Scottsdale, AZ – August 2, 2018 – Healthcare Trust of America, Inc. (NYSE: HTA) (“HTA”) announced results for the three and six months ended June 30, 2018.
Operating
Second Quarter 2018:
Year-to-Date 2018:
Portfolio
2017 Investment Performance
As of June 30, 2018, the six completed development properties were 87% leased and generated $1.9 million of Cash NOI. HTA believes it is currently in the late stages of lease negotiations for an additional 33,000 square feet of GLA that would bring the leased rate on these development properties to 88%, 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 and Capital Markets
Subsequent Events
Financial Results – Second Quarter 2018
Rental Income
Rental income increased 24.2% to $173.2 million for the three months ended June 30, 2018, compared to $139.5 million for the three months ended June 30, 2017.
Net Income
Net income increased 367.5% to $15.7 million for the three months ended June 30, 2018, compared to a net loss of $(5.9) million for the three months ended June 30, 2017.
FFO
FFO, as defined by NAREIT, was $0.40 per diluted share, or $84.4 million, for the three months ended June 30, 2018, compared to $0.30 per diluted share, or $54.2 million, for the three months ended June 30, 2017.
Normalized FFO
Normalized FFO was $0.41 per diluted share, or $85.1 million, for the three months ended June 30, 2018, compared to $0.39 per diluted share, or $69.6 million, for the three months ended June 30, 2017.
Normalized FAD
Normalized FAD increased 19.2% to $72.2 million, for the three months ended June 30, 2018, compared to $60.6 million for the three months ended June 30, 2017.
NOI
NOI increased 24.2% to $119.8 million for the three months ended June 30, 2018, compared to $96.4 million for the three months ended June 30, 2017.
Same-Property Cash NOI
Same-Property Cash NOI increased $1.9 million, or 2.6%, to $77.9 million, for the three months ended June 30, 2018, compared to $75.9 million for the three months ended June 30, 2017. Excluding the MOBs located on its Forest Park Dallas campus, Same-Property Cash NOI growth would have been 3.1%.
General and Administrative Expenses
General and administrative expenses were $8.7 million for the three months ended June 30, 2018, compared to $8.5 million for the three months ended June 30, 2017.
Interest Expense
Total interest expense was $26.3 million for the three months ended June 30, 2018, compared to $17.9 million for the three months ended June 30, 2017.
Tenant Retention
Tenant retention for the Same-Property portfolio was 86% by GLA for the quarter, which included approximately 0.7 million square feet of GLA of expiring leases.
Financial Results – Year-to-Date 2018
Rental income increased 32.4% to $348.8 million for the six months ended June 30, 2018, compared to $263.5 million for the six months ended June 30, 2017.
Net income increased 215.1% to $25.7 million for the six months ended June 30, 2018, compared to $8.1 million for the six months ended June 30, 2017.
FFO, as defined by NAREIT, was $0.81 per diluted share, or $169.0 million, for the six months ended June 30, 2018, compared to $0.70 per diluted share, or $114.4 million, for the six months ended June 30, 2017.
Normalized FFO was $0.81 per diluted share, or $170.1 million, for the six months ended June 30, 2018, compared to $0.79 per diluted share, or $129.8 million, for the six months ended June 30, 2017.
Normalized FAD increased 30.6% to $148.2 million, for the six months ended June 30, 2018, compared to $113.5 million for the six months ended June 30, 2017.
NOI increased 31.7% to $239.4 million for the six months ended June 30, 2018, compared to $181.7 million for the six months ended June 30, 2017.
Same-Property Cash NOI increased $3.7 million, or 2.5%, to $154.1 million, for the six months ended June 30, 2018, compared to $150.4 million for the six months ended June 30, 2017. Excluding the MOBs located on its Forest Park Dallas campus, Same-Property Cash NOI growth would have been 2.8%.
General and administrative expenses were $17.5 million for the six months ended June 30, 2018, compared to $16.9 million for the six months ended June 30, 2017.
Total interest expense was $52.6 million for the six months ended June 30, 2018, compared to $33.4 million for the six months ended June 30, 2017.
Investment Activity
During the six months ended June 30, 2018, 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 other MOBs.
Leased Rate, Occupancy Rate and Tenant Retention
The leased rate (includes leases which have been executed, but which have not yet commenced) was 91.9% by GLA as of June 30, 2018. The occupancy rate of HTA’s portfolio was 90.9% by GLA as of June 30, 2018. Tenant retention for the Same-Property portfolio was 84% by GLA year-to-date, which included approximately 1.3 million square feet of expiring leases.
Credit Rated Tenants
Investment grade rated tenants as a percent of annualized base rent was 48% as of June 30, 2018. Additionally, 61% of HTA’s annualized base rent as of June 30, 2018 was derived from tenants that have (or whose parent companies have) a credit rating from a nationally recognized rating agency.
In-House Property Management and Leasing Platform
As of June 30, 2018, HTA’s in-house property management and leasing platform operated approximately 22.7 million square feet of GLA, or 94%, of HTA’s total portfolio.
About Healthcare Trust of America, Inc.
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of medical office buildings in the United States, comprising over 24.2 million square feet of GLA, with over $7.0 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 Website, Facebook, LinkedIn and Twitter.
Forward-Looking Language
This press release contains certain forward-looking statements with respect to HTA. Forward-looking statements are statements that are not descriptions of historical facts and include statements regarding management’s intentions, beliefs, expectations, plans or predictions of the future, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies, actual results may differ materially and in adverse ways from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, without limitation, the following: changes in economic conditions generally and the real estate market specifically; legislative and regulatory changes, including changes to laws governing the taxation of REITs and changes to laws governing the healthcare industry; the availability of capital; changes in interest rates; competition in the real estate industry; the supply and demand for operating properties in our proposed market areas; changes in accounting principles generally accepted in the United States of America; policies and guidelines applicable to REITs; the availability of properties to acquire; and the availability of financing. Additional information concerning us and our business, including additional factors that could materially and adversely affect our financial results, include, without limitation, the risks described under Part I, Item 1A – Risk Factors, in our 2017 Annual Report on Form 10-K and in our filings with the SEC.
