Healthcare Realty Boosts Outlook on Strong Q1, Medical Sector Boom

NASHVILLE, TN – April 30, 2026 – Healthcare Realty Trust (NYSE: HR) delivered a robust first-quarter performance, capitalizing on the surging demand for medical outpatient facilities and prompting an upward revision of its full-year 2026 guidance. The nation's largest pure-play owner of medical outpatient buildings reported a significant 6.9% increase in Same Store Cash Net Operating Income (NOI) and a Normalized Funds From Operations (FFO) of $0.41 per share, surpassing the $0.39 per share recorded in the same period last year.

The strong results, driven by high tenant retention and vigorous leasing activity, have instilled confidence in the company's outlook. Management increased its 2026 Normalized FFO guidance to a range of $1.59 to $1.65 per share. The forecast for Same Store Cash NOI growth was also lifted by 25 basis points to a new range of 3.75% to 4.75%, signaling sustained operational momentum in a resilient and growing sector.

A Sector in Robust Health

Healthcare Realty's impressive quarter is not an isolated event but rather a reflection of powerful tailwinds in the broader healthcare real estate market. The medical outpatient building (MOB) sector is experiencing unprecedented demand, fueled by a confluence of demographic shifts and changes in healthcare delivery.

A primary driver is the aging U.S. population, which is increasing the need for accessible and frequent medical services, particularly for chronic conditions best managed in outpatient settings. This demographic trend is compounded by a systemic shift in the healthcare industry itself. Seeking cost efficiencies and patient convenience, health systems are increasingly moving procedures and services from traditional, expensive inpatient hospitals to more nimble and affordable outpatient facilities. Outpatient care can be 30-60% less expensive, a compelling economic incentive for providers and payers alike.

These factors have created a landlord's market for high-quality MOBs. Occupancy rates reached a record high of 92.7% at the end of 2025, and with new construction starts constrained by higher financing costs, inventories remain tight. This supply-demand imbalance is pushing rental rates upward and making MOBs a highly sought-after, defensive asset class for institutional investors. Healthcare Realty, with its vast portfolio of properties located on or adjacent to leading hospital campuses, is uniquely positioned to benefit from these long-term trends.

Strategic Maneuvers Fuel Growth

Beyond favorable market conditions, Healthcare Realty's proactive capital management and strategic partnerships have been instrumental in its success. A key component of this strategy is its joint venture with global investment firm KKR, which serves as a powerful engine for growth and capital recycling.

In the first quarter, the JV executed its first new acquisition since its formation, purchasing a state-of-the-art MOB in Birmingham, Alabama, for $89 million. This transaction expands the company's footprint in a key market and demonstrates the JV's capacity for growth. The venture, which could exceed $1 billion in value, allows Healthcare Realty to unlock capital from its stabilized assets—receiving cash for an 80% stake sold to KKR while retaining management and a 20% interest—and redeploy it into higher-return opportunities, including share repurchases.

Demonstrating confidence in its own valuation, the company repurchased 5.7 million shares of its common stock for $100 million during the quarter. This strategic use of capital, funded in part by proceeds from the KKR partnership, directly enhances shareholder value. Further strengthening its financial position, the company secured $400 million in commitments for a new unsecured delayed draw term loan and established a $600 million commercial paper program, significantly boosting its liquidity and financial flexibility.

Modernizing the Landscape of Care

Healthcare Realty is not merely a landlord but an active partner in shaping the future of healthcare delivery. The company's development and redevelopment pipeline is focused on modernizing facilities to meet the sophisticated needs of today's health systems and patients. In the first quarter, the company executed 2.0 million square feet of leases, including significant renewals with major health systems like Wellstar Health System in Atlanta and Advocate Health in Charlotte.

Completed projects, such as the $35 million redevelopment of two MOBs in Charlotte, North Carolina, showcase this commitment. Now 98% leased, the properties host a diverse mix of high-demand specialties including cardiology, oncology, and women's health. In Boston, the company has commenced a $25 million redevelopment of a 155,000 square-foot building connected to Tufts Medical Center, a project designed to modernize the fully leased property and support the delivery of world-class healthcare.

These projects underscore a focus on creating state-of-the-art environments that are essential for modern medical practice, solidifying the long-term value and relevance of the company's portfolio.

A Steady Hand on Governance

The company's strategic execution is guided by a proactive approach to corporate governance. As part of its ongoing “Board Refreshment initiatives,” longtime director Jay Leupp announced he will retire following the upcoming annual meeting. This move is part of a broader, deliberate strategy to ensure the board remains agile and aligned with best practices.

This initiative saw a more significant change in June 2025, when the company streamlined its board from 12 to 7 members. This reduction was a conscious effort to enhance efficiency and align with the structures of peer REITs. In his retirement announcement, Mr. Leupp, the longest-tenured independent director, noted his belief in continuing board refreshment and his plan to remain a shareholder, expressing confidence in the company's leadership and strategic direction. This disciplined approach to governance provides a stable foundation, assuring investors that the company is well-stewarded for long-term growth and resilience in a strong position to continue navigating the dynamic healthcare landscape.