Fitch Expects to Rate Healthcare Realty's Senior Notes 'BBB'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings expects to assign a 'BBB' rating to the senior notes being offered by Healthcare Realty Trust Incorporated (Healthcare Realty). Net proceeds from the offering are expected to be used to repay outstanding balances on the company's unsecured revolving credit facility, to provide advance funding for the repayment of the $278 million of 8.125% senior notes due May 2011, and for general corporate purposes. The Rating Outlook is Negative.

Healthcare Realty's 'BBB' Issuer Default Rating (IDR) is based on the expectation that subsequent to expected near-term delevering transactions, the company's credit profile will be consistent with a 'BBB' IDR. While fixed charge coverage has deteriorated over the past year, partially due to an increase in the cost of funds, Fitch expects that it will improve over the near to medium term. The expected improvement is driven by anticipated delevering transactions, the lease up of development assets and a full year's contribution to EBITDA from recent acquisitions.

The Negative Outlook centers on the current weak leverage and coverage metrics for the rating category, and the uncertainty inherent in future equity raises. Absent significant delevering transactions in 2011, Fitch would view the company's credit profile more consistent with a lower rating.

For additional information, please refer to Fitch's Nov. 30, 2010 full rating report, 'Healthcare Realty Trust Incorporated', available at 'www.fitchratings.com'.

Healthcare Realty Trust is a REIT headquartered in Nashville, TN that owns a portfolio of healthcare-related properties in 28 states in the U.S. As of Sept. 30, 2010, the portfolio consisted of 209 assets, totaling 13.3 million square feet. The portfolio is dominated by Medical Office Buildings, 80.1% of square footage, Specialty Inpatient facilities 6.9% and Physician Clinics 6.6%. As of Sept. 30, 2010, Healthcare Realty had $2.4 billion of undepreciated book assets, a total market capitalization of $2.5 billion and an equity market capitalization of $1.3 billion.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:
--Corporate Rating Methodology, Aug. 13, 2010;
--Criteria for Rating U.S. Equity REITs and REOCs, April 16, 2010;
--Equity Credit for Hybrids & Other Capital Securities - Amended, Dec. 29, 2009;
--Rating Hybrid Securities, Dec. 29, 2009;
--Recovery Rating and Notching Criteria for REITs, Dec. 23, 2009.

Applicable Criteria and Related Research:
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646
Equity Credit for Hybrids & Other Capital Securities - Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493112
Rating Hybrid Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493086
Recovery Rating and Notching Criteria for REITs
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=492828

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CONTACT:

Fitch Ratings
Primary Analyst:
George Hoglund, CFA, +1-212-908-9149
Associate Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Janice Svec, +1-212-908-0304
Senior Director
or
Media Relations, New York:
Cindy Stoller, +1-212-908-0526
[email protected]

KEYWORDS:   United States  North America  New York  Tennessee

INDUSTRY KEYWORDS:   Health  Hospitals  Professional Services  Finance  Construction & Property  Commercial Building & Real Estate

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