Healthcare Realty Trust Inc 10-Q

Item 1. Financial Statements Healthcare Realty Trust Incorporated Condensed Consolidated Balance Sheets Amounts in thousands, except per share data ASSETS Unaudited MARCH 31, 2025 DECEMBER 31, 2024 Real estate properties Land $ 1,134,635 $ 1,143,468 Buildings and improvements 9,729,912 9,707,066 Lease intangibles 631,864 664,867 Personal property 9,938 9,909 Investment in financing receivable, net 123,813 123,671 Financing lease right-of-use assets 76,958 77,343 Construction in progress 35,101 31,978 Land held for development 52,408 52,408 Total real estate properties 11,794,629 11,810,710 Less accumulated depreciation and amortization ( 2,583,819 ) ( 2,483,656 ) Total real estate properties, net 9,210,810 9,327,054 Cash and cash equivalents 25,722 68,916 Assets held for sale, net 6,635 12,897 Operating lease right-of-use assets 259,764 261,438 Investments in unconsolidated joint ventures 470,418 473,122 Other assets, net 522,920 507,496 Total assets $ 10,496,269 $ 10,650,923 LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND STOCKHOLDERS' EQUITY Liabilities Notes and bonds payable $ 4,732,618 $ 4,662,771 Accounts payable and accrued liabilities 144,855 222,510 Liabilities of assets held for sale 422 1,283 Operating lease liabilities 224,117 224,499 Financing lease liabilities 72,585 72,346 Other liabilities 174,830 161,640 Total liabilities 5,349,427 5,345,049 Commitments and contingencies Redeemable non-controlling interests 4,627 4,778 Stockholders' equity Preferred stock, $ .01 par value per share; 200,000 shares authorized; none issued and outstanding — — Class A Common stock, $ .01 par value per share; 1,000,000 shares authorized; 350,996 and 350,532 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively 3,510 3,505 Additional paid-in capital 9,121,269 9,118,229 Accumulated other comprehensive loss ( 7,206 ) ( 1,168 ) Cumulative net income attributable to common stockholders 329,436 374,309 Cumulative dividends ( 4,368,739 ) ( 4,260,014 ) Total stockholders' equity 5,078,270 5,234,861 Non-controlling interest 63,945 66,235 Total equity 5,142,215 5,301,096 Total liabilities, redeemable non-controlling interests, and stockholders' equity $ 10,496,269 $ 10,650,923 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, 2024, are an integral part of these financial statements. 1 Table of Contents Healthcare Realty Trust Incorporated Condensed Consolidated Statements of Operations For the Three Months Ended March 31, 2025 and 2024 Amounts in thousands, except per share data Unaudited THREE MONTHS ENDED March 31, 2025 2024 Revenues Rental income $ 288,857 $ 318,076 Interest income 3,731 4,538 Other operating 6,389 4,191 298,977 326,805 Expenses Property operating 114,963 121,078 General and administrative 13,530 14,787 Transaction costs 1,011 395 Depreciation and amortization 150,969 178,119 280,473 314,379 Other income (expense) Gain on sales of real estate properties and other assets 2,904 22 Interest expense ( 54,812 ) ( 61,054 ) Impairment of real estate properties and credit loss reserves ( 12,081 ) ( 15,937 ) Impairment of goodwill — ( 250,530 ) Equity income (loss) from unconsolidated joint ventures 1 ( 422 ) Interest and other (expense) income, net 95 275 ( 63,893 ) ( 327,646 ) Net loss $ ( 45,389 ) $ ( 315,220 ) Net loss attributable to non-controlling interests 516 4,384 Net loss attributable to common stockholders $ ( 44,873 ) $ ( 310,836 ) Basic earnings per common share $ ( 0.13 ) $ ( 0.82 ) Diluted earnings per common share $ ( 0.13 ) $ ( 0.82 ) Weighted average common shares outstanding - basic 349,539 379,455 Weighted average common shares outstanding - diluted 349,539 379,455 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, 2024, are an integral part of these financial statements. 2 Table of Contents Healthcare Realty Trust Incorporated Condensed Consolidated Statements of Comprehensive Loss For the Three Months Ended March 31, 2025 and 2024 Amounts in thousands Unaudited THREE MONTHS ENDED March 31, 2025 2024 Net loss $ ( 45,389 ) $ ( 315,220 ) Other comprehensive income (loss) Interest rate derivatives Reclassification adjustments for gains included in interest expense ( 941 ) ( 3,865 ) (Losses) gains arising during the period on interest rate swaps ( 5,178 ) 19,611 ( 6,119 ) 15,746 Comprehensive loss ( 51,508 ) ( 299,474 ) Less: comprehensive loss attributable to non-controlling interests 681 4,170 Comprehensive loss attributable to common stockholders $ ( 50,827 ) $ ( 295,304 ) 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, 2024, are an integral part of these financial statements. 3 Table of Contents Healthcare Realty Trust Incorporated Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests For the Three Months Ended March 31, 2025 and 2024 Amounts in thousands, except per share data Unaudited Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Cumulative Net Income Cumulative Dividends Total Stockholders’ Equity Non-controlling Interests Total Equity Redeemable Non-controlling Interests Balance at December 31, 2024 $ 3,505 $ 9,118,229 $ ( 1,168 ) $ 374,309 $ ( 4,260,014 ) $ 5,234,861 $ 66,235 $ 5,301,096 $ 4,778 Common stock redemptions — ( 215 ) — — — ( 215 ) — ( 215 ) — Share-based compensation 5 3,023 — — — 3,028 — 3,028 — Redemption of non-controlling interest — — — — — — ( 330 ) ( 330 ) — Net loss — — — ( 44,873 ) — ( 44,873 ) ( 600 ) ( 45,473 ) 84 Reclassification adjustments for gains included in net income (interest expense) — — ( 928 ) — — ( 928 ) ( 13 ) ( 941 ) — Losses arising during the period on interest rate swaps — — ( 5,110 ) — — ( 5,110 ) ( 68 ) ( 5,178 ) — Adjustments to redemption value of redeemable non-controlling interests — 232 — — — 232 — 232 ( 235 ) Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.31 per share) — — — — ( 108,725 ) ( 108,725 ) ( 1,279 ) ( 110,004 ) — Balance at March 31, 2025 $ 3,510 $ 9,121,269 $ ( 7,206 ) $ 329,436 $ ( 4,368,739 ) $ 5,078,270 $ 63,945 $ 5,142,215 $ 4,627 Common Stock Additional Paid-In Capital Accumulated Other 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 Issuance of common stock, net of issuance costs — 104 — — — 104 — 104 — Common stock redemptions — ( 135 ) — — — ( 135 ) — ( 135 ) — Conversion of OP Units to common stock 2 3,410 — — — 3,412 ( 3,412 ) — — Share-based compensation 3 3,559 — — — 3,562 — 3,562 — Net loss — — — ( 310,836 ) — ( 310,836 ) ( 4,384 ) ( 315,220 ) — Reclassification adjustments for gains included in net income (interest expense) — — ( 3,813 ) — — ( 3,813 ) ( 52 ) ( 3,865 ) — Gains arising during the period on interest rate swaps — — 19,345 — — 19,345 266 19,611 — Contributions from redeemable non-controlling interests — — — — — — — — 13 Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 1 ) Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.31 per share) — — — — ( 118,406 ) ( 118,406 ) ( 1,427 ) ( 119,833 ) — 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 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, 2024, are an integral part of these financial statements. 4 Table of Contents Healthcare Realty Trust Incorporated Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2025 and 2024 Amounts in thousands Unaudited OPERATING ACTIVITIES THREE MONTHS ENDED March 31, 2025 2024 Net loss $ ( 45,389 ) $ ( 315,220 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 150,969 178,119 Other amortization 11,641 11,829 Share-based compensation 3,028 3,562 Amortization of straight-line rent receivable (lessor) ( 7,709 ) ( 8,568 ) Amortization of straight-line rent on operating leases (lessee) 865 935 Gain on sales of real estate properties and other assets ( 2,904 ) ( 22 ) Impairment of real estate properties and credit loss reserves 12,081 15,937 Impairment of goodwill — 250,530 Equity (income) loss from unconsolidated joint ventures ( 1 ) 422 Distributions from unconsolidated joint ventures 3,557 1,335 Non-cash interest from financing and notes receivable ( 178 ) ( 242 ) Changes in operating assets and liabilities: Other assets, including right-of-use-assets ( 27,748 ) ( 14,989 ) Accounts payable and accrued liabilities ( 64,848 ) ( 52,163 ) Other liabilities 14,424 4,687 Net cash provided by operating activities 47,788 76,152 INVESTING ACTIVITIES Development of real estate ( 3,414 ) ( 8,383 ) Additional long-lived assets ( 69,128 ) ( 50,388 ) Funding of mortgages and notes receivable — ( 1,052 ) Investments in unconsolidated joint ventures ( 852 ) — Investment in financing receivable ( 3 ) 746 Contributions from redeemable non-controlling interests — 13 Proceeds from sales of real estate properties and additional long-lived assets 19,353 226 Proceeds from notes receivable repayments 15,211 277 Net cash used in investing activities ( 38,833 ) ( 58,561 ) FINANCING ACTIVITIES Net borrowings on unsecured credit facility 94,000 120,000 Repayment on term loans ( 35,000 ) — Repayments of notes and bonds payable ( 345 ) ( 17,326 ) Dividends paid ( 108,809 ) ( 118,269 ) Net proceeds from issuance of common stock — 104 Common stock redemptions ( 215 ) ( 318 ) Distributions to non-controlling interest holders ( 1,315 ) ( 1,199 ) Redemption of non-controlling interest ( 330 ) — Payments made on finance leases ( 135 ) ( 110 ) Net cash used in financing activities ( 52,149 ) ( 17,118 ) (Decrease) increase in cash and cash equivalents ( 43,194 ) 473 Cash and cash equivalents at beginning of period 68,916 25,699 Cash and cash equivalents at end of period $ 25,722 $ 26,172 Supplemental Cash Flow Information Interest paid $ 67,283 $ 73,518 Mortgage notes receivable taken in connection with sale of real estate $ 5,400 $ — Invoices accrued for construction, tenant improvements and other capitalized costs $ 26,828 $ 35,777 Capitalized interest $ 857 $ 942 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, 2024, are an integral part of these financial statements. 5 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies Business Overview Healthcare Realty Trust Incorporated (the "Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, 2025, the Company had gross investments of approximately $ 11.8 billion in 587 cons olidated 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 March 31, 2025, the Company had a weighted average ownership interest of approxima tel y 30 % in 63 real estate properties held in unconsolidated joint ventures. See Note 2 below for more details regarding the Company's unconsolidated joint ventures. The Company's consolidated re al estate properties are located in 33 states and total approximately 34.3 million square feet. The Company provided leasing and property management services to 92 % of its portfolio nationwide as of March 31, 2025. The Company is structured as an umbrella partnership REIT under which substantially all of its business is conducted through the operating partnership, Healthcare Realty Holdings, L.P. (the “OP”) , the day-to-day management of which is exclusively controlled by the Company. As of March 31, 2025, the Company own ed 98.7 % of the issued and outstanding units of the OP (“OP Units”), with other investors owning the remaining 1.3 % 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. Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany transactions and balances have been eliminated in consolidation. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. In addition, the interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2025 for many reasons including, but not limited to, acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and uncertainties. Principles of Consolidation The Company’s Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification (“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 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. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Condensed Consolidated Financial Statements. The Company may change its original assessment of a VIE upon subsequent events, such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, the disposition of all or a portion of an interest held by the primary beneficiary, or changes in facts and circumstances 6 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. that impact the power to direct activities of the VIE that most significantly impacts economic performance. The Company performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100 % of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For an entity in which the Company owns less than 100 % of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entity's activities based upon the terms of the entity's ownership agreements. The OP is 98.7 % owned by the Company. Other holders of OP Units are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity in 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, 2025, there were approximately 4.7 million OP Units, or 1.3 % 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, 2025, the Company had three 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 as of March 31, 2025 and December 31, 2024: (dollars in thousands) March 31, 2025 December 31, 2024 Assets: Total real estate investments, net $ 101,439 $ 103,933 Cash and cash equivalents 417 159 Other assets, net 5,065 4,053 Total assets $ 106,921 $ 108,145 Liabilities: Notes and bonds payable $ 66,083 $ 60,170 Accounts payable and accrued liabilities 1,574 2,786 Other liabilities 156 45 Total liabilities $ 67,813 $ 63,001 As of March 31, 2025, the Company had four unconsolidated VIEs consisting of three notes receivable and one joint venture. The Company does not have the power or economic interests to direct the activities of these VIEs on a stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary. As a result, the Company accounts for the three notes receivable as amortized cost and a joint venture arrangement under the equity method. See below for additional information regarding the Company's unconsolidated VIEs. (dollars in thousands) ORIGINATION DATE LOCATION SOURCE CARRYING AMOUNT MAXIMUM EXPOSURE TO LOSS 2021 Charlotte, NC Note receivable 7,441 7,441 2022 Texas 1 Equity method 55,199 55,199 2024 Texas 2 Note receivable 9,691 16,729 2024 Texas 2 Note receivable 1 4,500 1 Includes investments in seven properties. 2 The Company provided seller financing and entered into a mortgage loan and a mezzanine loan in connection with a property disposition. 7 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. As of March 31, 2025, the Company's unconsolidated joint venture arrangement was accounted for using the equity method of accounting as the Company exercised significant influence over but did not control this entity. See Note 2 below for more details regarding the Company's unconsolidated joint ventures. Use of Estimates in the Condensed Consolidated Financial Statements Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. Segment Reporting The Company owns, leases, acquires, manages, finances, develops and redevelops outpatient and other healthcare-related properties. The Company is managed as one operating segment, rather than multiple operating segments, for internal reporting purposes and for internal decision-making and discloses its operating results in a single reportable segment. The Company's chief operating decision makers (“CODM”), represented by the Company's Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer, review financial information and assess the consolidated operations of the Company in order to make strategic decisions such as allocation of capital expenditures and other significant expenses. See Note 9 for additional information on segment reporting. Redeemable Non-Controlling Interests The Company accounts for redeemable equity securities in accordance with ASC Topic 480: Accounting for Redeemable Equity Instruments, which requires that equity securities redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity. The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheets. Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value. The Company measures the redemption value and records an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest. As of March 31, 2025, the Company had redeemable non-controlling interests of $ 4.6 million. Asset Impairment The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever the occurrence of an event or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its tenants. During the three months ended March 31, 2025, the Company recognized real estate impairments totaling $ 10.2 million as a result of completed and planned disposition activity. As of March 31, 2025, two real estate properties totaling $ 0.9 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, and less estimated closing costs. Investments in Leases - Financing Receivables, Net In accordance with ASC Topic 842: Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying 8 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. real estate assets but instead recognizes a financial asset in accordance with ASC Topic 310: Receivables. See below for additional information regarding the Company's financing receivables. (dollars in thousands) CARRYING VALUE AS OF ORIGINATION DATE LOCATION INTEREST RATE MARCH 31, 2025 DECEMBER 31, 2024 May 2021 Poway, CA 5.69 % $ 116,438 $ 116,304 November 2021 Columbus, OH 6.48 % 7,375 7,367 $ 123,813 $ 123,671 Real Estate Notes Receivable Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, a mortgage or deed of trust, and/or corporate guarantees. 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, 2025, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 117.8 million. (dollars in thousands) ORIGINATION MATURITY STATED INTEREST RATE MAXIMUM LOAN COMMITMENT OUTSTANDING as of MARCH 31, 2025 INTEREST RECEIVABLE (OTHER ASSETS) ALLOWANCE FOR CREDIT LOSSES FAIR VALUE DISCOUNT AND FEES CARRYING VALUE as of MARCH 31, 2025 Mezzanine loans Arizona 12/21/2023 12/20/2026 9.00 % $ 6,000 $ 6,000 $ 38 $ — $ — $ 6,038 Texas 10/03/2024 10/02/2029 11.00 % 4,500 1 — — — 1 Wisconsin 1 3/20/2025 3/19/2030 13.00 % 8,500 — — — — — 19,000 6,001 38 — — 6,039 Mortgage loans Texas 2 6/30/2021 12/02/2024 7.00 % 31,150 16,250 551 ( 16,801 ) — — North Carolina 3 12/22/2021 12/22/2024 8.00 % 6,000 6,000 1,441 — — 7,441 Florida 4 5/17/2022 2/27/2026 6.00 % 65,000 37,661 191 — ( 18 ) 37,834 California 3/30/2023 3/29/2026 6.00 % 45,000 45,000 188 — — 45,188 Florida 12/28/2023 12/28/2026 9.00 % 7,700 6,226 — — — 6,226 Texas 10/03/2024 10/02/2029 7.50 % 16,729 9,629 62 — — 9,691 Texas 5 3/20/2025 3/19/2030 6.80 % 5,400 5,400 — — — 5,400 176,979 126,166 2,433 ( 16,801 ) ( 18 ) 111,780 $ 195,979 $ 132,167 $ 2,471 $ ( 16,801 ) $ ( 18 ) $ 117,819 1 In March 2025, the Company entered an agreement to finance $ 8.5 million for a property in Green Bay, WI. As of March 31, 2025, the loan has not been funded. 2 In 2024, the Company determined that an allowance for credit loss of $ 16.8 million was needed on this mortgage loan, which included approximately $ 16.3 million of principal and approximately $ 0.5 million of interest. In January 2025, the underlying collateral for this loan was sold and the Company received $ 14.9 million towards the principal balance of this loan. 3 Outstanding principal and interest due upon maturity. As of the date of these financial statements, the outstanding principal and interest on this loan has not been repaid. The Company has evaluated the collectibility of the amount outstanding and has determined that the underlying collateral has a value that exceeds the carrying value of as of March 31, 2025, and is working with the borrower on satisfaction of the mortgage loan. 4 In April 2025, this loan was repaid in full. 5 In March 2025, the Company provided seller financing of $ 5.4 million in connection with the sale of a real estate property in Houston, TX. Allowance for Credit Losses Pursuant to ASC Topic 326: Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under ASC Topic 326. The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors. The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan 9 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. payments. The Company evaluates the collectability of loan receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans identified as having deteriorated credit quality, the amount of credit loss is determined on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual status are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, the loan may return to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. The following table summarizes the Company's allowance for credit losses on real estate notes receivable: Dollars in thousands THREE MONTHS ENDED MARCH 31, 2025 TWELVE MONTHS ENDED DECEMBER 31, 2024 Allowance for credit losses, beginning of period $ 16,801 $ 5,196 Credit loss reserves — 59,563 Recoveries — ( 4,000 ) Write-off — ( 43,958 ) Allowance for credit losses, end of period $ 16,801 $ 16,801 Interest Income Income from Lease Financing Receivables The Company recognized the related income from two financing receivables totaling $ 2.0 million and $ 2.1 million for the three months ended March 31, 2025 and 2024, respectively, based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable in any particular period will not equal the cash payments from the lease agreement in that period. Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to interest income over the life of the lease. Income from Real Estate Notes Receivable The Company recognized interest income related to real estate notes receivable of $ 1.8 million and $ 2.4 million for the three months ended March 31, 2025 and 2024, respectively. 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. As of March 31, 2025, the Company has two loans on non-accrual status. Revenue from Contracts with Customers (ASC Topic 606) The Company recognizes certain revenue under the core principle of ASC Topic 606. This topic requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of ASC Topic 606. To achieve the core principle, the Company applies the five-step model specified in the guidance. 