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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File Number: 001-11852

HEALTHCARE REALTY TRUST INCORPORATED
(Exact name of Registrant as specified in its charter) 
Maryland62-1507028
(State or other jurisdiction of
Incorporation or organization)
(I.R.S. Employer
Identification No.)
3310 West End Avenue, Suite 700
Nashville, Tennessee 37203
(Address of principal executive offices)
(615) 269-8175
(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common stock, $0.01 par value per shareHRNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
    Large accelerated filer         Accelerated filer         
    Non-accelerated filer         Smaller reporting company
            Emerging growth company

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
    complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  ☒
As of October 29, 2021, the Registrant had 147,541,832 shares of Common Stock outstanding.




HEALTHCARE REALTY TRUST INCORPORATED
FORM 10-Q
September 30, 2021


    Table of Contents
     
PART I - FINANCIAL INFORMATION
PART II - OTHER INFORMATION
SIGNATURE



Table of Contents

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Healthcare Realty Trust Incorporated
Condensed Consolidated Balance Sheets
Amounts in thousands, except per share data
ASSETS
Unaudited
SEPTEMBER 30, 2021
DECEMBER 31, 2020
Real estate properties
Land$375,342 $362,695 
Buildings, improvements and lease intangibles4,383,314 4,220,297 
Personal property11,555 11,195 
Investment in financing receivable, net104,806  
Construction in progress1,546  
Land held for development27,232 27,226 
Total real estate properties4,903,795 4,621,413 
Less accumulated depreciation and amortization(1,322,577)(1,239,224)
Total real estate properties, net3,581,218 3,382,189 
Cash and cash equivalents16,000 15,303 
Assets held for sale, net13,603 20,646 
Operating lease right-of-use assets128,945 125,198 
Financing lease right-of-use assets20,760 19,667 
Investments in unconsolidated joint ventures122,345 73,137 
Other assets, net186,328 176,120 
Total assets$4,069,199 $3,812,260 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Notes and bonds payable$1,691,433 $1,602,769 
Accounts payable and accrued liabilities79,381 81,174 
Liabilities of assets held for sale766 1,216 
Operating lease liabilities95,913 92,273 
Financing lease liabilities20,460 18,837 
Other liabilities65,913 67,615 
Total liabilities1,953,866 1,863,884 
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value per share; 50,000 shares authorized; none issued and outstanding
  
Common stock, $.01 par value per share; 300,000 shares authorized; 147,542 and 139,487 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
1,475 1,395 
Additional paid-in capital3,882,572 3,635,341 
Accumulated other comprehensive loss(12,413)(17,832)
Cumulative net income attributable to common stockholders1,244,551 1,199,499 
Cumulative dividends(3,000,852)(2,870,027)
Total stockholders' equity2,115,333 1,948,376 
Total liabilities and stockholders' equity$4,069,199 $3,812,260 
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, 2020, are an integral part of these financial statements.


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Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Income
For the Three and Nine Months Ended September 30, 2021 and 2020
Amounts in thousands, except per share data
Unaudited
THREE MONTHS ENDED
September 30,
NINE MONTHS ENDED
September 30,
2021202020212020
Revenues
Rental income$131,746 $123,384 $388,620 $368,385 
Interest from financing receivable, net1,917 — 2,426 — 
Other operating2,969 1,868 7,347 5,364 
136,632 125,252 398,393 373,749 
Expenses
Property operating55,518 50,171 159,241 146,305 
General and administrative8,207 7,299 25,251 23,498 
Acquisition and pursuit costs974 440 2,388 1,621 
Depreciation and amortization50,999 47,143 150,904 142,331 
115,698 105,053 337,784 313,755 
Other income (expense)
Gain on sales of real estate properties1,186 2,177 41,046 70,395 
Interest expense(13,334)(14,154)(39,857)(42,556)
Impairment of real estate properties(10,669)— (16,581)— 
Equity loss from unconsolidated joint ventures(183)(66)(404)(194)
Interest and other income (expense), net— 74 239 419 
(23,000)(11,969)(15,557)28,064 
Net (loss) income $(2,066)$8,230 $45,052 $88,058 
Basic earnings per common share $(0.02)$0.06 $0.31 $0.65 
Diluted earnings per common share $(0.02)$0.06 $0.31 $0.65 
Weighted average common shares
outstanding - basic
143,818 134,309 141,521 133,662 
Weighted average common shares
outstanding - diluted
143,818 134,357 141,613 133,736 
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, 2020, are an integral part of these financial statements.


