Form 8-K HEALTHCARE REALTY TRUST For: Nov 04

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November 4, 2014 4:57 PM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8K

CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 4, 2014 (November 4, 2014)


HEALTHCARE REALTY TRUST INCORPORATED
(Exact Name of Registrant as Specified in Charter)

MARYLAND
�
001-11852
�
62-1507028
(State or other jurisdiction of incorporation)
�
(Commission File Number)
�
(I.R.S. Employer
Identification No.)


3310 West End Avenue, Suite 700, Nashville, Tennessee 37203
(Address of principal executive offices) (Zip Code)

(615) 269-8175
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02����Results of Operations and Financial Condition
On November 4, 2014, Healthcare Realty Trust Incorporated (the Company) issued a press release announcing its earnings for the third quarter ended September 30, 2014. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

On November 4, 2014, the Company also issued a press release announcing its dividend for the third quarter ended September 30, 2014. A copy of this press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K is incorporated herein by reference in its entirety.

Item 7.01������� Regulation FD Disclosure
The Company is furnishing its Supplemental Information for the three months ended September 30, 2014, which is also contained on its website (www.healthcarerealty.com). See Exhibit 99.3 to this Current Report on Form 8-K.

Item 9.01 ������ Financial Statements and Exhibits
99.1����Second quarter earnings press release, dated�November 4, 2014.
99.2����Second quarter dividend press release, dated�November 4, 2014.
99.3����Supplemental�Information for the three months ended September 30, 2014.









































SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
�
HEALTHCARE REALTY TRUST INCORPORATED
�
By /s/ B. Douglas Whitman, II
Executive Vice President - Corporate Finance
Date: November 4, 2014
�











Carla Baca
Director of Corporate Communications
P: 615.269.8175
News Release
HEALTHCARE REALTY TRUST REPORTS NORMALIZED FFO OF $0.37 PER SHARE FOR THE THIRD QUARTER

NASHVILLE, Tennessee, November 4, 2014 - Healthcare Realty Trust Incorporated (NYSE: HR) today announced results for the third quarter ended September�30, 2014. Normalized FFO for the three months ended September�30, 2014 totaled $0.37 per diluted common share.

Salient third quarter highlights include:
"
Normalized FFO grew $5.4 million, or 17.6% year-over-year, to $35.9 million. Over the same time period, normalized FFO per share increased 15.6%.
"
During the third quarter, the Company purchased two on-campus medical office buildings totaling 108,000 square feet for a total purchase price of $27.8 million. These properties are collectively 95% leased.
"
In October 2014, the Company acquired a 69,000 square foot, 97% leased, on-campus medical office building in Oklahoma for a purchase price of $17.4 million.
"
Occupancy at the twelve development conversion properties rose 8% in the third quarter to 78%. At this occupancy level, NOI is expected to be $4.7 million when all occupants are in place and paying rent for an entire quarter.
"
Same store NOI grew by 3.6% year-over-year and occupancy remained stable at 91%.
"
Leases totaling 770,000 square feet commenced or renewed at the Company's multi-tenant properties, including 572,000 square feet in the same store portfolio where tenant retention was 86%.
"
A dividend of $0.30 per common share was declared, which is 81.1% of normalized FFO.

For the three months ended September�30, 2014, year-over-year revenue grew by $10.8 million to $94.5 million. The Company reported net income attributable to common stockholders for the quarter of $4.0 million.
Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $3.2 billion in 201 real estate properties and mortgages as of September�30, 2014. The Company's 200 owned real estate properties are located in 30 states and total approximately 14.3 million square feet. The Company provides property management services to approximately 9.7 million square feet nationwide.
__________________________________________________________________________________________________________



�
�
�
HEALTHCAREREALTY.COM��| PAGE 1 OF 5


Additional information regarding the Company, including this quarter's operations, can be found at www.healthcarerealty.com. Please contact the Company at 615.269.8175 to request a printed copy of this information.

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 Trust, including its Annual Report on Form 10-K for the year ended December 31, 2013 under the heading "Risk Factors," and as updated in its Quarterly Reports on Form 10-Q filed thereafter. 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.


�
HEALTHCAREREALTY.COM��| PAGE 2�OF 5


HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Balance Sheets (1)�
(amounts in thousands, except per share data)
(Unaudited)
�
ASSETS
�
�
�
�
Real Estate Properties:
�
9/30/2014

�
12/31/2013

Land
�

$183,991

�

$178,931

Buildings, improvements and lease intangibles
�
3,030,960

�
2,861,935

Personal property
�
9,535

�
9,267

Land held for development
�
17,054

�
17,054

Total real estate properties
�
3,241,540

�
3,067,187

Less accumulated depreciation
�
(693,517
)
�
(632,109
)
Total real estate properties, net
�
2,548,023

�
2,435,078

Cash and cash equivalents
�
1,684

�
8,671

Mortgage notes receivable
�
1,900

�
125,547

Assets held for sale and discontinued operations, net
�
11,479

�
6,852

Other assets, net
�
178,238

�
153,514

Total assets
�

$2,741,324

�

$2,729,662

�
�
�
�
�
LIABILITIES AND EQUITY
�
�
�
�
Liabilities:
�
�
�
�
Notes and bonds payable
�

$1,403,379

�

$1,348,459

Accounts payable and accrued liabilities
�
60,017

�
73,741

Liabilities of discontinued operations
�
508

�
1,112

Other liabilities
�
57,913

�
61,064

Total liabilities
�
1,521,817

�
1,484,376

Commitments and contingencies
�
�
�
�
Equity:
�
�
�
�
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding
�


�


Common stock, $.01 par value; 150,000 shares authorized; 98,119 and 95,924 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively
�
981

�
959

Additional paid-in capital
�
2,374,345

�
2,325,228

Accumulated other comprehensive income
�
51

�
51

Cumulative net income attributable to common stockholders
�
822,176

�
808,362

Cumulative dividends
�
(1,978,046
)
�
(1,891,123
)
Total stockholders equity
�
1,219,507

�
1,243,477

Noncontrolling interests
�


�
1,809

Total equity
�
1,219,507

�
1,245,286

Total liabilities and equity
�

$2,741,324

�

$2,729,662

�
(1)
The Condensed Consolidated Balance Sheets do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.


�
HEALTHCAREREALTY.COM��| PAGE 3�OF 5


HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Operations (1)�
(amounts in thousands, except per share data)
(Unaudited)
�
�
�
�
�
�
�
�
�
�
�
Three Months Ended September 30,
�
�
Nine Months Ended September 30,
�
�
�
2014

�
2013

�
2014

�
2013

Revenues
�
�
�
�
�
�
�
�
Rental income
�

$92,987

�

$78,161

�

$270,513

�

$230,094

Mortgage interest
�
44

�
3,926

�
3,634

�
10,290

Other operating
�
1,475

�
1,579

�
4,349

�
4,542

�
�
94,506

�
83,666

�
278,496

�
244,926

Expenses
�
�
�
�
�
�
�
�
Property operating
�
34,678

�
32,244

�
102,077

�
92,742

General and administrative
�
5,190

�
5,582

�
16,834

�
17,961

Depreciation
�
25,660

�
21,716

�
74,408

�
63,970

Amortization
�
2,656

�
2,595

�
8,190

�
7,819

Bad debt, net of recoveries
�
3

�
109

�
123

�
116

�
�
68,187

�
62,246

�
201,632

�
182,608

Other Income (Expense)
�
�
�
�
�
�
�
�
Loss on extinguishments of debt
�


�


�


�
(29,638
)
Interest expense
�
(18,192
)
�
(17,043
)
�
(54,176
)
�
(55,738
)
Interest and other income, net
�
410

�
237

�
2,545

�
686

�
�
(17,782
)
�
(16,806
)
�
(51,631
)
�
(84,690
)
�
�
�
�
�
�
�
�
�
Income (Loss) From Continuing Operations
�
8,537

�
4,614

�
25,233

�
(22,372
)
�
�
�
�
�
�
�
�
�
Discontinued Operations
�
�
�
�
�
�
�
�
Income (loss) from discontinued operations
�
121

�
1,241

�
(75
)
�
4,818

Impairments
�
(4,505
)
�
(6,259
)
�
(11,034
)
�
(9,889
)
Gain on sales of real estate properties
�


�
20,187

�
3

�
21,970

Income (Loss) From Discontinued Operations
�
(4,384
)
�
15,169

�
(11,106
)
�
16,899

�
�
�
�
�
�
�
�
�
Net Income (Loss)
�
4,153

�
19,783

�
14,127

�
(5,473
)
Less: Net (income) loss attributable to noncontrolling interests
�
(162
)
�
(18
)
�
(313
)
�
34

Net Income (Loss) Attributable To Common Stockholders
�

$3,991

�

$19,765

�

$13,814

�

($5,439
)
Basic Earnings (Loss) Per Common Share:
�
�
�
�
�
�
�
�
Income (loss) from continuing operations
�

$0.09

�

$0.05

�

$0.27

�

($0.25
)
Discontinued operations
�
(0.05
)
�
0.16

�
(0.12
)
�
0.19

Net income (loss) attributable to common stockholders
�

$0.04

�

$0.21

�

$0.15

�

($0.06
)
Diluted Earnings (Loss) Per Common Share:
�
�
�
�
�
�
�
�
Income (loss) from continuing operations
�

$0.09

�

$0.05

�

$0.26

�

($0.25
)
Discontinued operations
�
(0.05
)
�
0.16

�
(0.12
)
�
0.19

Net income (loss) attributable to common stockholders
�

$0.04

�

$0.21

�

$0.14

�

($0.06
)
Weighted Average Common Shares OutstandingBasic
�
95,858

�
93,443

�
94,846

�
89,871

Weighted Average Common Shares OutstandingDiluted
�
97,329

�
94,836

�
96,310

�
89,871

(1)
The Condensed Consolidated Statements of Operations do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

�
HEALTHCAREREALTY.COM��| PAGE 4�OF 5


HEALTHCARE REALTY TRUST INCORPORATED
Reconciliation of FFO and Normalized FFO (1)�(2)�
(amounts in thousands, except per share data)
(Unaudited)
�
�
�
�
�
�
�
Three Months Ended September 30,
�
�
�
2014

�
2013

Net Income Attributable to Common Stockholders
�

$3,991

�

$19,765

Gain on sales of real estate properties
�


�
(20,187
)
Impairments
�
4,505

�
6,259

Real estate depreciation and amortization
�
27,697

�
24,214

Total adjustments
�
32,202

�
10,286

Funds From Operations
�

$36,193

�

$30,051

Acquisition costs
�
188

�
504

Reversal of restricted stock amortization upon officer resignation
�
(445
)
�


Normalized Funds From Operations
�

$35,936

�

$30,555

Funds from Operations per Common ShareDiluted
�

$0.37

�

$0.32

Normalized Funds From Operations Per Common ShareDiluted
�

$0.37

�

$0.32

FFO Weighted Average Common Shares Outstanding
�
97,329

�
94,836



(1)
Funds from operations (FFO) and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REITs operating performance equal to net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
(2)
FFO does not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs. FFO should not be considered an alternative to net income attributable to common stockholders as an indicator of the Companys operating performance or as an alternative to cash flow as a measure of liquidity.










�
HEALTHCAREREALTY.COM��| PAGE 5�OF 5



Carla Baca
Director of Corporate Communications
P:615.269.8175
News Release
HEALTHCARE REALTY TRUST ANNOUNCES THIRD QUARTER DIVIDEND
NASHVILLE, Tennessee, November 4, 2014 - Healthcare Realty Trust Incorporated (NYSE: HR) today announced its common stock cash dividend for the quarter ended September 30, 2014. This dividend, in the amount of $0.30 per share, is payable on November 28, 2014 to shareholders of record on November 14, 2014.
Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $3.2 billion in 201 real estate properties and mortgages as of September 30, 2014. The Companys 200 owned real estate properties are located in 30 states, totaling approximately 14.3�million square feet. The Company provides property management services to approximately 9.7�million square feet nationwide.
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 Trust, including its Annual Report on Form 10-K for the year ended December�31, 2013 under the heading Risk Factors, and as updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Companys judgment as of the date of this release. The Company disclaims any obligation to update forward-looking statements.
�


















3Q | 2014

Supplemental Information

FURNISHED AS OF NOVEMBER 4, 2014 (UNAUDITED)






Table of Contents

�
�
�
�
3

��
Corporate Information
�
�
�
5

��
Historical Reconciliation of FFO
�
�
�
6

�
Balance Sheet Information
�
�
�
7

�
Statements of Income Information
�
�
�
8

��
Debt Metrics
�
�
�
9

��
Investment Activity
�
�
�
10

��
Portfolio by Market
�
�
�
11

�
Square Feet by Type, Provider and Building Size
�
�
�
12

��
Lease Maturity and Tenant Size
�
�
�
13

�
Occupancy Information
�
�
�
14

�
Same Store Leasing Statistics
�
�
�
15

��
Same Store Properties
�
�
�
16

��
Components of Net Asset Value
�
�
�
17

�
Components of Expected 2014 FFO

Copies of this report may be obtained at www.healthcarerealty.com or by contacting Investor Relations at 615.269.8175 or [email protected].
Forward looking statements and risk factors:
This Supplemental Information report contains disclosures that are forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words and phrases such as can, may, payable, indicative, annualized, expect, expected, future cash or NOI, deferred revenue, rent increases, range of expectations, components of expected 2014 FFO, and other comparable terms in this report. These forward-looking statements are made as of the date of this report and are not guarantees of future performance. These statements are based on the current plans and expectations of Company management and are subject to a number of unknown risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those described in this release or implied by such forward-looking statements. Such risks and uncertainties include, among other things, the following: changes in the economy; increases in interest rates; the availability and cost of capital at expected rates; changes to facility-related healthcare regulations; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent and repay loans; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to re-lease space at similar rates as vacancies occur; the Company's ability to renew expiring long-term single-tenant net leases; the Company's ability to timely reinvest proceeds from the sale of assets at similar yields; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; the Company may be required under purchase options to sell properties and may not be able to reinvest the proceeds from such sales at rates of return equal to the return received on the properties sold; uninsured or underinsured losses related to casualty or liability; the incurrence of impairment charges on its real estate properties or other assets; and other legal and operational matters. Other risks, uncertainties and factors that could cause actual results to differ materially from those projected are detailed under the heading Risk�Factors, in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for the year ended December 31, 2013 and other risks described from time to time thereafter in the Company's SEC filings.�The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

�
�
�
�
�
�
HEALTHCARE REALTY I 2
�
3Q I 2014 SUPPLEMENTAL INFORMATION



Corporate Information
�
�
Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $3.2 billion in 201 real estate properties and mortgages as of September 30, 2014. The Companys 200 owned real estate properties are located in 30 states and total approximately 14.3�million square feet. The Company provided leasing and property management services to approximately 9.7�million square feet nationwide.

