(Mark One) | ||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended: | ||||||||
OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
www.healthcarerealty.com | ||
(Internet address) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
☒ | ☐ | No | |||||||||
☒ | ☐ | No | |||||||||
☒ | ☐ | Accelerated filer | ☐ | Non-accelerated filer | |||||||||||||
Smaller reporting company | Emerging growth company | ||||||||||
Yes | ☒ | No | |||||||||
PART I - FINANCIAL INFORMATION | ||||||||
PART II - OTHER INFORMATION | ||||||||
Item 5 | Other Information | |||||||
SIGNATURE |
ASSETS | ||||||||
Unaudited MARCH 31, 2024 | DECEMBER 31, 2023 | |||||||
Real estate properties | ||||||||
Land | $ | $ | ||||||
Buildings and improvements | ||||||||
Lease intangibles | ||||||||
Personal property | ||||||||
Investment in financing receivable, net | ||||||||
Financing lease right-of-use assets | ||||||||
Construction in progress | ||||||||
Land held for development | ||||||||
Total real estate properties | ||||||||
Less accumulated depreciation and amortization | ( | ( | ||||||
Total real estate properties, net | ||||||||
Cash and cash equivalents | ||||||||
Assets held for sale, net | ||||||||
Operating lease right-of-use assets | ||||||||
Investments in unconsolidated joint ventures | ||||||||
Goodwill | ||||||||
Other assets, net | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Liabilities | ||||||||
Notes and bonds payable | $ | $ | ||||||
Accounts payable and accrued liabilities | ||||||||
Liabilities of assets held for sale | ||||||||
Operating lease liabilities | ||||||||
Financing lease liabilities | ||||||||
Other liabilities | ||||||||
Total liabilities | ||||||||
Commitments and contingencies | ||||||||
Redeemable non-controlling interests | ||||||||
Stockholders' equity | ||||||||
Preferred stock, $ | ||||||||
Class A Common stock, $ | ||||||||
Additional paid-in capital | ||||||||
Accumulated other comprehensive income (loss) | ( | |||||||
Cumulative net income attributable to common stockholders | ||||||||
Cumulative dividends | ( | ( | ||||||
Total stockholders' equity | ||||||||
Non-controlling interest | ||||||||
Total equity | ||||||||
Total liabilities and equity | $ | $ |
THREE MONTHS ENDED March 31, | ||||||||
2024 | 2023 | |||||||
Revenues | ||||||||
Rental income | $ | $ | ||||||
Interest income | ||||||||
Expenses | ||||||||
Property operating | ||||||||
General and administrative | ||||||||
Transaction costs | ||||||||
Merger-related costs | ||||||||
Depreciation and amortization | ||||||||
Other income (expense) | ||||||||
Gain on sales of real estate properties | ||||||||
Interest expense | ( | ( | ||||||
Impairment of real estate properties and credit loss reserves | ( | ( | ||||||
Impairment of goodwill | ( | |||||||
Equity loss from unconsolidated joint ventures | ( | ( | ||||||
Interest and other income, net | ||||||||
( | ( | |||||||
Net loss | $ | ( | $ | ( | ||||
Net loss attributable to non-controlling interests | ||||||||
Net loss attributable to common stockholders | $ | ( | $ | ( | ||||
Basic earnings per common share | $ | ( | $ | ( | ||||
Diluted earnings per common share | $ | ( | $ | ( | ||||
Weighted average common shares outstanding - basic | ||||||||
Weighted average common shares outstanding - diluted |
THREE MONTHS ENDED March 31, | ||||||||
2024 | 2023 | |||||||
Net loss | $ | ( | $ | ( | ||||
Other comprehensive income | ||||||||
Interest rate derivatives | ||||||||
Reclassification adjustments for gains included in interest expense | ( | ( | ||||||
Gains (losses) arising during the period on interest rate swaps | ( | |||||||
( | ||||||||
Comprehensive loss | ( | ( | ||||||
Less: comprehensive loss attributable to non-controlling interests | ||||||||
Comprehensive loss attributable to common stockholders | $ | ( | $ | ( |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Cumulative Net Income | Cumulative Dividends | Total Stockholders’ Equity | Non-controlling Interests | Total Equity | Redeemable Non-controlling Interests | |||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||
Issuance of common stock, net of issuance costs | — | — | — | — | — | — | |||||||||||||||||||||||
Common stock redemptions | — | ( | — | — | — | ( | — | ( | — | ||||||||||||||||||||
Conversion of OP Units to common stock | — | — | — | ( | — | ||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ( | ( | — | ||||||||||||||||||||
Reclassification adjustments for gains included in net income (interest expense) | — | — | ( | — | — | ( | ( | ( | — | ||||||||||||||||||||
Gains arising during the period on interest rate swaps | — | — | — | — | — | ||||||||||||||||||||||||
Contributions from redeemable non-controlling interests | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Adjustments to redemption value of redeemable non-controlling interests | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||
Dividends to common stockholders and distributions to non-controlling interest holders ($ | — | — | — | — | ( | ( | ( | ( | — | ||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Cumulative Net Income | Cumulative Dividends | Total Stockholders’ Equity | Non-controlling Interests | Total Equity | Redeemable Non-controlling Interests | |||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||
Issuance of common stock, net of issuance costs | — | — | — | — | — | — | |||||||||||||||||||||||
Common stock redemptions | ( | ( | — | — | — | ( | — | ( | — | ||||||||||||||||||||
Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | ( | ( | — | ||||||||||||||||||||
Reclassification adjustments for gains included in net income (interest expense) | — | — | ( | — | — | ( | ( | ( | — | ||||||||||||||||||||
Losses arising during the period on interest rate swaps | — | — | ( | — | — | ( | ( | ( | — | ||||||||||||||||||||
Adjustments to redemption value of redeemable non-controlling interests | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||
Dividends to common stockholders and distributions to non-controlling interest holders ($ | — | — | — | — | ( | ( | ( | ( | — | ||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ |
OPERATING ACTIVITIES | ||||||||
THREE MONTHS ENDED March 31, | ||||||||
2024 | 2023 | |||||||
Net loss | $ | ( | $ | ( | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | ||||||||
Other amortization | ||||||||
Share-based compensation | ||||||||
Amortization of straight-line rent receivable (lessor) | ( | ( | ||||||
Amortization of straight-line rent on operating leases (lessee) | ||||||||
Gain on sales of real estate properties | ( | ( | ||||||
Impairment of real estate properties and credit loss reserves | ||||||||
Impairment of goodwill | ||||||||
Equity loss from unconsolidated joint ventures | ||||||||
Distributions from unconsolidated joint ventures | ||||||||
Non-cash interest from financing and notes receivable | ( | ( | ||||||
Changes in operating assets and liabilities: | ||||||||
Other assets, including right-of-use-assets | ( | ( | ||||||
Accounts payable and accrued liabilities | ( | ( | ||||||
Other liabilities | ||||||||
Net cash provided by operating activities | ||||||||
INVESTING ACTIVITIES | ||||||||
Acquisitions of real estate | ( | |||||||
Development of real estate | ( | ( | ||||||
Additional long-lived assets | ( | ( | ||||||
Funding of mortgages and notes receivable | ( | ( | ||||||
Investments in unconsolidated joint ventures | ( | |||||||
Investment in financing receivable | ( | |||||||
Contributions from redeemable non-controlling interests | ||||||||
Proceeds from sales of real estate properties and additional long-lived assets | ||||||||
Proceeds from notes receivable repayments | ||||||||
Net cash (used in) provided by investing activities | ( | |||||||
FINANCING ACTIVITIES | ||||||||
Net borrowings on unsecured credit facility | — | |||||||
Repayments of notes and bonds payable | ( | ( | ||||||
Dividends paid | ( | ( | ||||||
Net proceeds from issuance of common stock | ||||||||
Common stock redemptions | ( | ( | ||||||
Distributions to non-controlling interest holders | ( | ( | ||||||
Payments made on finance leases | ( | ( | ||||||
Net cash used in financing activities | ( | ( | ||||||
Increase (decrease) in cash and cash equivalents | ( | |||||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||
Supplemental Cash Flow Information | ||||||||
Interest paid | $ | $ | ||||||
Mortgage note receivables taken in connection with sale of real estate | $ | $ | ||||||
Invoices accrued for construction, tenant improvements and other capitalized costs | $ | $ | ||||||
Capitalized interest | $ | $ | ||||||
(dollars in thousands) | MARCH 31, 2024 | ||||
Assets: | |||||
Net real estate investments | $ | ||||
Cash and cash equivalents | |||||
Receivables and other assets | |||||
Total assets | $ | ||||
Liabilities: | |||||
Accrued expenses and other liabilities | $ | ||||
Total equity | |||||
Total liabilities and equity | $ |
(dollars in thousands) ORIGINATION DATE | LOCATION | SOURCE | CARRYING AMOUNT | MAXIMUM EXPOSURE TO LOSS | ||||||||||
2021 | Houston, TX 1 | Note receivable | $ | $ | ||||||||||
2021 | Charlotte, NC 1 | Note receivable | ||||||||||||
2022 | Texas 2 | Joint venture |
(dollars in thousands) ORIGINATION DATE | LOCATION | INTEREST RATE | CARRYING VALUE as of MARCH 31, 2024 | ||||||||
May 2021 | Poway, CA | $ | |||||||||
November 2021 | Columbus, OH | ||||||||||
$ |
(dollars in thousands) | ORIGINATION | MATURITY | STATED INTEREST RATE | MAXIMUM LOAN COMMITMENT | OUTSTANDING as of MAR 31, 2024 | ALLOWANCE FOR CREDIT LOSSES | FAIR VALUE DISCOUNT AND FEES | CARRYING VALUE as of MAR 31, 2024 | ||||||||||||||||||
Mezzanine loans | ||||||||||||||||||||||||||
Texas | 6/24/2021 | 6/24/2024 | % | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||
Arizona | 12/21/2023 | 12/20/2026 | % | |||||||||||||||||||||||
( | ( | |||||||||||||||||||||||||
Mortgage loans | ||||||||||||||||||||||||||
Texas | 6/30/2021 | 7/01/2024 | % | |||||||||||||||||||||||
North Carolina | 12/22/2021 | 12/22/2024 | % | ( | ||||||||||||||||||||||
Florida | 5/17/2022 | 2/27/2026 | % | ( | ||||||||||||||||||||||
California | 3/30/2023 | 3/29/2026 | % | |||||||||||||||||||||||
Florida | 12/28/2023 | 12/28/2026 | % | |||||||||||||||||||||||
( | ||||||||||||||||||||||||||
$ | $ | $ | ( | $ | ( | $ |
Dollars in thousands | THREE MONTHS ENDED MARCH 31, 2024 | TWELVE MONTHS ENDED DECEMBER 31, 2023 | ||||||
Allowance for credit losses, beginning of period | $ | $ | ||||||
Credit loss reserves | ||||||||
Allowance for credit losses, end of period | $ | $ |
THREE MONTHS ENDED March 31, | ||||||||
in thousands | 2024 | 2023 | ||||||
Type of Revenue | ||||||||
Parking income | $ | $ | ||||||
Management fee income/other 1 | ||||||||
$ | $ |
THREE MONTHS ENDED March 31, | ||||||||
Dollars in thousands | 2024 | 2023 | ||||||
Investments in unconsolidated joint ventures, beginning of period | $ | $ | ||||||
New investment during the period 1 | ||||||||
Equity loss recognized during the period | ( | ( | ||||||
Owner distributions | ( | ( | ||||||
Investments in unconsolidated joint ventures, end of period | $ | $ |
Dollars in thousands | March 31, 2024 | December 31, 2023 | ||||||||||||
Balance Sheet data: | ||||||||||||||
Land | $ | $ | ||||||||||||
Building and improvements | ||||||||||||||
Lease intangibles | ||||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Real estate assets held for sale, net 1 | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Other assets, net | ||||||||||||||
Assets held for sale, net | $ | $ | ||||||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||||||||
Operating lease liabilities | ||||||||||||||
Other liabilities | ||||||||||||||
Liabilities of assets held for sale | $ | $ |
Dollars in thousands | OPERATING | |||||||
2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
2029 and thereafter | ||||||||
$ |
Dollars in thousands | OPERATING | FINANCING | ||||||
2024 | $ | $ | ||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
2029 and thereafter | ||||||||
Total undiscounted lease payments | ||||||||
Discount | ( | ( | ||||||
Lease liabilities | $ | $ |
THREE MONTHS ENDED March 31, | ||||||||
Dollars in thousands | 2024 | 2023 | ||||||
Operating lease cost | ||||||||
Operating lease expense | $ | $ | ||||||
Variable lease expense | ||||||||
Finance lease cost | ||||||||
Amortization of right-of-use assets | ||||||||
Interest on lease liabilities | ||||||||
Total lease expense | $ | $ | ||||||
Other information | ||||||||
Operating cash flows outflows related to operating leases | $ | $ | ||||||
Operating cash flows outflows related to financing leases | $ | $ | ||||||
Financing cash flows outflows related to financing leases | $ | $ | ||||||
Weighted-average years remaining lease term (excluding renewal options) - operating leases | ||||||||
Weighted-average years remaining lease term (excluding renewal options) - finance leases | ||||||||
Weighted-average discount rate - operating leases | % | % | ||||||
Weighted-average discount rate - finance leases | % | % |
MATURITY DATES | BALANCE 1 AS OF | EFFECTIVE INTEREST RATE as of 3/31/2024 | ||||||||||||
Dollars in thousands | 3/31/2024 | 12/31/2023 | ||||||||||||
$ | 10/25 | $ | $ | % | ||||||||||
$ | 5/24 | % | ||||||||||||
$ | 7/24 | % | ||||||||||||
$ | 10/25 | % | ||||||||||||
$ | 6/26 | % | ||||||||||||
$ | 7/27 | % | ||||||||||||
$ | 1/28 | % | ||||||||||||
Senior Notes due 2025 | 5/25 | % | ||||||||||||
Senior Notes due 2026 | 8/26 | % | ||||||||||||
Senior Notes due 2027 | 7/27 | % | ||||||||||||
Senior Notes due 2028 | 1/28 | % | ||||||||||||
Senior Notes due 2030 | 2/30 | % | ||||||||||||
Senior Notes due 2030 | 3/30 | % | ||||||||||||
Senior Notes due 2031 | 3/31 | % | ||||||||||||
Senior Notes due 2031 | 3/31 | % | ||||||||||||
Mortgage notes payable | 9/24-12/26 | |||||||||||||
$ | $ |
AMOUNT | WEIGHTED AVERAGE RATE | |||||||
May 2026 | % | |||||||
June 2026 | % | |||||||
December 2026 | % | |||||||
June 2027 | % | |||||||
December 2027 | % | |||||||
$ | % |
BALANCE AT MARCH 31, 2024 | ||||||||
In thousands | BALANCE SHEET LOCATION | FAIR VALUE | ||||||
Derivatives designated as hedging instruments | ||||||||
Interest rate swaps | Other liabilities | $ | ( | |||||
Interest rate swaps | Other assets | $ | ||||||
Total derivatives designated as hedging instruments | $ |
(GAIN)/LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended March 31, | (GAIN)/LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended March 31, | ||||||||||||||||
In thousands | 2024 | 2023 | 2024 | 2023 | |||||||||||||
Interest rate swaps | $ | ( | $ | Interest expense | $ | ( | $ | ( | |||||||||
Settled treasury hedges | Interest expense | ||||||||||||||||
Settled interest rate swaps | Interest expense | ||||||||||||||||
$ | ( | $ | Total interest expense | $ | ( | $ | ( |
THREE MONTHS ENDED MARCH 31, 2024 | TWELVE MONTHS ENDED DECEMBER 31, 2023 | |||||||
Balance, beginning of period | ||||||||
Issuance of common stock | ||||||||
Conversion of OP unit to Common stock | ||||||||
Non-vested share-based awards, net of withheld shares and forfeitures | ||||||||
Balance, end of period |
THREE MONTHS ENDED MARCH 31, | ||||||||
Dollars in thousands, except per share data | 2024 | 2023 | ||||||
Weighted average common shares outstanding | ||||||||
Weighted average common shares outstanding | ||||||||
Non-vested shares | ( | ( | ||||||
Weighted average common shares outstanding - basic | ||||||||
Weighted average common shares outstanding - basic | ||||||||
Dilutive effect of forward equity shares | ||||||||
Dilutive effect of OP Units | ||||||||
Dilutive effect of employee stock purchase plan | — | |||||||
Weighted average common shares outstanding - diluted | ||||||||
Net loss | $ | ( | $ | ( | ||||
Income allocated to participating securities | ( | ( | ||||||
Loss attributable to non-controlling interest | ||||||||
Adjustment to loss attributable to non-controlling interest for legally outstanding restricted units | ( | ( | ||||||
Net loss applicable to common stockholders - basic | $ | ( | $ | ( | ||||
Basic earnings per common share - net loss | $ | ( | $ | ( | ||||
Diluted earnings per common share - net loss | $ | ( | $ | ( |
THREE MONTHS ENDED MARCH 31, | |||||
Volatility | % | ||||
Dividend assumption | Accrued | ||||
Expected term | |||||
Risk-free rate | % | ||||
Stock price (per share) | $ |
THREE MONTHS ENDED MARCH 31, | |||||
Volatility | % | ||||
Dividend assumption | Accrued | ||||
Expected term | |||||
Risk-free rate | % | ||||
Stock price (per share) | $ |
THREE MONTHS ENDED MARCH 31, | ||||||||
2024 | 2023 | |||||||
Share-based awards, beginning of period | ||||||||
Granted 1 | ||||||||
Vested | ( | ( | ||||||
Forfeited | ( | ( | ||||||
Share-based awards, end of period |
Dollars in millions | FUTURE AMORTIZATION of non-vested shares | ||||
2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 and thereafter | |||||
Total | $ |
March 31, 2024 | December 31, 2023 | ||||||||||||||||
Dollars in millions | CARRYING VALUE | FAIR VALUE | CARRYING VALUE | FAIR VALUE | |||||||||||||
Notes and bonds payable 1 | $ | $ | $ | $ | |||||||||||||
Real estate notes receivable 1 | $ | $ | $ | $ | |||||||||||||
EXPIRATION DATE | AMOUNT | WEIGHTED AVERAGE RATE | ||||||
May 2026 | $ | 275,000 | 3.74 | % | ||||
June 2026 | 150,000 | 3.83 | % | |||||
December 2026 | 150,000 | 3.84 | % | |||||
June 2027 | 200,000 | 4.27 | % | |||||
December 2027 | 300,000 | 3.93 | % | |||||
$ | 1,075,000 | 3.92 | % |
YEAR EXERCISABLE | NUMBER OF PROPERTIES | GROSS REAL ESTATE INVESTMENT AS OF MARCH 31, 2024 1 | ||||||
Current 2 | 6 | $ | 110,891 | |||||
2025 | 5 | 93,860 | ||||||
2026 | 6 | 181,744 | ||||||
2027 | 4 | 110,574 | ||||||
2028 | 5 | 134,893 | ||||||
2029 | 3 | 81,846 | ||||||
2030 | — | — | ||||||
2031 | 4 | 106,016 | ||||||
2032 | 2 | 23,415 | ||||||
2033 | — | — | ||||||
2034 and thereafter 3 | 9 | 319,710 | ||||||
Total | 44 | $ | 1,162,949 |
THREE MONTHS ENDED MARCH 31, | ||||||||
Amounts in thousands, except per share data | 2024 | 2023 | ||||||
Net loss attributable to common stockholders | $ | (310,836) | $ | (87,125) | ||||
Net loss attributable to common stockholders per diluted share 1 | $ | (0.82) | $ | (0.23) | ||||
Gain on sales of real estate properties | (22) | (1,007) | ||||||
Impairment of real estate properties | 15,937 | 26,227 | ||||||
Real estate depreciation and amortization | 181,161 | 186,109 | ||||||
Non-controlling loss from operating partnership units | (4,278) | (1,067) | ||||||
Proportionate share of unconsolidated joint ventures | 4,568 | 4,841 | ||||||
FFO adjustments | $ | 197,366 | $ | 215,103 | ||||
FFO adjustments per common share - diluted | $ | 0.51 | $ | 0.56 | ||||
FFO attributable to common stockholders | $ | (113,470) | $ | 127,978 | ||||
FFO attributable to common stockholders per common share - diluted 2 | $ | (0.30) | $ | 0.33 | ||||
Transaction costs | 395 | 287 | ||||||
Merger-related costs 3 | — | 4,855 | ||||||
Merger-related fair value of debt instruments | 10,105 | 10,864 | ||||||
Lease intangible amortization | 175 | 146 | ||||||
Allowance for credit losses 4 | — | 8,599 | ||||||
Impairment of goodwill | 250,530 | — | ||||||
Unconsolidated JV normalizing items 5 | 87 | 117 | ||||||
Normalized FFO adjustments | $ | 261,292 | $ | 24,868 | ||||
Normalized FFO adjustments per common share - diluted | $ | 0.68 | $ | 0.06 | ||||
Normalized FFO attributable to common stockholders | $ | 147,822 | $ | 152,846 | ||||
Normalized FFO attributable to common stockholders per common share - diluted | $ | 0.39 | $ | 0.40 | ||||
Non-real estate depreciation and amortization | 485 | 604 | ||||||
Non-cash interest amortization 6 | 1,277 | 682 | ||||||
Rent reserves, net | (151) | 1,371 | ||||||
Straight-line rent, net | (7,633) | (8,246) | ||||||
Share-based compensation | 3,562 | 3,745 | ||||||
Unconsolidated JV non-cash items 7 | (122) | (227) | ||||||
Normalized FFO adjusted for non-cash items | $ | 145,240 | $ | 150,775 | ||||
2nd generation TI | (20,204) | (8,882) | ||||||
Leasing commissions paid | (15,215) | (7,013) | ||||||
Capital additions | (5,363) | (8,946) | ||||||
FAD | $ | 104,458 | $ | 125,934 | ||||
FFO weighted average common shares outstanding - diluted 8 | 383,413 | 383,335 |
NUMBER OF PROPERTIES | GROSS INVESTMENT at March 31, 2024 | SAME STORE CASH NOI for the three months ended March 31, | ||||||||||||
Dollars in thousands | 2024 | 2023 | ||||||||||||
Same store properties | 624 | $ | 12,512,764 | $ | 191,222 | $ | 185,796 | |||||||
Joint venture same store properties | 33 | 352,845 | $ | 4,833 | $ | 4,563 | ||||||||
SAME STORE RECONCILIATION | ||||||||
THREE MONTHS ENDED MARCH 31, | ||||||||
Dollars in thousands | 2024 | 2023 | ||||||
Net loss | $ | (315,220) | $ | (88,078) | ||||
Other expense | 327,646 | 94,407 | ||||||
General and administrative expense | 14,787 | 14,935 | ||||||
Depreciation and amortization expense | 178,119 | 184,479 | ||||||
Other expenses 1 | 4,727 | 7,940 | ||||||
Straight-line rent, net | (7,633) | (8,245) | ||||||
Joint venture properties | 4,958 | 4,769 | ||||||
Other revenue 2 | (7,006) | (733) | ||||||
Cash NOI | 200,378 | 209,474 | ||||||
Cash NOI not included in same store | (4,323) | (19,115) | ||||||
Same store cash NOI | 196,055 | 190,359 | ||||||
Same store joint venture properties | (4,833) | (4,563) | ||||||
Same store cash NOI (excluding JVs) | $ | 191,222 | $ | 185,796 | ||||
AS OF MARCH 31, 2024 | ||||||||||||||
Dollars and square feet in thousands | PROPERTY COUNT | GROSS INVESTMENT 1 | SQUARE FEET | OCCUPANCY | ||||||||||
Same store properties | 624 | $ | 12,512,764 | 36,101 | 89.5 | % | ||||||||
Joint venture same store properties | 33 | 352,845 | 1,913 | 86.2 | % | |||||||||
Wholly owned and joint venture acquisitions | 3 | 50,838 | 195 | 97.8 | % | |||||||||
Development completions | 4 | 95,195 | 335 | 64.5 | % | |||||||||
Redevelopments | 18 | 440,632 | 1,503 | 51.7 | % | |||||||||
Planned Dispositions | 5 | 61,505 | 228 | 25.9 | % | |||||||||
Total | 687 | $ | 13,513,779 | 40,275 | 87.4 | % | ||||||||
Joint venture properties | 34 | 360,501 | 1,949 | 86.5 | % | |||||||||
Total owned real estate properties | 653 | $ | 13,153,278 | 38,326 | 87.5 | % |
THREE MONTHS ENDED MARCH 31, | CHANGE | |||||||||||||
Dollars in thousands | 2024 | 2023 | $ | % | ||||||||||
Contractual interest | $ | 49,458 | $ | 50,766 | $ | (1,308) | (2.6) | % | ||||||
Net discount/premium accretion | 10,067 | 9,591 | 476 | 5.0 | % | |||||||||
Debt issuance costs amortization | 1,207 | 1,476 | (269) | (18.2) | % | |||||||||
Amortization of interest rate swap settlement | 42 | 42 | — | — | % | |||||||||
Amortization of treasury hedge settlement | 107 | 107 | — | — | % | |||||||||
Fair value derivative | 177 | 1,429 | (1,252) | (87.6) | % | |||||||||
Interest cost capitalization | (942) | (570) | (372) | 65.3 | % | |||||||||
Interest on lease liabilities | 938 | 918 | 20 | 2.2 | % | |||||||||
Total interest expense | $ | 61,054 | $ | 63,759 | $ | (2,705) | (4.2) | % |
PERIOD | TOTAL NUMBER OF SHARES PURCHASED | AVERAGE PRICE PAID per share | TOTAL NUMBER OF SHARES purchased as part of publicly announced plans or programs | MAXIMUM NUMBER OF SHARES that may yet be purchased under the plans or programs | ||||||||||
January 1 - January 31 | — | $ | — | — | — | |||||||||
February 1 - February 29 | 8,228 | 16.31 | — | — | ||||||||||
March 1 - March 31 | — | — | — | — | ||||||||||
Total | 8,228 | $ | 16.31 |
EXHIBIT | DESCRIPTION | |||||||
Exhibit 3.1 | ||||||||
Exhibit 3.2 | ||||||||
Exhibit 3.4 | ||||||||
Exhibit 3.5 | ||||||||
Exhibit 4.1 |
Exhibit 101.INS | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. | |||||||
Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document (furnished electronically herewith) | |||||||
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document (furnished electronically herewith) | |||||||
Exhibit 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document (furnished electronically herewith) | |||||||
Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document (furnished electronically herewith) | |||||||
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document (furnished electronically herewith) |
HEALTHCARE REALTY TRUST INCORPORATED | ||||||||
By: | /s/ J. CHRISTOPHER DOUGLAS | |||||||
J. Christopher Douglas | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
May 7, 2024 |
Debt Instrument | Issuer | ||||
3.88% Senior Notes due 2025 | Healthcare Realty Holdings, L.P. | ||||
3.50% Senior Notes due 2026 | Healthcare Realty Holdings, L.P. | ||||
3.75% Senior Notes due 2027 | Healthcare Realty Holdings, L.P. | ||||
3.63% Senior Notes due 2028 | Healthcare Realty Holdings, L.P. | ||||
3.10% Senior Notes due 2030 | Healthcare Realty Holdings, L.P. | ||||
2.40% Senior Notes due 2030 | Healthcare Realty Holdings, L.P. | ||||
2.05% Senior Notes due 2031 | Healthcare Realty Holdings, L.P. | ||||
2.00% Senior Notes due 2031 | Healthcare Realty Holdings, L.P. |
Date: | May 7, 2024 | |||||||
/s/ TODD J. MEREDITH | ||||||||
Todd J. Meredith | ||||||||
President and Chief Executive Officer |
Date: | May 7, 2024 | |||||||
/s/ J. CHRISTOPHER DOUGLAS | ||||||||
J. Christopher Douglas | ||||||||
Executive Vice President and Chief Financial Officer |
Date: | May 7, 2024 | |||||||
/s/ TODD J. MEREDITH | ||||||||
Todd J. Meredith | ||||||||
President and Chief Executive Officer | ||||||||
/s/ J. CHRISTOPHER DOUGLAS | ||||||||
J. Christopher Douglas | ||||||||
Executive Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 381,502,000 | 380,964,000 |
