Q3 2021 Healthcare Trust Of America Inc Earnings Call

November 5, 2021

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[music].

Hello, everyone and a warm welcome to Healthcare Trust of America's third quarter 2021 earnings call. My name is Lydia and I'm your operator today.

My name is Lydia on your right to today.

If you'd like to ask a question at the end of the presentation. You may do so by pressing star followed by one on your telephone keypad.

It's my pleasure to now hand, you over to our host David Gustafson, Chief Accounting Officer. Please go ahead when you're already.

Thank you, and welcome to Healthcare Trust of America's third quarter 2021 earnings call. We filed our earnings release and our financial supplement earlier this morning. These documents can be found on the Investor Relations section of our website or with the SEC. Please note this call is being webcast and will be available for replay for the next 90 days. We'll be happy to take your questions at the conclusion of our prepared remarks.

Occupancy can be found on the Investor Relations section of our website or with the SEC. Please note. This call is being webcast and will be available for replay for the next 90 days, we'll be happy to take your questions at the conclusion of our prepared remarks.

During the course of the call we will make forward-looking statements. These forward-looking statements are based on the current beliefs of management and information currently available to us.

Our actual results will be affected by known and unknown risks, trends uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and therefore, our actual future results could materially differ from our current expectations. For detailed description on potential risks. Please refer to our SEC filings, which can be found in the investor relations sector on our website. I will now turn the call over to Brad Blair Chairman of Healthcare Trust of America. Brad.

Our relations section of our website I will now turn the call over to Brad Blair Chairman of Healthcare Trust of America Brad.

Good morning. Thank you for joining us for healthcare Trust of America's third quarter earnings Conference call. Joining me today is Peter Foss, our interim Chief Executive Officer, Robert Milligan, Our Chief Financial Officer, and America, Amanda Houghton, our Executive Vice President of asset management.

Joining me today is Peter Foss, our interim Chief Executive Officer, Robert Milligan, Our Chief Financial Officer, and America, Amanda Houghton, our executive Vice President of asset management.

Before we get into discussing another strong quarter for HTA, I wanted to provide some additional insight to the HTA board priorities and actions, which have certainly accelerated since July.

First, we announced the preliminary conclusion of the company's previously disclosed investigation into allegations reported through its whistle-blower hotline. As outlined in yesterday's SEC filing, the audit committee and the company investigated allegations stemming from the list of all our reports the company received in July 2021.

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The allegations included claims related to the whistle-blower policy and potential retaliation as well as the company's policies related to personnel expense management around corporate cards and corporate aircraft use.

Given the seriousness of the claims and the potential impact to those involved. Board undertook a very thorough and extensive investigation that utilized independent counsel to come to an objective conclusion of fact.

Board undertook a very thorough and extensive investigation that utilized independent counsel to come to an objective conclusion of fact.

Counsel for the audit Committee work closely with counsel for the company conducted investigation, which involves collection and review of a significant number of documents and interviews of numerous witnesses.

The investigation concluded this week and found that the former CEO engaged in conduct that was either in violation of or inconsistent with various company policies as it relates to the whistle-blower policy, personal expense reimbursements and personal use of the company aircraft.

The financial impact of the inappropriate and expenses that were specifically identified in these preliminary findings will not result in any material impact to the company or cause any financial restatements.

As a result of these findings the board and the audit committee have begun a process with the assistance of counsel to address the results of the investigation.

The board and the audit Committee also intend to enhance the company's policies and procedures regarding personal expenses and aircraft usage. The list of all our policy and disclosure controls and procedures.

We are encouraged that HTA has commitment to empower employees to raise legitimate concerns coupled with the board seriousness and addressing allegations of inappropriate behavior has served a greater purpose of ensuring accountability across the organization.

As it relates to Scott, our former CEO declined to be interviewed for the investigation. He resigned of his own volition.

<unk> designed to have its own volition.