�
A�|
Corporate Headquarters
Healthcare Realty Trust Incorporated
3310 West End Avenue, Suite 700
Nashville, Tennessee 37203
Phone: 615.269.8175
Fax: 615.269.8461
Website: www.healthcarerealty.com

�
B�|
Executive Officers
�
�
David R. Emery
��
Chairman of the Board and Chief Executive Officer
�
�
John M. Bryant, Jr.
��
Executive Vice President and General Counsel
�
�
Scott W. Holmes
��
Executive Vice President and Chief Financial Officer
�
�
Todd J. Meredith
��
Executive Vice President - Investments
�
�
B. Douglas Whitman, II
��
Executive Vice President - Corporate Finance

�
C�|
Board of Directors
�
�
David R. Emery
��
Chairman of the Board and Chief Executive Officer, Healthcare Realty Trust Incorporated
�
�
Errol L. Biggs, Ph.D.
��
Director, Graduate Programs in Health Administration, University of Colorado
�
�
C. Raymond Fernandez, M.D.
��
Former Chief Executive Officer, Piedmont Clinic (Retired)
�
�
Batey M. Gresham, Jr.
��
Founder, Gresham Smith & Partners (Retired)
�
�
Edwin B. Morris III
��
Managing Director, Morris & Morse Company, Inc.
�
�
J. Knox Singleton
��
President and Chief Executive Officer, Inova Health System
�
�
Bruce D. Sullivan
��
Former Audit Partner, Ernst & Young LLP (Retired)
�
�
Roger O. West
��
Former General Counsel, Healthcare Realty Trust Incorporated (Retired)
�
�
Dan S. Wilford
��
Former President and Chief Executive Officer, Memorial Hermann Healthcare System (Retired)


�



������������
�
�
�
�
�
�
HEALTHCARE REALTY I 3
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Corporate Information
�
D�|
Professional Services
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BDO USA, LLP
414 Union Street, Suite 1800, Nashville, Tennessee 37219
TRANSFER AGENT
Wells Fargo N.A., Shareowner Services
1110 Centre Pointe Curve, Suite 101, Mendota Heights, Minnesota 55120-4100

�
E�|
Stock Exchange, Symbol and CUSIP Number
�
�
SECURITY DESCRIPTION
STOCK�EXCHANGE
SYMBOL
CUSIP�NUMBER
�
Common Stock
NYSE
HR
421946104
�
Senior Notes due 2017
OTC
HR
42225BAA4
�
Senior Notes due 2021
OTC
HR
421946AG9
�
Senior Notes due 2023
OTC
HR
421946AH7
�
F�|
Dividend Reinvestment Plan
Through the Companys transfer agent, Wells Fargo, named stockholders of record can re-invest dividends in shares at a 5% discount and may also purchase up to $60,000 of HR common stock per calendar year without a service or sales charge. For information, write Wells Fargo Shareowner Services, P.O. Box 64856, St. Paul, Minnesota 55164-0856, or call 1.800.468.9716. Information may also be obtained at the transfer agents website, www.shareowneronline.com.
�
G�|
Direct Deposit of Dividends
Direct deposit of dividends is offered as a convenience to stockholders of record. For information, write Wells Fargo Shareowner Services, P.O. Box 64856, St. Paul, Minnesota 55164-0856, or call 1.800.468.9716. Information may also be obtained at the transfer agents website, www.shareowneronline.com.
�
H�|
Dividends Declared
On November 4, 2014, the Company declared a dividend of $0.30 per share, payable on November 28, 2014, to stockholders of record on November 14, 2014.
�
I�|
Analyst Coverage
�
�
�
Cowen�and Company, LLC
�
KeyBanc Capital Markets Inc.
�
�
�
�
�
Goldman, Sachs & Co.
�
Mizuho Securities USA Inc.
�
�
�
�
�
Green Street Advisors, Inc.
�
RBC Capital Markets, LLC
�
�
�
�
�
J.J.B. Hilliard W.L. Lyons, LLC
�
Stifel, Nicolaus & Company, Inc.
�
�
�
�
�
J.P. Morgan Securities LLC
�
SunTrust Robinson Humphrey, Inc.
�
�
�
�
�
JMP Securities LLC
�
Wells Fargo Securities, LLC
�
�
�
�





�
�
�
�
�
�
HEALTHCARE REALTY I 4
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Historical Reconciliation of FFO (1) (2)�
(amounts in thousands, except for share data)


�
�
�
�
�
�
�
�
�
�
�
�
�
�
2014
�
�
2013
�
�
�
Q3

�
Q2

�
Q1

�
Q4

�
Q3

Net Income Attributable to Common Stockholders
�

$3,991

�

$5,971

�

$3,852

�

$12,384

�

$19,765

Gain on sales of real estate properties
�


�
(3
)
�


�
(2,748
)
�
(20,187
)
Impairments
�
4,505

�
3,105

�
3,425

�


�
6,259

Real estate depreciation and amortization
�
27,697

�
27,017

�
26,248

�
25,776

�
24,214

Total adjustments
�
32,202

�
30,119

�
29,673

�
23,028

�
10,286

Funds from Operations (3)
�

$36,193

�

$36,090

�

$33,525

�

$35,412

�

$30,051

Acquisition costs
�
188

�
49

�


�
681

�
504

Reversal of restricted stock amortization upon officer resignation
�
(445
)
�


�


�


�


Refund of prior year overpayment of certain operating expenses
�


�
(1,919
)
�


�


�


Gain on sale of cost method investment in real estate
�


�


�


�
(1,492
)
�


Normalized Funds from Operations
�

$35,936

�

$34,220

�

$33,525

�

$34,601

�

$30,555

Funds from Operations per Common ShareDiluted
�

$0.37

�

$0.38

�

$0.35

�

$0.37

�

$0.32

Normalized Funds from Operations Per Common ShareDiluted
�

$0.37

�

$0.36

�

$0.35

�

$0.36

�

$0.32

FFO Weighted Average Common Shares Outstanding
�
97,329

�
95,978

�
95,585

�
95,485

�
94,836


(1)
Funds from operations (FFO) and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REITs operating performance equal to net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
(2)
FFO does not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States of America and are not necessarily indicative of cash available to fund cash needs. FFO should not be considered alternatives to net income attributable to common stockholders as indicators of the Company's operating performance or as alternatives to cash flow as measures of liquidity.
(3)
FFO for the fourth quarter of 2013 includes the impact of a gain recognized on the sale of a cost method investment in an unconsolidated limited liability company.




�
�
�
�
�
�
HEALTHCARE REALTY I 5
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Balance Sheet Information
(dollars in thousands)
ASSETS
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
2014
�
�
2013
�
Real Estate Properties:
�
Q3

�
Q2

�
Q1

�
Q4

�
Q3

Land
�

$183,991

�

$183,581

�

$176,553

�

$178,931

�

$165,325

Buildings, improvements and lease intangibles
�
3,030,960

�
3,014,422

�
2,903,471

�
2,861,935

�
2,765,055

Personal property
�
9,535

�
9,504

�
9,369

�
9,267

�
9,217

Land held for development
�
17,054

�
17,054

�
17,054

�
17,054

�
17,054

Total real estate properties
�
3,241,540

�
3,224,561

�
3,106,447

�
3,067,187

�
2,956,651

Less accumulated depreciation
�
(693,517
)
�
(675,890
)
�
(652,349
)
�
(632,109
)
�
(610,402
)
Total real estate properties, net
�
2,548,023

�
2,548,671

�
2,454,098

�
2,435,078

�
2,346,249

Cash and cash equivalents
�
1,684

�
17,523

�
10,169

�
8,671

�
7,160

Mortgage notes receivable
�
1,900

�
4,858

�
86,372

�
125,547

�
126,409

Assets held for sale and discontinued operations, net
�
11,479

�
5,759

�
10,218

�
6,852

�
9,084

Other assets, net
�
178,238

�
173,299

�
160,267

�
153,514

�
155,961

Total assets
�

$2,741,324

�

$2,750,110

�

$2,721,124

�

$2,729,662

�

$2,644,863

�
�
�
�
�
�
�
�
�
�
�
LIABILITIES AND EQUITY
�
�
�
�
�
�
�
�
�
�
Liabilities:
�
�
�
�
�
�
�
�
�
�
Notes and bonds payable
�

$1,403,379

�

$1,397,027

�

$1,388,241

�

$1,348,459

�

$1,268,194

Accounts payable and accrued liabilities
�
60,017

�
72,460

�
50,682

�
73,741

�
57,610

Liabilities of discontinued operations
�
508

�
1,041

�
971

�
1,112

�
1,024

Other liabilities
�
57,913

�
60,232

�
59,436

�
61,064

�
59,706

Total liabilities
�
1,521,817

�
1,530,760

�
1,499,330

�
1,484,376

�
1,386,534

Commitments and contingencies
�
�
�
�
�
�
�
�
�
�
Equity:
�
�
�
�
�
�
�
�
�
�
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding
�


�


�


�


�


Common stock, $.01 par value; 150,000 shares authorized
�
981

�
972

�
960

�
959

�
959

Additional paid-in capital
�
2,374,345

�
2,348,925

�
2,326,889

�
2,325,228

�
2,324,140

Accumulated other comprehensive income
�
51

�
51

�
51

�
51

�
(2,092
)
Cumulative net income attributable to common stockholders
�
822,176

�
818,185

�
812,214

�
808,362

�
795,977

Cumulative dividends
�
(1,978,046
)
�
(1,948,783
)
�
(1,919,925
)
�
(1,891,123
)
�
(1,862,367
)
Total stockholders equity
�
1,219,507

�
1,219,350

�
1,220,189

�
1,243,477

�
1,256,617

Noncontrolling interests
�


�


�
1,605

�
1,809

�
1,712

Total equity
�
1,219,507

�
1,219,350

�
1,221,794

�
1,245,286

�
1,258,329

Total liabilities and equity
�

$2,741,324

�

$2,750,110

�

$2,721,124

�

$2,729,662

�

$2,644,863

OTHER INFORMATION
�
�
�
�
�
�
�
�
�
�
Acquisitions�(1)
�

$28,962

�

$100,742

�

$40,247

�

$103,392

�

$178,764

Dispositions
�
(2,300
)
�
(6,213
)
�


�
(20,541
)
�
(64,550
)
Real estate additions and improvements�(2)
�
10,431

�
24,766

�
10,030

�
22,730

�
11,518


(1)
In Q2 2014, the Company acquired a property in Oklahoma for $85.4 million of which $81.2 million was previously funded by the Company under a construction mortgage note receivable.
(2)
Included in the Q3 2014 real estate additions and improvements amount is approximately $2.5 million of improvements related to the Company's development conversion properties and approximately $1.7 million of redevelopment costs incurred.

�
�
�
�
�
�
HEALTHCARE REALTY I 6

�
3Q I 2014 SUPPLEMENTAL INFORMATION


Statements of Income Information
(dollars in thousands)
�
�
�
�
�
�
�
�
�
�
�
�
�
Three Months Ended
�
�
�
2014
�
�
2013
�
�
�
Q3

�
Q2

�
Q1

�
Q4

�
Q3

Revenues
�
�
�
�
�
�
�
�
�
�
Rental income
�

$92,987

�

$90,152

�

$87,374

�

$85,645

�

$78,161

Mortgage interest
�
44

�
969

�
2,621

�
2,411

�
3,926

Other operating
�
1,475

�
1,425

�
1,449

�
1,387

�
1,579

�
�
94,506

�
92,546

�
91,444

�
89,443

�
83,666

Expenses
�
�
�
�
�
�
�
�
�
�
Property operating
�
34,678

�
34,104

�
33,296

�
31,660

�
32,244

General and administrative
�
5,190

�
5,666

�
5,978

�
5,763

�
5,582

Depreciation
�
25,660

�
24,790

�
23,958

�
23,345

�
21,716

Amortization
�
2,656

�
2,775

�
2,759

�
2,826

�
2,595

Bad debt, net of recoveries
�
3

�
73

�
47

�
61

�
109

�
�
68,187

�
67,408

�
66,038

�
63,655

�
62,246

Other Income (Expense)
�
�
�
�
�
�
�
�
�
�
Interest expense
�
(18,192
)
�
(18,066
)
�
(17,918
)
�
(17,772
)
�
(17,043
)
Gain on sale of cost method investment in real estate
�


�


�


�
1,492

�


Interest and other income, net
�
410

�
2,036

�
100

�
260

�
237

�
�
(17,782
)
�
(16,030
)
�
(17,818
)
�
(16,020
)
�
(16,806
)
�
�
�
�
�
�
�
�
�
�
�
Income From Continuing Operations
�
8,537

�
9,108

�
7,588

�
9,768

�
4,614

�
�
�
�
�
�
�
�
�
�
�
Discontinued Operations
�
�
�
�
�
�
�
�
�
�
Income (loss) from discontinued operations
�
121

�
5

�
(200
)
�
(60
)
�
1,241

Impairments
�
(4,505
)
�
(3,105
)
�
(3,425
)
�


�
(6,259
)
Gain on sales of real estate properties
�


�
3

�


�
2,748

�
20,187

Income (Loss) From Discontinued Operations
�
(4,384
)
�
(3,097
)
�
(3,625
)
�
2,688

�
15,169

�
�
�
�
�
�
�
�
�
�
�
Net Income
�
4,153

�
6,011

�
3,963

�
12,456

�
19,783

Less: Net (income) attributable to noncontrolling interests
�
(162
)
�
(40
)
�
(111
)
�
(72
)
�
(18
)
Net Income Attributable To Common Stockholders
�

$3,991

�

$5,971

�

$3,852

�

$12,384

�

$19,765

Net Operating Income
�
�
�
�
�
�
�
�
�
�
Property operating income
�

$72,730

�

$71,926

�

$70,172

�

$67,870

�

$63,119

Single-tenant net lease
�
17,202

�
15,746

�
14,931

�
14,870

�
12,689

Straight-line rent
�
3,055

�
2,480

�
2,271

�
2,905

�
2,353

Rental income
�
92,987

�
90,152

�
87,374

�
85,645

�
78,161

Less: Property operating expense
�
(34,678
)
�
(34,104
)
�
(33,296
)
�
(31,660
)
�
(32,244
)
Less: Straight-line rent
�
(3,055
)
�
(2,480
)
�
(2,271
)
�
(2,905
)
�
(2,353
)
Add: Property lease guaranty revenue (a)
�
1,100

�
1,160

�
1,141

�
1,124

�
1,383

Net operating income
�

$56,354

�

$54,728

�

$52,948

�

$52,204

�

$44,947

(a) Other operating income reconciliation:
�
�
�
�
�
�
�
�
�
�
Property lease guaranty revenue
�

$1,100

�

$1,160

�

$1,141

�

$1,124

�

$1,383

Interest income
�
247

�
132

�
192

�
173

�
102

Other
�
128

�
133

�
116

�
90

�
94

Total consolidated other operating income
�

$1,475

�

$1,425

�

$1,449

�

$1,387

�

$1,579


�
�
�
�
�
�
HEALTHCARE REALTY I 7

�
3Q I 2014 SUPPLEMENTAL INFORMATION


Debt Metrics
(dollars in thousands)

SUMMARY OF INDEBTEDNESS
�
�
Q3 2014 Interest Expense

�
Balance as of
9/30/2014

�
Weighted Months�to
Maturity

�
Effective
Interest�Rate

Senior Notes due 2017, net of discount
�

$4,950

�

$299,231

�
28

�
6.62
%
Senior Notes due 2021, net of discount
�
5,822

�
397,791

�
76

�
5.86
%
Senior Notes due 2023, net of discount
�
2,388

�
248,208

�
103

�
3.85
%
Total Senior Notes Outstanding
�
13,160

�
945,230

�
67

�
5.57
%
Unsecured credit facility due 2017
�
347

�
84,000

�
31

�
1.55
%
Unsecured term loan facility due 2019
�
820

�
200,000

�
53

�
1.60
%
Mortgage notes payable, net
�
2,534

�
174,149

�
53

�
5.42
%
Total Outstanding Notes and Bonds Payable
�

$16,861

�

$1,403,379

�
61

�
4.75
%
Interest cost capitalization
�


�
�
�
�
�
�
Deferred financing costs
�
794

�
�
�
�
�
�
Unsecured credit facility fee
�
537

�
�
�
�
�
�
Total Quarterly Consolidated Interest Expense
�

$18,192

�
�
�
�
�
�


�
�
�
Calculation
�
Requirement
�
Trailing Twelve Months Ended 9/30/2014

Revolving Credit Facility and Term Loan
�
�
�
�
Leverage Ratio
�
Total Debt / Total Capital
�
Not greater than 60%
�
42.4
%
Secured Leverage Ratio
�
Total Secured Debt / Total Capital
�
Not greater than 30%
�
5.2
%
Unencumbered Leverage Ratio
�
Unsecured Debt / Unsecured Real Estate
�
Not greater than 60%
�
43.2
%
Fixed Charge Coverage Ratio
�
EBITDA / Fixed Charges
�
Not less than 1.65x
�
2.8x

