HR · Healthcare Realty Trust Incorporated

Healthcare Realty Trust Incorporated, through its operating partnership Healthcare Realty Holdings, L.P., completed pricing of a significantly upsized $600 million private placement of exchangeable senior notes due 2032, increasing from the initially proposed $500 million. This financing activity provides the company with approximately $582.6 million in net proceeds, strategically allocated to multiple uses that balance capital structure optimization, equity protection, and debt refinancing. Specifically, $24 million funds capped call transactions designed to mitigate dilution from potential note exchanges by covering the shares underlying the notes up to a cap price of $27.41 per share, representing a 40% premium to the May 4, 2026, closing price of $19.58. Concurrently, $75 million facilitates the repurchase of approximately 3.83 million shares of class A common stock in privately negotiated transactions, signaling confidence in valuation and returning capital to shareholders. The remainder, supplemented by revolver borrowings, retires higher-rate 3.500% senior notes due 2026, extending maturities and likely lowering near-term refinancing risk. The notes carry a competitive 3.00% coupon payable semi-annually from January 2027, with an initial exchange rate implying a 17.5% premium, offering noteholders upside participation above $23.01 per share while the issuer retains redemption flexibility post-2030 and repurchase rights on fundamental changes. Initial purchasers hold a 13-day option for an additional $100 million, providing scaling flexibility. Healthcare Realty's full guarantee underscores commitment, though the unregistered Rule 144A structure limits liquidity until potential resale registration. Capped call hedging may introduce stock volatility through counterparties' derivative and share activities, particularly around exchanges or redemptions. This transaction enhances liquidity for opportunistic investments or debt management while hedging equity dilution, positioning the REIT favorably amid its focus on medical outpatient properties.