HTA - Earnings call transcript Q3 2021 | Healthcare Trust of America, Inc.

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Operator

Hello, all, and a warm welcome to Healthcare Trust of America’s Third Quarter 2021 Earnings Call. My name is Lydia, and I’m your operator today. [Operator Instructions] It’s my pleasure to now hand you over to our host, David Gershenson, Chief Accounting Officer. Please go ahead when you’re ready.

David Gershenson

Thank you, and welcome to Healthcare Trust of America’s Third Quarter 2021 Earnings Call. release financial earnings morning. earlier our filed and supplement our this We documents the with website on be the Relations These found our Investor can section of SEC. or for webcast note, will Please is the being call be XX this available replay days. for next and to happy at questions remarks. your our the take of prepared be We’ll conclusion

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

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

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

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

Brad Blair

thank third Healthcare you for for us conference Good earnings morning. quarter And joining America’s of Trust call.

today Vice Joining Executive Robert Officer; our Houghton, is Executive Management. and Amanda Chief Officer; Interim Milligan, our Chief of Financial me Asset President Foss, our Peter

Before to actions, get HTA additional wanted some to priorities into insight HTA, strong accelerated discussing provide for we quarter and since certainly which I have Board July. the another

the we First, bar announced investigation reported previously disclosed hotline. into the allegations company’s preliminary conclusion of whistle through its

and related in use. expense the to received Audit the and around the related policies to investigated company policy retaliation company from XXXX. included and aircraft whistleblower cards filing, management Committee well outlined potential in yesterday’s reports the personal as whistleblower corporate SEC As allegations stemming The company’s corporate the the as claims July allegations

and financial a to of Board and extensive objective the which of those involved. come CEO interviews personal was of week conclusion involves seriousness former policy, significant it company the the use utilized to reimbursements number whistleblower counsel fact. various to the personal or and relates expenses the and policies conduct collection to worked documents found company in in independent of undertook in any impact the for aircraft. in company identified an material that the with would of expense potential thorough claims that investigation either and as of conduct inconsistent a Counsel of violation The concluded The engaged impact witnesses. for counsel Audit investigation the were review preliminary specifically and or Committee with that financial this to not company inappropriate The findings the very Given the impact any to of that closely these restatements. numerous an investigation, result cause

Audit of procedures. to the the personal policy a expenses result and these also whistleblower the and begun the the and Audit disclosure a of investigation. controls counsel policies of usage, procedures enhance Committee The aircraft process and findings, Board to Board company’s the address and with results the the As have intend and assistance Committee regarding

the legitimate organization. greater We ensuring to Board’s across to the are served behavior, encouraged addressing concerns, seriousness allegations raise coupled inappropriate purpose employees the HCA’s that empowering commitment in has of with of accountability

and when elected the Scott, As forward. Since moving occurred our process. dialogue then, the to former investigation his beginning without any limit volition of its it declined Board exclusively to to focus turned to any a has he reason. investigation, relates be resigned interviewed this at for own time the business just Board has CEO, This was the

his resignation or this and will not related privacy respect statements make his any We to further at time. comments

company the continued a permanent for its CEO. Second, search

of component three search independent in to permanent firm for being a evaluation We committee and alternatives. be a of the As an CEO announced a in leading September, consisting search overall believe search strategic the search by members. critical led Board independent the the is Board’s executive

the the enhance shareholder strategic Lastly, and value. in to priorities plan, order regularly Board reviews company’s opportunities

As have it continue continues plan to and alternatives. to company’s as review evolve strategic the been reviewing such, we amongst viable

As us our fulfilling previously the to of advisers, in interest HTA act shareholder. JPMorgan, disclosed, in best including commitment to engaged assist we

we are actively a help, including, asset others, and alternatives, ventures merger, sale of among or corporate their partnerships With evaluating number or sales. joint a

