Healthcare Realty Reports First Quarter 2025 Results and Declares Quarterly Dividend

NASHVILLE, Tenn., May 01, 2025 (GLOBE NEWSWIRE) -- Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the first quarter ended March 31, 2025. Net (loss) income attributable to common stockholders for the three months ended March 31, 2025 was $(44.9) million, or $(0.13) per diluted common share. Additionally, the Company announced its quarterly dividend of $0.31 per share and operating partnership unit.

KEY HIGHLIGHTS

• Normalized FFO per share totaled $0.39 for the quarter.
• 89.3% same store occupancy as of quarter end, up from 89.2% in the fourth quarter of 2024.
• $66 million of gross proceeds comprised of $28 million of first quarter asset sale transactions and a $38 million loan repayment received in April.

LEASING

• Portfolio leasing activity that commenced in the first quarter totaled 1,450,000 square feet related to 377 leases:
  • 1,002,000 square feet of renewals
  • 448,000 square feet of new and expansion lease commencements
• In the first quarter, the Company signed new leases totaling 370,000 square feet.

SAME STORE METRICS

• Cash NOI for the first quarter increased 2.3% year over year.
• Tenant retention for the first quarter was 84.8%, an increase from 81.6% in the fourth quarter of 2024.
• MOB cash leasing spreads were 2.3% for the quarter.

BALANCE SHEET

• Run rate net debt to adjusted EBITDA was 6.4 times.
• In January 2025, the Company repaid $35 million of its term loans maturing in 2026.

LEADERSHIP

• Peter A. Scott appointed as the Company's President & Chief Executive Officer effective April 15, 2025.
• Mr. Scott is expected to be added to the Board of Directors following the Company's 2025 annual meeting of stockholders.
• Connie Moore, who served as Interim President and CEO of the Company from November 2024 until April 14, 2025, will continue to serve on the Board of Directors.
  
  

DIVIDEND

• A common stock cash dividend in the amount of $0.31 per share will be paid on May 23, 2025, to Class A common stockholders of record on May 12, 2025. Additionally, the eligible holders of operating partnership units will receive a distribution of $0.31 per unit, equivalent to the Company's Class A common stock dividend.

GUIDANCE

• The Company reaffirms its per share guidance, as outlined below, as well as the guidance provided on page 28 of the Supplemental Information:
  
  
  
  

	2025 GUIDANCE		ACTUAL
	LOW	HIGH	1Q 2025
Earnings per share	$(0.28)	$(0.20)	$(0.13)
NAREIT FFO per share	$1.44	$1.48	$0.35
Normalized FFO per share	$1.56	$1.60	$0.39

The 2025 annual guidance range reflects the Company's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, interest rates, and operating and general and administrative expenses. The Company's guidance does not contemplate impacts from gains or losses from

dispositions, potential impairments, or debt extinguishment costs, if any. There can be no assurance that the Company's actual results will not be materially higher or lower than these expectations. If actual results vary from these assumptions, the Company's expectations may change.

EARNINGS CALL

• On Friday, May 2, 2025, at 11:00 a.m. Eastern Time, Healthcare Realty Trust has scheduled a conference call to discuss earnings results, quarterly activities, general operations of the Company and industry trends.
• Simultaneously, a webcast of the conference call will be available to interested parties at https://investors.healthcarerealty.com/corporate-profile/webcasts under the Investor Relations section. A webcast replay will be available following the call at the same address.
• Live Conference Call Access Details:
  • Domestic Dial-In Number: +1 800-715-9871 access code 4950066;
  • All Other Locations: +1 646-307-1963 access code 4950066.
• Replay Information:
  • Domestic Dial-In Number: +1 800-770-2030 access code 4950066;
  • All Other Locations: +1 609-800-9909 access code 4950066.