This occurred at a time when the board was just beginning its investigation process. Since then, the board has elected to limit any dialogue and has turned its focus exclusively to moving the business forward, we will not make any further comments or statements related to his resignation and respect his privacy at this time.

Second, the company continues its search for a permanent CEO. As announced in September, the search is being led by a leading executive search firm and an independent search committee consisting of three independent board members. We believe the search for a permanent CEO to be a critical component and the board's overall evaluation of strategic alternatives.

The search for a permanent CEO.

CEO to be a critical component and the board's overall evaluation of strategic alternatives.

Lastly, the board regularly reviews, the company's strategic plan, priorities and opportunities in order to enhance shareholder value. As such we have been reviewing and continue to review the company's strategic plan as it continues to evolve amongst viable alternatives.

As previously disclosed we engaged advisors, including JPMorgan to assist us in fulfilling our commitment to act in the best interest of HTA shareholders. With their help, we are actively evaluating a number of alternatives, including, among others, a corporate sale or merger, joint ventures, and partnerships or asset sales.

With their help we are actively evaluating a number of alternatives.

<unk>, among others, a corporate sale or merger joint ventures, and partnerships or asset sales.

During the board's evaluation, HTA will continue to adapt its strategic plan and position the company's portfolio for growth success and value creation. As we will continue to discuss on this earnings call. I want to stress that there can be no assurance that any transaction will result from the strategic review process.

And we do not intend to disclose developments relating to this process unless until the board has approved a specific agreement our transaction. Or has terminated its review. We continue to execute and position HTA's portfolio for growth, success and value creation.

Less until the board has approved a specific agreement our transaction.

<unk> terminated its review, we continue to execute and positioned <unk> portfolio for growth success and value creation.

That said, the purpose of this call is to discuss our financial results. As a board, we have split the chairman and CEO roles. So that the board can focus on these strategic alternatives, while Peter is focused on running the business with his capable team.

As a board we have split the chairman and CEO roles. So that the board can focus on these strategic alternatives, while Peter is focused on running the business with his capable team.

To this end, we will be unable to answer any questions on our strategic evaluations and we ask that you keep your questions focused on the company's current performance. With that, I'd like now to turn the call over to Peter.

Thanks, very much, Brad. Before I made and Robert presenters for the growth for the quarter. I'd like to provide you some of my initial observations. And so I approached 100 days as the company's interim CEO and believe me, it's gone by very quickly and very and with a lot of great events. As you'd expect I've spent a significant amount of my time focused on people, our team, shareholders, our key tenants and health systems relationships.

I'd like to provide you some of my initial observations and so I approached 100 days as the company's interim CEO and believe me, it's gone by very quickly and very and with a lot of great events as you'd expect I've spent a significant amount of my time focused on people our team shareholders are key tenants and health systems.

And I can report to you that our people are excited about the potential of this great company to turn to page and deliver significant value in ways that we haven't before. I've been fortunate in my career to be associated with some great growth businesses, helping to grow GE plastics from less than $1 billion to over $7 billion in sales over a 15 year period. And turning the Olympics for GE into a $1 billion revenue source for the GE businesses.

<unk> been fortunate in my career to be associated with some great growth businesses, helping to grow GE plastics from less than $1 billion over $7 billion in sales over a 15 year period and turning the Olympics for GE into a $1 billion revenue source for the GE businesses.

And those adventures useful scale, size and capabilities to accelerate growth. That's exactly the positioning of HTA, a franchise that has size scale and capabilities, that's ready to be unleashed.

Size and capabilities to accelerate growth that's exactly the positioning of HCA. The franchise that has size scale and capabilities, that's ready to be unleashed.

In the past few months I've spent my time getting to know our team. In my time as an independent board director, we frequently interacted. However, there was no replace them there is no replacement for the daily interaction as a CEO. I've been very impressed with our team's expertise, sophistication and when it comes to operating our assets in their community of the inherent complexities in the MLP sector, there is nobody better.

In my time as an independent board director.

