HR - Earnings call 2 2023 | Healthcare Realty Trust Incorporated

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Operator

Good morning or good afternoon, and welcome to the Healthcare Realty Trust Second Quarter Earnings Conference Call. My name is Adam, and I will be your operator for today. [Operator Instructions] I will now hand the call over to VP of Investor Relations, Ron Hubbard to begin.

So Ron.

Ronald Hubbard

Thanks, Adam. us Call. Healthcare joining XXXX Second for Conference Earnings you today Realty's for Quarter Thank

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

Todd Meredith

new leasing upside macro quarter are environment, results. capture operational our generated gains XXXX. you, from Robust quarter. for the volatile and us this early bullish our into extremely and on see Despite quarter steady we to and leases the second operating Ron, momentum call. to in second this tours morning activity moving you, Realty thank earnings a and of our XXXX year ability occupancy indicators joining Thank for saw everyone, record remain We we expect later portfolio. executed Healthcare

We Realty's are also is through further growth asset net not a acquisitions. environment. Healthcare the joint clear valuation for conducive are we through this refining venture. be formation current of the point, public this and sales sellers portfolio On want in many, to Healthcare Realty accretive to that Like I positioning

Our implied market. cap in rate well high the is trading we're either currently strategic seeing trading assets private Xs is Xs. nearly X%, This where with Core into are assets in side of the X%. some disconnected the

less strategic selling X.X%. actively We on noncore are average assets around

pursuing disconnect, of It's this portfolio. sales assets, accretively. sale rare can improves when be we're asset of Given which from recycled remaining nonstrategic also our the the nonstrategic proceeds quality

concentrate are seizing properties. our growth to window on and our further portfolio We this refine highest

Healthcare obtaining than ownership of form recently strategic These joint investments. venture, more of process will launched a assets into We also Realty's strategic go-forward properties. to fund a proceeds selling any portion

invest development from the JV, We range Through stock can health gains. portfolio growth market redeploy ahead, broad estate of regardless our seed occupancy excess conditions. capital funding grow looking it accretively [indiscernible] means expect care with need drive provides capital options, capital limited debt on to a and a of and to meaningful into who real continually repurchase, providers to including capital also a services, repayment, returns attractive we proceeds generate and

outlook. our expect well circle to XXXX. what improving back Chris discuss Rob current we will the us momentum for environment Forming and I'll after and backdrop to a strategic joint an venture growth be in position in leasing

over it turn to I'll Now Chris.

J. Douglas

Todd. Thanks,

operating Our outpatient second business. come the performance the from and investors medical stability reflects know quarter to appreciate have

NOI JVs, from What leasing growth X%. tremendous share increases the the front, approximately spreads and first also The onetime a XX.X%. we moderated X per there revenue quarter. to still in gains the quarter benefit success the the the primary change Trailing benefited the excludes in quarter. This included XX-month in increases spreads is in to rent X% the the was that These point now experienced of share quarter. the of moderation, the and this costs. contractual growth for of feet a striking was merger-related basis averaged SOFR transfer in Despite grew contractual The for taxes related maximizing up quarter, quarter had refund quarter same-store driver NOI per second last improvement was averaged leases increased $XX markets of both Year-over-year interest for increase over future rate a in NOI behind to This occupancy driven in growth had FFO macro to commenced by 'XX paid in-place is that normalized are accelerate compared sequential million X X.X%. On X.X% of which share. or million X.X% Cash $X.XX of with X.XX%, XX to quarter. quarterly between FFO company's X.X%. square the Annual from X.X%. $X.XX. quarter. increases We basis points and third

had than more points seen portfolio properties. feet example, scale. have legacy higher XX%. the this points the of current Year-over-year is we HCA's below over XXX occupancy of where year. opportunity for legacy just occupancy is gains points HTA is levels. For its achievable. portfolio, pre-COVID in levels portfolio than the fact spreads pricing pre-COVID where is deep This in occupancy HR's basis occupancy Seattle the portion is on shows of current average over XXX This legacy XX.X% largest levels. X.X% increased The is pre-code basis over occupancy by this in Returning renewals that to Total multi-tenant multi-tenant significant for market XX.X% power same-store last basis multi-tenant of the square XX the to XXX,XXX

properties. leases build-out across XXX and these are We points progress basis making HTA already with of over

