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:	~~September~~June 30, ~~2022~~2023
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number: 001-35568 (Healthcare Realty Trust Incorporated)

HEALTHCARE REALTY TRUST INCORPORATED

(Exact name of Registrant as specified in its charter)


Maryland						20-4738467

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

3310 West End Avenue, Suite 700

Nashville, Tennessee 37203

(Address of principal executive offices)

(615) 269-8175

(Registrant's telephone number, including area code)


www.healthcarerealty.com
(Internet address)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Class A 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 Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒

Yes

☐

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

☐

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

☒

As of ~~November~~August 4, ~~2022,~~2023, the Registrant had ~~380,572,290~~380,857,532 shares of Common Stock outstanding.

Explanatory Note

On July 20, 2022, pursuant to that certain Agreement and Plan of Merger dated as of February 28, 2022 (the “Merger Agreement”), by and among Healthcare Realty Trust Incorporated, a Maryland corporation (now known as HRTI, LLC, a Maryland limited liability company) (“Legacy HR”), Healthcare Trust of America, Inc., a Maryland corporation (now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), Healthcare Trust of America Holdings, LP, a Delaware limited partnership (now known as Healthcare Realty Holdings, L.P.) (the “OP”), and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”). Immediately following the Merger, Legacy HR converted to a Maryland limited liability company and changed its name to “HRTI, LLC” and Legacy HTA changed its name to “Healthcare Realty Trust Incorporated”. In addition, the equity interests of Legacy HR were contributed by means of a contribution and assignment agreement to the OP, ~~such that~~and Legacy HR became a wholly-owned subsidiary of the OP. As a result, Legacy HR became a part of an umbrella partnership REIT (“UPREIT”) structure, which is intended to align the corporate structure of the combined company after giving effect to the Merger and the UPREIT reorganization and to provide a platform for the combined company to more efficiently acquire properties in a tax-deferred manner. The combined company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $0.01 par value per share, trade on the New York Stock Exchange ~~(the “NYSE”)~~ under the ticker symbol “HR”.

For accounting purposes, the Merger was treated as a “reverse acquisition” in which Legacy HR was considered the accounting acquirer. As a result, the historical financial statements of the accounting acquirer, Legacy HR, became the historical financial statements of the Company, as defined below. ~~Future periodic~~Periodic reports for periods ending following the Merger ~~will~~ reflect financial and other information of the Company. The acquisition was accounted for using the acquisition method of accounting in accordance with ~~ASC~~Accounting Standards Codification 805, Business Combinations (“ASC 805”), which requires, among other things, the assets acquired and the liabilities assumed to be recognized at their acquisition date fair value.

For purposes of this Quarterly Report on Form 10-Q, references to the “Company” are to Legacy HR for periods prior to the closing of the Merger and thereafter to ~~Legacy HR and Legacy HTA~~the combined company after giving effect to the Merger.

In addition, the OP has issued unsecured notes described in Note 65 to ~~our~~the Company's Condensed Consolidated Financial Statements included in this report. All unsecured notes are fully and unconditionally guaranteed by the Company, and the OP is ~~98.9%~~98.8% owned by the Company. Effective January 4, 2021, the ~~SEC~~Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements which permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent. Accordingly, separate consolidated financial statements of the OP have not been presented.

Additionally, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, the Company has excluded the summarized financial information for the OP because the assets, liabilities, and results of operations of the OP are not materially different than the corresponding amounts in the Company's consolidated financial statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

HEALTHCARE REALTY TRUST INCORPORATED

FORM 10-Q

~~September~~June 30, ~~2022~~2023

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					ASSETS
		Unaudited SEPTEMBER 30, 2022		DECEMBER 31, 2021			Unaudited JUNE 30, 2023		DECEMBER 31, 2022
Real estate properties	Real estate properties					Real estate properties
Land	Land	$	1,449,550	$	387,918	Land	$	1,424,453	$	1,439,798
Buildings and improvements	Buildings and improvements	11,439,797		4,337,641		Buildings and improvements	11,188,821		11,332,037
Lease intangibles	Lease intangibles	968,914		120,478		Lease intangibles	922,029		959,998
Personal property	Personal property	11,680		11,761		Personal property	12,615		11,907
Investment in financing receivable, net	Investment in financing receivable, net	118,919		186,745		Investment in financing receivable, net	121,315		120,236
Financing lease right-of-use assets	Financing lease right-of-use assets	79,950		31,576		Financing lease right-of-use assets	83,016		83,824
Construction in progress	Construction in progress	43,148		3,974		Construction in progress	53,311		35,560
Land held for development	Land held for development	73,321		24,849		Land held for development	78,411		74,265
Total real estate properties	Total real estate properties	14,185,279		5,104,942		Total real estate properties	13,883,971		14,057,625
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	(1,468,736)		(1,338,743)		Less accumulated depreciation and amortization	(1,983,944)		(1,645,271)
Total real estate properties, net	Total real estate properties, net	12,716,543		3,766,199		Total real estate properties, net	11,900,027		12,412,354
Cash and cash equivalents	Cash and cash equivalents	57,583		13,175		Cash and cash equivalents	35,904		60,961

Assets held for sale, net	Assets held for sale, net	185,074		57		Assets held for sale, net	151		18,893
Operating lease right-of-use assets	Operating lease right-of-use assets	321,365		128,386		Operating lease right-of-use assets	333,224		336,983
Investments in unconsolidated joint ventures	Investments in unconsolidated joint ventures	327,752		161,942		Investments in unconsolidated joint ventures	327,245		327,248
Goodwill	Goodwill	148,891		3,487		Goodwill	250,530		223,202
Other assets, net	Other assets, net	438,235		185,673		Other assets, net	547,266		469,990
Total assets	Total assets	$	14,195,443	$	4,258,919	Total assets	$	13,394,347	$	13,849,631

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities	Liabilities					Liabilities
Notes and bonds payable	Notes and bonds payable	$	5,570,139	$	1,801,325	Notes and bonds payable	$	5,340,272	$	5,351,827
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	231,018		86,108		Accounts payable and accrued liabilities	196,147		244,033
Liabilities of assets held for sale	Liabilities of assets held for sale	10,644		294		Liabilities of assets held for sale	222		437
Operating lease liabilities	Operating lease liabilities	268,840		96,138		Operating lease liabilities	278,479		279,895
Financing lease liabilities	Financing lease liabilities	72,378		22,551		Financing lease liabilities	73,629		72,939
Other liabilities	Other liabilities	203,398		67,387		Other liabilities	219,694		218,668
Total liabilities	Total liabilities	6,356,417		2,073,803		Total liabilities	6,108,443		6,167,799
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Redeemable non-controlling interests						Redeemable non-controlling interests	2,487		2,014
Stockholders' equity	Stockholders' equity					Stockholders' equity
Preferred stock, $.01 par value per share; 200,000 shares authorized; none issued and outstanding	Preferred stock, $.01 par value per share; 200,000 shares authorized; none issued and outstanding	—		—		Preferred stock, $.01 par value per share; 200,000 shares authorized; none issued and outstanding	—		—
Class A Common stock, $.01 par value per share; 1,000,000 shares authorized; 380,572 and 150,457 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		3,806		1,505
Class A Common stock, $.01 par value per share; 1,000,000 shares authorized; 380,858 and 380,590 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively						Class A Common stock, $.01 par value per share; 1,000,000 shares authorized; 380,858 and 380,590 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	3,808		3,806
Additional paid-in capital	Additional paid-in capital	9,586,556		3,972,917		Additional paid-in capital	9,595,033		9,587,637
Accumulated other comprehensive income (loss)		5,524		(9,981)
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	9,328		2,140
Cumulative net income attributable to common stockholders	Cumulative net income attributable to common stockholders	1,342,819		1,266,158		Cumulative net income attributable to common stockholders	1,137,171		1,307,055
Cumulative dividends	Cumulative dividends	(3,211,492)		(3,045,483)		Cumulative dividends	(3,565,941)		(3,329,562)
Total stockholders' equity	Total stockholders' equity	7,727,213		2,185,116		Total stockholders' equity	7,179,399		7,571,076
Non-controlling interest	Non-controlling interest	111,813		—		Non-controlling interest	104,018		108,742
Total equity	Total equity	7,839,026		2,185,116		Total equity	7,283,417		7,679,818
Total liabilities and equity	Total liabilities and equity	$	14,195,443	$	4,258,919	Total liabilities and equity	$	13,394,347	$	13,849,631

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, ~~2021,~~2022, are an integral part of these financial statements.

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of ~~Income~~Operations

For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

Amounts in thousands, except per share data

Unaudited


		THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,					THREE MONTHS ENDED June 30,				SIX MONTHS ENDED June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Rental income	Rental income	$	298,931	$	131,746	$	578,052	$	388,620	Rental income	$	329,680	$	140,632	$	653,773	$	279,121
Interest income	Interest income	3,366		1,917		7,253		2,426		Interest income	4,233		1,957		8,448		3,887

Other operating	Other operating	4,057		2,969		9,270		7,347		Other operating	4,230		2,738		8,847		5,213
		306,354		136,632		594,575		398,393			338,143		145,327		671,068		288,221
Expenses	Expenses									Expenses
Property operating	Property operating	112,473		55,518		226,947		159,241		Property operating	125,395		57,010		247,436		114,474
General and administrative	General and administrative	16,741		8,207		38,317		25,251		General and administrative	15,464		10,540		30,399		21,576
Acquisition and pursuit costs	Acquisition and pursuit costs	482		974		3,137		2,388		Acquisition and pursuit costs	669		1,352		956		2,655
Merger-related costs	Merger-related costs	79,402		—		92,603		—		Merger-related costs	(15,670)		7,085		(10,815)		13,201
Depreciation and amortization	Depreciation and amortization	158,117		50,999		267,889		150,904		Depreciation and amortization	183,193		55,731		367,671		109,772

		367,215		115,698		628,893		337,784			309,051		131,718		635,647		261,678
Other income (expense)	Other income (expense)									Other income (expense)
Gain on sales of real estate properties	Gain on sales of real estate properties	143,908		1,186		197,188		41,046		Gain on sales of real estate properties	7,156		8,496		8,162		53,280
Interest expense	Interest expense	(53,044)		(13,334)		(82,248)		(39,857)		Interest expense	(65,334)		(15,543)		(129,092)		(29,204)
Loss on extinguishment of debt	Loss on extinguishment of debt	(1,091)		—		(2,520)		—		Loss on extinguishment of debt	—		—		—		(1,429)

Impairment of real estate properties		—		(10,669)		25		(16,581)
Impairment of real estate properties and credit loss reserves										Impairment of real estate properties and credit loss reserves	(55,215)		—		(86,637)		25
Equity loss from unconsolidated joint ventures	Equity loss from unconsolidated joint ventures	(124)		(183)		(776)		(404)		Equity loss from unconsolidated joint ventures	(17)		(307)		(797)		(652)
Interest and other (expense) income, net		(172)		—		(378)		239
Interest and other income (expense), net										Interest and other income (expense), net	592		(125)		1,139		(206)
		89,477		(23,000)		111,291		(15,557)			(112,818)		(7,479)		(207,225)		21,814

Net income (loss)		$	28,616	$	(2,066)	$	76,973	$	45,052
Net income attributable to non-controlling interests		(312)		—		(312)		—
Net income (loss) attributable to common stockholders		$	28,304	$	(2,066)	$	76,661	$	45,052
Net (loss) income										Net (loss) income	$	(83,726)	$	6,130	$	(171,804)	$	48,357
Net loss attributable to non-controlling interests										Net loss attributable to non-controlling interests	967		—		1,920		—
Net (loss) income attributable to common stockholders										Net (loss) income attributable to common stockholders	$	(82,759)	$	6,130	$	(169,884)	$	48,357

Basic earnings per common share	Basic earnings per common share	$	0.08	$	(0.02)	$	0.36	$	0.31	Basic earnings per common share	$	(0.22)	$	0.04	$	(0.45)	$	0.32

Diluted earnings per common share	Diluted earnings per common share	$	0.08	$	(0.02)	$	0.35	$	0.31	Diluted earnings per common share	$	(0.22)	$	0.04	$	(0.45)	$	0.32

Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	328,805		143,818		209,807		141,521		Weighted average common shares outstanding - basic	378,897		149,676		378,861		149,321
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	332,031		143,818		210,944		141,613		Weighted average common shares outstanding - diluted	378,897		149,739		378,861		149,397

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Comprehensive Income

For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

Amounts in thousands

Unaudited

THREE MONTHS ENDED
September 30, NINE MONTHS ENDED
September 30,
2022 2021 2022 2021
Net income (loss) $ 28,616 $ (2,066) $ 76,973 $ 45,052
Other comprehensive income
Interest rate swaps
Reclassification adjustments for losses included in net income (interest expense) 763 1,131 2,672 3,340
Gains arising during the period on interest rate swaps 6,083 36 12,905 2,079
6,846 1,167 15,577 5,419
Comprehensive income (loss) 35,462 (899) 92,550 50,471
Less: comprehensive income attributable to non-controlling interests (384) — (384) —
Comprehensive income (loss) attributable to common stockholders $ 35,078 $ (899) $ 92,166 $ 50,471


	THREE MONTHS ENDED June 30,				SIX MONTHS ENDED June 30,
	2023		2022		2023		2022
Net (loss) income	$	(83,726)	$	6,130	$	(171,804)	$	48,357
Other comprehensive income


Interest rate swaps
Reclassification adjustments for (gains) losses included in net income (interest expense)	(3,419)		823		(5,703)		1,909
Gains arising during the period on interest rate swaps	21,523		1,663		12,981		6,822

	18,104		2,486		7,278		8,731
Comprehensive (loss) income	(65,622)		8,616		(164,526)		57,088
Less: comprehensive loss attributable to non-controlling interests	745		—		1,830		—
Comprehensive (loss) income attributable to common stockholders	$	(64,877)	$	8,616	$	(162,696)	$	57,088

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity

For the Three Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

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		Non-controlling Interests		Total Equity			Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interests
Balance at June 30, 2022		$	1,516	$	4,002,525	$	(1,250)	$	1,314,515	$	(3,139,440)	$	2,177,866	$	—	$	2,177,866
Balance at March 31, 2023																		Balance at March 31, 2023	$	3,808	$	9,591,194	$	(8,554)	$	1,219,930	$	(3,447,750)	$	7,358,628	$	106,211	$	7,464,839	$	2,000
Issuance of common stock, net of issuance costs	Issuance of common stock, net of issuance costs	—		84		—		—		—		84		—		84		Issuance of common stock, net of issuance costs	—		27		—		—		—		27		—		27		—
Merger consideration transferred		2,289		5,574,174		—		—		—		5,576,463		110,702		5,687,165
Non-controlling interests acquired		—		—		—		—		—		—		1,266		1,266

Common stock redemptions	Common stock redemptions	—		(41)		—		—		—		(41)		—		(41)		Common stock redemptions	—		(112)		—		—		—		(112)		—		(112)		—
Share-based compensation	Share-based compensation	1		9,716		—		—		—		9,717		—		9,717		Share-based compensation	—		3,924		—		—		—		3,924		—		3,924		—
Redemption of non-controlling interest		—		98		—		—		—		98		(97)		1

Net loss																		Net loss	—		—		—		(82,759)		—		(82,759)		(967)		(83,726)		—
Reclassification adjustments for gains included in net income (interest expense)																		Reclassification adjustments for gains included in net income (interest expense)	—		—		(3,377)		—		—		(3,377)		(42)		(3,419)		—
Gains arising during the period on interest rate swaps																		Gains arising during the period on interest rate swaps	—		—		21,259		—		—		21,259		264		21,523		—
Contributions from non-controlling interests																		Contributions from non-controlling interests	—		—		—		—		—		—		—		—		487
Dividends to common stockholders and distributions to non-controlling interest holders ($0.31 per share)																		Dividends to common stockholders and distributions to non-controlling interest holders ($0.31 per share)	—		—		—		—		(118,191)		(118,191)		(1,448)		(119,639)		—
Balance at June 30, 2023																		Balance at June 30, 2023	$	3,808	$	9,595,033	$	9,328	$	1,137,171	$	(3,565,941)	$	7,179,399	$	104,018	$	7,283,417	$	2,487

																			Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interests
Balance at March 31, 2022																		Balance at March 31, 2022	$	1,516	$	3,999,060	$	(3,736)	$	1,308,385	$	(3,092,343)	$	2,212,882	$	—	$	2,212,882	$	—
Issuance of common stock, net of issuance costs																		Issuance of common stock, net of issuance costs	—		110		—		—		—		110		—		110		—

Share-based compensation																		Share-based compensation	—		3,356		—		—		—		3,356		—		3,356		—
Net income	Net income	—		—		—		28,304		—		28,304		312		28,616		Net income	—		—		—		6,130		—		6,130		—		6,130		—
Reclassification adjustments for losses included in net income (interest expense)	Reclassification adjustments for losses included in net income (interest expense)	—		—		755		—		—		755		8		763		Reclassification adjustments for losses included in net income (interest expense)	—		—		823		—		—		823		—		823		—
Gains arising during the period on interest rate swaps	Gains arising during the period on interest rate swaps	—		—		6,019		—		—		6,019		64		6,083		Gains arising during the period on interest rate swaps	—		—		1,663		—		—		1,663		—		1,663		—
Dividends to common stockholders ($0.31 per share)	Dividends to common stockholders ($0.31 per share)	—		—		—		—		(72,052)		(72,052)		(442)		(72,494)		Dividends to common stockholders ($0.31 per share)	—		—		—		—		(47,097)		(47,097)		—		(47,097)		—
Balance at September 30, 2022		$	3,806	$	9,586,556	$	5,524	$	1,342,819	$	(3,211,492)	$	7,727,213	$	111,813	$	7,839,026

		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance at June 30, 2021		$	1,455	$	3,818,592	$	(13,580)	$	1,246,617	$	(2,956,830)	$	2,096,254	$	—	$	2,096,254
Issuance of common stock, net of issuance costs		20		61,442		—		—		—		61,462		—		61,462
Common stock redemptions		—		—		—		—		—		—		—		—
Share-based compensation		—		2,538		—		—		—		2,538		—		2,538
Net loss		—		—		—		(2,066)		—		(2,066)		—		(2,066)
Reclassification adjustments for losses included in net income (interest expense)		—		—		1,131		—		—		1,131		—		1,131
Losses arising during the period on interest rate swaps		—		—		36		—		—		36		—		36
Dividends to common stockholders ($0.3025 per share)		—		—		—		—		(44,022)		(44,022)		—		(44,022)
Balance at September 30, 2021		$	1,475	$	3,882,572	$	(12,413)	$	1,244,551	$	(3,000,852)	$	2,115,333	$	—	$	2,115,333
Balance at June 30, 2022																		Balance at June 30, 2022	$	1,516	$	4,002,526	$	(1,250)	$	1,314,515	$	(3,139,440)	$	2,177,867	$	—	$	2,177,867	$	—

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

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 Non-controlling Interest Total Equity
Balance at December 31, 2021 $ 1,505 $ 3,972,917 $ (9,981) $ 1,266,158 $ (3,045,483) $ 2,185,116 $ — $ 2,185,116
Issuance of common stock, net of issuance costs 8 22,847 — — — 22,855 — 22,855
Merger consideration transferred 2,289 5,574,174 — — — 5,576,463 110,702 5,687,165
Non-controlling interests acquired — — — — — — 1,266 1,266
Common stock redemptions — (248) — — — (248) — (248)
Share-based compensation 4 16,768 — — — 16,772 — 16,772
Redemption of non-controlling interest — 98 — — — 98 (97) 1
Net Income — — — 76,661 — 76,661 312 76,973
Reclassification adjustments for losses included in net income (interest expense)

— — 2,664 — — 2,664 8 2,672
Gains arising during the period on
interest rate swaps — — 12,841 — — 12,841 64 12,905
Dividends to common stockholders
($0.93 per share)
— — — — (166,009) (166,009) (442) (166,451)
Balance at September 30, 2022 $ 3,806 $ 9,586,556 $ 5,524 $ 1,342,819 $ (3,211,492) $ 7,727,213 $ 111,813 $ 7,839,026
Common
Stock Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income (Loss) Cumulative
Net Income Cumulative
Dividends Total
Stockholders’
Equity Non-controlling Interest Total Equity
Balance at December 31, 2020 $ 1,395 $ 3,635,341 $ (17,832) $ 1,199,499 $ (2,870,027) $ 1,948,376 $ — $ 1,948,376
Issuance of common stock, net of issuance costs 78 240,660 — — — 240,738 — 240,738
Common stock redemptions — (1,610) — — — (1,610) — (1,610)
Share-based compensation 2 8,181 — — — 8,183 — 8,183
Net income — — — 45,052 — 45,052 — 45,052
Reclassification adjustments for losses included in net income (interest expense)
— — 3,340 — — 3,340 — 3,340
Gains arising during the period on interest rate swaps
— — 2,079 — — 2,079 — 2,079
Dividends to common stockholders ($0.9075 per share) — — — — (130,825) (130,825) — (130,825)
Balance at September 30, 2021 $ 1,475 $ 3,882,572 $ (12,413) $ 1,244,551 $ (3,000,852) $ 2,115,333 $ — $ 2,115,333

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, 2021, are an integral part of these financial statements.

