What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 225 added, 165 removed, 613 unchanged (39% of the section changed)

3 unchanged sentences

Amounts in thousands, except per share data

MARCH 31, 2023

JUNE 30, 2023

DECEMBER 31, 2022

34 unchanged sentences

1,000,000 shares authorized;

380,816 and 380,590 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

380,858 and 380,590 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 9,595,033 9,587,637

9 unchanged sentences

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2023 and 2022

For the Three and Six Months Ended June 30, 2023 and 2022

Amounts in thousands, except per share data

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

2023 2022 2023 2022

Rental income $ 329,680 $ 140,632 $ 653,773 $ 279,121

26 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2023 and 2022

For the Three and Six Months Ended June 30, 2023 and 2022

Amounts in thousands

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

2023 2022 2023 2022

Net (loss) income $ ( 83,726 ) $ 6,130 $ ( 171,804 ) $ 48,357

2 unchanged sentences

Reclassification adjustments for (gains) losses included in net income (interest expense) ( 3,419 ) 823 ( 5,703 ) 1,909

(Losses) gains arising during the period on interest rate swaps ( 8,541 ) 5,159

Gains arising during the period on interest rate swaps 21,523 1,663 12,981 6,822

18,104 2,486 7,278 8,731

5 unchanged sentences

Condensed Consolidated Statements of Equity

For the Three Months Ended March 31, 2023 and 2022

For the Three Months Ended June 30, 2023 and 2022

Amounts in thousands, except per share data

7 unchanged sentences

Equity Non-controlling Interests Total

Balance at December 31, 2022 $ 3,806 $ 9,587,637 $ 2,140 $ 1,307,055 $ ( 3,329,562 ) $ 7,571,076 $ 108,742 $ 7,679,818

Equity Redeemable Non-controlling Interests

Balance at March 31, 2023 $ 3,808 $ 9,591,194 $ ( 8,554 ) $ 1,219,930 $ ( 3,447,750 ) $ 7,358,628 $ 106,211 $ 7,464,839 $ 2,000

Issuance of common stock, net of issuance costs — 27 — — — 27 — 27 —

7 unchanged sentences

— — 21,259 — — 21,259 264 21,523 —

Dividends to common stockholders

($ 0.31 per share)

Contributions from non-controlling interests — — — — — — — — 487

Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.31 per share)

— — — — ( 118,191 ) ( 118,191 ) ( 1,448 ) ( 119,639 ) —

Balance at June 30, 2023 $ 3,808 $ 9,595,033 $ 9,328 $ 1,137,171 $ ( 3,565,941 ) $ 7,179,399 $ 104,018 $ 7,283,417 $ 2,487

Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Cumulative

Net Income Cumulative

Dividends Total

Stockholders’

Equity Non-controlling Interests Total

Equity Redeemable Non-controlling Interests

Balance at March 31, 2022 $ 1,516 $ 3,999,060 $ ( 3,736 ) $ 1,308,385 $ ( 3,092,343 ) $ 2,212,882 $ — $ 2,212,882 $ —

Issuance of common stock, net of issuance costs — 110 — — — 110 — 110 —

Share-based compensation — 3,356 — — — 3,356 — 3,356 —

Net income — — — 6,130 — 6,130 — 6,130 —

Reclassification adjustments for losses included in net income (interest expense)

— — 823 — — 823 — 823 —

Gains arising during the period on interest rate swaps

— — 1,663 — — 1,663 — 1,663 —

Dividends to common stockholders ($ 0.31 per share)

— — — — ( 47,097 ) ( 47,097 ) — ( 47,097 ) —

Balance at June 30, 2022 $ 1,516 $ 4,002,526 $ ( 1,250 ) $ 1,314,515 $ ( 3,139,440 ) $ 2,177,867 $ — $ 2,177,867 $ —

The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, are an integral part of these financial statements.

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity

For the Six Months Ended June 30, 2023 and 2022

Amounts in thousands, except per share data

Stock Additional

6 unchanged sentences

Equity Non-controlling Interests Total

Equity Redeemable Non-controlling Interests

Balance at December 31, 2022 $ 3,806 $ 9,587,637 $ 2,140 $ 1,307,055 $ ( 3,329,562 ) $ 7,571,076 $ 108,742 $ 7,679,818 $ 2,014

2 unchanged sentences

Share-based compensation 3 8,913 — — — 8,916 — 8,916 —

Net loss — — — ( 169,884 ) — ( 169,884 ) ( 1,920 ) ( 171,804 ) —

Reclassification adjustments for gains included in net income (interest expense)

