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Healthcare Realty Trust (HR)
NYSE:HR
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Healthcare Realty Trust
(NYSE:HR)
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Rating:65Neutral
Price Target:
$19.00
â–²(4.68% Upside)
Action:ReiteratedDate:02/14/26
The score is driven primarily by improved balance-sheet positioning and solid cash-flow durability, reinforced by a generally positive earnings-call narrative around execution, leasing, and cost discipline. It is held back by weak GAAP profitability (negative earnings and softening revenue), and valuation is less supportive due to the negative P/E despite an attractive dividend yield; technicals are moderately constructive but somewhat stretched.
Positive Factors
Cash generation strength
Consistent positive operating cash flow and a strong free cash flow improvement in 2025 provide durable internal funding for debt service, maintenance capex, redevelopment and dividends. This reduces reliance on external equity markets and supports liquidity and capital allocation flexibility over the medium term.
Leasing momentum & NOI growth
Robust leasing execution, elevated tenant retention and multi‑year average lease terms create predictable rental cash flows. Same-store NOI outperformance and ongoing pipeline activity indicate durable demand from health systems, supporting sustained NOI growth and occupancy over coming quarters.
Balance-sheet repair & liquidity
Material dispositions and liability reduction materially improved leverage and liquidity, lowering refinancing risk and extending maturities. Stronger balance-sheet posture and a commercial paper program enhance short‑term funding optionality and increase capacity to fund redevelopment and operational priorities over the next several quarters.
Negative Factors
Weak GAAP profitability
Persistent GAAP net losses mean return on equity remains negative and the company depends on non‑GAAP metrics (FFO) to demonstrate cash profitability. This limits retained earnings, constrains long‑term shareholder returns and requires careful execution to convert cash strength into sustained GAAP profitability.
Refinancing interest‑rate headwind
Refinancing a large bond at materially higher coupons increases interest expense and compresses free cash flow margins. With leverage still in the mid‑5x range, higher borrowing costs will meaningfully reduce distributable cash and limit flexibility for redeploying capital or rebuilding payouts over the medium term.
Cost of capital constrains growth
Management's explicit exclusion of acquisitions and buybacks, plus stated cap‑rate thresholds, signals constrained external growth optionality. Reliance on dispositions and internal redevelopments to drive expansion narrows avenues for scalable portfolio growth and leaves upside dependent on execution and favorable cap‑rate moves.
Healthcare Realty Trust (HR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.29B
Dividend Yield6.56%
Average Volume (3M)3.87M
Price to Earnings (P/E)―
Beta (1Y)0.21
Revenue Growth-6.59%
EPS Growth33.35%
CountryUS
Employees550
SectorReal Estate
Sector Strength53
IndustryREIT - Healthcare Facilities
Share Statistics
EPS (TTM)0.04
Shares Outstanding348,849,900
10 Day Avg. Volume4,536,481
30 Day Avg. Volume3,868,220
Financial Highlights & Ratios
PEG Ratio0.40
Price to Book (P/B)1.28
Price to Sales (P/S)5.02
P/FCF Ratio46.71
Enterprise Value/Market Cap1.68
Enterprise Value/Revenue8.96
Enterprise Value/Gross Profit-26.68
Enterprise Value/Ebitda20.34
Forecast
1Y Price Target
$19.57Price Target Upside7.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)-0.11
Revenue Forecast (FY)$1.15B
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 generates revenue primarily through the leasing of its healthcare properties to medical providers and organizations. The company's revenue model is based on long-term lease agreements, often structured to provide predictable cash flows. Key revenue streams include rental income from tenants, which typically consists of base rent and, in some cases, additional charges for property-related expenses. The company also benefits from strategic partnerships with healthcare systems and providers, leading to increased occupancy rates and stable lease renewals. Furthermore, HR may engage in property acquisitions and developments that can enhance its portfolio, thereby contributing to revenue growth over time. Overall, the company's focus on the healthcare sector, combined with its real estate expertise, positions it to capitalize on the increasing demand for healthcare facilities and services.
Healthcare Realty Trust Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presented a strong operational and strategic turnaround story: asset-management overhaul, meaningful leasing volume and pipeline, successful $1.2B disposition program at attractive cap rates, G&A and margin improvements, debt reduction and improved ratings outlook, and clear redevelopment and capital-allocation priorities. Offsetting items included flat 2026 reported FFO at the midpoint (reflecting dilution from dispositions and deleveraging), a rightsized dividend, refinancing at higher coupon assumptions, continued mid-5x leverage, and constrained near-term acquisition activity due to cost-of-capital considerations. On balance, highlights around execution, leasing momentum, margin and balance sheet repair significantly outweigh the lowlights.Q4-2025 Updates
Positive Updates
Same-Store NOI and FFO Outperformance
Full-year same-store NOI growth of 4.8% (2025) and Q4 same-store cash NOI growth of 5.5%; full-year normalized FFO per share of $1.61, exceeding the midpoint of prior guidance by $0.03; Q4 normalized FFO of $0.40.
