Healthcare Realty Trust Inc
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
HR$19.20+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001360604-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001360604-24-000093
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 171 current paragraphs.
55 unchanged; 45 reworded; 52 added; 23 removed; 4 previous and 19 current paragraphs rearranged.
Tables are not compared: 7 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
The Company disposed of or contributed to a joint venture 25 properties during the six months ended June 30, 2024 for a total sales price of $464.9 million, generating cash proceeds of $378.7 million, net of joint venture contributions, including $96.0 million of proceeds that were held in escrow at June 30, 2024. The following table details these dispositions for the six months ended June 30, 2024:
Current report
1 The Company contributed the following medical outpatient properties to a joint venture in which the Company retained 20% ownership: one in each of Raleigh, NC, New York, NY, Philadelphia, PA, Atlanta, GA and Austin, TX; two medical outpatient properties in Los Angeles and four in Seattle, WA. Sale price and square footage reflect the total sale price paid by the joint venture and total square footage of the property.
Current report
2 The Company sold seven MOB properties in Greensboro, NC and two MOB properties in Raleigh, NC to a single buyer in a single transaction.
Current report
Investment in Unconsolidated Joint Venture
Current report
During the six months ended June 30, 2024, the Company's investment in an unconsolidated joint venture in which it holds a 20% interest increased by $66.5 million relating to the retained ownership from the MOB properties contributed to the joint venture.
Current report
•$17.9 million toward building capital.
Current report
Real Estate Notes Receivable
Current report
On June 24, 2024, the Company's mezzanine loans totaling $54.1 million in Texas matured. As of the date of these financial statements, the outstanding principal and interest on these loans had not been repaid. On July 15, 2024, the senior lender on the construction loan associated with the underlying project provided notice of foreclosure proceedings to the borrower. The borrower is in negotiations with a third party to provide financing that will repay the senior lender. The Company expects to extend the maturity of the mezzanine loans concurrent with this arrangement.
Current report
Additionally, during the three months ended June 30, 2024, the Company placed one of its real estate notes receivable with a principal balance of $20.5 million on non-accrual status. The Company determined that the risk of credit loss was no longer remote and recorded a credit loss reserve of $11.2 million.
Current report
Changes in Debt Structure
Current report
In June 2024, the Company repaid $100 million of the $350 million Unsecured Term Loan and exercised its second option to extend the maturity date for one year to July 2025 for a fee of approximately $0.3 million.
Current report
•Dispositions in 2023 and 2024 resulted in a decrease of $18.8 million.
Current report
•Acquisitions in 2023 contributed $0.3 million.
Current report
•Reversed revenue related to the Steward Health Care System LLC ("Steward") bankruptcy resulted in a decrease of $5.5 million, including $2.6 million of straight-line rent.
Current report
Property operating expenses decreased $7.7 million, or 6.1%, for the three months ended June 30, 2024 compared to the prior year period primarily as a result of the following activity:
Current report
•Dispositions in 2023 and 2024 resulted in a decrease of $8.3 million.
Current report
•Acquisitions in 2023 resulted in an increase of $0.1 million.
Current report
◦Janitorial expense of $0.2 million.
Current report
•Decreases in portfolio operating expenses as follows:
Current report
•Utilities expense of $0.8 million;
Current report
•Property taxes of $0.2 million.
Current report
Merger-related costs for the three months ended June 30, 2023 included a net reduction in legal and consulting fees as a result of a refund related to state transfer taxes.
Current report
Depreciation and amortization expense decreased $9.7 million, or 5.3%, for the three months ended June 30, 2024 compared to the prior year period primarily as a result of the following activity:
Current report
•Acquisitions in 2023 resulted in an increase of $0.2 million.
Current report
Gains on sale of real estate properties and other assets
Current report
In the second quarter of 2024, the Company recognized gains on sale of real estate properties and other assets of approximately $38.3 million. In the second quarter of 2023, the Company recognized gains on sale of real estate properties of approximately $7.2 million.
Current report
Impairment of real estate properties and credit loss reserves
Current report
In the second quarter of 2024, the Company recognized impairments totaling $10.2 million on 15 properties sold and $110.7 million on 17 properties with changes in the expected holding periods. In addition, the Company recorded $11.2 million in credit loss reserves relates to notes receivables. In the second quarter of 2023, the Company recognized impairments totaling $55.2 million primarily as a result of four properties with changes in the expected holding periods.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Revenues
Current report
•Dispositions in 2023 and 2024 resulted in a decrease of $34.0 million.
Current report
•Acquisitions in 2023 contributed $1.4 million.
Current report
•Reversed revenue related to the Steward bankruptcy resulted in a decrease of $6.2 million, including straight-line rent of $2.7 million.
Current report
Expenses
Current report
Property operating expenses decreased $8.6 million, or 3.5%, for the six months ended June 30, 2024 compared to the prior year period primarily as a result of the following activity:
Current report
•Dispositions in 2023 and 2024 resulted in a decrease of $16.1 million.
Current report
◦Utilities expense of $1.0 million;
Current report
◦Compensation expense of $1.0 million;
Current report
◦Janitorial expense of $0.9 million; and
Current report
◦Security expense of $0.2 million.
Showing the first 40 of 52 passages. Open the source sections for the rest.
Removed paragraphs (23)
Previous report
Dividends paid by the Company for the three months ended March 31, 2024 were funded from cash flows from operations and the Unsecured Credit Facility, as cash flows from operations were not adequate to fully fund dividends, primarily as a result of the timing of interest payments. The Company expects that cash flows from property operations will generate sufficient cash flows such that dividends for the full year 2024 can be funded by cash flows from operations or other sources of liquidity described above.
Previous report
Acquisitions
Previous report
The Company had no acquisitions for the three months ended March 31, 2024.
Previous report
The Company had no real estate dispositions during the three months ended March 31, 2024.
Previous report
Subsequent to March 31, 2024, the Company disposed of two medical outpatient buildings totaling 39,000 square feet for $5.8 million. The two properties were held for sale as of March 31, 2024.
Previous report
•$5.3 million toward capital expenditures.
Previous report
Changes in Mortgage Notes Payable
Previous report
2 For the three months ended March 31, 2024, basic weighted average common shares outstanding was the denominator used in the per share calculation.
Previous report
3 Includes costs incurred related to the Merger.
Previous report
•Acquisitions in 2023 contributed $1.1 million.
Previous report
•Dispositions in 2023 resulted in a decrease of $15.4 million.
Previous report
Other operating income decreased $0.4 million, or 9.2%, for the three months ended March 31, 2024 compared to the prior year period primarily as a result of variable parking and management fees.
Previous report
Property operating expenses decreased $1.0 million, or 0.8%, for the three months ended March 31, 2024 compared to the prior year period primarily as a result of the following activity:
Previous report
◦Utilities expense of $2.0 million;
Previous report
◦Property taxes of $0.3 million;
Previous report
◦Janitorial expense of $0.7 million; and
Previous report
◦Insurance expense of $0.2 million.
Previous report
•Decrease in compensation expense of $1.5 million.
Previous report
•Dispositions in 2023 resulted in a decrease of $8.4 million.
Previous report
Merger-related costs decreased $4.9 million for the three months ended March 31, 2024 compared to the prior year period primarily due to 2023 legal and consulting services in connection with the Merger.
Previous report
The Company had no real estate dispositions in the first quarter of 2024. In the first quarter of 2023, the Company recognized gains of approximately $1.0 million primarily on the disposition of one property.
Previous report
Contractual interest expense decreased $1.3 million, or 2.6%, for the three months ended March 31, 2024 compared to the prior year period primarily as a result of the following activity:
Previous report
Impairment of Real Estate Properties
Reworded paragraphs (45)
Previous wording
Unless stated otherwise or the context otherwise requires, references to "Healthcare Realty Trust" are to Legacy HTA after giving effect to the Merger and references to the "Company," "we," "us," and "our" are to Healthcare Realty Trust and, unless the context requires otherwise, its consolidated subsidiaries, including the OP.
Current wording
Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us," and "our" are to Healthcare Realty Trust and, unless the context requires otherwise, its consolidated subsidiaries, including the OP.
Previous wording
The Company’s primary sources of cash include rent receipts from its real estate portfolio based on contractual arrangements with its tenants, proceeds from the sales of real estate properties, joint ventures, and proceeds from public or private debt or equity offerings. As of March 31, 2024, the Company had $1.4 billion available to be drawn on its unsecured credit facility ("Unsecured Credit Facility") and available cash.
Current wording
The Company’s primary sources of cash include rent receipts from its real estate portfolio based on contractual arrangements with its tenants, proceeds from the sales of real estate properties, joint ventures, and proceeds from public or private debt or equity offerings. As of June 30, 2024, the Company had $1.3 billion available to be drawn on its unsecured credit facility ("Unsecured Credit Facility") and available cash.
Previous wording
Unsecured Credit Facility. Management believes that the Company's liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.
Current wording
The Company expects to continue to meet its liquidity needs, including funding additional investments, paying dividends, and funding debt service, through cash flows from operations and liquidity sources, including the Unsecured Credit Facility. Management believes that the Company's liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.