I During continue the and process developments its result no we specific position transaction there plan that strategic strategic stress its has on and the be we has can intend to a to continue or Board’s until growth, company want review as discuss this HTA unless to the assurance success transaction evaluation, Board or terminated will adapt that and review. earnings relating will creation disclose from in for any this the value and approved its not call. to process, to do agreement portfolio

continue position its call of purpose this execute That HTA We to discuss for value portfolio success financial our and in results. and the said, growth, creation. to is

CEO strategic focused Peter. to questions can so our on the the his role on focused keep As turn strategic to and with on Board To while I’d evaluations, unable the we questions we answer the current team. running company’s like split be business your end, a and now Chairman this will you call over performance. With Peter any alternatives, ask that have to that focus the we that, capable Board, is on the

Peter Foss

very Brad. Thanks much,

provide pacific as Interim it’s company’s our me, the I’d lot very growth And CEO. some of you XXX a Robert great quickly as initial approach quarter, present I to the gone by like and believe my with Amanda events. of and days Before observations for

sales value those fortunate billion haven’t positioning our scale, That’s both for period, the in Plastics businesses, for this XX-year than $X size turning GE great our the great potential to getting Olympics company to a focused exactly with and some of source be system been ready amount Director, scale can report we that and a be and the past tenants In over And capabilities growth and I helping deliver into would of career use to significant billion less turn months, are excited my of the time businesses. over GE health about team. you know page accelerate Board billion an before. interacted. to growth. time on few spent I’ve and adventures to my size, unleashed. In to in $X frequently has our to key associated from grow that $X ways people you capabilities my to We revenue GE that a As the franchise the relationships. spent in and HTA, independent expect, I’ve we as I that’s our time significant people, team, shareholders, have my

there our no for daily interaction inherent it replacement as the our and no community is of very was the sophistication nobody sector, to there operating better. with been expertise, the CEO. complexities a in comes their assets when However, team’s there’s and I’ve replacement, impressed MOB

roles a we’ve us profitability company to talent and operations. can in and that strong team, our While exceptional accelerate growth and our added have we help in leasing, investments

we’ve they our delivering We’re also as strides us adding investments in with that great more to market and technology assist care without while improving a us produce make our working and capabilities We and be to on and on health will value. analytics, operate will efficient HR, add that faster relative to larger developing our us pale adding in growth HR also on will in team help staff customers, focus investments team, structure can alone, significant growth, focused made people, on our value growing helping help scale to this costs infrastructure while topline. analytics quarter an in investments us In do also and by our adding and market and relentless will insightful. making significant the that that and

time portfolio meeting health past care leaders. many the with During touring months, also few I’ve and our spent

these tenants As and health our of two quality we markets is of in the communities the are assets provider the our care apparent, play best.

dense care critical establish assets leading to I’ve bases, working the Healthcare my care GE create in with clear platform scale across care operating worked and patient health health with closely running health been time top has with In foundations, strategy value many providers can with gateway an that for country. various in providers. markets Our

in square allowed leases over X.X%. excited their the other I re-leasing of noise we four same-store for these the leasing were in feet with This them this, despite space, executed levels to lease the the feet top XXX,XXX square represented all leases, all spreads quarter new of XXX,XXX continued they us, work members As our beat. the by highest X.X%. which years. without missing with the call increase leases that move On an that the has for third are about new team, rate renewed of And in in the execute of our forward. impressive HTA were of to to team us quarter, XXX,XXX each and And businesses our leaders surrounded of alone, opportunities a quarter feet square

my Interim CEO, as to $XXX on tenants days Director. I team and have of to our our as our and people, a We with summary, an shows uniquely remains In the six my positioned while company, It’s stakeholders. platform to acquisitions views over deliver This portfolio, pipeline also Independent pipeline were million currently formed is our our assets. on XXX,XXX focused, outstanding things XXX LOIs clear result feet HTA years more which that that of our me square closed further on of moving over confirmed my than development value forward. first move as of development forward and

this my team, have Let development created. continue the commitment of and me that HTA you restate growth that great to this team Scott have franchise

and activity. over it performance turn to Amanda the like I’d leasing to specific quarterly discuss Now, to

