EXHIBIT 99.2
[HEALTHCARE REALTY TRUST LOGO]
NEWS RELEASE
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Contact: Scott W. Holmes, Senior Vice President and
Chief Financial Officer, (615) 269-8175
HEALTHCARE REALTY TRUST ANNOUNCES THIRD QUARTER RESULTS
NASHVILLE, Tennessee October 28, 2004 -- Healthcare Realty Trust
Incorporated (NYSE:HR) today announced results for the third quarter that ended
September 30, 2004. Revenues for the third quarter totaled $61.8 million,
compared with the prior year's $48.1 million. Net income for the period was
$16.4 million, or $0.36 per diluted common share, versus $17.4 million, or $0.42
per diluted common share, for the third quarter of 2003.
Funds from operations ("FFO"), calculated according to the definition of
the National Association of Real Estate Investment Trusts and comprised
primarily of net income and depreciation from real estate, totaled $31.2 million
for the third quarter of 2004, compared with $28.2 million for the same period
in 2003. FFO per diluted common share for the third quarter of 2004 totaled
$0.69, compared with $0.68 for the third quarter of 2003. A reconciliation of
FFO to net income follows.
Revenues for the nine months ended September 30, 2004 totaled $170.6
million compared with the prior year's $142.1 million. Net income for the
nine-month period was $49.8 million, or $1.15 per diluted common share, versus
$53.7 million, or $1.29 per diluted common share, for the first nine months of
2003. Diluted FFO totaled $89.4 million for the nine months ended September 30,
2004, compared with $84.9 million for the same period in 2003. FFO per diluted
common share for the first nine months of 2004 was $2.06, versus $2.04 for the
same period in 2003.
The decline in net income in the quarter ended September 30, 2004 is
largely related to the application of Financial Accounting Standards Board
("FASB") Statement No. 141 in accounting for the acquisition of real estate
operations. The Company has acquired approximately $299 million in real estate
operations year-to-date. FASB Statement No. 141 requires that the purchase price
of these real estate operations be allocated between the land, the physical
building as if the building was vacant when acquired, and the lease intangible
assets acquired. The purchase price allocated to the lease intangible assets is
amortized over the remaining lease term, typically one to five years, compared
to the estimated depreciable life of the building of 39 years. The majority of
the lease intangible amortization is charged to amortization expense and,
because it is accelerated, has reduced net income more significantly for the
current year than prior years due to the increased volume of acquisitions. In
addition, during the third quarter of 2004, the Company's independent auditors
initiated a review of the Company's accounting treatment of the non-cash
amortization of deferred compensation. Management believes the accounting
treatment consistently followed since 1994 is correct. Resolution of the matter
may result in an adjustment that would decrease a portion of the unamortized
balance of deferred compensation. As of September 30, 2004, the unamortized
deferred compensation balance was approximately $23.3 million. The matter
remains under discussion; and, accordingly, the Company's financial statements
may be subject to change.
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 September 30, 2004, the Company had investments of approximately
$2.0 billion in 255 real estate properties or mortgages, totaling approximately
13.7 million square feet. The Company's portfolio was comprised of six major
facility types, located in 31 states. The Company provided property management
services to approximately 7.7 million square feet nationwide.
The Company directs interested parties to its Internet page site,
www.healthcarerealty.com, where material 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, 2003. 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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HR Reports Third Quarter Results
Page Two
October 28, 2004
HEALTHCARE REALTY TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2004 2003 2004 2003
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Revenues:
Master lease rental income $ 23,385 $ 21,564 $ 69,106 $ 65,875
Property operating income 30,352 18,523 77,862 52,852
Straight line rent 354 811 844 2,001
Mortgage interest income 1,953 2,710 7,586 7,678
Other operating income 5,805 4,468 15,195 13,666
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61,849 48,076 170,593 142,072
Expenses:
General and administrative 3,066 2,701 9,306 8,235
Property operating expenses 15,556 8,757 38,980 25,054
Interest 11,715 8,627 32,470 25,637
Depreciation 12,359 10,549 35,018 31,169
Amortization 2,775 13 5,003 40
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45,471 30,647 120,777 90,135
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Income from continuing operations 16,378 17,429 49,816 51,937
Discontinued operations:
Operating income from discontinued operations 0 481 0 2,383
Loss on sale of real estate properties 0 (461) 0 (668)
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0 20 0 1,715
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Net income $ 16,378 $ 17,449 $ 49,816 $ 53,652
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Basic earnings per common share:
Income from continuing operations per common share $ 0.37 $ 0.42 $ 1.17 $ 1.27
============ ============ ============ ============
Discontinued operations per common share $ 0.00 $ 0.00 $ 0.00 $ 0.04
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Net income per common share $ 0.37 $ 0.42 $ 1.17 $ 1.31
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Diluted earnings per common share:
Income from continuing operations per common share $ 0.36 $ 0.42 $ 1.15 $ 1.25
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Discontinued operations per common share $ 0.00 $ 0.00 $ 0.00 $ 0.04
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Net income per common share $ 0.36 $ 0.42 $ 1.15 $ 1.29
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Weighted average common
shares outstanding - Basic 44,784,456 41,087,329 42,751,434 40,939,067
============ ============ ============ ============
Weighted average common
shares outstanding - Diluted 45,499,021 41,732,935 43,463,096 41,636,126
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HR Reports Third Quarter Results
Page Three
October 28, 2004
HEALTHCARE REALTY TRUST INCORPORATED
RECONCILIATION OF FUNDS FROM OPERATIONS (1)
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
2004 2003 2004 2003
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Net income(2) $ 16,378 $ 17,449 $ 49,816 $ 53,652
Net loss on sale of real estate properties 37 461 603 668
Real estate depreciation and amortization 14,829 10,308 39,010 30,628
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Total adjustments 14,866 10,769 39,613 31,296
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Funds from operations - Basic and Diluted $ 31,244 $ 28,218 $ 89,429 $ 84,948
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Funds from operations per common share - Basic $ 0.70 $ 0.69 $ 2.09 $ 2.08
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Funds from operations per common share - Diluted $ 0.69 $ 0.68 $ 2.06 $ 2.04
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Weighted average common shares outstanding - Basic 44,784,456 41,087,329 42,751,434 40,939,067
=========== =========== =========== ===========
Weighted average common shares outstanding - Diluted 45,499,021 41,732,935 43,463,096 41,636,126
=========== =========== =========== ===========
(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 REIT operating performance equal to a REIT's net
income, excluding gains or losses from sales of property and adding back
real estate depreciation."
Management believes FFO and FFO per share to be important supplemental
measures of a REIT's performance because they provide an understanding of
the operating performance of the Company's properties without giving effect
to significant non-cash items, primarily depreciation of real estate.
Management uses FFO and FFO per share to compare 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 in
their notes and publications about REITs; and finally, because research
analysts publish their earnings estimates and consensus estimates for
healthcare REITs only in terms of fully-diluted FFO per share and not in
terms of net income or earnings per share. For these reasons, management
has deemed it appropriate to disclose and discuss FFO and FFO per share.
However, FFO does not represent cash generated from operating activities
determined in accordance with accounting principles generally accepted in
the United States ("GAAP") 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) Net income includes non-cash deferred compensation of $850 thousand and
$688 thousand, respectively, for the three months ended September 30, 2004
and 2003, and $2.5 million and $2.1 million, respectively, for the nine
months ended September 30, 2004 and 2003.
Healthcare Realty Trust maintains a website: www.healthcarerealty.com to provide
general corporate, investor and financial information.
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