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Healthcare Trust of America, Inc. Reports 2020 Results and 2021 Earnings Guidance

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SCOTTSDALE, Ariz., Feb. 22, 2021 /PRNewswire/ -- Healthcare Trust of America, Inc. (NYSE: HTA) ("HTA") announced results for the quarter and year ended December 31, 2020.

Healthcare Trust of America, Inc. Logo. (PRNewsFoto/Healthcare Trust of America, Inc.) (PRNewsfoto/Healthcare Trust of America, In)
Healthcare Trust of America, Inc. Logo. (PRNewsFoto/Healthcare Trust of America, Inc.) (PRNewsfoto/Healthcare Trust of America, In)

"In 2020, HTA continued to grow its best-in-class portfolio despite the ongoing COVID-19 pandemic, displaying the resilience and strength of the leader in the medical office building industry," stated Chairman, CEO and President Scott D. Peters. "As we look ahead to 2021, we are excited to see new opportunities to grow as a company while continuing to provide attractive returns for our stockholders."

Highlights

Fourth Quarter 2020:

  • Reported net income attributable to common stockholders of $0.13 per diluted share.

  • Reported Same-Property Cash Net Operating Income ("NOI") growth of 2.5% compared to Q4 2019.

  • Reported Funds From Operations ("FFO") as defined by NAREIT of $0.43 per diluted share, an increase of 4.9% compared to Q4 2019.

  • Reported Normalized FFO of $0.43 per diluted share, an increase of 2.4% compared to Q4 2019.

  • Reported Normalized FAD of $80.3 million, an increase of 11.1% compared to Q4 2019.

Year Ended 2020:

  • Reported net income attributable to common stockholders of $0.24 per diluted share.

  • Reported FFO as defined by NAREIT of $1.56 per diluted share, an increase of 2.0% compared to 2019.

  • Reported Normalized FFO of $1.71 per diluted share, an increase of 4.3% compared to 2019.

  • Reported Normalized FAD of $317.6 million, an increase of 9.8% compared to 2019.

  • Raised $800 million of senior unsecured notes at a coupon of 2% per annum. Proceeds were used to repay approximately $600 million of existing debt.

  • Raised our quarterly dividend for the 7th consecutive year.

Portfolio Performance

  • As of December 31, 2020, our portfolio had a leased rate of 89.8% by gross leasable area ("GLA") and an occupancy rate of 89.1% by GLA.

Fourth Quarter 2020:

  • HTA executed approximately 0.6 million square feet of leases, including 136 thousand square feet of new leases and 442 thousand square feet of renewals. Re-leasing spreads increased to 2.7% and tenant retention for the Same-Property portfolio was 80% by GLA.

  • For Q4, we collected more than 99.5% of our total monthly rents that are contractually due and owed. Our January and February 2021 collections continue to be consistent with Q4.

Year Ended December 31, 2020:

  • HTA executed approximately 3.9 million square feet of GLA in leases, or approximately 17% of our leased space. This includes 668 thousand square feet of GLA in new leases and 3.2 million square feet of GLA in renewals. Re-leasing spreads increased to 4.7% and tenant retention for the Same-Property portfolio was 87% by GLA.

  • For 2020 charges only, we collected 99% of our total monthly rents that are contractually due and owed, which includes the impact of our remaining deferred charges.

  • In total in 2020, we have approved deferral plans that total approximately $11.1 million, or approximately 1.5% of annual revenues. Of this total, approximately $8.5 million have been repaid as of today. The remainder are expected to be repaid within the next 6 to 9 months. We have not approved any material deferrals in January.

Investment Activity

  • During the quarter, HTA closed on $129 million of medical office investments totaling approximately 386 thousand square feet of GLA. For the year, HTA has now closed over $181 million of MOB investments totaling approximately 600 thousand square feet of GLA with expected year-one contractual yields of 6.0%. These properties were approximately 94% leased as of closing and are located within HTA's key markets.

  • In Q4, we sold one asset in the Overland Park, Kansas market for approximately $17 million resulting in a $7.6 million gain on sale of real estate.

  • In 2020, we completed our initial development started by HTA. This 127,000 SF Class A MOB development in Raleigh, North Carolina is anchored by WakeMed Health System. The building is 77% leased and began paying cash rent in 4Q 2020. Annual Cash NOI upon full stabilization is expected to approximate $3.4 million.

  • Our remaining three developments in California, Florida, and Texas continue to progress, and we anticipate completion on-time between Q1 and Q3 2021. The first two of these developments, representing 135,000 square feet of GLA and over $50 million of total construction costs located in Miami, Florida and Bakersfield, California, are anticipated for construction completion and occupancy commencement in late Q1 2021, generating NOI beginning in Q2 2021.

Capital Activity and Liquidity

  • HTA ended Q4 2020 with total leverage of (i) 32.3%, measured as debt less cash and cash equivalents to total capitalization, and (ii) 5.9x net debt to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for real estate ("Adjusted EBITDAre"). Including the impact of the unsettled forward equity agreements, leverage would be 29.2% and 5.3x, respectively.

  • HTA ended Q4 with total liquidity of $1.4 billion, inclusive of $1.0 billion available on our unsecured revolving credit facility, $277.5 million of unsettled equity forward transactions and $115.4 million of cash and cash equivalents.

  • During the year, we issued $800 million in senior unsecured notes due 2031 at 2.0% coupon. Proceeds were used to refinance $600 million of existing debt, allowing us to extend our nearest term public debt to 2026.

  • As of the end of the quarter, HTA had $277.5 million of equity to be settled on a forward basis with the issuance of approximately 9.4 million shares of common stock, subject to adjustment for costs to borrow under the terms of the applicable equity distribution agreements.

Dividend
On December 4, 2020, HTA's Board of Directors announced a quarterly cash dividend of $0.320 per share of common stock and per Operating Partnership Unit, paid on January 12, 2021 to stockholders of record on January 5, 2021. This marks the 7th consecutive year of dividend increases to our stockholders.

2021 Guidance:
HTA expects 2021 guidance to range as follows:



Annual Expectations



Low

to

High

Net income attributable to common stockholders per share


$0.32


$0.40






Same-Property Cash NOI


2.0%


3.0%






FFO per share, as defined by NAREIT


$1.70


$1.77






Normalized FFO per share


$1.71


$1.79

The 2021 outlook guidance includes the following additional assumptions:

  • $300 - $600 million of investments at an average 5.5% to 6.0% yield;

  • $50 - $100 million of dispositions at a 5.0% to 7.0% yield;

  • general and administrative costs of $43 - $46 million;

  • average fully diluted shares of between 226 and 229 million fully diluted shares of common stock outstanding, with proceeds from equity previously raised on a forward basis being utilized to fund acquisitions as they close; and

  • developments being substantially completed as planned.

  • The lower end of the range assumes settlement of forward equity agreements without deployment of cash proceeds for investments.

  • HTA expects leverage, measured as (i) debt less cash and cash equivalents to total capitalization, and (ii) measured as debt less cash and cash equivalents to Adjusted EBITDAre to range between 5.5x and 6.0x throughout the year.

HTA's 2021 guidance is based on a number of various assumptions that are subject to change and many of which are outside the control of the Company. Additionally, HTA's guidance does not contemplate impacts from gains or losses from dispositions, potential impairments, or debt extinguishment costs, if any. If actual results vary from these assumptions, HTA's expectations may change. There can be no assurance that HTA will achieve these results.

About Healthcare Trust of America, Inc.
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of MOBs in the United States, comprising approximately 25.4 million square feet of GLA, with $7.5 billion invested primarily in MOBs. HTA provides real estate infrastructure for the integrated delivery of healthcare services in highly-desirable locations. Investments are targeted to build critical mass in 20 to 25 leading gateway markets that generally have leading university and medical institutions, which translates to superior demographics, high-quality graduates, intellectual talent and job growth. The strategic markets HTA invests in support a strong, long-term demand for quality medical office space. HTA utilizes an integrated asset management platform consisting of on-site leasing, property management, engineering and building services, and development capabilities to create complete, state of the art facilities in each market. This drives efficiencies, strong tenant and health system relationships, and strategic partnerships that result in high levels of tenant retention, rental growth and long-term value creation. Headquartered in Scottsdale, Arizona, HTA has developed a national brand with dedicated relationships at the local level.

Founded in 2006 and listed on the New York Stock Exchange in 2012, HTA has produced attractive returns for its stockholders that have outperformed the US REIT index. More information about HTA can be found on the Company's Website (www.htareit.com), Facebook, LinkedIn and Twitter.