Healthcare Realty (NYSE:HR) is a real estate investment trust (REIT) that owns and operates medical outpatient buildings primarily located around market-leading hospital campuses. The Company selectively grows its portfolio through property acquisition and development. As the first and largest REIT to specialize in medical outpatient buildings, Healthcare Realty's portfolio includes approximately 650 properties totaling more than 38 million square feet concentrated in 15 growth markets.

Additional information regarding the Company, including this quarter's operations, can be found at www.healthcarerealty.com. In addition to the historical information contained within, this press release contains certain forward-looking statements with respect to the Company. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "target," "intend," "plan," "estimate," "project," "continue," "should," "could," "budget" and other comparable terms. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Such risks and uncertainties include, among other things, the following: the Company's expected results may not be achieved; risks related to future opportunities and plans for the Company, including the uncertainty of expected future financial performance and results of the Company; pandemics or other health crises; increases in interest rates; the availability and cost of capital at expected rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to release space at similar rates as vacancies occur; the Company's ability to renew expiring leases; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; the Company may be required under purchase options to sell properties and may not be able to reinvest the proceeds from such sales at rates of return equal to the return received on the properties sold; uninsured or underinsured losses related to casualty or liability; the incurrence of impairment charges on its real estate properties or other assets; other legal and operational matters; and other risks and uncertainties affecting the Company, including those described from time to time under the caption "Risk Factors" and elsewhere in the Company's filings and reports with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Moreover, other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company's filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing. For a detailed discussion of the Company's risk factors, please refer to the Company's filings with the SEC, including this report and the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Consolidated Balance Sheets
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
ASSETS
	1Q 2025		4Q 2024		3Q 2024		2Q 2024		1Q 2024
Real estate properties
Land	$1,134,635		$1,143,468		$1,195,116		$1,287,532		$1,342,895
Buildings and improvements	9,729,912		9,707,066		10,074,504		10,436,218		10,902,835
Lease intangibles	631,864		664,867		718,343		764,730		816,303
Personal property	9,938		9,909		9,246		12,501		12,720
Investment in financing receivables, net	123,813		123,671		123,045		122,413		122,001
Financing lease right-of-use assets	76,958		77,343		77,728		81,401		81,805
Construction in progress	35,101		31,978		125,944		97,732		70,651
Land held for development	52,408		52,408		52,408		59,871		59,871
Total real estate investments	11,794,629		11,810,710		12,376,334		12,862,398		13,409,081
Less accumulated depreciation and amortization	(2,583,819	)	(2,483,656	)	(2,478,544	)	(2,427,709	)	(2,374,047	)
Total real estate investments, net	9,210,810		9,327,054		9,897,790		10,434,689		11,035,034
Cash and cash equivalents 1	25,722		68,916		22,801		137,773		26,172
Assets held for sale, net	6,635		12,897		156,218		34,530		30,968
Operating lease right-of-use assets	259,764		261,438		259,013		261,976		273,949
Investments in unconsolidated joint ventures	470,418		473,122		417,084		374,841		309,754
Other assets, net and goodwill	522,920		507,496		491,679		559,818		605,047
Total assets	$10,496,269		$10,650,923		$11,244,585		$11,803,627		$12,280,924
LIABILITIES AND STOCKHOLDERS' EQUITY
	1Q 2025		4Q 2024		3Q 2024		2Q 2024		1Q 2024
Liabilities
Notes and bonds payable	$4,732,618		$4,662,771		$4,957,796		$5,148,153		$5,108,279
Accounts payable and accrued liabilities	144,855		222,510		197,428		195,884		163,172
Liabilities of properties held for sale	422		1,283		7,919		1,805		700
Operating lease liabilities	224,117		224,499		229,925		230,601		229,223
Financing lease liabilities	72,585		72,346		71,887		75,199		74,769
Other liabilities	174,830		161,640		180,283		177,293		197,763
Total liabilities	5,349,427		5,345,049		5,645,238		5,828,935		5,773,906
Redeemable non-controlling interests	4,627		4,778		3,875		3,875		3,880
Stockholders' equity
Preferred stock, $0.01 par value; 200,000 shares authorized	—		—		—		—		—
Common stock, $0.01 par value; 1,000,000 shares authorized	3,510		3,505		3,558		3,643		3,815
Additional paid-in capital	9,121,269		9,118,229		9,198,004		9,340,028		9,609,530
Accumulated other comprehensive (loss) income	(7,206	)	(1,168	)	(16,963	)	6,986		4,791
Cumulative net income attributable to common stockholders	329,436		374,309		481,155		574,178		717,958
Cumulative dividends	(4,368,739	)	(4,260,014	)	(4,150,328	)	(4,037,693	)	(3,920,199	)
Total stockholders' equity	5,078,270		5,234,861		5,515,426		5,887,142		6,415,895
Non-controlling interest	63,945		66,235		80,046		83,675		87,243
Total equity	5,142,215		5,301,096		5,595,472		5,970,817		6,503,138
Total liabilities and stockholders' equity	$10,496,269		$10,650,923		$11,244,585		$11,803,627		$12,280,924

