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) June 30, 2021 December 31, 2020 ASSETS Real estate investments: Land $ 596,084 $ 596,269 Building and improvements 6,542,944 6,507,816 Lease intangibles 617,731 628,621 Construction in progress 88,609 80,178 7,845,368 7,812,884 Accumulated depreciation and amortization ( 1,806,165 ) ( 1,702,719 ) Real estate investments, net 6,039,203 6,110,165 Investment in unconsolidated joint venture 63,593 64,360 Cash and cash equivalents 19,796 115,407 Restricted cash 70,542 3,358 Receivables and other assets, net 294,550 251,728 Right-of-use assets - operating leases, net 228,870 235,223 Other intangibles, net 8,850 10,451 Total assets $ 6,725,404 $ 6,790,692 LIABILITIES AND EQUITY Liabilities: Debt $ 3,073,465 $ 3,026,999 Accounts payable and accrued liabilities 172,653 200,358 Derivative financial instruments - interest rate swaps 10,755 14,957 Security deposits, prepaid rent and other liabilities 83,474 82,553 Lease liabilities - operating leases 195,210 198,367 Intangible liabilities, net 29,959 32,539 Total liabilities 3,565,516 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; 218,825,737 and 218,578,012 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 2,188 2,186 Additional paid-in capital 4,919,353 4,916,784 Accumulated other comprehensive loss ( 12,734 ) ( 16,979 ) Cumulative dividends in excess of earnings ( 1,807,753 ) ( 1,727,752 ) Total stockholders’ equity 3,101,054 3,174,239 Non-controlling interests 58,834 60,680 Total equity 3,159,888 3,234,919 Total liabilities and equity $ 6,725,404 $ 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues: Rental income $ 188,494 $ 178,670 $ 379,844 $ 364,201 Interest and other operating income 121 175 264 420 Total revenues 188,615 178,845 380,108 364,621 Expenses: Rental 57,409 56,200 116,988 113,062 General and administrative 10,929 10,160 21,489 21,678 Transaction 66 32 162 172 Depreciation and amortization 74,977 74,927 151,251 152,592 Interest expense 23,133 24,277 46,119 48,149 Impairment 16,825 — 16,825 — Total expenses 183,339 165,596 352,834 335,653 Gain on sale of real estate, net 32,753 — 32,753 1,991 Income from unconsolidated joint venture 406 379 798 801 Other income 304 97 307 173 Net income $ 38,739 $ 13,725 $ 61,132 $ 31,933 Net income attributable to non-controlling interests ( 728 ) ( 236 ) ( 1,091 ) ( 543 ) Net income attributable to common stockholders $ 38,011 $ 13,489 $ 60,041 $ 31,390 Earnings per common share - basic: Net income attributable to common stockholders $ 0.17 $ 0.06 $ 0.27 $ 0.14 Earnings per common share - diluted: Net income attributable to common stockholders $ 0.17 $ 0.06 $ 0.27 $ 0.14 Weighted average common shares outstanding: Basic 218,822 218,483 218,787 217,588 Diluted 222,326 222,088 222,297 221,228 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income $ 38,739 $ 13,725 $ 61,132 $ 31,933 Other comprehensive income (loss) Change in unrealized gains (losses) on cash flow hedges 1,523 ( 3,228 ) 4,315 ( 25,726 ) Total other comprehensive income (loss) 1,523 ( 3,228 ) 4,315 ( 25,726 ) Total comprehensive income 40,262 10,497 65,447 6,207 Comprehensive income attributable to non-controlling interests ( 754 ) ( 184 ) ( 1,161 ) ( 131 ) Total comprehensive income attributable to common stockholders $ 39,508 $ 10,313 $ 64,286 $ 6,076 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 Non-controlling 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 non-controlling 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 Issuance of OP Units in HTALP — — — — — — 1,378 1,378 Share-based award transactions, net ( 1 ) — 2,100 — — 2,100 — 2,100 Repurchase and cancellation of common stock ( 7 ) — ( 174 ) — — ( 174 ) — ( 174 ) Redemption of non-controlling interest and other 40 — 1,096 — — 1,096 ( 1,096 ) — Dividends declared ($ 0.315 ) per common share) — — — — ( 68,827 ) ( 68,827 ) ( 1,162 ) ( 69,989 ) Net Income — — — — 13,489 13,489 236 13,725 Other comprehensive loss — — — ( 3,176 ) — ( 3,176 ) ( 52 ) ( 3,228 ) Balance as of June 30, 2020 218,515 $ 2,185 $ 4,912,419 $ ( 20,768 ) $ ( 1,609,048 ) $ 3,284,788 $ 63,976 $ 3,348,764 Class A Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Cumulative Dividends in Excess of Earnings Total Stockholders’ Equity Non-controlling 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 non-controlling 