What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-08 · 195 added, 155 removed, 683 unchanged (34% of the section changed)

3 unchanged sentences

Amounts in thousands, except per share data

JUNE 30, 2023

SEPTEMBER 30, 2023

DECEMBER 31, 2022

34 unchanged sentences

1,000,000 shares authorized;

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

380,860 and 380,590 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 9,597,629 9,587,637

Accumulated other comprehensive (loss) income 9,328 2,140

Accumulated other comprehensive income 17,079 2,140

Cumulative net income attributable to common stockholders 1,069,327 1,307,055

7 unchanged sentences

Condensed Consolidated Statements of Operations

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

For the Three and Nine Months Ended September 30, 2023 and 2022

Amounts in thousands, except per share data

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

September 30, NINE MONTHS ENDED

September 30,

2023 2022 2023 2022

12 unchanged sentences

Interest expense ( 66,304 ) ( 53,044 ) ( 195,397 ) ( 82,248 )

Loss on extinguishment of debt — — — ( 1,429 )

Gain (loss) on extinguishment of debt 62 ( 1,091 ) 62 ( 2,520 )

Impairment of real estate properties and credit loss reserves ( 56,873 ) — ( 143,510 ) 25

3 unchanged sentences

Net (loss) income $ ( 68,604 ) $ 28,616 $ ( 240,408 ) $ 76,973

Net loss attributable to non-controlling interests 967 — 1,920 —

Net loss (income) attributable to non-controlling interests 760 ( 312 ) 2,680 ( 312 )

Net (loss) income attributable to common stockholders $ ( 67,844 ) $ 28,304 $ ( 237,728 ) $ 76,661

6 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

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

For the Three and Nine Months Ended September 30, 2023 and 2022

Amounts in thousands

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

September 30, NINE MONTHS ENDED

September 30,

2023 2022 2023 2022

6 unchanged sentences

Comprehensive (loss) income ( 60,756 ) 35,462 ( 225,283 ) 92,550

comprehensive loss attributable to non-controlling interests 745 — 1,830 —

comprehensive loss (income) attributable to non-controlling interests 663 ( 384 ) 2,494 ( 384 )

Comprehensive (loss) income attributable to common stockholders $ ( 60,093 ) $ 35,078 $ ( 222,789 ) $ 92,166

1 unchanged sentence

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity

For the Three Months Ended June 30, 2023 and 2022

Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests

For the Three Months Ended September 30, 2023 and 2022

Amounts in thousands, except per share data

8 unchanged sentences

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

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

Issuance of common stock, net of issuance costs — 33 — — — 33 — 33 —

4 unchanged sentences

— — ( 4,118 ) — — ( 4,118 ) ( 50 ) ( 4,168 ) —

Gains arising during the period on

interest rate swaps

Gains arising during the period on interest rate swaps

— — 11,869 — — 11,869 147 12,016 —

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

Contributions from redeemable non-controlling interests — — — — — — — — 710

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

— — — — ( 118,203 ) ( 118,203 ) ( 1,467 ) ( 119,670 ) —

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

Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 2 )

Balance at September 30, 2023 $ 3,809 $ 9,597,629 $ 17,079 $ 1,069,327 $ ( 3,684,144 ) $ 7,003,700 $ 101,888 $ 7,105,588 $ 3,195

Stock Additional

7 unchanged sentences

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 $ —

Balance at June 30, 2022 $ 1,516 $ 4,002,525 $ ( 1,250 ) $ 1,314,515 $ ( 3,139,440 ) $ 2,177,866 $ — $ 2,177,866 $ —

Issuance of common stock, net of issuance costs — 84 — — — 84 — 84 —

Merger consideration transferred 2,289 5,574,174 — — — 5,576,463 110,702 5,687,165 —

Non-controlling interests acquired — — — — — — 1,266 1,266 —

Common stock redemptions — ( 41 ) — — — ( 41 ) — ( 41 ) —

Share-based compensation 1 9,716 — — — 9,717 — 9,717 —

Redemption of non-controlling interest — 98 — — — 98 ( 97 ) 1 —

Net income — — — 28,304 — 28,304 312 28,616 —

3 unchanged sentences

— — 6,019 — — 6,019 64 6,083 —

Dividends to common stockholders ($ 0.31 per share)

