Healthcare Realty Trust Reports Normalized FFO of $0.41 Per Share for the First Quarter
May 04 2016 - 5:00PM
Healthcare Realty Trust Incorporated (NYSE:HR) today announced
results for the first quarter ended March 31, 2016.
Normalized FFO for the three months ended March 31, 2016
totaled $0.41 per diluted common share. Revenue for the first
quarter grew by $3.6 million to $100.0 million compared to the same
quarter in 2015. The Company reported net income of $9.2
million for the quarter.
Salient highlights include:
- Normalized FFO for the first quarter grew 8.9% year-over-year
to $41.7 million. Over the same time period, normalized FFO
per share increased 5.1%.
- For the trailing twelve months ended March 31, 2016, same store
revenue grew 3.9%, operating expenses increased 1.9%, and same
store NOI grew 5.1%.
- Average same store occupancy increased to 89.7% from 88.9% a
year ago – a 60 basis point increase in multi-tenant and a 140
basis point increase in single-tenant net lease.
- Same store revenue per average occupied square foot increased
2.9% over the prior year – 3.2% for multi-tenant properties and
1.6% for single-tenant net lease.
- Leasing activity totaled 547,000 square feet related to 148
leases:
- 407,000 square feet renewed, including 335,000 square feet in
the same store properties
- 140,000 square feet new and expanded
- Four predictive growth measures in the same store multi-tenant
portfolio:
- Contractual rent increases occurring in the quarter averaged
2.9%
- Cash leasing spreads were 7.2% on 335,000 square feet renewed:
2% of square feet (<0% spread), 10% (0-3%), 48% (3-4%) and 40%
(>4%)
- Tenant retention was 87.2%
- The average yield on renewed leases increased 120 basis
points
- In March 2016, the Company acquired a 100% leased, 69,700
square foot medical office building in Seattle, Washington for a
purchase price of $38.3 million. The property is located 0.24
miles from UW Medicine's Northwest Hospital and Medical Center
campus where the Company purchased a 60,400 square foot on-campus
medical office building in November 2015.
- In April 2016, the Company acquired a 100% leased, 46,600
square foot medical office building in Seattle, Washington for a
purchase price of $21.6 million. The property is located on
UW Medicine's Valley Medical Center campus.
- During the first quarter, the Company sold 2.4 million shares
through the at-the-market (ATM) program, generating net proceeds of
$69.7 million. In April 2016, the Company sold an additional
0.6 million shares through the ATM, generating net proceeds of
$17.0 million.
- A dividend of $0.30 per common share was declared, which is
equal to 73.2% of normalized FFO per share.
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 March 31, 2016, the Company had
investments of approximately $3.4 billion in 199 real estate
properties located in 30 states totaling approximately 14.3 million
square feet. The Company provided leasing and property
management services to approximately 9.9 million square feet
nationwide.
Additional information regarding the Company,
including this quarter's operations, can be found at
www.healthcarerealty.com. 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, 2015
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 INCORPORATED |
Condensed
Consolidated Balance Sheets (1) |
(amounts in
thousands, except per share data) |
|
ASSETS |
|
|
|
|
Real estate
properties: |
|
|
3/31/2016 |
|
|
|
|
12/31/2015 |
|
|
Land |
|
$ |
201,157 |
|
|
|
$ |
198,585 |
|
|
Buildings, improvements
and lease intangibles |
|
|
3,181,748 |
|
|
|
|
3,135,893 |
|
|
Personal property |
|
|
9,881 |
|
|
|
|
9,954 |
|
|
Construction in
progress |
|
|
31,669 |
|
|
|
|
19,024 |
|
|
Land held for
development |
|
|
17,434 |
|
|
|
|
17,452 |
|
|
Total real estate
properties |
|
|
3,441,889 |
|
|
|
|
3,380,908 |
|
|
Less accumulated
depreciation and amortization |
|
|
(790,819 |
) |
|
|
|
(761,926 |
) |
|
Total real estate
properties, net |
|
|
2,651,070 |
|
|
|
|
2,618,982 |
|
|
Cash and cash
equivalents |
|
|
2,174 |
|
|
|
|
4,102 |
|
|
Assets held for sale and
discontinued operations, net |
|
|
706 |
|
|
|
|
724 |
|
|
Other assets, net |
|
|
187,665 |
|
|
|
|
186,416 |
|
|
Total assets |
|
$ |
2,841,615 |
|
|
|
$ |
2,810,224 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Notes and bonds
payable |
|
$ |
1,418,347 |
|
|
|
$ |
1,424,992 |
|
|
Accounts payable and
accrued liabilities |
|
|
66,013 |
|
|
|
|
75,489 |
|
|
Liabilities of
discontinued operations |
|
|
20 |
|
|
|
|
33 |
|
|
Other liabilities |
|
|
64,236 |
|
|
|
|
66,963 |
|
|
Total
liabilities |
|
|
1,548,616 |
|
|
|
|
1,567,477 |
|
|
Commitments and
contingencies |
|
|
|
|
Stockholders'
equity: |
|
|
|
|
Preferred stock, $.01 par
value; 50,000 shares authorized; none issued and outstanding |
|
|
— |
|
|
|
|
— |
|
|
Common stock, $.01 par
value; 150,000 shares authorized; 104,249 and 101,517 shares issued
and outstanding at March 31, 2016 and December 31, 2015,
respectively |
|
|
1,042 |
|
|
|
|
1,015 |
|
|
Additional paid-in
capital |
|
|
2,533,130 |
|
|
|
|
2,461,376 |
|
|
Accumulated other
comprehensive income |
|
|
(1,527 |
) |
|
|
|
(1,569 |
) |
|
Cumulative net income
attributable to common stockholders |
