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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2018
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period to
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Maryland
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62-1507028
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(State or other jurisdiction of
Incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common stock, $0.01 par value per share
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New York Stock Exchange
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Page
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Gross Investment
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Square Feet
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Percentage of
Square Feet
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December 31, 2018
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(Dollars and square feet in thousands)
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Number of Properties
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Occupancy (1)
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|||||||
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Medical office/outpatient
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$
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3,525,277
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13,671
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92.4
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%
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189
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87.3
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%
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Inpatient
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250,919
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570
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3.8
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%
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5
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100.0
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%
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Office
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134,621
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558
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3.8
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%
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5
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85.9
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%
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Sub-Total
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3,910,817
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14,799
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100.0
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%
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199
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87.8
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%
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Construction in progress
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33,107
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Land held for development
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24,647
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Corporate property
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5,500
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|||||
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Total
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$
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3,974,071
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(1)
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The occupancy column represents the percentage of total rentable square feet leased (including month-to-month and holdover leases), excluding one property classified as held for sale as of December 31, 2018.
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Expiration Year
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Number of Leases
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Leased Square Feet
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Percentage of Leased Square Feet
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2019 (1)
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733
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2,852,561
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22.0
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%
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2020
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485
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1,899,982
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14.6
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%
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2021
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414
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1,468,849
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11.3
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%
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2022
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316
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1,396,595
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10.8
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%
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2023
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|
306
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1,335,053
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10.3
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%
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2024
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167
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943,981
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7.3
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%
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2025
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95
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723,638
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5.5
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%
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2026
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70
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226,921
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1.7
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%
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2027
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62
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625,618
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4.8
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%
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2028
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93
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755,676
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5.8
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%
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Thereafter
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77
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761,529
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5.9
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%
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2,818
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12,990,403
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100.0
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%
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(1)
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Includes 59 leases totaling 160,749 square feet that expired prior to December 31, 2018 and are currently on month-to-month terms.
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•
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the Tax Cuts and Jobs Act of 2017, affects healthcare providers and health systems in a variety of ways, positively and negatively, including by limiting their ability to deduct interest on debt, denying deductions for and imposing an excise tax on the compensation in excess of $1 million of the five most highly-compensated employees of health systems, and eliminating, in 2019, the tax penalty for the Affordable Care Act’s individual health insurance mandate;
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•
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the expansion of Medicaid benefits and the implementation of health insurance exchanges under the Affordable Care Act, whether run by the state or by the federal government, whereby individuals and small businesses purchase health insurance, including government-funded plans, many assisted by federal subsidies that are subject to ongoing legal and legislative challenges;
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•
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quality control, cost containment, and value-based payment system reforms for Medicaid and Medicare, such as expansion of pay-for-performance criteria, bundled provider payments, accountable care organizations, increased patient cost-sharing, geographic payment variations, comparative effectiveness research, and lower payments for hospital readmissions;
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•
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implementation of MACRA, which, if not amended in future legislation, will eventually replace the traditional fee-for-service payment model for physicians with a new value-based payment initiative; the CMS exempted approximately two-thirds of physician practices from MACRA compliance in 2018;
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•
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equalization of Medicare payment rates across different facility-type settings; Section 603 of the Bipartisan Budget Act of 2015 lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician office settings;
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•
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the continued adoption by providers of federal standards for the meaningful-use of electronic health records;
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•
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anti-trust scrutiny of health insurance company mergers; and
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•
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consideration of significant cost-saving overhauls of Medicare and Medicaid, including capped federal Medicaid payments to states, premium-support models to provide for a fixed amount of Medicare benefits per enrollee, and an increase in the eligibility age for Medicare.
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•
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The construction of properties generally requires various government and other approvals that may not be received when expected, or at all, which could delay or preclude commencement of construction;
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•
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Opportunities that the Company pursued but later abandoned could result in the expensing of pursuit costs, which could impact the Company’s consolidated results of operations;
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•
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Construction costs could exceed original estimates, which could impact the building’s profitability to the Company;
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•
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Operating expenses could be higher than forecasted;
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•
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Time required to initiate and complete the construction of a property and to lease up a completed property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity;
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•
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Occupancy rates and rents of a completed development property may not be sufficient to make the property profitable to the Company; and
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•
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Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed.
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•
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The Company’s purchase price for acquired facilities may be based upon a series of market or building-specific judgments which may be incorrect;
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•
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The costs of any maintenance or improvements for properties might exceed estimated costs;
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•
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The Company may incur unexpected costs in the acquisition, construction or maintenance of real estate assets that could impact its expected returns on such assets; and
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•
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Leasing may not occur at all, within expected time frames or at expected rental rates.
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•
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disrupt the proper functioning of the Company's networks and systems and therefore the Company's operations and/or those of certain tenants;
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•
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result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines;
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•
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result in the Company's inability to properly monitor its compliance with the rules and regulations regarding the Company's qualification as a REIT;
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•
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result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive, or otherwise valuable information of the Company or others, which others could use to compete against the Company or which could expose it to damage claims by third-parties for disruption, destructive, or otherwise harmful purposes or outcomes;
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•
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result in the Company's inability to maintain the building systems relied upon by the its tenants for the efficient use of their leased space;
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•
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require significant management attention and resources to remedy any damages that result;
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•
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subject the Company to claims for breach of contract, damages, credits, penalties, or termination of leases or other agreements; or
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•
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damage the Company's reputation among its tenants and investors generally.
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•
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limit the Company’s ability to adjust rapidly to changing market conditions in the event of a downturn in general economic conditions or in the real estate and/or healthcare industries;
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•
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impair the Company’s ability to obtain additional debt financing or require potentially dilutive equity to fund obligations and carry out its business strategy; and
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•
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result in a downgrade of the rating of the Company’s debt securities by one or more rating agencies, which would increase the costs of borrowing under the Unsecured Credit Facility and the cost of issuance of new debt securities, among other things.
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•
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trends in the method of delivery of healthcare services;
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•
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competition among healthcare providers;
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•
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consolidation among healthcare providers, health insurers, hospitals and health systems;
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•
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lower reimbursement rates from government and commercial payors, high uncompensated care expense, investment losses and limited admissions growth pressuring operating profit margins for healthcare providers;
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•
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availability of capital;
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•
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credit downgrades;
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•
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liability insurance expense;
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•
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pharmaceutical drug expense;
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•
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regulatory and government reimbursement uncertainty resulting from the Affordable Care Act and other healthcare reform laws;
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•
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efforts to repeal, replace or modify the Affordable Care Act in whole or in part;
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•
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health reform initiatives to address healthcare costs through expanded value-based purchasing programs, bundled provider payments, health insurance exchanges, increased patient cost-sharing, geographic payment variations, comparative effectiveness research, lower payments for hospital readmissions, and shared risk-and-reward payment models such as accountable care organizations;
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•
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federal court decisions on cases challenging the legality of the Affordable Care Act, in whole or in part;
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•
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federal and state government plans to reduce budget deficits and address debt ceiling limits by lowering healthcare provider Medicare and Medicaid payment rates;
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•
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equalizing Medicare payment rates across different settings;
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•
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heightened health information technology security standards and the meaningful use of electronic health records by healthcare providers; and
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•
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potential tax law changes affecting providers.
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•
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Preferred Stock. The Company's charter authorizes the board of directors to issue preferred stock in one or more classes and establish the preferences and rights of any class of preferred stock issued. These actions can be taken without stockholder approval. The issuance of preferred stock could have the effect of delaying or preventing someone from taking control of the Company.
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•
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Business combinations. Pursuant to the Maryland law, the Company cannot merge into or consolidate with another corporation or enter into a statutory share exchange transaction in which the Company is not the surviving entity or sell all or substantially all of its assets unless the board of directors adopts a resolution declaring the proposed transaction advisable and two-thirds of the stockholders voting together as a single class approve the transaction.
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•
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Control share acquisitions. Maryland general corporation law also provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquirer or by officers or employee directors. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or to acquisitions approved or exempted by the corporation's charter or bylaws.
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•
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Maryland unsolicited takeover statute. Under Maryland law, the Company's board of directors could adopt various anti-takeover provisions without the consent of stockholders. The adoption of such measures could discourage offers for the Company or make an acquisition of the Company more difficult. On February 12, 2019, the Company opted out of the provision of this statute that permits the board to classify without shareholder vote. As such, the Company's board could not classify into multiple classes without stockholders' approval.
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Plan Category
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Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (1)
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Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights (1)
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|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in the First
Column)
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|
Equity compensation plans approved by security holders
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|
328,533
|
|
|
—
|
|
|
1,788,760
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|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
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|
|
Total
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|
328,533
|
|
|
—
|
|
|
1,788,760
|
|
|
(1)
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The outstanding options relate only to the 2000 Employee Stock Purchase Plan. The Company is unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights under the 2000 Employee Stock Purchase Plan or the weighted average exercise price of outstanding rights under that plan. The 2000 Employee Stock Purchase Plan provides that shares of common stock may be purchased at a per share price equal to 85% of the fair market value of the common stock at the beginning of the offering period or a purchase date applicable to such offering period, whichever is lower.
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Period
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Total Number of Shares Purchased
|
|
Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
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|
|
|
January 1 - January 31
|
20,687
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|
$
|
32.12
|
|
—
|
|
—
|
|
|
February 1 - February 28
|
509
|
|
29.36
|
|
—
|
|
—
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|
|
|
March 1 - March 31
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
April 1 - April 30
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
May 1 - May 31
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
June 1 - June 30
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
July 1 - July 31
|
1,359
|
|
29.04
|
|
—
|
|
—
|
|
|
|
August 1 - August 31
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
September 1 - September 30
|
—
|
|
—
|
|
—
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|
—
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|
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|
October 1 - October 31
|
—
|
|
—
|
|
—
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|
—
|
|
|
|
November 1 - November 30
|
11,318
|
|
29.80
|
|
—
|
|
—
|
|
|
|
December 1 - December 31
|
117,480
|
|
28.89
|
|
—
|
|
—
|
|
|
|
Total
|
151,353
|
|
|
|
|
||||
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Year Ended December 31,
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||||||||||||||||||
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(Amounts in thousands except per share data)
|
2018
|
|
|
2017 (1)
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|
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2016 (1)
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|
|
2015
|
|
|
2014
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|
|||||
|
Statement of Income Data:
|
|
|
|
|
|
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|
||||||||||
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Total revenues
|
$
|
450,389
|
|
|
$
|
424,737
|
|
|
$
|
411,955
|
|
|
$
|
388,471
|
|
|
$
|
370,855
|
|
|
Total expenses
|
370,016
|
|
|
335,055
|
|
|
310,003
|
|
|
283,541
|
|
|
267,100
|
|
|||||
|
Other income (expense)
|
(10,602
|
)
|
|
(66,590
|
)
|
|
(16,381
|
)
|
|
(46,094
|
)
|
|
(69,776
|
)
|
|||||
|
Income from continuing operations
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
$
|
58,836
|
|
|
$
|
33,979
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
10,600
|
|
|
(1,799
|
)
|
|||||
|
Net income attributable to common stockholders
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
$
|
69,436
|
|
|
$
|
31,887
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Income from continuing operations
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
$
|
0.78
|
|
|
$
|
0.59
|
|
|
$
|
0.35
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.11
|
|
|
(0.02
|
)
|
|||||
|
Net income attributable to common stockholders
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
$
|
0.78
|
|
|
$
|
0.70
|
|
|
$
|
0.33
|
|
|
Weighted average common shares outstanding-Diluted
|
123,351
|
|
|
118,017
|
|
|
109,387
|
|
|
99,880
|
|
|
96,759
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Balance Sheet Data (as of the end of the period):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Real estate properties, gross
|
$
|
3,974,071
|
|
|
$
|
3,838,638
|
|
|
$
|
3,628,221
|
|
|
$
|
3,380,908
|
|
|
$
|
3,258,279
|
|
|
Real estate properties, net
|
$
|
2,958,897
|
|
|
$
|
2,941,208
|
|
|
$
|
2,787,382
|
|
|
$
|
2,618,982
|
|
|
$
|
2,557,608
|
|
|
Mortgage notes receivable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,900
|
|
|
Assets held for sale, net
|
$
|
9,272
|
|
|
$
|
33,147
|
|
|
$
|
3,092
|
|
|
$
|
724
|
|
|
$
|
9,146
|
|
|
Total assets
|
$
|
3,191,247
|
|
|
$
|
3,193,585
|
|
|
$
|
3,040,647
|
|
|
$
|
2,810,224
|
|
|
$
|
2,757,510
|
|
|
Notes and bonds payable, net
|
$
|
1,345,984
|
|
|
$
|
1,283,880
|
|
|
$
|
1,264,370
|
|
|
$
|
1,424,992
|
|
|
$
|
1,403,692
|
|
|
Total stockholders' equity
|
$
|
1,716,642
|
|
|
$
|
1,789,883
|
|
|
$
|
1,653,414
|
|
|
$
|
1,242,747
|
|
|
$
|
1,221,054
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Funds from operations (2)
|
$
|
194,960
|
|
|
$
|
134,274
|
|
|
$
|
174,420
|
|
|
$
|
124,571
|
|
|
$
|
146,493
|
|
|
Funds from operations per common share - Diluted (2)
|
$
|
1.57
|
|
|
$
|
1.13
|
|
|
$
|
1.59
|
|
|
$
|
1.25
|
|
|
$
|
1.51
|
|
|
Cash flows from operations
|
$
|
208,355
|
|
|
$
|
179,766
|
|
|
$
|
151,272
|
|
|
$
|
160,375
|
|
|
$
|
125,370
|
|
|
Dividends paid
|
$
|
150,266
|
|
|
$
|
142,327
|
|
|
$
|
131,759
|
|
|
$
|
120,266
|
|
|
$
|
116,371
|
|
|
Dividends declared and paid per common share
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
(1)
|
The Company made certain reclassifications to the Consolidated Statements of Income that are outlined in Note 1, "Summary of Significant Accounting Policies" to the Consolidated Financial Statements. Also, the Company adopted Topic 606 using the full retrospective method on January 1, 2018. The years ended December 31, 2017 and 2016 includes the impact of the adoption.
|
|
(2)
|
See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of funds from operations (“FFO”), including why the Company presents FFO and a reconciliation of net income attributable to common stockholders to FFO.
|
|
•
|
The Company's expected results may not be achieved;
|
|
•
|
The Company may decide or may be required under purchase options to sell certain properties. The Company may not be able to reinvest the proceeds from sale at rates of return equal to the return received on the properties sold. Uncertain market conditions could result in the Company selling properties at unfavorable rates or at losses in the future;
|
|
•
|
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;
|
|
•
|
Owning real estate and indirect interests in real estate is subject to inherent risks;
|
|
•
|
The Company may incur impairment charges on its real estate properties or other assets;
|
|
•
|
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 to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected;
|
|
•
|
Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses;
|
|
•
|
The Company has, and may have more in the future, 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 expenses;
|
|
•
|
The Company’s real estate investments are illiquid and the Company may not be able to sell properties strategically targeted for disposition;
|
|
•
|
The Company is subject to risks associated with the development and redevelopment of properties;
|
|
•
|
The Company may make material acquisitions and undertake developments that may involve the expenditure of significant funds and may not perform in accordance with management’s expectations;
|
|
•
|
The Company is exposed to risks associated with geographic concentration;
|
|
•
|
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;
|
|
•
|
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;
|
|
•
|
The Company may experience uninsured or underinsured losses;
|
|
•
|
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;
|
|
•
|
United States government tenants may not receive annual budget appropriations, which could adversely affect their ability to pay the Company;
|
|
•
|
The Company has incurred significant debt obligations and may incur additional debt and increase leverage in the future;
|
|
•
|
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;
|
|
•
|
A change to the Company’s current dividend payment may have an adverse effect on the market price of the Company’s common stock;
|
|
•
|
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;
|
|
•
|
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;
|
|
•
|
The Company is exposed to increases in interest rates, changes to the method that LIBOR rates are determined, and the potential phasing out of LIBOR; and such changes could adversely impact the Company's ability to refinance existing debt, sell assets or engage in acquisition and development activity;
|
|
•
|
The Company's swap agreements may not effectively reduce its exposure to changes in interest rates;
|
|
•
|
If a healthcare tenant loses its licensure or certification, becomes unable to provide healthcare services, cannot meet its financial obligations to the Company or otherwise vacates a facility, the Company would have to obtain another tenant for the affected facility;
|
|
•
|
Adverse trends in the healthcare service industry may negatively affect the Company’s lease revenues and the values of its investments;
|
|
•
|
The costs of complying with governmental laws and regulations may adversely affect the Company's results of operations;
|
|
•
|
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;
|
|
•
|
The Company's Articles of Incorporation, as well as provisions of Maryland general corporation law, 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;
|
|
•
|
Complying with the REIT requirements may cause the Company to forego otherwise attractive opportunities;
|
|
•
|
The prohibited transactions tax may limit the Company's ability to sell properties;
|
|
•
|
Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code; and
|
|
•
|
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.
|
|
•
|
Overview
|
|
•
|
Liquidity and Capital Resources
|
|
•
|
Trends and Matters Impacting Operating Results
|
|
•
|
Results of Operations
|
|
•
|
Non-GAAP Financial Measures and Key Performance Indicators
|
|
•
|
Off-Balance Sheet Arrangements
|
|
•
|
Contractual Obligations
|
|
•
|
Application of Critical Accounting Policies to Accounting Estimates
|
|
(Dollars in millions)
|
|
Health System Affiliation
|
|
Date
Acquired |
|
Purchase Price
|
|
|
Mortgage
Notes Payable Assumed |
|
|
Square
Footage |
|
|
Cap Rate (1)
|
|
|
Hospital Campus Location (2)
|
|
Type (3)
|
||
|
Seattle, WA
|
|
Overlake Health
|
|
5/4/18
|
|
$
|
7.8
|
|
|
$
|
—
|
|
|
13,314
|
|
|
5.0
|
%
|
|
ADJ
|
|
MOB
|
|
Denver, CO (4)
|
|
CHI
|
|
5/18/18
|
|
12.1
|
|
|
(8.0
|
)
|
|
93,992
|
|
|
5.5
|
%
|
|
ADJ
|
|
MOB
|
||
|
Denver, CO (4)
|
|
CHI
|
|
5/18/18
|
|
12.9
|
|
|
—
|
|
|
93,869
|
|
|
7.3
|
%
|
|
ADJ
|
|
OFC
|
||
|
Oklahoma City, OK
|
|
Integris Health
|
|
5/21/18
|
|
11.4
|
|
|
—
|
|
|
82,647
|
|
|
5.9
|
%
|
|
ADJ
|
|
MOB
|
||
|
Seattle, WA
|
|
MultiCare Health
|
|
6/29/18
|
|
26.2
|
|
|
—
|
|
|
86,942
|
|
|
5.7
|
%
|
|
ON
|
|
MOB
|
||
|
Denver, CO
|
|
CHI
|
|
8/24/18
|
|
4.1
|
|
|
—
|
|
|
17,084
|
|
|
6.0
|
%
|
|
ADJ
|
|
MOB
|
||
|
Nashville, TN
|
|
N/A
|
|
12/4/18
|
|
31.9
|
|
|
—
|
|
|
108,691
|
|
|
5.0
|
%
|
|
N/A
|
|
OFC
|
||
|
Chicago, IL (5)
|
|
Ascension Health
|
|
12/19/18
|
|
5.1
|
|
|
—
|
|
|
14,883
|
|
|
5.9
|
%
|
|
ON
|
|
MOB
|
||
|
|
|
|
|
|
|
$
|
111.5
|
|
|
$
|
(8.0
|
)
|
|
511,422
|
|
|
5.7
|
%
|
|
|
|
|
|
(1)
|
Cap rate equals the forecasted first year cash net operating income divided by the purchase price plus acquisition costs and expected first year capital expenditures.
