UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended:	March 31, ~~2020~~2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to For the transition period to

Commission File Number: 001-11852

~~001-11852~~

HEALTHCARE REALTY TRUST INCORPORATED

(Exact name of Registrant as specified in its charter)



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

3310 West End Avenue, Suite 700

Nashville,, Tennessee37203

(Address of principal executive offices)

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

(Registrant's telephone number, including area code)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, $0.01 par value per share

New York Stock Exchange

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

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

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

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

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

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

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

As of ~~May 1, 2020,~~April 30, 2021, the Registrant had ~~134,932,261~~141,660,077 shares of Common Stock outstanding.

HEALTHCARE REALTY TRUST INCORPORATED

FORM 10-Q

March 31, ~~2020~~2021

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Healthcare Realty Trust Incorporated

Condensed Consolidated Balance Sheets

Amounts in thousands, except per share data


ASSETS							ASSETS
	Unaudited MARCH 31, 2020			DECEMBER 31, 2019				Unaudited MARCH 31, 2021		DECEMBER 31, 2020
Real estate properties							Real estate properties
Land	$	319,882		$	289,751		Land	$	369,202	$	362,695
Buildings, improvements and lease intangibles	4,126,046			3,986,326			Buildings, improvements and lease intangibles	4,201,251		4,220,297
Personal property	10,783			10,538			Personal property	11,370		11,195
Construction in progress	—			48,731

Land held for development	24,647			24,647			Land held for development	27,226		27,226
Total real estate properties	4,481,358			4,359,993			Total real estate properties	4,609,049		4,621,413
Less accumulated depreciation and amortization	(1,164,462		)	(1,121,102		)	Less accumulated depreciation and amortization	(1,238,044)		(1,239,224)
Total real estate properties, net	3,316,896			3,238,891			Total real estate properties, net	3,371,005		3,382,189
Cash and cash equivalents	103,370			657			Cash and cash equivalents	12,087		15,303

Assets held for sale, net	20			37			Assets held for sale, net	64,578		20,646
Operating lease right-of-use assets	125,040			126,177			Operating lease right-of-use assets	120,890		125,198
Financing lease right-of-use assets	12,615			12,667			Financing lease right-of-use assets	19,559		19,667

Investments in unconsolidated joint ventures							Investments in unconsolidated joint ventures	83,943		73,137
Other assets, net	189,708			185,426			Other assets, net	182,043		176,120
Total assets	$	3,747,649		$	3,563,855		Total assets	$	3,854,105	$	3,812,260

LIABILITIES AND STOCKHOLDERS' EQUITY							LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities							Liabilities
Notes and bonds payable	$	1,644,454		$	1,414,069		Notes and bonds payable	$	1,609,251	$	1,602,769
Accounts payable and accrued liabilities	64,574			78,517			Accounts payable and accrued liabilities	66,407		81,174
Liabilities of properties held for sale	74			145
Liabilities of assets held for sale							Liabilities of assets held for sale	1,342		1,216
Operating lease liabilities	91,093			91,574			Operating lease liabilities	91,921		92,273
Financing lease liabilities	17,953			18,037			Financing lease liabilities	18,722		18,837
Other liabilities	70,073			61,504			Other liabilities	68,353		67,615
Total liabilities	1,888,221			1,663,846			Total liabilities	1,855,996		1,863,884
Commitments and contingencies							Commitments and contingencies	0
Stockholders' equity							Stockholders' equity
Preferred stock, $.01 par value per share; 50,000 shares authorized; none issued and outstanding	—			—
Common stock, $.01 par value per share; 300,000 shares authorized; 134,932 and 134,706 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	1,349			1,347
Preferred stock, $.01 par value per share; 50,000 shares authorized; NaN issued and outstanding							Preferred stock, $.01 par value per share; 50,000 shares authorized; NaN issued and outstanding	0		0
Common stock, $.01 par value per share; 300,000 shares authorized; 141,660 and 139,487 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively							Common stock, $.01 par value per share; 300,000 shares authorized; 141,660 and 139,487 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	1,417		1,395
Additional paid-in capital	3,494,123			3,485,003			Additional paid-in capital	3,699,867		3,635,341
Accumulated other comprehensive loss	(19,777		)	(6,175		)	Accumulated other comprehensive loss	(13,887)		(17,832)
Cumulative net income attributable to common stockholders	1,131,619			1,127,304			Cumulative net income attributable to common stockholders	1,223,521		1,199,499
Cumulative dividends	(2,747,886		)	(2,707,470		)	Cumulative dividends	(2,912,809)		(2,870,027)
Total stockholders' equity	1,859,428			1,900,009			Total stockholders' equity	1,998,109		1,948,376

Total liabilities and stockholders' equity	$	3,747,649		$	3,563,855		Total liabilities and stockholders' equity	$	3,854,105	$	3,812,260

The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, are an integral part of these financial statements.

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Income

For the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

Amounts in thousands, except per share data

Unaudited


	THREE MONTHS ENDED March 31,							THREE MONTHS ENDED March 31,
	2020			2019					2021		2020
Revenues							Revenues
Rental income	$	122,644		$	110,696		Rental income		$	128,389	$	122,644

Other operating	2,163			1,961			Other operating		1,950		2,163
	124,807			112,657					130,339		124,807
Expenses							Expenses
Property operating	49,552			42,725			Property operating		52,215		49,552
General and administrative	8,766			8,510			General and administrative		8,499		8,766
Acquisition and pursuit costs	750			305			Acquisition and pursuit costs		744		750
Depreciation and amortization	47,497			42,662			Depreciation and amortization		50,079		47,497
	106,565			94,202

									111,537		106,565
Other Income (Expense)							Other Income (Expense)
Gain (loss) on sales of real estate assets	(49		)	15
Gain (loss) on sales of real estate properties							Gain (loss) on sales of real estate properties		18,890		(49)
Interest expense	(13,960		)	(13,588		)	Interest expense		(13,262)		(13,960)

Impairment of real estate properties							Impairment of real estate properties		(834)		—
Equity loss from unconsolidated joint ventures							Equity loss from unconsolidated joint ventures		(74)		(11)
Interest and other income (expense), net	82			9			Interest and other income (expense), net		500		93
									5,220		(13,927)

	(13,927		)	(13,564		)
Net Income	$	4,315		$	4,891		Net Income		$	24,022	$	4,315


Basic earnings per common share	$	0.03		$	0.04		Basic earnings per common share		$	0.17	$	0.03

Diluted earnings per common share	$	0.03		$	0.04		Diluted earnings per common share		$	0.17	$	0.03

Weighted average common shares outstanding - basic	133,036			124,130			Weighted average common shares outstanding - basic		138,774		133,036
Weighted average common shares outstanding - diluted	133,150			124,232			Weighted average common shares outstanding - diluted		138,871		133,150
Dividends declared, per common share, during the period	$	0.30		$	0.30

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

Amounts in thousands

Unaudited


	THREE MONTHS ENDED March 31,
	2021		2020
Net income	$	24,022	$	4,315
Other comprehensive income (loss)


Interest rate swaps
Reclassification adjustments for losses included in net income (interest expense)	1,095		328
Gains (losses) arising during the period on interest rate swaps	2,850		(9,663)
Losses on settlement of treasury rate locks arising during the period	0		(4,267)
	3,945		(13,602)

Comprehensive income (loss)	$	27,967	$	(9,287)

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

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity

For the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

Amounts in thousands, except per share data

Unaudited


																		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity
Balance at December 31, 2020																	Balance at December 31, 2020	$	1,395	$	3,635,341	$	(17,832)	$	1,199,499	$	(2,870,027)	$	1,948,376
Issuance of common stock, net of issuance costs																	Issuance of common stock, net of issuance costs	21		63,064		—		—		—		63,085
Common stock redemptions																	Common stock redemptions	(1)		(1,555)		—		—		—		(1,556)
Share-based compensation																	Share-based compensation	2		3,017		—		—		—		3,019
Net income																	Net income	—		—		—		24,022		—		24,022
Reclassification adjustments for losses included in net income (interest expense)																	Reclassification adjustments for losses included in net income (interest expense)	—		—		1,095		—		—		1,095
Gains arising during the period on interest rate swaps and treasury rate locks																	Gains arising during the period on interest rate swaps and treasury rate locks	—		—		2,850		—		—		2,850
Dividends to common stockholders ($0.3025 per share)																	Dividends to common stockholders ($0.3025 per share)	—		—		—		—		(42,782)		(42,782)
Balance at March 31, 2021																	Balance at March 31, 2021	$	1,417	$	3,699,867	$	(13,887)	$	1,223,521	$	(2,912,809)	$	1,998,109