|
|
918,841 |
|
|
|
|
909,685 |
|
|
Cumulative
dividends |
|
|
(2,158,487 |
) |
|
|
|
(2,127,760 |
) |
|
Total
stockholders' equity |
|
|
1,292,999 |
|
|
|
|
1,242,747 |
|
|
Total liabilities and stockholders' equity |
|
$ |
2,841,615 |
|
|
|
$ |
2,810,224 |
|
|
(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 INCORPORATED |
Condensed
Consolidated Statements of Income (1) |
(amounts in
thousands, except per share data) |
(Unaudited) |
|
|
|
Three Months Ended
March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
Revenues |
|
|
|
|
Rental income |
|
$ |
98,740 |
|
|
$ |
95,034 |
|
Mortgage interest |
|
— |
|
|
|
31 |
|
Other operating |
|
|
1,281 |
|
|
|
1,391 |
|
|
|
|
100,021 |
|
|
|
96,456 |
|
Expenses |
|
|
|
|
Property operating |
|
|
35,406 |
|
|
|
34,263 |
|
General and administrative |
|
|
10,246 |
|
|
|
6,738 |
|
Depreciation |
|
|
27,693 |
|
|
|
26,387 |
|
Amortization |
|
|
2,700 |
|
|
|
2,667 |
|
Bad debts, net of recoveries |
|
|
(39 |
) |
|
|
(207 |
) |
|
|
|
76,006 |
|
|
|
69,848 |
|
Other Income (Expense) |
|
|
|
|
Interest expense |
|
|
(14,938 |
) |
|
|
(18,322 |
) |
Impairment of real estate assets |
|
— |
|
|
|
(3,328 |
) |
Interest and other income, net |
|
|
86 |
|
|
|
91 |
|
|
|
|
(14,852 |
) |
|
|
(21,559 |
) |
|
|
|
|
|
Income From Continuing
Operations |
|
|
9,163 |
|
|
|
5,049 |
|
|
|
|
|
|
Discontinued Operations |
|
|
|
|
Income (loss) from discontinued operations |
|
|
(7 |
) |
|
|
333 |
|
Income (Loss) From Discontinued
Operations |
|
|
(7 |
) |
|
|
333 |
|
|
|
|
|
|
Net Income |
|
$ |
9,156 |
|
|
$ |
5,382 |
|
Basic Earnings Per Common
Share: |
|
|
|
|
Income from continuing operations |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
Discontinued operations |
|
|
0.00 |
|
|
|
0.00 |
|
Net income |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
Diluted Earnings Per Common
Share: |
|
|
|
|
Income from continuing operations |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
Discontinued operations |
|
|
0.00 |
|
|
|
0.00 |
|
Net income |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
Weighted Average
Common Shares Outstanding—Basic |
|
|
101,432 |
|
|
|
98,360 |
|
Weighted Average
Common Shares Outstanding—Diluted |
|
|
102,165 |
|
|
|
99,137 |
|
(1) The Condensed Consolidated Statements of Income 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 FFO and Normalized FFO
(1)(amounts in thousands, except per share
data)(Unaudited)
Non-GAAP MeasuresManagement considers funds
from operations ("FFO"), FFO per share, normalized FFO, and
normalized FFO per share 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 or
future 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.
|
|
Three Months Ended March 31, |
|
|
|
2016 |
|
|
|
|
2015 |
|
Net Income |
|
$ |
9,156 |
|
|
|
$ |
5,382 |
|
Gain on sales of real estate
properties |
|
|
— |
|
|
|
|
— |
|
Impairments of real estate
assets |
|
|
— |
|
|
|
|
3,328 |
|
Real estate depreciation and
amortization |
|
|
30,800 |
|
|
|
|
29,370 |
|
Total adjustments |
|
|
30,800 |
|
|
|
|
32,698 |
|
Funds From
Operations |
|
$ |
39,956 |
|
|
|
$ |
38,080 |
|
Acquisition costs (2) |
|
|
1,618 |
|
|
|
|
38 |
|
Severance expense |
|
|
— |
|
|
|
|
141 |
|
Revaluation of awards upon
retirement |
|
|
89 |
|
|
|
|
— |
|
Normalized Funds From
Operations |
|
$ |
41,663 |
|
|
|
$ |
38,259 |
|
Funds from
Operations per Common Share—Diluted |
|
$ |
0.39 |
|
|
|
$ |
0.38 |
|
Normalized Funds From Operations Per Common
Share—Diluted |
|
$ |
0.41 |
|
|
|
$ |
0.39 |
|
FFO Weighted
Average Common Shares Outstanding |
|
|
102,165 |
|
|
|
|
99,137 |
|
(1) FFO and FFO per share are operating performance measures
adopted by the National Association of Real Estate Investment
Trusts, Inc. (“NAREIT”). NAREIT defines FFO as the most commonly
accepted and reported measure of a REIT’s operating performance
equal to “net income (computed in accordance with GAAP), excluding
gains (or losses) from sales of property, plus depreciation and
amortization (including amortization of leasing commissions), and
after adjustments for unconsolidated partnerships and joint
ventures.” The Company defines Normalized FFO as FFO
excluding acquisition-related expenses and other normalizing items
that are unusual and infrequent in nature. FFO does 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 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.
Management believes FFO, FFO per share, Normalized FFO, and
Normalized FFO per share 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, and Normalized FFO
per share 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. However, these measures 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, FFO per share, Normalized FFO, and Normalized
FFO per share should not be considered as an alternative to net
income attributable to common stockholders as an indicator of the
Company’s operating performance or as an alternative to cash flow
from operating activities as a measure of liquidity.
(2) Acquisition costs in Q1 2016 includes a credit to the seller
related to a loan prepayment, broker's commission and excise
tax.
Carla Baca
Director of Corporate Communications
P: 615.269.8175
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