Healthcare Realty's Q2 2026 Earnings Call: A Year of Outperformance and Strategic Progress
July 31, 2026
In a call that marked one year since the company laid out its strategic plan to improve operational performance, strengthen its portfolio, reestablish credibility, and maximize shareholder value, Healthcare Realty's President and CEO, Peter Scott, reported on the company's second quarter earnings for 2026.
According to Scott, the company is "outperforming every one of our key objectives over the last four quarters," with same-store NOI growth averaging 5.7%, same-store occupancy increasing to nearly 93%, retention averaging nearly 90%, and cash leasing spreads averaging 4.1%. Additionally, leverage is down nearly a full turn, and guidance has been raised every quarter along the way.
"Our outperformance has been a collaborative effort across the entire organization," Scott emphasized, "and would not have been possible without the hard work of all 500-plus employees and the support of our best-in-class board of directors." He further stated that the company had built a winning mentality and culture of executing with purpose and intensity that was now pervasive throughout the organization.
Scott also highlighted the company's recent leasing success, citing 3.5 million sq ft of leases executed year-to-date. This represents over 10% of the total portfolio, and has resulted in a weighted average remaining lease term of 65 months, an improvement of 15 months since the strategic plan was disclosed.
"Our leadership team has also implemented a new leasing model designed to drive ROI across the portfolio," Scott explained. "Over the last four quarters, lease IRRs have improved nearly 3,000 basis points, and our payback period is down nearly 25%." He further stated that as the company continues to execute quarter after quarter, its core earnings growth engine will rerate meaningfully higher.
In addition to its leasing success, Scott also highlighted two recent health system transactions. The first was with CommonSpirit, where Healthcare Realty executed approximately 160,000 sq ft of renewals in five states at a positive 7% cash leasing spread, while selling the company 15 acres of land in Denver for $16 million. As part of this transaction, Healthcare Realty retained future MOB development rights on the site.
The second transaction was with Wellstar, where Healthcare Realty executed 215,000 sq ft of renewal leases at a positive 4% cash leasing spread, along with 27,000 sq ft of new leases. In addition to these renewals and new leases, Healthcare Realty also sold Wellstar an additional site for $36 million.
Lastly, Scott mentioned that Healthcare Realty had recently executed an LOI with Ascension Saint Thomas for 203,000 sq ft of leases across three campuses in Nashville, with a cash leasing spread of positive 11% and expected execution in the third quarter.