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

— — — — ( 72,052 ) ( 72,052 ) ( 442 ) ( 72,494 ) —

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

Balance at September 30, 2022 $ 3,806 $ 9,586,556 $ 5,524 $ 1,342,819 $ ( 3,211,492 ) $ 7,727,213 $ 111,813 $ 7,839,026 $ —

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

Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests

For the Nine Months Ended September 30, 2023 and 2022

Amounts in thousands, except per share data

17 unchanged sentences

— — 24,696 — — 24,696 303 24,999 —

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

Contributions from redeemable non-controlling interests — — — — — — — — 1,210

Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.93 per share)

— — — — ( 354,582 ) ( 354,582 ) ( 4,360 ) ( 358,942 ) —

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

Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 29 )

Balance at September 30, 2023 $ 3,809 $ 9,597,629 $ 17,079 $ 1,069,327 $ ( 3,684,144 ) $ 7,003,700 $ 101,888 $ 7,105,588 $ 3,195

Stock Additional

9 unchanged sentences

Issuance of common stock, net of issuance costs 8 22,847 — — — 22,855 — 22,855 —

Merger consideration transferred 2,289 5,574,174 — — — 5,576,463 110,702 5,687,165 —

Non-controlling interests acquired — — — — — — 1,266 1,266 —

Common stock redemptions — ( 248 ) — — — ( 248 ) — ( 248 ) —

Share-based compensation 4 16,768 — — — 16,772 — 16,772 —

Redemption of non-controlling interest — 98 — — — 98 ( 97 ) 1 —

Net income — — — 76,661 — 76,661 312 76,973 —

3 unchanged sentences

— — 12,841 — — 12,841 64 12,905 —

Dividends to common stockholders ($ 0.62 per share)

Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.93 per share)

— — — — ( 166,009 ) ( 166,009 ) ( 442 ) ( 166,451 ) —

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

Balance at September 30, 2022 $ 3,806 $ 9,586,556 $ 5,524 $ 1,342,819 $ ( 3,211,492 ) $ 7,727,213 $ 111,813 $ 7,839,026 $ —

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2023 and 2022

For the Nine Months Ended September 30, 2023 and 2022

Amounts in thousands

OPERATING ACTIVITIES

SIX MONTHS ENDED

NINE MONTHS ENDED

September 30,

Net (loss) income $ ( 240,408 ) $ 76,973

6 unchanged sentences

Gain on sales of real estate properties ( 56,974 ) ( 197,188 )

Loss on extinguishment of debt — 1,429

(Gain) loss on extinguishment of debt ( 62 ) 2,520

Impairment of real estate properties and credit loss reserves 143,510 ( 25 )

14 unchanged sentences

Investment in financing receivable ( 310 ) 167

Contributions from redeemable non-controlling interests 710 —

Proceeds from sales of real estate properties and additional long-lived assets 366,779 870,806

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

Proceeds from notes receivable repayments — 500

Cash assumed in Merger, including restricted cash for special dividend payment — 1,149,681

Net cash provided by investing activities 112,463 1,425,834

FINANCING ACTIVITIES

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

Net repayments on unsecured credit facility ( 149,000 ) ( 154,400 )

Borrowings on term loans — 666,500

Repayment on term loan — ( 718,500 )

Repayments of notes and bonds payable ( 11,988 ) ( 18,880 )

1 unchanged sentence

Dividends paid ( 354,171 ) ( 165,735 )

Special dividend paid in relation to the Merger — ( 1,123,648 )

Net proceeds from issuance of common stock 110 22,851

3 unchanged sentences

Payments made on finance leases ( 12 ) —

Net cash (used in) provided by financing activities ( 273,234 ) 188,183

Net cash used in financing activities ( 521,260 ) ( 1,508,085 )

(Decrease) increase in cash and cash equivalents ( 36,293 ) 44,408

1 unchanged sentence

Cash and cash equivalents at end of period $ 24,668 $ 57,583

Supplemental Cash Flow Information

Supplemental Cash Flow Information NINE MONTHS ENDED

September 30,

Interest paid $ 185,402 $ 83,382

1 unchanged sentence

Invoices accrued for construction, tenant improvements and other capitalized costs $ 32,590 $ 52,840

Mortgage note payable assumed in connection with acquisition of real estate, net $ 5,284 $ —

Capitalized interest $ 2,077 $ 848

4 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 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.

