Healthcare Realty Trust (HR) 4 Nov 212021 Q3 Earnings call transcript

Company Profile

Participants

Kara Smith	executive
Todd Meredith	executive
Bethany Mancini	executive
Robert Hull	executive
J. Douglas	executive
Juan Sanabria	analyst
Jordan Sadler	analyst
Nicholas Joseph	analyst
Richard Anderson	analyst
Connor Siversky	analyst
John Pawlowski	analyst
Michael Mueller	analyst

Call transcript

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Operator

Good afternoon, and welcome to the Healthcare Realty Trust Third 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, Investor Relations. Please go ahead.

Kara Smith

Thank you for joining us today for Healthcare Realty's third quarter 2021 earnings conference call.

matters call Kris Todd for that Douglas. A information within the Rob Bethany the involve on call contained and this and Hull reminder the estimates, me assumptions, today forward-looking uncertainties. Meredith, are Mancini, historical may risks, Joining contain on statements discussed that except the discussed XX, December XXXX. These specifically Form filed ended in risks are with year XX-K a more the SEC for as of These the of forward-looking company's statements represent this judgment the call. date material. The from any matters also per disclaims The adjusted normalized share, obligation for FAD, per call financial this forward-looking funds FFO, FFO in to may and distribution, discussed EBITDA. company net contain measures, update this such operations, FFO non-GAAP income, certain operating normalized EBITDA available as share, funds FFO, NOI, the of third comparable be press these measures may company's to XXXX. in the release for reconciliation XX, financial measures found September GAAP the earnings ended most quarter A information, the the XX-K release, and and press XX-Q earnings to over Meredith. call website. I'll company's company's Officer, our Chief supplemental The Todd Form Executive on now available are turn

Todd Meredith

joining Thank for and of quarterly past per This over by growth Good everyone, largely our months. $XXX call. was for we driven thank growth morning, over FFO share quarter you of million reported acquisitions X.X%. Kara. Yesterday, XX third you, earnings us the

incredibly we're operational are utilization important, as busy Healthcare buildings improvements seeing our outpatient as providers Just across the in portfolio. normalizes.

and the our momentum So, term, building. In is chain everyone, too is through not surprisingly, supply we're issues. leasing up activity like near working

historical MOB sector's real capital. is growth occupancy, trending cap a many so for for to are into estate returns more for X% model. stabilize the Cap this high-quality, million our rates through take these properties our are same-store tenants In at these initial Xs at multi-tenant and sourcing Like asset NOI portfolios with new expect As to able time we've properties to mostly like MOB attracting We've we classes, higher. proven individual The $XXX range. and been frames valuations direct build out acquired resiliency rate. tenants year, assets return acquire certain now X.X% contrast, asset-by-asset bond far higher common large XX meaningfully characteristics. our

our same-store time. operational and these our approach constrained and existing These pricing, growth in initial where is the Diego. targeted like over clusters Dallas, superior properties are Denver We're meaningfully supply delivers norm. platform Beyond Angeles, Los markets dense buying population growth markets, places above acquisition San within

acquire are to and We stabilized continue that on properties adjacent to campus.

quarters diligent foot XX% level gas to doing settings. Years our safety our growth, long-term of platform, utilization, safely investment proven across attractive like keeping pedal. is volumes return to we're to our strategy many use value-add volumes local on-campus, we're to growth investments and execution the our JV ability our off-campus deliver an As over our we in population, years future, of driving in and this strong profile. more acquisition portfolio. and And FFO build increased include quality to is more growth-oriented the and MOB ability guidance allowed aging build execute compounding very to continued on and a lead allow of poised exceed of We've ahead. operating return again achieving these looking effect on cluster in levels the to this value an And properties. our basis. record This nearby and relationships knowledge our us strike within consistently a year, partnership set. 'XX. core sub-market, and ultra strength growth and the the to long-term scale extends to our us on risk years compelling. The healthcare balance expand and this XXXX, sustain annual range to XXXX With highest to strategy enterprise and we're in we these our pace refinement After of due Combined the and and with of pipeline than see creates

the recently Corporate published we achieved, over, our turn numerous call our third which milestones want I and to available We're Report, GRESB I proud Responsibility website. Before goals mention, annual ESG of is the ahead. I'll on Carla including our forward leading participation. for sustainability and to thank healthcare look to making committee on the want the I further over we an in update to call trends. important Bethany Baca years initiatives, our now these turn we've strides for and

