Healthcare Realty Trust Inc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read together with the Condensed Consolidated Financial Statements and related Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2024, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations." Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us," and "our" are to Healthcare Realty Trust and its consolidated subsidiaries, including the OP. Disclosure Regarding Forward-Looking Statements This report and other materials the Company has filed or may file with the SEC, as well as information included in oral statements or other written statements made, or to be made, by senior management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could” and other comparable terms. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could materially affect the Company’s current plans and expectations and future financial condition and results. Such risks and uncertainties as more fully discussed in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and in other reports filed by the Company with the SEC from time to time include, among other things, the following: Risks relating to our business and operations • The Company's expected results may not be achieved; • The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company; • The Company's results of operations have been and will continue to be impacted negatively by the Steward Health and Prospect Medical bankruptcies; • Owning real estate and indirect interests in real estate is subject to inherent risks; • The Company may incur impairment charges on its real estate properties or other assets; • The Company has properties subject to purchase options that expose it to reinvestment risk and reduction in expected investment returns; • If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected; • Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses; • The Company has, and in the future may have more exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense; • The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition; • The Company is subject to risks associated with the development and redevelopment of properties; • The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations; • The Company is exposed to risks associated with geographic concentration; • Many of the Company’s leases are dependent on the viability of associated health systems. Revenue concentrations relating to these leases expose the Company to risks related to the financial condition of the associated health systems; 27 Table of Contents • Many of the Company’s properties are held under ground leases. These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties; • The Company may experience uninsured or underinsured losses; • Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company; • The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems; • The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility; • Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries; • The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid; • Pandemics, and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition; and • The Company's success depends, in part, on its ability to attract and retain talented employees. The loss of any one of the Company's key personnel or the inability to maintain appropriate staffing could adversely impact the Company's business. Risks relating to our capital structure and financings • The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future; • Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations; • If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted; • The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity; • Increases in interest rates could have a material adverse effect on the Company's cost of capital; • The Company's swap agreements may not effectively reduce its exposure to changes in interest rates; • The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and may enter into additional such agreements in the future; • The U.S. federal income tax treatment of the cash that the Company might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements; and • In case of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock. Risks relating to government regulations • The Company's property taxes could increase due to reassessment or property tax rate changes; • Trends in the healthcare service industry, including the recent passage of the One Big Beautiful Bill Act which is the subject of ongoing analysis, may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments; • The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations; • Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code; 28 Table of Contents • If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock; • The Company’s articles of incorporation, as well as provisions of the MGCL, contain limits and restrictions on transferability of the Company’s common stock which may have adverse effects on the value of the Company’s common stock; • Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities; • The prohibited transactions tax may limit the Company's ability to sell properties; • New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT; • New and increased transfer tax rates may reduce the value of the Company’s properties. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing. Liquidity and Capital Resources Sources and Uses of Cash The Company’s primary sources of cash include rent receipts from its real estate portfolio based on contractual arrangements with its tenants, proceeds from the sales of real estate properties, joint ventures, and proceeds from public or private debt or equity offerings. On July 25, 2025, the Company entered into the Unsecured Credit Facility, which, among other things, replaced the Prior Credit Facility and extended the maturity of its revolver to July 2029. As of September 30, 2025, the Company had $1.4 billion available to be drawn on the Unsecured Credit Facility and available cash. The Company expects to continue to meet its liquidity needs, including funding additional investments, paying dividends, and funding debt service, through cash flows from operations and liquidity sources, including the Unsecured Credit Facility. Management believes that the Company's liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs. Investing Activities Cash flows used in investing activities for the nine months ended September 30, 2025, were approximately $184.3 million. Below is a summary of the investing activities. Dispositions The Company disposed of 31 medical outpatient properties and two land parcels during the nine months ended September 30, 2025 for a total sales price of $477.6 million, generating net proceeds of $447.3 million after seller financing and closing credits. The following table details these dispositions for the nine months ended September 30, 2025: 29 Table of Contents Dollars in thousands Date Disposed Sale Price Square Footage Boston, MA 2/7/25 $ 4,500 30,304 Denver, CO 1 2/14/25 8,600 69,715 Houston, TX 2 3/20/25 15,000 127,933 Boston, MA 4/30/25 486 — Boston, MA 5/23/25 3,000 33,176 Jacksonville, FL 6/26/25 8,100 53,169 Yakima, WA 1 6/26/25 31,000 91,561 Houston, TX 6/27/25 10,500 — South Bend, IN 7/15/25 43,100 205,573 Milwaukee, WI 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 Boston, MA 8/25/25 450 9,010 Lakeland, FL 8/27/25 7,325 31,158 Salem, OR 8/29/25 4,000 21,026 Milwaukee, WI 1 9/29/25 60,000 220,747 Tampa, FL 9/30/25 22,000 47,962 Dallas, TX 2 5 9/30/25 58,800 448,879 Chicago, IL 9/30/25 18,700 56,531 Columbus, OH 4 9/30/25 33,750 117,060 Miami, FL 9/30/25 62,000 152,976 Total $ 477,561 2,015,438 1 Includes two medical outpatient properties. 2 The Company provided seller financing of approximately $5.4 million in connection with this sale. 3 Includes four medical outpatient properties. 4 Includes three medical outpatient properties. 5 Proceeds held in a cash escrow account and recorded in other assets. Cash was received by the Company on October 1, 2025. Subsequent to September 30, 2025, the Company disposed of the following land parcel and a property which was classified as held for sale as of September 30, 2025: Dollars in thousands Date Disposed Sale Price Square Footage New Haven, CT 10/16/25 $ 725 — Des Moines, IA 10/29/25 7,225 152,655 Total $ 7,950 152,655 Capital Expenditures During the nine months ended September 30, 2025, the Company incurred capital costs totaling $230.1 million for the following: • $108.9 million toward development and redevelopment of properties; • $59.9 million toward first generation tenant improvements and planned capital expenditures for acquisitions; • $35.9 million toward second generation tenant improvements; and • $25.4 million toward building capital. 30 Table of Contents Real Estate Notes Receivable In January 2025, the Company received $14.9 million as payment towards the principal balance of its mortgage loan that matured on December 2, 2024. In March 2025, the Company executed a mezzanine loan receivable agreement with a maximum loan commitment of $8.5 million. As of September 30, 2025, the Company had funded $6.2 million under this agreement. In April 2025, a mortgage loan receivable of $37.7 million maturing in February 2026 was repaid in full. See Note 1 to the Condensed Consolidated Financial Statements in this report for more information about real estate notes receivable and allowance for credit losses. Financing Activities Cash flows used in financing activities for the nine months ended September 30, 2025 were approximately $534.5 million. See Notes 4 and 7 to the Condensed Consolidated Financial Statements in this report for more information about capital markets and financing activities. Debt Activity As of September 30, 2025, the Company had 15 outstanding interest rate swaps totaling $1.0 billion to hedge the one-month term Secured Overnight Financing Rate ("SOFR"). As of September 30, 2025, seven of these swaps totaling $500 million were designated as cash flow hedges. The following table details the amount and rate of each swap (dollars in thousands): EXPIRATION DATE TOTAL OUTSTANDING AMOUNT WEIGHTED AVERAGE RATE May 2026 $ 241,608 3.63 % June 2026 150,000 3.83 % December 2026 150,000 3.84 % June 2027 200,000 4.27 % December 2027 300,000 3.93 % $ 1,041,608 3.90 % Changes in Debt Structure During the first quarter of 2025, the Company repaid $25.0 million of the $200 million Unsecured Term Loan due May 2025 and $10.0 million of the $300 million Unsecured Term Loan due October 2025. On April 8, 2025, the Company exercised its final option 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 existing $200 million term loan facility was also amended to include a four-month extension option, which would extend the final maturity to May 2026. On October 7, 2025, the Company fully repaid its $200 million Unsecured Term Loan due January 2026, which had a remaining principal balance of $151.3 million. On September 26, 2025, the Company exercised an option to extend the maturity date of the $300 million Term Loan to January 2026 for a fee of approximately $0.1 million. The Company has three additional options to extend the maturity date of this term loan. As of September 30, 2025, the principal balance was $268.7 million. 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 Unsecured Credit Facility, which replaced the Prior Credit Facility. See Note 4 to the Condensed Consolidated Financial Statements in this report for more information about the Unsecured Credit Facility and the Prior Credit Facility. Supplemental Guarantor Information The OP has issued unsecured notes described in Note 4 to the Company's Condensed Consolidated Financial Statements included in this report. All unsecured notes are fully and unconditionally guaranteed by the Company, and the OP is 98.6% owned by the Company. Effective January 4, 2021, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements which permit subsidiary issuers of 31 Table of Contents obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent. Accordingly, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, the Company has excluded the summarized financial information for the OP because the assets, liabilities, and results of operations of the OP are not materially different than the corresponding amounts in the Company's consolidated financial statements and management believes such summarized financial information would be repetitive and would not provide incremental value to investors. Operating Activities Cash flows provided by operating activities decreased from $363.6 million for the nine months ended September 30, 2024 to $324.8 million for the nine months ended September 30, 2025. Items impacting cash flows from operations include, but are not limited to, cash generated from property operations, interest payments and the timing of the payment of invoices and other expenses. The Company may, from time to time, sell properties and redeploy cash from property sales into new investments or to repay indebtedness. The income from the new investments or reduction in interest expense could be less than the income from properties sold which would adversely affect the Company's results of operations and cash flows. Trends and Matters Impacting Operating Results Management monitors factors and trends important to the Company and the REIT industry to gauge the potential impact on Company operations. In addition to the matters discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, some of the factors and trends that management believes may impact future operations of the Company are outlined below. Economic and Market Conditions Rising interest rates and increased volatility in the capital markets have increased the Company’s cost and availability of debt and equity capital. Limited availability and increases in the cost of capital could adversely impact the Company’s ability to finance operations and acquire, develop, and redevelop properties. To the extent the Company’s tenants experience increased costs or financing difficulties due to the economic and market conditions, they may be unable or unwilling to make payments or perform their obligations when due. Additionally, increased interest rates may also result in less liquid property markets, limiting the Company’s ability to sell existing assets or obtain joint venture capital. Expiring Leases The Company expects that approximately 15% o f its leases will expire each year in the ordinary course of business. There are 350 multi-tenant and single-tenant leases totaling 1.2 million square feet that will expire during the remainder of 2025. Approximately 70% of the leases expiring during the remainder of 2025 are for space in buildings located on or adjacent to hospital campuses, are distributed throughout the portfolio, and are not concentrated with any one tenant, health system or market area. The Company typically expects to retain 75% to 90% of tenants upon expiration, and the retention ratio for the first nine months of the year was within this range. Prospect Medical On January 11, 2025, Prospect Medical Holdings (“Prospect”) filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas. Prospect leases approximately 80,912 square feet of space from the Company, accounting for approximately $2.9 million of annual revenue. The Company moved to cash basis accounting for these leases and recorded a reserve of $0.7 million in the fourth quarter of 2024. On October 16, 2025, Prospect designated ECHN Holdings, Inc., a subsidiary of Hartford HealthCare (“Hartford Health”) as the successful bidder for the Prospect assets most closely associated with the Company’s Prospect leases. While the Company owns approximately 220,000 square feet of space currently leased by Hartford Health, there can be no assurances that Hartford Health will assume Prospect’s leases with the Company. During the nine months ended September 30, 2025, the Company received rent payments due from Prospect totaling approximately $2.4 million. 