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. This line item includes parking income, management fee income and other miscellaneous income. Below is a detail of the amounts by category: THREE MONTHS ENDED March 31, in thousands 2025 2024 Type of Revenue Parking income $ 1,863 $ 2,545 Management fee income/other 1 4,526 1,646 $ 6,389 $ 4,191 1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement. 10 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. The Company’s major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time, and the Company recognizes revenue monthly based on this principle. New Accounting Pronouncements On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Disaggregation of Income Statement Expenses, which will require entities to provide more detailed information in the notes to the financial statements related to certain expense captions on the face of the income statement. The ASU aims to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the income statement. The new standard does not change the requirements for the presentation of expenses on the face of the income statement. Under this ASU, entities are required to disaggregate, in a tabular format, expense captions presented on the face of the income statement — excluding earnings or losses from equity method investments — if they include any of the following expense categories: purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation or depletion. For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses. The new ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of the adoption of this ASU on its consolidated financial statements and compliance with these new disclosure requirements will begin with the Company's Annual Report on Form 10-K for the year ended December 31, 2027. Note 2. Real Estate Investments 2025 Acquisition Activity The Company had no real estate acquisition activity for the three months ended March 31, 2025. Unconsolidated Joint Ventures The Company's investment in and income (losses) recognized for the three months ended March 31, 2025 and 2024 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below: THREE MONTHS ENDED March 31, Dollars in thousands 2025 2024 Investments in unconsolidated joint ventures, beginning of period $ 473,122 $ 311,511 New investment during the period 852 — Equity income (loss) recognized during the period 1 ( 422 ) Owner distributions ( 3,557 ) ( 1,335 ) Investments in unconsolidated joint ventures, end of period $ 470,418 $ 309,754 2025 Real Estate Asset Dispositions The following table details the Company's dispositions for the three months ended March 31, 2025. Dollars in thousands DATE DISPOSED SALE PRICE CLOSING ADJUSTMENTS COMPANY-FINANCED MORTGAGE NOTES NET PROCEEDS NET REAL ESTATE INVESTMENT OTHER (INCLUDING RECEIVABLES) GAIN/(IMPAIRMENT) SQUARE FOOTAGE Boston, MA 2/7/25 $ 4,500 $ ( 135 ) $ — $ 4,365 $ 4,325 $ 15 $ 25 30,304 Denver, CO 1 2/14/25 8,600 ( 2,144 ) — 6,456 7,948 113 ( 1,605 ) 69,715 Houston, TX 2 3/20/25 15,000 ( 4,087 ) ( 5,400 ) 5,513 14,343 347 ( 3,777 ) 127,933 Total dispositions $ 28,100 $ ( 6,366 ) $ ( 5,400 ) $ 16,334 $ 26,616 $ 475 $ ( 5,357 ) 227,952 1 Includes two medical outpatient properties. 2 The Company provided seller financing of approximately $ 5.4 million in connection with this sale. 11 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Assets Held for Sale The Company had two properties classified as assets held for sale as of March 31, 2025, and three properties classified as assets held for sale as of December 31, 2024. The table below reflects the assets and liabilities classified as held for sale as of March 31, 2025 and December 31, 2024: Dollars in thousands March 31, 2025 December 31, 2024 Balance Sheet data: Land $ 3,710 $ 10,859 Building and improvements 4,023 3,410 Lease intangibles 2,056 3,286 9,789 17,555 Accumulated depreciation ( 3,390 ) ( 5,275 ) Real estate assets held for sale, net 1 6,399 12,280 Other assets, net 236 617 Assets held for sale, net $ 6,635 $ 12,897 Accounts payable and accrued liabilities $ 259 $ 694 Other liabilities 163 589 Liabilities of assets held for sale $ 422 $ 1,283 1 Net real estate assets held for sale include the impact of $ 2.5 million of impairment charges for the three months ended March 31, 2025. Note 3. Leases Lessor Accounting The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. Some leases provide tenants with fixed rent renewal terms while others have market rent renewal terms. 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 leases typically have escalators that are either based on a stated percentage or an index such as the Consumer Price Index ("CPI"). In addition, most of the Company's leases include non-lease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and non-lease components. Rent escalators based on indices and reimbursements of operating expenses that are not included in the lease rate are considered variable lease payments. Variable payments are recognized in the period earned. Lease income for the Company's operating leases, recognized for the three months ended March 31, 2025 and 2024, was $ 288.9 million and $ 318.1 million, respectively. Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sales-type lease, as of March 31, 2025, were as follows: Dollars in thousands OPERATING 2025 $ 616,105 2026 765,801 2027 652,094 2028 539,161 2029 433,875 2030 and thereafter 1,592,445 $ 4,599,481 12 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Lessee Accounting The Company has obligations, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2025, the Company had 215 ground leases associated with properties covering 16.1 million square feet. 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 stated in the lease or based on CPI. The Company had 73 prepaid ground leases as of March 31, 2025. 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 each of the three months ended March 31, 2025 and 2024. The Company’s future lease payments (primarily for its 142 non-prepaid ground leases) as of March 31, 2025, were as follows: Dollars in thousands OPERATING FINANCING 2025 $ 8,886 $ 1,440 2026 12,540 2,106 2027 12,743 2,145 2028 12,879 2,177 2029 12,944 2,209 2030 and thereafter 657,744 383,172 Total undiscounted lease payments 717,736 393,249 Discount ( 493,619 ) ( 320,664 ) Lease liabilities $ 224,117 $ 72,585 The following table provides details of the Company's total lease expense for the three months ended March 31, 2025 and 2024: THREE MONTHS ENDED March 31, Dollars in thousands 2025 2024 Operating lease cost Operating lease expense $ 4,358 $ 4,465 Variable lease expense 1,328 1,228 Finance lease cost Amortization of right-of-use assets 370 387 Interest on lease liabilities 916 937 Total lease expense $ 6,972 $ 7,017 Other information Operating cash flows outflows related to operating leases $ 4,492 $ 4,040 Operating cash flows outflows related to financing leases $ 543 $ 563 Financing cash flows outflows related to financing leases $ 134 $ 110 Weighted-average years remaining lease term (excluding renewal options) - operating leases 44.0 45.8 Weighted-average years remaining lease term (excluding renewal options) - finance leases 57.5 57.7 Weighted-average discount rate - operating leases 5.7 % 5.7 % Weighted-average discount rate - finance leases 5.0 % 5.0 % 13 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Note 4. Notes and Bonds Payable The table below details the Company’s notes and bonds payable as of March 31, 2025 and December 31, 2024. MATURITY DATE BALANCE 1 AS OF EFFECTIVE INTEREST RATE as of 3/31/2025 Dollars in thousands 3/31/2025 12/31/2024 $ 1.5 billion Unsecured Credit Facility 2 10/25 $ 94,000 $ — 5.27 % $ 200 million Unsecured Term Loan 3 5/25 174,958 199,896 5.37 % $ 300 million Unsecured Term Loan 4 10/25 289,987 299,981 5.37 % $ 150 million Unsecured Term Loan 6/26 149,827 149,790 5.37 % $ 200 million Unsecured Term Loan 7/27 199,676 199,641 5.37 % $ 300 million Unsecured Term Loan 1/28 298,812 298,708 5.37 % Senior Notes due 2025 5/25 249,967 249,868 4.12 % Senior Notes due 2026 8/26 588,837 586,824 4.94 % Senior Notes due 2027 7/27 489,231 488,104 4.76 % Senior Notes due 2028 1/28 298,183 298,029 3.85 % Senior Notes due 2030 2/30 588,763 586,028 5.30 % Senior Notes due 2030 3/30 297,294 297,190 2.72 % Senior Notes due 2031 3/31 296,472 296,343 2.25 % Senior Notes due 2031 3/31 671,804 667,233 5.13 % Mortgage notes payable 12/25-12/26 44,807 45,136 3.57 % - 6.88 % $ 4,732,618 $ 4,662,771 1 Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable. 2 As of March 31, 2025, the Company had $ 1.4 billion available to be drawn on its $ 1.5 billion Unsecured Credit Facility. 3 In January 2025, the Company repaid $ 25 million of the $ 200 million Unsecured term Loan. 4 In January 2025, the Company repaid $ 10 million of the $ 300 million Unsecured term Loan. Subsequent Debt Activity In April 2025, the Company exercised its second of two options to extend the maturity date of the $ 200 million Unsecured Term Loan due May 2025 to January 2026 for a fee of approximately $ 0.1 million. The loan also was amended to include a four-month extension option, resulting in a latest final maturity in May 2026. On May 1, 2025, the Company repaid its Senior Notes due 2025 at maturity including $ 250 million of principal and $ 4.8 million of accrued interest. Note 5. Derivative Financial Instruments Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. 14 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. For derivatives designated, and that qualify, as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income (Loss) ("AOCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2025, the Company had 15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk: AMOUNT WEIGHTED AVERAGE RATE May 2026 $ 275,000 3.74 % June 2026 150,000 3.83 % December 2026 150,000 3.84 % June 2027 200,000 4.27 % December 2027 300,000 3.93 % $ 1,075,000 3.92 % 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 and their classification on the Condensed Consolidated Balance Sheet as of March 31, 2025 and December 31, 2024. AS OF MARCH 31, 2025 AS OF DECEMBER 31, 2024 In thousands BALANCE SHEET LOCATION FAIR VALUE BALANCE SHEET LOCATION FAIR VALUE Interest rate swaps 2019 Other Assets $ 1,848 Other Assets $ 2,493 Interest rate swaps 2022 Other Assets 188 Other Assets 2,250 Interest rate swaps 2022 Other Liabilities ( 3,144 ) Other Liabilities ( 853 ) Interest rate swaps 2023 Other Assets 201 Other Assets 521 Interest rate swaps 2023 Other Liabilities ( 4,261 ) Other Liabilities ( 3,310 ) Total derivatives designated as hedging instruments $ ( 5,168 ) $ 1,101 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, 2025 and 2024 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 AOCI INTO INCOME three months ended March 31, In thousands 2025 2024 2025 2024 Interest rate swaps $ 5,178 $ ( 19,611 ) Interest expense $ ( 1,090 ) $ ( 4,014 ) Settled treasury hedges — — Interest expense 107 107 Settled interest rate swaps — — Interest expense 42 42 $ 5,178 $ ( 19,611 ) Total interest expense $ ( 941 ) $ ( 3,865 ) The Company estimates that an additional $ 0.2 million will be reclassified from accumulated other comprehensive loss as a net decrease to interest expense over the next 12 months. Credit-risk-related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision that provides if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of March 31, 2025, 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 $ 5.2 million . As of March 31, 2025, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. 