Healthcare Realty Trust Incorporated

NASHVILLE, Tenn., May 01, 2025 (GLOBE NEWSWIRE) -- Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the first quarter ended March 31, 2025. Net (loss) income attributable to common stockholders for the three months ended March 31, 2025 was $(44.9) million, or $(0.13) per diluted common share. Additionally, the Company announced its quarterly dividend of $0.31 per share and operating partnership unit.

KEY HIGHLIGHTS

Normalized FFO per share totaled $0.39 for the quarter. 89.3% same store occupancy as of quarter end, up from 89.2% in the fourth quarter of 2024. $66 million of gross proceeds comprised of $28 million of first quarter asset sale transactions and a $38 million loan repayment received in April.

LEASING

Portfolio leasing activity that commenced in the first quarter totaled 1,450,000 square feet related to 377 leases:

1,002,000 square feet of renewals 448,000 square feet of new and expansion lease commencements In the first quarter, the Company signed new leases totaling 370,000 square feet.

SAME STORE METRICS

Cash NOI for the first quarter increased 2.3% year over year. Tenant retention for the first quarter was 84.8%, an increase from 81.6% in the fourth quarter of 2024. MOB cash leasing spreads were 2.3% for the quarter.

BALANCE SHEET

Run rate net debt to adjusted EBITDA was 6.4 times. In January 2025, the Company repaid $35 million of its term loans maturing in 2026.

LEADERSHIP

Peter A. Scott appointed as the Company's President & Chief Executive Officer effective April 15, 2025. Mr. Scott is expected to be added to the Board of Directors following the Company's 2025 annual meeting of stockholders. Connie Moore, who served as Interim President and CEO of the Company from November 2024 until April 14, 2025, will continue to serve on the Board of Directors.

DIVIDEND

A common stock cash dividend in the amount of $0.31 per share will be paid on May 23, 2025, to Class A common stockholders of record on May 12, 2025. Additionally, the eligible holders of operating partnership units will receive a distribution of $0.31 per unit, equivalent to the Company's Class A common stock dividend.

GUIDANCE

The Company reaffirms its per share guidance, as outlined below, as well as the guidance provided on page 28 of the Supplemental Information:

2025 GUIDANCE ACTUAL LOW HIGH 1Q 2025 Earnings per share $(0.28) $(0.20) $(0.13) NAREIT FFO per share $1.44 $1.48 $0.35 Normalized FFO per share $1.56 $1.60 $0.39

The 2025 annual guidance range reflects the Company's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, interest rates, and operating and general and administrative expenses. The Company's guidance does not contemplate impacts from gains or losses from
dispositions, potential impairments, or debt extinguishment costs, if any. There can be no assurance that the Company's actual results will not be materially higher or lower than these expectations. If actual results vary from these assumptions, the Company's expectations may change.

Story Continues

EARNINGS CALL

On Friday, May 2, 2025, at 11:00 a.m. Eastern Time, Healthcare Realty Trust has scheduled a conference call to discuss earnings results, quarterly activities, general operations of the Company and industry trends. Simultaneously, a webcast of the conference call will be available to interested parties at https://investors.healthcarerealty.com/corporate-profile/webcasts under the Investor Relations section. A webcast replay will be available following the call at the same address. Live Conference Call Access Details:

Domestic Dial-In Number: +1 800-715-9871 access code 4950066; All Other Locations: +1 646-307-1963 access code 4950066. Replay Information:

Domestic Dial-In Number: +1 800-770-2030 access code 4950066; All Other Locations: +1 609-800-9909 access code 4950066.

Healthcare Realty (NYSE: HR) is a real estate investment trust (REIT) that owns and operates medical outpatient buildings primarily located around market-leading hospital campuses. The Company selectively grows its portfolio through property acquisition and development. As the first and largest REIT to specialize in medical outpatient buildings, Healthcare Realty's portfolio includes approximately 650 properties totaling more than 38 million square feet concentrated in 15 growth markets.

