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Press release from PR Newswire

Healthcare Realty Trust Reports Normalized FFO Of $0.34 Per Share For The Second Quarter

Tuesday, July 31, 2012

Healthcare Realty Trust Reports Normalized FFO Of $0.34 Per Share For The Second Quarter17:02 EDT Tuesday, July 31, 2012NASHVILLE, Tenn., July 31, 2012 /PRNewswire/ -- Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the second quarter ended June 30, 2012.  Normalized FFO and FFO for the three months ended June 30, 2012 totaled $0.34 per diluted common share.  Normalized FAD and FAD for the three months ended June 30, 2012 totaled $0.36 per diluted common share.  For the three months ended June 30, 2012, revenues totaled $78.7 million, income from continuing operations totaled $2.4 million, and net income attributable to common stockholders totaled $2.9 million.Salient highlights include:Healthcare Realty's stabilizing properties ("SIP") are 51% leased, up from 46% last quarter.  Occupancy in the SIP portfolio increased to 33% from 28% as tenants' suites were built out.  Adjusted NOI for the SIP properties improved by approximately $300,000 compared to the previous quarter. The Company has one property under construction, which is 40% leased, and expects to complete construction in the third quarter of 2012.  Including the developments that the Company is funding through construction loans, which are all secured by 100%-leased properties, Healthcare Realty's overall development portfolio is now 62% leased. Healthcare Realty invested $28.5 million during the second quarter of 2012, including $10.7 million in one property acquisition, $15.6 million in two existing construction mortgages, and $2.2 million in one property under construction. Occupancy in the same facility portfolio was 90%, and the occupancy of investments made during the past five quarters, which are not included in the same facility portfolio, was 96%.  The multi-tenant same facility NOI increased 3.5% in the second quarter from a year ago, and the overall same facility portfolio NOI increased 2.1% over the same time period. The weighted average increase in lease rates for the Company's multi-tenant properties remained strong in the second quarter.  Contractual rates for in-place leases were up 3.1%, and rate increases on newly executed leases ("cash leasing spreads") averaged 1.8%. The percentage of Healthcare Realty's medical office properties that are on or adjacent to hospital campuses increased to 77% in the second quarter of 2012, compared to 66% eight quarters ago, continuing the Company's strategic shift toward lower-risk, on-campus medical office buildings. A dividend of $0.30 per share was declared for the second quarter of 2012, which is 83% of normalized FAD. 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.  The Company had investments of approximately $2.9 billion in 205 real estate properties and mortgages as of June 30, 2012.  The Company's 198 owned real estate properties are located in 28 states and total approximately 13.5 million square feet.  The Company provides property management services to approximately 10.3 million square feet nationwide.The Company directs interested parties to its Internet site, www.healthcarerealty.com, where information is posted regarding this quarter's operations.  Please contact the Company at 615.269.8175 to request a printed copy of this information.In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2011 under the heading "Risk  Factors," and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company's judgment as of the date of this release.  