FILED PURSUANT TO RULE 424 (B) (2)
REGISTRATION STATEMENT NUMBER 33-97888
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 2, 1995)
March 2, 1998
A Maximum of 108,700 Shares
HEALTHCARE REALTY TRUST INCORPORATED
Common Stock
Healthcare Realty Trust Incorporated ("Healthcare Realty" or the "Company")
is a self-managed and self-administered real estate investment trust ("REIT")
that integrates owning, acquiring, managing and developing income-producing real
estate properties related to healthcare services throughout the United States.
As of January 31, 1998, the Company owned and operated, either directly or
through consolidated entities, 87 properties containing approximately 4.4
million square feet in 44 markets nationwide. In addition, as of January 31,
1998, the Company provided property management services for 130
healthcare-related properties nationwide and third party asset management
services for 251 properties nationwide.
All of the shares of the Company's common stock, par value $.01 per share
(the "Common Stock"), offered hereby (the "Shares") are being issued and sold by
the Company to one or more institutional investors at negotiated purchase
prices, for an aggregate purchase price and proceeds to the Company of up to
$3.0 million. The Common Stock is listed on the New York Stock Exchange ("NYSE")
under the symbol "HR." On February 27, 1998, the last reported sale price for
the Common Stock on the NYSE was $28.625 per share. Following completion of the
offering, assuming all of the Shares are sold at the last reported sales price,
the Company will issue 85,875 Shares to the purchasers and the Company will have
20,740,857 Shares outstanding (excluding shares reserved for issuance under its
compensation plans and its dividend reinvestment plan). The actual number of
Shares issued pursuant to the Offering and the number of Shares outstanding
following the Offering are dependent upon the per share sale price of the Shares
during completion of the Offering but shall not exceed a maximum of 108,700
Shares. The Company pays regular quarterly dividends.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus Supplement, the accompanying Prospectus and the information
incorporated herein by reference may contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995, which
statements are intended to be covered by the provisions of such act. Investors
are cautioned that all forward-looking statements involve risks and
uncertainties, including the factors contained in this Prospectus Supplement,
the accompanying Prospectus and the information incorporated by reference,
including the cautionary statements contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
The following information is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in,
or incorporated by reference into, this Prospectus Supplement and the
accompanying Prospectus. Unless the context otherwise requires, all references
to the "Company" or "Healthcare Realty" include Healthcare Realty Trust
Incorporated, its wholly-owned subsidiaries, and other entities in which
Healthcare Realty Trust Incorporated or its subsidiaries own an interest.
THE COMPANY
Healthcare Realty is a self-managed and self-administered REIT that
integrates owning, acquiring, managing and developing income-producing real
estate properties related to healthcare services throughout the United States.
From the commencement of its operations in June 1993 through January 31, 1998,
the Company has invested or committed to invest, directly and indirectly, over
$525 million in 87 income-producing real estate properties related to the
delivery of healthcare services, containing over 4.4 million square feet. As of
January 31, 1998, the Company's portfolio was comprised of seven facility types,
located in 44 markets nationwide, and operated pursuant to contractual
arrangements with 18 healthcare providers. At January 31, 1998, the Company
provided property management services for 130 healthcare-related properties
nationwide, totaling over 3.9 million square feet, and third-party asset
management services for 251 properties nationwide, totaling over 1.3 million
square feet. The Company intends to maintain a portfolio of properties that are
focused predominantly on the outpatient services segment of the healthcare
industry and are diversified by tenant, geographic location and facility type.
RECENT DEVELOPMENTS
Acquisitions. In December 1997, Healthcare Realty completed a $12.5 million
acquisition of an 80,000 square foot ancillary hospital facility under
development and additional building sites located adjacent to the 251-bed
Bradley County Memorial Hospital in Cleveland, Tennessee. Upon completion of the
development, which is expected to occur in June 1998, the ancillary hospital
facility is expected to be occupied by physician practices and affiliated
hospital services and support functions, including diagnostic imaging,
laboratory services and an ambulatory surgery center. The development is
situated on 8.5 acres that contain two additional sites for further development.