Additional information regarding the Company, including this quarter's operations, can be found at www.healthcarerealty.com. In addition to the historical information contained within, this press release contains certain forward-looking statements with respect to the Company. 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 such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could," "budget" and other comparable terms. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Such risks and uncertainties include, among other things, the following: the Company’s expected results may not be achieved; risks related to future opportunities and plans for the Company, including the uncertainty of expected future financial performance and results of the Company; pandemics or other health crises; increases in interest rates; the availability and cost of capital at expected rates; 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; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to release space at similar rates as vacancies occur; the Company's ability to renew expiring leases; 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; other legal and operational matters; and other risks and uncertainties affecting the Company, including those described from time to time under the caption “Risk Factors” and elsewhere in the Company’s filings and reports with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Moreover, other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing. For a detailed discussion of the Company’s risk factors, please refer to the Company's filings with the SEC, including this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Consolidated Balance Sheets DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA  ASSETS  1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Real estate properties  Land $1,134,635  $1,143,468  $1,195,116  $1,287,532  $1,342,895  Buildings and improvements 9,729,912  9,707,066  10,074,504  10,436,218  10,902,835  Lease intangibles 631,864  664,867  718,343  764,730  816,303  Personal property 9,938  9,909  9,246  12,501  12,720  Investment in financing receivables, net 123,813  123,671  123,045  122,413  122,001  Financing lease right-of-use assets 76,958  77,343  77,728  81,401  81,805  Construction in progress 35,101  31,978  125,944  97,732  70,651  Land held for development 52,408  52,408  52,408  59,871  59,871  Total real estate investments 11,794,629  11,810,710  12,376,334  12,862,398  13,409,081  Less accumulated depreciation and amortization (2,583,819 ) (2,483,656 ) (2,478,544 ) (2,427,709 ) (2,374,047 ) Total real estate investments, net 9,210,810  9,327,054  9,897,790  10,434,689  11,035,034  Cash and cash equivalents 1 25,722  68,916  22,801  137,773  26,172  Assets held for sale, net 6,635  12,897  156,218  34,530  30,968  Operating lease right-of-use assets 259,764  261,438  259,013  261,976  273,949  Investments in unconsolidated joint ventures 470,418  473,122  417,084  374,841  309,754  Other assets, net and goodwill 522,920  507,496  491,679  559,818  605,047  Total assets $10,496,269  $10,650,923  $11,244,585  $11,803,627  $12,280,924   LIABILITIES AND STOCKHOLDERS' EQUITY  1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Liabilities  Notes and bonds payable $4,732,618  $4,662,771  $4,957,796  $5,148,153  $5,108,279  Accounts payable and accrued liabilities 144,855  222,510  197,428  195,884  163,172  Liabilities of properties held for sale 422  1,283  7,919  1,805  700  Operating lease liabilities 224,117  224,499  229,925  230,601  229,223  Financing lease liabilities 72,585  72,346  71,887  75,199  74,769  Other liabilities 174,830  161,640  180,283  177,293  197,763  Total liabilities 5,349,427  5,345,049  5,645,238  5,828,935  5,773,906   Redeemable non-controlling interests 4,627  4,778  3,875  3,875  3,880   Stockholders' equity  Preferred stock, $0.01 par value; 200,000 shares authorized —  —  —  —  —  Common stock, $0.01 par value; 1,000,000 shares authorized 3,510  3,505  3,558  3,643  3,815  Additional paid-in capital 9,121,269  9,118,229  9,198,004  9,340,028  9,609,530  Accumulated other comprehensive (loss) income (7,206 ) (1,168 ) (16,963 ) 6,986  4,791  Cumulative net income attributable to common stockholders 329,436  374,309  481,155  574,178  717,958  Cumulative dividends (4,368,739 ) (4,260,014 ) (4,150,328 ) (4,037,693 ) (3,920,199 ) Total stockholders' equity 5,078,270  5,234,861  5,515,426  5,887,142  6,415,895  Non-controlling interest 63,945  66,235  80,046  83,675  87,243  Total equity 5,142,215  5,301,096  5,595,472  5,970,817  6,503,138  Total liabilities and stockholders' equity $10,496,269  $10,650,923  $11,244,585  $11,803,627  $12,280,924

2Q 2024 cash and cash equivalents include $96.0 million of proceeds held in a cash escrow account from a portfolio disposition that closed on June 28, 2024, and was received by the Company on July 1, 2024.

