Healthcare Realty Reports First Quarter 2025 Results and Declares Quarterly Dividend

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 renewals448,000 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 $0.31 per unit, equivalent to the Company's Class A common stock dividend. GUIDANCE The Company reaffirms its per share guidance, as outlined below, as well as the guidance provided on page 28 of the Supplemental Information: 2025 GUIDANCEACTUAL LOWHIGH1Q 2025Earnings per share$(0.28)$(0.20)$(0.13)NAREIT FFO per share$1.44$1.48$0.35Normalized 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 fromdispositions, 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. 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 SheetsDOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA ASSETS 1Q 20254Q 20243Q 20242Q 20241Q 2024Real estate properties Land$1,134,635 $1,143,468 $1,195,116 $1,287,532 $1,342,895 Buildings and improvements9,729,912 9,707,066 10,074,504 10,436,218 10,902,835 Lease intangibles631,864 664,867 718,343 764,730 816,303 Personal property9,938 9,909 9,246 12,501 12,720 Investment in financing receivables, net123,813 123,671 123,045 122,413 122,001 Financing lease right-of-use assets76,958 77,343 77,728 81,401 81,805 Construction in progress35,101 31,978 125,944 97,732 70,651 Land held for development52,408 52,408 52,408 59,871 59,871 Total real estate investments11,794,629 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, net9,210,810 9,327,054 9,897,790 10,434,689 11,035,034 Cash and cash equivalents 125,722 68,916 22,801 137,773 26,172 Assets held for sale, net6,635 12,897 156,218 34,530 30,968 Operating lease right-of-use assets259,764 261,438 259,013 261,976 273,949 Investments in unconsolidated joint ventures470,418 473,122 417,084 374,841 309,754 Other assets, net and goodwill522,920 507,496 491,679 559,818 605,047 Total assets$10,496,269 $10,650,923 $11,244,585 $11,803,627 $12,280,924 LIABILITIES AND STOCKHOLDERS' EQUITY 1Q 20254Q 20243Q 20242Q 20241Q 2024Liabilities Notes and bonds payable$4,732,618 $4,662,771 $4,957,796 $5,148,153 $5,108,279 Accounts payable and accrued liabilities144,855 222,510 197,428 195,884 163,172 Liabilities of properties held for sale422 1,283 7,919 1,805 700 Operating lease liabilities224,117 224,499 229,925 230,601 229,223 Financing lease liabilities72,585 72,346 71,887 75,199 74,769 Other liabilities174,830 161,640 180,283 177,293 197,763 Total liabilities5,349,427 5,345,049 5,645,238 5,828,935 5,773,906 Redeemable non-controlling interests4,627 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 authorized3,510 3,505 3,558 3,643 3,815 Additional paid-in capital9,121,269 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 stockholders329,436 374,309 481,155 574,178 717,958 Cumulative dividends(4,368,739)(4,260,014)(4,150,328)(4,037,693)(3,920,199)Total stockholders' equity5,078,270 5,234,861 5,515,426 5,887,142 6,415,895 Non-controlling interest63,945 66,235 80,046 83,675 87,243 Total equity5,142,215 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 IncomeDOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA 1Q 20254Q 20243Q 20242Q 20241Q 2024Revenues Rental income 1$288,857 $300,065 $306,499 $308,135 $318,076 Interest income3,731 4,076 3,904 3,865 4,538 Other operating6,389 5,625 5,020 4,322 4,191 298,977 309,766 315,423 316,322 326,805 Expenses Property operating114,963 114,415 120,232 117,719 121,078 General and administrative13,530 34,208 20,124 14,002 14,787 Normalizing items 2(502)(22,991)(6,861)— — Normalized general and administrative13,028 11,217 13,263 14,002 14,787 Transaction costs1,011 1,577 719 431 395 Depreciation and amortization150,969 160,330 163,226 173,477 178,119 280,473 310,530 304,301 305,629 314,379 Other income (expense) Interest expense before merger-related fair value(44,366)(47,951)(50,465)(52,393)(50,949)Merger-related fair value adjustment(10,446)(10,314)(10,184)(10,064)(10,105)Interest expense(54,812)(58,265)(60,649)(62,457)(61,054)Gain on sales of real estate properties and other assets2,904 32,082 39,310 38,338 22 Loss on extinguishment of debt— (237)— — — Impairment of real estate assets and credit loss reserves(12,081)(81,098)(84,394)(132,118)(15,937)Impairment of goodwill— — — — (250,530)Equity income (loss) from unconsolidated joint ventures1 224 208 (146)(422)Interest and other income (expense), net95 (154)(132)(248)275 (63,893)(107,448)(105,657)(156,631)(327,646)Net loss$(45,389)$(108,212)$(94,535)$(145,938)$(315,220)Net loss attributable to non-controlling interests516 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 - basic349,539 351,560 358,960 372,477 379,455 Weighted average common shares outstanding - diluted 3349,539 351,560 358,960 372,477 379,455 In 4Q 2024, rental income was reduced by $0.7 million for Prospect Medical revenue reserves. In 2Q 2024, rental income was reduced by $3.0 million for Steward Health revenue reserves.Normalizing items primarily include restructuring, severance-related costs and non-routine advisory fees associated with shareholder engagement.Potential common shares are not included in the computation of diluted earnings per share when a loss exists, as the effect would be an antidilutive per share amount. As a result, the outstanding limited partnership units in the Company's operating partnership ("OP"), totaling 3,665,625 units were not included. Reconciliation of FFO, Normalized FFO and FAD 1,2,3DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA 1Q 20254Q 20243Q 20242Q 20241Q 2024Net loss attributable to common stockholders$(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 assets10,145 75,423 37,632 120,917 15,937 Real estate depreciation and amortization155,288 164,656 167,821 177,350 181,161 Non-controlling loss from operating partnership units(599)(1,422)(1,372)(2,077)(4,278)Unconsolidated JV depreciation and amortization6,717 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 costs1,011 1,577 719 431 395 Lease intangible amortization(228)(2,348)(10)129 175 Non-routine legal costs/forfeited earnest money received77 306 306 465 — Debt financing costs— 237 — — — Restructuring and severance-related charges502 22,991 6,861 — — Credit losses and gains (losses) on other assets, net 51,936 4,582 46,600 8,525 — Impairment of goodwill— — — — 250,530 Merger-related fair value adjustment10,446 10,314 10,184 10,064 10,105 Unconsolidated JV normalizing items 6204 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 amortization222 404 276 313 485 Non-cash interest amortization, net 71,217 1,239 1,319 1,267 1,277 Rent reserves, net 894 (369)(27)1,261 (151)Straight-line rent income, net(6,844)(7,051)(5,771)(6,799)(7,633)Stock-based compensation3,028 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 items135,186 140,388 141,534 142,777 145,240 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 10353,522 355,874 363,370 376,556 383,413 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 HubbardVice President, Investor RelationsP: 615.269.8290

Healthcare Realty Reports First Quarter 2025 Results and Declares Quarterly Dividend

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