EX-99.1 2 exhibit991thirdquarter2012.htm EXHIBIT Exhibit 99.1 Third Quarter 2012 Earnings Press Release


Section 2: EX-99.1 (THIRD QUARTER EARNINGS PRESS RELEASE, DATED NOVEMBER 7, 2012)

Exhibit 99.1
Carla Baca
Financial Communications
P: 615.269.8175
News Release
HEALTHCARE REALTY TRUST REPORTS NORMALIZED FFO OF $0.33 PER SHARE FOR THE THIRD QUARTER

NASHVILLE, Tennessee, November 7, 2012 - 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.




 
 
 
 
 
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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.


 
 
 
 
 
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HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Balance Sheets (1) 
(dollars in thousands, except per share data)
(Unaudited)
 
 
 
September 30, 2012
 
December 31, 2011
Assets
 
 
 
 
REAL ESTATE PROPERTIES:
 
 
 
 
Land
 
$
156,427

 
$
162,843

Buildings, improvements, and lease intangibles
 
2,544,935

 
2,521,226

Personal property
 
18,860

 
18,221

Construction in progress
 
—

 
61,152

Land held for development
 
25,171

 
25,176

Total real estate properties
 
2,745,393

 
2,788,618

Less accumulated depreciation
 
(557,951
)
 
(516,747
)
Total real estate properties, net
 
2,187,442

 
2,271,871

Cash and cash equivalents
 
8,781

 
4,738

Mortgage notes receivable
 
141,107

 
97,381

Assets held for sale and discontinued operations, net
 
11,550

 
28,650

Other assets, net
 
121,896

 
118,382

Total assets
 
$
2,470,776

 
$
2,521,022

Liabilities and Equity
 
 
 
 
LIABILITIES:
 
 
 
 
Notes and bonds payable
 
$
1,212,615

 
$
1,393,537

Accounts payable and accrued liabilities
 
51,264

 
72,217

Liabilities of discontinued operations
 
162

 
518

Other liabilities
 
55,668

 
49,944

Total liabilities
 
1,319,709

 
1,516,216

Commitments and contingencies
 
 
 
 
EQUITY:
 
 
 
 
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, respectively
 
872

 
779

Additional paid-in capital
 
2,099,101

 
1,894,604

Accumulated other comprehensive loss
 
(3,332
)
 
(3,332
)
Cumulative net income attributable to common stockholders
 
807,808

 
795,951

Cumulative dividends
 
(1,753,382
)
 
(1,683,196
)
Total stockholders’ equity
 
1,151,067

 
1,004,806

Total 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.







 
 
 
 
 
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HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Operations (1) 
(dollars in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2012
 
2011
 
2012
 
2011
REVENUES
 
 
 
 
 
 
 
 
Rental income
 
$
75,305

 
$
70,004

 
$
222,479

 
$
203,446

Mortgage interest
 
2,244

 
1,776

 
6,575

 
5,250

Other operating
 
1,523

 
2,061

 
4,664

 
6,400

 
 
79,072

 
73,841

 
233,718

 
215,096

EXPENSES
 
 
 
 
 
 
 
 
Property operating
 
30,115

 
30,070

 
87,970

 
85,108

General and administrative
 
4,732

 
5,530

 
14,514

 
16,467

Depreciation
 
21,172

 
19,150

 
63,098

 
55,496

Amortization
 
2,554

 
2,222

 
7,631

 
5,777

Bad debt, net
 
40

 
(353
)
 
149

 
(82
)
 
 
58,613

 
56,619

 
173,362

 
162,766

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
—

 
—

 
—

 
(1,986
)
Interest expense
 
(18,905
)
 
(17,928
)
 
(55,814
)
 
(57,546
)
Interest and other income, net
 
204

 
199

 
711

 
618

 
 
(18,701
)

(17,729
)
 
(55,103
)
 
(58,914
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
 
1,758

 
(507
)
 
5,253

 
(6,584
)
DISCONTINUED OPERATIONS
 
 
 
 
 
 
 
 
Income from discontinued operations
 
672

 
1,352

 
4,145

 
3,789

Impairments
 
(2,860
)
 
(1,551
)
 
(7,197
)
 
(1,698
)
Gain on sales of real estate properties
 
6,265

 
1,357

 
9,696

 
1,393

INCOME FROM DISCONTINUED OPERATIONS
 
4,077

 
1,158

 
6,644

 
3,484

NET INCOME (LOSS)
 
5,835

 
651

 
11,897

 
(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
 
0.06

 
0.02

 
0.08

 
0.05

Net income (loss) attributable to common stockholders
 
$
0.08

 
$
0.01

 
$
0.15

 
$
(0.04
)
DILUTED EARNINGS (LOSS) PER COMMON SHARE
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
 
$
0.02

 
$
(0.01
)
 
$
0.07

 
$
(0.09
)
Discontinued operations
 
0.05

 
0.02

 
0.08

 
0.05

Net income (loss) attributable to common stockholders
 
$
0.07

 
$
0.01

 
$
0.15

 
$
(0.04
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC
 
76,712,594

 
76,139,055

 
76,534,508

 
71,478,463

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED
 
78,020,971

 
76,139,055

 
77,799,291

 
71,478,463

(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.

