Healthcare Realty Trust Incorporated · NYSE:HR
Healthcare Realty Trust — Investor Presentation (August 2022)
27 slides from Healthcare Realty Trust's investor presentation, August 2022
Slide 1: Investor Presentation August 2022
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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) Post Merger (2) 746 44M 95 % 68% PROPERTIES SQUARE FEET MEDICAL OFFICE ON/ADJACENT TO IN 35 STATES AND OUTPATIENT HOSPITAL CAMPUSES MARKETS OVER 1,000,000 SF % OF MSA TOP MSAs SQ FT TOTAL RANK GLA Dallas 8 3,914,586 9.3% Houston 9 2,511,044 6.0% Southern California 4 2,025,309 4.
Slide 4: Leading Market Scale
Leading Market Scale Post Merger Legacy Legacy HR HTA HR M il l ion s of S F 3.9 HR # of Markets 2 2 9 MOB SF OWNED 1.5M % of Total SF 20% 15% 45% # of Markets 4 7 14 3.1 Ne x t L a r g e s t P u b l i c 1.0M+ % of Total SF 35% 39% 59% MOB Owner # of Markets 13 18 27 2.4 500K+ % of Total SF 71% 73%
Slide 5: Health System Affiliations
Health System Affiliations (1) (2) Post Merger Healthcare Realty has relationships with 58 of the top 100 health systems (Common Spirit) (Common Spirit) in the U.S. (Ascension) (Common Spirit) (Ascension) (1) Ranked by net patient revenue based on Modern Healthcare's Healthcare Systems Financial Dat
Slide 6: Sum of the Parts = Scale
Sum of the Parts = Scale Legacy Legacy HR HTA HR Square Feet (MOB) 17.5 24.7 41.7 SECTOR LEADING PURE PLAY MOB REIT # of MOB Properties 269 452 721 Occupancy 89% 90% 89% % On/Adjacent to Campus 83% 57% 68% % Multi-tenant 95% 73% 82% ENHANCED GROWTH AND SAFETY % Single tenant Occupancy 100% 98% 98% %
Slide 7: Who Owns MOBs?
Who Owns MOBs? Post Merger % OF MOBS IN PORTFOLIO (1) 23% 22% 36% 95% 1% 9 2% 1% 31% 6 5% 7 2% 41 % WELL VTR PE AK HR M PW DOC NHI CHCT GMRE UHT DHC 82 Healthcare REITs without MOBs % Multi-tenant 63 OHI C TRE HR DOC SBRA LTC % On or adjacent 68 (2) 51 to campus HR DOC MOB STATS(3) (1) Measured by i
Slide 8: Premier MOB REIT
Premier MOB REIT Post Merger TOTAL SF 42 Largest MOB Platform (1) Scale with Top (2) SQUARE FEET IN MILLIONS Health Systems (2) SQUARE FEET IN MILLIONS ON/ADJ SF 28 TOP 100 28 22 23 18 18 TOP 25 20 18 15 13 13 12 12 10 8 8 7 7 4 HR PEAK W ELL DO C VT R HR PE AK W E LL DOC VTR Exposure to Top 100 MSA
Slide 9: Off Campus Portfolio Comparison
Off Campus Portfolio Comparison (1) Post Merger Sizable, dense and fast growing markets are critical when investing in off campus MOBs. PROJECTED POPULATION 4.1% GROWTH RATE TOP MARKETS DEMOGRAPHIC (% OF OFF-CAMPUS MOB SF) 4.3% STRENGTH 4.6% % 3.9% 808 WTD. AVG. 10-MILE 95 3.9% POPULATION 87 88 (in
Slide 10: MOB Market Focus
MOB Market Focus (1) (2) Post Merger MARKET SUMMARY BY COMPANY # OF # OF AVG # OF AVG SF/ MARKETS MOBS MOBS/MARKET MARKET GEOGRAPHICALLY ISOLATED HR 82 721 8.8 514,552 PROPERTIES (3) PEAK 71 281 4.1 302,014 WELL 99 381 3.8 234,367 DOC 89 272 3.1 171,138 15 VTR 90 330 3.7 204,486 14 13 % OF 12 12 OFF
Slide 11: Size of MOB Market
Size of MOB Market Post Merger Development projects, more so than acquisitions, foster hospital relationships. T O T A L O U T P A T I E NT / M O B M A R K E T A VER A GE A N N UA L S A L ES NEW DEVELOPMENT EACH Y EAR $460B $11B $9-12B Non-REITS $110B (24%) Investor- owned $170B (37%) REITS $60B (13
Slide 12: Industry Landscape
Industry Landscape $1.6 TRILLION OF HEALTHCARE REAL ESTATE VALUE A C U T E C ARE Hospitals AC UITY $642B IRF & LTCH O UT PA T I EN T C A R E $30B MOB/Outpatient RE C O V E RY & $460B RE H ABILIT AT IO N Skilled Nursing RESI DENTI AL CARE $150B Senior Housing $300B SETTING Source: Revista, Green Stre
Slide 13: Booming Demand
Booming Demand The aging population, health reform, A N N UA L PHYS I C I A N OF FICE VISITS & HEALTHCARE COSTS BY AG E and increased utilization are driving the volume of outpatient visits higher. 2.0 Visits 18.8% 20.0% <45 $ $ $4,300 Annual Cost 17.0% of G DP HC E xp . % 3.0 Visits % o ve r 6 5 y
Slide 14: Provider Trends
Provider Trends HOSPITALS' GROSS REVENUE PHYSICIAN COMPENSATION GROWTH 2009–2020 Inpatient vs. Outpatient 50% 40% 30% 28% 49% 20% 10% 1994 2018 0% 2009 2020 EMPLOYMENT OF PHYSICIANS 60% Pediatrics 37% % O F H O S P I T AL EM PL OY ED PH Y SI C I AN S Internal Med. & Family Practice 35% 50% Cardiolog
