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 JUNE 30, 2025 DECEMBER 31, 2024 Real estate properties Land $ 1,105,231 $ 1,143,468 Buildings and improvements 9,199,089 9,707,066 Lease intangibles 567,244 664,867 Personal property 6,944 9,909 Investment in financing receivable, net 124,134 123,671 Financing lease right-of-use assets 76,574 77,343 Construction in progress 40,421 31,978 Land held for development 49,110 52,408 Total real estate properties 11,168,747 11,810,710 Less accumulated depreciation and amortization ( 2,494,169 ) ( 2,483,656 ) Total real estate properties, net 8,674,578 9,327,054 Cash and cash equivalents 25,507 68,916 Assets held for sale, net 358,207 12,897 Operating lease right-of-use assets 243,910 261,438 Investments in unconsolidated joint ventures 463,430 473,122 Other assets, net 469,940 507,496 Total assets $ 10,235,572 $ 10,650,923 LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND STOCKHOLDERS' EQUITY Liabilities Notes and bonds payable $ 4,694,391 $ 4,662,771 Accounts payable and accrued liabilities 194,076 222,510 Liabilities of assets held for sale 30,278 1,283 Operating lease liabilities 203,678 224,499 Financing lease liabilities 73,019 72,346 Other liabilities 158,704 161,640 Total liabilities 5,354,146 5,345,049 Commitments and contingencies Redeemable non-controlling interests 4,332 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; 351,568 and 350,532 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 3,516 3,505 Additional paid-in capital 9,129,338 9,118,229 Accumulated other comprehensive loss ( 9,185 ) ( 1,168 ) Cumulative net income attributable to common stockholders 171,585 374,309 Cumulative dividends ( 4,477,940 ) ( 4,260,014 ) Total stockholders' equity 4,817,314 5,234,861 Non-controlling interest 59,780 66,235 Total equity 4,877,094 5,301,096 Total liabilities, redeemable non-controlling interests, and stockholders' equity $ 10,235,572 $ 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 and Six Months Ended June 30, 2025 and 2024 Amounts in thousands, except per share data Unaudited THREE MONTHS ENDED June 30, SIX MONTHS ENDED June 30, 2025 2024 2025 2024 Revenues Rental income $ 287,070 $ 308,135 $ 575,927 $ 626,211 Interest income 3,449 3,865 7,180 8,403 Other operating 6,983 4,322 13,371 8,513 297,502 316,322 596,478 643,127 Expenses Property operating 109,924 117,719 224,887 238,798 General and administrative 23,482 14,002 37,011 28,788 Transaction costs 593 431 1,604 826 Depreciation and amortization 147,749 173,477 298,717 351,596 281,748 305,629 562,219 620,008 Other income (expense) Gain on sales of real estate properties and other assets 20,004 38,338 22,907 38,360 Interest expense ( 53,346 ) ( 62,457 ) ( 108,157 ) ( 123,510 ) Impairment of real estate properties and credit loss reserves ( 142,348 ) ( 132,118 ) ( 154,429 ) ( 148,055 ) Impairment of goodwill — — — ( 250,530 ) Equity income (loss) from unconsolidated joint ventures 158 ( 146 ) 159 ( 568 ) Interest and other (expense) income, net ( 366 ) ( 248 ) ( 271 ) 27 ( 175,898 ) ( 156,631 ) ( 239,791 ) ( 484,276 ) Net loss $ ( 160,144 ) $ ( 145,938 ) $ ( 205,532 ) $ ( 461,157 ) Net loss attributable to non-controlling interests 2,293 2,158 2,808 6,541 Net loss attributable to common stockholders $ ( 157,851 ) $ ( 143,780 ) $ ( 202,724 ) $ ( 454,616 ) Basic earnings per common share $ ( 0.45 ) $ ( 0.39 ) $ ( 0.58 ) $ ( 1.22 ) Diluted earnings per common share $ ( 0.45 ) $ ( 0.39 ) $ ( 0.58 ) $ ( 1.22 ) Weighted average common shares outstanding - basic 349,628 372,477 349,584 375,962 Weighted average common shares outstanding - diluted 349,628 372,477 349,584 375,962 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 and Six Months Ended June 30, 2025 and 2024 Amounts in thousands Unaudited THREE MONTHS ENDED June 30, SIX MONTHS ENDED June 30, 2025 2024 2025 2024 Net loss $ ( 160,144 ) $ ( 145,938 ) $ ( 205,532 ) $ ( 461,157 ) Other comprehensive loss Interest rate derivatives Reclassification adjustments for gains included in interest expense ( 980 ) ( 3,662 ) ( 1,921 ) ( 7,528 ) (Losses) gains arising during the period on interest rate swaps ( 1,028 ) 5,891 ( 6,206 ) 25,501 ( 2,008 ) 2,229 ( 8,127 ) 17,973 Comprehensive loss ( 162,152 ) ( 143,709 ) ( 213,659 ) ( 443,184 ) Less: comprehensive loss attributable to non-controlling interests 2,322 2,124 3,002 6,295 Comprehensive loss attributable to common stockholders $ ( 159,830 ) $ ( 141,585 ) $ ( 210,657 ) $ ( 436,889 ) 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 June 30, 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 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 redemptions ( 1 ) ( 1,327 ) — — — ( 1,328 ) — ( 1,328 ) — Conversion of OP Units to common stock — 334 — — — 334 ( 334 ) — — Share-based compensation 7 8,767 — — — 8,774 — 8,774 — Net loss — — — ( 157,851 ) — ( 157,851 ) ( 2,293 ) ( 160,144 ) — Reclassification adjustments for gains included in net income (interest expense) — — ( 966 ) — — ( 966 ) ( 14 ) ( 980 ) — Losses arising during the