Healthcare Realty Trust 8K Reports Results for the Fourth Quarter | SEC 13 Feb 19

4Q2018

Supplemental Information

FURNISHED AS OF FEBRUARY 13, 2019 - UNAUDITED

FORWARD LOOKING STATEMENTS & RISK FACTORS

This Supplemental Information report contains disclosures that are “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 and phrases such as “can,” “may,” “payable,” “indicative,” "predictive," “annualized,” “expect,” “expected,” “range of expectations,” "would have been," "budget," and other comparable terms in this report. These forward-looking statements are made as of the date of this report and are not guarantees of future performance. These statements are based on the current plans and expectations of Company management and are subject to a number of unknown risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those described in this release or implied by such forward-looking statements. Such risks and uncertainties include, among other things, the following: changes in the economy; increases in interest rates; the availability and cost of capital at expected rates; changes to facility-related healthcare regulations; 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 and repay loans; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease

space at similar rates as vacancies occur; the Company's ability to renew expiring long-term single-tenant net leases; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; 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; and other legal and operational matters. Other risks, uncertainties and factors that could cause actual results to differ materially from those projected are detailed under the heading “Risk Factors,” in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2018 and other risks described from time to time thereafter in the Company's SEC filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Table of Contents



4		Highlights
5		Salient Facts
6		Corporate Information
7		Balance Sheet
8		Statements of Income
9		FFO, Normalized FFO, & FAD
10		Capital Funding & Commitments
11		Debt Metrics
12		Acquisition & Disposition Activity
13		Re/Development Activity
14		Portfolio
15		Associated Health Systems
16		Top Tenants
17		MOB Proximity to Hospital
18		Lease Maturity, Lease & Building Size
19		Historical Occupancy
20		Occupancy Reconciliation
21		Same Store Leasing Statistics
22		Same Store Performance
23		Reconciliation of NOI
24		Reconciliations of NOI & EBITDA
25		Components of Net Asset Value
26		Components of Expected FFO

Copies of this report may be obtained at www.healthcarerealty.com or by contacting Investor Relations at 615.269.8175 or communications@healthcarerealty.com.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 3

Highlights

QUARTERLY HIGHLIGHTS

Same store cash NOI for the fourth quarter increased 3.6% over the fourth quarter of 2017. For the trailing twelve months ended December 31, 2018, same store cash NOI grew 2.9%:


•	Revenues and revenue per average occupied square foot increased 2.7%.


•	Operating expenses increased 2.3%.


•	Average occupancy remained stable at 89.7%.

Predictive growth measures in the same store multi-tenant portfolio include:


•	In-place contractual rent increases averaged 2.91%, up from 2.80% a year ago, partially attributable to future annual contractual increases of 3.18% for leases commencing in the quarter.


•	Weighted average cash leasing spreads were (0.5%) on 327,000 square feet renewed:


◦	21% (<0% spread)


◦	10% (0-3%)


◦	50% (3-4%)


◦	19% (>4%)


◦	Excluding two tenants totaling approximately 50,000 square feet, or 15% of renewals during the quarter, cash leasing spreads would have been 3.8%.


•	Tenant retention was 82.6%.

Leasing activity in the fourth quarter totaled 473,000 square feet related to 140 leases:


•	341,000 square feet of renewals


•	132,000 square feet of new and expansion leases

Acquisitions totaled $37.0 million in the fourth quarter, comprised 124,000 square feet, and were 80% leased:


•	In December, the Company acquired its corporate headquarters in Nashville for $31.9 million. The Company occupies 34% of the 109,000 square foot multi-tenant office building, which is currently 78% leased.


•	Also in December, the Company paid $5.1 million to purchase a 15,000 square foot surgery center suite on the first floor of a previously acquired medical office building, bringing the Company's ownership in the building to 100%. The 114,000 square foot property is 94% leased and is connected to Ascension Health's St. Alexius Medical Center campus in Chicago.

Dispositions totaled $33.2 million in the fourth quarter, including one inpatient rehab facility in Denver, CO and two medical office buildings located in Cleveland, TN and Tucson, AZ.

Leverage remained steady with net debt to adjusted EBITDA at 5.1 times.

ANNUAL HIGHLIGHTS

Normalized FFO totaled $195.3 million, or $1.57 per diluted common share.

Predictive growth measures in the same store multi-tenant portfolio include:


•	In-place contractual rent increases averaged 2.91%, up from 2.80% a year ago, partially attributable to future annual contractual increases of 3.34% for leases commencing in the year.


•	Weighted average cash leasing spreads were 3.4% on 1,284,000 square feet renewed:


◦	10% (<0% spread)


◦	8% (0-3%)


◦	52% (3-4%)


◦	30% (>4%)


•	Tenant retention averaged 83.9%.

Annual leasing activity totaled 2,080,000 square feet related to 556 leases:


•	1,565,000 square feet of renewals


•	515,000 square feet of new and expansion leases

Net investment activity totaled $48.4 million:


•	$111.5 million of acquisitions


•	$35.6 million of development and redevelopment funding


•	$98.7 million of dispositions

A dividend of $0.30 per common share was declared for the fourth quarter. Dividends paid for 2018 totaled $150.3 million, which equaled 76.9% of normalized FFO and 99.7% of FAD.

OTHER ITEMS OF NOTE


•	The Company expects general and administrative expenses to increase in the first quarter of 2019 over the fourth quarter of 2018 by approximately $0.8 million due to customary increases in payroll taxes, non-cash ESPP expense and healthcare savings account fundings. Approximately $0.7 million is not expected to recur in subsequent quarters.


•	The Company has one remaining property operating agreement that expires in February 2019. The Company recognized $0.2 million of income related to this agreement in the fourth quarter of 2018.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 4

Salient Facts

AS OF DECEMBER 31, 2018



	Properties

	$3.9B invested in 199 properties
	14.8M SF owned in 27 states
	11.2M SF managed by Healthcare Realty
	92.4% medical office and outpatient
	87.6% on/adjacent to hospital campuses
	2.9% same store cash NOI growth (TTM)


	Capitalization

	$5.4B enterprise value as of 2/8/2019
	$4.1B market capitalization as of 2/8/2019
	125.3M shares outstanding
	$0.30 quarterly dividend per share
	BBB/Baa2 credit rating
	27.6% debt to enterprise value at 12/31/2018
	5.1x net debt to adjusted EBITDA




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 5

Corporate Information

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 December 31, 2018, the Company owned 199 real estate properties in 27 states totaling 14.8 million square feet and was valued at approximately $4.9 billion. The Company provided leasing and property management services to 11.2 million square feet nationwide.

CORPORATE HEADQUARTERS

Healthcare Realty Trust Incorporated

3310 West End Avenue, Suite 700

Nashville, Tennessee 37203

Phone 615.269.8175 Fax 615.269.8461

communications@healthcarerealty.com

www.healthcarerealty.com

EXECUTIVE OFFICERS

David R. Emery

Executive Chairman of the Board

Todd J. Meredith

President and Chief Executive Officer

John M. Bryant, Jr.

Executive Vice President and General Counsel

J. Christopher Douglas

Executive Vice President and Chief Financial Officer

Robert E. Hull

Executive Vice President - Investments

ANALYST COVERAGE

BMO Capital Markets

BTIG, LLC

CapitalOne Securities, Inc.

Green Street Advisors, Inc.

J.P. Morgan Securities LLC

Jefferies LLC

JMP Securities LLC

KeyBanc Capital Markets Inc.

Mizuho Securities USA Inc

Morgan Stanley

Raymond James & Associates

Stifel, Nicolaus & Company, Inc.

SunTrust Robinson Humphrey, Inc.

Wells Fargo Securities, LLC

BOARD OF DIRECTORS

David R. Emery

Executive Chairman of the Board

Healthcare Realty Trust Incorporated

Nancy H. Agee

President and Chief Executive Officer

Carilion Clinic

Edward H. Braman

Retired Audit Partner

Ernst & Young LLP

Peter F. Lyle

Vice President

Medical Management Associates, Inc.

Todd J. Meredith

President and Chief Executive Officer

Healthcare Realty Trust Incorporated

Edwin B. Morris III

Retired Managing Director

Morris & Morse Company, Inc.

