Healthcare Realty Trust Incorporated

Good morning, thank you for attending the healthcare realty third quarter 2024 earnings conference call my name is Bridget and i'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I will now like to pass the conference over to our host Ron Hubbard vice president of investor relations with healthcare realty Thank you Ron you may proceed.

Thank you for joining us today for Healthcare Realty's third quarter 2024 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 at December 31, 2023, and other SEC filings. 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 matter 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 press release for the quarter-ended September 30, 2024. 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 Todd.

Thank you, Ron, and thank you, everyone, for being with us today. Joining me for our prepared remarks is Austin Helfrich, our interim CFO. Also here with us and available for Q&A are Rob Hull, our Chief Operating Officer, and Ryan Crowley, our Chief Investment Officer. I will start by highlighting key quarterly results, leasing trends, and operational metrics. Then I'll turn the call over to Austin to walk through capital allocation, the balance sheet, and guidance. HealthCat Realty had a strong third quarter. We reported normalized FFO per share of 39 cents at the high end of our expectations. With these results up 1.2%, we are pleased to return to year-over-year growth. MOB market fundamentals are strong with demand for outpatient space outstripping supply. We are benefiting from the secular tailwinds of aging demographics and the shift in care to outpatient settings. Taking advantage of this backdrop, I'm proud of our leasing team for producing their fifth consecutive quarter of over 400,000 square feet of new signed leases in the multi-tenant portfolio. I'm also pleased to report our team delivered another quarter of strong multi-tenant absorption, totaling 159,000 square feet, or 49 basis points. This occupancy gain was driven by 565,000 square feet of new lease commencements, coupled with strong tenant retention of over 80%. This is tremendous execution by all members of our team. We've gained 164 basis points of occupancy over the last four quarters. With one quarter to go in our published five-quarter occupancy bridge, we are on pace to be at the high end of our 150 to 200 basis point goal. NOI growth was also solid in the third quarter. We achieved same-store property year-over-year growth of 3.1%. Future contractual escalators for leases commencing were 3.1%, and cash leasing spreads were 3.9%. NOI growth also benefited from continued tailwinds from our expense management program, with same-store expenses down 1.5% year-over-year. While we expect expenses to increase in the fourth quarter on a year-over-year basis, we're seeing a steady return to a more normal expense pattern versus the high inflationary environment of the last several years. For total multi-tenant properties, NOI growth was 3.5% in the third quarter. Although we had significant absorption in the quarter, the full potential economics were not realized due to the relative timing of earlier move outs versus later move ins. While timing differences are not uncommon, they were more pronounced than usual this quarter. We expect NOI growth to accelerate as timing differences moderate and free rent burns off. Before I turn it over, I'd like to briefly touch on our recently announced leadership changes. We made the changes to build on the operational success of the last year and to more closely align our leadership with our 2025 growth initiatives. These changes will extend healthcare realty's operational momentum and further increase focus on execution, acceleration of growth, and accretive capital allocation. In just the first few weeks, it's been invigorating to see the fresh perspectives and intensity the team has brought to their new roles. Now I'll turn it over to Austin.