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-20191231xearningsfo.htm
EX-99.1 - EXHIBIT 99.1 - HEALTHCARE REALTY TRUST INC	exhibit991fourthquarte.htm

4Q2019

Supplemental Information

FURNISHED AS OF FEBRUARY 12, 2020 - 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,” "predictive," “annualized,” “expect,” “expected,” “range of expectations,” "would have been," "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, 2019 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
8		Statements of Income
9		FFO, Normalized FFO, & FAD
10		Capital Funding & Commitments
11		Debt Metrics
12		Debt Covenants
13		Acquisition & Disposition Activity
14		Investment Activity
15		Portfolio
16		Associated Health Systems
17		Top Tenants
18		MOB Proximity to Hospital
19		Lease Maturity, Lease & Building Size
20		Historical Occupancy
21		Occupancy Reconciliation
22		Same Store Leasing Statistics
23		Same Store Performance
24		NOI Reconciliations
26		EBITDA Reconciliations
27		Components of Net Asset Value
28		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	4Q 2019 SUPPLEMENTAL INFORMATION 3

Highlights

QUARTERLY HIGHLIGHTS

Normalized FFO per share increased 4.0% over fourth quarter of 2018.

For the trailing twelve months ended December 31, 2019, same store cash NOI grew 2.9%.


•	Revenues increased 2.5% and revenue per average occupied square foot increased 2.6%.


•	Operating expenses increased 1.8%.


•	Average occupancy remained stable at 89.3%.

Predictive growth measures in the same store multi-tenant portfolio include:


•	Average in-place rent increases of 2.90%, up from 2.81% eight quarters ago


•	Future annual contractual increases of 3.16% for leases commencing in the quarter


•	Weighted average cash leasing spreads of 4.2% on 353,000 square feet renewed:


◦	13% (<0% spread)


◦	7% (0-3%)


◦	40% (3-4%)


◦	40% (>4%)


•	Tenant retention of 86.6%

Portfolio leasing activity in the fourth quarter totaled 527,000 square feet related to 135 leases:


•	382,000 square feet of renewals


•	145,000 square feet of new and expansion leases

During the fourth quarter, the Company acquired six medical office buildings for $107.4 million totaling 317,000 square feet. Acquisitions included:


•	In Raleigh, a 58,000 square foot building adjacent to A2 rated WakeMed's North Hospital for $21.6 million.


•	In Dallas, a 48,000 square foot building adjacent to AA- rated Baylor Scott & White Health's Medical Center of Plano for $20.1 million.


•	In Seattle, a 36,000 square foot building anchored by A rated EvergreenHealth for $22.8 million.


•	In Seattle, a 44,000 square foot building anchored by AA+ rated UW Medicine and A rated Overlake Hospital for $24.3 million.


•	In Seattle, a 20,000 square foot building adjacent to BBB+ rated CommonSpirit Health's Highline Medical Center for $10.0 million.


•	In Memphis, a 111,000 square foot building anchored by BBB+ rated Baptist Memorial Health Care. The 85% pre-leased building is being redeveloped for a total budget of $27.8 million, including the acquisition of the building for $8.7 million, and is expected to generate a yield of 7.6% once stabilized.

Subsequent to the end of the quarter, the Company acquired an 87,000 square foot medical office building adjacent to AA- rated MemorialCare Health's Saddleback Medical Center in Los Angeles for $42.0 million.

Fourth quarter dispositions totaled $39.7 million including four medical office buildings, two inpatient rehab facilities, and one skilled nursing facility.

During the fourth quarter, the Company sold 3.1 million shares through its at-the-market equity program, generating $103.2 million in net proceeds.

Net debt to adjusted EBITDA decreased to 4.9 times at the end of the quarter.

A dividend of $0.30 per share was declared for the fourth quarter.

ANNUAL HIGHLIGHTS

Normalized FFO totaled $206.2 million, or $1.60 per diluted common share, up from $1.57 per diluted common share in 2018.

Predictive growth measures in the same store multi-tenant portfolio include:


•	Average in-place contractual rent increases of 2.90%


•	Future annual contractual increases of 3.12% for leases commencing in the year


•	Weighted average cash leasing spreads of 3.8% on 1,870,000 square feet renewed:


◦	10% (<0% spread)


◦	4% (0-3%)


◦	59% (3-4%)


◦	27% (>4%)


•	Average tenant retention of 87.4%

Annual portfolio leasing activity totaled 2,592,000 square feet related to 658 leases:


◦	2,080,000 square feet of renewals


◦	512,000 square feet of new and expansion leases

Net investment activity totaled $355.0 million:


•	$381.3 million of acquisitions


•	$28.6 million of development and redevelopment funding


•	$54.9 million of dispositions

Dividends paid in 2019 totaled $155.4 million, which equaled 75.3% of normalized FFO and 95.0% of FAD.

OTHER ITEMS OF NOTE

The Company expects general and administrative expense to increase in the first quarter of 2020 over the fourth quarter of 2019 by approximately $0.8 million due to customary increases in payroll taxes, non-cash ESPP expense and healthcare savings account fundings. Approximately $0.7 million is not expected to recur in subsequent quarters.

In May 2019, the Company entered into a $150 million unsecured term loan due 2026 with a delayed draw feature through February 2020. The Company will draw the $150 million term loan at the end of February and the credit spread will be 50 basis points higher than has been paid to carry this balance on the revolver during the delayed draw period.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 4

Salient Facts

AS OF DECEMBER 31, 2019



	Properties

	$4.3B invested in 204 properties
	15.4M SF owned in 25 states
	11.4M SF managed by Healthcare Realty
	93.8% medical office and outpatient
	87.6% on/adjacent to hospital campuses
	2.9% same store cash NOI growth (TTM)


	Capitalization

	$6.3B enterprise value as of 2/7/2020
	$4.9B market capitalization as of 2/7/2020
	134.7M shares outstanding as of 2/7/2020
	$0.30 quarterly dividend per share
	BBB/Baa2/BBB+ S&P/Moody's/Fitch
	24.0% debt to enterprise value at 12/31/2019
	4.9x net debt to adjusted EBITDA




HEALTHCARE REALTY	4Q 2019 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 December 31, 2019, the Company owned 204 real estate properties in 25 states totaling 15.4 million square feet and was valued at approximately $5.9 billion. The Company provided leasing and property management services to 11.4 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

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

Berenberg Capital Markets LLC

BTIG, LLC

CapitalOne Securities, Inc.

Citi Research

Green Street Advisors, Inc.

J.P. Morgan Securities LLC

Jefferies LLC

JMP Securities LLC

KeyBanc Capital Markets Inc.

Mizuho Securities USA Inc

Morgan Stanley & Co, LLC

Raymond James & Associates

SMBC Nikko Securities America, Inc.

Stifel, Nicolaus & Company, Inc.

Wells Fargo Securities, LLC

BOARD OF DIRECTORS

J. Knox Singleton

Chairman, Healthcare Realty

Retired Chief Executive Officer, Inova Health System

Todd J. Meredith

President and Chief Executive Officer

Healthcare Realty Trust Incorporated

John V. Abbott

Retired Chief Executive Officer

Aviation Asset Management Group, General Electric Company

Nancy H. Agee

President and Chief Executive Officer

Carilion Clinic

Edward H. Braman

Retired Audit Partner

Ernst & Young LLP

Peter F. Lyle

Executive Vice President

Medical Management Associates, Inc.

Bruce D. Sullivan

Retired Audit Partner

Ernst & Young LLP

Christann M. Vasquez

Executive Vice President and Chief Operating Officer

Ascension Texas

David R. Emery (1944-2019)

Chairman Emeritus

Healthcare Realty Trust Incorporated




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 6

Balance Sheet

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ASSETS
	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018
Real estate properties
Land		$289,751			$267,803			$247,772			$230,206			$230,206
Buildings, improvements and lease intangibles	3,986,326			3,915,308			3,845,546			3,757,260			3,675,415
Personal property	10,538			10,899			10,804			10,739			10,696
Construction in progress	48,731			44,041			36,996			40,326			33,107
Land held for development	24,647			24,647			24,647			24,647			24,647
Total real estate properties	4,359,993			4,262,698			4,165,765			4,063,178			3,974,071
Less accumulated depreciation and amortization	(1,121,102		)	(1,106,387		)	(1,064,408		)	(1,035,800		)	(1,015,174		)
Total real estate properties, net	3,238,891			3,156,311			3,101,357			3,027,378			2,958,897
Cash and cash equivalents	657			11,809			7,617			11,313			8,381
Assets held for sale, net	37			5,289			6,615			10,568			9,272
Operating lease right-of-use assets ¹	126,177			126,711			127,326			128,141			—
Financing lease right-of-use assets ¹	12,667			9,063			9,095			9,259			—
Other assets	185,426			181,975			176,537			175,864			214,697
Total assets		$3,563,855			$3,491,158			$3,428,547			$3,362,523			$3,191,247

