What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-09 compared with 2021-11-05 · 178 added, 195 removed, 273 unchanged (58% of the section changed)

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We cannot guarantee the accuracy of any such forward-looking statements contained in this Quarterly Report, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Forward-looking statements regarding HR and HTA, include, but are not limited to, statements related to the Merger, including the anticipated timing, benefits and financial and operational impact thereof;

HR’s expected financing for the transaction;

other statements of management’s belief, intentions or goals;

and other statements that are not historical facts.

These forward-looking statements are based on each of the companies’ current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties.

Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with:

HR’s and HTA’s ability to complete the Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary shareholder approvals and satisfaction of other closing conditions to consummate the Merger;

the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the Merger;

risks related to diverting the attention of HR and HTA management from ongoing business operations;

failure to realize the expected benefits of the Merger;

significant transaction costs and/or unknown or inestimable liabilities;

the risk of shareholder litigation in connection with the Merger, including resulting expense or delay;

the risk that HTA’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected;

the ability to obtain the expected financing to consummate the Merger;

risks related to future opportunities and plans for the Company, including the

uncertainty of expected future financial performance and results of the Company following completion of the Merger;

effects relating to the announcement of the Merger or any further announcements or the consummation of the Merger on the market price of HR’s or HTA’s common stock;

the possibility that, if HR does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial analysts or investors, the market price of HR’s common stock could decline;

general adverse economic and local real estate conditions;

the inability of significant tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business;

increases in interest rates;

increases in operating expenses and real estate taxes;

changes in the dividend policy for HR’s common stock or its ability to pay dividends;

impairment charges;

pandemics or other health crises, such as COVID-19;

and other risks and uncertainties affecting HR and HTA, including those described from time to time under the caption “Risk Factors” and elsewhere in HR’s and HTA’s SEC filings and reports, including HR’s Annual Report on Form 10-K for the year ended December 31, 2021, HTA’s Annual Report on Form 10-K for the year ended December 31, 2021, and other filings and reports by either company.

Moreover, other risks and uncertainties of which HR or HTA are not currently aware may also affect each of the companies’ forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated.

The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by HR or HTA on their respective websites or otherwise.

Neither HR nor HTA undertakes any obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law.

Any such forward-looking statements reflect our current views about future events, are subject to unknown risks, uncertainties, and other factors, and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, all of which are difficult or impossible to predict accurately.

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Approximately 67% of our portfolio is located on the campuses of, or adjacent to, nationally and regionally recognized healthcare systems.

Our portfolio is diversified geographically across 32 states, with no state having more than 21% of our total GLA as of September 30, 2021.

Our portfolio is diversified geographically across 32 states, with no state having more than 21% of our total GLA as of March 31, 2022.

We are concentrated in 20 to 25 key markets that are generally experiencing higher economic and demographic trends than other markets that we expect will drive demand for MOBs.

As of September 30, 2021, we had approximately 1 million square feet of GLA in ten of our top 20 markets and approximately 94% of our portfolio, based on GLA, is located in the top 75 Metropolitan Statistical Area ("MSAs"), with Dallas, Houston, Boston, Miami and Indianapolis being our largest markets by annualized base rent.

As of March 31, 2022, we had approximately 1 million square feet of GLA in ten of our top 20 markets and approximately 95% of our portfolio, based on GLA, is located in the top 75 Metropolitan Statistical Area ("MSAs"), with Dallas, Houston, Boston, Miami and Indianapolis being our largest markets by annualized base rent.

Merger with Healthcare Realty Trust Incorporated

On February 28, 2022, the Company, the Company OP and Merger Sub entered into a Merger Agreement with HR whereby Merger Sub will merge with and into HR, with HR continuing as the surviving corporation.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of Common Stock, $0.01 par value per share, of HR Common Stock will be converted into the right to receive 1.0 share of Class A Common Stock, $0.01 par value per share, of the Company Common Stock.

The Merger Agreement contains customary representations, warranties and covenants by each party.

The Merger is subject to certain conditions which are set forth in the Merger Agreement, including the approval of both companies’ stockholders.

The boards of directors of the Company and HR have unanimously approved the Merger Agreement.

The Merger is expected to close during the third quarter of 2022.

Additionally, on May 2, 2022, HTA and HR filed a Form S-4 Registration Statement with the SEC in connection with the contemplated Merger.

Please review this Form S-4 for more information about the contemplated Merger.

Company Highlights

Portfolio Operating Performance

• For the three months ended September 30, 2021, our total revenue was $191.3 million, compared to $187.3 million for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, our total revenue was $571.4 million, compared to $551.9 million for the nine months ended September 30, 2020.

• For the three months ended September 30, 2021, our net income was $22.0 million, compared to $(6.9) million, for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, our net income was $83.2 million, compared to $25.0 million for the nine months ended September 30, 2020.

• For the three months ended September 30, 2021, our net income attributable to common stockholders was $0.10 per diluted share, or $21.7 million, compared to $(0.03) per diluted share, or $(6.8) million, for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, our net income attributable to common stockholders was $0.37 per diluted share, or $81.7 million, compared to $0.11 per diluted share, or $24.6 million, for the nine months ended September 30, 2020.

• For the three months ended September 30, 2021, HTA’s FFO, as defined by NAREIT, was $97.3 million, or $0.44 per diluted share, compared to $0.31 per diluted share, or $68.5 million, for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, HTA’s FFO was $291.9 million, or $1.31 per diluted share, compared to $1.13 per diluted share, or $249.4 million, for the nine months ended September 30, 2020.

• For the three months ended September 30, 2021, HTALP’s FFO was $97.7 million, or $0.44 per diluted OP Unit, compared to $0.31 per diluted OP Unit, or $68.4 million, for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, HTALP’s FFO was $293.4 million, or $1.32 per diluted OP Unit, compared to $1.13 per diluted OP Unit, or $249.8 million, for the nine months ended September 30, 2020.

