Healthcare Realty Trust Inc. (HR) ,
a real estate investment trust (REIT), reported fourth quarter 2012
normalized funds from operations (FFO) per share of 31 cents in
line with the Zacks Consensus Estimate. However, this was lower
than the year-ago figure of 33 cents.
The results were negatively impacted by around 3 cents owing to
9.2 million shares issued at the end of the third quarter for
funding under construction properties. However, this is expected to
prove accretive to the earnings going forward, after the completion
of the construction of properties in the second half of 2013.
Funds available for distribution (FAD) in the reported quarter
were $28.4 million or 33 cents per share compared with $27.5
million or 35 cents per share in the year-ago period.
Behind the Headlines
Total revenue increased 8% to $81.3 million from $75.3 million in
the year-ago quarter and also exceeded the Zacks Consensus Estimate
of $78 million.
Total multi-tenant same facility net operating income (NOI)
increased 3.4% year over year in the quarter to $31.8 million. For
the total portfolio, same-facility NOI upped 3.8% year over year to
$45.1 million during the quarter. The same facility portfolio
recorded an occupancy level of 90.3% at the end of the
The company's multi-tenant properties exhibited an uptrend, backed
by modest weighted average increase in lease rates. While
contractual rates for in-place leases inched up 3.1%, average
increase in the rate on newly executed leases hovered around
During the quarter, occupancy at the company's stabilization in
progress (SIP) properties reached 41.2%. However, the company's SIP
portfolio was 60% leased at the end of the year.
Healthcare Realty continued its strategic shift towards
lower-risk, on-campus medical office buildings. About 78% of the
total medical office properties were located on or adjacent to
hospital campuses at the end of 2012, compared with 74% at the end
During the quarter, Healthcare Realty acquired 5 properties for a
total value of $87.6 million. The facilities, spanning
approximately 288,000 square feet, have an average occupancy rate
As of Dec 31, 2012, Healthcare Realty owned 202 properties,
spanning approximately 13.6 million square feet, located across 28
As of Dec 31, 2012, Healthcare Realty had $6.8 million of cash and
Subsequent to the quarter-end, the company sold 1.6 million of
common shares under its at-the-market equity offering program
('ATM') for roughly $39.7 million. The net proceeds were utilized
for funding the recent acquisitions.
Concurrent with the earnings release, Healthcare Realty declared a
dividend of 30 cents per share in the reported quarter. The
dividend is equivalent to 90.9% of normalized FAD.
We are encouraged with the decent result at Healthcare Realty. The
company is well-positioned with a low risk, highly stable portfolio
of physician-oriented medical office buildings (MOB) as well as
clinical and surgical outpatient real estate properties.
Also, the company has almost completed the strategic shift away
from a single-tenant/Master Lease model to a multi-tenant operating
model, thereby reducing concentration risk and augmenting the
probability. We expect this, along with company's ongoing
opportunistic acquisitions, to provide significant upside potential
to the stock going forward.HEALTHCARE RLTY (HR): Free Stock Analysis
ReportHERSHA HOSPTLY (HT): Free Stock Analysis ReportMEDICAL PPTYS (MPW): Free Stock Analysis ReportVENTAS INC (VTR): Free Stock Analysis ReportTo read this article on Zacks.com click here.
One of the REITs, Ventas Inc. (VTR)
reported a better-than-expected fourth quarter 2012 results with
normalized FFO of 99 cents per share, beating the Zacks Consensus
Estimate by a couple of cents.
Healthcare Realty currently holds a Zacks Rank #3 (Hold). REITs
that are performing better than Healthcare Realty include
Hersha Hospitality Trust (HT)
and Medical Properties Trust Inc. (MPW)
, both carrying a Zacks Rank #2 (Buy).
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