HTA - Earnings call transcript Q1 2018 | Healthcare Realty Trust Incorporated

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Operator

Good day everyone and welcome to the Healthcare Trust of America First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] And please note that today's event is being recorded. I would now like to turn the conference over to Caroline Chiodo, Senior Vice President of Finance. ahead. go Please

Caroline Chiodo

the found this market of note, our Relations welcome XXXX be and the being is and Trust America's to of financial Thank call. webcast to We with can for Investor quarter SEC. the next prior morning, earnings after release replay days. These or for the filed section in first on documents Please call website supplement and you available this Healthcare open. our our earnings XX

We take conclusion will questions of your our happy be to at prepared the remarks.

we During make management the course of the based us. beliefs to statements. call, are forward-looking of on available current will statements These currently information and forward-looking

and predict. factors ability are control results or our that actual be known will and uncertainties Our beyond to by affected unknown trends, risks,

we expectations. assumptions our future from Therefore, our not reasonable, materially future are our performance. they differ believe Although, could results actual current guarantees of are

potential a our some For our refer which Chairman Scott? the section will Relations the website. description Healthcare filings, call be of I to of Scott of now Trust SEC detailed found and Peters, to Investor America. turn in on risks, over please CEO can

Scott Peters

thank Trust earnings and joining morning for first conference for Healthcare Good today of us call. you quarter America's

the me Joining Management. Vice on Financial Amanda our of Chief President Officer; Robert and Asset Milligan, call today are Executive Houghton, our

office hospitals making the driven into and focus outpatient trends such industry demographic This medical and to buildings demand mass focused remain effective. out there regarding remain increase critical as across we sector medical operator a settings is office We United markets to leading cost medical more being trends key continues online. States. of our XXXX, steadfast supply on begin we patients coming drive ageing healthcare office. As continue as optimism These XX and demand to with continues the to gateway the and by limited of in in XX owner on

on tenants both offers to on outpatient and Our campus solutions portfolio and like. these the to MOBs focus best patients community meet of core needs

In that. three, remains other cost above Two, attributes retention traditional addition And properties. the remains of coverage sectors. other rents re-tenanting high. space healthcare are a office meaningful tenant positive remains few MOB below One,

over feet campus which includes to is healthcare million on square the in on XX or portfolio feet Our the million square campuses, country. XX largest portfolio adjacent

faster cash services, efficiently operate expertise. management our focus, translate growth continue space. consistent management office in best-in-class and management in gateway to leasing, continues medical development NOI us to offers to economic the that greater due We markets hubs relocated key national to average geographic a and and These invested growing property academic growth, creation, platform deliver portfolio asset future. Not platform have results. job but will grow concentration, which to university are faster only that presence. us annual of concentration distinguish the to population than strategically markets fully should sector strong continue our are bottom-line allows integrated property building platform the the continues This now to wage markets, in This asset

balance size, this returns. we As billion X.X and sheet regarding regarding transactions, includes environment current growth us focus growth, the we look internal economic in with uncertainty allow market which to and look shareholder scale, execution the depth XXXX, the company to economic recognized to the at drive on our positioned at interest we that our today rates has and

growth with translate feet markets healthcare XXX,XXX depth square future in systems we to Just and nearly drives XX opportunities. have or over million to deeper encompass with square that put feet that market X XX more. this perspective, markets This relationships

County. in Miami, These deeper in accretive projects process and solutions n Orange for a are new of to importantly our most market and redevelopment we Boston returns For growth provide tenants' various relationships development future continue and shareholders. to share example, requirements will platform, generate increase project our given and our and development Raleigh, our

balance a with through accretive through when annual mark-to-market capital and development systems in the in one, escalators; improvement down revenue we at healthcare recycling to of two, returns; non-core utilizing leasing As to lease key rates continue position time and paying again growing debt an once to accretive. focus finally are acquisitions management on; leading our three, markets; out four, markets for platform invest our higher sheet team

look at within Park the have If our same-store exclude came Forest X%. X.X%. growth of for been MOB long-term to the repositioning, XXXX we our would the in As we X% growth quarter, and same-store view quarter

Our X% activity XXXX into and investments XX%. property when acquisition. to long-term and and investments synergies were are quarter we X.X occupancy. performing one, from up management our for yields lease as X.X% focus The solid retention services. leasing expected achieved around spreads we of the million are now spreads in lease continue quarter building on These remains was Renewal while volume X.X% as

Over the come to remaining we yields expect next these online. closer as X.X to quarters, the developments range, few be

I'm XXXX hospital we to our key this first to The with intend invest project new with on of MOB Jackson to our use development, XX,XXX door Florida. million pleased our Hospital XX% in a We the part be foot platform Miami, markets built will added investments, targeted next state-of-the-art announce new building. in preleasing a the South of capabilities. As to to key healthcare square development $XX basis platform a systems.

