HEALTHCARE REALTY TRUST INC - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
EX-99.3 - EXHIBIT 99.3 - HEALTHCARE REALTY TRUST INC	exhibit993investorpresen.htm
EX-99.1 - EXHIBIT 99.1 - HEALTHCARE REALTY TRUST INC	exhibit991secondquarte.htm
8-K - 8-K - HEALTHCARE REALTY TRUST INC	hr-2020630xearningsfor.htm

2Q2020

Supplemental Information

FURNISHED AS OF AUGUST 5, 2020 - UNAUDITED

FORWARD LOOKING STATEMENTS & RISK FACTORS

This Supplemental Information report contains disclosures that are “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 and phrases such as “can,” “may,” “payable,” “indicative,” "predictive," “annualized,” “expect,” “expected,” “range of expectations,” "would have been," "budget," and other comparable terms in this report. These forward-looking statements are made as of the date of this report and are not guarantees of future performance. These statements are based on the current plans and expectations of Company management and are subject to a number of unknown risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those described in this release or implied by such forward-looking statements. Such risks and uncertainties include, among other things, the following: the duration and scope of the COVID-19 pandemic; the impact of the COVID-19 pandemic on occupancy rates and on the operations of the Company and its tenants; actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting the Company’s properties and the operations of the Company and its tenants; the effects of health and safety measures adopted by the Company and its tenants related to the COVID-19 pandemic; the impact of the COVID-19 pandemic on the business and financial condition of tenants; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth

changes in the economy; increases in interest rates; the availability and cost of

capital at expected rates; changes to facility-related healthcare regulations; 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 and repay loans; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease space at similar rates as vacancies occur; the Company's ability to renew expiring long-term single-tenant net leases; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; 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; and other legal and operational matters. Other risks, uncertainties and factors that could cause actual results to differ materially from those projected are detailed under the heading “Risk Factors,” in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2019, under the heading "Risk Factors," in the Company's Quarterly Reports on Form 10-Q filed with the SEC for the quarters ended March 31, 2020 and June 30, 2020, and other risks described from time to time thereafter in the Company's SEC filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Table of Contents



4		Highlights
5		Salient Facts
6		Corporate Information
7		Balance Sheet
8		Statements of Income
9		FFO, Normalized FFO, & FAD
10		Capital Funding & Commitments
11		Debt Metrics
12		Debt Covenants
13		Acquisition & Disposition Activity
14		Investment Activity
15		Portfolio
16		Associated Health Systems
17		Top Tenants
18		MOB Proximity to Hospital
19		Lease Maturity, Lease & Building Size
20		Historical Occupancy
21		Occupancy Reconciliation
22		Same Store Leasing Statistics
23		Same Store Performance
24		NOI Reconciliations
26		EBITDA Reconciliations
27		Components of Net Asset Value
28		Components of Expected FFO

Copies of this report may be obtained at www.healthcarerealty.com or by contacting Investor Relations at 615.269.8175 or communications@healthcarerealty.com.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 3

Highlights

QUARTERLY HIGHLIGHTS

Normalized FFO per share of $0.42 increased 5.0% over second quarter of 2019.

For the trailing twelve months ended June 30, 2020, same store cash NOI grew 1.9%.

Predictive growth measures in the same store multi-tenant portfolio include:


•	Average in-place rent increases of 2.89%


•	Future annual contractual increases of 3.10% for leases commencing in the quarter


•	Weighted average cash leasing spreads of 4.5% on 330,000 square feet renewed:


◦	6% (<0% spread)


◦	11% (0-3%)


◦	54% (3-4%)


◦	29% (>4%)


•	Tenant retention of 84.6%

Portfolio leasing activity in the second quarter totaled 572,000 square feet related to 133 leases:


•	393,000 square feet of renewals


•	179,000 square feet of new and expansion leases

Subsequent to the end of the second quarter, the Company acquired four medical office buildings for $83.2 million totaling 165,000 square feet. Acquisitions included:


•	In San Diego, a 46,000 square foot building adjacent to A rated Palomar Health's Poway Hospital for $16.7 million.


•	In Los Angeles, a 50,000 square foot building for $35.0 million. The property is located adjacent to Huntington Hospital, which is currently under a definitive agreement to join Aa3 rated Cedars-Sinai Health System. The Company owns two other properties adjacent to this campus.


•	In Seattle, a 21,000 square foot building adjacent to AA- rated MultiCare Health System's Allenmore Hospital for $11.0 million. The Company owns three additional properties on or adjacent to this campus.


•	In Atlanta, a 48,000 square foot building adjacent to A rated Wellstar Health System's Kennestone Hospital for $20.5 million. The Company owns four additional properties on or adjacent to this campus.

On July 30, 2020, the Company sold to Mercy two single-tenant properties totaling 386,000 square feet for $244.5 million, including:


•	a medical office building in Edmond, Oklahoma, and


•	an orthopedic specialty hospital in Springfield, Missouri.

On May 29th, the Company borrowed $150 million from its unsecured term loan due 2026.

As of June 30, the Company had cash of $43.7 million and $700 million available on its revolver.

Net debt to adjusted EBITDA decreased to 5.1 times at the end of the quarter.

During the quarter, the Company issued 1.1 million shares through its at-the-market equity program at a weighted average price of $31.08 per share, generating $32.9 million in net proceeds.

In addition, the Company currently has approximately 2.3 million shares to be settled through forward equity contracts at a weighted average price per share of $31.72. The Company expects gross proceeds of approximately $74 million, before costs of borrowing under the forward contracts.

A dividend of $0.30 per share was declared for the second quarter. Dividends paid totaled $40.5 million, which equaled 71.9% of normalized FFO and 84.2% of FAD.

OTHER ITEMS OF NOTE

The Company expects approximately $0.02 of FFO per share of dilution in the third quarter of 2020 related to the timing and reinvestment of the $244.5 million disposition proceeds from the two Mercy transactions.

The Company traditionally experiences a reduction of approximately $0.01 of FFO per share in the third quarter due to the impact of seasonally high temperatures on utility expenses.

The Company added disclosures to its June 30, 2020 Form 10-Q regarding the impact of COVID-19. In addition, the Company provided a business update furnished as Exhibit 99.3 to the Form 8-K on August 5, 2020, which provides additional information. Below are select COVID-19 related matters that occurred in the second quarter:


•	99% of second quarter rent collected or deferred:


◦	97% of rent collected


◦	2% of deferred rent with repayment scheduled by year-end


•	$3.1 million of outstanding rent deferred as of July 31, 2020:


◦	$7.2 million originally granted


◦	$4.1 million repaid, including $3.7 million repaid early


•	Trailing twelve month same store cash NOI growth was 1.9%. This amount was negatively impacted by approximately 20 basis points due to the following second quarter items:


◦	A general reserve of approximately $0.7 million against rent deferred


◦	Sequential parking revenue decrease of approximately $0.8 million


◦	Operating expense savings, net of reimbursements, of approximately $1 million


•	FFO for the second quarter was not materially impacted by the same store items listed above due to an offsetting decrease in incentive compensation and travel expenses totaling $0.6 million.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 4

Salient Facts

AS OF JUNE 30, 2020



	Properties

	$4.2B invested in 210 properties
	15.5M SF owned in 24 states
	12.0M SF managed by Healthcare Realty
	95.0% medical office and outpatient
	1.9% same store cash NOI growth (TTM)



	Capitalization

	$5.5B enterprise value as of 7/31/20
	$4.0B market capitalization as of 7/31/20
	136.0M shares outstanding as of 7/31/20
	$0.30 quarterly dividend per share
	BBB/Baa2/BBB+ S&P/Moody's/Fitch
	27.7% net debt to enterprise value at 6/30/20
	5.1x net debt to adjusted EBITDA




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 5

Corporate Information

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. As of June 30, 2020, the Company owned 210 real estate properties in 24 states totaling 15.5 million square feet and was valued at approximately $5.5 billion. The Company provided leasing and property management services to 12.0 million square feet nationwide.

CORPORATE HEADQUARTERS

Healthcare Realty Trust Incorporated

3310 West End Avenue, Suite 700

Nashville, Tennessee 37203

Phone 615.269.8175 Fax 615.269.8461

communications@healthcarerealty.com

www.healthcarerealty.com

EXECUTIVE OFFICERS

Todd J. Meredith

President and Chief Executive Officer

John M. Bryant, Jr.

Executive Vice President and General Counsel

J. Christopher Douglas

Executive Vice President and Chief Financial Officer

Robert E. Hull

Executive Vice President - Investments

ANALYST COVERAGE

BMO Capital Markets

Berenberg Capital Markets LLC

BTIG, LLC

CapitalOne Securities, Inc.

Citi Research

Green Street Advisors, Inc.

J.P. Morgan Securities LLC

Jefferies LLC

KeyBanc Capital Markets Inc.

Mizuho Securities USA Inc

Morgan Stanley & Co, LLC

Raymond James & Associates

SMBC Nikko Securities America, Inc.

Wells Fargo Securities, LLC

BOARD OF DIRECTORS

J. Knox Singleton

Chairman, Healthcare Realty

Retired Chief Executive Officer, Inova Health System

Todd J. Meredith

President and Chief Executive Officer

Healthcare Realty Trust Incorporated

John V. Abbott

Retired Chief Executive Officer

Aviation Asset Management Group, General Electric Company

Nancy H. Agee

President and Chief Executive Officer

Carilion Clinic

Edward H. Braman

Retired Audit Partner

Ernst & Young LLP

James J. Kilroy

President and Portfolio Manager

Willis Investment Counsel

Peter F. Lyle

Executive Vice President

Medical Management Associates, Inc.

