NASHVILLE, Tenn., Nov. 10 /PRNewswire-FirstCall/ -- Healthcare Realty Trust Incorporated today announced results for the third quarter ended September 30, 2008. Funds from operations ("FFO") per diluted common share totaled $0.36, compared with $0.31 for the same period in 2007. FFO per diluted common share totaled $1.13 for the nine months ended September 30, 2008, compared with the prior year's $1.13. FFO would have been $0.38 and $1.14 per diluted common share for the three and nine months ended September 30, 2008, respectively, before a one-time charge of $765,000 related to a litigation expense settlement. Funds available for distribution ("FAD") for the third quarter of 2008 totaled $0.44 per diluted common share.
Revenues for the three months ended September 30, 2008 totaled $54.8 million, compared with the prior year's $50.5 million. Revenues for the nine months ended September 30, 2008 totaled $159.8 million, compared with the prior year's $149.7 million. Income from continuing operations for the three months ended September 30, 2008 totaled $3.3 million, compared with $4.0 million for the three months ended September 30, 2007. Income from continuing operations for the nine months ended September 30, 2008 totaled $12.5 million, compared with the prior year's $9.3 million.
Net income for the third quarter of 2008 totaled $5.5 million, or $0.11 per diluted common share, versus $5.5 million, or $0.12 per diluted common share, for the third quarter of 2007. Net income for the nine months ended September 30, 2008 totaled $26.1 million, or $0.52 per diluted common share, compared with $55.5 million, or $1.17 per diluted common share for the nine months ended September 30, 2007. Net income for the nine months ended September 30, 2008, as compared to 2007, was affected by the disposition of the senior living assets and resulting gain included in discontinued operations in 2007.
Healthcare Realty Trust is a real estate investment trust that integrates owning, managing and developing income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. The Company had investments of approximately $1.8 billion in 179 real estate properties and mortgages as of September 30, 2008, excluding assets classified as held for sale and including investments in three unconsolidated limited liability companies. The Company's 173 owned real estate properties, excluding assets classified as held for sale, are comprised of six facility types, located in 25 states, totaling approximately 10.9 million square feet. The Company provides property management services to approximately 7.4 million square feet nationwide.
The Company directs interested parties to its Internet site, http://www.healthcarerealty.com/ , where information is posted regarding this quarter's operations. Please contact the Company at (615) 269-8175 to request a printed copy of this information.
In addition to the historical information contained within, the matters discussed in this press release may contain forward-looking statements that involve risks and uncertainties. These risks are discussed in filings with the Securities and Exchange Commission by Healthcare Realty Trust, including its Annual Report on Form 10-K for the year ended December 31, 2007 under the heading "Risk Factors," and as may be updated in its Quarterly Reports on Form 10-Q filed thereafter. Forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims any obligation to update forward-looking material.
HEALTHCARE REALTY TRUST INCORPORATED Condensed Consolidated Statements of Income (1) (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 REVENUES Master lease rent $14,434 $13,979 $43,669 $42,358 Property operating 35,441 31,208 101,767 92,190 Straight-line rent 113 611 (87) 655 Mortgage interest 579 404 1,647 1,217 Other operating 4,255 4,269 12,846 13,257 54,822 50,471 159,842 149,677 EXPENSES General and administrative 6,018 4,335 17,926 15,730 Property operating 22,062 18,849 60,220 54,155 Impairment 1,600 - 1,600 - Bad debts, net of recoveries 95 53 355 130 Depreciation 12,353 10,719 35,733 31,322 Amortization 769 997 1,919 3,597 42,897 34,953 117,753 104,934 OTHER INCOME (EXPENSE) Gain on extinguishment of debt, net 2,015 - 2,024 - Interest expense (10,785) (12,096) (32,379) (36,819) Interest and other income, net 184 533 807 1,326 (8,586) (11,563) (29,548) (35,493) INCOME FROM CONTINUING OPERATIONS 3,339 3,955 12,541 9,250 DISCONTINUED OPERATIONS (2) Income from discontinued operations 1,442 2,001 4,483 11,614 Impairments - (4,057) (29) (6,849) Gain on sales of real estate properties 746 3,587 9,098 41,459 INCOME FROM DISCONTINUED OPERATIONS 2,188 1,531 13,552 46,224 NET INCOME $5,527 $5,486 $26,093 $55,474 BASIC EARNINGS PER COMMON SHARE Income from continuing operations per common share $0.07 $0.08 $0.25 $0.20 Discontinued operations per common share 0.04 0.04 0.28 0.99 Net income per common share $0.11 $0.12 $0.53 $1.19 DILUTED EARNINGS PER COMMON SHARE Income from continuing operations per common share $0.07 $0.08 $0.25 $0.19 Discontinued operations per common share 0.04 0.04 0.27 0.98 Net income per common share $0.11 $0.12 $0.52 $1.17 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 49,530,813 46,683,619 49,438,796 46,680,455 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 50,614,173 47,601,330 50,481,469 47,596,154 (1) The Condensed Consolidated Statements of Income do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. (2) In accordance with SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," the Company reports real estate properties and related assets and liabilities to be sold as held for sale and includes the results of operations of real estate properties sold or held for sale in discontinued operations on the Company's Condensed Consolidated Statements of Income. HEALTHCARE REALTY TRUST INCORPORATED Condensed Consolidated Statements of Cash Flows (1) (Dollars in thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Cash flows from operating activities: Net income $5,527 $5,486 $26,093 $55,474 Non-cash items: Depreciation and amortization - real estate 13,025 12,345 38,300 38,611 Depreciation and amortization - other 663 551 1,868 1,681 Provision for bad debt, net of recoveries 95 33 426 115 Impairments 1,600 4,057 1,629 6,849 Straight-line rent receivable (124) (640) 75 (735) Straight-line rent liability 61 535 147 1,269 Equity in (income) losses from unconsolidated LLCs (55) (193) 93 59 Consolidated losses from variable interest entities - 282 - 676 Stock-based compensation 1,084 1,015 3,487 3,681 Provision for deferred post-retirement benefits 828 506 2,482 1,544 Other non-cash items 133 30 572 108 Total non-cash items 17,310 18,521 49,079 53,858 Other items: Accounts payable and accrued liabilities 13,325 3,597 9,653 (3,180) Other liabilities 2,739 (2,506) (71) 1,099 Other assets (837) 478 5,029 (1,732) Gain on sales of real estate properties (746) (3,587) (9,098) (41,459) Gain on repurchase of notes payable (2,015) - (2,024) - State income taxes paid, net of refunds (30) (66) (651) (107) Total other items 12,436 (2,084) 2,838 (45,379) Net cash provided by operating activities 35,273 21,923 78,010 63,953 Cash flows from investing activities: Acquisition and development of real estate properties (100,758) (69,206) (138,452) (106,808) Funding of mortgages and notes receivable (5,338) 51 (12,519) (4,020) Distributions received from unconsolidated LLCs 15 603 882 1,127 Redemption of preferred equity investment in unconsolidated LLC 5,546 - 5,546 - Proceeds from sales of real estate 2,641 15,642 24,681 297,341 Proceeds from mortgages and notes receivable repayments 2,555 26 2,634 65,545 Net cash provided by (used in) investing activities (95,339) (52,884) (117,228) 253,185 Cash flows from financing activities: Borrowings on notes and bonds payable 190,000 99,001 280,000 403,840 Repayments on notes and bonds payable (280,895) (102,895) (350,720) (468,556) Repurchase of notes payable (25,906) - (31,238) - Special dividend paid - - - (227,157) Quarterly dividends paid (19,542) (18,458) (58,609) (81,623) Proceeds from issuance of common stock 196,701 68,791 197,062 70,558 Stock issuance costs (18) - (32) - Common stock redemption - - (282) (30) Credit facility amendment fee - - (326) - Net cash provided by (used in) financing activities 60,340 46,439 35,855 (302,968) Increase (decrease) in cash and cash equivalents 274 15,478 (3,363) 14,170 Cash and cash equivalents, beginning of period 4,882 642 8,519 1,950 Cash and cash equivalents, end of period $5,156 $16,120 $5,156 $16,120 (1) The Condensed Consolidated Statements of Cash Flows do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. RECONCILIATION OF FUNDS FROM OPERATIONS (1) (2): (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Net Income $5,527 $5,486 $26,093 $55,474 Gain on sales of real estate properties (746) (3,587) (9,098) (41,459) Real estate depreciation and amortization 13,456 12,664 39,878 39,734 Total adjustments 12,710 9,077 30,780 (1,725) Funds From Operations - Basic and Diluted $18,237 $14,563 $56,873 $53,749 Funds From Operations Per Common Share - Basic $0.37 $0.31 $1.15 $1.15 Funds From Operations Per Common Share - Diluted $0.36 $0.31 $1.13 $1.13 Weighted Average Common Shares Outstanding - Basic 49,530,813 46,683,619 49,438,796 46,680,455 Weighted Average Common Shares Outstanding - Diluted 50,614,173 47,601,330 50,481,469 47,596,154 RECONCILIATION OF FUNDS AVAILABLE FOR DISTRIBUTION (2): (Dollars in thousands, except per share data) (Unaudited) Three Months Ended September 30, 2008 Net Income $5,527 Gain on sales of real estate properties (746) Total non-cash items included in cash flows from operating activities (3) 17,310 Funds Available For Distribution $22,091 Funds Available For Distribution Per Common Share - Diluted 0.44 Weighted Average Common Shares Outstanding - Diluted 50,614,173 (1) Funds from operations ("FFO") is calculated according to the definition of the National Association of Real Estate Investment Trusts ("NAREIT") and is comprised primarily of net income and depreciation from real estate, but is not adjusted for certain non-cash income and expense items. Gains on the sale of real estate properties are excluded from FFO and FFO per share, while impairments are included in FFO and FFO per share. (2) FFO and Funds Available For Distribution ("FAD") do not represent cash generated from operating activities determined in accordance with accounting principles generally accepted in the United States and are not necessarily indicative of cash available to fund cash needs. FFO and FAD should not be considered alternatives to net income as indicators of the Company's operating performance or as alternatives to cash flow as measures of liquidity. (3) See the Condensed Consolidated Statements of Cash Flows that are included in this earnings release.