— — ( 5,635 ) — — ( 5,635 ) ( 68 ) ( 5,703 ) —

Gains arising during the period on interest rate swaps

— — 12,823 — — 12,823 158 12,981 —

Contributions from non-controlling interests — — — — — — — — 473

Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.62 per share)

— — — — ( 236,379 ) ( 236,379 ) ( 2,894 ) ( 239,273 ) —

Balance at June 30, 2023 $ 3,808 $ 9,595,033 $ 9,328 $ 1,137,171 $ ( 3,565,941 ) $ 7,179,399 $ 104,018 $ 7,283,417 $ 2,487

Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Cumulative

Net Income Cumulative

Dividends Total

Stockholders’

Equity Non-controlling Interests Total

Equity Redeemable Non-controlling Interests

Balance at December 31, 2021 $ 1,505 $ 3,972,917 $ ( 9,981 ) $ 1,266,158 $ ( 3,045,483 ) $ 2,185,116 $ — $ 2,185,116 $ —

Issuance of common stock, net of issuance costs 7 22,764 — — — 22,771 — 22,771 —

Common stock redemptions — ( 206 ) — — — ( 206 ) — ( 206 ) —

Share-based compensation 4 7,051 — — — 7,055 — 7,055 —

Net income — — — 48,357 — 48,357 — 48,357 —

1 unchanged sentence

— — 1,909 — — 1,909 — 1,909 —

Losses arising during the period on interest rate swaps

Gains arising during the period on interest rate swaps

— — 6,822 — — 6,822 — 6,822 —

1 unchanged sentence

— — — — ( 93,957 ) ( 93,957 ) — ( 93,957 ) —

Balance at March 31, 2022 $ 1,516 $ 3,999,060 $ ( 3,736 ) $ 1,308,385 $ ( 3,092,343 ) $ 2,212,882 $ — $ 2,212,882

Balance at June 30, 2022 $ 1,516 $ 4,002,526 $ ( 1,250 ) $ 1,314,515 $ ( 3,139,440 ) $ 2,177,867 $ — $ 2,177,867 $ —

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Amounts in thousands

OPERATING ACTIVITIES

THREE MONTHS ENDED

SIX MONTHS ENDED

Net (loss) income $ ( 171,804 ) $ 48,357

24 unchanged sentences

Proceeds from sales of real estate properties and additional long-lived assets 160,870 108,044

Proceeds from notes receivable repayments 336 —

Net cash provided by (used in) investing activities 41,560 ( 113,267 )

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

FINANCING ACTIVITIES

Net borrowings on unsecured credit facility — 124,000

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

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

4 unchanged sentences

Distributions to non-controlling interest holders ( 2,546 ) —

Debt issuance and assumption costs ( 438 ) —

Payments made on finance leases ( 40 ) ( 51 )

13 unchanged sentences

Healthcare Realty Trust Incorporated is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States.

As of March 31, 2023, the Company had gross investments of approximately $ 13.9 billion in 681 real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property.

As of June 30, 2023, the Company had gross investments of approximately $ 13.9 billion in 680 wholly-owned real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property.

The Company's 680 real estate properties are located in 35 states and total approximately 39.8 million square feet.

The Company provided leasing and property management services to approximately 39.3 million square feet nationwide.

As of March 31, 2023, the Company had a weighted average ownership interest of approximately 44 % in 34 real estate properties held in joint ventures.

In addition, as of June 30, 2023, the Company had a weighted average ownership interest of approximately 44 % in 34 real estate properties held in joint ventures.

See Note 3 below for more details regarding the Company's unconsolidated joint ventures.

5 unchanged sentences

They do not include all of the information and footnotes required by GAAP for complete financial statements.

However, except as disclosed herein and specific disclosures incorporated as a result of the Merger, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

However, except as disclosed herein and specific disclosures included as a result of the Merger, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

All material intercompany transactions and balances have been eliminated in consolidation.

9 unchanged sentences

The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Condensed Consolidated Financial Statements.

The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, the disposition of all or a portion of an interest held by the primary beneficiary, or changes in facts and circumstances

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

that impact the power to direct activities of the VIE that most significantly impacts economic performance.

The Company performs this analysis on an ongoing basis.

2 unchanged sentences

For entities in which the Company owns less than 100 % of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements.

Healthcare Realty Holdings, L.P.

(the "OP") is 98.8 % owned by the Company.

Healthcare Realty Holdings, L.P., a Delaware limited partnership (the "OP"), is 98.8 % owned by the Company.

Holders of operating partnership units (“OP Units”) are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity on the accompanying Condensed Consolidated Balance Sheets.

1 unchanged sentence

Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity.

As of March 31, 2023, there were approximately 4.7 million, or 1.2 %, of OP Units issued and outstanding held by non-controlling interest holders.

