Quantcast
Last updated on April 19, 2014 at 7:50 EDT

Healthcare Trust of America, Inc. Reports 22% Increase in Normalized FFO in Second Quarter

August 7, 2012

SCOTTSDALE, Ariz., Aug. 7, 2012 /PRNewswire/ — Healthcare Trust of America, Inc. (NYSE: HTA) (“HTA” or the “Company”) announced results for the three months ended June 30, 2012.

HTA listed its Class A common stock on the New York Stock Exchange during the second quarter further positioning the Company to continue to execute its strategic plan. As of June 30, 2012, the Company had invested $2.5 billion in a high quality portfolio of medical office buildings (“MOB”). The portfolio is 96% on-campus or aligned with dominant healthcare systems in 26 states. It is 91% occupied with 56% credit rated tenants of which 39% are investment grade. The Company has a strong balance sheet with flexibility and liquidity for growth and it has investment grade ratings by Moody’s and Standard & Poors. Management is pleased with the financial results for the second quarter and its earnings growth. HTA will continue to focus on value creation for its shareholders by prudently investing in high quality MOBs, managing and operating its national portfolio and enhancing its investment grade balance sheet.

Second Quarter 2012 Highlights

  • Normalized FFO: Increased $6.5 million, or 22.2%, to $35.7 million, or $0.16 per share, as compared to 2011. Normalized FFO excludes listing and transitional costs and represents our ongoing operations as a publicly traded REIT.
  • Normalized FAD: Increased $5.3 million, or 20.9% to $30.6 million, or $0.13 per share from $25.3 million, or $0.11 per share in 2011.
  • Normalized FFO Run Rate: Based upon the scheduled closing of the Rush transaction and the completion of the tender offer in the third quarter, combined with our ongoing G&A and interest savings, the run rate for normalized FFO is anticipated to be $0.16 per share on a quarterly basis and $0.64 on an annualized basis.
  • NOI: Increased by 11.2%, or $5.2 million to $51.5 million from $46.3 million in 2011. Same property cash NOI increased 2.7% compared to 2011.
  • Revenues: Total revenues increased by 12.0% to $76.3 million as compared to 2011.
  • Listing Shares on the NYSE: Listed the Company’s Class A common stock on the New York Stock Exchange (“NYSE”) under the symbol “HTA” (the “Listing”).
  • Balance Sheet: As of June 30, 2012, the Company had total assets of $2.4 billion, cash and cash equivalents of $24.0 million, $575.0 million available on the unsecured revolving credit facility and a leverage ratio of total debt to total capitalization of 27.4%.
  • Paid down secured debt: The Company utilized proceeds from its $300.0 million unsecured term loan with an interest rate fixed at 2.95% per annum to repay four mortgage notes payable totaling $75.3 million with a weighted average interest rate of 6.0% per annum.
  • Occupancy & Tenant Retention: The occupancy rate of the Company’s portfolio remains stable at approximately 91% and its tenant retention for the quarter was 83%.
  • Transitioned Property Management: Transitioned 1.2 million square feet from third party property management companies to our in-house property management platform.
  • Credit Rated Tenants: Investment grade rated tenants as a percent of annualized base rent was 39% as of June 30, 2012 and 56% of the Company’s annualized base rent derived from tenants that have (or whose parent companies have) a credit rating from a nationally recognized rating agency.

Subsequent Events

  • Completed Tender Offer: Completed a $150.0 million tender offer on July 25, 2012 reducing the total outstanding shares to approximately 215 million.
  • Closed on 7-Year term loan: Closed on a $155.0 million term loan priced at LIBOR plus 200 bps and swapped $50.0 million of the principal to a fixed rate of 3.4% per annum at closing. Should the remaining amount be swapped at the same rate, HTA’s weighted average borrowing cost would be reduced to 4.2% from 5.05% per annum at the end of 2011.
  • Acquisitions: Entered into an agreement to purchase $54.0 million on-campus Rush MOB by converting existing mortgage note at 2010 cap rates.
  • Stock Repurchase Plan: Approved a stock repurchase program to purchase up to $100.0 million of the Company’s Class A common stock over a 2-year period.

Listing

On June 6, 2012, HTA completed the Listing of its Class A common stock on the NYSE under the symbol “HTA”. The Company believes that the listing will enable it to continue the execution of its strategic plan, increase stockholder value, enhance the Company’s enterprise value, and provide access to more efficient, lower cost capital. The Class B shares will convert to Class A shares over time. The Company incurred $12.5 million of expenses associated with the Listing and related transitional activities which were primarily for professional fees, share based compensation expense and other previously deferred offering costs.

Financial Results

FFO and Normalized FFO

Funds from Operations, or FFO, totaled $11.7 million, or $0.05 per share for the three months ended June 30, 2012, compared with $27.9 million, or $0.12 per share, for the three months ended June 30, 2011.

Normalized FFO, totaled $35.7 million, or $0.16 per share, for the three months ended June 30, 2012, compared to $29.2 million, or $0.13 per share, for the three months ended June 30, 2011.

Normalized FAD

Normalized Funds Available for Distribution, or Normalized FAD, was $30.6 million or $0.13 per share, an increase of $5.3 million from $25.3 million, or $0.11 per share in 2011.

Revenues

Total revenues increased 12.0% to $76.3 million for the three months ended June 30, 2012, compared to $68.1 million for the three months ended June 30, 2011. Rental income increased 12.8% to $75.0 million for the three months ended June 30, 2012, compared to $66.4 million for the three months ended June 30, 2011. The increase in rental income was driven by $246.2 million of completed acquisitions since June 30, 2011 and same property portfolio growth.

General and Administrative Expenses

General and administrative expenses were $4.9 million as compared $5.3 million for the three months ended June 30, 2011. Management believes our general and administrative expense reflects the Company’s normalized operations as a publicly traded REIT.

Interest Expense and Change in the Fair Value of Derivative Financial Instruments

Interest expense for the three months ended June 30, 2012 was $15.9 million which included a $4.8 million net loss on the change in the fair value of its derivative financial instruments. During the quarter, the Company paid off $75.3 million of mortgage loans that had a weighted average interest rate of 6.0% per annum.

During the first half of 2012, inclusive of the $155.0 million term loan which closed on July 20, 2012, HTA entered into over $1.0 billion of new credit facilities, including the refinancing of $650.0 million of existing mortgage and credit facilities. The net impact from these transactions has been to lower the average borrowing rate and extend maturities. The weighted average borrowing cost, inclusive of the term loan which closed July 20, 2012, has decreased to 4.2% per annum, down significantly from 5.05% per annum as of December 31, 2011. Additionally, the weighted average remaining term of the debt portfolio increased from 3.8 years to 4.5 years. As part of the refinancing activities, the Company retired approximately $75.3 million of secured mortgage loans with a weighted average interest rate of 6.0%. In connection with the refinancings, HTA incurred $1.9 million of debt extinguishment costs associated with the retirement of these mortgage loans, but will result in annual cash savings of $2.25 million from decreased interest expense.

Balance Sheet

As of June 30, 2012, the Company had total assets of $2.4 billion, cash and cash equivalents of $24.0 million, $575.0 million available on the unsecured revolving credit facility and a leverage ratio of total debt to total capitalization was 27.4%.

Occupancy & Tenant Retention

The occupancy rate of the portfolio remained at approximately 91%. Tenant retention for the quarter was 83%.

Credit Rated Tenants

Investment grade rated tenants as a percent of annualized base rent was 39% as of June 30, 2012 and 56% of annualized base rent is derived from tenants that have (or whose parent companies have) a credit rating from a nationally recognized rating agency.

In-House Property Management Platform

During the quarter, the Company transitioned 1.2 million square feet from third party property management companies to its in-house property management platform and expects to have 70% of current GLA managed internally by year end.

Tender Offer

On July 25, 2012, the Company completed a modified “Dutch Auction” tender offer (“Tender Offer”) of the Company’s Class A common stock. As a result of the Tender Offer, the Company purchased 14.9 million shares of its Class A common stock at a purchase price of $10.10 per share, for an aggregate cost of $150.0 million, excluding fees and expenses. The Tender Offer decreased total shares outstanding to 214.7 million as of July 25, 2012.

In addition to the Tender Offer, the Company repurchased 2.1 million shares during the quarter as part of the Share Repurchase Program. In connection with of the Listing, the Company terminated its previous Share Repurchase Program.

Funds from Operations, Normalized Funds from Operations and Funds Available for Distribution

HTA defines FFO, a non-GAAP measure, as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property and impairment write downs of depreciable assets, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. HTA uses normalized funds from operations, or normalized FFO, which excludes from FFO acquisition-related expenses, net change in fair value of derivative financial instruments, listing expenses, transitional expenses, debt extinguishment costs and other normalizing items, to further evaluate how its portfolio might perform after its acquisition stage is complete and the sustainability of its distributions in the future. Other normalizing items are non-recurring items such as legal settlements, lease termination fees and the write-off of deferred financing costs.

HTA defines normalized FAD, a non-GAAP measure, which excludes from normalized FFO interest and dividend income, non-cash compensation expense, straight-line rent adjustments, amortization of below and above market leases, deferred rent – tenant improvement related, amortization of interest rate contracts, loan premiums, and prepaid financing costs and recurring capital expenditures, tenant improvements and leasing commissions.

FFO, normalized FFO or normalized FAD should not be considered as an alternative to net income or to cash flows from operating activities and are not intended to be used as a liquidity measure indicative of cash flow available to fund HTA’s cash needs, including its ability to make distributions. FFO, normalized FFO and normalized FAD should be reviewed in connection with other GAAP measurements.

The following is the reconciliation of FFO and normalized FFO to net (loss) income and normalized FFO to FAD for the three and six months ended June 30, 2012 and 2011 (amounts in thousands, except per share amounts):

                                                            Three Months Ended June 30,  Six Months Ended June 30,
                                                            ---------------------------  -------------------------
                                                                          2012             2011               2012            2011
                                                                          ----             ----               ----            ----
    Reconciliation of Net (loss)
     Income to FFO & Normalized
     FFO
    ----------------------------
    Net (loss) income                                        $(19,314)           $1,162          $(19,620)           $3,352
                                 Depreciation and amortization          30,964           26,701             58,321          53,451
                                                                        ------
    FFO                                                       $11,650           $27,863           $38,701           $56,803
                                                              -------           -------           -------           -------
    FFO per share - basic                                       $0.05             $0.12             $0.17             $0.26
                                                                -----             -----             -----             -----
    FFO per share - diluted                                     $0.05             $0.12             $0.17             $0.26
                                                                -----             -----             -----             -----
                                 Acquisition-related expenses            2,970              361              5,292           1,423
                                  Net change in fair value of
                                  derivative financial instruments       4,787            1,078              5,295             574
                                 Listing expenses                       12,544                -             12,544               -
                                 Transitional expenses                   1,704                -              1,704               -
                                 Debt extinguishment costs               1,886                -              1,886               -
                                 Other normalizing items                   135             (111)               200          (1,417)
                                                                           ---
    Normalized FFO                                            $35,676           $29,191           $65,622           $57,383
                                                              =======           =======           =======           =======
    Normalized FFO per share -
     basic                                                      $0.16             $0.13             $0.29             $0.26
                                                                =====             =====             =====             =====
    Normalized FFO per share -
     diluted                                                    $0.16             $0.13             $0.29             $0.26
                                                                =====             =====             =====             =====

    Reconciliation of Normalized
     FFO to Normalized FAD
    ----------------------------
    Normalized FFO                                            $35,676           $29,191           $65,622           $57,383
                                 Interest and dividend income              (63)             (26)               (91)           (144)
                                 Non-cash compensation expense             (20)             645                982           1,542
                                 Straight-line rent adjustments, net    (2,119)          (2,131)            (4,564)         (4,221)
                                  Amortization of acquired below and
                                  above market leases                      427              660              1,022           1,338
                                  Deferred revenue -tenant
                                  improvement related                     (106)            (157)              (266)           (574)
                                  Amortization of interest rate
                                  contracts, loan premiums and
                                  prepaid financing costs                  953              707              1,646           1,634
                                  Recurring capital expenditures,
                                  tenant improvements and leasing
                                  commissions                           (4,116)          (3,561)            (5,873)         (6,643)
                                                                       -------
    Normalized FAD                                            $30,632           $25,328           $58,478           $50,315
                                                              =======           =======           =======           =======
    Normalized FAD per share -
     basic                                                      $0.13             $0.11             $0.26             $0.23
                                                                =====             =====             =====             =====
    Normalized FAD per share -
     diluted                                                    $0.13             $0.11             $0.25             $0.23
                                                                =====             =====             =====             =====

    Weighted average common
     shares outstanding:
    Basic                                                              229,436          228,341            229,159         221,607
                                                                       =======          =======            =======         =======
    Diluted                                                            229,614          228,801            229,336         222,067
                                                                       =======          =======            =======         =======

Net Operating Income

NOI is a non-GAAP financial measure that is defined as net income or loss, computed in accordance with GAAP, generated from HTA’s total portfolio of properties before general and administrative expenses, acquisition-related expenses, depreciation and amortization, listing expenses, non-traded REIT expenses, interest expense and net change in the fair value of derivative financial instruments, debt extinguishment costs and interest and dividend income. HTA believes that NOI provides an accurate measure of the operating performance of its operating assets because NOI excludes certain items that are not associated with management of the properties. Additionally, HTA believes that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, HTA’s use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.

The following is the reconciliation of net (loss) income to NOI for the three and six months ended June 30, 2012 and 2011 (amounts in thousands):

                                                 Three Months Ended June 30, Six Months Ended June 30,
                                                 --------------------------- -------------------------
                                                                 2012           2011             2012          2011
                                                                 ----           ----             ----          ----
    Net (loss) income                                $(19,314)         $1,162        $(19,620)         $3,352
    Add:
                         General and administrative expenses    4,908          5,331           10,915        10,668
                         Acquisition-related expenses           2,970            361            5,292         1,423
                         Depreciation and amortization         30,964         26,701           58,321        53,451
                         Listing expenses                      12,544              -           12,544             -
                         Non-traded REIT expenses               1,704          1,424            3,847         3,395
                          Interest expense and net change in
                          fair value of derivative financial
                          instruments                          15,932         11,397           26,965        21,239
                         Debt extinguishment costs              1,886              -            1,886             -
    Less:
                         Interest and dividend income              63             26               91           144
                                                                  ---
    Net operating income                              $51,531         $46,350        $100,059         $93,384
                                                      =======         =======        ========         =======

Note that all figures are rounded to reflect approximate amounts.

About Healthcare Trust of America, Inc.

Healthcare Trust of America, Inc. (NYSE:HTA), a publicly traded real estate investment trust, is a fully-integrated, leading owner of medical office buildings. HTA listed its shares on the New York Stock Exchange on June 6, 2012. HTA is a full-service real estate company focused on acquiring, owning and operating high-quality medical office buildings that are located on the campuses of nationally recognized healthcare systems in the major U.S. metropolitan areas. Since its formation in 2006, HTA has built a portfolio of properties that totals approximately $2.5 billion based on purchase price and is comprised of approximately 12.4 million square feet of gross leasable area located in 26 states. For more information on Healthcare Trust of America, Inc., please visit www.htareit.com.

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, but are not limited to, 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 assessment of strategic success of our alternatives, including potential liquidity alternatives; 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 including, but not limited to, the risks described under Part I, Item 1A, Risk Factors, included in our annual report on Form 10-K and in our other filings with the SEC.

                                                                    Healthcare Trust of America, Inc.
                                                                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                As of June 30, 2012 and December 31, 2011
                                                            (In thousands, except share and per share amount)
                                                                               (Unaudited)

                                                                         June 30, 2012                                            December 31, 2011
                                                                         -------------                                            -----------------
                                                    ASSETS
    Real estate investments, net                                                               $2,001,932                                                  $1,806,471
    Real estate notes receivable, net                                                              20,000                                                      57,459
    Cash and cash equivalents                                                                    23,977                                                      69,491
    Accounts and other receivables, net                                                          11,297                                                      12,658
    Restricted cash and escrow deposits                                                          16,649                                                      16,718
    Identified intangible assets, net                                                           295,665                                                     272,390
    Other assets, net                                                                            67,347                                                      56,442
                                                                                                 ------                                                      ------
                     Total assets                                                            $2,436,867                                                  $2,291,629
                     ============
                                   LIABILITIES AND STOCKHOLDERS' EQUITY
    Liabilities:
                     Debt, net                                                                 $859,318                                                    $639,149
                      Accounts payable
                      and accrued
                      liabilities                                                                59,217                                                      47,801
                      Derivative
                      financial
                      instruments-
                      interest rate
                      swaps                                                                       6,998                                                       1,792
                      Security
                      deposits,
                      prepaid rent
                      and other
                      liabilities                                                                20,404                                                      19,930
                      Identified
                      intangible
                      liabilities,
                      net                                                                        12,284                                                      11,832
                     -------------
                     Total liabilities                                                          958,221                                                     720,504
    Commitments and Contingencies
    Redeemable noncontrolling interest of limited
     partners                                                                                     3,641                                                       3,785
    Stockholders' Equity:
                                                     -                                                         -

                      Preferred stock,
                      $0.01 par
                      value;
                      200,000,000
                      shares
                      authorized;
                      none issued and
                      outstanding
                      Common stock,
                      $0.01 par
                      value;
                      1,000,000,000
                      shares
                      authorized;
                      228,491,312
                      issued and
                      outstanding as
                      of December 31,
                      2011                                                                            -                                                       2,284
                                                   573                                                         -

                      Class A common
                      stock, $0.01
                      par value;
                      700,000,000
                      shares
                      authorized,
                      57,379,033
                      issued and
                      outstanding as
                      of June 30,
                      2012
                                                 1,718                                                         -
                      Class B common
                      stock, $0.01
                      par value;
                      300,000,000
                      shares
                      authorized,
                      171,845,262
                      issued and
                      outstanding as
                      of June 30,
                      2012
                      Additional paid-
                      in capital                                                              2,039,925                                                   2,032,305
                      Accumulated
                      deficit                                                                  (567,211)                                                   (467,249)
                     ------------
                     Total stockholders' equity                                               1,475,005                                                   1,567,340
                                                                                              ---------                                                   ---------
                          Total liabilities and
                           stockholders' equity                                              $2,436,867                                                  $2,291,629
                                                                                             ==========                                                  ==========

                                                                                 Healthcare Trust of America, Inc.
                                                                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     For the Three and Six Months Ended June 30, 2012 and 2011
                                                                               (In thousands, except per share data)
                                                                                            (Unaudited)

                                                                                                                           Three Months Ended June 30,                Six Months Ended June 30,
                                                                                                                           ---------------------------                -------------------------
                                                                                                                                    2012                      2011                    2012                    2011
                                                                                                                                    ----                      ----                    ----                    ----
    Revenues:
                                                   Rental income                                                                 $74,953                   $66,426                $144,888                $135,669
                                                    Interest income from mortgage
                                                    notes receivable and other
                                                    income                                                                         1,308                     1,648                   2,616                   3,297
                                                   -------------
                                                   Total revenues                                                                 76,261                    68,074                 147,504                 138,966
    Expenses:
                                                   Rental expenses                                                                24,730                    21,724                  47,445                  45,582
                                                    General and administrative
                                                    expenses                                                                       4,908                     5,331                  10,915                  10,668
                                                   Acquisition-related expenses                                                    2,970                       361                   5,292                   1,423
                                                   Depreciation and amortization                                                  30,964                    26,701                  58,321                  53,451
                                                   Listing expenses                                                               12,544                         -                  12,544                       -
                                                   Non-traded REIT expenses                                                        1,704                     1,424                   3,847                   3,395
                                                   -------------
                                                   Total expenses                                                                 77,820                    55,541                 138,364                 114,519
                                                                                                                                  ------                    ------                 -------                 -------
    (Loss) income before other income (expense)                                                                                   (1,559)                   12,533                   9,140                  24,447
    Other income (expense):
                                                                                                                  (10,498)                    (9,953)                 (20,731)                (19,939)
                                                    Interest expense (including
                                                    amortization of deferred
                                                    financing costs and debt
                                                    premium/discount):
                                                    Interest expense related to
                                                    debt
                                                    Interest expense related to derivative financial instruments and net
                                                    change in fair value of derivative financial instruments                      (5,434)                   (1,444)                 (6,234)                 (1,300)
                                                   Debt extinguishment costs                                                      (1,886)                        -                  (1,886)                      -
                                                   Interest and dividend income                                                       63                        26                      91                     144
                                                   -------------
    Net (loss) income                                                                                                           $(19,314)                   $1,162                $(19,620)                 $3,352
                                                    Less: net (income) loss
                                                    attributable to controlling
                                                    interest of limited partners                                                      (8)                        9                     (16)                    (31)
                                                   -------------
    Net (loss) income attributable to controlling interest                                                                      $(19,322)                   $1,171                $(19,636)                 $3,321
                                                                                                                                ========                    ======                ========                  ======
                                                                                                                                  $(0.08)                    $0.01                  $(0.09)                  $0.01

    Net (loss) income per share attributable to controlling interest on distributed and undistributed
     earnings -basic and diluted
                                                                                                                                                                                                               ===
    Weighted average number of shares outstanding
                                                   Basic                                                                         229,436                   228,341                 229,159                 221,607
                                                   =====
                                                   Diluted                                                                       229,436                   228,801                 229,159                 222,067
                                                   =======
    Distributions declared per common share                                                                                        $0.17                     $0.18                   $0.35                   $0.36
                                                                                                                                   =====                     =====                   =====                   =====

SOURCE Healthcare Trust of America, Inc.


Source: PR Newswire