We frequently interacted. However, there was no replace them there is no replacement for the daily interaction as a CEO I've been very impressed with our team's expertise sophistication and when it comes to operating our assets in their community of the inherent complexities in the MLP sector, there is nobody better well.

We have a strong team, we have added exceptional talent to our company in roles that can help us accelerate our growth and profitability and leasing and investments and operations.

We're also focused on adding infrastructure to assist in our growth, investments in HR and technology. And market analytics that will help us scale and added value to our larger customers. While also helping us to operate as an efficient team with a relentless focus on delivering value.

In this quarter alone we've made great strides in growing and improving our HR team, while also making significant investments in market in health care analytics, adding staff and capabilities that will make us faster and help us be more insightful.

We can do that without adding significant costs by working on our structure and developing our people. Investments that will pay off relative to growth they will produce on the top line.

During the past few months, I've also spent time touring our portfolio and meeting with many health care leaders. As I tour these markets apparent the quality of our assets in the communities we play in our health care provider tenants are the best. Our strategy has been clear to establish critical scale in gateway markets with dense patient basis with assets in an operating platform that can create value for top health care providers. In my time working with GE healthcare on running various health care foundations.

Vince patient basis with assets in an operating platform that can create value for top health care providers in my time, working with GE healthcare on running various health care foundations.

I worked closely with many leading health care providers across the country. As I call them these leaders with members of the HTA team, they're excited about the opportunities to work with each other and move their businesses forward.

On top of all this, our team has continued to execute in the third quarter without missing a beat. And despite all the noise that surrounded us, in the quarter alone we executed leases for 670000 square feet of space, 227000 square feet of which represented new leases, the highest levels of new leasing and over four years. This allowed us to increase our same store leased rate by 1.4% and for the 450000 square feet of leases that were renewed in the quarter, our re-leasing spreads were an impressive 2.9%. We also closed on over $130 million of acquisitions and moved forward on our development pipeline.

For years this allowed us to increase our same store leased rate by one 4% and for the 450000 square feet of leases that were renewed in the quarter. Our re leasing spreads were an impressive two 9%. We also closed on over $130 million of acquisitions and move forward on our development pipeline.

With more than 300000 square feet of LOI currently outstanding on our development pipeline assets. This shows that our team remains focused while moving things forward.

In summary, my first 100 days as interim CEO have further confirmed my views of the company, which were formed over my six years as an independent director. It's clear to me that as a result of our people platform and portfolio. HTA is uniquely positioned to deliver value to our tenants and our stakeholders. Let me restate that you have my commitment to continue the development and growth of this HTA franchise that Scott and this team great team have created. Now I'd like to turn it over to Amanda to discuss the quarterly performance since specific leasing activity.

You have my commitment to continue the development and growth of this HCA franchise that Scott and this team great team have created.

Now I'd like to turn it over to Amanda to discuss the quarterly performance since specific leasing activity.

Thank you, Peter. Our operating performance remained strong in the third quarter highlighted by same store NOI growth of 2.5%.

Our operating performance remained strong in the third quarter highlighted by same store NOI growth of two 5%.

This meaningful portfolio growth was led by strong performance from both our leasing and operations team.

Our new leasing totalled 227000 square feet with one of the highest level since 2017, driven by growth in markets like North Haven, Dallas and Charlotte.

<unk> in Charlotte.

Our teams have seen a notable pick up in new leasing activity and increased willingness of health systems and physician partners to invest long term in our assets. As reflected in the increasing level of term for new leases over seven years for the last two quarters.

Long term in our assets as reflected in the increasing level of term for new leases over seven years and last few quarters.

In addition to new leases, we had over 400000 square feet of renewal that resulted in 83% retention for the same store portfolio. And rent growth of 2.9%. Year to date leasing activity has totalled over 2 million square feet with nearly 600000 square feet coming in the form of new leases.

Year to date leasing activity totaled over 2 million square feet with nearly 600000 square feet coming in the form of new leases.

Our annual escalators for new leases signed in the third quarter were 2.7%, reaching 2.8% on a year to date basis, continuing our trend of increasing escalators to approximately 3% as we manage lease explorations in our portfolio.

