(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.) | ||||
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
| PART I - FINANCIAL INFORMATION | ||||||||
| PART II - OTHER INFORMATION | ||||||||
| SIGNATURE | ||||||||
| ASSETS | ||||||||
Unaudited MARCH 31, 2022 | DECEMBER 31, 2021 | |||||||
| Real estate properties | ||||||||
| Land | $ | $ | ||||||
| Buildings, improvements and 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 | ||||||||
| 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 | ||||||||
| Stockholders' equity | ||||||||
Preferred stock, $ | ||||||||
Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||
| Cumulative net income attributable to common stockholders | ||||||||
| Cumulative dividends | ( | ( | ||||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
| THREE MONTHS ENDED March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | ||||||||
| Rental income | $ | $ | ||||||
| Interest from financing receivable, net | — | |||||||
| Expenses | ||||||||
| Property operating | ||||||||
| General and administrative | ||||||||
| Acquisition and pursuit costs | ||||||||
| Merger-related costs | ||||||||
| Depreciation and amortization | ||||||||
| Other income (expense) | ||||||||
| Gain on sales of real estate properties | ||||||||
| Interest expense | ( | ( | ||||||
| Loss on extinguishment of debt | ( | |||||||
| Impairment of real estate properties | ( | |||||||
| Equity loss from unconsolidated joint ventures | ( | ( | ||||||
| Interest and other income (expense), net | ( | |||||||
| Net income | $ | $ | ||||||
| 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, | ||||||||
| 2022 | 2021 | |||||||
| Net income | $ | $ | ||||||
| Other comprehensive income | ||||||||
| Interest rate swaps | ||||||||
| Reclassification adjustments for losses included in net income (interest expense) | ||||||||
| Gains arising during the period on interest rate swaps | ||||||||
| Comprehensive income | $ | $ | ||||||
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Cumulative Net Income | Cumulative Dividends | Total Stockholders’ Equity | |||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | |||||||||||||||||
| Common stock redemptions | — | ( | — | — | — | ( | ||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
Reclassification adjustments for losses included in net income (interest expense) | — | — | — | — | ||||||||||||||||
| Gains arising during the period on interest rate swaps | — | — | — | — | ||||||||||||||||
Dividends to common stockholders ($ | — | — | — | — | ( | ( | ||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Cumulative Net Income | Cumulative Dividends | Total Stockholders’ Equity | |||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | |||||||||||||||||
| Common stock redemptions | ( | ( | — | — | — | ( | ||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Reclassification adjustments for losses included in net income (interest expense) | — | — | — | — | ||||||||||||||||
| Gains arising during the period on interest rate swaps | — | — | — | — | ||||||||||||||||
Dividends to common stockholders ($ | — | — | — | — | ( | ( | ||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||
| OPERATING ACTIVITIES | ||||||||
| THREE MONTHS ENDED March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income 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 | ( | ( | ||||||
| Loss on extinguishment of debt | ||||||||
| Impairment of real estate properties | ( | |||||||
| Equity loss from unconsolidated joint ventures | ||||||||
| Non-cash interest from financing 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 | ( | ( | ||||||
| Investments in unconsolidated joint ventures | ( | ( | ||||||
| Investment in financing receivable | ||||||||
| Proceeds from sales of real estate properties | ||||||||
| Net cash used in investing activities | ( | ( | ||||||
| FINANCING ACTIVITIES | ||||||||
| Net borrowings on unsecured credit facility | ||||||||
| Repayments of notes and bonds payable | ( | ( | ||||||
| Redemption of notes and bonds payable | ( | |||||||
| Dividends paid | ( | ( | ||||||
| Net proceeds from issuance of common stock | ||||||||
| Common stock redemptions | ( | ( | ||||||
| Debt issuance and assumption costs | — | ( | ||||||
| Payments made on finance leases | ( | ( | ||||||
| Net cash provided by 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 | $ | $ | ||||||
| Invoices accrued for construction, tenant improvements and other capitalized costs | $ | $ | ||||||
| Capitalized interest | $ | $ | ||||||
| THREE MONTHS ENDED March 31, | ||||||||
| in thousands | 2022 | 2021 | ||||||
| Type of Revenue | ||||||||
| Parking income | $ | $ | ||||||
Management fee income 1 | ||||||||
| Miscellaneous | ||||||||
| $ | $ | |||||||
| Dollars in thousands | DATE ACQUIRED | PURCHASE PRICE | CASH CONSIDERATION 1 | REAL ESTATE 2 | OTHER 3 | SQUARE FOOTAGE | ||||||||||||||
| Dallas, TX | 2/11/22 | $ | $ | $ | $ | ( | ||||||||||||||
San Francisco, CA 3 | 3/7/22 | |||||||||||||||||||
| Total real estate acquisitions | $ | $ | $ | $ | ||||||||||||||||
| Dollars in thousands | DATE ACQUIRED | PURCHASE PRICE | SQUARE FOOTAGE | ||||||||
| Atlanta, GA | 4/7/22 | $ | |||||||||
| Denver, CO | 4/13/22 | ||||||||||
Colorado Springs, CO 1 | 4/13/22 | ||||||||||
| Seattle, WA | 4/28/22 | ||||||||||
| Houston, TX | 4/28/22 | ||||||||||
| Los Angeles, CA | 4/29/22 | ||||||||||
| Oklahoma City, OK | 4/29/22 | ||||||||||
| Total real estate acquisitions | $ | ||||||||||
| Dollars in thousands | DATE ACQUIRED | PURCHASE PRICE | CASH CONSIDERATION 1 | REAL ESTATE | OTHER 2 | SQUARE FOOTAGE | COMPANY OWNERSHIP % | ||||||||||||||||
San Francisco, CA 3 | 3/7/22 | % | |||||||||||||||||||||
Los Angeles, CA 4 | 3/7/22 | ( | % | ||||||||||||||||||||
| Total real estate acquisitions | $ | $ | $ | $ | |||||||||||||||||||
| THREE MONTHS ENDED March 31, | ||||||||
| Dollars in thousands | 2022 | 2021 | ||||||
Investments in unconsolidated joint ventures, beginning of period 1 | $ | $ | ||||||
| New investments during the period | ||||||||
Equity loss recognized during the period 1 | ( | ( | ||||||
Investments in unconsolidated joint ventures, end of period 1 | $ | $ | ||||||
| Dollars in millions | DATE DISPOSED | SALE PRICE | CLOSING ADJUSTMENTS | NET PROCEEDS | NET REAL ESTATE INVESTMENT | OTHER (INCLUDING RECEIVABLES) 1 | GAIN/(IMPAIRMENT) | SQUARE FOOTAGE | ||||||||||||||||||
Loveland, CO 2 | 2/24/22 | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||
| Dollars in thousands | March 31, 2022 | December 31, 2021 | ||||||||||||
| Balance Sheet data: | ||||||||||||||
| Land | $ | $ | ||||||||||||
| Building, improvements and lease intangibles | ||||||||||||||
| Personal property | ||||||||||||||
| Accumulated depreciation | ( | |||||||||||||
| Real estate assets held for sale, net | ||||||||||||||
| Other assets, net | ||||||||||||||
| Assets held for sale, net | $ | $ | ||||||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||||||||
| Other liabilities | ||||||||||||||
| Liabilities of assets held for sale | $ | $ | ||||||||||||
| Dollars in thousands | OPERATING | |||||||
| 2022 | $ | |||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 and thereafter | ||||||||
| $ | ||||||||
| Dollars in thousands | OPERATING | FINANCING | ||||||
| 2022 | $ | $ | ||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 and thereafter | ||||||||
| Total undiscounted lease payments | ||||||||
| Discount | ( | ( | ||||||
| Lease liabilities | $ | $ | ||||||
| THREE MONTHS ENDED March 31, | ||||||||
| Dollars in thousands | 2022 | 2021 | ||||||
| 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 | $ | $ | ||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term (excluding renewal options) - operating leases | ||||||||
| Weighted-average remaining lease term (excluding renewal options) - finance leases | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
| Weighted-average discount rate - finance leases | % | % | ||||||
| MATURITY DATES | BALANCE AS OF | EFFECTIVE INTEREST RATE as of 3/31/2022 | ||||||||||||
| Dollars in thousands | 3/31/2022 | 12/31/2021 | ||||||||||||
$ | 5/23 | $ | $ | % | ||||||||||
$ | 5/24 | % | ||||||||||||
$ | 6/26 | % | ||||||||||||
Senior Notes due 2025, net of discount and issuance costs 3 | 5/25 | % | ||||||||||||
| Senior Notes due 2028, net of discount and issuance costs | 1/28 | % | ||||||||||||
Senior Notes due 2030, net of discount and issuance costs 4 | 3/30 | % | ||||||||||||
| Senior Notes due 2031, net of discount and issuance costs | 3/31 | % | ||||||||||||
| Mortgage notes payable, net of discounts and issuance costs and including premiums | 8/23-12/26 | % | ||||||||||||
| $ | $ | |||||||||||||
| DERIVATIVE INSTRUMENT | NUMBER OF INSTRUMENTS | NOTIONAL AMOUNT in millions | ||||||
| Interest rate swaps | $ | |||||||
| BALANCE AT MARCH 31, 2022 | ||||||||
| In thousands | BALANCE SHEET LOCATION | FAIR VALUE | ||||||
| Derivatives designated as hedging instruments | ||||||||
| Interest rate swaps 2017 and 2018 | Other liabilities | $ | ( | |||||
| Interest rate swaps 2019 | Other assets | |||||||
| Total derivatives designated as hedging instruments | $ | |||||||
| (GAIN) LOSS RECOGNIZED IN AOCI ON DERIVATIVE three months ended March 31, | LOSS RECLASSIFIED FROM AOCI INTO INCOME three months ended March 31, | ||||||||||||||||
| In thousands | 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Interest rate swaps | $ | ( | $ | ( | Interest expense | $ | $ | ||||||||||
| Settled treasury hedges | Interest expense | ||||||||||||||||
| Settled interest rate swaps | Interest expense | ||||||||||||||||
| $ | ( | $ | ( | Total interest expense | $ | $ | |||||||||||
| THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||
| MARCH 31, 2022 | DECEMBER 31, 2021 | |||||||
| Balance, beginning of period | ||||||||
| Issuance of common stock | ||||||||
| Non-vested share-based awards, net of withheld shares | ||||||||
| Balance, end of period | ||||||||
| WEIGHTED AVERAGE SALE PRICE per share | FORWARD SHARE CONTRACTS | SHARES SETTLED | SHARES REMAINING TO BE SETTLED | NET PROCEEDS in millions | |||||||||||||
Balance at December 31, 2021 | $ | $ | |||||||||||||||
1Q 2022 | $ | $ | |||||||||||||||
| THREE MONTHS ENDED MARCH 31, | ||||||||
| Dollars in thousands, except per share data | 2022 | 2021 | ||||||
| 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 employee stock purchase plan | ||||||||
| Weighted average common shares outstanding - diluted | ||||||||
| Net Income | $ | $ | ||||||
| Dividends paid on nonvested share-based awards | ( | ( | ||||||
| Net income applicable to common stockholders | $ | $ | ||||||
| Basic earnings per common share - net income | $ | $ | ||||||
| Diluted earnings per common share - net income | $ | $ | ||||||
| THREE MONTHS ENDED MARCH 31, | ||||||||
| 2022 | 2021 | |||||||
| Share-based awards, beginning of period | ||||||||
| Granted | ||||||||
| Vested | ( | ( | ||||||
| Forfeited | ( | |||||||
| Share-based awards, end of period | ||||||||
| THREE MONTHS ENDED MARCH 31, | |||||
| Volatility | % | ||||
| Dividend assumption | Accrued | ||||
| Expected term in years | |||||
| Risk-free rate | % | ||||
| Stock price (per share) | $ | ||||
| THREE MONTHS ENDED MARCH 31, | ||||||||
| Restricted Stock Units | Weighted Average Grant Date Fair Value | |||||||
| Non-vested as of December 31, 2021 | ||||||||
| Granted | $ | |||||||
| Vested | ||||||||
| Non-vested as of March 31, 2022 | ||||||||
| THREE MONTHS ENDED MARCH 31, | ||||||||
| 2022 | 2021 | |||||||
| Outstanding and exercisable, beginning of period | ||||||||
| Granted | ||||||||
| Exercised | ( | ( | ||||||
| Forfeited | ( | ( | ||||||
| Expired | ( | ( | ||||||
| Outstanding and exercisable, end of period | ||||||||
| March 31, 2022 | December 31, 2021 | |||||||||||||
| Dollars in millions | CARRYING VALUE | FAIR VALUE | CARRYING VALUE | FAIR VALUE | ||||||||||
Notes and bonds payable 1 | $ | $ | $ | $ | ||||||||||
| Dollars in thousands | ASSOCIATED HEALTH SYSTEM/TENANCY 1 | DATE ACQUIRED | PURCHASE PRICE | SQUARE FOOTAGE | MILES TO CAMPUS | ||||||||||||
| Dallas, TX | Texas Health Resources | 2/11/22 | $ | 8,175 | 18,000 | 0.19 | |||||||||||
San Francisco, CA 2 | Kaiser/Sutter Health | 3/7/22 | 114,000 | 166,396 | 0.90 to 3.30 | ||||||||||||
| Total real estate acquisitions | $ | 122,175 | 184,396 | ||||||||||||||
| Dollars in thousands | ASSOCIATED HEALTH SYSTEM/TENANCY 1 | DATE ACQUIRED | PURCHASE PRICE | SQUARE FOOTAGE | MILES TO CAMPUS | ||||||||||||
| Atlanta, GA | Wellstar Health | 4/7/22 | $ | 6,912 | 21,535 | 0.00 | |||||||||||
| Denver, CO | Centura Health | 4/13/22 | 6,320 | 12,207 | 2.40 | ||||||||||||
Colorado Springs, CO 2 | Centura Health | 4/13/22 | 13,680 | 25,800 | 0.80 to 1.70 | ||||||||||||
| Seattle, WA | UW Medicine | 4/28/22 | 8,350 | 13,256 | 0.05 | ||||||||||||
| Houston, TX | CommonSpirit | 4/28/22 | 36,250 | 76,781 | 1.70 | ||||||||||||
| Los Angeles, CA | Cedars-Sinai Health Systems | 4/29/22 | 35,000 | 34,282 | 0.11 | ||||||||||||
| Oklahoma City, OK | Mercy Health | 4/29/22 | 11,100 | 34,944 | 0.18 | ||||||||||||
| Total real estate acquisitions | $ | 117,612 | 218,805 | ||||||||||||||
| Dollars in thousands | ASSOCIATED HEALTH SYSTEM/TENANCY 1 | DATE ACQUIRED | PURCHASE PRICE | SQUARE FOOTAGE | MILES TO CAMPUS | COMPANY OWNERSHIP % | ||||||||||||||
San Francisco, CA 2 | MarinHealth/Kaiser | 3/7/22 | $ | 67,175 | 110,865 | 0.00 to 3.30 | 50 | % | ||||||||||||
Los Angeles, CA 3 | Valley Presbyterian Health | 3/7/22 | 33,800 | 103,259 | 1.30 | 50 | % | |||||||||||||
| Total TIAA Joint Venture acquisitions | $ | 100,975 | 214,124 | |||||||||||||||||
| Dollars in thousands | Date Disposed | Sales Price | Square Footage | |||||||||||
Loveland, CO 1 | 2/24/22 | $ | 84,950 | 150,291 | ||||||||||
| WEIGHTED AVERAGE SALE PRICE per share | FORWARD SHARE CONTRACTS | SHARES SETTLED | SHARES REMAINING TO BE SETTLED | NET PROCEEDS in millions | |||||||||||||
| Balance at December 31, 2021 | $ | — | — | — | 727,400 | $ | — | ||||||||||
1Q 2022 | $ | 31.73 | — | 727,400 | — | $ | 22.3 | ||||||||||
| EFFECTIVE DATE | AMOUNT | WEIGHTED AVERAGE RATE | EXPIRATION DATE | ||||||||
| December 18, 2017 | $ | 25,000 | 2.18 | % | December 16, 2022 | ||||||
| February 1, 2018 | 50,000 | 2.46 | % | December 16, 2022 | |||||||
| May 1, 2019 | 50,000 | 2.33 | % | May 1, 2026 | |||||||