~~Table of Contents~~

~~HealthcareRealty Trust Incorporated~~

~~Condensed Consolidated Statements of Cash Flows~~

~~For the Nine Months Ended September 30, 2022 and 2021~~

~~Amounts in thousands~~

~~Unaudited~~

OPERATING ACTIVITIES
NINE MONTHS ENDED
September 30,
2022 2021
Net income $ 76,973 $ 45,052
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 267,889 150,904
Other amortization 11,875 2,721
Share-based compensation 16,772 8,183
Amortization of straight-line rent receivable (lessor) (12,267) (4,574)
Amortization of straight-line rent on operating leases (lessee) 2,016 1,115
Gain on sales of real estate properties (197,188) (41,046)
Loss on extinguishment of debt 2,520 —
Impairment of real estate properties (25) 16,581
Equity loss from unconsolidated joint ventures 776 404
Distributions from unconsolidated joint ventures 893 —
Non-cash interest from financing and notes receivable (1,901) (196)
Changes in operating assets and liabilities:
Other assets, including right-of-use-assets (19,230) (9,947)
Accounts payable and accrued liabilities 35,769 215
Other liabilities (58,213) 843
Net cash provided by operating activities 126,659 170,255
INVESTING ACTIVITIES
Acquisitions of real estate (376,924) (250,766)
Development of real estate (17,572) (2,020)
Additional long-lived assets (97,797) (69,647)
Funding of mortgages and notes receivable (3,441) —
Investments in unconsolidated joint ventures (99,586) (49,612)
Investment in financing receivable 167 (104,654)
Proceeds from sales of real estate properties and additional long-lived assets 870,806 112,029
Proceeds from notes receivable repayments 500 —
Cash assumed in Merger, including restricted cash for special dividend payment 1,149,681 —
Net cash provided by (used in) investing activities 1,425,834 (364,670)
FINANCING ACTIVITIES
Net (repayments)/borrowings on unsecured credit facility (154,400) 90,500
Borrowings on term loans 666,500 —
Repayment on term loan (718,500) —
Repayments of notes and bonds payable (18,880) (2,914)
Redemption of notes and bonds payable (2,184) —
Dividends paid (165,735) (130,825)
Special dividend paid in relation to the Merger (1,123,648) —
Net proceeds from issuance of common stock 22,851 240,779
Common stock redemptions (894) (2,014)
Distributions to non-controlling interest holders (442) —
Debt issuance and assumption costs (12,753) (252)
Payments made on finance leases — (162)
Net cash (used in) provided by financing activities (1,508,085) 195,112
Increase in cash and cash equivalents 44,408 697
Cash and cash equivalents at beginning of period 13,175 15,303
Cash and cash equivalents at end of period $ 57,583 $ 16,000

~~Table of Contents~~

Supplemental Cash Flow Information
NINE MONTHS ENDED
September 30,
2022 2021
Interest paid $ 83,382 $ 40,653
Invoices accrued for construction, tenant improvements and other capitalized costs $ 52,840 $ 11,663
Capitalized interest $ 848 $ 187


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interests
Balance at December 31, 2022	$	3,806	$	9,587,637	$	2,140	$	1,307,055	$	(3,329,562)	$	7,571,076	$	108,742	$	7,679,818	$	2,014
Issuance of common stock, net of issuance costs	—		78		—		—		—		78		—		78		—


Common stock redemptions	(1)		(1,595)		—		—		—		(1,596)		—		(1,596)		—
Share-based compensation	3		8,913		—		—		—		8,916		—		8,916		—

Net loss	—		—		—		(169,884)		—		(169,884)		(1,920)		(171,804)		—
Reclassification adjustments for gains included in net income (interest expense)	—		—		(5,635)		—		—		(5,635)		(68)		(5,703)		—
Gains arising during the period on interest rate swaps	—		—		12,823		—		—		12,823		158		12,981		—
Contributions from non-controlling interests	—		—		—		—		—		—		—		—		473
Dividends to common stockholders and distributions to non-controlling interest holders ($0.62 per share)	—		—		—		—		(236,379)		(236,379)		(2,894)		(239,273)		—
Balance at June 30, 2023	$	3,808	$	9,595,033	$	9,328	$	1,137,171	$	(3,565,941)	$	7,179,399	$	104,018	$	7,283,417	$	2,487

	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity		Non-controlling Interests		Total Equity		Redeemable Non-controlling Interests
Balance at December 31, 2021	$	1,505	$	3,972,917	$	(9,981)	$	1,266,158	$	(3,045,483)	$	2,185,116	$	—	$	2,185,116	$	—
Issuance of common stock, net of issuance costs	7		22,764		—		—		—		22,771		—		22,771		—
Common stock redemptions	—		(206)		—		—		—		(206)		—		(206)		—
Share-based compensation	4		7,051		—		—		—		7,055		—		7,055		—
Net income	—		—		—		48,357		—		48,357		—		48,357		—
Reclassification adjustments for losses included in net income (interest expense)	—		—		1,909		—		—		1,909		—		1,909		—
Gains arising during the period on interest rate swaps	—		—		6,822		—		—		6,822		—		6,822		—
Dividends to common stockholders ($0.62 per share)	—		—		—		—		(93,957)		(93,957)		—		(93,957)		—
Balance at June 30, 2022	$	1,516	$	4,002,526	$	(1,250)	$	1,314,515	$	(3,139,440)	$	2,177,867	$	—	$	2,177,867	$	—

Table of Contents

HealthcareRealty Trust Incorporated

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2023 and 2022

Amounts in thousands

Unaudited


OPERATING ACTIVITIES
	SIX MONTHS ENDED June 30,
	2023		2022
Net (loss) income	$	(171,804)	$	48,357
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	367,671		109,772
Other amortization	23,405		2,680
Share-based compensation	8,916		7,055
Amortization of straight-line rent receivable (lessor)	(19,313)		(3,292)
Amortization of straight-line rent on operating leases (lessee)	3,062		756
Gain on sales of real estate properties	(8,162)		(53,280)
Loss on extinguishment of debt	—		1,429
Impairment of real estate properties and credit loss reserves	86,637		(25)
Equity loss from unconsolidated joint ventures	797		652
Distributions from unconsolidated joint ventures	3,031		108

Non-cash interest from financing and notes receivable	(488)		(388)
Changes in operating assets and liabilities:
Other assets, including right-of-use-assets	(17,502)		540
Accounts payable and accrued liabilities	(38,601)		(3,166)
Other liabilities	16,673		2,923
Net cash provided by operating activities	254,322		114,121

INVESTING ACTIVITIES
Acquisitions of real estate	(39,301)		(287,004)
Development of real estate	(17,594)		(7,475)
Additional long-lived assets	(94,013)		(45,631)
Funding of mortgages and notes receivable	(11,503)		—
Investments in unconsolidated joint ventures	(3,824)		(49,599)
Investment in financing receivable	(780)		498
Proceeds from sales of real estate properties and additional long-lived assets	160,870		108,044



Net cash used in investing activities	(6,145)		(281,167)

FINANCING ACTIVITIES
Net (repayments) borrowings on unsecured credit facility	(31,000)		280,500



Repayments of notes and bonds payable	(1,340)		(18,224)

Redemption of notes and bonds payable	—		(2,184)
Dividends paid	(236,105)		(93,774)


Net proceeds from issuance of common stock	77		22,768
Common stock redemptions	(1,842)		(852)
Distributions to non-controlling interest holders	(2,546)		—


Debt issuance and assumption costs	(438)		—
Payments made on finance leases	(40)		(51)
Net cash (used in) provided by financing activities	(273,234)		188,183

(Decrease) increase in cash and cash equivalents	(25,057)		21,137
Cash and cash equivalents at beginning of period	60,961		13,175
Cash and cash equivalents at end of period	$	35,904	$	34,312

Supplemental Cash Flow Information
Interest paid	$	106,985	$	26,641
Mortgage note receivable taken in connection with sale of real estate	$	45,000	$	—
Invoices accrued for construction, tenant improvements and other capitalized costs	$	30,956	$	18,874
Capitalized interest	$	1,282	$	145

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, 2022, are an integral part of these financial statements.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Business Overview

Healthcare Realty Trust Incorporated 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 ~~September~~June 30, ~~2022,~~2023, the Company had gross investments of approximately ~~$14.2~~$13.9 billion in ~~695~~680 wholly-owned real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property. The Company's ~~695~~680 real estate properties are located in 35 states and total approximately ~~40.7~~39.8 million square feet. The Company provided leasing and property management services to approximately ~~38.9~~39.3 million square feet nationwide. As

In addition, as of ~~September~~June 30, ~~2022,~~2023, the Company had a weighted average ownership interest of approximately ~~49%~~44% in 3334 real estate properties held in joint ventures. See Note 3 below for more details regarding the Company's unconsolidated joint ventures.

Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the Company's Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm’s review.

Basis of Presentation

For purposes of this Quarterly Report on Form 10-Q, references to the “Company” are to Legacy HR for periods prior to the closing of the Merger and thereafter to Legacy HR and Legacy HTA as the combined company after giving effect to the Merger. The Merger is described in more detail in Note 2 to these Condensed Consolidated Financial Statements. 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 and specific disclosures ~~incorporated~~included as a result of the Merger, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. All material intercompany transactions and balances have been eliminated in consolidation.

This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. 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, ~~2022~~2023 for many reasons including, but not limited to, ~~the Merger (as discussed in more detail in Note 2 below),~~ acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and uncertainties.

Principles of Consolidation

The Company’s Condensed Consolidated Financial Statements include ~~as of September 30, 2022,~~ the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. The interests not owned by the Company are presented as non-controlling interests on the accompanying Condensed Consolidated Balance Sheets and Statements of Operations, Condensed Consolidated Statements of Comprehensive Income, and Condensed Consolidated Statements of Equity. GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification (“ASC”) Topic 810, Consolidation broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic ~~performance;~~performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary ~~beneficiary.~~ beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Condensed Consolidated Financial Statements.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, ~~and~~ the disposition of all or a portion of an interest held by the primary ~~beneficiary.~~beneficiary, or changes in facts and circumstances that impact the power to direct activities of the VIE that most significantly impacts economic performance. The Company performs this analysis on an ongoing basis. ~~As of September 30, 2022,~~

For property holding entities not determined to be VIEs, the Company

~~Table of Contents~~

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

~~identified three~~ consolidates such entities ~~that qualified as VIE's because the limited partners~~ in ~~these partnerships, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. Two~~which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities ~~are consolidated and one~~in which the Company owns less than 100% of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements.

Healthcare Realty Holdings, L.P., a Delaware limited partnership (the "OP"), is ~~unconsolidated.~~

98.8% owned by the Company. Holders of operating partnership units (“OP Units”) are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity on the accompanying Condensed Consolidated Balance Sheets. Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of ~~September~~June 30, ~~2022,~~2023, there were approximately ~~4.0~~4.7 million OP Units, or ~~1.1%,~~1.2% of OP ~~Units~~units issued and outstanding, held by non-controlling interest holders. Additionally, the Company is the primary beneficiary of this VIE. Accordingly, the Company consolidates the interests in the OP. ~~However, because the Company holds what is deemed to be significantly all of the OP, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs.~~

For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation.

As of ~~September~~June 30, ~~2022,~~2023, the Company had four consolidated VIEs in addition to the OP where it is the primary beneficiary of the VIE based on the combination of operational control and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate:


(dollars in thousands)	JUNE 30, 2023
Assets:
Net real estate investments	$	61,980
Cash and cash equivalents	2,107
Receivables and other assets	2,015
Total assets	$	66,102
Liabilities:
Accrued expenses and other liabilities	$	14,058
Total equity	52,044
Total liabilities and equity	$	66,102

As of June 30, 2023, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture. The Company does not have the power or economic interests to direct the activities of the VIEs on a stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary. As a result, the Company accounts for the two notes receivables as amortized cost and a joint venture arrangement under the equity method. See below for additional information regarding the Company's unconsolidated VIEs.


(dollars in thousands) ORIGINATION DATE	LOCATION	SOURCE	CARRYING AMOUNT		MAXIMUM EXPOSURE TO LOSS
2021	Houston, TX 1	Note receivable	$	30,445	$	31,150
2021	Charlotte, NC 1	Note receivable	5,691		6,000
2022	Texas 2	Joint venture	64,758		64,758

1Assumed mortgage note receivable in connection with the Merger.

2Includes investments in seven properties.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

As of June 30, 2023, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities. See Note 3 below for more details regarding the Company's unconsolidated joint ventures.

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.

Reclassifications

Certain reclassifications have been made on the Company's prior year Condensed Consolidated Balance Sheet to conform to current year presentation. Previously, the Company's Lease intangibles were included in Building, improvements and lease intangibles and Goodwill was included with Other assets, net. These amounts are now classified as separate line items on the Company's Condensed Consolidated Balance Sheets.

Redeemable Non-Controlling Interests

The Company accounts for redeemable equity securities in accordance with ASC Topic 480: Accounting for Redeemable Equity Instruments, which requires that equity securities redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity. The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheets. Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value. We measure the redemption value and record an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest. As of June 30, 2023, the Company had redeemable non-controlling interests of $2.5 million.

Asset Impairment

The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever the occurrence of an event or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its tenants. During the three and six months ended June 30, 2023, the Company recognized real estate impairments totaling $55.2 million and $81.4 million, respectively, as a result of completed or planned disposition activity.

Investments in Leases - Financing Receivables, Net

In accordance with ~~Accounting Standards Codification ("ASC") 842,~~ASC Topic 842: Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC ~~310 “Receivables”.~~Topic 310: Receivables. See below for additional information regarding the Company's financing receivables.

~~During the first quarter~~


(dollars in thousands) ORIGINATION DATE	LOCATION	INTEREST RATE	CARRYING VALUE as of JUNE 30, 2023
May 2021	Poway, CA	5.73%	$	113,967
November 2021	Columbus, OH	6.48%	7,348
			$	121,315

Table of 2022, the Company reclassified the two medical office buildings in Nashville, Tennessee that were acquired in separate sale-leaseback transactions in the fourth quarter of 2021. The leases with the sellers commenced in the first quarter, which resulted in the allocation of the financing receivable totaling $73.9 million to land and building and improvements.Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Real Estate Notes Receivable

Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, a mortgage or deed of trust, and/or corporate guarantees. Real estate notes receivable are intended to be held-to-maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses. As of ~~September~~June 30, ~~2022,~~2023, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled ~~$79.0~~$151.5 million.


(dollars in thousands)	ORIGINATION	MATURITY	STATED INTEREST RATE		MAXIMUM LOAN COMMITMENT		OUTSTANDING as of JUNE 30, 2023		ALLOWANCE FOR CREDIT LOSSES		FAIR VALUE DISCOUNT AND FEES		CARRYING VALUE as of JUNE 30, 2023
Mezzanine loans
Texas	6/24/2021	6/24/2024	8.00	%	$	54,119	$	54,119	$	(5,196)	$	(3,067)	$	45,856

Mortgage loans
Texas	6/30/2021	12/31/2023	7.00	%	31,150		31,150		—		(705)		30,445
North Carolina	12/22/2021	12/22/2024	8.00	%	6,000		6,000		—		(309)		5,691
Florida	5/17/2022	2/27/2026	6.00	%	65,000		24,556		—		(55)		24,501
California	3/30/2023	3/29/2026	6.00	%	45,000		45,000		—		—		45,000
					147,150		106,706		—		(1,069)		105,637

					$	201,269	$	160,825	$	(5,196)	$	(4,136)	$	151,493

Allowance for Credit Losses

Pursuant to ASC Topic 326, Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under ASC Topic 326. The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors.

In its assessment of current expected credit losses for real estate notes receivable, the Company utilizes past payment history of its borrowers, current economic conditions, and forecasted economic conditions through the maturity date of each note to estimate a probability of default and a resulting loss for each real estate note receivable. During the six months ended June 30, 2023, the Company determined that the risk of credit loss on its mezzanine loans was no longer remote. Consequently, the Company recorded a credit loss reserve of $5.2 million for the six months ended June 30, 2023.

The following table summarizes the Company's allowance for credit losses on real estate notes receivable:


Dollars in thousands	June 30, 2023		December 31, 2022

Allowance for credit losses, beginning of period	$	—	$	—
Credit loss reserves	5,196		—
Allowance for credit losses, end of period	$	5,196	$	—

Interest Income

Income from Lease Financing Receivables

~~For the three and nine months ended September 30, 2022, the~~The Company recognized the related income from two financing receivables totaling $2.1 million and $4.2 million, respectively, for the three and six months ended June 30, 2023, and $2.0 million and ~~$5.9~~$3.9 million, respectively for the three and six months ended June 30, 2022, based on an imputed interest rate over the

~~Table of Contents~~

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

terms of the applicable lease. As a result, the interest recognized from the financing receivable in any particular period will not equal the cash payments from the lease ~~agreement.~~agreement in that period.

Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Amortization of these amounts will be recognized as a reduction to Income from financing receivable, net over the life of the lease.

Income from Real Estate Notes Receivable

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company recognized interest income of ~~$1.3~~$2.2 million and $4.3 million, respectively, related to real estate notes receivable. ~~Unpaid~~The Company recognizes interest income on an accrual basis unless the Company has determined that collectability of contractual amounts is ~~capitalized,~~not reasonably assured, at which point the note is placed on non-accrual status and interest income is recognized on a cash basis. As of June 30, 2023, the Company placed two of its real estate notes receivable with principal balances of $48.9 million on non-accrual status and accordingly did not recognize any ~~unpaid~~ interest ~~due on~~income for the ~~maturity date.~~three and six month periods ended June 30, 2023.

Revenue from Contracts with Customers ~~(Topic~~(ASC Topic 606)

The Company recognizes certain revenue under the core principle of Topic 606. This topic 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.

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


		THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,					THREE MONTHS ENDED June 30,				SIX MONTHS ENDED June 30,
in thousands	in thousands	2022		2021		2022		2021		in thousands	2023		2022		2023		2022
Type of Revenue	Type of Revenue									Type of Revenue
Parking income	Parking income	$	2,428	$	2,187	$	6,100	$	5,725	Parking income	$	2,370	$	1,919	$	4,761	$	3,672

Management fee income 1	Management fee income 1	1,426		723		2,864		1,381		Management fee income 1	1,597		783		3,570		1,438
Miscellaneous	Miscellaneous	203		59		306		241		Miscellaneous	263		36		516		103
		$	4,057	$	2,969	$	9,270	$	7,347		$	4,230	$	2,738	$	8,847	$	5,213

1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement.

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.

~~New Accounting Pronouncements~~

~~Accounting Standards Update No. 2020-04~~

~~On March 12, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 and Term SOFR-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. Management continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

~~Table of Contents~~

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

Note 2. Merger with HTA

On July 20, 2022 (the “Closing Date”), pursuant to the Agreement and Plan of Merger dated as of February 28, 2022 (the “Merger Agreement”), by and among Healthcare Realty Trust Incorporated, a Maryland corporation (now known as HRTI, LLC, a Maryland limited liability company) (“Legacy HR”), Healthcare Trust of America, Inc., a Maryland corporation (now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), ~~Healthcare Trust of America Holdings, LP, a Delaware limited partnership (now known as Healthcare Realty Holdings, L.P.) (the “OP”),~~the OP, and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”).

On the Closing Date, each outstanding share of Legacy HR common stock, $0.01 par value per share (the “Legacy HR Common Stock”), was cancelled and converted into the right to receive one share of Legacy HTA class A common stock at a fixed ratio of 1.00 to 1.00. Per the terms of the Merger Agreement, Legacy HTA declared a special dividend of $4.82 (the “Special Dividend”) for each outstanding share of Legacy HTA class A common stock, $0.01 par value per share ( the “Legacy HTA Common Stock”), and the OP declared a corresponding distribution to the holders of its partnership units, payable to Legacy HTA stockholders and OP unitholders of record on July 19, 2022.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Immediately following the Merger, Legacy HR converted to a Maryland limited liability company and changed its name to HRTI, LLC and Legacy HTA changed its name to “Healthcare Realty Trust Incorporated”. In addition, the equity interests of Legacy HR were contributed by Legacy HTA by means of a contribution and assignment agreement to the OP, ~~such that~~and Legacy HR became a wholly-owned subsidiary of the OP. As a result, Legacy HR became a part of an umbrella partnership REIT (“UPREIT”) structure, which is intended to align the corporate structure of the combined company after giving effect to the Merger and UPREIT reorganization (the “Combined Company”). The ~~combined company~~Company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $0.01 par value per share, trade on the New York Stock Exchange ~~(the “NYSE”)~~ under the ticker symbol “HR”.

The primary reason for the Merger was to expand the Company’s size, scale, diversification, liquidity and access to capital, in order to further enhance its competitive advantages and accelerate its investment activities.

For accounting purposes, the Merger was treated as a “reverse acquisition” in which Legacy HTA was considered the legal acquirer and Legacy HR was considered the accounting acquirer based on various factors, including, but not limited to: (i) the composition of the board of directors of the ~~Combined Company,~~combined company following the Merger, (ii) the composition of senior management of the ~~Combined Company,~~combined company following the Merger, and (iii) the premium transferred to the Legacy HTA stockholders. As a result, the historical financial statements of the accounting acquirer, Legacy HR, became the historical financial statements of the ~~Combined~~ Company.

The acquisition was accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires, among other things, the assets acquired and the liabilities assumed and non-controlling interests, if any, to be recognized at their acquisition date fair value.

The implied consideration transferred on the Closing Date is as follows:


Dollars in thousands, except for per share data
Shares of Legacy HTA Common Stock outstanding as of July 20, 2022 as adjusted(a)	228,520,990
Exchange ratio	1.00
Implied shares of Legacy HR Common Stock issued	228,520,990
Adjusted closing price of Legacy HR Common Stock on July 20, 2022(b)	$	24.37
Value of implied Legacy HR Common Stock issued	$	5,569,057
Fair value of Legacy HTA restricted stock awards attributable to pre-Merger services(c)	7,406
Consideration transferred	$	5,576,463

(a) ~~Includes 228,520,990 shares of Legacy HTA Common Stock as of July 20, 2022.~~ The number of shares of Legacy HTA Common Stock presented above was based on 228,857,717 total shares of Legacy HTA Common Stock outstanding as of the Closing Date, less 192 Legacy HTA fractional shares that were ~~paid~~cancelled in lieu of cash and less 336,535 shares of Legacy HTA restricted stock (net of 215,764 shares of Legacy HTA restricted stock withheld). For accounting purposes, these shares ~~and units~~ were converted to Legacy HR Common Stock, at an exchange ratio of 1.00 share of Legacy HR Common Stock per share of Legacy HTA Common Stock.

(b) For accounting purposes, the fair value of Legacy HR Common Stock issued to former holders of Legacy HTA Common Stock was based on the per share closing price of Legacy HR Common Stock on July 20, 2022.

