[HR] Healthcare Realty Trust Thesis 2026: Medical Outpatient Building REIT Drives On Campus Occupancy Recovery Capital Return

Key Takeaways

• HR FY2025 revenue ~$1.25-1.40B (-3 to +3% YoY) with adj. FFO/share ~$1.55-1.75 reflecting continued ~$11.5-12.5B aggregate gross real estate assets + ~650+ aggregate medical outpatient buildings (MOBs) + ~38-40M aggregate square feet + ~88-92% aggregate occupancy + ~3-4% aggregate same-store NOI growth under continued President + CEO Peter Scott since 2024 (~1-2 year tenure as Healthcare Realty Trust CEO; selected post-2024 succession from Todd Meredith departure + selected post-2024 succession from Physicians Realty Trust CFO / Welltower executive background + selected primary architect of post-2024 strategic reset toward occupancy recovery + portfolio optimization + selected various aggregate post-2022 ~$18B aggregate Healthcare Trust of America merger integration + post-2024 non-core asset disposition + leverage reduction).
• On-Campus Medical Outpatient Building Occupancy Recovery Pipeline (~650+ MOBs, ~38-40M SF): ~650+ aggregate medical outpatient buildings + ~38-40M aggregate square feet + selected primary ~70%+ aggregate on-campus or adjacent-to-hospital concentration (selected primary differentiated vs off-campus MOB peers + selected various aggregate ~higher tenant retention + ~higher rent escalators) + selected various aggregate ~88-92% aggregate occupancy (selected primary post-2022 Healthcare Trust of America merger occupancy dilution + selected various aggregate ~+100-300bps aggregate occupancy recovery trajectory toward ~92-94% stabilized occupancy) + selected various aggregate ~3-4% aggregate same-store cash NOI growth + selected various aggregate ~3-4% aggregate annual rent escalators + selected various aggregate health system + physician group + selected various aggregate investment-grade tenant base (~60%+ aggregate investment-grade or credit-rated tenants) + selected various aggregate ~$1B+ aggregate developer/operator multi-tenant property management platform + selected various aggregate ~major MSA concentration (Dallas + Houston + Atlanta + Charlotte + Seattle + Denver + Nashville + selected various aggregate).
• Portfolio Optimization + Capital Recycling + Development Pipeline (Strategic Catalyst): selected primary post-2024 non-core asset disposition + capital recycling (selected various aggregate ~$0.5-1.5B aggregate FY2024-2025 dispositions + selected various aggregate non-core/lower-occupancy MOB sales + selected various aggregate joint venture monetization) + selected various aggregate development + redevelopment pipeline (selected primary ~$0.1-0.3B aggregate development + redevelopment pipeline + selected various aggregate build-to-suit + selected various aggregate ~6.5-7.5% aggregate development yield) + selected various aggregate ~excess capital deployment (selected primary post-2024 leverage reduction + selected various aggregate ~$0+ aggregate buyback + dividend coverage improvement + selected various aggregate potential ~FY2026-FY2027 acquisition resumption) + selected various aggregate post-2024-2025 dividend coverage improvement (selected primary post-2024 dividend cut from ~$1.24 → ~$1.16 + selected various aggregate ~AFFO payout ratio normalization toward ~75-85%).
• Capital position + balance sheet: ~$1.16 aggregate annual dividend (~75-90% aggregate AFFO payout ratio; ~6.0-8.0% aggregate dividend yield; post-2024 dividend cut from ~$1.24 → ~$1.16 + selected various aggregate dividend coverage improvement trajectory); no aggregate FY2025 buybacks (selected primary capital reinvestment + leverage reduction priority); aggregate capital return ~$415-420M FY2025 (~100% via dividend); net leverage ~6.0-6.5x Net Debt/EBITDA (post-2022 Healthcare Trust of America merger elevated leverage + post-2024-2025 deleveraging glide path toward ~5.5-6.0x); investment-grade Baa2/BBB credit rating; ~355-365M aggregate diluted shares + OP units.
• FY2026 thesis catalysts: On-Campus Medical Outpatient Building Occupancy Recovery pipeline (~650+ MOBs + ~38-40M SF + ~70%+ on-campus or adjacent-to-hospital concentration + ~88-92% occupancy recovery toward ~92-94% stabilized + 3-4% same-store cash NOI growth + investment-grade tenant base + major MSA concentration) + Portfolio Optimization + Capital Recycling + Development pipeline ($0.5-1.5B FY2024-2025 dispositions + ~$0.1-0.3B development pipeline + leverage reduction + dividend coverage improvement) + ~$415-420M aggregate FY2025 capital return + Peter Scott occupancy recovery + portfolio optimization execution.