| June 3, 2019 | 50,000 | 2.13 | % | May 1, 2026 | |||||||
| $ | 175,000 | 2.29 | % | ||||||||
| NUMBER OF PROPERTIES | GROSS REAL ESTATE INVESTMENT AS OF MARCH 31, 2022 | ||||||||||||||||
| YEAR EXERCISABLE | MOB | INPATIENT | FAIR MARKET VALUE METHOD 1 | NON FAIR MARKET VALUE METHOD 2 | TOTAL | ||||||||||||
Current 3 | 2 | 1 | $ | 54,909 | $ | — | $ | 54,909 | |||||||||
| 2023 | — | — | — | — | — | ||||||||||||
| 2024 | — | — | — | — | — | ||||||||||||
| 2025 | 4 | — | 48,264 | 19,459 | 67,723 | ||||||||||||
| 2026 | 1 | — | 20,664 | — | 20,664 | ||||||||||||
| 2027 | — | — | — | — | — | ||||||||||||
| 2028 | 1 | — | 41,091 | — | 41,091 | ||||||||||||
| 2029 | 2 | — | 51,446 | — | 51,446 | ||||||||||||
| 2030 | — | — | — | — | — | ||||||||||||
| 2031 | 3 | — | 84,364 | — | 84,364 | ||||||||||||
2032 and thereafter 4 | 7 | — | 250,135 | — | 250,135 | ||||||||||||
| Total | 20 | 1 | $ | 550,873 | $ | 19,459 | $ | 570,332 | |||||||||
| THREE MONTHS ENDED MARCH 31, | ||||||||
| Amounts in thousands, except per share data | 2022 | 2021 | ||||||
| Net income | $ | 42,227 | $ | 24,022 | ||||
| Gain on sales of real estate properties | (44,784) | (18,890) | ||||||
| Impairment of real estate properties | (25) | 834 | ||||||
| Real estate depreciation and amortization | 55,658 | 51,311 | ||||||
| Proportionate share of unconsolidated joint ventures | 2,369 | 813 | ||||||
| FFO attributable to common stockholders | $ | 55,445 | $ | 58,090 | ||||
Acquisition and pursuit costs 1 | 1,303 | 744 | ||||||
Merger-related costs 2 | 6,116 | — | ||||||
| Lease intangible amortization | 309 | (72) | ||||||
Non-routine legal costs/forfeited earnest money received 3 | 91 | (500) | ||||||
| Debt financing costs | 1,429 | — | ||||||
Unconsolidated JV normalizing items 4 | 95 | 27 | ||||||
| Normalized FFO attributable to common stockholders | $ | 64,788 | $ | 58,289 | ||||
| Non-real estate depreciation and amortization | 460 | 673 | ||||||
Non-cash interest amortization 5 | 711 | 894 | ||||||
| Provision for bad debt, net | 143 | (79) | ||||||
| Straight-line rent, net | (1,209) | (1,094) | ||||||
| Stock-based compensation | 3,699 | 3,019 | ||||||
Unconsolidated JV non-cash items 6 | (271) | (357) | ||||||
| Normalized FFO adjusted for non-cash items | $ | 68,321 | $ | 61,345 | ||||
| 2nd generation TI | (4,899) | (5,189) | ||||||
| Leasing commissions paid | (3,767) | (1,193) | ||||||
| Capital additions | (2,620) | (2,019) | ||||||
| FAD | $ | 57,035 | $ | 52,944 | ||||
| FFO per common share - diluted | $ | 0.37 | $ | 0.42 | ||||
| Normalized FFO per common share - diluted | $ | 0.43 | $ | 0.42 | ||||
FFO weighted average common shares outstanding - diluted 7 | 149,856 | 139,714 | ||||||
| NUMBER OF PROPERTIES | GROSS INVESTMENT at March 31, 2022 | SAME STORE CASH NOI for the three months ended March 31, | ||||||||||||
| Dollars in thousands | 2022 | 2021 | ||||||||||||
| Same store properties | 181 | $ | 3,882,562 | $ | 69,696 | $ | 67,794 | |||||||
| THREE MONTHS ENDED MARCH 31, | ||||||||
| Dollars in thousands | 2022 | 2021 | ||||||
| Net income | $ | 42,227 | $ | 24,022 | ||||
| Other income (expense) | (29,293) | (5,220) | ||||||
| General and administrative expense | 11,036 | 8,499 | ||||||
| Depreciation and amortization expense | 54,041 | 50,079 | ||||||
Other expenses 1 | 9,929 | 2,783 | ||||||
| Straight-line rent revenue | (1,209) | (1,094) | ||||||
| Joint venture properties | 2,052 | 465 | ||||||
Other revenue 2 | (2,044) | (1,865) | ||||||
| Cash NOI | 86,739 | 77,669 | ||||||
| Cash NOI not included in same store | (17,043) | (9,875) | ||||||
| Same store cash NOI | 69,696 | 67,794 | ||||||
| AS OF MARCH 31, 2022 | ||||||||||||||
| Dollars in thousands | PROPERTY COUNT | GROSS INVESTMENT 1 | SQUARE FEET | OCCUPANCY | ||||||||||
| Same store properties | 181 | $ | 3,882,562 | 13,506,008 | 89.2 | % | ||||||||
| Acquisitions | 54 | 1,025,058 | 2,588,197 | 90.0 | % | |||||||||
| Development completions | 1 | 36,325 | 110,883 | 98.0 | % | |||||||||
| Redevelopments | 6 | 144,590 | 647,978 | 65.7 | % | |||||||||
| Total owned real estate properties | 242 | $ | 5,088,535 | 16,853,066 | 88.5 | % | ||||||||
| THREE MONTHS ENDED MARCH 31, | CHANGE | |||||||||||||
| Dollars in thousands | 2022 | 2021 | $ | % | ||||||||||
| Contractual interest | $ | 12,502 | $ | 12,239 | $ | 263 | 2.1 | % | ||||||
| Net discount/premium accretion | 50 | 47 | 3 | 6.4 | % | |||||||||
| Deferred financing costs amortization | 711 | 698 | 13 | 1.9 | % | |||||||||
| Interest rate swap amortization | 42 | 42 | — | — | % | |||||||||
| Treasury hedge amortization | 107 | 107 | — | — | % | |||||||||
| Interest cost capitalization | (38) | (118) | 80 | (67.8) | % | |||||||||
| Right-of-use assets financing amortization | 287 | 247 | 40 | 16.2 | % | |||||||||
| Total interest expense | $ | 13,661 | $ | 13,262 | $ | 399 | 3.0 | % | ||||||
| PERIOD | TOTAL NUMBER OF SHARES PURCHASED | AVERAGE PRICE PAID per share | TOTAL NUMBER OF SHARES purchased as part of publicly announced plans of programs | MAXIMUM NUMBER OF SHARES that may yet be purchased under the plans or programs | ||||||||||
| January 1 - January 31 | — | $ | — | — | — | |||||||||
| February 1 - February 28 | 6,727 | 30.67 | — | — | ||||||||||
| March 1 - March 31 | — | — | — | — | ||||||||||
| Total | 6,727 | |||||||||||||
| EXHIBIT | DESCRIPTION | ||||
Exhibit 4.1 | Specimen Stock Certificate 3 | ||||
| Exhibit 4.9 | |||||
| Exhibit 4.10 | |||||
| Exhibit 4.11 | |||||
| Exhibit 4.12 | |||||
| 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 5, 2022 | ||||||||
Date: | May 5, 2022 | |||||||
/s/ TODD J. MEREDITH | ||||||||
Todd J. Meredith | ||||||||
President and Chief Executive Officer | ||||||||
Date: | May 5, 2022 | |||||||
/s/ J. CHRISTOPHER DOUGLAS | ||||||||
J. Christopher Douglas | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
Date: | May 5, 2022 | |||||||
/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, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
| Preferred stock, authorized (shares) | 50,000,000 | 50,000,000 |
| Preferred stock, issued (shares) | 0 | 0 |
| Preferred stock, outstanding (shares) | 0 | 0 |
| Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, authorized (shares) | 300,000,000 | 300,000,000 |
| Common stock, issued (shares) | 151,605,000 | 150,457,000 |
| Common stock, outstanding (shares) | 151,605,000 | 150,457,000 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Net income | $ 42,227 | $ 24,022 |
| Interest rate swaps | ||
| Reclassification adjustments for losses included in net income (interest expense) | 1,086 | 1,095 |
| Gains (losses) arising during the period on interest rate swaps and treasury rate locks | 5,159 | 2,850 |
| Other comprehensive income | 6,245 | 3,945 |
| Comprehensive income | 48,472 | 27,967 |
| Interest Rate Swaps | ||
| Interest rate swaps | ||
| Gains (losses) arising during the period on interest rate swaps and treasury rate locks | $ 5,159 | $ 2,850 |
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Statement of Stockholders' Equity [Abstract] | ||
