Press Release

Healthcare Trust Of America, Inc. Reports First Quarter Earnings

Q1 2016 Normalized FFO of $0.40 per diluted share

$162 Million in First Quarter Investments

Company Release - 4/25/2016 4:05 PM ET

SCOTTSDALE, Ariz., April 25, 2016 /PRNewswire/ -- Healthcare Trust of America, Inc. (NYSE: HTA) ("HTA") announced results for the quarter ended March 31, 2016.

First Quarter 2016 Highlights

Operating

  • Normalized FFO: Increased 11.7% to $52.1 million, compared to Q1 2015.
  • Normalized FFO Per Share: $0.40 per diluted share, an increase of $0.03 per diluted share, or 8.1%, compared to Q1 2015.
  • Normalized FAD: $0.37 per diluted share, or $48.6 million, an increase of $0.02 per diluted share, or 5.7%, compared to Q1 2015.
  • Same-Property Cash NOI: Increased $1.9 million, or 3.0%, to $64.4 million, compared to Q1 2015. Same-Property rental revenue increased $1.5 million, or 2.1%, to $72.6 million, compared to Q1 2015.

Portfolio

  • Investments: During the quarter, HTA completed investments of $162.0 million (91% leased and approximately 792,000 square feet of GLA) located in our key markets of Charleston and Houston, and in New England where we strategically expanded our presence in New Haven, Connecticut. In addition, subsequent to the quarter-end, HTA completed investments of $204.8 million located in the markets of Hartford, New Haven and Columbus consisting of approximately 659,000 square feet of GLA and 97% leased. The majority of these investments were located on the campuses of, or aligned with, nationally and regionally recognized healthcare systems.
  • Leasing: During the quarter, HTA entered into new and renewal leases on approximately 254,000 square feet of GLA, or 1.6% of its portfolio. Quarter-to-date, renewal leases included tenant improvements of $1.60 per square foot per year of the lease term and approximately one week of free rent per year of the lease term. Tenant retention for the Same-Property portfolio was 82% by GLA for the quarter.
  • Leased Rate: At the end of the quarter, the leased rate by GLA was 92.1%, an increase from 91.7% as of Q1 2015. For the Same-Property portfolio the leased rate increased 40 basis points to 92.6% by GLA, compared to Q1 2015.

Balance Sheet and Liquidity

  • Balance Sheet: At the end of the quarter, HTA had total leverage, measured by debt to capitalization, of 30.0% and total liquidity of $562.3 million, including $548.5 million of availability on its unsecured revolving credit facility and $13.8 million of cash and cash equivalents.
  • Equity Raise: In January 2016, HTA entered into a new equity distribution agreement with respect to its at-the-market offering program (the "ATM") of common stock with an aggregate sales price of up to $300.0 million. During the quarter, HTA raised approximately $93.2 million from the sale of its common stock under the ATM at an average price of $27.25 per share. In April 2016, HTA issued $242.7 million of common equity comprised of $171.9 million from the sale of shares of common stock in an underwritten public offering at an average price of $28.75 per share, and $70.8 million from the issuance of Class A Units in an acquisition transaction.

Financial Results

Rental Income
Rental income increased 8.9% to $107.3 million for the three months ended March 31, 2016, compared to $98.5 million for the three months ended March 31, 2015.

FFO
Funds from Operations ("FFO") was $0.36 per diluted share, or $47.4 million, for the three months ended March 31, 2016, compared to $0.34 per diluted share, or $43.1 million, for the three months ended March 31, 2015.

Normalized FFO
Normalized Funds from Operations ("Normalized FFO") was $0.40 per diluted share, or $52.1 million, for the three months ended March 31, 2016, compared to $0.37 per diluted share, or $46.6 million, for the three months ended March 31, 2015.

Normalized FAD
Normalized Funds Available for Distribution ("Normalized FAD") was $0.37 per diluted share, or $48.6 million, for the three months ended March 31, 2016, compared to $0.35 per diluted share, or $44.3 million, for the three months ended March 31, 2015.

