3Q2020 | ||
Supplemental Information | ||
FURNISHED AS OF NOVEMBER 4, 2020 - 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: the duration and scope of the COVID-19 pandemic; the impact of the COVID-19 pandemic on occupancy rates and on the operations of the Company and its tenants; actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting the Company’s properties and the operations of the Company and its tenants; the effects of health and safety measures adopted by the Company and its tenants related to the COVID-19 pandemic; the impact of the COVID-19 pandemic on the business and financial condition of tenants; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth
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, 2019, under the heading "Risk Factors," in the Company's Quarterly Reports on Form 10-Q filed with the SEC for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020 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 | Debt Covenants | ||||
13 | Acquisition & Disposition Activity | ||||
14 | Re/development Activity | ||||
15 | Portfolio | ||||
16 | Associated Health Systems | ||||
17 | Top Tenants | ||||
18 | MOB Proximity to Hospital | ||||
19 | Lease Maturity, Lease & Building Size | ||||
20 | Historical Occupancy | ||||
21 | Occupancy Reconciliation | ||||
22 | Same Store Leasing Statistics | ||||
23 | Same Store Performance | ||||
24 | NOI Reconciliations | ||||
26 | EBITDA Reconciliations | ||||
27 | Components of Net Asset Value | ||||
28 | 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 | 3Q 2020 SUPPLEMENTAL INFORMATION 3 |
Highlights | ||
QUARTERLY HIGHLIGHTS | ||
Normalized FFO per share of $0.41 compared to $0.40 in the third quarter of 2019.
Same store cash NOI for the third quarter increased 2.4% over the third quarter of 2019. For the trailing twelve months ended September 30, 2020, same store cash NOI grew 1.9%.
Predictive growth measures in the same store multi-tenant portfolio include:
•Average in-place rent increases of 2.90%
•Future annual contractual increases of 3.04% for leases commencing in the quarter
•Weighted average cash leasing spreads of 4.5% on 516,000 square feet renewed:
◦23% (<0% spread)
◦15% (0-3%)
◦31% (3-4%)
◦31% (>4%)
•Tenant retention of 85.1%
Portfolio leasing activity in the third quarter totaled 816,000 square feet related to 194 leases:
•670,000 square feet of renewals
•146,000 square feet of new and expansion leases
Since the end of the second quarter, the Company acquired seven medical office buildings for $117.1 million totaling 267,000 square feet. Acquisitions included:
◦In San Diego, a 46,000 square foot building adjacent to A rated Palomar Health's Poway Hospital for $16.7 million.
◦In Los Angeles, a 50,000 square foot building for $35.0 million. The property is located adjacent to Huntington Hospital, which is currently under a definitive agreement to join Aa3 rated Cedars-Sinai Health System. The Company owns two other properties adjacent to this campus.
◦In Seattle, a 21,000 square foot building adjacent to AA- rated MultiCare Health System's Allenmore Hospital for $11.0 million. The Company owns three additional properties on or adjacent to this campus.
◦In Atlanta, a 48,000 square foot building adjacent to A rated Wellstar Health System's Kennestone Hospital for $20.5 million. The Company owns four additional properties on or adjacent to this campus.
◦In Houston, a 40,000 square foot building adjacent to A+ rated Memorial Hermann's Woodlands Medical Center for $11.0 million. The Company owns four additional properties adjacent to this campus.
◦In Los Angeles, a 24,000 square foot building adjacent to AA- rated Providence St. Joseph Health's Orange Hospital for $14.0 million.
◦In Colorado Springs, a 37,000 square foot off campus building near BBB+ rated CommonSpirit Health's St. Francis Medical Center for $8.9 million. The property is located immediately adjacent to a medical office building acquired by the Company in March 2020.
In addition, the Company is under contract to purchase 12 properties for $276 million expected to close by year-end, or shortly thereafter, and subject to customary closing conditions.
Since the end of the second quarter, dispositions totaled $249.4 million including two single-tenant properties totaling 386,000 square feet for $244.5 million to Mercy, and one building totaling 26,000 square feet located in Miami.
The Company currently has approximately 3.6 million shares to be settled through forward equity contracts at a weighted average price per share of $31.30. The Company expects gross proceeds of approximately $112 million, before cost of borrowing under the forward contracts.
As of September 30, the Company had cash of $183 million and $700 million available on its revolver.
Net debt to adjusted EBITDA decreased to 4.8 times at the end of the quarter.
On October 2, the Company issued $300 million of senior notes due March 2031 with a coupon rate of 2.05%. The Company also called its $250 million, 3.75% senior notes due 2023, which were redeemed on October 19, 2020.
A dividend of $0.30 per share was declared for the third quarter, which equaled 88.1% of FAD. On a trailing twelve months basis, dividends paid equaled 92.2% of FAD.
OTHER ITEMS OF NOTE | ||
In July 2020, the Company closed on the sale of two properties for $244.5 million. The annualized impact of this transaction is approximately $0.03 per share of dilution once the proceeds are fully reinvested. In the third quarter of 2020, the Company reinvested a portion of the proceeds and experienced approximately $0.02 of FFO per share of dilution. The Company plans to reinvest the remaining proceeds by year-end and expects dilution of $0.01 per share of FFO in the fourth quarter, or a sequential improvement of $0.01 per share.
In October, the Company issued $300 million of 2.05% senior notes due 2031, redeemed its 3.75% senior notes due 2023, and expects accretion of approximately $0.8 million in the fourth quarter of 2020.
The Company added disclosures to its September 30, 2020 Form 10-Q regarding the impact of COVID-19. In addition, the Company provided a business update furnished as Exhibit 99.3 to the Form 8-K on November 4, 2020, which provides additional information. Below are select COVID-19 related matters that occurred in the third quarter:
•Collected over 99% of third quarter rent
•Collected over 96% of scheduled third quarter deferred rent payments
•Less than $100,000 of rent deferrals granted in the quarter
•$6.0 million repaid out of $7.2 million of cumulative deferrals granted
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 4 |
Salient Facts | ||
AS OF SEPTEMBER 30, 2020 | ||
Properties | |||||||||||
$4.3B invested in 211 properties | |||||||||||
15.5M SF owned in 24 states | |||||||||||
11.9M SF managed by Healthcare Realty | |||||||||||
95.0% medical office and outpatient | |||||||||||
1.9% same store cash NOI growth (TTM) | |||||||||||
Capitalization | |||||||||||
$5.4B enterprise value as of 11/3/20 | |||||||||||
$4.1B market capitalization as of 11/3/20 | |||||||||||
136.1M shares outstanding as of 11/3/20 | |||||||||||
$0.30 quarterly dividend per share | |||||||||||
BBB/Baa2/BBB+ S&P/Moody's/Fitch | |||||||||||
25.2% net debt to enterprise value at 9/30/20 | |||||||||||
4.8x net debt to adjusted EBITDA | |||||||||||
HEALTHCARE REALTY | 3Q 2020 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 September 30, 2020, the Company owned 211 real estate properties in 24 states totaling 15.5 million square feet and was valued at approximately $5.5 billion. The Company provided leasing and property management services to 11.9 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 | ||
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
Berenberg Capital Markets LLC
BTIG, LLC
CapitalOne Securities, Inc.
Citi Research
Green Street Advisors, Inc.
J.P. Morgan Securities LLC
Jefferies LLC
KeyBanc Capital Markets Inc.
Mizuho Securities USA Inc
Morgan Stanley & Co, LLC
Raymond James & Associates
SMBC Nikko Securities America, Inc.
Wells Fargo Securities, LLC
BOARD OF DIRECTORS | ||
J. Knox Singleton
Chairman, Healthcare Realty Trust Incorporated
Retired Chief Executive Officer, Inova Health System
Todd J. Meredith
President and Chief Executive Officer
Healthcare Realty Trust Incorporated
John V. Abbott
Retired Chief Executive Officer
Aviation Asset Management Group, General Electric Company
Nancy H. Agee
President and Chief Executive Officer
Carilion Clinic
Edward H. Braman
Retired Audit Partner
Ernst & Young LLP
James J. Kilroy
President and Portfolio Manager
Willis Investment Counsel
Peter F. Lyle
Executive Vice President
Medical Management Associates, Inc.
Bruce D. Sullivan
Retired Audit Partner
Ernst & Young LLP
Christann M. Vasquez
Executive Vice President and Chief Operating Officer
Ascension Texas
David R. Emery (1944-2019)
Chairman Emeritus
Healthcare Realty Trust Incorporated
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 6 |
Balance Sheet | ||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||
ASSETS | |||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | |||||||||||||||||||
Real estate properties | |||||||||||||||||||||||
Land | $330,840 | $312,139 | $319,882 | $289,751 | $267,803 | ||||||||||||||||||
Buildings, improvements and lease intangibles | 4,014,740 | 3,937,657 | 4,126,046 | 3,986,326 | 3,915,308 | ||||||||||||||||||
Personal property | 10,962 | 10,849 | 10,783 | 10,538 | 10,899 | ||||||||||||||||||
Construction in progress | — | — | — | 48,731 | 44,041 | ||||||||||||||||||
Land held for development | 24,647 | 24,647 | 24,647 | 24,647 | 24,647 | ||||||||||||||||||
Total real estate properties | 4,381,189 | 4,285,292 | 4,481,358 | 4,359,993 | 4,262,698 | ||||||||||||||||||
Less accumulated depreciation and amortization | (1,198,444) | (1,169,298) | (1,164,462) | (1,121,102) | (1,106,387) | ||||||||||||||||||
Total real estate properties, net | 3,182,745 | 3,115,994 | 3,316,896 | 3,238,891 | 3,156,311 | ||||||||||||||||||
Cash and cash equivalents | 121,992 | 43,680 | 103,370 | 657 | 11,809 | ||||||||||||||||||
Restricted cash 1 | 60,644 | — | — | — | — | ||||||||||||||||||
Assets held for sale, net | 20,051 | — | 20 | 37 | 5,289 | ||||||||||||||||||
Operating lease right-of-use assets | 123,807 | 124,398 | 125,040 | 126,177 | 126,711 | ||||||||||||||||||
Financing lease right-of-use assets | 19,776 | 19,884 | 12,615 | 12,667 | 9,063 | ||||||||||||||||||
Net investment in sales-type leases 2 | — | 244,381 | — | — | — | ||||||||||||||||||
Other assets | 182,436 | 183,616 | 189,708 | 185,426 | 181,975 | ||||||||||||||||||
Total assets | $3,711,451 | $3,731,953 | $3,747,649 | $3,563,855 | $3,491,158 | ||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Notes and bonds payable | $1,554,395 | $1,554,936 | $1,644,454 | $1,414,069 | $1,443,919 | ||||||||||||||||||
Accounts payable and accrued liabilities | 79,528 | 65,485 | 64,574 | 78,517 | 75,094 | ||||||||||||||||||
Liabilities of properties held for sale | 548 | — | 74 | 145 | 300 | ||||||||||||||||||
Operating lease liabilities | 91,466 | 91,259 | 91,093 | 91,574 | 91,356 | ||||||||||||||||||
Financing lease liabilities | 18,697 | 18,595 | 17,953 | 18,037 | 14,305 | ||||||||||||||||||
Other liabilities | 66,442 | 72,317 | 70,073 | 61,504 | 61,023 | ||||||||||||||||||
Total liabilities | 1,811,076 | 1,802,592 | 1,888,221 | 1,663,846 | 1,685,997 | ||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||
Stockholders' equity | |||||||||||||||||||||||
Preferred stock, $.01 par value; 50,000 shares authorized | — | — | — | — | — | ||||||||||||||||||
Common stock, $.01 par value; 300,000 shares authorized | 1,361 | 1,360 | 1,349 | 1,347 | 1,314 | ||||||||||||||||||
Additional paid-in capital | 3,532,130 | 3,529,559 | 3,494,123 | 3,485,003 | 3,379,572 | ||||||||||||||||||
Accumulated other comprehensive loss | (19,267) | (20,294) | (19,777) | (6,175) | (8,470) | ||||||||||||||||||
Cumulative net income attributable to common stockholders | 1,215,362 | 1,207,132 | 1,131,619 | 1,127,304 | 1,100,094 | ||||||||||||||||||
Cumulative dividends | (2,829,211) | (2,788,396) | (2,747,886) | (2,707,470) | (2,667,349) | ||||||||||||||||||
Total stockholders' equity | 1,900,375 | 1,929,361 | 1,859,428 | 1,900,009 | 1,805,161 | ||||||||||||||||||
Total liabilities and stockholders' equity | $3,711,451 | $3,731,953 | $3,747,649 | $3,563,855 | $3,491,158 |
1Restricted cash includes cash held in escrow from the sale of a property in Oklahoma. These proceeds have or will be disbursed as the Company acquires real estate investments in like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
2In the second quarter of 2020, the Company entered into agreements to sell two single-tenant net leased properties ("Mercy disposition"), resulting in a lease modification and classification change from operating to sales-type. The properties were sold on July 30, 2020.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 7 |
Statements of Income | ||
DOLLARS IN THOUSANDS | ||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | |||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||
Rental income | $123,384 | $122,358 | $122,644 | $119,438 | $117,740 | $114,351 | $110,696 | $111,149 | ||||||||||||||||||||||||||||||
Other operating | 1,868 | 1,332 | 2,163 | 2,086 | 2,059 | 1,966 | 1,961 | 2,019 | ||||||||||||||||||||||||||||||
125,252 | 123,690 | 124,807 | 121,524 | 119,799 | 116,317 | 112,657 | 113,168 | |||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||
Property operating | 50,171 | 46,580 | 49,552 | 46,214 | 46,777 | 44,286 | 42,725 | 42,815 | ||||||||||||||||||||||||||||||
General and administrative | 7,299 | 7,434 | 8,766 | 7,669 | 10,802 | 7,845 | 8,510 | 8,534 | ||||||||||||||||||||||||||||||
Acquisition and pursuit costs 1 | 440 | 431 | 750 | 515 | 501 | 422 | 305 | 200 | ||||||||||||||||||||||||||||||
Depreciation and amortization | 47,143 | 47,691 | 47,497 | 46,134 | 45,137 | 43,926 | 42,662 | 42,437 | ||||||||||||||||||||||||||||||
Bad debts, net of recoveries 2 | — | — | — | — | — | — | — | 18 | ||||||||||||||||||||||||||||||
105,053 | 102,136 | 106,565 | 100,532 | 103,217 | 96,479 | 94,202 | 94,004 | |||||||||||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||||||||
Gain (loss) on sales of real estate properties | 2,177 | 68,267 | (49) | 20,036 | 200 | 4,849 | 15 | 10,787 | ||||||||||||||||||||||||||||||
Interest expense | (14,154) | (14,442) | (13,960) | (13,816) | (14,181) | (13,850) | (13,588) | (13,602) | ||||||||||||||||||||||||||||||
Impairment of real estate assets | — | — | — | (7) | — | (5,610) | — | — | ||||||||||||||||||||||||||||||
Interest and other income (expense), net | 8 | 134 | 82 | 5 | — | (743) | 9 | (35) | ||||||||||||||||||||||||||||||
(11,969) | 53,959 | (13,927) | 6,218 | (13,981) | (15,354) | (13,564) | (2,850) | |||||||||||||||||||||||||||||||
Net income | $8,230 | $75,513 | $4,315 | $27,210 | $2,601 | $4,484 | $4,891 | $16,314 |
1Includes third party and travel costs related to the pursuit of acquisitions and developments.
