UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended:	~~March 31,~~September 30, 2020
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to For the transition period to

Commission File Number: 001-11852

~~001-11852~~

HEALTHCARE REALTY TRUST INCORPORATED

(Exact name of Registrant as specified in its charter)



Maryland			62-1507028
(State or other jurisdiction of Incorporation or organization)			(I.R.S. Employer Identification No.)

3310 West End Avenue, Suite 700

Nashville,, Tennessee37203

(Address of principal executive offices)

(~~615~~) (615) 269-8175

(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, $0.01 par value per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May 1,~~October 30, 2020, the Registrant had ~~134,932,261~~136,054,024 shares of Common Stock outstanding.

HEALTHCARE REALTY TRUST INCORPORATED

FORM 10-Q

September 30, 2020

~~March 31, 2020~~

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Healthcare Realty Trust Incorporated

Condensed Consolidated Balance Sheets

Amounts in thousands, except per share data


ASSETS							ASSETS
	Unaudited MARCH 31, 2020			DECEMBER 31, 2019				Unaudited SEPTEMBER 30, 2020		DECEMBER 31, 2019
Real estate properties							Real estate properties
Land	$	319,882		$	289,751		Land	$	330,840	$	289,751
Buildings, improvements and lease intangibles	4,126,046			3,986,326			Buildings, improvements and lease intangibles	4,014,740		3,986,326
Personal property	10,783			10,538			Personal property	10,962		10,538
Construction in progress	—			48,731			Construction in progress	0		48,731
Land held for development	24,647			24,647			Land held for development	24,647		24,647
Total real estate properties	4,481,358			4,359,993			Total real estate properties	4,381,189		4,359,993
Less accumulated depreciation and amortization	(1,164,462		)	(1,121,102		)	Less accumulated depreciation and amortization	(1,198,444)		(1,121,102)
Total real estate properties, net	3,316,896			3,238,891			Total real estate properties, net	3,182,745		3,238,891
Cash and cash equivalents	103,370			657			Cash and cash equivalents	121,992		657
Restricted cash							Restricted cash	60,644		0

Assets held for sale, net	20			37			Assets held for sale, net	20,051		37
Operating lease right-of-use assets	125,040			126,177			Operating lease right-of-use assets	123,807		126,177
Financing lease right-of-use assets	12,615			12,667			Financing lease right-of-use assets	19,776		12,667

Other assets, net	189,708			185,426			Other assets, net	182,436		185,426
Total assets	$	3,747,649		$	3,563,855		Total assets	$	3,711,451	$	3,563,855

LIABILITIES AND STOCKHOLDERS' EQUITY							LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities							Liabilities
Notes and bonds payable	$	1,644,454		$	1,414,069		Notes and bonds payable	$	1,554,395	$	1,414,069
Accounts payable and accrued liabilities	64,574			78,517			Accounts payable and accrued liabilities	79,528		78,517
Liabilities of properties held for sale	74			145
Liabilities of assets held for sale							Liabilities of assets held for sale	548		145
Operating lease liabilities	91,093			91,574			Operating lease liabilities	91,466		91,574
Financing lease liabilities	17,953			18,037			Financing lease liabilities	18,697		18,037
Other liabilities	70,073			61,504			Other liabilities	66,442		61,504
Total liabilities	1,888,221			1,663,846			Total liabilities	1,811,076		1,663,846
Commitments and contingencies							Commitments and contingencies
Stockholders' equity							Stockholders' equity
Preferred stock, $.01 par value per share; 50,000 shares authorized; none issued and outstanding	—			—
Common stock, $.01 par value per share; 300,000 shares authorized; 134,932 and 134,706 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	1,349			1,347
Preferred stock, $.01 par value per share; 50,000 shares authorized; NaN issued and outstanding							Preferred stock, $.01 par value per share; 50,000 shares authorized; NaN issued and outstanding	0		0
Common stock, $.01 par value per share; 300,000 shares authorized; 136,054 and 134,706 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively							Common stock, $.01 par value per share; 300,000 shares authorized; 136,054 and 134,706 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	1,361		1,347
Additional paid-in capital	3,494,123			3,485,003			Additional paid-in capital	3,532,130		3,485,003
Accumulated other comprehensive loss	(19,777		)	(6,175		)	Accumulated other comprehensive loss	(19,267)		(6,175)
Cumulative net income attributable to common stockholders	1,131,619			1,127,304			Cumulative net income attributable to common stockholders	1,215,362		1,127,304
Cumulative dividends	(2,747,886		)	(2,707,470		)	Cumulative dividends	(2,829,211)		(2,707,470)
Total stockholders' equity	1,859,428			1,900,009			Total stockholders' equity	1,900,375		1,900,009

Total liabilities and stockholders' equity	$	3,747,649		$	3,563,855		Total liabilities and stockholders' equity	$	3,711,451	$	3,563,855

The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, are an integral part of these financial statements.

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Income

For the Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019

Amounts in thousands, except per share data

Unaudited


	THREE MONTHS ENDED March 31,							THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,
	2020			2019				2020		2019		2020		2019
Revenues							Revenues
Rental income	$	122,644		$	110,696		Rental income	$	123,384	$	117,740	$	368,385	$	342,787

Other operating	2,163			1,961			Other operating	1,868		2,059		5,364		5,987
	124,807			112,657				125,252		119,799		373,749		348,774
Expenses							Expenses
Property operating	49,552			42,725			Property operating	50,171		46,777		146,305		133,790
General and administrative	8,766			8,510			General and administrative	7,299		10,802		23,498		27,157
Acquisition and pursuit costs	750			305			Acquisition and pursuit costs	440		501		1,621		1,227
Depreciation and amortization	47,497			42,662			Depreciation and amortization	47,143		45,137		142,331		131,725
	106,565			94,202

								105,053		103,217		313,755		293,899
Other Income (Expense)							Other Income (Expense)
Gain (loss) on sales of real estate assets	(49		)	15
Gain on sales of real estate assets							Gain on sales of real estate assets	2,177		200		70,395		5,065
Interest expense	(13,960		)	(13,588		)	Interest expense	(14,154)		(14,181)		(42,556)		(41,619)

Impairment of real estate assets							Impairment of real estate assets	—		—		—		(5,610)

Interest and other income (expense), net	82			9			Interest and other income (expense), net	8		—		225		(736)
								(11,969)		(13,981)		28,064		(42,900)

	(13,927		)	(13,564		)
Net Income	$	4,315		$	4,891		Net Income	$	8,230	$	2,601	$	88,058	$	11,975


Basic earnings per common share	$	0.03		$	0.04		Basic earnings per common share	$	0.06	$	0.02	$	0.65	$	0.08

Diluted earnings per common share	$	0.03		$	0.04		Diluted earnings per common share	$	0.06	$	0.02	$	0.65	$	0.08

Weighted average common shares outstanding - basic	133,036			124,130			Weighted average common shares outstanding - basic	134,309		128,090		133,662		126,571
Weighted average common shares outstanding - diluted	133,150			124,232			Weighted average common shares outstanding - diluted	134,357		128,169		133,736		126,657
Dividends declared, per common share, during the period	$	0.30		$	0.30		Dividends declared, per common share, during the period	$	0.30	$	0.30	$	0.90	$	0.90

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019

Amounts in thousands

Unaudited


	THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,
	2020		2019		2020		2019
Net income	$	8,230	$	2,601	$	88,058	$	11,975
Other comprehensive income (loss)


Interest rate swaps
Reclassification adjustments for losses included in net income (interest expense)	1,101		60		2,367		74
Losses arising during the period on interest rate swaps	(74)		(2,341)		(11,192)		(7,642)
Losses on settlement of treasury rate locks arising during the period	0		0		(4,267)		0
	1,027		(2,281)		(13,092)		(7,568)

Comprehensive income	$	9,257	$	320	$	74,966	$	4,407

THREE MONTHS ENDED
March 31,
2020
2019
Net income $ 4,315
$ 4,891
Other comprehensive income (loss)
Interest rate swaps
Reclassification adjustments for losses included in net income (interest expense) 328
15
Losses arising during the period on interest rate swaps (9,663 ) (724 )
Losses on settlement of treasury rate locks arising during the period (4,267 ) —
(13,602 ) (709 )
Comprehensive income $ (9,287 ) $ 4,182

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity

For the Three Months Ended ~~March 31,~~September 30, 2020 and 2019

Amounts in thousands, except per share data

Unaudited


																		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity
Balance at June 30, 2020																	Balance at June 30, 2020	$	1,360	$	3,529,559	$	(20,294)	$	1,207,132	$	(2,788,396)	$	1,929,361
Issuance of common stock, net of issuance costs																	Issuance of common stock, net of issuance costs	1		126		—		—		—		127
	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Net Income		Cumulative Dividends			Total Stockholders’ Equity
Balance at December 31, 2019	$	1,347	$	3,485,003		$	(6,175	)	$	1,127,304	$	(2,707,470	)	$	1,900,009
Issuance of common stock, net of issuance costs	2		7,319			—			—		—			7,321
Common stock redemptions	—		(798		)	—			—		—			(798		)
Share-based compensation	—		2,599			—			—		—			2,599			Share-based compensation	—		2,445		—		—		—		2,445
Net income	—		—			—			4,315		—			4,315			Net income	—		—		—		8,230		—		8,230
Reclassification adjustments for losses included in net income (interest expense)	—		—			328			—		—			328			Reclassification adjustments for losses included in net income (interest expense)	—		—		1,101		—		—		1,101
Losses arising during the period on treasury rate locks	—		—			(13,930		)	—		—			(13,930		)
Losses arising during the period on interest rate swaps and treasury rate locks																	Losses arising during the period on interest rate swaps and treasury rate locks	—		—		(74)		—		—		(74)
Dividends to common stockholders ($0.30 per share)	—		—			—			—		(40,416		)	(40,416		)	Dividends to common stockholders ($0.30 per share)	—		—		—		—		(40,815)		(40,815)
Balance at March 31, 2020	$	1,349	$	3,494,123		$	(19,777	)	$	1,131,619	$	(2,747,886	)	$	1,859,428
Balance at September 30, 2020																	Balance at September 30, 2020	$	1,361	$	3,532,130	$	(19,267)	$	1,215,362	$	(2,829,211)	$	1,900,375

	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Net Income		Cumulative Dividends			Total Stockholders’ Equity				Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity
Balance at December 31, 2018	$	1,253	$	3,180,284		$	(902	)	$	1,088,119	$	(2,552,112	)	$	1,716,642
Balance at June 30, 2019																	Balance at June 30, 2019	$	1,292	$	3,305,344	$	(6,189)	$	1,097,493	$	(2,628,497)	$	1,769,443
Issuance of common stock, net of issuance costs	38		120,462			—			—		—			120,500			Issuance of common stock, net of issuance costs	22		71,792		—		—		—		71,814
Common stock redemptions	—		(570		)	—			—		—			(570		)	Common stock redemptions	—		(2,695)		—		—		—		(2,695)
Share-based compensation	1		2,638			—			—		—			2,639			Share-based compensation	—		5,131		—		—		—		5,131
Net income	—		—			—			4,891		—			4,891			Net income	—		—		—		2,601		—		2,601
Reclassification adjustments for losses included in net income (interest expense)	—		—			15			—		—			15			Reclassification adjustments for losses included in net income (interest expense)	—		—		60		—		—		60
Losses arising during the period on interest rate swaps	—		—			(724		)	—		—			(724		)	Losses arising during the period on interest rate swaps	—		—		(2,341)		—		—		(2,341)
Dividends to common stockholders ($0.30 per share)	—		—			—			—		(37,614		)	(37,614		)	Dividends to common stockholders ($0.30 per share)	—		—		—		—		(38,852)		(38,852)
Balance at March 31, 2019	$	1,292	$	3,302,814		$	(1,611	)	$	1,093,010	$	(2,589,726	)	$	1,805,779
Balance at September 30, 2019																	Balance at September 30, 2019	$	1,314	$	3,379,572	$	(8,470)	$	1,100,094	$	(2,667,349)	$	1,805,161

Table of Contents

HealthcareRealty Trust Incorporated

Condensed Consolidated Statements of ~~Cash Flows~~Equity

For the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020 and 2019

Amounts in thousands, except per share data

Unaudited

OPERATING ACTIVITIES

THREE MONTHS ENDED
March 31,
2020
2019
Net income $ 4,315
$ 4,891
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 47,497
42,662
Other amortization 1,491
727
Share-based compensation 2,599
2,639
Amortization of straight-line rent receivable (lessor) (1,043 ) (668 )
Amortization of straight-line rent on operating leases (lessee) 375
390
(Gain) loss on sales of real estate assets 49
(15 )
Loss from unconsolidated joint ventures 11
10
Distributions from unconsolidated joint ventures 118
88
Changes in operating assets and liabilities:
Other assets, including right-of-use-assets (4,032 ) (4,971 )
Accounts payable and accrued liabilities (10,005 ) (10,276 )
Other liabilities (2,931 ) (673 )
Net cash provided by operating activities 38,444
34,804

INVESTING ACTIVITIES
Acquisitions of real estate (83,580 ) (91,787 )
Development of real estate (2,451 ) (5,712 )
Additional long-lived assets (22,164 ) (11,741 )
Net cash used in investing activities (108,195 ) (109,240 )

FINANCING ACTIVITIES
Net repayments on unsecured credit facility (78,000 ) (2,000 )
Borrowings of notes and bonds payable 298,995
—
Repayments of notes and bonds payable (7,202 ) (1,193 )
Dividends paid (40,416 ) (37,614 )
Net proceeds from issuance of common stock 7,213
120,617
Common stock redemptions (892 ) (2,442 )
Settlement of treasury rate locks (4,267 ) —
Debt issuance and assumption costs (2,646 ) —
Payments made on finance leases (321 ) —
Net cash provided by financing activities $ 172,464
$ 77,368

Increase in cash and cash equivalents 102,713
2,932
Cash and cash equivalents at beginning of period 657
8,381
Cash and cash equivalents at end of period $ 103,370
$ 11,313

Supplemental Cash Flow Information
Interest paid $ 11,428
$ 11,071
Invoices accrued for construction, tenant improvements and other capitalized costs $ 12,830
$ 13,509
Mortgage notes payable assumed upon acquisition (adjusted to fair value) $ 19,269
$ —
Capitalized interest $ 421
$ 307


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity
Balance at December 31, 2019	$	1,347	$	3,485,003	$	(6,175)	$	1,127,304	$	(2,707,470)	$	1,900,009
Issuance of common stock, net of issuance costs	13		40,477		—		—		—		40,490
Common stock redemptions	—		(798)		—		—		—		(798)
Share-based compensation	1		7,448		—		—		—		7,449
Net income	—		—		—		88,058		—		88,058
Reclassification adjustments for losses included in net income (interest expense)	—		—		2,367		—		—		2,367
Losses arising during the period on interest rate swaps	—		—		(15,459)		—		—		(15,459)
Dividends to common stockholders ($0.90 per share)	—		—		—		—		(121,741)		(121,741)
Balance at September 30, 2020	$	1,361	$	3,532,130	$	(19,267)	$	1,215,362	$	(2,829,211)	$	1,900,375