LIABILITIES AND STOCKHOLDERS' EQUITY
	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018
Liabilities
Notes and bonds payable		$1,414,069			$1,443,919			$1,442,758			$1,343,110			$1,345,984
Accounts payable and accrued liabilities	78,517			75,094			60,394			61,519			80,411
Liabilities of properties held for sale	145			300			511			633			587
Operating lease liabilities ¹	91,574			91,356			91,056			91,044			—
Financing lease liabilities ¹	18,037			14,305			14,216			14,294			—
Other liabilities	61,504			61,023			50,168			46,144			47,623
Total liabilities	1,663,846			1,685,997			1,659,103			1,556,744			1,474,605
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; 50,000 shares authorized	—			—			—			—			—
Common stock, $.01 par value; 300,000 shares authorized	1,347			1,314			1,292			1,292			1,253
Additional paid-in capital	3,485,003			3,379,572			3,305,344			3,302,814			3,180,284
Accumulated other comprehensive loss	(6,175		)	(8,470		)	(6,189		)	(1,611		)	(902		)
Cumulative net income attributable to common stockholders	1,127,304			1,100,094			1,097,494			1,093,010			1,088,119
Cumulative dividends	(2,707,470		)	(2,667,349		)	(2,628,497		)	(2,589,726		)	(2,552,112		)
Total stockholders' equity	1,900,009			1,805,161			1,769,444			1,805,779			1,716,642
Total liabilities and stockholders' equity		$3,563,855			$3,491,158			$3,428,547			$3,362,523			$3,191,247

Beginning in the first quarter of 2019 with the adoption of Accounting Standards Codification Topic 842, the Company recorded the present value of future lease payments on the Condensed Consolidated Balance Sheet. This amount was recorded as a right-of-use asset with a corresponding lease liability. The right-of-use asset also includes prepaid leases and acquisition market rate intangibles. The Company's leases where it is the lessee are primarily ground leases. All of the Company's ground leases that were in-place as of December 31, 2018 were recorded as operating leases. The Company assumed two ground leases in connection with an acquisition in the first quarter and one ground lease in connection with an acquisition in the fourth quarter that were classified as finance leases.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 7

Statements of Income

DOLLARS IN THOUSANDS




	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Revenues
Rental income		$119,438			$117,740			$114,351			$110,696			$111,149			$111,452			$109,566			$110,229
Other operating	2,086			2,059			1,966			1,961			2,019			2,010			2,068			1,895
	121,524			119,799			116,317			112,657			113,168			113,462			111,634			112,124
Expenses
Property operating	46,214			46,777			44,286			42,725			42,815			44,135			41,737			41,818
General and administrative ¹	7,669			10,802			7,845			8,510			8,534			8,504			8,373			9,101
Acquisition and pursuit costs ²	515			501			422			305			200			141			120			277
Depreciation and amortization	46,134			45,137			43,926			42,662			42,437			42,061			40,130			39,573
Bad debts, net of recoveries ³	—			—			—			—			18			(62		)	104			—
	100,532			103,217			96,479			94,202			94,004			94,779			90,464			90,769
Other income (expense)
Gain on sales of real estate properties	20,036			200			4,849			15			10,787			1,288			29,590			—
Interest expense	(13,816		)	(14,181		)	(13,850		)	(13,588		)	(13,602		)	(13,464		)	(13,069		)	(12,668		)
Impairment of real estate assets	(7		)	—			(5,610		)	—			—			—			—			—
Interest and other income (expense), net	5			—			(743		)	9			(35		)	41			38			493
	6,218			(13,981		)	(15,354		)	(13,564		)	(2,850		)	(12,135		)	16,559			(12,175		)
Net income		$27,210			$2,601			$4,484			$4,891			$16,314			$6,548			$37,729			$9,180


1	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses in the third quarter of 2019 for the acceleration of his outstanding restricted stock awards and associated taxes.


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


3	Beginning in the first quarter of 2019 with the adoption of Accounting Standards Codification Topic 842, bad debts, net of recoveries associated with lease revenue was recorded within rental income.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 8

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

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA




	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Net income		$27,210			$2,601			$4,484			$4,891			$16,314			$6,548			$37,729			$9,180
Gain on sales of real estate assets	(20,036		)	(200		)	(4,849		)	(15		)	(10,787		)	(1,288		)	(29,590		)	—
Impairments of real estate assets	7			—			5,610			—			—			—			—			—
Real estate depreciation and amortization	47,042			45,926			44,682			43,383			43,380			42,723			40,747			40,003
FFO		$54,223			$48,327			$49,927			$48,259			$48,907			$47,983			$48,886			$49,183
Acquisition and pursuit costs ³	515			501			422			305			200			141			120			277
Lease intangible amortization ⁴	4			5			54			84			—			—			—			—
Accelerated stock awards ⁵	—			2,854			—			—			—			70			—			—
Forfeited earnest money received	—			—			—			—			—			—			—			(466		)
Debt financing costs	—			—			760			—			—			—			—			—
Normalized FFO		$54,742			$51,687			$51,163			$48,648			$49,107			$48,194			$49,006			$48,994
Non-real estate depreciation and amortization	838			838			829			763			790			845			829			820
Non-cash interest expense amortization ⁶	731			727			707			702			649			661			652			646
Provision for bad debt, net	124			(32		)	150			(75		)	18			(62		)	104			—
Straight-line rent income, net	(781		)	(379		)	(1		)	(270		)	(302		)	(413		)	(683		)	(1,330		)
Stock-based compensation	2,133			2,375			2,372			2,639			2,601			2,605			2,593			2,822
Normalized FFO adjusted for non-cash items	57,787			55,216			55,220			52,407			52,863			51,830			52,501			51,952
2nd generation TI	(12,126		)	(6,114		)	(6,124		)	(4,326		)	(10,367		)	(6,950		)	(7,755		)	(5,867		)
Leasing commissions paid	(4,970		)	(2,697		)	(2,315		)	(1,347		)	(2,182		)	(1,139		)	(1,947		)	(1,851		)
Capital expenditures	(5,159		)	(3,543		)	(4,993		)	(3,462		)	(2,817		)	(6,229		)	(7,117		)	(4,184		)
FAD		$35,532			$42,862			$41,788			$43,272			$37,497			$37,512			$35,682			$40,050
Dividends paid		$40,121			$38,852			$38,771			$37,614			$37,571			$37,570			$37,569			$37,556
FFO per common share - diluted		$0.41			$0.37			$0.39			$0.39			$0.39			$0.39			$0.39			$0.40
Normalized FFO per common share - diluted		$0.41			$0.40			$0.40			$0.39			$0.40			$0.39			$0.40			$0.40
FFO weighted average common shares outstanding - diluted⁷	133,125			129,015			128,279			124,928			124,240			124,192			123,983			123,984

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 “net income (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.”

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.

The Company adopted the 2018 NAREIT FFO White Paper Restatement during the first quarter of 2019. This amended definition specifically includes the impact of acquisition related market lease intangible amortization in the calculation of NAREIT FFO. The Company historically included this amortization in the real estate depreciation and amortization line item which is added back in the calculation of NAREIT FFO. Prior periods were not restated for the adoption.


5	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses recorded in the third quarter of 2019 associated with the acceleration of his outstanding non-vested share-based awards. The third quarter of 2018 includes a revaluation adjustment recorded in connection with an officer retirement.


6	Includes the amortization of deferred financing costs, discounts and premiums.


7	Diluted weighted average common shares outstanding for the three months ended December 31, 2019 includes the dilutive effect of nonvested share-based awards outstanding of 807,447.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 9

Capital Funding & Commitments

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ACQUISITION AND RE/DEVELOPMENT FUNDING
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018
Acquisitions ¹	$107,408		$78,681		$102,225		$93,000		$36,950
Re/development ¹	7,028		7,359		6,916		7,281		6,895
1st gen. TI & acquisition capex ²	8,184		3,793		4,934		2,887		3,394

MAINTENANCE CAPITAL EXPENDITURES
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018
$ Spent
2nd generation TI	$12,126		$6,114		$6,124		$4,326		$10,367
Leasing commissions paid	4,970		2,697		2,315		1,347		2,182
Capital expenditures	5,159		3,543		4,993		3,462		2,817
	$22,255		$12,354		$13,432		$9,135		$15,366
% of Cash NOI
2nd generation TI	16.2	%	8.4	%	8.5	%	6.2	%	14.8	%
Leasing commissions paid	6.7	%	3.7	%	3.2	%	1.9	%	3.1	%
Capital expenditures	6.9	%	4.9	%	6.9	%	5.0	%	4.0	%
	29.8	%	17.0	%	18.6	%	13.1	%	21.9	%

LEASING COMMITMENTS
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018
Renewals
Square feet	381,561		756,211		366,524		575,195		341,032
2nd generation TI/square foot/lease year	$3.15		$2.12		$1.75		$2.12		$1.69
Leasing commissions/square foot/lease year	$0.91		$0.86		$0.43		$0.60		$0.49
WALT (in months) ³	56.6		55.0		53.0		46.3		51.4

New leases
Square feet	117,274		95,948		123,918		78,947		104,248
2nd generation TI/square foot/lease year	$5.06		$4.79		$5.18		$5.06		$4.72
Leasing commissions/square foot/lease year	$1.60		$1.29		$1.05		$0.91		$1.23
WALT (in months) ³	69.0		74.3		60.7		59.6		72.8

All
Square feet	498,835		852,159		490,442		654,142		445,280
2nd generation TI/square foot/lease year	$3.67		$2.51		$2.71		$2.56		$2.60
Leasing commissions/square foot/lease year	$1.10		$0.92		$0.60		$0.64		$0.72
Leasing commitments as a % of annual net rent	21.0	%	14.0	%	15.7	%	14.4	%	16.0	%
WALT (in months) ³	59.5		57.2		55.0		47.9		56.4


1	The Company acquired a property in Memphis, Tennessee during the fourth quarter of 2019, which the Company plans to redevelop during 2020. The purchase price of $8.7 million for building and land is included in the acquisition funding.


