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Healthcare Trust of America, Inc. Discusses MOB Same Store Growth and Related Topics

Normalized FFO of $0.41 Per Diluted Share Same-Property Cash NOI Growth of 2.3%, 3.2% Excluding Forest Park Properties New Development Announced Healthcare Trust of America, Inc. (NYSE: HTA) (“HTA”) announced results for the three months ended March 31, 2018.

| Scottsdale, AZ

First Quarter 2018 Highlights

Operating

  • Net Income Attributable to Common Stockholders:Decreased (27.6)% to $9.8 million, compared to Q1 2017. Earnings per diluted share decreased (44.4)% to $0.05 per diluted share, compared to Q1 2017. This decrease is primarily related to the increase in depreciation and amortization of $23.3 million as a result of the increase in the size of our investment portfolio.
  • Funds From Operations (“FFO”): As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), increased 40.5%, to $84.6 million, compared to Q1 2017. FFO per diluted share decreased (2.4)%, to $0.40 per diluted share, compared to Q1 2017.
  • Normalized FFO: Increased 41.3%, to $85.0 million, compared to Q1 2017. Normalized FFO per diluted share remained stable at $0.41 per diluted share, compared to Q1 2017.
  • Normalized Funds Available for Distribution (“FAD”): Increased 43.6%, to $75.9 million, compared to Q1 2017.
  • Same-Property Cash Net Operating Income (“NOI”): Increased $1.8 million, or 2.3%, to $81.0 million, compared to Q1 2017. Excluding the MOBs located on its Forest Park campuses, Same-Property Cash NOI growth would have been 3.2%. This increase was driven by an increase of 1.5% in Same-Property rental revenue and an increase of 70 bps to 88.5% in Same-Property rental margins, measured as Same-Property Cash NOI divided by Same-Property rental revenue, compared to Q1 2017. From an occupancy perspective for the Same-Property pool, the leased rate increased 20 bps to 92.1% while the occupancy rate declined 10 bps to 91.0%, compared to Q1 2017.

Portfolio

  • Leasing: HTA entered into new and renewal leases on approximately 663,000 square feet of GLA, or 2.7% of its portfolio. Tenant retention for the Same-Property portfolio was 81% by GLA for the quarter, which included approximately 609,000 square feet of GLA of total expiring leases. Releasing spreads for renewal leases on a cash basis were 2.7%. Renewal leases included tenant improvements of $1.07 per square foot of GLA per year of the lease term and approximately seven days of free rent per year of the lease term.
  • Leased Rate: As of March 31, 2018, HTA had a leased rate for its portfolio of 91.8% by GLA and an occupancy rate of 90.7% by GLA.
  • Forest Park Update: During the three months ended March 31, 2018, HTA entered into approximately 41,000 square feet of GLA of new leases on the former Forest Park Dallas campus. This leasing included approximately 37,000 square feet of GLA that is directly leased to the hospital.
  • Development: Subsequent to March 31, 2018, HTA entered into a development agreement for a new MOB in the key gateway market of Miami, Florida. The state-of-the-art MOB will total approximately 51,000 square feet of GLA and be located adjacent to the Jackson South Hospital. Total development costs are estimated to be $21.8 million and the building is expected to be 70% pre-leased to the hospital with construction expected to begin in 2019.
  • Investments: During the quarter, HTA remained disciplined and strategically expanded within its key gateway markets. HTA invested $8.4 million to acquire an MOB of approximately 24,000 square feet of GLA in Raleigh, North Carolina, that was 100% leased as of the acquisition date to Duke Health System. In addition, HTA invested $3.9 million to consolidate its ownership interests in several MOBs.
  • Dispositions: As of April 30, 2018, HTA has received letters of intent to sell multiple MOBs totaling an aggregate sales price of over $50 million. These properties are subject to customary closing conditions and no closings are assured.

2017 Investment Performance

  • Cash NOI: During the three months ended March 31, 2018, HTA generated $34.5 million of Cash NOI on its 2017 investments, including its investment in its unconsolidated joint venture. This Cash NOI includes approximately $1.8 million of income from property management and building engineering services provided to its tenants. As of March 31, 2018, HTA’s run rate yield on its 2017 investments was approximately 5.2%, which included the full year impact of new leases that were signed but not yet occupied.
  • Development: During the three months ended March 31, 2018, five of the seven acquired development properties were completed. The remaining two development properties, which are 100% pre-leased, are on track to be completed by the middle of 2018. As of the end of the quarter, the five development properties were 84% leased and generated $1.1 million of Cash NOI. HTA believes it is currently in the late stages of lease negotiations for an additional 26,000 square feet of GLA that would bring the leased rate on these development properties to 89% if completed. In total, the seven development properties are projected to generate between approximately $2.5 million and $2.8 million in quarterly Cash NOI upon completion and stabilization.

Balance Sheet

  • Balance Sheet: As of March 31, 2018, HTA had total leverage of 33.0% measured as net debt (total debt less cash and cash equivalents) to total capitalization, and 5.9x measured as net debt to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for real estate (“Adjusted EBITDAre”). Total liquidity at the end of the quarter was $1.1 billion, including $994.5 million of availability under HTA’s unsecured revolving credit facility, $56.2 million of cash and cash equivalents and a $75.0 million forward equity agreement, excluding anticipated costs to borrow.