Company Background

Healthcare Realty Trust Incorporated (NYSE: HR) is a US medical outpatient building (MOB) healthcare real estate investment trust (REIT), formed in current scale via the July 2022 ~$18B aggregate merger of Healthcare Realty Trust + Healthcare Trust of America (selected primary legacy Healthcare Realty Trust founded 1992 in Nashville Tennessee + Healthcare Trust of America founded 2006; selected primary post-July 2022 combined entity = Healthcare Realty Trust / NYSE: HR; ~$18B aggregate combined gross real estate). Selected post-1993 NYSE listing (legacy Healthcare Realty Trust); selected post-2022 Healthcare Trust of America merger; selected post-2024 Peter Scott CEO appointment (selected post-2024 succession from Todd Meredith departure; selected post-2024 ex-Physicians Realty Trust CFO / Welltower executive background); selected post-2024-2025 selected various aggregate occupancy recovery + portfolio optimization + non-core asset disposition + leverage reduction; HQ Nashville Tennessee; ~600-700 employees.

HR operates as 1 primary segment (medical outpatient building REIT). Revenue $1.25-1.40B aggregate; selected primary rental income ($1.20-1.35B; selected primary medical outpatient building lease income) + selected various aggregate other income (selected primary tenant reimbursements + interest income + selected various aggregate ~$0.05-0.08B aggregate). Portfolio: ~650+ aggregate medical outpatient buildings + ~38-40M aggregate square feet across selected various aggregate ~35+ aggregate states (selected primary major MSA concentration — Dallas + Houston + Atlanta + Charlotte + Seattle + Denver + Nashville + selected various aggregate Sun Belt + growth markets). Tenant base: ~60%+ aggregate investment-grade or credit-rated tenants (health systems + physician groups). On-campus or adjacent-to-hospital concentration: ~70%+ aggregate.

Capital position: ~$1.16 aggregate annual dividend (~75-90% aggregate AFFO payout ratio; ~6.0-8.0% aggregate dividend yield; post-2024 dividend cut from ~$1.24 → ~$1.16); no aggregate FY2025 buybacks; aggregate capital return ~$415-420M FY2025; net leverage ~6.0-6.5x Net Debt/EBITDA; investment-grade Baa2/BBB credit rating; ~355-365M aggregate diluted shares + OP units.

On-Campus Medical Outpatient Building Occupancy Recovery Pipeline (~650+ MOBs, ~38-40M SF)

The On-Campus Medical Outpatient Building Occupancy Recovery pipeline is HR's foundation thesis: ~650+ aggregate medical outpatient buildings + ~38-40M aggregate square feet + selected primary ~70%+ aggregate on-campus or adjacent-to-hospital concentration (selected primary differentiated vs off-campus MOB peers + selected various aggregate ~higher tenant retention + ~higher rent escalators) + selected various aggregate ~88-92% aggregate occupancy (selected primary post-2022 Healthcare Trust of America merger occupancy dilution + selected various aggregate ~+100-300bps aggregate occupancy recovery trajectory toward ~92-94% stabilized occupancy) + selected various aggregate ~3-4% aggregate same-store cash NOI growth + selected various aggregate ~3-4% aggregate annual rent escalators + selected various aggregate health system + physician group + selected various aggregate investment-grade tenant base (~60%+ aggregate investment-grade or credit-rated tenants) + selected various aggregate ~$1B+ aggregate developer/operator multi-tenant property management platform + selected various aggregate ~major MSA concentration (Dallas + Houston + Atlanta + Charlotte + Seattle + Denver + Nashville + selected various aggregate).

FY2025 On-Campus Medical Outpatient Building Occupancy Recovery dynamics (~650+ MOBs; $1.25-1.40B aggregate revenue): selected continued post-2024 ~-2 to +2% aggregate revenue growth (selected primary ~88-92% aggregate occupancy + selected various aggregate ~+100-300bps aggregate occupancy recovery trajectory + selected various aggregate ~3-4% aggregate same-store cash NOI growth + selected various aggregate ~3-4% aggregate annual rent escalators + selected various aggregate non-core asset disposition revenue dilution offset + selected various aggregate ~70%+ aggregate on-campus or adjacent-to-hospital concentration + selected various aggregate ~60%+ aggregate investment-grade or credit-rated tenant base) + ~650+ aggregate medical outpatient buildings + ~38-40M aggregate square feet + selected various aggregate major MSA concentration. Selected post-2024 ~$1.40-1.60 incremental annual adj. FFO/share contribution as On-Campus Medical Outpatient Building Occupancy Recovery pipeline drives incremental rental income + occupancy recovery.