Bethany Mancini

a years, growth remain and are trends positive Delayed spot across regionally. presence the routine reimbursement lines service continues to controls wage and Their in move should in outpatient visits in their has up providers extend patient healthcare and this Physician Physician a future and strong volumes demand surgery. X demand high prove volumes Realty's even offices relief margins the both since reduced. Outpatient surge treatment past we increases uncertainty have to consistent health is amid growth to Temporary demand, continued strong. Physician over for sign for will Medicare it higher are for continue for pandemic quarter. look the is delta resiliency. Government ways is was necessity care to labor. and COVID patient ACA for coverage. economic are and and pressures, in sector. adding office the markets due been inpatient groups both of year third system. seeing and for rates expand to positive More has with XXXX. outpatient, the healthcare plans sector their amid to effective, employment nation's Healthcare on demand to board, need had higher performing subsidies ramp also MOB in Medicaid within and strength anything signaled bright are support relief end a signals insurance federal even their the and been XXXX, healthcare conditions for the steady track momentum growth. September, space. support a for undeterred boost looking providers Overall, continue Hospitals marginal in for sunset cost and at healthcare are The to to coverage are declining with the Congress Todd. learned reimbursement internal performance proving the growth. by operations, Thanks, towards certainty providers but If our positive of chronic

with performance the are steady HR's physician pleased and tenants the We strength our hospital partners of of MOB. and

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

Robert Hull

XX to Bethany. within separate existing transactions, continues Thanks, XX our all build. Year-to-date, Acquisition have momentum across million invested and $XXX we markets.

high-end. to at moved the have the up For $XXX year, million we guidance our

and curating chasing starts local of for market MOB with simply not We of high-quality the a portfolio, network data-driven are sake knowledge. industry relationships our volume vast market volume. deep research, This

for recognizing want the leverage fast growing whether quality acquire to by own we access buildings us healthcare our or to begins markets ultimately not can We where determine alongside and we For relationships these build properties. identifying scale providers. sale leading and gain

multiple our portfolios. with Beyond time To highlight operational and buildings to opportunities contrasting over process, of the enhance of million is clusters acquisition and worth the widely activity our it provides $XXX marketed volume, owning advantages leasing performance.

billion market MOB over this have year, $X of marketed portfolios above real widely we far million, $XXX estate. XX So, -- evaluated representing

to have acquisitions X when these points. compared demographics portfolios. There are superior Our data

the is that First, averaged national population of growth and around marketed nearly portfolios This average. double our the X.X%. acquisitions

XXX,XXX greater household the higher our is these third, deals. average. our income Second, the national portfolios $XX,XXX density than than XX% of population marketed of XX% And was both and median

ago. not to XXX% or of with noting In buying partnered triangle, the adjacent XX of leading acquisitions know but we acquisitions basis better. for we that blended million. a only properties systems. In addition higher better total quarter, the third were valuations. we are in mostly of campus short, million over were versus are deals. to just And we've of marketed Colorado, for our since a great now state, that XXXX. investing and We part in markets concentrated months feet worth market these of XX% superior Springs. markets, well, demographics, at a in these in were Denver the XX cap X entered X.X market estate Raleigh, acquired $XXX weighing in own the rate are in our real totaling also buildings, fast-growing Colorado It's properties health X points were square this better our these than existing buildings tech-driven real research on estate our been XX% for are directly XX portfolios, average with fundamentals we also XX we In approximately

year Looking with will quarter. the finish ahead, a fourth we strong

we an rate all We sales Driven under by average accretive have of the the at million market, contract fund our acquisitions. to have rate X.X%. average Year-to-date, dispositions completed strength of cap the markets in million of $XXX capital for remain an low-Xs. in an $XXX over LOI, cap source in at existing

we markets path few to sell expect We where long-term square significant don't in more see this a a to and buildings growth. drive footage add year