Material Leasing Activity and Improved Leasing Metrics
Executed ~5,800,000 square feet of leasing in 2025 (including 1,600,000 sq ft of new leases); Q4 leasing ~1,500,000 sq ft; annual escalators on lease activity averaged 3.1% (portfolio average 2.9%, +7 bps YoY); weighted average lease term ~6 years; tenant retention improved to 82% for the year and ~83% in Q4 (eight consecutive quarters >80%).
Asset Management Revamp Driving Better Economics
New asset management platform delivered a 60 bps improvement in cash leasing spreads, a 220 bps improvement in tenant retention, improved lease IRRs and payback periods, and early signs of stronger lease economics across the portfolio.
Redevelopment Program with Attractive Yields
Redevelopment yields on cost targeted at ~10%; redevelopment portfolio saw ~1,000 bps increase in lease percentage since Q3; identified roughly $15M of the targeted $50M redevelopment NOI upside to date with ongoing lease-up momentum (example: 64k sq ft St. Peter’s lease).
Successful Dispositions and Geographic Repositioning
Completed $1,200,000,000 of asset sales at a blended 6.7% cap rate (exceeding expectations); exited 14 noncore markets and improved geographic exposure to higher-growth MSAs; Q4 dispositions ~ $700,000,000 contributing to debt paydown.
Balance Sheet Repair and Liquidity Improvements
Net debt to EBITDA reduced from 6.4x to 5.4x; repaid ~$900,000,000 of debt (including bond repayment and term loan payoffs); extended maturities and increased liquidity; rating outlook improved to Stable from Moody’s and S&P.
G&A and Margin Savings
Achieved target run-rate G&A savings of $10,000,000; total G&A now $45,000,000; property NOI margins improved by 60 bps with further margin expansion expected.
Capital Return and Share Repurchases
Dividend right-sized to a level generating ~6% current yield; Q4 FAD per share $0.32 (full-year FAD $1.26) with a quarterly dividend payout ratio of 75%; repurchased $50,000,000 of stock in January (2,900,000 shares) with $450,000,000 remaining authorization.
Prudent 2026 Guidance with Embedded Core Growth
2026 normalized FFO guidance $1.58–$1.64 (midpoint $1.61) with same-store cash NOI growth guidance of 3.5%–4.5%; company notes ~5% core earnings growth embedded in midpoint that offsets dilution from 2025 dispositions/deleveraging.
Access to Short-Term Capital and Refinancing Plan
Launched $600,000,000 commercial paper program to diversify capital sources and improve cost of funds; assume refinancing $600,000,000 bonds due August at roughly low-5% coupon (planned midyear).
Robust Leasing Pipeline and Health System Relationships
Active 1,300,000 square foot pipeline with strong demand from health systems; notable renewals/extensions (e.g., Tufts 154k sq ft, Advocate 142k sq ft) and very high occupancy in some relationships (Baptist portfolio ~99% leased).
Negative Updates
Flat Reported FFO Guidance for 2026
2026 midpoint normalized FFO guidance of $1.61 implies flat year-over-year FFO (2025 normalized FFO $1.61), which management acknowledged could be perceived as underwhelming despite embedded core growth offsetting dilution.
Dividend Reduction / Rightsizing
Dividend was reduced (rightsized) earlier in the turnaround: while management frames it as appropriate and supportive of reinvestment, dividend right-sizing can be negative for income-focused shareholders.
Refinancing Interest-Rate Headwind
Plan assumes refinancing $600,000,000 of bonds due August at a low-5% coupon versus current 3.5% coupon, implying materially higher interest expense on that issuance and a potential near-term cost increase if market conditions change.
Cost of Capital Constrains External Growth
Management noted current cost of capital and discount to intrinsic asset value limit external acquisitions; implied cap-rate threshold for new investments is in the low-7% range, making many market deals unattractive without JV or other structures.
Leverage Still Material Despite Improvement
Net debt to EBITDA reduced to 5.4x (from 6.4x) — progress made but leverage remains in the mid-5x range, which limits balance sheet flexibility and influences capital allocation conservatism.
High Maintenance / Leasing CapEx
Management indicates maintenance and second-generation leasing capex in the ~15%–20% of NOI range (historically ~16%–17%), and significant redevelopment spending is planned, which compresses near-term free cash available for other uses.
