Healthcare Realty Trust Incorporated

Good morning, ladies and gentlemen. Thank you for attending today's Healthcare Realty First Quarter 2022 Earnings Call. My name is Jaquita. I will be your moderator for today's call. Our lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. Be mindful there is two participants. I would now like to pass the conference over to your host, Chris Douglas, Chief Financial Officer with Healthcare Realty Trust. Chris, please go ahead.

Thank you for joining us today for Healthcare Realty's first quarter 2022 earnings conference call. 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 the company's Form 10-K filed with the SEC for the year ended December 31, 2021, and a Form 10-Q filed with the SEC for the quarter ended March 31, 2022. 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 or 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 release for the first quarter ended March 31, 2022. The company's earnings press release, supplemental information, and Form 10-Q are available on the company's website. I'll now turn the call over to Todd. Thank you, Chris, and thank you, everyone, for joining us today.

I'll start with a few comments about our solid operating results for the first quarter. Second, I'll provide some updates on our pending strategic combination with HTA. And finally, I'll touch on the process and expected timeline between now and closing of the HTA transaction. For the first quarter, we're pleased to report both strong internal growth and robust external investment. Same-store NOI growth of 2.9% was driven by healthy top-line growth. Strong leasing interest across the portfolio drove positive sequential absorption of more than 40 basis points. Based on constructive provider sentiment, we expect steady absorption gains in the coming quarters. $340 million of year-to-date acquisitions gives us a head start to 2022. Our acquisition cap rate is in line with guidance and well above our disposition cap rate, resulting in accretive capital recycling. Additionally, we're seeing accelerated development activity. Our $1.6 billion embedded development pipeline is expanding with multiple sizable projects slated to start later this year. Strong demand for space is driving portfolio occupancy gains and increased interest in development, which bolsters our strong outlook for 2022. Now turning to the HTA transaction, I'll first touch on the unsolicited offer we described in the merger proxy and in our press release earlier today. After receiving the proposal from Party F on March 28th, our board thoroughly reviewed it with our advisors. The board unanimously rejected the proposal in writing. In mid-April, we received a second letter from Party F acknowledging our response and reiterating interest at the same terms. The board did not respond to this letter. Then on Tuesday this week, shortly after the Wall Street Journal article, we received another letter from Party F reiterating interest at the same terms as the March 28th proposal. So we've now received three letters from Party F expressing interest at the same terms. We can only interpret these letters as an opportunistic and disruptive distraction. The board has unanimously rejected the unsolicited proposal and continues to believe that the strategic combination with HTA offers a superior value and is in the best interest of the company's shareholders. Looking ahead, we remain focused on our pending combination with HTA. Earlier today, we published an updated presentation on the transaction, which can be found on our investor page. We've made tremendous progress in the last 60 days, and we're even more excited about the combination since our announcement in February. This is a game-changing transaction that positions healthcare realty as the leading pure-play MOB REIT. Operating at scale gives us tremendous efficiencies, but the ultimate benefit here, which you can see on page six of our updated presentation, is accelerated growth. The combination with HTA will enable us to shift into a higher gear, moving from average annual fad per share growth of 4.5% over the last three years to a range of 5 to 7 percent going forward. In a few minutes, Rob will more fully describe how our combined cluster strategy will accelerate our growth. With regards to the $1.1 billion special cash dividend for HTA shareholders, I'm pleased to report that we've lined up $1.6 billion in proceeds at cap rates of around 4.8 percent through a combination of JV and asset sales. We've received letters of intent and advanced discussions with multiple parties. We expect a portion of the asset sales to close prior to the merger vote, already having been approved by HTA. These proceeds will be held by HTA to fund the special cash dividend just before close, and we expect the balance to close on or around the closing of the merger. We consider these initial efforts to address funding needs for the completion of the transaction as phase one. And based on the strong demand of Phase 1, we're initiating the next phase to further align the combined portfolio through the sale or JV of an additional $500 million. Similar to Phase 1, we expect to transact at portfolio sizes where we can generate premiums relative to single asset pricing. We'll use the proceeds to match fund attractive higher-yielding developments and accretive individual asset acquisitions. And also, the board has recently authorized a $500 million stock repurchase program. This gives us another choice where we can reinvest proceeds accretively from phase one or phase two by repurchasing our own stock if the price is materially discounted. Finally, I'd like to touch on our ongoing transaction process and expected timeline. We have secured commitments for a new credit facility, which Chris will cover in a few minutes. We also intend to preserve HTA's upgrade status, which gives us a modern operating structure with a tax-advantaged currency for future acquisitions. We filed our preliminary proxy on Monday, which we expect to become effective in early June, assuming no material comments from the SEC. The shareholder vote is likely to occur in early to mid-July, followed shortly thereafter by the closing of the transaction. Before I turn it over to Rob, I want to underscore my confidence in this strategic combination. We're making great progress studying both companies' processes, technology, and teams, and we're well positioned to implement our integration plan following the closing. I'm excited about our ability to deliver to shareholders this rare combination of sector-leading scale, increased stability, and accelerated growth. I'll now turn it over to Rob, who will provide an update on our investment activity and some more color on our growth strategy. Rob?