1. 2Q 2024 cash and cash equivalents include $96.0 million of proceeds held in a cash escrow account from a portfolio disposition that closed on June 28, 2024, and was received by the Company on July 1, 2024.

Consolidated Statements of Income
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	1Q 2025		4Q 2024		3Q 2024		2Q 2024		1Q 2024
Revenues
Rental income 1	$288,857		$300,065		$306,499		$308,135		$318,076
Interest income	3,731		4,076		3,904		3,865		4,538
Other operating	6,389		5,625		5,020		4,322		4,191
	298,977		309,766		315,423		316,322		326,805
Expenses
Property operating	114,963		114,415		120,232		117,719		121,078
General and administrative	13,530		34,208		20,124		14,002		14,787
Normalizing items 2	(502	)	(22,991	)	(6,861	)	—		—
Normalized general and administrative	13,028		11,217		13,263		14,002		14,787
Transaction costs	1,011		1,577		719		431		395
Depreciation and amortization	150,969		160,330		163,226		173,477		178,119
	280,473		310,530		304,301		305,629		314,379
Other income (expense)
Interest expense before merger-related fair value	(44,366	)	(47,951	)	(50,465	)	(52,393	)	(50,949	)
Merger-related fair value adjustment	(10,446	)	(10,314	)	(10,184	)	(10,064	)	(10,105	)
Interest expense	(54,812	)	(58,265	)	(60,649	)	(62,457	)	(61,054	)
Gain on sales of real estate properties and other assets	2,904		32,082		39,310		38,338		22
Loss on extinguishment of debt	—		(237	)	—		—		—
Impairment of real estate assets and credit loss reserves	(12,081	)	(81,098	)	(84,394	)	(132,118	)	(15,937	)
Impairment of goodwill	—		—		—		—		(250,530	)
Equity income (loss) from unconsolidated joint ventures	1		224		208		(146	)	(422	)
Interest and other income (expense), net	95		(154	)	(132	)	(248	)	275
	(63,893	)	(107,448	)	(105,657	)	(156,631	)	(327,646	)
Net loss	$(45,389	)	$(108,212	)	$(94,535	)	$(145,938	)	$(315,220	)
Net loss attributable to non-controlling interests	516		1,366		1,512		2,158		4,384
Net loss attributable to common stockholders	$(44,873	)	$(106,846	)	$(93,023	)	$(143,780	)	$(310,836	)
Basic earnings per common share	$(0.13	)	$(0.31	)	$(0.26	)	$(0.39	)	$(0.82	)
Diluted earnings per common share	$(0.13	)	$(0.31	)	$(0.26	)	$(0.39	)	$(0.82	)
Weighted average common shares outstanding - basic	349,539		351,560		358,960		372,477		379,455
Weighted average common shares outstanding - diluted 3	349,539		351,560		358,960		372,477		379,455

1. In 4Q 2024, rental income was reduced by $0.7 million for Prospect Medical revenue reserves. In 2Q 2024, rental income was reduced by $3.0 million for Steward Health revenue reserves.
2. Normalizing items primarily include restructuring, severance-related costs and non-routine advisory fees associated with shareholder engagement.
3. Potential common shares are not included in the computation of diluted earnings per share when a loss exists, as the effect would be an antidilutive per share amount. As a result, the outstanding limited partnership units in the Company's operating partnership ("OP"), totaling 3,665,625 units were not included.