The Company disclaims any obligation to update forward-looking statements. HEALTHCARE REALTY TRUST INCORPORATEDCondensed Consolidated Balance Sheets (1) (dollars in thousands, except for share data)(Unaudited)ASSETSReal Estate Properties:6/30/201212/31/2011Land$ 163,211$ 162,843Buildings, improvements, and lease intangibles2,552,1062,521,226Personal property18,77618,221Construction in progress34,18086,328Total real estate properties 2,768,2732,788,618Less accumulated depreciation(545,677)(516,747)Total real estate properties, net2,222,5962,271,871Cash and cash equivalents3,1034,738Mortgage notes receivable118,05997,381Assets held for sale and discontinued operations, net12,92128,650Other assets, net115,645118,382Total assets$ 2,472,324$ 2,521,022LIABILITIES AND EQUITYLiabilities:Notes and bonds payable$ 1,395,600$ 1,393,537Accounts payable and accrued liabilities57,78572,217Liabilities of discontinued operations174518Other liabilities52,57049,944Total liabilities1,506,1291,516,216Commitments and contingenciesEquity:Preferred stock, $.01 par value; 50,000,000 shares authorized; none issued and outstanding--Common stock, $.01 par value; 150,000,000 shares authorized; 78,002,812 and 77,843,883 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively780779Additional paid-in capital1,896,7351,894,604Accumulated other comprehensive loss(3,332)(3,332)Cumulative net income attributable to common stockholders801,993795,951Cumulative dividends(1,729,981)(1,683,196)Total stockholders' equity966,1951,004,806Total liabilities and equity$ 2,472,324$ 2,521,022(1)The Condensed Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.HEALTHCARE REALTY TRUST INCORPORATEDCondensed Consolidated Statements of Operations (1) (dollars in thousands, except for share data) (Unaudited)Three Months Ended June 30,Six Months Ended June 30,2012201120122011RevenuesProperty operating $ 60,948$ 53,320$ 119,913$ 105,141Single-tenant net lease12,83313,45925,09227,503Straight-line rent1,5421,0763,4492,364Mortgage interest 2,0391,8254,3313,474Other operating 1,3742,0473,1464,34578,73671,727155,931142,827ExpensesProperty operating 29,45727,77358,03955,210General and administrative4,5195,1579,78210,938Depreciation21,31118,48742,33336,756Amortization2,5401,7785,0773,555Bad debt, net 1499310927157,97653,288115,340106,730Other Income (Expense)Loss on extinguishment of debt---(1,986)Interest expense(18,530)(17,343)(36,909)(39,617)Interest and other income, net203196508418(18,327)(17,147)(36,401)(41,185)Income (Loss) From Continuing Operations2,4331,2924,190(5,088)Discontinued OperationsIncome from discontinued operations6597192,7771,448Impairments(167)-(4,336)(147)Gain on sales of real estate properties3-3,43136Income From Discontinued Operations4957191,8721,337Net Income (Loss)2,9282,0116,062(3,751)Less:  Net income attributable to noncontrolling interests(20)-(20)(27)Net Income (Loss) Attributable to Common Stockholders $ 2,908$ 2,011$ 6,042$ (3,778)Basic Earnings (Loss) Per Common Share Income (loss) from continuing operations$ 0.03$ 0.02$ 0.05$ (0.07)Discontinued operations 0.010.010.030.02Net income (loss) attributable to common stockholders$ 0.04$ 0.03$ 0.08$ (0.05)Diluted Earnings (Loss) Per Common ShareIncome (loss) from continuing operations$ 0.03$ 0.02$ 0.05$ (0.07)Discontinued operations 0.010.010.030.02Net income (loss) attributable to common stockholders$ 0.04$ 0.03$ 0.08$ (0.05)Weighted Average Common Shares Outstanding - Basic76,462,26672,035,15476,444,48769,109,543Weighted Average Common Shares Outstanding - Diluted77,712,49373,149,23277,678,36269,109,543(1)  The Condensed Consolidated Statements of Operations do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  HEALTHCARE REALTY TRUST INCORPORATEDCondensed Consolidated Statements of Cash Flows(1) (dollars in thousands) (Unaudited)Three Months Ended June 30,Six Months Ended June 30,2012201120122011Cash flows from operating activities:Net income (loss)$ 2,928$ 2,011$ 6,062$ (3,751)NON-CASH ITEMS:Depreciation and amortization - real estate23,46720,41046,89640,592Depreciation and amortization - other1,5631,6542,8663,327Provision for bad debt, net 15093108287Gain on sales of real estate properties(3)-(3,431)(36)Impairments167-4,336147Straight-line rent receivable(1,545)(1,109)(3,445)(2,395)Straight-line rent liability112149202246Stock-based compensation7216611,6531,602Provision for deferred post-retirement benefits266459532918    Total non-cash items24,89822,31749,71744,688OTHER ITEMS:Accounts payable and accrued liabilities11,0559,067(9,573)2,649Other liabilities2195,0812,5416,299Other assets2,760(1,655)4,050(5,376)Loss on extinguishment of debt---1,986    Total other items14,03412,493(2,982)5,558    Net cash provided by operating