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(Mark One)
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2019
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OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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Trading Symbol
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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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HR
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New York Stock Exchange
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SIGNATURES AND SCHEDULES
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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). The Company had no properties classified as held for sale as of December 31, 2019.
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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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2020 1
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736
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2,685,057
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19.9
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%
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2021
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481
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1,707,938
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12.7
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%
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2022
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473
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1,725,329
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12.8
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%
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2023
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334
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1,478,025
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11.0
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%
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2024
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404
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1,932,217
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14.4
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%
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2025
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129
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827,185
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6.1
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%
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2026
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113
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427,655
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3.2
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%
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2027
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91
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735,677
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5.5
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%
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2028
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90
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748,753
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5.6
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%
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2029
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97
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755,856
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5.6
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%
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Thereafter
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67
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438,750
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3.2
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%
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3,015
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13,462,442
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100.0
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%
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1
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Includes 59 leases totaling 142,705 square feet that expired prior to December 31, 2019 and were 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 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
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various state legislature proposals for state-funded single-payer health insurance and a limit on allowable rates of reimbursement to healthcare providers;
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the implementation of 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, comparative effectiveness research, and lower payments for hospital readmissions;
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•
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MACRA, which requires quality reporting and a transition toward value-based reimbursement models for Medicare payments to physicians;
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equalization of Medicare payment rates across different facility-type settings, according to Section 603 of the Bipartisan Budget Act of 2015, which 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; the CMS rule for hospital outpatient department Medicare payments in 2020 expanded site-neutral payments for clinic visits in previously-grandfathered off-campus facilities, although this regulation is subject to ongoing legal challenges;
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the continued adoption by providers of federal standards for the meaningful-use of electronic health records;
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reforms to the physician self-referral laws, commonly referred to as the Stark Law, that prohibit physician referral of a Medicare or Medicaid patient to an entity with which the physician has a financial relationship; without reform, both the laws and the regulations stemming from them could impede the transition toward value-based, coordinated care among providers;
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consideration of broad reforms to 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 a significant expansion of Medicare coverage to the greater U.S. population;
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•
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regulation requiring the publication of hospital prices for certain services, as well as hospitals’ negotiated rates with insurers for these services, beginning 2021, although this regulation is subject to ongoing legal challenges;
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limits on price increases in pharmaceutical drugs and the cost to Medicare beneficiaries; and
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legislation to prohibit “surprise billing,” or high payment rates charged to consumers for out-of-network physician services.
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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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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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Construction costs could exceed original estimates, which could impact the building’s profitability to the Company;
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Operating expenses could be higher than forecasted;
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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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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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Favorable capital sources to fund the Company’s development and redevelopment activities may not be available when needed.
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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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The costs of any maintenance or improvements for properties might exceed estimated costs;
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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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Leasing may not occur at all, within expected time frames or at expected rental rates.
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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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result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines;
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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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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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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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require significant management attention and resources to remedy any damages that result;
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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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damage the Company's reputation among its tenants and investors generally.
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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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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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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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potential joint venture partners could have financing and investment goals or strategies that are different than those of the Company, including terms and strategies for such investment and what levels of debt place on the venture;
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the parties to a joint venture could reach an impasse on certain decisions, which could result in unexpected costs, including costs associated with litigation or arbitration;
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joint venture partners could have investments that are competitive with the Company's properties in certain markets;
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interests in joint ventures are often illiquid and the Company may have difficulty exiting such in investment, or may have to exit at less than fair market value;
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joint venture partners may be structured differently than the Company for tax purposes and their could be conflicts relating to the Company's REIT status; and
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joint venture partners could become insolvent, fail to fund capital contributions, or otherwise fail to fulfill their obligations as a partner, which could require the Company to invest more capital into such ventures than anticipated.
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trends in the method of delivery of healthcare services;
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transition to value-based care and reimbursement of providers;
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competition among healthcare providers;
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consolidation among healthcare providers, health insurers, hospitals and health systems;
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a rise in government-funded health insurance coverage;
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pressure on providers' operating profit margins from lower reimbursement rates, lower admissions growth, and higher expense growth;
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availability of capital;
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credit downgrades;
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liability insurance expense;
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rising pharmaceutical drug expense;
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regulatory and government reimbursement uncertainty related to the Medicare and Medicaid programs;
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a trend toward government regulation of hospital, physician and pharmaceutical pricing;
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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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site-neutral rate-setting for Medicare services across different care settings;
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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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potential tax law changes affecting providers.
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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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Business combinations. Pursuant to 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
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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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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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332,659
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—
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1,511,921
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Equity compensation plans not approved by security holders
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—
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—
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—
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Total
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332,659
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—
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1,511,921
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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
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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
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10,947
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$
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28.28
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—
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—
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February 1 - February 28
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7,649
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31.69
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—
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—
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March 1 - March 31
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950
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31.60
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—
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—
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April 1 - April 30
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—
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—
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—
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—
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May 1 - May 31
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—
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—
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—
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—
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June 1 - June 30
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—
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—
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—
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—
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July 1 - July 31
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—
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—
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—
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—
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August 1 - August 31
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—
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—
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—
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—
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September 1 - September 30
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80,490
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33.50
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—
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—
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October 1 - October 31
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—
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—
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—
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—
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November 1 - November 30
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—
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—
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—
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—
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December 1 - December 31
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1,544
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33.37
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—
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—
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Total
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101,580
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YEAR ENDED DECEMBER 31,
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Amounts in thousands except per share data
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2019
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2018
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2017
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2016
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2015
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Statement of Income Data
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Total revenues
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$
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470,298
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$
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450,389
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$
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424,737
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$
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411,955
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$
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388,471
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Total expenses
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394,432
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370,016
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335,055
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310,003
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283,541
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Other income (expense)
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(36,681
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)
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(10,602
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)
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(66,590
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)
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(16,381
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)
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(46,094
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)
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Income from continuing operations
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$
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39,185
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$
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69,771
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$
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23,092
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$
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85,571
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$
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58,836
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Income from discontinued operations
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—
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—
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—
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—
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10,600
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Net income attributable to common stockholders
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$
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39,185
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$
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69,771
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$
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23,092
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$
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85,571
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$
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69,436
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Diluted earnings per common share
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Income from continuing operations
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$
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0.29
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$
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0.55
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$
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0.18
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$
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0.78
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$
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0.59
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Income from discontinued operations
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—
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—
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—
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—
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0.11
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Net income attributable to common stockholders
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$
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0.29
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$
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0.55
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$
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0.18
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$
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0.78
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$
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0.70
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Weighted average common shares outstanding - diluted
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128,084
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|
123,351
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|
118,017
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|
109,387
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|
99,880
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Balance Sheet Data as of the end of the period
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Real estate properties, gross
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$
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4,359,993
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$
|
3,974,071
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$
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3,838,638
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$
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3,628,221
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$
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3,380,908
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Real estate properties, net
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$
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3,238,891
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$
|
2,958,897
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$
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2,941,208
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$
|
2,787,382
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$
|
2,618,982
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Assets held for sale, net
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$
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37
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|
$
|
9,272
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|
$
|
33,147
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$
|
3,092
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|
$
|
724
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|
|
Total assets
|
$
|
3,563,855
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|
$
|
3,191,247
|
|
$
|
3,193,585
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|
$
|
3,040,647
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|
$
|
2,810,224
|
|
|
Notes and bonds payable, net
|
$
|
1,414,069
|
|
$
|
1,345,984
|
|
$
|
1,283,880
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|
$
|
1,264,370
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|
$
|
1,424,992
|
|
|
Total stockholders' equity
|
$
|
1,900,009
|
|
$
|
1,716,642
|
|
$
|
1,789,883
|
|
$
|
1,653,414
|
|
$
|
1,242,747
|
|
|
|
|
|
|
|
|
||||||||||
|
Other Data
|
|
|
|
|
|
||||||||||
|
Funds from operations 1
|
$
|
200,737
|
|
$
|
194,960
|
|
$
|
134,274
|
|
$
|
174,420
|
|
$
|
124,571
|
|
|
Funds from operations per common share - diluted 1
|
$
|
1.56
|
|
$
|
1.57
|
|
$
|
1.13
|
|
$
|
1.59
|
|
$
|
1.25
|
|
|
Cash flows from operations
|
$
|
213,138
|
|
$
|
208,355
|
|
$
|
179,766
|
|
$
|
151,272
|
|
$
|
153,983
|
|
|
Dividends paid
|
$
|
155,358
|
|
$
|
150,266
|
|
$
|
142,327
|
|
$
|
131,759
|
|
$
|
120,266
|
|
|
Dividends declared and paid per common share
|
$
|
1.20
|
|
$
|
1.20
|
|
$
|
1.20
|
|
$
|
1.20
|
|
$
|
1.20
|
|
|
1
|
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.
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|
•
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The Company's expected results may not be achieved;
|
|
•
|
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 or make significant leasing concessions to attract new tenants, then the Company’s business, consolidated financial condition and results of operations would be adversely affected;
|
|
•
|
Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses;
|
|
•
|
The Company has, and in the future may have more exposure to fixed rent escalators, which could lag behind inflation and the growth in operating expenses such as real estate taxes, utilities, insurance, and maintenance expense;
|
|
•
|
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 and redevelopments 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;
|
|
•
|
Damage from catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in losses to the Company;
|
|
•
|
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;
|
|
•
|
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. 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;
|
|
•
|
The Company may enter into joint venture agreements that would limit its flexibility with respect to jointly owned properties;
|
|
•
|
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;
|
|
•
|
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.
|
|
•
|
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
|
MILES TO CAMPUS
|
|
DATE ACQUIRED
|
PURCHASE PRICE
|
|
SQUARE FOOTAGE
|
|
CAP
RATE 1
|
|
|
|
Washington, D.C. 2
|
Inova Health
|
0.00
|
|
3/28/19
|
$
|
46.0
|
|
158,338
|
|
5.2
|
%
|
|
Indianapolis, IN
|
Indiana University Health
|
0.00
|
|
3/28/2019
|
47.0
|
|
143,499
|
|
5.1
|
%
|
|
|
Atlanta, GA
|
Piedmont Healthcare
|
0.14
|
|
4/2/2019
|
28.0
|
|
47,963
|
|
5.7
|
%
|
|
|
Dallas, TX
|
Baylor Scott & White Health
|
0.01
|
|
6/10/2019
|
17.0
|
|
89,990
|
|
6.2
|
%
|
|
|
Seattle, WA
|
MultiCare Health System
|
0.20
|
|
6/11/2019
|
7.7
|
|
29,870
|
|
6.9
|
%
|
|
|
Seattle, WA
|
UW Medicine
|
0.27
|
|
6/14/2019
|
19.0
|
|
47,255
|
|
5.8
|
%
|
|
|
Seattle, WA
|
UW Medicine
|
0.35
|
|
6/28/2019
|
30.5
|
|
78,288
|
|
5.7
|
%
|
|
|
Houston, TX
|
Houston Methodist
|
0.00
|
|
8/1/2019
|
13.5
|
|
29,903
|
|
5.7
|
%
|
|
|
Oklahoma City, OK
|
Integris Health
|
0.02
|
|
9/26/2019
|
4.1
|
|
28,542
|
|
6.3
|
%
|
|
|
Los Angeles, CA 2
|
Huntington Hospital
|
0.05
|
|
9/30/2019
|
61.1
|
|
115,634
|
|
5.2
|
%
|
|
|
Raleigh, NC
|
WakeMed Health
|
0.11
|
|
10/31/2019
|
21.6
|
|
57,730
|
|
5.5
|
%
|
|
|
Dallas, TX 3
|
Baylor Scott & White Health
|
0.04
|
|
10/31/2019
|
20.1
|
|
48,192
|
|
5.3
|
%
|
|
|
Seattle, WA
|
EvergreenHealth
|
0.30
|
|
11/18/2019
|
22.8
|
|
36,350
|
|
5.5
|
%
|
|
|
Seattle, WA
|
UW Medicine
|
3.50
|
|
12/10/2019
|
24.2
|
|
44,166
|
|
6.1
|
%
|
|
|
Memphis, TN 4
|
Baptist Memorial Health Care
|
0.26
|
|
12/13/2019
|
8.7
|
|
110,883
|
|
NA
|
|
|
|
Seattle, WA
|
CommonSpirit Health
|
0.15
|
|
12/18/2019
|
10.0
|
|
20,109
|
|
6.3
|
%
|
|
|
Total acquisitions
|
|
|
|
$
|
381.3
|
|
1,086,712
|
|
5.5
|
%
|
|
|
1
|
The cap rate represents the forecasted first year net operating income ("NOI") divided by purchase price.
|
|
2
|
Includes two properties.
|
|
3
|
Represents the cap rate when tenant build out for existing leases is complete and all tenants are occupying and paying full rent.
|
|
4
|
The Company acquired this property as part of a redevelopment project. During the construction period, the property is expected to be 44% occupied and NOI is expected to break-even.
|
|
•
|
$28.6 million toward development and redevelopment of properties;
|
|
•
|
$19.8 million toward first generation tenant improvements and planned capital expenditures for acquisitions;
|
|
•
|
$28.7 million toward second generation tenant improvements; and
|
|
•
|
$17.2 million toward capital expenditures. See the Trends and Matters Impacting Operating Results - Capital Expenditures for more detail.
|
|
Dollars in millions
|
DATE
DISPOSED
|
PROPERTY
TYPE 1
|
SALES PRICE
|
|
SQUARE FOOTAGE
|
|
DISPOSITION CAP RATE 2
|
|
|
|
Tucson, AZ 3
|
4/9/19
|
MOB
|
$
|
13.0
|
|
67,345
|
|
6.2
|
%
|
|
Virginia Beach, VA
|
8/1/19
|
MOB
|
1.3
|
|
10,000
|
|
12.2
|
%
|
|
|
San Antonio, TX
|
8/28/19
|
MOB
|
0.9
|
|
10,138
|
|
3.0
|
%
|
|
|
Erie, PA 4
|
10/25/19
|
IRF
|
14.0
|
|
90,123
|
|
15.6
|
%
|
|
|
New Orleans, LA 5
|
11/25/19
|
MOB
|
3.7
|
|
136,155
|
|
3.3
|
%
|
|
|
Kingsport, TN
|
11/27/19
|
SNF
|
9.5
|
|
75,000
|
|
8.7
|
%
|
|
|
Pittsburgh, PA 4
|
12/18/19
|
IRF
|
3.8
|
|
78,731
|
|
(9.0
|
)%
|
|
|
Dallas, TX 5
|
12/30/19
|
MOB
|
8.7
|
|
69,558
|
|
4.5
|
%
|
|
|
Total dispositions
|
|
$
|
54.9
|
|
537,050
|
|
7.6
|
%
|
|
|
Total MOB dispositions
|
|
$
|
27.6
|
|
293,196
|
|
5.5
|
%
|
|
|
1
|
MOB = medical office building; SNF = skilled nursing facility; IRF = inpatient rehabilitation facility
|
|
2
|
Cap rate represents the in-place cash NOI divided by sales price.