2Beginning in the first quarter of 2019 with the adoption of Accounting Standards Codification Topic 842, bad debts, net of recoveries associated with lease revenue was recorded within rental income.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 8 |
FFO, Normalized FFO, & FAD 1, 2 | ||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Net income | $8,230 | $75,513 | $4,315 | $27,210 | $2,601 | $4,484 | $4,891 | $16,314 | |||||||||||||||||||||||||||||||||||||||||||||
(Gain) loss on sales of real estate assets | (2,177) | (68,267) | 49 | (20,036) | (200) | (4,849) | (15) | (10,787) | |||||||||||||||||||||||||||||||||||||||||||||
Impairments of real estate assets | — | — | — | 7 | — | 5,610 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Real estate depreciation and amortization | 48,295 | 48,657 | 48,611 | 47,042 | 45,926 | 44,682 | 43,383 | 43,380 | |||||||||||||||||||||||||||||||||||||||||||||
FFO | $54,348 | $55,903 | $52,975 | $54,223 | $48,327 | $49,927 | $48,259 | $48,907 | |||||||||||||||||||||||||||||||||||||||||||||
Acquisition and pursuit costs 3 | 440 | 431 | 750 | 515 | 501 | 422 | 305 | 200 | |||||||||||||||||||||||||||||||||||||||||||||
Lease intangible amortization 4 | (35) | (16) | 745 | 4 | 5 | 54 | 84 | — | |||||||||||||||||||||||||||||||||||||||||||||
Accelerated stock awards 5 | — | — | — | — | 2,854 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Debt financing costs | — | — | — | — | — | 760 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Normalized FFO | $54,753 | $56,318 | $54,470 | $54,742 | $51,687 | $51,163 | $48,648 | $49,107 | |||||||||||||||||||||||||||||||||||||||||||||
Non-real estate depreciation and amortization | 785 | 822 | 823 | 838 | 838 | 829 | 763 | 790 | |||||||||||||||||||||||||||||||||||||||||||||
Non-cash interest expense amortization 6 | 934 | 1,035 | 746 | 731 | 727 | 707 | 702 | 649 | |||||||||||||||||||||||||||||||||||||||||||||
Provision for bad debt, net | (144) | 945 | (83) | 124 | (32) | 150 | (75) | 18 | |||||||||||||||||||||||||||||||||||||||||||||
Straight-line rent income, net | (535) | (382) | (660) | (781) | (379) | (1) | (270) | (302) | |||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 2,445 | 2,405 | 2,599 | 2,133 | 2,375 | 2,372 | 2,639 | 2,601 | |||||||||||||||||||||||||||||||||||||||||||||
Normalized FFO adjusted for non-cash items | 58,238 | 61,143 | 57,895 | 57,787 | 55,216 | 55,220 | 52,407 | 52,863 | |||||||||||||||||||||||||||||||||||||||||||||
2nd generation TI | (5,323) | (6,005) | (6,040) | (12,126) | (6,114) | (6,124) | (4,326) | (10,367) | |||||||||||||||||||||||||||||||||||||||||||||
Leasing commissions paid | (1,999) | (2,258) | (2,824) | (4,970) | (2,697) | (2,315) | (1,347) | (2,182) | |||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | (4,580) | (4,777) | (3,470) | (5,159) | (3,543) | (4,993) | (3,462) | (2,817) | |||||||||||||||||||||||||||||||||||||||||||||
FAD | $46,336 | $48,103 | $45,561 | $35,532 | $42,862 | $41,788 | $43,272 | $37,497 | |||||||||||||||||||||||||||||||||||||||||||||
Dividends paid | $40,815 | $40,510 | $40,416 | $40,121 | $38,852 | $38,771 | $37,614 | $37,571 | |||||||||||||||||||||||||||||||||||||||||||||
FFO per common share - diluted | $0.40 | $0.42 | $0.40 | $0.41 | $0.37 | $0.39 | $0.39 | $0.39 | |||||||||||||||||||||||||||||||||||||||||||||
Normalized FFO per common share - diluted | $0.41 | $0.42 | $0.41 | $0.41 | $0.40 | $0.40 | $0.39 | $0.40 | |||||||||||||||||||||||||||||||||||||||||||||
FFO weighted average common shares outstanding - diluted 7 | 135,159 | 134,464 | 133,980 | 133,125 | 129,015 | 128,279 | 124,928 | 124,240 |
1Funds 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 “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.”
2FFO, 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.
3Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.
4The Company adopted the 2018 NAREIT FFO White Paper Restatement during the first quarter of 2019. This amended definition specifically includes the impact of acquisition related market lease intangible amortization in the calculation of NAREIT FFO. The Company historically included this amortization in the real estate depreciation and amortization line item which is added back in the calculation of NAREIT FFO. Prior periods were not restated for the adoption.
5The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses recorded in the third quarter of 2019 associated with the acceleration of his outstanding non-vested share-based awards.
6Includes the amortization of deferred financing costs, discounts and premiums.
7The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 801,382 for the three months ended September 30, 2020.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 9 |
Capital Funding & Commitments | ||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||
ACQUISITION AND RE/DEVELOPMENT FUNDING | ||||||||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | ||||||||||||||||||||||||||||||||||
Acquisitions 1 | $108,127 | $ | — | $102,030 | $107,408 | $78,681 | ||||||||||||||||||||||||||||||||
Re/development | 4,709 | 5,664 | 6,916 | 7,028 | 7,359 | |||||||||||||||||||||||||||||||||
1st gen. TI & acquisition capex 2 | 6,471 | 4,991 | 2,731 | 8,184 | 3,793 | |||||||||||||||||||||||||||||||||
MAINTENANCE CAPITAL EXPENDITURES | ||||||||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | ||||||||||||||||||||||||||||||||||
$ Spent | ||||||||||||||||||||||||||||||||||||||
2nd generation TI | $5,323 | $6,005 | $6,040 | $12,126 | $6,114 | |||||||||||||||||||||||||||||||||
Leasing commissions paid | 1,999 | 2,258 | 2,824 | 4,970 | 2,697 | |||||||||||||||||||||||||||||||||
Capital expenditures | 4,580 | 4,777 | 3,470 | 5,159 | 3,543 | |||||||||||||||||||||||||||||||||
$11,902 | $13,040 | $12,334 | $22,255 | $12,354 | ||||||||||||||||||||||||||||||||||
% of Cash NOI | ||||||||||||||||||||||||||||||||||||||
2nd generation TI | 7.3 | % | 8.0 | % | 8.0 | % | 16.2 | % | 8.4 | % | ||||||||||||||||||||||||||||
Leasing commissions paid | 2.7 | % | 3.0 | % | 3.8 | % | 6.7 | % | 3.7 | % | ||||||||||||||||||||||||||||
Capital expenditures | 6.2 | % | 6.3 | % | 4.6 | % | 6.9 | % | 4.9 | % | ||||||||||||||||||||||||||||
16.2 | % | 17.3 | % | 16.4 | % | 29.8 | % | 17.0 | % | |||||||||||||||||||||||||||||
LEASING COMMITMENTS | ||||||||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | ||||||||||||||||||||||||||||||||||
Renewals | ||||||||||||||||||||||||||||||||||||||
Square feet | 669,687 | 393,496 | 342,614 | 381,561 | 756,211 | |||||||||||||||||||||||||||||||||
2nd generation TI/square foot/lease year | $1.49 | $1.78 | $1.65 | $3.15 | $2.12 | |||||||||||||||||||||||||||||||||
Leasing commissions/square foot/lease year | $1.13 | $0.86 | $0.80 | $0.91 | $0.86 | |||||||||||||||||||||||||||||||||
WALT (in months) 3 | 48.8 | 45.1 | 46.3 | 56.6 | 55.0 | |||||||||||||||||||||||||||||||||
New leases | ||||||||||||||||||||||||||||||||||||||
Square feet | 111,310 | 108,485 | 97,305 | 117,274 | 95,948 | |||||||||||||||||||||||||||||||||
2nd generation TI/square foot/lease year | $5.38 | $6.40 | $4.07 | $5.06 | $4.79 | |||||||||||||||||||||||||||||||||
Leasing commissions/square foot/lease year | $1.01 | $1.30 | $1.06 | $1.60 | $1.29 | |||||||||||||||||||||||||||||||||
WALT (in months) 3 | 89.0 | 74.8 | 75.3 | 69.0 | 74.3 | |||||||||||||||||||||||||||||||||
All | ||||||||||||||||||||||||||||||||||||||
Square feet | 780,997 | 501,981 | 439,919 | 498,835 | 852,159 | |||||||||||||||||||||||||||||||||
2nd generation TI/square foot/lease year | $2.40 | $3.23 | $2.41 | $3.67 | $2.51 | |||||||||||||||||||||||||||||||||
Leasing commissions/square foot/lease year | $1.10 | $1.00 | $0.88 | $1.10 | $0.92 | |||||||||||||||||||||||||||||||||
Leasing commitments as a % of annual net rent | 15.0 | % | 21.3 | % | 14.9 | % | 21.0 | % | 14.0 | % | ||||||||||||||||||||||||||||
WALT (in months) 3 | 54.6 | 51.5 | 52.7 | 59.5 | 57.2 | |||||||||||||||||||||||||||||||||
1Acquisitions exclude the first quarter and third quarter of 2020 purchases of land previously ground leased totaling $1.6 million and $1.0 million.
2Planned capital expenditures for acquisitions include expected near-term fundings that were contemplated as part of the acquisition.
