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 FOURTH QUARTER RESULTS
NASHVILLE, Tennessee January 27, 2005 -- Healthcare Realty Trust
Incorporated (NYSE:HR) today announced results for the fourth quarter that ended
December 31, 2004. Revenues for the fourth quarter totaled $62.9 million,
compared with the prior year's $48.8 million. Net income for the period was
$16.1 million, or $0.34 per diluted common share, versus $16.9 million, or $0.40
per diluted common share, for the fourth quarter of 2003.
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, totaled
$31.9 million for the fourth quarter of 2004, compared with $29.0 million for
the same period in 2003. FFO per diluted common share for the fourth quarter of
2004 totaled $0.67, compared with $0.69 for the fourth quarter of 2003. Prior to
asset impairment charges totaling $606 thousand, FFO per diluted common share
was $0.69 for the fourth quarter of 2004. A reconciliation of FFO to net
income follows.
Revenues for the twelve months ended December 31, 2004 totaled $227.2
million compared with the prior year's $184.2 million. Net income for the
twelve-month period was $63.4 million, or $1.42 per diluted common share, versus
$70.5 million, or $1.69 per diluted common share, for the same period in 2003.
FFO totaled $118.2 million for the twelve months ended December 31, 2004,
compared with $114.0 million for the same period ended December 31, 2003. FFO
per diluted common share for the twelve months ended December 31, 2004 was
$2.65, versus $2.73 for the same period in 2003. Prior to asset impairment
charges totaling $1.2 million, FFO per diluted common share was $2.68 for the
twelve months ended December 31, 2004.
The decline in net income for the three and twelve months ended December
31, 2004 is largely related to the application of Financial Accounting Standards
Board ("FASB") Statement No. 141 in accounting for the acquisition of
approximately $299 million in real estate operations during 2004. 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, the lease intangible assets, the goodwill, and the customer
relationship 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. Net income for the twelve months ended December 31, 2004 also
included a non-cash amortization charge of $2.4 million during the third quarter
of 2004, as discussed in the Form 10-Q for the third quarter. Further, net
income for the three and twelve months ended December 31, 2004 includes
impairment charges of $606 thousand and $1.2 million, respectively, related to
the dispositions of real estate assets including the non-cash write-off of
straight line rent receivables.
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, 2004, the Company had investments of approximately
$2.0 billion in 253 real estate properties or mortgages, totaling approximately
13.2 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 Fourth Quarter Results
Page Two
January 27, 2005
HEALTHCARE REALTY TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------- -------------------------------
2004 2003 2004 2003
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(Unaudited) (Unaudited) (Unaudited)
Revenues:
Master lease rental income $ 22,185 $ 20,926 $ 84,942 $ 80,329
Property operating income 33,153 20,248 111,016 73,077
Straight line rent 789 521 1,592 2,419
Mortgage interest income 1,180 2,763 8,766 10,441
Other operating income 5,635 4,316 20,835 17,978
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62,942 48,774 227,151 184,244
Expenses:
General and administrative 3,514 2,887 12,822 11,121
Adjustment to amortization of deferred
compensation -- -- 2,440 --
Property operating expenses 17,892 9,752 56,659 34,544
Interest 10,911 8,964 43,380 34,602
Depreciation 12,486 10,241 46,050 39,844
Amortization 3,152 1,275 8,155 1,315
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47,955 33,119 169,506 121,426
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Income from continuing operations 14,987 15,655 57,645 62,818
Discontinued operations:
Operating income from discontinued operations 1,672 1,642 6,993 8,798
Loss on sale of real estate properties and
impairments (606) (441) (1,210) (1,109)
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1,066 1,201 5,783 7,689
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Net income $ 16,053 $ 16,856 $ 63,428 $ 70,507
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Basic earnings per common share:
Income from continuing operations per
common share $ 0.32 $ 0.38 $ 1.32 $ 1.53
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Discontinued operations per common share $ 0.03 $ 0.02 $ 0.13 $ 0.18
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Net income per common share $ 0.35 $ 0.40 $ 1.45 $ 1.71
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Diluted earnings per common share:
Income from continuing operations per common share $ 0.32 $ 0.37 $ 1.29 $ 1.50
============ ============ ============ ============
Discontinued operations per common share $ 0.02 $ 0.03 $ 0.13 $ 0.19
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Net income per common share $ 0.34 $ 0.40 $ 1.42 $ 1.69
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Weighted average common
shares outstanding - Basic 46,377,130 41,693,382 43,650,455 41,129,282
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Weighted average common
shares outstanding - Diluted 47,353,076 42,276,811 44,572,367 41,780,088
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HR Reports Fourth Quarter Results
Page Three
January 27, 2005
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,
---------------------------- ----------------------------
2004 2003 2004 2003
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Net income (2) $ 16,053 $ 16,856 $ 63,428 $ 70,507
Net loss on sale of real estate properties 0 441 0 1,109
Real estate depreciation and amortization 15,808 11,741 54,818 42,370
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Total adjustments 15,808 12,182 54,818 43,479
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Funds from operations - Basic and Diluted $ 31,861 $ 29,038 $ 118,246 $ 113,986
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Funds from operations per common share - Basic $ 0.69 $ 0.70 $ 2.71 $ 2.77
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Funds from operations per common share - Diluted $ 0.67 $ 0.69 $ 2.65 $ 2.73
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Weighted average common shares outstanding - Basic 46,377,130 41,693,382 43,650,455 41,129,282
=========== =========== =========== ===========
Weighted average common shares outstanding - Diluted 47,353,076 42,276,811 44,572,367 41,780,088
=========== =========== =========== ===========
Impairments $ 606 $ 0 $ 1,210 $ 0
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Per share impact of impairments on diluted funds from operations $ 0.02 $ 0.00 $ 0.03 $ 0.00
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(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."
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 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; furthermore, because FFO per share is
consistently and regularly reported, discussed and compared by research
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) During the third quarter of 2004, the Company concluded that certain
amendments related to retirement provisions in the employment agreements
of certain officers that were effective as of January 1, 2000 impacted the
measurement dates and amortization periods related to the restricted stock
of those officers. In the third quarter of 2004, the Company adjusted its
non-cash amortization of the restricted stock for these officers resulting
in a $2.4 million adjustment. Net income includes non-cash deferred
compensation, including the $2.4 million adjustment, of $885 thousand and
$686 thousand, respectively, for the three months ended December 31, 2004
and 2003, and $5.9 million and $2.8 million, respectively, for the twelve
months ended December 31, 2004 and 2003. Further, net income for the three
and twelve months ended December 31, 2004 includes impairment charges of
$606 thousand and $1.2 million, respectively, related to the disposition
of real estate assets including the non-cash write-off of straight line
rent receivables.
Healthcare Realty Trust maintains a website: www.healthcarerealty.com to provide
general corporate, investor and financial information.
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