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July 2014
In addition to the historical information contained within, the matters discussed in this presentation contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2013 under the heading “Risk Factors,” and as may be updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company’s judgment as of the date of this presentation. The Company disclaims any obligation to update forward-looking material.
Information as of June 30, 2014, unless otherwise disclosed.
| 3
TOP LOCATIONS SQ FT %
Dallas/Fort Worth 2,348,811 16.4%
Charlotte 820,457 5.8%
Nashville 794,912 5.6%
Denver/Colorado Springs 724,410 5.1%
San Antonio 689,764 4.8%
Houston 591,027 4.1%
Indianapolis 558,694 3.9%
Richmond, Virginia 558,209 3.9%
Los Angeles 551,371 3.9%
Des Moines 532,610 3.7%
The Big Picture
$3.2B 14.3M 9.7MINVESTED IN 202 PROPERTIES AND MORTGAGES
SQUARE FEET OWNED IN 29 STATES
SQUARE FEET MANAGED INTERNALLY
83%MEDICAL OFFICE AND OUTPATIENT
81%ON/ADJACENT TO HOSPITAL CAMPUSES
| 4
(CHI)
(Ascension)
(CHI)
Health System Affiliations
With nearly 80% of its portfolio associated with credit rated health systems, Healthcare Realty is aligned with well-established providers who have the resources to adapt to reform.
INVESTMENT GRADE AFFILIATIONS
ASSOC. SQ FT
%
Baylor Scott & White Health 2,357,719 16.5%
Ascension Health 1,167,438 8.2%
Catholic Health Initiative (CHI) 901,855 6.3%
Carolinas HealthCare System 729,824 5.1%
Bon Secours Health System 548,209 3.8%
Baptist Memorial Health Care 515,876 3.6%
Mercy 386,000 2.7%
Indiana University Health 382,695 2.7%
University of Colorado Health 345,240 2.4%
CHE Trinity Health 278,904 2.0%
| 5
Portfolio History
93
ASSETS
(in m
illions
)
99 0596 02 0894 00 0697 03 09 10 1195 01 0798 04
2008
Acquired Carolinas Healthcare System Portfolio
2011
Acquired Bon Secours Portfolio
1995
Acquired Starr Sanders Johnson
1998
Acquired Capstone Capital Corporation
2004
Acquired BaylorHealthcare Portfolio
2007
Sold Senior Living Facilities and paid special dividend of $4.75 per share
3,000
1,000
2,000
0
12 13
1,500
2,500
$3,500
500
MEDICAL OFFICE BUILDING SPECIALITY INPATIENT SENIOR HOUSING OTHER
75% MOB
27% MULTI-TENANT
51 ,000 AVG SF / BUILDING
68% MOB
60% MULTI-TENANT
54,000 AVG SF / BUILDING
83% MOB
84% MULTI-TENANT
70,000 AVG SF / BUILDING
| 6
Industry Landscape
MORE THAN $1 TRILLION OF HEALTHCARE REAL ESTATE VALUE
Source: Sg2 and Stifel Nicolaus
ACUITY
SETTING
OUTPATIENT CARE
RESIDENTIAL CARE
ACUTE CARE
RECOVERY & REHABILITATION
Senior Housing$163B
MOB/Outpatient$183B
Small Physician Clinics $220B
Hospital-BasedOutpatient
$45B
Hospitals$304B
Skilled Nursing$104B
LTAC$18B
IRF$15B
| 7
Who Owns MOBs?
HCP VTR (3) HCN DRE SNH (2) OHI HR MPW HTA H C T (3) LTC SBRA
13% 17% 16%
14% 32%
1% 1% 83% 89%
% Multi-tenant
% On-campus
Avg building size
75
74
48kSF
81
91
72kSF
HR
HR
HR
% OF MOBS IN PORTFOLIO (1)
(1) Includes only public REITs(2) Includes MOBs, Life Science, and other medical use buildings(3) On June 2, 2014, VTR announced that it will acquire HCT
Source: Company Filings
HTA
HTA
HTA
MOB STATS
N H I
55%
| 8
Size of MOB Market
NEW DEVELOPMENT EACH YEARTOTAL OUTPATIENT / MOB MARKET AVERAGE ANNUAL SALES
Hospital-owned$226B
Investor-owned $57B
REITs $20B
Non-REITs $37B
$6.1B $4B-6B$283B*
* Total outpatient/MOB market excludes government and most small physician clinics
Source: RBC Capital Markets; Stifel Nicolaus; Real Capital Analytics; Modern Healthcare
Development projects, more so than acquisitions, foster hospital relationships.
