What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-19 compared with 2024-02-16 · 240 added, 254 removed, 513 unchanged (49% of the section changed)

1 unchanged sentence

Disclosure Regarding Forward-Looking Statements

This report and other materials the Company have filed or may file with the SEC, as well as information included in oral statements or other written statements made, or to be made, by senior management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could” and other comparable terms.

This report and other materials the Company has filed or may file with the SEC, as well as information included in oral statements or other written statements made, or to be made, by senior management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could” and other comparable terms.

These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could materially affect the Company’s current plans and expectations and future financial condition and results.

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• The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company;

• The Company's results of operations have been and will continue to be impacted negatively by the Steward Health and Prospect Medical bankruptcies;

• Owning real estate and indirect interests in real estate is subject to inherent risks;

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• If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected;

• Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses;

• The Company has, and in the future may have more, exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense;

• The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition;

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• The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations;

• The Company is exposed to risks associated with geographic concentration;

• Many of the Company’s leases are dependent on the viability of associated health systems.

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• The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems;

• The Company may structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility;

• The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility;

• Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries

• The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid;

• The Company previously incurred and may continue to incur substantial expenses related to the Merger;

• Pandemics, such as COVID-19, and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition.

• Pandemics, and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition;

• The Company's success depends, in part, on its ability to attract and retain talented employees.

The loss of any one of the Company's key personnel or the inability to maintain appropriate staffing could adversely impact the Company's business.

Risks relating to our capital structure and financings

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The Company seeks to reduce financial and operational risk by owning properties in high-growth markets with a broad tenant mix that includes over 30 physician specialties, as well as surgery, imaging, cancer, and diagnostic centers.

As described in the Explanatory Note above and elsewhere in this report, on July 20, 2022, Legacy HR and Legacy HTA completed a merger between the companies in which Legacy HR merged with and into a wholly-owned subsidiary of Legacy HTA, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA.

As described in Item 1.

Business above and elsewhere in this report, on July 20, 2022, Legacy HR and Legacy HTA completed a merger between the companies in which Legacy HR merged with and into a wholly-owned subsidiary of Legacy HTA, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA.

Immediately following the Merger, Legacy HTA changed its name to “Healthcare Realty Trust Incorporated.” For accounting purposes, the Merger was treated as a “reverse acquisition” in which Legacy HR was considered the acquirer.

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These sources of revenue represent the Company's primary source of liquidity to fund its dividends and its operating expenses, including interest incurred on debt, principal payments on debt, general and administrative costs, capital expenditures and other expenses incurred in connection with managing its existing portfolio and investing in additional properties.

To the extent additional investments are not funded by these sources, the Company will fund its investment activity generally through equity or debt issuances either in the public or private markets, property dispositions or through proceeds from the Unsecured Credit Facility.

To the extent additional investments are not funded by these sources, the

Company will fund its investment activity generally through equity or debt issuances either in the public or private markets, asset sales and joint venture contributions or through proceeds from the Unsecured Credit Facility.

The Company expects to continue to meet its liquidity needs, including capital for additional investments, tenant improvement allowances, operating and finance lease payments, paying dividends, and funding debt service, through cash on hand, cash flows from operations and the cash flow sources addressed above.

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The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements.

The Company cannot,

however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.

The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.

The Company has exposure to variable interest rates and its common stock price is impacted by the volatility in the stock markets.

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Cash flows provided by operating activities for the two years ended December 31, 2024 and 2023 were $501.6 million and $499.8 million, respectively.

Several items impact cash flows from operating activities including, but not limited to, cash generated from property operations, merger-related costs, interest payments and the timing related to the payment of invoices and other expenses and receipt of tenant rent.

Several items impact cash flows from operating activities including, but not limited to, cash generated from property operations, interest payments and the timing related to the payment of invoices and other expenses and receipt of tenant rent.

The Company may, from time to time, sell properties and redeploy cash from property sales into new investments.

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See Note 5 to the Consolidated Financial Statements for more detail on these activities.

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

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

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

The Company had no real estate acquisition activity for the year ended December 31, 2024.

Investment in Unconsolidated Joint Ventures

In 2024, the Company's investment in unconsolidated joint ventures increased by $172.7 million, as a result of the Company's contribution of medical outpatient properties to two joint ventures in which it holds a 20% interest.

Capital Funding

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See "Trends and Matters Impacting Operating Results" below for more detail.

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

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

GAIN/(IMPAIRMENT) SQUARE FOOTAGE

Tampa/Miami, FL 2

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

Real Estate Notes Receivable

On June 24, 2024, the Company's two mezzanine loans in Texas with a total principal balance of $54.1 million matured.

On July 15, 2024, the senior lender on the construction mortgage loans associated with the underlying project initiated foreclosure proceedings to the borrower.

In the third quarter of 2024, the Company recorded an allowance for credit loss of $46.8 million to cover the entire carrying amount for these loans.

The Company had

previously placed the mezzanine loans on non-accrual status in 2023.

In the fourth quarter of 2024, the underlying project was sold, and the Company received $4.0 million as consideration for its mezzanine loan interests.

The Company no longer has a mezzanine loan position in connection with the project.

In 2024, the Company placed one of its real estate notes receivable with a principal balance of $31.2 million on non-accrual status.

The Company determined that the risk of credit loss was no longer remote and recorded a credit loss reserve of $16.8 million including $0.5 million of accrued interest in 2024.

In January 2025, the underlying real estate collateral was sold and the Company received $14.9 million towards the principal balance of this loan.

See Note 1 to the Consolidated Financial Statements accompanying this report for more information about real estate notes receivable and allowance for credit losses.