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Table of Contents

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Comprehensive Income (Loss)
For the Three and Nine Months Ended September 30, 2021 and 2020
Amounts in thousands
Unaudited
THREE MONTHS ENDED
 September 30,
NINE MONTHS ENDED
September 30,
2021202020212020
Net (loss) income $(2,066)$8,230 $45,052 $88,058 
Other comprehensive income (loss)
Interest rate swaps
Reclassification adjustments for losses included in net income (interest expense)1,131 1,101 3,340 2,367 
Gains (losses) arising during the period on interest rate swaps36 (74)2,079 (11,192)
Losses on settlement of treasury rate locks arising during the period   (4,267)
1,167 1,027 5,419 (13,092)
Comprehensive (loss) income $(899)$9,257 $50,471 $74,966 
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, 2020, are an integral part of these financial statements.


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Table of Contents

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Equity
For the Three Months Ended September 30, 2021 and 2020
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
Balance at June 30, 2021$1,455 $3,818,592 $(13,580)$1,246,617 $(2,956,830)$2,096,254 
Issuance of common stock, net of issuance costs20 61,442 — — — 61,462 
Share-based compensation— 2,538 — — — 2,538 
Net loss— — — (2,066)— (2,066)
Reclassification adjustments for losses included in net income (interest expense)

— — 1,131 — — 1,131 
Gains arising during the period on
interest rate swaps
— — 36 — — 36 
Dividends to common stockholders
($0.3025 per share)
— — — — (44,022)(44,022)
Balance at September 30, 2021$1,475 $3,882,572 $(12,413)$1,244,551 $(3,000,852)$2,115,333 
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Cumulative
Net Income
Cumulative
Dividends
Total
Stockholders’
Equity
Balance at June 30, 2020$1,360 $3,529,559 $(20,294)$1,207,132 $(2,788,396)$1,929,361 
Issuance of common stock, net of issuance costs1 126 — — — 127 
Share-based compensation— 2,445 — — — 2,445 
Net income— — — 8,230 — 8,230 
Reclassification adjustments for losses included in net income (interest expense)

— — 1,101 — — 1,101 
Losses arising during the period on interest rate swaps

— — (74)— — (74)
Dividends to common stockholders ($0.3000 per share)
— — — — (40,815)(40,815)
Balance at September 30, 2020$1,361 $3,532,130 $(19,267)$1,215,362 $(2,829,211)$1,900,375 
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, 2020, are an integral part of these financial statements.






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Table of Contents

Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Equity
For the Nine Months Ended September 30, 2021 and 2020
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
Balance at December 31, 2020$1,395 $3,635,341 $(17,832)$1,199,499 $(2,870,027)$1,948,376 
Issuance of common stock, net of issuance costs78 240,660 — — — 240,738 
Common stock redemptions— (1,610)— — — (1,610)
Share-based compensation2 8,181 — — — 8,183 
Net income— — — 45,052 — 45,052 
Reclassification adjustments for losses included in net income (interest expense)

— — 3,340 — — 3,340 
Gains arising during the period on
interest rate swaps
— — 2,079 — — 2,079 
Dividends to common stockholders
($0.9075 per share)
— — — — (130,825)(130,825)
Balance at September 30, 2021$1,475 $3,882,572 $(12,413)$1,244,551 $(3,000,852)$2,115,333 
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Cumulative
Net Income
Cumulative
Dividends
Total
Stockholders’
Equity
Balance at December 31, 2019$1,347 $3,485,003 $(6,175)$1,127,304 $(2,707,470)$1,900,009 
Issuance of common stock, net of issuance costs13 40,477 — — — 40,490 
Common stock redemptions— (798)— — — (798)
Share-based compensation1 7,448 — — — 7,449 
Net income— — — 88,058 — 88,058 
Reclassification adjustments for losses included in net income (interest expense)

— — 2,367 — — 2,367 
Losses arising during the period on interest rate swaps

— — (15,459)— — (15,459)
Dividends to common stockholders ($0.9000 per share)
— — — — (121,741)(121,741)
Balance at September 30, 2020$1,361 $3,532,130 $(19,267)$1,215,362 $(2,829,211)$1,900,375 

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, 2020, are an integral part of these financial statements.