Bruce D. Sullivan

Retired Audit Partner

Ernst & Young LLP

Christann M. Vasquez

Executive Vice President and Chief Operating Officer

Ascension Texas

David R. Emery (1944-2019)

Chairman Emeritus

Healthcare Realty Trust Incorporated




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 6

Balance Sheet

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ASSETS
	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019
Real estate properties
Land		$312,139			$319,882			$289,751			$267,803			$247,772
Buildings, improvements and lease intangibles	3,937,657			4,126,046			3,986,326			3,915,308			3,845,546
Personal property	10,849			10,783			10,538			10,899			10,804
Construction in progress	—			—			48,731			44,041			36,996
Land held for development	24,647			24,647			24,647			24,647			24,647
Total real estate properties	4,285,292			4,481,358			4,359,993			4,262,698			4,165,765
Less accumulated depreciation and amortization	(1,169,298		)	(1,164,462		)	(1,121,102		)	(1,106,387		)	(1,064,408		)
Total real estate properties, net	3,115,994			3,316,896			3,238,891			3,156,311			3,101,357
Cash and cash equivalents	43,680			103,370			657			11,809			7,617
Assets held for sale, net	—			20			37			5,289			6,615
Operating lease right-of-use assets	124,398			125,040			126,177			126,711			127,326
Financing lease right-of-use assets	19,884			12,615			12,667			9,063			9,095
Net investment in sales-type leases ¹	244,381			—			—			—			—
Other assets	183,616			189,708			185,426			181,975			176,537
Total assets		$3,731,953			$3,747,649			$3,563,855			$3,491,158			$3,428,547

LIABILITIES AND STOCKHOLDERS' EQUITY
	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019
Liabilities
Notes and bonds payable		$1,554,936			$1,644,454			$1,414,069			$1,443,919			$1,442,758
Accounts payable and accrued liabilities	65,485			64,574			78,517			75,094			60,394
Liabilities of properties held for sale	—			74			145			300			511
Operating lease liabilities	91,259			91,093			91,574			91,356			91,056
Financing lease liabilities	18,595			17,953			18,037			14,305			14,216
Other liabilities	72,317			70,073			61,504			61,023			50,168
Total liabilities	1,802,592			1,888,221			1,663,846			1,685,997			1,659,103
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; 50,000 shares authorized	—			—			—			—			—
Common stock, $.01 par value; 300,000 shares authorized	1,360			1,349			1,347			1,314			1,292
Additional paid-in capital	3,529,559			3,494,123			3,485,003			3,379,572			3,305,344
Accumulated other comprehensive loss	(20,294		)	(19,777		)	(6,175		)	(8,470		)	(6,189		)
Cumulative net income attributable to common stockholders	1,207,132			1,131,619			1,127,304			1,100,094			1,097,494
Cumulative dividends	(2,788,396		)	(2,747,886		)	(2,707,470		)	(2,667,349		)	(2,628,497		)
Total stockholders' equity	1,929,361			1,859,428			1,900,009			1,805,161			1,769,444
Total liabilities and stockholders' equity		$3,731,953			$3,747,649			$3,563,855			$3,491,158			$3,428,547


1.	In the second quarter of 2020, the Company entered into agreements to sell two single-tenant net leased properties ("Mercy disposition"), resulting in a lease modification and classification change from operating to sales-type. The properties were sold on July 30, 2020.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 7

Statements of Income

DOLLARS IN THOUSANDS




	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018
Revenues
Rental income		$122,358			$122,644			$119,438			$117,740			$114,351			$110,696			$111,149			$111,452
Other operating	1,332			2,163			2,086			2,059			1,966			1,961			2,019			2,010
	123,690			124,807			121,524			119,799			116,317			112,657			113,168			113,462
Expenses
Property operating	46,580			49,552			46,214			46,777			44,286			42,725			42,815			44,135
General and administrative ¹	7,434			8,766			7,669			10,802			7,845			8,510			8,534			8,504
Acquisition and pursuit costs ²	431			750			515			501			422			305			200			141
Depreciation and amortization	47,691			47,497			46,134			45,137			43,926			42,662			42,437			42,061
Bad debts, net of recoveries ³	—			—			—			—			—			—			18			(62		)
	102,136			106,565			100,532			103,217			96,479			94,202			94,004			94,779
Other income (expense)
Gain (loss) on sales of real estate properties	68,267			(49		)	20,036			200			4,849			15			10,787			1,288
Interest expense	(14,442		)	(13,960		)	(13,816		)	(14,181		)	(13,850		)	(13,588		)	(13,602		)	(13,464		)
Impairment of real estate assets	—			—			(7		)	—			(5,610		)	—			—			—
Interest and other income (expense), net	134			82			5			—			(743		)	9			(35		)	41
	53,959			(13,927		)	6,218			(13,981		)	(15,354		)	(13,564		)	(2,850		)	(12,135		)
Net income		$75,513			$4,315			$27,210			$2,601			$4,484			$4,891			$16,314			$6,548


1	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses in the third quarter of 2019 for the acceleration of his outstanding restricted stock awards and associated taxes.


2	Includes third party and travel costs related to the pursuit of acquisitions and developments.


3	Beginning in the first quarter of 2019 with the adoption of Accounting Standards Codification Topic 842, bad debts, net of recoveries associated with lease revenue was recorded within rental income.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 8

FFO, Normalized FFO, & FAD ^{1, 2}

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA




	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018
Net income		$75,513			$4,315			$27,210			$2,601			$4,484			$4,891			$16,314			$6,548
(Gain) loss on sales of real estate assets	(68,267		)	49			(20,036		)	(200		)	(4,849		)	(15		)	(10,787		)	(1,288		)
Impairments of real estate assets	—			—			7			—			5,610			—			—			—
Real estate depreciation and amortization	48,657			48,611			47,042			45,926			44,682			43,383			43,380			42,723
FFO		$55,903			$52,975			$54,223			$48,327			$49,927			$48,259			$48,907			$47,983
Acquisition and pursuit costs ³	431			750			515			501			422			305			200			141
Lease intangible amortization ⁴	(16		)	745			4			5			54			84			—			—
Accelerated stock awards ⁵	—			—			—			2,854			—			—			—			70
Debt financing costs	—			—			—			—			760			—			—			—
Normalized FFO		$56,318			$54,470			$54,742			$51,687			$51,163			$48,648			$49,107			$48,194
Non-real estate depreciation and amortization	822			823			838			838			829			763			790			845
Non-cash interest expense amortization ⁶	1,035			746			731			727			707			702			649			661
Provision for bad debt, net	945			(83		)	124			(32		)	150			(75		)	18			(62		)
Straight-line rent income, net	(382		)	(660		)	(781		)	(379		)	(1		)	(270		)	(302		)	(413		)
Stock-based compensation	2,405			2,599			2,133			2,375			2,372			2,639			2,601			2,605
Normalized FFO adjusted for non-cash items	61,143			57,895			57,787			55,216			55,220			52,407			52,863			51,830
2nd generation TI	(6,005		)	(6,040		)	(12,126		)	(6,114		)	(6,124		)	(4,326		)	(10,367		)	(6,950		)
Leasing commissions paid	(2,258		)	(2,824		)	(4,970		)	(2,697		)	(2,315		)	(1,347		)	(2,182		)	(1,139		)
Capital expenditures	(4,777		)	(3,470		)	(5,159		)	(3,543		)	(4,993		)	(3,462		)	(2,817		)	(6,229		)
FAD		$48,103			$45,561			$35,532			$42,862			$41,788			$43,272			$37,497			$37,512
Dividends paid		$40,510			$40,416			$40,121			$38,852			$38,771			$37,614			$37,571			$37,570
FFO per common share - diluted		$0.42			$0.40			$0.41			$0.37			$0.39			$0.39			$0.39			$0.39
Normalized FFO per common share - diluted		$0.42			$0.41			$0.41			$0.40			$0.40			$0.39			$0.40			$0.39
FFO weighted average common shares outstanding - diluted⁷	134,464			133,980			133,125			129,015			128,279			124,928			124,240			124,192

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 “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.”

FFO, Normalized FFO and Funds Available for Distribution ("FAD") do 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, 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	Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.

The Company adopted the 2018 NAREIT FFO White Paper Restatement during the first quarter of 2019. This amended definition specifically includes the impact of acquisition related market lease intangible amortization in the calculation of NAREIT FFO. The Company historically included this amortization in the real estate depreciation and amortization line item which is added back in the calculation of NAREIT FFO. Prior periods were not restated for the adoption.


5	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses recorded in the third quarter of 2019 associated with the acceleration of his outstanding non-vested share-based awards. The third quarter of 2018 includes a revaluation adjustment recorded in connection with an officer retirement.