• For the three months ended September 30, 2021, HTA’s and HTALP’s Normalized FFO was $0.44 per diluted share and OP Unit, or $97.8 million, compared to $0.43 per diluted share and OP Unit, or $96.2 million for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, HTA’s and HTALP’s Normalized FFO was $1.32 per diluted share and OP Unit, or $293.7 million, compared to $1.28 per diluted share and OP Unit, or $282.9 million for the nine months ended September 30, 2020.

• For the three months ended March 31, 2022, our total revenue was $202.0 million, compared to $191.5 million for the three months ended March 31, 2021.

• For the three months ended March 31, 2022, our net income was $18.7 million, compared to $22.4 million, for the three months ended March 31, 2021.

• For the three months ended March 31, 2022, our net income attributable to common stockholders was $0.08 per diluted share, or $18.3 million, compared to $0.10 per diluted share, or $22.0 million, for the three months ended March 31, 2021.

• For the three months ended March 31, 2022, HTA’s FFO, as defined by NAREIT, was $93.6 million, or $0.40 per diluted share, compared to $0.44 per diluted share, or $97.8 million, for the three months ended March 31, 2021.

• For the three months ended March 31, 2022, HTALP’s FFO was $94.0 million, or $0.40 per diluted OP Unit, compared to $0.44 per diluted OP Unit, or $98.2 million, for the three months ended March 31, 2021.

• For the three months ended March 31, 2022, HTA’s and HTALP’s Normalized FFO was $0.44 per diluted share and OP Unit, or $101.5 million, compared to $0.44 per diluted share and OP Unit, or $98.3 million for the three months ended March 31, 2021.

• For additional information on FFO and Normalized FFO, see “FFO and Normalized FFO” below, which includes a reconciliation to net income attributable to common stockholders/unitholders and an explanation of why we present this non-GAAP financial measure.

• For the three months ended September 30, 2021, our Net Operating Income (“NOI”) was $131.7 million, compared to $130.1 million for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, our NOI was $394.8 million, compared to $381.6 million for the nine months ended September 30, 2020.

• For the three months ended September 30, 2021, our Same-Property Cash NOI increased 2.5%, or $2.8 million, to $115.2 million, compared to $112.3 million for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, our Same-Property Cash NOI increased 2.1%, or $6.9 million, to $345.2 million, compared to $338.2 million for the nine months ended September 30, 2020.

• For the three months ended March 31, 2022, our Net Operating Income (“NOI”) was $136.1 million, compared to $131.9 million for the three months ended March 31, 2021.

• For the three months ended March 31, 2022, our Same-Property Cash NOI increased 0.8%, or $0.9 million, to $117.4 million, compared to $116.5 million for the three months ended March 31, 2021.

• For additional information on our NOI and Same-Property Cash NOI, see “NOI, Cash NOI and Same-Property Cash NOI” below, which includes a reconciliation from net income and an explanation of why we present these non-GAAP financial measures.

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markets from an economic and demographic perspective.

As of September 30, 2021, approximately 94% of our portfolio’s GLA is located in the top 75 MSAs.

As of March 31, 2022, approximately 95% of our portfolio’s GLA is located in the top 75 MSAs.

Our key markets represent top MSAs with strong growth metrics in jobs, household income and population, as well as low unemployment and mature healthcare infrastructures.

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• Our key market focus has enabled us to establish scale across 20 to 25 key markets and effectively utilize our asset management and leasing platform to deliver consistent same store growth and additional yield on investments, as well as cost effective service to tenants.

As of September 30, 2021, we had approximately 1 million square feet of GLA in ten of our top 20 markets and approximately 0.5 million square feet of GLA in 17 of our top 20 markets.

• During the nine months ended September 30, 2021, we closed on $187.5 million worth of medical office investments totaling approximately 626,000 square feet of GLA.

As of March 31, 2022, we had approximately 1 million square feet of GLA in ten of our top 20 markets and approximately 0.5 million square feet of GLA in 17 of our top 20 markets.

• During the three months ended March 31, 2022, we closed on $19.0 million worth of medical office building investments totaling approximately 44,000 square feet of GLA.

In addition, we funded $2.3 million of investments in real estate notes receivable.

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Our full-service operating platform has also enabled us to focus on generating cost efficiencies as we gain scale across individual markets and regions.

• As of September 30, 2021, our in-house asset management and leasing platform operated approximately 24.8 million square feet of GLA, or 96% of our total portfolio.

• As of September 30, 2021, our leased rate (which includes leases which have been executed, but which have not yet commenced) was 89.7% by GLA and our occupancy rate was 88.0% by GLA.

• We entered into new and renewal leases on approximately 0.7 million and 2.0 million square feet of GLA, or approximately 2.6% and 7.9% of the GLA of our total portfolio, during the three and nine months ended September 30, 2021, respectively.

• During the three and nine months ended September 30, 2021, tenant retention for the Same-Property portfolio was 83% and 76%, respectively.

• As of March 31, 2022, our in-house asset management and leasing platform operated approximately 25.0 million square feet of GLA, or 96% of our total portfolio.

• As of March 31, 2022, our leased rate (which includes leases which have been executed, but which have not yet commenced) was 89.3% by GLA and our occupancy rate was 87.3% by GLA.

• We entered into new and renewal leases on approximately 0.7 million square feet of GLA, or approximately 2.7% of the GLA of our total portfolio, during the three months ended March 31, 2022.

• During the three months ended March 31, 2022, tenant retention for the Same-Property portfolio was 69%.

Tenant retention is defined as the sum of the total leased GLA of tenants that renewed a lease during the period over the total GLA of leases that renewed or expired during the period.

Financial Strategy and Balance Sheet Flexibility

• As of September 30, 2021, we had total leverage, measured by debt less cash and cash equivalents to total capitalization, of 31.4%.

Total liquidity was approximately $1.2 billion, inclusive of $950.0 million available on our unsecured revolving credit facility, $218.8 million of forward equity agreements, cash and cash equivalents of $12.8 million and $1.7 million of restricted cash for funds held in a 1031 exchange account as of September 30, 2021.

• As of September 30, 2021, the weighted average remaining term of our debt portfolio was 6.4 years.

• As of March 31, 2022, we had total leverage, measured by debt less cash and cash equivalents to total capitalization, of 29.4%.

Total liquidity was approximately $1.0 billion, inclusive of $975.0 million available on our unsecured revolving credit facility and cash and cash equivalents of $10.9 million as of March 31, 2022.

• As of March 31, 2022, the weighted average remaining term of our debt portfolio was 6.2 years.

Critical Accounting Policies

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Factors Which May Influence Results of Operations

The novel coronavirus, or COVID-19 pandemic, continues to impact economies and markets worldwide.

All our buildings have remained in operation throughout the course of the pandemic.

However, we addressed periodic requests from a number of our tenants about their ability to defer payment of a portion of their rents for a limited duration.

We evaluated each such request on a case by case basis.

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 $10.8 million of these deferrals have been repaid through September 30, 2021.

There are no material outstanding requests for assistance from tenants.

Payments of rent deferrals are generally expected to be repaid within the next 3 to 6 months.

As of September 30, 2021, we have not granted unilateral rent forgiveness in connection with our deferral program, however, we may do so in the future if conditions and the specific economics warrant the use of such measures.

In addition, in 2020 we entered into certain lease modifications in the form of early renewals where we provide concessions in the form of free rent, which averaged three months at the inception of the lease, in exchange for additional term, which, averaged approximately three years.

During the nine months ended September 30, 2021, we have not entered into any material deferral arrangements or early renewal leases with substantive amounts of free rent or other forms of concession at the onset of the applicable lease as a result of COVID-19.

Although we did not experience significant disruptions from the COVID-19 pandemic during the nine months ended September 30, 2021, 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 federal, state and local agencies or foreign governments, 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.

Other than the above, we are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate generally and the risk factors previously discussed in Part I, Item 1A - Risk Factors, in our 2020 Annual Report on Form 10-K, and this Quarterly Report on Form 10-Q under Item 1A.

We are not aware of material trends or uncertainties other than the risk factors previously discussed in Part I, Item 1A - Risk Factors, in our 2021 Annual Report on Form 10-K, and this Quarterly Report on Form 10-Q under Item 1A.

Risk Factors below, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the investment, management and operation of our properties.

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Investment Activity

During the nine months ended September 30, 2021, we had investments with an aggregate gross purchase price of $189.2 million.

During the nine months ended September 30, 2020, we had investments with an aggregate gross purchase price of $52.9 million.

Subsequent to The amount of any future acquisitions or dispositions could have a significant impact on our results of operations in future periods.

During the three months ended March 31, 2022, we had investments with an aggregate gross purchase price of $19.1 million.

During the three months ended March 31, 2021, we had investments with an aggregate gross purchase price of $32.9 million.

The amount of any future acquisitions or dispositions could have a significant impact on our results of operations in future periods.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2021 and 2020

As of September 30, 2021 and 2020, we owned and operated approximately 25.8 million and 25.1 million square feet of GLA, respectively, with a leased rate of 89.7% and 90.1%, respectively (including leases which have been executed, but which have not yet commenced), and an occupancy rate of 88.0% and 89.5%, respectively.

Comparison of the Three Months Ended March 31, 2022 and 2021

As of March 31, 2022 and 2021, we owned and operated approximately 26.0 million and 25.6 million square feet of GLA, respectively, with a leased rate of 89.3% and 89.2%, respectively (including leases which have been executed, but which have not yet commenced), and an occupancy rate of 87.3% and 87.9%, respectively.

All explanations are applicable to both HTA and HTALP unless otherwise noted.

Comparison of the three months ended September 30, 2021 and 2020, respectively, is set forth below (in thousands):

Three Months Ended September 30,

2021 2020 Change % Change

Rental income $ 189,832 $ 187,258 $ 2,574 1.4 %

Interest and other operating income 1,430 68 1,362 NM

Total revenues 191,262 187,326 3,936 2.1

Rental 59,568 57,248 2,320 4.1

General and administrative 10,765 10,670 95 0.9

Transaction 137 125 12 9.6

Depreciation and amortization 76,056 75,892 164 0.2

Interest expense 23,331 23,136 195 0.8

Total expenses 169,857 167,071 2,786 1.7

Gain on sale of real estate, net 143 — 143 NM

Loss on extinguishment of debt, net — (27,726) 27,726 100.0

Income from unconsolidated joint venture 400 422 (22) (5.2)

Other income 94 117 (23) (19.7)

Net income (loss) $ 22,042 $ (6,932) $ 28,974 NM

NOI $ 131,694 $ 130,078 $ 1,616 1.2 %

Same-Property Cash NOI $ 115,158 $ 112,316 $ 2,842 2.5 %

Comparison of the nine months ended September 30, 2021 and 2020, respectively, is set forth below (in thousands):

Nine Months Ended September 30,

Comparison of the three months ended March 31, 2022 and 2021, respectively, is set forth below (in thousands):

Three Months Ended March 31,

2022 2021 Change % Change

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General and administrative 12,448 10,560 1,888 17.9

Merger-related costs 6,018 — 6,018 NM

Transaction 144 96 48 50.0

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Interest expense 23,940 22,986 954 4.2