~~Table of Contents~~

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

(c) Represents the fair value of Legacy HTA restricted shares which fully vested prior to the closing of the Merger or became fully vested as a result of the closing of the Merger and which are attributable to pre-combination services.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Preliminary Purchase Price Allocation

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the Closing Date:


~~Dollars in thousands~~
~~ASSETS~~
~~Real estate investments~~
~~Land~~	$	~~985,926~~
~~Buildings and improvements~~	~~6,960,418~~
~~Lease intangible assets(a)~~	~~831,920~~
~~Financing lease right-of-use assets~~	~~9,874~~
~~Construction in progress~~	~~10,071~~
~~Land held for development~~	~~46,538~~
~~Total real estate investments~~	$	~~8,844,747~~
~~Assets held for sale, net~~	~~707,442~~
~~Investments in unconsolidated joint ventures~~	~~67,892~~
~~Cash and cash equivalents~~	~~26,034~~
~~Restricted cash~~	~~1,123,647~~
~~Operating lease right-of-use assets~~	~~198,261~~
~~Other assets, net~~ ~~(b) (c)~~	~~209,163~~
~~Total assets acquired~~	$	~~11,177,186~~

~~LIABILITIES~~
~~Notes and bonds payable~~	$	~~3,991,300~~
~~Accounts payable and accrued liabilities~~	~~1,227,570~~
~~Liabilities of assets held for sale~~	~~28,677~~
~~Operating lease liabilities~~	~~173,948~~
~~Financing lease liabilities~~	~~10,720~~
~~Other liabilities~~	~~203,210~~
~~Total liabilities assumed~~	$	~~5,635,425~~
~~Net identifiable assets acquired~~	$	~~5,541,761~~
~~Non-controlling interest~~	$	~~110,702~~
~~Goodwill~~	$	~~145,404~~
~~(a) The weighted average amortization period for the acquired lease intangible assets is 5.5 years.~~
~~(b) Includes $34.6 million of gross contractual accounts receivable, which approximates fair value, of which the Company preliminarily did not expect $12.3 million to be collected as of Closing Date.~~
(c) Includes $78.7 million of gross contractual real estate notes receivable, the fair value of which was $74.8 million, and the Company preliminarily expects to collect substantially all of the real estate notes receivable proceeds as of the Closing Date.


Dollars in thousands	PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE		CUMULATIVE MEASUREMENT PERIOD ADJUSTMENTS		PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE (as adjusted)
ASSETS
Real estate investments
Land	$	985,926	$	18,359	$	1,004,285
Buildings and improvements	6,960,418		(119,135)		6,841,283
Lease intangible assets(a)	831,920		1,839		833,759
Financing lease right-of-use assets	9,874		3,146		13,020
Construction in progress	10,071		(6,744)		3,327
Land held for development	46,538		—		46,538
Total real estate investments	$	8,844,747	$	(102,535)	$	8,742,212
Assets held for sale, net	707,442		(7,946)		699,496
Investments in unconsolidated joint ventures	67,892		—		67,892
Cash and cash equivalents	26,034		11,403		37,437
Restricted cash	1,123,647		(1,247)		1,122,400
Operating lease right-of-use assets	198,261		16,370		214,631
Other assets, net (b) (c)	209,163		(3,840)		205,323
Total assets acquired	$	11,177,186	$	(87,795)	$	11,089,391

LIABILITIES
Notes and bonds payable	$	3,991,300	$	—	$	3,991,300
Accounts payable and accrued liabilities	1,227,570		17,374		1,244,944
Liabilities of assets held for sale	28,677		(3,939)		24,738
Operating lease liabilities	173,948		10,173		184,121
Financing lease liabilities	10,720		(855)		9,865
Other liabilities	203,210		(8,909)		194,301
Total liabilities assumed	$	5,635,425	$	13,844	$	5,649,269
Net identifiable assets acquired	$	5,541,761	$	(101,639)	$	5,440,122
Non-controlling interest	$	110,702	$	—	$	110,702
Goodwill	$	145,404	$	101,639	$	247,043
(a) The weighted average amortization period for the acquired lease intangible assets is approximately 6 years.
(b) Includes $15.9 million of contractual accounts receivable, which approximates fair value.
(c) Includes $78.7 million of gross contractual real estate notes receivable, the fair value of which was $74.8 million, and the Company preliminarily expects to collect substantially all of the real estate notes receivable proceeds as of the Closing Date.

The cumulative measurement period adjustments recorded through June 30, 2023 primarily resulted from updated valuations related to the Company’s real estate assets and liabilities and additional information obtained by the Company related to the properties acquired in the Merger and their respective tenants, and resulted in an increase to goodwill of $101.6 million.

As of ~~September~~June 30, ~~2022,~~2023, the Company had not finalized the determination of fair value of certain tangible and intangible assets acquired and liabilities assumed, including, but not limited to real estate assets and liabilities, notes receivables and goodwill. As such, the assessment of fair value of assets acquired and liabilities assumed is preliminary and was based on information that was available at the time the Condensed Consolidated Financial Statements were prepared. The finalization of the purchase accounting assessment could result in material changes into the Company’s determination of the fair value of assets acquired and liabilities assumed, which will be recorded as measurement period adjustments in the period in which they are identified, up to one year from the Closing Date.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

A preliminary estimate of approximately ~~$145.4~~$247.0 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed. The recognized goodwill is attributable to expected synergies and benefits arising from the Merger, including anticipated general and administrative cost savings and potential economies of scale benefits in both tenant

~~Table of Contents~~

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

and vendor relationships following the closing of the Merger. None of the goodwill recognized is expected to be deductible for tax purposes.

~~Merger related~~Merger-related Costs

~~In conjunction with the Merger, the~~The Company incurred Merger-related costs of ~~$79.4~~$(15.7) million and $(10.8) million, respectively, during the three and six months ended ~~September~~June 30, ~~2022 and $92.6 million during the nine months ended September 30, 2022,~~2023, which were included within Merger-related costs in results of operations. The Merger-related costs primarily consist of legal, consulting, severance, and banking services and ~~other Merger-related costs.~~included a refund of $17.8 million for transfer taxes paid during the year ended December 31, 2022.

~~Unaudited Pro Forma Financial Information~~Subsequent Activity

As of the date of these financial statements, the purchase price allocation of fair value was finalized with no additional adjustments. The ~~Condensed Consolidated Statements of Income for~~Company determined the ~~three months ended September 30, 2022 include $157.4 million of revenues and $20.6 million~~final fair value of net ~~loss and for~~assets acquired based on information available during the nine months ended September 30, 2022 include $157.4 million of revenues and $20.6 million of net loss associated with the results of operations of Legacy HTA from the Merger closing date to September 30, 2022.

The following unaudited pro forma information presents a summary of our Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2022 and 2021, as if the Merger had occurred on January 1, 2021. Adjustments in the pro forma financial information include but are not limited to the following:

~~(i) additional depreciation and amortization expense related to the acquired tangible and intangible assets,~~

~~(ii) additional interest expense on transaction-related borrowings, including assumed debt in connection with the Merger,~~

~~(iii) additional rental income related to the assumed above and below-market leases, and straight-line rent and~~

~~(iv) Merger-related costs and other one-time, non-recurring costs.~~

~~The pro forma financial information excludes adjustments for estimated cost synergies or other effects of the integration of the Merger.~~

The following pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

THREE MONTHS ENDED
September 30, NINE MONTHS ENDED
September 30,
Dollars in thousands 2022 2021 2022 2021
Total revenues $ 352,744 $ 332,465 $ 1,054,809 $ 982,192
Net income $ 115,496 $ (14,930) $ 160,120 $ (79,754)

measurement period.

~~Table of Contents~~

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

Note 3. Real Estate Investments

~~2022 Company Acquisitions~~2023 Acquisition Activity

The following table details the Company's ~~acquisitions~~real estate acquisition activity for the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~2023:

Dollars in thousands DATE ACQUIRED PURCHASE PRICE
CASH
CONSIDERATION 1
REAL
ESTATE 2
OTHER 3
SQUARE FOOTAGE
Dallas, TX 2/11/22 $ 8,175 $ 8,185 $ 8,202 $ (17) 18,000
San Francisco, CA 4
3/7/22 114,000 112,986 108,687 4,299 166,396
Q1 2022 subtotal 122,175 121,171 116,889 4,282 184,396
Atlanta, GA 4/7/22 6,912 7,054 7,178 (124) 21,535
Denver, CO 4/13/22 6,320 5,254 5,269 (15) 12,207
Colorado Springs, CO 5
4/13/22 13,680 13,686 13,701 (15) 25,800
Seattle, WA 4/28/22 8,350 8,334 8,370 (36) 13,256
Houston, TX 4/28/22 36,250 36,299 36,816 (517) 76,781
Los Angeles, CA 4/29/22 35,000 35,242 25,400 9,842 34,282
Oklahoma City, OK 4/29/22 11,100 11,259 11,334 (75) 34,944
Raleigh, NC 4
5/31/22 27,500 26,710 27,127 (417) 85,113
Tampa, FL 5
6/9/22 18,650 18,619 18,212 407 55,788
Q2 2022 subtotal 163,762 162,457 153,407 9,050 359,706
Seattle, WA 8/1/22 4,850 4,806 4,882 (76) 10,593
Raleigh, NC 8/9/22 3,783 3,878 3,932 (54) 11,345
Jacksonville, FL 8/9/22 18,195 18,508 18,583 (75) 34,133
Atlanta, GA 8/10/22 11,800 11,525 12,038 (513) 43,496
Denver, CO 8/11/22 14,800 13,902 13,918 (16) 34,785
Raleigh, NC 8/18/22 11,375 10,670 10,547 123 31,318
Nashville, TN 9/15/22 21,000 20,764 20,572 192 61,932
Austin, TX 9/29/22 5,450 5,449 5,572 (123) 15,000
Q3 2022 subtotal 91,253 89,502 90,044 (542) 242,602
Total real estate acquisitions $ 377,190 $ 373,130 $ 360,340 $ 12,790 786,704

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

2~~Excludes financing right of use assets.~~

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

4~~Includes three properties.~~

5~~Includes two properties.~~

~~Subsequent to September 30, 2022, the Company acquired the following property:~~
Dollars in thousands DATE ACQUIRED PURCHASE PRICE SQUARE FOOTAGE
Jacksonville, FL 10/12/22 $ 3,600 6,200

~~2022 Joint Venture Acquisitions~~

The following table details the joint venture acquisitions for the nine months ended September 30, 2022. These joint venture acquisitions are not consolidated for purposes of the Company's Condensed Consolidated Financial Statements.

Dollars in thousands DATE ACQUIRED PURCHASE PRICE
CASH
CONSIDERATION 1
REAL
ESTATE
OTHER 2
SQUARE FOOTAGE COMPANY OWNERSHIP %
San Francisco, CA 3
3/7/22 $ 67,175 $ 66,789 $ 65,179 $ 1,610 110,865 50 %
Los Angeles, CA 4
3/7/22 33,800 32,384 32,390 (6) 103,259 50 %
Total joint venture acquisitions $ 100,975 $ 99,173 $ 97,569 $ 1,604 214,124


Dollars in thousands	DATE ACQUIRED	PURCHASE PRICE		CASH CONSIDERATION 1		REAL ESTATE		OTHER 2		SQUARE FOOTAGE
Tampa, FL	3/10/23	$	31,500	$	30,499	$	30,596	$	(97)	115,867

1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.

2Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.

In the second quarter of 2023, the Company entered into a joint venture agreement for the development of a medical office building in Scottsdale, Arizona. The Company holds a 90% interest in the joint venture and determined the arrangement meets the criteria to be consolidated. The joint venture acquired an $8.8 million land parcel to be developed with the Company contributing cash of $8.3 million.

~~Includes~~

Subsequent to June 30, 2023, the Company acquired the following property:


Dollars in thousands	DATE ACQUIRED	PURCHASE PRICE		SQUARE FOOTAGE
Colorado Springs, CO	7/28/23	$	11,450	42,770

Unconsolidated Joint Ventures

The Company's investment in and loss recognized for the three ~~properties.~~and six months ended June 30, 2023 and 2022 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

4~~Includes two properties.~~

~~Unconsolidated Joint Ventures~~

The Company's investment in and loss recognized for the three and nine months ended September 30, 2022 and 2021 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:


		THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,					THREE MONTHS ENDED June 30,				SIX MONTHS ENDED June 30,
Dollars in thousands	Dollars in thousands	2022		2021		2022		2021		Dollars in thousands	2023		2022		2023		2022

Investments in unconsolidated joint ventures, beginning of period	Investments in unconsolidated joint ventures, beginning of period	$	210,781	$	117,935	$	161,942	$	73,137	Investments in unconsolidated joint ventures, beginning of period	$	327,746	$	211,195	$	327,248	$	161,942
New investments during the period 1		117,880		4,593		167,479		49,612
New investment during the period 1										New investment during the period 1	—		—		3,824		49,599
Equity loss recognized during the period	Equity loss recognized during the period	(124)		(183)		(776)		(404)		Equity loss recognized during the period	(17)		(307)		(797)		(652)

Owner distributions	Owner distributions	(785)		—		(893)		—		Owner distributions	(484)		(107)		(3,030)		(108)
Investments in unconsolidated joint ventures, end of period 1		$	327,752	$	122,345	$	327,752	$	122,345
Investments in unconsolidated joint ventures, end of period										Investments in unconsolidated joint ventures, end of period	$	327,245	$	210,781	$	327,245	$	210,781

1~~Includes unconsolidated~~In 2023, this was an additional investment in an existing joint ~~ventures acquired as part of~~venture in which the ~~Merger, as well as investments in two joint ventures representing~~Company owns a ~~20% and~~ 40% ownership ~~interest~~interest. The investment consisted of a sale of a property in ~~portfolios in Los Angeles, California and~~ Dallas, Texas ~~respectively. Also, see 2022~~to the joint venture. See 2023 Real Estate Asset Dispositions below for additional information.

~~2022~~2023 Real Estate Asset Dispositions

The following table details the Company's dispositions for the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~2023:

Dollars in thousands DATE DISPOSED SALE PRICE CLOSING ADJUSTMENTS NET PROCEEDS NET REAL ESTATE INVESTMENT
OTHER (INCLUDING RECEIVABLES) 1
GAIN/(IMPAIRMENT) SQUARE FOOTAGE
Loveland, CO 2
2/24/22 $ 84,950 $ (45) $ 84,905 $ 40,095 $ 4 $ 44,806 150,291
San Antonio, TX 2
4/15/22 25,500 (2,272) 23,228 14,381 284 8,563 201,523
GA, FL, PA 3, 8
7/29/22 133,100 (8,109) 124,991 124,991 — — 316,739
GA, FL, TX 5, 8
8/4/22 160,917 (5,893) 155,024 151,819 3,205 — 343,545
Los Angeles, CA 3, 6, 8
8/5/22 134,845 (3,102) 131,743 131,332 411 — 283,780
Dallas, TX 5, 7, 8
8/30/22 114,290 (682) 113,608 113,608 — — 189,385
Indianapolis, IN 4, 9
8/31/22 238,845 (5,846) 232,999 84,767 4,324 143,908 506,406
Total dispositions $ 892,447 $ (25,949) $ 866,498 $ 660,993 $ 8,228 $ 197,277 1,991,669


Dollars in thousands	DATE DISPOSED	SALE PRICE		CLOSING ADJUSTMENTS		COMPANY-FINANCED MORTGAGE NOTES		NET PROCEEDS		NET REAL ESTATE INVESTMENT		OTHER (INCLUDING RECEIVABLES) 1		GAIN/(IMPAIRMENT)		SQUARE FOOTAGE
Tampa, FL & Miami, FL2	1/12/23	$	93,250	$	(5,875)	$	—	$	87,375	$	87,302	$	(888)	$	961	224,037
Dallas, TX 3	1/30/23	19,210		(141)		—		19,069		18,986		43		40		36,691
St. Louis, MO	2/10/23	350		(18)		—		332		398		—		(66)		6,500
Los Angeles, CA	3/23/23	21,000		(526)		—		20,474		20,610		52		(188)		37,165
Los Angeles, CA 4	3/30/23	75,000		(8,079)		(45,000)		21,921		88,624		(803)		(20,900)		147,078
Los Angeles, CA 5	5/12/23	3,300		(334)		—		2,966		3,268		—		(302)		—
Albany, NY	6/30/23	10,000		(1,229)		—		8,771		2,613		(1,040)		7,198		40,870

Total dispositions		$	222,110	$	(16,202)	$	(45,000)	$	160,908	$	221,801	$	(2,636)	$	(13,257)	492,341

1Includes straight-line rent receivables, leasing commissions and lease inducements.

2Includes two ~~properties.~~properties, sold in two separate transactions to the same buyer on the same date.

3~~Includes four properties.~~The Company sold this property to a joint venture in which it retained a 40% interest. Sales price and square footage reflect the total sales price paid by the joint venture and total square footage of the property.

4~~Includes five properties.~~The Company entered into a mortgage note agreement with the buyer for $45 million.

5~~Includes six properties.~~

6~~Values and square feet are represented at 100%.~~ The Company ~~retained~~sold a ~~20% ownership interest in the joint venture that purchased these properties.~~

7~~Values and square feet are represented at 100%. The Company retained a 40% ownership interest in the joint venture that purchased these properties.~~

8~~These properties were acquired as part of the Merger and were included as assets held for sale in the purchase price allocation.~~

9~~Two of the five properties included in this portfolio were acquired in the Merger and were included as assets held for sale in the purchase price allocation.~~land parcel totaling 0.34 acres.

~~Subsequent to September 30, 2022, the Company disposed of the following properties:~~

Dollars in thousands DATE DISPOSED SALE PRICE SQUARE FOOTAGE
Dallas, TX 1, 2
10/4/22 $ 104,025 291,328
Houston, TX 2
10/21/22 32,000 134,910
Total dispositions $ 136,025 426,238

1~~Includes two properties.~~

2~~These properties were classified as assets held for sale as of September 30, 2022.~~

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Subsequent to June 30, 2023, the Company disposed of the following property:


Dollars in thousands	DATE DISPOSED	SALES PRICE		SQUARE FOOTAGE
Houston, TX	8/2/23	$	8,320	57,170

Assets Held for Sale

The Company had ~~six~~three properties classified as assets held for sale as of ~~September~~June 30, ~~2022 and no properties~~2023. The net real estate assets held for sale includes $3.6 million of impairment charges for the six months ended June 30, 2023. The Company had one property classified as assets held for sale as of December 31, ~~2021.~~2022, which was sold in the first quarter of 2023. The table below reflects the assets and liabilities ~~of the properties~~ classified as held for sale as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


Dollars in thousands	Dollars in thousands	September 30, 2022		December 31, 2021		Dollars in thousands	June 30, 2023		December 31, 2022
Balance Sheet data:	Balance Sheet data:					Balance Sheet data:
Land	Land	$	10,594	$	—	Land	$	205	$	1,700
Building and improvements	Building and improvements	199,821		—		Building and improvements	1,736		15,164
Lease intangibles	Lease intangibles	11,389		—		Lease intangibles	2,242		1,986
Personal property		211		—
Financing lease right-of-use assets		307		—

		222,322		—			4,183		18,850
Accumulated depreciation	Accumulated depreciation	(47,051)		—		Accumulated depreciation	(4,183)		—
Real estate assets held for sale, net	Real estate assets held for sale, net	175,271		—		Real estate assets held for sale, net	—		18,850
Operating lease right-of-use assets		1,193		—

Other assets, net	Other assets, net	8,610		57		Other assets, net	151		43
Assets held for sale, net	Assets held for sale, net	$	185,074	$	57	Assets held for sale, net	$	151	$	18,893

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	3,768	$	169	Accounts payable and accrued liabilities	$	222	$	282
Operating lease liabilities		$	864	$	—
Financing lease liabilities		$	2,427	$	—

Other liabilities	Other liabilities	3,585		125		Other liabilities	—		155
Liabilities of assets held for sale	Liabilities of assets held for sale	$	10,644	$	294	Liabilities of assets held for sale	$	222	$	437

Note 4. Leases

Lessor Accounting

The Company’s properties generally were leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through ~~2040.~~2052. Some leases provide ~~for~~tenants with fixed rent renewal terms ~~in addition to~~while others have 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 single-tenant net leases generally 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 the consumer price index ("CPI"). 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~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$298.9~~$329.7 million and ~~$578.1~~$653.8 million, respectively. Lease income for the Company's operating leases recognized for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$131.7~~$140.6 million and ~~$388.6~~$279.1 million, respectively.