As quarterly Rob over driver a primary continued and leases of was the percentage. X.X% drove saw was will of we and year. a balance executed were lease new expenses, suites the basis square than less operating historical saw compared Net operating Revenue will This elevated of This by improvement norms increased drive these personal XXX,XXX in total but in over more XXXX, approximately portfolio inflation new leases offset of point feet absorption XX%. an in expenses to move most janitorial These detail, what XX in the sequential through improvement of the we still in quarter. as growth future labor recoveries, is year-over-year. X.X% increase expenses. expense which X%. The in up discuss

year. operating as growth payout ahead, is flow the leasing we Looking portfolio the NOI million through tied and levels We're the that is expenses of toward the back in to realized. will increased XXX% ratio year. quarter to into the come expected will strong the NOI half generated below to of seasonal the $X continue cash absorption in pressures an move as from allow positive strong of first improvement back quarter, low the we in trend is back tenant more and XXXX. expect to later comfortable This spending the to from in momentum XX.X% subside labor historical increase CapEx Maintenance second underlying

separate by a guidance. revision X the $X.XX guidance was on the factors. updated to driven The for Now was share. few primarily to macro comments but per FFO adjusted year $X.XX related

is This First, original inflation higher and but costs operating not is as moderating, expectations. lower as driving quickly labor our margins.

rates to and quarter experienced be interest year rates in higher this now projected second before not in addition, expected. declining interest as XXXX. than In what Short-term the in the are quarter are third declining fourth previously we

actual Additionally, to a we higher well the dispositions. rent item of impact year-to-date guidance, expected noncash as as lowered straight-line reflect

to expect X.Xx. The FFO over to growth in now to XX% is seeing ago. us Our was this significant EBITDA as almost we million XX% more debt year as and color as expect a total Xx target repayment for our position same-store will contract growth well activities. have capital. to increased repayment $XXX debt, million dispositions reduce The opportunistic other currently over further and on debt, we balance well share and on Rob down will excess accelerating With after we primarily investment under boost will floating funding rate to The it or activity to leasing of strong debt repurchases. additional to proceeds which proceeds million. excess sheet be be I leasing occupancy. are debt of repayment, disposition from allocated LOI, $XXX $XXX strengthened guidance turn of in With range 'XX capitalize developments to our will to the

Robert Hull

Chris. Thanks,

increased market. The a disposition and or to transaction throughout characterized volumes the lower this market potential Chris $XXX currently under be to quick like I'd contract is First, out expected are in million and opportunity sales mentioned that balance touch the update should cleanup. LOI, on to have with on properties scale. of areas close The as build portfolio growth year. These the little provide

Of basis a cluster total these for of the annual sales lower non-MOB by and average HR's about represented about part examples, than the most As XX are properties. are group half of not escalators portfolio. MOBs,

a All have this debt rates to a generate Xs steadily with some MOB MOBs product pricing, the These by level these be increasing X%. core pricing lenders rates assets meaningful At disposition blended this continues for reflects we market refinement sales held to rare in lending higher-quality Transaction moment in larger accretive levels. when the low expect of the at in We around rate the remain space. achieve cap X. can cap below driven with portfolio rates allocations activity for of costs in, mid-Xs.