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 Share-based award transactions, net ( 6 ) — 2,065 — — 2,065 — 2,065 Repurchase and cancellation of common stock ( 5 ) — ( 129 ) — — ( 129 ) — ( 129 ) Redemption of non-controlling interest and other 13 — 291 — — 291 ( 291 ) — Dividends declared ($ 0.320 ) per common share) — — — — ( 70,019 ) ( 70,019 ) ( 1,278 ) ( 71,297 ) Net income — — — — 38,011 38,011 728 38,739 Other comprehensive income — — — 1,497 — 1,497 26 1,523 Balance as of June 30, 2021 218,826 $ 2,188 $ 4,919,353 $ ( 12,734 ) $ ( 1,807,753 ) $ 3,101,054 $ 58,834 $ 3,159,888 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) Six Months Ended June 30, 2021 2020 Cash flows from operating activities: Net income $ 61,132 $ 31,933 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 142,062 144,724 Share-based compensation expense 5,402 5,303 Income from unconsolidated joint venture ( 798 ) ( 801 ) Distributions from unconsolidated joint venture 1,565 1,670 Impairment 16,825 — Gain on sale of real estate, net ( 32,753 ) ( 1,991 ) Changes in operating assets and liabilities: Receivables and other assets, net 10,540 2,504 Accounts payable and accrued liabilities ( 8,552 ) ( 6,337 ) Security deposits, prepaid rent and other liabilities ( 4,496 ) 5,178 Net cash provided by operating activities 190,927 182,183 Cash flows from investing activities: Investments in real estate ( 50,628 ) ( 41,338 ) Development of real estate ( 33,983 ) ( 30,367 ) Proceeds from the sale of real estate 65,349 6,420 Capital expenditures ( 53,471 ) ( 43,917 ) Collection of real estate notes receivable 15,405 514 Advances on real estate notes receivable ( 61,020 ) ( 6,000 ) Net cash used in investing activities ( 118,348 ) ( 114,688 ) Cash flows from financing activities: Borrowings on unsecured revolving credit facility 100,000 1,314,000 Payments on unsecured revolving credit facility ( 55,000 ) ( 1,150,000 ) Payments on secured mortgage loans — ( 96,206 ) Proceeds from issuance of common stock — 50,020 Issuance of OP Units — 1,378 Repurchase and cancellation of common stock ( 3,377 ) ( 4,798 ) Dividends paid ( 140,022 ) ( 137,050 ) Distributions paid to non-controlling interest of limited partners ( 2,607 ) ( 2,455 ) Net cash used in financing activities ( 101,006 ) ( 25,111 ) Net change in cash, cash equivalents and restricted cash ( 28,427 ) 42,384 Cash, cash equivalents and restricted cash - beginning of period 118,765 37,616 Cash, cash equivalents and restricted cash - end of period $ 90,338 $ 80,000 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) June 30, 2021 December 31, 2020 ASSETS Real estate investments: Land $ 596,084 $ 596,269 Building and improvements 6,542,944 6,507,816 Lease intangibles 617,731 628,621 Construction in progress 88,609 80,178 7,845,368 7,812,884 Accumulated depreciation and amortization ( 1,806,165 ) ( 1,702,719 ) Real estate investments, net 6,039,203 6,110,165 Investment in unconsolidated joint venture 63,593 64,360 Cash and cash equivalents 19,796 115,407 Restricted cash 70,542 3,358 Receivables and other assets, net 294,550 251,728 Right-of-use assets - operating leases, net 228,870 235,223 Other intangibles, net 8,850 10,451 Total assets $ 6,725,404 $ 6,790,692 LIABILITIES AND PARTNERS’ CAPITAL Liabilities: Debt $ 3,073,465 $ 3,026,999 Accounts payable and accrued liabilities 172,653 200,358 Derivative financial instruments - interest rate swaps 10,755 14,957 Security deposits, prepaid rent and other liabilities 83,474 82,553 Lease liabilities - operating leases 195,210 198,367 Intangible liabilities, net 29,959 32,539 Total liabilities 3,565,516 3,555,773 Commitments and contingencies Partners’ Capital: Limited partners’ capital, 3,495,755 and 3,519,545 OP Units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 58,564 60,410 General partners’ capital, 218,825,737 and 218,578,012 OP Units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 3,101,324 3,174,509 Total partners’ capital 3,159,888 3,234,919 Total liabilities and partners’ capital $ 6,725,404 $ 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 for per unit data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues: Rental income $ 188,494 $ 178,670 $ 379,844 $ 364,201 Interest and other operating income 121 175 264 420 Total revenues 188,615 178,845 380,108 364,621 Expenses: Rental 57,409 56,200 116,988 113,062 General and administrative 10,929 10,160 21,489 21,678 Transaction 66 32 162 172 Depreciation and amortization 74,977 74,927 151,251 152,592 Interest expense 23,133 24,277 46,119 48,149 Impairment 16,825 — 16,825 — Total expenses 183,339 165,596 352,834 335,653 Gain on sale of real estate, net 32,753 — 32,753 1,991 Income from unconsolidated joint venture 406 379 798 801 Other income 304 97 307 173 Net income $ 38,739 $ 13,725 $ 61,132 $ 31,933 Net income attributable to non-controlling interests — — — — Net income attributable to common unitholders $ 38,739 $ 13,725 $ 61,132 $ 31,933 Earnings per common OP Unit - basic: Net income attributable to common unitholders $ 0.17 $ 0.06 $ 0.28 $ 0.14 Earnings per common OP Unit - diluted: Net income attributable to common unitholders $ 0.17 $ 0.06 $ 0.28 $ 0.14 Weighted average common OP Units outstanding: Basic 222,326 222,088 222,297 221,228 Diluted 222,326 222,088 222,297 221,228 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 (In thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income $ 38,739 $ 13,725 $ 61,132 $ 31,933 Other comprehensive income (loss) Change in unrealized gains (losses) on cash flow hedges 1,523 ( 3,228 ) 4,315 ( 25,726 ) Total other comprehensive income (loss) 1,523 ( 3,228 ) 4,315 ( 25,726 ) Total comprehensive income 40,262 10,497 65,447 6,207 Comprehensive income attributable to non-controlling interests — — — — Total comprehensive income attributable to common unitholders $ 40,262 $ 10,497 $ 65,447 $ 6,207 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 Issuance of limited partner OP Units 47 1,378 1,378 Share-based award transactions, net ( 1 ) 2,100 — — 2,100 Redemption and cancellation of general partner OP Units ( 7 ) ( 174 ) — — ( 174 ) Redemption of limited partner OP Units and other 40 1,096 ( 40 ) ( 1,096 ) — Distributions declared ($ 0.315 per common OP Unit) — ( 68,827 ) — ( 1,162 ) ( 69,989 ) Net income — 13,489 — 236 13,725 Other comprehensive loss — ( 3,176 ) — ( 52 ) ( 3,228 ) Balance as of June 30, 2020 218,515 $ 3,285,058 3,568 $ 63,706 $ 3,348,764 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 Share-based award transactions, net ( 6 ) 2,065 — — 2,065 Redemption and cancellation of general partner OP Units ( 5 ) ( 129 ) — — ( 129 ) Redemption of limited partner OP Units and other 13 291 ( 13 ) ( 291 ) — Distributions declared ($ 0.320 per common OP Unit) — ( 70,019 ) — ( 1,278 ) ( 71,297 ) Net income — 38,011 — 728 38,739 Other comprehensive income — 1,497 — 26 1,523 Balance as of June 30, 2021 218,826 $ 3,101,324 3,496 $ 58,564 $ 3,159,888 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) Six Months Ended June 30, 2021 2020 Cash flows from operating activities: Net income $ 61,132 $ 31,933 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 142,062 144,724 Share-based compensation expense 5,402 5,303 Income from unconsolidated joint venture ( 798 ) ( 801 ) Distributions from unconsolidated joint venture 1,565 1,670 Impairment 16,825 — Gain on sale of real estate, net ( 32,753 ) ( 1,991 ) Changes in operating assets and liabilities: Receivables and other assets, net 10,540 2,504 Accounts payable and accrued liabilities ( 8,552 ) ( 6,337 ) Security deposits, prepaid rent and other liabilities ( 4,496 ) 5,178 Net cash provided by operating activities 190,927 182,183 Cash flows from investing activities: Investments in real estate ( 50,628 ) ( 41,338 ) Development of real estate ( 33,983 ) ( 30,367 ) Proceeds from the sale of real estate 65,349 6,420 Capital expenditures ( 53,471 ) ( 43,917 ) Collection of real estate notes receivable 15,405 514 Advances on real estate notes receivable ( 61,020 ) ( 6,000 ) Net cash used in investing activities ( 118,348 ) ( 114,688 ) Cash flows from financing activities: Borrowings on unsecured revolving credit facility 100,000 1,314,000 Payments on unsecured revolving credit facility ( 55,000 ) ( 1,150,000 ) Payments on secured mortgage loans — ( 96,206 ) Proceeds from issuance of general partner units — 50,020 Issuance of OP Units — 1,378 Repurchase and cancellation of general partner units ( 3,377 ) ( 4,798 ) Distributions paid to general partner ( 140,022 ) ( 137,050 ) Distributions paid to limited partners and redeemable non-controlling interests ( 2,607 ) ( 2,455 ) Net cash used in financing activities ( 101,006 ) ( 25,111 ) Net change in cash, cash equivalents