Hospital-owned facilities are rarely for sale.
TOP SELLERS
Cogdell Spencer $709M
WRIT 480M
ARCT 413M
Seavest 342M
LaSalle 331M
(2012-2013)
| 9
Booming Demand
ANNUAL PHYSICIAN OFFICE VISITS BY AGE
2.3 Visits
3.7 Visits
6.9 Visits
<45
>65
45-64
2000 2020 2030
HC Exp. % of GDP
% over 65yr. old
13.8%
12.4%
19.9% 20.3%
Source: CMS.gov, US Centers for Disease Control and Prevention, US Census Bureau, AHA Hospital Statistics, BLS.gov
1985 1990 1995 2000 2005 2010
700
500
300
100
Outpatien
t Visits
Inpatient Days
PATIENT VISITS BY YEAR ( IN MILLIONS) EMPLOYMENT CHANGE SINCE 2009
2009 2010 201 1 2012 2013 2014
30%
20%
10%
0%
-10%
+ 30% Outpatient Care Centers
+ 15% Ambulatory (all outpatient facilities)
+ 9% Healthcare Jobs+ 9% Office of Physicians
+ 3% Total US Employment
The aging population and increased utilization are expected to drive higher volumes of outpatient visits.
Healthcare employment continues to increase to meet growing demand.
2010
| 10Source: Dixon Hughes Goodman, AHA Annual Survey data for Community hospitals
2002 2014
100%
50%
0%
PRACTIC
ES OWNED
BY HOS
PITALS
PRACTICES OWNED BY PHYSICIANS
Provider Trends
To reduce costs, hospitals are aligning with physicians and shifting more procedures to outpatient settings. Healthcare Realty's portfolio is positioned to benefit from these structural changes.
INPATIENT vs OUTPATIENT
1991
2001
201 1
24%
35%
43%
Hospitals' Gross Revenue
| 11
Topography
HIGHE
R RIS
K
LOWE
R FU
NGIBI
LITY
HOSPITAL
ON-CAMPUS
NEAR-CAMPUS
OFF-CAMPUS AFF IL I ATED
HR
’S %
ON
/AD
J TO
CA
MP
US
BY
SQ
UA
RE
FE
ET
LOW-FUNGIBILITY: Having a unique quality which cannot be replaced exactly.
Proximity to hospital drives long-term value and lowers risk.
20122010 2011 2013
81
7775
69
64
Healthcare Realty has strategically shifted its portfolio toward lower-risk, on-campus medical office buildings.
WHY ON-CAMPUS MATTERS.. .
ON-CAMPUS OFF-CAMPUS
Occupancy* 87.6% 84.4%
Tenant Retention* 82.9% 78.1%
Re-leasing Spread* 3.4% 2.3%
* HR results from 2008-2013
2014
OFF-CAMPUS
| 12
Intrinsic Real Estate Value vs. Leasehold Value
Multi-tenant building in dense location with strong demand.
Credit worthy single tenant in location with few replacement tenants.
Leasehold Value
• Credit-driven• High fungibility• Rent exceeds market• Renewal roll down (terminal value risk)• Duration: lease term (finite)
Intrinsic Real Estate Value
• Demand-driven• Low fungibility• Perpetual cash flow• Duration: infinite
DEMAND > SUPPLYSUPPLY > DEMAND
QUANT I T Y (SF )
PRIC
E (
RENT)
| 13
Rent Cushion
RENT ( 1 x )
RENT CUSHION*
COVERAGE RATIO 1 .2 X1 .5 X
3 X3.4 X
> 6 X
> 9 X
Assisted Living/Independent Living
Skilled Nursing Facility Inpatient Rehab Facility Acute Care Hospital Surgical Hospital Medical Office Building
* Rent Cushion (8x) = Coverage ratio (9X) - rent (1X)
Source: Stifel Nicolaus; Company Filings; MGMA
MOB rent coverage provides a buffer against reimbursement changes.