The following table details the Company's asset sales and joint venture contributions for the year ended December 31, 2024:

Dollars in thousands DATE DISPOSED SALE PRICE CLOSING COSTS & CREDITS COMPANY-FINANCED MORTGAGE NOTES NET CONSIDERATION NET REAL ESTATE INVESTMENT OTHER GAIN/(IMPAIR-MENT) 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

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

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

Los Angeles, CA 4

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

Los Angeles, CA 5

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

Raleigh, NC 2

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

Albany, NY 8/2/24 6,300 (847) — 5,453 5,528 486 (561) 180,000

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

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

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

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

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

Evansville, IN 6

Charlotte, NC 8/6/24 26,670 (395) — 26,275 14,853 613 10,809 90,633

Charleston, SC 8/13/24 14,500 (589) — 13,911 11,488 1 2,422 46,711

8/23/24 118,000 (8,615) — 109,385 113,956 548 (5,119) 266,782

8/27/24 177,250 (7,085) — 170,165 169,545 5,363 (4,743) 473,003

Austin, TX 9/13/24 42,281 (1,257) — 41,024 14,561 425 26,038 76,246

Raleigh, NC 9/26/24 1,813 (27) — 1,786 1,694 50 42 5,934

Houston, TX 4

Charleston, SC 7

10/3/24 12,000 (1,001) (9,630) 1,369 11,266 295 (563) 140,012

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

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

Tucson, AZ 8,9

Greensboro, NC 10/9/24 12,514 (21) — 12,493 10,152 296 2,045 35,373

Des Moines, IA 10/15/24 31,750 (1,320) — 30,430 13,869 1,662 14,899 95,486

Albany, NY 10/15/24 9,500 (521) — 8,979 7,823 1,193 (37) 80,676

Salt Lake City, UT 5

10/24/24 30,712 (8,962) — 21,750 26,899 (9,406) 4,257 112,192

Miami, FL 10/25/24 36,789 (706) — 36,083 35,925 (209) 367 102,186

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

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

Jacksonville/Orlando/Miami, FL 10

10/25/24 17,767 (718) — 17,049 14,650 (210) 2,609 60,761

Cleveland, OH 12/10/24 1,000 (157) — 843 1,454 57 (668) 31,152

12/12/24 18,350 (2,003) — 16,347 17,562 345 (1,560) 83,078

12/18/24 310,250 (6,767) — 303,483 321,437 6,616 (24,570) 766,622

Atlanta, GA 12/20/24 15,900 (1,318) — 14,582 13,344 635 603 42,921

Los Angeles, CA 7

12/20/24 64,000 (4,805) — 59,195 47,322 1,676 10,197 162,554

Tampa, FL 12/27/24 37,500 (402) — 37,098 41,556 (1,962) (2,496) 95,896

Wichita Falls, TX 12/27/24 600 (130) — 470 2,530 14 (2,074) 25,133

Total dispositions $ 1,450,312 $ (67,295) $ (9,630) $ 1,373,387 $ 1,291,584 $ 35,525 $ 55,907 4,132,769

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

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

3 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.

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

5 The Company sold a land parcel totaling 0.34 acres.

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

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

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

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

10 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.

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, Austin, TX, Miami, FL, Denver, CO, Memphis, TN, Indianapolis, IN, and Honolulu, HI;

two MOBs in Los Angeles;

three MOBs in Houston, TX and Dallas, TX;

and five 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 $584.9 million.

2 The Company sold seven MOBs in Greensboro, NC and two non-clustered single-tenant MOBs in Raleigh, NC to a single buyer in a single transaction.

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

one in each of Dallas, TX, San Antonio, TX and Atlanta, GA;

and two MOBs in each of Nashville, TN and Denver, CO.

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 $148.9 million.

4 The Company provided seller financing of approximately $9.6 million in connection with this sale.

5 The Company sold an MOB that was included in a consolidated joint venture in which the Company held a 63% ownership interest.

Proceeds include the Company's pro-rata share of the purchase price as well as amounts due to the Company by the joint venture.

6 Includes two properties.

7 Includes three properties.

Subsequent Dispositions

On February 7, 2025, the Company disposed of a 30,304 square foot medical outpatient building in Boston, Massachusetts for $4.5 million.

On February 14, 2025, the Company disposed of two medical outpatient buildings in Denver, Colorado, with a combined total of 69,715 square feet for an aggregate purchase price of $8.6 million.

Financing Activities

Common Stock Issuances

The Company has in place an at-the-market ("ATM") equity offering program to sell shares of the Company’s common stock from time to time in at-the-market sales transactions.

The Company has equity distribution agreements with various sales agents with respect to the ATM offering program with an aggregate sales amount of up to $750.0 million.

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

Common Stock Repurchases

During 2024, the Company repurchased 30.8 million shares of its common stock at an average price of $16.56 per share for a total of $509.8 million.

As of December 31, 2024, the Company had $237.0 million of authorized share repurchases remaining.

Debt Activity

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(dollars in millions) TRANSACTION DATE PRINCIPAL BORROWING (REPAYMENT) ENCUMBERED SQUARE FEET CONTRACTUAL INTEREST RATE

Debt assumptions:

Colorado Springs, CO 7/28/2023 $ 5.6 42,770 4.50 %

Mortgages repaid at maturity:

Atlanta, GA 8/1/2023 $ (9.8) 66,984 3.31 %

Lakewood, CO 12/1/2023 (6.6) 93,992 4.51 %

Total repayments $ (16.4) 160,976 3.79 %

Subsequent Activity

(dollars in millions) TRANSACTION DATE PRINCIPAL REPAYMENT ENCUMBERED SQUARE FEET CONTRACTUAL INTEREST RATE

Mortgages repaid at maturity:

West Hills, CA 1/6/2024 $ (11.3) 63,012 4.77 %

Atlanta, GA 2/1/2024 (5.6) 40,324 4.12 %

Minnesota 9/1/2024 (7.0) 64,143 4.15 %

Total repayments $ (23.9) 167,479 4.44 %

On April 26, 2023, the Company exercised the first of its two one-year extension options for the $350 million delayed-draw term loan facility, extending the initial maturity date of July 20, 2023 to July 20, 2024.

An extension fee of $0.4 million (0.125% of the committed funds) was paid and will be amortized over the extension term.

During 2024, the Company repaid its $350 million Unsecured Term Loan, due 2025 and recognized approximately $0.2 million of accelerated amortization expense included in the loss on extinguishment of debt.

Subsequent Activity

On January 7, 2025, the Company made a partial repayment of $25 million on its $200 million Unsecured Term Loan due 2025 .

On January 14, 2025 the Company made a partial repayment of $10 million on its $300 million Unsecured Term Loan due 2025 .

Interest Rate Swaps

As of December 31, 2023, the Company had outstanding interest rate derivatives totaling approximately $1.3 billion to hedge one-month SOFR.

As of December 31, 2024, the Company had outstanding interest rate derivatives totaling approximately $1.1 billion to hedge one-month Secured Overnight Financing Rate (“SOFR”).

The following details the amount and rate of each swap as of such date (dollars in thousands):

EXPIRATION AMOUNT WEIGHTED

January 2024 200,000 1.21 %

May 2026 $ 275,000 3.74 %

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December 2027 300,000 3.93 %

$ 1,275,000 3.49 %

2023 Interest Rate Swap Activity

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 with a notional amount of $75.0 million and 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.

Total $ 1,075,000 3.92 %

The following table details the Company's debt balances as of December 31, 2024:

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$150 million unsecured term loan 150,000 149,790 1.4 SOFR + 1.04% 5.59 %

$150 million unsecured term loan 150,000 149,643 2.4 SOFR + 1.05% 6.39 %

$300 million unsecured term loan 3

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The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such debt agreements.

Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create

liens or encumbrances.

Among other things, these provisions require the Company to maintain certain financial ratios and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances.

As of December 31, 2024, the Company was in compliance with the financial covenant provisions under all of its various debt instruments.

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Downgrades in ratings by the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on consolidated results of operations, liquidity and/or financial condition.

Supplemental Guarantor Information

The OP has issued unsecured notes described in Note 10 to the Company's Consolidated Financial Statements included in this report.

All unsecured notes are fully and unconditionally guaranteed by the Company, and the OP is 98.7% owned by the Company.

Effective January 4, 2021, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements which permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent.

Accordingly, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, the Company has excluded the summarized financial information for the OP because the assets, liabilities, and results of operations of the OP are not materially different than the corresponding amounts in the Company's Consolidated Financial Statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

Trends and Matters Impacting Operating Results

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Additionally, increased interest rates may also result in less liquid property markets, limiting the Company’s ability to sell existing assets or obtain joint venture capital.

The Company reviews goodwill for impairment annually as of December 31 of each year or whenever events or changes in circumstances indicate that an impairment may exist.

Given volatility in its stock price, the Company performed a quantitative assessment, and the fair value of the Company’s single reporting unit was estimated using a combination of discounted cash flow models and earnings multiples techniques.

The determination of fair value using the discounted cash flow model technique requires the use of estimates and assumptions related to revenue and expense growth rates, capitalization rates, discount rates, capital expenditures and working capital levels.

The determination of fair value using the earnings multiples technique requires assumptions to be made in relation to maintainable earnings and earnings multipliers.

These forecasts and assumptions are highly subjective, and while we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.

Although the quantitative assessment indicated goodwill was not impaired as of December 31, 2023, given the results of our quantitative assessment, the Company is at risk for future goodwill impairment because it is reasonably possible that, among other factors, continual stock price volatility and downward pressure on the Company's market capitalization could have a material impact on one or more of the estimates and assumptions used to evaluate goodwill.

Acquisitions and Dispositions

In 2023, the Company acquired two medical office buildings.

The total purchase price of the acquisitions was $43.0 million and the weighted average capitalization rate for these investments was 6.5%.

The Company disposed of 39 properties in 2023 for sales prices totaling $787.0 million, including a regional corporate office and one property contributed into a joint venture in which the Company maintains a non-controlling interest.

These transactions yielded net cash proceeds of $687.6 million, net of $36.9 million of closing costs and related adjustments, $58.7 million in Company financed notes and $3.8 million of retained joint venture interests.

In 2024, the Company completed no property acquisitions.

The Company disposed of 67 properties in 2024 for sales prices totaling $1.5 billion, including 30 properties contributed into two joint ventures in which the Company maintains a non-controlling interest.

These transactions yielded net cash proceeds of $1.2 billion, net of $67.3 million of closing costs and related adjustments and $172.7 million of retained joint venture interests.

The weighted average capitalization rate for these properties was 6.6%.

The Company calculates the capitalization rate for dispositions as the in-place cash net operating income divided by the sales price.

See the Company's discussion of its 2023 acquisition and disposition activity in Note 5 to the Consolidated Financial Statements.

See the Company's discussion of its 2024 disposition activity in Note 5 to the Consolidated Financial Statements.

Development and Redevelopment Activity

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Development Activity

Nashville, TN 1 $ 11,971 $ 37,330 $ 6,670 $ 44,000 106,194

Orlando, FL 1

2 16,047 32,680 32,320 65,000 156,566

Raleigh, NC 1 $ 11,602 $ 44,994 $ 7,606 $ 52,600 122,991

Phoenix, AZ 1 33,609 54,950 3,050 58,000 101,086

Fort Worth, TX 1 30,076 30,076 18,124 48,200 101,000

Total $ 75,287 $ 130,020 $ 28,780 $ 158,800 325,077

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Washington, DC 1 4,212 8,995 1,083 10,078 57,323

White Plains, NY 1 4,601 4,601 14,799 19,400 65,851

Raleigh, NC 1 768 768 10,032 10,800 40,400

Total $ 36,053 $ 61,187 $ 45,348 $ 106,535 906,860

1 This project is funded through a construction note receivable.

The Company funded an additional $22.6 million related to ongoing tenant improvements at previously completed projects.

The Company is in the planning stages with several health systems and developers regarding new development and redevelopment opportunities and one or more could begin in 2024.

Total costs to develop or redevelop a typical medical office building can vary depending on the scope of the project, market rental terms, parking configuration, building amenities, asset type and geographic location.

The Company’s disclosures regarding certain estimates or projections may not be indicative of actual results.

For previously completed development and redevelopment projects, during 2024, the Company funded an additional $39.2 million related to ongoing tenant improvements.

The Company maintains discussions with health systems and developers regarding long-term future new development opportunities.

In addition, the Company continually evaluates its portfolio for accretive redevelopment opportunities.

Security Deposits and Letters of Credit

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Expiring Leases

The Company expects that approximately 15% to 20% of the leases in its portfolio will expire each year.

The Company expects that approximately 15% of the leases in its portfolio will expire each year.

In-place leases have a weighted average lease term of 8.3 years and a weighted average remaining lease term of 4.2 years.

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In 2025, the Company has 1,359 leases totaling 4.3 million square feet in its multi-tenant portfolio that are scheduled to expire.

Of those leases, 74% are in on-campus buildings, which, in our experience, tend to have high tenant retention rates between 75% to 90%.

See additional information regarding expiring single-tenant leases under the heading "Single-Tenant Leases" below.

The Company continues to emphasize its contractual rent increases for in-place leases.

The Company seeks contractual rent increases for in-place leases.

As of December 31, 2024 and 2023, the Company's contractual rental rate growth averaged 2.83% and 2.82%, respectively, for in-place leases.

In addition, the Company continued to see strong quarterly weighted average rental rate growth for renewing leases ("cash leasing spread") and expects the majority of its renewal rates to increase between 3.0% and 4.0%.

In addition, the Company continued to see strong quarterly weighted average rental rate growth for renewing leases ("cash leasing spread").

In 2024, cash leasing spreads averaged 3.3%.

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Net leases, in which tenants pay substantially all operating expenses, total 59% of the leased portfolio.

Absolute net leases, in which tenants pay substantially all the building's operating and capital expenses, comprise 5%.

Absolute net leases, in which tenants pay substantially all of the building's operating and capital expenses, comprise 4%.

Steward Health

As previously disclosed, on May 6, 2024, Steward Health announced that it had filed petitions for relief under Chapter 11 of the U.S.

Bankruptcy Code in the U.S.

Bankruptcy Court for the Southern District of Texas.

Prior to the bankruptcy filing, Steward leased approximately 593,000 square feet of space from the Company.

Leases for six buildings in Massachusetts totaling approximately 244,000 square feet were assumed in connection with the sale of Steward’s Massachusetts hospitals on or about September 30, 2024.

In October 2024, the Company received $2.2 million for prior rent owed under these assumed leases.

Leases for approximately 349,000 square feet in buildings in Florida and Massachusetts were rejected by Steward.

The total annual revenue associated with the rejected leases was approximately $13.0 million.

The Company made significant progress re-leasing space previously occupied by Steward Health, with leases representing over 80% of the rejected Steward Health square feet.

Prospect Medical

On January 11, 2025, Prospect Medical Holdings filed petitions for relief under Chapter 11 of the U.S.

Bankruptcy Code in the U.S.

Bankruptcy Court for the Northern District of Texas.

Prospect leases approximately 80,912 square feet of space from the Company, accounting for approximately $2.9 million of annual revenue.

The Company moved to cash basis accounting for these leases and recorded a reserve of $0.7 million in the fourth quarter.

While it is early in the bankruptcy proceedings and the Company is in discussions with Prospect regarding its leases with the Company, there can be no assurance that the Company will recover unpaid rent from Prospect.

Capital Expenditures

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The first and second generation tenant overage amount amortized to rent, including interest, totaled approximately $7.8 million in 2024, $8.4 million in 2023, and $7.5 million in 2022.

Second generation, multi-tenant tenant improvement commitments in 2023 for renewals averaged $1.78 per square foot per lease year, ranging quarterly from $1.64 to $1.89.

Second generation tenant improvement commitments in 2024 for renewals averaged $2.14 per square foot per lease year, ranging quarterly from $1.80 to $2.39.

In 2023, these commitments averaged $1.78 per square foot per lease year, ranging quarterly from $1.64 to $1.89.

In 2022, these commitments averaged $1.76 per square foot per lease year, ranging quarterly from $1.46 to $1.90.

Second generation, multi-tenant tenant improvement commitments in 2023 for new leases averaged $5.69 per square foot per lease year, ranging quarterly from $4.44 to $7.11.

Second generation tenant improvement commitments in 2024 for new leases averaged $7.22 per square foot per lease year, ranging quarterly from $6.93 to $7.34.

In 2023, these commitments averaged $5.69 per square foot per lease year, ranging quarterly from $4.44 to $7.11.

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In 2023, the Company paid leasing commissions of approximately $35.9 million, or $0.93 per square foot.

In 2022, the Company paid leasing commissions of approximately $22.9 million, or $0.57 per square foot.

As a percentage of total cash net operating income, leasing commissions paid for 2024, 2023 and 2022 were 6.0%, 4.3% and 4.0%, respectively.

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As of December 31, 2024, the Company had a total of 110 single-tenant buildings, with a weighted average lease term of 11.6 years and a weighted average remaining lease term of 5.5 years.

Twenty-one single-tenant buildings have leases that expire in 2024.

Eleven of these leases have been renewed.

The Company is in negotiations with eight of the tenants and expects the leases to be renewed or the building to be immediately backfilled.

Twenty-two single-tenant buildings have leases that expire in 2025.

Five of these leases have been renewed.

The Company is in negotiations with tenants in fifteen of these buildings and expects the leases to be renewed or the building to be backfilled.

The Company expects the tenants of two of these single-tenant buildings to vacate the buildings upon lease expiration.

One of these buildings is part of a planned redevelopment and the other is expected to be leased or sold.

The expected lost revenue from these expirations in 2024 is $3.8 million.

The annual base rent for leases that are not expected to renew or be backfilled in 2025 is $4.1 million.

Operating Leases

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Total 44 $ 1,173,065

1 Purchase option prices are based on fair market value components that are determined by an appraisal process, except for three properties totaling $45.3 million with stated prices or prices based on fixed capitalization rates.

1 Purchase option prices are based on fair market value components that are determined by an appraisal process, except for three properties totaling $45.4 million wi th stated prices or prices based on fixed capitalization rates.

2 These purchase options have been exercisable for an average of 15.1 years.

3 Includes two medical office buildings that are recorded in the line item Investment in financing receivable, net on the Company's Consolidated Balance Sheet.

3 Includes two medical outpatient properties tha t are recorded in the line item Investment in financing receivable, net on the Company's Consolidated Balance Sheet.

Debt Management

The Company maintains a conservative and flexible capital structure that allows it to fund new investments and operate its existing portfolio.

The Company has approximately $70.8 million of mortgage notes payable, most of which were assumed when the Company acquired properties.