leasing Now turning our activity. to

when New the month engaged. became increased teams our executed have beginning the leasing year leases each of fully since

of by seeing Healthcare is strong, strong coming amount in quarter, share merger nearly we were XX leases benefits signed first. scale doubled markets. activity increased of the than the advantages in were footage our are in leases In third-party are brokerage new quarters. markets, these each of Realty's are positioning for the is the the covered completed model largest of square us XX% more them legacy in HCA in brokerage New our of A meet saw that many new feet square our from of Where number our provides scale XXX,XXX XX an more top the these to from new disproportionate markets. This come come leasing the beginning quarter, Tours the gains these the In teams. portfolio. second leases multi-tenant up tenant we through. further to options with of outsized Such a really indication needs.

expanded has portfolio, are XXX This almost of last leases executed total majority XX the basis the are points represent take our from new basis points The leases year. out by of that these For expected future end of quarter. to build occupancy in this occupancy.

for over space, physician we've third-party volume of Regarding couple from broader past the quarters tremendous demand tenants. seen

We are costs. labor driven demand health also seeing The volume outpatient have increased profit for recently stabilizing systems by reported strong improving and results systems. from

HCA of just and second surgical example, outpatient both For Tenant volumes. quarter elevated a reported straight

hearing are among similar trends We profit not-for systems. the

leasing Looking systems seen expect greater to is health a play engagement have from already and systems we higher. volumes we development. seen in health ahead, increased role new we have where driving Where around our

activity growing foot venture HonorHealth and redevelopments saw market In a on square choice of national active XXX,XXX for given The partner development significant with merger. X adjacent to MOB pre-leased $XXX presence quarter. projects. this as a Our new obvious million development us formed with and developer our this added joint to XX% a campus. the project, an developer post We we redevelopment Scottsdale, new X totals

is HCA came HCA we the a how pleased X in leasing Charlotte Health One portfolio. Both We portfolio. both redevelopment with redevelopments near campus. potential upside the in own with and X on other D.C., Novant an our opportunities, Across also in commenced where much and the investment MOBs see projects. are is Novant Washington, we from we

Todd. Now to I'll back it over turn

Todd Meredith

our accelerate I momentum out round our want in leasing Rob. 'XX. remarks you, is how poised Thank prepared growth to to underscoring

for year, leasing providers providers. square is HTA leasing of XX of business leased leases improvement first we're Realty of XX versus XXX average steadily picking call feet our portfolio volume scale since executed second first new points closed encouraging X and volume, drivers a the elevating an our top new XX it's the Healthcare last and relationships. do the has XXX,XXX where And primary obvious the over with Since is risen market with described, the we've and January, merger. over momentum quarter. With quarter. of lot basis merger since just is an really brokers. occupied was this Rob buildings up multi-tenant markets, basis our seeing repeat in of points As We in especially highest new volume volume

we any scale, other we leasing outpatient As makes likely top be developer and systems in their most insight able also grow brokerage their needs. health to and pricing address services, than markets. with our market transactions immediately owner to are they gives do This both deeper know our and far more And the occupancy that drives owner teams. us priority us these power. Scale for the knowledge

than doubled Realty. portfolios their As Healthcare Rob indicated, merger with the more

Those highlight care an our how On often more are Investor lucrative client, motivating them tour and note, partners. in will relationships leasing growth. on their brokers most market drive our hear providers health outlook we're bright health our Realty's momentum. Day Healthcare joined Raleigh rent meet to bring is and to our and largely We October growth built who chance gains occupancy hosting properties, a reliable and momentum, to scale for XXXX system X buildings. this to on have from leasing

new especially in the have upside merger will combination. Record legacy HTA moving amount XXXX, created a We bolster leasing the of occupancy portfolio. tremendous into volume operational by

to We range, boost to to level. more potential to NOI now expect ramp to per Adam, XXX And XXXX. translate to we're XXX can that, to the Q&A absorption ready Healthcare shift X% X% the growth same-store course up the share portion. even gains of at Realty's points has With this basis through the FFO which the to to

Operator

KeyBanc [Operator Instructions] from question Markets. comes Capital the first Austin Wurschmidt from And

Austin Wurschmidt

Or breaking change NOI revenue same-store of sole same-store NOI expenses same-store Just was was guidance, basis driver to down your the any decrease XXXX? the to guidance? XX the outlook change to the there for growth points

