HEALTHCARE REALTY TRUST INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 16, 2016

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Carla Baca
Director of Corporate Communications
P: 615.269.8175
News Release
HEALTHCARE REALTY TRUST REPORTS NORMALIZED FFO OF $0.41 PER SHARE FOR THE FOURTH QUARTER

NASHVILLE, Tennessee, February 16, 2016 - Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the fourth quarter ended December 31, 2015. Normalized FFO for the three months ended December 31, 2015 totaled $0.41 per diluted common share. Year-over-year revenue for the fourth quarter grew by $3.6 million to $98.6 million. The Company reported net income attributable to common stockholders for the quarter of $18.7 million.

Salient highlights include:
•
Normalized FFO for the fourth quarter grew 7.0% year-over-year to $41.1 million. Over the same time period, normalized FFO per share increased 5.1%.
•
For the full year of 2015, normalized FFO grew 10.9% to $160.0 million and normalized FFO per share increased 7.4% to $1.60.
•
Same store NOI grew 5.2% for the year ended December 31, 2015.
•
Average same store occupancy increased to 89.4% from 88.5% a year ago. Same store revenue per average occupied square foot increased 2.8% over the prior year.
•
The four predictive growth measures in the same store multi-tenant portfolio for the fourth quarter were:
◦
Contractual increases for in-place leases ("annual bumps") averaged 3.0%
◦
Cash leasing spreads were 3.7% on 220,000 square feet renewed: 5% of square feet (<0% spread), 22% (0-3%), 51% (3-4%) and 22% (>4%)
◦
Tenant retention was 91.2%
◦
The average yield on renewed leases increased 60 basis points
•
Acquisitions totaled $187.2 million for 2015, comprising 504,000 square feet at an average leased percentage of 95%, including the following fourth quarter acquisitions totaling $99.5 million:
◦
In October, the Company acquired a 100% leased, 33,000 square foot medical office building and adjacent land in Tacoma, Washington for a purchase price of $8.8 million. The property is located adjacent to MultiCare Health's Tacoma General Hospital campus.
◦
In November, the Company acquired a 97% leased, 100,000 square foot medical office building in Oakland, California for a purchase price of $47.0 million. The property is located on the campus of Sutter Health's Alta Bates Summit Medical Center campus.
◦
Also in November, the Company acquired a 100% leased, 60,000 square foot medical office building in Seattle, Washington for a purchase price of $27.6 million. The property is located on UW Medicine's Northwest Hospital and Medical Center campus.


 
 
 
HEALTHCAREREALTY.COM  | PAGE 1 OF 5


◦
In December, the Company acquired a 92% leased 64,000 square foot medical office building in Minneapolis, Minnesota for a purchase price of $16.0 million. The property is located on Allina Health's Unity Hospital campus and is adjacent to a 60,000 square foot medical office building the Company purchased in July 2014.
•
During the fourth quarter, the Company sold two medical office buildings located in Arizona and Georgia totaling 115,000 square feet for $19.3 million. For the year, the Company disposed of nine properties totaling 534,000 square feet for $158.0 million.
•
A dividend of $0.30 per common share was declared, which is equal to 73.2% of normalized FFO.

Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $3.3 billion in 198 real estate properties as of December 31, 2015. The Company's 198 owned real estate properties are located in 30 states and total approximately 14.3 million square feet. The Company provided leasing and property management services to approximately 9.8 million square feet nationwide.
__________________________________________________________________________________________________________

Additional information regarding the Company, including this quarter's operations, can be found at www.healthcarerealty.com. Please contact the Company at 615.269.8175 to request a printed copy of this information.

In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2015 under the heading "Risk Factors," and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims any obligation to update forward-looking statements.