15 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Note 6. Commitments and Contingencies Legal Proceedings 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. Note 7. Stockholders' Equity Common Stock The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the three months ended March 31, 2025, and the twelve months ended December 31, 2024: THREE MONTHS ENDED MARCH 31, 2025 TWELVE MONTHS ENDED DECEMBER 31, 2024 Balance, beginning of period 350,532,006 380,964,433 Issuance of common stock — 8,623 Conversion of OP units to common stock — 194,767 Shares Repurchased — ( 30,794,250 ) Non-vested share-based awards, net of withheld shares and forfeitures 464,163 158,433 Balance, end of period 350,996,169 350,532,006 Common Stock Dividends During the three months ended March 31, 2025, the Company declared and paid common stock dividends totaling $ 0.31 per share. On May 1, 2025, the Company declared a quarterly common stock dividend in the amount of $ 0.31 per share payable on May 23, 2025 to stockholders of record on May 12, 2025. Common Stock Repurchases On October 29, 2024, the Company's Board of Directors authorized the repurchase of up to $ 300.0 million of outstanding shares of the Company's common stock, superseding the previous stock repurchase authorization. The stock repurchase authorization expires on October 28, 2025, and the Company may suspend or terminate repurchases at any time without prior notice. As of December 31, 2024, the Company had repurchased 3,679,162 shares for $ 63.0 million under this authorization. The Company has not repurchased shares in 2025. As of March 31, 2025, the Company had $ 237.0 million remaining under this authorization. 16 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Earnings Per Common Share The Company uses the two-class method of computing net earnings per common share. 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, 2025 and 2024. THREE MONTHS ENDED MARCH 31, Dollars in thousands, except per share data 2025 2024 Weighted average common shares outstanding Weighted average common shares outstanding 350,758,618 381,335,208 Non-vested shares ( 1,219,619 ) ( 1,880,401 ) Weighted average common shares outstanding - basic 349,538,999 379,454,807 Weighted average common shares outstanding - basic 349,538,999 379,454,807 Dilutive effect of OP Units — — Weighted average common shares outstanding - diluted 349,538,999 379,454,807 Net loss $ ( 45,389 ) $ ( 315,220 ) Income allocated to participating securities ( 612 ) ( 693 ) Loss attributable to non-controlling interest 516 4,384 Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units ( 17 ) ( 1,341 ) Net loss applicable to common stockholders - basic and diluted $ ( 45,502 ) $ ( 312,870 ) Basic earnings per common share - net loss $ ( 0.13 ) $ ( 0.82 ) Diluted earnings per common share - net loss $ ( 0.13 ) $ ( 0.82 ) The effect of OP Units redeemable for 3,665,625 shares of common stock for the three months ended March 31, 2025 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 The Company's stock incentive plan (the "Incentive Plan") permits the grant of incentive awards to its employees and directors in any of the following forms: options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents, or other stock-based awards, including units in the OP. Equity Incentive Plans During the three months ended March 31, 2025, the Company made the following equity awards under the Incentive Plan: • During the first quarter of 2025, 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 $ 7.9 million, which consisted of an aggregate of 477,226 non-vested shares of common stock with vesting periods ranging from three to eight years . • On February 11, 2025, the Company granted an aggregate of 275,735 restricted stock units ("RSUs") to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $ 5.4 million. 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 $ 19.47 for the February 2025 grant using the following assumptions: 17 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Volatility 28.0 % Dividend assumption Accrued Expected term 3 years Risk-free rate 4.35 % Stock price (per share) $ 16.17 The Company records amortization expense based on the Monte Carlo simulation throughout the performance period. • On February 11, 2025, the Company granted an aggregate of 166,976 LTIP Series C units ("LTIP-C units") in the OP to its named executive officers with three-year forward-looking performance targets, a three-year vesting period and an aggregate grant date fair value of $ 1.6 million. 