Item 1.
Business.
The use of the words “we,” “us” or “our” refers to Healthcare Trust of America, Inc. and its subsidiaries, including Healthcare Trust of America Holdings, LP, or our operating partnership, except where the context otherwise requires.
BUSINESS OVERVIEW
We are a fully integrated, self-administered and self-managed real estate investment trust, or REIT. We acquire, own and operate medical office buildings and other facilities that serve the healthcare industry. Since January 2007, we have been an active, disciplined buyer of medical office buildings and other facilities that serve the healthcare industry, acquiring properties with an aggregate purchase price of approximately $2.3 billion and building key industry relationships with significant healthcare systems and quality tenants. We are one of the largest owners of medical office buildings, based on gross leasable area, or GLA, in the United States. Our portfolio is primarily concentrated within major U.S. metropolitan areas and located primarily on or adjacent to campuses of nationally recognized healthcare systems.
As of December 31, 2011, approximately 57% of our annualized base rent was derived from tenants or their parent companies that have a credit rating as determined by a nationally recognized rating agency. Approximately 38% of our annualized base rent was derived from tenants that have an investment grade credit rating as determined by nationally recognized rating agencies, including, but not limited to, Greenville Hospital System, Community Health Systems, Aurora Healthcare, West Penn Allegheny Health System, Indiana University Health, Hospital Corporation of America, and Banner Health. As of December 31, 2011, our portfolio contains approximately 11.2 million square feet of GLA with an occupancy rate of approximately 91%, including leases signed but which have not yet commenced. Approximately 95% of our portfolio (based on GLA) is located on, adjacent to, or anchored by the campuses of nationally and regionally recognized healthcare systems. Our portfolio is diversified geographically, across 25 states, with no state having more than 13% of the GLA of our portfolio. As of December 31, 2011, none of our tenants at our properties accounted for 7.0% or more of our aggregate annual rental revenue. Our portfolio consisted of 248 medical office buildings and other facilities that serve the healthcare industry, as well as two mortgage loans receivable.
We invest primarily in medical office buildings based on fundamental healthcare and real estate economics. Medical office buildings serve a critical role in the national healthcare delivery system, and we believe there are key dynamics within the healthcare industry that increase the need for, and the value of, medical office buildings. As hospitals and other facilities that serve the healthcare industry and physicians continue to collaborate, we believe an increasing number of healthcare services will be undertaken in medical offices. Further, with healthcare reform projected to expand coverage to over 30 million additional patients by 2019, we believe the performance of office-based services will play a key role in providing quality healthcare while also allowing for the recognition of cost efficiencies. In addition, as the emphasis within the healthcare industry moves toward preventative care, rather than responsive care, we expect that more healthcare services will be undertaken at medical offices.
Another key reason that we invest in medical office buildings is that we believe there is generally the potential for higher returns with lower vacancy risk relative to other types of real estate investing. Like traditional commercial office property, as we renew leases and lease new space, we expect that the recovering economy will allow us to earn higher rents. Unlike commercial office space, however, medical office tenants, primarily physicians, hospitals and other healthcare providers, typically do not move or relocate, thus providing for stable tenancies and an ongoing demand for medical office space.
We are a Maryland corporation, formed in April 2006. Since that time, we have raised equity capital to finance our real estate investment activities through two public offerings of our common stock. Our offerings raised an aggregate of approximately $2.2 billion in gross offering proceeds, excluding proceeds associated with shares issued under our distribution reinvestment plan, or DRIP. Our principal executive offices are located at 16435 North Scottsdale Road, Suite 320, Scottsdale, AZ 85254 and our telephone number is (480) 998-3478. We maintain a web site at www.htareit.com at which there is additional information about us. The contents of that site are not incorporated by reference in, or otherwise a part of, this filing. We make our periodic and current reports available at www.htareit.com as soon as reasonably practicable after such materials are electronically filed with the SEC. They are also available for printing for any stockholder upon request.
BUSINESS STRATEGIES
Our primary objective is to enhance stockholder value with disciplined growth through strategic investments and to provide an attractive total risk-adjusted return for our stockholders by consistently increasing our cash flow. The strategies we intend to execute to achieve this objective include:
We believe we have relationships and a proven track record of acquiring properties in off-market transactions at accretive cap rates. We will continue to focus our acquisition activity primarily on high quality medical office buildings, which we believe comprise the majority of our current property portfolio. We believe our pure focus on the medical office building sector of healthcare related real estate will provide insulation from the impact of certain governmental regulatory actions, such as the recently-passed cut in 2012 Medicare payments to skilled nursing facilities. This is because medical office buildings typically have a diversified payer mix composed largely of private health insurance companies.