HR - Earnings call 2 2021 | Healthcare Realty Trust Incorporated

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Operator

Good morning, and welcome to the Healthcare Realty Trust Second Quarter Financial Results Conference call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kara Smith. Please go ahead.

Kara Smith

Thank you for joining us today for Healthcare Realty's Second Quarter 2021 Earnings Conference Call.

call Chris Todd Douglas. the Rob Bethany on and Hull me today Meredith, are Mancini, Joining

may that A information uncertainties. a matters call Form contained that These within, forward-looking reminder except specifically the discussed for risks are on discussed risks estimates, assumptions, involve the more historical contain and any statements in XX-K XXXX. of represent disclaims statements judgment as to These the The the of obligation the for call. year the forward-looking SEC with this forward-looking filed ended XX, this date material. December update company's company this

discussed NOI, The funds per share, certain from and EBITDA share, such this operations, matters financial funds income, per FFO available in adjusted contain EBITDA. for call may as FFO normalized non-GAAP distribution, also FFO, Fad, FFO, normalized operating measures, net

of XX, most for call earnings press The earnings company's financial measures comparable over the found Meredith. on turn available June Chief Officer, reconciliation release press to website. be and Todd supplemental these and the I'll the ended Executive the GAAP XXXX. in now quarter to forms may measures XX-Q information XX-K company's are release, our company's the second A

Todd Meredith

Good thank joining for Today, our strategy close steady external you I'll by second I'll how our everyone, you, And us describe trends, call. morning, internal growth health our few And of I'll delivers quarter quarter for earnings care touching initiatives. current results, quarter. and Thank our discuss quarter utilization Kara. second and on our a growth after momentum.

levels. returned pandemic. their tenants care providers hearing to their normal outpatient most doctors, are from pandemic procedures or to Health above and terms to to are operate Patients in we're of ability pleased that pre utilization. back proven First, have providers see throughout the that our we're to have back

continue poised physicians health more our they utilization by health demographics. is propelled demand. businesses more annual consistent growing to us Even on their space care underscores a view growing telling basis, systems need that to are aging are and meet encouraging, and This

growth Turning of average X%. in quarter, to line puts which of NOI us historical our our second the for same-store X.X% results. We back about reported with

Looking these steady growth. sustain internal positioned ahead, we're levels well to of

operating entry. continue insulates with benefits markets us growth. of from see This the barriers and facilitates rent to dense new high in We supply to steady

As benefit shorter to rents terms, ability often. gives the increase we're rise, rents well more positioned from to lease us which

properties ability isolated sell ever, XXXX confident momentum. at was portfolios. and relative respect growth, our lower With cap to we're in truly Today, we're way for $XXX our assets to Year-to-date, which firing external quality, We're of comprised especially on rates. This to million. often is aggregator driving cap acquisition year all XX volume, we've continue best our on exceed or rate compression, we're cylinders. our well premium acquired this on over meet portfolios seeing

sourcing What makes assets building quality markets prices us different is attractive on that our at individual clusters. better we're strategic and in

integrate our ability value operations properties into the existing smoothly our to platform. of reflects Our

Another pipeline, our embedded $X opportunities. over of development source includes of billion is growth value which creation

years. in on-campus our over LEED of the relationship This an nearly Thomas a of project Campus. Ascension Nashville. at X our starting and Midtown we're center for redevelopment of builds building property the Nashville, in million cluster office medical here St. St. strengthens on example, with we've larger certified In building, feet Thomas an existing owned XX a constructing As involving we're the place square

