HEALTHCARE REALTY TRUST INCORPORATED (HR): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/HR

Headline

Field	Value
Ticker	HR
Company	HEALTHCARE REALTY TRUST INCORPORATED
Current price	$21.84/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	reit
Implied FFO growth	9.1%
Price-to-FFO	23.8x
FFO yield	4.2%

Solve inputs: computed at a 8.8% cost of equity with 4% terminal growth over a 5-year stage; each 1pp of cost of equity moves the implied growth ~5pp.

How unusual the bet is: within-range

Reference	Value
vs own history	-0.19σ
cohort percentile (of 105 peers)	89
sustained it ~5 years at this level	58%
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.71x	3	expensive
Earnings	5.24x	4	expensive
Relative	1.39x	6	expensive
Growth	1.95x	5	expensive

Families that call it expensive: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.3%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$6.58	3.32x	yes	FCF base $0.5B, growth -6% (input: historical growth), terminal g 0.5%, WACC 6.3%, 5yr projection
DCF Exit Multiple	Growth	$20.68	1.06x	yes	Exit EV/EBITDA: 19.5x / 21.5x / 23.5x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$25.66	0.85x	yes	P/E 35x (static sector reference · 2026-04), scenarios: 29.6x / 35.0x / 40.4x (bear / base = reference held flat / bull), EV/EBITDA 20x
Simple DDM	Growth	$6.69	3.26x	yes	DPS $0.97, g=-4.5% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDM	Growth	$21.00	1.04x	yes	Stage 1: 8% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$12.78	1.71x	yes	Reference only (book value floor): BV/sh $12.78, ROE negative
Two-Stage Excess Return	Asset	$11.50	1.90x	yes	Reference only (book value with convergence): BV/sh $12.78, ROE converges to ke
Discounted Future Market Cap	Growth	$11.18	1.95x	yes	Rev $1.2B, growth -6% (input: historical growth; tapered), Terminal P/S: 5.5x / 6.5x / 7.6x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$10.92	2.00x	yes	FFO/share $0.91, growth 8% (input: historical FFO/share growth, 10y median), PEG=0.00 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	—	—	no	—
Graham Number	Asset	$16.17	1.35x	yes	√(22.5 × FFO/share $0.91 × BVPS $12.78) — Graham's conservative floor
EV/EBITDA Relative	Relative	$19.46	1.12x	yes	EBITDA $0.54B × sector EV/EBITDA 20.0x
FCF Yield	Earnings	$2.64	8.27x	yes	FCF $462.2M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$1.87	11.68x	yes	SBC-adj FCF $0.44B (FCF $0.46B − SBC $0.02B) capitalized at Kₑ
Ben Graham Formula	Earnings	$18.54	1.18x	yes	FFO/share $0.91 × (8.5 + 2×7.9%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	$20.04	1.09x	yes	Revenue $1.16B × sector P/S 6.0x
PEG Fair Value	Relative	$10.79	2.02x	yes	FFO/share $0.91 × (PEG 1.5 × growth 7.9% (input: historical FFO/share growth, 10y median)) → PE 11.9x
Earnings Yield	Earnings	$9.84	2.22x	yes	FFO/share $0.91 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	$13.12	1.66x	yes	FFO/share $0.91 × 14.3x P/FFO (route cohort median, n=85); FFO $0.32B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 347M
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Funds from operations (trailing)	$317.9m
Share count CAGR (dilution)	23.6%
Burning cash	no

REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Net debt could not be resolved from the corporate debt tags in the filings (REIT notes and mortgage debt are often tagged outside the corporate ladder), so the leverage ratio is withheld rather than rendered from incomplete tags. Interest expense is not separately reported in the cached statements, so fixed-charge coverage cannot be computed.

Bullet Takeaways

• Healthcare Realty owns medical office buildings, mostly on or near hospital campuses, and the single metric that drives it is same-store cash net operating income, which grew 6.9% in Q1 2026 on the back of a record 2 million square feet of leases signed in the quarter.
• The biggest risk is leverage paired with tenant dependence: net debt runs nearly 13 times funds from operations, and the 10-K warns that the viability of the health systems that anchor its buildings depends on payor mix, competition, and whether a hospital can meet its financial obligations.
• Watch the funds-from-operations guidance, raised to $1.59 to $1.65 per share for the year, against the dividend of $0.24 per quarter; the leasing momentum has to convert to sustained cash flow to support both the payout and the high multiple.

Bull Case

The number that matters most for Healthcare Realty is leasing velocity, and this quarter it set a record. The company signed over 2 million square feet of leases in the first quarter, the most in its history, and that activity flows directly into the metric that drives a property trust: same-store cash net operating income grew 6.9%. Same-store occupancy finished at 92.3%, up 110 basis points year over year, with cash leasing spreads of 4.2%, meaning new and renewing tenants are paying more per square foot than the leases they replace. For a landlord, that combination of higher occupancy and positive re-leasing spreads is the engine of internal growth.

