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Press release from PR Newswire

Healthcare Realty Trust Reports Normalized FFO Of $0.33 Per Share For The Third Quarter

Wednesday, November 07, 2012

Healthcare Realty Trust Reports Normalized FFO Of $0.33 Per Share For The Third Quarter17:01 EST Wednesday, November 07, 2012NASHVILLE, Tenn., Nov. 7, 2012 /PRNewswire/ -- Healthcare Realty Trust Incorporated (NYSE: HR) today announced results for the third quarter ended September 30, 2012. Normalized FFO and FFO for the three months ended September 30, 2012 totaled $0.33 per diluted common share. Normalized FAD and FAD for the three months ended September 30, 2012 totaled $0.35 per diluted common share.  For the three months ended September 30, 2012, revenues totaled $79.1 million, income from continuing operations totaled $1.8 million, and net income attributable to common stockholders totaled $5.8 million.Salient highlights for the third quarter include:The multi-tenant same facility NOI increased 5.0% in the third quarter from a year ago, and the overall same facility portfolio NOI increased 4.2% over the same time period. Healthcare Realty's stabilizing properties ("SIP") are 54% leased and remain on target to reach 60% leased by year-end 2012.  Occupancy in the SIP portfolio increased to 37% as tenants' suites were built out.  Adjusted NOI for the SIP properties improved by approximately $497,000 compared to the previous quarter. On September 28, 2012, Healthcare Realty completed the sale of 9.2 million shares of common stock for net proceeds of approximately $201.1 million to fund investment activity.  The use of funds will be accretive as these investments come online over the next two to three quarters.  As a result of this offering, Healthcare Realty's debt-to-EBITDA ratio at the end of the third quarter was 6.2x and the leverage ratio was 41.7%.  Subsequent to the end of the quarter, the Company acquired two MOBs located in Tennessee and Washington for a total investment of $20.4 million.  The buildings total approximately 87,000 square feet and have an average occupancy rate of 94%.  Through September 30, 2012, the Company funded $94.4 million out of a total budget of $203 million toward two, build-to-suit facilities that are fully leased by "AA-" rated Mercy Health.  The Company currently generates mortgage interest income at 6.75% on the funded balances.  Upon completion, Healthcare Realty will assume ownership of the facilities at an initial yield of 8%. 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 95%.  The percentage of Healthcare Realty's medical office properties that are on or adjacent to hospital campuses increased to 78% in the third 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 third quarter of 2012, which is 86% 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 $2.9 billion in 201 real estate properties and mortgages as of September 30, 2012.  The Company's 195 owned real estate properties are located in 28 states and total approximately 13.3 million square feet.  The Company provides property management services to approximately 10.2 million square feet nationwide.The Company directs interested parties to its Internet site, www.healthcarerealty.com, where information is posted regarding this quarter's operations.  Please contact the Company at 615.269.8175 to request a printed copy of this information.In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2011 under the heading "Risk  Factors," and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company's judgment as of the date of this release.  The Company disclaims any obligation to update forward-looking statements.   HEALTHCARE REALTY TRUST INCORPORATEDCondensed Consolidated Balance Sheets (1) (dollars in thousands, except for share data)(Unaudited)ASSETSReal Estate Properties:9/30/201212/31/2011Land$ 156,427$ 162,843Buildings, improvements, and lease intangibles2,544,9352,521,226Personal property18,86018,221Construction in progress-61,152Land held for development25,17125,176Total real estate properties 2,745,3932,788,618Less accumulated depreciation(557,951)(516,747)Total real estate properties, net2,187,4422,271,871Cash and cash equivalents8,7814,738Mortgage notes receivable141,10797,381Assets held for sale and discontinued operations, net11,55028,650Other assets, net121,896118,382Total assets$ 2,470,776$ 2,521,022LIABILITIES AND EQUITYLiabilities:Notes and bonds payable$ 1,212,615$ 1,393,537Accounts payable and accrued liabilities51,26472,217Liabilities of discontinued operations162518Other liabilities55,66849,944Total liabilities1,319,7091,516,216Commitments and contingenciesEquity:Preferred stock, $.01 par value; 50,000,000 shares authorized; none issued and outstanding--Common stock, $.01 par value; 150,000,000 shares authorized; 87,230,936 and 77,843,883 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively872779Additional paid-in capital2,099,1011,894,604Accumulated other comprehensive loss(3,332)(3,332)Cumulative net income attributable to common stockholders807,808795,951Cumulative dividends(1,753,382)(1,683,196)Total stockholders' equity1,151,0671,004,806Total liabilities and equity$ 2,470,776$ 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 September 30,Nine Months Ended September 30,2012201120122011RevenuesRental income$ 75,305$ 70,004$ 222,479$ 203,446Mortgage interest 2,2441,7766,5755,250Other operating 1,5232,0614,6646,40079,07273,841233,718215,096ExpensesProperty