What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-02 compared with 2024-05-07 · 251 added, 135 removed, 536 unchanged (42% of the section changed)

3 unchanged sentences

Amounts in thousands, except per share data

MARCH 31, 2024

JUNE 30, 2024

DECEMBER 31, 2023

34 unchanged sentences

1,000,000 shares authorized;

381,502 and 380,964 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

364,327 and 380,964 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 9,340,028 9,602,592

9 unchanged sentences

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2024 and 2023

For the Three and Six Months Ended June 30, 2024 and 2023

Amounts in thousands, except per share data

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

2024 2023 2024 2023

Rental income $ 308,135 $ 329,680 $ 626,211 $ 653,773

9 unchanged sentences

Other income (expense)

Gain on sales of real estate properties 22 1,007

Gain on sales of real estate properties and other assets 38,338 7,156 38,360 8,162

Interest expense ( 62,457 ) ( 65,334 ) ( 123,510 ) ( 129,092 )

2 unchanged sentences

Equity loss from unconsolidated joint ventures ( 146 ) ( 17 ) ( 568 ) ( 797 )

Interest and other income, net 275 547

Interest and other (expense) income, net ( 248 ) 592 27 1,139

( 156,631 ) ( 112,818 ) ( 484,276 ) ( 207,225 )

9 unchanged sentences

Condensed Consolidated Statements of Comprehensive Loss

For the Three Months Ended March 31, 2024 and 2023

For the Three and Six Months Ended June 30, 2024 and 2023

Amounts in thousands

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

2024 2023 2024 2023

Net loss $ ( 145,938 ) $ ( 83,726 ) $ ( 461,157 ) $ ( 171,804 )

2 unchanged sentences

Reclassification adjustments for gains included in interest expense ( 3,662 ) ( 3,419 ) ( 7,528 ) ( 5,703 )

Gains (losses) arising during the period on interest rate swaps 19,611 ( 8,541 )

Gains arising during the period on interest rate swaps 5,891 21,523 25,501 12,981

2,229 18,104 17,973 7,278

5 unchanged sentences

Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests

For the Three Months Ended March 31, 2024 and 2023

For the Three Months Ended June 30, 2024 and 2023

Amounts in thousands, except per share data

8 unchanged sentences

Equity Redeemable Non-controlling Interests

Balance at March 31, 2024 $ 3,815 $ 9,609,530 $ 4,791 $ 717,958 $ ( 3,920,199 ) $ 6,415,895 $ 87,243 $ 6,503,138 $ 3,880

Common stock redemptions — ( 3 ) — — — ( 3 ) — ( 3 ) —

Share-based compensation — 3,382 — — — 3,382 — 3,382 —

Common stock repurchases ( 172 ) ( 272,881 ) — — — ( 273,053 ) — ( 273,053 ) —

Net loss — — — ( 143,780 ) — ( 143,780 ) ( 2,158 ) ( 145,938 ) —

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

— — ( 3,611 ) — — ( 3,611 ) ( 51 ) ( 3,662 ) —

Gains arising during the period on interest rate swaps

— — 5,806 — — 5,806 85 5,891 —

Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 5 )

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

— — — — ( 117,494 ) ( 117,494 ) ( 1,444 ) ( 118,938 ) —

Balance at June 30, 2024 $ 3,643 $ 9,340,028 $ 6,986 $ 574,178 $ ( 4,037,693 ) $ 5,887,142 $ 83,675 $ 5,970,817 $ 3,875

Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Cumulative

Net Income Cumulative

Dividends Total

Stockholders’

Equity Non-controlling Interests Total

Equity Redeemable Non-controlling Interests

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

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

Common stock redemptions — ( 112 ) — — — ( 112 ) — ( 112 ) —

Share-based compensation — 3,924 — — — 3,924 — 3,924 —

Net loss — — — ( 82,759 ) — ( 82,759 ) ( 967 ) ( 83,726 ) —

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

— — ( 3,377 ) — — ( 3,377 ) ( 42 ) ( 3,419 ) —

Gains arising during the period on interest rate swaps

— — 21,259 — — 21,259 264 21,523 —

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

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

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

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

The accompanying notes, together with the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of these financial statements.