|
|
3
|
Includes four properties sold to a single purchaser.
|
|
4
|
Previously classified as held for sale.
|
|
5
|
Includes two properties.
|
|
•
|
During the first quarter of 2019, the Company sold 135,265 shares generating $4.3 million in net proceeds at prices to the public ranging from $32.01 to $32.86 per share (weighted average of $32.36 per share).
|
|
•
|
No shares were sold in the second quarter of 2019.
|
|
•
|
During the third quarter of 2019, the Company sold 2,191,522 shares generating $71.6 million in net proceeds at prices to the public ranging from $32.62 to $33.77 per share (weighted average of $33.15 per share).
|
|
•
|
During the fourth quarter of 2019, the Company sold 3,143,886 shares generating $103.2 million in net proceeds at prices to the public ranging from $32.02 to $33.74 per share (weighted average of $33.30 per share).
|
|
EFFECTIVE DATE
|
AMOUNT
|
|
WEIGHTED
AVERAGE RATE
|
|
EXPIRATION DATE
|
|
|
December 18, 2017
|
$
|
25,000
|
|
2.18
|
%
|
December 16, 2022
|
|
February 1, 2018
|
50,000
|
|
2.46
|
%
|
December 16, 2022
|
|
|
May 1, 2019
|
50,000
|
|
2.33
|
%
|
May 1, 2026
|
|
|
June 3, 2019
|
50,000
|
|
2.13
|
%
|
May 1, 2026
|
|
|
|
$
|
175,000
|
|
2.29
|
%
|
|
|
|
PRINCIPAL BALANCE
|
|
CARRYING BALANCE 1
|
|
WEIGHTED YEARS TO MATURITY
|
|
CONTRACTUAL RATE
|
|
EFFECTIVE RATE
|
|
||
|
Senior Notes due 2023
|
$
|
250,000
|
|
$
|
248,540
|
|
3.3
|
|
3.75
|
%
|
3.95
|
%
|
|
Senior Notes due 2025 2
|
250,000
|
|
248,522
|
|
5.3
|
|
3.88
|
%
|
4.08
|
%
|
||
|
Senior Notes due 2028
|
300,000
|
|
295,651
|
|
8.0
|
|
3.63
|
%
|
3.84
|
%
|
||
|
Total Senior Notes Outstanding
|
800,000
|
|
792,713
|
|
5.7
|
|
3.74
|
%
|
3.95
|
%
|
||
|
$700 million unsecured credit facility due 2023 3
|
293,000
|
|
293,000
|
|
3.4
|
|
LIBOR+0.90%
|
|
2.66
|
%
|
||
|
$200 million unsecured term loan due 2024 4
|
200,000
|
|
199,013
|
|
4.4
|
|
LIBOR+1.00%
|
|
3.27
|
%
|
||
|
$150 million unsecured term loan due 2026 5
|
—
|
|
—
|
|
6.4
|
|
LIBOR+1.60%
|
|
NA
|
|
||
|
Mortgage notes payable
|
129,258
|
|
129,343
|
|
4.4
|
|
4.95
|
%
|
4.81
|
%
|
||
|
Total Outstanding Notes and Bonds Payable
|
$
|
1,422,258
|
|
$
|
1,414,069
|
|
4.9
|
|
3.56
|
%
|
3.67
|
%
|
|
1
|
Balances are reflected net of discounts and debt issuance costs and include premiums.
|
|
2
|
The effective interest rate includes the impact of the $1.7 million settlement of a forward-starting interest rate swap that is included in accumulated other comprehensive income on the Company's Consolidated Balance Sheets.
|
|
3
|
As of December 31, 2019, the Company had $293.0 million outstanding under the Unsecured Credit Facility with a weighted average interest rate of approximately 2.66% and a remaining borrowing capacity of approximately $407.0 million. As of December 31, 2018, the Company had $262.0 million outstanding with a weighted average interest rate of approximately 3.50%
|
|
4
|
The effective interest rate includes the impact of interest rate swaps totaling $175.0 million to hedge the 1-month LIBOR portion of the cost of borrowing under the Unsecured Term Loan due 2026 at a weighted average interest rate of 2.29% (plus the applicable margin rate, currently 1.00%).
|
|
5
|
As of December 31, 2019, there are no outstanding loans under the $150 million Unsecured Term Loan due 2026. This term loan has a delayed draw feature that allows the Company until February 28, 2020 to draw against the commitments.
|
|
•
|
The Company completed the redevelopment of a medical office building in Charlotte, North Carolina, which included a 40,278 square foot vertical expansion. The Company funded approximately $1.5 million during the year ended December 31, 2019. The first tenant took occupancy during the second quarter of 2019.
|
|
•
|
The Company continued development of a 151,000 square foot medical office building in Seattle, Washington. The Company funded $25.2 million during the year ended December 31, 2019. The Company expects initial occupancy to occur in the first quarter of 2020.
|
|
•
|
The Company began the redevelopment of a 110,883 square foot medical office building in Memphis, Tennessee. The Company funded approximately $0.3 million, excluding $8.7 million for the acquisition of building and land, during the year ended December 31, 2019.
|
|
•
|
The Company funded an additional $1.0 million on a previously completed redevelopment in Nashville, Tennessee and $0.6 million on a previously completed development project in Denver, Colorado.
|
|
|
NUMBER OF PROPERTIES
|
GROSS REAL ESTATE INVESTMENT AS OF DECEMBER 31, 2019
|
|||||||||||
|
YEAR EXERCISABLE
|
MOB
|
|
INPATIENT
|
|
FAIR MARKET
VALUE METHOD 1
|
|
NON FAIR MARKET
VALUE METHOD 2
|
|
TOTAL
|
|
|||
|
Current 3
|
3
|
|
1
|
|
$
|
96,039
|
|
$
|
—
|
|
$
|
96,039
|
|
|
2020
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
2021
|
1
|
|
—
|
|
—
|
|
14,984
|
|
14,984
|
|
|||
|
2022
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
2023
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
2024
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
2025
|
5
|
|
1
|
|
48,138
|
|
221,929
|
|
270,067
|
|
|||
|
2026
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
2027
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
|
2028
|
1
|
|
—
|
|
43,925
|
|
—
|
|
43,925
|
|
|||
|
2029
|
1
|
|
—
|
|
26,413
|
|
—
|
|
26,413
|
|
|||
|
2030 and thereafter
|
4
|
|
—
|
|
99,785
|
|
—
|
|
99,785
|
|
|||
|
Total
|
15
|
|
2
|
|
$
|
314,300
|
|
$
|
236,913
|
|
$
|
551,213
|
|
|
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 11.4 years.
|
|
|
% INCREASE
|
|
% OF BASE RENT
|
|
|
Annual increase
|
|
|
||
|
CPI
|
2.0
|
%
|
7.7
|
%
|
|
Fixed
|
3.0
|
%
|
84.8
|
%
|
|
Non-annual increase
|
|
|
||
|
CPI
|
1.4
|
%
|
1.0
|
%
|
|
Fixed
|
1.9
|
%
|
5.7
|
%
|
|
No increase
|
|
|
||
|
Term > 1 year
|
—
|
%
|
0.8
|
%
|
|
|
|
|
CHANGE
|
||||||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
$
|
|
%
|
|
|||
|
Property operating
|
$
|
415,142
|
|
$
|
390,256
|
|
$
|
24,886
|
|
6.4
|
%
|
|
Single-tenant net lease
|
44,083
|
|
47,860
|
|
(3,777
|
)
|
(7.9
|
)%
|
|||
|
Straight-line rent
|
3,000
|
|
4,281
|
|
(1,281
|
)
|
(29.9
|
)%
|
|||
|
Total rental income
|
$
|
462,225
|
|
$
|
442,397
|
|
$
|
19,828
|
|
4.5
|
%
|
|
•
|
Acquisitions and developments in 2018 and 2019 contributed $19.7 million.
|
|
•
|
Leasing activity, including contractual rent increases, contributed $9.7 million.
|
|
•
|
Dispositions in 2018 and 2019 resulted in a decrease of $4.5 million.
|
|
•
|
Dispositions in 2018 and 2019 resulted in a decrease of $4.7 million.
|
|
•
|
Leasing activity, including contractual rent increases, contributed $0.9 million.
|
|
•
|
Acquisitions and developments in 2018 and 2019 resulted in an increase of $1.1 million.
|
|
•
|
Dispositions in 2018 and 2019 resulted in a decrease of $0.2 million.
|
|
•
|
Reduced rent abatements along with net leasing activity and contractual rent increases resulted in a decrease of $2.2 million.
|
|
•
|
Acquisitions and developments in 2018 and 2019 resulted in an increase of $8.7 million.
|
|
•
|
Increases in portfolio operating expenses as follows:
|
|
◦
|
Property tax expense of $1.1 million;
|
|
◦
|
Maintenance and repair expense of $1.6 million;
|
|
◦
|
Leasing commission amortization of $0.9 million;
|
|
◦
|
Insurance expense of $0.6 million; and
|
|
◦
|
Janitorial expense of $0.2 million.
|
|
•
|
Utilities expense decreased $0.9 million.
|
|
•
|
Dispositions in 2018 and 2019 resulted in a decrease of $2.7 million.
|
|
•
|
The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the acceleration of his outstanding nonvested share-based awards and associated taxes. This amount was partially offset by $0.3 reduction in non-cash compensation expense.
|
|
•
|
Non-cash compensation expense decreased $0.8 million mainly due to an officer retirement.
|
|
•
|
Office rent decreased $0.8 million due to the 2018 acquisition of the Company's headquarters.
|
|
•
|
Other net decreases, including professional fees and other administrative costs, of $0.7 million.
|
|
•
|
Acquisitions and developments in 2018 and 2019 resulted in increases of $13.4 million.
|
|
•
|
Various building and tenant improvement expenditures caused increases of $10.5 million.
|
|
•
|
Dispositions in 2018 and 2019 resulted in decreases of $5.4 million.
|
|
•
|
Assets that became fully depreciated resulted in decreases of $4.8 million.
|
|
|
|
|
CHANGE
|
||||||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
$
|
|
%
|
|
|||
|
Contractual interest
|
$
|
53,364
|
|
$
|
51,147
|
|
$
|
2,217
|
|
4.3
|
%
|
|
Net discount/premium accretion
|
250
|
|
5
|
|
245
|
|
4,900.0
|
%
|
|||
|
Debt issuance costs amortization
|
2,448
|
|
2,435
|
|
13
|
|
0.5
|
%
|
|||
|
Amortization of interest rate swap settlement
|
168
|
|
168
|
|
—
|
|
—
|
%
|
|||
|
Interest cost capitalization
|
(1,411
|
)
|
(951
|
)
|
(460
|
)
|
48.4
|
%
|
|||
|
Right-of-use assets financing amortization
|
616
|
|
—
|
|
616
|
|
—
|
%
|
|||
|
Total interest expense
|
$
|
55,435
|
|
$
|
52,804
|
|
$
|
2,631
|
|
5.0
|
%
|
|
•
|
The Unsecured Credit Facility accounted for a net increase of $1.9 million.
|
|
•
|
The Unsecured Term Loan due 2024 accounted for a net increase of $1.3 million.
|
|
•
|
The ticking fee on committed amounts that remain undrawn associated with the Unsecured Term Loan due 2026 accounted for an increase of $0.2 million.
|
|
•
|
Mortgage notes repayments accounted for a decrease of $1.2 million.
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
Amounts in thousands, except per share data
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Net income
|
$
|
39,185
|
|
$
|
69,771
|
|
$
|
23,092
|
|
|
Gain on sales of real estate properties
|
(25,101
|
)
|
(41,665
|
)
|
(39,524
|
)
|
|||
|
Impairments
|
5,617
|
|
—
|
|
5,385
|
|
|||
|
Real estate depreciation and amortization
|
181,036
|
|
166,854
|
|
145,321
|
|
|||
|
FFO
|
200,737
|
|
194,960
|
|
134,274
|
|
|||
|
Acquisition and pursuit costs 1
|
1,742
|
|
738
|
|
2,180
|
|
|||
|
Lease intangible amortization 2
|
147
|
|
—
|
|
—
|
|
|||
|
Accelerated stock awards 3
|
2,854
|
|
70
|
|
—
|
|
|||
|
Forfeited earnest money received
|
—
|
|
(466
|
)
|
—
|
|
|||
|
Debt financing costs
|
760
|
|
—
|
|
45,773
|
|
|||
|
Normalized FFO
|
206,240
|
|
195,302
|
|
182,227
|
|
|||
|
Non-real estate depreciation and amortization
|
3,269
|
|
3,284
|
|
2,757
|
|
|||
|
Non-cash interest expense amortization 4
|
2,866
|
|
2,608
|
|
2,832
|
|
|||
|
Provision for bad debt, net
|
167
|
|
60
|
|
159
|
|
|||
|
Straight-line rent income, net
|
(1,431
|
)
|
(2,728
|
)
|
(4,575
|
)
|
|||
|
Share-based compensation
|
9,519
|
|
10,621
|
|
10,027
|
|
|||
|
Normalized FFO adjusted for non-cash items
|
220,630
|
|
209,147
|
|
193,427
|
|
|||
|
2nd Generation tenant improvements
|
(28,690
|
)
|
(30,939
|
)
|
(20,367
|
)
|
|||
|
Leasing commissions paid
|
(11,329
|
)
|
(7,119
|
)
|
(7,099
|
)
|
|||
|
Capital expenditures
|
(17,158
|
)
|
(20,347
|
)
|
(18,790
|
)
|
|||
|
FAD
|
$
|
163,453
|
|
$
|
150,742
|
|
$
|
147,171
|
|
|
FFO per common share - diluted
|
$
|
1.56
|
|
$
|
1.57
|
|
$
|
1.13
|
|
|
Normalized FFO per common share - diluted
|
$
|
1.60
|
|
$
|
1.57
|
|
$
|
1.53
|
|
|
Weighted average common shares outstanding - diluted 5
|
128,863
|
|
124,104
|
|
118,877
|
|
|||
|
1
|
Acquisition and pursuit costs include third party and travel costs related to the pursuit of acquisitions and developments.
|
|
2
|
The Company adopted the 2018 NAREIT FFO White Paper Restatement during the first quarter of 2019. This amended definition specifically includes the impact of acquisition related market lease intangible amortization in the calculation of NAREIT FFO. The Company historically included this amortization in the real estate depreciation and amortization line item which is added back in the calculation of NAREIT FFO. Prior periods were not restated for the adoption.
|
|
3
|
The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in a $2.9 million charge for the acceleration of his outstanding nonvested share-based awards and associated taxes.
|
|
4
|
Includes the amortization of deferred financing costs, discounts and premiums.
|
|
5
|
The Company utilizes the treasury stock method which includes the dilutive effect of nonvested share-based awards outstanding of 779,081, 753,121 and 860,145, respectively, for the twelve months ended December 31, 2019, 2018, and 2017.
|
|
•
|
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.