Previous wording
Cash flows used in investing activities for the three months ended March 31, 2024 were approximately $58.6 million. Below is a summary of the investing activities.
Current wording
Cash flows provided by investing activities for the six months ended June 30, 2024 were approximately $151.4 million. Below is a summary of the investing activities.
Previous wording
During the three months ended March 31, 2024, the Company incurred capital expenditures totaling $58.6 million for the following:
Current wording
During the six months ended June 30, 2024, the Company incurred capital costs totaling $140.7 million for the following:
Previous wording
•$10.5 million toward active development and redevelopment of properties;
Current wording
•$44.1 million toward active development and redevelopment of properties;
Previous wording
•$11.1 million toward completed development and redevelopment of properties;
Current wording
•$22.3 million toward completed development and redevelopment of properties;
Previous wording
•$11.8 million toward first generation tenant improvements and planned capital expenditures for acquisitions;
Current wording
•$24.4 million toward first generation tenant improvements and planned capital expenditures for acquisitions;
Previous wording
•$19.9 million toward second generation tenant improvements; and
Current wording
•$32.0 million toward second generation tenant improvements; and
Previous wording
Cash flows used in financing activities for the three months ended March 31, 2024 were approximately $17.1 million. See Notes 4 and 7 to the Condensed Consolidated Financial Statements accompanying this report for more information about capital markets and financing activities.
Current wording
Cash flows used in financing activities for the six months ended June 30, 2024 were approximately $379.6 million. See Notes 4 and 7 to the Condensed Consolidated Financial Statements accompanying this report for more information about capital markets and financing activities.
Previous wording
As of March 31, 2024, the Company had outstanding interest rate derivatives totaling $1.1 billion to hedge one-month Term SOFR. The following details the amount and rate of each swap (dollars in thousands):
Current wording
As of June 30, 2024, the Company had outstanding interest rate derivatives totaling $1.1 billion to hedge the one-month term Secured Overnight Financing Rate ("SOFR"). The following details the amount and rate of each swap (dollars in thousands):
Previous wording
Cash flows provided by operating activities increased from $69.2 million for the three months ended March 31, 2023 to $76.2 million for the three months ended March 31, 2024. Items impacting cash flows from operations include, but are not limited to, cash generated from property operations, interest payments and the timing related to the payment of invoices and other expenses.
Current wording
Cash flows provided by operating activities decreased from $254.3 million for the six months ended June 30, 2023 to $244.3 million for the six months ended June 30, 2024. Items impacting cash flows from operations include, but are not limited to, cash generated from property operations, interest payments and the timing of the payment of invoices and other expenses.
Previous wording
Management monitors factors and trends important to the Company and the REIT industry to gauge the potential impact on the operations of the Company. In addition to the matters discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, below are some of the factors and trends that management believes may impact future operations of the Company.
Current wording
Management monitors factors and trends important to the Company and the REIT industry to gauge the potential impact on Company operations. In addition to the matters discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, some of the factors and trends that management believes may impact future operations of the Company are outlined below.
Previous wording
The Company expects that approximately 15% of its leases will expire each year in the ordinary course of business. There are 1,146 leases totaling 3.5 million square feet that will expire during the remainder of 2024. Approximately 75%of the leases expiring during the remainder of 2024 are for space in buildings located on or adjacent to hospital campuses, are distributed throughout the portfolio, and are not concentrated with any one tenant, health system or market area. The Company typically expects to retain 75% to 90% of tenants upon expiration, and the retention ratio for the first three months of the year was within this range.
Current wording
The Company expects that approximately 15% of its leases will expire each year in the ordinary course of business. There are 793 multi-tenant leases totaling 2.5 million square feet that will expire during the remainder of 2024. Approximately 70.1% of the leases expiring during the remainder of 2024 are for space in buildings located on or adjacent to hospital campuses, are distributed throughout the portfolio, and are not concentrated with any one tenant, health system or market area. The Company typically expects to retain 75% to 90% of tenants upon expiration, and the retention ratio for the first six months of the year was within this range.
Previous wording
1 Includes three properties totaling$45.4 million with stated purchase prices or prices based on fixed capitalization rates.
Current wording
1 Includes three properties totaling $45.4 million with stated purchase prices or prices based on fixed capitalization rates.
Previous wording
2 These purchase options have been exercisable for an average of 14.1 years.
Current wording
2 These purchase options have been exercisable for an average of 14.4 years.
Previous wording
3 Includes two medical office buildings that are recorded in the line item Investment in financing receivable, net on the Company's Condensed Consolidated Balance Sheet.