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; the availability of financing; and pandemics and other health concerns, and the measures intended to prevent their spread, including the currently ongoing COVID-19 pandemic, and potential material adverse effect these may have on our business, results of operations, cash flows and financial condition. 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 2020 Annual Report on Form 10-K and in our filings with the SEC.

Conference Call
HTA will host a conference call and webcast on Tuesday, February 23, 2021 at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time) to review its financial performance and operating results for the quarter and year ended December 31, 2020.

Conference Call and Webcast Details:
Domestic Dial-In Number: (877) 507-6265
International Dial-In Number: (412) 902-6633
Canada Dial-In Number: (855) 669-9657
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
Canada Dial-In Number: (855) 669-9658
Conference ID: 10152006
Available February 23, 2021 (one hour after the end of the conference call) to March 23, 2021 at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time)

Financial Contact:
Robert A. Milligan
Chief Financial Officer
480.998.3478

HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)







December 31, 2020


December 31, 2019

ASSETS





Real estate investments:





Land


$

596,269



$

584,546


Building and improvements


6,507,816



6,252,854


Lease intangibles


628,621



628,066


Construction in progress


80,178



28,150




7,812,884



7,493,616


Accumulated depreciation and amortization


(1,702,719)



(1,447,815)


Real estate investments, net


6,110,165



6,045,801


Investment in unconsolidated joint venture


64,360



65,888


Cash and cash equivalents


115,407



32,713


Restricted cash


3,358



4,903


Receivables and other assets, net


251,728



237,024


Right-of-use assets - operating leases, net


235,223



239,867


Other intangibles, net


10,451



12,553


Total assets


$

6,790,692



$

6,638,749


LIABILITIES AND EQUITY





Liabilities:





Debt


$

3,026,999



$

2,749,775


Accounts payable and accrued liabilities


200,358



171,698


Derivative financial instruments - interest rate swaps


14,957



29


Security deposits, prepaid rent and other liabilities


82,553



49,174


Lease liabilities - operating leases


198,367



198,650


Intangible liabilities, net


32,539



38,779


Total liabilities


3,555,773



3,208,105


Commitments and contingencies





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;
218,578,012 and 216,453,312 shares issued and outstanding as of December 31,
2020 and December 31, 2019, respectively


2,186



2,165


Additional paid-in capital


4,916,784



4,854,042


Accumulated other comprehensive (loss) income


(16,979)



4,546


Cumulative dividends in excess of earnings


(1,727,752)



(1,502,744)


Total stockholders' equity


3,174,239



3,358,009


Noncontrolling interests


60,680



72,635


Total equity


3,234,919



3,430,644


Total liabilities and equity


$

6,790,692



$

6,638,749


HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)



Three Months Ended December 31,


Year Ended December 31,


2020


2019


2020


2019

Revenues:








Rental income

$

186,955



$

176,199



$

738,414



$

691,527


Interest and other operating income

63



114



551



513


Total revenues

187,018



176,313



738,965



692,040


Expenses:








Rental

56,549



53,266



226,859



211,479


General and administrative

10,621



10,203



42,969



41,360


Transaction

668



1,492



965



2,350


Depreciation and amortization

75,344



78,654



303,828



290,384


Interest expense

23,328



24,031



94,613



96,632


Total expenses

166,510



167,646



669,234



642,205


Gain (loss) on sale of real estate, net

7,599



(117)



9,590



(154)


Loss on extinguishment of debt, net





(27,726)



(21,646)


Income from unconsolidated joint venture

389



426



1,612



1,882


Other income

11



60



301



841


Net income

$

28,507



$

9,036



$

53,508



$

30,758


Net income attributable to noncontrolling interests

(452)



(118)



(890)



(604)


Net income attributable to common stockholders

$

28,055



$

8,918



$

52,618



$

30,154


Earnings per common share - basic:








Net income attributable to common stockholders

$

0.13



$

0.04



$

0.24



$

0.15


Earnings per common share - diluted:








Net income attributable to common stockholders

$

0.13



$

0.04



$

0.24



$

0.14


Weighted average common shares outstanding:








Basic

218,575



207,395



218,078



205,720


Diluted

222,099



211,472



221,666



209,605


Dividends declared per common share

$

0.320



$

0.315



$

1.270



$

1.250


HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



Year Ended December 31,


2020


2019


2018

Cash flows from operating activities:






Net income

$

53,508



$

30,758



$

217,626


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






Depreciation and amortization

283,039



280,969



271,441


Share-based compensation expense

8,916



10,127



9,755


Impairment





8,887


Income from unconsolidated joint venture

(1,612)



(1,882)



(1,735)


Distributions from unconsolidated joint venture

3,240



3,030



2,665


(Gain) loss on sale of real estate, net

(9,590)



154



(165,977)


Loss (gain) on extinguishment of debt, net

27,726



21,646



(242)


Changes in operating assets and liabilities:






Receivables and other assets, net

(11,042)



(12,857)



(17,558)


Accounts payable and accrued liabilities

2,066



(128)



9,478


Security deposits, prepaid rent and other liabilities

31,711



8,577



3,056


Net cash provided by operating activities

387,962



340,394



337,396


Cash flows from investing activities:






Investments in real estate

(185,286)



(553,298)



(17,389)


Development of real estate

(77,077)



(28,066)



(34,270)


Proceeds from the sale of real estate

22,939



4,880



305,135


Capital expenditures

(74,743)



(91,544)



(77,870)


Collection of real estate notes receivable

907



739



703


Advances on real estate notes receivable

(6,000)






Net cash (used in) provided by investing activities

(319,260)



(667,289)



176,309


Cash flows from financing activities:






Borrowings on unsecured revolving credit facility

1,329,862



610,000



145,000


Payments on unsecured revolving credit facility

(1,429,862)



(510,000)



(145,000)


Proceeds from unsecured senior notes

793,568



906,927




Payments on unsecured senior notes

(300,000)



(700,000)




Payments on secured mortgage loans

(114,060)



(97,361)



(241,021)


Deferred financing costs

(6,800)



(7,776)



(782)


Debt extinguishment costs

(25,939)



(18,383)



(1,909)


Proceeds from issuance of common stock

50,020



323,393



72,814


Issuance of OP Units

1,378





411


Repurchase and cancellation of common stock

(5,192)



(12,178)



(70,319)


Dividends paid

(275,816)



(256,117)



(252,651)


Distributions paid to noncontrolling interest of limited partners

(4,712)



(8,758)



(5,278)


Sale of noncontrolling interest



1,234




Net cash provided by (used in) financing activities

12,447



230,981



(498,735)


Net change in cash, cash equivalents and restricted cash

81,149



(95,914)



14,970


Cash, cash equivalents and restricted cash - beginning of year

37,616



133,530



118,560


Cash, cash equivalents and restricted cash - end of year

$

118,765



$

37,616



$

133,530


HEALTHCARE TRUST OF AMERICA, INC.
NOI, CASH NOI AND SAME-PROPERTY CASH NOI
(In thousands)
(Unaudited)



Three Months Ended December 31,


Year Ended December 31,


2020


2019


2020


2019

Net income

$

28,507



$

9,036



$

53,508



$

30,758


General and administrative expenses

10,621



10,203



42,969



41,360


Transaction expenses

668



1,492



965



2,350


Depreciation and amortization expense

75,344



78,654



303,828



290,384


Interest expense

23,328



24,031



94,613



96,632


(Gain) loss on sale of real estate, net

(7,599)



117



(9,590)



154


Loss on extinguishment of debt, net





27,726



21,646


Income from unconsolidated joint venture

(389)



(426)



(1,612)



(1,882)


Other income

(11)



(60)



(301)



(841)


NOI

$

130,469



$

123,047



$

512,106



$

480,561


NOI percentage growth

6.0

%




6.6

%











NOI

$

130,469



$

123,047



$

512,106



$

480,561


Straight-line rent adjustments, net

(3,298)



(1,600)



(15,971)



(9,861)


Amortization of (below) and above market leases/leasehold
interests, net and other GAAP adjustments (1)

(519)



(1,475)



(2,722)



(3,347)


Notes receivable interest income

(9)



(21)



(161)



(96)


Other normalizing adjustments (2)





5,031




Cash NOI

$

126,643



$

119,951



$

498,283



$

467,257


Acquisitions not owned/operated for all periods presented
and disposed properties Cash NOI

(6,295)



(1,880)



(36,408)



(9,273)


Redevelopment Cash NOI

314



(167)



698



(2,635)


Intended for sale Cash NOI (3)

(1,344)



(1,440)



(5,486)



(5,499)


Same-Property Cash NOI (4)

$

119,318



$

116,464



$

457,087



$

449,850


Same-Property Cash NOI percentage growth

2.5

%




1.6

%













(1)

The presentation includes certain adjustments to allow for the consistent treatment of items impacted by Topic 842-Leases.