Guidance Excludes Acquisitions and Buybacks
2026 guidance does not include new acquisitions, developments, or incremental share repurchases, signaling constrained near-term external growth expectations and conservative capital deployment assumptions.
Organizational Change Challenges
Management acknowledged difficult personnel reductions to rightsize the cost structure; workforce changes were necessary but represent execution and cultural challenges during the turnaround.
Company Guidance
The company guided normalized FFO of $1.58–$1.64 per share (midpoint $1.61), noting the midpoint implies roughly 5% core earnings growth offset by dilution from 2025 dispositions/deleveraging; same-store cash NOI growth of 3.5%–4.5% driven by lease-up and positive releasing spreads; G&A of $43M–$47M; free cash flow post-dividends of approximately $100M at the midpoint; $175M of asset sales embedded in guidance (including roughly $70M that leaked into early 2026 and a $45M loan repayment expected in late March); sources also include a note receivable maturing early 2026 and modest additional dispositions, while uses include the asset-level capital plan (and the $50M of share repurchases already executed); balance-sheet assumptions include refinancing $600M bonds due August into new bonds in the low-5% coupon area, a new $600M commercial paper program, and full-year leverage targeted in the mid‑5x net debt/EBITDA range; guidance excludes any incremental acquisitions, developments, or share repurchases.Healthcare Realty Trust Financial Statement Overview
Summary
Cash flow is a clear strength (consistently positive operating cash flow and improved free cash flow in 2025) and leverage improved materially (very low debt-to-equity in 2025). Offsetting this, revenue has weakened recently and profitability is inconsistent with recurring net losses, keeping overall financial performance only moderately positive.Income Statement
Revenue has weakened recently, with declines in 2024 and 2025 after a sharp expansion in 2022–2023. Profitability is the primary concern: net income has been negative in three of the last four years (including 2024 and 2025), resulting in persistently negative net margins despite generally steady gross margins around the low-60% range. While operating earnings improved materially in 2025 versus 2024, the company is still not consistently translating revenue into bottom-line profits.42
Neutral
Balance Sheet
Leverage appears meaningfully improved in 2025, with debt very low relative to equity (debt-to-equity near 0.05), a sharp step down from the elevated levels seen from 2021–2024. The company maintains a large equity base relative to assets, which supports balance-sheet resilience. The key weakness is shareholder returns: return on equity remains negative in 2023–2025, reflecting ongoing net losses and limiting the quality of the capital structure despite the lower leverage.68
Positive
Cash Flow
Cash generation is a relative strength. Operating cash flow has been consistently positive across the period, and free cash flow improved strongly in 2025 versus 2024 with robust growth. Cash flow also covers debt well in recent years (coverage above 1x in 2024–2025). The main watch-out is volatility in free cash flow over time (notably weaker 2021–2022 vs. 2020, then improving again), and the disconnect between positive cash flow and reported net losses in multiple years.72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.18B | 1.27B | 1.34B | 932.64M | 534.82M |
| Gross Profit | -396.46M | -555.43M | -618.09M | -317.56M | -82.88M |
| EBITDA | 519.96M | 266.62M | 717.28M | 635.71M | 321.90M |
| Net Income | -246.07M | -654.49M | -278.26M | 40.90M | 66.66M |
Balance Sheet | |||||
| Total Assets | 9.21B | 10.65B | 12.64B | 13.85B | 4.26B |
| Cash, Cash Equivalents and Short-Term Investments | 26.17M | 68.92M | 25.70M | 60.96M | 13.18M |
| Total Debt | 4.15B | 4.96B | 5.30B | 5.70B | 1.92B |
| Total Liabilities | 4.53B | 5.35B | 5.71B | 6.17B | 2.07B |
| Stockholders Equity | 4.62B | 5.23B | 6.82B | 7.57B | 2.19B |
Cash Flow | |||||
| Free Cash Flow | 126.94M | 252.64M | 268.79M | 109.20M | 131.94M |
| Operating Cash Flow | 457.10M | 501.62M | 499.82M | 272.75M | 232.63M |
| Investing Cash Flow | 710.83M | 900.92M | 349.14M | 1.63B | -562.47M |
| Financing Cash Flow | -1.21B | -1.36B | -884.22M | -1.86B | 327.72M |
Healthcare Realty Trust Technical Analysis
Positive
18.15
Price Trends
17.13
Positive
17.51
Positive
16.63
Positive
Market Momentum
0.29
Negative
65.00
Neutral
72.73
Neutral
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 18.15 is above the 20-day moving average (MA) of 17.19, above the 50-day MA of 17.13, and above the 200-day MA of 16.63, indicating a bullish trend. The MACD of 0.29 indicates Negative momentum. The RSI at 65.00 is Neutral, neither overbought nor oversold. The STOCH value of 72.73 is Neutral, 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