	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Net Income		Cumulative Dividends			Total Stockholders’ Equity				Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Cumulative Net Income		Cumulative Dividends		Total Stockholders’ Equity
Balance at December 31, 2019	$	1,347	$	3,485,003		$	(6,175	)	$	1,127,304	$	(2,707,470	)	$	1,900,009		Balance at December 31, 2019	$	1,347	$	3,485,003	$	(6,175)	$	1,127,304	$	(2,707,470)	$	1,900,009
Issuance of common stock, net of issuance costs	2		7,319			—			—		—			7,321			Issuance of common stock, net of issuance costs	2		7,319		—		—		—		7,321
Common stock redemptions	—		(798		)	—			—		—			(798		)	Common stock redemptions	—		(798)		—		—		—		(798)
Share-based compensation	—		2,599			—			—		—			2,599			Share-based compensation	—		2,599		—		—		—		2,599
Net income	—		—			—			4,315		—			4,315			Net income	—		—		—		4,315		—		4,315
Reclassification adjustments for losses included in net income (interest expense)	—		—			328			—		—			328			Reclassification adjustments for losses included in net income (interest expense)	—		—		328		—		—		328
Losses arising during the period on treasury rate locks	—		—			(13,930		)	—		—			(13,930		)
Dividends to common stockholders ($0.30 per share)	—		—			—			—		(40,416		)	(40,416		)
Losses arising during the period on interest rate swaps																	Losses arising during the period on interest rate swaps	—		—		(13,930)		—		—		(13,930)
Dividends to common stockholders ($0.3000 per share)																	Dividends to common stockholders ($0.3000 per share)	—		—		—		—		(40,416)		(40,416)
Balance at March 31, 2020	$	1,349	$	3,494,123		$	(19,777	)	$	1,131,619	$	(2,747,886	)	$	1,859,428		Balance at March 31, 2020	$	1,349	$	3,494,123	$	(19,777)	$	1,131,619	$	(2,747,886)	$	1,859,428

	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Cumulative Net Income		Cumulative Dividends			Total Stockholders’ Equity
Balance at December 31, 2018	$	1,253	$	3,180,284		$	(902	)	$	1,088,119	$	(2,552,112	)	$	1,716,642
Issuance of common stock, net of issuance costs	38		120,462			—			—		—			120,500
Common stock redemptions	—		(570		)	—			—		—			(570		)
Share-based compensation	1		2,638			—			—		—			2,639
Net income	—		—			—			4,891		—			4,891
Reclassification adjustments for losses included in net income (interest expense)	—		—			15			—		—			15
Losses arising during the period on interest rate swaps	—		—			(724		)	—		—			(724		)
Dividends to common stockholders ($0.30 per share)	—		—			—			—		(37,614		)	(37,614		)
Balance at March 31, 2019	$	1,292	$	3,302,814		$	(1,611	)	$	1,093,010	$	(2,589,726	)	$	1,805,779

Table of Contents

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

Amounts in thousands

Unaudited


OPERATING ACTIVITIES							OPERATING ACTIVITIES
	THREE MONTHS ENDED March 31,							THREE MONTHS ENDED March 31,
	2020			2019				2021		2020
Net income	$	4,315		$	4,891		Net income	$	24,022	$	4,315
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	47,497			42,662			Depreciation and amortization	50,079		47,497
Other amortization	1,491			727			Other amortization	822		1,491
Share-based compensation	2,599			2,639			Share-based compensation	3,019		2,599
Amortization of straight-line rent receivable (lessor)	(1,043		)	(668		)	Amortization of straight-line rent receivable (lessor)	(1,461)		(1,043)
Amortization of straight-line rent on operating leases (lessee)	375			390			Amortization of straight-line rent on operating leases (lessee)	367		375
(Gain) loss on sales of real estate assets	49			(15		)
Loss from unconsolidated joint ventures	11			10
(Gain) loss on sales of real estate properties							(Gain) loss on sales of real estate properties	(18,890)		49

Impairment of real estate properties							Impairment of real estate properties	834		0
Equity loss from unconsolidated joint ventures							Equity loss from unconsolidated joint ventures	74		11
Distributions from unconsolidated joint ventures	118			88			Distributions from unconsolidated joint ventures	0		118

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Other assets, including right-of-use-assets	(4,032		)	(4,971		)	Other assets, including right-of-use-assets	(3,467)		(4,032)
Accounts payable and accrued liabilities	(10,005		)	(10,276		)	Accounts payable and accrued liabilities	(17,181)		(10,005)
Other liabilities	(2,931		)	(673		)	Other liabilities	4,278		(2,931)
Net cash provided by operating activities	38,444			34,804			Net cash provided by operating activities	42,496		38,444

INVESTING ACTIVITIES							INVESTING ACTIVITIES
Acquisitions of real estate	(83,580		)	(91,787		)	Acquisitions of real estate	(64,275)		(83,580)
Development of real estate	(2,451		)	(5,712		)	Development of real estate	(184)		(2,451)
Additional long-lived assets	(22,164		)	(11,741		)	Additional long-lived assets	(19,937)		(22,164)
Investments in unconsolidated joint ventures							Investments in unconsolidated joint ventures	(10,880)		0
Proceeds from sales of real estate properties							Proceeds from sales of real estate properties	25,445		0

Net cash used in investing activities	(108,195		)	(109,240		)	Net cash used in investing activities	(69,831)		(108,195)

FINANCING ACTIVITIES							FINANCING ACTIVITIES
Net repayments on unsecured credit facility	(78,000		)	(2,000		)
Borrowings of notes and bonds payable	298,995			—
Net borrowings (repayments) on unsecured credit facility							Net borrowings (repayments) on unsecured credit facility	7,000		(78,000)
Borrowings on term loan							Borrowings on term loan	0		298,995

Repayments of notes and bonds payable	(7,202		)	(1,193		)	Repayments of notes and bonds payable	(946)		(7,202)

Dividends paid	(40,416		)	(37,614		)	Dividends paid	(42,782)		(40,416)
Net proceeds from issuance of common stock	7,213			120,617			Net proceeds from issuance of common stock	63,195		7,213
Common stock redemptions	(892		)	(2,442		)	Common stock redemptions	(1,959)		(892)

Settlement of treasury rate locks	(4,267		)	—			Settlement of treasury rate locks	0		(4,267)
Debt issuance and assumption costs	(2,646		)	—			Debt issuance and assumption costs	(27)		(2,646)
Payments made on finance leases	(321		)	—			Payments made on finance leases	(362)		(321)
Net cash provided by financing activities	$	172,464		$	77,368		Net cash provided by financing activities	24,119		172,464

Increase in cash and cash equivalents	102,713			2,932
Decrease (increase) in cash and cash equivalents							Decrease (increase) in cash and cash equivalents	(3,216)		102,713
Cash and cash equivalents at beginning of period	657			8,381			Cash and cash equivalents at beginning of period	15,303		657
Cash and cash equivalents at end of period	$	103,370		$	11,313		Cash and cash equivalents at end of period	$	12,087	$	103,370

Supplemental Cash Flow Information							Supplemental Cash Flow Information
Interest paid	$	11,428		$	11,071		Interest paid	$	15,779	$	11,428
Invoices accrued for construction, tenant improvements and other capitalized costs	$	12,830		$	13,509		Invoices accrued for construction, tenant improvements and other capitalized costs	$	17,805	$	12,830
Mortgage notes payable assumed upon acquisition (adjusted to fair value)	$	19,269		$	—		Mortgage notes payable assumed upon acquisition (adjusted to fair value)	$	0	$	19,269
Capitalized interest	$	421		$	307		Capitalized interest	$	118	$	421

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Business Overview

Healthcare Realty Trust Incorporated (the "Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, ~~2020,~~2021, the Company had gross investments of approximately ~~$4.4~~$4.6 billion in ~~212~~223 real estate properties located in 2524 states totaling approximately ~~15.8~~16.1 million square feet. The Company provided leasing and property management services to approximately ~~12.0~~13.1 million square feet nationwide. ~~Square footage~~The Company owns 50% of an unconsolidated joint venture with Teachers Insurance and ~~property count disclosures in these Notes to~~Annuity Association ("TIAA Joint Venture") and earns certain fees as the managing member. As of March 31, 2021, the TIAA Joint Venture owned 5 buildings. See Note 2 for more details regarding the Company's ~~Condensed Consolidated Financial Statements are unaudited.~~unconsolidated joint ventures.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. All material intercompany transactions and balances have been eliminated in consolidation.

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

This interim financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. In addition, the interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, ~~2020~~2021 for many reasons including, but not limited to, acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and ~~uncertainties,~~uncertainties.

Principles of Consolidation

The Company’s Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. 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 810 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; 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. The Company may change its original assessment of a VIE upon subsequent events such as the ~~impact~~modification of contractual arrangements that affect the characteristics or adequacy of the ~~COVID-19 pandemic.~~entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis.

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. For entities 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.