ground break stabilized yield develop to expect a We of to XXXX and X%. over in

in opportunities patients acquisitions valuations. estate we to working to and achieving marketing the to system necessary directly real months. accretive to develop. opportunities healthcare see investment remain We From We and traditional will we additional our continue existing key pipeline appreciate announce and disciplined both this relationships relationships. in for look we forward through as yield markets, expect brought our an are hard with to we committed shareholders relationships to while a directly best-in-class in coming platform confidence acquire developments these additional channels of redevelopments from perspective, accretive and the at by HTA These

key portfolio are similar we Long discussions non-core we our 'XX continue in and This Beach. four are when Milwaukee sell expect concentrate be $XXX year, to total on sold million. We to is active $XX always quarter in markets to This in assets execution assets between markets. would in dispositions looking our in to proceeds to million

Lastly, our balance shape. sheet is in great

at net as leverage predicted is debt-to-EBITDA. times' Our low X.X

have our We of well maturity maturities. laddered $X.X alluded scheduled billion excess and near in in liquidity regarding debt is term an

moment to to Bowman our of bring Finally, turn diversity benefit Company I the Booth, to to a before to take two HTA. Vicki that Both and depth to Amanda, and I board. relationships both would of members like Roberta our experience a welcome it some thought and over will bring board

you Maryland Unsolicited to These most As access a for commitment environment proxy. changes shareholders, leading and shareholders. and our from keeping board to new see members Amanda. Act a Takeovers a changing the I our our we filed from recently HTA government's perspective, company to will been have out recently the reinforce to allowing to can bringing to active call the opting responsive proxy, over shareholder and turn our now

Amanda Houghton

platform from advantages. underlying well to full benefits service learn local with once and we again platform and is owner year, offers pleased as place strength benefit the in seven assets easily scale have platform in the our tenants I'm we over best This past offerings, management to Each Scott. operating that have the from and team. our asset dedication cannot a our market. of as insight you, and of put replicated the years. value scale to national of Thank continue we innovate service the highlight of key developed certainly optimize be concentrations the our practices, This

the HTA to to team those create been Given our lost magnified our platform our time has value has in recent opportunities. capitalizing and for acquisitions, no on ability

acted our systematically upon electrical, XX% third three previously and third-party year quarters, XX% services thus to fees fee services We a to the special markups. opportunities at we managed has compared now of parties funding Over at in-house paid properties, provide HTA costly approximately portfolio mechanical to internalize over last eliminating ago. and our perform and evaluated

have as command are in extensive undergoing throughout for business. our where our rebidding We able demand also discounts big we been portfolio competitively our bundle and sizeable vendors an process to

we rebidding receive to bid be being our feedback annual an process to savings in still believe have begun those of and items initial While is XX% on underway, reasonable. to X%

the working was best-in-class same-store of our our to dedication. They a with employees first daily platform a brand executed management on tenants XXX performance face significant their we and our performance Our by is property hard building NOI all construction From work X.X%. and a in perspective, and management part basis, that quarter HTA in are of the out service field. were

strong X.X%, our part campuses fourth would excluding on our HTA, fundamentals underlying the same-store core of been owned MOBs legacy the NOI have our the However, now by reflecting portfolio.

in Park excluding the again Our the growth over revenue base revenue period up was Forest based have would X%. been cash X.X%

XX see gateway in ended seeing our to at directly Turning many capitalize market. we of activity, to quarter continue are feet the opportunities occupying. XX.X% add square least and increase value key at we as portfolio upon XX.X% significant in million demand leasing we core market, to With our

were new at the the of square X.X%. spreads on we XX% leases Tenant healthy period, During and retention re-leasing feet renewal basis of was cash executed XXX,XXX X.X% portfolio. or a

X%. spreads increase long-term above disciplined we historic The spaces in we efforts of right remain third quarter buildings. and to tenants specific move to row in We for rents seen our the secured a flat and ensure have range our

with direct up some place feet transition. of hospital prime in with assets, positive take we the first in to Forest of on majority to a HTA. addition, XXX,XXX XX,XXX the step the wanted with provide In leases the ended quarter, we brings activity This with to interest square campus XX,XXX Dallas at later this one by the entered the Park feet that signed already This color occupancy is year campus buildings. at leased to increase and vacancy the is square Dallas new and rate feet scheduled our year. as square In sizable I the being XX% related on into where the hospital

our additional square basis growth an the this allowed gaining remainder in of have platform, The of deals negotiations of We XX points margins same-store asset stages on are came and feet various increased XX,XXX campus. same-store year-over-year. management from attraction our increased NOI overall which of the under utilization re-stabilization significant

colder specifically a Although, our actually up utilities expenses removal total to basis, snow million. our were on X.X and down related were year-over-year expenses the weather,

our this third turn the parties. the However, relative and than I to call building internal over more our spreading platform from to increasing services our generating by Robert management investments over platform like of discuss the of financials. XXXX to the now from use property offset saving would -- generated all

