Healthcare Realty Trust (HR) Q2 2024 earnings summary

Executive summary

• Achieved strong operational and capital allocation execution in Q2 2024, with Normalized FFO at $0.38 per share, or $0.39 excluding a Steward revenue reserve, and a net loss of $143.8 million driven by impairment charges.

• Owns nearly 700 properties across 35 states, totaling over 40 million square feet, with 93% outpatient medical facilities and deep relationships with top health systems.

• Largest medical office building (MOB) platform among public REITs, with significant exposure to high-growth MSAs and 72% of properties on or adjacent to hospital campuses.

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

• Repurchased over 18 million shares for nearly $300 million year-to-date, with a new $500 million repurchase authorization in April 2024.

Financial highlights

• Normalized FFO per share was $0.38 in Q2 2024, or $0.39 excluding a $3 million Steward revenue reserve, 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 the reserve), and multi-tenant NOI grew 3.9%, both at the high end of guidance.

• Cash NOI margins improved 50 bps sequentially and 70 bps year-over-year; operating expenses declined nearly 1% year-over-year.

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

Outlook and guidance

• Full-year 2024 Normalized FFO per share guidance affirmed at $1.53–$1.58, with expectations for continued strong operational momentum into 2025.

• Multi-tenant occupancy gains projected at 100–150 bps in 2024, with a multi-year plan to reach 90% occupancy.

• Dividend expected to be fully covered going into 2025, even with elevated revenue-enhancing CapEx.

• 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.

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