Healthcare Realty Trust Incorporated

Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests

For the Six Months Ended June 30, 2024 and 2023

Amounts in thousands, except per share data

Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Cumulative

Net Income Cumulative

Dividends Total

Stockholders’

Equity Non-controlling Interests Total

Equity Redeemable Non-controlling Interests

Balance at December 31, 2023 $ 3,810 $ 9,602,592 $ ( 10,741 ) $ 1,028,794 $ ( 3,801,793 ) $ 6,822,662 $ 96,252 $ 6,918,914 $ 3,868

3 unchanged sentences

Share-based compensation 3 6,941 — — — 6,944 — 6,944 —

Common stock repurchases ( 172 ) ( 272,881 ) — — — ( 273,053 ) — ( 273,053 ) —

Net loss — — — ( 454,616 ) — ( 454,616 ) ( 6,541 ) ( 461,157 ) —

7 unchanged sentences

— — — — ( 235,900 ) ( 235,900 ) ( 2,870 ) ( 238,770 ) —

Balance at March 31, 2024 $ 3,815 $ 9,609,530 $ 4,791 $ 717,958 $ ( 3,920,199 ) $ 6,415,895 $ 87,243 $ 6,503,138 $ 3,880

Balance at June 30, 2024 $ 3,643 $ 9,340,028 $ 6,986 $ 574,178 $ ( 4,037,693 ) $ 5,887,142 $ 83,675 $ 5,970,817 $ 3,875

Stock Additional

14 unchanged sentences

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

Losses arising during the period on interest rate swaps

Gains arising during the period on interest rate swaps

— — 12,823 — — 12,823 158 12,981 —

Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 14 )

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

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

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

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

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2024 and 2023

For the Six Months Ended June 30, 2024 and 2023

Amounts in thousands

OPERATING ACTIVITIES

THREE MONTHS ENDED

SIX MONTHS ENDED

Net loss $ ( 461,157 ) $ ( 171,804 )

5 unchanged sentences

Amortization of straight-line rent on operating leases (lessee) 1,998 3,062

Gain on sales of real estate properties ( 22 ) ( 1,007 )

Gain on sales of real estate properties and other assets ( 38,360 ) ( 8,162 )

Impairment of real estate properties and credit loss reserves 148,055 86,637

18 unchanged sentences

Proceeds from notes receivable repayments 567 —

Net cash (used in) provided by investing activities ( 58,561 ) 41,560

Net cash provided by (used in) investing activities 151,388 ( 6,145 )

FINANCING ACTIVITIES

Net borrowings on unsecured credit facility 120,000 —

Net borrowings (repayments) on unsecured credit facility 250,000 ( 31,000 )

Repayment on term loan ( 100,000 ) —

Repayments of notes and bonds payable ( 17,746 ) ( 1,340 )

2 unchanged sentences

Common stock redemptions ( 321 ) ( 1,842 )

Common stock repurchases ( 273,053 ) —

Distributions to non-controlling interest holders ( 2,399 ) ( 2,546 )

Debt issuance and assumption costs ( 563 ) ( 438 )

Payments made on finance leases ( 30 ) ( 40 )

3 unchanged sentences

Cash and cash equivalents at end of period $ 41,765 $ 35,904

Supplemental Cash Flow Information

Supplemental Cash Flow Information SIX MONTHS ENDED

Interest paid $ 103,708 $ 106,985

2 unchanged sentences

Capitalized interest $ 1,916 $ 1,282

Proceeds from dispositions held in escrow $ 96,008 $ —

Contribution of real estate properties into unconsolidated joint venture $ 66,547 $ —

2 unchanged sentences

Business Overview

Healthcare Realty Trust Incorporated ("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.

As of March 31, 2024, the Company had gross investments of approximately $ 13.4 billion in 654 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property, excluding held for sale assets.

The Company's re al estate properties are located in 35 states and total approxima tely 38.4 million square feet.

The Company provided leasing and property management services to 92 % of its portfolio nationwide as of March 31, 2024.

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.

As of June 30, 2024, the Company had gross investments of approximately $ 12.9 billion in 629 con solidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property, excluding held for sale assets.

In addition, as of June 30, 2024, the Company had a weighted average ownership interest of approxima tel y 36 % in 44 re al estate properties held in unconsolidated joint ventures.

See Note 2 below for more details regarding the Company's unconsolidated joint ventures.

The Company's re al estate properties are located in 35 states and total approxima tel y 37.2 million square feet.

The Company provided leasing and property management services to 92 % of its portfolio nationwide as of June 30, 2024.

On July 20, 2022, pursuant to that certain Agreement and Plan of Merger dated as of February 28, 2022, 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”), Healthcare Trust of America Holdings, LP, a Delaware limited partnership (now known as Healthcare Realty Holdings, L.P.) (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”).

1 unchanged sentence

The Company is structured as an umbrella partnership REIT under which substantially all of its business is conducted through the OP, the day-to-day management of which is exclusively controlled by the Company.

As of March 31, 2024, the Company owned 98.6 % of the issued and outstanding units of the OP, with other investors owning the remaining 1.4 % of outstanding units.

In addition, as of March 31, 2024, the Company had a weighted average ownership interest of approxima tely 43 % in 33 re al estate properties held in unconsolidated joint ventures.

See Note 2 below for more details regarding the Company's unconsolidated joint ventures.

As of June 30, 2024, the Company owned 98.6 % of the issued and outstanding units of the OP, with other investors owning the remaining 1.4 % of the OP's issued and outstanding units.

Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the Company's Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm’s review.

9 unchanged sentences

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 (“ASC”) Topic 810, Consolidation 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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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:

(i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity.

(i) the power to direct the

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity.

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

5 unchanged sentences

The OP is 98.6 % owned by the Company.

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

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

Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages.

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

As of March 31, 2024, there were approximately 5.2 million OP Units, or 1.4 % of OP Units issued and outstanding, held by non-controlling interest holders.

As of June 30, 2024, there were approximately 5.3 million OP Units, or 1.4 % of OP Units issued and outstanding, held by non-controlling interest holders.

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

Accordingly, the Company consolidates its interests in the OP.

As of March 31, 2024, 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.

As of June 30, 2024, 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) MARCH 31, 2024

Net real estate investments $ 92,028

(dollars in thousands) JUNE 30, 2024

Total real estate properties, net

Cash and cash equivalents 3,205

Receivables and other assets

Other assets, net

Accrued expenses and other liabilities

Total liabilities

Redeemable non-controlling interests

Partners' equity

Cumulative net loss

Total partners' equity

Total liabilities and equity

As of March 31, 2024, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture.

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

As of June 30, 2024, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture.

The Company does not have the power or economic interests to direct the activities of these VIEs on a

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary.

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

6 unchanged sentences

2 Includes investments in seven properties.

As of March 31, 2024, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities.

As of June 30, 2024, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities.

See Note 2 below for more details regarding the Company's unconsolidated joint ventures.

8 unchanged sentences

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

As of March 31, 2024, the Company had redeemable non-controlling interests of $ 3.9 million.

As of June 30, 2024, the Company had redeemable non-controlling interests of $ 3.9 million.

Asset Impairment

5 unchanged sentences

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

During the three months ended March 31, 2024, the Company recognized real estate impairments totaling $ 15.9 million as a result of planned disposition activity.

As of March 31, 2024, three properties totaling $ 2.9 million were measured at fair value using level 3 fair value hierarchy.

The level 3 fair value techniques included brokerage estimates and unexecuted purchase and sale agreements, less estimated closing costs.

During the three and six months ended June 30, 2024, the Company recognized real estate impairments totaling $ 120.9 million and $ 136.9 million, respectively, as a result of completed and planned disposition activity.

As of June 30, 2024, 16 real estate properties totaling $ 265.6 million were measured at fair value using level 3 fair value hierarchy.

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

Goodwill Impairment

4 unchanged sentences

The Company recorded a $ 250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the Condensed Consolidated Statements of Operations.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Investments in Leases - Financing Receivables, Net

3 unchanged sentences

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

(dollars in thousands) ORIGINATION DATE LOCATION INTEREST RATE CARRYING VALUE as of MARCH 31, 2024

(dollars in thousands) ORIGINATION DATE LOCATION INTEREST RATE CARRYING VALUE as of JUNE 30, 2024

May 2021 Poway, CA 5.72 % $ 115,056

3 unchanged sentences

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

As of March 31, 2024, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 174.4 million.

As of June 30, 2024, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 168.8 million.

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

MAR 31, 2024 ALLOWANCE FOR CREDIT LOSSES FAIR VALUE DISCOUNT AND FEES CARRYING VALUE as of MAR 31, 2024

JUN 30, 2024 INTEREST RECEIVABLE (OTHER ASSETS) ALLOWANCE FOR CREDIT LOSSES FAIR VALUE DISCOUNT AND FEES CARRYING VALUE as of JUNE 30, 2024

Mezzanine loans

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

6/24/2021 6/24/2024 8.00 % $ 54,119 $ 54,119 $ 906 $ ( 5,196 ) $ ( 3,067 ) $ 46,762

Arizona 12/21/2023 12/20/2026 9.00 % 6,000 6,000 36 — — 6,036

1 unchanged sentence

Mortgage loans

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

6/30/2021 12/02/2024 7.00 % 31,150 31,150 551 ( 11,201 ) — 20,500

North Carolina 3

12/22/2021 12/22/2024 8.00 % 6,000 6,000 1,211 — ( 100 ) 7,111

Florida 5/17/2022 2/27/2026 6.00 % 65,000 35,623 532 — ( 34 ) 36,121

3 unchanged sentences

$ 214,969 $ 185,025 $ 3,414 $ ( 16,397 ) $ ( 3,201 ) $ 168,841

1 As of the date of these financial statements, the outstanding principal and interest on these loans had not been repaid, and on July 15, 2024, the senior lender on the construction loans associated with the underlying projects provided notice of foreclosure proceedings to the borrower.

