures	18,000		24,000		11,301
Cash yield
Acquisitions	5.25	%	6.00	%	5.9	%
Dispositions
YTD dispositions	15.4	%	15.4	%	15.4	%
Remaining dispositions	5.5	%	7.0	%	—	%
Re/development (stabilized)	6.25	%	7.50	%	NA
Leverage (debt/cap)	30.0	%	35.0	%	33.1	%
Net debt to adjusted EBITDA	4.75x		5.5x		5.1x




HEALTHCARE REALTY	2Q 2018 SUPPLEMENTAL INFORMATION 25

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