period on interest rate swaps — — ( 1,013 ) — — ( 1,013 ) ( 15 ) ( 1,028 ) — Adjustments to redemption value of redeemable non-controlling interests — 295 — — — 295 — 295 ( 295 ) Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.31 per share) — — — — ( 109,201 ) ( 109,201 ) ( 1,509 ) ( 110,710 ) — Balance at June 30, 2025 $ 3,516 $ 9,129,338 $ ( 9,185 ) $ 171,585 $ ( 4,477,940 ) $ 4,817,314 $ 59,780 $ 4,877,094 $ 4,332 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 March 31, 2024 $ 3,815 $ 9,609,530 $ 4,791 $ 717,958 $ ( 3,920,199 ) $ 6,415,895 $ 87,243 $ 6,503,138 $ 3,880 Common stock redemptions — ( 3 ) — — — ( 3 ) — ( 3 ) — Share-based compensation — 3,382 — — — 3,382 — 3,382 — Common stock repurchases ( 172 ) ( 272,881 ) — — — ( 273,053 ) — ( 273,053 ) — Net loss — — — ( 143,780 ) — ( 143,780 ) ( 2,158 ) ( 145,938 ) — Reclassification adjustments for gains included in net income (interest expense) — — ( 3,611 ) — — ( 3,611 ) ( 51 ) ( 3,662 ) — Gains arising during the period on interest rate swaps — — 5,806 — — 5,806 85 5,891 — Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 5 ) Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.31 per share) — — — — ( 117,494 ) ( 117,494 ) ( 1,444 ) ( 118,938 ) — Balance at June 30, 2024 $ 3,643 $ 9,340,028 $ 6,986 $ 574,178 $ ( 4,037,693 ) $ 5,887,142 $ 83,675 $ 5,970,817 $ 3,875 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 Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests For the Six Months Ended June 30, 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 ( 1 ) ( 1,542 ) — — — ( 1,543 ) — ( 1,543 ) — Conversion of OP Units to common stock — 334 — — — 334 ( 334 ) — — Share-based compensation 12 11,790 — — — 11,802 — 11,802 — Redemption of non-controlling interest — — — — — — ( 331 ) ( 331 ) — Net loss — — — ( 202,724 ) — ( 202,724 ) ( 2,892 ) ( 205,616 ) 84 Reclassification adjustments for gains included in net income (interest expense) — — ( 1,894 ) — — ( 1,894 ) ( 27 ) ( 1,921 ) — Losses arising during the period on interest rate swaps — — ( 6,123 ) — — ( 6,123 ) ( 83 ) ( 6,206 ) — Adjustments to redemption value of redeemable non-controlling interests — 527 — — — 527 — 527 ( 530 ) Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.62 per share) — — — — ( 217,926 ) ( 217,926 ) ( 2,788 ) ( 220,714 ) — Balance at June 30, 2025 $ 3,516 $ 9,129,338 $ ( 9,185 ) $ 171,585 $ ( 4,477,940 ) $ 4,817,314 $ 59,780 $ 4,877,094 $ 4,332 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 — ( 138 ) — — — ( 138 ) — ( 138 ) — Conversion of OP Units to common stock 2 3,410 — — — 3,412 ( 3,412 ) — — Share-based compensation 3 6,941 — — — 6,944 — 6,944 — Common stock repurchases ( 172 ) ( 272,881 ) — — — ( 273,053 ) — ( 273,053 ) — Net loss — — — ( 454,616 ) — ( 454,616 ) ( 6,541 ) ( 461,157 ) — Reclassification adjustments for gains included in net income (interest expense) — — ( 7,424 ) — — ( 7,424 ) ( 104 ) ( 7,528 ) — Gains arising during the period on interest rate swaps — — 25,151 — — 25,151 350 25,501 — Contributions from redeemable non-controlling interests — — — — — — — — 13 Adjustments to redemption value of redeemable non-controlling interests — — — — — — — — ( 6 ) Dividends to common stockholders and distributions to non-controlling interest holders ($ 0.62 per share) — — — — ( 235,900 ) ( 235,900 ) ( 2,870 ) ( 238,770 ) — Balance at June 30, 2024 $ 3,643 $ 9,340,028 $ 6,986 $ 574,178 $ ( 4,037,693 ) $ 5,887,142 $ 83,675 $ 5,970,817 $ 3,875 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 Healthcare Realty Trust Incorporated Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2025 and 2024 Amounts in thousands Unaudited OPERATING ACTIVITIES SIX MONTHS ENDED June 30, 2025 2024 Net loss $ ( 205,532 ) $ ( 461,157 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 298,717 351,596 Other amortization 23,901 23,390 Share-based compensation 11,802 6,944 Amortization of straight-line rent receivable (lessor) ( 15,613 ) ( 14,198 ) Amortization of straight-line rent on operating leases (lessee) 1,724 1,998 Gain on sales of real estate properties and other assets ( 22,907 ) ( 38,360 ) Impairment of real estate properties and credit loss reserves 154,429 148,055 Impairment of goodwill — 250,530 Equity (income) loss from unconsolidated joint ventures ( 159 ) 568 Distributions from unconsolidated joint ventures 10,829 2,649 Non-cash interest from financing and notes receivable ( 395 ) ( 478 ) Changes in operating assets and liabilities: Other assets, including right-of-use-assets ( 17,101 ) ( 4,257 ) Accounts payable and accrued liabilities ( 31,051 ) ( 23,131 ) Other liabilities 2,359 155 Net cash provided by operating activities 211,003 244,304 INVESTING ACTIVITIES Development of real estate ( 8,174 ) ( 31,901 ) Additional long-lived assets ( 154,781 ) ( 117,775 ) Funding of mortgages and notes receivable ( 2,799 ) ( 3,466 ) Investments in unconsolidated joint ventures ( 978 ) — Proceeds from (investment in) financing receivable ( 194 ) 475 Contributions from redeemable non-controlling interests — 13 Proceeds from sales of real estate properties and additional long-lived assets 69,805 303,475 Proceeds from insurance recovery 2,000 — Proceeds from notes receivable repayments 53,190 567 Net cash (used in) provided by investing activities ( 41,931 ) 151,388 FINANCING ACTIVITIES Net borrowings on unsecured credit facility 295,000 250,000 Repayment on term loans ( 35,140 ) ( 100,000 ) Repayments of notes and bonds payable ( 250,692 ) ( 17,746 ) Dividends paid ( 217,756 ) ( 235,618 ) Net proceeds from issuance of common stock — 104 Common stock redemptions ( 713 ) ( 321 ) Common stock repurchases — ( 273,053 ) Distributions to non-controlling interest holders ( 2,653 ) ( 2,399 ) Redemption of non-controlling interest ( 330 ) — Debt issuance and assumption costs — ( 563 ) Payments made on finance leases ( 46 ) ( 30 ) Net cash used in financing activities ( 212,330 ) ( 379,626 ) (Decrease) increase in cash and cash equivalents ( 43,258 ) 16,066 Cash and cash equivalents at beginning of period 68,916 25,699 Cash and cash equivalents at end of period, including held for sale 25,658 41,765 Cash and cash equivalents held for sale ( 151 ) — Cash and cash equivalents at end of period $ 25,507 $ 41,765 6 Table of Contents Supplemental Cash Flow Information SIX MONTHS ENDED June 30, 2025 2024 Interest paid $ 90,251 $ 103,708 Mortgage notes receivable taken in connection with sale of real estate $ 5,400 $ — Invoices accrued for construction, tenant improvements and other capitalized costs $ 47,815 $ 39,016 Capitalized interest $ 4,608 $ 1,916 Proceeds from dispositions held in escrow $ — $ 96,008 Contribution of real estate properties into unconsolidated joint venture $ — $ 66,547 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. 7 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 June 30, 2025, the Company had gross investments of approximately $ 11.2 billion in 559 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 June 30, 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 32 states and total approximately 32.2 million square feet. The Company provided leasing and property management services to 93 % of its portfolio nationwide as of June 30, 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 June 30, 2025, the Company own ed 98.6 % of the issued and outstanding units of the OP (“OP Units”), with other investors owning the remaining 1.4 % of OP 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 8 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 98.6 % 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 June 30, 2025, there were approximately 5.1 million OP Units, or 1.4 % of OP Units issued and outstanding, held by non-controlling interest holders. Additionally, the Company is the primary beneficiary of this VIE. Accordingly, the Company consolidates its interests in the OP. As of June 30, 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 June 30, 2025 and December 31, 2024: (dollars in thousands) June 30, 2025 December 31, 2024 Assets: Total real estate investments, net $ 103,933 $ 103,933 Cash and cash equivalents 965 159 Other assets, net 5,865 4,053 Total assets $ 110,763 $ 108,145 Liabilities: Notes and bonds payable $ 69,302 $ 60,170 Accounts payable and accrued liabilities 1,828 2,786 Other liabilities 200 45 Total liabilities $ 71,330 $ 63,001 As of June 30, 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 the 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 5,970 7,441 2022 Texas 1 Equity method 53,892 53,892 2024 Texas 2 Note receivable 9,690 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. 9 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. As of June 30, 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 June 30, 2025, the Company had redeemable non-controlling interests of $ 4.3 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 and six months ended June 30, 2025, the Company recognized real estate impairments totaling $ 140.9 million and $ 151.0 million , respectively, as a result of the indicators described above. As of June 30, 2025, 11 real estate properties totaling $ 126.3 million were measured at fair value using level 3 fair value hierarchy. The level 3 fair value techniques included using discounted cash flow models, brokerage estimates, letters of intent, and unexecuted purchase and sale agreements, and less estimated closing costs. 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. 