|
|
|
|
|
SAME STORE CASH NOI
for the year ended December 31,
|
|
|||||||||
|
Dollars in thousands
|
NUMBER OF PROPERTIES 1
|
|
GROSS INVESTMENT
at December 31, 2019
|
|
2019
|
|
2018
|
|
PERCENTAGE GROWTH
|
|
|||
|
Multi-tenant properties
|
157
|
|
$
|
3,240,598
|
|
$
|
229,214
|
|
$
|
222,210
|
|
3.2
|
%
|
|
Single-tenant net lease properties
|
14
|
|
460,415
|
|
41,432
|
|
40,702
|
|
1.8
|
%
|
|||
|
Total
|
171
|
|
$
|
3,701,013
|
|
$
|
270,646
|
|
$
|
262,912
|
|
2.9
|
%
|
|
1
|
Properties are based on the same store definition included above and exclude assets classified as held for sale, if any.
|
|
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, interest, above and below market lease intangible amortization, lease inducement amortization, lease terminations and tenant improvement overage amortization.
|
|
|
AS OF DECEMBER 31, 2019
|
|||||||
|
|
PROPERTY COUNT
|
|
GROSS INVESTMENT
|
|
SQUARE
FEET
|
|
OCCUPANCY
|
|
|
Same store properties
|
171
|
|
3,701,013
|
|
13,440
|
|
89.3
|
%
|
|
Acquisitions
|
24
|
|
500,063
|
|
1,487
|
|
86.1
|
%
|
|
Reposition
|
9
|
|
71,007
|
|
429
|
|
41.9
|
%
|
|
Total owned real estate properties
|
204
|
|
4,272,083
|
|
15,356
|
|
87.7
|
%
|
|
|
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
|
$
|
1,645,487
|
|
$
|
62,905
|
|
$
|
106,529
|
|
$
|
854,166
|
|
$
|
621,887
|
|
|
Operating lease commitments 2
|
348,186
|
|
5,483
|
|
10,715
|
|
10,671
|
|
321,317
|
|
|||||
|
Finance lease commitments 3
|
87,283
|
|
745
|
|
1,516
|
|
1,566
|
|
83,456
|
|
|||||
|
Construction in progress 4
|
18,683
|
|
16,088
|
|
2,595
|
|
—
|
|
—
|
|
|||||
|
Tenant improvements 5
|
46,588
|
|
46,588
|
|
—
|
|
—
|
|
—
|
|
|||||
|
Redevelopment 6
|
8,190
|
|
8,190
|
|
|
|
|
||||||||
|
Total contractual obligations
|
$
|
2,154,417
|
|
$
|
139,999
|
|
$
|
121,355
|
|
$
|
866,403
|
|
$
|
1,026,660
|
|
|
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 2024, whose balance and interest rate may fluctuate from day to day. The fixed rate interest resulting from the Company's outstanding swaps on $175.0 million of the Unsecured Term Loan due 2024 are reflected in the table above. As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $150 million commitments. Excluded from the table above are the discounts on the Company's outstanding senior notes of approximately $3.0 million, net premiums totaling approximately $0.6 million on 16 mortgage notes payable, and debt issuance costs totaling approximately $5.8 million which are included in notes and bonds payable on the Company’s Consolidated Balance Sheet as of December 31, 2019. The Company’s long-term debt principal obligations are presented in more detail in the table below.
|
|
In millions
|
PRINCIPAL BALANCE
at Dec. 31, 2019
|
|
PRINCIPAL BALANCE
at Dec. 31, 2018
|
|
MATURITY DATE
|
CONTRACTUAL INTEREST RATES
at Dec. 31, 2018
|
|
PRINCIPAL PAYMENTS
|
INTEREST PAYMENTS
|
||
|
Unsecured Credit Facility
|
$
|
293.0
|
|
$
|
262.0
|
|
5/23
|
LIBOR + 0.90%
|
|
At maturity
|
Monthly
|
|
Unsecured Term Loan due 2024
|
200.0
|
|
150.0
|
|
5/24
|
LIBOR + 1.00%
|
|
At maturity
|
Monthly
|
||
|
Unsecured Term Loan due 2026
|
—
|
|
—
|
|
6/26
|
LIBOR + 1.60%
|
|
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
|
129.3
|
|
143.1
|
|
7/20-5/40
|
3.31%-6.88%
|
|
Monthly
|
Monthly
|
||
|
|
$
|
1,422.3
|
|
$
|
1,355.1
|
|
|
|
|
|
|
|
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 three ground leases, with expiration dates through 2091, related to real estate investments for which the Company is currently making payments.
|
|
4
|
Includes cash flow projections related to the construction of one building in Seattle, Washington. This amount includes $3.6 million of invoices that were accrued and included in construction in progress on the Company's Consolidated Balance Sheet as of December 31, 2019.
|
|
5
|
The Company has remaining tenant improvement allowances, excluding construction in progress, of approximately $46.6 million. This amount includes $9.7 million of invoices that were accrued as of December 31, 2019.
|
|
6
|
Includes the Memphis Redevelopment tenant improvement obligations of $8.2 million. The Company executed the contract for the redevelopment of the core and shell in January 2020.
|
|
•
|
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.
|
|
|
|
|
IMPACT ON EARNINGS AND CASH FLOW
|
|||||||||
|
Dollars in thousands
|
OUTSTANDING
PRINCIPAL BALANCE
as of Dec. 31, 2019
|
|
CALCULATED
ANNUAL INTEREST
|
|
ASSUMING 10%
INCREASE
in market interest rates
|
|
ASSUMING 10%
DECREASE
in market interest rates
|
|
||||
|
Variable Rate Debt
|
|
|
|
|
||||||||
|
Unsecured Credit Facility
|
$
|
293,000
|
|
$
|
7,801
|
|
$
|
(780
|
)
|
$
|
780
|
|
|
Unsecured Term Loan due 2024 1
|
200,000
|
|
6,540
|
|
(79
|
)
|
79
|
|
||||
|
Unsecured Term Loan due 2026 2
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
|
|
$
|
493,000
|
|
$
|
14,341
|
|
$
|
(859
|
)
|
$
|
859
|
|
|
1
|
As of December 31, 2019 the Company had interest rate swaps that fix the interest rate of $175.0 million of the Unsecured Term Loan due 2024.
|
|
2
|
As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan due 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $150 million commitment.
|
|
|
|
FAIR VALUE
|
|||||||||||||
|
Dollars in thousands
|
CARRYING VALUE
as of Dec. 31, 2019 2
|
|
DEC. 31, 2019
|
|
ASSUMING 10%
INCREASE
in market interest rates
|
|
ASSUMING 10%
DECREASE
in market interest rates
|
|
DEC. 31, 2018 1
|
|
|||||
|
Fixed Rate Debt
|
|
|
|
|
|
||||||||||
|
Senior Notes due 2023
|
$
|
248,540
|
|
$
|
247,105
|
|
$
|
244,136
|
|
$
|
250,090
|
|
$
|
239,377
|
|
|
Senior Notes due 2025
|
248,522
|
|
248,981
|
|
244,466
|
|
253,685
|
|
238,811
|
|
|||||
|
Senior Notes due 2028
|
295,651
|
|
306,783
|
|
300,269
|
|
313,649
|
|
294,662
|
|
|||||
|
Mortgage Notes Payable
|
129,343
|
|
130,895
|
|
129,752
|
|
132,060
|
|
142,474
|
|
|||||
|
|
$
|
922,056
|
|
$
|
933,764
|
|
$
|
918,623
|
|
$
|
949,484
|
|
$
|
915,324
|
|
|
1
|
Fair values as of December 31, 2018 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.
|
|
•
|
Utilizing professionals with specialized skills and knowledge to assist in: (i) evaluating the reasonableness of the methodology used to determine the appropriate discount rates that approximated the incremental borrowing rates for the underlying leased asset, (ii) performing sensitivity analyses to evaluate the impact of changes in the estimated incremental borrowing rates on the right-of-use assets and lease liabilities recorded, and (iii) evaluating the reasonableness of certain assumptions and inputs used to determine the incremental borrowing rates including the unsecured credit rating based on the Company's credit profile as compared to market data.
|
|
•
|
Assessing the reasonableness of management’s key assumptions and inputs, including certain qualitative factors such as acquisition dates of properties, terms of current leases, anticipated new leases and renewals of existing leases, potential sales of properties based on offers received, and market considerations such as closures of nearby hospitals, used to determine that no triggering events had occurred for properties and verifying that forecasted cash flows were sufficient such that no triggering event had occurred.
|
|
•
|
Testing the completeness and accuracy of the underlying real estate property data including validating the number of properties and certain financial results to the general ledger.
|
|
•
|
Reviewing internal documentation including Board of Director minutes, letters of intent for properties held for sale, and operation department communications for properties including those at or near breakeven, properties with lower occupancy and properties with leases expiring in the near term, to assess whether additional triggering factors were present.
|
|
•
|
Utilizing professionals with specialized skills and knowledge to assist in: (i) evaluating the reasonableness of the purchase price allocation methodology used by management for a sample of transactions to determine the relative fair value of the tangible and intangible assets acquired, and (ii) obtaining independent comparable sale transactions for land and evaluating the reasonableness of the market inputs and assumptions utilized by management.
|
|
•
|
Evaluating the appropriateness of the comparable transactions utilized by management by reviewing the underlying assumptions and inputs including location of land acquired and other relevant information.
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Revenues
|
|
|
|
||||||
|
Rental income
|
$
|
462,225
|
|
$
|
442,397
|
|
$
|
416,978
|
|
|
Other operating
|
8,073
|
|
7,992
|
|
7,759
|
|
|||
|
|
470,298
|
|
450,389
|
|
424,737
|
|
|||
|
Expenses
|
|
|
|
||||||
|
Property operating
|
180,005
|
|
170,506
|
|
157,252
|
|
|||
|
General and administrative
|
34,826
|
|
34,511
|
|
32,992
|
|
|||
|
Acquisition and pursuit costs
|
1,742
|
|
738
|
|
2,180
|
|
|||
|
Depreciation and amortization
|
177,859
|
|
164,201
|
|
142,472
|
|
|||
|
Bad debt, net of recoveries
|
—
|
|
60
|
|
159
|
|
|||
|
|
394,432
|
|
370,016
|
|
335,055
|
|
|||
|
Other income (expense)
|
|
|
|
||||||
|
Gain on sales of real estate assets
|
25,101
|
|
41,665
|
|
39,524
|
|
|||
|
Interest expense
|
(55,435
|
)
|
(52,804
|
)
|
(56,402
|
)
|
|||
|
Loss on extinguishment of debt
|
—
|
|
—
|
|
(44,985
|
)
|
|||
|
Impairment of real estate assets
|
(5,617
|
)
|
—
|
|
(5,385
|
)
|
|||
|
Interest and other income (expense), net
|
(730
|
)
|
537
|
|
658
|
|
|||
|
|
(36,681
|
)
|
(10,602
|
)
|
(66,590
|
)
|
|||
|
Net income
|
$
|
39,185
|
|
$
|
69,771
|
|
$
|
23,092
|
|
|
|
|
|
|
||||||
|
Basic earnings per common share
|
$
|
0.29
|
|
$
|
0.55
|
|
$
|
0.18
|
|
|
Diluted earnings per common share
|
$
|
0.29
|
|
$
|
0.55
|
|
$
|
0.18
|
|
|
|
|
|
|
||||||
|
Weighted average common shares
outstanding - basic
|
128,000
|
|
123,292
|
|
117,926
|
|
|||
|
Weighted average common shares
outstanding - diluted
|
128,084
|
|
123,351
|
|
118,017
|
|
|||
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Net income
|
$
|
39,185
|
|
$
|
69,771
|
|
$
|
23,092
|
|
|
Other comprehensive income (loss)
|
|
|
|
||||||
|
Interest rate swaps
|
|
|
|
||||||
|
Reclassification adjustment for losses included in net income (interest expense)
|
319
|
|
424
|
|
176
|
|
|||
|
Losses arising during the period
|
(5,592
|
)
|
(27
|
)
|
(74
|
)
|
|||
|
|
(5,273
|
)
|
397
|
|
102
|
|
|||
|
Comprehensive income
|
$
|
33,912
|
|
$
|
70,168
|
|
$
|
23,194
|
|
|
|
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, 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
|
)
|
|||||||
|
Share-based compensation
|
—
|
|
4
|
|
10,024
|
|
—
|
|
—
|
|
—
|
|
10,028
|
|
|||||||
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
23,092
|
|
—
|
|
23,092
|
|
|||||||
|
Gain 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
|
)
|
|||||||
|
Share-based compensation
|
—
|
|
3
|
|
10,688
|
|
—
|
|
—
|
|
—
|
|
10,691
|
|
|||||||
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
69,771
|
|
—
|
|
69,771
|
|
|||||||
|
Gain on forward starting 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
|
|
|||||||
|
Issuance of stock, net of costs
|
—
|
|
92
|
|
295,764
|
|
—
|
|
—
|
|
—
|
|
295,856
|
|
|||||||
|
Common stock redemption
|
—
|
|
(1
|
)
|
(3,317
|
)
|
—
|
|
—
|
|
—
|
|
(3,318
|
)
|
|||||||
|
Share-based compensation
|
—
|
|
3
|
|
12,272
|
|
—
|
|
—
|
|
—
|
|
12,275
|
|
|||||||
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
39,185
|
|
—
|
|
39,185
|
|
|||||||
|
Loss on interest rate swaps
|
—
|
|
—
|
|
—
|
|
(5,273
|
)
|
—
|
|
—
|
|
(5,273
|
)
|
|||||||
|
Dividends to common stockholders
($1.20 per share)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(155,358
|
)
|
(155,358
|
)
|
|||||||
|
Balance at December 31, 2019
|
$
|
—
|
|
$
|
1,347
|
|
$
|
3,485,003
|
|
$
|
(6,175
|
)
|
$
|
1,127,304
|
|
$
|
(2,707,470
|
)
|
$
|
1,900,009
|
|
|
OPERATING ACTIVITIES
|
|||||||||
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Net income
|
$
|
39,185
|
|
$
|
69,771
|
|
$
|
23,092
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
|
Depreciation and amortization
|
177,859
|
|
164,201
|
|
142,472
|
|
|||
|
Other amortization
|
3,013
|
|
3,000
|
|
3,879
|
|
|||
|
Share-based compensation
|
12,275
|
|
10,691
|
|
10,028
|
|
|||
|
Amortization of straight-line rent receivable (lessor)
|
(3,000
|
)
|
(4,281
|
)
|
(6,072
|
)
|
|||
|
Amortization of straight-line rent on operating leases (lessee)
|
1,537
|
|
1,519
|
|
1,497
|
|
|||
|
Gain on sales of real estate assets
|
(25,101
|
)
|
(41,665
|
)
|
(39,524
|
)
|
|||
|
Loss on extinguishment of debt
|
—
|
|
—
|
|
44,985
|
|
|||
|
Impairment of real estate assets
|
5,617
|
|
—
|
|
5,385
|
|
|||
|
Loss (income) from unconsolidated joint ventures
|
19
|
|
(4
|
)
|
(7
|
)
|
|||
|
Distributions from unconsolidated joint ventures
|
381
|
|
182
|
|
—
|
|
|||
|
Provision for bad debts, net
|
—
|
|
60
|
|
159
|
|
|||
|
Changes in operating assets and liabilities:
|
|
|
|
||||||
|
Other assets, including right-of-use-assets
|
(8,573
|
)
|
(3,998
|
)
|
(2,156
|
)
|
|||
|
Accounts payable and accrued liabilities
|
2,752
|
|
4,731
|
|
(7,307
|
)
|
|||
|
Other liabilities
|
7,174
|
|
4,148
|
|
3,335
|
|
|||
|
Net cash provided by operating activities
|
213,138
|
|
208,355
|
|
179,766
|
|
|||
|
|
|
|
|
||||||
|
INVESTING ACTIVITIES
|
|
|
|
||||||
|
Acquisitions of real estate
|
(380,274
|
)
|
(104,312
|
)
|
(274,668
|
)
|
|||
|
Development of real estate
|
(25,985
|
)
|
(26,728
|
)
|
(14,911
|
)
|
|||
|
Additional long-lived assets
|
(64,670
|
)
|
(70,807
|
)
|
(80,613
|
)
|
|||
|
Investment in unconsolidated joint ventures
|
—
|
|
—
|
|
(8,701
|
)
|
|||
|
Proceeds from sales of real estate assets
|
52,401
|
|
96,812
|
|
119,426
|
|
|||
|
Proceeds from notes receivable repayments
|
—
|
|
8
|
|
19
|
|
|||
|
Net cash used in investing activities
|
(418,528
|
)
|
(105,027
|
)
|
(259,448
|
)
|
|||
|
|
|
|
|
||||||
|
FINANCING ACTIVITIES
|
|
|
|
||||||
|
Net borrowings on unsecured credit facility
|
31,000
|
|
73,000
|
|
82,000
|
|
|||
|
Borrowings on term loan
|
50,000
|
|
—
|
|
—
|
|
|||
|
Borrowings of notes and bonds payable
|
—
|
|
—
|
|
297,459
|
|
|||
|
Repayments of notes and bonds payable
|
(13,857
|
)
|
(19,850
|
)
|
(5,829
|
)
|
|||
|
Redemption of notes and bonds payable
|
—
|
|
—
|
|
(442,774
|
)
|
|||
|
Dividends paid
|
(155,358
|
)
|
(150,266
|
)
|
(142,327
|
)
|
|||
|
Net proceeds from issuance of common stock
|
295,946
|
|
611
|
|
248,554
|
|
|||
|
Common stock redemptions
|
(5,097
|
)
|
(4,532
|
)
|
(1,686
|
)
|
|||
|
Debt issuance and assumption costs
|
(4,589
|
)
|
(125
|
)
|
(4,007
|
)
|
|||
|
Payments made on finance leases
|
(379
|
)
|
—
|
|
—
|
|
|||
|
Net cash provided by (used in) financing activities
|
197,666
|
|
(101,162
|
)
|
31,390
|
|
|||
|
|
|
|
|
||||||
|
(Decrease) increase in cash and cash equivalents
|
(7,724
|
)
|
2,166
|
|
(48,292
|
)
|
|||
|
Cash and cash equivalents at beginning of period
|
8,381
|
|
6,215
|
|
54,507
|
|
|||
|
Cash and cash equivalents at end of period
|
$
|
657
|
|
$
|
8,381
|
|
$
|
6,215
|
|
|
|
|
|
|
||||||
|
Supplemental Cash Flow Information
|
|
|
|
||||||
|
Interest paid
|
$
|
53,978
|
|
$
|
45,752
|
|
$
|
64,395
|
|
|
Mortgage notes payable assumed upon acquisition (adjusted to fair value)
|
$
|
—
|
|
$
|
7,995
|
|
$
|
43,674
|
|
|
Invoices accrued for construction, tenant improvements and other capitalized costs
|
$
|
17,294
|
|
$
|
12,682
|
|
$
|
8,303
|
|
|
Capitalized interest
|
$
|
1,411
|
|
$
|
951
|
|
$
|
871
|
|
|
Land improvements
|
3.0 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.
