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![]() | PRESS RELEASE | |
Financial Contact: | ||
Robert A. Milligan | ||
Chief Financial Officer | ||
480.998.3478 |
• | Net Income Attributable to Common Stockholders: Increased $159.2 million, to $173.0 million, compared to Q3 2017. Earnings per diluted share increased $0.75, to $0.82 per diluted share, compared to Q3 2017. |
• | Funds From Operations (“FFO”): As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), decreased (3.4)%, to $81.4 million, compared to Q3 2017. FFO per diluted share decreased (7.3)%, to $0.38 per diluted share, compared to Q3 2017. |
• | Normalized FFO: Increased 0.8%, to $86.1 million, compared to Q3 2017. Normalized FFO per diluted share decreased (2.4)%, to $0.41 per diluted share, compared to Q3 2017. |
• | Normalized Funds Available for Distribution (“FAD”): Decreased (8.0)%, to $68.8 million, compared to Q3 2017. |
• | Same-Property Cash Net Operating Income (“NOI”): Increased $2.7 million, or 2.5%, to $108.8 million, compared to Q3 2017. |
• | Net Income Attributable to Common Stockholders: Increased $176.7 million, to $198.1 million, compared to 2017. Earnings per diluted share increased $0.82, to $0.94 per diluted share, compared to 2017. |
• | FFO: As defined by NAREIT, increased 26.0%, to $250.4 million, compared to 2017. FFO per diluted share increased 6.3%, to $1.19 per diluted share, compared to 2017. |
• | Normalized FFO: Increased 19.0%, to $256.2 million, compared to 2017. Normalized FFO per diluted share increased 0.8%, to $1.22 per diluted share, compared to 2017. |
• | Normalized FAD: Increased 15.3%, to $217.0 million, compared to 2017. |
• | Same-Property Cash NOI: Increased $5.6 million, or 2.4%, to $233.2 million, compared to 2017. Excluding the MOBs located on its Forest Park Dallas campus, Same-Property Cash NOI growth was 2.7%. |
• | Leasing: During the three months ended September 30, 2018, HTA entered into new and renewal leases on approximately 532,000 square feet of gross leasable area (“GLA”), or 2.3%, of its portfolio. Tenant retention for the Same-Property portfolio was 82% by GLA for the quarter, which included approximately 381,000 square feet of GLA of total expiring leases. Re-leasing spreads for renewal leases on a cash basis were approximately 3.7%. Renewal leases included tenant improvements of $1.53 per square foot of GLA per year of the lease term and less than one day of free rent per year of the lease term during the three months ended September 30, 2018. |
• | Leased Rate: As of September 30, 2018, HTA had a leased rate for its portfolio of 92.1% by GLA and an occupancy rate of 90.9% by GLA. |
• | Forest Park Update: During the three months ended September 30, 2018, HTA entered into approximately 41,000 square feet of GLA of new leases on the former Forest Park Dallas campus (the “Campus”), bringing total new leasing for the Campus to 81,000 square feet of GLA for the nine months ended September 30, 2018. The total leased rate for the Campus was approximately 84% as of September 30, 2018. |
• | Dispositions: During the three months ended September 30, 2018, HTA completed the disposition of 19 MOBs, primarily located in Greenville, South Carolina for an aggregate gross sales price of $305.9 million and totaling approximately 1.1 million square feet of GLA, generating gains of approximately $166.4 million, and consisted of the following: |
◦ | In August 2018, HTA completed the disposition of its Greenville, South Carolina MOB portfolio (the “Greenville Disposition”), which consisted of 17 MOBs for an aggregate gross sales price of $294.3 million in two transactions, including (i) the sale of a single MOB which HTA classified as held for sale as of June 30, 2018, and (ii) the Greenville Disposition which consisted of approximately 965,000 square feet of GLA. |
◦ | Additionally, HTA completed the disposition of two MOBs located in Derry, New Hampshire and North Adams, Massachusetts for an aggregate gross sales price of $11.6 million, totaling approximately 120,000 square feet of GLA. |
