Healthcare Realty Trust (HR) is making steady progress on its strategic plan and remains on track to reach its targeted funds-from-operations run-rate ahead of schedule, with recent debt refinancing likely lifting the lower end of that range, RBC Capital Markets said Thursday in a report.

Phase I of HR 2.0, focused on fixing systems, is complete, marked by a rebuilt operating team, a workable asset-management model, a stronger balance sheet and clearer audience targeting, RBC said after meeting with company executives.

Phase II, centered on execution, is underway as the company deepens its health-system relationships, driving better leasing results and higher tenant retention, the report said.

Phase III, aimed at fueling growth, has begun as the company evaluates incremental investment opportunities, the report said. This backdrop supports a three-year FFO run-rate of $1.65 to $1.85, and once achieved, the plan should allow mid-single-digit FFO growth, RBC said.

RBC maintained its sector-perform rating on Healthcare Realty stock and its $22 price target.

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