Healthcare Realty Trust Inc (HR) Q3 2024 Earnings Call Highlights: Strong Leasing Performance ...

GuruFocus News
4 min read

In This Article:

  • Normalized FFO per Share: $0.39, up 1.2% year-over-year.

  • New Signed Leases: Over 400,000 square feet in the multi-tenant portfolio.

  • Multi-Tenant Absorption: 159,000 square feet or 49 basis points.

  • Tenant Retention: Over 80%.

  • Same-Store Property Growth: 3.1% year-over-year.

  • Leasing Spreads: 3.9%.

  • Same-Store Expenses: Down 1.5% year-over-year.

  • Total Multi-Tenant NOI Growth: 3.5% in the third quarter.

  • Asset Sales Proceeds: $875 million through October, with full-year range increased to $1.05 billion to $1.15 billion.

  • Share Repurchases: Nearly $450 million year-to-date at a weighted average share price of $16.48.

  • Net Debt to Adjusted EBITDA: 6.6 times, expected to decline to 6.5 times by end of 2024.

  • Credit Facility Availability: Approximately $1.3 billion.

  • Payout Ratio: 106% in the quarter, expected to decline below 100% in 2025.

  • Steward Leases Exposure: $27 million of annual NOI, with clarity on two-thirds of exposure.

  • Guidance for Normalized FFO per Share: Narrowed to $1.55 to $1.56 for 2024.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Healthcare Realty Trust Inc (NYSE:HR) reported normalized FFO per share of $0.39, at the high end of expectations, marking a 1.2% increase and a return to year-over-year growth.

  • The company achieved strong leasing performance with over 400,000 square feet of new signed leases for the fifth consecutive quarter.

  • Occupancy gains were significant, with a multi-tenant absorption totaling 159,000 square feet, driven by 565,000 square feet of new lease commencements and strong tenant retention over 80%.

  • Same-store property year-over-year growth was 3.1%, with future contractual escalators for leases commencing at 3.1% in cash and leasing spreads at 3.9%.

  • Healthcare Realty Trust Inc (NYSE:HR) successfully increased its full-year proceeds range from asset sales to $1.05 billion to $1.15 billion, up $100 million at the midpoint, and repurchased nearly $450 million of shares year-to-date.

Negative Points

  • The company experienced timing differences in lease commencements, which affected the full potential economics of the quarter.

  • There is a $10 million annual NOI exposure from Steward leases that were not accepted by new operators or lack visibility on near-term replacement leases.

  • The payout ratio was 106% in the quarter, indicating a higher payout than earnings, although it is expected to decline below 100% in 2025.

  • Healthcare Realty Trust Inc (NYSE:HR) faces challenges in backfilling space from Steward leases, with expectations to recover only half of the $10 million annual NOI through leasing efforts.

  • The company had a $47 million credit loss related to the final write-down of a mezzanine loan in Houston, impacting financial results.

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