Healthcare Realty Trust 8K Announces Fourth Quarter Results | SEC 26 Feb 07

Exhibit 99.1

N e w s R e l e a s e

Contact: Scott W. Holmes, Senior Vice President and Chief Financial Officer, (615) 269-8175

HEALTHCARE REALTY TRUST ANNOUNCES FOURTH QUARTER RESULTS

NASHVILLE, Tennessee February 26, 2007 – Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the fourth quarter that ended December 31, 2006. Revenues for the fourth quarter totaled $65.8 million, compared with the prior year’s $66.2 million. Net income for the fourth quarter was $7.7 million, or $0.16 per diluted common share, versus $11.7 million, or $0.25 per diluted common share, for the fourth quarter of 2005.

Funds from operations (“FFO”), calculated according to the definition of the National Association of Real Estate Investment Trusts (“NAREIT”) and comprised primarily of net income and depreciation from real estate, but not adjusted for certain non-cash income and expense items, totaled $24.8 million compared with $26.2 million for the same period in 2005. FFO per diluted common share totaled $0.52 compared with $0.55 for the fourth quarter of 2005. A reconciliation of FFO to net income follows.

Net income and FFO for the three months ended December 31, 2006 include the impact of non-cash impairment charges totaling $1.8 million. Before these charges, FFO per diluted common share for the fourth quarter of 2006 would have been $0.56.

Revenues for the twelve months ended December 31, 2006 totaled $264.9 million compared with the prior year’s $251.8 million. Net income for the twelve-month period was $39.7 million, or $0.84 per diluted common share, versus $52.7 million, or $1.11 per diluted common share, for the twelve months ended December 31, 2005. FFO totaled $101.1 million for the twelve months ended December 31, 2006, compared with $107.9 million for the same period in 2005. FFO, per diluted common share, for the twelve months ended December 31, 2006 totaled $2.13, versus $2.28 for the same period in 2005.

Funds available for distribution for the fourth quarter of 2006 totaled $0.61 per diluted common share. A reconciliation of funds available for distribution to net income follows.

Healthcare Realty Trust is a real estate investment trust that integrates owning, managing and developing income-producing real estate properties associated with the delivery of healthcare services throughout the United States. As of December 31, 2006, the Company had investments of approximately $2.0 billion in 249 real estate properties and mortgages, including investments in unconsolidated limited liability companies. The Company’s 237 owned real estate properties are comprised of six facility types, located in 28 states, totaling approximately 12.9 million square feet. The Company provides property management services to approximately 6.8 million square feet nationwide.

The Company directs interested parties to its Internet page site, www.healthcarerealty.com, where information is posted regarding this quarter’s operations. Please contact the Company at (615) 269-8175 to request a printed copy of this information. In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in a 10-K filed with the SEC by Healthcare Realty Trust for the year ended December 31, 2005. Forward-looking statements represent the Company’s judgment as of the date of this release. The Company disclaims any obligation to update forward-looking material.

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HEALTHCARE REALTY TRUST INCORPORATED
Consolidated Statements of Income (1)
(Unaudited)
(Dollars in thousands, except per share data)


	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006		2005
Revenues:
Master lease rental income	$	21,553		$	18,472		$	83,251	$	70,983
Property operating income		32,358			33,856			127,200		135,035
Straight-line rent		93			1,422			2,358		295
Mortgage interest income		1,918			2,827			11,014		9,103
Other operating income (2)		9,898			9,644			41,059		36,356

		65,820			66,221			264,882		251,772

Expenses:
General and administrative		3,862			4,083			16,867		16,089
Property operating expenses		17,041			19,209			70,449		72,677
Other operating expenses (2)		4,209			4,058			17,209		15,938
Impairments		1,800			0			5,611		0
Bad debt expense, net		5			1,177			1,256		1,308
Interest		13,900			12,911			53,553		48,395
Depreciation		15,456			11,331			54,492		49,321
Amortization		1,890			2,972			9,938		12,153

		58,163			55,741			229,375		215,881


Income from continuing operations		7,657			10,480			35,507		35,891

Discontinued operations:
Net income (loss) from discontinued operations		(2	)		1,210			1,010		10,007
Gain on sales of real estate properties, net of impairments		0			(3	)		3,202		6,770

		(2	)		1,207			4,212		16,777


Net income	$	7,655		$	11,687		$	39,719	$	52,668


Basic earnings per common share:
Income from continuing operations per common share	$	0.16		$	0.22		$	0.76	$	0.77

Discontinued operations per common share	$	0.00		$	0.03		$	0.09	$	0.36

Net income per common share	$	0.16		$	0.25		$	0.85	$	1.13


Diluted earnings per common share:
Income from continuing operations per common share	$	0.16		$	0.22		$	0.75	$	0.76

Discontinued operations per common share	$	0.00		$	0.03		$	0.09	$	0.35

Net income per common share	$	0.16		$	0.25		$	0.84	$	1.11


Weighted average common shares outstanding - Basic		46,542,450			46,488,468			46,527,857		46,465,215


Weighted average common shares outstanding - Diluted		47,562,122			47,429,525			47,498,937		47,406,798

(1) The income statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

(2) Includes the operations of the properties consolidated in the Company’s consolidated financial statements as required in FIN 46(R) as variable interest entities.