As of March 31, 2021, 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 2 for more details regarding the Company's unconsolidated joint ventures.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Use of Estimates in the Condensed Consolidated Financial Statements

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

The Company considered the impact of COVID-19 on these assumptions and estimates used and determined that there were no material adverse impacts on the Company's results of operations and financial position at March 31, 2021. There can be no assurance that COVID-19 will not have a future material adverse impact on the financial results and business operations of the Company.

Revenue from Contracts with Customers (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.

~~Table of Contents~~

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

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

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


	THREE MONTHS ENDED March 31,
in thousands	2021		2020
Type of Revenue
Parking income	$	1,658	$	2,051

Management fee income	239		78
Miscellaneous	53		34
	$	1,950	$	2,163

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. 2016-13~~

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

~~Accounting Standards Update No. 2017-04~~

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

Accounting Standards Update No. 2020-04

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

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Note 2. Real Estate Investments

~~2020~~2021 Company Acquisitions

The following table details the Company's acquisitions for the three months ended March 31, ~~2020:~~2021:


Dollars in thousands	TYPE 1	DATE ACQUIRED	PURCHASE PRICE		CASH CONSIDERATION 2		REAL ESTATE		OTHER 3		SQUARE FOOTAGE
San Diego, CA	MOB	1/7/21	$	17,150	$	17,182	$	17,182	$	0	22,461
Dallas, TX 4	MOB	2/1/21	22,515		22,299		22,641		(342)		121,709
Atlanta, GA 4	MOB	2/17/21	9,800		10,027		10,073		(46)		44,567
Washington, D.C.	MOB	3/3/21	12,750		12,709		12,658		51		26,496








Total real estate acquisitions			$	62,215	$	62,217	$	62,554	$	(337)	215,233

1MOB = medical office building.

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

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

4Includes two properties.

Unconsolidated Joint Venture Acquisitions

The TIAA Joint Venture is not consolidated for purposes of the Company's Condensed Consolidated Financial Statements. The following table details the TIAA Joint Venture acquisition for the three months ended March 31, 2021:


Dollars in thousands	TYPE 1	DATE ACQUIRED	PURCHASE PRICE		CASH CONSIDERATION 2		REAL ESTATE		OTHER 3		SQUARE FOOTAGE	OWNERSHIP %
Denver, CO	MOB	3/30/21	$	14,375	$	14,056	$	14,550	$	(494)	59,359	50	%

1MOB = medical office building.

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

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

Subsequent to March 31, 2021, the TIAA Joint Venture acquired the following properties:


Dollars in thousands	TYPE 1	DATE ACQUIRED	PURCHASE PRICE		SQUARE FOOTAGE	OWNERSHIP %
Colorado Springs, CO	MOB	4/1/21	$	7,200	27,510	50	%
Los Angeles, CA	MOB	4/8/21	31,335		57,573	50	%
San Antonio, TX	MOB	4/30/21	13,600		45,000	50	%









			$	52,135	130,083

1MOB = medical office building.

Unconsolidated Joint Ventures

The Company's investment in and loss recognized for the three months ended March 31, 2021 and 2020 related to its joint ventures accounted for under the equity method are shown in the table below:


	THREE MONTHS ENDED March 31,
Dollars in thousands		2021		2020

Investments in unconsolidated joint ventures, beginning of period 1		$	73,137	$	8,130
New investments during the period		10,880		0
Equity loss recognized during the period 1		(74)		(11)
Owner distributions		0		(119)
Investments in unconsolidated joint ventures, end of period 1		$	83,943	$	8,000

1In addition to the TIAA Joint Venture, the Company also has a 55% and 27% ownership interest in 2 limited liability companies that each own a parking garage in Atlanta, Georgia.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

REAL
ESTATE

OTHER ³

SQUARE FOOTAGE
Los Angeles, CA MOB 1/3/20 $ 42.0
$ (19.3 ) $ 22.8
$ 42.4
$ (0.3 ) 86,986
Atlanta, GA MOB 2/13/20 12.0
—
11.8
12.1
(0.3 ) 64,624
Raleigh, NC MOB 2/25/20 6.3
—
6.5
6.5
—
15,964
Colorado Springs, CO MOB 3/9/20 8.2
—
8.3
8.6
(0.3 ) 34,210
Denver, CO ⁴
MOB 3/13/20 33.5
—
33.2
34.0
(0.8 ) 136,994
Total real estate acquisitions $ 102.0
$ (19.3 ) $ 82.6
$ 103.6
$ (1.7 ) 338,778
Land acquisition ⁵
1.6
—
1.7
1.7
—
—
$ 103.6
$ (19.3 ) $ 84.3
$ 105.3
$ (1.7 ) 338,778
2021 Real Estate Asset Dispositions


1	~~MOB = medical office building.~~


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


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


4	~~Includes three properties.~~


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

The following table details the Company's dispositions for the three months ended March 31, 2021:


Dollars in millions	TYPE 1	Date Disposed	Sale Price		Closing Adjustments		Net Proceeds		Net Real Estate Investment		Other (including receivables)2		Gain/(Impairment)		Square Footage (Unaudited)
Los Angeles, CA 3	MOB	3/11/21	$	26,000	$	(555)	$	25,445	$	6,046	$	509	$	18,890	73,906

1MOB = medical office building

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

3Includes 2 properties sold to a single purchaser in 2 transactions which occurred on March 5 and March 11, 2021.

Subsequent Disposition

On April 12, 2021, the Company disposed of a 19,732 square foot single-tenant net leased medical office building located in Atlanta, GA. The sales price was $8.1 million and the Company's net investment in the building as of March 31, 2021 was approximately $5.7 million.

Assets Held for Sale

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 09 and 4 properties, respectively, classified as assets held for sale. The following properties were reclassified to held for sale during the first quarter of 2021:

•a medical office building in Atlanta, GA with a contractual sales price of $8.1 million. The sales price is greater than the current net investment of approximately $5.7 million. The Company disposed of this property on April 12, 2021.

•3 medical office buildings in Gadsden, AL with a contractual sales price of $5.5 million. An impairment charge of $0.8 million was recorded based on the contractual sales price less estimated costs to sell.

•a medical office building in Richmond, VA with a contractual sales price of $52.0 million. The contractual sales price is greater than the current net investment of approximately $29.4 million.

The table below reflects the assets and liabilities of the properties classified as held for ~~sale.~~sale as of March 31, 2021 and December 31, 2020:


(Dollars in thousands)	March 31, 2021		December 31, 2020
Balance Sheet data:
Land	$	3,148	$	1,664
Building, improvements and lease intangibles	96,013		27,443
Personal property	56		39
	99,217		29,146
Accumulated depreciation	(40,381)		(10,455)
Real estate assets held for sale, net	58,836		18,691
Operating lease right-of-use assets	3,241		0
Other assets, net	2,501		1,955
Assets held for sale, net	$	64,578	$	20,646

Accounts payable and accrued liabilities	$	588	$	533
Other liabilities	754		683
Liabilities of assets held for sale	$	1,342	$	1,216

Note 3. Leases

Lessor Accounting

The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through ~~2035.~~2040. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s ~~portfolio of~~ single-tenant net leases generally ~~requires~~require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company's leases typically have escalators that are either based on a stated percentage or an index such as ~~CPI (consumer~~consumer price ~~index)~~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 months ended March 31, ~~2020~~2021 was ~~$122.6~~$128.4 million.

Future lease payments under the non-cancelable operating leases, excluding any reimbursements, as of March 31, ~~2020~~2021 were as follows:

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

~~Table of Contents~~

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


In thousands	Operating
2021	$	286,175
2022	345,229
2023	298,828
2024	233,601
2025	183,405
2026 and thereafter	459,569
	$	1,806,807

Lessee Accounting

As of March 31, ~~2020,~~2021, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, ~~2020,~~2021, the Company had 104 properties, excluding 1 property classified as held for sale, totaling ~~8.7~~8.6 million square feet that were held under ground leases. Some of the ground ~~leases'~~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 ~~2117.~~2119. Any rental increases related to the Company’s ground leases are generally either stated or based on ~~the~~ CPI. The Company had 42 prepaid ground leases, excluding 1 property classified as held for sale, as of March 31, ~~2020.~~2021. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately ~~$0.2~~$0.1 million and ~~$0.1~~$0.2 million of the Company’s rental expense for the three months ended March 31, ~~2020~~2021 and ~~March 31, 2019,~~2020, respectively.