Unsecured Coverage Ratio
�
Unsecured EBITDA / Unsecured Interest
�
Not less than 1.75x
�
3.1x

Tangible Net Worth
�
Tangible Net Worth - Required Base
�
Greater than $0
�
$826,010
Construction and Development
�
CIP / Total Assets
�
Not greater than 15%
�
0.0
%
Asset Investments
�
Mortgages & Unimproved Land / Total Assets
�
Not greater than 20%
�
0.7
%
�
�
�
�
�
�
�
Senior Notes
�
�
�

�

Incurrence of Total Debt
�
Total Debt / Total Assets
�
Not greater than 60%
�
41.0
%
Incurrence of Debt Secured by Any Lien
�
Secured Debt / Total Assets
�
Not greater than 40%
�
5.0
%
Maintenance of Total Unsecured Assets
�
Unencumbered Assets / Unsecured Debt
�
Not less than 150%
�
245.7
%
Debt Service Coverage
�
EBITDA / Interest Expense
�
Not less than 1.5x
�
3.1x

�
�
�
�
�
�
�
Other
�
�
�

�


Debt to EBITDA
�
Total Debt / EBITDA
�
Not required
�
6.5x


(1) Does not include all financial and non-financial covenants and restrictions that are required by the Company's various debt agreements.

�
�
�
�
�
�
HEALTHCARE REALTY I 8
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Investment Activity
(dollars in thousands)

�

2014 INVESTMENT ACTIVITY
�
�
�
�
�
�
�
�
�
�
�
Location
�
Property�Type
�
Closing
�
Purchase Price of Acquisition

�
Approximate
Square Feet

�
Aggregate
Leased %

Acquisitions
�
�
�
�
�
�
�
�
�
�
Austin, TX
�
MOB
�
6/4/2014
�

$8,676

�
48,048

�
95
%
Greensboro, NC
�
MOB
�
6/6/2014
�
6,500

�
35,292

�
100
%
Minneapolis, MN
�
MOB
�
7/28/2014
�
19,845

�
60,476

�
100
%
Tampa, FL
�
MOB
�
9/16/2014
�
7,930

�
47,962

�
89
%
Total
�
�
�
�
�

$42,951

�
191,778

�
96
%
�
�
�
�
�
�
�
�
�
�
�
Construction Mortgage Conversion (1)
Oklahoma City, OK
�
MOB
�
5/22/2014
�

$85,405

�
200,000

�
100
%


HISTORICAL INVESTMENT ACTIVITY
�
�
Acquisitions�(1)

�
Mortgage
Funding

�
Construction
Mortgage Funding

�
Development
Funding

�
Total Investments

�
Dispositions

2010
�

$301,600

�

$3,700

�

$20,740

�

$63,301

�

$389,341

�

$34,708

2011
�
150,312

�
40,000

�
61,931

�
79,375

�
331,618

�
22,700

2012
�
94,951

�


�
78,297

�
5,608

�
178,856

�
91,384

2013
�
216,956

�


�
58,731

�


�
275,687

�
101,910

2014
�
48,491

�
1,900

�
1,244

�


�
51,635

�
8,513

Total
�

$812,310

�

$45,600

�

$220,943

�

$148,284

�

$1,227,137

�

$259,215

% of Total
�
66.2
%
�
3.7
%
�
18.0
%
�
12.1
%
�
100.0
%
�
�

(1)
Net of mortgage notes receivable payoffs upon acquisition. In Q2 2014, the Company acquired a property in Oklahoma for $85.4 million of which $81.2 million was previously funded by the Company under a construction mortgage note receivable.


�
�
�
�
�
�
HEALTHCARE REALTY I 9
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Portfolio by Market
(dollars in thousands)�

BY MARKET
�
�
�
�
SQUARE FEET
�
�
MOB/OUTPATIENT (87.6%)
�
INPATIENT (7.9%)
�
OTHER (4.5%)
�
�
�
�
�
Investment(1)

Multi-tenant

�
Single-tenant Net Lease

�
Rehab

�
Surgical

�
Other

�
Total

�
% of Total

Dallas - Fort Worth, TX

$463,309

2,149,939

�
�
�
42,627

�
156,245

�
�
�
2,348,811

�
16.4
%
Charlotte, NC
165,808

820,457

�
�
�
�
�
�
�
�
�
820,457

�
5.8
%
Nashville, TN
102,012

794,912

�
�
�
�
�
�
�
�
�
794,912

�
5.6
%
Denver - Colorado Springs, CO
207,125

690,342

�
�
�
34,068

�
�
�
�
�
724,410

�
5.1
%
San Antonio, TX
127,574

649,978

�
�
�
39,786

�
�
�
�
�
689,764

�
4.8
%
Houston, TX
130,498

591,027

�
�
�
�
�
�
�
�
�
591,027

�
4.1
%
Richmond, VA
150,338

558,801

�
�
�
�
�
�
�
�
�
558,801

�
3.9
%
Indianapolis, IN
144,426

382,695

�
58,474

�
�
�
117,525

�
�
�
558,694

�
3.9
%
Los Angeles, CA
134,094

488,371

�
�
�
63,000

�
�
�
�
�
551,371

�
3.9
%
Des Moines, IA
134,446

233,413

�
146,542

�
�
�
�
�
152,655

�
532,610

�
3.7
%
Memphis, TN
90,215

515,876

�
�
�
�
�
�
�
�
�
515,876

�
3.6
%
Roanoke, VA
49,822



�
334,454

�
�
�
�
�
131,750

�
466,204

�
3.3
%
Seattle - Bellevue, WA
171,251

393,780

�
67,510

�
�
�
�
�
�
�
461,290

�
3.2
%
Austin, TX
124,073

351,725

�
�
�
66,095

�
�
�
�
�
417,820

�
2.9
%
Honolulu, HI
128,908

298,427

�
�
�
�
�
�
�
�
�
298,427

�
2.1
%
Phoenix, AZ
73,032

236,608

�
�
�
51,903

�
�
�
�
�
288,511

�
2.0
%
Chicago, IL
54,794

243,491

�
�
�
�
�
�
�
�
�
243,491

�
1.7
%
Washington, DC
39,911

241,739

�
�
�
�
�
�
�
�
�
241,739

�
1.7
%
Miami, FL
46,375

215,980

�
�
�
�
�
�
�
�
�
215,980

�
1.5
%
Other (34 markets)
680,989

1,645,284

�
417,621

�
373,722

�
186,000

�
355,466

�
2,978,093

�
20.8
%
Total

$3,219,000

11,502,845

�
1,024,601

�
671,201

�
459,770

�
639,871

�
14,298,288

�
100.0
%
Number of Investments
�
159

�
16

�
11

�
3

�
11

�
200

�
�
Number of Mortgages
�
1

�


�


�


�


�
1

�
�
Total Investments
�
160

�
16

�
11

�
3

�
11

�
201

�
�
Percent of Square Feet
�
80.4
%
�
7.2
%
�
4.7
%
�
3.2
%
�
4.5
%
�
100.0
%
�
�
Investment�(1)
�

$2,426,847

�

$261,339

�

$192,332

�

$252,093

�

$86,389

�

$3,219,000

�
�
Mortgages
�
1,900

�


�


�


�


�
1,900

�
�
Total $ Invested
�

$2,428,747

�

$261,339

�

$192,332

�

$252,093

�

$86,389

�

$3,220,900

�
�
% of $ Invested
�
75.4
%
�
8.1
%
�
6.0
%
�
7.8
%
�
2.7
%
�
100.0
%
�
�



ON/OFF CAMPUS BY SQUARE FEET
�
�
�
�
�
�
2014

�
2013
�
�
�
Q3

�
Q2

�
Q1

�
Q4

�
Q3

On/adjacent
�
81
%
�
81
%
�
80
%
�
80
%
�
79
%
Off (2)
�
19
%
�
19
%
�
20
%
�
20
%
�
21
%
�
�
100
%
�
100
%
�
100
%
�
100
%
�
100
%

(1)
Excludes gross assets held for sale, land held for development and corporate property.
(2)
Approximately 38% of the off-campus square feet is anchored by a hospital system.

