Healthcare Realty Trust Inc.
) - a real estate investment trust (REIT) - reported
second-quarter 2013 normalized funds from operations (FFO) per
share of 32 cents, beating the Zacks Consensus Estimate by 2
cents. However, this was below the prior year quarter figure of
Normalized funds available for distribution (FAD) in the
reported quarter was 33 cents per share, compared with 36 cents
in the year-ago period.
Total revenue increased 8.3% year over year to $84.1 million
in the reported quarter and exceeded the Zacks Consensus Estimate
of $81 million.
Behind the Headlines
In the reported quarter, same-store properties revenues nudged
up 0.9% year over year to $68.7 million. On the other hand,
same-store properties expenses rose 1.8% year over year to $24.9
million. Consequently, same-store properties net operating income
(NOI) increased 0.4% year over year to $43.8 million.
Moreover, at the quarter-end, the 12 stabilizing properties
(SIP) were 69% leased and has escalating occupancy of 48%.
Portfolio Restructuring Activity
Healthcare Realty inked a deal to acquire four MOB properties
and signed a letter of intent to purchase the fifth one. The
purchase price of 5 assets, which are 95% occupied and span
528,000 square feet, is roughly $156 million. The transactions
are expected to close in the third quarter of 2013.
During the reported quarter, Healthcare Realty divested 5
smaller assets, spanning about 158,000 square feet, for $12.0
As of Jun 30, 2013, Healthcare Realty had cash and cash
equivalents worth approximately $1.2 million, compared with $94.2
million at the prior quarter-end.
Concurrent with the earnings release, Healthcare Realty
declared a dividend of 30 cents per share in the reported
quarter. This dividend is payable on Aug 30, 2013 to stockholders
of record as of Aug 15. The dividend is equivalent to 90.9% of
We are encouraged with another decent result at Healthcare
Realty. The ongoing strategic opportunistic acquisitions and
divestitures bode well for company's long-term profitability.
Moreover, the company shifted its focus from a
single-tenant/Master Lease model to a multi-tenant operating
model, thus mitigating concentration risks and driving
probability. We expect this to provide significant upside
potential to the stock going forward.
Another healthcare REIT,
) second-quarter 2013 normalized FFO per share of $1.01 missed
the Zacks Consensus Estimate by a penny but rose 6.3% year over
year. While a rise in share count, higher debt levels and an
increase in net cash balances acted as dampeners for the quarter,
Ventas' results benefited from strategic investments made in
Healthcare Realty currently carries a Zacks Rank #2 (Buy).
Other well-performing REITs include
Extra Space Storage Inc.
Franklin Street Properties Corp.
). Both these stocks have a Zacks Rank #2.
Note: 1. FFO, a widely accepted and reported measure of the
performance of REITs, is derived by adding depreciation,
amortization and other non-cash expenses to net income.
2. FAD, a measure to ascertain the ability of REITs to
generate cash, is derived by subtracting straight-line rent and
non-recurring real estate expenses from funds from
EXTRA SPACE STG (EXR): Free Stock Analysis
FRANKLIN ST PPT (FSP): Free Stock Analysis
HEALTHCARE RLTY (HR): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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