Rating Action: Moody's affirms the Baa2 ratings of Healthcare Realty andHealthcare Trust of America following their merger announcement,outlooks remain stableGlobal Credit Research - 04 Mar 2022New York, March 04, 2022 -- Moody's Investors Service, ("Moody's") hasaffirmed all ratings of Healthcare Realty Trust Incorporated ("HR" or"Healthcare Realty") following the announcement of the proposed mergerwith Healthcare Trust of America Holdings, LP, the operating subsidiary ofHealthcare Trust of America, Incorporated (collectively "HTA") where HR'sboard of directors and management will lead the surviving entity. Allratings of HTA have also been affirmed. The rating outlooks for both HRand HTA are stable.The rating affirmations reflect the portfolio strength of the combinedplatform, stable operating cash flows from a significantly larger medicaloffice building (MOB) portfolio, and adequate liquidity with no meaningfulnear-term debt maturities. The stable rating outlook for HealthcareRealty' reflects Moody's expectation that the REIT will continue toprudently manage the balance sheet and liquidity. Healthcare Trust ofAmerica's stable outlook reflects the expectation that the transactionwill close in the third quarter of 2022, subject to customary closingconditions, including approval by the respective shareholders for bothREITs.Affirmations:..Issuer: Healthcare Realty Trust Incorporated....Senior Unsecured, Affirmed Baa2....Senior Unsecured Shelf, Affirmed (P)Baa2..Issuer: Healthcare Trust of America Holdings, LP....Senior Unsecured, Affirmed Baa2....Issuer Rating, Affirmed Baa2Outlook Actions:..Issuer: Healthcare Realty Trust Incorporated....Outlook, Remains Stable..Issuer: Healthcare Trust of America Holdings, LP....Outlook, Remains StableRATINGS RATIONALEOn March 1, 2022, Healthcare Realty and Healthcare Trust of Americaannounced that they had entered into a definitive merger agreement wherebyHR will reverse merge into HTA in an "all cash and stock" transaction witha pro forma combined enterprise value of approximately $17.6 billion andmarket capitalization of approximately $11.6 billion. Upon the completionof the transaction, HR's management team will remain in place to lead thenew company, which will operate under the Healthcare Realty name and tradeunder the NYSE ticker HR symbol. HTA shareholders will receive a specialcash dividend of $4.82 per share and a one-for-one transaction exchangeratio based on HR's unaffected stock price of $30.26 as of February 24,2022. The cash dividend will be funded with a combination of net proceedsfrom joint venture transactions and asset dispositions. HR anticipatesassuming all of the debt from HTA, which has received a commitment letterfor $1.7 billion of debt financing from JPMorgan Chase. The boards of bothentities have approved the merger and the deal is expected to close in thethird quarter of 2022 following other closing conditions includingapprovals from shareholders of both entities.The merger will create the largest REIT purely dedicated to owning andoperating medical office buildings with 727 properties, containingapproximately 44 million square feet (SF). Approximately 68% of the totalfootprint will be on or adjacent to hospital campuses. Immediate benefitsinclude approximately $33 million to $36 million in expected G&A costssynergies within the first 12 months. The increase in the size of theoperating platform is expected to produce more portfolio diversification,a larger subset of embedded development opportunities as well as astronger balance sheet and more access to capital. Additional strategicbenefits include an expansion of scale into the top 100 markets with 26clustered markets containing over half a million SF. This will result indeeper market penetration in terms of more leasing and investmentopportunities as well as higher potential operating efficiencies. Overall,the new portfolio will be spread across Sunbelt and coastal metro marketswith strong demand drivers, comprising 147 nodes with close to 200,000 SFon average. The portfolio will remain relatively granular in terms oftenant, healthcare system and geographic concentration risk.On a Moody's adjusted basis, HR's total debt to gross assets and net debtplus preferred stock to EBITDA were 34% and 6.5x, while HTA's wereapproximately 38% and 6.6x as of December 31, 2021. HR's and HTA's creditprofiles are supported by an unencumbered asset base of approximately 86%and 100% of gross assets, respectively, and strong fixed charge coverageratios in excess of 5.0x. Moody's expects the combined company's pro formaeffective leverage to remain in the mid-30% debt to gross assets rangewith operating leverage in the low to mid-6.0x range. The financialflexibility is expected to remain strong, bolstered by a largeunencumbered asset base of approximately 95% of gross assets and a fixedcharge coverage above 5.0x, providing ample cushion against higherinterest expense or an unexpected decline in EBITDA. Positively, neithercompany has any corporate debt maturities in 2022. Healthcare Realtymaintains broad access to capital and a proven record with its bankinggroup to refinance its debt obligations, including potentially recastingthe revolving credit facility, which matures in 2023.Moody's expects the newly combined company to maintain its prudentfinancial policy with near-term liquidity needs to be modest, coupled witha manageable debt maturity schedule going forward and good access tocapital. Additionally, the new company will own a larger, high-qualityunencumbered portfolio and have a strong fixed charge coverage ratio.The stable rating outlook incorporates the expectation that HR willcontinue to prudently manage the balance sheet and its liquidity whilemaintaining, at a minimum, the same level of quality, diversification andperformance of the operating portfolio. HTA's stable outlook reflects ourexpectation that the transaction will be closed.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward rating momentum would be predicated upon Healthcare Realtyachieving the following criteria on a recurring basis: 1) net debt toEBITDA approaching 5.0x; 2) maintenance of same-store net operating income(NOI) above 3.5%; 3) fixed charge coverage ratio rising to above 4.5x; and4) increase in asset diversity including high-quality non-MOB assets.Downward rating pressure for the REIT would result from: 1) net debt toEBITDA rising to above 6.5x; 2) same-store NOI remains meaningfully below2.5%; 3) secured debt to gross assets rising to above 10%; 3) fixed chargecoverage ratio declining to below 3.5x and 4) any significant tenantcredit issues.Upward rating movement is unlikely for HTA given the pending closing ofthe merger. If HR's acquisition of HTA does not occur and HTA's portfolioquality and management platform were to be considered weaker thanexpected, downward rating pressure could result on HTA's ratings.Based in Nashville, Tennessee, Healthcare Realty Trust Incorporated [NYSE:HR] is a REIT dedicated to the ownership, management, acquisition, leasingand development/redevelopment of medical office buildings ("MOBs") thatprimarily provide outpatient healthcare services throughout the U.S.Comprising approximately 18.0 million SF, HR owns or holds interests in258 properties located across 35 markets in 23 states. As of December 31,2021, the REIT's gross assets and book equity totaled approximately $5.6billion and $2.19 billion, respectively.Headquartered in Scottsdale, Arizona, Healthcare Trust of America, Inc.[NYSE: HTA] is a self-managed publicly traded REIT dedicated to owningreal estate primarily consisting of medical office buildings located on oradjacent to hospital campuses or in off-campus, community core outpatientlocations and that are leased to health systems, research and academicinstitutions, and various sized physician practices. At yearend 2021, theREIT owned 26.1 million SF of MOB and other healthcare assets locatedacross 32 states. Gross assets and book equity totaled $8.48 billion and$3.26 billion, respectively.The principal methodology used in these ratings was REITs and OtherCommercial Real Estate Firms Methodology published in July 2021 andavailable athttps://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1272320.Alternatively, please see the Rating Methodologies page on www.moodys.comfor a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions andsensitivity analysis, see the sections Methodology Assumptions andSensitivity to Assumptions in the disclosure form. Moody's Rating Symbolsand Definitions can be found at:https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt orsecurity this announcement provides certain regulatory disclosures inrelation to each rating of a subsequently issued bond or note of the sameseries, category/class of debt, security or pursuant to a program forwhich the ratings are derived exclusively from existing ratings inaccordance with Moody's rating practices. For ratings issued on a supportprovider, this announcement provides certain regulatory disclosures inrelation to the credit rating action on the support provider and inrelation to each particular credit rating action for securities thatderive their credit ratings from the support provider's credit rating. Forprovisional ratings, this announcement provides certain regulatorydisclosures in relation to the provisional rating assigned, and inrelation to a definitive rating that may be assigned subsequent to thefinal issuance of the debt, in each case where the transaction structureand terms have not changed prior to the assignment of the definitiverating in a manner that would have affected the rating. For furtherinformation please see the ratings tab on the issuer/entity page for therespective issuer on www.moodys.com.For any affected securities or rated entities receiving direct creditsupport from the primary entity(ies) of this credit rating action, andwhose ratings may change as a result of this credit rating action, theassociated regulatory disclosures will be those of the guarantor entity.Exceptions to this approach exist for the following disclosures, ifapplicable to jurisdiction: Ancillary Services, Disclosure to ratedentity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designatedagent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy forDesignating and Assigning Unsolicited Credit Ratings available on itswebsite www.moodys.com.Regulatory disclosures contained in this press release apply to the creditrating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social andgovernance (ESG) risks in our credit analysis can be found athttp://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement wasissued by one of Moody's affiliates outside the EU and is endorsed byMoody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322,Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No1060/2009 on Credit Rating Agencies. Further information on the EUendorsement status and on the Moody's office that issued the credit ratingis available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement wasissued by one of Moody's affiliates outside the UK and is endorsed byMoody's Investors Service Limited, One Canada Square, Canary Wharf, LondonE14 5FA under the law applicable to credit rating agencies in the UK.Further information on the UK endorsement status and on the Moody's officethat issued the credit rating is available on www.moodys.com.The below contact information is provided for information purposes only.Please see the ratings tab of the issuer page at www.moodys.com, for eachof the ratings covered, Moody's disclosures on the lead rating analyst andthe Moody's legal entity that has issued the ratings.Please see www.moodys.com for any updates on changes to the lead ratinganalyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com foradditional regulatory disclosures for each credit rating.Juan AcostaAsst Vice President - AnalystCorporate Finance GroupMoody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007U.S.A.JOURNALISTS: 1 212 553 0376Client Service: 1 212 553 1653Philip KibelAssociate Managing DirectorCorporate Finance GroupJOURNALISTS: 1 212 553 0376Client Service: 1 212 553 1653Releasing Office:Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007U.S.A.JOURNALISTS: 1 212 553 0376Client Service: 1 212 553 1653© 2022 Moody's Corporation, Moody's Investors Service, Inc.,Moody's Analytics, Inc. and/or their licensors and affiliates(collectively, "MOODY'S"). 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