On March 30, 2022, the Company executed a lease as a ground lessor for a 1.9 acre parcel of land in Texas previously recorded in land held for development. The lease is classified as a sales-type lease under Topic 842 as the present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset. The land value of $1.8 million was reclassified from Land held for development to Other assets.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of ~~September~~June 30, ~~2022~~2023 were as follows:


Dollars in thousands	Dollars in thousands	OPERATING		Dollars in thousands	OPERATING
2022		$	243,946
2023	2023	937,733		2023	$	467,393
2024	2024	816,000		2024	861,323
2025	2025	702,251		2025	751,369
2026	2026	605,417		2026	648,352
2027 and thereafter		2,242,792
2027				2027	536,874
2028 and thereafter				2028 and thereafter	1,950,019
		$	5,548,139		$	5,215,330

Lessee Accounting

As of ~~September~~June 30, ~~2022,~~2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of ~~September~~June 30, ~~2022,~~2023, the Company had ~~243~~241 properties totaling ~~17.8~~17.5 million square feet that were held under ground leases. Some of the ground lease 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 2119. Any rental increases related to the Company’s ground leases are generally either stated or based on CPI. The Company had 75 prepaid ground leases as of ~~September~~June 30, ~~2022.~~2023. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately ~~$0.5~~$0.3 million and $0.1 million of the Company’s rental expense for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$0.8~~$0.7 million and ~~$0.4~~$0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company’s future lease payments (primarily for its ~~168~~166 non-prepaid ground leases) as of ~~September~~June 30, ~~2022~~2023 were as follows:


Dollars in thousands	Dollars in thousands	OPERATING		FINANCING		Dollars in thousands	OPERATING		FINANCING
2022		$	3,665	$	503
2023	2023	15,606		2,139		2023	$	7,315	$	992
2024	2024	15,193		2,182		2024	15,011		2,182
2025	2025	14,715		2,218		2025	14,597		2,218
2026	2026	14,735		2,255		2026	14,631		2,255
2027 and thereafter		894,018		398,092
2027						2027	14,701		2,294
2028 and thereafter						2028 and thereafter	929,853		396,398
Total undiscounted lease payments	Total undiscounted lease payments	957,932		407,389		Total undiscounted lease payments	996,108		406,339
Discount	Discount	(689,092)		(335,011)		Discount	(717,629)		(332,710)
Lease liabilities	Lease liabilities	$	268,840	$	72,378	Lease liabilities	$	278,479	$	73,629

Table of Contents

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~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


		THREE MONTHS ENDED September 30,						NINE MONTHS ENDED September 30,					THREE MONTHS ENDED June 30,						SIX MONTHS ENDED June 30,
Dollars in thousands	Dollars in thousands	2022			2021			2022		2021		Dollars in thousands	2023			2022			2023		2022
Operating lease cost	Operating lease cost											Operating lease cost
Operating lease expense	Operating lease expense	$	4,204		$	1,196		$	6,613	$	3,555	Operating lease expense	$	5,329		$	1,194		$	10,436	$	2,409
Variable lease expense	Variable lease expense	1,061			1,016			3,123		2,883		Variable lease expense	2,235			1,038			4,371		2,062

Finance lease cost	Finance lease cost											Finance lease cost
Amortization of right-of-use assets	Amortization of right-of-use assets	381			90			884		267		Amortization of right-of-use assets	387			331			774		503
Interest on lease liabilities	Interest on lease liabilities	861			255			1,913		748		Interest on lease liabilities	923			765			1,841		1,052
Total lease expense	Total lease expense	$	6,507		$	2,557		$	12,533	$	7,453	Total lease expense	$	8,874		$	3,328		$	17,422	$	6,026

Other information	Other information											Other information
Operating cash flows outflows related to operating leases	Operating cash flows outflows related to operating leases	$	3,847		$	1,424		$	8,443	$	5,855	Operating cash flows outflows related to operating leases	$	5,230		$	1,799		$	11,190	$	4,596
Operating cash flows outflows related to financing leases	Operating cash flows outflows related to financing leases	$	476		$	151		$	1,262	$	678	Operating cash flows outflows related to financing leases	$	541		$	509		$	1,094	$	767
Financing cash flows outflows related to financing leases	Financing cash flows outflows related to financing leases	$	3		$	6		$	3	$	162	Financing cash flows outflows related to financing leases	$	6		$	—		$	17	$	51
Right-of-use assets obtained in exchange for new finance lease liabilities	Right-of-use assets obtained in exchange for new finance lease liabilities	$	9,874		$	1,420		$	50,463	$	1,420	Right-of-use assets obtained in exchange for new finance lease liabilities	$	—		$	—		$	—	$	40,589
Right-of-use assets obtained in exchange for new operating lease liabilities		$	198,261		$	8,298		$	198,261	$	8,298

Weighted-average years remaining lease term (excluding renewal options) - operating leases	Weighted-average years remaining lease term (excluding renewal options) - operating leases	50.2			47.8							Weighted-average years remaining lease term (excluding renewal options) - operating leases	47.3			47.4
Weighted-average years remaining lease term (excluding renewal options) - finance leases	Weighted-average years remaining lease term (excluding renewal options) - finance leases	60.1			63.2							Weighted-average years remaining lease term (excluding renewal options) - finance leases	58.4			61.7
Weighted-average discount rate - operating leases	Weighted-average discount rate - operating leases	5.7		%	5.6		%					Weighted-average discount rate - operating leases	5.8		%	5.6		%
Weighted-average discount rate - finance leases	Weighted-average discount rate - finance leases	5.0		%	5.4		%					Weighted-average discount rate - finance leases	5.0		%	5.0		%

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

~~Note 5. Other Assets and Liabilities~~

~~Other Assets~~

Other assets consist primarily of intangible assets, prepaid assets, real estate notes receivable, straight-line rent receivables, accounts receivable, additional long-lived assets and interest rate swaps. Items included in "Other assets, net" on the Company's Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 are detailed in the table below:

Dollars in thousands September 30, 2022 December 31, 2021
Above-market intangible assets, net $ 86,410 $ 4,966
Prepaid assets 85,053 58,618
Real estate notes receivable, net 1
79,036 —
Straight-line rent receivables 78,038 70,784
Accounts receivable, net 36,103 14,072
Additional long-lived assets, net 21,722 20,048
Interest rate swap assets 16,136 —
Ground lease modification, net 8,170 8,511
Other receivables, net 7,258 —
Debt issuance costs, net 6,504 1,813
Project costs 4,001 5,129
Net investment in lease 1,828 —
Customer relationship intangible assets, net 1,134 1,174
Other 6,842 558
$ 438,235 $ 185,673
~~1 In October 2022, an additional amount of $15.0 million was funded for a real estate loan transaction.~~

~~Accounts Payable and Accrued Liabilities~~

The following table provides details of the items included in "Accounts payable and accrued liabilities" on the Company's Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021:

Dollars in thousands September 30, 2022 December 31, 2021
Accrued property taxes $ 86,192 $ 35,295
Accounts payable and capital expenditures 61,461 17,036
Accrued interest 24,959 12,060
Accrued income and franchise taxes 2,685 983
Retainage accrued on construction invoices 1,304 2,215
Other operating accruals 54,417 18,519
$ 231,018 $ 86,108

~~Other Liabilities~~

~~The following table provides details of the items included in "Other liabilities" on the Company's Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021:~~

Dollars in thousands September 30, 2022 December 31, 2021
Below-market intangible liabilities, net $ 113,118 $ 4,931
Deferred revenue 60,675 45,130
Security deposits 28,299 11,116
Interest rate swap liability — 5,917
Other 1,306 293
$ 203,398 $ 67,387

~~Table of Contents~~

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

Note 6.5. Notes and Bonds Payable

The table below details the Company’s notes and bonds payable as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

MATURITY DATES 1
BALANCE 2 AS OF
EFFECTIVE INTEREST RATE
as of 9/30/2022
Dollars in thousands 9/30/2022 12/31/2021
$1.5 billion Unsecured Credit Facility 3
10/27 $ 190,600 $ — 3.99 %
$700 million Unsecured Credit Facility 3
5/23 — 210,000 — %
$1.125 billion Asset Sale Term Loan 4
7/24 421,919 — 4.07 %
$350 million Unsecured Term Loan 3
7/25 348,735 — 4.10 %
$200 million Unsecured Term Loan 4
5/26 199,611 199,460 3.51 %
$300 million Unsecured Term Loan 4 5
10/26 299,930 — 2.47 %
$150 million Unsecured Term Loan 5
5/26 149,458 149,376 3.32 %
$200 million Unsecured Term Loan 4 5
7/27 199,328 — 2.27 %
$300 million Unsecured Term Loan 3
1/28 297,764 — 3.56 %
Senior Notes due 2025 5/25 249,025 249,040 4.12 %
Senior Notes due 2026 4
8/26 569,786 — 4.94 %
Senior Notes due 2027 4
7/27 478,541 — 4.76 %
Senior Notes due 2028 1/28 296,711 296,612 3.85 %
Senior Notes due 2030 4
2/30 562,974 — 5.30 %
Senior Notes due 2030 3/30 296,787 296,813 2.72 %
Senior Notes due 2031 4
3/31 628,617 — 5.13 %
Senior Notes due 2031 3/31 295,424 295,374 2.25 %
Mortgage notes payable 8/23-12/26 84,929 104,650 3.97 %
$ 5,570,139 $ 1,801,325


	MATURITY DATES	BALANCE 1 AS OF				EFFECTIVE INTEREST RATE as of 6/30/2023
Dollars in thousands		6/30/2023		12/31/2022
$1.5 billion Unsecured Credit Facility	10/25	$	354,000	$	385,000	6.05	%


$350 million Unsecured Term Loan 2	7/24	349,499		349,114		6.21	%
$200 million Unsecured Term Loan	5/24	199,786		199,670		6.21	%
$300 million Unsecured Term Loan	10/25	299,947		299,936		6.21	%
$150 million Unsecured Term Loan	6/26	149,569		149,495		6.21	%
$200 million Unsecured Term Loan	7/27	199,432		199,362		6.21	%
$300 million Unsecured Term Loan	1/28	298,079		297,869		6.21	%
Senior Notes due 2025	5/25	249,298		249,115		4.12	%
Senior Notes due 2026	8/26	575,256		571,587		4.94	%
Senior Notes due 2027	7/27	481,615		479,553		4.76	%
Senior Notes due 2028	1/28	297,138		296,852		3.85	%
Senior Notes due 2030	2/30	570,356		565,402		5.30	%
Senior Notes due 2030	3/30	296,579		296,385		2.72	%
Senior Notes due 2031	3/31	295,795		295,547		2.25	%
Senior Notes due 2031	3/31	640,999		632,693		5.13	%
Mortgage notes payable	8/23-12/26	82,924		84,247		3.57%-4.84%
		$	5,340,272	$	5,351,827

1~~Includes extension options.~~

2Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable.

32On ~~July 20, 2022,~~April 26, 2023, the Company ~~entered into an amended and restated credit facility which included~~exercised its option to extend the maturity date for one year for a ~~$1.5 billion revolving credit facility, replacing Legacy HR's $700 million credit facility.~~

4~~Debt instruments assumed as part~~fee of ~~the Merger with Legacy HTA on July 20, 2022. Amounts shown represent fair value adjustments.~~

5~~The effective interest rate includes the impact of interest rate swaps on $675.0 million at a weighted average rate of 1.57% (plus the applicable margin rate, currently 105 basis points).~~approximately $0.4 million.

Subsequent Changes in Debt Structure

~~Mortgage payoffs~~

On ~~February 18, 2022,~~August 1, 2023, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of ~~4.70% that~~3.31% per annum with an outstanding principal of $9.8 million. The mortgage note encumbered a ~~56,762~~66,984 square foot property in California. The aggregate payoff price of $12.6 million consisted of outstanding principal of $11.0 million and a "make-whole" amount of approximately $1.6 million. The unamortized premium of $0.8 million and the unamortized cost on this note of $0.1 million were written off upon payoff.

On February 24, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 6.17% that encumbered a 80,153 square foot property in Colorado, in conjunction with the disposition of the property. The aggregate payoff price of $6.4 million consisted of outstanding principal of $5.8 million and a "make-whole" amount of approximately $0.6 million. The unamortized premium of $0.1 million was written off upon payoff.

~~Exchange Offer~~

In connection with the Merger, the OP offered to exchange all validly tendered and accepted notes of each series previously issued by Legacy HR (the “Old HR Notes”) for (i) up to $250,000,000 of 3.875% Senior Notes due 2025 (the “2025 Notes”), (ii) up to $300,000,000 of 3.625% Senior Notes due 2028 (the “2028 Notes”), (iii) up to $300,000,000 of 2.400% Senior Notes due 2030 (the “2030 Notes”) and (iv) up to $300,000,000 of 2.050% Senior Notes due 2031 to be issued by the OP (the “2031 Notes” and, collectively, the “New HR Notes”) and solicited consents from holders of the Old HR Notes to amend the indenture governing the Old HR Notes to eliminate substantially all of the restrictive covenants in such indenture (the “Exchange Offers”). The New HR Notes were issued pursuant to an indenture dated July 22, 2022, among the OP, Legacy HTA and U.S. Bank Trust Company, National Association, as trustee, as

~~Table of Contents~~

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

supplemented by the first supplemental indenture, dated as of July 22, 2022, the second supplemental indenture, dated as of July 22, 2022, the third supplemental indenture, dated as of July 22, 2022 and the fourth supplemental indenture, dated as of July 22, 2022. Legacy HTA guaranteed the New HR Notes pursuant to (i) a guarantee of the 2025 Notes, (ii) a guarantee of the 2028 Notes, (iii) a guarantee of the 2030 Notes, and (iv) a guarantee of the 2031 Notes, each dated July 22, 2022. Legacy HTA and the OP filed a registration statement on Form S-4 (File No. 333-265593) relating to the issuance of the New HR Notes with the Securities and Exchange Commission (the “SEC”) on June 14, 2022, which was declared effective by the SEC on June 28, 2022. The following sets forth the results of the Exchange Offers:

Series of Old HR Notes Tenders and Consents Received as of the Expiration Date Percentage of Total Outstanding Principal Amount of Such Series of Old HR Notes
3.875 % Senior Notes due 2025 $235,016,000 94.01 %
3.625 % Senior Notes due 2028 $290,246,000 96.75 %
2.400 % Senior Notes due 2030 $297,507,000 99.17 %
2.050 % Senior Notes due 2031 $298,858,000 99.62 %

~~Senior Notes Assumed with the Merger~~

In connection with the Merger, the Company assumed senior notes ("Legacy Senior Notes") that were originated on various dates prior to the date of the Merger by the OP (formerly, Healthcare Trust of America Holdings, LP). These notes are all fully and unconditionally guaranteed by the Company and have semi-annual payment requirements. In addition, the Legacy Senior Notes carry customary restrictive financial covenants, including limitations on our ability to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. In addition, the corresponding indentures provide for the ability to redeem the Legacy Senior Notes, subject to certain "make whole" call provisions. The Legacy Senior Notes assumed by the Company consist of the following:

COUPON PRINCIPAL OUTSTANDING AS OF
Dollars in thousands FACE VALUE 9/30/2022 12/31/2021
Senior Notes due 2026 3.50% $ 600,000 $ 600,000 $ —
Senior Notes due 2027 3.75% 500,000 500,000 —
Senior Notes due 2030 3.10% 650,000 650,000 —
Senior Notes due 2031 2.00% 800,000 800,000 —
$ 2,550,000 $ 2,550,000 $ —
Georgia.

~~Credit Facilities~~

In connection with the effectiveness of the Merger, Legacy HR (in a limited capacity), Legacy HTA and the OP entered into the Fourth Amended and Restated Credit and Term Loan Agreement (the “Credit Facility”) with Wells Fargo Bank, National Association, as Administrative Agent; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., and Citibank, N.A., as Joint Book Runners; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., U.S. Bank National Association, Citibank, N.A., The Bank of Nova Scotia, Capital One, National Association, U.S. Bank National Association, and PNC Capital Markets LLC, as Joint Lead Arrangers; and the other lenders named therein. The Credit Facility restructured the parties’ existing bank facilities and added additional borrowing capacities for the Company following the Merger. The OP is the borrower under the Credit Facility (in such capacity, the “Borrower”).

•Legacy HR’s existing $700.0 million revolving credit facility under the Amended and Restated Credit Agreement, dated as of May 31, 2019 (as amended, restated, replaced, supplemented, or otherwise modified from time to time prior to July 20, 2022, the “Existing HR Revolving Credit Agreement”), by and among Legacy HR, the lenders party thereto from time to time and their assignees, as lenders, and Wells Fargo Bank, National Association, as the administrative agent (the “WF Administrative Agent”), was terminated, all outstanding obligations in respect thereof were deemed paid in full and all commitments thereunder were permanently reduced to zero and terminated.

~~Table of Contents~~

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

•Legacy HR’s existing $200.0 million term loan facility and existing $150.0 million term loan facility under the Amended and Restated Term Loan Agreement, dated as of May 31, 2019 (as amended, restated, replaced, supplemented, or otherwise modified from time to time prior to July 20, 2022, the “Existing HR Term Loan Agreement”), by and among Legacy HR, the lenders party thereto from time to time and their assignees, as lenders, and the WF Administrative Agent, in each, case, were deemed continued and assumed by the Borrower under the Credit Facility, and the Existing HR Term Loan Agreement was terminated.

◦The existing $200.0 million term loan facility was amended to: (a) conform to the terms of the Borrower’s other term loan facilities under the Credit Facility; (b) include two one-year extension options, resulting in a latest final maturity in May 2026; and (c) reprice to align with the pricing for the Borrower’s other term loan facilities under the Credit Facility; and

◦The existing $150.0 million term loan facility was amended to conform to the terms of the Borrower’s other term loan facilities under the Credit Facility, and the existing maturity in June 2026 remains unchanged under the Credit Facility.

•Legacy HTA’s and the OP’s existing $1.0 billion revolving credit facility was upsized to $1.5 billion (the “Revolver”) pursuant to the Credit Facility. The Revolver currently matures in October 2025, and the Credit Facility adds an additional one-year extension option for the Revolver, for a total of two one-year extension options.

•Legacy HTA’s and the OP’s existing $300.0 million term loan facility was deemed continued pursuant to the Credit Facility and was amended to conform to the terms of the Borrower’s other term loan facilities under the Credit Facility. The existing maturity in October 2025 remains unchanged under the Credit Facility.

•Legacy HTA’s and the OP’s existing $200.0 million term loan facility was deemed continued pursuant to the Credit Facility and was amended to (a) conform to the terms of the Borrower’s other term loan facilities under the Credit Facility; (b) extend the maturity from January 2024 to July 20, 2027; and (c) reprice to align with the pricing for the Borrower’s other term loan facilities under the Credit Facility.

•The Credit Facility provides for a new $350.0 million delayed-draw term loan facility that is available to be drawn for 12 months after July 20, 2022 and has an initial maturity date of July 20, 2023, with two one-year extension options. As of September 30, 2022, the $350.0 million Credit Facility was drawn in full. The terms of any delayed draw term loans funded thereunder conform to the terms of the Borrower’s other term loan facilities under the Credit Facility, and the pricing for such delayed draw term loans aligns with the pricing for the Borrower’s other term loan facilities under the Credit Facility.

•The Credit Facility provides for a new $300.0 million term loan facility that was funded on July 20, 2022 and has a maturity date of January 20, 2028, with no extension options. The terms of such term loan facility conform to the terms of the Borrower’s other term loan facilities under the Credit Facility, and the pricing for such term loan facility aligns with the pricing for the Borrower’s other term loan facilities under the Credit Facility.

Note 7.6. 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.

~~Table of Contents~~

~~NOTES TO THE CONDENSED 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.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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.

As of ~~September~~June 30, ~~2022,~~2023, the Company had 1514 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

EXPIRATION DATE AMOUNT WEIGHTED
AVERAGE RATE
December 16, 2022 75,000 2.37 %
January 31, 2023 $ 300,000 1.42 %
January 15, 2024 1
200,000 1.21 %
May 1, 2026 1
100,000 2.15 %
$ 675,000 1.57 %

~~1 Derivatives hedge one-month term SOFR.~~


EXPIRATION DATE	AMOUNT		WEIGHTED AVERAGE RATE
January 15, 2024	$	200,000	1.21	%
May 1, 2026	100,000		2.15	%
June 1, 2026	150,000		3.83	%
December 1, 2026	150,000		3.84	%
June 1, 2027	150,000		4.13	%
December 1, 2027	250,000		3.79	%
	$	1,000,000	3.17	%

Subsequent to September 30, 2022, the Company entered into two additional interest rate swaps totaling $250.0 million with multiple counterparties, with both expiring in 2027. The Company designated these interest rate swaps as cash flow hedges of interest rate risk in the fourth quarter of 2022.

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 ~~September~~June 30, ~~2022.~~2023.


	BALANCE AT ~~SEPTEMBER~~JUNE 30, ~~2022~~2023
In thousands	BALANCE SHEET LOCATION	FAIR VALUE
Derivatives designated as hedging instruments
Interest rate swaps	Other liabilities	$	(1,248)
Interest rate swaps	Other assets	$	~~16,136~~16,046
Total derivatives designated as hedging instruments		$	14,798

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~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 related to the Company's outstanding interest rate swaps.


		GAIN RECOGNIZED IN AOCI ON DERIVATIVE three months ended September 30,					LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended September 30,					(GAIN)/LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended June 30,					(GAIN)/LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended June 30,
In thousands	In thousands	2022		2021			2022		2021		In thousands	2023		2022			2023		2022
Interest rate swaps	Interest rate swaps	$	(6,083)	$	(36)	Interest expense	$	614	$	982	Interest rate swaps	$	(21,523)	$	(1,663)	Interest expense	$	(3,568)	$	674
Settled treasury hedges	Settled treasury hedges	—		—		Interest expense	107		107		Settled treasury hedges	—		—		Interest expense	107		107
Settled interest rate swaps	Settled interest rate swaps	—		—		Interest expense	42		42		Settled interest rate swaps	—		—		Interest expense	42		42
		$	(6,083)	$	(36)	Total interest expense	$	763	$	1,131		$	(21,523)	$	(1,663)	Total interest expense	$	(3,419)	$	823


	(GAIN)/LOSS RECOGNIZED IN AOCI ON DERIVATIVE six months ended June 30,					(GAIN)/LOSS RECLASSIFIED FROM AOCI INTO INCOME six months ended June 30,
In thousands	2023		2022			2023		2022
Interest rate swaps	$	(12,981)	$	(6,822)	Interest expense	$	(6,000)	$	1,612
Settled treasury hedges	—		—		Interest expense	213		213
Settled interest rate swaps	—		—		Interest expense	84		84
	$	(12,981)	$	(6,822)	Total interest expense	$	(5,703)	$	1,909

2320

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

GAIN RECOGNIZED IN
AOCI ON DERIVATIVE
nine months ended September 30, LOSS RECLASSIFIED FROM
AOCI INTO INCOME
nine months ended September 30,
In thousands 2022 2021 2022 2021
Interest rate swaps $ (12,905) $ (2,079) Interest expense $ 2,226 $ 2,894
Settled treasury hedges — — Interest expense 320 320
Settled interest rate swaps — — Interest expense 126 126
$ (12,905) $ (2,079) Total interest expense $ 2,672 $ 3,340

The Company estimates that ~~$4.8~~an additional $14.4 million related to active interest rate swaps will be reclassified from AOCI as a decrease to interest expense over the next 12 months, and that an additional $0.6 million related to settled interest rate swaps will be amortized from AOCI as an increase 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.

As of ~~September~~June 30, ~~2022,~~2023, the fair value of derivatives in a net asset position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was ~~$16.5~~$15.4 million. As of ~~September~~June 30, ~~2022,~~2023, the Company ~~has~~had not posted any collateral related to these agreements and was not in breach of any agreement.

Note 8.7. 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.