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 10 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 JUNE 30, 2025 DECEMBER 31, 2024 May 2021 Poway, CA 5.69 % $ 116,780 $ 116,304 November 2021 Columbus, OH 6.48 % 7,354 7,367 $ 124,134 $ 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 June 30, 2025, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $ 81.1 million. (dollars in thousands) ORIGINATION MATURITY STATED INTEREST RATE MAXIMUM LOAN COMMITMENT OUTSTANDING as of JUNE 30, 2025 INTEREST RECEIVABLE (OTHER ASSETS) ALLOWANCE FOR CREDIT LOSSES FAIR VALUE DISCOUNT AND FEES CARRYING VALUE as of JUNE 30, 2025 Mezzanine loans Arizona 12/21/2023 12/20/2026 9.00 % $ 6,000 $ 6,000 $ 36 $ — $ — $ 6,036 Texas 10/03/2024 10/02/2029 11.00 % 4,500 1 — — — 1 Wisconsin 3/20/2025 3/19/2030 13.00 % 8,500 2,833 — — — 2,833 19,000 8,834 36 — — 8,870 Mortgage loans Texas 1 6/30/2021 12/02/2024 7.00 % 31,150 16,250 551 ( 16,801 ) — — North Carolina 2 12/22/2021 12/22/2024 8.00 % 6,000 6,000 1,441 ( 1,471 ) — 5,970 Florida 3 5/17/2022 2/27/2026 6.00 % 65,000 — — — — — California 3/30/2023 3/29/2026 6.50 % 45,000 45,000 181 — — 45,181 Florida 12/28/2023 12/28/2026 9.00 % 7,700 5,909 — — — 5,909 Texas 10/03/2024 10/02/2029 7.50 % 16,729 9,629 61 — — 9,690 Texas 4 3/20/2025 3/19/2030 6.75 % 5,400 5,400 30 — — 5,430 176,979 88,188 2,264 ( 18,272 ) — 72,180 $ 195,979 $ 97,022 $ 2,300 $ ( 18,272 ) $ — $ 81,050 1 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. 2 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 an allowance for credit loss of $ 1.5 million was needed on this loan. 3 In April 2025, this loan was repaid in full. 4 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 payments. The Company evaluates the collectability of loan receivables based on a combination of credit quality 11 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. 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. In the second quarter of 2025, the Company determined the risk of credit loss on one of its mortgage notes receivable was no longer remote and recorded a credit loss reserve of $ 1.5 million. The following table summarizes the Company's allowance for credit losses on real estate notes receivable: Dollars in thousands SIX MONTHS ENDED JUNE 30, 2025 TWELVE MONTHS ENDED DECEMBER 31, 2024 Allowance for credit losses, beginning of period $ 16,801 $ 5,196 Credit loss reserves 1,471 59,563 Recoveries — ( 4,000 ) Write-off — ( 43,958 ) Allowance for credit losses, end of period $ 18,272 $ 16,801 Interest Income Income from Lease Financing Receivables The Company recognized the related income from two financing receivables totaling $ 2.0 million and $ 3.9 million, respectively, for the three and six months ended June 30, 2025, and $ 2.1 million and $ 4.2 million, respectively, for the three and six months ended June 30, 2024, 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 $ 1.5 million and $ 3.3 million, respectively, for the three and six months ended June 30, 2025, and $ 1.8 million and $ 4.2 million, respectively, for the three and six months ended June 30, 2024. 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 June 30, 2025, the Company had 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. 12 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Revenue that is accounted for under ASC Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Operations in the Other operating line item. 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 June 30, SIX MONTHS ENDED June 30, in thousands 2025 2024 2025 2024 Type of Revenue Parking income $ 2,369 $ 2,463 $ 4,231 $ 5,009 Management fee income/other 1 4,614 1,859 9,140 3,504 $ 6,983 $ 4,322 $ 13,371 $ 8,513 1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement. 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 six months ended June 30, 2025. Unconsolidated Joint Ventures The Company's investment in and income (losses) recognized for the three and six months ended June 30, 2025 and 2024 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below: THREE MONTHS ENDED June 30, SIX MONTHS ENDED June 30, Dollars in thousands 2025 2024 2025 2024 Investments in unconsolidated joint ventures, beginning of period $ 470,418 $ 309,754 $ 473,122 $ 311,511 New investment during the period 126 66,547 978 66,547 Equity income (loss) recognized during the period 158 ( 146 ) 159 ( 568 ) Owner distributions ( 7,272 ) ( 1,314 ) ( 10,829 ) ( 2,649 ) Investments in unconsolidated joint ventures, end of period $ 463,430 $ 374,841 $ 463,430 $ 374,841 13 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. 2025 Real Estate Asset Dispositions The following table details the Company's dispositions for the six months ended June 30, 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 3/20/25 15,000 ( 4,087 ) ( 5,400 ) 5,513 14,343 347 ( 3,777 ) 127,933 Boston, MA 4/30/25 486 ( 49 ) — 437 60 — 377 — Boston, MA 5/23/25 3,000 ( 48 ) — 2,952 2,631 15 306 33,176 Jacksonville, FL 6/26/25 8,100 ( 43 ) — 8,057 23,064 ( 561 ) ( 14,446 ) 53,169 Yakima, WA 6/26/25 31,000 ( 2,380 ) — 28,620 8,689 219 19,712 91,561 Houston, TX 6/27/25 10,500 ( 57 ) — 10,443 10,250 — 193 — Total dispositions $ 81,186 $ ( 8,943 ) $ ( 5,400 ) $ 66,843 $ 71,310 $ 148 $ 785 405,858 1 Includes two medical outpatient properties. Subsequent to June 30, 2025, the Company disposed of the following properties, which were classified as held for sale as of June 30, 2025: Dollars in thousands Date Disposed Sale Price Square Footage South Bend, IN 7/15/25 $ 43,100 205,573 Milwaukee, WI 1 7/29/25 42,000 147,406 Naples, FL 7/29/25 19,250 61,359 New York, NY 7/30/25 