Common stock, outstanding (in shares) | 381,502,000 | 380,964,000 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
|
Net loss | $ (315,220) | $ (88,078) |
Interest rate derivatives | ||
Reclassification adjustments for gains included in interest expense | (3,865) | (2,284) |
Gains (losses) arising during the period on interest rate swaps | 19,611 | (8,541) |
Other comprehensive income | 15,746 | (10,825) |
Comprehensive loss | (299,474) | (98,903) |
Less: comprehensive loss attributable to non-controlling interests | 4,170 | 1,084 |
Comprehensive loss attributable to common stockholders | (295,304) | (97,819) |
Interest Rate Swaps | ||
Interest rate derivatives | ||
Gains (losses) arising during the period on interest rate swaps | $ 19,611 | $ (8,541) |
Condensed Consolidated Statements of Equity and Redeemable Non-Controlling Interests (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends to common stockholders and distributions to non-controlling interest holders (in dollars per share) | $ 0.31 | $ 0.31 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Business Overview Healthcare Realty Trust Incorporated ("Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, 2024, the Company had gross investments of approximately $13.4 billion in 654 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property, excluding held for sale assets. The Company's real estate properties are located in 35 states and total approximately 38.4 million square feet. The Company provided leasing and property management services to 92% of its portfolio nationwide as of March 31, 2024. On July 20, 2022, pursuant to that certain Agreement and Plan of Merger dated as of February 28, 2022, by and among Healthcare Realty Trust Incorporated, a Maryland corporation (now known as HRTI, LLC, a Maryland limited liability company) (“Legacy HR”), Healthcare Trust of America, Inc., a Maryland corporation (now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), Healthcare Trust of America Holdings, LP, a Delaware limited partnership (now known as Healthcare Realty Holdings, L.P.) (the “OP”), and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”). The combined company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $0.01 par value per share, trade on the New York Stock Exchange under the ticker symbol “HR”. The Company is structured as an umbrella partnership REIT under which substantially all of its business is conducted through the OP, the day-to-day management of which is exclusively controlled by the Company. As of March 31, 2024, the Company owned 98.6% of the issued and outstanding units of the OP, with other investors owning the remaining 1.4% of outstanding units. In addition, as of March 31, 2024, the Company had a weighted average ownership interest of approximately 43% in 33 real estate properties held in unconsolidated joint ventures. See Note 2 below for more details regarding the Company's unconsolidated joint ventures. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the Company's Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm’s review. Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany transactions and balances have been eliminated in consolidation. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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, 2024 for many reasons including, but not limited to, acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and uncertainties. Principles of Consolidation The Company’s Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification (“ASC”) Topic 810, Consolidation broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Condensed Consolidated Financial Statements. The Company may change its original assessment of a VIE upon subsequent events, such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, the disposition of all or a portion of an interest held by the primary beneficiary, or changes in facts and circumstances that impact the power to direct activities of the VIE that most significantly impacts economic performance. The Company performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For 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. The OP is 98.6% owned by the Company. Holders of operating partnership units (“OP Units”) are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity on the accompanying Condensed Consolidated Balance Sheets. Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of March 31, 2024, there were approximately 5.2 million OP Units, or 1.4% of OP Units issued and outstanding, held by non-controlling interest holders. Additionally, the Company is the primary beneficiary of this VIE. Accordingly, the Company consolidates its interests in the OP. As of March 31, 2024, the Company had four consolidated VIEs, in addition to the OP, consisting of joint venture investments in which the Company is the primary beneficiary of the VIE based on the combination of operational control and the rights to receive residual returns or the obligation to absorb losses arising from the joint ventures. Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate:
As of March 31, 2024, the Company had three unconsolidated VIEs consisting of two notes receivables and one joint venture. The Company does not have the power or economic interests to direct the activities of the VIEs on a stand-alone basis, and therefore it was determined that the Company was not the primary beneficiary. As a result, the Company accounts for the two notes receivables as amortized cost and a joint venture arrangement under the equity method. See below for additional information regarding the Company's unconsolidated VIEs.
1Assumed mortgage note receivable in connection with the Merger. 2Includes investments in seven properties. As of March 31, 2024, 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 below for more details regarding the Company's unconsolidated joint ventures. Use of Estimates in the Condensed Consolidated Financial Statements Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. Redeemable Non-Controlling Interests The Company accounts for redeemable equity securities in accordance with ASC Topic 480: Accounting for Redeemable Equity Instruments, which requires that equity securities redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity. The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheets. Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value. We measure the redemption value and record an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest. As of March 31, 2024, the Company had redeemable non-controlling interests of $3.9 million. Asset Impairment The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever the occurrence of an event or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its tenants. During the three months ended March 31, 2024, the Company recognized real estate impairments totaling $15.9 million as a result of planned disposition activity. As of March 31, 2024, three properties totaling $2.9 million were measured at fair value using level 3 fair value hierarchy. The level 3 fair value techniques included brokerage estimates and unexecuted purchase and sale agreements, less estimated closing costs. Goodwill Impairment During the first quarter of 2024, the Company experienced a sustained decline in the price per share of its common stock, which was identified as an indicator of goodwill impairment. As a result, a goodwill evaluation was performed. The Company's current operations are carried out through a single reporting unit with a carrying value of approximately $12.0 billion. The Company determined that the carrying value exceeded estimated fair value and therefore an impairment of goodwill was recorded. The Company recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the Condensed Consolidated Statements of Operations. Investments in Leases - Financing Receivables, Net In accordance with ASC Topic 842: Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC Topic 310: Receivables. See below for additional information regarding the Company's financing receivables.
Real Estate Notes Receivable Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, a mortgage or deed of trust, and/or corporate guarantees. Real estate notes receivable are intended to be held-to-maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses. As of March 31, 2024, real estate notes receivable, net, which are included in Other assets on the Company's Condensed Consolidated Balance Sheets, totaled $174.4 million.