our markets. target to We on upper the are end our guidance $XXX and million. Development around activity track disposition focused increasing remains of

currently $XXX Seattle have development million of Dallas. We Nashville, in underway and

are our over of from sourced billion. $X projects primarily Our pipeline embedded

that and We Georgia, a sign health plan for North providers strong existing continue look are having in Carolina to growth. meaningful discussions and Texas, ahead system several partners with

in pipeline look investment constantly we our is large It efforts being is as replenished sourcing our been. markets. As ever to as it's XXXX, through target

our refined our process to grown activity. sustain higher have We of and levels team

apart us are set and for ever better accelerated growth. positioned we has before execute consistently to ability accretive Our than external

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

J. Douglas

our healthy per for contribute quarter FFO FFO it results was third X.X%. Strong Rob. up quarter, Thanks, demonstrate meaningful is and up to performance acquisition growth. operating X.X%, volume per and Year-to-date, share the share steady how

experienced share reported the extreme MOB reliably have platform over built to quarterly deliver. couple last positive we FFO what exactly is of have many per While volatility quality years, growth, our earnings

lines. last between delays out XX even throughout interest is out of build existing next the in NOI The at to contractual and tenant months. and same-store our activity saw will our of trend space. the was running and growth approximately sequentially. This pause towards occupancy. encouraging team tenants been due for back drop Currently, in-place X%. same-store the more lines and in several the strong our the impact over same-store basis is the average a time is escalators point a of XXXX reporting allow build that This of Our XX X.X% occupancy new NOI NOI for has really includes time X% challenges occupancy in quarters. What is summer in stabilizing X% decline stabilized leasing our ongoing We to

Our is growth embedded drive drivers. consistent portfolio ability supported our by internal to performance

quarter, This spreads cash X%. leasing were

were fuel and our quarter, annually increases contractual earnings and commencing also in-place compound engine. X%. were The our bumps the leases for growth Our X.XX%, in these built-in escalators

This better communicate help escalators disclosure quarter to we across added our new the portfolio.

rent in-place have opportunity assets. lower is to average. acquisitions. for important the out these attractive What increases growth very of provides profile We Typically, that breaking our are improve portfolio now is the escalators this than acquisitions a

roll, leases to these escalators. expect we improve As

doing provides over X in accretion. meaningful cap Our incremental success so day and value rate above

our external balance to fund accretively Regarding and to capital benefit of from sheet to multiple we access continue liquidity, sources our growth.

equity by Fitch and the We million $XXX settled our have low with XX were And leverage, forward S&P. contracts next over to affirmed debt months. ratings be of recently

we Beyond markets, the venture capital joint of have a long-term with unique through source public Teachers. our

there XX But seasonally With track higher we quarter. was FAD months, and our on to XX% the is respect below are XX.X% million trailing year-to-date $XXX typically payout and coverage, year the in with partnership ratio basis. Over a ratio a the FAD is end more. so with on fourth dividend XX-month significant for XX%. CapEx to invested capacity even our payout Maintenance this last almost we

are sheet medical for of balance drive robust by to As multiple open us and we questions. volume those with sources per look ahead outpatient office. and of This the care markets now we're share growth. Operator, improving a margin position we translate capital internal safety and well for pipeline. unique accelerating across line attractive A demand the to year, will encouraged growth strong our FFO to next into acquisition continued to investment flexible ready

Operator

from Capital comes Markets. today question with first Juan Our Sanabria BMO Instructions] [Operator

Juan Sanabria

lower into of kind curious cap comments Just rates Xs. on moving you your about the

is the strategy of deals being just are -- platform, a of purely sought that's sense to indicative of after as are that building operating that benefiting local much signing can one-off that kind it opportunity? oil are the the disconnect, competition, where is or as and the you the from not there's So, kind presences kind pricing the somehow you've that cap being of your deals trying of rates get and add has -- not since or of value find and been or quoting recently tightened

Todd Meredith

more Juan, certainly you the what said. of just latter

sort been for while private there time substantial been folks we've lot scale chasing for while out MOB, being in the capital, -- of the a portfolio clearly paid. it. that sought pointing a -- is premiums some getting has of nature a It's of think there I a just after of lot

