Healthcare Realty Trust Incorporated · NYSE:HR
Healthcare Realty Trust — Investor Presentation (May 2024)
29 slides from Healthcare Realty Trust's investor presentation, May 2024
Slide 1: Investor Presentation
May 2024 Investor Presentation
Slide 2: Forward-looking statements
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 stateme
Slide 3: The Big Picture
The Big Picture (1)(2) 687 40M 93% 72% PROPERTIES SQUARE FEET, 93% OF SQUARE OUTPATIENT MEDICAL ON/ADJACENT TO IN 35 STATES FEET MANAGED INTERNALLY FACILITIES HOSPITAL CAMPUSES % OF MSA TOTAL TOP MSAs RANK SQ FT GLA Dallas 4 3,800,000 9.4% Houston 5 2,400,000 6.0% Denver 19 2,000,000 4.9% Los Angele
Slide 4: Leading Market Scale
Leading Market Scale # of Markets 7 1.5M+ MOB SF OW NED % of Total SF 38% # of Markets 13 1.0M+ % of Total SF 57% 3.6 Next Largest Public MOB Owner 3.2 HR # of Markets 27 3.2 500K+ % of Total SF 82% Millions of SF 2.4 1.9 1.8 1.8 1.8 1.7 1.7 1.6 1.5 1.4 1.4 1.5 1.2 1.2 1.1 1.0 1.2 1.2 0.9 1.1 1.1 0.
Slide 5: Health System Affiliations
Health System Affiliations (1)(2) Healthcare Realty has deep relationships with leading hospitals and health systems. Relationships with 57 of the Top 100 Health Systems 421 properties located on/adj to hospital campuses Green Street Hospital Rankings for HR portfolio(3): 96% B or better grade 89% A
Slide 6: Size of MOB Market
Size of MOB Market $530B $13.2B $9-12B Total Outpatient/MOB Market Average Annual Sales New Development Each Year Non-REITS $229B (43%) Investor- owned $286B (54%) TOP SELLERS (2022-2023) TOP DEVELOPERS IN 2023 (Annual starts) SQ FT REITS Healthcare Realty Trust (NYSE:HR) $1,007 Hammes 417,713 $60B
Slide 7: Industry Landscape
Industry Landscape $1.7 Trillion Of Healthcare Real Estate Value ACUTE CARE ACUIT Y Hospitals $740B RECOVERY & REHABILITATION IRF & LTCH OUTPATIENT CARE $30B MOB/Outpatient $509B Skilled Nursing RESIDENTIAL CARE $150B Senior Housing $300B SETTING Source: Revista, Green Street Advisors | 7
Slide 8: Secular Demand Trends
Secular Demand Trends Relative Increase in Population Annual Physician Office Visits and Healthcare Costs BY AGE, 2023 - 2O33 (Projected) BY AGE 67.7% of US population growth is among the 2 Visits/year +6.9M 65+ cohort. < 45 $5,100/year < 65 2023 2033 (+2.5%) 278M 285M 4 Visits/year +14.5M 45 - 64 $
Slide 9: Strong Relative MOB Supply - Demand
Strong Relative MOB Supply - Demand Annual Average Occupancy Change MOB Development Starts SECTOR COMPARISON TRAILING TWELVE MONTHS 4-YEAR (since pandemic) 2-YEAR (recovery) 18M SF 16M +0.5% +0.4% 14M -0.3% -0.3% 12M -1.0% -0.9% -1.5% -1.3% -1.7% -1.7% -2.0% 10M 8M -4.4% 6M LIFE MULTI- SELF INDUSTRI
Slide 10: Improving Provider Trends
Improving Provider Trends Same Facility In/Outpatient Growth CYTD Operating Margin Index IP SURGICAL 2.5 CASES 2.4% OP SURGICAL TOTAL CASES AVG ADMISSIONS 2.0 3.6% 3.7% 1.5 3-Year Average: 1.0% 1.0 2020 0.5 0 2017 2018 2019 2021 2022 2023 -0.5 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC '23 Sour
Slide 11: Rent Cushion
Rent Cushion MOB rent coverage provides a buffer against reimbursement changes. 8 - 14x 5 - 10x 3.5x 3.2x 2.4x 1.3x Coverage Ratio 1.0x Rent Cushion(1) Assisted Living/ Skilled Acute Care Inpatient Surgical Outpatient Outpatient Independent Nursing Hospital Rehab Hospital Medical - Medical - Living
Slide 12: Who Owns MOBs?