Amanda Houghton

Peter. you, Thank

team. third portfolio led operating of by NOI operations This the strong from and remained performance by same-store leasing Our performance our meaningful growth was X.X%. both strong in highlighted growth quarter,

was leasing markets new highest XXXX North by since Our in Dallas like square and XXX,XXX Charlotte. totaled of levels growth feet driven the Haven, one

in years over two pickup in and seen term activity and leasing notable assets our willingness the invest in for new last Our to long-term the teams systems reflected leases quarters. physician level of have health a for as partners seven of new increasing increased

that rent feet the had of XX% in activity new XXX,XXX feet leases. of growth retention totaled In X X.X%. has portfolio leases, coming addition resulted for form to Year-to-date, over with we new square of XXX,XXX in and square over nearly same-store leasing feet the square million renewals

basis, to quarter continuing on increasing our escalators trend year-to-date X.X% Our leases portfolio. X% our in of in were lease manage escalators expirations reaching third for as approximately a annual we X.X%, the new signed

a our points on This same-store for inflationary same-store Despite basis savings cost basis call to benefits deliver order sequential As year-over-year. operating by increased our efficiently assets scaled a to our leased our to I’ll this X.X% testament increase in minimal pool. quarter is a pressures, expenses a only XX increased result, rate portfolio Robert. platform over to like turn of having the our operate tenants. team’s the to and ours in now ability

Robert Milligan

Thanks, Amanda.

financial increase the share performance X% of at – strong, our in as the FFO share, remained third performance up to improved held highlighted Our X.X%. quarter to of over is NOI earnings $X.XX, Normally, during an by growth quarter per which same-store per XXXX. portfolio versus year-to-date X $X.XX compared X.X% XXXX. Bringing with the

Our normalized FADs X% XXXX FAD year-to-date from million. up normalized and million was $XXX $XX to

$X.X million, shares being our of than consistent related G&A offset Our CEO. at XX% our CEO, unvested to Chairman for whistleblower less related elimination prior of million with the our NOI. compensation remained new of approximately $XX.X costs investigation, This to costs by includes

our a ended to balance billion impact facility, times, and credit unsecured a we but for guidance year including As cost liquidity extension an totaling net were equity Ford range, term, result, additional borrowing tightening our resulting leave years From the able refinanced in October, million. with of of the $XXX $X.X previous $X.X of our X.X and full of a the debt-to-EBITDA quarter midpoint we in agreements reduction the billion sheet the perspective, re-conform including options. intact. unsettled four we In

activity, we an densification year investment acquisitions and our the previously closed totaling markets to one These million. MOB increased our $XXX year-to-date $XXX announced acquisition four in in quarter of anticipated and yield million on terms X.X%. activity brought key place acquisitions In in of

Center of million year-end. close with a the letters total million $XXX under of prior in project funding completed We to was $XX million. and of intent or that development core quarter in Houston’s to XXXX, exclusive have additional projects expected $XXX From to third commitments to Dallas that we of in end to the million cash expected funded perspective, the before on is time our construction expect contract quarter, of Medical acquisitions an shell third Texas through activity loan investment we rents $XX the in Including year. development over commence

pipeline development square codevelop highlighted Innovation five over Medistar Medical with a XXX,XXX of on Plaza projects million partnership feet the the our by Corporation the of we $XXX in addition, process, totaling in in Power pre-leasing strategic GLA, In have the and various and stages Horizon almost Center. Texas Texas to

end, tremendous data investment completed analytics, billions physical Pivotal on locations, providers for the strategic the around quarter healthcare ultimate come Following an partner referral the insurance implementations. world, and an strategic is to decision-making that service the with made an and of annual a of process can office line health applying basis innovative from company an in we the best OptumHealth impact patterns and claims that also efforts improving insights around of goal

That strategic developed in tools well-positioned at investing our HTA leverage including provides we a numbers from – $X head Series XXXX. as us intently as in specific execute way monetary we we position this our believe steps way, a we grow that is on infrastructure. with focused in to strategic and innovative utilize a being company. we is accelerate to the perspective, talent the This into that small part we this a are to A related several relatively Outside leverage from basis the preferred quarter, While our their million, in plan. by can investment and can earnings very in

with we and focus always Peter operate As will noted, efficiency.