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Table of Contents


Healthcare Realty Trust Incorporated
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2021 and 2020
Amounts in thousands
Unaudited
OPERATING ACTIVITIES
NINE MONTHS ENDED
September 30,
20212020
Net income$45,052 $88,058 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization150,904 142,331 
Other amortization2,721 3,409 
Share-based compensation8,183 7,449 
Amortization of straight-line rent receivable (lessor)(4,574)(2,722)
Amortization of straight-line rent on operating leases (lessee)1,115 1,122 
Gain on sales of real estate properties(41,046)(70,395)
Impairment of real estate properties16,581 — 
Equity loss from unconsolidated joint ventures 404 194 
Distributions from unconsolidated joint ventures— 193 
Proceeds from disposition of sales-type lease properties— 244,454 
Non-cash interest from financing receivable(196)— 
Changes in operating assets and liabilities:
Other assets, including right-of-use-assets(9,947)(965)
Accounts payable and accrued liabilities215 5,098 
Other liabilities843 (6,662)
Net cash provided by operating activities170,255 411,564 
INVESTING ACTIVITIES
Acquisitions of real estate(250,766)(199,162)
Development of real estate(2,020)(2,941)
Additional long-lived assets(69,647)(62,707)
Investments in unconsolidated joint ventures(49,612)— 
Investment in financing receivable(104,654)— 
Proceeds from sales of real estate properties112,029 4,905 
Net cash used in investing activities(364,670)(259,905)
FINANCING ACTIVITIES
Net borrowings (repayments) on unsecured credit facility90,500 (293,000)
Borrowings on term loan— 150,000 
Borrowings of notes and bonds payable— 298,995 
Repayments of notes and bonds payable(2,914)(32,704)
Dividends paid(130,825)(121,741)
Net proceeds from issuance of common stock240,779 40,296 
Common stock redemptions(2,014)(892)
Settlement of treasury rate locks— (4,267)
Debt issuance and assumption costs(252)(3,057)
Payments made on finance leases(162)(3,310)
Net cash provided by financing activities195,112 30,320 
Increase in cash and cash equivalents697 181,979 
Cash and cash equivalents at beginning of period15,303 657 
Cash and cash equivalents at end of period$16,000 $182,636 
Supplemental Cash Flow Information
Interest paid$40,653 $39,165 
Invoices accrued for construction, tenant improvements and other capitalized costs$11,663 $12,709 
Mortgage notes payable assumed upon acquisition (adjusted to fair value)$— $19,269 
Capitalized interest$187 $913 
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, 2020, are an integral part of these financial statements.


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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 September 30, 2021, the Company had gross investments of approximately $4.9 billion in 235 real estate properties located in 24 states totaling approximately 16.8 million square feet. The Company provided leasing and property management services to approximately 13.8 million square feet nationwide. The Company owns 50% of an unconsolidated joint venture with Teachers Insurance and Annuity Association (the "TIAA Joint Venture") and earns certain fees as the managing member. As of September 30, 2021, the TIAA Joint Venture owned ten real estate properties. See Note 2 for more details regarding the Company's unconsolidated joint ventures.
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. However, except as disclosed herein, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2020. 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, 2020. 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, 2021 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 810 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. 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 and the disposition of all or a portion of an interest held by the primary beneficiary. 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 entities 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 entities’ activities based upon the terms of the respective entities’ ownership agreements.
As of September 30, 2021, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities. See Note 2 for more details regarding the Company's unconsolidated joint ventures.


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Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
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.
The Company considered the impact of COVID-19 on these assumptions and estimates used and determined that there were no material adverse impacts on the Company's results of operations and financial position at September 30, 2021. There can be no assurance that COVID-19 will not have a future material adverse impact on the financial results and business operations of the Company.
Investments in Leases - Financing Receivables, Net
In accordance with Accounting Standards Codification ("ASC") 842, 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 real estate asset but instead recognizes a financial asset in accordance with ASC 310 “Receivables”. In the second quarter of 2021, the Company acquired a building in San Diego, California in a sale leaseback transaction in which the seller-lessee had a purchase option. Therefore, control was not considered to be transferred under GAAP. Accordingly, this transaction was accounted for as a financing receivable and recorded on the Condensed Consolidated Balance Sheet in the line item Investment in financing receivable, net. The Company evaluated the impact of ASC 326, "Credit Losses" to the financing receivable, and the amount calculated was determined to be immaterial and therefore not recorded.
Income from Lease Financing Receivables
The Company recognizes the related income from the financing receivable based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable will not equal the cash payments from the lease agreement.
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 Income from financing receivable, net over the life of the lease.
Revenue from Contracts with Customers (Topic 606)
The Company recognizes certain revenue under the core principle of 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 Topic 606. To achieve the core principle, the Company applies the five step model specified in the guidance.
Revenue that is accounted for under Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Income 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
September 30,
NINE MONTHS ENDED
September 30,
in thousands2021202020212020
Type of Revenue
Parking income$2,187 $1,764 $5,725 $5,042 
Management fee income 1
723 62 1,381 209 
Miscellaneous59 42 241 113 
$2,969 $1,868 $7,347 $5,364 
1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement.