25,000 89,893 Total $ 129,350 504,231 1 Includes two medical outpatient properties. Assets Held for Sale The Company had 25 properties and a land parcel held for development classified as assets held for sale as of June 30, 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 June 30, 2025 and December 31, 2024: Dollars in thousands June 30, 2025 December 31, 2024 Balance Sheet data: Land $ 18,330 $ 10,859 Building and improvements 443,895 3,410 Lease intangibles 25,768 3,286 Personal property 633 — Land held for development 3,836 — 492,462 17,555 Accumulated depreciation ( 164,327 ) ( 5,275 ) Real estate assets held for sale, net 1 328,135 12,280 Cash and cash equivalents 151 — Operating lease right-of-use assets 15,248 — Other assets, net 14,673 617 Assets held for sale, net $ 358,207 $ 12,897 Accounts payable and accrued liabilities $ 6,761 $ 694 Operating lease liabilities 19,384 — Other liabilities 4,133 589 Liabilities of assets held for sale $ 30,278 $ 1,283 Redeemable noncontrolling interest held for sale $ 1,221 $ — 1 Net real estate assets held for sale include the impact of $ 54.5 million of impairment charges for the six months ended June 30, 2025. 14 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. 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 and six months ended June 30, 2025 was $ 287.1 million and $ 575.9 million, respectively. Lease income for the Company's operating leases, recognized for the three and six months ended June 30, 2024 was $ 308.1 million and $ 626.2 million, respectively. Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sales-type lease, as of June 30, 2025, were as follows: Dollars in thousands OPERATING 2025 $ 414,817 2026 794,621 2027 683,818 2028 570,959 2029 466,000 2030 and thereafter 1,734,240 $ 4,664,455 Lessee Accounting The Company has obligations, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of June 30, 2025, the Company had 198 ground leases associated with properties covering 14.4 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 68 prepaid ground leases as of June 30, 2025. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $ 0.3 million and $ 0.5 million of the Company's rental expense for each of the three months ended June 30, 2025 and 2024, respectively, and $ 0.7 million and $ 0.9 million for each of the six months ended June 30, 2025 and 2024, respectively. 15 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. The Company’s future lease payments (primarily for its 130 non-prepaid ground leases), excluding amounts due for held for sale properties, as of June 30, 2025, were as follows: Dollars in thousands OPERATING FINANCING 2025 $ 5,235 $ 957 2026 11,392 2,106 2027 11,581 2,145 2028 11,717 2,177 2029 11,776 2,209 2030 and thereafter 563,917 383,172 Total undiscounted lease payments 615,618 392,766 Discount ( 411,940 ) ( 319,747 ) Lease liabilities $ 203,678 $ 73,019 The following table provides details of the Company's total lease expense for the three and six months ended June 30, 2025 and 2024: THREE MONTHS ENDED June 30, SIX MONTHS ENDED June 30, Dollars in thousands 2025 2024 2025 2024 Operating lease cost Operating lease expense $ 4,397 $ 4,599 $ 8,753 $ 9,065 Variable lease expense 1,474 1,315 2,802 2,542 Finance lease cost Amortization of right-of-use assets 370 392 741 779 Interest on lease liabilities 921 942 1,837 1,880 Total lease expense $ 7,162 $ 7,248 $ 14,133 $ 14,266 Other information Operating cash flows outflows related to operating leases $ 4,529 $ 4,889 $ 9,021 $ 8,929 Operating cash flows outflows related to financing leases $ 576 $ 591 $ 1,119 $ 1,154 Financing cash flows outflows related to financing leases $ 5 $ 4 $ 139 $ 30 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 2,561 $ — $ 2,561 Weighted-average years remaining lease term (excluding renewal options) - operating leases 41.9 45.9 Weighted-average years remaining lease term (excluding renewal options) - finance leases 57.2 57.4 Weighted-average discount rate - operating leases 5.5 % 5.7 % Weighted-average discount rate - finance leases 5.0 % 5.0 % 16 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 June 30, 2025 and December 31, 2024. MATURITY DATE BALANCE 1 AS OF EFFECTIVE INTEREST RATE as of 6/30/2025 Dollars in thousands 6/30/2025 12/31/2024 $ 1.5 billion Unsecured Credit Facility 2 10/25 $ 295,000 $ — 5.27 % $ 200 million Unsecured Term Loan 3 1/26 174,879 199,896 5.36 % $ 300 million Unsecured Term Loan 4 10/25 289,992 299,981 5.36 % $ 150 million Unsecured Term Loan 6/26 149,864 149,790 5.36 % $ 200 million Unsecured Term Loan 7/27 199,710 199,641 5.36 % $ 300 million Unsecured Term Loan 1/28 298,917 298,708 5.36 % Senior Notes due 2025 5 5/25 — 249,868 4.12 % Senior Notes due 2026 8/26 590,874 586,824 4.94 % Senior Notes due 2027 7/27 490,371 488,104 4.76 % Senior Notes due 2028 1/28 298,338 298,029 3.85 % Senior Notes due 2030 2/30 591,535 586,028 5.30 % Senior Notes due 2030 3/30 297,398 297,190 2.72 % Senior Notes due 2031 3/31 296,603 296,343 2.25 % Senior Notes due 2031 3/31 676,434 667,233 5.13 % Mortgage notes payable 12/25-12/26 44,476 45,136 3.57 % - 6.88 % $ 4,694,391 $ 4,662,771 1 Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable. 2 As of June 30, 2025, the Company had $ 1.2 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 due October 2025. 