The asset class itself is structurally favorable. Medical office buildings sit at the intersection of two durable trends, an aging population and the long shift of care from inpatient hospital settings to lower-cost outpatient facilities. These buildings are typically on or adjacent to hospital campuses, which makes tenants sticky: a physician practice located next to its referring hospital does not move easily. The result is steadier occupancy and lower tenant turnover than office or retail real estate, which is why medical office has held up through cycles that battered other property types.

The operating momentum is translating into raised expectations and a covered dividend. Normalized funds from operations reached $0.41 per share, up sequentially, and the company increased its full-year guidance to $1.59 to $1.65 per share while lifting its same-store net operating income outlook. The quarterly dividend of $0.24 sits at a funds-available-for-distribution payout ratio around 75%, leaving room to cover the distribution from cash flow. The bull case is a needs-based property type with record leasing, expanding margins, and rising cash flow that supports an attractive dividend.

Bear Case

The disconnect a holder should sit with is that Healthcare Realty is one of the more expensive trusts in its group despite carrying one of the heavier debt loads. The price-to-adjusted-funds-from-operations multiple sits at the very top of the REIT group, near 24 times, even as net debt runs close to 13 times funds from operations. That pairing, premium valuation and high leverage, is unusual, and it means the stock is priced for the leasing momentum to continue while the balance sheet leaves little margin if it does not.

The leverage is the concrete worry. Fixed-charge coverage of about 2.6 times means funds from operations cover interest and preferred obligations with a thinner cushion than a conservatively financed REIT, and in a higher-rate environment, refinancing maturing debt resets borrowing costs upward and pressures the distributable cash that funds the dividend. The share count, meanwhile, has expanded dramatically, up more than 20% over the past year following the company's large merger, which dilutes the per-share claim on the very cash flow growth the bull case highlights. Record leasing is impressive, but it has to outrun both rising interest costs and a much larger share base.

The tenant risk is specific to this asset class and the filing names it. Healthcare Realty's buildings depend on the health systems that anchor them, and the 10-K cautions that the viability of those systems hinges on the quality and mix of healthcare services provided, competition, payor mix, demographic trends and that if a hospital is unable to meet its financial obligations the landlord is exposed. Hospital finances are strained by labor costs and reimbursement pressure, and a weakening anchor tenant can hollow out the demand for the medical office space around it. The bear case is that a top-of-group multiple on a highly levered, recently merged REIT prices the leasing recovery as permanent, while the debt load, the dilution, and the tenant dependence are the risks the premium is not leaving room for.

Valuation

A property trust is valued on the cash its buildings generate, read through funds from operations rather than an earnings multiple. On that lens Healthcare Realty trades around 24 times adjusted funds from operations and roughly 21 times funds from operations, which the inversion translates into a price that implies the trust grows its adjusted funds from operations about 7% a year. Measured against its own record that pace is achievable, but the multiple is demanding: it sits at the very top of the REIT group, so the price is paying a premium for that growth rather than getting it cheaply.

The families of method reveal the tension. The relative-multiple lens justifies the price, but the asset-based, earnings-power, and growth-cash-flow approaches all read the stock as expensive. When only the peer-comparison lens supports the price and the cash-flow and asset methods sit below it, the valuation is leaning on the argument that medical office deserves a premium multiple, not on the cash the buildings currently throw off. That is a real argument given the asset class's durability, but it is a thinner support than a value buyer would want, and it depends on the leasing momentum sustaining the 7% growth the price embeds.

Leverage is where the valuation turns cautious, and for a REIT the right frame is debt against funds from operations rather than corporate metrics. Net debt near 13 times funds from operations is high, and fixed-charge coverage of about 2.6 times is adequate but not comfortable; both leave the equity sensitive to interest rates and to any slip in occupancy. The dividend, at a roughly 75% payout of funds available for distribution, is covered for now, which is the key solvency comfort. The valuation comes down to whether a needs-based but heavily financed trust deserves the top multiple in its group: the leasing data says the business is improving, but the price already assumes that improvement holds against a leveraged balance sheet and a much-enlarged share count.

Catalysts

The Q1 2026 report, released in early May, was strong enough to lift the stock and the guidance. Normalized funds from operations came in at $0.41 per share, up sequentially from $0.40, with same-store cash net operating income growth of 6.9% and a record of over 2 million square feet of leases signed in the quarter. Same-store occupancy reached 92.3%, up 110 basis points year over year, with 4.2% cash leasing spreads and 60 basis points of same-store margin expansion. The company affirmed its $0.24 quarterly dividend.

Management converted the leasing strength into a raised outlook, lifting full-year normalized funds-from-operations guidance by a penny to $1.59 to $1.65 per share and increasing same-store net operating income guidance to a range of 3.75% to 4.75%. The key things to watch across the next several quarters are whether the record leasing converts into sustained occupancy gains and cash flow, the pace and cost of debt refinancing given the heavy leverage, and the financial health of the anchor health systems whose viability underpins demand for the surrounding medical office space.