Impairment 16,825 — 16,825 NM

Total expenses 183,820 169,495 14,325 8.5

Gain on sale of real estate, net 32,896 1,991 30,905 NM

Loss on extinguishment of debt, net — (27,726) 27,726 NM

Loss on sale of real estate, net (4) — (4) NM

Income from unconsolidated joint venture 400 392 8 2.0

Other income 401 290 111 38.3

Net income $ 83,174 $ 25,001 $ 58,173 NM

Other income 88 3 85 NM

Net income $ 18,666 $ 22,393 $ (3,727) (16.6) %

NOI $ 136,118 $ 131,914 $ 4,204 3.2 %

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Rental Income

For the three and nine months ended September 30, 2021 and 2020, respectively, rental income was comprised of the following (in thousands):

Three Months Ended September 30,

2021 2020 Change % Change

Contractual rental income $ 181,275 $ 176,708 $ 4,567 2.6 %

Straight-line rent and amortization of above and (below) market leases

4,545 7,298 (2,753) (37.7)

Other rental revenue 4,012 3,252 760 23.4

Total rental income $ 189,832 $ 187,258 $ 2,574 1.4 %

Nine Months Ended September 30,

For the three months ended March 31, 2022 and 2021, respectively, rental income was comprised of the following (in thousands):

Three Months Ended March 31,

2022 2021 Change % Change

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Total rental income $ 200,243 $ 191,350 $ 8,893 4.6 %

Contractual rental income, which includes expense reimbursements, increased $4.6 million and $22.4 million for the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020.

The increases were primarily due to additional contractual rental income of $6.5 million and $15.6 million from our 2020 and 2021 acquisitions, and contractual rent increases for the three and nine months ended September 30, 2021, partially offset by $2.8 million and $4.8 million of reduced contractual rental income as a result of the buildings we sold during 2020 and 2021 for the three and nine months ended September 30, 2021, respectively.

In addition, during the nine months ended September 30, 2020, we recorded a non-recurring charge of $4.7 million of bad debt as a reduction in revenue.

Average starting and expiring base rents for new and renewal leases consisted of the following for the three and nine months ended September 30, 2021 and 2020, respectively (in thousands, except in average base rents per square foot of GLA):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Contractual rental income, which includes expense reimbursements, increased $8.7 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.

The increase was primarily due to additional contractual rental income of $8.2 million from our 2021 and 2022 acquisitions, and contractual rent increases for the three months ended March 31, 2022, partially offset by $2.8 million of reduced contractual rental income as a result of the buildings we sold during 2021 and 2022 for the three months ended March 31, 2022, respectively.

Average starting and expiring base rents for new and renewal leases consisted of the following for the three months ended March 31, 2022 and 2021, respectively (in thousands, except in average base rents per square foot of GLA):

Three Months Ended March 31,

New an d renewal leases:

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In general, leasing concessions vary depending on lease type, term, geography, and supply/demand dynamics.

Tenant improvements, leasing commissions and tenant concessions for new and renewal leases consisted of the following for the three and nine months ended September 30, 2021 and 2020, respectively (in per square foot of GLA):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Tenant improvements, leasing commissions and tenant concessions for new and renewal leases consisted of the following for the three months ended March 31, 2022 and 2021, respectively (in per square foot of GLA):

Three Months Ended March 31,

Tenant improvements $ 35.09 $ 22.34

Leasing commissions

6.47 2.05 4.90 2.86

Tenant concessions 0.41 7.14

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Leasing commissions

2.27 2.07 2.17 2.87

Tenant concessions 0.00 0.16

The average term for new and renewal leases executed consisted of the following for the three and nine months ended September 30, 2021 and 2020, respectively (in years):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The average term for new and renewal leases executed consisted of the following for the three months ended March 31, 2022 and 2021, respectively (in years):

Three Months Ended March 31,

New leases 6.5 4.4

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Rental Expenses

For the three months ended September 30, 2021 and 2020, rental expenses attributable to our properties were $59.6 million and $57.2 million, respectively.

For the nine months ended September 30, 2021 and 2020, rental expenses attributable to our properties were $176.6 million and $170.3 million, respectively.

These increases in rental expenses were primarily due to $2.4 million and $5.1 million of additional rental expenses associated with our 2020 and 2021 acquisitions for the three and nine months ended September 30, 2021, respectively.

For the three months ended March 31, 2022 and 2021, rental expenses attributable to our properties were $65.9 million and $59.6 million, respectively.

The increase in rental expenses was primarily due to $3.8 million of additional rental expenses associated with our 2021 and 2022 acquisitions for the three months ended March 31, 2022, respectively.

General and Administrative Expenses

For the three months ended September 30, 2021 and 2020, general and administrative expenses were $10.8 million and $10.7 million, respectively.

For each of the nine months ended September 30, 2021 and 2020, general and administrative expenses were $32.3 million.

For the three months ended September 30, 2021, general and administrative expenses included a reduction of approximately $(2.1) million in stock compensation expense principally related to the resignation of our former CEO net of new award activity with the appointments of our interim CEO and new board chairman, offset by approximately $0.5 million of incremental legal costs related to the whistleblower investigation, and increased costs related to our leasing efforts, travel-related expenses, professional services and other administrative costs.

For the three months ended March 31, 2022 and 2021, general and administrative expenses were $12.4 million and $10.6 million, respectively.

The increase was driven primarily by the following:

(i) increased board expenses of $0.4 million, which includes additional board meeting fees of $0.2 million incurred primarily as a result of the Merger Agreement and the process related thereto, and $0.2 million of board member retainer fees for the board chairman and new board members;

(ii) increased legal and professional fees of $0.4 million, primarily driven by costs incurred as a result of the previously disclosed whistleblower investigation, employee retention and strategic review matters;

and (iii) increased costs for general corporate matters.

Merger-related costs

For the three months ended March 31, 2022, merger-related costs as a result of the contemplated Merger with HR were $6.0 million and included the following:

(i) financial advisor fees of $3.8 million;

(ii) legal fees of $1.8 million;

(iii) merger and integration consulting fees of $0.3 million;

and (iv) travel costs of $0.1 million.

No such costs were incurred for the three months ended March 31, 2021.

