Healthcare Realty Trust Reports Normalized FFO of $0.33 Per Share for the Fourth Quarter

HEALTHCARE REALTY TRUST INCORPORATED

Consolidated Statements of Operations (1)

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2011

2010

2011

2010

REVENUES

Master lease rent

$      13,073

$      12,758

$      54,930

$      52,262

Property operating

58,962

50,121

222,039

189,778

Straight-line rent

1,168

586

4,771

2,627

Mortgage interest

1,723

669

6,973

2,377

Other operating

1,516

2,242

7,936

8,630

76,442

66,376

296,649

255,674

EXPENSES

General and administrative

4,523

4,380

20,991

16,891

Property operating

28,791

26,037

115,415

100,314

Impairment

-

-

-

1,259

Bad debt, net

(169)

9

(249)

(431)

Depreciation

20,894

17,561

78,088

66,393

Amortization

2,480

1,480

8,257

5,373

56,519

49,467

222,502

189,799

OTHER INCOME (EXPENSE)

Loss on extinguishment of debt

-

-

(1,986)

(480)

Interest expense

(18,492)

(17,908)

(76,038)

(65,710)

Interest and other income, net

201

615

820

2,403

(18,291)

(17,293)

(77,204)

(63,787)

INCOME (LOSS) FROM CONTINUING OPERATIONS

1,632

(384)

(3,057)

2,088

DISCONTINUED OPERATIONS

Income from discontinued operations

641

876

2,535

4,059

Impairments

(4,999)

(150)

(6,697)

(6,252)

Gain on sales of real estate properties

5,642

40

7,035

8,352

INCOME FROM DISCONTINUED OPERATIONS

1,284

766

2,873

6,159

NET INCOME (LOSS)

2,916

382

(184)

8,247

Less:  Net income attributable to noncontrolling interests

-

(2)

(30)

(47)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

$        2,916

$           380

$         (214)

$        8,200

BASIC EARNINGS (LOSS) PER COMMON SHARE

Income (loss) from continuing operations

$          0.02

$        (0.01)

$        (0.04)

$          0.03

Discontinued operations

0.02

0.02

0.04

0.10

Net income (loss) attributable to common stockholders

$          0.04

$          0.01

$          0.00

$          0.13

DILUTED EARNINGS (LOSS) PER COMMON SHARE

Income (loss) from continuing operations

$          0.02

$        (0.01)

$        (0.04)

$          0.03

Discontinued operations

0.02

0.02

0.04

0.10

Net income (loss) attributable to common stockholders

$          0.04

$          0.01

$          0.00

$          0.13

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC

76,404,709

63,176,732

72,720,147

61,722,786

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED

77,474,951

63,176,732

72,720,147

62,770,826

(1)

The 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

Consolidated Statements of Cash Flows (1)

(Dollars in thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2011

2010

2011

2010

Cash flows from operating activities:

Net income (loss)

$  2,916

$        382

$      (184)

$     8,247

NON-CASH ITEMS:

Depreciation and amortization - real estate

23,062

19,011

85,362

72,213

Depreciation and amortization - other

1,942

1,399

7,026

5,681

Provision for bad debt, net

(95)

9

(160)

(409)

Impairments

4,999

150

6,697

7,511

Straight-line rent receivable

(1,137)

(549)

(4,630)

(2,472)

Straight-line rent liability

119

(217)

488

92

Stock-based compensation

650

566

2,922

2,411

Provision for deferred post-retirement benefits

461

223

1,844

1,390

Other non-cash items

-

-

-

(542)

  Total non-cash items

30,001

20,592

99,549

85,875

OTHER ITEMS:

Accounts payable and accrued liabilities

12,148

(3,524)

10,770

5,834

Other liabilities

1,822

(1,098)

7,939

470

Other assets

(3,459)

(2,212)

(7,993)

(9,137)

Gain on sales of real estate properties

(5,642)

(40)

(7,035)

(8,352)

Loss on extinguishment of debt

-

-

1,986

480

Payment of partial pension settlement

-

(2,240)

-

(2,582)

  Total other items

4,869

(9,114)

5,667

(13,287)

Net cash provided by operating activities

37,786

11,860

105,032

80,835

Cash flows from investing activities:

Acquisition and development of real estate properties

(50,255)

(185,381)

(230,106)

(369,034)

Funding of mortgages and notes receivable

(9,953)

(11,188)

(101,931)

(25,109)

Proceeds from sales of real estate

14,579

1,191

19,572

34,512

Proceeds from mortgages and notes receivable repayments

2,809

1,816

17,797

9,201

Net cash used in investing activities

(42,820)

(193,562)

(294,668)

(350,430)

Cash flows from financing activities:

Net borrowings (repayments) on unsecured credit facility

37,000

(131,000)

212,000

(50,000)

Borrowings on notes and bonds payable

-

396,800

-

396,800

Repayments on notes and bonds payable

(1,166)

(757)

(3,703)

(2,516)

Repurchase of notes payable

-

-

(280,201)

(8,556)

Dividends paid

(23,352)

(19,340)

(89,270)

(75,821)

Proceeds from issuance of common stock

80

38,761

251,916

118,205

Purchase of noncontrolling interests

-

-

(1,591)

-

Common stock redemptions

(35)

-

(86)

-

Debt issuance and assumption costs

(6,806)

(483)

(7,728)

(1,199)

Capital contributions received from noncontrolling interests

-

(53)

-

633

Distributions to noncontrolling interest holders

(3)

(82)

(284)

(481)

Net cash provided by financing activities

5,718

283,846

81,053

377,065

Increase (decrease) in cash and cash equivalents

684

102,144

(108,583)

107,470

Cash and cash equivalents, beginning of period

4,054

11,177

113,321

5,851

Cash and cash equivalents, end of period

$  4,738

$ 113,321

$    4,738

$ 113,321

(1)  The 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 December 31,

Twelve Months Ended December 31,

2011

2010

2011

2010

Net Income (loss) Attributable to Common Stockholders

$                       2,916

$                             380

$                     (214)

$                        8,200

  Gain on sales of real estate properties

(5,642)

(40)

(7,035)

(8,352)

  Impairments

4,999

150

6,697

7,511

  Real estate depreciation and amortization

23,062

18,883

85,234

71,725

  Total adjustments

22,419

18,993

84,896

70,884

Funds From Operations

$                     25,335

$                        19,373

$                  84,682

$                      79,084

Funds From Operations Per Common Share - Diluted

$                         0.33

$                            0.30

$                      1.15

$                          1.26

Weighted Average Common Shares Outstanding - Diluted

77,474,951

64,241,164

73,807,041

62,770,826

Reconciliation of Funds Available for Distribution (2):

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

December 31, 2011

Net Income Attributable to Common Stockholders

$                          2,916

  Gain on sales of real estate properties

(5,642)

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

30,001

Funds Available For Distribution

$                        27,275

Funds Available For Distribution Per Common Share - Diluted

$                            0.35

Weighted Average Common Shares Outstanding - Diluted

77,474,951

Normalized Funds from Operations and Funds Available for Distribution:

(Dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

December 31, 2011

Funds From Operations

$                        25,335

Adjustments:

  Acquisition costs

199

  Write off of deferred financing costs upon renewal of line of credit facility

393

Normalized Funds From Operations

$                        25,927

Normalized Funds From Operations Per Common Share - Diluted

$                            0.33

Weighted Average Common Shares Outstanding - Diluted

77,474,951

Three Months Ended

December 31, 2011

Funds Available For Distribution

$                        27,275

Adjustments:

  Acquisition costs

199

Normalized Funds Available For Distribution

$                        27,474

Normalized Funds Available For Distribution Per Common Share - Diluted

$                            0.35

Weighted Average Common Shares Outstanding - Diluted

77,474,951

(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.  The SEC indicated in 2003 that impairment charges (losses) could not be added back to net income attributable to common stockholders in calculating FFO.  However, in late October 2011, NAREIT issued an alert indicating that the SEC staff recently advised NAREIT that it currently takes no position on the matter of whether impairment charges should be added back to net income to compute FFO and NAREIT affirmed its original definition of FFO.  For 2011, the Company is following  the NAREIT definition to exclude impairment charges and has restated all prior periods to exclude impairment charges in calculating FFO and FFO per share to agree with the 2011 presentation.

(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 Consolidated Statements of Cash Flows that are included in this earnings release.