As of June 30, 2023, there were approximately 4.7 million OP Units, or 1.2 % of OP units issued and outstanding, held by non-controlling interest holders.

Additionally, the Company is the primary beneficiary of this VIE.

Accordingly, the Company consolidates the interests in the OP.

As of March 31, 2023, the Company had three consolidated VIEs in addition to the OP where it is the primary beneficiary of the VIE based on the combination of operational control and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures.

As of June 30, 2023, the Company had four consolidated VIEs in addition to the OP where it is the primary beneficiary of the VIE based on the combination of operational control and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures.

Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate:

(dollars in thousands) MARCH 31, 2023

(dollars in thousands) JUNE 30, 2023

Net real estate investments $ 61,980

3 unchanged sentences

Total liabilities and equity

As of March 31, 2023, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture.

The Company does not have the power or economics to direct the activities of the VIEs on a stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary.

As of June 30, 2023, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture.

The Company does not have the power or economic interests to direct the activities of the VIEs on a stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary.

As a result, the Company accounts for the two notes receivables as amortized cost and a joint venture arrangement under the equity method.

9 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

As of March 31, 2023, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities.

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

See Note 3 below for more details regarding the Company's unconsolidated joint ventures.

7 unchanged sentences

Redeemable Non-Controlling Interests

The Company accounts for redeemable equity securities in accordance with Accounting Standards Codification Topic 480:

The Company accounts for redeemable equity securities in accordance with ASC Topic 480:

Accounting for Redeemable Equity Instruments, which requires that equity securities redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity.

The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheet.

The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheets.

Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value.

We measure the redemption value and record an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest.

As of March 31, 2023, the Company had redeemable non-controlling interests of $ 2.0 million.

As of June 30, 2023, the Company had redeemable non-controlling interests of $ 2.5 million.

Asset Impairment

The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever the occurrence of an event or a change in circumstances indicates that the carrying value might not be fully recoverable.

Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results;

significant changes in the Company’s use of assets or the strategy for its overall business;

plans to sell an asset before its depreciable life has ended;

the expiration of a significant portion of leases in a property;

or significant negative economic trends or negative industry trends for the Company or its tenants.

During the three and six months ended June 30, 2023, the Company recognized real estate impairments totaling $ 55.2 million and $ 81.4 million, respectively, as a result of completed or planned disposition activity.

Investments in Leases - Financing Receivables, Net

In accordance with ASC 842, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option.

As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC 310 “Receivables”.

In accordance with ASC Topic 842:

Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option.

As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC Topic 310:

See below for additional information regarding the Company's financing receivables.

(dollars in thousands) ORIGINATION DATE LOCATION INTEREST RATE CARRYING VALUE as of JUNE 30, 2023

May 2021 Poway, CA 5.73 % $ 113,967

November 2021 Columbus, OH 6.48 % 7,348

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Real Estate Notes Receivable

1 unchanged sentence

Real estate notes receivable are intended to be held-to-maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses.

As of March 31, 2023, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 147.3 million.

As of June 30, 2023, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 151.5 million.

(dollars in thousands) ORIGINATION MATURITY STATED INTEREST RATE MAXIMUM LOAN COMMITMENT OUTSTANDING as of

MARCH 31, 2023

Mezzanine loan

JUNE 30, 2023 ALLOWANCE FOR CREDIT LOSSES FAIR VALUE DISCOUNT AND FEES CARRYING VALUE as of JUNE 30, 2023

Mezzanine loans

Texas 6/24/2021 6/24/2024 8.00 % $ 54,119 $ 54,119 $ ( 5,196 ) $ ( 3,067 ) $ 45,856

5 unchanged sentences

147,150 106,706 — ( 1,069 ) 105,637

Accrued interest 1,428

Allowance for credit losses ( 5,196 )

Fair-value discount and fees ( 4,542 )

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Allowance for Credit Losses

Pursuant to ASC Topic 326, Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under Topic 326.

The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary.

1 unchanged sentence

In its assessment of current expected credit losses for real estate notes receivable, the Company utilizes past payment history of its borrowers, current economic conditions, and forecasted economic conditions through the maturity date of each note to estimate a probability of default and a resulting loss for each real estate note receivable.

During the three months ended March 31, 2023, the Company determined that the risk of credit loss on its mezzanine loans was no longer remote.

Consequently, the Company recorded a credit loss reserve of $ 5.2 million for the three months ended March 31, 2023.

During the six months ended June 30, 2023, the Company determined that the risk of credit loss on its mezzanine loans was no longer remote.

Consequently, the Company recorded a credit loss reserve of $ 5.2 million for the six months ended June 30, 2023.

