HEALTHCARE TRUST OF AMERICA, INC. REPORTS FIRST QUARTER 2022 EARNINGS AND ANNOUNCES SECOND QUARTER 2022 DIVIDEND
First Quarter 2022 Highlights:
- Reported net income attributable to common stockholders of
$0.08 per diluted share. - Reported Funds From Operations ("FFO"), as defined by NAREIT, of
$0.40 per diluted share. - Reported Normalized FFO of
$0.44 per diluted share. This excludes normalizing adjustments totaling approximately$7.4 million consisting of the following: - Merger-related costs of
$6.0 million including: (i) financial advisor fees of$3.8 million ; (ii) legal fees of$1.8 million ; (iii) merger and integration consulting fees of$0.3 million ; and (iv) travel costs of$0.1 million ; - Interest expense of
$0.9 million related to amortization of bridge loan commitment fees; and - Other normalizing adjustments of
$0.5 million including: (i) additional board meeting fees of$159,000 ; (ii) legal and professional fees related to the whistleblower investigation of$143,000 ; (iii) legal fees related to employee retention matters of$131,000 ; and (iv) professional fees related to strategic review matters of$81,000 . - Reported Normalized FAD of
$80.3 million . - Reported Same-Property Cash Net Operating Income ("NOI") growth of 0.8% compared to Q1 2021. The change in Same-Property Cash NOI from Q1 2021 to Q1 2022 was impacted by
$1.1 million of increased platform operating expenses, resulting in a compression in rental margin of 0.8%. These expenses included increased accounting, labor and technology costs of approximately$0.3 million as well as increased engineering costs of approximately$0.4 million related primarily to compensation and outside vendor services.
Portfolio Performance
- As of
March 31, 2022 , our portfolio had a leased rate of 89.3% by gross leasable area ("GLA") and an occupancy rate of 87.3% by GLA. - During Q1 2022, HTA executed leases of 713 thousand square feet of GLA, including 202 thousand square feet of GLA in new leases and 511 thousand square feet of GLA in renewal leases. Re-leasing spreads were 3.0% and tenant retention for the Same-Property portfolio was 69% by GLA.
Investment Activity
- During Q1 2022, HTA closed on a
$19 million medical office building totaling approximately 44,000 square feet of GLA located in theTampa, Florida key market. - In Q1 2022, we closed on the sale of a tenant purchase option transaction on a property located in
Georgia for a gross sales price of approximately$26.8 million .
Capital Activity and Liquidity
- HTA ended Q1 2022 with total leverage of (i) 29.4%, measured as debt less cash and cash equivalents to total capitalization, and (ii) 6.0x net debt to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for real estate ("Adjusted EBITDAre").
- HTA ended Q1 with total liquidity of
$1.0 billion , inclusive of$1.0 billion available on our unsecured revolving credit facility and$10.9 million of cash and cash equivalents.
Transaction with
On
Upon the consummation of the merger, this transaction would bring together two of the largest owners of medical office buildings, creating the preeminent, pure-play medical office building REIT and positions the combined company to create long-term stockholder value. With 733 properties totaling 44 million square feet, the combined company would be the largest pure-play MOB REIT, with nearly double the square footage of the next largest MOB portfolio. The combined company will have a pro forma equity market capitalization of approximately
The special cash dividend as described above is expected to be financed through a combination of joint venture transactions and asset sales. As of
Additionally, HTA and HR have secured initial commitments for amended and restated credit facilities for the combined company, including the following:
- a
$1.5 billion revolving credit facility; -
$1.5 billion of term loans, including$650 million of new capacity; and - a
$1.1 billion asset sale term loan to replace the transaction bridge loan commitment and to backstop the$1.1 billion special cash dividend to HTA shareholders, if needed, depending on the timing of asset sales and joint ventures.
On
In light of its pending merger transaction with HR, HTA will not provide earnings guidance for 2022 and will not host a conference call or webcast in connection with Q1 2022 financial results.
