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Healthcare Realty Trust (HR)
NYSE:HR

Healthcare Realty Trust (HR) AI Stock Analysis

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HR

Healthcare Realty Trust

(NYSE:HR)

Rating:59Neutral
Price Target:
$16.00
▲(0.50%Upside)
Healthcare Realty Trust's overall score reflects a balance between strong technical indicators and governance improvements, weighed down by financial performance challenges and leverage concerns. The high dividend yield is attractive, but profitability issues and potential earnings dilution from asset sales pose risks.
Positive Factors
Earnings
Normalized FFO per share beat the Street expectations, showing stronger performance in earnings.
Financial Performance
FAD per share beat the Street's expectations.
Leadership
Scott is expected to bolster HR's leadership team.
Negative Factors
Dividend
A potential ~20% dividend cut is likely towards a benchmark 80% AFFO payout ratio.
Financial Strain
The dividend payout ratio remains high at 111%, indicating financial strain.
Guidance
Guidance maintained below the Street's expectations for normalized FFO.

Healthcare Realty Trust (HR) vs. SPDR S&P 500 ETF (SPY)

Healthcare Realty Trust Business Overview & Revenue Model

Company DescriptionHealthcare Realty Trust is a real estate investment trust that integrates owning, managing, financing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of September 30, 2020, the Company owned 211 real estate properties in 24 states totaling 15.5 million square feet and was valued at approximately $5.5 billion. The Company provided leasing and property management services to 11.9 million square feet nationwide.
How the Company Makes MoneyHealthcare Realty Trust makes money primarily through leasing its properties to healthcare providers, including hospitals, medical groups, and outpatient service centers. The company generates revenue through rental income from long-term leases, which often include annual rent escalations to adjust for inflation and market conditions. Additionally, HR may engage in property development projects, generating income from property sales or through increased rental income from newly developed properties. The company's earnings are also influenced by strategic partnerships and joint ventures with healthcare providers, which can enhance property value and occupancy rates. Furthermore, HR may engage in selective acquisitions of healthcare properties to expand its portfolio and increase revenue potential.

Healthcare Realty Trust Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 2.25%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with strong leasing performance and financial results being overshadowed by high leverage and dividend coverage concerns. While the company is actively working on reducing leverage and optimizing its portfolio, these efforts may lead to earnings dilution. However, the strong demand for outpatient medical space and a high-quality portfolio in growth markets provide a positive foundation.
Q1-2025 Updates
Positive Updates
Strong Leasing Activity
Commenced nearly 1.5 million square feet of new and renewal leases with a solid pipeline of over 630,000 square feet, indicating robust demand for outpatient medical space.
Positive Financial Performance
Normalized FFO per share was $0.39 for the quarter, in line with expectations. Same-store cash NOI growth was 2.3%, with expectations for material acceleration in the remainder of the year.
Successful Dispositions
Sold four buildings for $28 million and received full payoff of an outstanding loan for $38 million, reflecting strong execution by the team.
High-Quality Portfolio
The portfolio is focused on high growth markets including Dallas, Seattle, Nashville, Houston, and Denver, with a tenant roster comprising market-leading health systems.
Increased Health System Leasing
Health system leasing as a percentage of new signed lease activity has nearly doubled over the past five quarters, showcasing strong demand from health partners.
Negative Updates
High Leverage Concerns
Net debt to adjusted EBITDA remains high at 6.4 times, with a focus on reducing leverage to improve balance sheet capacity.
Dividend Coverage Concerns
The dividend payout ratio is elevated, and future adjustments are being discussed due to the need for clarity on earnings profile and efficiency gains.
Occupancy Challenges
Same-store occupancy was at 89.3%, with a target to increase to the low 90% range, indicating room for improvement in leasing efforts.
Potential Dilution from Asset Sales
There is a focus on selling assets to optimize the portfolio, which may lead to earnings dilution, although efforts are being made to offset this through efficiencies and leasing upside.
Company Guidance
During the Healthcare Realty First Quarter 2025 Earnings Conference Call, several key metrics and strategic focuses were outlined. Same-store occupancy was at 89.3%, with expectations to increase it to the low 90% range, capturing a potential 200 to 300 basis points of upside. The company executed nearly 1.5 million square feet of new and renewal leases in the quarter, and the signed not occupied pipeline accounted for over 630,000 square feet. Normalized FFO per share was $0.39, in line with expectations, and same-store cash NOI growth was 2.3%. The company reaffirmed its full-year normalized FFO per share guidance of $1.56 to $1.60. Moreover, Healthcare Realty sold four buildings for $28 million and expects increased disposition activity in the second quarter. The company also focused on deleveraging, with net debt to adjusted EBITDA unchanged at 6.4 times, aiming to decrease it to a range of 6 to 6.25 times by year-end. The dividend was maintained at $0.31 per share, with discussions ongoing at the Board level regarding its future, contingent on the company's strategic plan outcomes.