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Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.


The Company’s major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time, and the Company recognizes revenue monthly based on this principle.
New Accounting Pronouncements
Accounting Standards Update No. 2020-04
On March 12, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
Note 2. Real Estate Investments
2021 Company Acquisitions
The following table details the Company's acquisitions for the nine months ended September 30, 2021:
Dollars in thousandsDATE ACQUIREDPURCHASE PRICE
CASH
CONSIDERATION
1
REAL
ESTATE
OTHER 2
SQUARE FOOTAGE
San Diego, CA 3
1/7/21$17,150 $17,182 $17,182 $ 22,461 
Dallas, TX 4
2/1/2122,515 22,299 22,641 (342)121,709 
Atlanta, GA 4
2/17/219,800 10,027 10,073 (46)44,567 
Washington, D.C.3/3/2112,750 12,709 12,658 51 26,496 
Houston, TX5/14/2113,500 12,986 13,379 (393)45,393 
San Diego, CA 5
5/28/21102,650 103,984 104,629 (645)160,394 
Greensboro, NC6/28/219,390 9,475 10,047 (572)25,168 
Baltimore, MD6/29/2114,600 14,357 14,437 (80)33,316 
Denver, CO 6
7/16/2170,426 69,151 65,100 4,051 259,555 
Greensboro, NC 3
7/19/216,400 6,374 6,514 (140)18,119 
Colorado Springs, CO7/27/2133,400 32,738 33,241 (503)69,526 
Birmingham, AL8/19/219,250 9,355 9,388 (33)29,942 
Raleigh, NC9/20/215,780 5,821 5,810 11 18,280 
Denver, CO9/22/2120,250 19,630 19,405 225 83,604 
Raleigh, NC9/30/2110,000 9,921 9,874 47 29,178 
Total real estate acquisitions$357,861 $356,009 $354,378 $1,631 987,708 
1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.
2Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.
3Represents a single-tenant property.
4Includes two properties.
5The Company accounted for this transaction as a financing receivable.
6Includes three properties.






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Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
2021 TIAA Joint Venture Acquisitions
The TIAA Joint Venture is not consolidated for purposes of the Company's Condensed Consolidated Financial Statements. The following table details the TIAA Joint Venture acquisitions for the nine months ended September 30, 2021:
Dollars in thousandsDATE ACQUIREDPURCHASE PRICE
CASH
CONSIDERATION
1
REAL
ESTATE
OTHER 2
SQUARE FOOTAGECOMPANY OWNERSHIP %
Denver, CO3/30/21$14,375 $14,056 $14,550 $(494)59,35950 %
Colorado Springs, CO4/1/217,200 7,288 7,347 (59)27,510 50 %
Los Angeles, CA4/8/2131,335 30,179 30,642 (463)57,573 50 %
San Antonio, TX4/30/2113,600 13,412 13,656 (244)45,000 50 %
Los Angeles, CA5/10/2124,600 24,259 24,147 112 73,078 50 %
Colorado Springs, CO 3
7/27/219,133 9,137 9,135 2 23,956 50 %
Total real estate acquisitions$100,243 $98,331 $99,477 $(1,146)286,476 

1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.
2Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.
3Includes purchase of adjoining 3.0 acre land parcel.

Subsequent to September 30, 2021, the TIAA Joint Venture acquired the following property:
Dollars in thousandsDATE ACQUIREDPURCHASE PRICESQUARE FOOTAGECOMPANY OWNERSHIP %
Denver, CO10/21/21$23,000 57,257 50 %


Unconsolidated Joint Ventures
The Company's investment in and loss recognized for the three and nine months ended September 30, 2021 and 2020 related to its joint ventures accounted for under the equity method are shown in the table below:
THREE MONTHS ENDED
September 30,
NINE MONTHS ENDED
September 30,
Dollars in thousands2021202020212020
Investments in unconsolidated joint ventures, beginning of period 1
$117,935 $7,818 $73,137 $8,130 
New investments during the period4,593  49,612  
Equity loss recognized during the period 1
(183)(66)(404)(194)
Owner distributions (9) (193)
Investments in unconsolidated joint ventures, end of period 1
$122,345 $7,743 $122,345 $7,743 
1In addition to the TIAA Joint Venture, the Company also has a 55% and 27% ownership interest, respectively, in two limited liability companies that each own a parking garage in Atlanta, Georgia.



