Healthcare Realty Trust Reports Normalized FFO of $0.31 Per Share for the Third Quarter

HEALTHCARE REALTY TRUST INCORPORATED

Condensed Consolidated Statements of Operations (1)

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

REVENUES

Master lease rent

$            14,049

$            13,303

$            43,312

$            41,056

Property operating 

57,078

47,716

163,280

140,008

Straight-line rent

1,109

639

3,536

1,989

Mortgage interest 

1,776

601

5,250

1,708

Other operating 

2,067

2,128

6,425

6,399

76,079

64,387

221,803

191,160

EXPENSES

General and administrative

5,530

4,243

16,469

12,513

Property operating 

30,851

26,681

87,423

75,116

Impairment

-

1,259

-

1,259

Bad debt, net 

(353)

39

(80)

(438)

Depreciation

19,959

16,975

57,928

49,582

Amortization

2,214

1,237

5,753

3,869

58,201

50,434

167,493

141,901

OTHER INCOME (EXPENSE)

Loss on extinguishment of debt

-

-

(1,986)

(480)

Interest expense

(17,928)

(15,923)

(57,546)

(47,803)

Interest and other income, net

205

187

636

1,799

(17,723)

(15,736)

(58,896)

(46,484)

INCOME (LOSS) FROM CONTINUING OPERATIONS

155

(1,783)

(4,586)

2,775

DISCONTINUED OPERATIONS

Income from discontinued operations

690

485

1,791

2,878

Impairments

(1,551)

(6,102)

(1,698)

(6,102)

Gain on sales of real estate properties

1,357

4,092

1,393

8,313

INCOME (LOSS) FROM DISCONTINUED OPERATIONS

496

(1,525)

1,486

5,089

NET INCOME (LOSS)

651

(3,308)

(3,100)

7,864

Less:  Net (income) loss attributable to noncontrolling interests

(4)

60

(31)

(44)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

$                 647

$             (3,248)

$             (3,131)

$              7,820

BASIC EARNINGS (LOSS) PER COMMON SHARE

Income (loss) from continuing operations

$                0.00

$               (0.03)

$               (0.06)

$                0.05

Discontinued operations 

0.01

(0.02)

0.02

0.08

Net income (loss) attributable to common stockholders

$                0.01

$               (0.05)

$               (0.04)

$                0.13

DILUTED EARNINGS (LOSS) PER COMMON SHARE

Income (loss) from continuing operations

$                0.00

$               (0.03)

$               (0.06)

$                0.05

Discontinued operations 

0.01

(0.02)

0.02

0.08

Net income (loss) attributable to common stockholders

$                0.01

$               (0.05)

$               (0.04)

$                0.13

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC

76,139,055

62,369,773

71,478,463

61,232,810

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED

77,177,114

62,369,773

71,478,463

62,269,413

(1)

The Condensed Consolidated Statements of Operations do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

HEALTHCARE REALTY TRUST INCORPORATED

Condensed Consolidated Statements of Cash Flows (1)

(Dollars in thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Cash flows from operating activities:

Net income (loss)

$                   651

$               (3,308)

$               (3,100)

$                7,864

Non-cash items:

Depreciation and amortization - real estate

21,709

18,202

62,300

53,202

Depreciation and amortization - other

1,757

1,358

5,084

4,282

Provision for bad debt, net

(352)

39

(65)

(418)

Impairments

1,551

7,361

1,698

7,361

Straight-line rent receivable

(1,098)

(604)

(3,493)

(1,923)

Straight-line rent liability

123

103

369

309

Stock-based compensation

670

525

2,272

1,845

Provision for deferred post-retirement benefits

465

385

1,383

1,167

Other non-cash items

-

-

-

(542)

  Total non-cash items

24,825

27,369

69,548

65,283

Other items:

Accounts payable and accrued liabilities

(4,030)

4,171

(1,380)

9,358

Other liabilities

(182)

2,056

6,117

1,568

Other assets

844

(6,762)

(4,532)

(6,923)

Gain on sales of real estate properties

(1,357)

(4,092)

(1,393)

(8,313)

Loss on extinguishment of debt

-

-

1,986

480

Payment of partial pension settlement

-

-

-

(342)

  Total other items

(4,725)

(4,627)

798

(4,172)

Net cash provided by operating activities

20,751

19,434

67,246

68,975

Cash flows from investing activities:

Acquisition and development of real estate properties

(96,740)

(129,596)

(179,851)

(183,653)

Funding of mortgages and notes receivable

(8,837)