The Company has approximately $24.1 million of mortgage notes payable that will mature in 2024.

The Company maintains a flexible capital structure that allows it to fund new investments and operate its existing portfolio.

The Company has approximately $45.3 million of mortgage notes payable, maturing in 2025 and 2026 , most of which were assumed when the Company acquired properties.

The Company will repay mortgages with cash on hand or borrowings under the Unsecured Credit Facility.

See additional information in Liquidity and Capital Resources - Financing Activities.

The Company had $1.5 billion of outstanding debt that matures in 2025 and 2026.

See additional information in “Liquidity and Capital Resources - Financing Activities” above.

Impact of Inflation

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The Company's leases have a weighted average lease term remaining of approximately 4.2 years.

The Company has 94.9% of leases that provide for fixed base rent increases and 5.1% that provide for Consumer Price Index-based rent increases as of December 31, 2023.

As of December 31, 2024 , 95.6% of the Company's leases provide for fixed base rent increases and 4.4% provide for Consumer Price Index-based rent increases.

New Accounting Pronouncements

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The Company’s consolidated results of operations for 2023 compared to 2022 were significantly impacted by the Merger, acquisitions, dispositions, gain on sales and impairment charges recorded on real estate properties, and capital markets transactions.

Rental income increased $401.7 million, or 44.3%, to approximately $1.3 billion compared to $907.5 million in the prior year as a result of the following:

• Impact from the Merger contributed $377.0 million.

• Acquisitions in 2022 and 2023 contributed $19.4 million.

• Leasing activity contributed $21.5 million.

The Company’s consolidated results of operations for 2024 compared to 2023 were impacted by acquisitions, developments, dispositions, gain on sales and impairment charges recorded on real estate properties, and capital markets transactions.

Rental income decreased $76.4 million, or 5.8%, as a result of the following:

• Dispositions in 2023 and 2024 resulted in a decrease of $96.3 million.

Interest income increased $5.7 million, or 49.3%, from the prior year primarily as result of notes receivables assumed in the Merger and notes receivables entered into with a buyer upon disposition of properties during 2023.

Other operating income increased $3.7 million, or 27.3%, from the prior year primarily as a result of income from transient parking and management fees assumed with the Merger.

Property operating expenses increased $156.4 million, or 45.5%, from the prior year primarily as a result of the following activity:

• Impact from the Merger resulted in an increase of $130.9 million.

• Acquisitions in 2022 and 2023 resulted in an increase of $8.9 million.

• Acquisitions and developments in 2023 and 2024 contributed $2.3 million.

• Leasing activity, including contractual rent increases contributed $24.5 million.

• Reversed revenue related to the Steward bankruptcy resulted in a decrease of $6.2 million, including straight-line rent of $2.7 million.

• Reversed revenue related to the Prospect Medical bankruptcy resulted in a decrease of $0.7 million.

Other operating income increased $1.7 million, or 9.8%, from the prior year primarily as a result of income from management fees.

Property operating expenses decreased $27.0 million, or 5.4%, from the prior year primarily as a result of the following activity:

• Dispositions in 2023 and 2024 resulted in a decrease of $35.9 million.

• Acquisitions and developments in 2023 and 2024 resulted in an increase of $0.8 million.

• Increases in portfolio operating expenses as follows:

◦ Utilities expense of $7.0 million;

◦ Administrative, leasing commissions, and other legal expense of $5.7 million;

◦ Maintenance and repair expense of $4.9 million;

◦ Janitorial expense of $1.9 million;

◦ Administrative, primarily leasing commissions, of $5.1 million;

◦ Utilities of $2.7 million;

◦ Property taxes of $1.9 million;

◦ Security expense of $0.3 million;

• Dispositions in 2022 and 2023 resulted in a decrease of $1.7 million.

• Property tax expense decreased $1.0 million.

• Insurance expense decreased $0.3 million.

◦ Janitorial expense of $0.2 million.

• Decreases in portfolio operating expenses were due to maintenance and repair expenses of $1.3 million and compensation expense of $0.8 million.

General and administrative expenses increased approximately $24.7 million, or 42.3%, from the prior year primarily as a result of the following activity:

• Net increases, primarily due to impacts from the Merger, including professional fees, audit services, insurance, travel and other administrative costs, of $5.6 million.

• Payroll and related expenses of $1.5 million, of which $1.3 million was related to severance.

• Decrease in non-cash compensation incentive expense of $1.4 million.

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, included a refund of $17.8 million for transfer taxes paid during the year ended December 31, 2022.

Depreciation and amortization expense increased $277.6 million, or 61.3%, from the prior year primarily as a result of the following activity:

• Impact from the Merger, including purchase accounting fair value adjustments, resulted in an increase of $251.2 million.

• Acquisitions in 2022 and 2023 resulted in an increase of 9.8 million.

• Various building and tenant improvement expenditures caused an increase of $28.3 million.

• Increase in restructuring and severance-related charges of $28.3 million

• Decrease in payroll and payroll related expenses of approximately $2.4 million.

• Increase in cash compensation expense of $1.4 million.

• Increase in non-cash compensation incentive expense of $0.9 million.

• Other decreases including travel, legal and other administrative costs of $3.5 million.

There were no merger-related costs for the year ended December 31, 2024.

Merger-related costs for the year ended December 31, 2023, included legal and consulting fees, which were offset by a refund related to state transfer taxes.

Depreciation and amortization expense decreased $55.6 million, or 7.6%, from the prior year primarily as a result of the following activity:

• Dispositions in 2023 and 2024 resulted in a decrease of $56.6 million.

• Acquisitions and developments in 2023 and 2024 resulted in an increase of $0.9 million.

• Various building and tenant improvement expenditures resulted in an increase of $39.0 million.

• Assets that became fully depreciated resulted in a decrease of $38.9 million.

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Gain on Sales of Real Estate Properties

Gain on sales of real estate properties totaling approximately $77.5 million and $270.3 million are associated with the sales of 12 and ten real estate properties during 2023 and 2022, respectively.

Gains on the sale of real estate properties and other assets for the years ended December 31, 2024 and 2023 totaled $109.8 million and $77.5 million, respectively.

Interest Expense

Interest expense increased $111.9 million for the year ended December 31, 2023 compared to the prior year.