Reconciliation of FFO, Normalized FFO and FAD 1,2,3
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
	1Q 2025		4Q 2024		3Q 2024		2Q 2024		1Q 2024
Net loss attributable to common stockholders	$(44,873	)	$(106,846	)	$(93,023	)	$(143,780	)	$(310,836	)
Net loss attributable to common stockholders/diluted share 3	$(0.13	)	$(0.31	)	$(0.26	)	$(0.39	)	$(0.82	)
Gain on sales of real estate assets	(2,904	)	(32,082	)	(39,148	)	(33,431	)	(22	)
Impairments of real estate assets	10,145		75,423		37,632		120,917		15,937
Real estate depreciation and amortization	155,288		164,656		167,821		177,350		181,161
Non-controlling loss from operating partnership units	(599	)	(1,422	)	(1,372	)	(2,077	)	(4,278	)
Unconsolidated JV depreciation and amortization	6,717		5,913		5,378		4,818		4,568
FFO adjustments	$168,647		$212,488		$170,311		$267,577		$197,366
FFO adjustments per common share - diluted	$0.48		$0.60		$0.47		$0.71		$0.51
FFO	$123,774		$105,642		$77,288		$123,797		$(113,470	)
FFO per common share - diluted 4	$0.35		$0.30		$0.21		$0.33		$(0.30	)
Transaction costs	1,011		1,577		719		431		395
Lease intangible amortization	(228	)	(2,348	)	(10	)	129		175
Non-routine legal costs/forfeited earnest money received	77		306		306		465		—
Debt financing costs	—		237		—		—		—
Restructuring and severance-related charges	502		22,991		6,861		—		—
Credit losses and gains (losses) on other assets, net 5	1,936		4,582		46,600		8,525		—
Impairment of goodwill	—		—		—		—		250,530
Merger-related fair value adjustment	10,446		10,314		10,184		10,064		10,105
Unconsolidated JV normalizing items 6	204		113		101		89		87
Normalized FFO adjustments	$13,948		$37,772		$64,761		$19,703		$261,292
Normalized FFO adjustments per common share - diluted	$0.04		$0.11		$0.18		$0.05		$0.68
Normalized FFO	$137,722		$143,414		$142,049		$143,500		$147,822
Normalized FFO per common share - diluted	$0.39		$0.40		$0.39		$0.38		$0.39
Non-real estate depreciation and amortization	222		404		276		313		485
Non-cash interest amortization, net 7	1,217		1,239		1,319		1,267		1,277
Rent reserves, net 8	94		(369	)	(27	)	1,261		(151	)
Straight-line rent income, net	(6,844	)	(7,051	)	(5,771	)	(6,799	)	(7,633	)
Stock-based compensation	3,028		3,028		4,064		3,383		3,562
Unconsolidated JV non-cash items 9	(253	)	(277	)	(376	)	(148	)	(122	)
Normalized FFO adjusted for non-cash items	135,186		140,388		141,534		142,777		145,240
2nd generation TI	(14,885	)	(20,003	)	(16,951	)	(12,287	)	(20,204	)
Leasing commissions paid	(11,394	)	(11,957	)	(10,266	)	(10,012	)	(15,215	)
Building capital	(6,687	)	(8,347	)	(7,389	)	(12,835	)	(5,363	)
Total maintenance capex	(32,966	)	(40,307	)	(34,606	)	(35,134	)	(40,782	)
FAD	$102,220		$100,081		$106,928		$107,643		$104,458
Quarterly dividends and OP distributions	$109,840		$110,808		$113,770		$118,627		$119,541
FFO wtd avg common shares outstanding - diluted 10	353,522		355,874		363,370		376,556		383,413

