Exhibit 99.2
Opening – Curtis Parker
Welcome to the first quarter 2023 Healthcare Trust, Inc., or HTI, webcast. All participants will be in listen-only mode.
Please note, this event is being recorded. Also note that certain statements and assumptions in this webcast presentation which are not historical facts will be forward-looking and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain assumptions and risk factors which could cause HTI’s actual results to differ materially from the forward-looking statements. We refer all of you to our SEC filings including the Form 10-K for the year ended December 31, 2022, filed on March 17, 2023, and all other SEC filings after that date for a more detailed discussion of the risk factors that could cause these differences and impact our business.
During today's call, we will discuss non-GAAP financial measures of HTI. These measures should not be considered in isolation or as a substitution for the financial results prepared in accordance with GAAP. HTI has provided a reconciliation of these measures to the most directly comparable GAAP measure as part of the first quarter 2023 investor presentation for HTI and as part of the Annual Report on Form 10-K for HTI for the year ended December 31, 2022 (both available on HTI’s website at www.healthcaretrustinc.com).
You may submit questions during today’s webcast by typing them in the box on the screen and a member of our investor relations group will follow-up to answer questions directly after this presentation. Also, please note that later today a copy of this presentation and replay of the webcast will be available on HTI’s website.
I would now like to turn the call over to Michael Weil, Chief Executive Officer. Please go-ahead Mike.
Opening Script
HTI Webinar Script
Slide 2: Company Overview – (Mike Weil)
Thanks Curtis and thank you all for joining us today. I’m pleased to report that in the first quarter HTI grew Net Operating Income, or NOI, by nearly $3 million compared to the first quarter of 2022, completed accretive acquisitions and built a forward leasing pipeline. We remain confident in our long-term strategy of owning high quality Seniors Housing and Medical Office Buildings across the US.
In the MOB segment, first-quarter NOI grew by 4.2% to $24.7 million up from $23.7 million in the first quarter of 2022. We closed on five MOB acquisitions during the quarter for a total of $25.2 million at a weighted-average cap rate of 7.6%. In addition to acquisitions, we have built a 64,200 SF MOB leasing pipeline that is expected to increase MOB occupancy to 92.1% from 90.9% and increase annualized straight-line rent by $1.2 million, assuming these leases commence. Throughout the COVID-19 pandemic, we have maintained nearly 100% cash rent collection and over 90% occupancy in our MOB portfolio.
In our SHOP segment, first quarter NOI grew by 27.7%, or $1.9 million, compared to the first quarter of 2022, which was driven by higher revenue. We believe that SHOP occupancy will continue to increase as the effects of the pandemic continue to subside and the investments we’ve made differentiate our properties from competitors in the same markets.
Looking at the balance sheet, as of March 31, 2023, HTI had Net Leverage of 39.1%. Subsequent to quarter end, we completed a $240 million commercial mortgage-backed security loan, encumbered by 62 of our MOBs. A portion of the proceeds from the loan were used to repay and terminate our previous credit facility, which removed restrictive corporate covenants. We are pleased to have completed this financing and believe that it will enhance our capacity to grow and respond to the dynamic realities of the current healthcare real estate environment.
We believe the continued execution of our corporate initiatives, including completing accretive acquisitions as well as dispositions, leasing of available space to high-quality tenants in our medical office buildings and enhancements to our shop portfolio, all positively impact the factors our board will likely consider when it decides to evaluate a liquidity event in the future.
Slide 3: Portfolio Snapshot
As of March 31, 2023, HTI owned over 200 properties, totaling over 9.2 million rentable square feet in 34 states. The portfolio consisted of 155 medical office buildings, 50 seniors housing operating properties with over 4,300 individual units, and two land parcels. Based on NOI, the portfolio was comprised of 74% MOB and 26% SHOP assets.
At quarter end, our medical office building portfolio was 90.9% occupied with a weighted-average remaining lease term of 4.9 years and featured annual rent escalators that averaged 2.3% on approximately 90% of leases, which increase the cash rental payments in future periods.
Slide 4: Dynamic Portfolio Fundamentals
We have diligently constructed a portfolio of MOB and SHOP assets and continue to deploy capital into select high-quality assets throughout the US. Our portfolio is geographically well-diversified across 34 states with only two states representing more than 10% of the total portfolio by square feet: Pennsylvania where we have a strong relationship with The University of Pittsburgh Medical Center, and Florida, where MOBs and seniors housing serve a large population of baby boomers.
Slide 5: Strategic Partners
The quality of our tenants is essential to the success of our healthcare real estate portfolio. Our asset management strategy is focused on developing strong relationships with well-respected brands, which we believe will contribute to superior long-term benefits for not only HTI, but also for the residents and practitioners who live and work at our properties.