 
HEALTHCAREREALTY.COM  | PAGE 2 OF 5


HEALTHCARE REALTY TRUST INCORPORATED
Consolidated Balance Sheets (1) 
(amounts in thousands, except per share data)

 
ASSETS
 
 
 
 
Real estate properties:
 
12/31/2015

 
12/31/2014

Land
 

$198,585

 

$183,060

Buildings, improvements and lease intangibles
 
3,135,893

 
3,048,251

Personal property
 
9,954

 
9,914

Construction in progress
 
19,024

 
—

Land held for development
 
17,452

 
17,054

Total real estate properties
 
3,380,908

 
3,258,279

Less accumulated depreciation and amortization
 
(761,926
)
 
(700,671
)
Total real estate properties, net
 
2,618,982

 
2,557,608

Cash and cash equivalents
 
4,102

 
3,519

Mortgage notes receivable
 
—

 
1,900

Assets held for sale and discontinued operations, net
 
724

 
9,146

Other assets, net
 
192,918

 
185,337

Total assets
 

$2,816,726

 

$2,757,510

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Notes and bonds payable
 

$1,431,494

 

$1,403,692

Accounts payable and accrued liabilities
 
75,489

 
70,240

Liabilities of discontinued operations
 
33

 
372

Other liabilities
 
66,963

 
62,152

Total liabilities
 
1,573,979

 
1,536,456

Commitments and contingencies
 
 
 
 
Stockholders' equity:
 
 
 
 
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding
 
—

 
—

Common stock, $.01 par value; 150,000 shares authorized; 101,517 and 98,828 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively
 
1,015

 
988

Additional paid-in capital
 
2,461,376

 
2,389,830

Accumulated other comprehensive income
 
(1,569
)
 
(2,519
)
Cumulative net income attributable to common stockholders
 
909,685

 
840,249

Cumulative dividends
 
(2,127,760
)
 
(2,007,494
)
Total stockholders' equity
 
1,242,747

 
1,221,054

Total liabilities and stockholders' equity
 

$2,816,726

 

$2,757,510

 
(1)
The Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.


 
HEALTHCAREREALTY.COM  | PAGE 3 OF 5


HEALTHCARE REALTY TRUST INCORPORATED
Consolidated Statements of Income (1) 
(amounts in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
 
Twelve Months Ended December 31,
 
 
 
2015

 
2014

 
2015

 
2014

Revenues
 
 
 
 
 
 
 
 
Rental income
 

$97,466

 

$93,648

 

$383,333

 

$361,525

Mortgage interest
 
—

 
32

 
91

 
3,665

Other operating
 
1,116

 
1,320

 
5,047

 
5,665

 
 
98,582

 
95,000

 
388,471

 
370,855

Expenses
 
 
 
 
 
 
 
 
Property operating
 
36,758

 
33,386

 
140,195

 
134,057

General and administrative
 
7,216

 
5,990

 
26,925

 
22,808

Depreciation
 
27,019

 
25,881

 
106,530

 
99,384

Amortization
 
2,556

 
2,630

 
10,084

 
10,820

Bad debts, net of recoveries
 
9

 
(92
)
 
(193
)
 
31

 
 
73,558

 
67,795

 
283,541

 
267,100

Other Income (Expense)
 
 
 
 
 
 
 
 
Gain on sales of real estate properties
 
9,138

 
—

 
56,602

 
—

Interest expense
 
(14,885
)
 
(18,237
)
 
(65,534
)
 
(72,413
)
Loss on extinguishment of debt
 
—

 
—

 
(27,998
)
 
—

Pension termination
 
—

 
—

 
(5,260
)
 
—

Impairment of real estate assets
 
(1
)
 
—

 
(3,639
)
 
—

Impairment of internally-developed software
 
—

 
—

 
(654
)
 
—

Interest and other income, net
 
78

 
91

 
389

 
2,637

 
 
(5,670
)
 
(18,146
)
 
(46,094
)
 
(69,776
)
 
 
 
 
 
 
 
 
 
Income From Continuing Operations
 
19,354

 
9,059

 
58,836

 
33,979

 
 
 
 
 
 
 
 
 
Discontinued Operations
 
 
 
 
 
 
 
 
Income from discontinued operations
 
(10
)
 
729

 
715

 
967

Impairments of real estate assets
 
(686
)
 
(995
)
 
(686
)
 
(12,029
)
Gain on sales of real estate properties
 
—

 
9,280

 
10,571

 
9,283

Income (Loss) From Discontinued Operations
 
(696
)
 
9,014

 
10,600

 
(1,779
)
 
 
 
 
 
 
 
 
 
Net Income
 
18,658

 
18,073

 
69,436

 
32,200

Less: Net income attributable to noncontrolling interests
 
—

 
—

 
—

 
(313
)
Net Income Attributable To Common Stockholders
 

$18,658

 

$18,073

 