As a result, our leased rate increased on a sequential basis by 30 basis points for our same store pool. Despite inflationary pressures, expenses in our same store portfolio this quarter increased only 1.2% year over year.

Despite inflationary pressures expenses in our same store portfolio this quarter increased only one 2% year over year.

This minimal increase is a testament to our operating team's ability to efficiently operate our assets and the benefits of having a scaled platform like ours in order to deliver cost savings to our tenants. I'll now turn the call over to Robert.

I'll now turn the call over to Robert.

Thanks, Amanda. Our financial performance in the third quarter remained strong as highlighted by improved portfolio performance with same store NOI growth of 2.5%. Normalized FFO per share held during the quarter at 44 cents, an increase of 2.3% versus 2020, bringing our year to date earnings to $1.32 per share, which is up over 3% compared to 2020.

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Our normalized FAD was $78 million. And year to date FAD is up 4% from 2020 million to $248 million. Our G&A remained consistent at $10.8 million less than 10% of NOI. This includes approximately $5 million of costs related to our whistle-blower investigation. With cost for a new CEO chairman compensation being offset by the elimination of unvested shares related to our prior CEO.

Elimination of Unvested shares related to our prior CEO.

As a result, we were able to reconfirm our previous guidance for the full year tightening the range between the midpoint intact. From a balance sheet perspective, we ended the quarter with $1.2 billion of liquidity and net debt to EBITDA of 5.8 times, including the impact of unsettled forward equity agreements totalling $218 million.

In October we refinanced our $1 3 billion unsecured credit facility, resulting in a reduction in our borrowing costs and an additional four years of term including extension options.

In terms of acquisition activity, we closed on four previously announced MLP acquisitions in the quarter totaling $135 million.

Anticipated in place year, one yields of five 7%. These acquisitions increased densification in our key markets and brought our year to date investment activity to $188 million.

We have an additional $159 million of acquisitions under contract were exclusive letters of intent that we expect to close prior to year end, including the $69 million of loan funding commitments to projects in Houston, Texas Medical Center, a $54 million that was funded through third quarter 2021 investment activity is expected to total over $400 million.

From a development perspective in the third quarter, we completed corn shell construction on time.

And our development project in Dallas with cash rent is expected to commence before the end of the year in.

In addition, we have a development pipeline of five projects at various stages in the pre leasing process totaling almost $400 million and over 850000 square feet of GLA highlighted by our strategic partnership with <unk> Corporation to co develop the Verizon tower on the Texas A&M innovation Plaza in the Texas Medical Center.

Following quarter end, we made a strategic investment in pivotal analytics, and often health partner and an innovative company that is a client a tremendous data and insights that can come from the billions of health insurance claims completed on an annual basis to the physical world with an ultimate goal of improving the decision making process for health care providers around strategic.

Office locations the impact of referral patterns and also best efforts around service line implementations, while relatively small from a monetary basis at $6 million. This investment of their series, a and provides us with the preferred preferred position to grow and utilize the tool is being developed by this innovative company.

That way, we can leverage in a way that we can leverage as we execute our strategic plan.

Outside the specific numbers in the quarter, we believe HTA is very well positioned to accelerate our earnings as we head into 2022. This is in part related to several steps that we are intently focused on from a strategic perspective, including investing in our talent and infrastructure. As Peter noted, we will always operate with focus on efficiency. However, we believe that growing the overall capabilities our team will provide tremendous returns and drive growth within our portfolio and on an external basis. This includes a focus on training and alignment, but also an investment in head count to add additional leasing investment professionals and market research.

<unk>, our team will provide tremendous returns and drive growth within our portfolio and on an external basis. This includes a focus on training and alignment, but also an investment in head count to add additional leasing investment professionals and market research.