6	Includes the amortization of deferred financing costs, discounts and premiums.


7	The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 767,760 for the three months ended June 30, 2020.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 9

Capital Funding & Commitments

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



ACQUISITION AND RE/DEVELOPMENT FUNDING
	2Q 2020			1Q 2020		4Q 2019		3Q 2019		2Q 2019
Acquisitions ¹	$	—		$102,030		$107,408		$78,681		$102,225
Re/development ¹	5,664			6,916		7,028		7,359		6,916
1st gen. TI & acquisition capex ²	4,991			2,731		8,184		3,793		4,934

MAINTENANCE CAPITAL EXPENDITURES
	2Q 2020			1Q 2020		4Q 2019		3Q 2019		2Q 2019
$ Spent
2nd generation TI	$6,005			$6,040		$12,126		$6,114		$6,124
Leasing commissions paid	2,258			2,824		4,970		2,697		2,315
Capital expenditures	4,777			3,470		5,159		3,543		4,993
	$13,040			$12,334		$22,255		$12,354		$13,432
% of Cash NOI
2nd generation TI	8.0		%	8.0	%	16.2	%	8.4	%	8.5	%
Leasing commissions paid	3.0		%	3.8	%	6.7	%	3.7	%	3.2	%
Capital expenditures	6.3		%	4.6	%	6.9	%	4.9	%	6.9	%
	17.3		%	16.4	%	29.8	%	17.0	%	18.6	%

LEASING COMMITMENTS
	2Q 2020			1Q 2020		4Q 2019		3Q 2019		2Q 2019
Renewals
Square feet	393,496			342,614		381,561		756,211		366,524
2nd generation TI/square foot/lease year	$1.78			$1.65		$3.15		$2.12		$1.75
Leasing commissions/square foot/lease year	$0.86			$0.80		$0.91		$0.86		$0.43
WALT (in months) ³	45.1			46.3		56.6		55.0		53.0

New leases
Square feet	108,485			97,305		117,274		95,948		123,918
2nd generation TI/square foot/lease year	$6.40			$4.07		$5.06		$4.79		$5.18
Leasing commissions/square foot/lease year	$1.30			$1.06		$1.60		$1.29		$1.05
WALT (in months) ³	74.8			75.3		69.0		74.3		60.7

All
Square feet	501,981			439,919		498,835		852,159		490,442
2nd generation TI/square foot/lease year	$3.23			$2.41		$3.67		$2.51		$2.71
Leasing commissions/square foot/lease year	$1.00			$0.88		$1.10		$0.92		$0.60
Leasing commitments as a % of annual net rent	21.3		%	14.9	%	21.0	%	14.0	%	15.7	%
WALT (in months) ³	51.5			52.7		59.5		57.2		55.0


1	Acquisitions exclude the first quarter of 2020 purchase of land previously ground leased totaling $1.6 million.


2	Planned capital expenditures for acquisitions include expected near-term fundings that were contemplated as part of the acquisition.


3	WALT = weighted average lease term.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 10

Debt Metrics

DOLLARS IN THOUSANDS



SUMMARY OF INDEBTEDNESS AS OF JUNE 30, 2020
	PRINCIPAL BALANCE	BALANCE ¹	INTEREST EXPENSE	MONTHS TO MATURITY	CONTRACTUAL RATE		EFFECTIVE RATE
Senior notes due April 2023	$250,000	$248,756	$2,399	34	3.75	%	3.95	%
Senior notes due May 2025 ²	250,000	248,647	2,469	58	3.88	%	4.08	%
Senior notes due January 2028	300,000	295,885	2,775	90	3.63	%	3.84	%
Senior notes due March 2030 ³	300,000	296,299	1,929	117	2.40	%	2.71	%
Total senior notes outstanding	$1,100,000	$1,089,587	$9,572	77	3.38	%	3.61	%
$700 million unsecured credit facility due May 2023	—	—	371	35	LIBOR + 0.90%		N/A
$200 million unsecured term loan facility due May 2024 ⁴	200,000	199,124	1,364	47	LIBOR + 1.00%		2.00	%
$150 million unsecured term loan facility due June 2026 ⁵	150,000	149,431	479	71	LIBOR + 1.60%		3.15	%
Mortgage notes payable, net	116,829	116,794	1,666	45	4.40	%	4.38	%
Total outstanding notes and bonds payable	$1,566,829	$1,554,936	$13,452	70	3.25	%	3.42	%
Total outstanding notes and bonds payable, net of cash	$1,523,149	$1,511,256
Interest cost capitalization			(286)
Unsecured credit facility fee and deferred financing costs			1,036
Financing lease right-of-use assets			240
Total quarterly consolidated interest expense			$14,442



DEBT MATURITIES SCHEDULE AS OF JUNE 30, 2020
	PRINCIPAL PAYMENTS								WEIGHTED AVERAGE RATE
	TERM LOANS		SENIOR NOTES		MORTGAGE NOTES		TOTAL		MORTGAGE NOTES		OTHER		TOTAL
2020					$2,023		$2,023		4.68	%	—	%	4.68	%
2021					17,751		17,751		5.52	%	—	%	5.52	%
2022					13,136		13,136		3.80	%	—	%	3.80	%
2023			$250,000		30,390		280,390		4.21	%	3.75	%	3.80	%
2024	$200,000				26,124		226,124		4.48	%	2.00	%	2.29	%
2025			250,000		2,096		252,096		5.10	%	3.88	%	3.89	%
2026	150,000				24,879		174,879		3.93	%	3.15	%	3.26	%
2027					430		430		6.17	%	—	%	6.17	%
2028			300,000				300,000		—	%	3.63	%	3.63	%
Thereafter			300,000				300,000		—	%	2.40	%	2.40	%
Total	$350,000		$1,100,000		$116,829		$1,566,829		4.40	%	3.16	%	3.25	%
Weighted average rate	2.49	%	3.38	%	4.40	%	3.25	%


1	Balances are reflected net of discounts and deferred financing costs and include premiums.


2	The effective interest rate includes the impact of the $1.7 million settlement of a forward-starting interest rate swap that is included in accumulated other comprehensive income on the Company's Condensed Consolidated Balance Sheets.


3	The effective interest rate includes the impact of the $4.3 million settlement of forward interest rate hedges that are included in accumulated other comprehensive income on the Company's Condensed Consolidated Balance Sheets.


4	The effective interest rate includes the impact of interest rate swaps on $75.0 million at a weighted average rate of 2.37% (plus the applicable margin rate, currently 100 basis points).


5	The effective interest rate includes the impact of interest rate swaps on $100.0 million at a weighted average rate of 2.23% (plus the applicable margin rate, currently 160 basis points).




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 11

Debt Covenants

DOLLARS IN THOUSANDS



SELECTED FINANCIAL DEBT COVENANTS TTM ENDED JUNE 30, 2020 ¹
	CALCULATION	REQUIREMENT	PER DEBT COVENANTS
Revolving credit facility and term loan ²
Leverage ratio ³	Total debt/total capital	Not greater than 60%	33.9	%
Secured leverage ratio	Total secured debt/total capital	Not greater than 30%	2.5	%
Unencumbered leverage ratio ³	Unsecured debt/unsecured real estate	Not greater than 60%	37.2	%
Fixed charge coverage ratio	EBITDA/fixed charges	Not less than 1.50x	4.4x
Unsecured coverage ratio	Unsecured EBITDA/unsecured interest	Not less than 1.75x	4.9x
Construction and development	CIP/total assets	Not greater than 15%	0.0	%
Asset investments	Mortgages & unimproved land/total assets	Not greater than 20%	0.9	%

Senior Notes due 2030 ⁴
Incurrence of total debt ³	Total debt/total assets	Not greater than 60%	33.9	%
Incurrence of debt secured by any lien	Secured debt/total assets	Not greater than 40%	2.5	%
Maintenance of total unsecured assets ³	Unencumbered assets/unsecured debt	Not less than 150%	295.4	%
Debt service coverage	EBITDA/interest expense	Not less than 1.5x	5.0x

Other Senior Notes ⁵
Incurrence of total debt ³	Total debt/total assets	Not greater than 60%	35.3	%
Incurrence of debt secured by any lien	Secured debt/total assets	Not greater than 40%	2.6	%
Maintenance of total unsecured assets ³	Unencumbered assets/unsecured debt	Not less than 150%	284.2	%
Debt service coverage	EBITDA/interest expense	Not less than 1.5x	4.9x

Other
Net debt to adjusted EBITDA ⁶	Net debt (debt less cash)/adjusted EBITDA	Not required	5.1x
Net debt to enterprise value ⁷	Net Debt/enterprise value	Not required	27.7	%


1	Does not include all financial and non-financial covenants and restrictions that are required by the Company's various debt agreements.


2	As part of the Company's amendment to the credit facility and term loan agreements during the second quarter of 2019, the financial covenants were updated to exclude the impact of the Topic 842, Lease Accounting from the covenant calculations.


3	As of June 30, 2020, the Company had cash of $43.7 million. These financial covenant results would improve if the Company used this cash to repay debt.


4	The financial covenants for the Senior Note due 2030 exclude the impact of Topic 842, Lease Accounting from the financial covenant calculations.


5	The senior note covenants calculations apply to the Senior Notes due 2025 and 2028. The Senior Notes due 2023 have similar covenants but contain a less restrictive definition of total assets.


6	Adjusted EBITDA is based on the current quarter results, annualized. See page 26 for a reconciliation of adjusted EBITDA. Net debt does not include lease liabilities.


7	Based on the closing price of $29.29 on June 30, 2020 and 136,048,171 shares outstanding. Debt does not include lease liabilities.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 12

Acquisition & Disposition Activity

DOLLARS IN THOUSANDS



ACQUISITION ACTIVITY
MARKET	TYPE ¹	MILES TO CAMPUS	ASSOCIATED HEALTH SYSTEM	CLOSING	PURCHASE PRICE	SQUARE FEET	LEASED %		CAP RATE ²
Los Angeles, CA	MOB	0.14	MemorialCare Health	1/3/2020	$42,000	86,986	79	%	5.3	%
Atlanta, GA	MOB	0.10	Wellstar Health System	2/13/2020	11,965	64,624	94	%	5.6	%
Raleigh, NC	MOB	0.04	WakeMed Health	2/25/2020	6,325	15,964	100	%	6.7	%
Colorado Springs, CO	MOB	1.60	None	3/9/2020	8,240	34,210	100	%	6.5	%
Denver, CO ³	MOB	0.24	UCHealth	3/13/2020	33,500	136,994	94	%	6.1	%
San Diego, CA	MOB	0.04	Palomar Health	7/1/2020	16,650	46,083	92	%	5.9	%
Los Angeles, CA	MOB	0.11	Cedars-Sinai/Huntington	7/17/2020	35,000	49,785	100	%	5.4	%
Seattle, WA	MOB	0.06	MultiCare Health System	7/23/2020	11,025	21,309	100	%	5.6	%
Atlanta, GA	MOB	0.13	Wellstar Health System	7/31/2020	20,452	48,145	100	%	6.2	%
Total ⁴					$185,157	504,100	93	%	5.7	%