|
|
(2)
|
ON = Located on a hospital campus; ADJ = Adjacent to hospital campus
|
|
(3)
|
MOB = medical office building; OFC = office building
|
|
(4)
|
The mortgage note payable assumed at acquisition encumbers both buildings.
|
|
(5)
|
The Company acquired an additional suite in a previously acquired medical office building.
|
|
•
|
First generation tenant improvements and planned capital expenditures for acquisitions of approximately $13.1 million;
|
|
•
|
Second generation tenant improvements of approximately $30.9 million; and
|
|
•
|
Capital expenditures of approximately $20.3 million. See the Trends and Matters Impacting Operating Results - Capital Expenditures for more detail.
|
|
(Dollars in millions)
|
|
Date Disposed
|
|
Sales Price
|
|
Square Footage
|
|
Cap Rate (1)
|
|
Type (2)
|
||||
|
Roanoke, VA (3) (4)
|
|
4/26/18
|
|
$
|
46.2
|
|
|
460,881
|
|
|
13.3
|
%
|
|
MOB, OFC
|
|
Michigan (5)
|
|
6/27/18
|
|
9.5
|
|
|
121,672
|
|
|
25.5
|
%
|
|
SNF
|
|
|
St. Louis, MO
|
|
8/30/18
|
|
9.8
|
|
|
70,893
|
|
|
4.3
|
%
|
|
MOB
|
|
|
Denver, CO
|
|
12/20/18
|
|
16.9
|
|
|
34,068
|
|
|
6.9
|
%
|
|
IRF
|
|
|
Cleveland, TN
|
|
12/21/18
|
|
13.3
|
|
|
81,382
|
|
|
6.5
|
%
|
|
MOB
|
|
|
Tucson, AZ
|
|
12/27/18
|
|
3.0
|
|
|
37,310
|
|
|
8.8
|
%
|
|
MOB
|
|
|
Total dispositions
|
|
$
|
98.7
|
|
|
806,206
|
|
|
11.4
|
%
|
|
|
||
|
(1)
|
Cap rate equals in-place cash net operating income divided by the sales price.
|
|
(2)
|
MOB = medical office building; SNF = skilled nursing facility; OFC = office; IRF = inpatient rehabilitation facility
|
|
(3)
|
Previously classified as held for sale.
|
|
(4)
|
Includes seven properties and comprised of five single-tenant net lease buildings and two multi-tenant buildings.
|
|
(5)
|
Includes five skilled nursing facilities.
|
|
•
|
In January 2018, the Company entered into two interest rate swaps totaling $50.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2022 to a fixed rate of interest of 2.46% (plus the applicable margin rate, currently 1.10%) through December 16, 2022.
|
|
•
|
The following table details the mortgage note payable activity for the year ended December 31, 2018:
|
|
(Dollars in millions)
|
|
Transaction Date
|
|
Borrowing (Repayment)
|
|
Encumbered Square Footage
|
|
Contractual Interest Rate
|
||||
|
Debt assumptions:
|
|
|
|
|
|
|
|
|
||||
|
Denver, CO (1)
|
|
05/18/18
|
|
$
|
8.0
|
|
|
187,861
|
|
|
4.5
|
%
|
|
Total borrowings
|
|
|
|
$
|
8.0
|
|
|
187,861
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
||||
|
Repayments in full:
|
|
|
|
|
|
|
|
|
||||
|
Richmond, VA
|
|
10/1/18
|
|
$
|
(5.7
|
)
|
|
59,240
|
|
|
6.6
|
%
|
|
Seattle, WA
|
|
12/3/18
|
|
(9.1
|
)
|
|
35,558
|
|
|
5.8
|
%
|
|
|
Total repayments
|
|
$
|
(14.8
|
)
|
|
94,798
|
|
|
6.1
|
%
|
||
|
(1)
|
Assumed upon acquisition and excluding fair value adjustments totaling $0.1 million in aggregate recorded at closing.
|
|
|
|
Principal Balance
|
|
Carrying Balance (3)
|
|
Weighted Years to
Maturity
|
|
|
Contractual Rate
|
|
|
Effective
Rate
|
|
|
Senior Notes due 2023
|
|
$250,000
|
|
$248,117
|
|
4.3
|
|
|
3.75
|
%
|
|
3.95
|
%
|
|
Senior Notes due 2025
|
|
250,000
|
|
248,278
|
|
6.3
|
|
|
3.88
|
%
|
|
4.08
|
%
|
|
Senior Notes due 2028
|
|
300,000
|
|
295,198
|
|
9.0
|
|
|
3.63
|
%
|
|
3.84
|
%
|
|
Total Senior Notes Outstanding
|
|
$800,000
|
|
$791,593
|
|
6.7
|
|
|
3.74
|
%
|
|
3.95
|
%
|
|
Unsecured credit facility due 2020 (1)
|
|
262,000
|
|
262,000
|
|
1.6
|
|
|
LIBOR+1.00%
|
|
|
3.50
|
%
|
|
Unsecured term loan due 2022 (2)
|
|
150,000
|
|
149,183
|
|
4.0
|
|
|
LIBOR+1.10%
|
|
|
3.53
|
%
|
|
Mortgage notes payable
|
|
143,115
|
|
143,208
|
|
5.1
|
|
|
4.96
|
%
|
|
4.79
|
%
|
|
Total Outstanding Notes and Bonds Payable
|
|
$1,355,115
|
|
$1,345,984
|
|
5.2
|
|
|
3.80
|
%
|
|
3.91
|
%
|
|
(1)
|
As of December 31, 2018, the Company had $262.0 million outstanding under the Unsecured Credit Facility with a weighted average interest rate of approximately 3.50% and a remaining borrowing capacity of approximately $438.0 million.
|
|
(2)
|
The effective interest rate includes the impact of interest rate swaps totaling $25.0 million and $50.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Term Loan to a fixed rate of interest of 2.18% and 2.46%, respectively (plus the applicable margin rate, currently 1.10%).
|
|
(3)
|
Balances are reflected net of discounts and debt issuance costs and include premiums.
|
|
•
|
The Company continued the redevelopment of a medical office building in Charlotte, North Carolina, which includes a 38,000 square foot vertical expansion. The Company funded approximately $6.1 million during the year ended December 31, 2018. The Company expects initial occupancy to occur in the second quarter of 2019.
|
|
•
|
The Company continued development of a 151,000 square foot medical office building in Seattle, Washington. The Company funded $21.5 million during the year ended December 31, 2018. The Company expects initial occupancy to occur in the fourth quarter of 2019.
|
|
•
|
The Company received a certificate of occupancy for a 99,957 square foot medical office building in Denver, Colorado in 2017. The Company spent $1.8 million during the year ended December 31, 2018 including approximately $0.1 million related to overages on tenant improvement projects that have been or will be reimbursed by the tenant. The Company anticipates funding tenant improvements throughout 2019.
|
|
•
|
The Company completed the redevelopment and expansion of one of its medical office buildings in Nashville, Tennessee in 2017. The Company spent approximately $6.1 million during the year ended December 31, 2018, including approximately $1.9 million related to overages on tenant improvement projects that have been or will be reimbursed by the tenant.
|
|
|
|
Number of Properties
|
|
Gross Real Estate Investment as of December 31, 2018
|
||||||||||||||
|
Year Exercisable
|
|
MOB
|
|
Inpatient
|
|
Fair Market Value Method (1)
|
|
|
Non Fair Market Value Method (2)
|
|
|
Total
|
|
|||||
|
Current (3)
|
|
3
|
|
|
1
|
|
|
$
|
95,709
|
|
|
$
|
—
|
|
|
$
|
95,709
|
|
|
2019
|
|
—
|
|
|
1
|
|
|
21,355
|
|
|
—
|
|
|
21,355
|
|
|||
|
2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
2021
|
|
1
|
|
|
—
|
|
|
—
|
|
|
14,984
|
|
|
14,984
|
|
|||
|
2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
2025
|
|
5
|
|
|
1
|
|
|
47,615
|
|
|
221,929
|
|
|
269,544
|
|
|||
|
2026
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
2028
|
|
1
|
|
|
—
|
|
|
43,858
|
|
|
—
|
|
|
43,858
|
|
|||
|
2029 and thereafter
|
|
3
|
|
|
—
|
|
|
75,733
|
|
|
—
|
|
|
75,733
|
|
|||
|
Total
|
|
13
|
|
|
3
|
|
|
$
|
284,270
|
|
|
$
|
236,913
|
|
|
$
|
521,183
|
|
|
(1)
|
The purchase option price includes a fair market value component that is determined by an appraisal process.
|
|
(2)
|
Includes properties with stated purchase prices or prices based on fixed capitalization rates. These properties have purchase prices that are on average 17% greater than the Company's current gross investment.
|
|
(3)
|
These purchase options have been exercisable for an average of 10.4 years.
|
|
|
% Increase
|
|
% of Base Rent
|
|
|
Annual increase
|
|
|
||
|
CPI
|
2.1
|
%
|
10.0
|
%
|
|
Fixed
|
2.9
|
%
|
81.1
|
%
|
|
Non-annual increase
|
|
|
||
|
CPI
|
0.9
|
%
|
1.5
|
%
|
|
Fixed
|
1.9
|
%
|
5.9
|
%
|
|
No increase
|
|
|
||
|
Term > 1 year
|
—
|
%
|
1.5
|
%
|
|
|
|
|
Change
|
|||||||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
|
$
|
|
|
%
|
|
|||
|
Property operating
|
$
|
390,256
|
|
|
$
|
358,009
|
|
|
$
|
32,247
|
|
|
9.0
|
%
|
|
Single-tenant net lease
|
47,860
|
|
|
52,897
|
|
|
(5,037
|
)
|
|
(9.5
|
)%
|
|||
|
Straight-line rent
|
4,281
|
|
|
6,072
|
|
|
(1,791
|
)
|
|
(29.5
|
)%
|
|||
|
Total Rental income
|
$
|
442,397
|
|
|
$
|
416,978
|
|
|
$
|
25,419
|
|
|
6.1
|
%
|
|
•
|
Acquisitions and developments in 2017 and 2018 contributed $26.8 million.
|
|
•
|
Leasing activity, including contractual rent increases, contributed $8.3 million.
|
|
•
|
The conversion of one property to single-tenant net lease resulted in a decrease of $0.6 million.
|
|
•
|
Dispositions in 2017 and 2018 resulted in a decrease of $2.3 million.
|
|
•
|
Dispositions in 2017 and 2018 resulted in a decrease of $7.2 million.
|
|
•
|
Acquisitions in 2017 contributed $0.5 million.
|
|
•
|
The conversion of one property from multi-tenant resulted in an increase of $0.4 million.
|
|
•
|
Leasing activity, including contractual rent increases, contributed $1.3 million.
|
|
•
|
Acquisitions and developments in 2017 and 2018 resulted in an increase of $0.8 million.
|
|
•
|
Dispositions in 2017 and 2018 resulted in a decrease of $0.4 million.
|
|
•
|
Net leasing activity and contractual rent increases resulted in a decrease of $2.2 million.
|
|
•
|
Acquisitions and developments in 2017 and 2018 resulted in an increase of $11.4 million.
|
|
•
|
Increases in portfolio operating expenses as follows:
|
|
◦
|
property tax expense of $1.6 million;
|
|
◦
|
compensation-related expense of $1.1 million;
|
|
◦
|
janitorial expense of $0.3 million; and
|
|
◦
|
maintenance and repair expense of $0.2 million.
|
|
•
|
Dispositions in 2017 and 2018 resulted in a decrease of $1.3 million.
|
|
•
|
Increase in non-cash performance-based compensation expense totaling $0.6 million.
|
|
•
|
Increase in payroll compensation of $0.9 million.
|
|
•
|
Decrease in cash performance-based compensation expense totaling $0.4 million.
|
|
•
|
Other net increases, including professional fees and other administrative costs, of $0.4 million.
|
|
•
|
Acquisitions and developments in 2017 and 2018 resulted in increases of $18.6 million.
|
|
•
|
Various building and tenant improvement expenditures caused increases of $11.7 million.
|
|
•
|
Dispositions in 2017 and 2018 resulted in decreases of $3.2 million.
|
|
•
|
Assets that became fully depreciated resulted in decreases of $5.4 million.
|
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
Percentage Change
|
|
|||
|
Contractual interest
|
$
|
51,147
|
|
|
$
|
54,435
|
|
|
$
|
(3,288
|
)
|
|
(6.0
|
)%
|
|
Net discount/premium accretion
|
5
|
|
|
187
|
|
|
(182
|
)
|
|
(97.3
|
)%
|
|||
|
Debt issuance costs amortization
|
2,435
|
|
|
2,476
|
|
|
(41
|
)
|
|
(1.7
|
)%
|
|||
|
Amortization of interest rate swap settlement
|
168
|
|
|
175
|
|
|
(7
|
)
|
|
(4.0
|
)%
|
|||
|
Interest cost capitalization
|
(951
|
)
|
|
(871
|
)
|
|
(80
|
)
|
|
9.2
|
%
|
|||
|
Total interest expense
|
$
|
52,804
|
|
|
$
|
56,402
|
|
|
$
|
(3,598
|
)
|
|
(6.4
|
)%
|
|
•
|
The Senior Notes due 2028 in an aggregate amount of $300.0 million were issued in the fourth quarter of 2017 and accounted for an increase of $10.3 million.
|
|
•
|
The Senior Notes due 2021 were repaid in the fourth quarter of 2017 and accounted for a decrease of $21.9 million.
|
|
•
|
The Unsecured Credit Facility due 2020 and Unsecured Term Loan due 2022 accounted for a net increase of $7.1
|
|
•
|
Mortgage notes assumed upon acquisition of real properties accounted for an increase of $1.7 million, and mortgage notes repayments accounted for a decrease of $0.2 million.
|
|
•
|
Scheduled monthly interest payments related to the Company's mortgage notes payable decreased $0.3 million.
|
|
|
|
|
Change
|
|||||||||||
|
(Dollars in thousands)
|
2017
|
|
|
2016
|
|
|
$
|
|
|
%
|
|
|||
|
Property operating
|
$
|
358,009
|
|
|
$
|
331,109
|
|
|
$
|
26,900
|
|
|
8.1
|
%
|
|
Single-tenant net lease
|
52,897
|
|
|
63,895
|
|
|
(10,998
|
)
|
|
(17.2
|
)%
|
|||
|
Straight-line rent
|
6,072
|
|
|
7,201
|
|
|
(1,129
|
)
|
|
(15.7
|
)%
|
|||
|
Total Rental income
|
$
|
416,978
|
|
|
$
|
402,205
|
|
|
$
|
14,773
|
|
|
3.7
|
%
|
|
•
|
Acquisitions and developments in 2016 and 2017 resulted in an increase of $18.2 million.
|
|
•
|
Net leasing activity including contractual rent increases and renewals contributed $13.1 million.
|
|
•
|
Dispositions in 2016 and 2017 resulted in a decrease of $4.4 million.
|
|
•
|
Dispositions in 2016 and 2017 resulted in a decrease of $10.1 million.
|
|
•
|
Reduction in lease revenue of $2.1 million upon tenant vacate and reclassification to held for sale.
|
|
•
|
Acquisitions in 2016 and 2017 resulted in an increase of $0.7 million.
|
|
•
|
Contractual rent increases resulted in an increase of $0.5 million.
|
|
•
|
Acquisitions in 2016 and 2017 resulted in an increase of $0.8 million.
|
|
•
|
Dispositions in 2016 and 2017 resulted in a decrease of $0.5 million.
|
|
•
|
The effect of prior year rent abatements that expired and net leasing activity resulted in a decrease of $1.4 million.
|
|
•
|
Acquisitions and developments in 2016 and 2017 resulted in an increase of $7.7 million.
|
|
•
|
Increases in portfolio operating expenses as follows:
|
|
◦
|
property tax expense of $2.0 million;
|
|
◦
|
maintenance and repair expense of $0.3 million;
|
|
◦
|
ground lease straight-line rent expense of $0.8 million;
|
|
◦
|
janitorial expense of $0.7 million;
|
|
◦
|
utilities expense of $0.3 million;
|
|
◦
|
compensation-related expense of $0.4 million; and
|
|
◦
|
security expense of $0.1 million.
|
|
•
|
Dispositions in 2016 and 2017 resulted in a decrease of $1.6 million.
|
|
•
|
Increase in non-cash performance-based compensation expense totaling $2.6 million.
|
|
•
|
Increase in payroll compensation of $0.4 million.
|
|
•
|
Decrease in cash performance-based compensation expense totaling $0.8 million.
|
|
•
|
Other net decreases, including professional fees and other administrative costs, of $0.5 million.
|
|
•
|
Acquisitions and developments in 2016 and 2017 resulted in increases of $11.1 million.
|
|
•
|
Various building and tenant improvement expenditures caused increases of $11.9 million.
|
|
•
|
Dispositions in 2016 and 2017 resulted in decreases of $5.2 million.
|
|
•
|
Assets that became fully depreciated resulted in decreases of $3.0 million.
|
|
(Dollars in thousands)
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
Percentage Change
|
|
|||
|
Contractual interest
|
$
|
54,435
|
|
|
$
|
55,666
|
|
|
$
|
(1,231
|
)
|
|
(2.2
|
)%
|
|
Net discount/premium accretion
|
187
|
|
|
(45
|
)
|
|
232
|
|
|
(515.6
|
)%
|
|||
|
Debt issuance costs amortization
|
2,476
|
|
|
2,820
|
|
|
(344
|
)
|
|
(12.2
|
)%
|
|||
|
Amortization of interest rate swap settlement
|
175
|
|
|
168
|
|
|
7
|
|
|
4.2
|
%
|
|||
|
Interest cost capitalization
|
(871
|
)
|
|
(1,258
|
)
|
|
387
|
|
|
(30.8
|
)%
|
|||
|
Total interest expense
|
$
|
56,402
|
|
|
$
|
57,351
|
|
|
$
|
(949
|
)
|
|
(1.7
|
)%
|
|
•
|
The Senior Notes due 2028 in an aggregate amount of $300.0 million were issued in the fourth quarter of 2017 and accounted for an increase of $0.6 million.
|
|
•
|
The Senior Notes due 2021 were repaid in the fourth quarter of 2017 and accounted for a decrease of $1.1 million.
|
|
•
|
The Unsecured Credit Facility and Unsecured Term Loan due 2022 accounted for a net decrease of $0.2 million.
|
|
•
|
Mortgage notes assumed upon acquisition of real properties accounted for an increase of $0.3 million, and mortgage notes repayments accounted for a decrease of $0.9 million.
|
|
•
|
Scheduled monthly interest payments related to the Company's mortgage notes payable increased $0.1 million.
