10-Q 1 hta201393010-q.htm 10-Q HTA 2013.9.30 10-Q

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2013
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: 001-35568 (Healthcare Trust of America, Inc.)
Commission File Number: 333-190916 (Healthcare Trust of America Holdings, LP)
_________________________ 
HEALTHCARE TRUST OF AMERICA, INC.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
(Exact name of registrant as specified in its charter)
Maryland (Healthcare Trust of America, Inc.)
 
20-4738467
Delaware (Healthcare Trust of America Holdings, LP)
 
20-4738347
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
16435 N. Scottsdale Road, Suite 320
Scottsdale, Arizona 85254
(Address of principal executive offices)
(480) 998-3478
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Healthcare Trust of America, Inc.
x Yes
¨ No
 
Healthcare Trust of America Holdings, LP
x Yes
¨ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    
Healthcare Trust of America, Inc.
x Yes
¨ No
 
Healthcare Trust of America Holdings, LP
x Yes
¨ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Healthcare Trust of America, Inc.
Large-accelerated filer ¨
Accelerated filer x
Non-accelerated filer ¨
Smaller reporting company ¨
 
 
 
(Do not check if a smaller reporting company)
 
Healthcare Trust of America Holdings, LP
Large-accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
 
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Healthcare Trust of America, Inc.
¨ Yes
x No
 
Healthcare Trust of America Holdings, LP
¨ Yes
x No
 
As of October 31, 2013, there were 179,640,980 shares of Class A common stock and 57,268,109 shares of Class B common stock of Healthcare Trust of America, Inc. outstanding.
 



Explanatory Note
This report combines the Quarterly Reports on Form 10-Q for the quarter ended September 30, 2013 of Healthcare Trust of America, Inc., a Maryland corporation, and Healthcare Trust of America Holdings, LP, a Delaware limited partnership, of which Healthcare Trust of America, Inc. is the parent and general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “the Company” or “our Company” refer to Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP, collectively.
Healthcare Trust of America, Inc. (“HTA”) operates as a real estate investment trust, or REIT, and is the general partner of Healthcare Trust of America Holdings, LP (“HTALP”). As of September 30, 2013, HTA owned an approximate 98.94% partnership interest and other limited partners, including some of HTA’s directors, executive officers and their affiliates, owned the remaining partnership interest (including long term incentive plan units) in HTALP. As the sole general partner of HTALP, HTA has the full, exclusive and complete responsibility for HTALP’s day-to-day management and control.
We believe it is important to understand the few differences between HTA and HTALP in the context of how HTA and HTALP operate as an interrelated consolidated company. HTA is a REIT whose only material asset is its ownership of partnership interests in HTALP. As a result, HTA does not conduct business itself, other than acting as the sole general partner of HTALP, issuing public equity from time to time and guaranteeing certain debt of HTALP. HTALP holds substantially all of the assets of the Company. HTALP conducts the operations of the business of the Company and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from public equity issuances by HTA, which are generally contributed to HTALP in exchange for partnership units in HTALP, HTALP generates the capital required through HTALP’s operations, by HTALP’s direct or indirect incurrence of indebtedness or through the issuance of partnership units.
Redeemable noncontrolling interests of limited partners, stockholders’ equity and partners’ capital are the primary areas of difference between the consolidated financial statements of HTA and HTALP. Limited partner units in HTALP are accounted for as partners’ capital in HTALP’s condensed consolidated balance sheets and as noncontrolling interest reflected within equity or redeemable noncontrolling interest of limited partners reflected outside of equity in HTA’s condensed consolidated balance sheets. The differences between stockholders’ equity and partners’ capital in HTA and HTALP result from the differences in the equity issued from HTA and HTALP.
The Company believes combining the Quarterly Reports on Form 10-Q of HTA and HTALP, including the notes to the condensed consolidated financial statements, into this single report results in the following benefits:
enhances investors’ understanding of HTA and HTALP by enabling investors to view the business as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this report applies to both HTA and HTALP; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
In order to highlight the material differences between HTA and HTALP, this report includes sections that separately present and discuss areas that are materially different between HTA and HTALP, including:
the condensed consolidated financial statements;
certain accompanying notes to the financial statements, including Note 11 - Stockholders’ Equity and Partners’ Capital, Note 13 - Per Share Data, and Note 14 - Per Unit Data;
funds from operations and normalized funds from operations in Item 2 of this report;
the controls and procedures in Item 4 of this report; and
the certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31 and 32 to this report.
In the sections that combine disclosure for HTA and HTALP, this report refers to actions or holdings as being actions or holdings of the Company. Although HTALP (directly or indirectly through one of its subsidiaries) is generally the entity that enters into contracts, holds assets and issues debt, management believes this presentation is appropriate for the reasons set forth above and because the business is one enterprise and the Company operates the business through HTALP.


2


HEALTHCARE TRUST OF AMERICA, INC.
HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
TABLE OF CONTENTS
 
 
 
Page
Healthcare Trust of America, Inc.
 
 
 
 
 
Healthcare Trust of America Holdings, LP
 
 
 
 
 
Notes for Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP
 
 
 
 
 


3


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
September 30, 2013
 
December 31, 2012
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Land
 
$
195,115

 
$
183,651

Building and improvements
 
2,215,513

 
2,044,113

Lease intangibles
 
386,801

 
352,884

Property held for sale, net
 
21,138

 

 
 
2,818,567

 
2,580,648

Accumulated depreciation and amortization
 
(415,615
)
 
(349,118
)
Real estate investments, net
 
2,402,952

 
2,231,530

Real estate notes receivable
 
28,520

 
20,000

Cash and cash equivalents
 
82,181

 
15,956

Restricted cash and escrow deposits
 
20,068

 
17,623

Receivables and other assets, net
 
104,996

 
84,970

Other intangibles, net
 
41,794

 
44,011

Non-real estate assets of property held for sale, net
 
1,009

 

Total assets
 
$
2,681,520

 
$
2,414,090

LIABILITIES AND EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Debt, net
 
$
1,125,792

 
$
1,037,359

Accounts payable and accrued liabilities
 
86,795

 
63,443

Derivative financial instruments - interest rate swaps
 
3,258

 
9,370

Security deposits, prepaid rent and other liabilities
 
32,327

 
24,450

Intangible liabilities, net
 
11,262

 
11,309

Total liabilities
 
1,259,434

 
1,145,931

Commitments and contingencies
 

 

Redeemable noncontrolling interest of limited partners
 
3,375

 
3,564

Equity:
 
 
 