Depreciation and Amortization Expense

For the three months ended September 30, 2021 and 2020, depreciation and amortization expense was $76.1 million and $75.9 million, respectively.

For the nine months ended September 30, 2021 and 2020, depreciation and amortization expense was $227.3 million and $228.5 million, respectively.

The slight variances were associated with our 2020 and 2021 acquisitions, offset by buildings we disposed of during 2020 and 2021.

For the three months ended March 31, 2022 and 2021, depreciation and amortization expense was $75.4 million and $76.3 million, respectively.

The slight decrease in expense was associated with our buildings we disposed of during 2021 and 2022, offset by 2021 and 2022 acquisitions.

Interest Expense

For the three months ended September 30, 2021 and 2020, interest expense was $23.3 million and $23.1 million, respectively.

For the nine months ended September 30, 2021 and 2020, interest expense was $69.5 million and $71.3 million, respectively.

The decreases in year-to-date interest expense is primarily due to lower average interest rates as compared to the same period in 2020.

For the three months ended March 31, 2022 and 2021, interest expense was $23.9 million and $23.0 million, respectively.

The increase in interest expense is primarily related to amortization of commitment fees on the $1.7 billion bridge loan financing commitment secured in connection with the contemplated Merger with HR.

To achieve our objectives, we borrow at both fixed and variable rates.

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We do not enter into derivative or interest rate transactions for speculative purposes.

For the nine months ended September 30, 2021, we recorded impairment charges of $16.8 million on two properties related to:

(i) a purchase option included in a lease agreement that was exercised for a contractual sale price less than its carrying value;

and (ii) an executed sales agreement for a sale price less than its carrying value.

We recorded no impairment charges during the nine months ended September 30, 2020.

Gain on Sale of Real Estate, net

For the nine months ended September 30, 2021, we realized a net gain of approximately $32.9 million, primarily as a result of the sale of a 13 property portfolio located in one or more of Tennessee and Virginia.

For the nine months ended September 30, 2020, we realized a net gain of approximately $2.0 million on the sale of part of our interest in undeveloped land in Miami, Florida.

For the three months ended September 30, 2021 and 2020, net income was $22.0 million and $(6.9) million, respectively.

For the nine months ended September 30, 2021 and 2020, net income was $83.2 million and $25.0 million, respectively.

The increases are primarily the result of gains associated with disposition of assets in non-key markets, as well as continued growth in our operations due to accretive acquisitions and improved operating efficiencies.

Additionally, during the three and nine months ended September 30, 2020, we recorded a net loss on extinguishment of debt of approximately $27.7 million.

Loss on Sale of Real Estate, net

For the three months ended March 31, 2022, we realized a net loss of approximately $4 thousand, as a result of the sale of a tenant purchase option on 1 of our MOBs located in Georgia.

For the three months ended March 31, 2021, we had no property dispositions.

For the three months ended March 31, 2022 and 2021, net income was $18.7 million and $22.4 million, respectively.

The decrease is primarily the result of the merger-related costs incurred as a result of the contemplated Merger with HR.

NOI and Same-Property Cash NOI

For the three months ended September 30, 2021 and 2020, NOI was $131.7 million and $130.1 million, respectively.

For the nine months ended September 30, 2021 and 2020, NOI was $394.8 million and $381.6 million, respectively.

The increases in NOI was primarily due to additional NOI from our 2020 and 2021 acquisitions of $5.0 million and $12.4 million for the three and nine months ended September 30, 2021, respectively, partially offset by $1.5 million and $2.7 million of reduced NOI as a result of the buildings we sold during 2020 and 2021 for the three and nine months ended September 30, 2021, respectively, and a reduction in straight-line rent from properties we owned for more than a year.

Same-Property Cash NOI increased 2.5% to $115.2 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

Same-Property Cash NOI increased 2.1% to $345.2 million for the nine months ended September 30, 2021 compared to nine months ended September 30, 2020.

The increases were primarily the result of rent escalations and improved operating efficiencies, offset by a slight decrease in average occupancy.

For the three months ended March 31, 2022 and 2021, NOI was $136.1 million and $131.9 million, respectively.

The increases in NOI was primarily due to additional NOI from our 2021 and 2022 acquisitions of $5.6 million for the three months ended March 31, 2022, respectively, partially offset by $1.6 million of reduced NOI as a result of the buildings we sold during 2021 and 2022 for the three months ended March 31, 2022, respectively, and a reduction in straight-line rent from properties we owned for more than a year.

Same-Property Cash NOI increased 0.8% to $117.4 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The increase was primarily the result of rent escalations, offset by a slight decrease in average occupancy.

Non-GAAP Financial Measures

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We compute FFO in accordance with the current standards established by NAREIT.

NAREIT defines FFO as net income or loss attributable to common stockholders/unitholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and after adjustments for unconsolidated partnerships and joint ventures.

FFO is defined as net income or loss attributable to common stockholders/unitholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property and impairment write-downs of depreciable assets, plus depreciation and amortization related to investments in real estate, and after adjustments for unconsolidated partnerships and joint ventures.

Additionally, with respect to gains and losses on the sale of assets incidental to the main business of a REIT, the REIT has the option to include or exclude such gains and losses in the calculation of FFO.

Since FFO excludes depreciation and amortization unique to real estate, among other items, it provides a perspective not immediately apparent from net income or loss attributable to common stockholders/unitholders.

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In addition, the amounts included in the calculation of FFO and Normalized FFO are generally the same for HTALP and HTA, except for net income or loss attributable to common stockholders/unitholders, non-controlling income or loss from OP Units included in diluted shares (only applicable to the Company) and the weighted average shares of our common stock or HTALP OP Units outstanding.