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 $ 9.88 for the February 2025 grant using the following assumptions: Volatility 28.0 % Dividend assumption Accrued Expected term 3 years Risk-free rate 4.35 % Stock price (per share) $ 16.17 The Company records amortization expense based on the Monte Carlo simulation throughout the performance period. The following table represents the summary of non-vested share-based awards under the Incentive Plan for the three months ended March 31, 2025, and 2024: THREE MONTHS ENDED MARCH 31, 2025 2024 Share-based awards, beginning of period 1,799,737 2,615,562 Granted 1 919,937 1,475,811 Vested ( 39,970 ) ( 28,414 ) Change in awards based on performance assessment ( 59,762 ) — Forfeited — ( 19,805 ) Share-based awards, end of period 2,619,942 4,043,154 1 LTIP-C units are issued at the maximum number of units 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. During the three months ended March 31, 2025 and 2024, the Company withheld 13,063 and 8,228 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested. The following table represents expected amortization of the Company's non-vested awards issued as of March 31, 2025: Dollars in millions FUTURE AMORTIZATION of non-vested shares 2025 $ 9.8 2026 10.4 2027 8.2 2028 1.7 2029 and thereafter 0.6 Total $ 30.7 Subsequent Activity 18 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. On April 15, 2025, the Company granted the following awards to it's CEO: • Non-vested stock awards with a grant date fair value of $ 5.7 million, which consisted of 366,242 non-vested shares of common stock with a vesting period of four years . • Non-vested stock awards with a grant date fair value of $ 1.2 million, which consisted of 74,522 non-vested shares of common stock with a vesting period of three years . • LTIP Series C units in the OP with three-year forward-looking performance targets and a three-year vesting period, which consisted of 347,770 units with an approximate grant date fair value of $ 3.9 million. Note 8. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practical to estimate that value. • Cash and cash equivalents - The carrying amount approximates fair value (level 1 inputs) due to the short-term maturity of these investments. • Real estate notes receivabl e - Real estate notes receivable are recorded in other assets on the Company's Condensed Consolidated Balance Sheets. 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 receivable's collateral, which was determined based on an executed purchase and sale agreement of the underlying collateral and therefore was classified as level 1 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. • Senior Notes and Mortgage Notes payable - The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements. • Interest rate swap agreements - Interest rate swap agreements are recorded in other assets/liabilities on the Company's Condensed Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models, level 2 inputs, which consider forward yield curves and discount rates. 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 as of March 31, 2025, and December 31, 2024: March 31, 2025 December 31, 2024 Dollars in millions CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE Notes and bonds payable 1, 2 $ 4,732.6 $ 4,670.1 $ 4,662.8 $ 4,578.4 Real estate notes receivable $ 117.8 $ 110.3 $ 127.2 $ 122.4 1 Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets. 2 Fair value for senior notes includes accrued interest as of March 31, 2025. 19 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Note 9. Segment Reporting The Company is a REIT that owns, leases, acquires, invests in joint ventures, manages, finances, develops and redevelops its medical outpatient properties and reports the operating results in the accompanying Condensed Consolidated Financial Statements as one reportable segment. The CODM assesses performance and allocates resources based on consolidated net income (loss) as reported on the Company's Condensed Consolidated Statements of Operations. The Company uses net income (loss) to monitor expected versus actual results to assess the segment's performance. The measure of the Company's reportable segment assets is reported on the Company's Condensed Consolidated Balance Sheets as total assets. Pursuant to ASU 2023-07, Segment Reporting (Topic 280), public entities are required to disclose more detailed information about significant reportable segment expenses that are regularly provided to the CODM. The table below details the significant expenses for the three months ended March 31, 2025, and 2024. THREE MONTHS ENDED MARCH 31, Dollars in thousands 2025 2024 Significant Segment Expenses: Property taxes $ 28,810 $ 32,929 Personnel 24,379 24,619 Utilities 21,951 24,082 Maintenance 28,747 29,639 Totals $ 103,887 $ 111,269 The following schedule reconciles net loss to segment expenses. THREE MONTHS ENDED MARCH 31, Dollars in thousands 2025 2024 Revenue $ 298,977 $ 326,805 Property taxes ( 28,810 ) ( 32,929 ) Personnel ( 24,379 ) ( 24,619 ) Utilities ( 21,951 ) ( 24,082 ) Maintenance ( 28,747 ) ( 29,639 ) Other segment expenses 1 ( 24,606 ) ( 24,596 ) Transaction costs ( 1,011 ) ( 395 ) Depreciation and amortization ( 150,969 ) ( 178,119 ) Gain on sales of real estate properties and other assets 2,904 22 Interest expense ( 54,812 ) ( 61,054 ) Impairment of real estate properties and credit loss reserves ( 12,081 ) ( 15,937 ) Impairment of goodwill — ( 250,530 ) Equity income (loss) from unconsolidated joint ventures 1 ( 422 ) Interest and other (expense) income, net 95 275 Net loss $ ( 45,389 ) $ ( 315,220 ) 1. Other segment expenses are primarily related to administrative costs, travel, legal, technology, and insurance. 20 Table of Contents