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.

As of September 30, 2023, the Company had gross investments of approximately $ 13.6 billion in 663 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 663 re al estate properties are located in 35 states and total approxima tely 39.1 million square feet.

The Company provided leasing and property management services to approximat ely 38.6 million sq uare feet nationwide.

In addition, as of September 30, 2023, the Company had a weighted average ownership interest of approxima tely 44 % in 34 re al estate properties held in joint ventures.

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

27 unchanged sentences

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

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

As of September 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 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.

As of September 30, 2023, the Company had four consolidated VIEs, in addition to the OP, consisting of joint venture investments in which the Company 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) JUNE 30, 2023

(dollars in thousands) SEPTEMBER 30, 2023

Net real estate investments $ 72,756

3 unchanged sentences

Total liabilities and equity

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

As of September 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.

10 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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.

As of September 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.

12 unchanged sentences

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

As of September 30, 2023, the Company had redeemable non-controlling interests of $ 3.2 million.

Asset Impairment

5 unchanged sentences

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.

During the three and nine months ended September 30, 2023, the Company recognized real estate impairments totaling $ 56.9 million and $ 138.3 million, respectively, as a result of completed or planned disposition activity.

Investments in Leases - Financing Receivables, Net

3 unchanged sentences

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

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

May 2021 Poway, CA 5.73 % $ 113,634

4 unchanged sentences

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 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.

As of September 30, 2023, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 155.0 million.

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

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

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

Mezzanine loans

12 unchanged sentences

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 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.

During the first quarter of 2023, the Company determined that the risk of credit loss on its mezzanine loans was no longer remote and recorded a credit loss reserve of $ 5.2 million.

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

Dollars in thousands June 30, 2023 December 31, 2022

Dollars in thousands NINE MONTHS ENDED SEPTEMBER 30, 2023 TWELVE MONTHS ENDED DECEMBER 31, 2022

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

3 unchanged sentences

Income from Lease Financing Receivables

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.

The Company recognized the related income from two financing receivables totaling $ 2.0 million and $ 6.2 million, respectively, for the three and nine months ended September 30, 2023, and $ 2.0 million and $ 5.9 million, respectively for the three and nine months ended September 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.

1 unchanged sentence

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

Amortization of these amounts will be recognized as a reduction to Interest income over the life of the lease.

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 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.

During the three and nine months ended September 30, 2023, the Company recognized interest income of $ 2.3 million and $ 6.5 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 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.

As of January 1, 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 nine month periods ended September 30, 2023.

Revenue from Contracts with Customers (ASC Topic 606)

7 unchanged sentences

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

September 30, NINE MONTHS ENDED

September 30,

in thousands 2023 2022 2023 2022

12 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, 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”.

The Company operates under the

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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:

16 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Preliminary Purchase Price Allocation

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 CUMULATIVE MEASUREMENT PERIOD ADJUSTMENTS PRELIMINARY AMOUNTS RECOGNIZED ON THE CLOSING DATE

Final Purchase Price Allocation

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

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

The finalization of the purchase accounting assessment could result in material changes to the Company’s determination of the fair value of assets acquired and liabilities assumed, which will be recorded as measurement period adjustments in the period in which they are identified, up to one year from the Closing Date.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

A preliminary estimate of approximately $ 247.0 million has been allocated to goodwill.

The cumulative measurement period adjustments recorded through June 30, 2023 are final and 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.

Based on the final purchase price allocation of fair value, approximately $ 247.0 million has been allocated to goodwill.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed.

1 unchanged sentence

None of the goodwill recognized is expected to be deductible for tax purposes.

During the third quarter of 2023, the Company experienced a sustained decline in the price per share of its common stock, which it identified as an indicator of goodwill impairment.

As a result, the Company performed an interim goodwill evaluation.

The fair value of the Company’s single reporting unit

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

was estimated using a combination of discounted cash flow models and earnings multiples techniques.

The quantitative assessment as of September 30, 2023 indicated goodwill was not impaired.

Merger-related Costs

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.

The Company incurred Merger-related costs of $ 7.5 million and $( 3.4 ) million, respectively, during the three and nine months ended September 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 for the nine months ended September 30, 2023 including a refund of $ 17.8 million for transfer taxes paid during the year ended December 31, 2022.

Real Estate Investments

2023 Acquisition Activity

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

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

Dollars in thousands DATE ACQUIRED PURCHASE PRICE MORTGAGE NOTES PAYABLE, NET CASH

CONSIDERATION 1

2 unchanged sentences

Tampa, FL 3/10/23 $ 31,500 $ — $ 30,499 $ 30,596 $ ( 97 ) 115,867

Colorado Springs, CO 7/28/23 11,450 ( 5,284 ) 6,024 11,416 ( 108 ) 42,770

Total real estate acquisitions $ 42,950 $ ( 5,284 ) $ 36,523 $ 42,012 $ ( 205 ) 158,637

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

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

In the third quarter of 2023, the Company acquired a parcel of land previously under a ground lease for $ 0.8 million and an additional interest in an operating property for $ 0.6 million.

Unconsolidated Joint Ventures

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.

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

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

September 30, NINE MONTHS ENDED

September 30,

Dollars in thousands 2023 2022 2023 2022

5 unchanged sentences

Investments in unconsolidated joint ventures, end of period $ 325,453 $ 327,752 $ 325,453 $ 327,752

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.

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

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

See 2023 Real Estate Asset Dispositions below for additional information.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

2023 Real Estate Asset Dispositions

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

The following table details the Company's dispositions for the nine months ended September 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

GAIN/(IMPAIRMENT) SQUARE FOOTAGE

Tampa, FL & Miami, FL 2

Tampa/Miami, FL 2

1/12/23 $ 93,250 $ ( 5,875 ) $ — $ 87,375 $ 87,302 $ ( 888 ) $ 961 224,037

7 unchanged sentences

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

Houston, TX 8/2/23 8,320 ( 285 ) — 8,035 4,567 194 3,274 57,170

Atlanta, GA 8/22/23 25,142 ( 66 ) — 25,076 23,226 ( 536 ) 2,386 55,195

Dallas, TX 9/15/23 115,000 ( 1,504 ) — 113,496 64,183 6,094 43,219 161,264

Houston, TX 9/18/23 250 ( 24 ) — 226 1,998 — ( 1,772 ) 52,040

Chicago, IL 9/27/23 59,950 ( 870 ) — 59,080 74,710 ( 380 ) ( 15,250 ) 104,912

Total dispositions $ 430,772 $ ( 18,951 ) $ ( 45,000 ) $ 366,821 $ 390,485 $ 2,736 $ 18,600 922,922

5 unchanged sentences

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 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 17 properties and one corporate entity classified as assets held for sale as of September 30, 2023.

The net real estate assets held for sale includes the impact of $ 15.9 million and $ 46.4 million, respectively, of impairment charges for the three and nine months ended September 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

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

Dollars in thousands September 30, 2023 December 31, 2022

Balance Sheet data:

2 unchanged sentences

Lease intangibles 12,938 1,986

68,758 18,850

Accumulated depreciation ( 13,634 ) —

Real estate assets held for sale, net 55,124 18,850

Operating lease right-of-use assets 585 —

Other assets, net 1,929 43

1 unchanged sentence

Accounts payable and accrued liabilities $ 1,716 $ 282

Operating lease liabilities 1,020 —

Other liabilities 1,078 155

Liabilities of assets held for sale $ 3,814 $ 437

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Lessor Accounting

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

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

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

6 unchanged sentences

Variable payments are recognized in the period earned.

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:

Lease income for the Company's operating leases recognized for the three and nine months ended September 30, 2023 was $ 333.3 million and $ 987.1 million, respectively.

Lease income for the Company's operating leases recognized for the three and nine months ended September 30, 2022 was $ 298.9 million and $ 578.1 million, respectively.

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

Dollars in thousands OPERATING

2 unchanged sentences

Lessee Accounting

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.

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

As of September 30, 2023, the Company had 240 properties totaling 17.4 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 June 30, 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 June 30, 2023 and 2022, respectively, and $ 0.7 million and $ 0.3 million for the six months ended June 30, 2023 and 2022, respectively.

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

The Company had 75 prepaid ground leases as of September 30, 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 September 30, 2023 and 2022, respectively, and $ 1.0 million and $ 0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company’s future lease payments (primarily for its 165 non-prepaid ground leases) as of September 30, 2023 were as follows:

Dollars in thousands OPERATING FINANCING

8 unchanged sentences

Lease liabilities $ 273,319 $ 74,087

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

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

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

September 30, NINE MONTHS ENDED

September 30,

Dollars in thousands 2023 2022 2023 2022

11 unchanged sentences

Right-of-use assets obtained in exchange for new finance lease liabilities $ — $ 9,874 $ — $ 50,463

Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 198,261 $ — $ 198,261

Weighted-average years remaining lease term (excluding renewal options) - operating leases 47.5 50.2

4 unchanged sentences

Notes and Bonds Payable

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

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

MATURITY DATES BALANCE 1 AS OF

30 unchanged sentences

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

Changes in Mortgage Notes Payable

On July 28, 2023, the Company assumed a mortgage note payable of $ 5.6 million in connection with the acquisition of a 42,770 square foot property in Colorado Springs, Colorado.

The note bears interest at a rate of 4.5 % per annum and matures on April 1, 2026.

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.

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

Derivative Financial Instruments

8 unchanged sentences

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

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

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

life of the agreements without exchange of the underlying notional amount.

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

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

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

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

As of September 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

6 unchanged sentences

$ 1,000,000 3.17 %

Subsequent Activity

On October 19, 2023, the Company entered into two swap transactions totaling $ 100.0 million.

The notional amounts were $ 50.0 million each with fixed rates of 4.71 % and 4.67 %.

The swap agreements have effective dates of November 1, 2023 and termination dates of June 1, 2027 and December 1, 2027, respectively.

On October 23, 2023, the Company entered into two swap transactions totaling $ 100.0 million with an aggregate fixed rate of 4.73 %.

The swap agreements have effective dates of November 1, 2023 and termination dates of May 31, 2026.

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 June 30, 2023.

BALANCE AT JUNE 30, 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 September 30, 2023.

BALANCE AT SEPTEMBER 30, 2023

In thousands BALANCE SHEET LOCATION FAIR VALUE

Derivatives designated as hedging instruments

Interest rate swaps Other liabilities $ ( 1,248 )

Interest rate swaps Other assets $ 21,499

Total derivatives designated as hedging instruments $ 14,798

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

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

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

(GAIN)/LOSS RECOGNIZED IN

AOCI ON DERIVATIVE

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

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

AOCI INTO INCOME

three months ended June 30,

three months ended September 30,

In thousands 2023 2022 2023 2022

5 unchanged sentences

AOCI ON DERIVATIVE

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

nine months ended September 30, (GAIN)/LOSS RECLASSIFIED FROM

AOCI INTO INCOME

six months ended June 30,

nine months ended September 30,

In thousands 2023 2022 2023 2022

3 unchanged sentences

$ ( 24,999 ) $ ( 12,905 ) Total interest expense $ ( 9,874 ) $ 2,672

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company estimates that an additional $ 14.1 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 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.

As of September 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 $ 21.5 million.

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

For the nine months ended September 30, 2023, the Company invested $ 55.3 million and $ 15.4 million toward active development and redevelopment of properties, respectively, and $ 9.2 million toward recently completed development and redevelopment projects.

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.

This is included in the Company's investment toward active development properties for the nine months ended September 30, 2023.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Stockholders' Equity

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

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

NINE MONTHS ENDED SEPTEMBER 30, 2023 TWELVE MONTHS ENDED DECEMBER 31, 2022

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

3 unchanged sentences

At-The-Market Equity Offering Program

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 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.

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

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

During the nine months ended September 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 equity offering program.

Common Stock Dividends

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.

During the nine months ended September 30, 2023, the Company declared and paid common stock dividends totaling $ 0.93 per share.

On October 30, 2023, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on November 30, 2023 to stockholders of record on November 14, 2023.

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 and six months ended June 30, 2023 and 2022.

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

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

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

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

4 unchanged sentences

Weighted average common shares outstanding - basic 378,925,339 328,805,255 378,886,107 209,806,810

Dilutive effect of forward equity shares — — — —

Dilutive effect of OP Units — 3,167,668 — 1,067,493

Dilutive effect of employee stock purchase plan — 58,461 — 69,687

Weighted average common shares outstanding - diluted 378,925,339 332,031,384 378,886,107 210,943,990

Net (loss) income attributable to common stockholders $ ( 82,759 ) $ 6,130 $ ( 169,884 ) $ 48,357

Dividends paid on nonvested share-based awards ( 588 ) ( 601 ) ( 1,193 ) ( 1,207 )

Net (loss) income $ ( 68,604 ) $ 28,616 $ ( 240,408 ) $ 76,973

Income allocated to participating securities ( 636 ) ( 610 ) ( 1,868 ) ( 1,817 )

Loss (income) attributable to non-controlling interest 760 ( 312 ) 2,680 ( 312 )

Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units ( 29 ) — ( 122 ) —

Net (loss) income applicable to common stockholders - basic $ ( 68,509 ) $ 27,694 $ ( 239,718 ) $ 74,844

1 unchanged sentence

Diluted earnings per common share - net income $ ( 0.18 ) $ 0.08 $ ( 0.63 ) $ 0.35

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.

The effect of OP units totaling 4,042,993 shares and options under the Company's Employee Stock Purchase Plan (the "ESPP") to purchase the Company's common stock totaling 26,678 shares for the three months ended September 30,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Equity Awards

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

During the nine months ended September 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 .

1 unchanged sentence

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,

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

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2023 2022 2023 2022

4 unchanged sentences

Share-based awards, end of period 1,932,221 2,001,997 1,932,221 2,001,997

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.

During the nine months ended September 30, 2023 and 2022, the Company withheld 38,632 and 8,745 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 and six months ended June 30, 2023:

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

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

6 unchanged sentences

In January 2023, the Company modified its incentive compensation structure to award LTIP Series C units ("LTIP-C units) in the OP to named executive officers in lieu of RSUs.

The LTIP-C units are granted with three-year forward-looking performance targets, with a grant date fair value of $ 7.1 million, which consisted of an aggregate 448,249 LTIP-C units with a five-year vesting period.

The LTIP-C units were granted with three-year forward-looking performance targets, with a grant date fair value of $ 7.1 million, which consisted of an aggregate 448,249 LTIP-C units with a five-year vesting period.

Approximately 43 % of the LTIP-C units vest based on two market performance conditions.

1 unchanged sentence

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 assumption:

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

THREE MONTHS ENDED MARCH 31,

7 unchanged sentences

The combined weighted average grant date fair value of the January LTIP-C units was $ 15.85 per share.

The Company records amortization expense based on the probability of achieving certain operating performance conditions, which is evaluated throughout the performance period.

Employee Stock Purchase Plan

2 unchanged sentences

No new options will be granted under the ESPP.

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,

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

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2023 2022 2023 2022

5 unchanged sentences

Outstanding and exercisable, end of period 172,109 363,330 172,109 363,330

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Dollars in millions FUTURE AMORTIZATION

3 unchanged sentences

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

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

• Cash and cash equivalents - The carrying amount approximates fair value (level 1 inputs) due to the short term maturity of these investments.

• Real estate notes receivabl e - Real estate notes receivable are recorded in other assets on the Company's Condensed Consolidated Balance Sheets.

4 unchanged sentences

Fair value is estimated by utilizing pricing models, level 2 inputs, that consider forward yield curves and discount rates.

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 June 30, 2023 and December 31, 2022.

June 30, 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 September 30, 2023 and December 31, 2022.

September 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