and restricted cash ( 28,427 ) 42,384 Cash, cash equivalents and restricted cash - beginning of period 118,765 37,616 Cash, cash equivalents and restricted cash - end of period $ 90,338 $ 80,000 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 non-controlling interests on the accompanying condensed consolidated balance sheets and statements of operations, condensed consolidated statements of comprehensive income, and condensed consolidated statements of equity and changes in partners’ capital. Holders of OP Units are considered to be non-controlling 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 non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of June 30, 2021 and December 31, 2020, there were approximately 3.5 million of OP Units issued and outstanding held by non-controlling 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. In addition, from time to time, the Company acquires properties using a like-kind exchange structure pursuant to Section 1031 of the Internal Revenue Code (a “1031 exchange”) and, as such, the proceeds from a property or portfolio disposition are in the possession of an Exchange Accommodation Titleholder (“EAT”) until the 1031 exchange is completed. The EAT is classified as a VIE as it is a “thinly capitalized” entity. The Company consolidates the EAT because we are the primary beneficiary as we have the ability to control the activities that most significantly impact the EAT’s economic performance and can close out the 1031 exchange structure at any time. As of June 30, 2021, the Company had one such entity where the 1031 exchange had not completed. 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 typically comprised of: (i) reserve accounts for property taxes, insurance, capital and tenant improvements; (ii) collateral accounts for debt and interest rate swaps; (iii) 1031 exchange funds; and (iv) 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): June 30, 2021 2020 Cash and cash equivalents $ 19,796 $ 75,202 Restricted cash 70,542 4,798 Total cash, cash equivalents and restricted cash $ 90,338 $ 80,000 15 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 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 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 June 30, 2021 and 2020 was $ 60.7 million and $ 58.2 million, respectively. Depreciation expense of buildings and improvements for the six months ended June 30, 2021 and 2020 was $ 121.9 million and $ 117.1 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 $ 10.2 million have been repaid through June 30, 2021. The second category is early renewals, where the Company renewed lease arrangements prior to their contractual expirations, providing concessions at the commencement of the lease in exchange for additional term, which additional term averages approximately three years. This category is treated as a modification under Topic 842, with the existing balance of the 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 more term and/or increased rental rates. For the six months ended June 30, 2021, the Company has entered into very few new deferral arrangements or early renewal leases with substantive amounts of free rent or other forms of concessions at the onset of the lease term. The Lease Modification Q&A had no material impact on our condensed consolidated financial statements as of and for the six months ended June 30, 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 a discounted cash flow analysis, which involves management's best estimate of market participants' holding periods, market comparables, future occupancy levels, rental rates, capitalization rates, lease-up periods and capital requirements. As of June 30, 2021 and December 31, 2020, the Company had no properties classified as held for sale. Real Estate Notes Receivable Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner and/or corporate guarantees . Real estate notes receivable are intended to be held-to-maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses. Pursuant to Topic 326 - Financial Instruments - Credit Losses, we adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under Topic 326. Given management’s estimated probability of default at inception, we determined that the current risk of credit loss is remote. Accordingly, we have recorded no reserve for credit loss as of June 30, 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 June 30, 2021 and December 31, 2020, we had a 50 % interest in one such investment with a carrying value and maximum exposure to risk of $ 63.6 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 June 30, 2021 and 2020, we recognized income of $ 0.4 million. For each of the six months ended June 30, 2021 and 2020, we recognized income of $ 0.8 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. 