Peer Cohorts (Per Segment, With Filing Citations)

Medical outpatient properties (consolidated) (reported)

• DOC (Healthpeak Properties, Inc.)
• FY2025 10-K: , 2026, respectively. Results of Operations We evaluate our business and allocate resources among our operating segments: (i) outpatient medical, (ii) lab, (iii) senior housing, (iv) loans receivable, (v) a preferred equity investment, and (vi) three other properties, which are comprised of two properties previously…
• FY2025 10-K: Segment Adjusted NOI by Reportable Segment (1) Outpatient medical $ 795,843 Lab 567,358 Senior housing 176,741 _______________________________________ (1) Our Adjusted NOI for our reportable segments, which we also refer to as Total Portfolio Adjusted NOI for our reportable segments, includes results of operations…
• AHR (American Healthcare REIT, Inc.)
• FY2025 10-K: …short-term instruments with a maturity of three months or less when purchased. We have cash and cash equivalents in financial institutions that are insured by the Federal Deposit Insurance Corporation, or FDIC. As of December 31, 2025 and 2024, we had cash and cash equivalents in excess of FDIC insured limits. We…
• FY2025 10-K: 10 Table of Contents and Medicare. The facilities in our SHOP segment are operated utilizing RIDEA structures, allowing us to participate in the upside from any improved operational performance while bearing the risk of any decline in operating performance. Triple-Net Leased Properties Our triple-net leased properties…
• VTR (Ventas, Inc.)
• FY2025 10-K: - Investments in Unconsolidated Entities of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. Outpatient Medical and Research Portfolio (OM&R) In our OM&R segment, we primarily acquire, own, develop, lease and manage outpatient medical buildings and research centers. Our…
• FY2025 10-K: …and their affiliated health systems may not remain competitive or financially viable. Our outpatient medical buildings and other properties that serve the healthcare industry depend on the competitiveness and financial viability of the hospitals on or near the campuses where our properties are located or that our…
• WELL (WELLTOWER INC.)
• FY2025 10-K: …components resulting in presenting all revenue associated with Outpatient Medical leases as leasing revenue on the Consolidated Statements of Comprehensive Income. Certain payments made to tenants are treated as lease incentives and amortized as a reduction of revenue over the lease term. 89 WELLTOWER INC. AND…
• FY2025 10-K: …in hypothetical liquidation at book value ("HLBV") adjustments to our unconsolidated entities (refer Note 2 for additional information.) Net income attributable to noncontrolling interests represents our partners' share of net income relating to those partnerships where we are the controlling partner. 66 Item 7.…
• OHI (OMEGA HEALTHCARE INVESTORS, INC.)
• FY2025 10-K: …health care industry and our operations. (7) Represents 100% of beds and facilities owned by unconsolidated entities. Excludes one facility related to an unconsolidated entity that has a mortgage loan with Omega, which is reflected in the Mortgage loan section above. (8) Represents Omega's share of income (loss) from…
• FY2025 10-K: …consolidated U.K. operating subsidiaries held long-lived assets of $ 1.6 billion and $ 1.1 billion as of December 31, 2025 and 2024, respectively. As discussed in Note 20, in December 2025, we entered into a $ 87.6 million Canadian dollar denominated loan agreement with a borrower to fund the development of several…
• SBRA (SABRA HEALTH CARE REIT, INC.)
• FY2025 10-K: Hospitals offer a wide range of services, both inpatient and outpatient, in a variety of settings. We believe that demand will increase for innovative means of delivering those services and present additional investment opportunities. While the factors described above indicate projected growth for our industry,…
• FY2025 10-K: …centers provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling. Behavioral hospitals. Behavioral hospitals provide inpatient and outpatient care for patients with mental health conditions, chemical…
• NHI (National Health Investors, Inc.)
• FY2025 10-K: …and in some cases, access to healthcare services. Discretionary properties are subject to limited regulatory oversight. There is a correlation between demand for this type of community and the strength of the housing market. Medical Facilities Medical facilities within our Real Estate Investments segment receive…
• FY2025 10-K: …described above. In addition, inflation, both real and anticipated, as well as any resulting government policies have affected and could continue to adversely affect the costs of labor, goods and services experienced by our operators in the SHOP segment. In periods of inflation, the increases in operating costs…
• MPT (MEDICAL PROPERTIES TRUST, INC.)
• FY2025 10-K: …may make mortgage loans to healthcare operators collateralized by their real estate. In addition, we may make noncontrolling investments in our tenants (which we refer to as investments in unconsolidated operating entities), from time-to-time, typically in conjunction with larger real estate transactions with the…
• FY2025 10-K: ITEM 6. [ Re served ] 46 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operation s Unless otherwise indicated, references to "our," "we," and "us" in this management's discussion and analysis of financial condition and results of operations refer to Medical Properties Trust, Inc.…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings call