Healthcare Realty Reports Second Quarter 2025 Results
NASHVILLE, Tenn., July 31, 2025 (GLOBE NEWSWIRE) -- Healthcare Realty Trust Incorporated (NYSE:HR) today announced results for the second quarter ended June 30, 2025.
SECOND QUARTER 2025 HIGHLIGHTS
GAAP Net loss of $(0.45) per share, NAREIT FFO of $0.34 per share, Normalized FFO of $0.41 per share, and FAD of $115.4 million (payout ratio of 96%).
Improved same store operating metrics including cash NOI growth of +5.1%, a 40 bps sequential increase in occupancy to 90%, margin of 64.3%, 83% tenant retention, and +3.3% cash leasing spreads.
Increased Normalized FFO per share guidance $0.01 at the midpoint to $1.57 - $1.61 and increased Same Store Cash NOI growth by +25 bps to 3.25% - 4.00%.
Second quarter new and renewal lease executions totaled 1.5 million square feet including 452,000 square feet of new lease executions.
During the second quarter and through July, completed sales of $182.4 million of assets through 9 separate transactions.
YTD sales total $210.5 million at a blended 6.2% cap rate
An additional $700 million of sales are under contract or LOI
Run-rate Net Debt to Adjusted EBITDA of 6.0x; anticipated to be between 5.4x and 5.7x by year end
Received strong support from our lender relationships to extend bank facilities:
Extended $1.5 billion revolver to mature in July 2030 (inclusive of extension options)
Added 1 to 2 years of additional extension options on outstanding term loans
Announced a series of leadership and corporate governance changes:
Peter Scott joined as President and CEO on April 15th and as a director on May 20th
Board reduced from 12 to 7 members
Commenced a platform restructuring to drive improved results
Julie Wilson, EVP - Chief Administrative Officer, to depart the organization by year-end
Published a Strategic Plan highlighting the decisive actions being taken by new leadership to maximize value for shareholders.
Board unanimously approved a common stock dividend in the amount of $0.24 per share.
SECOND QUARTER 2025 RESULTS
THREE MONTHS ENDED
JUNE 30, 2025
JUNE 30, 2024
(in thousands, except per share amounts)
AMOUNT
PER SHARE
AMOUNT
PER SHARE
GAAP Net loss
$
(157,851
)
$
(0.45
)
$
(143,780
)
$
(0.39
)
NAREIT FFO, diluted
$
120,371
$
0.34
$
123,797
$
0.33
Normalized FFO, diluted
$
143,736
$
0.41
$
143,500
$
0.38
LEASING ACTIVITY
During the second quarter, the Company executed 341 new and renewal leases for 1.5 million square feet.
Weighted average lease term of 5.3 years with an average annual escalator of 3.2%.
Health system leasing made up approximately 33% of our signed lease volume in the quarter.
Key leasing highlights:
Houston, TX. 24,000 square foot new lease at our on-campus redevelopment in Houston with CLS Health, a premier multi-specialty group aligned with HCA's North Cypress hospital.
Orange County, CA. 23,000 square foot new lease with UC Irvine Health. UC Irvine Health recently purchased the adjacent hospital from Tenet and is investing in the growth of the campus.
Houston, TX. 42,000 square foot renewal in Houston with Texas Children's Pediatrics.
DISPOSITION PROGRESS
During the second quarter and through July, the Company completed asset sales of $182.4 million through nine separate transactions. A summary of the significant completed transactions is as follows:
Yakima, WA. Completed strategic market exit of the Yakima, WA MSA with the $31 million sale of two single-tenant MOBs to the affiliated health system. The sale achieved top of market pricing while avoiding costly tenant improvement allowances associated with a master lease renewal.
Houston, TX. Disposed of a land parcel for $10.5 million previously intended for future development. The property was sold to the affiliated health system and was in a submarket where the Company owns no other properties.
South Bend, IN. Completed its strategic market exit of the South Bend, IN MSA with the $43.1 million sale of a consistently under-occupied MOB to the affiliated health system.
Milwaukee, WI. Disposed of two single-tenant, off-campus MOBs to a private market purchaser for $42 million. The Company achieved attractive disposition economics while partially exiting this noncore market.
New York, NY. Targeted sale of an under-occupied property with a short ground lease term to the affiliated health system for $25 million. The Company was able to harvest maximum value for a noncore asset.
Naples, FL. Disposed of its only asset in the Naples, FL MSA with the $19.3 million sale of this off-campus, unaffiliated property to a private market purchaser.
BALANCE SHEET
Debt paydown from asset sales has decreased run-rate Net Debt to Adjusted EBITDA to 6.0x. By year-end, Net Debt to Adjusted EBITDA is anticipated to be between 5.4x - 5.7x. Through July and inclusive of asset sales, the Company has approximately $1.2 billion of liquidity.
On July 25th, the Company entered into an extension of its $1.5 billion revolving credit facility, which extended the maturity to 2030 (inclusive of two 6-month extension options). As part of this process, the Company also received additional extension options on all its outstanding term loans. With these new extension options, the Company will have no term loan maturities in 2026 and has reduced its debt maturing through the end of 2026 from $1.5 billion to $600 million.
STRATEGIC PLAN PRESENTATION
A Strategic Plan presentation is posted to the Investor Relations section of the Company's website at www.healthcarerealty.com. Clear and purposeful changes are underway at the Company to improve operational performance, optimize the portfolio, and re-establish credibility. The successful implementation of the Strategic Plan will reposition the Company for accretive long-term growth and value creation to maximize shareholder value.
LEADERSHIP UPDATE
During the second quarter, the Company commenced a platform restructuring to drive meaningful cost savings and promote incremental accountability at the asset level between the operations and leasing teams. As part of this restructuring, the Company hired two proven industry veterans to spearhead the newly created asset management platform: Tony Acevedo (SVP, Asset Management) and Glenn Preston (SVP, Asset Management). Tony and Glenn have 16 years and 25 years of Outpatient Medical operating experience, respectively. They will each report up to our COO, Rob Hull.
After a 24-year career at Healthcare Realty, Julie Wilson (EVP, Chief Administrative Officer) will be departing the organization at year-end. In addition, there are various other senior leadership positions impacted by the restructuring that will result in additional departures during 2025.
"We have some exciting changes happening at Healthcare Realty aimed at improving performance. I look forward to working closely with Tony and Glenn as we shift towards an operations-centric model," commented Peter Scott, President and CEO. "I would also like to express a heartfelt thanks to Julie and all the departing officers. They all played vital roles in the growth of the organization, and we wish them the best in their future endeavors."
DIVIDEND
The Board unanimously approved a common stock dividend in the amount of $0.24 per share to be paid on August 28, 2025, to Class A common stockholders of record on August 14, 2025. Additionally, the eligible holders of operating partnership units will receive a distribution of $0.24 per unit, equivalent to the Company's Class A common stock dividend.
The right-sized dividend is a 23% reduction from the prior level and immediately reduces the FAD payout ratio to approximately 80%. The key drivers of the right-sized dividend are: (i) mitigating refinancing risk on near-term bonds; (ii) achieving $100 million of annual incremental retained earnings to fund significant return-on-capital investments in the existing portfolio; and (iii) maximizing go-forward earnings potential.
GUIDANCE
The Company increased its Normalized FFO per share and Same Store Cash NOI growth guidance, as outlined below, as well as updated the guidance provided on page 30 of the Supplemental Information:
EXPECTED 2025
PRIOR
CURRENT
ACTUAL
LOW
HIGH
LOW
HIGH
2Q 2025
YTD
Earnings per share
$
(0.28
)
$
(0.20
)
$
(0.78
)
$
(0.73
)
$
(0.45
)
$
(0.58
)
NAREIT FFO per share
$
1.44
$
1.48
$
1.42
$
1.46
$
0.34
$
0.69
Normalized FFO per share
$
1.56
$
1.60
$
1.57
$
1.61
$
0.41
$
0.80
Same Store Cash NOI growth
3.00
%
3.75
%
3.25
%
4.00
%
5.1
%
3.9
%
The 2025 annual guidance range reflects the Company's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, interest rates, and operating and general and administrative expenses. The Company's guidance does not contemplate impacts from gains or losses from dispositions, potential impairments, or debt extinguishment costs, if any. There can be no assurance that the Company's actual results will not be materially higher or lower than these expectations. If actual results vary from these assumptions, the Company's expectations may change.
FINANCIAL REPORTING
In the second quarter, the Company began utilizing the Carrying Value of its debt in the calculation of Net Debt for purposes of reporting leverage metrics. For the second quarter, the result of this change was an approximate 0.25x reduction in Net Debt to Adjusted EBITDA.