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
In thousands
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Type of Revenue
|
|
|
|
||||||
|
Parking income
|
$
|
7,520
|
|
$
|
6,930
|
|
$
|
6,611
|
|
|
Property lease guaranty income
|
128
|
|
675
|
|
726
|
|
|||
|
Management fee income
|
270
|
|
273
|
|
308
|
|
|||
|
Miscellaneous
|
155
|
|
114
|
|
114
|
|
|||
|
|
$
|
8,073
|
|
$
|
7,992
|
|
$
|
7,759
|
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
(Dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Property operating income
|
$
|
415,142
|
|
$
|
390,256
|
|
$
|
358,009
|
|
|
Single-tenant net lease
|
44,083
|
|
47,860
|
|
52,897
|
|
|||
|
Straight-line rent
|
3,000
|
|
4,281
|
|
6,072
|
|
|||
|
Rental income
|
$
|
462,225
|
|
$
|
442,397
|
|
$
|
416,978
|
|
|
Dollars in thousands
|
NUMBER OF PROPERTIES
|
|
LAND
|
|
BUILDINGS, IMPROVEMENTS, AND LEASE INTANGIBLES
|
|
PERSONAL PROPERTY
|
|
TOTAL
|
|
ACCUMULATED DEPRECIATION
|
|
|||||
|
Seattle, WA
|
25
|
|
$
|
58,565
|
|
$
|
532,767
|
|
$
|
421
|
|
$
|
591,753
|
|
$
|
(88,890
|
)
|
|
Dallas, TX
|
25
|
|
19,194
|
|
496,683
|
|
442
|
|
516,319
|
|
(181,556
|
)
|
|||||
|
Los Angeles, CA
|
14
|
|
44,386
|
|
205,829
|
|
347
|
|
250,562
|
|
(95,979
|
)
|
|||||
|
Atlanta, GA
|
9
|
|
3,679
|
|
212,509
|
|
84
|
|
216,272
|
|
(20,040
|
)
|
|||||
|
Nashville, TN
|
6
|
|
20,053
|
|
180,463
|
|
1,109
|
|
201,625
|
|
(64,038
|
)
|
|||||
|
Charlotte, NC
|
16
|
|
4,200
|
|
176,261
|
|
105
|
|
180,566
|
|
(67,040
|
)
|
|||||
|
Denver, CO
|
9
|
|
16,514
|
|
134,004
|
|
271
|
|
150,789
|
|
(25,265
|
)
|
|||||
|
Washington, D.C.
|
6
|
|
—
|
|
150,304
|
|
21
|
|
150,325
|
|
(25,097
|
)
|
|||||
|
Richmond, VA
|
7
|
|
—
|
|
149,132
|
|
106
|
|
149,238
|
|
(44,204
|
)
|
|||||
|
Houston, TX
|
9
|
|
16,211
|
|
132,013
|
|
78
|
|
148,302
|
|
(44,229
|
)
|
|||||
|
Honolulu, HI
|
3
|
|
8,327
|
|
135,641
|
|
159
|
|
144,127
|
|
(39,165
|
)
|
|||||
|
Des Moines, IA
|
7
|
|
12,665
|
|
126,401
|
|
99
|
|
139,165
|
|
(34,725
|
)
|
|||||
|
Oklahoma City, OK
|
4
|
|
10,401
|
|
115,706
|
|
15
|
|
126,122
|
|
(19,351
|
)
|
|||||
|
Indianapolis, IN
|
4
|
|
3,299
|
|
118,847
|
|
—
|
|
122,146
|
|
(26,082
|
)
|
|||||
|
San Francisco, CA
|
3
|
|
14,054
|
|
107,396
|
|
43
|
|
121,493
|
|
(20,906
|
)
|
|||||
|
Springfield, MO
|
1
|
|
1,989
|
|
109,304
|
|
—
|
|
111,293
|
|
(17,740
|
)
|
|||||
|
Austin, TX
|
5
|
|
14,236
|
|
92,809
|
|
123
|
|
107,168
|
|
(24,048
|
)
|
|||||
|
Memphis, TN
|
7
|
|
5,241
|
|
92,508
|
|
194
|
|
97,943
|
|
(37,582
|
)
|
|||||
|
San Antonio, TX
|
6
|
|
6,487
|
|
88,583
|
|
404
|
|
95,474
|
|
(40,573
|
)
|
|||||
|
Chicago, IL
|
3
|
|
5,859
|
|
87,588
|
|
211
|
|
93,658
|
|
(23,540
|
)
|
|||||
|
Minneapolis, MN
|
4
|
|
2,090
|
|
62,359
|
|
—
|
|
64,449
|
|
(10,486
|
)
|
|||||
|
Other (16 markets)
|
31
|
|
17,079
|
|
475,409
|
|
806
|
|
493,294
|
|
(165,159
|
)
|
|||||
|
|
204
|
|
284,529
|
|
3,982,516
|
|
5,038
|
|
4,272,083
|
|
(1,115,695
|
)
|
|||||
|
|
|
|
|
|
|
|
|||||||||||
|
Construction in progress
|
—
|
|
—
|
|
48,731
|
|
—
|
|
48,731
|
|
—
|
|
|||||
|
Land held for development
|
—
|
|
24,647
|
|
—
|
|
—
|
|
24,647
|
|
(671
|
)
|
|||||
|
Memphis Redevelopment
|
—
|
|
5,222
|
|
3,810
|
|
—
|
|
9,032
|
|
(50
|
)
|
|||||
|
Corporate property
|
—
|
|
—
|
|
—
|
|
5,500
|
|
5,500
|
|
(4,686
|
)
|
|||||
|
Total real estate investments
|
204
|
|
$
|
314,398
|
|
$
|
4,035,057
|
|
$
|
10,538
|
|
$
|
4,359,993
|
|
$
|
(1,121,102
|
)
|
|
In thousands
|
|
||
|
2020
|
$
|
360,340
|
|
|
2021
|
315,426
|
|
|
|
2022
|
275,798
|
|
|
|
2023
|
233,424
|
|
|
|
2024
|
177,738
|
|
|
|
2025 and thereafter
|
501,849
|
|
|
|
|
$
|
1,864,575
|
|
|
In thousands
|
|
||
|
2019
|
$
|
326,441
|
|
|
2020
|
279,211
|
|
|
|
2021
|
235,660
|
|
|
|
2022
|
201,072
|
|
|
|
2023
|
163,978
|
|
|
|
2024 and thereafter
|
476,673
|
|
|
|
|
$
|
1,683,035
|
|
|
In thousands
|
OPERATING
|
|
FINANCING
|
|
||
|
2020
|
$
|
4,814
|
|
$
|
746
|
|
|
2021
|
4,844
|
|
754
|
|
||
|
2022
|
4,875
|
|
763
|
|
||
|
2023
|
4,913
|
|
774
|
|
||
|
2024
|
4,969
|
|
795
|
|
||
|
2025 and thereafter
|
307,665
|
|
83,404
|
|
||
|
Total undiscounted lease payments
|
332,080
|
|
87,236
|
|
||
|
Discount
|
(240,506
|
)
|
(69,199
|
)
|
||
|
Lease liabilities
|
$
|
91,574
|
|
$
|
18,037
|
|
|
In thousands
|
|
||
|
2019
|
$
|
5,288
|
|
|
2020
|
5,260
|
|
|
|
2021
|
5,238
|
|
|
|
2022
|
5,207
|
|
|
|
2023
|
5,224
|
|
|
|
2024 and thereafter
|
323,533
|
|
|
|
|
$
|
349,750
|
|
|
In thousands
|
YEAR ENDED
Dec. 31, 2019
|
|
|
|
Operating lease cost
|
|
||
|
Operating lease expense
|
$
|
4,623
|
|
|
Variable lease expense
|
3,161
|
|
|
|
|
|
|
|
|
Finance lease cost
|
|
|
|
|
Amortization of right-of-use assets
|
165
|
|
|
|
Interest on lease liabilities
|
616
|
|
|
|
Total lease expense
|
$
|
8,565
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
Operating cash flows outflows related to operating leases
|
$
|
6,972
|
|
|
Financing cash flows outflows related to financing leases
|
$
|
379
|
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
$
|
17,800
|
|
|
|
|
|
|
|
Weighted-average remaining lease term (excluding renewal options) - operating leases
|
49.5
|
|
|
|
Weighted-average remaining lease term (excluding renewal options) -finance leases
|
65.2
|
|
|
|
Weighted-average discount rate - operating leases
|
5.7
|
%
|
|
|
Weighted-average discount rate - finance leases
|
5.4
|
%
|
|
|
Dollars in millions
|
TYPE 1
|
DATE ACQUIRED
|
PURCHASE PRICE
|
|
CASH
CONSIDERATION 2 |
|
REAL
ESTATE
|
|
OTHER 3
|
|
SQUARE FOOTAGE
unaudited |
|
||||
|
Washington, D.C. 4
|
MOB
|
3/28/19
|
$
|
46.0
|
|
$
|
45.9
|
|
$
|
50.2
|
|
$
|
(4.3
|
)
|
158,338
|
|
|
Indianapolis, IN 5
|
MOB
|
3/28/19
|
47.0
|
|
44.8
|
|
43.7
|
|
1.1
|
|
143,499
|
|
||||
|
Atlanta, GA
|
MOB
|
4/2/19
|
28.0
|
|
28.0
|
|
28.0
|
|
—
|
|
47,963
|
|
||||
|
Dallas, TX
|
MOB
|
6/10/19
|
17.0
|
|
16.7
|
|
17.0
|
|
(0.3
|
)
|
89,990
|
|
||||
|
Seattle, WA
|
MOB
|
6/11/19
|
7.7
|
|
7.8
|
|
7.8
|
|
—
|
|
29,870
|
|
||||
|
Seattle, WA
|
MOB
|
6/14/19
|
19.0
|
|
19.1
|
|
19.5
|
|
(0.4
|
)
|
47,255
|
|
||||
|
Seattle, WA
|
MOB
|
6/28/19
|
30.5
|
|
30.4
|
|
30.6
|
|
(0.2
|
)
|
78,288
|
|
||||
|
Houston, TX
|
MOB
|
8/1/19
|
13.5
|
|
13.5
|
|
13.5
|
|
—
|
|
29,903
|
|
||||
|
Oklahoma City, OK
|
MOB
|
9/26/19
|
4.1
|
|
4.1
|
|
4.1
|
|
—
|
|
28,542
|
|
||||
|
Los Angeles, CA 6
|
MOB
|
9/30/19
|
61.1
|
|
60.9
|
|
61.8
|
|
(0.9
|
)
|
115,634
|
|
||||
|
Raleigh, NC
|
MOB
|
10/31/19
|
21.6
|
|
22.0
|
|
21.7
|
|
0.3
|
|
57,730
|
|
||||
|
Dallas, TX 7
|
MOB
|
10/31/19
|
20.1
|
|
19.5
|
|
20.2
|
|
(0.7
|
)
|
48,192
|
|
||||
|
Seattle, WA
|
MOB
|
11/18/19
|
22.8
|
|
23.1
|
|
23.2
|
|
(0.1
|
)
|
36,350
|
|
||||
|
Seattle, WA
|
MOB
|
12/10/19
|
24.2
|
|
24.5
|
|
24.6
|
|
(0.1
|
)
|
44,166
|
|
||||
|
Memphis, TN
|
MOB
|
12/13/19
|
8.7
|
|
8.9
|
|
8.9
|
|
—
|
|
110,883
|
|
||||
|
Seattle, WA
|
MOB
|
12/18/19
|
10.0
|
|
9.3
|
|
9.9
|
|
(0.6
|
)
|
20,109
|
|
||||
|
|
|
|
$
|
381.3
|
|
$
|
378.5
|
|
$
|
384.7
|
|
$
|
(6.2
|
)
|
1,086,712
|
|
|
1
|
MOB = medical office building.