Who Owns MOBs? % of MOBs in Portfolio(1)(2)(3) 20% 22% 56% 93% 23% 40% 68% 34% 70% WELL VTR DOC HR AHR CHCT DHC GMRE UHT Healthcare REITs without MOBs OHI CTRE SBRA LTC MPW NHI Sources: Company Filings, Cap IQ for market cap data (1) Measured by income and includes only public REITs as of 12/31/2023
Slide 13: Premier MOB REIT
Premier MOB REIT Largest MOB Platform(1)(2) Scale with Top Health Systems(3) SQUARE FEET IN MILLIONS SQUARE FEET IN MILLIONS 37 37 27 26 TOP 100 26 26 26 22 TOP 25 17 16 13 14 13 11 4 TOTAL SF 8 7 2 2 ON/ADJ SF 1 HR DOC WELL VTR AHR HR DOC WELL VTR AHR Exposure to Top MSAs Population Density and Gro
Slide 14: Off Campus Portfolio Comparison
Off Campus Portfolio Comparison (1) Top Markets % OF OFF-CAMPUS MOB SF Demographic Strength OFF CAMPUS 28% 31% 49% 34% 55% % OF TOTAL PORTFOLIO PROJECTED 2.7% POPULATION GROWTH RATE 2.4% HR DOC WELL VTR AHR 2.6% 2.7% 2.4% 99 WTD. AVG. 10-MILE 89 88 % OF TOP 100 MSAs POPULATION (IN 000S) 810 78 79 79
Slide 15: MOB Market Focus
MOB Market Focus (1)(2) Market Summary by Company AVG # OF # OF # OF MOBS PER AVG SF/ MARKETS MOBS MARKET MARKET Geographically Isolated Properties(3) HR 64 657 10.3 585,700 32 DOC 126 561 4.5 293,985 21 WELL 110 432 3.9 237,160 14 VTR 112 407 3.6 193,324 12 AHR 40 82 2.1 106,472 11 11 9 Scale in ma
Slide 16: Cluster Strategy
Cluster Strategy Medical Outpatient Buildings by Cluster A cluster is defined as at least two properties within a geographic radius of two miles. Clusters provide # OF % OF operational efficiencies and greater local leasing TOTAL SF PROPERTIES MOB SF knowledge that accelerate NOI growth. CLUSTERED 4
Slide 17: Market Scale and Cluster Track Record
Market Scale and Cluster Track Record Improved NOI drivers with market scale in major MSA’s such as Seattle, Denver, Dallas, Los Angeles, and Nashville # MARKETS / BUILDINGS / CLUSTERS / CLUSTERS CLUSTERED % CASH LEASING ANNUAL RENT BUILDINGS PER MARKET AND SIZE SPREADS(1) BUMPS(1) OCCUPANCY(2) lust
Slide 18: Tenant Diversity
Tenant Diversity (1)(2) The average multi-tenant lease size is approximately 4,500 SF. 0-2,500 SF 2,501- 5,001- 7,501- 10,000+ 45 5,000 SF 7,500 SF 10,000 SF SF Mix of US Top Medical Tenant Specialties % of Healthcare Realty SQ FT Physicians (1)(2) Healthcare Realty reduces risk through tenant size
Slide 19: Tenant Satisfaction
Tenant Satisfaction 2023 Kingsley Survey Data SURVEY SCALE 1-5 4.29 4.23 4.06 4.04 4.01 3.83 3.83 3.84 3.80 3.57 3.59 HTA HTA HR 3.44 2022 2023 2022 2023 2022 2023 2022 2023 Overall Satisfaction Property Management Maintenance Leasing Process HR has materially enhanced customer service at HTA proper
Slide 20: Multi-tenant Occupancy Trends
Multi-tenant Occupancy Trends Over the last two quarters, total multi-tenant occupancy has increased by 70 bps and legacy HTA properties by 130 bps Multi-tenant – Total Portfolio Multi-tenant – Legacy HTA 88% 88% 87.1% 87% 87% 86.7% Total Leased SNO +170 bps 86% 86% 85.7% 85.6% 85.4% HTA Total Lease