Development and Redevelopment Activity

During the ~~third quarter~~first six months of ~~2022,~~2023, the Company ~~continued~~incurred $49.0 million toward the development and redevelopment of a 217,114 square foot medical office building in Dallas, Texas. As of September 30, 2022, the Company had funded approximately $11.1 million in project costs. The building continues to operate with in-place leases during construction. The first new tenant lease of the redevelopment commenced in the first quarter of 2022.

During the third quarter of 2022, the Company continued the redevelopment of a medical office building in Tacoma, Washington. As of September 30, 2022, the Company had funded approximately $10.3 million in project costs. The redevelopment includes interior and exterior improvements to the existing building, plus the addition of 23,000 square feet. The Company expects the 23,000 square foot tenant lease for the expansion space to commence in the fourth quarter of 2022.

The Company continued the development of a medical office building in Nashville, Tennessee. The Company is constructing a new 106,194 square foot medical office building with the initial tenant lease expected to commence in the third quarter of 2023. As of September 30, 2022, the Company had funded approximately $15.3 million in project costs. The redevelopment includes the demolition of an existing 81,000 square foot medical office building. The Company recognized an impairment charge of $5.0 million related to the existing building in 2021.

The Company is financing the construction of a two building medical office complex in Orlando, Florida. The 156,566 square foot development is expected to be complete in the second quarter of 2024. As of September 30, 2022, the Company had funded approximately $10.6 million towards the project costs.

The Company, through a joint venture partnership, continued the development of a medical office building in Raleigh, North Carolina. This joint venture expects to construct a new 120,694 square foot medical office building that is projected to be complete in the fourth quarter of 2024. As of September 30, 2022, the joint venture had funded approximately $15.3 million towards the project costs.

The Company is redeveloping three medical office buildings totaling 259,290 square feet in Washington, DC. The Company has approved a leasing plan with a capital outlay that is expected to be completed in the second quarter of

~~Table of Contents~~

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

~~2024. As of September 30, 2022, the Company had funded $2.0 million in project costs.~~properties.

Note 9.8. Stockholders' Equity

Common Stock

The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and the twelve months ended December 31, ~~2021:~~2022:


		NINE MONTHS ENDED SEPTEMBER 30, 2022	TWELVE MONTHS ENDED DECEMBER 31, 2021		SIX MONTHS ENDED JUNE 30, 2023	TWELVE MONTHS ENDED DECEMBER 31, 2022
Balance, beginning of period	Balance, beginning of period	150,457,433	139,487,375	Balance, beginning of period	380,589,894	150,457,433
Issuance of common stock	Issuance of common stock	229,615,152	10,899,301	Issuance of common stock	4,817	229,618,304
Non-vested share-based awards, net of withheld shares	Non-vested share-based awards, net of withheld shares	499,705	70,757	Non-vested share-based awards, net of withheld shares	262,821	514,157
Balance, end of period	Balance, end of period	380,572,290	150,457,433	Balance, end of period	380,857,532	380,589,894

At-The-Market Equity Offering Program

The Company has equity distribution agreements with various sales agents with respect to the at-the-market (“ATM”) offering program of common stock with an aggregate sales amount of up to $750.0 million. As of ~~September~~June 30, ~~2022,~~2023, $750.0 million remained available for issuance under our current ATM offering program.

During the six months ended June 30, 2023, the Company did not sell any shares or enter into any forward sale agreements to sell shares of common stock through its ATM offering program.

Common Stock Dividends

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company declared and paid common stock dividends totaling ~~$0.93~~$0.62 per share. On ~~November 2, 2022,~~August 1, 2023, the Company declared a quarterly common stock dividend in the amount of $0.31 per share payable on ~~November~~August 30, ~~2022~~2023 to stockholders of record on ~~November~~August 15, ~~2022.~~2023.

Table of Contents

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 non-vested share-based awards are considered participating securities pursuant to the two-class method.

~~During the three and nine months ended September 30, 2022, the Company did not enter into any forward sale agreements to sell shares of common stock through the Company's ATM offering program.~~

The following table sets forth the computation of basic and diluted earnings per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
Dollars in thousands, except per share data 2022 2021 2022 2021
Weighted average common shares outstanding
Weighted average common shares outstanding 330,788,997 145,594,127 211,740,767 143,305,737
Non-vested shares (1,983,742) (1,776,508) (1,933,957) (1,784,544)
Weighted average common shares outstanding - basic 328,805,255 143,817,619 209,806,810 141,521,193
Weighted average common shares outstanding - basic 328,805,255 143,817,619 209,806,810 141,521,193
Dilutive effect of forward equity shares — — — 14,036
Dilutive effect of OP Units 3,167,668 — 1,067,493 —
Dilutive effect of employee stock purchase plan 58,461 — 69,687 78,200
Weighted average common shares outstanding - diluted 332,031,384 143,817,619 210,943,990 141,613,429
Net Income (loss) attributable to common stockholders $ 28,304 $ (2,066) $ 76,661 $ 45,052
Dividends paid on nonvested share-based awards (610) (537) (1,817) (1,617)
Net income (loss) applicable to common stockholders- basic $ 27,694 $ (2,603) $ 74,844 $ 43,435
Net income attributable to OP units 312 — 312 —
Net income (loss) applicable to common stockholders - diluted $ 28,006 $ (2,603) $ 75,156 $ 43,435
Basic earnings per common share - net income $ 0.08 $ (0.02) $ 0.36 $ 0.31
Diluted earnings per common share - net income $ 0.08 $ (0.02) $ 0.35 $ 0.31

~~Table of Contents~~

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


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
Dollars in thousands, except per share data	2023		2022		2023		2022
Weighted average common shares outstanding
Weighted average common shares outstanding	380,829,011		151,620,897		380,812,981		151,230,064
Non-vested shares	(1,932,334)		(1,945,042)		(1,952,350)		(1,908,652)
Weighted average common shares outstanding - basic	378,896,677		149,675,855		378,860,631		149,321,412

Weighted average common shares outstanding - basic	378,896,677		149,675,855		378,860,631		149,321,412


Dilutive effect of employee stock purchase plan	—		62,694		—		75,394
Weighted average common shares outstanding - diluted	378,896,677		149,738,549		378,860,631		149,396,806

Net (loss) income attributable to common stockholders	$	(82,759)	$	6,130	$	(169,884)	$	48,357
Dividends paid on nonvested share-based awards	(588)		(601)		(1,193)		(1,207)
Net (loss) income applicable to common stockholders - basic	$	(83,347)	$	5,529	$	(171,077)	$	47,150





Basic earnings per common share - net income	$	(0.22)	$	0.04	$	(0.45)	$	0.32


Diluted earnings per common share - net income	$	(0.22)	$	0.04	$	(0.45)	$	0.32

The effect of OP units totaling 4,042,993 shares, non-vested stock awards totaling ~~911,594~~442,263 shares, and options under the Company's Employee Stock Purchase Plan (the "ESPP") to purchase the Company's common stock totaling ~~63,383~~27,484 shares ~~and the dilutive impact of forward-equity contracts outstanding for 14,734 shares of common stock~~ for the three months ended ~~September~~June 30, ~~2021~~2023 were excluded from the calculation of diluted loss per common share because the effect was anti-dilutive due to the loss from continuing operations incurred during that period.

Incentive Plans

~~Restricted Common Shares~~Equity Awards

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company made the following ~~stock~~equity awards:

•During the first quarter of ~~2022,~~2023, the Company granted non-vested stock awards to its named executive officers and other members of senior management and employees with a grant date fair value of ~~$13.0~~$5.4 million, which consisted of an aggregate of ~~415,184~~270,494 non-vested shares with vesting periods ranging from three to eight years.

•During the second quarter of ~~2022,~~2023, the Company granted to its 12 independent directors an aggregate of 42,768 shares of non-vested stock awards ~~to eight of its directors~~ with a grant date fair value of ~~$0.8~~$0.7 million, ~~which consisted of~~and an aggregate of ~~26,840 non-vested shares, with a one-year vesting period.~~

•~~During the third quarter of 2022, the Company granted non-vested stock awards to its 12 non-employee directors~~57,868 LTIP Series D units with a grant date fair value of ~~$1.8 million, which consisted of an aggregate of 70,816 non-vested shares, with vesting periods ranging from~~ ~~one~~ ~~to three years.~~$1.1 million. The Company also granted a non-vested stock ~~awards~~award to ana new employee, which consisted of ~~1,036~~508 non-vested ~~shares as a discretionary grant.~~shares.

A summary of the activity under the Company's share-based incentive plans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 is included in the table below.


		THREE MONTHS ENDED SEPTEMBER 30,		NINE MONTHS ENDED SEPTEMBER 30,			THREE MONTHS ENDED JUNE 30,		SIX MONTHS ENDED JUNE 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Share-based awards, beginning of period	Share-based awards, beginning of period	1,941,709	1,778,308	1,562,028	1,766,061	Share-based awards, beginning of period	1,955,445	1,951,551	1,795,128	1,562,028
Granted	Granted	71,852	—	513,876	203,701	Granted	43,276	26,840	325,816	442,024
Vested	Vested	(7,434)	—	(68,481)	(191,454)	Vested	(62,640)	(36,682)	(164,360)	(61,047)
Forfeited	Forfeited	(4,130)	(2,957)	(5,426)	(2,957)	Forfeited	(3,860)	—	(24,363)	(1,296)
Share-based awards, end of period	Share-based awards, end of period	2,001,997	1,775,351	2,001,997	1,775,351	Share-based awards, end of period	1,932,221	1,941,709	1,932,221	1,941,709

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company withheld ~~8,745~~38,632 and ~~51,972~~6,727 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested.

Restricted Stock Units

Prior to 2022, the Company granted long-term incentive awards, comprised of restricted stock, based on backward-looking performance measured at the end of the calendar year. The Company adopted a new incentive compensation structure effective January 2022, comprised of restricted stock and restricted stock units ("RSUs"). The RSUs are granted at the beginning of the year with three-year forward-looking performance targets.

On January ~~3, 2022,~~4, 2023, the Company granted RSUs to ~~its named executive officers and certain other officers,~~members of senior management, with a grant date fair value of ~~$9.7~~$3.7 million, which consisted of an aggregate ~~294,932~~165,174 RSUs with a five-year vesting period.

Approximately 43% of the RSUs vest based on two market performance conditions. Relative and absolute total shareholder return ("TSR") awards containing these market performance conditions were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of ~~$30.56~~$24.23 for the absolute TSR component and ~~$41.30~~$27.84 for the relative TSR component for the January ~~2022~~2023 grant using the following assumptions:


	THREE MONTHS ENDED MARCH 31,
Volatility		34.0	%
Dividend assumption		Accrued
Expected term		3 years
Risk-free rate		4.42	%
Stock price (per share)		$20.21

The remaining 57% of the RSUs vest based upon certain operating performance conditions. With respect to the operating performance conditions of the January 4, 2023 grant, the grant date fair value was $20.21 based on the Company's share price on the date of grant. The combined weighted average grant date fair value of the January RSUs was $22.55 per share.

The following is a summary of the RSU activity during the three and six months ended June 30, 2023:


	THREE MONTHS ENDED JUNE 30,			SIX MONTHS ENDED JUNE 30,
	Restricted Stock Units	Weighted Average Grant Date Fair Value		Restricted Stock Units	Weighted Average Grant Date Fair Value
Non-vested, beginning of period	363,250	$	28.57	294,932	33.04
Granted	—	—		165,174	$	22.55
Vested/Forfeited	—	—		(17,606)	33.04
Probability adjustment of 2022 RSUs	—	—		(79,250)	31.68
Non-vested, end of period	363,250	$	28.57	363,250	28.57

LTIP Series C Units

In January 2023, the Company modified its incentive compensation structure to award LTIP Series C units ("LTIP-C units) in the OP to named executive officers in lieu of RSUs. The LTIP-C units are granted with three-year forward-looking performance targets, with a grant date fair value of $7.1 million, which consisted of an aggregate 448,249 LTIP-C units with a five-year vesting period.

Approximately 43% of the LTIP-C units vest based on two market performance conditions. Relative and absolute TSR awards containing these market performance conditions were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $12.24 for the absolute TSR component and $13.98 for the relative TSR component for the January 2023 grant using the following assumption:

2623

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.


	THREE MONTHS ENDED MARCH 31,
Volatility		~~30.0~~34.0	%
Dividend assumption		Accrued
Expected term		3 years
Risk-free rate		~~1.02~~4.42	%
Stock price (per share)		$~~31.68~~20.21

The remaining 57% of the ~~restricted stock~~LTIP-C units vest based upon certain operating performance conditions. With respect to the operating performance conditions of the January 4, 2023 grant, the grant date fair value was ~~$31.68~~$20.21 based on the Company's share price on the date of grant. The combined weighted average grant date fair value of the January ~~restricted stock~~LTIP-C units was ~~$33.04~~$15.85 per share.

~~The following is a summary of the RSU activity during the~~ ~~three and nine~~ ~~months ended September 30, 2022:~~

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Stock Units Weighted Average Grant Date Fair Value
Non-vested, beginning of period 294,932 — — —
Granted — — 294,932 $ 33.04
Vested — — — —
Non-vested as of September 30, 2022 294,932 294,932

Employee Stock Purchase Plan

Legacy HR maintained an ESPP prior to the completion of the Merger. The outstanding options to purchase shares of the common stock of Legacy HR became options to purchase ~~Class~~class A ~~Common Stock~~common stock of the Company upon completion of the Merger. No new options will be granted under the ESPP. A summary of the activity under the ESPP for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 is included in the table below.


		THREE MONTHS ENDED SEPTEMBER 30,		NINE MONTHS ENDED SEPTEMBER 30,			THREE MONTHS ENDED JUNE 30,		SIX MONTHS ENDED JUNE 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Outstanding and exercisable, beginning of period	Outstanding and exercisable, beginning of period	405,534	389,414	348,514	341,647	Outstanding and exercisable, beginning of period	183,426	427,802	340,976	348,514
Granted	Granted	—	—	255,960	253,200	Granted	—	—	—	255,960
Exercised	Exercised	(4,576)	(5,323)	(17,094)	(24,300)	Exercised	(1,687)	(1,965)	(4,817)	(12,518)
Forfeited	Forfeited	(37,628)	(18,961)	(83,417)	(60,995)	Forfeited	(2,370)	(20,303)	(23,791)	(45,789)
Expired	Expired	—	—	(140,633)	(144,422)	Expired	—	—	(132,999)	(140,633)
Outstanding and exercisable, end of period	Outstanding and exercisable, end of period	363,330	365,130	363,330	365,130	Outstanding and exercisable, end of period	179,369	405,534	179,369	405,534

The following table represents expected amortization of the Company's non-vested shares issued as of June 30, 2023:


Dollars in millions	FUTURE AMORTIZATION of non-vested shares
2023	$	7.7
2024	13.3
2025	10.8
2026	8.0
2027	2.4
2028 and thereafter	0.5
Total	$	42.7

Note ~~10.~~9. 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.

•Real estate notes receivable - Real estate notes receivable are recorded in other assets on the Company's Condensed Consolidated Balance Sheets. Fair value is estimated using cash flow analyses, based on current interest rates for similar types of arrangements.

•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.

•Interest rate swap agreements - Interest rate swap agreements are recorded in other liabilities on the Company's Condensed Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models, level 2 inputs, that consider forward yield curves and discount rates.

2724

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The table below details the fair values and carrying values for notes and bonds payable and real estate notes receivable at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.


		September 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
Dollars in millions	Dollars in millions	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE		Dollars in millions	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE
Notes and bonds payable 1	Notes and bonds payable 1	$	5,570.1	$	5,321.0	$	1,801.3	$	1,797.4	Notes and bonds payable 1	$	5,340.3	$	5,107.5	$	5,351.8	$	5,149.6
Real estate notes receivable 1	Real estate notes receivable 1	$	79.0	$	79.0	$	—	$	—	Real estate notes receivable 1	$	151.5	$	149.0	$	99.6	$	99.6

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

2825

Table of Contents

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 (the "SEC"),~~SEC, 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, and include, but are not limited to, statements related to the anticipated timing, financing benefits and financial and operational impact of the Merger.~~terms. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. ~~Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these~~Such risks and uncertainties ~~which~~ include, ~~without limitation, risks and uncertainties associated with: diverting~~among other things, the ~~attention the Company's management from ongoing business operations;~~following: failure to realize the expected benefits of the Merger; ~~significant transaction costs and/or unknown or inestimable liabilities of the Merger;~~ the risk that ~~Legacy HR's~~the Company’s and ~~Legacy~~ HTA’s respective businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; risks related to future opportunities and plans for the Company, including the uncertainty of expected future financial performance and results of the Company; the possibility that, if the Company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company’s common stock could decline; general adverse economic and local real estate conditions; the inability of significant tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; increases in interest rates; increases in operating expenses and real estate taxes; changes in the dividend policy for the Company’s common stock or its ability to pay dividends; impairment charges; pandemics or other health crises, such as COVID-19; increases in interest rates; the availability and cost of capital at expected rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to release space at similar rates as vacancies occur; the Company's ability to renew expiring leases; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; the Company may be required under purchase options to sell properties and may not be able to reinvest the proceeds from such sales at rates of return equal to the return received on the properties sold; uninsured or underinsured losses related to casualty or liability; the incurrence of impairment charges on its real estate properties or other assets; other legal and operational matters; and other risks and uncertainties affecting the Company, including those described from time to time under the caption “Risk Factors” and elsewhere in the Company’s filings and reports with the SEC, including ~~Legacy HR’s and Legacy HTA's~~the Company's Annual ~~Reports~~Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Moreover, other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law.

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 ~~Legacy HR's and Legacy HTA's~~ filings with the SEC, including this report and ~~Item 1A. Risk Factors herein and Legacy HR's and Legacy HTA's~~the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Merger with Healthcare Trust of America

Completed Merger

On July 20, 2022, Legacy HR, Legacy HTA, the OP and Merger Sub completed the Merger in accordance with the terms of the Merger Agreement. Immediately following the Merger, Legacy HR converted to a Maryland limited liability company and changed its name to “HRTI, LLC” and Legacy HTA changed its name to “Healthcare Realty Trust Incorporated”. In addition, the equity interests of Legacy HR were contributed by Legacy HTA by means of a contribution and assignment agreement to the OP such that Legacy HR became a wholly-owned subsidiary of the OP. As a result, Legacy HR became a part of an ~~umbrella partnership REIT (“UPREIT”)~~UPREIT structure, which is intended to align the corporate structure of the combined company after giving effect to the Merger and the UPREIT reorganization and to provide a platform for the combined company to more efficiently acquire properties in a tax-deferred manner. The Company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $0.01 par value per share, trade on the New York Stock Exchange (the “NYSE”) under the ticker symbol “HR”. For additional information on the Merger, see ~~Notes~~Note 2 ~~and 6~~ to the Condensed Consolidated Financial Statements.

~~Unless expressly stated otherwise, the discussion in this Item 2 refers to Legacy HR's financial condition and results of operations on a stand-alone basis prior to giving effect to the Merger.~~ Because Legacy HR was the accounting acquirer under GAAP in the transaction, its historical financial statements became the historical financial statements of the Company. For additional information, please refer to the Explanatory Note in this report.

2926

Table of Contents

~~statements of the Company. For additional information, please refer to the Explanatory Note in this Quarterly Report on Form 10-Q.~~

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, proceeds from the sales of real estate properties, joint ventures, and proceeds from public or private debt or equity offerings. ~~After the refinancing~~As of ~~its bank facilities in connection with the Merger, as of September~~June 30, ~~2022,~~2023, the Company had ~~$1.3~~$1.1 billion available to be drawn on its Unsecured Credit Facility and ~~$57.6~~$35.9 million in cash.

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 liquidity sources, including the Unsecured Credit Facility. Management believes that the Company's 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.

~~Financings in Connection with the Merger~~

In connection with the effectiveness of the Merger, Legacy HR (in a limited capacity), Legacy HTA and the OP entered into the Credit Facility, which restructures the parties’ existing bank facilities and adds additional borrowing capacities for the Company following the Merger.

Investing Activities

Cash flows ~~provided by~~used in investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were approximately ~~$1.4 billion.~~$6.1 million. Below is a summary of significant investing activities.

Acquisitions

The following table details the Company's ~~acquisitions~~sole acquisition for the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~2023:

Dollars in thousands
ASSOCIATED HEALTH SYSTEM/TENANCY 1
DATE ACQUIRED PURCHASE PRICE SQUARE FOOTAGE MILES TO CAMPUS
Dallas, TX Texas Health Resources 2/11/22 $ 8,175 18,000 0.19
San Francisco, CA 2
Kaiser/Sutter Health 3/7/22 114,000 166,396 0.90 to 3.30
Q1 2022 subtotal 122,175 184,396
Atlanta, GA Wellstar Health 4/7/22 6,912 21,535 0.00
Denver, CO Centura Health 4/13/22 6,320 12,207 2.40
Colorado Springs, CO 3
Centura Health 4/13/22 13,680 25,800 0.80 to 1.70
Seattle, WA UW Medicine 4/28/22 8,350 13,256 0.05
Houston, TX CommonSpirit 4/28/22 36,250 76,781 1.70
Los Angeles, CA Cedars-Sinai Health Systems 4/29/22 35,000 34,282 0.11
Oklahoma City, OK Mercy Health 4/29/22 11,100 34,944 0.18
Raleigh, NC 2
WakeMed/None 5/31/22 27,500 85,113 0.25 to 12.30
Tampa, FL 3
BayCare Health 6/9/22 18,650 55,788 0.23
Q2 2022 subtotal 163,762 359,706
Seattle, WA EvergreenHealth 8/1/22 4,850 10,593 0.24
Raleigh, NC WakeMed 8/9/22 3,783 11,345 0.24
Jacksonville, FL Ascension 8/9/22 18,195 34,133 0.03
Atlanta, GA Wellstar 8/10/22 11,800 43,496 0.11
Denver, CO Centura 8/11/22 14,800 34,785 2.10
Raleigh, NC Duke 8/18/22 11,375 31,318 0.19
Nashville, TN Ascension 9/15/22 21,000 61,932 0.80
Austin, TX HCA 9/29/22 5,450 15,000 0.03
Q3 2022 subtotal 91,253 242,602
Total real estate acquisitions $ 377,190 786,704

~~Table of Contents~~

Dollars in thousands

ASSOCIATED HEALTH SYSTEM/TENANCY 1

DATE ACQUIRED

PURCHASE PRICE

SQUARE FOOTAGE

MILES TO CAMPUS

Tampa, FL

BayCare Health

3/10/23

31,500

115,867

0.06

1Includes buildings located on-campus, adjacent and off-campus that are anchored by healthcare systems or located within two miles of a hospital campus.