Allowance for Credit Losses Pursuant to ASC Topic 326, Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under ASC Topic 326. The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors. The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. The Company evaluates the collectability of loan receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans identified as having deteriorated credit quality, the amount of credit loss is determined on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual status are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, the loan may return to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. During the first quarter of 2023, the Company determined that the risk of credit loss on a few of its mezzanine loans were no longer remote and recorded a credit loss reserve of $5.2 million. During the three months ended March 31, 2024, the Company determined that no additional credit loss reserve was needed for its real estate notes receivable. The following table summarizes the Company's allowance for credit losses on real estate notes receivable:
Interest Income Income from Lease Financing Receivables The Company recognized the related income from two financing receivables totaling $2.1 million for each of the three months ended March 31, 2024 and 2023, based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable in any particular period will not equal the cash payments from the lease agreement in that period. Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to Interest income over the life of the lease. Income from Real Estate Notes Receivable During the three months ended March 31, 2024 and 2023, the Company recognized interest income of $2.4 million and $2.1 million, respectively, related to real estate notes receivable. The Company recognizes interest income on an accrual basis unless the Company has determined that collectability of contractual amounts is not reasonably assured, at which point the note is placed on non-accrual status and interest income is recognized on a cash basis. In 2023, the Company placed two of its real estate notes receivable with principal balances, net of credit loss, of $48.9 million on non-accrual status and accordingly did not recognize any interest income for the three months ended March 31, 2024. Revenue from Contracts with Customers (ASC Topic 606) The Company recognizes certain revenue under the core principle of ASC Topic 606. This topic requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of ASC Topic 606. To achieve the core principle, the Company applies the five-step model specified in the guidance. Revenue that is accounted for under ASC Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Operations in the Other operating line item. This line item includes parking income, management fee income and other miscellaneous income. Below is a detail of the amounts by category:
1 Includes the recovery of certain expenses under the financing receivable as outlined in the management agreement. The Company’s major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time, and the Company recognizes revenue monthly based on this principle. New Accounting Pronouncements On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280). Some of the main provisions of this update to segment reporting include; (i) a requirement to disclose significant segment expenses, on an annual and interim basis, that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; (ii) a requirement to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (iii) a requirement that an entity that has a single reportable segment provide all the disclosures required by the amendments in this update. The update is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. At this time, the Company does not expect that the adoption of this ASU will have a material impact on its consolidated financial statements and compliance of these new disclosure requirements will begin with the Company's Annual Report on Form 10-K for the year ending December 31, 2024.
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Real Estate Investments |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments | Real Estate Investments 2024 Acquisition Activity The Company had no real estate acquisition activity for the three months ended March 31, 2024. Unconsolidated Joint Ventures The Company's investment in and loss recognized for the three months ended March 31, 2024 and 2023 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:
1In 2023, this was an additional investment in an existing joint venture in which the Company retained a 40% ownership interest. The investment consisted of the Company's sale of a property in Dallas, Texas to the joint venture. 2024 Real Estate Asset Dispositions The Company had no real estate dispositions for the three months ended March 31, 2024. Subsequent to March 31, 2024, the Company disposed of two medical outpatient buildings totaling 39,000 square feet for an aggregate of $5.8 million. The two properties were classified as held for sale as of March 31, 2024. Assets Held for Sale The table below reflects the assets and liabilities classified as held for sale as of March 31, 2024 and December 31, 2023:
1 Net real estate assets held for sale includes the impact of $1.5 million of impairment charges for the three months ended March 31, 2024.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Lessor Accounting The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. Some leases provide tenants with fixed rent renewal terms while others have market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. The Company's leases typically have escalators that are either based on a stated percentage or an index such as the consumer price index ("CPI"). In addition, most of the Company's leases include nonlease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and 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 months ended March 31, 2024 was $318.1 million. Lease income for the Company's operating leases recognized for the three months ended March 31, 2023 was $324.1 million. Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sale-type lease, as of March 31, 2024 were as follows:
Lessee Accounting As of March 31, 2024, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2024, the Company had 231 properties totaling 16.9 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 75 prepaid ground leases as of March 31, 2024. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.3 million of the Company’s rental expense for the three months ended March 31, 2024 and March 31, 2023. The Company’s future lease payments (primarily for its 156 non-prepaid ground leases) as of March 31, 2024 were as follows:
The following table provides details of the Company's total lease expense for the three months ended March 31, 2024 and 2023:
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Leases | Leases Lessor Accounting The Company’s properties generally are leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2052. Some leases provide tenants with fixed rent renewal terms while others have market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. The Company's leases typically have escalators that are either based on a stated percentage or an index such as the consumer price index ("CPI"). In addition, most of the Company's leases include nonlease components, such as reimbursement of operating expenses as additional rent, or include the reimbursement of expected operating expenses as part of the lease payment. The Company adopted an accounting policy to combine lease and 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 months ended March 31, 2024 was $318.1 million. Lease income for the Company's operating leases recognized for the three months ended March 31, 2023 was $324.1 million. Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sale-type lease, as of March 31, 2024 were as follows:
Lessee Accounting As of March 31, 2024, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2024, the Company had 231 properties totaling 16.9 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 75 prepaid ground leases as of March 31, 2024. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.3 million of the Company’s rental expense for the three months ended March 31, 2024 and March 31, 2023. The Company’s future lease payments (primarily for its 156 non-prepaid ground leases) as of March 31, 2024 were as follows:
The following table provides details of the Company's total lease expense for the three months ended March 31, 2024 and 2023:
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Notes and Bonds Payable |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes and Bonds Payable | Notes and Bonds Payable The table below details the Company’s notes and bonds payable as of March 31, 2024 and December 31, 2023.
1Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable. 2In April 2024, the Company exercised its option to extend the maturity date for one year to May 2025 for a fee of approximately $0.3 million. Changes in Mortgage Notes Payable On January 6, 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.77% per annum with an outstanding principal balance of $11.3 million. The mortgage note encumbered a 63,012 square foot property in California. On February 1, 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.12% per annum with an outstanding principal balance of $5.6 million. The mortgage note encumbered a 40,324 square foot property in Georgia.
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Derivative Financial Instruments |
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Derivative Financial Instruments | Derivative Financial Instruments Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. For derivatives designated, and that qualify, as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income (Loss) ("AOCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2024, the Company had 15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of March 31, 2024.
Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) The table below presents the effect of cash flow hedge accounting on AOCI during the three months ended March 31, 2024 and 2023 related to the Company's outstanding interest rate swaps.
The Company estimates that an additional $10.5 million related to active interest rate swaps will be reclassified from AOCI as a decrease to interest expense over the next 12 months, and that an additional $0.6 million related to settled interest rate swaps will be amortized from AOCI as an increase to interest expense over the next 12 months. Credit-risk-related Contingent Features The Company's agreements with each of its derivative counterparties contain a cross-default provision under which the Company could be declared in default of its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. As of March 31, 2024, the fair value of derivatives in a net asset position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $7.6 million. As of March 31, 2024, the Company had not posted any collateral related to these agreements and was not in breach of any agreement.
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Commitments and Contingencies |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings The Company is, from time to time, involved in litigation arising in the ordinary course of business. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Development and Redevelopment Activity For the three months ended March 31, 2024, the Company invested $7.7 million and $2.8 million toward active development and redevelopment of properties, respectively, and $11.1 million toward recently completed development and redevelopment projects.
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Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Common Stock The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the three months ended March 31, 2024 and the twelve months ended December 31, 2023:
Common Stock Dividends During the three months ended March 31, 2024, the Company declared and paid common stock dividends totaling $0.31 per share. On April 30, 2024, the Company declared a quarterly common stock dividend in the amount of $0.31 per share payable on May 23, 2024 to stockholders of record on May 13, 2024. Authorization to Repurchase Common Stock On May 31, 2023, the Company’s Board of Directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company’s common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints, and other customary conditions. The Company is not obligated under this authorization to repurchase any specific number of shares. This authorization supersedes all previous stock repurchase authorizations. In April 2024, the Company repurchased 2,966,764 shares of its common stock at a weighted average price of $14.07 for a total of $41.7 million under this authorization. On April 30, 2024, the Company's Board of directors authorized the repurchase of up to $500.0 million of outstanding shares of the Company's common stock, superseding the previous stock repurchase authorization. Earnings Per Common Share The Company uses the two-class method of computing net earnings per common shares. The Company's non-vested share-based awards are considered participating securities pursuant to the two-class method. The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2024 and 2023.