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

Dollars in thousands March 31, 2023 December 31, 2022

Dollars in thousands June 30, 2023 December 31, 2022

Allowance for credit losses, beginning of period $ — $ —

3 unchanged sentences

Income from Lease Financing Receivables

For the three months ended March 31, 2023, the Company recognized the related income from two financing receivables totaling $ 1.5 million based on an imputed interest rate over the terms of the applicable lease.

As a result, the interest recognized from the financing receivable will not equal the cash payments from the lease agreement.

The Company recognized the related income from two financing receivables totaling $ 2.1 million and $ 4.2 million, respectively, for the three and six months ended June 30, 2023, and $ 2.0 million and $ 3.9 million, respectively for the three and six months ended June 30, 2022, based on an imputed interest rate over the terms of the applicable lease.

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

Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees.

These costs are classified with the financing receivable and are included in the balance of the net investment.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Income from Real Estate Notes Receivable

During the three months ended March 31, 2023, the Company recognized interest income of $ 2.0 million related to real estate notes receivable.

During the three and six months ended June 30, 2023, the Company recognized interest income of $ 2.2 million and $ 4.3 million, respectively, related to real estate notes receivable.

The Company recognizes interest income on an accrual basis unless the Company has determined that collectability of contractual amounts is not reasonably assured, at which point the note is placed on non-accrual status and interest income is recognized on a cash basis.

As of March 31, 2023, the Company placed two of its real estate notes receivable with a principal balance of $ 54.1 million on non-accrual status and accordingly did not recognize any interest income for the quarter.

Revenue from Contracts with Customers (Topic 606)

As of June 30, 2023, the Company placed two of its real estate notes receivable with principal balances of $ 48.9 million on non-accrual status and accordingly did not recognize any interest income for the three and six month periods ended June 30, 2023.

Revenue from Contracts with Customers (ASC Topic 606)

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

2 unchanged sentences

To achieve the core principle, the Company applies the five step model specified in the guidance.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Revenue that is accounted for under Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Operations in the Other operating line item.

2 unchanged sentences

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

in thousands 2023 2022 2023 2022

2 unchanged sentences

Management fee income 1

1,597 783 3,570 1,438

Miscellaneous 263 36 516 103

7 unchanged sentences

Per the terms of the Merger Agreement, Legacy HTA declared a special dividend of $ 4.82 (the “Special Dividend”) for each outstanding share of Legacy HTA class A common stock, $ 0.01 par value per share ( the “Legacy HTA Common Stock”), and the OP declared a corresponding distribution to the holders of its partnership units, payable to Legacy HTA stockholders and OP unitholders of record on July 19, 2022.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Immediately following the Merger, Legacy HR converted to a Maryland limited liability company and changed its name to HRTI, LLC and Legacy HTA changed its name to “Healthcare Realty Trust Incorporated”.

In addition, the equity interests of Legacy HR were contributed by Legacy HTA by means of a contribution and assignment agreement to the OP such that Legacy HR became a wholly-owned subsidiary of the OP.

The Company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $ 0.01 par value per share, trade on the New York Stock Exchange (the “NYSE”) under the ticker symbol “HR”.

In addition, the equity interests of Legacy HR were contributed by Legacy HTA by means of a contribution and assignment agreement to the OP, and Legacy HR became a wholly-owned subsidiary of the OP.

The Company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $ 0.01 par value per share, trade on the New York Stock Exchange under the ticker symbol “HR”.

For accounting purposes, the Merger was treated as a “reverse acquisition” in which Legacy HTA was considered the legal acquirer and Legacy HR was considered the accounting acquirer based on various factors, including, but not limited to:

1 unchanged sentence

As a result, the historical financial statements of the accounting acquirer, Legacy HR, became the historical financial statements of the Company.

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

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Dollars in thousands, except for per share data

6 unchanged sentences

Consideration transferred $ 5,576,463

(a) The number of shares of Legacy HTA Common Stock presented above was based on 228,857,717 total shares of Legacy HTA Common Stock outstanding as of the Closing Date, less 192 HTA fractional shares that were cancelled in lieu of cash and less 336,535 shares of Legacy HTA restricted stock (net of 215,764 shares of Legacy HTA restricted stock withheld).

(a) The number of shares of Legacy HTA Common Stock presented above was based on 228,857,717 total shares of Legacy HTA Common Stock outstanding as of the Closing Date, less 192 Legacy HTA fractional shares that were cancelled in lieu of cash and less 336,535 shares of Legacy HTA restricted stock (net of 215,764 shares of Legacy HTA restricted stock withheld).

For accounting purposes, these shares were converted to Legacy HR Common Stock, at an exchange ratio of 1.00 share of Legacy HR Common Stock per share of Legacy HTA Common Stock.