Also adding additional infrastructure that can help us streamline our operations to add efficiency. Second, we're focused on markets and data analytics to drive performance, we already have great teams on the ground, but are supplementing that with a greater focus on analytics to drive the depth and intelligence that's needed to really outperform in ways that improve our capital allocation decision-making, improving leasing performance and adding value for our customers. Our investment in pivotal just one effort that we have undertaken to better position our teams. Third, by aligning capital sources with the reality of the MLP marketplace. Simply put the public markets do not always valued a stable growth some of these to remain competitive we must diversify our capital sources in ways that enable us to execute on the unique opportunities that we see as the leader in this space.

We're focused on markets and data analytics to drive performance, we already have great teams on the ground, but are supplementing that with a greater focus on analytics to drive the depth and intelligence that's needed to really outperform in ways that improve our capital allocation decision, making improving leasing performance and adding value for our customers our investment in pivotal just one effort that we have under.

taken to better position our teams. Third, by aligning capital sources with the reality of the MLP marketplace. Simply put the public markets do not always valued a stable growth some of these to remain competitive we must diversify our capital sources in ways that enable us to execute on the unique opportunities that we see as the leader in this space.

From a practical perspective, this should drive upside growth in the following ways. First, through occupancy upsides, our occupancy was 88% as of September 30th. We believe a realistic run rate occupancy for our portfolio is closer to the 92% to 93% range, which is consistent with the broader MLP market in which we have achieved prior to COVID-19.

Achieving this occupancy gain was a result in almost 1 million square feet of absorption and it could result in $16 million to $20 million in incremental annual NOI.

Absorption and it could result in $16 million to $20 million in incremental annual NOI.

We believe this can be achievable given that some of our highest growth markets currently contained meaningful amounts of occupancy upside, including Houston, and Dallas and Charlotte Phoenix. These four markets each with strong underlying operating fundamentals account for nearly 900000 square feet or a third of the 2.7 million square feet of leasable space as of September 30th.

Number three.

Second area is by driving development, we believe that the development will come in multiple ways. First with a traditional health system RFP, where we will compete to win pre lease projects.

However, these are extremely competitive driving the pricing down. The real opportunity is using our market intelligence from both a tenant in local market relationships and our balance sheet flexibility to proactively identify key areas of growth for health care providers. And creatively structure medical office opportunities for which providers will compete.

The real opportunity is using our market intelligence from both a tenant tenant in local market relationships and our balance sheet flexibility to proactively identify key areas of growth for health care providers and creatively structure medical office opportunities for which providers will compete.

Third area's by pursuing joint ventures. Private market interest in medical office and never been higher. As seen across other REIT sectors, partnering with private capital joint venture partners as an attractive path for growth, allowing established public companies to leverage our operating platform and expertise while benefiting from access to currently lower cost private capital and. And a space that has seen several regional operators raised $1 billion funds. We believe we are uniquely positioned as the best in class operator where many can and should want to partner over the long term.

<unk> seen several regional operators raised $1 billion funds. We believe we are uniquely positioned as the best in class operator.

many can and should want to partner over the long term.

Fourth areas through asset sales. In addition to the JDS will be utilized in this competitive market sell assets that no longer fit our strategic plans. These are great assets, just happen to be located in noncore markets, or assets for which we believe we maximize value.

Assets that we can sell at great pricing and redeploy into other opportunities for the benefit of shareholders. In short HTA has a number of opportunities on which to execute to drive performance in the short to medium term. With that, I will now turn it over to Peter to wrap it up.

With that I will now turn it over to Peter to wrap it up.

Thanks, Robert and thanks Amanda. Before I open up for questions, I just wanted to make one more comment. First, I just wanted to say thanks to all the HTA folks for welcoming Brad and I into pretty difficult situation, when we weren't expecting and they weren't expecting but you folks have done a wonderful job, kept the focus. The results speak for themselves.

Before I open up for questions I, just wanted to make one more comment first I just wanted to say thanks to all the <unk>.

HCA folks for welcoming Brad and I into pretty difficult situation, when we werent expecting and they werent expecting but you folks have done a wonderful job kept the focus the results speak for themselves.

