HEALTHCARE TRUST AMERICA SCOTTSDALE, Ariz., Aug. 1, 2016 /PRNewswire/ -- Healthcare Trust of America, Inc. (NYSE: HTA) ("HTA") announced results for the three and six months ended June 30, 2016.
Second Quarter 2016 Highlights
Operating
-- Net Income Attributable to Common Stockholders: Increased 40.7% to $13.1
million, compared to Q2 2015. Earnings per diluted share increased
28.6% to $0.09 per diluted share, compared to Q2 2015.
-- Funds From Operations ("FFO"): As defined by the National Association of
Real Estate Investment Trusts ("NAREIT"), increased 9.4% to $53.3
million, compared to Q2 2015. FFO per diluted share was $0.38,
consistent with Q2 2015.
-- Normalized FFO: Increased 16.3% to $56.5 million, compared to Q2 2015.
-- Normalized FFO Per Diluted Share: Increased 5.3% to $0.40 per diluted
share, compared to Q2 2015.
-- Same-Property Cash Net Operating Income ("NOI"): Increased $1.9 million,
or 3.1%, to $65.2 million, compared to Q2 2015. Same-Property rental
revenue increased $1.5 million, or 2.0%, to $73.4 million, compared to
Q2 2015.
Portfolio
-- Investments: During the quarter, HTA invested $273.8 million to acquire
medical office buildings totaling approximately 919,000 square feet of
gross leasable area ("GLA") that were 96% leased in our key markets of
Columbus, Ohio; Dallas, Texas; and Hartford, Connecticut, and
strategically expanded our presence into two new markets of Birmingham,
Alabama and Portland, Oregon.
-- Dispositions: In June 2016, HTA completed the disposition of four senior
care facilities located in Texas for an aggregate gross sales price of
$26.5 million (approximately 155,000 square feet of GLA), generating a
gain of $4.2 million. These assets were acquired in 2008. At the time
of the sale, HTA had achieved an average annual yield of 9.5%.
-- Leasing: During the quarter, HTA entered into new and renewal leases on
approximately 528,000 square feet of GLA, or 3.1% of its portfolio.
Quarter-to-date, renewal leases included tenant improvements of $0.86
per square foot per year of the lease term and approximately two days of
free rent per year of the lease term. Tenant retention for the
Same-Property portfolio was 87% by GLA for the quarter.
Balance Sheet and Capital Markets
-- Balance Sheet: At the end of the quarter, HTA had total leverage of
26.2% measured as debt to capitalization, and 5.5x measured as debt to
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization.
Total liquidity at the end of the quarter was $591.6 million, including
$583.5 million of availability under its unsecured revolving credit
facility and $8.1 million of cash and cash equivalents.
-- Equity: During the quarter, HTA issued $272.5 million of equity
comprised of $171.9 million from the sale of common stock in an
underwritten public offering at an average price of $28.75 per share,
$70.8 million from the issuance of Class A Operating Partnership Units
in connection with an acquisition transaction, and $29.8 million from
the sale of common stock under the ATM at an average price of $29.75 per
share.
Year-to-Date 2016 Highlights
Operating
-- Net Income Attributable to Common Stockholders: Increased 42.5% to $22.9
million, compared to year-to-date 2015. Earnings per diluted share
increased 30.8% to $0.17 per diluted share, compared to year-to-date
2015.
-- FFO: As defined by NAREIT, increased 9.7% to $100.7 million, compared to
year-to-date 2015. FFO per diluted share increased 2.8% to $0.74 per
diluted share, compared to year-to-date 2015.
-- Normalized FFO: Increased 14.1% to $108.6 million, compared to
year-to-date 2015.
-- Normalized FFO Per Diluted Share: Increased 6.7% to $0.80 per diluted
share, compared to year-to-date 2015.
-- Same-Property Cash NOI: Increased $3.9 million, or 3.1%, to $129.0
million, compared to year-to-date 2015. Same-Property rental revenue
increased $3.0 million, or 2.1%, to $145.4 million, compared to
year-to-date 2015.
Portfolio
-- Investments: Year-to-date, HTA has completed $435.8 million of
investments totaling approximately 1.7 million square feet of GLA that
were 94% leased as of the date of acquisition.
-- Leasing: Year-to-date, HTA entered into new and renewal leases on
approximately 783,000 square feet of GLA, or 4.6% of its portfolio.