Slide 21: Leasing Momentum
Leasing Momentum Multi-tenant Portfolio New Signed Leasing Activity Leasing Pipeline Represents approximately four quarters of future lease signings Active Tours ~50% 447K SF 440K SF 425K SF LOI/Proposal 376K SF ~30% 240K SF Lease Out/ Document Prep ~20% 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 1.4-1
Slide 22: Multi-tenant Occupancy and NOI Bridge
Multi-tenant Occupancy and NOI Bridge Projected 1Q 2024 Progress First quarter multi- Expected Y-o-Y tenant occupancy Multi-tenant Absorption (SF) 56,972 and NOI are on NOI Growth track with 1H 2024 Change in Occupancy (bps) +17 5.5% expectations Occupancy 85.4% NOI Growth (Y-o-Y) 2.8% 4.4% 4.0% Act
Slide 23: Flexible Balance Sheet
Flexible Balance Sheet Capitalization(1) Debt Maturity Schedule $2,000M Senior Notes Term Notes Mortgage Notes Debt 36% 1,500 Equity 64% 1,000 500 0 2024 2025 2026 2027 2028 Thereafter LEVERAGE Net debt to adjusted EBITDA(2) 6.5x Expected range 6.0 - 6.5x Note: Term loan maturities reflect recently
Slide 24: Appendix
Appendix
Slide 25: WakeMed Cluster - Raleigh
WakeMed Cluster - Raleigh Tryon MOBs I & II, 1.5 mi 1000 Crescent Green 115 Crescent Commons 1400 Crescent Green 601 Keisler Drive MPOC - 200 Ashville Avenue Triangle Medical Center MPOC - 210 Ashville Avenue H MPOC - 226 Ashville Avenue P MPOC - 300 Ashville Avenue MPOC - 216 Ashville Avenue MPOC -
Slide 26: Cluster Formation - Atlanta
Cluster Formation - Atlanta Investment Progression 2017 2020 2020 TODAY FUTURE Acquired three on Acquired two MOBs In coordination with Wellstar Current cluster size Embedded campus MOBs from adjacent to campus from Kennestone, acquired a 2.5 development • 357,360 SF developer two different owners a
Slide 27: Cluster Formation - Denver
Cluster Formation - Denver Investment Progression 2012 2015 2017 2018 TODAY FUTURE Developed two Acquired one Developed third Acquired three Current cluster size Embedded on campus MOBs MOB adjacent on campus MOB buildings on 15 acres development • 539,082 SF to campus of land for future potential •
Slide 28: Cluster Formation - Seattle
Cluster Formation - Seattle Investment Progression 2016 2017 2020 2020 TODAY FUTURE Acquired two on Acquired one Developed one Acquired one MOB Current cluster size Embedded campus MOBs, adjacent MOB on MOB on campus adjacent to campus development • 331,256 SF including one for 4 acres of land poten
Slide 29: Market Clustering Strategy - Seattle
Market Clustering Strategy - Seattle Investment Progression 2008 2012 2016 2020 2023 N # of Buildings 2 6 15 27 29 Edmonds 4 properties H Square Feet 141K 379K 958K 1,546K 1,593K $52.9M investment Acquisition $39M $53M $327M $519M $537M 171K square feet Northgate Kirkland Development $0 $97M $97M $1
Healthcare Realty Trust — Investor Presentation (May 2024) on 6ix