Also like to thank Brad. Couldn't have a better partner than Brad. He's kept focus on his side and let me focus on the operations with Robert and Amanda and a great team. So I just want to say thanks to all of you for for letting us continuance in such a nice fluid manner. With that, we'll open up the call for questions. Thank you.

Kept focus on his side of it.

Focus on the operations with Robert and demand and a great team.

To say thanks to all of you for for letting us continuance in such a nice fluid manner.

With that, we'll open up the call for questions. Thank you.

Thank you, Peter. If you'd like to ask a question. Please press star followed by one on your telephone keypad now. To withdraw your question, please press star followed by two. And when prepared to ask a question. Please ensure your device is unmuted locally.

Withdraw your question. Please press star followed by <unk>.

Im on for Pam to ask a question. Please ensure your devices on mute.

We kindly remind you to ask only one question and if you have any follow up questions. Please register again, a question star one to get back in the queue.

Our first question today comes from Rich Anderson of SMBC. Rich, your line is open. Please go ahead.

Thanks, Good morning out there. So the comment we've made early that a permanent CEO is critical. As you look around for strategic alternatives.

So.

The comment we've made early that a permanent CEO is critical.

As you look around for St to strategic alternatives.

And I'm trying to overlay that with the process I know you're not going to talk about it. But that would imply that you're primarily looking at an entity level type of deal. No CEO is going to come in if they're going to get bought by another REIT and begun 10 minutes later, so I'm curious if that's the right way to think about it.

As an entity level type of transaction, primarily perhaps through private equity channel. Any kind of color you can give on that would be interesting. Thanks.

Any kind of color you can give on that would be interesting. Thanks.

Well this is Brad. Rich. As we have announced, our search committee engaged Spencer Stuart to assist with search for a new CEO. We continue to conduct that process in a robust way and we intend to do that with this prospect that we will identify the appropriate person to lead the HTA.

Rich.

As we have announced.

<unk> engaged Spencer Stuart to assist with reach search for.

As CEO.

We continue to conduct that process in a robust way and we intend to do.

Do that with a spot with this prospect that we will identify the appropriate person to lead the HCA.

We believe that the characteristics of HTA will give us the opportunity to interview a number such people. And we would not considered as we're addressing just the standalone big we want to make sure the company is continue to advance itself and be prepared. And whatever event might come out of our process.

Sure.

We would.

Not considered as we're addressing just the standalone big we want to make sure. The company is continue to advance itself and be prepared.

And whatever event might come out of our process.

<unk> come out of our.

Process.

Okay.

And if I could snap to a very quick follow up. Same store is 2.5% occupancy was down 150 basis points. How would that possibly happen?

Maybe that's for Amanda. Yeah, Rich, on a sequential quarter over quarter basis, we are at we were up about 30 basis points quarter over quarter for 40 on the total portfolio. In the first quarter I think we had pretty low retention, but we still are getting our existing portfolio the close to 90% occupied we had the existing rent bumps in it. So while on a year over year basis toward down slightly with our existing escalators in place and the new leases that were doing favorable leasing terms with those I think that's driving much of that revenue increase, which resulted net NOI growth. And Rich, also keep in mind last year is when we had a number of kind of early renewals as part of our strategy of really working with health systems to work through the COVID process. So I think in the prior year period, we had a number of leasing concessions free rent that was the result of early renewals.

Yeah rich or.

On a quarter sequential quarter over quarter basis, we are at we were up about 30 basis points quarter over quarter.

I'm, sorry, 40 items total portfolio.

In the first quarter I think we had.

Pretty low retention, but we still are getting our existing portfolio. The close to 90% occupied we had the existing rent bumps in it so while on a year.

over year basis toward down slightly with our existing escalators in place and the new leases that were doing favorable leasing terms with those I think that's driving much of that revenue increase, which resulted net NOI growth. And Rich, also keep in mind last year is when we had a number of kind of early renewals as part of our

strategy of really working with health systems to work through the COVID process. So I think in the prior year period, we had a number of

leasing concessions free rent that was the result of early renewals.

