What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-16 compared with 2023-03-01 · 433 added, 572 removed, 1127 unchanged (47% of the section changed)

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Healthcare Realty Trust Incorporated (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Healthcare Realty Trust Incorporated (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity and redeemable non-controlling interests, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 1, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 16, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Asset Impairment - Identification of Triggering Events for Real Estate Properties

The Company recorded total real estate investments, net, of approximately $11.2 billion as of December 31, 2023.

As described in Notes 1 and 7 to the Company's consolidated financial statements, the Company assesses the potential for impairment of long-lived assets, including real estate properties, whenever events occur, or a change in circumstances indicates, that the carrying value might not be fully recoverable ("triggering events").

If management determines that a triggering event exists, the estimated current and projected operating cash flows of the property are compared to the property’s net carrying value which may result in an impairment charge.

As described in Note 1 to the Company's consolidated financial statements, the Company assesses the potential for impairment of long-lived assets, including real estate properties, whenever events occur, or a change in circumstances indicates, that the carrying value might not be fully recoverable ("triggering events").

We identified management’s assessment of qualitative indicators of potential impairment for real estate properties as a critical audit matter.

Qualitative indicators of potential impairment may include significant changes in the Company’s use of properties or the strategy for its overall business, plans to sell a property before its depreciable life has ended, or negative economic or industry trends for the Company or its tenants.

industry trends for the Company or its tenants.

Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters.

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• Assessing the reasonableness of management’s key assumptions with respect to qualitative factors, including potential sales of properties based on offers received and changes in the use of the Company’s properties, used to determine whether triggering events had occurred.

• Reviewing internal documentation to assess whether additional triggering factors were present.

Determination of the Accounting Acquirer

As discussed in Note 2 to the consolidated financial statements, effective July 20, 2022, Healthcare Realty Trust Incorporated (“Legacy HR”) merged with Healthcare Trust of America, Inc.

(“Legacy HTA”), with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA.

The merger was accounted for as a reverse acquisition with Legacy HR being identified as the accounting acquirer.

We have identified the evaluation of the Company’s determination of the accounting acquirer to be a critical audit matter.

A high degree of auditor judgment was required to evaluate the relative importance of the indicative factors, individually and in aggregate, including but not limited to:

(i) the composition of the board of directors of the post-merger company, (ii) the composition of senior management of the post-merger company, and (iii) the premium transferred to the Legacy HTA stockholders.

A different conclusion would result in a material difference in the accounting for the Merger.

The primary procedures we performed to address this critical audit matter included:

• Evaluating management’s conclusions with respect to the accounting acquirer, including consideration of post-merger voting rights, the composition of the board of directors and senior management of the post-merger company, terms of the premium transferred, the relative size of the entities, minority voting interests, and the entity initiating the combination, as evidenced in the amended and restated bylaws of the Company, investor presentations, the Merger Agreement, and certain filings with the Securities and Exchange Commission.

• Utilizing professionals with specialized knowledge and experience in consolidation assessments to assist in identifying and evaluating the various factors relevant to the determination of the accounting acquirer as well as management’s conclusions with respect to the determination of the accounting acquirer.

Acquisition of Real Estate Properties in Connection with Business Combination

As discussed in Note 2 to the consolidated financial statements, Legacy HR merged into Legacy HTA, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA.

The transaction was accounted for as business combination.

In connection with the business combination, the Company acquired real estate investments with a preliminary estimated fair value of $8.8 billion.

We identified the volume of the fair value measurements for the acquired real estate investments, constituting land, buildings, and related intangible assets, recorded in connection with the merger as a critical audit matter.

The number of real estate properties acquired in the merger increased the sensitivity of management’s estimates with respect to the fair values of land, buildings and related intangible assets acquired.

As a result, increased auditor effort, including the use of specialists, was required to test management’s fair value estimates.

The primary procedures we performed to address this critical audit matter included:

• Involving professionals outside of the engagement team to assist in determining the appropriate risk and controls-based approach to testing the fair value measurements recorded in connection with the merger.

• Testing the details of a sample of the real estate properties acquired in connection with the merger including evaluating the accuracy of certain inputs into the fair value measurements including rental payments per executed lease agreements.

• Utilizing professionals with specialized skills and experience in valuation to assist in testing certain of the valuation specific assumptions used in the valuation of land, building, and related intangible assets for a selection of real estate properties.

/s/ BDO USA, LLP

• Examining internal documentation to assess whether additional triggering events were present.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2005.

Nashville, Tennessee

March 1, 2023

February 16, 2024

Healthcare Realty Trust Incorporated

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Additional paid-in capital 9,602,592 9,587,637

Accumulated other comprehensive income (loss) 2,140 ( 9,981 )

Accumulated other comprehensive (loss) income ( 10,741 ) 2,140

Cumulative net income attributable to common stockholders 1,028,794 1,307,055

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Healthcare Realty Trust Incorporated

Consolidated Statements of Income

Consolidated Statements of Operations

Amounts in thousands, except per share data

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Interest expense ( 258,584 ) ( 146,691 ) ( 53,124 )

Loss on extinguishment of debt ( 2,401 ) — ( 21,503 )

Impairment of real estate properties ( 54,427 ) ( 17,101 ) —

Gain (loss) on extinguishment of debt 62 ( 2,401 ) —

Impairment of real estate properties and credit loss reserves ( 154,912 ) ( 54,427 ) ( 17,101 )

Equity loss from unconsolidated joint ventures ( 1,682 ) ( 687 ) ( 795 )

Interest and other (expense) income, net ( 1,546 ) ( 9 ) 559

Interest and other income (expense), net 1,343 ( 1,546 ) ( 9 )

( 336,227 ) 64,519 ( 15,089 )

Net income 40,693 66,659 72,195

Net (loss) income ( 282,083 ) 40,693 66,659

Net loss attributable to non-controlling interests 3,822 204 —

Net income attributable to common stockholders $ 40,897 $ 66,659 $ 72,195

Net (loss) income attributable to common stockholders $ ( 278,261 ) $ 40,897 $ 66,659

Basic earnings per common share $ ( 0.74 ) $ 0.15 $ 0.45

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Healthcare Realty Trust Incorporated

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Amounts in thousands

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2023 2022 2021

Net income $ 40,693 $ 66,659 $ 72,195

Other comprehensive income (loss)

Net (loss) income $ ( 282,083 ) $ 40,693 $ 66,659

Other comprehensive (loss) income

Interest rate swaps

Reclassification adjustment for losses included in net income (interest expense) 1,527 4,472 3,472

Gains (losses) arising during the period on interest rate swaps 10,630 3,379 ( 10,862 )

Losses on settlement of treasury rate locks arising during the period — — ( 4,267 )

Reclassification adjustment for (gains) losses included in net income (interest expense) ( 14,488 ) 1,527 4,472

Gains arising during the period on interest rate swaps 1,463 10,630 3,379

( 13,025 ) 12,157 7,851

Comprehensive income 52,850 74,510 60,538

Comprehensive (loss) income ( 295,108 ) 52,850 74,510

Comprehensive loss attributable to non-controlling interests

Comprehensive income attributable to common stockholders $ 53,018 $ 74,510 $ 60,538

Comprehensive (loss) income attributable to common stockholders $ ( 291,142 ) $ 53,018 $ 74,510

See accompanying notes.

Healthcare Realty Trust Incorporated

Consolidated Statements of Equity

Consolidated Statements of Equity and Redeemable Non-Controlling Interests

Amounts in thousands, except per share data

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Interests Total

Equity Redeemable Non-controlling Interests

Balance at December 31, 2020 $ — $ 1,395 $ 3,635,341 $ ( 17,832 ) $ 1,199,499 $ ( 2,870,027 ) $ 1,948,376 $ — $ 1,948,376 $ —

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Issuance of stock, net of costs — 6 22,901 — — — 22,907 — 22,907 —

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

Common stock redemption — ( 1 ) ( 2,791 ) — — — ( 2,792 ) — ( 2,792 ) —

Share-based compensation — 7 20,339 — — — 20,346 — 20,346 —

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

Net income — — — — 40,897 — 40,897 ( 204 ) 40,693 —

Reclassification adjustments for losses included in net income (interest expense) — — — 1,531 — — 1,531 ( 4 ) 1,527 —

Gain on interest rate swaps and treasury locks — — — 10,590 — — 10,590 40 10,630 —

Contributions from redeemable non-controlling interests — — — — — — — — — 2,014

Dividends to common stockholders

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Issuance of stock, net of costs — — 130 — — — 130 — 130 —

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

Common stock redemption — ( 1 ) ( 2,234 ) — — — ( 2,235 ) — ( 2,235 ) —

Conversion of OP Units to common stock — 2 2,774 — — — 2,776 ( 2,776 ) — —

Share-based compensation — 3 14,285 — — — 14,288 — 14,288 —

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

Net income — — — — 40,897 — 40,897 ( 204 ) 40,693

Reclassification adjustments for losses included in net income (interest expense) — — — 1,531 — — 1,531 ( 4 ) 1,527

Net loss — — — — ( 278,261 ) — ( 278,261 ) ( 3,822 ) ( 282,083 ) —

Reclassification adjustments for gains included in net income (interest expense) — — — ( 14,315 ) — — ( 14,315 ) ( 173 ) ( 14,488 ) —

Gains arising during the period on interest rate swaps — — — 1,434 — — 1,434 29 1,463 —

Contributions from redeemable non-controlling interests — — — — — — — — — 1,889

Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — — ( 35 )

Dividends to common stockholders

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OPERATING ACTIVITIES 2023 2022 2021

Net income $ 40,693 $ 66,659 $ 72,195

Net (loss) income $ ( 282,083 ) $ 40,693 $ 66,659

Adjustments to reconcile net income to net cash provided by operating activities:

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Gain on sales of real estate properties ( 77,546 ) ( 270,271 ) ( 55,940 )

Loss on extinguishment of debt 2,401 — 21,503

Impairment of real estate properties 54,427 17,101 —

(Gain) loss on extinguishment of debt ( 62 ) 2,401 —

Impairment of real estate properties and credit loss reserves 154,912 54,427 17,101

Equity loss from unconsolidated joint ventures 1,682 687 795

Distributions from unconsolidated joint ventures 17,880 1,881 —

Proceeds from disposition of sales-type lease properties — — 244,454

Non-cash interest from financing and real estate notes receivable ( 1,654 ) ( 2,257 ) ( 391 )

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Proceeds from sales of real estate properties and additional long-lived assets 701,434 1,201,068 184,221

Contributions from redeemable non-controlling interests 1,389 — —

Proceeds from notes receivable repayments — 1,688 —

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FINANCING ACTIVITIES

Net borrowings/(repayments) on unsecured credit facility 40,000 210,000 ( 293,000 )

Net (repayments) borrowing on unsecured credit facility ( 385,000 ) 40,000 210,000

Borrowings on term loans — 666,500 —

Repayment on term loan — ( 1,141,500 ) —

Borrowings of notes and bonds payable — — 596,562

Repayments of notes and bonds payable ( 19,143 ) ( 20,042 ) ( 24,557 )

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Distributions to non-controlling interest of limited partners ( 5,123 ) ( 1,695 ) —

Settlement of treasury rate locks — — ( 4,267 )

Debt issuance and assumption costs ( 529 ) ( 12,753 ) ( 405 )

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Net cash (used in) provided by financing activities ( 884,222 ) ( 1,859,325 ) 327,716

Increase (decrease) in cash and cash equivalents 47,786 ( 2,128 ) 14,646

(Decrease) increase in cash and cash equivalents ( 35,262 ) 47,786 ( 2,128 )

Cash and cash equivalents cash at beginning of period 60,961 13,175 15,303

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Interest paid $ 216,033 $ 112,692 $ 49,443

Mortgage notes payable assumed upon acquisition (adjusted to fair value) $ — $ 11,790 $ 36,536

Mortgage notes payable assumed in connection with acquisition of real estate, net $ 5,284 $ — $ 11,790

Invoices accrued for construction, tenant improvements and other capitalized costs $ 31,469 $ 48,292 $ 17,655

Capitalized interest $ 2,961 $ 1,410 $ 221

Mortgage note receivables taken in connection with sale of real estate $ 51,000 $ — $ —

Real estate notes receivable assumed in Merger (adjusted to fair value) $ — $ 74,819 $ —

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Business Overview

Healthcare Realty Trust Incorporated (the “Company”) 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 of America.

See Note 2 below for a discussion of the Merger between Legacy HR and Legacy HTA.

The Company had gross investments of approximately $ 14.1 billion in 688 real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development, and corporate property as of December 31, 2022.

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 of America.

Except as otherwise provided in the Notes to the Company’s Consolidated Financial Statements, references herein to the "Company" mean Healthcare Realty Trust Incorporated and its consolidated subsidiaries, including Healthcare Realty Holdings, L.P.

(formerly known as Healthcare Trust of America Holdings, LP) (the "OP"), after giving effect to the Merger discussed in more detail in Note 2 below.

As of December 31, 2023, the Company had gross investments of approximately $ 13.4 billion in 655 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development, corporate property and excluding held for sale assets.

The Company’s real estate properties are located in 35 states and total approximately 38.5 million square feet.

In addition, the Company had a weighted average ownership interest of approximately 48 % in 33 real estate properties held in joint ventures.

In addition, the Company had a weighted average ownership interest of approximately 43 % in 33 real estate properties held in unconsolidated joint ventures.

See Note 5 below for more details regarding the Company's joint ventures.

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The Company’s Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities.

GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”).

Accounting Standards Codification Topic 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support.

GAAP requires the Company to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”).

ASC Topic 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support.

The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics:

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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.

(formally known as Healthcare Trust of America Holdings, LP) (the "OP") is 98.9 % owned by the Company.

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 Consolidated Balance Sheets.

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

Accordingly, the Company consolidates the interests in the OP.

As of December 31, 2022, 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.

Accordingly, such joint ventures have been

Accordingly, the Company consolidates its interests in the OP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate:

As of December 31, 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) DECEMBER 31, 2023

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As of December 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, therefore it was determined that the Company was not the primary beneficiary.

It was determined that the Company was not the primary beneficiary of the unconsolidated VIEs because the Company does not have the power or economics to direct the activities of the VIEs on a stand-alone basis.

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

See below for additional information regarding the Company's unconsolidated VIEs:

ORIGINATION DATE LOCATION SOURCE CARRYING AMOUNT MAXIMUM EXPOSURE TO LOSS

(dollars in thousands) ORIGINATION DATE LOCATION SOURCE CARRYING AMOUNT MAXIMUM EXPOSURE TO LOSS

2021 Houston, TX 1

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1 Assumed mortgage note receivable in connection with the Merger.

2 Includes investments in six properties.

2 Includes investments in seven properties.

As of December 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.

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Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, impairments, collectability of tenant receivables, and fair value measurements, as applicable.

Reclassifications

Certain reclassifications have been made on the Company's prior year Consolidated Balance Sheet to conform to current year presentation.

Previously, the Company's Lease intangibles were included in Building, improvements and lease intangibles and Goodwill was included with Other assets, net.

These amounts are now classified as separate line items on the Company's Consolidated Balance Sheets.

Segment Reporting

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Real Estate Properties

Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under Accounting Standards Codification Topic 805, Business Combinations .

Real estate properties are recorded at cost or at fair value if acquired in a transaction that is a business combination under ASC Topic 805, Business Combinations .

Cost or fair value at the time of acquisition is allocated among land, buildings, tenant improvements, lease and other intangibles, and personal property as applicable.

During 2023 and 2022, the Company eliminated against accumulated depreciation approximately $ 51.7 million and $ 19.6 million, respectively, of fully amortized real estate intangibles that were initially recorded as a component of certain real estate acquisitions.

Also during 2022 and 2021, approximately $ 4.1 million and $ 9.9 million, respectively, of fully depreciated tenant and capital improvements that were no longer in service were eliminated against accumulated depreciation.

In addition, during 2021, the Company eliminated against accumulated depreciation approximately $ 7.1 million of a fully depreciated building that is being demolished and redeveloped.

During 2022, approximately $ 4.1 million of fully depreciated tenant and capital improvements that were no longer in service were eliminated against accumulated depreciation.

Depreciation expense of real estate properties for the three years ended December 31, 2023, 2022 and 2021 was $ 518.6 million, $ 320.8 million and $ 170.0 million, respectively.

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The Company continues to capitalize interest on the unoccupied portion of the properties in stabilization for up to one year after the buildings have been placed into service, at which time the capitalization of interest must cease.

Land Held for Development

Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own outpatient healthcare facilities.

The Company's land held for development included twenty parcels as of December 31, 2022 and seven parcels as of December 31, 2021.

The Company’s investments in land held for development totaled approximately $ 74.3 million as of December 31, 2022 and $ 24.8 million as of December 31, 2021.

The current land that is held for development is located adjacent to certain of the Company's existing medical office buildings in California, Colorado, Connecticut, Florida, Georgia, Massachusetts, New York, North Carolina, Tennessee, Texas and Washington.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Asset Impairment

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Land fair value is estimated by using an assessment of comparable transactions and other relevant data.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company considers whether any of the in-place lease rental rates are above- or below-market.

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Likewise, the owner would have acquired a measurable asset in that, assuming the building was vacant, certain fixed costs would be avoided because the actual in-place lessees would reimburse a certain portion of fixed costs through expense reimbursements during the absorption period.

All of these intangible assets (above- or below-market lease, tenant improvement costs avoided, leasing costs avoided, rental income lost, and expenses recovered through in-place lessee reimbursements) are estimated and recorded in amounts equal to the present value of estimated future cash flows.

These assets (above- or below-market lease, tenant improvement, leasing costs avoided, rental income lost, and expenses recovered through in-place lessee reimbursements) are estimated and recorded in amounts equal to the present value of estimated future cash flows.

The actual purchase price is allocated based on the various relative asset fair values described above.

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Any goodwill recorded through a business combination would be reviewed for impairment at least annually and is not amortized.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

See Note 9 for more details on the Company’s intangible assets.

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• Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Executed purchase and sale agreements, that are binding agreements, are categorized as level one inputs.

Executed purchase and sale agreements, which are binding agreements, are categorized as level one inputs.

Brokerage estimates, letters of intent, or unexecuted purchase and sale agreements are considered to be level three as they are nonbinding in nature.

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Fair values of derivatives are estimated by pricing models that consider the forward yield curves and discount rates.

The fair value of the Company's forward starting interest rate swap contracts are estimated by pricing models that consider foreign trade rates and discount rates.

The fair value of the Company's forward starting interest

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

rate swap contracts are estimated by pricing models that consider foreign trade rates and discount rates.

Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future.

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Gains and losses are reclassified from accumulated other comprehensive income (loss) into earnings once the underlying hedged transaction is recognized in earnings.

As of December 31, 2022 and 2021, the Company had $ 2.1 million recorded in accumulated other comprehensive income and $ 10.0 million recorded in accumulated other comprehensive loss, respectively, related to forward starting interest rate swaps entered into and settled during 2015 and 2020 and a hedge of the Company's variable rate debt.

As of December 31, 2023 and 2022, the Company had $ 10.7 million recorded in accumulated other comprehensive loss and $ 2.1 million recorded in accumulated other comprehensive (loss) income, respectively, related to forward starting interest rate swaps entered into and settled during 2015 and 2020 and a hedge of the Company's variable rate debt.

See Note 11 for additional information.

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In-place lease and customer relationship intangible assets are amortized on a straight-line basis over the applicable lives of the assets.

Debt issuance costs are amortized

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

over the term of the debt instrument on the effective interest method or the straight-line method when the effective interest method is not applicable.

Debt issuance costs are amortized over the term of the debt instrument on the effective interest method or the straight-line method when the effective interest method is not applicable.

Goodwill is not amortized but is evaluated annually as of December 31 for impairment.

The Company's goodwill asset increased to $ 223.2 million in 2022 as a result of the Merger.

The Company's goodwill asset increased $ 27.3 million to $ 250.5 million in 2023 compared to $ 223.2 million in 2022, as a result of the final purchase price allocation adjustments related to the Merger.

The 2023 impairment evaluation indicated that no impairment had occurred with respect to the Company's goodwill asset.

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The Company has various employee and director share-based awards outstanding.

These awards include non-vested common stock and options to purchase common stock granted to employees pursuant to the Company's Amended and Restated 2006 Incentive Plan, dated April 29, 2021 ("Incentive Plan"), which replaced the Company's 2015 Stock Incentive Plan (the "Legacy HR Stock Incentive Plan") following the Merger.

References to the Incentive Plan include issuances under the Incentive Plan and the Legacy HR Stock Incentive Plan.

Legacy HR's 2000 Employee Stock Purchase Plan (the "Legacy HR Employee Stock Purchase Plan") was terminated during 2022 and all outstanding options will expire by 2024.

No new options will be issued under this plan.

The Company recognizes share-based payments to employees and directors in the Consolidated Statements of Income on a straight-line basis over the requisite service period based on the fair value of the award on the measurement date.

These awards include non-vested common stock or other stock-based awards, including units in the OP, pursuant to the Company's Amended and Restated 2006 Incentive Plan, dated April 29, 2021 ("the Incentive Plan").

The Company recognizes share-based payments to employees and directors in the Consolidated Statements of Operations on a straight-line basis over the

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

requisite service period based on the fair value of the award on the measurement date.

The Company recognizes the impact of forfeitures as they occur.

See Note 13 for details on the Company’s share-based awards.

Accumulated Other Comprehensive Income (Loss)

Certain items must be included in comprehensive income, including items such as foreign currency translation adjustments, minimum pension liability adjustments, changes in the fair value of derivative instruments and unrealized gains or losses on available-for-sale securities.

As of December 31, 2022, the Company’s accumulated other comprehensive income (loss) consists of the loss for changes in the fair value of active derivatives designated as cash flow hedges and the loss on the unamortized settlement of forward starting swaps and treasury hedges.

Accumulated Other Comprehensive (Loss) Income

Certain items must be included in comprehensive (loss) income, including items such as foreign currency translation adjustments, minimum pension liability adjustments, changes in the fair value of derivative instruments and unrealized gains or losses on available-for-sale securities.

As of December 31, 2023, the Company’s accumulated other comprehensive (loss) income consists of the loss for changes in the fair value of active derivatives designated as cash flow hedges and the loss on the unamortized settlement of forward starting swaps and treasury hedges.

See Note 11 for more details on the Company's derivative financial instruments.

4 unchanged sentences

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

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

This line item includes parking income, management fee income and other miscellaneous income.

1 unchanged sentence

YEAR ENDED DECEMBER 31,

Dollars in thousands 2022 2021 2020

in thousands 2023 2022 2021

Type of Revenue

Parking income $ 9,903 $ 8,513 $ 7,859

Management fee income 4,668 2,049 343

Miscellaneous 525 383 304

Management fee income/other 1

7,548 5,193 2,432

The Company’s three major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied.

$ 17,451 $ 13,706 $ 10,291

1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement.

The Company’s two major types of revenue that are accounted for under Topic 606 are all accounted for as the performance obligation is satisfied.

The performance obligations that are identified for each of these items are satisfied over time and the Company recognizes revenue monthly based on this principle.

In most cases, the revenue is due and payable on a monthly basis.

The Company had a receivable balance of $ 1.5 million and $ 1.4 million for the years ended December 31, 2022 and 2021, respectively.

The Company had a receivable balance of $ 1.9 million and $ 1.5 million, and $ 1.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Management fee income includes property management services provided to third parties and certain of the properties in the Company's unconsolidated joint ventures and is generally calculated, accrued and billed monthly based on a percentage of cash collections of tenant receivables for the month or a stated amount per square foot.

1 unchanged sentence

Internal management fee income, where the Company manages its owned properties, is eliminated in consolidation.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Rental Income

1 unchanged sentence

The Company's lease agreements generally include provisions for stated annual increases or increases based on a Consumer Price Index ("CPI").

Rental income from properties under multi-tenant office lease arrangements and rental income from properties with single-tenant lease arrangements are included in rental income on the Company's Consolidated Statements of Income.

For lessors, the new standard requires a lessor to classify leases as either sales-type, direct-financing or operating.

For lessors, the standard requires a lessor to classify leases as either sales-type, direct-financing or operating.

A lease will be treated as a sale if it is considered to transfer control of the underlying asset to the lessee.

6 unchanged sentences

YEAR ENDED DECEMBER 31,

Dollars in thousands 2022 2021 2020

in thousands 2023 2022 2021

Property operating income $ 1,270,508 $ 883,953 $ 514,533

6 unchanged sentences

See Note 16 for further discussion.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

If HR fails to qualify as a REIT in any taxable year, it will be subject to U.S.

If the Company fails to qualify as a REIT in any taxable year, it will be subject to U.S.

federal income taxes on its taxable income and will not be permitted to qualify for treatment as a REIT for U.S.

federal income tax purposes for four years following the year during which the qualification is lost unless the IRS grants it relief under certain statutory provisions.

Such event could have a material adverse effect on its business, financial condition, results of operations and net cash available for dividend distributions to its stockholders.

HR conducts substantially all of its operations through the OP.

Such an event could have a material adverse effect on its business, financial condition, results of operations and net cash available for dividend distributions to its stockholders.

The Company conducts substantially all of its operations through the OP.

As a partnership, the OP generally is not liable for federal income taxes.

The income and loss from the operations of the OP is included in the tax returns of its partners, including HR, who are responsible for reporting their allocable share of the partnership income and loss.

The income and loss from the operations of the OP is included in the tax returns of its partners, including the Company, who are responsible for reporting their allocable share of the partnership income and loss.

Accordingly, no provision for income tax has been made in the accompanying consolidated financial statements.

2 unchanged sentences

Federal tax returns for the years 2020, 2021, 2022 and 2023 are currently subject to examination by taxing authorities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

State Income Taxes

The Company must pay certain state income taxes and the provisions for such taxes are generally included in general and administrative expense on the Company’s Consolidated Statements of Income.

The Company must pay certain state income taxes and the provisions for such taxes are generally included in general and administrative expenses on the Company’s Consolidated Statements of Operations.

See Note 16 for further discussion.

2 unchanged sentences

The Company is generally reimbursed for these taxes by the tenant.

The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis in rental income in the Company’s Consolidated Statements of Income.

The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis in rental income in the Company’s Consolidated Statements of Operations.

Assets Held for Sale

1 unchanged sentence

Further, depreciation of these assets ceases at the time the assets are classified as held for sale.

Losses resulting from the sale of such properties are characterized as impairment losses in the Consolidated Statements of Income.

Losses resulting from the sale of such properties are characterized as impairment losses in the Consolidated Statements of Operations.

See Note 6 for more detail on assets held for sale.

9 unchanged sentences

See Note 14 for the calculations of earnings per share.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Redeemable Non-Controlling Interests

The Company accounts for redeemable equity securities in accordance with Accounting Standards Update 2009-04 Liabilities (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 accounts for redeemable equity securities in accordance with Accounting Standards Update ("ASU") 2009-04 Liabilities (Topic 480):

Accounting for Redeemable Equity Instruments, which requires that equity securities contingently 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 Consolidated Balance Sheet.

2 unchanged sentences

As of December 31, 2023, the Company had redeemable non-controlling interests of $ 3.9 million.

Investments in Financing Receivables, Net

In accordance with Accounting Standards Codification ("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”.

The Company had two and four medical office buildings that were accounted for as separate sale-lease back transactions and recorded as investments in financing receivables as of December 31, 2022 and 2021, respectively.

Income from Financing Receivables, net

The Company recognizes the related interest income from the financing receivable 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.

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.

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Investments in Leases - Financing Receivables, Net

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 as of December 31, 2023.

(dollars in thousands) ORIGINATION DATE LOCATION INTEREST RATE CARRYING VALUE as of DECEMBER 31, 2023

May 2021 Poway, CA 5.71 % $ 115,239

November 2021 Columbus, OH 6.48 % 7,363

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 December 31, 2022, real estate notes receivable, net, which are included in Other assets on the Company's Consolidated Balance Sheets totaled $ 99.6 million.

As of December 31, 2023, real estate notes receivable, net, which are included in Other assets, net on the Company's Consolidated Balance Sheets totaled $ 173.6 million.

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

DECEMBER 31, 2022

DEC 31, 2023 ALLOWANCE FOR CREDIT LOSSES FAIR VALUE DISCOUNT AND FEES CARRYING VALUE as of DEC 31, 2023

Mezzanine loans

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

North Carolina 12/22/2021 12/22/2024 8 % 6,000 6,000

Arizona 12/21/2023 12/20/2026 9.00 % 6,000 6,000 — — 6,000

60,119 60,119 ( 5,196 ) ( 3,067 ) 51,856

Mortgage loan

Mortgage loans

Texas 6/30/2021 7/01/2024 7.00 % 31,150 31,150 — — 31,150

North Carolina 12/22/2021 12/22/2024 8.00 % 6,000 6,000 — ( 204 ) 5,796

Florida 5/17/2022 2/27/2026 6.00 % 65,000 32,156 — ( 44 ) 32,112

California 3/30/2023 3/29/2026 6.00 % 45,000 45,000 — — 45,000

Florida 12/28/2023 12/28/2026 9.00 % 7,700 7,700 — — 7,700

154,850 122,006 — ( 248 ) 121,758

Accrued interest 758

Fair-value discount and fees ( 5,446 )

$ 214,969 $ 182,125 $ ( 5,196 ) $ ( 3,315 ) $ 173,614

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 ASC 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.

The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors.

The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments.

The Company evaluates the collectability of loan receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral.

A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement.

For those loans identified as having deteriorated credit quality, the amount of credit loss is determined on an individual basis.

Placement on non-accrual status may be required.

Consistent with this definition, all loans on non-accrual status are

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

We utilize a probability of default method approach for estimating current expected credit losses and have determined that the current risk of credit loss is remote.

Accordingly, we have recorded no reserve for credit loss as of December 31, 2022.

deemed to have deteriorated credit quality.

To the extent circumstances improve and the risk of collectability is diminished, the loan may return to income accrual status.

While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance.

As of December 31, 2023, the Company's carrying value of its outstanding loans was $ 173.6 million.

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

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

Credit loss reserves 5,196 —

Allowance for credit losses, end of period $ 5,196 $ —

Interest Income

Income from Lease Finance Receivables

The Company recognized the related income from two financing receivables totaling $ 8.3 million and $ 8.1 million, respectively, for the years ended December 31, 2023 and 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.

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

Income from Real Estate Notes Receivable

For the years ended December 31, 2023 and 2022, the Company recognized interest income of $ 8.8 million and $ 3.4 million, respectively, related to real estate notes receivable.

For 2021, the Company had no 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 January 1, 2023, the Company placed 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 year ended December 31, 2023.

New Accounting Pronouncements

Accounting Standards Update No.

2020-04 and 2022-06

On March 12, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848) .

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR and Term SOFR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 which was issued to defer the sunset date of Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform to December 31, 2024.

ASU 2022-06 is effective immediately for all companies.

ASU 2022-06 will have no impact on the Company’s consolidated financial statements for the year ended December 31, 2022, as the Company no longer has any LIBOR-based debt.

On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting ( Topic 280) .

Some of the main provisions of this update to segment reporting include;

(i) a requirement to disclose significant segment expenses, on an annual and interim basis, that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss;

(ii) a requirement to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (iii) a requirement that an entity that has a single reportable segment provide all the disclosures required by the amendments in this update.

The update is effective for reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

Early adoption is permitted.

At this time, the Company does not expect that the adoption of this ASU will have a material impact on its consolidated financial statements and compliance of these new disclosure requirements will begin with the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Merger with HTA

On July 20, 2022 (the “Closing Date”), pursuant to the Agreement and Plan of Merger dated as of February 28, 2022 (the “Merger Agreement”), by and among Healthcare Realty Trust Incorporated, a Maryland corporation (now known as HRTI, LLC, a Maryland limited liability company) (“Legacy HR”), Healthcare Trust of America, Inc., a Maryland corporation (now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), the OP, and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”).

(now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), the OP, and HR Acquisition 2, LLC (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”).

On the Closing Date, each outstanding share of Legacy HR common stock, $ 0.01 par value per share (the “Legacy HR Common Stock”), was cancelled and converted into the right to receive one share of Legacy HTA class A common stock at a fixed ratio of 1.00 to 1.00.

1 unchanged sentence

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:

(i) the composition of the board of directors of the consolidated Company, (ii) the composition of senior management of the consolidated Company, and (iii) the premium transferred to the Legacy HTA stockholders.

(i) the composition of the board of directors of the combined company following the Merger, (ii) the composition of senior management of the combined company following the Merger, and (iii) the premium transferred to the Legacy HTA stockholders.

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, the liabilities assumed and non-controlling interests, if any, to be recognized at their acquisition date fair value.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

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:

7 unchanged sentences

Consideration transferred $ 5,576,463

(a) Includes 228,520,990 shares of Legacy HTA Common Stock as of July 20, 2022.

The number of shares of 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 paid in cash 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 and units were converted to Legacy HR Common Stock, at an exchange ratio of 1.00 per share of HTA Common Stock.

(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.

(b) For accounting purposes, the fair value of Legacy HR Common Stock issued to former holders of Legacy HTA Common Stock was based on the per share closing price of Legacy HR Common Stock on July 20, 2022.

1 unchanged sentence

NOTES TO THE 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 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 measurement period adjustments recorded during the year ended December 31, 2022 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 $ 74.3 million.

As of December 31, 2022, 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 Consolidated Financial Statements were prepared.

The finalization of the purchase accounting assessment could result in material changes in 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 CONSOLIDATED FINANCIAL STATEMENTS, cont.

A preliminary estimate of approximately $ 219.7 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.

Merger related Costs

In conjunction with the Merger, the Company incurred Merger-related costs of $ 103.4 million during the year ended December 31, 2022, which were included within Merger-related costs in results of operations.

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

Unaudited Pro Forma Financial Information

The Consolidated Statement of Income for the year ended December 31, 2022 includes $ 351.8 million of revenues and $ 79.3 million of net loss associated with the results of operations of Legacy HTA from the Merger closing date to December 31, 2022.

The following unaudited pro forma information presents a summary of our Consolidated Statements of Income for the years ended December 31, 2022 and 2021, as if the Merger had occurred on January 1, 2021.

Adjustments in the pro forma financial information include but are not limited to the following:

(i) additional depreciation and amortization expense related to the acquired tangible and intangible assets,

(ii) additional interest expense on transaction-related borrowings, including assumed debt in connection with the Merger,

(iii) additional rental income related to the assumed above and below-market leases, and straight-line rent and

(iv) Merger-related costs and other one-time, non-recurring costs.

The pro forma financial information excludes adjustments for estimated cost synergies or other effects of the integration of the Merger.

The following pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

Dollars in thousands 2022 2021

Total revenues $ 1,391,096 $ 1,316,743

Net income $ 130,445 $ ( 78,990 )

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Merger-related Costs

The Company incurred Merger-related costs of $( 2.0 ) million and $ 103.4 million, respectively, for the years ended December 31, 2023 and 2022, which were included within Merger-related costs in results of operations.

The Merger-related costs primarily consisted of legal, consulting, severance, and banking services and for the year ended December 31, 2023, including a refund of $ 17.8 million for transfer taxes paid during the year ended December 31, 2022.

Property Investments

4 unchanged sentences

Dallas, TX 43 $ 90,168 $ 1,004,810 $ 68,139 $ 550 $ 1,163,667 $ ( 221,375 )

Houston, TX 31 76,959 614,531 60,651 57 752,198 ( 97,793 )

Seattle, WA 29 64,295 631,438 9,921 715 706,369 ( 186,903 )

Los Angeles, CA 23 98,524 460,780 31,790 453 591,547 ( 129,663 )

Boston, MA 18 128,904 396,002 63,134 — 588,040 ( 13,513 )

Denver, CO 33 76,698 501,994 43,268 610 622,570 ( 94,906 )

Charlotte, NC 32 35,465 463,461 26,971 110 526,007 ( 116,578 )

Houston, TX 34 85,389 633,474 64,045 57 782,965 ( 63,486 )

Miami, FL 23 72,364 400,839 46,355 105 519,663 ( 52,920 )

Phoenix, AZ 35 20,262 437,804 36,384 425 494,875 ( 59,449 )

Atlanta, GA 27 49,095 417,112 28,204 100 494,511 ( 79,569 )

Tampa, FL 20 31,533 377,455 36,838 33 445,859 ( 18,991 )

Denver, CO 33 76,698 497,235 45,854 609 620,396 ( 65,123 )

Boston, MA 17 127,447 299,742 41,183 14 468,386 ( 37,569 )

Raleigh, NC 28 56,620 371,932 36,411 9 464,972 ( 38,879 )

Phoenix, AZ 35 20,262 430,396 37,097 425 488,180 ( 30,281 )

Chicago, IL 7 32,374 266,672 20,608 81 319,735 ( 28,243 )

Indianapolis, IN 36 52,180 265,070 32,739 13 350,002 ( 19,705 )

Hartford, CT 30 43,326 204,049 31,803 — 279,178 ( 8,015 )

Nashville, TN 13 43,347 397,192 10,206 7,427 458,172 ( 115,979 )

New York, NY 14 64,402 167,819 26,430 — 258,651 ( 4,771 )

Los Angeles, CA 20 72,086 360,330 16,481 453 449,350 ( 145,875 )

Miami, FL 19 53,994 326,343 35,014 178 415,529 ( 74,470 )

Tampa, FL 19 31,121 351,879 27,438 33 410,471 ( 36,726 )

Indianapolis, IN 36 54,899 285,806 32,780 13 373,498 ( 42,273 )

Austin, TX 13 27,063 274,229 18,568 142 320,002 ( 55,891 )

Orlando, FL 8 20,708 180,694 21,581 1 222,984 ( 11,654 )

New York, NY 14 64,402 170,304 26,430 — 261,136 ( 15,887 )

Chicago, IL 6 13,804 216,473 13,011 81 243,369 ( 39,671 )

Memphis, TN 11 13,901 189,941 4,211 322 208,375 ( 71,813 )

Honolulu, HI 6 9,527 188,772 6,319 169 204,787 ( 61,575 )

Hartford, CT 30 29,381 138,713 21,848 — 189,942 ( 15,883 )

Other (49 markets) 193 332,731 3,238,567 272,864 1,310 3,845,472 ( 617,789 )

655 1,343,265 10,881,373 836,302 12,718 13,073,658 ( 2,226,853 )

Investment in financing receivables, net — — — — 122,602 —

Financing lease right-of-use assets — — — — — 82,209 —

Construction in progress — — — — — 60,727 —

Land held for development — — — — — 59,871 —

Financing lease right-of-use assets — — — — — 83,824 —

Investment in financing receivables, net — — — — — 120,236 —

Corporate property 1

— 1,853 2,343 684 5,538 10,418 ( 5,288 )

Total real estate investments 655 $ 1,343,265 $ 10,881,373 $ 836,302 $ 12,718 $ 13,399,067 $ ( 2,226,853 )

1 Includes a 15,014 square foot building located in Charleston, South Carolina that is used as one of the Company's corporate offices.

Lessor Accounting Under ASC 842

The Company’s properties generally are 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 the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property.

The Company’s portfolio of single-tenant leases generally requires the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

The Company records these expenses on a net basis, with the exception of property taxes.

Property taxes are recorded on a gross basis as a lessor cost in which the tenant reimburses the Company.

The Company generally expects that collectability is probable at lease commencement.

If the assessment of collectability changes after the lease commencement date and Rental income is not considered probable, Rental income is recognized on a

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

cash basis and all previously recognized uncollectible Rental income is reversed in the period in which it is determined not to be probable of collection.

In addition to the lease-specific collectability assessment performed under Topic 842, the Company may also apply a general reserve ("provision for bad debt"), as a reduction to Rental income, for its portfolio of operating lease receivables.

The Company's leases typically have escalators that are either based on a stated percentage or an index such as CPI (consumer price index).

refusal to purchase the leased property.

The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

The Company's leases typically have escalators that are either based on a stated percentage or an index such as the CPI.

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.

2 unchanged sentences

Variable payments are recognized in the period earned.

Lease income for the Company's operating leases recognized for the year ended December 31, 2022 was $ 907.5 million.

Future minimum lease payments under the non-cancelable operating leases, excluding any reimbursements, as of December 31, 2022 are as follows:

Lease income for the Company's operating leases recognized for the years ended December 31, 2023 and 2022 was $ 1.3 billion and $ 907.5 million, respectively.

Future minimum lease payments under the non-cancelable operating leases, excluding any reimbursements, as of December 31, 2023 were as follows:

2024 $ 894,442

7 unchanged sentences

The Company expects that the purchase price from its purchase options will be greater than its net investment in the properties at the time of potential exercise by the lessee.

The Company had investments of approximately $ 100.4 million in five real estate properties as of December 31, 2022 that were subject to purchase options that were exercisable.

The Company had investments of approximately $ 111.1 million in six real estate properties as of December 31, 2023 that were subject to purchase options that were exercisable.

Lessee Accounting Under ASC 842

As of December 31, 2022, the Company was obligated, as the lessee, under operating and finance lease agreements consisting primarily of the Company’s ground leases.

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

Contracts evaluated and treated as leases are those that convey the right to control the use of identified assets for a period of time in exchange for consideration.

1 unchanged sentence

As of December 31, 2023, the Company had 232 properties totaling 16.9 million square feet that were held under ground leases.

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

These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119.

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

Some of the ground leases include fixed rent renewal terms and others have market rent renewal terms.

The ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119.

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

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

The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 1.1 million for the year ended December 31, 2022 and $ 0.6 million for the years ended December 31, 2021 and 2020.

The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 1.3 million, $ 1.1 million and $ 0.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

10 unchanged sentences

Lease liabilities $ 229,714 $ 74,503

The following table provides details of the Company's total lease expense for the year ended December 31, 2022:

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

In thousands YEAR ENDED

19 unchanged sentences

Acquisitions, Dispositions and Mortgage Repayments

2023 Acquisition Activity

The following table details the Company's real estate acquisition activity for the year ended December 31, 2023:

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

CONSIDERATION 1

ESTATE OTHER 2

SQUARE FOOTAGE

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

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

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.

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

The following table summarizes the estimated relative fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2023 as of the acquisition date:

in millions ESTIMATED

Building $ 27.5 17.0 - 30.0

Tenant Improvements 3.4 5.1 - 5.9

Land Improvements 1.1 6.0 - 10.0

At-market lease intangibles 4.5 5.1 - 5.9

Above-market lease intangibles (lessor) 0.2 1.8 - 4.9

Below-market lease intangibles (lessor) ( 0.2 ) 6.4 - 13.9

Mortgage notes payable assumed, including fair value adjustments ( 5.3 )

Other assets acquired 0.1

Accounts payable, accrued liabilities and other liabilities assumed ( 0.3 )

Total cash paid $ 36.5

Unconsolidated Joint Ventures

As of December 31, 2023, the Company had a weighted average ownership interest of approximately 43 % in 33 real estate properties held in unconsolidated joint ventures.

The Company recognizes distributions from unconsolidated joint ventures utilizing the nature of distribution approach and classifies the distributions based on the nature of the underlying activity that generated the distribution.

The distributions from unconsolidated joint ventures for the years ended December 31, 2023 and 2022 were classified as operating activities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

Dollars in millions 2023 2022

Investments in unconsolidated joint ventures, beginning of period $ 327.2 $ 161.9

New investments during the period 3.8 167.9

Equity loss recognized during the period ( 1.7 ) ( 0.7 )

Owner distributions ( 17.8 ) ( 1.9 )

Investments in unconsolidated joint ventures, end of period $ 311.5 $ 327.2

2022 Acquisitions

33 unchanged sentences

$ 403,578 $ 399,189 $ 386,818 $ 12,371 863,184

1 MOB = medical office building.

1 MOB = medical outpatient building.

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

8 unchanged sentences

Building $ 250.7 14.0 - 38.0

Tenant Improvements 20.7 1.5 - 13.4

Land Improvements 11.2 5.0 - 14.0

7 unchanged sentences

Unconsolidated Joint Ventures

As of December 31, 2022, the Company had a weighted average ownership interest of approximately 48 % in 33 real estate properties held in joint ventures.

2022 Acquisitions

The following table details the joint venture acquisitions for the year ended December 31, 2022:

9 unchanged sentences

$ 100,975 $ 99,173 $ 97,569 $ 1,604 214,124

1 MOB = medical office building.

1 MOB = medical outpatient building.

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

2 unchanged sentences

5 Includes two properties.

The Company's investment in and loss recognized for the years ended December 31, 2022 and 2021 related to its joint ventures accounted for under the equity method are shown in the table below:

Dollars in millions 2022 2021

Investments in unconsolidated joint ventures, beginning of period $ 161.9 $ 73.1

New investments during the period 1

Equity loss recognized during the period ( 0.7 ) ( 0.8 )

Owner distributions ( 1.9 ) —

Investments in unconsolidated joint ventures, end of period $ 327.2 $ 161.9

1 For the year ended December 31, 2022, this included unconsolidated joint ventures acquired as part of the Merger, as well as investments in two joint ventures representing a 20 % and 40 % ownership interest in portfolios in Los Angeles, California and Dallas, Texas, respectively.

Also, see 2022 Real Estate Asset Dispositions below for additional information.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

2021 Acquisitions

The following table details the Company's acquisitions for the year ended December 31, 2021:

2023 Real Estate Asset Dispositions

The following table details the Company's dispositions for the year ended December 31, 2023:

Dollars in thousands Type 1

DATE ACQUIRED PURCHASE PRICE 2

MORTGAGES ASSUMED 3

CONSIDERATION 4

SQUARE FOOTAGE

San Diego, CA 6

MOB 1/7/21 $ 17,150 $ — $ 17,182 $ 17,182 $ — 22,461

MOB 2/1/21 22,515 — 22,299 22,641 ( 342 ) 121,709

Atlanta, GA 8

MOB 2/17/21 9,800 — 10,027 10,073 ( 46 ) 44,567

Washington, D.C.

MOB 3/3/21 12,750 — 12,709 12,658 51 26,496

Houston, TX MOB 5/14/21 13,500 — 12,986 13,379 ( 393 ) 45,393

San Diego, CA 6,7

MOB 5/28/21 102,650 — 103,984 104,629 ( 645 ) 160,394

Greensboro, NC MOB 6/28/21 9,390 — 9,475 10,047 ( 572 ) 25,168

Baltimore, MD MOB 6/29/21 14,600 — 14,357 14,437 ( 80 ) 33,316

MOB 7/16/21 70,426 — 69,151 65,100 4,051 259,555

Greensboro, NC 6

MOB 7/19/21 6,400 — 6,374 6,514 ( 140 ) 18,119

Colorado Springs, CO MOB 7/27/21 33,400 — 32,738 33,241 ( 503 ) 69,526

Birmingham, AL MOB 8/19/21 9,250 — 9,355 9,388 ( 33 ) 29,942

Raleigh, NC MOB 9/20/21 5,780 — 5,821 5,810 11 18,280

Denver, CO MOB 9/22/21 20,250 — 19,630 19,405 225 83,604

Raleigh, NC MOB 9/30/21 10,000 — 9,921 9,874 47 29,178

Denver, CO MOB 11/15/21 7,700 — 7,383 7,431 ( 48 ) 18,599

Denver, CO MOB 11/18/21 22,400 — 22,343 22,422 ( 79 ) 30,185

Columbus, OH 10

DATE DISPOSED SALE PRICE CLOSING ADJ COMPANY-FINANCED NOTES NET PROCEEDS NET REAL ESTATE OTHER (INCLUDING RECEIVABLES) 2

GAIN/(IMPAIR-MENT) SQUARE FOOTAGE

Tampa/Miami, FL 3

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

Nashville, TN MOB 12/2/21 11,300 — 11,245 11,263 ( 18 ) 34,908

Colorado Springs, CO MOB 12/20/21 10,575 — 10,541 11,009 ( 468 ) 44,166

Columbus, OH 8

MOB 1/30/23 19,210 ( 141 ) — 19,069 18,986 43 40 36,691

Louis, MO MOB 2/10/23 350 ( 18 ) — 332 398 — ( 66 ) 6,500

Los Angeles, CA MOB 3/23/23 21,000 ( 526 ) — 20,474 20,610 52 ( 188 ) 37,165

Nashville, TN 11

Los Angeles, CA 5

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

Austin, TX MOB 12/29/21 20,500 — 20,696 20,741 ( 45 ) 62,548

Los Angeles, CA 6

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

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

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

Atlanta, GA MOB 8/22/23 25,140 ( 66 ) — 25,074 23,226 ( 536 ) 2,386 55,195

Nashville, TN 12

MOB 12/30/21 54,000 — 53,923 54,072 ( 149 ) 74,489

Nashville, TN 12

MOB 12/30/21 20,500 — 19,833 19,825 8 32,454

$ 575,811 $ ( 11,000 ) $ 561,465 $ 562,824 $ 9,641 1,540,141

1 MOB = medical office building.

2 Includes investments in financing receivables and an $ 8.9 million right-of-use asset related to the Columbus, Ohio transaction.

3 The mortgages assumed in the acquisitions do not reflect the fair value adjustments totaling $ 0.8 million in aggregate recorded by the Company upon acquisition (included in Other).

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

5 Includes other assets acquired, liabilities assumed, intangibles, and fair value mortgage adjustments recognized at acquisition.

6 Represents a single-tenant property.

7 The Company acquired a single-tenant net lease property in San Diego, CA in a sale-leaseback transaction which was accounted for as a financing arrangement as required under ASC 842, Leases.

8 Includes two properties.

9 Includes three properties.

10 This sale-leaseback transaction was a multi-tenant lease property.

A portion of the transaction totaling $ 7.4 million was accounted for as a financing receivable and the remaining $ 8.9 million was accounted for as an imputed lease arrangement.

See Note 1 to the Consolidated Financial Statements accompanying this report for more information.

11 Includes purchase of an adjoining 2.7 acre land parcel that will be held for development.

12 This sale-leaseback transaction was a multi-tenant lease property which was accounted for as a financing arrangement as required under ASC 842, Leases.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The following table summarizes the estimated relative fair values of the assets acquired and liabilities assumed in the real estate acquisitions for 2021 as of the acquisition date:

in millions ESTIMATED

Building $ 275.1 18.0 - 44.0

Investment in financing receivables, net 185.9 0.5 - 34.0

Financing lease right of use assets 1

8.9 15.0 - 34.0

Land Improvements 8.9 6.0 - 16.0

At-market lease intangibles 58.8 2.6 - 16.6

Above-market lease intangibles (lessor) 3.4 1.9 - 8.1

Below-market lease intangibles (lessor) ( 1.4 ) 3.1 - 21.8

Above-market lease intangibles (lessee) ( 0.3 ) 36.7 - 64.5

Below-market lease intangibles (lessee) 4.7 45.4

Mortgage notes payable assumed, including fair value adjustments ( 11.8 )

Other assets acquired 0.8

Accounts payable, accrued liabilities and other liabilities assumed ( 5.6 )

Total cash paid $ 561.5

1 The Company acquired a building in Columbus, Ohio in a sale lease back transaction totaling $ 16.3 million, in which $ 8.9 million was recorded as an imputed lease arrangement and the remaining $ 7.4 million was recorded as an investment in financing receivables.

Unconsolidated Joint Ventures

The following table details the joint venture acquisitions for the year ended December 31, 2021:

Dollars in thousands TYPE 1

DATE ACQUIRED PURCHASE PRICE CASH

CONSIDERATION 2

ESTATE OTHER 3

SQUARE FOOTAGE

Denver, CO MOB 3/30/21 $ 14,375 $ 14,056 $ 14,550 $ ( 494 ) 59,359

Colorado Springs, CO MOB 4/1/21 7,200 7,288 7,347 ( 59 ) 27,510

Los Angeles, CA MOB 4/8/21 31,335 30,179 30,642 ( 463 ) 57,573

San Antonio, TX MOB 4/30/21 13,600 13,412 13,656 ( 244 ) 45,000

Los Angeles, CA MOB 5/10/21 24,600 24,259 24,147 112 73,078

Colorado Springs, CO 4

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

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

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

Evansville, IN 7

MOB 11/13/23 18,500 ( 63 ) — 18,437 17,807 ( 149 ) 779 260,520

Denver, CO MOB 10/21/21 23,000 22,638 23,021 ( 383 ) 57,257

San Antonio, TX 5

Houston, TX HOSPITAL 12/1/23 4,100 ( 6 ) — 4,094 3,486 — 608 83,223

Charleston, SC 8

OFFICE 12/15/23 6,200 ( 401 ) — 5,799 3,415 — 2,384 15,014

Dallas, TX MOB 12/20/23 43,295 ( 764 ) — 42,531 33,882 ( 3,782 ) 12,431 77,827

Los Angeles, CA OFFICE 12/21/23 19,000 ( 1,311 ) — 17,689 17,787 — ( 98 ) 104,377

Tucson, AZ 9,10

MOB 12/22/23 43,230 ( 3,770 ) ( 6,000 ) 33,460 39,786 ( 26 ) ( 300 ) 215,471

San Antonio, TX MOB 12/29/21 6,094 6,218 6,308 ( 90 ) 22,381

San Antonio, TX MOB 12/29/21 8,850 8,915 8,866 49 30,542

$ 180,487 $ 177,994 $ 179,862 $ ( 1,868 ) 514,253

1 MOB = medical office building.

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

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

4 Includes purchase of an adjoining 3.0 acre land parcel.

5 Includes three properties.

Miami, FL MOB 12/22/23 18,250 ( 756 ) — 17,494 17,354 643 ( 503 ) 48,000

Sebring, FL MOB 12/27/23 9,500 ( 81 ) — 9,419 10,438 ( 512 ) ( 507 ) 38,949

Boston, MA MOB 12/28/23 117,197 ( 2,079 ) — 115,118 107,803 9,828 ( 2,513 ) 161,254

Jacksonville/Orlando/Miami, FL 11

SNF 12/29/23 77,000 ( 8,678 ) ( 7,700 ) 60,622 65,839 ( 294 ) 2,777 354,500

Total dispositions $ 787,042 $ ( 36,860 ) $ ( 58,700 ) $ 691,482 $ 708,082 $ 8,444 $ 33,658 2,282,057

MOB = medical outpatient building;

SNF = skilled nursing facility.

Includes straight-line rent receivables, leasing commissions and lease inducements.

Includes two properties sold in two separate transactions to the same buyer on the same date.

The Company sold this property to a joint venture in which it retained a 40 % interest.

Sales price and square footage reflect the total sales price paid by the joint venture and total square footage of the property.

The Company entered into a mortgage loan agreement with the buyer for $ 45.0 million.

The Company sold a land parcel totaling 0.34 acres.

Includes five properties sold in three separate transactions to the same buyer on the same date.

The Company sold a corporate office in Charleston, SC that was 100 % occupied by the Company.

Includes 12 properties sold in one transaction to the same buyer.

The Company entered into a mezzanine loan with the buyer for $ 6.0 million.

Includes three properties sold in one transaction to the same buyer.

The Company entered into a separate note receivable for $ 7.7 million related to this sale.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

27 unchanged sentences

$ 1,242,218 $ ( 45,666 ) $ 1,196,552 $ 939,363 $ 14,225 $ 242,964 3,069,124

1 MOB = medical office building

1 MOB = medical outpatient building

2 Includes straight-line rent receivables, leasing commissions and lease inducements.

11 unchanged sentences

12 Two of the five properties included in this portfolio were acquired in the Merger and were included as assets held for sale in the purchase price allocation.

Subsequent Dispositions

On January 13, 2023, the Company disposed of two medical office buildings, one in Tampa, Florida and one in Miami, Florida, with a combined total of 224,037 square feet for an aggregate purchase price of $ 93.3 million.

On January 30, 2023, the Company disposed of a 36,691 square foot medical office building in Dallas, Texas, for a purchase price of $ 19.2 million.

The Company retained a 40 % ownership interest in the joint venture that purchased this property.

On February 10, 2023, the Company disposed of a 6,500 square foot medical office building in St.

Louis, Missouri for a purchase price of $ 0.4 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

2021 Real Estate Asset Dispositions

The following table details the Company's dispositions for the year ended December 31, 2021:

Dollars in thousands TYPE 1

DATE DISPOSED SALES PRICE CLOSING ADJUSTMENTS NET PROCEEDS NET REAL ESTATE INVESTMENT OTHER

receivables 2

(IMPAIRMENT) SQUARE FOOTAGE

Los Angeles, CA 3

MOB 3/11/21 $ 26,000 $ ( 555 ) $ 25,445 $ 6,046 $ 509 $ 18,890 73,906

Atlanta, GA MOB 4/12/21 8,050 ( 272 ) 7,778 5,675 151 1,952 19,732

Richmond, VA MOB 5/18/21 52,000 ( 314 ) 51,686 29,414 3,270 19,002 142,856

Gadsden, AL 4

MOB 5/19/21 5,500 ( 280 ) 5,220 5,914 175 ( 869 ) 120,192

MOB 7/9/21 23,000 ( 1,117 ) 21,883 18,733 1,966 1,184 190,160

Chicago, IL MOB 10/28/21 13,300 ( 388 ) 12,912 23,213 706 ( 11,007 ) 95,436

Des Moines, IA 6

MOB 12/8/21 47,000 ( 901 ) 46,099 32,312 1,037 12,750 132,617

Aberdeen, SD MOB 12/22/21 12,750 ( 299 ) 12,451 10,337 — 2,114 58,285

Dallas, TX MOB 12/23/21 800 ( 103 ) 697 712 167 ( 182 ) 13,818

$ 188,400 $ ( 4,229 ) $ 184,171 $ 132,356 $ 7,981 $ 43,834 847,002

1 MOB = medical office building

2 Includes straight-line rent receivables, leasing commissions and lease inducements.

3 Includes two properties sold to a single purchaser in two transactions which closed on March 5 and March 11, 2021.

4 Includes three properties.

5 Includes four properties and a land parcel sold under a single purchase agreement.

6 Includes three properties and two land parcels under a single purchase agreement.

Held for Sale

Assets and liabilities of properties sold or classified as held for sale are separately identified on the Company’s Consolidated Balance Sheets.

As of December 31, 2022 the Company had one property classified as held for sale, and as of December 31, 2021 the Company had no real estate properties classified as held for sale.

The Company had one property classified as assets held for sale as of December 31, 2023.

The net real estate assets held for sale includes the impact of $ 5.9 million of impairment charges for the year ended December 31, 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

13 unchanged sentences

An asset is impaired when undiscounted cash flows expected to be generated by the asset are less than the carrying value of the asset.

The Company must assess the potential for impairment of its long-lived assets, including real estate properties, whenever events occur or there is a change in circumstances, such as the sale of a property or the decision to sell a property, that indicate that the recorded value might not be fully recoverable.

The Company recorded impairment charges on 12 properties sold and three additional properties associated with completed or planned disposition activity for the year ended December 31, 2022 totaling $ 54.4 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

recorded impairment charges on five properties sold and one property being redeveloped for a total of $ 17.1 million in 2021.

The Company must assess the potential for impairment of its long-lived assets, including real estate properties, whenever events occur or there is a change in circumstances, such as the sale of a property or the decision to sell a property, which indicate that the recorded value might not be fully recoverable.

The Company recorded impairment charges on 31 properties sold and six additional properties associated with planned disposition activity for the year ended December 31, 2023, totaling $ 149.7 million.

The Company recorded impairment charges on 12 properties sold and three additional properties associated with planned disposition activity for the year ended December 31, 2022, totaling $ 54.4 million.

Both level 1 and level 3 fair value techniques were used to derive these impairment charges.

Other Assets and Liabilities

As of December 31, 2023, six properties totaling $ 53.6 million were measured at fair value using level 3 fair value hierarchy.

The level 3 fair value techniques included nonbinding letters of intent and unexecuted purchase and sale agreements, less estimated closing costs.

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.

9 unchanged sentences

Interest rate swap assets 4,634 14,512

Other receivables, net 7,169 —

Investment in securities 2

5 unchanged sentences

$ 592,368 $ 469,990

1 This amount is net of allowance for doubtful accounts of $ 4.0 million

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

Accounts Payable and Accrued Liabilities

The following table provides details of the items included in "Accounts payable and accrued liabilities" on the Company's Consolidated Balance Sheets as of December 31, 2022 and 2021:

Dollars in thousands December 31, 2022 December 31, 2021

Accrued property taxes $ 78,185 $ 35,295

Accounts payable and capital expenditures 57,352 17,036

Accrued interest 50,037 12,060

Other operating accruals 58,459 21,717

$ 244,033 $ 86,108

Other Liabilities

The following table provides details of the items included in "Other liabilities" on the Company's Consolidated Balance Sheets as of December 31, 2022 and 2021:

Dollars in thousands December 31, 2022 December 31, 2021

Below-market intangible liabilities, net $ 97,935 $ 4,931

Deferred revenue 87,325 45,130

Security deposits 28,521 11,116

Interest rate swap liability 4,269 5,917

Other 618 293

$ 218,668 $ 67,387

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

1 The amounts for December 31, 2023 and 2022 are net of allowance for doubtful accounts of $ 8.4 million and $ 4.0 million, respectively.

The amount for December 31, 2022 includes $ 7,169 of other receivables, net.

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

Intangible Assets and Liabilities

The Company has several types of intangible assets and liabilities included in its Consolidated Balance Sheets, including goodwill, debt issuance costs, above-, below-, and at-market lease intangibles, and customer relationship intangibles.

For additional detail on the Company's debt issuance costs, see Note 10 to the Consolidated Financial Statements.

The Company’s intangible assets and liabilities, including assets held for sale and excluding certain debt issuance costs, as of December 31, 2022 and 2021 consisted of the following:

For additional details on the Company's debt issuance costs, see Note 10 to the Consolidated Financial Statements.

The Company’s intangible assets and liabilities, including assets held for sale and certain debt issuance costs, as of December 31, 2023 and 2022 consisted of the following:

GROSS BALANCE

19 unchanged sentences

Dollars in thousands 2023 2022

$ 700 M Unsecured Credit Facility

$ — $ 210,000 5/23 LIBOR + 0.90 %

N/A At maturity Monthly

$ 1.5 B Unsecured Credit Facility

45 unchanged sentences

As of December 31, 2023, the Company was in compliance with its financial covenant provisions under its various debt instruments.

Exchange Offer

In connection with the Merger, the OP offered to exchange all validly tendered and accepted notes of each series previously issued by Legacy HR (the “Old HR Notes”) for (i) up to $ 250,000,000 of 3.875 % Senior Notes due 2025 (the “2025 Notes”), (ii) up to $ 300,000,000 of 3.625 % Senior Notes due 2028 (the “2028 Notes”), (iii) up to $ 300,000,000 of 2.400 % Senior Notes due 2030 (the “2030 Notes”) and (iv) up to $ 300,000,000 of 2.050 % Senior Notes due 2031 to be issued by the OP (the “2031 Notes” and, collectively, the “New HR Notes”) and solicited consents from holders of the Old HR Notes to amend the indenture governing the Old HR Notes to eliminate substantially all of the restrictive covenants in such indenture (the “Exchange Offers”).

Legacy HTA guaranteed the New HR Notes pursuant to (i) a guarantee of the 2025 Notes, (ii) a guarantee of the 2028 Notes, (iii) a guarantee of the 2030 Notes, and (iv) a guarantee of the 2031 Notes, each dated July 22, 2022.

Legacy HTA and the OP filed a registration statement on Form S-4 (File No.

333-265593) relating to the issuance of the New HR Notes with the Securities and Exchange Commission (the “SEC”) on June 14, 2022, which was declared effective by the SEC on June 28, 2022.

The following sets forth the results of the Exchange Offers:

Series of Old HR Notes Tenders and Consents Received as of the Expiration Date Percentage of Total Outstanding Principal Amount of Such Series of Old HR Notes

3.875 % Senior Notes due 2025

$ 235,016,000 94.01 %

3.625 % Senior Notes due 2028

$ 290,246,000 96.75 %

2.400 % Senior Notes due 2030

$ 297,507,000 99.17 %

2.050 % Senior Notes due 2031

$ 298,858,000 99.62 %

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Senior Notes Assumed with the Merger

In connection with the Merger, the Company assumed senior notes ("Legacy Senior Notes") that were originated on various dates prior to the date of the Merger by the OP (formerly, Healthcare Trust of America Holdings, LP).

These notes are all fully and unconditionally guaranteed by the Company and have semi-annual payment requirements.

In addition, the Legacy Senior Notes carry customary restrictive financial covenants, including limitations on our ability to incur additional indebtedness and requirements to maintain a pool of unencumbered assets.

In addition, the corresponding indentures provide for the ability to redeem the Legacy Senior Notes, subject to certain "make whole" call provisions.

The Legacy Senior Notes assumed by the Company consist of the following:

COUPON PRINCIPAL OUTSTANDING AS OF

Dollars in thousands FACE VALUE 12/31/2022 12/31/2021

Senior Notes due 2026 3.50 % $ 600,000 $ 600,000 $ —

Senior Notes due 2027 3.75 % 500,000 500,000 —

Senior Notes due 2030 3.10 % 650,000 650,000 —

Senior Notes due 2031 2.00 % 800,000 800,000 —

$ 2,550,000 $ 2,550,000 $ —

The following table reconciles the Company’s aggregate Senior notes principal balance with the Company’s Consolidated Balance Sheets as of December 31, 2023 and 2022.

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Senior notes carrying amount $ 3,427,233 $ 3,387,134

Credit Facilities

The Unsecured Credit Facility restructured the parties’ existing bank facilities and added additional borrowing capacities for the Company following the Merger.

The OP is the borrower under the Unsecured Credit Facility (in such capacity, the “Borrower”).

• Legacy HR’s existing $ 700.0 million revolving credit facility under the Amended and Restated Credit Agreement, dated as of May 31, 2019 (as amended, restated, replaced, supplemented, or otherwise modified from time to time prior to July 20, 2022, the “Existing HR Revolving Credit Agreement”), by and among Legacy HR, the lenders party thereto from time to time and their assignees, as lenders, and Wells Fargo Bank, National Association, as the administrative agent (the “WF Administrative Agent”), was terminated, all outstanding obligations in respect thereof were deemed paid in full and all commitments thereunder were permanently reduced to zero and terminated.

• Legacy HR’s existing $ 200.0 million term loan facility and existing $ 150.0 million term loan facility under the Amended and Restated Term Loan Agreement, dated as of May 31, 2019 (as amended, restated, replaced, supplemented, or otherwise modified from time to time prior to July 20, 2022, the “Existing HR Term Loan Agreement”), by and among Legacy HR, the lenders party thereto from time to time and their assignees, as lenders, and the WF Administrative Agent, in each, case, were deemed continued and assumed by the Borrower under the Credit Facility, and the Existing HR Term Loan Agreement was terminated.

◦ The existing $ 200.0 million term loan facility was amended to:

(a) conform to the terms of the Borrower’s other term loan facilities under the Credit Facility;

(b) include two one-year extension options, resulting in a latest final maturity in May 2026;

and (c) reprice to align with the pricing for the Borrower’s other term loan facilities under the Credit Facility;

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

◦ The existing $ 150.0 million term loan facility was amended to conform to the terms of the Borrower’s other term loan facilities under the Credit Facility, and the existing maturity in June 2026 remains unchanged under the Credit Facility.

• Legacy HTA’s and the OP’s existing $ 1.0 billion revolving credit facility was upsized to $ 1.5 billion (the “Revolver”) pursuant to the Credit Facility.

The Revolver currently matures in October 2025, and the Credit Facility adds an additional one-year extension option for the Revolver, for a total of two one-year extension options.

• Legacy HTA’s and the OP’s existing $ 300.0 million term loan facility was deemed continued pursuant to the Credit Facility and was amended to conform to the terms of the Borrower’s other term loan facilities under the Credit Facility.

The existing maturity in October 2025 remains unchanged under the Credit Facility.

• Legacy HTA’s and the OP’s existing $ 200.0 million term loan facility was deemed continued pursuant to the Credit Facility and was amended to (a) conform to the terms of the Borrower’s other term loan facilities under the Credit Facility;

(b) extend the maturity from January 2024 to July 20, 2027;

and (c) reprice to align with the pricing for the Borrower’s other term loan facilities under the Credit Facility.

• The Credit Facility provides for a new $ 350.0 million delayed-draw term loan facility that is available to be drawn for 12 months after July 20, 2022 and has an initial maturity date of July 20, 2023, with two one-year extension options.

As of December 31, 2022, the $ 350.0 million Credit Facility was drawn in full.

The terms of any delayed draw term loans funded thereunder conform to the terms of the Borrower’s other term loan facilities under the Credit Facility, and the pricing for such delayed draw term loans aligns with the pricing for the Borrower’s other term loan facilities under the Credit Facility.

• The Credit Facility provides for a new $ 300.0 million term loan facility that was funded on July 20, 2022 and has a maturity date of January 20, 2028, with no extension options.

The terms of such term loan facility conform to the terms of the Borrower’s other term loan facilities under the Credit Facility, and the pricing for such term loan facility aligns with the pricing for the Borrower’s other term loan facilities under the Credit Facility.

The following table reconciles the Company’s aggregate term loan principal balance with the Company’s Consolidated Balance Sheets as of December 31, 2023 and 2022.

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Term Loans carrying amount $ 1,497,092 $ 1,495,446

$ 1.125 billion Asset Sale Term Loan

The Company completed its draw of the $ 1.125 billion asset sale term loan on July 19, 2022.

The principal balance was fully repaid on December 30, 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Mortgage Notes Payable

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Mortgage notes payable carrying amount $ 70,534 $ 84,247

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Mortgage Activity

On February 18, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 4.70 % that encumbered a 56,762 square foot property in California.

The aggregate payoff price of $ 12.6 million consisted of outstanding principal of $ 11.0 million and a "make-whole" amount of approximately $ 1.6 million.

The unamortized premium of $ 0.8 million and the unamortized cost on this note of $ 0.1 million were written off upon payoff.

On February 24, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 6.17 % that encumbered a 80,153 square foot property in Colorado, in conjunction with the disposition of the property.

The aggregate payoff price of $ 6.4 million consisted of outstanding principal of $ 5.8 million and a "make-whole" amount of approximately $ 0.6 million.

The unamortized premium of $ 0.1 million was written off upon payoff.

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 Marietta, Georgia.

On December 1, 2023, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.51 % per annum with an outstanding principal of $ 6.6 million.

The mortgage note encumbered a 93,992 square foot property in Lakewood, Colorado.

Subsequent Changes in Debt Structure

On January 6, 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.77 % per annum with an outstanding principal of $ 11.3 million.

The mortgage note encumbered a 63,012 square foot property in California .

On February 1, 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.12 % per annum with an outstanding principal of $ 5.6 million.

T he mortgage note encumbered a 40,324 squ are foot property in Georgia .

The following table details the Company’s mortgage notes payable, with related collateral.

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Dollars in millions 2023 2023 2022

Commercial Bank 1

15.0 5.25 % 4/27 MOB Monthly/ 20 -yr amort.

Life Insurance Co.

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Life Insurance Co.

12.3 3.86 % 8/23 MOB Monthly/ 7 -yr amort.

25.9 10.0 10.3

Life Insurance Co.

9.0 4.84 % 12/23 MOB,OFC Monthly/ 10 -yr amort.

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6.0 6.88 % 4/26 MOB Monthly/ 7 -yr amort.

Life Insurance Co.

19.2 4.08 % 12/26 MOB Monthly/ 10 -yr amort.

45.7 17.5 17.9

$ 202.1 $ 70.5 $ 84.2

1 The Company repaid this loan at the time of disposal in February 2022.

2 The Company repaid this loan in February 2022.

1 The Company repaid this loan in August 2023.

The Company's unencumbered gross investment was $ 26.0 million at December 31, 2023.

3 The unaccreted portion of the $ 0.2 million discount recorded on this note upon acquisition is included in the balance above.

4 The unamortized portion of the $ 0.1 million premium recorded on this note upon acquisition is included in the balance above.

2 The Company repaid this loan in December 2023.

The Company's unencumbered gross investment was $ 24.5 million at December 31, 2023.

3 The unamortized portion of the $ 0.8 million premium recorded on this note upon acquisition is included in the balance above.

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6 The unamortized portion of the $ 0.7 million premium recorded on this note upon acquisition is included in the balance above.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

7 The unaccreted portion of the $ 0.3 million discount recorded on this note upon acquisition is included in the balance above.

8 Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).

10 The contractual interest rates for the eight outstanding mortgage notes ranged from 3.3 % to 4.8 % as of December 31, 2022.

9 The contractual interest rates for the seven outstanding mortgage notes ranged from 3.6 % to 4.8 % as of December 31, 2023.

10 MOB-Medical office building;

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$ 5,270,037 $ ( 265,803 ) $ ( 9,375 ) $ 4,994,859 100.0 %

1 Includes discount accretion and premium amortization related to the Company’s Senior Notes and six mortgage notes payable.

2 Excludes approximately $ 6.0 million in debt issuance costs related to the Company's Unsecured Credit Facility included in other assets, net.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

1 Includes discount accretion and premium amortization related to the Company’s Senior Notes and four mortgage notes payable.

2 Excludes approximate ly $ 3.9 million in debt issuance costs related to the Company's Unsecured Credit Facility included in other assets, net.

Derivative Financial Instruments

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Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

During 2020, the Company entered into two treasury rate locks totaling $ 75.0 million and $ 40.0 million, respectively.

The treasury rate locks were settled for an aggregate amount of $ 4.3 million concurrent with the Company's issuance of its Senior Notes due 2030.

The settlement will be amortized over the 10 -year term of the notes.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

On February 16, 2023, the Company entered into a swap transaction with a notional amount of $ 50.0 million and a fixed rate of 4.16 %.

The swap agreement has an effective date of March 1, 2023 and a termination date of June 1, 2026.

On March 28, 2023, the Company entered into a swap transaction with a notional amount of $ 100.0 million and a fixed rate of 3.67 %.

The swap agreement has an effective date of April 3, 2023 and a termination date of June 1, 2026.

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.

On November 9, 2023, the Company entered into a swap transaction totaling $ 75.0 million with a fixed rate of 4.54 %.

The swap agreement has an effective date of December 1, 2023 and a termination date of May 31, 2026.

As of December 31, 2023, the Company had interest rate derivatives that were designated as cash flow hedges of interest rate risk.

The table below presents the notional value and weighted average rates of the Company's derivative financial instruments as of December 31, 2023 and 2022:

NOTIONAL VALUE AS OF WEIGHTED AVERAGE RATE

EXPIRATION DATE DECEMBER 31, 2022

January 31, 2023 $ 300,000 1.42 %

January 15, 2024 200,000 1.21 %

May 1, 2026 100,000 2.15 %

December 1, 2026 150,000 3.84 %

June 1, 2027 150,000 4.13 %

December 1, 2027 250,000 3.79 %

NOTIONAL VALUE AS OF WEIGHTED AVERAGE RATE NOTIONAL VALUE AS OF WEIGHTED AVERAGE RATE

EXPIRATION DECEMBER 31, 2023 EXPIRATION DECEMBER 31, 2022

January 2024 $ 200,000 1.21 % January 2023 $ 300,000 1.42 %

May 2026 275,000 3.74 % January 2024 200,000 1.21 %

June 2026 150,000 3.83 % May 2026 100,000 2.15 %

December 2026 150,000 3.84 % December 2026 150,000 3.84 %

June 2027 200,000 4.27 % June 2027 150,000 4.13 %

December 2027 300,000 3.93 % December 2027 250,000 3.79 %

$ 1,275,000 3.49 % $ 1,150,000 2.63 %

On February 16, 2023, the Company entered into a swap transaction with a notional amount of $ 50.0 million and a fixed rate of 4.16 %.

The swap agreement has an effective date of March 1, 2023 and a termination date of June 1, 2026.

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

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VALUE BALANCE SHEET LOCATION FAIR

Derivatives designated as hedging instruments

Interest rate swaps 2017 Other liabilities $ ( 420 )

Interest rate swaps 2018 Other liabilities ( 976 )

Interest rate swaps 2019 Other Assets $ 13,603 Other liabilities ( 4,521 )

Interest rate swaps 2019 Other Assets $ 4,214 Other Assets $ 13,603

Interest rate swaps 2022 Other Assets 909

Interest rate swaps 2022 Other Liabilities ( 5,067 ) Other Liabilities ( 4,269 )

Interest rate swaps 2023 Other Assets 411

Interest rate swaps 2023 Other Liabilities ( 7,357 )

Total derivatives designated as hedging instruments $ ( 7,799 ) $ 10,243

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Tabular Disclosure of the Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive

Income (Loss)

The table below presents the effect of cash flow hedge accounting on Accumulated other comprehensive income (loss) as of December 31, 2022 related to the Company's outstanding interest rate swaps.

AMOUNT OF GAIN/(LOSS) RECOGNIZED IN OCI

on derivatives AMOUNT OF (GAIN)/LOSS RECLASSIFIED

FROM OCI INTO INCOME

The table below presents the effect of cash flow hedge accounting on Accumulated other comprehensive income (loss) as of December 31, 2023 and 2022 related to the Company's outstanding interest rate swaps.

AMOUNT OF GAIN/(LOSS) RECOGNIZED

IN AOCI ON DERIVATIVE

for the year ended December 31, AMOUNT OF (GAIN)/LOSS RECLASSIFIED

FROM AOCI INTO INCOME

for the year ended December 31,

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Interest rate swaps 2022 4,583 ( 3,252 ) Interest expense ( 6,289 ) ( 109 )

Interest rate swaps 2023 ( 5,115 ) — Interest expense ( 1,829 ) —

Settled treasury hedges — — Interest expense 426 426

3 unchanged sentences

Tabular Disclosure Offsetting Derivatives

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of December 31, 2023.

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

If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $ 2.1 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

Stockholders’ Equity

4 unchanged sentences

Issuance of common stock 8,627 229,618,304 10,899,301

Conversion of OP units to common stock 190,544 — —

Non-vested share-based awards, net of withheld shares and forfeitures 175,368 514,157 70,757

Balance, end of year 380,964,433 380,589,894 150,457,433

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

At-The-Market Equity Offering Program

2 unchanged sentences

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

The Company's previous ATM agreements involving Legacy HR are no longer in effect following the Merger on July 20, 2022.

The following table details the Company's at-the-market activity, including any forward transactions:

WEIGHTED AVERAGE SALE PRICE

per share SHARES PRICED SHARES SETTLED SHARES REMAINING TO BE SETTLED NET PROCEEDS

2021 $ 31.09 9,763,680 10,859,539 727,400 $ 330.3

2022 $ 31.73 — 727,400 — $ 22.3

Dividends Declared

During 2023, the Company declared and paid common stock dividends aggregating $ 1.24 per share ($ 0.31 per share per quarter).

On February 24, 2023, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on March 21, 2023 to stockholders of record on March 7, 2023.

On February 13, 2024, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on March 14, 2024, to stockholders of record on February 26 , 2024.

Authorization to Repurchase Common Stock

On August 2, 2022, the Company’s Board of Directors authorized the repurchase of up to $ 500.0 million of outstanding shares of the Company’s common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints, and other customary conditions.

On May 31, 2023, the Company’s Board of Directors authorized the repurchase of up to $ 500.0 million of outstanding shares of the Company’s common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints, and other customary conditions.

The Company is not obligated under this authorization to repurchase any specific number of shares.

1 unchanged sentence

As of the date of these Consolidated Financial Statements, the Company has not repurchased any shares of its common stock under this authorization.

Accumulated Other Comprehensive Income

During the year ended December 31, 2020, the Company entered into two treasury rate locks that were settled for an aggregate amount of $ 4.3 million concurrent with the Company’s issuance of its Senior Notes due 2030.

This amount will be reclassified out of accumulated other comprehensive over the 10 -year term of the notes.

The Company continues to amortize the 2015 settlement of forward-starting interest rate swaps.

This amount will be reclassified out of accumulated other comprehensive income impacting net income over the 10 -year term of the associated senior note issuance.

See Note 11 for more information regarding the Company's derivative instruments.

Accumulated Other Comprehensive (Loss) Income

The following table represents the changes in accumulated other comprehensive income (loss) during the years ended December 31, 2023 and 2022:

3 unchanged sentences

Beginning balance $ 2,140 $ ( 9,981 )

Other comprehensive loss before reclassifications 1,531 4,472

Amounts reclassified from accumulated other comprehensive income 10,590 3,379

Net current-period other comprehensive income 12,121 7,851

Other comprehensive income (loss) before reclassifications 1,434 1,531

Amounts reclassified from accumulated other comprehensive (loss) income ( 14,315 ) 10,590

Net current-period other comprehensive (loss) income ( 12,881 ) 12,121

Ending balance $ ( 10,741 ) $ 2,140

10 unchanged sentences

Stock Incentive Plan

The Legacy HR stockholders approved the Legacy HR Incentive Plan, which authorized the Company to issue 3,500,000 shares of common stock to its employees and directors.

The Legacy HR Incentive Plan was replaced as of the merger date by the Incentive Plan.

As of December 31, 2022 and 2021, the Company had issued a total of 3,417,696 and 2,386,822 restricted shares under the Incentive Plan and the Legacy HR Incentive Plan, respectively.

The Company's Incentive Plan permits the grant of incentive awards to its employees and directors in any of the following forms:

options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents, or other stock-based awards, including units in the OP.

The Incentive Plan replaced the Legacy HR Incentive Plan as of the merger date.

Unvested awards under the Legacy HR Incentive Plan were assumed according to their existing terms by the Company in connection with the Merger.

Non-vested shares issued under the Legacy HR Incentive Plan are generally subject to fixed vesting periods varying from three to eight years beginning on the date of issue.

As of the Merger date, 9,647,839 share-based awards were available for grant under the Incentive Plan.

As of December 31, 2023 and 2022, the Company had share-based awards available for grant under the Incentive Plan of 8,102,861 and 9,432,388 shares, respectively.

Non-vested shares issued to employees under the Incentive Plan are generally subject to fixed vesting periods varying from three to eight years beginning on the date of issue.

If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company.

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Under the terms of the Executive Incentive Plan, the Company's named executive officers and certain other members of senior management may earn incentive awards in the form of cash, non-vested stock, restricted stock units ("RSUs"), and units in the OP ("OP Units").

For 2022, 2021 and 2020, compensation expense, included in general and administrative expense, resulting from the amortization of the Executive Incentive Plan non-vested share and RSU grants to officers was approximately $ 9.8 million , $ 6.6 million, and $ 5.9 million, respectively.

For 2023, 2022 and 2021, compensation expense, included in general and administrative expense, resulting from the amortization of the Executive Incentive Plan non-vested share, RSU, and OP Unit grants to officers was approximately $ 9.0 million , $ 9.8 million, and $ 6.6 million, respectively.

Details of equity awards that have been issued under this plan are as follows:

• On January 3, 2022, the Company granted non-vested stock awards to its named executive officers, and certain other members of senior management and employees, with a grant date fair value of $ 7.9 million, which consisted of an aggregate of 249,689 non-vested shares with a five-year vesting period, which will result in an annual compensation expense of $ 1.6 million for each of 2023, 2024, 2025 and 2026.

• On January 3, 2022, the Company granted RSUs to its named executive officers, and certain other members of senior management and officers, with a grant date fair value of $ 9.7 million, which consisted of an aggregate

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

294,932 RSUs with a three-year performance period and a total five-year vesting period, which will result in an annual compensation expense of $ 1.9 million for each of 2023, 2024, 2025, and 2026.

• On February 22, 2022, the Company granted a performance-based award to its named executive officers, senior vice presidents, and first vice presidents with a grant date fair value of $ 3.9 million, which consisted of an aggregate of 126,930 non-vested shares with a five-year vesting period, which will result in an annual compensation expense of $ 0.8 million for 2023, 2024, 2025 and 2026, and $ 0.1 million for 2027.

• On December 12, 2022, the Company granted non-vested stock awards to its named executive officers in view of efforts with respect to the merger transaction and integration of the two companies, with a grant date fair value of $ 2.7 million, which consisted of an aggregate of 140,809 non-vested shares with a three-year vesting period, which will result in an compensation expense of $ 0.9 million for 2023, 2024 and 2025.

• On January 4, 2023, the Company granted non-vested stock awards to its named executive officers, senior vice presidents, and first vice presidents with a grant date fair value of $ 4.1 million , which consisted of an aggregate of 205,264 shares with a ratable five-year vesting period, which will result in an annual compensation expense of $ 0.8 million for 2024, 2025, 2026 and 2027.

• On January 4, 2023, the Company granted 627,547 in OP units to named executive officers with a three-year performance period and ratable vestings of 50 % in year four and 50 % in year five.

The expense will be recognized on the straight-line basis over the five-year vesting period.

• On January 4, 2023, the Company granted RSUs to certain of its non-executive senior officers consisting of an aggregate of 165,174 RSUs with ratable vestings of 50 % in year four and 50 % in year five.

• On January 4, 2023, the Company granted 165,174 RSUs to certain of its non-executive senior officers.

These award are subject to a three-year performance period and if the performance criteria is met, the awards are then

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

subject to two additional years with ratable vesting of 50 % in year four and 50 % in year five.

The expense will be recognized on the straight-line basis over the five-year vesting period.

Approximately 43 % of the RSUs vest based on two market performance conditions.

Relative and absolute total shareholder return ("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 $ 30.56 for the absolute TSR component and $ 41.30 for the relative TSR component for the January 2022 grant using the following assumptions:

◦ Approximately 43 % of the RSU awards are subject to two market performance conditions:

relative and absolute total shareholder return ("TSR").

These components were valued using independent specialists utilizing a Monte Carlo simulation to calculate the weighted average grant date fair values of $ 24.23 for the absolute TSR component and $ 27.84 for the relative TSR component for the January 2023 grant using the following assumptions:

Volatility 34.0 %

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Stock price (per share) $ 20.21

The remaining 57 % of the RSUs vest upon certain operating performance conditions.

With respect to the operating performance conditions of the January grant, the grant date fair value was $ 31.68 based on the Company's share price on the date of grant.