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


3	WALT = weighted average lease term.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 10

Debt Metrics

DOLLARS IN THOUSANDS



SUMMARY OF INDEBTEDNESS AS OF DECEMBER 31, 2019
	INTEREST EXPENSE	PRINCIPAL BALANCE	BALANCE ¹	MONTHS TO MATURITY	CONTRACTUAL RATE		EFFECTIVE RATE
Senior notes due April 2023	$2,398	$250,000	$248,540	40	3.75	%	3.95	%
Senior notes due May 2025 ²	2,469	250,000	248,522	64	3.88	%	4.08	%
Senior notes due January 2028	2,774	300,000	295,651	96	3.63	%	3.84	%
Total senior notes outstanding	$7,641	$800,000	$792,713	68	3.74	%	3.95	%
$700 million unsecured credit facility due May 2023	1,932	293,000	293,000	41	LIBOR + 0.90%		2.66	%
$200 million unsecured term loan facility due May 2024 ³	1,893	200,000	199,013	53	LIBOR + 1.00%		3.27	%
$150 million unsecured term loan facility due June 2026 ⁴	—	—	—	77	LIBOR + 1.60%		NA
Mortgage notes payable, net	1,567	129,258	129,343	53	4.95	%	4.81	%
Total outstanding notes and bonds payable	$13,033	$1,422,258	$1,414,069	59	3.56	%	3.67	%
Interest cost capitalization	(412)
Unsecured credit facility fee and deferred financing costs	971
Financing lease right-of-use assets	224
Total quarterly consolidated interest expense	$13,816



DEBT MATURITIES SCHEDULE AS OF DECEMBER 31, 2019
	PRINCIPAL PAYMENTS										WEIGHTED AVERAGE RATE
	CREDIT FACILITY		TERM LOANS		SENIOR NOTES		MORTGAGE NOTES		TOTAL		MORTGAGE NOTES		OTHER		TOTAL
2020							$23,064		$23,064		6.06	%	—	%	6.06	%
2021							17,594		17,594		5.56	%	—	%	5.56	%
2022							12,977		12,977		3.84	%	—	%	3.84	%
2023	$293,000				$250,000		30,230		573,230		4.23	%	3.16	%	3.22	%
2024			$200,000				25,966		225,966		4.52	%	3.27	%	3.42	%
2025					250,000		1,940		251,940		5.63	%	3.88	%	3.89	%
2026							8,512		8,512		4.09	%	—	%	4.09	%
2027							785		785		6.38	%	—	%	6.38	%
2028					300,000		380		300,380		6.63	%	3.63	%	3.63	%
Thereafter							7,810		7,810		6.85	%	—	%	6.85	%
Total	$293,000		$200,000		$800,000		$129,258		$1,422,258		4.95	%	3.43	%	3.56	%
Weighted average rate	2.66	%	3.27	%	3.74	%	4.95	%	3.56	%


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 $175.0 million at a weighted average rate of 2.29% (plus the applicable margin rate, currently 100 basis points).


4	As of December 31, 2019, there are no outstanding loans under the $150 million unsecured term loan due June 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the commitments.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 11

Debt Covenants

DOLLARS IN THOUSANDS



SELECTED FINANCIAL DEBT COVENANTS TTM ENDED DECEMBER 31, 2019 ¹
	CALCULATION	REQUIREMENT	PER DEBT COVENANTS		EXCLUDING ²LEASE ACCOUNTING IMPACT
Revolving credit facility and term loan ³
Leverage ratio	Total debt/total capital	Not greater than 60%	32.2	%
Secured leverage ratio	Total secured debt/total capital	Not greater than 30%	2.9	%
Unencumbered leverage ratio	Unsecured debt/unsecured real estate	Not greater than 60%	32.6	%
Fixed charge coverage ratio	EBITDA/fixed charges	Not less than 1.50x	4.3x
Unsecured coverage ratio	Unsecured EBITDA/unsecured interest	Not less than 1.75x	4.8x
Construction and development	CIP/total assets	Not greater than 15%	1.4	%
Asset investments	Mortgages & unimproved land/total assets	Not greater than 20%	0.9	%

Senior notes ⁴
Incurrence of total debt	Total debt/total assets	Not greater than 60%	33.5	%	31.8	%
Incurrence of debt secured by any lien	Secured debt/total assets	Not greater than 40%	3.0	%	2.9	%
Maintenance of total unsecured assets	Unencumbered assets/unsecured debt	Not less than 150%	300.9	%	315.5	%
Debt service coverage	EBITDA/interest expense	Not less than 1.5x	4.8x		4.8x

Other
Net debt to adjusted EBITDA ⁵	Net debt (debt less cash)/adjusted EBITDA	Not required	4.9x
Debt to enterprise value ⁶	Debt/enterprise value	Not required	24.0	%


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


2	Excludes the impact of the adoption of Topic 842, Leases where lease liabilities are considered debt per the covenant definitions.


3	As part of the Company's amendment to the credit facility and term loan agreements during the second quarter of 2019, the financial covenants were updated to exclude the impact of the Topic 842, Lease Accounting from the covenant calculations.


4	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.


5	Adjusted EBITDA is based on the current quarter results, annualized. See page 27 for a reconciliation of adjusted EBITDA. Net debt does not include lease liabilities.


6	Based on the closing price of $33.37 on December 31, 2019 and 134,706,154 shares outstanding. Debt does not include lease liabilities.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 12

Acquisition & Disposition Activity

DOLLARS IN THOUSANDS



ACQUISITION ACTIVITY
MARKET	TYPE ¹	MILES TO CAMPUS	ASSOCIATED HEALTH SYSTEM	CLOSING	PURCHASE PRICE	SQUARE FEET	LEASED %		CAP RATE ²
Washington D.C.³	MOB	0.00	Inova Health	3/28/2019	$46,000	158,338	75	%	5.2	%
Indianapolis, IN	MOB	0.00	Indiana University Health	3/28/2019	47,000	143,499	100	%	5.1	%
Atlanta, GA	MOB	0.14	Piedmont Healthcare	4/2/2019	28,000	47,963	100	%	5.7	%
Dallas, TX	MOB	0.01	Baylor Scott & White Health	6/10/2019	17,000	89,990	85	%	6.2	%
Seattle, WA	MOB	0.20	MultiCare Health System	6/11/2019	7,720	29,870	100	%	6.9	%
Seattle, WA	MOB	0.27	UW Medicine (Seattle)	6/14/2019	19,005	47,255	96	%	5.8	%
Seattle, WA	MOB	0.35	UW Medicine (Seattle)	6/28/2019	30,500	78,288	99	%	5.7	%
Houston, TX	MOB	0.00	Houston Methodist	8/1/2019	13,500	29,903	100	%	5.7	%
Oklahoma City, OK	MOB	0.02	Integris Health	9/26/2019	4,100	28,542	76	%	6.3	%
Los Angeles, CA³	MOB	0.05	Huntington Hospital	9/30/2019	61,081	115,634	87	%	5.2	%
Raleigh, NC	MOB	0.11	WakeMed Health	10/31/2019	21,625	57,730	100	%	5.5	%
Dallas, TX ⁴	MOB	0.04	Baylor Scott & White Health	10/31/2019	20,084	48,192	95	%	5.3	%
Seattle, WA	MOB	0.30	EvergreenHealth	11/18/2019	22,800	36,350	100	%	5.5	%
Seattle, WA	MOB	3.50	UW Medicine (Seattle)	12/10/2019	24,250	44,166	94	%	6.1	%
Memphis, TN ⁵	MOB	0.26	Baptist Memorial Health Care	12/13/2019	8,699	110,883	NA		NA
Seattle, WA	MOB	0.15	CommonSpirit Health	12/18/2019	9,950	20,109	100	%	6.3	%
2019 Total					$381,314	1,086,712	92	%	5.5	%
Subsequent activity
Los Angeles, CA	MOB	0.14	MemorialCare Health	1/3/2020	42,000	86,986	79	%	5.3	%