| 14
0-2,500 SF 2,501-5,000 SF 5,001-7,500 SF 7,501-10,000 SF 10,000+ SF
Tenant Diversity
AllergyAnesthesiologyAudiologyBariatric SurgeryCardio/Thoracic SurgeryCardiologyColon and Rectal SurgeryDermatologyEndocrinologyFamily PracticeGastroenterologyGeneral Surgery
Healthcare Realty Tenant Specialties
Hematology/OncologyInfectious DiseaseInternal MedicineNeonatologyNephrologyNeurologyNeurosurgeryObstetrics/GynecologyOphthalmologyOrthopedicsOtolaryngologyPain Management
PediatricsPhysical TherapyPlastic SurgeryPodiatryPsychology/PsychiatryPulmonary MedicineRadiologyReproductive EndocrinlogyRheumatologySports MedicineUrologyVascular Surgery
Healthcare Realty reduces risk through tenant size and diversity of medical specialties.
HEALTHCARE REALTY’S AVERAGE TENANT SIZE = 4,445 SF
| 15
Historical Investment Activity
2 0 1 2
2008-2013 Cumulative New Investments: $1.8B
2008-2013 ANNUAL AVERAGE OF NEW INVESTMENTS: $297M
2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1
Total Assets with New Investments
ACQUISITION
DEVELOPMENT
$316M
$111M
$1,637M
$81M$96M
$2,081M
$2,220M
$2,541M
$2,800M$305M
$84M$190M
$95M$141M$84M
$2 . 1 B
$ 2 . 3 B
$ 2 . 6 B
$ 2 . 9 B$ 3 . 0 B
Since 2007, Healthcare Realty has invested nearly $1.8B in quality assets, more than doubling its asset base, reducing risk and increasing long-term value.
2 0 1 3
$2,911M
$217M
$59M
$3 . 2 B
32%
A CQUI S
I TION $
1,204M
DEVE
LOPM
ENT
$575M
68%
| 16
Healthcare Demand/Need
PatientAffluence
PHYSICIAN OFFICE VISITSINPATIENT PROCEDURES
PHYSICIAN NEED
INCOMEINSURED POPULATION / PAYOR MIX
POPULATION GROWTH
HIGHEST RISK
LOWEST RISK
RECENT ACQUISITIONS
HR PORTFOLIO
HR DEVELOPMENT CONVERSIONS
HR’S ESTIMATED CAP RATE RANGE
MOB Differentiation
On/off campus
Hospital strength
Tenant mix
Building size
Ground lease vs. fee simple
Building condition/functionality
Competition
Parking
Financial measures:
Growth profile
Lease rates
Capital needs
Operating expenses
Lease turnover/expirations
%
6.5-7%
7.5% +
6-6.5%
7-7.5%
Beyond market dynamics, asset and portfolio value is a function of asset-specific attributes, including:
Source: Montecito Research & Analytics
Healthcare Realty’s assets are predominately in the top two quadrants.
| 17
Recent MOB Acquisitions
F I R S T H I L L
SEATTLE | 82,000 SQ FT
Adjacent to Swedish Medical Center, part of AA rated Provi-
dence Health & Services.
SUMMI T CROSSING
GASTONIA (CHARLOTTE) | 91,000 SQ FT
Adjacent to AA- rated CaroMont Health Regional Medical Center.
SAINT JOSEPH REGIONAL MEDICAL CENTER MOB
SOUTH BEND | 206,000 SQ FT
On campus and attached to Saint Joseph Regional Medi-cal Center, part of AA- rated CHE Trinity.
MEDICAL CENTER OF THE ROCKIES MOB I AND I I
LOVELAND (DENVER) | 150,000 SQ FT
On campus and attached to A+ rated University of Colorado Health's Medical Center of the Rockies.
8000 WOLF RIVER
GERMANTOWN (MEMPHIS) | 52,000 SQ FT
Adjacent to 39,000 SQ FT MOB purchased in October 2012. Affiliated with AA- rated Baptist Memorial Health Care.
Healthcare Realty targets on-campus, multi-tenant MOBs associated with market-leading hospitals.
JE F FERSON MOB
AUSTIN | 98,000 SQ FT
Affiliated with Seton Healthcare, part of AA+ rated Ascension Health.
AUSTIN MEDICAL PLAZA
AUSTIN | 48,000 SQ FT
On the campus of Seton Medical Center, part of AA+ rated Ascension Health.
WESLEY LONG PROFESSIONAL BUILDING
GREENSBORO | 35,000 SQ FT
On the campus of Wesley Long Hospital, part of AA rated Cone Health.
F R I D L E Y ME D I C A L CEN TER
MINNEAPOLIS | 60,000 SQ FT
On campus and attached to Unity Hospital, part of AA-
rated Allina Health.
| 18
Mercy Health Projects
SIZE 200,000 SQ FT
TOTAL PROJECT COST $91.2M(1)
CONVERSION DATE May 22, 2014
2Q14 INTEREST / RENTAL INCOME $1.7M
3Q14 RENTAL INCOME $1.8M
SIZE 186,000 SQ FT
TOTAL PROJECT COST $111.4M (2)
CONVERSION DATE September 27, 2013
2Q14 RENTAL INCOME $2.3M
COMPREHENSIVE OUTPATIENT FACILITYOklahoma City, OK
ORTHOPEDIC SURGICAL FACILITYSpringfield, MO
(1) Healthcare Realty purchased for $85.4M and subsequent to purchase the Company funded an additional
$1.7M and anticipates funding an additional $4.1M in 2014.(2) Healthcare Realty purchased for $102.6M and subsequent to purchase the Company funded an additional $8.8M.
These two built-to-suit facilities are complete and are 100% leased to "AA-" rated Mercy Health, a Saint Louis based health system.
| 19
Growth Strategies
HIGHER RISK
DEVELOP MOBs
ACQUIRE MOBs
NEW ASSET TYPES
MERGERS AND ACQUISIT IONS
EXPENSE CONTROL
LEASING
DISPOSIT IONS
CAPITAL IMPROVEMENTS
REDEVELOPMENT
Tight spreads
Immediate accretion
Quality vs. quantity
Capital market risk
Newer assets
Growth markets
Leading health systems
Slower timeline
LOWER RISK
LO
WE
R R
ET
UR
NH
IGH
ER
RE
TU
RN
Development
Acquisitions
Internal Growth
Portfolio Shift
As a pure-play REIT, Healthcare Realty is focused on maintaining a strong internal growth profile, supplemented by disciplined acquisitions and selective developments.
| 20
Portfolio Management
$3.1 BILLION OF ASSETS*
DEVELOPMENT CONVERSIONS
NON-CORE ASSETS
STABILIZED PROPERTIES
LEASE-UP
RECENT ACQUISIT IONS
DISPOSITION
96% 4%
* Excludes land held for development and corporate property
Like recent acquisitions, the development properties are stabilized and will be included in same store in 1Q 2015.
0%$3,019M Gross
Investment$120M Net Book Value
CIP
| 21
Stabilized Properties
STABILIZED PROPERTIES96% OF ASSETS
• > 8% yield on cost
• 91% occupied
• $176M annualized NOI
• 2-4% NOI growth profile
• 19% single-tenant net lease
• 81% multi-tenant
• 82% leased, 70% occupied
• $25M-30M of estimated NOI at stabilization
• $4.1M quarterly NOI as of Q2 2014(2)
• $5-10M in remaining TI funding in 2014
• 96% occupied
• 7% yield on cost
DEVELOPMENT CONVERSIONS
RECENT ACQUISIT IONS (1)
SAME STORE PROPERTIES
$459M Invested
1.3M SQ FT
13 Properties
$441M Invested
1.3M SQ FT
12 Properties
$2.1B Invested
10.5M SQ FT
156 Properties
(1) Properties acquired during the prior five quarters, not included in same store(2) Adjusted to reflect NOI if all occupants at June 30, 2014 had taken occupancy and paid rent for the entire quarter
| 22
Non-Core Assets
• 48% Occupied
• $120M net book value
• $2.6M annual NOI
• 22 MOBs (including 3 assets held for sale)
• 1.3M square feet
• 43% off campus
• Largest concentrations: Nashville, Dallas, New Orleans, Los Angeles, Chicago, St. Louis
DEVELOPMENT CONVERSIONS
NON-CORE ASSETS
STABILIZED PROPERTIES
LEASE-UP
RECENT ACQUISIT IONS
DISPOSITION
4%
Through routine asset management, Healthcare Realty recycles capital into new assets. The Company projects $40M-$60M in dispositions in 2014.