Slide 15: Accelerated Growth
Accelerated Growth 8% I N TER N A L D R I VER S EXTERNAL DRIVERS 7% +30bps +30bps D IR EC T SO U R C IN G 6% +20bps RE/DEVEL OP M ENT +100bps RE N T GRO W TH AN N U AL F A D P E R S H A R E GR O WT H 5% O C C U PA N C Y GA IN S 4.5% HR HISTORICAL AVERAGE 4.7% 4% 4.4% 4.4% M U L T I T E N AN T RE/D E
Slide 16: Internal Growth Drivers
Internal Growth Drivers # MARKETS / BUILDINGS / CLUSTERED % CASH LEASING ANNUAL RENT CLUSTERS / CLUSTERS OCCUPANCY (2) AND SIZE SPREADS (1) BUMPS (1) BUILDINGS PER MARKET c luster 6% e 1M+ SF 89.4% d 8 5 markets(3) owned in 24 clusters 19.2 buildings 5.35% +170 bps market 4.8 clusters 96 buildings +
Slide 17: External Growth Drivers
External Growth Drivers HEALTH SYSTEM NEEDS HR SOLUTION & VALUE SHAREHOLDER BENEFIT • Expand care footprint • Re/Development + Occupancy gains • Patient experience • Relocation/expansion + Rent growth Re/Development • Physician recruitment/retention • Price point and product diversity + • Se
Slide 18: Embedded Development Pipeline
Embedded Development Pipeline DEVELOPMENT PIPELINE BY MARKET $ IN MILLIONS LEGACY LEGACY Legacy Legacy HR HTA HR HTA HR Seattle $467 $0 $467 Houston 28 279 307 Denver 206 21 227 Dallas 89 107 196 HR Raleigh 101 89 190 Development Other 653 139 792 Total $1,544 $634 $2,179 Potential Annual Starts $25
Slide 19: Expanded Investment Activity
Expanded Investment Activity NET INVESTMENT ACTIVITY $ IN MILLIONS $2,000 ~$1.5B 1,500 ACQUISITIONS IN NEW MARKETS AND EXPANDED RELATIONSHIPS 1,000 EXPANDED DEVELOPMENT BASELINE PIPELINE DEVELOPMENTS BASELINE ACQUISITIONS 500 2018 2019 20 20 20 21 20 21 E F u t ure Run-Rate 0 DISPOSITIONS 500 19
Slide 20: Accretion Bridge
Accretion Bridge Adjusted to reflect change in forward interest rate curve from February to current. Excludes additional accretion potential from occupancy gains, rent growth, and accelerated external investment. Change Stand- Stand- Stand- Change in in Net alone alone Change in HR Alone JV/asset Ca
Slide 21: Valuation Potential
Valuation Potential Post Merger Based on historical valuation ranges, HR has the potential to reach attractive price levels before realizing the full growth potential of the combination with HTA. 30x NTM AFFO HR Price at AFFO Percentile Multiple of $1.45/share (1) 75th 23.2x $33.66 50th 21.9x $31.72
Slide 22: Flexible Balance Sheet
Flexible Balance Sheet(1) Post Merger PRO FORMA PRO FORMA DEBT MATURITY SCHEDULE CAPITALIZATION (1) $1,200 M Senior Notes Term Notes 30% Mortgage Notes Debt 1,000 70% 800 Equity 600 400 200 0 20 22 20 23 20 24 20 25 20 26 2027 2028 2029 203 0 203 1 Legacy Legacy HR after Leverage HR HTA JV/Sales (3)
Slide 23: Appendix
Appendix 23
Slide 24: Cluster Formation - Atlanta
Cluster Formation - Atlanta INVESTMENT PROGRESSION 2 01 7 2020 20 20 TODAY FUTURE Acquired three Acquired two MOBs In coordination with Wellstar Current cluster size Embedded on campus MOBs adjacent to campus from Kennestone, acquired a 2.5 acre • 357,360 SF development from developer two different
Slide 25: Cluster Formation - Denver
Cluster Formation - Denver INVESTMENT PROGRESSION 2 01 2 2015 20 1 7 20 1 8 TODAY FUTURE Developed two Acquired one MOB Developed 3rd Acquired three buildings Current cluster size Embedded on campus MOBs adjacent to campus on campus MOB on 15 acres of land for • 539,082 SF development • 186,672 SF •
Slide 26: Cluster Formation - Seattle
Cluster Formation - Seattle INVESTMENT PROGRESSION 2 01 6 2017 20 20 20 22 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 • 331,256 SF development including one for 4 acres of land p
Slide 27: Market Clustering Strategy - Seattle
Market Clustering Strategy - Seattle I N VES TMENT PROG RESSION 2008 2012 2016 2020 2022 N # of Buildings 2 6 15 27 28 Edmonds 4 properties H Square Feet 141.0K 379.3K 957.7K 1,545.5K 1,558.8K $50.2M investment 171k square feet Acquisition $39.0M $52.6M $326.8M $518.5M $526.9M Northgate Kirkland Dev
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