	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity
Balance at December 31, 2018	$	1,253	$	3,180,284	$	(902)	$	1,088,119	$	(2,552,112)	$	1,716,642
Issuance of common stock, net of issuance costs	61		192,414		—		—		—		192,475
Common stock redemptions	(1)		(3,266)		—		—		—		(3,267)
Share-based compensation	1		10,140		—		—		—		10,141
Net income	—		—		—		11,975		—		11,975
Reclassification adjustments for losses included in net income (interest expense)	—		—		74		—		—		74
Losses arising during the period on interest rate swaps	—		—		(7,642)		—		—		(7,642)
Dividends to common stockholders ($0.90 per share)	—		—		—		—		(115,237)		(115,237)
Balance at September 30, 2019	$	1,314	$	3,379,572	$	(8,470)	$	1,100,094	$	(2,667,349)	$	1,805,161

Table of Contents

HealthcareRealty Trust Incorporated

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019

Amounts in thousands

Unaudited


OPERATING ACTIVITIES
	NINE MONTHS ENDED September 30,
	2020		2019
Net income	$	88,058	$	11,975
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	142,331		131,725
Other amortization	3,409		2,279
Share-based compensation	7,449		10,141
Amortization of straight-line rent receivable (lessor)	(2,722)		(1,833)
Amortization of straight-line rent on operating leases (lessee)	1,122		1,159
Gain on sales of real estate assets	(70,395)		(5,065)

Impairment of real estate assets	—		5,610
Loss from unconsolidated joint ventures	194		16
Distributions from unconsolidated joint ventures	193		277
Proceeds from disposition of sales-type lease properties	244,454		0
Changes in operating assets and liabilities:

Other assets, including right-of-use-assets	(965)		(6,740)
Accounts payable and accrued liabilities	5,098		3,220
Other liabilities	(6,662)		5,709
Net cash provided by operating activities	411,564		158,473

INVESTING ACTIVITIES
Acquisitions of real estate	(199,162)		(271,575)
Development of real estate	(2,941)		(19,152)
Additional long-lived assets	(62,707)		(45,902)
Proceeds from sales of real estate assets	4,905		14,151

Net cash used in investing activities	(259,905)		(322,478)

FINANCING ACTIVITIES
Net (repayments) borrowings on unsecured credit facility	(293,000)		60,000
Borrowings on term loan	150,000		50,000

Borrowings of notes and bonds payable	298,995		—
Repayments of notes and bonds payable	(32,704)		(12,663)


Dividends paid	(121,741)		(115,237)
Net proceeds from issuance of common stock	40,296		192,514
Common stock redemptions	(892)		(2,343)


Settlement of treasury rate locks	(4,267)		—
Debt issuance and assumption costs	(3,057)		(4,589)
Payments made on finance leases	(3,310)		(249)
Net cash provided by financing activities	30,320		167,433

Increase in cash, cash equivalents and restricted cash	181,979		3,428
Cash and cash equivalents at beginning of period	657		8,381
Cash, cash equivalents and restricted cash at end of period	$	182,636	$	11,809

Supplemental Cash Flow Information
Interest paid	$	39,165	$	37,946
Invoices accrued for construction, tenant improvements and other capitalized costs	$	12,709	$	10,702
Mortgage notes payable assumed upon acquisition (adjusted to fair value)	$	19,269	$	—
Capitalized interest	$	913	$	999

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Business Overview

Healthcare Realty Trust Incorporated (the "Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of ~~March 31,~~September 30, 2020, the Company had gross investments of approximately ~~$4.4~~$4.3 billion in ~~212~~211 real estate properties located in 2524 states totaling approximately ~~15.8~~15.5 million square feet. The Company provided leasing and property management services to approximately ~~12.0~~11.9 million square feet nationwide. Square footage and property count disclosures in these Notes to the Company's Condensed Consolidated Financial Statements are unaudited.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019. All material intercompany transactions and balances have been eliminated in consolidation.

The Company considered the impact of COVID-19 on these assumptions and estimates used and determined that there were no material adverse impacts on the Company's results of operations and financial position at March 31, 2020. A prolonged outbreak could have a material adverse impact on the financial results and business operations of the Company.

This interim financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. In addition, the interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2020 for many reasons including, but not limited to, acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and uncertainties, such as the impact of the COVID-19 pandemic.

Use of Estimates in the Condensed Consolidated Financial Statements

Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates.

The Company considered the impact of COVID-19 on these assumptions and estimates used and determined that there were no material adverse impacts on the Company's results of operations and financial position at September 30, 2020. There can be no assurance that COVID-19 will not have a future material adverse impact on the financial results and business operations of the Company.

COVID-19 Update

Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

In response to the COVID-19 pandemic, all of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants temporarily closed their offices or clinical space or operated on a reduced basis in response to government requirements or recommendations. Many of these restrictions have been lifted, but could be reimposed. In response to these disruptions, the Company provided some of its tenants with deferred rent arrangements. Such arrangements were made primarily in the second quarter of 2020, and less than $0.1 million of deferred rent arrangements originated in the third quarter. Through November 2, 2020, the Company has collected more than 99% of second and third quarter 2020 aggregate tenant billings. The Company has collected 96% of total scheduled deferral payments due in the third quarter of 2020. In addition, the Company has remaining various forms of rent deferrals outstanding representing

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

approximately $1.2 million, or less than 1% of second and third quarter 2020 aggregate tenant billings. The tenant deferral agreements generally require the deferred amounts to be repaid by the fourth quarter of 2020.

For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease. However, in light of the COVID-19 pandemic in which many leases are being modified, the Financial Accounting Standards Board (the "FASB") and U.S. Securities and Exchange Commission (the "SEC") have provided relief that will allow companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. The Company has elected to use this relief where applicable and therefore will have no change in the current classification of its leases in connection with many of the leases impacted by negotiations with its tenants. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. If the cash flows are substantially the same or less, there are two methods to potentially account for such rent deferrals under the relief. The first would be as if no changes to the lease contract were made. Under that accounting, a lessor would increase its lease receivable and a lessee would increase its accounts payable as receivables/payments accrue. In its income statement, a lessor would continue to recognize revenue during the deferral period. The second method would be to treat the deferred payments as variable lease payments (i.e., revenue recognized when cash received). The Company has elected the first method described above, which results in the revenue being recognized on an accrual basis.

If tenants are unable to timely repay deferred rent, or repay at all, request additional rent deferrals or abatements, decide not to renew leases, or renew leases at lower cash leasing spreads, the impact on the Company’s results of operations and financial condition could be material. In the second quarter of 2020, the Company recognized approximately $0.7 million general reserve against the deferred rent balance. Following positive collection trends in the third quarter of 2020, the Company released approximately $0.3 million of the general reserve. As of September 30, 2020, the Company had a remaining general reserve of $0.4 million against an approximate $1.7 million deferred rent balance.

Given the daily evolution of the COVID-19 pandemic and the global response to curb its spread, the Company is not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for the fiscal year 2020. The Company continues to evaluate the impact of various forms of governmental assistance that may be or become available to the Company or its tenants.

Revenue from Contracts with Customers (Topic 606)

The Company recognizes certain revenue under the core principle of Topic 606. This requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of Topic 606. To achieve the core principle, the Company applies the five step model specified in the guidance.

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.~~

Revenue that is accounted for under Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Income in the Other operating line item. This line item includes parking income, rental lease guaranty income, management fee income and other miscellaneous income. Below is a detail of the amounts by category:

THREE MONTHS ENDED
March 31,
in thousands 2020
2019
Type of Revenue
Parking income $ 2,051
$ 1,734
Rental lease guaranty —
128
Management fee income 78
69
Miscellaneous 34
30
$ 2,163
$ 1,961


	THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,
in thousands	2020		2019		2020		2019
Type of Revenue
Parking income	$	1,764	$	1,935	$	5,042	$	5,538
Rental lease guaranty	0		0		0		128
Management fee income	62		69		209		201
Miscellaneous	42		55		113		120
	$	1,868	$	2,059	$	5,364	$	5,987

The Company’s major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time, and the Company recognizes revenue monthly based on this principle.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased. Restricted cash includes cash held in escrow from the sale of a property in Oklahoma. These proceeds have been or will be disbursed as the Company acquires real estate investments in like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's Condensed Consolidated Balance Sheets to the combined amounts shown on the Company's Condensed Consolidated Statements of Cash Flows:


In thousands	September 30, 2020		December 31, 2019
Cash and cash equivalents	$	121,992	$	657
Restricted cash	60,644		0
Total cash, cash equivalents and restricted cash	$	182,636	$	657

New Accounting Pronouncements

Accounting Standards Update No. 2016-13

In June 2016, the ~~Financial Accounting Standards Board (the "FASB")~~FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments." This update is intended to improve financial reporting by requiring timelier recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. This update requires that financial statement assets measured at an amortized cost and certain other financial instruments be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. This standard is effective for annual and interim periods beginning after December 15, 2019 with early adoption permitted. Operating lease receivables, representing the majority of the Company's receivables, are not within the scope of the new standard. The Company adopted this standard as of January 1, 2020. There was not a material impact to the Condensed Consolidated Financial Statements resulting from the adoption of this standard.

Accounting Standards Update No. 2017-04

In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment." This update eliminates Step 2 of the goodwill impairment test. As such, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value. This standard is effective for the Company for annual and interim periods beginning after December 15, 2019. The Company adopted this standard as of January 1, 2020. There was not a material impact to the Condensed Consolidated Financial Statements resulting from the adoption of this standard.

Accounting Standards Update No. 2020-04

On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Note 2. Real Estate Investments

2020 Acquisitions

The following table details the Company's acquisitions for the ~~three~~nine months ended ~~March 31,~~September 30, 2020:


Dollars in millions	TYPE 1	DATE ACQUIRED	PURCHASE PRICE		MORTGAGE NOTES PAYABLE		CASH CONSIDERATION 2		REAL ESTATE		OTHER 3		SQUARE FOOTAGE
Los Angeles, CA	MOB	1/3/20	$	42.0	$	(19.3)	$	22.8	$	42.4	$	(0.3)	86,986
Atlanta, GA	MOB	2/13/20	12.0		0		11.8		12.1		(0.3)		64,624
Raleigh, NC	MOB	2/25/20	6.3		0		6.5		6.5		0		15,964
Colorado Springs, CO	MOB	3/9/20	8.2		0		8.3		8.6		(0.3)		34,210
Denver, CO 4	MOB	3/13/20	33.5		0		33.2		34.0		(0.8)		136,994
San Diego, CA	MOB	7/1/20	16.7		0		16.7		16.9		(0.2)		46,083
Los Angeles, CA	MOB	7/17/20	35.0		0		37.7		37.7		0		49,785
Seattle, WA	MOB	7/23/20	11.0		0		10.9		11.3		(0.4)		21,309
Atlanta, GA	MOB	7/31/20	20.5		0		21.6		21.3		0.3		48,145
Houston, TX	MOB	9/24/20	11.0		0		10.9		11.0		(0.1)		40,235
Los Angeles, CA	MOB	9/28/20	14.0		0		14.0		13.9		0.1		24,252

Total real estate acquisitions			$	210.2	$	(19.3)	$	194.4	$	215.7	$	(2.0)	568,587
Land acquisition 5			1.6		0		1.7		1.7		0		0
Land acquisition 6			1.0		0		1.1		1.1		0		0
			$	212.8	$	(19.3)	$	197.2	$	218.5	$	(2.0)	568,587

Dollars in millions
TYPE ¹
DATE ACQUIRED PURCHASE PRICE
MORTGAGE NOTES PAYABLE
CASH
CONSIDERATION ²

REAL
ESTATE

OTHER ³

SQUARE FOOTAGE
Los Angeles, CA MOB 1/3/20 $ 42.0
$ (19.3 ) $ 22.8
$ 42.4
$ (0.3 ) 86,986
Atlanta, GA MOB 2/13/20 12.0
—
11.8
12.1
(0.3 ) 64,624
Raleigh, NC MOB 2/25/20 6.3
—
6.5
6.5
—
15,964
Colorado Springs, CO MOB 3/9/20 8.2
—
8.3
8.6
(0.3 ) 34,210
Denver, CO ⁴
MOB 3/13/20 33.5
—
33.2
34.0
(0.8 ) 136,994
Total real estate acquisitions $ 102.0
$ (19.3 ) $ 82.6
$ 103.6
$ (1.7 ) 338,778
Land acquisition ⁵
1.6
—
1.7
1.7
—
—
$ 103.6
$ (19.3 ) $ 84.3
$ 105.3
$ (1.7 ) 338,778
1MOB = medical office building.


1	~~MOB = medical office building.~~


2	~~Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.~~


3	~~Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.~~


4	~~Includes three properties.~~


5	~~The Company acquired land parcels under four existing buildings (previously ground leased from the hospital system).~~

2Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.

3Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.

4Includes 3 properties.

5The Company acquired land parcels under 4 existing buildings (previously ground leased).

6The Company acquired a land parcel under an existing building (previously ground leased). The building and land were sold on September 30, 2020.

Subsequent Acquisition

On October 7, 2020 the Company acquired a 36,720 square foot medical office building in Colorado Springs, CO for a purchase price of $8.9 million.

2020 Real Estate Asset Dispositions

The following table details the Company's dispositions for the nine months ended September 30, 2020:


Dollars in millions	TYPE 1	Date Disposed	Sale Price		Closing Adjustments		Net Proceeds		Net Real Estate Investment		Other (including receivables)2		Gain/(Impairment)		Square Footage (Unaudited)
Springfield, MO 3	SF	7/30/20	$	138.0	$	0	$	138.0	$	92.4	$	3.9	$	41.7	186,000
Oklahoma City, OK 3	MOB	7/30/20	106.5		0		106.5		76.8		3.1		26.6		200,000
Miami, FL	MOB	9/30/20	5.0		(0.2)		4.8		2.6		0.1		2.1		26,000

Total dispositions			$	249.5	$	(0.2)	$	249.3	$	171.8	$	7.1	$	70.4	412,000

1.MOB = medical office building; SF = surgical facility

2.Includes straight-line rent receivables, leasing commissions and lease inducements.

3.In the second quarter of 2020, the Company entered into agreements to sell 2 single-tenant net leased properties, resulting in a lease modification and classification change from operating to sales-type.

Assets Held for Sale

AsIn September 2020, the Company reclassified 4 medical office buildings and a land parcel to assets held for sale upon acceptance of ~~March 31,~~an offer from a third party to purchase the properties under a single sales agreement. The contractual sales price of $23.0 million is greater than the current net investment of approximately $18.1 million. As

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

of September 30, 2020 and December 31, 2019, the Company had 4 and 0 properties, respectively, classified as assets held for sale.

The table below reflects the assets and liabilities of the properties classified as held for ~~sale.~~sale as of September 30, 2020 and December 31, 2019:


(Dollars in thousands)	September 30, 2020		December 31, 2019
Balance Sheet data:
Land	$	1,664	$	0
Building, improvements and lease intangibles	26,871		0
Personal property	39		0
	28,574		0
Accumulated depreciation	(10,443)		0
Real estate assets held for sale, net	18,131		0
Other assets, net	1,920		37
Assets held for sale, net	$	20,051	$	37

Accounts payable and accrued liabilities	$	437	$	37
Other liabilities	111		108
Liabilities of assets held for sale	$	548	$	145

Note 3. Leases

Lessor Accounting

The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2035. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s ~~portfolio of~~ single-tenant net leases generally ~~requires~~require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

The Company's leases typically have escalators that are either based on a stated percentage or an index such as CPI (consumer price index). In addition, most of the Company's leases include nonlease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and nonlease components. Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments. Variable payments are recognized in the period earned. Lease income for the Company's operating leases recognized for the three and nine months ended ~~March 31,~~September 30, 2020 was ~~$122.6~~$123.4 million and $368.4 million, respectively.

In May 2020, the Company and Mercy Health negotiated the sale of 2 single-tenant net leased properties, a medical office building in Oklahoma and an orthopedic specialty hospital in Missouri, for $244.5 million. The sale was structured through amendments to the leases to allow for the early exercise of existing purchase options. The amendments resulted in the application of lease modification accounting under ASC Topic 842, which resulted in lease classification changes from operating to sales-type. During the second quarter, the Company derecognized the real estate assets on the Condensed Consolidated Balance Sheets and recognized the net investment in sales-type leases, resulting in a gain of $68.3 million. The Company disposed of these properties on July 30, 2020.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Tabular Disclosure of the Components of Sales-Type Leases

The table below presents the components of sale-type leases for the three and nine months ended September 30, 2020:


	SALES-TYPE LEASES
In thousands	three months ended September 30, 2020		nine months ended September 30, 2020
Profit recognized at commencement date	$	0	$	68,267	Gain on sales of real estate assets
Interest income	1,454		3,007		Rental income

Future lease payments under the non-cancelable operating leases, excluding any reimbursements, as of ~~March 31,~~September 30, 2020 were as follows:


In thousands	Operating
2020	$	93,722
2021	352,341
2022	307,166
2023	261,187
2024	200,578
2025 and thereafter	555,264
	$	1,770,258

In thousands
2020 $ 280,413
2021 335,188
2022 294,771
2023 250,284
2024 193,772
2025 and thereafter 514,144
$ 1,868,572

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.~~

Lessee Accounting

As of ~~March 31,~~September 30, 2020, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of ~~March 31,~~September 30, 2020, the Company had ~~104~~103 properties totaling 8.7 million square feet that were held under ground leases. Some of the ground leases' renewal terms are based on fixed rent renewal terms and others have market rent renewal terms. These ground leases typically have initial terms of 40 to 99 years with expiration dates through ~~2117.~~2119. Any rental increases related to the Company’s ground leases are generally either stated or based on the CPI. The Company had 42 prepaid ground leases as of ~~March 31,~~September 30, 2020. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.2 million ~~and $0.1 million~~ of the Company’s rental expense for the three months ended ~~March 31,~~September 30, 2020 and ~~March 31,~~2019, respectively and $0.5 million and $0.4 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company’s future lease payments (primarily for its 6261 non-prepaid ground leases) as of ~~March 31,~~September 30, 2020 were as follows:


In thousands	OPERATING		FINANCING
2020	$	1,008	$	143
2021	4,844		930
2022	4,875		783
2023	4,913		793
2024	4,969		815
2025 and thereafter	307,665		88,808
Total undiscounted lease payments	328,274		92,272
Discount	(236,808)		(73,575)
Lease liabilities	$	91,466	$	18,697

In thousands OPERATING
FINANCING
2020 $ 3,113
$ 429
2021 4,844
754
2022 4,875
763
2023 4,913
774
2024 4,969
795
2025 and thereafter 307,665
83,404
Total undiscounted lease payments 330,379
86,919
Discount (239,286 ) (68,966 )
Lease liabilities $ 91,093
$ 17,953

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The following table provides details of the Company's total lease expense for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019:


	THREE MONTHS ENDED September 30,						NINE MONTHS ENDED September 30,
In thousands	2020			2019			2020		2019
Operating lease cost
Operating lease expense	$	1,180		$	1,169		$	3,534	$	3,448
Variable lease expense	1,066			845			2,664		2,380

Finance lease cost
Amortization of right-of-use assets	88			51			236		101
Interest on lease liabilities	245			196			722		392
Total lease expense	$	2,579		$	2,261		$	7,156	$	6,321

Other information
Operating cash flows outflows related to operating leases	$	1,440		$	1,313		$	5,412	$	5,461
Financing cash flows outflows related to financing leases	$	143		$	107		$	3,310	$	249
Right-of-use assets obtained in exchange for new finance lease liabilities	$	0		$	0		$	7,212	$	14,294

Weighted-average remaining lease term (excluding renewal options) - operating leases	48.9			49.7
Weighted-average remaining lease term (excluding renewal options) -finance leases	64.7			70.1
Weighted-average discount rate - operating leases	5.7		%	5.7		%
Weighted-average discount rate - finance leases	5.4		%	5.5		%

THREE MONTHS ENDED MARCH 31,
In thousands 2020
2019
Operating lease cost
Operating lease expense $ 1,174
$ 1,116
Variable lease expense 800
740

Finance lease cost
Amortization of right-of-use assets 70
—
Interest on lease liabilities 237
—
Total lease expense $ 2,281
$ 1,856

Other information
Operating cash flows outflows related to operating leases $ 2,550
$ 2,771
Financing cash flows outflows related to financing leases $ 321
$ —
Right-of-use assets obtained in exchange for new finance lease liabilities $ —
$ —

Weighted-average remaining lease term (excluding renewal options) - operating leases 49.4
54.0
Weighted-average remaining lease term (excluding renewal options) -finance leases 64.9
—
Weighted-average discount rate - operating leases 5.7 % 5.5 %
Weighted-average discount rate - finance leases 5.4 % — %

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Note 4. Notes and Bonds Payable

The table below details the Company’s notes and bonds payable.


	MATURITY DATES	BALANCE AS OF				EFFECTIVE INTEREST RATE as of 9/30/2020
Dollars in thousands		9/30/2020		12/31/2019
$700 million Unsecured Credit Facility	5/23	$	0	$	293,000	N/A
$200 million Unsecured Term Loan Facility, net of issuance costs 1	5/24	199,180		199,013		1.99	%
$150 million Unsecured Term Loan due 2026 2	6/26	149,455		0		3.14	%
Senior Notes due 2023, net of discount and issuance costs	4/23	248,863		248,540		3.95	%
Senior Notes due 2025, net of discount and issuance costs 3	5/25	248,711		248,522		4.08	%
Senior Notes due 2028, net of discount and issuance costs	1/28	296,003		295,651		3.84	%
Senior Notes due 2030, net of discount and issuance costs 4	3/30	296,384		0		2.71	%
Mortgage notes payable, net of discounts and issuance costs and including premiums	1/21-4/27	115,799		129,343		4.38	%
		$	1,554,395	$	1,414,069

MATURITY DATES BALANCE AS OF
EFFECTIVE INTEREST RATE
as of 3/31/2020

Dollars in thousands 3/31/2020
12/31/2019
$700 million Unsecured Credit Facility 5/23 $ 215,000
$ 293,000
1.89 %
$200 million Unsecured Term Loan Facility, net of issuance costs ¹
5/24 199,069
199,013
3.20 %
$150 million Unsecured Term Loan due 2026 ²
6/26 —
—
N/A
Senior Notes due 2023, net of discount and issuance costs 4/23 248,647
248,540
3.95 %
Senior Notes due 2025, net of discount and issuance costs ³
5/25 248,584
248,522
4.08 %
Senior Notes due 2028, net of discount and issuance costs 1/28 295,768
295,651
3.84 %
Senior Notes due 2030, net of discount and issuance costs ⁴
3/30 296,211
—
2.71 %
Mortgage notes payable, net of discounts and issuance costs and including premiums 7/20-5/40 141,175
129,343
4.70 %
$ 1,644,454
$ 1,414,069

1The effective interest rate includes the impact of interest rate swaps on $75.0 million at a weighted average rate of 2.37% (plus the applicable margin rate, currently 100 basis points).

2The effective interest rate includes the impact of interest rate swaps on $100.0 million at a weighted average rate of 2.23% (plus the applicable margin rate, currently 160 basis points).

3The effective interest rate includes the impact of the $1.7 million settlement of a forward-starting interest rate swap that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets.

4The effective interest rate includes the impact of the $4.3 million settlement of forward interest rate hedges that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets.


1	~~The effective interest rate includes the impact of interest rate swaps on $175.0 million~~ ~~at a weighted average rate of~~ ~~2.29%~~ ~~(plus the applicable margin rate, currently~~ ~~100~~ ~~basis points).~~


2	~~As of March 31, 2020, there were~~ 0 ~~outstanding loans under the~~ ~~$150.0 million~~ ~~unsecured term loan due June 2026. This term loan has a delayed draw feature that allows the Company until May 29, 2020 to draw against the commitments.~~


3	~~The effective interest rate includes the impact of the~~ ~~$1.7 million~~ ~~settlement of a forward-starting interest rate swap that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets.~~


4	~~The effective interest rate includes the impact of the~~ ~~$4.3 million~~ ~~settlement of a forward-starting interest rate swap that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets.~~

Changes in Debt Structure

On February 3, 2020, the Company repaid in full a mortgage note payable bearing interest at a rate of 6.10% per annum with an outstanding principal of $5.9 million. The mortgage note encumbered a 68,860 square foot property in Oklahoma.

On March 4, 2020, the Company issued $300.0 million of unsecured senior notes due 2030 (the "Senior Notes due 2030") in a registered public offering. The Senior Notes due 2030 bear interest at 2.40%, payable semi-annually on March 15 and September 15, beginning September 15, 2020, and are due on March 15, 2030, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $1.0 million and the Company incurred approximately $2.8 million in debt issuance costs. Concurrent with this transaction, the Company settled 2 treasury rate locks for $4.3 million. Inclusive of the discount, debt issuance costs and settlement of the treasury rate locks, the effective interest rate was 2.71%. The Senior Notes due 2030 have various financial covenants that are required to be met on a quarterly and annual basis.

On May 4, 2020, the Company repaid in full a mortgage note payable bearing interest at a rate of 5.74% per annum with an outstanding principal of $0.3 million. The mortgage note encumbered an 83,318 square foot property in Iowa.

On May 29, 2020, the Company borrowed $150.0 million pursuant to its unsecured term loan due 2026.

On June 2, 2020, the Company repaid in full a mortgage note payable bearing interest at a rate of 6.44% per annum with an outstanding principal of $12.6 million. The mortgage note encumbered a 67,510 square foot property in Washington.

On June 25, 2020, the Company repaid in full 3 mortgage notes bearing interest at rates of 5.63%, 6.63% and 6.88% per annum with outstanding principal of $0.5 million, $2.8 million, and $7.0 million, respectively. The mortgage notes encumbered a 60,476 square foot property in Minnesota.

Subsequent Changes in Debt Structure

On October 1, 2020, the Company repaid in full a mortgage note payable bearing interest at a rate of 5.47% per annum with an outstanding principal of $4.2 million. The mortgage note encumbered a 40,171 square foot property in Georgia.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

On October 2, 2020, the Company issued $300.0 million of unsecured senior notes due 2031 (the "Senior Notes due 2031") in a registered public offering. The Senior Notes due 2031 bear interest at 2.05%, payable semi-annually on March 15 and September 15, beginning March 15, 2021, and are due on March 15, 2031, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $2.4 million and the Company incurred approximately $2.8 million in debt issuance costs. Inclusive of the discount and debt issuance costs, the effective interest rate was 2.24%. The Senior Notes due 2031 have various financial covenants that are required to be met on a quarterly and annual basis.

On October 19, 2020, the Company redeemed its unsecured senior notes due 2023 (the "Senior Notes due 2023"). The aggregate redemption price of $270.5 million consisted of outstanding principal of $250.0 million, accrued interest of $0.1 million, and a "make-whole" amount of approximately $20.4 million for the early extinguishment of debt. The unaccreted discount and unamortized costs on these notes of $1.1 million was written off upon redemption. In October 2020, the Company recognized a loss on early extinguishment of debt of approximately $21.5 million related to this redemption.

Note 5. Derivative Financial Instruments

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.~~

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income (Loss) ("AOCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

On February 24 and 25, 2020, the Company entered into 2 treasury rate locks totaling $75.0 million and $40.0 million, respectively. The treasury rate locks were settled for an aggregate amount of $4.3 million on March 4, 2020 concurrent with the Company's issuance of its Senior Notes due 2030. The settlement will be amortized over the 10-year term of the notes.

As of ~~March 31,~~September 30, 2020, the Company had 8 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:


DERIVATIVE INSTRUMENT	NUMBER OF INSTRUMENTS	NOTIONAL AMOUNT in millions
Interest rate swaps	8	$175.0

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of ~~March 31,~~September 30, 2020.


	BALANCE AT SEPTEMBER 30, 2020
In thousands	BALANCE SHEET LOCATION	FAIR VALUE
Derivatives designated as hedging instruments
Interest rate swaps	Other liabilities	$	14,460
Total derivatives designated as hedging instruments		$	14,460

BALANCE AT MARCH 31, 2020
In thousands BALANCE SHEET LOCATION FAIR VALUE
Derivatives designated as hedging instruments
Interest rate swaps Other liabilities $ 14,672
Total derivatives designated as hedging instruments $ 14,672

Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)

The table below presents the effect of cash flow hedge accounting on AOCI during the three and nine months ended ~~March 31,~~September 30, 2020 and 2019 related to the Company's outstanding interest rate swaps.


	LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended September 30,					(GAIN) LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended September 30,
In thousands	2020		2019			2020		2019
Interest rate swaps	$	74	$	2,341	Interest expense	$	952	$	18
Settled treasury hedges	0		0		Interest expense	107		0
Settled interest rate swaps	0		0		Interest expense	42		42
	$	74	$	2,341	Total interest expense	$	1,101	$	60


	LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended March 31,					(GAIN) LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended March 31,						LOSS RECOGNIZED IN AOCI ON DERIVATIVE nine months ended September 30,					(GAIN) LOSS RECLASSIFIED FROM AOCI INTO INCOME nine months ended September 30,
In thousands	2020		2019			2020		2019			In thousands	2020		2019			2020		2019
Interest rate swaps	$	9,663	$	724	Interest expense	$	271	$	(27	)	Interest rate swaps	$	11,192	$	7,642	Interest expense	$	2,012	$	(52)
Settled treasury hedges	4,267		—		Interest expense	15		—			Settled treasury hedges	4,267		0		Interest expense	229		0
Settled interest rate swaps	—		—		Interest expense	42		42			Settled interest rate swaps	0		0		Interest expense	126		126
	$	13,930	$	724	Total interest expense	$	328	$	15			$	15,459	$	7,642	Total interest expense	$	2,367	$	74

The Company estimates that ~~$4.0~~$4.4 million will be reclassified from AOCI to interest expense over the next 12 months.

Credit-risk-related Contingent Features

The Company's agreements with each of its derivative counterparties contain a cross-default provision under which the Company could be declared in default of its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.~~

As of ~~March 31,~~September 30, 2020, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was ~~$15.2~~$15.1 million. As of ~~March 31,~~September 30, 2020, the Company has not posted any collateral related to these agreements and was not in breach of any agreement.

Note 6. Commitments and Contingencies

Legal Proceedings

The Company is, from time to time, involved in litigation arising in the ordinary course of business. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Redevelopment Activity

The Company initiated the redevelopment of a 110,883 square foot medical office building in Memphis, Tennessee ("Memphis Redevelopment") in December 2019. ~~The~~As of September 30, 2020, the Company funded approximately ~~$1.5~~$5.7 million in project costs, excluding the purchase price of $8.7 million for the land and building. The building will continue to operate with in-place leases during construction. The core and shell portion of the Memphis Redevelopment is expected to be completed in the first quarter of 2021, with construction of tenant spaces to be completed throughout the remainder of 2021.