The Company’s future lease payments (primarily for its 62 non-prepaid ground leases) as of March 31, ~~2020~~2021 were as follows:


In thousands	OPERATING		FINANCING
2021	$	3,164	$	611
2022	4,932		783
2023	4,971		793
2024	5,027		815
2025	5,068		826
2026 and thereafter	303,574		87,983
Total undiscounted lease payments	326,736		91,811
Discount	(234,815)		(73,089)
Lease liabilities	$	91,921	$	18,722

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

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 months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


	THREE MONTHS ENDED March 31,
In thousands	2021			2020
Operating lease cost
Operating lease expense	$	1,178		$	1,174
Variable lease expense	896			800

Finance lease cost
Amortization of right-of-use assets	88			70
Interest on lease liabilities	247			237
Total lease expense	$	2,409		$	2,281

Other information
Operating cash flows outflows related to operating leases	$	1,844		$	2,550
Financing cash flows outflows related to financing leases	$	362		$	321


Weighted-average remaining lease term (excluding renewal options) - operating leases	48.4			49.4
Weighted-average remaining lease term (excluding renewal options) -finance leases	64.2			64.9
Weighted-average discount rate - operating leases	5.7		%	5.7		%
Weighted-average discount rate - finance leases	5.4		%	5.4		%

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

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

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

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

~~Table of Contents~~

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

Note 4. Notes and Bonds Payable

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


	MATURITY DATES	BALANCE AS OF				EFFECTIVE INTEREST RATE as of 3/31/2021
Dollars in thousands		3/31/2021		12/31/2020
$700 million Unsecured Credit Facility	5/23	$	7,000	$	0	1.01	%
$200 million Unsecured Term Loan Facility, net of issuance costs 1	5/24	199,292		199,236		1.96	%
$150 million Unsecured Term Loan due 2026 2	6/26	149,503		149,479		3.13	%
Senior Notes due 2025, net of discount and issuance costs 3	5/25	248,841		248,776		4.08	%
Senior Notes due 2028, net of discount and issuance costs	1/28	296,243		296,123		3.84	%
Senior Notes due 2030, net of discount and issuance costs 4	3/30	296,554		296,468		2.71	%
Senior Notes due 2031, net of discount and issuance costs	3/31	295,037		294,924		2.24	%
Mortgage notes payable, net of discounts and issuance costs and including premiums	11/22-4/27	116,781		117,763		4.07	%
		$	1,609,251	$	1,602,769

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

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


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


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


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


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

~~Changes in Debt Structure~~

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

On March 4, 2020, the Company issued $300.0 million of unsecured senior notes due 2030 (the "Senior Notes due 2030") in a registered public offering. The Senior Notes due 2030 bear interest at 2.40%, payable semi-annually on March 15 and September 15, beginning September 15, 2020, and are due on March 15, 2030, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $1.0 million and the Company incurred approximately $2.8 million in debt issuance costs. Concurrent with this transaction, the Company settled 2 treasury rate locks for $4.3 million. Inclusive of the discount, debt issuance costs and settlement of the treasury rate locks, the effective interest rate ~~was 2.71%~~includes the impact of interest rate swaps on $75.0 million at a weighted average rate of 2.37% (plus the applicable margin rate, currently 100 basis points).

2The ~~Senior Notes due 2030 have various financial covenants~~effective interest rate includes the impact of interest rate swaps on $100.0 million at a weighted average rate of 2.23% (plus the applicable margin rate, currently 160 basis points).

3The effective interest rate includes the impact of the $1.7 million settlement of forward-starting interest rate swaps that ~~are required to be met~~is included in Accumulated other comprehensive loss on ~~a quarterly and annual basis.~~the Company's Condensed Consolidated Balance Sheets.

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

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Note 5. Derivative Financial Instruments

Risk Management Objective of Using Derivatives

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

~~Table of Contents~~

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

Cash Flow Hedges of Interest Rate Risk

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

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

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

As of March 31, ~~2020,~~2021, the Company had 8 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:


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

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

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of March 31, ~~2020.~~2021.


	BALANCE AT MARCH 31, 2021
In thousands	BALANCE SHEET LOCATION	FAIR VALUE
Derivatives designated as hedging instruments
Interest rate swaps	Other liabilities	$	9,378
Total derivatives designated as hedging instruments		$	9,378

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

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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 months ended March 31, ~~2020~~2021 and ~~2019~~2020 related to the Company's outstanding interest rate swaps.


	(GAIN) LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended March 31,					LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended March 31,
In thousands	2021		2020			2021		2020
Interest rate swaps	$	(2,850)	$	9,663	Interest expense	$	946	$	271
Settled treasury hedges	0		4,267		Interest expense	107		15
Settled interest rate swaps	0		0		Interest expense	42		42
	$	(2,850)	$	13,930	Total interest expense	$	1,095	$	328

LOSS RECOGNIZED IN
AOCI ON DERIVATIVE
three months ended March 31,

(GAIN) LOSS RECLASSIFIED FROM
AOCI INTO INCOME
three months ended March 31,
In thousands 2020
2019
2020
2019
Interest rate swaps $ 9,663
$ 724
Interest expense $ 271
$ (27 )
Settled treasury hedges 4,267
—
Interest expense 15
—
Settled interest rate swaps —
—
Interest expense 42
42
$ 13,930
$ 724
Total interest expense $ 328
$ 15

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

Credit-risk-related Contingent Features

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

~~Table of Contents~~

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

As of March 31, ~~2020,~~2021, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was ~~$15.2~~$9.8 million. As of March 31, ~~2020,~~2021, the Company has not posted any collateral related to these agreements and was not in breach of any agreement.

Note 6. Commitments and Contingencies

Legal Proceedings

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

Redevelopment Activity

The Company ~~initiated~~continued the redevelopment of a 217,114 square foot medical office building in Dallas, Texas. As of March 31, 2021, the Company funded approximately $0.4 million in project costs. The building continues to operate with in-place leases during construction. The first new tenant lease of the redevelopment is expected to commence in the first quarter of 2022.

The Company continued the redevelopment of a 110,883 square foot medical office building in Memphis, Tennessee ("Memphis Redevelopment") in December 2019. The Company funded approximately $1.5 million, excluding the purchase price of $8.7 million for the land and building. The building will continue to operate with in-place leases during construction. The Memphis Redevelopment is expected to be completed in the first quarter of 2021.

~~Development Activity~~

~~The Company completed the development of a 151,031 square foot medical office building in Seattle, Washington.~~Tennessee. As of March 31, ~~2020,~~2021, the Company ~~had~~ funded approximately ~~$54.1~~$27.1 million ~~towards~~in project costs. The core and shell portion of this redevelopment was completed and the ~~development. The Company expects to fund an additional amount of approximately $10.0 million for additional tenant improvements associated with this project. The~~ first new tenant took occupancy in the first quarter of ~~2020.~~2021, with the construction of tenant spaces to be completed throughout the remainder of 2021.

In April 2021, the Company began the redevelopment of a medical office building in Tacoma, Washington. The redevelopment includes interior and exterior improvements to the existing building, plus the addition of 23,000 square feet. The Company expects the tenant lease to commence in the second quarter of 2022.

Note 7. Stockholders' Equity

Common Stock

The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the three months ended March 31, ~~2020~~2021 and the year ended December 31, ~~2019:~~2020:


	MARCH 31, 2021	DECEMBER 31, 2020
Balance, beginning of period	139,487,375	134,706,154
Issuance of common stock	2,057,157	4,637,445
Nonvested share-based awards, net of withheld shares	115,483	143,776
Balance, end of period	141,660,015	139,487,375

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

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

At-The-Market Equity Offering Program

~~On February 14, 2020, the~~The Company ~~entered into sales agreements with six investment banks to allow sales under its~~has in place an at-the-market equity offering program ofto sell up to an aggregate of $500.0 million of the Company’s common ~~stock. During the first quarter of 2020, the Company sold 196,250 shares under~~stock from time to time. The following table details the Company's at-the-market ~~equity offering program generating approximately $7.0~~activity, including forward transactions:


	WEIGHTED AVERAGE SALE PRICE per share		SHARES PRICED	SHARES SETTLED	SHARES REMAINING TO BE SETTLED	NET PROCEEDS in millions
Balance, beginning of period	$	0	0	0	1,823,259	$	0
1Q 2021	$	30.09	215,532	2,038,791	0	$	62.7
April 2021	$	30.81	4,133,619	0	4,133,619	$	0

The 4.1 million inshares remaining are expected to be settled by April 2022, and the Company expects net proceeds ~~at prices to the public~~ ranging from ~~$33.00~~$120.9 million to ~~$36.15 per share (weighted average~~$125.5 million, depending on the timing of ~~$36.09 per share). NaN shares were sold from March 18, 2020 through~~settlement. Expected net proceeds are calculated by reducing the ~~date of this filing. The~~initial price by adjustments provided in the forward equity arrangements. After accounting for these settlements, the Company ~~had $492.9~~has approximately $163.6 million remaining available to be sold under the current sales agreements at the date of this filing.