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. 17 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 3. Investments in Real Estate For the six months ended June 30, 2021, our investments had an aggregate purchase price of $ 53.0 million. As part of these investments, we incurred approximately $ 0.5 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 six months ended June 30, 2021 and 2020, respectively (in thousands): Six Months Ended June 30, 2021 2020 Land $ 1,093 $ 2,817 Building and improvements 45,629 35,259 In place leases 5,291 3,621 Below market leases ( 79 ) ( 693 ) Above market leases 66 334 ROU assets ( 1,372 ) — Net real estate assets acquired 50,628 41,338 Other, net 2,397 334 Aggregate purchase price $ 53,025 $ 41,672 The acquired intangible assets and liabilities referenced above had weighted average lives of the following terms for the six months ended June 30, 2021 and 2020, respectively (in years): Six Months Ended June 30, 2021 2020 Acquired intangible assets 4.2 5.4 Acquired intangible liabilities 5.7 3.6 4. Dispositions and Impairment Dispositions During the six months ended June 30, 2021, we sold a 13 property portfolio with locations in Tennessee and Virginia for a gross sales price of $ 67.5 million, resulting in a net gain to us of approximately $ 32.8 million. During the six months ended June 30, 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 to us of approximately $ 2.0 million. Impairment During the six months ended June 30, 2021, we recorded impairment charges of $ 16.8 million on two properties, for which the holding period was revised by the Company to be less than the previously estimated useful life. The estimated fair values were based on a purchase option and a pending sales agreement, both of which were executed subsequent to June 30, 2021. We recorded no impairment charges during the six months ended June 30, 2020. 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 June 30, 2021 and December 31, 2020, respectively (in thousands, except with respect to the weighted average remaining amortization terms): June 30, 2021 December 31, 2020 Balance Weighted Average Remaining Amortization in Years Balance Weighted Average Remaining Amortization in Years Assets: In place leases $ 477,562 9.6 $ 483,779 9.7 Tenant relationships 140,169 10.4 144,842 10.0 Above market leases 37,093 6.4 37,876 5.8 654,824 666,497 Accumulated amortization ( 436,330 ) ( 427,937 ) Total $ 218,494 9.6 $ 238,560 9.6 Liabilities: Below market leases $ 61,951 14.8 $ 61,896 14.6 Accumulated amortization ( 31,992 ) ( 29,357 ) Total $ 29,959 14.8 $ 32,539 14.6 The following is a summary of the net intangible amortization for the three and six months ended June 30, 2021 and 2020, respectively (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Amortization recorded against rental income related to above and (below) market leases $ ( 641 ) $ ( 751 ) $ ( 1,233 ) $ ( 2,719 ) Amortization expense related to in place leases and tenant relationships 11,340 13,438 23,227 29,373 6. Receivables and Other Assets Receivables and other assets consisted of the following as of June 30, 2021 and December 31, 2020, respectively (in thousands): June 30, 2021 December 31, 2020 Tenant receivables, net $ 9,966 $ 17,717 Other receivables, net 5,118 6,243 Deferred financing costs, net 1,724 2,586 Deferred leasing costs, net 42,505 43,234 Straight-line rent receivables, net 134,806 128,070 Prepaid expenses, deposits, equipment and other, net 38,755 46,114 Real estate notes receivable, net 46,341 — Finance ROU asset, net 15,335 7,764 Total $ 294,550 $ 251,728 19 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 a summary of the amortization of deferred leasing costs and financing costs for the three and six months ended June 30, 2021 and 2020, respectively (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Amortization expense related to deferred leasing costs $ 2,204 $ 2,113 $ 4,427 $ 4,009 Interest expense related to deferred financing costs 431 431 862 862 7. Leases For the three months ended June 30, 2021, one new ground lease has commenced. Based on our analysis, we concluded that its classification was as a finance lease. Additionally, we sold a portfolio of properties resulting in the removal of eight of our in-place operating ground leases. For more details on the disposition, refer to Note 4 - Dispositions and Impairment. Lessee - Maturity of Lease Liabilities The following table summarizes the future minimum lease obligations of our operating and finance leases as of June 30, 2021 (in thousands): Year Operating Leases Finance Leases 2021 $ 5,304 $ 277 2022 10,797 558 2023 10,934 563 2024 10,277 568 2025 9,764 573 2026 9,766 584 Thereafter 606,467 35,797 Total undiscounted lease payments $ 663,309 $ 38,920 Less: Interest ( 468,099 ) ( 23,468 ) Present value of lease liabilities $ 195,210 $ 15,452 Lessor - Lease Revenues and Maturity of Future Minimum Rents For the three months ended June 30, 2021 and 2020, we recognized $ 187.4 million and $ 176.2 million, respectively, of rental and other lease-related income related to our operating leases, of which $ 42.2 million and $ 41.8 million, respectively, were variable lease payments. For the six months ended June 30, 2021, and 2020, we recognized $ 377.8 million and $ 360.5 million, respectively, of rental and other lease-related income related to our operating leases, of which $ 87.3 million and $ 84.6 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 June 30, 2021 (in thousands): Year Amount 2021 $ 275,454 2022 529,289 2023 475,792 2024 419,934 2025 366,142 2026 317,544 Thereafter 1,183,342 Total $ 3,567,497 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 June 30, 2021 and December 31, 2020, respectively (in thousands): June 30, 2021 December 31, 2020 Unsecured revolving credit facility $ 45,000 $ — Unsecured term loans 500,000 500,000 Unsecured senior notes 2,550,000 2,550,000 Fixed rate mortgages — — $ 3,095,000 $ 3,050,000 Deferred financing costs, net ( 17,661 ) ( 19,157 ) Premium, net ( 3,874 ) ( 3,844 ) Total $ 3,073,465 $ 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 if so increased. 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 June 30, 2021, we had $ 45.0 million outstanding under this unsecured revolving credit facility at an interest rate of 1.13 % per annum. The margin associated with our borrowings was 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 June 30, 2021 was 1.10 % per annum. We have interest rate swaps hedging the floating interest rate, which resulted in a fixed rate of 2.52 % per annum, based on our current credit rating. As of June 30, 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 June 30, 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 June 30, 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, and bear interest at 3.50 % per annum which is 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 June 30, 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, and bear interest at 3.75 % per annum which is 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 June 30, 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, and bear interest at 3.10 % per annum which is 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 June 30, 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, and bear interest at 2.00 % per annum which is 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 June 30, 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 June 30, 2021 (in thousands): Year Amount 2021 $ — 2022 45,000 2023 300,000 2024 200,000 2025 — Thereafter 2,550,000 Total $ 3,095,000 Deferred Financing Costs As of June 30, 2021, the future amortization of our deferred financing costs is as follows (in thousands): Year Amount 2021 $ 1,496 2022 2,993 2023 2,497 2024 2,104 2025 2,092 Thereafter 6,479 Total $ 17,661 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 June 30, 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 June 30, 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 an 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 June 30, 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 June 30, 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 June 30, 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 June 30, 2021 December 31, 2020 Balance Sheet Location June 30, 2021 December 31, 2020 Interest rate swaps Receivables and other assets $ — $ — Derivative financial instruments $ 10,755 $ 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 and six months ended June 30, 2021 and 2020, respectively (in thousands): Three Months Ended June 30, Six Months Ended June 30, Effect of Derivative Instruments Location in Statement of Operations and Comprehensive Income (Loss) 2021 2020 2021 2020 Gain (loss) recognized in OCI Change in unrealized losses on cash flow hedges $ ( 150 ) $ ( 4,300 ) $ 1,013 $ ( 26,453 ) Gain (loss) reclassified from accumulated OCI into income Interest expense ( 1,673 ) ( 1,072 ) ( 3,302 ) ( 727 ) 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 June 30, 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 $ 11.0 million. As of June 30, 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. Unfunded Loan Commitments Unfunded loan commitments include amounts undrawn on mezzanine loans. As of June 30, 2021, unfunded loan commitments totaled $ 20.6 million. 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 thereof 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. 24 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 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 June 30, 2021, $ 750.0 million remained available for issuance by us under our current ATM. 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 have been extended and mature on or about December 31, 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 June 30, 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 and six months ended June 30, 2021 and 2020. As of June 30, 2021, declared, but unpaid, dividends totaling $ 71.3 million were included in accounts payable and accrued liabilities. On August 3, 2021 our Board of Directors announced an increased quarterly cash dividend of $ 0.325 per share of common stock and per OP Unit to be paid on October 11, 2021 to stockholders and unitholders of record on October 4, 2021. Incentive Plan On April 29, 2021, our Board of Directors approved and adopted the Amended and Restated 2006 Incentive Plan (the “Plan”), which was approved by our Stockholders on July 7, 2021 at our Annual Meeting of Stockholders. The Plan permits the grant of incentive awards to our employees, officers, non-employee directors and consultants as selected by our Board of Directors and 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; and other stock-based and cash-based awards. The aggregate number of awards reserved and available for issuance under the Plan is 10,000,000 shares. There were no issuances of stock under the Plan, as amended, as of June 30, 2021. Restricted Common Stock For the three and six months ended June 30, 2021, we recognized compensation expense of $ 2.1 million and $ 5.4 million, respectively. For the three and six months ended June 30, 2020, we recognized compensation expense of $ 2.1 million and $ 5.3 million, respectively. Substantially all compensation expense was recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations. As of June 30, 2021, we had $ 7.9 million of unrecognized compensation expense, net of estimated forfeitures, which we will recognize over a remaining weighted average period of 1.9 years. The following is a summary of our restricted common stock activity as of June 30, 2021 and 2020, respectively: June 30, 2021 June 30, 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 26.62 244,531 30.20 Vested ( 270,099 ) 27.48 ( 361,150 ) 28.89 Forfeited ( 6,767 ) 28.87 ( 10,197 ) 28.78 Ending balance 513,821 $ 27.54 474,171 $ 28.49 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 June 30, 2021 and December 31, 2020, respectively (in thousands): June 30, 2021 December 31, 2020 Carrying Amount Fair Value Carrying Amount Fair Value Level 2 - Assets: Real estate notes receivable, net $ 46,341 $ 46,341 $ — $ — Derivative financial instruments — — — — Level 2 - Liabilities: Derivative financial instruments $ 10,755 $ 10,755 $ 14,957 $ 14,957 Debt 3,073,465 3,227,343 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. Fair values for real estate notes receivable are estimated based on rates currently prevailing for similar instruments of similar maturities and are based primarily on Level 2 inputs. 