 
Preferred stock, $0.01 par value; 200,000,000 shares authorized; none issued and outstanding
 

 

Class A common stock, $0.01 par value; 900,000,000 and 700,000,000 shares authorized as of September 30, 2013 and December 31, 2012, respectively; 178,475,080 and 100,086,387 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively
 
1,785

 
1,001

Class B common stock, $0.01 par value; 100,000,000 and 300,000,000 shares authorized as of September 30, 2013 and December 31, 2012, respectively; 57,268,109 and 114,566,254 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively
 
573

 
1,146

Additional paid-in capital
 
2,115,596

 
1,885,836

Cumulative dividends in excess of earnings
 
(712,148
)
 
(633,717
)
Total stockholders’ equity
 
1,405,806

 
1,254,266

Noncontrolling interest
 
12,905

 
10,329

Total equity
 
1,418,711

 
1,264,595

Total liabilities and equity
 
$
2,681,520

 
$
2,414,090

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Rental income
$
81,906

 
$
76,465

 
$
234,338

 
$
220,222

Interest income from real estate notes receivable and other income
635

 
1,067

 
1,874

 
3,683

Total revenues
82,541

 
77,532

 
236,212

 
223,905

Expenses:
 
 
 
 
 
 
 
Rental
25,774

 
25,744

 
72,235

 
73,038

General and administrative
5,980

 
5,164

 
18,645

 
16,079

Non-traded REIT

 
350

 

 
4,197

Acquisition-related 
1,403

 
1,341

 
3,086

 
6,633

Depreciation and amortization
29,581

 
29,228

 
87,554

 
87,091

Listing

 
4,751

 
4,405

 
17,295

Total expenses
62,738

 
66,578

 
185,925

 
204,333

Income (loss) before other income (expense)
19,803

 
10,954

 
50,287

 
19,572

Other income (expense):
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
Interest related to debt
(12,146
)
 
(10,172
)
 
(35,543
)
 
(30,648
)
Interest related to derivative financial instruments and net change in fair value of derivative financial instruments
(3,042
)
 
(3,832
)
 
5,125

 
(10,066
)
Debt extinguishment costs

 

 

 
(1,886
)
Other income (expense)
10

 
(24
)
 
28

 
67

Income (loss) from continuing operations
4,625

 
(3,074
)
 
19,897

 
(22,961
)
Income from discontinued operations
380

 
143

 
725

 
410

Net income (loss)
$
5,005

 
$
(2,931
)
 
$
20,622

 
$
(22,551
)
Net income attributable to noncontrolling interests
(182
)
 
(21
)
 
(423
)
 
(37
)
Net income (loss) attributable to controlling interest
$
4,823

 
$
(2,952
)
 
$
20,199

 
$
(22,588
)
Earnings (losses) per share attributable to controlling interest - basic:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Discontinued operations
0.00

 
0.00

 
0.00

 
0.00

Net income (loss)
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Earnings (losses) per share attributable to controlling interest - diluted:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Discontinued operations
0.00

 
0.00

 
0.00

 
0.00

Net income (loss)
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Weighted average number of shares outstanding: 
 
 
 
 
 
 
 
Basic
232,514

 
218,264

 
225,132

 
225,501

Diluted
235,023

 
218,264

 
226,771

 
225,501

Dividends declared per common share
$
0.14

 
$
0.14

 
$
0.43

 
$
0.49

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
 
 
Common Stock Issued
 
Par Value
 
Additional Paid-In Capital
 
Cumulative Dividends in Excess of Earnings
 
Total Stockholders’ Equity
 
Noncontrolling Interest
 
Total Equity
 
Common Stock
 
Class A
 
Class B
 
 
 
 
 
 
Balance as of December 31, 2011
228,491

 

 

 
$
2,284

 
$
2,032,305

 
$
(467,249
)
 
$
1,567,340

 
$

 
$
1,567,340

Share-based award transactions, net
626

 
41

 
12

 
7

 
6,358

 

 
6,365

 
5,925

 
12,290

Issuance of common stock under the DRIP
3,362

 

 

 
33

 
31,882

 

 
31,915

 

 
31,915

Repurchase and cancellation of common stock
(3,070
)
 
(14,936
)
 
(144
)
 
(181
)
 
(185,097
)
 

 
(185,278
)
 

 
(185,278
)
Conversion
(229,409
)
 
57,429

 
171,980

 

 

 

 

 

 

Dividends

 

 

 

 

 
(111,165
)
 
(111,165
)
 
(73
)
 
(111,238
)
Net income (loss)

 

 

 

 

 
(22,588
)
 
(22,588
)
 

 
(22,588
)
Balance as of September 30, 2012

 
42,534

 
171,848

 
$
2,143

 
$
1,885,448

 
$
(601,002
)
 
$
1,286,589

 
$
5,852

 
$
1,292,441

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2012

 
100,086

 
114,566

 
$
2,147

 
$
1,885,836

 
$
(633,717
)
 
$
1,254,266

 
$
10,329

 
$
1,264,595

Issuance of common stock

 
20,707

 

 
207

 
228,099

 

 
228,306

 

 
228,306

Share-based award transactions, net

 
427

 
(15
)
 
4

 
1,948

 

 
1,952

 
3,177

 
5,129

Repurchase and cancellation of common stock

 
(28
)
 

 

 
(287
)
 

 
(287
)
 

 
(287
)
Conversion

 
57,283

 
(57,283
)
 

 

 

 

 

 

Dividends

 

 

 

 

 
(98,630
)
 
(98,630
)
 
(954
)
 
(99,584
)
Net income (loss)

 

 

 

 

 
20,199

 
20,199

 
353

 
20,552

Balance as of September 30, 2013

 
178,475

 
57,268

 
$
2,358

 
$
2,115,596

 
$
(712,148
)
 
$
1,405,806

 
$
12,905

 
$
1,418,711

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


HEALTHCARE TRUST OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Nine Months Ended September 30,
 
2013
 
2012
Cash flows from operating activities:
 
 
 
Net income (loss)
$
20,622

 
$
(22,551
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation, amortization and other
86,654

 
85,941

Share-based compensation expense
5,129

 
12,290

Bad debt expense
107

 
578

Change in fair value of derivative financial instruments
(8,573
)
 
7,815

Changes in operating assets and liabilities:
 
 
 
Receivables and other assets
(13,569
)
 
(4,370
)
Accounts payable and accrued liabilities
21,928

 
6,560

Security deposits, prepaid rent and other liabilities
6,377

 
(2,460
)
Net cash provided by operating activities
118,675

 
83,803

Cash flows from investing activities:
 