Common Stock Dividends

During the three months ended March 31, ~~2020,~~2021, the Company declared and paid common stock dividends totaling ~~$0.30~~$0.3025 per share. On May ~~5, 2020,~~4, 2021, the Company declared a quarterly common stock dividend in the amount of ~~$0.30~~$0.3025 per share payable on May ~~29, 2020~~28, 2021 to stockholders of record on May ~~15, 2020.~~17, 2021.

~~Table of Contents~~

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

Earnings Per Common Share

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

During the three months ended March 31, 2021, the Company did not enter into any forward sale agreements to sell shares of common stock through the Company's at-the-market equity offering program. The Company considered the accounting guidance governing financial instruments and derivatives to account for these agreements and concluded that it was not a liability as it did not embody obligations to repurchase our shares of common stock nor did it embody obligations to issue a variable number of shares for which the monetary value was predominately fixed, varying with something other than the fair value of the shares, or varying inversely in relation to the shares. In addition, the Company evaluated whether the agreements met the derivative and hedging guidance scope exception to be accounted for as an equity instrument and concluded that the agreements can be classified as equity.

The Company used the treasury method to determine the dilution from the forward equity agreements during the period of time prior to settlement. The number of weighted-average shares outstanding used in the computation of earnings per common share for the three months ended March 31, 2021 did not include the effect from any assumed issuance of shares of common stock pursuant to the settlement of the forward equity agreements at the contractual price, less the assumed repurchase of the common stock at the average market price using the proceeds, adjusted for costs to borrow. For the three months ended March 31, 2021, no weighted-average incremental shares of common stock were excluded from the computation of weighted-average common shares outstanding - diluted.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.


	THREE MONTHS ENDED MARCH 31,
Dollars in thousands, except per share data		2021		2020
Weighted average common shares outstanding
Weighted average common shares outstanding		140,567,352		134,758,335
Non-vested shares		(1,793,598)		(1,722,090)
Weighted average common shares outstanding - basic		138,773,754		133,036,245

Weighted average common shares outstanding - basic		138,773,754		133,036,245
Dilutive effect of forward equity shares		0		0
Dilutive effect of employee stock purchase plan		97,064		113,321
Weighted average common shares outstanding - diluted		138,870,818		133,149,566

Net Income		$	24,022	$	4,315
Dividends paid on nonvested share-based awards		(540)		(517)
Net income applicable to common stockholders		$	23,482	$	3,798





Basic earnings per common share - net income		$	0.17	$	0.03


Diluted earnings per common share - net income		$	0.17	$	0.03

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

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

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

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

Incentive Plans

During the three months ended March 31, 2021, the Company made the following stock awards:

•On January 1, 2021, the Company granted non-vested stock awards to certain officers with a grant date fair value of $0.6 million which consisted of an aggregate 21,396 shares through its salary deferral program.

•On February 10, 2021, the Company granted non-vested stock awards to its 4 named executive officers, 5 senior vice presidents, and 5 first vice presidents with a grant date fair value totaling $3.8 million, which consisted of an aggregate 124,648 non-vested shares, with a five-year vesting period.

•Also, on February 10, 2021, the Company granted a performance-based award to officers, excluding the 4 named executive officers, 5 senior vice presidents, and 5 first vice presidents, under the Long-term Incentive Program totaling $0.6 million, which consisted of an aggregate 19,679 non-vested shares.

A summary of the activity under the Company's share-based incentive plans for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is included in the table below.

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


	THREE MONTHS ENDED MARCH 31,
		2021	2020
Share-based awards, beginning of period		1,766,061	1,754,066
Granted		165,723	39,344
Vested		(145,413)	(68,649)

Share-based awards, end of period		1,786,371	1,724,761

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company withheld ~~23,563~~50,240 and ~~19,546~~23,563 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested.

Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

In addition to the share-based incentive plans, the Company maintains the 2000 Employee Stock Purchase Plan (the "Purchase Plan"). A summary of the activity under the Purchase Plan for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is included in the table below.

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


	THREE MONTHS ENDED MARCH 31,
		2021	2020
Outstanding and exercisable, beginning of period		341,647	332,659
Granted		253,200	212,716
Exercised		(15,965)	(11,904)
Forfeited		(19,161)	(22,981)
Expired		(144,422)	(139,794)
Outstanding and exercisable, end of period		415,299	370,696

~~Table of Contents~~

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

Note 8. Fair Value of Financial Instruments

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

•

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

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

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

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


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


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


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

The table below details the fair values and carrying values for notes and bonds payable at March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.


	March 31, 2021				December 31, 2020
Dollars in millions	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE
Notes and bonds payable 1	$	1,609.3	$	1,581.9	$	1,602.8	$	1,645.4

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

MARCH 31, 2020 DECEMBER 31, 2019
Dollars in millions CARRYING VALUE
FAIR VALUE
CARRYING VALUE
FAIR VALUE
Notes and bonds payable ¹
$ 1,644.5
$ 1,706.7
$ 1,414.1
$ 1,425.8


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

Table of Contents

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

~~Note 9. Subsequent Events~~

~~COVID-19 Update~~

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

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

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

Disclosure Regarding Forward-Looking Statements

This report and other materials the Company has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could," "budget" and other comparable terms. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties, including the duration and scope of the COVID-19 pandemic; the impact of the COVID-19 pandemic on occupancy rates for the Company's properties, actions governments take in response to the COVID-19 pandemic, including the introduction of public health measures and other regulations affecting the Company’s properties and the operations of the Company and its tenants; the effects of health and safety measures adopted by the Company and its tenants related to the COVID-19 pandemic; the impact of the COVID-19 pandemic on the operations, business and financial condition of the Company and its tenants; general economic uncertainty in key markets as a result of the COVID-19 pandemic and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; and the risks described in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, that could significantly affect the Company’s current plans and expectations and future financial condition and results.

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

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

~~COVID-19 Update~~

~~Table of Contents~~

All of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects have instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants have temporarily closed their offices or clinical space or have operated on a reduced basis in response to government requirements or recommendations. Through May 5, 2020, the Company has collected 89% of April 2020 aggregate tenant billings and has agreed to various forms of rent deferrals representing approximately 7% of April 2020 aggregate tenant billings. The tenant deferral agreements require the deferred amounts to be repaid in the third and fourth quarters of 2020. The tenant deferral agreements require the amounts to be repaid in the third and fourth quarters of 2020. Many of these tenants have requested, and the Company management expects more will likely seek, rent deferral or abatement for May 2020 and subsequent months, though it cannot predict how many.

Management believes that many of its tenants who have experienced disruption to their businesses as a result of the COVID-19 pandemic will qualify for various forms of government financial assistance including pursuant to the CARES Act, which was signed into law on March 27, 2020. Accordingly, the Company has undertaken efforts to promote awareness of the availability of these initiatives to its tenants. At this time, the Company expects to collect the deferred rent prior to the end of 2020. However, if tenants are unable to timely repay, or repay at all, deferred rent, if they request additional rent deferrals or abatements, decide not to renew leases, or renew leases at lower cash leasing spreads (See “Expiring Leases” below), the impact on the Company’s results of operations and financial condition could be material. As a result, the Company cannot estimate at this time the overall effect that the COVID-19 pandemic might have on its business.

At March 31, 2020, the Company had available $738.4 million in liquidity (See “Sources and Uses of Cash” and “Financing Activities” below) and no significant debt maturities prior to 2023. The COVID-19 pandemic has affected the availability and cost of capital and may continue to do so for some time. Management believes that the Company currently has adequate liquidity to operate its business without significant disruption. However, if the pandemic continues to have an impact on the availability and cost of capital, the Company’s business could be materially affected.

Liquidity and Capital Resources

Sources and Uses of Cash

The Company’s primary sources of cash include rent receipts from its real estate portfolio based on contractual arrangements with its tenants, borrowings under the Company's ~~Unsecured~~Amended and Restated Credit ~~Facility~~Agreement, dated as of May 31, 2019, as amended (the "Unsecured Credit Facility") and the Amended and Restated Term Loan Agreement, dated as of May 31, 2019, as amended (the "Unsecured Term Loan due 2024" and "Unsecured Term Loan due 2026"), proceeds from the sales of real estate properties, joint ventures, and proceeds from public or private debt or equity offerings. As of March 31, ~~2020,~~2021, the Company had ~~$485.0~~$693.0 million available to be drawn on its Unsecured Credit Facility ~~$103.4~~and $12.1 million in ~~cash, and~~cash. In addition, the Company has entered into forward equity agreements that have expected net proceeds of up to approximately $125.5 million, depending on the ~~ability to draw $150.0 million on its unsecured term loan due 2026.~~timing of settlement which is at the Company's election anytime through April 2022.

The Company expects to continue to meet its liquidity needs, including funding additional investments, paying dividends, and funding debt service, through cash flows from operations and the cash flow sources described above. The Company had unencumbered real estate assets with a gross book value of approximately ~~$4.1~~$4.4 billion at March 31, ~~2020,~~2021, of which a portion could serve as collateral for secured mortgage financing. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.