J. Knox Singleton

Retired Chief Executive Officer

Inova Health System

Bruce D. Sullivan

Retired Audit Partner

Ernst & Young LLP

Christann M. Vasquez

President

Dell Seton Medical Center at University of Texas

Seton Medical Center Austin

Seton Shoal Creek Hospital




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 6

Balance Sheet

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ASSETS
	4Q 2018			3Q 2018			2Q 2018			1Q 2018			4Q 2017
Real estate properties
Land		$230,206			$217,322			$214,755			$201,090			$201,283
Buildings, improvements and lease intangibles	3,675,415			3,669,852			3,668,938			3,600,826			3,601,460
Personal property	10,696			10,454			10,355			10,205			10,314
Construction in progress	33,107			26,960			23,102			14,990			5,458
Land held for development	24,647			24,645			24,633			20,123			20,123
Total real estate properties	3,974,071			3,949,233			3,941,783			3,847,234			3,838,638
Less accumulated depreciation and amortization	(1,015,174		)	(989,585		)	(959,732		)	(924,304		)	(897,430		)
Total real estate properties, net	2,958,897			2,959,648			2,982,051			2,922,930			2,941,208
Cash and cash equivalents	8,381			10,027			7,414			3,796			6,215
Assets held for sale, net	9,272			8,826			8,788			36,118			33,147
Other assets	214,697			222,582			216,437			220,576			213,015
Total assets		$3,191,247			$3,201,083			$3,214,690			$3,183,420			$3,193,585

LIABILITIES AND STOCKHOLDERS' EQUITY
	4Q 2018			3Q 2018			2Q 2018			1Q 2018			4Q 2017
Liabilities
Notes and bonds payable		$1,345,984			$1,344,759			$1,335,732			$1,306,951			$1,283,880
Accounts payable and accrued liabilities	80,411			72,927			66,490			62,318			70,995
Liabilities of properties held for sale	587			141			340			201			93
Other liabilities	47,623			43,004			44,072			49,402			48,734
Total liabilities	1,474,605			1,460,831			1,446,634			1,418,872			1,403,702
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; 50,000 shares authorized	—			—			—			—			—
Common stock, $.01 par value; 300,000 shares authorized	1,253			1,252			1,252			1,252			1,251
Additional paid-in capital	3,180,284			3,181,263			3,178,514			3,175,809			3,173,429
Accumulated other comprehensive income (loss)	(902		)	473			5			(639		)	(1,299		)
Cumulative net income attributable to common stockholders	1,088,119			1,071,804			1,065,256			1,027,528			1,018,348
Cumulative dividends	(2,552,112		)	(2,514,540		)	(2,476,971		)	(2,439,402		)	(2,401,846		)
Total stockholders' equity	1,716,642			1,740,252			1,768,056			1,764,548			1,789,883
Total liabilities and stockholders' equity		$3,191,247			$3,201,083			$3,214,690			$3,183,420			$3,193,585




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 7

Statements of Income

DOLLARS IN THOUSANDS




	4Q 2018			3Q 2018			2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017
Revenues
Rental income		$111,149			$111,452			$109,566			$110,229			$105,806			$105,078			$103,384			$102,709
Other operating	2,019			2,010			2,068			1,895			1,943			1,947			1,934			1,935
	113,168			113,462			111,634			112,124			107,749			107,025			105,318			104,644
Expenses
Property operating	42,815			44,135			41,737			41,818			40,590			40,628			38,184			37,852
General and administrative	8,534			8,504			8,373			9,101			8,272			8,021			8,005			8,694
Acquisition and pursuit costs ¹	200			141			120			277			302			507			785			586
Depreciation and amortization	42,437			42,061			40,130			39,573			37,324			35,873			34,823			34,452
Bad debts, net of recoveries	18			(62		)	104			—			(17		)	4			105			66
	94,004			94,779			90,464			90,769			86,471			85,033			81,902			81,650
Other income (expense)
Gain on sales of real estate properties	10,787			1,288			29,590			—			—			(7		)	16,124			23,408
Interest expense	(13,602		)	(13,464		)	(13,069		)	(12,668		)	(13,707		)	(14,107		)	(14,315		)	(14,272		)
Loss on extinguishment of debt	—			—			—			—			(44,985		)	—			—			—
Impairment of real estate assets	—			—			—			—			2			(5,059		)	(5		)	(323		)
Interest and other income, net	(35		)	41			38			493			261			354			4			38
	(2,850		)	(12,135		)	16,559			(12,175		)	(58,429		)	(18,819		)	1,808			8,851
Net income (loss)		$16,314			$6,548			$37,729			$9,180			($37,151	)		$3,173			$25,224			$31,845


1	Includes third party and travel costs related to the pursuit of acquisitions and developments.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 8

FFO, Normalized FFO, & FAD ^{1, 2}

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA




	4Q 2018			3Q 2018			2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017
Net income (loss)		$16,314			$6,548			$37,729			$9,180			($37,151	)		$3,173			$25,224			$31,845
Gain on sales of real estate assets	(10,787		)	(1,288		)	(29,590		)	—			—			7			(16,124		)	(23,408		)
Impairments of real estate assets	—			—			—			—			(2		)	5,059			5			323
Real estate depreciation and amortization	43,380			42,723			40,747			40,003			37,869			36,478			35,421			35,555
FFO		$48,907			$47,983			$48,886			$49,183			$716			$44,717			$44,526			$44,315
Acquisition and pursuit costs ³	200			141			120			277			302			507			785			586
Revaluation of awards upon retirement	—			70			—			—			—			—			—			—
Forfeited earnest money received	—			—			—			(466		)	—			—			—			—
Debt financing costs	—			—			—			—			45,773			—			—			—
Normalized FFO		$49,107			$48,194			$49,006			$48,994			$46,791			$45,224			$45,311			$44,901
Non-real estate depreciation and amortization	1,439			1,506			1,481			1,466			1,439			1,388			1,369			1,355
Provision for bad debt, net	18			(62		)	104			—			(17		)	4			105			66
Straight-line rent income, net	(302		)	(413		)	(683		)	(1,330		)	(201		)	(1,156		)	(1,623		)	(1,595		)
Stock-based compensation	2,601			2,605			2,593			2,822			2,531			2,429			2,453			2,614
Non-cash items	3,756			3,636			3,495			2,958			3,752			2,665			2,304			2,440
2nd generation TI	(10,367		)	(6,950		)	(7,755		)	(5,867		)	(6,929		)	(4,481		)	(3,680		)	(5,277		)
Leasing commissions paid	(2,182		)	(1,139		)	(1,947		)	(1,851		)	(2,705		)	(1,826		)	(984		)	(1,584		)
Capital expenditures	(2,817		)	(6,229		)	(7,117		)	(4,184		)	(6,400		)	(4,203		)	(5,667		)	(2,520		)
FAD		$37,497			$37,512			$35,682			$40,050			$34,509			$37,379			$37,284			$37,960
Dividends paid		$37,571			$37,570			$37,569			$37,556			$37,467			$34,964			$34,961			$34,937
FFO per common share - diluted		$0.39			$0.39			$0.39			$0.40			$0.01			$0.37			$0.38			$0.38
Normalized FFO per common share - diluted		$0.40			$0.39			$0.40			$0.40			$0.38			$0.38			$0.39			$0.39
FFO weighted average common shares outstanding - diluted⁴	124,240			124,192			123,983			123,984			124,125			120,081			115,674			115,507

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 (including amortization of leasing commissions), and after adjustments for unconsolidated partnerships and joint ventures.”

FFO, Normalized 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 is 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.


3	Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.


4	Diluted weighted average common shares outstanding for the three months ended December 31, 2018 includes the dilutive effect of nonvested share-based awards outstanding of 863,261.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 9

Capital Funding & Commitments

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ACQUISITION AND RE/DEVELOPMENT FUNDING
	4Q 2018		3Q 2018		2Q 2018		1Q 2018			4Q 2017
Acquisitions	$36,950		$4,150		$70,350			$—		$246,568
Re/development	6,895		5,016		10,998		12,658			4,010
1st gen. TI & acq. cap. ex. ¹	3,394		3,866		4,668		1,194			1,271

MAINTENANCE CAPITAL EXPENDITURES
	4Q 2018		3Q 2018		2Q 2018		1Q 2018			4Q 2017
$ Spent
2nd generation TI	$10,367		$6,950		$7,755		$5,867			$6,929
Leasing commissions paid	2,182		1,139		1,947		1,851			2,705
Capital expenditures	2,817		6,229		7,117		4,184			6,400
	$15,366		$14,318		$16,819		$11,902			$16,034
% of NOI
2nd generation TI	14.8	%	10.1	%	11.2	%	8.5		%	10.4	%
Leasing commissions paid	3.1	%	1.6	%	2.8	%	2.7		%	4.0	%
Capital expenditures	4.0	%	9.0	%	10.3	%	6.1		%	9.6	%
	21.9	%	20.7	%	24.3	%	17.3		%	24.0	%

