Healthcare Realty Trust Provides Second Quarter Business Update on Operational and Capital Allocation Momentum
Healthcare Realty Trust (NYSE: HR) reported significant operational and capital allocation momentum in its second quarter update.
The company signed new leases totaling 432,000 square feet, marking the fourth consecutive quarter of leasing above 400,000 square feet. First-half multi-tenant occupancy increased by 183,000 square feet, exceeding guidance. Multi-tenant occupancy has risen by 371,000 square feet over the past three quarters.
Steward Health has paid nearly all rent owed for June and July, but Healthcare Realty expects to reserve approximately $3.0 million for unpaid pre-bankruptcy rent.
The company has generated $400 million in proceeds from joint ventures and asset sales year-to-date, with expected total proceeds exceeding $1 billion. These funds will support share repurchases and capital commitments. To date, Healthcare Realty has repurchased 18.0 million shares for $286 million.
CEO Todd Meredith highlighted the strong leasing momentum and anticipated improvements in dividend coverage and FFO growth.
- Signed new leases totaling 432,000 square feet in Q2, maintaining strong leasing momentum.
- First half multi-tenant occupancy increased by 183,000 square feet, above guidance.
- Generated $400 million from JV and asset sales year-to-date with total expected proceeds over $1 billion.
- Repurchased 18.0 million shares for $286 million, reducing outstanding shares by 6.7 million.
- Expected to reserve approximately $3.0 million for unpaid pre-bankruptcy rent from Steward Health.
Insights
The operational and capital allocation update from Healthcare Realty Trust reveals strong progress that may be of interest to investors. The company has demonstrated consistent leasing activity, with new leases totaling 432,000 square feet for the fourth consecutive quarter. This sustained performance above 400,000 square feet indicates robust demand for their properties, which is important for revenue stability and growth.
The multi-tenant absorption of 183,000 square feet for the first half of the year, surpassing guidance, shows effective property management and healthy occupancy rates. Positive absorption of 110 basis points suggests efficient utilization of space, which can lead to higher net operating income (NOI) and improved profitability.
On the capital allocation front, the company has been active, completing or planning asset sales and joint ventures (JVs) exceeding $1 billion. These transactions are significant as they provide the necessary funds for share repurchases and capital commitments without increasing leverage. The repurchase of 18 million shares at an average price of
Critical for investors is the impact on dividend coverage and funds from operations (FFO) growth. The company's progress in operational efficiency and capital allocation is expected to result in improved dividend coverage, making it a potentially attractive investment for income-focused investors.
The update from Healthcare Realty Trust highlights strong market performance and asset management. The company's ability to maintain and increase multi-tenant occupancy in a competitive market underscores the desirability and strategic location of their properties. Such stability is essential for a REIT, as it directly impacts rental income and property valuation.
The ongoing joint ventures with KKR and Nuveen Real Estate are noteworthy. Partnering with established entities like these can enhance operational efficiencies, diversify risk and provide access to additional capital. This strategic collaboration can also unlock new growth opportunities, allowing Healthcare Realty to expand its footprint without over-leveraging.
Moreover, the successful completion of asset sales and the execution of planned transactions reflect sound asset turnover and liquidity management. For investors, this proactive approach in capital recycling ensures that the portfolio remains dynamic and aligned with market demands, which can lead to sustained long-term growth.
Overall, the company's performance metrics and strategic decisions suggest a well-managed REIT with a clear focus on operational excellence and prudent capital allocation.
Multi-tenant new leases signed totaling 432,000 square feet
1H 2024 multi-tenant occupancy gain of 183,000 square feet, above guidance range
Steward Health has paid substantially all rent for June and July
Greater than
NASHVILLE, Tenn., July 08, 2024 (GLOBE NEWSWIRE) -- Healthcare Realty Trust Incorporated (NYSE:HR) today provided a second quarter update on its operational and capital allocation momentum.
OPERATIONAL MOMENTUM
In the second quarter, new signed leases totaled 432,000 square feet, the fourth consecutive quarter above 400,000. Multi-tenant absorption in the second quarter was 122,000 square feet. Combined with the first quarter, multi-tenant absorption for the first half of the year was 183,000 square feet, which was above the guidance range of 90,000 to 140,000 square feet provided in the Company’s Multi-tenant Occupancy and NOI Bridge. Over the last three quarters, multi-tenant occupancy has increased 371,000 square feet, representing approximately 110 basis points of positive absorption.
STEWARD HEALTH
Steward Health has paid substantially all rent owed for June and July. In the second quarter, Healthcare Realty expects to reserve approximately
CAPITAL ALLOCATION MOMENTUM
As previously disclosed, Healthcare Realty has generated approximately
To date, the Company has repurchased 18.0 million shares of its common stock for
“We are making meaningful progress on our capital allocation and operating priorities. We continue to see strong leasing momentum and occupancy gains,” stated Todd Meredith, President and CEO. “Looking ahead, we expect this progress to lead to improved dividend coverage and accelerated FFO growth.”
About Healthcare Realty
Healthcare Realty is a real estate investment trust (REIT) that owns and operates medical outpatient buildings primarily located around market-leading hospital campuses. The Company selectively grows its portfolio through property acquisition and development. As the first and largest REIT to specialize in medical outpatient buildings, Healthcare Realty’s portfolio includes nearly 700 properties totaling over 40 million square feet concentrated in 15 growth markets. Additional information regarding the Company can be found at www.healthcarerealty.com.
Ron Hubbard
Vice President, Investor Relations
P: 615.269.8290
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, including its Annual Report on Form 10-K for the year ended December 31, 2023 under the heading “Risk Factors,” and in its Quarterly Reports filed thereafter and in the Company’s other SEC filings. 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.
FAQ
What is the total square footage of new leases signed by Healthcare Realty Trust in Q2 2024?
How did Healthcare Realty Trust's multi-tenant occupancy change in the first half of 2024?
How much did Healthcare Realty Trust generate from joint ventures and asset sales in 2024?
How many shares has Healthcare Realty Trust repurchased to date in 2024?
What is the expected financial impact of Steward Health's unpaid pre-bankruptcy rent on Healthcare Realty Trust?