In with new local tenants. knowledge straightforward. strong on environment, strategy investments We and health industry and trends market our attract source systems. competitive with today's new relationships help leading focus demographic Our is markets us partner and

and lease properties in more efficiency we close benefits, these and Our manage cluster gain proximity. amplifies and and scale more we as strategy

where adjacent incremental off. our joint we to of further utilizing targeted target terms returns. we and able enhance projects widens This off-campus our venture We're on and which has in by facilities can yields development location, complemented engaging paid drive nearby partnership, properties In our campus, strategy to set. with opportunity

whose volatility we've REITS, delivered other of hard were many XX to FFO each during months, last the results the hit growth share per contrast In quarter. in

long the strategy through value creates for of compounding Over shareholders our cash the flows. term, steady

that of promotion Before growth team I XX some of is recently Wilson, We period. over been promoted leadership of Julie in has our few our over of me driver as with of our and a Executive to Julie I'm long success. take us announce her to call well pleased this breadth that hand the platform highlights a the to as highlight and our years, moments Operations. believe for we initiatives. to let depth Vice the Bethany, recent the President tenure and time leadership

our as has Julie effort. operations to respect we oversight ESG, and dedicate of as with resources marketing, technology And ESG portfolio to well this important to groups. continue

second full our completed survey. later by responsibility This year, Baca. corporate led release time third Our year, ESG be this program Carla will GRESB our we'll report. And now we

trends. the Investor on will finally, pleased care now you experience policy who Kara to over for these efforts going lead brings for forward. health Relations Smith, may have to heard and an years welcome and we're And I'll call Bethany introduction, as the Healthcare recent in turn update Realty of REIT

Bethany Mancini

care for was and Health Performance in board. elective strong across hospital the in public patient Thank the you, better-than-expected companies. the second utilization Systems Todd. momentum are reporting quarter

in of MGMA XXXX, volume. up for for care main recovery and hospitals the most One visits have also compensation elective throughout settings shutdown growth more ramp to routine able outpatient physician and Ambulatory strength patient growth experienced amid strong of the recovery. have employment in growth a than outpatient drivers surgery/ been and surgeries quickly outlook markets. Physicians reported the of their sign in average positive

lower and capital a which fund costs, demand. the In to in external medical sector, well administrative groups growth. into XXXX, physician market care continue expanding larger practice bright share, spot Physicians for job office be to for to health offices bodes increase gains space are utilize

also X insurance gain providers policy health enrollment from year. increased to through Health coverage. after marketplaces expanded ACA subsidies continues environment availability benefiting exchange positive people special are support and public last reimbursement million period a More during Congress the care a health insurance that of than

Congress eligibility is stable budget providers for extending they greater in the the subsidies expansion on and meet The demand and backdrop a growth X-year now infrastructure of pursue agenda upcoming ACA provide exchange build. and focused initiatives. legislative should as patient

to care CMS regulatory of anti-competitive consolidation requiring the costs. be prices practices transparency, several the common regulations price on lower FTC and side, executive Biden to hospitals of On continues of avenues a providers. their most BMS in President July, hospital is order to among an issued list increased scrutiny health pursuing to mandating implement also services. published

when care patient health outpatient change to continuing lie outpatient trends The tide It portfolio position policy, remains the if and hospital external office growth correlation seen for regulation, of delivery these HR's within to and The lower be well settings. of nation's and ensure opportunities prospects the advance services. growth that incentives efforts choosing care disclosures is But care. medical consumer-friendly in demand accelerate ahead facilities. for health their to health competition cost will behavior should rising

an us will I to turn call on give the Now, activity. investment update Rob to over Rob?

Robert Hull

asset the has of MOBs Investor the for Bethany. resilience by highlighted demand the accelerated, you, over months. last class Thank XX

to lower. have continued As a result, trend rates cap

of capitalize aggregators uptick have portfolios in an also in to pricing. seek as this attractive demand number the the We market MOB on seen and

to at view, a we our properties properties. individual growing our targeting high-quality contrast, these In of basis priced In disparate by of the curate are assets most over is strategy XXX portfolios points richly clustered to XX dense portfolio, in want. similar quality markets

