Healthcare Realty Trust Incorporated · NYSE:HR
Healthcare Realty Trust — Investor Presentation (August 2023)
26 slides from Healthcare Realty Trust's investor presentation, August 2023
Slide 1: Investor Presentation August 2023
August 2023 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) 714 42M 91% 72% PROPERTIES SQUARE FEET, 93% OF SQUARE MEDICAL OFFICE ON/ADJACENT TO IN 35 STATES FEET MANAGED INTERNALLY AND OUTPATIENT HOSPITAL CAMPUSES % OF MSA TOP MSAs SQ FT TOTAL RANK GLA Dallas 4 4,042,000 9.7% Houston 5 2,611,000 6.3% Denver 19 1,991,000 4.8% Los Angele
Slide 4: Leading Market Scale
Leading Market Scale # of Markets 8 1.5M MOB SF OW NED % of Total SF 41% # of Markets 14 1 .0 M + % of Total SF 59% 3.3 HR 3.3 Next Largest Public MOB Owner # of Markets 27 5 0 0 K+ % of Total SF 81% 2.4 Millions of SF 2.3 1.9 1.8 1.7 1.6 1.6 1.5 1.5 1.4 1.5 1.2 1.1 1.1 1.0 1.0 1.3 0.9 1.1 1.1 1.1 1
Slide 5: Health System Affiliations
Health System Affiliations (1)(2) Healthcare Realty has deep relationships with leading hospitals and health systems. • Relationships with 56 of the top 100 health systems • 233 properties located on hospital campuses • Green Street Hospital Rankings for HR portfolio(3): • 96% B or better grade • 89
Slide 6: Who Owns MOBs?
Who Owns MOBs? % of MOBs in Portfolio(1)(2) 22% 23% 41% 91% 1% 96% 2% 25% 69% 67% 36% WELL VTR PEAK HR MPW DOC NHI CHCT UHT GMRE DHC MOB STATS 86 % Multi-tenant 61 Healthcare REITs HR DOC without MOBs OHI CTRE % On or adjacent 72 52 SBRA LTC to campus(3) HR DOC (1) Measured by income and includes on
Slide 7: 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 TOTAL SF 38 27 ON/ADJ SF TOP 100 27 25 22 18 19 TOP 25 18 18 15 13 13 12 13 8 9 8 7 7 5 HR PEAK WELL DOC VTR HR PEAK WELL DOC VTR Exposure to Top MSAs Population Density and G
Slide 8: Off Campus Portfolio Comparison
Off Campus Portfolio Comparison (1) Top Markets Demographic Strength % OF OFF-CAMPUS MOB SF PROJECTED POPULATION 98 GROWTH RATE 2.6% 88 89 82 2.5% 78 78 77 TOP 100 MSAs 2.7% 74 67 TOP 50 MSAs 2.7% 2.5% 61 804 WTD. AVG. 10-MILE POPULATION (IN 000S) 687 612 564 520 HR PEAK WELL DOC VTR TOTAL OFF CAMPU
Slide 9: MOB Market Focus
MOB Market Focus (1)(2) Market Summary by Company # OF # OF AVG # OF AVG SF/ MARKETS MOBS MOBS/MARKET MARKET HR 68 677 10.0 561,942 PEAK 72 287 4.0 306,653 Geographically Isolated Properties(3) WELL 109 422 3.9 233,139 DOC 86 274 3.2 178,528 15 VTR 88 333 3.8 213,409 13 13 12 % OF OFF CAMPUS 11 11 M
Slide 10: Cluster Strategy
Cluster Strategy Medical Office Buildings by Cluster A cluster is defined as at least two properties within a geographic radius of two miles. Clusters provide # OF % OF TOTAL SF operational efficiencies and greater local leasing PROPERTIES MOB SF knowledge that accelerate NOI growth. CLUSTERED 481 2
Slide 11: Market Scale and Cluster Benefits
Market Scale and Cluster Benefits # MARKETS / BUILDINGS / CLUSTERED % CASH LEASING ANNUAL RENT CLUSTERS / CLUSTERS OCCUPANCY(2) AND SIZE SPREADS(1) BUMPS(1) BUILDINGS PER MARKET luster %c ed 86 1M+ SF 89.4% owned in 5 markets(3) +170 bps 19.2 buildings 5.35% market 24 clusters 4.8 clusters 96 buildi
Slide 12: Tours-to-Occupancy Roadmap
Tours-to-Occupancy Roadmap on Multi-Tenant Portfolio PROJECTED VOLUME Average Quarterly Tours 640 Conversion Rate (15 - 20%) 17.5% New Leases 112 Estimated SF/Lease 4,000 Tour to New Lease New Lease SF 448,000 Approximately 4 months New Lease to Occupancy New Occupancy SF +448,000 Approximately 6 mo
Slide 13: NOI Growth Potential
NOI Growth Potential 100 - 150 bps 90%+ 100 - 200 bps 100 - 200 bps Occupancy upside has the potential to double annual NOI growth. 50 - 100 bps 85% Multi-tenant Incremental Growth Potential NOI Growth Occupancy 100 - 200 bps Occupancy Baseline NOI Growth 2.5 3.0% @ 75% Multi-tenant NOI + + 1.5 - 3.