3WALT = weighted average lease term.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 10 |
Debt Metrics | ||
DOLLARS IN THOUSANDS | ||
SUMMARY OF INDEBTEDNESS AS OF SEPTEMBER 30, 2020 | ||||||||||||||||||||
PRINCIPAL BALANCE | BALANCE 1 | INTEREST EXPENSE | MONTHS TO MATURITY | CONTRACTUAL RATE | EFFECTIVE RATE | |||||||||||||||
Senior notes due April 2023 2 | $250,000 | $248,863 | $2,399 | 31 | 3.75 | % | 3.95 | % | ||||||||||||
Senior notes due May 2025 3 | 250,000 | 248,711 | 2,469 | 55 | 3.88 | % | 4.08 | % | ||||||||||||
Senior notes due January 2028 | 300,000 | 296,003 | 2,776 | 87 | 3.63 | % | 3.84 | % | ||||||||||||
Senior notes due March 2030 4 | 300,000 | 296,384 | 1,929 | 114 | 2.40 | % | 2.71 | % | ||||||||||||
Senior notes due March 2031 5 | — | — | — | — | 2.05 | % | 2.24 | % | ||||||||||||
Total senior notes outstanding | $1,100,000 | $1,089,961 | $9,573 | 74 | 3.38 | % | 3.61 | % | ||||||||||||
$700 million unsecured credit facility due May 2023 | — | — | 41 | 32 | LIBOR + 0.90% | 1.05 | % | |||||||||||||
$200 million unsecured term loan facility due May 2024 6 | 200,000 | 199,180 | 1,016 | 44 | LIBOR + 1.00% | 1.99 | % | |||||||||||||
$150 million unsecured term loan facility due June 2026 7 | 150,000 | 149,455 | 1,204 | 68 | LIBOR + 1.60% | 3.14 | % | |||||||||||||
Mortgage notes payable, net | 115,823 | 115,799 | 1,240 | 42 | 4.39 | % | 4.38 | % | ||||||||||||
Total outstanding notes and bonds payable | $1,565,823 | $1,554,395 | $13,074 | 67 | 3.25 | % | 3.42 | % | ||||||||||||
Total outstanding notes and bonds payable, net of cash | $1,383,187 | $1,371,759 | ||||||||||||||||||
Interest cost capitalization | (207) | |||||||||||||||||||
Unsecured credit facility fee and deferred financing costs | 1,042 | |||||||||||||||||||
Financing lease right-of-use assets | 245 | |||||||||||||||||||
Total quarterly consolidated interest expense | $14,154 |
DEBT MATURITIES SCHEDULE AS OF SEPTEMBER 30, 2020 | |||||||||||||||||||||||||||||
PRINCIPAL PAYMENTS | WEIGHTED AVERAGE RATE | ||||||||||||||||||||||||||||
TERM LOANS | SENIOR NOTES | MORTGAGE NOTES | TOTAL | MORTGAGE NOTES | OTHER | TOTAL | |||||||||||||||||||||||
2020 | $1,017 | $1,017 | 4.68 | % | — | % | 4.68 | % | |||||||||||||||||||||
2021 | 17,751 | 17,751 | 5.52 | % | — | % | 5.52 | % | |||||||||||||||||||||
2022 | 13,136 | 13,136 | 3.80 | % | — | % | 3.80 | % | |||||||||||||||||||||
2023 2 | $250,000 | 30,390 | 280,390 | 4.21 | % | 3.75 | % | 3.80 | % | ||||||||||||||||||||
2024 | $200,000 | 26,124 | 226,124 | 4.48 | % | 1.99 | % | 2.28 | % | ||||||||||||||||||||
2025 | 250,000 | 2,096 | 252,096 | 5.10 | % | 3.88 | % | 3.89 | % | ||||||||||||||||||||
2026 | 150,000 | 24,879 | 174,879 | 3.93 | % | 3.14 | % | 3.26 | % | ||||||||||||||||||||
2027 | 430 | 430 | 6.17 | % | — | % | 6.17 | % | |||||||||||||||||||||
2028 | 300,000 | 300,000 | — | % | 3.63 | % | 3.63 | % | |||||||||||||||||||||
Thereafter | 300,000 | 300,000 | — | % | 2.40 | % | 2.40 | % | |||||||||||||||||||||
Total | $350,000 | $1,100,000 | $115,823 | $1,565,823 | 4.39 | % | 3.16 | % | 3.25 | % | |||||||||||||||||||
Weighted average rate | 2.48 | % | 3.38 | % | 4.39 | % | 3.25 | % |
1Balances are reflected net of discounts and deferred financing costs and include premiums.
2On October 19, 2020, the Company redeemed the Senior notes due April 2023, including a make-whole payment of $20.4 million.
3The 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.
4The effective interest rate includes the impact of the $4.3 million settlement of forward interest rate hedges that are included in accumulated other comprehensive income on the Company's Condensed Consolidated Balance Sheets.
5On October 2, 2020, the Company issued the Senior notes due March 2031 with a principal balance of $300.0 million at a contractual rate of 2.05%.
6The effective interest rate includes the impact of interest rate swaps on $75.0 million at a weighted average rate of 2.37% (plus the applicable margin rate, currently 100 basis points).
7The effective interest rate includes the impact of interest rate swaps on $100.0 million at a weighted average rate of 2.23% (plus the applicable margin rate, currently 160 basis points).
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 11 |
Debt Covenants | ||
DOLLARS IN THOUSANDS | ||
SELECTED FINANCIAL DEBT COVENANTS TTM ENDED SEPTEMBER 30, 2020 1 | |||||||||||
CALCULATION | REQUIREMENT | PER DEBT COVENANTS | |||||||||
Revolving credit facility and term loan 2 | |||||||||||
Leverage ratio 3 | Total debt/total capital | Not greater than 60% | 33.8 | % | |||||||
Secured leverage ratio | Total secured debt/total capital | Not greater than 30% | 2.5 | % | |||||||
Unencumbered leverage ratio 3 | Unsecured debt/unsecured real estate | Not greater than 60% | 36.0 | % | |||||||
Fixed charge coverage ratio | EBITDA/fixed charges | Not less than 1.50x | 4.5x | ||||||||
Unsecured coverage ratio | Unsecured EBITDA/unsecured interest | Not less than 1.75x | 5.0x | ||||||||
Construction and development | CIP/total assets | Not greater than 15% | 0.0 | % | |||||||
Asset investments | Mortgages, JV & land/total assets | Not greater than 20% | 0.9 | % | |||||||
Senior Notes due 2030 4 | |||||||||||
Incurrence of total debt 3 | Total debt/total assets | Not greater than 60% | 33.7 | % | |||||||
Incurrence of debt secured by any lien | Secured debt/total assets | Not greater than 40% | 2.5 | % | |||||||
Maintenance of total unsecured assets 3 | Unencumbered assets/unsecured debt | Not less than 150% | 296.9 | % | |||||||
Debt service coverage | EBITDA/interest expense | Not less than 1.5x | 5.1x | ||||||||
Other Senior Notes 5 | |||||||||||
Incurrence of total debt 3 | Total debt/total assets | Not greater than 60% | 35.1 | % | |||||||
Incurrence of debt secured by any lien | Secured debt/total assets | Not greater than 40% | 2.6 | % | |||||||
Maintenance of total unsecured assets 3 | Unencumbered assets/unsecured debt | Not less than 150% | 285.5 | % | |||||||
Debt service coverage | EBITDA/interest expense | Not less than 1.5x | 5.0x | ||||||||
Other | |||||||||||
Net debt to adjusted EBITDA 6 | Net debt (debt less cash)/adjusted EBITDA | Not required | 4.8x | ||||||||
Net debt to enterprise value 7 | Net Debt/enterprise value | Not required | 25.2 | % |
1Does not include all financial and non-financial covenants and restrictions that are required by the Company's various debt agreements.
2As part of the Company's amendment to the credit facility and term loan agreements during the second quarter of 2019, the financial covenants were updated to exclude the impact of the Topic 842, Lease Accounting from the covenant calculations.
3As of September 30, 2020, the Company had cash of $182.6 million. These financial covenant results would improve if the Company used this cash to repay debt.
4The financial covenants for the Senior Note due 2030 exclude the impact of Topic 842, Lease Accounting from the financial covenant calculations.
5The 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.
6Adjusted EBITDA is based on the current quarter results, annualized. See page 26 for a reconciliation of adjusted EBITDA. Net debt does not include lease liabilities.
7Based on the closing price of $30.12 on September 30, 2020 and 136,053,940 shares outstanding. Debt does not include lease liabilities.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 12 |
Acquisition & Disposition Activity | ||
DOLLARS IN THOUSANDS | ||
ACQUISITION ACTIVITY | |||||||||||||||||||||||||||||
MARKET | TYPE 1 | MILES TO CAMPUS | ASSOCIATED HEALTH SYSTEM | CLOSING | PURCHASE PRICE | SQUARE FEET | LEASED % | CAP RATE 2 | |||||||||||||||||||||
Los Angeles, CA | MOB | 0.14 | MemorialCare Health | 1/3/2020 | $42,000 | 86,986 | 79 | % | 5.3 | % | |||||||||||||||||||
Atlanta, GA | MOB | 0.10 | Wellstar Health System | 2/13/2020 | 11,965 | 64,624 | 94 | % | 5.6 | % | |||||||||||||||||||
Raleigh, NC | MOB | 0.04 | WakeMed Health | 2/25/2020 | 6,325 | 15,964 | 100 | % | 6.7 | % | |||||||||||||||||||
Colorado Springs, CO | MOB | 1.60 | None | 3/9/2020 | 8,240 | 34,210 | 100 | % | 6.5 | % | |||||||||||||||||||
Denver, CO 3 | MOB | 0.24 | UCHealth | 3/13/2020 | 33,500 | 136,994 | 94 | % | 6.1 | % | |||||||||||||||||||
San Diego, CA | MOB | 0.04 | Palomar Health | 7/1/2020 | 16,650 | 46,083 | 92 | % | 5.9 | % | |||||||||||||||||||
Los Angeles, CA | MOB | 0.11 | Cedars-Sinai/Huntington | 7/17/2020 | 35,000 | 49,785 | 100 | % | 5.4 | % | |||||||||||||||||||
Seattle, WA 4 | MOB | 0.06 | MultiCare Health System | 7/23/2020 | 11,025 | 21,309 | 100 | % | 5.6 | % | |||||||||||||||||||
Atlanta, GA | MOB | 0.13 | Wellstar Health System | 7/31/2020 | 20,452 | 48,145 | 100 | % | 6.2 | % | |||||||||||||||||||
Houston, TX | MOB | 0.03 | Memorial Hermann | 9/24/2020 | 11,000 | 40,235 | 89 | % | 5.6 | % | |||||||||||||||||||
Los Angeles, CA | MOB | 0.03 | Providence St. Joseph Health | 9/28/2020 | 14,000 | 24,252 | 95 | % | 5.6 | % | |||||||||||||||||||
Colorado Springs, CO | MOB | 1.60 | None | 10/7/2020 | 8,925 | 36,720 | 93 | % | 6.5 | % | |||||||||||||||||||
Total 5 | $219,082 | 605,307 | 93 | % | 5.8 | % |
DISPOSITION ACTIVITY | ||||||||||||||||||||||||||
LOCATION | TYPE 1 | MILES TO CAMPUS | ASSOCIATED HEALTH SYSTEM | CLOSING | SALES PRICE | SQUARE FEET | LEASED % | CAP RATE 6 | ||||||||||||||||||
Springfield, MO 4 | SF | NA | Mercy (St. Louis) | 7/30/2020 | $137,987 | 186,000 | 100 | % | 7.5 | % | ||||||||||||||||
Oklahoma City, OK 4 | MOB | 1.10 | Mercy (St. Louis) | 7/30/2020 | 106,469 | 200,000 | 100 | % | 7.5 | % | ||||||||||||||||
Miami, FL | MOB | 0.00 | HCA | 9/30/2020 | 4,987 | 26,000 | 78 | % | 3.9 | % | ||||||||||||||||
Total | $249,443 | 412,000 | 99 | % | 7.4 | % |
HISTORICAL INVESTMENT ACTIVITY | |||||||||||||||||||||||
ACQUISITIONS | RE/DEVELOPMENT FUNDING | TOTAL INVESTMENTS | DISPOSITIONS | ||||||||||||||||||||
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 | |||||||||||||||||||
2019 | 381,314 | 28,584 | 409,898 | 54,860 | |||||||||||||||||||
YTD 2020 | 219,082 | 17,290 | 236,372 | 249,443 | |||||||||||||||||||
Average (2016-2019) | 265,468 | 35,450 | 300,917 | 92,734 | |||||||||||||||||||
% of Total | 88.2 | % | 11.8 | % | 100.0 | % |
1MOB = Medical office building; SF = Surgical facility
2For acquisitions, cap rate represents the forecasted first year NOI divided by purchase price.
3Includes three properties.
4Represents a single-tenant property.
5Total excludes the first quarter and third quarter of 2020 purchases of land previously ground leased totaling $1.6 million and $1.0 million, respectively.
