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Press Release

Healthcare Trust of America, Inc. Reports First Quarter 2018 Earnings

Healthcare Trust of America
Posted on: 30 Apr 18

SCOTTSDALE, Ariz., April 30, 2018 /PRNewswire/ -- Healthcare Trust of America, Inc. (NYSE: HTA) ("HTA") announced results for the three months ended March 31, 2018.

First Quarter 2018 Highlights

Operating

Net Income Attributable to Common Stockholders: Decreased (27.6)% to $9.8 million, compared to Q1 2017.  Earnings per diluted share decreased (44.4)% to $0.05 per diluted share, compared to Q1 2017.  This decrease is primarily related to the increase in depreciation and amortization of $23.3 million as a result of the increase in the size of our investment portfolio.

Funds From Operations ("FFO"): As defined by the National Association of Real Estate Investment Trusts ("NAREIT"), increased 40.5%, to $84.6 million, compared to Q1 2017.  FFO per diluted share decreased (2.4)%, to $0.40 per diluted share, compared to Q1 2017.

Normalized FFO: Increased 41.3%, to $85.0 million, compared to Q1 2017.  Normalized FFO per diluted share remained stable at $0.41 per diluted share, compared to Q1 2017.

Normalized Funds Available for Distribution ("FAD"): Increased 43.6%, to $75.9 million, compared to Q1 2017.

Same-Property Cash Net Operating Income ("NOI"): Increased $1.8 million, or 2.3%, to $81.0 million, compared to Q1 2017.  Excluding the MOBs located on its Forest Park campuses, Same-Property Cash NOI growth would have been 3.2%.  This increase was driven by an increase of 1.5% in Same-Property rental revenue and an increase of 70 bps to 88.5% in Same-Property rental margins, measured as Same-Property Cash NOI divided by Same-Property rental revenue, compared to Q1 2017.  From an occupancy perspective for the Same-Property pool, the leased rate increased 20 bps to 92.1% while the occupancy rate declined 10 bps to 91.0%, compared to Q1 2017. 

Portfolio

Leasing: HTA entered into new and renewal leases on approximately 663,000 square feet of GLA, or 2.7% of its portfolio.  Tenant retention for the Same-Property portfolio was 81% by GLA for the quarter, which included approximately 609,000 square feet of GLA of total expiring leases.  Releasing spreads for renewal leases on a cash basis were 2.7%.  Renewal leases included tenant improvements of $1.07 per square foot of GLA per year of the lease term and approximately seven days of free rent per year of the lease term.

Leased Rate: As of March 31, 2018, HTA had a leased rate for its portfolio of 91.8% by GLA and an occupancy rate of 90.7% by GLA.

Forest Park Update: During the three months ended March 31, 2018, HTA entered into approximately 41,000 square feet of GLA of new leases on the former Forest Park Dallas campus.  This leasing included approximately 37,000 square feet of GLA that is directly leased to the hospital.

Development: Subsequent to March 31, 2018, HTA entered into a development agreement for a new MOB in the key gateway market of Miami, Florida.  The state-of-the-art MOB will total approximately 51,000 square feet of GLA and be located adjacent to the Jackson South Hospital.  Total development costs are estimated to be $21.8 million and the building is expected to be 70% pre-leased to the hospital with construction expected to begin in 2019.

Investments: During the quarter, HTA remained disciplined and strategically expanded within its key gateway markets.  HTA invested $8.4 million to acquire an MOB of approximately 24,000 square feet of GLA in Raleigh, North Carolina, that was 100% leased as of the acquisition date to Duke Health System.  In addition, HTA invested $3.9 million to consolidate its ownership interests in several MOBs.

Dispositions: As of April 30, 2018, HTA has received letters of intent to sell multiple MOBs totaling an aggregate sales price of over $50 million.  These properties are subject to customary closing conditions and no closings are assured. 

2017 Investment Performance

Cash NOI: During the three months ended March 31, 2018, HTA generated $34.5 million of Cash NOI on its 2017 investments, including its investment in its unconsolidated joint venture.  This Cash NOI includes approximately $1.8 million of income from property management and building engineering services provided to its tenants.  As of March 31, 2018, HTA's run rate yield on its 2017 investments was approximately 5.2%, which included the full year impact of new leases that were signed but not yet occupied.

Development: During the three months ended March 31, 2018, five of the seven acquired development properties were completed.  The remaining two development properties, which are 100% pre-leased, are on track to be completed by the middle of 2018.  As of the end of the quarter, the five development properties were 84% leased and generated $1.1 million of Cash NOI.  HTA believes it is currently in the late stages of lease negotiations for an additional 26,000 square feet of GLA that would bring the leased rate on these development properties to 89% if completed.  In total, the seven development properties are projected to generate between approximately $2.5 million and $2.8 million in quarterly Cash NOI upon completion and stabilization.

Balance Sheet

Balance Sheet: As of March 31, 2018, HTA had total leverage of 33.0% measured as net debt (total debt less cash and cash equivalents) to total capitalization, and 5.9x measured as net debt to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for real estate ("Adjusted EBITDAre").  Total liquidity at the end of the quarter was $1.1 billion, including $994.5 million of availability under HTA's unsecured revolving credit facility, $56.2 million of cash and cash equivalents and a $75.0 million forward equity agreement, excluding anticipated costs to borrow.

Financial Results - First Quarter 2018

Rental Income

Rental income increased 41.6% to $175.6 million for the three months ended March 31, 2018, compared to $124.0 million for the three months ended March 31, 2017.

