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Healthcare Realty Trust Inc.’s (HR - Free Report) third-quarter 2016 normalized funds from operations per share (“FFO”) of 39 cents came a penny short of the Zacks Consensus Estimate of 40 cents, down by 2 cents year over year.
Though this healthcare real estate investment trust (“REIT”) witnessed 10.7% year-over-year growth in normalized FFO, the decline on a per share basis reflects a rise in share count.
Total revenue of $103.7 million in the quarter grew 7.2% from the prior-year period, however narrowly missed the Zacks Consensus Estimate of $104 million.
Inside the Headlines
For the trailing 12-month period ended Sep 30, 2016, same store revenue improved 4.1%, operating expenses expanded 3.8% and finally same store net operating income (“NOI”) increased 4.3%. Further, same-store revenue per average occupied square foot grew 3.6%, while average same store occupancy expanded 50 basis points (bps) from a year ago to 89.9%.
Healthcare Realty’s leasing activity included 173 leases and aggregated 561,000 square feet of space. This comprised 399,000 square feet renewals, 162,000 square feet new and expansion leases and 52,000 square feet of net absorption.
For third-quarter 2016, in the company’s same-store multi-tenant portfolio, contractual rent increases averaged 2.8%; while cash leasing spreads were 4.3% on 314,000 square feet renewed. Moreover, tenant retention was 90.1% and the average yield on renewed leases climbed 60 bps.
Notably, on Jul 5, 2016, the company completed the sale of 9.2 million shares of common stock, reaping net proceeds of around $304.6 million for funding investment activity and pay back debt.
Finally, Healthcare Realty exited the quarter with cash and cash equivalents of $12.6 million, up from $4.1 million at prior-year end.
Dividend Update
On Nov 1, 2016, Healthcare Realty declared a quarterly dividend of 30 cents per share. This dividend is payable on Nov 30 to stockholders of record as of Nov 16 and is equivalent to 76.9% of normalized FFO per share.
Our Take
Rising national healthcare expenditure and an anticipated increase in demand for medical office buildings augurs well for Healthcare Realty. However, sturdy competition and an estimated rise in interest rate is likely to curtail its growth momentum in the near term.
Healthcare Realty currently has a Zacks Rank #4 (Sell).
Investors interested in the REIT industry may consider stocks like Duke Realty Corporation , Mack-Cali Realty Corp. and Ventas, Inc. (VTR - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.
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Healthcare Realty (HR) Misses Q3 FFO, Revenue Estimates
Healthcare Realty Trust Inc.’s (HR - Free Report) third-quarter 2016 normalized funds from operations per share (“FFO”) of 39 cents came a penny short of the Zacks Consensus Estimate of 40 cents, down by 2 cents year over year.
Though this healthcare real estate investment trust (“REIT”) witnessed 10.7% year-over-year growth in normalized FFO, the decline on a per share basis reflects a rise in share count.
Total revenue of $103.7 million in the quarter grew 7.2% from the prior-year period, however narrowly missed the Zacks Consensus Estimate of $104 million.
Inside the Headlines
For the trailing 12-month period ended Sep 30, 2016, same store revenue improved 4.1%, operating expenses expanded 3.8% and finally same store net operating income (“NOI”) increased 4.3%. Further, same-store revenue per average occupied square foot grew 3.6%, while average same store occupancy expanded 50 basis points (bps) from a year ago to 89.9%.
Healthcare Realty’s leasing activity included 173 leases and aggregated 561,000 square feet of space. This comprised 399,000 square feet renewals, 162,000 square feet new and expansion leases and 52,000 square feet of net absorption.
For third-quarter 2016, in the company’s same-store multi-tenant portfolio, contractual rent increases averaged 2.8%; while cash leasing spreads were 4.3% on 314,000 square feet renewed. Moreover, tenant retention was 90.1% and the average yield on renewed leases climbed 60 bps.
Notably, on Jul 5, 2016, the company completed the sale of 9.2 million shares of common stock, reaping net proceeds of around $304.6 million for funding investment activity and pay back debt.
Finally, Healthcare Realty exited the quarter with cash and cash equivalents of $12.6 million, up from $4.1 million at prior-year end.
Dividend Update
On Nov 1, 2016, Healthcare Realty declared a quarterly dividend of 30 cents per share. This dividend is payable on Nov 30 to stockholders of record as of Nov 16 and is equivalent to 76.9% of normalized FFO per share.
Our Take
Rising national healthcare expenditure and an anticipated increase in demand for medical office buildings augurs well for Healthcare Realty. However, sturdy competition and an estimated rise in interest rate is likely to curtail its growth momentum in the near term.
Healthcare Realty currently has a Zacks Rank #4 (Sell).
HEALTHCARE RLTY Price, Consensus and EPS Surprise
HEALTHCARE RLTY Price, Consensus and EPS Surprise | HEALTHCARE RLTY Quote
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the REIT industry may consider stocks like Duke Realty Corporation , Mack-Cali Realty Corp. and Ventas, Inc. (VTR - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>