Consolidated Statements of Income DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA   1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Revenues  Rental income 1 $288,857  $300,065  $306,499  $308,135  $318,076  Interest income 3,731  4,076  3,904  3,865  4,538  Other operating 6,389  5,625  5,020  4,322  4,191  298,977  309,766  315,423  316,322  326,805  Expenses  Property operating 114,963  114,415  120,232  117,719  121,078  General and administrative 13,530  34,208  20,124  14,002  14,787  Normalizing items 2 (502 ) (22,991 ) (6,861 ) —  —  Normalized general and administrative 13,028  11,217  13,263  14,002  14,787  Transaction costs 1,011  1,577  719  431  395  Depreciation and amortization 150,969  160,330  163,226  173,477  178,119  280,473  310,530  304,301  305,629  314,379  Other income (expense)  Interest expense before merger-related fair value (44,366 ) (47,951 ) (50,465 ) (52,393 ) (50,949 ) Merger-related fair value adjustment (10,446 ) (10,314 ) (10,184 ) (10,064 ) (10,105 ) Interest expense (54,812 ) (58,265 ) (60,649 ) (62,457 ) (61,054 ) Gain on sales of real estate properties and other assets 2,904  32,082  39,310  38,338  22  Loss on extinguishment of debt —  (237 ) —  —  —  Impairment of real estate assets and credit loss reserves (12,081 ) (81,098 ) (84,394 ) (132,118 ) (15,937 ) Impairment of goodwill —  —  —  —  (250,530 ) Equity income (loss) from unconsolidated joint ventures 1  224  208  (146 ) (422 ) Interest and other income (expense), net 95  (154 ) (132 ) (248 ) 275  (63,893 ) (107,448 ) (105,657 ) (156,631 ) (327,646 ) Net loss $(45,389 ) $(108,212 ) $(94,535 ) $(145,938 ) $(315,220 ) Net loss attributable to non-controlling interests 516  1,366  1,512  2,158  4,384  Net loss attributable to common stockholders $(44,873 ) $(106,846 ) $(93,023 ) $(143,780 ) $(310,836 )   Basic earnings per common share $(0.13 ) $(0.31 ) $(0.26 ) $(0.39 ) $(0.82 ) Diluted earnings per common share $(0.13 ) $(0.31 ) $(0.26 ) $(0.39 ) $(0.82 )  Weighted average common shares outstanding - basic 349,539  351,560  358,960  372,477  379,455  Weighted average common shares outstanding - diluted 3 349,539  351,560  358,960  372,477  379,455

In 4Q 2024, rental income was reduced by $0.7 million for Prospect Medical revenue reserves. In 2Q 2024, rental income was reduced by $3.0 million for Steward Health revenue reserves. Normalizing items primarily include restructuring, severance-related costs and non-routine advisory fees associated with shareholder engagement. Potential common shares are not included in the computation of diluted earnings per share when a loss exists, as the effect would be an antidilutive per share amount. As a result, the outstanding limited partnership units in the Company's operating partnership ("OP"), totaling 3,665,625 units were not included.

Reconciliation of FFO, Normalized FFO and FAD 1,2,3 DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA   1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Net loss attributable to common stockholders $(44,873 ) $(106,846 ) $(93,023 ) $(143,780 ) $(310,836 ) Net loss attributable to common stockholders/diluted share 3 $(0.13 ) $(0.31 ) $(0.26 ) $(0.39 ) $(0.82 )  Gain on sales of real estate assets (2,904 ) (32,082 ) (39,148 ) (33,431 ) (22 ) Impairments of real estate assets 10,145  75,423  37,632  120,917  15,937  Real estate depreciation and amortization 155,288  164,656  167,821  177,350  181,161  Non-controlling loss from operating partnership units (599 ) (1,422 ) (1,372 ) (2,077 ) (4,278 ) Unconsolidated JV depreciation and amortization 6,717  5,913  5,378  4,818  4,568  FFO adjustments $168,647  $212,488  $170,311  $267,577  $197,366  FFO adjustments per common share - diluted $0.48  $0.60  $0.47  $0.71  $0.51  FFO $123,774  $105,642  $77,288  $123,797  $(113,470 ) FFO per common share - diluted 4 $0.35  $0.30  $0.21  $0.33  $(0.30 )  Transaction costs 1,011  1,577  719  431  395  Lease intangible amortization (228 ) (2,348 ) (10 ) 129  175  Non-routine legal costs/forfeited earnest money received 77  306  306  465  —  Debt financing costs —  237  —  —  —  Restructuring and severance-related charges 502  22,991  6,861  —  —  Credit losses and gains (losses) on other assets, net 5 1,936  4,582  46,600  8,525  —  Impairment of goodwill —  —  —  —  250,530  Merger-related fair value adjustment 10,446  10,314  10,184  10,064  10,105  Unconsolidated JV normalizing items 6 204  113  101  89  87  Normalized FFO adjustments $13,948  $37,772  $64,761  $19,703  $261,292  Normalized FFO adjustments per common share - diluted $0.04  $0.11  $0.18  $0.05  $0.68  Normalized FFO $137,722  $143,414  $142,049  $143,500  $147,822  Normalized FFO per common share - diluted $0.39  $0.40  $0.39  $0.38  $0.39   Non-real estate depreciation and amortization 222  404  276  313  485  Non-cash interest amortization, net 7 1,217  1,239  1,319  1,267  1,277  Rent reserves, net 8 94  (369 ) (27 ) 1,261  (151 ) Straight-line rent income, net (6,844 ) (7,051 ) (5,771 ) (6,799 ) (7,633 ) Stock-based compensation 3,028  3,028  4,064  3,383  3,562  Unconsolidated JV non-cash items 9 (253 ) (277 ) (376 ) (148 ) (122 ) Normalized FFO adjusted for non-cash items 135,186  140,388  141,534  142,777  145,240  2nd generation TI (14,885 ) (20,003 ) (16,951 ) (12,287 ) (20,204 ) Leasing commissions paid (11,394 ) (11,957 ) (10,266 ) (10,012 ) (15,215 ) Building capital (6,687 ) (8,347 ) (7,389 ) (12,835 ) (5,363 ) Total maintenance capex (32,966 ) (40,307 ) (34,606 ) (35,134 ) (40,782 ) FAD $102,220  $100,081  $106,928  $107,643  $104,458  Quarterly dividends and OP distributions $109,840  $110,808  $113,770  $118,627  $119,541  FFO wtd avg common shares outstanding - diluted 10 353,522  355,874  363,370  376,556  383,413