4 unchanged sentences

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

Dollars in thousands PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE MEASUREMENT PERIOD ADJUSTMENTS PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE

Dollars in thousands PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE CUMULATIVE MEASUREMENT PERIOD ADJUSTMENTS PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE

(as adjusted)

29 unchanged sentences

(c) Includes $ 78.7 million of gross contractual real estate notes receivable, the fair value of which was $ 74.8 million, and the Company preliminarily expects to collect substantially all of the real estate notes receivable proceeds as of the Closing Date.

The cumulative measurement period adjustments recorded through March 31, 2023 primarily resulted from updated valuations related to the Company’s real estate assets and liabilities and additional information obtained by the Company related to the properties acquired in the Merger and their respective tenants, and resulted in an increase to goodwill of $ 111.9 million.

As of March 31, 2023, the Company had not finalized the determination of fair value of certain tangible and intangible assets acquired and liabilities assumed, including, but not limited to real estate assets and liabilities, notes receivables and goodwill.

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

As of June 30, 2023, the Company had not finalized the determination of fair value of certain tangible and intangible assets acquired and liabilities assumed, including, but not limited to real estate assets and liabilities, notes receivables and goodwill.

As such, the assessment of fair value of assets acquired and liabilities assumed is preliminary and was based on information that was available at the time the Condensed Consolidated Financial Statements were prepared.

6 unchanged sentences

Merger-related Costs

The Company incurred Merger-related costs of $ 4.9 million during the three months ended March 31, 2023, which were included within Merger-related costs in results of operations.

The Merger-related costs primarily consist of legal, consulting, severance, and banking services.

Subsequent to March 31, 2023, the Company received a refund of $ 17.8 million for transfer taxes paid during the year ended December 31, 2022 in connection with the Merger.

The Company will record this as a reduction of Merger-related costs in the second quarter of 2023.

The Company incurred Merger-related costs of $( 15.7 ) million and $( 10.8 ) million, respectively, during the three and six months ended June 30, 2023, which were included within Merger-related costs in results of operations.

The Merger-related costs primarily consist of legal, consulting, severance, and banking services and included a refund of $ 17.8 million for transfer taxes paid during the year ended December 31, 2022.

Subsequent Activity

As of the date of these financial statements, the purchase price allocation of fair value was finalized with no additional adjustments.

The Company determined the final fair value of net assets acquired based on information available during the measurement period.

Real Estate Investments

2023 Acquisition Activity

The following table details the Company's real estate acquisition activity for the three months ended March 31, 2023:

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

Dollars in thousands DATE ACQUIRED PURCHASE PRICE CASH

5 unchanged sentences

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

In the second quarter of 2023, the Company entered into a joint venture agreement for the development of a medical office building in Scottsdale, Arizona.

The Company holds a 90 % interest in the joint venture and determined the arrangement meets the criteria to be consolidated.

The joint venture acquired an $ 8.8 million land parcel to be developed with the Company contributing cash of $ 8.3 million.

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

Dollars in thousands DATE ACQUIRED PURCHASE PRICE SQUARE FOOTAGE

Colorado Springs, CO 7/28/23 $ 11,450 42,770

Unconsolidated Joint Ventures

The Company's investment in and loss recognized for the three months ended March 31, 2023 and 2022 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

Dollars in thousands 2023 2022 2023 2022

1 unchanged sentence

New investment during the period 1

— — 3,824 49,599

Equity loss recognized during the period ( 17 ) ( 307 ) ( 797 ) ( 652 )

1 unchanged sentence

Investments in unconsolidated joint ventures, end of period $ 327,245 $ 210,781 $ 327,245 $ 210,781

1 This was an additional investment in an existing joint venture representing a 40 % ownership interest in a property in Dallas, Texas.

Also, see 2023 Real Estate Asset Dispositions below for additional information.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

1 In 2023, this was an additional investment in an existing joint venture in which the Company owns a 40 % ownership interest.

The investment consisted of a sale of a property in Dallas, Texas to the joint venture.

See 2023 Real Estate Asset Dispositions below for additional information.

2023 Real Estate Asset Dispositions

The following table details the Company's dispositions for the three months ended March 31, 2023:

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

Dollars in thousands DATE DISPOSED SALE PRICE CLOSING ADJUSTMENTS COMPANY-FINANCED MORTGAGE NOTES NET PROCEEDS NET REAL ESTATE INVESTMENT OTHER (INCLUDING RECEIVABLES) 1

7 unchanged sentences

3/30/23 75,000 ( 8,079 ) ( 45,000 ) 21,921 88,624 ( 803 ) ( 20,900 ) 147,078

Los Angeles, CA 5

5/12/23 3,300 ( 334 ) — 2,966 3,268 — ( 302 ) —

Albany, NY 6/30/23 10,000 ( 1,229 ) — 8,771 2,613 ( 1,040 ) 7,198 40,870

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

4 unchanged sentences

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

5 The Company sold a land parcel totaling 0.34 acres.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Dollars in thousands DATE DISPOSED SALES PRICE SQUARE FOOTAGE

Houston, TX 8/2/23 $ 8,320 57,170

Assets Held for Sale

The Company had three properties and one land parcel classified as assets held for sale as of March 31, 2023.