Healthcare Realty Trust Financial Statement Overview

Summary
Healthcare Realty Trust shows mixed financial performance. Strong cash flow management and cost control are evident from positive free cash flow and high EBITDA margins. However, the company is struggling with profitability due to high operational expenses, leading to net losses. The balance sheet has improved leverage, but negative ROE indicates profitability concerns.
Income Statement
42
Neutral
The company has shown a declining revenue trend with a negative revenue growth rate in recent years. The gross profit margin for the TTM is at 47.0%, indicating a strong ability to manage direct costs. However, the net profit margin is significantly negative due to ongoing net losses, suggesting challenges in managing operational and other expenses. The EBIT and EBITDA margins are 15.1% and 61.7% respectively for the TTM, indicating some operational efficiency but not enough to cover all expenses, leading to net losses.
Balance Sheet
55
Neutral
The debt-to-equity ratio has improved to 0.06 in the TTM from 0.95 in the previous year, indicating reduced leverage. The return on equity is negative due to net losses, impacting shareholder returns. The equity ratio stands at 48.4%, reflecting a balanced asset financing between liabilities and equity.
Cash Flow
60
Neutral
Free cash flow has shown growth, with a positive free cash flow growth rate in the TTM. The operating cash flow to net income and free cash flow to net income ratios are positive, indicating that despite net losses, the company generates sufficient cash flows from operations to cover its investments and financing needs.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.22B1.25B1.34B932.64M534.82M499.63M
Gross Profit579.51M772.59M112.62M588.60M322.54M303.12M
EBITDA607.44M711.56M780.51M555.62M287.60M274.18M
Net Income-391.06M-654.49M-278.26M-106.00M14.32M19.19M
Balance Sheet
Total Assets10.50B10.65B12.64B13.85B4.26B3.81B
Cash, Cash Equivalents and Short-Term Investments25.72M68.92M25.70M60.96M13.18M15.30M
Total Debt5.03B4.96B5.30B5.70B1.92B1.71B
Total Liabilities5.35B5.35B5.71B6.17B2.07B1.86B
Stockholders Equity5.08B5.23B6.82B7.57B2.19B1.95B
Cash Flow
Free Cash Flow205.53M252.64M268.79M109.20M131.94M376.13M
Operating Cash Flow473.25M501.62M499.82M272.75M232.63M470.09M
Investing Cash Flow920.65M900.92M349.14M1.63B-562.47M-555.17M
Financing Cash Flow-1.39B-1.36B-884.22M-1.86B327.72M99.72M

Healthcare Realty Trust Technical Analysis

Technical Analysis Sentiment
Positive
Last Price15.92
Price Trends
50DMA
14.98
Positive
100DMA
15.49
Positive
200DMA
16.05
Negative
Market Momentum
MACD
0.31
Negative
RSI
69.20
Neutral
STOCH
83.59
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HR, the sentiment is Positive. The current price of 15.92 is above the 20-day moving average (MA) of 15.20, above the 50-day MA of 14.98, and below the 200-day MA of 16.05, indicating a neutral trend. The MACD of 0.31 indicates Negative momentum. The RSI at 69.20 is Neutral, neither overbought nor oversold. The STOCH value of 83.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HR.