focus believe we headcount investment tremendous can includes efficiency. research, training that professionals us on also that capabilities the of returns also add adding portfolio external to market within an drive alignment an and operations growth and overall our team will investment additional but However, streamline provide infrastructure our leasing, additional in basis. a and This growing and our on to add help

that’s on to are and already capital ground, depth teams really for We on focus and that focused the drive we’re ways and but analytes outperform leasing a improving drive greater allocation with supplementing our to to markets adding value analytics decision-makingm that needed Second, intelligence on great data performance. our performance in customers. have improve the

to Our effort teams. undertaken better position Pivotal one just investment is in have we our that

this in we Third, by stable remain Simply us enable see opportunities drive always should this that practical aligning do public of of marketplace. not To markets following on upside execute ways. we ways the in capital sources to competitive, the space. in the must as MOBs. growth growth unique sources with the the leader diversify value that capital the From a perspective, reality MOB the put, our

occupancy through upside. First,

These range, is Our could market with occupancy run occupancy we XX% in $XX was to Charlotte annual September to of the XX. incremental feet Dallas believe result markets and achievable gain of this MOB absorption of almost fundamentals We highest million for some to markets, in the to this as a realistic and occupancy in X/X and rate the operating as believe which upside, is Achieving be million X.X growth XX. leasable and million including NOI. would have our each of Phoenix. consistent September for four XX% of square account to square closer square broader currently our XX% We which XXX,XXX feet nearly meaningful occupancy given prior underlying COVID. of amounts result million of feet or portfolio and contain X $XX with space Houston that achieved strong

ways. multiple believe area in We come will that by development development. Second is the driving

projects. the with will where First, win traditional RFP, health compete we to system pre-leased

to structure compete. competitive, which health is sheet are key areas medical market providers proactively and tenant from real opportunities of for office balance market The local growth extremely these and However, for our driving and providers care creatively will pricing relationships identify both down. our intelligence using opportunity the flexibility

by office is in pursuing medical market has been area ventures. joint never Private interest higher. Third

billion over leverage are where sales. funds, regional other partnering we several As through partner allowing for public should a raised operator cost REIT currently with is area and venture that seen path Fourth our uniquely joint is across operators private the sectors, and access to believe benefiting operating best-in-class long-term. want while established expertise many positioned capital. can capital partners In asset seen has from a lower platform $X as growth, attractive space we to to private an companies

we’ll that assets market These assets to markets In maximize located addition JVs, are sell our just no be great to for be which assets, strategic or the longer to happen this plans. competitive on fit we we believe utilize value.

which HTA that wrap the on Assets to can to at execute I over has to of to and it opportunities other sell great we into will to With shareholders. In number redeploy short, pricing the now Peter for of short drive medium-term. that, benefit turn performance in up. it opportunities a

Peter Foss

thanks, Amanda. and Robert, Thanks,

Before want more one make comment. to I open just up for questions,

results to I’d But of First, on the expecting to and have a I kept Brad great the focus. weren’t a Brad. The say and into you thanks me themselves. just situation pretty better they like weren’t and thank kept for welcoming all let speak folks Brad, to operations difficult He’s you couldn’t wonderful we side the a I when want HTA than with a and it, partner folks expecting. done on focus his team. for Amanda focus Robert have also job,

letting With Thank open to us that, to call up a I for you the fluid say manner. we’ll thanks continue in of So all nice you. for such questions.

