Healthcare Realty Trust Inc.
) - a real estate investment trust (REIT) - reported
third-quarter 2013 normalized funds from operations (FFO) per
share of 32 cents, missing both the Zacks Consensus Estimate and
year-ago quarter figure by a penny. This was due to an increase
in expenses in the quarter.
Normalized funds available for distribution (FAD) in the
reported quarter were 34 cents per share, down from 35 cents in
the year-ago period.
Total revenue increased 10.2% year over year to $84.8 million
in the reported quarter and exceeded the Zacks Consensus Estimate
of $82 million.
Inside the Headlines
In the reported quarter, Healthcare Realty renewed leases on
241,000 square feet of space, with a retention rate of 82.1%. In
particular, the company penned new lease deals for 121,000 square
feet of space at its same store properties (153
assets). Consequently, same-store occupancy upped 90 basis
points year over year to 91.0%.
Also, same-store revenues nudged up 1.8% year over year to
$66.4 million. On the other hand, same-store expenses rose 1.5%
year over year to $24.5 million. Thus, same-store net operating
income (NOI) increased 1.9% year over year to $42.0 million.
At the quarter end, the 12 stabilizing properties (SIP) were
72% leased with an escalating occupancy of 57%.
Portfolio Enhancement Activity
During the quarter under review, Healthcare Realty acquired a
Springfield, Mo.-based orthopedic surgical facility for $102.6
million. The property, spanning 186,000 square foot, is currently
100% leased to Mercy Health - an AA- rated healthcare
Also, the company bought 2 medical office buildings,
positioned on hospital campuses in South Bend (Indiana) and
Denver (Colorado), for $77.5 million. The 91% leased assets,
spanning 286,000 square feet, are affiliated with the University
of Colorado Health and CHE Trinity.
Subsequent to quarter end, in October, Healthcare Realty
purchased 3 medical office properties for $76.8 million. The
buildings, spanning 242,000 square feet, are placed on or
adjacent to hospital campuses in Charlotte, Seattle and Denver.
The 95% leased assets are affiliated with CaroMont Health,
University of Colorado Health and Providence Health &
As of Sep 30, 2013, Healthcare Realty had cash and cash
equivalents worth approximately $7.2 million, up from $1.2
million at the prior quarter-end.
On Oct 29, 2013, Healthcare Realty declared a quarterly
dividend of 30 cents per share. This dividend is payable on Nov
29, 2013 to stockholders of record as of Nov 14. The dividend is
equivalent to 88.2% of normalized FAD.
Although rise in expenses acted as the dampener, higher
revenues and significant leasing activity lead to decent
quarterly results at Healthcare Realty. The ongoing strategic
opportunistic acquisitions and divestitures bode well for the
company's long-term profitability. Moreover, Healthcare Realty's
strong balance sheet position is also a positive. We expect these
factors to provide significant upside potential to the stock
Yet, a large portion of the company's revenue originates from
a few tenants, which exposes it to concentration risk.
Another healthcare REIT,
) reported third-quarter 2013 adjusted FFO (funds from
operations) per share of 79 cents, 2 cents ahead of the Zacks
Consensus Estimate and 10 cents above the prior-year quarter
figure. The result was aided by growth in total revenues.
Healthcare Realty currently carries a Zacks Rank #4 (Sell).
However, well-performing REITs include
Sabra Health Care REIT, Inc.
Parkway Properties Inc.
). Both these stocks have a Zacks Rank #1 (Strong Buy).
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
HCP INC (HCP): Free Stock Analysis Report
HEALTHCARE RLTY (HR): Free Stock Analysis
PARKWAY PPTY (PKY): Free Stock Analysis
SABRA HEALTHCR (SBRA): Free Stock Analysis
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