5 In May 2025, the Company repaid its Senior Notes due 2025 at maturity including $ 250 million of principal and $ 4.8 million of accrued interest. Changes in Debt Structure On April 8, 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, which would extend the final maturity to 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. On July 25, 2025, the Company entered into the Fifth Amended and Restated Revolving Credit and Term Loan Agreement (the “ New Credit Facility ”) with Wells Fargo Bank, National Association, as Administrative Agent; Wells Fargo Securities, LLC and JPMorgan Chase Bank, N.A. as Joint Book Runners; Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A., PNC Capital Markets LLC, U.S. Bank National Association, The Bank of Nova Scotia, and BofA Securities, Inc., as Joint Lead Arrangers; and the other lenders named therein. The New Credit Facility provides for (i) a $ 1.5 billion unsecured revolving credit facility (the “Revolver”) and (ii) five individual unsecured term loan tranches totaling $ 1.115 billion. The OP is the borrower under the New Credit Facility (in such capacity, the “ Borrower ”). A summary of the principal terms of the New Credit Facility and the New Credit Facility's effect on the Company's existing revolving credit term loan facilities is as follows: • The New Credit Facility replaces the Unsecured Credit Facility. All outstanding obligations due under the Unsecured Credit Facility were reallocated to the lenders under the New Credit Facility. • The Company’s $ 1.5 billion Revolver was continued with a maturity extension from October 31, 2025 to July 25, 2029, with two six-month extension options. The Revolver includes a sublimit of $ 120 million for letters of credit. • The previously funded $ 175 million term loan was continued with a maturity date of January 31, 2026 and three extension options totaling 16 months. 17 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. • The previously funded $ 150 million term loan was continued with a maturity date of June 1, 2026, with two extension options of six months each. • The previously funded $ 290 million term loan was continued with a maturity date of October 31, 2025, with four extension options totaling 24 months. • The previously funded $ 200 million term loan was continued with a maturity date of July 20, 2027, with two extension options of 12 months each. • The previously funded $ 300 million term loan was continued with a maturity date of January 20, 2028, with one extension option of 12 months. Revolving loans outstanding under the New Credit Facility bear interest at a floating rate equal to the daily simple Secured Overnight Financing Rate ("SOFR"), term SOFR or base rates, as applicable, plus an applicable margin. The applicable margin is determined based on the Borrower’s credit ratings and ranges from 0.725 % per annum to 1.40 % per annum (currently 0.85 % per annum). Term loans outstanding under the New Credit Facility bear interest at a rate equal to Term SOFR rates plus an applicable margin. The applicable margin is determined based on the Borrower’s credit ratings and ranges from 0.80 % per annum to 1.60 % per annum (currently 0.95 % per annum). In addition, the Borrower pays a facility fee on the Revolver commitments at a rate per annum determined based on the Borrower’s credit ratings and ranging from 0.125 % per annum to 0.30 % per annum (currently 0.20 % per annum). Except as set forth above, the principal terms of the New Credit Facility are substantially consistent with the terms of the Unsecured Credit Facility. Specifically, the New Credit Facility contains representations and warranties and affirmative and negative covenants that are customary for facilities of this size and type. These covenants include, among others: limitations on the incurrence of additional indebtedness; limitations on mergers, investments and acquisitions; limitations on dividends and redemptions of capital stock; limitations on transactions with affiliates; and requirements to comply with certain financial covenants, including a maximum consolidated leverage ratio, a maximum consolidated secured leverage ratio, a maximum consolidated unencumbered leverage ratio, a minimum fixed charge coverage ratio and a minimum unsecured coverage ratio. 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 swaps 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. 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. 