Healthcare Realty Trust Reports Normalized FFO Of $0.34 Per Share For The Second Quarter

HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Balance Sheets ⁽¹⁾
(dollars in thousands, except for share data)
(Unaudited)

ASSETS

Real Estate Properties:

6/30/2012

12/31/2011

Land

$ 163,211

$ 162,843

Buildings, improvements, and lease intangibles

2,552,106

2,521,226

Personal property

18,776

18,221

Construction in progress

34,180

86,328

Total real estate properties 

2,768,273

2,788,618

Less accumulated depreciation

(545,677)

(516,747)

Total real estate properties, net

2,222,596

2,271,871

Cash and cash equivalents

3,103

4,738

Mortgage notes receivable

118,059

97,381

Assets held for sale and discontinued operations, net

12,921

28,650

Other assets, net

115,645

118,382

Total assets

$ 2,472,324

$ 2,521,022

LIABILITIES AND EQUITY

Liabilities:

Notes and bonds payable

$ 1,395,600

$ 1,393,537

Accounts payable and accrued liabilities

57,785

72,217

Liabilities of discontinued operations

174

518

Other liabilities

52,570

49,944

Total liabilities

1,506,129

1,516,216

Commitments and contingencies

Equity:

Preferred stock, $.01 par value; 50,000,000 shares authorized; none issued and outstanding

-

-

Common stock, $.01 par value; 150,000,000 shares authorized; 78,002,812 and 77,843,883

shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively

780

779

Additional paid-in capital

1,896,735

1,894,604

Accumulated other comprehensive loss

(3,332)

(3,332)

Cumulative net income attributable to common stockholders

801,993

795,951

Cumulative dividends

(1,729,981)

(1,683,196)

Total stockholders' equity

966,195

1,004,806

Total liabilities and equity

$ 2,472,324

$ 2,521,022

(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.

HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Operations ⁽¹⁾
(dollars in thousands, except for share data)
(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Revenues

Property operating 

$ 60,948

$ 53,320

$ 119,913

$ 105,141

Single-tenant net lease

12,833

13,459

25,092

27,503

Straight-line rent

1,542

1,076

3,449

2,364

Mortgage interest 

2,039

1,825

4,331

3,474

Other operating 

1,374

2,047

3,146

4,345

78,736

71,727

155,931

142,827

Expenses

Property operating 

29,457

27,773

58,039

55,210

General and administrative

4,519

5,157

9,782

10,938

Depreciation

21,311

18,487

42,333

36,756

Amortization

2,540

1,778

5,077

3,555

Bad debt, net 

149

93

109

271

57,976

53,288

115,340

106,730

Other Income (Expense)

Loss on extinguishment of debt

-

-

-

(1,986)

Interest expense

(18,530)

(17,343)

(36,909)

(39,617)

Interest and other income, net

203

196

508

418

(18,327)

(17,147)

(36,401)

(41,185)

Income (Loss) From Continuing Operations

2,433

1,292

4,190

(5,088)

Discontinued Operations

Income from discontinued operations

659

719

2,777

1,448

Impairments

(167)

-

(4,336)

(147)

Gain on sales of real estate properties

3

-

3,431

36

Income From Discontinued Operations

495

719

1,872

1,337

Net Income (Loss)

2,928

2,011

6,062

(3,751)

Less:  Net income attributable to noncontrolling interests

(20)

-

(20)

(27)

Net Income (Loss) Attributable to Common Stockholders 

$ 2,908

$ 2,011

$ 6,042

$ (3,778)

Basic Earnings (Loss) Per Common Share 

Income (loss) from continuing operations

$ 0.03

$ 0.02

$ 0.05

$ (0.07)

Discontinued operations 

0.01

0.01

0.03

0.02

Net income (loss) attributable to common stockholders

$ 0.04

$ 0.03

$ 0.08

$ (0.05)

Diluted Earnings (Loss) Per Common Share

Income (loss) from continuing operations

$ 0.03

$ 0.02

$ 0.05

$ (0.07)

Discontinued operations 

0.01

0.01

0.03

0.02

Net income (loss) attributable to common stockholders

$ 0.04

$ 0.03

$ 0.08

$ (0.05)

Weighted Average Common Shares Outstanding - Basic

76,462,266

72,035,154

76,444,487

69,109,543

Weighted Average Common Shares Outstanding - Diluted

77,712,493

73,149,232

77,678,362

69,109,543

(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. 