�
�
�
�
�
�
HEALTHCARE REALTY I 10
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Square Feet by Type, Provider and Building Size (1)�

BY FACILITY TYPE
�
�
Managed
by HR

�
Managed�by
Third Party

�
Single-Tenant
Net Leases

�
Total

�
Percent�of
Total

�
Third�Party
Managed�by HR

�
Total

Medical Office/Outpatient
�
9,055,216

�
2,447,629

�
1,024,601

�
12,527,446

�
87.6
%
�
449,700

�
12,977,146

Inpatient Rehab
�
�
�
�
�
671,201

�
671,201

�
4.7
%
�
�
�
671,201

Inpatient Surgical
�
�
�
�
�
459,770

�
459,770

�
3.2
%
�
�
�
459,770

Other
�
157,978

�
255,721

�
226,172

�
639,871

�
4.5
%
�
�
�
639,871

Total Square Feet
�
9,213,194

�
2,703,350

�
2,381,744

�
14,298,288

�
100.0
%
�
449,700

�
14,747,988

Percent of Total Square Footage
�
64.4
%
�
18.9
%
�
16.7
%
�
100.0
%
�
�
�
�
�
�
Total Number of Properties
�
129

�
34

�
37

�
200

�
�
�
�
�
�
BY PROVIDER
�
�
�
�
�
�
�
�
�
�
�
�
Top Providers
�
Credit Rating
�
Associated Buildings (2)

�
Associated SF (2)

�
% of Total SF(3)

�
Leased SF Total

�
% of Total SF

Baylor Scott & White Health
�
A+/Aa3
�
25

�
2,357,719

�
16.5
%
�
1,225,277

�
8.6
%
Ascension Health
�
AA+/Aa2
�
17

�
1,167,438

�
8.2
%
�
290,204

�
2.0
%
Catholic Health Initiative
�
A+/A1
�
12

�
901,855

�
6.3
%
�
492,920

�
3.4
%
HCA
�
B+/B3
�
14

�
863,596

�
6.0
%
�
438,423

�
3.1
%
Tenet Healthcare Corporation
�
B/B1
�
11

�
759,084

�
5.3
%
�
198,706

�
1.4
%
Carolinas HealthCare System
�
--/Aa3
�
15

�
729,824

�
5.1
%
�
574,418

�
4.0
%
Bon Secours Health System
�
A-/A3
�
7

�
548,801

�
3.8
%
�
247,877

�
1.7
%
Baptist Memorial Health Care
�
�AA-/--
�
7

�
515,876

�
3.6
%
�
130,809

�
0.9
%
Mercy
�
AA-/Aa3
�
2

�
386,000

�
2.7
%
�
386,000

�
2.7
%
Indiana University Health
�
AA-/Aa3
�
3

�
382,695

�
2.7
%
�
243,072

�
1.7
%
Healthsouth
�
BB-/Ba3
�
5

�
346,894

�
2.4
%
�
346,894

�
2.4
%
University of Colorado Health
�
A+/A1
�
5

�
345,240

�
2.4
%
�
131,425

�
0.9
%
CHE Trinity Health
�
AA-/Aa2
�
2

�
278,904

�
2.0
%
�
176,491

�
1.2
%
Medstar
�
A-/A2
�
3

�
241,739

�
1.7
%
�
125,481

�
0.9
%
Advocate Health Care
�
AA/Aa2
�
2

�
238,391

�
1.7
%
�
69,128

�
0.5
%
Memorial Hermann
�
A+/A1
�
4

�
206,090

�
1.4
%
�
82,686

�
0.6
%
Providence Health & Services
�
AA-/Aa3
�
4

�
202,729

�
1.4
%
�
129,826

�
0.9
%
Overlake Hospital
�
A/A2
�
1

�
191,051

�
1.3
%
�
45,610

�
0.3
%
Ortho Indy
�
N/R
�
2

�
175,999

�
1.2
%
�
175,999

�
1.2
%
Hawaii Pacific Health
�
A-/A2
�
2

�
173,502

�
1.2
%
�
58,194

�
0.4
%
Other- Credit Rated
�
�
�
14

�
654,807

�
4.6
%
�
�
�
�
Total - Credit Rated
�
�
�
155

�
11,492,235

�
80.3
%
�
�
�
�
Total
�
�
�
200

�
14,298,288

�
100.0
%
�
�
�
�
BY BUILDING SQUARE FEET
Size Range by Square Feet
�
%�of�Total

�
Total Square
Footage

�
Average
Square�Feet

�
Number of
Properties

>100,000
�
44.4
%
�
6,353,143

�
144,390

�
44

<100,000 and >75,000
�
23.4
%
�
3,337,081

�
85,566

�
39

<75,000 and >50,000
�
17.2
%
�
2,458,410

�
63,036

�
39

<50,000
�
15.0
%
�
2,149,654

�
27,560

�
78

Total
�
100.0
%
�
14,298,288

�
71,491

�
200


(1)
Excludes mortgage notes receivable and assets classified as held for sale.
(2)
Associated buildings and square footage refers to on-campus, adjacent or off-campus/affiliated properties associated with these healthcare providers.
(3)
Based on square footage, 80.3% of HR's portfolio is associated with a credit rated healthcare provider and 65.4% is associated with an investment-grade rated healthcare provider.

�
�
�
�
�
�
HEALTHCARE REALTY I 11
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Lease Maturity and Tenant Size (1)�
(dollars in thousands)



LEASE MATURITY SCHEDULE
�
�
�
�
NUMBER OF LEASES
�
�
�
�
�
�
Annualized Minimum Rents (2)
�
Multi-Tenant
Properties

�
Single-Tenant
Net Lease Properties

�
Percentage of Revenues

�
Total�Sq.�Ft.

2014
�
$15,582
�
177

�
1

�
5.3
%
�
641,850

2015
�
36,642
�
383

�


�
12.5
%
�
1,418,457

2016
�
33,467
�
306

�
4

�
11.4
%
�
1,239,408

2017
�
37,725
�
295

�
5

�
12.9
%
�
1,568,454

2018
�
30,336
�
245

�


�
10.4
%
�
1,194,935

2019
�
34,489
�
219

�
9

�
11.8
%
�
1,362,448

2020
�
16,391
�
71

�
1

�
5.6
%
�
609,634

2021
�
11,700
�
66

�
2

�
4.0
%
�
491,286

2022
�
15,509
�
60

�
2

�
5.3
%
�
620,370

2023
�
16,373
�
90

�
1

�
5.6
%
�
646,361

Thereafter
�
44,326
�
53

�
12

�
15.2
%
�
1,564,219




AVERAGE TENANT SIZE
�
�
NUMBER OF LEASES
Square Footage
�
Multi-Tenant Properties (3)

�
Single-Tenant
Net Lease Properties

0 - 2,500
�
972

�


2,501 - 5,000
�
532

�


5,001 - 7,500
�
177

�
1

7,501 - 10,000
�
85

�
1

10,001 +
�
199

�
35

Total Leases
�
1,965

�
37


(1)
Excludes mortgage notes receivable, construction in progress, corporate property and assets classified as held for sale.
(2)
Represents the annualized minimum rents on leases in-place, excluding the impact of potential lease renewals, and sponsor support payments under financial support agreements and straight-line rent.
(3)
The average lease size in the multi-tenant properties is 4,568 square feet.