The effect of OP Units redeemable for 3,681,225 shares and options under the Company's Employee Stock Purchase Plan (the "ESPP") to purchase 23,140 shares of the Company's common stock for the three months ended March 31, 2024 were excluded from the calculation of diluted loss per common share because the effect was anti-dilutive due to the loss from continuing operations incurred during that period. Stock Incentive Plan The Company's stock incentive plan ("Incentive Plan") permits the grant of incentive awards to its employees and directors in any of the following forms: options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents, or other stock-based awards, including units in the OP. Equity Incentive Plans During the three months ended March 31, 2024, the Company made the following equity awards: •Restricted Stock During the first quarter of 2024, the Company granted non-vested stock awards to its named executive officers and other members of senior management and employees with an aggregate grant date fair value of $5.6 million, which consisted of an aggregate of 361,712 non-vested shares with vesting periods ranging from to eight years. •Restricted Stock Units ("RSUs") On February 13, 2024, the Company granted an aggregate of 208,055 RSUs to members of senior management, with an aggregate grant date fair value of $3.5 million and a five-year vesting period. Approximately 36% of the RSUs vest based on relative total shareholder return ("TSR") and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $19.10 for the relative TSR component for the February 2024 grant using the following assumptions:
The remaining 64% of the RSUs vest based upon certain operating performance conditions. With respect to the operating performance conditions of the February 13, 2024 grant, the grant date fair value was $15.22 based on the Company's share price on the date of grant. •LTIP Series C Units On February 13, 2024, the Company granted an aggregate of 906,044 LTIP Series C units ("LTIP-C units) in the OP with three-year forward-looking performance targets, a five-year vesting period and an aggregate grant date fair value of $7.5 million. Approximately 36% of the LTIP-C units vest based on relative TSR and were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair value of $9.62 for the relative TSR component for the February 2024 grant using the following assumptions:
The remaining 64% of the LTIP-C units vest based upon certain operating performance conditions. With respect to the operating performance conditions of the February 13, 2024 grant, the grant date fair value was $15.22 based on the Company's share price on the date of grant. The Company records amortization expense based on the probability of achieving certain operating performance conditions, which is evaluated throughout the performance period. The following table represents the summary of non-vested share-based awards under the Incentive Plans for the three months ended March 31, 2024 and 2023:
1.LTIP-C units are issued at the maximum possible value of the award and are reflected as such in this table until the performance period has been satisfied and the exact number of awards are determinable. During the three months ended March 31, 2024 and 2023, the Company withheld 8,228 and 38,632 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested. The following table represents expected amortization of the Company's non-vested shares issued as of March 31, 2024:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practical to estimate that value. •Cash and cash equivalents - The carrying amount approximates fair value (level 1 inputs) due to the short-term maturity of these investments. •Real estate notes receivable - Real estate notes receivable are recorded in other assets on the Company's Condensed Consolidated Balance Sheets. Fair value is estimated using cash flow analyses, based on current interest rates for similar types of arrangements. •Borrowings under the Unsecured Credit Facility and the Term Loans Due 2024 and 2026 - The carrying amount approximates fair value because the borrowings are based on variable market interest rates. •Senior Notes and Mortgage Notes payable - The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements. •Interest rate swap agreements - Interest rate swap agreements are recorded in other liabilities on the Company's Condensed Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models, level 2 inputs, which consider forward yield curves and discount rates. See Note 5 for additional information. The table below details the fair values and carrying values for notes and bonds payable and real estate notes receivable at March 31, 2024 and December 31, 2023.
1Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||
Net income (loss) | $ (310,836) | $ (87,125) |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Business Overview | Business Overview Healthcare Realty Trust Incorporated ("Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, 2024, the Company had gross investments of approximately $13.4 billion in 654 consolidated real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property, excluding held for sale assets. The Company's real estate properties are located in 35 states and total approximately 38.4 million square feet. The Company provided leasing and property management services to 92% of its portfolio nationwide as of March 31, 2024. On July 20, 2022, pursuant to that certain Agreement and Plan of Merger dated as of February 28, 2022, by and among Healthcare Realty Trust Incorporated, a Maryland corporation (now known as HRTI, LLC, a Maryland limited liability company) (“Legacy HR”), Healthcare Trust of America, Inc., a Maryland corporation (now known as Healthcare Realty Trust Incorporated) (“Legacy HTA”), Healthcare Trust of America Holdings, LP, a Delaware limited partnership (now known as Healthcare Realty Holdings, L.P.) (the “OP”), and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), Merger Sub merged with and into Legacy HR, with Legacy HR continuing as the surviving entity and a wholly-owned subsidiary of Legacy HTA (the “Merger”). The combined company operates under the name “Healthcare Realty Trust Incorporated” and its shares of class A common stock, $0.01 par value per share, trade on the New York Stock Exchange under the ticker symbol “HR”. The Company is structured as an umbrella partnership REIT under which substantially all of its business is conducted through the OP, the day-to-day management of which is exclusively controlled by the Company. As of March 31, 2024, the Company owned 98.6% of the issued and outstanding units of the OP, with other investors owning the remaining 1.4% of outstanding units. In addition, as of March 31, 2024, the Company had a weighted average ownership interest of approximately 43% in 33 real estate properties held in unconsolidated joint ventures. See Note 2 below for more details regarding the Company's unconsolidated joint ventures. Any references to square footage or occupancy percentage, and any amounts derived from these values in these notes to the Company's Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm’s review.
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Basis of Presentation | Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. All material intercompany transactions and balances have been eliminated in consolidation. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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, 2024 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.
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Principles of Consolidation | Principles of Consolidation The Company’s Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification (“ASC”) Topic 810, Consolidation broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary, with any minority interests reflected as non-controlling interests or redeemable non-controlling interests in the accompanying Condensed Consolidated Financial Statements. The Company may change its original assessment of a VIE upon subsequent events, such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk, the disposition of all or a portion of an interest held by the primary beneficiary, or changes in facts and circumstances that impact the power to direct activities of the VIE that most significantly impacts economic performance. The Company performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For 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. The OP is 98.6% owned by the Company. Holders of operating partnership units (“OP Units”) are considered to be non-controlling interest holders in the OP and their ownership interests are reflected as equity on the accompanying Condensed Consolidated Balance Sheets. Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to common stock, any difference between the fair value of the common stock issued and the carrying value of the OP Units converted to common stock is recorded as a component of equity. As of March 31, 2024, there were approximately 5.2 million OP Units, or 1.4% of OP Units issued and outstanding, held by non-controlling interest holders. Additionally, the Company is the primary beneficiary of this VIE. Accordingly, the Company consolidates its interests in the OP.
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Variable Interest Entities | As of March 31, 2024, 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. |
Use of Estimates in the Condensed Consolidated Financial Statements | 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.
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Redeemable Non-Controlling Interests | Redeemable Non-Controlling Interests The Company accounts for redeemable equity securities in accordance with ASC Topic 480: Accounting for Redeemable Equity Instruments, which requires that equity securities redeemable at the option of the holder, not solely within our control, be classified outside permanent stockholders’ equity. The Company classifies redeemable equity securities as redeemable non-controlling interests in the accompanying Condensed Consolidated Balance Sheets. Accordingly, the Company records the carrying amount at the greater of the initial carrying amount (increased or decreased for the non-controlling interest’s share of net income or loss and distributions) or the redemption value. We measure the redemption value and record an adjustment to the carrying value of the equity securities as a component of redeemable non-controlling interest.
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Asset Impairment | Asset Impairment The Company assesses the potential for impairment of identifiable, definite-lived, intangible assets and long-lived assets, including real estate properties, whenever the occurrence of an event or a change in circumstances indicates that the carrying value might not be fully recoverable. Indicators of impairment may include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; the expiration of a significant portion of leases in a property; or significant negative economic trends or negative industry trends for the Company or its tenants.
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Goodwill Impairment | Goodwill Impairment During the first quarter of 2024, the Company experienced a sustained decline in the price per share of its common stock, which was identified as an indicator of goodwill impairment. As a result, a goodwill evaluation was performed. The Company's current operations are carried out through a single reporting unit with a carrying value of approximately $12.0 billion. The Company determined that the carrying value exceeded estimated fair value and therefore an impairment of goodwill was recorded. The Company recorded a $250.5 million full impairment of its goodwill, which is recorded as a non-cash charge in “Impairment of goodwill” in the Condensed Consolidated Statements of Operations.