• | Development/Redevelopment: During the nine months ended September 30, 2018, HTA announced a new development in its key gateway market of Miami, Florida and commenced two redevelopments, including an agreement to build a new on-campus MOB in Raleigh, North Carolina. These projects will have total expected construction costs of approximately $70.6 million and are approximately 78% pre-leased to major health systems. |
• | Investments: During the nine months ended September 30, 2018, HTA invested approximately $13.9 million to acquire three MOBs of approximately 60,000 square feet of GLA in the key market of Raleigh, North Carolina. In addition, HTA invested approximately $3.9 million to consolidate its ownership interests in several other MOBs. |
• | Cash NOI: During the three months ended September 30, 2018, HTA generated $36.4 million of Cash NOI from its 2017 investments, including its investment in its unconsolidated joint venture. As of September 30, 2018, HTA’s run rate yield on its 2017 investments was approximately 5.3%, which included the full year impact of new leases which have been executed, but which have not yet commenced. |
• | Development: As part of the 2017 investments, HTA acquired seven development projects that were under construction and not stabilized at the date of acquisition. During the quarter, HTA completed the remaining development of the Providence Facey MOB in Los Angeles, California. This MOB is approximately 37,000 square feet of GLA and is 100% pre-leased. |
• | Balance Sheet: As of September 30, 2018, HTA had total leverage of 29.7%, measured as debt less cash and cash equivalents to total capitalization, and 5.3x, measured as debt less cash and cash equivalents to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for real estate (“Adjusted EBITDAre”). Total liquidity at the end of the quarter was $1.2 billion, including $994.5 million of availability under HTA’s unsecured revolving credit facility and $225.5 million of cash and cash equivalents. |
• | Debt: In August 2018, HTA prepaid approximately $72.6 million of its fixed and variable rate mortgages, including the settlement of three cash flow hedges, utilizing net proceeds from the Greenville Disposition to do so. Additionally, in August 2018, HTA’s operating partnership, HTALP, entered into a modification of its $200.0 million unsecured term loan previously due in 2023. This modification decreased pricing at HTA’s current credit rating by 65 bps. The maturity date was also extended by five months to January 2024. The other material terms of the unsecured term loan prior to the modification remained substantially unchanged. |
• | Stock Repurchase Plan: In August 2018, HTA’s Board of Directors approved a stock repurchase plan authorizing HTA to purchase up to $300.0 million of its common stock from time to time. During the nine months ended September 30, 2018, HTA repurchased 628,002 shares of its common stock at an average price of $26.25 per share, for an aggregate amount of approximately $16.5 million. As of September 30, 2018, the remaining amount of common stock available for repurchase under the stock repurchase plan was approximately $283.5 million. |
• | Topic 842 Leases: In February 2016, the Financial Accounting Standards Board issued Topic 842, which is effective for HTA as of January 1, 2019. As part of Topic 842, companies are required to expense initial direct costs that are currently capitalized. For the nine months ended September 30, 2018, HTA capitalized approximately $3.7 million of internal costs related to leasing activities. Utilizing a traditional third party leasing commission structure of 3% of gross lease value, total leasing commissions would have totaled over $9 million during the nine months ended September 30, 2018. |
• | Debt: Subsequent to September 30, 2018, HTA prepaid approximately $67.2 million of its fixed rate mortgages. HTA did not incur any prepayment fees related to this transaction. |
• | Dividends: On October 25, 2018, HTA’s Board of Directors announced a quarterly dividend of $0.310 per share of common stock and per OP Unit. The quarterly dividend is to be paid on January 9, 2019 to stockholders of record of its common stock and holders of its OP Units on January 2, 2019. |