NOI
Net Operating Income ("NOI") was $74.0 million for the three months ended March 31, 2016, compared to $67.8 million for the three months ended March 31, 2015.

Same-Property Cash NOI
Same-Property Cash NOI increased $1.9 million, or 3.0%, to $64.4 million, for the three months ended March 31, 2016, compared to $62.5 million for the three months ended March 31, 2015.  Same-Property rental revenue increased $1.5 million, or 2.1%, to $72.6 million, for the three months ended March 31, 2016, compared to the three months ended March 31, 2015.

General and Administrative Expenses
General and administrative expenses were $6.8 million for the three months ended March 31, 2016, compared to $6.6 million for the three months ended March 31, 2015. 

Interest Expense and Change in Fair Value of Derivative Financial Instruments
The total interest expense and change in fair value of derivative financial instruments for the three months ended March 31, 2016, was $17.6 million, which included $14.8 million of interest expense related to debt and interest rate swaps, and a net loss of $2.8 million on the change in the fair value of HTA's derivative financial instruments. 

HTA ended the quarter with a weighted average interest rate of 3.21% per annum, including the impact of interest rate swaps.  The weighted average remaining term of the debt portfolio was 4.5 years, including extension options.

Net Income
Net income for the three months ended March 31, 2016, was $10.0 million, compared to $6.9 million for the three months ended March 31, 2015.

Balance Sheet

As of March 31, 2016, HTA had total assets of $3.3 billion, cash and cash equivalents of $13.8 million, and $548.5 million available on its unsecured revolving credit facility (includes the impact of $5.5 million of outstanding letters of credit).  The leverage ratio of debt to capitalization was 30.0% as of March 31, 2016.

Leased Rate, Occupancy Rate and Tenant Retention

The leased rate (includes leases which have been executed, but which have not yet commenced) was 92.1% by gross leasable area ("GLA") as of March 31, 2016, an increase from 91.7% as of March 31, 2015.  The occupancy rate of HTA's portfolio was 91.4% by GLA as of March 31, 2016, an increase from 91.3% as of March 31, 2015.  Tenant retention for the Same-Property portfolio was 82% by GLA for the quarter.

Credit Rated Tenants

Investment grade rated tenants as a percent of annualized base rent was 44% as of March 31, 2016.  Additionally, 60% of HTA's annualized base rent as of March 31, 2016 was derived from tenants that have (or whose parent companies have) a credit rating from a nationally recognized rating agency.

In-House Property Management and Leasing Platform

As of March 31, 2016, HTA's in-house property management and leasing platform operated approximately 15.7 million square feet of GLA, or 97% of HTA's total portfolio.

About Healthcare Trust of America, Inc.

Healthcare Trust of America, Inc. (NYSE: HTA) is a publicly traded real estate investment trust that acquires, owns and operates medical office buildings.  Since its formation in 2006, HTA has invested $3.7 billion in medical office buildings and other healthcare assets comprising 16.2 million square feet across 29 states.  HTA listed on the New York Stock Exchange in June of 2012 and has a consistent track record of generating stockholder returns.

HTA invests in key markets with above average growth and healthcare infrastructure that are capable of servicing long-term patient demand.  Within each key market, HTA focuses on acquiring medical office buildings on health system campuses, in community-core locations, or near university medical centers.  The portfolio consists of medical office buildings that are core-critical, a key part of the integrated delivery of healthcare, and that continue to complement HTA's institutional asset management and leasing platform.  HTA's business strategy is defined by establishing critical mass within key markets which allows HTA's asset management and in-house leasing platform to drive earnings growth, capitalize on synergies and maximize expense efficiencies, and build lasting tenant relationships, which is designed to lead to tenant retention, rent growth and long-term value creation across the portfolio.

More information about HTA can be found on the company's website at 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, 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 Annual Report on Form 10-K and in our other filings with the SEC.

Conference Call

HTA will host a conference call and webcast on Tuesday, April 26, 2016 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to review its financial performance and operating results for the quarter ended March 31, 2016.