6For dispositions, cap rate represents the in-place cash NOI divided by sales price.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 13 |
Re/Development Activity | ||
DOLLARS IN THOUSANDS | ||
UNDER CONSTRUCTION | ||||||||||||||||||||||||||||||||
MARKET | TYPE | MILES TO CAMPUS | SQUARE FEET | BUDGET | FUNDINGS THRU 9/30/20 | REMAINING FUNDINGS | LEASED % | EXPECTED QTR NOI AT LEASED % | EXPECTED STABILIZED YIELD | ASSOCIATED HEALTH SYSTEM | ||||||||||||||||||||||
Memphis, TN 1 | Redev | 0.26 | 110,883 | $30,200 | $14,425 | $15,775 | 96 | % | $552 | 7.6 | % | Baptist Memorial | ||||||||||||||||||||
EXPECTED NOI AND OCCUPANCY RAMP UP TO LEASED % | ||||||||||||||||||||||||||||||||
Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | |||||||||||||||||||||||||||
Cash NOI | — | — | $224 | $408 | $519 | $552 | ||||||||||||||||||||||||||
Average occupancy | 44 | % | 44 | % | 59 | % | 78 | % | 88 | % | 96 | % | ||||||||||||||||||||
RECENTLY COMPLETED | |||||||||||||||||||||||||||||
MARKET | TYPE | INITIAL OCCUPANCY | SQUARE FEET | BUDGET | Q3 2020 NOI | LEASED % | EXPECTED STABILIZED YIELD | ||||||||||||||||||||||
Seattle, WA | Dev | Q1 2020 | 151,031 | $64,120 | $668 | 60 | % | 7.0 | % | ||||||||||||||||||||
1The project includes the acquisition of a 110,883 square foot medical office building for $8.7 million and redevelopment costs related to the property.
2Does not reflect the impact of capitalized interest that will be reduced at lease commencement.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 14 |
Portfolio 1 | ||
DOLLARS IN THOUSANDS | ||
MARKETS (BY SQUARE FEET) | ||||||||||||||||||||||||||||||||||||||
MOB 95.0% | NON-MOB 5.0% | |||||||||||||||||||||||||||||||||||||
MARKET | MSA RANK | INVESTMENT | COUNT | MULTI-TENANT | SINGLE-TENANT | INPATIENT/SURGICAL | OFFICE | TOTAL | % OF TOTAL | |||||||||||||||||||||||||||||
Dallas, TX | 4 | $495,127 | 21 | 1,883,038 | 156,245 | 145,365 | 2,184,648 | 14.1 | % | |||||||||||||||||||||||||||||
Seattle, WA | 15 | 657,308 | 27 | 1,456,720 | 88,819 | 1,545,539 | 10.0 | % | ||||||||||||||||||||||||||||||
Los Angeles, CA | 2 | 345,525 | 17 | 870,820 | 63,000 | 933,820 | 6.0 | % | ||||||||||||||||||||||||||||||
Nashville, TN | 36 | 207,342 | 6 | 766,523 | 108,691 | 875,214 | 5.7 | % | ||||||||||||||||||||||||||||||
Charlotte, NC | 22 | 182,103 | 16 | 860,735 | 860,735 | 5.6 | % | |||||||||||||||||||||||||||||||
Denver, CO | 19 | 189,696 | 12 | 694,362 | 93,869 | 788,231 | 5.1 | % | ||||||||||||||||||||||||||||||
Houston, TX | 5 | 161,377 | 10 | 603,995 | 57,170 | 661,165 | 4.3 | % | ||||||||||||||||||||||||||||||
Atlanta, GA | 9 | 250,219 | 11 | 636,786 | 19,732 | 656,518 | 4.2 | % | ||||||||||||||||||||||||||||||
Richmond, VA | 44 | 151,108 | 7 | 548,801 | 548,801 | 3.5 | % | |||||||||||||||||||||||||||||||
Des Moines, IA | 82 | 138,815 | 7 | 197,994 | 181,961 | 152,655 | 532,610 | 3.4 | % | |||||||||||||||||||||||||||||
Indianapolis, IN | 33 | 120,071 | 4 | 526,194 | 526,194 | 3.4 | % | |||||||||||||||||||||||||||||||
Memphis, TN | 43 | 100,337 | 7 | 515,876 | 515,876 | 3.3 | % | |||||||||||||||||||||||||||||||
Washington, DC | 6 | 151,706 | 6 | 507,336 | 507,336 | 3.3 | % | |||||||||||||||||||||||||||||||
San Antonio, TX | 24 | 96,383 | 6 | 473,673 | 473,673 | 3.1 | % | |||||||||||||||||||||||||||||||
Austin, TX | 29 | 108,324 | 5 | 374,886 | 374,886 | 2.4 | % | |||||||||||||||||||||||||||||||
Chicago, IL | 3 | 93,882 | 3 | 352,800 | 352,800 | 2.3 | % | |||||||||||||||||||||||||||||||
Honolulu, HI | 56 | 144,349 | 3 | 298,427 | 298,427 | 1.9 | % | |||||||||||||||||||||||||||||||
San Francisco, CA | 12 | 120,860 | 3 | 286,270 | 286,270 | 1.9 | % | |||||||||||||||||||||||||||||||
Colorado Springs, CO | 78 | 65,049 | 4 | 275,434 | 275,434 | 1.8 | % | |||||||||||||||||||||||||||||||
Miami, FL | 7 | 54,287 | 3 | 215,980 | 215,980 | 1.4 | % | |||||||||||||||||||||||||||||||
Minneapolis, MN | 16 | 63,403 | 4 | 172,900 | 34,608 | 207,508 | 1.3 | % | ||||||||||||||||||||||||||||||
Other (16 markets) | 439,345 | 29 | 1,563,889 | 287,874 | 1,851,763 | 12.0 | % | |||||||||||||||||||||||||||||||
Total | $4,336,616 | 211 | 14,083,439 | 612,994 | 219,245 | 557,750 | 15,473,428 | 100.0 | % | |||||||||||||||||||||||||||||
Number of properties | 193 | 11 | 2 | 5 | 211 | |||||||||||||||||||||||||||||||||
% of square feet | 91.0 | % | 4.0 | % | 1.4 | % | 3.6 | % | 100.0 | % | ||||||||||||||||||||||||||||
Investment 1 | $3,927,017 | $157,875 | $110,662 | $141,062 | $4,336,616 | |||||||||||||||||||||||||||||||||
Quarterly cash NOI | $65,786 | $3,178 | $2,971 | $1,389 | $73,324 | |||||||||||||||||||||||||||||||||
% of cash NOI | 89.7 | % | 4.4 | % | 4.0 | % | 1.9 | % | 100.0 | % |
BY BUILDING TYPE | |||||||||||||||||
MOB TOTAL | MULTI-TENANT | SINGLE-TENANT | TOTAL | ||||||||||||||
Number of properties | 204 | 198 | 13 | 211 | |||||||||||||
Square feet | 14,696,433 | 14,641,189 | 832,239 | 15,473,428 | |||||||||||||
% of square feet | 95.0 | % | 94.6 | % | 5.4 | % | 100.0 | % | |||||||||
Occupancy % | 86.9 | % | 86.2 | % | 100.0 | % | 87.0 | % | |||||||||
Investment 1 | $4,084,892 | $4,068,079 | $268,537 | $4,336,616 | |||||||||||||
Quarterly cash NOI | $68,964 | $67,175 | $6,149 | $73,324 | |||||||||||||
% of cash NOI | 94.1 | % | 91.6 | % | 8.4 | % | 100.0 | % |
1Excludes assets held for sale, land held for development, construction in progress, Memphis Redevelopment and corporate property.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 15 |
Associated Health Systems 1 | ||
MOB PORTFOLIO (BY SQUARE FEET) | |||||||||||||||||||||||||||||
SYSTEM RANK 3 | CREDIT RATING | ASSOCIATED 94.7% 2 | OFF CAMPUS | % OF TOTAL MOB | |||||||||||||||||||||||||
HEALTH SYSTEM | ON | ADJACENT 4 | ANCHORED 5 | TOTAL MOB | |||||||||||||||||||||||||
Baylor Scott & White Health | 20 | AA-/Aa3 | 1,644,096 | 280,941 | 163,188 | — | 2,088,225 | 14.2 | % | ||||||||||||||||||||
Ascension Health | 3 | AA+/Aa2 | 1,080,681 | 155,881 | — | — | 1,236,562 | 8.4 | % | ||||||||||||||||||||
CommonSpirit Health 6 | 5 | BBB+/Baa1 | 807,182 | 311,310 | 95,486 | — | 1,213,978 | 8.3 | % | ||||||||||||||||||||
Atrium Health | 25 | AA-/Aa3 | 393,815 | 98,066 | 313,513 | — | 805,394 | 5.5 | % | ||||||||||||||||||||
Tenet Healthcare | 6 | B/B2 | 570,264 | 67,790 | — | — | 638,054 | 4.3 | % | ||||||||||||||||||||
UW Medicine (Seattle) | 92 | AA+/Aaa | 345,567 | 102,540 | 44,166 | 125,543 | 617,816 | 4.2 | % | ||||||||||||||||||||
Wellstar Health System | 75 | A/A2 | 476,054 | 112,769 | — | — | 588,823 | 4.0 | % | ||||||||||||||||||||
Bon Secours Mercy Health | 21 | A+/A1 | 548,801 | — | — | — | 548,801 | 3.7 | % | ||||||||||||||||||||
Indiana University Health | 26 | AA/Aa2 | 423,628 | 102,566 | — | — | 526,194 | 3.6 | % | ||||||||||||||||||||
Baptist Memorial Health Care | 90 | BBB+/-- | 424,306 | — | 39,345 | 52,225 | 515,876 | 3.5 | % | ||||||||||||||||||||
UCHealth | 46 | AA/Aa3 | 150,291 | 298,093 | 33,850 | — | 482,234 | 3.3 | % | ||||||||||||||||||||
HCA | 1 | BB+/Ba2 | 151,340 | 167,017 | — | 78,305 | 396,662 | 2.7 | % | ||||||||||||||||||||
Trinity Health | 7 | AA-/Aa3 | 267,952 | 73,331 | — | — | 341,283 | 2.3 | % | ||||||||||||||||||||
Providence St. Joseph Health | 4 | AA-/Aa3 | 176,854 | 153,433 | — | — | 330,287 | 2.2 | % | ||||||||||||||||||||
Hawaii Pacific Health | 182 | --/A1 | 173,502 | — | — | 124,925 | 298,427 | 2.0 | % | ||||||||||||||||||||
Inova Health System | 70 | AA+/Aa2 | 262,121 | — | — | — | 262,121 | 1.8 | % | ||||||||||||||||||||
Memorial Hermann | 39 | A+/A1 | — | 246,325 | — | — | 246,325 | 1.7 | % | ||||||||||||||||||||
Medstar Health | 45 | A/A2 | 241,739 | — | — | — | 241,739 | 1.6 | % | ||||||||||||||||||||
MultiCare Health System | 82 | AA-/Aa3 | 154,452 | 84,348 | — | — | 238,800 | 1.6 | % | ||||||||||||||||||||
Advocate Aurora Health Care | 14 | AA/Aa3 | 142,955 | 95,436 | — | — | 238,391 | 1.6 | % | ||||||||||||||||||||
Overlake Health System | 294 | A/A2 | 191,051 | 39,659 | — | — | 230,710 | 1.6 | % | ||||||||||||||||||||
Other (24 credit rated systems) | 907,321 | 1,058,664 | 146,689 | — | 2,112,674 | 14.4 | % | ||||||||||||||||||||||
Subtotal - credit rated 7 | 9,533,972 | 3,448,169 | 836,237 | 380,998 | 14,199,376 | 96.6 | % | ||||||||||||||||||||||
Non-credit rated | 102,555 | — | — | 394,502 | 497,057 | 3.4 | % | ||||||||||||||||||||||
Total | 9,636,527 | 3,448,169 | 836,237 | 775,500 | 14,696,433 | 100.0 | % | ||||||||||||||||||||||
% of total | 65.5 | % | 23.5 | % | 5.7 | % | 5.3 | % |
1Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.
2Includes total square feet of buildings located on-campus, adjacent and off-campus/anchored by healthcare systems.
3Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.
4The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.
5Includes buildings where health systems lease 40% or more of the property.
6Previously Catholic Health Initiatives.
