Healthcare Realty Trust Inc 10-Q

Item 1. Financial Statements (Unaudited) HEALTHCARE TRUST OF AMERICA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data) (Unaudited) March 31, 2021 December 31, 2020 ASSETS Real estate investments: Land $ 596,084 $ 596,269 Building and improvements 6,500,503 6,507,816 Lease intangibles 617,774 628,621 Construction in progress 95,341 80,178 7,809,702 7,812,884 Accumulated depreciation and amortization ( 1,738,056 ) ( 1,702,719 ) Real estate investments, net 6,071,646 6,110,165 Assets held for sale, net 36,098 — Investment in unconsolidated joint venture 63,972 64,360 Cash and cash equivalents 29,990 115,407 Restricted cash 3,096 3,358 Receivables and other assets, net 251,558 251,728 Right-of-use assets - operating leases, net 230,708 235,223 Other intangibles, net 9,523 10,451 Total assets $ 6,696,591 $ 6,790,692 LIABILITIES AND EQUITY Liabilities: Debt $ 3,027,732 $ 3,026,999 Accounts payable and accrued liabilities 159,226 200,358 Liabilities of assets held for sale 3,375 — Derivative financial instruments - interest rate swaps 12,222 14,957 Security deposits, prepaid rent and other liabilities 78,433 82,553 Lease liabilities - operating leases 195,338 198,367 Intangible liabilities, net 31,278 32,539 Total liabilities 3,507,604 3,555,773 Commitments and contingencies Equity: Preferred stock, $ 0.01 par value; 200,000,000 shares authorized; none issued and outstanding — — Class A common stock, $ 0.01 par value; 1,000,000,000 shares authorized; 218,823,963 and 218,578,012 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 2,188 2,186 Additional paid-in capital 4,917,126 4,916,784 Accumulated other comprehensive loss ( 14,231 ) ( 16,979 ) Cumulative dividends in excess of earnings ( 1,775,745 ) ( 1,727,752 ) Total stockholders’ equity 3,129,338 3,174,239 Noncontrolling interests 59,649 60,680 Total equity 3,188,987 3,234,919 Total liabilities and equity $ 6,696,591 $ 6,790,692 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for per share data) (Unaudited) Three Months Ended March 31, 2021 2020 Revenues: Rental income $ 191,350 $ 185,531 Interest and other operating income 143 245 Total revenues 191,493 185,776 Expenses: Rental 59,579 56,862 General and administrative 10,560 11,518 Transaction 96 140 Depreciation and amortization 76,274 77,665 Interest expense 22,986 23,872 Total expenses 169,495 170,057 Gain on sale of real estate, net — 1,991 Income from unconsolidated joint venture 392 422 Other income 3 76 Net income $ 22,393 $ 18,208 Net income attributable to noncontrolling interests ( 363 ) ( 307 ) Net income attributable to common stockholders $ 22,030 $ 17,901 Earnings per common share - basic: Net income attributable to common stockholders $ 0.10 $ 0.08 Earnings per common share - diluted: Net income attributable to common stockholders $ 0.10 $ 0.08 Weighted average common shares outstanding: Basic 218,753 216,692 Diluted 222,268 220,623 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) (Unaudited) Three Months Ended March 31, 2021 2020 Net income $ 22,393 $ 18,208 Other comprehensive income (loss) Change in unrealized gains (losses) on cash flow hedges 2,792 ( 22,498 ) Total other comprehensive income (loss) 2,792 ( 22,498 ) Total comprehensive income (loss) 25,185 ( 4,290 ) Comprehensive (income) loss attributable to noncontrolling interests ( 407 ) 53 Total comprehensive income (loss) attributable to common stockholders $ 24,778 $ ( 4,237 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (In thousands) (Unaudited) Class A Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Cumulative Dividends in Excess of Earnings Total Stockholders’ Equity Noncontrolling Interests Total Equity Shares Amount Balance as of December 31, 2019 216,453 $ 2,165 $ 4,854,042 $ 4,546 $ ( 1,502,744 ) $ 3,358,009 $ 72,635 $ 3,430,644 Issuance of common stock, net 1,675 17 50,003 — — 50,020 — 50,020 Share-based award transactions, net 236 2 3,201 — — 3,203 — 3,203 Repurchase and cancellation of common stock ( 154 ) ( 2 ) ( 4,622 ) — — ( 4,624 ) — ( 4,624 ) Redemption of noncontrolling interest and other 273 3 6,773 — — 6,776 ( 6,776 ) — Dividends declared ($ 0.315 per common share) — — — — ( 68,867 ) ( 68,867 ) ( 1,134 ) ( 70,001 ) Net income — — — — 17,901 17,901 307 18,208 Other comprehensive loss — — — ( 22,138 ) — ( 22,138 ) ( 360 ) ( 22,498 ) Balance as of March 31, 2020 218,483 $ 2,185 $ 4,909,397 $ ( 17,592 ) $ ( 1,553,710 ) $ 3,340,280 $ 64,672 $ 3,404,952 Class A Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Cumulative Dividends in Excess of Earnings Total Stockholders’ Equity Noncontrolling Interests Total Equity Shares Amount Balance as of December 31, 2020 218,578 $ 2,186 $ 4,916,784 $ ( 16,979 ) $ ( 1,727,752 ) $ 3,174,239 $ 60,680 $ 3,234,919 Share-based award transactions, net 354 3 3,334 — — 3,337 — 3,337 Repurchase and cancellation of common stock ( 119 ) ( 1 ) ( 3,247 ) — — ( 3,248 ) — ( 3,248 ) Redemption of noncontrolling interest and other 11 — 255 — — 255 ( 255 ) — Dividends declared ($ 0.320 per common share) — — — — ( 70,023 ) ( 70,023 ) ( 1,183 ) ( 71,206 ) Net income — — — — 22,030 22,030 363 22,393 Other comprehensive income — — — 2,748 — 2,748 44 2,792 Balance as of March 31, 2021 218,824 $ 2,188 $ 4,917,126 $ ( 14,231 ) $ ( 1,775,745 ) $ 3,129,338 $ 59,649 $ 3,188,987 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 2021 2020 Cash flows from operating activities: Net income $ 22,393 $ 18,208 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71,671 72,949 Share-based compensation expense 3,337 3,203 Income from unconsolidated joint venture ( 392 ) ( 422 ) Distributions from unconsolidated joint venture 785 885 Gain on sale of real estate, net — ( 1,991 ) Changes in operating assets and liabilities: Receivables and other assets, net 2,275 1,196 Accounts payable and accrued liabilities ( 27,613 ) ( 19,662 ) Security deposits, prepaid rent and other liabilities ( 7,103 ) 1,055 Net cash provided by operating activities 65,353 75,421 Cash flows from investing activities: Investments in real estate ( 30,472 ) ( 41,338 ) Development of real estate ( 17,096 ) ( 12,103 ) Proceeds from the sale of real estate — 6,420 Capital expenditures ( 28,931 ) ( 23,793 ) Collection of real estate notes receivable 200 191 Advances on real estate notes receivable — ( 6,000 ) Net cash used in investing activities ( 76,299 ) ( 76,623 ) Cash flows from financing activities: Borrowings on unsecured revolving credit facility 15,000 720,000 Payments on unsecured revolving credit facility ( 15,000 ) ( 415,000 ) Payments on secured mortgage loans — ( 95,602 ) Proceeds from issuance of common stock — 50,020 Repurchase and cancellation of common stock ( 3,248 ) ( 4,624 ) Dividends paid ( 70,000 ) ( 68,227 ) Distributions paid to noncontrolling interest of limited partners ( 1,485 ) ( 1,509 ) Net cash (used in) provided by financing activities ( 74,733 ) 185,058 Net change in cash, cash equivalents and restricted cash ( 85,679 ) 183,856 Cash, cash equivalents and restricted cash - beginning of period 118,765 37,616 Cash, cash equivalents and restricted cash - end of period $ 33,086 $ 221,472 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents HEALTHCARE TRUST OF AMERICA HOLDINGS, LP CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except unit data) (Unaudited) March 31, 2021 December 31, 2020 ASSETS Real estate investments: Land $ 596,084 $ 596,269 Building and improvements 6,500,503 6,507,816 Lease intangibles 617,774 628,621 Construction in progress 95,341 80,178 7,809,702 7,812,884 Accumulated