existing on-campus quarters acquisitions busy blended of closed buildings basis with X assets average. We upside the density located initial end cap markets. the acquisitions these directly rate are are the on X.X%, been these all another is have The over million front. XX-mile around X.X% lease-up. XX a acquisition the is and and population on of We U.S. since projected growth nearly for double had in These March. points average of of embedded XX through $XXX of $XXX,XXX, located

strategy the illustrate depth our These system our cluster relationships. health also assets of and existing

leading decade. more As a an with square we expect for over million and X worked X associated system Health, Colorado we have acquired over Centura with a time. to add Centura now over with in have We feet example, that buildings

we portfolio. Year-to-date, our $XXX have to completed million adding X.X of feet square million acquisitions,

of range strength our raising are a activity the year-to-date now is $XXX robust million. Given increased to pipeline, we The and acquisitions million guidance. $XXX our

to In of strong recycle capital also taking this the prospects. long-term with pricing into investments growth better we competitive environment, are advantage

on year-to-date. sales $XXX We closed have million of approximately

our their raising our development momentum as to are In the million $XXX year. expand $XXX million to increased we programs. outpatient see pipeline, for hospitals guidance We disposition

subterranean St. new front Ascension square off Thomas' LEED-certified a Hospital. kicked parking it foot development a with also we tower leading MOB shared will with highly Nashville, is services garage, We're a that include with integrated the of women's and hospital. this the building XXX,XXX Midtown entrance In

the is Nashville. this budget nearly on approximately campus square million construction and almost we take $XX care and Our health years. At of XXX,XXX feet X will corridor dense million, will have $X completion, in

yields above comparable to What's create target relationships basis important provider We to attractive points development value. is developments like stabilized our of and are an these strengthen XXX avenue XXX assets.

accretive acquisitions are pace on With that are clusters on investments we net activity investment will tomorrow. robust lead to our we closing, to means focus today making In for investments the relationships year. the increased deliver more and our guidance,

turn it results. I'll review Chris of a our over Now, financial to for

J. Douglas

Thanks, Rob.

a the of over our MOB million share was the from $X.XX along Normalized quarter is the acquisitions meaningful FFO year in growth $X.XX, from XX net past Our contribution growth. results reflect driven the with up ago. This second per same-store of business. steady completed months, focused $XXX

our the benefited XX-month second a X.X%, which X% quarter is quarter. NOI up Trailing long-term from from few growth was first key line NOI growth increased in same-store items. quarter in Second with outlook. same-store The NOI X.X%, year-over-year

above X.X% expenses appears in increase the to be normal. First,

last in under grew long-term This However, a basis our year. On of off from from expenses annual coming XXXX, quarter to lows quarantine is second rate compound growth mind, X% of keep below just the X%. expectation we're impacted X.X%.

to is back rebound parking growth essentially levels. the pre-pandemic in year-over-year income, quarter. The for parking of second, XX% income generated The

for in year-over-year the last is the comparison. reserve $XXX,XXX booked COVID Finally, rent boosting second year deferrals quarter

your that we models, reserves in updating embedded takeaway the As expenses the is normalizing third the repaid. When fourth year-over-year with of majority will you're were the reversed together the in the X quarter dampen next XXXX of this our please the a But as mind in consistent quarters. and reversal, portfolio. keep deferrals real in growth reminder, growth

is The rent X.X%. average contractual increase approaching in-place portfolio

second cash to X% our averaged X% our spread Year-to-date, is leasing quarter average lease leasing which range. end For target was X.X%. X.X%, spreads of high have at renewals, cash the the Releases in-place our pricing commencing in our quality This contractual increase from quarter, future reflects attractive derived average X.X%, than our XX second in our basis portfolio markets. higher average. is the points power

impact respect high-growth sector, occupancy, the permitting from still in like estate we like XX%. working up the increase and delays doubled. average, time build summer. we're some we lines out In permitting lines, approximately have are construction. catching last and seen time have through With of more On to And by Dallas, most real markets than

As a basis was average XX year-over-year. same-store down occupancy our points result,

real are While are seek we more long in our occupancy about as projected Tours the And run, term, the expansions. these delays their office space interest the year. improvements care for over strong may outpatient and will need in drive ability into physicians medical drive persist our moving growth to in for short next estate. the across portfolio optimistic

Regarding quarter. our the debt-to-EBITDA X.Xx liquidity, X.Xx, in balance was from first and down sheet net

million quarter, well second as million from million the equity of with as the million forward investments of contracts. $XX partner $XXX we of $XX $XXX settlement joint our During of funded venture dispositions,

As look liquidity pipeline fund have we we ahead, acquisitions. our growing to ample of

ratio foreign have year-to-date equity with the addition and $XXX The moderate other XX% cash to half first million settled, maintenance year. payout remaining liquidity be the is We of of to sources. in CapEx in contracts FAD

to We the ratio remain year. increase back for to we move the but expect maintenance as XX% half, payout below CapEx to the

drivers share believe when growth. tailwinds, These more the resilience leverage the with for to capital The to We and we're questions. and sources will the underlying of our multiple demand continue now line the of past drive for combined external ready XX help strong to internal compounding outpatient proved per of low Operator, care open access will months events than growth. portfolio. drive

Operator

first Our with Scotiabank. Yulico question from Instructions] Nick [Operator comes

Nicholas Yulico

increase the that seeing on of I a transaction you're was little talk did about side. you guidance hear terms and the decision to more some hoping opportunities of guidance? you the why and bit acquisition Maybe just could little to in just bit the increase market more a

Todd Meredith

Yes. Sure.

I we think being driven. if you going building Really, pipeline. our at and to to focusing our our back team to way you continue really the if look last properties, really out benefit source we of goes -- build kind out from of on when year, back kind We're clusters. relationship continue

this so part with continued build you that first of we it's into is last we really $X properties, closing we're that pipeline on for up year, to targeted those look pipeline, momentum came And on year. that we the if And approaching as saw we some approaching this billion. the at and our year. And working put

momentum we're traction. of lot and there, a So we gaining see some

as able execute And the so through that confidence these. has of we've been year sort level of risen to on

our that on have year, us markets in in. see out that adjacent close properties And like think building the that on primarily we've this so already we're know much I relationships and good clusters properties, we look and in what existing closed already an you'll

Nicholas Yulico

And disposition has but you some Perfect. is yield lowered question on lower which assets. on those the not a expectation been than year-to-date, I just activity, year-to-date your fully -- leased of dispositions And also Okay. follow-up you've then the dispositions on yield were acquisitions, the that. think

I'm that. affected you're are where trying you're terms understand cap disposition to How more versus little now of that fully buildings being investing selling. buildings? just a leased the rates where benefit selling looks not stabilized accretive bit an or like So of by in much right It

Todd Meredith

advantage environment. of you're But clusters a to that some Yes. opportunity I we didn't they where the taking that. there Certainly, for pricing was an combination mean we're build growth. in it's buildings I right, see an were out of strong the cases think opportunity

although properties, were were wise, those of opportunity. individuals who saw the they buyers occupancy some so struggling And an local

forward. where were a And assets achieve cap able we to lot on nice didn't of a see some so going we rate growth

the them. decision roll out to I So of made

Operator

Our next question with Sadler from comes Jordan Capital KeyBanc Markets.

Arthur Porto

Jordan. the nature, of term? maybe in for negative on same-store the long Porto And X the questions some in Is see continues investment Arthur for sort more me. we that the net this short-term is is This sustainable portfolio elevated for also, pace Or absorption. to year? next noticed of

could be you some So this provide would on if color that appreciated. trend,

Todd Meredith

Sure, Arthur.

is pace, described, say, the to acquisition And sustainable. pipeline expand. the would is has On as Rob continued I view it our

been see building, maybe out as been look X back And years, expanding X, on really X a the over years, of process you If Rob described, pipeline. or it's our X focusing you'll that and that's building clusters.

depth markets today And a the so we just very in see but markets. a lot to approach we're in new It's some targeting want that there. upon, also that of we targeted expand

So we're making there. progress

that driving that's ebb And we year, of there, level I pace our this may approaching you're to it close going try level a year, to seeing of last sustained a XX% that obviously, it towards push plan sort a value to or as certainly of from think towards bit a forward. each year. effort and close enterprise little flow see but and

to? you the occupancy, Chris, On want

J. Douglas

start will to and be it and such. plays and seen permanent year, seeing, which it into is tours the we've that remains to really as that's including the as as delays absorption, as permitting times underlying and leveling out tied issue. construction last -- delays it which We to space, extended relates in But we're appear to On hopefully to that's occupancy a and and build-out, for well materials increased does has strong what some Yes. demand not temporary, in due over positive. view that But reverse.

next moving and optimism overall year, the future as late on have we So this into we occupancy. year, into absorption into out look

Operator

with from comes question Nick Joseph The Citi. next

Nicholas Joseph

that premiums You on and you are portfolios you're seeing strategic Obviously, on you're current have What as in But accretion portfolio everything. guys the about sure at that look some at market. consider market? different when larger you the these been of considerations look opportunities, the thinking the touched I'm important. key you is

Todd Meredith

Atlanta. clusters? market strategy not it to Obviously, years Obviously, you our focus, to really portfolio. really the quality today. whether in. portfolio, these [ it's focused wanted there's does that smaller very high and and be or or on markets portfolio properties. portfolio expand new we're pricing. Are how every -- on that a they we our can That this a a had can all with clearly, larger work very is and several in want individual be ] markets perfect. But available an of But market-driven. Or we're disciplined mean, asset us very get I we portfolio jump the focused we're into, and in strategically, ago, Meditenoli our saw was It's much that it's the about and

it for more and us, made there. a sense bit So aggressive we were

market-driven strength very and it's market-leading, systems, then themselves. health the So strong they're of health relationship whether assets layer systems. being with the the And then next the obviously, the

Nicholas Joseph

what are capital the as company the of or And either of were know, about if you of cost the else, then the given just do I think of size to ability kind and of anything of scale, from you growing. don't kind the considerations negatives And get about to current how the versus positives think your enterprise kind you or the current value, current kind larger? there?

Todd Meredith

touching that sides side on, There's side, getting sourcing, the knowledge, that market do as right? well having that markets more in. larger I There's efficiencies you portfolio the and as we and the to leasing that markets where build in upon from that, was X operational that comes can can just scale

scale. that positive with all be can So

as that seen record long a it think asset of I pretty sheet you for or As there can terms would certainly benefit I efficiencies say capital, some cycle would And the balance got scale sort multiples, we've some improved. I there are in track you there. think to being of look a our clearly, it's and in super I safe credit spreads We've of cost have at, attractive that's relatively we relates features life up. whether we say enjoyed as capital. equity class, that

disadvantage. So we grow that see I we benefit. to as But continue a don't and scale, certainly think will

Operator

question from next Vikram Stanley. Malhotra Morgan with The comes

Vikram Malhotra

I was remind the quick you that quarter. There what us was? Maybe think, impairment, just first, Could just an just numbers. in

J. Douglas

tearing Vikram, to room that Yes, property. down that the building a new redevelopment Nashville. while We're existing make is for talked That's larger the related to about to be an here for this in Chris. Rob we've owned going

And so demo went happening preparation and in this this ahead impairment we took for that that year. quarter later

Vikram Malhotra

to as now different tenants just focusing while a trying call maybe And I'm anything seeing push next ago, contractual you for post-COVID leases. the terms anything that, in then just you're renewals, it, months, either from you're just to to is in were of on change remember I structure environment, the lease what in place or trying or higher your rents, in a XX anything a related wondering you're rent of there or achieve bumps like increases.

J. Douglas

say below wouldn't were commenced points I there's our higher. if changes. for X.X% that you contractual contractual future increases this average Even just saw And quarter is quarter, about for running basis XX the any No. leases this the material the portfolio.

to expectation. it's been those about able But a moving escalators, to we continue to do little feel to forward. so and to incrementally higher. grind what expect we So very we've time been grow confident of able at to kind have a But that's bit here achieve and continue our

Vikram Malhotra

in property the between then decision-making get terms that -- you your venture? specifically, sort acquisitions the And and in what the the the last joint on-balance JV, sheet bucket? how is And of each on sort fits how what -- fees are of can you remind just one, of of us in the sort

Todd Meredith

maybe Vikram, certainly And it As these set. see a of I out very down take in of us way JV obviously, we my or remarks, us you've terms mentioned still as on enables characteristics some the But something widen of that as clusters, value much center occupancy. in different somewhat we to described can that is some that. we some and little up. lower in to where the MOBs. build Rob opportunity a acquisitions do our we profiles can the seen take add, recently, that of investments lease And

on look as got may lower it end, be So -- it's may a rate cap front a higher but it the cap stabilized rate matures.

in very we other assets you with as scale work additional we and compensation also the looking maybe some purchased the on you've enhance that, so as in the accretively there. put the JV JV And most of And the that off-campus. can some do said, And for then at us seen the of is off-campus well. more even end

but widen So of that. for and then way sort it's a opportunity the risk cost of that's balance capital the us set to the in

not then various as the partner. And going JV structure, value give of related specific on we to anything fee you expect, to with fees there. the we're But types that would obviously, the deliver

Operator

The comes Markets. Capital next question from Juan with Sanabria BMO

Juan Sanabria

us the seeing kind portfolio? kind Just pushed may or on when If how versus of a out or demand will that of on expected boost to the occupied be or of you lease of occupancy curious you thinking because some what provide there's kind And occupancy, more and across retentions spread, occupancy build-outs, to given on a what getting target number can level? just give delays the you're have about permitting. broadly, recovery the you're visibility

Todd Meredith

Yes.

of I think that on that. answer a it's multi-point kind

about Specifically higher feet the is than a take that to XXX,XXX now, have it's related yet XX% historically. right occupancy, executed is what which to leases square little it over

You always that. have a portion of

of tandem it basically amount So permitting that build-outs. that complete has and has in the to taken time grown with the

we're where hopefully occupancy. our relates starting it the off some that's that, hopefully as move leveling to short is think do back we run -- stabilizing to more that in So seeing and opportunity historical towards and that's levels, improving

on be we've XXs, there's a because friction. said occupancy be might But goal our multi-tenant portion different occupancy And our that going of churn drive into the portfolio our with tenant. of to up end that just XX%. focus continue others you higher of in is than versus Over our to as run, long hope and natural the single some the result, up to approaching and kind because a

and But a get that and off the certainly expect the in XX% that's of the retention, portfolio But of you differential we that we type we with that portfolio that be multi-tenant the plus. We just don't realistic have. going portfolio it's think based the to think also don't that -- advantages piece have occupancy. tenant multi-tenant growth you last embedded the value in that provide that from that renewals the in incremental of escalators, overcomes

Juan Sanabria

And on then cap or acquisition just rates follow-up a yields.

You mentioned compressing assets. quality spreads lower for some

you however of So put just kind could quality today that stuff, frame your you focus? do think off if that pricing markets you of some broadly more on guideposts want to the maybe -- what secondary sorry. you market or versus primary to where the relative And about for lower versus do think is for kind

Todd Meredith

Yes.

And think rates, buildings a in quarters, if probably mentioned, moved you back quality was the type that low think a similar lower our X-plus asset, you range. sort obviously, I been several into acquired the this X.X quality at There's that of far probably cap think we Xs. And ]. we've stuff year, cap sort that of we've think down it go there our just X.X averaging rates taken what there's -- you I we're about if when as think at. about look range done a [ But maybe for that the really, so that's we've maybe targeted was move. I of

-- real low in to Those for in assets the pricing portfolios. high you Xs, Xs where are need the seem differences be a pricing be Xs. probably the that think in to see I low down

that So you're play that cap at don't a just seeing that rate out portfolios assets premium for warrant the on level. probably

Operator

Anderson Rich question from Next comes SMBC. with

Richard Anderson

said you, a the half of last of back growth. of we because deferrals reversal So to Chris, should the first dampening in year-over-year you that year expect

relative should of are you will to half second So an quarter? Or the store, guidance I about relative this where idea your -- trying land I'm X% talking talking produced to the X.X% get X%. you're guess you to be of to same that

J. Douglas

Yes.

are I to, that we pointing we as think our and what is what say, $X.X expect is cash that's exactly we're with billion, you Rich, that our well escalators in and what contractual with long-term leasing great, which is consistent would spreads. seeing as

You kind create have going that a of items to few of noise. comparison these some are

And so of the X% going tying that range the it to the still embedded long we term, escalators. but X%. for X% that back may X% But to to range, to within be closer growth provided the that our underlying guidance year in

Richard Anderson

And then growing shorter think X% getting range, you that Are get call, was rents? get question you bumps part earlier with the shorter-term to at go Todd looking then is, second that it I cash term you're actually releasing to and you're quicker of on you leases. rents of to spreads said your And kind the getting in that too.

it's a at sort level similar whether release? a bump of So how more or of are you growth, rent a getting really

Todd Meredith

about this forth. would Chris' to the mean, comment I little sectors think, focus, the to that's a our And than everything back tenant, single the now. longer. than be comment materials, space. leases different inflation, our not goes again, It's in other relative And on, that's pressure time, which answer have whatever, shorter-term when first to benefit tends is competition. just going costs, point targeting be a the your that Over more I of of Yes. necessarily multi-tenant you But a peers rising to feel so even question we're we and

of we're So our is I positioned that. view result as a well think

a those propensity we of that. be rent But in been higher leasing little for average of always with roughly. in to increasing X% we It's sort the that little that see higher a have towards cash said, just bumps Chris to As spreads been this be historically environment. more us that grinding expect than recent higher. going And deals

kind talking even is moving things quarter double long Again, and there we expect term, we really then of a not but where to here every about a level. to easily now above and see be. again, X% little higher we're X% digit, X% could the But

J. Douglas

Yes.

X% to right now running X.X% spreads. long-term X.X%. we're right X% on we're on at So at and And year-to-date, escalators

we're right XXX on So basis we now -- improvement points seeing seeing some are it, call versus spreads comps. yes, that

Richard Anderson

question events last great a selling, then And than I'm High-quality portfolio. perhaps off-campus would lot about. you are for events, hypothetical. suggesting recent bit they're portfolio, not me, that at The talking HTA, a a been certainly more that's like. something people but

So you just of again, it you hard is relative But something would to how theirs? a too that? if, I pencil like take it would to available. strategy assume look because your became handle hypothetically,

Todd Meredith

the space all drama drama sort we're of of Yes. of Rich, obviously, medical in low kind by office. shocked the

So look and play obviously, out. going still it's not XX everything. at mean, hours speculate But to I on that. old do we we're to

you from looked mentioned, up at in know years from our if looked back, everything, asset deals, it's always space. it's to whether relevant As you we've M&A one us we've

to play we're to to but speculate. everything, So look and going idea we what's no out, have we're going at going not

Operator

comes The Bernstein Daniel next with One. Capital question from

Daniel Bernstein

up little assets, process COVID-XX one demand? up selling like whether estate that slow for And been I very guess their maybe of demand terms or that's surgery what that's sped know guess. particular in of decision-making process, versus nuance picking decisions, more could in physician type of X sounds And any terms than type in if space, kind of secondly, always demand a specialties in maybe another. bit space leasing don't but reason that's or others? of are real then the leasing One, you it at I as questions, hospitals physician it's if I any a provide the on it's there's