32 Table of Contents Operating Expenses The Company historically has experienced increases in property taxes throughout its portfolio as a result of increasing assessments and tax rates levied across the country. The Company continues its efforts to appeal property tax increases and manage the impact of the increases. In addition, the Company historically has incurred variability in portfolio utilities expenses based on seasonality, with the first and third quarters usually reflecting greater amounts. The effects of these operating expense increases are mitigated in leases that have provisions for operating expense reimbursement. As of September 30, 2025, leases for approximately 92% of the Company's total leased square footage allow for some recovery of operating expenses, with approximately 30% having modified gross lease structures and approximately 62% having net lease structures. Purchase Options Information about the Company's unexercised purchase options and the amount and basis for determination of the purchase price is detailed in the table below (dollars in thousands): YEAR EXERCISABLE NUMBER OF PROPERTIES GROSS REAL ESTATE INVESTMENT AS OF SEPTEMBER 30, 2025 1 Current 2 5 $ 100,701 2025 — — 2026 5 143,015 2027 5 140,613 2028 5 135,188 2029 3 82,153 2030 — — 2031 4 109,776 2032 2 24,604 2033 — — 2034 — — 2035 and thereafter 3 12 417,543 Total 41 $ 1,153,593 1 Includes three properties totaling $87.6 million with stated purchase prices or prices based on fixed capitalization rates. 2 These purchase options have been exercisable for an average of 18.6 years. 3 Includes two medical outpatient properties that are recorded in the line item Investment in financing receivable, net on the Company's Condensed Consolidated Balance Sheets. Non-GAAP Financial Measures and Key Performance Indicators Management considers certain non-GAAP financial measures and key performance indicators to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of these measures to the most directly comparable GAAP financial measures. The non-GAAP financial measures and key performance indicators presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Condensed Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q. 33 Table of Contents Funds from Operations ("FFO"), Normalized FFO and Funds Available for Distribution ("FAD") FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, impairment, and after adjustments for unconsolidated partnerships and joint ventures.” In addition to FFO, the Company presents Normalized FFO and FAD. Normalized FFO is presented by adding to FFO acquisition-related costs, acceleration of debt issuance costs, debt extinguishment costs and other Company-defined normalizing items to evaluate operating performance. FAD is presented by adding to Normalized FFO non-real estate depreciation and amortization, non-cash financing receivable amortization, loan origination cost amortization, deferred financing fees amortization, stock-based compensation expense and rent reserves, net; and subtracting maintenance capital expenditures, including second generation tenant improvements and leasing commissions paid and straight-line rent income, net of expense. The Company's definition of these terms may not be comparable to that of other real estate companies as they may have different methodologies for computing these amounts. FFO, Normalized FFO and FAD should not be considered as an alternative to net income as an indicator of the Company's financial performance or to cash flow from operating activities as an indicator of the Company's liquidity. FFO, Normalized FFO and FAD should be reviewed in connection with GAAP financial measures. Management believes FFO, Normalized FFO, FFO per common share, Normalized FFO per share and FAD ("Non-GAAP Measures") provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods. The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these Non-GAAP Measures. However, none of these measures represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity. 34 Table of Contents The table below reconciles net income to FFO, Normalized FFO and FAD for the three and nine months ended September 30, 2025 and 2024: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, Amounts in thousands, except per share data 2025 2024 2025 2024 Net loss attributable to common stockholders $ (57,738) $ (93,023) $ (260,462) $ (547,639) Net loss attributable to common stockholders per diluted share 1 $ (0.17) $ (0.26) $ (0.75) $ (1.49) Gain on sales of real estate properties (76,771) (39,148) (99,678) (72,601) Impairment of real estate properties 104,362 37,632 255,384 174,486 Real estate depreciation and amortization 143,187 167,821 451,411 526,332 Non-controlling loss from operating partnership units (806) (1,372) (3,698) (7,727) Unconsolidated JV depreciation and amortization 6,688 5,378 20,111 14,764 FFO adjustments $ 176,660 $ 170,311 $ 623,530 $ 635,254 FFO adjustments per common share - diluted $ 0.50 $ 0.47 $ 1.76 $ 1.70 FFO attributable to common stockholders $ 118,922 $ 77,288 $ 363,068 $ 87,615 FFO attributable to common stockholders per common share - diluted $ 0.34 $ 0.21 $ 1.02 $ 0.23 Transaction costs 125 719 1,729 1,545 Lease intangible amortization (203) (10) (652) 294 Non-routine legal costs 9 306 564 771 Debt financing costs 2 3,493 — 3,493 — Restructuring and severance-related charges 12,046 6,861 22,849 6,861 Credit losses and losses on other assets, net 3 — 46,600 3,407 55,125 Impairment of goodwill — — — 250,530 Merger-related fair value of debt instruments 10,715 10,184 31,741 30,353 Unconsolidated JV normalizing items 4 233 101 599 277 Normalized FFO adjustments $ 26,418 $ 64,761 $ 63,730 $ 345,756 Normalized FFO adjustments per common share - diluted $ 0.07 $ 0.18 $ 0.18 $ 0.92 Normalized FFO attributable to common stockholders $ 145,340 $ 142,049 $ 426,798 $ 433,371 Normalized FFO attributable to common stockholders per common share - diluted $ 0.41 $ 0.39 $ 1.20 $ 1.16 Non-real estate depreciation and amortization 114 276 542 1,075 Non-cash interest amortization, net 5 1,384 1,319 3,731 3,862 Rent reserves, net 146 (27) 370 1,083 Straight-line rent, net (5,899) (5,771) (19,787) (20,203) Stock-based compensation 3,386 4,064 10,301 11,008 Unconsolidated JV non-cash items 6 (463) (376) (1,073) (646) Normalized FFO adjusted for non-cash items $ 144,008 $ 141,534 $ 420,882 $ 429,550 2nd generation TI (9,398) (16,951) (36,319) (49,443) Leasing commissions paid (7,438) (10,266) (24,019) (35,493) Building capital (10,319) (7,389) (26,117) (25,587) FAD $ 116,853 $ 106,928 $ 334,427 $ 319,027 FFO weighted average common shares outstanding - diluted 7 354,690 363,370 354,294 374,414 1 Potential common shares are not included in diluted earnings per share when a loss exists as the effect would be antidilutive. 2 Includes loss on debt extinguishment, loss on derivatives, and legal fees related to the amended credit facility. 3 For the nine months ended September 30, 2025, represents a $1.5 million credit loss reserve on a mortgage note receivable and a $1.9 million loss on other assets included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations. For the nine months ended September 30, 2024, includes a $5.1 million gain on sale of corporate assets included in "Gains on sales of real estate and other assets" on the Statement of Operations, a $2.2 million straight line rent reversed included in "Rental income" on the Statement of Operations, and a $58.0 million credit loss reserve on three notes receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations. 4 Includes the Company's proportionate share of lease intangible amortization related to unconsolidated joint ventures. 5 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization. 6 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures. 7 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 472,119 and 35 Table of Contents 760,552, respectively, for the three months ended September 30, 2025 and 2024, and the dilutive impact of 4,253,989 and 4,213,402 OP Units outstanding for the three and nine months ended September 30, 2025, respectively. Cash Net Operating Income ("NOI") and Same Store Cash NOI Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income plus interest from financing receivables less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, financing receivable amortization, tenant improvement amortization and leasing commission amortization. The Company also excludes cash lease termination fees. Cash NOI is historical and not necessarily indicative of future results. Same Store Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale or intended for sale, properties undergoing redevelopment, and newly redeveloped or developed properties. The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction through the application of additional resources, including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures. Any recently acquired property will be included in the same store pool once the Company has owned the property for five full quarters. Newly developed or redeveloped properties will be included in the same store pool five full quarters after substantial completion. The following table reflects the Company's Same Store Cash NOI for the nine months ended September 30, 2025 and 2024: NUMBER OF PROPERTIES GROSS INVESTMENT as of September 30, 2025 SAME STORE CASH NOI for the nine months ended September 30, Dollars in thousands 2025 2024 Same store properties 492 $ 9,392,025 $ 454,475 $ 433,710 Joint venture same store properties 30 $ 331,800 $ 13,157 $ 13,549 The following tables reconcile net loss to Same Store NOI and the same store property metrics to the total owned