 
 
 
 
 
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HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Cash Flows (1) 
(dollars in thousands)
(Unaudited) 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2012
 
2011
 
2012
 
2011
Cash flows from operating activities:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
5,835

 
$
651

 
$
11,897

 
$
(3,100
)
NON-CASH ITEMS:
 
 
 
 
 
 
 
 
Depreciation and amortization—real estate
 
23,336

 
21,709

 
70,231

 
62,300

Depreciation and amortization—other
 
1,590

 
1,757

 
4,457

 
5,084

Provision for bad debt, net
 
39

 
(352
)
 
147

 
(65
)
Gain on sales of real estate properties
 
(6,265
)
 
(1,357
)
 
(9,696
)
 
(1,393
)
Impairments
 
2,860

 
1,551

 
7,197

 
1,698

Straight-line rent receivable
 
(1,481
)
 
(1,098
)
 
(4,926
)
 
(3,493
)
Straight-line rent liability
 
110

 
123

 
312

 
369

Stock-based compensation
 
935

 
670

 
2,588

 
2,272

Provision for deferred post-retirement benefits
 
266

 
465

 
798

 
1,383

Total non-cash items
 
21,390

 
23,468

 
71,108

 
68,155

OTHER ITEMS:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
(3,654
)
 
(4,030
)
 
(13,228
)
 
(1,380
)
Other liabilities
 
3,005

 
(182
)
 
5,546

 
6,117

Other 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 activities
 
19,496

 
20,751

 
72,272

 
67,246

Cash 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 estate
 
28,757

 
1,218

 
64,866

 
4,993

Proceeds from mortgage repayment by previously consolidated VIE
 
—

 
—

 
35,057

 
—

Proceeds from mortgages and notes receivable repayments
 
2,678

 
14,930

 
11,931

 
14,988

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
)
 
175,000

Repayments 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
)
Net proceeds from issuance of common stock
 
201,736

 
27,791

 
202,247

 
251,836

Purchase 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
)
 
75,335

Increase (decrease) in cash and cash equivalents
 
5,678

 
(13,722
)
 
4,043

 
(109,267
)
Cash and cash equivalents, beginning of period
 
3,103

 
17,776

 
4,738

 
113,321

Cash 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.

 
 
 
 
 
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Reconciliation of Funds from Operations (1) (2) 
(dollars in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended September 30,
 
 
2012
 
2011
Net Income Attributable to Common Stockholders
 
$
5,815

 
$
647

Gain on sales of real estate properties
 
(6,265
)
 
(1,357
)
Impairments
 
2,860

 
1,551

Real estate depreciation and amortization
 
23,336

 
21,709

Total adjustments
 
19,931

 
21,903

Funds From Operations
 
$
25,746

 
$
22,550

        Acquisition costs
 
—

 
400

        Seasonal utilities
 
—

 
1,300

Normalized Funds From Operations
 
$
25,746

 
$
24,250

Funds From Operations Per Common Share—Diluted
 
$
0.33

 
$
0.29

Normalized Funds From Operations Per Common Share—Diluted
 
$
0.33

 
$
0.31

Weighted Average Common Shares Outstanding—Diluted
 
78,020,971

 
77,177,114


Reconciliation of Funds Available for Distribution (2) 
(dollars in thousands, except per share data)
(Unaudited)
 
Three Months Ended September 30,
 
2012
 
2011
Net Income Attributable to Common Stockholders
$
5,815

 
$
647

Gain on sales of real estate properties
(6,265
)
 
(1,357
)
Impairments
2,860

 
1,551

Other non-cash items
24,795

 
23,274

Total non-cash items included in cash flows from operating activities (3)
21,390

 
23,468

Funds Available For Distribution
$
27,205

 
$
24,115

       Acquisition costs
—

 
400

       Seasonal utilities
—

 
1,300

Normalized Funds Available For Distribution
$
27,205

 
$
25,815

Funds Available For Distribution Per Common Share—Diluted
$
0.35

 
$
0.31

Normalized Funds Available For Distribution Per Common Share - Diluted
$
0.35

 
$
0.33

Weighted Average Common Shares Outstanding—Diluted
78,020,971

 
77,177,114


(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 the 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.



 
 
 
 
 
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