Funds from operations (“FFO”) and FFO per share are operating performance measures adopted by 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 GAAP and are 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. Potential common shares are not included in the computation of diluted earnings per share when a loss exists, as the effect would be an antidilutive per share amount. For 1Q 2024, basic weighted average common shares outstanding was the denominator used in the per share calculation. 1Q 2025 represents a $1.9 million loss on other assets. 4Q 2024 includes $1.6 million of credit loss reserves, net of recoveries and a $4.1 million loss on other assets. These amounts were partially offset by a $1.1 million recovery of prior-period Steward Health straight-line rent for leases assumed. 3Q 2024 includes $46.8 million of credit loss reserves and $0.2 million gain on other assets. 2Q 2024 includes $11.2 million of credit loss reserves and $2.2 million write-off of prior period Steward Health straight-line rent, offset by $4.9 million gain on other assets. Includes the Company's proportionate share of normalizing items related to unconsolidated joint ventures such as lease intangibles and acquisition and pursuit costs. Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization. 2Q 2024 includes $0.8 million related to the Steward Health revenue reserve for March. Includes the Company's proportionate share of straight-line rent, net and rent reserves, net related to unconsolidated joint ventures. The Company utilizes the treasury stock method, which includes the dilutive effect of nonvested share-based awards outstanding of 317,511 for the three months ended March 31, 2025. Also includes the diluted impact of 3,665,625 OP units outstanding.

Reconciliation of Non-GAAP Measures 
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA - UNAUDITED

Management considers funds from operations ("FFO"), FFO per share, normalized FFO, normalized FFO per share, and funds available for distribution ("FAD") to be useful non-GAAP measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure historical financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors.

The non-GAAP financial measures presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs.

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO as “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.” The Company defines Normalized FFO as FFO excluding acquisition-related expenses, lease intangible amortization and other normalizing items that are unusual and infrequent in nature. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense and rent reserves, net; and subtracting maintenance capital expenditures, including second generation tenant improvements and leasing commissions paid and straight-line rent income, net of expense. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. FFO, Normalized FFO and FAD do not represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. FFO, Normalized FFO and FAD should not be considered an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity. FFO, Normalized FFO and FAD should be reviewed in connection with GAAP financial measures.

Management believes FFO, FFO per share, Normalized FFO, Normalized FFO per share, and FAD provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, including depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, gains or losses from sales of real estate, and other normalizing items that are unusual and infrequent, FFO, FFO per share, Normalized FFO, Normalized FFO per share and FAD can facilitate comparisons of operating performance between periods. The Company reports these measures because they have been observed by management to be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because these measures are consistently reported, discussed, and compared by research analysts in their notes and publications about REITs.

Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income plus interest from financing receivables less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, lease termination fees, financing receivable amortization, tenant improvement amortization and leasing commission amortization. Cash NOI is historical and not necessarily indicative of future results.

Same Store Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale, properties undergoing redevelopment, and newly redeveloped or developed properties.

The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction through the application of additional resources, including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures.

Any recently acquired property will be included in the same store pool once the Company has owned the property for five full quarters. Newly developed or redeveloped properties will be included in the same store pool five full quarters after substantial completion.

Ron Hubbard
Vice President, Investor Relations
P: 615.269.8290