7Based on square footage, 88.8% is associated with an investment-grade rated healthcare provider.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 16 |
Top Tenants 1 | ||
# OF ASSOCIATED PROPERTIES | LEASED SQUARE FEET | |||||||||||||||||||||||||||||||||||||
TENANT | SYSTEM RANK 2 | CREDIT RATING | # OF LEASES | MOB | INPATIENT | TOTAL | % OF TOTAL LEASED | % OF TTM REVENUE | ||||||||||||||||||||||||||||||
Baylor Scott & White Health | 20 | AA-/Aa3 | 21 | 146 | 915,063 | 156,245 | 1,071,308 | 8.0 | % | 8.1 | % | |||||||||||||||||||||||||||
Atrium Health | 25 | AA-/Aa3 | 16 | 73 | 641,245 | — | 641,245 | 4.8 | % | 4.1 | % | |||||||||||||||||||||||||||
CommonSpirit Health 3 | 5 | BBB+/Baa1 | 17 | 74 | 568,315 | — | 568,315 | 4.2 | % | 4.0 | % | |||||||||||||||||||||||||||
Indiana University Health | 26 | AA/Aa2 | 4 | 62 | 439,971 | — | 439,971 | 3.3 | % | 2.8 | % | |||||||||||||||||||||||||||
Ascension Health | 3 | AA+/Aa2 | 11 | 65 | 383,222 | — | 383,222 | 2.8 | % | 2.6 | % | |||||||||||||||||||||||||||
WellStar Health System | 75 | A/A2 | 9 | 51 | 347,821 | — | 347,821 | 2.6 | % | 2.2 | % | |||||||||||||||||||||||||||
UW Medicine (Seattle) | 92 | AA+/Aaa | 9 | 27 | 230,152 | — | 230,152 | 1.7 | % | 2.0 | % | |||||||||||||||||||||||||||
Bon Secours Mercy Health | 21 | A+/A1 | 7 | 59 | 276,541 | — | 276,541 | 2.1 | % | 1.8 | % | |||||||||||||||||||||||||||
UCHealth | 46 | AA/Aa3 | 8 | 14 | 221,718 | — | 221,718 | 1.6 | % | 1.7 | % | |||||||||||||||||||||||||||
Proliance Surgeons | - | - | 7 | 18 | 146,539 | — | 146,539 | 1.1 | % | 1.6 | % | |||||||||||||||||||||||||||
Baptist Memorial Health Care | 90 | BBB+/-- | 7 | 25 | 193,187 | — | 193,187 | 1.4 | % | 1.5 | % | |||||||||||||||||||||||||||
Tenet Healthcare | 6 | B/B2 | 10 | 31 | 121,835 | 63,000 | 184,835 | 1.4 | % | 1.3 | % | |||||||||||||||||||||||||||
Medstar Health | 45 | A/A2 | 3 | 54 | 153,353 | — | 153,353 | 1.1 | % | 1.3 | % | |||||||||||||||||||||||||||
Trinity Health | 7 | AA-/Aa3 | 3 | 31 | 165,250 | — | 165,250 | 1.2 | % | 1.2 | % | |||||||||||||||||||||||||||
Providence St. Joseph Health | 4 | AA-/Aa3 | 6 | 22 | 100,739 | — | 100,739 | 0.7 | % | 1.0 | % | |||||||||||||||||||||||||||
Eating Recovery Center | - | B-/Caa1 | 4 | 6 | 100,946 | — | 100,946 | 0.7 | % | 0.9 | % | |||||||||||||||||||||||||||
Hawaii Pacific Health | 182 | --/A1 | 3 | 35 | 91,426 | — | 91,426 | 0.7 | % | 0.9 | % | |||||||||||||||||||||||||||
MultiCare Health System | 82 | AA-/Aa3 | 5 | 18 | 150,201 | — | 150,201 | 1.1 | % | 0.9 | % | |||||||||||||||||||||||||||
USPI 4 | - | - | 5 | 10 | 109,113 | — | 109,113 | 0.8 | % | 0.8 | % | |||||||||||||||||||||||||||
DaVita | - | BB/Ba2 | 10 | 12 | 105,847 | — | 105,847 | 0.8 | % | 0.8 | % | |||||||||||||||||||||||||||
Inova Health | 70 | AA+/Aa2 | 3 | 10 | 90,533 | — | 90,533 | 0.7 | % | 0.8 | % | |||||||||||||||||||||||||||
Labcorp of America | - | BBB/Baa2 | 21 | 23 | 173,658 | — | 173,658 | 1.3 | % | 0.8 | % | |||||||||||||||||||||||||||
Kaiser Permanente | 2 | AA-/-- | 3 | 10 | 101,830 | — | 101,830 | 0.8 | % | 0.7 | % | |||||||||||||||||||||||||||
Memorial Hermann | 39 | A+/A1 | 2 | 2 | 99,874 | — | 99,874 | 0.7 | % | 0.7 | % | |||||||||||||||||||||||||||
Overlake Health System | 294 | A/A2 | 2 | 8 | 73,676 | — | 73,676 | 0.5 | % | 0.7 | % | |||||||||||||||||||||||||||
HCA | 1 | BB+/Ba2 | 5 | 14 | 84,358 | — | 84,358 | 0.6 | % | 0.7 | % | |||||||||||||||||||||||||||
Allina Health | 57 | AA-/Aa3 | 2 | 8 | 62,529 | — | 62,529 | 0.5 | % | 0.5 | % | |||||||||||||||||||||||||||
Advocate Health Care | 14 | AA/Aa3 | 2 | 11 | 60,566 | — | 60,566 | 0.4 | % | 0.5 | % | |||||||||||||||||||||||||||
Cedars-Sinai Health | 51 | --/Aa3 | 1 | 14 | 47,661 | — | 47,661 | 0.4 | % | 0.5 | % | |||||||||||||||||||||||||||
Univ. of MD Medical Center | 61 | A/A2 | 2 | 8 | 71,973 | — | 71,973 | 0.5 | % | 0.5 | % | |||||||||||||||||||||||||||
Top 30 tenants | 941 | 6,329,142 | 219,245 | 6,548,387 | 48.5 | % | 47.9 | % | ||||||||||||||||||||||||||||||
Total Investment-grade tenants 5 | 922 | 6,271,407 | 156,245 | 6,427,652 | 47.8 | % | 45.1 | % |
1Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.
2Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.
3Previously Catholic Health Initiatives.
4As of September 30, 2020, USPI is approximately 95% owned by Tenet Health.
5Includes affiliates of investment grade tenants.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 17 |
MOB Proximity to Hospital 1, 2 | ||
MEDICAL OFFICE BUILDINGS BY LOCATION | ||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | |||||||||||||||||||||
On campus | 65.6 | % | 67.1 | % | 66.2 | % | 67.4 | % | 68.4 | % | 68.9 | % | ||||||||||||||
Adjacent to campus 3 | 23.5 | % | 21.9 | % | 21.6 | % | 20.2 | % | 19.3 | % | 18.7 | % | ||||||||||||||
Total on/adjacent | 89.1 | % | 89.0 | % | 87.8 | % | 87.6 | % | 87.7 | % | 87.6 | % | ||||||||||||||
Off campus - anchored by health system 4 | 5.6 | % | 5.7 | % | 7.0 | % | 7.2 | % | 6.7 | % | 7.3 | % | ||||||||||||||
Off campus | 5.3 | % | 5.3 | % | 5.2 | % | 5.2 | % | 5.6 | % | 5.1 | % | ||||||||||||||
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 | 118 | 9,636,527 | 65.6 | % | 65.6 | % | On campus | 7,641,107 | 89.3 | % | ||||||||||||||||
0.00 | 250 yards | 38 | 2,137,108 | 14.6 | % | 80.2 | % | Adjacent 3 | 128,717 | 1.5 | % | |||||||||||||||
250 yards | 0.25 miles | 24 | 1,311,061 | 8.9 | % | 89.1 | % | 120,036 | 1.4 | % | ||||||||||||||||
0.25 miles | 0.50 | 4 | 286,818 | 2.0 | % | 91.1 | % | Off campus | 124,925 | 1.5 | % | |||||||||||||||
0.50 | 1.00 | 2 | 280,873 | 1.9 | % | 93.0 | % | — | — | % | ||||||||||||||||
1.00 | 2.00 | 5 | 353,656 | 2.4 | % | 95.4 | % | 319,446 | 3.7 | % | ||||||||||||||||
2.00 | 5.00 | 7 | 352,316 | 2.3 | % | 97.7 | % | 13,818 | 0.2 | % | ||||||||||||||||
5.00 | 10.00 | 3 | 205,631 | 1.4 | % | 99.1 | % | 205,631 | 2.4 | % | ||||||||||||||||
10.00 | 3 | 132,443 | 0.9 | % | 100.0 | % | — | — | % | |||||||||||||||||
Total | 204 | 14,696,433 | 100.0 | % | 8,553,680 | 100.0 | % |
1Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.
2Proximity 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.
3The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.
4Includes buildings where health systems lease 40% or more of the property.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 18 |
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 | |||||||||||||||||||||||
2020 | 211 | 751,206 | 6.0 | % | — | — | — | % | 211 | 751,206 | 5.6 | % | 5.8 | % | ||||||||||||||||||
2021 | 639 | 2,163,370 | 17.1 | % | 1 | 83,318 | 10.0 | % | 640 | 2,246,688 | 16.7 | % | 16.5 | % | ||||||||||||||||||
2022 | 515 | 1,747,162 | 13.8 | % | 1 | 58,285 | 7.0 | % | 516 | 1,805,447 | 13.4 | % | 13.7 | % | ||||||||||||||||||
2023 | 425 | 1,753,206 | 13.9 | % | — | — | — | % | 425 | 1,753,206 | 13.0 | % | 13.4 | % | ||||||||||||||||||
2024 | 420 | 1,947,034 | 15.4 | % | 1 | 63,000 | 7.6 | % | 421 | 2,010,034 | 14.9 | % | 14.4 | % | ||||||||||||||||||
2025 | 304 | 1,434,095 | 11.4 | % | 2 | 91,561 | 11.0 | % | 306 | 1,525,656 | 11.3 | % | 11.1 | % | ||||||||||||||||||
2026 | 126 | 485,111 | 3.9 | % | — | — | — | % | 126 | 485,111 | 3.6 | % | 3.3 | % | ||||||||||||||||||
2027 | 107 | 468,162 | 3.7 | % | 1 | 156,245 | 18.7 | % | 108 | 624,407 | 4.7 | % | 5.7 | % | ||||||||||||||||||
2028 | 110 | 659,613 | 5.2 | % | 1 | 35,419 | 4.3 | % | 111 | 695,032 | 5.2 | % | 5.0 | % | ||||||||||||||||||
2029 | 106 | 619,955 | 4.9 | % | 3 | 165,342 | 19.9 | % | 109 | 785,297 | 5.8 | % | 6.0 | % | ||||||||||||||||||
Thereafter | 151 | 598,481 | 4.7 | % | 3 | 179,069 | 21.5 | % | 154 | 777,550 | 5.8 | % | 5.1 | % | ||||||||||||||||||
Total leased | 3,114 | 12,627,395 | 86.2 | % | 13 | 832,239 | 100.0 | % | 3,127 | 13,459,634 | 87.0 | % | 100.0 | % | ||||||||||||||||||
Total building | 14,641,189 | 100.0 | % | 832,239 | 100.0 | % | 15,473,428 | 100.0 | % | |||||||||||||||||||||||
WALTR (months) 3 | 43.1 | 76.1 | 45.1 | |||||||||||||||||||||||||||||
WALT (months) 3 | 85.3 | 142.8 | 89.1 |
# 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 | 1,671 | — | >100,000 | 40.2 | % | 6,216,108 | 144,561 | 43 | ||||||||||||||||||
2,501 - 5,000 | 764 | — | <100,000 and >75,000 | 26.2 | % | 4,055,599 | 86,289 | 47 | ||||||||||||||||||
5,001 - 7,500 | 251 | — | <75,000 and >50,000 | 17.0 | % | 2,625,702 | 62,517 | 42 | ||||||||||||||||||
7,501 - 10,000 | 142 | — | <50,000 and >25,000 | 14.0 | % | 2,175,742 | 38,853 | 56 | ||||||||||||||||||
10,001 + | 286 | 13 | <25,000 | 2.6 | % | 400,277 | 17,403 | 23 | ||||||||||||||||||
Total Leases | 3,114 | 13 | Total | 100.0 | % | 15,473,428 | 73,334 | 211 |
1Excludes land held for development, construction in progress, Memphis Redevelopment, corporate property and assets classified as held for sale.
2Represents the current annualized minimum rents on in-place leases, excluding the impact of potential lease renewals and straight-line rent.
3WALTR = weighted average lease term remaining; WALT = weighted average lease term.