|
|
|
Year Ended December 31,
|
||||||||||
|
(Amounts in thousands, except per share data)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Net income
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
Gain on sales of real estate properties
|
(41,665
|
)
|
|
(39,524
|
)
|
|
(41,044
|
)
|
|||
|
Impairments
|
—
|
|
|
5,385
|
|
|
121
|
|
|||
|
Real estate depreciation and amortization
|
166,854
|
|
|
145,321
|
|
|
129,772
|
|
|||
|
Total adjustments
|
125,189
|
|
|
111,182
|
|
|
88,849
|
|
|||
|
Funds from Operations
|
$
|
194,960
|
|
|
$
|
134,274
|
|
|
$
|
174,420
|
|
|
Acquisition and pursuit costs
|
738
|
|
|
2,180
|
|
|
3,414
|
|
|||
|
Write-off of debt issuance costs upon amendment of credit facilities
|
—
|
|
|
—
|
|
|
81
|
|
|||
|
Pension termination
|
—
|
|
|
—
|
|
|
4
|
|
|||
|
Forfeited earnest money received
|
(466
|
)
|
|
—
|
|
|
—
|
|
|||
|
Revaluation of awards upon retirement
|
70
|
|
|
—
|
|
|
89
|
|
|||
|
Debt financing costs
|
—
|
|
|
45,773
|
|
|
—
|
|
|||
|
Normalized Funds from Operations
|
$
|
195,302
|
|
|
$
|
182,227
|
|
|
$
|
178,008
|
|
|
Non-real estate depreciation and amortization
|
5,892
|
|
|
5,551
|
|
|
5,475
|
|
|||
|
Provision for bad debt, net
|
60
|
|
|
159
|
|
|
(21
|
)
|
|||
|
Straight-line rent income, net
|
(2,728
|
)
|
|
(4,575
|
)
|
|
(7,134
|
)
|
|||
|
Stock-based compensation
|
10,621
|
|
|
10,027
|
|
|
7,509
|
|
|||
|
Non-cash items included in cash flows from operating activities
|
13,845
|
|
|
11,162
|
|
|
5,829
|
|
|||
|
2nd Generation tenant improvements
|
(30,939
|
)
|
|
(20,367
|
)
|
|
(23,692
|
)
|
|||
|
Leasing commissions paid
|
(7,119
|
)
|
|
(7,099
|
)
|
|
(5,210
|
)
|
|||
|
Capital expenditures
|
(20,347
|
)
|
|
(18,790
|
)
|
|
(17,122
|
)
|
|||
|
Funds Available for Distribution
|
$
|
150,742
|
|
|
$
|
147,133
|
|
|
$
|
137,813
|
|
|
Funds from Operations per Common Share - Diluted
|
$
|
1.57
|
|
|
$
|
1.13
|
|
|
$
|
1.59
|
|
|
Normalized Funds from Operations per Common Share - Diluted
|
$
|
1.57
|
|
|
$
|
1.53
|
|
|
$
|
1.63
|
|
|
Weighted average common shares outstanding - Diluted
|
124,104
|
|
|
118,877
|
|
|
109,387
|
|
|||
|
|
|
|
|
|
Same Store Cash NOI for the
|
|||||||||
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||
|
(Dollars in thousands)
|
Number of Properties (1)
|
|
|
Gross Investment at December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|||
|
Multi-tenant Properties
|
151
|
|
|
$
|
2,897,873
|
|
|
$
|
208,348
|
|
|
$
|
202,556
|
|
|
Single-tenant Net Lease Properties
|
14
|
|
|
471,319
|
|
|
42,476
|
|
|
41,101
|
|
|||
|
Total
|
165
|
|
|
$
|
3,369,192
|
|
|
$
|
250,824
|
|
|
$
|
243,657
|
|
|
(1)
|
Properties are based on the same store definition included below and exclude assets classified as held for sale.
|
|
•
|
Properties having less than 60% occupancy that is expected to last at least two quarters;
|
|
•
|
Properties that experience a loss of occupancy over 30% in a single quarter; or
|
|
•
|
Properties with negative net operating income that is expected to last at least two quarters.
|
|
Reconciliation of Same Store Cash NOI:
|
|||||||
|
|
Year Ended December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
2017
|
||||
|
Net income
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
Other income (expense)
|
10,602
|
|
|
66,590
|
|
||
|
General and administrative expense
|
34,511
|
|
|
32,992
|
|
||
|
Depreciation and amortization expense
|
164,201
|
|
|
142,472
|
|
||
|
Other expenses (1)
|
7,849
|
|
|
8,626
|
|
||
|
Straight-line rent revenue
|
(4,281
|
)
|
|
(6,072
|
)
|
||
|
Other revenue (2)
|
(5,287
|
)
|
|
(4,566
|
)
|
||
|
Cash NOI
|
277,366
|
|
|
263,134
|
|
||
|
Cash NOI not included in same store
|
(26,542
|
)
|
|
(19,477
|
)
|
||
|
Same store Cash NOI
|
$
|
250,824
|
|
|
$
|
243,657
|
|
|
|
|
|
|
||||
|
(1)
|
Includes acquisition and pursuit costs, bad debt, above and below market ground lease intangible amortization, leasing commission amortization and ground lease straight-line rent.
|
|
(2)
|
Includes management fee income, storage income, interest, mortgage interest income, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.
|
|
Reconciliation of Same Store Property Count:
|
||
|
|
Property Count as of December 31, 2018
|
|
|
Same store properties
|
165
|
|
|
Acquisitions
|
22
|
|
|
Development Completions
|
1
|
|
|
Reposition
|
11
|
|
|
Total owned real estate properties
|
199
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
(Dollars in thousands)
|
Total
|
|
|
Less than
1 Year
|
|
|
1 -3
Years
|
|
|
3 - 5
Years
|
|
|
More than 5
Years
|
|
|||||
|
Long-term debt obligations, including interest (1)
|
$
|
1,602,728
|
|
|
$
|
52,365
|
|
|
$
|
376,206
|
|
|
$
|
507,276
|
|
|
$
|
666,881
|
|
|
Operating lease commitments (2)
|
349,750
|
|
|
5,288
|
|
|
10,498
|
|
|
10,431
|
|
|
323,533
|
|
|||||
|
Construction in progress (3)
|
46,133
|
|
|
39,352
|
|
|
6,781
|
|
|
—
|
|
|
—
|
|
|||||
|
Tenant improvements (4)
|
29,176
|
|
|
29,176
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total contractual obligations
|
$
|
2,027,787
|
|
|
$
|
126,181
|
|
|
$
|
393,485
|
|
|
$
|
517,707
|
|
|
$
|
990,414
|
|
|
(1)
|
The amounts shown include estimated interest on total debt other than the Unsecured Credit Facility and a portion of the Unsecured Term Loan due 2022, whose balance and interest rate may fluctuate from day to day. The fixed rate interest resulting from the Company's outstanding swaps on $75.0 million of the Unsecured Term Loan due 2022 are reflected in the table above. Excluded from the table above are the discounts on the Company's outstanding senior notes of approximately $3.4 million, net premiums totaling approximately $0.8 million on 17 mortgage notes payable, and debt issuance costs totaling approximately $6.5 million which are included in notes and bonds payable on the Company’s Consolidated Balance Sheet as of December 31, 2018. The Company’s long-term debt principal obligations are presented in more detail in the table below.
|
|
(In millions)
|
Principal Balance
at Dec. 31, 2018
|
|
|
Principal Balance
at Dec. 31, 2017
|
|
|
Maturity
Date
|
|
Contractual Interest
Rates at
December 31, 2018
|
|
|
Principal
Payments
|
|
Interest Payments
|
||
|
Unsecured Credit Facility
|
$
|
262.0
|
|
|
$
|
189.0
|
|
|
7/20
|
|
LIBOR + 1.00%
|
|
|
At maturity
|
|
Monthly
|
|
Unsecured Term Loan due 2022
|
150.0
|
|
|
150.0
|
|
|
12/22
|
|
LIBOR + 1.10%
|
|
|
At maturity
|
|
Monthly
|
||
|
Senior Notes due 2023
|
250.0
|
|
|
250.0
|
|
|
4/23
|
|
3.75
|
%
|
|
At maturity
|
|
Semi-Annual
|
||
|
Senior Notes due 2025
|
250.0
|
|
|
250.0
|
|
|
5/25
|
|
3.88
|
%
|
|
At maturity
|
|
Semi-Annual
|
||
|
Senior Notes due 2028
|
300.0
|
|
|
300.0
|
|
|
1/28
|
|
3.63
|
%
|
|
At maturity
|
|
Semi-Annual
|
||
|
Mortgage notes payable
|
143.1
|
|
|
154.9
|
|
|
7/19-5/40
|
|
3.31%-6.88%
|
|
|
Monthly
|
|
Monthly
|
||
|
|
$
|
1,355.1
|
|
|
$
|
1,293.9
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Includes primarily ground leases, with expiration dates through 2117, related to various real estate investments for which the Company is currently making payments.
|
|
(3)
|
Includes cash flow projections related to the construction of one building in Seattle, Washington and the redevelopment of a building in Charlotte, North Carolina. This amount includes $3.4 million of invoices that were accrued and included in construction in progress on the Company's Consolidated Balance Sheet as of December 31, 2018.
|
|
(4)
|
The Company has remaining tenant improvement allowances, excluding construction in progress, of approximately $29.2 million.
|
|
•
|
Management, having the authority to approve the action, commits to a plan to sell the property or disposal group;
|
|
•
|
The property or disposal group is available for immediate sale (i.e., a seller currently has the intent and ability to transfer the property or disposal group to a buyer) in its present condition, subject only to conditions that are usual and customary for sales of such properties or disposal groups;
|
|
•
|
An active program to locate a buyer and other actions required to complete the plan to sell have been initiated;
|
|
•
|
The sale of the property or disposal group is probable (i.e., likely to occur) and the transfer is expected to qualify for recognition as a completed sale within one year, with certain exceptions;
|
|
•
|
The property or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and
|
|
•
|
Actions necessary to complete the plan indicate that it is unlikely significant changes to the plan will be made or that the plan will be withdrawn.
|
|
•
|
type of contractual arrangement under which the receivable was recorded, e.g., a mortgage note, a triple net lease, a gross lease, a property operating agreement or some other type of agreement;
|
|
•
|
tenant’s or debtor’s reason for slow payment;
|
|
•
|
industry influences and healthcare segment under which the tenant or debtor operates;
|
|
•
|
evidence of willingness and ability of the tenant or debtor to pay the receivable;
|
|
•
|
credit-worthiness of the tenant or debtor;
|
|
•
|
collateral, security deposit, letters of credit or other monies held as security;
|
|
•
|
tenant’s or debtor’s historical payment pattern;
|
|
•
|
other contractual agreements between the tenant or debtor and the Company;
|
|
•
|
relationship between the tenant or debtor and the Company;
|
|
•
|
state in which the tenant or debtor operates; and
|
|
•
|
existence of a guarantor and the willingness and ability of the guarantor to pay the receivable.
|
|
|
|
|
|
|
Impact on Earnings and Cash Flows
|
||||||||||
|
(Dollars in thousands)
|
Outstanding
Principal Balance as of
December 31, 2018
|
|
|
Calculated Annual
Interest
|
|
|
Assuming 10% Increase in Market
Interest Rates
|
|
|
Assuming 10%
Decrease in Market Interest
Rates
|
|
||||
|
Variable Rate Debt:
|
|
|
|
|
|
|
|
||||||||
|
Unsecured Credit Facility
|
$
|
262,000
|
|
|
$
|
9,177
|
|
|
$
|
(656
|
)
|
|
$
|
656
|
|
|
Unsecured Term Loan due 2022 (1)
|
150,000
|
|
|
5,295
|
|
|
(530
|
)
|
|
530
|
|
||||
|
|
$
|
412,000
|
|
|
$
|
14,472
|
|
|
$
|
(1,186
|
)
|
|
$
|
1,186
|
|
|
(1)
|
As of December 31, 2018 the Company had interest rate swaps that fix the interest rate of $75.0 million of the Unsecured Term Loan due 2022.
|
|
|
|
|
Fair Value
|
||||||||||||||||
|
(Dollars in thousands)
|
Carrying Value
as of December 31, 2018
|
|
|
December 31, 2018
|
|
|
Assuming 10%
Increase in
Market Interest Rates
|
|
|
Assuming 10% Decrease in
Market Interest Rates
|
|
|
December 31, 2017 (1)
|
|
|||||
|
Fixed Rate Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Senior Notes due 2023 (2)
|
248,117
|
|
|
239,377
|
|
|
235,028
|
|
|
243,842
|
|
|
240,281
|
|
|||||
|
Senior Notes due 2025 (2)
|
248,278
|
|
|
238,811
|
|
|
232,836
|
|
|
245,147
|
|
|
241,324
|
|
|||||
|
Senior Notes due 2028 (2)
|
295,198
|
|
|
294,662
|
|
|
286,180
|
|
|
303,545
|
|
|
294,848
|
|
|||||
|
Mortgage Notes Payable (2)
|
143,208
|
|
|
142,474
|
|
|
140,649
|
|
|
144,349
|
|
|
155,301
|
|
|||||
|
|
$
|
934,801
|
|
|
$
|
915,324
|
|
|
$
|
894,693
|
|
|
$
|
936,883
|
|
|
$
|
931,754
|
|
|
(1)
|
Fair values as of December 31, 2017 represent fair values of obligations that were outstanding as of that date, and do not reflect the effect of any subsequent changes in principal balances and/or additions or extinguishments of instruments.
|
|
(2)
|
Balances are presented net of discounts and debt issuance costs and including premiums. The fair value presented is based on Level 2 inputs defined as model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
|
|
|
December 31,
|
||||||
|
|
2018
|
|
|
2017
|
|
||
|
ASSETS
|
|
|
|
||||
|
Real estate properties:
|
|
|
|
||||
|
Land
|
$
|
230,206
|
|
|
$
|
201,283
|
|
|
Buildings, improvements and lease intangibles
|
3,675,415
|
|
|
3,601,460
|
|
||
|
Personal property
|
10,696
|
|
|
10,314
|
|
||
|
Construction in progress
|
33,107
|
|
|
5,458
|
|
||
|
Land held for development
|
24,647
|
|
|
20,123
|
|
||
|
|
3,974,071
|
|
|
3,838,638
|
|
||
|
Less accumulated depreciation
|
(1,015,174
|
)
|
|
(897,430
|
)
|
||
|
Total real estate properties, net
|
2,958,897
|
|
|
2,941,208
|
|
||
|
Cash and cash equivalents
|
8,381
|
|
|
6,215
|
|
||
|
Assets held for sale, net
|
9,272
|
|
|
33,147
|
|
||
|
Other assets, net
|
214,697
|
|
|
213,015
|
|
||
|
Total assets
|
$
|
3,191,247
|
|
|
$
|
3,193,585
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
|
Liabilities:
|
|
|
|
||||
|
Notes and bonds payable
|
$
|
1,345,984
|
|
|
$
|
1,283,880
|
|
|
Accounts payable and accrued liabilities
|
80,411
|
|
|
70,995
|
|
||
|
Liabilities of properties held for sale
|
587
|
|
|
93
|
|
||
|
Other liabilities
|
47,623
|
|
|
48,734
|
|
||
|
Total liabilities
|
1,474,605
|
|
|
1,403,702
|
|
||
|
Commitments and contingencies
|
|
|
|
|
|
||
|
Stockholders' Equity:
|
|
|
|
||||
|
Preferred stock, $.01 par value; 50,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
|
Common stock, $.01 par value; 300,000 shares authorized; 125,279 and 125,132 shares issued and outstanding at December 31, 2018 and 2017, respectively.