The following is the reconciliation of HTA’s FFO and Normalized FFO to net income attributable to common stockholders for the three and nine months ended September 30, 2021 and 2020, respectively (in thousands, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net income (loss) attributable to common stockholders $ 21,672 $ (6,827) $ 81,713 $ 24,563

The following is the reconciliation of HTA’s FFO and Normalized FFO to net income attributable to common stockholders for the three months ended March 31, 2022 and 2021, respectively (in thousands, except per share data):

Three Months Ended March 31,

Net income attributable to common stockholders $ 18,315 $ 22,030

Depreciation and amortization expense related to investments in real estate

74,799 75,331

Gain on sale of real estate, net (143) — (32,896) (1,991)

Loss on sale of real estate, net 4 —

Proportionate share of joint venture depreciation and amortization

487 468 1,462 1,443

FFO attributable to common stockholders $ 93,606 $ 97,849

Transaction expenses 144 96

Loss on extinguishment of debt, net — 27,726 — 27,726

Merger-related costs (1)

Commitment fee amortization (2)

Non-controlling income from OP Units included in diluted shares 351 363

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Normalized FFO attributable to common stockholders $ 101,525 $ 98,308

Net income (loss) attributable to common stockholders per diluted share $ 0.10 $ (0.03) $ 0.37 $ 0.11

Net income attributable to common stockholders per diluted share $ 0.08 $ 0.10

FFO adjustments per diluted share, net

0.34 0.34 0.94 1.02

FFO attributable to common stockholders per diluted share

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Normalized FFO adjustments per diluted share, net

0.00 0.12 0.01 0.15

Normalized FFO attributable to common stockholders per diluted share

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233,046 222,268

(1) For the nine months ended September 30, 2020, other normalizing adjustments includes the following:

non-recurring bad debt of $4,672 thousand;

incremental hazard pay to facilities employees of $314 thousand;

and incremental personal protective equipment of $45 thousand.

The following is the reconciliation of HTALP’s FFO and Normalized FFO to net income attributable to common unitholders for the three and nine months ended September 30, 2021 and 2020, respectively (in thousands, except per unit data):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net income (loss) attributable to common unitholders $ 22,042 $ (6,932) $ 83,174 $ 25,001

(1) For the three months ended March 31, 2022, merger-related costs include the following:

(i) financial advisor fees of $3.8 million;

(ii) legal fees of $1.8 million;

(iii) merger and integration consulting fees of $0.3 million;

and (iv) travel costs of $0.1 million.

(2) For the three months ended March 31, 2022, commitment fee amortization relates to commitment fees on the $1.7 billion bridge loan financing commitment secured in connection with the pending transaction with HR.

(3) For the three months ended March 31, 2022, other normalizing adjustments include the following:

(i) additional board meeting fees of $159,000;

(ii) legal and professional fees related to the whistleblower investigation of $143,000;

(iii) legal fees related to employee retention matters of $131,000;

and (iv) professional fees related to strategic review matters of $81,000 .

The following is the reconciliation of HTALP’s FFO and Normalized FFO to net income attributable to common unitholders for the three months ended March 31, 2022 and 2021, respectively (in thousands, except per unit data):

Three Months Ended March 31,

Net income attributable to common unitholders $ 18,666 $ 22,393

Depreciation and amortization expense related to investments in real estate

74,799 75,331

Gain on sale of real estate, net (143) — (32,896) (1,991)

Loss on sale of real estate, net 4 —

Proportionate share of joint venture depreciation and amortization

487 468 1,462 1,443

FFO attributable to common unitholders $ 93,957 $ 98,212

Transaction expenses 144 96

Loss on extinguishment of debt, net — 27,726 — 27,726

Merger-related costs (1)

Commitment fee amortization (2)

Other normalizing adjustments (3)

Normalized FFO attributable to common unitholders $ 101,525 $ 98,308

Net income (loss) attributable to common unitholders per diluted share $ 0.10 $ (0.03) $ 0.37 $ 0.11

Net income attributable to common unitholders per diluted share $ 0.08 $ 0.10

FFO adjustments per diluted OP Unit, net 0.32 0.34

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Weighted average diluted common OP Units outstanding 233,046 222,268

(1) For the nine months ended September 30, 2020, other normalizing adjustments includes the following:

non-recurring bad debt of $4,672 thousand;

incremental hazard pay to facilities employees of $314 thousand;

and incremental personal protective equipment of $45 thousand.

(1) For the three months ended March 31, 2022, merger-related costs include the following:

(i) financial advisor fees of $3.8 million;

(ii) legal fees of $1.8 million;

(iii) merger and integration consulting fees of $0.3 million;

and (iv) travel costs of $0.1 million.

(3) For the three months ended March 31, 2022, other normalizing adjustments include the following:

(i) additional board meeting fees of $159,000;

(ii) legal and professional fees related to the whistleblower investigation of $143,000;

(iii) legal fees related to employee retention matters of $131,000;

and (iv) professional fees related to strategic review matters of $81,000 .

NOI, Cash NOI and Same-Property Cash NOI

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(v) interest expense;

(vi) gain or loss on sales of real estate;

(vi) gain or loss on sales of real estate and corporate assets;

(vii) gain or loss on extinguishment of debt;

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To facilitate the comparison of Cash NOI between periods, we calculate comparable amounts for a subset of our owned and operational properties referred to as “Same-Property”.

Same-Property Cash NOI excludes (i) properties which have not been owned and operated by us during the entire span of all periods presented and disposed properties, (ii) our share of unconsolidated joint ventures, (iii) development, redevelopment and land parcels, (iv) properties intended for disposition in the near term which have (a) been approved by the Board of Directors, (b) is actively marketed for sale, and (c) an offer has been received at prices we would transact and the sales process is ongoing, and (v) certain non-routine items.

Same-Property Cash

NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance.

received at prices we would transact and the sales process is ongoing, and (v) certain non-routine items.

Same-Property Cash NOI should not be considered as an alternative to net income or loss (computed in accordance with GAAP) as an indicator of our financial performance.

Same-Property Cash NOI should be reviewed in connection with other GAAP measurements.