DISPOSITION ACTIVITY
LOCATION	TYPE ¹	MILES TO CAMPUS	ASSOCIATED HEALTH SYSTEM	CLOSING	SALES PRICE	SQUARE FEET	LEASED %		CAP RATE ⁶
Tucson, AZ⁷	MOB	Varies	Tenet Healthcare ⁷	4/9/2019	$13,000	67,345	95	%	6.2	%
Virginia Beach, VA	MOB	0.25	None	8/1/2019	1,300	10,000	100	%	12.2	%
San Antonio, TX	MOB	0.04	HCA	8/28/2019	900	10,138	50	%	3.0	%
New Orleans, LA³	MOB	0.00	LCMC Health	11/25/2019	3,750	136,155	25	%	3.3	%
Dallas, TX³	MOB	7.00	Baylor Scott & White Health	12/30/2019	8,660	69,558	80	%	4.5	%
Subtotal - MOBs					$27,610	293,196	58	%	5.5	%
Erie, PA	IRF	NA	NA	10/25/2019	14,000	90,123	100	%	15.6	%
Kingsport, TN	SNF	NA	NA	11/27/2019	9,500	75,000	100	%	8.7	%
Pittsburgh, PA	IRF	NA	NA	12/18/2019	3,750	78,731	—	%	(9.0	)%
2019 Total					$54,860	537,050	63	%	7.6	%


1	MOB = Medical office building; IRF = Inpatient rehabilitation facility; SNF = skilled nursing facility


2	For acquisitions, cap rate represents the forecasted first year NOI divided by purchase price.


3	Includes two properties.


4	Represents the cap rate when tenant build out for existing leases is complete and all tenants are occupying and paying full rent.


5	The Company acquired a 110,883 square foot building in Memphis, Tennessee that it has classified as a redevelopment project. This property was 43% occupied and 84% leased at acquisition and is expected to produce NOI at or near breakeven during the construction period. The project is expected to be completed and stabilized in the first quarter of 2021.


6	For dispositions, cap rate represents the in-place cash NOI divided by sales price.


7	Includes three off-campus MOBs and one on-campus MOB sold to a single purchaser. The associated health system is Tenet for three of these buildings.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 13

Investment Activity

DOLLARS IN THOUSANDS



RE/DEVELOPMENT ACTIVITY
LOCATION	MILES TO CAMPUS	SQUARE FEET	BUDGET	FUNDINGS THRU 12/31/2019	REMAINING FUNDINGS	LEASED %		EXPECTED CASH NOI AT LEASED %	EXPECTED STABILIZED YIELD
Development
Seattle, WA	0.00	151,000	$64,120	$49,033	$15,087	60	%	$617	7.0	%
Redevelopment
Memphis, TN ¹	0.26	110,883	27,800	9,032	18,768	85	%	449	7.6	%
Total		261,883	$91,920	$58,065	$33,855	71	%	$1,066



RE/DEVELOPMENT EXPECTED CASH NOI AND OCCUPANCY RAMP UP TO LEASED % ²
LOCATION	INITIAL OCCUPANCY	Q4 2019		Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021
Development
Seattle, WA
Cash NOI		—		$40		$386		$617		$617		$621		$633
Average occupancy	Q1 2020	—	%	10	%	40	%	60	%	60	%	60	%	60	%
Redevelopment
Memphis, TN
Cash NOI		—		—		—		—		—		$449		$449
Average occupancy	Q4 2019	43	%	44	%	44	%	44	%	44	%	85	%	85	%
Total Cash NOI		$0		$40		$386		$617		$617		$1,070		$1,082



HISTORICAL INVESTMENT ACTIVITY
	ACQUISITIONS		RE/DEVELOPMENT FUNDING		TOTAL INVESTMENTS		DISPOSITIONS
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
2018	111,450		35,567		147,017		98,691
2019	381,314		28,584		409,898		54,860
2020	42,000		NA		42,000		NA
Average (2015-2019)	249,817		33,932		283,749		105,782
% of Total	88.0	%	12.0	%	100.0	%


1	The project includes the acquisition of a 110,883 square foot medical office building for $8.7 million and redevelopment costs related to the property.


2	Does not reflect the impact of capitalized interest that will be reduced at lease commencement.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 14

Portfolio ¹

DOLLARS IN THOUSANDS



MARKETS (BY SQUARE FEET)
				MOB 93.8%				NON-MOB 6.2%
MARKET	MSA RANK	INVESTMENT	COUNT	MULTI-TENANT		SINGLE-TENANT		INPATIENT/SURGICAL		OFFICE		TOTAL		% OF TOTAL
Dallas, TX	4	$516,319	25	2,073,198				156,245		145,365		2,374,808		15.5	%
Seattle, WA	15	591,753	25	1,305,689		67,510						1,373,199		8.9	%
Nashville, TN	36	201,625	6	766,523						108,691		875,214		5.7	%
Charlotte, NC	22	180,566	16	860,735								860,735		5.6	%
Los Angeles, CA	2	250,562	14	709,797				63,000				772,797		5.0	%
Denver, CO	19	150,789	9	557,368						93,869		651,237		4.2	%
Houston, TX	5	148,302	9	563,760						57,170		620,930		4.1	%
Richmond, VA	44	149,238	7	548,801								548,801		3.6	%
Atlanta, GA	9	216,272	9	524,017		19,732						543,749		3.5	%
Des Moines, IA	87	139,165	7	197,994		181,961				152,655		532,610		3.5	%
Indianapolis, IN	33	122,146	4	526,194								526,194		3.4	%
Memphis, TN	43	97,943	7	515,876								515,876		3.4	%
Washington, DC	6	150,325	6	507,336								507,336		3.3	%
San Antonio, TX	24	95,474	6	473,673								473,673		3.1	%
Oklahoma City, OK	41	126,122	4	180,049		200,000						380,049		2.5	%
Austin, TX	30	107,168	5	375,333								375,333		2.4	%
Chicago, IL	3	93,658	3	352,800								352,800		2.3	%
Honolulu, HI	56	144,127	3	298,427								298,427		1.9	%
San Francisco, CA	12	121,493	3	286,270								286,270		1.9	%
Miami, FL	7	59,306	4	241,980								241,980		1.6	%
Colorado Springs, CO	79	54,084	3	241,224								241,224		1.6	%
Other (16 markets)		555,646	29	1,494,693		322,482		186,000				2,003,175		13.0	%
Total		$4,272,083	204	13,601,737		791,685		405,245		557,750		15,356,417		100.0	%
Number of properties				185		11		3		5		204
% of square feet				88.6	%	5.2	%	2.6	%	3.6	%	100.0	%
Investment¹				$3,674,712		$238,937		$221,478		$136,956		$4,272,083
Quarterly cash NOI				$62,333		$4,953		$5,471		$1,540		$74,297
% of cash NOI				83.9	%	6.7	%	7.3	%	2.1	%	100.0	%



BY BUILDING TYPE
	MOB TOTAL		MULTI-TENANT		SINGLE-TENANT		TOTAL
Number of properties	196		190		14		204
Square feet	14,393,422		14,159,487		1,196,930		15,356,417
% of square feet	93.8	%	92.2	%	7.8	%	100.0	%
Occupancy %	87.1	%	86.6	%	100.0	%	87.7	%
Investment¹	$3,913,649		$3,811,668		$460,415		$4,272,083
Quarterly cash NOI	$67,286		$63,873		$10,424		$74,297
% of cash NOI	90.6	%	86.0	%	14.0	%	100.0	%


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




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 15

Associated Health Systems ¹



MOB PORTFOLIO (BY SQUARE FEET)
			ASSOCIATED 94.8%²
HEALTH SYSTEM	SYSTEM RANK ³	CREDIT RATING	ON		ADJACENT ⁴		ANCHORED ⁵		OFF CAMPUS		TOTAL MOB	% OF TOTAL MOB
Baylor Scott & White Health	20	AA-/Aa3	1,834,256		280,941		163,188		—		2,278,385	15.8	%
Ascension Health	4	AA+/Aa2	1,080,681		156,328		—		—		1,237,009	8.6	%
CommonSpirit Health ⁶	3	BBB+/Baa1	807,182		311,310		95,486		—		1,213,978	8.4	%
Atrium Health	29	AA-/Aa3	393,815		98,066		313,513		—		805,394	5.7	%
Tenet Healthcare	7	B/B2	570,264		67,790		—		—		638,054	4.4	%
Bon Secours Mercy Health	78	A+/--	548,801		—		—		—		548,801	3.8	%
Indiana University Health	26	AA/Aa2	423,628		102,566		—		—		526,194	3.7	%
Baptist Memorial Health Care	95	BBB+/--	424,306		—		39,345		52,225		515,876	3.6	%
Wellstar Health System	84	A/A2	476,054		—		—		—		476,054	3.3	%
UW Medicine (Seattle)	49	AA+/Aaa	194,536		102,540		44,166		125,543		466,785	3.2	%
HCA	2	BB+/Ba2	177,340		167,017		—		78,305		422,662	2.9	%
University of Colorado Health	68	AA/Aa3	150,291		161,099		33,850		—		345,240	2.4	%
Trinity Health	6	AA-/Aa3	267,952		73,331		—		—		341,283	2.4	%
Providence St. Joseph Health	5	AA-/Aa3	176,854		129,181		—		—		306,035	2.1	%
Hawaii Pacific Health	195	--/A1	173,502		—		—		124,925		298,427	2.1	%
Inova Health System	76	AA+/Aa2	262,121		—		—		—		262,121	1.8	%
Medstar Health	39	A/A2	241,739		—		—		—		241,739	1.7	%
Advocate Aurora Health Care	14	AA/Aa3	142,955		95,436		—		—		238,391	1.7	%
Overlake Health System	339	A/A2	191,051		39,659		—		—		230,710	1.6	%
MultiCare Health System	110	AA-/Aa3	154,452		63,039		—		—		217,491	1.5	%
Memorial Hermann	43	A+/A1	—		206,090		—		—		206,090	1.4	%
Mercy (St. Louis)	37	AA-/Aa3	—		—		200,000		—		200,000	1.4	%
Other (22 credit rated systems)			907,321		859,846		146,689		—		1,913,856	13.3	%
Subtotal - credit rated⁷			9,599,101		2,914,239		1,036,237		380,998		13,930,575	96.8	%
Non-credit rated			102,555		—		—		360,292		462,847	3.2	%
Total			9,701,656		2,914,239		1,036,237		741,290		14,393,422	100.0	%
% of total			67.4	%	20.2	%	7.2	%	5.2	%