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Development Activity

~~The~~In the first quarter of 2020, the Company completed the ~~development~~construction of the core and shell of a 151,031 square foot medical office building in Seattle, Washington. As of ~~March 31,~~September 30, 2020, the Company had funded approximately ~~$54.1~~$59.1 million towards the ~~development.~~development and additional tenant improvements. The Company expects to fund an additional amount of approximately ~~$10.0~~$5.0 million for additional tenant improvements associated with this project. The first tenant ~~took occupancy~~commenced rent payment in the first quarter of 2020.

Note 7. Stockholders' Equity

Common Stock

The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and the year ended December 31, 2019:


	SEPTEMBER 30, 2020	DECEMBER 31, 2019
Balance, beginning of period	134,706,154	125,279,455
Issuance of common stock	1,292,324	9,251,440
Nonvested share-based awards, net of withheld shares	55,462	175,259
Balance, end of period	136,053,940	134,706,154

MARCH 31, 2020
DECEMBER 31, 2019
Balance, beginning of period 134,706,154
125,279,455
Issuance of common stock 210,271
9,251,440
Nonvested share-based awards, net of withheld shares 15,781
175,259
Balance, end of period 134,932,206
134,706,154

At-The-Market Equity Offering Program

On February 14, 2020, the Company entered into sales agreements with ~~six~~6 investment banks to allow sales under its at-the-market equity offering program of up to an aggregate of $500.0 million of common stock. The Company sold 1,268,237 shares under the Company's at-the market equity offering program during the nine months ended September 30, 2020. The sales generated $39.9 million in net proceeds at prices to the public ranging from $30.50 to $36.15 per share (weighted average of $31.86 per share). The sales occurred during the following time periods:

•During the first quarter of 2020, the Company sold 196,250 shares ~~under the Company's at-the-market equity offering program~~ generating approximately $7.0 million in net proceeds at prices to the public ranging from ~~$33.00~~$33.00 to $36.15 per share (weighted average of $36.09 per share). ~~NaN~~

•During the second quarter of 2020, the Company sold 1,071,987 shares ~~were sold~~generating approximately $32.9 million in net proceeds at prices to the public ranging from ~~March 18,~~$30.50 to $31.29 per share (weighted average of $31.08 per share).

In addition, the Company has entered into 3 forward equity agreements totaling 3.6 million shares at a weighted average price of $31.30 per share:

•In the second quarter of 2020, ~~through~~ the ~~date~~Company entered into a forward equity agreement for a total of ~~this filing. The~~1,579,371 shares at a weighted average price of $31.66 per share, subject to adjustments as provided in the forward equity agreements. This agreement matures in June 2021.

•In the third quarter of 2020, the Company ~~had $492.9~~entered into a forward equity agreement for a total of 764,472 shares at a weighted average price of $31.84 per share, subject to adjustments as provided in the forward equity agreements. This agreement matures in July 2021.

•In the fourth quarter of 2020, the Company entered into a forward equity agreement for a total of 1,235,129 shares at a weighted average price of $30.52 per share, subject to adjustments as provided in the forward equity agreements. This agreement matures in October 2021.

After taking into account the forward equity contracts discussed above, the Company has approximately $347.6 million remaining available to be sold under the current sales agreements at the date of this filing.

Common Stock Dividends

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, the Company declared and paid common stock dividends totaling ~~$0.30~~$0.90 per share. On ~~May 5,~~November 3, 2020, the Company declared a quarterly common stock dividend in the amount of $0.30 per share payable on ~~May 29,~~December 1, 2020 to stockholders of record on ~~May 15,~~November 16, 2020.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Earnings Per Common Share

The Company uses the two-class method of computing net earnings per common shares. The Company's nonvested share-based awards are considered participating securities pursuant to the two-class method.

During the nine months ended September 30, 2020, the Company entered into forward sale agreements to sell approximately 2.3 million shares of common stock through the Company's at-the-market equity offering program. The Company considered the accounting guidance governing financial instruments and derivatives to account for these agreements and concluded that it was not a liability as it did not embody obligations to repurchase our shares of common stock nor did it embody obligations to issue a variable number of shares for which the monetary value was predominately fixed, varying with something other than the fair value of the shares, or varying inversely in relation to the shares. In addition, the Company evaluated whether the agreements met the derivative and hedging guidance scope exception to be accounted for as an equity instrument and concluded that the agreements can be classified as equity.

The Company used the treasury method to determine the dilution from the forward equity agreements during the period of time prior to settlement. The number of weighted-average shares outstanding used in the computation of earnings per common share for the three and nine months ended September 30, 2020 included the effect from the assumed issuance of 2.3 million shares of common stock pursuant to the settlement of the forward equity agreements at the contractual price, less the assumed repurchase of the common stock at the average market price using the proceeds of approximately $72.7 million, adjusted for costs to borrow. For the three and nine months ended September 30, 2020, 137,757 and 51,133 weighted-average incremental shares of common stock were excluded from the computation of weighted-average common shares outstanding - diluted, as the impact was anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019.


	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
Dollars in thousands, except per share data	2020		2019		2020		2019
Weighted average common shares outstanding
Weighted average common shares outstanding	136,048,781		129,865,985		135,393,798		128,348,638
Non-vested shares	(1,739,364)		(1,775,911)		(1,731,658)		(1,777,743)
Weighted average common shares outstanding - basic	134,309,417		128,090,074		133,662,140		126,570,895

Weighted average common shares outstanding - basic	134,309,417		128,090,074		133,662,140		126,570,895
Dilutive effect of forward equity shares	0		0		0		0
Dilutive effect of employee stock purchase plan	47,810		78,610		74,029		85,690
Weighted average common shares outstanding - diluted	134,357,227		128,168,684		133,736,169		126,656,585

Net Income	$	8,230	$	2,601	$	88,058	$	11,975
Dividends paid on nonvested share-based awards	(522)		(534)		(1,561)		(1,603)
Net income applicable to common stockholders	$	7,708	$	2,067	$	86,497	$	10,372





Basic earnings per common share - net income	$	0.06	$	0.02	$	0.65	$	0.08


Diluted earnings per common share - net income	$	0.06	$	0.02	$	0.65	$	0.08

THREE MONTHS ENDED MARCH 31,
Dollars in thousands, except per share data 2020
2019
Weighted average common shares outstanding
Weighted average common shares outstanding 134,758,335
125,908,335
Non-vested shares (1,722,090 ) (1,778,700 )
Weighted average common shares outstanding - basic 133,036,245
124,129,635

Weighted average common shares outstanding - basic 133,036,245
124,129,635
Dilutive effect of employee stock purchase plan 113,321
102,132
Weighted average common shares outstanding - diluted 133,149,566
124,231,767

Net Income $ 4,315
$ 4,891
Dividends paid on nonvested share-based awards (517 ) (536 )
Net income applicable to common stockholders $ 3,798
$ 4,355

Basic earnings per common share - net income $ 0.03
$ 0.04
Diluted earnings per common share - net income $ 0.03
$ 0.04

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Incentive Plans

A summary of the activity under the Company's share-based incentive plans for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019 is included in the table below.


	THREE MONTHS ENDED SEPTEMBER 30,		NINE MONTHS ENDED SEPTEMBER 30,
	2020	2019	2020	2019
Share-based awards, beginning of period	1,739,258	1,778,134	1,754,066	1,769,863
Granted	188	0	79,025	89,767
Vested 1	0	(204,548)	(93,645)	(286,044)

Share-based awards, end of period	1,739,446	1,573,586	1,739,446	1,573,586

THREE MONTHS ENDED MARCH 31,
2020
2019
Share-based awards, beginning of period 1,754,066
1,769,863
Granted 39,344
64,771
Vested (68,649 ) (50,507 )
Share-based awards, end of period 1,724,761
1,784,127

1The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in the accelerated vesting of 204,548 outstanding nonvested share-based awards.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019, the Company withheld 23,563 and ~~19,546~~100,036 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested.

In addition to the share-based incentive plans, the Company maintains the 2000 Employee Stock Purchase Plan (the "Purchase Plan"). A summary of the activity under the Purchase Plan for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019 is included in the table below.

THREE MONTHS ENDED MARCH 31,
2020
2019
Outstanding and exercisable, beginning of period 332,659
328,533
Granted 212,716
235,572
Exercised (11,904 ) (14,630 )
Forfeited (22,981 ) (16,625 )
Expired (139,794 ) (142,074 )
Outstanding and exercisable, end of period 370,696
390,776


	THREE MONTHS ENDED SEPTEMBER 30,		NINE MONTHS ENDED SEPTEMBER 30,
	2020	2019	2020	2019
Outstanding and exercisable, beginning of period	361,719	363,218	332,659	328,533
Granted	0	0	212,716	235,572
Exercised	(3,504)	(9,927)	(17,871)	(28,943)
Forfeited	(6,659)	(11,762)	(36,154)	(51,559)
Expired	0	0	(139,794)	(142,074)
Outstanding and exercisable, end of period	351,556	341,529	351,556	341,529

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.~~

Note 8. Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practical to estimate that value.

•

•Cash and cash equivalents - The carrying amount approximates fair value due to the short term maturity of these investments.

•Borrowings under the Unsecured Credit Facility and the Term Loans Due 2024 and 2026 - The carrying amount approximates fair value because the borrowings are based on variable market interest rates.

•Senior Notes and Mortgage Notes payable - The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements.

• ~~- The carrying amount approximates fair value due to the short term maturity of these investments.~~


•	~~Borrowings under the Unsecured Credit Facility and the Term Loan Due 2024~~ ~~- The carrying amount approximates fair value because the borrowings are based on variable market interest rates.~~


•	~~Senior Notes and Mortgage Notes payable~~ ~~- The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements.~~


•	Interest rate swap agreements - Interest rate swap agreements are recorded in other liabilities on the Company's Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models that consider forward yield curves and discount rates.

The table below details the fair values and carrying values for notes and bonds payable at ~~March 31,~~September 30, 2020 and December 31, 2019.


	September 30, 2020				December 31, 2019
Dollars in millions	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE
Notes and bonds payable 1	$	1,554.4	$	1,621.7	$	1,414.1	$	1,425.8

MARCH 31, 2020 DECEMBER 31, 2019
Dollars in millions CARRYING VALUE
FAIR VALUE
CARRYING VALUE
FAIR VALUE
Notes and bonds payable ¹
$ 1,644.5
$ 1,706.7
$ 1,414.1
$ 1,425.8
1Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.


1	~~Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.~~

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~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.~~

~~Note 9. Subsequent Events~~

~~COVID-19 Update~~

All of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects have instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants have temporarily closed their offices or clinical space or have operated on a reduced basis in response to government requirements or recommendations. Through May 5, 2020, the Company has collected 89% of April 2020 aggregate tenant billings and has agreed to various forms of rent deferrals representing approximately 7% of April 2020 aggregate tenant billings. The tenant deferral agreements require the deferred amounts to be repaid in the third and fourth quarters of 2020. However, if tenants are unable to timely repay, or repay at all, deferred rent, if they request additional rent deferrals or abatements, decide not to renew leases, or renew leases at lower cash leasing spreads, the impact on the Company’s results of operations and financial condition could be material. Given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for the fiscal year 2020. The Company continues to evaluate the impact of various forms of governmental assistance that may be or become available to the Company or its tenants, including the Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act".

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclosure Regarding Forward-Looking Statements

This report and other materials the Company has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could," "budget" and other comparable terms. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties, including the duration and scope of the COVID-19 pandemic; the impact of the COVID-19 pandemic on occupancy rates for the Company's properties, actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting the Company’s properties and the operations of the Company and its tenants; the effects of health and safety measures adopted by the Company and its tenants related to the COVID-19 pandemic; the impact of the COVID-19 pandemic on the operations, business and financial condition of the Company and its tenants; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; and the risks described in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, that could significantly affect the Company’s current plans and expectations and future financial condition and results.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing.

For a detailed discussion of the Company’s risk factors, please refer to the Company’s filings with the Securities and Exchange Commission, including this report, ~~and~~ its Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2019, and the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

COVID-19 Update

~~Table of Contents~~

~~All~~In response to the COVID-19 pandemic, all of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects ~~have~~ instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants ~~have~~ temporarily closed their offices or clinical space or ~~have~~ operated on a reduced basis in response to government requirements or recommendations. Many of these restrictions have been lifted, but could be reimposed. In response to these disruptions, the Company provided some of its tenants with deferred rent arrangements. Through ~~May 5,~~November 2, 2020, the Company has collected ~~89%~~more than 99% of ~~April~~second and third quarter 2020 aggregate tenant ~~billings and~~billings. The Company has ~~agreed to~~collected 96% of total scheduled deferral payments in the third quarter of 2020. In addition, the Company has remaining various forms of rent deferrals outstanding representing approximately 7%$1.2 million, or less than 1% of ~~April~~second and third quarter 2020 aggregate tenant billings. The tenant deferral agreements generally require the deferred amounts to be repaid inby the ~~third and~~ fourth ~~quarters~~quarter of 2020. The tenant deferral agreements require the amounts to be repaid in the third and fourth quarters of 2020. Many of these tenants have requested, and the Company management expects more will likely seek, rent deferral or abatement for May 2020 and subsequent months, though it cannot predict how many.

Management believes that many of its tenants who have experienced disruption to their businesses as a result of the COVID-19 pandemic will qualify for various forms of government financial assistance including pursuant to the CARES Act, which was signed into law on March 27, 2020. Accordingly, the Company has undertaken efforts to promote awareness of the availability of these initiatives to its tenants. At this time, the Company expects to collect the deferred rent prior to the end of 2020. However, ifIf tenants are unable to timely repay, or repay at all, deferred rent, if they request additional rent deferrals or abatements, decide not to renew leases, or renew leases at lower cash leasing spreads (See “Expiring Leases” below), the impact on the Company’s results of operations and financial condition could be material. ~~As a result,~~In the second quarter of 2020, the Company ~~cannot estimate at this time~~recognized an approximately $0.7 million general reserve against the ~~overall effect that~~deferred rent balance. Following positive collection trends in the ~~COVID-19 pandemic might have on its business.~~third quarter of 2020, the Company released approximately $0.3 million of the general reserve. As of September 30, 2020, the Company had a remaining general reserve of $0.4 million against an approximate $1.7 million deferred rent balance.

Table of Contents

At ~~March 31,~~September 30, 2020, the Company had available ~~$738.4~~$882.6 million in liquidity (See “Sources and Uses of Cash” and “Financing Activities” below) and no significant debt maturities prior to 2023. In addition, the Company has entered into forward equity agreements that have expected proceeds of up to approximately $112.0 million, before the costs of borrowing, that can be settled at the Company's election anytime through October 2021. The COVID-19 pandemic has affected the availability and cost of capital and may continue to do so for some time. Management believes that the Company currently has adequate liquidity to operate its business without significant disruption. However, if the pandemic continues to have an impact on the availability and cost of capital, the Company’s business could be materially affected.