$69,436

 

$31,887

Basic Earnings (Loss) Per Common Share:
 
 
 
 
 
 
 
 
Income from continuing operations
 

$0.19

 

$0.09

 

$0.59

 

$0.35

Discontinued operations
 
0.00

 
0.10

 
0.11

 
(0.02
)
Net income attributable to common stockholders
 

$0.19

 

$0.19

 

$0.70

 

$0.33

Diluted Earnings (Loss) Per Common Share:
 
 
 
 
 
 
 
 
Income from continuing operations
 

$0.19

 

$0.09

 

$0.59

 

$0.35

Discontinued operations
 
0.00

 
0.09

 
0.11

 
(0.02
)
Net income attributable to common stockholders
 

$0.19

 

$0.18

 

$0.70

 

$0.33

Weighted Average Common Shares Outstanding—Basic
 
99,699

 
96,566

 
99,171

 
95,279

Weighted Average Common Shares Outstanding—Diluted
 
100,474

 
98,086

 
99,880

 
96,759

(1)
The Consolidated Statements of Income do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

 
HEALTHCAREREALTY.COM  | PAGE 4 OF 5


HEALTHCARE REALTY TRUST INCORPORATED
Reconciliation of FFO and Normalized FFO (1) (2) 
(amounts in thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED DECEMBER 31
 
 
 
2015

 
2014

Net Income Attributable to Common Stockholders
 

$18,658

 

$18,073

Gain on sales of real estate properties
 
(9,138
)
 
(9,280
)
Impairments of real estate assets
 
687

 
995

Leasing commission amortization (3)
 
886

 
810

Real estate depreciation and amortization
 
29,021

 
27,897

Total adjustments
 
21,456

 
20,422

Funds From Operations Attributable to Common Stockholders
 

$40,114

 

$38,495

Acquisition costs
 
1,068

 
471

Reversal of restricted stock amortization upon director / officer resignation
 
(40
)
 
(115
)
Security deposit recognized upon sale
 
—

 
(407
)
Normalized Funds From Operations Attributable to Common Stockholders
 

$41,142

 

$38,444

Funds from Operations per Common Share—Diluted
 

$0.40

 

$0.39

Normalized Funds From Operations Per Common Share—Diluted
 

$0.41

 

$0.39

FFO Weighted Average Common Shares Outstanding
 
100,474

 
98,086

TWELVE MONTHS ENDED DECEMBER 31
 
 
 
2015

 
2014

Net Income Attributable to Common Stockholders
 

$69,436

 

$31,887

Gain on sales of real estate properties
 
(67,172
)
 
(9,283
)
Impairments of real estate assets
 
4,325

 
12,029

Leasing commission amortization (3)
 
3,449

 
3,000

Real estate depreciation and amortization
 
114,533

 
108,860

Total adjustments
 
55,135

 
114,606

Funds From Operations Attributable to Common Stockholders
 

$124,571

 

$146,493

Acquisition costs
 
1,394

 
708

Severance expense
 
141

 
—

Loss on extinguishment of debt
 
27,998

 
—

Refund of prior year overpayment of certain operating expenses
 
—

 
(1,919
)
Pension termination
 
5,260

 
—

Impairment of internally-developed software
 
654

 
—

Reversal of restricted stock amortization upon director / officer resignation
 
(40
)
 
(560
)
Security deposit recognized upon sale
 
—

 
(407
)
Normalized Funds From Operations Attributable to Common Stockholders
 

$159,978

 

$144,315

Funds from Operations per Common Share—Diluted
 

$1.25

 

$1.51

Normalized Funds From Operations Per Common Share—Diluted
 

$1.60

 

$1.49

FFO Weighted Average Common Shares Outstanding
 
99,880

 
96,759


(1)
Funds from operations (“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 the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization (including amortization of leasing commissions), and after adjustments for unconsolidated partnerships and joint ventures.”
(2)
FFO does not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs. FFO should not be considered an alternative to net income attributable to common stockholders as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity.
(3)
In the third quarter of 2015, the Company began including an add-back for leasing commission amortization in order to provide a better basis for comparing its results of operations with those of others in the industry, consistent with the NAREIT definition of FFO. All periods presented have been adjusted.


 
HEALTHCAREREALTY.COM  | PAGE 5 OF 5

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