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HEALTHCARE REALTY TRUST INCORPORATED

Consolidated Statement of Cash Flows
(Unaudited)
(Dollars in thousands, except per share data)


	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Cash flows from operating activities:
Net income	$	7,655		$	11,687		$	39,719		$	52,668

Non-cash items:
Depreciation and amortization – real estate		17,023			14,236			63,397			61,842
Depreciation and amortization – other		664			372			1,877			1,437
Amortization of deferred loan fees		0			8			255			250
Provision for bad debt, net of recoveries		5			1,177			1,256			1,308
Impairments		1,800			0			5,611			0
Increase in straight-line rent receivable		(93	)		(1,404	)		(1,736	)		(99	)
Equity in (income) losses from unconsolidated LLCs		147			(161	)		307			90
Consolidated losses from variable interest entities		286			290			1,110			3,183
Impairments due to sale of real estate		0			3			73			713
Stock-based compensation expense		943			842			4,002			3,677
Provision for deferred post-retirement benefits		487			514			2,072			1,254
Other non-cash items		55			119			52			(67	)

Total non-cash items		21,317			15,996			78,276			73,588

Other items:
Decrease in accounts payable and accrued liabilities		(8,626	)		(19,651	)		(1,780	)		(3,906	)
Increase (decrease) in other liabilities		(333	)		1,234			(2,389	)		(861	)
(Increase) decrease in other assets		(2,960	)		321			(1,463	)		(12,401	)
Gain on sale of real estate, net		0			0			(3,275	)		(7,483	)

Total other items		(11,919	)		(18,096	)		(8,907	)		(24,651	)

Net cash provided by operating activities		17,053			9,587			109,088			101,605

Cash flows from investing activities:
Acquisition and development of real estate properties		(18,805	)		(5,978	)		(126,347	)		(87,399	)
Funding of mortgages and notes receivable		(1,315	)		(11,660	)		(22,794	)		(76,636	)
Investment in unconsolidated LLCs		(340	)		0			(10,654	)		(11,135	)
Distributions from unconsolidated LLCs		262			0			988			326
Proceeds from sales of real estate		0			0			32,706			124,879
Proceeds from mortgage and note receivable collections		3,573			3,082			72,553			14,095

Net cash used in investing activities		(16,625	)		(14,556	)		(53,548	)		(35,870	)

Cash flows from financing activities:
Borrowings on notes and bonds payable		54,000			87,100			364,000			250,348
Repayments on notes and bonds payable		(24,852	)		(49,016	)		(287,048	)		(187,296	)
Interest rate swap termination		0			0			(10,127	)		0
Dividends paid		(31,549	)		(31,520	)		(126,205	)		(125,342	)
Debt issuance costs		0			0			(1,333	)		0
Common stock redemption		0			0			(481	)		0
Proceeds from issuance of common stock		176			56			567			909

Net cash provided by (used in) financing activities		(2,225	)		6,620			(60,627	)		(61,381	)

Increase (decrease) in cash and cash equivalents		(1,797	)		1,651			(5,087	)		4,354
Cash and cash equivalents, beginning of period		3,747			5,386			7,037			2,683

Cash and cash equivalents, end of period	$	1,950		$	7,037		$	1,950		$	7,037

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Reconciliation of funds available for distribution(1):


	Three Months Ended
	December 31, 2006
Net income		$	7,655
Less: Gain on sale of real estate			-
Plus: Total non-cash items included in cash flows from operating activities (2)			21,317

Funds available for distribution		$	28,972


Funds available for distribution per common share - Diluted		$	0.61


Weighted average common shares outstanding - Diluted			47,562,122

(1) Funds available for distribution does not represent cash generated from operating activities determined in accordance with accounting principals generally accepted in the United States and is not necessarily indicative of cash available to fund cash needs. Funds available for distribution should not be considered an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity.

(2) See Consolidated Statement of Cash Flows included in this press release.

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HEALTHCARE REALTY TRUST INCORPORATED
Reconciliation of Funds From Operations (1)
(Unaudited)
(Dollars in thousands, except per share data)


	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2006		2005		2006			2005
Net income (2)	$	7,655	$	11,687	$	39,719		$	52,668
Gain on sale of real estate properties, net		0		0		(3,275	)		(7,483	)
Real estate depreciation and amortization		17,189		14,559		64,662			62,758

Total adjustments		17,189		14,559		61,387			55,275


Funds from operations - Basic and Diluted	$	24,844	$	26,246	$	101,106		$	107,943


Funds from operations per common share - Basic	$	0.53	$	0.56	$	2.17		$	2.32


Funds from operations per common share - Diluted	$	0.52	$	0.55	$	2.13		$	2.28


Weighted average common shares outstanding - Basic		46,542,450		46,488,468		46,527,857			46,465,215


Weighted average common shares outstanding - Diluted		47,562,122		47,429,525		47,498,937			47,406,798

(1)		Funds from operations (“FFO”) and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.” Impairments are not added back to net income to measure FFO. Management uses FFO and FFO per share to compare and evaluate its own operating results from period to period, and to monitor the operating results of the Company’s peers in the REIT industry. The Company reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. However, FFO does not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States and is not necessarily indicative of cash available to fund cash needs. FFO should not be considered an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity.

(2)		See the Consolidated Statement of Cash Flows for a reconciliation of non-cash items included in net income. Net income for the three- and twelve-month periods ended December 31, 2006 includes non-cash impairment charges totaling $1.8 million and $5.6 million, respectively. Before these charges, FFO per diluted common share for the three months ended December 31, 2006 would have been $0.56.

Healthcare Realty Trust maintains a website: www.healthcarerealty.com to provide corporate, investor and financial information.

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Healthcare Realty Trust 8-KHealthcare Realty Trust Announces Fourth Quarter Results