Operating Results and Distributions. Funds from operations ("FFO") for the
year ended December 31, 1997 increased 51.1% to $42.3 million, from $28.0
million for the year ended December 31, 1996. FFO for the three months ended
December 31, 1997 increased 52.7% to $11.3 million, from $7.4 million for the
three months ended December 31, 1996. The Company generally considers FFO a
widely used and appropriate measure of performance for an equity REIT which
provides a relevant basis for comparison among REITs.
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The Company's payout ratio, based on FFO, has decreased from approximately
90% for the year ended December 31, 1996 to approximately 87% for the year ended
December 31, 1997, and from approximately 88% for the three months ended
December 31, 1996 to approximately 85% for the three months ended December 31,
1997.
FFO, as defined by the National Association of Real Estate Investment
Trusts, Inc. 1995 White Paper, means net income computed in accordance with
generally accepted accounting principles ("GAAP"), excluding gains or losses
from debt restructuring and sales of property, plus depreciation and
amortization of real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash provided by
operating activities, as defined by GAAP, should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of operating performance and is not indicative of cash available to fund all
cash flow needs, including the Company's ability to make cash distributions.
USE OF PROCEEDS
The net proceeds from the sale of the shares of the Common Stock offered
hereby, after deducting estimated expenses of this Offering, are approximately
$3.0 million. The Company intends to use the net proceeds to fund its
development and acquisition activities and for general corporate purposes.
PLAN OF DISTRIBUTION
The Company plans to offer the Common Stock offered hereby at varying
prices related to the closing prices of the Common Stock on the NYSE directly to
one or more institutional investors without deduction for commissions or
discounts.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
On February 2, 1998, the Clinton Administration announced its revenue
proposals for the 1998/1999 Federal budget. These proposals contain certain
provisions that, if enacted, would significantly modify the REIT-related Code
provisions. The following list sets forth the major changes that have been
proposed: (i) limit the grandfathered status of existing stapled, or
paired-share, REITs by treating the stapled entities as one entity with respect
to properties acquired and activities or services performed relating to such
properties after the effective date; (ii) restrict impermissible businesses
indirectly conducted by REITs by prohibiting REITs from acquiring stock that
represents more than 10% of the vote and value of all classes of stock of a
corporation after the effective date (subject to certain grandfather
provisions); (iii) modify the treatment of closely held REITs by imposing as an
additional requirement for initial REIT qualification that no person can own
stock of a REIT possessing more than 50% of the total combined voting power of
all classes of voting stock or more than 50% of the total value of shares of all
classes of stock; and (iv effectively eliminate the tax-free conversions of
large C corporations to REITs by repealing Code Section 1374 and requiring the
conversion to be treated as a liquidation of the C corporation followed by a
contribution of the assets to a REIT. If enacted, the effective date of each of
these provisions will generally be the first date of committee action. At this
time, it is uncertain whether any or all of these provisions, or additional
provisions, will be enacted, or if enacted, to what extent, if any, they will
materially affect the Company.
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A Maximum of 108,700 Shares
HEALTHCARE REALTY
TRUST INCORPORATED
COMMON STOCK
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PROSPECTUS SUPPLEMENT
March 2, 1998
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No person has been authorized in connection with the offering made hereby
to give any information or to make any representations not contained in this
Prospectus Supplement and accompanying Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Underwriter. Neither this Prospectus Supplement nor the
accompanying Prospectus constitutes an offer to sell or a solicitation of an
offer to buy the shares of Common Stock offered hereby to any person or by
anyone in any jurisdiction in which it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus Supplement and the
accompanying Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained in this
Prospectus Supplement and the accompanying Prospectus is correct as of any date
subsequent to the date hereof.
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TABLE OF CONTENTS
Prospectus Supplement
<S> <C>
Page
The Company S-2
Recent Developments S-2
Use of Proceeds S-3
Plan of Distribution S-3
Certain Federal Income Tax Considerations S-3
Prospectus
Available Information 2
Incorporation of Certain Documents by
Reference 2
The Company 3
Use of Proceeds 3
Ratio of Earnings to Fixed Charges 3
Description of Common Stock 3
Description of Common Stock Warrants 6
Description of Preferred Stock 6
Description of Debt Securities 10
Federal Income Tax and ERISA
Considerations 15
Plan of Distribution 16
Experts 17
Legal Matters 17
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