LEASING COMMITMENTS
	4Q 2018		3Q 2018		2Q 2018		1Q 2018			4Q 2017
Renewals
Square feet	341,032		572,554		346,539		309,665			394,721
2nd generation TI/square foot/lease year	$1.69		$1.50		$2.48		$1.86			$1.67
Leasing commissions/square foot/lease year	$0.49		$0.75		$0.57		$0.56			$0.59
WALT (in months) ²	51.4		34.0		75.6		51.8			46.0

New leases
Square feet	104,248		79,545		95,542		140,884			111,788
2nd generation TI/square foot/lease year	$4.72		$4.28		$4.04		$5.42			$4.74
Leasing commissions/square foot/lease year	$1.23		$1.14		$0.84		$1.06			$0.92
WALT (in months) ²	72.8		58.5		63.8		93.8			90.7

All
Square feet	445,280		652,099		442,081		450,549			506,509
2nd generation TI/square foot/lease year	$2.60		$2.03		$2.77		$3.47			$2.77
Leasing commissions/square foot/lease year	$0.72		$0.82		$0.62		$0.79			$0.71
Leasing commitments as a % of annual net rent	16.0	%	12.0	%	15.8	%	20.7		%	16.0	%
WALT (in months) ²	56.4		37.0		73.0		64.9			55.9


1	Planned capital expenditures for acquisitions include expected near-term fundings that were contemplated as part of the acquisition.


2	WALT = weighted average lease term.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 10

Debt Metrics

DOLLARS IN THOUSANDS



SUMMARY OF INDEBTEDNESS AS OF DECEMBER 31, 2018
	INTEREST EXPENSE	PRINCIPAL BALANCE	BALANCE ¹	MONTHS TO MATURITY	CONTRACTUAL RATE		EFFECTIVE RATE
Senior notes due 2023	$2,396	$250,000	$248,117	52	3.75	%	3.95	%
Senior notes due 2025 ²	2,469	250,000	248,278	76	3.88	%	4.08	%
Senior notes due 2028	2,772	300,000	295,198	108	3.63	%	3.84	%
Total senior notes outstanding	$7,637	$800,000	$791,593	80	3.74	%	3.95	%
$700 million unsecured credit facility due 2020	2,189	262,000	262,000	19	LIBOR + 1.00%		3.50	%
Unsecured term loan facility due 2022 ³	1,316	150,000	149,183	48	LIBOR + 1.10%		3.53	%
Mortgage notes payable, net	1,758	143,115	143,208	61	4.96	%	4.79	%
Total outstanding notes and bonds payable	$12,900	$1,355,115	$1,345,984	63	3.80	%	3.91	%
Interest cost capitalization	(267)
Unsecured credit facility fee and deferred financing costs	969
Total quarterly consolidated interest expense	$13,602



SELECTED FINANCIAL DEBT COVENANTS ⁴
	CALCULATION	REQUIREMENT	YEAR ENDED 12/31
Revolving credit facility and term loan
Leverage ratio	Total debt/total capital	Not greater than 60%	33.2	%
Secured leverage ratio	Total secured debt/total capital	Not greater than 30%	3.5	%
Unencumbered leverage ratio	Unsecured debt/unsecured real estate	Not greater than 60%	33.8	%
Fixed charge coverage ratio	EBITDA/fixed charges	Not less than 1.50x	4.3x
Unsecured coverage ratio	Unsecured EBITDA/unsecured interest	Not less than 1.75x	4.9x
Construction and development	CIP/total assets	Not greater than 15%	1.0	%
Asset investments	Mortgages & unimproved land/total assets	Not greater than 20%	1.0	%

Senior notes ⁵
Incurrence of total debt	Total debt/total assets	Not greater than 60%	32.9	%
Incurrence of debt secured by any lien	Secured debt/total assets	Not greater than 40%	3.5	%
Maintenance of total unsecured assets	Unencumbered assets/unsecured debt	Not less than 150%	307.3	%
Debt service coverage	EBITDA/interest expense	Not less than 1.5x	4.8x

Other
Net debt to adjusted EBITDA ⁶	Net debt (debt less cash)/adjusted EBITDA	Not required	5.1x
Debt to enterprise value ⁷	Debt/enterprise value	Not required	27.6	%


1	Balances are reflected net of discounts and deferred financing costs and include premiums.


2	The effective interest rate includes the impact of the $1.7 million settlement of a forward-starting interest rate swap that is included in accumulated other comprehensive income on the Company's Condensed Consolidated Balance Sheets.


3	The effective interest rate includes the impact of interest rate swaps on $25.0 million and $50.0 million of the outstanding balance at a rate of 2.18% and 2.46%, respectively (plus the applicable margin rate, currently 110 basis points).


4	Does not include all financial and non-financial covenants and restrictions that are required by the Company's various debt agreements.


5	The senior note covenants calculations apply to the senior notes due 2025 and 2028. The senior notes due 2023 have similar covenants but contain a less restrictive definition of total assets.


6	Adjusted EBITDA is based on the current quarter results, annualized. See page 24 for a reconciliation of adjusted EBITDA.


7	Based on the closing price of $28.44 on December 31, 2018 and 125,279,455 shares outstanding.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 11

Acquisition & Disposition Activity

DOLLARS IN THOUSANDS



ACQUISITION ACTIVITY
LOCATION	TYPE ¹	MILES TO CAMPUS	ASSOCIATED HEALTH SYSTEM	CLOSING	PURCHASE PRICE	SQUARE FEET	LEASED %		CAP RATE ²
Seattle, WA	MOB	0.04	Overlake Health	5/4/2018	$7,750	13,314	100	%	5.0	%
Denver, CO	MOB	0.06	CHI	5/18/2018	12,068	93,992	70	%	5.5	%
Denver, CO	OFC	0.06	CHI	5/18/2018	12,932	93,869	87	%	7.3	%
Oklahoma City, OK	MOB	0.10	Integris Health	5/21/2018	11,400	82,647	96	%	5.9	%
Seattle, WA	MOB	0.00	MultiCare Health	6/29/2018	26,200	86,942	91	%	5.7	%
Denver, CO	MOB	0.05	CHI	8/24/2018	4,150	17,084	100	%	6.0	%
Nashville, TN	OFC	NA	NA	12/4/2018	31,865	108,691	78	%	5.0	%
Chicago, IL	MOB	0.00	Ascension	12/19/2018	5,085	14,883	100	%	5.9	%
Total					$111,450	511,422	85	%	5.7	%



DISPOSITION ACTIVITY
LOCATION	TYPE ¹	MILES TO CAMPUS	ASSOCIATED HEALTH SYSTEM	CLOSING	SALES PRICE	SQUARE FEET	LEASED %		CAP RATE ³
Roanoke, VA ⁴	MOB, OFC	Various	HCA	4/26/2018	$46,236	460,881	75	%	13.3	%
Michigan ⁵	SNF	NA	NA	6/27/2018	9,516	121,672	100	%	25.5	%
St. Louis, MO	MOB	1.43	None	8/30/2018	9,754	70,893	76	%	4.3	%
Denver, CO	IRF	NA	NA	12/20/2018	16,900	34,068	100	%	6.9	%
Cleveland, TN	MOB	0.00	Community Health	12/21/2018	13,340	81,382	83	%	6.5	%
Tucson, AZ	MOB	0.00	Tenet	12/27/2018	2,945	37,310	80	%	8.8	%
Total					$98,691	806,206	81	%	11.4	%



HISTORICAL INVESTMENT ACTIVITY
	ACQUISITIONS		MORTGAGE FUNDING			CONSTRUCTION MORTGAGE FUNDING		RE/DEVELOPMENT FUNDING		TOTAL INVESTMENTS		DISPOSITIONS
2014	$85,077			$1,900		$1,244		$4,384		$92,605		$34,840
2015	187,216		—			—		27,859		215,075		157,975
2016	241,939		—			—		45,343		287,282		94,683
2017	327,167		—			—		32,305		359,472		122,700
2018	111,450		—			—		35,567		147,017		98,691
Average (2014-2018)	190,569		380			249		29,092		220,290		101,778
% of Total	86.5	%	0.2		%	0.1	%	13.2	%	100.0	%


1	MOB = Medical office building; OFC = Office; SNF = Skilled nursing facility, IRF = Inpatient rehabilitation facility


2	For acquisitions, cap rate represents the forecasted first year cash NOI / purchase price plus acquisition costs and expected first year capital expenditures.


3	For dispositions, cap rate represents the in-place cash NOI / sales price.


4	Includes five single-tenant net lease medical office buildings and two multi-tenant buildings. These properties were sold subject to a fixed price purchase option.