depreciation and amortization ( 1,738,056 ) ( 1,702,719 ) Real estate investments, net 6,071,646 6,110,165 Assets held for sale, net 36,098 — Investment in unconsolidated joint venture 63,972 64,360 Cash and cash equivalents 29,990 115,407 Restricted cash 3,096 3,358 Receivables and other assets, net 251,558 251,728 Right-of-use assets - operating leases, net 230,708 235,223 Other intangibles, net 9,523 10,451 Total assets $ 6,696,591 $ 6,790,692 LIABILITIES AND PARTNERS’ CAPITAL Liabilities: Debt $ 3,027,732 $ 3,026,999 Accounts payable and accrued liabilities 159,226 200,358 Liabilities of assets held for sale 3,375 — Derivative financial instruments - interest rate swaps 12,222 14,957 Security deposits, prepaid rent and other liabilities 78,433 82,553 Lease liabilities - operating leases 195,338 198,367 Intangible liabilities, net 31,278 32,539 Total liabilities 3,507,604 3,555,773 Commitments and contingencies Partners’ Capital: Limited partners’ capital, 3,508,545 and 3,519,545 OP Units issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 59,379 60,410 General partners’ capital, 218,823,963 and 218,578,012 OP Units issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 3,129,608 3,174,509 Total partners’ capital 3,188,987 3,234,919 Total liabilities and partners’ capital $ 6,696,591 $ 6,790,692 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 Table of Contents HEALTHCARE TRUST OF AMERICA HOLDINGS, LP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per unit data) (Unaudited) Three Months Ended March 31, 2021 2020 Revenues: Rental income $ 191,350 $ 185,531 Interest and other operating income 143 245 Total revenues 191,493 185,776 Expenses: Rental 59,579 56,862 General and administrative 10,560 11,518 Transaction 96 140 Depreciation and amortization 76,274 77,665 Interest expense 22,986 23,872 Total expenses 169,495 170,057 Gain on sale of real estate, net — 1,991 Income from unconsolidated joint venture 392 422 Other income 3 76 Net income $ 22,393 $ 18,208 Net income attributable to noncontrolling interests — — Net income attributable to common unitholders $ 22,393 $ 18,208 Earnings per common OP Unit - basic: Net income attributable to common unitholders $ 0.10 $ 0.08 Earnings per common OP Unit - diluted: Net income attributable to common unitholders $ 0.10 $ 0.08 Weighted average common OP Units outstanding: Basic 222,268 220,368 Diluted 222,268 220,623 The accompanying notes are an integral part of these condensed consolidated financial statements. 10 Table of Contents HEALTHCARE TRUST OF AMERICA HOLDINGS, LP CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) (Unaudited) Three Months Ended March 31, 2021 2020 Net income $ 22,393 $ 18,208 Other comprehensive income (loss) Change in unrealized gains (losses) on cash flow hedges 2,792 ( 22,498 ) Total other comprehensive income (loss) 2,792 ( 22,498 ) Total comprehensive (loss) income 25,185 ( 4,290 ) Comprehensive income attributable to noncontrolling interests — — Total comprehensive (loss) income attributable to common unitholders $ 25,185 $ ( 4,290 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 11 Table of Contents HEALTHCARE TRUST OF AMERICA HOLDINGS, LP CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS ’ CAPITAL (In thousands) (Unaudited) General Partners’ Capital Limited Partners’ Capital Total Partners’ Capital Units Amount Units Amount Balance as of December 31, 2019 216,453 $ 3,358,279 3,834 $ 72,365 $ 3,430,644 Issuance of general partner OP Units 1,675 50,020 — — 50,020 Share-based award transactions, net 236 3,203 — — 3,203 Redemption and cancellation of general partner OP Units ( 154 ) ( 4,624 ) — — ( 4,624 ) Redemption of limited partner OP Units and other 273 6,776 ( 273 ) ( 6,776 ) — Distributions declared ($ 0.315 per common OP Unit) — ( 68,867 ) — ( 1,134 ) ( 70,001 ) Net income — 17,901 — 307 18,208 Other comprehensive loss — ( 22,138 ) — ( 360 ) ( 22,498 ) Balance as of March 31, 2020 218,483 $ 3,340,550 3,561 $ 64,402 $ 3,404,952 General Partners’ Capital Limited Partners’ Capital Total Partners’ Capital Units Amount Units Amount Balance as of December 31, 2020 218,578 $ 3,174,509 3,520 $ 60,410 $ 3,234,919 Share-based award transactions, net 354 3,337 — — 3,337 Redemption and cancellation of general partner OP Units ( 119 ) ( 3,248 ) — — ( 3,248 ) Redemption of limited partner OP Units and other 11 255 ( 11 ) ( 255 ) — Distributions declared ($ 0.320 per common OP Unit) — ( 70,023 ) — ( 1,183 ) ( 71,206 ) Net income — 22,030 — 363 22,393 Other comprehensive income — 2,748 — 44 2,792 Balance as of March 31, 2021 218,824 $ 3,129,608 3,509 $ 59,379 $ 3,188,987 The accompanying notes are an integral part of these condensed consolidated financial statements. 12 Table of Contents HEALTHCARE TRUST OF AMERICA HOLDINGS, LP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 2021 2020 Cash flows from operating activities: Net income $ 22,393 $ 18,208 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71,671 72,949 Share-based compensation expense 3,337 3,203 Income from unconsolidated joint venture ( 392 ) ( 422 ) Distributions from unconsolidated joint venture 785 885 Gain on sale of real estate, net — ( 1,991 ) Changes in operating assets and liabilities: Receivables and other assets, net 2,275 1,196 Accounts payable and accrued liabilities ( 27,613 ) ( 19,662 ) Security deposits, prepaid rent and other liabilities ( 7,103 ) 1,055 Net cash provided by operating activities 65,353 75,421 Cash flows from investing activities: Investments in real estate ( 30,472 ) ( 41,338 ) Development of real estate ( 17,096 ) ( 12,103 ) Proceeds from the sale of real estate — 6,420 Capital expenditures ( 28,931 ) ( 23,793 ) Collection of real estate notes receivable 200 191 Advances on real estate notes receivable — ( 6,000 ) Net cash used in investing activities ( 76,299 ) ( 76,623 ) Cash flows from financing activities: Borrowings on unsecured revolving credit facility 15,000 720,000 Payments on unsecured revolving credit facility ( 15,000 ) ( 415,000 ) Payments on secured mortgage loans — ( 95,602 ) Proceeds from issuance of general partner units — 50,020 Repurchase and cancellation of general partner units ( 3,248 ) ( 4,624 ) Distributions paid to general partner ( 70,000 ) ( 68,227 ) Distributions paid to limited partners and redeemable noncontrolling interests ( 1,485 ) ( 1,509 ) Net cash (used in) provided by financing activities ( 74,733 ) 185,058 Net change in cash, cash equivalents and restricted cash ( 85,679 ) 183,856 Cash, cash equivalents and restricted cash - beginning of period 118,765 37,616 Cash, cash equivalents and restricted cash - end of period $ 33,086 $ 221,472 The accompanying notes are an integral part of these condensed consolidated financial statements. 13 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unless otherwise indicated or unless the context requires otherwise the use of the words “we,” “us,” or “our” refers to Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP, collectively. 1. Organization and Description of Business HTA, a Maryland corporation, and HTALP, a Delaware limited partnership, were incorporated or formed, as applicable, on April 20, 2006. HTA operates as a REIT and is the general partner of HTALP, which is the operating partnership, in an umbrella partnership, or “UPREIT” structure. HTA has qualified and intends to continue to be taxed as a REIT for federal income tax purposes under the applicable sections of the Internal Revenue Code. We own real estate primarily consisting of medical office buildings (“MOBs”) located on or adjacent to hospital campuses or in off-campus, community core outpatient locations across 32 states within the United States, and we lease space to tenants primarily consisting of health systems, research and academic institutions, and various sized physician practices. Through our full-service operating platform, we provide leasing, asset management, acquisitions, development and other related services for our properties. Our primary objective is to maximize stockholder value with growth through strategic investments that provide an attractive risk-adjusted return for our stockholders by consistently increasing our cash flow. In pursuing this objective, we: (i) seek internal growth through proactive asset management, leasing, building services and property management oversight; (ii) target accretive acquisitions and developments of MOBs in markets with attractive demographics that complement our existing portfolio; and (iii) actively manage our balance sheet to maintain flexibility with conservative leverage. Additionally, from time to time we consider, on an opportunistic basis, significant portfolio acquisitions that we believe fit our core business and we expect to enhance our existing portfolio. COVID-19 Pandemic On March 11, 2020 the novel coronavirus disease (“COVID-19”) was declared a pandemic by the World Health Organization. As the virus continued to spread throughout the United States and other countries across the world, Federal, state and local governments took various actions including the issuance of “stay-at-home” orders, social distancing guidelines and ordering the temporary closure of non-essential businesses to limit the spread of COVID-19. While many businesses have reopened and vaccinations are becoming more widely available to the general population, the economic uncertainty created by the COVID-19 pandemic continue to present risks to the Company and the future results of our operations. Should current and planned measures, including further development and delivery of vaccines and other measures intended to reduce or eliminate the spread of COVID-19, past and/or proposed economic stimulus, and other laws, acts and orders proposed or enacted by these various governmental agencies ultimately not be successful or limited in their efficacy, our business and the broader real estate industry may experience significant adverse consequences. These consequences include loss of revenues, increased expenses, increased costs of materials, difficulty in maintaining an active workforce, and constraints on our ability to secure capital or financing, among other factors. 2. Summary of Significant Accounting Policies The summary of significant accounting policies presented below is designed to assist in understanding our condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the U.S. (“GAAP”) in all material respects and have been consistently applied in preparing our accompanying condensed consolidated financial statements. Basis of Presentation Our accompanying condensed consolidated financial statements include our accounts and those of our subsidiaries and any consolidated variable interest entities (“VIEs”). All inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements. . Interim Unaudited Financial Data Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such results may be less favorable for the full year. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 2020 Annual Report on Form 10-K. 14 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Principles of Consolidation The condensed consolidated financial statements include the accounts of our subsidiaries and consolidated joint venture arrangements. The portions of the HTALP operating partnership not owned by us are presented as noncontrolling interests on the accompanying condensed consolidated balance sheets and statements of operations, condensed consolidated statements of comprehensive income, and condensed consolidated statements of equity and changes in partners’ capital. Holders of OP Units are considered to be noncontrolling interest holders in HTALP and their ownership interests are reflected as equity on the accompanying condensed consolidated balance sheets. Further, a portion of the earnings and losses of HTALP are allocated to noncontrolling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of March 31, 2021 and December 31, 2020, there were approximately 3.5 million and 3.5 million, respectively, of OP Units issued and outstanding held by noncontrolling interest holders. VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following: (i) the power to direct the activities that most significantly impact the entity’s economic performance; (ii) the obligation to absorb the expected losses of the entity; and (iii) the right to receive the expected returns of the entity. We consolidate our investment in VIEs when we determine that we are the primary beneficiary. A primary beneficiary is one that has both: (i) the power to direct the activities of the VIE that most significantly impacts the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The HTALP operating partnership and our other joint venture arrangements are VIEs because the limited partners in those partnerships, although entitled to vote on certain matters, do not possess kick-out rights or substantive participating rights. Additionally, we determined that we are the primary beneficiary of our VIEs. Accordingly, we consolidate our interests in the HTALP operating partnership and in our other joint venture arrangements. However, because we hold what is deemed a majority voting interest in the HTALP operating partnership and our other joint venture arrangements, it qualifies for the exemption from providing certain disclosure requirements associated with investments in VIEs. We will evaluate on an ongoing basis the need to consolidate entities based on the standards set forth in GAAP as described above. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that effect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent asset and liabilities. These estimates are made and evaluated on an ongoing basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in adverse ways, and those estimates could be different under different assumptions or conditions. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of all highly liquid investments with a maturity of three months or less when purchased. Restricted cash is comprised of: (i) reserve accounts for property taxes, insurance, capital and tenant improvements; (ii) collateral accounts for debt and interest rate swaps; and (iii) deposits for future investments. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed consolidated balance sheets to the combined amounts shown on the accompanying condensed consolidated statements of cash flows (in thousands): March 31, 2021 2020 Cash and cash equivalents $ 29,990 $ 216,515 Restricted cash 3,096 4,957 Total cash, cash equivalents and restricted cash $ 33,086 $ 221,472 Revenue Recognition Minimum annual rental revenue is recognized on a straight-line basis over the term of the related lease (including rent holidays). Differences between rental income recognized and amounts contractually due under the lease agreements are recorded as straight-line rent receivables. Tenant reimbursements, which is comprised of additional amounts recoverable from tenants for real estate taxes, common area maintenance and other certain operating expenses are recognized as revenue on a gross basis in the period in which the related recoverable expenses are incurred. We accrue revenue corresponding to these expenses on a quarterly basis to adjust recorded amounts to our best estimate of the final annual amounts to be billed. Subsequent to year-end, on a calendar year basis, we perform reconciliations on a lease-by-lease basis and bill or credit each tenant for any differences between the estimated expenses we billed and the actual expenses that were incurred. We recognize 15 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) lease termination fees when there is a signed termination letter agreement, all of the conditions of the agreement have been met, and the tenant is no longer occupying the property. Rental income is reported net of amortization of inducements. The revenue recognition process is based on a five-step model to account for revenue arising from contracts with customers as outlined in Topic 606. We 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. We have identified all of our revenue streams and we have concluded that rental income from leasing arrangements represents a substantial portion of our revenue and is governed and evaluated with the adoption of Topic 842. Investments in Real Estate Depreciation expense of buildings and improvements for the three months ended March 31, 2021 and 2020 was $ 61.2 million and $ 58.9 million, respectively. Leases As a lessor, we lease space in our MOBs primarily to medical enterprises for terms generally ranging from three to seven years in length. The assets underlying these leases consist of buildings and associated land which are included as real estate investments on our accompanying condensed consolidated balance sheets. All of our leases for which we are the lessor are classified as operating leases under Topic 842. Leases, for which we are the lessee, are classified as separate components on our accompanying condensed consolidated balance sheets. Operating leases are included as right-of-use (“ROU”) assets - operating leases, net, with a corresponding lease liability. Financing lease assets are included in receivables and other assets, net, with a corresponding lease liability in security deposits, prepaid rent and other liabilities. A lease liability is recognized for our obligation related to the lease and an ROU asset represents our right to use the underlying asset over the lease term. Refer to Note 7 - Leases in the accompanying notes to the condensed consolidated financial statements for more detail relating to our leases. Through the duration of the coronavirus (“COVID-19”) pandemic, changes to our leases as a result of COVID-19 have been in two categories. Leases are categorized based upon the impact of the modification on its cash flows. One category is rent deferrals for which the guidance provided by the Lease Modification Q&A issued by the Financial Accounting Standards Board (“FASB”) in April 2020 was utilized, which provided relief from requiring a lease by lease analysis pursuant to Topic 842. These deferrals are generally for up to three months of rent with a payback period from three to twelve months once the deferral period has ended. Deferrals do not have an impact on cash flows over the lease term, rather, payments are made in different periods while the cash flows for the entirety of the lease term are the same. However, we have continued to recognize revenue and straight line revenue for amounts subject to deferral agreements in accordance with Topic 842. In 2020, which is the period that we believe constituted the majority of our COVID-related deferral requests, we approved deferral plans totaling approximately $ 11.1 million, of which approximately $ 9.2 million have been repaid through March 31, 2021. The second category is early renewals, where the Company renewed lease arrangements prior to their contractual expirations, providing concession at the commencement of the lease in exchange for additional term, on average approximately three years. This category is treated as a modification under Topic 842, with the existing balance of cumulative difference between rental income and payment amounts (existing straight line rent receivable) being recast over the new term, factoring in any changes attributable to the new lease arrangement and for which we performed a lease by lease analysis. Cash flows are impacted over the long term as customary free rent, at an average of three months in conjunction with these agreements, and is offset by substantively more term and/or increased rental rates. For the three months ended March 31, 2021, the Company has entered into minimal new deferral arrangements or early renewal leases with substantive amounts of free rent or other forms of concession at the onset of the lease. The Lease Modification Q&A had no material impact on our condensed consolidated financial statements as of and for the three months ended March 31, 2021, however, its future impact to us is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by us at the time of entering into any such concessions. 16 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Real Estate Held for Sale We consider properties held for sale once management commits to a plan to sell the property and has determined that the sale is probable and expected to occur within one year. Upon classification as held for sale, we record the property at the lower of its carrying amount or fair value, less costs to sell, and cease depreciation and amortization. The fair value is generally based on discounted cash flow analyses, which involves management's best estimate of market participants' holding period, market comparables, future occupancy levels, rental rates, capitalization rates, lease-up periods and capital requirements. As of March 31, 2021, we classified a 13 property portfolio with locations in Tennessee and Virginia as real estate assets held for sale on the accompanying condensed consolidated balance sheets. As of December 31, 2020, there were no properties classified as held for sale. The following table represents the major classes of assets and liabilities, and the balance sheet classification as of March 31, 2021 (in thousands): March 31, 2021 Land $ 1,278 Buildings and Improvements 47,785 Lease intangibles 10,717 59,780 Accumulated depreciation and amortization ( 29,705 ) Real estate assets held for sale, net 30,075 Receivables and other assets, net 3,498 Right-of-use assets, net 2,279 Other intangibles, net 246 Assets held for sale, net $ 36,098 Security deposits, prepaid rent & other liabilities $ 443 Lease liabilities 2,932 Liabilities of assets held for sale $ 3,375 Credit Losses The Company adopted Topic 326 - Financial Instruments - Credit Losses as of January 1, 2020. Pursuant to the guidance, we adopted a policy to book current expected credit losses at the inception of loans qualifying for treatment under Topic 326. No expected credit loss was recorded for the three months ended March 31, 2021. Unconsolidated Joint Ventures We account for our investments in unconsolidated joint ventures using the equity method of accounting because we have the ability to exercise significant influence, but not control, over the financial and operational policy decisions of the investments. Using the equity method of accounting, the initial investment is recognized at cost and subsequently adjusted for our share of the net income and any distributions from the joint venture. As of March 31, 2021 and December 31, 2020, we had a 50 % interest in one such investment with a carrying value and maximum exposure to risk of $ 64.0 million and $ 64.4 million, respectively, which is recorded in investment in unconsolidated joint venture on the accompanying condensed consolidated balance sheets. We record our share of net income in income from unconsolidated joint venture on the accompanying condensed consolidated statements of operations. For each of the three months ended March 31, 2021 and 2020, we recognized income of $ 0.4 million. Recently Issued or Adopted Accounting Pronouncements Recently Adopted Accounting Pronouncements S-X Rule 13-01 In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The rule became effective on January 4, 2021, at which time we adopted S-X Rule 13-01. The adoption did not have a material effect on our financial statements and related footnotes. 17 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Recently Issued Accounting Pronouncements ASU 2021-01, Reference Rate Reform (Topic 848) In January 2021, the FASB issued ASU 2021-01, which amends the scope of ASU 2020-04. The amendments of ASU 2021-01 clarify that certain optional expedients and exceptions to Topic 848 for contract modification and hedge accounting apply to derivatives that are affected by the discounting transition. For information related to the Company's current cash flow hedges, refer to Note 9 - Derivative Financial Instruments and Hedging Activities. The amendments are elective and effective immediately for contract modifications made through December 31, 2022. The Company is evaluating how the transition away from LIBOR will effect the Company and if the guidance in this standard will be adopted, however, if adopted, we do not expect that this ASU will have a material impact on our financial statements. 3. Investments in Real Estate For the three months ended March 31, 2021, our investments had an aggregate purchase price of $ 32.9 million. As part of these investments, we incurred approximately $ 0.3 million of capitalized costs. The allocations for these investments, in which we own a controlling financial interest, are set forth below in the aggregate for the three months ended March 31, 2021 and 2020, respectively (in thousands): Three Months Ended March 31, 2021 2020 Land $ 1,093 $ 2,817 Building and improvements 26,819 35,259 In place leases 3,449 3,621 Below market leases ( 79 ) ( 693 ) Above market leases 66 334 ROU assets ( 876 ) — Net real estate assets acquired 30,472 41,338 Other, net 2,397 334 Aggregate purchase price $ 32,869 $ 41,672 The acquired intangible assets and liabilities referenced above had weighted average lives of the following terms for the three months ended March 31, 2021 and 2020, respectively (in years): Three Months Ended March 31, 2021 2020 Acquired intangible assets 6.4 5.4 Acquired intangible liabilities 5.7 3.8 4. Dispositions and Impairment Dispositions We had no dispositions during the three months ended March 31, 2021. During the three months ended March 31, 2020, we sold part of our interest in undeveloped land in Miami, Florida for a gross sales price of $ 7.6 million, resulting in a net gain of approximately $ 2.0 million. Impairment During the three months ended March 31, 2021, and 2020, respectively, we recorded no impairment charges after the consideration of the impacts, on a qualitative and quantitative basis, of the ongoing COVID-19 pandemic in our quarterly assessment. As the COVID-19 pandemic continues to develop, we will monitor the performance of our buildings and other assets to determine whether any additional impairment indicators unique to the COVID-19 pandemic are present, including, but not limited to, significant prolonged disruption in cash flows, tenant vacancies, or lease modifications, and that would indicate the recoverability of recorded values of these assets may be at risk. Accordingly, we will continue to apply the applicable accounting guidance in our consideration of our ongoing impairment analysis as conditions warrant. 18 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 5. Intangible Assets and Liabilities Intangible assets and liabilities consisted of the following as of March 31, 2021 and December 31, 2020, respectively (in thousands, except weighted average remaining amortization terms): March 31, 2021 December 31, 2020 Balance Weighted Average Remaining Amortization in Years Balance Weighted Average Remaining Amortization in Years Assets: In place leases $ 477,605 9.7 $ 483,779 9.7 Tenant relationships 140,169 10.2 144,842 10.0 Above market leases 37,092 6.5 37,876 5.8 654,866 666,497 Accumulated amortization ( 426,223 ) ( 427,937 ) Total $ 228,643 9.6 $ 238,560 9.6 Liabilities: Below market leases $ 61,951 14.7 $ 61,896 14.6 Accumulated amortization ( 30,673 ) ( 29,357 ) Total $ 31,278 14.7 $ 32,539 14.6 The following is a summary of the net intangible amortization for the three months ended March 31, 2021 and 2020, respectively (in thousands): Three Months Ended March 31, 2021 2020 Amortization recorded against rental income related to above and (below) market leases $ ( 591 ) $ ( 1,968 ) Amortization expense related to in place leases and tenant relationships 11,886 15,935 6. Receivables and Other Assets Receivables and other assets consisted of the following as of March 31, 2021 and December 31, 2020, respectively (in thousands): March 31, 2021 December 31, 2020 Tenant receivables, net $ 12,051 $ 17,717 Other receivables, net 5,892 6,243 Deferred financing costs, net 2,155 2,586 Deferred leasing costs, net 42,351 43,234 Straight-line rent receivables, net 130,221 128,070 Prepaid expenses, deposits, equipment and other, net 47,172 46,114 Finance ROU asset, net 11,716 7,764 Total $ 251,558 $ 251,728 The following is a summary of the amortization of deferred leasing costs and financing costs for the three months ended March 31, 2021 and 2020, respectively (in thousands): Three Months Ended March 31, 2021 2020 Amortization expense related to deferred leasing costs $ 2,223 $ 1,896 Interest expense related to deferred financing costs 431 431 19 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 7. Leases For the three months ended March 31, 2021, one new ground lease has commenced. Based on our analysis, we concluded that its classification was a finance lease. Lessee - Maturity of Lease Liabilities The following table summarizes the future minimum lease obligations of our operating and finance leases as of March 31, 2021 (in thousands): Year Operating Leases Finance Leases 2021 $ 7,950 $ 331 2022 10,797 443 2023 10,934 446 2024 10,277 449 2025 9,764 454 2026 9,775 467 Thereafter 606,571 26,371 Total undiscounted lease payments $ 666,068 $ 28,961 Less: Interest ( 470,730 ) ( 17,189 ) Present value of lease liabilities $ 195,338 $ 11,772 Lessor - Lease Revenues and Maturity of Future Minimum Rents For the three months ended March 31, 2021 and 2020, we recognized $ 190.4 million and $ 184.3 million, respectively, of rental and other lease-related income related to our operating leases, of which $ 45.1 million and $ 42.8 million, respectively, were variable lease payments. The following table summarizes the future minimum rent contractually due under operating leases, excluding tenant reimbursements of certain costs, as of March 31, 2021 (in thousands): Year Amount 2021 $ 413,951 2022 519,815 2023 466,157 2024 411,340 2025 358,711 2026 314,893 Thereafter 1,167,753 Total $ 3,652,620 20 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 8. Debt Debt consisted of the following as of March 31, 2021 and December 31, 2020, respectively (in thousands): March 31, 2021 December 31, 2020 Unsecured revolving credit facility $ — $ — Unsecured term loans 500,000 500,000 Unsecured senior notes 2,550,000 2,550,000 Fixed rate mortgages — — $ 3,050,000 $ 3,050,000 Deferred financing costs, net ( 18,409 ) ( 19,157 ) Premium, net ( 3,859 ) ( 3,844 ) Total $ 3,027,732 $ 3,026,999 Unsecured Credit Agreement Unsecured Revolving Credit Facility due 2022 Our amended and restated $ 1.3 billion unsecured credit agreement (the “Unsecured Credit Agreement”) includes an unsecured revolving credit facility of $ 1.0 billion maturing on June 30, 2022 and an unsecured term loan of $ 300.0 million maturing on February 1, 2023. The maximum principal amount of the Unsecured Credit Agreement may be increased by up to $ 750.0 million, subject to certain conditions, for a total principal amount of $ 2.05 billion. Borrowings under the unsecured revolving credit facility accrue interest at a rate equal to adjusted LIBOR, plus a margin ranging from 0.83 % to 1.55 % per annum based on our credit rating. We also pay a facility fee ranging from 0.13 % to 0.30 % per annum on the aggregate commitments under the unsecured revolving credit facility. As of March 31, 2021, we had no outstanding balance under this unsecured revolving credit facility. The current margin associated with any future borrowings is 1.00 % per annum and the facility fee was 0.20 % per annum. Unsecured Term Loan due 2023 Under the Unsecured Credit Agreement as noted above, we have a $ 300.0 million unsecured term loan, guaranteed by HTA, with a maturity date of February 1, 2023. Borrowings under this unsecured term loan accrue interest equal to adjusted LIBOR, plus a margin ranging from 0.90 % to 1.75 % per annum based on our credit rating. The margin associated with our borrowings as of March 31, 2021 was 1.10 % per annum. We have interest rate swaps hedging the floating interest rate, which resulted in a fixed rate of 2.53 % per annum, based on our current credit rating. As of March 31, 2021, we had $ 300.0 million under this unsecured term loan outstanding. $ 200.0 Million Unsecured Term Loan due 2024 Borrowings under the unsecured term loan accrue interest at a rate equal to LIBOR, plus a margin ranging from 0.75 % to 1.65 % per annum based on our credit rating. The margin associated with our borrowings as of March 31, 2021 was 1.00 % per annum. We have interest rate swaps hedging the floating index rate, which resulted in a fixed interest rate at 2.32 % per annum, based on our current credit rating. As of March 31, 2021, we had $ 200.0 million under this unsecured term loan outstanding. This loan matures on January 15, 2024. $ 600.0 Million Unsecured Senior Notes due 2026 In September 2019, in connection with the $ 650.0 million unsecured senior notes due 2030 referenced below, HTALP issued $ 250.0 million as additional unsecured senior notes to the $ 350.0 million aggregate principal of senior notes issued on July 12, 2016, all of which are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 3.50 % per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 103.66 % and 99.72 %, respectively, of the principal amount thereof, with an effective yield to maturity of 2.89 % and 3.53 % per annum, respectively. As of March 31, 2021, we had $ 600.0 million of these unsecured senior notes outstanding that mature on August 1, 2026. $ 500.0 Million Unsecured Senior Notes due 2027 In 2017, HTALP issued $ 500.0 million of unsecured senior notes that are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 3.75 % per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 99.49 % of the principal amount thereof, with an effective yield to maturity of 3.81 % per annum. As of March 31, 2021, we had $ 500.0 million of these unsecured senior notes outstanding that mature on July 1, 2027. 21 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) $ 650.0 million Unsecured Senior Notes due 2030 In September 2019, in connection with the $ 250.0 million additional unsecured senior notes due 2026 referenced above, HTALP issued $ 650.0 million of unsecured senior notes that are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 3.10 % per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 99.66 % of the principal amount thereof, with an effective yield to maturity of 3.14 % per annum. As of March 31, 2021, we had $ 650.0 million of these unsecured senior notes outstanding that mature on February 15, 2030. $ 800.0 million Unsecured Senior Notes due 2031 In September 2020, HTALP issued $ 800.0 million of unsecured senior notes that are guaranteed by HTA. These unsecured senior notes are registered under the Securities Act, bear interest at 2.00 % per annum and are payable semi-annually. Additionally, these unsecured senior notes were offered at 99.20 % of the principal amount thereof, with an effective yield to maturity of 2.09 % per annum. As of March 31, 2021, we had $ 800.0 million of these unsecured senior notes outstanding that mature on March 15, 2031. Future Debt Maturities The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of March 31, 2021 (in thousands): Year Amount 2021 $ — 2022 — 2023 300,000 2024 200,000 2025 — Thereafter 2,550,000 Total $ 3,050,000 Deferred Financing Costs As of March 31, 2021, the future amortization of our deferred financing costs is as follows (in thousands): Year Amount 2021 $ 2,244 2022 2,993 2023 2,497 2024 2,104 2025 2,092 Thereafter 6,479 Total $ 18,409 Debt Covenants We are required by the terms of our applicable loan agreements to meet various affirmative and negative covenants that we believe are customary for these types of facilities, such as limitations on the incurrence of debt by us and our subsidiaries that own unencumbered assets, limitations on the nature of HTALP’s business, and limitations on distributions by HTALP and its subsidiaries that own unencumbered assets. Our loan agreements also impose various financial covenants on us, such as a maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a minimum tangible net worth covenant, a maximum ratio of unsecured indebtedness to unencumbered asset value, rent coverage ratios and a minimum ratio of unencumbered Net Operating Income (“NOI”) to unsecured interest expense. As of March 31, 2021, we believe that we were in compliance with all such financial covenants and reporting requirements. In addition, certain of our loan agreements include events of default provisions that we believe are customary for these types of facilities, including restricting us from making dividend distributions to our stockholders in the event we are in default thereunder, except to the extent necessary for us to maintain our REIT status. We have also concluded as of March 31, 2021 we were not aware of non-compliance with any financial or non-financial covenants in light of the ongoing COVID-19 pandemic. 22 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 9. Derivative Financial Instruments and Hedging Activities Risk Management Objective of Using Derivative Financial Instruments We may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions. We do not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we and our affiliates may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations. We record counterparty credit risk valuation adjustments on interest rate swap derivative assets in order to properly reflect the credit quality of the counterparty. In addition, the fair value of derivative financial instruments designated as cash flow hedges are adjusted to reflect the impact of our credit quality. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps and treasury locks as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for us making fixed rate payments over the life of the agreements without exchange of the underlying notional amount. A treasury lock is a synthetic forward sale of a U.S. treasury note, which is settled in cash based upon the difference between an agreed upon treasury rate and the prevailing treasury rate at settlement. Such treasury locks are entered into to effectively fix the treasury component of an upcoming debt issuance. Amounts reported in accumulated other comprehensive income in the accompanying condensed consolidated balance sheets related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. During the next twelve months, we estimate that an additional $ 6.6 million will be reclassified from other comprehensive income in the accompanying condensed consolidated balance sheets as an increase to interest related to derivative financial instruments in the accompanying condensed consolidated statements of operations. As of March 31, 2021, we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands, except number of instruments): Interest Rate Swaps March 31, 2021 Number of instruments 7 Notional amount $ 500,000 The table below presents the fair value of our derivative financial instruments designated as cash flow hedges as well as the classification in the accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively (in thousands): Asset Derivatives Liability Derivatives Fair Value at: Fair Value at: Derivatives Designated as Hedging Instruments: Balance Sheet Location March 31, 2021 December 31, 2020 Balance Sheet Location March 31, 2021 December 31, 2020 Interest rate swaps Receivables and other assets $ — $ — Derivative financial instruments $ 12,222 $ 14,957 23 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The table below presents the gain or loss recognized on our derivative financial instruments designated as cash flow hedges as well as the classification in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020, respectively (in thousands): Three Months Ended March 31, Effect of Derivative Instruments Location in Statement of Operations and Comprehensive Income (Loss) 2021 2020 Gain (loss) recognized in OCI Change in unrealized losses on cash flow hedges $ 1,163 $ ( 22,153 ) Gain (loss) reclassified from accumulated OCI into income Interest expense ( 1,629 ) 345 Credit Risk Related Contingent Features We have agreements with each of our derivative counterparties that contain a provision that if we default on any of our indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. We also have agreements with each of our derivative counterparties that incorporate provisions from our indebtedness with a lender affiliate of the derivative counterparty requiring it to maintain certain minimum financial covenant ratios on our indebtedness. Failure to comply with the covenant provisions would result in us being in default on any derivative instrument obligations covered by these agreements. As of March 31, 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 $ 12.5 million. As of March 31, 2021, we have not posted any collateral related to these agreements and we were not in breach of any of the provisions of these agreements. If we had breached any of the provisions of these agreements, we could have been required to settle our obligations under these agreements. 10. Commitments and Contingencies Litigation We engage in litigation from time to time with various parties as a routine part of our business, including tenant defaults. However, we are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows. Environmental Matters We follow the policy of monitoring our properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material effect on our condensed consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability at our properties that we believe would require additional disclosure or the recording of a loss contingency. Other Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business. In our opinion, these matters are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations or cash flows. 11. Stockholders’ Equity and Partners’ Capital HTALP’s operating partnership agreement provides that it will distribute cash flow from operations and net sale proceeds to its partners in accordance with their overall ownership interests at such times and in such amounts as the general partner determines. Dividend distributions are made such that a holder of one OP Unit in HTALP will receive distributions from HTALP in an amount equal to the dividend distributions paid to the holder of one share of our common stock. In addition, for each share of common stock issued or redeemed by HTA, HTALP issues or redeems a corresponding number of OP Units. Common Stock Offerings In March 2021, we entered into equity distribution agreements with various sales agents with respect to our at-the-market (“ATM”) offering program of common stock with an aggregate sales amount of up to $ 750.0 million, which replaces our prior ATM offering program that expired in February 2021. As of March 31, 2021, $ 750.0 million remained available for issuance by us under our current ATM. 24 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Currently, we have four outstanding forward sale arrangements pursuant to forward equity agreements under our prior ATM program, with total anticipated net proceeds of $ 277.5 million based on an average initial forward price of $ 29.46 , subject to adjustments as provided in the forward equity agreements. All four of the arrangements mature by the middle of 2021. Refer to Note 13 - Per Share Data of HTA to these condensed consolidated financial statements for a more detailed discussion related to our forward equity agreements. Stock Repurchase Plan In September 2020, our Board of Directors approved the reactivation of a stock repurchase plan authorizing us to purchase up to $ 300.0 million of our common stock from time to time prior to the expiration thereof on September 22, 2023. As of March 31, 2021, the remaining amount of common stock available for repurchase under our stock repurchase plan was $ 300.0 million. Common Stock Dividends See our accompanying condensed consolidated statements of equity and condensed statements of changes in partners’ capital for the dividends declared during the three months ended March 31, 2021 and 2020. As of March 31, 2021, declared but unpaid dividends totaling $ 71.1 million were included in accounts payable and accrued liabilities. Incentive Plan Our Incentive Plan permits the grant of incentive awards to our employees, officers, non-employee directors and consultants as selected by our Board of Directors. This Plan authorizes us to grant awards in any of the following forms: options; stock appreciation rights; restricted stock; restricted or deferred stock units; performance awards; dividend equivalents; other stock-based awards, including units in HTALP; and cash-based awards. The aggregate number of awards reserved and available for issuance under the Plan is 5,000,000 shares. As of March 31, 2021, this Plan has expired and is currently subject to amendment which, under applicable rules of the NYSE, is required to be brought before shareholders for approval. We anticipate a new incentive plan will be voted upon at our Annual Meeting of Stockholders in July 2021. We intend the new Plan, as amended, will contain substantively similar features as the existing plan. Restricted Common Stock For the three months ended March 31, 2021 and 2020, we recognized compensation expense of $ 3.3 million and $ 3.2 million, respectively. Substantially all compensation expense was recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2021, we had $ 8.5 million of unrecognized compensation expense, net of estimated forfeitures, which we will recognize over a remaining weighted average period of 2.1 years. The following is a summary of our restricted common stock activity as of March 31, 2021 and 2020, respectively: March 31, 2021 March 31, 2020 Restricted Common Stock Weighted Average Grant Date Fair Value Restricted Common Stock Weighted Average Grant Date Fair Value Beginning balance 436,399 $ 28.27 600,987 $ 28.04 Granted 354,288 26.20 243,037 30.23 Vested ( 258,000 ) 27.50 ( 343,771 ) 28.81 Forfeited ( 333 ) 30.07 ( 7,407 ) 28.83 Ending balance 532,354 $ 27.45 492,846 $ 28.57 25 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 12. Fair Value of Financial Instruments Financial Instruments Reported at Fair Value - Recurring The table below presents the carrying amounts and fair values of our financial instruments on a recurring basis as of March 31, 2021 and December 31, 2020 (in thousands): March 31, 2021 December 31, 2020 Carrying Amount Fair Value Carrying Amount Fair Value Level 2 - Assets: Derivative financial instruments $ — $ — $ — $ — Level 2 - Liabilities: Derivative financial instruments $ 12,222 $ 12,222 $ 14,957 $ 14,957 Debt 3,027,732 3,123,473 3,026,999 3,258,573 The carrying amounts of cash and cash equivalents, tenant and other receivables, restricted cash, accounts payable, and accrued liabilities approximate fair value. Although we have determined that the majority of the inputs used to value our cash flow hedges fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our cash flow hedge positions and have determined that the credit valuation adjustments are not significant to their overall valuation. As a result, we have determined that our cash flow hedge valuations in their entirety are classified in Level 2 of the fair value hierarchy. For further discussion of the assumptions considered, refer to Note 2 - Summary of Significant Accounting Policies. Financial Instruments Reported at Fair Value - Non-Recurring We also have assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. This generally includes assets subject to impairment. 13. Per Share Data of HTA Currently, we have four outstanding forward sale arrangements pursuant to forward equity agreements, with total anticipated net proceeds of $ 277.5 million, based on an average initial forward price of $ 29.46 , subject to adjustments as provided in the forward equity agreements. All four of the arrangements mature by the middle of 2021. To account for the forward equity agreements, we considered the accounting guidance governing financial instruments and derivatives and concluded that our forward equity agreements were not liabilities as they did not embody obligations to repurchase our shares of common stock nor did they 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 our shares. We also evaluated whether the agreements met the derivatives and hedging guidance scope exception to be accounted for as equity instruments and concluded that the agreements can be classified as an equity contract based on the following assessment: (i) none of the agreements’ exercise contingencies were based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own common stock. In addition, we considered the potential dilution resulting from the forward equity agreements mentioned above on our earnings per common share calculations. We use the treasury method to determine the dilution resulting from the forward equity agreements during the period of time prior to settlement. The impact to our weighted-average shares - diluted was anti-dilutive in nature and, thus, approximately 505,000 shares were excluded from the calculation for the three months ended March 31, 2021. For the three months ended March 31, 2020, the impact to our weighted-average shares - diluted was dilutive and thus, approximately 255,000 shares were added to the calculation. We include unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents as “participating securities” pursuant to the two-class method. The resulting classes are our common stock and restricted stock. Our forward equity agreements are not considered a participating security and, therefore, are not included in the computation of earnings per share using the two-class method. For the three months ended March 31, 2021 and 2020, all of our earnings were distributed and the calculated earnings per share amount would be the same for all classes. 26 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per share of HTA for the three months ended March 31, 2021 and 2020, respectively (in thousands, except per share data): Three Months Ended March 31, 2021 2020 Numerator: Net income $ 22,393 $ 18,208 Net income attributable to noncontrolling interests ( 363 ) ( 307 ) Net income attributable to common stockholders $ 22,030 $ 17,901 Denominator: Weighted average shares outstanding - basic 218,753 216,692 Dilutive shares - OP Units convertible into common stock 3,515 3,676 Dilutive effect of forward equity sales agreement — 255 Adjusted weighted average shares outstanding - diluted 222,268 220,623 Earnings per common share - basic Net income attributable to common stockholders $ 0.10 $ 0.08 Earnings per common share - diluted Net income attributable to common stockholders $ 0.10 $ 0.08 14. Per Unit Data of HTALP Currently, we have four outstanding forward sale arrangements pursuant to forward equity agreements, with total anticipated net proceeds of $ 277.5 million, subject to adjustments as provided in the forward equity agreements. All four of the arrangements mature by the middle of 2021. Refer to Note 13 - Per Share Data of HTA to these condensed consolidated financial statements for a more detailed discussion related to our forward equity agreements executed in 2019 and March 2020. The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per unit of HTALP for the three months ended March 31, 2021 and 2020, respectively (in thousands, except per unit data): Three Months Ended March 31, 2021 2020 Numerator: Net income $ 22,393 $ 18,208 Net income attributable to noncontrolling interests — — Net income attributable to common unitholders $ 22,393 $ 18,208 Denominator: Weighted average OP Units outstanding - basic 222,268 220,368 Dilutive effect of forward equity sales agreement — 255 Adjusted weighted average units outstanding - diluted 222,268 220,623 Earnings per common unit - basic: Net income attributable to common unitholders $ 0.10 $ 0.08 Earnings per common unit - diluted: Net income attributable to common unitholders $ 0.10 $ 0.08 27 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 15. Supplemental Cash Flow Information The following is the supplemental cash flow information for the three months ended March 31, 2021 and 2020, respectively (in thousands): Three Months Ended March 31, 2021 2020 Supplemental Disclosure of Cash Flow Information: Interest paid, net of capitalized interest $ 38,605 $ 34,062 Cash paid for operating leases 4,554 3,352 Supplemental Disclosure of Noncash Investing and Financing Activities: Accrued capital expenditures $ 19,013 $ 8,923 Dividend distributions declared, but not paid 71,146 69,731 Redemption of noncontrolling interest 255 6,776 ROU assets obtained in exchange for lease obligations 3,995 — 28 Table of Contents