|
|
2
|
Cash consideration excludes prorations of revenue and expense due to/from seller at the time of the acquisition.
|
|
3
|
Includes other assets acquired, liabilities assumed, and intangibles recognized at acquisition.
|
|
4
|
Includes two properties. The Company assumed two ground leases in connection with this acquisition that are classified as financing leases. The present value of future lease payments totaling $14.3 million was recorded on the Company's Consolidated Balance Sheets under the caption Finance lease liabilities. In addition, the right-of-use assets were partially offset by $5.2 million of above-market lease intangibles included in Other.
|
|
5
|
The Company assumed a prepaid ground lease totaling $0.8 million and recorded a below-market lease intangible totaling $0.9 million in connection with this acquisition that is classified as an operating lease that is included in Other.
|
|
6
|
Includes two properties.
|
|
7
|
The Company assumed a ground lease in connection with this acquisition that is classified as a financing lease. The present value of future lease payments totaling $3.6 million was recorded on the Company's Consolidated Balance Sheets under the caption Finance lease liabilities.
|
|
|
ESTIMATED
FAIR VALUE
in millions
|
|
ESTIMATED
USEFUL LIFE
in years
|
|
|
|
Building
|
$
|
270.7
|
|
8.0 - 37.0
|
|
|
Land
|
59.1
|
|
—
|
|
|
|
Land Improvements
|
4.2
|
|
3.0 - 12.0
|
|
|
|
|
|
|
|||
|
Intangibles
|
|
|
|||
|
At-market lease intangibles
|
50.7
|
|
3.3 - 9.2
|
|
|
|
Above-market lease intangibles (lessor)
|
0.7
|
|
2.4 - 9.9
|
|
|
|
Below-market lease intangibles (lessor)
|
(0.7
|
)
|
1.2 - 8.6
|
|
|
|
Above-market lease intangibles (lessee)
|
(5.1
|
)
|
69.1 - 72.3
|
|
|
|
Below-market lease intangibles (lessee)
|
0.9
|
|
65.1
|
|
|
|
|
|
|
|||
|
Other assets acquired
|
2.3
|
|
|
||
|
Accounts payable, accrued liabilities and other liabilities assumed
|
(4.3
|
)
|
|
||
|
Total cash paid
|
$
|
378.5
|
|
|
|
|
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 6
|
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
in millions
|
|
ESTIMATED
USEFUL LIFE
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 (lessor)
|
14.3
|
|
1.3 - 4.2
|
|
|
|
Below-market lease intangibles (lessor)
|
(0.1
|
)
|
3.8
|
|
|
|
|
|
|
|||
|
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 DISPOSED
|
SALES PRICE
|
|
CLOSING ADJUSTMENTS
|
|
NET PROCEEDS
|
|
NET REAL ESTATE INVESTMENT
|
|
OTHER
including receivables 2 |
|
GAIN/
(IMPAIRMENT) |
|
SQUARE FOOTAGE
unaudited |
|
||||||
|
Tucson, AZ 3
|
MOB
|
4/9/19
|
$
|
13.0
|
|
$
|
(0.9
|
)
|
$
|
12.1
|
|
$
|
6.9
|
|
$
|
0.4
|
|
$
|
4.8
|
|
67,345
|
|
|
Virginia Beach, VA 4
|
MOB
|
8/1/19
|
1.3
|
|
(0.1
|
)
|
1.2
|
|
1.2
|
|
—
|
|
—
|
|
10,000
|
|
||||||
|
San Antonio, TX
|
MOB
|
8/28/19
|
0.9
|
|
(0.1
|
)
|
0.8
|
|
0.6
|
|
—
|
|
0.2
|
|
10,138
|
|
||||||
|
Erie, PA
|
IRF
|
10/25/19
|
14.0
|
|
—
|
|
14.0
|
|
1.3
|
|
—
|
|
12.7
|
|
90,123
|
|
||||||
|
New Orleans, LA 5
|
MOB
|
11/25/19
|
3.7
|
|
(0.2
|
)
|
3.5
|
|
1.2
|
|
0.2
|
|
2.1
|
|
136,155
|
|
||||||
|
Kingsport, TN
|
SNF
|
11/27/19
|
9.5
|
|
(0.3
|
)
|
9.2
|
|
5.0
|
|
1.3
|
|
2.9
|
|
75,000
|
|
||||||
|
Pittsburgh, PA 6
|
IRF
|
12/18/19
|
3.8
|
|
(0.3
|
)
|
3.5
|
|
3.5
|
|
—
|
|
—
|
|
78,731
|
|
||||||
|
Dallas, TX 5
|
MOB
|
12/30/19
|
8.7
|
|
(0.6
|
)
|
8.1
|
|
6.1
|
|
(0.4
|
)
|
2.4
|
|
69,558
|
|
||||||
|
|
|
|
$
|
54.9
|
|
$
|
(2.5
|
)
|
$
|
52.4
|
|
$
|
25.8
|
|
$
|
1.5
|
|
$
|
25.1
|
|
537,050
|
|
|
1
|
MOB = medical office building; IRF = inpatient rehabilitation facility; SNF = skilled nursing facility
|
|
2
|
Includes straight-line rent receivables, leasing commissions and lease inducements.
|
|
3
|
Includes four properties sold to a single purchaser.
|
|
4
|
The Company reclassified this property to held for sale during the second quarter of 2019 and recorded an impairment charge of $0.4 million based on the sales price less estimated costs to sell.
|
|
5
|
Includes two properties.
|
|
6
|
The Company reclassified this property to held for sale during the first quarter of 2017 and subsequently in the second quarter of 2019, the Company accepted an offer to purchase and recorded an impairment charge of $5.2 million.
|
|
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 |
|
|||||||
|
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
|
|
|||||||
|
|
$
|
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.
|
|
|
DECEMBER 31,
|
|||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
||
|
Balance Sheet data
|
|
|
||||
|
Land
|
$
|
—
|
|
$
|
1,125
|
|
|
Buildings, improvements and lease intangibles
|
—
|
|
18,231
|
|
||
|
|
—
|
|
19,356
|
|
||
|
Accumulated depreciation
|
—
|
|
(10,657
|
)
|
||
|
Real estate assets held for sale, net
|
—
|
|
8,699
|
|
||
|
Other assets, net
|
37
|
|
573
|
|
||
|
Assets held for sale, net
|
$
|
37
|
|
$
|
9,272
|
|
|
Accounts payable and accrued liabilities
|
$
|
37
|
|
$
|
450
|
|
|
Other liabilities
|
108
|
|
137
|
|
||
|
Liabilities of properties held for sale
|
$
|
145
|
|
$
|
587
|
|
|
1
|
Includes debt issuance costs related to the Company's Unsecured Credit Facility and Unsecured Term Loan due 2026.
|
|
2
|
Includes below-market ground lease intangibles as of December 31, 2018. These intangibles were reclassified to Operating right-of-use assets on the Company's Consolidated Balance Sheets as of December 31, 2019.
|
|
|
DECEMBER 31,
|
|||||
|
Dollars in millions
|
2019
|
|
2018
|
|
||
|
Net LLC investments, beginning of period
|
$
|
8.5
|
|
$
|
8.7
|
|
|
Equity income (loss) recognized during the period
|
—
|
|
—
|
|
||
|
Owner distributions
|
(0.4
|
)
|
(0.2
|
)
|
||
|
Net LLC investments, end of period
|
$
|
8.1
|
|
$
|
8.5
|
|
|
|
GROSS BALANCE
at December 31,
|
ACCUMULATED AMORTIZATION
at December 31,
|
WEIGHTED AVG.
REMAINING LIFE
in years
|
BALANCE SHEET CLASSIFICATION
|
||||||||||
|
Dollars in millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||||
|
Goodwill
|
$
|
3.5
|
|
$
|
3.5
|
|
$
|
—
|
|
$
|
—
|
|
N/A
|
Other assets, net
|
|
Credit facility debt issuance costs
|
5.8
|
|
5.4
|
|
0.8
|
|
3.2
|
|
3.8
|
Other assets, net
|
||||
|
Above-market lease intangibles (lessor)
|
4.0
|
|
4.5
|
|
2.8
|
|
3.3
|
|
3.9
|
Other assets, net
|
||||
|
Customer relationship intangibles (lessor)
|
4.1
|
|
2.7
|
|
1.6
|
|
1.0
|
|
43.1
|
Other assets, net
|
||||
|
Below-market lease intangibles
|
(7.3
|
)
|
(7.3
|
)
|
(4.0
|
)
|
(4.0
|
)
|
6.7
|
Other liabilities
|
||||
|
Debt issuance costs 1
|
9.2
|
|
9.3
|
|
3.5
|
|
2.8
|
|
5.8
|
Notes and bonds payable
|
||||
|
At-market lease intangibles
|
147.9
|
|
114.4
|
|
59.8
|
|
52.0
|
|
5.4
|
Real estate properties
|
||||
|
Above-market lease intangibles (lessee)
|
(7.2
|
)
|
(2.0
|
)
|
(0.2
|
)
|
(0.1
|
)
|
75.5
|
Right-of-use asset
|
||||
|
Below-market lease intangibles (lessee)
|
18.8
|
|
17.8
|
|
2.5
|
|
2.2
|
|
63.0
|
Right-of-use asset
|
||||
|
|
$
|
178.8
|
|
$
|
148.3
|
|
$
|
66.8
|
|
$
|
60.4
|
|
16.6
|
|
|
1
|
Includes debt issuance costs related to the Company's Unsecured Senior Notes payable, Unsecured Term Loan due 2024, and mortgage notes payable.
|
|
Dollars in millions
|
FUTURE AMORTIZATION OF INTANGIBLES, NET
|
|
|
|
2019
|
$
|
24.1
|
|
|
2020
|
19.1
|
|
|
|
2021
|
16.0
|
|
|
|
2022
|
11.2
|
|
|
|
2023
|
7.0
|
|
|
|
|
DECEMBER 31,
|
MATURITY DATES
|
CONTRACTUAL INTEREST RATES
|
|
PRINCIPAL PAYMENTS
|
INTEREST PAYMENTS
|
|||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
|||||||
|
Unsecured Credit Facility
|
$
|
293,000
|
|
$
|
262,000
|
|
5/23
|
LIBOR + .90%
|
|
At maturity
|
Monthly
|
|
Unsecured Term Loan due 2024 1
|
199,013
|
|
149,183
|
|
5/24
|
LIBOR + 1.00%
|
|
At maturity
|
Monthly
|
||
|
Unsecured Term Loan due 2026 2
|
—
|
|
—
|
|
6/26
|
LIBOR + 1.60%
|
|
At maturity
|
Monthly
|
||
|
Senior Notes due 2023 1
|
248,540
|
|
248,117
|
|
4/23
|
3.75
|
%
|
At maturity
|
Semi-Annual
|
||
|
Senior Notes due 2025 1
|
248,522
|
|
248,278
|
|
5/25
|
3.88
|
%
|
At maturity
|
Semi-Annual
|
||
|
Senior Notes due 2028 1
|
295,651
|
|
295,198
|
|
1/28
|
3.63
|
%
|
At maturity
|
Semi-Annual
|
||
|
Mortgage notes payable 3
|
129,343
|
|
143,208
|
|
7/20-5/40
|
3.31%-6.88%
|
|
Monthly
|
Monthly
|
||
|
|
$
|
1,414,069
|
|
$
|
1,345,984
|
|
|
|
|
|
|
|
1
|
Balances are shown net of discounts and unamortized issuance costs.
|
|
2
|
As of December 31, 2019, there are no outstanding loans under the Unsecured Term Loan 2026. This term loan has a delayed draw feature that allows the Company up to February 2020 to draw against the $150 million commitments.
|
|
3
|
Balances are shown net of discounts and unamortized issuance costs and include premiums.
|
|
|
DECEMBER 31,
|
|||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
||
|
Senior Notes due 2025 face value
|
$
|
250,000
|
|
$
|
250,000
|
|
|
Unaccreted discount
|
(121
|
)
|
(141
|
)
|
||
|
Debt issuance costs
|
(1,357
|
)
|
(1,581
|
)
|
||
|
Senior Notes due 2028 carrying amount
|
$
|
248,522
|
|
$
|
248,278
|
|
|
|
ORIGINAL BALANCE
|
|
EFFECTIVE INTEREST RATE 20
|
|
MATURITY
DATE
|
COLLATERAL 21
|
PRINCIPAL AND
INTEREST PAYMENTS 19
|
INVESTMENT IN COLLATERAL
at December 31,
|
BALANCE
at December 31,
|
||||||||
|
Dollars in millions
|
2019
|
|
2019
|
|
2018
|
|
|||||||||||
|
Commercial Bank 1
|
$
|
9.4
|
|
4.55
|
%
|
7/19
|
MOB
|
Monthly/8-yr amort
|
$
|
—
|
|
$
|
—
|
|
$
|
9.0
|
|
|
Commercial Bank 2
|
15.2
|
|
7.65
|
%
|
7/20
|
MOB
|
18
|
18.6
|
|
12.5
|
|
12.5
|
|
||||
|
Life Insurance Co. 3
|
7.9
|
|
4.00
|
%
|
8/20
|
MOB
|
Monthly/15-yr amort.
|
20.7
|
|
0.5
|
|
1.3
|
|
||||
|
Life Insurance Co. 4
|
7.3
|
|
5.25
|
%
|
8/20
|
MOB
|
Monthly/27-yr amort.
|
18.1
|
|
6.0
|
|
6.2
|
|
||||
|
Life Insurance Co. 5
|
5.6
|
|
4.30
|
%
|
1/21
|
MOB
|
Monthly/10-yr amort.
|
15.8
|
|
4.5
|
|
4.6
|
|
||||
|
Commercial Bank 6
|
12.9
|
|
6.43
|
%
|
2/21
|
MOB
|
Monthly/12-yr amort.
|
55.2
|
|
10.1
|
|
10.3
|
|
||||
|
Life Insurance Co. 7
|
11.0
|
|
3.87
|
%
|
11/22
|
MOB
|
Monthly/7-yr amort.
|
22.0
|
|
10.0
|
|
10.2
|
|
||||
|
Life Insurance Co. 8
|
12.3
|
|
3.86
|
%
|
8/23
|
MOB
|
Monthly/7-yr amort.
