Healthcare Realty Trust Incorporated · NYSE:HR
Healthcare Realty Trust — Investor Presentation (March 2023)
24 slides from Healthcare Realty Trust's investor presentation, March 2023
Slide 1: Investor Presentation March 2023
March 2023 Investor Presentation
Slide 2: Forward-Looking Statements
In addition to the historical information contained within, this press release contains certain forward-looking statements with respect to the Company. Forward- looking statements are statements that are not descriptions of historical facts and include statements regarding management’s intentions, b
Slide 3: The Big Picture
The Big Picture (1)(2) 721 42M 92% 70% PROPERTIES SQUARE FEET MEDICAL OFFICE ON/ADJACENT TO IN 35 STATES AND OUTPATIENT HOSPITAL CAMPUSES % OF MSA TOP MSAs SQ FT TOTAL RANK GLA Dallas 4 4,000,000 9.5% Houston 5 2,611,100 6.2% Los Angeles 2 2,088,000 4.9% Denver 19 1,991,000 4.7% Charlotte 22 1,790,0
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 58% 3.3 HR 3.3 Next Largest Public MOB Owner # of Markets 27 5 0 0 K+ % of Total SF 79% 2.4 Millions of SF 2.3 1.9 1.9 1.8 1.6 1.6 1.5 1.5 1.4 1.4 1.5 1.1 1.1 1.0 1.0 0.9 1.2 1.1 1.1 1.1 1
Slide 5: Health System Affiliations
Health System Affiliations (1)(2) Healthcare Realty has deep relationships (Common Spirit) with leading hospitals and health systems. (Common Spirit) (Ascension) • Relationships with 58 of the top 100 health systems • 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) 23% 24% 38% 95% 1% 96% 2% 32% 67% 68% 41% WELL VTR PEAK HR MPW DOC NHI CHCT GMRE UHT DHC MOB STATS 85 % Multi-tenant 63 Healthcare REITs without MOBs HR DOC OHI CTRE % On or adjacent 70 SBRA LTC to campus(2) 52 HR DOC (1) Measured by income or square feet (G
Slide 7: Premier MOB REIT
Premier MOB REIT Largest MOB Platform(1) Scale with Top Health Systems(2) SQUARE FEET IN MILLIONS SQUARE FEET IN MILLIONS 39 TOTAL SF 27 ON/ADJ SF TOP 100 27 24 22 18 18 TOP 25 18 19 15 12 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(2) and G
Slide 8: Off Campus Portfolio Comparison
Off Campus Portfolio Comparison (1) Top Markets Demographic Strength % OF OFF-CAMPUS MOB SF PROJECTED POPULATION 4.2% 96 GROWTH RATE 88 88 82 4.6% 4.2% 77 77 TOP 100 MSAs 75 74 67 TOP 50 MSAs WTD. AVG. 10-MILE 3.9% 61 POPULATION 800 3.9% (in 000s) 674 637 510 451 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 71 685 9.6 509,907 PEAK 72 289 4.0 308,708 Geographically Isolated Properties(3) WELL 101 392 3.9 237,951 DOC 88 272 3.1 173,358 15 14 VTR 89 333 3.7 211,011 13 12 12 % OF OFF CAMPUS 11 MO
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. # OF % OF TOTAL SF PROPERTIES MOB SF Clusters provide operational efficiencies and greater CLUSTERED 485 26,700,000 69% local leasing knowledge that accelerat
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% 5 markets(3) owned in 19.2 buildings 5.35% +170 bps market 24 clusters 4.8 clusters 96 buildi
Slide 12: 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 $60B (13%) TOP SELLERS (2020-2021) TOP DEVELOPERS IN 2022 (Annual starts) SQ FT Welltower $1,920 Provider-owned/ Landmark Healthcare
Slide 13: Industry Landscape
Industry Landscape $1.6 Trillion Of Healthcare Real Estate Value ACUTE CARE ACUITY Hospitals $642B RECOVERY & REHABILITATION IRF & LTCH OUTPATIENT CARE $30B MOB/Outpatient $460B Skilled Nursing $150B RESIDENTIAL CARE Senior Housing $300B SETTING Source: Revista, Green Street Advisors | 13
Slide 14: 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 20.0% 18.8% 2.0 Visits 17.0% < 45 $4,300/year 19.6% 17.0% 3.0 Visits 45 - 64 $10,200/year 14.0% 6.0 Visits 2013
Slide 15: Provider Trends
Provider Trends Hospitals' Gross Revenue Physician Compensation Growth INPATIENT vs. OUTPATIENT 2009 - 2020 50% 40% 30% 28% 49% 20% 10% 1994 2018 0% 2009 2020 Employment of Physicians Pediatrics 37% General Surgery 31% % OF HOSPITAL EMPLOYED PHYSICIANS Internal Med. & Family Practice 35% Oncology 29
Slide 16: Occupancy Upside
Occupancy Upside on Multi-tenant SF 90% Increasing occupancy to 90% Occupancy generates incremental cash flow of $57M annually or $0.15 per share. 1,065K SF 480K SF x $35.75/SF x $39.50/SF $38.1M/Year $19.0M/Year $57.1M/Year 86.8% LEASING CATALYSTS • Market scale and efficiency • High-performing lea
Slide 17: Development Pipeline
Development Pipeline $1.7B 3.1M SF HR expects to create value by converting the embedded pipeline to prospective and active projects. • Target Development Yields HR has a high degree 6.5%-8.0% of control over project Seattle timing and economics. • Target Redevelopment Yields Charlotte 8.0%-11.0% At
Slide 18: 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) 6.4x Expected range 6.0 - 6.5x (1) Based on book capitalization,
Slide 19: Appendix
Appendix
Slide 20: WakeMed Cluster Aerial - Raleigh
WakeMed Cluster Aerial - Raleigh Rex Cary MOB MPOC - Tryon 216 MOB I & II Ashville Avenue 601 Keisler Drive MOB MPOC - 300 WakeMed Cary Hospital Ashville Avenue Triangle Medical Center WakeMed Medical Park of Cary MOB 115 Crescent Commons 1400 Crescent 1000 Crescent Green Green | 20
Slide 21: 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 22: 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 23: 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 4 MOB on campus adjacent to campus development • 331,256 SF including one for acres of land poten
Slide 24: 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 $50.2M investment 171k square feet Acquisition $39M $53M $327M $519M $537M Northgate Kirkland Development $0 $97M $97M $1
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