|
1,253
|
|
|
1,251
|
|
||
|
Additional paid-in capital
|
3,180,284
|
|
|
3,173,429
|
|
||
|
Accumulated other comprehensive loss
|
(902
|
)
|
|
(1,299
|
)
|
||
|
Cumulative net income attributable to common stockholders
|
1,088,119
|
|
|
1,018,348
|
|
||
|
Cumulative dividends
|
(2,552,112
|
)
|
|
(2,401,846
|
)
|
||
|
Total stockholders’ equity
|
1,716,642
|
|
|
1,789,883
|
|
||
|
Total liabilities and stockholders' equity
|
$
|
3,191,247
|
|
|
$
|
3,193,585
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
REVENUES
|
|
|
|
|
|
||||||
|
Rental income
|
$
|
442,397
|
|
|
$
|
416,978
|
|
|
$
|
402,205
|
|
|
Other operating
|
7,992
|
|
|
7,759
|
|
|
9,750
|
|
|||
|
|
450,389
|
|
|
424,737
|
|
|
411,955
|
|
|||
|
EXPENSES
|
|
|
|
|
|
||||||
|
Property operating
|
170,506
|
|
|
157,252
|
|
|
146,529
|
|
|||
|
General and administrative
|
34,511
|
|
|
32,992
|
|
|
31,309
|
|
|||
|
Acquisition and pursuit costs
|
738
|
|
|
2,180
|
|
|
4,496
|
|
|||
|
Depreciation and amortization
|
164,201
|
|
|
142,472
|
|
|
127,690
|
|
|||
|
Bad debt, net of recoveries
|
60
|
|
|
159
|
|
|
(21
|
)
|
|||
|
|
370,016
|
|
|
335,055
|
|
|
310,003
|
|
|||
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
||||||
|
Gain on sales of real estate assets
|
41,665
|
|
|
39,524
|
|
|
41,044
|
|
|||
|
Interest expense
|
(52,804
|
)
|
|
(56,402
|
)
|
|
(57,351
|
)
|
|||
|
Loss on extinguishment of debt
|
—
|
|
|
(44,985
|
)
|
|
—
|
|
|||
|
Pension termination
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
|
Impairment of real estate assets
|
—
|
|
|
(5,385
|
)
|
|
(121
|
)
|
|||
|
Interest and other income, net
|
537
|
|
|
658
|
|
|
51
|
|
|||
|
|
(10,602
|
)
|
|
(66,590
|
)
|
|
(16,381
|
)
|
|||
|
NET INCOME
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
Basic earnings per common share
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
$
|
0.79
|
|
|
Diluted earnings per common share
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
$
|
0.78
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC
|
123,292
|
|
|
117,926
|
|
|
108,572
|
|
|||
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED
|
123,351
|
|
|
118,017
|
|
|
109,387
|
|
|||
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
NET INCOME
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
|
Interest rate swaps:
|
|
|
|
|
|
||||||
|
Reclassification adjustment for losses included in net income (Interest expense)
|
424
|
|
|
176
|
|
|
168
|
|
|||
|
Losses arising during the period
|
(27
|
)
|
|
(74
|
)
|
|
—
|
|
|||
|
Other comprehensive income
|
397
|
|
|
102
|
|
|
168
|
|
|||
|
COMPREHENSIVE INCOME
|
$
|
70,168
|
|
|
$
|
23,194
|
|
|
$
|
85,739
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
|
Cumulative
Net Income
|
|
|
Cumulative
Dividends
|
|
|
Total
Stockholders’
Equity
|
|
|||||||
|
Balance at December 31, 2015
|
$
|
—
|
|
|
$
|
1,015
|
|
|
$
|
2,461,376
|
|
|
$
|
(1,569
|
)
|
|
$
|
909,685
|
|
|
$
|
(2,127,760
|
)
|
|
$
|
1,242,747
|
|
|
Issuance of stock, net of costs
|
—
|
|
|
140
|
|
|
450,409
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
450,549
|
|
|||||||
|
Common stock redemption
|
—
|
|
|
—
|
|
|
(1,460
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,460
|
)
|
|||||||
|
Stock-based compensation
|
—
|
|
|
9
|
|
|
7,589
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,598
|
|
|||||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85,571
|
|
|
—
|
|
|
85,571
|
|
|||||||
|
Loss on forward starting interest rate swaps
|
—
|
|
|
—
|
|
|
—
|
|
|
168
|
|
|
—
|
|
|
—
|
|
|
168
|
|
|||||||
|
Dividends to common stockholders ($1.20 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(131,759
|
)
|
|
(131,759
|
)
|
|||||||
|
Balance at December 31, 2016
|
—
|
|
|
1,164
|
|
|
2,917,914
|
|
|
(1,401
|
)
|
|
995,256
|
|
|
(2,259,519
|
)
|
|
1,653,414
|
|
|||||||
|
Issuance of stock, net of costs
|
—
|
|
|
84
|
|
|
248,508
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
248,592
|
|
|||||||
|
Common stock redemption
|
—
|
|
|
(1
|
)
|
|
(3,017
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,018
|
)
|
|||||||
|
Stock-based compensation
|
—
|
|
|
4
|
|
|
10,024
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,028
|
|
|||||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,092
|
|
|
—
|
|
|
23,092
|
|
|||||||
|
Loss on forward starting interest rate swaps
|
—
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|||||||
|
Dividends to common stockholders ($1.20 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(142,327
|
)
|
|
(142,327
|
)
|
|||||||
|
Balance at December 31, 2017
|
—
|
|
|
1,251
|
|
|
3,173,429
|
|
|
(1,299
|
)
|
|
1,018,348
|
|
|
(2,401,846
|
)
|
|
1,789,883
|
|
|||||||
|
Issuance of stock, net of costs
|
—
|
|
|
—
|
|
|
616
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
616
|
|
|||||||
|
Common stock redemption
|
—
|
|
|
(1
|
)
|
|
(4,449
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,450
|
)
|
|||||||
|
Stock-based compensation
|
—
|
|
|
3
|
|
|
10,688
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,691
|
|
|||||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,771
|
|
|
—
|
|
|
69,771
|
|
|||||||
|
Loss on interest rate swaps
|
—
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|||||||
|
Dividends to common stockholders ($1.20 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(150,266
|
)
|
|
(150,266
|
)
|
|||||||
|
Balance at December 31, 2018
|
$
|
—
|
|
|
$
|
1,253
|
|
|
$
|
3,180,284
|
|
|
$
|
(902
|
)
|
|
$
|
1,088,119
|
|
|
$
|
(2,552,112
|
)
|
|
$
|
1,716,642
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
|
Net income
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
164,201
|
|
|
142,472
|
|
|
127,690
|
|
|||
|
Other amortization
|
3,000
|
|
|
3,879
|
|
|
3,351
|
|
|||
|
Share-based compensation
|
10,691
|
|
|
10,028
|
|
|
7,598
|
|
|||
|
Amortization of straight-line rent receivable
|
(4,281
|
)
|
|
(6,072
|
)
|
|
(7,201
|
)
|
|||
|
Amortization of straight-line rent liability
|
1,519
|
|
|
1,497
|
|
|
67
|
|
|||
|
Gain on sales of real estate assets
|
(41,665
|
)
|
|
(39,524
|
)
|
|
(41,044
|
)
|
|||
|
Loss on extinguishment of debt
|
—
|
|
|
44,985
|
|
|
—
|
|
|||
|
Impairment of real estate assets
|
—
|
|
|
5,385
|
|
|
121
|
|
|||
|
Equity from unconsolidated joint ventures (income)
|
(4
|
)
|
|
(7
|
)
|
|
—
|
|
|||
|
Distributions from unconsolidated joint ventures
|
182
|
|
|
—
|
|
|
—
|
|
|||
|
Provision for bad debts, net
|
60
|
|
|
159
|
|
|
(21
|
)
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
|
Other assets
|
(3,998
|
)
|
|
(2,156
|
)
|
|
(1,332
|
)
|
|||
|
Accounts payable and accrued liabilities
|
4,731
|
|
|
(7,307
|
)
|
|
449
|
|
|||
|
Other liabilities
|
4,148
|
|
|
3,335
|
|
|
(23,977
|
)
|
|||
|
Net cash provided by operating activities
|
208,355
|
|
|
179,766
|
|
|
151,272
|
|
|||
|
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
|
Acquisitions of real estate
|
(104,312
|
)
|
|
(274,668
|
)
|
|
(224,944
|
)
|
|||
|
Development of real estate
|
(26,728
|
)
|
|
(14,911
|
)
|
|
(34,719
|
)
|
|||
|
Additional long-lived assets
|
(70,807
|
)
|
|
(80,613
|
)
|
|
(71,433
|
)
|
|||
|
Investment in unconsolidated joint ventures
|
—
|
|
|
(8,701
|
)
|
|
—
|
|
|||
|
Proceeds from sales of real estate
|
96,812
|
|
|
119,426
|
|
|
93,253
|
|
|||
|
Proceeds from notes receivable repayments
|
8
|
|
|
19
|
|
|
19
|
|
|||
|
Net cash used in investing activities
|
(105,027
|
)
|
|
(259,448
|
)
|
|
(237,824
|
)
|
|||
|
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
|
Net borrowings (repayments) on unsecured credit facility
|
73,000
|
|
|
82,000
|
|
|
(99,000
|
)
|
|||
|
Repayment on term loan
|
—
|
|
|
—
|
|
|
(50,000
|
)
|
|||
|
Borrowings of notes and bonds payable
|
—
|
|
|
297,459
|
|
|
11,500
|
|
|||
|
Repayments of notes and bonds payable
|
(19,850
|
)
|
|
(5,829
|
)
|
|
(37,910
|
)
|
|||
|
Redemption of notes and bonds payable
|
—
|
|
|
(442,774
|
)
|
|
—
|
|
|||
|
Dividends paid
|
(150,266
|
)
|
|
(142,327
|
)
|
|
(131,759
|
)
|
|||
|
Net proceeds from issuance of common stock
|
611
|
|
|
248,554
|
|
|
450,503
|
|
|||
|
Common stock redemptions
|
(4,532
|
)
|
|
(1,686
|
)
|
|
(1,756
|
)
|
|||
|
Debt issuance and assumption costs
|
(125
|
)
|
|
(4,007
|
)
|
|
(4,621
|
)
|
|||
|
Net cash (used in) provided by financing activities
|
(101,162
|
)
|
|
31,390
|
|
|
136,957
|
|
|||
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
2,166
|
|
|
(48,292
|
)
|
|
50,405
|
|
|||
|
Cash, cash equivalents and restricted cash at beginning of period
|
6,215
|
|
|
54,507
|
|
|
4,102
|
|
|||
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
8,381
|
|
|
$
|
6,215
|
|
|
$
|
54,507
|
|
|
|
|
|
|
|
|
||||||
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
||||||
|
Interest paid
|
$
|
45,752
|
|
|
$
|
64,395
|
|
|
$
|
55,878
|
|
|
Mortgage notes payable assumed upon acquisition (adjusted to fair value)
|
$
|
7,995
|
|
|
$
|
43,674
|
|
|
$
|
13,951
|
|
|
Invoices accrued for construction, tenant improvements and other capitalized costs
|
$
|
12,682
|
|
|
$
|
8,303
|
|
|
$
|
11,734
|
|
|
Capitalized interest
|
$
|
951
|
|
|
$
|
871
|
|
|
$
|
1,258
|
|
|
Land improvements
|
5.0 to 39.0 years
|
|
Buildings and improvements
|
3.3 to 39.0 years
|
|
Lease intangibles (including ground lease intangibles)
|
2.1 to 99.0 years
|
|
Personal property
|
2.8 to 20.0 years
|
|
•
|
Level 1 – quoted prices for identical instruments in active markets;
|
|
•
|
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
|
|
•
|
Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
|
(in thousands)
|
Year Ended December 31,
|
||||||||||
|
Type of Revenue
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Parking income
|
$
|
6,930
|
|
|
$
|
6,611
|
|
|
$
|
6,121
|
|
|
Property lease guaranty income
|
675
|
|
|
726
|
|
|
3,058
|
|
|||
|
Management fee income
|
273
|
|
|
308
|
|
|
402
|
|
|||
|
Miscellaneous
|
114
|
|
|
114
|
|
|
169
|
|
|||
|
|
$
|
7,992
|
|
|
$
|
7,759
|
|
|
$
|
9,750
|
|
|
|
Year Ended December 31,
|
||||||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Property operating income
|
$
|
390,256
|
|
|
$
|
358,009
|
|
|
$
|
331,109
|
|
|
Single-tenant net lease
|
47,860
|
|
|
52,897
|
|
|
63,895
|
|
|||
|
Straight-line rent
|
4,281
|
|
|
6,072
|
|
|
7,201
|
|
|||
|
Rental income
|
$
|
442,397
|
|
|
$
|
416,978
|
|
|
$
|
402,205
|
|
|
|
Year Ended December 31,
|
||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||
|
(in thousands)
|
As Previously Reported
|
|
As Reclassified
|
|
As Previously Reported
|
|
As Reclassified
|
||||||||
|
EXPENSES
|
|
|
|
|
|
|
|
||||||||
|
Property operating expense
|
$
|
157,233
|
|
|
$
|
157,252
|
|
|
$
|
146,458
|
|
|
$
|
146,529
|
|
|
Bad debt, net
|
169
|
|
|
159
|
|
|
(21
|
)
|
|
(21
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
|
Gain on sales of properties
|
$
|
39,519
|
|
|
$
|
39,524
|
|
|
$
|
41,038
|
|
|
$
|
41,044
|
|
|
Impairments
|
(5,385
|
)
|
|
(5,385
|
)
|
|
—
|
|
|
(121
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
INCOME FROM CONTINUING OPERATIONS
|
$
|
23,096
|
|
|
$
|
23,092
|
|
|
$
|
85,756
|
|
|
$
|
85,571
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
|
||||||||
|
Loss from discontinued operations
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
(71
|
)
|
|
$
|
—
|
|
|
Impairments of real estate assets
|
—
|
|
|
—
|
|
|
(121
|
)
|
|
—
|
|
||||
|
Gain on sales of properties
|
5
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
|
LOSS FROM DISCONTINUED OPERATIONS
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(185
|
)
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||
|
(in thousands)
|
As Previously Reported
|
|
As Reclassified
|
|
As Previously Reported
|
|
As Reclassified
|
||||||||
|
REVENUES
|
|
|
|
|
|
|
|
||||||||
|
Rental income
|
$
|
422,852
|
|
|
$
|
416,978
|
|
|
$
|
407,481
|
|
|
$
|
402,205
|
|
|
Other operating
|
1,647
|
|
|
7,759
|
|
|
4,149
|
|
|
9,750
|
|
||||
|
|
$
|
424,499
|
|
|
$
|
424,737
|
|
|
$
|
411,630
|
|
|
$
|
411,955
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
|
Interest and other income, net
|
$
|
896
|
|
|
$
|
658
|
|
|
$
|
375
|
|
|
$
|
51
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
NET INCOME
|
$
|
23,092
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
$
|
85,571
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in thousands)
|
Number of Facilities
|
|
|
Land
|
|
|
Buildings, Improvements,and Lease Intangibles
|
|
|
Personal Property
|
|
|
Total
|
|
|
Accumulated Depreciation
|
|
|||||
|
Dallas, TX
|
25
|
|
|
$
|
16,911
|
|
|
$
|
464,077
|
|
|
$
|
430
|
|
|
$
|
481,418
|
|
|
$
|
(166,980
|
)
|
|
Seattle, WA
|
19
|
|
|
28,867
|
|
|
438,880
|
|
|
419
|
|
|
468,166
|
|
|
(69,148
|
)
|
|||||
|
Nashville, TN
|
6
|
|
|
20,053
|
|
|
176,257
|
|
|
1,041
|
|
|
197,351
|
|
|
(53,052
|
)
|
|||||
|
Atlanta, GA
|
8
|
|
|
1,015
|
|
|
189,167
|
|
|
37
|
|
|
190,219
|
|
|
(11,547
|
)
|
|||||
|
Los Angeles, CA
|
12
|
|
|
27,709
|
|
|
157,496
|
|
|
316
|
|
|
185,521
|
|
|
(87,678
|
)
|
|||||
|
Charlotte, NC
|
16
|
|
|
4,200
|
|
|
162,922
|
|
|
99
|
|
|
167,221
|
|
|
(60,389
|
)
|
|||||
|
Denver, CO
|
9
|
|
|
16,514
|
|
|
131,760
|
|
|
273
|
|
|
148,547
|
|
|
(20,315
|
)
|
|||||
|
Richmond, VA
|
7
|
|
|
—
|
|
|
147,809
|
|
|
106
|
|
|
147,915
|
|
|
(38,288
|
)
|
|||||
|
Honolulu, HI
|
3
|
|
|
8,327
|
|
|
134,037
|
|
|
159
|
|
|
142,523
|
|
|
(34,703
|
)
|
|||||
|
Des Moines, IA
|
7
|
|
|
12,665
|
|
|
127,063
|
|
|
99
|
|
|
139,827
|
|
|
(30,376
|
)
|
|||||
|
Houston, TX
|
8
|
|
|
13,672
|
|
|
118,918
|
|
|
77
|
|
|
132,667
|
|
|
(39,195
|
)
|
|||||
|
Oklahoma City, OK
|
3
|
|
|
9,427
|
|
|
111,452
|
|
|
10
|
|
|
120,889
|
|
|
(14,751
|
)
|
|||||
|
San Francisco, CA
|
3
|
|
|
14,054
|
|
|
105,611
|
|
|
43
|
|
|
119,708
|
|
|
(15,539
|
)
|
|||||
|
Springfield, MO
|
1
|
|
|
1,989
|
|
|
109,304
|
|
|
—
|
|
|
111,293
|
|
|
(14,893
|
)
|
|||||
|
Austin, TX
|
5
|
|
|
14,236
|
|
|
91,816
|
|
|
119
|
|
|
106,171
|
|
|
(20,766
|
)
|
|||||
|
Washington, DC
|
4
|
|
|
—
|
|
|
101,186
|
|
|
8
|
|
|
101,194
|
|
|
(20,701
|
)
|
|||||
|
Memphis, TN
|
7
|
|
|
5,241
|
|
|
90,966
|
|
|
191
|
|
|
96,398
|
|
|
(35,109
|
)
|
|||||
|
San Antonio, TX
|
7
|
|
|
6,647
|
|
|
88,954
|
|
|
378
|
|
|
95,979
|
|
|
(37,877
|
)
|
|||||
|
Chicago, IL
|
3
|
|
|
5,859
|
|
|
86,068
|
|
|
201
|
|
|
92,128
|
|
|
(19,372
|
)
|
|||||
|
Indianapolis, IN
|
3
|
|
|
3,299
|
|
|
72,360
|
|
|
—
|
|
|
75,659
|
|
|
(21,299
|
)
|
|||||
|
Minneapolis, MN
|
4
|
|
|
2,090
|
|
|
61,761
|
|
|
—
|
|
|
63,851
|
|
|
(7,750
|
)
|
|||||
|
Other (20 markets)
|
39
|
|
|
17,431
|
|
|
507,551
|
|
|
1,190
|
|
|
526,172
|
|
|
(190,586
|
)
|
|||||
|
|
199
|
|
|
230,206
|
|
|
3,675,415
|
|
|
5,196
|
|
|
3,910,817
|
|
|
(1,010,314
|
)
|
|||||
|
Land held for development
|
—
|
|
|
24,647
|
|
|
—
|
|
|
—
|
|
|
24,647
|
|
|
(393
|
)
|
|||||
|
Construction in progress
|
|
|
—
|
|
|
33,107
|
|
|
—
|
|
|
33,107
|
|
|
—
|
|
||||||
|
Corporate property
|
—
|
|
|
—
|
|
|
|
|
|
5,500
|
|
|
5,500
|
|
|
(4,467
|
)
|
|||||
|
Total real estate investments
|
199
|
|
|
$
|
254,853
|
|
|
$
|
3,708,522
|
|
|
$
|
10,696
|
|
|
$
|
3,974,071
|
|
|
$
|
(1,015,174
|
)
|
|
2019
|
$
|
326,441
|
|
|
2020
|
279,211
|
|
|
|
2021
|
235,660
|
|
|
|
2022
|
201,072
|
|
|
|
2023
|
163,978
|
|
|
|
2024 and thereafter
|
476,673
|
|
|
|
|
$
|
1,683,035
|
|
|
(Dollars in millions)
|
Type (1)
|
|
Date
Acquired |
|
Purchase Price
|
|
|
Mortgage
Notes Payable Assumed (2) |
|
|
Cash
Consideration(3) |
|
|
Real
Estate |
|
|
Other (4)
|
|
|
Square
Footage (Unaudited) |
|
|||||
|
Seattle, WA
|
MOB
|
|
5/4/18
|
|
$
|
7.8
|
|
|
$
|
—
|
|
|
$
|
7.8
|
|
|
$
|
7.8
|
|
|
$
|
—
|
|
|
13,314
|
|
|
Denver, CO (5)
|
MOB
|
|
5/18/18
|
|
12.1
|
|
|
(8.0
|
)
|
|
3.8
|
|
|
12.1
|
|
|
(0.2
|
)
|
|
93,992
|
|
|||||
|
Denver, CO (5)
|
OFC
|
|
5/18/18
|
|
12.9
|
|
|
—
|
|
|
12.8
|
|
|
13.0
|
|
|
(0.2
|
)
|
|
93,869
|
|
|||||
|
Oklahoma City, OK
|
MOB
|
|
5/21/18
|
|
11.4
|
|
|
—
|
|
|
11.4
|
|
|
11.5
|
|
|
(0.1
|
)
|
|
82,647
|
|
|||||
|
Seattle, WA
|
MOB
|
|
6/29/18
|
|
26.2
|
|
|
—
|
|
|
26.2
|
|
|
26.7
|
|
|
(0.5
|
)
|
|
86,942
|
|
|||||
|
Denver, CO
|
MOB
|
|
8/24/18
|
|
4.1
|
|
|
—
|
|
|
4.2
|
|
|
4.2
|
|
|
—
|
|
|
17,084
|
|
|||||
|
Nashville, TN
|
OFC
|
|
12/4/18
|
|
31.9
|
|
|
—
|
|
|
32.0
|
|
|
32.0
|
|
|
—
|
|
|
108,691
|
|
|||||
|
Chicago, IL (5)
|
MOB
|
|
12/19/18
|
|
5.1
|
|
|
—
|
|
|
4.9
|
|
|
5.1
|
|
|
(0.2
|
)
|
|
14,883
|
|
|||||
|
|
|
|
|
|
$
|
111.5
|
|
|
$
|
(8.0
|
)
|
|
$
|
103.1
|
|
|
$
|
112.4
|
|
|
$
|
(1.2
|
)
|
|
511,422
|
|
|
(1)
|
MOB = medical office building; OFC = office
|
|
(2)
|
The mortgage note payable assumed in the acquisition does not reflect the fair value premium totaling $0.1 million recorded by the Company upon acquisition (included in Other).
|
|
(3)
|
Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.
|
|
(4)
|
Includes other assets acquired, liabilities assumed, intangibles recognized at acquisition and fair value adjustments on debt assumed.
|
|
(5)
|
The mortgage note payable assumed at acquisition encumbers both buildings.
|
|
(6)
|
The Company acquired an additional suite in a previously acquired medical office building.
|
|
|
Estimated Fair Value
|
|
|
Estimated Useful Life
|
|
|
|
|
(In millions)
|
|
(In years)
|
|||
|
Building
|
$
|
64.0
|
|
|
20.0 - 30.0
|
|
|
Land
|
31.4
|
|
|
—
|
|
|
|
Land Improvements
|
2.7
|
|
|
5.0 - 13.5
|
|
|
|
Intangibles:
|
|
|
|
|||
|
At-market lease intangibles
|
14.3
|
|
|
1.3 - 4.2
|
|
|
|
Below-market lease intangibles
|
(0.1
|
)
|
|
3.8
|
|
|
|
Total intangibles
|
14.2
|
|
|
|
||
|
Mortgage notes payable assumed, including fair value adjustments
|
(8.0
|
)
|
|
|
||
|
Other assets acquired
|
0.2
|
|
|
|
||
|
Accounts payable, accrued liabilities and other liabilities assumed
|
(1.4
|
)
|
|
|
||
|
Total cash paid
|
$
|
103.1
|
|
|
|
|
|
(Dollars in millions)
|
Type (1)
|
|
Date
Acquired |
|
Purchase Price
|
|
|
Mortgage
Notes Payable Assumed (2) |
|
|
Cash
Consideration(3) |
|
|
Real
Estate |
|
|
Other (4)
|
|
|
Square
Footage (Unaudited) |
|
|||||
|
Real estate acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
St. Paul, MN
|
MOB
|
|
3/6/17
|
|
$
|
13.5
|
|
|
$
|
—
|
|
|
$
|
13.5
|
|
|
$
|
13.3
|
|
|
$
|
0.2
|
|
|
34,608
|
|
|
San Francisco, CA
|
MOB
|
|
6/12/17
|
|
26.8
|
|
|
—
|
|
|
26.8
|
|
|
26.8
|
|
|
—
|
|
|
75,649
|
|
|||||
|
Washington, D.C.
|
MOB
|
|
6/13/17
|
|
24.0
|
|
|
(12.1
|
)
|
|
12.5
|
|
|
24.8
|
|
|
(0.2
|
)
|
|
62,379
|
|
|||||
|
Los Angeles, CA
|
MOB
|
|
7/31/17
|
|
16.3
|
|
|
—
|
|
|
16.7
|
|
|
16.9
|
|
|
(0.2
|
)
|
|
42,780
|
|
|||||
|
Atlanta, GA
|
MOB
|
|
11/1/17
|
|
25.5
|
|
|
—
|
|
|
25.5
|
|
|
26.3
|
|
|
(0.8
|
)
|
|
76,944
|
|
|||||
|
Atlanta, GA
|
MOB
|
|
11/1/17
|
|
30.3
|
|
|
—
|
|
|
30.7
|
|
|
30.7
|
|
|
—
|
|
|
74,024
|
|
|||||
|
Atlanta, GA (5)
|
MOB
|
|
11/1/17
|
|
49.7
|
|
|
—
|
|
|
50.9
|
|
|
47.5
|
|
|
3.4
|
|
|
118,180
|
|
|||||
|
Atlanta, GA
|
MOB
|
|
11/1/17
|
|
6.7
|
|
|
—
|
|
|
6.7
|
|
|
6.7
|
|
|
—
|
|
|
19,732
|
|
|||||
|
Seattle, WA
|
MOB
|
|
11/1/17
|
|
12.7
|
|
|
—
|
|
|
12.6
|
|
|
12.8
|
|
|
(0.2
|
)
|
|
26,345
|
|
|||||
|
Atlanta, GA (5)
|
MOB
|
|
12/13/17
|
|
25.8
|
|
|
(10.5
|
)
|
|
15.3
|
|
|
22.0
|
|
|
3.8
|
|
|
59,427
|
|
|||||
|
Atlanta, GA
|
MOB
|
|
12/13/17
|
|
15.4
|
|
|
(4.7
|
)
|
|
10.8
|
|
|
15.7
|
|
|
(0.2
|
)
|
|
40,171
|
|
|||||
|
Atlanta, GA (5)
|
MOB
|
|
12/18/17
|
|
26.3
|
|
|
(11.8
|
)
|
|
14.5
|
|
|
24.6
|
|
|
1.7
|
|
|
66,984
|
|
|||||
|
Atlanta, GA
|
MOB
|
|
12/18/17
|
|
14.2
|
|
|
(6.7
|
)
|
|
7.6
|
|
|
14.5
|
|
|
(0.2
|
)
|
|
40,324
|
|
|||||
|
Chicago, IL
|
MOB
|
|
12/18/17
|
|
28.7
|
|
|
—
|
|
|
27.7
|
|
|
28.5
|
|
|
(0.8
|
)
|
|
99,526
|
|
|||||
|
Seattle, WA
|
MOB
|
|
12/18/17
|
|
8.8
|
|
|
—
|
|
|
8.8
|
|
|
9.0
|
|
|
(0.2
|
)
|
|
32,828
|
|
|||||
|
Austin, TX (6)
|
MOB
|
|
12/21/17
|
|
2.5
|
|
|
—
|
|
|
2.5
|
|
|
2.5
|
|
|
—
|
|
|
7,972
|
|
|||||
|
|
|
|
|
|
$
|
327.2
|
|
|
$
|
(45.8
|
)
|
|
$
|
283.1
|
|
|
$
|
322.6
|
|
|
$
|
6.3
|
|
|
877,873
|
|
|
(1)
|
MOB = medical office building
|
|
(2)
|
The mortgage notes payable assumed in the acquisitions do not reflect the fair value adjustments totaling $0.6 million in aggregate recorded by the Company upon acquisition (included in Other).
|
|
(3)
|
Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.
|
|
(4)
|
Includes other assets acquired, liabilities assumed, intangibles recognized at acquisition and fair value adjustments on debt assumed.
|
|
(5)
|
The "Other" column includes the equity investment in limited liability companies that own two parking garages.
|
|
(6)
|
The Company acquired additional ownership interests in an existing building bringing the Company's ownership to 69.4%.
|
|
|
Estimated Fair Value
|
|
|
Estimated Useful Life
|
|
|
|
|
(In millions)
|
|
(In years)
|
|||
|
Building
|
$
|
272.1
|
|
|
15.0 - 37.0
|
|
|
Land
|
11.7
|
|
|
—
|
|
|
|
Land Improvements
|
1.6
|
|
|
5.0 - 12.0
|
|
|
|
Intangibles:
|
|
|
|
|||
|
At-market lease intangibles
|
37.2
|
|
|
2.1 - 12.6
|
|
|
|
Below-market lease intangibles
|
(0.9
|
)
|
|
8.5 - 15.0
|
|
|
|
Below-market ground lease intangibles
|
0.4
|
|
|
36.8 - 99.0
|
|
|
|
Total intangibles
|
36.7
|
|
|
|
||
|
Mortgage notes payable assumed, including fair value adjustments
|
(46.4
|
)
|
|
|
||
|
Other assets acquired
|
0.4
|
|
|
|
||
|
Equity investment in joint ventures
|
8.7
|
|
|
|
||
|
Accounts payable, accrued liabilities and other liabilities assumed
|
(1.7
|
)
|
|
|
||
|
Total cash paid
|
$
|
283.1
|
|
|
|
|
|
(Dollars in millions)
|
Type (1)
|
|
Date
Disposed |
|
Sales Price
|
|
Closing Adjustments
|
|
Net
Proceeds |
|
Net Real
Estate Investment |
|
Other
(including receivables) (3) |
|
Gain/
(Impairment) |
|
Square
Footage (Unaudited) |
|||||||||||||
|
Real estate dispositions
|
||||||||||||||||||||||||||||||
|
Roanoke, VA (2) (4)
|
MOB, OFC
|
|
4/26/18
|
|
$
|
46.2
|
|
|
$
|
—
|
|
|
$
|
46.2
|
|
|
$
|
23.9
|
|
|
$
|
—
|
|
|
$
|
22.3
|
|
|
460,881
|
|
|
Michigan (5)
|
SNF
|
|
6/27/18
|
|
9.5
|
|
|
(0.7
|
)
|
|
8.8
|
|
|
3.4
|
|
|
—
|
|
|
5.4
|
|
|
121,672
|
|
||||||
|
St. Louis, MO
|
MOB
|
|
8/30/18
|
|
9.8
|
|
|
(0.5
|
)
|
|
9.3
|
|
|
7.5
|
|
|
0.5
|
|
|
1.3
|
|
|
70,893
|
|
||||||
|
Denver, CO
|
IRF
|
|
12/20/18
|
|
16.9
|
|
|
(0.3
|
)
|
|
16.6
|
|
|
9.2
|
|
|
1.4
|
|
|
6.0
|
|
|
34,068
|
|
||||||
|
Cleveland, TN
|
MOB
|
|
12/21/18
|
|
13.3
|
|
|
(0.2
|
)
|
|
13.1
|
|
|
8.6
|
|
|
0.4
|
|
|
4.1
|
|
|
81,382
|
|
||||||
|
Tucson, AZ
|
MOB
|
|
12/27/18
|
|
3.0
|
|
|
(0.2
|
)
|
|
2.8
|
|
|
1.9
|
|
|
0.2
|
|
|
0.7
|
|
|
37,310
|
|
||||||
|
Total dispositions
|
|
$
|
98.7
|
|
|
$
|
(1.9
|
)
|
|
$
|
96.8
|
|
|
$
|
54.5
|
|
|
$
|
2.5
|
|
|
$
|
39.8
|
|
|
806,206
|
|
|||
|
(1)
|
MOB = medical office building; IRF = inpatient rehabilitation facility; OFC = office; SNF = skilled nursing facility
|
|
(2)
|
Previously classified as held for sale.
|
|
(3)
|
Includes straight-line rent receivables, leasing commissions and lease inducements.
|
|
(4)
|
Includes seven properties and comprised of five single-tenant net lease buildings and two multi-tenant buildings. These buildings were sold pursuant to the exercise of a fixed-price purchase option.
|
|
(5)
|
Includes five skilled nursing facilities. Sales price includes $0.5 million of forfeited earnest money from a prior terminated transaction.
|
|
(Dollars in millions)
|
Type (1)
|
|
Date
Disposed |
|
Sales Price
|
|
Closing Adjustments
|
|
Net
Proceeds |
|
Net Real
Estate Investment |
|
Other
(including receivables) (3) |
|
Gain/
(Impairment) |
|
Square
Footage (Unaudited) |
|||||||||||||
|
Real estate dispositions
|
||||||||||||||||||||||||||||||
|
Evansville, IN
|
OTH
|
|
3/6/17
|
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
5.3
|
|
|
29,500
|
|
|
Columbus, GA (2)
|
MOB
|
|
3/7/17
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
12,000
|
|
||||||
|
Las Vegas, NV (2)
|
MOB
|
|
3/30/17
|
|
5.5
|
|
|
(0.7
|
)
|
|
4.8
|
|
|
2.2
|
|
|
0.3
|
|
|
2.3
|
|
|
18,147
|
|
||||||
|
Texas (3 properties)
|
IRF
|
|
3/31/17
|
|
69.5
|
|
|
(1.6
|
)
|
|
67.9
|
|
|
46.9
|
|
|
5.2
|
|
|
15.8
|
|
|
169,722
|
|
||||||
|
Chicago, IL (4)
|
MOB
|
|
6/16/17
|
|
0.5
|
|
|
(0.1
|
)
|
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
5,100
|
|
||||||
|
San Antonio, TX
|
IRF
|
|
6/29/17
|
|
14.5
|
|
|
(0.2
|
)
|
|
14.3
|
|
|
5.1
|
|
|
0.9
|
|
|
8.3
|
|
|
39,786
|
|
||||||
|
Roseburg, OR
|
MOB
|
|
6/29/17
|
|
23.2
|
|
|
(0.6
|
)
|
|
22.6
|
|
|
14.5
|
|
|
0.3
|
|
|
7.8
|
|
|
62,246
|
|
||||||
|
St. Louis, MO
|
MOB
|
|
9/7/17
|
|
2.5
|
|
|
(0.1
|
)
|
|
2.4
|
|
|
7.4
|
|
|
0.1
|
|
|
(5.1
|
)
|
|
79,980
|
|
||||||
|
Total dispositions
|
|
$
|
122.7
|
|
|
$
|
(3.3
|
)
|
|
$
|
119.4
|
|
|
$
|
78.2
|
|
|
$
|
6.8
|
|
|
$
|
34.4
|
|
|
416,481
|
|
|||
|
(1)
|
MOB = medical office building; IRF = inpatient rehabilitation facility; OTH = other
|
|
(2)
|
Previously classified as held for sale.
|
|
(3)
|
Includes straight-line rent receivables, leasing commissions and lease inducements.
|
|
(4)
|
The Company recorded an impairment of approximately $0.3 million in the first quarter of 2017 upon management's decision to sell.
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
||
|
Balance Sheet data
|
|
|
|
||||
|
Land
|
$
|
1,125
|
|
|
$
|
4,636
|
|
|
Buildings, improvements and lease intangibles
|
18,231
|
|
|
63,654
|
|
||
|
Personal property
|
—
|
|
|
82
|
|
||
|
|
19,356
|
|
|
68,372
|
|
||
|
Accumulated depreciation
|
(10,657
|
)
|
|
(35,790
|
)
|
||
|
Real estate assets held for sale, net
|
8,699
|
|
|
32,582
|
|
||
|
Other assets, net
|
573
|
|
|
565
|
|
||
|
Assets held for sale, net
|
$
|
9,272
|
|
|
$
|
33,147
|
|
|
Accounts payable and accrued liabilities
|
$
|
450
|
|
|
$
|
38
|
|
|
Other liabilities
|
137
|
|
|
55
|
|
||
|
Liabilities of properties held for sale
|
$
|
587
|
|
|
$
|
93
|
|
|
|
December 31,
|
||||||
|
(Dollars in millions)
|
2018
|
|
|
2017
|
|
||
|
Straight-line rent receivables
|
$
|
69.5
|
|
|
$
|
67.0
|
|
|
Prepaid assets
|
66.2
|
|
|
65.2
|
|
||
|
Additional long-lived assets, net
|
23.5
|
|
|
24.9
|
|
||
|
Above-market intangible assets, net
|
16.8
|
|
|
17.9
|
|
||
|
Accounts receivable
|
10.0
|
|
|
7.4
|
|
||
|
Allowance for uncollectible accounts
|
(0.3
|
)
|
|
(0.3
|
)
|
||
|
Ground lease modification, net
|
9.9
|
|
|
10.3
|
|
||
|
Equity investments in joint ventures
|
8.5
|
|
|
8.7
|
|
||
|
Goodwill
|
3.5
|
|
|
3.5
|
|
||
|
Project costs
|
2.2
|
|
|
2.0
|
|
||
|
Debt issuance costs, net (1)
|
2.2
|
|
|
3.5
|
|
||
|
Customer relationship intangible assets, net
|
1.7
|
|
|
1.7
|
|
||
|
Interest rate swap assets
|
0.2
|
|
|
—
|
|
||
|
Other
|
0.8
|
|
|
1.2
|
|
||
|
|
$
|
214.7
|
|
|
$
|
213.0
|
|
|
(1)
|
Includes debt issuance costs related to the Company's Unsecured credit facility due 2020.
|
|
|
December 31,
|
||||||
|
(Dollars in millions)
|
2018
|
|
|
2017
|
|
||
|
Net LLC investments, beginning of period
|
$
|
8.7
|
|
|
$
|
—
|
|
|
New investments during the period
|
—
|
|
|
8.7
|
|
||
|
Equity income (loss) recognized during the period
|
—
|
|
|
—
|
|
||
|
Owner distributions
|
(0.2
|
)
|
|
—
|
|
||
|
Net LLC investments, end of period
|
$
|
8.5
|
|
|
$
|
8.7
|
|
|
|
Gross Balance at December 31,
|
|
Accumulated Amortization at December 31,
|
|
Weighted
Avg. Remaining Life
(Years)
|
|
Balance Sheet
Classification
|
||||||||||||
|
(Dollars in millions)
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|||||||
|
Goodwill
|
$
|
3.5
|
|
|
$
|
3.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
Other assets, net
|
|
Credit facility debt issuance costs
|
5.4
|
|
|
5.4
|
|
|
3.2
|
|
|
1.9
|
|
|
1.6
|
|
Other assets, net
|
||||
|
Above-market lease intangibles
|
22.3
|
|
|
22.9
|
|
|
5.5
|
|
|
5.0
|
|
|
59.6
|
|
Other assets, net
|
||||
|
Customer relationship intangibles
|
2.7
|
|
|
2.6
|
|
|
1.0
|
|
|
0.9
|
|
|
24.6
|
|
Other assets, net
|
||||
|
Below-market lease intangibles
|
(9.3
|
)
|
|
(9.5
|
)
|
|
(4.1
|
)
|
|
(3.5
|
)
|
|
38.0
|
|
Other liabilities
|
||||
|
Debt issuance costs (1)
|
9.3
|
|
|
9.3
|
|
|
2.8
|
|
|
1.8
|
|
|
3.7
|
|
Notes and bonds payable
|
||||
|
At-market lease intangibles
|
114.4
|
|
|
110.0
|
|
|
52.0
|
|
|
41.6
|
|
|
4.8
|
|
Real estate properties
|
||||
|
|
$
|
148.3
|
|
|
$
|
144.2
|
|
|
$
|
60.4
|
|
|
$
|
47.7
|
|
|
16.5
|
|
|
|
(1)
|
Includes debt issuance costs related to the Company's Unsecured credit facility due 2020.
|
|
(Dollars in millions)
|
Future Amortization of Intangibles, net
|
|
|
|
2019
|
$
|
22.1
|
|
|
2020
|
15.5
|
|
|
|
2021
|
9.6
|
|
|
|
2022
|
7.3
|
|
|
|
2023
|
4.6
|
|
|
|
|
December 31,
|
|
Maturity
Dates
|
|
Contractual
Interest Rates
|
|
|
Principal
Payments
|
|
Interest
Payments
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
|
|
|
||||||||
|
Unsecured Credit Facility
|
$
|
262,000
|
|
|
$
|
189,000
|
|
|
7/20
|
|
LIBOR + 1.00%
|
|
|
At maturity
|
|
Monthly
|
|
Unsecured Term Loan due 2022 (1)
|
149,183
|
|
|
148,994
|
|
|
12/22
|
|
LIBOR + 1.10%
|
|
|
At maturity
|
|
Monthly
|
||
|
Senior Notes due 2023 (1)
|
248,117
|
|
|
247,703
|
|
|
4/23
|
|
3.75
|
%
|
|
At maturity
|
|
Semi-Annual
|
||
|
Senior Notes due 2025 (1)
|
248,278
|
|
|
248,044
|
|
|
5/25
|
|
3.88
|
%
|
|
At maturity
|
|
Semi-Annual
|
||
|
Senior Notes due 2028 (1)
|
295,198
|
|
|
294,757
|
|
|
1/28
|
|
3.63
|
%
|
|
At maturity
|
|
Semi-Annual
|
||
|
Mortgage notes payable (2)
|
143,208
|
|
|
155,382
|
|
|
7/19-5/40
|
|
3.31%-6.88%
|
|
|
Monthly
|
|
Monthly
|
||
|
|
$
|
1,345,984
|
|
|
$
|
1,283,880
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Balances are shown net of discounts and unamortized issuance costs.
|
|
(2)
|
Balances are shown net of discounts and unamortized issuance costs and include premiums.
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
||
|
Unsecured Term Loan due 2022 principal balance
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
Debt issuance costs
|
(817
|
)
|
|
(1,006
|
)
|
||
|
Unsecured Term Loan due 2022 carrying amount
|
$
|
149,183
|
|
|
$
|
148,994
|
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
||
|
Senior Notes due 2023 face value
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
Unaccreted discount
|
(974
|
)
|
|
(1,178
|
)
|
||
|
Debt issuance costs
|
(909
|
)
|
|
(1,119
|
)
|
||
|
Senior Notes due 2023 carrying amount
|
$
|
248,117
|
|
|
$
|
247,703
|
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
||
|
Senior Notes due 2025 face value
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
Unaccreted discount
|
(141
|
)
|
|
(160
|
)
|
||
|
Debt issuance costs
|
(1,581
|
)
|
|
(1,796
|
)
|
||
|
Senior Notes due 2028 carrying amount
|
$
|
248,278
|
|
|
$
|
248,044
|
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
||
|
Senior Notes due 2028 face value
|
$
|
300,000
|
|
|
$
|
300,000
|
|
|
Unaccreted discount
|
(2,319
|
)
|
|
(2,529
|
)
|
||
|
Debt issuance costs
|
$
|
(2,483
|
)
|
|
$
|
(2,714
|
)
|
|
Senior Notes due 2028 carrying amount
|
$
|
295,198
|
|
|
$
|
294,757
|
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
||
|
Mortgage notes payable principal balance
|
$
|
143,115
|
|
|
$
|
154,916
|
|
|
Unamortized premium
|
1,805
|
|
|
2,651
|
|
||
|
Unaccreted discount
|
(968
|
)
|
|
(1,332
|
)
|
||
|
Debt issuance costs
|
(744
|
)
|
|
(853
|
)
|
||
|
Mortgage notes payable carrying amount
|
$
|
143,208
|
|
|
$
|
155,382
|
|
|
|
Original Balance
|
|
|
Effective Interest Rate (22)
|
|
|
Maturity
Date
|
|
Collateral (23)
|
|
Principal and Interest Payments (21)
|
|
Investment in Collateral at December 31,
|
|
|
Balance at December 31,
|
|||||||
|
(Dollars in millions)
|
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
||||||||||
|
Insurance Co. (1)
|
7.3
|
|
|
5.54
|
%
|
|
12/18
|
|
MOB
|
|
Monthly/25-yr amort.
|
|
—
|
|
|
—
|
|
|
6.0
|
|
|||
|
Commercial Bank (2)
|
9.5
|
|
|
5.07
|
%
|
|
3/19
|
|
MOB
|
|
Monthly/5-yr amort.
|
|
—
|
|
|
—
|
|
|
9.3
|
|
|||
|
Commercial Bank (3)
|
9.4
|
|
|
4.55
|
%
|
|
7/19
|
|
MOB
|
|
Monthly/8-yr amort
|
|
27.8
|
|
|
9.0
|
|
|
9.2
|
|
|||
|
Commercial Bank (4)
|
15.2
|
|
|
7.65
|
%
|
|
7/20
|
|
MOB
|
|
(20)
|
|
20.2
|
|
|
12.5
|
|
|
12.7
|
|
|||
|
Life Insurance Co. (5)
|
7.9
|
|
|
4.00
|
%
|
|
8/20
|
|
MOB
|
|
Monthly/15-yr amort.
|
|
20.7
|
|
|
1.3
|
|
|
2.0
|
|
|||
|
Life Insurance Co. (6)
|
7.3
|
|
|
5.25
|
%
|
|
8/20
|
|
MOB
|
|
Monthly/27-yr amort.
|
|
18.0
|
|
|
6.2
|
|
|
6.5
|
|
|||
|
Life Insurance Co. (7)
|
5.6
|
|
|
4.30
|
%
|
|
1/21
|
|
MOB
|
|
Monthly/10-yr amort.
|
|
15.7
|
|
|
4.6
|
|
|
4.8
|
|
|||
|
Commercial Bank (8)
|
12.9
|
|
|
6.43
|
%
|
|
2/21
|
|
MOB
|
|
Monthly/12-yr amort.
|
|
55.1
|
|
|
10.3
|
|
|
10.5
|
|
|||
|
Life Insurance Co. (9)
|
11.0
|
|
|
3.87
|
%
|
|
11/22
|
|
MOB
|
|
Monthly/7-yr amort.
|
|
22.0
|
|
|
10.2
|
|
|
10.4
|
|
|||
|
Life Insurance Co. (10)
|
12.3
|
|
|
3.86
|
%
|
|
8/23
|
|
MOB
|
|
Monthly/7-yr amort.
|
|
25.4
|
|
|
11.2
|
|
|
11.5
|
|
|||
|
Financial Services (11)
|
12.4
|
|
|
4.27
|
%
|
|
10/23
|
|
MOB
|
|
Monthly/10-yr amort.
|
|
24.9
|
|
|
12.0
|
|
|
12.2
|
|
|||
|
Life Insurance Co. (12)
|
9.0
|
|
|
4.84
|
%
|
|
12/23
|
|
MOB,OFC
|
|
Monthly/10-yr amort.
|
|
25.3
|
|
|
7.8
|
|
|
—
|
|
|||
|
Life Insurance Co. (13)
|
13.3
|
|
|
4.13
|
%
|
|
1/24
|
|
MOB
|
|
Monthly/10-yr amort.
|
|
21.2
|
|
|
13.0
|
|
|
13.3
|
|
|||
|
Life Insurance Co. (14)
|
6.8
|
|
|
3.96
|
%
|
|
2/24
|
|
MOB
|
|
Monthly/7-yr amort.
|
|
14.5
|
|
|
6.6
|
|
|
6.7
|
|
|||
|
Financial Services (15)
|
9.7
|
|
|
4.32
|
%
|
|
9/24
|
|
MOB
|
|
Monthly/10-yr amort.
|
|
16.5
|
|
|
8.6
|
|
|
8.8
|
|
|||
|
Commercial Bank
|
11.5
|
|
|
3.71
|
%
|
|
1/26
|
|
MOB
|
|
Monthly/10-yr amort.
|
|
38.4
|
|
|
10.1
|
|
|
10.5
|
|
|||
|
Commercial Bank (16)
|
15.0
|
|
|
5.25
|
%
|
|
4/27
|
|
MOB
|
|
Monthly/20-yr amort.
|
|
33.5
|
|
|
8.8
|
|
|
9.6
|
|
|||
|
Municipal Government (17) (18)
|
11.0
|
|
|
4.79
|
%
|
|
(19)
|
|
MOB
|
|
Semi-Annual (19)
|
|
21.0
|
|
|
11.0
|
|
|
11.4
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
$
|
400.2
|
|
|
$
|
143.2
|
|
|
$
|
155.4
|
|
||
|
(1)
|
The Company repaid this mortgage note in October 2018. The Company's unencumbered gross investment was $14.4 million at December 31, 2018.
|
|
(2)
|
The Company repaid this mortgage note in December 2018. The Company's unencumbered gross investment was $14.1 million at December 31, 2018.
|
|
(3)
|
The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(4)
|
The unaccreted portion of the $2.4 million discount recorded on this note upon acquisition is included in the balance above.
|
|
(5)
|
The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(6)
|
The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(7)
|
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(8)
|
The unaccreted portion of the $1.0 million discount recorded on this note upon acquisition is included in the balance above.
|
|
(9)
|
The unaccreted portion of the $0.1 million discount recorded on this note upon acquisition is included in the balance above.
|
|
(10)
|
The unaccreted portion of the $0.2 million discount recorded on this note upon acquisition is included in the balance above.
|
|
(11)
|
The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(12)
|
The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(13)
|
The unamortized portion of the $0.8 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(14)
|
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(15)
|
The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(16)
|
The unamortized portion of the $0.7 million premium recorded on this note upon acquisition is included in the balance above.
|
|
(17)
|
Balance consists of three notes secured by the same building.
|
|
(18)
|
The unamortized portion of the $1.0 million premium recorded on the three notes upon acquisition is included in the balance above.
|
|
(19)
|
These three mortgage notes payable are series municipal bonds that have maturity dates ranging from from May 2022 to May 2040. One of the four original notes payable was repaid upon maturity in May 2017. The remaining three require interest only payments and have future maturity dates but allow repayment after May 2020 without penalty. The Company intends on repaying all three notes payable at that time.
|
|
(20)
|
Payable in monthly installments of interest only for 24 months and then installments of principal and interest based on an 11-year amortization with the final payment due at maturity.
|
|
(21)
|
Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).
|
|
(22)
|
The contractual interest rates for the 18 outstanding mortgage notes ranged from 3.3% to 6.9% as of December 31, 2018.
|
|
(23)
|
MOB-Medical office building. OFC-Office
|
|
(Dollars in thousands)
|
Principal
Maturities
|
|
|
Net Accretion/
Amortization (1)
|
|
|
Debt Issuance Costs (2)
|
|
|
Notes and Bonds Payable
|
|
%
|
|
||||
|
2019
|
$
|
13,857
|
|
|
$
|
(250
|
)
|
|
$
|
(1,067
|
)
|
|
$
|
12,540
|
|
0.9
|
%
|
|
2020
|
285,064
|
|
|
(392
|
)
|
|
(1,061
|
)
|
|
283,611
|
|
21.1
|
%
|
||||
|
2021
|
17,593
|
|
|
(326
|
)
|
|
(1,046
|
)
|
|
16,221
|
|
1.2
|
%
|
||||
|
2022
|
162,977
|
|
|
(336
|
)
|
|
(1,058
|
)
|
|
161,583
|
|
12.0
|
%
|
||||
|
2023
|
280,230
|
|
|
(183
|
)
|
|
(697
|
)
|
|
279,350
|
|
20.8
|
%
|
||||
|
2024 and thereafter
|
595,394
|
|
|
(1,110
|
)
|
|
(1,605
|
)
|
|
592,679
|
|
44.0
|
%
|
||||
|
|
$
|
1,355,115
|
|
|
$
|
(2,597
|
)
|
|
$
|
(6,534
|
)
|
|
$
|
1,345,984
|
|
100.0
|
%
|
|
(1)
|
Includes discount accretion and premium amortization related to the Company’s Senior Notes due 2023, Senior Notes due 2025, Senior Notes due 2028 and 17 mortgage notes payable.
|
|
(2)
|
Excludes approximately $2.2 million in debt issuance costs related to the Company's Unsecured Credit Facility included in other assets, net.
|
|
Interest Rate Derivative
|
|
Number of Instruments
|
|
|
Notional
(in millions)
|
|
|
Interest rate swaps - 2017
|
|
2
|
|
|
$25.0
|
|
|
Interest rate swaps - 2018
|
|
2
|
|
|
50.0
|
|
|
Total interest rate swaps
|
|
4
|
|
|
$75.0
|
|
|
|
As of December 31, 2018
|
|
As of December 31, 2017
|
||||||||
|
(Dollars in thousands)
|
Balance Sheet Location
|
|
Fair Value
|
|
|
Balance Sheet Location
|
|
Fair Value
|
|
||
|
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
||||
|
Interest rate swaps 2017
|
Other assets, net
|
|
$
|
229
|
|
|
Other liabilities
|
|
$
|
(67
|
)
|
|
Interest rate swaps 2018
|
Other liabilities
|
|
(68
|
)
|
|
|
|
—
|
|
||
|
Total derivatives designated as hedging instruments
|
|
|
$
|
161
|
|
|
|
|
$
|
(67
|
)
|
|
|
Amount of Gain/(Loss) Recognized in OCI on Derivatives
|
|
Amount of Loss Reclassified from OCI into Income for the Twelve Months Ended December 31,
|
||||||||
|
(Dollars in thousands)
|
2018
|
|
2018
|
|
|
2017
|
|
||||
|
Interest rate swaps 2017
|
$
|
246
|
|
Interest expense
|
$
|
51
|
|
|
$
|
7
|
|
|
Interest rate swaps 2018
|
(273
|
)
|
Interest expense
|
204
|
|
|
—
|
|
|||
|
Settled interest rate swaps
|
—
|
|
Interest expense
|
169
|
|
|
169
|
|
|||
|
|
$
|
(27
|
)
|
Total interest expense
|
$
|
424
|
|
|
$
|
176
|
|
|
Offsetting of Derivative Assets
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets
|
||||||||||||||||
|
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Assets presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral
|
|
Net Amount
|
||||||||||||
|
Derivatives
|
$
|
229
|
|
|
$
|
—
|
|
|
$
|
229
|
|
|
$
|
(68
|
)
|
|
$
|
—
|
|
|
$
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Offsetting of Derivative Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets
|
||||||||||||||||
|
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Assets presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral
|
|
Net Amount
|
||||||||||||
|
Derivatives
|
$
|
(68
|
)
|
|
$
|
—
|
|
|
$
|
(68
|
)
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Balance, beginning of year
|
125,131,593
|
|
|
116,416,900
|
|
|
101,517,009
|
|
|
Issuance of common stock
|
26,203
|
|
|
8,395,607
|
|
|
14,063,100
|
|
|
Non-vested stock-based awards, net of withheld shares and forfeitures
|
121,659
|
|
|
319,086
|
|
|
836,791
|
|
|
Balance, end of year
|
125,279,455
|
|
|
125,131,593
|
|
|
116,416,900
|
|
|
|
|
Shares Sold
|
|
|
Sales Price Per Share
|
|
Net Proceeds
(in millions)
|
|
|
|
2018
|
|
—
|
|
|
NA
|
|
$
|
—
|
|
|
2017
|
|
—
|
|
|
NA
|
|
$
|
—
|
|
|
2016
|
|
4,795,601
|
|
|
$28.31 - $33.66
|
|
$
|
144.6
|
|
|
|
|
Interest Rate Swaps
|
||||||
|
|
|
December 31,
|
||||||
|
(Dollars in thousands)
|
|
2018
|
|
|
2017
|
|
||
|
Beginning balance
|
|
$
|
(1,299
|
)
|
|
$
|
(1,401
|
)
|
|
Other comprehensive loss before reclassifications
|
|
424
|
|
|
176
|
|
||
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
(27
|
)
|
|
(74
|
)
|
||
|
Net current-period other comprehensive income
|
|
397
|
|
|
102
|
|
||
|
Ending balance
|
|
$
|
(902
|
)
|
|
$
|
(1,299
|
)
|
|
Details about accumulated other comprehensive income (loss) components
|
|
Amount reclassified from accumulated other comprehensive income (loss)
|
|
|
Affected line item in the statement where net income is presented
|
|
|
(Dollars in thousands)
|
|
|
|
|
||
|
Amounts reclassified from accumulated other comprehensive income (loss) related to settled interest rate swaps
|
|
$
|
169
|
|
|
Interest Expense
|
|
Amounts reclassified from accumulated other comprehensive income (loss) related to current interest rate swaps
|
|
255
|
|
|
Interest Expense
|
|
|
|
|
$
|
424
|
|
|
|
|
(Dollars in millions)
|
Future Amortization of Non-Vested Shares
|
|
|
|
2019
|
$
|
8.6
|
|
|
2020
|
8.1
|
|
|
|
2021
|
7.0
|
|
|
|
2022
|
4.5
|
|
|
|
2023
|
2.3
|
|
|
|
2024 and thereafter
|
2.8
|
|
|
|
Total
|
$
|
33.3
|
|
|
•
|
On December 12, 2018, the Company granted non-vested stock awards for TSR performance to its four named executive officers and five senior vice presidents with a grant date fair value totaling $5.0 million, which were granted in the form of 165,261 non-vested shares, with a five-year vesting period, which will result in annual compensation expense of $1.0 million for the each of 2019, 2020, 2021, and 2022, and $0.9 million for 2023, respectively.
|
|
•
|
On December 11, 2017, the Company granted non-vested stock awards for TSR performance to its five named executive officers and four senior vice presidents with a grant date fair value totaling $10.1 million, which were granted in the form of 309,874 non-vested shares, with a five-year vesting period, which will result in annual compensation expense of $2.0 million for the each of 2019, 2020, and 2021, and $1.9 million for 2022, respectively.
|
|
•
|
On December 16, 2016, the Company granted non-vested stock awards for TSR performance to its five named executive officers and five senior vice presidents with a grant date fair value totaling $6.3 million, which were granted
|
|
•
|
On February 16, 2016, the Company granted cash incentive and non-vested performance-based awards totaling $5.8 million to its five named executive officers and five senior vice presidents. The officers could elect cash based awards or non-vested stock awards. Cash awards totaled $1.1 million. The non-vested awards, which the officers elected to receive in lieu of cash, had a grant date fair value totaling $4.7 million, which were granted in the form of 163,788 non-vested shares, with either a three- or five-year vesting period, resulting in annual compensation expense of $1.1 million for the year 2018 and $0.7 million for each of 2019 and 2020, respectively.
|
|
•
|
On March 1, 2016, the Company issued 50,000 shares to the Chief Financial Officer with a 10-year vesting period, resulting in compensation expense of $0.2 million per year.
|
|
•
|
On December 30, 2016, the Company issued 200,000 shares to the President and Chief Executive Officer with a 10-year vesting period, resulting in compensation expense of $0.6 million per year.
|
|
•
|
On December 30, 2016, the Company issued 150,000 shares to the Executive Chairman with a 5-year vesting period, resulting in compensation expense of $0.9 million per year.
|
|
|
Year Ended December 31,
|
||||||||||
|
(Dollars in thousands, except per share data)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Stock-based awards, beginning of year
|
1,907,645
|
|
|
1,786,497
|
|
|
1,092,262
|
|
|||
|
Granted
|
273,012
|
|
|
413,489
|
|
|
885,219
|
|
|||
|
Vested
|
(410,794
|
)
|
|
(292,341
|
)
|
|
(190,984
|
)
|
|||
|
Stock-based awards, end of year
|
1,769,863
|
|
|
1,907,645
|
|
|
1,786,497
|
|
|||
|
Weighted-average grant date fair value of:
|
|
|
|
|
|
||||||
|
Stock-based awards, beginning of year
|
$
|
28.44
|
|
|
$
|
27.18
|
|
|
$
|
24.72
|
|
|
Stock-based awards granted during the year
|
$
|
29.72
|
|
|
$
|
32.05
|
|
|
$
|
29.60
|
|
|
Stock-based awards vested during the year
|
$
|
25.32
|
|
|
$
|
25.88
|
|
|
$
|
24.34
|
|
|
Stock-based awards, end of year
|
$
|
29.36
|
|
|
$
|
28.44
|
|
|
$
|
27.18
|
|
|
Grant date fair value of shares granted during the year
|
$
|
8,114
|
|
|
$
|
13,254
|
|
|
$
|
26,204
|
|
|
|
Year Ended December 31,
|
||||||||||
|
(Dollars in thousands, except per share data)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Options outstanding, beginning of year
|
318,100
|
|
|
316,321
|
|
|
340,958
|
|
|||
|
Granted
|
203,836
|
|
|
206,824
|
|
|
198,450
|
|
|||
|
Exercised
|
(16,716
|
)
|
|
(32,076
|
)
|
|
(57,924
|
)
|
|||
|
Forfeited
|
(40,897
|
)
|
|
(40,659
|
)
|
|
(22,081
|
)
|
|||
|
Expired
|
(135,790
|
)
|
|
(132,310
|
)
|
|
(143,082
|
)
|
|||
|
Options outstanding and exercisable, end of year
|
328,533
|
|
|
318,100
|
|
|
316,321
|
|
|||
|
Weighted-average exercise price of:
|
|
|
|
|
|
||||||
|
Options outstanding, beginning of year
|
$
|
25.00
|
|
|
$
|
23.69
|
|
|
$
|
20.70
|
|
|
Options granted during the year
|
$
|
27.30
|
|
|
$
|
25.77
|
|
|
$
|
24.07
|
|
|
Options exercised during the year
|
$
|
24.01
|
|
|
$
|
24.31
|
|
|
$
|
21.40
|
|
|
Options forfeited during the year
|
$
|
24.06
|
|
|
$
|
25.01
|
|
|
$
|
23.16
|
|
|
Options expired during the year
|
$
|
23.55
|
|
|
$
|
23.22
|
|
|
$
|
18.11
|
|
|
Options outstanding, end of year
|
$
|
24.17
|
|
|
$
|
25.00
|
|
|
$
|
23.69
|
|
|
Weighted-average fair value of options granted during the year (calculated as of the grant date)
|
$
|
7.81
|
|
|
$
|
6.31
|
|
|
$
|
5.37
|
|
|
Intrinsic value of options exercised during the year
|
$
|
71
|
|
|
$
|
271
|
|
|
$
|
634
|
|
|
Intrinsic value of options outstanding and exercisable (calculated as of December 31)
|
$
|
1,402
|
|
|
$
|
2,683
|
|
|
$
|
2,098
|
|
|
Exercise prices of options outstanding (calculated as of December 31)
|
$
|
24.17
|
|
|
$
|
25.00
|
|
|
$
|
23.69
|
|
|
Weighted-average contractual life of outstanding options (calculated as of December 31, in years)
|
0.8
|
|
|
0.8
|
|
|
0.8
|
|
|||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Risk-free interest rates
|
1.89
|
%
|
|
1.20
|
%
|
|
1.06
|
%
|
|
Expected dividend yields
|
3.66
|
%
|
|
3.70
|
%
|
|
4.64
|
%
|
|
Expected life (in years)
|
1.45
|
|
|
1.45
|
|
|
1.42
|
|
|
Expected volatility
|
28.4
|
%
|
|
20.4
|
%
|
|
17.6
|
%
|
|
Expected forfeiture rates
|
85
|
%
|
|
85
|
%
|
|
85
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
(Dollars in thousands, except per share data)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Weighted Average Common Shares
|
|
|
|
|
|
||||||
|
Weighted average Common Shares outstanding
|
125,219,773
|
|
|
119,739,216
|
|
|
109,861,580
|
|
|||
|
Non-vested shares
|
(1,927,648
|
)
|
|
(1,813,058
|
)
|
|
(1,289,478
|
)
|
|||
|
Weighted average Common Shares - Basic
|
123,292,125
|
|
|
117,926,158
|
|
|
108,572,102
|
|
|||
|
Weighted average Common Shares - Basic
|
123,292,125
|
|
|
117,926,158
|
|
|
108,572,102
|
|
|||
|
Dilutive effect of non-vested shares
|
—
|
|
|
—
|
|
|
709,559
|
|
|||
|
Dilutive effect of employee stock purchase plan
|
58,808
|
|
|
91,007
|
|
|
105,336
|
|
|||
|
Weighted average Common Shares - Diluted
|
123,350,933
|
|
|
118,017,165
|
|
|
109,386,997
|
|
|||
|
Net Income
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
Dividends paid on nonvested share-based awards
|
(2,320
|
)
|
|
(2,149
|
)
|
|
—
|
|
|||
|
Net income applicable to common stockholders
|
$
|
67,451
|
|
|
$
|
20,943
|
|
|
$
|
85,571
|
|
|
Basic Earnings Per Common Share
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
$
|
0.79
|
|
|
Diluted Earnings Per Common Share
|
$
|
0.55
|
|
|
$
|
0.18
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|||||||||||||||
|
(Dollars in thousands)
|
|
Number of Properties
|
|
Initial Occupancy
|
|
Construction in Progress Balance
|
|
|
Total Funded During the Year
|
|
|
Total Amount Funded
|
|
|
Estimated Remaining Fundings (unaudited)
|
|
|
Estimated Total Investment (unaudited)
|
|
|
Approximate Square Feet (unaudited)
|
|
|||||
|
Construction Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Charlotte, NC
|
|
1
|
|
Q2 2019
|
|
$
|
9,586
|
|
|
$
|
6,099
|
|
|
$
|
9,586
|
|
|
2,414
|
|
|
$
|
12,000
|
|
|
38,000
|
|
|
|
Seattle, WA
|
|
1
|
|
Q4 2019
|
|
23,521
|
|
|
21,549
|
|
|
23,821
|
|
|
40,299
|
|
|
64,120
|
|
|
151,000
|
|
|||||
|
Total
|
|
|
|
|
|
$
|
33,107
|
|
|
$
|
27,648
|
|
|
$
|
33,407
|
|
|
$
|
42,713
|
|
|
$
|
76,120
|
|
|
189,000
|
|
|
2019
|
$
|
5,288
|
|
|
2020
|
5,260
|
|
|
|
2021
|
5,238
|
|
|
|
2022
|
5,207
|
|
|
|
2023
|
5,224
|
|
|
|
2024 and thereafter
|
323,533
|
|
|
|
|
$
|
349,750
|
|
|
|
Year Ended December 31,
|
||||||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
Net income
|
$
|
69,771
|
|
|
$
|
23,092
|
|
|
$
|
85,571
|
|
|
Reconciling items to taxable income:
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
64,775
|
|
|
46,426
|
|
|
38,260
|
|
|||
|
Gain or loss on disposition of depreciable assets
|
(27,581
|
)
|
|
1,570
|
|
|
(32,103
|
)
|
|||
|
Impairments
|
—
|
|
|
—
|
|
|
121
|
|
|||
|
Straight-line rent
|
(3,049
|
)
|
|
(4,551
|
)
|
|
(7,101
|
)
|
|||
|
Receivable allowances
|
2,470
|
|
|
1,680
|
|
|
2,067
|
|
|||
|
Stock-based compensation
|
(1,699
|
)
|
|
1,855
|
|
|
1,301
|
|
|||
|
Other
|
842
|
|
|
6,552
|
|
|
2,236
|
|
|||
|
|
35,758
|
|
|
53,532
|
|
|
4,781
|
|
|||
|
Taxable income (1)
|
$
|
105,529
|
|
|
$
|
76,624
|
|
|
$
|
90,352
|
|
|
Dividends paid
|
$
|
150,266
|
|
|
$
|
142,327
|
|
|
$
|
131,759
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
|
Per Share
|
|
|
%
|
|
|
Per Share
|
|
|
%
|
|
|
Per Share
|
|
|
%
|
|
|||
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Ordinary income (1)
|
$
|
0.75
|
|
|
62.2
|
%
|
|
$
|
0.42
|
|
|
34.5
|
%
|
|
$
|
0.78
|
|
|
65.0
|
%
|
|
Return of capital
|
0.33
|
|
|
27.8
|
%
|
|
0.50
|
|
|
42.0
|
%
|
|
0.35
|
|
|
29.5
|
%
|
|||
|
Unrecaptured section 1250 gain
|
0.12
|
|
|
10.0
|
%
|
|
0.28
|
|
|
23.5
|
%
|
|
0.07
|
|
|
5.5
|
%
|
|||
|
Common stock distributions
|
$
|
1.20
|
|
|
100.0
|
%
|
|
$
|
1.20
|
|
|
100.0
|
%
|
|
$
|
1.20
|
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
(Dollars in thousands)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
State income tax expense:
|
|
|
|
|
|
||||||
|
Texas gross margins tax
|
$
|
586
|
|
|
$
|
608
|
|
|
$
|
562
|
|
|
Other
|
—
|
|
|
—
|
|
|
2
|
|
|||
|
Total state income tax expense
|
$
|
586
|
|
|
$
|
608
|
|
|
$
|
564
|
|
|
State income tax payments, net of refunds and collections
|
$
|
637
|
|
|
$
|
555
|
|
|
$
|
544
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
(Dollars in millions)
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
||||
|
Notes and bonds payable (1)
|
$
|
1,346.0
|
|
|
$
|
1,326.5
|
|
|
$
|
1,283.9
|
|
|
$
|
1,269.7
|
|
|
|
Quarter Ended
|
||||||||||||||
|
(Dollars in thousands, except per share data)
|
March 31
|
|
|
June 30 (1)
|
|
|
September 30
|
|
|
December 31 (2)
|
|
||||
|
2018
|
|
|
|
|
|
|
|
||||||||
|
Revenues from continuing operations
|
$
|
112,124
|
|
|
$
|
111,634
|
|
|
$
|
113,462
|
|
|
$
|
113,168
|
|
|
Net income attributable to common stockholders
|
$
|
9,180
|
|
|
$
|
37,729
|
|
|
$
|
6,548
|
|
|
$
|
16,314
|
|
|
Net income attributable to common stockholders per share:
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per common share
|
$
|
0.07
|
|
|
$
|
0.30
|
|
|
$
|
0.05
|
|
|
$
|
0.13
|
|
|
Diluted earnings per common share
|
$
|
0.07
|
|
|
$
|
0.30
|
|
|
$
|
0.05
|
|
|
$
|
0.13
|
|
|
(1)
|
The increases in net income and amounts per share for the second quarter of 2018 are primarily attributable to gains of $27.7 million on the sale of twelve properties.
|
|
(2)
|
The increases in net income and amounts per share for the fourth quarter of 2018 are primarily attributable to gains of $10.8 million on the sale of three properties.
|
|
|
Quarter Ended
|
||||||||||||||
|
(Dollars in thousands, except per share data)
|
March 31 (1)
|
|
|
June 30 (2)
|
|
|
September 30 (3)
|
|
|
December 31 (4)
|
|
||||
|
2017
|
|
|
|
|
|
|
|
||||||||
|
Revenues from continuing operations
|
$
|
104,644
|
|
|
$
|
105,318
|
|
|
$
|
107,025
|
|
|
$
|
107,749
|
|
|
Net income attributable to common stockholders
|
$
|
31,845
|
|
|
$
|
25,224
|
|
|
$
|
3,173
|
|
|
$
|
(37,151
|
)
|
|
Net income attributable to common stockholders per share:
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per common share
|
$
|
0.28
|
|
|
$
|
0.22
|
|
|
$
|
0.02
|
|
|
$
|
(0.31
|
)
|
|
Diluted earnings per common share
|
$
|
0.28
|
|
|
$
|
0.22
|
|
|
$
|
0.02
|
|
|
$
|
(0.31
|
)
|
|
(1)
|
The increases in net income and amounts per share for the first quarter of 2017 are primarily attributable to gains of $23.4 million on the sale of six properties.
|
|
(2)
|
The increases in net income and amounts per share for the second quarter of 2017 are primarily attributable to gains of $16.1 million on the sale of three properties.
|
|
(3)
|
The decreases in net income and amounts per share for the third quarter of 2017 are primarily attributable to impairment charges of $5.1 million.
|
|
(4)
|
The decreases in net income and amounts per share for the fourth quarter of 2017 are primarily attributable to a loss on the extinguishment of debt of $45.0 million.
|
|
Name
|
|
Age
|
|
|
Position
|
|
David R. Emery
|
|
74
|
|
|
Executive Chairman of the Board
|
|
Todd J. Meredith
|
|
44
|
|
|
President & Chief Executive Officer
|
|
J. Christopher Douglas
|
|
43
|
|
|
Executive Vice President & Chief Financial Officer
|
|
John M. Bryant, Jr.
|
|
52
|
|
|
Executive Vice President & General Counsel
|
|
Robert E. Hull
|
|
46
|
|
|
Executive Vice President - Investments
|
|
(a)
|
Index to Historical Financial Statements, Financial Statement Schedules and Exhibits
|
|
(1)
|
Financial Statements:
|
|
(3)
|
Exhibits:
|
|
Exhibit
Number
|
|
|
|
Description of Exhibits
|
|
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
4.1
|
|
—
|
|
|
Specimen stock certificate. (3)
|
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
__
|
|
|
||
|
|
__
|
|
|
||
|
|
__
|
|
|
||
|
|
__
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
|
—
|
|
|
||
|
101.INS
|
|
—
|
|
|
This instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
|
101.SCH
|
|
—
|
|
|
XBRL Taxonomy Extension Schema Document. (filed herewith)
|
|
101.CAL
|
|
—
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document. (filed herewith)
|
|
101.LAB
|
|
—
|
|
|
XBRL Taxonomy Extension Labels Linkbase Document. (filed herewith)
|
|
101.DEF
|
|
—
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document. (filed herewith)
|
|
101.PRE
|
|
—
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document. (filed herewith)
|
|
(1)
|
Filed as an exhibit to the Company’s Form 8-K filed February 19, 2016 and hereby incorporated by reference.
|
|
(2)
|
Filed as an exhibit to the Company's Form 8-K filed May 5, 2017 and hereby incorporated by reference.
|
|
(3)
|
Filed as an exhibit to the Company's Registration Statement on Form S-11 (Registration No. 33-60506) previously filed pursuant to the Securities Act of 1933 and hereby incorporated by reference.
|
|
(4)
|
Filed as an exhibit to the Company's Form 8-K filed May 17, 2001 and hereby incorporated by reference.
|
|
(5)
|
Filed as an exhibit to the Company’s Form 8-K filed December 4, 2009 and hereby incorporated by reference.
|
|
(6)
|
Filed as an exhibit to the Company’s Form 8-K filed December 13, 2010 and hereby incorporated by reference.
|
|
(7)
|
Filed as an exhibit to the Company's Form 8-K filed March 26, 2013 and hereby incorporated by reference.
|
|
(8)
|
Filed as an exhibit to the Company’s Form 8-K filed April 24, 2015 and hereby incorporated by reference.
|
|
(9)
|
Filed as an exhibit to the Company’s Form 8-K filed December 11, 2017 and hereby incorporated by reference.
|
|
(10)
|
Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1999 and hereby incorporated by reference.
|
|
(11)
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2018 and hereby incorporated by reference.
|
|
(12)
|
Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 33-79452) previously filed on September 26, 2003 pursuant to the Securities Act of 1933 and hereby incorporated by reference.
|
|
(13)
|
Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2015 and hereby incorporated by reference.
|
|
(14)
|
Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2016 and hereby incorporated by reference.
|
|
(15)
|
Filed as an exhibit to the Company's Form 8-K filed February 3, 2016 and hereby incorporated by reference.
|
|
(16)
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2010 and hereby incorporated by reference.
|
|
(17)
|
Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2013 and hereby incorporated by reference.
|
|
(18)
|
Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference.
|
|
(19)
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2012 and hereby incorporated by reference.
|
|
(20)
|
Filed as an exhibit to the Company's proxy statement filed March 30, 2015 and hereby incorporated by reference.
|
|
(21)
|
Filed as an exhibit to the Company's Form 8-K filed October 19, 2011 and hereby incorporated by reference.
|
|
(22)
|
Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2012 and hereby incorporated by reference.
|
|
(23)
|
Filed as an exhibit to the Company's Form 8-K filed February 28, 2014 and hereby incorporated by reference.
|
|
(24)
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2016 and hereby incorporated by reference.
|
|
(25)
|
Filed as an exhibit to the Company's Form 8-K filed December 22, 2017 and hereby incorporated by reference.
|
|
1.
|
2000 Employee Stock Purchase Plan (filed as Exhibit 10.1)
|
|
2.
|
Amendment No. 1 to 2000 Employee Stock Purchase Plan (filed as Exhibit 10.2)
|
|
3.
|
Third Amended and Restated Employment Agreement, dated February 16, 2016, between David R. Emery and the Company (filed as Exhibit 10.4)
|
|
4.
|
Third Amended and Restated Employment Agreement, dated February 16, 2016, between Todd J. Meredith and the Company (filed as Exhibit 10.5)
|
|
5.
|
Third Amended and Restated Employment Agreement, dated February 15, 2017, between John M. Bryant, Jr. and the Company (filed as Exhibit 10.6)
|
|
6.
|
Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and the Company (filed as Exhibit 10.7)
|
|
7.
|
Third Amended and Restated Employment Agreement, dated February 15, 2017, between B. Douglas Whitman, II and the Company (filed as Exhibit 10.8)
|
|
8.
|
Amended and Restated Employment Agreement, dated February 2, 2016, between J. Christopher Douglas and the Company (filed as Exhibit 10.9)
|
|
9.
|
Healthcare Realty Trust Incorporated Amended and Restated Executive Incentive Plan (filed as Exhibit 10.10)
|
|
10.
|
2010 Restricted Stock Implementation for Non-Employee Directors, dated May 4, 2010 (filed as Exhibit 10.11)
|
|
11.
|
Amendment No. 1 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.12)
|
|
12.
|
Amendment No. 2 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.13)
|
|
13.
|
Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Non-Employee Directors (filed as Exhibit 10.14)
|
|
14.
|
Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Officers (filed as Exhibit 10.15)
|
|
15.
|
Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.16)
|
|
16.
