Healthcare Realty Trust Reports Strong Leasing Growth

Healthcare Realty Trust Incorporated (NYSE: HR) has provided its second quarter business update, highlighting its operational and capital allocation momentum. The company reported multi-tenant new leases signed totaling 432,000 square feet in the second quarter, marking the fourth consecutive quarter above 400,000. Furthermore, the first half of 2024 saw a multi-tenant occupancy gain of 183,000 square feet, exceeding the guidance range of 90,000 to 140,000 square feet.

In terms of occupancy, multi-tenant absorption in the second quarter was 122,000 square feet. Over the last three quarters, multi-tenant occupancy increased by 371,000 square feet, representing approximately 110 basis points of positive absorption.

Regarding its tenant Steward Health, Healthcare Realty confirmed that Steward Health has paid substantially all the rent owed for June and July. Additionally, the company expects to reserve approximately $3.0 million of unpaid pre-bankruptcy rent, including a portion of March, all of April, and the first five days of May. Rent owed for May following Steward's bankruptcy filing on May 6th is expected to be paid as part of the outcome of the bankruptcy process.

On the capital allocation front, Healthcare Realty has generated approximately $400 million of proceeds from joint venture (JV) and asset sale transactions year-to-date. The company has additional asset sales and JV transactions under contract or letter of intent (LOI), which are now expected to increase proceeds to over $1 billion. These transactions, including expected proceeds from asset contributions to the company's KKR and Nuveen Real Estate JVs, are anticipated to be completed in the third quarter. The proceeds will fund accretive, leverage-neutral share repurchases and existing capital commitments.

To date, Healthcare Realty has repurchased 18.0 million shares of its common stock for $286 million at an average price of $15.85 per share. This has resulted in a reduction of 6.7 million shares compared to the first quarter, with the company expecting the weighted average shares outstanding for the second quarter to be approximately 376.7 million shares.

Todd Meredith, President and CEO, expressed the company's progress on its capital allocation and operating priorities, noting strong leasing momentum and occupancy gains. He also anticipated this progress to lead to improved dividend coverage and accelerated FFO growth in the future.

Healthcare Realty Trust Incorporated is a real estate investment trust (REIT) specializing in owning and operating medical outpatient buildings primarily located around market-leading hospital campuses. The company's portfolio comprises nearly 700 properties totaling over 40 million square feet concentrated in 15 growth markets. As a result of these announcements, the company's shares have moved -1.0% on the market, and are now trading at a price of $16.97. For more information, read the company's full 8-K submission here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.