real estate portfolio for the nine months ended September 30, 2025 and 2024: Reconciliation of Same Store Cash NOI SAME STORE RECONCILIATION NINE MONTHS ENDED SEPTEMBER 30, Dollars in thousands 2025 2024 Net loss $ (264,076) $ (555,692) Other expense 322,907 589,933 General and administrative expense 58,782 48,913 Depreciation and amortization expense 436,558 514,821 Other expenses 1 22,676 16,388 Straight-line rent, net (19,788) (17,971) Joint venture properties 24,887 16,939 Other revenue 2 (28,794) (20,773) Cash NOI 553,152 592,558 Cash NOI not included in same store (85,520) (145,299) Same store cash NOI 467,632 447,259 Same store joint venture properties (13,157) (13,549) Same store cash NOI (excluding JVs) $ 454,475 $ 433,710 1. Includes transaction costs, rent reserves, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense. 36 Table of Contents 2. Includes management fee income, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization. Reconciliation of Same Store Properties AS OF SEPTEMBER 30, 2025 Dollars and square feet in thousands PROPERTY COUNT GROSS INVESTMENT 1 SQUARE FEET OCCUPANCY Same store properties 492 $ 9,392,025 27,158 91.2 % Joint venture same store properties 30 331,800 1,673 90.3 % Wholly owned and joint venture acquisitions 30 183,552 2,193 95.1 % Developments 2 82,875 224 34.3 % Development completions 2 52,400 107 82.1 % Redevelopments 18 652,294 1,869 66.9 % Redevelopment completions 5 76,684 352 70.3 % Total 579 $ 10,771,630 33,576 89.4 % Joint venture properties 65 623,774 4,254 89.5 % Total owned real estate properties 514 $ 10,147,856 29,322 89.4 % 1 Excludes assets held for sale, construction in progress, land held for development, corporate property and financing lease right-of-use assets unrelated to an imputed lease arrangement as a result of a sale leaseback transaction. Results of Operations Three Months Ended September 30, 2025, Compared to Three Months Ended September 30, 2024 The Company’s results of operations for the three months ended September 30, 2025, compared to the same period in 2024 were impacted by developments, dispositions, gains on sale, and capital markets transactions. Revenues Rental income decreased $19.1 million, or 6.2%, for the three months ended September 30, 2025, compared to the prior year period. This decrease is primarily comprised of the following: • Dispositions in 2024 and 2025 resulted in a decrease of $28.5 million. • Leasing activity resulted in an increase of $7.4 million. • Developments completed in 2024 resulted in an increase of $2.0 million. Interest income decreased $0.4 million, or 10.9% for the three months ended September 30, 2025, compared to the prior year period primarily as a result of the repayment and maturity of note receivables, partially offset by the addition of new mortgages receivables. Other operating income increased $1.9 million, or 37.2%, for the three months ended September 30, 2025, compared to the prior year period primarily as a result of income from management fees related to unconsolidated joint ventures. Expenses Property operating expenses decreased $6.8 million, or 5.6%, for the three months ended September 30, 2025, compared to the prior year period primarily as a result of the following activity: • Dispositions in 2024 and 2025 resulted in a decrease of $10.0 million. • Decreases in portfolio operating expenses as follows: ◦ Property tax expense of $0.5 million; and ◦ Insurance expense of $0.2 million. • Developments completed in 2024 resulted in an increase of $0.5 million. • Increases in portfolio operating expenses as follows: ◦ Leasing commissions and other administrative and legal expenses of $1.1 million; ◦ Utilities expense of $0.9 million; 37 Table of Contents ◦ Compensation expense of $0.9 million; ◦ Janitorial expense of $0.3 million; and ◦ Maintenance and repair expense of $0.2 million. General and administrative expenses increased approximately $1.6 million, or 8.2%, for the three months ended September 30, 2025, compared to the prior year period primarily as a result of the following activity: • Decreases in the following expenses: ◦ Cash compensation expense of $2.3 million; ◦ Non-cash incentive compensation expense of $0.7 million; and ◦ Other decreases include legal and other administrative costs of $0.6 million. • Increase in restructuring and severance-related charges of $5.2 million. Depreciation and amortization expense decreased $25.4 million, or 15.6%, for the three months ended September 30, 2025, compared to the prior year period primarily as a result of the following activity: • Dispositions in 2024 and 2025 resulted in a decrease of $17.1 million. • Assets that became fully depreciated resulted in a decrease of $16.9 million. • Various building and tenant improvement expenditures resulted in an increase of $7.9 million. • Developments completed in 2024 resulted in an increase of $0.7 million. Other Income (Expense) Gains on sale of real estate properties and other assets In the three months ended September 30, 2025 , the Company recognized gains on sale of real estate properties and other assets of approximately $76.8 million. In the three