Healthcare Realty Trust Incorporated

Thank you for standing by. My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Healthcare Realty Fourth Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your telephone keypad. Do we draw your question? Press star followed by the number one again. I will now turn the call over to Ron Hubbard, Vice President of Investor Relations. Please go ahead.

Thank you for joining us today for Healthcare Realty's fourth 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 December 31, 2024. 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. Our 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 December 31, 2024. The company's earnings press release, supplemental information, and Form 10-K are available on our website. And now I'll turn the call over to our interim president and CEO, Connie Moore.

Thank you, Ron, and good morning, everyone, and thank you for being with us today. Joining me for our prepared remarks is Austin Helfrich, our Chief Financial Officer, and Rob Hull, our Chief Operating Officer. Also here with us and available for questions and answers is Ryan Crowley, our Chief Investment Officer. As many of you know, I've been affiliated with Healthcare Realty since the middle of 2022 as a member of the Board of Directors. Since our last call, and shortly after I stepped into my current role as interim president and CEO, the company made several meaningful board and management changes. We elevated existing director Tom Bajalian to independent chair. We appointed three new independent directors with deep industry and leadership experience, Dave Henry, Glenn Ruffano, and Don Wood. And we promoted Austin Helfrich to chief financial officer. In my new leadership role at Healthcare Realty, I've had the opportunity to become directly involved in our operations, our capital allocation decisions, and outlining our 2025 strategic priorities. Coupled with other executive appointments we announced in September, I am pleased to share that our leadership team has a fresh perspective, renewed vigor, and is executing with intensity. With these management enhancements, I'm more confident than ever that HR has the management team competitive position, and portfolio to deliver incremental value to shareholders and to do so on an accelerated basis. Moving to our 24 results, we laid out a plan to increase leasing and occupancy momentum and aggressively recycle capital during the year. Our normalized FFO per share in the fourth quarter was 40 cents at the high end of the range we provided and represents 2.5% year-over-year growth. We also achieved new lease commitments of nearly 600,000 square feet in the fourth quarter and 2 million square feet for the year, both all-time records. For occupancy absorption, we had projected 100 to 150 points of occupancy gains in the multi-tenant portfolio. We finished the year delivering 149 basis points at the high end of our plan. We did what we said we would do. We also continued our efforts to focus on operational efficiency. We reduced controllable operating expenses by 100 basis points. Our 2024 capital allocation plan was to raise proceeds and accretively repurchase shares that were trading at a significant discount. We generated $1.3 billion in proceeds during the year, including nearly $500 million of non-core asset sales that had limited upside. We also raised through an expanded joint venture platform with leading institutional partners, KKR and Nuveen. These joint ventures have been a strong new capital source to monetize largely stabilized assets. We allocated 510 million of the 1.3 billion to repurchase 31 million shares on a leveraged neutral basis. Along with the share repurchases, we also repaid 350 million of debt and ended the year at 6.4 times leverage, below the 6.5 times leverage we'd forecasted on our last call. Looking forward to 25, our strategic priorities are focused on, one, continuing our operational growth and momentum and operating efficiencies. Two, refining our portfolio through asset sales to focus the portfolio on the densest and fastest growing markets to maximize long-term NOI growth. And finally, our capital allocation priority in 2025 is focused on significant debt reduction. Combined with our operational growth, we will allocate proceeds to debt repayment and drive a natural deleveraging process towards the low end of our debt to EBITDA range. With this deleveraging process, there will be a modest near-term earnings headwind. We believe it's the right strategy to position HR for a lower cost of capital and stronger long-term growth. Before I turn the call over to the rest of the team, I want to provide an update on the CEO search. When I assumed the interim role, I communicated my tenure would be temporary and the board was committed to identifying a permanent CEO who would further advance our strategic priorities. The board search committee was established and the process began underway and has been underway since December with a leading executive search firm. We will not rush the process to ensure that the right leader is selected. So with that, I'm going to turn the call over to Rob to cover more details on our operations and market fundamentals. Austin will then finish with our financial results for 2025 guidance.