The following is the reconciliation of HTA’s and HTALP’s NOI, Cash NOI and Same-Property Cash NOI to net income for the three and nine months ended September 30, 2021 and 2020, respectively (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net income (loss) $ 22,042 $ (6,932) $ 83,174 $ 25,001

The following is the reconciliation of HTA’s and HTALP’s NOI, Cash NOI and Same-Property Cash NOI to net income for the three months ended March 31, 2022 and 2021, respectively (in thousands):

Three Months Ended March 31,

Net income $ 18,666 $ 22,393

General and administrative expenses 12,448 10,560

Merger-related costs 6,018 —

Transaction expenses 144 96

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23,940 22,986

Gain on sale of real estate, net (143) — (32,896) (1,991)

Loss on extinguishment of debt, net

— 27,726 — 27,726

Loss on sale of real estate, net 4 —

Income from unconsolidated joint venture (400) (392)

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Notes receivable interest income

(1,264) (11) (1,273) (152)

Other normalizing adjustments (1)

Cash NOI $ 131,223 $ 127,659

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$ 117,430 $ 116,549

(1) For the nine months ended September 30, 2020, other normalizing adjustments includes the following:

non-recurring bad debt of $4,672 thousand, incremental hazard pay to facilities employees of $314 thousand, and incremental personal protective equipment of $45 thousand.

(2) Same-Property includes 421 and 414 buildings for the three and nine months ended September 30, 2021 and 2020, respectively.

(1) Same-Property includes 424 buildings for the three months ended March 31, 2022 and 2021, respectively.

Liquidity and Capital Resources

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Investments and maturing indebtedness may require funds from borrowings under our unsecured revolving credit facility, the issuance of debt and/or equity securities or proceeds from sales of real estate.

As of September 30, 2021, we had total liquidity of $1.2 billion, inclusive of $950.0 million available on our unsecured revolving credit facility, $218.8 million of unsettled forward equity agreements, cash and cash equivalents of $12.8 million and $1.7 million of restricted cash for funds held in a 1031 exchange account.

We believe that we have sufficient liquidity and opportunities to obtain additional liquidity at our disposal to sustain operations for the foreseeable future.

On October 6, 2021, we entered into a third amended and restated revolving credit and term loan agreement (the “Credit Agreement”), which includes an unsecured revolving credit facility in an aggregate maximum principal amount of $1.0 billion (the “Revolver”) and a term loan facility in an aggregate maximum principal amount of $300.0 million (the “Term Loan”).

The Credit Agreement amends and restates, in its entirety, the unsecured credit agreement referenced above, reduces our overall borrowing costs, and extends the maturities of the existing unsecured revolving credit facility to October 31, 2025.

As of September 30, 2021, we had unencumbered assets with a gross book value of $8.0 billion.

As of March 31, 2022, we had total liquidity of $1.0 billion, inclusive of $975.0 million available on our unsecured revolving credit facility and cash and cash equivalents of $10.9 million.

As of March 31, 2022, we had unencumbered assets with a gross book value of $7.9 billion.

The unencumbered properties may be used as collateral to secure additional financings in future periods or refinance our current debt as it becomes due.

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The capital plan for each investment will be adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs.

Capital expenditures for the remainder of the year will be primarily targeted towards planned maintenance activities and other capital improvements that are either of an immediate need to preserve liquidity, or strategically necessary for revenue generation purposes.

Currently these expenditures are estimated at approximately $20 million to $25 million per quarter.

Although we cannot provide assurance that we will not exceed these estimated expenditure levels, we believe our liquidity of $1.2 billion allows us the flexibility to fund such capital expenditures as may be necessary or advisable.

As of March 31, 2022, we estimate that our expenditures for capital improvements including lease commissions for the remainder of the year will range from approximately $75 million to $100 million depending on leasing activity.

In addition, we have approximately $150 million inclusive of costs to complete active development projects and incremental tenant improvements as part of our recently completed development projects.

Although we cannot provide assurance that we will not exceed these estimated expenditure levels, we believe our liquidity of $1.0 billion allows us the flexibility to fund such capital expenditures.

If we experience lower occupancy levels, reduced rental rates, reduced revenues as a result of asset sales, or increased capital expenditures and leasing costs compared to historical levels due to competitive market conditions for new and renewal leases, the effect would be a reduction of net cash provided by operating activities.

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Any changes in these assumptions could impact our financial results and our ability to fund working capital and unanticipated cash needs.

The following is a summary of our cash flows for the nine months ended September 30, 2021 and 2020, respectively (in thousands):

Nine Months Ended September 30,

The following is a summary of our cash flows for the three months ended March 31, 2022 and 2021, respectively (in thousands):

Three Months Ended March 31,

2022 2021 Change

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Cash, cash equivalents and restricted cash - end of period $ 15,422 $ 33,086 $ (17,664)

Net cash provided by operating activities increased in 2021 primarily due to the impact of our 2020 and 2021 acquisitions and contractual rent increases, partially offset by our 2020 and 2021 dispositions.

Net cash provided by operating activities decreased in 2022 primarily due to the impact of our 2021 and 2022 dispositions, partially offset by our 2021 and 2022 acquisitions and contractual rent increases.

We anticipate cash flows from operating activities to increase as a result of the growth in our portfolio through new acquisitions and continued leasing activity in our existing portfolio.

For the nine months ended September 30, 2021, net cash used in investing activities primarily related to investments in real estate of $147.3 million, capital expenditures of $78.0 million, advances on real estate notes receivable of $66.5 million, and development of real estate of $48.5 million, partially offset by proceeds from the sale of real estate of $67.6 million and collection of real estate notes receivable of $15.4 million.

For the nine months ended September 30, 2020, net cash used in investing activities primarily related to capital expenditures of $59.0 million, investments in real estate of $52.6 million, development of real estate of $49.5 million, and funding of a real estate loan of $6.0 million, partially offset by proceeds from the sale of real estate of $6.4 million.

