| Michael Anderson | executive |
| Scott Lappetito | executive |
Welcome to the Second Quarter 2024 Healthcare Trust Inc. or HTI Webcast. [Operator Instructions] Please note this event is being recorded. Also note that certain statements and assumptions in this webcast presentation, which are not historical facts, will be forward-looking and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain assumptions and risk factors, which could cause HTI's actual results to differ materially from the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K for the year ended December 31, 2023, filed on March 15, 2024, as amended by the Form 10-K/A filed on March 22, 2024, and all other SEC filings after that date for a more detailed discussion of the risk factors that could cause these differences and impact our business.
During today's call, we will discuss non-GAAP financial measures of HTI. These measures should not be considered in isolation or as a substitution for the financial results prepared in accordance with GAAP. HTI has provided a reconciliation of these measures to the most directly comparable GAAP measure as part of our second quarter 2024 investor presentation available on HTI's website at www.healthcaretrustinc.com. [Operator Instructions]
Also, please note that later today, a copy of this presentation and a replay of the webcast will be available on HTI's website. I would now like to turn the call over to Michael Anderson, our Chief Executive Officer. Please go ahead, Michael.
Thanks, Curtis. Thank you all for joining us today.
Before we get to our second quarter results, I wanted to provide an update on the exciting news that HTI has filed recently, including changing our name to National Healthcare Properties, internalizing the management of the company and our announced plans to pursue a listing in 2025. On July 1, we announced our intention to pursue a transition to self-management of the company or what we refer to as an internalization. On August 7, we announced that a definitive agreement for the internalization had been signed with an expected closing date of September 27, 2024. The internalization will terminate the company's existing arrangement for advisory and property management services currently provided by affiliates of AR Global and shift those responsibilities to employees of HTI. Upon closing of the internalization, we will also be changing the name of the company to National Healthcare Properties, Inc. By internalizing the management functions of the company, we expect to save more than $25 million in annual operating fees that were previously paid to related parties as well as potentially realizing additional G&A savings in the future. We believe additional benefits of the internalization include enhanced corporate governance and a more favorable market opinion of the internally managed REITs if the company ultimately completes a listing on national exchange, which we have announced as our intention in 2025. Simultaneously, we are executing on a strategic disposition initiative that we believe will enhance our portfolio composition, improve the company's operating metrics and realize liquidity to fund along with cash on hand, if necessary, the completion of the internalization. Subsequent to quarter end, we closed on the disposition of 7 skilled nursing facilities in Illinois for a contract sales price of $50.5 million.
Additionally, we have a disposition pipeline that includes 8 additional medical office building assets and 1 SHOP asset, representing an expected aggregate total sale price of $78.7 million if such dispositions are completed on the anticipated terms. I'm happy to report year-over-year increases in revenue from tenants, NOI in both the MOB and SHOP segments of our portfolio and SHOP occupancy. Beginning this quarter, we will be adding certain new non-GAAP metrics to our quarterly reporting that more closely align with other publicly traded REITs as we continue to progress towards an anticipated public listing of our common stock. Scott will discuss these metrics in more detail but I wanted to highlight that one such metric, adjusted funds from operations, or AFFO, grew 13.8% to $4.4 million compared to $3.8 million in the second quarter of 2023. In the second quarter, we signed 15 lease renewals totaling over 76,000 square feet at a positive lease renewal rental spread of 9.4%, which is expected to be recognized over the weighted average term of these renewed leases of 6.1 years.
We have a forward leasing pipeline of approximately 50,000 square feet that is expected to grow occupancy in the MOB portfolio to 91.2% from the current 90.3% occupancy rate upon commencement, assuming all the leases commence on their current terms and signed LOIs lead to definitive agreements.
As of June 30, 2024, HTI owned 207 properties totaling 9 million rentable square feet in 32 states. The portfolio consisted of 160 medical office buildings, 45 senior housing operating properties with 4,069 individual units and 2 land parcels. Based on NOI, the portfolio was comprised of approximately 73.8% MOB and 26.2% SHOP assets.
Additionally, as of June 30, 2024, our MOB segment was 90.3% occupied, with a weighted average remaining lease term of 4.5 years and featured annual cash rent escalations that averaged 2.3% on approximately 94% of leases, which increased cash rental payments in future periods. SHOP occupancy was 76.4% at the end of the second quarter, a 1.1% increase over the end of the first quarter and a 3.1% increase over the second quarter of 2023.
We have diligently constructed a portfolio of MOB and SHOP assets throughout the U.S.
Our portfolio is well diversified geographically across 32 states with only 2 states representing more than 10% of total portfolio by straight-line rent. Quarterly NOI for the portfolio was approximately $33.8 million, 73.8% of which was generated by the MOB segment. We partner with top healthcare brands in well-established markets to maintain durable portfolio of healthcare real estate. We believe that the quality of our tenants is essential to our long-term success and that developing strong relationships with well-respected brands gives our portfolio stability and focus. We believe our partnerships with tenants such as DaVita, Fresenius and UPMC in the MOB portfolio benefit not only HTI's shareholders but patients and other stakeholders as well.
As we continue to actively manage our portfolio, we seek to add high-quality tenants to HTI's MOB portfolio and to foster strong relationships with our SHOP operators.