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Investments in Leases - Financing Receivables, Net and Real Estate Notes Receivable and Interest Income | Investments in Leases - Financing Receivables, Net In accordance with ASC Topic 842: Leases, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC Topic 310: Receivables.Real Estate Notes Receivable Real estate notes receivable consists of mezzanine and other real estate loans, which are generally collateralized by a pledge of the borrower’s ownership interest in the respective real estate owner, a mortgage or deed of trust, and/or corporate guarantees. Real estate notes receivable are intended to be held-to-maturity and are recorded at amortized cost, net of unamortized loan origination costs and fees and allowance for credit losses.Allowance for Credit Losses Pursuant to ASC Topic 326, Financial Instruments - Credit Losses, the Company adopted a policy to evaluate current expected credit losses at the inception of loans qualifying for treatment under ASC Topic 326. The Company utilizes a probability of default method approach for estimating current expected credit losses and evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers industry and economic conditions, credit enhancements, liquidity, and other factors. The determination of the credit allowance is based on a quarterly evaluation of all outstanding loans, including general economic conditions and estimated collectability of loan payments. The Company evaluates the collectability of loan receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, financial strength of the borrower and guarantors, and nature, extent, and value of the underlying collateral. A loan is considered to have deteriorated credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement. For those loans identified as having deteriorated credit quality, the amount of credit loss is determined on an individual basis. Placement on non-accrual status may be required. Consistent with this definition, all loans on non-accrual status are deemed to have deteriorated credit quality. To the extent circumstances improve and the risk of collectability is diminished, the loan may return to income accrual status. While a loan is on non-accrual status, any cash receipts are applied against the outstanding principal balance. Interest Income Income from Lease Financing Receivables The Company recognized the related income from two financing receivables totaling $2.1 million for each of the three months ended March 31, 2024 and 2023, based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable in any particular period will not equal the cash payments from the lease agreement in that period. Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to Interest income over the life of the lease.
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Revenue from Contracts with Customers (ASC Topic 606) | Revenue from Contracts with Customers (ASC Topic 606) The Company recognizes certain revenue under the core principle of ASC Topic 606. This topic requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of ASC Topic 606. To achieve the core principle, the Company applies the five-step model specified in the guidance. Revenue that is accounted for under ASC Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Operations in the Other operating line item. This line item includes parking income, management fee income and other miscellaneous income.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.
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New Accounting Pronouncements | New Accounting Pronouncements On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280). Some of the main provisions of this update to segment reporting include; (i) a requirement to disclose significant segment expenses, on an annual and interim basis, that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; (ii) a requirement to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (iii) a requirement that an entity that has a single reportable segment provide all the disclosures required by the amendments in this update. The update is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. At this time, the Company does not expect that the adoption of this ASU will have a material impact on its consolidated financial statements and compliance of these new disclosure requirements will begin with the Company's Annual Report on Form 10-K for the year ending December 31, 2024.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Balance Sheet | Accordingly, such joint ventures have been consolidated, and the table below summarizes the balance sheets of consolidated VIEs, excluding the OP, in the aggregate:
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Schedule of Variable Interest Entities | As a result, the Company accounts for the two notes receivables as amortized cost and a joint venture arrangement under the equity method. See below for additional information regarding the Company's unconsolidated VIEs.
1Assumed mortgage note receivable in connection with the Merger. 2Includes investments in seven properties.
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Schedule of Accounts, Notes, Loans and Financing Receivable | See below for additional information regarding the Company's financing receivables.
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Schedule of Company's Allowance For Credit Losses | The following table summarizes the Company's allowance for credit losses on real estate notes receivable:
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Schedule of Disaggregation of revenue | Below is a detail of the amounts by category:
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Real Estate Investments (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments | The Company's investment in and loss recognized for the three months ended March 31, 2024 and 2023 related to its unconsolidated joint ventures accounted for under the equity method are shown in the table below:
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Schedule of Assets and Liabilities Held for Sale | The table below reflects the assets and liabilities classified as held for sale as of March 31, 2024 and December 31, 2023:
1 Net real estate assets held for sale includes the impact of $1.5 million of impairment charges for the three months ended March 31, 2024.
|
Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Operating Lease Payments Receivable | Future lease payments under the non-cancelable operating leases, excluding any reimbursements and one sale-type lease, as of March 31, 2024 were as follows:
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Schedule of Future Minimum Operating Lease Payments | The Company’s future lease payments (primarily for its 156 non-prepaid ground leases) as of March 31, 2024 were as follows:
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Schedule of Future Minimum Financing Lease Payments | The Company’s future lease payments (primarily for its 156 non-prepaid ground leases) as of March 31, 2024 were as follows:
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Schedule of Lease Cost | The following table provides details of the Company's total lease expense for the three months ended March 31, 2024 and 2023:
|
Notes and Bonds Payable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The table below details the Company’s notes and bonds payable as of March 31, 2024 and December 31, 2023.
1Balance is presented net of discounts and issuance costs and inclusive of premiums, where applicable. 2In April 2024, the Company exercised its option to extend the maturity date for one year to May 2025 for a fee of approximately $0.3 million.
|
Derivative Financial Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | As of March 31, 2024, the Company had 15 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
The table below presents the effect of cash flow hedge accounting on AOCI during the three months ended March 31, 2024 and 2023 related to the Company's outstanding interest rate swaps.
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Condensed Consolidated Balance Sheet as of March 31, 2024.
|
Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Common Stock Outstanding | The following table provides a reconciliation of the beginning and ending shares of common stock outstanding for the three months ended March 31, 2024 and the twelve months ended December 31, 2023:
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Schedule of Earnings (Loss) per Share | The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2024 and 2023.
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Schedule of Stock Options, Valuation Assumptions |
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Summary of the Activity Under the Incentive Plan and RSU Activity | The following table represents the summary of non-vested share-based awards under the Incentive Plans for the three months ended March 31, 2024 and 2023:
1.LTIP-C units are issued at the maximum possible value of the award and are reflected as such in this table until the performance period has been satisfied and the exact number of awards are determinable.
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Schedule of Unrecognized Compensation Cost, Nonvested Awards | The following table represents expected amortization of the Company's non-vested shares issued as of March 31, 2024:
|
Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value And Carrying Values For Notes And Bonds Payable, Real Estate Notes Receivable, And Notes Receivable | The table below details the fair values and carrying values for notes and bonds payable and real estate notes receivable at March 31, 2024 and December 31, 2023.
1Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
|
Summary of Significant Accounting Policies - Consolidated balance sheets (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Assets: | ||
Net real estate investments | $ 11,035,034 | $ 11,172,214 |
Cash and cash equivalents | 26,172 | 25,699 |
Total assets | 12,280,924 | 12,637,131 |
Liabilities: | ||
Total equity | 6,415,895 | 6,822,662 |
Total liabilities and equity | 12,280,924 | $ 12,637,131 |
Variable interest entity | ||
Assets: | ||
Net real estate investments | 92,028 | |
Cash and cash equivalents | 2,548 | |
Receivables and other assets | 2,687 | |
Total assets | 97,263 | |
Liabilities: | ||
Accrued expenses and other liabilities | 5,681 | |
Total equity | 91,582 | |
Total liabilities and equity | $ 97,263 |
Summary of Significant Accounting Policies - Variable interest entity (Details) $ in Thousands |
Mar. 31, 2024
USD ($)
note_receivable
property
|
---|---|
Variable Interest Entity | |
Variable Interest Entity [Line Items] | |
Number of notes receivable | note_receivable | 2 |
Houston, TX | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Notes receivable, carrying amount | $ 31,150 |
MAXIMUM EXPOSURE TO LOSS | 31,150 |
North Carolina | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Notes receivable, carrying amount | 5,848 |
MAXIMUM EXPOSURE TO LOSS | 6,000 |
Texas | Variable Interest Entity, Not Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Joint venture, carrying amount | 60,476 |
MAXIMUM EXPOSURE TO LOSS | $ 60,476 |
Number of owned real estate properties | property | 7 |
Summary of Significant Accounting Policies - Schedule of Company's Allowance For Credit Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses, beginning of period | $ 5,196 | $ 0 | $ 0 |
Credit loss reserves | 0 | $ 5,200 | 5,196 |
Allowance for credit losses, end of period | $ 5,196 | $ 5,196 |
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | ||
Type of Revenue | $ 4,191 | $ 4,618 |
Parking income | ||
Disaggregation of Revenue [Line Items] | ||
Type of Revenue | 2,545 | 2,391 |
Management fee income/other | ||
Disaggregation of Revenue [Line Items] | ||
Type of Revenue | $ 1,646 | $ 2,227 |
Real Estate Investments - Narrative (Details) ft² in Thousands, $ in Millions |
1 Months Ended | |
---|---|---|
May 07, 2024
USD ($)
ft²
property
|
Mar. 31, 2024
property
|
|
Asset Acquisition [Line Items] | ||
Number of owned real estate properties | 2 | |
Subsequent event | ||
Asset Acquisition [Line Items] | ||
Number of property dispositions | 2 | |
Real Estate Dispositions | Subsequent event | ||
Asset Acquisition [Line Items] | ||
Area covered under real estate investment sold in measurement units | ft² | 39 | |
Proceeds from sale, real estate, held-for-investment | $ | $ 5.8 |
Real Estate Investments - Unconsolidated Joint Venture Acquisitions (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Equity Method Investments [Roll Forward] | ||
Investments in unconsolidated joint ventures, beginning of period | $ 311,511 | |
Equity loss recognized during the period | (422) | $ (780) |
Investments in unconsolidated joint ventures, end of period | 309,754 | |
Parking Garages | ||
Equity Method Investments [Roll Forward] | ||
Investments in unconsolidated joint ventures, beginning of period | 311,511 | 327,248 |
New investments during the period | 0 | 3,824 |
Equity loss recognized during the period | (422) | (780) |
Owner distributions | (1,335) | (2,546) |
Investments in unconsolidated joint ventures, end of period | $ 309,754 | $ 327,746 |
Parking Garages | Los Angeles, California [Member] | Limited Liability Company One | ||
Equity Method Investments [Roll Forward] | ||
Joint venture, ownership (in percentage) | 40.00% |
Leases - Lease Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Leases [Abstract] | ||
Rental income | $ 318,076 | $ 324,093 |
Leases - Lessor Accounting (Details) $ in Thousands |
Mar. 31, 2024
USD ($)
|
---|---|
OPERATING | |
2024 | $ 680,129 |
2025 | 831,775 |
2026 | 734,080 |
2027 | 611,277 |
2028 | 497,470 |
2029 and thereafter | 1,665,663 |
Total | $ 5,020,394 |
Leases - Ground Leases (Details) ft² in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024
USD ($)
ft²
lease
|
Mar. 31, 2023
USD ($)
|
|
Lessee, Lease, Description [Line Items] | ||
Square feet subject to ground leases | ft² | 16.9 | |
Number of prepaid ground leases | 75 | |
Amortization of prepaid rent | $ | $ 0.3 | $ 0.3 |
Number of non-prepaid ground leases | 156 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Ground lease, initial term | 40 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Ground lease, initial term | 99 years |
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
OPERATING | ||
2024 | $ 8,760 | |
2025 | 12,415 | |
2026 | 12,503 | |
2027 | 12,689 | |
2028 | 12,809 | |
2029 and thereafter | 698,464 | |
Total undiscounted lease payments | 757,640 | |
Discount | (528,417) | |
Lease liabilities | 229,223 | $ 229,714 |
FINANCING | ||
2024 | 1,523 | |
2025 | 2,218 | |
2026 | 2,255 | |
2027 | 2,294 | |
2028 | 2,326 | |
2029 and thereafter | 394,072 | |
Total undiscounted lease payments | 404,688 | |
Discount | (329,919) | |
Lease liabilities | $ 74,769 | $ 74,503 |
Leases - Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Operating lease cost | ||
Operating lease expense | $ 4,465 | $ 5,107 |
Variable lease expense | 1,228 | 2,136 |
Finance lease cost | ||
Amortization of right-of-use assets | 387 | 388 |
Interest on lease liabilities | 937 | 918 |
Total lease expense | 7,017 | 8,549 |
Other information | ||
Operating cash flows outflows related to operating leases | 4,040 | 5,960 |
Operating cash flows outflows related to financing leases | 563 | 553 |
Financing cash flows outflows related to financing leases | $ 110 | $ 101 |
Weighted-average years remaining lease term (excluding renewal options) - operating leases | 45 years 9 months 18 days | 47 years 4 months 24 days |
Weighted-average years remaining lease term (excluding renewal options) - finance leases | 57 years 8 months 12 days | 58 years 8 months 12 days |
Weighted-average discount rate - operating leases | 5.70% | 5.80% |
Weighted-average discount rate - finance leases | 5.00% | 5.00% |
Notes and Bonds Payable - Narrative (Details) - Mortgages $ in Millions |
Feb. 01, 2024
USD ($)
ft²
|
Jan. 06, 2024
USD ($)
ft²
|
---|---|---|
Debt Instrument [Line Items] | ||
Effective interest rate | 4.12% | 4.77% |
Outstanding principal repaid | $ | $ 5.6 | $ 11.3 |
California | ||
Debt Instrument [Line Items] | ||
Encumbered square footage | 63,012 | |
Georgia | ||
Debt Instrument [Line Items] | ||
Encumbered square footage | 40,324 |
Derivative Financial Instruments - Fair Value of Derivative Instruments on the Balance Sheet (Details) - Designated as hedging instrument - Interest Rate Swaps $ in Thousands |
Mar. 31, 2024
USD ($)
|
---|---|
Derivative [Line Items] | |
Liability derivatives | $ 7,630 |
Other liabilities | |
Derivative [Line Items] | |
Liability derivatives | (2,973) |
Other assets | |
Derivative [Line Items] | |
Liability derivatives | $ 10,603 |
Derivative Financial Instruments - Derivative Instruments Designated as Cash Flow Hedges (Details) $ in Millions |
Mar. 31, 2024
USD ($)
|
---|---|
Derivative [Line Items] | |
Derivatives in net asset position | $ 7.6 |
Active Interest Rate Swap | |
Derivative [Line Items] | |
Interest rate cash flow hedge gain (loss) to be reclassified to interest expense during the next 12 months | 10.5 |
Settled Interest Rate Swaps | |
Derivative [Line Items] | |
Interest rate cash flow hedge gain (loss) to be reclassified to interest expense during the next 12 months | $ (0.6) |
Commitment and Contingencies - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
| |
Active Development Properties | |
Other Commitments [Line Items] | |
Construction activity and development properties | $ 7.7 |
Redevelopment Properties | |
Other Commitments [Line Items] | |
Construction activity and development properties | 2.8 |
Completed Develpoment and Redevelopment Properties | |
Other Commitments [Line Items] | |
Construction activity and development properties | $ 11.1 |
Stockholders' Equity - Reconciliation of Beginning and Ending Common Stock Outstanding (Details) - shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Reconciliation of the beginning and ending common stock outstanding | ||
Balance, beginning of period (in shares) | 380,964,000 | |
Balance, end of period (in shares) | 381,502,000 | 380,964,000 |
Common Stock | ||
Reconciliation of the beginning and ending common stock outstanding | ||
Balance, beginning of period (in shares) | 380,964,433 | 380,589,894 |
Issuance of common stock (in shares) | 8,623 | 8,627 |
Stock issued during period, shares, conversion of units | 194,767 | 190,544 |
Non-vested share-based awards, net of withheld shares and forfeitures (in shares) | 333,679 | 175,368 |
Balance, end of period (in shares) | 381,501,502 | 380,964,433 |
Stockholders' Equity - Schedule of Stock Options, Valuation Assumptions (Details) - $ / shares |
1 Months Ended | |
---|---|---|
Jan. 04, 2023 |
Jan. 31, 2023 |
|
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Volatility | 28.00% | |
Expected term | 3 years | |
Risk-free rate | 4.44% | |
Stock price (in dollar per share) | $ 15.22 | |
Operating Partnership Performance Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Volatility | 28.00% | |
Expected term | 3 years | |
Risk-free rate | 4.44% | |
Stock price (in dollar per share) | $ 15.22 |
Stockholders' Equity - Summary of the Activity Under the Incentive Plan and RSU Activity (Details) - Stock incentive plan - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Summary of the activity under the incentive plans | ||
Share-based awards, beginning of period (in shares) | 2,615,562 | 2,090,060 |
Granted (in shares) | 1,475,811 | 1,075,261 |
Vested/Forfeited (in shares) | (28,414) | (113,766) |
Forfeited (in shares) | (19,805) | (26,063) |
Share-based awards, ending of period (in shares) | 4,043,154 | 3,025,492 |
Stockholders' Equity - Amortization of Compensation for Nonvested Shares (Details) $ in Millions |
Mar. 31, 2024
USD ($)
|
---|---|
Equity [Abstract] | |
2024 | $ 11.5 |
2025 | 13.3 |
2026 | 10.6 |
2027 | 5.7 |
2028 and thereafter | 2.8 |
Total | $ 43.9 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
CARRYING VALUE | ||
Derivative [Line Items] | ||
Notes and bonds payable | $ 5,108.3 | $ 4,994.9 |
Real estate notes receivable | 174.4 | 173.6 |
FAIR VALUE | ||
Derivative [Line Items] | ||
Notes and bonds payable | 4,931.9 | 4,872.7 |
Real estate notes receivable | $ 172.8 | $ 172.5 |
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