Dividends paid by the Company for the three months ended March 31, ~~2020~~2021 were funded from cash flows from operations and the Unsecured Credit Facility, as cash flows from operations were not adequate to fully fund dividends paid at the rate per quarter of ~~$0.30~~$0.3025 per common share. The Company expects that additional cash flows from existing properties, acquisitions and developments will generate sufficient cash flows from operations such that dividends for the full year ~~2020~~2021 can be funded by cash flows from operations or other sources of liquidity described above.

Table of Contents

Investing Activities

Cash flows used in investing activities for the three months ended March 31, ~~2020~~2021 were approximately ~~$108.2~~$69.8 million. Below is a summary of significant investing activities.

~~2020~~2021 Company Acquisitions

The following table details the Company's acquisitions for the three months ended March 31, ~~2020:~~2021:


Dollars in thousands	ASSOCIATED HEALTH SYSTEM/TENANCY 1	DATE ACQUIRED	PURCHASE PRICE		SQUARE FOOTAGE	MILES TO CAMPUS
San Diego, CA	Scripps Health/UCSD	1/7/21	$	17,150	22,461	0.02
Dallas, TX 2	Baylor Scott & White Health	2/1/21	22,515		121,709	0.00
Atlanta, GA 2	Wellstar Health System	2/17/21	9,800		44,567	0.19
Washington, D.C.	Sentara Healthcare	3/3/21	12,750		26,496	0.09








Total real estate acquisitions			$	62,215	215,233

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

2Includes two properties.

Unconsolidated Joint Venture Acquisitions

The following table details the TIAA Joint Venture's acquisition for the three months ended March 31, 2021:

Dollars in thousands

ASSOCIATED HEALTH SYSTEM/TENANCY 1

DATE ACQUIRED

PURCHASE PRICE

SQUARE FOOTAGE

MILES TO CAMPUS

OWNERSHIP %

Denver, CO

HCA

3/30/21

14,375

59,359

0.60

1Includes buildings located on-campus, adjacent and off-campus that are anchored by healthcare systems or located within 2 miles of a hospital campus.

Subsequent to March 31, 2021, the TIAA Joint Venture acquired the following properties:


Dollars in thousands	TYPE 1	DATE ACQUIRED	PURCHASE PRICE		SQUARE FOOTAGE	OWNERSHIP %
Colorado Springs, CO	MOB	4/1/21	$	7,200	27,510	50	%
Los Angeles, CA	MOB	4/8/21	31,335		57,573	50	%
San Antonio, TX	MOB	4/30/21	13,600		45,000	50	%









			$	52,135	130,083

2021 Dispositions

The Company disposed of two properties during the three months ended March 31, 2021 for a total sales price of $26.0 million, including cash proceeds of $25.4 million. In addition, the Company sold one property subsequent to the end of the quarter. The following table details these dispositions for the three months ended March 31, 2021:

Dollars in thousands

Date Disposed

Sales Price

Square Footage

1Q 2021 NOI

Property Type 1

Los Angeles, CA 2

3/11/21

26,000

73,906

(15)

MOB

1MOB = Medical office building

2Includes two properties sold to a single purchaser in two transactions which occurred on March 5 and March 11, 2021.

Subsequent Dispositions

On April 12, 2021 the Company disposed of a 19,732 square foot medical office building located in Atlanta, GA. The purchase price was $8.1 million and the Company's net investment in the building as of March 31, 2021 was approximately $5.7 million.

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

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

$ 103.6
338,778


1	~~Includes three properties.~~


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

Table of Contents

Capital Funding

During the three months ended March 31, ~~2020,~~2021, the Company funded the following:

•$~~6.9~~9.3 million toward development and redevelopment of properties;

•$~~2.7~~3.8 million toward first generation tenant improvements and planned capital expenditures for acquisitions;

•$~~6.0~~5.2 million toward second generation tenant improvements; and

•$~~3.5~~2.0 million toward capital expenditures.

Financing Activities

Cash flows provided by financing activities for the three months ended March 31, ~~2020~~2021 were approximately ~~$172.5~~$24.1 million. Inflows from equity related to the Company's common stock issuances and net borrowings totaled ~~$306.2~~$69.2 million, net of issuance costs incurred. Aggregate cash outflows totaled approximately ~~$133.7~~$45.1 million primarily associated with dividends paid to common ~~stockholders and repayments on the Credit Facility.~~stockholders. See Notes 4 and 7 to the Condensed Consolidated Financial Statements for more information about capital markets and financing activities.

Common Stock Issuances

~~On February 14, 2020, the~~At-The-Market Equity Offering Program

The Company ~~entered into sales agreements with six investment banks to allow sales under its~~has in place an at-the-market equity offering program ofto sell up to an aggregate of $500.0 million of the Company’s common ~~stock. During the first quarter of 2020, the Company sold 196,250 shares under~~stock from time to time. The following table details the Company's at-the-market ~~equity offering program generating approximately $7.0~~activity, including forward transactions:


	WEIGHTED AVERAGE SALE PRICE per share		SHARES PRICED	SHARES SETTLED	SHARES REMAINING TO BE SETTLED	NET PROCEEDS in millions
Balance, beginning of period	$	—	—	—	1,823,259	$	—
1Q 2021	$	30.09	215,532	2,038,791	—	$	62.7
April 2021	$	30.81	4,133,619	—	4,133,619	$	—

The 4.1 million inshares remaining are expected to be settled by April 2022, and the Company expects net proceeds ~~at prices to the public~~ ranging from ~~$33.00~~$120.9 million to ~~$36.15 per share (weighted average~~$125.5 million, depending on the timing of ~~$36.09 per share). No shares were sold from March 18, 2020 through~~settlement. Expected net proceeds are calculated by reducing the ~~date of this filing. The~~initial price by adjustments provided in the forward equity arrangements. After accounting for these settlements, the Company ~~had $492.9~~has approximately $163.6 million remaining available to be sold under the current sales agreements at the date of this filing.

Debt Activity

~~Table of Contents~~

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

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


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

Operating Activities

Cash flows provided by operating activities increased from ~~$34.8 million for the three months ended March 31, 2019 to~~ $38.4 million for the three months ended March 31, ~~2020.~~2020 to $42.5 million for the three months ended March 31, 2021. 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.

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Off-Balance Sheet Arrangements

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

New Accounting Pronouncements

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

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Trends and Matters Impacting Operating Results

Management monitors factors and trends important to the Company and the REIT industry to gauge the potential impact on the operations of the Company. In addition to the matters discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, below are some of the factors and trends that management believes may impact future operations of the Company.

~~COVID-19 Pandemic~~

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

Expiring Leases

The Company expects that approximately 15% to 20% of the leases ~~in its multi-tenanted portfolio~~ will expire each year in the ordinary course of business. There are ~~583~~548 leases totaling ~~2.1~~1.7 million square feet ~~in the Company's multi-tenant portfolio~~ that will expire during the remainder of ~~2020.~~2021. Approximately ~~85%~~92% of the leases expiring in ~~2020~~2021 are in buildings located on or adjacent to hospital campuses, are distributed throughout the portfolio, and are not concentrated with any one tenant, health system or market area. The Company typically expects to retain 75% to 90% of ~~multi-tenant property~~ tenants upon expiration, and the retention ratio for the first three months of the year ~~has been~~was within this range.

Included in the 2020 lease expirations is a 111,000 square foot fitness center leased by Baylor Scott & White Health. The fitness center is located in a 217,000 square foot on-campus medical office building. The lease expired on March 31, 2020, and the tenant is currently under a month-to-month lease arrangement as the Company finalizes a new lease with an independent fitness center operator for approximately half the space. The Company expects to redevelop the remaining space for clinical use.

Also included in the 2020 lease expirations is the July 31 expiration of a 62,000 square foot office lease. A telecommunication company occupies three floors of a 145,000 square foot office building and is expected to vacate. The Company has begun marketing the space and anticipates that releasing efforts will include subdividing the space for multiple users. The Company recognized revenue of approximately $0.4 million related to this lease in the first quarter of 2020.

The Company has one single-tenant net leased, on-campus medical office building with a lease term scheduled to expire in the second quarter of 2020. The Company has been in discussions about a long-term lease renewal, but given the COVID-19 pandemic, plans to provide a 6-month extension to allow more time to finalize a long-term lease agreement.

Operating Expenses

The Company has historically experienced increases in property taxes throughout its portfolio as a result of increasing assessments and tax rates levied across the country. The Company continues its efforts to appeal property tax increases and manage the impact of the increases. In addition, the Company has historically incurred variability in portfolio utilities expense based on seasonality, with the first and third quarters usually reflecting greater amounts. The effects of these operating expense increases are mitigated in leases that have provisions for operating expense reimbursement. As of March 31, ~~2020,~~2021, leases for ~~89%~~90% of the Company's multi-tenant leased square footage allow for some recovery of operating expenses, with ~~31%~~33% having modified gross lease structures and ~~58%~~57% having net lease structures.