months ended September 30, 2024, the Company recognized gains on sale of real estate properties and other assets of approximately $39.3 million. Interest expense Interest expense decreased $8.0 million, or 13.2%, for the three months ended September 30, 2025, compared to the prior year period. The components of interest expense are as follows: THREE MONTHS ENDED SEPTEMBER 30, CHANGE Dollars in thousands 2025 2024 $ % Contractual interest $ 43,484 $ 49,307 $ (5,823) (11.8) % Net discount/premium accretion 10,855 10,327 528 5.1 % Debt issuance costs amortization 1,252 1,227 25 2.0 % Amortization of interest rate swap settlement — 42 (42) (100.0) % Amortization of treasury hedge settlement 107 107 — — % Interest cost capitalization (3,983) (1,295) (2,688) 207.6 % Interest on lease liabilities 927 934 (7) (0.7) % Total interest expense $ 52,642 $ 60,649 $ (8,007) (13.2) % Contractual interest expense decreased $5.8 million, or 11.8%, for the three months ended September 30, 2025, compared to the prior year period primarily as a result of the following activity: • The unsecured term loans accounted for a decrease of approximately $7.8 million as a result of a decreased aggregate balance. • The unsecured credit facility accounted for an increase of approximately $1.8 million as a result of an increased weighted average balance outstanding. • The repayment of the Senior Notes due 2025 accounted for a decrease of $2.4 million. • Active interest rate swaps accounted for an increase of $2.7 million. • Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $0.1 million. 38 Table of Contents Debt extinguishment costs In the third quarter of 2025, the Company recorded approximately $0.3 million in debt extinguishment costs related to the replacement of the Prior Credit Facility with the Unsecured Credit Facility. Interest and other income (expense) In the third quarter of 2025, the Company reclassified approximately $2.8 million from AOCI to other expense related to ineffectiveness on eight interest rate swaps. See Note 5 to the Condensed Consolidated Financial Statements in this report for more details regarding the Company's derivative accounting. Impairment of real estate properties and credit loss reserves In the third quarter of 2025, the Company recognized impairments totaling $1.6 million on five properties sold and $102.8 million on eight properties with changes in the expected holding periods. In the third quarter of 2024, the Company recognized impairments totaling $10.8 million on 13 properties sold and $26.8 million on 12 properties with changes in the expected holding periods. In addition, the Company recorded $46.8 million in credit loss reserves relating to notes receivable. Equity loss from unconsolidated joint ventures The Company recognized its proportionate share of income or losses from its unconsolidated joint ventures. Losses are primarily attributable to non-cash depreciation expens e. See Note 2 to the Condensed Consolidated Financial Statements in this report for more details regarding the Company's unconsolidated joint ventures. Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024 The Company’s results of operations for the nine months ended September 30, 2025 compared to the same period in 2024 were impacted by developments, dispositions, gains on sale, and capital markets transactions. Revenues Rental income decreased $69.4 million, or 7.4%, for the nine months ended September 30, 2025 compared to the prior year period. This decrease is primarily comprised of the following: • Dispositions in 2024 and 2025 resulted in a decrease of $104.0 million. • Leasing activity, including contractual rent increases, resulted in an increase of $29.0 million. • Developments completed in 2024 resulted in an increase of $5.6 million. Interest income decreased $1.6 million, or 13.4%, for the nine months ended September 30, 2025, compared to the prior year period primarily as a result of the repayment and maturity of note receivables, partially offset by the addition of new mortgages receivables. Other operating income increased $6.7 million, or 49.7%, for the nine months ended September 30, 2025, compared to the prior year period primarily as a result of income from management fees related to unconsolidated joint ventures. Expenses Property operating expenses decreased $20.7 million, or 5.8%, for the nine months ended September 30, 2025 compared to the prior year period primarily as a result of the following activity: • Dispositions in 2024 and 2025 resulted in a decrease of $35.6 million. • Decreases in portfolio operating expenses including insurance expense of $0.5 million. • Developments completed in 2024 resulted in an increase of $1.4 million. • Increases in portfolio operating expenses as follows: ◦ Administrative, leasing commissions, and other legal expense of $3.8 million; ◦ Compensation expense of $3.4 million; ◦ Utilities expense of $3.0 million; ◦ Maintenance and repair expense of $1.8 million; ◦ Janitorial expense of $1.2 million; ◦ Property tax expense of $0.6 million; and ◦ Security expense of $0.2 million. 