Net Income

Net income decreased (28.5)% to $10.0 million for the three months ended March 31, 2018, compared to $14.0 million for the three months ended March 31, 2017.  This decrease is primarily related to the increase in depreciation and amortization of $23.3 million as a result of the increase in the size of our investment portfolio.

FFO

FFO, as defined by NAREIT, was $0.40 per diluted share, or $84.6 million, for the three months ended March 31, 2018, compared to $0.41 per diluted share, or $60.2 million, for the three months ended March 31, 2017.

Normalized FFO

Normalized FFO was $0.41 per diluted share, or $85.0 million, for the three months ended March 31, 2018, which remained stable compared to the three months ended March 31, 2017.

Normalized FAD

Normalized FAD increased 43.6% to $75.9 million, for the three months ended March 31, 2018, compared to $52.9 million for the three months ended March 31, 2017.

NOI

NOI increased 40.2% to $119.6 million for the three months ended March 31, 2018, compared to $85.3 million for the three months ended March 31, 2017.

Same-Property Cash NOI

Same-Property Cash NOI increased $1.8 million, or 2.3%, to $81.0 million, for the three months ended March 31, 2018, compared to $79.2 million for the three months ended March 31, 2017.  Excluding the MOBs located on its Forest Park campuses, Same-Property Cash NOI growth would have been 3.2%.

General and Administrative Expenses

General and administrative expenses were $8.8 million for the three months ended March 31, 2018, compared to $8.4 million for the three months ended March 31, 2017.

Interest Expense

Total interest expense was $26.3 million for the three months ended March 31, 2018, compared to $16.4 million for the three months ended March 31, 2017.

Investment Activity

During the three months ended March 31, 2018, HTA invested $8.4 million to acquire an MOB of approximately 24,000 square feet of GLA in Raleigh, North Carolina, that was 100% leased as of the acquisition date to Duke Health System.  In addition, HTA invested $3.9 million to consolidate its ownership interests in several MOBs.

Tenant Retention

Tenant retention for the Same-Property portfolio was 81% by GLA for the quarter, which included approximately 609,000 square feet of GLA of expiring leases. 

About Healthcare Trust of America, Inc.
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of medical office buildings in the United States, comprising over 24.1 million square feet of GLA, with over $7.0 billion invested primarily in medical office buildings.  HTA provides real estate infrastructure for the integrated delivery of healthcare services in highly-desirable locations.  Investments are targeted to build critical mass in 20 to 25 leading gateway markets that generally have leading university and medical institutions which translates to superior demographics, high-quality graduates, intellectual talent and job growth.  The strategic markets HTA invests in support a strong, long-term demand for quality medical office space.  HTA utilizes an integrated asset management platform consisting of on-site leasing, property management, engineering and building services, and development capabilities to create complete, state of the art facilities in each market.  This drives efficiencies, strong tenant and health system relationships, and strategic partnerships that result in high levels of tenant retention, rental growth and long-term value creation.  Headquartered in Scottsdale, Arizona, HTA has developed a national brand with dedicated relationships at the local level.

Founded in 2006 and listed on the New York Stock Exchange in 2012, HTA has produced attractive returns for its stockholders that have significantly outperformed the S&P 500 and US REIT indices.  More information about HTA can be found on the Company's Website, Facebook, LinkedIn and Twitter.

Forward-Looking Language
This press release contains certain forward-looking statements with respect to HTA.  Forward-looking statements are statements that are not descriptions of historical facts and include statements regarding management's intentions, beliefs, expectations, plans or predictions of the future, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Because such statements include risks, uncertainties and contingencies, actual results may differ materially and in adverse ways from those expressed or implied by such forward-looking statements.  These risks, uncertainties and contingencies include, without limitation, the following: changes in economic conditions generally and the real estate market specifically; legislative and regulatory changes, including changes to laws governing the taxation of REITs and changes to laws governing the healthcare industry; the availability of capital; changes in interest rates; competition in the real estate industry; the supply and demand for operating properties in our proposed market areas; changes in accounting principles generally accepted in the United States of America; policies and guidelines applicable to REITs; the availability of properties to acquire; and the availability of financing.  Additional information concerning us and our business, including additional factors that could materially and adversely affect our financial results, include, without limitation, the risks described under Part I, Item 1A - Risk Factors, in our 2017 Annual Report on Form 10-K and in our filings with the SEC.

Conference Call

HTA will host a conference call and webcast on Monday, April 30, 2018 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to review its financial performance and operating results for the three months ended March 31, 2018.

Conference Call and Webcast Details:
Domestic Dial-In Number: (877) 507-6265
International Dial-In Number: (412) 902-6633
Canada Dial-In Number: (855) 669-9657
Webcast: www.htareit.com under the Investor Relations tab

Replay Conference Call Details:
Domestic Dial-In Number: (877) 344-7529
International Dial-In Number: (412) 317-0088
Canada Dial-In Number: (855) 669-9658
Conference ID: 10119251
Available April 30, 2018 (one hour after the end of the conference call) to May 30, 2018 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)

Supplemental Information

Supplemental financial data are available on the HTA's website at www.htareit.com.

Financial Contact:
Robert A. Milligan
Chief Financial Officer
480.998.3478

For more information:
www.prnewswire.com/news-releases/healthcare-trust-of-america-inc-reports-first-quarter-2018-earnings-300638596.html

Editor's Details

Mike Wood
PharmiWeb.com
www.pharmiweb.com
editor@pharmiweb.com

Last updated on: 30/04/2018

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