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Purchase Options

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


	NUMBER OF PROPERTIES		GROSS REAL ESTATE INVESTMENT AS OF MARCH 31, 2021
YEAR EXERCISABLE	MOB	INPATIENT	FAIR MARKET VALUE METHOD 1		NON FAIR MARKET VALUE METHOD 2		TOTAL
Current 3	2	1	$	54,284	$	—	$	54,284
2022	1	—	—		14,984		14,984
2023	—	—	—		—		—
2024	—	—	—		—		—
2025	4	—	48,175		19,459		67,634
2026	—	—	—		—		—
2027	—	—	—		—		—
2028	1	—	40,983		—		40,983
2029	1	—	26,494		—		26,494
2030	—	—	—		—		—
2031 and thereafter	4	—	101,697		—		101,697
Total	13	1	$	271,633	$	34,443	$	306,076

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

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

3These purchase options have been exercisable for an average of 13.6 years.

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

NON FAIR MARKET
VALUE METHOD ²

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


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


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


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

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Non-GAAP Financial Measures and Key Performance Indicators

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

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

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

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

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

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~~defined~~Company-defined normalizing items to evaluate operating performance. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, stock-based compensation expense and provision for bad debts, net; and subtracting maintenance capital expenditures, including second generation tenant improvements and leasing commissions paid and straight-line rent income, net of expense. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. 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 share, Normalized FFO per share and FAD ("Non-GAAP Measures") provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods. The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these Non-GAAP Measures. However, none of these measures represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity. The table below reconciles net income to FFO, Normalized FFO and FAD for the three months ended March 31, ~~2020~~2021 and ~~2019.~~

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


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


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


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

2020.

2221

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	THREE MONTHS ENDED MARCH 31,
Amounts in thousands, except per share data		2021		2020
Net income		$	24,022	$	4,315
(Gain) loss on sales of real estate properties		(18,890)		49
Impairment of real estate properties		834		—
Real estate depreciation and amortization		51,311		48,531
Proportionate share of unconsolidated joint ventures		813		80
FFO attributable to common stockholders		$	58,090	$	52,975
Acquisition and pursuit costs 1		744		750
Lease intangible amortization		(72)		745
Forfeited earnest money received		(500)		—
Unconsolidated JV normalizing items 2		27		—
Normalized FFO attributable to common stockholders		$	58,289	$	54,470
Non-real estate depreciation and amortization		673		823
Non-cash interest expense amortization 3		894		746
Provision for bad debt, net		(79)		(83)
Straight-line rent, net		(1,094)		(668)
Stock-based compensation		3,019		2,599
Unconsolidated JV non-cash items 4		(357)		8
Normalized FFO adjusted for non-cash items		$	61,345	$	57,895
2nd generation TI		(5,189)		(6,040)
Leasing commissions paid		(1,193)		(2,824)
Capital additions		(2,019)		(3,470)
FAD		$	52,944	$	45,561
FFO per common share - diluted		$	0.42	$	0.40
Normalized FFO per common share - diluted		$	0.42	$	0.41
FFO weighted average common shares outstanding - diluted 5		139,714		133,980

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

2Includes the Company's proportionate share of acquisition and pursuit costs related to unconsolidated joint ventures.

3Includes the amortization of deferred financing costs, discounts and premiums.

4Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.

5The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 843,173 for the three months ended March 31, 2021.

Cash ~~NOI~~Net Operating Income ("NOI") and Same Store Cash NOI

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

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

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

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

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

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

During the first quarter of 2021, the Company's reposition pool decreased by one property to a total of nine properties as a result of the property being reclassified from reposition to held for sale.

The following table reflects the Company's same store cash NOI for the three months ended March 31, ~~2020~~2021 and ~~2019.~~

2020.

NUMBER OF PROPERTIES
GROSS INVESTMENT
at March 31, 2020

SAME STORE CASH NOI for the three months ended March 31,
Dollars in thousands 2020
2019
Multi-tenant properties 157
$ 3,248,042
$ 57,981
$ 56,751
Single-tenant net lease properties 14
460,433
10,449
10,271
Total 171
$ 3,708,475
$ 68,430
$ 67,022


	NUMBER OF PROPERTIES	GROSS INVESTMENT at March 31, 2021		SAME STORE CASH NOI for the three months ended March 31,
Dollars in thousands				2021		2020
Same store properties	167	$	3,587,129	$	65,009	$	63,696

The following tables reconcile net income to same store NOI and the same store property metrics to the total owned real estate portfolio for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:

Reconciliation of Same Store Cash NOI


	THREE MONTHS ENDED MARCH 31,
Dollars in thousands	2021		2020
Net income	$	24,022	$	4,315


Other income (expense)	(5,220)		13,927
General and administrative expense	8,499		8,766
Depreciation and amortization expense	50,079		47,497
Other expenses 1	3,150		3,740
Straight-line rent revenue	(1,461)		(1,043)
Joint venture properties	465		78
Other revenue 2	(1,865)		(2,004)
Cash NOI	77,669		75,276
Cash NOI not included in same store	(12,660)		(11,580)
Same store cash NOI	65,009		63,696
Reposition NOI	881		1,330
Same store and reposition cash NOI	$	65,890	$	65,026

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

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

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


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


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

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Reconciliation of Same Store Properties


	AS OF MARCH 31, 2021
Dollars in thousands	PROPERTY COUNT	GROSS INVESTMENT		SQUARE FEET	OCCUPANCY
Same store properties	167	$	3,587,129	12,981,334	88.6	%
Acquisitions	45	788,875		2,091,663	89.8	%
Development completions	2	81,940		261,914	64.5	%
Reposition	9	118,362		741,798	59.7	%
Total owned real estate properties	223	$	4,576,306	16,076,709	87.1	%

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

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

Results of Operations

Three Months Ended March 31, ~~2020~~2021 Compared to Three Months Ended March 31, ~~2019~~2020

The Company’s results of operations for the three months ended March 31, ~~2020~~2021 compared to the same period in ~~2019~~2020 were impacted by acquisitions, developments, dispositions, gains on sale, and capital markets transactions.

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Revenues

~~Total revenues~~Rental income increased ~~$12.2~~$5.7 million, or ~~10.8%~~4.7%, ~~to approximately $124.8 million~~ for the three months ended March 31, ~~2020~~2021 compared to ~~$112.7 million in~~ the prior year period. This increase is comprised of the following:

•Acquisitions in 2020 and 2021 contributed $8.6 million.

THREE MONTHS ENDED MARCH 31, CHANGE
Dollars in thousands 2020
2019
$
%
Property operating $ 111,148
$ 98,982
$ 12,166
12.3 %
Single-tenant net lease 10,453
11,046
(593 ) (5.4 )%
Straight-line rent 1,043
668
375
56.1 %
Rental income 122,644
110,696
11,948
10.8 %
Other operating 2,163
1,961
202
10.3 %
Total revenues $ 124,807
$ 112,657
$ 12,150
10.8 %
•A development completed in 2020 contributed $0.7 million.

~~Property~~•Leasing activity, including contractual rent increases, contributed $1.2 million.

•Dispositions in 2020 and 2021 resulted in a decrease of $4.8 million.

Other operating ~~revenue increased $12.2~~income decreased $0.2 million, or ~~12.3%~~9.8%, from the prior year period primarily ~~as a result of the following activity:~~

~~Acquisitions in 2019 and 2020 and a development in 2020 contributed $9.4 million.~~

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

~~Dispositions in 2019 resulted in a decrease of $1.0 million.~~

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

~~Dispositions in 2019 resulted in a decrease of $0.8 million.~~

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

~~Straight-line rent revenue increased $0.4 million or 56.1% from the prior year primarily~~ due to ~~acquisitions~~a reduction in ~~2019 and 2020 and a development in 2020.~~

variable parking revenue.

Expenses

Property operating expenses increased ~~$6.8~~$2.7 million, or ~~16.0%~~5.4%, for the three months ended March 31, ~~2020~~2021 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in ~~2019 and~~ 2020 and a2021 resulted in an increase of $3.2 million.

•A development completed in 2020 resulted in an increase of ~~$4.2~~$0.1 million.

•Increases in portfolio operating expenses as follows:

•Portfolio property tax expense of ~~$1.2~~$0.2 million; and

~~Maintenance~~•Compensation increase of $0.2 million.