 
 
Acquisition of real estate operating properties and other assets
(223,839
)
 
(230,636
)
Capital expenditures
(16,486
)
 
(18,341
)
Issuance of real estate notes receivable
(8,520
)
 

Restricted cash, escrow deposits and notes receivable
(2,446
)
 
(4,840
)
Release of restricted cash

 
580

Real estate deposits paid

 
(3,810
)
Real estate deposits used

 
4,810

Net cash used in investing activities
(251,291
)
 
(252,237
)
Cash flows from financing activities:
 
 
 
Proceeds from unsecured senior notes
297,558

 

Borrowings on unsecured revolving credit facility
103,000

 
281,000

Payments on unsecured revolving credit facility
(175,000
)
 
(268,000
)
Borrowings on unsecured term loans

 
455,000

Payments on secured real estate term loan and mortgage loans
(155,302
)
 
(106,532
)
Deferred financing costs
(3,471
)
 
(6,439
)
Derivative financial instrument termination payments
(1,195
)
 

Security deposits
967

 
551

Proceeds from issuance of common stock, net
229,498

 

Repurchase and cancellation of common stock
(287
)
 
(182,397
)
Payment of offering costs

 
(2,884
)
Dividends
(95,597
)
 
(62,457
)
Payment on earnout liability
(92
)
 
(328
)
Distributions to noncontrolling interest of limited partners
(1,238
)
 
(231
)
Net cash provided by financing activities
198,841

 
107,283

Net change in cash and cash equivalents
66,225

 
(61,151
)
Cash and cash equivalents - beginning of period
15,956

 
69,491

Cash and cash equivalents - end of period
$
82,181

 
$
8,340

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
September 30, 2013
 
December 31, 2012
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Land
 
$
195,115

 
$
183,651

Building and improvements
 
2,215,513

 
2,044,113

Lease intangibles
 
386,801

 
352,884

Property held for sale, net
 
21,138

 

 
 
2,818,567

 
2,580,648

Accumulated depreciation and amortization
 
(415,615
)
 
(349,118
)
Real estate investments, net
 
2,402,952

 
2,231,530

Real estate notes receivable
 
28,520

 
20,000

Cash and cash equivalents
 
82,181

 
15,956

Restricted cash and escrow deposits
 
20,068

 
17,623

Receivables and other assets, net
 
104,996

 
84,970

Other intangibles, net
 
41,794

 
44,011

Non-real estate assets of property held for sale, net
 
1,009

 

Total assets
 
$
2,681,520

 
$
2,414,090

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
Liabilities:
 
 
 
 
Debt, net
 
$
1,125,792

 
$
1,037,359

Accounts payable and accrued liabilities
 
86,795

 
63,443

Derivative financial instruments - interest rate swaps
 
3,258

 
9,370

Security deposits, prepaid rent and other liabilities
 
32,327

 
24,450

Intangible liabilities, net
 
11,262

 
11,309

Total liabilities
 
1,259,434

 
1,145,931

Commitments and contingencies
 


 


Redeemable noncontrolling interest of limited partners
 
1,807

 
1,960

Partners’ Capital:
 
 
 
 
Limited partners’ capital, 3,053,618 and 3,055,718 units issued and outstanding as of September 30, 2013 and December 31, 2012, respectively
 
14,203

 
11,663

General partners’ capital, 235,743,189 and 214,652,641 units issued and outstanding as of September 30, 2013 and December 31, 2012, respectively
 
1,406,076

 
1,254,536

Total partners’ capital
 
1,420,279

 
1,266,199

Total liabilities and partners’ capital
 
$
2,681,520

 
$
2,414,090

The accompanying notes are an integral part of these condensed consolidated financial statements.


8


HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Rental income
$
81,906

 
$
76,465

 
$
234,338

 
$
220,222

Interest income from real estate notes receivable and other income
635

 
1,067

 
1,874

 
3,683

Total revenues
82,541

 
77,532

 
236,212

 
223,905

Expenses:
 
 
 
 
 
 
 
Rental
25,774

 
25,744

 
72,235

 
73,038

General and administrative
5,980

 
5,164

 
18,645

 
16,079

Non-traded REIT

 
350

 

 
4,197

Acquisition-related 
1,403

 
1,341

 
3,086

 
6,633

Depreciation and amortization
29,581

 
29,228

 
87,554

 
87,091

Listing

 
4,751

 
4,405

 
17,295

Total expenses
62,738

 
66,578

 
185,925

 
204,333

Income (loss) before other income (expense)
19,803

 
10,954

 
50,287

 
19,572

Other income (expense):
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
Interest related to debt
(12,146
)
 
(10,172
)
 
(35,543
)
 
(30,648
)
Interest related to derivative financial instruments and net change in fair value of derivative financial instruments
(3,042
)
 
(3,832
)
 
5,125

 
(10,066
)
Debt extinguishment costs

 

 

 
(1,886
)
Other income (expense)
10

 
(24
)
 
28

 
67

Income (loss) from continuing operations
4,625

 
(3,074
)
 
19,897

 
(22,961
)
Income from discontinued operations
380

 
143

 
725

 
410

Net income (loss)
$
5,005

 
$
(2,931
)
 
$
20,622

 
$
(22,551
)
Net income attributable to noncontrolling interests
(9
)
 
(20
)
 
(39
)
 
(28
)
Net income (loss) attributable to controlling interest
$
4,996

 
$
(2,951
)
 
$
20,583

 
$
(22,579
)
Earnings (losses) per unit attributable to controlling interest - basic:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Discontinued operations
0.00

 
0.00

 
0.00

 
0.00

Net income (loss)
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Earnings (losses) per unit attributable to controlling interest - diluted:
 
 
 
 
 
 
 
Continuing operations
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Discontinued operations
0.00

 
0.00

 
0.00

 
0.00

Net income (loss)
$
0.02

 
$
(0.01
)
 
$
0.09

 
$
(0.10
)
Weighted average number of units outstanding: 
 
 
 
 
 
 
 
Basic
235,570

 
221,413

 
228,188

 
227,105

Diluted
235,570

 
221,413

 
228,188

 
227,105

Dividends declared per common unit
$
0.14

 
$
0.14

 
$
0.43

 
$
0.49

The accompanying notes are an integral part of these condensed consolidated financial statements.