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 category generally includes assets subject to impairment. The table below presents our assets measured at fair value on a non-recurring basis as of June 30, 2021 and December 31, 2020 (in thousands): June 30, 2021 December 31, 2020 Fair Value Fair Value Level 2 - Assets: MOB (1) $ 27,318 $ — (1) The hold period was revised by the Company to be less than the previously estimated useful life for two MOBs. Consequently, at June 30, 2021, MOBs with a carrying amount of $ 44.1 million were written down to their fair value $ 27.3 million, resulting in impairment charges of $ 16.8 million for the six months ended June 30, 2021. The estimated fair values for these MOBs as of June 30, 2021 were based on a purchase option and a pending sales agreement, both of which were executed subsequent to June 30, 2021. 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 have been extended and mature on or about December 31, 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 the fair value of 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. 26 Table of Contents HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) 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 389,000 and 445,000 shares were excluded from the calculation for the three and six months ended June 30, 2021. For the three and six months ended June 30, 2020, the impact to our weighted-average shares - diluted was anti-dilutive in nature and, thus, approximately 1.4 million and 0.5 million shares, respectively, were excluded from 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 and six months ended June 30, 2021 and 2020, all of our earnings were distributed and the calculated earnings per share amount would be the same for all classes. The following is the reconciliation of the numerator and denominator used in basic and diluted earnings per share of HTA for the three and six months ended June 30, 2021 and 2020, respectively (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator: Net income $ 38,739 $ 13,725 $ 61,132 $ 31,933 Net income attributable to non-controlling interests ( 728 ) ( 236 ) ( 1,091 ) ( 543 ) Net income attributable to common stockholders $ 38,011 $ 13,489 $ 60,041 $ 31,390 Denominator: Weighted average shares outstanding - basic 218,822 218,483 218,787 217,588 Dilutive shares - OP Units convertible into common stock 3,504 3,605 3,510 3,640 Adjusted weighted average shares outstanding - diluted 222,326 222,088 222,297 221,228 Earnings per common share - basic Net income attributable to common stockholders $ 0.17 $ 0.06 $ 0.27 $ 0.14 Earnings per common share - diluted Net income attributable to common stockholders $ 0.17 $ 0.06 $ 0.27 $ 0.14 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 have been extended and mature on or about December 31, 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. 27 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 unit of HTALP for the three and six months ended June 30, 2021 and 2020, respectively (in thousands, except per unit data): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator: Net income $ 38,739 $ 13,725 $ 61,132 $ 31,933 Net income attributable to non-controlling interests — — — — Net income attributable to common unitholders $ 38,739 $ 13,725 $ 61,132 $ 31,933 Denominator: Weighted average OP Units outstanding - basic 222,326 222,088 222,297 221,228 Dilutive units - OP Units convertible into common units — — — — Adjusted weighted average units outstanding - diluted 222,326 222,088 222,297 221,228 Earnings per common unit - basic: Net income attributable to common unitholders $ 0.17 $ 0.06 $ 0.28 $ 0.14 Earnings per common unit - diluted: Net income attributable to common unitholders $ 0.17 $ 0.06 $ 0.28 $ 0.14 15. Supplemental Cash Flow Information The following is the supplemental cash flow information for the six months ended June 30, 2021 and 2020, respectively (in thousands): Six Months Ended June 30, 2021 2020 Supplemental Disclosure of Cash Flow Information: Interest paid, net of capitalized interest $ 39,827 $ 44,230 Cash paid for operating leases 7,942 6,340 Supplemental Disclosure of Noncash Investing and Financing Activities: Accrued capital expenditures $ 13,065 $ 8,536 Dividend distributions declared, but not paid 71,302 69,956 Redemption of non-controlling interest 546 7,872 ROU assets obtained in exchange for lease obligations 7,683 — 28 Table of Contents