4The average lease size in the multi-tenant properties is 4,055 square feet.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 19 |
Historical Occupancy 1 | ||
DOLLARS IN THOUSANDS | ||
SAME STORE PROPERTIES | ||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | |||||||||||||||||||||||||||
Multi-tenant | ||||||||||||||||||||||||||||||||
Number of properties | 156 | 161 | 157 | 157 | 149 | 147 | ||||||||||||||||||||||||||
Total building square feet | 11,984,473 | 12,519,841 | 12,243,069 | 12,243,069 | 11,675,944 | 11,533,207 | ||||||||||||||||||||||||||
Period end % occupied | 87.6 | % | 87.7 | % | 87.9 | % | 88.3 | % | 87.6 | % | 88.3 | % | ||||||||||||||||||||
Single-tenant | ||||||||||||||||||||||||||||||||
Number of properties | 12 | 12 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||||
Total building square feet | 810,930 | 810,930 | 1,196,930 | 1,196,930 | 1,252,198 | 1,252,198 | ||||||||||||||||||||||||||
Period end % occupied | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||
Total same store properties | ||||||||||||||||||||||||||||||||
Number of properties | 168 | 173 | 171 | 171 | 163 | 161 | ||||||||||||||||||||||||||
Total building square feet | 12,795,403 | 13,330,771 | 13,439,999 | 13,439,999 | 12,928,142 | 12,785,405 | ||||||||||||||||||||||||||
Period end % occupied | 88.4 | % | 88.4 | % | 89.0 | % | 89.3 | % | 88.8 | % | 89.5 | % | ||||||||||||||||||||
PROPERTIES NOT IN SAME STORE | ||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | |||||||||||||||||||||||||||
Acquisitions 2 | ||||||||||||||||||||||||||||||||
Number of properties | 31 | 26 | 31 | 24 | 30 | 27 | ||||||||||||||||||||||||||
Total building square feet | 1,667,990 | 1,455,265 | 1,826,029 | 1,487,251 | 1,935,189 | 1,803,890 | ||||||||||||||||||||||||||
Period end % occupied | 91.4 | % | 89.2 | % | 86.9 | % | 86.1 | % | 90.1 | % | 91.1 | % | ||||||||||||||||||||
Development completions | ||||||||||||||||||||||||||||||||
Number of properties | 1 | 1 | 1 | — | — | 1 | ||||||||||||||||||||||||||
Total building square feet | 151,031 | 151,031 | 151,031 | — | — | 99,957 | ||||||||||||||||||||||||||
Period end % occupied | 60.5 | % | 60.5 | % | 20.2 | % | — | % | — | % | 41.8 | % | ||||||||||||||||||||
% leased | 60.5 | % | 60.5 | % | 60.0 | % | — | % | — | % | 44.9 | % | ||||||||||||||||||||
Reposition 3 | ||||||||||||||||||||||||||||||||
Number of properties | 11 | 10 | 9 | 9 | 11 | 12 | ||||||||||||||||||||||||||
Total building square feet | 859,004 | 523,159 | 429,167 | 429,167 | 567,252 | 577,390 | ||||||||||||||||||||||||||
Period end % occupied | 62.1 | % | 46.9 | % | 41.9 | % | 41.9 | % | 36.0 | % | 38.7 | % | ||||||||||||||||||||
TOTAL PROPERTIES | ||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | |||||||||||||||||||||||||||
Number of properties | 211 | 210 | 212 | 204 | 204 | 201 | ||||||||||||||||||||||||||
Total building square feet | 15,473,428 | 15,460,226 | 15,846,226 | 15,356,417 | 15,430,583 | 15,266,642 | ||||||||||||||||||||||||||
Period end % occupied | 87.0 | % | 86.8 | % | 86.8 | % | 87.7 | % | 87.0 | % | 87.4 | % |
1Excludes land held for development, construction in progress, Memphis Redevelopment, corporate property and assets classified as held for sale.
2Acquisition includes properties acquired within the last 8 quarters of the period presented and are excluded from same store.
3Reposition 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. In addition, the Company reclassified a property to reposition during third quarter of 2020 due to strategic reposition. This reclassification is described in more detail in Trends and Matters Impacting Operating Results of the Company's Q3 2020 Form 10-Q.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 20 |
Occupancy Reconciliation | ||
SQUARE FEET | ||
SEQUENTIAL | |||||||||||||||||||||||||||||
PORTFOLIO | SAME STORE | ||||||||||||||||||||||||||||
COUNT | OCCUPIED | TOTAL | % | COUNT | OCCUPIED | TOTAL | % | ||||||||||||||||||||||
Beginning June 30, 2020 | 210 | 13,423,187 | 15,460,226 | 86.8 | % | 173 | 11,788,219 | 13,330,771 | 88.4 | % | |||||||||||||||||||
Portfolio activity | |||||||||||||||||||||||||||||
Acquisitions | 6 | 216,112 | 229,809 | 94.0 | % | NA | NA | NA | NA | ||||||||||||||||||||
Re/development completions | — | — | — | — | % | — | — | — | — | % | |||||||||||||||||||
Dispositions 1 | (5) | (100,515) | (216,607) | 46.4 | % | (3) | (75,147) | (108,996) | 68.9 | % | |||||||||||||||||||
Same store reclassifications | |||||||||||||||||||||||||||||
Acquisitions | NA | NA | NA | NA | 1 | 11,781 | 17,084 | 69.0 | % | ||||||||||||||||||||
Development completions | NA | NA | NA | NA | — | — | — | — | % | ||||||||||||||||||||
Reposition to same store | NA | NA | NA | NA | — | — | — | — | % | ||||||||||||||||||||
Reposition from same store | NA | NA | NA | NA | (3) | (379,197) | (443,456) | 85.5 | % | ||||||||||||||||||||
211 | 13,538,784 | 15,473,428 | 87.5 | % | 168 | 11,345,656 | 12,795,403 | 88.7 | % | ||||||||||||||||||||
Leasing activity | |||||||||||||||||||||||||||||
New leases/expansions | NA | 146,567 | NA | NA | NA | 107,137 | NA | NA | |||||||||||||||||||||
Move-outs/contractions | NA | (225,717) | NA | NA | NA | (141,697) | NA | NA | |||||||||||||||||||||
Net absorption | NA | (79,150) | NA | NA | NA | (34,560) | NA | NA | |||||||||||||||||||||
Ending September 30, 2020 | 211 | 13,459,634 | 15,473,428 | 87.0 | % | 168 | 11,311,096 | 12,795,403 | 88.4 | % | |||||||||||||||||||
YEAR-OVER-YEAR | |||||||||||||||||||||||||||||
PORTFOLIO | SAME STORE | ||||||||||||||||||||||||||||
COUNT | OCCUPIED | TOTAL | % | COUNT | OCCUPIED | TOTAL | % | ||||||||||||||||||||||
Beginning September 30, 2019 | 204 | 13,425,337 | 15,430,583 | 87.0 | % | 163 | 11,476,507 | 12,928,142 | 88.8 | % | |||||||||||||||||||
Portfolio activity | |||||||||||||||||||||||||||||
Acquisitions | 18 | 703,435 | 775,134 | 90.8 | % | NA | NA | NA | NA | ||||||||||||||||||||
Re/development completions | 1 | 30,445 | 151,031 | 20.2 | % | — | — | — | — | % | |||||||||||||||||||
Dispositions 1 | (12) | (631,398) | (883,320) | 71.5 | % | (8) | (600,477) | (637,624) | 94.2 | % | |||||||||||||||||||
Same store reclassifications | |||||||||||||||||||||||||||||
Acquisitions | NA | NA | NA | NA | 16 | 917,474 | 948,341 | 96.7 | % | ||||||||||||||||||||
Development completions | NA | NA | NA | NA | — | — | — | — | % | ||||||||||||||||||||
Reposition to same store | NA | NA | NA | NA | — | — | — | — | % | ||||||||||||||||||||
Reposition from same store | NA | NA | NA | NA | (3) | (377,850) | (443,456) | 85.2 | % | ||||||||||||||||||||
211 | 13,527,819 | 15,473,428 | 87.4 | % | 168 | 11,415,654 | 12,795,403 | 89.2 | % | ||||||||||||||||||||
Leasing activity | |||||||||||||||||||||||||||||
New leases/expansions | NA | 563,439 | NA | NA | NA | 387,574 | NA | NA | |||||||||||||||||||||
Move-outs/contractions | NA | (631,624) | NA | NA | NA | (492,132) | NA | NA | |||||||||||||||||||||
Net absorption | NA | (68,185) | NA | NA | NA | (104,558) | NA | NA | |||||||||||||||||||||
Ending September 30, 2020 | 211 | 13,459,634 | 15,473,428 | 87.0 | % | 168 | 11,311,096 | 12,795,403 | 88.4 | % |
1Includes properties reclassified as held for sale.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 21 |
Same Store Leasing Statistics 1 | ||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | |||||||||||||||||||||||||||||||||||||||||||
Average in-place contractual increases | ||||||||||||||||||||||||||||||||||||||||||||||||||
Multi-tenant | 2.90 | % | 2.89 | % | 2.89 | % | 2.90 | % | 2.93 | % | 2.91 | % | 2.91 | % | 2.91 | % | ||||||||||||||||||||||||||||||||||
Single-tenant | 2.27 | % | 2.13 | % | 2.10 | % | 2.10 | % | 2.12 | % | 2.43 | % | 2.46 | % | 2.45 | % | ||||||||||||||||||||||||||||||||||
2.85 | % | 2.83 | % | 2.79 | % | 2.80 | % | 2.82 | % | 2.84 | % | 2.85 | % | 2.84 | % | |||||||||||||||||||||||||||||||||||
Multi-tenant renewals | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash leasing spreads | 4.5 | % | 4.5 | % | 4.4 | % | 4.2 | % | 3.3 | % | 5.0 | % | 3.3 | % | (0.5 | %) | ||||||||||||||||||||||||||||||||||
Tenant retention rate | 85.1 | % | 84.6 | % | 84.0 | % | 86.6 | % | 90.2 | % | 87.4 | % | 85.5 | % | 82.6 | % |
AVERAGE IN-PLACE CONTRACTUAL INCREASES 2 | ||||||||||||||||||||||||||
MULTI-TENANT | SINGLE-TENANT | TOTAL | ||||||||||||||||||||||||
% INCREASE | % OF BASE RENT | % INCREASE | % OF BASE RENT | % INCREASE | % OF BASE RENT | |||||||||||||||||||||
Annual increase | ||||||||||||||||||||||||||
CPI | 2.33 | % | 2.35 | % | 1.30 | % | 12.44 | % | 2.03 | % | 3.07 | % | ||||||||||||||
Fixed | 2.98 | % | 94.43 | % | 2.65 | % | 39.74 | % | 2.97 | % | 90.53 | % | ||||||||||||||
Non-annual increase (annualized) | ||||||||||||||||||||||||||
CPI | 1.16 | % | 0.35 | % | 0.50 | % | 4.93 | % | 0.81 | % | 0.67 | % | ||||||||||||||
Fixed | 1.42 | % | 1.87 | % | 2.39 | % | 42.89 | % | 2.04 | % | 4.80 | % | ||||||||||||||
No increase | ||||||||||||||||||||||||||
Term > 1 year | — | % | 1.00 | % | — | % | — | % | — | % | 0.93 | % | ||||||||||||||
Total 2 | 2.90 | % | 100.00 | % | 2.27 | % | 100.00 | % | 2.85 | % | 100.00 | % |
TYPE AND OWNERSHIP STRUCTURE (% OF SQUARE FEET) | ||||||||||||||
MULTI-TENANT | SINGLE-TENANT | TOTAL | ||||||||||||
Tenant type | ||||||||||||||
Hospital | 51.4 | % | 83.0 | % | 53.7 | % | ||||||||
Physician and other | 48.6 | % | 17.0 | % | 46.3 | % | ||||||||
Lease structure | ||||||||||||||
Gross | 11.2 | % | — | % | 10.4 | % | ||||||||
Modified gross | 28.8 | % | — | % | 26.8 | % | ||||||||
Net | 60.0 | % | — | % | 55.6 | % | ||||||||
Absolute net 3 | — | % | 100.0 | % | 7.2 | % | ||||||||
Ownership type | ||||||||||||||
Ground lease | 62.6 | % | 15.6 | % | 59.6 | % | ||||||||
Fee simple | 37.4 | % | 84.4 | % | 40.4 | % |
1Excludes recently acquired or disposed properties, construction in progress, Memphis Redevelopment, land held for development, corporate property, reposition properties and assets classified as held for sale.
2Excludes leases with terms of one year or less.