• | Stock Repurchase Plan: Subsequent to September 30, 2018, HTA repurchased 289,519 shares of its common stock at an average price of $25.69 per share, for an aggregate amount of approximately $7.4 million under its stock repurchase plan. |
September 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Real estate investments: | ||||||||
Land | $ | 483,541 | $ | 485,319 | ||||
Building and improvements | 5,743,439 | 5,830,824 | ||||||
Lease intangibles | 604,215 | 639,199 | ||||||
Construction in progress | 27,273 | 14,223 | ||||||
6,858,468 | 6,969,565 | |||||||
Accumulated depreciation and amortization | (1,151,490 | ) | (1,021,691 | ) | ||||
Real estate investments, net | 5,706,978 | 5,947,874 | ||||||
Investment in unconsolidated joint venture | 67,592 | 68,577 | ||||||
Cash and cash equivalents | 225,518 | 100,356 | ||||||
Restricted cash | 14,639 | 18,204 | ||||||
Receivables and other assets, net | 213,482 | 207,857 | ||||||
Other intangibles, net | 100,475 | 106,714 | ||||||
Total assets | $ | 6,328,684 | $ | 6,449,582 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Debt | $ | 2,609,659 | $ | 2,781,031 | ||||
Accounts payable and accrued liabilities | 160,246 | 167,852 | ||||||
Derivative financial instruments - interest rate swaps | — | 1,089 | ||||||
Security deposits, prepaid rent and other liabilities | 55,753 | 61,222 | ||||||
Intangible liabilities, net | 62,887 | 68,203 | ||||||
Total liabilities | 2,888,545 | 3,079,397 | ||||||
Commitments and contingencies | ||||||||
Redeemable noncontrolling interests | 6,610 | 6,737 | ||||||
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; 207,231,171 and 204,892,118 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 2,072 | 2,049 | ||||||
Additional paid-in capital | 4,574,913 | 4,508,528 | ||||||
Accumulated other comprehensive income | 648 | 274 | ||||||
Cumulative dividends in excess of earnings | (1,224,006 | ) | (1,232,069 | ) | ||||
Total stockholders’ equity | 3,353,627 | 3,278,782 | ||||||
Noncontrolling interests | 79,902 | 84,666 | ||||||
Total equity | 3,433,529 | 3,363,448 | ||||||
Total liabilities and equity | $ | 6,328,684 | $ | 6,449,582 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 175,038 | $ | 175,431 | $ | 523,826 | $ | 438,949 | |||||||
Interest and other operating income | 97 | 563 | 302 | 1,271 | |||||||||||
Total revenues | 175,135 | 175,994 | 524,128 | 440,220 | |||||||||||
Expenses: | |||||||||||||||
Rental | 55,789 | 56,331 | 165,364 | 138,874 | |||||||||||
General and administrative | 8,770 | 8,283 | 26,281 | 25,178 | |||||||||||
Transaction | 346 | 261 | 933 | 5,618 | |||||||||||
Depreciation and amortization | 70,568 | 70,491 | 210,064 | 172,900 | |||||||||||
Impairment | 4,281 | — | 8,887 | 5,093 | |||||||||||
Total expenses | 139,754 | 135,366 | 411,529 | 347,663 | |||||||||||
Income before other income (expense) | 35,381 | 40,628 | 112,599 | 92,557 | |||||||||||
Interest income (expense): | |||||||||||||||
Interest related to derivative financial instruments | 169 | (264 | ) | 297 | (827 | ) | |||||||||
Gain on change in fair value of derivative financial instruments, net | — | — | — | 884 | |||||||||||
Total interest related to derivative financial instruments, including net change in fair value of derivative financial instruments | 169 | (264 | ) | 297 | 57 | ||||||||||
Interest related to debt | (25,003 | ) | (25,924 | ) | (77,689 | ) | (59,688 | ) | |||||||
Gain on sale of real estate, net | 166,372 | — | 166,372 | 3 | |||||||||||
Loss on extinguishment of debt, net | (1,092 | ) | (774 | ) | (1,092 | ) | (11,192 | ) | |||||||
Income from unconsolidated joint venture | 432 | 318 | 1,405 | 381 | |||||||||||
Other income (expense) | 89 | (27 | ) | 129 | (13 | ) | |||||||||
Net income | $ | 176,348 | $ | 13,957 | $ | 202,021 | $ | 22,105 | |||||||
Net income attributable to noncontrolling interests | (3,362 | ) | (194 | ) | (3,887 | ) | (715 | ) | |||||||
Net income attributable to common stockholders | $ | 172,986 | $ | 13,763 | $ | 198,134 | $ | 21,390 | |||||||
Earnings per common share - basic: | |||||||||||||||
Net income attributable to common stockholders | $ | 0.83 | $ | 0.07 | $ | 0.96 | $ | 0.12 | |||||||
Earnings per common share - diluted: | |||||||||||||||