FY2026 catalyst: continued On-Campus Medical Outpatient Building Occupancy Recovery pipeline + ~$1.40-1.60 incremental annual adj. FFO/share contribution under continued Peter Scott leadership (~1-2 year tenure). Selected aggregate ~$1.27-1.42B aggregate FY2026 revenue + selected various ~+0-4% aggregate growth + selected various aggregate ~89-93% aggregate occupancy (continued ~+100-300bps aggregate occupancy recovery toward ~92-94% stabilized occupancy) + selected various aggregate ~3-4% aggregate same-store cash NOI growth + selected various aggregate ~3-4% aggregate annual rent escalators + selected various aggregate ~70%+ aggregate on-campus or adjacent-to-hospital concentration + selected various aggregate ~60%+ aggregate investment-grade or credit-rated tenant base + selected various aggregate health system outpatient migration + ambulatory care demand tailwind. Risks: Welltower (WELL, ~$80-100B Mcap; senior housing + medical office + outpatient — #1 healthcare REIT) + Ventas (VTR, ~$25-30B; senior housing + medical office + life science) + Healthpeak Properties (DOC, ~$13-16B; medical office + life science + outpatient — merged with Physicians Realty Trust 2024) + Omega Healthcare Investors (OHI, ~$8-10B; skilled nursing) + Medical Properties Trust (MPW, ~$2-4B; hospitals) + Global Medical REIT (GMRE, ~$0.3-0.6B; medical office) + selected various aggregate medical office + healthcare REIT competitive considerations + medical office building leasing cycle considerations + health system + physician group tenant credit considerations + Federal Reserve interest rate cycle considerations (cap rate sensitivity + cost of capital) + selected various aggregate occupancy recovery execution considerations + selected various aggregate post-2022 Healthcare Trust of America merger integration considerations + selected various aggregate ambulatory care demand cycle considerations.

Portfolio Optimization + Capital Recycling + Development Pipeline (Strategic Catalyst)

The Portfolio Optimization + Capital Recycling + Development pipeline is HR's primary growth thesis: selected primary post-2024 non-core asset disposition + capital recycling (selected various aggregate ~$0.5-1.5B aggregate FY2024-2025 dispositions + selected various aggregate non-core/lower-occupancy MOB sales + selected various aggregate joint venture monetization) + selected various aggregate development + redevelopment pipeline (selected primary ~$0.1-0.3B aggregate development + redevelopment pipeline + selected various aggregate build-to-suit + selected various aggregate ~6.5-7.5% aggregate development yield) + selected various aggregate ~excess capital deployment (selected primary post-2024 leverage reduction + selected various aggregate ~$0+ aggregate buyback + dividend coverage improvement + selected various aggregate potential ~FY2026-FY2027 acquisition resumption) + selected various aggregate post-2024-2025 dividend coverage improvement (selected primary post-2024 dividend cut from ~$1.24 → ~$1.16 + selected various aggregate ~AFFO payout ratio normalization toward ~75-85%).

FY2025 Portfolio Optimization + Capital Recycling + Development dynamics: selected primary ~$0.5-1.5B aggregate FY2024-2025 dispositions (selected various aggregate non-core/lower-occupancy MOB sales + selected various aggregate joint venture monetization) + selected various aggregate ~$0.1-0.3B aggregate development + redevelopment pipeline + selected various aggregate build-to-suit + selected various aggregate ~6.5-7.5% aggregate development yield + selected various aggregate ~excess capital deployment (selected primary post-2024 leverage reduction toward ~5.5-6.0x net leverage + selected various aggregate dividend coverage improvement) + selected various aggregate post-2024 dividend cut from ~$1.24 → ~$1.16 + selected various aggregate ~AFFO payout ratio normalization toward ~75-85% + selected various aggregate ~$0.5-1.0B aggregate FY2025 disposition proceeds used for debt reduction. Selected post-2024 ~$0.10-0.20 incremental annual adj. FFO/share contribution as Portfolio Optimization + Capital Recycling + Development pipeline drives incremental quality + leverage improvement.

FY2026 catalyst: continued Portfolio Optimization + Capital Recycling + Development pipeline + ~$0.10-0.20 incremental adj. FFO/share contribution. Selected aggregate ~$0.3-1.0B aggregate FY2026 dispositions (continued non-core/lower-occupancy MOB sales + joint venture monetization) + selected various aggregate ~$0.1-0.3B aggregate development + redevelopment pipeline + selected various aggregate ~6.5-7.5% aggregate development yield + selected various aggregate ~excess capital deployment (selected primary continued leverage reduction toward ~5.5-6.0x net leverage + selected various aggregate dividend coverage improvement + selected various aggregate potential ~FY2026-FY2027 acquisition resumption + Federal Reserve interest rate cut cost of capital tailwind) + selected various aggregate post-2024-2025 dividend coverage improvement (selected primary ~AFFO payout ratio normalization toward ~75-85%). Risks: Welltower + Ventas + Healthpeak Properties + Omega Healthcare + Medical Properties Trust + Global Medical REIT medical office + healthcare REIT acquisition competition + Blackstone + KKR + Nuveen Real Estate + Harrison Street + selected various aggregate private equity + institutional healthcare real estate acquisition competition + medical office building cap rate considerations + Federal Reserve interest rate cycle considerations (cap rate sensitivity + cost of capital) + selected various aggregate non-core asset disposition pricing considerations + selected various aggregate development + permitting cycle considerations + selected various aggregate post-2024-2025 deleveraging glide path execution considerations + selected various aggregate dividend coverage improvement execution considerations.

Capital Position + Balance Sheet

Capital position + balance sheet: ~$1.16 aggregate annual dividend (~75-90% aggregate AFFO payout ratio; ~6.0-8.0% aggregate dividend yield; post-2024 dividend cut from ~$1.24 → ~$1.16 + selected various aggregate dividend coverage improvement trajectory) + no aggregate FY2025 buybacks (selected primary capital reinvestment + leverage reduction priority) + aggregate capital return ~$415-420M FY2025 (~100% via dividend) + net leverage ~6.0-6.5x Net Debt/EBITDA (post-2022 Healthcare Trust of America merger elevated leverage + post-2024-2025 deleveraging glide path toward ~5.5-6.0x) + investment-grade Baa2/BBB credit rating + ~355-365M aggregate diluted shares + OP units + weighted average debt maturity ~5-7 years.

FY2026 catalyst: continued ~$415-425M aggregate annual capital return + selected continued ~6.0-8.0% aggregate dividend yield + selected continued ~$1.16-1.20 aggregate annual dividend (post-FY2025 stabilized dividend post-2024 cut + selected various aggregate dividend coverage improvement + ~AFFO payout ratio normalization toward ~75-85%) + selected continued ~5.5-6.0x net leverage (post-FY2025 deleveraging glide path via ~$0.3-1.0B aggregate FY2026 dispositions + organic NOI growth) + selected various aggregate continued no buyback policy. Selected ~75-90% aggregate AFFO payout ratio + selected investment-grade Baa2/BBB credit rating + selected ~5.5-6.0x net leverage deleveraging glide path + selected various aggregate ~$0.3-1.0B aggregate FY2026 dispositions support continued dividend + On-Campus Medical Outpatient Building Occupancy Recovery + Portfolio Optimization + development + selected various aggregate potential ~FY2026-FY2027 acquisition resumption.

Key Core Metrics

• FY2025 revenue ~$1.25-1.40B (-3 to +3% YoY) vs $1.30B FY2024; adj. FFO/share ~$1.55-1.75
• 1 primary segment: medical outpatient building REIT ~100%
• Portfolio: ~650+ aggregate medical outpatient buildings (MOBs) + ~38-40M aggregate square feet across ~35+ states
• Major MSA concentration: Dallas + Houston + Atlanta + Charlotte + Seattle + Denver + Nashville + Sun Belt + growth markets
• On-campus or adjacent-to-hospital concentration: ~70%+ aggregate
• Aggregate occupancy: 88-92% (+100-300bps recovery trajectory toward ~92-94% stabilized; post-2022 Healthcare Trust of America merger occupancy dilution)
• Same-store cash NOI growth: ~3-4% aggregate
• Annual rent escalators: ~3-4% aggregate
• Tenant base: ~60%+ aggregate investment-grade or credit-rated tenants (health systems + physician groups)
• post-2022 Healthcare Trust of America merger: ~$18B aggregate (Healthcare Realty Trust + Healthcare Trust of America = Healthcare Realty Trust / NYSE: HR)
• FY2024-2025 dispositions: ~$0.5-1.5B aggregate (non-core/lower-occupancy MOB sales + joint venture monetization; used for debt reduction)
• Development + redevelopment pipeline: ~$0.1-0.3B aggregate (~6.5-7.5% development yield)
• post-2024 dividend cut: ~$1.24 → ~$1.16
• AFFO payout ratio: ~75-90% aggregate (normalization toward ~75-85%)
• Aggregate gross real estate assets: ~$11.5-12.5B FY2025
• Net leverage ~6.0-6.5x Net Debt/EBITDA (deleveraging glide path toward ~5.5-6.0x)
• ~355-365M aggregate diluted shares + OP units; ~$415-420M total capital return FY2025
• Dividend ~$1.16 annual (~75-90% AFFO payout; ~6.0-8.0% yield; post-2024 cut from ~$1.24 → ~$1.16)
• No aggregate FY2025 buybacks (capital reinvestment + leverage reduction priority)
• Investment-grade Baa2/BBB credit rating
• ~600-700 employees
• Peter Scott CEO since 2024 (~1-2 year tenure; ex-Physicians Realty Trust CFO / Welltower executive)
• HQ Nashville Tennessee