The borrower is in negotiations with a third party to provide financing that will repay the senior lender.

2 During the second quarter of 2024, the Company determined that an allowance for credit loss of $ 11.2 million was needed on this mortgage loan.

The reserve amount consists of approximately $ 10.7 million of principal and approximately $ 0.5 million of interest.

Additionally, the maturity date on this mortgage loan was extended to December 2, 2024.

3 Outstanding principal and interest due upon maturity.

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.

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 determination of the credit allowance is based on a quarterly

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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.

5 unchanged sentences

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

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

During the three months ended March 31, 2024, the Company determined that no additional credit loss reserve was needed for its real estate notes receivable.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

During the three and six months ended June 30, 2024, the Company determined that the risk of credit loss on one of its mortgage note receivables was no longer remote and recorded a credit loss reserve of $ 11.2 million.

The Company utilized the level 3 fair value hierarchy, which included a brokerage estimate on the underlying collateral of the loan, to determine the amount of credit loss reserve.

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

Dollars in thousands THREE MONTHS ENDED MARCH 31, 2024 TWELVE MONTHS ENDED DECEMBER 31, 2023

Dollars in thousands SIX MONTHS ENDED JUNE 30, 2024 TWELVE MONTHS ENDED DECEMBER 31, 2023

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

3 unchanged sentences

Income from Lease Financing Receivables

The Company recognized the related income from two financing receivables totaling $ 2.1 million for each of the three months ended March 31, 2024 and 2023, based on an imputed interest rate over the terms of the applicable lease.

The Company recognized the related income from two financing receivables totaling $ 2.1 million and $ 4.2 million, respectively, for the three and six months ended June 30, 2024, and $ 2.1 million and $ 4.2 million, respectively, for the three and six months ended June 30, 2023, 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.

3 unchanged sentences

Income from Real Estate Notes Receivable

During the three months ended March 31, 2024 and 2023, the Company recognized interest income of $ 2.4 million and $ 2.1 million, respectively, related to real estate notes receivable.

The Company recognized interest income related to real estate notes receivable of $ 1.8 million and $ 4.2 million, respectively, for the three and six months ended June 30, 2024, and $ 2.2 million and $ 4.3 million, respectively, for the three and six months ended June 30, 2023.

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.

In 2023, the Company placed two of its real estate notes receivable with principal balances, net of credit loss, of $ 48.9 million on non-accrual status and accordingly did not recognize any interest income for the three months ended March 31, 2024.

In 2024, the Company placed one of its real estate notes receivable with a principal balance, net of credit loss, of $ 20.5 million on non-accrual status.

Revenue from Contracts with Customers (ASC Topic 606)

3 unchanged sentences

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

2 unchanged sentences

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

in thousands 2024 2023 2024 2023

3 unchanged sentences

1,859 1,860 3,504 4,086

$ 4,322 $ 4,230 $ 8,513 $ 8,847

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

5 unchanged sentences

(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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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.

(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 annual 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 ending December 31, 2024.

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

Real Estate Investments

2024 Acquisition Activity

The Company had no real estate acquisition activity for the three months ended March 31, 2024.

The Company had no real estate acquisition activity for the six months ended June 30, 2024.

Unconsolidated Joint Ventures

The Company's investment in and loss recognized for the three months ended March 31, 2024 and 2023 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:

The Company's investment in and loss recognized for the three and six months ended June 30, 2024 and 2023 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

Dollars in thousands 2024 2023 2024 2023

1 unchanged sentence

New investment during the period 1

66,547 — 66,547 3,824

Equity loss recognized during the period ( 146 ) ( 17 ) ( 568 ) ( 797 )

1 unchanged sentence

Investments in unconsolidated joint ventures, end of period $ 374,841 $ 327,245 $ 374,841 $ 327,245

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

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

2024 Real Estate Asset Dispositions

The Company had no real estate dispositions for the three months ended March 31, 2024.

Subsequent to March 31, 2024, the Company disposed of two medical outpatient buildings totaling 39,000 square feet for an aggregate of $ 5.8 million.

The two properties were classified as held for sale as of March 31, 2024.

1 In the second quarter of 2024, the Company contributed 11 properties into a new joint venture in which it retained a 20 % ownership interest.

See 2024 "Real Estate Asset Dispositions" below for additional information.