Robert Milligan

the year financial impact position to a to of execute quarter We or continue public the rates. first Amanda. in very strategic Thanks allow us of interest ended business the our equity that the should strong regardless models, of markets

stands liquidity million Our of XXXX raised the $XX five our debt will October basis pay with the Duke one-off billion use in markets. the months. From in our at In over X.X coming over end a the of almost and occasional million make development approximately debt, perspective, financing. the year, and XXX of due XX near take quarter at to seller debt the of of XX cash acquisitions coming of term, our which times EBITDA we leverage available down fund including X% have forward last million in we we key liquidity, to X.X intend equity on including million to net

XXX prepay October. of million debt EBITDA XX can a to that million without with we by mortgage with to retire over rates the that interest times liquidity, mid-five drive in X% to This additional over debt have we X.X% year-end. early should us also enable mortgage penalty including We can leverage

earnings $X.XX per to of period, consistent with quarter first was normalized the FFO the first Turning for XXXX. share quarter diluted

online. and not Our lease year stabilize operational and should come occupied Park the leases comes our strong remains and as development Forest up backlog accelerate performance throughout but online,

development. and leverage are the recycling assets we term on in using longer-term of However, We cause earnings markets actions proceeds near to recognize focused out that these invest lower also solution. non-core

create they However, and more that prospects stronger greater over has the growth a longer-term. focused company

million range. low $XX.X dividend Our prior normalized year and to in ratio is our to funds XX% the the available for distribution XX% increased payout compared

same-store our was growth and quarter Forest X.X% impact the to the first MOBs. of XXXX cash Amanda Park excluding As of X.X% the compared noted, NOI

our an million driven and sequential by concessions This X.X% in leasing XX from and in cash Our base was in do improved basis, a was not points revenue expenses of increase driven primarily $XXX,XXX of same-store basis we up increase snow On rental tenants. removal, decline period. fully The $XXX,XXX our compared the was NOI was fourth leases result were seasonal the in primarily down margin to quarter revenue, year-over-year. rental XXXX. which utilities $X.X rent remainder by free million recover X.X

acquisitions This includes of X.X% to party elimination revenue pace yielding X.X XXXX building synergies and period mid online. almost developments which million the less management the reach in the X% Our of come as value. from in points of the G&A million, range on ended the than final third property quarter X% expenses. approximately was maintenance XX for was gross asset basis $X.X

between million quarter per to of for $X.X the We million remainder expect this $X the to remain year.

internal demonstrates our costs to now efficiency building This less of capital, performance line. the XX.X capital improvements, expenditures I to back Finally, than drive including it This turn capital million leasing includes XXXX. to commissions remarks. to of million tenant in final of the portfolio recurring leasing rules are or which NOI. have we accounting ability subject and XX% our cash in Scott for will and of bottom changes X.X

Scott Peters

Thank Robert, for open and you, we'll questions. up

Operator

Thank you.

now Jonathan with Hughes We Raymond [Operator James. session. the will questioner first begin ahead. go today Instructions] question-and-answer be Our Please will

Jonathan Hughes

you really cap of there just this So aggressive? capital on bid MOB rates still PE terms seeing of in or guys cost acquisition the and what from are changed up environment? is higher Has

Scott Peters

to Well, what and rate pretty, the we been and -- there around right that market some consistent. are portfolios pretty we've are are some from assets now, seemed in cap understand there be

in think a private portfolio But We be to couple haven’t now, the I desire some or there closes. medical is or first equity for which -- closed we assets year, give will three close, when this indication anything the seen consistent office. there certainly two seems first right

Jonathan Hughes

assets? Okay, even X% quality about so high probably lower or for no change quality for low still

Scott Peters

those out strength real, even that is high some in haven't that basis still seeing compared of our is Well, indication it are and markets one-off understanding assets on to assets appears all. our real there. an in be quality very And our a cap our gateway that from things markets competitive could lower sub-X. out that of that it and And but select high that quality then aren't opportunities that's at or a rates rate moved perspective, couple it's certainly very or a X market, to are we're taxes the assets where that low quality cap still

Jonathan Hughes

the with shareholder seen I your and share curious, you've level I'm in at the but highlighted all changes friendly recently you HTA any peers, earlier, all from appreciate in and an virtually made entity the I transactions like few the potential week. hurdles M&A past health Scott But a HTA? the of made those, done know but just to been of care changes frustrated late pretty effort REIT being we've if activity And at in remove price are

Scott Peters

are simply XXXX, we've progress are public X, X.X that now we're to have second, Company. since making after we the the X founded the been one, from making being think years; since natural the or I we changes progress;

sector, welcome I in path. are moving shareholders. down you So and in proxy opportunity done industry the to will some diversity companies the they the then board certainly add that well the think And the three changing four to by and to going of all received most think things be really are are relative we've on that that was I

Operator

Street ahead. And Please Michael with will our go Knott next today questioner be Green Advisors.