Conference Call and Webcast Details:
Domestic Dial-In Number: (877) 507-6265
International Dial-In Number: (412) 902-6633
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
Conference ID: 10084448
Available April 26, 2016 (one hour after the end of the conference call) to May 26, 2016 at 11:00 a.m. Eastern Time

Supplemental Information

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

 

HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)




March 31, 2016


December 31, 2015

ASSETS





Real estate investments:





Land


$

321,021



$

303,706


Building and improvements


3,038,674



2,901,157


Lease intangibles


446,511



430,749




3,806,206



3,635,612


Accumulated depreciation and amortization


(712,381)



(676,144)


Real estate investments, net


3,093,825



2,959,468


Cash and cash equivalents


13,827



13,070


Restricted cash and escrow deposits


16,687



15,892


Receivables and other assets, net


143,012



141,703


Other intangibles, net


43,168



42,167


Total assets


$

3,310,519



$

3,172,300


LIABILITIES AND EQUITY





Liabilities:





Debt


$

1,667,320



$

1,590,696


Accounts payable and accrued liabilities


85,453



94,933


Derivative financial instruments - interest rate swaps


4,735



2,370


Security deposits, prepaid rent and other liabilities


47,993



46,295


Intangible liabilities, net


31,538



26,611


Total liabilities


1,837,039



1,760,905


Commitments and contingencies





Redeemable noncontrolling interests


4,429



4,437


Equity:





Preferred stock, $0.01 par value; 200,000,000 shares authorized; none issued and outstanding





Class A common stock, $0.01 par value; 1,000,000,000 shares authorized; 130,662,036 and 127,026,839 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively


1,307



1,270


Additional paid-in capital


2,422,138



2,328,806


Cumulative dividends in excess of earnings


(979,332)



(950,652)


Total stockholders' equity


1,444,113



1,379,424


Noncontrolling interests


24,938



27,534


Total equity


1,469,051



1,406,958


Total liabilities and equity


$

3,310,519



$

3,172,300


 

HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)




Three Months Ended March 31,



2016


2015

Revenues:





Rental income


$

107,250



$

98,452


Interest and other operating income


65



68


Total revenues


107,315



98,520


Expenses:





Rental


33,353



30,697


General and administrative


6,773



6,575


Acquisition-related


1,813



1,357


Depreciation and amortization


37,828



36,595


Total expenses


79,767



75,224


Income before other income (expense)


27,548



23,296


Interest expense:





Interest related to derivative financial instruments


(645)



(555)


Loss on change in fair value of derivative financial instruments, net


(2,792)



(2,010)


Total interest related to derivative financial instruments, including net change in fair value of derivative financial instruments


(3,437)



(2,565)


Interest related to debt


(14,128)



(13,804)


Other income


53



15


Net income


$

10,036



$

6,942


Net income attributable to noncontrolling interests


(176)



(138)


Net income attributable to common stockholders


$

9,860



$

6,804


Earnings per common share - basic:





Net income attributable to common stockholders


$

0.08



$

0.05


Earnings per common share - diluted:





Net income attributable to common stockholders


$

0.08



$

0.05


Weighted average common shares outstanding:





Basic


129,336



125,175


Diluted


131,240



127,105


 

HEALTHCARE TRUST OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




Three Months Ended March 31,



2016


2015

Cash flows from operating activities:





Net income


$

10,036



$

6,942


Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation, amortization and other


37,091



35,788


Share-based compensation expense


1,803



1,914


Bad debt expense


92



146


Change in fair value of derivative financial instruments


2,792



2,010


Changes in operating assets and liabilities:





Receivables and other assets, net


(1,438)



(723)


Accounts payable and accrued liabilities


(10,370)



(13,172)


Security deposits, prepaid rent and other liabilities


446



4,290


Net cash provided by operating activities


40,452



37,195


Cash flows from investing activities:





Investments in real estate


(158,686)



(35,300)


Capital expenditures


(8,824)



(6,524)


Restricted cash, escrow deposits and other assets


(799)



(321)


Net cash used in investing activities


(168,309)



(42,145)


Cash flows from financing activities:





Borrowings on unsecured revolving credit facility


166,000



82,000


Payments on unsecured revolving credit facility


(88,000)



(81,000)


Borrowings on unsecured term loans




65,000


Payments on secured real estate term loan and mortgage loans


(1,761)



(19,960)


Deferred financing costs




(31)


Security deposits


729



(17)


Proceeds from issuance of common stock


91,757




Repurchase and cancellation of common stock


(1,901)



(1,292)


Dividends paid


(37,473)



(36,275)


Distributions paid to noncontrolling interest of limited partners


(737)



(371)


Net cash provided by financing activities


128,614



8,054


Net change in cash and cash equivalents


757



3,104


Cash and cash equivalents - beginning of period


13,070



10,413


Cash and cash equivalents - end of period


$

13,827



$

13,517


 

HEALTHCARE TRUST OF AMERICA, INC.

NOI, CASH NOI AND SAME-PROPERTY CASH NOI

(In thousands)

(Unaudited)




Three Months Ended March 31,



2016


2015

Net income


$

10,036



$

6,942


General and administrative expenses


6,773



6,575


Acquisition-related expenses


1,813



1,357


Depreciation and amortization expense


37,828



36,595


Interest expense and net change in fair value of derivative financial instruments


17,565



16,369


Other income


(53)



(15)


NOI


$

73,962



$

67,823


NOI percentage growth


9.1

%








NOI


$

73,962



$

67,823


Straight-line rent adjustments, net


(1,451)



(2,019)


Amortization of below and above market leases/leasehold interests, net


433



580


Lease termination fees


(16)



(11)


Cash NOI


$

72,928



$

66,373


Non Same-Property Cash NOI


(8,521)



(3,867)


Same-Property Cash NOI (1)


$

64,407



$

62,506


Same-Property Cash NOI percentage growth


3.0

%








(1) Same-Property includes 278 buildings for the three months ended March 31, 2016 and 2015.

 

NOI is a non-GAAP financial measure that is defined as net income or loss (computed in accordance with GAAP) before: (i) general and administrative expenses; (ii) acquisition-related expenses; (iii) depreciation and amortization expense; (iv) interest expense and net change in fair value of derivative financial instruments; and (v) other income or expense.  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 the management of the properties.  Additionally, HTA believes that NOI is a widely accepted measure of comparative operating performance of real estate investment trusts ("REITs").  However, HTA's use of the term NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount.  NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance.  NOI should be reviewed in connection with other GAAP measurements.

Cash NOI is a non-GAAP financial measure which excludes from NOI: (i) straight-line rent adjustments; (ii) amortization of below and above market leases/leasehold interests; and (iii) lease termination fees.  HTA believes that Cash NOI provides another measurement of the operating performance of its operating assets.  Additionally, HTA believes that Cash NOI is a widely accepted measure of comparative operating performance of REITs.  However, HTA's use of the term Cash NOI may not be comparable to that of other REITs as they may have different methodologies for computing this amount.  Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance.  Cash NOI should be reviewed in connection with other GAAP measurements.

To facilitate the comparison of Cash NOI between periods, HTA calculates comparable amounts for a subset of its owned properties referred to as "Same-Property".  Same-Property Cash NOI excludes properties which have not been owned and operated by HTA during the entire span of all periods presented, excluding properties intended for disposition in the near term, notes receivable interest income and certain non-routine items.  Same-Property Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance.  Same-Property Cash NOI should be reviewed in connection with other GAAP measurements.

HEALTHCARE TRUST OF AMERICA, INC.