Todd Meredith

same-store our side, it's the growth. on really then towards well No, as can to the see expense NOI isolated you updated Yes. the margin line through all through as which guidance bottom

Austin Wurschmidt

HTA that highlighted Got the it. range you're to I'm you do leasing those portfolio, then And better? leasing spreads are the leasing HTA seeing spreads accelerate the cash the portfolio? when back kind but mid-X% of you in is or a expect on combined if to lot cash of legacy weighing And curious that

Todd Meredith

Yes. -- that sort It's obviously in will we've had of front an we interesting point out the observation. work of have of sort that that's us. I

actually at on -- If you look be the HTA strong. just HTA as seen portfolio spreads at versus in we've off-campus, cash the leasing the

In mid- fact, on a was the this than Xs. quarter little HR high to stronger campus. Both the in

And trending. so off-campus really, the it's is

the kind maybe at X months look Xs this in you of almost X%. If trending first of year, high the

seeing really prevent that's So as we're well in portfolio we're push really spreads. portfolio would the the little that the softer those really HTA bit a and continuing But true seeing HTA not HR. in in us to leasing just from cash off anything as

Austin Wurschmidt

acceleration an XXXX expect you the portfolio? or Do combined the of half in the on back year

Todd Meredith

obviously even range volume had cash is X% really all certainly Chris leasing to we range. can X that of is that even strong you as in your or lot have high we it the end leases move difficult X% the markets and a And very, few view real a spreads above be end outside out, each that push to X of to very doing highlights some where volume our quarter. think up I pointed consistent. We with do, to

X% still in to So we I think view in. to that continue is we're is our X% think can and comfortable perform range a

Operator

comes next Griffin Michael question Citi. The from from

Michael Griffin

X% basin curious achievable operations if kind of X% range, is on real And has then how quick. going next for to into conservatism that year. of you kind that just you it any of year? this to look think sort asking as growth in guidance I'm Maybe

Todd Meredith

as I seeing mean it side. little off seeing the Yes. now No. we're of in well trying things where we're based experiencing rate to interest what bring what and as tighter a side we're terms on we're the the of guidance, labor on right bit

but trying kind depending remainder account the you we're through how the better we and we of here the next it piece how what started of is account see out look couple that's so to plays through, than months. right of also overall I that's that quarter margins that, that quarter over wait planning into utilities we'll coming to the wave of experience and at NOI on may take another maybe of could we things of relates are took we kind shift the into seasonal third little to that where what bit all in that think plays out now, is this as as are have store given one the a to heat

J. Douglas

clarify, X And really store, and want year our range. mentioned looking X I that I we're spread this to to think we at But talking same cash X%. That's you year, I when mentioned X% about leasing talk just X% expectation. X% to to then next

Michael Griffin

And that then to those any last to change Were around Or that in up relative you be disposition target. performing just quarter? noncore anything dispositions highlighted of clarity not terms would Did the turning to expectations? helpful. they

Todd Meredith

I done, an what basis where quarter, implied leaning and based No. or contract have asset million that stock we we're on were with very that progress there last And were trading we which the would what sales. cap that to be under going already into that making it's nonstrategic that's LOI. we we've reported say we saw $XXX off what with great seeing, of our we consistent was

Operator

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

Juan Sanabria

revised the guidance, year? you guess, spread lease occupancy rate. and leased and historically the the occupancy end the and pipeline that I where has question, to What on between with expect rate a the been Just that do

Todd Meredith

at history, we've COVID historically, or of was think, really the forth relative then I the HTA XXX expanded you points, basis obviously, so really couple a extended it's basis and and or minus, tracking And XXX on less. -- as out and guess, over of Healthcare lower, it around in and it mentioned, since that basis plus but then out basis portfolio now portfolio, multi-tenant tracked it's a points if about overall something Juan, as actually little Realty, bit chains coming it XXX Yes. for really COVID, that points but would think it. we I I say XXX probably supply a points. call little And within

where, our obviously components potential. more we FFO seeing where expected in of that's our moving. We lay clearly, occupancy of So out see that we're and disclosure

So we to certainly down our in when points XXX the a That little you gets see XX single have tenant. it -- bit we mix in the still diluted multi-tenant basis side.