activities41,86036,82152,79746,495Cash flows from investing activities:Acquisition and development of real estate properties(17,196)(57,574)(61,522)(83,111)Funding of mortgages and notes receivable(15,772)(34,361)(28,550)(83,141)Proceeds from sales of real estate29,485-36,1093,775Proceeds from mortgage repayment by consolidated variable interest entity--35,057-Proceeds from mortgages and notes receivable repayments4,507409,23258    Net cash provided by (used in) investing activities1,024(91,895)(9,674)(162,419)Cash flows from financing activities:Net borrowings (repayments) on unsecured credit facility(22,000)(41,000)4,000123,000Repayments on notes and bonds payable(1,223)(810)(2,436)(1,616)Repurchase of notes payable---(280,201)Dividends paid(23,398)(22,325)(46,785)(42,570)Proceeds from issuance of common stock230134,033511224,045Purchase of noncontrolling interests ---(1,591)Common stock redemptions--(45)(51)Debt issuance costs--(3)(356)Distributions to noncontrolling interest holders-(55)-(281)   Net cash provided by (used in) financing activities(46,391)69,843(44,758)20,379Increase (decrease) in cash and cash equivalents(3,507)14,769(1,635)(95,545)Cash and cash equivalents, beginning of period6,6103,0074,738113,321Cash and cash equivalents, end of period$ 3,103$ 17,776$ 3,103$ 17,776(1)The Condensed Consolidated Statements of Cash Flows do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. HEALTHCARE REALTY TRUST INCORPORATEDReconciliation of Funds from Operations(1) (2) (dollars in thousands, except per share data)(Unaudited)Three Months Ended June 30, 2012Three Months Ended June 30, 2011(4)Net Income Attributable to Common Stockholders$ 2,908$ 2,011Gain on sales of real estate properties(3)-Impairments167-Real estate depreciation and amortization23,46720,410Total adjustments23,63120,410Funds From Operations$ 26,539$ 22,421Acquisition costs-299Normalized Funds From Operations$ 26,539$ 22,720Funds From Operations Per Common Share - Diluted$ 0.34$ 0.31Normalized Funds From Operations Per Common Share - Diluted$ 0.34$ 0.31Weighted Average Common Shares Outstanding - Diluted77,712,49373,149,232Reconciliation of Funds Available for Distribution(2) (Dollars in thousands, except per share data)(Unaudited)Three Months Ended June 30, 2012Three Months Ended June 30, 2011(4)Net Income Attributable to Common Stockholders$ 2,908$ 2,011Gain on sales of real estate properties(3)-Impairments167-Other non-cash items24,73422,317Total non-cash items included in cash flows from operating activities (3)24,89822,317Funds Available For Distribution$ 27,806$ 24,328Acquisition costs-299Normalized Funds Available For Distribution$ 27,806$ 24,627Funds Available For Distribution Per Common Share - Diluted$ 0.36$ 0.33Normalized Funds Available For Distribution Per Common Share - Diluted$ 0.36$ 0.34Weighted Average Common Shares Outstanding - Diluted77,712,49373,149,232(1)Funds from operations ("FFO") and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT's operating performance equal to "net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures."  The SEC indicated in 2003 that impairment charges (losses) could not be added back to net income attributable to common stockholders in calculating FFO.  However, in late October 2011, NAREIT issued an alert indicating that the SEC staff recently advised NAREIT that it currently takes no position on the matter of whether impairment charges should be added back to net income to compute FFO, and NAREIT affirmed its original definition of FFO.  The Company follows the NAREIT definition to exclude impairment charges and all prior periods have been restated to agree with current presentation.(2)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 are not necessarily indicative of cash available to fund cash needs.  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)See the Condensed Consolidated Statements of Cash Flows that are included in this earnings release.(4)Normalization was not previously reported.  Adjustments have been reflected in accordance with the current presentation. SOURCE Healthcare Realty Trust IncorporatedFor further information: Carla Baca, Financial Communications, +1-615-269-8175