DISPOSITION ACTIVITY
LOCATION	TYPE ¹	MILES TO CAMPUS	ASSOCIATED HEALTH SYSTEM	CLOSING	SALES PRICE	SQUARE FEET	LEASED %		CAP RATE ⁵
Springfield, MO	SF	NA	Mercy (St. Louis)	7/30/2020	$137,987	186,000	100	%	7.5	%
Edmond, OK	MOB	1.10	Mercy (St. Louis)	7/30/2020	106,469	200,000	100	%	7.5	%
Total ⁴					$244,456	386,000	100	%	7.5	%



HISTORICAL INVESTMENT ACTIVITY
	ACQUISITIONS		RE/DEVELOPMENT FUNDING		TOTAL INVESTMENTS		DISPOSITIONS
2016	$241,939		$45,343		$287,282		$94,683
2017	327,167		32,305		359,472		122,700
2018	111,450		35,567		147,017		98,691
2019	381,314		28,584		409,898		54,860
YTD 2020	185,157		12,580		197,737		244,456
Average (2016-2019)	265,468		35,450		300,917		92,734
% of Total	88.2	%	11.8	%	100.0	%


1	MOB = Medical office building; SF = Surgical facility


2	For acquisitions, cap rate represents the forecasted first year NOI divided by purchase price.


3	Includes three properties.


4	Total excludes the first quarter of 2020 purchase of land previously ground leased totaling $1.6 million.


5	For dispositions, cap rate represents the in-place cash NOI divided by sales price.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 13

Investment Activity

DOLLARS IN THOUSANDS



RE/DEVELOPMENT ACTIVITY
MARKET	TYPE		MILES TO CAMPUS		SQUARE FEET		BUDGET		FUNDINGS THRU 6/30/20		REMAINING FUNDINGS		LEASED %		EXPECTED QTR NOI AT LEASED %	EXPECTED STABILIZED YIELD		ASSOCIATED HEALTH SYSTEM
Memphis, TN ¹	Redev		0.26		110,883		$30,200		$11,019		$19,181		94	%	$540	7.6	%	Baptist Memorial

	EXPECTED NOI AND OCCUPANCY RAMP UP TO LEASED %
	Q2 2020		Q3 2020		Q4 2020		Q1 2021		Q2 2021		Q3 2021		Q4 2021
Cash NOI	—		—		—		$211		$428		$528		$540
Average occupancy	44	%	44	%	44	%	58	%	76	%	87	%	94	%



RECENT RE/DEVELOPMENT COMPLETION
MARKET	TYPE	INITIAL OCCUPANCY	SQUARE FEET	BUDGET	Q2 2020 AVERAGE OCCUPANCY		Q2 2020 NOI	LEASED %		EXPECTED QTR NOI AT LEASED %	EXPECTED STABILIZED YIELD
Seattle, WA	Dev	Q1 2020	151,031	$64,120	40	%	$467	60	%	$617	7.0	%


1	The project includes the acquisition of a 110,883 square foot medical office building for $8.7 million and redevelopment costs related to the property.


2	Does not reflect the impact of capitalized interest that will be reduced at lease commencement.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 14

Portfolio ¹

DOLLARS IN THOUSANDS



MARKETS (BY SQUARE FEET)
				MOB 95.0%				NON-MOB 5.0%
MARKET	MSA RANK	INVESTMENT	COUNT	MULTI-TENANT		SINGLE-TENANT		INPATIENT/SURGICAL		OFFICE		TOTAL		% OF TOTAL
Dallas, TX	4	$521,378	25	2,073,198				156,245		145,365		2,374,808		15.4	%
Seattle, WA	15	645,180	26	1,456,720		67,510						1,524,230		9.9	%
Nashville, TN	36	204,259	6	766,523						108,691		875,214		5.7	%
Charlotte, NC	22	181,973	16	860,735								860,735		5.6	%
Los Angeles, CA	2	292,718	15	796,783				63,000				859,783		5.6	%
Denver, CO	19	187,736	12	694,362						93,869		788,231		5.1	%
Houston, TX	5	149,447	9	563,760						57,170		620,930		4.0	%
Atlanta, GA	9	228,707	10	588,641		19,732						608,373		3.9	%
Richmond, VA	44	150,261	7	548,801								548,801		3.5	%
Des Moines, IA	82	138,726	7	197,994		181,961				152,655		532,610		3.4	%
Indianapolis, IN	33	119,852	4	526,194								526,194		3.4	%
Memphis, TN	43	99,594	7	515,876								515,876		3.3	%
Washington, DC	6	151,269	6	507,336								507,336		3.3	%
San Antonio, TX	24	96,224	6	473,673								473,673		3.1	%
Austin, TX	29	108,383	5	375,333								375,333		2.4	%
Chicago, IL	3	93,728	3	352,800								352,800		2.3	%
Honolulu, HI	56	144,274	3	298,427								298,427		1.9	%
San Francisco, CA	12	120,009	3	286,270								286,270		1.9	%
Colorado Springs, CO	78	64,641	4	275,434								275,434		1.8	%
Miami, FL	7	59,672	4	241,980								241,980		1.6	%
Minneapolis, MN	16	64,556	4	172,900		34,608						207,508		1.3	%
Other (15 markets)		421,483	28	1,517,806		287,874						1,805,680		11.6	%
Total		$4,244,070	210	14,091,546		591,685		219,245		557,750		15,460,226		100.0	%
Number of properties				193		10		2		5		210
% of square feet				91.2	%	3.8	%	1.4	%	3.6	%	100.0	%
Investment¹				$3,847,628		$146,567		$110,228		$139,647		$4,244,070
Quarterly cash NOI				$64,955		$3,021		$2,778		$1,608		$72,362
% of cash NOI				89.8	%	4.2	%	3.8	%	2.2	%	100.0	%



BY BUILDING TYPE
	MOB TOTAL		MULTI-TENANT		SINGLE-TENANT		TOTAL
Number of properties	203		198		12		210
Square feet	14,683,231		14,649,296		810,930		15,460,226
% of square feet	95.0	%	94.8	%	5.2	%	100.0	%
Occupancy %	86.3	%	86.1	%	100.0	%	86.8	%
Investment¹	$3,994,195		$3,987,275		$256,795		$4,244,070
Quarterly cash NOI	$67,976		$66,563		$5,799		$72,362
% of cash NOI	94.0	%	92.0	%	8.0	%	100.0	%


1	Excludes assets held for sale, land held for development, construction in progress, Memphis Redevelopment and corporate property.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 15

Associated Health Systems ¹



MOB PORTFOLIO (BY SQUARE FEET)
	SYSTEM RANK ³	CREDIT RATING	ASSOCIATED 94.7%²						OFF CAMPUS			% OF TOTAL MOB
HEALTH SYSTEM	SYSTEM RANK ³	CREDIT RATING	ON		ADJACENT ⁴		ANCHORED ⁵		OFF CAMPUS		TOTAL MOB	% OF TOTAL MOB
Baylor Scott & White Health	20	AA-/Aa3	1,644,096		280,941		163,188		—		2,088,225	14.2	%
Ascension Health	3	AA+/Aa2	1,080,681		156,328		—		—		1,237,009	8.4	%
CommonSpirit Health ⁶	5	BBB+/Baa1	807,182		311,310		95,486		—		1,213,978	8.3	%
Atrium Health	25	AA-/Aa3	393,815		98,066		313,513		—		805,394	5.5	%
Tenet Healthcare	6	B/B2	570,264		67,790		—		—		638,054	4.4	%
UW Medicine (Seattle)	92	AA+/Aaa	345,567		102,540		44,166		125,543		617,816	4.2	%
Bon Secours Mercy Health	21	A+/A1	548,801		—		—		—		548,801	3.7	%
Wellstar Health System	75	A/A2	476,054		64,624		—		—		540,678	3.7	%
Indiana University Health	26	AA/Aa2	423,628		102,566		—		—		526,194	3.6	%
Baptist Memorial Health Care	90	BBB+/--	424,306		—		39,345		52,225		515,876	3.5	%
UCHealth	46	AA/Aa3	150,291		298,093		33,850		—		482,234	3.3	%
HCA	1	BB+/Ba2	177,340		167,017		—		78,305		422,662	2.9	%
Trinity Health	7	AA-/Aa3	267,952		73,331		—		—		341,283	2.3	%
Providence St. Joseph Health	4	AA-/Aa3	176,854		129,181		—		—		306,035	2.1	%
Hawaii Pacific Health	182	--/A1	173,502		—		—		124,925		298,427	2.0	%
Inova Health System	70	AA+/Aa2	262,121		—		—		—		262,121	1.8	%
Medstar Health	45	A/A2	241,739		—		—		—		241,739	1.6	%
Advocate Aurora Health Care	14	AA/Aa3	142,955		95,436		—		—		238,391	1.6	%
Overlake Health System	294	A/A2	191,051		39,659		—		—		230,710	1.6	%
MultiCare Health System	82	AA-/Aa3	154,452		63,039		—		—		217,491	1.5	%
Memorial Hermann	39	A+/A1	—		206,090		—		—		206,090	1.4	%
Other (24 credit rated systems)			1,097,481		962,796		146,689		—		2,206,966	15.0	%
Subtotal - credit rated⁷			9,750,132		3,218,807		836,237		380,998		14,186,174	96.6	%
Non-credit rated			102,555		—		—		394,502		497,057	3.4	%
Total			9,852,687		3,218,807		836,237		775,500		14,683,231	100.0	%
% of total			67.1	%	21.9	%	5.7	%	5.3	%


1	Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.