So a around see when those lot portfolios of of you come that. scale, fever

remarks, And you these so as see we super cap enhance It But described, And well. generally are the look seeing, assets may maybe as we profile individual is view those. those as our places doesn't prepared Occasionally, We're in speaking, term, certain Kris slower just growth characteristics, of complement growth may a at assets. portfolio cluster. my in where can come not those vehicles. down. lease where long rates bonds fit I also mentioned like some our it

approach So not extra the our paying give think us cap an advantage markets are you've our pointed asset-by-asset I does LOI do platform going our premiums. view or contract those as out, at seen to what in deals and of under is similar year-to-date. rates us very Rob And our

current rates. cap fresh So those are think I very

Juan Sanabria

curious guess, just about then on the sitting space. delays out in, And your I comments

do the get won't availability regards you start with we'll think labor worse they to better? occupancy that before issues and tick the up see when So, back to get confidence

Todd Meredith

right. you're Yes,

about lines We stabilized. kind about call The extended outs. our have time that this And pre-pandemic last from little was quarter a bit positive seen quarter. extended We that some talked of levels it, it's by, in build XX%.

seeing we So, extend. those time weren't lines

just year. able to then just if positive hopefully even if that they out will being next helps stabilize the the occupancy terms to and up absorption. build to that be stabilization over terms in lines able And of rebound of in So, with us the next the to -- to quarters help speed shorten, start time to start then can can into several start

been at, I interesting things is amount in One what's our also the looked with longer has of the happening that expanded unoccupied outs. of lease but we've think, build with is space concert

also what it's months. last than the the than longer XX% we seeing so And before XX larger before about were or

XX was and that if space, up we growth. benefits first And difference space occupancy because as if that leased that basis to points will look But have going year all so that was speed additional that's say, stabilization line is said quarter in in that well been just occupancy Xs, that lease good, back you of would think if of as see back that our to see meaningful provide have quarter approaching escalators higher any And our contractual difference in but we same high our same-store trend the and allow growth. which in X. also 'XX, then will with start next NOI just incremental and the it some us up this can unoccupied same-store unoccupied a would in but is NOI

Operator

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

Jordan Sadler

lease or you What's not wanted last maybe occupied the to normalize. trend of that that will, for online? watching if that basis point frame the clarify points, and compressing time of but just to sort on I XX come sort

Todd Meredith

the I looking growing. at I'm stabilizing, just the Jordan, not right guess, is now, fact and it it's that way it's

occupancy. because benefit So, so provides we XX% and it's in not what that higher in you're than you're saw a That before. of ground, losing kind itself of staying not losing

-- that and above not already able escalators. But you that -- at that to and pick build several to the lines we from be rebound when of this our NOI will uplift just the point in the to a time closure normal. we're So we're out to some quarters going over be happen, rebound we're that next benefit when provide see expect over improvement to stabilization. to incremental itself will the date tell and does those and just seeing If

Jordan Sadler

material -- within I And don't back office you supply the what's was driving because would be in around some then chain just these the medical little Is I it looking I'm taking -- wasn't rearing may hear of thinking bit that think particular. would curious detail how and I necessarily a specifically, of space you you because or mentioned delays? causing have -- kind issues, those just supply head issues. to characterize the chain be And what

J. Douglas

of of things. a portion A combination It's is it permitting.

Nashville, So, get the it's to markets, Denver, of in areas. on local a high getting longer through or permitting types the a municipality, depending Dallas especially growth like those

not what as it's and space of And And differs the to project the one difficult equipment. some that's every with really be issue. relates depending materials. to it see. out source kind supply could we're Frankly, areas, chain, build to on more across consistent paint frankly, So, the it you project. on the has board do the the of seeing In HVAC of it

we and through supply permitting. to really arrive. everybody chain think so But better waiting it's the lines is about ahead trying to I the of try doesn't of is on material of how know We well make delays, of we that those things to going that to supplies some paint trying that that mentioning, -- to when was of a kind supplies and to ordering things of are a ahead back that But adjusting we color if as consistent to figure as everybody combination know the work find time sure the we to doing we create buy have hand, scheme I I get consistent think what out have we we it just we that to if it. and the a can offset trying time backlog have use on some

Todd Meredith

medical call Jordan, something as this unique I office. wouldn't to out And

you're same things I think across across estate, hearing the individual real issues. these are

to longer. issues, as lot right a electronics refrigerator it's house, Kris to the for going paint, order you all the It's your a way from take it's materials If now down same said.

Jordan Sadler

was I expecting of se, helpful wasn't I factor per about risk bus I color. continuing, just that to -- wasn't the I that's something you. hear just And just No, maybe, -- it thinking it MOBs. was okay. wasn't MOB that Todd, have within And

ton growth spent managing potential, portfolio refining you it the last So, working to Can around several the And base. the the really it? time maximize guys and of aggressively, you especially the as overall but of portfolio's a related also portfolio growth insight asset over of and of years, to escalators, terms accretive the refining of these to the in how company's growth the asset maybe current piece assets external some offer strategy quality addition growth? the the is

Todd Meredith

care think it goes to over portfolio I want we and scale can where build the looking relationships, refining right, be of in the it's you're those focusing the to said, these assets, years, quality really health in, on back we providers. alongside have Rob as places certainly, sort markets great for

time. is So, more finding for that of opportunities now the we've and done space we're to more and the lot think a have our our reputation all we we're that of And in a and expertise view relationships getting where from long our I that. traction expand

And so Seattle is perfect example. the

page it's the X make. create also Kris locally enhance through and on we on talk even have leasing go but say to to the as about the in we powerful meaning to on us but have it's then and your scale the And benefits leasing Seattle. acquisitions in only talk of certainly escalators, day how platform, And We in point, said, expense value those the we a expertise have several about more side, where presentation heard continue we side. push not investor you've our of I'd can accretion, our

occurs can that's assets buy or role up we years escalators average lease through have after as we towards that X.XX%. buy several move at we X% that over and we if the place, and work it So, the they're X.X%, in

clear clearly, providers. relationships accretion And benefits also initial there's beyond healthcare build then the you from So, with that, acquisition that. beyond

they go usually whether off-campus, it's looking we're business that hospital or And expand want providers, away so from at locations their are identifying we doctor when campus. to groups

that many cases, reward return, higher may quality we higher And find us have -- So, risk it those little follow also providers. higher a in helps some profile. little a can acquisitions

we that a and the As of put kind you know, of risk. JV balance lot that in

always the that focused view than to out and that of that the So, we external growth up. see we've as way, external whole and so power we ever building growth, have, growth but internal adding see very enhancing growth been more in now building strategy a

Operator

next comes with Our from Joseph question Nick Citi.

Nicholas Joseph

Maybe following up on the disposition.

handful maybe of a those within portfolio? strategy fit this of sales for don't you What's So the remainder asset and the current assets terms in beyond that mentioned year.

Robert Hull

the if planned you -- of tuning, at fine look fine we're the that think of it's remainder to sell I to tune continuing sort year, selling what this for portfolio.

We be are of assets. orphan that have out a to we assets handful there what deem

So, think candidates build where described. to growth drive certainly Todd can this places scale just as and continue we don't we

and I a and as a So, to out grow the similar see we within we and clusters think enhanced at year for that opportunities look things the just be don't market. move scale that, from would next good into opportunity dispositions, it benefit build to

Nicholas Joseph

could be that for year's well, growth don't source fit? of external additional a But as next that dispositions capital

Robert Hull

view way. we'd it Certainly, Yes. that

at taking can in taking those assets the dollars and strength meaningful rates I of where pricing growth. the grow the drive market in selling we clusters think we're the today, look you certainly and long-term where and advantage we're -- of where the if rotating cap

continue that's that our with forward. -- be to So our strategy will dispositions going

Nicholas Joseph

midpoint are the following getting on the towards or commentary that Appreciate rate And on guidance. at anything low-end XXXX? long-term additional kind trending same-store But then Is in things get just maintained least maybe cash XXXX the there same-store for you to and NOI the growth. you quarter the run to up back disclosure. could that fourth that up of