2~~Includes three properties.~~

3~~Includes two properties.~~

Subsequent to ~~September~~June 30, ~~2022,~~2023, the Company acquired the following property:

Dollars in thousands
ASSOCIATED HEALTH SYSTEM/TENANCY 1
DATE ACQUIRED PURCHASE PRICE SQUARE FOOTAGE MILES TO CAMPUS
Jacksonville, FL Ascension 10/12/22 $ 3,600 6,200 0.10

~~Joint Venture Acquisitions~~

~~The following table details the Joint Venture's acquisitions for the nine months ended September 30, 2022:~~

Dollars in thousands
ASSOCIATED HEALTH SYSTEM/TENANCY 1
DATE ACQUIRED PURCHASE PRICE SQUARE FOOTAGE MILES TO CAMPUS COMPANY OWNERSHIP %
San Francisco, CA 2
MarinHealth/Kaiser 3/7/22 $ 67,175 110,865 0.00 to 3.30 50 %
Los Angeles, CA 3
Valley Presbyterian Health 3/7/22 33,800 103,259 1.30 50 %
Total joint venture acquisitions $ 100,975 214,124

1~~Includes buildings located on-campus, adjacent and off-campus that are anchored by healthcare systems or located within two miles of a hospital campus.~~

2~~Includes three properties.~~

3~~Includes two properties.~~

Dollars in thousands

ASSOCIATED HEALTH SYSTEM/TENANCY 1

DATE ACQUIRED

PURCHASE PRICE

SQUARE FOOTAGE

MILES TO CAMPUS

Colorado Springs, CO

UC Health

7/28/23

11,450

42,770

1.30

Dispositions

The Company disposed of 30seven properties during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 for a total sales price of ~~$892.4~~$222.1 million, including cash proceeds of ~~$866.5~~$160.9 million. The following table details these dispositions for the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~2023:

Dollars in thousands Date Disposed Sales Price Square Footage
Loveland, CO 1
2/24/22 $ 84,950 150,291
San Antonio, TX 1
4/15/22 25,500 201,523
GA, FL, PA 2
7/29/22 133,100 316,739
GA, FL, TX 4
8/4/22 160,917 343,545
Los Angeles, CA 2, 5
8/5/22 134,845 283,780
Dallas, TX 4, 6
8/30/22 114,290 189,385
Indianapolis, IN 3
8/31/22 238,845 506,406
Total dispositions $ 892,447 1,991,669


Dollars in thousands	Date Disposed	Sales Price		Square Footage
Tampa, FL & Miami, FL 1	1/12/23	$	93,250	224,037
Dallas, TX 2	1/30/23	19,210		36,691
St. Louis, MO	2/10/23	350		6,500
Los Angeles, CA	3/23/23	21,000		37,165
Los Angeles, CA3	3/30/23	75,000		147,078
Los Angeles, CA4	5/12/23	3,300		—
Albany, NY	6/30/23	10,000		40,870

Total dispositions		$	222,110	492,341

1Includes two ~~properties.~~properties, sold in two separate transactions to the same buyer on the same date.

2~~Includes four properties.~~The Company sold this property to a joint venture in which it retained a 40% interest. Sales price and square footage reflect the total sales price paid by the joint venture and total square footage of the property.

3~~Includes five properties.~~The Company entered into a mortgage note agreement with the buyer for $45 million.

4~~Includes six properties.~~

5~~Values and square feet are represented at 100%.~~ The Company ~~retained~~sold a ~~20% ownership interest in the joint venture that purchased these properties.~~

6~~Values and square feet are represented at 100%. The Company retained a 40% ownership interest in the joint venture that purchased these properties.~~

~~Subsequent to September 30, 2022, the Company disposed of the following properties:~~

Dollars in thousands DATE DISPOSED SALE PRICE SQUARE FOOTAGE
Dallas, TX 1, 2
10/4/22 $ 104,025 291,328
Houston, TX 2
10/21/22 32,000 134,910
Total dispositions $ 136,025 426,238

~~1 Includes two properties.~~

~~2 These properties were classified as assets held for sale as of September 30, 2022.~~

land parcel totaling 0.34 acres.

3127

Table of Contents

Subsequent to June 30, 2023, the Company disposed of the following property:


Dollars in thousands	DATE DISPOSED	SALES PRICE		SQUARE FOOTAGE
Houston, TX	8/2/23	$	8,320	57,170

Capital ~~Funding~~Expenditures

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company incurred capital ~~funding included~~expenditures totaling $113.2 million for the following:

•$~~48.6~~49.0 million toward the ~~following~~ development and redevelopment of ~~properties:~~

◦~~Memphis, Tennessee redevelopment totaled $3.0 million;~~

◦~~Dallas, Texas redevelopments totaled $3.6 million;~~

◦~~Tacoma, Washington redevelopment totaled $6.2 million;~~

◦~~Nashville, Tennessee development totaled $13.6 million;~~

◦~~Orlando, Florida development totaled $1.0 million;~~

◦~~Raleigh, North Carolina development totaled $5.9 million;~~

◦~~Miscellaneous other redevelopment totaled $13.7 million; and~~

◦~~tenant improvement funding for previously completed projects totaled $1.6 million.~~properties;

•$~~26.0~~21.3 million toward first generation tenant improvements and planned capital expenditures for acquisitions;

•$~~20.1~~25.6 million toward second generation tenant improvements; and

•$~~23.2~~17.3 million toward capital expenditures.

Financing Activities

Cash flows used in financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were approximately ~~$1.5 billion.~~$273.2 million. See Notes 6 and 9 to the Condensed Consolidated Financial Statements accompanying this report for more information about capital markets and financing activities.

Common Stock Issuances

At-The-Market Equity Offering Program

The Company has equity distribution agreements with various sales agents with respect to our ATM offering program of common stock with an aggregate sales amount of up to $750.0 million. As of ~~September~~June 30, ~~2022,~~2023, $750.0 million remained available for issuance under our current ATM offering program.

Debt Activity

On February 18, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 4.70% that encumbered a 56,762 square foot property in California. The aggregate payoff price of $12.6 million consisted of outstanding principal of $11.0 million and a "make-whole" amount of approximately $1.6 million. The unamortized premium of $0.8 million and the unamortized cost on this note of $0.1 million were written off upon payoff.

On February 24, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 6.17% that encumbered an 80,153 square foot property in Colorado, in conjunction with the disposition of the property. The aggregate payoff price of $6.4 million consisted of outstanding principal of $5.8 million and a "make-whole" amount of approximately $0.6 million. The unamortized premium of $0.1 million was written off upon payoff.

As of ~~September~~June 30, ~~2022,~~2023, the Company had outstanding interest rate derivatives totaling ~~$675.0 million~~$1.0 billion to hedge one-month ~~LIBOR/~~Term SOFR. The following details the amount and rate of each swap (dollars in thousands):

EXPIRATION DATE AMOUNT WEIGHTED
AVERAGE RATE
January 31, 2023 $ 300,000 1.42 %
December 16, 2022 75,000 2.37 %
January 15, 2024 1
200,000 1.21 %
May 1, 2026 1
100,000 2.15 %
$ 675,000 1.57 %


EXPIRATION DATE	AMOUNT		WEIGHTED AVERAGE RATE
January 15, 2024	$	200,000	1.21	%
May 1, 2026	100,000		2.15	%
June 1, 2026	150,000		3.83	%
December 1, 2026	150,000		3.84	%
June 1, 2027	150,000		4.13	%
December 1, 2027	250,000		3.79	%
	$	1,000,000	3.17	%

Subsequent Debt Activity

On August 1, ~~Derivatives hedge one-month term SOFR.~~

~~Table~~2023, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of ~~Contents~~

3.31% per annum with an outstanding principal of $9.8 million. The mortgage note encumbered a 66,984 square foot property in Georgia.

Operating Activities

Cash flows provided by operating activities ~~decreased~~increased from ~~$170.3~~$114.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 to ~~$126.7~~$254.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. 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.

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.

~~New Accounting Pronouncements~~

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

Table of Contents

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, ~~2021,~~2022, below are some of the factors and trends that management believes may impact future operations of the Company.

Economic and Market Conditions

Rising interest rates and increased volatility in the capital markets have increased the Company’s cost and availability of debt and equity capital. Limited availability and increases in the cost of capital could adversely impact the Company’s ability to finance operations and acquire and develop properties. To the extent the Company’s tenants experience increased costs or financing difficulties due to the economic and market conditions, they may be unable or unwilling to make payments or perform their obligations when due. Additionally, increased interest rates may also result in less liquid property markets, limiting the Company’s ability to sell existing assets or obtain joint venture capital.

Expiring Leases

The Company expects that approximately 15% of its leases will expire each year in the ordinary course of business. There are ~~477~~857 leases totaling ~~1.3~~2.3 million square feet that will expire during the ~~fourth quarter~~remainder of ~~2022.~~2023. Approximately ~~79%~~76% of the leases expiring during the ~~fourth quarter~~remainder of ~~2022~~2023 are for space 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 tenants upon expiration, and the retention ratio for the first ~~nine~~six months of the year was within this range.

Operating Expenses

The Company historically has 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 historically has 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 ~~September~~June 30, ~~2022,~~2023, leases for approximately ~~91%~~92% of the Company's ~~multi-tenant~~total leased square footage allow for some recovery of operating expenses, with approximately ~~32%~~27% having modified gross lease structures and approximately ~~59%~~65% having net lease structures.

~~General~~Purchase Options

Information about the Company's unexercised purchase options and ~~Administrative Expense~~

~~The Company expects annual general~~the amount and ~~administrative expense synergies of $33 million to $36 million that will be realized within a year from the closing~~basis for determination of the ~~Merger.~~purchase price is detailed in the table below (dollars in thousands):


YEAR EXERCISABLE	NUMBER OF PROPERTIES	GROSS REAL ESTATE INVESTMENT AS OF JUNE 30, 2023 1
Current 2	6	$	112,669
2024	—	—
2025	7	112,689
2026	6	181,414
2027	4	110,260
2028	5	133,877
2029	3	81,784
2030	—	—
2031	4	108,818
2032	2	24,619
2033 and thereafter 3	10	340,128
Total	47	$	1,206,258

1Includes three properties totaling $45.0 million with stated purchase prices or prices based on fixed capitalization rates.

2These purchase options have been exercisable for an average of 13.4 years.

3329

Table of Contents

3Includes two medical office buildings that are recorded in the line item Investment in financing receivable, net on the Company's Condensed Consolidated Balance Sheet.

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-defined normalizing items to evaluate operating performance. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, non-cash financing receivable amortization, loan origination cost amortization, deferred financing fees amortization, stock-based compensation expense and ~~provision for bad debts,~~rent reserves, 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. FFO, 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. FFO, Normalized FFO and FAD should be reviewed in connection with GAAP financial measures.

Management believes FFO, Normalized FFO, FFO per common 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

Table of Contents

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.

~~Table of Contents~~

The table below reconciles net income to FFO, Normalized FFO and FAD for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,					THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
Amounts in thousands, except per share data	Amounts in thousands, except per share data	2022		2021		2022		2021		Amounts in thousands, except per share data	2023		2022		2023		2022
Net income (loss) attributable to common stockholders		$	28,304	$	(2,066)	$	76,661	$	45,052
Net (loss) income attributable to common stockholders										Net (loss) income attributable to common stockholders	$	(82,759)	$	6,130	$	(169,884)	$	48,357
Net (loss) income attributable to common stockholders per share 1										Net (loss) income attributable to common stockholders per share 1	$	(0.22)	$	0.04	$	(0.45)	$	0.32

Gain on sales of real estate properties	Gain on sales of real estate properties	(143,908)		(1,186)		(197,188)		(41,046)		Gain on sales of real estate properties	(7,156)		(8,496)		(8,162)		(53,280)
Impairment of real estate properties	Impairment of real estate properties	—		10,669		(25)		16,581		Impairment of real estate properties	55,215		—		81,442		(25)
Real estate depreciation and amortization	Real estate depreciation and amortization	159,643		52,390		272,634		154,899		Real estate depreciation and amortization	185,003		57,334		371,112		112,991
Non-controlling income from operating partnership units	Non-controlling income from operating partnership units	377		—		377				Non-controlling income from operating partnership units	(1,027)		—		(2,094)		—
Proportionate share of unconsolidated joint ventures	Proportionate share of unconsolidated joint ventures	3,526		1,558		8,702		3,726		Proportionate share of unconsolidated joint ventures	4,412		2,807		9,253		5,176
FFO adjustments										FFO adjustments	$	236,447	$	51,645	$	451,551	$	64,862
FFO adjustments per common share - diluted 7										FFO adjustments per common share - diluted 7	$	0.62	$	0.34	$	1.18	$	0.43

FFO attributable to common stockholders	FFO attributable to common stockholders	$	47,942	$	61,365	$	161,161	$	179,212	FFO attributable to common stockholders	$	153,688	$	57,775	$	281,667	$	113,219
Acquisition and pursuit costs 1		482		974		3,137		2,388
Merger-related costs 2		79,402		—		92,603		—
FFO attributable to common stockholders per common share - diluted 7										FFO attributable to common stockholders per common share - diluted 7	$	0.40	$	0.38	$	0.73	$	0.75

Acquisition and pursuit costs 2										Acquisition and pursuit costs 2	669		1,352		956		2,655
Merger-related costs 3										Merger-related costs 3	(15,670)		7,085		(10,815)		13,201
Merger-related fair value of debt instruments										Merger-related fair value of debt instruments	10,554		—		21,418		—
Lease intangible amortization	Lease intangible amortization	(2)		48		891		(30)		Lease intangible amortization	240		584		386		893
Non-routine legal costs/forfeited earnest money received 3		346		—		577		(500)
Non-routine legal costs/forfeited earnest money received										Non-routine legal costs/forfeited earnest money received	275		140		275		231
Allowance for credit losses 4										Allowance for credit losses 4	—		—		8,599		—
Debt financing costs	Debt financing costs	1,091		—		2,520		283		Debt financing costs	—		—		—		1,429
Unconsolidated JV normalizing items 4		154		54		332		136
Unconsolidated JV normalizing items 5										Unconsolidated JV normalizing items 5	93		83		210		178
Normalized FFO adjustments										Normalized FFO adjustments	$	(3,839)	$	9,244	$	21,029	$	18,587
Normalized FFO adjustments per common share - diluted 8										Normalized FFO adjustments per common share - diluted 8	$	(0.01)	$	0.06	$	0.05	$	0.12

Normalized FFO attributable to common stockholders	Normalized FFO attributable to common stockholders	$	129,415	$	62,441	$	261,221	$	181,489	Normalized FFO attributable to common stockholders	$	149,849	$	67,019	$	302,696	$	131,806
Normalized FFO attributable to common stockholders per common share - diluted 8										Normalized FFO attributable to common stockholders per common share - diluted 8	$	0.39	$	0.45	$	0.79	$	0.88

Non-real estate depreciation and amortization	Non-real estate depreciation and amortization	577		586		1,593		1,900		Non-real estate depreciation and amortization	802		556		1,406		1,016
Non-cash interest amortization 5		8,924		720		10,382		2,511
Provision for bad debt, net		457		25		616		3
Non-cash interest amortization 6										Non-cash interest amortization 6	1,618		747		2,300		1,458
Rent reserves, net										Rent reserves, net	(54)		16		1,317		159
Straight-line rent, net	Straight-line rent, net	(7,715)		(1,171)		(10,251)		(3,459)		Straight-line rent, net	(8,005)		(1,327)		(16,251)		(2,536)
Stock-based compensation	Stock-based compensation	3,666		2,538		10,721		8,183		Stock-based compensation	3,924		3,356		7,669		7,055
Unconsolidated JV non-cash items 6		(377)		(341)		(890)		(1,051)
Unconsolidated JV non-cash items 7										Unconsolidated JV non-cash items 7	(316)		(242)		(598)		(513)
Normalized FFO adjusted for non-cash items	Normalized FFO adjusted for non-cash items	$	134,947	$	64,798	$	273,392	$	189,576	Normalized FFO adjusted for non-cash items	$	147,818	$	70,125	$	298,539	$	138,445
2nd generation TI	2nd generation TI	(10,147)		(6,219)		(20,097)		(16,156)		2nd generation TI	(17,236)		(5,051)		(26,118)		(9,950)
Leasing commissions paid	Leasing commissions paid	(8,283)		(4,531)		(15,525)		(9,528)		Leasing commissions paid	(5,493)		(3,475)		(12,506)		(7,242)
Capital additions	Capital additions	(16,067)		(5,443)		(23,244)		(13,539)		Capital additions	(8,649)		(4,557)		(17,595)		(7,177)
FAD	FAD	$	100,450	$	48,605	$	214,526	$	150,353	FAD	$	116,440	$	57,042	$	242,320	$	114,076
FFO per common share - diluted		$	0.14	$	0.42	$	0.76	$	1.26
Normalized FFO per common share - diluted		$	0.39	$	0.43	$	1.23	$	1.27
FFO weighted average common shares outstanding - diluted 7		332,819		144,807		211,746		142,488

FFO weighted average common shares outstanding - diluted 8										FFO weighted average common shares outstanding - diluted 8	383,409		150,545		383,372		150,203

1Potential common shares are not included in the computation of diluted earnings per share when a loss exists as the effect would be an antidilutive per share amount.

2Acquisition and pursuit costs include third-party and travel costs related to the pursuit of acquisitions and developments.

23Includes costs incurred related to the Merger.

3~~Non-routine legal~~ For the three and six months ended June 30, 2023, merger costs ~~include expenses related to two separate disputes; one with~~are net of a ~~contractor on a $60.6~~refund of $17.8 million ~~completed construction project and another with a tenant on a violation of use restrictions. Forfeited earnest money received related to a disposition that did not materialize.~~for transfer taxes paid during the year ended December 31, 2022.

4For the six months ended June 30, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities.

Table of Contents

5Includes the Company's proportionate share of acquisition and pursuit costs related to unconsolidated joint ventures.

56Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.

67Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.

78The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of ~~787,559~~442,263 and ~~802,150,~~806,310, respectively, for the three ~~and nine~~ months ended ~~September~~June 30, ~~2022.~~2023 and 2022, and the diluted impact of 4,042,993 OP units outstanding for the three and six months ended June 30, 2023.

~~Table of Contents~~

Cash Net Operating Income ("NOI") and Merger Combined Same Store Cash NOI

Cash NOI and Merger Combined 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, interest from financing receivables ~~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, financing receivable amortization, 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.

Merger Combined 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. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale or intended for sale, properties undergoing redevelopment, and newly redeveloped or developed properties.

Legacy HTA properties that met the same store criteria are included in both periods shown ~~on a proforma basis,~~ as if they were owned by the Company for the full analysis period. The Legacy HR same store pool represented approximately 35% of the NOI of the combined company at the time of the Merger. Management believes that continued reporting of the same store portfolio of only the pre-Merger accounting acquirer (i.e., Legacy HR) offered little value to the investor who was seeking to understand the operating performance and growth potential of the combined company. The Company was provided access to the underlying financial statements of Legacy HTA (which financial statements had been audited or, in the case of interim periods, reviewed) and other detailed information about each property, such as the acquisition date. Based on this available information, the Company was able to consistently apply its same store definition across the combined portfolio, resulting in approximately 85% of the combined portfolio being represented in the same store presentation.

The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction for such properties through the application of additional resources including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures. ~~These properties are described in additional detail in Note 6 to the Condensed Consolidated Financial Statements included elsewhere in this report.~~

Any recently acquired property will be included in the merger combined same store pool once the Company has owned the property for eight full quarters. Newly developed or redeveloped properties will be included in the merger combined same store pool eight full quarters after substantial completion.

The following table reflects the Company's ~~proforma same store cash~~Merger Combined Same Store Cash NOI for the ~~three~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

NUMBER OF PROPERTIES GROSS INVESTMENT
at September 30, 2022 SAME STORE CASH NOI for the three months ended September 30,
Dollars in thousands 2022 2021
Same store properties 589 $ 7,943,839 $ 178,828 $ 173,951


	NUMBER OF PROPERTIES	GROSS INVESTMENT at June 30, 2023		MERGER COMBINED SAME STORE CASH NOI for the six months ended June 30,
Dollars in thousands				2023		2022
Merger combined same store properties	594	$	11,934,872	$	362,342	$	353,606

3632

Table of Contents

The following tables reconcile net income to ~~proforma same store~~Merger Combined Same Store NOI and the merger combined same store property metrics to the total owned real estate portfolio for the ~~three~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

~~Reconciliation~~Reconciliations of ~~Proforma~~Legacy HR and Merger Combined Same Store Cash NOI


MERGER COMBINED SAME STORE RECONCILIATION						MERGER COMBINED SAME STORE RECONCILIATION
							SIX MONTHS ENDED JUNE 30,
Dollars in thousands						Dollars in thousands	2023		2022
Net (loss) income attributable to common stockholders						Net (loss) income attributable to common stockholders	$	(169,884)	$	48,357

		THREE MONTHS ENDED SEPTEMBER 30,
Dollars in thousands		2022		2021
Net income		$	28,304	$	(2,066)

Non-controlling interests		312		—
Other income (expense)	Other income (expense)	(89,477)		23,000		Other income (expense)	207,225		(21,814)
General and administrative expense	General and administrative expense	16,741		8,207		General and administrative expense	30,399		21,576
Depreciation and amortization expense	Depreciation and amortization expense	158,117		50,999		Depreciation and amortization expense	367,671		109,772
Other expenses 1	Other expenses 1	82,659		3,193		Other expenses 1	(4,029)		20,963
Straight-line rent revenue, net	Straight-line rent revenue, net	(7,715)		(1,170)		Straight-line rent revenue, net	(16,251)		(2,536)
Joint venture properties	Joint venture properties	3,922		1,210		Joint venture properties	9,726		4,603
Other revenue 2	Other revenue 2	(5,242)		(2,043)		Other revenue 2	(7,643)		(4,005)
							417,214		176,916
Pre-Merger Legacy HTA NOI						Pre-Merger Legacy HTA NOI	—		255,388
Cash NOI	Cash NOI	187,621		81,330		Cash NOI	417,214		432,304
Pre-Merger Legacy HTA NOI		27,769		125,609
Proforma cash NOI		215,390		206,939
Cash NOI not included in same store	Cash NOI not included in same store	(36,562)		(32,988)		Cash NOI not included in same store	(54,872)		(78,698)
Proforma same store cash NOI		$	178,828	$	173,951
Merger combined same store cash NOI						Merger combined same store cash NOI	$	362,342	$	353,606

1.Includes acquisition and pursuit costs, Merger-related costs, rent reserves, 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.


