Healthcare Realty Trust (HR) Q2 2024 earnings summary

Executive summary

• Delivered strong Q2 2024 results with normalized FFO of $0.38 per share, or $0.39 excluding a $3 million Steward revenue reserve, and reported a net loss of $143.8 million due to significant impairment charges.

• Owns nearly 700 properties across 35 states, totaling over 40 million square feet, with 93% outpatient medical facilities and 72% located on or adjacent to hospital campuses as of June 30, 2024.

• Largest medical office building (MOB) platform among public REITs, with deep relationships with top health systems and significant exposure to high-growth MSAs.

• No real estate acquisitions in the first half of 2024; 25 properties disposed or contributed to joint ventures for $464.9 million, with over $1 billion in asset sale proceeds expected by end of Q3.

• Repurchased 18.5 million shares for $294.5 million year-to-date, with a new $500 million repurchase authorization in April 2024.

Financial highlights

• Normalized FFO per share was $0.38 for Q2 2024, or $0.39 excluding Steward revenue reserves, at the upper end of guidance.

• Rental income for Q2 2024 was $308.1 million, down 6.5% year-over-year; six-month rental income was $626.2 million, down 4.2%.

• Same-store NOI grew 3.5% in Q2 (excluding Steward reserve), and multi-tenant NOI growth reached 3.9%.

• Operating expenses declined nearly 1% year-over-year and are expected to remain below 3% growth for the full year.

• Net loss attributable to common stockholders for Q2 2024 was $(143.8) million, or $(0.39) per diluted share, driven by $250.5 million goodwill impairment and $136.9 million real estate impairments.

Outlook and guidance

• 2024 Normalized FFO per share guidance affirmed at $1.53–$1.58, with the midpoint raised by $0.005; would have been $0.01 higher without the Steward reserve.

• Management expects to meet liquidity needs through cash flows from operations and $1.3 billion undrawn on the unsecured credit facility as of June 30, 2024.

• Expect multi-tenant occupancy gains of 150–200 basis points over five quarters, with continued NOI growth toward 5%.

• Full dividend coverage expected going into 2025, with further improvement anticipated in 2025 and 2026.

• Guidance includes share repurchases, expected debt repayment, and impact of JV/asset sales.