Year-to-date, renewal leases included tenant improvements of $1.04 per
square foot per year of the lease term and approximately three days of
free rent per year of the lease term. Tenant retention for the
Same-Property portfolio was 85% by GLA year-to-date.
-- Leased Rate: At the end of the quarter, the leased rate by GLA was
92.2%, an increase from 91.7% as of June 30, 2015. For the
Same-Property portfolio the leased rate increased 40 basis points to
92.7% by GLA, compared to June 30, 2015.
Capital Markets
-- Equity: Year-to-date, HTA issued $365.6 million of equity comprised of
$171.9 million from the sale of common stock in an underwritten public
offering at an average price of $28.75 per share, $70.8 million from the
issuance of Class A Operating Partnership Units in connection with an
acquisition transaction, and $122.9 million from the sale of common
stock under the ATM at an average price of $27.82 per share.
Subsequent Events
-- Debt: In July 2016, HTA issued $350.0 million of senior unsecured
10-year notes, with a coupon of 3.50% per annum. HTA intends to use the
net proceeds of the offering to repay a portion of the outstanding
indebtedness under the revolving credit and term loan facility and for
general corporate purposes, including, without limitation, working
capital and investment in real estate.
-- Dividends: On August 1, 2016, HTA's Board of Directors approved a 1.7%
increase to the Company's quarterly cash dividend of $0.30 per common
share, from $0.295 per common share. The new dividend will be paid on
October 7, 2016 to stockholders of record for its common stock on
October 3, 2016. The dividend represents an annualized rate of $1.20
per share.
Financial Results
Rental Income
Rental income increased 14.0% to $113.1 million for the three months ended June 30, 2016, compared to $99.2 million for the three months ended June 30, 2015.
Net Income
Net income for the three months ended June 30, 2016, was $13.5 million, compared to $9.5 million for the three months ended June 30, 2015.
FFO
FFO, as defined by NAREIT, was $0.38 per diluted share, or $53.3 million, for the three months ended June 30, 2016, compared to $0.38 per diluted share, or $48.7 million, for the three months ended June 30, 2015.
Normalized FFO
Normalized FFO was $0.40 per diluted share, or $56.5 million, for the three months ended June 30, 2016, compared to $0.38 per diluted share, or $48.5 million, for the three months ended June 30, 2015.
Normalized FAD
Normalized Funds Available for Distribution ("Normalized FAD") increased 12.6% to $50.1 million, for the three months ended June 30, 2016, compared to $44.4 million for the three months ended June 30, 2015.
NOI
NOI was $78.2 million for the three months ended June 30, 2016, compared to $70.1 million for the three months ended June 30, 2015.
Same-Property Cash NOI
Same-Property Cash NOI increased $1.9 million, or 3.1%, to $65.2 million, for the three months ended June 30, 2016, compared to $63.3 million for the three months ended June 30, 2015. Same-Property rental revenue increased $1.5 million, or 2.0%, to $73.4 million, for the three months ended June 30, 2016, compared to the three months ended June 30, 2015.
General and Administrative Expenses
General and administrative expenses were $6.8 million for the three months ended June 30, 2016, compared to $6.2 million for the three months ended June 30, 2015.
Interest Expense and Change in Fair Value of Derivative Financial Instruments
The total interest expense and change in fair value of derivative financial instruments for the three months ended June 30, 2016, was $15.3 million, which included $14.6 million of interest expense related to debt and interest rate swaps, and a net loss of $0.7 million on the change in the fair value of HTA's derivative financial instruments.
HTA ended the quarter with a weighted average interest rate of 3.25% per annum, including the impact of interest rate swaps. The weighted average remaining term of the debt portfolio was 4.4 years, including extension options.
Balance Sheet
As of June 30, 2016, HTA had total assets of $3.5 billion, cash and cash equivalents of $8.1 million, and $583.5 million available under its unsecured revolving credit facility (includes the impact of $5.5 million of outstanding letters of credit). The leverage ratio of debt to capitalization was 26.2% as of June 30, 2016.
Leased Rate, Occupancy Rate and Tenant Retention
The leased rate (includes leases which have been executed, but which have not yet commenced) was 92.2% by GLA as of June 30, 2016, an increase from 91.7% as of June 30, 2015. The occupancy rate of HTA's portfolio was 91.6% by GLA as of June 30, 2016, an increase from 91.1% as of June 30, 2015. Tenant retention for the Same-Property portfolio was 87% by GLA for the quarter.
Credit Rated Tenants
Investment grade rated tenants as a percent of annualized base rent was 43% as of June 30, 2016. Additionally, 59% of HTA's annualized base rent as of June 30, 2016 was derived from tenants that have (or whose parent companies have) a credit rating from a nationally recognized rating agency.
In-House Property Management and Leasing Platform
As of June 30, 2016, HTA's in-house property management and leasing platform operated approximately 15.7 million square feet of GLA, or 92% of HTA's total portfolio.
About Healthcare Trust of America, Inc.
Healthcare Trust of America, Inc. (NYSE: HTA) is the largest dedicated owner and operator of medical office buildings ("MOBs") in the United States, based on gross leasable area ("GLA"). We provide the real estate infrastructure for the integrated delivery of healthcare services in highly desirable locations. Over the last decade, we have invested $4.0 billion primarily in MOBs and other healthcare assets comprising 17.0 million square feet of GLA. Our investments are targeted in 20 to 25 key markets that we believe have superior healthcare demographics that support strong, long-term demand for medical office space. We have achieved, and continue to achieve, critical mass within these key markets by expanding our presence through accretive acquisitions, and utilizing our in-house operating expertise through our regionally located property management and leasing platform.
Founded in 2006 and listed on the New York Stock Exchange in 2012, HTA has produced attractive returns for its stockholders that we believe have significantly outperformed the S&P 500 and US REIT indices. More information about HTA can be found on the Company's website at www.htareit.com.
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; and the availability of financing. 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 Annual Report on Form 10-K and in our other filings with the SEC.
Conference Call
HTA will host a conference call and webcast on Tuesday, August 2, 2016 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to review its financial performance and operating results for the three and six months ended June 30, 2016.
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: 10088845
Available August 2, 2016 (one hour after the end of the conference call) to September 5, 2016 at 11:00 a.m. Eastern Time
Supplemental Information
Supplemental financial data are available on the company's website at www.htareit.com.
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
December 31, 2015
June 30, 2016
-------------
ASSETS
Real estate investments:
Land 357,602 303,706
$ $
Building and improvements 2,901,157
3,240,979
Lease intangibles 430,749
459,490
-------
3,635,612
4,058,071
Accumulated depreciation and amortization (676,144)
(741,186)
--------
Real estate investments, net 2,959,468
3,316,885
Cash and cash equivalents 13,070
8,148
Restricted cash and escrow deposits 15,892
16,268
Receivables and other assets, net 141,703
145,851
Other intangibles, net 42,167
45,137
------
Total assets 3,532,289 3,172,300
$ $
=== ===
LIABILITIES AND EQUITY
Liabilities:
Debt 1,631,642 1,590,696
$ $
Accounts payable and accrued liabilities 94,933
90,123
Derivative financial instruments -interest
rate swaps 2,370
5,393
Security deposits, prepaid rent and other
liabilities 46,295
46,241
Intangible liabilities, net 26,611
37,226
------
Total liabilities 1,760,905
1,810,625
Commitments and contingencies
Redeemable noncontrolling interests 4,437
9,462
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; 137,752,741
and 127,026,839 shares issued and
outstanding as of June 30, 2016 and December
31, 2015, respectively 1,270
1,378
Additional paid-in capital 2,328,806
2,625,269
Cumulative dividends in excess of earnings (950,652)
(1,006,888)
----------
Total stockholders' equity 1,379,424
1,619,759
Noncontrolling interests 27,534
92,443
------
Total equity 1,406,958
1,712,202
---------
Total liabilities and equity 3,532,289 3,172,300
$ $
=== ===
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Revenues:
Rental income $113,144 99,243 220,394 197,695
$ $ $
Interest and other operating
income 90 68 155 136
--- --- --- ---
Total revenues 113,234 99,311 220,549 197,831
Expenses:
Rental 35,061 29,237 68,414 59,934
General and administrative 6,813 6,224 13,586 12,799
Acquisition-related 2,062 1,101 3,875 2,458
Depreciation and amortization 44,738 38,066 82,566 74,661
Impairment - 1,655 - 1,655
--- ----- --- -----
Total expenses 88,674 76,283 168,441 151,507
------ ------ ------- -------
Income before other income