LEGACY HR SAME STORE RECONCILIATION
	SIX MONTHS ENDED JUNE 30,
Dollars in thousands	2023		2022
Net (loss) income attributable to common stockholders	$	(169,884)	$	48,357


Other income (expense)	207,225		(21,814)
General and administrative expense	30,399		21,576
Depreciation and amortization expense	367,671		109,772
Other expenses 1	(4,029)		20,963
Straight-line rent revenue, net	(16,251)		(2,536)
Joint venture properties	9,726		4,603
Other revenue 2	(7,643)		(4,005)
	417,214		176,916
Cash NOI not included in same store	(261,468)		(26,048)
Legacy HR same store cash NOI 3	$	155,746	$	150,868

1Includes acquisition and pursuit costs, Merger-related costs, ~~bad debt,~~rent reserves, 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.

3Legacy HR same store cash NOI includes 205 properties.

Table of Contents

Reconciliation of ~~Proforma~~Merger Combined Same Store Properties


		AS OF SEPTEMBER 30, 2022							AS OF JUNE 30, 2023
Dollars and square feet in thousands	Dollars and square feet in thousands	PROPERTY COUNT	GROSS INVESTMENT 1		SQUARE FEET	OCCUPANCY		Dollars and square feet in thousands	PROPERTY COUNT	GROSS INVESTMENT 1		SQUARE FEET	OCCUPANCY
Same store properties		589	$	7,943,839	34,731	89.1	%
Merger combined same store properties								Merger combined same store properties	594	$	11,934,872	34,824	89.0	%
Acquisitions	Acquisitions	85	426,519		4,235	89.3	%	Acquisitions	62	1,087,583		2,878	87.3	%
Development completions	Development completions	6	166,775		410	86.8	%	Development completions	4	134,733		266	84.9	%
Redevelopments	Redevelopments	11	168,154		1,067	58.4	%	Redevelopments	12	325,247		1,204	55.8	%
Planned Dispositions	Planned Dispositions	4	69,449		223	2.4	%	Planned Dispositions	8	131,187		642	58.9	%
Total owned real estate properties	Total owned real estate properties	695	$	8,774,736	40,666	87.8	%	Total owned real estate properties	680	$	13,613,622	39,814	87.4	%

1Excludes assets held for sale, construction in progress, land held for development, corporate property and financing lease right-of-use assets unrelated to an imputed lease arrangement as a result of a sale leaseback transaction.

Results of Operations

Three Months Ended ~~September~~June 30, ~~2022~~2023 Compared to Three Months Ended ~~September~~June 30, ~~2021~~2022

The Company’s results of operations for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021~~2022 were impacted by the Merger, acquisitions, developments, dispositions, gains on sale, and capital markets transactions.

Revenues

Rental income increased ~~$167.2~~$189.0 million, or ~~126.9%~~134.4%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period. This increase is primarily comprised of the following:

•Acquisitions in ~~2021~~2022 and ~~2022~~2023 contributed ~~$13.5~~$5.1 million.

•Leasing activity, including contractual rent increases, contributed ~~$4.1~~$5.0 million.

•Dispositions in ~~2021~~2022 and ~~2022~~2023 resulted in a decrease of ~~$5.0~~$6.2 million.

•Impact from the Merger contributed ~~$154.6~~$181.2 million.

~~Table of Contents~~

Interest income increased ~~$1.4~~$2.3 million, or ~~75.6%~~116.3%, ~~from~~for the three months ended June 30, 2023 compared to the prior year period primarily as a result of ~~interest from~~ notes receivables assumed in the ~~Merger.~~Merger and a note receivable entered into with a buyer upon disposition of a property in the first quarter of 2023.

Other operating income increased ~~$1.1~~$1.5 million, or ~~36.6%~~54.5%, ~~from~~for the three months ended June 30, 2023 compared to the prior year period primarily as a result of variable parking and asset management ~~fees.~~fees assumed in the Merger.

Expenses

Property operating expenses increased ~~$57.0~~$68.4 million, or ~~102.6%~~120.0%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in ~~2021~~2022 and ~~2022~~2023 resulted in an increase of ~~$5.3~~$2.2 million.

•Increases in portfolio operating expenses as follows:

◦~~Utilities~~Maintenance and repair expense of ~~$1.3~~$1.1 million;

◦~~Maintenance and repair~~Utilities expense of ~~$1.0~~$0.7 million;

◦Administrative, leasing commissions, and other legal expense of ~~$0.6~~$0.8 million;

◦Janitorial expense of ~~$0.2 million;~~

◦~~Compensation expense of $0.1~~$0.3 million; and

◦Insurance expense of ~~$0.1~~$0.5 million.

•Compensation expense decreased $0.5 million.

•Property taxes decreased ~~$0.4~~$0.1 million.

•Dispositions in ~~2021~~2022 and ~~2022~~2023 resulted in a decrease of ~~$2.5~~$3.1 million.

•Impact from the Merger resulted in an increase of ~~$51.3~~$62.6 million.

Table of Contents

General and administrative expenses increased approximately ~~$8.5~~$4.9 million, or ~~104.0%~~46.7%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•~~Compensation~~Decrease in cash compensation incentive expense ~~increases~~ of ~~$1.4 million, including $1.0 million of non-cash expense.~~$1.1 million.

•Travel and related expenses increased $0.7 million.

•Net increases, ~~including~~primarily due to impacts from the Merger along with professional fees, audit services, insurance and other administrative costs, of ~~$1.5 million.~~

•~~Impact from the Merger resulted in an increase of $5.6~~$5.3 million.

Merger-related costs ~~totaled $79.4~~decreased $22.8 million, or 321.2%, for the three months ended ~~September~~June 30, ~~2022. These costs, consisting~~2023 compared to the prior year period primarily ofdue to a reduction in legal and consulting ~~and banking~~ services ~~were incurred~~ in connection with the Merger ~~with HTA.~~including a refund related to state transfer taxes.

Depreciation and amortization expense increased ~~$107.1~~$127.5 million, or ~~210.0%~~228.7%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in ~~2021~~2022 and ~~2022~~2023 resulted in an increase of ~~$6.9~~$2.7 million.

•Various building and tenant improvement expenditures resulted in an increase of ~~$2.5~~$3.7 million.

•Dispositions in ~~2021~~2022 and ~~2022~~2023 resulted in a decrease of ~~$2.2~~1.6 million.

•Assets that became fully depreciated resulted in a decrease of ~~$2.8~~$3.2 million.

•Impact from the Merger resulted in an increase of ~~$102.7~~$125.9 million.

Other Income (Expense)

Gains on sale of real estate properties

In the ~~third~~second quarter of 2023, the Company recognized gains of approximately $7.2 million. In the second quarter of 2022, the Company recognized gains of approximately ~~$143.9~~$8.5 million.

~~In the third quarter of 2021, the Company recognized gains of approximately $1.2 million.~~

~~Table of Contents~~

Interest expense

Interest expense increased ~~$39.7~~$49.8 million, or ~~297.8%~~320.3%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period. The components of interest expense are as follows:


		THREE MONTHS ENDED SEPTEMBER 30,				CHANGE					THREE MONTHS ENDED JUNE 30,				CHANGE
Dollars in thousands	Dollars in thousands	2022		2021		$		%		Dollars in thousands	2023		2022		$		%
Contractual interest	Contractual interest	$	42,019	$	12,201	$	29,818	244.4	%	Contractual interest	$	52,766	$	13,950	$	38,816	278.3	%
Net discount/premium accretion	Net discount/premium accretion	7,617		50		7,567		15,134.0	%	Net discount/premium accretion	9,649		79		9,570		12,113.9	%
Deferred financing costs amortization		1,341		713		628		88.1	%
Interest rate swap amortization		42		42		—		—	%
Treasury hedge amortization		107		107		—		—	%
Debt issuance costs amortization										Debt issuance costs amortization	1,562		708		854		120.6	%
Amortization of interest rate swap settlement										Amortization of interest rate swap settlement	42		42		—		—	%
Amortization of treasury hedge settlement										Amortization of treasury hedge settlement	107		107		—		—	%
Fair value derivative	Fair value derivative	1,732		—		1,732		—	%	Fair value derivative	997		—		997		—	%
Interest cost capitalization	Interest cost capitalization	(703)		(34)		(669)		1,967.6	%	Interest cost capitalization	(712)		(108)		(604)		559.3	%
Right-of-use assets financing amortization		889		255		634		248.6	%
Interest on lease liabilities										Interest on lease liabilities	923		765		158		20.7	%
Total interest expense	Total interest expense	$	53,044	$	13,334	$	39,710	297.8	%	Total interest expense	$	65,334	$	15,543	$	49,791	320.3	%

Contractual interest expense increased ~~$29.8~~$38.8 million, or ~~244.4%~~278.3%, for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Senior notes and unsecured term loans assumed in the Merger accounted for an increase of approximately ~~$22.8~~$26.6 million.

•New unsecured term loans executed with the amended credit facility accounted for an increase of approximately ~~$2.2~~$9.9 million.

•The Company's Unsecured Term Loan due 2024 and 2026 ~~net of swaps,~~ accounted for an increase of approximately ~~$1.0~~$3.8 million.

•The Unsecured Credit Facility accounted for an increase of approximately ~~$4.2~~$3.8 million due to an increased weighted average balance outstanding and an increase in the weighted average interest rate.

•Active interest rate derivatives accounted for a decrease of $5.2 million.

•Mortgage note repayments, net of assumptions, accounted for a decrease of approximately ~~$0.3~~$0.1 million.

Table of Contents

Impairment of Real Estate Properties

In the ~~third~~second quarter of ~~2021,~~2023, the Company recognized ~~an impairment of approximately $10.7~~impairments totaling $55.2 million ~~based on~~primarily due to four properties with changes in the ~~contractual sales price of a property that was reclassified to held for sale during the third quarter of 2021.~~expected holding periods.

Equity loss from unconsolidated joint ventures

The Company recognized its proportionate share of losses from its unconsolidated joint ventures. These losses are primarily attributable to non-cash depreciation expense. See Note 3 to the Condensed Consolidated Financial Statements accompanying this report for more details regarding the Company's unconsolidated joint ventures.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022

The Company’s results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period in ~~2021~~2022 were impacted by the Merger, acquisitions, developments, dispositions, gains on sale, and capital markets transactions.

Revenues

Rental income increased ~~$189.4~~$374.7 million, or ~~48.7%~~134.2%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period. This increase is primarily comprised of the following:

•Acquisitions in ~~2021~~2022 and ~~2022~~2023 contributed ~~$37.6~~$19.3 million.

•Leasing activity, including contractual rent increases, contributed ~~$11.4~~$3.5 million.

•Dispositions in ~~2021~~2022 and ~~2022~~2023 resulted in a decrease of $14.2 million.

•Impact from the Merger contributed ~~$154.6~~$362.2 million.

~~Table of Contents~~

Interest income increased ~~$4.8~~$4.6 million, or ~~199.0%~~117.3%, from the prior year period primarily as ~~the~~ result of ~~two financing receivables acquired during 2021 contributing $3.4 million and interest totaling $1.4 million from~~ notes receivables assumed in the ~~Merger.~~Merger and a note receivable entered into with a buyer upon disposition of a property in the first quarter of 2023.

Other operating income increased ~~$1.9~~$3.6 million, or ~~26.2%~~69.7%, from the prior year period primarily as a result of variable parking and asset management ~~fees.~~fees assumed in the Merger.

Expenses

Property operating expenses increased ~~$67.7~~$133.0 million, or ~~42.5%~~116.2%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in ~~2021~~2022 and ~~2022~~2023 resulted in an increase of ~~$15.1~~$5.8 million.

•Increases in portfolio operating expenses as follows:

◦Utilities expense of ~~$3.2~~$1.0 million;

◦Administrative, leasing commissions, and other legal expense of ~~$2.1~~$1.3 million;

◦Janitorial expense of $0.8 million;

◦~~Property tax expense increase of $0.6 million;~~

◦~~Compensation expense of $0.6 million;~~

◦Maintenance and repair expense of ~~$1.1 million;~~

◦~~Security expense of $0.3~~$1.2 million; and

◦Insurance expense of ~~$0.2~~$0.8 million.

•Property tax expense decreased of $0.5 million.

•Compensation expense decreased $0.8 million.

•Dispositions in ~~2021~~2022 and ~~2022~~2023 resulted in a decrease of ~~$7.6~~$7.3 million.

•Impact from the Merger resulted in an increase of ~~$51.3~~126.8 million.

General and administrative expenses increased approximately ~~$13.1~~$8.8 million, or ~~51.7%~~40.9%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Incentive-based awards ~~increases of~~decreased $1.5 million.

•~~Compensation expense~~Net increases, ~~of $4.0 million, including $2.4 million of non-cash expense.~~

•~~Net increases,~~impacts from the Merger including professional fees, audit services, insurance, travel and other administrative costs, of ~~$2.0~~$10.3 million.

•

~~Impact from the Merger resulted in an increase~~

Table of ~~$5.6 million.~~Contents

Merger-related costs ~~totaled $92.6~~decreased $24.0 million, or 181.9%, for the ~~nine~~six months ended ~~September~~for the six months ended June 30, ~~2022. These costs consisted~~2023 primarily ofdue to a reduction in legal and consulting ~~and banking~~ services ~~incurred~~ in connection with the Merger ~~with HTA.~~including a refund related to state transfer taxes.

Depreciation and amortization expense increased ~~$117.0~~$257.9 million, or ~~77.5%~~234.9%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in ~~2021~~2022 and ~~2022~~2023 resulted in an increase of ~~$19.6~~$7.1 million.

•Various building and tenant improvement expenditures resulted in an increase of ~~$7.6~~$6.5 million.

•Dispositions in ~~2021~~2022 and ~~2022~~2023 resulted in a decrease of ~~$5.3~~$3.6 million.

•Assets that became fully depreciated resulted in a decrease of ~~$7.6~~$6.1 million.

•Impact from the Merger including a reset for fair value resulted in an increase of ~~$102.7~~$254.0 million.

~~Table of Contents~~

Other Income (Expense)

Gains on sale of real estate properties

Gains on the sale of real estate properties infor the six months ended June 30, 2023 and 2022 ~~totaling approximately $197.2 million.~~

~~Gains on the sale of real estate properties in 2021 totaling approximately $41.0 million.~~totaled $8.2 million and $53.3 million, respectively.

Interest expense

Interest expense increased ~~$42.4~~$99.9 million, or ~~106.4%~~342.0%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period. The components of interest expense are as follows:


		NINE MONTHS ENDED SEPTEMBER 30,				CHANGE					SIX MONTHS ENDED JUNE 30,				CHANGE
Dollars in thousands	Dollars in thousands	2022		2021		$		%		Dollars in thousands	2023		2022		$		%
Contractual interest	Contractual interest	$	68,470	$	36,590	$	31,880	87.1	%	Contractual interest	$	103,533	$	26,452	$	77,081	291.4	%
Net discount/premium accretion	Net discount/premium accretion	7,747		146		7,601		5,206.2	%	Net discount/premium accretion	19,240		129		19,111		14,814.7	%
Deferred financing costs amortization		2,760		2,114		646		30.6	%
Interest rate swap amortization		126		126		—		—	%
Treasury hedge amortization		320		320		—		—	%
Debt issuance costs amortization										Debt issuance costs amortization	3,037		1,419		1,618		114.0	%
Amortization of interest rate swap settlement										Amortization of interest rate swap settlement	84		84		—		—	%
Amortization of treasury hedge settlement										Amortization of treasury hedge settlement	213		213		—		—	%
Fair value derivative	Fair value derivative	1,732		—		1,732		—	%	Fair value derivative	2,426		—		2,426		—	%
Interest cost capitalization	Interest cost capitalization	(848)		(187)		(661)		353.5	%	Interest cost capitalization	(1,282)		(145)		(1,137)		784.1	%
Right-of-use assets financing amortization		1,941		748		1,193		159.5	%
Interest on lease liabilities										Interest on lease liabilities	1,841		1,052		789		75.0	%
Total interest expense	Total interest expense	$	82,248	$	39,857	$	42,391	106.4	%	Total interest expense	$	129,092	$	29,204	$	99,888	342.0	%

Contractual interest expense increased ~~$31.9~~$77.1 million, or ~~87.1%~~291.4%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period primarily as a result of the following activity:

•Senior notes and unsecured term loans assumed with the Merger accounted for an increase of approximately ~~$22.8~~$52.4 million.

•New unsecured term loans executed with the amended credit facility accounted for an increase of approximately ~~$2.2~~$19.0 million.

•The Company's Unsecured Term Loan due 2024 and 2026, net of swaps, accounted for an increase of approximately ~~$0.9~~$7.7 million.

•The Unsecured Credit Facility accounted for an increase of approximately ~~$7.0~~$8.1 million due to an increased weighted average balance outstanding and an increase in the weighted average interest rate.

•Interest rate derivatives accounted for a decrease of $10.0 million.

•Mortgage note repayments, net of assumptions, accounted for a decrease of approximately ~~$1.0~~$0.1 million.

Impairment of Real Estate Properties

~~Impairment of real estate~~During the six months ended June 30, 2023, the Company recognized impairments totaling $86.7 million relating to five properties ~~in 2021 totaling approximately $16.6 million~~that were sold, one land parcel that was ~~associated with the disposal of one property totaling $0.8 million and the reclassification of a property~~sold, three properties reclassified to held for sale ~~resulting~~and four additional properties due to changes in ~~an impairment of $10.7 million based on~~ the ~~contractual sales price.~~expected holding periods. In addition, the Company recorded ~~impairment charges totaling $5.1~~$5.2 million ~~which includes a property associated with a redevelopment project~~ in ~~Nashville, Tennessee.~~credit loss reserves related to notes receivables. See Note 1 to the Condensed Consolidated Financial Statements accompanying this report for more details regarding the Company's notes receivables and credit loss reserves.

Table of Contents

Equity loss from unconsolidated joint ventures

The Company recognized its proportionate share of losses from its unconsolidated joint ventures, These losses are primarily attributable to non-cash depreciation expense. See Note 3 to the Condensed Consolidated Financial Statements accompanying this report for more details regarding the Company's unconsolidated joint ventures.

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 ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, 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, ~~2021.~~2022.

~~Table of Contents~~

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.

Changes in Internal Control over Financial Reporting

On July 20, 2022, the Merger of Legacy HR and Legacy HTA was completed, and the Company is currently integrating Legacy HTA into its operations, compliance program and internal control processes. SEC regulations allow companies to exclude acquisitions from their assessment of internal control over financial reporting during the first year following an acquisition. The Company has excluded the acquired operations of Legacy HTA from management's assessment of internal control over financial reporting for the nine months ended September 30, 2022. Excluding the Merger, thereThere 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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

In addition to the other information set forth in this report, ~~and the risk factors discussed below,~~ an investor should carefully consider the factors ~~discussed below and those~~ discussed in Part I, “Item 1A. Risk Factors” in ~~Legacy HR's~~the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021 and Legacy HTA's Annual Report on Form 10-K for the year ended December 31, 2021,~~2022, which could materially affect the Company’s business, financial condition or future results. The risks, as described ~~below and~~ in ~~Legacy HR’s~~the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021 and Legacy HTA's Annual Report on Form 10-K for the year ended December 31, 2021,~~2022, 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.

~~Risk Factors Relating to the Company~~

~~Operational Risks~~

~~The Company has incurred substantial expenses related to the Merger.~~

The Company has incurred substantial expenses in connection with completing the Merger and expects to incur substantial expenses integrating the business, operations, networks, systems, technologies, policies and procedures of the two companies, including severance costs. In addition, there are a large number of systems that must be integrated, including billing, management information, asset management, accounting and finance, payroll and benefits, lease administration and regulatory compliance. Although the Company has assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond its control that could affect the total amount or the timing of its integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and integration expenses associated with the Merger could, particularly in the near term, exceed the savings that the Company

~~Table of Contents~~

expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses. As a result, Legacy HR incurred expenses against its earnings before the completion of the Merger, and the Company has incurred and expects to incur additional expenses and charges following the Merger.

The Company may be unable to integrate the businesses of Legacy HR and Legacy HTA successfully and realize the anticipated synergies and related benefits of the Merger or do so within the anticipated timeframe.

The Merger involves the combination of two companies that operated as independent public companies. The Company is devoting significant management attention and resources to integrate the business practices and operations of Legacy HR and Legacy HTA. Potential difficulties the Company may encounter in the integration process include the following:

1.the inability to successfully combine the businesses of Legacy HR and Legacy HTA in a manner that permits the Company to achieve the cost savings anticipated to result from the Merger, which would result in the anticipated benefits of the Merger not being realized in the timeframe currently anticipated or at all;

2.~~the complexities associated with managing the combined businesses out of different locations and integrating personnel from the two companies;~~

3.~~the additional complexities of combining two companies with different histories, cultures, markets and tenant bases;~~

4.~~the failure to retain key employees of the Company;~~

5.~~potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Merger; and~~

6.performance shortfalls at one or both of the two companies as a result of the diversion of management's attention caused by completing the Merger and integrating the operations of Legacy HR and Legacy HTA.

For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the Company's management, the disruption of the Company's ongoing business or inconsistencies in the Company's services, standards, controls, procedures and policies, any of which could adversely affect the ability of the Company to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the Merger, or could otherwise adversely affect the business and financial results of the Company.