| Dividend per share to common Stockholders (in dollars per share) | $ 0.31 | $ 0.3025 |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Business Overview Healthcare Realty Trust Incorporated (the "Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, 2022, the Company had gross investments of approximately $5.2 billion in 242 real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property. The Company's 242 real estate properties are located in 23 states and total approximately 16.9 million square feet. The Company provided leasing and property management services to approximately 14.8 million square feet nationwide. The Company owns 50% of an unconsolidated joint venture with Teachers Insurance and Annuity Association (the "TIAA Joint Venture") and earns certain fees as the managing member. As of March 31, 2022, the TIAA Joint Venture owned 21 real estate properties. See Note 2 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. However, except as disclosed herein, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2021. 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, 2021. 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, 2022 for many reasons including, but not limited to, the Company's pending merger with Healthcare Trust of America, Inc. (as discussed in more detail in Note 9 below), acquisitions, dispositions, capital financing transactions, changes in interest rates and the effects of other trends, risks and uncertainties. Principles of Consolidation The Company’s Condensed Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures and partnerships where the Company controls the operating activities. GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis. For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. As of March 31, 2022, the Company's unconsolidated joint venture arrangements were accounted for using the equity method of accounting as the Company exercised significant influence over but did not control these entities. See Note 2 for more details regarding the Company's unconsolidated joint ventures. 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. Investments in Leases - Financing Receivables, Net In accordance with Accounting Standards Codification ("ASC") 842, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC 310 “Receivables”. During the first quarter of 2022, the Company reclassified the two medical office buildings in Nashville, Tennessee that were acquired in separate sale-leaseback transactions. The leases with the sellers commenced in the first quarter which resulted in the allocation of the financing receivable totaling $73.9 million to land and building and improvements. Income from Lease Financing Receivables The Company recognizes the related income from the financing receivable based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable will not equal the cash payments from the lease agreement. Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to Income from financing receivable, net over the life of the lease. Revenue from Contracts with Customers (Topic 606) The Company recognizes certain revenue under the core principle of Topic 606. This topic requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of Topic 606. To achieve the core principle, the Company applies the five step model specified in the guidance. Revenue that is accounted for under Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Income in the Other operating line item. This line item includes parking income, management fee income and other miscellaneous income. Below is a detail of the amounts by category:
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 Accounting Standards Update No. 2020-04 On March 12, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
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Real Estate Investments |
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| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Real Estate Investments | Real Estate Investments 2022 Company Acquisitions The following table details the Company's acquisitions for the three months ended March 31, 2022:
1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition. 2Excludes financing right of use assets. 3Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition. 4Includes three properties. Subsequent to March 31, 2022, the Company acquired the following properties:
1Includes two properties. 2022 TIAA Joint Venture Acquisitions The TIAA Joint Venture is not consolidated for purposes of the Company's Condensed Consolidated Financial Statements. The following table details the TIAA Joint Venture acquisitions for the three months ended March 31, 2022:
1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition. 2Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition. 3Includes three properties. 4Includes two properties. Unconsolidated Joint Ventures The Company's investment in and loss recognized for the three months ended March 31, 2022 and 2021 related to its joint ventures accounted for under the equity method are shown in the table below:
1In addition to the TIAA Joint Venture, the Company also has a 55% and 27% ownership interest, respectively, in two limited liability companies that each own a parking garage in Atlanta, Georgia. 2022 Real Estate Asset Dispositions The following table details the Company's dispositions for the three months ended March 31, 2022:
1Includes straight-line rent receivables, leasing commissions and lease inducements. 2Includes two properties. Assets Held for Sale As of March 31, 2022, the Company had two properties and a garage classified as assets held for sale. The Company did not have any properties classified as assets held for sale as of December 31, 2021. During the first quarter of 2022, the Company reclassified to assets held for sale two medical office buildings and a garage in San Antonio, Texas with a contractual sales price of $25.5 million under a single purchase agreement. The sales price was greater than the current net investment of approximately $14.4 million. The Company disposed of these properties on April 15, 2022. The table below reflects the assets and liabilities of the properties classified as held for sale as of March 31, 2022 and December 31, 2021:
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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 2040. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. The Company's leases typically have escalators that are either based on a stated percentage or an index such as the consumer price index ("CPI"). In addition, most of the Company's leases include nonlease components, such as 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, 2022 was $138.5 million. On March 30, 2022, the Company executed a lease as a ground lessor for a 1.9 acre parcel of land in Texas previously recorded in land held for development. The lease is classified as a sales-type lease under Topic 842 as the present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset. The land value of $1.8 million was reclassified from Land held for development to Other assets. Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of March 31, 2022 were as follows:
Lessee Accounting As of March 31, 2022, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2022, the Company had 108 properties totaling 8.9 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 41 prepaid ground leases as of March 31, 2022. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.1 million and $0.2 million of the Company’s rental expense for the three months ended March 31, 2022 and 2021, respectively. The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of March 31, 2022 were as follows:
The following table provides details of the Company's total lease expense for the three months ended March 31, 2022 and 2021:
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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 2040. Some leases provide for fixed rent renewal terms in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease, with an option or right of first refusal to purchase the leased property. The Company’s single-tenant net leases generally require the lessee to pay minimum rent and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property. The Company's leases typically have escalators that are either based on a stated percentage or an index such as the consumer price index ("CPI"). In addition, most of the Company's leases include nonlease components, such as 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, 2022 was $138.5 million. On March 30, 2022, the Company executed a lease as a ground lessor for a 1.9 acre parcel of land in Texas previously recorded in land held for development. The lease is classified as a sales-type lease under Topic 842 as the present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset. The land value of $1.8 million was reclassified from Land held for development to Other assets. Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of March 31, 2022 were as follows:
Lessee Accounting As of March 31, 2022, the Company was obligated, as the lessee, under operating lease agreements consisting primarily of the Company’s ground leases. As of March 31, 2022, the Company had 108 properties totaling 8.9 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 41 prepaid ground leases as of March 31, 2022. The amortization of the prepaid rent, included in the operating lease right-of-use asset, represented approximately $0.1 million and $0.2 million of the Company’s rental expense for the three months ended March 31, 2022 and 2021, respectively. The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of March 31, 2022 were as follows:
The following table provides details of the Company's total lease expense for the three months ended March 31, 2022 and 2021:
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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.
1The effective interest rate includes the impact of interest rate swaps on $75.0 million at a weighted average rate of 2.37% (plus the applicable margin rate, currently 100 basis points). 2The effective interest rate includes the impact of interest rate swaps on $100.0 million at a weighted average rate of 2.23% (plus the applicable margin rate, currently 95 basis points). 3The effective interest rate includes the impact of the $1.7 million settlement of forward-starting interest rate swaps that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets. 4The effective interest rate includes the impact of the $4.3 million settlement of forward interest rate hedges that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets. Changes in Debt Structure Mortgage payoffs On February 18, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 4.70% that encumbered a 56,762 square foot property in California. The aggregate payoff price of $12.6 million consisted of outstanding principal of $11.0 million and a "make-whole" amount of approximately $1.6 million. The unamortized premium of $0.8 million and the unamortized cost on this note of $0.1 million were written off upon payoff. On February 24, 2022, the Company repaid in full a mortgage note payable bearing interest at a rate of 6.17% that encumbered a 80,153 square foot property in Colorado, in conjunction with the disposition of the property. The aggregate payoff price of $6.4 million consisted of outstanding principal of $5.8 million and a "make-whole" amount of approximately $0.6 million. The unamortized premium of $0.1 million was written off upon payoff.
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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, 2022, the Company had eight 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, 2022.
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, 2022 and 2021 related to the Company's outstanding interest rate swaps.
The Company estimates that $1.5 million will be reclassified from AOCI 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, 2022, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $0.1 million. As of March 31, 2022, the Company has not posted any collateral related to these agreements and was not in breach of any agreement.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2022 | |
| 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. Redevelopment Activity The Company continued the redevelopment of a 217,114 square foot medical office building in Dallas, Texas. As of March 31, 2022, the Company had funded approximately $9.4 million in project costs. The building continues to operate with in-place leases during construction. The first new tenant lease of the redevelopment commenced in the first quarter of 2022. The Company continued the redevelopment of a medical office building in Tacoma, Washington. As of March 31, 2022, the Company had funded approximately $7.5 million in project costs. The redevelopment includes interior and exterior improvements to the existing building, plus the addition of 23,000 square feet. The Company expects the 23,000 square foot tenant lease for the expansion space to commence in the second quarter of 2022. The Company continued the development of a medical office building in Nashville, Tennessee. The Company expects to construct a new 106,194 square foot medical office building with the initial tenant lease expected to commence in the third quarter of 2023. As of March 31, 2022, the Company had funded approximately $2.7 million in project costs. The redevelopment includes the demolition of an existing 81,000 square foot medical office building. The Company recognized an impairment charge of $5.0 million related to the existing building in 2021. During the first quarter of 2022, the Company approved redevelopment projects related to the following: •Two medical office buildings totaling 158,338 square feet in Washington, DC. The Company has approved a a leasing plan with a capital outlay that is expected to be completed in the first quarter of 2024. •A medical office building totaling 145,365 square feet in Dallas, Texas. The Company has approved a capital and leasing plan that is expected to be completed in the first quarter of 2024. As of March 31, 2022, the Company has funded $0.3 million in project costs. •A medical office building totaling 93,992 square feet in Denver, Colorado that is expected to be a part of a larger redevelopment plan to be initiated in 2022.