9


HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS CAPITAL
(In thousands)
(Unaudited)

 
General Partners’ Capital
 
Limited Partners’ Capital
 
Total Partners’ Capital
 
Units
 
Amount
 
Units
 
Amount
 
Balance as of December 31, 2011
228,491

 
$
1,567,510

 
156

 
$
1,417

 
$
1,568,927

Issuance of units under the DRIP
3,362

 
31,915

 

 

 
31,915

Redemptions of general partner units
(18,150
)
 
(185,278
)
 

 

 
(185,278
)
Share-based award transactions, net
679

 
6,365

 
2,875

 
5,925

 
12,290

Distributions

 
(111,165
)
 

 
(73
)
 
(111,238
)
Net income (loss) attributable to controlling interest

 
(22,588
)
 

 
9

 
(22,579
)
Balance as of September 30, 2012
214,382

 
$
1,286,759

 
3,031

 
$
7,278

 
$
1,294,037

 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2012
214,652

 
$
1,254,536

 
3,056

 
$
11,663

 
$
1,266,199

Issuance of general partner units
20,707

 
228,306

 

 

 
228,306

Redemptions of general partner units
(28
)
 
(287
)
 

 

 
(287
)
Share-based award transactions, net
412

 
1,952

 
(2
)
 
3,177

 
5,129

Distributions

 
(98,630
)
 

 
(1,021
)
 
(99,651
)
Net income (loss) attributable to controlling interest

 
20,199

 

 
384

 
20,583

Balance as of September 30, 2013
235,743

 
$
1,406,076

 
3,054

 
$
14,203

 
$
1,420,279

The accompanying notes are an integral part of these condensed consolidated financial statements.


10


HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Nine Months Ended September 30,
 
2013
 
2012
Cash flows from operating activities:
 
 
 
Net income (loss)
$
20,622

 
$
(22,551
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation, amortization and other
86,654

 
85,941

Share-based compensation expense
5,129

 
12,290

Bad debt expense
107

 
578

Change in fair value of derivative financial instruments
(8,573
)
 
7,815

Changes in operating assets and liabilities:
 
 
 
Receivables and other assets
(13,569
)
 
(4,370
)
Accounts payable and accrued liabilities
21,928

 
6,560

Security deposits, prepaid rent and other liabilities
6,377

 
(2,460
)
Net cash provided by operating activities
118,675

 
83,803

Cash flows from investing activities:
 
 
 
Acquisition of real estate operating properties and other assets
(223,839
)
 
(230,636
)
Capital expenditures
(16,486
)
 
(18,341
)
Issuance of real estate notes receivable
(8,520
)
 

Restricted cash, escrow deposits and notes receivable
(2,446
)
 
(4,840
)
Release of restricted cash

 
580

Real estate deposits paid

 
(3,810
)
Real estate deposits used

 
4,810

Net cash used in investing activities
(251,291
)
 
(252,237
)
Cash flows from financing activities:
 
 
 
Proceeds from unsecured senior notes
297,558

 

Borrowings on unsecured revolving credit facility
103,000

 
281,000

Payments on unsecured revolving credit facility
(175,000
)
 
(268,000
)
Borrowings on unsecured term loans

 
455,000

Payments on secured real estate term loan and mortgage loans
(155,302
)
 
(106,532
)
Deferred financing costs
(3,471
)
 
(6,439
)
Derivative financial instrument termination payments
(1,195
)
 

Security deposits
967

 
551

Proceeds from issuance of general partner units, net
229,498

 

Repurchase and cancellation of general partner units
(287
)
 
(182,397
)
Payment of offering costs

 
(2,884
)
Distributions to general partner
(95,597
)
 
(62,457
)
Payment on earnout liability
(92
)
 
(328
)
Distributions to limited partners and redeemable noncontrolling interests
(1,238
)
 
(231
)
Net cash provided by financing activities
198,841

 
107,283

Net change in cash and cash equivalents
66,225

 
(61,151
)
Cash and cash equivalents - beginning of period
15,956

 
69,491

Cash and cash equivalents - end of period
$
82,181

 
$
8,340

The accompanying notes are an integral part of these condensed consolidated financial statements.


11


HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unless otherwise indicated or unless the context requires otherwise the use of the words “we,” “us” or “our” refers to Healthcare Trust of America, Inc. and Healthcare Trust of America Holdings, LP, collectively.

1. Organization and Description of Business
Healthcare Trust of America, Inc., a Maryland corporation, and Healthcare Trust of America Holdings, LP, a Delaware limited partnership, were incorporated or formed, as applicable, on April 20, 2006. Healthcare Trust of America, Inc. (“HTA”) operates as a real estate investment trust, or REIT, and is the general partner of Healthcare Trust of America Holdings, LP (“HTALP”) which is the operating partnership. As of September 30, 2013, HTA owned an approximate 98.94% partnership interest and other limited partners, including some of HTA’s directors, executive officers and their affiliates, owned the remaining partnership interest (including long term incentive plan units) in HTALP. As the sole general partner of HTALP, HTA has the full, exclusive and complete responsibility for HTALP’s day-to-day management and control. HTA’s only material asset is its ownership of partnership interests of HTALP. As a result, HTA does not conduct business itself, other than acting as the sole general partner of HTALP, issuing public equity from time to time and guaranteeing certain debt of HTALP. HTALP holds substantially all of the assets of the Company. HTALP conducts the operations of the business of the Company and is structured as a limited partnership with no publicly traded equity.
HTA is a fully integrated, self-administered and internally managed REIT and conducts substantially all of its operations through HTALP. We are primarily focused on acquiring, owning and operating high-quality medical office buildings that are predominantly located on, or aligned with, campuses of nationally or regionally recognized healthcare systems. HTA is one of the largest public REITs focused on medical office buildings in the United States based on gross leasable area, or GLA, and has strong industry relationships, a stable and diversified tenant mix, and an extensive and active acquisition network. Our primary objective is to maximize stockholder value with disciplined growth through strategic investments and to provide an attractive risk-adjusted return for our stockholders by consistently increasing our cash flow. In pursuing this objective, we (i) target mid-sized acquisitions of high-quality medical office buildings in markets with dominant healthcare systems, attractive demographics and that complement our existing portfolio, (ii) actively manage our balance sheet to maintain flexibility with conservative leverage, and (iii) seek internal growth through proactive asset management, leasing and property management oversight. HTA has qualified to be taxed as a REIT for federal income tax purposes and intends to continue to be taxed as a REIT.
We invest primarily in high-quality medical office buildings in our target markets, and have acquired high-quality medical office buildings and other facilities that serve the healthcare industry with an aggregate purchase price of $2.8 billion through September 30, 2013. As of September 30, 2013, our portfolio consisted of 260 medical office buildings and 19 other facilities that serve the healthcare industry, as well as real estate notes receivable secured by medical office buildings.
On June 6, 2012, HTA listed its Class A common stock on the New York Stock Exchange, or the NYSE, or the Listing. In accordance with an amendment to HTA’s charter approved by stockholders on December 20, 2010, all of the common stock was converted into Class A, Class B-1, Class B-2 and Class B-3 common stock. The Class B common stock is identical to the Class A common stock except that the Class B common stock is not currently listed on a national securities exchange. The shares of the Class B-1 and Class B-2 common stock converted into shares of our Class A common stock on December 6, 2012 and June 6, 2013, respectively, and are now listed on the NYSE. On November 4, 2013, HTA’s Board of Directors announced that the Class B-3 common stock will convert to Class A common stock after the market closes on November 7, 2013 and be eligible for trading on the NYSE.
Our principal executive offices are located at 16435 N. Scottsdale Road, Suite 320, Scottsdale, Arizona, 85254.

2. Summary of Significant Accounting Policies
The summary of significant accounting policies presented below is designed to assist in understanding our condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing our accompanying condensed consolidated financial statements.

12

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Reclassifications
To better present our real estate related balances, we have chosen to break out the details of real estate investments (net) in our balance sheet as opposed to disclosing the details in a footnote. In addition, we have reclassified certain accounts, as further discussed below, in HTA’s previously issued balance sheet to conform to current period presentation. In place leases and tenant relationship intangibles are now included in real estate investments (net) as lease intangibles. In addition, accounts and other receivables (net) have been combined with receivables and other assets (net). None of the revised reclassifications reflect corrections of any amounts. The following table presents the previously reported balances of and the reclassified balances for the impacted line items of the December 31, 2012 balance sheet (in thousands):
 
 
December 31, 2012
 
 
As Previously Reported
 
As Reclassified
Real estate investments:
 
 
 
 
Land
 
$

 
$
183,651

Building and improvements
 

 
2,044,113

Lease intangibles
 

 
352,884

 
 

 
2,580,648

Accumulated depreciation and amortization
 

 
(349,118
)
Real estate investments, net
 
1,992,607

 
2,231,530

Accounts and other receivables, net
 
13,317

 

Receivables and other assets, net
 
71,653

 
84,970

Other intangibles, net
 
282,934

 
44,011

Real Estate Depreciation
Depreciation expense of buildings and improvements for the three months ended September 30, 2013 and 2012, was $18.9 million and $17.8 million, respectively. Depreciation expense of buildings and improvements for the nine months ended September 30, 2013 and 2012, was $55.5 million and $53.0 million, respectively.
Listing Expenses
Listing expenses primarily include fees associated with the Listing and share-based compensation expense associated with the long term incentive program, or LTIP, awards that we granted in connection with the Listing.
Noncontrolling Interests
HTA’s net income attributable to noncontrolling interests in its accompanying condensed consolidated statements of operations relate to both noncontrolling interest reflected within equity and redeemable noncontrolling interest of limited partners reflected outside of equity in our accompanying condensed consolidated balance sheets. Limited partner units in HTALP are accounted for as partners’ capital in HTALP’s condensed consolidated balance sheets and as noncontrolling interest reflected within equity or redeemable noncontrolling interest of limited partners reflected outside of equity in HTA’s condensed consolidated balance sheets.
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our opinion, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such results may be less favorable for the full year. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in the 2012 Annual Report on Form 10-K for HTA and the Registration Statement on Form S-4 for HTALP, as amended, that was declared effective by the SEC on October 22, 2013 (File No. 333-190916).

13

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Recently Issued or Adopted Accounting Pronouncements
In January 2013, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, 2013-01, Balance Sheet (Topic 210) - Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, or ASU 2013-01, which clarifies the scope of ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 requires entities to disclose both gross and net information about derivatives, including bifurcated embedded derivatives, repurchase agreements and reverse purchase agreements and securities borrowing and securities lending transactions that are subject to an agreement similar to a master netting arrangement. Entities are required to apply these disclosures for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity must provide the disclosures required by those amendments retrospectively for all comparative periods presented. We adopted ASU 2011-11 and ASU 2013-01 in the first quarter of fiscal 2013 and have reflected the adoption in our disclosures to our interim condensed consolidated financial statements.

3. Business Combinations
For the nine months ended September 30, 2013, we have completed seven acquisitions for an aggregate purchase price of $241.9 million, in addition to closing costs attributable to these acquisitions of $1.4 million. Results of operations for these acquisitions are reflected in our condensed consolidated statements of operations for the three and nine months ended September 30, 2013, for the periods subsequent to the acquisition dates.
The aggregate net purchase price of the 2013 acquisitions was allocated in the amounts set forth in the table below. Due to the recent timing of certain acquisitions, we have not yet finalized our purchase price allocation. Since the acquisitions were determined to be individually not significant, but material on a collective basis, the allocations for these acquisitions are set forth below in the aggregate (in thousands):
2013 Acquisitions
 
Total
Land
 
$
13,415

Building and improvements
 
175,039

Below market leasehold interests
 
1,836

Above market leases
 
1,987

In place leases
 
32,205

Tenant relationships
 
16,541

Below market leases
 
(1,167
)
Above market debt
 
(241
)
Net assets acquired
 
239,615

Other, net
 
2,299

Aggregate purchase price
 
$
241,914

The weighted average lives of the above acquired intangible assets and liabilities were 7.4 years and 5.7 years, respectively.
The property acquisitions completed during the nine months ended September 30, 2013, were all cash transactions except for the acquisition on September 20, 2013 and we acquired a 100% ownership interest in each property acquisition. See below for a brief description of each of the acquisitions.
On March 11, 2013, we completed the acquisition of a medical office building located in Dallas, Texas for $48.7 million.
On March 22, 2013, we completed the acquisition of a medical office building located in Bryan - College Station, Texas for $39.8 million.
On June 18, 2013, we completed the acquisition of a medical office building located in Atlanta, Georgia for $5.6 million.
On July 12, 2013, we completed the acquisition of a medical office property located in Monroeville, Pennsylvania for $15.1 million.
On July 29, 2013, we completed the acquisition of a medical office building located in Denver, Colorado for $42.0 million.

14

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On August 30, 2013, we completed the acquisition of a medical office building located in Dallas, Texas for $27.7 million.
On September 20, 2013, we completed the acquisition of a portfolio of medical office buildings located in South Florida for $62.9 million. As part of the acquisition, we assumed approximately $18.0 million of mortgage loans.
In addition, we have entered into two definitive purchase agreements for the acquisition of medical office buildings located in Austin, Texas totaling approximately $30.0 million. The closing of these acquisitions are subject to the satisfaction of customary closing conditions.
The aggregate net purchase price of the 2012 acquisitions was allocated in the amounts set forth in the table below. Since the acquisitions were determined to be individually not significant, but material on a collective basis, the allocations for these acquisitions are set forth below in the aggregate (in thousands):
2012 Acquisitions
 
Total
Land
 
$
3,809

Building and improvements
 
214,772

Below market leasehold interests
 
3,284

Above market leases
 
4,199

In place leases
 
23,388

Tenant relationships
 
19,863

Below market leases
 
(1,415
)
Net assets acquired
 
267,900

Other, net
 
287

Aggregate purchase price
 
$
268,187

The weighted average lives of the above acquired intangible assets and liabilities were 14.8 years and 7.5 years, respectively.

4. Real Estate Notes Receivable
Real estate notes receivable includes four promissory notes totaling $20.0 million as of September 30, 2013 and December 31, 2012. The promissory notes are secured by medical office buildings, with interest rates ranging from 10.85% to 10.95% per annum. The weighted average effective interest rate based on the purchase price of the notes was 14.57% per annum as of September 30, 2013. The promissory notes matured on November 1, 2013 and we expect to receive payment on the principal balance or extend the maturity date during the quarter ending December 31, 2013. The promissory notes have sufficient collateral coverage based on the value of the medical office buildings. The promissory notes will continue to accrue interest as the same per annum rates and as of September 30, 2013 all interest payments were current.
In addition, we originated two promissory notes in September 2013 totaling $8.5 million. The promissory notes are secured by medical office buildings in South Florida, each with an interest rate of 7.0% per annum. The properties are being actively marketed for sale and the notes will be repaid upon any sale. The promissory notes mature on October 1, 2016.
We monitor the credit quality of our real estate notes receivable on an ongoing basis by tracking possible credit quality indicators. As of September 30, 2013, all of our real estate notes receivable are current and we have not provided for any allowance for losses or recorded any impairments with respect to our notes receivable. We made no purchases or sales of real estate notes receivable during the nine months ended September 30, 2013.


15

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. Intangible Assets and Liabilities
Intangible assets and liabilities consisted of the following as of September 30, 2013 and December 31, 2012 (in thousands, except weighted average remaining amortization period):
 
September 30, 2013
 
December 31, 2012
 
 
 
Balance
 
Weighted Average Remaining Amortization Period in Years
 
Balance
 
Weighted Average Remaining Amortization Period in Years
 
Balance Sheet Classification
Assets:
 
 
 
 
 
 
 
 
 
In place leases
$
197,185

 
8.7
 
$
174,615

 
9.7
 
Lease intangibles
Tenant relationships
189,616

 
10.6
 
178,269

 
11.6
 
Lease intangibles
Above market leases
25,878

 
6.3
 
25,387

 
6.9
 
Other intangibles, net
Below market leasehold interests
29,128

 
63.9
 
30,587

 
69.4
 
Other intangibles, net
 
441,807

 
 
 
408,858

 
 
 
 
Accumulated amortization
(143,160
)
 
 
 
(125,924
)
 
 
 
 
Total
$
298,647

 
 
 
$
282,934

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Below market leases
$
13,548

 
13.0
 
$
12,823

 
13.7
 
Intangible liabilities, net
Above market leasehold interests
3,827

 
33.3
 
3,827

 
34.0
 
Intangible liabilities, net
 
17,375

 
 
 
16,650

 
 
 
 
Accumulated amortization
(6,113
)
 
 
 
(5,341
)
 
 
 
 
Total
$
11,262

 
 
 
$
11,309

 
 
 
 
The following is a summary of the net intangible amortization for the three and nine months ended September 30, 2013 and 2012 (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Amortization recorded against rental income related to above or below market leases
$
417

 
$
470

 
$
1,298

 
$
1,185

Rental expense related to above or below market leasehold interests
89

 
106

 
278

 
413

Amortization expense related to in place leases and tenant relationships
9,955

 
10,705

 
29,912

 
32,151



16

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. Receivables and Other Assets
Receivables and other assets consisted of the following as of September 30, 2013 and December 31, 2012 (in thousands):
 
September 30, 2013
 
December 31, 2012
Accounts and other receivables, net
$
19,595

 
$
13,317

Tenant note receivable
3,202

 
3,287

Deferred financing costs, net
11,395

 
11,006

Deferred leasing costs, net
12,223

 
10,554

Lease inducements, net
762

 
880

Straight-line rent receivables, net
44,861

 
39,095

Prepaid expenses, deposits, equipment and other
9,302

 
6,831

Derivative financial instruments - interest rate swaps
3,656

 

Total
$
104,996

 
$
84,970

The tenant note receivable is for a loan to a tenant for building improvements. The interest rate thereon is 9.0% per annum and requires monthly principal and interest payments from the tenant through July 2027. As of September 30, 2013, this tenant note receivable is current and we have not provided any allowance for losses, and we have had no impairment with respect to this note receivable.
The following is a summary of amortization of deferred leasing costs, deferred financing costs, and lease inducements for the three and nine months ended September 30, 2013 and 2012 (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Amortization expense related to deferred leasing costs
$
686

 
$
568

 
$
1,844

 
$
1,436

Interest expense related to deferred financing costs
805

 
896

 
3,030

 
2,987

Amortization recorded against rental income related to lease inducements
56

 
54

 
156

 
220


7. Assets Held for Sale and Discontinued Operations
During 2013 we classified one of our properties as held for sale as we committed to an approved plan to seek to dispose of the property. The sale of the property is expected to occur within one year. As of December 31, 2012, there were no properties held for sale. The following table represents the major classes of assets and liabilities, and the balance sheet classification as of September 30, 2013 (in thousands):
 
 
September 30, 2013
Land
 
$
5,109

Building and improvements, net
 
15,181

Lease intangibles, net
 
848

Property held for sale, net
 
$
21,138

 
 
 
Receivables and other assets, net
 
$
1,009

Non-real estate assets of property held for sale, net
 
$
1,009

 
 
 
Security deposits, prepaid rent and other liabilities
 
$
181

Security deposits, prepaid rent and other liabilities
 
$
181


17

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The table below reflects the results of operations of the property classified as held for sale, which are included in discontinued operations for the three and nine months ended September 30, 2013 and 2012 (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Rental income
$
443