2	Includes total square feet of buildings located on-campus, adjacent and off-campus/anchored by healthcare systems.


3	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.


4	The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.


5	Includes buildings where health systems lease 40% or more of the property.


6	Previously Catholic Health Initiatives.


7	Based on square footage, 88.6% is associated with an investment-grade rated healthcare provider.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 16

Top Tenants ¹




			# OF ASSOCIATED PROPERTIES		LEASED SQUARE FEET
TENANT	SYSTEM RANK ²	CREDIT RATING	# OF ASSOCIATED PROPERTIES	# OF LEASES	MOB	INPATIENT	TOTAL	% OF TOTAL LEASED		% OF TTM REVENUE
Baylor Scott & White Health	20	AA-/Aa3	21	150	914,356	156,245	1,070,601	8.0	%	8.3	%
Atrium Health	25	AA-/Aa3	16	73	641,245	—	641,245	4.8	%	4.2	%
CommonSpirit Health ³	5	BBB+/Baa1	17	75	570,434	—	570,434	4.2	%	4.0	%
Indiana University Health	26	AA/Aa2	4	62	439,971	—	439,971	3.3	%	2.9	%
Ascension Health	3	AA+/Aa2	11	65	384,575	—	384,575	2.9	%	2.6	%
WellStar Health System	75	A/A2	8	51	347,821	—	347,821	2.6	%	2.2	%
UW Medicine (Seattle)	92	AA+/Aaa	9	27	230,152	—	230,152	1.7	%	1.9	%
Bon Secours Mercy Health	21	A+/A1	7	59	276,541	—	276,541	2.1	%	1.8	%
Proliance Surgeons	-	–	7	18	146,539	—	146,539	1.1	%	1.6	%
UCHealth	46	AA/Aa3	8	14	221,718	—	221,718	1.7	%	1.6	%
Baptist Memorial Health Care	90	BBB+/--	7	25	193,187	—	193,187	1.4	%	1.4	%
Medstar Health	45	A/A2	3	53	151,463	—	151,463	1.1	%	1.4	%
Tenet Healthcare	6	B/B2	10	32	124,702	63,000	187,702	1.4	%	1.2	%
Trinity Health	7	AA-/Aa3	3	31	165,250	—	165,250	1.2	%	1.1	%
Providence St. Joseph Health	4	AA-/Aa3	6	22	100,739	—	100,739	0.7	%	1.0	%
USPI ⁴	-	–	6	11	124,590	—	124,590	0.9	%	1.0	%
Eating Recovery Center	-	B-/Caa1	4	6	100,946	—	100,946	0.8	%	1.0	%
Hawaii Pacific Health	182	--/A1	3	35	91,534	—	91,534	0.7	%	0.9	%
MultiCare Health System	82	AA-/Aa3	4	17	128,892	—	128,892	1.0	%	0.9	%
DaVita	-	BB/Ba2	11	13	115,646	—	115,646	0.9	%	0.9	%
Inova Health	70	AA+/Aa2	3	10	90,533	—	90,533	0.7	%	0.8	%
Labcorp of America	-	BBB/Baa2	22	24	175,012	—	175,012	1.3	%	0.8	%
Kaiser Permanente	2	AA-/--	3	9	101,830	—	101,830	0.8	%	0.7	%
Memorial Hermann	39	A+/A1	2	2	99,874	—	99,874	0.7	%	0.7	%
Overlake Health System	294	A/A2	2	8	73,676	—	73,676	0.5	%	0.6	%
HCA	1	BB+/Ba2	6	14	84,358	—	84,358	0.6	%	0.6	%
Allina Health	57	AA-/Aa3	2	8	66,474	—	66,474	0.5	%	0.6	%
Advocate Health Care	14	AA/Aa3	2	10	58,027	—	58,027	0.4	%	0.5	%
Cedars-Sinai Health	51	--/Aa3	1	14	47,661	—	47,661	0.4	%	0.5	%
Total				938	6,267,746	219,245	6,486,991	48.4	%	47.7	%


1	Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.


2	Ranked by revenue based on Modern Healthcare's Healthcare Systems Financials Database.


3	Previously Catholic Health Initiatives.


4	As of June 30, 2020, USPI is approximately 95% owned by Tenet Health.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 17

MOB Proximity to Hospital ^{1, 2}



MEDICAL OFFICE BUILDINGS BY LOCATION
	2Q 2020		1Q 2020		4Q 2019		3Q 2019		2Q 2019		1Q 2019
On campus	67.1	%	66.2	%	67.4	%	68.4	%	68.9	%	70.0	%
Adjacent to campus ³	21.9	%	21.6	%	20.2	%	19.3	%	18.7	%	17.9	%
Total on/adjacent	89.0	%	87.8	%	87.6	%	87.7	%	87.6	%	87.9	%
Off campus - anchored by health system ⁴	5.7	%	7.0	%	7.2	%	6.7	%	7.3	%	7.6	%
Off campus	5.3	%	5.2	%	5.2	%	5.6	%	5.1	%	4.5	%
	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



DISTANCE TO HOSPITAL CAMPUS
									GROUND LEASE PROPERTIES
GREATER THAN	LESS THAN OR EQUAL TO	# OF PROPERTIES	SQUARE FEET	% OF TOTAL		CUMULATIVE %		CAMPUS PROXIMITY	SQUARE FEET	% OF TOTAL
	0.00	123	9,852,687	67.1	%	67.1	%	On campus	7,667,107	89.4	%
0.00	250 yards	32	1,907,746	13.0	%	80.1	%	Adjacent ³	128,717	1.5	%
250 yards	0.25 miles	24	1,311,061	8.9	%	89.0	%	Adjacent ³	120,036	1.4	%
0.25 miles	0.50	4	286,818	2.0	%	91.0	%	Off campus	124,925	1.4	%
0.50	1.00	2	280,873	1.9	%	92.9	%		—	—	%
1.00	2.00	5	353,656	2.4	%	95.3	%		319,446	3.7	%
2.00	5.00	7	352,316	2.4	%	97.7	%		13,818	0.2	%
5.00	10.00	3	205,631	1.4	%	99.1	%		205,631	2.4	%
10.00		3	132,443	0.9	%	100.0	%		—	—	%
Total		203	14,683,231	100.0	%				8,579,680	100.0	%


1	Excludes construction in progress, Memphis Redevelopment and assets classified as held for sale.


2	Proximity to hospital campus includes acute care hospitals with inpatient beds. The Company does not consider inpatient rehab hospitals (IRFs), skilled nursing facilities (SNFs) or long-term acute care hospitals (LTACHs) to be hospital campuses for distance calculations.


3	The Company defines an adjacent property as being no more than 0.25 miles from a hospital campus.


4	Includes buildings where health systems lease 40% or more of the property.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 18

Lease Maturity, Lease & Building Size ¹



LEASE MATURITY SCHEDULE
	MULTI-TENANT				SINGLE-TENANT				TOTAL
	# OF LEASES	SQUARE FEET	% OF SQUARE FEET		# OF LEASES	SQUARE FEET	% OF SQUARE FEET		# OF LEASES	SQUARE FEET	% OF TOTAL SQUARE FEET		% OF BASE REVENUE ²
2020	407	1,629,705	12.9	%	—	—	—	%	407	1,629,705	12.1	%	12.2	%
2021	568	1,888,504	15.1	%	1	83,318	10.3	%	569	1,971,822	14.7	%	14.4	%
2022	502	1,751,462	13.9	%	1	58,285	7.2	%	503	1,809,747	13.5	%	13.9	%
2023	390	1,656,629	13.1	%	—	—	—	%	390	1,656,629	12.3	%	12.8	%
2024	415	1,923,278	15.2	%	1	63,000	7.7	%	416	1,986,278	14.8	%	14.4	%
2025	254	1,188,079	9.4	%	2	91,561	11.3	%	256	1,279,640	9.5	%	9.1	%
2026	120	480,383	3.8	%	—	—	—	%	120	480,383	3.6	%	3.2	%
2027	100	433,745	3.4	%	1	156,245	19.3	%	101	589,990	4.4	%	5.6	%
2028	102	591,927	4.7	%	1	35,419	4.4	%	103	627,346	4.7	%	4.4	%
2029	104	602,664	4.8	%	3	165,342	20.4	%	107	768,006	5.7	%	5.9	%
Thereafter	102	465,881	3.7	%	2	157,760	19.4	%	104	623,641	4.7	%	4.1	%
Total leased	3,064	12,612,257	86.1	%	12	810,930	100.0	%	3,076	13,423,187	86.8	%	100.0	%
Total building		14,649,296	100.0	%		810,930	100.0	%		15,460,226	100.0	%
WALTR (months) ³		42.2				77.4				44.3
WALT (months) ³		86.1				165.1				90.9



# OF LEASES BY SIZE			BY BUILDING SIZE
LEASED SQUARE FEET	MULTI-TENANT ⁴	SINGLE-TENANT	BUILDING SQUARE FEET	% OF TOTAL		TOTAL SQUARE FOOTAGE	AVERAGE SQUARE FEET	# OF PROPERTIES
0 - 2,500	1,631	—	>100,000	40.2	%	6,216,108	144,561	43
2,501 - 5,000	759	—	<100,000 and >75,000	26.2	%	4,055,599	86,289	47
5,001 - 7,500	244	—	<75,000 and >50,000	17.9	%	2,763,848	62,815	44
7,501 - 10,000	145	—	<50,000 and >25,000	13.3	%	2,060,730	38,162	54
10,001 +	285	12	<25,000	2.4	%	363,941	16,543	22
Total Leases	3,064	12	Total	100.0	%	15,460,226	73,620	210


1	Excludes land held for development, construction in progress, Memphis Redevelopment, corporate property and assets classified as held for sale.


2	Represents the current annualized minimum rents on in-place leases, excluding the impact of potential lease renewals and straight-line rent.