J. Douglas

to occurred and things. rent we There XX deferrals some talked going of of probably quarter-to-quarter those comparability are year, that midpoint. we'll full about there's are, and circumstances For the quarter, a that last over unusual related given be that issues months on parking lot below last as the

offset of other. the and quarter, reversal rent pretty our in each quarter. bit a last rebound of some of much reserves provided parking lift deferral a the They this For

that you that so things talked we is have around. is occupancy the lower right that piece those driving now the And about. main same-store But NOI are bouncing that

that to in expectation start hope up but with And build contractual more back X% and our the But to to rebound, pointed those will still probably so range, stabilizing within X% line out, will several is that the as take escalators. to but you midpoint. below quarters the

Operator

from question next with Anderson SMBC. Our comes Rich

Richard Anderson

I think back Kris, tenant I hear of did to getting delays, you started correctly? So, said you the the in -- you same-store Did conversation, delays summer tenant XXXX.

J. Douglas

of Yes, you had a terms you XXXX. of couple the during of a such leasing had Then things. just pause in summer activity

chain. momentum did And those into leasing through occupancy terms did play leasing then to of on late convert being because back the from that leased of going the bit get at to start that velocity Once to delays in kind by so things a normal year of was point. tours the able in last and supply that of was that compounded

at So as got kind you the on a look you've combination XX-month both those of basis, it items. of of trailing

Richard Anderson

play were produce year? not those Why in second in if quarter why same-store line, So, to into didn't first the of able this then growth numbers? and you better, it

J. Douglas

deferrals, the some last repayment the offset deferrals, comparability a the And with that was, do reserves quarter-to-quarter going on. reversal we look from specifically lot the of the took it the It's of parking. issues. as of It's quarter, and about, we the of year-over-year as the that those talked to you rebounding has

year, So of but that's, noise of talked they but going just comparability -- as earlier they still other. issue. this We as the offset we've from that well, creates that a some about frankly on had kind some in each quarter

and them creating seeing. items of one quarter any what those to is -- variability in is impact be it's the going you're that particular of so And the some

Richard Anderson

terms issue line out I'm and if that occupancy and noise hearing right, in I bottom from you take parking would have in this if as well same-store quarter the second see. deferral growth variability the of that rent been kind then, this present of first you So,

J. Douglas

algorithm kind And look certainly. back Yes, it, of the it and just math. I at the goes the to

X.X% underlying equal. spreads then you X%, contractual has X% margin, all The occupancy growth -- that about cash us, If our a to seeing from your our And go NOI. you're to or of minus plus X%, escalators for impact leasing growth kind should X-plus. else be is given or our or X%

the expectation high if change is in kind -- occupancy running to to you're have be NOI. that you running and your should X% is Xs X% whatever of then if impact to So, your overall a going your

a to the So from kind you XX point down Xs. Xs of in drop for occupancy this quarter, the moves basis

should So what from expect, that's that's what expect you and would I portfolios. to see other

expect. Now, from algorithm like would results what see said, and make issues you that those would differ you I comparabilities that might that

Richard Anderson

question Second whomever. for

obviously, works, is factor calculation? in I same-store I'm occupancy So year to terms triangulate that's a that, to the of -- of the bit side the hence, get trying behind expense hiding points little what's basis over are the the much to the of that create in you but occupancy coming trying -- you curious know capitalized, business and of the same-store calculation. say let's cost how just How recover this gain in I'm the not included scenes same-store and just -- calculation? just I'm the XX

J. Douglas

On really CapEx an there. is it impact. much inside TI your related your the to to you're going that expense of have see to not going to you're the going NOI, and have build Where you're same-store of maintenance

Richard Anderson

all it's capitalized. all capitalized. is this So That's

J. Douglas

we one be longer seen reasons the spend of And and that the on our to the with that's have especially beginning of TI that. associated going reasons is time it's money you and trending so TI The on low as exactly. capitalized with year we're fast lines end, build-out at those this to spent expected of one Yes, the we the the year. compared haven't what