Slide 14: Size of MOB Market
Size of MOB Market $460B $11B $9-12B Total Outpatient/MOB Market Average Annual Sales New Development Each Year Non-REITS $110B (24%) Investor- owned $170B (37%) REITS TOP SELLERS (2021-2022) TOP DEVELOPERS IN 2022 $60B (13%) (Annual starts) SQ FT Remedy Medical Properties, Inc. $1,060 Hammes 656,00
Slide 15: Industry Landscape
Industry Landscape $1.7 Trillion Of Healthcare Real Estate Value ACUTE CARE ACUITY 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 | 15
Slide 16: Booming Demand
Booming Demand The aging population, health reform, and increased utilization are driving the volume Annual Physician Office Visits and Healthcare Costs of outpatient visits higher. BY AGE 19.9% 17.4% 2 Visits 17.0% < 45 $5,100/year 19.6% 17.2% 4 Visits 13.9% 45 - 64 $11,300/year 7 Visits 2013 2022
Slide 17: Provider Trends
Provider Trends Hospitals' Gross Revenue Physician Compensation Growth INPATIENT vs. OUTPATIENT 2009 - 2021 50% 40% 30% 28% 49% 20% 1994 2021 10% Employment of Physicians % OF HOSPITAL EMPLOYED PHYSICIANS 0% 2009 2021 52% 60% 47% Pediatrics 41% General Surgery 38% Internal Med. & Family Practice 43%
Slide 18: Tenant Diversity
Tenant Diversity (1)(2) The average multi-tenant lease size is 3,951 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) ON/ADJ OFF TOTAL Healthcare Realty reduces risk through tenant si
Slide 19: Development Pipeline
Development Pipeline $1.8B HR expects to create value by converting the embedded 3.1M SF pipeline to prospective and active projects. • Target Development Yields 6.5%-8.0% • Target Redevelopment Yields 9.0%-12.0% • $100-125M expected in 2023 funding Seattle Charlotte HR has a high degree Atlanta $33
Slide 20: Flexible Balance Sheet
Flexible Balance Sheet Capitalization(1) Debt Maturity Schedule Senior Notes $2,000M Term Notes Mortgage Notes Debt 36% 1,500 Equity 64% 1,000 500 0 2023 2024 2025 2026 2027 2028 Thereafter LEVERAGE Run-rate debt to adjusted EBITDA(2) 6.6x Expected range 6.0 - 6.5x (1) Based on book capitalization,
Slide 21: Appendix
Appendix
Slide 22: WakeMed Cluster - Raleigh
WakeMed Cluster - Raleigh Rex Cary MOB Tryon MOB I & II MPOC - 216 Ashville Avenue 601 Keisler Drive MOB WakeMed Cary Hospital MPOC - 300 Ashville Avenue WakeMed Medical Park of Cary MOB 115 Crescent Commons Triangle Medical Center 1000 Crescent Green 1400 Crescent Green Healthcare Realty Property |
Slide 23: 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 24: 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 25: 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 26: Market Clustering Strategy - Seattle
Market Clustering Strategy - Seattle Investment Progression 2008 2012 2016 2020 2022 N # of Buildings 2 6 15 27 29 Edmonds 4 properties H Square Feet 141K 379K 958K 1,546K 1,569K $52.3M investment Acquisition $39M $53M $327M $519M $537M 171k square feet Northgate Kirkland Development $0 $97M $97M $1
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