That drove revenue down so even though we had occupancy down on a year over year basis. The total amount of cash pay revenue was not nearly as impacted as it was on an occupancy basis. So that's really how you get to that math.

Okay. Thanks. Thank you. Our next question today comes from Nick Joseph with Citi. Your line is open. Please go ahead.

Thank you. Our next question today comes from Nick Joseph with Citi. Your.

Your line is open. Please go ahead.

Thank you. I just wanted to better understand what the strategic review process involved. Is the advisor actively so let's be bid. In proactive on outreach to potential bidders? Is there a data room setup? Just any more color on the mandate there.

Advisor actively so let's be bid.

In proactive on outreach to potential bidders is there a data room setup anymore.

Any more color on.

The mandate there.

Well I appreciate and understand the question as we address and board related matters in our prepared remarks. We will have to limit our comments with respect to this process.

We will have to <unk>.

The limit our comments with respect to this process.

We will continue to be guided by JPMorgan and advising us in this process. That's about all I can tell you about the process details.

We will continue to be guided by JP, Morgan and advising us in this.

Processing.

That's about all I can tell you about the process details.

Yes, I mean, I guess the process is pretty broad right. I mean is there, I recognize on this call you are trying to stick to the current quarter results. But is there going to be another opportunity to expand on what exactly that mandate is?

I recognize on this call you are trying to stick to the current quarter results, but is there going to be another opportunity to expand on what exactly you got mandate is.

Okay.

Well the mandate is to review all alternative options. We have such a conclusion as to one or none, we'll certainly bring that to your attention. We can't comment any further about the details.

We have such a conclusion as to one or none, we'll certainly bring that to your attention.

We can't comment any further about the details.

Thanks, and then just maybe on the whistle blower news that you guys filed yesterday.

Maybe on the whistle blower.

New debt that you guys filed yesterday.

Are there any continued investigations or complaints outstanding or was that everything that was related to the whistle-blower from three months ago?

That was related to the whistleblower from three months ago.

The investigation of the facts has concluded. And because we had indicated in our press release, the board will be reviewing circumstances that we need to be improved indoor. Addressed in the final completion process.

The investigation of the facts it's concluded.

And because we had indicated in our press release the board will be reviewing.

Circumstances that we need to be improved indoor.

Addressed.

Final completion process.

Were there any other employees disciplined or terminated related to the whistle-blower findings?

To the whistleblower findings.

We're not at liberty to talk about those.

Great. Thanks, Nick. As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad now. Please ask one question only did you have any follow up questions. Please register again by pressing star one to step back in the queue. Our next question comes from Juan Sanabria of BMO capital markets. Your line is open.

Nick.

As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad now please.

Please ask one question only did you have any follow up questions. Please Register again my question one step back in the queue.

Our next question comes from Juan Sanabria of BMO capital markets. Your line is open.

Hi, just following up on Rich's question on the CEO search. Is it the intention to have somebody in the seat before the strategic review process is complete in whatever form that takes?

Is it the intention to have somebody in the seat before.

The strategic review process is complete in whatever form that takes.

We can't comment any timelines on how and when that closes it gets completed. But we will rely on the search committee and Spencer Stuart to give us best outcome possible and I can't as I said comment on any timelines.

Comment any timelines on how and when that closes it gets completed.

But.

We will rely on the search committee and Spencer Stuart to give us.

Best outcome possible and I can't as I.

Could you comment on any timelines.

Okay. Can you comment if you received any unsolicited bids as of yet into the board for the company, one form or another?

Can you comment.

<unk> any unsolicited bids as of yet.

And to the board for the company, one form or another.

Once again, we can't comment on that at this time. Thanks.

Thanks.

Okay, and maybe just one last follow up for me given the brevity answers. Just on joint ventures, can you talk about that as the sourcing for attractive capital? And how far along you may or may not be with partners on discussions? And would that be focused on new assets for acquisitions, where you come in as a minority partner perhaps or something where you contribute existing assets.