Operator

question Thank open. is Rich today comes of Please SMBC. you, your Peter. [Operator first ahead. Instructions] go Our from Rich, line Anderson

Rich Anderson

out morning Good Thanks. there.

to going by they’re to imply minutes but bought in gone come level get deal. primarily going you know comment that another trying made for about that I’m talk process. to be later. CEO going that alternatives. entity is overlay XX the to REIT I you’re around not looking early CEO it, and No And was permanent look a critical as at that So is strategic the of an you’re with would type if

So I’m that’s as you transaction give Thanks. is if entity through can of on to equity level Any channels? of kind primarily an it be way think the curious color type perhaps interesting. would about right private that

Brad Blair

is This Rich. Brad,

As CEO. the search we Stuart with have announced the committee reach our or engaged assist new to Spencer for a search

to want conduct HTA that appropriate with us process that in identify opportunity I that the way believe to characteristics continue and to advance a just we out we’re in interview robust a not number company would our the might HTA. prepared We has do be of and itself considered such in to this the person give people. whatever prospect the we will event we a continued of And make addressing will that stand-alone sure as process. of intend that we to to lead come

Rich Anderson

And ask a that’s was Occupancy Okay. Maybe X.X%. was just for same-store How down if could points. that quick XXX basis Amanda. would very happen? I follow-up, possibly

Amanda Houghton

we our to quarter basis, – the Rich, but quarter, points basis Yes. same-store – had think XX total I on were we the our existing getting quarter-over-quarter portfolio. the pretty are XX% up about sequential low occupied. XX In that’s quarter-over-quarter, portfolio, a on we still retention, first close

We in it. existing have bumps rent the

we’re leasing escalators favorable revenue which that So a with new of increase terms growth. place we’re basis, doing, slightly down existing think leases results year-over-year the on in much and that’s NOI driving while the our in those, of I

Brad Blair

early of year strategy COVID process. kind a health working in we And through the Rich, our number when part also, mind, with of systems keep had really is last of renewals work to as of

drove of a that the prior rent the free renewals, early leasing in had revenue think period, of I number was down. that we So year concessions, result

was we on occupancy as was amount pay it though a of basis. impacted occupancy down had year-over-year the nearly revenue as basis, even So an not on cash total

get you how that math. really to that’s So

Rich Anderson

Okay, thanks.

Operator

you. Thank

Citi. go Joseph Please next your comes Nick line from question ahead. today open. Our of is Nick,

Nick Joseph

being potential room process better the the soliciting on data what actively involves. bids mandate Is any up? review adviser the outreach and proactive Just Just to bidders? color set a want there. more Is to there understand on strategic

Peter Foss

I appreciate the question. you Well, understand

prepared process comments to this process. this you guided to As will tell process. in in I about to the we all continue have JPMorgan by details. addressed respect us our be in And about our and advising We’ll the board-related limit with matters that’s remarks, can we

Nick Joseph

I Yes. this process I expand you’re on is guess quarter opportunity trying I right? to to mean another but to be I that recognize is current going there a – on mandate the pretty is what mean there is? exactly to stick broad, call, results,

Peter Foss

none, review can’t alternative to as bring this at Well, your and the mandate comment to one attention. certainly a But such will is we we about stage, the that options we have all details. to any or further conclusion

Nick Joseph

that then I you any ago? whistleblower everything Thanks. related to that just yesterday. investigations the complaints three was outstanding? mean, guys are that And maybe from was on continued whistleblower there or news filed Or months the

Peter Foss

release, The be be the press investigation facts will we need to reviewing And indicated final Board and/or our conclusion of the addressed that the has as concluded. circumstances process. in improved in

Nick Joseph

or employees other terminated disciplined related any to there the findings? Were whistleblower

Peter Foss

at Thank not those. liberty to We’re about you. talk

David Gershenson

Great. Thanks, Nick.

Operator

Instructions] next Juan comes Sanabria from BMO question [Operator Markets. of Capital Our

Your line is open.

Juan Sanabria

Hi.

question is the it Just that search. following whatever process the Is on CEO up takes? before somebody in Rich’s form strategic review on have the seat complete the to intention in

Peter Foss

how and as on we time will committee comment I any time But to the lines us the I on can’t when give Spencer search on outcome and rely said, closes any And possible. and can’t, lines. best on Stuart comment gets completed. that We

Juan Sanabria

into company comment in any one of you form can if the unsolicited the yet received bids as for And another. Board Okay. you’ve or