1	Excludes construction in progress, Memphis Redevelopment 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	Previously Catholic Health Initiatives.


7	Based on square footage, 88.6% is associated with an investment-grade rated healthcare provider.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 16

Top Tenants ¹




					LEASED SQUARE FEET
TENANT	SYSTEM RANK ²	CREDIT RATING	# OF ASSOCIATED PROPERTIES	# OF LEASES	MOB	INPATIENT	TOTAL	% OF TOTAL LEASED		% OF TTM REVENUE
Baylor Scott & White Health	20	AA-/Aa3	24	150	927,456	156,245	1,083,701	8.0	%	8.6	%
Atrium Health	29	AA-/Aa3	16	81	644,090	—	644,090	4.8	%	4.3	%
Mercy (St. Louis)	37	AA-/Aa3	2	2	200,000	186,000	386,000	2.9	%	3.9	%
CommonSpirit Health ³	3	BBB+/Baa1	17	76	583,151	—	583,151	4.3	%	3.8	%
Indiana University Health	26	AA/Aa2	4	61	436,456	—	436,456	3.2	%	2.6	%
Ascension Health	4	AA+/Aa2	11	68	389,583	—	389,583	2.9	%	2.6	%
WellStar Health System	84	A/A2	7	48	322,697	—	322,697	2.4	%	2.2	%
UW Medicine (Seattle)	49	AA+/Aaa	8	23	189,427	—	189,427	1.4	%	1.7	%
Bon Secours Mercy Health	78	A+/--	7	59	271,252	—	271,252	2.0	%	1.7	%
Proliance Surgeons	-	-	7	17	134,474	—	134,474	1.0	%	1.5	%
University of Colorado Health	68	AA/Aa3	5	13	194,061	—	194,061	1.4	%	1.3	%
Baptist Memorial Health Care	95	BBB+/--	7	25	193,187	—	193,187	1.4	%	1.3	%
Providence St. Joseph Health	5	AA-/Aa3	6	24	107,540	—	107,540	0.8	%	1.1	%
Medstar Health	39	A/A2	3	53	151,463	—	151,463	1.1	%	1.1	%
USPI	-	-	6	11	124,590	—	124,590	0.9	%	1.1	%
Eating Recovery Center	-	B-/B3	4	7	104,193	—	104,193	0.8	%	1.0	%
Trinity Health	6	AA-/Aa3	3	31	165,250	—	165,250	1.2	%	1.0	%
Tenet Healthcare	7	B/B2	10	31	105,493	63,000	168,493	1.3	%	0.9	%
MultiCare Health System	110	AA-/Aa3	4	18	128,978	—	128,978	1.0	%	0.9	%
Hawaii Pacific Health	195	--/A1	3	35	91,072	—	91,072	0.7	%	0.9	%
DaVita	-	BB/Ba2	11	13	115,646	—	115,646	0.9	%	0.9	%
Inova Health	76	AA+/Aa2	3	10	90,533	—	90,533	0.7	%	0.8	%
Labcorp of America	-	BBB/Baa2	22	24	176,837	—	176,837	1.3	%	0.8	%
HCA	2	BB+/Ba2	6	13	81,025	—	81,025	0.6	%	0.7	%
Kaiser Permanente	1	AA-/--	3	8	85,162	—	85,162	0.6	%	0.6	%
Overlake Health System	339	A/A2	2	8	73,676	—	73,676	0.5	%	0.6	%
Advocate Aurora Health Care	14	AA/Aa3	2	11	63,797	—	63,797	0.5	%	0.6	%
Memorial Hermann	43	A+/A1	2	2	99,874	—	99,874	0.7	%	0.6	%
Allina Health	58	AA-/Aa3	2	9	76,929	—	76,929	0.6	%	0.5	%
Cedars-Sinai Health	66	--/Aa3	1	14	47,661	—	47,661	0.4	%	0.5	%
Total				945	6,375,553	405,245	6,780,798	50.3	%	50.1	%


1	Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.


2	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.


3	Previously Catholic Health Initiatives.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 17

MOB Proximity to Hospital ^{1, 2}



MEDICAL OFFICE BUILDINGS BY LOCATION
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018
On campus	67.4	%	68.4	%	68.9	%	70.0	%	69.3	%	69.6	%
Adjacent to campus ³	20.2	%	19.3	%	18.7	%	17.9	%	18.3	%	18.1	%
Total on/adjacent	87.6	%	87.7	%	87.6	%	87.9	%	87.6	%	87.7	%
Off campus - anchored by health system ⁴	7.2	%	6.7	%	7.3	%	7.6	%	7.8	%	7.7	%
Off campus	5.2	%	5.6	%	5.1	%	4.5	%	4.6	%	4.6	%
	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	122	9,701,656	67.4	%	67.4	%	On campus	7,706,236	89.4	%
0.00	250 yards	29	1,740,172	12.1	%	79.5	%	Adjacent ³	128,717	1.5	%
250 yards	0.25 miles	21	1,174,067	8.1	%	87.6	%	Adjacent ³	120,036	1.4	%
0.25 miles	0.50	4	286,818	2.0	%	89.6	%	Off campus	124,925	1.4	%
0.50	1.00	2	280,873	2.0	%	91.6	%		—	—	%
1.00	2.00	5	519,446	3.6	%	95.2	%		319,446	3.7	%
2.00	5.00	7	352,316	2.5	%	97.7	%		13,818	0.2	%
5.00	10.00	3	205,631	1.4	%	99.1	%		205,631	2.4	%
10.00		3	132,443	0.9	%	100.0	%		—	—	%
Total		196	14,393,422	100.0	%				8,618,809	100.0	%


1	Excludes construction in progress, Memphis Redevelopment 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	4Q 2019 SUPPLEMENTAL INFORMATION 18

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
2020	735	2,601,739	21.2	%	1	83,318	7.0	%	736	2,685,057	19.9	%	19.5	%
2021	481	1,707,938	13.9	%	—	—	—	%	481	1,707,938	12.7	%	12.3	%
2022	472	1,667,044	13.6	%	1	58,285	4.9	%	473	1,725,329	12.8	%	13.0	%
2023	334	1,478,025	12.1	%	—	—	—	%	334	1,478,025	11.0	%	11.4	%
2024	403	1,869,217	15.2	%	1	63,000	5.2	%	404	1,932,217	14.4	%	13.9	%
2025	127	735,624	6.0	%	2	91,561	7.6	%	129	827,185	6.1	%	6.1	%
2026	113	427,655	3.5	%	—	—	—	%	113	427,655	3.2	%	2.8	%
2027	89	393,432	3.2	%	2	342,245	28.6	%	91	735,677	5.5	%	7.5	%
2028	88	513,334	4.2	%	2	235,419	19.7	%	90	748,753	5.6	%	6.0	%
2029	94	590,514	4.8	%	3	165,342	13.8	%	97	755,856	5.6	%	5.1	%
Thereafter	65	280,990	2.3	%	2	157,760	13.2	%	67	438,750	3.2	%	2.4	%
Total leased	3,001	12,265,512	86.6	%	14	1,196,930	100.0	%	3,015	13,462,442	87.7	%	100.0	%
Total building		14,159,487	100.0	%		1,196,930	100.0	%		15,356,417	100.0	%
WALTR (months) ³		42.7				87.0				46.7
WALT (months) ³		86.5				165.5				93.5