◦ The remaining 57 % of the RSU awards are subject to certain operating performance conditions.

With respect to the operating performance conditions of these awards, the grant date fair value was $ 20.21 based on the Company's share price on the date of grant.

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

◦ The combined weighted average grant date fair value of the January 2023 RSUs was $ 22.55 per share.

Long-Term Incentive Program

In the first quarter of 2022, the Company granted a performance-based award to certain non-executive officers under the Long-term Incentive Program adopted under the Legacy HR Incentive Plan (the "LTIP") totaling approximately $ 0.6 million, which was granted in the form of 19,204 non-vested shares.

In the first quarter of 2021, the Company granted a performance-based award to certain non-executive officers under the LTIP totaling approximately $ 0.6 million, which was granted in the form of 19,679 non-vested shares.

The shares have vesting periods ranging from one to eight years with a weighted average vesting period of approximately five years .

For 2022, 2021 and 2020, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $ 0.9 million , $ 1.0 million, and $ 1.1 million, respectively.

LTIP Series C Units

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 were granted with three-year forward-looking performance targets, with a grant date fair value of $ 7.1 million, which consisted of an aggregate 627,547 LTIP-C units with a five-year vesting period.

LTIP-C units are granted notionally at the maximum value of the award.

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

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 assumption:

Volatility 34.0 %

Dividend assumption Accrued

Expected term 3 years

Risk-free rate 4.42 %

Stock price (per share) $ 20.21

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

With respect to the operating performance conditions of the January 4, 2023 grant, the grant date fair value was $ 20.21 based on the Company's share price on the date of grant.

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

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

For 2023, compensation expense resulting from the amortization of LTIP-C units awarded to officers was approximately $ 1.2 million.

Officer Incentive Program

In the first quarter of 2023 the Company granted a performance-based award to certain non-executive officers totaling approximately $ 0.7 million, which was granted in the form of 33,438 non-vested shares.

The shares have vesting periods ranging from three to eight years with a weighted average vesting period of approximately five years .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

For 2023, 2022 and 2021, compensation expense resulting from the amortization of these non-vested share grants awarded to officers was approximately $ 0.6 million, $ 0.9 million, and $ 1.0 million, respectively.

Salary Deferral Plan

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Non-employee Directors Incentive Plan

The Company issues non-vested shares to its non-employee directors under the Incentive Plan.

The directors’ shares have a one-year vesting period and are subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company.

For each of the years 2022, 2021 and 2020, compensation expense resulting from the amortization of non-vested share grants to directors was approximately $ 1.5 million , $ 1.2 million, and $ 1.0 million, respectively.

• On May 13, 2022, the Company granted a non-vested stock award to eight of its directors, with a grant date fair value of $ 0.8 million, which consisted of an aggregate of 26,840 non-vested shares, with a one-year vesting period.

• On August 2, 2022, the Company granted non-vested stock awards to twelve of its directors, with a grant date fair value of $ 1.8 million, which consisted of an aggregate of 70,816 non-vested shares, with a vesting period between one and three years .

The Company issued three one-time non-vested share grants related to executive management transition in 2016.

For 2022, 2021 and 2020, compensation expense resulting from the amortization of these non-vested share grants to officers was approximately $ 0.8 million , $ 0.7 million, and $ 0.8 million, respectively.

In 2022, the Company made discretionary awards of 5,806 shares of non-vested stock to three employees.

A summary of the activity under the Incentive Plans and related information for the three years in the period ended December 31, 2022 follows:

The Company grants non-vested share-based awards to its non-employee directors under the Incentive Plan.

The directors’ awards typically have a one-year vesting period and are subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company.

For each of the years 2023, 2022 and 2021, compensation expense resulting from the amortization of non-vested share-based grants to directors was approximately $ 2.1 million , $ 1.5 million, and $ 1.2 million, respectively.

• On June 5, 2023, the Company granted a non-vested stock award to six of its directors, with a grant date fair value of $ 0.7 million, which consisted of an aggregate of 42,768 non-vested shares, with a one-year vesting period.

• On June 5, 2023, the Company also granted LTIP-D units in the OP to six of its directors, with a grant fair value of $ 1.1 million, which consisted of an aggregate of 57,868 non-vested units, with a one-year vesting period.

The following table represents the summary of non-vested share-based awards (including restricted stock, RSUs, LTIP-C units and LTIP-D units) under the Incentive Plans and related information for the three years ended December 31, 2023:

YEAR ENDED DECEMBER 31,

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Share-based awards, beginning of year 2,090,060 1,562,028 1,766,061

Granted 657,475 203,701 197,999

1,164,359 952,407 203,701

Vested ( 403,266 ) ( 418,949 ) ( 404,777 )

Change in awards based on performance assessment 2

( 205,668 ) — —

Forfeited ( 29,923 ) ( 5,426 ) ( 2,957 )

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Share-based awards vested during the year $ 28.38 $ 31.52 $ 28.38

Share-based awards change in performance assessment during the year $ 29.05 $ — $ —

Stock-based awards forfeited during the year $ 31.16 $ 31.48 $ 33.04

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Grant date fair value of shares granted during the year $ 22,171 $ 28,225 $ 6,286

1 LTIP-C units are issued at the maximum possible value of the award and are reflected as such in this table until the performance period has been satisfied and the exact number of awards are determinable.

2 The Company's RSUs that are based on operating performance metrics are evaluated on the probability of those performance metrics being achieved.

During 2023, the Company determined that the operating performance goals related to the RSUs issued in 2022 are not probable of being achieved and reversed all of the outstanding amortization expense for that grant.

In addition, the Company lowered the probability of achieving the operating performance goals related to the RSUs issued in 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The vesting periods for the non-vested shares granted during 2023 ranged from one to eight years with a weighted-average amortization period remaining as of December 31, 2023 of approximately 4.8 years .

During 2023, 2022 and 2021, the Company withheld 126,085 s hares, 137,892 shares and 129,987 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to the vesting of shares.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Internal Revenue Code.

The Company provides a matching contribution of up to 3 % of each eligible employee’s salary, subject to certain limitations.

The Company provides a matching contribution up to $ 2,800 per employee, subject to certain limitations.

The Company’s matching contributions were approximately $ 1.5 million for the year ended December 31, 2023, $ 1.2 million for 2022 and $ 0.7 million for 2021.

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No new options will be issued under the Legacy HR Employee Stock Purchase Plan and existing options will expire in March 2024.

During the years ended December 31, 2022, 2021 and 2020, the Company recognized in general and administrative expenses approximately $ 0.4 million, $ 0.4 million, and $ 0.3 million, respectively, of compensation expense related to the annual grant of options to its employees to purchase shares under the Legacy HR Employee Stock Purchase Plan.

During the years ended December 31, 2022 and 2021, the Company recognized in general and administrative expenses approximately $ 0.4 million, and $ 0.4 million, respectively, of compensation expense related to the annual grant of options to its employees to purchase shares under the Legacy HR Employee Stock Purchase Plan.

Cash received from employees upon exercising options under the Legacy HR Employee Stock Purchase Plan was approximately $ 0.2 million for the year ended December 31, 2023, $ 0.4 million for the year ended December 31, 2022, and $ 0.8 million for the year ended December 31, 2021.

A summary of the Legacy HR Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2022 is as follows:

A summary of the Legacy HR Employee Stock Purchase Plan activity and related information for the three years ended December 31, 2023 is as follows:

YEAR ENDED DECEMBER 31,

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The fair values for these options were estimated at the date of grant using a Black-Scholes options pricing model with the weighted-average assumptions for the options granted during the period noted in the following table.

The risk-free interest rate was based on the U.S.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

free interest rate was based on the U.S.

Treasury constant maturity-nominal two-year rate whose maturity is nearest to the date of the expiration of the latest option outstanding and exercisable;

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the expected life of each option was estimated using the historical exercise behavior of employees;

expected volatility was based on

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

historical volatility of the Company’s common stock;

expected volatility was based on historical volatility of the Company’s common stock;

and expected forfeitures were based on historical forfeiture rates within the look-back period.

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As of and for the year ended December 31, 2022, these forward equity agreements settled and consequently, the Company did not have any remaining shares subject to unsettled forward sale agreements.

The table below sets forth the computation of basic and diluted earnings per common share for the three years in the period ended December 31, 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The table below sets forth the computation of basic and diluted earnings per common share for the three years ended December 31, 2023.

YEAR ENDED DECEMBER 31,

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Weighted average common shares outstanding - diluted 378,927,871 253,873,321 142,710,228

Net income attributable to common stockholders $ 40,897 $ 66,659 $ 72,195

Dividends paid on nonvested share-based awards ( 2,437 ) ( 2,154 ) ( 2,083 )

Net income applicable to common stockholders - basic $ 38,460 $ 64,505 $ 70,112

Net (loss) income $ ( 282,083 ) $ 40,693 $ 66,659

Net loss attributable to non-controlling interest 3,822 204 —

Net (loss) income attributable to common stockholders $ ( 278,261 ) $ 40,897 $ 66,659

Income allocated to participating securities ( 2,504 ) ( 2,437 ) ( 2,154 )

Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units ( 851 ) — —

Net (loss) income applicable to common stockholders - basic $ ( 281,616 ) $ 38,460 $ 64,505

Net income attributable to OP Units — 81 —

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Diluted earnings per common share - net income $ ( 0.74 ) $ 0.15 $ 0.45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The effect of OP units convertible into shares totaling 4,023,679 shares and options to purchase 31,997 shares under the Company's Employee Stock Purchase Plan for the year ended December 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 the year.

Commitments and Contingencies

Re/development Activity

During the year ended December 31, 2022, the Company funded $ 60.8 million toward development and redevelopment of properties.

During the year ended December 31, 2023, the Company invested $ 69.1 million and $ 20.5 million toward active development and redevelopment of properties, respectively, and $ 22.6 million toward recently completed development and redevelopment projects.

Tenant Improvements

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Land held for development includes parcels of land owned by the Company, upon which the Company intends to develop and own outpatient healthcare facilities.

The Company's land held for development included twenty parcels as of December 31, 2022 and seven parcels as of December 31, 2021.

The Company's land held for development included 17 parcels as of December 31, 2023 and 20 parcels as of December 31, 2022.

The Company’s investments in land held for development totaled approximately $ 59.9 million as of December 31, 2023 and $ 74.3 million as of December 31, 2022.

The current land held for development is located adjacent to certain of the Company's existing medical office buildings in New York, Massachusetts, California, Connecticut, Florida, North Carolina, Texas, Tennessee, Georgia, Washington, and Colorado.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

The current land held for development is located adjacent to certain of the Company's existing medical office buildings in Colorado, Connecticut, Florida, Georgia, Massachusetts, New York, Tennessee, Texas, and Washington.

Security Deposits and Letters of Credit

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While Legacy HR was considered the accounting acquirer in the Merger for GAAP purposes, Legacy HR’s separate tax existence ceased with the Merger and Legacy HTA continues as the tax successor.

On a tax basis, the Company’s gross real estate assets totaled approximately $ 13.0 billion as of December 31, 2022.

As of December 31, 2021 and 2020 gross real estate assets on a tax basis were $ 5.0 billion and $ 4.7 billion for Legacy HR and $ 8.2 billion and $ 7.9 billion for Legacy HTA, respectively.

On a tax basis, the Company’s gross real estate assets totaled approximately $ 12.6 billion and $ 13.0 billion as of December 31, 2023 and 2022, respectively.

As of December 31, 2021, gross real estate assets on a tax basis were $ 5.0 billion for Legacy HR and $ 8.2 billion for Legacy HTA, respectively.

Characterization of Distributions (unaudited)

Distributions in excess of earnings and profits generally constitute a return of capital.

The following table gives the characterization of the distributions on the Company’s common stock for the three years ended December 31, 2022.

The following table gives the characterization of the distributions of the Company’s common stock for the three years ended December 31, 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, cont.

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State Income Taxes

The Company must pay certain state income taxes, which are typically included in general and administrative expense on the Company’s Consolidated Statements of Income.

The State of Texas gross margins tax on gross receipts from operations is disclosed in the table below as an income tax because it is considered such by the Securities and Exchange Commission.

The Company must pay certain state income taxes, which are typically included in general and administrative expense on the Company’s Consolidated Statements of Operations.

The State of Texas gross margins tax on gross receipts from operations is disclosed in the table below as an income tax.

State income tax expense and state income tax payments for the three years ended December 31, 2023 are detailed in the table below:

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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-K

Item 8. Financial Statements and Supplementary Data