5	Includes five single-tenant net lease skilled nursing facilities. Sales price includes $0.5 million of forfeited earnest money from a prior terminated transaction.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 12

Re/Development Activity

DOLLARS IN THOUSANDS



RE/DEVELOPMENT ACTIVITY
LOCATION	CAMPUS LOCATION	SQUARE FEET	BUDGET	FUNDINGS THRU 12/31/2018	REMAINING FUNDINGS	LEASED %		EXPECTED CASH NOI AT LEASED %	EXPECTED STABILIZED YIELD
Same store redevelopment
Charlotte, NC ¹	ON	38,000	$12,000	$9,586	$2,414	81	%	$159	7.2	%
Development
Seattle, WA	ON	151,000	64,120	23,821	40,299	60	%	617	7.0	%
Total		189,000	$76,120	$33,407	$42,713	64	%	$776



RE/DEVELOPMENT EXPECTED CASH NOI AND OCCUPANCY RAMP UP TO LEASED %
LOCATION	INITIAL OCCUPANCY	Q1 2019		Q2 2019		Q3 2019		Q4 2019		Q1 2020		Q2 2020
Same store redevelopment
Charlotte, NC ¹		��
Cash NOI		—		$25		$159		$159		$159		$160
Average Occupancy	Q2 2019	—	%	41	%	81	%	81	%	81	%	81	%
Development
Seattle, WA
Cash NOI		—		—		—		$(62)		$407		$617
Average Occupancy	Q4 2019	—	%	—	%	—	%	10	%	40	%	60	%
Total Cash NOI		—		$25		$159		$97		$566		$777


1	Redevelopment project is a 38,000 square foot expansion to an existing medical office building. When complete, the building will be 204,000 square feet.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 13

Portfolio

DOLLARS IN THOUSANDS



MARKETS (BY SQUARE FEET)
				MOB 92.4%				NON-MOB 7.6%
MARKET	MSA RANK	INVESTMENT ¹	COUNT	MULTI-TENANT		SINGLE-TENANT		INPATIENT REHAB ²		INPATIENT SURGICAL		OFFICE		TOTAL		% OF TOTAL
Dallas, TX	4	$481,418	25	2,004,574						156,245		145,365		2,306,184		15.6	%
Seattle, WA	15	468,166	19	1,049,651		67,510								1,117,161		7.5	%
Nashville, TN	36	197,351	6	766,523								108,691		875,214		5.9	%
Charlotte, NC	22	167,221	16	820,457										820,457		5.5	%
Los Angeles, CA	2	185,521	12	594,163				63,000						657,163		4.4	%
Denver, CO	19	148,547	9	557,368								93,869		651,237		4.4	%
Houston, TX	5	132,667	8	533,857								57,170		591,027		4.0	%
Richmond, VA	44	147,915	7	548,801										548,801		3.7	%
Des Moines, IA	87	139,827	7	197,994		181,961						152,655		532,610		3.6	%
Memphis, TN	43	96,398	7	515,876										515,876		3.5	%
Atlanta, GA	9	190,219	8	476,054		19,732								495,786		3.4	%
San Antonio, TX	24	95,979	7	483,811										483,811		3.3	%
Indianapolis, IN	33	75,659	3	382,695										382,695		2.6	%
Austin, TX	30	106,171	5	375,333										375,333		2.5	%
Chicago, IL	3	92,128	3	352,800										352,800		2.4	%
Oklahoma City, OK	41	120,889	3	151,507		200,000								351,507		2.4	%
Washington, DC	6	101,194	4	348,998										348,998		2.4	%
Honolulu, HI	56	142,523	3	298,427										298,427		2.0	%
San Francisco, CA	12	119,708	3	286,270										286,270		1.9	%
Miami, FL	7	57,488	4	241,980										241,980		1.6	%
Colorado Springs, CO	79	53,254	3	241,224										241,224		1.6	%
Other (20 markets)		590,574	37	1,650,463		322,482		165,123		186,000		—		2,324,068		15.8	%
Total		$3,910,817	199	12,878,826		791,685		228,123		342,245		557,750		14,798,629		100.0	%
Number of properties				178		11		3		2		5		199
% of square feet				87.0	%	5.4	%	1.5	%	2.3	%	3.8	%	100.0	%
Investment¹				$3,284,891		$240,386		$42,194		$208,725		$134,621		$3,910,817
Quarterly cash NOI				$57,083		$4,855		$1,404		$4,767		$1,431		$69,540
% of cash NOI				82.1	%	7.0	%	2.0	%	6.9	%	2.0	%	100.0	%



BY BUILDING TYPE
	MOB TOTAL		MULTI-TENANT		SINGLE-TENANT		TOTAL
Number of properties	189		183		16		199
Square feet	13,670,511		13,436,576		1,362,053		14,798,629
% of square feet	92.4	%	90.8	%	9.2	%	100.0	%
Occupancy %	87.3	%	86.5	%	100.0	%	87.8	%
Investment¹	$3,525,277		$3,419,512		$491,305		$3,910,817
Quarterly cash NOI	$61,938		$58,514		$11,026		$69,540
% of cash NOI	89.1	%	84.1	%	15.9	%	100.0	%


1	Excludes gross assets held for sale, land held for development, construction in progress and corporate property.


2	Includes inpatient rehab facilities and a skilled nursing facility.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 14

Associated Health Systems ¹



MOB PORTFOLIO (BY SQUARE FEET)
			ASSOCIATED 95.4%²
HEALTH SYSTEM	SYSTEM RANK ³	CREDIT RATING	ON		ADJACENT ⁴		ANCHORED ⁵		OFF CAMPUS		TOTAL MOB	% OF TOTAL MOB
Baylor Scott & White Health	19	AA-/Aa3	1,834,256		142,759		163,188		—		2,140,203	15.7	%
Ascension Health	3	AA+/Aa2	1,080,681		156,328		—		—		1,237,009	9.0	%
Catholic Health Initiatives	8	BBB+/Baa1	807,182		291,201		95,486		—		1,193,869	8.7	%
Atrium Health	33	AA-/Aa3	353,537		98,066		313,513		—		765,116	5.6	%
Tenet Healthcare Corporation	6	B/B2	583,767		67,790		30,096		—		681,653	5.0	%
Bon Secours Health System	79	A+/A2	548,801		—		—		—		548,801	4.0	%
WellStar Health System	83	A/A2	476,054		—		—		—		476,054	3.5	%
Baptist Memorial Health Care	92	BBB+/--	424,306		—		39,345		—		463,651	3.4	%
HCA	2	BB+/Ba2	177,340		177,155		78,305		—		432,800	3.2	%
Indiana University Health	26	AA/Aa2	280,129		102,566		—		—		382,695	2.8	%
University of Colorado Health	66	AA-/Aa3	150,291		161,099		33,850		—		345,240	2.5	%
Trinity Health	5	AA-/Aa3	267,952		73,331		—		—		341,283	2.5	%
Providence St. Joseph Health	4	AA-/Aa3	176,854		129,181		—		—		306,035	2.2	%
UW Medicine (Seattle)	49	AA+/Aaa	194,536		102,540		—		—		297,076	2.2	%
Medstar Health	37	A/A2	241,739		—		—		—		241,739	1.8	%
Advocate Health Care	25	AA/Aa3	142,955		95,436		—		—		238,391	1.7	%
Overlake Health System	299	A/A2	191,051		39,659		—		—		230,710	1.7	%
Memorial Hermann	44	A+/A1	—		206,090		—		—		206,090	1.5	%
Mercy (St. Louis)	35	AA-/Aa3	—		—		200,000		—		200,000	1.4	%
MultiCare Health System	105	AA-/Aa3	154,452		33,169		—		—		187,621	1.4	%
Sutter Health	13	AA-/Aa3	175,591		—		—		—		175,591	1.3	%
Other (20 credit rated systems)			979,112		619,977		110,339		—		1,709,428	12.5	%
Subtotal - credit rated⁶			9,240,586		2,496,347		1,064,122		—		12,801,055	93.6	%
Non-credit rated			238,710		—		—		630,746		869,456	6.4	%
Total			9,479,296		2,496,347		1,064,122		630,746		13,670,511	100.0	%
% of total			69.3	%	18.3	%	7.8	%	4.6	%


1	Excludes construction in progress and assets classified as held for sale.


2	Includes total square feet of buildings located on-campus, adjacent and off-campus/anchored by healthcare systems.


3	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.