(expense) 24,560 23,028 52,108 46,324
Interest expense:
Interest related to derivative
financial instruments (659) (820) (1,304) (1,375)
(Loss) gain on change in fair
value of derivative financial
instruments, net (658) 1,314 (3,450) (696)
---- ----- ------ ----
Total interest related to
derivative financial instruments,
including net change in fair
value of derivative financial
instruments (1,317) 494 (4,754) (2,071)
Interest related to debt (13,989) (14,159) (28,117) (27,963)
Gain on sale of real estate, net 4,212 - 4,212 -
(Loss) gain on extinguishment of
debt, net (22) 121 (22) 121
Other income 72 4 125 19
--- --- --- ---
Net income $13,516 9,488 23,552 16,430
$ $ $
Net income attributable to
noncontrolling interests (442) (196) (618) (334)
---- ---- ---- ----
Net income attributable to common
stockholders $13,074 9,292 22,934 16,096
$ $ $
===
Earnings per common share - basic:
Net income attributable to common
stockholders $0.10 0.07 0.17 0.13
$ $ $
===
Earnings per common share - diluted:
Net income attributable to common
stockholders $0.09 0.07 0.17 0.13
$ $ $
===
Weighted average common shares outstanding:
Basic 136,528 125,194 132,932 125,184
======= ======= ======= =======
Diluted 140,512 127,124 135,876 127,114
======= ======= ======= =======
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
2016 2015
---- ----
Cash flows from operating activities:
Net income $23,552 16,430
$
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and other 81,362 72,905
Share-based compensation expense 3,033 3,104
Bad debt expense 386 289
Gain on sale of real estate, net (4,212) -
Impairment - 1,655
Loss (gain) on extinguishment of debt, net 22 (121)
Change in fair value of derivative
financial instruments 3,450 696
Changes in operating assets and
liabilities:
Receivables and other assets, net (667) (3,885)
Accounts payable and accrued liabilities (5,983) (12,024)
Prepaid rent and other liabilities (4,543) 8,117
------ -----
Net cash provided by operating activities 96,400 87,166
------ ------
Cash flows from investing activities:
Investments in real estate (336,760) (224,345)
Proceeds from the sale of real estate 23,368 -
Capital expenditures (21,826 (13,131)
Restricted cash, escrow deposits and other
assets (426) 4,550
Net cash used in investing activities (335,644) (232,926)
-------- --------
Cash flows from financing activities:
Borrowings on unsecured revolving credit
facility 336,000 361,000
Payments on unsecured revolving credit
facility (293,000) (167,000)
Borrowings on unsecured term loans - 100,000)
Payments on secured real estate term loan
and mortgage loans (22,791) (67,171)
Deferred financing costs - (276)
Security deposits 765 183
Proceeds from issuance of common stock 292,984 -
Repurchase and cancellation of common
stock (2,287) (1,298)
Dividends paid (76,018) (72,584)
Distributions paid to noncontrolling
interest of limited partners (1,331) (930)
------ ----
Net cash provided by financing activities 234,322 151,924
------- -------
Net change in cash and cash equivalents (4,922) 6,164
Cash and cash equivalents -beginning of
period 13,070 10,413
------ ------
Cash and cash equivalents - end of period $8,148 16,577
$
===
HEALTHCARE TRUST OF AMERICA, INC.
NOI, CASH NOI AND SAME-PROPERTY CASH NOI
(In thousands)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net income
$13,516 9,488 23,552 16,430
$ $ $
General and administrative
expenses 6,813 6,224 13,586 12,799
Acquisition-related expenses 2,062 1,101 3,875 2,458
Depreciation and amortization
expense 44,738 38,066 82,566 74,661
Impairment - 1,655 - 1,655
Interest expense and net
change in fair value of
derivative financial
instruments 15,306 13,665 32,871 30,034
Gain on sale of real estate,
net (4,212) - (4,212) -
Loss (gain) on extinguishment
of debt, net 22 (121) 22 (121)
Other income (72) (4) (125) (19)
--- --- ---- ---
70,074
$
NOI $78,173 $ $152,135 137,897
======= === ======== =======
NOI percentage growth 11.6% 10.3%
==== ====
70,074
$
NOI $78,173 $ $152,135 137,897
Straight-line rent
adjustments, net (1,024) (2,066) (2,475) (4,085)
Amortization of below and
above market leases/
leasehold interests, net 87 572 520 1,152
Lease termination fees (10) - (26) (11)
--- --- --- ---
150,154
Cash NOI $77,226 68,580 $ 134,953
$ $
Non Same-Property Cash NOI (11,977) (5,270) (21,123) (9,775)
------- ------ ------- ------
Same-Property Cash NOI (1) $65,249 63,310 129,031 125,178
$ $ $
===
Same-Property Cash NOI
percentage growth 3.1% 3.1%
=== ===
(1) Same-Property
includes 280 and 278
buildings for the three
and six months ended
June 30, 2016 and 2015.