Current wording
3 Includes two medical office buildings that are recorded in the line item Investment in financing receivable, net on the Company's Condensed Consolidated Balance Sheets.
Previous wording
Management believes FFO, Normalized FFO, FFO per common share, Normalized FFO per share and FAD ("Non-GAAP Measures") provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods. The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these Non-GAAP Measures. However, none of these measures represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity.
Current wording
Management believes FFO, Normalized FFO, FFO per common share, Normalized FFO per share and FAD ("Non-GAAP Measures") provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, all of which are based on historical costs, and which may be of limited relevance in evaluating current performance, Non-GAAP Measures can facilitate comparisons of operating performance between periods. The Company reports Non-GAAP Measures because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these Non-GAAP Measures. However, none of these measures represent cash generated from operating activities determined in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs. Further, these measures should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity.
Previous wording
The table below reconciles net income to FFO, Normalized FFO and FAD for the three months ended March 31, 2024 and 2023.
Current wording
The table below reconciles net income to FFO, Normalized FFO and FAD for the three and six months ended June 30, 2024 and 2023:
Previous wording
1 Potential common shares are not included in the computation of diluted earnings per share when a loss exists as the effect would be an antidilutive per share amount.
Current wording
1 Potential common shares are not included in diluted earnings per share when a loss exists as the effect would be antidilutive.
Previous wording
4 For the three months ended March 31, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities.
Current wording
2 For the three and six months ended June 30, 2024, includes a $4.9 million gain on sale of corporate assets included in "Gains on sales of real estate and other assets" on the Statement of Operations, a $2.2 million straight line rent reversed included in "Rental income" on the Statement of Operations, and a $11.2 million credit loss reserve on a note receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations. For the six months ended June 30, 2023, includes a $5.2 million credit allowance for a mezzanine loan included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations and $3.4 million reserve included in “Rental Income” on the Statement of Operations for previously deferred rent and straight line rent for three skilled nursing facilities.
Previous wording
5 Includes the Company's proportionate share of acquisition and pursuit costs related to unconsolidated joint ventures.
Current wording
3 Includes the Company's proportionate share of lease intangible amortization related to unconsolidated joint ventures.
Previous wording
6 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.
Current wording
4 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.
Previous wording
7 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.
Current wording
5 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.
Previous wording
8 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 254,261 and 401,937, respectively, for the three months ended March 31, 2024 and 2023, and the diluted impact of 3,681,225 OP Units outstanding for the three months ended March 31, 2024.
Current wording
6 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 420,687 and 442,263, respectively, for the three months ended June 30, 2024 and 2023, and the dilutive impact of 3,657,682 and 3,669,454 OP units outstanding for the three and six months ended June 30, 2024, respectively.
Previous wording
The following table reflects the Company's Same Store Cash NOI for the three months ended March 31, 2024 and 2023.
Current wording
The following table reflects the Company's Same Store Cash NOI for the six months ended June 30, 2024 and 2023:
Previous wording
The following tables reconcile net income to Same Store NOI and the same store property metrics to the total owned real estate portfolio for the three months ended March 31, 2024 and 2023:
Current wording
The following tables reconcile net loss to Same Store NOI and the same store property metrics to the total owned real estate portfolio for the six months ended June 30, 2024 and 2023:
Previous wording
Rental income decreased $6.0 million, or 1.9%, for the three months ended March 31, 2024 compared to the prior year period. This decrease is primarily comprised of the following:
Current wording
Rental income decreased $21.5 million, or 6.5%, for the three months ended June 30, 2024 compared to the prior year period. This decrease is primarily comprised of the following:
Previous wording
•Leasing activity, including contractual rent increases, contributed $8.3 million.
Current wording
•Leasing activity, including contractual rent increases, contributed $2.5 million.
Previous wording
General and administrative expenses decreased approximately $0.1 million, or 1.0%, for the three months ended March 31, 2024 compared to the prior year period primarily as a result of the following activity:
Current wording
General and administrative expenses decreased approximately $1.5 million, or 9.5%, for the three months ended June 30, 2024 compared to the prior year period primarily as a result of the following activity:
Previous wording
•Decrease in payroll and payroll related expenses of approximately $0.9 million.
Current wording
•Decrease in payroll and payroll related expenses of approximately $0.5 million.
Previous wording
•Increase in non-cash compensation incentive expense of $0.5 million.
Current wording
•Increase in cash compensation incentive expense of $0.5 million.
Previous wording
•Other decreases included legal and other administrative costs of $0.4 million.
Current wording
•Other decreases including legal and other administrative costs of $0.6 million.
Previous wording
•Various building and tenant improvement expenditures resulted in an increase of $13.0 million.
Current wording
•Various building and tenant improvement expenditures resulted in an increase of $11.6 million.
Previous wording
•Dispositions in 2023 resulted in a decrease of $11.5 million.
Current wording
•Dispositions in 2023 and 2024 resulted in a decrease of $11.5 million.
Previous wording
•Assets that became fully depreciated resulted in a decrease of $8.6 million.
Current wording
•Assets that became fully depreciated resulted in a decrease of $10.0 million.
Previous wording
Interest expense decreased $2.7 million, or 4.2%, for the three months ended March 31, 2024 compared to the prior year period. The components of interest expense are as follows:
Current wording
Interest expense decreased $2.9 million, or 4.4%, for the three months ended June 30, 2024 compared to the prior year period. The components of interest expense are as follows:
Previous wording
Depreciation and amortization expense decreased $6.4 million, or 3.4%, for the three months ended March 31, 2024 compared to the prior year period primarily as a result of the following activity:
Current wording
Contractual interest expense decreased $1.8 million, or 3.4%, for the three months ended June 30, 2024 compared to the prior year period primarily as a result of the following activity:
Previous wording
•The Unsecured Term Loans accounted for an increase of approximately $3.3 million.
Current wording
•The Unsecured Term Loans accounted for an increase of approximately $1.1 million.
Previous wording
•The Unsecured Credit Facility accounted for a decrease of approximately $4.0 million due to a decreased weighted average balance outstanding.
Current wording
•The Unsecured Credit Facility accounted for a decrease of approximately $3.3 million as a result of a decreased weighted average balance outstanding.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (19)
Current report — wording carried from elsewhere
◦Administrative, leasing commissions, and other legal expense of $2.3 million; and
Current report — wording carried from elsewhere
•Maintenance and repair expense of $1.0 million; and
Current report — wording carried from elsewhere
•Decrease in non-cash compensation incentive expense of $0.4 million.
Current report — wording carried from elsewhere
•Decrease in travel expense of $0.5 million.
Current report — wording carried from elsewhere
The Company’s results of operations for the six months ended June 30, 2024 compared to the same period in 2023 were impacted by acquisitions, developments, dispositions, gains on sale, and capital markets transactions.
Current report — wording carried from elsewhere
Rental income decreased $27.6 million, or 4.2%, for the six months ended June 30, 2024 compared to the prior year period. This decrease is primarily comprised of the following:
Current report — wording carried from elsewhere
•Leasing activity, including contractual rent increases, contributed $11.2 million.
Current report — wording carried from elsewhere
•Increases in portfolio operating expenses as follows:
Current report — wording carried from elsewhere
•Decrease in payroll and payroll related expenses of approximately $1.7 million.
Current report — wording carried from elsewhere
•Increase in non-cash compensation incentive expense of $1.2 million.
Current report — wording carried from elsewhere
•Other decreases including legal and other administrative costs of $1.1 million.
Current report — wording carried from elsewhere
•Various building and tenant improvement expenditures resulted in an increase of $24.3 million.
Current report — wording carried from elsewhere
•Assets that became fully depreciated resulted in a decrease of $18.0 million.
Current report — wording carried from elsewhere
Interest expense decreased $5.6 million, or 4.3%, for the six months ended June 30, 2024 compared to the prior year period. The components of interest expense are as follows:
Current report — wording carried from elsewhere
•The Unsecured Term Loans accounted for an increase of approximately $4.4 million.
Current report — wording carried from elsewhere
•The Unsecured Credit Facility accounted for a decrease of approximately $7.3 million as a result of a decreased weighted average balance outstanding.
Current report — wording carried from elsewhere
•Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $0.7 million.
Current report — wording carried from elsewhere
Equity loss from unconsolidated joint ventures
Current report — wording carried from elsewhere
The Company recognized its proportionate share of losses from its unconsolidated joint ventures. These losses are primarily attributable to non-cash depreciation expense. See Note 2 to the Condensed Consolidated Financial Statements accompanying this report for more details regarding the Company's unconsolidated joint ventures.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The Company expects to continue to meet its liquidity needs, including funding additional investments, paying dividends, and funding debt service, through cash flows from operations and liquidity sources, including the
Previous report — wording carried elsewhere
•Acquisitions in 2023 resulted in an increase of $0.5 million.
Previous report — wording carried elsewhere
•Increase in cash compensation incentive expense of $0.7 million.
Previous report — wording carried elsewhere
Gains on sale of real estate properties.