|
25.4
|
|
10.9
|
|
11.2
|
|
||||
|
Financial Services 9
|
12.4
|
|
4.27
|
%
|
10/23
|
MOB
|
Monthly/10-yr amort.
|
22.6
|
|
11.7
|
|
12.0
|
|
||||
|
Life Insurance Co. 10
|
9.0
|
|
4.84
|
%
|
12/23
|
MOB,OFC
|
Monthly/10-yr amort.
|
25.7
|
|
7.6
|
|
7.8
|
|
||||
|
Life Insurance Co. 11
|
13.3
|
|
4.13
|
%
|
1/24
|
MOB
|
Monthly/10-yr amort.
|
20.8
|
|
12.7
|
|
13.0
|
|
||||
|
Life Insurance Co. 12
|
6.8
|
|
3.96
|
%
|
2/24
|
MOB
|
Monthly/7-yr amort.
|
14.6
|
|
6.4
|
|
6.6
|
|
||||
|
Financial Services 13
|
9.7
|
|
4.32
|
%
|
9/24
|
MOB
|
Monthly/10-yr amort.
|
17.0
|
|
8.3
|
|
8.6
|
|
||||
|
Commercial Bank
|
11.5
|
|
3.71
|
%
|
1/26
|
MOB
|
Monthly/10-yr amort.
|
38.6
|
|
9.6
|
|
10.1
|
|
||||
|
Commercial Bank 14
|
15.0
|
|
5.25
|
%
|
4/27
|
MOB
|
Monthly/20-yr amort.
|
33.5
|
|
7.9
|
|
8.8
|
|
||||
|
Municipal Government 15, 16
|
11.0
|
|
4.79
|
%
|
17
|
MOB
|
Semi-Annual 17
|
21.0
|
|
10.6
|
|
11.0
|
|
||||
|
|
|
|
|
|
|
$
|
369.6
|
|
$
|
129.3
|
|
$
|
143.2
|
|
|||
|
1
|
The Company repaid this mortgage note in April 2019. The Company's unencumbered gross investment was $27.8 million at December 31, 2019.
|
|
2
|
The unaccreted portion of the $2.4 million discount recorded on this note upon acquisition is included in the balance above.
|
|
3
|
The unamortized portion of the $0.3 million premium recorded on this note upon acquisition is included in the balance above.
|
|
4
|
The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above. This mortgage note payable was repaid in full on February 3, 2020.
|
|
5
|
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
|
|
6
|
The unaccreted portion of the $1.0 million discount recorded on this note upon acquisition is included in the balance above.
|
|
7
|
The unaccreted portion of the $0.1 million discount recorded on this note upon acquisition is included in the balance above.
|
|
8
|
The unaccreted portion of the $0.2 million discount recorded on this note upon acquisition is included in the balance above.
|
|
9
|
The unamortized portion of the $0.4 million premium recorded on this note upon acquisition is included in the balance above.
|
|
10
|
The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.
|
|
11
|
The unamortized portion of the $0.8 million premium recorded on this note upon acquisition is included in the balance above.
|
|
12
|
The unamortized portion of the $0.2 million premium recorded on this note upon acquisition is included in the balance above.
|
|
13
|
The unamortized portion of the $0.1 million premium recorded on this note upon acquisition is included in the balance above.
|
|
14
|
The unamortized portion of the $0.7 million premium recorded on this note upon acquisition is included in the balance above.
|
|
15
|
Balance consists of three notes secured by the same building.
|
|
16
|
The unamortized portion of the $1.0 million premium recorded on the three notes upon acquisition is included in the balance above.
|
|
17
|
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.
|
|
18
|
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.
|
|
19
|
Payable in monthly installments of principal and interest with the final payment due at maturity (unless otherwise noted).
|
|
20
|
The contractual interest rates for the 17 outstanding mortgage notes ranged from 3.3% to 6.9% as of December 31, 2019.
|
|
21
|
MOB-Medical office building. OFC-Office
|
|
Dollars in thousands
|
PRINCIPAL MATURITIES
|
|
NET ACCRETION/
AMORTIZATION 1
|
|
DEBT
ISSUANCE COSTS 2
|
|
NOTES AND
BONDS PAYABLE
|
|
%
|
|
||||
|
2020
|
$
|
23,064
|
|
$
|
(392
|
)
|
$
|
(1,081
|
)
|
$
|
21,591
|
|
1.5
|
%
|
|
2021
|
17,594
|
|
(326
|
)
|
(1,065
|
)
|
16,203
|
|
1.1
|
%
|
||||
|
2022
|
12,977
|
|
(336
|
)
|
(1,077
|
)
|
11,564
|
|
0.8
|
%
|
||||
|
2023
|
573,230
|
|
(183
|
)
|
(921
|
)
|
572,126
|
|
40.5
|
%
|
||||
|
2024
|
225,966
|
|
(262
|
)
|
(667
|
)
|
225,037
|
|
15.9
|
%
|
||||
|
2025 and thereafter
|
569,427
|
|
(849
|
)
|
(1,030
|
)
|
567,548
|
|
40.2
|
%
|
||||
|
|
$
|
1,422,258
|
|
$
|
(2,348
|
)
|
$
|
(5,841
|
)
|
$
|
1,414,069
|
|
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 16 mortgage notes payable.
|
|
2
|
Excludes approximately $5.0 million in debt issuance costs related to the Company's Unsecured Credit Facility and Unsecured Term Loan due 2026 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
|
|
|
|
Interest rate swaps - 2019
|
4
|
|
100.0
|
|
|
|
Total interest rate swaps
|
8
|
|
$
|
175.0
|
|
|
|
AS OF DECEMBER 31, 2019
|
AS OF DECEMBER 31, 2018
|
||||||
|
Dollars in thousands
|
BALANCE SHEET LOCATION
|
FAIR
VALUE
|
|
BALANCE SHEET LOCATION
|
FAIR
VALUE
|
|
||
|
Derivatives designated as hedging instruments
|
|
|
|
|
||||
|
Interest rate swaps 2017
|
Other liabilities
|
$
|
(467
|
)
|
Other assets, net
|
$
|
229
|
|
|
Interest rate swaps 2018
|
Other liabilities
|
(1,335
|
)
|
Other liabilities
|
(68
|
)
|
||
|
Interest rate swaps 2019
|
Other liabilities
|
(3,478
|
)
|
Other liabilities
|
—
|
|
||
|
Total derivatives designated as hedging instruments
|
|
$
|
(5,280
|
)
|
|
$
|
161
|
|
|
|
AMOUNT OF (LOSS) RECOGNIZED IN OCI
on derivatives
|
|
AMOUNT OF (GAIN)/LOSS RECLASSIFIED
FROM OCI INTO INCOME
for the twelve months ended December 31,
|
|||||||
|
Dollars in thousands
|
2019
|
|
2019
|
|
2018
|
|
||||
|
Interest rate swaps 2017
|
$
|
(674
|
)
|
Interest expense
|
$
|
(22
|
)
|
$
|
51
|
|
|
Interest rate swaps 2018
|
(1,366
|
)
|
Interest expense
|
99
|
|
204
|
|
|||
|
Interest rate swaps 2019
|
(3,552
|
)
|
Interest expense
|
74
|
|
—
|
|
|||
|
Settled interest rate swaps
|
—
|
|
Interest expense
|
168
|
|
169
|
|
|||
|
|
$
|
(5,592
|
)
|
Total interest expense
|
$
|
319
|
|
$
|
424
|
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Balance, beginning of year
|
$
|
125,279,455
|
|
$
|
125,131,593
|
|
$
|
116,416,900
|
|
|
Issuance of common stock
|
9,251,440
|
|
26,203
|
|
8,395,607
|
|
|||
|
Non-vested share-based awards, net of withheld shares and forfeitures
|
175,259
|
|
121,659
|
|
319,086
|
|
|||
|
Balance, end of year
|
$
|
134,706,154
|
|
$
|
125,279,455
|
|
$
|
125,131,593
|
|
|
|
SHARES SOLD
|
|
SALE PRICE
per share
|
NET PROCEEDS
in millions
|
|
|
|
2019
|
5,470,673
|
|
$32.01 - $33.77
|
$
|
179.1
|
|
|
2018
|
—
|
|
NA
|
$
|
—
|
|
|
2017
|
—
|
|
NA
|
$
|
—
|
|
|
|
INTEREST RATE SWAPS
as of December 31,
|
|||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
||
|
Beginning balance
|
$
|
(902
|
)
|
$
|
(1,299
|
)
|
|
Other comprehensive loss before reclassifications
|
319
|
|
424
|
|
||
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
(5,592
|
)
|
(27
|
)
|
||
|
Net current-period other comprehensive (loss) income
|
(5,273
|
)
|
397
|
|
||
|
Ending balance
|
$
|
(6,175
|
)
|
$
|
(902
|
)
|
|
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
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss) related to settled interest rate swaps
|
$
|
168
|
|
Interest Expense
|
|
Amounts reclassified from accumulated other comprehensive income (loss) related to current interest rate swaps
|
151
|
|
Interest Expense
|
|
|
|
$
|
319
|
|
|
|
Dollars in millions
|
FUTURE AMORTIZATION
of non-vested shares
|
|
|
|
2020
|
$
|
8.7
|
|
|
2021
|
7.3
|
|
|
|
2022
|
5.9
|
|
|
|
2023
|
3.8
|
|
|
|
2024
|
2.5
|
|
|
|
2025 and thereafter
|
1.9
|
|
|
|
Total
|
$
|
30.1
|
|
|
•
|
On December 12, 2019, the Company granted non-vested stock awards for TSR performance to its four named executive officers, five senior vice presidents, and five first vice presidents with a grant date fair value totaling $6.1 million, which were granted in the form of 187,072 non-vested shares, with a five-year vesting period, which will result in annual compensation expense of $1.2 million for the each of 2020, 2021, 2022, and 2023, and $1.1 million for 2024, respectively.
|
|
•
|
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 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. The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in the acceleration of this outstanding grant totaling $2.0 million.
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
Dollars in thousands, except per share data
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Share-based awards, beginning of year
|
1,769,863
|
|
1,907,645
|
|
1,786,497
|
|
|||
|
Granted
|
276,839
|
|
273,012
|
|
413,489
|
|
|||
|
Vested
|
(292,636
|
)
|
(410,794
|
)
|
(292,341
|
)
|
|||
|
Share-based awards, end of year
|
1,754,066
|
|
1,769,863
|
|
1,907,645
|
|
|||
|
|
|
|
|
||||||
|
Weighted-average grant date fair value of
|
|
|
|
||||||
|
Share-based awards, beginning of year
|
$
|
29.36
|
|
$
|
28.44
|
|
$
|
27.18
|
|
|
Share-based awards granted during the year
|
$
|
31.75
|
|
$
|
29.72
|
|
$
|
32.05
|
|
|
Share-based awards vested during the year
|
$
|
28.84
|
|
$
|
25.32
|
|
$
|
25.88
|
|
|
Share-based awards, end of year
|
$
|
29.82
|
|
$
|
29.36
|
|
$
|
28.44
|
|
|
|
|
|
|
||||||
|
Grant date fair value of shares granted during the year
|
$
|
8,791
|
|
$
|
8,114
|
|
$
|
13,254
|
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
Dollars in thousands, except per share data
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Options outstanding, beginning of year
|
328,533
|
|
318,100
|
|
316,321
|
|
|||
|
Granted
|
235,572
|
|
203,836
|
|
206,824
|
|
|||
|
Exercised
|
(35,277
|
)
|
(16,716
|
)
|
(32,076
|
)
|
|||
|
Forfeited
|
(54,095
|
)
|
(40,897
|
)
|
(40,659
|
)
|
|||
|
Expired
|
(142,074
|
)
|
(135,790
|
)
|
(132,310
|
)
|
|||
|
Options outstanding and exercisable, end of year
|
332,659
|
|
328,533
|
|
318,100
|
|
|||
|
|
|
|
|
||||||
|
Weighted-average exercise price of
|
|
|
|
||||||
|
Options outstanding, beginning of year
|
$
|
24.17
|
|
$
|
25.00
|
|
$
|
23.69
|
|
|
Options granted during the year
|
$
|
24.17
|
|
$
|
27.30
|
|
$
|
25.77
|
|
|
Options exercised during the year
|
$
|
25.01
|
|
$
|
24.01
|
|
$
|
24.31
|
|
|
Options forfeited during the year
|
$
|
25.26
|
|
$
|
24.06
|
|
$
|
25.01
|
|
|
Options expired during the year
|
$
|
25.77
|
|
$
|
23.55
|
|
$
|
23.22
|
|
|
Options outstanding, end of year
|
$
|
25.59
|
|
$
|
24.17
|
|
$
|
25.00
|
|
|
|
|
|
|
||||||
|
Weighted-average fair value of options granted during the year (calculated as of the grant date)
|
$
|
7.02
|
|
$
|
7.81
|
|
$
|
6.31
|
|
|
Intrinsic value of options exercised during the year
|
$
|
269
|
|
$
|
71
|
|
$
|
271
|
|
|
Intrinsic value of options outstanding and exercisable
(calculated as of December 31)
|
$
|
2,589
|
|
$
|
1,402
|
|
$
|
2,683
|
|
|
Exercise prices of options outstanding
(calculated as of December 31)
|
$
|
25.59
|
|
$
|
24.17
|
|
$
|
25.00
|
|
|
Weighted-average contractual life of outstanding options (calculated as of December 31, in years)
|
0.8
|
|
0.8
|
|
0.8
|
|
|||
|
|
2019
|
|
2018
|
|
2017
|
|
|
Risk-free interest rates
|
2.48
|
%
|
1.89
|
%
|
1.20
|
%
|
|
Expected dividend yields
|
4.19
|
%
|
3.66
|
%
|
3.70
|
%
|
|
Expected life (in years)
|
1.45
|
|
1.45
|
|
1.45
|
|
|
Expected volatility
|
29.8
|
%
|
28.4
|
%
|
20.4
|
%
|
|
Expected forfeiture rates
|
85
|
%
|
85
|
%
|
85
|
%
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
Dollars in thousands, except per share data
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Weighted average common shares
|
|
|
|
||||||
|
Weighted average common shares outstanding
|
129,735,723
|
|
125,219,773
|
|
119,739,216
|
|
|||
|
Non-vested shares
|
(1,736,022
|
)
|
(1,927,648
|
)
|
(1,813,058
|
)
|
|||
|
Weighted average common shares - basic
|
127,999,701
|
|
123,292,125
|
|
117,926,158
|
|
|||
|
|
|
|
|
||||||
|
Weighted average common shares - basic
|
127,999,701
|
|
123,292,125
|
|
117,926,158
|
|
|||
|
Dilutive effect of employee stock purchase plan
|
84,283
|
|
58,808
|
|
91,007
|
|
|||
|
Weighted average common shares - diluted
|
128,083,984
|
|
123,350,933
|
|
118,017,165
|
|
|||
|
|
|
|
|
||||||
|
Net income
|
$
|
39,185
|
|
$
|
69,771
|
|
$
|
23,092
|
|
|
Dividends paid on nonvested share-based awards
|
(2,075
|
)
|
(2,320
|
)
|
(2,149
|
)
|
|||
|
Net income applicable to common stockholders
|
$
|
37,110
|
|
$
|
67,451
|
|
$
|
20,943
|
|
|
|
|
|
|
||||||
|
Basic earnings per common share
|
$
|
0.29
|
|
$
|
0.55
|
|
$
|
0.18
|
|
|
Diluted earnings per common share
|
$
|
0.29
|
|
$
|
0.55
|
|
$
|
0.18
|
|
|
|
|
|
DECEMBER 31, 2019
|
ESTIMATED REMAINING FUNDINGS unaudited
|
|
ESTIMATED TOTAL INVESTMENT unaudited
|
|
APPROXIMATE SQUARE FEET unaudited
|
|
|||||||||||
|
Dollars in thousands
|
NUMBER OF PROPERTIES
|
|
INITIAL OCCUPANCY
|
CONSTRUCTION IN PROGRESS BALANCE
|
|
TOTAL FUNDED during the year
|
|
TOTAL AMOUNT FUNDED
|
|
|||||||||||
|
Construction Activity
|
|
|
|
|
|
|
|
|||||||||||||
|
Seattle, WA
|
1
|
|
Q1 2020
|
$
|
48,731
|
|
$
|
25,211
|
|
$
|
49,033
|
|
$
|
15,087
|
|
$
|
64,120
|
|
151,000
|
|
|
Redevelopment Activity
|
|
|
|
|
|
|
|
|||||||||||||
|
Memphis, TN 1
|
1
|
|
Q1 2021
|
—
|
|
9,032
|
|
9,032
|
|
18,768
|
|
27,800
|
|
110,883
|
|
|||||
|
Total
|
|
|
$
|
48,731
|
|
$
|
34,243
|
|
$
|
58,065
|
|
$
|
33,855
|
|
$
|
91,920
|
|
261,883
|
|
|
|
1
|
Initial occupancy represents the quarter in which the redevelopment is expected to be completed. The building will continue to operate with in-place leases during construction.