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

2024 Real Estate Asset Dispositions

The following table details the Company's dispositions and joint venture contributions for the six months ended June 30, 2024.

Dollars in thousands DATE DISPOSED SALE PRICE CLOSING ADJUSTMENTS NET PROCEEDS NET REAL ESTATE INVESTMENT OTHER (INCLUDING RECEIVABLES) GAIN/(IMPAIRMENT) SQUARE FOOTAGE

Albany, NY 4/1/24 $ 725 $ ( 60 ) $ 665 $ 765 $ ( 82 ) $ ( 18 ) 14,800

San Angelo, TX 4/12/24 5,085 ( 128 ) 4,957 4,917 66 ( 26 ) 24,580

Houston, TX 5/20/24 250 ( 9 ) 241 713 ( 520 ) 48 37,040

5/23/24 284,348 ( 14,270 ) 270,078 254,176 25,836 ( 9,934 ) 556,274

Denver, CO 5/30/24 19,000 ( 628 ) 18,372 18,522 165 ( 315 ) 37,130

6/6/24 54,858 ( 1,575 ) 53,283 27,964 623 24,696 129,879

Minneapolis, MN 6/21/24 1,082 ( 144 ) 938 303 43 592 50,291

Greensboro/Raleigh, NC 2, 3

6/28/24 99,518 ( 2,835 ) 96,683 86,810 906 8,967 309,424

Total dispositions $ 464,866 $ ( 19,649 ) $ 445,217 $ 394,170 $ 27,037 $ 24,010 1,159,418

1 The Company contributed the following medical outpatient properties to a joint venture in which the Company retained 20 % ownership:

one in each of Raleigh, NC, New York, NY, Philadelphia, PA, Atlanta, GA and Austin, TX;

two medical outpatient properties in Los Angeles and four in Seattle, WA.

Sale price and square footage reflect the total sale price paid by the joint venture and total square footage of the property.

The net proceeds to the Company related to these dispositions totaled $ 256.8 million.

2 The Company sold seven medical outpatient properties in Greensboro, NC and two medical outpatient properties in Raleigh, NC to a single buyer in a single transaction.

3 The amount in the net proceeds column for this portfolio disposition includes the receivable for the cash held in escrow that closed on June 28, 2024 and was received by the Company on July 1, 2024.

These proceeds were recorded as a receivable in other assets, net as of June 30, 2024.

Assets Held for Sale

The table below reflects the assets and liabilities classified as held for sale as of March 31, 2024 and December 31, 2023:

Dollars in thousands March 31, 2024 December 31, 2023

The Company had three properties classified as assets held for sale as of June 30, 2024 and one property classified as assets held for sale as of December 31, 2023.

The table below reflects the assets and liabilities classified as held for sale as of June 30, 2024 and December 31, 2023:

Dollars in thousands June 30, 2024 December 31, 2023

Balance Sheet data:

12 unchanged sentences

Liabilities of assets held for sale $ 1,805 $ 295

1 Net real estate assets held for sale includes the impact of $ 1.5 million of impairment charges for the three months ended March 31, 2024.

Lessor Accounting

2 unchanged sentences

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 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 single-tenant net leases generally require the lessee to pay

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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 Consumer Price Index ("CPI").

3 unchanged sentences

Variable payments are recognized in the period earned.

Lease income for the Company's operating leases recognized for the three months ended March 31, 2024 was $ 318.1 million.

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

Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sale-type lease, as of March 31, 2024 were as follows:

Lease income for the Company's operating leases recognized for the three and six months ended June 30, 2024 was $ 308.1 million and $ 626.2 million, respectively.

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

Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sale-type lease, as of June 30, 2024 were as follows:

Dollars in thousands OPERATING

1 unchanged sentence

2029 and thereafter 1,629,794

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Lessee Accounting

As of March 31, 2024, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases.

As of March 31, 2024, the Company had 231 properties totaling 16.9 million square feet that were held under ground leases.

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

As of June 30, 2024, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases.

As of June 30, 2024, the Company had 221 properties totaling 16.5 million square feet that were held under ground leases.

Some of the Company's ground lease 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 CPI.

The Company had 75 prepaid ground leases as of March 31, 2024.

The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 0.3 million of the Company’s rental expense for the three months ended March 31, 2024 and March 31, 2023.

The Company’s future lease payments (primarily for its 156 non-prepaid ground leases) as of March 31, 2024 were as follows:

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

The Company had 73 prepaid ground leases as of June 30, 2024.

The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 0.5 million and $ 0.3 million of the Company's rental expense for the three months ended June 30, 2024 and 2023, respectively, and $ 0.9 million and $ 0.7 million for the six months ended June 30, 2024 and 2023, respectively.

The Company’s future lease payments (primarily for its 148 non-prepaid ground leases) as of June 30, 2024 were as follows:

Dollars in thousands OPERATING FINANCING

8 unchanged sentences

Lease liabilities $ 230,601 $ 75,199

The following table provides details of the Company's total lease expense for the three months ended March 31, 2024 and 2023:

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The following table provides details of the Company's total lease expense for the three and six months ended June 30, 2024 and 2023:

THREE MONTHS ENDED

June 30, SIX MONTHS ENDED

Dollars in thousands 2024 2023 2024 2023

10 unchanged sentences

Financing cash flows outflows related to financing leases $ 4 $ 6 $ 30 $ 17

Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,561 $ — $ 2,561 $ —

Weighted-average years remaining lease term (excluding renewal options) - operating leases 45.9 47.3

2 unchanged sentences

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Notes and Bonds Payable

The table below details the Company’s notes and bonds payable as of March 31, 2024 and December 31, 2023.

MATURITY DATES BALANCE 1 AS OF

The table below details the Company’s notes and bonds payable as of June 30, 2024 and December 31, 2023.

MATURITY DATE BALANCE 1 AS OF

EFFECTIVE INTEREST RATE

28 unchanged sentences

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

2 As of June 30, 2024, the Company had $ 1.3 billion available to be drawn on its $ 1.5 billion Unsecured Credit Facility.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

3 In April 2024, the Company exercised its option to extend the maturity date for one year to May 2025 for a fee of approximately $ 0.3 million.

Changes in Mortgage Notes Payable

4 In June 2024, the Company repaid $ 100 million of the initial $ 350 million Unsecured Term Loan and exercised its second option to extend the maturity date for one year to July 2025 for a fee of approximately $ 0.3 million.

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 balance of $ 11.3 million.

12 unchanged sentences

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

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

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

1 unchanged sentence

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

As of March 31, 2024, the Company had 15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

As of June 30, 2024, the Company had 15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

AMOUNT WEIGHTED

5 unchanged sentences

$ 1,075,000 3.92 %

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

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

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of March 31, 2024.

BALANCE AT MARCH 31, 2024

The table below presents the fair value of the Company's derivative financial instruments and their classification on the Condensed Consolidated Balance Sheet as of June 30, 2024.

BALANCE AT JUNE 30, 2024

In thousands BALANCE SHEET LOCATION FAIR VALUE

4 unchanged sentences

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

The table below presents the effect of cash flow hedge accounting on AOCI during the three months ended March 31, 2024 and 2023 related to the Company's outstanding interest rate swaps.

The table below presents the effect of cash flow hedge accounting on AOCI during the three and six months ended June 30, 2024 and 2023 related to the Company's outstanding interest rate swaps.

(GAIN)/LOSS RECOGNIZED IN

AOCI ON DERIVATIVE

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

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

AOCI INTO INCOME

three months ended March 31,

three months ended June 30,

In thousands 2024 2023 2024 2023

3 unchanged sentences

$ ( 5,891 ) $ ( 21,523 ) Total interest expense $ ( 3,662 ) $ ( 3,419 )

(GAIN)/LOSS RECOGNIZED IN

AOCI ON DERIVATIVE

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

AOCI INTO INCOME

six months ended June 30,

In thousands 2024 2023 2024 2023

Interest rate swaps $ ( 25,501 ) $ ( 12,981 ) Interest expense $ ( 7,825 ) $ ( 6,000 )

Settled treasury hedges — — Interest expense 213 213

Settled interest rate swaps — — Interest expense 84 84

$ ( 25,501 ) $ ( 12,981 ) Total interest expense $ ( 7,528 ) $ ( 5,703 )

The Company estimates that an additional $ 10.5 million related to active interest rate swaps will be reclassified from AOCI as a decrease to interest expense over the next 12 months, and that an additional $ 0.6 million related to settled interest rate swaps will be amortized from AOCI as an increase to interest expense over the next 12 months.

Credit-risk-related Contingent Features

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

As of March 31, 2024, the fair value of derivatives in a net asset position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 7.6 million.

As of March 31, 2024, the Company had not posted any collateral related to these agreements and was not in breach of any agreement.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

As of June 30, 2024, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 0.3 million.

As of June 30, 2024, the Company had not posted any collateral related to these agreements and was not in breach of any agreement.

Commitments and Contingencies

Legal Proceedings

The Company is, from time to time, involved in litigation arising in the ordinary course of business.

From time to time, the Company is involved in litigation arising in the ordinary course of business.

The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

Development and Redevelopment Activity

For the three months ended March 31, 2024, the Company invested $ 7.7 million and $ 2.8 million toward active development and redevelopment of properties, respectively, and $ 11.1 million toward recently completed development and redevelopment projects.

For the six months ended June 30, 2024, the Company invested $ 35.6 million and $ 8.5 million toward active development and redevelopment of properties, respectively, and $ 22.3 million toward recently completed development and redevelopment projects.

Stockholders' Equity

The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the three months ended March 31, 2024 and the twelve months ended December 31, 2023:

THREE MONTHS ENDED MARCH 31, 2024 TWELVE MONTHS ENDED DECEMBER 31, 2023

The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the six months ended June 30, 2024 and the twelve months ended December 31, 2023:

SIX MONTHS ENDED JUNE 30, 2024 TWELVE MONTHS ENDED DECEMBER 31, 2023

Balance, beginning of period 380,964,433 380,589,894

Issuance of common stock 8,623 8,627

Conversion of OP unit to Common stock 194,767 190,544

Conversion of OP units to common stock 194,767 190,544

Shares Repurchased ( 17,242,237 ) —

Non-vested share-based awards, net of withheld shares and forfeitures 401,648 175,368

1 unchanged sentence

Common Stock Dividends

During the three months ended March 31, 2024, the Company declared and paid common stock dividends totaling $ 0.31 per share.

On April 30, 2024, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on May 23, 2024 to stockholders of record on May 13, 2024.

Authorization to Repurchase Common Stock

During the six months ended June 30, 2024, the Company declared and paid common stock dividends totaling $ 0.62 per share.

On Jul y 30, 2024, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on August 28, 2024 to stockholders of record on August 12, 2024.

Common Stock Repurchases

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.

This authorization supersedes all previous stock repurchase authorizations.

In April 2024, the Company repurch ased 2,966,764 shares of its common stock at a weighted average price of $ 14.07 for a total of $ 41.7 million under this authorization.

On April 30, 2024, the Company's Board of Directors authorized the repurchase of up to $ 500.0 million of outstanding shares of the Company's common stock, superseding the previous stock repurchase authorization.

The stock repurchase authorization expires on April 29, 2025, and the Company may suspend or terminate repurchases at any time without prior notice.

Under the Maryland General Corporation Law, outstanding shares of common stock acquired by a corporation become authorized but unissued shares, which may be re-issued.

In May and June 2024, the Company repurchased an aggregate of 14,275,473 shares of its common stock at a weighted average price of $ 16.18 for a total of $ 231.0 million under this authorization.

As of June 30, 2024, the Company was authorized to repurchase an additional $ 269.0 million of the Company's common stock.

Subsequent to June 30, 2024, the Company repurchased 1,296,985 shares of its common stock for a total of $ 21.8 million.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

2 unchanged sentences

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

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2024 and 2023.

THREE MONTHS ENDED MARCH 31,

The following table sets forth the computation of basic and diluted earnings per common share for the three and six months ended June 30, 2024 and 2023.

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

Dollars in thousands, except per share data 2024 2023 2024 2023

4 unchanged sentences

Weighted average common shares outstanding - basic 372,477,299 378,896,677 375,962,033 378,860,631

Dilutive effect of forward equity shares — —

Dilutive effect of OP Units — — — —

Dilutive effect of employee stock purchase plan — —

Weighted average common shares outstanding - diluted 372,477,299 378,896,677 375,962,033 378,860,631

6 unchanged sentences

Diluted earnings per common share - net loss $ ( 0.39 ) $ ( 0.22 ) $ ( 1.22 ) $ ( 0.45 )

The effect of OP Units redeemable for 3,681,225 shares and options under the Company's Employee Stock Purchase Plan (the "ESPP") to purchase 23,140 shares of the Company's common stock for the three months ended March 31, 2024 were excluded from the calculation of diluted loss per common share because the effect was anti-dilutive due to the loss from continuing operations incurred during that period.

The effect of OP Units redeemable for 3,657,682 shares and 3,669,454 shares for the three and six months ended June 30, 2024, respectively, 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 those periods.

Stock Incentive Plan

2 unchanged sentences

Equity Incentive Plans

During the three months ended March 31, 2024, the Company made the following equity awards:

During the six months ended June 30, 2024, the Company made the following equity awards:

• Restricted Stock

During the first quarter of 2024, the Company granted non-vested stock awards to its named executive officers and other members of senior management and employees with an aggregate grant date fair value of $ 5.6 million, which consisted of an aggregate of 361,712 non-vested shares with vesting periods ranging from three to eight years .

• During the first quarter of 2024, the Company granted non-vested stock awards to its named executive officers and other members of senior management with an aggregate grant date fair value of $ 5.6 million, which consisted of an aggregate of 361,712 non-vested shares with vesting periods ranging from three to eight years .

• During the second quarter of 2024, the Company granted to independent directors an aggregate of 58,910 shares of non-vested stock awards with a grant date fair value of $ 0.9 million, and an aggregate of 45,982 LTIP Series D units with a grant date fair value of $ 0.7 million.

The Company also granted non-vested stock awards to other members of senior management with an aggregate grant date fair value of $ 0.1 million, which consisted of an aggregate of 9,350 non-vested shares.

• Restricted Stock Units ("RSUs")

• On February 13, 2024, the Company granted an aggregate of 208,055 RSUs to members of senior management, with an aggregate grant date fair value of $ 3.5 million and a five-year vesting period.

Approximately 36 % of the RSUs vest based on relative total shareholder return ("TSR") and were valued using independent specialists.

The Company utilized a Monte Carlo simulation to calculate the weighted

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

average grant date fair value of $ 19.10 for the relative TSR component for the February 2024 grant using the following assumptions:

THREE MONTHS ENDED MARCH 31,

• On April 30, 2024, the Company granted an aggregate of 21,816 RSUs to members of senior management, with an aggregate grant date fair value of $ 0.3 million and a five-year vesting period.

Approximately 36 % of the RSUs vest based on relative total shareholder return ("TSR") and were valued using independent specialists.

The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $ 19.10 for the relative TSR component for the February 2024 grant using the following assumptions:

Volatility 28.0 %

6 unchanged sentences

• LTIP Series C Units

On February 13, 2024, the Company granted an aggregate of 906,044 LTIP Series C units ("LTIP-C units) in the OP with three-year forward-looking performance targets, a five-year vesting period and an aggregate grant date fair value of $ 7.5 million.

On February 13, 2024, the Company granted an aggregate of 906,044 LTIP Series C units ("LTIP-C units) in the OP to its named executive officers with three-year forward-looking performance targets, a five-year vesting period and an aggregate grant date fair value of $ 7.5 million.

Approximately 36 % of the LTIP-C units vest based on relative TSR and were valued using independent specialists.

The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $ 9.62 for the relative TSR component for the February 2024 grant using the following assumptions:

THREE MONTHS ENDED MARCH 31,

Volatility 28.0 %

6 unchanged sentences

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

The following table represents the summary of non-vested share-based awards under the Incentive Plans for the three months ended March 31, 2024 and 2023:

THREE MONTHS ENDED MARCH 31,

The following table represents the summary of non-vested share-based awards under the Incentive Plan for the three and six months ended June 30, 2024 and 2023:

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

2024 2023 2024 2023

Share-based awards, beginning of period 4,043,154 2,946,242 2,615,562 2,090,060

1 unchanged sentence

Vested ( 46,660 ) ( 74,304 ) ( 75,074 ) ( 188,070 )

Change in awards based on performance assessment ( 47,202 ) — ( 47,202 ) ( 79,250 )

Forfeited — ( 3,860 ) ( 19,805 ) ( 29,923 )

Share-based awards, end of period 4,085,059 2,911,354 4,085,059 2,911,354

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.

During the three months ended March 31, 2024 and 2023, the Company withheld 8,228 and 38,632 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested.

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 conditions have been satisfied and the exact number of awards are determinable.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.

The following table represents expected amortization of the Company's non-vested shares issued as of March 31, 2024:

The following table represents expected amortization of the Company's non-vested awards issued as of June 30, 2024:

Dollars in millions FUTURE AMORTIZATION

5 unchanged sentences

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

Fair value is estimated using cash flow analyses, based on current interest rates for similar types of arrangements.

Fair value is estimated using cash flow analyses, based on current interest rates for similar types of arrangements using level 2 inputs in the hierarchy.

However, the fair value of one note receivable was determined utilizing the fair value of the receivables' collateral, as the receivables are collateral-dependent, and were classified as level 3 inputs in the hierarchy.

• Borrowings under the Unsecured Credit Facility and the Term Loans Due 2024 and 2026 - The carrying amount approximates fair value because the borrowings are based on variable market interest rates.

3 unchanged sentences

See Note 5 for additional information.

The table below details the fair values and carrying values for notes and bonds payable and real estate notes receivable at March 31, 2024 and December 31, 2023.

March 31, 2024 December 31, 2023

The table below details the fair values and carrying values for notes and bonds payable and real estate notes receivable at June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

Dollars in millions CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE

2 unchanged sentences

Real estate notes receivable $ 168.8 $ 163.6 $ 173.6 $ 172.5

$ 174.4 $ 172.8 $ 173.6 $ 172.5

1 Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.

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

What changed 10-Q

Item 1. Financial Statements