Second Quarter 2022 Dividend
HTA's regular quarterly dividends are expected to continue under the terms of merger agreement. On
Additionally, the eligible holders of HTA's operating partnership units ("OP Units") will receive a quarterly OP Unit distribution, which is on par with HTA's common stock dividend described above. In addition, holders of HTA's OP Units will receive a corresponding special distribution of
About
Founded in 2006 and listed on the
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: our ability to consummate the proposed merger transaction with
|
||||
|
|
|
||
|
|
|
||
|
|
|
|
|
ASSETS |
|
|
|
|
Real estate investments: |
|
|
|
|
Land |
|
$ 644,194 |
|
$ 640,382 |
Building and improvements |
|
6,744,865 |
|
6,688,516 |
Lease intangibles |
|
393,756 |
|
404,714 |
Construction in progress |
|
15,673 |
|
32,685 |
|
|
7,798,488 |
|
7,766,297 |
Accumulated depreciation and amortization |
|
(1,650,257) |
|
(1,598,468) |
Real estate investments, net |
|
6,148,231 |
|
6,167,829 |
Assets held for sale, net |
|
— |
|
27,070 |
Investment in unconsolidated joint venture |
|
62,454 |
|
62,834 |
Cash and cash equivalents |
|
10,944 |
|
52,353 |
Restricted cash |
|
4,478 |
|
4,716 |
Receivables and other assets, net |
|
350,781 |
|
334,941 |
Right-of-use assets - operating leases, net |
|
228,009 |
|
229,226 |
Other intangibles, net |
|
10,011 |
|
10,720 |
Total assets |
|
$ 6,814,908 |
|
$ 6,889,689 |
LIABILITIES AND EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Debt |
|
$ 3,053,884 |
|
$ 3,028,122 |
Accounts payable and accrued liabilities |
|
159,659 |
|
198,078 |
Liabilities of assets held for sale |
|
— |
|
262 |
Derivative financial instruments - interest rate swaps |
|
— |
|
5,069 |
Security deposits, prepaid rent and other liabilities |
|
78,771 |
|
86,225 |
Lease liabilities - operating leases |
|
196,226 |
|
196,286 |
Intangible liabilities, net |
|
30,001 |
|
31,331 |
Total liabilities |
|
3,518,541 |
|
3,545,373 |
Commitments and contingencies |
|
|
|
|
Equity: |
|
|
|
|
Preferred stock, |
|
— |
|
— |
Class A common stock, |
|
2,291 |
|
2,289 |
Additional paid-in capital |
|
5,180,579 |
|
5,178,132 |
Accumulated other comprehensive income (loss) |
|
1,727 |
|
(7,041) |
Cumulative dividends in excess of earnings |
|
(1,971,904) |
|
(1,915,776) |
Total stockholders' equity |
|
3,212,693 |
|
3,257,604 |
Non-controlling interests |
|
83,674 |
|
86,712 |
Total equity |
|
3,296,367 |
|
3,344,316 |
Total liabilities and equity |
|
$ 6,814,908 |
|
$ 6,889,689 |
|
|||
|
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Revenues: |
|
|
|
Rental income |
$ 200,243 |
|
$ 191,350 |
Interest and other operating income |
1,759 |
|
143 |
Total revenues |
202,002 |
|
191,493 |
Expenses: |
|
|
|
Rental |
65,884 |
|
59,579 |
General and administrative |
12,448 |
|
10,560 |
Merger-related costs |
6,018 |
|
— |
Transaction |
144 |
|
96 |
Depreciation and amortization |
75,386 |
|
76,274 |
Interest expense |
23,940 |
|
22,986 |
Total expenses |
183,820 |
|
169,495 |
Loss on sale of real estate, net |
(4) |
|
— |
Income from unconsolidated joint venture |
400 |
|
392 |
Other income |
88 |
|
3 |
Net income |
$ 18,666 |
|
$ 22,393 |
Net income attributable to non-controlling interests |
(351) |
|
(363) |
Net income attributable to common stockholders |
$ 18,315 |
|
$ 22,030 |
Earnings per common share - basic: |
|
|
|
Net income attributable to common stockholders |
$ 0.08 |
|
$ 0.10 |
Earnings per common share - diluted: |
|
|
|
Net income attributable to common stockholders |
$ 0.08 |
|
$ 0.10 |
Weighted average common shares outstanding: |
|
|
|
Basic |
228,978 |
|
218,753 |
Diluted |
233,046 |
|
222,268 |
Dividends declared per common share |
$ 0.325 |
|
$ 0.320 |
|
|||
|
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Cash flows from operating activities: |
|
|
|
Net income |
$ 18,666 |
|
$ 22,393 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
71,009 |
|
71,671 |
Share-based compensation expense |
2,025 |
|
3,337 |
Income from unconsolidated joint venture |
(400) |
|
(392) |
Distributions from unconsolidated joint venture |
785 |
|
785 |
Loss on sale of real estate, net |
4 |
|
— |
Changes in operating assets and liabilities: |
|
|
|
Receivables and other assets, net |
(3,229) |
|
2,275 |
Accounts payable and accrued liabilities |
(34,131) |
|
(27,613) |