Liquidity and Capital Resources

Sources and Uses of Cash

The Company’s primary sources of cash include rent receipts from its real estate portfolio based on contractual arrangements with its tenants, borrowings under the Company's Unsecured Credit Facility and Term Loan, proceeds from the sales of real estate properties and proceeds from public or private debt or equity offerings. As of ~~March 31,~~September 30, 2020, the Company had ~~$485.0~~$700.0 million available to be drawn on its Unsecured Credit Facility ~~$103.4~~and $182.6 million in cash and restricted cash. In addition, the Company has entered into forward equity agreements that have expected proceeds of up to approximately $112.0 million, before the ~~ability to draw $150.0 million on its unsecured term loan due 2026.~~costs of borrowing, that can be settled at the Company's election anytime through October 2021.

The Company expects to continue to meet its liquidity needs, including funding additional investments, paying dividends, and funding debt service, through cash flows from operations and the cash flow sources described above. The Company had unencumbered real estate assets with a gross book value of approximately $4.1 billion at ~~March 31,~~September 30, 2020, of which a portion could serve as collateral for secured mortgage financing. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.

Dividends paid by the Company for the three months ended March 31, 2020 were funded from cash flows from operations and the Unsecured Credit Facility, as cash flows from operations were not adequate to fully fund dividends paid at the rate per quarter of $0.30 per common share. The Company expects that additional cash flows from existing properties, acquisitions and developments will generate sufficient cash flows from operations such that dividends for the full year 2020 can be funded by cash flows from operations or other sources of liquidity described above.

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Investing Activities

Cash flows used in investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 were approximately ~~$108.2~~$259.9 million. Below is a summary of significant investing activities.

2020 Acquisitions

The following table details the Company's acquisitions for the ~~three~~nine months ended ~~March 31,~~September 30, 2020:


Dollars in millions	HEALTH SYSTEM AFFILIATION	DATE ACQUIRED	PURCHASE PRICE		SQUARE FOOTAGE	CAP RATE		MILES TO CAMPUS
Los Angeles, CA	MemorialCare Health	1/3/20	$	42.0	86,986	5.3	%	0.14
Atlanta, GA	Wellstar Health System	2/13/20	12.0		64,624	5.6	%	0.10
Raleigh, NC	WakeMed Health	2/25/20	6.3		15,964	6.7	%	0.04
Colorado Springs, CO	None	3/9/20	8.2		34,210	6.5	%	1.60
Denver, CO 1	UCHealth	3/13/20	33.5		136,994	6.1	%	0.24
San Diego, CA	Palomar Health	7/1/20	16.7		46,083	5.9	%	0.04
Los Angeles, CA	Cedars-Sinai/Huntington	7/17/20	35.0		49,785	5.4	%	0.11
Seattle, WA	MultiCare Health System	7/23/20	11.0		21,309	5.6	%	0.06
Atlanta, GA	Wellstar Health System	7/31/20	20.5		48,145	6.2	%	0.13
Houston, TX	Memorial Hermann Health	9/24/20	11.0		40,235	5.6	%	0.03
Los Angeles, CA	Providence St. Joseph Health	9/28/20	14.0		24,252	5.6	%	0.03

Total real estate acquisitions			$	210.2	568,587	5.7	%
Land acquisition 2			1.6		—
Land acquisition 3			1.0		—
			$	212.8	568,587

1Includes three properties.

2The Company acquired land parcels under four existing buildings (previously ground leased with the hospital system).

3The Company acquired a land parcel under an existing building (previously ground leased). The building and land were disposed September 30, 2020.

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Dollars in millions HEALTH SYSTEM AFFILIATION DATE ACQUIRED PURCHASE PRICE
SQUARE FOOTAGE
CAP
RATE

MILES TO CAMPUS
Los Angeles, CA MemorialCare Health 1/3/20 $ 42.0
86,986
5.3 % 0.14
Atlanta, GA Wellstar Health System 2/13/20 12.0
64,624
5.6 % 0.10
Raleigh, NC WakeMed Health 2/25/20 6.3
15,964
6.7 % 0.04
Colorado Springs, CO None 3/9/20 8.2
34,210
6.5 % 1.60
Denver, CO ¹
UCHealth 3/13/20 33.5
136,994
6.1 % 0.24
Total real estate acquisitions $ 102.0
338,778
5.8 %
Land acquisition ²
1.6
—

$ 103.6
338,778


1	~~Includes three properties.~~


2	~~The Company acquired land parcels under four existing buildings (previously ground leased with the hospital system).~~

Subsequent Acquisition

On October 7, 2020 the Company acquired a 36,720 square foot medical office building in Colorado Springs, CO for a purchase price of $8.9 million.

2020Dispositions

The Company disposed of three properties during the nine months ended September 30, 2020 for a total sales price of $249.5 million, including cash proceeds of $249.3 million and $0.2 million of closing costs and related adjustments. The following table details these dispositions for the nine months ended September 30, 2020:


Dollars in millions	Date Disposed	Sales Price		Square Footage	3Q 2020 NOI		Disposition Cap Rate		Property Type
Springfield, MO	7/30/20	$	138.0	186,000	$	0.8	7.5	%	SF
Oklahoma City, OK	7/30/20	106.5		200,000	0.6		7.5	%	MOB
Miami, FL	9/30/20	5.0		26,000	—		3.9	%	MOB
Total dispositions		$	249.5	412,000	$	1.4	7.4	%

1MOB = Medical office building; SF = Surgical facility

Capital Funding

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, the Company funded the following:

•$~~6.9~~17.3 million toward development and redevelopment of properties;

•$~~2.7~~14.2 million toward first generation tenant improvements and planned capital expenditures for acquisitions;

•$~~6.0~~17.4 million toward second generation tenant improvements; and

•$~~3.5~~12.8 million toward capital expenditures.

Financing Activities

Cash flows provided by financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 were approximately ~~$172.5~~$30.3 million. Inflows from equity related to the Company's common stock issuances and net borrowings totaled ~~$306.2~~$160.5 million, net of issuance costs incurred. Aggregate cash outflows totaled approximately ~~$133.7~~$130.2 million primarily associated with dividends paid to common ~~stockholders and repayments on the Credit Facility.~~stockholders. See Notes 4 and 7 to the Condensed Consolidated Financial Statements for more information about capital markets and financing activities.

Common Stock Issuances

On February 14, 2020, the Company entered into sales agreements with six investment banks to allow sales under its at-the-market equity offering program of up to an aggregate of $500.0 million of common stock. The Company sold 1,268,237 shares under the Company's at-the market equity offering program during the nine months ended September 30, 2020. The sales generated $39.9 million in net proceeds at prices to the public ranging from $30.50 to $36.15 per share (weighted average of $31.86 per share). The sales occurred during the following time periods:

•During the first quarter of 2020, the Company sold 196,250 shares ~~under the Company's at-the-market equity offering program~~ generating approximately $7.0 million in net proceeds at prices to the public ranging from $33.00 to $36.15 per share (weighted average of $36.09 per share). No

In addition, the Company has entered into three forward equity agreements totaling 3.6 million shares at a weighted average price of $31.30 per share:

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Debt Activity

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On March 4, 2020, the Company issued $300.0 million of ~~the~~ Senior Notes due 2030 in a registered public offering. The Senior Notes due 2030 bear interest at 2.40%, payable semi-annually on March 15 and September 15, beginning September 15, 2020, and are due on March 15, 2030, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $1.0 million and the Company incurred approximately $2.8 million in debt issuance costs. Concurrent with this transaction, the Company settled two treasury rate locks for $4.3 million. Inclusive of the discount, debt issuance costs and settlement of the treasury rate locks, the effective interest rate was 2.71%. The Senior Notes due 2030 have various financial covenants that are required to be met on a quarterly and annual basis.

On May 29, 2020, the Company borrowed $150.0 million from its unsecured term loan due 2026.

On June 25, 2020, the Company repaid in full three mortgage notes bearing interest at rates of 5.63%, 6.63% and 6.88% per annum with outstanding principal of $0.5 million, $2.8 million, and $7.0 million, respectively. The mortgage notes encumbered a 60,476 square foot property in Minnesota.

The Company has outstanding interest rate ~~swaps~~derivatives totaling $175.0 million to hedge one-month LIBOR. The following details the amount and rate of each swap (dollars in thousands):


EFFECTIVE DATE	AMOUNT		WEIGHTED AVERAGE RATE		EXPIRATION DATE
December 18, 2017	$	25,000	2.18	%	December 16, 2022
February 1, 2018	50,000		2.46	%	December 16, 2022
May 1, 2019	50,000		2.33	%	May 1, 2026
June 3, 2019	50,000		2.13	%	May 1, 2026
	$	175,000	2.29	%

Subsequent Debt Activity

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EFFECTIVE DATE AMOUNT
WEIGHTED
AVERAGE RATE

EXPIRATION DATE
December 18, 2017 $ 25,000
2.18 % December 16, 2022
February 1, 2018 50,000
2.46 % December 16, 2022
May 1, 2019 50,000
2.33 % May 1, 2026
June 3, 2019 50,000
2.13 % May 1, 2026
$ 175,000
2.29 %
On October 2, 2020, the Company issued $300.0 million of Senior Notes due 2031 in a registered public offering. The Senior Notes due 2031 bear interest at 2.05%, payable semi-annually on March 15 and September 15, beginning March 15, 2021, and are due on March 15, 2031, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $2.4 million and the Company incurred approximately $2.8 million in debt issuance costs. Inclusive of the discount and debt issuance costs, the effective interest rate was 2.24%. The Senior Notes due 2031 have various financial covenants that are required to be met on a quarterly and annual basis.

On October 19, 2020, the Company redeemed its Senior Notes due 2023. The aggregate redemption price of $270.5 million consisted of outstanding principal of $250.0 million, accrued interest of $0.1 million, and a "make-whole" amount of approximately $20.4 million for the early extinguishment of debt. The unaccreted discount and unamortized costs on these notes of $1.1 million was written off upon redemption. In October 2020, the Company recognized a loss on early extinguishment of debt of approximately $21.5 million related to this redemption.

Operating Activities

Cash flows provided by operating activities increased from ~~$34.8~~$158.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 to ~~$38.4~~$411.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. Items impacting cash flows from operations include, but are not limited to, cash generated from property operations, interest payments and the timing related to the payment of invoices and other expenses. Also included in operating cash flows was approximately $244.4 million of proceeds from the dispositions of sale-type lease properties.

The Company may, from time to time, sell properties and redeploy cash from property sales into new investments. To the extent revenues related to the properties being sold exceed income from these new investments, the Company's results of operations and cash flows could be adversely affected.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

New Accounting Pronouncements

See Note 1 to the Company's Condensed Consolidated Financial Statements accompanying this report for information on new accounting standards.

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Trends and Matters Impacting Operating Results

Management monitors factors and trends important to the Company and the REIT industry to gauge the potential impact on the operations of the Company. In addition to the matters discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, below are some of the factors and trends that management believes may impact future operations of the Company.

COVID-19 Pandemic

For information on the ways that the COVID-19 pandemic is impacting the Company and its tenants, see "COVID-19 Update" ~~above and in Part II, Item 1A.~~above.

Expiring Leases

The Company expects that approximately 15% to 20% of the leases in its multi-tenanted portfolio will expire each year in the ordinary course of business. There are ~~583~~211 leases totaling ~~2.1~~0.8 million square feet in the Company's multi-tenant portfolio that will expire during the remainder of 2020. Approximately 85% of the leases expiring in 2020 are in buildings located on or adjacent to hospital campuses, are distributed throughout the portfolio, and are not concentrated with any one tenant, health system or market area. The Company typically expects to retain 75% to 90% of multi-tenant property tenants upon expiration, and the retention ratio for the first ~~three~~nine months of the year has been within this range.

~~Included~~Previously included in the 2020 lease expirations iswas a 111,000 square foot fitness center leased by Baylor Scott & White Health. The fitness center is located in a 217,000 square foot on-campus medical office building. ~~The~~A new operator, Cowboys Fit, executed an approximately 14-year lease ~~expired on March 31, 2020,~~for a reconfigured 52,000 square foot fitness center.

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Baylor has executed a temporary lease at a reduced rental rate to continue to operate the existing fitness center until the construction of the new center is complete. Once the Baylor lease expires, the remaining 59,000 square feet is expected to be redeveloped into clinical space. In addition, the Company plans to upgrade the common areas, bathrooms, and the ~~tenant is currently under a month-to-month lease arrangement as~~exterior of the ~~Company finalizes a new lease with an independent fitness center operator for approximately half the space. The Company expects to redevelop the remaining space for clinical use.~~building.

~~Also~~Previously included in the 2020 lease expirations iswas the July 31 expiration of a 62,000 square foot office lease. A telecommunication company ~~occupies~~occupied three floors of a 145,000 square foot office building and ~~is expected~~vacated upon expiration of the lease. The Company recognized revenue of approximately $0.1 million related to ~~vacate.~~this lease in the third quarter of 2020. The Company intends to reposition the property, converting the vacated space from full floor to multi-tenant configurations. The Company has begun marketing the space and anticipates that releasing efforts will include subdividing the space for multiple users. The Company recognized revenue of approximately $0.4 million related to this lease in the first quarter of 2020.has executed a 10,000 square foot lease.

The Company ~~has one~~had an 83,000 square foot, single-tenant net leased, on-campus medical office building with a lease term ~~scheduled to expire~~that expired in the second quarter of 2020. The Company has been in discussions about a long-term lease renewal, but given the COVID-19 pandemic, ~~plans to provide~~executed a 6-month extension through December 31, 2020 to allow more time to finalize a long-term lease agreement.

Operating Expenses

The Company has historically experienced increases in property taxes throughout its portfolio as a result of increasing assessments and tax rates levied across the country. The Company continues its efforts to appeal property tax increases and manage the impact of the increases. In addition, the Company has historically incurred variability in portfolio utilities expense based on seasonality, with the first and third quarters usually reflecting greater amounts. The effects of these operating expense increases are mitigated in leases that have provisions for operating expense reimbursement. As of ~~March 31,~~September 30, 2020, leases for 89% of the Company's multi-tenant leased square footage allow for some recovery of operating expenses, with 31% having modified gross lease structures and 58% having net lease structures.

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Purchase Options

Information about the Company's unexercised purchase options and the amount and basis for determination of the purchase price is detailed in the table below (dollars in thousands):


	NUMBER OF PROPERTIES		GROSS REAL ESTATE INVESTMENT AS OF SEPTEMBER 30, 2020
YEAR EXERCISABLE	MOB	INPATIENT	FAIR MARKET VALUE METHOD 1		NON FAIR MARKET VALUE METHOD 2		TOTAL
Current 3	3	1	$	96,865	$	—	$	96,865
2021	1	—	—		14,984		14,984
2022	—	—	—		—		—
2023	—	—	—		—		—
2024	—	—	—		—		—
2025	4	—	48,165		19,459		67,624
2026	—	—	—		—		—
2027	—	—	—		—		—
2028	1	—	43,961		—		43,961
2029	1	—	26,494		—		26,494
2030 and thereafter	4	—	101,118		—		101,118
Total	14	1	$	316,603	$	34,443	$	351,046

1The purchase option price includes a fair market value component that is determined by an appraisal process.

2Includes properties with stated purchase prices or prices based on fixed capitalization rates.

3These purchase options have been exercisable for an average of 12.1 years.