The net real estate assets held for sale includes $ 5.1 million of impairment charges.

As of December 31, 2022, the Company had one property classified as assets held for sale as of December 31, 2022, which was sold in the first quarter of 2023.

The table below reflects the assets and liabilities classified as held for sale as of March 31, 2023 and December 31, 2022:

Dollars in thousands March 31, 2023 December 31, 2022

The Company had three properties classified as assets held for sale as of June 30, 2023.

The net real estate assets held for sale includes $ 3.6 million of impairment charges for the six months ended June 30, 2023.

The Company had one property classified as assets held for sale as of December 31, 2022, which was sold in the first quarter of 2023.

The table below reflects the assets and liabilities classified as held for sale as of June 30, 2023 and December 31, 2022:

Dollars in thousands June 30, 2023 December 31, 2022

Balance Sheet data:

2 unchanged sentences

Lease intangibles 2,242 1,986

Land held for development 3,251 —

Accumulated depreciation ( 4,183 ) —

7 unchanged sentences

The Company’s properties generally were leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052.

Some leases provide for fixed rent renewal terms in addition to market rent renewal terms.

Some leases provide tenants with fixed rent renewal terms while others have market rent renewal terms.

Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property.

2 unchanged sentences

In addition, most of the Company's leases include nonlease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment.

The Company adopted an accounting policy to combine lease and nonlease

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company adopted an accounting policy to combine lease and nonlease components.

Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments.

Variable payments are recognized in the period earned.

Lease income for the Company's operating leases recognized for the three months ended March 31, 2023 was $ 324.1 million.

Lease income for the Company's operating leases recognized for the three months ended March 31, 2022 was $ 138.5 million.

Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of March 31, 2023 were as follows:

Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2023 was $ 329.7 million and $ 653.8 million, respectively.

Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2022 was $ 140.6 million and $ 279.1 million, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Dollars in thousands OPERATING

2 unchanged sentences

Lessee Accounting

As of March 31, 2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases.

As of March 31, 2023, the Company had 242 properties totaling 17.8 million square feet that were held under ground leases.

As of June 30, 2023, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases.

As of June 30, 2023, the Company had 241 properties totaling 17.5 million square feet that were held under ground leases.

Some of the ground lease renewal terms are based on fixed rent renewal terms and others have market rent renewal terms.

1 unchanged sentence

Any rental increases related to the Company’s ground leases are generally either stated or based on CPI.

The Company had 75 prepaid ground leases as of March 31, 2023.

The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 0.3 million and $ 0.1 million of the Company’s rental expense for the three months ended March 31, 2023 and 2022, respectively.

The Company’s future lease payments (primarily for its 167 non-prepaid ground leases) as of March 31, 2023 were as follows:

The Company had 75 prepaid ground leases as of June 30, 2023.

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

Dollars in thousands OPERATING FINANCING

9 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The following table provides details of the Company's total lease expense for the three months ended March 31, 2023 and 2022:

The following table provides details of the Company's total lease expense for the three and six months ended June 30, 2023 and 2022:

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

Dollars in thousands 2023 2022 2023 2022

15 unchanged sentences

Weighted-average discount rate - finance leases 5.0 % 5.0 %

Other Assets and Liabilitie s

Other assets consist primarily of intangible assets, prepaid assets, real estate notes receivable, straight-line rent receivables, accounts receivable, additional long-lived assets and interest rate swaps.

Items included in "Other assets, net" on the Company's Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 are detailed in the table below:

Dollars in thousands March 31, 2023 December 31, 2022

Real estate notes receivable, net 1

$ 147,326 $ 99,643

Straight-line rent receivables 98,923 88,868

Prepaid assets 88,694 81,900

Above-market intangible assets, net 85,100 80,720

Accounts receivable, net

48,676 47,498

Additional long-lived assets, net 22,173 21,446

Interest rate swap assets 9,767 14,512

Investment in securities 2

Other receivables, net 5,962 7,169

Debt issuance costs, net 5,449 5,977

Project costs 4,900 4,337

Net investment in lease 1,828 1,828

Customer relationship intangible assets, net 1,106 1,120

Other 8,505 8,961

$ 534,420 $ 469,990

1 This amount includes an allowance for credit losses.

See Note 1 for additional information.

