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Healthcare Realty Trust (HR) Q3 Earnings call transcript Oct 30, 2024

Daily EarningsWednesday, Oct 30, 2024 11:43 pm ET

1min read

HR --

In the latest earnings call, Healthcare Realty showcased a robust third quarter performance, with key highlights including a return to year-over-year growth in normalized FFO per share and strong multi-tenant absorption. The company's focus on outpatient space, driven by demographic trends and the shift towards outpatient care, has resulted in a five-quarter streak of over 400,000 square feet of new signed leases in the multi-tenant portfolio. This growth trajectory is expected to continue into the fourth quarter and beyond.

Navigating Market Challenges and Strategic Changes

Healthcare Realty is not immune to market challenges, with the Steward bankruptcy process impacting approximately 2/3 of the company's annual NOI. However, the company is working diligently to mitigate these losses, securing new tenants for approximately 2/3 of the affected space and aiming to recover over 80% of the lost NOI through strategic leasing efforts. This resilience in the face of market disruptions underscores the company's operational strength and adaptability.

Moreover, the company has recently undergone leadership changes aimed at aligning its strategy with 2025 growth initiatives and enhancing operational momentum. These changes are expected to further position Healthcare Realty for success in the evolving healthcare real estate landscape.

Financial Health and Capital Allocation

Healthcare Realty's financial health remains solid, with a focus on capital allocation and debt management. The company has seen significant success in JV contributions and asset sales, allowing for a strategic reduction in debt and an increase in share buybacks. This capital allocation strategy is expected to yield long-term benefits for shareholders, positioning Healthcare Realty for sustainable growth and value creation.

Looking Ahead

As Healthcare Realty moves into the fourth quarter, the company is poised for continued growth, driven by a strong operational performance and strategic initiatives. The company's focus on outpatient space, coupled with its strategic leasing efforts and capital allocation strategies, sets the stage for a promising future. Investors and stakeholders can look forward to Healthcare Realty's ongoing efforts to maximize value and capitalize on opportunities in the healthcare real estate sector.

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