Healthcare Realty Trust Risk Analysis

Healthcare Realty Trust disclosed 42 risk factors in its most recent earnings report. Healthcare Realty Trust reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Healthcare Realty Trust Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$5.98B34.007.02%4.29%43.27%80.97%
77
Outperform
$4.43B31.515.15%6.45%7.81%179.16%
NHNHI
76
Outperform
$3.31B22.4710.56%5.08%7.44%4.23%
AHAHR
68
Neutral
$5.99B-1.93%2.70%11.30%
65
Neutral
£989.01M11.77-0.08%5.05%10.32%31.28%
HRHR
59
Neutral
$5.59B-6.83%7.79%-7.26%18.45%
MPMPW
52
Neutral
$2.63B-28.86%7.31%19.56%-12.73%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HR
Healthcare Realty Trust
15.92
0.16
1.02%
NHI
National Health Investors
70.80
5.20
7.93%
SBRA
Sabra Healthcare REIT
18.62
4.35
30.48%
MPW
Medical Properties
4.38
0.52
13.47%
CTRE
CareTrust REIT
31.20
6.38
25.71%
AHR
American Healthcare REIT, Inc.
37.07
22.10
147.63%

Healthcare Realty Trust Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Healthcare Realty Trust Announces Board Restructuring
Positive
Jun 23, 2025

On June 18, 2025, Healthcare Realty Trust announced the voluntary retirement of five directors from its Board, reducing its size from 12 to 7 members. This strategic move aligns the Board’s size with industry standards and reinforces the company’s commitment to best practices in corporate governance. The changes are expected to enhance shareholder engagement and drive value, with the remaining directors focused on strengthening stakeholder relationships and capitalizing on strong industry fundamentals.

The most recent analyst rating on (HR) stock is a Buy with a $20.00 price target. To see the full list of analyst forecasts on Healthcare Realty Trust stock, see the HR Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Healthcare Realty Trust Appoints New Director and CEO
Neutral
May 22, 2025

On May 20, 2025, Healthcare Realty Trust‘s Board of Directors appointed Peter A. Scott as a director and increased the board size to 12 members, with plans to reduce it in the future. Mr. Scott, who became the company’s President and CEO on April 15, 2025, will serve on the Capital Allocation Committee. At the annual stockholders’ meeting on May 20, 2025, several directors were elected, and key proposals, including the ratification of BDO USA, P.C. as the independent accounting firm and executive compensation, were approved.

The most recent analyst rating on (HR) stock is a Buy with a $20.00 price target. To see the full list of analyst forecasts on Healthcare Realty Trust stock, see the HR Stock Forecast page.

Executive/Board ChangesDividendsBusiness Operations and StrategyFinancial Disclosures
Healthcare Realty Trust Appoints New President & CEO
Neutral
May 1, 2025

Healthcare Realty Trust reported a net loss of $44.9 million for the first quarter of 2025, with a normalized FFO per share of $0.39. The company declared a quarterly dividend of $0.31 per share and announced leadership changes with Peter A. Scott appointed as President & CEO. The company also highlighted a slight increase in same-store occupancy and tenant retention, alongside significant leasing activity and asset sale transactions.

Executive/Board ChangesBusiness Operations and Strategy
Healthcare Realty Trust Appoints New CEO Peter A. Scott
Positive
Apr 7, 2025

Healthcare Realty Trust has appointed Peter A. Scott as its new President and CEO, effective April 15, 2025, following a rigorous search process. Scott, who previously served as CFO of Healthpeak Properties, brings extensive experience in healthcare real estate and investment banking. His appointment is expected to bolster the company’s growth and operational strategies, leveraging his expertise in strategic mergers and financial restructuring. Concurrently, Constance B. Moore will step down as Interim President and CEO but will remain on the Board, ensuring a smooth transition.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 24, 2025