18 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. As of June 30, 2025, the Company had 15 outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk: MATURITY 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 June 30, 2025 and December 31, 2024. AS OF JUNE 30, 2025 AS OF DECEMBER 31, 2024 In thousands BALANCE SHEET LOCATION FAIR VALUE BALANCE SHEET LOCATION FAIR VALUE Interest rate swaps 2019 Other Assets $ 1,442 Other Assets $ 2,493 Interest rate swaps 2022 Other Assets — Other Assets 2,250 Interest rate swaps 2022 Other Liabilities ( 4,791 ) Other Liabilities ( 853 ) Interest rate swaps 2023 Other Assets 156 Other Assets 521 Interest rate swaps 2023 Other Liabilities ( 4,100 ) Other Liabilities ( 3,310 ) Total derivatives designated as hedging instruments $ ( 7,293 ) $ 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 and six months ended June 30, 2025 and 2024 related to the Company's outstanding interest rate swaps. (GAIN)/LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended June 30, (GAIN)/LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended June 30, In thousands 2025 2024 2025 2024 Interest rate swaps $ 1,028 $ ( 5,891 ) Interest expense $ ( 1,098 ) $ ( 3,811 ) Settled treasury hedges — — Interest expense 107 107 Settled interest rate swaps — — Interest expense 11 42 $ 1,028 $ ( 5,891 ) Total interest expense $ ( 980 ) $ ( 3,662 ) (GAIN)/LOSS RECOGNIZED IN AOCI ON DERIVATIVE six months ended June 30, (GAIN)/LOSS RECLASSIFIED FROM AOCI INTO INCOME six months ended June 30, In thousands 2025 2024 2025 2024 Interest rate swaps $ 6,206 $ ( 25,501 ) Interest expense $ ( 2,188 ) $ ( 7,825 ) Settled treasury hedges — — Interest expense 214 213 Settled interest rate swaps — — Interest expense 53 84 $ 6,206 $ ( 25,501 ) Total interest expense $ ( 1,921 ) $ ( 7,528 ) 19 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. The Company estimates that an additional $ 1.2 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 providing that 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 June 30, 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 $ 7.3 million . As of June 30, 2025, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. 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 six months ended June 30, 2025, and the twelve months ended December 31, 2024: SIX MONTHS ENDED JUNE 30, 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 22,228 194,767 Shares Repurchased — ( 30,794,250 ) Non-vested share-based awards, net of withheld shares and forfeitures 1,013,583 158,433 Balance, end of period 351,567,817 350,532,006 Common Stock Dividends During the six months ended June 30, 2025, the Company declared and paid common stock dividends totaling $ 0.62 per share. On July 31, 2025, the Company declared a quarterly common stock dividend in the amount of $ 0.24 per share payable on August 28, 2025 to stockholders of record on August 14, 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 Company has not repurchased shares in 2025. As of June 30, 2025, the Company had $ 237.0 million remaining under this authorization. 20 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 and six months ended June 30, 2025 and 2024. THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, Dollars in thousands, except per share data 2025 2024 2025 2024 Weighted average common shares outstanding 351,411,541 374,498,770 351,086,883 377,916,989 Non-vested shares ( 1,783,234 ) ( 2,021,471 ) ( 1,502,983 ) ( 1,954,956 ) Weighted average common shares outstanding - basic 349,628,307 372,477,299 349,583,900 375,962,033 Weighted average common shares outstanding - basic 349,628,307 372,477,299 349,583,900 375,962,033 Dilutive effect of OP Units — — — — Weighted average common shares outstanding - diluted 349,628,307 372,477,299 349,583,900 375,962,033 Net loss $ ( 160,144 ) $ ( 145,938 ) $ ( 205,532 ) $ ( 461,157 ) Income allocated to participating securities ( 783 ) ( 917 ) ( 1,212 ) ( 1,819 ) Loss attributable to non-controlling interest 2,293 2,158 2,808 6,541 Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units ( 395 ) ( 717 ) ( 492 ) ( 2,047 ) Net loss applicable to common stockholders - basic and diluted $ ( 159,029 ) $ ( 145,414 ) $ ( 204,428 ) $ ( 458,482 ) Basic earnings per common share - net loss $ ( 0.45 ) $ ( 0.39 ) $ ( 0.58 ) $ ( 1.22 ) Diluted earnings per common share - net loss $ ( 0.45 ) $ ( 0.39 ) $ ( 0.58 ) $ ( 1.22 ) The effect of OP Units redeemable for 4,161,628 shares and 3,914,997 shares of common stock for the three and six months ended June 30, 2025, respectively, were excluded from the calculation of diluted loss per common share because the effect was anti-dilutive due to the loss from continuing operations incurred during those periods. Stock Incentive Plan 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 six months ended June 30, 2025, the Company made the following equity awards under the Incentive Plan: Restricted Stock 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 . During the second 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 $ 7.8 million, which consisted of an aggregate of 499,323 non-vested shares of common stock with vesting periods ranging from three to four years . The Company also granted to independent directors an aggregate of 72,144 shares of non-vested stock with a grant date fair value of $ 1.1 million, and an aggregate of 34,586 LTIP Series D units in the OP with a grant date fair value of $ 0.5 million. 