CIP
$6.2M sales price
2 off campus MOBs
• 111k square feet
• 60% occupied
2014 DISPOSIT IONS
Q1
2 0 1 4
Q2
Q2
| 23
Portfolio Trends
DEVELOPMENT LEASE UP
Leased
Occupied
SAME STORE OCCUPANCY
CONTRACTUAL RENT INCREASES YEAR-OVER-YEAR SAME STORE NOI GROWTH
51%
2.5%
33%
3.1%
82%
3.0%
100% 100%
2.1%
87%88%
70%
2.2%
Mult i-Tenant
Mult i-Tenant
STNL*
STNL*
* Single-tenant net lease
Q2 Q3 Q4
2 0 1 2
Q1 Q2
2 0 1 3
Q3 Q4
Average: 2.1%
2.1%
Q1
2 0 1 4
Q2 Q3 Q4
2 0 1 2
Q1 Q2
2 0 1 3
Q3 Q4 Q1
2 0 1 4
Q2 Q3 Q4
2 0 1 2
Q1 Q2
2 0 1 3
Q3 Q4
Q1
2 0 1 4
Q2 Q3 Q4
2 0 1 2
Q1 Q2
2 0 1 3
Q3 Q4 Q2
Q2
| 24
OLD RENT TERM
NEW RENT TENANT IMPROVEMENTS
GROSS INVESTMENT RENT CONCESSIONS
RENT BUMP LEASING COMMISSIONS
Cash Releasing Spread
Average
Releasing Yield
Average*
Releasing Yield
10.5% 11.0%
$26.95 $27.64
* Not indicative of overall yield because it does not reflect any vacancy
Releasing yield captures the overall economics of leases renewed, whereas releasing spreads only reflect one factor.
| 25
Debt-to-EBITDA
MOB MOB
RISK RISK
DEBT LEVEL*
DEBT LEVEL*
SH SHIRF IRFSNF SNFHOSP. HOSP.
Cap Rate Cap Rate
DEBT
EBITDA
DEBT
EBITDA
* Debt level is debt as a percentage of total capital
Assuming debt-to-EBITDA is held constant, riskier assets would perversely supporthigher debt levels.
Assuming equal debt levels, safer lower-yielding assets will result in higher debt-to-EBITDA.
| 26
$89M
$248M
$299 M
$398M
$163M
$2,464M(2)
Revolver (1)
Senior Notes Due 2023
Senior Notes Due 2017
Senior Notes Due 2021
Mortgage Notes Payable (1)
Equity Market Value
$3,861MILLION
April 2017
January 2017
1 .55%
January 2021
April 2023
November 2017
∞
0 YRS 10 YRS
6.62%
5.86%
3.85%
5.47%
Capital Stack and Maturities
(1) Balance as of June 30, 2014(2) Based on closing price of $25.28 on July 28, 2014 and 97,461,515 shares outstanding as of July 25, 2014(3) Reflects the stabilization of the 12 properties in development conversion using the midpoint of an estimated $25-30M of NOI from the properties
DEBT METRICS Q2 2014 Annualized Stabilized (3)
Fixed Charge Coverage Ratio 2.8x 3.0x
Debt Service Coverage 3.1x 3.2x
Debt to EBITDA 6.4x 6.0x
Debt to Total Assets 42.6% NA
MATURITY
Total Capitalization
4.7
3% B
LEN
DE
D C
OST
OF
DE
BT
$200M
Term loan due 2019
February 20191 .60%
| 27
Healthcare Realty
Healthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing
and developing real estate properties associated primarily with the delivery of outpatient healthcare
services throughout the United States. The Company had investments of approximately $3.2 billion in
202 real estate properties and mortgages as of June 30, 2014. The Company’s 200 owned real
estate properties are located in 29 states and total approximately 14.3 million square feet. The Company
provided property management services to approximately 9.7 million square feet nationwide.