NUMBER OF PROPERTIES GROSS REAL ESTATE INVESTMENT AS OF MARCH 31, 2020
YEAR EXERCISABLE MOB
INPATIENT
FAIR MARKET
VALUE METHOD ¹

NON FAIR MARKET
VALUE METHOD ²

TOTAL
Current ³
3
1
$ 96,233
$ —
$ 96,233
2021 1
—
—
14,984
14,984
2022 —
—
—
—
—
2023 —
—
—
—
—
2024 —
—
—
—
—
2025 5
1
48,165
221,929
270,094
2026 —
—
—
—
—
2027 —
—
—
—
—
2028 1
—
43,943
—
43,943
2029 1
—
26,494
—
26,494
2030 and thereafter
4
—
100,151
—
100,151
Total 15
2
$ 314,986
$ 236,913
$ 551,899


1	~~The purchase option price includes a fair market value component that is determined by an appraisal process.~~


2	Includes properties with stated purchase prices or prices based on fixed capitalization rates. These properties have purchase prices that are on average 17% greater than the Company's current gross investment.


3	~~These purchase options have been exercisable for an average of 11.6 years.~~

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Non-GAAP Financial Measures and Key Performance Indicators

Management considers certain non-GAAP financial measures and key performance indicators to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of these measures to the most directly comparable GAAP financial measures.

The non-GAAP financial measures and key performance indicators presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Condensed Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.

Funds from Operations ("FFO"), Normalized FFO and Funds Available for Distribution ("FAD")

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, impairment, and after adjustments for unconsolidated partnerships and joint ventures.”

In addition to FFO, the Company presents Normalized FFO and FAD. Normalized FFO is presented by adding to FFO acquisition-related costs, acceleration of debt issuance costs, debt extinguishment costs and other ~~Company-~~

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~~defined~~Company-defined normalizing items to evaluate operating performance. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, stock-based compensation expense and provision for bad debts, net; and subtracting maintenance capital expenditures, including second generation tenant improvements and leasing commissions paid and straight-line rent income, net of expense. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. Normalized FFO and FAD should not be considered as an alternative to net income as an indicator of the Company's financial performance or to cash flow from operating activities as an indicator of the Company's liquidity. Normalized FFO and FAD should be reviewed in connection with GAAP financial measures.

Management believes FFO, Normalized FFO, FFO per share, Normalized FFO per share and FAD ("Non-GAAP Measures") provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods. The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these Non-GAAP Measures. However, none of these measures represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity. The table below reconciles net income to FFO, Normalized FFO and FAD for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019.

THREE MONTHS ENDED MARCH 31,
Amounts in thousands, except per share data 2020
2019
Net income $ 4,315
$ 4,891
(Gain) loss on sales of real estate assets 49
(15 )
Real estate depreciation and amortization 48,611
43,383
FFO attributable to common stockholders $ 52,975
$ 48,259
Acquisition and pursuit costs ¹
750
305
Lease intangible amortization 745
84
Normalized FFO attributable to common stockholders $ 54,470
$ 48,648
Non-real estate depreciation and amortization 823
763
Non-cash interest expense amortization ²
746
702
Provision for bad debt, net (83 ) (75 )
Straight-line rent, net (660 ) (270 )
Stock-based compensation 2,599
2,639
Normalized FFO adjusted for non-cash items $ 57,895
$ 52,407
2nd generation TI (6,040 ) (4,326 )
Leasing commissions paid (2,824 ) (1,347 )
Capital additions (3,470 ) (3,462 )
FAD $ 45,561
$ 43,272
FFO per common share - diluted $ 0.40
$ 0.39
Normalized FFO per common share - diluted $ 0.41
$ 0.39
FFO weighted average common shares outstanding - diluted ³
133,980
124,928


1	~~Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.~~


2	~~Includes the amortization of deferred financing costs, discounts and premiums.~~


3	The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 830,024 and 696,432, respectively, for the three months ended March 31, 2020 and 2019.

2226

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	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
Amounts in thousands, except per share data	2020		2019		2020		2019
Net income	$	8,230	$	2,601	$	88,058	$	11,975
(Gain) on sales of real estate assets	(2,177)		(200)		(70,395)		(5,065)
Impairment of real estate assets	—		—		—		5,610
Real estate depreciation and amortization	48,295		45,926		145,564		133,993
FFO attributable to common stockholders	$	54,348	$	48,327	$	163,227	$	146,513
Acquisition and pursuit costs 1	440		501		1,621		1,227
Lease intangible amortization	(35)		5		694		143
Accelerated Stock Awards	—		2,854		—		2,854
Debt financing costs	—		—		—		760
Normalized FFO attributable to common stockholders	$	54,753	$	51,687	$	165,542	$	151,497
Non-real estate depreciation and amortization	785		838		2,430		2,430
Non-cash interest expense amortization 2	934		727		2,715		2,136
Provision for bad debt, net	(144)		(32)		718		43
Straight-line rent, net	(535)		(379)		(1,577)		(650)
Stock-based compensation 3	2,445		2,375		7,449		7,386
Normalized FFO adjusted for non-cash items	$	58,238	$	55,216	$	177,277	$	162,842
2nd generation TI	(5,323)		(6,114)		(17,368)		(16,564)
Leasing commissions paid	(1,999)		(2,697)		(7,081)		(6,359)
Capital additions	(4,580)		(3,543)		(12,827)		(11,998)
FAD	$	46,336	$	42,862	$	140,001	$	127,921
FFO per common share - diluted	$	0.40	$	0.37	$	1.21	$	1.15
Normalized FFO per common share - diluted	$	0.41	$	0.40	$	1.23	$	1.19
FFO weighted average common shares outstanding - diluted 4	135,159		129,015		134,537		127,424

1Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.

2Includes the amortization of deferred financing costs, discounts and premiums.

3The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the acceleration of his outstanding nonvested share-based awards and associated taxes.

4The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 801,382 and 800,370, respectively for the three and nine months ended September 30, 2020.

Cash NOI and Same Store Cash NOI

Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income and property lease guaranty income less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, tenant improvement amortization and leasing commission amortization. The Company also excludes cash lease termination fees. Cash NOI is historical and not necessarily indicative of future results.

Same Store Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented and include redevelopment projects. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale, reposition properties and newly developed properties. The Company utilizes the reposition classification for properties experiencing a shift in strategic direction. Such a shift can occur for a variety of reasons, including a substantial change in the use of the asset, a change in strategy or closure of a neighboring hospital, or significant property damage. Such properties may require enhanced management, leasing, capital needs or a disposition strategy that differs from the rest of the portfolio. To identify properties exhibiting these reposition characteristics, the Company applies the following Company-defined criteria:

•Properties having less than 60% occupancy that is expected to last at least two quarters;

•Properties that experience a loss of occupancy over 30% in a single quarter; or

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•Properties with negative net operating income that is expected to last at least two quarters.

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Any recently acquired property will be included in the same store pool once the Company has owned the property for eight full quarters. Newly developed properties will be included in the same store pool eight full quarters after substantial completion. Any additional square footage created by redevelopment projects at a same store property is included in the same store pool immediately upon completion. Any property included in the reposition property group will be included in the same store analysis once occupancy has increased to 60% or greater with positive net operating income and has remained at that level for eight full quarters.

During the third quarter of 2020, the Company's reposition pool increased by one property to a total of 11 properties. Two properties were reclassified from reposition to held for sale, two properties were reclassified into reposition pursuant to the Company-defined criteria outlined above and one property that is undergoing a shift in strategic direction as a significant portion of the building is being repurposed from fitness space to clinical space was reclassified from same store to reposition . This 217,000 square foot on-campus medical office building included a 111,000 square foot fitness center previously leased by Baylor Scott & White Health. A new operator, Cowboys Fit, executed an approximately 14-year lease for a reconfigured 52,000 square foot fitness center. Baylor has executed a temporary lease for the remaining 59,000 square feet at a reduced rental rate to continue to operate the existing fitness center until the construction of the new center is complete. Once the Baylor lease expires, the remaining 59,000 square feet is expected to be redeveloped into clinical space. In addition, the Company plans to upgrade the common areas, bathrooms, and the exterior of the building.

The following table reflects the Company's same store cash NOI for the three months ended ~~March 31,~~September 30, 2020 and 2019.


	NUMBER OF PROPERTIES	GROSS INVESTMENT at March 31, 2020		SAME STORE CASH NOI for the three months ended March 31,					NUMBER OF PROPERTIES	GROSS INVESTMENT at September 30, 2020		SAME STORE CASH NOI for the three months ended September 30,
Dollars in thousands				2020		2019		Dollars in thousands				2020		2019
Multi-tenant properties	157	$	3,248,042	$	57,981	$	56,751	Multi-tenant properties	156	$	3,237,143	$	57,663	$	56,317
Single-tenant net lease properties	14	460,433		10,449		10,271		Single-tenant net lease properties	12	257,229		6,033		5,870
Total	171	$	3,708,475	$	68,430	$	67,022	Total	168	$	3,494,372	$	63,696	$	62,187

The following tables reconcile net income to same store NOI and the same store property metrics to the total owned real estate portfolio for the three months ended ~~March 31,~~September 30, 2020 and 2019:

Reconciliation of Same Store Cash NOI


	THREE MONTHS ENDED SEPTEMBER 30,
Dollars in thousands	2020		2019
Net income	$	8,230	$	2,601


Other income (expense)	11,969		13,981
General and administrative expense	7,299		10,802
Depreciation and amortization expense	47,143		45,137
Other expenses 1	2,737		2,462
Straight-line rent revenue	(915)		(770)
Other revenue 2	(3,062)		(1,726)
Cash NOI	73,401		72,487
Cash NOI not included in same store	(9,705)		(10,300)
Same store cash NOI	63,696		62,187
Reposition NOI	1,358		1,660
Same store and reposition cash NOI	$	65,054	$	63,847

1Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense.

2Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.

THREE MONTHS ENDED MARCH 31,
Dollars in thousands 2020
2019
Net income $ 4,315
$ 4,891
Other income (expense) 13,927
13,564
General and administrative expense 8,766
8,510
Depreciation and amortization expense 47,497
42,662
Other expenses¹
3,365
1,768
Straight-line rent revenue (668 ) (277 )
Other revenue²
(2,004 ) (1,468 )
Cash NOI 75,198
69,650
Cash NOI not included in same store (6,529 ) (2,361 )
Same store cash NOI 68,669
67,289
Reposition NOI (239 ) (267 )
Same store and reposition cash NOI $ 68,430
$ 67,022


1	~~Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense.~~


2	~~Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.~~

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Reconciliation of Same Store Properties


	AS OF SEPTEMBER 30, 2020
	PROPERTY COUNT	GROSS INVESTMENT		SQUARE FEET	OCCUPANCY
Same store properties	168	$	3,494,372	12,795,403	88.4	%
Acquisitions	31	647,974		1,667,990	91.4	%
Development completions	1	51,889		151,031	60.5	%
Reposition	11	142,381		859,004	62.1	%
Total owned real estate properties	211	$	4,336,616	15,473,428	87.0	%

AS OF MARCH 31, 2020
PROPERTY COUNT
GROSS INVESTMENT
SQUARE
FEET

OCCUPANCY
Same store properties 171
$ 3,708,475
13,439,999
89.0 %
Acquisitions 31
606,061
1,826,029
86.9 %
Development completions 1
53,669
151,031
20.2 %
Reposition 9
72,782
429,167
41.9 %
Total owned real estate properties 212
$ 4,440,987
15,846,226
86.8 %

Results of Operations

Three Months Ended ~~March 31,~~September 30, 2020 Compared to Three Months Ended ~~March 31,~~September 30, 2019

The Company’s results of operations for the three months ended ~~March 31,~~September 30, 2020 compared to the same period in 2019 were impacted by acquisitions, developments, dispositions, gains on sale, and capital markets transactions.

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Revenues

Total revenues increased ~~$12.2~~$5.5 million, or ~~10.8%~~4.6%, to approximately ~~$124.8~~$125.3 million for the three months ended ~~March 31,~~September 30, 2020 compared to ~~$112.7~~$119.8 million in the prior year period. This increase is comprised of the following:


	THREE MONTHS ENDED MARCH 31,				CHANGE						THREE MONTHS ENDED SEPTEMBER 30,				CHANGE
Dollars in thousands	2020		2019		$			%		Dollars in thousands	2020		2019		$		%
Property operating	$	111,148	$	98,982	$	12,166		12.3	%	Property operating	$	114,921	$	105,805	$	9,116	8.6	%
Single-tenant net lease	10,453		11,046		(593		)	(5.4	)%	Single-tenant net lease	7,548		11,165		(3,617)		(32.4)	%
Straight-line rent	1,043		668		375			56.1	%	Straight-line rent	915		770		145		18.8	%
Rental income	122,644		110,696		11,948			10.8	%	Rental income	123,384		117,740		5,644		4.8	%
Other operating	2,163		1,961		202			10.3	%	Other operating	1,868		2,059		(191)		(9.3)	%
Total revenues	$	124,807	$	112,657	$	12,150		10.8	%	Total revenues	$	125,252	$	119,799	$	5,453	4.6	%

Property operating revenue increased ~~$12.2~~$9.1 million, or ~~12.3%~~8.6%, from the prior year period primarily as a result of the following activity:

•Acquisitions in 2019 and 2020 ~~and a~~contributed $7.4 million.

•A development completed in 2020 contributed ~~$9.4~~$0.8 million.

•Leasing activity, including contractual rent increases, contributed ~~$3.8~~$1.4 million.

•Dispositions in 2019 and 2020 resulted in a decrease of ~~$1.0~~$0.5 million.

Single-tenant net lease revenue decreased ~~$0.6~~$3.6 million, or ~~5.4%~~32.4%, from the prior year period primarily as a result of the following activity:

•Dispositions in 2019 and 2020 resulted in a decrease of ~~$0.8~~$3.8 million.

•An acquisition in 2020 contributed $0.1 million.

•Leasing activity ~~including contractual rent increases,~~ contributed ~~$0.2~~$0.1 million.

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Straight-line rent revenue increased ~~$0.4~~$0.1 million or ~~56.1%~~18.8% from the prior year period primarily ~~due to acquisitions~~as a result of the following activity:

•Acquisitions in 2019 and 2020 contributed $0.4 million.

•A development completed in 2020 contributed $0.1 million.

•Leasing, including contractual rent increases, resulted in a decrease of $0.3 million.

•Dispositions in 2019 and 2020 resulted in a ~~development~~decrease of $0.1 million.

Other operating income decreased $0.2 million or 9.3% from the prior year period primarily due to a reduction in ~~2020.~~variable parking revenue.

Expenses

Property operating expenses increased ~~$6.8~~$3.4 million, or ~~16.0%~~7.3%, for the three months ended ~~March 31,~~September 30, 2020 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in 2019 and 2020 resulted in an increase of $3.1 million.

•A development completed in 2020 resulted in an increase of $0.2 million.

•Increases in portfolio operating expenses as follows:

•Portfolio property tax expense of $0.6 million;

•Janitorial expenses of $0.2 million; and

•Portfolio insurance expense of $0.1 million.

•Maintenance and repair expense decreased $0.3 million.

•Utilities expense decreased $0.1 million.

•Dispositions in 2019 and 2020 resulted in a decrease of $0.4 million.