Security deposits, prepaid rent and other liabilities |
(5,421) |
|
(7,103) |
Net cash provided by operating activities |
49,308 |
|
65,353 |
Cash flows from investing activities: |
|
|
|
Investments in real estate |
(19,094) |
|
(30,472) |
Development of real estate |
(10,372) |
|
(17,096) |
Proceeds from the sale of real estate |
26,791 |
|
— |
Capital expenditures |
(28,560) |
|
(28,931) |
Collection of real estate notes receivable |
— |
|
200 |
Loan origination fees |
325 |
|
— |
Advances on real estate notes receivable |
(2,270) |
|
— |
Net cash used in investing activities |
(33,180) |
|
(76,299) |
Cash flows from financing activities: |
|
|
|
Borrowings on unsecured revolving credit facility |
75,000 |
|
15,000 |
Payments on unsecured revolving credit facility |
(50,000) |
|
(15,000) |
Deferred financing costs |
(5,355) |
|
— |
Repurchase and cancellation of common stock |
(1,641) |
|
(3,248) |
Dividends paid |
(74,377) |
|
(70,000) |
Distributions paid to non-controlling interest of limited partners |
(1,402) |
|
(1,485) |
Net cash used in financing activities |
(57,775) |
|
(74,733) |
Net change in cash, cash equivalents and restricted cash |
(41,647) |
|
(85,679) |
Cash, cash equivalents and restricted cash - beginning of period |
57,069 |
|
118,765 |
Cash, cash equivalents and restricted cash - end of period |
$ 15,422 |
|
$ 33,086 |
|
|||
|
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Net income |
$ 18,666 |
|
$ 22,393 |
General and administrative expenses |
12,448 |
|
10,560 |
Merger-related costs |
6,018 |
|
— |
Transaction expenses |
144 |
|
96 |
Depreciation and amortization expense |
75,386 |
|
76,274 |
Interest expense |
23,940 |
|
22,986 |
Loss on sale of real estate, net |
4 |
|
— |
Income from unconsolidated joint venture |
(400) |
|
(392) |
Other income |
(88) |
|
(3) |
NOI |
$ 136,118 |
|
$ 131,914 |
NOI percentage growth |
3.2 % |
|
|
|
|
|
|
NOI |
$ 136,118 |
|
$ 131,914 |
Straight-line rent adjustments, net |
(2,828) |
|
(3,774) |
Amortization of (below) and above market leases/leasehold interests, net and other |
(407) |
|
(475) |
Notes receivable interest income |
(1,660) |
|
(6) |
Cash NOI |
$ 131,223 |
|
$ 127,659 |
Acquisitions not owned/operated for all periods presented and disposed properties |
(6,280) |
|
(2,180) |
Redevelopment Cash NOI |
(2,105) |
|
(2,650) |
Intended for sale Cash NOI |
(5,408) |
|
(6,280) |
Same-Property Cash NOI(1) |
$ 117,430 |
|
$ 116,549 |
Same-Property Cash NOI percentage growth |
0.8 % |
|
|
|
|
|
|
(1) Same-Property includes 424 buildings for the three months ended |
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) transaction expenses; (iii) depreciation and amortization expense; (iv) impairment; (v) interest expense; (vi) gain or loss on sales of real estate and corporate assets; (vii) gain or loss on extinguishment of debt; (viii) income or loss from unconsolidated joint venture; and (ix) 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 its 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 HTA's 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 other GAAP adjustments; (iii) notes receivable interest income; and (iv) other normalizing adjustments. Contractual base rent, contractual rent increases, contractual rent concessions and changes in occupancy or lease rates upon commencement and expiration of leases are a primary driver of HTA's revenue performance. HTA believes that Cash NOI, which removes the impact of straight-line rent adjustments, 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 its 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 and operational properties referred to as "Same-Property". Same-Property Cash NOI excludes (i) properties which have not been owned and operated by HTA during the entire span of all periods presented and disposed properties, (ii) HTA's share of unconsolidated joint ventures, (iii) development, redevelopment and land parcels, (iv) properties intended for disposition in the near term which have (a) been approved by the Board of Directors, (b) are actively marketed for sale, and (c) an offer has been received at prices HTA would transact and the sales process is ongoing, and (v) 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 its financial performance. Same-Property Cash NOI should be reviewed in connection with other GAAP measurements.