�
�
�
�
�
�
HEALTHCARE REALTY I 12
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Occupancy Information (1)�
(dollars in thousands)�


OCCUPANCY
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
2014

�
2013
�
�
Investment�at� 9/30/2014

Square Feet at 9/30/2014

�
Q3

�
Q2

�
Q1

�
Q4

�
Q3

Multi-Tenant
�
�
�
�
�
�
�
�
�
�
�
�
Same store properties, as reported (2)

$1,606,109

8,511,705

�
88.4
%
�
88.3
%
�
88.3
%
�
88.4
%
�
89.0
%
Acquisitions
258,609

970,438

�
88.7
%
�
93.0
%
�
93.6
%
�
93.0
%
�
90.8
%
Development conversions�(3)
443,486

1,282,716

�
78.1
%
�
69.8
%
�
65.5
%
�
63.3
%
�
56.8
%
Reposition
180,264

1,151,685

�
53.2
%
�
52.6
%
�
54.1
%
�
53.5
%
�
53.4
%
Total

$2,488,468

11,916,544

�
83.9
%
�
83.2
%
�
82.8
%
�
82.2
%
�
81.6
%
�
�
�
�
�
�
�
�
�
�
�
�
�
Single-Tenant Net lease
�
�
�
�
�
�
�
�
�
�
�
�
Same store properties, as reported (2)

$517,243

1,961,676

�
100.0
%
�
100.0
%
�
100.0
%
�
100.0
%
�
100.0
%
Acquisitions
213,289

420,068

�
100.0
%
�
100.0
%
�
100.0
%
�
100.0
%
�
100.0
%
Total

$730,532

2,381,744

�
100.0
%
�
100.0
%
�
100.0
%
�
100.0
%
�
100.0
%
�
�
�
�
�
�
�
�
�
�
�
�
�
Total
�
�
�
�
�
�
�
�
�
�
�
�
Same store properties, as reported (2)

$2,123,352

10,473,381

�
90.6
%
�
90.5
%
�
90.5
%
�
90.5
%
�
91.0
%
Acquisitions
471,898

1,390,506

�
92.1
%
�
95.5
%
�
95.2
%
�
95.5
%
�
95.2
%
Development conversions�(3)
443,486

1,282,716

�
78.1
%
�
69.8
%
�
65.5
%
�
63.3
%
�
56.8
%
Reposition
180,264

1,151,685

�
53.2
%
�
52.6
%
�
54.1
%
�
53.5
%
�
53.4
%
Total

$3,219,000

14,298,288

�
86.6
%
�
86.1
%
�
85.5
%
�
85.1
%
�
84.6
%
�
�
�
�
�
�
�
�
�
�
�
�
�
# of Properties
�
�
�
�
�
�
�
�
�
�
�
�
Same store properties, as reported (2)
�
�
�
155

�
156

�
156

�
152

�
153

Acquisitions
�
�
�
14

�
13

�
11

�
14

�
9

Development conversions�(3)
�
�
�
12

�
12

�
12

�
12

�
12

Reposition
�
�
�
19

�
19

�
19

�
20

�
20

Total
�
�
�
200

�
200

�
198

�
198

�
194


(1)
Excludes mortgage notes receivable, land held for development, construction in progress, corporate property and assets classified as held for sale.
(2)
In order to provide meaningful comparisons, same store properties occupancy excludes properties that were recently acquired or disposed of, properties held for sale, and development conversions.
(3)
Development conversions represent properties that were previously included as stabilization in process properties ("SIP"). The properties have converted from the stabilization in process category in Q4 2013, but will require a five quarter conversion period before the properties can be included with the same store properties. The development conversions are 82% leased, 78% occupied and provided $3.3 million of aggregate NOI for the third quarter of 2014. The difference between occupied and leased reflects tenants that have signed leases but have not taken occupancy because of buildout of the suite. The Company funded $2.5 million in the third quarter of 2014 and expects to fund an additional $2 million to $7 million in tenant improvements related to these properties during 2014. Had all the occupants at September 30, 2014 occupied and paid rent for an entire quarter, NOI would have been $4.7 million.

�
�
�
�
�
�
HEALTHCARE REALTY I 13
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Same Store Leasing Statistics (1)(2)�


�
�
�
�
�
�
�
�
2014
�
�
2013
�
�
Q3

Q2

Q1

�
Q4

Q3

Contractual increases for in-place leases ("annual bumps")
�
�
�
�
�
�
Multi-tenant properties
3.0
%
3.0
%
2.9
%
�
3.1
%
3.0
%
Single-tenant net lease properties
3.5
%
2.1
%
1.7
%
�
3.0
%
2.2
%
Newly executed leases ("cash leasing spreads"), multi-tenant properties
1.4
%
2.5
%
2.0
%
�
1.6
%
2.7
%
Tenant retention rate, multi-tenant properties
85.9
%
89.7
%
77.4
%
�
78.4
%
85.2
%


�
�
�
�
As of 9/30/2014

�
Multi-Tenant Contractual Rental Rate Increases by Type
�
�
Annual increase
80.7
%
�
Non-annual increase
10.3
%
�
No increase (term < 1 year)
3.7
%
�
No increase (term > 1 year)
5.3
%
�
�
�
�
Tenant Type
�
�
Multi-Tenant properties
�
�
Hospital
46.6
%
�
Physician and other
53.4
%
�
Single-Tenant net lease properties
�
�
Hospital
87.8
%
�
Other
12.2
%
�
�
�
�
Lease Structure, multi-tenant only
�
Gross
20.0
%
�
Modified gross
38.0
%
�
Net
42.0
%
�
�
�
�
Ownership Type
�
Ground lease
55.9
%
�
Fee simple
44.1
%
�


(1)
Excludes mortgage notes receivable, construction in progress, land held for development, corporate property, development conversions, reposition properties and assets classified as held for sale.
(2)
All percentages presented are calculated based on total square feet.




�
�
�
�
�
�
HEALTHCARE REALTY I 14
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Same Store Properties
(dollars in thousands)�
SAME STORE PROPERTIES�(1)(2)
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
SEQUENTIAL
�
YEAR-OVER-YEAR
�
�
3Q 2014

�
2Q 2014

�
3Q 2013

�
$ Change

�
% Change

�
$ Change

�
% Change

Multi-tenant
�
�
�
�
�
�
�


�


�


�


Revenues
�

$55,908

�

$55,542

�

$54,685

�

$366

�
0.7
�%
�

$1,223

�
2.2
�%
Expenses
�
24,488

�
24,150

�
24,514

�
338

�
1.4
�%
�
(26
)
�
(0.1
)%
NOI
�

$31,420

�

$31,392

�

$30,171

�

$28

�
0.1
�%
�

$1,249

�
4.1
�%
Occupancy
�
88.4
%
�
88.3
%
�
89.0
%
�
�
�
�
�
�
�
�
Number of properties
�
121

�
121

�
121

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Single-tenant net lease
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Revenues
�

$13,126

�

$13,059

�

$12,964

�

$67

�
0.5
�%
�

$162

�
1.2
�%
Expenses
�
299

�
421

�
410

�
(122
)
�
(29.0
)%
�
(111
)
�
(27.1
)%
NOI
�

$12,827

�

$12,638

�

$12,554

�

$189

�
1.5
�%
�

$273

�
2.2
�%
Occupancy
�
100.0
%
�
100.0
%
�
100.0
%
�
�
�
�
�
�
�
�
Number of properties
�
34

�
34

�
34

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Total Revenues
�

$69,034

�

$68,601

�

$67,649

�

$433

�
0.6
�%
�
$1,385
�
2.0
�%
Total Expenses
�
24,787

�
24,571

�
24,924

�
216

�
0.9
�%
�
(137
)
�
(0.5
)%
Total NOI
�

$44,247

�

$44,030

�

$42,725

�

$217

�
0.5
�%
�

$1,522

�
3.6
�%
Occupancy
�
90.6
%
�
90.5
%
�
91.0
%
�
�
�
�
�
�
�
�
Number of properties
�
155

�
155

�
155

�
�
�
�
�
�
�
�
RECONCILIATION OF NOI
�
�
3Q 2014

�
2Q 2014

�
3Q 2013

Rental income
�

$92,987

�

$90,152

�

$78,161

Property lease guaranty revenue (a)
�
1,100

�
1,160

�
1,383

Exclude straight-line rent revenue
�
(3,055
)
�
(2,480
)
�
(2,353
)
Revenue
�
91,032