operating 30,11530,07087,97085,108General and administrative4,7325,53014,51416,467Depreciation21,17219,15063,09855,496Amortization2,5542,2227,6315,777Bad debt, net 40(353)149(82)58,61356,619173,362162,766Other Income (Expense)Loss on extinguishment of debt---(1,986)Interest expense(18,905)(17,928)(55,814)(57,546)Interest and other income, net204199711618(18,701)(17,729)(55,103)(58,914)Income (Loss) From Continuing Operations1,758(507)5,253(6,584)Discontinued OperationsIncome from discontinued operations6721,3524,1453,789Impairments(2,860)(1,551)(7,197)(1,698)Gain on sales of real estate properties6,2651,3579,6961,393Income From Discontinued Operations4,0771,1586,6443,484Net Income (Loss)5,83565111,897(3,100)Less:  Net income attributable to noncontrolling interests(20)(4)(40)(31)Net Income (Loss) Attributable to Common Stockholders $ 5,815$ 647$ 11,857$ (3,131)Basic Earnings (Loss) Per Common Share Income (loss) from continuing operations$ 0.02$ (0.01)$ 0.07$ (0.09)Discontinued operations 0.060.020.080.05Net income (loss) attributable to common stockholders$ 0.08$ 0.01$ 0.15$ (0.04)Diluted Earnings (Loss) Per Common ShareIncome (loss) from continuing operations$ 0.02$ (0.01)$ 0.07$ (0.09)Discontinued operations 0.050.020.080.05Net income (loss) attributable to common stockholders$ 0.07$ 0.01$ 0.15$ (0.04)Weighted Average Common Shares Outstanding - Basic76,712,59476,139,05576,534,50871,478,463Weighted Average Common Shares Outstanding - Diluted78,020,97176,139,05577,799,29171,478,463     (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 EndedSeptember 30,Nine Months EndedSeptember 30,2012201120122011Cash flows from operating activities:Net income (loss)$ 5,835$ 651$ 11,897$ (3,100)NON-CASH ITEMS:Depreciation and amortization - real estate23,33621,70970,23162,300Depreciation and amortization - other1,5901,7574,4575,084Provision for bad debt, net 39(352)147(65)Gain on sales of real estate properties(6,265)(1,357)(9,696)(1,393)Impairments2,8601,5517,1971,698Straight-line rent receivable(1,481)(1,098)(4,926)(3,493)Straight-line rent liability110123312369Stock-based compensation9356702,5882,272Provision for deferred post-retirement benefits2664657981,383    Total non-cash items21,39023,46871,10868,155OTHER ITEMS:Accounts payable and accrued liabilities(3,654)(4,030)(13,228)(1,380)Other liabilities3,005(182)5,5466,117Other assets(7,080)844(3,051)(4,532)Loss on extinguishment of debt---1,986    Total other items(7,729)(3,368)(10,733)2,191    Net cash provided by operating activities19,49620,75172,27267,246Cash flows from investing activities:Acquisition and development of real estate properties(14,612)(96,740)(76,134)(179,851)Funding of mortgages and notes receivable(25,714)(8,837)(54,264)(91,978)Proceeds from sales of real estate28,7571,21864,8664,993Proceeds from mortgage repayment by previously consolidated VIE--35,057-Proceeds from mortgages and notes receivable repayments2,67814,93011,93114,988    Net cash used in investing activities(8,891)(89,429)(18,544)(251,848)Cash flows from financing activities:Net borrowings (repayments) on unsecured credit facility(182,000)52,000(178,000)175,000Repayments on notes and bonds payable(1,242)(921)(3,678)(2,537)Repurchase of notes payable---(280,201)Dividends paid(23,401)(23,348)(70,186)(65,918)Proceeds from issuance of common stock201,73627,791202,247251,836Purchase of noncontrolling interests ---(1,591)Common stock redemptions--(45)(51)Debt issuance and assumption costs-(566)(3)(922)Distributions to noncontrolling interest holders(20)-(20)(281)   Net cash provided by (used in) financing activities(4,927)54,956(49,685)75,335Increase (decrease) in cash and cash equivalents5,678(13,722)4,043(109,267)Cash and cash equivalents, beginning of period3,10317,7764,738113,321Cash and cash equivalents, end of period$ 8,781$ 4,054$ 8,781$ 4,054     (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 September 30, 2012 Three Months Ended September 30, 2011Net Income Attributable to Common Stockholders$ 5,815$ 647Gain on sales of real estate properties(6,265)(1,357)Impairments2,8601,551Real estate depreciation and amortization23,33621,709Total adjustments19,93121,903Funds From Operations$ 25,746$ 22,550Acquisition costs-400Seasonal utilities-1,300Normalized Funds From Operations$ 25,746$ 24,250Funds From Operations Per Common Share - Diluted$ 0.33$ 0.29Normalized Funds From Operations Per Common Share - Diluted$ 0.33$ 0.31Weighted Average Common Shares Outstanding - Diluted78,020,97177,177,114Reconciliation of Funds Available for Distribution(2) (Dollars in thousands, except per share data)(Unaudited)Three Months Ended September 30, 2012 Three Months Ended September 30, 2011Net Income Attributable to Common Stockholders$ 5,815$ 647Gain on sales of real estate properties(6,265)(1,357)Impairments2,8601,551Other non-cash items24,79523,274Total non-cash items included in cash flows from operating activities (3)21,39023,468Funds Available For Distribution$ 27,205$ 24,115Acquisition costs-400Seasonal utilities-1,300Normalized Funds Available For Distribution$ 27,205$ 25,815Funds Available For Distribution Per Common Share - Diluted$ 0.35$ 0.31Normalized Funds Available For Distribution Per Common Share - Diluted$ 0.35$ 0.33Weighted Average Common Shares Outstanding - Diluted78,020,97177,177,114(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.  SOURCE Healthcare Realty Trust IncorporatedFor further information: Carla Baca, Financial Communications, +1-615-269-8175