2 This amount represents the value of the Company's preferred stock investment in a data analytics platform.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Accounts Payable and Accrued Liabilities

The following table provides details of the items included in "Accounts payable and accrued liabilities" on the Company's Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:

Dollars in thousands March 31, 2023 December 31, 2022

Accrued property taxes $ 48,629 $ 78,185

Accounts payable and capital expenditures 35,128 57,352

Accrued interest 28,483 50,037

Other operating accruals 42,970 58,459

$ 155,210 $ 244,033

Other Liabilities

The following table provides details of the items included in "Other liabilities" on the Company's Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:

Dollars in thousands March 31, 2023 December 31, 2022

Below-market intangible liabilities, net $ 96,214 $ 97,935

Deferred revenue 90,979 87,325

Security deposits 29,020 28,521

Interest rate swap liability 11,927 4,269

Other 3,889 618

$ 232,029 $ 218,668

Notes and Bonds Payable

The table below details the Company’s notes and bonds payable as of March 31, 2023 and December 31, 2022.

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

MATURITY DATES BALANCE 1 AS OF

29 unchanged sentences

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

2 Subsequent to March 31, 2023, the Company exercised its option to extend the maturity date for one year for a fee of approximately $ 0.4 million.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

2 On April 26, 2023, the Company exercised its option to extend the maturity date for one year for a fee of approximately $ 0.4 million.

Subsequent Changes in Debt Structure

On August 1, 2023, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 3.31 % per annum with an outstanding principal of $ 9.8 million.

The mortgage note encumbered a 66,984 square foot property in Georgia.

Derivative Financial Instruments

10 unchanged sentences

Such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

For derivatives designated, and that qualify, as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income (Loss) ("AOCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

As of March 31, 2023, the Company had 14 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

As of June 30, 2023, the Company had 14 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

EXPIRATION DATE AMOUNT WEIGHTED

7 unchanged sentences

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

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of March 31, 2023.

BALANCE AT MARCH 31, 2023

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of June 30, 2023.

BALANCE AT JUNE 30, 2023

In thousands BALANCE SHEET LOCATION FAIR VALUE

4 unchanged sentences

Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)

The table below presents the effect of cash flow hedge accounting on AOCI during the three months ended March 31, 2023 and 2022 related to the Company's outstanding interest rate swaps.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The table below presents the effect of cash flow hedge accounting on AOCI during the three and six months ended June 30, 2023 and 2022 related to the Company's outstanding interest rate swaps.

(GAIN)/LOSS RECOGNIZED IN

AOCI ON DERIVATIVE

three months ended March 31, (GAIN)/LOSS RECLASSIFIED FROM

three months ended June 30, (GAIN)/LOSS RECLASSIFIED FROM

AOCI INTO INCOME

three months ended March 31,

three months ended June 30,

In thousands 2023 2022 2023 2022

3 unchanged sentences

$ ( 21,523 ) $ ( 1,663 ) Total interest expense $ ( 3,419 ) $ 823

(GAIN)/LOSS RECOGNIZED IN

AOCI ON DERIVATIVE

six months ended June 30, (GAIN)/LOSS RECLASSIFIED FROM

AOCI INTO INCOME

six months ended June 30,

In thousands 2023 2022 2023 2022

Interest rate swaps $ ( 12,981 ) $ ( 6,822 ) Interest expense $ ( 6,000 ) $ 1,612

Settled treasury hedges — — Interest expense 213 213

Settled interest rate swaps — — Interest expense 84 84

$ ( 12,981 ) $ ( 6,822 ) Total interest expense $ ( 5,703 ) $ 1,909

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

1 unchanged sentence

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

As of March 31, 2023, 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 $ 7.0 million.

As of March 31, 2023, the Company has not posted any collateral related to these agreements and was not in breach of any agreement.

As of June 30, 2023, the fair value of derivatives in a net asset position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 15.4 million.

As of June 30, 2023, the Company had not posted any collateral related to these agreements and was not in breach of any agreement.

Commitments and Contingencies

3 unchanged sentences

Development and Redevelopment Activity

During the first quarter of 2023, the Company funded $ 16.9 million toward the development and redevelopment of properties.

During the first six months of 2023, the Company incurred $ 49.0 million toward the development and redevelopment of properties.

Stockholders' Equity

The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the three months ended March 31, 2023 and the twelve months ended December 31, 2022:

THREE MONTHS ENDED MARCH 31, 2023 TWELVE MONTHS ENDED DECEMBER 31, 2022

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

SIX MONTHS ENDED JUNE 30, 2023 TWELVE MONTHS ENDED DECEMBER 31, 2022

Balance, beginning of period 380,589,894 150,457,433

4 unchanged sentences

The Company has equity distribution agreements with various sales agents with respect to the at-the-market (“ATM”) offering program of common stock with an aggregate sales amount of up to $ 750.0 million.

