Healthcare Realty Trust Inc
For the period ended Mar 31, 2025. Filed May 1, 2025.
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.
Mar 31, 2025 · Filed May 1, 2025
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 2024-09-30; filed 2024-10-30.
0001360604-24-000129
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001360604-25-000059
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 184 previous paragraphs and 175 current paragraphs.
52 unchanged; 50 reworded; 69 added; 62 removed; 20 previous and 4 current paragraphs rearranged.
Tables are not compared: 10 previous and 8 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 (69)
Current report
Risks relating to our business and operations
Current report
•The Company’s revenues depend on the ability of its tenants under its leases to generate sufficient income from their operations to make rental payments to the Company;
Current report
•The Company's results of operations have been and will continue to be impacted negatively by the Steward Health and Prospect Medical bankruptcies;
Current report
•Owning real estate and indirect interests in real estate is subject to inherent risks;
Current report
•The Company has properties subject to purchase options that expose it to reinvestment risk and reduction in expected investment returns;
Current report
•If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than the previous rates or if the Company is required to undertake significant expenditures or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected;
Current report
•Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses;
Current report
•The Company has, and in the future may have more, exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense;
Current report
•The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition;
Current report
•The Company may make material acquisitions and undertake developments and redevelopments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations;
Current report
•The Company is exposed to risks associated with geographic concentration;
Current report
•Many of the Company’s leases are dependent on the viability of associated health systems. Revenue concentrations relating to these leases expose the Company to risks related to the financial condition of the associated health systems;
Current report
•Many of the Company’s properties are held under ground leases. These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties;
Current report
•Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company;
Current report
•The Company faces risks associated with security breaches through cyber attacks, cyber intrusions, or otherwise, as well as other significant disruptions of its information technology networks and related systems;
Current report
•The Company has structured and may in the future structure acquisitions of property in exchange for limited partnership units of the OP on terms that could limit its liquidity or flexibility;
Current report
•Healthcare Realty Trust is a holding company with no direct operations and, as such, it relies on funds received from the OP to pay liabilities, and the interests of its stockholders will be structurally subordinated to all liabilities and obligations of the OP and its subsidiaries
Current report
•The Company cannot assure you that it will be able to continue paying dividends at or above the rates previously paid;
Current report
•Pandemics, and measures intended to prevent their spread or mitigate their severity could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition; and
Current report
•The Company's success depends, in part, on its ability to attract and retain talented employees. The loss of any one of the Company's key personnel or the inability to maintain appropriate staffing could adversely impact the Company's business.
Current report
Risks relating to our capital structure and financings
Current report
•The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future;
Current report
•Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s consolidated financial condition and results of operations;
Current report
•If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s operations and consolidated financial position would be negatively impacted;
Current report
•The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity;
Current report
•Increases in interest rates could have a material adverse effect on the Company's cost of capital;
Current report
•The Company's swap agreements may not effectively reduce its exposure to changes in interest rates;
Current report
•The Company has entered into joint venture agreements that limit its flexibility with respect to jointly owned properties and expects to enter into additional such agreements in the future;
Current report
•The U.S. federal income tax treatment of the cash that the Company might receive from cash settlement of a forward equity agreement is unclear and could jeopardize the Company's ability to meet the REIT qualification requirements; and
Current report
•In case of our bankruptcy or insolvency, any forward equity agreements will automatically terminate, and the Company would not receive the expected proceeds from any forward sale of shares of its common stock.
Current report
Risks relating to government regulations
Current report
•The Company's property taxes could increase due to reassessment or property tax rate changes;
Current report
•Trends in the healthcare service industry may negatively affect the demand for the Company’s properties, lease revenues and the values of its investments;
Current report
•The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations;
Current report
•Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code;
Current report
•If the Company fails to remain qualified as a REIT, the Company will be subject to significant adverse consequences, including adversely affecting the value of its common stock;
Current report
•The Company’s articles of incorporation, as well as provisions of the MGCL, contain limits and restrictions on transferability of the Company’s common stock which may have adverse effects on the value of the Company’s common stock;
Current report
•Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities;
Current report
•The prohibited transactions tax may limit the Company's ability to sell properties;
Current report
•New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for the Company to qualify as a REIT; and
Showing the first 40 of 69 passages. Open the source sections for the rest.
Removed paragraphs (62)
Previous report
For a detailed discussion of the Company’s risk factors, please refer to the Company's filings with the SEC, including this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Previous 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, Austin, TX, Houston, TX, Miami, FL, and Denver, CO; two medical outpatient properties in Los Angeles and five 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.
Previous report
2 The Company sold seven medical outpatient properties in Greensboro, NC and two medical outpatient properties in Raleigh, NC to a single buyer in a single transaction.
Previous report
3 The Company sold the following medical outpatient properties into a joint venture, retaining 20% ownership: one in each of Dallas, TX, San Antonio, TX and Atlanta, GA; and two in each of Nashville, TN and Denver, CO.
Previous report
Subsequent to September 30, 2024, the Company disposed of the following properties:
Previous report
The Company sold a medical outpatient property that was included in a consolidated joint venture in which the Company held a 63% ownership interest.
Previous report
Investment in Unconsolidated Joint Venture
Previous report
During the nine months ended September 30, 2024, the Company's investment in two unconsolidated joint ventures in which it holds a 20% interest increased by $89.6 million and $21.3 million, respectively, relating to the Company's contribution of medical outpatient properties to the joint ventures.
Previous report
•$24.7 million toward building capital.
Previous report
On June 24, 2024, the Company's two mezzanine loans in Texas with a total principal balance of $54.1 million matured. 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. In the third quarter of 2024, the Company recorded an allowance for credit loss of $46.8 million to cover the entire carrying amount for these loans. As of the date of these financial statements, the outstanding principal and interest on these loans had not been repaid.
Previous report
During the second quarter of 2024, the Company placed one of its real estate notes receivable with a principal balance of $31.2 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.
Previous report
During the first quarter of 2024, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.77% per annum with an outstanding principal balance of $11.3 million. The mortgage note encumbered a 63,012 square foot property in California. Additionally, the Company repaid in full at maturity a mortgage note payable bearing interest at a rate of 4.12% per annum with an outstanding principal balance of $5.6 million. The mortgage note encumbered a 40,324 square foot property in Georgia.
Previous report
During the second quarter of 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. During the third quarter of 2024, the Company repaid an additional $150 million of the Unsecured Term Loan. In October 2024, the Company repaid the remaining $100 million outstanding of the Unsecured Term Loan.
Previous report
During the third quarter of 2024, the Company repaid in full at maturity, a mortgage note payable bearing interest at a rate of 4.15% per annum with an outstanding principal balance of $6.9 million. The mortgage note encumbered a 64,143 square foot property in Minnesota.
Previous report
Steward Health
Previous report
As previously disclosed, on May 6, 2024, Steward Health announced that it had filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. Prior to the bankruptcy filing, Steward leased approximately 593,000 square feet of space from the Company. Leases for six buildings in Massachusetts totaling approximately 244,000 square feet were assumed in connection with the sale of Steward’s Massachusetts hospitals on or about September 30, 2024. In October 2024, the Company received $2.2 million for prior rent owed under these assumed leases.
Previous report
On October 25, 2024, leases for approximately 232,000 square feet in buildings in Florida and Massachusetts were rejected by Steward effective as of October 31, 2024, bringing the total leases rejected to 266,000 square feet. The total base rent associated with the leases rejected is approximately $0.6 million per month and the Company expects to cover operating expenses of an additional $0.2 million per month. The Company is in active discussions with Steward's subtenants to lease a portion of the rejected space.
Previous report
The remaining Steward leases for approximately 83,000 square feet have not been rejected and are subject to continuing discussions. While the Company remains actively engaged in these discussions, significant uncertainty remains around whether these leases will be assumed or rejected.
Previous report
•Dispositions in 2023 and 2024 resulted in a decrease of $30.0 million.
Previous report
•Leasing activity, including contractual rent increases, resulted in an increase of $3.1 million.
Previous report
Property operating expenses decreased $11.4 million, or 8.7%, for the three months ended September 30, 2024 compared to the prior year period primarily as a result of the following activity:
Previous report
•Dispositions in 2023 and 2024 resulted in a decrease of $10.9 million.
Previous report
◦Leasing commissions expense of $1.4 million; and
Previous report
•Decreases in portfolio operating expenses as follows:
Previous report
◦Property taxes of $1.6 million;
Previous report
◦Janitorial expense of $0.5 million.
Previous report
•Increases from the following expenses:
Previous report
◦Payroll and payroll related expenses of approximately $0.7 million.
Previous report
◦Travel expenses of $0.7 million.
Previous report
There were no merger-related costs for the three months ended September 30, 2024. Merger-related costs for the three months ended September 30, 2023, included legal and consulting services.
Previous report
Depreciation and amortization expense decreased $19.8 million, or 10.8%, for the three months ended September 30, 2024 compared to the prior year period primarily as a result of the following activity:
Previous report
•Dispositions in 2023 and 2024 resulted in a decrease of $13.2 million.
Previous report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous report
Revenues
Previous report
•Dispositions in 2023 and 2024 resulted in a decrease of $61.9 million.
Previous report
•Acquisitions in 2023 resulted in an increase of $1.6 million.
Previous report
•Leasing activity, including contractual rent increases, resulted in an increase of $12.1 million.
Previous report
•Reversed revenue related to the Steward bankruptcy resulted in a decrease of $6.2 million, including straight-line rent of $2.7 million.
Previous report
Expenses
Previous report
Property operating expenses decreased $20.0 million, or 5.3%, for the nine months ended September 30, 2024 compared to the prior year period primarily as a result of the following activity:
Showing the first 40 of 62 passages. Open the source sections for the rest.
Reworded paragraphs (50)
Previous wording
The following discussion and analysis should be read together with the Consolidated Financial Statements and related Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2023, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations."
Current wording
The following discussion and analysis should be read together with the Condensed Consolidated Financial Statements and related Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. Other important factors are identified in our Annual Report on Form 10-K for the year ended December 31, 2024, including factors identified under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations."
Previous 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.
Current wording
Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us," and "our" are to Healthcare Realty Trust and its consolidated subsidiaries, including the OP.
Previous wording
This report and other materials the Company has filed or may file with the SEC, as well as information included in oral statements or other written statements made, or to be made, by management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could," "budget" and other comparable terms. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Such risks and uncertainties include, among other things, the following: the Company’s expected results may not be achieved; failure to realize the expected benefits of the Merger; risks related to future opportunities and plans for the Company, including the uncertainty of expected future financial performance and results of the Company; the possibility that, if the Company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company’s common stock could decline; pandemics or other health crises; increases in interest rates; the availability and cost of capital at expected rates; competition for quality assets; negative developments in the operating results or financial condition of the Company's tenants, including, but not limited to, their ability to pay rent; the Company's ability to reposition or sell facilities with profitable results; the Company's ability to release space at similar rates as vacancies occur; the Company's ability to renew expiring leases; government regulations affecting tenants' Medicare and Medicaid reimbursement rates and operational requirements; unanticipated difficulties and/or expenditures relating to future acquisitions and developments; changes in rules or practices governing the Company's financial reporting; the Company may be required under purchase options to sell properties and may not be able to reinvest the proceeds from such sales at rates of return equal to the return received on the properties sold; uninsured or underinsured losses related to casualty or liability; the incurrence of impairment charges on its real estate properties or other assets; other legal and operational matters; and other risks and uncertainties affecting the Company, including those described from time to time under the caption “Risk Factors” and elsewhere in the Company’s filings and reports with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Moreover, other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause ac…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This report and other materials the Company has filed or may file with the SEC, as well as information included in oral statements or other written statements made, or to be made, by senior management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could” and other comparable terms. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could materially affect the Company’s current plans and expectations and future financial condition and results. Such risks and uncertainties as more fully discussed in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and in other reports filed by the Company with the SEC from time to time include, among other things, the following:
Previous wording
•$34.6 million toward completed development and redevelopment of properties;
Current wording
•The Company is subject to risks associated with the development and redevelopment of properties;
Previous wording
Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing.
Current wording
The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports, including, without limitation, estimates and projections regarding the performance of development projects the Company is pursuing.
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 September 30, 2024, the Company had $1.3 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 March 31, 2025, the Company had$1.4 billion available to be drawn on its unsecured credit facility ("Unsecured Credit Facility") and available cash.
Previous wording
Cash flows provided by investing activities for the nine months ended September 30, 2024 were approximately $482.1 million. Below is a summary of the investing activities.
Current wording
Cash flows used in investing activities for the three months ended March 31, 2025, were approximately $38.8 million. Below is a summary of the investing activities.
Previous wording
The Company disposed of or contributed to joint ventures 41 properties during the nine months ended September 30, 2024, for a total sales price of $851.7 million, generating gross proceeds of $739.2 million, net of joint venture contributions and secured financing. The following table details these dispositions for the nine months ended September 30, 2024:
Current wording
The Company disposed of four properties during the three months ended March 31, 2025 for a total sales price of $28.1 million, generating net proceeds of $16.4 million after seller financing and closing credits. The following table details these dispositions for the three months ended March 31, 2025:
Previous wording
The Company provided seller financing of approximately $9.6 million in connection with this sale.
Current wording
2 The Company provided seller financing of approximately $5.4 million in connection with this sale.
Previous wording
During the nine months ended September 30, 2024, the Company incurred capital costs totaling $223.7 million for the following:
Current wording
During the three months ended March 31, 2025, the Company incurred capital costs totaling $67.9 million for the following:
Previous wording
•$76.4 million toward active development and redevelopment of properties;
Current wording
•$33.4 million toward development and redevelopment of properties;
Previous wording
•$39.2 million toward first generation tenant improvements and planned capital expenditures for acquisitions;
Current wording
•$13.2 million toward first generation tenant improvements and planned capital expenditures for acquisitions;
Previous wording
•$48.8 million toward second generation tenant improvements; and
Current wording
•$14.7 million toward second generation tenant improvements; and
Previous wording
Cash flows used in financing activities for the nine months ended September 30, 2024 were approximately $845.3 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 three months ended March 31, 2025 were approximately $52.1 million. See Notes 4 and 7 to the Condensed Consolidated Financial Statements accompanying this report for more information about capital markets and financing activities.
Previous wording
The OP has issued unsecured notes described in Note 4 to the Company's Condensed Consolidated Financial Statements included in this report. All unsecured notes are fully and unconditionally guaranteed by the Company, and the OP is 98.5% owned by the Company. Effective January 4, 2021, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements which permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent.
Current wording
The OP has issued unsecured notes described in Note 4 to the Company's Condensed Consolidated Financial Statements included in this report. All unsecured notes are fully and unconditionally guaranteed by the Company, and the OP is 98.7% owned by the Company. Effective January 4, 2021, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements which permit subsidiary issuers of obligations guaranteed by the parent to omit separate financial statements if the consolidated financial statements of the parent company have been filed, the subsidiary obligor is a consolidated subsidiary of the parent company, the guaranteed security is debt or debt-like, and the security is guaranteed fully and unconditionally by the parent.
Previous wording
Cash flows provided by operating activities decreased from $372.5 million for the nine months ended September 30, 2023 to $363.6 million for the nine months ended September 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.
Current wording
Cash flows provided by operating activities decreased from $76.2 million for the three months ended March 31, 2024 to $47.8 million for the three months ended March 31, 2025. 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
The Company expects that approximately 15% of its leases will expire each year in the ordinary course of business. There are 418 multi-tenant and single-tenant leases totaling 1.4 million square feet that will expire during the remainder of 2024. Approximately 69.7% 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 nine 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 1,072 multi-tenant and single-tenant leases totaling 3.9 million square feet that will expire during the remainder of 2025. Approximately 74.2% of the leases expiring during the remainder of 2025 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.
Previous wording
The Company historically has experienced increases in property taxes throughout its portfolio as a result of increasing assessments and tax rates levied across the country. The Company continues its efforts to appeal property tax increases and manage the impact of the increases. In addition, the Company historically has incurred variability in portfolio utilities expense based on seasonality, with the first and third quarters usually reflecting greater amounts. The effects of these operating expense increases are mitigated in leases that have provisions for operating expense reimbursement. As of September 30, 2024, leases for approximately 92% of the Company's total leased square footage allow for some recovery of operating expenses, with approximately 29% having modified gross lease structures and approximately 63% having net lease structures.
Current wording
The Company historically has experienced increases in property taxes throughout its portfolio as a result of increasing assessments and tax rates levied across the country. The Company continues its efforts to appeal property tax increases and manage the impact of the increases. In addition, the Company historically has incurred variability in portfolio utilities expenses based on seasonality, with the first and third quarters usually reflecting greater amounts. The effects of these operating expense increases are mitigated in leases that have provisions for operating expense reimbursement. As of March 31, 2025, leases for approximately 91% of the Company's total leased square footage allow for some recovery of operating expenses, with approximately 28% having modified gross lease structures and approximately 63% having net lease structures.
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 14.7 years.
Current wording
2 These purchase options have been exercisable for an average of 17.9 years.
Previous wording
The table below reconciles net income to FFO, Normalized FFO and FAD for the three and nine months ended September 30, 2024 and 2023:
Current wording
The table below reconciles net income to FFO, Normalized FFO and FAD for the three months ended March 31, 2025, and 2024:
Previous wording
2 For the nine months ended September 30, 2024, includes a $5.1 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 $58.0 million credit loss reserve on three notes receivable included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations. For the nine months ended September 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.
Current wording
3 For the three months ended March 31, 2025, represents a $1.9 million loss on other assets included in "Impairment of real estate properties and credit loss reserves" on the Statement of Operations.
Previous wording
3 Includes the Company's proportionate share of lease intangible amortization related to unconsolidated joint ventures.
Current wording
4 Includes the Company's proportionate share of lease intangible amortization related to unconsolidated joint ventures.
Previous wording
4 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.
Current wording
5 Includes the amortization of deferred financing costs, discounts and premiums, and non-cash financing receivable amortization.
Previous wording
5 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.
Current wording
6 Includes the Company's proportionate share of straight-line rent, net related to unconsolidated joint ventures.
Previous wording
6 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 760,552 and 432,597, respectively, for the three months ended September 30, 2024 and 2023, and the dilutive impact of 3,649,637 and 3,662,800 OP units outstanding for the three and nine months ended September 30, 2024, respectively.
Current wording
7 The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 317,511 and 254,261, respectively, for the three months ended March 31, 2025 and 2024, and the dilutive impact of 3,665,625 OP units outstanding for the three months ended March 31, 2025.
Previous wording
Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income, interest from financing receivables less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, financing receivable amortization, tenant improvement amortization and leasing commission amortization. The Company also excludes cash lease termination fees. Cash NOI is historical and not necessarily indicative of future results.
Current wording
Cash NOI and Same Store Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level operating results. The Company defines Cash NOI as rental income plus interest from financing receivables less property operating expenses. Cash NOI excludes non-cash items such as above and below market lease intangibles, straight-line rent, lease inducements, financing receivable amortization, tenant improvement amortization and leasing commission amortization. The Company also excludes cash lease termination fees. Cash NOI is historical and not necessarily indicative of future results.
Previous wording
The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction for such properties through the application of additional resources including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures.
Current wording
The Company utilizes the redevelopment classification for properties where management has approved a change in strategic direction through the application of additional resources, including an amount of capital expenditures significantly above routine maintenance and capital improvement expenditures.
Previous wording
The following table reflects the Company's Same Store Cash NOI for the nine months ended September 30, 2024 and 2023:
Current wording
The following table reflects the Company's Same Store Cash NOI for the three months ended March 31, 2025 and 2024:
Previous 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 nine months ended September 30, 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 three months ended March 31, 2025 and 2024:
Previous wording
Includes transaction costs, Merger-related costs, rent reserves, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense.
Current wording
Includes transaction costs, rent reserves, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent expense.
Previous wording
The Company’s results of operations for the three months ended September 30, 2024, compared to the same period in 2023 were impacted by acquisitions, developments, dispositions, gains on sale, and capital markets transactions.
Current wording
The Company’s results of operations for the three months ended March 31, 2025, compared to the same period in 2024 were impacted by developments, dispositions, gains on sale, and capital markets transactions.
Previous wording
Rental income decreased $26.8 million, or 8.1%, for the three months ended September 30, 2024 compared to the prior year period. This decrease is primarily comprised of the following:
Current wording
Rental income decreased $29.2 million, or 9.2%, for the three months ended March 31, 2025, compared to the prior year period. This decrease is primarily comprised of the following:
Previous wording
◦Maintenance and repair expense of $0.7 million;
Current wording
◦Maintenance and repair expense of $2.0 million;
Previous wording
◦Utilities expense of $1.3 million.
Current wording
◦Utilities expense of $0.7 million; and
Previous wording
General and administrative expenses increased approximately $6.7 million, or 50.2%, for the three months ended September 30, 2024 compared to the prior year period primarily as a result of the following activity:
Current wording
General and administrative expenses decreased approximately $1.3 million, or 8.5%, for the three months ended March 31, 2025, compared to the prior year period primarily as a result of the following activity:
Previous wording
◦Non-cash compensation incentive expense of $1.6 million.
Current wording
◦Non-cash compensation incentive expense of $0.5 million;
Previous wording
◦Cash incentive compensation expense of $0.1 million.
Current wording
◦Cash incentive compensation expense of $0.3 million; and
Previous wording
•Other decreases including travel, legal and other administrative costs of $1.5 million.
Current wording
◦Other decreases including legal and other administrative costs of $0.5 million.
Previous wording
◦Restructuring and severance-related charges of $6.2 million.
Current wording
•Increases related to restructuring and severance-related charges of $0.5 million.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
•The Company's expected results may not be achieved;
Current report — wording carried from elsewhere
•The Company may incur impairment charges on its real estate properties or other assets;
Current report — wording carried from elsewhere
•The Company may experience uninsured or underinsured losses;
Current report — wording carried from elsewhere
1 Includes two medical outpatient properties.
Rearranged previous paragraphs (20)
Previous report — wording carried elsewhere
◦Compensation expense of $0.5 million; and
Previous report — wording carried elsewhere
◦Legal and other administrative costs of $0.2 million.
Previous report — wording carried elsewhere
Contractual interest expense decreased $4.6 million, or 8.5%, for the three months ended September 30, 2024 compared to the prior year period primarily as a result of the following activity:
Previous report — wording carried elsewhere
The Company’s results of operations for the nine months ended September 30, 2024, compared to the same period in 2023 were impacted by acquisitions, developments, dispositions, gains on sale, and capital markets transactions.
Previous report — wording carried elsewhere
Rental income decreased $54.4 million, or 5.5%, for the nine months ended September 30, 2024 compared to the prior year period. This decrease is primarily comprised of the following:
Previous report — wording carried elsewhere
•Increases in portfolio operating expenses as follows:
Previous report — wording carried elsewhere
◦Maintenance and repair expense of $0.7 million; and
Previous report — wording carried elsewhere
•Increase in restructuring and severance-related charges of $6.2 million
Previous report — wording carried elsewhere
•Increase in non-cash compensation incentive expense of $1.4 million.
Previous report — wording carried elsewhere
•Various building and tenant improvement expenditures resulted in an increase of $31.6 million.
Previous report — wording carried elsewhere
•Assets that became fully depreciated resulted in a decrease of $29.2 million.
Previous report — wording carried elsewhere
Gains on sale of real estate properties and other assets
Previous report — wording carried elsewhere
Interest expense decreased $11.2 million, or 5.8%, for the nine months ended September 30, 2024, compared to the prior year period. The components of interest expense are as follows:
Previous report — wording carried elsewhere
•The Unsecured Term Loans accounted for an increase of approximately $2.5 million.
Previous report — wording carried elsewhere
•The Unsecured Credit Facility accounted for a decrease of approximately $11.1 million as a result of a decreased weighted average balance outstanding.
Previous report — wording carried elsewhere
•Active interest rate derivatives accounted for a decrease of $4.1 million, while expired interest rate derivatives accounted for an increase of $6.1 million.
Previous report — wording carried elsewhere
•Mortgage note repayments, net of assumptions, accounted for a decrease of approximately $1.1 million.
Previous report — wording carried elsewhere
Impairment of real estate properties and credit loss reserves
Previous report — wording carried elsewhere
Equity loss from unconsolidated joint ventures
Previous report — wording carried 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.