HEALTHCARE REALTY TRUST INCORPORATED
Condensed Consolidated Statements of Cash Flows⁽¹⁾
(dollars in thousands)
(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Cash flows from operating activities:

Net income (loss)

$ 2,928

$ 2,011

$ 6,062

$ (3,751)

NON-CASH ITEMS:

Depreciation and amortization - real estate

23,467

20,410

46,896

40,592

Depreciation and amortization - other

1,563

1,654

2,866

3,327

Provision for bad debt, net 

150

93

108

287

Gain on sales of real estate properties

(3)

-

(3,431)

(36)

Impairments

167

-

4,336

147

Straight-line rent receivable

(1,545)

(1,109)

(3,445)

(2,395)

Straight-line rent liability

112

149

202

246

Stock-based compensation

721

661

1,653

1,602

Provision for deferred post-retirement benefits

266

459

532

918

    Total non-cash items

24,898

22,317

49,717

44,688

OTHER ITEMS:

Accounts payable and accrued liabilities

11,055

9,067

(9,573)

2,649

Other liabilities

219

5,081

2,541

6,299

Other assets

2,760

(1,655)

4,050

(5,376)

Loss on extinguishment of debt

-

-

-

1,986

    Total other items

14,034

12,493

(2,982)

5,558

    Net cash provided by operating activities

41,860

36,821

52,797

46,495

Cash flows from investing activities:

Acquisition and development of real estate properties

(17,196)

(57,574)

(61,522)

(83,111)

Funding of mortgages and notes receivable

(15,772)

(34,361)

(28,550)

(83,141)

Proceeds from sales of real estate

29,485

-

36,109

3,775

Proceeds from mortgage repayment by consolidated variable interest entity

-

-

35,057

-

Proceeds from mortgages and notes receivable repayments

4,507

40

9,232

58

    Net cash provided by (used in) investing activities

1,024

(91,895)

(9,674)

(162,419)

Cash flows from financing activities:

Net borrowings (repayments) on unsecured credit facility

(22,000)

(41,000)

4,000

123,000

Repayments on notes and bonds payable

(1,223)

(810)

(2,436)

(1,616)

Repurchase of notes payable

-

-

-

(280,201)

Dividends paid

(23,398)

(22,325)

(46,785)

(42,570)

Proceeds from issuance of common stock

230

134,033

511

224,045

Purchase of noncontrolling interests 

-

-

-

(1,591)

Common stock redemptions

-

-

(45)

(51)

Debt issuance costs

-

-

(3)

(356)

Distributions to noncontrolling interest holders

-

(55)

-

(281)

   Net cash provided by (used in) financing activities

(46,391)

69,843

(44,758)

20,379

Increase (decrease) in cash and cash equivalents

(3,507)

14,769

(1,635)

(95,545)

Cash and cash equivalents, beginning of period

6,610

3,007

4,738

113,321

Cash and cash equivalents, end of period

$ 3,103

$ 17,776

$ 3,103

$ 17,776

(1)

The Condensed Consolidated Statements of Cash Flows 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.

HEALTHCARE REALTY TRUST INCORPORATED
Reconciliation of Funds from Operations^{(1) (2)}
(dollars in thousands, except per share data)
(Unaudited)

Three Months Ended June 30, 2012

Three Months Ended June 30, 2011⁽⁴⁾

Net Income Attributable to Common Stockholders

$ 2,908

$ 2,011

Gain on sales of real estate properties

(3)

-

Impairments

167

-

Real estate depreciation and amortization

23,467

20,410

Total adjustments

23,631

20,410

Funds From Operations

$ 26,539

$ 22,421

Acquisition costs

-

299

Normalized Funds From Operations

$ 26,539

$ 22,720

Funds From Operations Per Common Share - Diluted

$ 0.34

$ 0.31

Normalized Funds From Operations Per Common Share - Diluted

$ 0.34

$ 0.31

Weighted Average Common Shares Outstanding - Diluted

77,712,493

73,149,232

Reconciliation of Funds Available for Distribution⁽²⁾
(Dollars in thousands, except per share data)
(Unaudited)

Three Months Ended June 30, 2012

Three Months Ended June 30, 2011⁽⁴⁾

Net Income Attributable to Common Stockholders

$ 2,908

$ 2,011

Gain on sales of real estate properties

(3)

-

Impairments

167

-

Other non-cash items

24,734

22,317

Total non-cash items included in cash flows from operating activities (3)

24,898

22,317

Funds Available For Distribution

$ 27,806

$ 24,328

Acquisition costs

-

299

Normalized Funds Available For Distribution

$ 27,806

$ 24,627

Funds Available For Distribution Per Common Share - Diluted

$ 0.36

$ 0.33

Normalized Funds Available For Distribution Per Common Share - Diluted

$ 0.36

$ 0.34

Weighted Average Common Shares Outstanding - Diluted

77,712,493

73,149,232

(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 REIT's 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."  The SEC indicated in 2003 that impairment charges (losses) could not be added back to net income attributable to common stockholders in calculating FFO.  However, in late October 2011, NAREIT issued an alert indicating that the SEC staff recently advised NAREIT that it currently takes no position on the matter of whether impairment charges should be added back to net income to compute FFO, and NAREIT affirmed its original definition of FFO.  The Company follows the NAREIT definition 

to exclude impairment charges and all prior periods have been restated to agree with current presentation.

(2)

FFO and Funds Available For Distribution ("FAD") do 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 and FAD  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)

See the Condensed Consolidated Statements of Cash Flows that are included in this earnings release.

(4)

Normalization was not previously reported.  Adjustments have been reflected in accordance with the current presentation.