General and administrative expenses decreased approximately $3.5 million, or 32.4%, for the three months ended September 30, 2020 compared to the prior year period primarily as a result of the following activity:

•The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the three months ended September 30, 2019 because of the acceleration of his outstanding nonvested share-based awards and associated taxes.

•Decrease in performance-based awards of approximately $0.2 million.

•Decrease in travel expense of $0.4 million.

Depreciation and amortization expense increased $2.0 million, or 4.4%, for the three months ended September 30, 2020 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in 2019 and 2020 and a development in 2020 resulted in an increase of $4.2 million.

~~Increases~~•Various building and tenant improvement expenditures resulted in ~~portfolio operating expenses as follows:~~an increase of $2.8 million.

~~Portfolio property tax expense of $1.2 million;~~

~~Maintenance and repair expense of $0.3 million;~~

~~Compensation related expenses of $0.2 million;~~

~~Portfolio insurance expense of $0.2 million;~~

~~Portfolio security expense of $0.2 million; and~~

~~Portfolio janitorial expense of $0.1 million.~~

~~Leasing commissions and legal fees increased approximately $0.4 million.~~

~~Increase in intangible amortization expense totaling $0.7 million.~~

•Dispositions in 2019 and 2020 resulted in a decrease of ~~$0.7~~$1.6 million.

~~General and administrative expenses increased~~•Assets that became fully depreciated resulted in a decrease of $3.4 million.

Other income (Expense)

Gains on sale of real estate properties

In the third quarter of 2020, the Company recognized a gain of approximately ~~$0.3~~$2.2 million ~~or 3.0%,~~on the sale of one property.

In the third quarter of 2019, the Company recognized gains of approximately $0.2 million on the sale of two properties.

Interest expense

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Interest expense did not change significantly for the three months ended ~~March 31,~~September 30, 2020 compared to the prior year period. The components of interest expense are as follows:


	THREE MONTHS ENDED SEPTEMBER 30,				CHANGE
Dollars in thousands	2020		2019		$		%
Contractual interest	$	13,182	$	13,605	$	(423)	(3.1)	%
Net discount/premium accretion	102		72		30		41.7	%
Deferred financing costs amortization	683		613		70		11.4	%
Interest rate swap amortization	42		42		—		—	%
Treasury hedge amortization	107		—		107		—	%
Interest cost capitalization	(207)		(347)		140		(40.3)	%
Right-of-use assets financing amortization	245		196		49		25.0	%
Total interest expense	$	14,154	$	14,181	$	(27)	(0.2)	%

Contractual interest expense decreased $0.4 million, or 3.1%, primarily due to the following activity:

•The Senior Notes due 2030 accounted for an increase of $1.8 million.

•The Term Loan due 2024 and the initial funding of the Term Loan due 2026, net of swaps, accounted for an increase of approximately $0.4 million.

•The Unsecured Credit Facility principal and rate decreases accounted for a decrease of approximately $2.3 million.

•Mortgage note assumptions and repayments accounted for a net decrease of $0.3 million.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

The Company’s results of operations for the nine months ended September 30, 2020 compared to the same period in 2019 were impacted by acquisitions, developments, dispositions, gains on sale, and capital markets transactions.

Revenues

Total revenues increased $25.0 million, or 7.2%, to approximately $373.7 million for the nine months ended September 30, 2020 compared to $348.8 million in the prior year period. This increase is comprised of the following:


	NINE MONTHS ENDED SEPTEMBER 30,				CHANGE
Dollars in thousands	2020		2019		$		%
Property operating	$	337,144	$	307,606	$	29,538	9.6	%
Single-tenant net lease	28,519		33,348		(4,829)		(14.5)	%
Straight-line rent	2,722		1,833		889		48.5	%
Rental income	368,385		342,787		25,598		7.5	%
Other operating	5,364		5,987		(623)		(10.4)	%
Total revenues	$	373,749	$	348,774	$	24,975	7.2	%

Property operating revenue increased $29.5 million, or 9.6%, from the prior year period primarily as a result of the following activity:

•Acquisitions in 2019 and 2020 contributed $24.5 million.

•A development completed in 2020 contributed $1.6 million.

•Leasing activity, including contractual rent increases, contributed $5.6 million.

•Dispositions in 2019 and 2020 resulted in a decrease of $2.2 million.

Single-tenant net lease revenue decreased $4.8 million, or 14.5%, from the prior year period primarily as a result of the following activity:

•Dispositions in 2019 and 2020 resulted in a decrease of $5.2 million.

•Leasing activity, including contractual increases, contributed $0.4 million.

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Straight-line rent revenue increased $0.9 million or 48.5% from the prior year period primarily due to ~~compensation expense.~~acquisitions in 2019 and 2020 and a development in 2020 totaling $1.2 million, partially offset by 2019 and 2020 dispositions totaling $0.3 million.

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~~Depreciation and amortization expense increased $4.8~~Other operating income decreased $0.6 million or ~~11.3%~~10.4% from the prior year period primarily due to a reduction in variable parking revenue.

Expenses

Property operating expenses increased $12.5 million, or 9.4%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in 2019 and 2020 resulted in an increase of $10.8 million.

•A development completed in 2020 resulted in an increase of $0.4 million.

•Increases in portfolio operating expenses as follows:

•Portfolio property tax expense of $1.9 million;

•Compensation related expenses of $0.3 million;

•Administration and legal fees of $0.3 million;

•Portfolio insurance expense of $0.5 million;

•Portfolio security expense of $0.3 million; and

•Portfolio janitorial expense of $0.2 million.

•Utilities expense resulted in a decrease of $0.6 million.

•Maintenance and repair expense resulted in a decrease of $0.6 million.

•Increase in intangible amortization expense totaling $0.7 million.

•Dispositions in 2019 and 2020 resulted in a decrease of $1.7 million.

General and administrative expenses decreased approximately $3.7 million, or 13.5%, for the nine months ended September 30, 2020 compared to the prior year period primarily due to travel expense.

•The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the nine months ended September 30, 2019 because of the acceleration of his outstanding nonvested share-based awards and associated taxes.

•Decrease in incentive-based awards of approximately $0.6 million.

•Decrease in travel expense of $0.6 million.

•Increase in compensation expense of approximately $0.4 million.

Depreciation and amortization expense increased $10.6 million, or 8.1%, for the nine months ended September 30, 2020 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in 2019 and 2020 and a development in 2020 resulted in an increase of ~~$6.0~~$15.3 million.

•Various building and tenant improvement expenditures resulted in an increase of ~~$2.8~~$7.8 million.

•Dispositions in 2019 and 2020 resulted in a decrease of ~~$1.4~~$3.7 million.

•Assets that became fully depreciated resulted in a decrease of ~~$2.6~~$8.8 million.

Other income (expense)

Gains on sale of real estate properties

Gains on sale of real estate properties totaling approximately $70.4 million and $5.1 million are associated with the three and six real estate properties during 2020 and 2019, respectively.

Interest expense

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Interest expense increased ~~$0.4~~$0.9 million, or ~~2.7%~~2.3%, for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 compared to the prior year period. The components of interest expense are as follows:


	THREE MONTHS ENDED MARCH 31,						CHANGE						NINE MONTHS ENDED SEPTEMBER 30,				CHANGE
Dollars in thousands	2020			2019			$			%		Dollars in thousands	2020		2019		$		%
Contractual interest	$	13,398		$	13,193		$	205		1.6	%	Contractual interest	$	40,031	$	40,091	$	(60)	(0.1)	%
Net discount/premium accretion	52			52			—			—	%	Net discount/premium accretion	358		174		184		105.7	%
Deferred financing costs amortization	637			608			29			4.8	%	Deferred financing costs amortization	2,003		1,835		168		9.2	%
Interest rate swap amortization	42			42			—			—	%	Interest rate swap amortization	126		126		—		—	%
Treasury hedge amortization	15			—			15			—	%	Treasury hedge amortization	229		—		229		—	%
Interest cost capitalization	(421		)	(307		)	(114		)	37.1	%	Interest cost capitalization	(913)		(999)		86		(8.6)	%
Right-of-use assets financing amortization	237			—			237			—	%	Right-of-use assets financing amortization	722		392		330		84.2	%
Total interest expense	$	13,960		$	13,588		$	372		2.7	%	Total interest expense	$	42,556	$	41,619	$	937	2.3	%

Contractual interest expense ~~increased $0.2~~decreased $0.1 million, or ~~1.6%~~0.1%, primarily due to the following activity:

~~The Unsecured Credit Facility rate decrease accounted for a decrease of approximately $0.4 million.~~

~~The Term Loan due 2024 accounted for an increase of approximately $0.4 million due to the following:~~


◦	~~An increase in principal balance of $50 million accounted for an increase of approximately $0.5 million;~~


◦	~~A decrease in the interest rate accounted for a decrease of approximately $0.5 million~~


◦	~~The impact of the swaps accounted for an increase of approximately $0.3 million; and~~


◦	~~Unutilized fee expense relating to the Term Loan due 2026 accounted for an increase of approximately $0.1 million.~~

•Senior Notes due 2030 accounted for an increase of approximately ~~$0.3~~$3.9 million.

~~Mortgage notes repayments~~•The Term Loan due 2024 and the initial funding of the Term Loan due 2026, net of swaps, accounted for an increase of approximately $1.2 million.

•The Unsecured Credit Facility principal and rate decrease accounted for a decrease of ~~$0.1~~approximately $4.7 million.

•Mortgage note assumptions and repayments accounted for a net decrease of $0.5 million.

Impairment of real estate assets

Impairment of real estate assets totaling approximately $5.6 million is associated with the sales of two real estate properties during 2019.

Interest and other income (expense)

In 2019, the Company expensed approximately $0.8 million of debt issuance costs as a result of the Term Loan modification.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk in the form of changing interest rates on its debt and mortgage notes. Management uses regular monitoring of market conditions and analysis techniques to manage this risk. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, there were no material changes in the quantitative and qualitative disclosures about market risks presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports it files or submits under the Exchange Act.

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Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

In addition to the other information set forth in this report, an investor should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the Company's quarterly reports on the Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 which could materially affect the Company’s business, financial condition or future results. The risks, as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and the Company's quarterly reports on the Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 are not the only risks facing the Company. Additional risks and uncertainties not currently known to management or that management currently deems immaterial also may materially, adversely affect the Company’s business, financial condition, operating results or cash flows.

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition.

The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel.

All of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects ~~have~~ instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants ~~have~~ temporarily closed their offices or clinical space or ~~have~~ operated on a reduced basis in response to government requirements or recommendations. Many of these restrictions were lifted during the second quarter of 2020, but could be reimposed.

Through ~~May 5,~~November 2, 2020, the Company has collected ~~89%~~more than 99% of ~~April~~second and third quarter 2020 aggregate tenant ~~billings and~~billings. The Company has ~~agreed to~~collected 96% of total scheduled deferral payments in the third quarter of 2020. In addition, the Company has remaining various forms of rent deferrals outstanding representing approximately 7%$1.2 million, or less than 1% of ~~April~~second and third quarter 2020 aggregate tenant billings. The tenant deferral agreements require the deferred amounts to be repaid in the third and fourth quarters of 2020. The tenant deferral agreements require the amounts to be repaid in the third and fourth quarters of 2020. Many of these tenants have requested, and the Company management expects more will likely seek, rent deferral or abatement for May 2020 and subsequent months, though it cannot predict how many.

The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. There can be no assurance that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that the Company's access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. In addition, the deterioration of economic conditions as a result of the pandemic may ultimately decrease occupancy levels and average rent per square foot across the Company's portfolio as tenants reduce or defer their spending.

The extent of the COVID-19 pandemic’s effect on the Company's operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, the Company is not able at this time to estimate the effect of these factors on its business, but the adverse impact on the business, results of operations,

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financial condition and cash flows could be material. Moreover, many risk factors set forth in our Annual Report on

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Form 10-K for the year ended December 31, 2019 should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic.

Settlement provisions contained in a forward equity agreement could result in substantial dilution to the Company's earnings per share and return on equity or result in substantial cash payment obligations.

The Company has outstanding forward equity agreements and may enter into additional forward equity agreements in the future. Forward equity agreements typically provide that the relevant forward purchaser will have the right to accelerate that particular forward equity agreement (with respect to all or any portion of the transaction under that particular forward equity agreement that the relevant forward purchaser determines is affected by such event) and require us to settle on a date specified by the relevant forward purchaser if:

•the relevant forward purchaser is unable to establish, maintain or unwind its hedge position with respect to that particular forward equity agreement;

•a termination event occurs as a result of us declaring a dividend or distribution on our common stock with a cash value in excess of a specified amount per calendar quarter, or with an ex-dividend date prior to the anticipated ex-dividend date for such cash dividend;

•an extraordinary event (as such term is defined in that particular forward equity agreement and which includes certain mergers and tender offers and the delisting of our common stock) occurs or our board of directors votes to approve or there is a public announcement of, in either case, any action that, if consummated, would constitute such an extraordinary event; or

•certain other events of default, termination events, or other specified events occur, including, among other things, any material misrepresentation made by us in connection with entering into that particular forward equity agreement, or a nationalization, a bankruptcy termination event or a change in law (as such terms are defined in that particular forward equity agreement).

A forward purchaser’s decision to exercise its right to accelerate the settlement of a particular forward equity agreement will be made irrespective of the Company's need for capital. In such cases, we could be required to issue and deliver shares of common stock under the physical settlement provisions of that particular forward equity agreement or, if we so elect and the forward purchaser so permits our election, net share settlement provisions of that particular forward equity agreement irrespective of our capital needs, which would result in dilution to our earnings per share and return on equity.

We expect that settlement of any forward equity agreement will generally occur no later than the date specified in the particular forward equity agreement, which will generally be no later than twelve months following the trade date of that forward equity agreement. However, any forward equity agreement may be settled earlier than that specified date in whole or in part at our option. We expect that each forward equity agreement will be physically settled by delivery of shares of common stock unless we elect to cash settle or net share settle a particular forward equity agreement. Upon physical settlement or, if we so elect, net share settlement of a particular forward equity agreement, delivery of shares of common stock in connection with such physical settlement or net share settlement will result in dilution to our earnings per share and return on equity. If we elect cash settlement or net share settlement with respect to all or a portion of the shares of common stock underlying a particular forward equity agreement, we expect that the relevant forward purchaser (or an affiliate thereof) will purchase a number of shares of common stock necessary to satisfy its or its affiliate’s obligation to return the shares of common stock borrowed from third parties in connection with sales of shares of common stock under that forward equity agreement, adjusted in the case of net share settlement by any shares deliverable by or to us under the forward equity agreement. In addition, the purchase of shares of common stock in connection with the relevant forward purchaser or its affiliate unwinding its hedge positions could cause the price of shares of common stock to increase over such time (or prevent a decrease over such time), thereby increasing the amount of cash we would owe to the relevant forward purchaser (or decreasing the amount of cash that the relevant forward purchaser would owe us) upon a cash settlement of the relevant forward equity agreement or, in the event of net share settlement, increasing the number of shares of common stock we would deliver to the relevant forward purchaser (or decreasing the number of shares of common stock that the relevant forward purchaser would deliver to us).