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
2017
|
|
|||
|
Net income
|
$
|
39,185
|
|
$
|
69,771
|
|
$
|
23,092
|
|
|
Reconciling items to taxable income
|
|
|
|
||||||
|
Depreciation and amortization
|
67,953
|
|
64,775
|
|
46,426
|
|
|||
|
Gain or loss on disposition of depreciable assets
|
(15,689
|
)
|
(27,581
|
)
|
1,570
|
|
|||
|
Straight-line rent
|
(11,535
|
)
|
(3,049
|
)
|
(4,551
|
)
|
|||
|
Receivable allowances
|
1,942
|
|
2,470
|
|
1,680
|
|
|||
|
Share-based compensation
|
2,628
|
|
(1,699
|
)
|
1,855
|
|
|||
|
Other
|
12,631
|
|
842
|
|
6,552
|
|
|||
|
|
57,930
|
|
35,758
|
|
53,532
|
|
|||
|
Taxable income 1
|
$
|
97,115
|
|
$
|
105,529
|
|
$
|
76,624
|
|
|
Dividends paid
|
$
|
155,358
|
|
$
|
150,266
|
|
$
|
142,327
|
|
|
1
|
Before REIT dividend paid deduction.
|
|
|
2019
|
2018
|
2017
|
||||||||||||
|
|
PER SHARE
|
|
%
|
|
PER SHARE
|
|
%
|
|
PER SHARE
|
|
%
|
|
|||
|
Common stock
|
|
|
|
|
|
|
|||||||||
|
Ordinary income 1
|
$
|
0.79
|
|
65.7
|
%
|
$
|
0.75
|
|
62.2
|
%
|
$
|
0.42
|
|
34.5
|
%
|
|
Return of capital
|
0.40
|
|
33.9
|
%
|
0.33
|
|
27.8
|
%
|
0.50
|
|
42.0
|
%
|
|||
|
Unrecaptured section 1250 gain
|
0.01
|
|
0.4
|
%
|
0.12
|
|
10.0
|
%
|
0.28
|
|
23.5
|
%
|
|||
|
Common stock distributions
|
$
|
1.20
|
|
100.0
|
%
|
$
|
1.20
|
|
100.0
|
%
|
$
|
1.20
|
|
100.0
|
%
|
|
1
|
For the 2018 reporting year all ordinary income is also Code Section 199A eligible per the The Tax Cut and Jobs Act of 2017.
|
|
|
YEAR ENDED DECEMBER 31,
|
||||||||
|
Dollars in thousands
|
2019
|
|
2018
|
|
2017
|
|
|||
|
State income tax expense
|
|
|
|
||||||
|
Texas gross margins tax
|
$
|
550
|
|
$
|
586
|
|
$
|
608
|
|
|
Total state income tax expense
|
$
|
550
|
|
$
|
586
|
|
$
|
608
|
|
|
State income tax payments, net of refunds and collections
|
$
|
543
|
|
$
|
637
|
|
$
|
555
|
|
|
•
|
Cash, cash equivalents and restricted cash - The carrying amount approximates fair value.
|
|
•
|
Borrowings under the Unsecured Credit Facility, Unsecured Term Loan due 2024 and Unsecured Term Loan due 2026 - The carrying amount approximates fair value because the borrowings are based on variable market interest rates.
|
|
•
|
Senior unsecured notes payable - The fair value of notes and bonds payable is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements.
|
|
•
|
Mortgage notes payable - The fair value is estimated using cash flow analyses, based on the Company’s current interest rates for similar types of borrowing arrangements.
|
|
•
|
Interest rate swap agreements - Interest rate swap agreements are recorded in other liabilities on the Company's Consolidated Balance Sheets at fair value. Fair value is estimated by utilizing pricing models that consider forward yield curves and discount rates.
|
|
|
DECEMBER 31, 2019
|
DECEMBER 31, 2018
|
||||||||||
|
Dollars in millions
|
CARRYING VALUE
|
|
FAIR VALUE
|
|
CARRYING VALUE
|
|
FAIR VALUE
|
|
||||
|
Notes and bonds payable 1
|
$
|
1,414.1
|
|
$
|
1,425.8
|
|
$
|
1,346.0
|
|
$
|
1,326.5
|
|
|
1
|
Level 2 – model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
|
|
|
QUARTER ENDED
|
|||||||||||
|
Dollars in thousands, except per share data
|
MARCH 31
|
|
JUNE 30
|
|
SEPTEMBER 30
|
|
DECEMBER 31 1
|
|
||||
|
2019
|
|
|
|
|
||||||||
|
Revenues
|
$
|
112,657
|
|
$
|
116,317
|
|
$
|
119,799
|
|
$
|
121,524
|
|
|
Net income attributable to common stockholders
|
$
|
4,891
|
|
$
|
4,484
|
|
$
|
2,601
|
|
$
|
27,210
|
|
|
Net income attributable to common stockholders per share
|
|
|
|
|
||||||||
|
Basic earnings per common share
|
$
|
0.04
|
|
$
|
0.03
|
|
$
|
0.02
|
|
$
|
0.20
|
|
|
Diluted earnings per common share
|
$
|
0.04
|
|
$
|
0.03
|
|
$
|
0.02
|
|
$
|
0.20
|
|
|
1
|
The increases in net income and amounts per share for the fourth quarter of 2019 are primarily attributable to gains of $20.0 million on the sale of six properties.
|
|
|
QUARTER ENDED
|
|||||||||||
|
Dollars in thousands, except per share data
|
MARCH 31
|
|
JUNE 30 1
|
|
SEPTEMBER 30
|
|
DECEMBER 31 2
|
|
||||
|
2018
|
|
|
|
|
||||||||
|
Revenues
|
$
|
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.
|
|
NAME
|
AGE
|
|
POSITION
|
|
Todd J. Meredith
|
45
|
|
President & Chief Executive Officer
|
|
J. Christopher Douglas
|
44
|
|
Executive Vice President & Chief Financial Officer
|
|
John M. Bryant, Jr.
|
53
|
|
Executive Vice President & General Counsel
|
|
Robert E. Hull
|
47
|
|
Executive Vice President - Investments
|
|
•
|
Consolidated Balance Sheets – December 31, 2019 and December 31, 2018.
|
|
•
|
Consolidated Statements of Income for the years ended December 31, 2019, December 31, 2018 and December 31, 2017.
|
|
•
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, December 31, 2018 and December 31, 2017.
|
|
•
|
Consolidated Statements of Equity for the years ended December 31, 2019, December 31, 2018 and December 31, 2017.
|
|
•
|
Consolidated Statements of Cash Flows for the years ended December 31, 2019, December 31, 2018 and December 31, 2017.
|
|
•
|
Notes to Consolidated Financial Statements.
|
|
|
—
|
||
|
|
—
|
||
|
10.8
|
|
—
|
|
|
|
—
|
||
|
|
—
|
||
|
|
—
|
||
|
10.12
|
|
—
|
|
|
10.13
|
|
—
|
|
|
10.14
|
|
—
|
|
|
10.15
|
|
—
|
|
|
10.16
|
|
—
|
|
|
10.17
|
|
—
|
|
|
10.18
|
|
—
|
|
|
10.19
|
|
—
|
|
|
|
—
|
||
|
|
—
|
||
|
|
—
|
||
|
|
—
|
||
|
|
—
|
||
|
|
—
|
||
|
|
—
|
||
|
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 Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 13, 2019 and hereby incorporated by reference.
|
|
2
|
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.
|
|
3
|
Filed as an exhibit to the Company's Form 8-K filed May 17, 2001 and hereby incorporated by reference.
|
|
4
|
Filed as an exhibit to the Company's Form 8-K filed March 26, 2013 and hereby incorporated by reference.
|
|
5
|
Filed as an exhibit to the Company’s Form 8-K filed April 24, 2015 and hereby incorporated by reference.
|
|
6
|
Filed as an exhibit to the Company’s Form 8-K filed December 11, 2017 and hereby incorporated by reference.
|
|
7
|
Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1999 and hereby incorporated by reference.
|
|
8
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2018 and hereby incorporated by reference.
|
|
9
|
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.
|
|
10
|
Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2015 and hereby incorporated by reference.
|
|
11
|
Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 2016 and hereby incorporated by reference.
|
|
12
|
Filed as an exhibit to the Company's Form 8-K filed February 3, 2016 and hereby incorporated by reference.
|
|
13
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended March 31, 2010 and hereby incorporated by reference.
|
|
14
|
Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2013 and hereby incorporated by reference.
|
|
15
|
Filed as an exhibit to the Company’s Form 10-Q for the quarter ended June 30, 2015 and hereby incorporated by reference.
|
|
16
|
Filed as an exhibit to the Company's Form 10-Q for the quarter ended June 30, 2012 and hereby incorporated by reference.
|
|
17
|
Filed as an exhibit to the Company's proxy statement filed March 30, 2015 and hereby incorporated by reference.
|
|
18
|
Filed as an exhibit to the Company's Form 8-K filed May 31, 2019 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 Todd J. Meredith and the Company (filed as Exhibit 10.4)
|
|
4.
|
Amendment No. 1 to Third Amended and Restated Employment Agreement, dated February 12, 2020, 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.
|
Amendment No. 1 to Third Amended and Restated Employment Agreement, dated February 12, 2020, between John M. Bryant, Jr. and the Company (filed as Exhibit 10.7)
|
|
7.
|
Amended and Restated Employment Agreement, dated January 1, 2017, between Robert E. Hull and the Company (filed as Exhibit 10.8)
|
|
8.
|
Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between Robert E. Hull and the Company (filed as Exhibit 10.9)
|
|
9.
|
Amended and Restated Employment Agreement, dated February 2, 2016, between J. Christopher Douglas and the Company (filed as Exhibit 10.10)
|
|
10.
|
Amendment No. 1 to Amended and Restated Employment Agreement, dated February 12, 2020, between J. Christopher Douglas and the Company (filed as Exhibit 10.11)
|
|
11.
|
Healthcare Realty Trust Incorporated Amended and Restated Executive Incentive Plan (filed as Exhibit 10.12)
|
|
12.
|
2010 Restricted Stock Implementation for Non-Employee Directors, dated May 4, 2010 (filed as Exhibit 10.13)
|
|
13.
|
Amendment No. 1 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.14)
|
|
14.
|
Amendment No. 2 to Restricted Stock Implementation for Non-Employee Directors (filed as Exhibit 10.15)
|
|
15.
|
Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Non-Employee Directors (filed as Exhibit 10.16)
|
|
16.
|
Healthcare Realty Trust Incorporated Form of Restricted Stock Agreement for Officers (filed as Exhibit 10.17)
|
|
17.
|
Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.18)
|
|
18.
|
Amendment No. 1 to Healthcare Realty Trust Incorporated 2015 Stock Incentive Plan (filed as Exhibit 10.19)
|
|
|
HEALTHCARE REALTY TRUST INCORPORATED
|
|
|
|
|
|
|
|
By:
|
/s/ TODD J. MEREDITH
|
|
|
|
Todd J. Meredith
|
|
|
|
President and Chief Executive Officer
|
|
|
|
February 12, 2020
|
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
/s/ Todd J. Meredith
|
|
President and Chief Executive Officer
|
|
February 12, 2020
|
|
Todd J. Meredith
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ J. Christopher Douglas
|
|
Executive Vice President and Chief Financial
|
|
February 12, 2020
|
|
J. Christopher Douglas
|
|
Officer (Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Amanda L. Callaway
|
|
Senior Vice President and Chief Accounting
|
|
February 12, 2020
|
|
Amanda L. Callaway
|
|
Officer (Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/ John V. Abbott
|
|
Director
|
|
February 12, 2020
|
|
John V. Abbott
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Nancy H. Agee
|
|
Director
|
|
February 12, 2020
|
|
Nancy H. Agee
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Edward H. Braman
|
|
Director
|
|
February 12, 2020
|
|
Edward H. Braman
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Peter F. Lyle
|
|
Director
|
|
February 12, 2020
|
|
Peter F. Lyle
|
|
|
|
|
|
|
|
|
|
|
|
/s/ John Knox Singleton
|
|
Director
|
|
February 12, 2020
|
|
John Knox Singleton
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Bruce D. Sullivan
|
|
Director
|
|
February 12, 2020
|
|
Bruce D. Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Christann M. Vasquez
|
|
Director
|
|
February 12, 2020
|
|
Christann M. Vasquez
|
|
|
|
|
|
Dollars in thousands
|
|
ADDITIONS AND DEDUCTIONS
|
|
|
||||||||||||
|
DESCRIPTION
|
BALANCE
AT BEGINNING OF PERIOD
|
|
CHARGED/(CREDITED) TO COSTS AND EXPENSES
|
|
CHARGED
TO OTHER ACCOUNTS
|
|
UNCOLLECTIBLE ACCOUNTS WRITTEN-OFF
|
|
BALANCE
AT END OF PERIOD
|
|
||||||
|
2019
|
Accounts receivable allowance
|
$
|
251
|
|
$
|
167
|
|
$
|
—
|
|
$
|
—
|
|
$
|
418
|
|
|
2018
|
Accounts receivable allowance
|
$
|
256
|
|
$
|
60
|
|
$
|
—
|
|
$
|
65
|
|
$
|
251
|
|
|
2017
|
Accounts receivable allowance
|
$
|
148
|
|
$
|
159
|
|
$
|
—
|
|
$
|
51
|
|
$
|
256
|
|
|
Dollars in thousands
|
LAND 1
|
BUILDINGS, IMPROVEMENTS,
LEASE INTANGIBLES AND CIP 1
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
MARKET
|
NUMBER OF PROP.
