Key Highlights

● Normalized funds from operations were $0.41 per diluted share, unchanged from a year earlier.

● Same-store cash net operating income grew 5.1 per cent in the quarter.

● Total revenues fell to $281.8 million from $297.5 million amid an asset disposal programme.

● Full-year 2026 normalized FFO guidance was raised to $1.62 to $1.66 per share.

Healthcare Realty Trust (NYSE:HR), a real estate investment trust focused on medical outpatient buildings, reported second-quarter 2026 results on 30 July 2026. Because it is a REIT, the more informative measures are funds from operations (FFO) rather than headline earnings, and the company reported both. Normalized FFO was $0.41 per diluted share, unchanged from the prior-year quarter. NAREIT FFO rose to $0.36 per share from $0.34. The GAAP net loss narrowed to $43.5 million, or $0.13 per share, against $157.9 million, or $0.45, a year earlier. Total revenues were $281.8 million, down from $297.5 million, a decline that sits alongside the company's disposal programme.

Operating Indicators and Guidance

Same-store cash net operating income grew 5.1% in the quarter. Management reported tenant retention of 88.5% and cash leasing spreads of 4.8%, with 1.5 million square feet of leases executed across 323 transactions. Management guidance, which is a forecast rather than a result, was raised. Full-year 2026 normalised FFO is now expected at $1.62 to $1.66 per share, up from $1.59 to $1.65. Same-store cash NOI growth guidance moved to 4.25% to 5.00%. NAREIT FFO guidance was left at $1.45 to $1.51, and the earnings-per-share range was lowered to a loss of $0.15 to $0.11 per share.

Balance Sheet and Funding

The company reported run-rate net debt to adjusted EBITDA of 5.6 times and roughly $1.6 billion of liquidity. During the quarter it issued $700 million of 3.00% exchangeable senior notes due 2032, with an exchange price of $23.01 per share, and used the proceeds mainly to repay $600 million of notes due in August 2026. It also arranged a $400 million delayed draw term loan, undrawn at 30 June, and repurchased 3.8 million shares for $75 million. A quarterly dividend of $0.24 per share was approved, payable on 26 August 2026. The company reported a funds available for distribution payout ratio of 76% for the quarter.

Leverage Sits Above the Sector Norm

Healthcare Realty Trust's operating metrics, including 88.5 per cent tenant retention and 5.1 per cent same-store income growth, point to a stable medical office portfolio, even as revenue declines reflect roughly $83 million of planned dispositions at cap rates below 5 per cent against new joint-venture acquisitions near 7.5 per cent. With net debt to adjusted EBITDA at 5.6 times, above a typical REIT, and $700 million of new exchangeable notes carrying dilution risk if the shares rise above the $23.01 exchange price, the raised FFO guidance sits against a still-elevated leverage profile.