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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, 2022 and the twelve months ended December 31, 2021:
At-The-Market Equity Offering Program On August 6, 2021 and November 5, 2021, the Company entered into equity distribution agreements with 12 investment banks to allow for issuance and sale under its at-the-market equity offering program of up to an aggregate of $750.0 million of common stock. The following table details the Company's forward at-the-market activity:
The Company has approximately $686.0 million remaining available to be sold under the current equity distribution agreements at the date of this report. Common Stock Dividends During the three months ended March 31, 2022, the Company declared and paid common stock dividends totaling $0.31 per share. On May 3, 2022, the Company declared a quarterly common stock dividend in the amount of $0.31 per share payable on May 27, 2022 to stockholders of record on May 16, 2022. 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. During the three months ended March 31, 2022, the Company did not enter into any forward sale agreements to sell shares of common stock through the Company's at-the market equity offering program. The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2022 and 2021.
Incentive Plans Restricted Common Shares During the three months ended March 31, 2022, the Company made the following stock awards: •On January 1, 2022, the Company granted non-vested stock awards to certain officers with a grant date fair value of $0.5 million, which consisted of an aggregate of 17,381 non-vested shares through its salary deferral program. •On January 3, 2022, the Company granted non-vested stock awards to its named executive officers, and certain other members of senior management and employees, with a grant date fair value of $7.9 million, which consisted of an aggregate of 249,689 non-vested shares, with a five-year vesting period. •On February 7, 2022, the Company granted a non-vested stock award to a new employee, which consisted of 1,980 non-vested shares. •On February 22, 2022, the Company granted a performance-based award to its named executive officers, senior vice presidents, and first vice presidents with a grant date fair value of $3.9 million, which consisted of an aggregate of 126,930 non-vested shares with a five-year vesting period. •On February 22, 2022, the Company granted a performance-based award to its officers, excluding its named executive officers, senior vice presidents, and first vice presidents, with a grant date fair value of $0.6 million, which consisted of an aggregate of 19,204 non-vested shares with vesting periods ranging from to eight years. A summary of the activity under the Company's share-based incentive plans for the three months ended March 31, 2022 and 2021 is included in the table below.
Restricted Stock Units Prior to 2022, the Company granted long-term incentive awards, comprised of restricted stock, based on backward-looking performance measured at the end of the calendar year. The Company adopted a new incentive compensation structure effective January 2022, comprised of restricted stock and restricted stock units ("RSUs"). The RSUs are granted at the beginning of the year with three-year forward-looking performance targets. On January 3, 2022, the Company granted restricted stock units to its named executive officers, and certain other members of senior management and officers, with a grant date fair value of $9.7 million, which consisted of an aggregate 294,932 RSUs with a five-year vesting period. Approximately 43% of the RSUs vest based on two market performance conditions. Relative and absolute total shareholder return ("TSR") awards containing these market performance conditions were valued using independent specialists. The Company utilized a Monte Carlo simulation to calculate the weighted average grant date fair values of $30.56 for the absolute TSR component and $41.30 for the relative TSR component for the January 2022 grant using the following assumptions:
The remaining 57% of the restricted stock units vest upon certain operating performance conditions. With respect to the operating performance conditions of the January grant, the grant date fair value was $31.68 based on the Company's share price on the date of grant. The combined weighted average grant date fair value of the January restricted stock units was $33.04 per share. The following is a summary of the RSU activity during the three months ended March 31, 2022:
During the three months ended March 31, 2022 and 2021, the Company withheld 6,727 and 50,240 shares of common stock, respectively, from participants to pay estimated withholding taxes related to shares that vested. In addition to the share-based incentive plans, the Company maintains the Employee Stock Purchase Plan. A summary of the activity under the Purchase Plan for the three months ended March 31, 2022 and 2021 is included in the table below.
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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 due to the short term maturity of these investments. •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 that consider forward yield curves and discount rates. The table below details the fair values and carrying values for notes and bonds payable at March 31, 2022 and December 31, 2021.
1Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
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Pending Merger with Healthcare Trust of America |
3 Months Ended |
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Mar. 31, 2022 | |
| Business Combination and Asset Acquisition [Abstract] | |
| Pending Merger with Healthcare Trust of America | Pending Merger with Healthcare Trust of AmericaOn February 28, 2022, the Company executed a definitive Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 28, 2022, by and among the Company, Healthcare Trust of America, Inc., a Maryland corporation (“HTA”), Healthcare Trust of America Holdings, LP, a Delaware limited partnership (the “Operating Partnership”), and HR Acquisition 2, LLC, a Maryland limited liability company (“Merger Sub”), to effect a strategic business combination of the the Company and HTA to be led by the Company's management team (the "Merger"). The Merger Agreement provides for a reverse merger structure whereby the Company will merge with and into Merger Sub,with the Company continuing as the surviving corporation and a wholly owned subsidiary of HTA. Immediately following the merger, HTA will change its name to Healthcare Realty Trust Incorporated (the “Combined Company”). The executive officers of the Company immediately preceding the Merger will serve as the executive officers of the Combined Company. The board of directors of the Combined Company will be comprised of all nine directors from the Company's board and four directors from HTA’s board. The Company has incurred $6.1 million in costs related to the pending Merger. |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Business overview | Business OverviewHealthcare Realty Trust Incorporated (the "Company") is a real estate investment trust ("REIT") that owns, leases, manages, acquires, finances, develops and redevelops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of March 31, 2022, the Company had gross investments of approximately $5.2 billion in 242 real estate properties, construction in progress, redevelopments, financing receivables, financing lease right-of-use assets, land held for development and corporate property. The Company's 242 real estate properties are located in 23 states and total approximately 16.9 million square feet. The Company provided leasing and property management services to approximately 14.8 million square feet nationwide. The Company owns 50% of an unconsolidated joint venture with Teachers Insurance and Annuity Association (the "TIAA Joint Venture") and earns certain fees as the managing member. As of March 31, 2022, the TIAA Joint Venture owned 21 real estate properties. See Note 2 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 | Basis of Presentation The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, management believes there has been no material change in the information disclosed in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2021. 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, 2021. 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, 2022 for many reasons including, but not limited to, the Company's pending merger with Healthcare Trust of America, Inc. (as discussed in more detail in Note 9 below), 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 ConsolidationThe 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. |
| Variable Interest Entities | GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Accounting Standards Codification 810 broadly defines a VIE as an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis.For property holding entities not determined to be VIEs, the Company consolidates such entities in which it owns 100% of the equity or has a controlling financial interest evidenced by ownership of a majority voting interest. All intercompany balances and transactions are eliminated in consolidation. For entities in which the Company owns less than 100% of the equity interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the terms of the respective entities’ ownership agreements. As of March 31, 2022, 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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| Investments in and Income from Leases - Financing Receivables, Net | Investments in Leases - Financing Receivables, Net In accordance with Accounting Standards Codification ("ASC") 842, for transactions in which the Company enters into a contract to acquire an asset and leases it back to the seller (i.e., a sale leaseback transaction), control of the asset is not considered to have transferred when the seller-lessee has a purchase option. As a result, the Company does not recognize the underlying real estate asset but instead recognizes a financial asset in accordance with ASC 310 “Receivables”. During the first quarter of 2022, the Company reclassified the two medical office buildings in Nashville, Tennessee that were acquired in separate sale-leaseback transactions. The leases with the sellers commenced in the first quarter which resulted in the allocation of the financing receivable totaling $73.9 million to land and building and improvements. Income from Lease Financing Receivables The Company recognizes the related income from the financing receivable based on an imputed interest rate over the terms of the applicable lease. As a result, the interest recognized from the financing receivable will not equal the cash payments from the lease agreement. Acquisition costs incurred in connection with entering into the financing receivable are treated as loan origination fees. These costs are classified with the financing receivable and are included in the balance of the net investment. Amortization of these amounts will be recognized as a reduction to Income from financing receivable, net over the life of the lease.
