Healthcare Realty Trust Incorporated

Good morning and welcome to the Healthcare Realty Trust Fourth Quarter Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. So withdraw your question, please press star then two. Please note this event is being recorded I'd now like to turn the conference over to Kara Smith. Please go ahead.

Thank you for joining us today for Healthcare Realty's fourth quarter 2021 earnings conference call. Joining me on the call today are Todd Meredith, Rob Hull, and Chris Douglas. A reminder that except for the historical information contained within the matters discussed in this call may contain forward-looking statements that involve estimates, assumptions, risks, and uncertainties. These risks are more specifically discussed in a Form 10-K filed with the SEC for the year ended December 31, 2021. These forward-looking statements represent the company's judgment as of the date of this call. The company disclaims any obligation to update this forward-looking material. The matters discussed in this call may also contain certain non-GAAP financial measures, such as funds from operations, FFO, normalized FFO, FFO per share, normalized FFO per share, funds available for distribution, or FAD, net operating income, NOI, EBITDA, and adjusted EBITDA. A reconciliation of these measures to the most comparable GAAP financial measures may be found in the company's earnings press release for the fourth quarter ended December 31, 2021. The company's earnings press release, supplemental information, and Form 10-K are available on the company's website. I'll now turn the call over to our Chief Executive Officer, Todd Meredith.

Thank you, Kara, and thank you, everyone, for joining us for our fourth quarter 2021 earnings call. This morning, we reported normalized FFO per share growth of 4% for 21 over 20. This solid growth was driven in part by our investment momentum, including record acquisitions of $756 million in 21. These results were further compounded by the stability of our annual escalators, high tenant retention, and robust cash leasing spreads. Based on the strength of our 21 results and our competent outlook for 22, our board of directors authorized a 2.5% increase to our dividend. We have communicated our goal to grow the dividend for some time, and we are pleased to report this progress. Going forward, our ability to generate long-term, sustainable dividend growth is bolstered by the quality of our portfolio and inherent strength of our platform, both the internal growth engine and our external investment model. Our targeted investment approach delivered superior capital deployment opportunities in 21. Cap rates for many portfolios priced below 5 percent last year, but did not line up well enough with our criteria and market preferences. In contrast, we acquired 44 MOBs in our target markets at an average cap rate of 5.3 percent. With these investments, we increased density in our existing markets, adding to clusters and high-growth MSAs like Denver, Nashville, San Antonio, and Atlanta. It's worth noting the progress we've made in just the last three years. At the end of 2018, we had just two markets where we owned over 1 million square feet, Dallas and Seattle. Today, we have five markets with over 1 million square feet, including the additions of Nashville, Denver, and Los Angeles. We also supplement our densification approach by selectively entering new target markets. San Diego is a burgeoning success story for us, building on our nearby Los Angeles portfolio. We entered the San Diego market in 2019 with two MOB acquisitions, and we purchased two more in 21, bringing us to $180 million invested in four properties today. Our market-focused investment strategy naturally increases our local knowledge and leads to follow-on investments. But most importantly, it translates to improved operational efficiency and leasing velocity. In terms of operational performance, the fourth quarter showed signs of momentum. Our build-out times for new tenants stabilized in the fourth quarter. This, coupled with inherent demand from our tenants led to a 40 basis point sequential increase in occupancy. In 22, we expect occupancy gains to steadily improve same-store growth, NOI growth, with the potential to exceed our embedded rent escalators of just under 3%. As it relates to inflation, we have a strong track record of pushing rents in markets where rising replacement costs and supply constraints enable outsized rent growth. In 21, Two-thirds of our cash leasing spreads were between 3 and 4 percent, and over a fifth exceeded 4 percent. Our market focus and the density of our clusters strengthens our pricing power. And although healthcare providers have faced many challenges, they're doing well financially. Healthcare providers continue to report strong earnings as improving payer mix more than offsets inflationary pressures, including labor and supply costs. As cost control remains a focus for hospitals, the shift to outpatient becomes even more critical as they look to defend and grow their market share. We see this firsthand, and we're engaged in more development and redevelopment conversations than ever before. 2021 was a remarkable year for healthcare realty. Our success reflects the quality of our team and their collective efforts to make HR a clear choice for healthcare providers. Looking at 22 and beyond, the quality of our portfolio combined with the strength of our platform will drive attractive FFO per share growth and enable us to sustainably increase our dividend. I'll now turn it over to Rob to provide more detail on our investment activity. Rob?