 
$
566

 
$
1,257

 
$
1,697

Expenses:
 
 
 
 
 
 
 
Rental
63

 
65

 
200

 
216

Depreciation and amortization

 
230

 
171

 
688

Total expenses
63

 
295

 
371

 
904

Income before other income (expense)
380

 
271

 
886

 
793

Other income (expense):
 
 
 
 
 
 
 
Interest expense related to debt

 
(128
)
 
(161
)
 
(383
)
Income from discontinued operations
$
380

 
$
143

 
$
725

 
$
410



8. Debt
Debt consisted of the following as of September 30, 2013 and December 31, 2012 (in thousands):
 
 
September 30, 2013
 
December 31, 2012
Unsecured revolving credit facility
 
$

 
$
72,000

Unsecured term loans
 
455,000

 
455,000

Unsecured senior notes
 
300,000

 

Fixed rate mortgages
 
370,636

 
382,456

Secured real estate term loan
 

 
125,500

 
 
1,125,636

 
1,034,956

Net premium
 
156

 
2,403

Total
 
$
1,125,792

 
$
1,037,359

Unsecured Credit Agreement
On March 29, 2012, we entered into an unsecured credit agreement to obtain a $575.0 million unsecured revolving credit facility and a $300.0 million unsecured term loan. On March 7, 2013, we executed an amendment to the unsecured credit agreement pursuant to an existing provision therein to increase the principal amount of the unsecured revolving credit facility. This amendment added an additional lender and increased the unsecured revolving credit facility by $75.0 million to $650.0 million. The other existing terms of the unsecured credit agreement were unchanged. The unsecured credit agreement matures on March 29, 2016 and includes a one-year extension option, subject to certain conditions.
The actual amount of credit available under our unsecured credit agreement is a function of certain loan-to-value and debt service coverage ratios. The maximum principal amount may be increased; subject to such additional financing being provided by our existing lenders or new lenders added to the unsecured revolving credit facility.
Borrowings under the $650.0 million unsecured revolving credit facility accrue interest equal to adjusted LIBOR plus a margin ranging from 1.10% to 1.75% per annum based on our credit rating. We also pay a facility fee ranging from 0.20% to 0.50% per annum on the aggregate commitments under the unsecured revolving credit facility. As of September 30, 2013, the margin associated with borrowings was 1.55% per annum and the facility fee was 0.35% per annum. As of September 30, 2013, no amount was outstanding on our unsecured revolving credit facility.
Borrowings under the $300.0 million unsecured term loan accrue interest equal to adjusted LIBOR plus a margin ranging from 1.30% to 2.25% per annum based on our credit rating. The margin associated with borrowings as of September 30, 2013 was 1.85% per annum. We have interest rate swaps in place that fix the interest rate at 2.95% per annum, based on our current credit rating.

18

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

$155.0 million Unsecured Term Loan
On July 20, 2012, we entered into a $155.0 million unsecured term loan that matures on July 19, 2019. The interest rate thereon is equal to LIBOR plus a margin ranging from 1.55% to 2.40% per annum based on our credit rating. The margin associated with the borrowings as of September 30, 2013 was 2.00% per annum. We have interest rate swaps in place that fix the interest rate at 3.29% per annum, based on our current credit rating. The maximum principal amount may be increased by us, subject to such additional financing being provided by our existing lender.
$300.0 million Unsecured Senior Notes
On March 28, 2013, we issued $300.0 million of unsecured senior notes that mature on April 15, 2023. The unsecured senior notes bear interest at 3.70% per annum payable semi-annually and were offered at 99.186% of the principal amount thereof. The unsecured senior notes include registration rights to the holders, pursuant to which we filed an exchange offer on Form S-4 on October 22, 2013.
Fixed Rate Mortgages
As of September 30, 2013, we had fixed rate mortgages with interest rates ranging from 4.55% to 12.75% per annum and a weighted average interest rate of 5.86% per annum. As part of an acquisition, we assumed two mortgage loans; see Note 3, Business Combinations.
Secured Real Estate Term Loan
On March 28, 2013, we repaid in full the $125.5 million secured real estate term loan. In connection with that repayment, we terminated the secured real estate term loan (and the commitments thereunder) and the related security documents and guarantees. In addition, we terminated the $75.0 million interest rate swap associated with the secured real estate term loan.
Future Debt Maturities
As of September 30, 2013, the principal payments due on our debt for the three months ending December 31, 2013, for each of the next four years ending December 31 and thereafter, is as follows (in thousands):
Year
 
Amount
2013
 
$
1,722

2014
 
6,872

2015
 
73,128

2016
 
421,578

2017
 
99,963

Thereafter
 
522,373

Total
 
$
1,125,636

The above scheduled debt maturities do not include the available extension under the unsecured credit agreement as discussed above.
We are required by the terms of our applicable credit agreements to meet various affirmative and negative covenants that we believe are customary for these types of facilities, such as limitations on the incurrence of debt by us, and our subsidiaries that own unencumbered assets, limitations on the nature of HTALP’s business, and limitations on distributions by HTALP and its subsidiaries that own unencumbered assets. Our credit agreements also impose various financial covenants on us, such as a maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a minimum tangible net worth covenant, a maximum ratio of unsecured indebtedness to unencumbered asset value, rent coverage ratios, and a minimum ratio of unencumbered net operating income to unsecured interest expense. As of September 30, 2013, we believe that we were in compliance with all such financial covenants and reporting requirements. In addition, certain of our credit agreements include events of default provisions that we believe are customary for these types of facilities, including restricting HTA from making dividend distributions to our stockholders in the event we are in default, except to the extent necessary for HTA to maintain its REIT status.


19

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. Derivative Financial Instruments
The following table lists the derivative financial instrument assets and (liabilities) held by us as of September 30, 2013 (in thousands):
Notional Amount

 
Index
 
Rate
 
Fair Value
 
Instrument
 
Maturity
$
200,000

 
LIBOR
 
1.23
%
 
$
(2,490
)
 
Swap
 
3/29/2017
100,000

 
LIBOR
 
0.86

 
(768
)
 
Swap
 
6/15/2016
50,000

 
LIBOR
 
1.39

 
882

 
Swap
 
7/17/2019
105,000

 
LIBOR
 
1.24

 
2,774

 
Swap
 
7/17/2019
The following table lists the derivative financial instrument assets and (liabilities) held by us as of December 31, 2012 (in thousands):
Notional Amount
 
Index
 
Rate
 
Fair Value
 
Instrument
 
Maturity
$
17,304

(a)
LIBOR
 
3.79
%
 
$
(459
)
 
Swap
 
9/28/2013
75,000

(a)
LIBOR
 
1.07

 
(659
)
 
Swap
 
12/31/2013
200,000

 
LIBOR
 
1.23

 
(5,180
)
 
Swap
 
3/29/2017
100,000

 
LIBOR
 
0.86

 
(1,310
)
 
Swap
 
6/15/2016
50,000

 
LIBOR
 
1.39

 
(909
)
 
Swap
 
7/17/2019
105,000

 
LIBOR
 
1.24

 
(853
)
 
Swap
 
7/17/2019
(a) We terminated the interest rate swaps in March 2013.
As of September 30, 2013 and December 31, 2012, the gross fair value of our derivative financial instruments was as follows (in thousands):
 
 
Asset Derivatives
 
Liability Derivatives
  
 
September 30, 2013
 
December 31, 2012
 
September 30, 2013
 
December 31, 2012
Derivatives Not Designated as Hedging Instruments:
 
Balance Sheet
Location
 
Fair Value
 
Balance Sheet
Location
 
Fair Value
 
Balance Sheet
Location
 
Fair Value
 
Balance Sheet
Location
 
Fair Value
Interest rate swaps
 
Receivables and other assets
 
$
3,656

 
n/a
 
n/a
 
Derivative
financial
instruments
 
$
3,258

 
Derivative
financial
instruments
 
$
9,370

There were no derivatives offset in our balance sheet as of September 30, 2013 and December 31, 2012. As of September 30, 2013 and December 31, 2012, we had derivatives subject to enforceable master netting arrangements which allow for net cash settlement with the respective counterparties (in thousands):
 
September 30, 2013
 
December 31, 2012
 
Gross Amounts
 
Amounts Subject to Enforceable Master Netting Arrangements
 
Net Amounts
 
Gross Amounts
 
Amounts Subject to Enforceable Master Netting Arrangements
 
Net Amounts
Asset derivatives
$
3,656

 
$
(2,490
)
 
$
1,166

 
$

 
$

 
$

Liability derivatives
3,258

 
(2,490
)
 
768

 
9,370

 

 
9,370


20

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the three and nine months ended September 30, 2013 and 2012, the derivative financial instruments had the following effect on our condensed consolidated statements of operations (in thousands):
Derivatives Not Designated as Hedging Instruments:
 
Location of Gain (Loss)
Recognized
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Interest rate swaps
 
Interest related to derivative financial instruments and net change in fair value of derivative financial instruments
 
$
(1,955
)
 
$
(2,520
)
 
$
8,573

 
$
(7,726
)
Interest rate cap
 
Interest related to derivative financial instruments and net change in fair value of derivative financial instruments
 

 

 

 
(89
)
We have agreements with each of our interest rate swap derivative counterparties that contain a provision whereby if we default on certain of our unsecured indebtedness, then our counterparties could declare us in default on our interest rate swap derivative obligations resulting in an acceleration of the indebtedness. In addition, we are exposed to credit risk in the event of non-performance by our derivative counterparties. We believe we mitigate the credit risk by entering into agreements with credit-worthy counterparties. We record counterparty credit risk valuation adjustments on interest rate swap derivative assets in order to properly reflect the credit quality of the counterparty. In addition, our fair value of interest rate swap derivative liabilities is adjusted to reflect the impact of our credit quality. As of September 30, 2013, there have been no termination events or events of default related to our interest rate swaps, except for our voluntary termination as discussed above.

10. Commitments and Contingencies
Litigation
We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material effect on our condensed consolidated financial position, results of operations or cash flows. 
Environmental Matters
We follow the policy of monitoring our properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material effect on our condensed consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability at our properties that we believe would require additional disclosure or the recording of a loss contingency.
Other
Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business. In our opinion, these matters are not expected to have a material effect on our condensed consolidated financial position, results of operations or cash flows.

11. Stockholders’ Equity and Partners’ Capital
HTALP’s partnership agreement provides that it will distribute cash flows from operations and net sale proceeds to its partners in accordance with their overall ownership interests at such times and in such amounts as the general partner determines. Except for certain LTIP units that have not vested, dividend distributions are made such that a holder of one unit will receive annual dividend distributions from HTALP in an amount equal to the annual dividends paid to the holder of one of HTA’s shares. In addition, for each share of common stock issued or redeemed by HTA, HTALP issues or redeems a corresponding number of units.
Common Stock Offerings
On January 7, 2013, HTA commenced an equity at-the-market, or ATM, offering of its Class A common stock with an aggregate sales price of up to $250.0 million. During the nine months ended September 30, 2013, HTA issued and sold 20,707,113 shares, at an average price of $11.24 per share. On November 1, 2013, HTA terminated this ATM offering and commenced a new ATM offering of its Class A common stock with an aggregate sales price of up to $300.0 million.

21

HEALTHCARE TRUST OF AMERICA, INC. AND HEALTHCARE TRUST OF AMERICA HOLDINGS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Common Stock Dividends
The following are the cash dividends declared by HTA on all Class A and B common stock during 2013:
Declaration Date
 
Record Date
 
Amount Per Share
 
Payment Date
January 18, 2013
 
March 29, 2013
 
$
0.14375

 
April 4, 2013
April 26, 2013
 
June 27, 2013
 
0.14375

 
July 3, 2013
August 1, 2013
 
September 27, 2013
 
0.14375

 
October 4, 2013
November 4, 2013
 
December 27, 2013
 
0.14375

 
January 3, 2014
Incentive Plan
Our Amended and Restated 2006 Plan, or the Plan, permits the grant of incentive awards to our employees, officers, non-employee directors, and consultants as selected by our Board of Directors or the Compensation Committee. The Plan authorizes the granting of awards in any of the following forms: options; stock appreciation rights; restricted stock; restricted or deferred stock units; performance awards; dividend equivalents; other stock-based awards, including units in HTALP; and cash-based awards. The service period is generally three or four years. Subject to adjustment as provided in the Plan, the aggregate number of awards reserved and available for issuance under the Plan is 10,000,000. As of September 30, 2013, there were 5,096,100 awards available for grant under the Plan.
Long Term Incentive Program of OP Units
Awards under the LTIP consist of Series C units in HTALP, and are subject to the achievement of certain performance and market conditions in order to vest. Once vested, the Series C units are converted into common units of HTALP, which may be converted into shares of HTA’s common stock.
For the three and nine months ended September 30, 2013, we recognized compensation expense related to LTIP awards of $0.0 million and $3.1 million