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| Revenue from contract with customers (topic 606) | Revenue from Contracts with Customers (Topic 606) The Company recognizes certain revenue under the core principle of Topic 606. This topic requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Lease revenue is not within the scope of Topic 606. To achieve the core principle, the Company applies the five step model specified in the guidance. Revenue that is accounted for under Topic 606 is segregated on the Company’s Condensed Consolidated Statements of Income in the Other operating line item. This line item includes parking income, management fee income and other miscellaneous income.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 Accounting Standards Update No. 2020-04 On March 12, 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
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Summary of Significant Accounting Policies (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of revenue | Below is a detail of the amounts by category:
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Real Estate Investments (Tables) |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of acquisitions | The following table details the Company's acquisitions for the three months ended March 31, 2022:
1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition. 2Excludes financing right of use assets. 3Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition. 4Includes three properties. Subsequent to March 31, 2022, the Company acquired the following properties:
1Includes two properties.
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| Schedule of joint venture transactions | The following table details the TIAA Joint Venture acquisitions for the three months ended March 31, 2022:
1Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition. 2Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition. 3Includes three properties. 4Includes two properties.
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| Schedule of equity method investments | The Company's investment in and loss recognized for the three months ended March 31, 2022 and 2021 related to its joint ventures accounted for under the equity method are shown in the table below:
1In addition to the TIAA Joint Venture, the Company also has a 55% and 27% ownership interest, respectively, in two limited liability companies that each own a parking garage in Atlanta, Georgia.
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| Real estate dispositions | The following table details the Company's dispositions for the three months ended March 31, 2022:
1Includes straight-line rent receivables, leasing commissions and lease inducements. 2Includes two properties.
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| Schedule of assets and liabilities held for sale | The table below reflects the assets and liabilities of the properties classified as held for sale as of March 31, 2022 and December 31, 2021:
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Leases (Tables) |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Future Minimum Operating Lease Payments Receivable | Future lease payments under the non-cancelable operating leases, excluding any reimbursements and the sale-type lease, as of March 31, 2022 were as follows:
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| Future Minimum Operating Lease Payments | The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of March 31, 2022 were as follows:
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| Future Minimum Financing Lease Payments | The Company’s future lease payments (primarily for its 67 non-prepaid ground leases) as of March 31, 2022 were as follows:
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| Lease Cost | The following table provides details of the Company's total lease expense for the three months ended March 31, 2022 and 2021:
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Notes and Bonds Payable (Tables) |
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| Schedule of debt | The table below details the Company’s notes and bonds payable.
1The effective interest rate includes the impact of interest rate swaps on $75.0 million at a weighted average rate of 2.37% (plus the applicable margin rate, currently 100 basis points). 2The effective interest rate includes the impact of interest rate swaps on $100.0 million at a weighted average rate of 2.23% (plus the applicable margin rate, currently 95 basis points). 3The effective interest rate includes the impact of the $1.7 million settlement of forward-starting interest rate swaps that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets. 4The effective interest rate includes the impact of the $4.3 million settlement of forward interest rate hedges that is included in Accumulated other comprehensive loss on the Company's Condensed Consolidated Balance Sheets.
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Derivative Financial Instruments (Tables) |
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| Schedule of cash flow hedges included in accumulated other comprehensive income (loss) | As of March 31, 2022, the Company had eight 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, 2022 and 2021 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, 2022.
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Stockholders' Equity (Tables) |
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| 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, 2022 and the twelve months ended December 31, 2021:
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| At-the-market activity | The following table details the Company's forward at-the-market activity:
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| 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, 2022 and 2021.
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| Summary of the activity under the incentive plan and restricted stock unit | A summary of the activity under the Company's share-based incentive plans for the three months ended March 31, 2022 and 2021 is included in the table below.
The following is a summary of the RSU activity during the three months ended March 31, 2022:
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| Schedule of stock options, valuation assumptions |
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| Summary of employee stock purchase plan activity | A summary of the activity under the Purchase Plan for the three months ended March 31, 2022 and 2021 is included in the table below.
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value and carrying values for notes and bonds payable, mortgage notes receivable, and notes receivable | The table below details the fair values and carrying values for notes and bonds payable at March 31, 2022 and December 31, 2021.
1Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
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Summary of Significant Accounting Policies (Details) ft² in Millions, $ in Millions |
Mar. 31, 2022
USD ($)
ft²
building
state
property
|
Dec. 31, 2021
building
|
|---|---|---|
| Business Overview: | ||
| Gross investment amount, total | $ | $ 5,200.0 | |
| Number of real estate properties | property | 242 | |
| Number of states that the company owns real estate in, whole units | state | 23 | |
| Approximate square feet invested in by company | ft² | 16.9 | |
| Approximate square feet for which Nationwide property management services provided by company | ft² | 14.8 | |
| Joint venture ownership (percent) | 50.00% | |
| Number of buildings owned by joint venture with TIAA | building | 21 | |
| Equity ownership for consolidation (percent) | 100.00% | |
| Nashville, Tennessee | Medical office building | ||
| Leases [Abstract] | ||
| Number of buildings acquired in sale leaseback transactions | building | 2 | |
| Buildings acquired in sale leaseback transactions | $ | $ 73.9 |
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Disaggregation of Revenue [Line Items] | ||
| Type of Revenue | $ 2,475 | $ 1,950 |
| Parking income | ||
| Disaggregation of Revenue [Line Items] | ||
| Type of Revenue | 1,753 | 1,658 |
| Management fee income | ||
| Disaggregation of Revenue [Line Items] | ||
| Type of Revenue | 655 | 239 |
| Miscellaneous | ||
| Disaggregation of Revenue [Line Items] | ||
| Type of Revenue | $ 67 | $ 53 |
Real Estate Investments - Dispositions (Details) - Loveland, CO 2 $ in Thousands |
Feb. 24, 2022
USD ($)
ft²
|
|---|---|
| Real Estate Dispositions [Line Items] | |
| SALE PRICE | $ 84,950 |
| CLOSING ADJUSTMENTS | 45 |
| NET PROCEEDS | 84,905 |
| NET REAL ESTATE INVESTMENT | 40,095 |
| Other (including receivables) | 4 |
| GAIN/(IMPAIRMENT) | $ 44,806 |
| SQUARE FOOTAGE | ft² | 150,291 |
Leases - Lease Income (Details) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
|
Mar. 31, 2022
USD ($)
|
Mar. 31, 2021
USD ($)
|
Mar. 30, 2022
USD ($)
a
|
|
| Lessee, Lease, Description [Line Items] | |||
| Rental income | $ 138,489 | $ 128,389 | |
| Land held for development to other assets | $ 1,800 | ||
| Texas | Land Held For Devlopment | |||
| Lessee, Lease, Description [Line Items] | |||
| Joint venture, adjacent land parcel (acres) | a | 1.9 | ||
Leases - Lessor Accounting (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
|---|---|
| Future Operating Lease Payments Receivable [Abstract] | |
| 2022 | $ 312,208 |
| 2023 | 375,370 |
| 2024 | 304,440 |
| 2025 | 247,731 |
| 2026 | 195,917 |
| 2027 and thereafter | 469,372 |
| Total | $ 1,905,038 |
Leases - Ground Leases (Details) ft² in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
|
Mar. 31, 2022
USD ($)
ft²
lease
property
|
Mar. 31, 2021
USD ($)
|
|
| Lessee, Lease, Description [Line Items] | ||
| Number of properties subject to ground leases | property | 108 | |
| Square feet subject to ground leases | ft² | 8.9 | |
| Number of prepaid ground leases | 41 | |
| Amortization of prepaid rent | $ | $ 0.1 | $ 0.2 |
| Number of non-prepaid ground leases | 67 | |
| 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, 2022 |
Dec. 31, 2021 |
|---|---|---|
| OPERATING | ||
| 2022 | $ 3,272 | |
| 2023 | 5,071 | |
| 2024 | 5,130 | |
| 2025 | 5,174 | |
| 2026 | 5,201 | |
| 2027 and thereafter | 306,956 | |
| Total undiscounted lease payments | 330,804 | |
| Discount | (236,168) | |
| Lease liabilities | 94,636 | $ 96,138 |
| FINANCING | ||
| 2022 | 1,106 | |
| 2023 | 1,654 | |
| 2024 | 1,692 | |
| 2025 | 1,723 | |
| 2026 | 1,749 | |
| 2027 and thereafter | 368,730 | |
| Total undiscounted lease payments | 376,654 | |
| Discount | (314,922) | |
| Lease liabilities | $ 61,732 | $ 22,551 |
Notes and Bonds Payable - Narrative (Details) - Mortgages $ in Millions |
Feb. 24, 2022
USD ($)
ft²
|
Feb. 18, 2022
USD ($)
ft²
|
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Effective interest rate | 6.17% | 4.70% |
| Debt Instrument [Line Items] | ||
| Effective interest rate | 6.17% | 4.70% |
| redemption price | $ 6.4 | $ 12.6 |
| Outstanding principal repaid | 5.8 | 11.0 |
| Unamortized premium | 0.6 | 0.8 |
| Write off upon payoff | $ 0.1 | 0.1 |
| Make whole amount | $ 1.6 | |
| Los Angeles, CA | ||
| Debt Instrument [Line Items] | ||
| Encumbered square footage | ft² | 56,762 | |
| Colorado Springs, CO | ||
| Debt Instrument [Line Items] | ||
| Encumbered square footage | ft² | 80,153 |
Derivative Financial Instruments - Derivative Instruments Designated as Cash Flow Hedges (Details) $ in Millions |
Mar. 31, 2022
USD ($)
swapAgreement
|
|---|---|
| Derivative [Line Items] | |
| Derivatives in net liability position | $ 0.1 |
| 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 | $ 1.5 |
| Cash flow hedging | Designated as hedging instrument | Settled interest rate swaps | |
| Derivative [Line Items] | |
| Number of instruments | swapAgreement | 8 |
| Notional amount | $ 175.0 |
Derivative Financial Instruments - Fair Value of Derivative Instruments on the Balance Sheet (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
|---|---|
| Designated as hedging instrument | Settled interest rate swaps | |
| Derivative [Line Items] | |
| Liability derivatives | $ 179 |
| Other liabilities | Interest rate swaps 2017 and 2018 | |
| Derivative [Line Items] | |
| Liability derivatives | (487) |
| Other assets | Designated as hedging instrument | Interest rate swaps 2019 | |
| Derivative [Line Items] | |
| Liability derivatives | $ 666 |
Stockholders' Equity - Reconciliation of Beginning and Ending Common Stock Outstanding (Details) - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Reconciliation of the beginning and ending common stock outstanding | ||
| Balance, beginning of period (in shares) | 150,457,000 | |
| Balance, end of period (in shares) | 151,605,000 | |
| Common Stock | ||
| Reconciliation of the beginning and ending common stock outstanding | ||
| Balance, beginning of period (in shares) | 150,457,433 | 139,487,375 |
| Issuance of common stock (in shares) | 740,818 | 10,899,301 |
| Nonvested share-based awards, net of withheld shares (in shares) | 407,161 | 70,757 |
| Balance, end of period (in shares) | 151,605,412 | |
Stockholders' Equity - Computation of Basic and Diluted Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Weighted average Common Shares outstanding | ||
| Weighted average common shares outstanding (in shares) | 150,834,888 | 140,567,352 |
| Non-vested shares (in shares) | (1,871,858) | (1,793,598) |
| Weighted average common shares outstanding - basic (in shares) | 148,963,030 | 138,773,754 |
| Dilutive effect of employee stock purchase plan (in shares) | 88,234 | 97,064 |
| Weighted average common shares outstanding - diluted (in shares) | 149,051,264 | 138,870,818 |
| Net Income | $ 42,227 | $ 24,022 |
| Dividends paid on nonvested share-based awards | (605) | (540) |
| Net income applicable to common stockholders | $ 41,622 | $ 23,482 |
| Basic earnings per common share - net income (in dollars per share) | $ 0.28 | $ 0.17 |
| Diluted earnings per common share- net income (in dollars per share) | $ 0.28 | $ 0.17 |
Stockholders' Equity - Schedule of Stock Options, Valuation Assumptions (Details) |
1 Months Ended |
|---|---|
|
Jan. 31, 2022
$ / shares
| |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
| Volatility | 30.00% |
| Expected term in years | 3 years |
| Risk-free rate | 1.02% |
| Stock price (in dollar per share) | $ 31.68 |
Stockholders' Equity - Summary of Activity under Employee Stock Purchase Plan (Details) - Employee stock purchase plan - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Summary of the Employee Stock Purchase Plan activity | ||
| Outstanding and exercisable, beginning of period (in shares) | 348,514 | 341,647 |
| Granted (in shares) | 255,960 | 253,200 |
| Exercised (in shares) | (10,553) | (15,965) |
| Forfeited (in shares) | (25,486) | (19,161) |
| Expired (in shares) | (140,633) | (144,422) |
| Outstanding and exercisable, end of period (in shares) | 427,802 | 415,299 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| CARRYING VALUE | ||
| Derivative [Line Items] | ||
| Notes and bonds payable | $ 1,907.4 | $ 1,801.3 |
| FAIR VALUE | ||
| Derivative [Line Items] | ||
| Notes and bonds payable | $ 1,837.7 | $ 1,797.4 |
Pending Merger with Healthcare Trust of America (Details) $ in Millions |
Feb. 28, 2022
USD ($)
|
|---|---|
| Healthcare Trust Of America, Inc | |
| Business Acquisition [Line Items] | |
| Business Acquisition, Transaction Costs | $ 6.1 |