Property if the answers.

<unk>.

Joint Ventures can you talk about that as the sourcing for.

Attractive capital and how far along you may or may not be with partners on discussions.

And would that be focused on new assets for acquisitions, where you come in and buy it or.

Your partner, perhaps or something where you contribute existing assets.

Yes, Juan this is Robert. We can probably comment a little bit more about this as it is one of the options that I think the board is looking at it and frankly that we've been looking at for some time.

We can probably comment a little bit more about this as it is.

One of the options that I think the board is looking at it and frankly, we've been looking at for some time.

I think we look at is the number of really high quality capital sources that are out there that really would like to get a foothold in the medical office space as a real opportunity to get private capital that comes in that definitely has kind of different timing and different return requirements than what the public markets do for us right now.

And that is something we can move forward with just over the past quarter, you've seen a couple really smaller regional operators announce kind of $1 billion funds and the ability to report so I think as we look at it.

Kind of $1 billion funds and the ability to report so I think as we look at it.

It's an opportunity both to potentially sell assets into a joint venture with the seed portfolio. <unk> take those proceeds and reinvest them or do other things with them as well as the opportunity to grow. On a go forward basis.

<unk> take those proceeds and reinvest them or do other things with them as well as the opportunity to grow.

On a go forward basis.

I think from a timing perspective, obviously endpoints looking at kind of all sorts of options that we're preparing to go down that path and have a number of good conversations currently in the works and we're excited about what that opportunity could be for us.

Thank you.

Thank you. Our next question is a follow up from Jon Anderson of NBC Rich. Your line is open again.

Thank you just one question with promise.

When you when you think about.

Cap rates in the marketplace and let's say a one off deal is a five cap just to use a round number.

What is your experience on portfolio premiums.

And if you were to be a buyer or seller.

What type of lower cap rate from our five would you be interested in.

Rich that's a very specific question you are asking there. So we'll try to be a bit broader on that I think in the marketplace in the MLP space you certainly have seen portfolio premiums take place as we've talked extensively as we're announcing our acquisitions, we've been very much a buyer of single assets that typically gives.

25 to 50 basis points more cap rates at least in the current environment.

On top of which we typically get another call it 25% to 35 basis points of synergies from our property management platform. So I think when we look at the current marketplace over the last six to nine months as you've seen with some of our peers and some of the other transactions. There are certainly a 25 to call it 50 basis points premium.

Four.

For our portfolio of assets, sometimes even more than that if there is there is the ability for them to acquire a platform to be able to partner with somebody and see that growth opportunity go forward from there. So.

Does that does that premium gets bigger much bigger as the portfolio gets bigger or is 50 kind of.

The ceiling could it be much more than that if you are getting into a much larger type of transaction.

I think that's.

Probably a question that we haven't seen.

Super large portfolio I mean, I think the biggest one that we've seen was certainly by our good friends out of Milwaukee that they did up there I think is very high quality transaction and I think you certainly saw a very competitive price it around there relative to the individual assets I think it's a little bit hard to to compare on it but high quality assets as you can see her very well.

So, especially when you get a good operating partner that can help you grow in the space. So.

It's not just that I think we've seen it like I said with the announcement of both acquisitions as well as announcement of joint ventures with really two other two to three other operators that we've seen just this quarter alone in this space. So I think it's hard to project exactly what it is but it's certainly in this 25 to 50 basis points for the deals we've seen.

But.

Truly large deals have been relatively infrequent in this space.

Yes, okay. Thanks, very much I appreciate it.

Thanks Rich.

Okay.

As a final reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad now.

We have no further questions in the queue. So I'll hand back to the management for closing remarks.

Great well.

We just want to thank everybody for joining us on the call today, and we look forward to having additional conversations next week as part of the virtual NAREIT session and appreciate all your interest in HCA in the MLP space.

Thanks, very much for your time.

Okay.

This concludes today's call. Thank you Julian.

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