FFO, NORMALIZED FFO AND NORMALIZED FAD

(In thousands, except per share data)

(Unaudited)




Three Months Ended March 31,



2016


2015

Net income attributable to common stockholders


$

9,860



$

6,804


Depreciation and amortization expense related to investments in real estate


37,521



36,280


FFO attributable to common stockholders


$

47,381



$

43,084


Acquisition-related expenses


1,813



1,357


Loss on change in fair value of derivative financial instruments, net


2,792



2,010


Noncontrolling income from partnership units included in diluted shares


145



105


Other normalizing items, net


(16)



89


Normalized FFO attributable to common stockholders


$

52,115



$

46,645


Other income


(53)



(15)


Non-cash compensation expense


1,803



1,914


Straight-line rent adjustments, net


(1,451)



(2,019)


Amortization of below and above market leases/leasehold interests and corporate assets, net


740



580


Deferred revenue - tenant improvement related




(129)


Amortization of deferred financing costs and debt discount/premium, net


717



939


Recurring capital expenditures, tenant improvements and leasing commissions


(5,268)



(3,609)


Normalized FAD attributable to common stockholders


$

48,603



$

44,306







Net income attributable to common stockholders per diluted share


$

0.08



$

0.05


FFO adjustments per diluted share, net


0.28



0.29


FFO attributable to common stockholders per diluted share


$

0.36



$

0.34


Normalized FFO adjustments per diluted share, net


0.04



0.03


Normalized FFO attributable to common stockholders per diluted share


$

0.40



$

0.37


Normalized FAD adjustments per diluted share, net


(0.03)



(0.02)


Normalized FAD attributable to common stockholders per diluted share


$

0.37



$

0.35







Weighted average diluted common shares outstanding


131,240



127,105


 

HTA computes FFO in accordance with the current standards established by the National Association of Real Estate Investment Trusts ("NAREIT").  NAREIT defines FFO as net income or loss attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from the sales of real estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and after adjustments for unconsolidated partnerships and joint ventures.  HTA presents this non-GAAP financial measure because it considers it an important supplemental measure of its operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.  Historical cost accounting assumes that the value of real estate assets diminishes ratably over time.  Since real estate values have historically risen or fallen based on market conditions, many industry investors have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.  Because FFO excludes depreciation and amortization unique to real estate, among other items, it provides a perspective not immediately apparent from net income or loss attributable to common stockholders.

HTA's methodology for calculating FFO may be different from methods utilized by other REITs and, accordingly, may not be comparable to such other REITs.  FFO should not be considered as an alternative to net income or loss attributable to common stockholders (computed in accordance with GAAP) as an indicator of our financial performance, nor is it indicative of cash available to fund cash needs.  FFO should be reviewed in connection with other GAAP measurements.

HTA computes Normalized FFO, which excludes from FFO: (i) acquisition-related expenses; (ii) gain or loss on change in fair value of derivative financial instruments; (iii) noncontrolling income or loss from partnership units included in diluted shares; and (iv) other normalizing items, which include items that are unusual and infrequent in nature.  HTA presents this non-GAAP financial measure because it allows for the comparison of our operating performance to other REITs and between periods on a consistent basis.  HTA's methodology for calculating Normalized FFO may be different from the methods utilized by other REITs and, accordingly, may not be comparable to other REITs.  Normalized FFO should not be considered as an alternative to net income or loss attributable to common stockholders (computed in accordance with GAAP) as an indicator of our financial performance, nor is it indicative of cash available to fund cash needs.  Normalized FFO should be reviewed in connection with other GAAP measurements.

HTA also computes Normalized FAD, which excludes from Normalized FFO: (i) other income or expense; (ii) non-cash compensation expense; (iii) corporate depreciation; (iv) straight-line rent adjustments; (v) amortization of below and above market leases/leasehold interests and corporate assets; (vi) deferred revenue - tenant improvement related; (vii) amortization of deferred financing costs and debt premium/discount; and (viii) recurring capital expenditures, tenant improvements and leasing commissions.  HTA believes this non-GAAP financial measure provides a meaningful supplemental measure of our operating performance.  Normalized FAD should not be considered as an alternative to net income or loss attributable to common stockholders (computed in accordance with GAAP) as an indicator of our financial performance, nor is it indicative of cash available to fund cash needs.  Normalized FAD should be reviewed in connection with other GAAP measurements.

Financial Contact:
Robert A. Milligan
Chief Financial Officer
480.998.3478

 

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SOURCE Healthcare Trust of America, Inc.

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