Interest expense decreased $16.2 million for the year ended December 31, 2024 compared to the prior year.

The components of interest expense are as fol lows:

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Total interest expense $ 242,425 $ 258,584 $ (16,159) (6.2) %

Contractual interest increased $90.2 million, or 76.4%, primarily as a result of the following activity:

• Senior notes and unsecured term loans assumed in the Merger accounted for an increase of approximately $54.7 million.

• New unsecured term loans executed with the amended credit facility accounted for an increase of approximately $30.1 million.

• The Company's Unsecured Term Loans due 2024 and due 2026, accounted for an increase of approximately $11.9 million.

• The Unsecured Credit Facility accounted for an increase of approximately $10.4 million.

• Active interest rate derivatives accounted for a decrease of $16.6 million.

Contractual interest decreased $11.9 million, or 5.7%, primarily as a result of the following activity:

• The Unsecured Term Loans accounted for an decrease of approximately $4.8 million, primarily due to the repayment of the $350 million Unsecured Term Loan, due 2025.

• The Unsecured Credit Facility accounted for a decrease of approximately $11.4 million .

• Active interest rate derivatives account ed for a decrease of $2.5 million, while expired interest rate derivatives accounted for an increase of $8.2 million.

• Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $1.4 million.

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Impairment of real estate assets in 2024 totaling approximately $249.9 million is associated with completed or planned disposition activity.

Additionally, the Company recorded $5.2 million of credit loss reserves on its mortgage notes receivable.

Additionally, the Company recorded $59.5 million of credit loss reserves on its mortgage note receivables and a $4.1 million fair value adjustment for an equity investment in other assets.

Impairment of real estate assets in 2023 totaling approximately $149.7 million is associated with completed or planned disposition activity.

Additionally, the Company recorded $5.2 million of credit loss reserves on its mortgage notes receivable.

Impairment of Goodwill

During the first quarter of 2024, the Company determined that the carrying value of its single reporting unit exceeded estimated fair value and therefore recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the consolidated statements of operations.

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

Equity income (loss) from unconsolidated joint ventures

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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

The Company's discussion regarding the comparison of the year ended December 31, 2022 compared to the year ended December 31, 2021 was previously disclosed beginning on page 39 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023, and is incorporated herein by reference.

The Company's discussion regarding the comparison of the year ended December 31, 2023 compared to the year ended December 31, 2022 was previously disclosed beginning on page 37 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024, and is incorporated herein by reference.

Non-GAAP Financial Measures and Key Performance Indicators

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Normalized FFO is presented by adding to FFO acquisition-related costs, acceleration of debt issuance costs, debt extinguishment costs and other Company-defined normalizing items to evaluate operating performance.

FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense and provision for bad debts, net;

FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense

and provision for bad debts, net;

and subtracting straight-line rent income, net of expense, and maintenance capital expenditures, including second generation tenant improvements, capital expenditures and leasing commissions paid.

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However, real estate values instead have historically risen or fallen with market conditions.

The Company believes that by excluding the effect of depreciation,

amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods.

The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods.

The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs.

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Gain on sales of real estate assets (104,684) (77,546) (270,271)

Impairments 149,717 54,427 17,101

Impairment of real estate properties 249,909 149,717 54,427

Real estate depreciation and amortization 690,988 738,526 459,211

Non-controlling income from operating partnership units (3,426) (5) —

Proportionate share of unconsolidated joint ventures 18,116 12,722 5,541

Non-controlling loss from operating partnership units (9,149) (3,426) (5)

Unconsolidated JV depreciation and amortization 20,678 18,116 12,722

FFO adjustments $ 847,742 $ 825,387 $ 256,084

FFO adjustments per common share - diluted $ 2.29 $ 2.15 $ 1.01

$ 2.15 $ 1.01 $ 1.22

FFO attributable to common stockholders $ 193,257 $ 547,126 $ 296,981

FFO attributable to common stockholders per common share - diluted $ 0.52 $ 1.43 $ 1.17

$ 1.43 $ 1.17 $ 1.68

Acquisition and pursuit costs 2

2,026 3,229 3,930

Transaction costs 3,122 2,026 3,229

Merger-related costs 2

— (1,952) 103,380

Merger-related fair value of debt instruments 42,885 21,248 —

Lease intangible amortization (2,054) 860 1,028

Allowance for credit losses 4

Non-routine legal costs/forfeited earnest money received 1,077 175 771

Debt financing costs 237 (62) 3,145

Severance costs 1,445 — —

Restructuring and severance-related charges 29,852 1,445 —

Credit losses and gains (losses) on other assets, net 3

59,707 8,599 —

Impairment of goodwill 250,530 — —

Merger-related fair value of debt instruments 40,667 42,885 21,248

Unconsolidated JV normalizing items 4

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Normalized FFO adjustments per common share - diluted $ 1.04 $ 0.14 $ 0.52

$ 0.14 $ 0.52 $ 0.03

Normalized FFO attributable to common stockholders $ 576,785 $ 601,491 $ 430,112

Normalized FFO attributable to common stockholders per common share - diluted $ 1.56 $ 1.57 $ 1.69

$ 1.57 $ 1.69 $ 1.71

Non-real estate depreciation and amortization 1,478 2,566 2,217

Non-cash interest expense amortization 6

Non-cash interest amortization, net 5

5,101 4,968 5,129

Provision for bad debt, net 3,163 516 73

Straight-line rent income, net (32,592) (20,124) (4,303)

Share-based compensation 13,791 14,294 10,729

Rent reserves, net 714 3,163 516

Straight-line rent, net (27,254) (32,592) (20,124)

Stock-based compensation 14,036 13,791 14,294

Unconsolidated JV non-cash items 6

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Leasing commissions paid (47,450) (36,391) (22,929)

Capital expenditures (49,343) (48,913) (19,582)

Maintenance capital expenditures (151,815) (105,462) (57,687)

Building capital (33,934) (49,343) (48,913)

FAD $ 419,108 $ 440,538 $ 325,476

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369,767 383,381 254,622

1 Potential common shares are not included in the computation of diluted earnings per share when a loss exists as the effect would be an antidilutive per share amount.