3	WALTR = weighted average lease term remaining; WALT = weighted average lease term.


4	The average lease size in the multi-tenant properties is 4,116 square feet.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 19

Historical Occupancy ¹

DOLLARS IN THOUSANDS



SAME STORE PROPERTIES
	2Q 2020		1Q 2020		4Q 2019		3Q 2019		2Q 2019		1Q 2019
Multi-tenant
Number of properties	161		157		157		149		147		150
Total building square feet	12,519,841		12,243,069		12,243,069		11,675,944		11,533,207		11,432,246
Period end % occupied	87.7	%	87.9	%	88.3	%	87.6	%	88.3	%	88.1	%
Single-tenant
Number of properties	12		14		14		14		14		14
Total building square feet	810,930		1,196,930		1,196,930		1,252,198		1,252,198		1,252,198
Period end % occupied	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Total same store properties
Number of properties	173		171		171		163		161		164
Total building square feet	13,330,771		13,439,999		13,439,999		12,928,142		12,785,405		12,684,444
Period end % occupied	88.4	%	89.0	%	89.3	%	88.8	%	89.5	%	89.3	%

PROPERTIES NOT IN SAME STORE
	2Q 2020		1Q 2020		4Q 2019		3Q 2019		2Q 2019		1Q 2019
Acquisitions ²
Number of properties	26		31		24		30		27		24
Total building square feet	1,455,265		1,826,029		1,487,251		1,935,189		1,803,890		1,648,552
Period end % occupied	89.2	%	86.9	%	86.1	%	90.1	%	91.1	%	91.0	%
Development completions
Number of properties	1		1		—		—		1		1
Total building square feet	151,031		151,031		—		—		99,957		99,957
Period end % occupied	60.5	%	20.2	%	—	%	—	%	41.8	%	41.8	%
% leased	60.5	%	60.0	%	—	%	—	%	44.9	%	41.8	%
Reposition ³
Number of properties	10		9		9		11		12		12
Total building square feet	523,159		429,167		429,167		567,252		577,390		577,390
Period end % occupied	46.9	%	41.9	%	41.9	%	36.0	%	38.7	%	39.1	%

TOTAL PROPERTIES
	2Q 2020		1Q 2020		4Q 2019		3Q 2019		2Q 2019		1Q 2019
Number of properties	210		212		204		204		201		201
Total building square feet	15,460,226		15,846,226		15,356,417		15,430,583		15,266,642		15,010,343
Period end % occupied	86.8	%	86.8	%	87.7	%	87.0	%	87.4	%	87.2	%


1	Excludes land held for development, construction in progress, Memphis Redevelopment, corporate property and assets classified as held for sale.


2	Acquisition includes properties acquired within the last 8 quarters of the period presented and are excluded from same store.


3	Reposition includes properties that meet any of the Company-defined criteria: properties having less than 60% occupancy that is expected to last at least two quarters; properties that experience a loss of occupancy over 30% in a single quarter; or properties with negative net operating income that is expected to last at least two quarters.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 20

Occupancy Reconciliation

SQUARE FEET



SEQUENTIAL
	PORTFOLIO								SAME STORE
	COUNT		OCCUPIED		TOTAL		%		COUNT		OCCUPIED		TOTAL		%
Beginning March 31, 2020	212		13,752,539		15,846,226		86.8	%	171		11,956,008		13,439,999		89.0	%
Portfolio activity
Acquisitions	—		—		—		—	%	NA		NA		NA		NA
Re/development completions	—		—		—		—	%	—		—		—		—	%
Dispositions ¹	(2	)	(386,000	)	(386,000	)	100.0	%	(2	)	(386,000	)	(386,000	)	100.0	%
Same store reclassifications
Acquisitions	NA		NA		NA		NA		4		262,092		276,772		94.7	%
Development completions	NA		NA		NA		NA		—		—		—		—	%
Reposition to same store	NA		NA		NA		NA		—		—		—		—	%
Reposition from same store	NA		NA		NA		NA		—		—		—		—	%
	210		13,366,539		15,460,226		86.5	%	173		11,832,100		13,330,771		88.8	%
Leasing activity
New leases/expansions	NA		179,220		NA		NA		NA		68,033		NA		NA
Move-outs/contractions	NA		(122,572	)	NA		NA		NA		(111,914	)	NA		NA
Net absorption	NA		56,648		NA		NA		NA		(43,881	)	NA		NA
Ending June 30, 2020	210		13,423,187		15,460,226		86.8	%	173		11,788,219		13,330,771		88.4	%

YEAR-OVER-YEAR
	PORTFOLIO								SAME STORE
	COUNT		OCCUPIED		TOTAL		%		COUNT		OCCUPIED		TOTAL		%
Beginning June 30, 2019	201		13,349,603		15,266,642		87.4	%	161		11,440,491		12,785,405		89.5	%
Portfolio activity
Acquisitions	16		639,934		719,404		89.0	%	NA		NA		NA		NA
Re/development completions	1		30,445		151,031		20.2	%	—		—		—		—	%
Dispositions ¹	(8	)	(556,255	)	(676,851	)	82.2	%	(5	)	(523,622	)	(528,628	)	99.1	%
Same store reclassifications
Acquisitions	NA		NA		NA		NA		17		972,857		1,073,994		90.6	%
Development completions	NA		NA		NA		NA		—		—		—		—	%
Reposition to same store	NA		NA		NA		NA		—		—		—		—	%
Reposition from same store	NA		NA		NA		NA		—		—		—		—	%
	210		13,463,727		15,460,226		87.1	%	173		11,889,726		13,330,771		89.2	%
Leasing activity
New leases/expansions	NA		546,300		NA		NA		NA		369,445		NA		NA
Move-outs/contractions	NA		(586,840	)	NA		NA		NA		(470,952	)	NA		NA
Net absorption	NA		(40,540	)	NA		NA		NA		(101,507	)	NA		NA
Ending June 30, 2020	210		13,423,187		15,460,226		86.8	%	173		11,788,219		13,330,771		88.4	%


1	Includes properties reclassified as held for sale.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 21

Same Store Leasing Statistics¹




	2Q 2020		1Q 2020		4Q 2019		3Q 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018
Average in-place contractual increases
Multi-tenant	2.89	%	2.89	%	2.90	%	2.93	%	2.91	%	2.91	%	2.91	%	2.88	%
Single-tenant	2.13	%	2.10	%	2.10	%	2.12	%	2.43	%	2.46	%	2.45	%	2.42	%
	2.83	%	2.79	%	2.80	%	2.82	%	2.84	%	2.85	%	2.84	%	2.82	%
Multi-tenant renewals
Cash leasing spreads	4.5	%	4.4	%	4.2	%	3.3	%	5.0	%	3.3	%	(0.5	%)	3.8	%
Tenant retention rate	84.6	%	84.0	%	86.6	%	90.2	%	87.4	%	85.5	%	82.6	%	87.0	%



AVERAGE IN-PLACE CONTRACTUAL INCREASES ²
	MULTI-TENANT				SINGLE-TENANT				TOTAL
	% INCREASE		% OF BASE RENT		% INCREASE		% OF BASE RENT		% INCREASE		% OF BASE RENT
Annual increase
CPI	2.33	%	2.44	%	0.65	%	11.42	%	1.87	%	3.12	%
Fixed	2.99	%	92.88	%	2.65	%	36.70	%	2.98	%	88.65	%
Non-annual increase (annualized)
CPI	1.85	%	0.70	%	0.50	%	4.59	%	1.38	%	0.99	%
Fixed	1.32	%	3.00	%	2.25	%	47.29	%	1.84	%	6.33	%
No increase
Term > 1 year	—	%	0.98	%	—	%	—	%	—	%	0.91	%
Total ²	2.89	%	100.00	%	2.13	%	100.00	%	2.83	%	100.00	%



TYPE AND OWNERSHIP STRUCTURE (% OF SQUARE FEET)
	MULTI-TENANT		SINGLE-TENANT		TOTAL
Tenant type
Hospital	50.8	%	83.0	%	53.0	%
Physician and other	49.2	%	17.0	%	47.0	%

Lease structure
Gross	11.8	%	—	%	11.0	%
Modified gross	29.2	%	—	%	27.2	%
Net	59.0	%	—	%	54.9	%
Absolute net ³	—	%	100.0	%	6.9	%

Ownership type
Ground lease	62.5	%	15.6	%	59.7	%
Fee simple	37.5	%	84.4	%	40.3	%


1	Excludes recently acquired or disposed properties, construction in progress, Memphis Redevelopment, land held for development, corporate property, reposition properties and assets classified as held for sale.