As of March 31, 2023, $ 750.0 million remained available for issuance under our current ATM offering program.

During the three months ended March 31, 2023, the Company did not sell any shares or enter into any forward sale agreements to sell shares of common stock through its ATM offering program.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

As of June 30, 2023, $ 750.0 million remained available for issuance under our current ATM offering program.

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

Common Stock Dividends

During the three months ended March 31, 2023, the Company declared and paid common stock dividends totaling $ 0.31 per share.

On May 2, 2023, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on June 2, 2023 to stockholders of record on May 16, 2023.

During the six months ended June 30, 2023, the Company declared and paid common stock dividends totaling $ 0.62 per share.

On August 1, 2023, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on August 30, 2023 to stockholders of record on August 15, 2023.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Earnings Per Common Share

1 unchanged sentence

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

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2023 and 2022.

THREE MONTHS ENDED MARCH 31,

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,

Dollars in thousands, except per share data 2023 2022 2023 2022

11 unchanged sentences

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

The effect of OP units totaling 4,042,993 shares, non-vested stock awards totaling 401,937 shares, and options under the Company's Employee Stock Purchase Plan (the "ESPP") to purchase the Company's common stock totaling 49,322 shares for the three months ended March 31, 2023 were excluded from the calculation of diluted loss per common share because the effect was anti-dilutive due to the loss from continuing operations incurred during that period.

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

Incentive Plans

Restricted Common Shares

During the three months ended March 31, 2023, the Company granted non-vested stock awards to its named executive officers and other members of senior management and employees with a grant date fair value of $ 5.4 million, which consisted of an aggregate of 270,494 non-vested shares with vesting periods ranging from three to eight years .

A summary of the activity under the Company's share-based incentive plans for the three months ended March 31, 2023 and 2022 is included in the table below.

THREE MONTHS ENDED MARCH 31,

Equity Awards

During the six months ended June 30, 2023, the Company made the following equity awards:

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

• During the second quarter of 2023, the Company granted to its 12 independent directors an aggregate of 42,768 shares of non-vested stock awards with a grant date fair value of $ 0.7 million, and an aggregate of 57,868 LTIP Series D units with a grant date fair value of $ 1.1 million.

The Company also granted a non-vested stock award to a new employee, which consisted of 508 non-vested shares.

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,

2023 2022 2023 2022

Share-based awards, beginning of period 1,955,445 1,951,551 1,795,128 1,562,028

3 unchanged sentences

Share-based awards, end of period 1,932,221 1,941,709 1,932,221 1,941,709

During the three months ended March 31, 2023 and 2022, the Company withheld 38,632 and 6,727 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Restricted Stock Units

15 unchanged sentences

The combined weighted average grant date fair value of the January RSUs was $ 22.55 per share.

The following is a summary of the RSU activity during the three months ended March 31, 2023:

Restricted Stock Units Weighted Average Grant Date Fair Value

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,

Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Stock Units Weighted Average Grant Date Fair Value

Non-vested, beginning of period 363,250 $ 28.57 294,932 33.04

8 unchanged sentences

Relative and absolute TSR awards containing these market performance conditions were valued using independent specialists.

The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $ 12.24 for the absolute TSR component and $ 13.98 for the relative TSR component for the January 2023 grant using the following assumptions:

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

THREE MONTHS ENDED MARCH 31,

4 unchanged sentences

Stock price (per share) $ 20.21

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The remaining 57 % of the LTIP-C units vest based upon certain operating performance conditions.

5 unchanged sentences

No new options will be granted under the ESPP.

A summary of the activity under the ESPP for the three months ended March 31, 2023 and 2022 is included in the table below.

THREE MONTHS ENDED MARCH 31,

A summary of the activity under the ESPP for the three and six months ended June 30, 2023 and 2022 is included in the table below.

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,

2023 2022 2023 2022

Outstanding and exercisable, beginning of period 183,426 427,802 340,976 348,514

4 unchanged sentences

Outstanding and exercisable, end of period 179,369 405,534 179,369 405,534

The following table represents expected amortization of the Company's non-vested shares issued as of March 31, 2023:

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

Dollars in millions FUTURE AMORTIZATION

11 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The table below details the fair values and carrying values for notes and bonds payable and real estate notes receivable at March 31, 2023 and December 31, 2022.

March 31, 2023 December 31, 2022

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

June 30, 2023 December 31, 2022

Dollars in millions CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE

5 unchanged sentences

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 1. Financial Statements