For the nine months ended September 30, 2021, net cash used in financing activities primarily related to dividends paid to holders of our common stock of $210.0 million, distributions paid to non-controlling interest of limited partners of $3.9 million, and the repurchase and cancellation of common stock of $3.4 million, partially offset by proceeds from issuance of common stock of $53.7 million, and by net borrowings under our revolving credit facility of $50.0 million.

For the nine months ended September 30, 2020, net cash provided by financing activities primarily related to proceeds from unsecured senior notes of $793.6 million and proceeds from issuance of common stock of $50.0 million partially offset by payments on unsecured senior notes of $300.0 million, dividends paid to holders of our common stock of $205.9 million, payments on our secured mortgage loans of $114.1 million, and net payments on our unsecured revolving credit facility of $100.0 million.

For the three months ended March 31, 2022, net cash used in investing activities primarily related to capital expenditures of $28.6 million, investments in real estate of $19.1 million, development of real estate of $10.4 million, and advances on real estate notes receivable of $2.3 million, partially offset by proceeds from the sale of real estate of $26.8 million.

For the three months ended March 31, 2021, net cash used in investing activities primarily related to investments in real estate of $30.5 million, capital expenditures of $28.9 million and development of real estate of $17.1 million.

For the three months ended March 31, 2022, net cash used in financing activities primarily related to dividends paid to holders of our common stock of $74.4 million, and deferred financing costs of $5.4 million, partially offset by net borrowings under our revolving credit facility of $25.0 million.

For the three months ended March 31, 2021, net cash used in financing activities primarily related to dividends paid to holders of our common stock of $70.0 million, and the repurchase and cancellation of common stock of $3.2 million.

The amount of dividends we pay to our stockholders is determined by our Board of Directors, in their sole discretion, and is dependent on a number of factors, including funds available, our financial condition, capital expenditure requirements and annual dividend distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended.

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However, our Board of Directors may reduce our dividend rate and we cannot guarantee the timing and amount of dividends that we may pay in the future, if any.

For the nine months ended September 30, 2021, we paid cash dividends of $210.0 million on our common stock.

In October 2021 for the quarter ended September 30, 2021, we paid cash dividends on our common stock of $71.8 million.

For the three months ended March 31, 2022, we paid cash dividends of $74.4 million on our common stock.

In April 2022 for the quarter ended March 31, 2022, we paid cash dividends on our common stock of $74.4 million.

We have historically maintained a low leveraged balance sheet and intend to continue to maintain this structure in the long term.

However, our total leverage may fluctuate on a short-term basis as we execute our business strategy.

As of September 30, 2021, our leverage ratio, measured by debt less cash and cash equivalents to total capitalization, was 31.4%.

As of September 30, 2021, we had debt outstanding of $3.1 billion and the weighted average interest rate therein was 2.86% per annum, inclusive of the impact of our cash flow hedges.

As of March 31, 2022, our leverage ratio, measured by debt less cash and cash equivalents to total capitalization, was 29.4%.

As of March 31, 2022, we had debt outstanding of $3.1 billion and the weighted average interest rate therein was 2.86% per annum, inclusive of the impact of our cash flow hedges.

The following is a summary of our unsecured and secured debt.

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Unsecured Revolving Credit Facility

As of September 30, 2021, $950.0 million was available on our $1.0 billion unsecured revolving credit facility originally maturing in June 2022.

Subsequent to September 30, 2021, the unsecured revolving credit facility was amended and restated, extending maturity to October 2025.

As of March 31, 2022, $975.0 million was available on our $1.0 billion unsecured revolving credit facility maturing in October 2025.

Unsecured Term Loans

As of September 30, 2021, we had $500.0 million of unsecured term loans outstanding, comprised of $300.0 million under our Unsecured Credit Agreement originally maturing in 2023 and extended to 2025 subsequent to September 30, 2021, and $200.0 million under our unsecured term loan maturing in 2024.

As of March 31, 2022, we had $500.0 million of unsecured term loans outstanding, comprised of $300.0 million under our Unsecured Credit Agreement maturing in 2025, and $200.0 million under our unsecured term loan maturing in 2024.

Unsecured Senior Notes

As of September 30, 2021, we had $2.55 billion of unsecured senior notes outstanding, comprised of $600.0 million of senior notes maturing in 2026, $500.0 million of senior notes maturing in 2027, $650.0 million of senior notes maturing in 2030 and $800.0 million of senior notes maturing in 2031.

Commitments and Contingencies

As of September 30, 2021, we had unfunded loan commitments totaling $15.4 million.

See Note 10 - Commitments and Contingencies in the accompanying condensed consolidated financial statements for a further discussion of our commitments and contingencies.

As of March 31, 2022, we had $2.55 billion of unsecured senior notes outstanding, comprised of $600.0 million of senior notes maturing in 2026, $500.0 million of senior notes maturing in 2027, $650.0 million of senior notes maturing in 2030 and $800.0 million of senior notes maturing in 2031.

Debt Service Requirements

We are required by the terms of our applicable loan agreements to meet certain financial covenants, such as minimum net worth and liquidity, and reporting requirements, among others.

As of September 30, 2021, we believe that we were in compliance with all such covenants and we are not aware of any covenants that it is reasonably likely that we would not be able to meet in accordance with our loan agreements.

As of March 31, 2022, we believe that we were in compliance with all such covenants and we are not aware of any covenants that it is reasonably likely that we would not be able to meet in accordance with our loan agreements.

Off-Balance Sheet Arrangements

As of and during the nine months ended September 30, 2021, we had no material off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

As of and during the three months ended March 31, 2022, we had no material off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We are exposed to inflation risk as income from future long-term leases is the primary source of our cash flows from operations.

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However, due to the long-term nature of our leases, among other factors, the leases may not reset frequently enough to cover inflation.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in our 2021 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis