Healthcare Realty Trust Incorporated

What they do

The company operates as a real estate investment trust focused on income-producing properties primarily associated with outpatient healthcare delivery. It acquires, develops, redevelops, and manages a portfolio of medical office buildings and related facilities nationwide. As a REIT, it distributes taxable income to stockholders and is not subject to corporate federal income tax on that income.

Revenue drivers

• Rental income — Primary revenue source; Q2 2026 rental income was $270.6 million, down from $287.1 million in Q2 2025.
• Other operating income — Includes service and other property-related income; Q2 2026 was $8.0 million, up from $7.0 million year-over-year.
• Interest income — Interest from financing receivables and other sources; Q2 2026 was $3.3 million, similar to year-ago period.

Recent performance

In Q2 2026, GAAP net loss was $43.5 million or $(0.13) per diluted share, compared to a net loss of $157.9 million or $(0.45) in Q2 2025. NAREIT FFO was $0.36 per share and Normalized FFO was $0.41 per share, consistent with prior year. Same store cash NOI grew 5.1% year-over-year. Cash and equivalents were $19.0 million as of June 30, 2026, with total assets of $9.0 billion and long-term debt of $4.17 billion. The company reported a net loss attributable to common stockholders of $43.6 million for the first half of 2026.

Strategy

The company is focusing on disciplined capital allocation, including strategic joint venture acquisitions, dispositions at sub-5% cap rates, and development/redevelopment. In Q2 2026, it closed or had under contract/LOI on approximately $200 million of joint venture acquisitions (about $40 million at share) at a blended cash yield of roughly 7.5%. It also closed or had under contract on $83 million (at share) of dispositions at a sub-5% cap rate, including sales to affiliated health systems. Management is also repositioning its balance sheet by issuing $700 million of 3.00% Exchangeable Senior Notes due 2032 and repaying $600 million senior notes, while entering a $400 million delayed draw term loan.

Risks

• Tenant credit risk — Revenues depend on tenants' ability to generate income; the Prospect Medical bankruptcy has negatively and will continue to impact results.
• Impairment risk — The company has recorded significant impairment charges, including $41.8 million in the first half of 2026 and $154.4 million in the same period of 2025.
• Leverage and interest rate risk — High debt levels ($4.17 billion long-term debt) and covenant restrictions could limit flexibility; rising interest rates could increase borrowing costs.
• Re-leasing and occupancy risk — If properties cannot be re-let promptly or at similar rates, or if significant concessions are required, financial results would be adversely affected.

Outlook

Management increased full-year 2026 Normalized FFO guidance to $1.62 to $1.66 per diluted share (up $0.02 at midpoint from April) and raised Same Store Cash NOI growth guidance to 4.25% to 5.00%. They expect to close additional acquisitions and dispositions in the third and fourth quarters, including properties under LOI in Charleston, Seattle, and Denver. The company also anticipates closing the Atlanta MOB sale to the affiliated hospital in Q4 and Denver land sales by year-end 2026.