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Table of Contents
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
2021 Real Estate Asset Dispositions
The following table details the Company's dispositions for the nine months ended September 30, 2021:
Dollars in millionsDATE DISPOSEDSALE PRICECLOSING ADJUSTMENTSNET PROCEEDSNET REAL ESTATE INVESTMENT
OTHER (INCLUDING RECEIVABLES) 1
GAIN/(IMPAIRMENT)SQUARE FOOTAGE
Los Angeles, CA 2
3/11/21$26,000 $(555)$25,445 $6,046 $509 $18,890 73,906 
Atlanta, GA 3
4/12/218,050 (272)7,778 5,675 151 1,952 19,732 
Richmond, VA 3
5/18/2152,000 (314)51,686 29,414 3,270 19,002 142,856 
Gadsden, AL 3,4
5/19/215,500 (280)5,220 5,914 175 (869)120,192 
Dallas, TX 3,5
7/9/2123,000 (1,117)21,883 18,733 1,966 1,184 190,160 
Total dispositions$114,550 $(2,538)$112,012 $65,782 $6,071 $40,159 546,846 

1Includes straight-line rent receivables, leasing commissions and lease inducements.
2Includes two properties sold to a single purchaser in two transactions which occurred on March 5 and March 11, 2021.
3Previously classified as held for sale.
4Includes three properties.
5Includes four properties and a land parcel sold under a single purchase agreement.

Assets Held for Sale
As of September 30, 2021 and December 31, 2020, the Company had one and four properties, respectively, classified as assets held for sale. During the third quarter of 2021, the Company reclassified to held for sale a medical office building in Chicago, Illinois with a contractual sales price of $13.3 million and recorded an impairment charge of $10.7 million based on the contractual sales price less estimated costs to sell. The Company disposed of this property on October 28, 2021.
The table below reflects the assets and liabilities of the properties classified as held for sale as of September 30, 2021 and December 31, 2020:
(Dollars in thousands)September 30, 2021December 31, 2020
Balance Sheet data:
Land$5,859 $1,664 
Building, improvements and lease intangibles13,710 27,443 
Personal property133 39 
19,702 29,146 
Accumulated depreciation(7,158)(10,455)
Real estate assets held for sale, net12,544 18,691 
Other assets, net1,059 1,955 
Assets held for sale, net$13,603 $20,646 
Accounts payable and accrued liabilities$467 $533 
Other liabilities299 683 
Liabilities of assets held for sale$766 $1,216 
Note 3. Leases
Lessor Accounting
The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2040. Some leases provide for fixed rent renewal terms in addition to 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 nonlease components, such as


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
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 nonlease 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 nine months ended September 30, 2021 was $131.7 million and $388.6 million, respectively.
Future lease payments under the non-cancelable operating leases, excluding any reimbursements, as of September 30, 2021 were as follows:
In thousandsOPERATING
2021$102,435 
2022385,734 
2023336,473 
2024266,722 
2025215,350 
2026 and thereafter598,757 
$1,905,471 
Lessee Accounting
As of September 30, 2021, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of September 30, 2021, the Company had 110 properties totaling 9.2 million square feet that were held under ground leases. Some of the ground lease renewal terms are based on fixed rent renewal terms and others have market rent renewal terms. These ground leases typically have initial terms of 40 to 99 years with expiration dates through 2119. Any rental increases related to the Company’s ground leases are generally either stated or based on CPI. The Company had 43 prepaid ground leases as of September 30, 2021. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.1 million and $0.1 million of the Company’s rental expense for the three months ended September 30, 2021 and 2020, respectively, and $0.4 million and $0.5 million for the nine months ended September 30, 2021 and 2020, respectively.
The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of September 30, 2021 were as follows:
In thousandsOPERATINGFINANCING
2021$1,051 $180 
20225,030 838 
20235,071 848 
20245,130 871 
20255,174 886 
2026 and thereafter312,163 92,689 
Total undiscounted lease payments333,619 96,312 
Discount(237,706)(75,852)
Lease liabilities$95,913 $20,460 



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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, cont.
The following table provides details of the Company's total lease expense for the three and nine months ended September 30, 2021 and 2020:
THREE MONTHS ENDED
September 30,
NINE MONTHS ENDED
September 30,
In thousands2021202020212020
Operating lease cost
Operating lease expense$1,196 $1,180 $3,555 $3,529 
Variable lease expense1,016 1,066 2,883 2,669 
Finance lease cost
Amortization of right-of-use assets90 88 267 236 
Interest on lease liabilities255 245 748 722 
Total lease expense$2,557 $2,579 $7,453 $7,156 
Other information
Operating cash flows outflows related to operating leases$1,424$1,440 $5,855 $5,412 
Operating cash flows outflows related to financing leases$151$151 $678 $616 
Financing cash flows outflows related to financing leases$6$143 $162 $