(2)

Other normalizing adjustments includes the following: Non-recurring bad debt of $4,672 thousand, incremental hazard pay to facilities employees of $314 thousand,
and incremental personal protective equipment of $45 thousand for the year ended December 31, 2020. There were no other normalizing adjustments for the three
months ended December 31, 2020

(3)

Relates to properties currently under contract for sale, that remain subject to customary due diligence and closing conditions and are not guaranteed to
transact.

(4)

Same-Property includes 409 and 399 buildings for the three months and year ended December 31, 2020 and 2019, respectively.

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; (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.

HEALTHCARE TRUST OF AMERICA, INC.
FFO, NORMALIZED FFO AND NORMALIZED FAD
(Unaudited and in thousands, except per share data)



Three Months Ended December 31,


Year Ended December 31,


2020


2019


2020


2019

Net income attributable to common stockholders

$

28,055



$

8,918



$

52,618



$

30,154


Depreciation and amortization expense related to investments
in real estate

74,368



77,758



299,722



287,572


(Gain) loss on sale of real estate, net

(7,599)



117



(9,590)



154


Proportionate share of joint venture depreciation and
amortization

506



468



1,949



1,858


FFO attributable to common stockholders

$

95,330



$

87,261



$

344,699



$

319,738


Transaction expenses

668



1,492



965



2,350


Loss on extinguishment of debt, net





27,726



21,646


Noncontrolling income from OP units included in diluted
shares

452



118



890



538


Other normalizing adjustments (1)





5,031




Normalized FFO attributable to common stockholders

$

96,450



$

88,871



$

379,311



$

344,272


Non-cash compensation expense

1,781



2,299



8,916



10,127


Straight-line rent adjustments, net

(3,298)



(1,600)



(15,971)



(9,861)


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

618



(580)



1,122



(535)


Deferred revenue - tenant improvement related and other



(1)





(5)


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

1,190



935



4,452



5,216


Recurring capital expenditures, tenant improvements and
leasing commissions

(16,457)



(17,663)



(60,201)



(59,803)


Normalized FAD attributable to common stockholders

$

80,284



$

72,261



$

317,629



$

289,411










Net income attributable to common stockholders per diluted
share

$

0.13



$

0.04



$

0.24



$

0.14


FFO adjustments per diluted share, net

0.30



0.37



1.32



1.39


FFO attributable to common stockholders per diluted share

$

0.43



$

0.41



$

1.56



$

1.53


Normalized FFO adjustments per diluted share, net

0.00



0.01



0.15



0.11


Normalized FFO attributable to common stockholders per
diluted share

$

0.43



$

0.42



$

1.71



$

1.64










Weighted average diluted common shares outstanding

222,099



211,472



221,666



209,605




(1)

Other normalizing adjustments includes the following: Non-recurring bad debt of $4,672 thousand, incremental hazard pay to facilities employees of $314
thousand, and incremental personal protective equipment of $45 thousand for the year ended December 31, 2020. There were no other normalizing
adjustments for the three months ended December 31, 2020.

HTA computes FFO in accordance with the current standards established by NAREIT. NAREIT defines FFO 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 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) noncontrolling 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.

HEALTHCARE TRUST OF AMERICA, INC.
NET DEBT TO ADJUSTED EBITDAre
(Unaudited and in thousands)



Three Months Ended


December 31, 2020

Net income

$

28,507


Interest expense

23,328


Depreciation and amortization expense

75,344


Gain on sale of real estate, net

(7,599)


Proportionate share of joint venture depreciation and amortization

506


EBITDAre

$

120,086


Transaction expenses

668


Non-cash compensation expense

1,781


Pro forma impact of acquisitions/dispositions

1,659


Adjusted EBITDAre

$

124,194




Adjusted EBITDAre, annualized

$

496,776




As of December 31, 2020:


Debt

$

3,026,999


Less: cash and cash equivalents

115,407


Net Debt

$

2,911,592




Net Debt to Adjusted EBITDAre

5.9x


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 (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.

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SOURCE Healthcare Trust of America, Inc.