4	The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.


5	Includes buildings where health systems lease 40% or more of the property.


6	Based on square footage, 84.6% is associated with an investment-grade rated healthcare provider.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 15

Top Tenants ¹




					LEASED SQUARE FEET
TENANT	SYSTEM RANK ²	CREDIT RATING	# OF PROPERTIES	# OF LEASES	MOB	INPATIENT	TOTAL	% OF TOTAL LEASED		% OF TTM REVENUE
Baylor Scott & White Health	19	AA-/Aa3	22	156	966,248	156,245	1,122,493	8.6	%	9.3	%
Atrium Health	33	AA-/Aa3	16	80	611,304	—	611,304	4.7	%	4.1	%
Mercy (St. Louis)	35	AA-/Aa3	2	2	200,000	186,000	386,000	3.0	%	4.1	%
Catholic Health Initiatives	8	BBB+/Baa1	16	73	570,513	—	570,513	4.4	%	3.9	%
Ascension Health	3	AA+/Aa2	11	70	420,833	—	420,833	3.2	%	2.8	%
Indiana University Health	26	AA/Aa2	3	45	290,207	—	290,207	2.2	%	2.2	%
Bon Secours Health System	79	A+/A2	7	65	303,105	—	303,105	2.3	%	2.1	%
University of Colorado Health	66	AA-/Aa3	5	17	254,581	—	254,581	2.0	%	2.0	%
WellStar Health System	83	A/A2	7	42	271,364	—	271,364	2.1	%	1.9	%
UW Medicine (Seattle)	49	AA+/Aaa	5	23	177,995	—	177,995	1.4	%	1.7	%
Tenet Healthcare Corporation	6	B/B2	13	41	162,530	63,000	225,530	1.7	%	1.7	%
Proliance Surgeons	-	-	6	15	126,028	—	126,028	1.0	%	1.5	%
Baptist Memorial Health Care	92	BBB+/--	6	23	163,940	—	163,940	1.3	%	1.5	%
Medstar Health	37	A/A2	3	51	149,398	—	149,398	1.2	%	1.2	%
Trinity Health	5	AA-/Aa3	3	31	163,158	—	163,158	1.3	%	1.2	%
Providence St. Joseph Health	4	AA-/Aa3	6	29	103,432	—	103,432	0.8	%	1.1	%
Eating Recovery Center	-	B-/B3	4	6	100,946	—	100,946	0.8	%	1.0	%
MultiCare Health System	105	AA-/Aa3	3	14	118,506	—	118,506	0.9	%	0.9	%
Hawaii Pacific Health	176	--/A1	3	32	85,292	—	85,292	0.7	%	0.8	%
Inova Health System	77	AA+/Aa2	1	5	74,865	—	74,865	0.6	%	0.8	%
Labcorp of America	-	BBB/Baa2	20	22	172,589	—	172,589	1.3	%	0.8	%
Davita Kidney Care	-	BB/Ba2	12	14	108,651	—	108,651	0.8	%	0.8	%
HCA	2	BB+/Ba2	8	14	88,729	—	88,729	0.7	%	0.7	%
Advocate Health Care	25	AA/Aa3	2	11	63,797	—	63,797	0.5	%	0.6	%
Overlake Health System	299	A/A2	3	7	61,320	—	61,320	0.5	%	0.6	%
Total				888	5,809,331	405,245	6,214,576	48.0	%	49.3	%


1	Excludes construction in progress and assets classified as held for sale.


2	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 16

MOB Proximity to Hospital ^{1, 2}



MEDICAL OFFICE BUILDINGS BY LOCATION
	4Q 2018		3Q 2018		2Q 2018		1Q 2018		4Q 2017		3Q 2017
On campus	69.3	%	69.6	%	69.3	%	69.1	%	69.1	%	68.4	%
Adjacent to campus ³	18.3	%	18.1	%	17.9	%	17.6	%	17.6	%	17.5	%
Total on/adjacent	87.6	%	87.7	%	87.2	%	86.7	%	86.7	%	85.9	%
Off campus - anchored by health system ⁴	7.8	%	7.7	%	7.7	%	7.7	%	7.7	%	8.4	%
Off campus	4.6	%	4.6	%	5.1	%	5.6	%	5.6	%	5.7	%
	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



DISTANCE TO HOSPITAL CAMPUS
									GROUND LEASE PROPERTIES
GREATER THAN	LESS THAN OR EQUAL TO	# OF PROPERTIES	SQUARE FEET	% OF TOTAL		CUMULATIVE %		CAMPUS PROXIMITY	SQUARE FEET	% OF TOTAL
	0.00	121	9,479,296	69.3	%	69.3	%	On campus	7,513,779	89.7	%
0.00	250 yards	23	1,362,259	10.0	%	79.3	%	Adjacent ³	80,525	1.0	%
250 yards	0.25 miles	20	1,134,088	8.3	%	87.6	%	Adjacent ³	120,036	1.4	%
0.25 miles	0.50	1	124,925	0.9	%	88.5	%	Off campus	124,925	1.5	%
0.50	1.00	2	280,873	2.1	%	90.6	%		—	—	%
1.00	2.00	5	519,446	3.8	%	94.4	%		319,446	3.8	%
2.00	5.00	8	338,246	2.5	%	96.9	%		13,818	0.2	%
5.00	10.00	5	275,189	2.0	%	98.9	%		205,631	2.4	%
10.00		4	156,189	1.1	%	100.0	%		—	—	%
Total		189	13,670,511	100.0	%				8,378,160	100.0	%


1	Excludes construction in progress and assets classified as held for sale.


2	Proximity to hospital campus includes acute care hospitals with inpatient beds. The Company does not consider inpatient rehab hospitals (IRFs), skilled nursing facilities (SNFs) or long-term acute care hospitals (LTACHs) to be hospital campuses for distance calculations.


3	The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.


4	Includes buildings where health systems lease 40% or more of the property.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 17

Lease Maturity, Lease & Building Size ¹



LEASE MATURITY SCHEDULE
	MULTI-TENANT				SINGLE-TENANT				TOTAL
	# OF LEASES	SQUARE FEET	% OF SQUARE FEET		# OF LEASES	SQUARE FEET	% OF SQUARE FEET		# OF LEASES	SQUARE FEET	% OF TOTAL SQUARE FEET		% OF BASE REVENUE ²
2019	731	2,699,438	23.2	%	2	153,123	11.3	%	733	2,852,561	22.0	%	21.4	%
2020	484	1,816,664	15.6	%	1	83,318	6.1	%	485	1,899,982	14.6	%	14.3	%
2021	414	1,468,849	12.6	%	—	—	—	%	414	1,468,849	11.3	%	11.2	%
2022	315	1,338,310	11.5	%	1	58,285	4.3	%	316	1,396,595	10.8	%	10.6	%
2023	306	1,335,053	11.5	%	—	—	—	%	306	1,335,053	10.3	%	10.7	%
2024	167	943,981	8.1	%	—	—	—	%	167	943,981	7.3	%	6.4	%
2025	93	632,077	5.5	%	2	91,561	6.7	%	95	723,638	5.5	%	5.4	%
2026	70	226,921	2.0	%	—	—	—	%	70	226,921	1.7	%	1.7	%
2027	60	283,373	2.4	%	2	342,245	25.1	%	62	625,618	4.8	%	7.3	%
2028	91	520,257	4.5	%	2	235,419	17.3	%	93	755,676	5.8	%	6.0	%
Thereafter	71	363,427	3.1	%	6	398,102	29.2	%	77	761,529	5.9	%	5.0	%
Total leased	2,802	11,628,350	86.5	%	16	1,362,053	100.0	%	2,818	12,990,403	87.8	%	100.0	%
Total building		13,436,576	100.0	%		1,362,053	100.0	%		14,798,629	100.0	%
WALTR (months) ³		41.4				96.4				47.2
WALT (months) ³		89.4				162.7				97.0



# OF LEASES BY SIZE			BY BUILDING SIZE
LEASED SQUARE FEET	MULTI-TENANT ⁴	SINGLE-TENANT	BUILDING SQUARE FEET	% OF TOTAL		TOTAL SQUARE FOOTAGE	AVERAGE SQUARE FEET	# OF PROPERTIES
0 - 2,500	1,491	—	>100,000	42.3	%	6,267,300	145,751	43
2,501 - 5,000	690	—	<100,000 and >75,000	26.4	%	3,901,301	86,696	45
5,001 - 7,500	216	—	<75,000 and >50,000	16.7	%	2,469,882	63,330	39
7,501 - 10,000	136	—	<50,000 and >25,000	11.8	%	1,744,795	37,930	46
10,001 +	269	16	<25,000	2.8	%	415,351	15,975	26
Total Leases	2,802	16	Total	100.0	%	14,798,629	74,365	199


1	Excludes land held for development, construction in progress, corporate property and assets classified as held for sale.


