Healthcare Realty Delivers Strong Q4 Performance, Sets Sights on Accelerated Growth in 2025
Healthcare Realty's fourth-quarter 2024 earnings conference call highlighted a year of solid progress for the company. With a fresh perspective and renewed vigor under Interim President and CEO Connie Moore's leadership, Healthcare Realty demonstrated its ability to execute with intensity.
In prepared remarks on the conference call, Moore emphasized the company's confidence in its management team, competitive position, and portfolio. Noting several key executive appointments since her assumption of the role in 2022, Moore highlighted the importance of these changes in driving accelerated value delivery for shareholders. "We elevated existing director, Tom Bohjalian to Independent Chair," she explained. "We appointed three new independent directors with deep industry and leadership experience – Dave Henry, Glenn Rufrano, and Don Wood – and promoted Austen Helfrich to Chief Financial Officer."
Healthcare Realty's operational momentum continued throughout the quarter, with normalized FFO per share reaching $0.40 at the high end of the range provided. This represents a 2.5% year-over-year growth rate, solidifying the company's commitment to delivering value to shareholders. "We did what we said we would do," Moore noted proudly.
The company also achieved significant leasing and occupancy gains, with nearly 600,000 square feet in new lease commitments during the fourth quarter alone – a record for the company. For the year, Healthcare Realty secured 2 million square feet of new leases, another all-time high. Moreover, they delivered 149 basis points of occupancy gains in their multi-tenant portfolio, meeting or exceeding projections.
In addition to operational achievements, Healthcare Realty demonstrated its focus on operational efficiency by reducing controllable operating expenses by 100 basis points. Their capital allocation strategy centered on raising proceeds and accretively repurchasing shares trading at a significant discount. The company generated $1.3 billion in proceeds, including $500 million from non-core asset sales with limited upside potential.
The funds were allocated effectively – $510 million was used to repurchase 31 million shares on a leverage-neutral basis. This move complemented the repayment of $350 million of debt, which brought the company's leverage down to 6.4x, below its forecasted level of 6.5x.
As Healthcare Realty looks ahead to 2025, priorities have shifted toward continued operational growth and momentum, operating efficiencies, and refining their portfolio through strategic asset sales. Focusing on densest and fastest-growing markets will maximize long-term NOI growth potential, while capital allocation will center on significant debt reduction – a strategic decision aimed at further strengthening the company's financial position.
Healthcare Realty's fourth-quarter performance serves as a testament to its ability to adapt and execute on its strategic priorities. With its leadership team refreshed and committed to driving accelerated value delivery for shareholders, the company is well-positioned to continue delivering strong results in the years to come."