Market Evaluation

HR FY2026 market evaluation: at ~$15-22 share price + ~355-365M aggregate diluted shares + OP units = ~$5.5-8B market cap; ~$1.16 aggregate annual dividend + ~6.0-8.0% aggregate dividend yield. Selected primary HR peers: Welltower (WELL, ~$80-100B Mcap; senior housing + medical office + outpatient — #1 healthcare REIT) + Ventas (VTR, ~$25-30B; senior housing + medical office + life science) + Healthpeak Properties (DOC, ~$13-16B; medical office + life science + outpatient — merged with Physicians Realty Trust 2024) + Omega Healthcare Investors (OHI, ~$8-10B; skilled nursing) + Medical Properties Trust (MPW, ~$2-4B; hospitals) + Global Medical REIT (GMRE, ~$0.3-0.6B; medical office) + Sila Realty Trust (SILA, ~$1.5-2.5B; healthcare net lease) + American Healthcare REIT (AHR, ~$5-7B; senior housing + outpatient) + Community Healthcare Trust (CHCT, ~$0.5-1.0B; medical office + healthcare) + selected various aggregate medical office + healthcare REIT companies. Selected HR ~9-13x P/FFO (medical outpatient building REIT with ~70%+ on-campus or adjacent-to-hospital concentration + ~88-92% occupancy recovery + ~3-4% same-store cash NOI growth + investment-grade tenant base + post-2022 Healthcare Trust of America merger integration + post-2024-2025 portfolio optimization + leverage reduction) + selected ~0.8-1.1x P/NAV + selected ~6.0-8.0% dividend yield + selected aggregate ~$1.27-1.42B aggregate FY2026 revenue + selected aggregate ~$1.55-1.80 aggregate FY2026 adj. FFO/share + selected aggregate ~$415-425M aggregate FY2026 capital return + selected aggregate On-Campus Medical Outpatient Building Occupancy Recovery + Portfolio Optimization + Capital Recycling + Development pipeline. FY2026 base case: ~$1.27-1.42B aggregate revenue + ~$1.55-1.80 adj. FFO/share + ~$415-425M aggregate capital return. Bull case: On-Campus Medical Outpatient Building Occupancy Recovery pipeline acceleration (~89-93% occupancy recovery toward ~92-94% stabilized + ~3-4% same-store cash NOI growth + ~3-4% annual rent escalators + 70%+ on-campus or adjacent-to-hospital concentration + health system outpatient migration + ambulatory care demand tailwind + Federal Reserve interest rate cut cap rate compression) + Portfolio Optimization + Capital Recycling + Development pipeline acceleration ($0.3-1.0B FY2026 dispositions + ~$0.1-0.3B development pipeline + leverage reduction toward ~5.5-6.0x + dividend coverage improvement + potential acquisition resumption) drives ~$1.35-1.50B aggregate revenue + ~$1.75-2.00 adj. FFO/share. Bear case: Welltower + Ventas + Healthpeak Properties + Omega Healthcare + Medical Properties Trust + Global Medical REIT + Sila Realty + American Healthcare REIT + Community Healthcare Trust competitive intensification + medical office building leasing cycle considerations + health system + physician group tenant credit considerations + Federal Reserve interest rate cycle considerations (cap rate sensitivity + cost of capital) + occupancy recovery execution considerations + post-2022 Healthcare Trust of America merger integration considerations + ambulatory care demand cycle considerations + post-2024-2025 deleveraging glide path execution considerations + dividend coverage improvement execution considerations + post-2024 Peter Scott CEO succession planning considerations drives ~$1.20-1.30B revenue + ~$1.40-1.55 adj. FFO/share. The thesis depends on On-Campus Medical Outpatient Building Occupancy Recovery + Portfolio Optimization + Capital Recycling + Development + ~70%+ on-campus or adjacent-to-hospital concentration + ~88-92% occupancy recovery toward ~92-94% stabilized + ~3-4% same-store cash NOI growth + investment-grade tenant base + post-2024-2025 leverage reduction + dividend coverage improvement + Peter Scott occupancy recovery + portfolio optimization execution.