Net income attributable to common stockholders | $ | 0.82 | $ | 0.07 | $ | 0.94 | $ | 0.12 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 207,513 | 200,674 | 205,950 | 173,189 | |||||||||||
Diluted | 211,444 | 204,795 | 209,968 | 177,410 | |||||||||||
Dividends declared per common share | $ | 0.310 | $ | 0.305 | $ | 0.920 | $ | 0.905 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 202,021 | $ | 22,105 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and other | 203,550 | 169,057 | |||||
Share-based compensation expense | 7,830 | 5,493 | |||||
Impairment | 8,887 | 5,093 | |||||
Income from unconsolidated joint venture | (1,405 | ) | (381 | ) | |||
Distributions from unconsolidated joint venture | 1,680 | — | |||||
Gain on sale of real estate, net | (166,372 | ) | (3 | ) | |||
Loss on extinguishment of debt, net | 1,092 | 11,192 | |||||
Change in fair value of derivative financial instruments | — | (884 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Receivables and other assets, net | (7,820 | ) | (19,854 | ) | |||
Accounts payable and accrued liabilities | (5,932 | ) | 29,566 | ||||
Prepaid rent and other liabilities | (2,780 | ) | 7,158 | ||||
Net cash provided by operating activities | 240,751 | 228,542 | |||||
Cash flows from investing activities: | |||||||
Investments in real estate | (17,389 | ) | (2,357,570 | ) | |||
Investment in unconsolidated joint venture | — | (68,839 | ) | ||||
Development of real estate | (29,593 | ) | (19,163 | ) | |||
Proceeds from the sale of real estate | 302,440 | 4,746 | |||||
Capital expenditures | (61,136 | ) | (42,990 | ) | |||
Collection of real estate notes receivable | 524 | — | |||||
Net cash provided by (used in) investing activities | 194,846 | (2,483,816 | ) | ||||
Cash flows from financing activities: | |||||||
Borrowings on unsecured revolving credit facility | 145,000 | 515,000 | |||||
Payments on unsecured revolving credit facility | (145,000 | ) | (528,000 | ) | |||
Proceeds from unsecured senior notes | — | 900,000 | |||||
Payments on secured mortgage loans | (173,212 | ) | (75,444 | ) | |||
Deferred financing costs | (782 | ) | (16,902 | ) | |||
Debt extinguishment costs | (1,909 | ) | (10,391 | ) | |||
Security deposits | 499 | 1,932 | |||||
Proceeds from issuance of common stock | 72,814 | 1,624,222 | |||||
Issuance of operating partnership units | 411 | — | |||||
Repurchase and cancellation of common stock | (19,431 | ) | (3,413 | ) | |||
Dividends paid | (188,414 | ) | (145,877 | ) | |||
Distributions paid to noncontrolling interest of limited partners | (3,976 | ) | (4,019 | ) | |||
Net cash (used in) provided by financing activities | (314,000 | ) | 2,257,108 | ||||
Net change in cash, cash equivalents and restricted cash | 121,597 | 1,834 | |||||
Cash, cash equivalents and restricted cash - beginning of period | 118,560 | 25,045 | |||||
Cash, cash equivalents and restricted cash - end of period | $ | 240,157 | $ | 26,879 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 176,348 | $ | 13,957 | $ | 202,021 | $ | 22,105 | |||||||
General and administrative expenses | 8,770 | 8,283 | 26,281 | 25,178 | |||||||||||
Transaction expenses (1) | 346 | 261 | 933 | 5,618 | |||||||||||
Depreciation and amortization expense | 70,568 | 70,491 | 210,064 | 172,900 | |||||||||||
Impairment | 4,281 | — | 8,887 | 5,093 | |||||||||||
Interest expense and net change in fair value of derivative financial instruments | 24,834 | 26,188 | 77,392 | 59,631 | |||||||||||
Gain on sale of real estate, net | (166,372 | ) | — | (166,372 | ) | (3 | ) | ||||||||
Loss on extinguishment of debt, net | 1,092 | 774 | 1,092 | 11,192 | |||||||||||
Income from unconsolidated joint venture | (432 | ) | (318 | ) | (1,405 | ) | (381 | ) | |||||||
Other (income) expense | (89 | ) | 27 | (129 | ) | 13 | |||||||||
NOI | $ | 119,346 | $ | 119,663 | $ | 358,764 | $ | 301,346 | |||||||
NOI percentage growth | (0.3 | )% | 19.1 | % | |||||||||||
NOI | $ | 119,346 | $ | 119,663 | $ | 358,764 | $ | 301,346 | |||||||
Straight-line rent adjustments, net | (2,746 | ) | (3,009 | ) | (8,289 | ) | (5,834 | ) | |||||||
Amortization of (below) and above market leases/leasehold interests, net | (65 | ) | 214 | 190 | 246 | ||||||||||