I success getting think is leases, of to, end the our come the the momentum, year. executed those leasing most XXX,XXX Rob build-out view of as going the down by really the said, to on it's done in

XX that that quarter. within certainly the be combination like that to could of, first if XXX fourth will and But into the up is rolling really not in show either a in it So way, quarter, the feel building, we think multi-tenant. we

XX certainly XXX basis looking improvement the at to still points So multi-tenant that pace side. at that on

Juan Sanabria

that So XXX net that year-end the of XX kind is the... to absorption

Todd Meredith

Yes.

Juan Sanabria

points on Is running, that year-to-date? I that think, you're average at XX because number basis

Todd Meredith

rolling into year-end. of Yes. looking I mean, really, at that by we're sort

But to the in But that exactly hits by it's some it leases at the pace see of So as our think the just hits of the of pace that be or that or or into view by build-out we exactly done will we these obviously, whether down to I whether come XX round not to year-end. year year-end. December, getting is, hits show in these. rolling as them, up year-end, year. of it the we December at a to of December whether said, most end of going on expect lot And it end again, Rob not,

Robert Hull

see was move I that at Todd the that, activity. the would leasing add strong that, focused going activity and kind forward. was projected if as Todd, add on we that it this leasing out to -- And really of look Juan. said, new to new you and quarter. level And we're It I'd of that and

get to look that -- XX You basis to points. at you XXX

us like this this So we're and of if we've And run the is seen to feel a average that set up have XXXX the that will to we that rate supports momentum leasing at of year, level to XXX That's we focused that now. year kind that looking tours lot of the new of XXXX. we moving look of XXX strength into to that think level you that where at really moving accomplish us absorption. basis and points we're

Juan Sanabria

just in assumed could on comment what, the if with then And you anything, guidance follow-up, a regards as to is JV.

to and/or process a seems for point proceeds? mentioned started You be a buyback the focal that

Todd Meredith

for the calendar on in to guidance certainly touch I'll have Sure. JV don't this We one. year. anything that related

that's make So we'll process, our guidance that on 'XX. something we incorporate for progress in that we'll as

for we'll look we certainly of very accretive least the at incorporate So larger be amount well. in this place be take excess a have the through but proceeds as closing there. to repayment. to June. share this It's have And in large we'll your then compare assume proceeds, debt year. to obviously even think balance the excess funding and versus And amount that. that be of have. think, a choices stop the be and Whether had a choices -- of sales, then. early that next think we'll other that then And dilution, sort We to that certainly, could I asset certainly repurchase quickly reauthorized as that evaluating work potentially as frankly, repayment opportunistically point, amount from year first Board the we'll year to will guidance said, Chris not either the terms debt easy certainly way, I that or of the We critical into is nothing will happens it year to

Operator

Barclays. question from comes Steven from The Valiquette next

Steven J. Valiquette

wasn't be $X.XX cost that just appreciate going One higher But broken at with FFO how really down crystal into It of around guide. I all expense. the or versus operating just the midpoint. X the questions the higher interest can maybe revision. about details much down clear guidance the here the around

G&A increase some the the less only like that. normalized it than up think brings I in $X.XX or

there's breakdown? So $X.XX reduction, helpful figure proceeds any might with just all going redeploy by components immediately the on And if be you're sort some of dispositions, just further if in that. the any able I if also quantification trying the the you're to wonder those of give color to debt out

Todd Meredith

Yes.