|
Amendment No. 1 to Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.17)
|
|
|
HEALTHCARE REALTY TRUST INCORPORATED
|
||||
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ TODD J. MEREDITH
|
|
|
|
|
|
|
Todd J. Meredith
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
||
|
/s/ Todd J. Meredith
|
|
President and Chief Executive Officer
|
|
February 13, 2019
|
|
Todd J. Meredith
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
||
|
/s/ J. Christopher Douglas
|
|
Executive Vice President and Chief Financial
|
|
February 13, 2019
|
|
J. Christopher Douglas
|
|
Officer (Principal Financial Officer)
|
|
|
|
|
|
|
||
|
/s/ Amanda L. Callaway
|
|
Senior Vice President and Chief Accounting
|
|
February 13, 2019
|
|
Amanda L. Callaway
|
|
Officer (Principal Accounting Officer)
|
|
|
|
|
|
|
||
|
/s/ David R. Emery
|
|
Executive Chairman of the Board
|
|
February 13, 2019
|
|
David R. Emery
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Nancy H. Agee
|
|
Director
|
|
February 13, 2019
|
|
Nancy H. Agee
|
|
|
|
|
|
|
|
|
||
|
/s/ Edward H. Braman
|
|
Director
|
|
February 13, 2019
|
|
Edward H. Braman
|
|
|
|
|
|
|
|
|
||
|
/s/ Peter F. Lyle
|
|
Director
|
|
February 13, 2019
|
|
Peter F. Lyle
|
|
|
|
|
|
|
|
|
||
|
/s/ Edwin B. Morris, III
|
|
Director
|
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February 13, 2019
|
|
Edwin B. Morris, III
|
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/s/ John Knox Singleton
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Director
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February 13, 2019
|
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John Knox Singleton
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||
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/s/ Bruce D. Sullivan
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Director
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February 13, 2019
|
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Bruce D. Sullivan
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||
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/s/ Christann M. Vasquez
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Director
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February 13, 2019
|
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Christann M. Vasquez
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|
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Balance at Beginning of Period
|
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Additions and Deductions
|
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Uncollectible Accounts Written-off
|
|
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Balance at End of Period
|
|
|||||||||||
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Description
|
|
|
Charged /(Credited) to Costs and Expenses
|
|
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Charged to Other Accounts
|
|
|
|
|||||||||||||
|
2018
|
|
Accounts and notes receivable allowance
|
|
$
|
256
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
$
|
251
|
|
|
2017
|
|
Accounts and notes receivable allowance
|
|
$
|
148
|
|
|
$
|
159
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
$
|
256
|
|
|
2016
|
|
Accounts and notes receivable allowance
|
|
$
|
179
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
148
|
|
|
|
|
Land (1)
|
|
Buildings, Improvements, Lease Intangibles and CIP (1)
|
|
|
|
|
|
|
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|||||||||||||||||||||||||||||
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Market
|
Number of Properties
|
|
Initial Investment
|
|
|
Cost Capitalized Subsequent to Acquisition
|
|
|
Total
|
|
|
Initial Investment
|
|
|
Cost Capitalized Subsequent to Acquisition
|
|
|
Total
|
|
|
Personal Property
|
|
|
(2) (3) (5) Total Property
|
|
|
(1) (3) Accumulated Depreciation
|
|
|
(4) Encumbrances
|
|
|
Date Acquired
|
|
Date Constructed
|
||||||||||
|
Dallas, TX
|
25
|
|
$
|
16,668
|
|
|
$
|
243
|
|
|
$
|
16,911
|
|
|
$
|
345,126
|
|
|
$
|
118,951
|
|
|
$
|
464,077
|
|
|
$
|
430
|
|
|
$
|
481,418
|
|
|
$
|
166,980
|
|
|
$
|
—
|
|
|
2003-2010
|
|
1974-2008
|
|
Seattle, WA
|
19
|
|
27,050
|
|
|
1,817
|
|
|
28,867
|
|
|
407,491
|
|
|
31,389
|
|
|
438,880
|
|
|
419
|
|
|
468,166
|
|
|
69,148
|
|
|
31,868
|
|
|
2008-2018
|
|
1957-2009
|
||||||||||
|
Nashville, TN
|
6
|
|
20,004
|
|
|
49
|
|
|
20,053
|
|
|
115,061
|
|
|
61,196
|
|
|
176,257
|
|
|
1,041
|
|
|
197,351
|
|
|
53,052
|
|
|
—
|
|
|
2004-2018
|
|
1960-2015
|
||||||||||
|
Atlanta, GA
|
8
|
|
588
|
|
|
427
|
|
|
1,015
|
|
|
187,088
|
|
|
2,079
|
|
|
189,167
|
|
|
37
|
|
|
190,219
|
|
|
11,547
|
|
|
32,597
|
|
|
2017
|
|
1999-2014
|
||||||||||
|
Los Angela, CA
|
12
|
|
27,281
|
|
|
428
|
|
|
27,709
|
|
|
117,144
|
|
|
40,352
|
|
|
157,496
|
|
|
316
|
|
|
185,521
|
|
|
87,678
|
|
|
23,103
|
|
|
1993-2017
|
|
1973-1998
|
||||||||||
|
Charlotte, NC
|
16
|
|
4,163
|
|
|
37
|
|
|
4,200
|
|
|
150,022
|
|
|
12,900
|
|
|
162,922
|
|
|
99
|
|
|
167,221
|
|
|
60,389
|
|
|
—
|
|
|
2008-2013
|
|
1961-2008
|
||||||||||
|
Denver, CO
|
9
|
|
13,887
|
|
|
2,627
|
|
|
16,514
|
|
|
108,206
|
|
|
23,554
|
|
|
131,760
|
|
|
273
|
|
|
148,547
|
|
|
20,315
|
|
|
7,789
|
|
|
2010-2018
|
|
1977-2015
|
||||||||||
|
Richmond, VA
|
7
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139,636
|
|
|
8,173
|
|
|
147,809
|
|
|
106
|
|
|
147,915
|
|
|
38,288
|
|
|
—
|
|
|
2011
|
|
1992-2005
|
||||||||||
|
Honolulu, HI
|
3
|
|
8,314
|
|
|
13
|
|
|
8,327
|
|
|
93,839
|
|
|
40,198
|
|
|
134,037
|
|
|
159
|
|
|
142,523
|
|
|
34,703
|
|
|
—
|
|
|
2003-2004
|
|
1975-2010
|
||||||||||
|
Des Moines, IA
|
7
|
|
12,584
|
|
|
81
|
|
|
12,665
|
|
|
116,647
|
|
|
10,416
|
|
|
127,063
|
|
|
99
|
|
|
139,827
|
|
|
30,376
|
|
|
1,262
|
|
|
2008-2014
|
|
2002-2009
|
||||||||||
|
Houston, TX
|
8
|
|
13,408
|
|
|
264
|
|
|
13,672
|
|
|
96,894
|
|
|
22,024
|
|
|
118,918
|
|
|
77
|
|
|
132,667
|
|
|
39,195
|
|
|
—
|
|
|
1993-2014
|
|
1984-2012
|
||||||||||
|
Oklahoma City, OK
|
3
|
|
9,077
|
|
|
350
|
|
|
9,427
|
|
|
111,043
|
|
|
409
|
|
|
111,452
|
|
|
10
|
|
|
120,889
|
|
|
14,751
|
|
|
6,225
|
|
|
2010-2018
|
|
1981-2014
|
||||||||||
|
San Francisco, CA
|
3
|
|
14,054
|
|
|
—
|
|
|
14,054
|
|
|
93,852
|
|
|
11,759
|
|
|
105,611
|
|
|
43
|
|
|
119,708
|
|
|
15,539
|
|
|
—
|
|
|
2015-2017
|
|
1975-2014
|
||||||||||
|
Springfield, MO
|
1
|
|
1,989
|
|
|
—
|
|
|
1,989
|
|
|
109,304
|
|
|
—
|
|
|
109,304
|
|
|
—
|
|
|
111,293
|
|
|
14,893
|
|
|
—
|
|
|
2013
|
|
2013
|
||||||||||
|
Austin, TX
|
5
|
|
14,233
|
|
|
3
|
|
|
14,236
|
|
|
70,976
|
|
|
20,840
|
|
|
91,816
|
|
|
119
|
|
|
106,171
|
|
|
20,766
|
|
|
—
|
|
|
2007-2015
|
|
1972-2015
|
||||||||||
|
Washington, D.C.
|
4
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,730
|
|
|
7,456
|
|
|
101,186
|
|
|
8
|
|
|
101,194
|
|
|
20,701
|
|
|
11,980
|
|
|
2004-2017
|
|
1967-2005
|
||||||||||
|
Memphis, TN
|
7
|
|
5,241
|
|
|
—
|
|
|
5,241
|
|
|
68,180
|
|
|
22,786
|
|
|
90,966
|
|
|
191
|
|
|
96,398
|
|
|
35,109
|
|
|
—
|
|
|
1999-2013
|
|
1993-2007
|
||||||||||
|
San Antonio, TX
|
7
|
|
6,617
|
|
|
30
|
|
|
6,647
|
|
|
62,760
|
|
|
26,194
|
|
|
88,954
|
|
|
378
|
|
|
95,979
|
|
|
37,877
|
|
|
—
|
|
|
1996-2010
|
|
1978-2011
|
||||||||||
|
Chicago, IL
|
3
|
|
5,859
|
|
|
—
|
|
|
5,859
|
|
|
69,964
|
|
|
16,104
|
|
|
86,068
|
|
|
201
|
|
|
92,128
|
|
|
19,372
|
|
|
—
|
|
|
2004-2018
|
|
1993-2009
|
||||||||||
|
Indianapolis, IN
|
3
|
|
3,299
|
|
|
—
|
|
|
3,299
|
|
|
68,994
|
|
|
3,366
|
|
|
72,360
|
|
|
—
|
|
|
75,659
|
|
|
21,299
|
|
|
—
|
|
|
2008-2010
|
|
2005-2008
|
||||||||||
|
Minneapolis, MN
|
4
|
|
2,090
|
|
|
—
|
|
|
2,090
|
|
|
61,078
|
|
|
683
|
|
|
61,761
|
|
|
—
|
|
|
63,851
|
|
|
7,750
|
|
|
19,576
|
|
|
2014-2017
|
|
1974-2010
|
||||||||||
|
Other (21 markets)
|
40
|
|
18,098
|
|
|
458
|
|
|
18,556
|
|
|
436,620
|
|
|
89,162
|
|
|
525,782
|
|
|
1,190
|
|
|
545,528
|
|
|
201,243
|
|
|
8,808
|
|
|
1993-2016
|
|
1906-2009
|
||||||||||
|
Total Real Estate
|
200
|
|
224,504
|
|
|
6,827
|
|
|
231,331
|
|
|
3,123,655
|
|
|
569,991
|
|
|
3,693,646
|
|
|
5,196
|
|
|
3,930,173
|
|
|
1,020,971
|
|
|
143,208
|
|
|
|
|
|
||||||||||
|
Land Held for Develop.
|
—
|
|
24,647
|
|
|
—
|
|
|
24,647
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,647
|
|
|
393
|
|
|
—
|
|
|
|
|
|
||||||||||
|
Construction in Progress
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,107
|
|
|
—
|
|
|
33,107
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||||
|
Corporate Property
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,500
|
|
|
5,500
|
|
|
4,467
|
|
|
—
|
|
|
|
|
|
||||||||||
|
Total Properties
|
200
|
|
$
|
249,151
|
|
|
$
|
6,827
|
|
|
$
|
255,978
|
|
|
$
|
3,123,655
|
|
|
$
|
569,991
|
|
|
$
|
3,726,753
|
|
|
$
|
10,696
|
|
|
$
|
3,993,427
|
|
|
$
|
1,025,831
|
|
|
$
|
143,208
|
|
|
|
|
|
|
(1)
|
Includes one asset held for sale as of December 31, 2018 of approximately $19.4 million (gross) and accumulated depreciation of $10.7 million.
|
|
(2)
|
Total properties as of December 31, 2018 have an estimated aggregate total cost of $4.0 billion for federal income tax purposes.
|
|
(3)
|
Depreciation is provided for on a straight-line basis on buildings and improvements over 3.3 to 39.0 years, lease intangibles over to 2.1 to 99.0 years, personal property over 2.8 to 20.0 years, and land improvements over 5.0 to 39.0 years.
|
|
(4)
|
Includes unamortized premium of $1.8 million and unaccreted discount of $1.0 million and issuance costs of $0.7 million as of December 31, 2018.
|
|
(5)
|
Rollforward of Total Property and Accumulated Depreciation, including assets held for sale, for the year ended December 31, 2018, 2017 and 2016 follows:
|
|
|
Year Ended
December 31, 2018
|
|
Year Ended
December 31, 2017
|
|
Year Ended
December 31, 2016
|
||||||||||||||||||
|
(Dollars in thousands)
|
Total Property
|
|
|
Accumulated Depreciation
|
|
|
Total Property
|
|
|
Accumulated Depreciation
|
|
|
Total Property
|
|
|
Accumulated Depreciation
|
|
||||||
|
Beginning Balance
|
$
|
3,907,010
|
|
|
$
|
933,220
|
|
|
$
|
3,633,993
|
|
|
$
|
843,816
|
|
|
$
|
3,382,680
|
|
|
$
|
762,996
|
|
|
Additions during the period:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Real Estate acquired
|
112,591
|
|
|
4,175
|
|
|
322,616
|
|
|
4,206
|
|
|
239,265
|
|
|
3,898
|
|
||||||
|
Other improvements
|
74,317
|
|
|
157,385
|
|
|
59,442
|
|
|
135,807
|
|
|
70,595
|
|
|
121,592
|
|
||||||
|
Land held for development
|
4,525
|
|
|
153
|
|
|
—
|
|
|
74
|
|
|
—
|
|
|
26
|
|
||||||
|
Construction in Progress
|
27,649
|
|
|
—
|
|
|
14,598
|
|
|
—
|
|
|
35,596
|
|
|
—
|
|
||||||
|
Retirement/dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Real Estate
|
(132,665
|
)
|
|
(69,102
|
)
|
|
(123,639
|
)
|
|
(50,683
|
)
|
|
(94,143
|
)
|
|
(44,696
|
)
|
||||||
|
Land held for development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Ending Balance
|
$
|
3,993,427
|
|
|
$
|
1,025,831
|
|
|
$
|
3,907,010
|
|
|
$
|
933,220
|
|
|
$
|
3,633,993
|
|
|
$
|
843,816
|
|
|
ATTEST:
|
|
|
(A)
|
Certain Definitions:
|
|
(B)
|
Rank. The Series A Preferred Stock shall, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation, rank (a) senior to all classes or series of Common Stock of the Corporation, and to all equity securities ranking junior to such Series A Preferred Stock; (b) on a parity with all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank on a parity with the Series A Preferred Stock; and (c) junior to all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank senior to the Series A Preferred Stock. The term "equity securities" shall not include convertible debt securities.
|
|
(C)
|
Dividends.
|
|
(D)
|
Liquidation Preference.
|
|
(E)
|
Redemption by the Corporation.
|
|
(F)
|
Voting Rights.
|
|
1.
|
The undersigned parties agree to merge to form a new corporation.
|
|
2.
|
Healthcare Realty of Tennessee, L.P., a Tennessee limited partnership organized on March 20, 1997 (the “Merging Partnership”), shall merge with and into Healthcare Realty Trust Incorporated, a Maryland corporation with its principal office located in Baltimore (the “Merger”). Healthcare Realty Trust Incorporated shall be the successor corporation (“Successor Corporation”).
|
|
3.
|
The terms and conditions of the Merger were advised, authorized and approved by the undersigned parties in the manner and by the vote required by, in the case of the Merging Partnership, its certificate of limited partnership and the laws of the state of Tennessee, and in the case of the Successor Corporation, its charter and the laws of the state of Maryland. The Merger was approved by the general partner and the limited partners of the Merging Partnership by unanimous consent. The Merger was approved by the board of directors of the Successor Corporation by unanimous consent, in accordance with Section 3-105(a)(5) of the MGCL.
|
|
4.
|
There are no amendments to the Successor Corporation’s charter or to the Merging Partnership’s certificate of limited partnership to be effected as part of the Merger.
|
|
5.
|
The Surviving Corporation has authority to issue Two Hundred Million (200,000,000) shares of capital stock, of which One Hundred and Fifty Million (150,000,000) are Common Stock having a par value of $.01 per share and Fifty Million (50,000,000) are Preferred Stock having a par value of $.01 per share. The aggregate par value of all shares is Two Million Dollars ($2,000,000).
|
|
6.
|
There is only one class of limited partnership interests. The sole limited partner of the Merging partnership owns ninety-nine percent (99%) of the overall partnership interests. The general partner of the Merging Partnership owns one percent (1%) of the overall partnership interests.
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7.
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Manner and basis of conversion: Each unit of limited partnership interest in Healthcare Realty of Tennessee shall be converted into the right to receive Twelve Thousand Six Hundred Nineteen and 71/100 Dollars ($12,619.71).
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8.
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The effective date of the Merger, for accounting purposes only, is June 30, 1999.
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1.
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Article III, Section 3.2 is hereby amended and restated to read as follows:
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2.
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Article III, Section 3.3 is hereby amended and restated to read as follows:
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3.
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Article III, Section 3.8 is hereby amended and restated to read as follows:
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1.
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Article VII, Section 7.1 is hereby amended and restated in its entirety to read as follows:
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2.
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Article VII, Section 7.4 is hereby amended and restated in its entirety to read as follows:
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Amended by the Board of Directors of Healthcare Realty Trust Incorporated as of October 23, 2007
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/s/ Rita H. Todd
Rita H. Todd, Secretary
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Subsidiary
|
State of Incorporation
|
|
3310 West End, LLC
|
TN
|
|
5901 Westown Parkway MOB, LLC
|
DE
|
|
593HR, LLC
|
TN
|
|
Allenmore C, LLC
|
DE
|
|
Ankeny North MOB, LLC
|
DE
|
|
Clive Wellness Campus Building Five, LLC
|
DE
|
|
Clive Wellness Campus Building One, LLC
|
DE
|
|
Clive Wellness Campus Building Two, LLC
|
DE
|
|
DOB III, LLC
|
TN
|
|
DPCI 6002 Professional, LLC
|
GA
|
|
DPCII 6001 Professional, LLC
|
GA
|
|
Healthcare Acquisition of Texas, Inc.
|
AL
|
|
Healthcare Realty Services Incorporated
|
TN
|
|
Healthcare Realty Trust Incorporated
|
MD
|
|
HR 3705 Medical Parkway, LLC
|
DE
|
|
HR 601 Broadway Unit A, LLC
|
TN
|
|
HR 9191 Pinecroft SPE, LLC
|
DE
|
|
HR Acquisition I Corporation
|
MD
|
|
HR Acquisition of Alabama, Inc.
|
AL
|
|
HR Acquisition of Pennsylvania, Inc.
|
PA
|
|
HR Acquisition of San Antonio, Ltd.
|
AL
|
|
HR Assets, LLC
|
DE
|
|
HR Bell Air, LLC
|
MD
|
|
HR Briargate, LLC
|
DE
|
|
HR Carolinas Holdings, LLC
|
DE
|
|
HR Dakota, LLC
|
DE
|
|
HR First Hill Medical Building SPE, LLC
|
DE
|
|
HR Forest Glen, LLC
|
TN
|
|
HR Fridley, LLC
|
MN
|
|
HR HMP Unit 1 Manager, LLC
|
DE
|
|
HR HMP Unit 1 SPE, LLC
|
DE
|
|
HR Interests, Inc.
|
TX
|
|
HR Lowry Medical Center SPE, LLC
|
DE
|
|
HR MAC II, LLC
|
DE
|
|
HR McNaughten SPE, LLC
|
DE
|
|
HR MRMC MOB II SPE, LLC
|
DE
|
|
HR MRMC MOB III SPE, LLC
|
DE
|
|
HR North Carolina, LLC
|
DE
|
|
HR of California, Inc.
|
AL
|
|
Stevens Pavilion LLC
|
DE
|
|
Union Plaza Holdings, LLC
|
DE
|
|
West Norman SPE, LLC
|
TN
|
|
Yakima Valley Subsidiary LLC
|
DE
|
|
1.
|
I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated;
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|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
February 13, 2019
|
|
|
|
|
/s/ TODD J. MEREDITH
|
|
|
|
Todd J. Meredith
|
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
February 13, 2019
|
|
|
|
|
/s/ J. CHRISTOPHER DOUGLAS
|
|
|
|
J. Christopher Douglas
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Date:
|
February 13, 2019
|
|
|
|
|
/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
|