Healthcare Trust of America, Inc. (NYSE:HTA), the largest dedicated owner and operator of medical office buildings in the United States, announced today its 2017 investment activities. For the full year, HTA invested $2.73 billion to acquire 6.8 million square feet in medical office buildings and other healthcare real estate, sold $85.2 million in non-core medical office buildings, and completed three in-process developments that it acquired during the year. In the fourth quarter alone, HTA completed $32.7 million of investments located primarily in Dallas, TX, $80.2 million of dispositions in Milwaukee, WI and Long Beach, CA, and one development project in Raleigh, NC.
As a result of this activity, HTA ended the year with the largest, high quality medical office building focused portfolio consisting of $7.0 billion invested in 24 million square feet with approximately 80% of properties located in 20-25 key, gateway markets throughout the U.S., with 16 markets over 500 thousand square feet. The portfolio is the largest “on- campus” portfolio in the U.S. with almost 17 million square feet located either on or adjacent to a leading hospital or academic medical center campus, with the remaining approximately 7 million square feet located in core community outpatient locations that are mostly in healthcare clusters and close to attractive patient populations. The properties are operated by HTA’s best-in-class, full-service operating platform that provides property management, building engineering services, leasing, construction, and development capabilities to tenants and healthcare providers.
“We begin 2018 in the best strategic position in HTA’s history, as the most relevant provider of medical office buildings; the most cost-effective and convenient location for healthcare delivery going forward,” stated Chairman and CEO Scott D. Peters. “2017 was a transformative year in which we grew our portfolio by almost 40%, increased scale in key markets and improved the overall quality of the portfolio. We will use our leading position and operating platform to provide superior service to our tenants and generate steady growth for shareholders.”
For 2017, HTA invested $2.73 billion to acquire 6.8 million square feet of primarily medical office buildings across the country, with approximately 76% located on or adjacent to hospital campuses. Overall, 90% of the buildings were located in HTA’s existing key markets, allowing HTA’s operating platform to generate operating synergies through property management, building services, and leasing services. The acquired properties were approximately 93% leased at the time of closing.
HTA funded these transactions by issuing a combination of equity and debt that leaves the Company well capitalized heading into 2018. In total, HTA issued approximately $1.9 billion in equity, including $1.6 billion raised through a market transaction in April 2017 and $0.3 billion raised through its At-The-Market program, including $75 million raised on a forward basis in October 2017 which had not been closed out as of December 31. The Company also issued or refinanced over $2.5 billion of debt, including (i) $900 million of senior, unsecured notes at a blended interest rate of 3.4% and an average tenor of 7.7 years, (ii) $286 million of secured seller notes bearing 4% interest with annual principal installments due over the next 3 years starting in June 2017, and (iii) the increased credit facility consisting of a $1.0 billion revolving facility and a $300 million 5 year term loan.
HTA continued its capital recycling efforts, closing on $85.2 million of non-core medical office buildings during the year which represents an effective cap rate of 5.8% based on expected forward NOI. This included the fourth quarter sale of two off-campus MOBs in Milwaukee, WI totaling 129 thousand square feet for $61.5 million and one on-campus MOB in Long Beach, CA totaling 65 thousand square feet for $18.7 million. These properties were originally acquired for $63 million from 2007 to 2009 and generated unlevered returns of approximately 11% for HTA.
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of medical office buildings in the United States, based on gross leasable area. We provide the real estate infrastructure for the integrated delivery of healthcare services in highly desirable locations. Over the last decade, we have invested approximately $7.0 billion primarily in medical office buildings and other healthcare assets comprising over 24 million square feet of GLA. Our investments are targeted in key markets that we believe have superior healthcare demographics that support strong, long-term demand for medical office space. We have achieved, and continue to achieve, critical mass within these key markets by expanding our presence through accretive acquisitions, and utilizing our in-house operating expertise through our regionally located property management and leasing platform.
Founded in 2006 and listed on the New York Stock Exchange in 2012, HTA has produced attractive returns for its stockholders that we believe have significantly outperformed the S&P 500 and US REIT indices. More information about HTA can be found on the Company’s website at www.htareit.com.
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:
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.