So way I think it, of big it the about interest the higher expense think average to pieces SOFR. with are

big So change what into quarter. we had quarter, the was from that's last Super really through it balance last kind of a and When year it going decline we were the at looking year. like looking into of -- next was

spring, so -- now the we at compared basis to the the looking XX half were result, average what rate increase points, more SOFR of back in the year. looking at in a in about bit And as we're little a it's

that's So one of items. the first

is inflation Second different labor through couple is a of ways. running

that that same-store aren't well our as what we're rates that And that X.X%. of be our the little piece in a through increased seeing as as in noncash cost really for mentioned did. SOFR, through cash where is we're the we're big big talked at just run if right adjusting at additional G&A. all-in on last being through kind you the kind we're year the of basis about, margin And cash adjustment line piece far dispositions and portfolio balance the impact rent, dispositions we the now straight-line on a in a NOI in to X.XX%, the really able going already other the the have the year. of the so look a in of to you looking as to we the that. which then bit above with of sell fact the is decline well cap rolling that maybe given it's same-store line As then basis And The with on

really but impact that there So that, through. straight-line also much not is plays from rent some

the up that of make are big kind the pieces all larger those change. So

Operator

The from from next comes Wells Fargo. question Connor Siversky

Connor Siversky

[Indiscernible] today. for Conor

So the how XXXX. just the guide, into heightened the thinking and be of and going guidance the about lowered to In a capital the questions. we follow-up should dispositions allocation dividend context

Todd Meredith

Yes.

touched back momentum on year, sort that the current we're XXX% looking on 'XX upside our on is put the dividend, had I for XXX% obviously position Chris to seeing operational be environment a going of will to and do tremendous balance it's of of may in think the prepared us this remarks. has on payout. say the into we're we the picture that the view below comfortable better it see, But the level just And on over macro overall Certainly, a that we certainly, of in the many, impact like but picture. the early a ahead XX. in

view XXX% really from we going tolerate something that of we it potential after can while a But dividend and see a think into as bit and all we and capture a I that for Obviously, being upside revisit drive for guidance this below sure year. next sustainable little at the that XXX as see over that is we well we'll our tailwind. So that multiple meetings Fed look 'XX. how we

Connor Siversky

Great. the on Can us updated for the moment? follow-up. just give a kind M&A at for guide you acquisitions the quick cap your you dispositions. and an update of appetite And the following influencing just rate How environment is environment

J. Douglas

transaction the we're we're Xs MOB think stable right rates now, Yes. market range. I on in kind mean low seeing core that assets of cap I for what seeing

down, the the to will projected volume volumes activity into as do of seeing we're see below have that. be up seen rates are get though, transaction come that is decent where the lenders that year throughout the think dipped some have balance some are and opportunity certainly, we that as back high-quality continue it Generally, there. We We down. next space but interest deals and kind to move of in

there's So product. for an still there the I think out appetite

space, an opportunity for anticipate got continuing you've that for looking of kind to right targeting. now, folks looking seeing the get moment. sidelines, are to they're for but as the in some are still the some achieve Just and folks underwrite right opportunities we and Rs But the that higher

attractive still very space. So a

Todd Meredith

the And lot this prepared even Rob major remarks, maybe we do probably that. from space think seeing a who some back I'll all future. not just for seeing and a MOB it interest But are like in environment I mentioned in we his think the top sectors, volume the dependent lenders, but year, buyers in do maybe the is key of I regional environment all in to are the of And and because that, may a less even say, but banks. seeing cash lot go the of little lender banks lending cash better of on a the see upon we bigger we're

encouraging there's some And article big an tougher times. about I much think be the the simply contrast and back stability, a in those that's that there So there's And to some the it reliability even. it's signs of general not facing sectors goes just space, to in other MOB -- some want the space. just MOB Walstead office. to that lenders There's are apartments the

the of really out which So we sector, MOB the stability safety transaction lenders market. certainly the see seeking and is helping

Operator

comes Mueller question from next JPMorgan. The from Mike

Michael Mueller

seed consideration, would the XXXX? you the you'll a And net any on into for event, being what's a that again apologize then expected Yes. contribute? And here. portfolio of it's I seller But that comment background taking can on anticipate in XX assuming you size