2 Acquisition and pursuit costs include third-party and travel costs related to the pursuit of acquisitions and developments.

1 Potential common shares are not included in diluted earnings per share when a loss exists as the effect would be antidilutive.

2 Includes costs incurred related to the Merger.

For the year ended December 31, 2023, Merger costs are net of a refund of $17.8 million for transfer taxes paid during the year ended December 31, 2022.

4 For the year ended December 31, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities.

5 Includes the Company's proportionate share of acquisition and pursuit costs related to unconsolidated joint ventures.

For the year ended December 31, 2023, Merger-related costs are net of a refund of $17.8 million for transfer taxes paid during the year ended December 31, 2022.

3 For the year ended December 31, 2024, includes $59.6 million in credit loss reserves, net of recoveries on four notes receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, $5.1 million gain on sale of other assets included in "Gains on sales of real estate and other assets" on the Statement of Operations, $4.1 million loss on other asset included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations, and a $1.1 million straight line rent reversal included in "Rental income" on the Statement of Operations.

For the year ended December 31, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities.

4 Includes the Company's proportionate share of lease intangible amortization related to unconsolidated joint ventures.

5 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.

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7 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 556,201, 397,168, and 748,385 for the years ended December 31, 2024, 2023, and 2022, respectively.

Merger Combined Same Store Cash NOI

Cash NOI and Merger Combined Same Store Cash NOI are key performance indicators.

Cash Net Operating Income ("NOI") and Same Store Cash NOI

Cash NOI and Same Store Cash NOI are key performance indicators.

Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results.

The Company defines Cash NOI as rental income plus interest from financing receivables, less property operating expenses.

Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, financing receivable amortization, tenant improvement amortization, leasing commission amortization, and cash lease termination fees.

The Company defines Cash NOI as rental income, interest from financing receivables less property operating expenses.

The Company also excludes cash lease termination fees.

Cash NOI is historical and not necessarily indicative of future results.

Merger Combined Same Store Cash NOI compares Cash NOI for stabilized properties.

Same Store Cash NOI compares Cash NOI for stabilized properties.

Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented.

Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale or intended for sale, properties undergoing redevelopment, and newly-redeveloped or developed properties.

Legacy HTA properties that met the same store criteria are included in both periods shown as if they were owned by the Company for the full analysis period.

The Legacy HR same store pool represented approximately 35% of the NOI of the combined company at the time of the Merger.

Management believes that continued reporting of the same store portfolio of only the pre-Merger accounting acquirer (i.e., Legacy HR) offered little value to the investor who was seeking to understand the operating performance and growth potential of the combined company.

The Company was provided access to the underlying financial statements of Legacy HTA (which financial statements had been audited or, in the case of interim periods, reviewed) and other detailed information about each property, such as the acquisition date.

Based on this available information, the Company was able to consistently apply its same store definition across the combined portfolio, resulting in approximately 85% of the combined portfolio being represented in the same store presentation.

The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction for such properties through the application of additional resources including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures.

As of December 31, 2023, recently acquired properties were included in the merger combined same store pool after the Company owned the property for eight full quarters.

Newly developed properties have been included in the merger combined same store pool eight full quarters after substantial completion.

The following table reflects the Company's Merger Combined Same Store Cash NOI for the years ended December 31, 2023 and 2022.

Any recently acquired property will be included in the same store pool once the Company has owned the property for eight full quarters.

Newly-developed or redeveloped properties will be included in the same store pool eight full quarters after substantial completion.

The following table reflects the Company's Same Store Cash NOI for the years ended December 31, 2024 and 2023.

NUMBER OF PROPERTIES GROSS INVESTMENT

at December 31, 2023 MERGER COMBINED SAME STORE CASH NOI for the year ended December 31,

at December 31, 2024 SAME STORE CASH NOI for the year ended December 31

Dollars in thousands 2024 2023

Merger combined same store properties 597 $ 12,088,929 $ 726,574 $ 707,385

Joint venture merger combined same store properties 18 $ 227,064 $ 12,150 $ 11,523

The following tables reconcile net income to Merger Combined Same Store NOI and the merger combined same store property metrics to the total owned real estate portfolio for the years ended December 31, 2023 and 2022:

Reconciliations of Legacy HR and Merger Combined Same Store Cash NOI

MERGER COMBINED SAME STORE RECONCILIATION

Same store properties 556 $ 10,810,884 $ 670,867 $ 652,420

Joint venture same store properties 29 $ 322,639 $ 17,595 $ 16,869

The following tables reconcile net loss to Same Store NOI and the same store property metrics to the total owned real estate portfolio for the years ended December 31, 2024 and 2023:

Reconciliation of Same Store Cash NOI

SAME STORE RECONCILIATION

YEAR ENDED DECEMBER 31,

Dollars in thousands 2024 2023

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

Other expense (income) 336,227 (64,519)

Net loss $ (663,904) $ (282,083)

Other expense 697,381 336,227

General and administrative expense 83,121 58,405

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23,446 13,413

Straight-line rent revenue, net (32,592) (23,498)

Straight-line rent, net (26,115) (32,592)

Joint venture properties 24,219 19,176

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(31,967) (17,249)

826,006 577,917

Pre-Merger Legacy HTA NOI — 280,421

Cash NOI 781,333 826,006

Cash NOI not included in same store (92,871) (156,717)

Merger combined same store cash NOI, including joint ventures 738,724 718,908

Same store cash NOI 688,462 669,289

Same store joint venture properties (17,595) (16,869)

Wholly-owned merger combined same store cash NOI $ 726,574 $ 707,385

1 Includes acquisition and pursuit costs, Merger-related costs, rent reserves, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense.

2 Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.

LEGACY HR SAME STORE RECONCILIATION

YEAR ENDED DECEMBER 31,

Dollars in thousands 2023 2022

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

Other expense (income) 336,227 (64,519)

General and administrative expense 58,405 52,734

Depreciation and amortization expense 730,709 453,082

Other expenses 1

12,653 120,576

Straight-line rent revenue, net (32,592) (23,498)

Joint venture properties 19,176 15,222

Other revenue 2

(20,311) (16,577)

826,006 577,917

Cash NOI not included in same store (482,779) (250,066)

Legacy HR same store cash NOI, including joint ventures 343,227 327,851

Legacy HR same store joint venture properties (7,745) (7,275)

Legacy HR same store cash NOI 3

$ 335,482 $ 320,576

Same store cash NOI (excluding JVs) $ 670,867 $ 652,420

Includes transaction costs, Merger-related costs, rent reserves, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense.

Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.

3 Legacy HR same store cash NOI includes 240 properties.

Reconciliation of Merger Combined Same Store Properties

Reconciliation of Same Store Properties

AS OF DECEMBER 31, 2024

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FEET OCCUPANCY

Merger combined same store properties

Same store properties

556 $ 10,810,884 31,850 89.8 %

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Wholly owned and joint venture acquisitions 33 172,330 2,388 94.3 %

Development completions 5 120,425 403 67.0 %

Redevelopments 16 415,763 1,369 54.8 %

Wholly owned and joint venture development completions 5 191,113 553 57.7 %

Wholly owned and joint venture redevelopments 25 545,331 1,874 63.0 %

Planned Dispositions 3 50,245 144 58.3 %

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Joint venture properties 65 556,897 4,253 87.4 %

34 359,635 1,949 86.2 %

Total wholly-owned real estate properties 586 $ 11,535,645 34,192 88.3 %

1 Excludes assets held for sale, construction in progress, land held for development, corporate property and financing lease right-of-use assets unrelated to an imputed lease arrangement as a result of a sale leaseback transaction.

2 Includes one property held in a consolidated joint venture.

Application of Critical Accounting Policies to Accounting Estimates

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Management has reviewed the Company’s critical accounting policies with the Audit Committee of the Board of Directors.

Management believes the following paragraphs in this section describe the application of critical accounting policies and estimates by management to arrive at the critical accounting estimates reflected in the Consolidated Financial Statements.

The Company’s accounting policies are more fully discussed in Note 1 to the Consolidated Financial Statements.

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The overhead load factors are computed to absorb that portion of indirect employee costs (payroll and benefits, training, and similar costs) that are attributable to the productive time the employee incurs working directly on projects.

The employees in the Company’s

development departments who work on these projects maintain and report their hours, by project.

The employees in the Company’s development departments who work on these projects maintain and report their hours, by project.

Employee costs that are administrative, such as vacation time, sick time, or general and administrative time, are expensed in the period incurred.

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As of December 31, 2024 and 2023, the Company's Consolidated Balance Sheets include capitalized pursuit costs relating to potential developments totaling $4.9 million and $6.2 million, respectively.

The Company expensed costs related to the pursuit of acquisitions totaling $0.8 million, $1.0 million and $2.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

In addition, the Company expensed costs related to the pursuit of developments totaling $0.8 million, $2.2 million and $1.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Furthermore, the Company expensed costs related to the Merger totaling $(2.0) million, including a refund of $17.8 million for transfer taxes paid during the year ended December 31, 2022, and $103.4 million for the years ended December 31, 2023 and 2022, respectively.

The Company expensed costs related to the pursuit of acquisitions and dispositions totaling $1.7 million, $0.8 million and $1.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

In addition, the Company expensed costs related to the

pursuit of developments totaling $1.1 million, $0.8 million, and $2.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Valuation of Long-Lived Assets Held and Used, Unconsolidated Joint Ventures, Intangible Assets and Goodwill

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

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

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

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

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The Company may, from time to time, be approached by a third party with an interest in purchasing one or more of the Company's operating real estate properties that were otherwise not for sale.

Alternatively, the Company may

explore disposing of an operating real estate property but without specific intent to sell the property and without the property meeting the criteria to be classified as held for sale (see discussion below).

Alternatively, the Company may explore disposing of an operating real estate property but without specific intent to sell the property and without the property meeting the criteria to be classified as held for sale (see discussion below).

In such cases, the Company and a potential buyer typically negotiate a letter of intent followed by a purchase and sale agreement that includes a due diligence timeline for completion of customary due diligence procedures.

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The Company also performs an annual goodwill impairment review.

The Company's reviews are performed as of December 31 of each year.

The 2023 and 2022 reviews indicated that no impairment had occurred with respect to the Company's goodwill asset of $250.5 million and $223.2 million, respectively.

The Company's reviews are typically performed as of December 31 of each year.

However, during the first quarter of 2024, the Company experienced a sustained decline in the price per share of its common stock, which was identified as an indicator of goodwill impairment.

result, a goodwill evaluation was performed.

As of the measurement date, the Company's current operations are carried out through a single reporting unit that had a carrying value of approximately $12.0 billion.

The Company determined that the carrying value exceeded estimated fair value and therefore an impairment of goodwill was recorded.

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 Consolidated Statements of Operations.

In 2023, a review indicated that no impairment had occurred with respect to the Company's goodwill asset of $250.5 million.

Long-Lived Assets to be Disposed of by Planned Sale

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A property or disposal group classified as held for sale is initially measured at the lower of its carrying amount or fair value less estimated costs to sell.

An impairment charge is recognized for any initial adjustment of the property's or disposal group's carrying amount to its fair value less estimated costs to sell in the period the held for sale criteria are

The fair value less estimated costs to sell the property (disposal group) should be assessed each reporting period it remains classified as held for sale.

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The Company recorded impairment charges totaling $249.9 million for the year ended December 31, 2024 related to real estate properties and other long-lived assets.

The impairment charges related to 31 properties sold and six additional properties associated with planned disposition activity in 2024.

The impairment charges related to 51 properties sold and 13 additional properties associated with planned disposition activity in 2025.

The Company recorded impairment charges of $149.7 million in 2023.

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With regard to the elements of estimating the “as if vacant” values of the property and the intangible assets, including the absorption period, occupancy increases during the absorption period, tenant improvement amounts, and leasing commission percentages, the Company uses the same absorption period and occupancy assumptions for similar property types.

Any remaining excess purchase price is then allocated to the tangible and intangible assets based on their relative fair values.

Any remaining excess purchase price is then allocated

to the tangible and intangible assets based on their relative fair values.

The identifiable tangible and intangible assets are then subject to depreciation and amortization.

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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 7. Management’s Discussion and Analysis