|
|||
|
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Net income attributable to common stockholders |
$ 18,315 |
|
$ 22,030 |
Depreciation and amortization expense related to investments in real estate |
74,799 |
|
75,331 |
Loss on sale of real estate, net |
4 |
|
— |
Proportionate share of joint venture depreciation and amortization |
488 |
|
488 |
FFO attributable to common stockholders |
$ 93,606 |
|
$ 97,849 |
Transaction expenses |
144 |
|
96 |
Merger-related costs (1) |
6,018 |
|
— |
Commitment fee amortization (2) |
892 |
|
— |
Non-controlling income from OP units included in diluted shares |
351 |
|
363 |
Other normalizing adjustments (3) |
514 |
|
— |
Normalized FFO attributable to common stockholders |
$ 101,525 |
|
$ 98,308 |
Non-cash compensation expense |
2,024 |
|
3,337 |
Straight-line rent adjustments, net |
(2,828) |
|
(3,774) |
Amortization of (below) and above market leases/leasehold interests and |
196 |
|
621 |
Amortization of deferred financing costs and debt discount/premium, net (4) |
1,223 |
|
1,164 |
Recurring capital expenditures, tenant improvements and leasing commissions |
(21,855) |
|
(10,898) |
Normalized FAD attributable to common stockholders |
$ 80,285 |
|
$ 88,758 |
|
|
|
|
Net income attributable to common stockholders per diluted share |
$ 0.08 |
|
$ 0.10 |
FFO adjustments per diluted share, net |
0.32 |
|
0.34 |
FFO attributable to common stockholders per diluted share |
$ 0.40 |
|
$ 0.44 |
Normalized FFO adjustments per diluted share, net |
0.04 |
|
0.00 |
Normalized FFO attributable to common stockholders per diluted share |
$ 0.44 |
|
$ 0.44 |
|
|
|
|
Weighted average diluted common shares outstanding |
233,046 |
|
222,268 |
(1) |
For the three months ended |
(2) |
For the three months ended |
(3) |
For the three months ended |
(4) |
For the three months ended |
HTA computes FFO in accordance with the current standards established by NAREIT. FFO is defined as net income or loss attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and corporate assets 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. 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 computes Normalized FFO, which excludes from FFO: (i) transaction expenses; (ii) gain or loss on extinguishment of debt; (iii) non-controlling income or loss from OP Units included in diluted shares; and (iv) other normalizing adjustments, which include items that are unusual and infrequent in nature. 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.
HTA also computes Normalized FAD, which excludes from Normalized FFO: (i) non-cash compensation expense; (ii) straight-line rent adjustments; (iii) amortization of below and above market leases/leasehold interests and corporate assets; (iv) deferred revenue - tenant improvement related and other income; (v) amortization of deferred financing costs and debt premium/discount; and (vi) recurring capital expenditures, tenant improvements and leasing commissions. HTA believes this non-GAAP financial measure provides a meaningful supplemental measure of its 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 its financial performance, nor is it indicative of cash available to fund cash needs. Normalized FAD should be reviewed in connection with other GAAP measurements.
HTA presents these non-GAAP financial measures because it considers them important supplemental measures of its operating performance and believes they are 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. These non-GAAP financial measures should not be considered as alternatives to net income or loss attributable to common stockholders (computed in accordance with GAAP) as indicators of its financial performance. FFO and Normalized FFO is not indicative of cash available to fund cash needs. These non-GAAP financial measures should be reviewed in connection with other GAAP measurements.
|
|
|
|
|
Three Months Ended |
|
|
Net income |
$ 18,666 |
Interest expense |
23,940 |
Depreciation and amortization expense |
75,386 |
Loss on sale of real estate, net |
4 |
Proportionate share of joint venture depreciation and amortization |
488 |
EBITDAre |
$ 118,484 |
Transaction expenses |
144 |
Merger-related costs (1) |
6,018 |
Non-cash compensation expense |
2,024 |
Other normalizing adjustments (2) |
514 |
Pro forma impact of investments/dispositions |
(40) |
Pro forma impact of developments |
41 |
Adjusted EBITDAre |
$ 127,185 |
|
|
Adjusted EBITDAre, annualized |
$ 508,740 |
|
|
As of |
|
Debt |
$ 3,053,884 |
Less: cash and cash equivalents |
10,944 |
Net Debt |
$ 3,042,940 |
|
|
Net Debt to Adjusted EBITDAre |
6.0x |
(1) |
For the three months ended |
(2) |
For the three months ended |
As defined by NAREIT, EBITDAre is computed as net income or loss (computed in accordance with GAAP) plus: (i) interest expense; (ii) income tax expense (not applicable to HTA); (iii) depreciation and amortization; (iv) impairment; (v) gain or loss on the sale of real estate and corporate assets; and (vi) the proportionate share of joint venture depreciation and amortization.
Adjusted EBITDAre is presented on an assumed annualized basis. HTA defines Adjusted EBITDAre as EBITDAre (computed in accordance with NAREIT as defined above) plus: (i) transaction expenses; (ii) gain or loss on extinguishment of debt; (iii) non-cash compensation expense; (iv) pro forma impact of its acquisitions/dispositions; and (v) other normalizing adjustments. HTA considers Adjusted EBITDAre an important measure because it provides additional information to allow management, investors, and its current and potential creditors to evaluate and compare its core operating results and its ability to service debt.
Financial Contact:
Chief Financial Officer
480.998.3478
View original content:https://www.prnewswire.com/news-releases/healthcare-trust-of-america-inc-reports-first-quarter-2022-earnings-and-announces-second-quarter-2022-dividend-301541218.html
SOURCE