�
88,832

�
77,191

Revenue not included in same store
�
(21,998
)
�
(20,231
)
�
(9,542
)
Same store revenue
�

$69,034

�

$68,601

�

$67,649

�
�
�
�
�
�
�
Property operating expense
�

$34,678

�

$34,104

�

$32,244

Property operating expense not included in same store
�
(9,891
)
�
(9,533
)
�
(7,320
)
Same store property operating expense
�

$24,787

�

$24,571

�

$24,924

�
�
�
�
�
�
�
Same store NOI
�

$44,247

�

$44,030

�

$42,725

(a) Other operating income reconciliation:
�
�
�
�
�
�
Property lease guaranty revenue
�

$1,100

�

$1,160

�

$1,383

Interest income
�
247

�
132

�
102

Other
�
128

�
133

�
94

Total consolidated other operating income
�

$1,475

�

$1,425

�

$1,579


(1)
Excludes mortgage notes receivable, construction in progress, land held for development, corporate property, development conversions, reposition properties and assets classified as held for sale.
(2)
In order to provide meaningful comparisons, same store NOI excludes properties that were recently acquired or disposed of, properties held for sale, and development conversions.


�
�
�
�
�
�
HEALTHCARE REALTY I 15
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Components of Net Asset Value
(dollars in thousands)�
�
�
�
�
�
�
�
�
�
�
�
Asset Type
�

3Q�2014� NOI�(1)

�
Adjustments�(2)

�
Adjusted
3Q�2014� NOI

�
Annualized Adjusted 3Q 2014 NOI

�
% of
Adjusted NOI

Same Store Properties
�
�
�
�
�
�
�
�
�
�
MOB / Outpatient
�

$35,138

�

$4,786

�

$39,924

�

$159,696

�
67.3
%
Inpatient rehab
�
4,527

�
256

�
4,783

�
19,132

�
8.1
%
Inpatient surgical
�
3,149

�
2,305

�
5,454

�
21,816

�
9.2
%
Other
�
1,433

�
801

�
2,234

�
8,936

�
3.8
%
Subtotal
�

$44,247

�

$8,148

�

$52,395

�

$209,580

�
88.4
%
�
�
�
�
�
�
�
�
�
�
�
Development conversions�(3)
�

$3,289

�

$3,586

�

$6,875

�

$27,500

�
11.6
%
Total NOI
�

$47,536

�

$11,734

�

$59,270

�

$237,080

�
100.0
%
TOTAL SHARES OUTSTANDING (AS OF OCTOBER 31, 2014)����98,177,187
+
ADD: LAND AND MORTGAGES (GROSS BOOK VALUE)
�
Land held for development

$17,054

�
Mortgage notes receivable
1,900

�
Subtotal

$18,954

�
�
�
+
ADD: OTHER ASSETS
�
�
Assets held for sale (4)
18,615

�
Reposition properties (5)
112,289

�
Cash and other assets (6)
75,881

�
Subtotal

$206,785

�
�
�
�
�
�
-
SUBTRACT: DEBT
�
�
Unsecured credit facility

$84,000

�
Unsecured term loan
200,000

�
Senior notes
945,230

�
Mortgage notes payable
174,149

�
Remaining development TI
9,000

�
Other liabilities (7)
85,342

�
Subtotal

$1,497,721


(1)
See Same Store Properties schedule on page 16 for details on same store NOI.
(2)
Same store NOI is adjusted to reflect a full quarter of NOI from properties acquired during the prior five quarters.
(3)
Development conversions represent properties that were previously included as stabilization in process properties ("SIP"). The properties have converted from the stabilization in process category, but will require a five quarter conversion period before the properties can be included with the same store properties. The development conversions are 82% leased and 78% occupied. The difference between occupied and leased reflects tenants that have signed leases but have not taken occupancy because of buildout of the suite. The Company funded $2.5 million in the third quarter of 2014 and expects to fund an additional $2 million to $7 million in tenant improvements related to these properties during 2014. Had all the occupants at September 30, 2014 occupied and paid rent for an entire quarter, NOI would have been $4.7 million. Development conversions adjustments represent an estimated full stabilization rate of $6.9 million per quarter.
(4)
Assets held for sale are excluded from same store NOI and reflect net book value or the contractual purchase price, if applicable.
(5)
Reflects net carrying amount of certain properties not included in same store NOI, which comprises 1,151,685 square feet and generated NOI of approximately $0.7 million for 3Q 2014.
(6)
Includes cash of $1.7 million and other assets of $74.2 million that are expected to generate future cash or NOI and assets that are currently causing non-cash reductions to NOI. Other assets include prepaid assets of $60.5 million and above-market intangible assets (net) of $13.7 million.
(7)
Includes only liabilities that are expected to reduce future cash or NOI and that are currently producing non-cash benefits to NOI. Included are accounts payable and accrued liabilities of $60.5 million, pension plan liability of $13.9 million, security deposits of $6.2 million, market-rate lease intangibles of $4.3 million, and deferred operating expense reimbursements of $0.4 million. Also, excludes deferred revenue of $33.1 million.

�
�
�
�
�
�
HEALTHCARE REALTY I 16
�
3Q I 2014 SUPPLEMENTAL INFORMATION


Components of Expected 2014 FFO
(dollars in thousands, except per square foot data)

SAME STORE QUARTERLY RANGE OF EXPECTATIONS
�
�
�
�
�
�
Low

�
High

Occupancy
�
�
�
�
Multi-Tenant
�
87.0
%
�
89.0
%
Single-Tenant Net Lease
�
95.0
%
�
100.0
%
�
�
�
�
�
Revenue per Occupied Square Foot
�
�
�
�
Multi-Tenant
�

$28.00

�

$31.00

Single-Tenant Net Lease
�

$25.00

�

$27.00

�
�
�
�
�
Multi-Tenant NOI Margin
�
55.0
%
�
60.0
%
�
�
�
�
�
Multi-Tenant Contractual Rent Increases by Type (% of SF)
�
�
�
�
Annual Increase
�
75.0
%
�
85.0
%
Non-annual Increase
�
7.5
%
�
12.0
%
No Increase (term < 1 year)
�
3.0
%
�
5.0
%
No Increase (term > 1 year)
�
4.0
%
�
6.0
%
�
�
�
�
�
Contractual Annual Rent Increases
�
�
�
�
Multi-Tenant
�
3.0
%
�
3.5
%
Single-Tenant Net Lease
�
2.0
%
�
3.0
%
�
�
�
�
�
Multi-Tenant Cash Releasing Spreads
�
0.5
%
�
3.0
%
�
�
�
�
�
Multi-Tenant Lease Retention Rate
�
75.0
%
�
85.0
%
�
�
�
�
�
ANNUAL RANGE OF EXPECTATIONS
�
�
�
�
�
�
Low

�
High

Development Conversions ("SIP")
�
�
�
�
Year-End 2014 Occupancy Percentage
�
80.0
%
�
85.0
%
Year-End 2014 Quarterly Cash NOI
�
$4,000
�
$4,500
�
�
�
�
�
Same Store Multi-Tenant NOI Growth
�
2.0
%
�
4.0
%
�
�
�
�
�
Normalized G&A
�
$22,500
�
$24,000
�
�
�
�
�
Funding Activity
�
�
�
�
Development Conversions Funding (tenant improvements)
�
$10,000
�
$20,000
Construction Mortgage Funding
�
$10,000
�
$12,000
Acquisitions
�
$75,000
�
$150,000
Dispositions
�
$40,000
�
$60,000
�
�
�
�
�
Cap/Interest Rate
�
�
�
�
Acquisitions
�
6.00
%
�
7.00
%
Dispositions
�
5.75
%
�
6.75
%
�
�
�
�
�
Leverage (Debt/Cap)
�
40.0
%
�
45.0
%




�
�
�
�
�
�
HEALTHCARE REALTY I 17
�
3Q I 2014 SUPPLEMENTAL INFORMATION
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�


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