The Company has also started excluding Leasing Commissions related to first generation leases from Maintenance Capital for its calculation of FAD. Prior to this change, first generation Leasing Commissions were included in Maintenance Capital. Based on historical data, the Company would expect this to be an approximate $5-10 million annual decrease in Maintenance Capital depending on leasing activity. The Company's 2Q 2025 payout ratio would still have been below 100% without this reporting change.
These changes are intended to conform the Company's reporting with market norms.
EARNINGS CALL
On Friday, August 1, 2025, at 9:00 a.m. Eastern Time, Healthcare Realty Trust has scheduled a conference call to discuss earnings results, quarterly activities, general operations of the Company and industry trends.
Simultaneously, a webcast of the conference call will be available to interested parties at https://investors.healthcarerealty.com/corporate-profile/webcasts under the Investor Relations section. A webcast replay will be available following the call at the same address.
Live Conference Call Access Details:
Domestic Dial-In Number: +1 800-715-9871 access code 4950066;
All Other Locations: +1 646-307-1963 access code 4950066.
Replay Information:
Domestic Dial-In Number: +1 800-770-2030 access code 4950066;
All Other Locations: +1 609-800-9909 access code 4950066.
ABOUT HEALTHCARE REALTY
Healthcare Realty Trust Incorporated (NYSE:HR) is the largest, pure-play owner, operator and developer of medical outpatient buildings in the United States.
Additional information regarding the Company, including this quarter's operations, can be found at www.healthcarerealty.com. In addition to the historical information contained within, this press release contains certain forward-looking statements with respect to the Company. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "target," "intend," "plan," "estimate," "project," "continue," "should," "could," "budget" and other comparable terms. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Such risks and uncertainties include, among other things, the following: the Company's expected results may not be achieved; risks related to future opportunities and plans for the Company, including the uncertainty of expected future financial performance and results of the Company; pandemics or other health crises; increases in interest rates; the availability and cost of capital at expected rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to release space at similar rates as vacancies occur; the Company's ability to renew expiring leases; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; the Company may be required under purchase options to sell properties and may not be able to reinvest the proceeds from such sales at rates of return equal to the return received on the properties sold; uninsured or underinsured losses related to casualty or liability; the incurrence of impairment charges on its real estate properties or other assets; other legal and operational matters; and other risks and uncertainties affecting the Company, including those described from time to time under the caption "Risk Factors" and elsewhere in the Company's filings and reports with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Moreover, other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company's filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing. For a detailed discussion of the Company's risk factors, please refer to the Company's filings with the SEC, including this report and the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Consolidated Balance Sheets
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
ASSETS
2Q 2025
1Q 2025
4Q 2024
3Q 2024
2Q 2024
Real estate properties
Land
$
1,105,231
$
1,134,635
$
1,143,468
$
1,195,116
$
1,287,532
Buildings and improvements
9,199,089
9,729,912
9,707,066
10,074,504
10,436,218
Lease intangibles
567,244
631,864
664,867
718,343
764,730
Personal property
6,944
9,938
9,909
9,246
12,501
Investment in financing receivables, net
124,134
123,813
123,671
123,045
122,413
Financing lease right-of-use assets
76,574
76,958
77,343
77,728
81,401
Construction in progress
40,421
35,101
31,978
125,944
97,732
Land held for development
49,110
52,408
52,408
52,408
59,871
Total real estate investments
11,168,747
11,794,629
11,810,710
12,376,334
12,862,398
Less accumulated depreciation and amortization
(2,494,169
)
(2,583,819
)
(2,483,656
)
(2,478,544
)
(2,427,709
)
Total real estate investments, net
8,674,578
9,210,810
9,327,054
9,897,790
10,434,689
Cash and cash equivalents 1
25,507
25,722
68,916
22,801
137,773
Assets held for sale, net
358,207
6,635
12,897
156,218
34,530
Operating lease right-of-use assets
243,910
259,764
261,438
259,013
261,976
Investments in unconsolidated joint ventures
463,430
470,418
473,122
417,084
374,841
Other assets, net and goodwill
469,940
522,920
507,496
491,679
559,818
Total assets
$
10,235,572
$
10,496,269
$
10,650,923
$
11,244,585
$
11,803,627
LIABILITIES AND STOCKHOLDERS' EQUITY
2Q 2025
1Q 2025
4Q 2024