# 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	1,603	—	>100,000	42.0	%	6,451,077	146,615	44
2,501 - 5,000	739	—	<100,000 and >75,000	25.8	%	3,968,613	86,274	46
5,001 - 7,500	236	—	<75,000 and >50,000	17.2	%	2,643,246	62,934	42
7,501 - 10,000	143	—	<50,000 and >25,000	12.7	%	1,945,504	38,147	51
10,001 +	280	14	<25,000	2.3	%	347,977	16,570	21
Total Leases	3,001	14	Total	100.0	%	15,356,417	75,277	204


1	Excludes land held for development, construction in progress, Memphis Redevelopment, 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 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 4,087 square feet.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 19

Historical Occupancy ¹

DOLLARS IN THOUSANDS



SAME STORE PROPERTIES
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018
Multi-tenant
Investment	$3,240,598		$3,004,110		$2,946,524		$2,894,291		$2,897,873		$2,833,607
Number of properties	157		149		147		150		151		145
Total building square feet	12,243,069		11,675,944		11,533,207		11,432,246		11,490,212		11,341,527
Period end % occupied	88.3	%	87.6	%	88.3	%	88.1	%	88.6	%	88.5	%
Single-tenant
Investment	$460,415		$461,845		$461,794		$463,261		$471,319		$482,727
Number of properties	14		14		14		14		14		15
Total building square feet	1,196,930		1,252,198		1,252,198		1,252,198		1,307,713		1,341,781
Period end % occupied	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total same store properties
Investment	$3,701,013		$3,465,955		$3,408,318		$3,357,552		$3,369,192		$3,316,334
Number of properties	171		163		161		164		165		160
Total building square feet	13,439,999		12,928,142		12,785,405		12,684,444		12,797,925		12,683,308
Period end % occupied	89.3	%	88.8	%	89.5	%	89.3	%	89.8	%	89.7	%

PROPERTIES NOT IN SAME STORE
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018
Acquisitions ²
Investment	$500,063		$637,827		$574,793		$520,418		$437,835		$464,185
Number of properties	24		30		27		24		22		26
Total building square feet	1,487,251		1,935,189		1,803,890		1,648,552		1,381,323		1,470,154
Period end % occupied	86.1	%	90.1	%	91.1	%	91.0	%	92.5	%	91.9	%
Development completions
Investment	—		—		$29,798		$29,388		$29,375		$29,122
Number of properties	—		—		1		1		1		1
Total building square feet	—		—		99,957		99,957		99,957		99,957
Period end % occupied	—	%	—	%	41.8	%	41.8	%	38.4	%	38.4	%
% leased	—	%	—	%	44.9	%	41.8	%	41.8	%	41.8	%
Reposition ³
Investment	$71,007		$84,728		$85,713		$85,342		$74,415		$82,354
Number of properties	9		11		12		12		11		14
Total building square feet	429,167		567,252		577,390		577,390		519,424		574,396
Period end % occupied	41.9	%	36.0	%	38.7	%	39.1	%	35.7	%	47.0	%

TOTAL PROPERTIES
	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018
Investment	$4,272,083		$4,188,510		$4,098,622		$3,992,700		$3,910,817		$3,891,995
Number of properties	204		204		201		201		199		201
Total building square feet	15,356,417		15,430,583		15,266,642		15,010,343		14,798,629		14,827,815
Period end % occupied	87.7	%	87.0	%	87.4	%	87.2	%	87.8	%	87.9	%


1	Excludes land held for development, construction in progress, Memphis Redevelopment, 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	4Q 2019 SUPPLEMENTAL INFORMATION 20

Occupancy Reconciliation

SQUARE FEET



SEQUENTIAL
	PORTFOLIO								SAME STORE
	COUNT		OCCUPIED		TOTAL		%		COUNT		OCCUPIED		TOTAL		%
Beginning September 30, 2019	204		13,425,337		15,430,583		87.0	%	163		11,476,507		12,928,142		88.8	%
Portfolio activity
Acquisitions	5		178,638		206,547		86.5	%	NA		NA		NA		NA
Re/development completions	—		—		—		—	%	—		—		—		—	%
Dispositions ¹	(5	)	(162,394	)	(280,713	)	57.9	%	(3	)	(137,622	)	(142,628	)	96.5	%
Same store reclassifications
Acquisitions	NA		NA		NA		NA		11		639,110		654,485		97.7	%
Development completions	NA		NA		NA		NA		—		—		—		—	%
Reposition to same store	NA		NA		NA		NA		—		—		—		—	%
Reposition from same store	NA		NA		NA		NA		—		—		—		—	%
	204		13,441,581		15,356,417		87.5	%	171		11,977,995		13,439,999		89.1	%
Leasing activity
New leases/expansions	NA		145,141		NA		NA		NA		130,556		NA		NA
Move-outs/contractions	NA		(124,280	)	NA		NA		NA		(106,818	)	NA		NA
Net absorption	NA		20,861		NA		NA		NA		23,738		NA		NA
Ending December 31, 2019	204		13,462,442		15,356,417		87.7	%	171		12,001,733		13,439,999		89.3	%

YEAR-OVER-YEAR
	PORTFOLIO								SAME STORE
	COUNT		OCCUPIED		TOTAL		%		COUNT		OCCUPIED		TOTAL		%
Beginning December 31, 2018	199		12,990,403		14,798,629		87.8	%	165		11,488,129		12,797,925		89.8	%
Portfolio activity
Acquisitions	17		862,347		975,829		88.4	%	NA		NA		NA		NA
Re/development completions	—		32,002		40,278		79.5	%	—		32,002		40,278		79.5	%
Dispositions ¹	(12	)	(330,205	)	(458,319	)	72.0	%	(9	)	(295,511	)	(310,096	)	95.3	%
Same store reclassifications
Acquisitions	NA		NA		NA		NA		15		844,219		869,901		97.0	%
Development completions	NA		NA		NA		NA		1		38,384		99,957		38.4	%
Reposition to same store	NA		NA		NA		NA		—		—		—		—	%
Reposition from same store	NA		NA		NA		NA		(1	)	(37,519	)	(57,966	)	64.7	%
	204		13,554,547		15,356,417		88.3	%	171		12,069,704		13,439,999		89.8	%
Leasing activity
New leases/expansions	NA		473,240		NA		NA		NA		378,148		NA		NA
Move-outs/contractions	NA		(565,345	)	NA		NA		NA		(446,119	)	NA		NA
Net absorption	NA		(92,105	)	NA		NA		NA		(67,971	)	NA		NA
Ending December 31, 2019	204		13,462,442		15,356,417		87.7	%	171		12,001,733		13,439,999		89.3	%


1	Includes properties reclassified as held for sale.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 21

Same Store Leasing Statistics¹




	4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018		2Q 2018		1Q 2018
Average in-place contractual increases
Multi-tenant	2.90	%	2.93	%	2.91	%	2.91	%	2.91	%	2.88	%	2.84	%	2.81	%
Single-tenant	2.10	%	2.12	%	2.43	%	2.46	%	2.45	%	2.42	%	2.13	%	2.12	%
	2.80	%	2.82	%	2.84	%	2.85	%	2.84	%	2.82	%	2.73	%	2.71	%
Multi-tenant renewals
Cash leasing spreads	4.2	%	3.3	%	5.0	%	3.3	%	(0.5	%)	3.8	%	6.4	%	5.2	%
Tenant retention rate	86.6	%	90.2	%	87.4	%	85.5	%	82.6	%	87.0	%	84.4	%	81.5	%



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	2.30	%	2.50	%	1.87	%	49.88	%	1.98	%	8.56	%
Fixed	3.00	%	93.26	%	2.65	%	20.53	%	2.99	%	83.96	%
Non-annual increase (annualized)
CPI	1.85	%	0.72	%	0.50	%	2.62	%	1.38	%	0.96	%
Fixed	1.30	%	2.55	%	2.25	%	26.97	%	1.88	%	5.67	%
No increase
Term > 1 year	—	%	0.97	%	—	%	—	%	—	%	0.85	%
Total ²	2.90	%	100.00	%	2.10	%	100.00	%	2.80	%	100.00	%



TYPE AND OWNERSHIP STRUCTURE (% OF SQUARE FEET)
	MULTI-TENANT		SINGLE-TENANT		TOTAL
Tenant type
Hospital	50.8	%	88.5	%	54.5	%
Physician and other	49.2	%	11.5	%	45.5	%

Lease structure
Gross	12.3	%	—	%	11.0	%
Modified gross	28.8	%	—	%	26.0	%
Net	58.9	%	—	%	53.0	%
Absolute net ³	—	%	100.0	%	10.0	%

Ownership type
Ground lease	64.6	%	10.5	%	59.8	%
Fee simple	35.4	%	89.5	%	40.2	%


1	Excludes recently acquired or disposed properties, construction in progress, Memphis Redevelopment, 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	4Q 2019 SUPPLEMENTAL INFORMATION 22

