Healthcare Trust of America, Inc. Class A

Good afternoon and welcome to the Healthcare Trust of America first quarter 2021 earnings 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 telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Gershon, Chief Accounting Officer. Please go ahead.

Thank you, and welcome to Healthcare Trust of America's first quarter 2021 earnings call. We filed our earnings release in our financial supplement yesterday after the close. These documents can be found on the investor relations section of our website or with the SEC. Please note this call is being webcast and will be available for replay for the next 90 days. We will be happy to take your questions at the conclusion of our prepared remarks. During the course of the call, we will make forward-looking statements. These forward-looking statements are based on the current beliefs of management and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance. Therefore, our actual future results could materially differ from our current expectations. For a detailed description on potential risks, please refer to our SEC filings, which can be found in the investor relations section of our website. I will now turn the call over to Scott Peters, Chairman and CEO of Healthcare Trust of America. Scott?

Thank you, David, and good morning, and thank you, everyone, for joining us today for Healthcare Trust of America's first quarter 2021 earnings conference call. Joining me on the call today is Robert Milligan, our true financial officer. Over the last year, the medical office sector has lived up to its reputation as a steady, independable asset class. Occupancy and cash collections have remained strong. Tenant utilization and performance in our key markets are returning to near pre-COVID levels. Healthcare systems are rebounding from the temporary shutdowns in March and April of 2020, and patient visits are returning to normal given healthcare's need-based demand. However, the sector was not immune from the pandemic. Small practices and more secondary markets have certainly struggled more than most, while larger providers and healthcare systems consolidated and put expansion plans on hold and were subsidized by the relief packages passed by Congress. It has also accelerated additional change that were taking place, including the implementation of telemedicine, the move to lower-cost outpatient locations, continued provider consolidations, and to what we feel is a significant population trend towards increased growth in our key markets. Compared to most other sectors, these impacts have been relatively minimal and, in fact, will be positive over the longer term, given the amount of health care service demand that is expected as the population ages and the country accelerates investment into health care. However, without doubt, there continues a cautious and integrated approach that providers continue to take in their business plans as it relates to the longer-lasting impact of the pandemic. The good news for the sector is that we are seeing activity levels on key growth metrics coming back, which bodes well for expectations for occupancy, acquisitions, and developments as we progress throughout the year. For HTA, we have reacted to the pandemic by focusing on the long-term. Going into 2020, we had already positioned our company as a leader in the space, with a focus on key markets and an integrated operating team that can take advantage of opportunities as the sector evolves and grows. Over the last year, we have taken additional steps to ensure we are positioned for an ensuing rebound. First, we focused on our healthcare relationships. working with them through their difficult times through rent deferrals, early renewals, and asset purchases. Second, we positioned our portfolio for the inevitable rebound and focus on outpatient growth, limiting our long-term commitments that would require either below-market rents, abnormal concessions, or to tenants with business models or lease structures that are unlikely to succeed as we pivot and anticipate the oncoming new economic business cycle. Third, we have remained disciplined in our investments. As the private market has continued to pursue MOVs, we have remained committed to our underwriting discipline, focused on markets and assets that should perform over the next 10 to 15 years. Finally, we have preserved our capital and balance sheet, ending the first quarter with over 400 million of long-term capital and a balance sheet that can finance longer-term growth. Even with this long-term focus, our first quarter performed has remained extremely strong, highlighted by record earnings of $0.44 per diluted share, an increase of 4.8% compared to the first quarter 2020, and up on a sequential basis. Normalized FAD of $88.8 million, an increase of almost 15% from the prior year, fully supporting our dividend. HDA has raised its dividend seven years in a row. rent growth of 3.1% on almost half a million square feet of renewals, an increase in new leasing activity with over 200,000 square feet of new leases signed, the highest level we've had since 2017, and driven by properties in our development and redevelopment pools. Acquisitions of $30 million in our key markets at yields approaching 6%. Further, as of today, we have more than $160 million of additional investments either closed or under exclusive contract and expect to close in the second quarter at yields in our targeted range of 5.5% to 6%. 110 million of developments on track to be delivered in 2021 with a pipeline of potential new development opportunities in the pre-leasing stage that would get us back to our 100 to 200 million of annual announcements by the third quarter. This is a significant change for us as we find new and innovative ways to grow our portfolio accretively to the long term. Finally, a balance sheet with more than $1.3 billion in liquidity and leverage of just 5.4 times, incorporating forward equity we have previously raised. While we did not close on any dispositions, we have also entered into the agreement to sell out of our non-core markets at attractive pricing and invest in longer-term growth opportunities in our key markets. As a result of this performance, we were able to tighten our earnings guidance range for the year. As we look ahead towards the rest of 2021, HTA is focused entirely on continuing to position our company for the long term and positioning the portfolio for the economic implications and effects that may present themselves in the upcoming years. As we have illustrated in the last 12 months, we will focus on growing our earnings maximizing our investment capital, protecting our portfolio value, and creating long-term enterprise value based on strong underlying fundamentals. This includes a focus on our occupancy and rent levels, investments in our key markets, dispositions in our non-key markets, and utilization of our long-term capital while still maintaining our balance sheet for long-term growth. I will now turn the call over to Robert.