3Tenant is typically responsible for operating expenses and capital obligations.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 22 |
Same Store Performance 1 | ||
DOLLARS IN THOUSANDS, EXCEPT PER SQUARE FOOT DATA | ||
TTM 2020 | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | TTM 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | ||||||||||||||||||||||||||||||||
Multi-tenant | |||||||||||||||||||||||||||||||||||||||||
Revenues | $381,961 | $96,769 | $94,002 | $96,134 | $95,056 | $375,826 | $95,242 | $94,151 | $93,033 | $93,400 | |||||||||||||||||||||||||||||||
Expenses | 152,104 | 39,106 | 36,570 | 38,702 | 37,726 | 150,518 | 38,925 | 37,430 | 36,917 | 37,246 | |||||||||||||||||||||||||||||||
Cash NOI | $229,857 | $57,663 | $57,432 | $57,432 | $57,330 | $225,308 | $56,317 | $56,721 | $56,116 | $56,154 | |||||||||||||||||||||||||||||||
Revenue per occ SF 2 | $36.14 | $36.80 | $35.62 | $36.28 | $35.82 | $35.37 | $35.87 | $35.51 | $35.05 | $35.07 | |||||||||||||||||||||||||||||||
Margin | 60.2 | % | 59.6 | % | 61.1 | % | 59.7 | % | 60.3 | % | 60.0 | % | 59.1 | % | 60.2 | % | 60.3 | % | 60.1 | % | |||||||||||||||||||||
Average occupancy | 88.2 | % | 87.8 | % | 88.1 | % | 88.4 | % | 88.6 | % | 88.7 | % | 88.6 | % | 88.5 | % | 88.6 | % | 88.9 | % | |||||||||||||||||||||
Number of properties | 156 | 156 | 156 | 156 | 156 | 156 | 156 | 156 | 156 | 156 | |||||||||||||||||||||||||||||||
Single-tenant | |||||||||||||||||||||||||||||||||||||||||
Revenues | $25,914 | $6,662 | $6,224 | $6,533 | $6,495 | $25,393 | $6,503 | $6,491 | $6,217 | $6,182 | |||||||||||||||||||||||||||||||
Expenses | 2,267 | 629 | 425 | 612 | 601 | 2,010 | 633 | 604 | 396 | 377 | |||||||||||||||||||||||||||||||
Cash NOI | $23,647 | $6,033 | $5,799 | $5,921 | $5,894 | $23,383 | $5,870 | $5,887 | $5,821 | $5,805 | |||||||||||||||||||||||||||||||
Revenue per occ SF 2 | $31.95 | $32.86 | $30.70 | $32.22 | $32.03 | $31.31 | $32.07 | $32.01 | $30.66 | $30.49 | |||||||||||||||||||||||||||||||
Average occupancy | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||
Number of properties | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | |||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Revenues | $407,875 | $103,431 | $100,226 | $102,667 | $101,551 | $401,219 | $101,745 | $100,642 | $99,250 | $99,582 | |||||||||||||||||||||||||||||||
Expenses | 154,371 | 39,735 | 36,995 | 39,314 | 38,327 | 152,528 | 39,558 | 38,034 | 37,313 | 37,623 | |||||||||||||||||||||||||||||||
Cash NOI | $253,504 | $63,696 | $63,231 | $63,353 | $63,224 | $248,691 | $62,187 | $62,608 | $61,937 | $61,959 | |||||||||||||||||||||||||||||||
Revenue per occ SF 2 | $35.84 | $36.52 | $35.27 | $35.99 | $35.55 | $35.08 | $35.60 | $35.26 | $34.74 | $34.75 | |||||||||||||||||||||||||||||||
Margin | 62.2 | % | 61.6 | % | 63.1 | % | 61.7 | % | 62.3 | % | 62.0 | % | 61.1 | % | 62.2 | % | 62.4 | % | 62.2 | % | |||||||||||||||||||||
Average occupancy | 88.9 | % | 88.5 | % | 88.8 | % | 89.2 | % | 89.3 | % | 89.4 | % | 89.3 | % | 89.2 | % | 89.3 | % | 89.6 | % | |||||||||||||||||||||
Number of properties | 168 | 168 | 168 | 168 | 168 | 168 | 168 | 168 | 168 | 168 | |||||||||||||||||||||||||||||||
SAME STORE GROWTH | |||||||||||||||||||||||
YEAR-OVER-YEAR | |||||||||||||||||||||||
TTM 2020 | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | |||||||||||||||||||
Multi-tenant | |||||||||||||||||||||||
Revenue per occ SF 2 | 2.2 | % | 2.6 | % | 0.3 | % | 3.5 | % | 2.1 | % | |||||||||||||
Avg occupancy (bps) | -50 | -90 | -40 | -20 | -30 | ||||||||||||||||||
Revenues | 1.6 | % | 1.6 | % | (0.2 | %) | 3.3 | % | 1.8 | % | |||||||||||||
Expenses | 1.1 | % | 0.5 | % | (2.3 | %) | 4.8 | % | 1.3 | % | |||||||||||||
Cash NOI | 2.0 | % | 2.4 | % | 1.3 | % | 2.3 | % | 2.1 | % | |||||||||||||
Single-tenant | |||||||||||||||||||||||
Cash NOI | 1.1 | % | 2.8 | % | (1.5 | %) | 1.7 | % | 1.5 | % | |||||||||||||
Total | |||||||||||||||||||||||
Revenues | 1.7 | % | 1.7 | % | (0.4 | %) | 3.4 | % | 2.0 | % | |||||||||||||
Cash NOI | 1.9 | % | 2.4 | % | 1.0 | % | 2.3 | % | 2.0 | % |
1Excludes recently acquired or disposed properties, development completions, construction in progress, Memphis Redevelopment, land held for development, corporate property, reposition properties and assets classified as held for sale.
2Revenue 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 | 3Q 2020 SUPPLEMENTAL INFORMATION 23 |
NOI Reconciliations | ||
DOLLARS IN THOUSANDS | ||
BOTTOM UP RECONCILIATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Net income | $8,230 | $75,513 | $4,315 | $27,210 | $2,601 | $4,484 | $4,891 | $16,314 | |||||||||||||||||||||||||||||||||||||||||||||
Other income (expense) | 11,969 | (53,959) | 13,927 | (6,218) | 13,981 | 15,354 | 13,564 | 2,850 | |||||||||||||||||||||||||||||||||||||||||||||
General and administrative expense | 7,299 | 7,434 | 8,766 | 7,669 | 10,802 | 7,845 | 8,510 | 8,534 | |||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 47,143 | 47,691 | 47,497 | 46,134 | 45,137 | 43,926 | 42,662 | 42,437 | |||||||||||||||||||||||||||||||||||||||||||||
Other expenses 1 | 2,364 | 2,185 | 3,365 | 2,200 | 2,079 | 1,965 | 1,768 | 1,693 | |||||||||||||||||||||||||||||||||||||||||||||
Straight-line rent expense | 373 | 374 | 375 | 378 | 383 | 387 | 391 | 394 | |||||||||||||||||||||||||||||||||||||||||||||
Straight-line rent revenue | (915) | (764) | (1,043) | (1,167) | (770) | (395) | (668) | (682) | |||||||||||||||||||||||||||||||||||||||||||||
Other revenue 2 | (3,062) | (3,213) | (2,004) | (1,430) | (1,726) | (1,447) | (1,468) | (1,523) | |||||||||||||||||||||||||||||||||||||||||||||
Cash NOI | $73,401 | $75,261 | $75,198 | $74,776 | $72,487 | $72,119 | $69,650 | $70,017 | |||||||||||||||||||||||||||||||||||||||||||||
Acquisitions/development completions | (8,271) | (7,159) | (5,858) | (4,799) | (3,179) | (2,056) | (248) | (35) | |||||||||||||||||||||||||||||||||||||||||||||
Dispositions/other | (76) | (3,065) | (4,402) | (5,128) | (5,461) | (5,513) | (5,652) | (6,383) | |||||||||||||||||||||||||||||||||||||||||||||
Same store cash NOI and reposition | 65,054 | 65,037 | 64,938 | 64,849 | 63,847 | 64,550 | 63,750 | 63,599 | |||||||||||||||||||||||||||||||||||||||||||||
Reposition | (1,358) | (1,806) | (1,585) | (1,625) | (1,660) | (1,942) | (1,813) | (1,640) | |||||||||||||||||||||||||||||||||||||||||||||
Same store cash NOI | $63,696 | $63,231 | $63,353 | $63,224 | $62,187 | $62,608 | $61,937 | $61,959 | |||||||||||||||||||||||||||||||||||||||||||||
TOP DOWN RECONCILIATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Property operating before rent concessions | $115,616 | $111,676 | $112,022 | $108,029 | $106,319 | $103,245 | $99,607 | $99,877 | |||||||||||||||||||||||||||||||||||||||||||||
Rent concessions | (695) | (600) | (874) | (493) | (514) | (427) | (625) | (700) | |||||||||||||||||||||||||||||||||||||||||||||
Property operating | 114,921 | 111,076 | 111,148 | 107,536 | 105,805 | 102,818 | 98,982 | 99,177 | |||||||||||||||||||||||||||||||||||||||||||||
Single-tenant net lease | 7,548 | 10,518 | 10,453 | 10,735 | 11,165 | 11,138 | 11,046 | 11,290 | |||||||||||||||||||||||||||||||||||||||||||||
Straight-line rent revenue | 915 | 764 | 1,043 | 1,167 | 770 | 395 | 668 | 682 | |||||||||||||||||||||||||||||||||||||||||||||
Rental income | 123,384 | 122,358 | 122,644 | 119,438 | 117,740 | 114,351 | 110,696 | 111,149 | |||||||||||||||||||||||||||||||||||||||||||||
Property lease guaranty income | — | — | — | — | — | — | 128 | 187 | |||||||||||||||||||||||||||||||||||||||||||||
Parking income | 1,764 | 1,227 | 2,051 | 1,982 | 1,935 | 1,870 | 1,734 | 1,733 | |||||||||||||||||||||||||||||||||||||||||||||
Exclude straight-line rent revenue | (915) | (764) | (1,043) | (1,167) | (770) | (395) | (668) | (682) | |||||||||||||||||||||||||||||||||||||||||||||
Exclude other non-cash revenue 3 | (2,958) | (3,108) | (1,892) | (1,326) | (1,601) | (1,350) | (1,369) | (1,423) | |||||||||||||||||||||||||||||||||||||||||||||
Revenue | 121,275 | 119,713 | 121,760 | 118,927 | 117,304 | 114,476 | 110,521 | 110,964 | |||||||||||||||||||||||||||||||||||||||||||||
Property operating expense | (50,171) | (46,580) | (49,552) | (46,214) | (46,777) | (44,286) | (42,725) | (42,815) | |||||||||||||||||||||||||||||||||||||||||||||
Exclude non-cash expenses 4 | 2,297 | 2,128 | 2,990 | 2,063 | 1,960 | 1,929 | 1,854 | 1,868 | |||||||||||||||||||||||||||||||||||||||||||||
Cash NOI | $73,401 | $75,261 | $75,198 | $74,776 | $72,487 | $72,119 | $69,650 | $70,017 | |||||||||||||||||||||||||||||||||||||||||||||
Acquisitions/development completions | (8,271) | (7,159) | (5,858) | (4,799) | (3,179) | (2,056) | (248) | (35) | |||||||||||||||||||||||||||||||||||||||||||||
Dispositions/other | (76) | (3,065) | (4,402) | (5,128) | (5,461) | (5,513) | (5,652) | (6,383) | |||||||||||||||||||||||||||||||||||||||||||||
Same store cash NOI and reposition | 65,054 | 65,037 | 64,938 | 64,849 | 63,847 | 64,550 | 63,750 | 63,599 | |||||||||||||||||||||||||||||||||||||||||||||
Reposition | (1,358) | (1,806) | (1,585) | (1,625) | (1,660) | (1,942) | (1,813) | (1,640) | |||||||||||||||||||||||||||||||||||||||||||||
Same store cash NOI | $63,696 | $63,231 | $63,353 | $63,224 | $62,187 | $62,608 | $61,937 | $61,959 |
1Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, and leasing commission amortization.
2Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease termination fees and tenant improvement overage amortization.
3Includes above and below market lease intangibles, interest income related to sales-type leases, lease inducements, lease termination fees and TI amortization.
4Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 24 |
NOI Reconciliations | ||
DOLLARS IN THOUSANDS | ||
RECONCILIATION OF QTR AND TTM ENDED 9/30/2020 - CASH NOI | |||||||||||||||||||||||
Q3 2020 | Q3 2019 | % CHANGE | TTM 2020 | TTM 2019 | % CHANGE | ||||||||||||||||||
Same store cash NOI | $63,696 | $62,187 | 2.4 | % | $253,504 | $248,691 | 1.9 | % | |||||||||||||||
Reposition | 1,358 | 1,660 | (18.2 | %) | 6,374 | 7,055 | (9.7 | %) | |||||||||||||||
$65,054 | $63,847 | 1.9 | % | $259,878 | $255,746 | 1.6 | % | ||||||||||||||||
Acquisitions/development completions | 8,271 | 3,179 | 160.3 | % | 26,087 | 5,518 | 372.9 | % | |||||||||||||||
Dispositions/other | 76 | 5,461 | (98.6 | %) | 12,671 | 23,009 | (44.9 | %) | |||||||||||||||
Cash NOI | $73,401 | $72,487 | 1.3 | % | $298,636 | $284,273 | 5.1 | % | |||||||||||||||
RECONCILIATION OF NOI TO FFO AND NORMALIZED FFO | |||||||||||||||||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | 2Q 2019 | 1Q 2019 | 4Q 2018 | ||||||||||||||||||||||||||||
Cash NOI | $73,401 | $75,261 | $75,198 | $74,776 | $72,487 | $72,119 | $69,650 | $70,017 | |||||||||||||||||||||||||||
General and administrative expense | (7,299) | (7,434) | (8,766) | (7,669) | (10,802) | (7,845) | (8,510) | (8,534) | |||||||||||||||||||||||||||
Straight-line rent | 915 | 764 | 1,043 | 1,167 | 770 | 395 | 668 | 682 | |||||||||||||||||||||||||||
Interest and other income (expense), net | 8 | 134 | 82 | 5 | — | (743) | 9 | (35) | |||||||||||||||||||||||||||
Management fees and other income | 104 | 105 | 112 | 103 | 124 | 96 | 99 | 99 | |||||||||||||||||||||||||||
Bad debts, net of recoveries | — | — | — | — | — | — | — | (18) | |||||||||||||||||||||||||||
Other non-cash revenue 1 | 2,958 | 3,108 | 1,892 | 1,326 | 1,601 | 1,350 | 1,369 | 1,423 | |||||||||||||||||||||||||||
Other non-cash expenses 2 | (2,297) | (2,128) | (2,990) | (2,063) | (1,960) | (1,929) | (1,854) | (1,868) | |||||||||||||||||||||||||||
Debt Covenant EBITDA | $67,790 | $69,810 | $66,571 | $67,645 | $62,220 | $63,443 | $61,431 | $61,766 | |||||||||||||||||||||||||||
Interest expense | (14,154) | (14,442) | (13,960) | (13,816) | (14,181) | (13,850) | (13,588) | (13,602) | |||||||||||||||||||||||||||
Acquisition and pursuit costs | (440) | (431) | (750) | (515) | (501) | (422) | (305) | (200) | |||||||||||||||||||||||||||
Leasing commission amortization 3 | 1,971 | 1,795 | 1,893 | 1,667 | 1,547 | 1,505 | 1,404 | 1,415 | |||||||||||||||||||||||||||
Depreciation expense of unconsolidated JVs 4 | 80 | 80 | 80 | 80 | 80 | 80 | 80 | 80 | |||||||||||||||||||||||||||
Lease intangible amortization 5 | — | — | — | — | — | — | — | 238 | |||||||||||||||||||||||||||
Non-real estate depreciation and amortization | (899) | (909) | (859) | (838) | (838) | (829) | (763) | (790) | |||||||||||||||||||||||||||
FFO | $54,348 | $55,903 | $52,975 | $54,223 | $48,327 | $49,927 | $48,259 | $48,907 | |||||||||||||||||||||||||||
Acquisition and pursuit costs | 440 | 431 | 750 | 515 | 501 | 422 | 305 | 200 | |||||||||||||||||||||||||||
Lease intangible amortization | (35) | (16) | 745 | 4 | 5 | 54 | 84 | — | |||||||||||||||||||||||||||
Accelerated amortization of restricted stock awards | — | — | — | — | 2,854 | — | — | — | |||||||||||||||||||||||||||
Debt financing costs | — | — | — | — | — | 760 | — | — | |||||||||||||||||||||||||||
Normalized FFO | $54,753 | $56,318 | $54,470 | $54,742 | $51,687 | $51,163 | $48,648 | $49,107 |
1Includes above and below market lease intangibles, interest income related to sales-type leases, lease inducements, lease termination fees and TI amortization.
2Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.
3Leasing commission amortization is included in the real estate depreciation and amortization add back for FFO.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 25 |
4The Company has two unconsolidated joint ventures whose earnings are recorded in Interest and other income (expense), net on the Condensed Consolidated Statements of Income. The depreciation expense incurred related to these properties is included in real estate deprecation and amortization add back for FFO.
5Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 26 |
EBITDA Reconciliations | ||
DOLLARS IN THOUSANDS | ||
RECONCILIATION OF EBITDA | ||||||||||||||||||||
TTM | 3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | ||||||||||||||||
Net income | $115,268 | $8,230 | $75,513 | $4,315 | $27,210 | |||||||||||||||
Interest expense | 56,372 | 14,154 | 14,442 | 13,960 | 13,816 | |||||||||||||||
Depreciation and amortization | 188,465 | 47,143 | 47,691 | 47,497 | 46,134 | |||||||||||||||
EBITDA | $360,105 | $69,527 | $137,646 | $65,772 | $87,160 | |||||||||||||||
Other amortization 1 | 7,646 | 2,051 | 1,875 | 1,973 | 1,747 | |||||||||||||||
Gain on sales of real estate properties | (90,431) | (2,177) | (68,267) | 49 | (20,036) | |||||||||||||||
Impairments on real estate assets | 7 | — | — | — | 7 | |||||||||||||||
EBITDAre 2 | $277,327 | $69,401 | $71,254 | $67,794 | $68,878 | |||||||||||||||
EBITDA | $360,105 | $69,527 | $137,646 | $65,772 | $87,160 | |||||||||||||||
Acquisition and pursuit costs | 2,136 | 440 | 431 | 750 | 515 | |||||||||||||||
Gain on sales of real estate properties | (90,431) | (2,177) | (68,267) | 49 | (20,036) | |||||||||||||||
Impairments on real estate assets | 7 | — | — | — | 7 | |||||||||||||||
Debt Covenant EBITDA | $271,817 | $67,790 | $69,810 | $66,571 | $67,646 | |||||||||||||||
Other amortization 1 | 7,646 | 2,051 | 1,875 | 1,973 | 1,747 | |||||||||||||||
Lease intangible amortization | 698 | (35) | (16) | 745 | 4 | |||||||||||||||
Timing impact 3 | 199 | (887) | — | 737 | 349 | |||||||||||||||
Stock based compensation | 9,581 | 2,445 | 2,405 | 2,598 | 2,133 | |||||||||||||||
Adjusted EBITDA | $289,941 | $71,364 | $74,074 | $72,624 | $71,879 |
1Includes leasing commission amortization and depreciation expense of unconsolidated JVs.
2Earnings 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.”
3Adjusted to reflect quarterly EBITDA from properties acquired or disposed in the quarter.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 27 |
Components of Net Asset Value | ||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||
CASH NOI BY PROPERTY TYPE | ||||||||||||||||||||||||||
3Q 2020 | ||||||||||||||||||||||||||
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 | $59,743 | $8,105 | $1,358 | $1,467 | $70,673 | $282,692 | 94.5 | % | ||||||||||||||||||
Inpatient/Surgical | 2,972 | — | — | — | 2,972 | 11,888 | 4.0 | % | ||||||||||||||||||
Office | 981 | 166 | — | — | 1,147 | 4,588 | 1.5 | % | ||||||||||||||||||
Total Cash NOI | $63,696 | $8,271 | $1,358 | $1,467 | $74,792 | $299,168 | 100.0 | % |
DEVELOPMENT PROPERTIES | TOTAL SHARES OUTSTANDING | ||||||||||||||||
Land held for development | $24,647 | As of November 3, 2020 8 | 136,054,024 | ||||||||||||||
Memphis Redevelopment | 14,425 | ||||||||||||||||
Construction in progress | — | ||||||||||||||||
$39,072 | |||||||||||||||||
OTHER ASSETS | |||||||||||||||||
Assets held for sale 5 | $23,000 | ||||||||||||||||
Cash and other assets 6 | 289,729 | ||||||||||||||||
$312,729 | |||||||||||||||||
DEBT | IMPLIED CAP RATE | ||||||||||||||||
Unsecured credit facility | $— | STOCK PRICE | IMPLIED CAP RATE | ||||||||||||||
Unsecured term loan due 2024 | 200,000 | As of 11/3/20 | $29.78 | 5.56 | % | ||||||||||||
Unsecured term loan due 2026 | 150,000 | ||||||||||||||||
Senior notes | 1,100,000 | ||||||||||||||||
Mortgage notes payable | 115,823 | 3Q 2020 high | $30.12 | 5.52 | % | ||||||||||||
Remaining re/development funding | 20,747 | 3Q 2020 low | $27.11 | 5.97 | % | ||||||||||||
Other liabilities 7 | 89,666 | ||||||||||||||||
$1,676,236 |
1See Same Store Performance schedule on page 23 for details on same store NOI.
2Adjusted 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.
3Reposition properties includes 11 properties which comprise 859,004 square feet.
4Timing adjustments include current quarter acquisitions of $0.6 million as well as development completion adjustments of $0.9 million to reflect full quarterly stabilized NOI from a recently completed development.
5Assets held for sale includes four real estate properties that are excluded from same store NOI and reflect the contractual purchase price.
6Includes cash of $122.0 million, restricted cash of $60.6 million, prepaid assets of $59.5 million, accounts receivable of $10.8 million, and prepaid ground leases of $24.3 million. In addition, includes the Company's occupied portion of its corporate headquarters of $12.5 million.
7Includes 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 $80.0 million, security deposits of $9.4 million, and deferred operating expense reimbursements of $0.3 million.
8Total shares outstanding do not reflect the shares associated with forward equity contracts. As of November 3, 2020, the Company had 3.6 million shares to be issued in the future under forward equity contracts.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 28 |
Components of Expected FFO | ||
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA | ||
The Company provided its expectations for the full year of 2020 in February. These expectations have been revised to reflect the estimated impact of the COVID-19 pandemic.
SAME STORE RANGE OF 2020 EXPECTATIONS | |||||||||||||||||||||||
PRE COVID-19 | ACTUAL | COVID-19 ADJUSTED 1 | |||||||||||||||||||||
LOW | HIGH | Q3 2020 | LOW | HIGH | |||||||||||||||||||
TTM Average Occupancy | |||||||||||||||||||||||
Multi-tenant | 88.0 | % | 89.0 | % | 88.2 | % | 87.5 | % | 88.5 | % | |||||||||||||
Single-tenant | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
TTM revenue per occupied square foot | |||||||||||||||||||||||
Multi-tenant | $35.50 | $36.50 | $36.14 | $35.50 | $36.50 | ||||||||||||||||||
Single-tenant 2 | $31.50 | $32.50 | $31.95 | $31.50 | $32.50 | ||||||||||||||||||
TTM Multi-tenant cash NOI margin | 59.5 | % | 60.5 | % | 60.2 | % | 59.5 | % | 60.5 | % | |||||||||||||
Multi-tenant cash leasing spreads | 3.0 | % | 4.0 | % | 4.5 | % | 3.0 | % | 4.5 | % | |||||||||||||
Multi-tenant lease retention rate | 75.0 | % | 90.0 | % | 85.1 | % | 75.0 | % | 90.0 | % | |||||||||||||
TTM cash NOI growth | |||||||||||||||||||||||
Multi-tenant | 2.4 | % | 3.3 | % | 2.0 | % | 1.5 | % | 2.5 | % | |||||||||||||
Single-tenant | 1.7 | % | 2.5 | % | 1.1 | % | 1.7 | % | 2.5 | % | |||||||||||||
Total | 2.3 | % | 3.2 | % | 1.9 | % | 1.5 | % | 2.5 | % | |||||||||||||
ANNUAL RANGE OF 2020 EXPECTATIONS | |||||||||||||||||||||||
LOW | HIGH | YTD 2020 | LOW | HIGH | |||||||||||||||||||
Normalized G&A | $33,000 | $34,000 | $23,498 | $31,000 | $32,000 | ||||||||||||||||||
Straight-line rent, net 3 | 1,500 | 3,000 | 1,578 | 1,500 | 3,000 | ||||||||||||||||||
Funding activity | |||||||||||||||||||||||
Acquisitions | 250,000 | 350,000 | 219,082 | 400,000 | 475,000 | ||||||||||||||||||
Dispositions | (25,000) | (75,000) | (4,987) | (4,987) | (50,000) | ||||||||||||||||||
Mercy disposition | — | — | (244,456) | (244,456) | (244,456) | ||||||||||||||||||
Re/development | 30,000 | 50,000 | 17,290 | 20,000 | 30,000 | ||||||||||||||||||
1st generation TI and acq. cap. ex. | 20,000 | 25,000 | 14,193 | 18,000 | 23,000 | ||||||||||||||||||
2nd generation TI | 28,000 | 34,000 | 17,368 | 24,000 | 30,000 | ||||||||||||||||||
Leasing commissions paid | 8,000 | 12,000 | 7,081 | 7,000 | 11,000 | ||||||||||||||||||
Capital expenditures | 17,000 | 21,000 | 12,827 | 15,000 | 20,000 | ||||||||||||||||||
Outstanding forward equity contracts 4 | — | — | — | (105,600) | (109,700) | ||||||||||||||||||
Cash yield | |||||||||||||||||||||||
Acquisitions | 5.0 | % | 5.8 | % | 5.8 | % | 5.0 | % | 5.8 | % | |||||||||||||
Dispositions | 5.5 | % | 6.5 | % | 3.9 | % | 3.0 | % | 4.0 | % | |||||||||||||
Mercy disposition | — | — | 7.5 | % | 7.5 | % | 7.5 | % | |||||||||||||||
Re/development (stabilized) | 6.0 | % | 7.5 | % | NA | 6.0 | % | 7.5 | % | ||||||||||||||
Leverage (debt/cap) | 31.5 | % | 33.5 | % | 33.8 | % | 32.0 | % | 36.0 | % | |||||||||||||
Net debt to adjusted EBITDA | 5.0x | 5.5x | 4.8x | 5.0x | 5.5x |
1COVID-19 Adjusted represents the Company's estimate of full year 2020 results. The Company selected the accrual method related to rent deferral accounting. The current COVID-19 rent deferral agreements provide for the repayment of deferral amounts before year-end of 2020, and as such the accounting method is not expected to impact the full year 2020 results.
2Pre-COVID range was adjusted to reflect the impact of the Mercy disposition.
3This guidance range is based on current in-place leases. Straight-line rent, net was $1.4 million for the year ended December 31, 2019, with a quarterly range of $0.0 million to $0.8 million.
4Range reflects settlement between execution and settlement dates through October 14, 2021.
HEALTHCARE REALTY | 3Q 2020 SUPPLEMENTAL INFORMATION 29 |