•Decreases in portfolio operating expenses as follows:

•Legal and ~~repair expense~~other administrative costs of $0.3 million; and

~~Compensation related expenses~~•Intangible amortization write-off in the first quarter of ~~$0.2 million;~~

~~Portfolio insurance expense~~2020 due the acquisition of ~~$0.2 million;~~

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

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

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

~~Increase in intangible amortization expense~~previously ground leased land totaling $0.7 million.

~~Dispositions in 2019 resulted in a decrease of $0.7 million.~~

General and administrative expenses ~~increased~~decreased approximately $0.3 million, or 3.0%, for the three months ended March 31, ~~2020~~2021 compared to the prior year period primarily ~~due to compensation~~as a result of a decrease in travel expense.

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Depreciation and amortization expense increased ~~$4.8~~$2.6 million, or ~~11.3%~~5.4%, for the three months ended March 31, ~~2020~~2021 compared to the prior year period primarily as a result of the following activity:

•Acquisitions in ~~2019~~2020 and ~~2020~~2021 and a development in 2020 resulted in an increase of ~~$6.0~~$5.0 million.

•Various building and tenant improvement expenditures resulted in an increase of ~~$2.8~~$2.4 million.

•Dispositions in ~~2019~~2020 and 2021 resulted in a decrease of ~~$1.4 million.~~$1.9 million, including $0.3 million related to properties that were reclassified to held for sale.

•Assets that became fully depreciated resulted in a decrease of ~~$2.6~~$2.9 million.

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Other ~~income (expense)~~Income (Expense)

Gains on sale of real estate properties

In the first quarter of 2021, the Company recognized a gain of approximately $18.9 million on the sale of two properties.

Interest expense

Interest expense ~~increased $0.4~~decreased $0.7 million or ~~2.7%~~5.0%, for the three months ended March 31, ~~2020~~2021 compared to the prior year period. The components of interest expense are as follows:


	THREE MONTHS ENDED MARCH 31,						CHANGE						THREE MONTHS ENDED MARCH 31,				CHANGE
Dollars in thousands	2020			2019			$			%		Dollars in thousands	2021		2020		$		%
Contractual interest	$	13,398		$	13,193		$	205		1.6	%	Contractual interest	$	12,239	$	13,398	$	(1,159)	(8.7)	%
Net discount/premium accretion	52			52			—			—	%	Net discount/premium accretion	47		52		(5)		(9.6)	%
Deferred financing costs amortization	637			608			29			4.8	%	Deferred financing costs amortization	698		637		61		9.6	%
Interest rate swap amortization	42			42			—			—	%	Interest rate swap amortization	42		42		—		—	%
Treasury hedge amortization	15			—			15			—	%	Treasury hedge amortization	107		15		92		613.3	%
Interest cost capitalization	(421		)	(307		)	(114		)	37.1	%	Interest cost capitalization	(118)		(421)		303		(72.0)	%
Right-of-use assets financing amortization	237			—			237			—	%	Right-of-use assets financing amortization	247		237		10		4.2	%
Total interest expense	$	13,960		$	13,588		$	372		2.7	%	Total interest expense	$	13,262	$	13,960	$	(698)	(5.0)	%

Contractual interest expense ~~increased $0.2~~decreased $1.2 million, or ~~1.6%~~8.7%, primarily due to the following activity:

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

~~The Term Loan~~unsecured senior notes due ~~2024 accounted for an increase of approximately $0.4 million due to~~2031 and the ~~following:~~


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


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


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


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

Senior Notes due 2030 accounted for an increase of approximately ~~$0.3~~$3.0 million.

~~Mortgage~~•The redemption of the unsecured senior notes ~~repayments~~due 2023 accounted for a decrease of ~~$0.1~~$2.3 million.

•The Unsecured Term Loan due 2024 and the Unsecured Term Loan due 2026, net of swaps, accounted for an increase of approximately $0.5 million.

•The Unsecured Credit Facility accounted for a decrease of approximately $1.9 million.

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

Impairment of Real Estate Properties

Impairment of real estate properties totaling approximately $0.8 million was associated with the fair value impairment of in relation to a contract to sell three real estate properties.

Equity loss from unconsolidated joint ventures

The Company recognized its proportionate share of losses from the TIAA Joint Venture and its parking garage joint ventures. These losses are primarily attributable to non-cash depreciation expense. See Note 2 for more details regarding the Company's unconsolidated joint ventures.

Interest and other income (expense), net

In the first quarter of 2021, the Company recorded approximately $0.5 million from a forfeited earnest money deposit.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk in the form of changing interest rates on its debt and mortgage notes. Management uses regular monitoring of market conditions and analysis techniques to manage this risk. During the three months ended March 31, ~~2020,~~2021, there were no material changes in the quantitative and qualitative disclosures about market risks presented in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

2020.

2625

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

~~Table of Contents~~

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

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

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

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

All of the states and cities in which the Company owns properties, manages properties, and/or has development or redevelopment projects have instituted quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. As a result, a number of the Company's tenants have temporarily closed their offices or clinical space or have operated on a reduced basis in response to government requirements or recommendations. Through May 5, 2020, the Company has collected 89% of April 2020 aggregate tenant billings and has agreed to various forms of rent deferrals representing approximately 7% of April 2020 aggregate tenant billings. The tenant deferral agreements require the deferred amounts to be repaid in the third and fourth quarters of 2020. The tenant deferral agreements require the amounts to be repaid in the third and fourth quarters of 2020. Many of these tenants have requested, and the Company management expects more will likely seek, rent deferral or abatement for May 2020 and subsequent months, though it cannot predict how many.

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

The extent of the COVID-19 pandemic’s effect on the Company's operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, the Company is not able at this time to estimate the effect of these factors on its business, but the adverse impact on the business, results of operations, financial condition and cash flows could be material. Moreover, many risk factors set forth in our Annual Report on

~~Table of Contents~~

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

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

During the three ~~months~~ ended March 31, ~~2020,~~2021, the Company withheld and canceled shares of Company common stock to satisfy employee tax withholding obligations payable upon the vesting of ~~nonvested stock,~~non-vested shares, as follows:


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	50,240	30.95		—	—
March 1 - March 31	—	—		—	—
Total	50,240

On May 4, 2021, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of outstanding shares of the Company’s common stock either in the open market 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. As of the date 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 or programs

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

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

Table of Contents

Item 6. Exhibits



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


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


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


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


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


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

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

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

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

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

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

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

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

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

3027

Table of Contents


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


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


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

~~Table of Contents~~

SIGNATURE

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


			HEALTHCARE REALTY TRUST INCORPORATED

			~~HEALTHCARE REALTY TRUST INCORPORATED~~
By:
	~~By:~~	/s/ J. CHRISTOPHER DOUGLAS
				J. Christopher Douglas
				Executive Vice President and Chief Financial Officer
May 5, 2021				~~May 6, 2020~~



PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 3	Quantitative and Qualitative Disclosures about Market Risk	2625
Item 4	Controls and Procedures	2726

PART II - OTHER INFORMATION
Item 1	Legal Proceedings	2826
Item 1A	Risk Factors	2826
Item 2	Unregistered Sales of Equity and Use of Proceeds	2926
Item 6	Exhibits	3027

SIGNATURE		3228



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



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



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



	LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended March 31,					(GAIN) LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended March 31,
In thousands	2020		2019			2020		2019
Interest rate swaps	$	9,663	$	724	Interest expense	$	271	$	(27	)
Settled treasury hedges	4,267		—		Interest expense	15		—
Settled interest rate swaps	—		—		Interest expense	42		42
	$	13,930	$	724	Total interest expense	$	328	$	15



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



Dollars in millions	HEALTH SYSTEM AFFILIATION	DATE ACQUIRED	PURCHASE PRICE		SQUARE FOOTAGE	CAP RATE		MILES TO CAMPUS
Los Angeles, CA	MemorialCare Health	1/3/20	$	42.0	86,986	5.3	%	0.14
Atlanta, GA	Wellstar Health System	2/13/20	12.0		64,624	5.6	%	0.10
Raleigh, NC	WakeMed Health	2/25/20	6.3		15,964	6.7	%	0.04
Colorado Springs, CO	None	3/9/20	8.2		34,210	6.5	%	1.60
Denver, CO ¹	UCHealth	3/13/20	33.5		136,994	6.1	%	0.24
Total real estate acquisitions			$	102.0	338,778	5.8	%
Land acquisition ²			1.6		—
			$	103.6	338,778



	NUMBER OF PROPERTIES	GROSS INVESTMENT at March 31, 2020		SAME STORE CASH NOI for the three months ended March 31,
Dollars in thousands	NUMBER OF PROPERTIES	GROSS INVESTMENT at March 31, 2020		2020		2019
Multi-tenant properties	157	$	3,248,042	$	57,981	$	56,751
Single-tenant net lease properties	14	460,433		10,449		10,271
Total	171	$	3,708,475	$	68,430	$	67,022



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



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