Michael Knott

sort the you your house with and bit but on think house I down the call, of mentioned shares I a happened mortgage or would think last down don’t by the holdings. were your little stock. opposite that buy respect HTA sell much, to we're you XX%, Scott, if your

the like could how curious of at valuation you where question, the you're Just last a it like? thinking relative at tomorrow that's price about private here And we're compelling like sort to today. go seems

discount and Just here persistent curious how that you're opportunity about the been? thinking has how

Scott Peters

how the Well, expected. across off been go the three consistent. turns in have seems It that the next or very or to XX weeks. discount trading four certainly REIT as whole year next see to forward I sectors three think months two We'll be treasury the for with

leasing, stock from company from operational good that exactly has We synergies perspective, the year been responsive anticipated an from other fact continue from a perspective operations price to than doing XX the transaction. the our our good see we're markets the what we to Duke treasury, during

upon on this for equation that do we've a the metric, I about us we're to a It growth about and not talking think the us. as huge but things talked things phone shareholders do rely was in actually transformative the call acquisitions past. that allows

So, recycle asset markets what recycling be or and our shareholder into management and a out we from leasing synergies just and an taking us core doing markets continuing advantage if the for is our recycling markets do should XXXX generate platform to value. secondary of gateway long-term to we

Michael Knott

And maybe the one last call. just think on other also I one, then

office You've top in across and term and getting things; of a markets; two together. two, talked good the then and the long core universities medical on about importance campus one, community health top three, street; systems

if sort are on can there bit? expand for going of a And forward? maybe how could that MOBs happen of what you third curious, in Just that positioned aspect little you

Scott Peters

a assets just think there I to managing again, going Well, perspective, from of that medical be institutionalized process started. is continued a office movement these

are are associated what onboard. and the class, to such with that's with when a companies you asset dependable It couple the rates. become you're look a and of that think perspective a You And MOBs seeing were MOB coming size has think asset secondary addition years asset the that our regards demographics class. cap I synergies ago really major five other I with see now, class public from

to locations. the costs healthcare systems tailwinds propel moving continued You see lower to the

fortunate MOB a do. good to continues that platform direct with our the our X Healthcare think to place I but be specific. it and to our they're to is markets. be systems our seeing We're over it will leasing. accretive their seeing to the years. development working three We're enough very add do to a it's XX it it's to will with relationships next which space needs development, us. looking opportunities bit of It's four for We're in So of be strong also little looking what or or be in to are

So all, markets are our are going. positive very that where we're in I about where and think all

Operator

next our be Karin Please will with today And ahead. questioner Ford Securities. MUSG go

Karin Ford

the on the Thanks available for that maybe have or $XX got detail be million think start all another going under we pay potentially there acquisitions this the coming as year. assume you've to of that opposed reduction well? priority we the later is for debt is one-off you leverage down the year today contract should in dispositions towards as about to Should development

Scott Peters

Yes, We in a $XXX the perspective, priority Karin, good the of I a kind Duke of could cash. the think mortgages most debt. seller point. is X%. a disposition is million over really outlined we and continued going million $XXX pay bearing There likely that's roughly potential to the that down of From prepay the be usage to financing

any proceeds. likely near use term that's So, most the for cash

the to a before we're the be about are going developments the start we any we really We have that are one XXXX that more we're one of but in start money. and those spending excited date with, discussions that announced certainly

grow help really needs until that later opportunities great be XXXX. won't the in our to portfolio, any going of there're but us So, be funding

Karin Ford

piece that total can structure X% mentioned Amanda's you is XX% think would And then on. percentage one cost you operating comment, you savings where cost you're of do think clarification on from a renegotiating be? you've What your achieve to just of there

Amanda Houghton

we in are $X So the that million. about currently the services have rebate

Operator

And questioner Todd will with Please Wells our Stender Fargo. next today be go ahead.