Peter Foss

that. Once on comment again, can’t we

Juan Sanabria

given Okay. of answers. for And X the the me, just follow-up property maybe last

be on ventures, you partner partners that not capital you minority come as you assets perhaps that as focused new where something about or where attractive would on sourcing the acquisitions discussions? a talk with Just may joint along or may existing far for contribute And you can on for how assets? in be and

Robert Milligan

we’ve more for little frankly, and that looking a the that is time. the Board some looking this bit is about think It Yes. can Juan, I been at one options of probably And Robert. this. is comment we at

a kind the timing markets high-quality would a at look medical we really different that and comes real opportunity as public what think the to like different at that the get now can right of has really space as in to return I sources out that with. than number that in there foothold do it us office capital get requirements forward we definitely something capital of for private are

the to over funds kind move with of billion-dollar regional the seen couple forward smaller you’ve quarter, a and it. Just past really operators of announced ability

it’s assets potentially So joint opportunity opportunity to into them venture the proceeds sell both it, well take I to think things a with as them go-forward seed basis. an we with reinvest look on portfolio grow a do and and or a other as as at those

So I think from works, a timing opportunity perspective, that currently that obviously, the could options down Board a of good is path that and looking the at in us. we’re we’re have kind of for number be all sorts what go to excited conversations and about preparing

Juan Sanabria

Thank you.

Operator

follow-up is Anderson next from your is line Our a open, Rich Rich, again. of SMBC. question

Rich Anderson

Just marketplace think rates deal is your to say, use a and one the a cap promise. a in five about question, When number. cap, just you What let’s interested seller, one-off rate what round experience a cap five making a or deal? a if buyer be you lower were portfolio be of And type to premiums? a from you in would is on

Peter Foss

Well, Rich, a question there. asking very you’re specific that’s

bit on we’ll try be a that. to So broader

in certainly the the place. premium seen think space, in marketplace I you have take MOB portfolio

to property in very rates more synergies gives points XX of XX platform. we we’re which on we’ve XX talked typically it, basis a much cap XX current top extensively, our basis least management at acquisitions, announcing single assets of environment typically points our we’ve of get another, from buyer As as that the call been to

as marketplace XX the peers the other to of portfolio call to, look think it, you’ve last points are over of some certainly there premium current our I when we XX with and transactions, assets. for a some the basis nine So seen at six months,

if – and from there’s there. for a to acquire with Sometimes to be more opportunity to somebody ability partner than growth able forward go platform that that, even the see

Rich Anderson

that premium is transaction? if of type portfolio getting much more larger be much XX% bigger the much into of that than ceiling? as bigger? the gets you’re kind Could it get bigger, a Does Or

Peter Foss

by haven’t there transaction, there. the friends I high-quality mean, did super the they saw very a think one a was seen And of I and to a think a question Milwaukee, we’ve biggest out that’s pricing we certainly large I probably very good I up that competitive certainly think that portfolio. individual around that seen you think it’s relative I assets. our

I you valued. very bit as to on hard can think are it’s compare it, but a little see, high-quality assets, well

you a grow good help when get operating that partner the can you in space. So especially

it’s that. So – and not just

seen to I in think with that just as announcement – of really joint ventures like other we’ve it, two we’ve space. alone the I quarter seen said, this well announcement other both with operators of three acquisitions as two this

to So relatively it the the it’s I XX points basis large to have think it’s deals seen, hard truly for been what project exactly is. But in certainly the we’ve XX in deals but space.

Rich Anderson

Appreciate much. very Thanks it.

Peter Foss

Thanks, Rich.

Operator

hand back Thank for further you. [Operator Instructions] closing I’ll to the so remarks. management We have no questions in queue, the

Peter Foss

us appreciate we look HTA to we think the joining thank all additional part conversations having everybody for and want as today, just I session on NAREIT call space. Great. MOB your virtual in of to forward week the and the Well, in interest next

Robert Milligan

your much very for Thanks time.

Peter Foss

Thank you.

Operator

us. call. joining for Thank concludes This you today’s

your disconnect now lines. may You

Healthcare Trust of America (HTA) 5 Nov 212021 Q3 Earnings call transcript