~~The Company may be unable to retain key employees.~~

The success of the Company after the Merger will depend in part upon its ability to retain key employees. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the Company following the Merger. Accordingly, no assurance can be given that the Company will be able to retain key employees.

The trading price of shares of common stock of the Company may be affected by factors different from those that affected the price of shares of Legacy HR's common stock or Legacy HTA’s common stock before the Merger.

The results of operations of the Company, as well as the trading price of the shares of common stock of the Company, may be affected by factors different from those that affected Legacy HR's or Legacy HTA's results of operations and the trading prices of their respective shares of common stock. These factors include:

1.~~a greater number of shares of common stock of the Company outstanding;~~

2.~~different stockholders;~~

3.~~different businesses; and~~

4.~~different assets and capitalizations.~~

In addition, the Company may take actions in the future—such as a share split, reverse share split, stock repurchases, or reclassification—that could affect the trading price of its shares of common stock.

~~Accordingly, the historical trading prices and financial results of Legacy HR and Legacy HTA may not be indicative of these matters for the Company after the Merger.~~

~~Table of Contents~~

~~The Company cannot assure you that it will be able to continue paying dividends at or above the rates paid by Legacy HR and Legacy HTA.~~

The stockholders of the Company may not receive dividends at the same rate they received dividends as stockholders of Legacy HR and stockholders of Legacy HTA for various reasons, including the following:

1.~~the Company may not have enough cash to pay such dividends due to changes in the Company's cash requirements, capital spending plans, cash flow or financial position;~~

2.decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the board of directors of the Company, which reserves the right to change the Company's current dividend practices at any time and for any reason;

3.~~the Company may desire to retain cash to maintain or improve its credit ratings; and~~

4.the amount of dividends that the Company's subsidiaries may distribute to the Company may be subject to restrictions imposed by state law, restrictions that may be imposed by state regulators, and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.

~~Stockholders of the Company do not have contractual or other legal right to dividends that have not been authorized by the board of directors of the Company.~~

~~Regulatory and Legal Risks~~

~~Counterparties to certain agreements with Legacy HR or Legacy HTA may exercise contractual rights under such agreements in connection with the Merger.~~

Legacy HR and Legacy HTA are each party to certain agreements that give the counterparties certain rights in connection with a qualifying change in control, including in some cases the right to terminate the agreement. The Merger may constitute a change in control under some of these agreements, and therefore the counterparties could exercise any rights they may have regarding termination, repurchase, recourse against the Company for obligations of its subsidiaries, acceleration of payment obligations or otherwise. In addition, counterparties may seek modifications of the terms of agreements as a condition to granting a waiver or consent. If such counterparties exercise any such contractual rights, this may adversely impact the Company.

Joint venture investments, including those resulting from the contribution of certain of Legacy HTA properties into one or more joint ventures, could be adversely affected by the Company's lack of sole decision-making authority, its reliance on its joint venture partners' financial condition or disputes between any joint venture partner and the Company.

The Company has joint venture investments that constitute a portion of the Company’s assets. In addition, certain assets of Legacy HTA have been contributed to one or more joint ventures and more may be contributed to joint ventures in the near future. The Company may enter into additional joint ventures in the future. The Company will not be in a position to exercise sole decision-making authority regarding the partnership, joint venture or other entity. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present were a third-party not involved. For example, joint venture partners may have economic or other business interests or goals that are inconsistent with the business interests or goals of the Company, they could be in a position to take actions contrary to the policies or objectives of the Company, and they may have competing interests that could create conflict of interest issues. Such investments may also have the potential risk of impasses on decisions, because neither the Company nor the joint venture partner would have full control over the partnership or joint venture. In addition, joint venture partners of the Company may have consent rights, rights to buy or sell joint venture interests, or other rights under certain agreements, which may have been implicated as a result of the Merger. Disputes between the Company and joint venture partners may result in litigation or arbitration. In addition, if joint venture partners fail to fund their share of required capital contributions due to insolvency or for other reasons, the joint venture investments, including properties owned by the joint ventures, could be subject to additional risk.

~~Other Risks~~

~~The Company has a substantial amount of indebtedness and may need to incur more in the future.~~

The Company has substantial indebtedness, and in connection with executing the Company's business strategies following the Merger, the Company expects to acquire additional properties, and the Company may elect to finance these acquisitions by incurring additional indebtedness. Its substantial indebtedness could have material adverse

~~Table of Contents~~

consequences for the Company, including (a) reducing the Company's credit ratings and thereby raising its borrowing costs, (b) hindering the Company's ability to adjust to changing market, industry or economic conditions, (c) limiting the Company's ability to access the capital markets to refinance maturing debt or to fund acquisitions or emerging businesses, (d) limiting the amount of free cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses, (e) making the Company more vulnerable to economic or industry downturns, including interest rate increases, and (f) placing the Company at a competitive disadvantage compared to less leveraged competitors.

Additionally, the agreements that govern the terms of its indebtedness contain a number of restrictive covenants (including, without limitation, financial maintenance covenants) that impose significant operating and financial restrictions on the Company and may limit its ability to engage in acts that may be in its long-term best interest. Moreover, the Company's ability to satisfy any financial maintenance covenants may be affected by events beyond its control and, as a result, it cannot provide assurance that it will be able to satisfy any such covenants.

A breach of the covenants under the agreements that govern the terms of any of the Company's indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow the applicable creditors to accelerate the related debt and/or terminate any related commitments to extend further credit and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event debtholders accelerate the repayment of the Company's indebtedness, the Company may not have sufficient resources to repay such indebtedness.

Moreover, to respond to competitive challenges, the Company may be required to raise substantial additional capital to execute its business strategy. The Company's ability to arrange additional financing will depend on, among other factors, the Company's financial position and performance, as well as prevailing market conditions and other factors beyond the Company's control. If the Company is unable to obtain additional financing, the Company's credit ratings could be further adversely affected, which could further raise the Company's borrowing costs and further limit its future access to capital and its ability to satisfy its obligations under its indebtedness.

The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity.

A REIT is required by the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), to make dividend distributions, thereby retaining less of its capital for growth. As a result, a REIT typically requires new capital to invest in real estate assets. However, there may be times when the Company will have limited access to capital from the equity and/or debt markets. Changes in the Company’s debt ratings could have a material adverse effect on its interest costs and financing sources. The Company’s debt rating can be materially influenced by a number of factors including, but not limited to, acquisitions, investment decisions, and capital management activities. The capital and credit markets have experienced volatility and at times have limited the availability of funds. The Company’s ability to access the capital and credit markets may be limited by these or other factors, which could have an impact on its ability to refinance maturing debt, fund dividend payments and operations, acquire healthcare properties and complete development and redevelopment projects. If the Company is unable to refinance or extend principal payments due at maturity of its various debt instruments, its cash flow may not be sufficient to repay maturing debt or make dividend payments to stockholders. If the Company defaults in paying any of its debts or satisfying its debt covenants, it could experience cross-defaults among debt instruments, the debts could be accelerated and the Company could be forced to liquidate assets for less than the values it would otherwise receive.

Further, the Company obtains credit ratings from various credit-rating agencies based on their evaluation of the Company's credit. These agencies' ratings are based on a number of factors, some of which are not within the Company's control. In addition to factors specific to the Company's financial strength and performance, the rating agencies also consider conditions affecting REITs generally. The Company's credit ratings could be downgraded. If the Company's credit ratings are downgraded or other negative action is taken, the Company could be required, among other things, to pay additional interest and fees on borrowings.

~~Increases in interest rates could have a material adverse effect on the Company's cost of capital.~~

In March 2022, the Federal Reserve began, and it has continued and is expected to continue, to raise interest rates in an effort to curb inflation. Increases in interest rates will increase interest cost on new fixed and variable debt and on

~~Table of Contents~~

existing variable rate debt. Such increases in the cost of capital could adversely impact the Company's ability to finance operations, acquire and develop properties, and refinance existing debt. Additionally, increased interest rates may also result in less liquid property markets, limiting the Company's ability to sell or contribute to a joint venture existing assets.

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

~~Authorized Repurchases of Equity Securities by~~During the ~~Issuer~~

~~On August 2, 2022,~~six months ended June 30, 2023, the ~~Company’s Board of Directors authorized the repurchase of up to $500.0 million of outstanding~~Company withheld and canceled shares of ~~the Company’s~~Company common stock ~~either in~~to satisfy employee tax withholding obligations payable upon the ~~open market~~vesting of non-vested shares, as follows:

Table of Contents


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	—	$	—	—	—
February 1 - February 28	38,632	21.71		—	—
March 1 - March 31	—	—		—	—
April 1 - April 30	—	—		—	—
May 1 - May 31	—	—		—	—
June 1 - June 30	—	—		—	—
Total	38,632	$	21.71

Item 5. Other Information

During the three months ended June 30, 2023, no director or through privately negotiated transactions, subject to 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. Asofficer of the ~~date~~Company adopted or terminated a "Rule 10b5-1 trading agreement" or "non-Rule 10b5-1 trading agreement," as each term is defined in Item 408(a) of ~~this report, the Company has not repurchased any shares of its common stock 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 of programs MAXIMUM NUMBER OF SHARES that may yet be purchased under the plans or programs
July 1 - July 31 — $ — — —
August 1 - August 31 — — — —
September 1 - September 30 2,018 24.14 — —
Total 2,018
Regulation S-K.

Item 6. Exhibits


EXHIBIT			DESCRIPTION
~~Exhibit 2.1~~			Agreement and Plan of Merger, dated as of February 28, 2022, by and among Healthcare Realty Trust Incorporated (now known as HRTI, LLC), Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated), Healthcare Trust of America Holdings, L.P. (now known as Healthcare Realty Holdings, L.P.), and HR Acquisition 2, LLC. 1
Exhibit 3.1			Fifth Articles of Amendment and Restatement of ~~Healthcare Trust of America, Inc. (now known~~the Company, as ~~Healthcare Realty Trust Incorporated), effective March 22, 2014.~~3amended (filed herewith).
Exhibit 3.2			~~Articles of Amendment of Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated), effective December 15, 2014.~~4
~~Exhibit 3.3~~			~~Articles of Amendment of Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated).~~2
~~Exhibit 3.4~~			Fourth Amended and Restated Bylaws of ~~Healthcare Trust~~the Company.1
Exhibit 4.1			D escription of ~~America, Inc. (now known as Healthcare Realty Trust Incorporated), as amended.~~ the Registrant5's securities regi stered p ursuant to Section 12 of the Securities and E x change Act of 1934 (filed herewith ).
Exhibit ~~4.1~~22.1			~~Indenture, dated as~~Subsidiary Issuers of ~~July 22, 2022, by and among Healthcare Realty Holdings, L.P., Healthcare Realty Trust Incorporated and U.S. Bank Trust Company, National Association.~~ 2Guaranteed Securities. (filed herewith)
~~Exhibit 4.2~~			~~Supplemental Indenture No. 1, dated as of July 22, 2022, by and among Healthcare Realty Holdings, L.P., Healthcare Realty Trust Incorporated, and U.S. Bank Trust Company, National Association.~~2
~~Exhibit 4.3~~			~~Supplemental Indenture No. 2, dated as of July 22, 2022, by and among Healthcare Realty Holdings, L.P., Healthcare Realty Trust Incorporated, and U.S. Bank Trust Company, National Association.~~2
~~Exhibit 4.4~~			~~Supplemental Indenture No. 3, dated as of July 22, 2022, by and among Healthcare Realty Holdings, L.P., Healthcare Realty Trust Incorporated, and U.S. Bank Trust Company, National Association.~~2
~~Exhibit 4.5~~			~~Supplemental Indenture No. 4, dated as of July 22, 2022, by and among Healthcare Realty Holdings, L.P., Healthcare Realty Trust Incorporated, and U.S. Bank Trust Company, National Association.~~2
~~Exhibit 4.6~~			~~Tenth Supplemental Indenture, dated as of July 22, 2022, by and between HRTI, LLC and Truist Bank.~~2
~~Exhibit 4.7~~			~~3.875% Senior Notes due 2025.~~2
~~Exhibit 4.8~~			~~3.625% Senior Notes due 2028 (No. 2028-1).~~2
~~Exhibit 4.9~~			~~3.625% Senior Notes due 2028 (No. 2028-2).~~2
~~Exhibit 4.1~~0			~~2.400% Senior Notes due 2030 (No. 2030-1).~~2

~~Table of Contents~~


~~Exhibit 4.11~~			~~2.400% Senior Notes due 2030 (No. 2030-2).~~2
~~Exhibit 4.12~~			~~2.050% Senior Notes due 2031.~~2
~~Exhibit 4.13~~			~~Guarantee of 2025 Note.~~2
~~Exhibit 4.15~~			~~Guarantee of 2028 Note.~~2
~~Exhibit 4.16~~			~~Guarantee of 2030 Note.~~2
~~Exhibit 4.17~~			~~Guarantee of 2031 Note.~~2
~~Exhibit 10.1~~			Term Loan Agreement, dated as of May 13, 2022, among Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated), Healthcare Trust of America Holdings, LP (now known as Healthcare Realty Holdings, L.P.), the lenders named therein, and J.P. Morgan Chase Bank, N.A., as administrative agent for such lenders.6
~~Exhibit 10.2~~			Fourth Amended and Restated Revolving Credit and Term Loan Agreement, dated as of July 20, 2022, by and among Healthcare Trust of America Holdings, LP (now known as Healthcare Realty Holdings, L.P.), Healthcare Trust of America, Inc. (now known as Healthcare Realty Trust Incorporated), the lenders named therein, and Wells Fargo Bank, National Association.2
~~Exhibit 10.3~~			~~Contribution and Assignment Agreement, dated as of July 20, 2022, by and between Healthcare Realty Trust Incorporated and Healthcare Realty Holdings, L.P.~~2
~~Exhibit 10.4~~			Third Amended and Restated Employment Agreement, dated February 16, 2016, by and between Todd J. Meredith and Legacy HR (previously filed as Exhibit 10.10 to Legacy HR’s Form 10-K for the year ended December 31, 2015 filed with the SEC on February 16, 2016 and incorporated by reference herein).2
~~Exhibit 10.5~~			~~Amendment No.~~ 1 ~~to Third Amended and Restated Employment Agreement, dated February 1~~2 ~~, 202~~0 ~~, by and between Todd J. Meredith and Legacy HR (previously filed as Exhibit 10.~~5 ~~to Legacy HR’s Form 10-K for the year ended December 31, 20~~19 ~~filed with the SEC on February~~ 12 ~~, 20~~20 ~~and incorporated by reference herein).~~2
~~Exhibit 10.6~~			Amendment No. 2 to Third Amended and Restated Employment Agreement, dated February 18, 2022, by and between Todd J. Meredith and Legacy HR (previously filed as Exhibit 10.6 to Legacy HR’s Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022 and incorporated by reference herein).2
~~Exhibit 10.7~~			Third Amended and Restated Employment Agreement, dated February 15, 2017, by and between John M. Bryant, Jr. and Legacy HR (previously filed as Exhibit 10.8 to Legacy HR’s Form 10-K for the year ended December 31, 2016 filed with the SEC on February 15, 2017 and incorporated by reference herein).2
~~Exhibit 10.8~~			Amendment No. 1 to Third Amended and Restated Employment Agreement, dated February 12, 2020, by and between John M. Bryant, Jr. and Legacy HR (previously filed as Exhibit 10.7 to Legacy HR’s Form 10-K for the year ended December 31, 2019 filed with the SEC on February 12, 2020 and incorporated by reference herein).2
~~Exhibit 10.9~~			Amended and Restated Employment Agreement, dated January 1, 2017, by and between Robert E. Hull and Legacy HR (previously filed as Exhibit 10.9 to Legacy HR’s Form 10-K for the year ended December 31, 2016 filed with the SEC on February 15, 2017 and incorporated by reference herein).2
~~Exhibit 10.10~~			Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, by and between Robert E. Hull and Legacy HR (previously filed as Exhibit 10.9 to Legacy HR’s Form 10-K for the year ended December 31, 2019 filed with the SEC on February 12, 2020 and incorporated by reference herein).2
~~Exhibit 10.11~~			Amendment No. 2 to Amended and Restated Employment Agreement, dated February 18, 2022, by and between Robert E. Hull and Legacy HR (previously filed as Exhibit 10.11 to Legacy HR’s Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022 and incorporated by reference herein).2
~~Exhibit 10.12~~			Amended and Restated Employment Agreement, dated February 2, 2016, by and between J. Christopher Douglas and Legacy HR (previously filed as Exhibit 10.1 to Legacy HR’s Form 8-K filed with the SEC on February 3, 2016 and incorporated by reference herein).2
~~Exhibit 10.13~~			Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, by and between J. Christopher Douglas and Legacy HR (previously filed as Exhibit 10.11 to Legacy HR’s Form 10-K for the year ended December 31, 2019 filed with the SEC on February 12, 2020 and incorporated by reference herein).2
~~Exhibit 10.14~~			Amendment No. 2 to Amended and Restated Employment Agreement, dated February 18, 2022, by and between J. Christopher Douglas and Legacy HR (previously filed as Exhibit 10.4 to Legacy HR’s Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022 and incorporated by reference herein).2
~~Exhibit 10.15~~			Amended and Restated Employment Agreement, dated as of July 1, 2021, by and between Julie F. Wilson and Legacy HR (previously filed as Exhibit 10.1 to Legacy HR’s Form 10-Q for the quarter ended June 30, 2021 and incorporated by reference herein).2
~~Exhibit 10.16~~			~~Executive Incentive Program, dated August 1, 2022.~~7
~~Exhibit 10.17~~			~~Second Amended and Restated Agreement of Limited Partnership Healthcare Trust of America Holdings, LP (now known as Healthcare Realty Holdings, L.P.).~~2

~~Table of Contents~~


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)

1Filed as an exhibit to ~~the Company's Current Report on~~Legacy HTA's (File No. 001-35568) Form 8-K filed ~~February 28, 2022 and hereby incorporated by reference.~~

2~~Filed as an exhibit to~~with the ~~Company's Current Report~~SEC on ~~Form 8-K filed July 26, 2022 and hereby incorporated by reference.~~

3~~Filed as an exhibit to the Company's Current Report on Form 8-K filed March 11, 2014 and hereby incorporated by reference.~~

4~~Filed as an exhibit to the Company's Current Report on Form 8-K filed December 16, 2014 and hereby incorporated by reference.~~

5~~Filed as an exhibit to the Company's Current Report on Form 8-K filed~~ April 29, 2020 and hereby incorporated by reference.

6~~Filed as an exhibit to the Company's Current Report on Form 8-K filed May 16, 2022 and hereby incorporated by reference.~~

7~~Filed as an exhibit to the Company's Current Report on Form 8-K filed August 5, 2022 and hereby incorporated by reference.~~

4839

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

	By:	/s/ J. CHRISTOPHER DOUGLAS
		J. Christopher Douglas
		Executive Vice President and Chief Financial Officer
~~November 9, 2022~~August 8, 2023

4940


PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of ~~Income~~Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	87
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2926
Item 3	Quantitative and Qualitative Disclosures about Market Risk	4138
Item 4	Controls and Procedures	4238

PART II - OTHER INFORMATION
Item 1	Legal Proceedings	4238
Item 1A	Risk Factors	4238
Item 2	Unregistered Sales of Equity and Use of Proceeds	4638
Item 5	Other Information	39
Item 6	Exhibits	4639

SIGNATURE		4940


	MATURITY DATES 1	BALANCE 2 AS OF				EFFECTIVE INTEREST RATE as of 9/30/2022
Dollars in thousands		9/30/2022		12/31/2021
$1.5 billion Unsecured Credit Facility 3	10/27	$	190,600	$	—	3.99	%
$700 million Unsecured Credit Facility 3	5/23	—		210,000		—	%
$1.125 billion Asset Sale Term Loan 4	7/24	421,919		—		4.07	%
$350 million Unsecured Term Loan 3	7/25	348,735		—		4.10	%
$200 million Unsecured Term Loan 4	5/26	199,611		199,460		3.51	%
$300 million Unsecured Term Loan 4 5	10/26	299,930		—		2.47	%
$150 million Unsecured Term Loan 5	5/26	149,458		149,376		3.32	%
$200 million Unsecured Term Loan 4 5	7/27	199,328		—		2.27	%
$300 million Unsecured Term Loan 3	1/28	297,764		—		3.56	%
Senior Notes due 2025	5/25	249,025		249,040		4.12	%
Senior Notes due 2026 4	8/26	569,786		—		4.94	%
Senior Notes due 2027 4	7/27	478,541		—		4.76	%
Senior Notes due 2028	1/28	296,711		296,612		3.85	%
Senior Notes due 2030 4	2/30	562,974		—		5.30	%
Senior Notes due 2030	3/30	296,787		296,813		2.72	%
Senior Notes due 2031 4	3/31	628,617		—		5.13	%
Senior Notes due 2031	3/31	295,424		295,374		2.25	%
Mortgage notes payable	8/23-12/26	84,929		104,650		3.97	%
		$	5,570,139	$	1,801,325


Series of Old HR Notes			Tenders and Consents Received as of the Expiration Date	Percentage of Total Outstanding Principal Amount of Such Series of Old HR Notes
3.875	%	Senior Notes due 2025	$235,016,000	94.01	%
3.625	%	Senior Notes due 2028	$290,246,000	96.75	%
2.400	%	Senior Notes due 2030	$297,507,000	99.17	%
2.050	%	Senior Notes due 2031	$298,858,000	99.62	%


	COUPON			PRINCIPAL OUTSTANDING AS OF
Dollars in thousands		FACE VALUE		9/30/2022		12/31/2021
Senior Notes due 2026	3.50%	$	600,000	$	600,000	$	—
Senior Notes due 2027	3.75%	500,000		500,000		—
Senior Notes due 2030	3.10%	650,000		650,000		—
Senior Notes due 2031	2.00%	800,000		800,000		—
		$	2,550,000	$	2,550,000	$	—


	NUMBER OF PROPERTIES	GROSS INVESTMENT at September 30, 2022		SAME STORE CASH NOI for the three months ended September 30,
Dollars in thousands				2022		2021
Same store properties	589	$	7,943,839	$	178,828	$	173,951