39 Table of Contents • General and administrative expenses increased approximately $9.9 million, or 20.2%, for the nine months ended September 30, 2025 compared to the prior year period primarily as a result of the following activity: • Increase in restructuring and severance-related charges of $16.0 million. • Increase in cash incentive compensation expense of $1.6 million. • Decrease in payroll and payroll related expenses of approximately $2.8 million. • Decrease in travel-related expenses of $1.0 million. • Decrease in non-cash incentive compensation of $0.7 million. • Other decreases include legal and other administrative costs of $3.2 million. Depreciation and amortization expense decreased $78.3 million, or 15.2%, for the nine months ended September 30, 2025 compared to the prior year period primarily as a result of the following activity: • Dispositions in 2024 and 2025 resulted in a decrease of $55.6 million. • Assets that became fully depreciated resulted in a decrease of $47.0 million. • Developments completed in 2024 resulted in an increase of $1.7 million. • Various building and tenant improvement expenditures resulted in an increase of $22.6 million. Other Income (Expense) Gains on sale of real estate properties and other assets Gains on the sale of real estate properties and other assets for the nine months ended September 30, 2025 and 2024, totaled $99.7 million and $77.7 million, respectively. Interest expense Interest expense decreased $23.4 million, or 12.7%, for the nine months ended September 30, 2025 compared to the prior year period. The components of interest expense are as follows: NINE MONTHS ENDED SEPTEMBER 30, CHANGE Dollars in thousands 2025 2024 $ % Contractual interest $ 130,639 $ 149,712 $ (19,073) (12.7) % Net discount/premium accretion 32,169 30,592 1,577 5.2 % Debt issuance costs amortization 3,446 3,619 (173) (4.8) % Amortization of interest rate swap settlement 53 126 (73) (57.9) % Amortization of treasury hedge settlement 320 320 — — % Fair value derivative — 187 (187) (100.0) % Interest cost capitalization (8,591) (3,211) (5,380) 167.5 % Interest on lease liabilities 2,764 2,814 (50) (1.8) % Total interest expense $ 160,800 $ 184,159 $ (23,359) (12.7) % Contractual interest expense decreased $19.1 million, or 12.7%, for the nine months ended September 30, 2025 compared to the prior year period primarily as a result of the following activity: • The unsecured term loans accounted for a decrease of approximately $11.1 million. • The unsecured term loan repayments accounted for a decrease of approximately $14.7 million • The Unsecured Credit Facility accounted for an increase of approximately $2.6 million as a result of an increased weighted average balance outstanding. • Active interest rate swaps accounted for an increase of $8.1 million, while expired interest rate swaps accounted for an increase of $0.3 million. • Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $0.3 million. • The repayment of the Senior Note due 2025 accounted for a decrease of $4.0 million. 40 Table of Contents Debt extinguishment costs During the nine months ended September 30, 2025, the Company recorded approximately $0.3 million in debt extinguishment costs related to the replacement of the Prior Credit Facility with the Unsecured Credit Facility. Interest and other income (expense) During the nine months ended September 30, 2025, the Company reclassified approximately $2.8 million from AOCI to other expense related to ineffectiveness on eight interest rate swaps. See Note 5 to the Condensed Consolidated Financial Statements in this report for more details regarding the Company's derivative accounting. Impairment of real estate properties and credit loss reserves During the nine months ended September 30, 2025 , the Company recognized impairments totaling $255.4 million on 12 properties sold and 25 properties with changes in the expected holding periods. In addition, the Company recorded $1.5 million in credit loss reserves relating to a mortgage notes receivable and a $1.9 million fair value adjustment for an equity investment in other assets. During the nine months ended September 30, 2024, the Company recognized impairments totaling $174.5 million on 28 properties sold and 30 properties with changes in the expected holding periods, including one property reclassified to held for sale. In addition, the Company recorded $58.0 million in credit loss reserves related to three of its notes receivable. Impairment of Goodwill During the nine months ended September 30, 2024, the Company determined that the carrying value of its single reporting unit exceeded estimated fair value and therefore recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the consolidated statements of operations. See Note 1 to the Condensed Consolidated Financial Statements in this report for more details. Equity loss from unconsolidated joint ventures The Company recognized its proportionate share of losses from its unconsolidated joint ventures. These losses are primarily attributable to non-cash depreciation expense. See Note 2 to the Condensed Consolidated Financial Statements in this report for more details regarding the Company's unconsolidated joint ventures.