Notes receivable interest income and other GAAP adjustments | (33 | ) | (588 | ) | (218 | ) | (1,163 | ) | |||||||
Cash NOI | $ | 116,502 | $ | 116,280 | $ | 350,447 | $ | 294,595 | |||||||
Acquisitions not owned/operated for all periods presented and disposed properties Cash NOI | (6,065 | ) | (7,337 | ) | (112,557 | ) | (59,865 | ) | |||||||
Redevelopment Cash NOI | (607 | ) | (1,540 | ) | (1,923 | ) | (4,072 | ) | |||||||
Intended for sale Cash NOI | (1,007 | ) | (1,243 | ) | (2,815 | ) | (3,063 | ) | |||||||
Same-Property Cash NOI (2) | $ | 108,823 | $ | 106,160 | $ | 233,152 | $ | 227,595 | |||||||
Same-Property Cash NOI percentage growth | 2.5 | % | 2.4 | % | |||||||||||
(1) For the nine months ended September 30, 2017, transaction costs included $4.6 million of non-incremental costs related to the Duke acquisition. | |||||||||||||||
(2) Same-Property includes 403 and 317 buildings for the three and nine months ended September 30, 2018 and 2017, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income attributable to common stockholders | $ | 172,986 | $ | 13,763 | $ | 198,134 | $ | 21,390 | |||||||
Depreciation and amortization expense related to investments in real estate | 70,004 | 70,021 | 208,445 | 171,678 | |||||||||||
Gain on sale of real estate, net | (166,372 | ) | — | (166,372 | ) | (3 | ) | ||||||||
Impairment | 4,281 | — | 8,887 | 5,093 | |||||||||||
Proportionate share of joint venture depreciation and amortization | 463 | 464 | 1,277 | 506 | |||||||||||
FFO attributable to common stockholders | $ | 81,362 | $ | 84,248 | $ | 250,371 | $ | 198,664 | |||||||
Transaction expenses | 346 | 261 | 789 | 975 | |||||||||||
Gain on change in fair value of derivative financial instruments, net | — | — | — | (884 | ) | ||||||||||
Loss on extinguishment of debt, net | 1,092 | 774 | 1,092 | 11,192 | |||||||||||
Noncontrolling income from partnership units included in diluted shares | 3,344 | 166 | 3,822 | 635 | |||||||||||
Other normalizing items, net (1) | — | — | 144 | 4,643 | |||||||||||
Normalized FFO attributable to common stockholders | $ | 86,144 | $ | 85,449 | $ | 256,218 | $ | 215,225 | |||||||
Other (income) expense | (89 | ) | 27 | (129 | ) | 13 | |||||||||
Non-cash compensation expense | 2,127 | 1,654 | 7,830 | 5,493 | |||||||||||
Straight-line rent adjustments, net | (2,746 | ) | (3,009 | ) | (8,289 | ) | (5,834 | ) | |||||||
Amortization of (below) and above market leases/leasehold interests and corporate assets, net | 499 | 683 | 1,809 | 1,467 | |||||||||||
Deferred revenue - tenant improvement related | (1 | ) | (12 | ) | (70 | ) | (23 | ) | |||||||
Amortization of deferred financing costs and debt discount/premium, net | 1,277 | 1,290 | 3,857 | 2,929 | |||||||||||
Recurring capital expenditures, tenant improvements and leasing commissions | (18,397 | ) | (11,315 | ) | (44,258 | ) | (31,020 | ) | |||||||
Normalized FAD attributable to common stockholders | $ | 68,814 | $ | 74,767 | $ | 216,968 | $ | 188,250 | |||||||
Net income attributable to common stockholders per diluted share | $ | 0.82 | $ | 0.07 | $ | 0.94 | $ | 0.12 | |||||||
FFO adjustments per diluted share, net | (0.44 | ) | 0.34 | 0.25 | 1.00 | ||||||||||
FFO attributable to common stockholders per diluted share | $ | 0.38 | $ | 0.41 | $ | 1.19 | $ | 1.12 | |||||||
Normalized FFO adjustments per diluted share, net | 0.03 | 0.01 | 0.03 | 0.09 | |||||||||||
Normalized FFO attributable to common stockholders per diluted share | $ | 0.41 | $ | 0.42 | $ | 1.22 | $ | 1.21 | |||||||
Weighted average diluted common shares outstanding | 211,444 | 204,795 | 209,968 | 177,410 | |||||||||||
(1) For the nine months ended September 30, 2017, other normalizing items included $4.6 million of non-incremental costs related to the Duke acquisition that were included in transaction expenses on HTA’s condensed consolidated statements of operations. |
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Ticker: HTAEvents:
CIK: 1360604
Form Type: 8-K Corporate News
Accession Number: 0001360604-18-000098
Submitted to the SEC: Thu Oct 25 2018 4:14:26 PM EST
Accepted by the SEC: Thu Oct 25 2018
Period: Thursday, October 25, 2018
Industry: Real Estate Investment Trusts