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $8.97B | 25.62 | 9.21% | 3.56% | 59.25% | 88.37% | |
77 Outperform | $4.24B | 28.04 | 10.87% | 4.73% | 8.04% | 9.20% | |
70 Outperform | $5.05B | 31.47 | 5.59% | 6.47% | 8.12% | 75.95% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
65 Neutral | $6.29B | -25.41 | -5.04% | 6.56% | -6.59% | 33.35% | |
62 Neutral | $1.86B | 53.42 | 3.49% | 6.70% | 11.89% | -68.41% |
* Real Estate Sector Average
HR
Healthcare Realty Trust
18.15
2.41
15.31%
LTC
LTC Properties
38.92
6.20
18.96%
NHI
National Health Investors
88.71
20.56
30.16%
SBRA
Sabra Healthcare REIT
19.93
5.04
33.88%
CTRE
CareTrust REIT
40.05
15.81
65.22%
Healthcare Realty Trust Corporate Events
Business Operations and StrategyFinancial DisclosuresM&A TransactionsPrivate Placements and Financing
Healthcare Realty Trust Reports Q4 Results, Highlights Transformation
Positive
Feb 12, 2026
Healthcare Realty Trust reported fourth-quarter 2025 results on February 12, 2026, highlighting same-store cash NOI growth of 5.5%, strong tenant retention, 1.5 million square feet of lease executions, and GAAP net income of $0.04 per share. For full year 2025, the company posted a GAAP net loss of $0.71 per share but generated $1.61 per share in Normalized FFO, completed $1.2 billion of asset sales through February 2026 at a 6.7% blended cap rate, reduced net debt to adjusted EBITDA to 5.4x, refinanced and extended key debt facilities, cut run-rate G&A by $10 million, refreshed its leadership team, and launched a $600 million commercial paper program while exiting several non-core markets to sharpen its core medical office portfolio and support long-term growth.
The company executed significant leasing with major health system partners in markets including Memphis, Austin, Hartford and Charlotte, helping drive occupancy gains and improved leasing spreads in 2025. Strategic dispositions included a 25-property portfolio sale and full exits from several secondary MSAs such as El Paso, Des Moines, Fort Wayne, Cincinnati, Salt Lake City, Las Vegas, Kokomo and Jacksonville, signaling a shift toward higher-priority markets and a stronger balance sheet following a year the CEO characterized as transformational for governance, capital allocation and operating performance.
The most recent analyst rating on (HR) stock is a Hold 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.
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Healthcare Realty Trust Announces New CFO Appointment
Neutral
Jan 7, 2026
On January 7, 2026, Healthcare Realty Trust announced that investment banking veteran Daniel Gabbay will become Executive Vice President and Chief Financial Officer, effective January 12, 2026, based at the company’s Nashville headquarters. Gabbay, who has nearly two decades of real estate investment banking experience and deep specialization in the healthcare REIT sector, will receive a compensation package that includes base salary, cash and equity incentives, a make-whole restricted stock grant, and relocation benefits, with his employment agreement outlining severance protections and full vesting of equity in the event of certain terminations, including following a change in control. The company simultaneously disclosed that current CFO Austen Helfrich, who has served as CFO since October 2024 and joined Healthcare Realty in 2019, will depart on January 12, 2026 to pursue new opportunities; his exit is not due to any disagreement with management or auditors and will be treated as a termination other than for cause under his contract, prompting an expected charge of about $5 million in the quarter ending March 31, 2026. Healthcare Realty emphasized continuity by affirming there is no change to its previously raised 2025 Normalized FFO guidance, signaling that the CFO transition is not expected to alter its near-term financial outlook or its positioning as a leading outpatient medical REIT.
The most recent analyst rating on (HR) stock is a Hold with a $17.50 price target. To see the full list of analyst forecasts on Healthcare Realty Trust stock, see the HR Stock Forecast page.
Business Operations and StrategyPrivate Placements and Financing
Healthcare Realty Trust Announces $1 Billion Equity Program
Positive
Dec 17, 2025
On December 17, 2025, Healthcare Realty Trust announced it entered equity distribution agreements and master forward confirmations with several financial firms for an equity offering program worth up to $1 billion. The move allows the company to issue Class A common stock and potentially engage in forward sale agreements to generate proceeds for general corporate purposes, including healthcare facility projects and debt repayment, reflecting a strategic step to secure capital for growth and strengthen its market positioning.
The most recent analyst rating on (HR) stock is a Hold with a $17.50 price target. To see the full list of analyst forecasts on Healthcare Realty Trust stock, see the HR Stock Forecast page.
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.