Todd Stender

preleased. sounds about little the Jackson feel more its the about to And you breaking development XX% like hear the comfortable we entered, own that then need ground? we Is more Can before that threshold with you you tell South contract Can it Hospital? land? bit

Scott Peters

the will I Well, start with threshold.

something We always a that like I'll I about XX% consistent so we’re let forward your little a to Robert more basis talk XX% preleased, we looking occupied. about that think the on talk is opportunity. and

Robert Milligan

we but the there in acquire simple public so is it’s hospital, opportunity, fresh we a specific the Duke, one land from hospitals pretty Yes, on lease the that one actually Miami. portfolio. the the land in have was of entered We with did the into,

the core of building So an to number a to that got is hospital from be opportunity would which system rest markets we literally expand you pretty the simple We adjacent us to our our top you of really it, like most it's relationships. as it next develop likely is we but on ground. perspective, the leased portfolio, XX% again from across of XX%, Miami, that. we physicians There to before right know in independent it's allows one expect the It's really this health where XX% of with that. and really which a hospital break to

Todd Stender

can if then we And the gears pool. switch to same-store

maybe which Just talk XXXX, list pool? from Park, have Duke Forest you've saw through lease the are. activity maybe your And you same-store then a some we just also drag you QX. for but from looking Can expectations also in about expectations coming our a got

Scott Peters

nail you Forest head Park. the I Well, the think with on hit

all we to try there. we things the assets of do kept is sure make the One in

the we five as we once that's starts timeframe this both is ramping as all and methodology. with Realistically, use the would in first So a XXXX, growth of quarter really lift that perspective, From that. without quarter the benefit get same-store up to a we fourth the rent. up, the get use full same-store we rolling going both expect revenue it, and get to be into impact quarter do the year a Forest certainly paying the lease cash we Park, with and growth

of the third XXXX assets pool really the in the Duke and the entered will same-store So you acquisitions all most quarter this see year.

we portfolio see very bought. of X% about As similar we strong we Duke out a that to talked the to lot X% it, growth

did certainty historically, services great get assets the of eliminating put platform a management, property them and third-party synergies, of As there. a from lift we team yield perspective. in job we getting the income bring really our Amanda those under building

So you really as really that into the in year both third see those third should the of quarter this as baseline quarter well of XXXX. baked numbers,

to is really by strength is expectation third our and diversification and stabilized So, portfolio the the just to the debt X% X% going quarter entered of be larger the there.

Operator

our Okusanya will questioner Please be ahead. next Omotayo And with today go Jefferies.

Omotayo Okusanya

you've Going lease rest what back you square to space Park, talk And of Forest it? the remaining kind XX,XXX so the there? leased Can about feet. to prospects you’re up seeing of

Amanda Houghton

is square remaining LOI there on about of XX,XXX the about negotiations square various feet with there XX,XXX stages got right of we've campus, out that. prospects Dallas Sure, at feet and of negotiations now

really feel good. we So,

I the in here quarter, and what word is to already campus. used think be on to committed the now revealing think I on the coming their that the street They will hospitals intended intended the is be.

are we see activity. starting good a to in pick-up So

Omotayo Okusanya

of of hospital guys going to you sense at? be what type it's have a Do

Amanda Houghton

comment don’t that. We on

Omotayo Okusanya

XX? about a Miami, little potential half it about for then of size into the And talk if that Could the development could also the go of of then just came you kind pipeline XX the And us how talk could kind project it's deals bit of kind about? new over announce, there. out again you of course you of back

Scott Peters

the the us team and being that now I for that. to really future what Well, development opportunity case, East Coast. know we've In a two good sit with the their a got systems we've had we have founded almost I on the approach they real specific here together or think needs healthcare in-house to is them. goes each I relationship think that to for three the is with talking so led to its We've to that's an efficiency the these again pre-released, of quarters see now so worked of platform about down moving that are assuring they in is two were real as already back ahead. demand they great what them concept a think critical integrated there. been with their And opportunities that opportunity three these growth, has do advantage able management have

and see till go opportunities get anything. So We'll to the we're not and road, signed, worth are we But of $XXX very you'll give we may million we that that the the down will preannounce have. to let don’t going going Robert need leases $XXX and as ahead he I'm any wait things I'll of get we thought that exciting be come till wait we million, move that done, so to forth, ourselves.

Robert Milligan

there, we but been been systems most and really what back was Scott had capabilities as transaction the was chip had lease did so, a team Duke to And how getting are one place a that died larger those HTA step a that when a go and that from they talking as most. extent. is partial relationships to had discussions see land the essentially that There fall. deal. that Miami we be pipeline has required the in about part perspective, of to Health the we've major around had going through wanted Duke with might we that of and that -- kept using on The we there deal acquired

to decided really space team the and us move the opportunity there. it kind introduce was and up ourselves. rest of so, very taken is lease get we're And It that for off. falling it excited one had going the built, was We forward combined HTA, of the back demand in comfortable bring had to about one with but with data relationship and and it