First Quarter 2018 Highlights

Healthcare Trust of America, Inc. (NYSE: HTA), the largest dedicated owner and operator of medical office buildings in the United States, has responded to recent inquiries as follows:

The medical office sector is generally known for its defensive and consistent performance. Most properties have longer term leases with fixed annual rent escalators and have high levels of retention upon expiration. This results in very consistent fundamentals, including steady occupancy and same store NOI growth. In fact, Revista, the leading data provider in the medical office sector, notes in their Fourth Quarter Medical Office – Fundamentals Report that from Q1 2015 to Q4 2017, sector same store NOI growth has ranged between 2.6 and 3.0% every quarter.

Since we became a publicly traded company in 2012, HTA’s same store performance has followed a similar pattern, ranging from 2.3% to 3.8% while averaging 3.1%. Our operating fundamentals have remained in a relatively constant range, with our portfolio occupancy running between 90.6% and 91.6% on a quarterly basis. Additionally, we have had limited lease rollover in any given year, with our annual expirations running between 5% and 11% over this same period. HTA has successfully reduced expenses over time by expanding our property management, building service and leasing platform to additional properties it serves in our portfolio. Our earnings, measured as Normalized Funds from Operations per Diluted Share, has grown from $0.26 per share on a split adjusted basis in Q1 2012 to $0.41 per share in Q1 2018, an increase of 56% during this time.

As disclosed in our public filings, we use a same store definition that is consistent with other REITs in our sector. Our Board of Directors reviews and approves our same store property pool on a quarterly basis. We add properties to the same store pool once we have owned them for a full 5 quarters and we only exclude properties we intend to sell in the near term. As stated in our first quarter earnings release, our same-store cash NOI growth was 2.3%. Excluding the MOBs located on our Forest Park campuses, same-property cash NOI growth would have been 3.2%.

Our Chief Financial Officer, Robert Milligan serves as our Principal Financial Officer and Principal Accounting Officer. In that capacity he is responsible for executing our required certifications under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as he has properly done. Mr. Milligan’s biographical information set forth in HTA’s most recently filed Form 10-K is accurate, and at no time was Mr. Milligan obligated to be licensed with the SEC or FINRA while he was employed with his former employer, Bank of America Merrill Lynch. Mr. Milligan is ably supported in his accounting responsibilities by David Gershenson, our Chief Accounting Officer and a long-time certified public accountant.

HTA is a strong advocate of best practices in governance matters. It has demonstrated this commitment in a number of ways, including (i) through the addition of four new independent directors over the last few years, two of whom have been women and all of whom have been industry leaders of high integrity with strong credentials, reputations and skills, and (ii) through bylaw amendments designed for the best interest of stockholders.

About Healthcare Trust of America, Inc. (NYSE: HTA)
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of medical office buildings in the United States, comprising over 24 million square feet of GLA, with over $7 billion invested primarily in medical office buildings. HTA provides real estate infrastructure for the integrated delivery of healthcare services in highly-desirable locations. Investments are targeted to build critical mass in 20 to 25 leading gateway markets that generally have leading university and medical institutions which translates to superior demographics, high-quality graduates, intellectual talent and job growth. The strategic markets HTA invests in support a strong, long-term demand for quality medical office space. HTA utilizes an integrated asset management platform consisting of on-site leasing, property management, engineering and building services, and development capabilities to create complete, state of the art facilities in each market. This drives efficiencies, strong tenant and health system relationships, and strategic partnerships that result in high levels of tenant retention, rental growth and long-term value creation. Headquartered in Scottsdale, Arizona, HTA has developed a national brand with dedicated relationships at the local level. Founded in 2006 and listed on the New York Stock Exchange in 2012, HTA has produced attractive returns for its stockholders that have significantly outperformed the S&P 500 and US REIT indices. More information about HTA can be found on the Company’s WebsiteFacebookLinkedIn and Twitter.

Forward-Looking Language
This press release contains certain forward-looking statements. Forward-looking statements are based on current expectations, plans, estimates, assumptions and beliefs, including expectations, plans, estimates, assumptions and beliefs about HTA, stockholder value and earnings growth.

The forward-looking statements included in this press release are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond HTA’s control. Although HTA believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, HTA’s actual results and performance could differ materially and in adverse ways from those set forth in the forward-looking statements. Factors which could have a material adverse effect on HTA’s operations and future prospects include, but are not limited to:

• changes in economic conditions affecting the healthcare property sector, the commercial real estate market and the credit market;
• competition for acquisition of medical office buildings and other facilities that serve the healthcare industry;
• economic fluctuations in certain states in which HTA’s property investments are geographically concentrated;
• retention of HTA’s senior management team;
• financial stability and solvency of HTA’s tenants;
• supply and demand for operating properties in the market areas in which HTA operates;
• HTA’s ability to acquire real properties, and to successfully operate those properties once acquired;
• changes in property taxes;
• legislative and regulatory changes, including changes to laws governing the taxation of REITs and changes to laws governing the healthcare industry;
• fluctuations in reimbursements from third party payors such as Medicare and Medicaid;
• changes in interest rates;
• the availability of capital and financing;
• restrictive covenants in HTA’s credit facilities;
• changes in HTA’s credit ratings;
• HTA’s ability to remain qualified as a REIT;
• changes in accounting principles generally accepted in the United States of America, policies and guidelines applicable to REITs;
• delays in liquidating defaulted mortgage loan investments; and
• the risk factors set forth in HTA’s most recent Annual Report on Form 10-K and in HTA’s most recent Quarterly Reports on Form 10-Q.

Forward-looking statements speak only as of the date made. Except as otherwise required by the federal securities laws, HTA undertakes no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date as of which they are made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this press release or that may be made elsewhere from time to time by, or on behalf of, HTA.