|
|
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 CONST.
|
||||||||||
|
Seattle, WA
|
25
|
|
$
|
54,446
|
|
$
|
4,119
|
|
$
|
58,565
|
|
$
|
490,461
|
|
$
|
42,306
|
|
$
|
532,767
|
|
$
|
421
|
|
$
|
591,753
|
|
$
|
88,890
|
|
$
|
22,666
|
|
2008-2019
|
1957-2010
|
|
Dallas, TX
|
25
|
|
18,785
|
|
409
|
|
19,194
|
|
372,644
|
|
124,039
|
|
496,683
|
|
442
|
|
516,319
|
|
181,556
|
|
—
|
|
2003-2019
|
1974-2018
|
||||||||||
|
Los Angeles, CA
|
14
|
|
43,719
|
|
667
|
|
44,386
|
|
161,322
|
|
44,507
|
|
205,829
|
|
347
|
|
250,562
|
|
95,979
|
|
22,340
|
|
1993-2019
|
1973-1998
|
||||||||||
|
Atlanta, GA
|
9
|
|
3,251
|
|
428
|
|
3,679
|
|
209,400
|
|
3,109
|
|
212,509
|
|
84
|
|
216,272
|
|
20,040
|
|
31,715
|
|
2017-2019
|
1999-2014
|
||||||||||
|
Nashville, TN
|
6
|
|
20,004
|
|
49
|
|
20,053
|
|
115,061
|
|
65,402
|
|
180,463
|
|
1,109
|
|
201,625
|
|
64,038
|
|
—
|
|
2004-2018
|
1960-2015
|
||||||||||
|
Charlotte, NC
|
16
|
|
4,163
|
|
37
|
|
4,200
|
|
159,340
|
|
16,921
|
|
176,261
|
|
105
|
|
180,566
|
|
67,040
|
|
—
|
|
2008-2013
|
1961-2008
|
||||||||||
|
Denver, CO
|
9
|
|
13,887
|
|
2,627
|
|
16,514
|
|
106,183
|
|
27,821
|
|
134,004
|
|
271
|
|
150,789
|
|
25,265
|
|
7,565
|
|
2010-2018
|
1977-2015
|
||||||||||
|
Washington, DC
|
6
|
|
—
|
|
—
|
|
—
|
|
141,467
|
|
8,837
|
|
150,304
|
|
21
|
|
150,325
|
|
25,097
|
|
11,707
|
|
2004-2019
|
1967-2005
|
||||||||||
|
Richmond, VA
|
7
|
|
—
|
|
—
|
|
—
|
|
139,636
|
|
9,496
|
|
149,132
|
|
106
|
|
149,238
|
|
44,204
|
|
—
|
|
2011
|
1992-2005
|
||||||||||
|
Houston, TX
|
9
|
|
15,475
|
|
736
|
|
16,211
|
|
107,902
|
|
24,111
|
|
132,013
|
|
78
|
|
148,302
|
|
44,229
|
|
—
|
|
1993-2019
|
1984-2012
|
||||||||||
|
Honolulu, HI
|
3
|
|
8,314
|
|
13
|
|
8,327
|
|
93,839
|
|
41,802
|
|
135,641
|
|
159
|
|
144,127
|
|
39,165
|
|
—
|
|
2003-2004
|
1975-2010
|
||||||||||
|
Des Moines, IA
|
7
|
|
12,584
|
|
81
|
|
12,665
|
|
114,527
|
|
11,874
|
|
126,401
|
|
99
|
|
139,165
|
|
34,725
|
|
515
|
|
2008-2014
|
2002-2009
|
||||||||||
|
Oklahoma, City, OK
|
4
|
|
9,838
|
|
563
|
|
10,401
|
|
114,212
|
|
1,494
|
|
115,706
|
|
15
|
|
126,122
|
|
19,351
|
|
5,985
|
|
2010-2019
|
1970-2014
|
||||||||||
|
Indianapolis, IN
|
4
|
|
3,299
|
|
—
|
|
3,299
|
|
112,718
|
|
6,129
|
|
118,847
|
|
—
|
|
122,146
|
|
26,082
|
|
—
|
|
2008-2019
|
1992-2008
|
||||||||||
|
San Francisco, CA
|
3
|
|
14,054
|
|
—
|
|
14,054
|
|
93,852
|
|
13,544
|
|
107,396
|
|
43
|
|
121,493
|
|
20,906
|
|
—
|
|
2015-2017
|
1975-2014
|
||||||||||
|
Springfield, MO
|
1
|
|
1,989
|
|
—
|
|
1,989
|
|
109,304
|
|
—
|
|
109,304
|
|
—
|
|
111,293
|
|
17,740
|
|
—
|
|
2013
|
2013
|
||||||||||
|
Austin, TX
|
5
|
|
14,233
|
|
3
|
|
14,236
|
|
70,976
|
|
21,833
|
|
92,809
|
|
123
|
|
107,168
|
|
24,048
|
|
—
|
|
2007-2015
|
1972-2015
|
||||||||||
|
Memphis, TN
|
7
|
|
5,241
|
|
—
|
|
5,241
|
|
66,868
|
|
25,640
|
|
92,508
|
|
194
|
|
97,943
|
|
37,582
|
|
—
|
|
1999-2013
|
1993-2007
|
||||||||||
|
San Antonio, TX
|
6
|
|
6,456
|
|
31
|
|
6,487
|
|
62,161
|
|
26,422
|
|
88,583
|
|
404
|
|
95,474
|
|
40,573
|
|
—
|
|
1996-2010
|
1978-2011
|
||||||||||
|
Chicago, IL
|
3
|
|
5,859
|
|
—
|
|
5,859
|
|
69,993
|
|
17,595
|
|
87,588
|
|
211
|
|
93,658
|
|
23,540
|
|
—
|
|
2004-2018
|
1993-2009
|
||||||||||
|
Minneapolis, MN
|
4
|
|
2,090
|
|
—
|
|
2,090
|
|
61,078
|
|
1,281
|
|
62,359
|
|
—
|
|
64,449
|
|
10,486
|
|
18,907
|
|
2014-2017
|
1974-2010
|
||||||||||
|
Other (16 markets)
|
31
|
|
16,434
|
|
645
|
|
17,079
|
|
388,102
|
|
87,307
|
|
475,409
|
|
806
|
|
493,294
|
|
165,159
|
|
7,943
|
|
1993-2019
|
1906-2009
|
||||||||||
|
Total real estate
|
204
|
|
274,121
|
|
10,408
|
|
284,529
|
|
3,361,046
|
|
621,470
|
|
3,982,516
|
|
5,038
|
|
4,272,083
|
|
1,115,695
|
|
129,343
|
|
|
|
||||||||||
|
Construction in progress
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
48,731
|
|
—
|
|
48,731
|
|
|
|
—
|
|
|
|
||||||||||
|
Land held for develop.
|
—
|
|
24,647
|
|
—
|
|
24,647
|
|
—
|
|
—
|
|
—
|
|
—
|
|
24,647
|
|
671
|
|
—
|
|
|
|
||||||||||
|
Memphis redevelopment
|
—
|
|
5,222
|
|
—
|
|
5,222
|
|
3,810
|
|
—
|
|
3,810
|
|
—
|
|
9,032
|
|
50
|
|
—
|
|
|
|
||||||||||
|
Corporate property
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,500
|
|
5,500
|
|
4,686
|
|
—
|
|
|
|
||||||||||
|
Total properties
|
204
|
|
$
|
303,990
|
|
$
|
10,408
|
|
$
|
314,398
|
|
$
|
3,364,856
|
|
$
|
621,470
|
|
$
|
4,035,057
|
|
$
|
10,538
|
|
$
|
4,359,993
|
|
$
|
1,121,102
|
|
$
|
129,343
|
|
|
|
|
1
|
The Company had no assets held for sale as of December 31, 2019.
|
|
2
|
Total properties as of December 31, 2019 have an estimated aggregate total cost of $4.4 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 2.1 to 99.0 years, personal property over 2.8 to 20.0 years, and land improvements over 3.0 to 39.0 years.
|
|
4
|
Includes unamortized premium of $1.2 million and unaccreted discount of $0.5 million and issuance costs of $0.5 million as of December 31, 2019.
|
|
|
YEAR ENDED DEC. 31, 2019
|
YEAR ENDED DEC. 31, 2018
|
YEAR ENDED DEC. 31, 2017
|
|||||||||||||||
|
Dollars in thousands
|
TOTAL PROPERTY
|
|
ACCUMULATED DEPRECIATION
|
|
TOTAL PROPERTY
|
|
ACCUMULATED DEPRECIATION
|
|
TOTAL PROPERTY
|
|
ACCUMULATED DEPRECIATION
|
|
||||||
|
Beginning Balance
|
$
|
3,993,427
|
|
$
|
1,025,831
|
|
$
|
3,907,010
|
|
$
|
933,220
|
|
$
|
3,633,993
|
|
$
|
843,816
|
|
|
Additions during the period
|
|
|
|
|
|
|
||||||||||||
|
Real Estate acquired
|
384,762
|
|
9,285
|
|
112,591
|
|
4,175
|
|
322,616
|
|
4,206
|
|
||||||
|
Other improvements
|
71,666
|
|
165,367
|
|
74,317
|
|
157,385
|
|
59,442
|
|
135,807
|
|
||||||
|
Land held for development
|
—
|
|
278
|
|
4,525
|
|
153
|
|
—
|
|
74
|
|
||||||
|
Construction in Progress
|
15,625
|
|
—
|
|
27,649
|
|
—
|
|
14,598
|
|
—
|
|
||||||
|
Retirement/dispositions
|
|
|
|
|
|
|
||||||||||||
|
Real Estate
|
(105,487
|
)
|
(79,659
|
)
|
(132,665
|
)
|
(69,102
|
)
|
(123,639
|
)
|
(50,683
|
)
|
||||||
|
Land held for development
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
|
Ending Balance
|
$
|
4,359,993
|
|
$
|
1,121,102
|
|
$
|
3,993,427
|
|
$
|
1,025,831
|
|
$
|
3,907,010
|
|
$
|
933,220
|
|
|
By:
|
/s/ John M. Bryant, Jr.
|
|
Name:
|
John M. Bryant, Jr.
|
|
Title:
|
Executive Vice President and General Counsel
|
|
/s/ Todd J. Meredith
|
|
Todd J. Meredith
|
|
By:
|
/s/ Todd J. Meredith
|
|
Name:
|
Todd J. Meredith
|
|
Title:
|
President and Chief Executive Officer
|
|
/s/ John M. Bryant, Jr.
|
|
John M. Bryant, Jr.
|
|
By:
|
/s/ John M. Bryant, Jr.
|
|
Name:
|
John M. Bryant, Jr.
|
|
Title:
|
Executive Vice President and General Counsel
|
|
/s/ Robert E. Hull
|
|
Robert E. Hull
|
|
By:
|
/s/ John M. Bryant, Jr.
|
|
Name:
|
John M. Bryant, Jr.
|
|
Title:
|
Executive Vice President and General Counsel
|
|
/s/ J. Christopher Douglas
|
|
J. Christopher Douglas
|
|
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
|
|
Cotton Pasadena, LLC
|
TN
|
|
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 Dakota, LLC
|
DE
|
|
HR Fair Oaks 3650, LLC
|
TN
|
|
HR Fair Oaks 3700, LLC
|
TN
|
|
HR First Hill Medical Building SPE, LLC
|
DE
|
|
HR Forest Glen, LLC
|
TN
|
|
HR Fridley, LLC
|
MN
|
|
HR HMP Unit 1 SPE, LLC
|
DE
|
|
HR Interests, Inc.
|
TX
|
|
HR Lowry Medical Center SPE, LLC
|
DE
|
|
HR MAC II, LLC
|
DE
|
|
HR MPC II, LLC
|
TN
|
|
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
|
|
HR of Carolinas, LLC
|
DE
|
|
HR of Indiana, LLC
|
DE
|
|
HR of Iowa, LLC
|
DE
|
|
HR of Kingsport, LLC
|
AL
|
|
HR of Los Angeles, Inc.
|
AL
|
|
HR of Los Angeles, Ltd.
|
AL
|
|
HR of Sarasota, Ltd.
|
AL
|
|
HR Richmond Community SPE, LLC
|
DE
|
|
HR Santa Rosa, LLC
|
TN
|
|
HR Springfield MO, LLC
|
DE
|
|
HR St. Francis MOB I SPE, LLC
|
DE
|
|
HR St. Mary’s MOB NW SPE, LLC
|
DE
|
|
HR St. Mary’s MOB South SPE, LLC
|
DE
|
|
HR St. Mary’s MOB West SPE, LLC
|
DE
|
|
HR Summit Crossing SPE, LLC
|
DE
|
|
HR Three Tree, LLC
|
DE
|
|
HR Unity, LLC
|
TN
|
|
HR Valley North, LLC
|
DE
|
|
HR West Des Moines SPE, LLC
|
DE
|
|
HR West Hills Manager SPE, LLC
|
TN
|
|
HR West Hills MOB SPE, LLC
|
TN
|
|
HRP MAC III, LLC
|
DE
|
|
HRP MAC IV, LLC
|
DE
|
|
HR-Pima, LLC
|
DE
|
|
HRT of Alabama, Inc.
|
AL
|
|
HRT of Delaware, Inc.
|
DE
|
|
HRT of Illinois, Inc.
|
DE
|
|
HRT of Louisiana, Inc.
|
LA
|
|
HRT of Mississippi, Inc.
|
DE
|
|
HRT of Roanoke, Inc.
|
VA
|
|
HRT of Tennessee, LLC
|
TN
|
|
HRT of Virginia, Inc.
|
VA
|
|
HRT Properties of Texas, Ltd.
|
TX
|
|
KCC 340 Kennestone, LLC
|
GA
|
|
KPCI 55 Whitcher, LLC
|
GA
|
|
KPCII 61 Whitcher, LLC
|
GA
|
|
La Plata Street Co., Inc.
|
CA
|
|
Lakewood MOB, LLC
|
DE
|
|
Maplewood MOB, LLC
|
DE
|
|
Oat Properties, LLC
|
TN
|
|
Pasadena Medical Plaza SSJ Ltd.
|
FL
|
|
Plano Medical Pavilion, LLC
|
TN
|
|
POP 144 Bill Carruth, LLC
|
GA
|
|
PPC 148 Bill Carruth, LLC
|
GA
|
|
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 12, 2020
|
|
|
|
|
/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 12, 2020
|
|
|
|
|
/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 12, 2020
|
|
|
|
|
/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
|