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) acquisition-related expenses; (iii) depreciation and amortization expense; (iv) impairment; (v) interest expense and net change in fair value of derivative financial instruments; (vi) gain or loss on sales of real estate; (vii) gain or loss on extinguishment of debt; and (viii) 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 our 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 (iii) lease termination fees. 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 our 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 properties referred to as "Same-Property". Same-Property Cash NOI excludes properties which have not been owned and operated by HTA during the entire span of all periods presented, excluding properties intended for disposition in the near term, notes receivable interest income and 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 our 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
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net income attributable to common stockholders
$
13,074 $9,292 22,934 16,096
$ $
Depreciation and amortization
expense related to investments
in real estate 44,411 37,752 81,932 74,032
Gain on sale of real estate, net (4,212 - (4,212) -
Impairment - 1,655 - 1,655
--- ----- --- -----
FFO attributable to common
stockholders $53,273 48,699 100,654 91,783
$ $ $
Acquisition-related expenses 2,062 1,101 3,875 2,458
Loss (gain) on change in fair
value of derivative financial
instruments, net 658 (1,314 3,450 696
Loss (gain) on extinguishment of
debt, net 22 (121 22 (121
Noncontrolling income from
partnership units included in
diluted shares 446 172 591 277
Other normalizing items, net - - (16) 89
--- --- --- ---
Normalized FFO attributable to
common stockholders $56,461 48,537 108,576 95,182
$ $ $
Other income (72) (4) (125) (19)
Non-cash compensation expense 1,230 1,190 3,033 3,104
Straight-line rent adjustments,
net (1,024) (2,066) (2,475) (4,085)
Amortization of below and above
market leases/leasehold
interests and corporate assets,
net 413 572 1,153 1,152
Deferred revenue -tenant
improvement related (7 (140 (7 (269
Amortization of deferred
financing costs and debt
discount/premium, net 776 804 1,493 1,743
Recurring capital expenditures,
tenant improvements and leasing
commissions (7,716) (4,447) (12,984) (8,056)
------ ------ ------- ------
Normalized FAD attributable to
common stockholders $50,061 44,446 98,664 88,752
$ $ $
===
Net income attributable to
common stockholders per diluted
share $0.09 0.07 0.17 0.13
$ $ $
FFO adjustments per diluted
share, net 0.29 0.31 0.57 0.59
---- ---- ---- ----
FFO attributable to common
stockholders per diluted share $0.38 0.38 0.74 0.72
$ $ $
Normalized FFO adjustments per
diluted share, net 0.02 0.00 0.06 0.03
---- ---- ---- ----
Normalized FFO attributable to
common stockholders per diluted
share $0.40 0.38 0.80 0.75
$ $ $
Weighted average diluted common
shares outstanding 140,512 127,124 135,876 127,114
======= ======= ======= =======
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. HTA presents this non-GAAP financial measure because it considers it an important supplemental measure of its operating performance and believes it is 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. 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) acquisition-related expenses; (ii) gain or loss on change in fair value of derivative financial instruments; (iii) gain or loss on extinguishment of debt; (iv) noncontrolling income or loss from partnership units included in diluted shares; and (v) other normalizing items, which include items that are unusual and infrequent in nature. HTA presents this non-GAAP financial measure because it allows for the comparison of our operating performance to other REITs and between periods on a consistent basis. 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. Normalized FFO 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 our financial performance, nor is it indicative of cash available to fund cash needs. Normalized FFO should be reviewed in connection with other GAAP measurements.
HTA also computes Normalized FAD, which excludes from Normalized FFO: (i) other income or expense; (ii) non-cash compensation expense; (iii) straight-line rent adjustments; (iv) amortization of below and above market leases/leasehold interests and corporate assets; (v) deferred revenue - tenant improvement related; (vi) amortization of deferred financing costs and debt premium/discount; and (vii) recurring capital expenditures, tenant improvements and leasing commissions. HTA believes this non-GAAP financial measure provides a meaningful supplemental measure of our 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 our financial performance, nor is it indicative of cash available to fund cash needs. Normalized FAD should be reviewed in connection with other GAAP measurements.
PRESS RELEASE
Financial Contact:
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Robert A. Milligan
Chief Financial Officer
480.998.3478
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SOURCE Healthcare Trust of America, Inc.