We are evaluating the composition of HTI's portfolio to ensure ongoing alignment with our investment strategy within both of our operating segments. Where appropriate, we are strategically disposing of properties, which we believe are no longer aligned with our strategy ahead of an anticipated public listing of our common stock. To that end, subsequent to the end of the quarter, we completed the sale of 7 skilled nursing facilities in Illinois for an aggregate sales price of $50.5 million and are building a pipeline of forward dispositions.
Additionally, we have a forward pipeline of additional dispositions that if all were completed on their contemplated terms, would result in a total of over $130 million in gross proceeds from dispositions since the beginning of this year. Scott, will you please take us through the financials?
Thank you, Michael.
We continue to actively manage our balance sheet and capital structure.
As of June 30, 2024, our net leverage was 44.5%.
All of our debt is fixed rate, inclusive of our hedging instruments at a weighted average economic interest rate of 5%.
Our debt is comprised of $828.3 million of fixed rate mortgages secured by 136 MOBs and 4 shops with an aggregate gross asset value of $1.4 billion.
In addition, we have $343.4 million that is drawn on our Fannie Mae Master Credit Facilities, which is secured by SHOPS and mature late in 2026.
During the quarter, we added 2 MOB properties to the collateral pool of our Capital One MOB Warehouse Facility, permitting us to receive an additional $7 million advance, which resulted in $21.7 million being drawn on the $50 million facility at quarter end. HTI continues to execute on our operational initiatives by increasing NOI through strong leasing activity in the MOB segment as well as occupancy growth, rental rate growth and effective expense management in the SHOP segment of our portfolio.
As Michael mentioned earlier, in the appendix of today's presentation, which will be filed and available on our website, you will find the expanded non-GAAP metrics that we will now be providing. These include FFO, AFFO, EBITDA, adjusted EBITDA, cash NOI, net debt to annualized adjusted EBITDA and cash paid for interest. I will note that this appendix includes reconciliations of the related GAAP and non-GAAP measures.
For the second quarter of 2024, we recorded a net loss attributable to common stockholders of $120 million as compared to a loss of $20.7 million in the second quarter of 2023.
During the same period, AFFO grew $0.6 million or 13.8% to $4.4 million as compared to $3.8 million. On a per share basis, AFFO increased to $0.04 per share in the second quarter of 2024, as compared to $0.03 per share in the second quarter of 2023. This was driven by performance improvements in both our MOB and SHOP segments. NOI in our SHOP segment grew by $0.8 million or 10.1% in the second quarter of 2024 compared to the second quarter of 2023 because of increased occupancy, rental rates and effective expense management. Similarly, NOI improved by $0.4 million or 1.9% in the MOB segment during the same period as revenues continued to increase as a result of accretive acquisitions and favorable leasing.
We continue to successfully lease available space in our MOB segment. In the quarter, we completed 15 lease renewals of more than 75,000 square feet at a positive lease renewal rental spread of 9.4%, which will be recognized over the weighted average term of these renewed leases of 6.1 years.
Lastly, during the second quarter of 2024, as compared to both the first quarter of 2024 and the second quarter of 2023, we reported increases in adjusted EBITDA, NOI and cash NOI.
We will continue to provide these additional non-GAAP metrics in the quarters to come. I would now like to turn the call back to Michael for some color on the HTI team and some closing remarks.
Thanks, Scott. We believe we will position HTI for long-term earnings growth by, among other things, capitalizing on leasing available space and strategically evaluating the properties in our portfolio.
Our portfolio continues to demonstrate its resilience as we earned a positive spread on lease renewals in the MOB portfolio and grew NOI compared to last quarter.
We have an experienced management team that we believe is well positioned to maximize the opportunities created by demographic trends, which favor long-term investment in healthcare real estate. We believe we have the right team in place to execute on our strategy and drive long-term value. Trent Taylor is our Senior Vice President of Asset Management and ensures that our existing properties are leased, performing as expected and that our tenants' needs are being met by local property managers. David Ruggiero is responsible for MOB acquisitions, applying over 30 years of experience and a $3 billion acquisitions track record to our strict investment guidelines and underwriting standards.
Our dedicated SHOP team has over 50 years of collective experience in the senior housing space. Lindsay Gordon and Michelle Stepinsky brings vast knowledge and experience the operations and sales groups at our properties. And Susan Rice, our VP of Clinical Operations, has been part of our SHOP team for over 5 years, helping guide this segment through COVID with their extensive clinical expertise.
We are pleased with the ongoing improvements in the performance of our SHOP portfolio. The 10.1% year-over-year increase in net operating income and 1.1% increase in occupancy we reported in the SHOP segment this quarter extend the momentum we've seen in this portfolio. At the same time, our MOB portfolio continued its strong, dependable performance, growing NOI 1.9% compared to the prior year's quarter.
As we disclosed last quarter, the company did not declare a stock dividend to be paid in July as the Board continues to consider a potential listing or another liquidity event for the company and its shareholders. By the next time we host this call, we expect that the internalization will be complete and that we will be welcoming you as stakeholders of National Healthcare Properties.
We will continue to keep you updated with these and additional exciting developments for HTI.