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The forward equity price that we expect to receive upon physical settlement of a particular forward equity agreement will be subject to adjustment on a daily basis based on a floating interest rate factor equal to a specified daily rate less a spread and will be decreased based on amounts related to expected dividends on shares of common stock during the term of the particular forward equity agreement. If the specified daily rate is less than the spread on any day, the interest factor will result in a daily reduction of the applicable forward equity price. If the market value of shares of common stock, determined in accordance with the terms of the relevant forward equity agreement, during the relevant valuation period under the particular forward equity agreement is above the applicable forward equity price, in the case of cash settlement, we would pay the relevant forward purchaser under that particular forward equity agreement an amount in cash equal to the difference or, in the case of net share settlement, we would deliver to the relevant forward purchaser a number of shares of common stock having a value, determined in accordance with the terms of the relevant forward equity agreement, equal to the difference. Thus, we could be responsible for a potentially substantial cash payment in the case of cash settlement of a particular forward equity agreement. If the market value of the Company’s common stock, determined in accordance with the terms of the relevant forward equity agreement, during the relevant valuation period under that particular forward equity agreement is below the applicable forward equity price, in the case of cash settlement, we would be paid the difference in cash by the relevant forward purchaser under that particular forward equity agreement or, in the case of net share settlement, we would receive from the relevant forward purchaser a number of shares of common stock having a value equal to the difference.

The U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements.

In the event that we elect to settle any forward equity agreement for cash and the settlement price is below the applicable forward equity price, we would be entitled to receive a cash payment from the relevant forward purchaser. Under Section 1032 of the Internal Revenue Code of 1986, as amended (the "Code"), generally, no gains and losses are recognized by a corporation in dealing in its own shares, including pursuant to a "securities futures contract" (as defined in the Code, by reference to the Securities Exchange Act of 1934, as amended). Although we believe that any amount received by us in exchange for our stock would qualify for the exemption under Section 1032 of the Code, because it is not entirely clear whether a forward equity agreement qualifies as a "securities futures contract," the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain. In the event that we recognize a significant gain from the cash settlement of a forward equity agreement, we might be unable to satisfy the gross income requirements applicable to REITs under the Code. In that case, we may be able to rely upon the relief provisions under the Code in order to avoid the loss of our REIT status. Even if the relief provisions apply, we will be subject to a 100% tax on the greater of (i) the excess of 75% of our gross income (excluding gross income from prohibited transactions) over the amount of such income attributable to sources that qualify under the 75% test or (ii) the excess of 95% of our gross income (excluding gross income from prohibited transactions) over the amount of such gross income attributable to sources that qualify under the 95% test, multiplied in either case by a fraction intended to reflect our profitability. In the event that these relief provisions were not available, we could lose our REIT status under the Code.

In case of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and we would not receive the expected proceeds from any forward sale of shares of the Company’s common stock.

If we file for or consent to a proceeding seeking a judgment in bankruptcy or insolvency or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or we or a regulatory authority with jurisdiction over us presents a petition for our winding-up or liquidation, and we consent to such a petition, any forward equity agreements that are then in effect will automatically terminate. If any such forward equity agreement so terminates under these circumstances, we would not be obligated to deliver to the relevant forward purchaser any shares of common stock not previously delivered, and the relevant forward purchaser would be discharged from its obligation to pay the applicable forward equity price per share in respect of any shares of common stock not previously settled under the applicable forward equity agreement. Therefore, to the extent that there are any shares of common stock with respect to which any forward equity agreement has not been settled at the time of the commencement of any such bankruptcy or insolvency proceedings, we would not receive the relevant forward equity price per share in respect of those shares of common stock.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~During~~Authorized Repurchases of Equity Securities by the ~~three months ended March 31,~~Issuer

On May 5, 2020, the ~~Company withheld~~Company’s Board of Directors authorized the repurchase of up to $50 million of outstanding shares of ~~Company~~the Company’s common stock either in the open market or through privately negotiated transactions, subject to ~~satisfy employee tax withholding obligations payable upon~~market conditions, regulatory constraints, and other customary conditions. The Company is not obligated under this authorization to repurchase any specific number of shares. This authorization supersedes all previous stock repurchase authorizations. As of the ~~vesting~~date of ~~nonvested~~this report, the Company has not repurchased any shares of its common stock ~~as follows:~~under this authorization.

PERIOD
TOTAL NUMBER OF
SHARES PURCHASED

AVERAGE PRICE PAID
per share

TOTAL NUMBER OF SHARES
purchased as part of publicly announced plans or programs

MAXIMUM NUMBER OF SHARES
that may yet be purchased
under the plans or programs

January 1 - January 31 18,753
$ 33.20
—
—
February 1 - February 29 4,810
36.46
—
—
March 1 - March 31 —
—
—
—
Total 23,563

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Item 6. Exhibits



EXHIBIT		DESCRIPTION
Exhibit 3.1		Second Articles of Amendment and Restatement of the Company, as amended¹
Exhibit 3.2		Amended and Restated Bylaws of the Company, as amended ¹
Exhibit 4.1		Specimen Stock Certificate ²
Exhibit 4.2		Indenture, dated as of May 15, 2001, by and between the Company and Truist Bank, formally known as Branch Banking and Trust Company , as trustee (as successor to the trustee named therein) ³
Exhibit 4.3		Fifth Supplemental Indenture, dated March 26, 2013, by and between the Company and Truist Bank, formally known as Branch Banking and Trust Company , as Trustee (as successor to the trustee named therein)⁴
Exhibit 4.4		Form of 3.75% Senior Notes due 2023 (set forth in Exhibit B to the Fifth Supplemental Indenture filed as Exhibit 4.3 thereto)⁴
Exhibit 4.5		Sixth Supplemental Indenture, dated April 24, 2015, by and between the Company and Truist Bank, formally known as Branch Banking and Trust Company , as Trustee (as successor to the trustee named therein) ⁵
Exhibit 4.6		Form of 3.875% Senior Notes due 2025 (set forth in Exhibit B to the Sixth Supplemental Indenture filed as Exhibit 4.5 thereto)⁵
Exhibit 4.7		Seventh Supplemental Indenture, dated December 11, 2017, by and between the Company and Truist Bank, formally known as Branch Banking and Trust Company , as Trustee. ⁸6
Exhibit 4.8		Form of 3.625% Senior Note due 2028 (set forth in Exhibit B to the Seventh Supplemental Indenture filed as Exhibit 4.7 hereto). ⁶
Exhibit 4.9		Eighth Supplemental Indenture, dated March 18, 2020, by and between the Company and Truist Bank, formally known as Branch Banking and Trust Company , as Trustee.⁷
Exhibit 4.10		Form of 2.400% Senior Note due 2030 (set forth in Exhibit B to the Eighth Supplemental Indenture filed as Exhibit 4.9 hereto).7
Exhibit ~~10.1~~4.11		~~First Amendment to Amended and Restated Term Loan,~~Ninth Supplemental Indenture, dated ~~March 4,~~October 2 , 2020, by and ~~among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the other Lenders party thereto. (filed herewith)~~
~~Exhibit 10.2~~	~~Amendment No. 1 to Third Amended and Restated Employment Agreement, dated February 12, 2020,~~ between the Company and ~~Todd J. Meredith.~~Truist Bank, formally known as Branch Banking and Trust Company , as Trustee.⁸
Exhibit ~~10.3~~4.12		~~Amendment No. 1~~Form of 2.050% Senior Note due 2031 (set forth in Exhibit B to ~~Third Amended and Restated Employment Agreement, dated February 12, 2020, between~~ the ~~Company and John M. Bryant, Jr..~~Ninth Supplemental Indenture filed as Exhibit 4.11 hereto).⁸
~~Exhibit 10.4~~	~~Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between the Company and Robert E. Hull.~~⁸
~~Exhibit 10.5~~	~~Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between the Company and J. Christopher Douglas.~~⁸
Exhibit 31.1		Certification of the Chief Executive Officer of Healthcare Realty Trust Incorporated pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
Exhibit 31.2		Certification of the Chief Financial Officer of Healthcare Realty Trust Incorporated pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
Exhibit 32		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
Exhibit 101.INS		The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH		XBRL Taxonomy Extension Schema Document (furnished electronically herewith)
Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (furnished electronically herewith)
Exhibit 101.LAB		XBRL Taxonomy Extension Labels Linkbase Document (furnished electronically herewith)
Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase Document (furnished electronically herewith)
Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (furnished electronically herewith)


1	~~Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2018 filed February 13, 2019 and hereby incorporated by reference.~~


2	~~Filed as an exhibit to the Company’s Registration Statement on Form S-11 (Registration No. 33-60506) filed April 2, 1993 and hereby incorporated by reference.~~


3	~~Filed as an exhibit to the Company's Current Report on Form 8-K filed May 17, 2001 and hereby incorporated by reference.~~


4	~~Filed as an exhibit to the Company's Current Report on Form 8-K filed March 26, 2013 and hereby incorporated by reference.~~


5	~~Filed as an exhibit to the Company's Current Report on Form 8-K filed April 24, 2015 and hereby incorporated by reference.~~

1Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2018 filed February 13, 2019 and hereby incorporated by reference.

2Filed as an exhibit to the Company’s Registration Statement on Form S-11 (Registration No. 33-60506) filed April 2, 1993 and hereby incorporated by reference.

3Filed as an exhibit to the Company's Current Report on Form 8-K filed May 17, 2001 and hereby incorporated by reference.

4Filed as an exhibit to the Company's Current Report on Form 8-K filed March 26, 2013 and hereby incorporated by reference.

5Filed as an exhibit to the Company's Current Report on Form 8-K filed April 24, 2015 and hereby incorporated by reference.

6Filed as an exhibit to the Company’s Current Report on Form 8-K filed December 11, 2017 and hereby incorporated by reference.

7Filed as an exhibit to the Company's Current Report on Form 8-K filed March 18, 2020 and hereby incorporated by reference.

8Filed as an exhibit to the Company's Current Report on Form 8-K filed October 2, 2020 and hereby incorporated by reference.

3039

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6	~~Filed as an exhibit to the Company’s Current Report on Form 8-K filed December 11, 2017 and hereby incorporated by reference.~~


7	~~Filed as an exhibit to the Company's Current Report on Form 8-K filed March 18, 2020 and hereby incorporated by reference.~~


8	~~Filed as an exhibit to the Company's Annual Report on Form 10-K filed February 12, 2020 and hereby incorporated by reference.~~

~~Table of Contents~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			HEALTHCARE REALTY TRUST INCORPORATED

			~~HEALTHCARE REALTY TRUST INCORPORATED~~
By:
	~~By:~~	/s/ J. CHRISTOPHER DOUGLAS
				J. Christopher Douglas
				Executive Vice President and Chief Financial Officer
				~~May 6,~~November 4, 2020



PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	56
	Notes to the Condensed Consolidated Financial Statements	67
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1620
Item 3	Quantitative and Qualitative Disclosures about Market Risk	2633
Item 4	Controls and Procedures	2733

PART II - OTHER INFORMATION
Item 1	Legal Proceedings	2835
Item 1A	Risk Factors	2835
Item 2	Unregistered Sales of Equity and Use of Proceeds	2938
Item 6	Exhibits	3039

SIGNATURE		3240



Dollars in millions	TYPE ¹	DATE ACQUIRED	PURCHASE PRICE		MORTGAGE NOTES PAYABLE			CASH CONSIDERATION ²		REAL ESTATE		OTHER ³			SQUARE FOOTAGE
Los Angeles, CA	MOB	1/3/20	$	42.0	$	(19.3	)	$	22.8	$	42.4	$	(0.3	)	86,986
Atlanta, GA	MOB	2/13/20	12.0		—			11.8		12.1		(0.3		)	64,624
Raleigh, NC	MOB	2/25/20	6.3		—			6.5		6.5		—			15,964
Colorado Springs, CO	MOB	3/9/20	8.2		—			8.3		8.6		(0.3		)	34,210
Denver, CO ⁴	MOB	3/13/20	33.5		—			33.2		34.0		(0.8		)	136,994
Total real estate acquisitions			$	102.0	$	(19.3	)	$	82.6	$	103.6	$	(1.7	)	338,778
Land acquisition ⁵			1.6		—			1.7		1.7		—			—
			$	103.6	$	(19.3	)	$	84.3	$	105.3	$	(1.7	)	338,778



In thousands
2020	$	280,413
2021	335,188
2022	294,771
2023	250,284
2024	193,772
2025 and thereafter	514,144
	$	1,868,572



	MATURITY DATES	BALANCE AS OF				EFFECTIVE INTEREST RATE as of 3/31/2020
Dollars in thousands	MATURITY DATES	3/31/2020		12/31/2019		EFFECTIVE INTEREST RATE as of 3/31/2020
$700 million Unsecured Credit Facility	5/23	$	215,000	$	293,000	1.89	%
$200 million Unsecured Term Loan Facility, net of issuance costs ¹	5/24	199,069		199,013		3.20	%
$150 million Unsecured Term Loan due 2026 ²	6/26	—		—		N/A
Senior Notes due 2023, net of discount and issuance costs	4/23	248,647		248,540		3.95	%
Senior Notes due 2025, net of discount and issuance costs ³	5/25	248,584		248,522		4.08	%
Senior Notes due 2028, net of discount and issuance costs	1/28	295,768		295,651		3.84	%
Senior Notes due 2030, net of discount and issuance costs ⁴	3/30	296,211		—		2.71	%
Mortgage notes payable, net of discounts and issuance costs and including premiums	7/20-5/40	141,175		129,343		4.70	%
		$	1,644,454	$	1,414,069



	MARCH 31, 2020	DECEMBER 31, 2019
Balance, beginning of period	134,706,154	125,279,455
Issuance of common stock	210,271	9,251,440
Nonvested share-based awards, net of withheld shares	15,781	175,259
Balance, end of period	134,932,206	134,706,154



	NUMBER OF PROPERTIES		GROSS REAL ESTATE INVESTMENT AS OF MARCH 31, 2020
YEAR EXERCISABLE	MOB	INPATIENT	FAIR MARKET VALUE METHOD ¹		NON FAIR MARKET VALUE METHOD ²		TOTAL
Current ³	3	1	$	96,233	$	—	$	96,233
2021	1	—	—		14,984		14,984
2022	—	—	—		—		—
2023	—	—	—		—		—
2024	—	—	—		—		—
2025	5	1	48,165		221,929		270,094
2026	—	—	—		—		—
2027	—	—	—		—		—
2028	1	—	43,943		—		43,943
2029	1	—	26,494		—		26,494
2030 and thereafter	4	—	100,151		—		100,151
Total	15	2	$	314,986	$	236,913	$	551,899



	AS OF MARCH 31, 2020
	PROPERTY COUNT	GROSS INVESTMENT		SQUARE FEET	OCCUPANCY
Same store properties	171	$	3,708,475	13,439,999	89.0	%
Acquisitions	31	606,061		1,826,029	86.9	%
Development completions	1	53,669		151,031	20.2	%
Reposition	9	72,782		429,167	41.9	%
Total owned real estate properties	212	$	4,440,987	15,846,226	86.8	%



PERIOD	TOTAL NUMBER OF SHARES PURCHASED	AVERAGE PRICE PAID per share		TOTAL NUMBER OF SHARES purchased as part of publicly announced plans or programs	MAXIMUM NUMBER OF SHARES that may yet be purchased under the plans or programs
January 1 - January 31	18,753	$	33.20	—	—
February 1 - February 29	4,810	36.46		—	—
March 1 - March 31	—	—		—	—
Total	23,563