2	Represents the current annualized minimum rents on in-place leases, excluding the impact of potential lease renewals and sponsor support payments under financial support arrangements and straight-line rent.


3	WALTR = weighted average lease term remaining; WALT = weighted average lease term.


4	The average lease size in the multi-tenant properties is 4,150 square feet.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 18

Historical Occupancy ¹

DOLLARS IN THOUSANDS



SAME STORE PROPERTIES
	4Q 2018		3Q 2018		2Q 2018		1Q 2018		4Q 2017
Multi-tenant
Investment	$2,897,873		$2,833,607		$2,738,045		$2,708,228		$2,665,547
Number of properties	151		145		144		143		142
Total building square feet	11,490,212		11,341,527		11,221,175		11,236,857		11,203,468
Period end % occupied	88.6	%	88.5	%	88.3	%	87.9	%	88.0	%
Single-tenant
Investment	$471,319		$482,727		$481,727		$473,636		$486,602
Number of properties	14		15		15		14		19
Total building square feet	1,307,713		1,341,781		1,341,781		1,306,362		1,428,034
Period end % occupied	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total same store properties
Investment	$3,369,192		$3,316,334		$3,219,772		$3,181,864		$3,152,149
Number of properties	165		160		159		157		161
Total building square feet	12,797,925		12,683,308		12,562,956		12,543,219		12,631,502
Period end % occupied	89.8	%	89.7	%	89.6	%	89.2	%	89.4	%

PROPERTIES NOT IN SAME STORE
	4Q 2018		3Q 2018		2Q 2018		1Q 2018		4Q 2017
Acquisitions ²
Investment	$437,835		$464,185		$557,434		$526,129		$563,499
Number of properties	22		26		27		24		25
Total building square feet	1,381,323		1,470,154		1,644,315		1,383,200		1,452,912
Period end % occupied	92.5	%	91.9	%	92.7	%	92.7	%	93.0	%
Development completions
Investment	$29,375		$29,122		$28,970		$31,929		$31,627
Number of properties	1		1		1		2		2
Total building square feet	99,957		99,957		99,957		112,837		112,837
Period end % occupied	38.4	%	38.4	%	29.9	%	34.9	%	34.9	%
% leased	41.8	%	41.8	%	41.8	%	48.4	%	45.4	%
Reposition ³
Investment	$74,415		$82,354		$82,251		$66,538		$60,179
Number of properties	11		14		14		13		13
Total building square feet	519,424		574,396		574,396		471,604		435,281
Period end % occupied	35.7	%	47.0	%	48.5	%	47.6	%	47.7	%

TOTAL PROPERTIES
	4Q 2018		3Q 2018		2Q 2018		1Q 2018		4Q 2017
Investment	$3,910,817		$3,891,995		$3,888,427		$3,806,460		$3,807,454
Number of properties	199		201		201		196		201
Total building square feet	14,798,629		14,827,815		14,881,624		14,510,860		14,632,532
Period end % occupied	87.8	%	87.9	%	87.9	%	87.7	%	88.1	%


1	Excludes land held for development, construction in progress, corporate property and assets classified as held for sale.


2	Acquisition includes properties acquired within the last 8 quarters of the period presented and are excluded from same store.


3	Reposition includes properties that meet any of the Company-defined criteria: properties having less than 60% occupancy that is expected to last at least two quarters; properties that experience a loss of occupancy over 30% in a single quarter; or properties with negative net operating income that is expected to last at least two quarters.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 19

Occupancy Reconciliation

SQUARE FEET



SEQUENTIAL
	PORTFOLIO								SAME STORE
	COUNT		OCCUPIED		TOTAL		%		COUNT		OCCUPIED		TOTAL		%
Beginning September 30, 2018	201		13,038,497		14,827,815		87.9	%	160		11,378,653		12,683,308		89.7	%
Portfolio activity
Acquisitions	1		102,018		123,574		82.6	%	NA		NA		NA		NA
Re/development completions	—		—		—		—	%	—		—		—		—	%
Dispositions ¹	(3	)	(132,239	)	(152,760	)	86.6	%	(3	)	(100,800	)	(115,450	)	87.3	%
Same store reclassifications
Acquisitions	NA		NA		NA		NA		5		176,562		212,405		83.1	%
Development completions	NA		NA		NA		NA		—		—		—		—	%
Reposition to same store	NA		NA		NA		NA		4		69,958		82,037		85.3	%
Reposition from same store	NA		NA		NA		NA		(1	)	(46,363	)	(64,375	)	72.0	%
	199		13,008,276		14,798,629		87.9	%	165		11,478,010		12,797,925		89.7	%
Leasing activity
New leases/expansions	NA		131,734		NA		NA		NA		111,403		NA		NA
Move-outs/contractions	NA		(149,607	)	NA		NA		NA		(101,284	)	NA		NA
Net absorption	NA		(17,873	)	NA		NA		NA		10,119		NA		NA
Ending December 31, 2018	199		12,990,403		14,798,629		87.8	%	165		11,488,129		12,797,925		89.8	%

YEAR-OVER-YEAR
	PORTFOLIO								SAME STORE
	COUNT		OCCUPIED		TOTAL		%		COUNT		OCCUPIED		TOTAL		%
Beginning December 31, 2017	201		12,887,891		14,632,532		88.1	%	161		11,288,895		12,631,502		89.4	%
Portfolio activity
Acquisitions	7		439,587		511,422		86.0	%	NA		NA		NA		NA
Re/development completions			—		—		—	%	—		—		—		—	%
Dispositions ¹	(9	)	(304,658	)	(345,325	)	88.2	%	(8	)	(272,346	)	(308,015	)	88.4	%
Same store reclassifications
Acquisitions	NA		NA		NA		NA		10		529,523		583,011		90.8	%
Development completions	NA		NA		NA		NA		1		12,880		12,880		100.0	%
Reposition to same store	NA		NA		NA		NA		4		73,744		91,262		80.8	%
Reposition from same store	NA		NA		NA		NA		(3	)	(147,986	)	(212,715	)	69.6	%
	199		13,022,820		14,798,629		88.0	%	165		11,484,710		12,797,925		89.7	%
Leasing activity
New leases/expansions	NA		515,154		NA		NA		NA		451,324		NA		NA
Move-outs/contractions	NA		(547,571	)	NA		NA		NA		(447,905	)	NA		NA
Net absorption	NA		(32,417	)	NA		NA		NA		3,419		NA		NA
Ending December 31, 2018	199		12,990,403		14,798,629		87.8	%	165		11,488,129		12,797,925		89.8	%


1	Includes properties reclassified as held for sale.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 20

Same Store Leasing Statistics¹




	4Q 2018		3Q 2018		2Q 2018		1Q 2018		4Q 2017		3Q 2017		2Q 2017		1Q 2017
Average in-place contractual increases
Multi-tenant	2.91	%	2.88	%	2.84	%	2.81	%	2.80	%	2.78	%	2.74	%	2.72	%
Single-tenant	2.45	%	2.42	%	2.13	%	2.12	%	2.12	%	2.10	%	2.04	%	1.98	%
	2.84	%	2.82	%	2.73	%	2.71	%	2.69	%	2.65	%	2.61	%	2.59	%
Multi-tenant renewals
Cash leasing spreads ²	(0.5	%)	3.8	%	6.4	%	5.2	%	3.7	%	4.6	%	9.5	%	4.5	%
Tenant retention rate	82.6	%	87.0	%	84.4	%	81.5	%	81.9	%	80.5	%	90.3	%	79.2	%



AVERAGE IN-PLACE CONTRACTUAL INCREASES ³
	MULTI-TENANT				SINGLE-TENANT				TOTAL
	% INCREASE		% OF BASE RENT		% INCREASE		% OF BASE RENT		% INCREASE		% OF BASE RENT
Annual increase
CPI	2.99	%	2.42	%	2.61	%	57.14	%	2.69	%	10.23	%
Fixed	3.01	%	92.58	%	2.56	%	14.04	%	3.00	%	81.38	%
Non-annual increase (annualized)
CPI	1.38	%	0.79	%	0.50	%	2.55	%	1.07	%	1.04	%
Fixed	1.25	%	2.86	%	2.25	%	26.27	%	1.86	%	6.20	%
No increase
Term > 1 year	—	%	1.35	%	—	%	—	%	—	%	1.15	%
Total ³	2.91	%	100.00	%	2.45	%	100.00	%	2.84	%	100.00	%



TYPE AND OWNERSHIP STRUCTURE (% OF SQUARE FEET)
	MULTI-TENANT		SINGLE-TENANT		TOTAL
Tenant type
Hospital	49.0	%	83.7	%	52.9	%
Physician and other	51.0	%	16.3	%	47.1	%

Lease structure
Gross	13.8	%	—	%	12.3	%
Modified gross	28.9	%	—	%	25.5	%
Net	57.3	%	—	%	50.7	%
Absolute net ⁴	—	%	100.0	%	11.5	%

Ownership type
Ground lease	62.8	%	13.9	%	57.8	%
Fee simple	37.2	%	86.1	%	42.2	%


1	Excludes recently acquired or disposed properties, construction in progress, land held for development, corporate property, reposition properties and assets classified as held for sale.


2	Excluding two tenants totaling approximately 50,000 square feet during the quarter, cash leasing spreads for the fourth quarter of 2018 would have been 3.8%.


3	Excludes leases with terms of one year or less.


4	Tenant is typically responsible for operating expenses and capital obligations.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 21

Same Store Performance ¹

DOLLARS IN THOUSANDS, EXCEPT PER SQUARE FOOT DATA




	2018		4Q 2018		3Q 2018		2Q 2018		1Q 2018		2017		4Q 2017		3Q 2017		2Q 2017		1Q 2017
Multi-tenant
Revenues	$350,848		$88,681		$88,909		$87,090		$86,168		$341,517		$85,760		$86,534		$85,407		$83,816
Expenses	142,500		35,604		36,679		34,939		35,278		138,961		34,725		35,923		34,282		34,031
Cash NOI	$208,348		$53,077		$52,230		$52,151		$50,890		$202,556		$51,035		$50,611		$51,125		$49,785
Revenue per occ SF ²	$34.48		$34.86		$34.96		$34.26		$33.88		$33.55		$33.70		$33.95		$33.51		$33.00
Margin	59.4	%	59.9	%	58.7	%	59.9	%	59.1	%	59.3	%	59.5	%	58.5	%	59.9	%	59.4	%
Average occupancy	88.6	%	88.6	%	88.5	%	88.5	%	88.5	%	88.6	%	88.6	%	88.7	%	88.7	%	88.4	%
Period end occupancy	88.6	%	88.6	%	88.5	%	88.6	%	88.4	%	88.7	%	88.7	%	88.5	%	88.9	%	88.5	%
Number of properties	151		151		151		151		151		151		151		151		151		151
Single-tenant
Revenues	$43,992		$11,040		$11,038		$10,956		$10,958		$42,932		$10,946		$10,772		$10,414		$10,800
Expenses	1,516		330		369		378		439		1,831		427		486		426		492
Cash NOI	$42,476		$10,710		$10,669		$10,578		$10,519		$41,101		$10,519		$10,286		$9,988		$10,308
Revenue per occ SF ²	$33.76		$33.76		$33.76		$33.66		$33.79		$33.10		$33.76		$33.22		$32.12		$33.31
Average occupancy	99.7	%	100.0	%	100.0	%	99.6	%	99.1	%	99.1	%	99.1	%	99.1	%	99.1	%	99.1	%
Number of properties	14		14		14		14		14		14		14		14		14		14
Total
Revenues	$394,840		$99,721		$99,947		$98,046		$97,126		$384,449		$96,706		$97,306		$95,821		$94,616
Expenses	144,016		35,934		37,048		35,317		35,717		140,792		35,152		36,409		34,708		34,523
Cash NOI	$250,824		$63,787		$62,899		$62,729		$61,409		$243,657		$61,554		$60,897		$61,113		$60,093
Revenue per occ SF ²	$34.40		$34.74		$34.82		$34.20		$33.87		$33.50		$33.71		$33.87		$33.35		$33.03
Margin	63.5	%	64.0	%	62.9	%	64.0	%	63.2	%	63.4	%	63.7	%	62.6	%	63.8	%	63.5	%
Average occupancy	89.7	%	89.7	%	89.7	%	89.6	%	89.6	%	89.7	%	89.7	%	89.8	%	89.8	%	89.5	%
Number of properties	165		165		165		165		165		165		165		165		165		165



SAME STORE GROWTH
	YEAR-OVER-YEAR
	2018		4Q 2018		3Q 2018		2Q 2018		1Q 2018
Multi-tenant
Revenue per occ SF ²	2.8	%	3.4	%	2.9	%	2.3	%	2.7	%
Avg occupancy (bps)	0		0		-20		-20		+10
Revenues	2.7	%	3.4	%	2.7	%	2.0	%	2.8	%
Expenses	2.5	%	2.5	%	2.1	%	1.9	%	3.7	%
Cash NOI	2.9	%	4.0	%	3.2	%	2.0	%	2.2	%
Single-tenant
Cash NOI	3.3	%	1.8	%	3.7	%	5.9	%	2.0	%
Total
Revenues	2.7	%	3.1	%	2.7	%	2.3	%	2.7	%
Cash NOI	2.9	%	3.6	%	3.3	%	2.6	%	2.2	%


1	Excludes recently acquired or disposed properties, development completions, construction in progress, land held for development, corporate property, reposition properties and assets classified as held for sale.


2	Revenue per occ SF is calculated by dividing revenue by the average of the occupied SF for the period provided. Quarterly revenue per occ SF is annualized.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 22

Reconciliation of NOI

DOLLARS IN THOUSANDS



BOTTOM UP RECONCILIATION
	4Q 2018			3Q 2018			2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017
Net income (loss)		$16,314			$6,548			$37,729			$9,180			($37,151	)		$3,173			$25,224			$31,845
Other income (expense)	2,850			12,135			(16,559		)	12,175			58,429			18,819			(1,808		)	(8,851		)
General and administrative expense	8,534			8,504			8,373			9,101			8,272			8,021			8,005			8,694
Depreciation and amortization expense	42,437			42,061			40,130			39,573			37,324			35,873			34,823			34,452
Other expenses ¹	2,087			1,855			1,939			1,968			2,522			1,922			2,204			1,979
Straight-line rent revenue	(682		)	(802		)	(1,074		)	(1,722		)	(1,205		)	(1,332		)	(1,783		)	(1,751		)
Other revenue ²	(1,409		)	(1,173		)	(1,268		)	(1,438		)	(1,258		)	(1,327		)	(1,196		)	(785		)
Cash NOI		$70,131			$69,128			$69,270			$68,837			$66,933			$65,149			$65,469			$65,583
Acquisitions/development completions	(5,583		)	(5,411		)	(4,623		)	(4,273		)	(2,148		)	(956		)	(365		)	(56		)
Reposition	(171		)	(301		)	(353		)	(436		)	(525		)	(584		)	(661		)	(705		)
Dispositions/other	(590		)	(517		)	(1,565		)	(2,719		)	(2,706		)	(2,712		)	(3,330		)	(4,729		)
Same store cash NOI		$63,787			$62,899			$62,729			$61,409			$61,554			$60,897			$61,113			$60,093

TOP DOWN RECONCILIATION
	4Q 2018			3Q 2018			2Q 2018			1Q 2018			4Q 2017			3Q 2017			2Q 2017			1Q 2017
Property operating before rent concessions		$99,877			$99,976			$97,185			$96,347			$92,209			$91,590			$89,395			$87,491
Rent concessions	(700		)	(609		)	(766		)	(1,053		)	(686		)	(655		)	(526		)	(809		)
Property operating	99,177			99,367			96,419			95,294			91,523			90,935			88,869			86,682
Single-tenant net lease	11,290			11,283			12,073			13,213			13,078			12,811			12,732			14,276
Straight-line rent revenue	682			802			1,074			1,722			1,205			1,332			1,783			1,751
Rental income	111,149			111,452			109,566			110,229			105,806			105,078			103,384			102,709
Property lease guaranty income	187			168			146			175			182			168			153			224
Parking income	1,733			1,752			1,819			1,626			1,705			1,669			1,669			1,568
Exclude straight-line rent revenue	(682		)	(802		)	(1,074		)	(1,722		)	(1,205		)	(1,332		)	(1,783		)	(1,751		)
Exclude other non-cash revenue ³	(1,309		)	(1,083		)	(1,165		)	(1,345		)	(1,201		)	(1,218		)	(1,085		)	(642		)
Revenue	111,078			111,487			109,292			108,963			105,287			104,365			102,338			102,108
Property operating expense	(42,815		)	(44,135		)	(41,737		)	(41,818		)	(40,590		)	(40,628		)	(38,184		)	(37,852		)
Exclude non-cash expenses ⁴	1,868			1,776			1,715			1,692			2,236			1,412			1,315			1,327
Cash NOI		$70,131			$69,128			$69,270			$68,837			$66,933			$65,149			$65,469			$65,583
Acquisitions/development completions	(5,583		)	(5,411		)	(4,623		)	(4,273		)	(2,148		)	(956		)	(365		)	(56		)
Reposition	(171		)	(301		)	(353		)	(436		)	(525		)	(584		)	(661		)	(705		)
Dispositions/other	(590		)	(517		)	(1,565		)	(2,719		)	(2,706		)	(2,712		)	(3,330		)	(4,729		)
Same store cash NOI		$63,787			$62,899			$62,729			$61,409			$61,554			$60,897			$61,113			$60,093


1	Includes acquisition and development expense, bad debt, above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.


2	Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.


3	Includes above and below market lease intangibles, lease inducements, lease terminations and TI amortization.


4	Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 23

Reconciliations of NOI & EBITDA

DOLLARS IN THOUSANDS



RECONCILIATION OF TTM ENDED 12/31/2018 - CASH NOI
	2018		2017		% CHANGE
Same store cash NOI		$250,824		$243,657	2.9	%
Reposition	1,261		2,475		(49.1	%)
		$252,085		$246,132	2.4	%
Acquisitions/development completions	19,890		3,525		464.3	%
Dispositions/other	5,391		13,477		(60.0	%)
Cash NOI		$277,366		$263,134	5.4	%



RECONCILIATION OF EBITDA
	2018			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Net income		$69,771			$16,314			$6,548			$37,729			$9,180
Interest expense	52,803			13,602			13,464			13,069			12,668
Depreciation and amortization	164,201			42,437			42,061			40,130			39,573
EBITDA		$286,775			$72,353			$62,073			$90,928			$61,421
Other amortization expense ¹	8,094			2,170			2,089			2,018			1,817
Gain on sales of real estate properties	(41,665		)	(10,787		)	(1,288		)	(29,590		)	—
EBITDAre ²		$253,204			$63,736			$62,874			$63,356			$63,238

EBITDA		$286,775			$72,353			$62,073			$90,928			$61,421
Acquisition and development expense	738			200			141			120			277
Gain on sales of real estate properties	(41,665		)	(10,787		)	(1,288		)	(29,590		)	—
Debt Covenant EBITDA		$245,848			$61,766			$60,926			$61,458			$61,698
Other amortization expense	8,094			2,170			2,089			2,018			1,817
Timing impact ³	(648		)	(349		)	(50		)	(249		)	—
Stock based compensation	10,621			2,601			2,605			2,593			2,822
Adjusted EBITDA		$263,915			$66,188			$65,570			$65,820			$66,337


1	Includes leasing commission amortization, above and below market lease intangible amortization, deferred financing costs amortization and the amortization of discounts and premiums on debt.


2	Earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") is an operating performance measure adopted by NAREIT. NAREIT defines EBITDAre equal to “net income (computed in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, impairments and minus gains on the disposition of depreciated property.”


3	Adjusted to reflect quarterly EBITDA from properties acquired or disposed in the quarter.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 24

Components of Net Asset Value

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



CASH NOI BY PROPERTY TYPE
	4Q 2018
ASSET TYPE	SAME STORE ¹		ACQ./DEV. COMPLETIONS ²		REPOSITION ³		TIMING ADJUSTMENTS ⁴		ADJUSTED CASH NOI		ANNUALIZED ADJUSTED NOI		% OF ADJUSTED NOI
MOB/outpatient		$56,423		$5,345		$335		$98		$62,201		$248,804	89.0	%
Inpatient rehab	1,404		—		—		—		1,404		5,616		2.0	%
Inpatient surgical	4,767		—		—		—		4,767		19,068		6.8	%
Office	1,193		238		—		131		1,562		6,248		2.2	%
Total Cash NOI		$63,787		$5,583		$335		$229		$69,934		$279,736	100.0	%



DEVELOPMENT PROPERTIES
Land held for development		$24,647
Construction in progress	33,107
Unstabilized development ⁵	29,375
		$87,129

OTHER ASSETS
Assets held for sale ⁶		$8,699
Reposition properties (net book value) ³	7,449
Cash and other assets ⁷	74,594
		$90,742

DEBT
Unsecured credit facility		$262,000
Unsecured term loan	150,000
Senior notes	800,000
Mortgage notes payable	143,115
Other liabilities ⁸	79,568
		$1,434,683



TOTAL SHARES OUTSTANDING
As of February 8, 2019			125,294,458










IMPLIED CAP RATE
	STOCK PRICE		IMPLIED CAP RATE
As of 2/8/19		$32.59	5.24	%

4Q 2018 high		$31.65	5.36	%
4Q 2018 low		$27.10	6.02	%


1	See Same Store Performance schedule on page 23 for details on same store NOI.


2	Adjusted to reflect quarterly NOI from properties acquired or stabilized developments completed during the full eight quarter period that are not included in same store NOI. Stabilized developments include developments completed during the full eight quarter period that are not included in same store, but are 90% occupied or greater.

Reposition properties includes 11 properties which comprise 519,424 square feet. The NOI table above includes 7 of these properties comprising 303,814 square feet that have generated positive NOI totaling approximately $0.3 million. The remaining 4 properties, comprising 215,610 square feet, have generated negative NOI of approximately $0.2 million and are reflected at a net book value of $7.4 million in the other assets table above.


4	Timing adjustments related to current quarter acquisitions and the difference between leased and occupied square feet on previous re/developments.


5	Unstabilized development includes the gross book value of one property that was completed on June 30, 2017. The building is 42% leased and 38% occupied as of December 31, 2018.


6	Assets held for sale includes one real estate property that is excluded from same store NOI and reflects net book value.


7	Includes cash of $8.4 million and prepaid assets of $66.2 million that are expected to generate future cash or NOI and assets that are currently causing non-cash reductions to NOI.


8	Includes only liabilities that are expected to reduce future cash or NOI and that are currently producing non-cash benefits to NOI. Included are accounts payable and accrued liabilities of $72.4 million, security deposits of $7.1 million, and deferred operating expense reimbursements of $0.1 million.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 25

Components of Expected FFO

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



SAME STORE RANGE OF EXPECTATIONS
	EXPECTED 2018				ACTUAL		EXPECTED 2019
	LOW		HIGH		2018		LOW		HIGH
TTM Average Occupancy
Multi-tenant	87.5	%	89.0	%	88.6	%	88.0	%	90.0	%
Single-tenant	95.0	%	100.0	%	99.7	%	99.0	%	100.0	%
TTM revenue per occupied square foot
Multi-tenant	$33.50		$34.50		$34.48		$34.50		$35.50
Single-tenant	$33.50		$34.50		$33.76		$33.50		$34.00
TTM Multi-tenant cash NOI margin	58.5	%	60.0	%	59.4	%	59.0	%	60.0	%
Multi-tenant cash leasing spreads ¹	3.0	%	6.0	%	3.4	%	3.0	%	4.0	%
Multi-tenant lease retention rate	75.0	%	90.0	%	83.9	%	75.0	%	90.0	%
TTM cash NOI growth
Multi-tenant	3.0	%	4.5	%	2.9	%	2.75	%	3.25	%
Single-tenant	1.0	%	3.0	%	3.3	%	1.50	%	3.50	%
Total	3.0	%	4.0	%	2.9	%	2.50	%	3.25	%

ANNUAL RANGE OF EXPECTATIONS
	LOW		HIGH		2018		LOW		HIGH
Normalized G&A	$33,000		$34,500		$34,441		$34,000		$35,000
Funding activity
Acquisitions	75,000		125,000		111,450		150,000		200,000
Dispositions	(85,506)		(115,506)		(98,691)		(75,000)		(125,000)
Re/development	30,000		50,000		35,567		30,000		50,000
1st generation TI and acq. cap. ex.	10,000		13,000		13,122		10,000		13,000
2nd generation TI	22,000		26,000		30,939		24,000		30,000
Leasing commissions paid	7,000		9,000		7,119		7,000		9,000
Capital expenditures	18,000		24,000		20,347		16,000		20,000
Cash yield
Acquisitions	5.25	%	6.0	%	5.7	%	5.1	%	5.8	%
Dispositions	11.4	%	11.4	%	11.4	%	6.0	%	7.5	%
Re/development (stabilized)	6.25	%	7.5	%	NA		6.0	%	7.5	%
Leverage (debt/cap)	30.0	%	35.0	%	33.2	%	30.0	%	35.0	%
Net debt to adjusted EBITDA	4.75x		5.5x		5.1x		5.0x		5.5x


1	Excluding two tenants totaling approximately 50,000 square feet during the quarter, cash leasing spreads for 2018 would have been 4.5%.




HEALTHCARE REALTY	4Q 2018 SUPPLEMENTAL INFORMATION 26

Healthcare Realty Trust 8-KHealthcare Realty Trust Reports Results for the Fourth Quarter