Todd Meredith

target. of quarter expect. seed would with a the out say said kind you partners, that as this JV in portfolio. $X to that's and We can would loosely Obviously, would move laid $XXX I billion. as sort we million engage of size what the we certainly say on of no I market, around, change from Mike, potential last

still lead that looking would that's to add, I say range structure sort flexible thing we're But certainly, would of that's process. the XX%. would thinking at I about. we're evolve So be piece, a the XX% a smaller also will again, probably to through us that a maybe

can think capital that's moving of of options us, into on think capital here we're where those depends attractive was in our will It an a funding, careful it in we'll JV the is continue from of everything share reinvest. cost dependent I your Our our where those. is redeployment So is, repurchase obviously, us. net certainly of depends last addition and cost to to seller source options, to sorry, how to all things going position terms capital macro development have 'XX? pursue sales, for all here asset repayment, of I But of I what environment. different which it relative debt where lot currently, we are very to be question? gives prudent largely that the But mean

will those continue So see for different. we're and 'XX until that I into something think we pursuing now,

Operator

The next from is Pawlowski from Green John question Street.

John Pawlowski

expense the for there you're pressures year? persist, the risk if seeing Chris, to same-store next X% I'm guidance X% if is curious to

J. Douglas

see down as recover have the through how it the just to We'll to pass-through a quickly comes structures able of how Yes. and we're much leases.

year. And together so we'll we put further as get expectations formal along to see next guidance as and that it's analyze for we we how start then adjusting our and

John Pawlowski

on like the the is more of elaborate Or a just of business? profile it of transitory in guidance, change you expense maybe the medium-term your kind a aside expense Setting seem Does could in your it growth pressures. mind? structural Okay.

J. Douglas

little because is I'm the few it Fed And from word mentioned using side say right on a years can the what seeing. now, what trends. coming labor down. of seems as to mostly be still Yes. speaks wary to we're is last the that, And it I that we what I over bit saw

as but So coming make that I just quickly. want to it's quite not clear, down

personnel quarter, down, first came up terms the labor the year-over-year, up In still Janitorial in almost of XX%. XX%. was in but in it quarter it year-over-year So second was

progress, making hasn't back levels. it full just we're So historical come to but

we do we'll to pass we that lower. that progress help trend that year. comps like we'll see that. making think portions to monitor other expense things of continue work just to the great balance So feel start offset continue and difficult But structure through we are the through can and as of and I But some the that

John Pawlowski

get to by debt-to-EBITDA aiming you to of the are Where down end me. year? for question Last Okay.

J. Douglas

Yes.

is which in are of range we to -- is So today. where that to X.X%, our in X% goal of be kind our

that, have the the through well year as We closer as we more down but will of high as year, next that range flow the then to be end in cash of that by expect trending probably the at growth of terms end income now well we did we're working as booking on sales couple another last repaid. we're we things potential and quarter, mezz that repayment one about as right that be talk of on had assets sale not a and will that loan

So loss down that income. of without pay can a that would be proceeds additional debt

that into range But be next this the to million late So the end occurs, would will yes, year, that year, a to of I X that moving for be say, impact expectations which in early year. still of X.X. has when likely meaningful pretty

Operator

Instructions]. [Operator

remarks. I'll we have call further questions, management concluding team to for no any As the hand the back

Todd Meredith

to Thank for be many soon. forward you, And We you morning. Raleigh on joining look everybody, a and in X at coming you, seeing our should Adam, October reminder, Investor this thank Day. of out us

get are Thank out So if interested, we'll you, you Ron, to sure please get a and not invitation. great reach an did and you day. one make Have everybody.

Operator

very today's attendance. much concludes you This for your Thank call.

lines. your disconnect now may You

Healthcare Realty Trust (HR) 8 Aug 232023 Q2 Earnings call transcript