1. Funds from operations ("FFO") and FFO per share are operating performance measures adopted by NAREIT. NAREIT defines FFO as "net income (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity."
2. FFO, Normalized FFO and Funds Available for Distribution ("FAD") do not represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. FFO, Normalized FFO and FAD should not be considered alternatives to net income attributable to common stockholders as indicators of the Company's operating performance or as alternatives to cash flow as measures of liquidity.
3. Potential common shares are not included in the computation of diluted earnings per share when a loss exists, as the effect would be an antidilutive per share amount.
4. For 1Q 2024, basic weighted average common shares outstanding was the denominator used in the per share calculation.
5. 1Q 2025 represents a $1.9 million loss on other assets. 4Q 2024 includes $1.6 million of credit loss reserves, net of recoveries and a $4.1 million loss on other assets. These amounts were partially offset by a $1.1 million recovery of prior-period Steward Health straight-line rent for leases assumed. 3Q 2024 includes $46.8 million of credit loss reserves and $0.2 million gain on other assets. 2Q 2024 includes $11.2 million of credit loss reserves and $2.2 million write-off of prior period Steward Health straight-line rent, offset by $4.9 million gain on other assets.
6. Includes the Company's proportionate share of normalizing items related to unconsolidated joint ventures such as lease intangibles and acquisition and pursuit costs.
7. Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.
8. 2Q 2024 includes $0.8 million related to the Steward Health revenue reserve for March.
9. Includes the Company's proportionate share of straight-line rent, net and rent reserves, net related to unconsolidated joint ventures.
10. The Company utilizes the treasury stock method, which includes the dilutive effect of nonvested share-based awards outstanding of 317,511 for the three months ended March 31, 2025. Also includes the diluted impact of 3,665,625 OP units outstanding.
    
    

Reconciliation of Non-GAAP Measures 

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA - UNAUDITED 

Management considers funds from operations ("FFO"), FFO per share, normalized FFO, normalized FFO per share, and funds available for distribution ("FAD") to be useful non-GAAP measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure historical financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors.

The non-GAAP financial measures presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs.

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"). NAREIT defines FFO as "net income (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity." The Company defines Normalized FFO as FFO excluding acquisition-related expenses, lease intangible amortization and other normalizing items that are unusual and infrequent in nature. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense and rent reserves, net; and subtracting maintenance capital expenditures, including second generation tenant improvements and leasing commissions paid and straight-line rent income, net of expense. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. FFO, Normalized FFO and FAD do not represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. FFO, Normalized FFO and FAD should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. FFO, Normalized FFO and FAD should be reviewed in connection with GAAP financial measures.

Management believes FFO, FFO per share, Normalized FFO, Normalized FFO per share, and FAD provide an understanding of the operating performance of the Company's properties without giving effect to certain significant non-cash items, including depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, gains or losses from sales of real estate, and other normalizing items that are unusual and infrequent, FFO, FFO per share, Normalized FFO, Normalized FFO per share and FAD can facilitate comparisons of operating performance between periods. The Company reports these measures because they have been observed by management to be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because these measures are consistently reported, discussed, and compared by research analysts in their notes and publications about REITs.

Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income plus interest from financing receivables less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, lease termination fees, financing receivable amortization, tenant improvement amortization and leasing commission amortization. Cash NOI is historical and not necessarily indicative of future results.

Same Store Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale, properties undergoing redevelopment, and newly redeveloped or developed properties.

The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction through the application of additional resources, including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures.

Any recently acquired property will be included in the same store pool once the Company has owned the property for five full quarters. Newly developed or redeveloped properties will be included in the same store pool five full quarters after substantial completion.

Ron Hubbard

Vice President, Investor Relations

P: 615.269.8290