2	Excludes leases with terms of one year or less.


3	Tenant is typically responsible for operating expenses and capital obligations.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 22

Same Store Performance ¹

DOLLARS IN THOUSANDS, EXCEPT PER SQUARE FOOT DATA




	TTM 2020		2Q 2020		1Q 2020		4Q 2019		3Q 2019		TTM 2019		2Q 2019		1Q 2019		4Q 2018		3Q 2018
Multi-tenant
Revenues	$392,148		$96,939		$99,068		$97,974		$98,167		$385,247		$97,002		$95,883		$96,158		$96,204
Expenses	157,490		37,941		40,198		39,056		40,295		155,293		38,744		38,293		38,619		39,637
Cash NOI	$234,658		$58,998		$58,870		$58,918		$57,872		$229,954		$58,258		$57,590		$57,539		$56,567
Revenue per occ SF ²	$35.52		$35.25		$35.87		$35.43		$35.49		$34.80		$35.11		$34.68		$34.70		$34.74
Margin	59.8	%	60.9	%	59.4	%	60.1	%	59.0	%	59.7	%	60.1	%	60.1	%	59.8	%	58.8	%
Average occupancy	88.2	%	87.9	%	88.2	%	88.3	%	88.4	%	88.4	%	88.3	%	88.3	%	88.6	%	88.5	%
Number of properties	161		161		161		161		161		161		161		161		161		161
Single-tenant
Revenues	$25,755		$6,224		$6,533		$6,495		$6,503		$25,112		$6,491		$6,217		$6,182		$6,222
Expenses	2,271		425		612		601		633		1,799		604		396		377		422
Cash NOI	$23,484		$5,799		$5,921		$5,894		$5,870		$23,313		$5,887		$5,821		$5,805		$5,800
Revenue per occ SF ²	$31.76		$30.70		$32.22		$32.03		$32.07		$30.96		$32.01		$30.66		$30.49		$30.69
Average occupancy	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Number of properties	12		12		12		12		12		12		12		12		12		12
Total
Revenues	$417,903		$103,163		$105,601		$104,469		$104,670		$410,359		$103,493		$102,100		$102,340		$102,426
Expenses	159,761		38,366		40,810		39,657		40,928		157,092		39,348		38,689		38,996		40,059
Cash NOI	$258,142		$64,797		$64,791		$64,812		$63,742		$253,267		$64,145		$63,411		$63,344		$62,367
Revenue per occ SF ²	$35.27		$34.94		$35.62		$35.20		$35.26		$34.54		$34.90		$34.41		$34.41		$34.46
Margin	61.8	%	62.8	%	61.4	%	62.0	%	60.9	%	61.7	%	62.0	%	62.1	%	61.9	%	60.9	%
Average occupancy	88.9	%	88.6	%	88.9	%	89.0	%	89.1	%	89.1	%	89.0	%	89.0	%	89.2	%	89.2	%
Number of properties	173		173		173		173		173		173		173		173		173		173



SAME STORE GROWTH
	YEAR-OVER-YEAR
	TTM 2020		2Q 2020		1Q 2020		4Q 2019		3Q 2019
Multi-tenant
Revenue per occ SF ²	2.1	%	0.4	%	3.4	%	2.1	%	2.2	%
Avg occupancy (bps)	-20		-40		-10		-20		-10
Revenues	1.8	%	(0.1	%)	3.3	%	1.9	%	2.0	%
Expenses	1.4	%	(2.1	%)	5.0	%	1.1	%	1.7	%
Cash NOI	2.0	%	1.3	%	2.2	%	2.4	%	2.3	%
Single-tenant
Cash NOI	0.7	%	(1.5	%)	1.7	%	1.5	%	1.2	%
Total
Revenues	1.8	%	(0.3	%)	3.4	%	2.1	%	2.2	%
Cash NOI	1.9	%	1.0	%	2.2	%	2.3	%	2.2	%


1	Excludes recently acquired or disposed properties, development completions, construction in progress, Memphis Redevelopment, land held for development, corporate property, reposition properties and assets classified as held for sale.


2	Revenue per occ SF is calculated by dividing revenue by the average of the occupied SF for the period provided. Quarterly revenue per occ SF is annualized.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 23

NOI Reconciliations

DOLLARS IN THOUSANDS



BOTTOM UP RECONCILIATION
	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018
Net income		$75,513			$4,315			$27,210			$2,601			$4,484			$4,891			$16,314			$6,548
Other income (expense)	(53,959		)	13,927			(6,218		)	13,981			15,354			13,564			2,850			12,135
General and administrative expense	7,434			8,766			7,669			10,802			7,845			8,510			8,534			8,504
Depreciation and amortization expense	47,691			47,497			46,134			45,137			43,926			42,662			42,437			42,061
Other expenses ¹	2,185			3,365			2,200			2,079			1,965			1,768			1,693			1,457
Straight-line rent expense	374			375			378			383			387			391			394			398
Straight-line rent revenue	(764		)	(1,043		)	(1,167		)	(770		)	(395		)	(668		)	(682		)	(802		)
Other revenue ²	(3,213		)	(2,004		)	(1,430		)	(1,726		)	(1,447		)	(1,468		)	(1,523		)	(1,288		)
Cash NOI		$75,261			$75,198			$74,776			$72,487			$72,119			$69,650			$70,017			$69,013
Acquisitions/development completions	(6,647		)	(5,654		)	(4,780		)	(3,171		)	(2,067		)	(276		)	(74		)	(28		)
Dispositions/other	(3,443		)	(4,568		)	(5,010		)	(5,325		)	(5,357		)	(5,524		)	(6,207		)	(6,058		)
Same store cash NOI and reposition	65,171			64,976			64,986			63,991			64,695			63,850			63,736			62,927
Reposition	(374		)	(185		)	(174		)	(249		)	(550		)	(439		)	(392		)	(560		)
Same store cash NOI		$64,797			$64,791			$64,812			$63,742			$64,145			$63,411			$63,344			$62,367

TOP DOWN RECONCILIATION
	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018
Property operating before rent concessions		$111,676			$112,022			$108,029			$106,319			$103,245			$99,607			$99,877			$99,976
Rent concessions	(600		)	(874		)	(493		)	(514		)	(427		)	(625		)	(700		)	(609		)
Property operating	111,076			111,148			107,536			105,805			102,818			98,982			99,177			99,367
Single-tenant net lease	10,518			10,453			10,735			11,165			11,138			11,046			11,290			11,283
Straight-line rent revenue	764			1,043			1,167			770			395			668			682			802
Rental income	122,358			122,644			119,438			117,740			114,351			110,696			111,149			111,452
Property lease guaranty income	—			—			—			—			—			128			187			168
Parking income	1,227			2,051			1,982			1,935			1,870			1,734			1,733			1,752
Exclude straight-line rent revenue	(764		)	(1,043		)	(1,167		)	(770		)	(395		)	(668		)	(682		)	(802		)
Exclude other non-cash revenue ³	(3,108		)	(1,892		)	(1,326		)	(1,601		)	(1,350		)	(1,369		)	(1,423		)	(1,198		)
Revenue	119,713			121,760			118,927			117,304			114,476			110,521			110,964			111,372
Property operating expense	(46,580		)	(49,552		)	(46,214		)	(46,777		)	(44,286		)	(42,725		)	(42,815		)	(44,135		)
Exclude non-cash expenses ⁴	2,128			2,990			2,063			1,960			1,929			1,854			1,868			1,776
Cash NOI		$75,261			$75,198			$74,776			$72,487			$72,119			$69,650			$70,017			$69,013
Acquisitions/development completions	(6,647		)	(5,654		)	(4,780		)	(3,171		)	(2,067		)	(276		)	(74		)	(28		)
Dispositions/other	(3,443		)	(4,568		)	(5,010		)	(5,325		)	(5,357		)	(5,524		)	(6,207		)	(6,058		)
Same store cash NOI and reposition	65,171			64,976			64,986			63,991			64,695			63,850			63,736			62,927
Reposition	(374		)	(185		)	(174		)	(249		)	(550		)	(439		)	(392		)	(560		)
Same store cash NOI		$64,797			$64,791			$64,812			$63,742			$64,145			$63,411			$63,344			$62,367


1	Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, and leasing commission amortization.


2	Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease termination fees and tenant improvement overage amortization.


3	Includes above and below market lease intangibles, interest income related to sales-type leases, lease inducements, lease termination fees and TI amortization.


4	Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 24

NOI Reconciliations

DOLLARS IN THOUSANDS



RECONCILIATION OF TTM ENDED 6/30/2020 - CASH NOI
	TTM 2020		TTM 2019		% CHANGE
Same store cash NOI		$258,142		$253,267	1.9	%
Reposition	982		1,941		(49.4	%)
		$259,124		$255,208	1.5	%
Acquisitions/development completions	20,252		2,445		728.4	%
Dispositions/other	18,346		23,146		(20.7	%)
Cash NOI		$297,722		$280,799	6.0	%



RECONCILIATION OF NOI TO FFO AND NORMALIZED FFO
	2Q 2020			1Q 2020			4Q 2019			3Q 2019			2Q 2019			1Q 2019			4Q 2018			3Q 2018
Cash NOI		$75,261			$75,198			$74,776			$72,487			$72,119			$69,650			$70,017			$69,013
General and administrative expense	(7,434		)	(8,766		)	(7,669		)	(10,802		)	(7,845		)	(8,510		)	(8,534		)	(8,504		)
Straight-line rent	764			1,043			1,167			770			395			668			682			802
Interest and other income (expense), net	134			82			5			—			(743		)	9			(35		)	41
Management fees and other income	105			112			103			124			96			99			99			90
Bad debts, net of recoveries	—			—			—			—			—			—			(18		)	62
Other non-cash revenue ¹	3,108			1,892			1,326			1,601			1,350			1,369			1,423			1,198
Other non-cash expenses ²	(2,128		)	(2,990		)	(2,063		)	(1,960		)	(1,929		)	(1,854		)	(1,868		)	(1,776		)
Debt Covenant EBITDA		$69,810			$66,571			$67,645			$62,220			$63,443			$61,431			$61,766			$60,926
Interest expense	(14,442		)	(13,960		)	(13,816		)	(14,181		)	(13,850		)	(13,588		)	(13,602		)	(13,464		)
Acquisition and pursuit costs	(431		)	(750		)	(515		)	(501		)	(422		)	(305		)	(200		)	(141		)
Leasing commission amortization ³	1,795			1,893			1,667			1,547			1,505			1,404			1,415			1,319
Depreciation expense of unconsolidated JVs ⁴	80			80			80			80			80			80			80			80
Lease intangible amortization ⁵	—			—			—			—			—			—			238			108
Non-real estate depreciation and amortization	(909		)	(859		)	(838		)	(838		)	(829		)	(763		)	(790		)	(845		)
FFO		$55,903			$52,975			$54,223			$48,327			$49,927			$48,259			$48,907			$47,983
Acquisition and pursuit costs	431			750			515			501			422			305			200			141
Lease intangible amortization	(16		)	745			4			5			54			84			—			—
Accelerated amortization of restricted stock awards⁶	—			—			—			2,854			—			—			—			70
Debt financing costs	—			—			—			—			760			—			—			—
Normalized FFO		$56,318			$54,470			$54,742			$51,687			$51,163			$48,648			$49,107			$48,194


1	Includes above and below market lease intangibles, interest income related to sales-type leases, lease inducements, lease termination fees and TI amortization.


2	Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.


3	Leasing commission amortization is included in the real estate depreciation and amortization add back for FFO.


4	The Company has two unconsolidated joint ventures whose earnings are recorded in Interest and other income (expense), net on the Condensed Consolidated Statements of Income. The depreciation expense incurred related to these properties is included in real estate deprecation and amortization add back for FFO.


5	Includes above and below market ground lease intangible amortization, leasing commission amortization, and ground lease straight-line rent.


6	The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses associated with the acceleration of his outstanding non-vested share-based awards. The third quarter of 2018 includes a revaluation adjustment recorded in connection with an officer retirement.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 25

EBITDA Reconciliations

DOLLARS IN THOUSANDS



RECONCILIATION OF EBITDA
	TTM			2Q 2020			1Q 2020		4Q 2019			3Q 2019
Net income		$109,639			$75,513			$4,315		$27,210			$2,601
Interest expense	56,399			14,442			13,960		13,816			14,181
Depreciation and amortization	186,459			47,691			47,497		46,134			45,137
EBITDA		$352,497			$137,646			$65,772		$87,160			$61,919
Other amortization ¹	7,223			1,875			1,973		1,747			1,628
Gain on sales of real estate properties	(88,454		)	(68,267		)	49		(20,036		)	(200		)
Impairments on real estate assets	7			—			—		7			—
EBITDAre ²		$271,273			$71,254			$67,794		$68,878			$63,347

EBITDA		$352,497			$137,646			$65,772		$87,160			$61,919
Acquisition and pursuit costs	2,197			431			750		515			501
Gain on sales of real estate properties	(88,454		)	(68,267		)	49		(20,036		)	(200		)
Impairments on real estate assets	7			—			—		7			—
Debt Covenant EBITDA		$266,247			$69,810			$66,571		$67,646			$62,220
Other amortization¹	7,223			1,875			1,973		1,747			1,628
Lease intangible amortization	738			(16		)	745		4			5
Timing impact ³	1,988			—			737		349			902
Stock based compensation	12,267			2,405			2,598		2,133			5,131
Adjusted EBITDA		$288,463			$74,074			$72,624		$71,879			$69,886


1	Includes leasing commission amortization and depreciation expense of unconsolidated JVs.


2	Earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") is an operating performance measure adopted by NAREIT. NAREIT defines EBITDAre equal to “net income (computed in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, impairments and minus gains on the disposition of depreciated property.”


3	Adjusted to reflect quarterly EBITDA from properties acquired or disposed in the quarter.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 26

Components of Net Asset Value

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA



CASH NOI BY PROPERTY TYPE
	2Q 2020
ASSET TYPE	SAME STORE ¹		ACQ./DEV. COMPLETIONS ²		REPOSITION ³		TIMING ADJUSTMENTS ⁴		ADJUSTED CASH NOI		ANNUALIZED ADJUSTED NOI		% OF ADJUSTED NOI
MOB/outpatient		$60,572		$6,563		$518		$1,124		$68,777		$275,108	94.0	%
Inpatient/Surgical	2,778		—		—		—		2,778		11,112		3.8	%
Office	1,447		161		—		—		1,608		6,432		2.2	%
Total Cash NOI		$64,797		$6,724		$518		$1,124		$73,163		$292,652	100.0	%



DEVELOPMENT PROPERTIES			TOTAL SHARES OUTSTANDING
Land held for development		$24,647	As of July 31, 2020 ⁸			136,048,233
Memphis Redevelopment	11,019
Construction in progress	—
		$35,666

OTHER ASSETS
Mercy disposition ⁵		$244,456
Reposition properties (net book value) ³	20,164
Cash and other assets ⁶	149,154
		$413,774

DEBT			IMPLIED CAP RATE
Unsecured credit facility		$—		STOCK PRICE		IMPLIED CAP RATE
Unsecured term loan due 2024	200,000		As of 7/31/20		$29.30	5.65	%
Unsecured term loan due 2026	150,000
Senior notes	1,100,000
Mortgage notes payable	116,829		2Q 2020 high		$33.32	5.11	%
Other liabilities ⁷	75,113		2Q 2020 low		$25.27	6.32	%
		$1,641,942


1	See Same Store Performance schedule on page 23 for details on same store NOI.


2	Adjusted to reflect quarterly NOI from properties acquired or stabilized developments completed during the full eight quarter period that are not included in same store NOI.

Reposition properties includes 10 properties which comprise 523,159 square feet. The NOI table above includes 7 of these properties comprising 321,556 square feet that have generated positive NOI totaling approximately $0.5 million. The remaining 3 properties, comprising 201,603 square feet, have generated negative NOI of approximately $0.1 million and are reflected at a net book value of $20.2 million in the other assets table above.


4	Timing adjustments include current quarter acquisitions as well as a development completion adjustments of $1.1 million to reflect full quarterly stabilized NOI from a recently completed developments.


5	In the second quarter of 2020, the Company entered into agreements to sell two single-tenant net leased properties, resulting in a lease modification and classification change from operating to sales-type. The properties were sold on July 30, 2020.


6	Includes cash of $43.7 million, prepaid assets of $57.9 million, accounts receivable of $10.9 million, and prepaid ground leases of $24.6 million. In addition, includes the Company's occupied portion of its corporate headquarters of $12.1 million.


7	Includes only liabilities that are expected to reduce future cash or NOI and that are currently producing non-cash benefits to NOI. Included are accounts payable and accrued liabilities of $65.5 million, security deposits of $9.0 million, and deferred operating expense reimbursements of $0.6 million.


8	Total shares outstanding do not reflect the shares associated with forward equity contracts. As of July 31, 2020, the Company had 2,343,843 shares under forward equity contracts.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 27

Components of Expected FFO

DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

The Company provided its expectations for the full year of 2020 in February. These expectations have been revised to reflect the estimated impact of the COVID-19 pandemic.



SAME STORE RANGE OF 2020 EXPECTATIONS
	PRE COVID-19				ACTUAL		COVID-19 ADJUSTED ¹
	LOW		HIGH		Q2 2020		LOW		HIGH
TTM Average Occupancy
Multi-tenant	88.0	%	89.0	%	88.2	%	87.0	%	88.0	%
Single-tenant	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
TTM revenue per occupied square foot
Multi-tenant	$35.50		$36.50		$35.52		$35.50		$36.50
Single-tenant ²	$31.50		$32.50		$31.76		$31.50		$32.50
TTM Multi-tenant cash NOI margin	59.5	%	60.5	%	59.8	%	59.5	%	60.0	%
Multi-tenant cash leasing spreads	3.0	%	4.0	%	4.5	%	2.5	%	4.5	%
Multi-tenant lease retention rate	75.0	%	90.0	%	84.6	%	75.0	%	90.0	%
TTM cash NOI growth
Multi-tenant	2.4	%	3.3	%	2.1	%	1.5	%	2.5	%
Single-tenant	1.7	%	2.5	%	0.7	%	1.7	%	2.5	%
Total	2.3	%	3.2	%	1.9	%	1.5	%	2.5	%

ANNUAL RANGE OF 2020 EXPECTATIONS
	LOW		HIGH		YTD 2020		LOW		HIGH
Normalized G&A	$33,000		$34,000		$16,199		$32,000		$33,000
Straight-line rent, net ²	1,500		3,000		1,043		1,500		3,000
Funding activity
Acquisitions	250,000		350,000		185,157		300,000		375,000
Dispositions	(25,000)		(75,000)		—		—		(50,000)
Mercy disposition	—		—		(244,456)		(244,456)		(244,456)
Re/development	30,000		50,000		12,580		25,000		35,000
1st generation TI and acq. cap. ex.	20,000		25,000		7,722		18,000		23,000
2nd generation TI	28,000		34,000		12,045		26,000		32,000
Leasing commissions paid	8,000		12,000		5,082		7,000		11,000
Capital expenditures	17,000		21,000		8,247		15,000		20,000
Outstanding forward equity contracts ³	—		—		—		(70,000)		(73,500)
Cash yield
Acquisitions	5.0	%	5.8	%	5.7	%	5.0	%	5.8	%
Dispositions	5.5	%	6.5	%	—	%	5.0	%	6.0	%
Mercy disposition	—		—		7.5	%	7.5	%	7.5	%
Re/development (stabilized)	6.0	%	7.5	%	NA		6.0	%	7.5	%
Leverage (debt/cap)	31.5	%	33.5	%	33.9	%	32.0	%	36.0	%
Net debt to adjusted EBITDA	5.0x		5.5x		5.1x		5.0x		5.5x


1	COVID-19 Adjusted represents the Company's estimate of full year 2020 results. The Company selected the accrual method related to rent deferral accounting. The current COVID-19 rent deferral agreements provide for the repayment of deferral amounts before year-end of 2020, and as such the accounting method is not expected to impact the full year 2020 results.


2	Pre-COVID range was adjusted to reflect the impact of the Mercy disposition.


3	This guidance range is based on current in-place leases. Straight-line rent, net was $1.4 million for the year ended December 31, 2019, with a quarterly range of $0.0 million to $0.8 million.


4	Range reflects settlement between execution and settlement dates through July 15, 2021.




HEALTHCARE REALTY	2Q 2020 SUPPLEMENTAL INFORMATION 28

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