Omotayo Okusanya

with we're more. can one just if you And indulging

guys it's to this Just you community was issues. at agenda, point? Can what as the of kind latest of having in headlines kind saying you that talk about

Scott Peters

to continues our by large and Well, community operators. hospital relationship local think I from a perspective, with be the

to size key each I the as think of the talked performance within our the local are ongoing markets basis. hospitals, communities, really the a local our company an and especially on we of about

as some so, have local the of be to certainly we are talk teams, And hospitals with their to sold. continue going

we've think that of portfolio seen you've with community. seen that the I across some

tenant. You've seen that with

the of transitions, if couple a we've where new campus gone put to to will there. the a ownership a capital there As new we've work is through reinvigoration actually seen looking you

hospitals as would transition seen. be hospitals, good and well expect one continues community we've So we any our but perform a is so likely continue to to

Operator

And our Anderson next Please questioner today be will ahead. securities. with Rich go Mizuho

Rich Anderson

is XXXX, thinking stock looking directionally, you Just road, you at versus for of any or that, office sort. $XX Scott, it or chose then change. stronger serious now at So it's obviously keep Do answer now? out stronger then? say yes, strategic the if did -- -- your medical recall strong the back fork And consideration was the have the growing. that would marketplace even there let's was moment picked was Would what in some it describe you event toward you in how and you

Scott Peters

I think market the back, stronger is looking Rich, now.

is more relevancy think class. to I there the asset much

the I years owners. of think brought significant the of tailwinds to last that type with attention have couple associated this

when the of folks I When we at than X you see the to So X this of together more at equity investors you you it. it's an type as put private some or in ago. much look involved when was look asset years think class, trying to that portfolios, get want it

Amanda XX markets when we a we touched as actually us mean think company in an Robert then have much and and relevance platform. the that we in we I touched now integrated back compared were were key on. between as as significant today on as I I have difference to think where we smaller today's

management. asset a leasing, integrated have property with We that's platform management

services engineers We on the XXX basis service to are assets full those a now that servicing assets. and providing have

as were company much significantly So company, think peak said, stock from price. that we of we we particular as couple I a further ahead price the than when a then. ago, when and perspective, were much than for a perhaps I time years think are you stronger we were we But where are

Richard Anderson

Did company? you recall to continuing deal having publicly on are you a about bent think a as pretty held a temptation or traded

Scott Peters

moment the Exchange has taken they New day directors the Stock that always the have when Rich, in the from XXXX, is think value. I we think direction listed want to shares X, York shareholder been that and comment on maximize the our the I

about laws, fact perspective. any things takeover merger is our open value. from contract don't have the that we or This management did very that I buy have in shareholders think a long we that we've any always about prohibit don’t term been prohibitive or

think to We're shareholders one business, put they from were that now. that value I on open maybe. are to however thing, where strong yield a then a balance focus are to it we continue place the and to maximize good feel about So perspective open continue doing shareholders in we it sheet

Richard Anderson

of portfolio. kind when in And you that, start this then to just in back XXXX-XXXX, build following

to give You buying have interesting gotten time -- take a has a credit have where we that almost that if to do an didn't a as caps basis low you today? then? obviously XX of period of we Do better happening for So the in today and market certainly in over are see you you past mirror image they see years. much was back XXXX, in have what

Scott Peters

compared flows The private to when have to back and think I continually XX that that I a go time ebbs accretive REIT that, down. look long. been think period markets that traded if think the markets you over, but REITs, markets over I've rates have you unfortunately always and to and I XX have of and we buy year over you And have interest years an and accretively a that cost rolled been last you capital do. opportunity around it's public

On And now the think it's opposite the in-place. other opposite. right side I I definitely is when that think

been that's time since forgot the long I think people a been prevalent. because it's really

on internal growth. You focus

focus You on balance the sheet.

on company focus your change. solutions You positioning

I So very disciplined. opportunity and I think from be is very patient this to see some extend,

Operator

will our Morgan Please next today be Stanley. with ahead. questioner go Vikram Malhotra from And

Vikram Malhotra

are you maybe more are last when maybe public, you is rate lot thinking trend of pricing upping today. about you to that went arguably advantage maybe about over market the more today? Company talk if strategically lot just that in bought private take cap last on question dispositions, your asset building just started which Can valuable and the -- where there just probably higher Scott, that you of

Scott Peters

early group that I definitely we took And criticism of when you are an become heart. which the through starting a something, our progression me told going and of once someone that eclectic We’ve on to secondary assets We markets. and gone encountered. you some frankly,

got to in. of markets, when we last So picked do And that in to XX% at were in we markets look we really fruition bought and XX then gateway year XX we invest, came we Duke where we want markets. Duke know was you the

XXXX, markets markets And that so, the did say buy they now things they're look on an portfolio and we've or we seven to advantage three mass become got six investment but we quality centric and the these vehicle focused what location. I in we’re took -- they have over operating the know increased second that and critical think the is a got I the fortunate We very of relevant. they very They think that brings infrastructure investors would we in that last folks where I our also heart heavily focus say, these thing that's to or years. XXXX, XXXX, very

-- we Two, and we which getting oversight, an feel opportunity. place you subject sure -- higher are so internal. opportunities gives So our we we’ve is turned there at us someone you portfolio offer, that what look buy? each recycle. making to that there when As are that that. making to third-party carefully third, open portfolio an the every as continue we They're that or an is down, where quality that were so will putting there's to time continue do never very and in time one, valuation critical maximizing markets look defiantly focusing you of mass. it probably on offer acquisition that always to think is key we And just if value of that just taking to time every operating we a said X% were gives the weren’t someone But XX% platform re something it of same to I if we we as bought someone and look think in

Vikram Malhotra

as for this And maybe one well. Robert then

might buybacks, the would on buybacks a stock a versus see how spread market engage lot around touched value little bit sort so or we see today? make up you discount way or implying of you sense, doesn’t -- this What talk of of in sort You you make say just you just that. color maybe give private us the some

Scott Peters

about get where talked I we a as my the in is from were out. buybacks now, right think it tricky, the prospective, always little we’re think capital capital bit we scares, business pay as to as I look allocation always business and in

position back and sold focus to company for to in down, balance were financing effectively, the down that seller we as good we I sale we our right look think X% the our you there that of mortgages sheet use a our the pay can debt of seen we've paying sell is X%. that got with capital Duke now do any really a dispositions has assets, seeing right now future from debt north to

to So with I use we do to to ability think debt that of anything going the capital is right look down deleverage. now the be first pay and

I think obviously will decisions make that we that beyond we've to got time. that, look at

Vikram Malhotra

them. maybe groups of last in one just that groups physician private is terms one quick clarification tenants, the of envisioned larger physician And that then

Amanda Houghton

No.

Operator

go security. will Our next Please ahead. be with One Bernstein from questioner Daniel Capital today

Daniel Bernstein

I Forest cash with given I appreciate that. in NOI, your Park the appreciate both and without you

has effort I that it's on ROI that there behind kind CapEx conjunction TI some On indicated releasing also improving. the you the that sum been is what's basis with the want in of cash CapEx that wash. so understand spreads, and to just higher

Amanda Houghton

that spread I re-leasing by the driven market. our seeing is strength are overall So, a largely you think in

were growing that's And spread so, see per those other big seeing. the as if in TI a factor goes, I and the are markets you than and you X% are at And releasing that quicker on as far think markets can a the can are so releasing actually spread. look not X% see our square of ones you foot some basis, year trending down where

Daniel Bernstein

And type equity of to shareholder topic or portfolio us or way another venture going like dividend? kind short Have and value. to the today joint part of special private of some that merger off some or then of putting company considered equity -- it the go about again selling of and back with private maybe valuation you seems is raising and thought

Scott Peters

type try to in us We really haven't come to continue the generate been have looking fact and think very open sides always improve I've our to demonstrate of growth fast way. think wouldn’t some shareholders most say capacity. seen that our we that ventures and some it's a a If the passive line, that that short are or to I or advantage of management I joint I in bottom JVs to opportunities of way just

with deserve giveaway burden markets, with to the infrastructure the think to pies is there opportunities like there our shareholders a grow we great have We're our and the perspective that these a XXX% from of someone management just us not the over last of grow great. Duke hard on to to We think now much externally. year acquisition I from so It's when transaction deserve that there within and is else. fortunate an benefit size that opportunities I

second I transaction only we continue reported. or is quarter think to that Duke the us the as the burden be This you perform to see. quarter to on continues third

been So, quarters. been it only years, seems it's three two like it's but

through synergies. adding continued those continue to out this get We synergies of to gain we're the year

us for over last or think done continuing what do we I to So have years. it's XX XX just the

XXXX, disciplined It's I sure at your we of that REIT allocating think we're particular $XX the that that only bought only even worth assets time. appropriately making though at capital million difference getting your in time. this year non-traded and really

Operator

Chad questioner will next with Please our go ahead. Vanacore And today be Stifel.

Chad Vanacore

questions modeling here. few a Just

that spend was consolidation minority interest buying So million a was ownership, or what and $X.X that that? on

Robert Milligan

buying small condos actually over some couple those really it's there of billions out. and It was, then

Chad Vanacore

then And worth for dispositions. million NOIs $XX got sign you've to of

the where cap on timing rates So, and those?

Robert Milligan

XX an with market to or closing days I on the what's a transactions think over assets, on from that. LOI depending with this for beyond perspective, all in going timing often up is as and

full our of is will one a XX to in probably think all XXX kind from I So that it year so be settles. view that dispositions

see outlook might our year really quarter, start the that's full kind some but in second on of that. You start really

Chad Vanacore

cap And rates? what about

Robert Milligan

looking you're range, rate out that --on cap we in X basis out, basis, forward on the the to secondary of rate cap really of markets a selling have. I some a X think

Chad Vanacore

Do Recurring thing. the you expect for CapEx the rate last for seem the one CapEx stay that XXXX? first quarter. just low What's the in then of And pretty steady? brand run rest of

Robert Milligan

capital from Well, slowest the period quarter improvement to first the typically, tends a be perspective. and fourth

So, been capital recurring should I XX% XX% a cash we that full be expenditures. form the we of view NOI of outlined that to the year think to said, in for

continues to third that think I of hit be top the Forest space. added the up likely would shelf space, be some that Park and some that, TIs we of that first lease as on fourth quarter. some would of have generation We'll

Operator

questioner our JP be Mueller go next with Morgan. today Please ahead. Michael And will

Michael Mueller

question. the talked know quick have Just bit. in for I a about services the you've past a engineering little

NOI $X just quarter, us them and million services Let's looking just NOI you the mind? little the items million property came make engineering under Can in remind this your categories of from cash that management. within $XX.X those

Robert Milligan

out. it flush Amanda let I'll Typically,

for the This is work. these maintenance synergies about things services, the HVAC is electrical. preventive acquisition. As Typically, in that is was talking that are we're building This specific the This plumbing. XXXX repair. like

through paid they have you like run operating did. a third-party, type just expenses would things our where of all So, we if

Amanda Houghton

right. That's

So, on look at of property management we third-party elimination management fees, the the side, property of and the internalization it.

the So entirely is that's eliminated.

have markup. specialty the factors. do On the third is with at parties we're engineering done services to One side, things it's previously able where two the

to And fee HTA we it's point. just engineering at market internalize keep some markup the Now, the an that revenue. the that on second, is

our premises So see their services and be part for it that direct the you'll by the performing landlords otherwise revenue. covered on said, tenants as would of engineers being

Operator

Doug will next ahead. Please be Davidson. go today D.A. the questioner with And Christopher

Doug Christopher

year, would of provided at What a kind range market. right now? a cap range take the that always rates of Duke last the you in acquisition through confident Up HTA

Scott Peters

close what The to consider would or I I frankly been I low anyone path cap of portfolio go about the not weren’t in we’re talked were that to we Frankly, going two five. the down back chase we of the A fact the interested we on to for, everything seen force of rates a things because talked based phone this and or we’re of changed to mislead get a the couple not go asset on we time, whether serious we that five, think been high high Class a yet. we what something into his indications this at just be earlier. the were and year and reported so weren’t have call. there we've three getting doing don't was

late So what not people last from much rates lose cap I were think year. about talking the have

Doug Christopher

And then can course key how leverage you just hit and from much some minimizing on points of and internalizing the leverage well. as the escalators, of How concessions, you really more Duke then now the financial is have of there much the acquisition? development

Scott Peters

I continue now mass and anything next our on the Robert, opportunity. out the We to have we to year. want The of play you really that do from starting focus to just work that this ability the add and critical through certainly into bring year to in that? to to regions for think Duke markets opportunity,

Robert Milligan

to of new most we thing that out perspective, in perspective, really as been capital to XX% to to from line we've think We've escalator. perspective, high XX% we think from I think the in low of cash or escalator continue to to the companies place think And in a X% play we we leases office kind in cash X% Xs. a TI be the been from look XX% drive leases capital from concessions. signing NOI. office ability to a to I new the the free sufficiency touched NOI low earnings I perspective. is very medical in on Traditional the seen the keep bottom the last tends to it I kind going continue continue In of at itself an your That’s rent.

but a we portfolio, as of portfolio. starting the we're was lot added to where seeing requirements, capital one us of capital, cash her this focus it year. and XX% NOI that the our You're benefits that I look we Duke young run a well very a of acquired limited the benefits to generation. just very on buildings allocate mean XX% is in of It’s as that to see

Operator

our any will to remarks. to like conference this question-and-answer And closing the sessions. back Scott would turn conclude Peters for over I

Scott Peters

All right, a to the look shareholders. making thank our you forward Thank you. questions, everybody beneficial on very Trust and of and Thank for we Healthcare focusing a us. for you joining continuing America for

Operator

The conference attending is today's now concluded. Thank for presentation. you

disconnect. now may You

Healthcare Realty Trust (HR) 30 Apr 182018 Q1 Earnings call transcript