Richard Anderson

the how it of but line benefit I get the the to don't the in revenue, of this know you all bottom is works, comes again, And earnings. I calculate. you but it kind down same-store mean,

are. are troubled the not but I'm it, question... by what optics they Last So

Todd Meredith

the and goes over almost going CapEx, lease. is one I life opposite of your upfront, Rich, maintenance you that the AFFO thing that get end out It's is the to of all the spending through that capital there. to revenue you're it would point up that where

so And there of as over there. that long-term it. the of is is positive growth positive headwind in But think AFFO earnings terms little the you start impact a worth about more to to bit a than absorption,

Richard Anderson

X% I get or others, And and among plus cap for I to assuming not you're that pretty that maybe spread because I type on being same-store buying earnings the XXX% but whoever, that reason perhaps course? and stuff Rob be people wide, Are always say close stuff, focusing better yes, same seems selling question, for of in should completely. harrier rates, agree. they X%. apples-to-apples acquisitions, dispositions very way and Last calculated

Robert Hull

I growth we've terms many opportunity those don't it's think I of of lot occupancy in properties on that they some certainly see in figured properties They're We a the number. a sold, mean, for the trailing cap NOI or rates, of And would I marketplace. growing. low not that say those of also properties. are

selling so there occupancy. in impact And from those low is some

Richard Anderson

forward So, dispositions on trailing XX? on XX acquisitions

Robert Hull

project obviously, out example, taking because going your it's speaking, what those model, forward, for of you the with and acquisitions. you're dispositions what right, Generally then that's are

So the otherwise. difference only it's that's price NOI and about

Operator

with Siversky Connor from comes question next Our Berenberg.

Connor Siversky

Just zero on second-gen in wanted to TI.

And could range, into get how even this if million typically trending assume to wondering reiterated a relative requires with the to I'm you million. we would the $XX hefty I'm for pretty $XX to midpoint was seasonality. it just on guidance QX. in quarter that spend to what because is wondering So, just comment fourth I think

J. Douglas

Yes.

range dividend the about in probably commissions coming second-gen guidance what be of Rich particular, is to low-end time be the we year expect fourth reasonable that in right. -- you're leasing spend longer is so the I spend back expectation there they're as the yes you think will it even appropriate right And and occur you're out the we're far the is But seasonally CapEx, and But below is that -- think well. of that on ratio think to XX%, in point below there for that's how But going lines were to on I at which in be TI, able a terms I the to it talking year-to-date. payout that is and a I to this midpoint. to trending and with that with on midpoint. would we assume are to higher typically FAD the or the that closer just goes with generate quarter, our

Connor Siversky

your FDA? And looking mean, in are seeing relative I are trends anything TI? of you've new improvements kind seen tenants terms these then within what to any in for of you

J. Douglas

on but costs, that all. that Not would like construction mean, at mean, real in certainly, of that, from a typical nothing cost but the shift. materially materially would and been not standpoint. estate we a or ever cost -- not it's change really that design. I the see we've just material the change lookout level different, pandemic pressures increases, seen It started materially for everyone the since I haven't design

Connor Siversky

a of bit level higher a question. And then

would cardio, to seeing increased Just considering facilitate that for for setting? specializations, or or certain hearing any you acuity compared are perhaps whether commentary assets your segments, in that's oncology operators example, a lower something that can demand suggest

Todd Meredith

the presentation are because list ones our at specialty we're Different campus, if of the for side. has our of demand based our market that you in on lot look and you heavily just as a on tend And I high been focus near the mean, would clearly, concept And specialties, cited that we on more very and a say, we specialty. time. long top I to around see campus.

be So continue we kind wouldn't a say I of dramatic we're break our point. can But it I at see versus that see you'll this and mean, here campus lot in shift on that down and you campus. seeing we a to strong on very around cardiology off. congregating oncology of see

cover speaking, the and larger more bit I that her think market groups tend gotten in locations locations, you to they about to see be time they in attract the and and can little a Bethany patients and more over that and all to have be expand. want more talked have remarks. broadly really

they might sprinkled well. on today, you whole around and lot on-campus a then off-campus market, multiple usually, around they So, may group as a wherever of have be, campuses a be and

just versus of really it's kind not one So, the other. everywhere,

Operator

Street Advisors. Our next with question Green Pawlowski from John comes

John Pawlowski

you lease that years on negotiations? your the question follow-up topic expect one shift structural just in Do over of Maybe coming kind average any of term guys tenant preferences. changes in in