21 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. Restricted Stock Units ("RSUs") On February 11, 2025, the Company granted an aggregate of 275,735 RSUs to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $ 5.4 million. During the second quarter of 2025 , the Company granted an aggregate of 16,038 RSUs to members of senior management, subject to a three-year performance period, with an aggregate grant date fair value of $ 0.3 million. The RSUs vest based on relative total shareholder return ("TSR") performance 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 RSU grants 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 LTIP Series C Units ("LTIP-C units") On February 11, 2025, the Company granted an aggregate of 166,976 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 in the OP vest based on relative TSR performance 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. On April 15, 2025, the Company granted 347,770 LTIP-C units in the OP to its newly appointed Chief Executive Officer with three-year forward-looking performance targets, a three-year vesting period and an aggregate grant date fair value of $ 3.4 million. The LTIP-C units in the OP vest based on relative TSR performance and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $ 9.83 for the April 2025 grant using the following assumptions: Volatility 27.0 % Dividend assumption Accrued Expected term 3 years Risk-free rate 3.80 % Stock price (per share) $ 15.70 The Company records amortization expense based on the Monte Carlo simulation throughout the performance period. 22 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. The following table represents the summary of non-vested share-based awards under the Incentive Plan for the three and six months ended June 30, 2025, and 2024: THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2025 2024 2025 2024 Share-based awards, beginning of period 2,619,942 4,043,154 1,799,737 2,615,562 Granted 1 969,861 135,767 1,889,798 1,611,578 Vested ( 311,301 ) ( 46,660 ) ( 351,271 ) ( 75,074 ) Change in awards based on performance assessment 22,656 ( 47,202 ) ( 37,106 ) ( 47,202 ) Forfeited ( 14,027 ) — ( 14,027 ) ( 19,805 ) Share-based awards, end of period 3,287,131 4,085,059 3,287,131 4,085,059 1 LTIP-C units in the OP 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 June 30, 2025, and 2024, the Company withheld 72,853 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 June 30, 2025: Dollars in millions FUTURE AMORTIZATION of non-vested shares 2025 $ 7.5 2026 13.1 2027 10.7 2028 3.0 2029 and thereafter 0.9 Total $ 35.2 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 receivable - 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 June 30, 2025, and December 31, 2024: 23 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont. June 30, 2025 December 31, 2024 Dollars in millions CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE Notes and bonds payable 1, 2 $ 4,694.4 $ 4,672.4 $ 4,662.8 $ 4,578.4 Real estate notes receivable $ 81.1 $ 79.7 $ 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 June 30, 2025. 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 and six months ended June 30, 2025, and 2024. THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, Dollars in thousands 2025 2024 2025 2024 Significant Segment Expenses: Property taxes $ 29,029 $ 32,487 $ 57,839 $ 65,416 Personnel 24,221 22,686 48,600 47,305 Utilities 22,189 23,411 44,140 47,492 Maintenance 24,746 27,082 53,493 56,721 Totals $ 100,185 $ 105,666 $ 204,072 $ 216,934 The following schedule reconciles net loss to segment expenses for the three and six months ended June 30, 2025, and 2024. THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, Dollars in thousands 2025 2024 2025 2024 Revenue $ 297,502 $ 316,322 $ 596,478 $ 643,127 Property taxes ( 29,029 ) ( 32,487 ) ( 57,839 ) ( 65,416 ) Personnel ( 24,221 ) ( 22,686 ) ( 48,600 ) ( 47,305 ) Utilities ( 22,189 ) ( 23,411 ) ( 44,140 ) ( 47,492 ) Maintenance ( 24,746 ) ( 27,082 ) ( 53,493 ) ( 56,721 ) Other segment expenses 1 ( 33,221 ) ( 26,055 ) ( 57,826 ) ( 50,652 ) Transaction costs ( 593 ) ( 431 ) ( 1,604 ) ( 826 ) Depreciation and amortization ( 147,749 ) ( 173,477 ) ( 298,717 ) ( 351,596 ) Gain on sales of real estate properties and other assets 20,004 38,338 22,907 38,360 Interest expense ( 53,346 ) ( 62,457 ) ( 108,157 ) ( 123,510 ) Impairment of real estate properties and credit loss reserves ( 142,348 ) ( 132,118 ) ( 154,429 ) ( 148,055 ) Impairment of goodwill — — — ( 250,530 ) Equity income (loss) from unconsolidated joint ventures 158 ( 146 ) 159 ( 568 ) Interest and other (expense) income, net ( 366 ) ( 248 ) ( 271 ) 27 Net loss $ ( 160,144 ) $ ( 145,938 ) $ ( 205,532 ) $ ( 461,157 ) 1 Other segment expenses are primarily related to administrative costs, travel, legal, technology, and insurance. 24 Table of Contents