J. Douglas

Yes.

there's In highlight anything terms of I say to there. specialties, wouldn't

As you campus. more adjacent know, to on and we're

specialist to you're a buildings. inside higher So going higher our see acuity, of

in worth growth that I one is But comparison those over seeing of say we're so in specialty would types of practices. another. noting And nothing

Todd Meredith

the say, cancer, cardiology, orthopedics, all I'd term, has certainly specialties said and And trend specialized things of near Yes. longer surgery, been fit highest the demand. that obstetrics what campus then into the Chris

quarters, year point we X and over inventory same which On take are the year had sort slow decision-making, it second liquidity about and X seeing for is and to all last that decision-making, some come things certainly reasons we we playing out That throws the with last that's last that. second that the all of the of great. saw certainly all or been thaw, other down quarter

It incremental level, the development showing in here many -- making that described certainly be Rob hospital in seems Nashville the in for to growth at was plans the years. one up the

you of ago Dan, property finally come to we were it. here. replace were tour that in we and going Nashville, here building you, and years some down, a think and it Well, I was said here at we're did we'll and maybe when pointing

didn't that's see the long-term change out COVID. to that coming plans of encouraging So

situation say growth seeing and system get by are it's aggressive come thaw very back. on going starting the the be to thing, plans. to it by and physician same we all health And upon dependent encouraging. I'd groups, but really It's market, So for same

So will we're what by that encouraged very bring.

Operator

Our will Mueller of next JPMorgan. Mike question come from

Michael Mueller

an unexpected relatively recent in there case management you've Board and talk steps to I know what had succession little about -- the in you're But young about in years, of is departure? takes can you thinking changes a team. bit terms a

Todd Meredith

Board We year. every do Sure. with certainly the that

In again. reviewed fact, recently it we just

So that. a than even have with team, and with priority but that whole me, obviously, we definitely deeper the management starting as the Board

focused So that a we sort I planned that place. And have when strength the well, Emery, as board my of remarks that he do in that we think that company candidates we regularly. do you to and who that I company, and the we ran that's mentioned certainly sure in our on continue a that. We and knew David make founder, was very have unplanned

to And very think here. a I priority tenured expertise. large fortunate have a of with people of it's we're lot lot So a

confident very that plan. So we're in

Operator

[Operator will from Green Street Hartwich Lukas Our question come next with Advisors. Instructions]

Lukas Hartwich

than on and this the challenging faster office years sense how there's looking lot and the team from for how trying obviously, once construction that to the bit rise rents. We new permanent changed have a that's do have because of you can have, have positive, like of your rents it might temporary replacement settles, costs say watching you front. thing be. noise a and team see will over everyone. price it's dust properties the out So developments, a numbers. is medical costs to whether and always data, Rob's rising existing We're versus one tended Obviously, know to And on -- the generally are speaking, versus levels? a consistent development always inflation pre-COVID The the we're

that's when obviously demand there's So the space. works of well much than greater supply it

our appear that's to and be outsized it any developments. completely going pencil to doesn't -- so And is view is it that therefore, difficult

But incrementally, beneficial on the our it's going that's, to continue to to assets. existing be obviously, challenging, and whole, I'd say

entry think in the to add fast that As to barriers and cost. a dense we that markets build to you obviously, the then, addition is the have out great that rising we clusters,

costs increases to in regular X% X% been a annual pretty construction thing. So even X%, has

the beneficial So I continue generally will to that be to think and us. case is

Operator

I'd Ladies question-and-answer and the conference concludes Todd any back to remarks. for to closing session. over turn gentlemen, Meredith our like this

Todd Meredith

everyone, have We of upcoming of for summer. seeing a us today. to you, great Thanks. look rest at conferences September, your many joining and forward Thank some you in

Operator

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

You now may disconnect.

Healthcare Realty Trust (HR) 5 Aug 212021 Q2 Earnings call transcript