Same Store Performance ¹

DOLLARS IN THOUSANDS, EXCEPT PER SQUARE FOOT DATA




	2019		4Q 2019		3Q 2019		2Q 2019		1Q 2019		2018		4Q 2018		3Q 2018		2Q 2018		1Q 2018
Multi-tenant
Revenues	$382,993		$96,403		$96,662		$95,537		$94,391		$373,724		$94,671		$94,713		$92,657		$91,683
Expenses	153,779		38,354		39,612		38,173		37,640		151,514		37,950		39,026		37,136		37,402
Cash NOI	$229,214		$58,049		$57,050		$57,364		$56,751		$222,210		$56,721		$55,687		$55,521		$54,281
Revenue per occ SF ²	$35.45		$35.73		$35.79		$35.39		$34.94		$34.54		$34.96		$35.00		$34.30		$33.94
Margin	59.8	%	60.2	%	59.0	%	60.0	%	60.1	%	59.5	%	59.9	%	58.8	%	59.9	%	59.2	%
Average occupancy	88.3	%	88.2	%	88.2	%	88.2	%	88.3	%	88.4	%	88.5	%	88.4	%	88.3	%	88.2	%
Number of properties	157		157		157		157		157		157		157		157		157		157
Single-tenant
Revenues	$43,683		$11,026		$11,019		$10,968		$10,670		$42,426		$10,635		$10,652		$10,578		$10,561
Expenses	2,251		601		643		608		399		1,724		381		429		434		480
Cash NOI	$41,432		$10,425		$10,376		$10,360		$10,271		$40,702		$10,254		$10,223		$10,144		$10,081
Revenue per occ SF ²	$36.49		$36.85		$36.82		$36.65		$35.66		$35.59		$35.54		$35.60		$35.53		$35.62
Average occupancy	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	99.6	%	100.0	%	100.0	%	99.5	%	99.1	%
Number of properties	14		14		14		14		14		14		14		14		14		14
Total
Revenues	$426,676		$107,429		$107,681		$106,505		$105,061		$416,150		$105,306		$105,365		$103,235		$102,244
Expenses	156,030		38,955		40,255		38,781		38,039		153,238		38,331		39,455		37,570		37,882
Cash NOI	$270,646		$68,474		$67,426		$67,724		$67,022		$262,912		$66,975		$65,910		$65,665		$64,362
Revenue per occ SF ²	$35.55		$35.84		$35.89		$35.51		$35.01		$34.64		$35.01		$35.06		$34.42		$34.11
Margin	63.4	%	63.7	%	62.6	%	63.6	%	63.8	%	63.2	%	63.6	%	62.6	%	63.6	%	62.9	%
Average occupancy	89.3	%	89.2	%	89.3	%	89.3	%	89.3	%	89.4	%	89.5	%	89.4	%	89.3	%	89.2	%
Number of properties	171		171		171		171		171		171		171		171		171		171



SAME STORE GROWTH
	YEAR-OVER-YEAR
	2019		4Q 2019		3Q 2019		2Q 2019		1Q 2019
Multi-tenant
Revenue per occ SF ²	2.6	%	2.2	%	2.2	%	3.2	%	2.9	%
Avg occupancy (bps)	-10		-30		-20		-10		0
Revenues	2.5	%	1.8	%	2.1	%	3.1	%	3.0	%
Expenses	1.5	%	1.1	%	1.5	%	2.8	%	0.6	%
Cash NOI	3.2	%	2.3	%	2.4	%	3.3	%	4.6	%
Single-tenant
Cash NOI	1.8	%	1.7	%	1.5	%	2.1	%	1.9	%
Total
Revenues	2.5	%	2.0	%	2.2	%	3.2	%	2.8	%
Cash NOI	2.9	%	2.2	%	2.3	%	3.1	%	4.1	%


1	Excludes recently acquired or disposed properties, development completions, construction in progress, Memphis Redevelopment, 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	4Q 2019 SUPPLEMENTAL INFORMATION 23

NOI Reconciliations

DOLLARS IN THOUSANDS



BOTTOM UP RECONCILIATION
	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Net income		$27,210			$2,601			$4,484			$4,891			$16,314			$6,548			$37,729			$9,180
Other income (expense)	(6,218		)	13,981			15,354			13,564			2,850			12,135			(16,559		)	12,175
General and administrative expense	7,669			10,802			7,845			8,510			8,534			8,504			8,373			9,101
Depreciation and amortization expense	46,134			45,137			43,926			42,662			42,437			42,061			40,130			39,573
Other expenses ¹	2,200			2,079			1,965			1,768			1,693			1,457			1,540			1,568
Straight-line rent expense	378			383			387			391			394			398			399			400
Straight-line rent revenue	(1,167		)	(770		)	(395		)	(668		)	(682		)	(802		)	(1,074		)	(1,722		)
Other revenue ²	(1,430		)	(1,726		)	(1,447		)	(1,468		)	(1,523		)	(1,288		)	(1,382		)	(1,553		)
Cash NOI		$74,776			$72,487			$72,119			$69,650			$70,017			$69,013			$69,156			$68,722
Acquisitions/development completions	(5,632		)	(4,013		)	(3,154		)	(1,287		)	(1,067		)	(1,089		)	(400		)	—
Dispositions/other	(433		)	(819		)	(885		)	(1,074		)	(1,756		)	(1,634		)	(2,625		)	(3,807		)
Same store cash NOI and reposition	68,711			67,655			68,080			67,289			67,194			66,290			66,131			64,915
Reposition	(237		)	(229		)	(356		)	(267		)	(219		)	(380		)	(466		)	(553		)
Same store cash NOI		$68,474			$67,426			$67,724			$67,022			$66,975			$65,910			$65,665			$64,362

TOP DOWN RECONCILIATION
	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Property operating before rent concessions		$108,029			$106,319			$103,245			$99,607			$99,877			$99,976			$97,185			$96,347
Rent concessions	(493		)	(514		)	(427		)	(625		)	(700		)	(609		)	(766		)	(1,053		)
Property operating	107,536			105,805			102,818			98,982			99,177			99,367			96,419			95,294
Single-tenant net lease	10,735			11,165			11,138			11,046			11,290			11,283			12,073			13,213
Straight-line rent revenue	1,167			770			395			668			682			802			1,074			1,722
Rental income	119,438			117,740			114,351			110,696			111,149			111,452			109,566			110,229
Property lease guaranty income	—			—			—			128			187			168			146			175
Parking income	1,982			1,935			1,870			1,734			1,733			1,752			1,819			1,626
Exclude straight-line rent revenue	(1,167		)	(770		)	(395		)	(668		)	(682		)	(802		)	(1,074		)	(1,722		)
Exclude other non-cash revenue ³	(1,326		)	(1,601		)	(1,350		)	(1,369		)	(1,423		)	(1,198		)	(1,279		)	(1,460		)
Revenue	118,927			117,304			114,476			110,521			110,964			111,372			109,178			108,848
Property operating expense	(46,214		)	(46,777		)	(44,286		)	(42,725		)	(42,815		)	(44,135		)	(41,737		)	(41,818		)
Exclude non-cash expenses ⁴	2,063			1,960			1,929			1,854			1,868			1,776			1,715			1,692
Cash NOI		$74,776			$72,487			$72,119			$69,650			$70,017			$69,013			$69,156			$68,722
Acquisitions/development completions	(5,632		)	(4,013		)	(3,154		)	(1,287		)	(1,067		)	(1,089		)	(400		)	—
Dispositions/other	(433		)	(819		)	(885		)	(1,074		)	(1,756		)	(1,634		)	(2,625		)	(3,807		)
Same store cash NOI and reposition	68,711			67,655			68,080			67,289			67,194			66,290			66,131			64,915
Reposition	(237		)	(229		)	(356		)	(267		)	(219		)	(380		)	(466		)	(553		)
Same store cash NOI		$68,474			$67,426			$67,724			$67,022			$66,975			$65,910			$65,665			$64,362


1	Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, and leasing commission amortization.


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


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


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




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 24

NOI Reconciliations

DOLLARS IN THOUSANDS



RECONCILIATION OF TTM ENDED 12/31/2019 - CASH NOI
	2019		2018		% CHANGE
Same store cash NOI		$270,646		$262,912	2.9	%
Reposition	1,089		1,618		(32.7	%)
		$271,735		$264,530	2.7	%
Acquisitions/development completions	14,086		2,556		451.1	%
Dispositions/other	3,211		9,822		(67.3	%)
Cash NOI		$289,032		$276,908	4.4	%



RECONCILIATION OF NOI TO FFO AND NORMALIZED FFO
	4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Cash NOI		$74,776			$72,487			$72,119			$69,650			$70,017			$69,013			$69,156			$68,722
General and administrative expense	(7,669		)	(10,802		)	(7,845		)	(8,510		)	(8,534		)	(8,504		)	(8,373		)	(9,101		)
Straight-line rent	1,167			770			395			668			682			802			1,074			1,722
Interest and other income (expense), net	5			—			(743		)	9			(35		)	41			38			493
Management fees and other income	103			124			96			99			99			90			103			94
Bad debts, net of recoveries	—			—			—			—			(18		)	62			(104		)	—
Other non-cash revenue ¹	1,326			1,601			1,350			1,369			1,423			1,198			1,279			1,460
Other non-cash expenses ²	(2,063		)	(1,960		)	(1,929		)	(1,854		)	(1,868		)	(1,776		)	(1,715		)	(1,692		)
Debt Covenant EBITDA	67,645			62,220			63,443			61,431			61,766			60,926			61,458			61,698
Interest expense	(13,816		)	(14,181		)	(13,850		)	(13,588		)	(13,602		)	(13,464		)	(13,069		)	(12,668		)
Acquisition and pursuit costs	(515		)	(501		)	(422		)	(305		)	(200		)	(141		)	(120		)	(277		)
Leasing commission amortization ³	1,667			1,547			1,505			1,404			1,415			1,319			1,258			1,233
Depreciation expense of unconsolidated JVs ⁴	80			80			80			80			80			80			80			80
Lease intangible amortization ⁵	—			—			—			—			238			108			108			(63		)
Non-real estate depreciation and amortization	(838		)	(838		)	(829		)	(763		)	(790		)	(845		)	(829		)	(820		)
FFO	54,223			48,327			49,927			48,259			48,907			47,983			48,886			49,183
Acquisition and pursuit costs	515			501			422			305			200			141			120			277
Lease intangible amortization	4			5			54			84			—			—			—			—
Accelerated amortization of restricted stock awards⁶	—			2,854			—			—			—			70			—			—
Forfeited earnest money received	—			—			—			—			—			—			—			(466		)
Debt financing costs	—			—			760			—			—			—			—			—
Normalized FFO	54,742			51,687			51,163			48,648			49,107			48,194			49,006			48,994


1	Includes above and below market lease intangibles, lease inducements, lease termination fees and TI amortization.


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


3	Leasing commission amortization is included in the real estate depreciation and amortization add back for FFO.


4	The Company has two unconsolidated joint ventures whose earnings are recorded in Interest and other income (expense), net on the Condensed Consolidated Statements of Income. The depreciation expense incurred related to these properties is included in real estate deprecation and amortization add back for FFO.


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


6	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses associated with the acceleration of his outstanding non-vested share-based awards. The third quarter of 2018 includes a revaluation adjustment recorded in connection with an officer retirement.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 25

EBITDA Reconciliations

DOLLARS IN THOUSANDS



RECONCILIATION OF EBITDA
	TTM			4Q 2019			3Q 2019			2Q 2019			1Q 2019
Net income		$39,185			$27,210			$2,601			$4,484			$4,891
Interest expense	55,435			13,816			14,181			13,850			13,588
Depreciation and amortization	177,859			46,134			45,137			43,926			42,662
EBITDA		$272,479			$87,160			$61,919			$62,260			$61,141
Other amortization ¹	6,446			1,747			1,628			1,585			1,486
Gain on sales of real estate properties	(25,101		)	(20,036		)	(200		)	(4,849		)	(15		)
Impairments on real estate assets	5,617			7			—			5,610			—
EBITDAre ²		$259,441			$68,878			$63,347			$64,606			$62,612

EBITDA		$272,479			$87,160			$61,919			$62,260			$61,141
Acquisition and pursuit costs	1,742			515			501			422			305
Gain on sales of real estate properties	(25,101		)	(20,036		)	(200		)	(4,849		)	(15		)
Impairments on real estate assets	5,617			7			—			5,610			—
Debt Covenant EBITDA		$254,737			$67,646			$62,220			$63,443			$61,431
Other amortization¹	6,446			1,747			1,628			1,585			1,486
Lease intangible amortization	147			4			5			54			84
Timing impact ³	3,411			349			902			1,024			1,136
Stock based compensation	12,275			2,133			5,131			2,372			2,639
Adjusted EBITDA		$277,016			$71,879			$69,886			$68,478			$66,776


1	Includes leasing commission amortization and depreciation expense of unconsolidated JVs.


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.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 26

Components of Net Asset Value

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



CASH NOI BY PROPERTY TYPE
	4Q 2019
ASSET TYPE	SAME STORE ¹		ACQ./DEV. COMPLETIONS ²		REPOSITION ³		TIMING ADJUSTMENTS ⁴		ADJUSTED CASH NOI		ANNUALIZED ADJUSTED NOI		% OF ADJUSTED NOI
MOB/outpatient		$61,898		$5,151		$399		$1,258		$68,706		$274,824	90.8	%
Inpatient/Surgical	5,471		—		—		—		5,471		21,884		7.2	%
Office	1,105		436		—		—		1,541		6,164		2.0	%
Total Cash NOI		$68,474		$5,587		$399		$1,258		$75,718		$302,872	100.0	%



DEVELOPMENT PROPERTIES
Land held for development		$24,647
Memphis Redevelopment	9,032
Construction in progress	48,731
		$82,410

OTHER ASSETS
Reposition properties (net book value) ³	7,301
Cash and other assets ⁵	103,757
		$111,058

DEBT
Unsecured credit facility		$293,000
Unsecured term loan	200,000
Senior notes	800,000
Mortgage notes payable	129,258
Other liabilities ⁶	87,120
		$1,509,378



TOTAL SHARES OUTSTANDING
As of February 7, 2020			134,703,119










IMPLIED CAP RATE
	STOCK PRICE		IMPLIED CAP RATE
As of 2/7/20		$36.35	4.88	%

4Q 2019 high		$34.77	5.05	%
4Q 2019 low		$31.81	5.41	%


1	See Same Store Performance schedule on page 23 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 9 properties which comprise 429,167 square feet. The NOI table above includes 7 of these properties comprising 321,556 square feet that have generated positive NOI totaling approximately $0.4 million. The remaining 2 properties, comprising 107,611 square feet, have generated negative NOI of approximately $0.2 million and are reflected at a net book value of $7.3 million in the other assets table above.


4	Timing adjustments include current quarter acquisitions as well as a development conversion adjustment of $1.3 million to reflect full quarterly stabilized NOI from a recently completed development.


5	Includes cash of $0.7 million, prepaid assets of $53.7 million, accounts receivable of $13.1 million, and prepaid ground leases of $24.5 million. In addition, includes the Company's occupied portion of its corporate headquarters of $11.8 million.


6	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 $78.6 million, security deposits of $8.4 million, and deferred operating expense reimbursements of $0.1 million.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 27

Components of Expected FFO

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



SAME STORE RANGE OF EXPECTATIONS
	EXPECTED 2019				ACTUAL		EXPECTED 2020
	LOW		HIGH		Q4 2019		LOW		HIGH
TTM Average Occupancy
Multi-tenant	88.0	%	90.0	%	88.3	%	88.0	%	89.0	%
Single-tenant	99.0	%	100.0	%	100.0	%	100.0	%	100.0	%
TTM revenue per occupied square foot
Multi-tenant	$34.50		$35.50		$35.45		$35.50		$36.50
Single-tenant	$34.00		$34.50		$36.49		$36.75		$37.50
TTM Multi-tenant cash NOI margin	59.0	%	60.0	%	59.8	%	59.5	%	60.5	%
Multi-tenant cash leasing spreads	3.0	%	4.0	%	4.2	%	3.0	%	4.0	%
Multi-tenant lease retention rate	75.0	%	90.0	%	86.6	%	75.0	%	90.0	%
TTM cash NOI growth
Multi-tenant	2.8	%	3.3	%	3.2	%	2.4	%	3.3	%
Single-tenant	1.5	%	3.5	%	1.8	%	1.7	%	2.5	%
Total	2.5	%	3.3	%	2.9	%	2.3	%	3.2	%

ANNUAL RANGE OF EXPECTATIONS
	LOW		HIGH		2019		LOW		HIGH
Normalized G&A	$32,500		$33,500		$31,972		$33,000		$34,000
Straight-line rent, net ¹	500		1,500		1,431		1,500		3,000
Funding activity
Acquisitions	350,000		400,000		381,314		250,000		350,000
Dispositions	(50,000)		(75,000)		(54,860)		(25,000)		(75,000)
Re/development	30,000		50,000		28,584		30,000		50,000
1st generation TI and acq. cap. ex.	14,000		17,000		19,798		20,000		25,000
2nd generation TI	24,000		30,000		28,690		28,000		34,000
Leasing commissions paid	7,000		9,000		11,329		8,000		12,000
Capital expenditures	16,000		20,000		17,158		17,000		21,000
Cash yield
Acquisitions	5.1	%	5.8	%	5.5	%	5.0	%	5.8	%
Dispositions	6.5	%	8.0	%	7.6	%	5.5	%	6.5	%
Re/development (stabilized)	6.0	%	7.5	%	NA		6.0	%	7.5	%
Leverage (debt/cap)	30.0	%	35.0	%	32.2	%	31.5	%	33.5	%
Net debt to adjusted EBITDA	5.0x		5.5x		4.9x		5.0x		5.5x


1	This guidance range is based on current in-place leases. Straight-line rent, net was $1.4 million for the year ended December 31, 2019, with a quarterly range of $0.0 million to $0.8 million.




HEALTHCARE REALTY	4Q 2019 SUPPLEMENTAL INFORMATION 28

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