(11,031)

(91,978)

(13,921)

Proceeds from sales of real estate

1,218

9,698

4,993

33,321

Proceeds from mortgages and notes receivable repayments

14,930

7,316

14,988

7,385

Net cash used in investing activities

(89,429)

(123,613)

(251,848)

(156,868)

Cash flows from financing activities:

Net borrowings on unsecured credit facility

52,000

111,000

175,000

81,000

Repayments on notes and bonds payable

(921)

(648)

(2,537)

(1,759)

Repurchase of notes payable

-

-

(280,201)

(8,556)

Dividends paid

(23,348)

(19,111)

(65,918)

(56,481)

Proceeds from issuance of common stock

27,791

19,995

251,836

79,444

Purchase of noncontrolling interests 

-

-

(1,591)

-

Common stock redemptions

-

-

(51)

-

Debt issuance and assumption costs

(566)

(201)

(922)

(716)

Capital contributions received from noncontrolling interest holders

-

16

-

686

Distributions to noncontrolling interest holders

-

(150)

(281)

(399)

Net cash provided by financing activities

54,956

110,901

75,335

93,219

Increase (decrease) in cash and cash equivalents

(13,722)

6,722

(109,267)

5,326

Cash and cash equivalents, beginning of period

17,776

4,455

113,321

5,851

Cash and cash equivalents, end of period

$                4,054

$              11,177

$                4,054

$              11,177

(1)  The Condensed Consolidated Statements of Cash Flows do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

RECONCILIATION OF FUNDS FROM OPERATIONS (1) (2):

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Net Income (Loss) Attributable to Common Stockholders

$                           647

$                                    (3,248)

$                       (3,131)

$                             7,820

   Gain on sales of real estate properties

(1,357)

(4,092)

(1,393)

(8,313)

   Real estate depreciation and amortization

21,709

18,075

62,173

52,843

   Total adjustments

20,352

13,983

60,780

44,530

Funds From Operations

$                      20,999

$                                    10,735

$                      57,649

$                           52,350

Funds From Operations Per Common Share - Diluted

$                          0.27

$                                        0.17

$                          0.79

$                               0.84

Weighted Average Common Shares Outstanding - Diluted

77,177,114

63,424,706

72,570,555

62,269,413

RECONCILIATION OF FUNDS AVAILABLE FOR DISTRIBUTION (2):

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

September 30, 2011

Net Income Attributable to Common Stockholders

$                                         647

   Gain on sales of real estate properties

(1,357)

   Total non-cash items included in cash flows from operating activities (3)

24,825

Funds Available For Distribution

$                                    24,115

Funds Available For Distribution Per Common Share - Diluted

$                                        0.31

Weighted Average Common Shares Outstanding - Diluted

77,177,114

NORMALIZING OF FUNDS FROM OPERATIONS AND FUNDS AVAILABLE FOR DISTRIBUTION:

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

September 30, 2011

Funds From Operations

$                                    20,999

Adjustments:

   Impairment

1,551

   Acquisition costs

400

   Seasonal utilities

1,300

Normalized Funds From Operations

$                                    24,250

Normalized Funds From Operations Per Common Share - Diluted

$                                        0.31

Weighted Average Common Shares Outstanding - Diluted

77,177,114

Three Months Ended

September 30, 2011

Funds Available For Distribution

$                                    24,115

Adjustments:

   Acquisition costs

400

   Seasonal utilities

1,300

Normalized Funds Available For Distribution

$                                    25,815

Normalized Funds Available For Distribution Per Common Share - Diluted

$                                        0.33

Weighted Average Common Shares Outstanding - Diluted

77,177,114

(1)

Funds from operations (“FFO”) is calculated according to the definition of the National Association of Real Estate Investment Trusts and is comprised primarily 

of net income (loss) attributable to common stockholders and depreciation from real estate, but is not adjusted for certain non-cash income and expense items.

Gains on the sale of real estate properties are excluded from FFO and FFO per share, while impairments are included in FFO and FFO per share. 

(2)

FFO and Funds Available For Distribution ("FAD") do not represent cash generated from operating activities determined in accordance with accounting principles 

generally accepted in the United States of America and are not necessarily indicative of cash available to fund cash needs.  FFO and FAD  should not be

considered alternatives to net income attributable to common stockholders as indicators of the Company's operating performance or as alternatives to cash flow 

as measures of liquidity.

(3)

See the Condensed Consolidated Statements of Cash Flows that are included in this earnings release.