Conference Call
HTA will host a conference call and webcast on Friday, August 3, 2018 at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time) to review its financial performance and operating results for the three and six months ended June 30, 2018.
Conference Call and Webcast Details:
Domestic Dial-In Number: (877) 507-6265
International Dial-In Number: (412) 902-6633
Canada Dial-In Number: (855) 669-9657
Webcast: www.htareit.com under the Investor Relations tab
Replay Conference Call Details:
Domestic Dial-In Number: (877) 344-7529
International Dial-In Number: (412) 317-0088
Canada Dial-In Number: (855) 669-9658
Conference ID: 10122321
Available August 3, 2018 (one hour after the end of the conference call) to September 3, 2018 at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time)
Supplemental Information
Supplemental financial data are available on the HTA’s website at www.htareit.com.
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
NOI, CASH NOI AND SAME-PROPERTY CASH NOI
NOI is a non-GAAP financial measure that is defined as net income or loss (computed in accordance with GAAP) before: (i) general and administrative expenses; (ii) transaction expenses; (iii) depreciation and amortization expense; (iv) impairment; (v) interest expense and net change in fair value of derivative financial instruments; (vi) gain or loss on sales of real estate; (vii) gain or loss on extinguishment of debt; (viii) income or loss from unconsolidated joint venture; and (ix) other income or expense. HTA believes that NOI provides an accurate measure of the operating performance of its operating assets because NOI excludes certain items that are not associated with the management of its properties. Additionally, HTA believes that NOI is a widely accepted measure of comparative operating performance of real estate investment trusts (“REITs”). However, HTA’s use of the term NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount. NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of its financial performance. NOI should be reviewed in connection with other GAAP measurements.
Cash NOI is a non-GAAP financial measure which excludes from NOI: (i) straight-line rent adjustments; (ii) amortization of below and above market leases/leasehold interests; (iii) notes receivable interest income; and (iv) other GAAP adjustments. Contractual base rent, contractual rent increases, contractual rent concessions and changes in occupancy or lease rates upon commencement and expiration of leases are a primary driver of HTA’s revenue performance. HTA believes that Cash NOI, which removes the impact of straight-line rent adjustments, provides another measurement of the operating performance of its operating assets. Additionally, HTA believes that Cash NOI is a widely accepted measure of comparative operating performance of REITs. However, HTA’s use of the term Cash NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount. Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of its financial performance. Cash NOI should be reviewed in connection with other GAAP measurements.
To facilitate the comparison of Cash NOI between periods, HTA calculates comparable amounts for a subset of its owned and operational properties referred to as “Same-Property”. Same-Property Cash NOI excludes (i) properties which have not been owned and operated by HTA during the entire span of all periods presented and disposed properties, (ii) HTA’s share of unconsolidated joint ventures, (iii) development, redevelopment and land parcels, (iv) properties intended for disposition in the near term which have (a) been approved by the Board of Directors, (b) is actively marketed for sale, and (c) an offer has been received at prices HTA would transact and the sales process is ongoing, and (v) certain non-routine items. Same-Property Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of its financial performance. Same-Property Cash NOI should be reviewed in connection with other GAAP measurements.
FFO, NORMALIZED FFO AND NORMALIZED FAD
HTA computes FFO in accordance with the current standards established by NAREIT. NAREIT defines FFO as net income or loss attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and after adjustments for unconsolidated partnerships and joint ventures. HTA presents this non-GAAP financial measure because it considers it an important supplemental measure of its operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. Historical cost accounting assumes that the value of real estate assets diminishes ratably over time. Since real estate values have historically risen or fallen based on market conditions, many industry investors have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Because FFO excludes depreciation and amortization unique to real estate, among other items, it provides a perspective not immediately apparent from net income or loss attributable to common stockholders.
HTA computes Normalized FFO, which excludes from FFO: (i) transaction expenses; (ii) gain or loss on change in fair value of derivative financial instruments; (iii) gain or loss on extinguishment of debt; (iv) noncontrolling income or loss from partnership units included in diluted shares; and (v) other normalizing items, which include items that are unusual and infrequent in nature. HTA presents this non-GAAP financial measure because it allows for the comparison of its operating performance to other REITs and between periods on a consistent basis. HTA’s methodology for calculating Normalized FFO may be different from the methods utilized by other REITs and, accordingly, may not be comparable to other REITs. Normalized FFO should not be considered as an alternative to net income or loss attributable to common stockholders (computed in accordance with GAAP) as an indicator of its financial performance, nor is it indicative of cash available to fund cash needs. Normalized FFO should be reviewed in connection with other GAAP measurements.
HTA also computes Normalized FAD, which excludes from Normalized FFO: (i) other income or expense; (ii) non-cash compensation expense; (iii) straight-line rent adjustments; (iv) amortization of below and above market leases/leasehold interests and corporate assets; (v) amortization of deferred financing costs and debt premium/discount; and (vi) recurring capital expenditures, tenant improvements and leasing commissions. HTA believes this non-GAAP financial measure provides a meaningful supplemental measure of its operating performance. Normalized FAD should not be considered as an alternative to net income or loss attributable to common stockholders (computed in accordance with GAAP) as an indicator of its financial performance, nor is it indicative of cash available to fund cash needs. Normalized FAD should be reviewed in connection with other GAAP measurements.