Our MOB portfolio includes top tenants such as The University of Pittsburgh Medical Center, DaVita, Aurora, and Ascension. We have streamlined and consolidated our SHOP operators from over 15 brands in 2019 to four, including Jaybird Senior Living and Senior Lifestyle Corporation, two industry leaders.
As we grow our portfolio, we continue to seek high-quality tenants to add to HTI’s MOB portfolio and to develop strong relationships with our current SHOP operators, who we trust to care for residents at our facilities.
Slide 6: Diligent Acquisition Program
During the quarter we acquired five medical office buildings in New York and Oregon for a total of $25.2 million. These acquisitions had a weighted-average cap rate of 7.6% and a weighted-average remaining lease term of 10.3 years. We believe we are well positioned to continue diligently seeking accretive acquisitions at opportunistic cap rates.
Scott, will you take us through our financials please?
Slide 7: Capitalization Highlights – (Scott Lappetito)
Thank you, Mike.
We continued to actively manage our capital structure during the first quarter. As of March 31, 2023, Net Leverage was 39.1%.
Additionally, as Mike mentioned earlier, subsequent to quarter end, we entered into a $240 million CMBS financing that refinanced and terminated our Credit Facility, which, among other things, provided approximately $39 million for acquisitions and general corporate purposes. This new financing has an interest-only term of 10 years at a 6.453% interest rate.
Slide 8: Key Operating Highlights
HTI continues to execute on our operational initiatives by growing SHOP occupancy and increasing MOB NOI.
As Mike mentioned earlier, SHOP NOI has grown dramatically year-over-year to $8.8 million in the first quarter of 2023 as revenue increased. In the MOB segment of our portfolio, our pipeline of over 64,000 square feet of new leases is expected to increase occupancy in this segment to 92.1% from 90.9% and annualized straight-line base rent by $1.2 million when all of the leases commence.
Our MOB portfolio continues to be resilient, growing NOI in the segment by 4.2% year-over-year to $24.7 million, primarily due to our high-quality MOB acquisitions. A reconciliation of GAAP net income to non-GAAP measures can be found in our investor presentation.
I would now like to turn the call back to Mike for some color on the HTI team and some closing remarks.
Slide 9: Company Highlights – (Mike Weil)
Thanks Scott.
We continue to position HTI for a liquidity event and long-term earnings growth by, among other things, capitalizing on leasing available space and acquiring high-quality MOB properties. Our portfolio continues to demonstrate its resilience, as we collected nearly all the cash rent due in our MOB portfolio in the first quarter, built a robust leasing pipeline and grew NOI in the SHOP portfolio compared to last year. We have an experienced management team that we believe is well positioned to maximize the opportunities created by demographic trends that favor long-term investment in healthcare real estate.
Slide 10: Experienced Leadership Team
We believe we have the right team in place to execute our strategy to drive long-term value.
On the MOB real estate side, David Ruggiero and his team collectively bring over 25 years of experience to HTI’s advisor, evaluating and negotiating hundreds of potential transactions per year while adhering to our strict investment guidelines and underwriting standards. Trent Taylor is the portfolio asset manager and ensures that our existing properties are leased, performing as expected, and that our tenants’ needs are being met by local property managers.
Slide 11: Dedicated SHOP Team
Supplementing the advisor’s leadership team for HTI, John Rimbach and his team collectively bring over 110 years of experience to our SHOP portfolio.
John’s team has extensive experience in the Seniors Housing space and has made significant improvements to this segment of our portfolio, including through interacting with our SHOP operators and advising on potential real estate acquisitions and dispositions. This year Lindsay Gordon and Michelle Stepinsky both joined the SHOP team, bringing vast knowledge and experience to the operations and sales groups at our properties. We are excited to have them as part of the team and look forward to the new perspective they will bring to our portfolio.
Closing Statements – (Mike Weil)
We are pleased with the continued strong, dependable performance of our MOB portfolio and encouraged by the year over year increase in SHOP portfolio NOI, reflecting not only the ongoing recovery of this segment from the impacts of COVID-19, but also the results of our team’s dedication to improving our SHOP facilities, operations, accessibility and attractiveness to seniors and their families. We have built a leasing pipeline that will continue to grow the MOB segment of our portfolio. Our focus remains on the future and positioning HTI for an eventual liquidity event. Thank you for joining us today and thank you for your continued support of HTI.
Operator Closes the Call
The conference has now concluded. If you have submitted questions during today’s webcast, a member of our investor relations group will follow-up to answer your questions. Also, please note that a copy of the presentation and replay of this webcast will be available on the company’s website at www.healthcaretrustinc.com. Thank you for attending today’s presentation. You may now disconnect.
