Healthcare Realty Trust Inc. (HR) – a real estate investment trust (:REIT) – reported fourth-quarter 2013 normalized funds from operations (:FFO) per share of 36 cents, beating the Zacks Consensus Estimate by 2 cents and the year-ago quarter figure by a nickel. The results were driven by a rise in revenue. Shares were up 1.65% during yesterday’s regular trading session on the NYSE.
Normalized funds available for distribution (FAD) in the reported quarter were 37 cents per share, up from 33 cents in the year-ago period.
Total revenue increased 15.2% year over year to $90.1 million in the reported quarter and exceeded the Zacks Consensus Estimate of $83 million.
Inside the Headlines
During the year, Healthcare Realty signed or renewed leases aggregating 1,242,000 square feet. The average retention rate was 80% and occupancy stood at 91% at year-end in its same store properties.
Same-store revenues nudged up 1.9% year over year to $66.3 million. On the other hand, same-store expenses rose 3.5% year over year to $23.3 million. Thus, same-store net operating income (:NOI) increased 1.1% year over year to $43.0 million. At the year end, the 12 stabilizing properties (:SIP) were 80% leased with occupancy rising to 63%.
Healthcare Realty made acquisitions aggregating $212.6 million in 2013, with an average leased percentage of 93%. In particular, during the quarter under review, the company acquired five properties, spanning 374,000 square feet, for $102.6 million. Leased 94%, the buildings are positioned in Healthcare Realty’s existing footprint including Seattle, Denver, Charlotte and Austin.
On the other hand, the company accomplished $101.9 million of dispositions in 2013 and $20.5 million in the fourth quarter. Among the properties sold were 8 off-campus medical office buildings, 4 inpatient rehab facilities, and 1 land parcel.
As of Dec 31, 2013, Healthcare Realty had cash and cash equivalents worth approximately $8.7 million, up from $6.8 million at the prior year-end.
On Feb 4, 2014, Healthcare Realty declared a quarterly dividend of 30 cents per share. This dividend is payable on Feb 28, 2014 to stockholders of record as of Feb 18. The dividend is equivalent to 81.1% of normalized FAD.
Healthcare Realty currently has a Zacks Rank #4 (Sell).
Key Picks from the Sector
Some other stocks worth considering in the REIT industry include Sabra Health Care REIT, Inc. (SBRA), Healthcare Trust of America, Inc. (HTA) and Omega Healthcare Investors Inc. (OHI). While Sabra Health Care holds a Zacks Rank #1 (Strong Buy), Healthcare Trust and Omega Healthcare carry a Zacks Rank #2 (Buy).
Note: 1. FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.
2. FAD, a measure to ascertain the ability of REITs to generate cash, is derived by subtracting straight-line rent and non-recurring real estate expenses from funds from operations.