Todd Meredith

other. wants that, see A No, what of we with that Not times I the as the dollars lease, on either change there, in materially. X usually pushing eye for one speaking, area dramatic we longer team is leasing an certainly say, lot be development reasons. comes a on generally those -- not and all seeing ear an terms which they get. to it direction want out. in may comfortable We're keep tenant keep of of spending out with true hard generally We're that or our That But is would the feedback a side well. typically some because we're the they years. not in certainly spread and lease in a new any

John Pawlowski

of distribution Second cash spread less break to spread. markets seeing decline you just me the up leasing you X% type -- type of properties way markets Could help than you what go are all out the and within greater cash those you're outsized fall and understand X% question, type posts? areas? product your guys spreads the growth type So where which that are of within the than on spread ones the leasing

Todd Meredith

And find onto think tell I usually every for that you will as Memphis and that patterns market. versus soon Nashville, you by it look quarter. reverses. that in you're track it happened as We look you We you, something something at

just maybe the a certainly high I corridor the We some a the of seen that here In bit at well. saw that as maybe very our haven't oh, we in we've geographic D.C. fair for discerning quite say some we a strong really there. Hawaii, the suggests, portfolio seen extremes, we're concentrations at say in saw versus long time. end. lower would having I would trend So, spreads area

talked up a of clear if kind we which pattern Rob particular think performance -- we on might it market. about say hey, our very to little I picking that's it's pick And think grow feeds might that, bit do we oh, the that, ability it If we on how about up there's and what we that is, wouldn't a But how and really about, that, start consistently poor inform portfolio a here. expand in dispositions.

J. Douglas

One makes negatives, do the leases leasing thing I higher would the and smaller average X% it's spreads add incrementally, the plus escalators big but for cash of is just see slightly to sense. extremes which not that and versus we

with cost up It's on structure tenant not close lease. end pricing if the maybe to much their have a power smaller not You campus small as may well. as a as percentage of overall

multi-tenant we we do of dynamics spreads the it So, one some frankly incremental negotiation. in and better And the single the because lease your up just that to the you getting start that's some tenant, those like of locations. in changes reasons see MOBs larger

Operator

with question next comes Our Mike JPMorgan. from Mueller

Michael Mueller

when the wondering to Just you've development number given annual inquiries ramp of the spend development up? the front start on would been seeing, you expect to

Robert Hull

and we on. where -- that million talked we're systems about $XXX that $XXX health going in of has to And year, And and terms those development out. on relationships great million, opportunities, next million of new developments. X where opportunity you'll that continue produce range looked of $XXX pipeline. we're of systems control in think continue develop. that that to at year side. We've new working year conversations have with be with this year And embedded terms We've Texas that's and going Colorado XX to level we kind now around the live of have where the got think Carolina, to from we're in before, kind We've -- most got think every the developments. of North in that the of that a we about think million in I see number developing $XXX we years, it's us right over the and to our I on starts at portfolio come that can we

for and frankly to also And we're cap rates to think to XXX are we partners with. today the can that we stabilized points think think we that value develop We developing them. We where meaningful service system with provides can that so provides where assets. level spreads where basis health the grow XXX above comfortable a our quite that's the

of we Certainly, embedded that we But we the of slightly, our where mitigated so mitigates -- of development the lot opportunity on risk we great thing that risk. out the by feel the might. we pipeline, a of have to sort stand the are development demands know the is the So, but it the side. terms move health we like we know like traditional up development traditional that we and in by the know we system, space is developing demands needed markets, think

Operator

session. Ladies and question-and-answer I conference like gentlemen, this back the any over for closing will to meredith turn conclude would remarks. our Todd to

Todd Meredith

at Nareit. today, and you, and next Have appreciate look interest everybody, of with week for us we in we to forward you Realty, a your joining time day. Healthcare many and speaking Thank great

Operator

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

You may disconnect. now

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